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1. Company Snapshot

1.a. Company Description

Fair Isaac Corporation develops analytic, software, and data management products and services that enable businesses to automate, enhance, and connect decisions in the Americas, Europe, the Middle East, Africa, and the Asia Pacific.It operates through two segments, Scores and Software.The Software segment offers pre-configured decision management solution designed for various business problems or processes, such as marketing, account origination, customer management, customer engagement, fraud detection, financial crimes compliance, collection, and marketing, as well as associated professional services.


This segment also provides FICO Platform, a modular software offering designed to support advanced analytic and decision use cases, as well as stand-alone analytic and decisioning software that can be configured by customers to address a wide range of business use cases.The Scores segment provides business-to-business scoring solutions and services for consumers that give clients access to analytics to be integrated into their transaction streams and decision-making processes, as well as business-to-consumer scoring solutions comprising myFICO.com subscription offerings.Fair Isaac Corporation markets its products and services primarily through its direct sales organization and indirect channels, as well as online.


The company was formerly known as Fair Isaac & Company, Inc.and changed its name to Fair Isaac Corporation in July 1992.Fair Isaac Corporation was founded in 1956 and is headquartered in Bozeman, Montana.

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1.b. Last Insights on FICO

Fair Isaac Corporation's recent performance was driven by strong Q4 earnings, fueled by growth in its Scores segment and mortgage originations. The company's new Mortgage Direct License Program, launched in October, eliminated hidden fees traditionally collected by credit bureaus, paving the way for price transparency and immediate savings. FICO's Q4 revenue reached $516 million, up 14% year-over-year, with a positive FY26 outlook. Its earnings per share (EPS) of $6.42 beat estimates, and the company reported net income of $155.0 million. Analysts have a "Moderate Buy" consensus rating on the stock.

1.c. Company Highlights

2. FICO's Q4 Earnings: A Strong Finish to a Record Year

FICO reported a robust Q4, with revenues reaching $516 million, a 14% increase over the prior year, and a record annual free cash flow. The company's full-year revenues were $1.991 billion, up 16% versus the prior year. The non-GAAP operating margin for the quarter was 54%, a 210 basis point increase year-over-year, driven by strong revenue growth and operational efficiency. GAAP net income was $155 million in the quarter, a 14% increase from the prior year, and $652 million for the full year, a 27% increase. Earnings per share (EPS) came in at $7.74, beating analyst estimates of $7.32.

Publication Date: Nov -07

📋 Highlights
  • Full-Year Revenue Growth:: FY '25 revenue reached $1.991 billion (+16% YoY), with Q4 revenue at $516 million (+14% YoY).
  • Scores Segment Expansion:: Q4 Scores revenue grew 25% YoY to $312 million, driven by B2B scores and new mortgage direct license program.
  • FICO Score 10T Adoption:: Adopted by 40 lenders managing $316 billion in annual originations and $1.5 trillion in servicing volume.
  • Software Momentum:: Platform ARR grew 16% YoY to $747 million total ARR, with 112% platform NRR and 102% dollar-based net retention.
  • FY '26 Guidance:: Revenue projected at $2.35 billion (+18% YoY), with non-GAAP EPS targeting $38.17 (+28%) and $907 million non-GAAP net income (+24%).

Segment Performance

The Software segment reported Q4 revenues of $204 million, flat year-over-year, with 17% platform revenue growth driven by FICO platform, offset by a 7% decline in non-platform revenue. The Scores segment reported Q4 revenues of $312 million, up 25% versus the prior year, driven by B2B scores growth. FICO scores continue to be the standard measure of consumer credit risk in the U.S., used by 90% of top U.S. lenders.

Growth Drivers and Innovations

FICO's strong momentum in its software business is driven by customer adoption of FICO platform, with notable innovations including the upcoming general availability of next-generation FICO platform and the groundbreaking FICO marketplace. The company's R&D investments are focused on driving real value for customers, bringing connected end-to-end customer experience, smarter explainable outcomes, and improved performance.

