US$657 million revenue and US$11.10 non-GAAP EPS in fiscal Q4

Fair Isaac Corporation (NYSE:FICO) delivered a sharp fourth-quarter lift, but offered investors less visibility into the year ahead. Revenue rose 27% to US$657.0 million for the three months ended September 30, 2026, while non-GAAP diluted earnings per share increased to US$11.10 from US$7.74 a year earlier. The company nevertheless declined to provide fiscal 2027 guidance, citing a transition to bespoke mortgage-originations pricing and uncertainty in a mortgage market still constrained by elevated interest rates and affordability pressures.

Scores revenue leads fourth-quarter growth

The Scores division supplied the largest contribution to the quarterly increase. Revenue climbed 33% to US$413.8 million, with business-to-business revenue up 39%. Fair Isaac attributed that rise primarily to a higher mortgage-origination scores unit price, partly offset by lower mortgage-origination volumes. Business-to-consumer revenue grew a more modest 3%, helped by higher royalties from scores sold indirectly through credit-reporting agencies.

Software revenue increased 19% to US$243.2 million. The underlying mix was more uneven: platform annual recurring revenue rose 72% year on year, while non-platform ARR fell 18%. Total software dollar-based net retention was 112%, comprising 156% for platform software and 82% for non-platform software. That split points to a business in transition, although the release does not quantify how much of the platform growth came from new customers versus expansion within existing accounts.

Reported earnings include settlement and restructuring costs

GAAP net income rose to US$175.0 million, or US$8.12 per diluted share, from US$155.0 million, or US$6.42, in the prior-year quarter. The result included a US$65 million accrual for a proposed settlement of antitrust class-action lawsuits involving the Scores business, a US$27 million restructuring charge tied to a committed workforce-reduction plan and a US$48 million non-operating gain from selling a minority equity investment.

Fair Isaac's non-GAAP figures exclude those items along with other adjustments, including share-based compensation and tax effects. On that basis, non-GAAP net income was US$239.3 million, compared with US$187.0 million previously. Operating cash flow rose to US$294.2 million and free cash flow to US$284.3 million for the quarter, while full-year free cash flow reached US$1.03 billion.

Mortgage pricing transition leaves 2027 outlook open

The company said it is moving towards pricing tailored to individual mortgage customers. Its FICO Preferred Program has already produced several announced deals, and Fair Isaac said it is working with other customers on programmes covering calendar 2027. However, agreements are still being finalised, making it difficult to quantify the near-term effect of the new pricing structure while mortgage originations remain below historical norms.

The balance sheet adds another point for investors to weigh. At September 30, Fair Isaac reported US$5.26 billion of total debt against US$217.6 million of cash and cash equivalents. During fiscal 2026, it generated US$1.07 billion in operating cash flow but also spent US$3.05 billion repurchasing shares, alongside debt issuance and repayments. The proposed settlement, workforce reduction and large capital-allocation programme therefore sit alongside a sizeable debt burden, even as the operating result remains robust.