Fair Isaac Q3 Earnings Call Highlights

Fair Isaac raised its fiscal 2026 outlook after third-quarter revenue increased 26% to $674 million, while GAAP EPS rose 41% to $10.45.

The company also generated $370 million in quarterly free cash flow and repurchased $1.96 billion of stock.

The Scores segment drove growth, with revenue up 41% to $459 million, largely due to higher mortgage-origination score pricing.

FICO said mortgage volumes remain pressured by elevated rates, but it has not seen meaningful volume losses from lenders using VantageScore alongside FICO scores.

FICO Platform momentum accelerated: Platform ARR rose 62% to $413 million, surpassing non-platform ARR for the first time, with 148% net retention.

The company expects continued migration from legacy products and plans to make a next-generation platform with enterprise fraud capabilities generally available later in 2026.

Fair Isaac NYSE: FICO raised its fiscal 2026 outlook after reporting third-quarter revenue growth of 26%, supported by higher mortgage score pricing and continued expansion of its FICO Platform business.

The company reported third-quarter revenue of $674 million, while GAAP net income rose 30% year over year to $237 million.

GAAP earnings per share increased 41% to $10.45.

On a non-GAAP basis, net income was $277 million, up 31%, and earnings per share were $12.18, up 42%.

FICO generated $370 million in free cash flow during the quarter and $961 million over the trailing four quarters, a 28% increase from the prior four-quarter period.

The company also accelerated its capital-return activity, repurchasing $1.96 billion of stock, or 1.75 million shares, at an average price of $1,149 per share, including an accelerated share repurchase program.

The Scores segment generated $459 million in revenue, up 41% from the prior-year quarter.

Business-to-business Scores revenue rose 49%, primarily reflecting a higher mortgage-origination score unit price, according to CFO Steve Weber.

Mortgage-origination score volumes increased by low single digits year over year, while mortgage-origination revenue climbed 97%.

Mortgage-originations revenue represented 71% of B2B Scores revenue and 62% of total Scores revenue during the quarter.

Auto-originations revenue increased 15% year over year.

Credit card, personal loan and other originations revenue rose 9%.

Business-to-consumer Scores revenue increased 5%.

CEO Will Lansing said elevated interest rates and affordability pressures continue to weigh on the mortgage market, keeping originations below historical levels.

He said mortgage activity slowed as rates increased during the quarter, though the market has held up better than FICO had initially expected for the year.

During the question-and-answer session, Lansing said the company was not seeing mortgage score volume losses associated with lenders using VantageScore in addition to FICO scores.

He characterized the emerging environment as one that enables “score shopping,” where lenders may use multiple scores to identify the most favorable consumer outcome.

Lansing said FICO expects FICO Score 10T eventually could join Classic FICO and VantageScore in the mortgage market.

The company currently bundles 10T with Classic FICO at no additional cost in its adopter program, though Lansing said final future pricing decisions have not been made.

FICO highlighted progress around FICO Score 10T, including the release by Fannie Mae and Freddie Mac of expanded historical datasets that allow mortgage participants to evaluate the model using government-sponsored enter...