AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-3: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 6/6 · 31/10/2026
Moat69
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 3/4 · Reported use in most U.S. credit decisions, underwriting compatibility and realized score repricing support a strong standard-based advantage. The conclusion does not depend on margins alone; adoption breadth remains issuer-reported.
durability · 3/4 · The disclosed three-decade common framework, continuing usage and pricing outcomes support persistence. Distributor influence, policy exposure and limited technology protection prevent an exceptional durability assessment.
customer dependency · 3/4 · Broad lender use and underwriting compatibility support substantial dependency. Implementation commitments, qualifying multi-year contracts and Platform cohort expansion reinforce it. Switching friction is inferred rather than quantified, and non-platform contraction limits breadth.
erosion resilience · 2/4 · Scores growth and realized repricing demonstrate current resilience. Non-platform ARR and cohort contraction, alongside lower Software margins, demonstrate uneven resilience. Distribution and policy risks remain possibilities rather than proven Scores displacement.
Pricing power63
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 3/4 · Fiscal 2024 B2B growth was attributed primarily to higher unit prices despite lower mortgage-origination volume. Fiscal 2026 third-quarter B2B revenue grew 49%, primarily from higher mortgage-score unit pricing. Software pricing is not separately isolated.
retention · 2/4 · Software DBNRR of 109%, with Platform at 148% and non-platform at 82%, demonstrates mixed repeat-demand outcomes. Scores dependency and revenue growth provide indirect repeat-demand evidence; no Scores retention rate is disclosed, and DBNRR includes price and usage effects.
margin resilience · 3/4 · Nine-month operating income grew faster than revenue, and Scores margins increased from 88% to 90% alongside higher prices and volume. Software margins fell from 31% to 28%, limiting breadth. Margins corroborate observed pricing outcomes rather than independently establishing the moat.
contractual freedom · 2/4 · Actual Scores repricing demonstrates some practical ability to change economics. Qualifying software contracts have terms of at least 24 months and fixed consideration plus usage estimates, constraining portions of near-term pricing; incremental renewal revenue permits some adjustment. Unilateral reset rights are undisclosed.
Predictability100
5 consecutive published annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 100.00
- Revenue growth volatility (pp)
- 4.25
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 3.08
- observedAnnualPeriods
- 5.00
Financial strength39
Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, an original issuer-reported unadjusted EBIT reconciled to net income, income tax and signed net interest, or reported pretax profit plus reported gross interest expense. Reported EBIT is distinct from GAAP operating income and gross interest. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 57.59
- netDebtEbitGrade
- 36.82
- interestCoverageGrade
- 53.82
- currentRatioGrade
- 6.43
- Debt / FCF (x)
- 3.97
- Net debt / operating income (x)
- 3.16
- Interest coverage (x)
- 6.92
- Current ratio (x)
- 0.83
Capital allocation91
Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income, an original issuer-reported unadjusted EBIT reconciled to net income, income tax and signed net interest, or EBIT calculated from reported pretax profit plus reported gross interest expense; the issuer-reported EBIT is distinct from GAAP operating income and gross interest; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. ROIC remains undefined for nonpositive invested capital; the explicit asset-return alternative does not change the ROIC chart. Missing financial inputs alone never trigger an alternative. Does not establish acquisition quality or buyback timing.
- 3-year pre-tax operating return (%)
- 71.99
- 3-year average dilution (%)
- -2.36
- 3-year average SBC / revenue (%)
- 8.25
- cashConversionGrade
- 100.00
Management63
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 1/4 · Nine-month operating cash generation rose to $777.9 million, but $3.1 billion of repurchases substantially exceeded it. A $1.5 billion debt-funded accelerated repurchase and debt growth from $3.1 billion to $5.6 billion show aggressive financing. Repurchase value creation is not demonstrated.
incentive alignment · 3/4 · Ownership guidelines, clawbacks, hedging restrictions and vesting requirements support alignment. Actual MSU outcomes differentiated performance, including a zero payout for the fiscal 2025 one-year tranche. One-year PSU measurement followed by staged vesting and unavailable individual ownership compliance limit the assessment.
execution · 3/4 · Scores growth, Platform ARR expansion, improved operating cash generation and an executed multi-year distribution agreement support strong execution indirectly through operating outcomes. Non-platform contraction and lower Software margins temper the result; management's causal contribution is not separately measured.
governance · 3/4 · An independent chairman, independent committees, annual elections and majority director voting support strong safeguards. The specified supermajority requirement was actually eliminated effective March 4, 2026. Inability to call special meetings, blank-check preferred authority and adopted officer exculpation limit the assessment.
