Fair Isaac Corporation (FICO) Q1 2026 Earnings Call Transcript

Fair Isaac Corporation (NYSE: FICO) Q1 2026 Earnings Call dated Jan. 28, 2026

Corporate Participants:

Dave Singleton — Investor Relations

Will Lansing — Chief Executive Officer

Steve Weber — Chief Financial Officer

Analysts:

Unidentified Participant

Manav Patnaik — Analyst

Jason Haas — Analyst

Ashish Sabadra — Analyst

Faiza Alwy — Analyst

Kyle Peterson — Analyst

George Tong — Analyst

Alexander Hess — Analyst

Ryan Griffin — Analyst

Scott Wurtzel — Analyst

Owen Lau — Analyst

Presentation:

operator

Good day and thank you for standing by. Welcome to the first quarter 2026 FICO Earnings Conference Call. At this time all participants are in listen only mode. After the speaker’s presentation will open up for questions. To ask a question during the session you need to press star 11 on your telephone. You’ll then hear an automated message advising your hand is raised to withdraw your question. Please press star 11 again. Please be advised that today’s conference is being recorded. I would now like to hand it over to your first speaker today, Dave Singleton. Please go ahead.

Dave Singleton — Investor Relations

Good afternoon and thank you for attending FICO’s first quarter earnings call. I’m Dave Singleton, Vice President of Investor Relations and I’m joined today by our CEO Will Lansing and our CFO Steve Weber. Today we issued a press release that describes financial results compared to the prior year. On this call, management will also discuss results in comparison to the prior quarter to facilitate an understanding of the run rate of the business. Certain statements made in this presentation are forward looking under the Private Securities Litigation Reform act of 1995. Those statements involve many risks and uncertainties that could cause actual results to differ materially.

Information concerning these risks and uncertainties is contained in the Company’s filings with the sec, particularly in the Risk factors and Forward looking statements. Portions of such filings copies are available from the sec, from the FICA website or from our Investor Relations team. This call will also include statements regarding certain non GAAP financial measures. Please refer to the Company’s Earnings Release and Regulation G schedule issued today for reconciliation of each of these non GAAP financial measures to the most comparable GAAP measure. The Earnings Release and Regulation G schedule are available on the Investor Relations page of the company’s website at fico.com, or on the SEC’s website at sec.gov A replay of this webcast will be available through January 28, 2027.

We have refreshed our quarterly investor presentation with additional content which is available in the Investor Relations section of our website. We will refer to this presentation during today’s earnings announcement. I will now turn the call over to our CEO Will Lansing.

Will Lansing — Chief Executive Officer

Thanks Dave and thank you everyone for joining us for our first quarter earnings call. We had another strong quarter and are reiterating our fiscal 2026 guidance. We reported Q1 revenues of $512 million, up 16% over last year. As you can see on Page 5 of our investor presentation for the quarter, we reported $158 million in GAAP net income in the quarter, up 4% and GAAP earnings of $6.61 per share, up 8% from the prior year. We reported $176 million in non GAAP net income, up 22% and non GAAP earnings of $7.33 per share, up 27% from the prior year.

We delivered free cash flow of $165 million in our first quarter. Over the last four quarters we delivered $718 million in free cash flow, an increase of 7% year over year. We continue to return capital to our shareholders through buybacks by repurchasing 95,000 shares and in Q1 at an average price of $1,707 per share. At the segment level on page 6 you can see our first quarter score. Segment revenues were 305 million. That’s up 29% versus the prior year. While B2B scores were the key driver of growth, we also saw continued growth in B2C scores.

In our software segment, we delivered 207 million in Q1 revenues. That’s up 2% over last year. Results included 37% platform revenue growth and a 13% decline in non platform revenue. Steve will provide additional revenue details later in the call. We had another strong execution quarter in our scores business, which we highlight on page eight. The FICO Mortgage Direct Licensing Program allows resellers the ability to streamline score access, enhance price transparency, and provide cost savings to lenders to reduce breakage fees. This quarter we announced the addition of four new strategic reseller participants to the FICO Mortgage Direct Licensing program, Zactus, Totality, Ascend Companies and CIC Credit.

Additionally, we signed a DLP agreement to add another participant, Meridian Link, a key platform provider to the mortgage industry. We’ll be releasing a press release on that soon. With strong demand from lenders, FICO is actively working alongside participants to support testing. One large reseller is close to completing production integration testing. Another large reseller has completed that testing and is now testing system integration downstream. While we expect to go live soon with multiple partners, we also continue to work on finalizing agreements with additional reseller participants. The Direct License program currently supports classic fico. While the conforming market is anticipating the general availability of FICO Score 10t, we expect FICO Score 10t to be available for direct licensing in both conforming and non conforming in the first half of calendar 26.

A high level overview of the Direct License program and FICO Score 10T can be found on page 9 and 10 of our presentation. FICO Score 10T is a meaningful Step forward in Credit risk assessment. FICO Score 10T offers significant improvements in predictive accuracy combined with a focus on fairness and model stability, offering tremendous benefits for lenders, investors and borrowers compared to other alternatives on the market. In the last year, we have nearly doubled the number of lenders in our FICO Square 10T Adopter program. These lenders account for more than 377 billion in annual originations and more than 1.6 trillion in eligible services volume most making multi year commitments to use the FICO Score for mortgage decisions in both the conforming and non conforming markets.

