IntrinsicIntrinsic

FAIR ISAAC CORP

FICO
🏢 Services-Business Services, NEC

Business Operations Summary

Fair Isaac Corporation (FICO) is a global analytics software leader operating in the analytics and decision management industry. The company serves thousands of businesses in more than 80 countries , including most leading banks and credit card issuers, insurers, retailers, telecommunications providers, automotive lenders, consumer reporting agencies, public agencies, and organizations in other industries. FICO also serves consumers through online services that enable people to access and understand their FICO Scores, the standard measure of consumer credit risk in the United States . The largest market segment is financial services, representing 92% of total revenue during fiscal 2025 , and the largest geographic market is the Americas, representing 87% of total revenue during fiscal 2025 .

FICO's competitive positioning is anchored by the FICO Score, which is the standard measure of consumer credit risk in the U.S. and is used in most U.S. credit decisions by nearly all major banks, credit card issuers, mortgage lenders, and auto loan originators . Primary competitors named in the filing include VantageScore (a joint venture of the three major U.S. consumer reporting agencies), consumer reporting agencies themselves (Experian, TransUnion, Equifax), and various software and analytics providers such as Nice Actimize, Pegasystems, SAS, IBM, and Adobe . The company believes it offers a unique mix of products, expertise, and capabilities, but notes that many competitors are larger and have more development, sales, and marketing resources . During fiscal 2025, 2024, and 2023, revenues generated from agreements with Experian, TransUnion, and Equifax collectively accounted for 51%, 45%, and 41% of total revenues, respectively .

FICO generates revenue through two operating segments: Scores and Software. The Scores segment includes business-to-business scoring solutions (primarily the FICO Score distributed through consumer reporting agencies on a usage-based royalty model) and business-to-consumer scoring solutions (sold directly through myFICO.com and other channels). The Software segment includes pre-configured analytic and decision management solutions (such as fraud detection, origination, customer management, and marketing), the FICO Platform modular software offering, and associated professional services. Software is sold as multi-year subscriptions with payments based on usage metrics, often subject to contracted minimum payments, and is available as software-as-a-service (SaaS) or on-premises . A significant and growing number of software solutions run natively on FICO Platform .

The Scores segment generated $1,168,575,000 in revenue during fiscal 2025, representing 59% of total revenues . This segment includes B2B scoring solutions such as the FICO Score (ranging 300-850), FICO Score 9, FICO Score 10 and 10 T, FICO Industry Scores (including Bankcard and Auto Industry versions of Score 10), the FICO Resilience Index, FICO Score XD (using alternative data), and the UltraFICO Score (using consumer-permissioned data) . B2B scores revenue was $948,595,000 in fiscal 2025, while B2C scores revenue was $219,980,000 . Outside the U.S., FICO Scores have been made available in over 40 countries , with client-specific versions developed in over ten countries . The segment's operating income was $1,026,243,000 in fiscal 2025, representing 88% of segment revenues .

The Software segment generated $822,294,000 in revenue during fiscal 2025, representing 41% of total revenues . This segment includes on-premises and SaaS software revenue of $740,145,000 and professional services revenue of $82,149,000 . Key software offerings include FICO Platform (a modular analytic and decisioning environment), FICO Fraud Solutions (leveraging the Falcon Intelligence Network with data from more than 10,000 institutions ), FICO Originations Solution, FICO Customer Communication Service, FICO Strategy Director, FICO TRIAD Customer Manager, and analytic and decisioning tools such as FICO Decision Modeler, FICO Blaze Advisor, FICO Xpress Optimization, FICO Analytics Workbench, FICO Data Orchestrator, FICO DMP Streaming, FICO Business Outcome Simulator, and FICO Decision Optimizer . Annual Recurring Revenue (ARR) from FICO Platform based products was $263,600,000 as of September 30, 2025 , representing 35% of total software ARR . Total software ARR was $747,300,000 as of September 30, 2025 . The segment's operating income was $247,694,000 in fiscal 2025, representing 30% of segment revenues .

