Fair Isaac Corporation

ticker: FICO step: 01 generated: 2026-05-12 source: quick-research

Fair Isaac Corporation (FICO) — Business Overview

Business Description

Fair Isaac Corporation (FICO) is the creator and owner of the FICO Score — the de facto standard credit score used in 90%+ of U.S. lending decisions, including virtually all mortgage originations. Founded in 1956 and headquartered in Bozeman, Montana (moved from San Jose), FICO operates as a high-margin analytics software and data company with two segments: Scores (~60% of revenue, ~88% operating margin) and Software (~40% of revenue). The Scores segment is essentially a toll booth on the $14+ trillion U.S. consumer lending market; the Software segment is a growing SaaS decisioning platform for financial institutions worldwide. FICO generated $1.99B in FY2025 revenue (fiscal year ends September 30).

Revenue Model

FICO monetizes through two streams: (1) Scores: Charges per credit inquiry — financial institutions pay FICO each time they pull a consumer credit score for lending decisions (mortgage origination, auto loans, credit cards). FICO raised its B2B mortgage score price from ~$0.60 to ~$4.95 over three years (2022–2025) — an 800% price increase that drove extraordinary revenue and margin expansion. Also includes B2C scores sold directly to consumers via myFICO.com. (2) Software/Platform: FICO Platform — a cloud-based AI-powered decisioning platform used by banks, insurers, telcos, and retailers for credit decisioning, fraud detection, customer management, and collections. Platform ARR reached $303M (+33% YoY) and represents 40% of total software ARR as of FY2025.

Products & Services

• FICO Score: The industry-standard credit score (300–850 scale) used by 90%+ of U.S. top lenders; scores are pulled from Equifax, Experian, and TransUnion data
• FICO Score for Mortgage: Specific mortgage origination score required by Fannie Mae/Freddie Mac — historically 100% mandated for GSE loans
• myFICO: Direct-to-consumer credit score monitoring subscription
• FICO Platform: Cloud AI decisioning platform; customer lifecycle management; loan origination, servicing, fraud
• FICO Falcon Fraud Manager: Leading real-time payment fraud detection system
• UltraFICO Score: Enhanced score incorporating bank account data (via Plaid partnership)
• FICO Mortgage Direct: New license program addressing mortgage lenders directly amid GSE competition

Customer Base & Go-to-Market

FICO serves 3,000+ financial institutions in 100+ countries. The B2B Scores business sells through credit bureaus (Equifax, Experian, TransUnion) as well as direct to lenders. Software is sold direct to large banks, telcos, insurers, and retailers under multi-year SaaS contracts. Net revenue retention in software is strong (>105%); software customer concentration is low. Scores revenue is semi-volume-sensitive (tied to mortgage origination activity, credit card application rates) but primarily price-driven.

Competitive Position

FICO holds a near-monopoly in U.S. mortgage scoring — Fannie Mae and Freddie Mac long mandated FICO scores, creating a legal barrier to competition. The competitive moat combines: (1) brand synonymous with creditworthiness; (2) network effects — all lenders use FICO because all lenders use FICO; (3) regulatory embedment in GSE/bank underwriting systems; (4) 215+ patents; and (5) decades of proprietary behavioral data training models. VantageScore (owned by the three credit bureaus) is the main competitor — in July 2025, the FHFA permitted lenders to use VantageScore 4.0 for GSE loans, introducing meaningful competition in the mortgage segment for the first time. Morningstar assigns FICO a Wide Moat.

Key Facts

• Founded: 1956
• Headquarters: Bozeman, Montana
• Employees: ~4,000
• Exchange: NYSE
• Sector / Industry: Technology / Application Software
• Fiscal Year End: September 30
• Market Cap: ~$40–45B (at ~$1,700–1,800/share)

ticker: FICO step: 04 generated: 2026-05-12 source: quick-research

Fair Isaac Corporation (FICO) — Financial Snapshot

Income Statement Summary

FICO fiscal year ends September 30. FY2025 (ended Sept 30, 2025): Revenue $1.99B (+16%); gross margin ~82.2%; operating margin ~46.5%; net income $652M; GAAP EPS $26.54 (+30%). FY2026 guidance (full year ending Sept 30, 2026): Revenue $2.45B (+23%); GAAP EPS $35.60; Non-GAAP EPS $40.45. The extraordinary EPS growth of 30–40%+ annually is driven by: (1) Scores price increases (mortgage score B2B price rose 800% over 3 years); (2) margin expansion; and (3) aggressive share buybacks reducing share count.

Cash Flow & Balance Sheet (FY2025)

Key Ratios (approximate, FY2025/2026)

• P/E (GAAP FY2025): ~65–70x | P/E (Non-GAAP FY2026E): ~45x | EV/FCF: ~55–60x
• FCF Yield: ~1.7–2.0% | Revenue Growth: +16% (FY2025), +23% guided (FY2026)
• Gross Margin: ~82% | Operating Margin: ~47% (FY2025) | Scores Segment Op. Margin: ~88%+
• ROIC: ~41% | Share count: declining ~5% annually from buybacks

Growth Profile

FICO's revenue growth has accelerated from ~8–10% to ~13–23% due almost entirely to Scores price increases — not volume growth. Mortgage origination volumes have been depressed (high rates suppressing refinancing), so the 60%+ YoY jump in mortgage scores revenue (Q3 2025) was driven by the price increase from ~$0.60 to ~$4.95 per score pull. This pricing power reflects FICO's monopoly position but also creates political and regulatory exposure. Software/Platform is growing at ~10–15% organically with Platform ARR (+33%) accelerating. The combination of Scores price leverage + Software mix shift toward higher-margin Platform + buybacks creates a ~25–35% EPS CAGR that is extraordinary for a company of this maturity.

Forward Estimates

• FY2026: Revenue $2.45B (+23%); GAAP EPS $35.60; Non-GAAP EPS $40.45; FCF ~$950M+
• FY2027+: Revenue growth expected to moderate to ~10–15% as price increase cycle matures; Software/Platform growth sustains at ~15%; buybacks continue reducing share count ~5%/year
• Capital Allocation: FICO returns nearly all FCF via buybacks (no dividend); ~$750M–1B annually in repurchases