Fair Isaac Corp 10-K for FY2025
Fair Isaac Corp (FICO)
10-K
2025-11-07
For: 2025-09-30
View Original
Added on
April 12, 2026
About this 10-K
Fair Isaac Corp filed this 10-K on November 7, 2025, covering the fiscal year ended September 30, 2025 (FY2025).
Headline figures
Fiscal year ended September 30, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $1.99B
- up 15.9% from $1.72B a year earlier
- Net income
- $651.95M
- up 27.1% from net income of $512.81M a year earlier
- Diluted EPS
- $26.54
- up 29.8% from $20.45 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the fiscal year ended September 30 , 2025
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from to
Commission File Number 1-11689
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
| (Address of principal executive offices) | (Zip Code) | ||||||||||
Registrant’s telephone number, including area code:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each Class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
| ☒ | Accelerated Filer | ☐ | |||||||||||||||
| Non-Accelerated Filer | ☐ | Smaller Reporting Company | |||||||||||||||
| Emerging Growth Company | |||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
| Yes | ☒ | No | |||||||||
As of March 31, 2025, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was $36,060,682,209 based on the last transaction price as reported on the New York Stock Exchange on such date. This calculation does not reflect a determination that certain persons are affiliates of the registrant for any other purposes.
The number of shares of common stock outstanding on October 23, 2025 was 23,709,047 (excluding 65,147,736 shares held by the Company as treasury stock).
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant’s definitive proxy statement relating to its 2026 Annual Meeting of Stockholders (“2026 Proxy Statement”) are incorporated by reference into Part III of this Annual Report on Form 10-K where indicated. The 2026 Proxy Statement will be filed with the U.S. Securities and Exchange Commission within 120 days after the end of the fiscal year to which this report relates.
TABLE OF CONTENTS
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1
FORWARD-LOOKING STATEMENTS
Statements contained in this report that are not statements of historical fact are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “PSLRA”). In addition, certain statements in our future filings with the Securities and Exchange Commission (“SEC”), in press releases, and in oral and written statements made by us or with our approval that are not statements of historical fact constitute forward-looking statements within the meaning of the PSLRA. Examples of forward-looking statements include, but are not limited to: (i) projections of revenue, income or loss, expenses, earnings or loss per share, the payment or nonpayment of dividends, share repurchases, capital structure and other statements concerning future financial performance; (ii) statements of our plans and objectives by our management or Board of Directors, including those relating to products or services, research and development, and the sufficiency of capital resources; (iii) statements of assumptions underlying such statements, including those related to economic conditions; (iv) statements regarding results of business combinations or strategic divestitures; (v) statements regarding business relationships with vendors, customers or collaborators, including the proportion of revenues generated from international as opposed to domestic customers; and (vi) statements regarding products and services, their characteristics, performance, sales potential or effect in use by customers. Words such as “believes,” “anticipates,” “expects,” “intends,” “targeted,” “should,” “potential,” “goals,” “strategy,” “outlook,” “plan,” “estimated,” “will,” variations of these terms and similar expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those in such statements. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to, those described in Part I, Item 1A, “Risk Factors,” below. The performance of our business and our securities may be adversely affected by these factors and by other factors common to other businesses and investments, or to the general economy. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date they are made. We disclaim any intent or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Readers should carefully review the disclosures and the risk factors described in this and other documents we file from time to time with the SEC, including our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
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PART I
Item 1. Business
GENERAL
Fair Isaac Corporation (NYSE: FICO) (together with its consolidated subsidiaries, the “Company,” which may also be referred to in this report as “we,” “us,” “our,” and “FICO”) is a global analytics software leader. We were founded in 1956 on the premise that data, used intelligently, can improve business decisions. Today, FICO’s software and the widely used FICO® Score operationalize analytics, enabling thousands of businesses in more than 80 countries to uncover new opportunities, make timely decisions that matter, and execute them at scale. Most leading banks and credit card issuers rely on our solutions, as do insurers, retailers, telecommunications providers, automotive lenders, consumer reporting agencies, public agencies, and organizations in other industries. We also serve consumers through online services that enable people to access and understand their FICO Scores — the standard measure of consumer credit risk in the United States (“U.S.”) — empowering them to increase financial literacy and manage their financial health. More information about us can be found on our website, www.fico.com. We make our Annual Reports on Forms 10-K, Quarterly Reports on Forms 10-Q, and Current Reports on Forms 8-K, as well as amendments to those reports, available free of charge through our website as soon as reasonably practicable after we electronically file them with the U.S. Securities and Exchange Commission (“SEC”). References to our website address in this report do not constitute an incorporation by reference. Information on our website is not part of this report.
PRODUCTS AND SERVICES
Our business consists of two operating segments: Scores and Software.
Our Scores segment includes our business-to-business (“B2B”) scoring solutions and services which give our clients access to predictive credit and other scores that can be easily integrated into their transaction streams and decision-making processes. This segment also includes our business-to-consumer (“B2C”) scoring solutions, including our myFICO.com subscription offerings.
Our Software segment includes pre-configured analytic and decision management solutions designed for a specific type of business need or process — such as account origination, customer management, customer engagement, fraud detection, and marketing — as well as associated professional services. This segment also includes FICO® Platform, a modular software offering designed to support advanced analytic and decision use cases, as well as stand-alone analytic and decisioning software that can be configured by our customers to address a wide variety of business use cases. Our offerings are available to our customers as software-as-a-service (“SaaS”) or as on-premises software.
Scores
Our B2B scoring solutions include the FICO® Score, which is the standard measure of consumer credit risk in the U.S. It is used in most U.S. credit decisions, by nearly all major banks, credit card issuers, mortgage lenders, and auto loan originators. Our B2B scoring solutions are primarily distributed through major consumer reporting agencies worldwide. Our B2C scores are sold directly to consumers through our myFICO.com website and other direct-to-consumer channels.
The FICO® Score is a three-digit number ranging from 300-850. Our proprietary analytic algorithms are applied to credit data collected and maintained by the three U.S. national consumer reporting agencies — Experian, TransUnion and Equifax — to produce standard scores that are used across the credit lifecycle, including in origination, account management and consumer marketing. Users of our scores generally pay the consumer reporting agencies a fee for each individual score generated by our algorithms, and the consumer reporting agencies pay an associated fee to us. Except for product development using de-personalized data, FICO does not collect or store the consumer credit data used in the calculation of our scores, and in most cases, we do not sell our scores directly to lenders or other end-users.
Since the introduction of the FICO® Score in the U.S. in 1989, we have regularly updated the score to take advantage of newly available data and enhanced analytics. FICO® Score 9 introduced the utilization of reported rental payment history, while also de-emphasizing medical debt and disregarding paid collections. Our most recent and most predictive scores, FICO® Score 10 and 10 T, were introduced in 2020. To increase its predictive power, FICO Score 10 T builds on FICO Score 10 but also incorporates trended credit data. Trended data considers a longer historical view, giving lenders even more insight into how individuals are managing their credit. Updated versions of our FICO Scores are generally designed to provide greater predictive accuracy than the scores they replace, and to be compatible with prior versions of the FICO Score.
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In addition to the FICO® Score, we offer several other broad-based scores, including specific FICO® Industry Scores. For example, in 2021 we introduced Bankcard and Auto Industry versions of FICO® Score 10. We also develop various custom scores for our financial services clients.
The FICO® Resilience Index offering is designed to complement FICO® Score models by identifying those consumers who are more resilient to economic stress relative to other consumers within the same FICO Score bands. The FICO Resilience Index is designed to enable lenders to continue to lend and better manage risk by providing a more precise assessment of loan default risk during periods of economic stress.
FICO has invested significant resources in the development of scores that can help expand credit access and lower borrowing costs for consumers that have limited credit history or who have sparse or inactive credit files. These scores use alternative data sources to enhance conventional consumer reporting agency data and generate scores for otherwise un-scorable consumers and in many cases improve the credit scores of scorable consumers.
•FICO® Score XD uses public records and property data, and a consumer’s history with mobile phone, landline phone and cable payments, to generate scores on the same 300-850 scale as standard FICO® Scores. FICO Score XD is available to lenders through our distribution partners, LexisNexis Risk Solutions and Equifax.
•The UltraFICO® Score uses consumer-permissioned data such as checking, savings, or money market account data, to generate scores on the same 300-850 scale as standard FICO® Scores. Incorporating consumer-permissioned data helps empower consumers to establish or improve their creditworthiness by using data that reflects sound financial activity, but that is not part of a conventional credit report.
Both scores maintain the same score to risk relationship as standard FICO® Scores, enhancing their compatibility with existing credit underwriting systems and models.
Outside the U.S., we offer FICO® Scores for consumer loans, and in some cases for small and medium business loans. These scores are typically sold to end-users through consumer reporting agencies in those countries, as they are in the U.S. FICO Scores have been made available in over 40 countries and we have also developed client-specific versions of the FICO Score in over ten countries.
We also provide FICO® Scores to consumers in the U.S. through our B2C scoring solutions. These Scores are distributed directly by us through our myFICO.com subscription offering and indirectly through our licensed distribution partners, including Experian and certain lenders through the FICO® Score Open Access Program. Through myFICO.com and other direct-to-consumer channels, consumers can purchase their FICO Scores, including credit reports associated with the scores, explanations of the factors affecting their scores, and customized educational information on how to manage their scores. Consumers can use products to simulate how taking specific actions could affect their FICO Score. Consumers can also subscribe to credit monitoring, which delivers alerts via email and text when changes to a user’s FICO Scores or other credit report content are detected. In addition, consumers can purchase identity theft monitoring products that alert them to potential risks of identity fraud.
Software
Our software harnesses the power of analytics and digital decisioning technology to help businesses automate, improve, and connect decisions across their enterprise. Most of our solutions address customer engagement, including acquisition and pricing, onboarding, servicing and management, and fraud protection. We also help businesses improve non-customer facing decisions such as supply chain optimization, scheduling management and policy adherence.
FICO provides software solutions to business customers in more than 80 countries around the world. Our software can be deployed in the cloud utilizing third-party cloud services, or on-premises using our customers’ IT infrastructure. We typically sell our software as multi-year subscriptions, with payments based on usage metrics such as the number of accounts, transactions or decisioning use cases deployed, often subject to contracted minimum payments.
A significant and growing number of our software solutions run natively on FICO® Platform, a modular software offering designed to support advanced analytics and decisioning use cases. While not all our software runs on FICO Platform today, we are continuing to invest significant development resources to enable substantially all of our software to run on FICO Platform in the future.
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Principal Areas of Expertise
We specialize in solutions that empower businesses to operationalize analytics to uncover new opportunities, make timely decisions that matter, and execute them at scale. With more than 65 years of analytics and software experience, we have found that bringing human and digital intelligence together allows our customers to target and acquire customers more efficiently, increase customer value, reduce fraud and credit losses, lower operating expenses, and enter new markets more profitably.
Our principal areas of research and development expertise are focused on the following four analytic domains.
•Predictive Modeling
Predictive modeling identifies and mathematically represents underlying relationships in historical data to make predictions or classifications about future events. Predictive models typically analyze current and historical data about individuals to produce easily understood metrics such as scores. These scores rank-order individuals or specific transactions against a particular variable such as the likelihood of making credit payments on time, the likelihood of a transaction being fraudulent or the probability of responding to a particular offer for services. Our predictive models are frequently used in mission-critical transactional systems and drive decisions and actions in near real time.
Several analytic methodologies underlie our products in this area. These include proprietary applications of both linear and nonlinear optimization algorithms, advanced neural systems, machine learning and artificial intelligence (“AI”). We also apply various statistical techniques for analysis and pattern detection within large datasets and can derive insights and predictive features from various forms of data, including unstructured data.
•Decision Analysis and Optimization
Decision analysis refers to the broad quantitative field that deals with modeling, analyzing, and optimizing decisions made by individuals, groups, and organizations. Whereas predictive models analyze multiple aspects of individual behavior to forecast future behavior, decision analysis analyzes multiple aspects of a given decision to identify the most effective action to take to reach a desired result. This is often referred to as prescriptive analytics. Our integrated approach to decision analysis incorporates a decision model that mathematically maps the entire decision structure; proprietary optimization technology that identifies the most effective strategies, given both the performance objective and constraints; testing and simulation required for active, continuous learning; and the robust extrapolation of an optimized strategy to a wider set of scenarios than historically encountered. Our optimization capabilities also include native support for Python modeling, as well as our own proprietary mathematical modeling and programming language, an easy-to-use authoring environment, a configurable business simulation and scenario management interface and a set of pre-built optimization algorithms.
•Transaction Profiling
Transaction profiling is a patent-protected technique used to extract meaningful information and reduce the complexity of transaction data used in modeling. Many of our products operate using transactional data, such as credit card purchase transactions, consumer interactions, or other types of data that change over time. In its raw form, this data is very difficult to use in predictive models for several reasons. First, an isolated transaction contains very little information about the behavior of the individual who generated the transaction. Second, transaction patterns change rapidly over time. Third, this type of data can often be highly complex. To overcome these issues, we have developed a set of techniques that transform raw transactional data into a mathematical representation that reveals latent information, and which make the data more usable by predictive models. This profiling technology accumulates data across multiple transactions of many types to create and update profiles of transaction patterns. These profiles enable our neural network models to efficiently and effectively make accurate assessments of, for example, fraud risk and credit risk within real-time transaction streams.
•Customer Data Integration
Decisions made about customers or prospects can benefit from data stored in multiple sources, both inside and outside the enterprise. In the areas of analytics and digital decisioning, more data is generally better. We have developed proprietary data ingestion and management tools that are able to assemble and integrate disparate data sources into a unified view of the customer, household, or other subject through the application of persistent keying technology. This data can include structured or unstructured data. In addition, our technology can integrate multiple data sources in real-time and make them available for rapid analysis and decisions such as credit approval, fraud detection and “next best offer” workflows.
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We believe our analytic tools and solutions are among the best commercially available, and that we are uniquely positioned to integrate advanced analytic, software and data technologies into mission-critical business solutions that offer superior returns on investment.
FICO® Platform
FICO® Platform is an analytic and decisioning environment that empowers businesses to configure solutions that orchestrate and operationalize high velocity decisions that matter, at scale. Users of FICO Platform can bring together data from multiple sources, apply advanced analytics to derive insights, and translate those insights into actions and workflows that can be executed in real-time. Based on a modular cloud architecture, FICO Platform can be configured by our customers to solve a vast array of business challenges. FICO Platform delivers increasing value to our customers over time as they add additional analytic capabilities, configure their own solutions or utilize pre-configured solutions to address a diverse set of use cases and integrate disparate analytic and decisioning silos onto a centralized, scalable platform. This drives additional subscription software revenue for FICO over time as customers purchase more FICO Platform capabilities and pay for more usage of those capabilities.
Our goal is to move substantially all of FICO’s current software products onto FICO® Platform. Many capabilities of FICO’s current software products are now part of FICO Platform, addressing use cases such as origination, fraud detection, customer management, and next best action, among others. We believe this strategy of moving our software products to FICO Platform will result in revenue growth through follow-on “land and expand” sales to existing FICO Platform customers and more sales to medium-sized businesses typically served through value-added resellers and systems integrators.
Our annual recurring revenue (“ARR”) from FICO® Platform based products was $263.6 million as of September 30, 2025, representing 35% of our total software ARR. For information about ARR, refer to Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, Annual Recurring Revenue, in this Annual Report on Form 10-K.
Our Offerings
We sell our software primarily as analytic and decisioning software or pre-configured solutions. Our software offerings are sold both individually and as integrated bundles of multiple products.
Analytic and Decisioning Software
FICO analytic and decisioning software offerings use proprietary and open source microservices and capabilities to enable both business users and data scientists to develop and execute advanced analytics and decision modeling. Our key products in this category include:
•FICO® Decision Modeler and FICO® Blaze Advisor® are our core decision rules modeling tools, which enable users to flexibly author and manage decision rules and strategies. FICO Decision Modeler delivers the functionality of our industry leading FICO Blaze Advisor product, with the added benefit of seamless integration into FICO® Platform. FICO Blaze Advisor, the predecessor to FICO Decision Modeler, is available as an off-platform product.
•FICO® Xpress Optimization provides operations research professionals and business analysts with world-class solvers and productivity tools to determine optimal outcomes for a wide range of industry problems. FICO Xpress Optimization includes a powerful modeling and programming language to quickly model and solve even the largest optimization problems. FICO Xpress Optimization runs on FICO® Platform.
•FICO® Analytics Workbench is a predictive analytics tool that allows businesses to create and deploy explainable machine learning models for use in decisions that typically require strict governance and compliance, often including regulatory oversight. FICO Analytics Workbench runs on FICO® Platform.
•FICO® Data Orchestrator is a data retrieval and mapping solution that can access, gather, and transform data from corporate or public facing information services. FICO Data Orchestrator runs on FICO® Platform.
•FICO® DMP Streaming is a real-time and batch data ingestion solution that uniquely delivers in-stream analytics for real-time data insights and complex event processing.
•FICO® Business Outcome Simulator enables business users to run a wide variety of insightful scenarios to assess how their business is likely to perform under varying conditions and assumptions. It unlocks insights into how key outcomes will likely shift in the face of changing competitor strategy, macroeconomic changes, evolving customer preferences, and more. FICO Business Outcome Simulator runs on FICO® Platform.
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•FICO® Decision Optimizer helps business users understand how different customers will react to a variety of different actions that are being considered. Once that link is understood, FICO Decision Optimizer identifies the combination of actions most likely to lead to the desired portfolio outcomes through decisions such as who to offer a new product, what limit and/or price to offer, or how to treat delinquent customers. FICO Decision Optimizer runs on FICO® Platform.
Pre-Configured Solutions
FICO's pre-configured solutions optimize customer interactions in real-time, driving greater customer engagement and improving business results. They enable acquisition and growth marketing, account activation and management, omni-channel communication, risk assessment, and fraud detection and prevention. Key FICO solutions currently offered include:
•FICO® Fraud Solutions empower organizations to safeguard the business and their customers from payments fraud and application fraud. Leveraging advanced analytic capabilities on a large scale and in real-time, FICO Fraud Solutions identify fraud and enable strategies designed to prevent fraud across payment cards, money transfers, and instances where stolen or synthetic identities are exploited to open accounts. Our models are continually improved using a proprietary, global data set of transaction data contributed by more than 10,000 institutions that participate in the FICO® Falcon® Intelligence Network. Certain Fraud Solutions capabilities are available on FICO® Platform today, and we plan to make additional Fraud Solutions capabilities available on FICO Platform in the future.
•FICO® Originations Solution is an application-to-decision credit originations solution. It enables banks, credit unions, finance companies, online lenders, auto lenders, and other companies to automate and improve the processing of requests for credit. Our Originations Solution increases the speed, consistency and efficiency with which requests are handled, reducing losses, and increasing approval rates through the application of sophisticated policies and analytics that assess applicant risk and reduce the need for manual review by underwriters. Originations capabilities are available on FICO® Platform.
•FICO® Customer Communication Service is an intelligent omnichannel digital communication manager for resolving customer interactions. It enables businesses to automate individualized customer dialogues with the same consistency and regulatory compliance as their human agents. With Customer Communication Service, businesses can be available 24/7 for one-way or two-way communication through any channel their consumers choose. Businesses can rapidly launch mobile alerts, messaging, virtual agents, self-service options, and other auto-resolution capabilities. It helps make the full customer journey more efficient and raises the level of data-driven digital intelligence behind lifecycle communications. Customer Communication capabilities are available on FICO® Platform.
•FICO® Strategy Director and FICO® TRIAD® Customer Manager enable businesses to automate and improve risk-based decisions for their existing credit customers. These products help businesses apply advanced analytics in credit account and customer decisions to increase portfolio revenue and reduce risk exposure and losses, while improving customer retention. They also allow users to manage risk and communications at both the account and customer level from a single place. FICO Strategy Director runs on FICO® Platform. FICO TRIAD Customer Manager, the predecessor to FICO Strategy Director, is available as an off-platform product.
FICO® Professional Services
FICO offers a range of professional services designed to help customers install and configure our software, develop and deploy advanced analytics using our software, and improve customer satisfaction and retention.
•FICO® Implementation Services. We often sell software implementation and configuration services in conjunction with our on-premises and SaaS subscriptions, and our license sales. The FICO implementation services team leverages their deep expertise in our products and their extensive industry-specific knowledge to help our customers implement and configure FICO software rapidly and effectively.
•FICO® Analytic Services. We build custom analytics, decision models and related analytics, and perform machine learning projects for clients in multiple industries. These analytic services help to improve critical business processes and operationalize analytics using FICO software products. Most of our engagements utilize predictive analytics, decision modeling and optimization to provide greater insight into customer preferences and help predict future customer behavior.
Our professional services are sold on an hourly time and materials basis or for a fixed project fee.
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MARKETS AND CUSTOMERS
Our scores and software products and services serve clients in multiple industries, including banking, insurance, retail, healthcare and public agencies. End users of our products include three-quarters of each of the largest 100 financial institutions in the U.S. and the largest 100 banks in the world. Our clients also include more than 600 insurers, including eight of the top ten U.S. property and casualty insurers; more than 300 retailers and general merchandisers; and more than 200 government or public agencies. Seven of the top ten companies on the 2025 Fortune 500 list use one or more of our solutions. In addition, our consumer solutions are marketed to more than 200 million U.S. consumers whose credit relationships are reported to the three major U.S. consumer reporting agencies.
The majority of our scores are marketed and sold through consumer reporting agencies. During fiscal 2025, 2024 and 2023, revenues generated from our agreements with Experian, TransUnion and Equifax collectively accounted for 51%, 45% and 41% of our total revenues, respectively. We also sell our scores and credit monitoring directly to consumers through our myFICO.com on-line subscription offerings. Outside of the U.S., we sell our scores through consumer reporting agencies, other third-party distributors, and in some cases directly to large end-users.
We market our software products and services primarily through our own direct sales organization that is organized around vertical and geographic markets. Sales teams are based in our headquarters and in field offices strategically located around the world. We also market our products through indirect channels, including alliance partners and other resellers. As more capabilities are made available on FICO® Platform, we expect our sales through indirect channels to grow. We are investing significant resources to develop our indirect channel relationships.
Our largest market segment is financial services, representing 92% of our total revenue during fiscal 2025. Our largest geographic market is the Americas, representing 87% of our total revenue during fiscal 2025.
COMPETITION
The market for our solutions is intensely competitive and is constantly changing. Our competitors vary both in size and in the scope of the products and services they offer. 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.
We believe we offer customers a unique mix of products, expertise and capabilities that allows us to compete effectively in our target markets. However, many of our competitors are larger than FICO, have more development, sales and marketing resources than FICO, and some have larger shares of our target geographic or product markets.
We believe the principal competitive factors affecting our markets include technical performance; access to unique proprietary analytical models and data; product attributes like adaptability, scalability, interoperability, functionality, and ease-of-use; on-premises and SaaS product availability; product price; customer service and support; the effectiveness of sales and marketing efforts; existing market penetration; and reputation. Although we believe our products and services compete favorably with respect to these factors, we may not be able to maintain our competitive position against current and future competitors.
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Scores
In our Scores segment, we compete with both outside suppliers and in-house analytics. Primary competitors among outside suppliers of scoring models are the three major consumer reporting agencies in the U.S. and Canada, which are also our partners in offering our scoring solutions, and VantageScore (a joint venture entity established by the three major U.S. consumer reporting agencies), which is selling a credit scoring product competitive with our products. Additional competitors include consumer reporting agencies outside the U.S. like CRIF Ratings, which operates in the European Union, and other data providers like LexisNexis and ChoicePoint, some of which also are our partners.
For our offerings that deliver credit scores, credit reports and consumer credit education solutions directly to consumers, we compete with other direct to consumer credit and identity services such as Credit Karma, Credit Sesame, Experian and TransUnion, some of which are also our partners.
Software
The competition in our Software segment varies by application. In the fraud solutions market for banking, we compete primarily with Nice Actimize, Experian, Pegasystems, BAE Systems Applied Intelligence, SAS, ACI Worldwide, IBM, Feedzai and Featurespace. In the customer origination market, we compete with Experian, Equifax, Moody’s, Meridian Link, and CGI, among others. In the customer management market, we compete with Experian and SAS, among others. In the marketing services market, we compete with Pegasystems, Equifax, Experian, SAS, Adobe and Salesforce, among others. In the decision platform market, we compete with Pegasystems, IBM and SAS, among others.
PRODUCT PROTECTION AND TRADEMARKS
We rely on a combination of patent, copyright, trademark and trade secret laws and confidentiality agreements and procedures to protect our proprietary rights.
We retain the title to and protect the suite of models and software used to develop scoring models as a trade secret. We also restrict access to our source code and limit access to and distribution of our software, documentation, and other proprietary information. We have generally relied upon the laws protecting trade secrets and upon contractual nondisclosure safeguards and restrictions on transferability to protect our software and proprietary interests in our product and service methodology and know-how. Our confidentiality procedures include invention assignment and proprietary information agreements with our employees and independent contractors, and nondisclosure agreements with our distributors, strategic partners, and customers. We also claim copyright protection for certain proprietary software and documentation.
We have patents on many of our technologies and have patent applications pending on other technologies. The patents we hold may not be upheld as valid and may not prevent the development of competitive products. In addition, patents may never be issued on our pending patent applications or on any future applications that we may submit. As of September 30, 2025, we held 204 U.S. and 26 foreign patents, with 79 applications pending.
Despite our precautions, it may be possible for competitors or users to copy or reproduce aspects of our software or to obtain information that we regard as trade secrets. In addition, the laws of some foreign countries do not protect proprietary rights to the same extent as do the laws of the U.S. Patents and other protections for our intellectual property are important, but we believe our success and growth will depend principally on such factors as the knowledge, ability, experience and creative skills of our personnel, new products, frequent product enhancements and name recognition.
We have developed technologies for research projects conducted under agreements with various U.S. government agencies or their subcontractors. Although we have acquired commercial rights to these technologies, the U.S. government typically retains ownership of intellectual property rights and licenses in the technologies that we develop under these contracts. In some cases, the U.S. government can terminate our rights to these technologies if we fail to commercialize them on a timely basis. In addition, under U.S. government contracts, the government may make the results of our research public, which could limit our competitive advantage with respect to future products based on funded research.
We have used, registered and/or applied to register certain trademarks and service marks for our technologies, products and services. As of September 30, 2025, we had 23 trademarks registered in the U.S. and select foreign countries.
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GOVERNMENTAL REGULATION
We are subject to a number of U.S. federal, state, local and foreign laws and regulations that involve matters central to our business. Laws and governmental regulation affect how our business is conducted and, in some cases, subject us to the possibility of government supervision or enforcement and future lawsuits arising from our products and services. Laws and governmental regulations also influence our current and prospective customers’ activities, as well as their expectations and needs in relation to our products and services. Laws and regulations that may affect our business and our current and prospective customers’ activities include, but are not limited to, those summarized below.
Many U.S. and foreign jurisdictions have passed, or are currently contemplating, a variety of consumer protection, data privacy, and cyber and data security laws and regulations that may relate to our business or the business of our customers or affect the demand for our products and services. For example, the General Data Protection Regulation (the “GDPR”) in the United Kingdom (“U.K.”) and the European Union (“E.U.”) imposes, among other things, strict obligations and restrictions on the collection and use of U.K. and E.U. personal data, a requirement for prompt notice of data breaches in certain circumstances, a requirement for implementation of certain approved safeguards (such as the use of approved “standard contractual clauses” and the performance of appropriate data transfer impact assessments) for transfers of personal data to other countries that have not been determined by the E.U. or the U.K. to provide adequate data privacy protections, and possible substantial fines for any violations. Our implementation of processes to meet such requirements for affected data flows, which may involve interpretive issues, and may have an adverse impact on cross-border transfers of personal data, may subject us or our customers to additional scrutiny from E.U. and U.K. regulators or may increase our costs of compliance associated with maintaining appropriate certifications, performing any necessary assessments, engaging in contract negotiations with third parties and implementing approved standard contractual clauses, and/or (if appropriate) localizing certain data processing activities. Numerous other countries have introduced and, in some cases, enacted, similar data privacy and cyber and data security laws.
The California Consumer Privacy Act of 2018 (“CCPA”) gives California residents certain privacy rights in the collection and disclosure of their personal information and requires businesses to make certain disclosures and take certain other acts in furtherance of those rights. Additionally, effective January 1, 2023, the California Privacy Rights Act (the “CPRA”) revised and significantly expanded the scope of the CCPA. The CPRA also created a new agency, the California Privacy Protection Agency, authorized to implement and enforce the CCPA and the CPRA. Numerous other U.S. states have passed similar privacy laws, and other states are considering such legislation.
The Gramm-Leach-Bliley Act ("GLBA") regulates, among other things, the receipt, use, disclosure, and security of non-public personal information of consumers held by “financial institutions” and applies indirectly to companies that provide services to financial institutions. As a provider of services to financial institutions, portions of our business are subject to obligations to comply with certain GLBA provisions, including limitations on the use or disclosure of the underlying data and rules relating to the technological, physical and administrative safeguarding of non-public personal information.
The Health Insurance Portability and Accountability Act of 1996, as amended by the American Recovery and Reinvestment Act of 2009 (“HIPAA”) and the Health Information Technology for Economic and Clinical Health Act (“HITECH”), and their respective implementing regulations impose specified requirements relating to the privacy, security and transmission of individually identifiable health information. Among other things, HITECH makes HIPAA’s security standards directly applicable to “business associates.” We function as a business associate for certain of our customers that are HIPAA-covered entities and service providers and, in that context, we are regulated as a business associate for the purposes of HIPAA.
The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) prohibits unfair, deceptive, or abusive acts or practices (“UDAAP”) with respect to the offering of consumer financial products and services and provides the Consumer Financial Protection Bureau (the “CFPB”) with authority to enforce those provisions as well as certain enumerated federal consumer financial laws. In certain circumstances, the CFPB also has examination and supervision powers with respect to service providers who provide a material service to a covered financial institution offering consumer financial products and services. Further, the CFPB has authority to issue rules designating non-depository “larger participants” in certain markets for consumer financial services and products for purposes of the CFPB’s supervisory authority under the Dodd-Frank Act, which the CFPB has done for several markets including the consumer reporting market. Such designated “larger participants” are subject to reporting and on-site compliance examinations by the CFPB, which may result in increased compliance costs and potentially greater enforcement risks based on these supervisory activities. In addition, the laws and regulations issued by U.S. and foreign regulators of some of our largest financial institution customers may require them to flow down certain contractual obligations, exercise greater oversight, and perform more rigorous audits of their key service providers such as us.
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The Federal Trade Commission Act (the “FTC Act”) prohibits unfair methods of competition and unfair or deceptive acts or practices. Under the FTC Act, the FTC’s jurisdiction includes the ability to bring enforcement actions based on the security measures we employ to safeguard the personal data of consumers. Allegations that we failed to safeguard or handle such data in a reasonable manner may subject us to regulatory scrutiny or enforcement action.
The U.S. Fair Credit Reporting Act (the “FCRA”) applies to consumer reporting agencies, as well as data furnishers, and users of consumer reports such as banks and other companies, many of which are our customers. The FCRA provisions govern the accuracy, fairness and privacy of information in the files of consumer reporting agencies that engage in the practice of assembling or evaluating information relating to consumers for certain specified purposes. The FCRA limits the type of information that may be reported by consumer reporting agencies, limits the distribution and use of consumer reports, establishes consumer rights to access and dispute their own credit files, includes provisions designed to prevent identity theft and assist fraud victims, requires consumer reporting agencies to make a free annual credit report available to consumers and imposes many other requirements on consumer reporting agencies, data furnishers and users of consumer report information. These requirements can affect the manner and extent to which our customers use our products and services.
A number of states have enacted requirements similar to the FCRA. Some of these state laws impose additional, or more stringent, requirements than the FCRA, especially in connection with investigations and responses to reported inaccuracies in consumer reports. The FCRA preempts some of these state laws, but the scope of preemption continues to be defined by the courts. Various consumer credit laws and regulations in the foreign countries where we conduct business also affect the products and services we offer to our customers.
The Credit Repair Organizations Act (the “CROA”) regulates companies that claim to be able to assist consumers in improving their credit standing. There have been efforts to apply the CROA to credit monitoring services offered by consumer reporting agencies and others, which may impact certain of our products and services.
Special requirements may apply to us when providing services directly or indirectly to U.S. federal, state and local government agencies. The applicable requirements depend upon the monetary value of the awarded contract, the particular government agency awarding or funding the contract, the scope of services to be delivered, and the level of access that the agency will need to provide to us to enable us to perform the contract. For example, we may need to abide by the Privacy Act of 1974, the Internal Revenue Service’s Publication 4812, and the Federal Acquisition Regulation and associated supplemental contract clauses. Each of these laws, regulations and contract clauses imposes certain requirements, including measures for the protection of personal information or information that is otherwise categorized as sensitive by the government. Government agencies frequently modify or supplement these requirements, and consequences for violations of applicable requirements may include penalties, civil liability and for severe infractions, criminal liability.
There has been an increased focus on laws and regulations related to our business and the business of our customers relating to policy concerns regarding the operation of consumer reporting agencies, the use and accuracy of credit and alternative data, the costs of consumer reports and credit scores, the use of credit scores and fair lending, and the use, transparency, and fairness of algorithms, AI, and machine learning in business processes.
The European Commission has finalized the EU AI Act, which establishes requirements for the provision and use of products that leverage AI systems, including in credit scoring. The EU AI Act entered into force on August 1, 2024 and its provisions take effect between six and 36 months after that date, with most of those provisions becoming effective in 2026. Other countries, as well as the executive branch of the U.S. government and a number of U.S. states, are considering or have implemented laws, regulations, or standards applicable to AI technologies.
Additional laws and regulations in the U.S. and abroad that may affect our business and our current and prospective customers’ activities include, but are not limited to, those in the following significant regulatory areas:
•Laws and regulations that limit the use of credit scoring models (e.g., state “mortgage trigger” or “inquiries” laws, state insurance restrictions on the use of credit-based insurance scores, and the E.U. Consumer Credit Directive).
•Fair lending laws (e.g., the Equal Credit Opportunity Act and Regulation B, and the Fair Housing Act) and laws and regulations that may impose requirements relating to algorithmic fairness or accountability.
•Laws and regulations related to data and cybersecurity, such as the Cybersecurity Act of 2015; the U.S. Department of Commerce’s National Institute of Standards and Technology’s Cybersecurity Framework; the Clarifying Lawful Overseas Use of Data Act; cyber incident notice requirements for banks and their service providers under rules and regulations issued by federal banking regulators; cybersecurity incident disclosure requirements for public companies under regulations issued by the SEC; and identity theft, file freezing, and similar state privacy laws.
•Laws and regulations related to extension of credit to consumers through the Electronic Fund Transfers Act and Regulation E, as well as non‑governmental VISA and MasterCard electronic payment standards.
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•Laws and regulations applicable to secondary market participants (e.g., The Federal National Mortgage Association (“Fannie Mae”) and The Federal Home Loan Mortgage Corporation (“Freddie Mac”)) that could have an impact on our scoring products and revenues, including 12 CFR Part 1254 (Validation and Approval of Credit Score Models) issued by the Federal Housing Finance Agency in accordance with Section 310 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (Public Law 115-174), and any regulations, standards or criteria established pursuant to such laws or regulations, including the ongoing validation and approval of the use of the FICO® Score by Fannie Mae, Freddie Mac, and the Federal Housing Finance Agency.
•Laws and regulations applicable to our customer communication clients and their use of our products and services (e.g., the Telemarketing Sales Rule, the Telephone Consumer Protection Act, the CAN-SPAM Act, the Fair Debt Collection Practices Act, and regulations promulgated thereunder, and similar state laws and similar laws in other countries).
•Laws and regulations applicable to our insurance clients and their use of our insurance products and services.
•The application or extension of consumer protection laws, including implementing regulations (e.g., the Consumer Financial Protection Act, the Truth In Lending Act and Regulation Z, the Fair Debt Collection Practices Act and Regulation F, the Servicemembers Civil Relief Act, and the Military Lending Act, and similar state consumer protection laws).
•Laws and regulations governing the use of the Internet and social media, telemarketing, advertising, endorsements and testimonials.
•Anti-money laundering laws and regulations (e.g., the Bank Secrecy Act and the USA PATRIOT Act).
•Laws and regulations restricting transactions with sanctioned parties and regarding export controls as they apply to FICO products delivered in non-U.S. countries or to foreign nationals (e.g., Office of Foreign Asset Control sanctions and Export Administration Regulations).
•Financial regulatory standards (e.g., Sarbanes-Oxley Act requirements to maintain and verify internal process controls, including controls for material event awareness and notification).
•Laws and regulations that apply to outsourcing of services by our clients, and that set forth requirements for managing third parties (e.g., vendors, contractors, suppliers and distributors).
•Laws and regulations relating to the environmental, social and governance, or sustainability, practices of companies, including enhanced climate-related disclosure requirements from regulators, such as California’s climate disclosure rules and the E.U.’s Corporate Sustainability Reporting Directive.
We are also subject to federal and state laws that are generally applicable to any U.S. business with national or international operations, such as antitrust and unfair competition laws, the Foreign Corrupt Practices Act, the Americans with Disabilities Act, state unfair or deceptive practices acts and various employment laws.
HUMAN CAPITAL RESOURCES
Our People
As of September 30, 2025, we employed 3,811 persons across 28 countries. Of these, our largest representation included 1,335 (35%) based in the U.S., 1,506 (40%) based in India and 271 (7%) based in the U.K. Other than to the extent mandated by applicable law in certain foreign jurisdictions, none of our employees are covered by a collective bargaining agreement, and no work stoppages were experienced during fiscal 2025.
Our Board of Directors (our “Board”) and executive leadership team believe that our people are vital to our success. The Leadership Development and Compensation Committee (the “LDCC”) of our Board oversees all human capital management policies, programs, and strategies, including but not limited to those regarding talent recruitment, development, retention, succession planning, health and safety, organizational culture, employee engagement, diversity, and compensation and benefit programs. The LDCC also periodically reviews and reports to the Board with respect to succession planning for our Chief Executive Officer and other senior management positions. In addition, our Chief Human Resources Officer reports to our Board periodically on people-focused programs.
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Employee Engagement
For the past decade, we have conducted quarterly workforce surveys to measure employee engagement and gain feedback and insights from our people about ways to improve the employee experience and the effectiveness of our business operations. Detailed findings from these surveys are promptly communicated to all employees, individual managers, the executive team and our Board and the findings are leveraged to drive positive organizational change. We involve designated human resources business partners and learning consultants who work with senior leaders to explore findings, identify high value actions and amplify messaging to help our people understand how survey participation can connect to positive change.
Examples of organizational changes that have been driven by the insights from these surveys include investments in expanded workforce capacity, broadened and more frequent company-wide communications, increased employee stock ownership by significantly expanding the recipients of equity-based awards and encouraging all employees to take advantage of our Employee Stock Purchase Plan, expanded benefit programs including paid parental leave, well-being, family building, childcare reimbursement and company-funded transportation programs, enhanced incentive plan funding, and expanded investments in professional development targeting leadership and technical skills, as well as initiatives to promote a culture where all employees feel welcome at work.
Our engagement scores have steadily strengthened and we have enjoyed strong workforce retention over the past year. Each of 22 engagement driver scores from our most recent surveys are at or above our external benchmark scores.
Organizational Culture
FICO is committed to building and reinforcing a culture where all employees feel welcome and where individual perspectives are valued. FICO believes that a highly talented workforce that includes people with a wide range of backgrounds, experiences and perspectives drives innovation while helping us relate to our global customer base. Our goal is to achieve this innovation and connection to our customer base through a culture that attracts the broadest talent audience possible, while always striving to select the most qualified individuals. We also believe that promoting a culture where each individual is truly valued allows our people to reach their full potential.
Our FICO Cares organization encourages our people to connect with and contribute to their community. We encourage employees to participate in volunteer activities by providing work schedule flexibility and paid Community Volunteer Leave. We also encourage and match employee cash donations and volunteer time to qualified charitable organizations through our Corporate Matching Gift Program.
Across our global workforce, as of September 30, 2025, the percentage of males and females was 67% and 33%, respectively. Looking at our U.S. workforce, as of September 30, 2025, 46% were racially/ethnically diverse employees who are members of a protected class.
Additional information on our talent programs is available on the Corporate Responsibility page of our website at www.fico.com/en/corporate-responsibility. Information contained on our website is not deemed part of or incorporated by reference into this Annual Report on Form 10-K.
Talent Recruitment
We leverage organizational culture as a competitive advantage in our efforts to attract people from the broadest possible talent pool. We deploy selection practices designed to ensure strong alignment between candidate qualifications and knowledge and skills needed for success in each role, and we invest in hiring manager training focused on effective selection strategies. Further, in the U.S., we detail our targeted base pay ranges on all public job postings and prohibit our recruiters from inquiring about a candidate’s current level of compensation. Our focus on the professional development of our people drives the internal posting of virtually all job opportunities. And, consistent with our remarkably low undesired attrition rate, FICO has significantly strengthened its position as an employer of choice, resulting in attractive external candidate pools.
Professional Development
To support professional development, we offer a structured onboarding program with training specific to a variety of identified career paths to help new employees become rapidly engaged and productive. We have invested in building the FICO Integrated Learning Organization (“ILO”), which is led by our Chief Learning Officer. The ILO develops customized learning content for colleagues, clients and partners around the world. We deliver high quality, targeted new hire onboarding, technology and product skill training, compliance and management and leadership education through this “FICO Learning” platform. This allows our employees to obtain the knowledge and skills to effectively perform in their current roles, while also preparing them for new opportunities. We also offer financial support for degreed or certificated programs through a tuition reimbursement program.
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We have defined specific career paths for all major functions in our organization so that our people understand how they can progress in their career by expanding their knowledge and skills. In doing so, our job titling system reflects both individual contributor (or technical) career tracks and people management career tracks to reinforce our philosophy that people can grow professionally in either track.
To further consistent administration, we conduct annual company-wide performance reviews supported by the use of performance rubrics for each major function. These rubrics set forth clear behavioral expectations for each function through a set of objective descriptors organized across our three levels of performance (Improvement Needed, Achieved Expectations, and Outstanding). In addition to rubrics, outcome-based goals are established for each individual based upon his/her specific role and priorities. Evaluation across both behavioral and outcome-based dimensions yields an overall performance assessment.
We define a “promotion” as an increase in pay band linked to the proven ability to be successful in the next level of responsibility. Our structured promotion process takes place twice annually with promotions to all job levels including senior job levels occurring with our year-end cycle (October/November) and promotions to lower and middle job levels taking place with our mid-year cycle (April/May). This process supports an integrated approach yielding improved consistency in promotion decisions, including that all groups are representatively recognized. Approximately 25% of our people are recognized via promotion each year.
Succession Planning
Our Board spends considerable time each year reviewing CEO and key leadership succession and development plans. These discussions include an annual dedicated review of CEO succession, as well as discussions at multiple meetings, including in executive session as needed, regarding broader key leader succession, organizational health and scenario planning in the event of unexpected leadership changes. The Board also has regular and direct exposure to senior leadership and high potential officers through formal and informal avenues throughout the year. Beyond the C-suite, we actively assess talent across the organization to optimize deployment of resources, encourage professional development, drive accountability, and identify and take actions to mitigate undesired attrition risk. At the mid-point of each fiscal year, talent assessments are performed by people managers for each team member. These assessments include a mid-year performance rating and a leadership strength rating, the combination of which yields a Talent Management Score ranging from one to nine with recommended follow-up actions associated with each score. In addition, managers identify any significant attrition risks and underlying drivers and develop related mitigation plans. Finally, for each senior leader role, managers identify potential successor candidates along with targeted development needs to encourage readiness.
For vice president-level roles, the executive team plays a central role through a process we refer to as “Session C.” This process involves a detailed evaluation of each vice president incumbent using several tools including a personal biography written by the incumbent identifying key accomplishments, career growth aspirations, and champions that can articulate their contributions. In addition, managers complete a Leader Profile for each vice president incumbent highlighting key strengths, development progress over the past year, go-forward development plans, attrition risks and drivers, and succession insights. All of these materials are centrally reviewed and discussed by the executive team during a multi-day meeting. After discussing incumbent vice presidents, the executive team evaluates any proposed candidates for promotion to vice president using a combination of promotion recommendation forms prepared by the sponsoring manager, a 360-degree performance evaluation involving self-evaluation, manager evaluation, direct report evaluation, and insights gathered from key stakeholders. Candidates for vice president-level promotion are placed “on-deck” for a one- to three-year period for observation prior to any promotion decision being finalized. This approach drives high quality, consistent decisions while ensuring our highest potential candidates are properly developed and ready when promoted.
Compensation and Benefit Programs
We regularly participate in market-based compensation surveys, seek the advice of outside experts, and leverage new hire, peer equity, and unplanned attrition trend data to ensure that our base pay and incentive structures are competitive. We create a strong sense of shared purpose by having our CEO and each member of our executive leadership team participate in the same annual cash incentive bonus design as all non-sales employees across our organization.
Beyond our structured promotion cycles, all compensation actions are determined in November following the conclusion of the year-end performance review process in October. This includes promotion and market-based base pay adjustments, annual bonus awards, and long-term incentive awards. This rewards-planning cycle ensures strong linkage between performance and rewards, and it allows for centralized review and refinement of reward recommendations leading to high quality and representative decisions.
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Over the course of the past decade, we’ve steadily and significantly expanded participation in our annual performance-based equity program from 7% to just over 33% of our workforce. In addition, we offer an Employee Stock Purchase Plan for eligible employees, which is designed to promote even broader equity participation.
We offer competitive health and welfare benefit plans with significant company subsidies to offset premiums, retirement plans with a competitive company match to encourage participation and flexible paid-time-off programs including vacation, sick time and disability time. We have paid Maternity and Parental Leave benefits totaling up to 12 weeks, and we have adopted a Well-Being Program designed to provide broad-based physical and mental health education and personal health coaching, as well as quarterly cash Wellness Awards designed to help employees fund wellness-related purchases which they find most valuable. In addition, we have a global Family Building Benefit program, which provides infertility, cryopreservation, surrogacy and adoption support services. In India, we have a Childcare Reimbursement program to assist parents of young children.
Promoting a Healthy and Safe Work Environment
We are committed to providing a safe and healthy workplace. We continuously strive to meet or exceed compliance with all laws, regulations and accepted practices pertaining to workplace safety. All employees and contractors are required to comply with established safety policies, standards, and procedures.
We foster a healthy work/life balance for our people including both remote and hybrid work location policies that provide significant flexibility surrounding work location and work schedules.
