Fair Isaac NYSE: FICO reported 27% revenue growth for its fiscal fourth quarter but declined to provide a fiscal 2027 forecast, citing uncertainty around mortgage pricing agreements and loan volumes.
The company’s revenue rose to $657 million in the quarter, while full-year revenue increased 27% to $2.535 billion. CEO Will Lansing called fiscal 2026 the most successful financial year in the company’s history, but said the transition to customized mortgage pricing is still underway as elevated interest rates and affordability challenges weigh on originations.
“We are in the middle of this pricing transition, where programs and agreements are still being finalized, and the outcomes of mortgage market challenges are uncertain,” Lansing said. He added that the absence of guidance did not change management’s long-term confidence in the business.
Fourth-quarter GAAP net income rose 13% to $175 million, or $8.12 per share, up 26% on a per-share basis. Non-GAAP net income increased 28% to $239 million, and non-GAAP earnings per share rose 43% to $11.10.
For the full year, GAAP net income grew 28% to $835 million, while non-GAAP net income increased 35% to $988 million. Free cash flow rose 40% to $1.034 billion.
Mortgage pricing transition
Scores revenue climbed 33% to $414 million in the fourth quarter. CFO Steve Weber said business-to-business scores revenue rose 39%, driven primarily by higher prices for mortgage origination scores, partly offset by lower mortgage origination volumes.
Mortgage origination scores revenue rose 72%, although volumes declined by a high-single-digit percentage from a year earlier. Weber said there was no meaningful loss of volume to competition during the quarter. A shift toward home equity lines of credit, which carry a lower average price than first-lien mortgages, reduced the segment’s average mortgage origination score price from the preceding quarter.
Fair Isaac launched its FICO Preferred Program in October through participating resellers. Enrolled lenders and brokers that commit to the program will have no increase in wholesale mortgage pricing for the FICO Score in calendar 2027 and will receive a bundle of classic FICO Score and FICO Score 10T.
Lansing said the program has attracted interest, but it is one of several pricing arrangements the company is pursuing. Contract terms vary by customer, he said. Asked whether average score pricing would rise or fall next year, Lansing declined to answer, saying the company would disclose fewer details about individual programs and prices.
Lansing said Fair Isaac would likely provide guidance as more pricing agreements are finalized. The company’s fiscal year starts Oct. 1, while its pricing changes take effect Jan. 1.
Score 10T and software growth
The company said its FICO Score 10T adopter program has grown to 84 lenders. Lansing said the Federal Housing Administration will make the score available to approved lenders beginning Jan. 1, 2027. He said Score 10T remains under review by the government-sponsored enterprises, or GSEs, and has not yet been implemented in the conforming market.
Fair Isaac has also signed direct license agreements with reseller partners representing about 73% of mortgage reseller volume. Lansing said the direct licensing program is live, although computation of scores by tri-merge resellers remains pending GSE approval.
In software, fourth-quarter revenue rose 19% to $243 million. Platform revenue increased 84%, helped by new business, expansion at existing customers and migrations from non-platform products. Excluding migrations, platform revenue grew in the low-50% range, Weber said.
Total software annual recurring revenue rose 14% to $851 million. Platform ARR increased 72% to $453 million, while non-platform ARR fell 18% to $398 million. Excluding migrations, platform ARR growth was in the mid-40% range.
Nikhil Behl, president of software, said customers are adopting the platform across areas including loan originations, fraud protection, compliance and collections. Weber said the company expects high platform growth rates in fiscal 2027 but did not provide a specific forecast.
Restructuring and capital allocation
Fourth-quarter operating expenses included a $65 million accrual for a proposed settlement of an antitrust class action related to the scores business and a $27 million workforce restructuring charge. The company also recorded a $48 million non-operating gain from the sale of a minority equity investment. The three items produced a combined net pretax charge of $44 million.
Weber said professional services roles were affected by the restructuring as the company expects a significant decline in professional services revenue in fiscal 2027, helped by third-party partnerships and AI-driven efficiencies. He said much of the restructuring savings would be reinvested, without providing a dollar estimate.
Fair Isaac repurchased $3.028 billion of stock during fiscal 2026 but paused buybacks in the fourth quarter to repay debt incurred for an accelerated share repurchase. The company ended the quarter with $5.26 billion in debt and net debt-to-EBITDA leverage of 3.29 times.
Lansing said the company expects to resume repurchases after reducing leverage. Weber did not provide a timeline, saying the company is paying down debt as quickly as it can.
About Fair Isaac (NYSE:FICO)
Fair Isaac Corporation, commonly known as FICO, develops analytics and decision-management software used by businesses to assess risk, detect fraud and make customer-related decisions. The company is best known for the FICO Score, a credit-risk scoring system used by lenders and other financial institutions to evaluate consumer creditworthiness.
FICO's offerings include credit scoring solutions, decisioning platforms, fraud-detection tools, customer management software and predictive analytics.
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