10-QPeriod: Q3 FY2025

FAIR ISAAC CORP Quarterly Report for Q3 Ended Jun 30, 2025

Filed July 30, 2025For Securities:FICO

Summary

Fair Isaac Corporation (FICO) reported a strong third quarter for fiscal year 2025, demonstrating robust revenue growth and improved profitability. Total revenues increased by 20% year-over-year to $536.4 million, driven primarily by a significant 34% surge in the Scores segment. This segment's growth was fueled by higher business-to-business scores revenue, benefiting from increased mortgage origination volumes and a key insurance score product renewal. The company also reported substantial increases in net income, up 44% to $181.8 million, and diluted Earnings Per Share (EPS), which rose 47% to $7.40. This performance was supported by strong operating income growth of 38% and improved operating leverage, with operating expenses growing at a slower pace than revenues. FICO's financial health is further underscored by a healthy increase in cash flow from operations and a strengthened balance sheet following a significant debt issuance and repayment. Key financial metrics reflect positive operational momentum, including growth in Annual Recurring Revenue (ARR) for the Software segment and a solid Dollar-Based Net Retention Rate (DBNRR) of 103%. The company also actively returned capital to shareholders through substantial share repurchases. FICO's outlook remains positive, with management expressing confidence in its ability to fund operations and future growth initiatives.

Financial Highlights

50 data points
Beta

Revenue

$536.41M

83.7% Gross Margin

Net Income

$181.79M

33.9% Net Margin

EPS (Diluted)

$7.40

Total Assets

$1.86B

Cash & Equivalents

$189.05M

Free Cash Flow

$284.43M

Financial Statements
Beta
Revenue$536.41M
Cost of Revenue$87.57M
Gross Profit$448.84M
R&D Expenses$47.21M
SG&A Expenses$139.11M
Operating Expenses$273.90M
Operating Income$262.52M
Net Income$181.79M
EPS (Basic)$7.49
EPS (Diluted)$7.40
Shares Outstanding (Basic)24.28M
Shares Outstanding (Diluted)24.57M

Key Highlights

  • 1Total revenues increased 20% year-over-year to $536.4 million for the quarter ended June 30, 2025.
  • 2The Scores segment experienced robust revenue growth of 34% year-over-year, reaching $324.3 million.
  • 3Net income grew significantly by 44% to $181.8 million.
  • 4Diluted Earnings Per Share (EPS) rose 47% to $7.40.
  • 5Operating income increased by 38% to $262.5 million, indicating improved operational efficiency.
  • 6Cash flow from operating activities increased substantially by $148.7 million year-over-year for the nine-month period.
  • 7The company issued $1.5 billion in senior notes and repaid existing term loans, enhancing its capital structure.

Frequently Asked Questions

The Scores segment's revenue increased by 34% year-over-year, primarily due to a $79.7 million increase in business-to-business (B2B) scores revenue. This growth was attributed to higher unit prices, increased mortgage origination volumes, and a multi-year license renewal for their insurance score product. Business-to-consumer (B2C) revenue also saw an increase, mainly from higher royalties generated through credit reporting agencies.

FICO issued $1.5 billion of senior notes on May 13, 2025, with a 6.00% interest rate maturing in 2033. The proceeds were used to repay all outstanding balances on its $300 million and $450 million term loans and its revolving line of credit. Additionally, the company amended its credit agreement to increase its revolving line of credit capacity to $1.0 billion and extended its maturity to 2030. As a result, total debt increased, but the company also secured more favorable long-term financing and extended its credit facility.

The Software segment showed a more modest revenue increase of 3% year-over-year for the quarter. However, Annual Recurring Revenue (ARR) for the Software segment as of June 30, 2025, was $739.1 million, a 4% increase from the prior year. The Dollar-Based Net Retention Rate (DBNRR) for the Software segment was a healthy 103% as of June 30, 2025, indicating that existing customers are expanding their use of FICO's software solutions.

FICO has generated strong operating cash flows, with a significant increase of $148.7 million year-over-year for the nine-month period. A substantial portion of this cash, along with proceeds from new debt, was used for significant share repurchases. Share repurchases totaled $511.3 million in the quarter and $878.1 million for the nine months ended June 30, 2025, reflecting the company's commitment to returning capital to shareholders. The company also noted its intention to use available cash for potential acquisitions and strategic investments.