This quarter we also announced a strategic partnership with PLAID to deliver the next generation of Ultra FICO Score. This score combines the proven reliability of the FICO Score with real time cash flow data from PLAID to provide lenders with a single enhanced credit score that delivers superior consumer risk assessment without operational complexity. The enhanced Ultra FICO Score solution is credit bureau agnostic and will leverage cash flow data, historical and current information about the money flowing into and out of a consumer’s transaction accounts, that’s checking, savings, money market accessed through plaid’s Open Finance network of consumer permissioned data.

Plaid powers nearly 1 million secure financial connections each day and has helped more than half of Americans with a bank account securely move more of their financial life online. We see growing demand for the Score, which will launch for distribution with PLAID in the first half of calendar 2026. Within the quarter, we continued to expand adoption of FICO Score Mortgage Simulator by partnering with Sharp Core Lending Solutions, Credit Interlink and Ascend Partners, including Zactus and Meridian Link. Announced in fiscal 2025, five resellers have adopted the simulator and we’re expecting another large reseller to sign shortly.

The FICO Score Mortgage Simulator is the only simulation tool available to mortgage professionals that use the FICO Score algorithm. It enables mortgage professionals to run credit event scenarios by applying mock changes in an applicant’s credit report data to simulate potential changes to the applicant’s FICO score. The FICO Score Mortgage Simulator supports simulations on all three credit bureaus and models potential changes to several FICO Score versions used in mortgage lending. Mortgage professionals can leverage valuable insight from the simulator to help drive smarter decisions that can present more loan options and favorable interest rates for customers. In our software business, we’re thrilled to be recognized by Gartner as a leader in the January 2026 Gartner Magic Quadrant for decision intelligence platforms.

We are positioned the highest for our ability to execute. We believe this recognition is a landmark moment for fico. Further, we feel it reflects our commitments to empowering customers and delivering lasting impact worldwide. As a market leader in decision intelligence, FICO enables businesses to make real time decisions at scale. The core of our strategy is to empower customers with always on real time customer insights that deliver connected decisions and continuous learning throughout the entire customer lifecycle. Our innovations will be on display at FICO World 2026, which is going to happen May 19 through 22 in Orlando, Florida.

FICO World brings together customers and partners from around the world, allowing participants to collaborate on how FICO Platform makes real time decisions at scale to optimize interactions with consumers. At fico, we’re obsessed with powering consumer connections and delivering always on personalized experiences to drive outsized business outcomes. At FICO World 26, you can network with the world’s leading experts to learn how you can power your organization, apply best practices in advanced platform decisioning, and drive financial inclusion. I’m going to now hand it over to Steve to provide further financial details.

Steve Weber — Chief Financial Officer

Thanks and good afternoon everyone. As will mentioned, our score segment revenues for the quarter were $305 million, up 29% in the prior year. As shown on Page 13 of our presentation, B2B revenues were up 36%, primarily attributable to higher mortgage origination scores, unit price and an increase of volume in mortgage originations. Our B2C revenues were up 5% versus the prior year. Driven mainly by our indirect channel partners. First quarter mortgage originations revenues were up 60% versus the prior year. Mortgage originations revenues accounted 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 the prior year.

For your reference, page 14 of our presentation provides five quarter trending on all of our scores metrics. Turning to our software segment, our software ACV bookings for the quarter were a.

Steve Weber — Chief Financial Officer

Record of $38 million.

Steve Weber — Chief Financial Officer

As shown on page 15 of the presentation, this quarter included an above average size international multi use case platform deal on a trailing twelve month basis. ACV bookings reached $119 million this quarter, an increase of 36% from the same period last year. Our strong bookings in recent quarters gives us increased confidence that our ARR growth will continue to accelerate in FY26. Our total software ARR is shown on page 16 with $766 million a 5% increase over the prior year. Platform ARR was $303 million representing 40% of our total Q1. 26 ARR Platform ARR grew 33% versus the prior year while non platform declined 8% to $463 million this quarter.

Platform ARR was driven by both new customer wins as well as expanded use cases and volumes from existing customers. We also migrated our non platform liquid credit solution to the platform. Excluding that liquid credit migration, our platform ARR growth was in the high 20% range. The non platform year over year ARR decline was driven primarily by migrations, the end of life of a legacy authentication suite solution and some usage declines. In our CCS business, ARR growth was relatively flat. Our dollar based net retention rate in the quarter was 103%. Platform NRR was 122% while our non platform NRR was 91%.

Platform NRR was driven by a combination of new use cases and increased usage of existing use cases. We now have over 150 customers on FICO platform with more than half leveraging FICO platform for multiple use cases. First quarter software segment revenues detailed on page 17 were $207 million, up 2% from the prior year. Within the segment, our SaaS revenues grew 12% driven by FICO platform. Our on premises revenues declined 12% primarily driven by lower point in time revenues. Year over year our platform revenues grew 37% and our non platform revenues declined 13%. As a reminder, our FY26 revenue guidance reflects an expectation of lower point in time revenues throughout FY26 due to fewer non platform license renewal opportunities compared to the prior year.

From a regional lens, 88% of total company revenues this quarter were derived from our Americas region, which is a combination of our North America and Latin America regions. Our EMEA region generated 8% of revenues and the Asia Pacific region delivered 4%. Operating expenses for the quarter as shown on page 18 were $278 million this quarter versus $279 million in the prior quarter, which included $10.9 million in restructuring charges excluding restructuring expenses grew 4% quarter over quarter, driven primarily by personnel expenses. We expect operating expense dollars to continue to trend upward modestly throughout the fiscal year.

