This is an old version of FICO from 8 days ago (Nov 5, 2026).See the latest version
FICO
- Price
- $701.03
- Discount category
- Close to intrinsic value
- Next earnings
- Feb 4, 2027
- Next earnings is estimate
- Yes
- Company name
- FICO
- Sector
- Credit scoring & analytics software
- About
- Fair Isaac (FICO) makes the FICO Score, the standard measure of consumer credit risk in the US, which 90% of the top US lenders use. FICO earns a fee each time a lender pulls a score, mostly through the three credit bureaus (Equifax, Experian and TransUnion), and it also sells scores to consumers through partners. Scores gave about 65% of revenue in the fiscal year to September 30, 2026, with a segment operating margin of about 90% in the quarter to June 30, 2026. Mortgage origination scores are the main driver of growth, because FICO raised their unit price. The second segment, Software, sells analytics and decision software to banks and other companies, mostly as subscriptions, and its platform annual recurring revenue grew 72% in the year to September 30, 2026. FICO had 3,876 employees at June 30, 2026, and it uses most of its free cash flow and new debt to buy back its own shares.
- Thesis
- FICO trades at a discount because the US housing regulator is removing the special place of the FICO Score in mortgages, and the market fears that lenders will move to the cheaper VantageScore 4.0. FICO's recent growth came mostly from higher prices for mortgage scores, and in the quarter to June 30, 2026, Scores revenue grew 41%. On September 28, 2026, FHFA Director Bill Pulte said that Fannie Mae and Freddie Mac will use one pricing grid for FICO and VantageScore, and the Freddie Mac bulletin said that fees will not change with the score model from October 1, 2026. The three credit bureaus, which own VantageScore, sell it for about $1 per mortgage score. Rocket Mortgage said that it will make VantageScore 4.0 its preferred model for eligible loans. The shares fell about 27% on September 29, 2026. For the gap to close, FICO must show that lenders and mortgage bond investors keep using the FICO Score, so that mortgage score revenue holds up in the fiscal 2027 outlook and in the quarters after Rocket's switch. Software platform revenue must also keep growing fast. The fiscal Q4 2026 report on November 4, 2026 failed the first test: FICO gave no fiscal 2027 outlook, because it is moving mortgage lenders to prices set for each customer and these agreements are not final. The next test is the fiscal Q1 2027 report, expected in early 2027, which shows the first full quarter of the new pricing grid. The gap can close only over several years, as quarterly data show how many lenders switch. The main risk is that a large share of mortgage lenders move to VantageScore and FICO must cut its prices.
- Risks
- Since October 1, 2026, Fannie Mae and Freddie Mac charge the same fees for loans with a FICO Score or a VantageScore 4.0. The credit bureaus sell VantageScore for about $1 per mortgage score, and Rocket Mortgage plans to prefer it for eligible loans. If many lenders switch, FICO loses volume in its most profitable product and can be forced to cut prices. The FHFA Director can change mortgage score rules quickly, and political pressure on credit score prices is high. In 2026, the FHFA first let all approved lenders use VantageScore 4.0 and then removed the price difference between the two scores. More changes can come without much notice. Mortgage score revenue depends on the number of mortgage applications. Higher mortgage rates lower home sales and refinancing, and this lowers the number of scores lenders pull. FICO has high debt and a stockholders' deficit of $3.87 billion at September 30, 2026, because it funded buybacks with debt. Debt was about $5.26 billion at September 30, 2026, after the $1.5 billion term loan in June 2026. If score revenue falls, debt becomes larger compared with profit. FICO gave no fiscal 2027 guidance on November 4, 2026, because it is moving mortgage lenders to prices set for each customer. Investors cannot yet see how much these agreements lower the mortgage score price or how many lenders sign them. Class actions claim that FICO broke antitrust law in the sale of its scores. FICO accrued $65 million in fiscal Q4 2026 for a proposed settlement, which is not final. FICO cuts about 15% of its positions from October 2026, and it uses more AI in product development. The cuts can slow product work or customer service while the plan runs to fiscal Q3 2027.
- Balance sheet
- Cash: $218M Debt: $5.3B Net debt: $5.0B Debt due within 12 months: $338M Last debt due: 2034 At September 30, 2026, FICO's balance sheet showed $5.26 billion of debt (carrying value, not principal): $338 million due within 12 months and $4.92 billion of long-term debt. Cash was $218 million, and marketable securities were $52 million. The fiscal Q4 2026 release gives no split of the debt; the 10-K, not yet filed on November 5, 2026, will give it. At June 30, 2026, debt principal was $5.61 billion: $3.40 billion of senior notes, a $1.50 billion term loan and $710 million drawn on the $1.0 billion revolving line of credit, which matures on May 13, 2030. The notes are $900 million at 4.00% due June 15, 2028, $1.5 billion at 6.00% due May 15, 2033, and $1.0 billion at 6.25% due September 15, 2034. The term loan matures on May 15, 2028 and is repaid in quarterly installments of $75 million through June 2027 and $112.5 million after that. FICO borrowed the term loan on June 5, 2026 to fund a $1.5 billion accelerated share buyback. In fiscal 2026, FICO bought back $3.05 billion of shares and had free cash flow of $1.03 billion. The stockholders' deficit was $3.87 billion at September 30, 2026, because of many years of buybacks. As of Sep 30, 2026.
