Why Is Fair Isaac (FICO) Up 1.5% Since Last Earnings Report?

It has been about a month since the last earnings report for Fair Isaac (FICO Quick QuoteFICO - Free Report) . Shares have added about 1.5% in that time frame, underperforming the S&P 500. But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Fair Isaac due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.Fair Isaac Q3 Earnings Beat Estimates on Scores, Revenues Up Y/Y Revenues rose 25.7% to $674.19 million but missed the consensus mark by 0.75%. The quarter benefited from strong business-to-business Scores demand, led by mortgage pricing, while software growth remained modest. Software annual recurring revenues reached $816 million, up 10% year over year, as platform ARR advanced 62%.FICO Scores Segment Extends Lead Mortgage origination revenues surged 97% year over year, with volumes rising in the low-single digits. Mortgage originations accounted for 71% of B2B revenues and 62% of total Scores revenues. Auto originations revenues increased 15% year over year, while credit card, personal loan, and other originations revenues rose 9%. The FICO Score 10T Adopter Program expanded to 70 lenders and represented $587 billion in eligible annual originations and $1.87 trillion in eligible annual servicing. FICO also signed direct licensing agreements with resellers representing about 60% of U.S. mortgage volume and remained in discussions that could bring coverage closer to 90%.Fair Isaac Software Mix Shifts to Platform Platform revenues jumped 66% and exceeded non-platform revenues for the first time. Platform ARR reached $413 million and represented 51% of total software ARR. Platform dollar-based net retention was 148% compared with 82% for non-platform software, lifting the total retention rate to 109%. Trailing 12-month software annual contract value bookings rose 39% year over year to $128 million. FICO also expanded its Accenture collaboration to support platform distribution and expects the next-generation FICO Platform, including its enterprise fraud solution, to become generally available later in calendar 2026.FICO Margins Expand Despite Higher Costs Operating income increased 38.1% year over year to $362.6 million. The non-GAAP operating margin expanded to 62% from 57% a year earlier, an improvement of 479 basis points. Management noted that strong B2B Scores growth was partly offset by higher personnel and interest expenses.Fair Isaac's Balance Sheet and Cash Flow Net cash from operating activities was $380.4 million, up from $286.2 million in the prior-year quarter. Free cash flow increased to $370.3 million from $276.2 million. Trailing 12-month free cash flow totaled $961 million, up 28%. FICO repurchased 1.705 million shares for $1.96 billion at an average price of $1,149 per share, marking its largest quarterly repurchase in dollar terms.FICO Raises Fiscal 2026 Outlook Non-GAAP net income guidance increased to $979 million from $946 million, while non-GAAP earnings guidance rose to $42.43 per share from $40.45. The updated view reflects continued Scores momentum and software-platform execution. Fourth-quarter operating expenses are expected to be modestly higher sequentially because of marketing tied to the Accenture partnership and anticipated one-time restructuring charges. Elevated interest rates and affordability pressures also continue to keep mortgage originations below historical norms.How Have Estimates Been Moving Since Then? The consensus estimate has shifted -6.74% due to these changes.VGM Scores Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookPerformance of an Industry Player CoStar reported revenues of $925 million in the last reported quarter, representing a year-over-year change of +18.4%. EPS of $0.32 for the same period compares with $0.17 a year ago. CoStar is expected to post earnings of $0.33 per share for the current quarter, representing a year-over-year change of +43.5%. Over the last 30 days, the Zacks Consensus Estimate has changed -4.8%. CoStar has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C. Beyond Nvidia: AI's Second Wave Is Here The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI's second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era. See Stocks Now >>