Fair Isaac Corporation Q1 FY2026 earnings call

• Scores Business Execution: The FICO Mortgage Direct Licensing Program added 4 new strategic reseller participants this quarter and signed a DLP agreement with MeridianLink. FICO Score 10T is expected to be available for Direct Licensing in both conforming and nonconforming in the first half of calendar '26. A strategic partnership with Plaid to deliver the next generation of UltraFICO Score was announced. FICO Score Mortgage Simulator was partnered with multiple companies.
• Software Business Recognition: Recognized by Gartner as a leader in the January 2026 Gartner Magic Quadrant for Decision Intelligence Platforms. FICO World 2026 will be held May 19 through 22 in Orlando, Florida.

Scores Segment

• Revenues were $305 million, up 29% versus prior year. B2B Scores were up 36% primarily due to higher mortgage origination Scores unit price and increased volume in mortgage originations. B2C Scores were up 5% driven mainly by indirect channel partners. Mortgage originations revenues were up 60% versus prior year, accounting for 51% of B2B revenue and 42% of total Scores revenue. Auto originations revenues were up 21%, while credit card, personal loan and other originations revenues were up 10% versus prior year.

Software Segment

• Revenues were $207 million, up 2% over last year. Platform revenue grew 37% and non-platform revenue declined 13%. Software ACV bookings for the quarter were a record $38 million. Trailing 12-month ACV bookings reached $119 million, an increase of 36% from the same period last year. Total software ARR was $766 million, a 5% increase over the prior year. Platform ARR was $303 million, representing 40% of total Q1 '26 ARR and grew 33% versus prior year, while non-platform ARR declined 8% this quarter.

• Reiterated fiscal 2026 guidance. Currently, not revising guidance as there is a lot of uncertainty in the macro environment, and they want another quarter to see how it plays out. The full year net effective tax rate is expected to be 24% and operating tax rate 25%.

• Uncertainty regarding the approval timeline of FICO Score 10T. Challenges with figuring out the timeline and issues related to LLPA grids such as gaming and adverse selection problems. Concerns from lenders regarding FICO Direct and the performance model, including miscalculation concerns and regulator views on passing on performance fees to end consumers.

Q: Manav Patnaik asked about the significance of the press release with LoanPASS and timing of FICO Score 10T approval.

A: Steven Weber said they are seeing adoption on nonconforming side and agencies are still testing for conforming side, no timeline yet.

Q: Jason Haas asked about LLPA grids timeline and concerns from lenders regarding FICO Direct and performance model.

A: William Lansing said no one knows LLPA grids timeline, concerns about miscalculation in Direct License Program are misplaced and regulators are proceeding at pace.

Q: Ashish Sabadra asked about timelines for resellers in Direct License Program to go live.

A: William Lansing said can't give exact timeline but working through integration testing.

Q: Surinder Thind asked about software business named accounts and platform vs non-platform ARR.

A: William Lansing said in beginning of Phase 2, direct selling efforts still primarily focused on financial services; Steven Weber said gradually migrating to platform as it's more efficient.

Q: Jeffrey Meuler asked about differences between FICO and Vantage Scores and LLPA grids for FICO 10T.

A: William Lansing said FICO Score and VantageScore are more than 20 points different 30% of the time; FICO 10T is closer to FICO Classic architecturally.

Q: Faiza Alwy asked about LLPA grid for 10T and timing of 10T and Vantage grids.

A: William Lansing said there'll be adjustment to grid for 10T; industry prefers 10T and Vantage grids to come out at same time.

Q: Kyle Peterson asked about platform business ARR growth sustainability.

A: William Lansing said current levels of platform ARR growth are sustainable; Steven Weber said total ARR will be driven by platform with continued significant growth.

Q: Steven Weber was asked about card business disruption.

A: Steven Weber said haven't seen any changes in card business activity.

Q: Alexander EM Hess asked about software platform business volume trends and drivers.

A: Steven Weber said hard to call trend in mortgage market, some volume increase across board; William Lansing said customers come to platform for same risk management solutions as before.

Q: Ryan Griffin asked about software land and expand momentum.

A: Steven Weber said expand piece is easier than land as once installed, customers find more ways to use it.

Q: Scott Wurtzel asked about next-gen platform and enterprise fraud solution driving bookings.

A: William Lansing said growth seen in Q1 predates enterprise solution.

Q: Owen Lau asked about impact of 10% credit card interest rate cap on FICO and credit card exposure.

A: William Lansing said consumers may look for alternate credit; Dave Singleton said they don't disclose credit card originations revenue.

Q: Kevin McVeigh asked about headcount investment and reseller adoption.

A: William Lansing said investing in go-to-market across software and Scores sides, aggressive in expanding headcount.

Q: Rayna Kumar asked about size of resellers in Direct License Program and addressing operational hurdles.

A: William Lansing said resellers represent somewhere in 70%-80% range; said no operational hurdles, moving smoothly.