Our non GAAP operating margin as shown on page 19 was 54% for the quarter compared with 50% in the same quarter last year, which means we delivered year over year non GAAP operating margin expansion of 432 basis points points. The effective tax rate for the quarter was 17.5%. The operating tax rate was 25.7%. The primary difference between operating tax rate and net effective tax rate for the quarter is $15.7 million in excess tax benefit recognized upon the settlement or exercise of employee stock awards.

Steve Weber — Chief Financial Officer

We continue to expect a full year.

Steve Weber — Chief Financial Officer

Net effective tax rate of 24% and an operating tax rate of 25%. At the end of the quarter, we had $218 million in cash and marketable investments. Our total debt at quarter end was $3.2 billion with a weighted average interest rate of 5.22%. As of December 31, 2025, 87% of our debt was held in senior notes with no term loans. We had $415 million balance on our revolving line of credit which is repayable at any time. As will highlighted, we continue to return capital to our shareholders through buybacks as shown on page 20 in Q1, we repurchased 95,000 shares for a total cost of $163 million and we continue to view share repurchases as an attractive use of cash.

With that, I’ll turn it back to.

Will Lansing — Chief Executive Officer

Will for his closing comments. Thanks Steve. We had a great start to the year and are well positioned to exceed our fiscal year guidance. As in prior years, we will revisit our guidance on our Q2 earnings call. In our software business, we’re seeing growth in bookings and ARR reflecting the value of our innovation in the market. Since FICO World 2025, we achieved general availability of FICO Marketplace and FICO Focused Foundation Model. Our next generation FICO Platform and Enterprise Fraud solution on FICO Platform will soon be generally available. I’m excited to see our innovation realized in the market and and delighting our customers in our SCORES business.

Our innovations are driving increased engagement for market participants. There’s continued participant adoption of our FICO Mortgage Direct Licensing program. Outside of Conforming Mortgages, there’s continued adoption for FICO score 10T. We see adoption of FICO SCORE Mortgage Simulator throughout the mortgage industry. The FICO SCORE continues to be the trusted industry Standard used by 90% of top US lenders as the standard measure of consumer credit risk in the U.S. with that, let me turn this over to Dave to open up the Q and A session.

Dave Singleton — Investor Relations

Thanks, Will. This concludes our prepared remarks and we’re now ready to take questions. Operator, please open the lines.

Questions and Answers:

operator

Thank you. And at this time we’ll conduct a question and answer session. As a reminder to ask a question, you will need to press Star 11 on your telephone and wait for a name to be announced. To withdraw your question, please press star 11 again. Please stand by with the Pilot Q and A roster. One moment for our first question. Our first question comes Line of Manav Patnaik from Barclays. Your line is open.

Manav Patnaik

Thank you. I just wanted to touch on the, you know, the 10C again, that slide.

Manav Patnaik

You had was really helpful, but, you.

Manav Patnaik

Know, right before earnings, you had this Press release with LoanPass and, you know, the data sharing and the back testing and stuff that can be done. I was just hoping you could help us appreciate the significance of that and any sense of timing around when 10T officially gets approved and used, et cetera.

Steve Weber

Yeah, thanks, Manav.

Steve Weber

I think we’re continuing to see a.

Steve Weber

Lot of adoption on the nonconforming side and the conforming side with the agencies. They’re still doing a lot of testing. We don’t really have a timeline. They haven’t published any kind of a timeline yet. So at this point, we really don’t know, you know, when it will be generally available.

Manav Patnaik

Okay, got it. And then maybe just on the performance model adoption, I was just wondering if you could give us any early signs based on your discussions, how you think that’s going. Is that going to be available to the credit bureau channel as well?

Steve Weber

The performance model right now is planned for the direct license program and it’s going well. We have a lot of interest and we’re busy working towards bringing. Bringing the direct channel live.

Manav Patnaik

Okay, fair enough. Maybe just. Sorry, if I can squeeze one more. And Steve, just, you know, it was a good quarter. You maintained the guide. I know that’s practice, but maybe you could just help us appreciate why there was no race to the guide this time. Yeah, thanks, Ma.

Steve Weber

It’s a good question.

Steve Weber

You know, we’re pretty confident we’re going.

Steve Weber

To be able to meet our guidance. I know we talked about. It was pretty conservative last quarter. At this point, we’re only three months in. There’s just a lot of questions out in the macro environment. I mean, with the Fed today, you know, it’s just, frankly, we don’t probably know what numbers we would move to. So I think by next quarter, we’ll have a much better idea of what the world looks like and what overall volumes are going to look like. So I think that that was our thinking behind that.

Manav Patnaik

Okay, fair enough.

Manav Patnaik

Thank you, guys.

operator

Thank you. One moment for our next question. Our next question will come from Jason Haas from Wells Fargo. Your line is open.

Jason Haas

Hey, good afternoon and thanks for taking my question. I’m curious if you had any sense what the timeline looks like for the.

Jason Haas

Release of the LLPA grids and if.

Jason Haas

You had any insight as to what.

Will Lansing

Those might look like. Well, the short answer to that is, no, I don’t think anyone knows what the timeline for the LLPA grids look looks like. You know, and as we’ve discussed in the past, there’s tremendous challenges with figuring out how to make those work because of the gaming and adverse selection issues. And so no one knows what the timeline really looks like. Certainly we don’t. But I think that we have some significant problems that have to be overcome before they can be released.

Jason Haas

Got it.

