Fourth-quarter fiscal 2026 earnings call, November 4, 2026

FICO closed fiscal 2026 with record results, but the call was dominated by what the company declined to say. Management did not issue fiscal 2027 guidance, and CEO Will Lansing said the company will no longer disclose the pricing, terms or participation rates of its mortgage score programs. "I recognize that this is not what you were expecting to hear from us today," Lansing said, while stressing that the decision "does not reflect a change in our long-term confidence in our business." For a stock whose earnings power rests on the unit price of a mortgage origination score, the loss of visibility on price is a material change in the investment case, whatever the quality of the reported quarter.

A Deliberate Retreat From Pricing Transparency

Lansing was blunt about the rationale. FICO historically published its score price on the view that a $10 or $4.95 fee was trivial against total closing costs. He said the company has concluded that transparency backfired. "We've really been attacked for what we consider to be not very good reasons," he said, adding that "somehow FICO has become the poster child for affordability in housing, which is just a crazy thing." Going forward, "we're not going to share every pricing program. We're not going to share what the prices are. We're not going to share all the terms."

Analysts from RBC, Goldman Sachs, Deutsche Bank and others pressed on whether blended pricing will be up, down or flat in 2027, what share of volume sits under committed agreements, and what EPS growth might look like. Management declined each time. Lansing said guidance will likely come "as we have more of the pricing out," noting that FICO's fiscal year begins October 1 while score pricing resets January 1, and that negotiations with lenders and originators are still under way. Management also would not provide mortgage volume assumptions or an ex-mortgage view of the business, with CFO Steve Weber saying the company guides in aggregate because the Scores and Software segments allow it to "balance puts and takes."

The practical consequence is that the Street must now model the largest swing factor in FICO's earnings without company input. Mortgage originations revenue rose 72% in the quarter and represented 58% of Scores revenue, driven by price, while volumes fell by high single digits on elevated rates. Sequentially, average mortgage score price declined from the third quarter as HELOC volumes, which carry a lower price than first-lien mortgages, grew faster. That mix effect is a small but concrete reminder that the price tailwind is not unlimited.

Bespoke Programs and the FICO Preferred Program

FICO is shifting from what Lansing called a "one-size-fits-all" approach to customized arrangements. The one disclosed example is the FICO Preferred Program, launched in October and distributed through participating tri-merge resellers. Enrolled lenders and brokers that commit receive no 2027 wholesale price increase on the FICO Score and a bundled classic FICO Score and FICO Score 10T. Terms across programs vary by customer, with some annual and others longer.

JPMorgan's Alexander Hess framed the program as a carrot that implies a stick. Lansing rejected that, saying "there's nothing exclusive about the preferred program," and that lenders can participate and still buy VantageScore. He attributed its popularity to the fact that it "looks a lot like business as usual" while providing price certainty. Notably, this implies the program's appeal is partly a price freeze, which sits uneasily with the earlier pricing-driven growth. Lansing also said FICO has not withdrawn the previously described performance-based pricing model, which still awaits GSE certification, and that whether it is superseded "is for the market to decide."

On the trade-off between price and volume, Lansing said FICO wants "to retain as much volume as we possibly can in the face of competition from Vantage," while also weighing its EPS commitments to shareholders. Asked about client reuse rights or new payer types, he said no changes are being made "at this time." The programs are primarily mortgage, though FICO is exploring other verticals.

Competitive Picture: VantageScore, Gaming and GSE Approvals

Management reported no meaningful volume loss to competition in the quarter and no spillover from VantageScore's entry into the conforming market to non-conforming mortgage, auto or credit cards. Lansing was pointed on the GSEs' approach to a unified loan-level price adjustment grid, arguing that blending two different scores into one grid underprices one of them. "Vantage is not being priced properly for risk. It's being underpriced," he said, adding that this amounts to a subsidy and that "sooner or later, adjustments will be made." He also said score gaming is "real" and would be "naive" to expect to disappear in a two-score system.