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INFORMATION ABOUT OUR EXECUTIVE OFFICERS
Our executive officers as of September 30, 2025 were as follows:
| Name | Positions Held | Age | ||||||
| William J. Lansing | January 2012–present, Chief Executive Officer and member of the Board of Directors of the Company. February 2009–November 2010, Chief Executive Officer and President, Infospace, Inc. 2004–2007, Chief Executive Officer and President, ValueVision Media, Inc. 2001–2003, General Partner, General Atlantic LLC. 2000–2001, Chief Executive Officer, NBC Internet, Inc. 1998–2000, President/Chief Executive Officer, Fingerhut Companies, Inc. 1996–1998, Vice President, Corporate Business Development, General Electric Company. 1996, Executive Vice President, Chief Operating Officer, Prodigy, Inc. 1986–1995, various positions, McKinsey & Company, Inc. | 67 | ||||||
| Steven P. Weber | May 2023–present, Executive Vice President, Chief Financial Officer of the Company. January 2023–May 2023, Vice President, Interim Chief Financial Officer of the Company. March 2021–January 2023, Vice President, Treasurer, Tax and Investor Relations of the Company. November 2010–March 2021, Vice President of Investor Relations and Treasurer of the Company. April 2003–November 2010, various positions with the Company. September 2001–April 2003, Senior Financial Analyst, Metris Companies. 1990–2001, various positions, Foodservice News. | 62 | ||||||
| Nikhil Behl | March 2025–present, President, Software of the Company. July 2024–March 2025, Executive Vice President, Software of the Company. August 2023–July 2024, Executive Vice President, Chief Marketing Officer of the Company. April 2014–August 2023, Vice President, Chief Marketing Officer of the Company. October 2013–April 2014, Consultant to the Company. February 2012–October 2013, Chief Executive Officer of Supplizer. August 2011–January 2012, Chief Executive Officer of Zoostores.com. July 2010–August 2011, Chief Executive Officer, Mercantila Business Unit of Infospace. 2007–2010, Chief Merchandising Officer of Mercantila. 1995–June 2007, various positions, including VP Sales & Operations and VP Sales & Customer Service, Home & Home Office Store of Hewlett Packard. | 51 | ||||||
| Thomas A. Bowers | August 2020–present, Executive Vice President, Corporate Strategy of the Company. September 2019–August 2020, Vice President, Business Consulting of the Company. April 2018–September 2019, Founder and Managing Partner, M Cubed Development, LLC. August 2012–March 2018, Executive Vice President, American Savings Bank. 1987–2012, Senior partner and various positions, McKinsey & Company, Inc. | 70 | ||||||
| Richard S. Deal | November 2015–present, Executive Vice President, Chief Human Resources Officer of the Company. August 2007–November 2015, Senior Vice President, Chief Human Resources Officer of the Company. January 2001–August 2007, Vice President, Human Resources of the Company. 1998–2001, Vice President, Human Resources, Arcadia Financial, Ltd. 1993–1998, managed broad range of human resources corporate and line consulting functions with U.S. Bancorp. | 58 | ||||||
| Michael S. Leonard | November 2011–present, Vice President, Chief Accounting Officer of the Company. November 2007–November 2011, Senior Director, Finance of the Company. July 2000–November 2007, Director, Finance of the Company. 1998–2000, Controller of Natural Alternatives International, Inc. 1994–1998, various audit staff positions at KPMG LLP. | 60 | ||||||
| Mark R. Scadina | February 2009–present, Executive Vice President, General Counsel and Corporate Secretary of the Company. June 2007–February 2009, Senior Vice President, General Counsel and Corporate Secretary of the Company. 2003–2007, various senior positions including Executive Vice President, General Counsel and Corporate Secretary, Liberate Technologies, Inc. 1999–2003, various leadership positions including Vice President and General Counsel, Intertrust Technologies Corporation. 1994–1999, Associate, Pennie and Edmonds LLP. | 56 | ||||||
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Item 1A. Risk Factors
Business, Market and Strategy Risks
We may not be successful in executing the business strategy for our Software segment, which could cause our growth prospects and results of operations to suffer.
We have increasingly focused our Software segment’s business strategy on investing significant development resources to enable substantially all of our software to run on FICO® Platform, our modular software offering designed to enable advanced analytics and decisioning use cases. This business strategy is designed to enable us to increase our business by selling multiple connectable and extensible products to clients, and to allow our clients to more easily expand their usage and the use cases they enable over time. The market may be unreceptive to our general business approach, including being unreceptive to our cloud-based offerings and unreceptive to purchasing multiple products from us. As we continue to pursue this business strategy, we may experience volatility in our Software segment’s revenues and operating results caused by various factors, including the differences in revenue recognition treatment and timing between our cloud-based offerings and on-premises software licenses, the timing of investments and other expenditures necessary to develop and operate our cloud-based offerings, and the adoption of new sales, delivery and distribution methods. If this business strategy is not successful, we may not be able to grow our Software segment’s business, growth may occur more slowly than we anticipate, or revenues and profits may decline.
We derive a substantial portion of our revenues from a small number of products and services, and if the market does not continue to accept these products and services, our revenues will decline.
We expect that revenues derived from our scoring solutions, fraud solutions, customer communication services, customer management solutions and decision management software will continue to account for a substantial portion of our total revenues for the foreseeable future. Our revenues will decline if the market does not continue to accept these products and services. Factors that might affect the market acceptance of these products and services include the following:
•changes in the business analytics industry;
•changes in technology, including increased use of artificial intelligence (“AI”);
•our inability to obtain or use key data for our products;
•saturation or contraction of market demand;
•loss of key customers;
•industry consolidation;
•failure to successfully adopt cloud-based technologies;
•our inability to obtain regulatory approvals for our products and services, including credit score models;
•the increasing availability of free or relatively inexpensive consumer credit, credit score and other information from public or commercial sources, including those that use AI technologies;
•failure to execute our selling approach; and
•inability to successfully sell our products in new vertical markets.
Our ability to increase our revenues depends to some extent upon introducing new products and services, upon introducing enhancements and improvements to existing products and services and upon entering new markets for products and services. If we are unable to successfully develop, or if the marketplace does not accept, new, enhanced or improved products and services, or if we experience defects, failures or delays associated with the introduction of new, enhanced or improved products or services, our business could suffer serious harm.
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Our revenue growth and the success of our business strategy depend upon our ability to enhance and improve existing products and services, and to continue to introduce new products and services that keep pace with technological developments, satisfy increasingly sophisticated customer requirements and achieve market acceptance. If we are unable to develop new, enhanced or improved products and services, including those that utilize AI technologies, or if we are not successful in introducing such products and services, we may not be able to grow our business or growth may occur more slowly than we anticipate. In addition, significant undetected errors or delays in new products or new versions of products may affect market acceptance of our products and could harm our business, financial condition or results of operations. In the past, we have experienced delays while developing and introducing new products and product enhancements, primarily due to difficulties developing models, acquiring data, and adapting to particular software operating environments and certain client or other systems. We have also experienced errors or “bugs” in our software products, despite testing prior to release of the products. These errors could affect the ability of our products to work with other hardware or software products, could delay the development or release of new products or new versions of products, and could adversely affect market acceptance of our products. Errors or defects in our products that are significant, or are perceived to be significant, could result in rejection of our products, damage to our reputation, loss of revenues, diversion of development resources, an increase in product liability claims, and increases in service and support costs and warranty claims. Our use of AI in the development of our products and our incorporation of AI features into some of our products could introduce errors, defects, or delays impacting our ability to successfully develop new products.
We also believe that much of the future growth of our business and the success of our business strategy may depend on our ability to continue to expand into newer markets for our products and services. Such areas are relatively new to our product development and sales and marketing personnel. Products and services that we plan to market in the future are in various stages of development. If these newer markets are not willing to adopt our products and services, either as a result of the quality of these products and services or due to other factors, such as economic conditions, our revenues may decrease.
We rely on relatively few customers, as well as our contracts with the three major consumer reporting agencies, for a significant portion of our revenues and profits. Many of our customers are significantly larger than we are and may have greater bargaining power. The businesses of our largest customers depend, in large part, on favorable macroeconomic conditions. If these customers are negatively impacted by weak global economic conditions, global economic volatility or the terms of these relationships otherwise change, our revenues and operating results could decline.
Most of our customers are relatively large enterprises, such as banks, credit card issuers, insurers, retailers, telecommunications providers, automotive lenders, consumer reporting agencies, public agencies, and organizations in other industries. As a result, many of our customers and potential customers are significantly larger than we are and may have sufficient bargaining power to demand reduced prices and favorable nonstandard terms.
In addition, the U.S. and other key international economies periodically experience downturns in which economic activity is impacted by falling demand for a variety of goods and services, increased volatility of interest rates, fluctuating rates of inflation, restricted credit, poor liquidity, reduced corporate profitability, volatility in credit, trade policies and tariffs, equity and foreign exchange markets, bankruptcies and overall uncertainty with respect to the economy. The potential for economic disruption presents considerable risks to our business, including potential bankruptcies or credit deterioration of financial institutions with which we have substantial relationships. Economic disruption could result in a decline in the sales of new products to our customers and the volume of transactions that we execute for existing customers. In addition, the volume of our Scores sales depends heavily on macroeconomic conditions, including, for example, the volume of transactions in the U.S. mortgage and credit card markets, which account for a significant portion of the revenues in our Scores segment.
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. The loss of or a significant change in a relationship with one of the three consumer reporting agencies with respect to their distribution of our products or with respect to our myFICO® offerings, the loss of or a significant change in a relationship with a major customer, the loss of or a significant change in a relationship with a significant third-party distributor (including payment card processors), or the loss of or delay of significant revenues from these sources, could have a material adverse effect on our revenues and results of operations.
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Our revenues depend, to a great extent, upon conditions in the banking (including consumer credit) industry. If our clients’ industry experiences uncertainty, it will likely harm our business, financial condition or results of operations.
During fiscal 2025, 92% of our revenues were derived from sales of products and services to the banking industry. Periods of global economic uncertainty experienced in the past have produced substantial stress, volatility, illiquidity and disruption of global credit and other financial markets, resulting in the bankruptcy or acquisition of, or government assistance to, several major domestic and international financial institutions. The potential for future stress and disruptions, including in connection with geopolitical tensions, military conflicts, trade policies and tariffs, the level of inflation and the volatility of interest rates, presents considerable risks to our businesses and operations. These risks include potential bankruptcies or credit deterioration of financial institutions, many of which are our customers. Such disruption would result in a decline in the revenue we receive from financial and other institutions. In addition, if consumer demand for financial services and products and the number of credit applications decrease, the demand for our products and services could also be materially reduced. These types of disruptions could lead to a decline in the volumes of products and services we provide our customers and could negatively impact our revenue and results of operations.
While the rate of account growth in the U.S. banking industry has been slow, we have generated most of our revenue growth in the banking industry by selling and cross-selling our products and services to large banks and other credit issuers. If the banking industry experiences contraction in the number of participating institutions, we may have fewer opportunities for revenue growth due to reduced or changing demand for our products and services that support customer acquisition programs of our customers. In addition, industry contraction could affect the base of recurring revenues derived from contracts in which we are paid on a per-transaction basis as formerly separate customers combine their operations under one contract. There can be no assurance that we will be able to prevent future revenue contraction or effectively promote future revenue growth in our businesses.
While we expand our sales into international markets, the risks are greater as some of these markets have experienced and may in the future experience substantial disruption and we are less well-known in them.
If use of the FICO® Score by Fannie Mae and Freddie Mac were to cease or decline, it could have a material adverse effect on our revenues, results of operations and stock price.
A significant portion of our revenues in our Scores segment is attributable to the U.S. mortgage market, which includes, for mortgages eligible for purchase by The Federal National Mortgage Association (“Fannie Mae”) and The Federal Home Loan Mortgage Corporation (“Freddie Mac”), a requirement by those enterprises that U.S. lenders provide FICO® Scores for each mortgage delivered to them. However, their continued use of the FICO Score is subject to ongoing validation and approval by those enterprises and the Federal Housing Finance Agency (“FHFA”). If other credit score models are approved for use with mortgages delivered to Fannie Mae and Freddie Mac, or the FICO Score is not approved for continued use with those mortgages, it could have a material adverse effect on our revenues, results of operations and stock price. 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, the change announced by the FHFA Director in July 2025 permitting mortgage originators to choose the credit score they submit with mortgages delivered to Fannie Mae and Freddie Mac or a potential future change permitting mortgage originators to underwrite loans using credit scores from fewer than three national consumer reporting agencies. The ability of our FICO Score to compete effectively in the U.S. 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.
We are subject to significant competition in the markets in which we operate, and our products and pricing strategies, and those of our competitors, could decrease our product sales and market share.
Demand for our products and services may be sensitive to product and pricing changes we implement, and our product and pricing strategies may not be accepted by the market. If our customers fail to accept our product and pricing strategies, our revenues, results of operations and business may suffer. The market for our solutions is intensely competitive and is constantly changing, and we expect competition to persist and intensify. Our regional and global competitors vary in size and in the scope of the products and services they offer, and include:
•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;
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•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.
We expect to experience additional competition from other established and emerging companies. This could include customers of ours that develop their own scoring models or other products, and as a result no longer purchase or reduce their purchases from us. We also expect to experience competition from other technologies. For example, certain of our fraud solutions products compete against other methods of preventing payment card fraud, such as cardholder verification and authentication solutions; mobile device payments and associated biometric measures on devices including fingerprint and face matching; and other card authorization and user verification techniques.
Many of our existing and anticipated competitors have greater financial, technical, marketing, professional services and other resources than we do, and industry consolidation is creating even larger competitors in many of our markets. As a result, our competitors may be able to respond more quickly to new or emerging technologies and changes in customer requirements. They may also be able to devote greater resources than we can to develop, promote and sell their products. Many of these companies have extensive customer relationships, including relationships with many of our current and potential customers. For example, Experian, TransUnion and Equifax have formed a joint venture that is selling a credit scoring product competitive with our products. Furthermore, new competitors or alliances among competitors may emerge and rapidly gain significant market share. If we are unable to respond as quickly or effectively to changes in customer requirements as our competition, our ability to expand our business and sell our products will be negatively affected.
Our competitors may be able to sell existing or new products competitive to ours at lower prices individually or as part of integrated suites of several related products. This ability may cause our customers to purchase products that directly compete with our products from our competitors, which could decrease our product sales and market share. Price reductions by our competitors could pressure us to reduce our product prices in a manner that negatively impacts our margins and could also harm our ability to obtain new long-term contracts and renewals of existing long-term contracts on favorable terms.
We rely on relationships with third parties for marketing, distribution and certain services. If we experience difficulties in these relationships, including competition from these third parties, our future revenues may be adversely affected.
Many of our products are sold by distributors or partners, and we intend to continue to market and distribute our products through these existing distributor and partner relationships, as well as invest resources to develop additional sales, distribution and marketing relationships. For example, our Scores segment relies on, among others, Experian, TransUnion and Equifax. Failure of our existing and future distributors or partners to generate significant revenues or otherwise perform their expected services or functions, demands by such distributors or partners to change the terms on which they offer our products, or our failure to establish additional distribution or sales and marketing alliances, could have a material adverse effect on our business, operating results and financial condition. 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. For example, Experian, TransUnion and Equifax have developed a credit scoring product to compete directly with our products and are actively selling that product. Competition from distributors or other sales and marketing partners could significantly harm sales of our products and services.
We will continue to rely upon proprietary technology rights, and if we are unable to protect them, our business could be harmed.
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Our success depends, in part, upon our proprietary technology and other intellectual property rights. To date, we have relied primarily on a combination of copyright, patent, trade secret, and trademark laws, and nondisclosure and other contractual restrictions on copying and distribution, to protect our proprietary technology. This protection of our proprietary technology is limited, and our proprietary technology could be used by others without our consent. In addition, patents may not be issued with respect to our pending or future patent applications, and our patents may not be upheld as valid or may not prevent the development of competitive products. Any disclosure, loss, invalidity of, or failure to protect our intellectual property could negatively impact our competitive position, and ultimately, our business. The extent to which our intellectual property rights can be protected differs by jurisdiction, and is rapidly evolving with respect to AI technologies. There can be no assurance that our protection of our intellectual property rights in the U.S. or abroad will be adequate or that others, including our competitors, will not use our proprietary technology without our consent. Furthermore, litigation may be necessary to enforce our intellectual property rights, to protect our trade secrets, or to determine the validity and scope of the proprietary rights of others. Such litigation could result in substantial costs and diversion of resources and could harm our business, financial condition or results of operations.
Some of our technologies were developed under research projects conducted under agreements with various U.S. government agencies or subcontractors. Although we have commercial rights to these technologies, the U.S. government typically retains ownership of intellectual property rights and licenses in the technologies developed by us under these contracts, and in some cases can terminate our rights in these technologies if we fail to commercialize them on a timely basis. Under these contracts with the U.S. government, the results of research may be made public by the government, limiting our competitive advantage with respect to future products based on our research.
If we fail to keep up with rapidly changing technologies, our products could become less competitive or obsolete.
In our markets, technology changes rapidly, and there are continuous improvements in computer hardware, network operating systems, programming tools, programming languages, operating systems, database technologies, cloud-based technologies and the use of the Internet. For example, AI technologies, including generative AI, and their use are currently undergoing rapid change. If we fail to enhance our current products and develop new products in response to changes in technology or industry standards, or if we fail to bring product enhancements or new product developments to market quickly enough, our products could rapidly become less competitive or obsolete. Our future success will depend, in part, upon our ability to:
•innovate by internally developing new and competitive technologies;
•use leading third-party technologies effectively;
•continue to develop our technical expertise;
•anticipate and effectively respond to changing customer needs;
•initiate new product introductions in a way that minimizes the impact of customers delaying purchases of existing products in anticipation of new product releases; and
•influence and respond to emerging industry standards and other technological changes, including relating to AI.
Our reengineering efforts may cause our growth prospects and profitability to suffer.
As part of our management approach, we pursue ongoing reengineering efforts designed to grow revenues through strategic resource allocation and improve profitability through cost reductions. Our reengineering efforts may not be successful over the long term should we fail to reduce expenses or increase revenues to anticipated levels or at all. If our reengineering efforts are not successful over the long term, our revenues, results of operations and business may suffer.
If we are unable to access new markets or develop new sales and distribution channels, our business and growth prospects could suffer.
We expect our future growth to depend, in part, on the sale of products and service solutions in industries and markets we do not currently serve. We also expect to grow our business by delivering our solutions through additional sales and distribution channels. If we fail to penetrate these industries and markets to the degree we anticipate, or if we fail to develop additional sales and distribution channels, we may not be able to grow our business, growth may occur more slowly than we anticipate, or our revenues and profits may decline.
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Our acquisition activities may disrupt our ongoing business and may involve increased expenses, and we may not realize the financial and strategic goals contemplated at the time of a transaction.
We have acquired, and may in the future acquire, companies, businesses, products, services and technologies. Acquisitions involve significant risks and uncertainties, including:
•our ongoing business may be disrupted and our management’s attention may be diverted by acquisition, transition or integration activities;
•an acquisition may not further our business strategy as we expected, we may not integrate acquired operations, systems or technology as successfully as we expected or we may overpay for our investments, or otherwise not realize the expected return, which could adversely affect our business or operating results;
•we may be unable to retain the key employees, customers and other business partners of the acquired operation;
•we may have difficulties entering new markets where we have no or limited direct prior experience or where competitors may have stronger market positions;
•our operating results or financial condition may be adversely impacted by known or unknown contingent liabilities, other liabilities or claims we assume in an acquisition or that are imposed on us as a result of an acquisition, including claims by government agencies or authorities, terminated employees, current or former customers, former stockholders or other third parties;
•we could incur material charges in connection with the impairment of goodwill or other assets that we acquire;
•a company that we acquire may have experienced a security incident that it has yet to discover, investigate and remediate, may have other cybersecurity vulnerabilities, or may have unsophisticated security measures, any of which we might not identify in a timely manner and which could spread more broadly to other parts of our company during the integration effort;
•we may incur material charges as a result of acquisition costs or costs incurred in combining and/or operating the acquired business that are greater than anticipated;
•we may not realize the anticipated increase in our revenues from an acquisition for a number of reasons, including if a larger than predicted number of customers decline to renew their contracts, if we are unable to incorporate the acquired technologies or products with our existing product lines in a uniform manner, if we are unable to sell the acquired products to our customer base or if contract models of an acquired company or changes in accounting treatment do not allow us to recognize revenues on a timely basis;
•our use of cash to pay for acquisitions may limit other potential uses of our cash, including stock repurchases, and retirement of outstanding indebtedness; and
•to the extent we issue a significant amount of equity securities in connection with future acquisitions, existing stockholders may be diluted and earnings per share may decrease.
Because acquisitions are inherently risky, our transactions may not be successful and may have a material adverse effect on our business, results of operations, financial condition or cash flows. Acquisitions of businesses having a significant presence outside the U.S. will increase our exposure to the risks of conducting operations in international markets.
There can be no assurance that strategic divestitures will provide business benefits.
As part of our strategy, we continuously evaluate our portfolio of businesses. As a result of these reviews, we have made decisions to divest certain products and lines of business, and we may do so again in the future. These divestitures involve risks, including:
•disruption of our operations or businesses;
•reductions of our revenues or earnings per share;
•difficulties in the separation of operations, services, products and personnel;
•failure to effectively transfer liabilities, contracts, facilities and employees to a purchaser;
•divestiture terms that contain potential future purchase price adjustments or require that assets or liabilities be divested, managed or run off separately;
•diversion of management's attention from our other businesses;
•the potential loss of key personnel;
•adverse effects on relationships with our customers, suppliers or their businesses;
•the erosion of employee morale or customer confidence; and
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•the retention of contingent liabilities and the possibility that we will become subject to third-party claims related to the divested business.
If we do not successfully manage the risks associated with divestitures, our business, financial condition, and results of operations could be adversely affected as the potential strategic benefits may not be realized or may take longer to realize than expected.
Our revenues, results of operations and overall financial performance may be negatively impacted by health epidemics or other disease outbreaks.
Our customers, and therefore our business and revenues, are sensitive to negative changes in general economic conditions and lending activities. Health epidemics or disease outbreaks could impact the rate of spending on our solutions and could adversely affect our customers’ ability or willingness to purchase our products and services, cause prospective customers to change product selections or term commitments, delay or cancel their purchasing decisions, extend sales cycles, and potentially increase payment defaults, all of which could adversely affect our future revenues, results of operations and overall financial performance.
Operational Risks
If our cybersecurity measures are compromised or unauthorized access to customer or consumer data is otherwise obtained, our products and services may be perceived as not being secure, customers may curtail or cease their use of our products and services, our reputation may be damaged and we could incur significant liabilities.
Because our business requires the storage, transmission and utilization of sensitive consumer and customer information, we will continue to routinely be the target of attempted cybersecurity and other security threats by technically sophisticated and well-resourced outside third parties, among others, attempting to access or steal the data we store. Many of our products are provided by us through the Internet. We are exposed to additional cybersecurity threats as we continue to migrate our software solutions and data from our legacy systems to cloud-based solutions. We operate in an environment of significant risk of cybersecurity incidents resulting from unintentional events or deliberate attacks by third parties or insiders, which may involve exploiting security vulnerabilities or sophisticated attack methods. These threats include social engineering attacks, phishing attacks and other cyber-attacks, including state-sponsored cyber-attacks, industrial espionage, insider threats, denial-of-service attacks, computer viruses, ransomware and other malware, payment fraud or other cyber incidents. As a software and technology vendor, we may incorporate or distribute software or other materials from third parties. Attacks or other threats to our supply chain for such software and materials may render us unable to provide assurances of the origin of such software and materials, and could put us at risk of distributing software or other materials that may cause harm to ourselves, our customers or other third parties. In addition, increased attention on and use of AI increases the risk of cyber-attacks and data breaches, which can occur more quickly and evolve more rapidly when AI is used. Further, use of AI by our employees, whether authorized or unauthorized, increases the risk that our intellectual property and other proprietary information will be unintentionally disclosed.
Cybersecurity breaches, including those that impact our third-party vendors and other security providers, could expose us to a risk of loss, the unauthorized disclosure of consumer or customer information, significant litigation, regulatory fines, penalties, loss of customers or reputational damage, indemnity obligations and other liability. There is no assurance that the programs, technologies and processes that we have put in place in an effort to maintain the security and protection of our non-public information and that of our customers will be fully implemented, complied with or effective. If our cybersecurity measures are breached as a result of third-party action, employee error, malfeasance or otherwise, and as a result, someone obtains unauthorized access to our systems or to consumer or customer information, sensitive data may be accessed, stolen, disclosed or lost, our reputation may be damaged, our business may suffer and we could incur significant liability. Because the techniques used to obtain unauthorized access, disable or degrade service or to sabotage systems change frequently and generally are not recognized until launched against a target, or even for some time after, we may be unable to anticipate these techniques, implement adequate preventative measures or remediate any intrusion on a timely or effective basis. Because a successful breach of our computer systems, software, networks or other technology asset could occur and persist for an extended period of time before being detected, we may not be able to immediately address the consequences of a cybersecurity incident.
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Malicious third parties may also conduct attacks designed to temporarily deny customers, distributors and vendors access to our systems and services, and may demand payment by us in order to restore access. Cybersecurity breaches experienced by our vendors, by our distributors, by our customers, by companies that we acquire, or by us may trigger governmental notice requirements and public disclosures, which may lead to widespread negative publicity, statutory damages, and lawsuits filed by individuals impacted by cybersecurity breaches under privacy and cybersecurity statutes that create rights of action. We may also be affected by cybersecurity breaches experienced by customers who use our products on-premises, and those breaches may occur due to factors not under our control, including a customer’s failure to timely install updates and fixes to our products, vulnerabilities in a customer’s own cybersecurity measures, and other factors. Any cybersecurity breach, whether actual or perceived, could harm our reputation, erode customer confidence in the effectiveness of our security measures, negatively impact our ability to attract new customers, cause existing customers to curtail or cease their use of our products and services, cause regulatory or industry changes that impact our products and services, or subject us to third-party lawsuits, regulatory fines or other action or liability, all of which could materially and adversely affect our business and operating results.
If we experience business interruptions or failure of our information technology and communication systems, the availability of our products and services could be interrupted which could adversely affect our reputation, business and financial condition.
Our ability to provide reliable products and services to our customers depends on the efficient and uninterrupted operation of our and our external service providers’ data centers, information technology and communication systems. Any disruption of or interference with our use of data centers, information technology or communication systems of our external service providers would adversely affect our operations and our business. As we continue to grow our Software segment’s business, our dependency on the continuing operation and availability of these systems increases. Our systems and data centers, and those of our external service providers, could be exposed to damage or interruption. These interruptions can include software or hardware malfunctions, communication failures, outages or other failures of third-party environments or service providers, or be due to defective updates, fires, floods, earthquakes, pandemics, war, terrorist acts or civil unrest, power losses, equipment failures, supply chain disruptions, computer viruses, denial-of-service or other cybersecurity attacks, employee or insider malfeasance, human error and other events beyond our control. Any steps that we or our external service providers have taken to prevent or reduce disruption may not be sufficient to prevent an interruption of services and disaster recovery planning may not account for all eventualities.
An operational failure or outage in any of these systems, or damage to or destruction of these systems, which causes disruptions in our services, could result in loss of customers, damage to customer relationships, reduced revenues and profits, refunds of customer charges and damage to our brand and reputation and may require us to incur substantial additional expense to repair or replace damaged equipment and recover data loss caused by the interruption. Any one or more of the foregoing occurrences could have a material adverse effect on our reputation, business, financial condition, cash flows and results of operations.
The failure to obtain certain forms of data from our customers or others for our use in product development could harm our business.
Our business requires that we develop or obtain a reliable source of sufficient amounts of current and statistically relevant data to analyze transactions and update some of our products. In most cases, this data must be periodically updated and refreshed to enable our products to continue to work effectively in a changing environment. We do not own or control much of the data that we require, most of which is collected privately and maintained in proprietary databases. Customers and key business partners provide us with the data we require to analyze transactions, report results and build new models. Our business strategy depends in part upon our ability to access new forms of data to develop custom and proprietary analytic tools. If we fail to maintain sufficient data sourcing relationships with our customers and business partners, or if they decline to provide such data due to privacy, security, competitive concerns, regulatory concerns, or prohibitions or a lack of permission from their customers or partners, we could lose access to required data and our products. If this were to happen, our development of new products might become less effective. We could also become subject to increased legislative, regulatory or judicial restrictions or mandates on the collection, disclosure, transfer or use of such data, in particular if such data is not collected by our providers in a way that allows us to legally use the data. Third parties have asserted copyright and other intellectual property interests in this data, and these assertions, if successful, could prevent us from using this data. We may not be successful in maintaining our relationships with these external data source providers or in continuing to obtain data from them on acceptable terms or at all. Any interruption of our supply of data could seriously harm our business, financial condition or results of operations.
The failure to recruit and retain qualified personnel could hinder our ability to successfully manage our business.
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Our business strategy and our future success will depend in large part on our ability to attract and retain experienced sales, consulting, research and development, marketing, technical support and management personnel. The labor market for these individuals, particularly in the complex disciplines of enterprise platform sales, software engineering, data science, AI and cybersecurity, is very competitive due to the limited number of people available with the necessary skills and understanding to build, sell and support our complex products and it may become more competitive with general market growth. We cannot be certain that our compensation strategies will be perceived as competitive by current or prospective employees. This and other competitive factors could impair our ability to recruit and retain personnel. We have experienced past difficulty in recruiting and retaining qualified personnel, especially in these intensely competitive and technical skill areas, and we may experience future difficulty in recruiting and retaining such personnel, at a time when we may need additional staff to support expanded research and development efforts, new customers and/or increased customer needs. We may also recruit skilled technical professionals from other countries to work in the U.S., and from the U.S. and other countries to work abroad. Limitations imposed by current and changing immigration laws in the U.S. and abroad and the availability of visas in the countries where we do business could hinder our ability to attract and retain necessary qualified personnel and harm our business and future operating results. There is a risk that even if we invest significant resources in attempting to attract, train and retain qualified personnel, we will not succeed in our efforts, and our business could be harmed. The failure of the value of our stock to appreciate may adversely affect our ability to use equity and equity-based incentive plans to attract and retain personnel, and may require us to use alternative forms of compensation for this purpose.
Legal, Regulatory and Compliance Risks
Increased regulatory focus on U.S. residential mortgage closing costs may affect our ability to implement price changes for FICO® Scores used in mortgage originations and thus limit the revenues and profitability of the FICO Score. If new laws, regulations or other governmental action affecting the FICO Score or our other products, services and solutions are implemented or carried out, it could adversely affect our business and results of operations.
There has been increased regulatory focus in the U.S. related to the transparency and fairness of certain fees charged to consumers in connection with the closing of a residential mortgage loan, including fees for credit reports and credit scores. If new laws, regulations or other governmental action limit the fees that can be charged for credit scores by us, consumer reporting agencies, or end users of our FICO® Scores, or that place other restrictions on the sale or distribution of credit scores, our ability in the future to increase pricing for FICO Scores used in mortgage originations may be impacted and thus the revenues and profitability of the FICO Score may be adversely affected and the growth of our Scores business may be constrained.
There has also been increased focus more broadly on laws and regulations in the U.S. related to our business and the business of consumer reporting agencies, including by U.S. state and federal regulators, relating to policy concerns with regard to the operation of consumer reporting agencies, the sale and distribution of credit scores and credit reports, the use and accuracy of credit and alternative data, the use of credit scores and fair lending, and the use, transparency, and fairness of algorithms, AI, and machine learning in business processes. The costs and other burdens of compliance with such laws and regulations, and with new or revised laws and regulations that may be implemented addressing these topics, could negatively impact the use and adoption of our solutions, reduce overall demand for them, and harm our business, financial condition or results of operations.
Laws and regulations in the U.S. and abroad that apply to us and/or to our customers may expose us to liability, cause us to incur significant expense, affect our ability to compete in certain markets, limit the profitability of or demand for our products, or render our products obsolete. If these laws and regulations require us to change our products and services, it could adversely affect our business and results of operations. New legislation or regulations, or changes to existing laws and regulations, may also negatively impact our business and increase our costs of doing business.
Laws and governmental regulation affect how our business is conducted and, in some cases, subject us to the possibility of government supervision or enforcement and future lawsuits arising from our products and services. Laws and governmental regulations also influence our current and prospective customers’ activities, as well as their expectations and needs in relation to our products and services, and may require them to flow down certain contractual obligations, exercise greater oversight, and perform more rigorous audits of their key service providers such as us. Laws and regulations in the U.S. and abroad that may affect our business and/or our current and prospective customers’ activities include, but are not limited to, those in the following significant regulatory areas:
•Privacy and security laws and regulations that limit the use and disclosure, require security procedures, or otherwise apply to the collection, processing, storage, use and transfer of personal data of individuals (e.g., the U.S. Financial Services Modernization Act of 1999, also known as the Gramm Leach Bliley Act; identity theft, file freezing, security breach notification and similar state privacy laws; and the data protection laws of other countries such as the General Data Protection Regulation (the “GDPR”) in the European Union (“E.U.”) and the United Kingdom (“U.K.”));
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•Laws and regulations relating to the privacy, security and transmission of protected health information of individuals, including the Health Insurance Portability and Accountability Act of 1996, as amended by the American Recovery and Reinvestment Act of 2009 (“HIPAA”) and the Health Information Technology for Economic and Clinical Health Act (“HITECH”) and their respective implementing regulations;
•Financial regulatory reform stemming from the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the many regulations mandated by that Act, including regulations issued by, and the supervisory and investigative authority of, the Consumer Financial Protection Bureau (“CFPB”) with respect to enumerated federal consumer financial laws and unfair, deceptive, or abusive acts or practices (“UDAAP”);
•The application or extension of consumer protection laws, including implementing regulations (e.g., the Consumer Financial Protection Act, the Federal Trade Commission Act, the Truth In Lending Act and Regulation Z, the Fair Debt Collection Practices Act and Regulation F, the Servicemembers Civil Relief Act, the Military Lending Act, and the Credit Repair Organizations Act, and similar state consumer protection laws);
•Use of data by creditors and consumer reporting agencies (e.g., the U.S. Fair Credit Reporting Act and similar state laws);
•Special requirements that may apply when we provide products or services directly or indirectly to U.S. federal, state and local government agencies (e.g., the Privacy Act of 1974, the Internal Revenue Service’s Publication 4812, and the Federal Acquisition Regulation);
•Laws and regulations that limit the use of credit scoring models (e.g., state “mortgage trigger” or “inquiries” laws, state insurance restrictions on the use of credit-based insurance scores, and the E.U. Consumer Credit Directive);
•Fair lending laws (e.g., the Equal Credit Opportunity Act and Regulation B, and the Fair Housing Act) and laws and regulations that may impose requirements relating to algorithmic fairness or accountability;
•Data and cybersecurity laws and regulations, including: the Cybersecurity Act of 2015; the U.S. Department of Commerce’s National Institute of Standards and Technology’s Cybersecurity Framework; the Clarifying Lawful Overseas Use of Data Act; cyber incident notice requirements for banks and their service providers under rules and regulations issued by federal banking regulators; cybersecurity incident disclosure requirements for public companies under regulations issued by the SEC; and identity theft, file freezing, and similar state privacy laws;
•Laws and regulations related to extension of credit to consumers through the Electronic Fund Transfers Act and Regulation E, as well as non‑governmental VISA and MasterCard electronic payment standards;
•Laws and regulations applicable to secondary market participants (e.g., Fannie Mae and Freddie Mac) that could have an impact on our scoring products and revenues, including 12 CFR Part 1254 (Validation and Approval of Credit Score Models) issued by the FHFA in accordance with Section 310 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (Public Law 115-174), and any regulations, standards or criteria established pursuant to such laws or regulations, including the ongoing validation and approval of the use of the FICO® Score by Fannie Mae, Freddie Mac, and the FHFA;
•Laws and regulations applicable to our customer communication clients and their use of our products and services (e.g., the Telemarketing Sales Rule, Telephone Consumer Protection Act, the CAN-SPAM Act, the Fair Debt Collection Practices Act, and regulations promulgated thereunder, and similar state laws and similar laws in other countries);
•Laws and regulations applicable to our insurance clients and their use of our insurance products and services;
•Laws and regulations governing the use of the Internet and social media, telemarketing, advertising, endorsements and testimonials;
•Antitrust and unfair competition laws;
•Anti-money laundering laws and regulations (e.g., the Bank Secrecy Act and the USA PATRIOT Act);
•Laws and regulations restricting transactions with sanctioned parties and regarding export controls as they apply to FICO products delivered in non-U.S. countries or to foreign nationals (e.g., Office of Foreign Asset Control sanctions and Export Administration Regulations);
•Anti-bribery and corruption laws and regulations (e.g., the Foreign Corrupt Practices Act and the UK Bribery Act 2010);
•Financial regulatory standards (e.g., Sarbanes-Oxley Act requirements to maintain and verify internal process controls, including controls for material event awareness and notification);
•Laws and regulations that apply to outsourcing of services by our clients, and that set forth requirements for managing third parties (e.g., vendors, contractors, suppliers and distributors); and
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•Laws and regulations relating to the environmental, social and sustainability practices of companies, including enhanced climate-related disclosure requirements from regulators, such as California’s climate disclosure rules and the E.U.’s Corporate Sustainability Reporting Directive.
Many U.S. and foreign jurisdictions have passed, or are currently contemplating, a variety of consumer protection, data privacy, and cyber and data security laws and regulations that may relate to our business or the business of our customers or affect the demand for our products and services. For example, the GDPR in the E.U. and the U.K. imposes strict obligations and restrictions on the collection and use of E.U. and U.K. personal data, and also on the transfer of such data to countries that have not been determined by the E.U. or the U.K. to provide adequate data privacy protections, unless there are additional approved transfer safeguards in place (such as the use of “standard contractual clauses” and the performance of appropriate data transfer impact assessments). Our implementation of processes to meet such requirements for affected data flows may involve additional compliance costs associated with maintaining appropriate regulatory certifications, performing any necessary assessments, engaging in contract negotiations with third parties and implementing approved standard contractual clauses, and/or (if appropriate) localizing certain data processing activities. Furthermore, such data transfer restrictions, which may involve interpretive issues, may have an adverse impact on cross-border transfers of personal data and may subject us and our customers to additional scrutiny from E.U. or U.K. data protection authorities.
Numerous other countries have introduced and, in some cases, enacted, similar data privacy and cyber and data security laws.
The California Consumer Privacy Act of 2018 (“CCPA”) gives California residents certain privacy rights in the collection and disclosure of their personal information and requires businesses to make certain disclosures and take certain other acts in furtherance of those rights. Additionally, effective January 1, 2023, the California Privacy Rights Act (the “CPRA”) revised and significantly expanded the scope of the CCPA. The CPRA also created a new agency, the California Privacy Protection Agency, authorized to implement and enforce the CCPA and the CPRA. Numerous other U.S. states have passed similar privacy laws, and other states are considering such legislation.
The European Commission has finalized the EU AI Act, which establishes requirements for the provision and use of products that leverage AI systems, including in credit scoring. The EU AI Act entered into force on August 1, 2024, and its provisions take effect between six and 36 months after that date, with most of those provisions becoming effective in 2026. Other countries, as well as the executive branch of the U.S. government and a number of U.S. states, are considering or have implemented laws, regulations or standards applicable to the provision and use of AI technologies.
The costs and other burdens of compliance with such laws and regulations, along with the potential for increased regulatory actions, could negatively impact the use and adoption of our solutions and reduce overall demand for them. Additionally, concerns regarding data privacy and cyber and data security may cause our customers, or their customers and potential customers, to resist providing the data necessary to allow us to deliver our solutions effectively. Even the perception that the privacy or security of personal information is not satisfactorily protected or does not meet regulatory requirements could inhibit sales of our solutions and any failure to comply with such laws and regulations could lead to significant fines, penalties or other liabilities. Any such decrease in demand or incurred fines, penalties or other liabilities could have a material adverse effect on our business, results of operations, and financial condition.
In addition to existing laws and regulations, changes in the U.S. or foreign legislative, judicial, regulatory or consumer environments could harm our business, financial condition or results of operations. The laws and regulations above, and changes to them or their interpretation by the courts, could affect the demand for or profitability of our products, including scoring and consumer products. New laws and regulations pertaining to our customers could cause them to pursue new strategies, reducing the demand for our products. We expect there will continue to be an increased focus on laws and regulations related to our business and/or the business of our clients, including with regard to the operation of consumer reporting agencies, the collection, use, accuracy, correction and sharing of personal information, credit scoring, the use of AI and machine learning, and algorithmic accountability and fair lending.
If we are subject to infringement claims, it could harm our business.
Products in the industry segments in which we compete, including software products, are often subject to claims of patent and other intellectual property infringement, and such claims could increase as the number of products and competitors in our industry segments grow. We may need to defend claims that our products infringe intellectual property rights, and as a result we may:
•incur significant defense costs or substantial damages;
•be required to cease the use or sale of infringing products;
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•expend significant resources to develop or license a substitute non-infringing technology;
•discontinue the use of some technology; or
•be required to obtain a license under the intellectual property rights of the third-party claiming infringement, which license may not be available or might require substantial royalties or license fees that would reduce our margins.
Moreover, in recent years, individuals and groups that are non-practicing entities, commonly referred to as “patent trolls,” have purchased patents and other intellectual property assets for the purpose of making claims of infringement in order to extract settlements. From time to time, we may receive threatening letters or notices or may be the subject of claims that our solutions and underlying technology infringe or violate the intellectual property rights of others. Responding to such claims, regardless of their merit, can be time consuming, costly to defend in litigation, divert management's attention and resources, damage our reputation and brand, and cause us to incur significant expenses.
Global Operational Risks
In operations outside the U.S., we are subject to additional risks that may harm our business, financial condition or results of operations.
A large portion of our revenues is derived from international sales. During fiscal 2025, 23% of our revenues were derived from business outside the U.S. As part of our growth strategy, we plan to continue to pursue opportunities outside the U.S., including opportunities in countries with economic systems that are in early stages of development and that may not mature sufficiently to result in growth for our business. Accordingly, our future operating results could be negatively affected by a variety of factors arising out of international commerce, some of which are beyond our control. These factors include:
•general economic and political conditions in countries where we sell our products and services;
•difficulty in staffing and efficiently managing our operations in multiple geographic locations and in various countries;
•effects of a variety of foreign laws and regulations, including restrictions on access to personal information;
•data privacy and consumer protection laws and regulations;
•import and export licensing requirements;
•longer payment cycles;
•difficulties in enforcing contracts and collecting accounts receivable;
•reduced protection for intellectual property rights;
•currency fluctuations;
•unfavorable tax rules;
•changes in tariffs and other trade barriers;
•the presence and acceptance of varying levels of business corruption in international markets;
•geopolitical tensions, instability, terrorism, and military conflicts;
•natural disasters and pandemics, including individual countries’ reactions to them; and
•difficulties and delays in translating products and related documentation into foreign languages.
There can be no assurance that we will be able to successfully address each of these challenges. Additionally, some of our business is and will be conducted in currencies other than the U.S. dollar. Substantial movements in foreign exchange rates relative to the dollar could adversely impact our cash flows, results of operations and financial position.
In addition to the risk of depending on international sales, we have risks incurred in having research and development personnel located in various international locations. We currently have a substantial portion of our product development staff in international locations, some of which have political and developmental risks. For example, approximately one-third of our workforce is located in India, which could be negatively impacted by heightened tensions between India and Pakistan. If any of such risks materialize, our business could be damaged.
Material adverse developments in global economic conditions, or the occurrence of certain other world events, could affect demand for our products and services and harm our business.
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Purchases of technology products and services and decisioning solutions are subject to adverse economic conditions. When an economy is struggling, companies in many industries delay or reduce technology purchases, and we experience softened demand for our decisioning solutions and other products and services. Global economic uncertainty has produced, and continues to produce, substantial stress, volatility, illiquidity and disruption of global credit and other financial markets. Various factors contribute to the uncertain economic environment, including geopolitical tensions, military conflicts, the level and volatility of interest rates, the level of inflation, an actual recession or fears of a recession, trade policies and tariffs, and political and governmental instability.
Economic uncertainty has and could continue to negatively affect the businesses and purchasing decisions of companies in the industries we serve. Such disruptions present considerable risks to our businesses and operations. As global economic conditions experience stress and negative volatility, including any stress or negative volatility related to the imposition of, and threatened imposition of, tariffs and retaliatory tariffs, economic sanctions and increased trade tensions or if there is an escalation in regional or global conflicts, or terrorism, we will likely experience reductions in the number of available customers and in capital expenditures by our remaining customers, longer sales cycles, deferral or delay of purchase commitments for our products and increased price competition, which may adversely affect our business, results of operations and liquidity.
As a result of these conditions, risks and uncertainties, we may need to modify our strategies, businesses or operations, and we may incur additional costs in order to compete in a changed business environment. Given the volatile nature of the global economic environment and the uncertainties underlying efforts to stabilize it, we may not timely anticipate or manage existing, new or additional risks, as well as contingencies or developments, which may include regulatory developments and trends in new products and services. Our failure to do so could materially and adversely affect our business, financial condition, results of operations and prospects.
Financial Risks
Our products have long and variable sales cycles. If we do not accurately predict these cycles, we may not forecast our financial results accurately, and our stock price could be adversely affected.
In our Software segment, the length of our sales cycles makes it difficult for us to predict the quarter in which sales will occur. In addition, our selling approach is complex as we look to sell multiple products and services across our customers’ organizations. This makes forecasting of revenues in any given period more difficult. For example, the sales cycle of our products can extend to greater than a year and as a result, revenues and operating results may vary significantly from period to period. 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. This may cause customers, particularly those experiencing financial stress, to make purchasing decisions more cautiously. Delays in completing sales can arise while customers complete their internal procedures to approve large capital expenditures and test and accept our applications. Consequently, we face difficulty predicting the quarter in which sales to expected customers will occur and experience fluctuations in our revenues and operating results.
In our Scores segment, a majority of our revenues come from the sale of our Scores through partners. We have limited visibility on those sales until we receive royalty reports from those partners at the end of each billing period. Furthermore, the volume of our Scores sales depends heavily on macroeconomic conditions that are hard to forecast, including, for example, the volume of transactions in the U.S. mortgage and credit card markets, which account for a significant portion of the revenues in our Scores segment.
If we are unable to accurately forecast our revenues, our ability to plan, budget or provide accurate guidance could be limited, and our stock price could be adversely affected.
Our financial results and key metrics fluctuate within each quarter and from quarter to quarter, making our future revenue, annual recurring revenue (“ARR”), and financial results difficult to predict, which may cause us to miss analyst expectations and may cause the price of our common stock to decline.