During fiscal 2025, FICO launched FICO Score 10 BNPL and FICO Score 10 T BNPL, the first credit scores from a leading credit scoring provider to incorporate Buy Now, Pay Later data . Internationally, the company launched a FICO Score in Kenya . In support of the B2C business, FICO launched the FICO Score Mortgage Simulator and introduced the Lenders Leading Financial Inclusion program . The company expanded FICO Platform reach with the launch of FICO Marketplace . During fiscal 2025, FICO repurchased 0.8 million shares at a total repurchase price of $1.4 billion . The company issued $1.5 billion of senior notes and used the net proceeds to repay all outstanding balances on its term loans, and amended its credit agreement to increase borrowing capacity under the unsecured revolving line of credit to $1.0 billion . Total debt balance was $3.1 billion as of September 30, 2025 . During the fourth quarter of fiscal 2025, the company incurred restructuring charges of $10,922,000 in employee separation costs due to the elimination of 226 positions .

Total revenues were $1,990,869,000 during fiscal 2025, a 16% increase from fiscal 2024 . Scores segment revenues were $1,168,575,000 , a 27% increase from fiscal 2024 . Operating income was $924,850,000 during fiscal 2025, a 26% increase from fiscal 2024 . Net income was $651,946,000 during fiscal 2025, a 27% increase from fiscal 2024 . Diluted EPS was $26.54 during fiscal 2025, a 30% increase from fiscal 2024 . Cash flow from operating activities was $778,807,000 during fiscal 2025, compared with $632,964,000 during fiscal 2024. Cash and cash equivalents were $134,136,000 as of September 30, 2025, compared with $150,667,000 as of September 30, 2024.

Business Outlook & Future Growth Drivers

A major growth vector is the continued advancement of FICO Platform, the modular analytic and decisioning environment. The company's goal is to move substantially all of FICO's current software products onto FICO Platform . ARR from FICO Platform based products was $263,600,000 as of September 30, 2025 , representing 35% of total software ARR , and the company expects this strategy to result in revenue growth through follow-on 'land and expand' sales to existing FICO Platform customers and more sales to medium-sized businesses served through value-added resellers and systems integrators . The company is continuing to invest significant development resources to enable substantially all of its software to run on FICO Platform in the future .

Another growth vector is the expansion of scoring solutions, including new products and international markets. In fiscal 2025, FICO launched FICO Score 10 BNPL and FICO Score 10 T BNPL, the first credit scores to incorporate Buy Now, Pay Later data . Internationally, the company launched a FICO Score in Kenya . The adoption of FICO Score 10 and FICO Score 10 T gained increased traction for non-conforming mortgages and was approved for conforming mortgages by the Federal Housing Finance Agency . The company also introduced the Lenders Leading Financial Inclusion program aimed at expanding credit access for underserved communities . Outside the U.S., FICO Scores have been made available in over 40 countries and client-specific versions have been developed in over ten countries .Cost of revenues as a percentage of revenues decreased to 18% during fiscal 2025 from 20% during fiscal 2024, primarily due to increased sales of higher-margin Scores products . Research and development expenses as a percentage of revenues decreased to 9% during fiscal 2025 from 10% during fiscal 2024 . Selling, general and administrative expenses as a percentage of revenues decreased to 26% during fiscal 2025 from 27% during fiscal 2024 .

The filing does not provide a specific operational outlook regarding supply chain, manufacturing capacity, or headcount strategy beyond noting that during the fourth quarter of fiscal 2025, the company eliminated 226 positions and that cash payments for all employee separation costs from restructuring will be paid by the end of fiscal 2026 . The company is investing significant resources to develop indirect channel relationships and to develop new sales, distribution, and marketing relationships .

Capital allocation priorities include share repurchases and debt management. In June 2025, the Board approved a new stock repurchase program authorizing repurchases up to an aggregate cost of $1.0 billion . As of September 30, 2025, $343,600,296 remained under this program . During fiscal 2025, total share repurchases were $1.4 billion . The company issued $1.5 billion of senior notes in May 2025 and used the proceeds to repay all outstanding balances on its term loans . The company amended its credit agreement to increase borrowing capacity under the unsecured revolving line of credit to $1.0 billion . Capitalized internal-use software costs were $30,485,000 during fiscal 2025. The company has not declared or paid any cash dividends on its common stock since May 2017 and does not presently plan to pay cash dividends in the foreseeable future .