Guidance and Outlook

FICO guided revenue of $2.35 billion in FY '26, an 18% increase from FY '25, and GAAP net income of $795 million, a 22% increase. The company's guidance assumes a net effective tax rate of 24% and an operating tax rate of 25%. Management is conservative in their guidance, citing uncertainty in trigger leads and market share retention.

Valuation and Metrics

With a P/E Ratio of 61.42 and an EV/EBITDA of 52.77, FICO's valuation multiples indicate high expectations for future growth. The company's ROIC of 52.96% suggests strong profitability, driven by its dominant position in the credit scoring market. Analysts estimate next year's revenue growth at 20.4%, which is slightly higher than FICO's guided growth rate of 18%. The stock's Free Cash Flow Yield is 1.86%, indicating a relatively low return in terms of cash flow.

3. NewsRoom

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FICO UK Credit Card Market Report: September 2025

Dec -04

Source: businesswire.com

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American Century Ultra Fund Q3 2025 Contributors/Detractors And Notable Trades

Nov -30

Source: seekingalpha.com

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Buy 5 Financial Technology Ginats Amid Fed Rate Cut Hope in December

Nov -28

Source: zacks.com

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Virtus Silvant Mid-Cap Growth Fund Q3 2025 Performance Review

Nov -26

Source: seekingalpha.com

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Bank Julius Baer & Co. Ltd Zurich Trims Stake in Fair Isaac Corporation $FICO

Nov -21

Source: defenseworld.net

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FICO Partners with Plaid to Launch Next-Generation Cash Flow UltraFICO® Score

Nov -20

Source: businesswire.com

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Here's What Key Metrics Tell Us About Fair Isaac (FICO) Q4 Earnings

Nov -14

Source: zacks.com

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Akre Capital Management's Strategic Move: Significant Increase in Fair Isaac Corp Holdings

Nov -13

Source: gurufocus.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.85%)

6. Segments

Scores

Expected Growth: 10.2%

Growing demand for credit scores drives Fair Isaac Corporation's growth, fueled by increasing adoption in emerging markets, rising regulatory requirements, and the need for efficient risk assessment.

Software

Expected Growth: 7.3%

Increasing demand for fraud and risk management solutions, coupled with the adoption of advanced analytics and decision management platforms, drives growth in Fair Isaac Corporation's software solutions for financial services and other industries.

7. Detailed Products

FICO Score

A three-digit credit score that summarizes an individual's credit history and creditworthiness

Decision Management Suite

A platform that enables organizations to automate and optimize decision-making processes

Falcon Fraud Manager

A fraud detection and prevention solution that identifies and prevents fraudulent transactions

FICO Origination Manager

A solution that streamlines and automates the loan origination process

FICO Customer Communication Services

A solution that enables personalized customer communication and engagement

FICO Analytic Modeler

A predictive analytics and modeling solution that enables organizations to build and deploy models

FICO Decision Central

A cloud-based decision management platform that enables organizations to make data-driven decisions

8. Fair Isaac Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Fair Isaac Corporation's credit scoring models are highly specialized and difficult to replicate, reducing the threat of substitutes.

Bargaining Power Of Customers

While customers have some bargaining power due to the availability of alternative credit scoring models, Fair Isaac Corporation's strong brand recognition and market presence mitigate this power.

Bargaining Power Of Suppliers

Fair Isaac Corporation has a diverse supplier base, reducing the bargaining power of individual suppliers.

Threat Of New Entrants

The high barriers to entry in the credit scoring market, including the need for significant investment in data and analytics, reduce the threat of new entrants.

Intensity Of Rivalry

While there is some rivalry in the credit scoring market, Fair Isaac Corporation's strong market position and brand recognition help to mitigate the intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 157.45%
Debt Cost 6.53%
Equity Weight -57.45%
Equity Cost 10.13%
WACC 4.47%
Leverage -274.07%

11. Quality Control: Fair Isaac Corporation passed 7 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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A-Score: 4.0/10

Value: 2.0

Growth: 8.1

Quality: 7.6

Yield: 0.0

Momentum: 2.0

Volatility: 4.3

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

1798.53$

Current Price

1798.53$

Potential

-0.00%

Expected Cash-Flows