Our quarterly financial results and key metrics have fluctuated in the past and will continue to do so in the future, and therefore period-to-period comparisons should not be relied upon as an indication of future performance. These fluctuations could cause our stock price to change significantly or experience declines. We also may provide investors with quarterly and annual financial forward-looking guidance that could prove to be inaccurate as a result of these fluctuations and other factors. In addition to the other risks described in these risk factors, some of the factors that could cause our financial results and key metrics to fluctuate include:
•variability in demand from our existing customers;
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•the lengthy and variable sales cycle of many products, combined with the relatively large size of orders for our products, increases the likelihood of short-term fluctuation in revenues;
•consumer or customer dissatisfaction with, or problems caused by, the performance of our products;
•the timing of new product announcements and introductions in comparison with our competitors;
•the level of our operating expenses;
•changes in demand and competitive and other conditions in the consumer credit, banking and insurance industries;
•the level and volatility of interest rates and the level of inflation;
•fluctuations in domestic and international economic conditions;
•our ability to complete large installations, and to adopt and configure cloud-based deployments, on schedule and within budget;
•announcements relating to litigation or regulatory matters;
•changes in senior management or key personnel;
•acquisition-related expenses and charges; and
•timing of orders for and deliveries of software systems.
Our operating expenses are based in part on our expectations for future revenue and many are fixed and cannot be quickly adjusted as revenue changes. Accordingly, any revenue shortfall below expectations has had, and in the future could have, an immediate and significant adverse effect on our operating results and profitability. Greater than anticipated expenses or a failure to maintain rigorous cost controls would also negatively affect profitability.
General Risk Factors
Our stock price has been subject to fluctuations, and will likely continue to be subject to fluctuations, or may decline, regardless of our operating performance.
Our stock price has been subject to fluctuations due to a number of factors, including variations in our revenues and operating results. The financial markets have at various times experienced significant price and volume fluctuations that have particularly affected the stock prices of many technology companies and financial services companies, and these fluctuations sometimes have been unrelated to the operating performance of these companies. Broad market fluctuations, as well as industry-specific and general economic conditions, may negatively affect our business and require us to record an impairment charge related to goodwill, which could adversely affect our results of operations, stock price and business.
If we experience changes in tax laws or adverse outcomes resulting from examination of our income tax returns, it could adversely affect our results of operations.
We are subject to federal and state income taxes in the U.S. and in certain foreign jurisdictions. Significant judgment is required in determining our worldwide provision for income taxes. Our future effective tax rates could be adversely affected by changes in tax laws, by our ability to generate taxable income in foreign jurisdictions in order to utilize foreign tax losses, and by the valuation of our deferred tax assets. In addition, we are subject to the examination of our income tax returns by the Internal Revenue Service and other tax authorities. We regularly assess the likelihood of adverse outcomes resulting from such examinations to determine the adequacy of our provision for income taxes. There can be no assurance that the outcomes from such examinations will not have an adverse effect on our operating results and financial condition.
Our anti-takeover defenses could make it difficult for another company to acquire control of FICO, thereby limiting the demand for our securities by certain types of purchasers or the price investors are willing to pay for our stock.
Certain provisions of our Restated Certificate of Incorporation, as amended, could make a merger, tender offer or proxy contest involving us difficult, even if such events would be beneficial to the interests of our stockholders. These provisions include giving our Board the ability to issue preferred stock and determine the rights and designations of the preferred stock at any time without stockholder approval. The rights of the holders of our common stock will be subject to, and may be adversely affected by, the rights of the holders of any preferred stock that may be issued in the future. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions and other corporate purposes, could have the effect of making it more difficult for a third-party to acquire, or discouraging a third-party from acquiring, a majority of our outstanding voting stock. These factors and certain provisions of the Delaware General Corporation Law may have the effect of deterring hostile takeovers or otherwise delaying or preventing changes in control or changes in our management, including transactions in which our stockholders might otherwise receive a premium over the fair market value of our common stock.
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Item 1B. Unresolved Staff Comments
Not applicable.
Item 1C. Cybersecurity
Cybersecurity Risk Management and Strategy
We recognize the importance of assessing, identifying, and managing material risks associated with cybersecurity threats, as such term is defined in Item 106(a) of Regulation S-K. These risks include, among other things: operational risks, intellectual property theft, fraud, extortion, harm to employees or customers and violation of data privacy or security laws.
We employ an experienced team of cybersecurity professionals with a variety of backgrounds. We seek to address material cybersecurity risks through a company-wide approach that assesses, ranks and prioritizes cybersecurity threats, vulnerabilities and issues as they are identified to maintain the confidentiality, integrity and availability of our information systems and the information that we collect and store. The Company’s cybersecurity policies, standards, processes and practices are informed by recognized frameworks established by the National Institute of Standards and Technology, the International Organization for Standardization and an array of other applicable standards-setting bodies, which are integrated into a broader risk management framework and related processes. We also hold various security-related industry certifications and attestations that have been validated by external auditors, including: SOC 1, SOC 2 Type II, ISO 27001, CSA STAR Level 2, PCI-DSS and others.
Leveraging threat intelligence and other signals, the Company undergoes periodic testing, audits and reviews of its policies, standards, processes and practices to identify, assess and address cybersecurity risks and events. The Company also undergoes routine internal and external penetration testing. The results of such tests and assessments are evaluated by management and periodically reported to the Audit Committee. The Company further adjusts its cybersecurity policies, standards, processes and practices based on these results. The Company also makes available to clients attestations of its various certifications, audits, and penetration tests.
Management Oversight and Governance
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The CISO, in coordination with other members of senior management, works collaboratively across the Company to implement a program designed to protect the Company’s information systems from cybersecurity threats and to promptly respond to cybersecurity incidents in accordance with the Company’s incident response and recovery plans. To facilitate the success of the Company’s cybersecurity program, cross-functional teams throughout the Company are tasked with addressing cybersecurity threats and responding to cybersecurity incidents. Through ongoing communications with these teams, the CISO and senior management are informed promptly about, and monitor the prevention, detection, investigation, mitigation and remediation of, cybersecurity threats. These teams are expected to operate pursuant to documented plans and playbooks that include processes for escalation of incidents to leadership and to the Audit Committee and the Board, as appropriate, based on the severity level of an incident. In addition, the Company periodically consults with outside advisors and experts to assist with assessing, identifying and managing cybersecurity risks, including to anticipate future threats and trends, and their impact on the Company’s risk management environment.
Specifically, management implements the Company’s cybersecurity and risk management strategy across several areas:
•Identification and Reporting. The Company has implemented a robust, cross-functional approach to identifying, assessing and managing cybersecurity threats and risks. The Company’s program includes controls and procedures designed to properly identify, classify, and escalate cybersecurity risks to provide management with visibility and prioritization of risk mitigation efforts and to publicly report material cybersecurity incidents if and when appropriate.
•Threat Intelligence. The Company maintains a Threat Intelligence team focused on profiling, intelligence collection, and threat analysis supporting the Company’s ongoing efforts to identify, assess and manage cybersecurity threats. The team’s input supports both near-term response to cybersecurity events, and long-term strategic planning and development of the Company’s cybersecurity risk management framework.
•Technical Safeguards. The Company implements technical safeguards that are designed to protect both the Company’s service offerings and other information systems it controls from cybersecurity threats, including firewalls, intrusion prevention and detection systems, anti-malware functionality, vulnerability management, encryption processes and access controls, all of which are periodically evaluated and improved through risk and control assessments and in response to cybersecurity threat intelligence as well as outside audits and certifications.
•Incident Response and Recovery Planning. The Company has established and maintains robust incident response, business continuity and disaster recovery plans designed to address the Company’s response to a cybersecurity incident, including any required public disclosure and reporting of material incidents in a timely manner. These plans and procedures serve to guide and document a rigorous incident response program that reflects the roles of an array of stakeholders, including personnel providing technical, operational, engineering, legal and other perspectives across the Company. The Company conducts regular tabletop exercises involving multiple operational teams, including senior management, to test these plans and to familiarize personnel with their roles in a response scenario.
•Third-Party Risk Management . The Company maintains a robust, risk-based approach to identifying and overseeing cybersecurity threats presented by certain third parties, including vendors, service providers and other external users of the Company’s systems, as well as the systems of third parties that could adversely impact our business in the event of a significant cybersecurity incident affecting those third-party systems.
•Education and Awareness. The Company regularly provides employee training on security-related duties and responsibilities, including knowledge about how to recognize security incidents and how to proceed if an actual or suspected incident should occur. This training is mandatory for employees across the Company, and is intended to provide the Company’s employees with effective tools to address cybersecurity threats, and to communicate the Company’s evolving information security policies, standards, processes and practices.
Board Oversight and Governance
Our management is responsible for identifying the various risks facing the Company, formulating risk management policies and procedures, and managing the Company’s risk exposures. Our Board responsibility is to monitor the Company’s risk management processes by informing itself concerning our material risks and evaluating whether management has reasonable controls in place to address the material risks. The Audit Committee of the Board is responsible for discussing with management the Company’s major risk exposures and the steps management has taken to monitor and control such exposures, including the Company’s risk assessment and risk management policies. Accordingly, our internal risk management team regularly reports to the Audit Committee on our major risk exposures and the steps management has taken to monitor and control such exposures, including our risk assessment and risk management policies. The Audit Committee, in turn, reports on the matters discussed at the committee level to the full Board .
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As part of its oversight of the Company’s risk management noted above, the Audit Committee oversees, reviews and discusses with management the Company’s risks from cybersecurity threats and management’s role in assessing and managing such risks. The Audit Committee receives regular presentations, reports and updates from the CISO and other members of management on developments regarding the Company’s cybersecurity program, broader cybersecurity trends, evolving industry standards, the threat environment and other topics.
The Company’s processes also allow for the Board and the Audit Committee to be informed of key cybersecurity risks outside the regular reporting schedule. While regular meetings of the Audit Committee are scheduled on a quarterly cadence, the Audit Committee is authorized to meet with management at any time it deems appropriate to discuss matters relevant to the Audit Committee. The Company’s policy is for the Board and the Audit Committee to receive prompt and timely information regarding any cybersecurity risk (including any incident) that meets pre-established reporting thresholds, as well as ongoing updates regarding any such risk.
Item 2. Properties
The Company’s headquarters are located in Bozeman, Montana. As of September 30, 2025, the Company leased office facilities in geographically dispersed locations primarily for corporate functions, sales, research and development, data centers and other purposes. The Company believes its existing facilities, which are used by both reportable segments, are in good operating condition and are suitable to meet operating needs.
Item 3. Legal Proceedings
FICO is a defendant in consolidated putative class action lawsuits brought in the Northern District of Illinois against FICO and the credit bureaus, Equifax, Experian and TransUnion, alleging antitrust claims in connection with the distribution of FICO Scores. On November 24, 2024, the court ruled on FICO’s and the credit bureaus’ motions to dismiss the plaintiffs’ amended complaints. The court dismissed with prejudice all claims in the lawsuit other than a Sherman Act Section 2 claim and accompanying state law claims against FICO, which were allowed to proceed through the discovery stage of the litigation. FICO intends to vigorously defend against the remaining claims in this proceeding.
Item 4. Mine Safety Disclosures
Not applicable.
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PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
Our common stock trades on the New York Stock Exchange under the symbol: FICO. According to records of our transfer agent, at October 23, 2025, we had 208 stockholders of record of our common stock.
Dividends
We have not declared or paid any cash dividends on our common stock since May 2017, and we do not presently plan to pay cash dividends on our common stock in the foreseeable future. Payment of future cash dividends, if any, will be at the discretion of our Board after taking into account various factors, including our financial condition, operating results, current and anticipated cash needs, outstanding indebtedness, plans for expansion and restrictions imposed by our debt arrangements, if any.
Unregistered Sales of Equity Securities and Use of Proceeds
Not applicable.
Issuer Purchases of Equity Securities
| Period | Total Number of Shares Purchased (1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) | Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2) | |||||||||||||||||||
| July 1, 2025 through July 31, 2025 | 131,572 | $ | 1,620.27 | 131,046 | $ | 667,795,277 | |||||||||||||||||
| August 1, 2025 through August 31, 2025 | 145,749 | $ | 1,373.86 | 145,457 | $ | 467,959,531 | |||||||||||||||||
| September 1, 2025 through September 30, 2025 | 81,456 | $ | 1,528.23 | 81,376 | $ | 343,600,296 | |||||||||||||||||
| 358,777 | $ | 1,499.27 | 357,879 | $ | 343,600,296 | ||||||||||||||||||
(1)Includes 898 shares delivered in satisfaction of the tax withholding obligations resulting from the vesting of restricted stock units held by employees during the quarter ended September 30, 2025.
(2)In June 2025, our Board approved a new stock repurchase program (the “June 2025 program”), replacing the previously authorized July 2024 stock repurchase program, which was terminated prior to its expiration. The June 2025 program is open-ended and authorizes repurchases of shares of our common stock from time to time up to an aggregate cost of $1.0 billion in the open market or in negotiated transactions. The June 2025 program remains in effect until the total authorized amount is expended or until further action by our Board.
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Performance Graph
The following graph shows the total stockholder return of an investment of $100 in cash on September 30, 2020, in (a) the Company’s common stock, (b) the Standard & Poor’s 500 Stock Index and (c) the Standard & Poor’s 500 Application Software Index, in each case with reinvestment of dividends. Our past performance may not be indicative of future performance.
Item 6. [Reserved]
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) includes the following: a business overview that provides a high-level summary of our strategies and initiatives, highlights from fiscal year 2025 and key performance metrics for our Software segment; a more detailed analysis of our results of operations; our capital resources and liquidity, which discusses key aspects of our statements of cash flows, changes in our balance sheets and our financial commitments; and a summary of our critical accounting estimates that involve a significant level of estimation uncertainty. Our MD&A should be read in conjunction with Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K. The following discussion contains forward-looking statements that are subject to risks and uncertainties. Actual results may differ from those referred to herein due to a number of factors, including but not limited to risks described in Item 1A, Risk Factors, in this Annual Report on Form 10-K.
Our MD&A focuses on discussion of year-over-year comparisons between fiscal 2025 and fiscal 2024. Discussion of fiscal 2023 results and year-over-year comparisons between fiscal 2024 and fiscal 2023 that are not included in this Annual Report on Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended September 30, 2024.
BUSINESS OVERVIEW
Strategies and Initiatives
In fiscal 2025, our B2B scoring solutions, including the flagship FICO® Score, continued to be the standard measure of consumer credit risk in the U.S. The adoption of our most predictive scores, FICO® Score 10 and FICO® Score 10 T, gained increased traction for non-conforming mortgages and was approved for conforming mortgages by the Federal Housing Finance Agency for enterprise credit scoring requirements. In addition, we launched FICO® Score 10 BNPL and FICO® Score 10 T BNPL, the first credit scores from a leading credit scoring provider to incorporate Buy Now, Pay Later (“BNPL”) data. These innovative scores represent a significant advancement in credit scoring, accounting for the growing importance of BNPL loans in the U.S. credit ecosystem. Internationally, we launched a FICO Score in Kenya, which leverages TransUnion data and CreditVision variables to redefine risk management and help expand access to financial services across Kenya. In fiscal 2025, in support of our B2C business and financial inclusion, we launched the FICO® Score Mortgage Simulator, which is the only simulator in the market built by FICO data scientists and powered by the FICO Score algorithm. We also introduced our Lenders Leading Financial Inclusion program that aims to expand credit access for underserved communities and we hosted free Score A Better Future® financial education workshops for students and adults from traditionally underserved communities.
During fiscal 2025, the strategy for our Software segment continued to advance and drive growth through our platform-first products. We expanded our FICO® Platform reach, both by geography and customer type, with the launch of FICO® Marketplace, enabling organizations to operationalize analytics, power customer connections, and make decisions at scale. Marketplace offers easy access to data, artificial intelligence (“AI”) models, optimization tools, decision rulesets, and machine learning models, which deliver enterprise business outcomes from AI. We continue to innovate and bring new capabilities to FICO Platform, demonstrating its value with new customers and expanding use cases with existing customers and partners. We announced newly granted patents around advancing responsible AI, machine learning, and applied intelligence technology. Additionally, we continue to expand our FICO® Educational Analytics Challenge program that was created to empower students and help educate the next generation of data scientists.
We also continued to enhance stockholder value by returning cash to stockholders through our stock repurchase program. During fiscal 2025, we repurchased 0.8 million shares at a total repurchase price of $1.4 billion.
Highlights from Fiscal 2025
•Total revenues were $2.0 billion during fiscal 2025, a 16% increase from fiscal 2024.
•Revenues for our Scores segment were $1.2 billion during fiscal 2025, a 27% increase from fiscal 2024.
•Annual Recurring Revenue for our Software segment as of September 30, 2025 was $747.3 million, a 4% increase from September 30, 2024.
•Dollar-Based Net Retention Rate for our Software segment was 102% as of September 30, 2025.
•Operating income was $924.9 million during fiscal 2025, a 26% increase from fiscal 2024.
•Net income was $651.9 million during fiscal 2025, a 27% increase from fiscal 2024.
•Diluted EPS was $26.54 during fiscal 2025, a 30% increase from fiscal 2024.
•Cash flow from operating activities was $778.8 million during fiscal 2025, compared with $633.0 million during fiscal 2024.
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•Cash and cash equivalents were $134.1 million as of September 30, 2025, compared with $150.7 million as of September 30, 2024.
•We issued $1.5 billion of senior notes and used the net proceeds to repay all the outstanding balances on our term loans. We also amended our credit agreement to increase our borrowing capacity under the unsecured revolving line of credit to $1.0 billion and extended its maturity. Total debt balance was $3.1 billion as of September 30, 2025, compared with $2.2 billion as of September 30, 2024.
•Total share repurchases during fiscal 2025 were $1.4 billion, compared with $0.8 billion during fiscal 2024.
Key performance metrics for Software segment
Annual Contract Value Bookings (“ACV Bookings”)
Management regards ACV Bookings as an important indicator of future revenues, but it is not comparable to, nor is it a substitute for, an analysis of our revenues and other U.S. generally accepted accounting principles (“U.S. GAAP”) measures. We define ACV Bookings as the average annualized value of software contracts signed in the current reporting period that generate current and future on-premises and SaaS software revenue. 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. For renewals of existing software subscription contracts, we count only incremental annual revenue expected over the current contract as ACV Bookings.
ACV Bookings is calculated by dividing the total expected contract value by the contract term in years. The expected contract value equals the fixed amount — including guaranteed minimums, if any — stated in the contract, plus estimates of future usage-based fees. We develop estimates from discussions with our customers and examinations of historical data from similar products and customer arrangements. Differences between estimates and actual results occur due to variability in the estimated usage. This variability can be the result of the economic trends in our customers’ industries, individual performance of our customers relative to their competitors, and regulatory and other factors that affect the business environment in which our customers operate. For the periods presented, ACV Bookings related to estimates of future usage-based fees was approximately 30% of the total ACV Bookings amount on an annualized basis. Differences between the initial estimates of future usage-based fees and actual results historically have not been material and we do not currently expect that they will be materially different in the future.
We disclose estimated revenue expected to be recognized in the future related to remaining performance obligations in Note 9 to the accompanying consolidated financial statements. However, we believe ACV Bookings is a useful supplemental measure of our business as it includes estimated revenues and future billings excluded from Note 9, such as usage-based fees and guaranteed minimums derived from our on-premises software licenses, among others.
The following table summarizes our ACV Bookings during the periods indicated:
| Quarter Ended September 30, | Year Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||
| Total on-premises and SaaS software | $ | 32.7 | $ | 22.1 | $ | 102.4 | $ | 84.7 | |||||||||||||||
Annual Recurring Revenue (“ARR”)
Accounting Standards Codification Topic 606, Revenue from Contracts with Customers, requires us to recognize a significant portion of revenue from our on-premises software subscriptions at the point in time when the software is first made available to the customer, or at the beginning of the subscription term, despite the fact that our contracts typically call for billing these amounts ratably over the life of the subscription. The remaining portion of our on-premises software subscription revenue including maintenance and usage-based fees are recognized over the life of the contract. This point-in-time recognition of a portion of our on-premises software subscription revenue creates significant variability in the revenue recognized period to period based on the timing of the subscription start date and the subscription term. Furthermore, this point-in-time revenue recognition can create a significant difference between the timing of our revenue recognition and the actual customer billing under the contract. We use ARR to measure the underlying performance of our subscription-based contracts and mitigate the impact of this variability. ARR is defined as the annualized revenue run-rate of on-premises and SaaS software agreements within a quarterly reporting period, and as such, is different from the timing and amount of revenue recognized. All components of our software licensing and subscription arrangements that are not expected to recur (primarily perpetual licenses) are excluded. We calculate ARR as the quarterly recurring revenue run-rate multiplied by four.
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The following table summarizes our ARR for on-premises and SaaS software exiting each of the dates presented:
| December 31, 2023 | March 31, 2024 | June 30, 2024 | September 30, 2024 | December 31, 2024 | March 31, 2025 | June 30, 2025 | September 30, 2025 | ||||||||||||||||||||||||||||||||||||||||
ARR | (In millions) | ||||||||||||||||||||||||||||||||||||||||||||||
| Platform | $ | 190.3 | $ | 201.4 | $ | 215.1 | $ | 227.0 | $ | 227.7 | $ | 234.7 | $ | 254.2 | $ | 263.6 | |||||||||||||||||||||||||||||||
| Non-platform | 497.4 | 495.6 | 494.5 | 494.2 | 501.6 | 479.9 | 484.9 | 483.7 | |||||||||||||||||||||||||||||||||||||||
| Total | $ | 687.7 | $ | 697.0 | $ | 709.6 | $ | 721.2 | $ | 729.3 | $ | 714.6 | $ | 739.1 | $ | 747.3 | |||||||||||||||||||||||||||||||
| Percentage | |||||||||||||||||||||||||||||||||||||||||||||||
| Platform | 28 | % | 29 | % | 30 | % | 31 | % | 31 | % | 33 | % | 34 | % | 35 | % | |||||||||||||||||||||||||||||||
| Non-platform | 72 | % | 71 | % | 70 | % | 69 | % | 69 | % | 67 | % | 66 | % | 65 | % | |||||||||||||||||||||||||||||||
| Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||||||||||||||||||
| YoY Change | |||||||||||||||||||||||||||||||||||||||||||||||
| Platform | 43 | % | 32 | % | 31 | % | 31 | % | 20 | % | 17 | % | 18 | % | 16 | % | |||||||||||||||||||||||||||||||
| Non-platform | 11 | % | 8 | % | 3 | % | — | % | 1 | % | (3) | % | (2) | % | (2) | % | |||||||||||||||||||||||||||||||
| Total | 18 | % | 14 | % | 10 | % | 8 | % | 6 | % | 3 | % | 4 | % | 4 | % | |||||||||||||||||||||||||||||||
Dollar-Based Net Retention Rate (“DBNRR”)
We consider DBNRR to be an important measure of our success in retaining and growing revenue from our existing customers. To calculate DBNRR for any period, we compare the ARR at the end of the prior comparable quarter (“base ARR”) to the ARR from that same cohort of customers at the end of the current quarter (“retained ARR”); we then divide the retained ARR by the base ARR to arrive at the DBNRR. 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. However, the calculation does not include the positive impact from sales to any new customers acquired during the period. Our DBNRR may increase or decrease from period to period as a result of various factors, including the timing of new sales and customer renewal rates.
The following table summarizes our DBNRR for on-premises and SaaS software exiting each of the dates presented:
| December 31, 2023 | March 31, 2024 | June 30, 2024 | September 30, 2024 | December 31, 2024 | March 31, 2025 | June 30, 2025 | September 30, 2025 | ||||||||||||||||||||||||||||||||||||||||
| DBNRR | |||||||||||||||||||||||||||||||||||||||||||||||
| Platform | 136 | % | 126 | % | 124 | % | 123 | % | 112 | % | 110 | % | 115 | % | 112 | % | |||||||||||||||||||||||||||||||
| Non-platform | 108 | % | 106 | % | 101 | % | 99 | % | 100 | % | 96 | % | 97 | % | 97 | % | |||||||||||||||||||||||||||||||
| Total | 114 | % | 112 | % | 108 | % | 106 | % | 105 | % | 102 | % | 103 | % | 102 | % | |||||||||||||||||||||||||||||||
RESULTS OF OPERATIONS
We are organized into two reportable segments: Scores and Software. Although we sell solutions and services into a large number of end user product and industry markets, our reportable business segments reflect the primary method in which management organizes and evaluates internal financial information to make operating decisions and assess performance.
Segment revenues, operating income, and related financial information, including disaggregation of revenue, for the years ended September 30, 2025, 2024 and 2023 are set forth in Note 9 and Note 15 to the accompanying consolidated financial statements.
Revenues
The following tables set forth certain summary information on a segment basis related to our revenues for fiscal 2025, 2024 and 2023:
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Year Ended September 30, | Period-to-Period Change | Period-to-Period Percentage Change | |||||||||||||||||||||||||||||||||||||||
| Segment | 2025 | 2024 | 2023 | 2025 to 2024 | 2024 to 2023 | 2025 to 2024 | 2024 to 2023 | ||||||||||||||||||||||||||||||||||
| (In thousands) | (In thousands) | ||||||||||||||||||||||||||||||||||||||||
| Scores | $ | 1,168,575 | $ | 919,650 | $ | 773,828 | $ | 248,925 | $ | 145,822 | 27 | % | 19 | % | |||||||||||||||||||||||||||
| Software | 822,294 | 797,876 | 739,729 | 24,418 | 58,147 | 3 | % | 8 | % | ||||||||||||||||||||||||||||||||
| Total | $ | 1,990,869 | $ | 1,717,526 | $ | 1,513,557 | 273,343 | 203,969 | 16 | % | 13 | % | |||||||||||||||||||||||||||||
| Percentage of Revenues Year Ended September 30, | |||||||||||||||||
| Segment | 2025 | 2024 | 2023 | ||||||||||||||
| Scores | 59 | % | 54 | % | 51 | % | |||||||||||
| Software | 41 | % | 46 | % | 49 | % | |||||||||||
| Total | 100 | % | 100 | % | 100 | % | |||||||||||
Scores
Scores segment revenues increased $248.9 million in fiscal 2025 from 2024 due to an increase of $236.7 million in our business-to-business scores revenue and an increase of $12.2 million in our business-to-consumer scores revenue. The increase in business-to-business scores revenue was primarily attributable to a higher unit price, an increase in volume of mortgage originations and a multi-year license renewal in the U.S. recognized on our insurance score product during fiscal 2025. The increase in business-to-consumer scores revenue was primarily attributable to an increase in royalties derived from scores sold indirectly to consumers through consumer reporting agencies.
Software
The following table provides information about disaggregated revenue for our Software segment by revenue types:
| Year Ended September 30, | Period-to-Period Change | Period-to-Period Percentage Change | |||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | 2025 to 2024 | 2024 to 2023 | 2025 to 2024 | 2024 to 2023 | |||||||||||||||||||||||||||||||||||
| (In thousands) | (In thousands) | ||||||||||||||||||||||||||||||||||||||||
On-premises and SaaS software | $ | 740,145 | $ | 711,340 | $ | 640,182 | $ | 28,805 | $ | 71,158 | 4 | % | 11 | % | |||||||||||||||||||||||||||
| Professional services | 82,149 | 86,536 | 99,547 | (4,387) | (13,011) | (5) | % | (13) | % | ||||||||||||||||||||||||||||||||
| Total | $ | 822,294 | $ | 797,876 | $ | 739,729 | 24,418 | 58,147 | 3 | % | 8 | % | |||||||||||||||||||||||||||||
The following table provides information about disaggregated revenue for on-premises and SaaS software within our Software segment by timing of revenue recognition:
| Year Ended September 30, | Period-to-Period Change | Period-to-Period Percentage Change | |||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | 2025 to 2024 | 2024 to 2023 | 2025 to 2024 | 2024 to 2023 | |||||||||||||||||||||||||||||||||||
| (In thousands) | (In thousands) | ||||||||||||||||||||||||||||||||||||||||
Software recognized at a point in time (1) | $ | 90,238 | $ | 76,284 | $ | 72,843 | $ | 13,954 | $ | 3,441 | 18 | % | 5 | % | |||||||||||||||||||||||||||
Software recognized over contract term (2) | 649,907 | 635,056 | 567,339 | 14,851 | 67,717 | 2 | % | 12 | % | ||||||||||||||||||||||||||||||||
Total | $ | 740,145 | $ | 711,340 | $ | 640,182 | $ | 28,805 | 71,158 | 4 | % | 11 | % | ||||||||||||||||||||||||||||
(1)Includes license portion of our on-premises subscription software and perpetual licenses, both of which are recognized when the software is made available to the customer, or at the start of the subscription.
(2)Includes maintenance portion and usage-based fees of our on-premises subscription software, maintenance revenue on perpetual licenses, as well as SaaS revenue.
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Software segment revenues increased $24.4 million in fiscal 2025 from 2024 due to a $28.8 million increase in on-premises and SaaS software revenue, partially offset by a $4.4 million decrease in professional services revenue. The increase in our on-premises and SaaS software revenue was primarily attributable to an increase in revenue recognized over time largely driven by SaaS growth for our Platform products and an increase in license revenue recognized at a point in time due to a large license renewal.
Operating Expenses and Other Income (Expense), Net
The following tables set forth certain summary information related to our consolidated statements of income and comprehensive income for fiscal 2025, 2024 and 2023:
| Year Ended September 30, | Period-to-Period Change | Period-to-Period Percentage Change | |||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | 2025 to 2024 | 2024 to 2023 | 2025 to 2024 | 2024 to 2023 | |||||||||||||||||||||||||||||||||||
| (In thousands, except employees) | (In thousands, except employees) | ||||||||||||||||||||||||||||||||||||||||
| Revenues | $ | 1,990,869 | $ | 1,717,526 | $ | 1,513,557 | $ | 273,343 | $ | 203,969 | 16 | % | 13 | % | |||||||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||||||||||||||||||
| Cost of revenues | 353,722 | 348,206 | 311,053 | 5,516 | 37,153 | 2 | % | 12 | % | ||||||||||||||||||||||||||||||||
| Research and development | 188,347 | 171,940 | 159,950 | 16,407 | 11,990 | 10 | % | 7 | % | ||||||||||||||||||||||||||||||||
| Selling, general and administrative | 513,028 | 462,834 | 400,565 | 50,194 | 62,269 | 11 | % | 16 | % | ||||||||||||||||||||||||||||||||
| Amortization of intangible assets | — | 917 | 1,100 | (917) | (183) | (100) | % | (17) | % | ||||||||||||||||||||||||||||||||
| Restructuring charges | 10,922 | — | — | 10,922 | — | — | % | — | % | ||||||||||||||||||||||||||||||||
| Gain on product line asset sale | — | — | (1,941) | — | 1,941 | — | % | (100) | % | ||||||||||||||||||||||||||||||||
| Total operating expenses | 1,066,019 | 983,897 | 870,727 | 82,122 | 113,170 | 8 | % | 13 | % | ||||||||||||||||||||||||||||||||
| Operating income | 924,850 | 733,629 | 642,830 | 191,221 | 90,799 | 26 | % | 14 | % | ||||||||||||||||||||||||||||||||
| Interest expense, net | (133,647) | (105,638) | (95,546) | (28,009) | (10,092) | 27 | % | 11 | % | ||||||||||||||||||||||||||||||||
| Other income, net | 11,392 | 14,034 | 6,340 | (2,642) | 7,694 | (19) | % | 121 | % | ||||||||||||||||||||||||||||||||
| Income before income taxes | 802,595 | 642,025 | 553,624 | 160,570 | 88,401 | 25 | % | 16 | % | ||||||||||||||||||||||||||||||||
| Provision for income taxes | 150,649 | 129,214 | 124,249 | 21,435 | 4,965 | 17 | % | 4 | % | ||||||||||||||||||||||||||||||||
| Net income | $ | 651,946 | $ | 512,811 | $ | 429,375 | 139,135 | 83,436 | 27 | % | 19 | % | |||||||||||||||||||||||||||||
| Number of employees at fiscal year-end | 3,811 | 3,586 | 3,455 | 225 | 131 | 6 | % | 4 | % | ||||||||||||||||||||||||||||||||
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| Percentage of Revenues Year Ended September 30, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Revenues | 100 | % | 100 | % | 100 | % | |||||||||||
| Operating expenses: | |||||||||||||||||
| Cost of revenues | 18 | % | 20 | % | 21 | % | |||||||||||
| Research and development | 9 | % | 10 | % | 11 | % | |||||||||||
| Selling, general and administrative | 26 | % | 27 | % | 26 | % | |||||||||||
| Amortization of intangible assets | — | % | — | % | — | % | |||||||||||
| Restructuring charges | 1 | % | — | % | — | % | |||||||||||
| Gain on product line asset sale | — | % | — | % | — | % | |||||||||||
| Total operating expenses | 54 | % | 57 | % | 58 | % | |||||||||||
| Operating income | 46 | % | 43 | % | 42 | % | |||||||||||
| Interest expense, net | (7) | % | (6) | % | (6) | % | |||||||||||
| Other income, net | 1 | % | 1 | % | — | % | |||||||||||
| Income before income taxes | 40 | % | 38 | % | 36 | % | |||||||||||
| Provision for income taxes | 7 | % | 8 | % | 8 | % | |||||||||||
| Net income | 33 | % | 30 | % | 28 | % | |||||||||||
Cost of Revenues
Cost of revenues consists primarily of employee salaries, incentives, and benefits for personnel directly involved in delivering software products, operating SaaS infrastructure, and providing support, implementation and consulting services; overhead, facilities and data center costs; software royalty fees; consumer reporting agency data and processing services; third-party hosting fees related to our SaaS services; travel costs; and outside services.
The fiscal 2025 over 2024 increase in cost of revenues of $5.5 million was primarily attributable to an $8.7 million increase in infrastructure and facilities costs, partially offset by a $2.1 million decrease in outside services costs and a $1.4 million decrease in personnel and labor costs. The increase in infrastructure and facilities costs was primarily attributable to an increase in third-party data center hosting costs and an increase in depreciation on data center computer hardware. The decrease in outside services costs was primarily attributable to decreased third-party contractor costs. The decrease in personnel and labor costs was primarily attributable to decreased incentive expense. Cost of revenues as a percentage of revenues decreased to 18% during fiscal 2025 from 20% during fiscal 2024, primarily due to increased sales of our higher-margin Scores products.
Research and Development
Research and development expenses include personnel and related overhead costs incurred in the development of new products and services, including research of mathematical and statistical models and development of new versions of Software products.
The fiscal 2025 over 2024 increase in research and development expenses of $16.4 million was primarily attributable to a $6.9 million increase in infrastructure and facilities costs, a $5.7 million increase in outside services costs, and a $3.8 million increase in personnel and labor costs. The increase in infrastructure and facilities costs was primarily attributable to increased third-party data center hosting costs and third-party SaaS services costs. The increase in outside services costs was primarily attributable to increased third-party contractor costs. The increase in personnel and labor costs was primarily attributable to increased headcount. Research and development expenses as a percentage of revenues decreased to 9% during fiscal 2025 from 10% during fiscal 2024.
Selling, General and Administrative
Selling, general and administrative expenses consist principally of employee salaries, incentives, commissions and benefits; travel costs; overhead costs; advertising and other promotional expenses; corporate facilities expenses; legal expenses; and business development expenses.
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The fiscal 2025 over 2024 increase in selling, general and administrative expenses of $50.2 million was primarily attributable to a $23.7 million increase in personnel and labor costs, a $22.4 million increase in advertising and other promotional costs, and a $3.3 million increase in travel costs. The increase in personnel and labor costs was primarily attributable to increased headcount, market base-pay adjustments, commission expense, and share-based compensation expense, partially offset by decreased fringe benefit costs related to our supplemental retirement and savings plan. The increase in advertising and other promotional costs was primarily attributable to increased costs for advertising campaigns and corporate events. The increase in travel costs was primarily attributable to promotional and corporate events. Selling, general and administrative expenses as a percentage of revenues decreased to 26% during fiscal 2025 from 27% during fiscal 2024.
Restructuring Charges
During the fourth quarter of fiscal 2025, we incurred charges of $10.9 million in employee separation costs due to the elimination of 226 positions throughout the Company. Cash payments for all the employee separation costs will be paid by the end of our fiscal 2026.
Interest Expense, Net
Interest expense includes interest on the senior notes issued in May 2025, December 2021, December 2019, and May 2018, as well as interest and credit agreement fees on the revolving line of credit and term loans. On our consolidated statements of income and comprehensive income, interest expense is netted with interest income, which is derived primarily from the investment of funds in excess of our immediate operating requirements.
The fiscal 2025 over 2024 increase in net interest expense of $28.0 million was primarily attributable to the $1.5 billion of 2025 Senior Notes (as defined below), partially offset by a lower average outstanding balance and a lower average interest rate on borrowings under our credit agreement during fiscal 2025.
Other Income, Net
Other income, net consists primarily of unrealized investment gains/losses and realized gains/losses on marketable securities classified as trading securities, exchange rate gains/losses resulting from remeasurement of foreign-currency-denominated receivable and cash balances held by our various reporting entities into their respective functional currencies at period-end market rates, net of the impact of offsetting foreign currency forward contracts, and other non-operating items.
The fiscal 2025 over 2024 decrease in other income, net of $2.6 million was primarily attributable to a decrease in net unrealized gains on investments classified as trading securities in our supplemental retirement and savings plan, partially offset by an increase in net exchange rate gains resulting from remeasurement of foreign-currency-denominated receivable and cash balances held by our various reporting entities into their respective functional currencies at period-end market rates, net of the impact of offsetting foreign currency forward contracts.
Provision for Income Taxes
Our effective income tax rates were 18.8%, 20.1% and 22.4% in fiscal 2025, 2024 and 2023, respectively.
The decrease in our effective tax rate in fiscal 2025 compared to fiscal 2024 was due to an increase in excess tax benefits related to share-based compensation.
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Operating Income
The following tables set forth certain summary information on a segment basis related to our operating income for fiscal 2025, 2024 and 2023:
| Year Ended September 30, | Period-to-Period Change | Period-to-Period Percentage Change | |||||||||||||||||||||||||||||||||||||||
| Segment | 2025 | 2024 | 2023 | 2025 to 2024 | 2024 to 2023 | 2025 to 2024 | 2024 to 2023 | ||||||||||||||||||||||||||||||||||
| (In thousands) | (In thousands) | ||||||||||||||||||||||||||||||||||||||||
| Scores | $ | 1,026,243 | $ | 813,354 | $ | 681,071 | $ | 212,889 | $ | 132,283 | 26 | % | 19 | % | |||||||||||||||||||||||||||
| Software | 247,694 | 257,529 | 241,191 | (9,835) | 16,338 | (4) | % | 7 | % | ||||||||||||||||||||||||||||||||
| Total segment operating income | 1,273,937 | 1,070,883 | 922,262 | 203,054 | 148,621 | 19 | % | 16 | % | ||||||||||||||||||||||||||||||||
| Unallocated corporate expenses | (181,498) | (186,898) | (156,426) | 5,400 | (30,472) | (3) | % | 19 | % | ||||||||||||||||||||||||||||||||
| Unallocated share-based compensation | (156,667) | (149,439) | (123,847) | (7,228) | (25,592) | 5 | % | 21 | % | ||||||||||||||||||||||||||||||||
| Unallocated amortization expense | — | (917) | (1,100) | 917 | 183 | (100) | % | (17) | % | ||||||||||||||||||||||||||||||||
| Unallocated restructuring charges | (10,922) | — | — | (10,922) | — | — | % | — | % | ||||||||||||||||||||||||||||||||
| Gain on product line asset sale | — | — | 1,941 | — | (1,941) | — | % | (100) | % | ||||||||||||||||||||||||||||||||
| Operating income | $ | 924,850 | $ | 733,629 | $ | 642,830 | 191,221 | 90,799 | 26 | % | 14 | % | |||||||||||||||||||||||||||||
Scores
| Year Ended September 30, | Percentage of Revenues | ||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||||||||||||||
| Segment revenues | $ | 1,168,575 | $ | 919,650 | $ | 773,828 | 100 | % | 100 | % | 100 | % | |||||||||||||||||||||||
| Segment operating expenses | (142,332) | (106,296) | (92,757) | (12) | % | (12) | % | (12) | % | ||||||||||||||||||||||||||
| Segment operating income | $ | 1,026,243 | $ | 813,354 | $ | 681,071 | 88 | % | 88 | % | 88 | % | |||||||||||||||||||||||
Software
| Year Ended September 30, | Percentage of Revenues | ||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||||||||||||||
| Segment revenues | $ | 822,294 | $ | 797,876 | $ | 739,729 | 100 | % | 100 | % | 100 | % | |||||||||||||||||||||||
| Segment operating expenses | (574,600) | (540,347) | (498,538) | (70) | % | (68) | % | (67) | % | ||||||||||||||||||||||||||
| Segment operating income | $ | 247,694 | $ | 257,529 | $ | 241,191 | 30 | % | 32 | % | 33 | % | |||||||||||||||||||||||
The fiscal 2025 over 2024 increase in operating income of $191.2 million was primarily attributable to a $273.3 million increase in segment revenues and a $5.4 million decrease in corporate expenses, partially offset by a $70.2 million increase in segment operating expenses, a $10.9 million increase in restructuring charges, and a $7.2 million increase in share-based compensation cost.
At the segment level, the $203.1 million increase in segment operating income was the result of a $212.9 million increase in our Scores segment operating income, partially offset by a $9.8 million decrease in our Software segment operating income.
The $212.9 million increase in our Scores segment operating income was attributable to a $248.9 million increase in segment revenue, partially offset by a $36.0 million increase in segment operating expenses. Segment operating income as a percentage of segment revenue for Scores was 88%, consistent with fiscal 2024.
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The $9.8 million decrease in our Software segment operating income was attributable to a $34.2 million increase in segment operating expenses, partially offset by a $24.4 million increase in segment revenue. Segment operating income as a percentage of segment revenue for Software decreased to 30% from 32%, primarily attributable to the increases in third-party data center hosting costs and in personnel and labor costs.
CAPITAL RESOURCES AND LIQUIDITY
Outlook
As of September 30, 2025, we had $134.1 million in cash and cash equivalents, which included $118.8 million held by our foreign subsidiaries. We believe our cash and cash equivalents balances, including those held by our foreign subsidiaries, as well as available borrowings from our $1.0 billion revolving line of credit and anticipated cash flows from operating activities, will be sufficient to fund our working and other capital requirements for at least the next 12 months and thereafter for the foreseeable future, including the $400.0 million principal payment on the 2018 Senior Notes (as defined below) due over the next 12 months. Under our current financing arrangements, we have no other significant debt obligations maturing over the next 12 months. For jurisdictions outside the U.S. where cash may be repatriated in the future, the Company expects the net impact of any repatriations to be immaterial to the Company’s overall tax liability.
In the normal course of business, we evaluate the merits of acquiring technology or businesses, or establishing strategic relationships with or investing in these businesses. We may elect to use available cash and cash equivalents to fund such activities in the future. In the event additional needs for cash arise, or if we refinance our existing debt, we may raise additional funds from a combination of sources, including the potential issuance of debt or equity securities. Additional financing might not be available on terms favorable to us, or at all. If adequate funds were not available or were not available on acceptable terms, our ability to take advantage of unanticipated opportunities or respond to competitive pressures could be limited.
Summary of Cash Flows
| Year Ended September 30, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (In thousands) | |||||||||||||||||
| Cash provided by (used in): | |||||||||||||||||
| Operating activities | $ | 778,807 | $ | 632,964 | $ | 468,915 | |||||||||||
| Investing activities | (43,719) | (27,993) | (15,954) | ||||||||||||||
| Financing activities | (750,329) | (592,923) | (455,001) | ||||||||||||||
| Effect of exchange rate changes on cash | (1,290) | 1,841 | 5,616 | ||||||||||||||
| Increase (decrease) in cash and cash equivalents | $ | (16,531) | $ | 13,889 | $ | 3,576 | |||||||||||
Cash Flows from Operating Activities
Our primary method for funding operations and growth has been through cash flows generated from operating activities. Net cash provided by operating activities totaled $778.8 million in fiscal 2025 compared to $633.0 million in fiscal 2024. The $145.8 million increase was attributable to a $139.1 million increase in net income, a $4.8 million increase in non-cash items, and a $1.9 million increase that resulted from timing of receipts and payments in our ordinary course of business.
Cash Flows from Investing Activities
Net cash used in investing activities totaled $43.7 million in fiscal 2025 compared to $28.0 million in fiscal 2024. The $15.7 million increase was attributable to a $13.8 million increase in capitalized internal-use software costs and a $1.9 million decrease in proceeds from sales, net of purchases, of marketable securities.
Cash Flows from Financing Activities
Net cash used in financing activities totaled $750.3 million in fiscal 2025 compared to $592.9 million in fiscal 2024. The $157.4 million increase was primarily attributable to a $988.8 million increase in payments, net of proceeds, on our revolving line of credit and term loans, a $592.8 million increase in repurchases of common stock, a $65.4 million increase in taxes paid related to net share settlement of equity awards, and a $16.5 million increase in debt issuance costs, partially offset by the proceeds from the issuance of our $1.5 billion 2025 Senior Notes (as defined below).
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Repurchases of Common Stock
In July 2024, our Board approved a stock repurchase program (the “July 2024 program”), replacing our previously authorized January 2024 stock repurchase program, which was terminated prior to its expiration. The July 2024 program was open-ended and authorized repurchases of shares of our common stock from time to time up to an aggregate cost of $1.0 billion in the open market or in negotiated transactions. In June 2025, our Board approved a new stock repurchase program (the “June 2025 program”), replacing the July 2024 program, which was terminated prior to its expiration. The June 2025 program is open-ended and authorizes repurchases of shares of our common stock from time to time up to an aggregate cost of $1.0 billion in the open market or in negotiated transactions. The June 2025 program remains in effect until the total authorized amount is expended or until further action by our Board. As of September 30, 2025, we had $343.6 million remaining under the June 2025 program. During fiscal 2025 and 2024, we expended $1.4 billion and $0.8 billion, respectively, under the June 2025 program and previously authorized stock repurchase programs, as applicable.
Revolving Line of Credit and Term Loans
On May 13, 2025, we amended our credit agreement with a syndicate of banks, increasing our borrowing capacity under the unsecured revolving line of credit from $600 million to $1.0 billion and extending its maturity to May 13, 2030. Also on May 13, 2025, we repaid in full and terminated the $300 million unsecured term loan (the “$300 Million Term Loan”) and the $450 million unsecured term loan (the “$450 Million Term Loan”) outstanding under our credit agreement, utilizing proceeds from the issuance of the 2025 Senior Notes (as defined below). Borrowings under the revolving line of credit can be used for working capital and general corporate purposes and may also be used for the refinancing of existing debt, acquisitions, and the repurchase of our common stock. Interest rates on amounts borrowed under the revolving line of credit are based on (i) an adjusted base rate, which is the greatest of (a) the prime rate, (b) the Federal Funds rate plus 0.5%, and (c) the Daily Simple Secured Overnight Financing Rate (“SOFR”) plus 1%, plus, in each case, an applicable margin, (ii) the Daily Simple SOFR plus an applicable margin (or, if such rate is no longer available, a successor benchmark rate determined in accordance with the terms of the credit agreement), or (iii) term SOFR (without a credit spread adjustment) plus an applicable margin (or, if such rate is no longer available, a successor benchmark rate determined in accordance with the terms of the credit agreement). The applicable margin for base rate borrowings and for SOFR borrowings is determined based on our consolidated leverage ratio. The applicable margin for base rate borrowings ranges from 0% to 0.75% per annum and for SOFR borrowings ranges from 1% to 1.75% per annum. In addition, we must pay certain credit facility fees. The credit agreement contains certain restrictive covenants including a maximum consolidated leverage ratio of 3.5 to 1.0, subject to a step up to 4.0 to 1.0 following certain permitted acquisitions and subject to certain conditions, and contains other covenants typical of an unsecured credit facility.
