FICO
TechnologyFair Isaac
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XBRL · SEC EDGAR2008–2025(18yr)| Metric | FY 2008 | FY 2009 | FY 2010 | FY 2011 | FY 2012 | FY 2013 | FY 2014 | FY 2015 | FY 2016 | FY 2017 | FY 2018 | FY 2019 | FY 2020 | FY 2021 | FY 2022 | FY 2023 | FY 2024 | FY 2025Latest | YoY |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | $744.8M | $630.7M | $605.6M | $619.7M | $676.4M | $743.4M | $789.0M | $838.8M | $881.4M | $932.2M | $1.0B | $1.2B | $1.3B | $1.3B | $1.4B | $1.5B | $1.7B | $2.0B | +15.9% |
| Gross Profit | $469.9M | $424.3M | $424.7M | $433.2M | $478.5M | $514.0M | $539.7M | $568.2M | $616.2M | $645.0M | $721.8M | $823.2M | $933.4M | $984.1M | $1.1B | $1.2B | $1.4B | $1.6B | +19.6% |
| Gross Margin | 63.1% | 67.3% | 70.1% | 69.9% | 70.7% | 69.1% | 68.4% | 67.7% | 69.9% | 69.2% | 69.9% | 71.0% | 72.1% | 74.7% | 78.1% | 79.4% | 79.7% | 82.2% | +2.5pp |
| Operating Income | $122.3M | $116.7M | $113.3M | $127.3M | $168.4M | $161.6M | $161.9M | $137.5M | $169.6M | $177.2M | $206.4M | $253.5M | $296.0M | $505.5M | $542.4M | $642.8M | $733.6M | $924.9M | +26.1% |
| Operating Margin | 16.4% | 18.5% | 18.7% | 20.5% | 24.9% | 21.7% | 20.5% | 16.4% | 19.2% | 19.0% | 20.0% | 21.9% | 22.9% | 38.4% | 39.4% | 42.5% | 42.7% | 46.5% | +3.7pp |
| Net Income | $84.0M | $65.1M | $64.5M | $71.6M | $92.0M | $90.1M | $94.9M | $86.5M | $109.4M | $128.3M | $142.4M | $192.1M | $236.4M | $392.1M | $373.5M | $429.4M | $512.8M | $651.9M | +27.1% |
| Net Margin | 11.3% | 10.3% | 10.6% | 11.5% | 13.6% | 12.1% | 12.0% | 10.3% | 12.4% | 13.8% | 13.8% | 16.6% | 18.3% | 29.8% | 27.1% | 28.4% | 29.9% | 32.7% | +2.9pp |
| Free Cash Flow | $136.4M | $137.7M | $88.3M | $122.1M | $104.3M | — | — | — | — | $205.8M | $191.8M | $236.4M | $342.9M | $416.2M | $503.4M | $464.7M | $624.1M | $769.9M | +23.4% |
| FCF Margin | 18.3% | 21.8% | 14.6% | 19.7% | 15.4% | — | — | — | — | 22.1% | 18.6% | 20.4% | 26.5% | 31.6% | 36.6% | 30.7% | 36.3% | 38.7% | +2.3pp |
| EPS (Diluted) | $1.70 | $1.33 | $1.42 | $1.79 | $2.55 | $2.48 | $2.72 | $2.65 | $3.39 | $3.98 | $4.57 | $6.34 | $7.90 | $13.40 | $14.18 | $16.93 | $20.45 | $26.54 | +29.8% |
1. THE BIG PICTURE
Fair Isaac is a high-margin toll-taker on the American credit system that is attempting to reinvent itself as a cloud-software powerhouse. While its "standard" credit scores provide a massive, high-margin cash cushion, Fair Isaac’s future valuation depends on whether it can successfully transition legacy software clients to the new FICO Platform without losing them to larger, better-capitalized rivals.
2. WHERE THE RISKS HIT HARDEST
Fair Isaac’s "long-standing relationships" with the three major U.S. consumer reporting agencies are its greatest distribution strength, yet this is threatened by the agencies' potential to develop "competitive products" (10-K Item 1A). If these partners—who control the data FICO needs—decide to bypass Fair Isaac, the Scores segment's 29% growth rate could evaporate. Furthermore, the strategic push toward the modular FICO Platform is threatened by "product concentration" risks; if the market rejects this integrated cloud approach, Fair Isaac has no fallback, as evidenced by the 8% decline in its non-platform software revenue (8-K).
