Core Insights - Baron FinTech Fund experienced a decline of 4.29% in Q3 2025, underperforming the FactSet Global FinTech Index, which declined by 1.90% [1] - Since inception, the fund has achieved an annualized return of 11.10%, significantly outperforming the benchmark's 4.00% return [1] - Market strength in the quarter was attributed to the resumption of Federal Reserve rate cuts and optimism surrounding AI technologies [1] Company Highlights - Fair Isaac Corporation (NYSE:FICO) reported a one-month return of 7.47%, but its shares have decreased by 23.37% over the past 52 weeks, closing at $1,741.37 with a market capitalization of $41.286 billion as of November 14, 2025 [2] - Despite strong quarterly results and raised full-year guidance, FICO's stock underperformed due to regulatory pressures from the Federal Housing Finance Agency, which is advocating for increased competition in credit scoring within the mortgage market [3] - The company is expected to maintain its dominant market position and grow earnings per share rapidly due to price increases, a rebound in mortgage originations, and growth in non-mortgage consumer lending [3] Investment Sentiment - Fair Isaac Corporation is not among the 30 most popular stocks among hedge funds, with 74 hedge fund portfolios holding its stock at the end of Q2 2025, up from 68 in the previous quarter [4] - While FICO is recognized for its potential, there are other AI stocks perceived to offer greater upside potential and lower downside risk [4]

For the quarter ended September 2025, Fair Isaac (FICO) reported revenue of $515.75 million, up 13.7% over the same period last year. EPS came in at $7.74, compared to $6.54 in the year-ago quarter.The reported revenue represents a surprise of +0.78% over the Zacks Consensus Estimate of $511.78 million. With the consensus EPS estimate being $7.34, the EPS surprise was +5.45%.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine ...

Core Insights - The big data industry focuses on companies that process, store, and analyze vast amounts of structured, unstructured, and semi-structured data, providing tools for data mining, transformation, visualization, and predictive analytics [1][3]. Company Summaries NVIDIA Corp. (NVDA) - NVIDIA is a leader in generative AI-powered GPUs, benefiting from a booming data center business driven by strong demand from hyperscalers and enterprise customers [7][8]. - The company has an expected revenue growth rate of 33% and earnings growth rate of 40% for the next year, with a consensus estimate for earnings improving by 0.6% over the last 30 days [9]. - The short-term average price target indicates a potential increase of 20.8% from the last closing price of $193.80, with a maximum upside of 80.6% and a downside of 48.4% [10]. Dell Technologies Inc. (DELL) - Dell is experiencing strong demand for AI servers, securing $8.2 billion in AI server orders in the last quarter, which has built a strong backlog [11][12]. - The expected revenue growth rate is 7% and earnings growth rate is 18.4% for the next year, with a consensus estimate for earnings improving by 1.2% over the last 30 days [14]. - The short-term average price target suggests a potential increase of 17.9% from the last closing price of $140.71, with a maximum upside of 42.1% and a downside of 7.6% [14]. Palantir Technologies Inc. (PLTR) - Palantir's AI strategy integrates its Foundry and Gotham platforms, promoting AI adoption across government and commercial sectors, particularly in defense and healthcare [15][16]. - The expected revenue growth rate is 41.1% and earnings growth rate is 43% for the next year, with a consensus estimate for earnings improving by 20.9% in the last 30 days [19]. - The short-term average price target indicates a potential increase of 4.6% from the last closing price of $184.17, with a maximum upside of 38.5% and a downside of 72.9% [19]. Fair Isaac Corp. (FICO) - Fair Isaac is experiencing strong growth in its Scores and Software segments, with advancements in credit modeling enhancing predictive accuracy [20][21]. - The expected revenue growth rate is 19.7% and earnings growth rate is 31.3% for the current year, with a consensus estimate for earnings improving by 3.6% in the last 30 days [22]. - The short-term average price target suggests a potential increase of 12% from the last closing price of $1,777.91, with a maximum upside of 35% and a downside of 41.1% [22]. Guidewire Software Inc. (GWRE) - Guidewire is benefiting from its cloud platform, winning 19 deals in the fourth quarter, including significant contracts with Tier 1 insurers [23][24]. - The expected revenue growth rate is 16.3% and earnings growth rate is 12.8% for the current year, with a consensus estimate for earnings improving by 1.7% in the last 60 days [25]. - The short-term average price target indicates a potential increase of 24.5% from the last closing price of $200.97, with a maximum upside of 51.8% and a downside of 20.4% [25].

