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FAIR ISAAC CORP (FICO)·Q3 2025 Earnings Summary

Executive Summary

  • FICO delivered a broad-based beat: revenue $536.4M (+20% y/y) and GAAP EPS $7.40; non-GAAP EPS $8.57, both above S&P Global consensus, driven by B2B Scores pricing, higher mortgage originations, and a one-time insurance score license renewal . EPS consensus was $7.70* and revenue consensus $515.4M*; actuals were $8.57 and $536.4M, respectively, a clear beat [GetEstimates]*.
  • Management raised FY25 EPS guidance (GAAP EPS to $25.60 from $25.05; non-GAAP to $29.15 from $28.58) while holding revenue at $1.98B; non-GAAP net income raised to $718M from $712M .
  • Record quarterly free cash flow of $276.2M and the largest buyback quarter in company history (284k shares, >$0.5B repurchases) highlight strong cash generation and capital returns .
  • Q4 revenue is guided to ~$505M, down sequentially due to lower “point-in-time” revenues, seasonal scores originations, and a sequential decline in professional services; one-time expenses >$10M expected in Q4 .

Values with asterisk (*) retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

  • Scores segment strength: $324.3M (+34% y/y); B2B +42% on price increases, higher mortgage originations, and a multi-year insurance score license renewal; B2C +6% via indirect partners . “We again delivered strong results…raising our full year guidance.” — CEO Will Lansing .
  • Software SaaS momentum: software revenues $212.1M (+3% y/y) with platform ARR +18% y/y and platform Dollar-Based NRR 115%; total NRR 103% .
  • Cash returns: record FCF $276.2M and buybacks of 284k shares, “the largest single quarter buyback in FICO history” .

What Went Wrong

  • Sequential deceleration ahead: Q4 revenue guide $505M implies sequential downshift due to reduced point-in-time items (insurance/license) and seasonal scores volumes; marketing and interest expense to rise; one-time items may exceed $10M .
  • Continued CCS usage headwinds (non-platform and platform), pressuring ARR growth; non-platform NRR 97% versus platform 115% .
  • Software ACV bookings ($26.7M) slightly below prior-year ($27.5M), though pipeline improved post FICO World .

Financial Results

Consolidated Revenue, EPS, Margins vs Prior Periods and Estimates

MetricQ3 2024Q1 2025Q2 2025Q3 2025Q3 2025 Consensus
Revenue ($USD Millions)$447.8 $440.0 $498.7 $536.4 $515.4*
GAAP Diluted EPS ($)$5.05 $6.14 $6.59 $7.40 $7.70*
Non-GAAP Diluted EPS ($)$6.25 $5.79 $7.81 $8.57 —
EBIT Margin %——49.25%*48.94%*—

Values with asterisk (*) retrieved from S&P Global.

Segment Revenue Breakdown

Segment Revenue ($USD Millions)Q3 2024Q2 2025Q3 2025
Scores$241.5 $297.0 $324.3
Software$206.4 $201.7 $212.1

KPIs and Cash Metrics

KPIQ1 2025Q2 2025Q3 2025
Free Cash Flow ($USD Millions)$186.8 $65.5 $276.2
Net Cash Provided by Operating Activities ($USD Millions)$194.0 $74.9 $286.2
Software ACV Bookings ($USD Millions)$21.2 $21.8 $26.7
Total Software ARR ($USD Millions)$729 $715 $739
Platform ARR ($USD Millions)$228 $235 $254
Dollar-Based NRR (Total)105% 102% 103%
Dollar-Based NRR (Platform / Non-Platform)112% / 100% 110% / 96% 115% / 97%
Shares Repurchased (000s)79 112 284

Non-GAAP adjustments exclude share-based compensation, amortization, tax adjustments, and excess tax benefit; free cash flow excludes capex .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Billions)FY 2025$1.98 $1.98 Maintained
GAAP Net Income ($USD Millions)FY 2025$624 $630 Raised
GAAP EPS ($)FY 2025$25.05 $25.60 Raised
Non-GAAP Net Income ($USD Millions)FY 2025$712 $718 Raised
Non-GAAP EPS ($)FY 2025$28.58 $29.15 Raised

