Timing clarification: FICO is scheduled to report today, July 29, 2026, after the market closes, not tomorrow. The earnings call begins at 5:00 p.m. Eastern Time.
FICO enters fiscal 3Q26 with unusually strong reported momentum but an unsettled investment debate.
The near-term financial story is straightforward: higher mortgage-score pricing has transformed Scores growth and expanded margins, while FICO Platform is accelerating within Software. The harder question is how durable those economics are as the mortgage market moves toward FICO 10T, direct licensing and potential competition from VantageScore.
Accordingly, the stock’s reaction may depend less on a routine earnings beat and more on management’s answers to three questions:
FICO’s March quarter established a demanding comparison for the report:
| Fiscal 2Q26 metric | Result | YoY change |
|---|---|---|
| Revenue | $691.7 million | +39% |
| Scores revenue | $475.0 million | +60% |
| Software revenue | $216.7 million | +7% |
| GAAP EPS | $11.14 | +69% |
| Non-GAAP EPS | $12.50 | +60% |
| Free cash flow | $214.3 million | +227% |
| Non-GAAP operating margin | 65% | +712 bps |
Mortgage was the principal driver. Mortgage-origination Scores revenue increased 127%, accounting for 72% of B2B Scores revenue and 63% of total Scores revenue.
That concentration is both the attraction and the risk: FICO is converting mortgage-score pricing into extraordinarily high incremental profit, but quarterly results have become increasingly sensitive to mortgage activity, pricing implementation and regulatory developments.
After fiscal 2Q26, management raised fiscal 2026 guidance to:
| Metric | FY26 guidance | Implied growth |
|---|---|---|
| Revenue | $2.45 billion | +23% |
| GAAP net income | $825 million | — |
| GAAP EPS | $35.60 | +34% |
| Non-GAAP net income | $946 million | — |
| Non-GAAP EPS | $40.45 | +35% |
FICO generated $1.204 billion of revenue and $19.80 of non-GAAP EPS in the first half. The guidance therefore requires approximately:
The $623 million quarterly revenue average would represent approximately 16% growth against fiscal 3Q25 revenue of $536.4 million, although the actual quarterly mix can differ materially because of mortgage volumes and point-in-time software revenue.
Interpretation: The raised full-year outlook does not require another $692 million quarter like fiscal 2Q26. As a result, investors should distinguish between a true deterioration and ordinary sequential normalization after a particularly strong quarter.
Scores is the main earnings engine. Its fiscal 2Q26 segment operating margin reached approximately 91%, meaning incremental revenue from score pricing and volume flows through at exceptionally high margins.
Investors should look for:
The fiscal 2Q26 mortgage result benefited from the new unit price, higher originations and some customers moving from lighter prior-year pricing to the full rate. That makes the year-over-year comparison powerful but means growth will eventually normalize as the pricing increase becomes fully annualized.
Management previously said it expected no volume loss to VantageScore during fiscal 2026. Any change in that language would be material.
The central strategic issue is the transition to next-generation mortgage scores.
FICO changed the direct-licensing performance model for FICO 10T from $4.95 per score plus a $33 funded-loan fee to $0.99 per score plus a $65 funding fee. Management described the revised structure as broadly revenue-neutral relative to traditional per-score pricing, but acknowledged that revenue under the performance model is recognized later because the funding fee follows the initial score pull.
At the last update:
A delay is not necessarily negative for current-quarter revenue—the traditional upfront model can produce better near-term timing. But persistent delays would weaken the strategic argument that FICO can move rapidly to direct relationships and performance-based economics.
Management’s position has been emphatic:
There is, however, a subtle risk and potential opportunity. If lenders pull both FICO and Vantage scores to determine which produces more favorable mortgage economics for a borrower, VantageScore could gain nominal share without reducing FICO’s score volume. In that scenario, the total addressable number of pulls could expand.
The important distinction on this call is therefore:
Investors should listen closely for any change from management’s prior confidence that the competitive rollout will not cause material FICO volume loss.
Software is smaller and lower-margin than Scores, but it is increasingly important to the durability of the valuation.
At the end of fiscal 2Q26:
| Software metric | Fiscal 2Q26 |
|---|---|
| Total ARR | $788.8 million, +10% |
| Platform ARR | $348.8 million, +49% |
| Non-platform ARR | $440.0 million, -8% |
| Total net retention | 109% |
| Platform net retention | 136% |
| Non-platform net retention | 90% |
| Quarterly ACV bookings | $28.3 million |
| Trailing-12-month ACV bookings | $126 million, +36% |
The reported 49% Platform ARR growth included migrations from non-platform products. Management said underlying Platform ARR growth excluding those migrations was in the mid-30% range, which remains excellent.
The ideal report would show Platform ARR continuing to grow above 30% organically, total ARR accelerating and non-platform deterioration stabilizing. A less favorable outcome would be strong headline Platform growth driven primarily by reclassification while total ARR and Software revenue remain sluggish.
Fiscal 2Q26’s 65% non-GAAP operating margin benefited from the mix shift toward high-margin Scores revenue. Management warned that operating expenses would rise modestly in the second half because of:
The key issue is not whether expenses increase sequentially—they probably should—but whether revenue growth continues to outpace those investments.
Scores remains strong, Software margins stabilize, and consolidated margins hold close to the fiscal 2Q level despite higher spending.
A combination of weaker mortgage volume, higher Software infrastructure costs and rising interest expense produces a sharper-than-expected margin reversal.
FICO repurchased $605 million of stock during fiscal 2Q26 at an average price of approximately $1,251. It subsequently disclosed another $170 million of purchases after quarter-end at an average price near $1,040.
The company has been willing to borrow and use free cash flow aggressively to reduce its share count. At March 31:
Questions for the report include:
Buybacks can support EPS meaningfully, but investors should separate per-share growth from underlying net-income growth, particularly as interest expense rises.
FICO closed at $1,336.26 on July 28, approximately:
That is still a substantial valuation, but it is far below the stock’s prior peak multiple. The setup is therefore more balanced than it was before the regulatory and competitive concerns emerged.
The market appears to be pricing in some erosion of FICO’s long-term mortgage economics, not an imminent collapse in current earnings. A strong quarter alone may not fully resolve that discount; investors will want evidence that the transition to FICO 10T preserves both usage and monetization.
This report is less about whether FICO can post another strong quarter—the mortgage-pricing reset makes strong year-over-year results likely—and more about the durability and transition path of those earnings.
The most important disclosure will be management’s update on FICO 10T, direct licensing and VantageScore. If FICO can demonstrate that it retains score volume, preserves unit economics and successfully shifts toward performance-based licensing, the current earnings power could prove durable. If regulatory implementation remains uncertain or management’s confidence on volume begins to soften, investors may continue to discount even excellent near-term numbers.
On the financial side, the cleanest indicators are Scores growth split between price and volume, Platform ARR excluding migrations, consolidated margins, fiscal 2026 guidance and the scale of fiscal 3Q repurchases.