As of September 30, 2025, we had $275.0 million in borrowings outstanding under the revolving line of credit at a weighted-average interest rate of 5.423% and we were in compliance with all financial covenants under the credit agreement.
Senior Notes
On May 8, 2018, we issued $400 million of senior notes in a private offering to qualified institutional investors (the “2018 Senior Notes”). The 2018 Senior Notes require interest payments semi-annually at a rate of 5.25% per annum and will mature on May 15, 2026. On December 6, 2019, we issued $350 million of senior notes in a private offering to qualified institutional investors (the “2019 Senior Notes”). The 2019 Senior Notes require interest payments semi-annually at a rate of 4.00% per annum and will mature on June 15, 2028. On December 17, 2021, we issued $550 million of additional senior notes of the same class as the 2019 Senior Notes in a private offering to qualified institutional investors (the “2021 Senior Notes”). The 2021 Senior Notes require interest payments semi-annually at a rate of 4.00% per annum and will mature on June 15, 2028, the same date as the 2019 Senior Notes. On May 13, 2025, we issued $1.5 billion of senior notes in a private offering to qualified institutional investors (the “2025 Senior Notes,” and collectively with the 2018 Senior Notes, the 2019 Senior Notes and the 2021 Senior Notes, the “Senior Notes”). The 2025 Senior Notes require interest payments semi-annually at a rate of 6.00% per annum and will mature on May 15, 2033. The indentures for the Senior Notes contain certain covenants typical of unsecured obligations. As of September 30, 2025, the carrying value of the Senior Notes was $2.8 billion and we were in compliance with all financial covenants under these obligations.
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Contractual Obligations
The following table presents a summary of our contractual obligations at September 30, 2025:
| Year Ending September 30, | Thereafter | Total | |||||||||||||||||||||||||||||||||||||||
| 2026 | 2027 | 2028 | 2029 | 2030 | |||||||||||||||||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||||||||||||||||||||
Senior Notes (1) | $ | 400,000 | $ | — | $ | 900,000 | $ | — | $ | — | $ | 1,500,000 | $ | 2,800,000 | |||||||||||||||||||||||||||
Revolving line of credit (1) | — | — | — | — | 275,000 | — | 275,000 | ||||||||||||||||||||||||||||||||||
| Interest due on Senior Notes | 147,500 | 126,000 | 126,000 | 90,000 | 90,000 | 270,000 | 849,500 | ||||||||||||||||||||||||||||||||||
| Operating lease obligations | 11,214 | 8,125 | 5,576 | 3,767 | 1,917 | 2,191 | 32,790 | ||||||||||||||||||||||||||||||||||
| Finance lease obligations | 3,625 | 3,625 | 441 | — | — | — | 7,691 | ||||||||||||||||||||||||||||||||||
Purchase obligations (2) | $ | 72,128 | 19,437 | 5,035 | 2,375 | 273 | — | 99,248 | |||||||||||||||||||||||||||||||||
Unrecognized tax benefits (3) | — | — | — | — | — | — | 19,505 | ||||||||||||||||||||||||||||||||||
| Total commitments | $ | 634,467 | $ | 157,187 | $ | 1,037,052 | $ | 96,142 | $ | 367,190 | $ | 1,772,191 | $ | 4,083,734 | |||||||||||||||||||||||||||
(1)Represents the unpaid principal payments due under the Senior Notes and revolving line of credit.
(2)Represents purchase obligations primarily consisting of commitments to purchase certain services. For services that have been delivered under these arrangements as of September 30, 2025, we recorded related liabilities within accounts payable or other accrued liabilities on our consolidated balance sheet, which are excluded from the purchase obligations amount.
(3)Represents unrecognized tax benefits related to uncertain tax positions. As we are not able to reasonably estimate the timing of the payments or the amount by which the liability will increase or decrease over time, the related balances have not been reflected in the section of the table showing payment by fiscal year.
CRITICAL ACCOUNTING ESTIMATES
We prepare our consolidated financial statements in conformity with U.S. GAAP. These accounting principles require management to make certain judgments and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. We periodically evaluate our estimates including those relating to revenue recognition, goodwill resulting from business combinations and other long-lived assets – impairment assessment, share-based compensation, income taxes, and contingencies and litigation. We base our estimates on historical experience and various other assumptions that we believe to be reasonable based on the specific circumstances, the results of which form the basis for making judgments about the carrying value of certain assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates and such differences could be material to our financial condition and results of operations. Critical accounting estimates are those that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition and results of operations.
While our significant accounting policies are more fully described in Note 1 and Note 9 to our consolidated financial statements included elsewhere in this report, we believe the following accounting policies require the most critical accounting estimates, which involve significant subjectivity and judgment, and changes to such estimates or assumptions could have a material impact on our financial condition or operating results. Therefore, we consider an understanding of the variability and judgment required in making these estimates and assumptions to be critical in fully understanding and evaluating our reported financial results.
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Revenue Recognition
For our SaaS subscriptions, we estimate the total variable consideration at contract inception — subject to any constraints that may apply — and update the estimates as new information becomes available and recognize the amount ratably over the SaaS service period, unless we determine it is appropriate to allocate the variable amount to each distinct service period and recognize revenue as each distinct service period is performed. Variable consideration is included in the transaction price if, in our judgment, it is probable that a significant future reversal of cumulative revenue recognized under the contract will not occur. Variable consideration is estimated based on either the expected value or the most likely amount method depending on which method we expect to better predict the amount of consideration to which we will be entitled. Our estimates of variable consideration are based largely on an assessment of our anticipated performance and all information (historical, current and forecasted) that is reasonably available to us at contract inception and require judgment. For the periods presented, we have not experienced significant changes to our estimates and judgments related to variable consideration in our contracts.
Our contracts with customers often include promises to transfer multiple products and services to a customer. Determining whether products and services are considered distinct and should be accounted for separately may require significant judgment. Specifically, when implementation service is included in the original software or SaaS offerings, judgment is required to determine if the implementation service significantly modifies or customizes the software or SaaS service in such a way that the risks of providing it and the customization service are inseparable. In rare instances, contracts may include significant modification or customization of the software of SaaS service and will result in the combination of software or SaaS service and implementation service as one performance obligation. For the periods presented, we have not experienced significant changes to our estimates and judgments related to the identification of performance obligations for our contracts.
We determine the standalone selling prices (“SSP”) using data from our historical standalone sales, or, in instances where such information is not available (such as when we do not sell the product or service separately), we consider factors such as the stated contract prices, our overall pricing practices and objectives, go-to-market strategy, size and type of the transactions, and effects of the geographic area on pricing, among others. When the selling price of a product or service is highly variable, we may use the residual approach to determine the SSP of that product or service. Significant judgment may be required to determine the SSP for each distinct performance obligation when it involves the consideration of many market conditions and entity-specific factors discussed above. For the periods presented, we have not experienced significant changes to our estimates and judgments related to the determination of our SSPs.
Goodwill and Other Long-Lived Assets - Impairment Assessment
Goodwill represents the excess of cost over the fair value of identifiable assets acquired and liabilities assumed in business combinations. We assess goodwill for impairment for each of our reporting units on an annual basis during our fourth fiscal quarter using a July 1 measurement date unless circumstances require a more frequent measurement.
We have determined that our reporting units are the same as our reportable segments. When evaluating goodwill for impairment, we may first perform an assessment qualitatively whether it is more likely than not that a reporting unit's carrying amount exceeds its fair value, referred to as a “step zero” approach. If, based on the review of the qualitative factors, we determine it is not more likely than not that the fair value of a reporting unit is less than its carrying value, we would bypass the two-step impairment test. Events and circumstances we consider in performing the “step zero” qualitative assessment include macro-economic conditions, market and industry conditions, internal cost factors, share price fluctuations, and the operational stability and overall financial performance of the reporting units. If we conclude that it is more likely than not that a reporting unit's fair value is less than its carrying amount, we would perform the first step (“step one”) of the two-step impairment test and calculate the estimated fair value of the reporting unit by using discounted cash flow valuation models and by comparing our reporting units to guideline publicly-traded companies. These methods require estimates of our future revenues, profits, capital expenditures, working capital, and other relevant factors, as well as selecting appropriate guideline publicly-traded companies for each reporting unit. We estimate these amounts by evaluating historical trends, current budgets, operating plans, industry data, and other relevant factors. Alternatively, we may bypass the qualitative assessment described above for any reporting unit in any period and proceed directly to performing step one of the goodwill impairment test.
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Our other long-lived assets are assessed for potential impairment when there is evidence that events and circumstances related to our financial performance and economic environment indicate the carrying amount of the assets may not be recoverable. When impairment indicators are identified, we test for impairment using undiscounted projected cash flows. If such tests indicate impairment, then we measure and record the impairment as the difference between the carrying value of the asset and the fair value of the asset. Significant management judgment is required in forecasting future operating results used in the preparation of the projected cash flows. Should different conditions prevail, material write downs of our other long-lived assets could occur.
As discussed above, while we believe that the assumptions and estimates utilized were appropriate based on the information available to management, different assumptions, judgments and estimates could materially affect our impairment assessments for our goodwill and other long-lived assets. For the periods presented, we have not experienced significant changes to our estimates and judgments related to our goodwill or other long-lived assets impairment assessment. We believe our projected operating results and cash flows would need to be significantly less favorable to have a material impact on our impairment assessment. However, based upon our historical experience with operations, we do not believe there is a reasonable likelihood of a significant change in our projections.
Share-Based Compensation
We measure share-based compensation cost at the grant date based on the fair value of the award and recognize it as expense, net of estimated forfeitures, over the vesting or service period, as applicable, of the stock award (generally three to four years). We use the Black-Scholes valuation model to determine the fair value of our stock options and a Monte Carlo valuation model to determine the fair value of our market share units. Our valuation models and generally accepted valuation techniques require us to make assumptions and to apply judgment to determine the fair value of our awards. These assumptions and judgments include estimating the volatility of our stock price, expected dividend yield, employee turnover rates and employee stock option exercise behaviors. For the periods presented, we have not experienced significant changes to our estimates and judgments related to the fair value of our awards. See Note 13 to the accompanying consolidated financial statements for further discussion of our share-based employee benefit plans.
Income Taxes
We estimate our income taxes based on the various jurisdictions where we conduct business, which involves significant judgment in determining our income tax provision. We estimate our current tax liability using currently enacted tax rates and laws and assess temporary differences that result from differing treatments of certain items for tax and accounting purposes. These differences result in deferred tax assets and liabilities recorded on our consolidated balance sheets using the currently enacted tax rates and laws that will apply to taxable income for the years in which those tax assets are expected to be realized or settled. We then assess the likelihood our deferred tax assets will be realized and to the extent we believe realization is not more likely than not, we establish a valuation allowance. When we establish a valuation allowance or increase this allowance in an accounting period, we record a corresponding income tax expense in our consolidated statements of income and comprehensive income. In assessing the need for the valuation allowance, we consider future taxable income in the jurisdictions we operate; our ability to carry back tax attributes to prior years; an analysis of our deferred tax assets and the periods over which they will be realizable; and ongoing prudent and feasible tax planning strategies. An increase in the valuation allowance would have an adverse impact, which could be material, on our income tax provision and net income in the period in which we record the increase.
We recognize and measure benefits for uncertain tax positions using a two-step approach. The first step is to evaluate the tax position taken or expected to be taken in a tax return by determining if the technical merits of the tax position indicate it is more likely than not that the tax position will be sustained upon audit, including resolution of any related appeals or litigation processes. For tax positions more likely than not of being sustained upon audit, the second step is to measure the tax benefit as the largest amount more than 50% likely of being realized upon settlement. Significant judgment is required to evaluate uncertain tax positions and they are evaluated on a quarterly basis. Our evaluations are based upon a number of factors, including changes in facts or circumstances, changes in tax law, correspondence with tax authorities during the course of audits and effective settlement of audit issues. Changes in the recognition or measurement of uncertain tax positions could result in material increases or decreases in our income tax expense in the period in which we make the change, which could have a material impact on our effective tax rate and operating results.
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Contingencies and Litigation
We are subject to various proceedings, lawsuits and claims relating to products and services, technology, labor, stockholder and other matters. We are required to assess the likelihood of any adverse outcomes and the potential range of probable losses in these matters. If the potential loss is considered probable and the amount can be reasonably estimated, we accrue a liability for the estimated loss. If the potential loss is considered less than probable or the amount cannot be reasonably estimated, disclosure of the matter is considered. The amount of loss accrual or disclosure, if any, is determined after analysis of each matter, and is subject to adjustment if warranted by new developments or revised strategies. Due to uncertainties related to these matters, accruals or disclosures are based on the best information available at the time. Significant judgment is required in both the assessment of likelihood and in the determination of a range of potential losses. Revisions in the estimates of the potential liabilities could have a material impact on our consolidated financial position or consolidated results of operations. For the periods presented, we have not experienced significant changes to our estimates and judgments related to the assessment of likelihood and in the determination of a range of potential losses.
New Accounting Pronouncements
For information about recent accounting pronouncements recently adopted and not yet adopted and the impact on our consolidated financial statements, refer to Part II, Item 8, Financial Statements and Supplementary Data, Note 1, Nature of Business and Summary of Significant Accounting Policies, in our accompanying Notes to Consolidated Financial Statements in this Annual Report on Form 10-K.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Market Risk Disclosures
We are exposed to market risk related to changes in interest rates and foreign exchange rates. We do not use derivative financial instruments for speculative or trading purposes.
Interest Rate
We maintain an investment portfolio consisting of bank deposits and money market funds. The funds provide daily liquidity and may be subject to interest rate risk and fall in value if market interest rates increase. We do not expect our operating expenses to be affected to any significant degree by a sudden change in market interest rates. The following table presents the principal amounts and related weighted-average yields for our investments with interest rate risk at September 30, 2025 and 2024:
| September 30, 2025 | September 30, 2024 | ||||||||||||||||||||||||||||||||||
| Cost Basis | Carrying Amount | Average Yield | Cost Basis | Carrying Amount | Average Yield | ||||||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 134,136 | $ | 134,136 | 1.77 | % | $ | 150,667 | $ | 150,667 | 2.88 | % | |||||||||||||||||||||||
The fair value of the Senior Notes may increase or decrease due to various factors, including fluctuations in market interest rates and fluctuations in general economic conditions. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Capital Resources and Liquidity” for additional information on the Senior Notes. The following table presents the face values and fair values for the Senior Notes at September 30, 2025 and 2024:
| September 30, 2025 | September 30, 2024 | ||||||||||||||||||||||
| Face Value | Fair Value | Face Value | Fair Value | ||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||
| The 2018 Senior Notes | $ | 400,000 | 399,500 | $ | 400,000 | $ | 399,500 | ||||||||||||||||
| The 2019 Senior Notes and the 2021 Senior Notes | 900,000 | 875,250 | 900,000 | 864,000 | |||||||||||||||||||
| The 2025 Senior Notes | 1,500,000 | 1,518,750 | — | — | |||||||||||||||||||
| Total | $ | 2,800,000 | $ | 2,793,500 | $ | 1,300,000 | $ | 1,263,500 | |||||||||||||||
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We have interest rate risk with respect to our unsecured revolving line of credit. Interest rates on amounts borrowed under the revolving line of credit are based on (i) an adjusted base rate, which is the greatest of (a) the prime rate, (b) the Federal Funds rate plus 0.5%, and (c) the Daily Simple Secured Overnight Financing Rate (“SOFR”) plus 1%, plus, in each case, an applicable margin, (ii) the Daily Simple SOFR plus an applicable margin (or, if such rate is no longer available, a successor benchmark rate determined in accordance with the terms of the credit agreement), or (iii) term SOFR (without a credit spread adjustment) plus an applicable margin (or, if such rate is no longer available, a successor benchmark rate determined in accordance with the terms of the credit agreement). The applicable margin for base rate borrowings and for SOFR borrowings is determined based on our consolidated leverage ratio. The applicable margin for base rate borrowings ranges from 0% to 0.75% per annum and for SOFR borrowings ranges from 1% to 1.75% per annum. A change in interest rates on this variable rate debt impacts the interest incurred and cash flows, but does not impact the fair value of the instrument. As of September 30, 2025, we had $275.0 million in borrowings outstanding under the revolving line of credit at a weighted-average interest rate of 5.423%.
Foreign Currency Forward Contracts
We maintain a program to manage our foreign exchange rate risk on existing foreign-currency-denominated receivable and cash balances by entering into forward contracts to sell or buy foreign currencies. At period end, foreign-currency-denominated receivable and cash balances held by our various reporting entities are remeasured into their respective functional currencies at current market rates. The change in value from this remeasurement is then reported as a foreign exchange gain or loss for that period in our accompanying consolidated statements of income and comprehensive income and the resulting gain or loss on the forward contract mitigates the foreign exchange rate risk of the associated assets. All of our foreign currency forward contracts have maturity periods of less than three months. Such derivative financial instruments are subject to market risk.
The following tables summarize our outstanding foreign currency forward contracts, by currency, at September 30, 2025 and 2024:
| September 30, 2025 | ||||||||||||||||||||
| Contract Amount | Fair Value | |||||||||||||||||||
| Foreign Currency | USD | USD | ||||||||||||||||||
| (In thousands) | ||||||||||||||||||||
| Sell foreign currency: | ||||||||||||||||||||
| Euro (EUR) | EUR | 7,700 | $ | 9,034 | — | |||||||||||||||
| Buy foreign currency: | ||||||||||||||||||||
| British pound (GBP) | GBP | 10,019 | $ | 13,500 | — | |||||||||||||||
| Singapore dollar (SGD) | SGD | 8,087 | $ | 6,300 | — | |||||||||||||||
| September 30, 2024 | |||||||||||||||||
| Contract Amount | Fair Value | ||||||||||||||||
| Foreign Currency | USD | USD | |||||||||||||||
| (In thousands) | |||||||||||||||||
| Sell foreign currency: | |||||||||||||||||
| Euro (EUR) | EUR | 13,000 | $ | 14,531 | — | ||||||||||||
| Buy foreign currency: | |||||||||||||||||
| British pound (GBP) | GBP | 12,237 | $ | 16,400 | — | ||||||||||||
| Singapore dollar (SGD) | SGD | 7,404 | $ | 5,800 | — | ||||||||||||
The foreign currency forward contracts were entered into on September 30, 2025 and 2024; therefore, their fair value was $0 at each of these dates.
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Item 8. Financial Statements and Supplementary Data
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the stockholders and the Board of Directors of
Fair Isaac Corporation
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Fair Isaac Corporation and subsidiaries (the "Company") as of September 30, 2025 and 2024, the related consolidated statements of income and comprehensive income, stockholders' deficit, and cash flows, for each of the three years in the period ended September 30, 2025, and the related notes (collectively referred to as the "financial statements"). We also have audited the Company’s internal control over financial reporting as of September 30, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of September 30, 2025 and 2024, and the results of operations and cash flows for each of the three years in the period ended September 30, 2025, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
Basis for Opinions
The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on these financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
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Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Revenue Recognition – Contracts with Customers – Refer to Note 1 and Note 9 to the financial statements
Critical Audit Matter Description
Revenue is recognized when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration to which the Company expects to be entitled to in exchange for those goods or services. The Company’s revenue is primarily derived from on-premises software and software-as-a-service (SaaS) subscriptions, professional services, and scoring services.
For contracts with customers that contain various combinations of products and services, the Company evaluates whether the products or services are distinct — distinct products or services will be accounted for as separate performance obligations, while non-distinct products or services are combined with others to form a single performance obligation.
For on-premises software, which includes a term-based license and post-contract support or maintenance, the transaction price is either a fixed fee, or a usage-based fee — sometimes subject to a guaranteed minimum. Any usage-based fees not subject to a guaranteed minimum or earned in excess of the minimum amount are recognized when the subsequent usage occurs.
For SaaS products, the Company estimates the total variable consideration at contract inception — subject to any constraints that may apply — and updates the estimates as new information becomes available and recognizes the amount ratably over the SaaS service period, unless the Company determines it is appropriate to allocate the variable amount to each distinct service period and recognize revenue as each distinct service period is performed.
The Company’s professional services include software implementation, consulting, model development and training. The transaction price can be a fixed amount or a variable amount based upon the time and materials expended. Revenue on fixed-price services is recognized using an input method based on labor hours expended, which the Company believes provides a faithful depiction of the transfer of services.
The Company’s scoring services include both business-to-business and business-to-consumer offerings. The Company’s business-to-business scoring services typically include a license that grants consumer reporting agencies the right to use the scoring solutions in exchange for a usage-based royalty. Revenue is generally recognized when the usage occurs. Business-to-consumer offerings provide consumers with access to their FICO® Scores and credit reports, as well as other value-add services. These are provided as either a one-time or ongoing subscription service renewed monthly or annually, all with a fixed consideration.
Given the complexity of certain of the Company’s contracts, together with the judgment involved in identifying performance obligations and estimating variable consideration, auditing the related revenue required both extensive audit effort due to the volume and complexity of the contracts and a high degree of auditor judgment when performing audit procedures and evaluating the results of those procedures.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to revenue recognition over the Company’s identification of performance obligations and estimation of variable consideration, included the following, among others:
•We tested the effectiveness of controls over contract revenue, including management’s controls over the identification of performance obligations and estimation of variable consideration.
•We selected a sample of contracts and performed the following procedures:
◦Obtained and read the contract, including master agreements, renewal agreements, and other source documents that are part of the contract.
◦Confirmed the terms of the contract directly with the customer, including whether there are terms not formally included in the contract that may impact the identification of performance obligations and revenue recognition and performed alternative procedures in the event of nonreplies.
52
◦Tested management’s identification of the performance obligations within the customer contract.
◦Tested management’s estimation of variable consideration in the transaction price by evaluating the reasonableness of the inputs used in management’s estimates.
| /s/ | |||||
| November 7, 2025 | |||||
| We have served as the Company’s auditor since 2004. | |||||
53
FAIR ISAAC CORPORATION
CONSOLIDATED BALANCE SHEETS
| September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| (In thousands, except par value data) | |||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Accounts receivable, net | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Total current assets | |||||||||||
| Marketable securities | |||||||||||
| Property and equipment, net | |||||||||||
| Operating lease right-of-use assets | |||||||||||
| Goodwill | |||||||||||
| Deferred income taxes | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities and Stockholders’ Deficit | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued compensation and employee benefits | |||||||||||
| Other accrued liabilities | |||||||||||
| Deferred revenue | |||||||||||
| Current maturities on debt | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt | |||||||||||
| Operating lease liabilities | |||||||||||
| Other liabilities | |||||||||||
| Total liabilities | |||||||||||
| Commitments and contingencies | |||||||||||
| Stockholders’ deficit: | |||||||||||
Preferred stock ($ | |||||||||||
Common stock ($ | |||||||||||
| Additional paid-in-capital | |||||||||||
Treasury stock, at cost ( | ( | ( | |||||||||
| Retained earnings | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Total stockholders’ deficit | ( | ( | |||||||||
| Total liabilities and stockholders’ deficit | $ | $ | |||||||||
See accompanying notes.
54
FAIR ISAAC CORPORATION
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
| Year Ended September 30, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (In thousands, except per share data) | |||||||||||||||||
| Revenues: | |||||||||||||||||
| On-premises and SaaS software | $ | $ | $ | ||||||||||||||
| Professional services | |||||||||||||||||
| Scores | |||||||||||||||||
| Total revenues | |||||||||||||||||
| Operating expenses: | |||||||||||||||||
| Cost of revenues | |||||||||||||||||
| Research and development | |||||||||||||||||
| Selling, general and administrative | |||||||||||||||||
| Amortization of intangible assets | |||||||||||||||||
| Restructuring charges | |||||||||||||||||
| Gain on product line asset sale | ( | ||||||||||||||||
| Total operating expenses | |||||||||||||||||
| Operating income | |||||||||||||||||
| Interest expense, net | ( | ( | ( | ||||||||||||||
| Other income, net | |||||||||||||||||
| Income before income taxes | |||||||||||||||||
| Provision for income taxes | |||||||||||||||||
| Net income | |||||||||||||||||
| Other comprehensive income (loss): | |||||||||||||||||
| Foreign currency translation adjustments | ( | ||||||||||||||||
| Comprehensive income | $ | $ | $ | ||||||||||||||
| Earnings per share: | |||||||||||||||||
| Basic | $ | $ | $ | ||||||||||||||
| Diluted | $ | $ | $ | ||||||||||||||
| Shares used in computing basic earnings per share: | |||||||||||||||||
| Basic | |||||||||||||||||
| Diluted | |||||||||||||||||
See accompanying notes.
55
FAIR ISAAC CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
Years Ended September 30, 2025, 2024 and 2023
| Common Stock | Additional Paid-in-Capital | Treasury Stock | Retained Earnings | Accumulated Other Comprehensive Loss | Total Stockholders’ Deficit | ||||||||||||||||||||||||||||||||||||
| (In thousands) | Shares | Par Value | |||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2022 | $ | $ | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Issuance of treasury stock under employee stock plans | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||
| Repurchases of common stock | ( | ( | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2023 | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Issuance of treasury stock under employee stock plans | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||
| Repurchases of common stock | ( | ( | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2024 | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Issuance of treasury stock under employee stock plans | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||
| Repurchases of common stock | ( | ( | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||
| Balance at September 30, 2025 | $ | $ | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||
See accompanying notes.
56
FAIR ISAAC CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Year Ended September 30, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (In thousands) | |||||||||||||||||
| Cash flows from operating activities: | |||||||||||||||||
| Net income | $ | $ | $ | ||||||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||
| Depreciation and amortization | |||||||||||||||||
| Share-based compensation | |||||||||||||||||
| Deferred income taxes | ( | ( | ( | ||||||||||||||
| Net gain on marketable securities | ( | ( | ( | ||||||||||||||
| Non-cash operating lease costs | |||||||||||||||||
| Provision of doubtful accounts | |||||||||||||||||
| Gain on product line asset sale | ( | ||||||||||||||||
| Net loss on sales and abandonment of property and equipment | |||||||||||||||||
| Changes in operating assets and liabilities: | |||||||||||||||||
| Accounts receivable | ( | ( | ( | ||||||||||||||
| Prepaid expenses and other assets | ( | ( | |||||||||||||||
| Accounts payable | |||||||||||||||||
| Accrued compensation and employee benefits | |||||||||||||||||
| Other liabilities | ( | ||||||||||||||||
| Deferred revenue | |||||||||||||||||
| Net cash provided by operating activities | |||||||||||||||||
| Cash flows from investing activities: | |||||||||||||||||
| Purchases of property and equipment | ( | ( | ( | ||||||||||||||
| Capitalized internal-use software costs | ( | ( | |||||||||||||||
| Proceeds from sales of marketable securities | |||||||||||||||||
| Purchases of marketable securities | ( | ( | ( | ||||||||||||||
| Cash transferred, net of proceeds, from product line asset sale | ( | ||||||||||||||||
| Net cash used in investing activities | ( | ( | ( | ||||||||||||||
| Cash flows from financing activities: | |||||||||||||||||
| Proceeds from revolving line of credit and term loans | |||||||||||||||||
| Payments on revolving line of credit and term loans | ( | ( | ( | ||||||||||||||
| Proceeds from issuance of senior notes | |||||||||||||||||
| Payments on debt issuance costs | ( | ( | |||||||||||||||
| Payments on finance leases | ( | ( | |||||||||||||||
| Proceeds from issuance of treasury stock under employee stock plans | |||||||||||||||||
| Taxes paid related to net share settlement of equity awards | ( | ( | ( | ||||||||||||||
| Repurchases of common stock | ( | ( | ( | ||||||||||||||
| Net cash used in financing activities | ( | ( | ( | ||||||||||||||
| Effect of exchange rate changes on cash | ( | ||||||||||||||||
| Increase (decrease) in cash and cash equivalents | ( | ||||||||||||||||
| Cash and cash equivalents, beginning of year | |||||||||||||||||
| Cash and cash equivalents, end of year | $ | $ | $ | ||||||||||||||
| Supplemental disclosures of cash flow information: | |||||||||||||||||
Cash paid for income taxes, net of refunds of $ | $ | $ | $ | ||||||||||||||
| Cash paid for interest | $ | $ | $ | ||||||||||||||
| Supplemental disclosures of non-cash investing and financing activities: | |||||||||||||||||
| Unsettled repurchases of common stock | $ | $ | $ | ||||||||||||||
| Purchase of property and equipment included in accounts payable | $ | $ | $ | ||||||||||||||
| Finance lease obligation incurred | $ | $ | $ | ||||||||||||||
See accompanying notes.
57
FAIR ISAAC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended September 30, 2025, 2024 and 2023
1. Nature of Business and Summary of Significant Accounting Policies
Fair Isaac Corporation
Fair Isaac Corporation (NYSE: FICO) (together with its consolidated subsidiaries, the “Company,” which may also be referred to in this report as “we,” “us,” “our,” or “FICO”) is a global analytics software leader. We were founded in 1956 on the premise that data, used intelligently, can improve business decisions. Today, FICO’s software and the widely used FICO® Score operationalize analytics, enabling thousands of businesses in more than 80 countries to uncover new opportunities, make timely decisions that matter, and execute them at scale. Most leading banks and credit card issuers rely on our solutions, as do insurers, retailers, telecommunications providers, automotive lenders, consumer reporting agencies, public agencies, and organizations in other industries. We also serve consumers through online services that enable people to access and understand their FICO Scores — the standard measure of consumer credit risk in the United States (“U.S.”) — empowering them to increase financial literacy and manage their financial health.
Principles of Consolidation and Basis of Presentation
The consolidated financial statements include the accounts of FICO and its subsidiaries. All intercompany accounts and transactions have been eliminated.
Use of Estimates
We make estimates and assumptions that affect the amounts reported in the financial statements and the disclosures made in the accompanying notes. For example, we use estimates in determining the appropriate levels of various accruals; variable considerations included in the transaction price and standalone selling price of each performance obligation for our customer contracts; labor hours in connection with fixed-fee service contracts; the amount of our tax provision; and the realizability of deferred tax assets. We also use estimates in determining the remaining economic lives and carrying values of property and equipment and other long-lived assets. In addition, we use assumptions to estimate the fair value of reporting units and share-based compensation. Actual results may differ from our estimates.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash in banks and investments with an original maturity of 90 days or less at time of purchase.
Fair Value of Financial Instruments
Investments
We categorize our investments in debt and equity instruments as trading, available-for-sale or held-to-maturity at the time of purchase. Trading securities are carried at fair value with unrealized gains or losses included in other income, net. Available-for-sale securities are carried at fair value measurements using quoted prices in active markets for identical assets or liabilities with unrealized gains or losses included in accumulated other comprehensive income (loss). Held-to-maturity securities are carried at amortized cost. Dividends and interest income are accrued as earned. Realized gains and losses are determined on a specific identification basis and are included in other income, net. We review marketable securities for impairment whenever circumstances and situations change such that there is an indication that the carrying amounts may not be recovered. We did not classify any securities as held-to-maturity or available-for-sale during each of the three years ended September 30, 2025, 2024 and 2023. Investments with remaining maturities over one year are classified as long-term investments.
58
FAIR ISAAC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended September 30, 2025, 2024 and 2023
Concentration of Risk
Financial instruments that potentially expose us to concentrations of risk consist primarily of cash and cash equivalents, marketable securities and accounts receivable, which are generally not collateralized. Our policy is to place our cash, cash equivalents, and marketable securities with high quality financial institutions, commercial corporations and government agencies in order to limit the amount of credit exposure. We have established guidelines relative to diversification and maturities for maintaining safety and liquidity. We generally do not require collateral from our customers, but our credit extension and collection policies include analyzing the financial condition of potential customers, establishing credit limits, monitoring payments, and aggressively pursuing delinquent accounts. We maintain allowances for potential credit losses.
A significant portion of our revenues are derived from the sales of products and services to the financial services industries.
Property and Equipment
Property and equipment are recorded at cost less accumulated depreciation and amortization. Major renewals and improvements are capitalized, while repair and maintenance costs are expensed as incurred. Depreciation and amortization charges are calculated using the straight-line method over the following estimated useful lives:
| Estimated Useful Life | |||||||||||
| Data processing equipment and purchased software | |||||||||||
| Internal-use software | |||||||||||
| Office furniture and equipment | to | ||||||||||
| Leasehold improvements | |||||||||||
Internal-Use Software
Costs incurred to develop internal-use software during the application development stage are capitalized and reported at cost. Application development stage costs generally include costs associated with internal-use software configuration, coding, installation and testing. Costs of significant upgrades and enhancements that result in additional functionality are also capitalized whereas costs incurred for maintenance and minor upgrades and enhancements are expensed as incurred. Amortization of capitalized costs are recorded within cost of revenues in our consolidated statements of income and comprehensive income.
Capitalized Software and Research and Development Costs
Software development costs relating to products to be sold in the normal course of business are expensed as incurred as research and development costs until technological feasibility is established. Technological feasibility for our products occurs approximately concurrently with the general release of our products; accordingly, we have not capitalized any development or production costs. Costs we incur to maintain and support our products are expensed in the period they are incurred and included in cost of revenues in our consolidated statements of income and comprehensive income.
Goodwill and Other Long-Lived Assets
Goodwill represents the excess of cost over the fair value of identifiable assets acquired and liabilities assumed in business combinations. We assess goodwill for impairment for each of our reporting units on an annual basis during our fourth fiscal quarter using a July 1 measurement date unless circumstances require a more frequent measurement.
59
FAIR ISAAC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended September 30, 2025, 2024 and 2023
We have determined that our reporting units are the same as our reportable segments. When evaluating goodwill for impairment, we may first perform an assessment qualitatively whether it is more likely than not that a reporting unit's carrying amount exceeds its fair value, referred to as a “step zero” approach. If, based on the review of the qualitative factors, we determine it is not more likely than not that the fair value of a reporting unit is less than its carrying value, we would bypass the two-step impairment test. Events and circumstances we consider in performing the “step zero” qualitative assessment include macro-economic conditions, market and industry conditions, internal cost factors, share price fluctuations, and the operational stability and overall financial performance of the reporting units. If we conclude that it is more likely than not that a reporting unit's fair value is less than its carrying amount, we would perform the first step (“step one”) of the two-step impairment test and calculate the estimated fair value of the reporting unit by using discounted cash flow valuation models and by comparing our reporting units to guideline publicly-traded companies. These methods require estimates of our future revenues, profits, capital expenditures, working capital, and other relevant factors, as well as selecting appropriate guideline publicly-traded companies for each reporting unit. We estimate these amounts by evaluating historical trends, current budgets, operating plans, industry data, and other relevant factors. Alternatively, we may bypass the qualitative assessment described above for any reporting unit in any period and proceed directly to performing step one of the goodwill impairment test.
Revenue Recognition
Revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration to which we expect to be entitled to in exchange for those goods or services.
See Note 9 for further discussion on revenues.
Income Taxes
We estimate our income taxes based on the various jurisdictions where we conduct business, which involves significant judgment in determining our income tax provision. We estimate our current tax liability using currently enacted tax rates and laws and assess temporary differences that result from differing treatments of certain items for tax and accounting purposes. These differences result in deferred tax assets and liabilities recorded on our consolidated balance sheets using the currently enacted tax rates and laws that will apply to taxable income for the years in which those tax assets are expected to be realized or settled. We then assess the likelihood our deferred tax assets will be realized and to the extent we believe realization is not more likely than not, we establish a valuation allowance. When we establish a valuation allowance or increase this allowance in an accounting period, we record a corresponding income tax expense in our consolidated statements of income and comprehensive income. In assessing the need for the valuation allowance, we consider future taxable income in the jurisdictions we operate; our ability to carry back tax attributes to prior years; an analysis of our deferred tax assets and the periods over which they will be realizable; and ongoing prudent and feasible tax planning strategies. An increase in the valuation allowance would have an adverse impact, which could be material, on our income tax provision and net income in the period in which we record the increase.
60
FAIR ISAAC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended September 30, 2025, 2024 and 2023
We recognize and measure benefits for uncertain tax positions using a two-step approach. The first step is to evaluate the tax position taken or expected to be taken in a tax return by determining if the technical merits of the tax position indicate it is more likely than not that the tax position will be sustained upon audit, including resolution of any related appeals or litigation processes. For tax positions more likely than not of being sustained upon audit, the second step is to measure the tax benefit as the largest amount more than 50% likely of being realized upon settlement. Significant judgment is required to evaluate uncertain tax positions and they are evaluated on a quarterly basis. Our evaluations are based upon a number of factors, including changes in facts or circumstances, changes in tax law, correspondence with tax authorities during the course of audits and effective settlement of audit issues. Changes in the recognition or measurement of uncertain tax positions could result in material increases or decreases in our income tax expense in the period in which we make the change, which could have a material impact on our effective tax rate and operating results.
Earnings per Share
Basic earnings per share are computed on the basis of the weighted-average number of common shares outstanding during the period under measurement. Diluted earnings per share are based on the weighted-average number of common shares outstanding and potential common shares. Potential common shares result from the assumed exercise of outstanding stock options or other potentially dilutive equity instruments, when they are dilutive under the treasury stock method.
Comprehensive Income
Comprehensive income is the change in our equity (net assets) during each period from transactions and other events and circumstances from non-owner sources. It includes net income and foreign currency translation adjustments.
Foreign Currency and Derivative Financial Instruments
We have determined that the functional currency of each foreign operation is the local currency. Assets and liabilities denominated in their local foreign currencies are translated into U.S. dollars at the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates of exchange prevailing during the period. Foreign currency translation adjustments are accumulated as a separate component of consolidated stockholders’ deficit.
We utilize derivative instruments to manage market risks associated with fluctuations in certain foreign currency exchange rates as they relate to specific balances of accounts receivable and cash denominated in foreign currencies. We principally utilize foreign currency forward contracts to protect against market risks arising in the normal course of business. Our policies prohibit the use of derivative instruments for the sole purpose of trading for profit on price fluctuations or to enter into contracts that intentionally increase our underlying exposure. All of our foreign currency forward contracts have maturity periods of less than three months.
We recorded transactional foreign exchange gains (losses) of $1.1 million, $(0.6 ) million and $(2.6 ) million during fiscal 2025, 2024 and 2023, respectively.
Share-Based Compensation
Advertising and Promotion Costs
61
FAIR ISAAC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended September 30, 2025, 2024 and 2023
New Accounting Pronouncements
Recent Accounting Pronouncements Adopted
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”). ASU 2023-07 expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. We adopted ASU 2023-07 in fiscal 2025 and the adoption did not have a significant impact on our disclosures within our consolidated financial statements.
Recent Accounting Pronouncements Not Yet Adopted
In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”). ASU 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as disaggregated information on income tax paid. The standard is effective for fiscal years beginning after December 15, 2024, which means that it will be effective for our fiscal years beginning October 1, 2025. Early adoption is permitted. We are currently evaluating the impact that the updated standard will have on our disclosures within our consolidated financial statements.
In November 2024, the FASB issued ASU No. 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” (“ASU 2024-03”). ASU 2024-03 requires disaggregated disclosure of certain income statement expenses an entity presents on the face of the income statement into specified categories in disclosures within the footnotes to the financial statements, including employee compensation, depreciation, intangible asset amortization, and certain other expenses, when applicable. The standard is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, which means that it will be effective for our annual periods beginning October 1, 2027, and our interim periods beginning October 1, 2028. Early adoption is permitted. We are currently evaluating the impact that the updated standard will have on our disclosures within our consolidated financial statements.
In September 2025, the FASB issued ASU No. 2025-06, “Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software” (“ASU 2025-06”). ASU 2025-06 removes references to prescriptive and sequential software development project stages, and instead requires capitalizing software costs when both of the following occur: (1) management has authorized and committed to funding the software project, and (2) it is probable that the project will be completed and the software will be used to perform the function intended, with consideration as to when significant uncertainty associated with the development activities of the software has been resolved. Additionally, ASU 2025-06 clarifies the disclosure requirements for capitalized internal-use software costs. The standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2027, which means that it will be effective for our fiscal years beginning October 1, 2028. Early adoption is permitted. We are currently evaluating the impact that the updated standard will have on our consolidated financial statements.
We do not expect that any other recently issued accounting pronouncements will have a significant effect on our consolidated financial statements.
2. Product Line Asset Sale
During fiscal 2023, we sold certain assets related to our Siron compliance business within our Software segment and recorded a gain of $1.9 million.
62
FAIR ISAAC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended September 30, 2025, 2024 and 2023
3. Cash, Cash Equivalents and Marketable Securities
The following is a summary of cash, cash equivalents and marketable securities at September 30, 2025 and 2024:
| September 30, 2025 | September 30, 2024 | ||||||||||||||||||||||
| Amortized Cost | Fair Value | Amortized Cost | Fair Value | ||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||
| Cash and Cash Equivalents: | |||||||||||||||||||||||
| Cash | $ | $ | $ | $ | |||||||||||||||||||
| Money market funds | |||||||||||||||||||||||
| Bank time deposits | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
| Marketable Securities: | |||||||||||||||||||||||
| Marketable securities | $ | $ | $ | $ | |||||||||||||||||||
The assets included in marketable securities represent long-term marketable equity securities held under a supplemental retirement and savings plan for certain officers and senior management employees, which are distributed upon termination or retirement of the employees. These investments are treated as trading securities and recorded at fair value.
4. Fair Value Measurements
Fair value is defined as the price that would be received from the sale of an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The accounting guidance establishes a three-level hierarchy for disclosure that is based on the extent and level of judgment used to estimate the fair value of assets and liabilities.
•Level 1 — uses unadjusted quoted prices that are available in active markets for identical assets or liabilities. Our Level 1 assets were comprised of money market funds and certain marketable securities and our Level 1 liabilities included senior notes as of September 30, 2025 and 2024.
•Level 2 — uses inputs other than quoted prices included in Level 1 that are either directly or indirectly observable through correlation with market data. These include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and inputs to valuation models or other pricing methodologies that do not require significant judgment because the inputs used in the model, such as interest rates and volatility, can be corroborated by readily observable market data. We did not have any assets or liabilities that are valued using inputs identified under a Level 2 hierarchy as of September 30, 2025 and 2024.
•Level 3 — uses one or more significant inputs that are unobservable and supported by little or no market activity, and that reflect the use of significant management judgment. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques, and significant management judgment or estimation. We did not value any assets or liabilities using inputs identified under a Level 3 hierarchy as of September 30, 2025 and 2024.
The following tables represent financial assets that we measured at fair value on a recurring basis at September 30, 2025 and 2024:
| September 30, 2025 | Active Markets for Identical Instruments (Level 1) | Fair Value as of September 30, 2025 | |||||||||
| (In thousands) | |||||||||||
| Assets: | |||||||||||
Cash equivalents (1) | $ | $ | |||||||||
Marketable securities (2) | |||||||||||
| Total | $ | $ | |||||||||
63
FAIR ISAAC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended September 30, 2025, 2024 and 2023
| September 30, 2024 | Active Markets for Identical Instruments (Level 1) | Fair Value as of September 30, 2024 | |||||||||
| (In thousands) | |||||||||||
| Assets: | |||||||||||
Cash equivalents (1) | $ | $ | |||||||||
Marketable securities (2) | |||||||||||
| Total | $ | $ | |||||||||
(1)Included in cash and cash equivalents on our consolidated balance sheets at September 30, 2025 and 2024. Not included in these tables are cash deposits of $134.1 million and $142.8 million at September 30, 2025 and 2024, respectively.
(2)Represents securities held under a supplemental retirement and savings plan for certain officers and senior management employees, which are distributed upon termination or retirement of the employees. Included in marketable securities on our consolidated balance sheets at September 30, 2025 and 2024.
See Note 8 for the fair value of our senior notes.
There were no transfers between Level 1, Level 2, and Level 3 of the fair value hierarchy during the years ended September 30, 2025, 2024 or 2023.
5. Derivative Financial Instruments
We use derivative instruments to manage risks caused by fluctuations in foreign exchange rates. The primary objective of our derivative instruments is to protect the value of foreign-currency-denominated receivable and cash balances from the effects of volatility in foreign exchange rates that might occur prior to conversion to their functional currencies. We principally utilize foreign currency forward contracts, which enable us to buy and sell foreign currencies in the future at fixed exchange rates and economically offset changes in foreign exchange rates. We routinely enter into contracts to offset exposures denominated in the British pound, Euro and Singapore dollar.
Foreign-currency-denominated receivable and cash balances are remeasured at foreign exchange rates in effect on the balance sheet date with the effects of changes in foreign exchange rates reported in other income, net. The forward contracts are not designated as hedges and are marked to market through other income, net. Fair value changes in the forward contracts help mitigate the changes in the value of the remeasured receivable and cash balances attributable to changes in foreign exchange rates. The forward contracts are short-term in nature and typically have average maturities at inception of less than three months .
