Fair Isaac Q1 Earnings Call Highlights

Core Insights - FICO reported a strong fiscal first-quarter 2026 performance with revenue of $512 million, a 16% increase year-over-year, and non-GAAP earnings per share rising to $7.33, up 27% [4][6] Scores Segment Performance - The Scores segment revenue reached $305 million, up 29% from the previous year, driven by a 60% increase in mortgage originations, which accounted for 51% of B2B Scores revenue and 42% of total Scores revenue [2][6] - B2B Scores revenue increased by 36%, primarily due to higher pricing and increased mortgage origination volume, while B2C Scores revenue grew by 5% [2][6] Capital Management - FICO returned $163 million to shareholders through share repurchases, buying back 95,000 shares at an average price of $1,707 per share [3][6] - The company generated free cash flow of $165 million in the quarter, totaling $718 million over the last four quarters, which is a 7% increase year-over-year [3][6] Direct Licensing Program - The Direct Licensing Program expanded with the addition of several resellers, including MeridianLink, and is expected to support FICO Score 10T in the first half of 2026 [5][7][9] - Management noted that the five resellers discussed represent approximately 70%-80% of the total reseller market [8] Software Segment Insights - Software segment revenue was $207 million, a 2% increase year-over-year, with record software ACV bookings of $38 million in the quarter [12][13] - Total software ARR was $766 million, up 5% year-over-year, with platform ARR rising 33% to $303 million, representing 40% of total ARR [13][14] Operating Expenses and Margins - Operating expenses were $278 million, slightly down from the previous quarter, with a non-GAAP operating margin of 54%, up from 50% year-over-year [16][17] - The company maintained expectations for a full-year net effective tax rate of 24% and an operating tax rate of 25% [17] Financial Position - FICO ended the quarter with $218 million in cash and marketable investments and $3.2 billion in total debt at a weighted average interest rate of 5.22% [18][19] - The company has a $415 million balance on its revolving credit line and reiterated its fiscal 2026 guidance amid macroeconomic uncertainties [19]