Core Insights - The comparison of machine learning (ML) to alchemy highlights the limitations of current AI practices, particularly the "black box" problem where models provide predictions without clear explanations of the underlying decision-making processes [1][7][8] - The focus of ML practitioners on achieving maximum predictive accuracy rather than understanding causal mechanisms restricts the applicability of AI in complex, high-stakes environments [3][5][8] Group 1: Black Box Problem - The "black box" issue arises from the complex mathematical operations in AI models, making it difficult to explain specific decisions made by these models [1][7] - A McKinsey survey indicated that 40% of respondents view explainability as a key risk in adopting generative AI, while a Fair Isaac Corporation survey found that about 70% of respondents could not explain specific AI model decisions [7] Group 2: Limitations of Current AI Practices - ML algorithms are designed to learn statistical regularities rather than causal mechanisms, which limits their reliability to simple, repetitive tasks in familiar environments [2][3] - The inability to interpret model outputs poses significant challenges in fields like healthcare and law, where understanding the rationale behind decisions is crucial for effective treatment and legal outcomes [3][5] Group 3: Future of AI - For AI to be genuinely useful, it must become more explainable, allowing it to contribute meaningfully to data-driven decision-making in critical areas such as public policy [5][8] - The long-term commitment to improving AI explainability is essential for justifying the substantial investments being made in AI development [5][8]

Financial Performance - As of September 30, 2025, annual recurring revenue (ARR) from FICO Platform-based products was $263.6 million, representing 35% of total software ARR[32] - The largest market segment for FICO is financial services, accounting for 92% of total revenue during fiscal 2025[42] - The Americas represent 87% of FICO's total revenue during fiscal 2025[42] - Revenues from agreements with Experian, TransUnion, and Equifax accounted for 51% of total revenues in fiscal 2025, up from 41% in fiscal 2023[41] Product and Service Offerings - FICO's professional services are sold on an hourly basis or for a fixed project fee, contributing to overall revenue growth[37] - FICO's Fraud Solutions leverage a global dataset from over 10,000 institutions to enhance fraud detection capabilities[38] - FICO aims to move substantially all current software products onto the FICO Platform, driving additional subscription revenue over time[32] - FICO's consumer solutions are marketed to over 200 million U.S. consumers whose credit relationships are reported to major consumer reporting agencies[40] - FICO's software offerings are sold both individually and as integrated bundles, enhancing customer engagement and business results[33] Intellectual Property - FICO held 204 U.S. and 26 foreign patents as of September 30, 2025, with 79 applications pending[53] Workforce and Employee Engagement - As of September 30, 2025, the company employed 3,811 persons across 28 countries, with 1,335 (35%) in the U.S., 1,506 (40%) in India, and 271 (7%) in the U.K.[74] - The company has conducted quarterly workforce surveys for the past decade to measure employee engagement, with all 22 engagement driver scores at or above external benchmark scores[79] - The company has expanded its benefit programs, including paid parental leave and childcare reimbursement, in response to employee feedback from surveys[78] - The percentage of racially/ethnically diverse employees in the U.S. workforce as of September 30, 2025, was 46%[82] - The company has significantly strengthened its position as an employer of choice, resulting in attractive external candidate pools and a remarkably low undesired attrition rate[84] - Approximately 25% of the company's employees are recognized via promotion each year, reflecting a structured promotion process[88] - The company has expanded participation in its annual performance-based equity program from 7% to just over 33% of its workforce over the past decade[93] - The company offers competitive health and welfare benefit plans, including paid maternity and parental leave benefits totaling up to 12 weeks[94] - The company conducts annual company-wide performance reviews supported by performance rubrics to ensure consistent administration[87] - The company has a structured onboarding program and invests in the FICO Integrated Learning Organization to support professional development[85] - The company regularly participates in market-based compensation surveys to ensure competitive base pay and incentive structures[91] Financial Position - As of September 30, 2025, the company reported cash and cash equivalents of $134.136 million with an average yield of 1.77%, down from $150.667 million and 2.88% in the previous year[271] - The company has a total of $2.8 billion in Senior Notes, with fair values of $2.7935 billion as of September 30, 2025, compared to $1.2635 billion in the previous year[271] - The company has $275 million in borrowings outstanding under its revolving line of credit at a weighted-average interest rate of 5.423% as of September 30, 2025[272] Regulatory Compliance - The California Consumer Privacy Rights Act (CPRA) revised and expanded the scope of the California Consumer Privacy Act (CCPA) effective January 1, 2023[60] - The EU AI Act, which establishes requirements for AI systems, will take effect between six and 36 months after its entry into force on August 1, 2024[70] - The Dodd-Frank Act provides the Consumer Financial Protection Bureau (CFPB) with authority to enforce provisions against unfair, deceptive, or abusive acts in consumer financial products[63] - The Gramm-Leach-Bliley Act (GLBA) imposes obligations on the company to comply with certain provisions regarding the security of non-public personal information[61] - The company is subject to various federal and state laws applicable to U.S. businesses, including antitrust laws and the Foreign Corrupt Practices Act[72] Foreign Currency Management - The company maintains a program to manage foreign exchange rate risk through forward contracts, with all contracts having maturity periods of less than three months[273] - As of September 30, 2025, the company has foreign currency forward contracts with a total contract amount of €7,700,000 for Euro, £10,019,000 for British Pound, and S$8,087,000 for Singapore Dollar[274] - The fair value of the Euro contracts as of September 30, 2025, is $9,034,000, while the British Pound contracts have a fair value of $13,500,000, and the Singapore Dollar contracts are valued at $6,300,000[274] - In comparison, as of September 30, 2024, the company had Euro contracts amounting to €13,000,000 with a fair value of $14,531,000, British Pound contracts of £12,237,000 valued at $16,400,000, and Singapore Dollar contracts of S$7,404,000 with a fair value of $5,800,000[274] - The total contract amount for Euro contracts decreased by 40% from 2024 to 2025[274] - The British Pound contract amount decreased by approximately 18% from 2024 to 2025[274] - The Singapore Dollar contract amount increased by approximately 9% from 2024 to 2025[274] - The fair value of Euro contracts decreased by approximately 38% from 2024 to 2025[274] - The fair value of British Pound contracts decreased by approximately 18% from 2024 to 2025[274] - The fair value of Singapore Dollar contracts increased by approximately 9% from 2024 to 2025[274] - The foreign currency forward contracts were entered into on September 30, 2025, and 2024, resulting in a fair value of $0 at each of these dates[274]

