Fair Isaac (FICO) Q2 FY26 earnings call: guidance and Q&A

Scores revenue was $475M, up 60% YoY, with B2B up 72% on higher mortgage-origination score unit price plus higher mortgage-origination volume. Mortgage originations revenue jumped 127% YoY and now represents 72% of B2B revenue and 63% of total Scores revenue.

Management attributed the volume beat to a temporary dip in interest rates that lifted originations, consistent with bureau commentary, but reiterated a conservative volume posture for the balance of the year. Auto originations grew 13% (decelerating on tougher comps and mix shift toward lower unit-cost tiers) and card/personal-loan/other originations grew 6%.

B2C revenue rose 5%, its sixth straight quarter of growth, driven by indirect channel partners.

FICO cut its 10T mortgage direct-licensing price from $4.95/score plus a $33 funding fee to $0.99/score plus a $65 funding fee, framed as spreading IP monetization across the value chain and encouraging widespread 10T adoption ahead of GSE acceptance. Lansing stressed 10T is at price parity with VantageScore ($0.99) while remaining more predictive, qualifying 5% more borrowers via rental/utility data.

Management pegged VantageScore's paid market share at roughly 2%, arguing most VantageScores are bundled free by bureaus and unpaid. In a two-score conforming system, management expects some lenders to pull both scores, calling that share loss but not volume loss for FICO, and flagged unresolved LLPA-grid 'gaming' risk tied to differing default/prepayment risk (VantageScore data only goes back to 2013, untested through a full cycle).

The 10T direct-license program is nearly live: 3 of the top 5 major resellers are signed, with the other 2 in deep discussion and expected to join. The key remaining gate is FHFA sign-off allowing resellers to calculate the score (management sees no issue since the math is identical).

Management said timing has run longer than the market's optimistic expectations but that they are close. Separately, the historical FICO 10T data sits with the FHFA/GSEs for release (timing uncertain, expected over the summer), and the early-adopter program added 11 lenders to reach 55, representing >$495B of annual serviceable originations (2025 HMDA) and >$1.6T of eligible servicing.

Software revenue was $217M, up 7%, with SaaS +19% and platform revenue +54%, offset by on-prem -4% and non-platform revenue -12%. Platform ARR reached $349M (+49% YoY, ~44% of total software ARR of $789M), or mid-30% growth excluding one-time^📎 Q1 liquid-credit and Q2 CCS migrations; non-platform ARR fell 8% to $440M on migrations, end-of-life products, and usage declines.

Platform NRR was 136% versus non-platform 90% (blended 109%). Management said it is not forcing legacy-to-platform migration, is happy to renew profitable legacy contracts, and views platform and legacy as roughly in balance. FY26 revenue guidance reflects lower point-in-time (license) revenue on fewer non-platform renewal opportunities.

Management argued AI is unlikely to displace the FICO score in underwriting near-term because fair-lending law demands explainability, model governance, and non-discrimination that black-box AI cannot deliver — citing the CFPB's shutdown of Upstart's approach and FICO's 32 consumer reason codes.

FICO holds 137 AI-based patents (including blockchain for traceable, explainable decisioning) and positions FICO Platform as 'agentic-by-design' for regulated financial services, recognized as a leader by Gartner, Forrester and IDC, with over 150 global platform clients across connected use cases.

Management said its latest score is more predictive than VantageScore and any other score, with the only caveat being lender proprietary scores built on top of FICO.

FICO repurchased 484,000 shares for $605M — its largest quarterly dollar buyback ever — at an average $1,251, and bought a further $170M (164,000 shares at $1,040 avg) since April 1, backed by a new $1.5B board authorization, strong FCF ($214M in Q2; $867M TTM, +28%) and an unutilized revolver.

Lansing called current levels an opportunistic time to lean in. The balance sheet carried $272M cash and $3.64B total debt at a 5.5% weighted-average rate (93% senior notes), including a March $1B senior-notes issuance due 2034 that funded redemption of $400M of notes due in May, plus $265M drawn on the revolver.

After a strong first half, FICO raised full-year guidance to $2.45B revenue (+23%), $825M GAAP net income ($35.60 EPS, +34%), and $946M non-GAAP net income ($40.45 EPS, +35%). Guidance assumes conservative score volumes, no volume loss to VantageScore this fiscal year, and builds in some revenue lag if the performance-based direct-license model goes live (pushing funding-fee revenue from late FY26 into early FY27).

Management characterized incremental Scores marketing and FICO World costs as not material to the model.