FAIR ISAAC CORP (FICO)

Price—Loading quote

AI: Overvalued

Price checkThe shares demand strong growth, while debt and competition leave little room for mistakes.

The last market close before the research time was $1,085.78 on August 14. Against FICO’s $36.86 fiscal-2026 earnings-per-share guidance, that is 29.5 times earnings. Using June’s 21.597 million shares gives a $23.45 billion market value. Nine-month free cash flow—cash left after running and investing in the business—was $750 million, or roughly $1 billion annualized, implying about 23 times cash flow. Those premiums require durable double-digit growth despite $5.33 billion of net debt and intensifying mortgage-score competition.

Big pictureProfit and cash growth are exceptional, but recent gains lean heavily on score pricing.

From fiscal 2020 through 2025, revenue grew about 9% annually, while net income and operating cash flow grew roughly 23% and 16% annually. Momentum strengthened during 2026: nine-month revenue rose 27%, net income rose 33%, and free cash flow increased 42% to $750 million. However, third-quarter business-to-business score revenue grew 49% primarily because mortgage-score prices increased. Mortgage volumes fluctuate with interest rates and housing activity, so continued growth cannot safely depend on both repeated price increases and favorable loan demand.

Business strengthA powerful franchise funds buybacks, yet borrowing has weakened the downside cushion.

FICO needs little physical investment: fiscal-2025 operating cash flow was $778.8 million against only $8.9 million of capital spending. Buybacks more than offset employee stock awards, reducing outstanding shares 9.1% from September 2025 to June 2026. The cost was substantial. Nine-month repurchases totaled $3.05 billion, while debt increased 83% to $5.58 billion and cash reached only $248 million. Negative equity of $4.10 billion largely reflects accumulated repurchases, not immediate insolvency, but the debt-funded strategy raises interest costs and limits protection if pricing power weakens.

What could change the storyNew score adoption could extend growth, while cheaper rivals could break pricing power.

The bull case strengthens if FICO Score 10T adoption expands, annual recurring software revenue keeps growing near 10%, and free cash flow exceeds $1 billion while debt declines. The bear case strengthens if lenders shift meaningful mortgage volume to VantageScore 4.0, which Experian priced at $0.99 per score, or if score growth drops sharply after FICO’s price increases anniversary. Third-quarter software revenue grew only 2%, despite 10% recurring-revenue growth. Therefore, slower score pricing combined with delayed software conversion could make the current 29.5-times earnings valuation difficult to sustain.

$1,085.78 price considered

AI: News

Quarterly growth, harsh resetFast score growth could not satisfy expectations, triggering a sharp valuation reset.

On July 29, FICO reported third-quarter revenue of $674.2 million, up 26%, and earnings of $10.45 per share, up from $7.40. It raised fiscal-2026 revenue guidance to $2.53 billion and earnings guidance to $36.86 per share. The shares nevertheless closed 17.0% lower at $1,139.54 on July 30. The timing and reported forecast disappointment suggest expectations drove the selloff, although price timing alone cannot establish a single cause.

Debt-funded buybackFICO borrowed heavily to shrink its share count, boosting each remaining share but raising risk.

On June 8, FICO announced a new $2 billion repurchase authorization and a $1.5 billion accelerated buyback funded entirely by a new term loan. The initial delivery was approximately 1.06 million shares. By June 30, total debt had risen to $5.58 billion and outstanding shares had fallen to 21.597 million. The reported transaction increases earnings per remaining share, but the higher fixed debt burden makes future value more sensitive to interest expense and durable score revenue.

Mortgage competition turns realMortgage lenders gained a cheaper scoring choice, directly challenging FICO’s strongest pricing advantage.

On April 22, the Federal Housing Finance Agency confirmed that approved lenders could deliver qualifying mortgages using either Classic FICO or VantageScore 4.0 during an interim phase. Experian had announced on March 9 that standalone VantageScore 4.0 mortgage scores would cost $0.99, far below FICO’s 2026 mortgage-score price. These are reported facts. The valuation implication is an inference: meaningful lender adoption could restrain future FICO price increases and weaken the unusually high margins supporting current earnings.

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Net income

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Free cash flow

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Total cash / debt

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Financial statements

	2025	2024	2023	2022	2021	2020	2019	2018	2017	2016	2015	2014	2013	2012	2011	2010	2009	2008
Revenue	$1.99B	$1.72B	$1.51B	$1.38B	$1.32B	$1.29B	$1.16B	$1.00B	$935.0M	$881.4M	$838.8M	$789.0M	$743.4M	$676.4M	$619.7M	$605.6M	$630.7M	$744.8M
Research & development	$188.3M	$171.9M	$159.9M	$146.8M	$171.2M	$166.5M	$149.5M	$128.4M	$110.9M	$103.7M	$98.8M	$83.4M	$67.0M	$59.5M	$62.1M	$73.6M	$73.6M	$77.8M
Operating income	$924.9M	$733.6M	$642.8M	$542.4M	$505.5M	$296.0M	$253.5M	$175.4M	$182.2M	$169.6M	$137.5M	$161.9M	$161.6M	$168.4M	$127.3M	$113.3M	$116.7M	$122.3M
EBITDAderived	$939.8M	$747.5M	$657.5M	$562.9M	$531.1M	$326.3M	$285.2M	$205.5M	$218.4M	$201.2M	$171.4M	$194.5M	$194.8M	$189.9M	$151.5M	$144.3M	$155.2M	$161.8M
Net income	$651.9M	$512.8M	$429.4M	$373.5M	$392.1M	$236.4M	$192.1M	$126.5M	$133.4M	$109.4M	$86.5M	$94.9M	$90.1M	$92.0M	$71.6M	$64.5M	$65.1M	$84.0M
Basic EPSper diluted share	$26.90	$20.78	$17.18	$14.34	$13.65	$8.13	$6.63	$4.26	$4.32	$3.52	$2.75	$2.80	$2.55	$2.64	$1.82	$1.44	$1.34	$1.72
Diluted EPSper diluted share	$26.54	$20.45	$16.93	$14.18	$13.40	$7.90	$6.34	$4.06	$4.14	$3.39	$2.65	$2.72	$2.48	$2.55	$1.79	$1.42	$1.33	$1.70

Review source filings at SEC.gov ↗

Insider buys & sells

Jul 1, 2024–Jun 30, 2026

Buys0$0.00 disclosed value

Sells (SEC code S)465$202.15M disclosed value

Transaction	Insider	Type	Shares	Price	Value	Owned after
Feb 25, 2026Form 4 · 10b5-1	Manolis EvaDirector	SellCommon Stock	520	$1.2K	$638.4K	344
Feb 13, 2026Form 4	Rees JoannaDirector	SellCommon Stock · indirect	358	$1.4K	$486.9K	11.2K
Dec 17, 2025Form 4	Weber Steven P.Executive Vice President & CFO	SellCommon Stock	1.4K	$1.8K	$2.58M	2.8K
Dec 12, 2025Form 4 · 10b5-1	Manolis EvaDirector	SellCommon Stock	521	$1.8K	$951.3K	344
Nov 26, 2025Form 4	MCMORRIS MARC FDirector	SellCommon Stock	240	$1.8K	$434.3K	242

Review ownership filings at SEC.gov ↗

FAIR ISAAC CORP (FICO)

Financial charts

Financial statements

Insider buys & sells