A month has gone by since the last earnings report for Fair Isaac (FICO). Shares have lost about 7.6% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Fair Isaac due for a breakout? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent drivers for Fair Isaac Corporation before we dive into how investors and analysts have reacted as of late.
Fair Isaac Q1 Earnings Top Estimates, Strong Scores Drive Up Sales Y/Y
Fair Isaac reported first-quarter fiscal 2026 non-GAAP earnings of $7.33 per share, which surpassed the Zacks Consensus Estimate by 5.54% and jumped 26.6% year over year.
Revenues of $512 million beat the consensus mark by 2.76% and increased 16.6% year over year. The Americas, EMEA, and Asia Pacific contributed 88%, 8%, and 4% to total revenues, respectively. Scores (59.5% of revenues) increased 29.2% year over year to $304.5 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 1.5% year over year to $207.4 million.
Software Annual Recurring Revenues (ARR) increased 5% year over year to $766 million, consisting of 33% platform ARR growth but an 8% decline in non-platform ARR. Software Dollar-Based Net Retention Rate was 103% in the fiscal first quarter, with platform software at 122% and non-platform software at 91%. On-premises and SaaS Software (36.8% of revenues) increased 1.2% year over year to $188.2 million. Professional services (3.8% of revenues) were $19.2 million, up 5% year over year.
Scores include FICO’s business-to-business (B2B) scoring solutions and business-to-consumer (B2C) scoring solutions. B2B revenues increased 36% year over year, driven primarily by higher unit prices and an increase in volume of mortgage originations. B2C revenues rose 5% year over year due to increased revenues from myFICO.com business and indirect channel partners.
Mortgage originations revenues rose 60% year over year. Auto originations revenues increased 21% year over year. Credit card, personal loan, and other origination revenues increased 10% year over year.
FICO’s Operating Details
Research and development expenses, as a percentage of revenues, contracted 50 basis points (bps) on a year-over-year basis to 9.7%.
Selling, general, and administrative expenses, as a percentage of revenues, decreased 160 bps year over year to 27.5%.
Non-GAAP Operating margin was 45.7% in the fiscal first quarter of 2026 compared with 40.8% in the year-ago quarter.
Adjusted EBITDA increased 26.5% year over year to $282.2 million in the reported quarter. The adjusted EBITDA margin in the fiscal first quarter of 2026 was 55.1% compared with 50.7% in the fiscal first quarter of 2025.
FICO’s Balance Sheet & Cash Flow
As of Dec. 31, 2025, FICO had $162 million in cash and cash equivalents compared with $134 million as of Sept. 30, 2025. Total debt was $3.19 billion.
Cash flow from operations was $174 million in the fiscal first quarter compared with $223.6 million in the prior quarter. Free cash flow was $165.3 million in the reported quarter compared with $210.8 million reported in the prior quarter.
In the fiscal first quarter, FICO repurchased 95K shares.
FICO Reiterates Fiscal 2026 Guidance
For fiscal 2026, FICO anticipates revenues of $2.35 billion
Non-GAAP earnings are projected to be $38.17 per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a upward trend in estimates revision.
VGM Scores
Currently, Fair Isaac has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for value investors.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, Fair Isaac has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Fair Isaac Corporation (FICO): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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