3. WHAT THE NUMBERS SAY TOGETHER
The financial data reveals a tale of two companies: a booming, high-priced scoring business and a stagnant software division. While total revenue grew 16%, the Scores segment surged 29% due to "higher unit pricing," whereas Software revenue grew only 2% (8-K). Fair Isaac maintains an elite 46.4% operating margin—the highest among its peers—but it carries $3.4B in net debt, resulting in 4.7x net leverage (XBRL). This debt load is significantly higher than peers like Salesforce or ServiceNow, which maintain net cash positions. Short interest stands at 6.7% of the float, suggesting a segment of the market is skeptical of Fair Isaac's ability to maintain this pricing-driven growth while carrying such heavy leverage.
4. IS IT WORTH IT AT THIS PRICE?
At 24.2x Forward P/EP/EPrice-to-Earnings ratio — share price divided by annual earnings per share; how much investors pay per dollar of profit. Higher P/E = higher growth expectations, Fair Isaac trades at a 33% premium to the peer median of 18.1x. The market is pricing in ~7.4% long-term growth (CAPM analysis). This expectation is currently supported by Fair Isaac’s 15.9% TTMTTMTrailing Twelve Months — the most recent full year of financial data, updated on a rolling basis each quarter revenue growth and its peer-leading 36.4% FCFFCFFree Cash Flow — cash left after paying for operations and capital investments; what the company can actually spend, save, or return to shareholders margin. However, the sensitivity is high: if growth were to slow to 5.0%, the justified multiple would drop to 15.3x. The current premium is essentially a bet that Fair Isaac can continue to raise prices on its Scores products to offset the "intensely competitive" software market where it faces much larger competitors with "greater sales and marketing resources" (10-K Item 1).
5. WHAT WOULD CHANGE THIS VIEW?
- Cautious if "non-platform" software ARR continues to decline faster than "platform" ARR can grow, suggesting the cloud transition is cannibalizing the base rather than expanding it.
- Constructive if the banking industry—which accounts for 92% of revenue—shows increased adoption of FICO Score 10 T or UltraFICO, signaling a successful product cycle.
- Cautious if there is a "significant change" in the relationship with Experian, TransUnion, or Equifax, as these three agencies are the gatekeepers for Fair Isaac’s primary revenue stream.
6. BOTTOM LINE
Structural Advantage: A dominant, industry-standard position in credit scoring supported by proprietary "Falcon" data networks that create massive switching costs for 10,000+ financial institutions.
Bottom Line: Fair Isaac is an exceptionally profitable specialist, but its high valuation and debt levels leave little room for error if its cloud software transition stalls or its banking partners revolt.
1. Top 5 Material Risks
- Software Segment Strategy: Fair Isaac is investing heavily to transition its software to the cloud-based FICO Platform. If the market remains unreceptive to this cloud-first approach or the strategy of selling multiple integrated products, Fair Isaac faces potential declines in Software segment revenues and profits.
- Product Concentration: A substantial portion of total revenues is derived from a limited set of offerings, including scoring solutions, fraud solutions, customer communication services, customer management solutions, and decision management software. Failure to maintain market acceptance for these specific products will lead to revenue contraction.
- Dependency on Consumer Reporting Agencies: The Scores segment relies on Experian, TransUnion, and Equifax for product distribution. The loss of or a significant change in these relationships, or the emergence of competitive products developed by these agencies, could have a material adverse effect on results of operations.
- Banking Industry Exposure: During fiscal 2025, 92% of total revenues were derived from the banking industry. Any economic stress, credit market disruption, or contraction in the number of participating financial institutions directly threatens Fair Isaac’s revenue base.
- Mortgage Market Regulation: A significant portion of Scores segment revenue is tied to the U.S. mortgage market and the requirement by Fannie Mae and Freddie Mac that lenders provide FICO Scores. If these enterprises cease using FICO Scores, or if the FHFA implements changes—such as allowing originators to choose alternative credit scores—Fair Isaac’s revenues and stock price could be materially harmed.
2. Company-Specific Risks
- Sales Cycle Complexity: The Software segment features sales cycles that can exceed one year, making it difficult to predict the timing of revenue recognition and creating significant period-to-period fluctuations in financial results.
- International Workforce Concentration: Approximately one-third of the total workforce is located in India, exposing Fair Isaac to risks associated with regional political instability, such as tensions between India and Pakistan.
- Acquisition Integration: Fair Isaac frequently acquires businesses and technologies; these activities carry the risk of diverting management attention, failing to realize expected financial returns, or incurring material impairment charges to goodwill.
- Proprietary Technology Protection: Fair Isaac relies on a combination of copyright, patent, trade secret, and trademark laws to protect its intellectual property. If these protections prove inadequate or if Fair Isaac is forced into litigation to enforce its rights, it could incur substantial costs and lose its competitive advantage.
