Key Highlights

  • Revenue rose 39% year-on-year to USD 692 million, led by 60% growth in Scores segment Revenue
  • GAAP Net Income increased 63% YoY to USD 264 million, with EPS up 69% to USD 11.14
  • B2B Mortgage-related scoring volumes and pricing drove the majority of incremental growth
  • FICO Platform ARR growth remained strong, supported by new customer wins and expanded use cases
  • Share repurchases reached USD 605 million, marking the largest quarterly buyback in company history

Strong Revenue Expansion Led by Scores Segment Growth

Fair Isaac Corporation (NYSE: FICO) reported second-quarter FY2026 Revenue of USD 692 million, representing a 39% year-on-year increase. The primary driver was the Scores segment, which generated USD 475 million in Revenue, up 60% YoY.

This growth was largely attributable to higher Mortgage origination volumes and pricing improvements in Business-to-Business (B2B) channels. Mortgage-related scoring remains the core Revenue engine, benefiting from both cyclical housing market activity and structural reliance on FICO scores across U.S. lending markets.

By contrast, the Software segment delivered more modest growth of 7% YoY to USD 217 million. However, within Software, platform-based Revenue expanded significantly, offset by declines in non-platform offerings due to ongoing customer migrations.

Profitability Expansion Reflects Leverage/">Operating Leverage

FICO’s profitability metrics showed notable improvement, with GAAP Net Income rising 63% YoY to USD 264 million and non-GAAP Net Income increasing 54% to USD 297 million. Earnings Per Share followed a similar trajectory, with GAAP EPS at USD 11.14 and non-GAAP EPS at USD 12.50.

Leverage/">Operating Leverage was particularly evident in the Scores segment, where Revenue growth outpaced incremental Marketing spend. Segment operating margins expanded to approximately 91%, reflecting the high-Margin nature of the scoring Business.

At the consolidated level, non-GAAP operating margins reached 65% in the quarter, highlighting the scalability of FICO’s Business model despite rising personnel and R&D expenses.

Mortgage Activity and Pricing Power Drive B2B Momentum

The B2B Scores Business remains central to FICO’s growth trajectory. According to the data on page 16, Mortgage originations accounted for the majority of Revenue expansion, with originations Revenue increasing 127% YoY in this category.

Price increases implemented in recent quarters also contributed to Revenue growth, alongside higher transaction volumes. Mortgage-related revenues now represent a substantial portion of B2B Scores Revenue, reinforcing the segment’s sensitivity to housing market cycles.

At the same time, growth in auto and Credit card originations provided incremental support, although at a significantly lower scale compared to mortgages.

FICO Platform Adoption Strengthens Software Economics

While overall Software Revenue growth was moderate, the underlying platform transition continues to reshape FICO’s Revenue mix. Platform annual recurring Revenue (ARR) reached approximately USD 349 million, with growth approaching 49% YoY.

The platform’s dollar-based net retention rate of 136% indicates strong expansion within existing customer accounts, driven by increased usage and additional decisioning use cases. This reflects the “land and expand” strategy, where initial deployments lead to broader enterprise adoption.

The platform integrates Machine Learning, predictive analytics, and decision automation into real-time workflows, positioning FICO as a key infrastructure provider in regulated financial services markets.

Cash Flow Strength and Capital Allocation Strategy

FICO generated trailing twelve-month free Cash Flow of USD 867 million, representing a 28% year-on-year increase.

The company deployed a significant portion of this cash toward share repurchases, spending USD 605 million during the quarter to buy back approximately 484,000 shares. This marks the largest quarterly buyback in the company’s history and underscores the role of repurchases in its Capital allocation framework.

Balance Sheet metrics indicate stable Leverage, with net Debt-to-EBITDA remaining within targeted ranges, while Liquidity improved through higher cash and Investment balances.

Guidance Upgrade Reflects Sustained Momentum

FICO raised its FY2026 guidance, now expecting Revenue of approximately USD 2.45 billion, representing 23% year-on-year growth. GAAP Net Income is projected at USD 825 million, with EPS of USD 35.60.

The upward revision reflects continued strength in the Scores segment and accelerating adoption of the FICO Platform. However, management also indicated that operating expenses will trend higher through the second half of the fiscal year, driven by personnel investments and Marketing activity.

Structural Positioning and Key Risks

FICO’s dual-engine model—high-Margin scoring and expanding software platform—continues to provide both cyclical and structural growth drivers. The Scores Business benefits from entrenched market adoption, while the platform strategy positions the company within enterprise AI decisioning.

However, several risks remain. Revenue concentration in Mortgage-related activity introduces sensitivity to Interest Rate cycles and housing Demand. Additionally, ongoing migration from non-platform to platform products may create short-term Revenue Volatility within the Software segment.

Rising operating costs, particularly in R&D and sales, could also moderate Margin expansion if Revenue growth slows.