Core Insights - The latest credit card data from FICO for September 2025 indicates that households are facing financial challenges, with signs of increased delinquency among cardholders with accumulated debt [1][2] - There is a notable decline in average credit card spending, reflecting subdued consumer confidence [3][9] Spending and Balances - Average UK credit card spend in September 2025 was £805, marking a 3.8% year-on-year decline, the most significant drop in recent months [3][9] - Average active balances increased to £1,915, which is 4.5% higher than September 2024, indicating ongoing financial pressure on households [4][9] Payment Trends - The percentage of total balance paid fell to 34.6%, a decrease of 6.5% year-on-year, suggesting that customers are struggling to pay down their balances [4][9][10] - Payments to balance saw a slight increase of 1% month-on-month, but remain significantly lower than the previous year [4][10] Delinquency Rates - There has been a 3.7% month-on-month increase in customers missing three payments, which is also 1.7% higher than September 2024, indicating a trend towards deeper delinquency [5][9][10] - Customers who have held their credit cards for five years or more exhibit the highest delinquent balances, with their delinquent balance being twice as high compared to their overall balance [6][7] Key Metrics Summary - Key metrics for September 2025 include: - Average credit card spend: £805, down 3.8% year-on-year [8][9] - Average card balance: £1,915, up 4.5% year-on-year [8][9] - Percentage of customers missing three payments: 0.21%, up 3.7% month-on-month [10] - Average credit limit: £5,900, up 2.5% year-on-year [10]

Core Insights - Brown Advisory's Large-Cap Growth Strategy reported a net return of -0.88% in Q3 2025, underperforming the Russell 1000 Growth Index due to its underweight position in speculative momentum-driven stocks despite significant exposure to AI [1] Company Overview - Fair Isaac Corporation (NYSE:FICO) specializes in analytic, software, and digital decision-making technologies and services [2] - As of December 2, 2025, Fair Isaac's stock closed at $1,778.71 per share, with a market capitalization of $42.696 billion [2] Performance Analysis - Fair Isaac's stock experienced a decline of over 20% in July 2025 following the FHFA's approval of the VantageScore for conforming loans, but rebounded more than 20% in early October 2025 after launching the FICO Mortgage Direct License Program [3] - The one-month return for Fair Isaac was 6.20%, while it lost 24.86% over the last 52 weeks [2] Investment Sentiment - Fair Isaac was held by 72 hedge fund portfolios at the end of Q3 2025, a decrease from 74 in the previous quarter, indicating a slight reduction in interest among hedge funds [4] - While Fair Isaac is recognized for its potential, the company is not considered among the 30 most popular stocks among hedge funds, with some analysts suggesting that other AI stocks may offer greater upside potential with less downside risk [4]

Core Insights - A recent study indicates that 76% of Americans are utilizing buy now, pay later (BNPL) services, with 49% having missed a payment [1] - FICO is set to release a new credit score model that will incorporate BNPL loans, which could significantly affect consumers' creditworthiness [2][3] Impact on Consumers - A significant portion of consumers (38%) are unaware of the upcoming changes to FICO's credit scoring model, which could negatively impact their financial health if they do not act promptly [3] - The use of BNPL services can lead to increased debt levels, as consumers may take on more short-term debt than they can afford due to the perceived affordability of small payments [5] - Missed or late payments on BNPL loans can be reported and may lower consumers' credit scores, affecting their future borrowing capabilities, including mortgages and car loans [6]

Federal Reserve and Interest Rates - The Federal Reserve will hold its last FOMC meeting of 2025 on December 9-10, with market participants anticipating a 25 basis-point cut in the benchmark lending rate, marking the third rate cut of 0.25% in 2025 [1] - The CME FedWatch tool indicates an 84.7% probability of a 25-basis-point rate cut in December, a significant increase from 42% the previous week, with the current Fed fund rate at 3.75-4% [1] Financial Technology (Fintech) Industry - The fintech sector's performance is inversely related to interest rate movements, benefiting from a low-interest-rate environment which fosters technological improvement and product innovation [3] - The expansion of mobile and broadband networks, along with advancements in AI and machine learning, positions fintech for significant growth, revolutionizing banking, payments, and investments [4] Investment Recommendations - Five financial technology companies are recommended for investment based on favorable Zacks Ranks: Robinhood Markets Inc. (HOOD), Interactive Brokers Group Inc. (IBKR), Fair Isaac Corp. (FICO), SoFi Technologies Inc. (SOFI), and Moody's Corp. (MCO) [5] - Each of these companies currently holds either a Zacks Rank 1 (Strong Buy) or 2 (Buy) [5] Company-Specific Insights Robinhood Markets Inc. (HOOD) - Robinhood operates a financial services platform allowing users to invest in various assets, with expected revenue and earnings growth rates of 21% and 16.2% respectively for next year [10] - The company has seen improved trading revenues due to higher retail participation and solid trading activity, supported by a robust liquidity position [9][10] Interactive Brokers Group Inc. (IBKR) - IBKR's revenue growth is supported by proprietary software development, lower compensation expenses, and an expanding global footprint, with expected revenue and earnings growth rates of 5.5% and 8.1% respectively for next year [12][13] Fair Isaac Corp. (FICO) - FICO benefits from strong performance in its Scores and Software segments, with expected revenue and earnings growth rates of 19.7% and 31.3% respectively for the current year [16] - The company is expanding its scoring models and has seen increased adoption of its software solutions [15] SoFi Technologies Inc. (SOFI) - SOFI is positioned as a leader in online banking services, with expected revenue and earnings growth rates of 25.5% and 65.1% respectively for next year [19] - The company focuses on innovation and strategic partnerships to enhance its market presence [18] Moody's Corp. (MCO) - Moody's is expanding through strategic acquisitions and has a strong position in the credit rating industry, with expected revenue and earnings growth rates of 6.8% and 11.3% respectively for next year [23] - The company is benefiting from a rebound in bond issuance volume and has made significant acquisitions to enhance its market presence [22]

