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FICO's direct licensing covers 73% of mortgage reseller volume, while Score 10T adoption reached 84 lenders.
FICO's platform ARR surged 72% to $453M, while the non-GAAP operating margin expanded to 61%.
Fair Isaac Corporation (FICO - Free Report) ended fiscal 2026 with strong revenue growth, but management's decision to withhold the fiscal 2027 guidance dominated its fourth-quarter earnings call. Uncertainty surrounding mortgage pricing agreements and origination volumes complicated the near-term outlook.
The company reported earnings of $9.61 per share in fourth-quarter fiscal 2026, surpassing the Zacks Consensus Estimate of $9.20. Revenues of $657 million beat the consensus estimate of $652.30 million.
Fair Isaac Corporation Price, Consensus and EPS Surprise
CEO William Lansing emphasized confidence in the company's long-term prospects while outlining a shift toward customized mortgage pricing, expanded credit score distribution and accelerating software platform adoption.
FICO Withholds FY27 Guidance Amid Pricing Changes
Lansing, FICO's president and CEO, said that the company would not provide its fiscal 2027 guidance while negotiating customized mortgage pricing arrangements covering calendar 2027.
Elevated interest rates and affordability pressures continue to constrain mortgage originations, adding uncertainty to the transition.
During the Q&A, a Goldman Sachs analyst questioned when guidance might resume. Lansing indicated that greater clarity on customer agreements could allow management to provide forecasts later in the fiscal year.
FICO Defends Its Bespoke Mortgage Pricing Strategy
Lansing described a departure from standardized pricing toward customer-specific arrangements designed to accommodate different lending requirements.
The FICO Preferred Program offers participating lenders and brokers no wholesale mortgage score price increase for 2027 while bundling classic FICO Scores with FICO Score 10T.
During questioning from RBC Capital Markets, Lansing declined to disclose whether average pricing would increase or decrease. He explained that FICO intends to reduce public disclosure of individual pricing programs and contractual terms.
FICO Sees Growing Adoption of Next-Generation Scores
Lansing highlighted expanding distribution partnerships, with direct licensing agreements covering approximately 73% of mortgage reseller volume.
The FICO Score 10T Adopter Program reached 84 lenders. Management also highlighted the Federal Housing Administration's decision to make Score 10T available to approved lenders beginning January 2027.
During questioning from Wells Fargo, Lansing clarified that direct licensing was operational, although reseller-based score computation still awaited government-sponsored enterprise approval. Broader implementation of Score 10T also remained under review.
FICO Platform Growth Strengthens Software Business
Software president Nikhil Behl attributed platform adoption to expanding customer applications across loan originations, fraud prevention, customer management and collections.
Platform annual recurring revenues (ARR) increased 72% year over year to $453 million, representing 53% of total software ARR. Excluding migrations, platform ARR growth was in the mid-40%.
Management highlighted the next-generation FICO Platform and Enterprise Fraud Solution launches. During questioning from Clear Street, Behl emphasized that customers were expanding platform usage as additional applications improved the value of existing implementations.
CFO Steven Weber reported fiscal fourth-quarter operating expenses of $390 million, including a $65-million proposed litigation settlement accrual and $27 million in restructuring charges.
Excluding these items, operating expenses declined 4% sequentially to $298 million. The non-GAAP operating margin reached 61% from 54% a year earlier.
During questioning from Deutsche Bank, Weber explained that restructuring primarily involved reallocating resources toward distribution, artificial intelligence and strategic capabilities. Management expects professional services revenues to decline significantly in fiscal 2027 as implementation requirements evolve.
FICO Balances Debt Reduction With Share Repurchases
Lansing highlighted the fiscal 2026 free cash flow of $1.034 billion, up 40% year over year, supporting the company's capital allocation flexibility.
FICO repurchased $3.03 billion in shares during the fiscal year but paused repurchases in the fourth quarter to reduce debt. Net leverage ended the period at 3.29 times EBITDA.
Responding to Needham, Lansing reaffirmed the company's commitment to repurchases after reducing leverage, describing the pause as a temporary adjustment rather than a strategic change.
FICO Maintains Long-Term Strategic Focus
Management's message combined confidence in software demand and scoring innovation with caution surrounding mortgage pricing negotiations.
The company remains focused on expanding direct customer relationships, commercializing new scoring products and strengthening its software platform while navigating competitive and mortgage-market uncertainty.
What FICO's Zacks Rank & Style Scores Indicate
FICO currently carries a Zacks Rank #5 (Strong Sell), indicating an unfavorable earnings estimate revision trend and weaker near-term performance prospects under the Zacks methodology.
Its Growth Score of A highlights favorable growth characteristics, while the Value Score of D and Momentum Score of F indicate weaknesses in valuation attractiveness and price momentum, respectively. The VGM Score of B reflects a favorable combined assessment, although the weak Zacks Rank remains a significant counterweight. The Zacks Rank can change as analysts revise earnings estimates following the latest quarterly results.
