FICO Q3 Earnings Beat Estimates, Strong Scores Drive Up Sales Y/Y

Fair Isaac FICO reported third-quarter fiscal 2025 non-GAAP earnings of $8.57 per share, which surpassed the Zacks Consensus Estimate by 10.87% and jumped 37.1% year over year.

Revenues of $536.4 million beat the consensus mark by 3.4% and increased 19.8% year over year. The Americas, EMEA and Asia Pacific contributed 87%, 8% and 5% to total revenues, respectively. Scores (60.5% of revenues) increased 34.3% year over year to $324.3 million.

FICO’s Top-Line Details

Software revenues, which include Fair Isaac’s analytics and digital-decisioning technology, as well as associated professional services, increased 2.8% year over year to $212.1 million.

Software Annual Recurring Revenues (ARR) increased 4% year over year, consisting of 18% platform ARR growth and a 2% decline in non-platform ARR. Software Dollar-Based Net Retention Rate was 103% in the fiscal third quarter, with platform software at 115% and non-platform software at 97%. On-premises and SaaS Software (35% of revenues) increased 2.2% year over year to $187.9 million. Professional services (4.5% of revenues) were $24.2 million, up 7% year over year. 

Scores include FICO’s business-to-business (B2B) scoring solutions and business-to-consumer (B2C) scoring solutions. B2B revenues increased 42% year over year, driven primarily by higher unit prices, an increase in volume of mortgage originations and a multi-year license renewal in the U.S. B2C revenues increased 6% year over year, aided by an increase in royalties derived from scores sold indirectly through credit reporting agencies.

Mortgage-originations revenues increased 53% year over year. Auto-originations revenues increased 23% year over year. Credit card, personal loan and other origination revenues are up 3% year over year.

Fair Isaac Corporation Price, Consensus and EPS Surprise

Fair Isaac Corporation price-consensus-eps-surprise-chart | Fair Isaac Corporation Quote

FICO continues to advance financial inclusion on a global scale. In the third quarter of fiscal 2025, the company officially launched its FICO Score10 BNPL and FICO Score10T BNPL models, integrating Buy-Now-Pay-Later data into credit scoring. It is also driving strong adoption of FICO Score 10 T for non-GSE loans and is seeing promising outcomes from the early adopter program.

FICO’s Operating Details

Research and development expenses, as a percentage of revenues, contracted 110 basis points (bps) year over year to 8.8%.

Selling, general and administrative expenses, as a percentage of revenues, decreased 200 bps year over year to 25.9%.

Adjusted EBITDA increased 31.9% year over year to $312.3 million in the reported quarter. The adjusted EBITDA margin in the fiscal third quarter of 2025 was 58.2% compared with 52.9% in the fiscal third quarter of 2024.

FICO’s Balance Sheet & Cash Flow

As of June 30, 2025, FICO had $189 million in cash and cash equivalents, and total debt was $2.8 billion. 

Cash flow from operations was $286.2 million in the fiscal third quarter compared with $213.3 million in the prior-year period. Free cash flow was $276.2 million for the reported quarter compared with $205.7 million reported in the prior-year period.

In the fiscal third quarter, FICO repurchased 284K shares.

FICO Reiterates Fiscal 2025 Guidance

For fiscal 2025, FICO anticipates revenues of $1.98 billion.

Non-GAAP earnings are projected to be $29.15 per share.

FICO’s Zacks Rank & Stocks to Consider

Currently, FICO has a Zacks Rank #3 (Hold). 

CommScope COMM, Watts Water Technologies WTS and CDW CDW are some better-ranked stocks that investors can consider in the broader sector. While CommScope sports a Zacks Rank #1 (Strong Buy), Watts Water Technologies and CDW carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

CommScope shares have gained 59.3% year to date. COMM is set to report its second-quarter 2025 results on Aug. 7.

Watts Water Technologies' shares have appreciated 28.3% year to date. WTS is set to report its second-quarter 2025 results on Aug. 6.

CDW shares have increased 1% year to date. CDW is set to report its second-quarter 2025 results on Aug. 6.

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This article originally published on Zacks Investment Research (zacks.com).

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