The following tables summarize our outstanding foreign currency forward contracts, by currency, at September 30, 2025 and 2024:
| September 30, 2025 | ||||||||||||||||||||
| Contract Amount | Fair Value | |||||||||||||||||||
| Foreign Currency | USD | USD | ||||||||||||||||||
| (In thousands) | ||||||||||||||||||||
| Sell foreign currency: | ||||||||||||||||||||
| Euro (EUR) | EUR | $ | ||||||||||||||||||
| Buy foreign currency: | ||||||||||||||||||||
| British pound (GBP) | GBP | $ | ||||||||||||||||||
| Singapore dollar (SGD) | SGD | $ | ||||||||||||||||||
64
FAIR ISAAC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended September 30, 2025, 2024 and 2023
| September 30, 2024 | ||||||||||||||||||||
| Contract Amount | Fair Value | |||||||||||||||||||
| Foreign Currency | USD | USD | ||||||||||||||||||
| (In thousands) | ||||||||||||||||||||
| Sell foreign currency: | ||||||||||||||||||||
| Euro (EUR) | EUR | $ | ||||||||||||||||||
| Buy foreign currency: | ||||||||||||||||||||
| British pound (GBP) | GBP | $ | ||||||||||||||||||
| Singapore dollar (SGD) | SGD | $ | ||||||||||||||||||
The foreign currency forward contracts were entered into on September 30, 2025 and 2024; therefore, their fair value was $0
Gains (losses) on derivative financial instruments were recorded in our consolidated statements of income and comprehensive income as a component of other income, net, and consisted of the following:
| Year Ended September 30, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (In thousands) | |||||||||||||||||
| Gain (loss) on foreign currency forward contracts | $ | ( | $ | $ | |||||||||||||
6. Goodwill
The following table summarizes changes to goodwill during fiscal 2025 and 2024, both in total and as allocated to our segments. As of September 30, 2025, there was no accumulated goodwill impairment loss.
| Scores | Software | Total | |||||||||||||||
| (In thousands) | |||||||||||||||||
| Balance at September 30, 2023 | $ | $ | $ | ||||||||||||||
| Foreign currency translation adjustment | |||||||||||||||||
| Balance at September 30, 2024 | |||||||||||||||||
| Foreign currency translation adjustment | |||||||||||||||||
| Balance at September 30, 2025 | $ | $ | $ | ||||||||||||||
7. Composition of Certain Financial Statement Captions
The following table presents the composition of property and equipment, net at September 30, 2025 and 2024:
| September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| (In thousands) | |||||||||||
| Property and equipment, net: | |||||||||||
| Data processing equipment and purchased software | $ | $ | |||||||||
| Internal-use software | |||||||||||
| Office furniture and equipment | |||||||||||
| Leasehold improvements | |||||||||||
| Less: accumulated depreciation and amortization | ( | ( | |||||||||
| Total | $ | $ | |||||||||
65
FAIR ISAAC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended September 30, 2025, 2024 and 2023
The following table presents the composition of other accrued liabilities at September 30, 2025 and 2024:
| September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| (In thousands) | |||||||||||
| Other accrued liabilities: | |||||||||||
| Interest payable | $ | $ | |||||||||
| Other | |||||||||||
| Total | $ | $ | |||||||||
8. Debt
The following table represents our debt at carrying value at September 30, 2025 and 2024:
| September 30, 2025 | September 30, 2024 | ||||||||||
| (In thousands) | |||||||||||
| Current maturities on debt: | |||||||||||
The $ | $ | $ | |||||||||
| The 2018 Senior Notes | |||||||||||
| Less: debt issuance costs | ( | ||||||||||
| Current maturities on debt | |||||||||||
| Long-term debt: | |||||||||||
| Revolving line of credit | |||||||||||
The $ | |||||||||||
The $ | |||||||||||
| The 2018 Senior Notes | |||||||||||
| The 2019 Senior Notes and the 2021 Senior Notes | |||||||||||
| The 2025 Senior Notes | |||||||||||
| Less: debt issuance costs | ( | ( | |||||||||
| Long-term debt | |||||||||||
| Total debt | $ | $ | |||||||||
66
FAIR ISAAC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended September 30, 2025, 2024 and 2023
Revolving Line of Credit and Term Loans
On May 13, 2025, we amended our credit agreement with a syndicate of banks, increasing our borrowing capacity under the unsecured revolving line of credit from $600 million to $1.0 billion and extending its maturity to May 13, 2030. Also on May 13, 2025, we repaid in full and terminated the $300 million unsecured term loan (the “$300 Million Term Loan”) and the $450 million unsecured term loan (the “$450 Million Term Loan”) outstanding under our credit agreement, utilizing proceeds from the issuance of the 2025 Senior Notes (as defined below). Borrowings under the revolving line of credit can be used for working capital and general corporate purposes and may also be used for the refinancing of existing debt, acquisitions, and the repurchase of our common stock. Interest rates on amounts borrowed under the revolving line of credit are based on (i) an adjusted base rate, which is the greatest of (a) the prime rate, (b) the Federal Funds rate plus 0.5 %, and (c) the Daily Simple Secured Overnight Financing Rate (“SOFR”) plus 1 %, plus, in each case, an applicable margin, (ii) the Daily Simple SOFR plus an applicable margin (or, if such rate is no longer available, a successor benchmark rate determined in accordance with the terms of the credit agreement), or (iii) term SOFR (without a credit spread adjustment) plus an applicable margin (or, if such rate is no longer available, a successor benchmark rate determined in accordance with the terms of the credit agreement). The applicable margin for base rate borrowings and for SOFR borrowings is determined based on our consolidated leverage ratio. The applicable margin for base rate borrowings ranges from 0 % to 0.75 % per annum and for SOFR borrowings ranges from 1 % to 1.75 % per annum. In addition, we must pay certain credit facility fees. The credit agreement contains certain restrictive covenants including a maximum consolidated leverage ratio of 3.5 to 1.0, subject to a step up to 4.0 to 1.0 following certain permitted acquisitions and subject to certain conditions, and contains other covenants typical of an unsecured credit facility.
As of September 30, 2025, we had $275.0 million in borrowings outstanding under the revolving line of credit at a weighted-average interest rate of 5.423 %, and we were in compliance with all financial covenants under the credit agreement.
Senior Notes
On May 8, 2018, we issued $400 million of senior notes in a private offering to qualified institutional investors (the “2018 Senior Notes”). The 2018 Senior Notes require interest payments semi-annually at a rate of 5.25 % per annum and will mature on May 15, 2026.
On December 6, 2019, we issued $350 million of senior notes in a private offering to qualified institutional investors (the “2019 Senior Notes”). The 2019 Senior Notes require interest payments semi-annually at a rate of 4.00 % per annum and will mature on June 15, 2028.
On December 17, 2021, we issued $550 million of additional senior notes of the same class as the 2019 Senior Notes in a private offering to qualified institutional investors (the “2021 Senior Notes”). The 2021 Senior Notes require interest payments semi-annually at a rate of 4.00 % per annum and will mature on June 15, 2028, the same date as the 2019 Senior Notes.
On May 13, 2025, we issued $1.5 billion of senior notes in a private offering to qualified institutional investors (the “2025 Senior Notes,” and collectively with the 2018 Senior Notes, the 2019 Senior Notes and the 2021 Senior Notes, the “Senior Notes”). The 2025 Senior Notes require interest payments semi-annually at a rate of 6.00 % per annum and will mature on May 15, 2033.
The indentures for the Senior Notes contain certain covenants typical of unsecured obligations and we were in compliance as of September 30, 2025.
The following table presents the face values and fair values for the Senior Notes at September 30, 2025 and 2024:
| September 30, 2025 | September 30, 2024 | ||||||||||||||||||||||
| Face Value | Fair Value | Face Value | Fair Value | ||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||
| The 2018 Senior Notes | $ | $ | $ | $ | |||||||||||||||||||
| The 2019 Senior Notes and the 2021 Senior Notes | |||||||||||||||||||||||
| The 2025 Senior Notes | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
67
FAIR ISAAC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended September 30, 2025, 2024 and 2023
Future principal payments for the Senior Notes are as follows:
| Year Ending September 30, | (In thousands) | ||||
| 2026 | $ | ||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| Thereafter | |||||
| Total | $ | ||||
9. Revenue from Contracts with Customers
Contracts with Customers
Our revenue is primarily derived from on-premises software and SaaS subscriptions, professional services and scoring services. For contracts with customers that contain various combinations of products and services, we evaluate whether the products or services are distinct — distinct products or services will be accounted for as separate performance obligations, while non-distinct products or services are combined with others to form a single performance obligation. For contracts with multiple performance obligations, the transaction price is allocated to each performance obligation on a relative standalone selling price (“SSP”) basis. Revenue is recognized when control of the promised goods or services is transferred to our customers.
Our on-premises software is primarily sold on a subscription basis, which includes a term-based license and post-contract support or maintenance, both of which generally represent distinct performance obligations and are accounted for separately. The transaction price is either a fixed fee, or a usage-based fee — sometimes subject to a guaranteed minimum. When the amount is fixed, including the guaranteed minimum in a usage-based fee, license revenue is recognized at the point in time when the software is made available to the customer. Maintenance revenue is recognized ratably over the contract period as customers simultaneously consume and receive benefits. Any usage-based fees not subject to a guaranteed minimum or earned in excess of the minimum amount are recognized when the subsequent usage occurs. We occasionally sell software arrangements consisting of on-premises perpetual licenses and maintenance. License revenue is recognized at a point in time when the software is made available to the customer and maintenance revenue is recognized ratably over the contract term.
Our SaaS products provide customers with access to and standard support for our software on a subscription basis, delivered through our own infrastructure or third-party cloud services. The SaaS transaction contracts typically include a guaranteed minimum fee per period that allows up to a certain level of usage and a consumption-based variable fee in excess of the minimum threshold; or a consumption-based variable fee not subject to a minimum threshold. The nature of our SaaS arrangements is to provide continuous access to our hosted solutions in the cloud, i.e., a stand-ready obligation that comprises a series of distinct service periods (e.g., a series of distinct daily, monthly or annual periods of service). We estimate the total variable consideration at contract inception — subject to any constraints that may apply — and update the estimates as new information becomes available and recognize the amount ratably over the SaaS service period, unless we determine it is appropriate to allocate the variable amount to each distinct service period and recognize revenue as each distinct service period is performed. Variable consideration is included in the transaction price if, in our judgment, it is probable that a significant future reversal of cumulative revenue recognized under the contract will not occur. Variable consideration is estimated based on either the expected value or the most likely amount method depending on which method we expect to better predict the amount of consideration to which we will be entitled. Our estimates of variable consideration are based largely on an assessment of our anticipated performance and all information (historical, current and forecasted) that is reasonably available to us at contract inception and require judgment.
Our professional services include software implementation, consulting, model development and training. Professional services are sold either standalone, or together with other products or services and generally represent distinct performance obligations. The transaction price can be a fixed amount or a variable amount based upon the time and materials expended. Revenue on fixed-price services is recognized using an input method based on labor hours expended, which we believe provides a faithful depiction of the transfer of services. Revenue on services provided on a time and materials basis is recognized by applying the “right-to-invoice” practical expedient as the amount to which we have a right to invoice the customer corresponds directly with the value of our performance to the customer.
68
FAIR ISAAC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended September 30, 2025, 2024 and 2023
Our scoring services include both business-to-business and business-to-consumer offerings. Our business-to-business scoring services typically include a license that grants consumer reporting agencies the right to use our scoring solutions in exchange for a usage-based royalty. Revenue is generally recognized when the usage occurs. Business-to-consumer offerings provide consumers with access to their FICO® Scores and credit reports, as well as other value-add services. These are provided as either a one-time or ongoing subscription service renewed monthly or annually, all with a fixed consideration. The nature of the subscription service is a stand-ready obligation to generate credit reports, provide credit monitoring, and other services for our customers, which comprises a series of distinct service periods (e.g., a series of distinct daily, monthly or annual periods of service). Revenue from one-time or monthly subscription services is recognized during the period when service is performed. Revenue from annual subscription services is recognized ratably over the subscription period.
Disaggregation of Revenue
During fiscal 2023, we sold certain assets related to our Siron compliance business. The comparability of the data below is impacted as a result of this sale.
The following tables provide information about disaggregated revenue by primary geographical market:
| Year Ended September 30, 2025 | |||||||||||||||||||||||
| Scores | Software | Total | Percentage | ||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| Americas | $ | $ | $ | % | |||||||||||||||||||
| Europe, Middle East and Africa | % | ||||||||||||||||||||||
| Asia Pacific | % | ||||||||||||||||||||||
| Total | $ | $ | $ | % | |||||||||||||||||||
| Year Ended September 30, 2024 | |||||||||||||||||||||||
| Scores | Software | Total | Percentage | ||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| Americas | $ | $ | $ | % | |||||||||||||||||||
| Europe, Middle East and Africa | % | ||||||||||||||||||||||
| Asia Pacific | % | ||||||||||||||||||||||
| Total | $ | $ | $ | % | |||||||||||||||||||
| Year Ended September 30, 2023 | |||||||||||||||||||||||
| Scores | Software | Total | Percentage | ||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| Americas | $ | $ | $ | % | |||||||||||||||||||
| Europe, Middle East and Africa | % | ||||||||||||||||||||||
| Asia Pacific | % | ||||||||||||||||||||||
| Total | $ | $ | $ | % | |||||||||||||||||||
The following table provides information about disaggregated revenue for on-premises and SaaS software within our Software segment by deployment method:
| Year Ended September 30, | Percentage of revenues | ||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||||||||
| On-premises software | $ | $ | $ | % | % | % | |||||||||||||||||||||||||||||
| SaaS software | % | % | % | ||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | % | % | % | |||||||||||||||||||||||||||||
69
FAIR ISAAC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended September 30, 2025, 2024 and 2023
The following table provides information about disaggregated revenue for on-premises and SaaS software within our Software segment by product features:
| Year Ended September 30, | Percentage of revenues | ||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||||||||
| Platform software | $ | $ | $ | % | % | % | |||||||||||||||||||||||||||||
| Non-platform software | % | % | % | ||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | % | % | % | |||||||||||||||||||||||||||||
The following table provides information about disaggregated revenue for on-premises and SaaS software within our Software segment by timing of revenue recognition:
| Year Ended September 30, | Percentage of revenues | ||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||||||||
Software recognized at a point in time (1) | $ | $ | $ | % | % | % | |||||||||||||||||||||||||||||
Software recognized over contract term (2) | % | % | % | ||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | % | % | % | |||||||||||||||||||||||||||||
(1)Includes license portion of our on-premises subscription software and perpetual license, both of which are recognized when the software is made available to the customer, or at the start of the subscription.
(2)Includes maintenance portion and usage-based fees of our on-premises subscription software, maintenance revenue on perpetual licenses, as well as SaaS revenue.
The following table provides information about disaggregated revenue for our Scores segment by distribution method:
| Year Ended September 30, | Percentage of revenues | ||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||||||||
| Business-to-business Scores | $ | $ | $ | % | % | % | |||||||||||||||||||||||||||||
| Business-to-consumer Scores | % | % | % | ||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | % | % | % | |||||||||||||||||||||||||||||
We derive a substantial portion of revenues from our contracts with the three major consumer reporting agencies, TransUnion, Equifax and Experian. Revenues collectively generated by agreements with these customers accounted for 51 %, 45 % and 41 % of our total revenues in fiscal 2025, 2024 and 2023, respectively, with all three consumer reporting agencies each contributing more than 10 10
Contract Balances
We record a receivable when we satisfy a performance obligation prior to invoicing if only the passage of time is required before payment is due or if we have an unconditional right to consideration before we satisfy a performance obligation. We record a contract asset when we satisfy a performance obligation prior to invoicing but our right to consideration is conditional. We record deferred revenue when the payment is made or due before we satisfy a performance obligation.
70
FAIR ISAAC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended September 30, 2025, 2024 and 2023
Receivables at September 30, 2025 and 2024 consisted of the following:
| September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| (In thousands) | |||||||||||
| Billed | $ | $ | |||||||||
| Unbilled | |||||||||||
| Less: allowance for doubtful accounts | ( | ( | |||||||||
| Net receivables | |||||||||||
Less: long-term receivables (*) | ( | ( | |||||||||
Short-term receivables (*) | $ | $ | |||||||||
(*) Short-term receivables and long-term receivables were recorded in accounts receivable, net and other assets, respectively, within the accompanying consolidated balance sheets.
Activity in the allowance for doubtful accounts was as follows:
| Year Ended September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| (In thousands) | |||||||||||
| Allowance for doubtful accounts, beginning balance | $ | $ | |||||||||
| Add: expense | |||||||||||
| Less: write-offs (net of recoveries) | ( | ||||||||||
| Allowance for doubtful accounts, ending balance | $ | $ | |||||||||
Deferred revenue primarily relates to our maintenance and SaaS contracts billed annually in advance and generally recognized ratably over the term of the service period. Significant changes in the deferred revenues balances are as follows:
| Year Ended September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| (In thousands) | |||||||||||
| Deferred revenues, beginning balance | $ | $ | |||||||||
| Revenue recognized that was included in the deferred revenues balance at the beginning of the period | ( | ( | |||||||||
| Increases due to billings, excluding amounts recognized as revenue during the period | |||||||||||
Deferred revenues, ending balance (*) | $ | $ | |||||||||
Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 to 60 days. In instances where the timing of revenue recognition differs from the timing of invoicing, we have determined our contracts generally do not include a significant financing component. The primary purpose of our invoicing terms is to provide customers with simplified and predictable ways of purchasing our products and services, not to provide customers with financing or to receive financing from our customers. Examples include multi-year on-premises licenses that are invoiced annually with revenue recognized upfront and invoicing at the beginning of a subscription term with revenue recognized ratably over the contract period.
71
FAIR ISAAC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended September 30, 2025, 2024 and 2023
Performance Obligations
Revenue allocated to remaining performance obligations represents contracted revenue that will be recognized in future periods, which is comprised of deferred revenue and amounts that will be invoiced and recognized as revenue in future periods. This does not include:
•Usage-based revenue that will be recognized in future periods from on-premises software subscriptions;
•Consumption-based variable fees from SaaS software that will be recognized in the distinct service period during which it is earned; and
•Revenue from variable considerations that will be recognized in accordance with the “right-to-invoice” practical expedient, such as fees from our professional services billed based on a time and materials basis.
Revenue allocated to remaining performance obligations was $655.7 million as of September 30, 2025, approximately 50 15 months and the remainder thereafter. Revenue allocated to remaining performance obligations was $507.3 million as of September 30, 2024.
Significant Judgments
Our contracts with customers often include promises to transfer multiple products and services to a customer. Determining whether products and services are considered distinct and should be accounted for separately may require significant judgment. Specifically, when implementation service is included in the original software or SaaS offerings, judgment is required to determine if the implementation service significantly modifies or customizes the software or SaaS service in such a way that the risks of providing it and the customization service are inseparable.
We determine the SSPs using data from our historical standalone sales, or, in instances where such information is not available (such as when we do not sell the product or service separately), we consider factors such as the stated contract prices, our overall pricing practices and objectives, go-to-market strategy, size and type of the transactions, and effects of the geographic area on pricing, among others. When the selling price of a product or service is highly variable, we may use the residual approach to determine the SSP of that product or service. Significant judgment may be required to determine the SSP for each distinct performance obligation when it involves the consideration of many market conditions and entity-specific factors discussed above.
Significant judgment may be required to determine the timing of satisfaction of a performance obligation in certain professional services contracts with a fixed consideration, in which we measure progress using an input method based on labor hours expended. In order to estimate the total hours of the project, we make assumptions about labor utilization, efficiency of processes, the customer’s specification and IT environment, among others. For certain complex projects, due to the risks and uncertainties inherent with the estimation process and factors relating to the assumptions, actual progress may differ due to the change in estimated total hours. Adjustments to estimates are made in the period in which the facts requiring such revisions become known and, accordingly, recognized revenues are subject to revisions as the contract progresses to completion.
Capitalized Commission Costs
We capitalize incremental commission fees paid as a result of obtaining customer contracts. Capitalized commission costs, which are recorded in other assets within the accompanying consolidated balance sheets, were $63.2 million and $60.5 million at September 30, 2025 and 2024, respectively.
Capitalized commission costs are amortized on a straight-line basis over ten years — determined using a portfolio approach — based on the transfer of goods or services to which the assets relate, taking into consideration both the initial and future contracts as we do not typically pay a commission on a contract renewal. The amortization costs are included in selling, general, and administrative expenses of our consolidated statements of income and comprehensive income. The amount of amortization was $9.9 million, $9.2 million, and $8.2 million during the years ended September 30, 2025, 2024 and 2023, respectively. There was no
We apply a practical expedient to recognize the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that we otherwise would have recognized is one year or less. These costs are recorded within selling, general, and administrative expenses.
72
FAIR ISAAC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended September 30, 2025, 2024 and 2023
10. Employee Benefit Plans
Defined Contribution Plans
We sponsor the Fair Isaac Corporation 401(k) plan for eligible employees in the U.S. Under this plan, eligible employees may contribute up to 25 % of compensation, not to exceed statutory limits. We also provide a company matching contribution. Investment in FICO common stock is not an option under this plan. Our contributions into all 401(k) plans, including former-acquired-company-sponsored plans that have since merged into the Fair Isaac Corporation 401(k) plan or have been frozen, totaled $10.2 million, $9.5 million and $8.9 million during fiscal 2025, 2024 and 2023, respectively.
Employee Incentive Plans
We maintain various employee incentive plans for the benefit of eligible employees, including officers. The awards generally are based upon the achievement of certain financial and performance objectives subject to the discretion of management. For executive officers, such discretion is exercised by the Leadership Development and Compensation Committee of our Board of Directors. Total expenses under our employee incentive plans were $60.8 million, $62.5 million and $57.8 million during fiscal 2025, 2024 and 2023, respectively.
11. Restructuring Charges
During fiscal 2025, we incurred restructuring charges of $10.9 million in employee separation costs due to the elimination of 226 positions throughout the Company. Cash payments for all the employee separation costs will be paid by the end of fiscal 2026.
There were no
The following table summarizes our restructuring accrual for employee separation costs. At September 30, 2025, the balance was classified as current liabilities and recorded in other accrued liabilities within the accompanying consolidated balance sheets.
| Year Ended | |||||
| September 30, 2025 | |||||
| (In thousands) | |||||
| Restructuring accrual, beginning balance | $ | ||||
| Expense additions | |||||
| Cash payments | ( | ||||
| Restructuring accrual, ending balance | $ | ||||
73
FAIR ISAAC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended September 30, 2025, 2024 and 2023
12. Income Taxes
The provision for income taxes was as follows during fiscal 2025, 2024 and 2023:
| Year ended September 30, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (In thousands) | |||||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | $ | $ | ||||||||||||||
| State | |||||||||||||||||
| Foreign | |||||||||||||||||
| Deferred: | |||||||||||||||||
| Federal | ( | ( | ( | ||||||||||||||
| State | ( | ( | ( | ||||||||||||||
| Foreign | ( | ||||||||||||||||
| ( | ( | ( | |||||||||||||||
| Total provision | $ | $ | $ | ||||||||||||||
The foreign provision was based on foreign pre-tax earnings of $144.5 million, $150.8 million and $172.7 million in fiscal 2025, 2024 and 2023, respectively. Current foreign tax expense related to foreign tax withholdings was $15.6 million, $14.6 million and $12.3 million in fiscal 2025, 2024 and 2023, respectively. Foreign withholding tax and related foreign tax credits are included in current tax expense above.
Deferred tax assets and liabilities at September 30, 2025 and 2024 were as follows:
| September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| (In thousands) | |||||||||||
| Deferred tax assets: | |||||||||||
| Loss and credit carryforwards | $ | $ | |||||||||
| Compensation benefits | |||||||||||
| Operating lease liabilities | |||||||||||
| Research and development costs | |||||||||||
| Other assets | |||||||||||
| Total deferred tax assets | |||||||||||
| Deferred tax liabilities: | |||||||||||
| Intangible assets | ( | ( | |||||||||
| Deferred commission | ( | ( | |||||||||
| Operating lease right-of-use assets | ( | ( | |||||||||
| Other liabilities | ( | ( | |||||||||
| Total deferred tax liabilities | ( | ( | |||||||||
| Deferred tax assets, net | $ | $ | |||||||||
Based upon the level of historical taxable income and projections for future taxable income over the periods that the deferred tax assets will reverse, management believes it is more likely than not that we will realize the benefits of the deferred tax assets at September 30, 2025.
74
FAIR ISAAC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended September 30, 2025, 2024 and 2023
As of September 30, 2025, we had available U.S. federal net operating loss (“NOL”) carryforwards of approximately $1.3 million. The U.S. federal NOLs were acquired in connection with our acquisitions of Adeptra in fiscal 2012 and Infoglide in fiscal 2013. The U.S. federal NOL carryforwards will expire at various dates beginning in fiscal 2026, if not utilized. Utilization of the U.S. federal NOLs is subject to an annual limitation due to the “change in ownership” provisions of the Internal Revenue Code of 1986, as amended. We had available an excess California state research credit of approximately $6.6 million as of September 30, 2025.
A reconciliation of the provision for income taxes, with the amount computed by applying the U.S. federal statutory income tax rate of 21% to income before provision for income taxes for fiscal 2025, 2024 and 2023 is shown below:
| Year Ended September 30, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (In thousands) | |||||||||||||||||
| Income tax provision at U.S. federal statutory rate | $ | $ | $ | ||||||||||||||
| State income taxes, net of U.S. federal benefit | |||||||||||||||||
| Foreign tax rate differential | |||||||||||||||||
| Research credits | ( | ( | ( | ||||||||||||||
| Valuation allowance | ( | ( | |||||||||||||||
| Excess tax benefits relating to share-based compensation | ( | ( | ( | ||||||||||||||
| GILTI, FDII, BEAT and FTC | ( | ( | ( | ||||||||||||||
| Other | |||||||||||||||||
| Recorded income tax provision | $ | $ | $ | ||||||||||||||
As of September 30, 2025, we had approximately $94.6 million of unremitted earnings of non-U.S. subsidiaries. The Company has provided $3.2 million of deferred tax liabilities for foreign withholding taxes on the undistributed earnings and profits from certain non-U.S. subsidiaries that are not permanently reinvested outside the U.S. For other jurisdictions permanently reinvested, the Company expects the net impact of any future repatriations to be immaterial to the Company’s overall tax liability.
Unrecognized Tax Benefit for Uncertain Tax Positions
We conduct business globally and, as a result, file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. In the normal course of business, we are subject to examination by taxing authorities. With a few exceptions, we are no longer subject to U.S. federal, state, local, or foreign income tax examinations for fiscal years prior to 2022.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
| Year Ended September 30, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (In thousands) | |||||||||||||||||
| Gross unrecognized tax benefits at beginning of year | $ | $ | $ | ||||||||||||||
| Gross increases for tax positions in prior years | |||||||||||||||||
| Gross decreases for tax positions in prior years | ( | ( | |||||||||||||||
| Gross increases based on tax positions related to the current year | |||||||||||||||||
| Decreases for settlements and payments | ( | ||||||||||||||||
| Decreases due to statute expiration | ( | ( | ( | ||||||||||||||
| Gross unrecognized tax benefits at end of year | $ | $ | $ | ||||||||||||||
We had $19.5 million of total unrecognized tax benefits as of September 30, 2025, including $18.0 million of tax benefits that, if recognized, would impact the effective tax rate. Although the timing and outcome of audit settlements are uncertain, it is unlikely there will be a significant reduction of the uncertain tax benefits in the next twelve months.
75
FAIR ISAAC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended September 30, 2025, 2024 and 2023
We recognize interest expense and penalties related to unrecognized tax benefits and penalties as part of the provision for income taxes in our consolidated statements of income and comprehensive income. We recognize interest earned related to income tax matters as interest income in our consolidated statements of income and comprehensive income. As of September 30, 2025, we had accrued interest of $1.9 million related to the unrecognized tax benefits.
The Organization for Economic Co-operation and Development published Pillar Two Model Rules (“Pillar Two”) for a global 15% minimum tax rate that are in the process of being adopted by a number of jurisdictions in which we operate. Pillar Two did not have a material impact on our fiscal 2025 consolidated financial statements.
13. Share-Based Employee Benefit Plans
Description of Stock Option and Share Plans
We maintain the 2021 Long-Term Incentive Plan (the “2021 Plan”). The 2021 Plan authorizes the issuance of up to 5,900,000 shares of our common stock, plus additional shares that become available due to the expiration, forfeiture or cancellation of awards outstanding under the 2012 Long-Term Incentive Plan. Under the terms of the 2021 Plan, the pool of shares available for issuance may be used for all types of equity awards available under the 2021 Plan, which include stock options, stock appreciation rights, restricted stock awards, stock unit awards and other share-based awards. All employees, consultants and advisors of FICO or any subsidiary, as well as all non-employee directors, are eligible to receive awards under the 2021 Plan. The 2021 Plan will remain in effect until the earliest of the following: all shares subject to the Plan are distributed, the Board terminates the Plan, or the tenth anniversary of the effective date of the Plan.
Stock option awards have a maximum term of ten years . In general, stock option awards and stock unit awards not subject to market or performance conditions vest annually over four years . Stock unit awards subject to market or performance conditions generally vest annually over three years based on the achievement of specified criteria. At September 30, 2025, there were 4,309,793 shares available for issuance as new awards under the 2021 Plan.
Description of Employee Stock Purchase Plan
We maintain the 2019 Employee Stock Purchase Plan (the “2019 Purchase Plan”) under which we are authorized to issue up to 1,000,000 shares of our common stock to eligible employees. Eligible employees may elect to have up to 15 % of their eligible pay withheld through payroll deductions to purchase FICO common stock during semi-annual offering periods. Offering period means approximately six-month periods commencing (a) on the first trading day on or after September 1 and terminating on the last trading day in the following February, and (b) on the first trading day on or after March 1 and terminating on the last trading day in the following August. Beginning with the March 2025 through August 2025 offering period and in subsequent offering periods, the purchase price of the stock is the lower of 85 % of (i) the closing sales price of FICO common stock on the first trading day of each offering period or (ii) the closing sales price of FICO common stock on the last trading day of each offering period. Prior to the March 2025 through August 2025 offering period, the purchase price was 85 % of the closing sales price of FICO common stock on the last trading day of each offering period. At September 30, 2025, there were 826,719 shares available for issuance under the 2019 Purchase Plan.
We satisfy stock option exercises, vesting of stock units and the 2019 Purchase Plan issuances from treasury shares.
Share-Based Compensation Expense and Related Income Tax Benefits
We recorded share-based compensation expense of $156.7 million, $149.4 million and $123.8 million in fiscal 2025, 2024 and 2023, respectively. The total tax benefit related to this share-based compensation expense was $15.3 million, $15.9 million and $13.8 million in fiscal 2025, 2024 and 2023, respectively. As of September 30, 2025, there was $199.9 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under all equity compensation plans. Total unrecognized compensation cost will be adjusted for future changes in estimated forfeitures. We expect to recognize that cost over a weighted-average period of 2.28 years.
In fiscal 2025 we received $14.7 million in cash from stock option exercises, with the tax benefit realized for the tax deductions from these exercises of $5.2 million.
76
FAIR ISAAC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended September 30, 2025, 2024 and 2023
Share-Based Activity
Restricted Stock Units
The fair value of restricted stock units (“RSUs”) granted is the closing market price of our common stock on the date of grant, adjusted for the expected dividend yield, if applicable. We amortize the fair value on a straight-line basis over the vesting period.
The following table summarizes the RSUs activity during fiscal 2025:
| Shares | Weighted-average Grant-date Fair Value | ||||||||||
| (In thousands) | |||||||||||
| Outstanding at September 30, 2024 | $ | ||||||||||
| Granted | |||||||||||
| Released | ( | ||||||||||
| Forfeited | ( | ||||||||||
| Outstanding at September 30, 2025 | $ | ||||||||||
The weighted-average fair value of the RSUs granted was $2,119.14 , $1,150.58 and $620.51 during fiscal 2025, 2024 and 2023, respectively. The total intrinsic value of the RSUs that vested was $274.7 million, $171.0 million and $101.1 million during fiscal 2025, 2024 and 2023, respectively, determined as of the date of vesting.
Performance Share Units
Performance share units (“PSUs”) are granted to our senior officers and earned based on pre-established performance goals approved by the Leadership Development and Compensation Committee of our Board of Directors for any given performance period. The range of payout is zero to 200 % of the number of target PSUs, based on the outcome of the performance conditions. We estimate the fair value of the PSUs using the closing market price of our common stock on the date of grant, adjusted for the expected dividend yield if applicable, based on the performance condition that is probable of achievement. We amortize the fair values over the requisite service period for each vesting tranche of the award. We reassess the probability at each reporting period and recognize the cumulative effect of the change in estimate in the period of change.
The following table summarizes the PSUs activity during fiscal 2025:
| Shares | Weighted- average Grant-date Fair Value | ||||||||||
| (In thousands) | |||||||||||
| Outstanding at September 30, 2024 | $ | ||||||||||
| Granted | |||||||||||
| Released | ( | ||||||||||
| Forfeited | ( | ||||||||||
| Outstanding at September 30, 2025 | $ | ||||||||||
The weighted-average fair value of the PSUs granted was $2,227.11 , $1,134.39 and $615.45 during fiscal 2025, 2024 and 2023, respectively. The total intrinsic value of the PSUs that vested was $101.1 million, $65.2 million and $40.3 million during fiscal 2025, 2024 and 2023, respectively, determined as of the date of vesting.
77
FAIR ISAAC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended September 30, 2025, 2024 and 2023
Market Share Units
Market share units (“MSUs”) are granted to our senior officers and earned based on our total stockholder return relative to a benchmark index over performance periods of , and three years . For grants made in fiscal 2025 and thereafter, performance is measured against the S&P 500 Index. For grants made prior to fiscal 2025, performance was measured against the Russell 3000 Index. We estimate the fair value of MSUs granted using the Monte Carlo valuation model and amortize the fair values over the requisite service period for each vesting tranche of the award. In addition, we do not reverse the compensation cost solely because the market condition is not satisfied, and the award is therefore not earned by the employee, provided the requisite service is rendered. We used the following assumptions to estimate the fair value of our MSUs during fiscal 2025, 2024 and 2023:
| Year Ended September 30, | ||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||
Expected volatility in FICO’s stock price | % | % | % | |||||||||||||||||||||||
| Expected volatility in Russell 3000 Index | N/A | % | % | |||||||||||||||||||||||
| Expected volatility in S&P 500 Index (peer average) | % | N/A | N/A | |||||||||||||||||||||||
Correlation between FICO and the Russell 3000 Index | N/A | % | % | |||||||||||||||||||||||
Correlation between FICO and the S&P 500 Index | % | N/A | N/A | |||||||||||||||||||||||
| Risk-free interest rate | % | % | % | |||||||||||||||||||||||
| Average expected dividend yield | % | % | % | |||||||||||||||||||||||
The expected volatility was determined based on daily historical movements in our stock price and the S&P 500 Index (Russell 3000 Index for grants prior to fiscal 2025) for the three years preceding the grant date. The correlation between FICO and the S&P 500 Index (Russell 3000 Index for grants prior to fiscal 2025) was determined based on historical daily stock price movements for the three years preceding the grant date. The risk-free rate was determined based on U.S. Treasury zero-coupon yields over the three-year performance period. Because we have not declared or paid any cash dividends on our common stock since May 2017, and we do not presently plan to pay cash dividends on our common stock in the foreseeable future, we used an expected dividend yield of zero .
The following table summarizes the MSUs activity during fiscal 2025:
| Shares | Weighted- average Grant-date Fair Value | ||||||||||
| (In thousands) | |||||||||||
| Outstanding at September 30, 2024 | $ | ||||||||||
| Granted | |||||||||||
| Released | ( | ||||||||||
| Forfeited | ( | ||||||||||
| Outstanding at September 30, 2025 | $ | ||||||||||
The weighted-average fair value of the MSUs granted was $1,596.70 , $1,014.75 and $822.96 during fiscal 2025, 2024 and 2023, respectively. The total intrinsic value of the MSUs that vested was $102.1 million, $95.0 million and $42.2 million during fiscal 2025, 2024 and 2023, respectively, determined as of the date of vesting.
78
FAIR ISAAC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended September 30, 2025, 2024 and 2023
Stock Options
We estimate the fair value of stock options granted using the Black-Scholes option valuation model and we amortize the fair value on a straight-line basis over the vesting period. We used the following assumptions to estimate the fair value of our stock options during fiscal 2025, 2024 and 2023:
| Year Ended September 30, | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| Stock Options: | |||||||||||||||||||||||||||||||||||
| Weighted-average expected term (years) | |||||||||||||||||||||||||||||||||||
| Expected volatility (range) | - | % | - | % | - | % | |||||||||||||||||||||||||||||
| Weighted-average volatility | % | % | % | ||||||||||||||||||||||||||||||||
| Risk-free interest rate (range) | - | % | - | % | - | % | |||||||||||||||||||||||||||||
| Weighted-average expected dividend yield | % | % | % | ||||||||||||||||||||||||||||||||
Expected Term. The expected term represents the period that our stock options are expected to be outstanding. We estimate the expected term based on historical experience of similar awards, giving consideration to the contractual terms of the share-based awards, vesting schedules and expectations of future employee behavior.
Expected Volatility. We estimate the volatility of our common stock at the date of grant based on a combination of the implied volatility of publicly traded options on our common stock and our historical volatility rate.
Risk-Free Interest Rate. The risk-free interest rate assumption is based on observed interest rates appropriate for the term of our employee options.
Dividends. We have not declared or paid any cash dividends on our common stock since May 2017, and we do not presently plan to pay cash dividends on our common stock in the foreseeable future. Consequently, we used an expected dividend yield of zero in the years presented.
Forfeitures. We use historical data to estimate pre-vesting option forfeitures and record share-based compensation expense only for those awards that are expected to vest.
The following table summarizes option activity during fiscal 2025:
| Shares | Weighted- average Exercise Price | Weighted- average Remaining Contractual Term | Aggregate Intrinsic Value | ||||||||||||||||||||
| (In thousands) | (In years) | (In thousands) | |||||||||||||||||||||
| Outstanding at September 30, 2024 | $ | ||||||||||||||||||||||
| Granted | |||||||||||||||||||||||
| Exercised | ( | ||||||||||||||||||||||
| Outstanding at September 30, 2025 | $ | $ | |||||||||||||||||||||
| Exercisable at September 30, 2025 | $ | $ | |||||||||||||||||||||
| Vested or expected to vest at September 30, 2025 | $ | $ | |||||||||||||||||||||
The weighted-average fair value of options granted was $705.43 , $419.00 and $289.54 during fiscal 2025, 2024 and 2023, respectively. The aggregate intrinsic value of options outstanding at September 30, 2025 was calculated as the difference between the exercise price of the underlying options and the market price of our common stock for the 124,000 outstanding options that had exercise prices lower than the $1,496.53 market price of our common stock at September 30, 2025. The total intrinsic value of options exercised was $107.6 million, $49.1 million and $16.7 million during fiscal 2025, 2024 and 2023, respectively, determined as of the date of exercise.
79
FAIR ISAAC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended September 30, 2025, 2024 and 2023
Employee Stock Purchase Plan
The compensation expense on the 2019 Purchase Plan arises from the 15 % discount offered to participants. A total of 12,455 , 13,721 , and 21,876 shares of our common stock were issued under the 2019 Purchase Plan during fiscal 2025, 2024 and 2023, respectively. The weighted-average purchase price was $1,457.57 , $1,217.05 , and $646.37 per share for fiscal 2025, 2024 and 2023, respectively.
14. Earnings per Share
The following table presents reconciliations for the numerators and denominators of basic and diluted earnings per share (“EPS”) during fiscal 2025, 2024 and 2023:
| Year Ended September 30, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (In thousands, except per share data) | |||||||||||||||||
| Numerator for diluted and basic earnings per share: | |||||||||||||||||
| Net income | $ | $ | $ | ||||||||||||||
| Denominator — share: | |||||||||||||||||
| Basic weighted-average shares | |||||||||||||||||
| Effect of dilutive securities | |||||||||||||||||
| Diluted weighted-average shares | |||||||||||||||||
| Earnings per share: | |||||||||||||||||
| Basic | $ | $ | $ | ||||||||||||||
| Diluted | $ | $ | $ | ||||||||||||||
Anti-dilutive share-based awards excluded from the calculations of diluted EPS were immaterial during the years presented.
15. Segment Information
We are organized into two reportable segments: Scores and Software. Although we sell solutions and services into a large number of end user product and industry markets, our reportable business segments reflect the primary method in which management organizes and evaluates internal financial information to make operating decisions and assess performance.
•Scores. This segment includes our business-to-business (“B2B”) scoring solutions and services which give our clients access to predictive credit and other scores that can be easily integrated into their transaction streams and decision-making processes. This segment also includes our business-to-consumer (“B2C”) scoring solutions, including our myFICO.com subscription offerings.
•Software. This segment includes pre-configured analytic and decision management solutions designed for a specific type of business need or process — such as account origination, customer management, customer engagement, fraud detection, and marketing — as well as associated professional services. This segment also includes FICO® Platform, a modular software offering designed to support advanced analytic and decision use cases, as well as stand-alone analytic and decisioning software that can be configured by our customers to address a wide variety of business use cases. These offerings are available to our customers as SaaS or as on-premises software.
80
FAIR ISAAC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended September 30, 2025, 2024 and 2023
Our chief operating decision maker (“CODM”), who is our Chief Executive Officer, evaluates segment financial performance based on segment revenues, segment operating expenses in total and segment operating income. Segment operating expenses consist of direct and indirect costs principally related to personnel, facilities, IT infrastructure, depreciation and amortization, consulting and travel. Indirect costs are allocated to the segments generally based on relative segment revenues, fixed rates established by management based upon estimated expense contribution levels and other assumptions that management considers reasonable. We do not allocate broad-based incentive expense, share-based compensation expense, restructuring and acquisition-related expense, amortization expense, various corporate charges and certain other income and expense measures to our segments. These income and expense items are not allocated because they are not considered in evaluating the segment’s operating performance. Our CODM does not evaluate the financial performance of each segment based on its respective assets or capital expenditures; rather, depreciation and amortization amounts are allocated to the segments from their internal cost centers as described above.
The following tables summarize segment information for fiscal 2025, 2024 and 2023:
| Year Ended September 30, 2025 | |||||||||||||||||
| Scores | Software | Total | |||||||||||||||
| (In thousands) | |||||||||||||||||
| Segment revenues: | |||||||||||||||||
| On-premises and SaaS software | $ | $ | $ | ||||||||||||||
| Professional services | |||||||||||||||||
| Scores | |||||||||||||||||
| Total segment revenues | |||||||||||||||||
| Segment operating expense | ( | ( | ( | ||||||||||||||
| Segment operating income | $ | $ | $ | ||||||||||||||
| Unallocated corporate expenses | ( | ||||||||||||||||
| Unallocated share-based compensation expense | ( | ||||||||||||||||
| Unallocated restructuring charges | ( | ||||||||||||||||
| Operating income | |||||||||||||||||
| Unallocated interest expense, net | ( | ||||||||||||||||
| Unallocated other income, net | |||||||||||||||||
| Income before income taxes | $ | ||||||||||||||||
| Year Ended September 30, 2024 | |||||||||||||||||
| Scores | Software | Total | |||||||||||||||
| (In thousands) | |||||||||||||||||
| Segment revenues: | |||||||||||||||||
| On-premises and SaaS software | $ | $ | $ | ||||||||||||||
| Professional services | |||||||||||||||||
| Scores | |||||||||||||||||
| Total segment revenues | |||||||||||||||||
| Segment operating expense | ( | ( | ( | ||||||||||||||
| Segment operating income | $ | $ | |||||||||||||||
| Unallocated corporate expenses | ( | ||||||||||||||||
| Unallocated share-based compensation expense | ( | ||||||||||||||||
| Unallocated amortization expense | ( | ||||||||||||||||
| Operating income | |||||||||||||||||
| Unallocated interest expense, net | ( | ||||||||||||||||
| Unallocated other income, net | |||||||||||||||||
| Income before income taxes | $ | ||||||||||||||||
81
FAIR ISAAC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended September 30, 2025, 2024 and 2023
| Year Ended September 30, 2023 | |||||||||||||||||
| Scores | Software | Total | |||||||||||||||
| (In thousands) | |||||||||||||||||
| Segment revenues: | |||||||||||||||||
| On-premises and SaaS software | $ | $ | $ | ||||||||||||||
| Professional services | |||||||||||||||||
| Scores | |||||||||||||||||
| Total segment revenues | |||||||||||||||||
| Segment operating expense | ( | ( | ( | ||||||||||||||
| Segment operating income | $ | $ | |||||||||||||||
| Unallocated corporate expenses | ( | ||||||||||||||||
| Unallocated share-based compensation expense | ( | ||||||||||||||||
| Unallocated amortization expense | ( | ||||||||||||||||
| Unallocated gain on product line asset sale | |||||||||||||||||
| Operating income | |||||||||||||||||
| Unallocated interest expense, net | ( | ||||||||||||||||
| Unallocated other income, net | |||||||||||||||||
| Income before income taxes | $ | ||||||||||||||||
The following table presents depreciation and amortization on property and equipment for fiscal 2025, 2024 and 2023:
| Year Ended September 30, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (In thousands) | |||||||||||||||||
| Depreciation and amortization: | |||||||||||||||||
| Scores | $ | $ | $ | ||||||||||||||
| Software | |||||||||||||||||
| Total segment depreciation and amortization | |||||||||||||||||
| Unallocated corporate | |||||||||||||||||
| Total depreciation and amortization | $ | $ | $ | ||||||||||||||
Long-lived assets held outside of the U.S. were immaterial at September 30, 2025 and 2024.
16. Leases
We lease office space and data centers under operating lease arrangements, which constitute the majority of our lease obligations. We also enter into finance lease agreements from time to time for certain computer equipment. For any lease with a lease term in excess of 12 months, the related lease assets and liabilities are recognized on our consolidated balance sheets as operating leases or finance leases at the commencement of an agreement where it is determined that a lease exists. We have lease agreements that contain both lease and non-lease components, and we have elected to combine these components together and account for them as a single lease component for all classes of assets. Leases with a lease term of 12 months or less are not recorded on our consolidated balance sheets. Furthermore, we recognize lease expense for these leases on a straight-line basis over the lease term.
82
FAIR ISAAC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended September 30, 2025, 2024 and 2023
The following table presents the lease balances within the accompanying consolidated balance sheets as of September 30, 2025 and 2024:
| Balance Sheet Location | September 30, | ||||||||||||||||
| 2025 | 2024 | ||||||||||||||||
| (In thousands) | |||||||||||||||||
| Assets | |||||||||||||||||
| Operating leases | Operating lease right-of-use assets | $ | $ | ||||||||||||||
| Finance leases (*) | |||||||||||||||||
| Total lease assets | $ | $ | |||||||||||||||
| Liabilities | |||||||||||||||||
| Current: | |||||||||||||||||
| Operating leases | $ | $ | |||||||||||||||
| Finance leases | |||||||||||||||||
| Non-current: | |||||||||||||||||
| Operating leases | Operating lease liabilities | ||||||||||||||||
| Finance leases | |||||||||||||||||
| Total lease liabilities | $ | $ | |||||||||||||||
(*) Finance leases were recorded net of accumulated depreciation of $4.8 million and $1.9 million at September 30, 2025 and 2024, respectively.
83
FAIR ISAAC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended September 30, 2025, 2024 and 2023
The components of our operating and finance lease expenses were as follows:
| Year Ended September 30, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (In thousands) | |||||||||||||||||
| Operating lease cost | $ | $ | $ | ||||||||||||||
| Finance lease cost: | |||||||||||||||||
| Depreciation of lease assets | |||||||||||||||||
| Interest on lease liabilities | |||||||||||||||||
| Short-term lease cost | |||||||||||||||||
| Variable lease cost | |||||||||||||||||
| Sublease income | ( | ( | ( | ||||||||||||||
| Total lease cost | $ | $ | $ | ||||||||||||||
The following table presents weighted-average remaining lease terms and weighted-average discount rates related to our operating and finance leases:
| September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Operating leases: | |||||||||||
| Weighted-average remaining lease term (in months) | |||||||||||
| Weighted-average discount rate | % | % | |||||||||
| Finance leases: | |||||||||||
| Weighted-average remaining lease term (in months) | |||||||||||
| Weighted-average discount rate | % | % | |||||||||
Supplemental cash flow information related to our non-cancellable leases was as follows:
| Year Ended September 30, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (In thousands) | |||||||||||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | |||||||||||||||||
| Operating cash outflow for operating leases | $ | $ | $ | ||||||||||||||
| Operating cash outflow for finance leases | |||||||||||||||||
| Financing cash outflow for finance leases | |||||||||||||||||
| Lease assets obtained in exchange for new lease liabilities: | |||||||||||||||||
| Operating leases | |||||||||||||||||
| Finance leases | |||||||||||||||||
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FAIR ISAAC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended September 30, 2025, 2024 and 2023
Future lease payments under our non-cancellable leases as of September 30, 2025 were as follows:
| Operating Leases | Finance Leases | ||||||||||
| (In thousands) | |||||||||||
| Fiscal 2026 | $ | $ | |||||||||
| Fiscal 2027 | |||||||||||
| Fiscal 2028 | |||||||||||
| Fiscal 2029 | |||||||||||
| Fiscal 2030 | |||||||||||
| Thereafter | |||||||||||
| Total future undiscounted lease payments | |||||||||||
| Less imputed interest | ( | ( | |||||||||
| Total reported lease liabilities | $ | $ | |||||||||
The amounts above do not include contractual sublease income totaling $0.4 million and $0.2 million during fiscal 2026 and 2027, respectively.
