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]

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]

Financial Performance - Total revenue for Q4 2025 was $5158 million, a decrease of 4% compared to Q3 2025, but an increase of 14% compared to Q4 2024[3] - Scores revenue in Q4 2025 reached $3116 million, down 4% from Q3 2025, but up 25% year-over-year[3] - Software revenue in Q4 2025 was $2042 million, a decrease of 4% compared to Q3 2025, and flat compared to Q4 2024[3] - Software ARR increased to $7473 million, a 1% increase quarter-over-quarter and a 4% increase year-over-year[3] - ACV Bookings for software reached $327 million, a 22% increase quarter-over-quarter and a 48% increase year-over-year[3] - Non-GAAP diluted EPS was $774, a decrease of 10% quarter-over-quarter, but an increase of 18% year-over-year[3] - Adjusted EBITDA was $2866 million, down 8% quarter-over-quarter, but up 18% year-over-year[3] - Full year revenues reached $235 billion[26] Segment Performance - Scores operating income was $2728 million in Q4 2025, a decrease of 4% quarter-over-quarter, but an increase of 24% year-over-year, with an operating margin of 88%[25] - Software operating income was $557 million in Q4 2025, an 18% decrease both quarter-over-quarter and year-over-year, with an operating margin of 27%[25] Balance Sheet - Cash and investments decreased to $1888 million, a 21% decrease quarter-over-quarter and a 4% decrease year-over-year[24] - Total assets increased to $18681 billion, a 0% increase quarter-over-quarter and a 9% increase year-over-year[24]

Group 1 - Fair Isaac Corporation (FICO) has launched the FICO Mortgage Direct License Program, which changes how FICO Scores are delivered and priced in the mortgage industry [1] - The new program allows tri-merge resellers to directly calculate and distribute FICO Scores, eliminating reliance on the three nationwide credit bureaus [1][2] - This shift is expected to enhance price transparency and provide immediate cost savings, potentially saving lenders up to 50% on per score FICO fees by removing credit bureau mark-ups [2] Group 2 - FICO is introducing two alternative pricing models to offer greater flexibility and choice [2] - The first model is a performance-based pricing structure, with a royalty fee of $4.95 per score, which represents a 50% reduction in average per-score fees for tri-merge resellers [3] - FICO develops software with analytics and digital decisioning technologies that support businesses in automating and enhancing decision-making across various regions [4]

Core Insights - U.S. stocks exhibited mixed performance, with the Dow Jones index declining by over 50 points on Thursday [1] - Taysha Gene Therapies Inc received Breakthrough Therapy designation from the FDA for TSHA-102, leading to a significant share price increase of 50.4% to $4.78 [1] Company Highlights - Taysha Gene Therapies Inc (NASDAQ:TSHA) saw its price target raised from $8 to $10 by Needham analyst Gil Blum, maintaining a Buy rating [1] - Bakkt Holdings Inc (NYSE:BKKT) experienced a 37.2% increase in share price to $46.81 following the completion of its Loyalty Business sale [4] - Canaan Inc – ADR (NASDAQ:CAN) shares surged by 29.8% to $1.35 after announcing a significant sales order for Bitcoin mining machines [4] - Ondas Holdings Inc (NYSE:ONDS) gained 25.5% to $9.18 after securing an initial order of 500 Wasp drones for U.S. defense market distribution [4] - Fair Isaac Corp (NYSE:FICO) shares rose 19.6% to $1,811.61 after launching the FICO Mortgage Direct License Program [4] - AST SpaceMobile Inc (NASDAQ:ASTS) jumped 12.3% to $63.98 after completing final assembly and testing of its BlueBird 6 satellite [4] - Joby Aviation Inc (NYSE:JOBY) rose 9.3% to $17.72, reflecting positive market sentiment [4] - Applied Digital Corp (NASDAQ:APLD) shares increased by 7.7% to $26.93, with crypto-linked stocks trading higher amid a rise in Bitcoin [4]