The regulatory path remains unresolved. FICO Score 10T is still in a second evaluation cycle at the GSEs after its 2022 approval, and the computation of scores by tri-merge resellers also awaits GSE sign-off, the one element of the direct license program not yet live. Lansing offered no timeline, saying "there is progress being made" but "I don't really have an update for you right now." The FHA said 10T will be available to approved lenders from January 1, 2027, and Lansing said it will be used as part of a broader credit evaluation. He declined to say how the FHA will treat the simultaneous availability of VantageScore 4.0, calling that its "secret sauce." Outside conforming, more than 80 lenders have adopted 10T, and the adopter program covers 84 lenders, over 60% of top-50 originator FHA volume and over 50% of GSE-purchased first-lien volume. Lansing predicted 2027 "will be a big year for 10T," though that outcome hinges on GSE approval that FICO does not control.

FICO has signed direct license agreements with resellers representing about 73% of mortgage reseller volume, including Informative Research this quarter. Lansing also contrasted the current go-to-market with five years ago, when FICO had no dedicated score sales force and relied on bureaus whose "priority is to sell their data and not to move FICO IP."

Software: Platform Momentum Is the Clear Bright Spot

Software was the cleaner part of the report. Fourth-quarter segment revenue was $243 million, up 19%, with platform revenue up 84% (low 50% range excluding migrations) and non-platform down 12%. Total ARR reached $851 million, up 14%. Platform ARR grew 72% to $453 million, now 53% of the total, or in the mid-40% range excluding migrations, while non-platform ARR fell 18% to $398 million. Net retention was 112% overall, 156% for platform and 82% for non-platform. Fourth-quarter ACV bookings were $45 million, and trailing 12-month bookings of $140 million rose 36%, a company record.

Software head Nikhil Behl attributed the growth to customers expanding across the consumer life cycle: "The more use cases they put on the platform, the better each and every platform use case gets." Management declined to guide platform growth but expects "very high platform growth rates" in fiscal 2027. The next-generation FICO platform reached general availability in early October alongside the Enterprise Fraud Solution and a FICO-focused sequence model, aimed at scams, authorized push payment fraud and agentic threats. Note that part of the platform growth is migration of existing customers from non-platform products, so the headline figures overstate new-customer momentum, and point-in-time revenue adds lumpiness.

Restructuring, Margins and Costs

FICO took a $27 million restructuring charge for a workforce reduction concentrated in professional services, where management expects a significant revenue decline in fiscal 2027 due to third-party partnerships and AI-driven efficiencies in the platform. Weber said much of the savings will be reinvested, particularly in distribution, and declined to quantify them. Management said no specific margin target drove the restructuring, but Lansing invited investors to judge the business "by the Rule of 40."

The quarter also included a $65 million accrual for the proposed settlement of the antitrust class action related to Scores. Excluding it and the restructuring, operating expense was $298 million, down 4% sequentially. Non-GAAP operating margin was 61% for both the quarter and the year, versus 54% and 55% a year earlier.

Financial Results and Capital Allocation

Q4 revenue was $657 million, up 27%, with Scores at $414 million (up 33%; B2B up 39%, B2C up 3%) and Software at $243 million. Non-GAAP EPS was $11.10, up 43%; GAAP EPS was $8.12. For fiscal 2026, revenue was $2.535 billion, up 27%, non-GAAP EPS was $42.99, up 44%, and free cash flow was $1.034 billion, up 40%. Auto originations revenue rose 11% and credit card, personal loan and other originations rose 12%.

FICO repurchased a record $3.028 billion of stock in fiscal 2026, or 2.514 million shares at an average $1,204, about 10% of shares outstanding. It paused buybacks in the fourth quarter to repay the term loan that funded the accelerated share repurchase, bringing net debt to EBITDA to 3.29x. Total debt was $5.26 billion at a 5.64% weighted average rate, and cash was $269 million. Interest expense was $78 million for the quarter. Lansing called the stock "quite a great value at these levels" and said buybacks will resume, describing the pause as "a 1- or 2-quarter thing," though Weber would not set a timeline. The fiscal 2027 operating tax rate is expected at 26%.