Core Insights - Fair Isaac Corporation (FICO) reported fourth-quarter fiscal 2025 non-GAAP earnings of $7.74 per share, exceeding the Zacks Consensus Estimate by 5.45% and reflecting an 18.3% year-over-year increase [1] - Revenues reached $515.8 million, surpassing the consensus mark by 0.78% and increasing 13.6% year over year, with contributions from the Americas (87%), EMEA (8%), and Asia Pacific (5%) [1] - Scores, which account for 60.4% of total revenues, rose 25% year over year to $311.6 million [1] Revenue Breakdown - Software revenues, including analytics and digital decisioning technology, declined 0.2% year over year to $204.2 million [2] - Software Annual Recurring Revenues (ARR) increased 4% year over year, driven by a 16% growth in platform ARR, while non-platform ARR declined by 2% [3] - On-premises and SaaS Software, making up 35.4% of revenues, increased 0.4% year over year to $182.4 million [3] - Professional services revenues, accounting for 4.2% of total revenues, decreased 4.8% year over year to $21.8 million [3] Scoring Solutions Performance - Business-to-business (B2B) scoring solutions revenues increased 29% year over year, primarily due to higher unit prices and increased mortgage originations [4] - Business-to-consumer (B2C) scoring solutions revenues rose 8% year over year, driven by growth in myFICO.com and indirect channel partners [4] - Mortgage originations revenues surged 55% year over year, while auto originations revenues increased by 24% [5] Operating Metrics - Research and development expenses as a percentage of revenues increased by 10 basis points year over year to 9.9% [6] - Selling, general, and administrative expenses as a percentage of revenues decreased by 270 basis points year over year to 24.3% [6] - Non-GAAP Operating margin improved to 54% in the fourth quarter of fiscal 2025, compared to 52% in the same quarter of the previous year [6] Financial Performance - Adjusted EBITDA rose 18.3% year over year to $286.6 million, with an adjusted EBITDA margin of 55.6% compared to 53.4% in the prior year [7] - As of September 30, 2025, FICO had $134 million in cash and cash equivalents, with total debt at $3.06 billion [8] - Cash flow from operations was $223.6 million in the fourth quarter, down from $286.2 million in the prior quarter, while free cash flow was $210.8 million compared to $276.2 million previously [8] Future Guidance - FICO anticipates fiscal 2026 revenues of $2.35 billion and non-GAAP earnings of $38.17 per share [9][10]