Core Insights - Fair Isaac, commonly known as FICO, is recognized as the most predictive and inclusive credit-scoring model in the market according to their latest earnings call [1] Company Overview - FICO has established itself as a leader in the credit-scoring industry, emphasizing the predictive capabilities of its model [1] Market Position - The company’s credit-scoring model is noted for its inclusivity, which may provide a competitive advantage in the financial services sector [1]

Core Insights - Fair Isaac Corporation (FICO) is a software company specializing in analytic, software, and digital decisioning technologies, with a market cap of $42.4 billion [1] Performance Overview - FICO has significantly underperformed the broader market, with stock prices dropping 25.8% over the past 52 weeks and 12.2% year-to-date, while the S&P 500 Index has returned 12% and 14% respectively [2] - The company also lagged behind the Technology Select Sector SPDR Fund, which saw a 19.7% increase over the past 52 weeks and 20.3% year-to-date [3] Financial Results - Following the release of Q3 results on November 5, FICO's stock gained 2.8%. The company's topline for the quarter increased 13.6% year-over-year to $515.8 million, surpassing consensus estimates by 78 basis points [4] - Adjusted EPS for the quarter rose 18.3% year-over-year to $7.74, exceeding market expectations [4] Future Projections - For the full fiscal year 2025, analysts project an adjusted EPS of $33.66, reflecting a 34.3% year-over-year increase. FICO has a mixed earnings surprise history, missing estimates once and surpassing them three times in the past four quarters [5] - Among 18 analysts covering FICO, the consensus rating is a "Moderate Buy," with 10 "Strong Buys," three "Moderate Buys," four "Holds," and one "Strong Sell" [5] Analyst Ratings - On November 6, JP Morgan analyst maintained a "Neutral" rating on FICO, raising the price target from $1,750 to $1,825. The mean price target of $2,005.56 indicates a 14.7% premium to current price levels, while the highest target of $2,400 suggests a 37.2% upside potential [7]

Core Insights - Fair Isaac Inc. (NYSE:FICO) shares are currently priced at $1753.49, reflecting a 1.94% decrease in the current market session, with a 5.17% increase over the past month and a 26.43% decline over the past year [1] Group 1: P/E Ratio Analysis - The price-to-earnings (P/E) ratio is a critical metric for long-term shareholders to evaluate the company's market performance against historical earnings and industry standards [5] - Fair Isaac's P/E ratio is lower than the software industry's aggregate P/E of 100.4, suggesting that the stock may be undervalued or that shareholders do not expect it to perform better than its peers [6] - While a lower P/E can indicate undervaluation, it may also imply a lack of expected future growth, necessitating the use of this metric alongside other financial indicators and qualitative analyses for informed investment decisions [9][10]

Core Insights - A new partnership between FICO and Plaid aims to enhance lending opportunities for consumers with limited credit history by providing real-time cash flow data to lenders [1][2][3] - The collaboration is expected to create a more comprehensive lending decision framework by integrating FICO's credit score intelligence with Plaid's financial data [3][5] - The traditional credit scoring system often disadvantages consumers with substantial savings but limited credit history, prompting the need for more inclusive lending solutions [3][4] Company and Industry Summary - FICO, known for its credit scoring system, is collaborating with Plaid, a fintech company that connects bank accounts with financial applications, to improve access to loans for consumers [1][2] - Plaid's extensive network includes 12,000 financial institutions, allowing it to provide valuable insights into consumer cash flow, which will be utilized by FICO to enhance its credit scoring model [1][2] - The introduction of the UltraFICO score in 2018 represents FICO's effort to create a more inclusive credit assessment by considering checking, savings, and money market accounts alongside traditional credit history [5]

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]

Core Insights - Fair Isaac (FICO) reported a revenue of $515.75 million for the quarter ended September 2025, reflecting a year-over-year increase of 13.7% and surpassing the Zacks Consensus Estimate by 0.78% [1] - The earnings per share (EPS) for the quarter was $7.74, up from $6.54 in the same quarter last year, exceeding the consensus EPS estimate of $7.34 by 5.45% [1] Financial Performance Metrics - Annual Recurring Revenue (ARR) for the Platform was reported at $263.6 million, slightly below the estimated $267.65 million [4] - Total ARR was $747.3 million, missing the average estimate of $761.69 million [4] - Non-Platform ARR stood at $483.7 million, compared to the estimated $494.05 million [4] - Revenue from Scores was $311.55 million, exceeding the average estimate of $303.78 million, with a year-over-year increase of 25% [4] - Software revenue was $204.2 million, slightly below the estimate of $210.53 million, showing a minor decline of 0.2% year-over-year [4] - Professional services revenue was $21.81 million, marginally below the average estimate of $21.87 million, reflecting a year-over-year decrease of 4.8% [4] - Business-to-consumer Scores revenue was $56.32 million, compared to the estimate of $57.73 million, with an increase of 8.2% year-over-year [4] - On-premises and SaaS software revenue was $182.39 million, below the estimate of $189.13 million, with a year-over-year increase of 0.4% [4] - Business-to-business Scores revenue was $255.32 million, exceeding the estimate of $247.78 million, with a significant year-over-year increase of 29.5% [4] - Operating income for Software was $55.69 million, below the average estimate of $68.79 million [4] - Operating income for Scores was $272.79 million, surpassing the estimate of $263.74 million [4] Stock Performance - Fair Isaac's shares have returned +7.2% over the past month, outperforming the Zacks S&P 500 composite's +1.4% change [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating potential for outperformance in the near term [3]