- Checkpoints
- Nov 4, 2026: Fiscal Q4 2026 results and fiscal 2027 outlook. Failed. Watch: A fiscal 2027 outlook with growth in Scores revenue and comments that lenders keep pulling FICO Scores pass; an outlook with lower mortgage score revenue or a price cut fails. Outcome: FICO gave no fiscal 2027 outlook, because it is moving mortgage lenders to prices set for each customer and the agreements are not final. Feb 4, 2027 (estimate): Fiscal Q1 2027 results: first full quarter of the single pricing grid. Pending. Watch: Stable or higher mortgage origination score revenue after Rocket's switch passes; a fall in mortgage score volume that is larger than the fall in mortgage applications fails. May 2027 (estimate): Fiscal Q2 2027 results: lender choice and Software growth. Pending. Watch: Mortgage origination score revenue that holds up for a second quarter under the single grid, with platform ARR growth above 30%, passes; a further fall in mortgage score volume or a price cut fails.
- Recent events
- Nov 4, 2026: FICO reported fiscal Q4 2026 results. Revenue was $657 million, up 27%. GAAP EPS was $8.12 and non-GAAP EPS was $11.10. Scores revenue grew 33%, and B2B scores revenue grew 39% from a higher mortgage score price, partly offset by fewer mortgage originations. Software revenue grew 19%, and platform ARR grew 72%. GAAP results include a $65 million accrual for a proposed settlement of the antitrust class actions about its Scores business, a $48 million gain on the sale of an equity investment and a $27 million restructuring charge. Fiscal 2026 revenue was $2.53 billion and non-GAAP EPS was $42.99. FICO gave no fiscal 2027 guidance, because it is moving mortgage lenders to prices set for each customer and the agreements are not final. Oct 23, 2026: FICO said that it will keep its wholesale mortgage score price at $10 for lenders and brokers in its Preferred Program, the same as a year earlier. The price covers both the Classic FICO Score and FICO Score 10T. Lenders must commit to FICO through participating tri-merge resellers. FICO did not say what other lenders pay. Oct 22, 2026: FICO said that it will report fiscal Q4 2026 results on November 4, 2026, after the market closes, with a call at 5:00 p.m. Eastern time. Oct 8, 2026: The Federal Housing Administration (FHA) issued Mortgagee Letter 2026-11. It lets lenders use FICO 10T and VantageScore 4.0, together with Classic FICO, to set the credit score of FHA-insured single-family loans. The change applies to FHA case numbers assigned from January 1, 2027. Oct 6, 2026: FICO said it will cut about 15% of its positions to remove management layers and use AI in product development. It expects about $27.0 million of pre-tax charges in fiscal Q4 2026, and it expects to complete the plan by the end of fiscal Q3 2027. Sep 30, 2026: Fannie Mae and Freddie Mac published new loan-level price rules. Freddie Mac said that credit fees will not change with the score model, FICO or VantageScore 4.0, for loans delivered from October 1, 2026. Sep 29, 2026: The shares fell about 27% after FHFA Director Bill Pulte said on September 28 that Fannie Mae and Freddie Mac will use one pricing grid for FICO and VantageScore. FHFA did not give a start date in that post. Rocket Mortgage said that it will make VantageScore 4.0 its preferred model for eligible loans. Jul 29, 2026: FICO reported fiscal Q3 2026 results. Revenue was $674 million, up 26%. GAAP EPS was $10.45 and non-GAAP EPS was $12.18. Scores revenue grew 41%, mostly from a higher unit price for mortgage origination scores. FICO raised its fiscal 2026 revenue guidance to $2.53 billion from $2.45 billion. Jun 8, 2026: FICO borrowed a $1.5 billion term loan and used it for a $1.5 billion accelerated share buyback with Wells Fargo, to be completed by September 30, 2026. It replaced its buyback program with a new $2.0 billion program. Apr 28, 2026: FICO reported fiscal Q2 2026 results. Revenue was $692 million, up 39%, and GAAP EPS was $11.14. Scores revenue grew 60% from a higher mortgage score price and more mortgage originations. FICO raised its fiscal 2026 revenue guidance to $2.45 billion from $2.35 billion.