Jason Haas

That’s very helpful. And then as a follow up, we’ve heard I guess two concerns around from.

Jason Haas

Lenders regarding FICO Direct and the performance model.

Jason Haas

One is that for FICO Direct there’s a concern the resellers I guess could improperly calculate the scores and aren’t taking legal responsibility for it. So I think there’s been some hesitancy from lenders.

Manav Patnaik

So I was curious if you could address that.

Jason Haas

And then on the performance model, I believe some lenders are concerned about how the regulators might view passing on that performance fee to the end consumer. So curious if you could comment on those two hang ups that may be out there.

Will Lansing

Yeah, I think that that’s a misplaced, misguided concern. The scores calculated by the resellers in the Direct License program will be the same scores that are calculated by the bureaus today. It’s the same algorithm and the same technology to do it. Same data is being used. And so I think that any kind of concern about miscalculation or differences in scores is misplaced. That said, I can tell you that we are in the midst of making sure that all the testing gives everyone every confidence that that’s not an issue. And then in terms of the regulators, they also are looking at it to get comfortable with it and that’s proceeding apace.

Got it. That’s very helpful, thank you.

operator

One moment for our next question. Our next question comes in line of Ashish Sabhadra from rbc. Your line is open.

Ashish Sabadra

Thanks for taking my question. It’s good to see that momentum in the direct license program with five resellers signed. You talked about them being in advanced stages of implementation. I was just wondering if you had some timelines around when they would go live and then at least when we’ve done checks with brokers, they are not aware of the performance model as yet. So when do we start to see that get communicated to the, to the mortgage brokers and the industry in general?

Steve Weber

Much more.

Will Lansing

Yeah, much better communicated.

Will Lansing

Thanks. On timeline. You know, I wish I could help you. I knew, I wish that we knew what the Timeline was. But you know, this is, this is the mortgage market and we don’t do anything without having everything extremely buttoned up. And so we are working through all the integration testing and all the downstream impacts and you can be assured that when, when it does go live, it’ll go live without a hiccup. But we’re, we’re well on our way. I just can’t give you, I can’t give you a timeline.

Ashish Sabadra

No, that’s understandable.

Steve Weber

Oh well. So the performance model. First of all the performance model is optional. Okay. No one’s being forced to take the performance model. So anyone who doesn’t like it doesn’t have to use it. They can just pay per score per unit as they always have. So you know, we introduced the performance model as an option to provide more flexibility for some originators, for some lenders who prefer that approach. And so you know, people who don’t like it, it’s a little hard to understand what the problem is. They don’t have to use it. They can just go with a per unit price.

Ashish Sabadra

That’s helpful. Color maybe. If I can just clarify that your revenue model is agnostic irrespective of whether the customers adopt performance or per score model, Is that right?

Steve Weber

It’s relatively agnostic.

Steve Weber

Yeah.

Will Lansing

Nothing’s ever truly agnostic but it’s set up to basically be relatively agnostic.

Ashish Sabadra

That’s helpful. Thanks. Thank you.

operator

Thank you. One moment for our next question. Next question. Confined of Surrender from Jeffries Yard is open.

Unidentified Participant

Thank you. I’m going to switch over to the software business. Some interesting improvements there to think about. Can you maybe talk about the target of the 500 named accounts globally?

Steve Weber

You broke that into 350 in financial services and 150 outside.

Unidentified Participant

So how does this kind of compare to your prior Strategy under the Gen1 platform? And how aggressively do you think you can reach those customers?

Unidentified Participant

And how much of this is a push to specifically go outside and expand beyond the financial institutions at this point?

Steve Weber

Are we kind of entering this phase two approach with the Gen 2 platform? I think we’re in the beginning of that phase two. Look, we are very heavy in financial services, have been historically, will continue to be, let’s be realistic about this. That said, the platform is very much designed to be horizontal and is highly appealing to other verticals and so we’re getting a lot of traction in telco and in other verticals. Further, we’re really committed to our partner program and, and going taking our IP to market through systems integrators. And other providers. And I think that’s going to be the way we wind up expanding to other verticals.

Our marketplace is designed to be able to do that, our next gen platforms designed to be able to do that. And so we’re still very interested in broadening our reach, but our direct selling efforts are still primarily focused on financial services. Got it.

Unidentified Participant

And just quickly, how many named accounts.

Unidentified Participant

Do you have right now in financial services?

Will Lansing

No, we don’t disclose it.

Will Lansing

We don’t.

Unidentified Participant

Got it.

Will Lansing

Okay, sorry. But I mean it’s an arbitrary number. We can name any we want. Any, you know, what number would you like it to be? It was just an attempt to kind of better understand the, the new customers you haven’t approached yet. It was just ballpark, but that’s understood. Understood. Look, I think there’s, I think the general answer to that is there’s several hundred to go. Got it. Okay, that’s helpful. And then as a follow up here, if we back out, kind of the international multi year deal here, still solid growth in the ARR, but there’s also a divergence.

You guys did list the reasons why between platform, AR growth and non platform, but is the idea that we’re beginning to also see customers that ultimately want to move from non platform to platform and so we should begin to see a sustained discrepancy in the ARR numbers?

Steve Weber

Yeah, I mean, gradually over time we’re looking to migrate everyone. Right.

Steve Weber

It’s a lot more efficient to be.