View the Zacks #1 Rank List
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FICO Q4'26 Earnings Call Highlights Pricing Uncertainty for FY27
Key Takeaways
Fair Isaac Corporation (FICO - Free Report) ended fiscal 2026 with strong revenue growth, but management's decision to withhold the fiscal 2027 guidance dominated its fourth-quarter earnings call. Uncertainty surrounding mortgage pricing agreements and origination volumes complicated the near-term outlook.
The company reported earnings of $9.61 per share in fourth-quarter fiscal 2026, surpassing the Zacks Consensus Estimate of $9.20. Revenues of $657 million beat the consensus estimate of $652.30 million.
Fair Isaac Corporation Price, Consensus and EPS Surprise
Fair Isaac Corporation price-consensus-eps-surprise-chart | Fair Isaac Corporation Quote
CEO William Lansing emphasized confidence in the company's long-term prospects while outlining a shift toward customized mortgage pricing, expanded credit score distribution and accelerating software platform adoption.
FICO Withholds FY27 Guidance Amid Pricing Changes
Lansing, FICO's president and CEO, said that the company would not provide its fiscal 2027 guidance while negotiating customized mortgage pricing arrangements covering calendar 2027.
Elevated interest rates and affordability pressures continue to constrain mortgage originations, adding uncertainty to the transition.
During the Q&A, a Goldman Sachs analyst questioned when guidance might resume. Lansing indicated that greater clarity on customer agreements could allow management to provide forecasts later in the fiscal year.
FICO Defends Its Bespoke Mortgage Pricing Strategy
Lansing described a departure from standardized pricing toward customer-specific arrangements designed to accommodate different lending requirements.
The FICO Preferred Program offers participating lenders and brokers no wholesale mortgage score price increase for 2027 while bundling classic FICO Scores with FICO Score 10T.
During questioning from RBC Capital Markets, Lansing declined to disclose whether average pricing would increase or decrease. He explained that FICO intends to reduce public disclosure of individual pricing programs and contractual terms.
FICO Sees Growing Adoption of Next-Generation Scores
Lansing highlighted expanding distribution partnerships, with direct licensing agreements covering approximately 73% of mortgage reseller volume.
The FICO Score 10T Adopter Program reached 84 lenders. Management also highlighted the Federal Housing Administration's decision to make Score 10T available to approved lenders beginning January 2027.
During questioning from Wells Fargo, Lansing clarified that direct licensing was operational, although reseller-based score computation still awaited government-sponsored enterprise approval. Broader implementation of Score 10T also remained under review.
FICO Platform Growth Strengthens Software Business
Software president Nikhil Behl attributed platform adoption to expanding customer applications across loan originations, fraud prevention, customer management and collections.
Platform annual recurring revenues (ARR) increased 72% year over year to $453 million, representing 53% of total software ARR. Excluding migrations, platform ARR growth was in the mid-40%.
Management highlighted the next-generation FICO Platform and Enterprise Fraud Solution launches. During questioning from Clear Street, Behl emphasized that customers were expanding platform usage as additional applications improved the value of existing implementations.
FICO Restructures Operations & Prioritizes Efficiency
CFO Steven Weber reported fiscal fourth-quarter operating expenses of $390 million, including a $65-million proposed litigation settlement accrual and $27 million in restructuring charges.
Excluding these items, operating expenses declined 4% sequentially to $298 million. The non-GAAP operating margin reached 61% from 54% a year earlier.
During questioning from Deutsche Bank, Weber explained that restructuring primarily involved reallocating resources toward distribution, artificial intelligence and strategic capabilities. Management expects professional services revenues to decline significantly in fiscal 2027 as implementation requirements evolve.
FICO Balances Debt Reduction With Share Repurchases
Lansing highlighted the fiscal 2026 free cash flow of $1.034 billion, up 40% year over year, supporting the company's capital allocation flexibility.
FICO repurchased $3.03 billion in shares during the fiscal year but paused repurchases in the fourth quarter to reduce debt. Net leverage ended the period at 3.29 times EBITDA.
Responding to Needham, Lansing reaffirmed the company's commitment to repurchases after reducing leverage, describing the pause as a temporary adjustment rather than a strategic change.
FICO Maintains Long-Term Strategic Focus
Management's message combined confidence in software demand and scoring innovation with caution surrounding mortgage pricing negotiations.
The company remains focused on expanding direct customer relationships, commercializing new scoring products and strengthening its software platform while navigating competitive and mortgage-market uncertainty.
What FICO's Zacks Rank & Style Scores Indicate
FICO currently carries a Zacks Rank #5 (Strong Sell), indicating an unfavorable earnings estimate revision trend and weaker near-term performance prospects under the Zacks methodology.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Its Growth Score of A highlights favorable growth characteristics, while the Value Score of D and Momentum Score of F indicate weaknesses in valuation attractiveness and price momentum, respectively. The VGM Score of B reflects a favorable combined assessment, although the weak Zacks Rank remains a significant counterweight. The Zacks Rank can change as analysts revise earnings estimates following the latest quarterly results.