Fair Isaac Raises Outlook as Scores Growth Slows
Fiscal third-quarter revenue reached $674.2 million as the company lifted its full-year forecast.
Fair Isaac Corp. (FICO), the analytics software company, posted slower growth in its fiscal third quarter as gains from mortgage-origination score pricing moderated from the prior period. Revenue rose 26% from a year earlier, down from 39% growth in the second quarter, and declined about 3% sequentially.
The slowdown followed a second quarter in which Scores benefited from both higher pricing and increased mortgage-origination volume. In the third quarter, B2B Scores growth was primarily due to higher mortgage-origination score unit pricing, while B2B growth eased to 49% from 72% in the prior quarter.
GAAP net income increased 30% to $237.2 million, and diluted earnings rose 41% to $10.45 a share. Both measures declined sequentially, with net income falling about 10% and earnings easing from $11.14 a share. On an adjusted basis, earnings rose 42% from a year earlier to $12.18 a share.
Scores revenue increased 41% to $458.9 million, slowing from 60% growth in the second quarter and declining about 3% sequentially. B2C revenue grew 5% for a third consecutive fiscal-2026 quarter, extending a deceleration from 8% growth in the fourth quarter of fiscal 2025.
Software revenue rose 2% to $215.3 million, while annual recurring revenue growth held at 10%. The underlying mix diverged further: platform ARR growth accelerated to 62% from 49% in the second quarter, while non-platform ARR fell 17%. Platform dollar-based net retention climbed to 148% from 136%, and non-platform retention declined to 82% from 90%.
Fair Isaac raised its fiscal-2026 revenue forecast to $2.53 billion from $2.45 billion, bringing the cumulative increase from its original guidance to $180 million. The company now expects GAAP earnings of $36.86 a share and adjusted earnings of $42.43 a share, up from its prior forecasts of $35.60 and $40.45, respectively.
Operating cash flow rose 33% to $380.4 million, and free cash flow increased 34% to $370.3 million, with both measures rising sharply from the second quarter. Fair Isaac also authorized a new $2.0 billion repurchase program and entered a $1.5 billion accelerated share repurchase funded by a new term loan, lifting repurchases for the first nine months of the fiscal year to $3.046 billion from $866.5 million a year earlier.