17. Commitments
In the ordinary course of business, we enter into contractual purchase obligations and other agreements that are legally binding and specify certain minimum payment terms. Our purchase obligations primarily relate to a third-party data center hosting agreement, subscription arrangements, and service agreements.
Future minimum payments under our non-cancellable purchase obligations as of September 30, 2025 were as follows:
| Year Ending September 30, | (In thousands) | ||||
| 2026 | $ | ||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| Total | $ | ||||
We are also a party to a management agreement with 17 of our executives providing for certain payments and other benefits in the event of a qualified change in control of FICO, coupled with a termination of the officer during the following year.
18. Contingencies
We are in disputes with certain customers regarding amounts owed in connection with the sale of certain of our products and services. We also have had claims asserted by former employees relating to compensation and other employment matters. We are also involved in various other claims and legal actions arising in the ordinary course of business. We record litigation accruals for legal matters which are both probable and estimable. For legal proceedings for which there is a reasonable possibility of loss (meaning those losses for which the likelihood is more than remote but less than probable), we have determined we do not have a material exposure, either individually or in the aggregate.
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FAIR ISAAC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended September 30, 2025, 2024 and 2023
19. Guarantees
In the ordinary course of business, we are not subject to potential obligations under guarantees, except for standard indemnification and warranty provisions that are contained within many of our customer license and service agreements and certain supplier agreements, including underwriter agreements, as well as standard indemnification agreements that we have executed with certain of our officers and directors, and give rise only to the disclosure in the consolidated financial statements. In addition, we continue to monitor the conditions that are subject to the guarantees and indemnifications to identify whether it is probable that a loss has occurred, and would recognize any such losses under the guarantees and indemnifications when those losses are estimable.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Not applicable.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
An evaluation was carried out under the supervision and with the participation of FICO’s management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of FICO’s disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this annual report. Based on that evaluation, the CEO and CFO have concluded that FICO’s disclosure controls and procedures were effective as of September 30, 2025 to ensure that information required to be disclosed by FICO in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. In addition, the disclosure controls and procedures are designed to ensure that information required to be disclosed is accumulated and communicated to management, including the CEO and CFO, allowing timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
No change in FICO’s internal control over financial reporting was identified in connection with the evaluation required by Rule 13a-15(d) of the Exchange Act that occurred during the quarter ended September 30, 2025, that has materially affected, or is reasonably likely to materially affect, FICO’s internal control over financial reporting.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Under the supervision and with the participation of management, including our CEO and CFO, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of September 30, 2025 based on the guidelines established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation management has concluded that our internal control over financial reporting was effective as of September 30, 2025.
Deloitte & Touche LLP, an independent registered public accounting firm that audited the consolidated financial statements included in this Annual Report on Form 10-K, has also audited the effectiveness of our internal control over financial reporting as of September 30, 2025, as stated in their attestation report included in Part II, Item 8 of this Annual Report on Form 10-K.
86
Item 9B. Other Information
Insider Trading Arrangements
On September 12, 2025 , Eva Manolis , a member of our Board of Directors , entered into a pre-arranged trading plan that is intended to satisfy the affirmative defense of Rule 10b5-1(c) of the Exchange Act. This plan provides for the sale of up to 1,041 shares of our common stock in the aggregate, and terminates on the earlier of the close of business on February 27, 2026 or the date all shares are sold thereunder.
During the three months ended September 30, 2025, no other directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted, modified or terminated
Amendment and Restatement of the Fair Isaac Supplemental Retirement and Savings Plan
Because we are filing this Annual Report on Form 10-K within four business days after the triggering event, we are reporting the following information in lieu of reporting on a Current Report on Form 8-K under Item 5.02 “Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers” and Item 9.01 “Financial Statements and Exhibits.”
On November 5, 2025, the LDCC and the Board approved an amendment and restatement of the Fair Isaac Supplemental Retirement and Savings Plan, effective January 1, 2026, to (a) change the base salary maximum deferral percentages to allow participants to defer up to 50% (instead of up to 25%) of their base salary (with the 75% limit for bonuses remaining the same); (b) change the time and form of payment elections, giving participants the ability to make the following payment elections with respect to their deferrals from eligible compensation earned in that year: (i) time of payment, at the earlier of (1) separation from service, or (2) at a specific date while still employed, and (ii) form of payment, with either (1) lump sum payment, or (2) installments of up to ten years; (c) change the name from the Fair Isaac Supplemental Retirement and Savings Plan to the Fair Isaac Non-Qualified Deferred Compensation Plan (the “NQDC Plan”); (d) allow participants to modify a previously made deferral election, in line with Section 409A of the Internal Revenue Code of 1986, as amended, and related rules limiting subsequent deferral elections; and (e) change the Company’s matching contribution structure so that an individual receives the same matching contribution as provided under the Fair Isaac 401(k) Plan (the “401(k) Plan”), based on the matching contribution formula available under the 401(k) Plan, reduced by the amount of matching contributions actually received by the participant under the 401(k) Plan for that plan year.
The foregoing description of the NQDC Plan is a summary only and is qualified by reference to the full text of the NQDC Plan, which is attached hereto as Exhibit 10.37 and incorporated into this Item 9B by reference.
Amendment and Restatement of Certificate of Incorporation
Because we are filing this Annual Report on Form 10-K within four business days after the triggering event, we are reporting the following information in lieu of reporting on a Current Report on Form 8-K under Item 3.03 “Material Modification to Rights of Security Holders,” Item 5.03 “Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year” and Item 9.01 “Financial Statements and Exhibits.”
On November 4, 2025, we filed a Certificate of Elimination (the “Certificate of Elimination”) with the Secretary of State of the State of Delaware to eliminate from our Restated Certificate of Incorporation all matters set forth in the Certificate of Designation with respect to the Series A Participating Preferred Stock (the “Series A Preferred Stock”) previously filed with the Secretary of State of the State of Delaware on August 9, 2001. The shares of Series A Preferred Stock were reserved for issuance upon the exercise of rights under a shareholder rights plan that is no longer in effect, and no shares of Series A Preferred Stock were ever issued or outstanding. The Certificate of Elimination became effective upon filing.
On November 5, 2025, we filed with the Secretary of State of the State of Delaware a Restated Certificate of Incorporation to reflect the elimination from our Restated Certificate of Incorporation of all matters related to the Series A Preferred Stock as described above. The Restated Certificate of Incorporation became effective upon filing.
The foregoing description of the Certificate of Elimination and the Restated Certificate of Incorporation is a summary only and is qualified by reference to the full texts of the Certificate of Elimination and the Restated Certificate of Incorporation, which are attached hereto as Exhibits 3.3 and 3.2, respectively, and incorporated into this Item 9B by reference.
87
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
88
PART III
Item 10. Directors, Executive Officers and Corporate Governance
The required information regarding our Directors is incorporated by reference from the information under the caption “Director Nominees” in our 2026 Proxy Statement to be filed with the SEC within 120 days after September 30, 2025.
Certain information with respect to our executive officers appears in Part I of this Annual Report on Form 10-K under the heading “Information about our Executive Officers.”
Information regarding compliance with Section 16(a) of the Securities Exchange Act, if applicable, is incorporated by reference from the information under the caption “Delinquent Section 16(a) Reports,” in our 2026 Proxy Statement to be filed with the SEC within 120 days after September 30, 2025. Information regarding material changes, if any, to the procedures by which stockholders may recommend nominees to the Company’s Board of Directors is incorporated by reference from the information under the caption “Stockholder-Recommended Director Candidates” in our 2026 Proxy Statement to be filed with the SEC within 120 days after September 30, 2025.
FICO has adopted a Code of Ethics for Senior Financial Management that applies to the Company’s principal executive officer, principal financial officer, principal accounting officer or controller, and other persons performing similar functions who have been identified by the Chief Executive Officer. We have posted the Code of Ethics on our website located at www.fico.com. FICO intends to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding an amendment to, or a waiver from, this Code of Ethics by posting such information on its website. FICO also has a Code of Conduct and Business Ethics applicable to all directors, officers and employees, which is also available at the website cited above.
The required information regarding the Company’s audit committee is incorporated by reference from the information under the caption “Board Committees” in our 2026 Proxy Statement to be filed with the SEC within 120 days after September 30, 2025.
The required information regarding the Company’s insider trading policies is incorporated by reference from the information under the caption “Insider Trading Policy ” in our 2026 Proxy Statement to be filed with the SEC within 120 days after September 30, 2025. Our Insider Trading Policy is filed as Exhibit 19.1 to this Annual Report on Form 10-K.
Item 11. Executive Compensation
The information required by this Item is incorporated by reference from the information under the captions “Director Compensation Programs,” “Executive Compensation” and “Interlocks and Insider Participation” in our 2026 Proxy Statement to be filed with the SEC within 120 days after September 30, 2025.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this Item is incorporated by reference from the information under the captions “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information” in our 2026 Proxy Statement to be filed with the SEC within 120 days after September 30, 2025.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this Item is incorporated by reference from the information under the captions “Certain Relationships and Related Persons Transactions,” “Board Committees” and “Director Nominees” in our 2026 Proxy Statement to be filed with the SEC within 120 days after September 30, 2025.
Item 14. Principal Accountant Fees and Services
The information required by this Item is incorporated by reference from the information under the caption “Ratification of Independent Registered Public Accounting Firm” in our 2026 Proxy Statement to be filed with the SEC within 120 days after September 30, 2025.
89
PART IV
Item 15. Exhibits and Financial Statement Schedules
1. Consolidated Financial Statements:
| Reference Page Form 10-K | |||||
2. Financial Statement Schedules
All financial statement schedules are omitted as the required information is not applicable or as the information required is included in the consolidated financial statements and related notes.
90
3. Exhibits:
Exhibit Number | Description | ||||
| 3.1 | |||||
| 3.2* | |||||
| 3.3* | |||||
| 4.1 | |||||
| 4.2 | |||||
| 4.3 | |||||
| 4.4 | |||||
| 4.5 | |||||
| 10.1 | |||||
| 10.2 | |||||
| 10.3 | |||||
| 10.4 | |||||
| 10.5 | |||||
| 10.6 | |||||
| 10.7 | |||||
| 10.8 | |||||
| 10.9 | |||||
| 10.10 | |||||
| 10.11 | |||||
| 10.12 | |||||
91
| 10.13 | |||||
| 10.14 | |||||
| 10.15 | |||||
| 10.16 | |||||
| 10.17 | |||||
| 10.18 | |||||
| 10.19 | |||||
| 10.20 | |||||
| 10.21 | |||||
| 10.22 | |||||
| 10.23 | |||||
| 10.24 | |||||
| 10.25 | |||||
| 10.26 | |||||
| 10.27 | |||||
| 10.28 | |||||
| 10.29 | |||||
| 10.30 | |||||
| 10.31 | |||||
| 10.32 | |||||
92
| 10.33 | |||||
| 10.34 | |||||
| 10.35 | |||||
| 10.36 | |||||
| 10.37* | |||||
| 10.38* | |||||
| 10.39* | |||||
| 10.40* | |||||
| 10.41* | |||||
| 19.1 | |||||
| 21.1* | |||||
| 23.1* | |||||
| 31.1* | |||||
| 31.2* | |||||
| 32.1** | |||||
| 32.2** | |||||
| 97.1 | |||||
| 101.INS* | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. | ||||
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document. | ||||
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | ||||
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document. | ||||
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document. | ||||
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | ||||
| 104* | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | ||||
(1)Management contract or compensatory plan or arrangement.
| * | Filed herewith. | ||||
| ** | Furnished herewith. | ||||
Item 16. Form 10-K Summary
None
93
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| FAIR ISAAC CORPORATION | ||||||||
| By | /s/ STEVEN P. WEBER | |||||||
| Steven P. Weber | ||||||||
| Executive Vice President and Chief Financial Officer | ||||||||
DATE: November 7, 2025
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Steven P. Weber his or her attorney-in-fact, with full power of substitution, for him or her in any and all capacities, to sign any amendments to this Annual Report on Form 10-K and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
94
| /s/ WILLIAM J. LANSING | Chief Executive Officer (Principal Executive Officer) and Director | November 7, 2025 | ||||||
| William J. Lansing | ||||||||
| /s/ STEVEN P. WEBER | Executive Vice President and Chief Financial Officer (Principal Financial Officer) | November 7, 2025 | ||||||
| Steven P. Weber | ||||||||
| /s/ MICHAEL S. LEONARD | Vice President and Chief Accounting Officer (Principal Accounting Officer) | November 7, 2025 | ||||||
| Michael S. Leonard | ||||||||
| /s/ FABIOLA R. ARREDONDO | Director | November 7, 2025 | ||||||
| Fabiola R. Arredondo | ||||||||
| /s/ BRADEN R. KELLY | Director | November 7, 2025 | ||||||
| Braden R. Kelly | ||||||||
| /s/ EVA MANOLIS | Director | November 7, 2025 | ||||||
| Eva Manolis | ||||||||
| /s/ MARC F. MCMORRIS | Director | November 7, 2025 | ||||||
| Marc F. McMorris | ||||||||
| /s/ JOANNA REES | Director | November 7, 2025 | ||||||
| Joanna Rees | ||||||||
| /s/ DAVID A. REY | Director | November 7, 2025 | ||||||
| David A. Rey | ||||||||
| /s/ H. TAYLOE STANSBURY | Director | November 7, 2025 | ||||||
| H. Tayloe Stansbury | ||||||||
95
Exhibit 3.2
RESTATED CERTIFICATE OF INCORPORATION
OF
FAIR ISAAC CORPORATION
Fair Isaac Corporation (the “Corporation”) was incorporated through an original Certificate of Incorporation filed with the Secretary of State of the State of Delaware on May 15, 1987.
This Restated Certificate of Incorporation restates and integrates and further amends the Corporation’s Restated Certificate of Incorporation, as heretofore amended. This Restated Certificate of Incorporation was duly adopted by the Corporation’s Board of Directors in accordance with Sections 242 and 245 of the Delaware General Corporation Law. The text of the Restated Certificate of Incorporation of the Corporation is hereby restated in its entirety to read as follows:
1. The name of the corporation is Fair Isaac Corporation.
2. The address of its registered office in the State of Delaware is 251 Little Falls Drive, Wilmington, Delaware 19808, County of New Castle. The name of its registered agent at such address is Corporation Service Company.
3. The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the Delaware General Corporation Law.
4. (a) The total number of shares of all classes of stock which the corporation shall have authority to issue is two hundred one million (201,000,000), of which one million (1,000,000) shares shall be Preferred Stock of the par value of $.01 per share, and two hundred million (200,000,000) shares shall be Common Stock of the par value of $.01 per share. The number of authorized shares of Common Stock or Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) if the increase or decrease is approved by the holders of a majority of the shares of Common Stock, without the vote of the holders of the shares of Preferred Stock or any series thereof, unless any such Preferred holders are entitled to vote thereon pursuant to the provisions established by the Board of Directors in the resolution or resolutions providing for the issue of such Preferred Stock, and if such holders of such Preferred Stock are so entitled to vote thereon, then, except as may otherwise be set forth in this Certificate of Incorporation, the only stockholder approval required shall be that of a majority of the combined voting power of the Common and Preferred Stock so entitled to vote.
(b) The Board of Directors is expressly authorized to provide for the issue, in one or more series, of all or any shares of the Preferred Stock and, in the resolution or resolutions providing for such issue, to establish for each such series the number of its shares, which may thereafter (unless forbidden in the resolution or resolutions providing for such issue) be increased or decreased (but not below the number of shares of the series then outstanding) pursuant to a subsequent resolution of the Board of Directors, the voting powers, full or limited, of the shares of such series, or that such shares shall have no voting powers, and the designations, preferences and relative, participating, optional or other special rights of the shares of such series, and the qualifications, limitations or restrictions thereof. In furtherance of the foregoing authority and not in limitation of it, the Board of Directors is expressly authorized, in the resolution or resolutions providing for the issue of a series of Preferred Stock, to make the shares of such series, without the consent of the holders of such shares, convertible into or exchangeable for shares of another class or classes of stock of the corporation or any series thereof, or redeemable for cash, property or rights, including securities, all on such conditions and on such terms as may be stated in such resolution or resolutions, and to make any of the voting powers, designations, preferences, rights and qualifications, limitations or restrictions of the shares of the series dependent upon facts ascertainable outside this Certificate of Incorporation.
(c) Holders of shares of Common Stock shall be entitled to receive such dividends or distributions as are lawfully declared on the Common Stock; to have notice of any authorized meeting of stockholders; to one vote for each share of Common Stock on all matters that are properly submitted to a vote of such stockholders; and, upon dissolution of the corporation, to share ratably in the assets thereof that may be available for distribution after satisfaction of creditors and of the preferences, if any, of any shares of Preferred Stock.
5. In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to make, alter or repeal the by-laws of the corporation.
6. (a) A director of the corporation shall not be liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit.
(b) Each director or officer of the corporation who was or is made a party or is threatened to be made a party to or is in any way involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (including without limitation any action, suit or proceeding brought by or in the right of the corporation to procure a judgment in its favor) (hereinafter a “proceeding”), including any appeal therefrom, by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director or officer of the corporation or of a subsidiary of the corporation, or is or was serving at the request of the corporation as a director or officer of another entity or enterprise, or was a director or officer of a foreign or domestic corporation which was a predecessor corporation of the corporation or of another entity or enterprise at the request of such predecessor corporation, or by reason of anything done or not done in such capacity, shall be indemnified and held harmless by the corporation, and the corporation shall advance all expenses incurred by any such person in connection with any such proceeding prior to its final determination, to the fullest extent authorized by the Delaware General Corporation Law. In any proceeding against the corporation to enforce these rights, such person shall be presumed to be entitled to indemnification and the corporation shall have the burden of proof to overcome that presumption. The rights to indemnification and advancement of expenses conferred by this Article shall be presumed to have been relied upon by directors and officers of the corporation in serving or continuing to serve the corporation and shall be enforceable as contract rights. Said rights shall not be exclusive of any other rights to which those seeking indemnification may otherwise be entitled. The corporation may, upon written demand presented by a director or officer of the corporation or of a subsidiary of the corporation, or by a person serving at the request of the corporation as a director or officer of another entity or enterprise, enter into contracts to provide such persons with specific rights to indemnification, which contracts may confer rights and protections to the maximum extent permitted by the Delaware General Corporation Law. The corporation may create trust funds, grant security interests, obtain letters of credit, or use other means to ensure payment of such amounts as may be necessary to perform the obligations provided for in this Article 6 or in any such contract.
(c) Any repeal or modification of the foregoing provisions of this Article 6, including without limitation any contractual rights arising under or authorized by it, by the stockholders of the corporation shall not adversely affect any right or protection of a director or officer of the corporation existing at the time of such repeal or modification.
(d) In addition to any vote of the holders of any class or series of the stock of this corporation required by law or by this Certificate of Incorporation, the affirmative vote of the holders of at least 66-2/3% of the voting power of all of the then-outstanding shares of the stock of the corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to amend or repeal this Article.
7. No holder of stock of the corporation, or of any class or classes or of a series or series thereof, shall be entitled to cumulate votes for the election of directors of the corporation.
IN WITNESS WHEREOF, the corporation has caused this Restated Certificate of Incorporation to be executed by its duly authorized officer on this 5th day of November, 2025.
| FAIR ISAAC CORPORATION | ||||||||
| By | /s/ Carrie H. Darling | |||||||
| Name: Carrie H. Darling | ||||||||
| Title: Vice President, Deputy General Counsel and Assistant Secretary | ||||||||
Exhibit 3.3
CERTIFICATE OF ELIMINATION
OF
SERIES A PARTICIPATING PREFERRED STOCK
OF
FAIR ISAAC CORPORATION
Pursuant to the provisions of Section 151(g) of the Delaware General Corporation Law (the “DGCL”), it is hereby certified that:
FIRST: The name of the corporation (hereinafter referred to as the “Corporation”) is Fair Isaac Corporation. On August 9, 2001, the Corporation filed a Certificate of Designation with respect to its Series A Preferred Stock (defined below), in the office of the Secretary of State of the State of Delaware (the “Series A Certificate of Designation”).
SECOND: The creation of a series of the Corporation’s Series A Participating Preferred Stock, par value $0.01 per share (the “Series A Preferred Stock”), and the rights, preferences, privileges and restrictions of the Series A Preferred Stock were provided for and authorized by resolutions duly adopted by the Board of Directors of the Corporation (the “Board”), which resolutions were set forth in the Series A Certificate of Designation heretofore filed with the Secretary of State of the State of Delaware pursuant to the provisions of Section 151(g) of the DGCL.
THIRD: No shares of the Series A Preferred Stock are outstanding and no shares thereof will be issued subject to the Series A Certificate of Designation.
FOURTH: The Board adopted the following resolutions on October 29, 2025 with respect to its Series A Preferred Stock and the Certificate of Designation with respect to the Series A Preferred Stock:
WHEREAS, the Corporation previously had in place a rights agreement covering the potential issuance of shares of Series A Participating Preferred Stock, and the terms of such Series A Preferred Stock were set forth in a Certificate of Designation filed with the Delaware Secretary of State and are included in Exhibit A to the Corporation’s Restated Certificate of Incorporation Certificate (the “Certificate”); further
WHEREAS, the rights agreement has terminated, the Corporation has no authorized shares of Series A Preferred Stock outstanding, and no authorized shares of Series A Preferred Stock will be issued.
RESOLVED, that the officers of the Corporation are each hereby authorized, jointly and severally, for and on behalf of the Corporation, to execute and file a certificate setting forth this resolution (a “Certificate of Elimination”) with the Delaware Secretary of State pursuant to the provisions of Section 151(g) of the DGCL for the purpose of eliminating from the Certificate all references to the Series A Preferred Stock of the Corporation.
FIFTH: The effective time of this Certificate of Elimination shall be upon filing with the Secretary of State of the State of Delaware, at which time, in accordance with the provisions of Section 151(g) of the DGCL, the Corporation’s Certificate of Incorporation shall be amended so as to eliminate therefrom all reference to the Series A Preferred Stock.
IN WITNESS WHEREOF, the corporation has caused this Certificate of Elimination to be executed by its duly authorized officer on this 4th day of November, 2025.
| FAIR ISAAC CORPORATION | ||||||||
| By | /s/ Carrie H. Darling | |||||||
| Name: Carrie H. Darling | ||||||||
| Title: Vice President, Deputy General Counsel and Assistant Secretary | ||||||||
Exhibit 10.37
FAIR ISAAC NON-QUALIFIED DEFERRED COMPENSATION PLAN
(As Amended and Restated Effective January 1, 2026)
TABLE OF CONTENTS
Page
ARTICLE I INTRODUCTION 1
1.1 Purpose of the Plan 1
1.2 Non-Qualified “Top-Hat” Plan 1
1.3 Plan Document 1
1.4 Effective Date of Document 1
ARTICLE II DEFINITIONS AND CONSTRUCTION 1
2.1 Definitions 1
2.2 Choice of Law 4
ARTICLE III PARTICIPATION AND CONTRIBUTION CREDITS 5
3.1 Participation 5
3.2 Elective Deferral Credits 5
3.3 Company Match Credits 6
ARTICLE IV ACCOUNTS AND INVESTMENT ADJUSTMENTS 7
4.1 Accounts 7
4.2 Valuation of Accounts 7
4.3 Earnings Credits 8
4.4 Statements 8
ARTICLE V VESTING 8
ARTICLE VI DISTRIBUTIONS AFTER SEPARATION OR DISABILITY 9
6.1 Benefit on Separation from Service or Disability 9
6.2 Time and Form of Distribution 9
6.3 Cash-Out of Small Accounts 11
6.4 Valuation of Accounts Following Separation from Service 12
ARTICLE VII DISTRIBUTIONS AFTER DEATH 12
7.1 Survivor Benefits 12
7.2 Beneficiary Designation 12
7.3 Successor Beneficiary 13
ARTICLE VIII CONTRACTUAL OBLIGATIONS AND FUNDING 13
8.1 Contractual Obligations 13
8.2 Funding 14
ARTICLE IX AMENDMENT AND TERMINATION OF PLAN 14
9.1 Right to Amend or Terminate 14
9.2 Effect of Termination 15
ARTICLE X ADMINISTRATION 15
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10.1 Administration 15
10.2 Correction of Errors And Duty to Review Information 16
10.3 Claims Procedure 16
10.4 Indemnification 17
10.5 Exercise of Authority 17
10.6 Telephonic or Electronic Notices and Transactions 18
ARTICLE XI MISCELLANEOUS 18
11.1 Nonassignability 18
11.2 Withholding 18
11.3 Right of Setoff 18
11.4 Uniformed Services Employment and Reemployment Rights Act 18
11.5 Successors of Fair Isaac 18
11.6 Employment Not Guaranteed 19
11.7 Gender, Singular and Plural 19
11.8 Captions 19
11.9 Validity 19
11.10 Waiver of Breach 19
11.11 Notice 19
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FAIR ISAAC NON-QUALIFIED DEFERRED COMPENSATION PLAN
ARTICLE I
INTRODUCTION
1.1 Purpose of the Plan. The FAIR ISAAC NON-QUALIFIED DEFERRED COMPENSATION PLAN (the “Plan”) is sponsored by Fair Isaac and its Participating Affiliates to attract high quality executives and to provide eligible executives with an opportunity to save on a pre-tax basis and accumulate tax-deferred earnings to achieve their financial goals.
1.2 Non-Qualified “Top-Hat” Plan.
1.2.1 ERISA Status. The Plan is a “top-hat” plan – that is, an unfunded plan maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees within the meaning of ERISA §§ 201(2), 301(a)(3) and 401(a)(1), and therefore is exempt from Parts 2, 3 and 4 of Title I of ERISA.
1.2.2 Compliance with Code § 409A. The Plan also is a nonqualified deferred compensation plan that is intended to meet the requirements of paragraph (2), (3) and (4) of Code § 409A(a) and the terms and provisions of the Plan should be interpreted and applied in a manner consistent with such requirements, including the regulations and other guidance issued under Code § 409A. While certain Accounts under this Plan reflect deferrals that were made and vested prior to January 1, 2005 (which is the effective date of Code § 409A), the intent generally is to treat such amounts as subject to Code § 409A notwithstanding the possible availability of “grandfather” treatment under Code § 409A.
1.3 Plan Document.
1.3.1 Plan Documents. The Plan document consists of this document, any appendix to this document and any document that is expressly incorporated by reference into this document.
1.3.2 Modifications by Employment or Similar Agreement. Fair Isaac or an Affiliate may be a party to an employment or similar agreement with a Participant, the terms of which may enhance or modify in some respect the benefits provided under this Plan, including, but not necessarily limited to, an enhancement to or modification of the benefit amount, payment forms and/or other rights and features of the Plan. The Plan consists only of this document and the core documents referenced in Sec. 1.3.1. Accordingly, any contractual rights that a Participant may have to any enhancement or modification called for under an employment or similar agreement are rights that derive from such agreement and not directly from the Plan. Nonetheless, the Plan will be applied in a manner that takes into account any enhancements or modifications called for under an enforceable employment or similar agreement as if such provisions were part of the Plan; provided that, no change can be made to the Plan by means of an employment or similar agreement that would not have been allowed by means of an amendment to the Plan (for example, an amendment inconsistent with Code § 409A).
1.4 Effective Date of Document. The Fair Isaac Supplemental Retirement and Savings Plan (as amended and restated) was originally effective January 1, 2009. Prior to January 1, 2009, the terms of the Plan were set forth in unadopted versions of this document and prior documents which reflect good faith compliance with the requirements of Code § 409A, and those provisions generally control prior to January 1, 2009. The Plan was amended and restated effective January 1, 2026, and the name of the Plan was changed to the “Fair Isaac Non-Qualified Deferred Compensation Plan.”
ARTICLE II
DEFINITIONS AND CONSTRUCTION
2.1 Definitions.
2.1.1 “Account” means an account established for a Participant pursuant to Article IV.
2.1.2 “Affiliate” means any business entity that is required to be aggregated and treated as one employer with Fair Isaac under Code § 414(b) or (c) (and for purposes of determining whether a Separation from Service has occurred, a standard of “at least 80 percent” will be used to identify an affiliate under Code § 414(b) and (c) notwithstanding the default standard of “at least 50 percent” found in Treas. Reg. § 1.409A-1(h)(3)).
2.1.3 “Aggregated Account Balance Plan” means any other “account balance plan” (as such term is defined in Treasury Regulation § 1.409A-1(c)(2)(i)(A)) that allows deferrals at the election of the Participant, is maintained by Fair Isaac or an Affiliate, and is subject to Code § 409A.
2.1.4 “Beneficiary” means a person or persons designated as such pursuant to Sec. 7.2.
2.1.5 “Board” means the Board of Directors of Fair Isaac.
2.1.6 “Code” means the Internal Revenue Code of 1986, as amended.
2.1.7 “Company Match Credit” means a credit to the Account of a Participant pursuant to Sec. 3.3.
2.1.8 “Deferral Eligible Amounts” means a Participant’s base salary, incentive pay, bonuses and sales commission compensation from Fair Isaac and its Affiliates, plus any other payment that Fair Isaac (acting in its corporate capacity) determines in its sole discretion to be eligible for a deferral election under this Plan; provided that, incentive pay and bonuses for the performance period in which an Employee first is eligible to enroll as an Active Participant will not be included in Deferral Eligible Amounts. Fair Isaac will make a determination to include or exclude a given type of pay from being a Deferral Eligible Amount prior to the start of a given Plan Year as reflected in the payroll system starting with the first payroll date within the Plan Year, and such determination will not be modified during the Plan Year.
An Employee’s “sales commission compensation” for this purpose means compensation paid to an Employee that consists of either a portion of the purchase price for a product or service sold to an unrelated customer or an amount substantially all of which is calculated by reference to the volume of sales; provided that, compensation is sales commission compensation only if payment of the compensation is contingent on receipt of payment from the customer or the closing of the sales transaction.
2.1.9 “Disability” means that the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months.
2.1.10 “Earnings Credit” means the gains and losses credited on the balance of an Account based on the choice made by the Participant (or Beneficiary after the death of the Participant) among the investment options made available under the Plan.
2.1.11 “Eligible Employee” means an Employee of Fair Isaac or a Participating Affiliate (while it is a Participating Affiliate):
(a) Who is in salary band F or above; and
(b) Who is on payroll in the United States.
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The Leadership Development and Compensation Committee of the Board, in its sole and absolute discretion, may determine that an Employee described above will not be an Eligible Employee, or may determine that an Employee not described above will be an Eligible Employee. However, the Plan is intended to cover only those Employees who are in a select group of management or highly compensated employees within the meaning of ERISA §§ 201(2), 301(a)(3) and 401(a)(1); and, accordingly, if any interpretation is issued by the Department of Labor that would exclude any Employee from satisfying that requirement, such Employee immediately will cease to be an Eligible Employee (and will cease to be an Active Participant as provided in Sec. 3.1.3).
2.1.12 “Employee” means any common-law employee of Fair Isaac or an Affiliate (while it is an Affiliate).
2.1.13 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
2.1.14 “Fair Isaac” means Fair Isaac Corporation, or any successor in interest by reason of a reorganization, merger or similar corporate transaction.
2.1.15 “Participant” means an Active Participant, or a current or former Eligible Employee who is not enrolled but who has a balance remaining in an Account under the Plan. “Active Participant” means an Eligible Employee who has enrolled in the Plan (or who previously enrolled, but without regard to whether a deferral election is currently in place) and who remains an Active Participant under Sec. 3.1.3.
2.1.16 “Participating Affiliate” means any Affiliate (while it is an Affiliate) which employs one or more Eligible Employees.
2.1.17 “Plan” means the Fair Isaac Non-Qualified Deferred Compensation Plan (prior to January 1, 2026, the Plan was known as the Fair Isaac Supplemental Retirement and Savings Plan).
2.1.18 “Plan Year” means the calendar year.
2.1.19 “Retirement” means any Separation from Service on or after the date on which the Employee:
(a) Has attained age sixty-five (65); or
(b) Has both attained age fifty-five (55) and completed at least ten (10) Years of Service for Vesting.
2.1.20 “Separation from Service” means that Fair Isaac and the Participant anticipate that the Participant will perform no future services (as an Employee or contractor) for Fair Isaac and its Affiliates or that the level of services the Participant will perform for Fair Isaac and its Affiliates (as an Employee or contractor) will permanently decrease to twenty percent (20%) or less of the average level of services performed over the immediately preceding thirty-six (36) month period (or the full period of services if the Participant has been providing services for less than thirty-six (36) months). In the event of a bona fide leave of absence, a Separation from Service will be deemed to have occurred on the date that is six (6) months (or in the case of a disability leave, twenty-nine (29) months) following the start of such leave; provided that, if the Participant has a statutory or contractual right to return to active employment that extends beyond the end of such leave period, the Separation from Service will be deemed to have occurred upon the expiration of such statutory or contractual right, and if the individual has a Termination of Employment during such leave period, the Separation from Service will be deemed to have occurred on such Termination of Employment. A “disability” leave for this purpose means an absence due to a medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than six (6) months, where such impairment causes the Participant to be unable to perform the duties of his/her position of employment or any substantially similar position.
In the case of a sale or other disposition of stock or substantial assets, or other corporate transaction, whether a Separation from Service has occurred may be affected by the provisions of Sec. 8.1.3.
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2.1.21 “Specified Employee” means an Employee who at any time during the twelve-(12) month period ending on the identification date was a “key employee” as defined under Code § 416(i) (applied in accordance with the regulations thereunder, but without regard to paragraph (5) thereof); provided that, an Employee will be a Specified Employee only if stock of Fair Isaac or an Affiliate is publicly traded (on an established securities market or otherwise) on the date of the Employee’s Separation from Service.
Fair Isaac may adopt a Specified Employee Identification Policy, which specifies the identification date, the effective date of any change in the key employee group, compensation definition and other variables that are relevant in identifying Specified Employees, and which may include an alternative method of identifying Specified Employees consistent with the regulations under Code § 409A. In the absence of any such policy or policy provision, for purposes of the above, the “identification date” is each December 31st, and an Employee who satisfies the above conditions will be considered to be a “Specified Employee” from April 1st following the identification date to March 31st of the following year, and the compensation and other variables, and special rules for corporate events and special rules relating to nonresident aliens, that is necessary in identifying Specified Employees will be determined and applied in accordance with the defaults specified in the regulations under Code § 409A. Any Specified Employee Identification Policy will apply uniformly to all nonqualified deferred compensation plans subject to Code § 409A that are maintained by Fair Isaac or an Affiliate.
2.1.21 “Spouse” means a person to whom the Participant is legally married as of the determination date (including a common-law spouse in any state that recognizes common-law marriage, provided that acceptable proof and certification of common-law marriage has been received by Fair Isaac).
2.1.22 “Termination of Employment” means that the common-law employer-employee relationship has ended between the individual and Fair Isaac and its Affiliates, as determined under the employment policies and practices of Fair Isaac (including by reason of voluntary or involuntary termination, retirement, death, expiration of and failure to return from a recognized leave of absence, or otherwise). A Termination of Employment does not occur merely as a result of transfer of employment from one Affiliate to another Affiliate, or from Fair Isaac to an Affiliate or from an Affiliate to Fair Isaac. In the case of an Employee working for an Affiliate, a Termination of Employment will not occur upon the sale of the stock of such employer such that it no longer satisfies the definition of an Affiliate (assuming the individual continues in the employ of that employer or a new affiliate of that employer after the sale).
2.1.23 “Trustee” means the trustee of a trust established pursuant to Sec. 8.2.
2.1.24 “Valuation Date” means the last day of each calendar month on which trading occurs on the New York Stock Exchange.
2.1.25 “Years of Service for Vesting” means the number of years determined by:
(a) First, measuring the number of days in the period from the date on which the Employee is hired by Fair Isaac or an Affiliate (or, if the Employee previously had a Termination of Employment at a time when he/she was not vested in the Plan and he/she had a recognized break in service, measured from the date he/she is again hired by Fair Isaac or an affiliate after the recognized break in service) to the date of his/her most recent Termination of Employment. In the case of an employer that becomes an Affiliate as a result of a stock acquisition, merger or similar corporate transaction, the measuring date will start on the date on which the employer becomes an Affiliate, unless agreed otherwise by Fair Isaac.
A “recognized break in service for this purpose” means a period of five (5) or more consecutive years during which an individual is not an Employee measured from the date after his/her Termination of Employment.
(b) Then, reducing that number by the number of days of any absence from employment of twelve (12) months or more that results because of a Termination of Employment (shorter absences are not subtracted).
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(c) Then, dividing that number by three-hundred and sixty five (365).
(d) Finally, rounding the result down to the next lowest whole number (that is, fractional years are not counted).
2.2 Choice of Law. The Plan will be governed by the laws of the State of Minnesota to the extent that such laws are not preempted by the laws of the United States. All controversies, disputes, and claims arising hereunder must be submitted to the United States District Court for the District of Minnesota.
ARTICLE III
PARTICIPATION AND CONTRIBUTION CREDITS
3.1 Participation.
3.1.1 Eligible Employees. All Eligible Employees will be eligible to participate in the Plan.
3.1.2 Enrollment. An Eligible Employee who is not a participant in any other Aggregated Account Balance Plan will be allowed to enroll in the Plan during the thirty (30) day period following the date he/she is notified of eligibility for the Plan, with enrollment to be effective as of the first payroll period that starts following the close of such enrollment period. Otherwise, an Eligible Employee may elect to enroll for a Plan Year during the annual enrollment period established by Fair Isaac for such Plan Year, which annual enrollment period will be a period of not less than thirty (30) days that ends not later than the last day of the prior Plan Year.
Enrollment is required and must be made in such manner and in accordance with such rules as may be prescribed for this purpose by Fair Isaac (including by means of a voice response or other electronic system under circumstances authorized by Fair Isaac).
3.1.3 End of Active Participation and Participation. An Active Participant will continue as an Active Participant until the earliest of the following:
(a) The date of his/her Separation from Service;
(b) The date on which the Plan is terminated and liquidated pursuant to Sec. 9.2.2; or
(c) The last day of the Plan Year in which the Participant ceases to be an Eligible Employee (other than as a result of Separation from Service) or the Plan Year in which the Plan is terminated other than pursuant to Sec. 9.2.3.
A Participant will continue as a Participant until having received a full distribution of the benefit due under the Plan.
3.2 Elective Deferral Credits.
3.2.1 Elective Deferral Credits. Elective Deferral Credits will be made for each pay date on behalf of each Active Participant who has enrolled in the Plan and who thereby elects to have his/her Deferral Eligible Amounts reduced in order to receive Elective Deferral Credits. The Elective Deferral Credits for a pay date will be credited to the appropriate Account on or as soon as administratively practicable after the pay date in an amount equal to the amount of the reduction in Deferral Eligible Amounts.
An Eligible Employee may elect to reduce his/her Deferral Eligible Amounts as follows for any pay date:
(a) In the case of base pay or sales commission compensation, any whole percent, but not more than fifty percent (50%).
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(b) In the case of incentive pay or bonuses, any whole percent, but not more than seventy-five percent (75%).
(c) Any election against other Deferral Eligible Amounts will be subject to such minimum and/or maximums as may be determined by Fair Isaac.
An election must be made in such manner and in accordance with such rules as may be prescribed for this purpose by Fair Isaac (including by means of a voice response or other electronic system under circumstances authorized by Fair Isaac). An election must be made as part the of enrollment process described in Sec. 3.1.2 and may specify an investment election for purposes of Sec. 4.3.2, a payment timing election for purposes of Sec. 6.2.1, and a payment form election for purposes of Sec. 6.2.4.
FICA taxes due on Elective Deferral Credits, plus pyramided income taxes on such FICA amounts will be drawn from the Plan and will reduce the net Elective Deferral Credit to the extent other compensation is not available to provide for FICA.
3.2.2 Elections Relate to Services Performed After the Election. An election applicable to base pay or sales commission compensation must be made by December 31st of the Plan Year prior to the Plan Year in which the services are performed that give rise to the right to receive such Deferral Eligible Amounts. For this purpose, the services that give rise to sales commission compensation are treated as being performed in the Plan Year in which the customer remits payment to Fair Isaac or an Affiliate that gives rise to the sales commission compensation to the Participant.
An election applicable to any incentive pay or bonus that is attributable to a performance or service period of less than twelve (12) months (for example, the six (6) month performance periods contemplated under the incentive plans maintained by Fair Isaac for 2007 – the Management Incentive Plan and Broad-Based Incentive Plan) must be made by December 31st of the Plan Year prior to the Plan Year in which such performance or service period begins.
Notwithstanding the above, for the Plan Year in which an Eligible Employee is first notified of eligibility for the Plan, an election made within the thirty (30) day period referenced in Sec. 3.1.2 (if applicable to the Eligible Employee) may apply to base pay and sales commission compensation attributable to pay periods, and any incentive pay or bonus attributable to a performance or service period, that starts on or after the effective date of enrollment as provided in Sec. 3.1.2.
3.2.3 Elections are Irrevocable for the Plan Year. An election will not be “evergreen” – that is, an election made for a given Plan Year (including for any incentive pay or bonus for a fiscal year that starts within such Plan Year) will not automatically be carried over and applied to the next Plan Year. An election will be irrevocable for a given Plan Year (or fiscal year) after the December 31st by which such election is required to made under Sec. 3.2.2; except that, Elective Deferrals will automatically stop if the Participant ceases to be an Active Participant during the Plan Year (or fiscal year).
3.2.4 Final Payroll Period Within Year. An election in effect for a given Plan Year (or portion thereof) with respect to base pay or sales commission compensation that is paid as part of payroll will apply only to payroll periods ending within the Plan Year – that is, in the case of the final payroll period starting within a Plan Year, if such payroll period ends in the following Plan Year, the election in effect for the following Plan Year will apply to amounts payable for such payroll period.
3.2.5 Limits. Fair Isaac may, in its sole discretion, limit the minimum or maximum amount of Elective Deferrals that are allowed under the Plan by any Participant or any group of Participants provided that such limit is established prior to the beginning of the Plan Year or prior to enrollment of the affected Participant.
3.3 Company Match Credits. After each Plan Year, Fair Isaac will make a Company Match Credit to the Plan on behalf of a Participant based on the Elective Deferral Credits made on behalf of the Participant for the Plan Year based on the matching contribution formula available under the Fair
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Isaac 401(k) Plan (taking into account for this purpose the Code § 401(a)(17) limit), reduced by the amount of matching contributions actually received by the Participant under the Fair Isaac 401(k) Plan for that Plan Year. The Company will credit the Company Match Credits to the Participant’s Company Match Account within 60 days of the end of the Plan Year.
ARTICLE IV
ACCOUNTS AND INVESTMENT ADJUSTMENTS
4.1 Accounts.
4.1.1 Types of Accounts. The following Accounts will be maintained under the Plan on behalf of each Participant:
(a) “Elective Deferral Account” to reflect any Elective Deferral Credits for a Plan Year beginning on or after January 1, 2005 (plus applicable Earnings Credits), with a separate such Account maintained for each Plan Year (or for each Plan Year for which a unique form of distribution election is made by the Participant).
(b) “Company Match Account” to reflect any Company Match Credits for a Plan Year beginning on or after January 1, 2005 (plus applicable Earnings Credits), with a separate such Account maintained for each Plan Year (or for each Plan Year for which a unique form of distribution election is made by the Participant).
(c) “Accumulation Account” to reflect all Elective Deferral Credits and Company Match Credits for Plan Years prior to January 1, 2005 (plus applicable Earnings Credits).
Additional Accounts may also be maintained if considered appropriate by Fair Isaac in the administration of the Plan.
4.1.2 Balance of Accounts. Accounts will have a cash balance expressed in United States Dollars.
4.1.3 Accounts for Bookkeeping Only. Accounts are for bookkeeping purposes only and the maintenance of Accounts will not require any segregation of assets of Fair Isaac or any Participating Affiliate. Neither Fair Isaac nor any Participating Affiliate will have any obligation whatsoever to set aside funds for the Plan or for the benefit of any Participant or Beneficiary, and no Participant or Beneficiary will have any rights to any amounts that may be set aside other than the rights of an unsecured general creditor of Fair Isaac or a Participating Affiliate that employs (or employed) the Participant.
4.2 Valuation of Accounts.
4.2.1 Daily Adjustments. Accounts will be adjusted from time to time as follows:
(a) Elective Deferral and Company Match Credits. Elective Deferral Credits and Company Match Credits will be added to the balance of the Account as of the date specified in Secs. 3.2 and 3.3.
(b) Earnings Credits. Earnings Credits will be added to (or subtracted) from the balance of the Account as of each Valuation Date as provided in Sec. 4.3.
(c) Distributions. The distributions made from an Account will be subtracted from the balance of the Account as of the date the distribution is made from the Plan.
4.2.2 Processing Transactions Involving Accounts. Accounts generally will be adjusted to reflect Elective Deferral Credits, Company Match Credits, Earnings Credits, distributions and other transactions as provided in Sec. 4.2.1. However, all information necessary to properly reflect a given transaction in an Account may not be immediately available, in which case the transaction will be reflected in the Account when such information is received and processed. Further, Fair Isaac reserves the right to delay the processing of any Elective Deferral Credit, Company Match
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Credit, Earnings Credit, distribution or other transaction for any legitimate administrative reason (including, but not limited to, failure of systems or computer programs, failure of the means of the transmission of data, force majeure, the failure of a service provider to timely receive net asset values or prices, or to correct for its errors or omissions or the errors or omissions of any service provider).
4.3 Earnings Credits.
4.3.1 Adjustment to Reflect Earnings Credits. Accounts will be adjusted (increased or decreased) as of each Valuation Date to reflect Earnings Credits as determined under Sec. 4.3.2.