Evidence
Scores Our B2B scoring solutions include the FICO® Score, which is the standard measure of consumer credit risk in the U.S.
Business / Scores / standard measure · Filed 07/11/2025
It is used in most U.S. credit decisions, by nearly all major banks, credit card issuers, mortgage lenders, and auto loan originators.
Business / Scores / lender usage · Filed 07/11/2025
For over three decades it has been the common framework for evaluating and communicating consumer credit risk across consumer credit markets, efficiently enabling billions of decisions across these markets every year in an objective and fair manner.
Proxy / scoring framework history and usage · Filed 27/01/2026
The increase in business-to-business scores revenue was primarily attributable to a higher unit price, partially offset by a decrease in volume of mortgage originations.
MD&A / fiscal 2024 B2B pricing and volume · Filed 06/11/2024
B2B revenue increased 49%, primarily attributable to a higher mortgage origination scores unit price.
Fiscal 2026 third-quarter results / B2B revenue and pricing · Filed 29/07/2026
•Revenues for our Scores segment were $458.9 million during the quarter ended June 30, 2026, a 41% increase from the quarter ended June 30, 2025, and $1.2 billion during the nine months ended June 30, 2026, a 45% increase from the nine months ended June 30, 2025.
MD&A / fiscal 2026 Scores revenue growth · Filed 29/07/2026
mortgage market may be constrained by the pricing and other business practices of the consumer reporting agencies, which could have a material adverse effect on our revenues, results of operations and stock price.
Risk factors / mortgage distribution pricing constraints · Filed 07/11/2025
We also derive a substantial portion of our Scores segment revenues and operating income from our contracts with the three major consumer reporting agencies in the U.S., Experian, TransUnion and Equifax, and other parties that distribute our products to certain markets.
Risk factors / dependence on consumer reporting agency contracts · Filed 07/11/2025
In addition, certain of our distributors and partners presently compete with us and may compete with us in the future, either by developing competitive products themselves or by distributing competitive offerings.
Risk factors / competition from distributors and partners · Filed 07/11/2025
Other changes implemented by FHFA, Fannie Mae or Freddie Mac could also affect the demand for FICO Scores and thus could have similar adverse effects on our business, including, for example, a change permitting mortgage originators to underwrite loans using credit scores from only two of the three national consumer reporting agencies (a “bi-merge report”) rather than from all three (a “tri-merge report”).
Risk factors / possible mortgage reporting policy changes · Filed 06/11/2024
This protection of our proprietary technology is limited, and our proprietary technology could be used by others without our consent.
Risk factors / limits on proprietary technology protection · Filed 07/11/2025
Both scores maintain the same score to risk relationship as standard FICO® Scores, enhancing their compatibility with existing credit underwriting systems and models.
Business / score compatibility with underwriting systems · Filed 07/11/2025
Customers are often cautious in making decisions to acquire our products because purchasing our products typically involves a significant commitment of capital and may involve shifts by the customer to a new software and/or hardware platform or changes in the customer’s operational procedures.
Risk factors / customer implementation and operational commitments · Filed 07/11/2025
The following table summarizes our DBNRR for on-premises and SaaS software exiting each of the dates presented:
September 30, 2024
December 31,
2024
March 31,
2025
June 30,
2025
September 30, 2025
December 31,
2025
March 31,
2026
June 30,
2026
DBNRR
Platform
123
%
112
%
110
%
115
%
112
%
122
%
136
%
148
%
Non-platform
99
%
100
%
96
%
97
%
97
%
91
%
90
%
82
%
Total
106
%
105
%
102
%
103
%
102
%
103
%
109
%
109
%
RESULTS OF OPERATIONS
We are organized into two reportable segments: Scores and Software.
