FICO · Q4 2025 Earnings

Bullish

Fair Isaac

Reported November 5, 2025

30-second summary

Q4 revenue of $516M (+13.6% YoY) beat the $505M guide by 2.2%, capping a FY25 with $1.99B revenue (+15.9%) and non-GAAP EPS of $29.88. The headline isn't the print — it's the FY26 guide of $2.35B (+18% YoY, accelerating from FY25's 15.9%) anchored on the newly-announced FICO Mortgage Direct License Program, which restructures score distribution to bypass bureau markups (from $10/score to $4.95) and is already engaged with resellers covering ~90% of mortgage volume. Scores +25% in Q4 carried the quarter; software ARR at +4% remains the unresolved drag, though Platform ARR (+16%, NRR 112%) is now 35% of total ARR.

Headline numbers

EPS

Q4 FY2025

$7.74

Revenue

Q4 FY2025

$0.52B

+13.6% YoY

Gross margin

Q4 FY2025

82.3%

Free cash flow

Q4 FY2025

$0.21B

Operating margin

Q4 FY2025

45.9%

Key financials

Q4 FY2025

Metric	Q4 FY2025	YoY	Q3 FY2025	QoQ
Revenue	$0.52B	+13.6%	$0.54B	-3.7%
EPS	$7.74	—	$8.57	-9.7%
Gross margin	82.3%	—	83.7%	-140bps
Operating margin	45.9%	—	49.0%	-310bps
Free cash flow	$0.21B	—	$0.28B	-23.6%

Guidance

FICO raised full-year FY2025 guidance substantially across all metrics (revenue +18.7%, GAAP EPS +30.7%, Non-GAAP EPS +30.9%) and issued FY2026 guidance reflecting 18% YoY revenue growth with maintained profitability targets.

Guidance is issued for both next quarter and the full year. Both may appear below.

Actuals vs prior guidance

Metric	Period	Prior guide	Actual	Δ	Result
Revenue	Q4 FY2025	$505 million	$516 million	+$11 million above guide	Beat

New guidance

Metric	Period	Guide	YoY
Revenue	FY2026	$2.35 billion	+18% YoY
GAAP EPS	FY2026	$33.47	—
Non-GAAP EPS	FY2026	$38.17	—
GAAP Net Income	FY2026	$795 million	—
Non-GAAP Net Income	FY2026	$907 million	—

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
GAAP EPS	FY2025	$25.60	$33.47	+$7.87 (+30.7%)	Raised
Non-GAAP EPS	FY2025	$29.15	$38.17	+$9.02 (+30.9%)	Raised
Revenue	FY2025	$1.98 billion	$2.35 billion	+$0.37 billion (+18.7%)	Raised
GAAP Net Income	FY2025	$630 million	$795 million	+$165 million (+26.2%)	Raised
Non-GAAP Net Income	FY2025	$718 million	$907 million	+$189 million (+26.3%)	Raised

Segment performance

Q4 FY2025

Segment	Q4 FY2025	YoY
Scores	$0.312B	+25.0%
Software (On-premises and SaaS)	$0.182B	+0.4%
Professional Services	$0.022B	-4.8%
B2B Scores Revenue Growth	29% YoY	—
B2C Scores Revenue Growth	8% YoY	—

Platform metrics

Q4 FY2025

Segment	Q4 FY2025
Software ARR (Annual Recurring Revenue)	Up 4% YoY
Platform ARR Growth	16% YoY
Non-Platform ARR Growth	-2% YoY
Software Dollar-Based Net Retention Rate	102%
Platform Software NRR	112%
Non-Platform Software NRR	97%

Management tone

Narrative arc: Q3 Score 10T regulatory victory → Q4 Direct License Program offense

Three quarters ago FICO management spoke of "closing the value gap gradually and predictably" on mortgage score pricing. This quarter they announced a structural assault on the distribution stack itself — the FICO Mortgage Direct License Program — already signed with Xactus and engaged with resellers representing ~90% of mortgage volume. The quote: "The performance model yields a 50% reduction in average per score fees to what resellers paid for FICO scores in 2025." This shifts the company from passive scoring utility extracting a regulated toll to active distribution operator competing on price against its own historical bureau partners. The pricing "gradualism" framing of Q3 has been replaced by structural channel disruption in Q4.

