FICO grew sales 27%. Why hold back next year's forecast?

FICO grew fourth-quarter revenue 27%, generated more than $1 billion of annual free cash flow and finished the year above its adjusted earnings target. But it has not supplied a forecast for fiscal 2027.

The missing piece is mortgage pricing. The credit-score and analytics company says it is still finalizing mortgage-origination pricing and customer programs for calendar 2027. Higher interest rates and housing-affordability pressures are also weighing on mortgage volumes.

That matters because higher prices, rather than more loan activity, are driving much of the growth in its business-to-business scores revenue. Investors have a strong set of results to examine, but no new annual target to show how the next pricing arrangements might translate into sales and profit.

Higher prices are doing the heavy lifting

Revenue for the quarter ended September 30 reached $657 million, up from $515.8 million a year earlier. The Scores business contributed $413.8 million, an increase of 33%.

Within Scores, business-to-business revenue rose 39%. FICO attributes that increase mainly to higher unit prices, partly offset by lower origination volumes. Revenue from scores sold indirectly to consumers grew 3%.

The pricing decisions still being worked out concern calendar 2027. FICO's fiscal year ends in September, so those customer programs and its next annual reporting period do not cover exactly the same months.

Software has a second growth story

Software revenue rose 19% to $243.2 million. Annual recurring revenue, a measure of the ongoing subscription business rather than revenue recognized during the quarter, grew 14%.

The mix is shifting sharply. Platform recurring revenue increased 72%, while the older non-platform portfolio declined 18%. Total dollar-based net retention was 112%, indicating that the existing customer base expanded its recurring business overall.

That leaves FICO with two distinct questions for the next year: what new mortgage pricing will deliver, and how far platform growth can carry the software portfolio as older products shrink.

A good finish, with a modest sales beat

Fiscal 2026 revenue was $2.535 billion, only slightly above the $2.53 billion forecast FICO issued in July. Adjusted earnings of $42.99 a share exceeded the $42.43 target. Reported earnings of $36.32 a share came in below the $36.86 target.

The fourth-quarter profit figures include several large items. Reported net income was $175 million, or $8.12 a share. That includes a $65 million accrual for a proposed antitrust class-action settlement, a $47.9 million gain from selling a minority equity investment and $27.3 million of restructuring costs.

Adjusted net income, which removes those items as well as stock compensation and related tax adjustments, was $239.3 million, or $11.10 a share. That compares with $187 million and $7.74 a year earlier. A smaller diluted share count also helped earnings per share.

The cash engine is strong. Buybacks were much larger.

Annual operating cash flow reached $1.072 billion. After spending on equipment and capitalized internal-use software, free cash flow was $1.034 billion, up from $739.4 million.

FICO spent $3.046 billion buying back shares, far more than the cash the business generated after those investments. Net borrowing through its credit arrangements and bond issues supplied $2.21 billion during the year.

Debt's balance-sheet carrying amount rose to $5.259 billion from $3.056 billion. Cash ended September at $217.6 million. Strong cash generation and a more indebted balance sheet are both part of the result.

The restructuring also continues into the new year. FICO disclosed its plan to eliminate about 15% of positions in October, with substantial completion expected by its fiscal third quarter of 2027. The charge in these results is part of that previously announced plan.

The FICO company profile tracks the financial results, financing and workforce plan. The missing annual forecast leaves a practical gap: how much of today's price-driven growth does management expect to carry into the new year?