MD&A / Software DBNRR through June 30, 2026 · Filed 29/07/2026
Our calculation includes the positive impact among this cohort of customers of selling additional products, price increases and increases in usage-based fees, and the negative impact of customer attrition, price decreases, and decreases in usage-based fees during the period.
MD&A / components included in DBNRR · Filed 29/07/2026
We only include contracts with an initial term of at least 24 months and we exclude perpetual licenses and other software revenues that are non-recurring in nature.
MD&A / qualifying software contract duration · Filed 29/07/2026
The expected contract value equals the fixed amount — including guaranteed minimums, if any — stated in the contract, plus estimates of future usage-based fees.
MD&A / fixed consideration and estimated usage fees · Filed 29/07/2026
On June 30, 2026, Software Annual Recurring Revenue (ARR) was up 10% year-over-year, consisting of a 62% increase in platform ARR and a 17% decline in non-platform ARR.
Fiscal 2026 third-quarter results / Platform and non-platform ARR · Filed 29/07/2026
Software segment operating income as a percentage of segment revenue decreased to 28% from 31%, primarily attributable to an increase in third-party data center hosting costs and a decrease in sales of higher-margin software recognized at a point in time.
MD&A / nine-month Software margin decline · Filed 29/07/2026
We encounter competition from several sources, including: •in-house analytic and systems developers; •developers and providers of neural networks, machine learning, and AI systems; •fraud solutions providers; •scoring model builders; •providers of credit reports and credit scores, including consumer reporting agencies; •software companies supplying predictive analytic modeling, rules, or analytic development tools; •entity resolution and social network analysis solutions providers; •providers of customer engagement and risk management solutions; •providers of account workflow management software; •business process management and decision rules management providers; •enterprise resource planning and customer relationship management solutions providers; •business intelligence solutions providers; •providers of automated application processing services; and •third-party professional services and consulting organizations.
Competition / generic competitor categories · Filed 07/11/2025
Scores segment operating income as a percentage of segment revenue increased to 90% from 88%, primarily due to higher business-to-business scores revenue driven by both a higher unit price and an increase in volume of mortgage origination scores.
MD&A / nine-month Scores margins, pricing and volume · Filed 29/07/2026
1 Table of Contents FAIR ISAAC CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Unaudited) Quarter Ended June 30, Nine Months Ended June 30, 2026 2025 2026 2025 (In thousands, except per share data) Revenues: On-premises and SaaS software $ 196,969 $ 187,915 $ 584,421 $ 557,752 Professional services 18,322 24,191 54,999 60,343 Scores 458,897 324,309 1,238,404 857,023 Total revenues 674,188 536,415 1,877,824 1,475,118 Operating expenses: Cost of revenues 87,017 87,571 265,477 262,546 Research and development 53,708 47,212 157,536 137,394 Selling, general and administrative 170,835 139,114 455,669 387,484 Total operating expenses 311,560 273,897 878,682 787,424 Operating income 362,628 262,518 999,142 687,694 Interest expense, net (59,877) (32,899) (146,462) (93,765) Other income, net 11,908 7,372 9,939 6,207 Income before income taxes 314,659 236,991 862,619 600,136 Provision for income taxes 77,487 55,202 202,616 103,204 Net income 237,172 181,789 660,003 496,932 Other comprehensive income (loss): Foreign currency translation adjustments (536) 13,003 (4,031) 3,356 Comprehensive income $ 236,636 $ 194,792 $ 655,972 $ 500,288 Earnings per share: Basic $ 10.46 $ 7.49 $ 28.28 $ 20.41 Diluted $ 10.45 $ 7.40 $ 28.12 $ 20.12 Shares used in computing earnings per share: Basic 22,670 24,284 23,341 24,350 Diluted 22,703 24,575 23,470 24,696 See accompanying notes.
Condensed consolidated income statements / revenue and operating income · Filed 29/07/2026
For renewals of existing software subscription contracts, we count only incremental annual revenue expected over the current contract as ACV Bookings.
