FICO Momentum Continues
FICO Exceeds Q3 EPS Expectations, Boosts Guidance Amidst Robust Platform Growth
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Key Points
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UltraFICO has become generally available, expanding access to subprime and near-prime borrowers.
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FICO Platform momentum is notable, with platform ARR up 62% to about $413 million and platform net retention at 148%; for the first time, platform revenue exceeded non-platform revenue.
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The mortgage Direct Licensing Program launch remains delayed pending certification from a GSE, with reseller agreements covering roughly 60% of mortgage volume.
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Mortgage revenue rose about 96% year over year despite roughly 100% price increases and low-single-digit mortgage volume growth, contributing to an industry-leading gross margin of about 84% over the last-twelve-month period.
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Management guided fourth-quarter mortgage origination volumes to be roughly flat year over year, and signaled approval for its Data, Logic and Products program soon.
Wells Fargo kept its Overweight rating on Fair Isaac (FICO) and raised its price target to $1,450, even as the stock has dropped about 21% this year. The move came after FICO posted a solid but mixed Q3 fiscal 2026 report — earnings beat expectations while revenue came in just short, according to Benzinga and Yahoo Finance.
FICO earned $12.18 per share on a non-GAAP basis, up 42.1% year over year. Revenue rose 25.7% to $674.1 million but missed analyst estimates. Seeking Alpha noted the stock fell on the revenue shortfall, even as the company raised its full-year guidance.
FICO Platform Crosses a Major Revenue Milestone
FICO's software platform had a breakout quarter. Platform annual recurring revenue (ARR) — the money FICO expects to collect each year from software contracts — jumped 62% to about $413 million. For the first time ever, platform revenue topped non-platform revenue. Net retention hit 148%, meaning existing customers are spending far more than they did a year ago, according to Seeking Alpha.
UltraFICO, a product that helps lenders reach subprime and near-prime borrowers, became generally available this quarter. That expands FICO's reach into a new pool of consumers who previously lacked access to credit scores. The platform's growing strength is a key reason Wells Fargo stayed bullish, per Benzinga.
Mortgage Revenue Surges 96% Despite Market Headwinds
FICO's mortgage business delivered a standout result. Mortgage revenue rose roughly 96% year over year, driven by price increases of about 100% and modest low-single-digit volume growth. Gross margins over the last twelve months reached about 84%, a class-leading figure for the industry, according to Seeking Alpha.
Management guided for mortgage origination volumes to be roughly flat year over year in Q4. A key pricing program — the Direct Licensing Program — remains delayed. It is waiting on certification from a government-sponsored enterprise (GSE), a federal body that backs mortgage loans. Reseller agreements currently cover about 60% of mortgage volume, filling the gap for now.
FICO Spent $2 Billion Buying Back Its Own Stock
FICO completed a massive share repurchase of roughly $2 billion during the quarter. To fund it, the company took on more debt, pushing total debt to about $5.6 billion. Management signaled its near-term priority will be paying down that debt rather than doing more buybacks right away, per Yahoo Finance.
The buyback shows confidence in FICO's long-term value. But the added debt load is something investors will watch closely. Higher debt means more interest costs, which can weigh on future earnings if growth slows.
Analysts Stay Bullish as Stock Lags the Broader Market
Beyond Wells Fargo's raised target of $1,450, RBC Capital also kept its Outperform rating on FICO, though it trimmed its price target to $1,525, according to Benzinga. Both firms see room for the stock to recover after its rough year. FICO shares are down about 21% in 2026, lagging the S&P 500 by a wide margin.
Investors are weighing strong earnings growth and pricing power against two concerns: the delayed mortgage licensing program and a shift in revenue mix toward software from scores. The scores business has historically carried higher margins, so any mix shift matters. Still, the platform's 148% net retention rate signals customers are deepening their commitment to FICO's software ecosystem.
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