Fair Isaac Q3 Earnings Beat Estimates on Scores, Revenues Up Y/Y

FICO Scores Segment Extends Lead

Scores revenues increased 41% year over year to $458.9 million. Business-to-business revenues climbed 49% year over year, mainly due to a higher mortgage origination score unit price, while business-to-consumer revenues grew 5% year over year on higher royalties from scores sold indirectly through credit reporting agencies. 

Mortgage origination revenues surged 97% year over year, with volumes rising in the low-single digits. Mortgage originations accounted for 71% of B2B revenues and 62% of total Scores revenues. Auto originations revenues increased 15% year over year, while credit card, personal loan, and other originations revenues rose 9%. 

The FICO Score 10T Adopter Program expanded to 70 lenders and represented $587 billion in eligible annual originations and $1.87 trillion in eligible annual servicing. FICO also signed direct licensing agreements with resellers representing about 60% of U.S. mortgage volume and remained in discussions that could bring coverage closer to 90%.

Fair Isaac Software Mix Shifts to Platform

Software revenues edged up 2% year over year to $215.3 million. On a year-over-year basis, SaaS revenues grew 21%, while on-premises revenues declined 16% and professional services revenues fell 24%. Excluding point-in-time and professional services revenues, the segment grew 10% year over year. 

Platform revenues jumped 66% and exceeded non-platform revenues for the first time. Platform ARR reached $413 million and represented 51% of total software ARR. Platform dollar-based net retention was 148% compared with 82% for non-platform software, lifting the total retention rate to 109%. 

Trailing 12-month software annual contract value bookings rose 39% year over year to $128 million. FICO also expanded its Accenture collaboration to support platform distribution and expects the next-generation FICO Platform, including its enterprise fraud solution, to become generally available later in calendar 2026.

FICO Margins Expand Despite Higher Costs

Total operating expenses increased 13.8% year over year to $311.6 million. Research and development expenses rose 13.8% year over year to $53.7 million, while selling, general and administrative expenses increased 22.8% year over year to $170.8 million.

Operating income increased 38.1% year over year to $362.6 million. The non-GAAP operating margin expanded to 62% from 57% a year earlier, an improvement of 479 basis points. Management noted that strong B2B Scores growth was partly offset by higher personnel and interest expenses.

Fair Isaac’s Balance Sheet and Cash Flow

As of June 30, 2026, FICO had $248.4 million in cash and cash equivalents compared with $219.4 million as of March 31, 2026. Total debt was $5.58 billion.

Net cash from operating activities was $380.4 million, up from $286.2 million in the prior-year quarter. Free cash flow increased to $370.3 million from $276.2 million. Trailing 12-month free cash flow totaled $961 million, up 28%.

FICO repurchased 1.705 million shares for $1.96 billion at an average price of $1,149 per share, marking its largest quarterly repurchase in dollar terms.

FICO Raises Fiscal 2026 Outlook

Management lifted fiscal 2026 revenue guidance to $2.53 billion from $2.45 billion. GAAP net income is now expected to be $850 million, with GAAP earnings projected to be $36.86 per share.

Non-GAAP net income guidance increased to $979 million from $946 million, while non-GAAP earnings guidance rose to $42.43 per share from $40.45. The updated view reflects continued Scores momentum and software-platform execution.

Fourth-quarter operating expenses are expected to be modestly higher sequentially because of marketing tied to the Accenture partnership and anticipated one-time restructuring charges. Elevated interest rates and affordability pressures also continue to keep mortgage originations below historical norms.

FICO’s Zacks Rank & Stocks to Consider

Fair Isaac currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Computer and Technology sector include Arista Networks ANET, ACI Worldwide ACIW and Analog Devices ADI. Each stock carries a Zacks Rank of 2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Arista Networks shares have gained 20.6% in the year-to-date period. Arista Networks is set to report second-quarter 2026 results on Aug. 4.

Shares of ACI Worldwide have gained 25.9% in the year-to-date period. ACI Worldwide is set to report the second-quarter 2026 results on Aug. 6.

Shares of Analog Devices have rallied 30.3% in the year-to-date period. Analog Devices is slated to report fiscal third-quarter 2026 results on Aug. 19.

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