Fair Isaac Corporation (NYSE: FIC) sells predictive analytic and decision management systems. Its largest segment is Strategy Machine Solutions, which produces software for specific business processes such as customer management or insurance claims management. It generates 52% of revenue ($388 mm).
However, Credit Scoring (57% operating margin) generates 56% of total profits. FIC's credit evaluation FICO product is used extensively as an objective measurement of an individual consumer's risk in the form of a credit score; FICO scores are used in 10 billion credit bureau risk scores a year. 90 of the 100 largest American financial institutions and more than half of the world's largest banks use FIC systems. 
FIC's sales and profits have declined over the past three years. Net Income decreased by 21% from 2006, while sales decreased by 9.7%. Although profit increased slightly from 2006 to 2007, operating income and margins have declined since 2006 on a consecutive yearly basis. The operating margin has declined from 18.5% to 16.4%, an 11% decrease.
Although FIC has a high return on equity (ROE) and a high gross profit margin compared to its industry and the market, its revenue decreased by nearly 10% in the past year. This contrasts with growth double digit growth among its competitors. The industry is composed of credit reporting companies, as defined by SIC and NAICS codes.
More than half (52%) of FIC's revenue comes from its Strategy Machine Solutions group, which includes software for credit card pre-screening, fraud prevention, and insurance claims management.TRIAD, a credit account maintenance product within this segment, is used by 250 issuers worldwide to manage approximately 65% of the world’s credit card accounts. Scoring Solutions includes the FICO credit score product as well as other credit evaluation products. Professional Services represents customized software work revenue, often in conjunction with sales of other FIC products. Analytic Software Tools are used as platforms for companies to build their own Decision Management software.
Scoring Solutions is FIC's most profitable segment, both in terms of its operating margin (58%) and its contributing share to total company profit (56%). Strategy Machine Solutions is the second most profitable segment in terms of operating margin (16%). Despite the fact that it is the largest segment by revenue, it is responsible for only 38% of total net operating income. Professional services remarkably has a 0% margin, however it contributes to generating sales for Stategy Machines by enabling FIC to customize its software for customers.  Analytic Software is the smallest segment by revenue ($52 mm), and operates with a 15% margin. 
In geographic segmentation, the United States accounts for 67% of revenues, the United Kingdom for 9%, and all other countries for 24%.
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There are three major consumer credit reporting agencies that offer products to evaluate customers' credit worthiness, and recently launched VantageScore to compete with FICO. In addittion, these companies also provide systems to manage customer relationships and risks.
Compared to the credit reporting agencies, Fair Issac is small, despite the popularity of the FICO product.
|Companies:||Fair Isaac||Equifax||Experian Americas||TransUnion LLC|
|Annual Sales ($ mil.)||744.8||1843||282||1200|
|Database Size (Users mil.)||N/A||400||230||500|