A structural headwind flagged by management is the reliance on the three major consumer reporting agencies (Experian, TransUnion, Equifax) for a significant portion of revenues and profits. During fiscal 2025, 2024, and 2023, revenues from these three customers collectively accounted for 51%, 45%, and 41% of total revenues, respectively . The loss of or a significant change in a relationship with one of these agencies could have a material adverse effect on revenues and results of operations . Additionally, the volume of Scores sales depends heavily on macroeconomic conditions, including the volume of transactions in the U.S. mortgage and credit card markets, which account for a significant portion of Scores segment revenues .

Regulatory and competitive constraints are also identified as headwinds. The continued use of the FICO Score by Fannie Mae and Freddie Mac is subject to ongoing validation and approval, and if other credit score models are approved or the FICO Score is not approved for continued use, it could have a material adverse effect on revenues, results of operations, and stock price . The FHFA Director announced in July 2025 a change permitting mortgage originators to choose the credit score they submit with mortgages delivered to Fannie Mae and Freddie Mac . Increased regulatory focus on U.S. residential mortgage closing costs may affect the ability to implement price changes for FICO Scores used in mortgage originations . The company also faces competition from VantageScore, a joint venture of the three major U.S. consumer reporting agencies, which is selling a competitive credit scoring product .

Major Risk Factors & Challenges

A material risk is the reliance on the three major consumer reporting agencies (Experian, TransUnion, Equifax), which collectively accounted for 51% of total revenues in fiscal 2025 ; the loss or significant change in any of these relationships could materially adversely affect revenues and results of operations . Another critical risk is the dependence on the continued use of the FICO Score by Fannie Mae and Freddie Mac, which is subject to ongoing validation and approval; if other credit score models are approved or the FICO Score is not approved, it could have a material adverse effect on revenues, results of operations, and stock price . The company faces intense competition, including from VantageScore, a joint venture of the three major U.S. consumer reporting agencies that sells a competitive credit scoring product . Cybersecurity risks are significant, as the company routinely is the target of attempted cybersecurity threats, and a successful breach could result in unauthorized disclosure of consumer or customer information, significant litigation, regulatory fines, and reputational damage . Additionally, the company's Scores segment revenues depend heavily on macroeconomic conditions, particularly the volume of transactions in the U.S. mortgage and credit card markets, which are hard to forecast .

Management Priorities & Sentiments

Management's message emphasizes the continued strength of the FICO Score as the standard measure of consumer credit risk in the U.S. and the advancement of the Software segment's platform-first strategy. Key themes include the adoption of FICO Score 10 and 10 T, which gained increased traction for non-conforming mortgages and was approved for conforming mortgages by the Federal Housing Finance Agency , and the launch of innovative products such as FICO Score 10 BNPL and FICO Score 10 T BNPL . Management highlights the expansion of FICO Platform reach, both by geography and customer type, with the launch of FICO Marketplace . Strategic priorities emphasized for the period ahead include continuing to invest significant development resources to enable substantially all software to run on FICO Platform , expanding into newer markets for products and services , and enhancing stockholder value through the stock repurchase program, with $1.4 billion in repurchases during fiscal 2025 .