Will Lansing

On the platform and we’ve said that for a long time. So there’ll be a lot of efficiencies to be gained from that. We haven’t done a lot of that in the past, but we’re getting to the point now where we can. So you’re going to see more and more of that, but you’re also seeing just a lot more sales. Even the big deal we had this quarter had very little ARR impact this quarter, but it’ll have a much bigger impact next quarter. So if you look at the rolling trend of ACV bookings, it’s grown dramatically and we think there’s still a lot more that to come this year and that’s going to drive more ARR growth.

So we’ve got a lot of land activity happening and we’ve got a lot more expand. So if you look at the platform, the net retention rate goes up, they find new use cases, they expand into other areas. So there’s just a lot of different areas we can grow in that business.

Steve Weber

This is a classic software business. Problem. We as a provider would love to have everybody on a single code base. It’d be really nice and easy to run it that way. And yet we have more legacy code that’s still highly profitable. We have customers who are really committed to using it and want to continue to use it. And so we wind up in this position where we have to make proactive decisions about what legacy solutions we’re going to continue to support and which ones we’re going to force migration on. The biggest factor in thinking that through is can we provide full features and functionality of the legacy solution on the new platform before we force a change through an end of life initiative.

And so far we’ve been pretty successful with that. I mean, our classic business, our historical legacy business, runs just fine and is profitable. And as the new platform, the next gen platform has the features and functionality that frankly is superior to what you find in the legacy solutions. We’re going to see voluntary migration, we’ll see some forced migration, and then we’ll see some end of life. Thank you. Thank you.

operator

One moment for our next question. Our next question comes Jeff Mueller from Baird. Your line is open.

Unidentified Participant

Yeah, thanks. Good afternoon. So everyone’s obviously awaiting the llpas, the market and investors.

Unidentified Participant

I just.

Unidentified Participant

Any education process or caveats you’d volunteer to kind of like help investors interpret how to compare the llpas under Vantage to fico. I’m thinking things like for the same consumer, what’s the delta between FICO and Vantage on average, or anything like that.

Unidentified Participant

And then just I know it’s a.

Will Lansing

Finger in the air assumption to say that the grids may be at parity. But just remind us, if the grids do appear to be at parity, what do you view as the key barriers to potential switching? I think it’s unlikely the grids will be a parity, but let’s hold that one and just talk a little bit about the first part of your question, which is differences in the score. Our research suggests that the FICO score and the Vantage score are more than 20 points different 30% of the time in both directions. It’s not consistently one direction, which means that it’s very, very hard to just substitute one score for another.

A Vantage score for a FICO score, you really have to have a completely independent separate system to run a score that just has different odds to score ratio for every three digit number. And so I think that’s one of the big challenges with developing the LLPA grids. How are you going to reconcile all that? And then, you know, you Kind of go beyond that to assuming you had separate LLPA grids and you somehow figured out how to do that. You know, you still have all the gaming problems that go with that, you know, and the adverse selection problems that go with that.

Those have to be resolved. And then you finally you have whatever objections the securitization market might have to whatever penalties they might impose on Vantage scored paper versus FICO scored paper. So I think there’s significant problems to be overcome. Got it. And then just to reconcile something, I thought that you said in your prepared remarks that Penn T was going to be available for both the conforming and non conforming market in the first half of calendar 26. And then in answering one of the earlier questions, I think Steve said you’re not sure when 10T is going to be available.

No. So one’s a guess and one it is true that we’re not sure. So the FICO 10T data is with the GSCS, is with the FHFA and we can’t give you a timeline, but we’re confident it’ll eventually be released.

Steve Weber

Jeff, those are two different comments. Just to clarify, the non conforming conforming is around having FICO 10T available on the direct licensing program. And the comment Steve talked about was having FICO10T available for the data for the market.

Unidentified Participant

Okay, thank you.

Steve Weber

Does that make sense what I said?

Unidentified Participant

Yep.

operator

Thank you. One moment for our next question. Our next question will come from line of Faiza AUI from Deutsche Bank. Your line is open.

Faiza Alwy

Yes, hi, thank you so much. So sorry to beat a dead horse here, but I guess just to clarify, do we need like an LLPA grid for 10T or do you think the conforming market could accept the 10T, you know, without that grid being out?

Steve Weber

That’s a great question. Whether there’d be adjustment to the grid. 10t is obviously much, much closer to FICO Classic than Vantage is. But my guess is when 10t is made available that there’ll be adjustment to the grid for that.

Steve Weber

Okay, and just a quick follow. Do you think that timing. I understand all of the issues that you’ve talked about, but are you expecting that the 10t and vented grids would come out at the same time and the acceptability is good, or the implementation is going to be around the same time, or do you think it could happen in stages?

Steve Weber

Certainly the industry would like them to come out at the same time. There’s a lot of efficiency in that. And you probably saw the letter sent to the director at the FHFA this past week from 35 economists and think tanks and industry groups who all believe that it’s critical that if and when any change is made away from FICO Classic that it be done simultaneously to to both FICO 10T and Vantage. So the industry has a preference for that. What the FHFA will ultimately do, no one knows. So you know, we’ll have to see. You know, to the earlier point about FICO10T and LLPA grids for FICO10T, I would point out that FICO10T is architecturally very similar to FICO Classic.

It’s built on the same kinds of attributes weighted in a similar way. That’s very different from Vantage. Vantage has a different architecture and weights the factors differently. And so in terms of compatibility and closeness, Phycoten T is much, much closer to FICO Classic.

Steve Weber

And don’t confuse that with predictability where FICO 10T is significantly more predictive than FICO Classic.