4.3.2 Earnings Credits. Fair Isaac will establish a procedure by which a Participant (or Beneficiary following the death of a Participant) may elect to have his/her Earnings Credits determined based the performance of one or more investment options deemed to be available under the Plan. The Investment Committee of Fair Isaac, in its sole discretion, will determine the investment options that will be available as benchmarks for determining the Earnings Credit, which may include mutual funds, common or commingled investment funds or any other investment option deemed appropriate by Fair Isaac. The Investment Committee of Fair Isaac may at any time and from time to time add to or remove from the investment options deemed to be available under the Plan.
A Participant (or Beneficiary following the death of the Participant) will be allowed on a hypothetical basis to direct the investment of his/her Account among the investment options available under the Plan. Hypothetical investment directions may be given with such frequency as is deemed appropriate by Fair Isaac, and must be made in such percentage or dollar increments, in such manner and in accordance with such rules as may be prescribed for this purpose by Fair Isaac (including by means of a voice response or other electronic system under circumstances so authorized by Fair Isaac). If an investment option has a loss, the Earnings Credit attributable to such investment option will serve to reduce the Account; similarly, if an investment option has a gain, the Earnings Credit attributable to such investment option will serve to increase the Account. If the Participant fails to elect an investment option, the Earnings Credit will be based on a money market investment option or such other investment option as may be selected for this purpose by the Investment Committee of Fair Isaac.
4.3.3 Hypothetical Investments. All investment directions of a Participant or Beneficiary will be on a “hypothetical” basis for the sole purpose of establishing the Earnings Credit for his/her Account – that is, the Account will be adjusted for Earnings Credits as if the Account were invested pursuant to the investment directions of the Participant or Beneficiary, but actual investments need not be made pursuant to such directions. However, Fair Isaac, in its sole discretion and without any obligation, may direct that investments be made per the investment directions of Participants and Beneficiaries.
4.4 Statements.
4.4.1 Statements. Fair Isaac may cause benefit statements to be issued from time to time advising Participants and Beneficiaries of the balance and/or investment of their Accounts, but it is not required to issue benefits statements.
4.4.2 Errors on Statements and Responsibility to Review. Fair Isaac may correct errors that appear on benefit statements at any time, and the issuance of a benefit statement (and any errors that may appear on a statement) will not in any way alter or affect the rights of a Participant or a Beneficiary with respect to the Plan.
Each Participant or Beneficiary has a duty to promptly review each benefit statement and to notify Fair Isaac of any error that appears on such statement as provided in Sec. 10.2.2.
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ARTICLE V
VESTING
A Participant will at all times have a fully vested interest in his/her Accounts under the Plan.
ARTICLE VI
DISTRIBUTIONS AFTER SEPARATION OR DISABILITY
6.1 Benefit on Separation from Service, Disability or on a Designated Date. Subject to Sec. 6.2.8, a Participant will receive a distribution of the full balance of his/her Accounts following his/her Separation from Service or Disability in accordance with the terms of this Article. Notwithstanding the preceding sentence, and subject to Sec. 6.2.8, for Accounts consisting of Elective Deferral Credits related to Deferral Eligible Amounts for services performed in Plan Years beginning on or after January 1, 2026 and related Company Match Credits and Earnings Credits (“Post-2025 Accounts”), a Participant will receive a distribution of the full balance of his/her Accounts following his/her Separation from Service or Disability, or, if earlier, on a specified month and date elected by the Participant (“Designated Date”), in accordance with the terms of this Article.
6.2 Time and Form of Distribution.
6.2.1 Time of Distribution Post-2025 Accounts. Subject to Sec. 6.2.8, a distribution of a Participant’s Post-2025 Accounts will be made, or installment distributions will commence, if installments are elected by the Participant, at the following time, or, if earlier and elected by the Participant, on the Designated Date:
(a) Specified Employees. In the case of a Participant who is a Specified Employee:
(1) In the case of Disability, a distribution will be made (or installments distributions will commence) as of the first day of the first (1st) calendar month following the Participant’s Disability.
(2) In the case of Separation from Service, a distribution will be made (or installment distributions will commence) as of the first day of the seventh (7th) calendar month following the Participant’s Separation from Service. A distribution to a Specified Employee made due to Separation from Service will not under any circumstances be made prior to the date specified above following Separation from Service, except in the case of the intervening death of the Participant as provided in Sec. 7.1.1.
(b) Participants Other than Specified Employees. In the case of any other Participant, a distribution will be made (or installment distributions will commence) as of the first day of the first (1st) calendar month following the Participant’s Separation from Service or Disability.
Separate Accounts will be established for the Elective Deferral Credits and Company Match Credits for each Plan Year, and a Participant can make a separate election of time and form of distribution for the Accounts for each Plan Year. A Participant shall elect to receive or commence distribution on the earlier of (i) Separation from Service or (ii) a Designated Date, which shall be no earlier than January of the second (2nd) Plan Year following the Plan Year for which the Account was established.
6.2.2 Time of Distribution Pre-2026 Accounts. Subject to Sec. 6.2.8, a distribution of a Participant’s Accounts consisting of Elective Deferral Credits related to Deferral Eligible Amounts for services performed in Plan Years beginning on or after January 1, 2005 but before January 1, 2026 and related Company Match Credits and Earnings Credits, and excluding any amounts in the
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Participant’s Accumulation Account (“Pre-2026 Accounts”) will be made, or installment distributions will commence, if installments are elected by the Participant, at the following time:
(a) Specified Employees. In the case of a Participant who is a Specified Employee:
(1) In the case of Disability, a distribution will be made (or installments distributions will commence) as of the first day of the first (1st) calendar month following the Participant’s Disability.
(2) In the case of Separation from Service, a distribution will be made (or installment distributions will commence) as of the first day of the seventh (7th) calendar month following the Participant’s Separation from Service. A distribution to a Specified Employee made due to Separation from Service will not under any circumstances be made prior to the date specified above following Separation from Service, except in the case of the intervening death of the Participant as provided in Sec. 7.1.1.
(b) Participants Other than Specified Employees. In the case of any other Participant, a distribution will be made (or installment distributions will commence) as of the first day of the first (1st) calendar month following the Participant’s Separation from Service or Disability.
6.2.3 Time of Distribution – Administrative Delay. Any payment may be delayed if necessary for administrative reasons, at the sole discretion of Fair Isaac, to a later date within the calendar year or, if later, to the fifteenth (15th) day of the third calendar month following the date described in Secs. 6.2.1 or Sec. 6.2.2.
6.2.4 Form of Distribution Post-2025 Accounts. A distribution of a Participant’s Post-2025 Accounts will be made in the following form as elected by the Participant:
(a) A single-sum distribution of the full balance of the Participant’s Account; or
(b) Annual installments over a period certain not to exceed ten (10) years.
In the case of installments, the first annual installment will be made as of the date specified in Sec. 6.2.1, and subsequent annual installments will be made on each anniversary date of the first installment payment date, subject to Sec. 6.2.3. A right to each installment payment is to be treated as a right to a separate payment for purposes of Code § 409A.
A Participant must make an election of the form of distribution with respect to each Plan Year for each Account maintained on his/her behalf under the Plan.
6.2.5 Form of Distribution Pre-2026 Accounts. Subject to 6.2.8, a distribution of a Participant’s Pre-2026 Accounts will be made in the following form:
(a) Retirement or Disability. In the case of Retirement or Disability, a distribution will be made in either of the following forms as elected by the Participant:
(1) A single-sum distribution of the full balance of the Participant’s Account; or
(2) Annual installments over a period certain not to exceed ten (10) years.
(b) Other Terminations. In the case of a Separation from Service other than Retirement, a distribution will be in the form of a single-sum distribution of the full balance of the Participant’s Account; provided that, in the case of an Accumulation Account, a distribution may be made in a different form pursuant to an election under Sec. 6.2.6.
In the case of installments, the first annual installment will be made as of the date specified in Sec. 6.2.2, and subsequent annual installments will be made on each anniversary date of the first
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installment payment date, subject to Sec. 6.2.3. A right to each installment payment is to be treated as a right to a separate payment for purposes of Code § 409A.
A Participant must make an election of the form of distribution with respect to each Plan Year for each Account maintained on his/her behalf under the Plan.
6.2.6 Form of Distribution Accumulation Account, Elections for Pre-2007 Accounts. Notwithstanding any contrary provision, a Participant will be allowed to make a distribution election for his/her Accumulation Account and/or his/her Elective Deferral and Company Match Accounts for the 2005 and 2006 Plan Years (“2005 and 2006 Accounts”) by December 31, 2006, consistent with the transition rules allowed under Code § 409A as specified in IRS Notice 2005-1, Q&A-19(c), and as modified by the Notice of Proposed Rulemaking published in the Federal Register on October 4, 2005. Such election will be irrevocable after December 31, 2006, but will not be effective with respect to any amount that would otherwise be payable in 2006 and will not be effective to cause any amount payable in a year after 2006 to be paid in 2006.
A Participant will be allowed to elect one of the forms of distribution allowed under Sec. 6.2.5(a) (but subject to the cash-out rule of Sec. 6.3), to apply to his/her Accumulation Account upon any Separation from Service, regardless of whether the Separation is a Retirement or due to Disability. Such distribution will be made (or installment distributions will commence) at the time specified in Sec. 6.2.2.
6.2.7 Elections Required. A Participant will be required to file or have filed a form of distribution election, and, for Post-2025 Accounts, an election of a Designated Date, if desired, as a condition of participation in the Plan for a given Plan Year (or the remaining portion thereof). If a Participant fails to properly complete an election form, the default time of payment will be upon a Separation from Service and the default form of payment will be a single-sum distribution.
6.2.8 Additional Deferral Election. A Participant may change certain elections made under Secs. 6.2.1, 6.2.2, 6.2.4, 6.2.5, or 6.2.6 by making a subsequent irrevocable election (“Additional Deferral Election”) as described below:
(a) Post-2025 Accounts. A Participant may make an Additional Deferral Election with respect to each Post-2025 Account to change the form of distribution from a lump sum to installments or to increase the number of installments elected under Sec. 6.2.4 or to select a later time of distribution, provided that only one Additional Deferral Election may be made with respect to each election made under Sec. 6.2.1 with respect to time of distribution or 6.2.4 with respect to form of distribution, the Additional Deferral Election shall not be effective for twelve (12) months following the date it is made, a change in the time or form of distribution shall mean that the distribution shall commence on the five-year anniversary of the date the distribution would otherwise be made or commence under Sec. 6.2.1, and any new Designated Date must be no earlier than the five-year anniversary of the original Designated Date.
(b) Pre-2026 Accounts. A Participant may make an Additional Deferral Election with respect to each Pre-2026 Account under Sec. 6.2.5 or, for 2005 and 2006 Accounts, under Sec. 6.2.6, to change the form of distribution upon Retirement/Disability or non-Retirement Separation from Service from a lump sum to annual installments of up to ten (10) years. Only one Additional Deferral Election may be made with respect to each Pre-2026 Account, the Additional Deferral Election shall not be effective for twelve (12) months following the date it is made, and a change in the form of distribution for Separation from Service or Retirement shall mean that the distribution shall commence on the five-year anniversary of the date the distribution would otherwise be made or commence under Sec. 6.2.2.
6.2.9 Distribution Election Procedures. A distribution election must be made in such manner and in accordance with such rules as may be prescribed for this purpose by Fair Isaac (including by means of a voice response or other electronic system under circumstances authorized by Fair Isaac).
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A distribution election will be effective only if it is received in properly completed form by Fair Isaac as part of the enrollment for the Plan Year for which the Account being distributed is established, and thereafter may not be modified, except as provided in Sec 6.2.8.
6.3 Cash-Out of Small Accounts.
6.3.1 Mandatory Cash-Out. If the balance of a Participant’s Accounts does not exceed ten thousand dollars ($10,000) as of the scheduled payment date under Secs. 6.2.1 or 6.2.2., then, notwithstanding that the Participant may otherwise be eligible for installments under Sec. 6.2.4, 6.2.5, or 6.2.6, the full balance of such Accounts will be paid in a single-sum distribution in full settlement of all obligations under the Plan.
6.3.2 Discretionary Cash-Out at the Direction of Fair Isaac. If the balance (or remaining balance) of a Participant’s Accounts, together with his/her interest under all other Aggregated Account Balance Plans does not exceed the applicable dollar amount then in effect under Code § 402(g)(1)(B) as of the scheduled payment date under Secs. 6.2.1 or 6.2.2, or as of any date thereafter while the Participant is receiving installment payments under Sec. 6.2.4, 6.2.5, or 6.2.6, then Fair Isaac may, in its sole discretion, direct that the Participant be paid the balance (or remaining balance) of his/her Accounts under this Plan, plus his/her entire interest under all other Aggregated Account Balance Plans be distributed to the Participant in a single-sum distribution in full settlement of all obligations under the Plan and other Aggregated Account Balance Plans maintained by Fair Isaac and its Affiliates.
6.4 Valuation of Accounts Following Separation from Service. An Account will continue to be credited with Earnings Credits in accordance with Article IV until it is paid in full to the Participant or Beneficiary.
ARTICLE VII
DISTRIBUTIONS AFTER DEATH
7.1 Survivor Benefits.
7.1.1 Survivor Benefits – General. If a Participant dies prior to the full distribution of his/her Accounts (including any death during the delayed payment period specified in Sec. 6.2.1(a)(2) or Sec. 6.2.2(a)(2)), his/her Beneficiary will be entitled to a survivor benefit under the Plan. The survivor benefit will consist of a single lump-sum payment in an amount equal to the total balance (or total remaining balance) in the Accounts. The survivor benefit will be paid on or as soon as administratively practicable after Fair Isaac determines that a survivor benefit is payable under the Plan – that is, the date Fair Isaac is provided with the documentation necessary to establish the fact of death of the Participant and the identity and entitlement of the Beneficiary.
7.1.2 Special Rule if Death Occurs During Installment Pay-out. Notwithstanding any contrary provision, if the Participant dies while he/she is receiving installments under Sec. 6.2.4(b) or Sec. 6.2.5(a)(2) with respect to an Account, such installments will continue to his/her Beneficiary over the same period such installments would have been paid to the Participant unless the Beneficiary otherwise elects a single-sum distribution by the December 31 of the year that follows the year of the Participant’s death.
7.2 Beneficiary Designation.
7.2.1 General Rule. A Participant may designate any person (natural or otherwise, including a trust or estate) as his/her Beneficiary to receive any balance remaining in his/her Accounts when he/she dies, and, subject to the consent requirements of Sec. 7.2.2, may change or revoke a Beneficiary designation previously made without the consent of any current Beneficiary.
7.2.2 Special Requirements for Married Participants. If a Participant has a Spouse at the time of death, such Spouse will be his/her Beneficiary unless the Spouse has consented in writing to the
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designation of a different Beneficiary. Consent of a Spouse will be deemed to have been obtained if it is established to the satisfaction of Fair Isaac that such consent cannot be obtained because the Spouse cannot be located. Consent by a Spouse will be effective only with respect to such Spouse, and cannot be revoked. A Beneficiary designation that has received spousal consent cannot be changed without spousal consent.
A Beneficiary designation will be automatically revoked upon marriage (other than common law marriage) of a Participant unless the new Spouse was designated as Beneficiary. Further, if a Spouse is designated as Beneficiary, such designation will be automatically revoked upon the divorce of the Participant and former Spouse.
7.2.3 Form and Method of Designation. A Beneficiary designation must be made on such form and in accordance with such rules as may be prescribed for this purpose by Fair Isaac. A Beneficiary designation will be effective (and will revoke all prior designations) if it is received by Fair Isaac (or if sent by mail, the post-mark of the mailing is) prior to the date of death of the Participant. Fair Isaac may rely on the latest Beneficiary designation on file (or if an effective designation is not on file may direct that payment be made pursuant to the default provision of the Plan) and will not be liable to any person making claim for such payment under a subsequently filed designation or for any other reason.
Fair Isaac may rely on the latest designation on file with it (or may direct that payment be made pursuant to the default provision if an effective designation is not on file) and will not be liable to any person making claim for such payment under a subsequently filed designation or for any other reason.
If a Participant designates a Beneficiary by name that is accompanied by a description of a business, legal or family relationship to the Participant (e.g., “spouse”, “business partner”, “landlord”), such Beneficiary will be deemed to have predeceased the Participant if such relationship has been dissolved or no longer exists at the death of the Participant. If a Participant designates a Beneficiary by name that is accompanied by a description of a personal relationship to the Participant (e.g., “friend”), the dissolution of that relationship will not affect the designation.
7.2.4 Default Designation. If a Beneficiary designation is not on file, or if a Beneficiary designation is revoked by divorce or otherwise and a new designation is not on file at death, or if no designated Beneficiary survives the Participant, the Beneficiary will be the following:
(a) Surviving Spouse. The Participant’s Spouse (if surviving).
(b) Estate. Otherwise, the Participant’s estate.
7.3 Successor Beneficiary. If a Beneficiary survives the Participant but dies before receiving payment of the balance due to such Beneficiary, the balance will be payable to the surviving contingent Beneficiary designated by the Participant or, if there is no surviving contingent Beneficiary, then to the estate of the deceased Beneficiary.
ARTICLE VIII
CONTRACTUAL OBLIGATIONS AND FUNDING
8.1 Contractual Obligations.
8.1.1 Obligations of Employer. The Plan creates a contractual obligation on the part of Fair Isaac and each Participating Affiliate to provide benefits as set forth in the Plan with respect to:
(a) Participants who are employed with Fair Isaac or that Participating Affiliate;
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(b) Participants who were employed with Fair Isaac or that Participating Affiliate prior to Termination of Employment; and
(c) Beneficiaries of the Participants described in (a) and (b).
A Participating Affiliate is not responsible for (and has no contractual obligation with respect to) benefits payable to a Participant who is or was employed with Fair Isaac or another Participating Affiliate unless the second Participating Affiliate is a successor to the legal liabilities of the first Participating Affiliate (for example, as a result of a merger). If a Participant is employed with two or more employers (Fair Isaac and a Participating Affiliate, or two or more Participating Affiliates, etc.), either concurrently or at different times, each will be responsible for the benefit attributable to Elective Deferral Credits and Company Match Credits made with respect to the period while the Participant was employed with that employer, adjusted for Earnings Credits.
8.1.2 Guarantee by Company. Fair Isaac will guarantee and assume secondary liability for the contractual commitment of each Participating Affiliate under Sec. 8.1.1.
8.1.3 Transfer of Liability in Corporate Transaction. In the event of a sale of the stock to an unrelated buyer, or a similar corporate transaction, where an employer ceases as a result of the transaction to be an Affiliate, for any individual who remains employed with the employer after it ceases to be an Affiliate, the transaction will not be deemed to constitute a Separation from Service and benefits thereafter will be paid in accordance with the terms of the Plan or, if applicable, the successor plan established by the buyer or an affiliate in a manner consistent with Code § 409A.
In the event of a sale of substantial assets (such as a plant or division, or substantially all assets of a trade or business) of Fair Isaac or an Affiliate to an unrelated buyer, Fair Isaac and the buyer may agree to transfer the contractual obligation and liability for benefits with respect to any individual who becomes an employee of the buyer or an affiliate of the buyer upon the closing or in connection with such transaction. In such case, the transaction will not be deemed to constitute a Separation from Service and benefits thereafter will be paid in accordance with the terms of the Plan or a successor plan established by the buyer or an affiliate in a manner consistent with Code § 409A.
8.2 Funding.
8.2.1 Establishment and Funding of Rabbi Trust. Fair Isaac may, in its sole and absolute discretion, establish a “rabbi” trust to serve as a funding vehicle for benefits payable under the Plan. Neither Fair Isaac nor any Participating Affiliate will have any obligation to establish such a trust, or to fund such trust if established. Any rabbi trust hereby established may be revocable if so established under the terms of the trust.
Any rabbi trust used to fund benefits payable under this Plan may be used to fund benefits payable under any other non-qualified deferred compensation plan maintained by Fair Isaac or any Participating Affiliate.
The assets of any rabbi trust hereby established will not be held or transferred outside of the United States, and the trust will not have any other feature that would result in a transfer of property being deemed to have occurred under Code § 409A (for example, there will be no funding obligation or restrictions on assets in connection with a change in financial health of Fair Isaac or any Affiliate). Further, neither Fair Isaac nor any Affiliate will transfer or contribute any funds during any “restricted period,” as defined in Code § 409A(b)(3)(B), to any rabbi trust established hereunder. If any funds are transferred or contributed during a restricted period and Fair Isaac certifies in writing that such transfer or contribution was disallowed under this provision, the funds will be deemed to have been transferred or contributed under a mistake of fact and will be returned to Fair Isaac, along with any earnings allocable to such funds, regardless of whether the rabbi trust’s terms establish it as revocable or irrevocable.
8.2.2 Effect on Benefit Obligations. The establishment and funding of a rabbi trust will not affect the contractual obligations of Fair Isaac and each Participating Affiliate under Sec. 8.1, except that such obligations with respect to any Participant or Beneficiary will be offset to the extent that
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payments actually are made from the trust to such Participant or Beneficiary. In the case of any transfer of contractual obligations and liabilities under Sec. 8.1.3, the parties may arrange for a transfer of trust assets to a rabbi trust maintained by the buyer or an affiliate of the buyer.
ARTICLE IX
AMENDMENT AND TERMINATION OF PLAN
9.1 Right to Amend or Terminate.
9.1.1 Action by Board of Directors. Fair Isaac may amend or terminate the Plan at any time and for any reason by action of the Board or its Leadership Development and Compensation Committee.
9.1.2 Delayed Timing of Amendment or Termination Effective Date Under Code § 409A. The Board or its Leadership Development and Compensation Committee generally will determine the effective date of any amendment to the Plan. However, if Code § 409A requires a delayed effective date (for example, if an amendment changes a deferral rule in a way that must be delayed for twelve (12) months), then the amendment will be effective as of the later of the date determined by the Board or its Leadership Development and Compensation Committee in connection with the amendment, or the earliest effective date allowed under Code § 409A.
The Board or its Leadership Development and Compensation Committee generally will determine the effective date of a termination of the Plan. However, a termination of the Plan will not be effective to cause a deferral election in place under the Plan for a Plan Year (including for any incentive pay or bonus for a fiscal year that starts within such Plan Year) to be modified or discontinued prior to the end of such Plan Year (or fiscal year), unless the Plan is terminated and liquidated pursuant to Sec. 9.2.2.
9.2 Effect of Termination.
9.2.1 No Negative Effect an Balances or Vesting. Fair Isaac may not amend or terminate the Plan in a manner that has the effect of reducing the balance or vested percentage of any Participant’s or Beneficiary’s Accounts except if Fair Isaac makes a good faith determination that either the amendment is required by law or the failure to adopt the amendment would have an adverse tax consequences to the Participants affected by such amendment.
9.2.2 Liquidation Terminations. Fair Isaac may terminate the Plan and provide for the acceleration and liquidation of all benefits remaining due under the Plan pursuant to Treas. Reg. § 1.409A-3(j)(4)(ix). In the event of such termination and liquidation, all deferrals and credits under the Plan will be discontinued (and all Active Participants will cease to be Active Participants) as of the termination date established by Fair Isaac, and all benefits remaining due will be paid in a lump-sum at a time specified by Fair Isaac as part of the action terminating the Plan and consistent with Treas. Reg. § 1.409A-3(j)(4)(ix).
9.2.3 Other Terminations. Fair Isaac may terminate the Plan other than pursuant to Treas. Reg. § 1.409A-3(j)(4)(ix). In the event of such termination, all deferrals and credits under the Plan will be discontinued (and all Active Participants will cease to be Active Participants) as of the end of the Plan Year (or, in the case of deferrals or credits attributable to incentive pay or bonus for a fiscal year that starts within such Plan Year, after the payment of such incentive pay or bonus), but all benefits remaining payable under the Plan will be paid at the same time and in the same form as if the termination had not occurred – that is, the termination will not result in any acceleration of any distribution under the Plan.
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ARTICLE X
ADMINISTRATION
10.1 Administration.
10.1.1 Company. Fair Isaac is the administrator of the Plan with authority to control and manage the operation and administration of the Plan and make all decisions and determinations incident thereto. Action on behalf of Fair Isaac as administrator may be taken by any of the following:
(a) Leadership Development and Compensation Committee. The Leadership Development and Compensation Committee of Fair Isaac is responsible for determining whether an Employee should no longer be an Eligible Employee or should become an Eligible Employee, and making all determinations expressly specified in the Plan.
(b) Policy and Oversight Committee. The Policy and Oversight Committee of Fair Isaac is responsible for all matters relating to the overall and day-to-day administration of the Plan, and the selection and monitoring of non-investment service providers (including the selection of recordkeeper) with respect to the Plan, including determinations as to whether a Participant is entitled to a distribution from the Plan and whether a Participant has a Disability.
(c) Investment Committee. The Investment Committee of Fair Isaac is responsible for all investment matters relating to the Plan, including the selection of the funds available for hypothetical investments by Participants and Beneficiaries, and the actual investment of assets that may be (but are not required to be) set aside to hedge liabilities resulting from the Plan, and actual investment of any rabbi trust assets if such a trust is established and funded, including the selection and monitoring investment providers (including the Trustee) with respect to the Plan.
Day-to-day non-discretionary administration of the Plan may be performed by the Benefits Department.
10.1.2 Third-Party Service Providers. Fair Isaac may from time to time contract with or appoint a recordkeeper or other third-party service provider for the Plan. Any such recordkeeper or other third-party service provider will serve in a non-discretionary capacity and will act in accordance with directions given and/or procedures established by Fair Isaac.
10.1.3 Rules of Procedure. Fair Isaac may establish, adopt or revise such rules and regulations as it may deem necessary or advisable for the administration of the Plan.
10.2 Correction of Errors And Duty to Review Information.
10.2.1 Correction of Errors. Errors may occur in the operation and administration of the Plan. Fair Isaac reserves the right to cause such equitable adjustments to be made to correct for such errors as it considers appropriate (including adjustments to Participant or Beneficiary Accounts), which will be final and binding on the Participant or Beneficiary.
10.2.2 Participant Duty to Review Information. Each Participant and Beneficiary has the duty to promptly review any information that is provided or made available to the Participant or Beneficiary and that relates in any way to the operation and administration of the Plan or his/her elections under the Plan (for example, to review payroll stubs to make sure a contribution election is being implemented appropriately, to review benefit statements to make sure investment elections are being implemented appropriately, to review summary plan descriptions and prospectuses, etc.) and to notify Fair Isaac of any error made in the operation or administration of the Plan that affects the Participant or Beneficiary within thirty (30) days of the date such information is provided or made available to the Participant or Beneficiary (for example, the date the information is sent by mail or the date the information is provided or made available electronically). If the Participant or Beneficiary fails to review any information or fails to notify
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Fair Isaac of any error within such period of time, he/she will not be able to bring any claim seeking relief or damages based on the error.
If Fair Isaac is notified of an alleged error within the thirty (30) day time period, Fair Isaac will investigate and either correct the error or notify the Participant or Beneficiary that it believes that no error occurred. If the Participant or Beneficiary is not satisfied with the correction (or the decision that no correction is necessary), he/she will have sixty (60) days from the date of notification of the correction (or notification of the decision that no correction is necessary), to file a formal claim under the claims procedures under Sec. 10.3.
10.3 Claims Procedure.
10.3.1 Claims Procedure. If a Participant or Beneficiary does not feel as if he/she has received full payment of the benefit due to such person under the Plan, or if a Participant or Beneficiary feels that an error has been made with respect to his/her Account and has satisfied the requirements in Sec. 10.2.2, the Participant or Beneficiary may file a written claim with Fair Isaac setting forth the nature of the benefit claimed, the amount thereof, and the basis for claiming entitlement to such benefit. The Policy and Oversight Committee will determine the validity of the claim and communicate a decision to the claimant promptly and, in any event, not later than ninety (90) days after the date of the claim. The claim may be deemed by the claimant to have been denied for purposes of further review described below in the event a decision is not furnished to the claimant within such ninety (90) day period. If additional information is necessary to make a determination on a claim, the claimant will be advised of the need for such additional information within forty-five (45) days after the date of the claim. The claimant will have up to one hundred and eighty (180) days to supplement the claim information, and the claimant will be advised of the decision on the claim within forty-five (45) days after the earlier of the date the supplemental information is supplied or the end of the one hundred and eighty (180) day period.
A claim for benefits which is denied will be denied by written notice setting forth in a manner calculated to be understood by the claimant:
(a) Reason for Denial. The specific reason or reasons for the denial, including a specific reference to any provisions of the Plan (including any internal rules, guidelines, protocols, criteria, etc.) on which the denial is based;
(b) Information Necessary to Process. A description of any additional material or information that is necessary to process the claim; and
(c) Explanation of Review Procedures. An explanation of the procedure for further reviewing the denial of the claim.
10.3.2 Review Procedures. Within sixty (60) days after the receipt of a denial on a claim, a claimant or his/her authorized representative may file a written request for review of such denial. Such review will be undertaken by the Policy and Oversight Committee and will be a full and fair review. The claimant will have the right to review all pertinent documents. The Policy and Oversight Committee will issue a decision not later than sixty (60) days after receipt of a request for review from a claimant unless special circumstances, such as the need to hold a hearing, require a longer period of time, in which case a decision will be rendered as soon as possible but not later than one hundred and twenty (120) days after receipt of the claimant’s request for review. The decision on review will be in writing and will include specific reasons for the decision written in a manner calculated to be understood by the claimant with specific reference to any provisions of the Plan on which the decision is based. Following the claims procedures through to completion is a condition of filing an arbitration action under Sec. 10.3.3.
10.3.3 Arbitration. If a Participant or Beneficiary follows the claims procedure but his/her final appeal is denied, he/she will have one year to file an arbitration action with respect to that claim, and failure to meet the one-year deadline will extinguish his/her right to file an arbitration action with respect to that claim.
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Any claim, dispute or other matter in question of any kind relating to this Plan which is not resolved by the claims procedures will be settled by arbitration in accordance with the employment dispute resolution rules of the American Arbitration Association. Notice of demand for arbitration will be made in writing to the opposing party and to the American Arbitration Association within one year after the claim, dispute or other matter in question has arisen. In no event will a demand for arbitration be made after the date when the applicable statute of limitations would bar the institution of a legal or equitable proceeding based on such claim, dispute or other matter in question. The decision of the arbitrator(s) will be final and may be enforced in any court of competent jurisdiction.
The arbitrator(s) may award reasonable fees and expenses to the prevailing party in any dispute hereunder and will award reasonable fees and expenses in the event that the arbitrator(s) find that the losing party acted in bad faith or with intent to harass, hinder or delay the prevailing party in the exercise of its rights in connection with the matter under dispute.
10.3.4 Participant Responsible for Timely Action Under Code § 409A. The Participant will be solely responsible for taking prompt actions in the event of disputed payments as necessary to avoid any adverse tax consequences under Code § 409A, even if action is required to be taken under Code § 409A in a more timely manner than is required under the claims procedures of Sec. 10.3.
10.4 Indemnification. Fair Isaac and the Participating Affiliates jointly and severally agree to indemnify and hold harmless, to the extent permitted by law, each director, officer, and employee against any and all liabilities, losses, costs, or expenses (including legal fees) of whatsoever kind and nature that may be imposed on, incurred by, or asserted against such person at any time by reason of such person’s services in the administration of the Plan, but only if such person did not act dishonestly, or in bad faith, or in willful violation of the law or regulations under which such liability, loss, cost, or expense arises.
10.5 Exercise of Authority. Fair Isaac, the Board, the Leadership Development and Compensation Committee of the Board, the Policy and Oversight Committee, the Investment Committee and any person who has authority with respect to the management, administration or investment of the Plan may exercise that authority in its/his/her full discretion. This discretionary authority includes, but is not limited to, the authority to make any and all factual determinations and interpret all terms and provisions of this document (or any other document established for use in the administration of the Plan) relevant to the issue under consideration. The exercise of authority will be binding upon all persons; and it is intended that the exercise of authority be given deference in all courts of law to the greatest extent allowed under law, and that it not be overturned or set aside by any court of law unless found to be arbitrary and capricious.
10.6 Telephonic or Electronic Notices and Transactions. Any notice that is required to be given under the Plan to a Participant or Beneficiary, and any action that can be taken under the Plan by a Participant or Beneficiary (including enrollments, changes in deferral percentages, loans, withdrawals, distributions, investment changes, consents, etc.), may be made or given by means of voice response or other electronic system to the extent so authorized by Fair Isaac.
ARTICLE XI
MISCELLANEOUS
11.1 Nonassignability.
11.1.1 General Rule Regarding Assignment. Neither the rights of, nor benefits payable to, a Participant or Beneficiary under the Plan may be alienated, assigned, transferred, pledged or hypothecated by any person, at any time, or to any person whatsoever. Such interest and benefits will be exempt from the claims of creditors or other claimants of the Participant or Beneficiary and from all orders, decrees, levies, garnishments or executions to the fullest extent allowed by law, except as provided in Sec. 11.1.2.
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11.1.2 Domestic Relations Orders. The Plan will comply with any court order purporting to divide the benefits payable under this Plan pursuant to a state’s domestic relations laws, to the extent permitted under Code § 409A. However, such court order shall be deemed to only apply to such amounts that actually become payable to a Participant under the terms of this Plan (and shall not create a separate interest in favor of the alternate payee).
11.2 Withholding. A Participant must make appropriate arrangements with Fair Isaac or a Participating Affiliate for satisfaction of any federal, state or local income tax withholding requirements and Social Security or other employee tax requirements applicable to the payment of benefits under the Plan. If no other arrangements are made, Fair Isaac or a Participating Affiliate may provide, at its discretion, for such withholding and tax payments as may be required, including, without limitation, by the reduction of other amounts payable to the Participant.
11.3 Right of Setoff. Notwithstanding any other provisions of this Plan, Fair Isaac reserves the right to withhold and setoff from any distribution or payments to a Participant or Beneficiary under the Plan any amount owed to Fair Isaac or an Affiliate by the Participant, whether such obligation is matured or unmatured and however arising, at the time of (and with priority over) any such distribution or payment. Further, Fair Isaac reserves the right to withhold and setoff from the Participant’s Account any amount owed to Fair Isaac or an Affiliate by the Participant, as satisfaction of such obligation of the Participant, where such obligation is incurred in the ordinary course of the service relationship between the Participant and Fair Isaac or an Affiliate, the entire amount of reduction in any of Fair Isaac’s taxable years that does not exceed five thousand dollars ($5,000), and the reduction is made at the same time and in the same amount as the obligation otherwise would have been due and collected from the Participant.
11.4 Uniformed Services Employment and Reemployment Rights Act. Deferral elections and changes to the time and form of payment shall be allowed in a manner consistent with the Uniformed Services Employment and Reemployment Rights Act (USERRA), to the extent also allowed under Code § 409A.
11.5 Successors of Fair Isaac. Any successor or assign of Fair Isaac will succeed to the rights and obligations of Fair Isaac under the Plan.
11.6 Employment Not Guaranteed. Nothing contained in the Plan nor any action taken hereunder will be construed as a contract of employment or as giving any Participant any right to continued employment with Fair Isaac or a Participating Affiliate.
11.7 Gender, Singular and Plural. All pronouns and any variations thereof will be deemed to refer to the masculine, feminine, or neuter, as the identity of the person or persons may require. As the context may require, the singular may be read as the plural and the plural as the singular.
11.8 Captions. The captions of the articles, paragraphs and sections of this document are for convenience only and will not control or affect the meaning or construction of any of its provisions.
11.9 Validity. In the event any provision of the Plan is held invalid, void or unenforceable, the same will not affect, in any respect whatsoever, the validity of any other provisions of the Plan.
11.10 Waiver of Breach. The waiver by Fair Isaac of any breach of any provision of the Plan will not operate or be construed as a waiver of any subsequent breach by that Participant or any other Participant.
11.11 Notice. Any notice or filing required or permitted to be given to Fair Isaac or the Participant under this Agreement will be sufficient if made in writing and hand-delivered, or sent by registered or certified mail, in the case of Fair Isaac, to the principal office of Fair Isaac, directed to the attention of Fair Isaac, and in the case of the Participant, to the last known address of the Participant indicated on the employment records of Fair Isaac. Such notice will be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on
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the receipt for registration or certification. Notices to Fair Isaac may be permitted by electronic communication according to specifications established by Fair Isaac.
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EXHIBIT 10.38
Fair Isaac Corporation
2021 Long-Term Incentive Plan
Executive Restricted Stock Unit Award Agreement (U.S.)
Terms and Conditions*
1. Grant of Restricted Stock Units. The Company hereby grants to you, subject to the terms and conditions in this Executive Restricted Stock Unit Award Agreement (the “Agreement”) and subject to the terms and conditions of the Plan, an Award of the number of Stock Units (the “Units”) specified on the cover page of this Agreement. Each Unit represents the right to receive one Share and will be credited to an account in your name maintained by the Company or its agent. This account shall be unfunded and maintained for book-keeping purposes only, with the Units simply representing an unfunded and unsecured obligation of the Company.
2. Restrictions on Units. Neither this Award nor the Units subject to this Award may be sold, assigned, transferred, exchanged or encumbered other than by a transfer upon your death in accordance with your will, by the applicable laws of descent and distribution or pursuant to a beneficiary designation submitted in accordance with Section 6(d) of the Plan (to the extent such designation is valid under applicable law). Any attempted transfer in violation of this Section 2 shall be of no effect and may result in the forfeiture of all Units. The Units and your right to receive Shares in settlement of the Units under this Agreement shall be subject to forfeiture as provided in Section 4 of this Agreement until satisfaction of the vesting conditions set forth in Section 3 of this Agreement.
3. Vesting of Units.
(a) Scheduled Vesting. If you remain a Service Provider to the Company or any of its Affiliates continuously from the Grant Date specified on the cover page of this Agreement, then the Units will vest in the numbers and on the dates specified in the vesting schedule on the cover page of this Agreement.
(b) Continued Vesting. Notwithstanding Section 3(a), vesting of the Units will continue in accordance with the vesting schedule specified on the cover page of this Agreement if your Service to the Company or any Affiliate terminates because of your Retirement and the following conditions are satisfied: (i) you commenced discussions with the Company’s Chief Executive Officer or most senior human resources executive regarding your retirement from Service at least 12 full months prior to the date your Service terminates (the “Retirement Date”) and (ii) during the period beginning on your Retirement Date and ending on the final day of the vesting schedule specified on the cover page, you: (a) continue to be available to provide Service as requested and (b) do not become employed by or otherwise provide paid services to any other entity or organization; provided, however, that you may be permitted to serve as an independent director on the board of directors for one or more entities that are not competitive with the Company’s business so long as any such service as an independent director is reviewed and approved in advance by the Committee. For the avoidance of doubt, if you fail to comply with the conditions in this Section 3(b), you will forfeit all unvested Units.
* To the extent any capitalized term used in this Agreement is not defined, it has the meaning assigned to it in the Plan as the Plan currently exists or as it is amended in the future.
For purposes of this Award, “Retirement” means the termination of your employment when (i) you (A) are age 55 or older, (B) have at least five years of continuous Service as an employee (which must be immediately preceding the date of termination) and (C) have served at least five cumulative years as an Executive Vice President (or higher level) of the Company (while both (B) and (C) must be satisfied, periods of time served as an Executive Vice President (or higher level) under (C) may also be counted toward the five years of continuous Service requirement under (B)), and (ii) the sum of your age as of the date of your termination plus your years of Service as an employee equals at least 75. Any Units that vest pursuant to this Section 3(b) shall be paid to you not later than 74 days after the applicable vesting date of the Units as specified on the cover page of this Agreement.
(c) Accelerated Vesting. Vesting of the Units will be accelerated if your Service to the Company or any Affiliate terminates because of your death or Disability, as provided in Section 6(e)(2) of the Plan. Vesting will also be accelerated under the circumstances described in Section 12(d) of the Plan and may be accelerated by action of the Committee in accordance with Sections 3(b)(2), 12(b)(3) and 12(c) of the Plan. Vesting may also be accelerated upon the occurrence of events and in accordance with the terms and conditions specified in any other written agreement you have with the Company.
4. Service Requirement. Except as otherwise provided in accordance with Sections 3(b) or 3(c) of this Agreement, if you cease to be a Service Provider to the Company or any of its Affiliates prior to the vesting date(s) specified on the cover page of this Agreement, you will forfeit all unvested Units.
5. Leave of Absence. Your Service will be deemed continuing while you are on a leave of absence approved by the Company in writing or guaranteed by applicable law or other written agreement you have entered into with the Company (an “Approved Leave”). If you do not resume providing Service to the Company or any Affiliate following your Approved Leave, your Service will be deemed to have terminated upon the expiration of the Approved Leave.
6. Settlement of Units. After any Units vest pursuant to Sections 3(a) or 3(c) of this Agreement, the Company shall, as soon as practicable (but in any event within the period specified in Treas. Reg. § 1.409A-1(b)(4) to qualify for a short-term deferral exception to Section 409A of the Code), cause to be issued and delivered to you, or to your validly designated beneficiary or estate in the event of your death, one Share in payment and settlement of each vested Unit (the date of such issuance being the “Settlement Date”). After any Units vest pursuant to Section 3(b) of this Agreement, the Company shall, as soon as practicable (but in any event within the period specified in Treas. Reg. § 1.409A–3(d)), cause to be issued and delivered to you, one Share in payment and settlement of each vested Unit. Delivery of the Shares shall be effected by the electronic delivery of the Shares to a brokerage account maintained for you at E*TRADE or another broker designated by the Company, or by another method provided by the Company, and shall be subject to the tax withholding provisions of Section 7 of this Agreement and the compliance provisions of Section 15 of this Agreement.
7. Tax Consequences and Withholding. You acknowledge that, regardless of any action taken by the Company, the ultimate liability for all income tax, social insurance or other tax-related items related to your participation in the Plan and legally applicable to you (the “Tax-Related Items”) is and remains your responsibility and may exceed the amount actually withheld by the Company. You further acknowledge that the Company (a) makes no representations or undertakings
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regarding the treatment of any Tax-Related Items in connection with any aspect of the Award or the Shares acquired pursuant to the Award, and (b) does not commit to and is under no obligation to structure the terms of the grant or any aspect of the Award to reduce or eliminate your liability for Tax-Related Items or achieve any particular tax result. Further, if you are subject to Tax-Related Items in more than one jurisdiction, you acknowledge that the Company (or your employer, if different) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
Prior to the tax withholding event, you agree to make arrangements to satisfy all Tax-Related Items. In this regard, you authorize the Company to satisfy any applicable withholding obligation for the Tax-Related Items through an automatic Share withholding procedure (the “Share Withholding Method”). Under the Share Withholding Method, the Company or its agent will withhold, upon the tax withholding event, a portion of the Shares with a Fair Market Value (measured as of such date) sufficient to cover the Tax-Related Items; provided, however, that the number of any Shares so withheld shall not exceed the number necessary to satisfy the Company’s withholding obligation using the applicable minimum statutory withholding rate or such other rate as may be permitted under the Plan up to the maximum rate applicable in your jurisdiction. You will be deemed to have been issued the full number of Shares subject to the vested Units, notwithstanding that a number of the Shares are held back solely for the purpose of paying the Tax-Related Items.
In the event the Committee determines that the Share Withholding Method would be problematic under applicable tax or securities laws or would result in materially adverse accounting consequences, you authorize the Company to collect the Tax-Related Items through, one of the following alternative methods:
(a) the use of the proceeds from a next-day sale of the Shares issued to you, provided that (i) such sale is permissible under the Company’s trading policies governing its securities, (ii) you make an irrevocable commitment, on or before a Settlement Date, to effect such sale of the Shares, and (iii) the transaction is not otherwise deemed to constitute a prohibited loan under Section 402 of the Sarbanes-Oxley Act of 2002;
(b) delivery of your authorization to E*TRADE (or another broker designated by the Company) to transfer to the Company from your account at such broker the amount of such Tax-Related Items;
(c) withholding from your wages or other cash compensation paid to you by the Company; and/or
(d) any other method approved by the Company and permitted under applicable law.
In the event of any over-withholding, you will have no entitlement to the over-withheld amount in Shares and such amounts will be refunded to you in cash in accordance with applicable law.
The Company may refuse to issue or deliver the Shares or the proceeds of the sale of Shares, if you fail to comply with your obligations in connection with the Tax-Related Items.
8. No Shareholder Rights Before Settlement. The Units subject to this Award do not entitle you to any rights of a shareholder of the Company. You will not have any of the rights of a shareholder of the Company in connection with the grant of Units subject to this Award unless
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and until Shares are issued to you upon settlement of the Units as provided in Section 6 of this Agreement.
9. Discontinuance of Service. This Agreement does not give you a right to continued Service with the Company or any Affiliate, and the Company or any such Affiliate may terminate your Service at any time and otherwise deal with you without regard to the effect it may have upon you under this Agreement.
10. Governing Plan Document. This Agreement and the Award are subject to all the provisions of the Plan, and to all interpretations, rules and regulations which may, from time to time, be adopted and promulgated by the Committee pursuant to the Plan. If there is any conflict between the provisions of this Agreement and the Plan, the provisions of the Plan will govern.
11. No Advice Regarding Grant. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding your participation in the Plan, or your acquisition or sale of the underlying Shares. You understand and agree that you should consult with your own personal tax, legal and financial advisors regarding your participation in the Plan before taking any action related to the Plan.
12. Choice of Law and Venue. This Award and Agreement will be interpreted and construed in accordance with and governed by the laws of the State of Minnesota, and all Participants agree to the exclusive venue and jurisdiction of the State and Federal Courts located in Hennepin County, Minnesota and waive any objection based on lack of jurisdiction or inconvenient forum. Any action relating to or arising out of this Plan must be commenced within one year after the cause of action accrued. This provision will not apply to Participants who primarily reside and work in California.
13. Binding Effect. This Agreement will be binding in all respects on your heirs, representatives, successors and assigns, and on the successors and assigns of the Company.
14. Compliance with Law. Notwithstanding any other provision of the Plan or this Agreement, unless there is an exemption from any registration, qualification or other legal requirement applicable to the Shares, the Company shall not be required to deliver any Shares issuable upon settlement of the Units prior to the completion of any registration or qualification of the shares under U.S. federal, state or foreign securities or exchange control law or under rulings or regulations of the U.S. Securities and Exchange Commission (“SEC”) or of any other governmental regulatory body, or prior to obtaining any approval or other clearance from any local, state, federal or foreign governmental agency, which registration, qualification or approval the Company shall, in its absolute discretion, deem necessary or advisable. You understand that the Company is under no obligation to register or qualify the Shares with the SEC or any state or foreign securities commission or to seek approval or clearance from any governmental authority for the issuance or sale of the Shares. Further, you agree that the Company shall have unilateral authority to amend the Agreement without your consent to the extent necessary to comply with securities or other laws applicable to the issuance of the Shares.
15. Insider Trading Policy. You acknowledge that you are subject to the Company’s insider trading policy as set forth in the “Statement of Company Policy as to Trades in the Company’s Securities By Company Personnel and Confidential Information” and that you are responsible for ensuring compliance with the restrictions and requirements therein.
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16. Imposition of Other Requirements. The Company reserves the right to impose other requirements on your participation in the Plan, on the Award and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require you to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
17. Electronic Delivery and Participation. The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. You hereby consent to receive such documents by electronic delivery and agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.