References

  1. [1] Item 1, Business — General
  2. [2] Item 1, Business — General
  3. [3] Item 1, Business — Markets and Customers
  4. [4] Item 1, Business — Markets and Customers
  5. [5] Item 1, Business — Products and Services — Scores
  6. [6] Item 1, Business — Competition
  7. [7] Item 1, Business — Competition
  8. [8] Item 1, Business — Markets and Customers
  9. [9] Item 1, Business — Products and Services — Software
  10. [10] Item 1, Business — Products and Services — Software
  11. [11] Item 7, MD&A — Results of Operations — Revenues
  12. [12] Item 7, MD&A — Results of Operations — Revenues
  13. [13] Item 1, Business — Products and Services — Scores
  14. [14] Item 8, Note 9 — Revenue from Contracts with Customers — Disaggregation of Revenue
  15. [15] Item 8, Note 9 — Revenue from Contracts with Customers — Disaggregation of Revenue
  16. [16] Item 1, Business — Products and Services — Scores
  17. [17] Item 1, Business — Products and Services — Scores
  18. [18] Item 7, MD&A — Results of Operations — Operating Income
  19. [19] Item 7, MD&A — Results of Operations — Operating Income
  20. [20] Item 7, MD&A — Results of Operations — Revenues
  21. [21] Item 7, MD&A — Results of Operations — Revenues
  22. [22] Item 7, MD&A — Results of Operations — Software
  23. [23] Item 7, MD&A — Results of Operations — Software
  24. [24] Item 1, Business — Products and Services — Pre-Configured Solutions
  25. [25] Item 1, Business — Products and Services — Our Offerings
  26. [26] Item 7, MD&A — Business Overview — Key performance metrics for Software segment — Annual Recurring Revenue
  27. [27] Item 7, MD&A — Business Overview — Key performance metrics for Software segment — Annual Recurring Revenue
  28. [28] Item 7, MD&A — Business Overview — Key performance metrics for Software segment — Annual Recurring Revenue
  29. [29] Item 7, MD&A — Results of Operations — Operating Income
  30. [30] Item 7, MD&A — Results of Operations — Operating Income
  31. [31] Item 7, MD&A — Business Overview — Strategies and Initiatives
  32. [32] Item 7, MD&A — Business Overview — Strategies and Initiatives
  33. [33] Item 7, MD&A — Business Overview — Strategies and Initiatives
  34. [34] Item 7, MD&A — Business Overview — Strategies and Initiatives
  35. [35] Item 7, MD&A — Business Overview — Highlights from Fiscal 2025
  36. [36] Item 7, MD&A — Business Overview — Highlights from Fiscal 2025
  37. [37] Item 7, MD&A — Business Overview — Highlights from Fiscal 2025
  38. [38] Item 7, MD&A — Results of Operations — Restructuring Charges
  39. [39] Item 7, MD&A — Business Overview — Highlights from Fiscal 2025
  40. [40] Item 7, MD&A — Business Overview — Highlights from Fiscal 2025
  41. [41] Item 7, MD&A — Business Overview — Highlights from Fiscal 2025
  42. [42] Item 7, MD&A — Business Overview — Highlights from Fiscal 2025
  43. [43] Item 7, MD&A — Business Overview — Highlights from Fiscal 2025
  44. [44] Item 7, MD&A — Business Overview — Highlights from Fiscal 2025
  45. [45] Item 7, MD&A — Business Overview — Highlights from Fiscal 2025
  46. [46] Item 7, MD&A — Business Overview — Highlights from Fiscal 2025
  47. [47] Item 7, MD&A — Business Overview — Highlights from Fiscal 2025
  48. [48] Item 7, MD&A — Business Overview — Highlights from Fiscal 2025
  49. [49] Item 7, MD&A — Business Overview — Highlights from Fiscal 2025
  50. [50] Item 7, MD&A — Business Overview — Highlights from Fiscal 2025
  51. [51] Item 7, MD&A — Business Overview — Highlights from Fiscal 2025
  52. [52] Item 7, MD&A — Business Overview — Highlights from Fiscal 2025
  53. [53] Item 1, Business — Products and Services — FICO Platform
  54. [54] Item 7, MD&A — Business Overview — Key performance metrics for Software segment — Annual Recurring Revenue
  55. [55] Item 7, MD&A — Business Overview — Key performance metrics for Software segment — Annual Recurring Revenue
  56. [56] Item 1, Business — Products and Services — FICO Platform
  57. [57] Item 1, Business — Products and Services — Software
  58. [58] Item 7, MD&A — Business Overview — Strategies and Initiatives
  59. [59] Item 7, MD&A — Business Overview — Strategies and Initiatives
  60. [60] Item 7, MD&A — Business Overview — Strategies and Initiatives