Reconciliation of non-GAAP guidance provided in the release .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
AI/Technology & FICO PlatformQ1: Platform ARR +20%, NRR 112%; FICO Marketplace/partners; BNPL study with Affirm; upcoming FICO World . Q2: Pipeline strong; bookings up; partner channels expanding; FX impact; CCS usage headwinds .Q3: Next-gen Platform, enterprise fraud solutions, FICO Marketplace to GA 2H25; “FICO Focus” foundation/language/sequence models; Forrester recognition; AWS strategic collaboration .Strengthening innovation; pipeline improving post-event .
Mortgage FHFA/RegulatoryQ1: FHFA timeline suspended; non-GSE 10T adoption growing; MCT marketplace/securitization use . Q2: Conservative guide amid macro; CCS usage caution .Q3: Strong defense of FICO’s industry role; lender choice risks highlighted; request to release GSE benchmarking; >30 lenders using 10T; securitization with 10T .Active engagement; narrative supportive of 10T adoption .
PricingQ1: 2025 pricing “socialized”, no elasticity seen . Q2: Auto B2B growth partly pricing; pricing feathers in over year .Q3: Ongoing review; desire to close value gap predictably; no decisions yet .Pricing tailwind continues; disciplined approach .
ARR/NRR & UsageQ1: Platform ARR +20% (FX -3%); NRR 105% (platform 112%) . Q2: Total ARR +3%; NRR 102%; usage headwinds .Q3: Total ARR +4%; total NRR 103%; platform NRR 115% .Gradual improvement; platform resilience .
Capital AllocationQ1: Buybacks 79k shares; capacity to lean in on dips . Q2: Buybacks 112k shares; stable leverage .Q3: Buybacks 284k shares; “largest quarter buyback”; leverage ~fixed-rate senior notes; buyers at current levels .Aggressive repurchases; leverage managed .
BNPL ScoringQ1: Affirm study; BNPL integration benefits .Q3: Launch of FICO Score 10 BNPL and 10T BNPL; available side-by-side at no additional fee; fall 2025 availability .Productization of BNPL capability .

Management Commentary

  • “We reported Q3 revenues of $536 million, up 20%…record-breaking free cash flow of $276 million in our third quarter.” — Will Lansing, CEO .
  • “We repurchased over half a billion dollars of shares this quarter, the largest single quarter buyback in FICO history.” — Prepared remarks .
  • “Platform ARR grew 18%…Platform NRR was 115%, while our non-platform NRR was 97%.” — Steve Weber, CFO .
  • On FHFA/lender choice: “Lender choice encourages…a race to the bottom…FICO Score 10T’s superior predictiveness will drive significant loss avoidance savings.” — Will Lansing .

Q&A Highlights

  • Adoption of FICO Score 10T: Pipeline strong; >30 lenders using; securitizations occurring; transition requires modest retooling .
  • Pricing philosophy: Management sees a “value gap” vs price; decisions made late fiscal year; changes to be predictable and measured .
  • Q4 guide drivers: Sequential revenue down; lower point-in-time items (insurance and licenses), seasonal originations; higher interest and marketing; one-time expenses >$10M .
  • Software bookings and AWS: Q3 ACV $26.7M vs $27.5M prior year; AWS partnership to amplify platform adoption; pipeline stronger post FICO World .

Estimates Context

  • Q3 2025 actual vs consensus: Revenue $536.4M vs $515.4M*; GAAP/non-GAAP EPS $7.40/$8.57 vs EPS consensus $7.70* — clear beat on both revenue and EPS [GetEstimates]*.
  • Implications: FY EPS guidance raised (GAAP $25.60; non-GAAP $29.15), suggesting upward revisions to FY EPS; Q4 revenue guide at ~$505M may temper sequential expectations and lead to fine-tuning of Q4 revenue models .

Values with asterisk (*) retrieved from S&P Global.

Key Takeaways for Investors

  • Strong beat underpinned by Scores B2B pricing and mortgage originations; insurance score license renewal provided additional “point-in-time” lift .
  • FY25 EPS raised while revenue maintained; signals operating leverage and margin execution despite usage headwinds in CCS .
  • Record FCF and largest buyback quarter indicate confidence and capital return priority; leverage terming-out into fixed-rate senior notes (100% fixed at quarter-end) reduces rate sensitivity .
  • Platform metrics resilient (ARR +18% platform; NRR 115%); innovation roadmap (Focus models, Marketplace GA, enterprise fraud) and AWS collaboration bolster medium-term software thesis .
  • Q4 sequential decline is primarily mix/seasonality and point-in-time dynamics; monitor insurance/license cadence and PS timing .
  • Mortgage policy debate (FHFA/lender choice) is a headline risk but management is actively engaged; 10T traction (>30 lenders, securitization) supports competitive positioning .
  • Near-term trading catalyst: guidance raise and buyback pace; medium-term: platform adoption, Marketplace ecosystem, BNPL score rollout in fall 2025 .

Additional Context: Other Relevant Q3 Press Releases

  • FICO launches BNPL-enhanced scores (10 BNPL and 10T BNPL); offered side-by-side at no additional fee, expected availability Fall 2025 .
  • New stock repurchase authorization up to $1B (June 19, 2025), supporting continued buyback capacity .
  • $1.5B senior notes priced (May 8, 2025) to refinance revolver/term loans; all debt fixed-rate at quarter-end .