Fair Isaac (FICO) Q4 FY2026 Earnings Call: Q&A Summary

Q: Manav Patnaik of Barclays asked about the number of different pricing programs expected for next year.

A: CEO Will Lansing stated there are multiple programs, some announced and some still in progress, and the company will make additional announcements as appropriate.

Q: Manav Patnaik of Barclays asked if the preferred program is popular.

A: Will Lansing confirmed the preferred program is popular and gaining uptake, though it is not the only option available.

Q: Simon Clinch of Rothschild & Co Redburn asked about the pain points being addressed and if VantageScore is being used as a negotiation point.

A: Will Lansing explained the company is moving away from a one-size-fits-all approach to be more responsive to customer needs, noting they are flexible in how they bring intellectual property to market.

Q: The operator asked for clarification on the contract terms for the preferred program.

A: Will Lansing noted that terms are bespoke and vary by customer, with some arrangements being annual and others differing based on specific needs.

Q: Ashish Sabadra of RBC Capital Markets asked if pricing will be flat, up, or down next year.

A: Will Lansing stated the company will not share pricing details or program specifics, noting that past transparency has not been helpful for the business.

Q: Faiza Alwy of Deutsche Bank asked why a customer might choose not to sign up for the preferred program.

A: Will Lansing declined to provide details on other programs or the reasons behind specific customer choices.

Q: Alexander Hess of JPMorgan asked if the preferred program includes a stick, such as exclusivity.

A: Will Lansing clarified there is no stick and the program is popular because it provides price stability and resembles business as usual.

Q: George Tong of Goldman Sachs asked what portion of 2027 mortgage originations will be under committed agreements.

A: Will Lansing stated the company will not provide details on the percentage of volume in specific programs.

Q: Curtis Nagle of BofA asked if the goal of bespoke pricing is to optimize for price or volume.

A: Will Lansing explained the company considers both factors, aiming to retain volume in the face of competition while meeting EPS commitments to shareholders.

Q: Jason Haas of Wells Fargo asked if lenders are having downstream issues with VantageScore that necessitate using FICO.

A: Will Lansing noted that FICO is used in most secondary market cases and suggested consulting VantageScore regarding any issues they may have.

Q: Jason Haas of Wells Fargo asked for an update on the direct licensing program timeline and 10T approval.

A: Will Lansing stated the direct licensing program is live via the preferred program, though computation by tri-merge resellers is pending GSE approval, and 10T is under review by GSEs but approved for FHA use starting January 1, 2027.

Q: Jeff Meuler of Baird asked if the prior performance model is still an option for 2027.

A: Will Lansing confirmed the model has not been withdrawn and remains an option, though it is still pending GSE certification.

Q: Jeff Meuler of Baird asked if new programs change client use rights or tap into new payer types.

A: Will Lansing replied that they do not at this time.

Q: Surinder Thind of Jefferies asked how the FHA uses credit scores given that both 10T and VantageScore may be available.

A: Will Lansing stated the FHA uses 10T as part of a broader credit evaluation.

Q: Surinder Thind of Jefferies asked for an update on conversations with regulators.

A: Will Lansing stated that conversations are ongoing and progress is being made, but he had no specific update.

Q: Ryan Griffin of BMO Capital Markets asked about the outlook for 10T adoption in 2027.

A: Will Lansing stated that 10T is the best score available and expects 2027 to be a big year for its adoption.

Q: Ryan Griffin of BMO Capital Markets asked about core gaming and unified LLPA grades.

A: Will Lansing stated that gaming is real and a unified grid does not make sense because it underprices risk, specifically noting that Vantage is not being priced properly.

Q: Patrick O'Shaughnessy of Raymond James asked if VantageScore's entry into the conforming market has impacted other parts of the Scores business.

A: Will Lansing stated they have not seen any impact.

Q: Kevin McVeigh of UBS asked if the sales exercise has changed given the shift to direct licensing.

A: Will Lansing explained the company now has a dedicated sales force and direct relationships with end customers, which is a significant and positive change from relying on bureaus.

Q: Kevin McVeigh of UBS asked about the regulatory outlook following the election.

A: Will Lansing declined to speculate on political outcomes but noted that the mortgage industry relies on quality IP and there is pent-up demand for 10T.

Q: Faiza Alwy of Deutsche Bank asked about expected savings from the restructuring program.

A: CFO Steve Weber stated that much of the savings will be reinvested into distribution and AI, and the restructuring was a reallocation of resources rather than a move to hit a specific margin target.

Q: Alexander Hess of JPMorgan asked for color on the outlook for the business excluding mortgage.

A: Steve Weber stated the company does not guide on individual pieces of the business.

Q: Owen Lau of Clear Street asked about the traction of platform ARR growth.

A: Nikhil Barrel, head of the software business, noted strong adoption across the consumer life cycle, particularly as customers expand from initial use cases to multiple platform solutions.

Q: Owen Lau of Clear Street asked if the custom pricing strategy applies to segments beyond mortgage.

A: Will Lansing stated it is primarily mortgage, but the company is exploring all options to be responsive to the market.

Q: Patrick O'Shaughnessy of Raymond James asked about the targeted margin profile post-restructuring.

A: Will Lansing and Steve Weber stated there is no public margin target, as the goal is to balance growth with margin expansion.

Q: Kyle Peterson of Needham asked if the fourth quarter platform ARR growth rate is a reasonable baseline.

A: Will Lansing and Steve Weber declined to provide forward-looking views on growth rates but noted they expect high platform growth rates in 2027.

Q: Kyle Peterson of Needham asked about capital deployment and when the company might resume buybacks.

A: Will Lansing and Steve Weber stated the company expects to be back in the market for buybacks after a one or two-quarter pause to lower leverage.

Q: Curtis Nagle of BofA asked what drove the acceleration in software revenue in the fourth quarter.

A: Steve Weber and Nikhil Barrel attributed the performance to strong bookings over the last 1.5 years, migrations to the platform, and strong product-market fit.

Q: Scott Wurtzel of Wolfe Research asked for directional guidance on mortgage volumes.

A: Will Lansing stated the company does not share internal estimates on industry volumes.