Faiza Alwy

Understood, that’s very helpful. And then I wanted to ask about your mortgage revenue growth. We saw a nice acceleration this quarter quarter relative to what we’ve been seeing. And I’m just curious is that are you just benefiting from maybe higher refi activity? I know you don’t disclose volumes but just directionally like was volume, was it volume growth that was higher?

Will Lansing

It’s all of the above. It’s price. It’s all of the above. So there’s some price there, there’s some value there, there’s some refi volume there. So all those are factors.

Faiza Alwy

Got it. Thank you very much.

operator

Thank you. One moment for our next question. Our next question will come from line of Kyle Peterson from Needham. Your line is open. Great.

Kyle Peterson

Good afternoon. Thanks for taking the questions guys. Wanted to start out on the platform business obviously nice quarter there. I know some of that was was the migration. I’m guessing some of that was the large deal but just wanted to see are we at a point where 30% plus ARR growth on the platform side should be sustainable again Or I guess how should we think about that in light of the really nice bounce back this quarter? Well, so Kyle, we don’t make promises but we had 40% growth in platform for 16 quarters. Then we were down a couple quarters in just under 20% range.

Now here we are at 30%. It does move around. The total ARR is definitely going to go up. That’s a short answer. Question is the ARR will go up. I think current levels are sustainable. That’s not a crazy thing to think. We’ve got a lot of appetite for our new platform and the total ARR.

Steve Weber

Is going to be driven by the platform because more and more we’re seeing acceleration in platform growth and frankly the platform ARR is a bigger portion of the overall number now. So as that grows faster it helps the overall number as well. So we see continued, sustained, you know, significant growth in ARR for the rest of the year, which is kind of what we’ve been talking about for a few quarters and now you’re starting to see it.

Kyle Peterson

Okay, okay, that is helpful and good to hear. And then switching over into the card business, the origination revenue on the credit cards seems to be climbing in the right direction here the last few quarters, which is good to see. I know it’s still early but have you guys seen any disruption or changes in activity? I know there’s been some chatter around a potential 10% cap on card APR. So I guess anything you guys are seeing there or is it still too early to tell in terms of when you guys are delivered the usage reports?

Will Lansing

We haven’t seen anything. We haven’t seen any changes in activity. There’s been a lot of pre qual activity in the card space and decent originations.

Kyle Peterson

We haven’t seen any changes. Okay. Okay, that’s great to hear. Thank you guys and nice quarter.

operator

Thanks. Thank you. One moment for our next question. Next question will come from the line of George Tong from Goldman Sachs. Your line is open.

George Tong

Hi, this is Sami on for George. In your discussions with the FHFA and GSEs do you get the sense that a move from Trimerge to Buy Merge is gaining traction? We saw the MBA came out with a single score proposition and also the regulators focus as recently shifted to the bureau’s. So just wanted to get your views on it.

Steve Weber

Yeah, there’s certainly a lot of talk about it these days. You know the bureau position. I don’t generally give the bureau position but I think it’s fair to say that the bureaus believe that Prime Merge makes a lot more sense because the bureau files are not identical to one another and if you chose two out of three files, some consumers on the margin are going to be underserved. And I think that’s a fair point. That’s just a fair point set against that. Tri Merge does give the bureaus a monopoly and that’s not a great thing.

So that would be an offset. I think the real challenge. Here’s the real challenge with moving to Buy Merge. It’s the same problem that we have with Lender choice. When you get to choose between two credit scores or when you get to choose your favorite two out of three credit bureaus, you’re going to have gaming, you’re going to have adverse selection, you’re going to have all of these downstream. All these problems occur. And you know, there’s a cost to be paid for that. That cost ultimately gets paid by Fannie and Freddie and potentially the U.S.

taxpayer. And so, you know, that is the biggest problem that has to be overcome. And frankly, I don’t know what kind of a solution there is to that. It’s structural.

George Tong

Okay.

George Tong

And on software, can you talk about where you are in the investment cycle? How far along are you in the platform build out and when should we expect the investments to normalize?

Steve Weber

You know, we continue to invest in our software business. We’re really bullish on it. It’s growing really nicely. We do anticipate margin expansion because our new platform is built for scaling profitably. And so the improvements to profitability of our software business will come more from additional volume and additional customers on the new platform versus reduced R and D spending, which of course is a lever and someday it will go down.

George Tong

All right, great.

George Tong

Thank you.

operator

Thank you. One moment for our next question. Our next question comes in line of Alexander Hess from J.P. morgan. Your line is open just maybe to.

Alexander Hess

Start with the scores business and volumes there. I saw a call out in the new slide deck which is by the way excellent that you guys saw positive volumes in all three of your underwriting lines. Can you maybe speak to volume trends in the industry overall? Are they improving? And then when you sort of turn the lens inward, how much of the improvement that you’ve seen in the degree that there is any is really industry wide versus fico innovation led? Yeah, that’s a good question.

Will Lansing

I mean, I think it’s hard to call any a trend at this point. There’s just a lot of uncertainty in the marketplace again, which is one of the reasons why we’ve chosen not to update our guidance today. I don’t think anybody really knows what’s going to happen in mortgage. I think if rates continue to trend downward, we’ll probably see more volumes there. Carter, we already talked about there’s some potential noise in that market. We’ll see how real that is. But we’ve seen decent volumes, decent volumes throughout, not like crazy growth, but not declines either. So at least some margin or some volume increases across the board.