MD&A / incremental revenue from software renewals · Filed 29/07/2026
Summary of Cash Flows
Nine Months Ended June 30,
Period-to-Period Change
2026
2025
(In thousands)
Cash provided by (used in):
Operating activities
$
777,880
$
555,138
$
222,742
Investing activities
(39,276)
(30,390)
(8,886)
Financing activities
(622,345)
(486,792)
(135,553)
Effect of exchange rate changes on cash
(1,951)
426
(2,377)
Increase in cash and cash equivalents
$
114,308
$
38,382
75,926
Cash Flows from Operating Activities
MD&A / nine-month cash flows · Filed 29/07/2026
•Total share repurchases during the quarter ended June 30, 2026 were $2.3 billion, compared with $511.3 million during the quarter ended June 30, 2025, and during the nine months ended June 30, 2026 were $3.1 billion, compared with $878.1 million during the nine months ended June 30, 2025.
MD&A / executed share repurchases · Filed 29/07/2026
•In June 2026, we amended our credit agreement to provide for a $1.5 billion term loan, the proceeds of which were used to fund an accelerated share repurchase agreement (“ASR Agreement”).
MD&A / term loan used for accelerated share repurchase · Filed 29/07/2026
•Total debt balance was $5.6 billion as of June 30, 2026, compared with $3.1 billion as of September 30, 2025.
MD&A / debt balance increase · Filed 29/07/2026
Quality Pay Practices and Policies Highlights Only “double-trigger” accelerated vesting or payment for equity awards upon a change in control of the Company Executive stock ownership guidelines that require ownership and further align our executive officers’ interests with those of our stockholders; only shares owned outright and time-based full value equity awards count towards meeting these guidelines Prohibition on hedging of Company common stock A compensation recovery, or “clawback,” policy pertaining to all performance-based compensation in the case of a restatement Supplemental clawback policy triggered in the event of misconduct situations that covers annual and long-term incentive compensation, including time-based equity awards Mandatory minimum vesting period of one year for equity awards Annual compensation peer group review with appropriate updates to ensure valid comparisons No tax “gross-ups” allowed except with respect to relocation benefits, required spousal travel and certain required regulatory filings Independent compensation consultant engaged by the LDCC that does not provide any other services to the Company EXECUTIVE COMPENSATION PROGRAM Compensation Philosophy and Objectives Our compensation program is designed to meet the following objectives: Attract, retain and reward high caliber talent ∎ Attract, retain, motivate and reward our outstanding leaders in a competitive market, who are instrumental in maintaining our position as a leading analytics software company Pay for Performance ∎ Set rigorous performance targets that drive achievement of our financial goals and strategic plans ∎ Responsive payouts that reward leaders for outperformance and result in a lower, or no, payout for results that fall short of high expectations Align Executive and Stockholder Interests ∎ Encourage long-term, sustained value creation for stockholders ∎ Heavily weight equity incentives to maximize alignment between executives’ pay outcomes and stockholder experience Account for Individual Performance ∎ Calibrate pay levels and opportunities relative to individuals’ contributions and track record of performance Fair Isaac Corporation l 2026 Proxy Statement 43 Table of Contents Proxy Summary Board of Directors Corporate Governance Executive Compensation Audit Committee Matters Charter Amendments Stock Ownership Other Matters 2025 Elements of Compensation The fiscal 2025 executive compensation program consisted of the following key elements.
Executive compensation / ownership, clawbacks and pay policies · Filed 27/01/2026
The number of MSUs earned for each performance period is calculated as follows: The relative return factor for each performance period of the fiscal 2025 MSUs is determined based on the Company’s total shareholder return relative to the S&P 500 Index for such performance period, with performance at the 55th percentile of the Index required to achieve target payout, as follows (with earned amounts interpolated between relative performance points): Fair Isaac Corporation l 2026 Proxy Statement 51 Table of Contents Proxy Summary Board of Directors Corporate Governance Executive Compensation Audit Committee Matters Charter Amendments Stock Ownership Other Matters The following table sets forth, for the applicable performance period that includes fiscal 2025 for each of the MSUs granted in fiscal 2025, 2024 and 2023, the Company’s TSR and percentile of performance relative to the TSR of the applicable comparator group – the S&P 500 Index for fiscal 2025 MSUs and the Russell 3000 Index for fiscal 2024 and 2023 MSUs - which on a relative basis for each performance period resulted in the relative return factor reported for each performance period: Award Performance Period Total TSR of FICO Russell 3000 Index TSR percentile(1) S&P 500 Index TSR percentile MSUs Earned (as a percentage of target) FY23 MSU 3-Year 251.33% 72.83% n/a 200% FY24 MSU 2-Year 80.92% 53.48% n/a 181% FY25 MSU 1-Year -19.87% n/a 5.05% 0% (1) Performance for MSUs granted prior to FY25 is determined based on the Company’s TSR performance relative to the Russell 3000 Index, with target payout awarded for performance matching the index, and scaling ranging as follows (with earned amounts interpolated between relative performance points): (i) 0% of target earned for relative performance of -25% or less; (ii) 50% of target earned for relative performance of -12.5%; (iii) 100% of target earned for performance matching the index; (iv) 150% of target earned for relative performance of +16.67%; and (v) 200% of target earned for relative performance of +33.33% or greater.
