FICO — Fourth Quarter Fiscal 2026 Earnings Summary

Financial Performance:

• GAAP revenue for the quarter was $657.0 million, a 27% increase compared to $515.8 million in the prior year period.
• GAAP net income totaled $175.0 million ($8.12 per share), compared to $155.0 million ($6.42 per share) in the prior year.
• Non-GAAP net income was $239.3 million, and Non-GAAP EPS was $11.10, compared to $187.0 million and $7.74 per share, respectively, in the prior year.
• Net cash provided by operating activities was $294.2 million, up from $223.7 million in the prior year.
• Free cash flow was $284.3 million, compared to $210.8 million in the prior year.
• GAAP revenue for the full fiscal year 2026 was $2.53 billion, up from $1.99 billion in fiscal 2025.
• GAAP net income for the full fiscal year 2026 was $835.0 million ($36.32 per share), compared to $651.9 million ($26.54 per share) in fiscal 2025.
• Non-GAAP net income for the full fiscal year 2026 was $988.3 million ($42.99 per share), compared to $734.0 million ($29.88 per share) in fiscal 2025.
• Free cash flow for the full fiscal year 2026 was $1.03 billion, compared to $739.4 million in fiscal 2025.
• Deferred revenue increased to $222.1 million at September 30, 2026, from $187.4 million at September 30, 2025.
• Total debt (current maturities plus long-term debt) increased to $5.26 billion at September 30, 2026, from $3.06 billion at September 30, 2025.
• Stockholders' deficit was $(3.87) billion at September 30, 2026, compared to $(1.75) billion at September 30, 2025.

Guidance and Future Outlook:

• The company is transitioning to bespoke mortgage originations pricing, with the FICO Preferred Program having several deals announced.
• The company is working on programs to cover calendar-year 2027.
• Due to elevated interest rates, ongoing affordability challenges, and the uncertainty of the pricing transition, FICO is not providing fiscal year 2027 guidance.
• Loan originations remain below historical norms due to the macro environment.

Business Segments and Product Lines:

• Scores revenue was $413.8 million, a 33% increase year-over-year from $311.6 million.
  • B2B scoring revenue increased 39%, driven by higher unit prices, partially offset by lower mortgage origination volume.
  • B2C scoring revenue increased 3%, driven by increased royalties from indirect sales through credit reporting agencies.
• Software revenue was $243.2 million, a 19% increase year-over-year from $204.2 million.
• Software Annual Recurring Revenue (ARR) was up 14% year-over-year as of September 30, 2026.
  • Platform ARR increased 72%.
  • Non-platform ARR declined 18%.
• Total Software Dollar-Based Net Retention Rate was 112% as of September 30, 2026.
  • Platform software retention was 156%.
  • Non-platform software retention was 82%.

Market and Competitive Landscape:

• The mortgage market faces challenges from elevated interest rates and affordability issues, keeping loan originations below historical norms.
• The company is navigating a pricing transition in the mortgage sector, moving toward bespoke pricing models.

Risks and Challenges:

• Significant one-time items impacted GAAP results: a $65 million accrual for a proposed antitrust class action settlement related to Scores, a $48 million non-operating gain from the sale of an equity investment, and a $27 million restructuring charge for workforce reduction.
• Forward-looking statements note risks including macroeconomic conditions, regulatory changes, competition, data protection, and the ability to retain key personnel.

Management Commentary and Tone:

• Will Lansing, CEO, stated, "I am proud of our performance in FY26," noting the team's execution despite a turbulent macro environment.
• Management highlighted the transition to bespoke pricing and the ongoing work to finalize programs for 2027.

Other Key Points:

• The company incurred a $65 million accrual for a proposed settlement of antitrust class action lawsuits related to its Scores business.
• The company recorded a $48 million non-operating gain from the sale of a minority equity investment.
• A $27 million restructuring charge was recorded for a committed workforce reduction plan.
• The company repurchased $3.05 billion of common stock during the full fiscal year 2026.
• The company issued $1.0 billion in senior notes and repaid $400 million in senior notes during the full fiscal year 2026.
• The company will host a webcast on November 4, 2026, at 5:00 p.m. Eastern Time to discuss results.