So that’s encouraging and we’ll see if that continues in terms of how much of that is driven by our innovation maybe a little bit in some cases. There are some different things that we’re providing that provide some additional volumes. But most of this is the macro environment and what’s happening in the auto lending industry or the mortgage or the card industry.

Will Lansing

Pivoting to software.

Will Lansing

You did see a nice pickup in ACV bookings.

Steve Weber

Obviously platform NRR growth is strong. Can you maybe provide a comment on what platform features, functions, use cases are really driving that recent momentum? Yeah, and you know, I’m not sure that it’s any particular use cases, to be frank. So just a little bit of history here. For many, many years, for 10, for decades, FICO is an application software company focused on solutions to half a dozen critical bank problems having to do with the life cycle risk oriented solutions. When we moved to the platform, we opened up a pretty vast set of solutions, potential solutions for banks that adopt the platform.

It’s no longer just decisioning around originations and customer management and fraud, so just a much, much wider set. That said, customers are coming to the platform for the basics. They come for originations, they come for customer management. We’re seeing those use cases as primary use cases. But what’s interesting is particularly on the expand side, if you think about land and expand they put in the platform and, and then they come up with all kinds of innovations on things they should be decisioning around that they have never done before. And so there’s a lot of that.

But I think it’s fair to say that they come to the platform for the same kinds of risk management solutions they bought in the past. Maybe I can squeeze a third in just on the predictive power of FICO 10T. Obviously you guys have the white paper out that showed a pretty compelling predictive lift in those key cohorts can you make. But that was on sort of the basis of defaults, delinquencies. Can you maybe pivot that conversation to prepayments? And do you have a view on will 10t be more predictive on prepayments than rival scores? You know, I think so.

And I think it’s important to note that, that credit default rates and prepayments are related. They’re sides of the same coin in some ways. So for example, I’ve heard people say, well, improving credit default rates doesn’t really matter in the conforming market because Fannie and Freddie stand behind it. And so who cares about the credit default rates? Well, when you have a credit default, it is functionally the same as a prepayment risk for those who hold the paper. So you know, I think 10T is going to help on both those sides.

operator

One moment for our next question. Our next question on coffee line of Ryan Griffin from VMO Capital Markets. Your line is open.

Ryan Griffin

Thanks so much. Just had a software question. I think you said 75 of your largest customers are using multiple use cases now I was just wondering how that has trended over the past year or so and what’s driving the land and expand momentum. Thank you. I’m not sure I followed the question.

Will Lansing

It’s the land expand. So essentially, yeah, I mean what’s driving it is that, you know, a lot.

Will Lansing

Of people bought in just to see how it would work. Right.

Will Lansing

They needed to be shown that it would work. And once they get it installed, the next use case is a lot easier.

Will Lansing

Than the first use case.

Will Lansing

So they find more ways to use it and they’re pleased with the way it’s working. So the Expand piece is, I shouldn’t say easy, but it’s a lot easier than the LAN because once it’s in and it’s working, they look for more ways to use it.

Will Lansing

Expand is running at roughly the same rate as Lamp. They’re kind of neck and neck on growth rate. The Expand piece really has two kinds. There’s two styles, right? One is expansion of the use cases that they started with and the second is bringing on new use cases and our revenue goes up in both situations. Great, thank you. And then just one more question on the volume side. I think we’ve all read some headlines about lenders struggling with their cost basis here. Was just wondering if you’re seeing any of this from your perspective in any changes in the lender behavior that you can call out relating to your business.

Thank you. You know, we really haven’t. I mean, you know how critical FICO scores are in, you know, in the system and we really have not seen any changes.

operator

Thank you. One moment for our next question. Our next question will come from the line of Scott Wurtzel from Wolff Research. Your line is open.

Scott Wurtzel

Hey, good evening guys. Just wanted to ask one question on the software business. I mean, you know, the trends on the booking side have been pretty positive. But you also had mentioned that you know, the next gen platform and I think the enterprise fraud solution are, you know, I guess not yet generally available. But are they helping to drive some of the bookings growth right now, you know, pending the general availability at all.

Scott Wurtzel

Thanks.

Will Lansing

Not, not yet. Not yet. All the growth you’re seeing is, you know, predates the enterprise solution. Thanks guys.

operator

Thank you. One moment for our next question. Our next question will come from line of Owen Lau from Clear Street. Your line is open. Good afternoon.

Owen Lau

Thank you for taking my question. I do want to go back to President Trump’s 10% credit card interest rate cap policy question.

Owen Lau

If it is implemented, how would it potentially impact fico?

Owen Lau

Do you think consumers will go to other form of loans which will still.

Owen Lau

Need to use FICO’s core for underwriting? And also could you please kind of.

Will Lansing

Like help us size the credit card exposure? Thank you. In terms of will consumers look for alternate credit if the card providers provide fewer cards to, you know, deeply subprime? You know, your guess is as good as mine, but I would assume so and I’m not sure.

Owen Lau

The second question was the size of our credit card originations revenue.

Will Lansing

But we don’t provide that, we don’t break that out. Now, you know, who knows whether this actually ever happens. But if it does, I think it puts that much more pressure on lenders to understand those subprime credits really, really well. And my guess is that they would be doing extra work involving FICO scores and credit data to, you know, to understand what happens on the margin.

Will Lansing

And if it went to some other type of personal lending or something else that would not apply then you know, obviously use FICO scores in that, in that area.

Will Lansing

You know, does it involve a shift to BNPL or so? I mean obviously we’d be beneficiaries in all those scenarios. Got it. That’s helpful.