A quarter ago Score 10T was characterized as $313B in "annualized originations committed." This quarter the number is "nearly 40 lenders…more than $316 billion in annual originations and more than $1.5 trillion in eligible servicing volume, most making multi-year commitments." The shift from "committed" to "multi-year" is small in dollars but meaningful in posture — management is now talking about 10T as a deployed, contracted product, not a regulatory approval gathering signatures.

GenAI framing inverted entirely between Q3 and Q4. In Q3 management positioned the platform as an "AI decisioning" infrastructure leader per Forrester. This quarter they quantified proprietary advantage: "FICO SFM results in more than 35% lift in world-class transaction analytic models in areas such as fraud detection, while requiring up to 1,000 times fewer resources compared to conventional Gen AI models." The pivot is from "we lead in AI decisioning" to "our domain-specific models are categorically more efficient than LLMs" — a defensive moat claim against the commodity-AI competitive threat that has dogged data-analytics SaaS for two years.

The FY26 guidance posture is unusually offensive for FICO. After Q3's "raise as we enter Q4" language, FY26 explicitly accelerates growth ("we are guiding even stronger growth than we achieved in fiscal 25") despite a flat macro assumption. Management is underwriting acceleration to Direct License adoption, FICO 10T billings, and platform bookings going live — not to mortgage cycle recovery. The Q&A confirmed this is conservatism layered on top: "additional haircuts" were applied to FY26 due to performance-model timing ambiguity, which suggests upside if Direct License conversion runs ahead of plan.

Recurring themes management leaned on this quarter:

FICO platform SaaS acceleration and net retention dominanceDirect mortgage licensing disruption and pricing power recoveryDomain-specific proprietary GenAI as competitive moatFICO 10T early adoption and performance superiority over VantageRecord capital return and margin expansionACV bookings milestone achievement

Risks management surfaced:

Macro environment uncertainty affecting mortgage origination volumesCCS customer usage reductions impacting platform ARR growthMortgage market regulatory and competitive response to Direct License ProgramTiming and magnitude of pricing initiative impact on full-year resultsVantage Score market share competition in non-GSE segments

Q&A highlights

Pat Nayak · Barclays

What are the next steps regarding FHFA discussions and Director Pulte's favorable response, particularly regarding FICO 10-T approval timeline?

Management noted constructive conversations with FHFA, emphasizing the direct distribution program as competition-driving. On FICO 10-T, they stated it's with the GSEs and they're working toward release but cannot provide an exact date, expressing confidence it will eventually be approved.

Direct distribution program creates competition in credit score distributionFICO 10-T is with GSEs for approvalNo specific timeline provided for FICO 10-T release

Simon Clinch · Rothschild & Co. Redburn

What assumptions around direct licensing model are built into guidance, and how should the cadence be understood given sensitivity to performance model versus historic model mix?

Management explained they are being more conservative this year due to macro uncertainties and timing ambiguities around the performance model. Performance-based deals may have payment timing lags spanning calendar years. They expect better clarity within a couple of quarters.

More conservatism in FY2026 guidance than typical due to macro and timing uncertaintiesPerformance model payments may lag into following year due to mortgage process timingBetter visibility expected within two quarters on model mix adoption

Ashish · RBC Capital Markets

How should strong ACV bookings in software convert to ARR acceleration going into FY2026?

Management indicated ARR acceleration is expected starting as soon as Q1, driven by deals going live and contributing immediately to ARR.

ARR acceleration expected starting Q1Live deals contribute immediately to ARR growth

Alexander Hess · J.P. Morgan

What could surprise to the upside in mortgage volumes given conservative guidance, and what role do interest rates play versus market share?

Management stated market share concerns are low; volumes vary primarily with interest rates. They have historically been conservative on volume forecasts tied to rate expectations and applied additional haircuts to guidance this year due to uncertainty.