Core Insights - PostFinance, Switzerland's leading digital bank, is enhancing its fraud protection and customer communication by expanding its partnership with FICO, utilizing FICO® Falcon® Fraud Manager and FICO® Customer Communication Services [1][2][3] Company Overview - PostFinance serves approximately 2.4 million customers in Switzerland and processes around 4 million transactions daily, with a total transaction value of CHF 5.9 billion [2] - The bank's debit cards account for an estimated one-third of all debit card transactions in Switzerland, both domestically and internationally [2] Technology and Solutions - FICO Falcon Fraud Manager employs artificial intelligence and is backed by over 100 patents in fraud detection, protecting more than 4 billion payment cards globally [2][4] - The partnership aims to provide instant communication with customers when fraud is suspected, thereby improving customer experience and protection [2][3] Strategic Importance - This expansion supports PostFinance's digital transformation and reinforces its leadership in electronic banking, particularly through its e-finance portal [2][3] - The collaboration reflects PostFinance's commitment to exceeding customer expectations in fraud protection and communication [2][3]

Fair Isaac (FICO) came out with quarterly earnings of $7.74 per share, beating the Zacks Consensus Estimate of $7.34 per share. This compares to earnings of $6.54 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of +5.45%. A quarter ago, it was expected that this financial services company would post earnings of $7.73 per share when it actually produced earnings of $8.57, delivering a surprise of +10.87%.Over the last four quarter ...

Financial Data and Key Metrics Changes - The company reported Q4 revenues of $516 million, up 14% year-over-year, and full fiscal year revenues of $1.991 billion, up 16% compared to the prior year [6][22] - GAAP net income for the quarter was $155 million, an increase of 14%, with GAAP earnings of $6.42 per share, up 18% from the prior year [29] - For the full fiscal year, GAAP net income was $652 million, equating to $26.54 of earnings per share, up 27% and 30% respectively [29] Business Line Data and Key Metrics Changes - In the software segment, Q4 revenues were $204 million, flat year-over-year, while for the full year, revenues were $822 million, up 3% from last year [7][22] - The scores segment saw Q4 revenues of $312 million, up 25% year-over-year, driven primarily by B2B scores, which were up 29% [9][23] - Total scores revenues for the full year were $1.169 billion, up 27%, with mortgage origination revenues up 52% year-over-year [23] Market Data and Key Metrics Changes - The Americas region accounted for 87% of total company revenues, while EMEA generated 8% and Asia-Pacific delivered 5% [22] - The company noted that mortgage origination revenues accounted for 55% of B2B revenue and 45% of total scores revenue [23] Company Strategy and Development Direction - The company plans to advance its direct and indirect distribution strategy and invest to capture market opportunities from innovations like the FICO Platform [9] - The FICO Mortgage Direct License Program aims to drive competition and transparency in the mortgage market, allowing trimerge resellers to calculate and distribute FICO scores directly [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving stronger growth in fiscal 2026, guiding for revenues of $2.35 billion, an increase of 18% over fiscal 2025 [33] - The company remains conservative in its guidance due to uncertainties in the macro environment, particularly regarding mortgage volumes and interest rates [72][78] Other Important Information - The company reported free cash flow of $211 million in Q4, with total free cash flow of $739 million over the last four quarters, representing a 22% increase year-over-year [30] - The company has a patent portfolio of over 230 issued patents, reinforcing its position in responsible AI development [9] Q&A Session Summary Question: Broader discussions with the FHFA and approval timeline for FICO 10T - Management confirmed constructive conversations with the FHFA and expressed confidence in the eventual release of FICO 10T [37] Question: Assumptions around the direct licensing model and its impact - Management indicated a conservative approach to guidance due to uncertainties in the macro environment and potential timing lags in performance-based fees [40][41] Question: Long-term pricing strategy and adjustments - Management stated that while they see a value gap in pricing, specific future pricing strategies remain uncertain [45][46] Question: Feedback from lenders on pricing models - Positive reception to the direct model was noted, with lenders appreciating the optionality provided by the two pricing models [50] Question: Adoption of FICO 10T in the non-conforming market - Management highlighted the importance of predictiveness in the non-conforming market and noted ongoing positive feedback from lenders [53] Question: Mortgage volume assumptions and potential upside - Management emphasized conservatism in volume assumptions, particularly regarding interest rates and market share retention [78] Question: Implementation progress with resellers - Management confirmed that resellers are on pace for adoption and that operational hurdles are minimal [82] Question: Performance model availability and pricing flexibility - Management clarified that pricing for the multi-year agreement with Zactus is set for 2026, with annual adjustments expected thereafter [75]