Executive compensation / realized relative-return award outcomes · Filed 27/01/2026
Performance Share Units (“PSUs”). The PSUs granted in fiscal 2025 were earned on the basis of a one-year performance period, with any earned shares vesting in equal installments over the first three anniversaries of the date of grant.
Executive compensation / PSU measurement and vesting periods · Filed 27/01/2026
Charter Amendments
Stock
Ownership
Other
Matters
Corporate Governance Highlights
Board and Committee Summary
Number of Director Nominees
8
Number of Independent Director Nominees
7
Board Committees Consist Entirely of Independent Directors
Yes
All Directors Attended at least 75% of Meetings Held
Yes
Annual Election of All Directors
Yes
Majority Voting for Directors
Yes
Plurality Carveout for Contested Elections
Yes
Director Resignation Policy
Yes
Separate Chairman and CEO
Yes
Chairman is Independent Director
Yes
Independent Directors Meet Regularly in Executive Session
Yes
Annual Board and Committee Self-Evaluations
Yes
Risk Oversight by Full Board and Committees
Yes
Annual Advisory Vote on Executive Compensation
Yes
Prohibit Hedging and Short Sales of FICO Securities
Yes
Stock Ownership Requirements for Directors and Executive Officers
Yes
Executive Compensation Recovery Policy
Yes
Stockholder Rights Summary
Controlled Company
No
Classified Board
No
Vote Standard for Charter or Bylaw Amendment
Majority*
Stockholder Ability to Call Special Meetings
No
Stockholder Ability to Act by Written Consent
Yes
Cumulative Voting
No
Board Ability to Issue Blank-Check Preferred Stock
Yes
Poison Pill
No
* “Majority” with respect to the vote standard for a charter or bylaw amendment refers to the affirmative vote of the holders of a majority of the outstanding shares of the Company entitled to vote thereon.
Corporate governance / board structure and stockholder rights · Filed 27/01/2026
As reported below in Item 5.07, at the 2026 Annual Meeting of Stockholders (the “Annual Meeting”) of Fair Isaac Corporation (the “Company”) on March 4, 2026, the stockholders of the Company approved (i) an amendment to the Company’s Restated Certificate of Incorporation to allow for exculpation of officers as permitted by Delaware law, and (ii) an amendment to the Company’s Restated Certificate of Incorporation to eliminate the supermajority voting requirement that requires at least 66-2/3% of the voting power of the Company’s outstanding shares to amend or repeal Article 6 thereof (collectively, the “Charter Amendments”).
Item 5.03 / approved charter amendments · Filed 05/03/2026
The Charter Amendments became effective upon the filing of a Certificate of Amendment (the “Certificate of Amendment”) to the Restated Certificate of Incorporation with the Secretary of State of the State of Delaware on March 4, 2026.
Item 5.03 / charter amendments effective March 4, 2026 · Filed 05/03/2026
mortgage industry. We entered into a multi-year direct license and distribution agreement with Xactus, a fintech and market leader in verification solutions for the mortgage industry and the largest credit verification and tri-merge provider of FICO® Scores, for it to participate in the FICO Mortgage Direct License Program.
Business highlights / executed Xactus distribution agreement · Filed 27/01/2026