Steve Weber

And then going back to software, I noticed that, I mean you mentioned that there was an above average size multi.

Ryan Griffin

Use case platform deal in the first quarter. Is it really a one off deal that we shouldn’t expect this to recur or FICO platform begins to gain recognition and traction and more similar deals could.

Steve Weber

Come more frequently in the future.

Ryan Griffin

It is the latter. There’s no question that the deal size is going up the frequency of it and the, and the amounts. Yeah.

Steve Weber

And I would just add to that. We think the FY26 ACV brokers are going to be significantly higher than FY25. So we’ve got, we’ve got a lot of deals we’ve already signed, we got a lot of deals in the pipeline. There’s a lot of momentum here and we’re seeing it in more and bigger deals.

Ryan Griffin

All right, thanks a lot.

operator

Thank you. One moment for our next question. Our next question will come from the line of Craig Huber from Huber Research Partners. Your line is open.

Ryan Griffin

Great, thank you. My first Question, you made a comment earlier on that you’re well positioned to well exceed guidance for fiscal 2026. Can you just talk about that a little bit further? What in your mind were you overly conservative on specifically, if you’re willing to talk about that and maybe also touch on how things are going in the reseller market, mortgage market, ready for these new pricing plans, reseller in particular, is that meaningfully ahead or behind or on schedule of what you originally were thinking.

Steve Weber

When you first rolled this out?

Ryan Griffin

So to take those in reverse order, the direct license program with the resellers is on track, roughly as expected. And frankly, whether it comes a little sooner or a little later does not have a big revenue impact on us. It’s really pretty close. You know, as we said earlier, we’re not completely agnostic, but you know, it’s pretty close. It’s not enough to drive a change in guidance, for example. And then as to what might have us change our guidance, it presumably it’d be volume. I mean, the price is extremely well understood and you know, it’s we publish it and that’s that price is here for the year.

And so it’s really much more around volume and what happens with interest rates and that no one knows. And so that’s why we want another quarter to see how it plays out. Yeah, I think there’s just like I.

Steve Weber

Said, there’s a lot of uncertainty in the marketplace and I think three months from now we’re going to have a much better idea. If we were to take a guess now, we would probably, you’d probably still think we were being too conservative. So at this point, in three months we’re going to know a lot more. We’ll have one more quarter under our belts and we’ll have a much better idea of how to discount. We really don’t want to get into the situation where we’re continually updating our guidance. Every quarter we have annual guidance. We try to stick to that until it’s pretty clear we can move to some more meaningful estimation of what it looks like.

Ryan Griffin

And that’s what we’re doing here. And then my last question, if I could, can you just talk about pricing for calendar 26 for auto and then credit card and personal loans. Is auto going to be up north of 10% again this year, for example?

Steve Weber

Well, we don’t disclose the specifics of it. It’s a lot more complicated in auto and card because there’s different price points depending on different tiers or different types of markets. So it’s a Lot more complicated than that. And we don’t get into the detail of that basically for competitive reasons.

Ryan Griffin

Okay, thank you.

operator

Thank you. One moment for our next question. Our next question will come from line of Kevin McVeigh from UBS. Your line is open. Great.

Ryan Griffin

I think you mentioned in the slide deck that there was some incremental headcount investment in FICO and increased marketing. Maybe help us understand was that related to the reseller adoption or what drove those investments? You know, we are investing in go to market across the board, both on the software side and on the score side. And after I would say many years of conservatism and growing headcount and direct sales, sales and partner sales, we’ve been fairly aggressive this year in expanding that headcount. So I would say it’s on both sides, software as well as scores.

Great. And then just in terms of goal post for the resellers actually going live, do you have any sense, would you expect the big five to go live simultaneously or one sequential? Any sense is just timing on that. You know, my guess is that it will not be a big bang with all of them going live at the same time. It’ll probably be staggered, but close in time. I mean, all the resellers we’ve signed with are well underway and I think for their own benefit, they’ll want to be able to offer the direct license program as quickly as possible.

So I would expect a convergence on timeline there, but I couldn’t say that it’s all going to happen simultaneously. Okay, thank you.

operator

Thank you. One moment for our next question. And our next question will come from the line. Raina Kumar from Oppenheimer, your line is open.

Unidentified Participant

Good evening. Thanks for taking my question. And congrats on the five resellers. I just want some more color on that. How much of the total resellers market would you say the five represent? Establish some size on these wins.

Ryan Griffin

How much of the market do those resellers represent?

Unidentified Participant

Yes.

Ryan Griffin

Somewhere in the 70, 80% range.

Unidentified Participant

Got it. Okay. And just as a follow up on your last earnings call, you discussed some operational hurdles in having resellers move to the direct model. Can you just talk about how you’re addressing some of those hurdles?

Ryan Griffin

We really don’t have any operational hurdles. It’s moving very smoothly. We’re working our way through the details and we’re highly confident that the program will be live in the relatively near future.

Unidentified Participant

Got it. Thank you.

operator

Thank you. I’m not showing any further questions in the queue. I’d like to turn the call back over to Dave for any closing remarks.

Will Lansing

No, that’s everything.

Ryan Griffin

We’re good.

Will Lansing

Great quarter.

Ryan Griffin

Thank you. Thanks, all.

operator

Thank you for participating in today’s conference. This does conclude the program. You may now disconnect, everyone. Have a great day.

Ryan Griffin

Sa.