Financial Data and Key Metrics Changes - The company reported Q4 revenues of $516 million, up 14% year-over-year, and for the full fiscal year, revenues reached $1.991 billion, an increase of 16% compared to the prior year [6][22] - GAAP net income for the quarter was $155 million, up 14%, with GAAP earnings of $6.42 per share, an 18% increase from the prior year [28][29] - Non-GAAP net income for the quarter was $187 million, up 15%, with non-GAAP earnings per share of $7.74, an 18% increase year-over-year [29] - Free cash flow for the quarter was $211 million, with a total of $739 million over the last four quarters, representing a 22% year-over-year increase [30] Business Line Data and Key Metrics Changes - In the software segment, Q4 revenues were $204 million, flat year-over-year, while for the fiscal year, revenues were $822 million, up 3% from last year [7][22] - The scores segment saw Q4 revenues of $312 million, up 25% year-over-year, driven primarily by B2B scores, which increased by 29% [9][23] - Total scores revenues for the fiscal year were $1.169 billion, up 27%, with mortgage origination revenues up 52% year-over-year [23] Market Data and Key Metrics Changes - The Americas region accounted for 87% of total company revenues, while EMEA generated 8% and Asia-Pacific delivered 5% [22] - The company anticipates no significant improvement in the macro environment for its Scores business, with expectations of stable market share and volume in auto, card, and personal loan originations [24] Company Strategy and Development Direction - The company plans to advance its direct and indirect distribution strategy and invest to capture market opportunities emerging from innovations like the FICO Platform and FICO FFM [9][24] - The FICO Mortgage Direct License Program aims to drive competition and transparency in the mortgage market, with significant interest from resellers and lenders [12][13] - The company maintains a focus on efficiencies and prioritizes resources for strategic initiatives, including headcount for distribution and development of the FICO Platform [28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving stronger growth in fiscal 2026, guiding for revenues of $2.35 billion, a 18% increase over fiscal 2025 [33] - The company is being conservative in its guidance due to uncertainties in the macro environment, particularly regarding mortgage volumes and interest rates [72] - Management highlighted the importance of maintaining a competitive edge through innovations and the value provided by FICO scores [45][56] Other Important Information - The company has a patent portfolio of over 230 issued patents and nearly 80 pending applications, reinforcing its position in responsible AI development [9] - The effective tax rate for the quarter was 23.4%, with a full-year net effective tax rate of 18.8% [29][30] Q&A Session Summary Question: Feedback from FHFA and FICO 10T approval timeline - Management confirmed constructive conversations with the FHFA and expressed confidence in the eventual release of FICO 10T [36] Question: Assumptions around direct licensing model in guidance - Management indicated a conservative approach in guidance due to uncertainties in the macro environment and potential timing issues with the performance model [39][40] Question: Long-term pricing strategy - Management stated that while they recognize a value gap, specific pricing strategies for 2027 and beyond are not yet determined [44][45] Question: Feedback from lenders on pricing models - Positive reception to the direct model was reported, with lenders appreciating the optionality provided by the two pricing models [49] Question: Adoption of FICO 10T in the non-conforming market - Management noted that lenders in the non-conforming market prioritize default risk and are satisfied with the performance of FICO 10T [53] Question: Mortgage volume assumptions in guidance - Management acknowledged conservatism in guidance due to uncertainties around interest rates and trigger leads [72] Question: Reseller adoption of the direct model - Management confirmed that resellers are on pace for adoption, with no significant operational hurdles anticipated [82] Question: Credit bureaus and performance model availability - Management indicated uncertainty regarding the split between the per-score and performance models among lenders [85]