  61. [61] Item 7, MD&A — Business Overview — Strategies and Initiatives
  62. [62] Item 1, Business — Products and Services — Scores
  63. [63] Item 1, Business — Products and Services — Scores
  64. [64] Item 7, MD&A — Results of Operations — Cost of Revenues
  65. [65] Item 7, MD&A — Results of Operations — Research and Development
  66. [66] Item 7, MD&A — Results of Operations — Selling, General and Administrative
  67. [67] Item 7, MD&A — Results of Operations — Restructuring Charges
  68. [68] Item 8, Note 11 — Restructuring Charges
  69. [69] Item 1, Business — Markets and Customers
  70. [70] Item 1A, Risk Factors — Business, Market and Strategy Risks
  71. [71] Item 5, Market for Registrant's Common Equity — Issuer Purchases of Equity Securities
  72. [72] Item 5, Market for Registrant's Common Equity — Issuer Purchases of Equity Securities
  73. [73] Item 7, MD&A — Capital Resources and Liquidity — Repurchases of Common Stock
  74. [74] Item 7, MD&A — Capital Resources and Liquidity — Senior Notes
  75. [75] Item 7, MD&A — Capital Resources and Liquidity — Revolving Line of Credit and Term Loans
  76. [76] Item 7, MD&A — Capital Resources and Liquidity — Revolving Line of Credit and Term Loans
  77. [77] Item 8, Consolidated Statements of Cash Flows
  78. [78] Item 5, Market for Registrant's Common Equity — Dividends
  79. [79] Item 1, Business — Markets and Customers
  80. [80] Item 1A, Risk Factors — Business, Market and Strategy Risks
  81. [81] Item 1A, Risk Factors — Business, Market and Strategy Risks
  82. [82] Item 1A, Risk Factors — Business, Market and Strategy Risks
  83. [83] Item 1A, Risk Factors — Business, Market and Strategy Risks
  84. [84] Item 1A, Risk Factors — Legal, Regulatory and Compliance Risks
  85. [85] Item 1, Business — Competition
  86. [86] Item 1, Business — Markets and Customers
  87. [87] Item 1A, Risk Factors — Business, Market and Strategy Risks
  88. [88] Item 1A, Risk Factors — Business, Market and Strategy Risks
  89. [89] Item 1, Business — Competition
  90. [90] Item 1A, Risk Factors — Operational Risks
  91. [91] Item 1A, Risk Factors — Financial Risks
  92. [92] Item 7, MD&A — Business Overview — Strategies and Initiatives
  93. [93] Item 7, MD&A — Business Overview — Strategies and Initiatives
  94. [94] Item 7, MD&A — Business Overview — Strategies and Initiatives
  95. [95] Item 1, Business — Products and Services — Software
  96. [96] Item 1A, Risk Factors — Business, Market and Strategy Risks
  97. [97] Item 7, MD&A — Business Overview — Strategies and Initiatives
  98. [98] Item 8, Consolidated Statements of Income and Comprehensive Income
  99. [99] Item 8, Consolidated Statements of Income and Comprehensive Income
  100. [100] Item 8, Consolidated Statements of Income and Comprehensive Income
  101. [101] Item 8, Consolidated Statements of Income and Comprehensive Income
  102. [102] Item 8, Consolidated Statements of Income and Comprehensive Income
  103. [103] Item 8, Consolidated Statements of Income and Comprehensive Income
  104. [104] Item 8, Consolidated Statements of Income and Comprehensive Income
  105. [105] Item 8, Consolidated Statements of Income and Comprehensive Income
  106. [106] Item 7, MD&A — Results of Operations — Operating Expenses and Other Income (Expense), Net
  107. [107] Item 7, MD&A — Results of Operations — Operating Expenses and Other Income (Expense), Net
  108. [108] Item 8, Consolidated Statements of Cash Flows
  109. [109] Item 8, Consolidated Statements of Cash Flows
  110. [110] Item 8, Note 8 — Debt
  111. [111] Item 8, Consolidated Balance Sheets
  112. [112] Item 7, MD&A — Results of Operations — Provision for Income Taxes
  113. [113] Item 7, MD&A — Results of Operations — Provision for Income Taxes
  114. [114] Item 8, Consolidated Statements of Income and Comprehensive Income
  115. [115] Item 8, Note 11 — Restructuring Charges
  116. [116] Item 7, MD&A — Results of Operations — Operating Income
  117. [117] Item 7, MD&A — Results of Operations — Operating Income
  118. [118] Item 7, MD&A — Results of Operations — Operating Income
  119. [119] Item 7, MD&A — Results of Operations — Operating Income

Report on Jun 8, 2026