8-K: FICO Reports Strong Q1 FY26 Earnings, Reaffirms Guidance

FICO announced robust first fiscal quarter 2026 results, with significant revenue and EPS growth, and reiterated its full-year guidance.

Summary

• Total revenues for the first fiscal quarter ended December 31, 2025, increased by 16% to $512.0 million, up from $440.0 million in the prior year period.
• GAAP net income for the quarter was $158.4 million, or $6.61 per diluted share, compared to $152.5 million, or $6.14 per diluted share, in the prior year.
• Non-GAAP net income rose to $175.6 million, or $7.33 per diluted share, from $143.8 million, or $5.79 per diluted share, in the prior year.
• Scores revenues grew 29% to $304.5 million, driven by a 36% increase in B2B revenue due to higher mortgage origination scores unit price and increased volume.
• Software revenues increased 2% to $207.5 million, with Software Annual Recurring Revenue (ARR) up 5% year-over-year.
• Platform ARR saw a 33% increase, while non-platform ARR declined by 8%.
• The total Software Dollar-Based Net Retention Rate was 103%, with platform software at 122% and non-platform software at 91%.
• Net cash provided by operating activities was $174.1 million, down from $194.0 million in the prior year period.
• Free cash flow was $165.4 million, down from $186.8 million in the prior year period.

Sentiment

Score: 8

Explanation: The company reported strong revenue and EPS growth, both GAAP and Non-GAAP, and reiterated positive full-year guidance. While cash flow metrics saw a slight decline year-over-year, the overall performance and outlook are very positive, especially the growth in Scores and Platform ARR.

Positives

• Total revenues increased 16% year-over-year to $512.0 million.
• GAAP diluted EPS grew to $6.61 from $6.14 in the prior year period.
• Non-GAAP diluted EPS increased significantly to $7.33 from $5.79 in the prior year period.
• Scores revenues surged 29% to $304.5 million, primarily due to strong B2B performance (up 36%).
• B2B Scores revenue benefited from a higher mortgage origination scores unit price and increased mortgage origination volume.
• Software Annual Recurring Revenue (ARR) increased 5% year-over-year.
• Platform ARR showed robust growth of 33%.
• Total Software Dollar-Based Net Retention Rate of 103% indicates strong customer retention and expansion, with platform software at an impressive 122%.
• Management reiterated strong fiscal year 2026 guidance, projecting stronger growth than achieved in FY25.

Negatives

• Net cash provided by operating activities decreased to $174.1 million from $194.0 million in the prior year period.
• Free cash flow declined to $165.4 million from $186.8 million in the prior year period.
• Non-platform ARR experienced an 8% decline year-over-year.
• Non-platform software Dollar-Based Net Retention Rate was 91%, indicating some churn or contraction in this segment.

Risks

• The impact of macroeconomic conditions on FICO's business, operations, and personnel.
• The success of the Company's business strategies.
• The ability to maintain existing relationships and create new relationships with customers, distributors, and other business partners.
• The ability to continue to develop new and enhanced products and services and to enter new markets.
• The ability to recruit and retain key technical and managerial personnel.
• Competition in the markets FICO serves.
• Regulatory changes applicable to the use or costs of consumer credit and other data.
• The failure to protect consumer credit and other data.
• The failure to realize the anticipated benefits of any acquisitions or divestitures.
• Material adverse developments or uncertainty in global economic conditions or in the markets or industries that the Company serves.

Future Outlook

FICO reiterated its fiscal year 2026 guidance, projecting revenues of $2.35 billion, GAAP net income of $795 million, GAAP EPS of $33.47, Non-GAAP net income of $907 million, and Non-GAAP EPS of $38.17. This guidance implies stronger growth than the company achieved in fiscal year 2025.

Management Comments

• Will Lansing, chief executive officer, stated: 'We had a good start to our fiscal year, with strong top and bottom-line growth. We reiterate our fiscal year 2026 guidance, which yields stronger growth than we achieved in FY25.'

Industry Context

FICO's strong Scores revenue growth, particularly in B2B, is significantly influenced by the mortgage market, with higher origination volumes and unit prices contributing. This suggests a potentially robust or recovering mortgage lending environment. The continued growth in platform software ARR and high retention rates indicate a successful shift towards cloud-based analytics solutions, aligning with broader industry trends of digital transformation and data-driven decision-making in financial services and other sectors. The decline in non-platform ARR suggests a strategic focus shift or market saturation in older software offerings.

Comparison to Industry Standards

• NA

Stakeholder Impact

• Shareholders: Positive impact due to strong financial performance, increased EPS, and reaffirmed positive guidance, suggesting potential for continued stock appreciation.
• Customers: Continued innovation and strong retention rates in platform software indicate ongoing value and satisfaction, particularly for those utilizing FICO's analytics and decisioning technology.
• Employees: Strong company performance and growth could lead to stability and potential opportunities, though the ability to recruit and retain key personnel is noted as a risk.
• Creditors: The company's strong financial health and cash generation (despite a slight YOY dip) generally provide comfort to creditors regarding debt servicing capacity.

Next Steps

• The company will host a webcast on January 28, 2026, at 5:00 p.m. Eastern Time to report its first quarter fiscal 2026 results and provide strategic and operational updates.
• A replay of the webcast will be available on FICO's Past Events page through January 28, 2027.

Key Dates

Recommendation

FICO delivered robust first-quarter results, exceeding prior-year performance across key revenue and earnings metrics. The significant growth in Scores revenue, driven by a strong mortgage market, and the impressive 33% increase in Platform ARR highlight the company's core strengths and successful strategic execution. While operating and free cash flow saw a modest year-over-year decline, the overall financial health remains strong, and management's reiteration of an optimistic fiscal year 2026 guidance, projecting stronger growth than FY25, signals confidence in sustained performance. The high Dollar-Based Net Retention Rate for platform software further underscores customer loyalty and expansion potential. These factors, combined with FICO's critical role in financial decisioning, position the company for continued strong performance, making it a compelling 'strong buy' for investors.

Keywords

FICO, Earnings, Financial Results, Q1 2026, Credit Scores, Analytics Software, Revenue Growth, EPS, GAAP, Non-GAAP, Software ARR, Mortgage Originations, Financial Technology, Predictive Analytics