Mortgage volumes primarily sensitive to interest rates, not market share riskConservative rate assumptions not expecting significant volume uplift from rate declinesAdditional guidance haircuts applied this year due to macro uncertaintyHistorical pattern of conservative guidance has provided upside in past years

Raina Kumar · Oppenheimer

How material is downstream mortgage score usage to total volume, and what are the dynamics affecting uptake of the new 495+33 performance pricing model?

Management described extensive downstream usage across mortgage originators, lenders, GSEs, rating agencies, MBS investors, mortgage insurers, and prudential regulators. They noted historically this usage was not monetized, and the per-close pricing model was designed to capture some of this IP value.

Score usage spans originators, lenders, GSEs, rating agencies, MBS investors, mortgage insurers, and regulatorsHistorically downstream usage was not monetizedPer-close loan pricing (495+33) designed to capture downstream IP value

Answers to last quarter's watch list

FY2026 Scores pricing announcement. Management did not announce a conventional mid-single-digit price increase — they announced a structural shift: the Mortgage Direct License Program, with a performance model at $4.95 + $33 closing funding fee, or a per-score model at $10. This is materially more ambitious than a price increase — it reframes how FICO captures value from the mortgage distribution stack.

Resolved positively

Platform ARR growth re-acceleration above 20%. Platform ARR grew 16% in Q4, down from 18% in Q3 — moving the wrong direction relative to management's stated 20%+ aspiration. However, management committed in Q&A to ARR acceleration starting Q1 FY26 from live deals booked this quarter. The aspiration is unmet but the forward signal is constructive.

Continue monitoring

Score 10T conversion from "committed" to billed. Committed originations moved from $313B to $316B (modest growth) but eligible servicing volume disclosed at $1.5T+ and "most" lenders now on multi-year commitments. FICO still did not disclose 10T-specific revenue or unit billings.

Continue monitoring

Non-platform ARR trajectory. Held at -2% YoY (unchanged from Q3) with non-platform NRR at 97% (also unchanged). Stabilized but not improving. Software ARR overall stayed at +4%.

Continue monitoring

Q4 actuals vs. the $505M revenue guide and the $10M+ one-time items flagged. Q4 came in at $516M, $11M ahead of guide despite the pre-warned one-time items.

Resolved positively

What to watch into next quarter

Direct License Program reseller conversions and economics disclosure. Management said resellers representing ~90% of mortgage volume are "actively engaged." Watch for signed conversion counts in Q1 and any disclosure of model mix (performance model at $4.95 + $33 vs. per-score model at $10) — the performance model meaningfully changes the unit economics if it dominates uptake.

Platform ARR re-acceleration above 18% in Q1. Management committed to ARR acceleration "starting Q1." If platform ARR growth holds at 16% or decelerates further, the FY26 software acceleration thesis weakens materially. The 20%+ aspiration is now a falsifiable forward commitment.

FICO 10T billed revenue disclosure or unit volumes. Committed originations grew only $3B sequentially ($313B → $316B). Eligible servicing volume jumped to $1.5T+. Watch for the first quarter where management discloses 10T revenue or billed units distinct from classic FICO — without that, "adoption" remains a narrative metric.

Q1 FY26 revenue print vs. implied seasonality from $2.35B FY guide. No standalone Q1 guide was given; FY26 at $2.35B is +18% YoY. Whether Q1 paces in line with FY trajectory or backloaded toward H2 (consistent with Direct License conversion timing per Q&A) tells you whether the FY guide is conservative or aggressive.

Performance-model payment timing impact on quarterly revenue recognition. Management flagged in Q&A that performance-model payments may "lag into the following year due to mortgage process timing." This is the first quarter where this could materially distort sequential trends — watch for management to begin guiding to or excluding timing effects.

Sources

FICO Q4 FY2025 press release, filed 2025-11-05 (SEC EDGAR exhibit 99.1)
FICO Q4 FY2025 earnings call Q&A transcript (analyst exchanges)
FICO Q3 FY2025 brief and watch list (Tapebrief internal)

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