3. Regulatory/Legal Risks
- Mortgage Closing Costs: Increased regulatory focus on the transparency and fairness of fees charged for credit reports and scores in residential mortgage closings may limit Fair Isaac’s ability to implement price changes for FICO Scores.
- AI and Algorithmic Regulation: The European Union’s AI Act, which establishes requirements for AI systems in credit scoring, and similar emerging U.S. state and federal regulations regarding algorithmic accountability and fair lending, could increase compliance costs and reduce demand for Fair Isaac’s solutions.
- Data Privacy Compliance: Fair Isaac is subject to stringent global data protection laws, including the GDPR in the E.U. and U.K., and the CCPA/CPRA in California. Failure to comply with these evolving privacy and security mandates could result in significant fines, penalties, and reputational damage.
- Patent Trolls: Fair Isaac is subject to potential infringement claims from non-practicing entities, which can lead to costly litigation, diversion of resources, and the potential requirement to pay substantial royalties or cease the sale of certain products.
4. Financial Impact Map
Software Segment Strategy → Software Segment Revenues and Operating Results → Volatility caused by differences in revenue recognition between cloud-based offerings and on-premises licenses. Product Concentration → Total Revenues → Decline if market acceptance for core scoring, fraud, and decision management products wanes. Dependency on Consumer Reporting Agencies → Scores Segment Revenues and Operating Income → Material adverse effect if distribution relationships with Experian, TransUnion, or Equifax are disrupted. Banking Industry Exposure → Total Revenues → 92% of fiscal 2025 revenues are tied to the banking industry; contraction in this sector directly reduces transaction-based and recurring revenue. Mortgage Market Regulation → Scores Segment Revenues and Stock Price → Potential for material decline if Fannie Mae/Freddie Mac cease using FICO Scores or allow the use of alternative credit models.
Recent Filings
| Form | Filed | Period |
|---|---|---|
| 8-K | Jan 2026 | — |
| 10-Q | Jan 2026 | Dec 2025 |
| 14A | Jan 2026 | — |
| 10-K | Nov 2025 | Sep 2025 |
AI-extracted key facts from press releases and SEC filings. Significance 1–10.
FICO Q4 Revenue $512M +16.4% YoY, Shares Fall 28.8% on Weak FY Guidance
- ▸Q4 revenue $512M, +16.4% YoY, beating estimates by 1.8%
- ▸Full-year revenue guidance missed analyst expectations significantly
- ▸Stock price declined 28.8% since earnings report
- ▸Broadridge (BR) Q4 revenue $1.71B, +7.8% YoY, beat estimates by 6.5%
- ▸Data & business process services sector average share price down 4.9% post-earnings
Fair Isaac completes $1B senior unsecured notes offering due 2034 to refinance debt
- ▸Completed $1.0B private offering of 6.250% senior unsecured notes due 2034
- ▸Proceeds to refinance debt and redeem $400M of 5.25% notes maturing 2026
- ▸Launched FICO Score Credit Insights Lab for lender analytics and model testing
- ▸Projects $2.9B revenue and $1.1B earnings by 2028
- ▸Requires 14.3% annual revenue growth to meet 2028 financial targets
FICO Q1 Revenue, Margins, and EPS Beat Analyst Expectations Amid Mortgage Growth
- ▸Q1 mortgage origination revenue +60% YoY driven by pricing
- ▸Q1 revenue, margins, and EPS all surpassed analyst expectations
- ▸Management reaffirmed full-year financial guidance
- ▸Goldman Sachs reiterates 'Buy' rating despite lowering price target to $1,777
- ▸Analysts project 20%+ EPS growth for CY26
FICO prices $1.0 billion in 6.250% senior notes due 2034
- ▸Priced $1.0 billion aggregate principal amount of 6.250% senior notes due 2034
- ▸Proceeds to repay existing revolving credit facility and redeem $400M 2026 notes
- ▸Notes priced at 100% of principal amount
- ▸Expected closing date of the offering is March 20, 2026
- ▸Proceeds may also be used for general corporate purposes, including stock repurchases
FICO proposes $1.0 billion senior notes offering due 2034 to refinance existing debt
- ▸Proposed $1.0 billion aggregate principal amount of senior notes due 2034
- ▸Proceeds to repay existing revolving credit facility debt
- ▸Proceeds to fund redemption of $400 million 5.25% senior notes due 2026
- ▸Remaining proceeds allocated for general corporate purposes and potential stock repurchases
- ▸Offering conducted via private placement to qualified institutional buyers