18. Section 409A of the Code. The Units as provided in this Agreement and any issuance of Shares or payment pursuant to this Agreement are intended to either be exempt from or comply with Section 409A of the Code so as not to subject you to payment of any additional tax, penalty or interest imposed under Section 409A of the Code. The provisions of this Award shall be construed and interpreted to avoid the imputation of any such additional tax, penalty or interest under Section 409A of the Code yet preserve (to the nearest extent reasonably possible) the intended benefit payable to you.
19. Compensation Recovery Policy. This Award and any compensation associated therewith shall be subject to forfeiture, recovery by the Company or any other action pursuant to any compensation recovery policy or policies adopted by the Board or the Committee, including but not limited to, a policy adopted in response to the requirements of Section 10D of the Exchange Act or any related rules applicable to the Company, as such policy or policies may be in effect from time to time. This Agreement will be automatically amended to comply with all such recovery policies.
20. Waiver. You acknowledge that a waiver by the Company of breach of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by you or any other Participant.
21. Severability. The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.
By accepting this Award in the manner prescribed by the Company, you agree to all the terms and conditions described in this Agreement and in the Plan document.
PARTICIPANT | FAIR ISAAC CORPORATION | |||||||
| By: | ||||||||
Title: Executive Vice President, | ||||||||
| General Counsel and Secretary | ||||||||
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EXHIBIT 10.39
Fair Isaac Corporation
2021 Long-Term Incentive Plan
Executive Non-Statutory Stock Option Agreement (U.S.)
Option Terms and Conditions*
1. Grant of Stock Options. The Company hereby grants to you, subject to the terms and conditions in this Executive Non-Statutory Stock Option Agreement (the “Agreement”) and subject to the terms and conditions of the Plan, an option to purchase the number of Shares specified on the cover page of this Agreement (the “Option”).
2. Non-Statutory Stock Option. This Option is not intended to be an “incentive stock option” within the meaning of Section 422 of the Code and will be interpreted accordingly.
3. Vesting and Exercise Schedule. This Option will vest and become exercisable as to the portion of Shares and on the dates specified on the cover page to this Agreement, so long as you remain a Service Provider or you meet the conditions set forth in Section 6 of this Agreement. The vesting and exercise schedule is cumulative, meaning that to the extent the Option has not already been exercised and has not expired, terminated or been cancelled, you or the person otherwise entitled to exercise the Option as provided in this Agreement may at any time purchase all or any portion of the Shares that may then be purchased under that schedule.
Vesting and exercisability of this Option will be accelerated during the term of the Option if your Service to the Company or any Affiliate terminates because of your death or Disability, as provided in Section 6(e)(2) of the Plan. Vesting and exercisability will also be accelerated under the circumstances described in Section 12(d) of the Plan and may be accelerated (or, as applicable, waived) by action of the Committee in accordance with Sections 3(b)(2), 12(b)(2), 12(b)(3) and 12(c) of the Plan. Vesting and exercisability may also be accelerated upon the occurrence of events and in accordance with the terms and conditions specified in any other written agreement you have with the Company.
4. Expiration. This Option will expire and will no longer be exercisable at 5:00 p.m. Central Time on the earliest of:
(a) the expiration date specified on the cover page of this Agreement;
(b) the expiration of any applicable period specified in Section 6(e) of the Plan during which this Option may be exercised after your termination of Service, except as set forth in Section 6 of this Agreement;
(c) if the Committee has taken action to accelerate exercisability in accordance with Sections 3(b)(2), 12(b)(3) or 12(c) of the Plan, the expiration of any applicable exercise period specified by the Committee pursuant to such action;
* To the extent any capitalized term used in this Agreement is not defined, it has the meaning assigned to it in the Plan as the Plan currently exists or as it is amended in the future.
(d) the date (if any) fixed for cancellation of this Option pursuant to Section 12(b)(2) or 12(d) of the Plan; or
(e) the expiration of any applicable period specified in any other written agreement you have with the Company providing for accelerated vesting and exercisability.
5. Service Requirement. Except as otherwise provided in Section 6 of this Agreement or Section 6(e) of the Plan, and as may otherwise be provided by action of the Committee in accordance with Sections 12(b)(3) or 12(c) of the Plan, this Option may be exercised only while you continue to provide Service to the Company or an Affiliate as a Service Provider, and only if you have continuously provided such Service since the date this Option was granted.
6. Retirement. Notwithstanding Section 5 of this Agreement, vesting of this Option will continue in accordance with the vesting schedule specified on the cover page to this Agreement if your employment with the Company or any Affiliate terminates because of your Retirement and the following conditions are satisfied: (a) you commenced discussions with the Company’s Chief Executive Officer or most senior human resources executive regarding your retirement from employment at least 12 full months prior to the date your employment terminates (the “Retirement Date”) and (b) during the period beginning on your Retirement Date and ending on the final day of the vesting schedule specified on the cover page, you: (i) continue to be available to provide Service as requested and (ii) do not become employed by or otherwise provide paid services to any other entity or organization; provided, however, that you may be permitted to serve as an independent director on the board of directors for one or more entities that are not competitive with the Company’s business so long as any such service as an independent director is reviewed and approved in advance by the Committee. For the avoidance of doubt, if you fail to comply with the conditions in this Section 6, you will forfeit the unvested portion of this Option. Upon your retirement in accordance with the Retirement Conditions, this Option may be exercised only until the 12-month anniversary of the date that the final portion of this Option vests, as set forth in the vesting schedule on the cover page to this Agreement.
For purposes of this Award, “Retirement” means the termination of your employment when (1) you (A) are age 55 or older, (B) have at least five years of continuous Service as an employee (which must be immediately preceding the Retirement Date) and (C) have served at least five cumulative years as an Executive Vice President (or higher level) of the Company (while both (B) and (C) must be satisfied, periods of time served as an Executive Vice President (or higher level) under (C) may also be counted toward the five years of continuous Service requirement under (B)), and (2) the sum of your age as of the date of your termination plus your years of Service as an employee equals at least 75.
7. Leave of Absence. Your Service will be deemed continuing while you are on a leave of absence approved by the Company in writing or guaranteed by applicable law or other written agreement you have entered into with the Company (an “Approved Leave”). If you do not resume providing Service following your Approved Leave, your Service will be deemed to have terminated upon the expiration of the Approved Leave.
8. Exercise of Option. Subject to Section 5 of this Agreement and to the Company’s policies governing trading in its securities, the vested and exercisable portion of this Option may be exercised through use of the account maintained for you at E*TRADE or another automated electronic platform approved by the Company or through delivery to the Company’s Stock
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Administration office of written notification of exercise that states the number of Shares to be purchased and is signed or otherwise authenticated by the person exercising this Option. If the person exercising this Option is not the Optionee, he or she also must submit appropriate proof of his or her right to exercise this Option.
9. Payment of Exercise Price. When you submit your notice of exercise pursuant to Section 8 of this Agreement, you must include payment of the exercise price of the Shares being purchased through one or a combination of the following methods:
(a) your personal check, a cashier’s check or money order;
(b) to the extent permitted by law, a broker-assisted cashless exercise in which you irrevocably instruct a broker to deliver proceeds of a sale of all or a portion of the Shares for which the Option is being exercised to the Company in payment of the exercise price of such Shares, and, to the extent consistent with Section 10 of this Agreement, in payment of Tax-Related Items (as defined below);
(c) by delivery to the Company or its designated agent of unencumbered Shares having an aggregate Fair Market Value on the date of exercise equal to the exercise price of the Shares for which the Option is being exercised; or
(d) by a reduction in the number of Shares to be delivered to you upon exercise, such number of Shares to be withheld having an aggregate Fair Market Value on the date of exercise equal to the exercise price of the Shares for which the Option is being exercised.
However, if the Committee determines, in any given circumstance, that payment of the exercise price with Shares pursuant to subsection (c) above or by authorizing the Company to retain Shares pursuant to subsection (d) above is undesirable for any reason, you will not be permitted to pay any portion of the exercise price in that manner. Moreover, if the Committee determines that payment of the exercise price by one of the methods specified above is required or desirable for legal or administrative reasons, you will be required to pay the exercise price by such method.
10. Tax Consequences and Withholding. You acknowledge that, regardless of any action taken by the Company, the ultimate liability for all income tax, social insurance, payroll tax, payment on account, or other tax-related items related to your participation in the Plan and legally applicable to you (the “Tax-Related Items”) is and remains your responsibility and may exceed the amount, if any, actually withheld by the Company. You further acknowledge that the Company (a) makes no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Option, including but not limited, the grant, vesting or exercise of the Option or subsequent sale of Shares acquired at exercise, and (b) does not commit to and is under no obligation to structure the terms of the grant or any aspect of the Option to reduce or eliminate your liability for Tax-Related Items or achieve any particular tax result. Further, if you are subject to Tax-Related Items in more than one jurisdiction, you acknowledge that the Company (or your employer, if different) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
Prior to any relevant taxable or tax withholding event, as applicable, you agree to make arrangements acceptable to the Company to satisfy all Tax-Related Items. In this regard, you
3
authorize the Company (or its agent), at its discretion, to satisfy any withholding obligation for the Tax-Related Items by one of the following methods:
(i) withholding from proceeds of the sale of Shares acquired at exercise of the Option either through a voluntary sale or through a mandatory sale arranged by the Company (on your behalf pursuant to this authorization without further consent);
(ii) delivery of your authorization to E*TRADE (or another broker designated by the Company) to transfer to the Company from your account at such broker the amount of such Tax-Related Items;
(iii) withholding from your wages or other cash compensation paid to you by the Company; and/or
(iv) any other method approved by the Company and permitted under applicable law.
Depending on the withholding method and to the extent permitted under the Plan and applicable law, the Company may withhold for Tax-Related Items by considering minimum statutory withholding rates or up to the maximum rate applicable in your jurisdiction. In the event of any over-withholding, you will have no entitlement to the over-withheld amount in Shares and such amounts will be refunded to you in cash in accordance with applicable law.
The Company may refuse to issue or deliver the Shares or the proceeds of the sale of Shares if you fail to comply with your obligations in connection with the Tax-Related Items.
11. Delivery of Shares. As soon as practicable after the Company receives the notice of exercise and exercise price provided for above and determines that all conditions to exercise and delivery of Shares, including the Tax-Related Items withholding provisions of Section 10 and the compliance provisions of Section 19 of this Agreement, have been satisfied, it will arrange for the delivery of the Shares being purchased. Delivery of the Shares shall be effected by the electronic delivery of the Shares to a brokerage account maintained for you at E*TRADE (or another broker designated by the Company), or by another method provided by the Company. All Shares so issued will be fully paid and nonassessable.
12. Transfer of Option. During your lifetime, only you (or your guardian or legal representative in the event of legal incapacity) may exercise this Option except in the case of a transfer described below. You may not assign or transfer this Option other than (a) a transfer upon your death in accordance with your will, by the laws of descent and distribution or pursuant to a beneficiary designation submitted in accordance with Section 6(d) of the Plan, (b) pursuant to a qualified domestic relations order, or (c) by gift to any “family member” (as defined in General Instruction A.1(a)(5) to Form S-8 under the Securities Act of 1933). Following any such transfer, this Option shall continue to be subject to the same terms and conditions that were applicable to this Option immediately prior to its transfer and may be exercised by such permitted transferee as and to the extent that this Option has become exercisable and has not terminated in accordance with the provisions of the Plan and this Agreement.
13. No Shareholder Rights Before Delivery of Shares. Neither you nor any permitted transferee of this Option will have any of the rights of a shareholder of the Company with respect to any Shares subject to this Option until such Shares have been delivered to you or your permitted
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transferee pursuant to Section 11 of this Agreement. No adjustments shall be made for dividends or other rights if the applicable record date occurs before such delivery has been effected, except as otherwise described in the Plan.
14. Discontinuance of Service. This Agreement does not give you a right to continued Service with the Company or any Affiliate, and the Company or any such Affiliate may terminate your Service at any time and otherwise deal with you without regard to the effect it may have upon you under this Agreement.
15. Governing Plan Document. This Agreement and Option are subject to all the provisions of the Plan, and to all interpretations, rules and regulations which may, from time to time, be adopted and promulgated by the Committee pursuant to the Plan. If there is any conflict between the provisions of this Agreement and the Plan, the provisions of the Plan will govern.
16. No Advice Regarding Grant. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding your participation in the Plan, or your acquisition or sale of the underlying Shares. You understand and agree that you should consult with your own personal tax, legal and financial advisors regarding your participation in the Plan before taking any action related to the Plan.
17. Choice of Law and Venue. This Option and Agreement will be interpreted and construed in accordance with and governed by the laws of the laws of the State of Minnesota and you agree to the exclusive venue and jurisdiction of the State and Federal Courts located in Hennepin County, Minnesota and waive any objection based on lack of jurisdiction or inconvenient forum. Any action relating to or arising out of this Plan must be commenced within one year after the cause of action accrued. This provision will not apply to you if you primarily reside and work in California.
18. Binding Effect. This Agreement will be binding in all respects on your heirs, representatives, successors and assigns, and on the successors and assigns of the Company.
19. Compliance with Law. Notwithstanding any other provision of the Plan or this Agreement, unless there is an exemption from any registration, qualification or other legal requirement applicable to the Shares, the Company shall not be required to deliver any Shares issuable upon exercise of the Option prior to the completion of any registration or qualification of the shares under any U.S. federal, state or foreign securities or exchange control law or under rulings or regulations of the U.S. Securities and Exchange Commission (“SEC”) or of any other governmental regulatory body, or prior to obtaining any approval or other clearance from any local, state, federal or foreign governmental agency, which registration, qualification or approval the Company shall, in its absolute discretion, deem necessary or advisable. You understand that the Company is under no obligation to register or qualify the Shares with the SEC or any state or foreign securities commission or to seek approval or clearance from any governmental authority for the issuance or sale of the Shares. Further, you agree that the Company shall have unilateral authority to amend the Agreement without your consent to the extent necessary to comply with securities or other laws applicable to the issuance of the Shares.
20. Insider Trading Policy. You acknowledge that you are subject to the Company’s insider trading policy as set forth in the “Statement of Company Policy as to Trades in the Company’s Securities By Company Personnel and Confidential Information,” and you are responsible for ensuring
5
compliance with the restrictions and requirements therein. Further, you may be subject to U.S. insider trading restrictions and/or market abuse laws, which may affect your ability to accept, acquire, sell or otherwise dispose of Shares or rights to Shares (e.g., the Option) or rights linked to the value of Shares during such times as you are considered to have “inside information” regarding the Company (as defined by the laws in the U.S.). Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under the Company’s insider trading policy.
21. Imposition of Other Requirements. The Company reserves the right to impose other requirements on your participation in the Plan, on the Option and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require you to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
22. Electronic Delivery and Participation. The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. You hereby consent to receive such documents by electronic delivery and agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.
23. Compensation Recovery Policy. This Award and any compensation associated therewith shall be subject to forfeiture, recovery by the Company or any other action pursuant to any compensation recovery policy or policies adopted by the Board or the Committee, including but not limited to, a policy adopted in response to the requirements of Section 10D of the Exchange Act or any related rules applicable to the Company, as such policy or policies may be in effect from time to time. This Agreement will be automatically amended to comply with all such recovery policies.
24. Waiver. You acknowledge that a waiver by the Company of breach of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by you or any other Participant.
25. Severability. The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.
By accepting this Option in the manner prescribed by the Company, you agree to all the terms and conditions described in this Agreement and in the Plan document.
PARTICIPANT | FAIR ISAAC CORPORATION | |||||||
| By: | ||||||||
Title: Executive Vice President, | ||||||||
| General Counsel and Secretary | ||||||||
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EXHIBIT 10.40
Executive Performance Share Unit Award Agreement
Fair Isaac Corporation
2021 Long-Term Incentive Plan
Performance Share Unit Agreement
Grant Number: PXX000X
This Performance Share Unit Award Agreement (this “Agreement”), dated December X, 20XX (the “Grant Date”), is by and between XXX (the “Participant”), and Fair Isaac Corporation, a Delaware corporation (the “Company”). Any term capitalized but not defined in this Agreement will have the meaning set forth in the Company’s 2021 Long-Term Incentive Plan (the “Plan”).
In the exercise of its discretion to grant Awards under the Plan, the Committee has determined that the Participant should receive an Award of performance share units under the Plan. This Award is subject to the following terms and conditions:
1. Grant of Performance Share Units. The Company hereby grants to the Participant an Award consisting of performance share units (the “Units”) in an amount initially equal to the Target Number of Units specified on Appendix A to this Agreement. The number of Units that may actually be earned and become eligible to vest pursuant to this Award can be between 0% and 200% of the Target Number of Units, but may not exceed the Maximum Number of Units specified on Appendix A to this Agreement. Each Unit that is earned pursuant to Section 3 of this Agreement and vests pursuant to Section 4 of this Agreement represents the right to receive one share of the Company’s common stock as provided in Section 7 of this Agreement. The Award will be subject to the terms and conditions of the Plan and this Agreement.
2. Restrictions on Units. Neither this Award nor the Units subject to this Award may be sold, assigned, transferred, exchanged or encumbered other than a transfer upon death in accordance with the Participant’s will, by the laws of descent and distribution or pursuant to a beneficiary designation submitted by the Participant in accordance with Section 6(d) of the Plan. Any attempted transfer in violation of this Section 2 shall be of no effect and may result in the forfeiture of all Units. The Units and the Participant’s right to receive Shares in settlement of the Units under this Agreement shall be subject to forfeiture as provided in this Agreement until satisfaction of the conditions for earning and vesting the Units as set forth in Section 3 and Section 4, respectively, of this Agreement.
3. Earned Units. Whether and to what degree the Units will be earned (the “Earned Units”) during the period starting on October X, 20XX and ending on September XX, 20XX (the “Performance Period”) will be determined by whether and to what degree the Company has satisfied the applicable performance goal(s) for the Performance Period as set forth in Appendix A to this Agreement. Any Units that are not designated as Earned Units at the conclusion of the Performance Period in accordance with this Section 3 will be forfeited.
4. Vesting of Earned Units. Subject to Section 6 of this Agreement, if the Participant remains a Service Provider continuously from the Grant Date, then ⅓ of the Earned Units will vest on each
of December X, 20XX, December X, 20XX, and December X, 20XX. The period from October X, 20XX through December X, 20XX is referred to as the “Vesting Period.”
5. Service Requirement. Except as otherwise provided in accordance with Section 6 of this Agreement, if you cease to be a Service Provider prior to the vesting dates specified in Section 4 of this Agreement, you will forfeit all unvested Units. Your Service will be deemed continuing while you are on a leave of absence approved by the Company in writing or guaranteed by applicable law or other written agreement you have entered into with the Company (an “Approved Leave”). If you do not resume providing Service to the Company or any Affiliate following your Approved Leave, your Service will be deemed to have terminated upon the expiration of the Approved Leave.
6. Effect of Termination of Service or Change in Control.
(a) Except as may be provided under the remainder of this Section 6, upon termination of Service during the Performance Period for any reason other than retirement in accordance with the Retirement Conditions, death or Disability, all Units will be immediately forfeited without consideration.
(b) Upon (i) termination of Service during the Performance Period due to death or Disability, the Target Number of Units subject to this Award will be deemed Earned Units and will vest in full upon such termination, or (ii) a Change in Control during the Performance Period as a result of which the Company does not survive as an operating company or survives only as a subsidiary of another entity (a “Business Combination”), the Target Number of Units subject to this Award will be deemed Earned Units and will vest in full upon or immediately before, and conditioned upon, the consummation of the Business Combination. Any remaining Units that do not vest as provided in this Section 6(b) will be immediately forfeited without consideration. In connection with a Change in Control during the Performance Period that is not a Business Combination, the Committee may provide in its discretion that the Target Number of Units subject to this Award will be deemed Earned Units and will vest in full upon the occurrence of the Change in Control or upon the termination of the Participant’s Service as an employee within 12 months following the Change in Control.
(c) Except as may be provided by the Committee pursuant to Section 6(d) or (e), upon termination of Service during the Vesting Period for any reason other than retirement in accordance with the Retirement Conditions, death or Disability, all Earned Units that have not vested will be immediately forfeited without consideration.
(d) Upon (i) termination of Service during the Vesting Period due to death or Disability, all Earned Units will vest in full upon such termination, or (ii) a Business Combination during the Vesting Period, all Earned Units will vest in full upon or immediately before, and conditioned upon, the consummation of the Business Combination. In connection with a Change in Control during the Vesting Period that is not a Business Combination, the Committee may provide in its discretion that all Earned Units will vest in full upon the occurrence of the Change in Control or upon the termination of the Participant’s Service as an employee within 12 months following the Change in Control.
(e) Notwithstanding anything to the contrary in this Agreement, the Units shall continue to be earned in accordance with Section 3 of this Agreement and vest over the Vesting
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Period in accordance with Section 4 of this Agreement if your Service to the Company or any Affiliate terminates because of your Retirement and the following conditions are satisfied: (i) you commenced discussions with the Company’s Chief Executive Officer or most senior human resources executive regarding your retirement from Service at least 12 full months prior to the date your Service terminates (the “Retirement Date”) and (ii) during the period beginning on your Retirement Date and ending on the final day of the Vesting Period, you: (a) continue to be available to provide Service as requested and (b) do not become employed by or otherwise provide paid services to any other entity or organization; provided, however, that you may be permitted to serve as an independent director on a board of directors for an entity that are not competitive with the Company’s business so long as any such service as an independent director is reviewed and approved in advance by the Committee. For the avoidance of doubt, if you fail to comply with the conditions in this Section 6(e), you will forfeit all unvested Earned Units.
For purposes of this Agreement, “Retirement” means the termination of your employment when (i) you (A) are age 55 or older, (B) have at least five years of continuous Service as an employee (which must be immediately preceding the date of termination) and (C) have served at least five cumulative years as an Executive Vice President (or higher level) of the Company (while both (B) and (C) must be satisfied, periods of time served as an Executive Vice President (or higher level) under (C) may also be counted toward the five years of continuous Service requirement under (B)), and (ii) the sum of your age as of the date of your termination plus your years of Service as an employee equals at least 75. Any Units that vest pursuant to this Section 6(e) shall be paid to you not later than 74 days after the applicable vesting date of the Units as specified in Section 4 of this Agreement.
7. Settlement of Units. After any Units vest pursuant to Section 4 or Section 6 of this Agreement, the Company shall, as soon as practicable (but in any event within the period specified in Treas. Reg. § 1.409A-1(b)(4) to qualify for a short-term deferral exception to Section 409A of the Code), cause to be issued and delivered to the Participant, or to the Participant’s designated beneficiary or estate in the event of the Participant’s death, one Share in payment and settlement of each vested Unit (the date of each such issuance being a “Settlement Date”). After any Units vest pursuant to Section 6(e) of this Agreement, the Company shall, as soon as practicable (but in any event within the period specified in Treas. Reg. § 1.409A-3(d)), cause to be issued and delivered to you, one Share in payment and settlement of each vested Unit. Delivery of the Shares shall be effected by the electronic delivery of the Shares to a brokerage account maintained for the Participant at E*TRADE (or another broker designated by the Company or the Participant), or by another method provided by the Company, and shall be subject to the tax withholding provisions of Section 8 of this Agreement and compliance with all applicable legal requirements, including compliance with the requirements of applicable federal and state securities laws, and shall be in complete satisfaction and settlement of such vested Units. Notwithstanding the foregoing, the Committee may provide that the settlement of any Earned Units that vest in accordance with Section 6(b)(ii) or 6(d)(ii) of this Agreement will be made in the amount and in the form of the consideration (whether stock, cash, other securities or property, or a combination thereof) to which a holder of a Share was entitled upon the consummation of the Business Combination (without interest thereon) (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares).
8. Tax Consequences and Withholding. As a condition precedent to the settlement of the Units, the Participant is required to make arrangements acceptable to the Company for payment of any
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federal, state or local withholding taxes that may be due as a result of the settlement of the Units (“Withholding Taxes”), in accordance with Section 14 of the Plan.
Until such time as the Company provides notice to the contrary, it will collect the Withholding Taxes through an automatic Share withholding procedure (the “Share Withholding Method”), unless other arrangements acceptable to the Company have been made. Under such procedure, the Company or its agent will withhold, upon the tax withholding event, a portion of the Shares with a Fair Market Value (measured as of such date) sufficient to cover the amount of such taxes; provided, however, that the number of any Shares so withheld shall not exceed the number necessary to satisfy the Company’s required tax withholding obligations using the applicable minimum statutory withholding rate or such other rate as may be permitted under the Plan up to the maximum rate applicable in your jurisdiction.
In the event that the Committee determines that the Share Withholding Method would be problematic under applicable tax or securities laws or would result in materially adverse accounting consequences, you authorize the Company to collect Withholding Taxes through one of the following methods:
(a) delivery of the Participant’s authorization to E*TRADE (or another broker designated by the Company or the Participant) to transfer to the Company from the Participant’s account at such broker the amount of such Withholding Taxes;
(b) the use of the proceeds from a next-day sale of the Shares issued to the Participant, provided that (i) such sale is permissible under the Company’s trading policies governing its securities, (ii) the Participant makes an irrevocable commitment, on or before a Settlement Date, to effect such sale of the Shares, and (iii) the transaction is not otherwise deemed to constitute a prohibited loan under Section 402 of the Sarbanes-Oxley Act of 2002; or
(c) any other method approved by the Company.
9. No Shareholder Rights. The Units subject to this Award do not entitle the Participant to any rights of a shareholder of the Company’s common stock. The Participant will not have any of the rights of a shareholder of the Company in connection with the grant of Units subject to this Agreement unless and until Shares are issued to the Participant upon settlement of the Units as provided in Section 7 of this Agreement.
10. Governing Plan Document. This Agreement and the Award are subject to all the provisions of the Plan, and to all interpretations, rules and regulations which may, from time to time, be adopted and promulgated by the Committee pursuant to the Plan. If there is any conflict between the provisions of this Agreement and the Plan, the provisions of the Plan will govern.
11. Choice of Law. This Agreement will be interpreted and enforced under the laws of the state of Minnesota (without regard to its conflicts or choice of law principles).
12. Binding Effect. This Agreement will be binding in all respects on the Participant’s heirs, representatives, successors and assigns, and on the successors and assigns of the Company.
13. Discontinuance of Service. This Agreement does not give the Participant a right to continued Service with the Company or any Affiliate, and the Company or any such Affiliate may terminate
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the Participant’s Service at any time and otherwise deal with the Participant without regard to the effect it may have upon the Participant under this Agreement.
14. Section 409A of the Code. The Units as provided in this Agreement and any issuance of Shares or payment pursuant to this Agreement are intended to either be exempt from or comply with Section 409A of the Code so as not to subject you to payment of any additional tax, penalty or interest imposed under Section 409A of the Code. The provisions of this Agreement shall be construed and interpreted to avoid the imputation of any such additional tax, penalty or interest under Section 409A of the Code yet preserve (to the nearest extent reasonably possible) the intended benefit payable to you.
15. Compensation Recovery Policy. This Award and any compensation associated therewith shall be subject to forfeiture, recovery by the Company or any other action pursuant to any compensation recovery policy or policies adopted by the Board or the Committee, including but not limited to, a policy adopted in response to the requirements of Section 10D of the Exchange Act or any related rules applicable to the Company, as such policy or policies may be in effect from time to time. This Agreement will be automatically amended to comply with all such recovery policies.
By executing this Agreement, the Participant accepts this Award and agrees to all the terms and conditions described in this Agreement and in the Plan document.
PARTICIPANT | FAIR ISAAC CORPORATION | |||||||
| By: | ||||||||
Title: Executive Vice President, | ||||||||
| General Counsel and Secretary | ||||||||
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EXHIBIT 10.41
Fair Isaac Corporation
2021 Long-Term Incentive Plan
Executive Market Share Unit Agreement
Grant Number: MXX000
This Market Share Unit Award Agreement (this “Agreement”), dated December X, 20XX (the “Grant Date”), is by and between XXX (the “Participant”), and Fair Isaac Corporation, a Delaware corporation (the “Company”). Any term capitalized but not defined in this Agreement will have the meaning set forth in the Company’s 2021 Long-Term Incentive Plan (the “Plan”).
In the exercise of its discretion to grant Awards under the Plan, the Committee has determined that the Participant should receive an Award of market share units under the Plan (the “Units”). This Award is subject to the following terms and conditions:
1. Grant of Market Share Units. The Company hereby grants to the Participant an Award consisting of XX Units (the “Target Units”), subject to possible decrease to as few as 0 Units and to possible increase to as many as XXX Units as provided by this Agreement. Each Unit that has been earned pursuant to Section 3 of this Agreement and vests pursuant to Section 4 of this Agreement represents the right to receive one share of the Company’s common stock as provided in Section 7 of this Agreement. The Award will be subject to the terms and conditions of the Plan and this Agreement.
2. Restrictions on Units. Neither this Award nor the Units subject to this Award may be sold, assigned, transferred, exchanged or encumbered other than a transfer upon death in accordance with the Participant’s will, by the laws of descent and distribution or pursuant to a beneficiary designation submitted by the Participant in accordance with Section 6(d) of the Plan. Any attempted transfer in violation of this Section 2 shall be of no effect and may result in the forfeiture of all Units. The Units and the Participant’s right to receive Shares in settlement of the Units under this Agreement shall be subject to forfeiture as provided in this Agreement until satisfaction of the conditions for earning and vesting the Units as set forth in Section 3 and Section 4 of this Agreement, respectively.
3. Earned Units. Whether and to what degree the Units are earned will be determined by the relationship between the Company’s total shareholder return performance relative to that of a benchmark index during three performance periods: Performance Period 1 will start on December 1, 20XX and end on November 30, 20XX, Performance Period 2 will start on December 1, 20XX and end on November 30, 20XX, and Performance Period 3 will start on December 1, 20XX and end on November 30, 20XX (each, a “Performance Period”). The Performance Periods may be adjusted under the circumstances and to the extent specified in Section 6(b) of this Agreement.
(a) The number of Units subject to this Award that will be deemed earned at the conclusion of Performance Period 1 (the “Period 1 Earned Units”) will equal ⅓ of the number of Target Units multiplied by the Relative Return Factor (calculated in accordance with Appendix A to this Agreement) applicable to Performance Period 1, rounded down to the nearest whole Unit in case of a fraction.
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(b) The number of Units subject to this Award that will be deemed earned at the conclusion of Performance Period 2 (the “Period 2 Earned Units”) will equal ⅓ of the number of Target Units multiplied by the Relative Return Factor applicable to Performance Period 2, rounded down to the nearest whole Unit in case of a fraction.
(c) The number of Units subject to this Award that will be deemed earned at the conclusion of Performance Period 3 (the “Period 3 Earned Units”) will equal the number of Target Units multiplied by the Relative Return Factor applicable to Performance Period 3, rounded down to the nearest whole Unit in case of a fraction, minus the sum of the Period 1 Earned Units and the Period 2 Earned Units; provided that if a negative number results from the calculation of Period 3 Earned Units, the number of Period 3 Earned Units will be deemed to be 0.
(d) Any Units that are not deemed to be Period 1 Earned Units, Period 2 Earned Units, or Period 3 Earned Units in accordance with this Section 3 will be forfeited without consideration.
4. Vesting of Earned Units. Subject to Section 6 of this Agreement, if the Participant remains a Service Provider continuously from the Grant Date, then all Period 1 Earned Units will vest as of December X, 20XX, all Period 2 Earned Units will vest as of December X, 20XX, and all Period 3 Earned Units will vest as of December X, 20XX.
5. Service Requirement. Except as otherwise provided in accordance with Section 6 of this Agreement, if you cease to be a Service Provider prior to the vesting dates specified in Section 4 of this Agreement, you will forfeit all unvested Units. Your Service will be deemed continuing while you are on a leave of absence approved by the Company in writing or guaranteed by applicable law or other written agreement you have entered into with the Company (an “Approved Leave”). If you do not resume providing Service to the Company or any Affiliate following your Approved Leave, your Service will be deemed to have terminated upon the expiration of the Approved Leave.
6. Effect of Termination of Service or Change in Control.
(a) Except as provided under the remainder of this Section 6, upon termination of Service prior to the final vesting date, any unvested Units will be immediately forfeited without consideration.
(b) Upon a Change in Control as a result of which the Company does not survive as an operating company or survives only as a subsidiary of another entity (a “Business Combination”) that is consummated before the end of Performance Period 3, the following provisions apply:
(i) Each Performance Period during which the Business Combination occurs will be truncated so that it ends on the date the Business Combination is consummated (each, an “Adjusted Performance Period”).
(ii) The number of Units deemed earned at the conclusion of each Adjusted Performance Period (the “Adjusted Period Earned Units”) will be calculated as specified in
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Section 3(a), (b), or (c) of this Agreement, as applicable, using the modified calculation of the Relative Return Factor set forth in Appendix A.
(iii) A portion of the Adjusted Period Earned Units for each Adjusted Performance Period will vest in full upon or immediately before, and conditioned upon, the consummation of the Business Combination, with such portion determined by multiplying the number of Adjusted Period Earned Units for that Adjusted Performance Period by a fraction, the numerator of which equals the number of days contained in the Adjusted Performance Period and the denominator of which equals the number of days contained in the Performance Period without adjustment (the “Accelerated Units”).
(iv) The number of Adjusted Period Earned Units in excess of the number of Accelerated Units for each Adjusted Performance Period (the “Time-Based Units”) will vest ratably on the 9th day of each month during the period beginning with the consummation of the Business Combination and ending on December X, 20XX, provided the Participant’s Service as an employee with the acquiring or surviving entity in the Business Combination (or with any of its affiliated entities) continues without interruption. If the Participant experiences an involuntary termination of Service for reasons other than Cause during such vesting period, the Time-Based Units will vest in full.
(c) In connection with a Change in Control that is not a Business Combination and that is consummated before the end of Performance Period 3, the Committee may provide in its discretion that some or all of the unearned and unvested Units subject to this Award will be deemed earned and will vest in full upon the occurrence of the Change in Control or upon the termination of the Participant’s Service as an employee within 12 months following the Change in Control.
(d) In connection with a Change in Control that is consummated after the end of Performance Period 3 but before December X, 20XX, the Period 3 Earned Units will vest in full upon the consummation of such a Change in Control.
(e) In connection with a termination of Service due to death or Disability before the end of Performance Period 3, a number of Units equal to the Target Units minus the sum of any vested Period 1 Earned Units and vested Period 2 Earned Units will vest in full upon such termination. In connection with a termination of Service due to death or Disability after the end of Performance Period 3 but before December X, 20XX, the Period 3 Earned Units will vest in full upon such termination.
(f) Notwithstanding anything to the contrary in this Agreement, the Units will continue to be earned and vest in accordance with Sections 3 and 4 of this Agreement if your Service to the Company or any Affiliate terminates because of your Retirement and the following conditions are satisfied: (i) you commenced discussions with the Company’s Chief Executive Officer or most senior human resources executive regarding your retirement from Service at least 12 full months prior to the date your Service terminates (the “Retirement Date”) and (ii) during the period beginning on your Retirement Date and ending on the final day of the vesting periods set forth in Section 4 of this Agreement, you: (a) continue to be available to provide Service as requested and (b) do not become employed by or otherwise provide paid services to any other entity or organization; provided, however, that you may be permitted to serve as an independent director on the board of directors for one or more entities that are not competitive with the
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Company’s business so long as any such service as an independent director is reviewed and approved in advance by the Committee. For the avoidance of doubt, if you fail to comply with the conditions in this Section 6(f), you will forfeit all unvested Earned Units.
For purposes of this Agreement, “Retirement” means the termination of your employment when (a) you (I) are age 55 or older, (II) have at least five years of continuous Service as an employee (which must be immediately preceding the date of termination) and (III) have served at least five cumulative years as an Executive Vice President (or higher level) of the Company (while both (II) and (III) must be satisfied, periods of time served as an Executive Vice President (or higher level) under (III) may also be counted toward the five years of continuous Service requirement under (II)), and (b) the sum of your age as of the date of your termination plus your years of Service as an employee equals at least 75. Any Units that vest pursuant to this Section 6(f) shall be paid to you not later than 74 days after the applicable vesting date of the Units as specified in Section 4 of this Agreement.
7. Settlement of Units. After any Units vest pursuant to Section 4 or Section 6 of this Agreement, the Company shall, as soon as practicable (but in any event within the period specified in Treas. Reg. § 1.409A-1(b)(4) to qualify for a short-term deferral exception to Section 409A of the Code), cause to be issued and delivered to the Participant, or to the Participant’s designated beneficiary or estate in the event of the Participant’s death, one Share in payment and settlement of each vested Unit (the date of each such issuance being a “Settlement Date”). After any Units vested pursuant to Section 6(f) of this Agreement, the Company shall, as soon as practicable (but in any event within the period specified in Treas. Reg. § 1,409A-3(d)), cause to be issued and delivered to you, one Share in payment and settlement of each vested Unit. Delivery of the Shares shall be effected by the electronic delivery of the Shares to a brokerage account maintained for the Participant at E*TRADE (or another broker designated by the Company or the Participant), or by another method provided by the Company, and shall be subject to the tax withholding provisions of Section 8 of this Agreement and compliance with all applicable legal requirements, including compliance with the requirements of applicable federal and state securities laws, and shall be in complete satisfaction and settlement of such vested Units. Notwithstanding the foregoing, (i) the settlement of each Time-Based Unit that vests in accordance with Section 6(b)(iv) of this Agreement will be made in the amount and in the form of the consideration (whether stock, cash, other securities or property, or a combination thereof) to which a holder of a Share was entitled upon the consummation of the Business Combination (without interest thereon) (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares), and (ii) the Committee may provide for the settlement of Adjusted Period Earned Units that vest in accordance with Section 6(b)(iii) of this Agreement or for the settlement of Period 3 Earned Units that vest under the circumstances specified in Section 6(d) of this Agreement on the same basis as described in the preceding clause (i).
8. Tax Consequences and Withholding. As a condition precedent to the delivery of Shares in settlement of the Units, the Participant is required to make arrangements acceptable to the Company for payment of any federal, state or local withholding taxes that may be due as a result of the settlement of the Units (“Withholding Taxes”), in accordance with Section 14 of the Plan.
Until such time as the Company provides notice to the contrary, it will collect the Withholding Taxes through an automatic Share withholding procedure (the “Share Withholding Method”), unless other arrangements acceptable to the Company have been made. Under such procedure,
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the Company or its agent will withhold, upon the tax withholding event, a portion of the Shares with a Fair Market Value (measured as of such date) sufficient to cover the amount of such taxes; provided, however, that the number of any Shares so withheld shall not exceed the number necessary to satisfy the Company’s required tax withholding obligations using the applicable minimum statutory withholding rate or such other rate as may be permitted under the Plan up to the maximum rate applicable in your jurisdiction.
In the event that the Committee determines that the Share Withholding Method would be problematic under applicable tax or securities laws or would result in materially adverse accounting consequences, you authorize the Company to collect Withholding Taxes through one of the following methods:
(a) delivery of the Participant’s authorization to E*TRADE (or another broker designated by the Company or the Participant) to transfer to the Company from the Participant’s account at such broker the amount of such Withholding Taxes;
(b) the use of the proceeds from a next-day sale of the Shares issued to the Participant, provided that (i) such sale is permissible under the Company’s trading policies governing its securities, (ii) the Participant makes an irrevocable commitment, on or before a Settlement Date, to effect such sale of the Shares, and (iii) the transaction is not otherwise deemed to constitute a prohibited loan under Section 402 of the Sarbanes-Oxley Act of 2002; or
(c) any other method approved by the Company.
9. No Shareholder Rights. The Units subject to this Award do not entitle the Participant to any rights of a shareholder of the Company’s common stock. The Participant will not have any of the rights of a shareholder of the Company in connection with the grant of Units subject to this Agreement unless and until Shares are issued to the Participant upon settlement of the Units as provided in Section 7 of this Agreement.
10. Governing Plan Document. This Agreement and the Award are subject to all the provisions of the Plan, and to all interpretations, rules and regulations which may, from time to time, be adopted and promulgated by the Committee pursuant to the Plan. If there is any conflict between the provisions of this Agreement and the Plan, the provisions of the Plan will govern.
11. Choice of Law. This Agreement will be interpreted and enforced under the laws of the state of Minnesota (without regard to its conflicts or choice of law principles).
12. Binding Effect. This Agreement will be binding in all respects on the Participant’s heirs, representatives, successors and assigns, and on the successors and assigns of the Company.
13. Discontinuance of Service. This Agreement does not give the Participant a right to continued Service with the Company or any Affiliate, and the Company or any such Affiliate may terminate the Participant’s Service at any time and otherwise deal with the Participant without regard to the effect it may have upon the Participant under this Agreement.
14. Section 409A of the Code. The Units as provided in this Agreement and any issuance of Shares or payment pursuant to this Agreement are intended to either be exempt from or comply with Section 409A of the Code so as not to subject you to payment of any additional tax, penalty or
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interest imposed under Section 409A of the Code. The provisions of this Agreement shall be construed and interpreted to avoid the imputation of any such additional tax, penalty or interest under Section 409A of the Code yet preserve (to the nearest extent reasonably possible) the intended benefit payable to you.
15. Compensation Recovery Policy. This Award and any compensation associated therewith shall be subject to forfeiture, recovery by the Company or any other action pursuant to any compensation recovery policy or policies adopted by the Board or the Committee, including but not limited to, a policy adopted in response to the requirements of Section 10D of the Exchange Act or any related rules applicable to the Company, as such policy or policies may be in effect from time to time. This Agreement will be automatically amended to comply with all such recovery policies.
By executing this Agreement, the Participant accepts this Award and agrees to all the terms and conditions described in this Agreement and in the Plan document.
PARTICIPANT | FAIR ISAAC CORPORATION | |||||||
| By: | ||||||||
Title: Executive Vice President, | ||||||||
| General Counsel and Secretary | ||||||||
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Exhibit 21.1
FAIR ISAAC CORPORATION
LIST OF SUBSIDIARIES
LIST OF SUBSIDIARIES
| Name of Company | Jurisdiction of Incorporation/Organization | ||||
| Data Research Technologies, Inc. | Minnesota | ||||
| Entiera, Inc. | Delaware | ||||
| eZmCom, Inc. | Delaware | ||||
| Fair Isaac (ASPAC) Pte. Ltd. | Singapore | ||||
| Fair Isaac (Australia) Pty Ltd | Australia | ||||
| Fair Isaac (Singapore) Pte. Ltd. | Singapore | ||||
| Fair Isaac (Thailand) Co., Ltd. | Thailand | ||||
| Fair Isaac Asia Holdings, Inc. | Minnesota | ||||
| Fair Isaac Asia Pacific Corp. | Delaware | ||||
| Fair Isaac Brazil, LLC | Delaware | ||||
| Fair Isaac Canada, Ltd. | Canada | ||||
| Fair Isaac Chile Software and Services Ltda. | Chile | ||||
| Fair Isaac Credit Services, Inc. | Delaware | ||||
| Fair Isaac Deutschland GmbH | Germany | ||||
| Fair Isaac do Brasil Ltda. | Brazil | ||||
| Fair Isaac España SL | Spain | ||||
| Fair Isaac Europe Limited | England and Wales | ||||
| Fair Isaac Holdings, Inc. | Delaware | ||||
| Fair Isaac Hong Kong Limited | Hong Kong | ||||
| Fair Isaac India Sales Private Limited | India | ||||
| Fair Isaac India Software Private Limited | India | ||||
| Fair Isaac Information Technology (Beijing) Co., Ltd. | People’s Republic of China | ||||
| Fair Isaac International Corporation | California | ||||
| Fair Isaac Italy S.r.l. | Italy | ||||
| Fair Isaac Japan G.K. | Japan | ||||
| Fair Isaac Lithuania, UAB | Lithuania | ||||
| Fair Isaac Malaysia Sdn. Bhd. | Malaysia | ||||
| Fair Isaac Mexico S.A. de C.V. | Mexico | ||||
| Fair Isaac Network, Inc. | Delaware | ||||
| Fair Isaac Nordics AB | Sweden | ||||
| Fair Isaac Services Limited | England and Wales | ||||
| Fair Isaac Software Holdings Limited | England and Wales | ||||
| Fair Isaac South Africa (Pty) Ltd | South Africa | ||||
| Fair Isaac Turkey Software and Consultancy Services Limited Sirketi | Turkey | ||||
| Fair Isaac UK Group Limited | England and Wales | ||||
| Fair Isaac UK Holdings, Inc. | Delaware | ||||
| Fair Isaac UK International Holdings Ltd. | England and Wales | ||||
| Fair Isaac UK Investment Holdings LP | England and Wales | ||||
| FICO Middle East FZ-LLC | United Arab Emirates | ||||
| HNC Software LLC | Delaware | ||||
| Infoglide Software Corporation | Delaware | ||||
| myFICO Consumer Services Inc. | Delaware | ||||
EXHIBIT 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement Nos. 333-253828, 333-236948, 333-230061, 333-230059, 333-223492, 333-216171, 333-209761, 333-194231, 333-114364, 333-133268, 333-179417, 333-123751, 333-123750, 333-114365, 333-66348, 333-32398, 333-95889, 333-83905, 333-65179, 333-02121 and 333-102848 on Form S-8 of our reports dated November 7, 2025, relating to the financial statements of Fair Isaac Corporation and the effectiveness of Fair Isaac Corporation’s internal control over financial reporting appearing in this Annual Report on Form 10-K for the year ended September 30, 2025.
| /s/ Deloitte & Touche LLP | ||
| San Diego, CA | ||
| November 7, 2025 | ||
EXHIBIT 31.1
CERTIFICATIONS
I, William J. Lansing, certify that:
1.I have reviewed this annual report on Form 10-K of Fair Isaac Corporation;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: November 7, 2025
| /s/ WILLIAM J. LANSING | ||
| William J. Lansing | ||
| Chief Executive Officer | ||
EXHIBIT 31.2
CERTIFICATIONS
I, Steven P. Weber, certify that:
1.I have reviewed this annual report on Form 10-K of Fair Isaac Corporation;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: November 7, 2025
| /s/ STEVEN P. WEBER | ||
| Steven P. Weber | ||
| Executive Vice President and Chief Financial Officer | ||
EXHIBIT 32.1
CERTIFICATION UNDER SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned certifies that this periodic report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in this periodic report fairly presents, in all material respects, the financial condition and results of operations of Fair Isaac Corporation.
Date: November 7, 2025
| /s/ WILLIAM J. LANSING | ||
| William J. Lansing | ||
| Chief Executive Officer | ||
EXHIBIT 32.2
CERTIFICATION UNDER SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned certifies that this periodic report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in this periodic report fairly presents, in all material respects, the financial condition and results of operations of Fair Isaac Corporation.
Date: November 7, 2025
| /s/ STEVEN P. WEBER | ||
| Steven P. Weber | ||
| Executive Vice President and Chief Financial Officer | ||