Good afternoon, and thank you for attending FICO's third-quarter earnings call. I'm Dave Singleton, Vice President of Investor Relations, and I'm joined today by our CEO, Will Lansing, and our CFO, Steve Weber.

Today, we issued a press release that describes financial results compared to the prior year. On this call, management will also discuss results in comparison with the prior quarter to facilitate an understanding of the run rate of the business.

Certain statements made in this presentation are forward-looking under the Private Securities Litigation Reform Act of 1995. Those statements involve many risks and uncertainties that could cause actual results to differ materially.

Information concerning these risks and uncertainties is contained in the company's filings with the SEC, particularly in the risk factors and forward-looking statements portions of such filings. Copies are available from the SEC, from the FICO website, or from our Investor Relations team.

This call will also include statements regarding certain non-GAAP financial measures. Please refer to the company's earnings release and Regulation G schedule issued today for a reconciliation of these non-GAAP financial measures to the most comparable GAAP measure.

The earnings release and Regulation G schedule are available on the Investor Relations page of the company's website at fico.com or on the SEC's website at sec.gov. A replay of this webcast will be available through July 29, 2027.

Our quarterly investor presentation is available in the Investor Relations section of our website. We will refer to this presentation during today's earnings announcement.

I will now turn the call over to our CEO, Will Lansing.

Thanks, Dave, and thank you everyone for joining us for our third-quarter earnings call. With another strong quarter, we are increasing our fiscal 2026 guidance.

We reported Q3 revenues of $674 million, up 26% over last year, as shown on page 5 of our investor presentation. For the quarter, we reported $237 million in GAAP net income, up 30%, and GAAP earnings of $10.45 per share, up 41% from the prior year.

We reported $277 million in non-GAAP net income, up 31%, and non-GAAP earnings of $12.18 per share, up 42% from the prior year. We delivered free cash flow of $370 million in our third quarter.

Over the last four quarters, we delivered $961 million in free cash flow, an increase of 28% over the prior four-quarter period. In Q3, we returned significant capital to shareholders through share repurchases, with repurchase spending exceeding three times the historical record quarter.

Including our accelerated share repurchase plan, we bought back $1.96 billion or 1.705 million shares at an average price of $1,149 per share. At the segment level shown on page 6, Scores segment revenues in our third quarter were $459 million, up 41% versus the prior year.

While B2B Scores were the key driver of growth, we also experienced continued growth in B2C Scores. In our Software segment, we delivered $215 million in Q3 revenues, up 2% year over year.

Results included 66% platform revenue growth and a 25% decline in non-platform revenue. Steve will provide additional revenue segment-level details later.

Beyond the financial results, we continue to make meaningful progress against the strategic priorities that position FICO for long-term growth. With more than 70 years of innovation, FICO has been the trusted backbone of high-stakes decision-making, turning data into intelligence and intelligence into better business outcomes.

That leadership continued this quarter with the GSE release of the FICO Score 10 T datasets and UltraFICO general availability. Fannie Mae and Freddie Mac recently released expanded historical level datasets for FICO Score 10 T, enabling mortgage ecosystem participants to independently evaluate credit score performance using real-world GSE mortgage data.

Independent analysis by Milliman, a leading global actuarial and risk management firm, reinforced earlier findings, concluding that FICO Score 10 T outperforms Vantage 4 on all three key statistical measures of predictiveness and across every origination year studied, both individually and in aggregate. Milliman found that FICO Score 10 T delivers more than a 10% predictive advantage for first-time homebuyers and more than an 8% predictive advantage over Vantage 4 for the most recent origination years, an especially important cohort because it exhibits some of the highest default rates in the dataset.

FICO's predictive advantage is not driven by access to different data. FICO Score 10 T and Vantage 4 are built on the same underlying datasets.

The comparison of the models can be found in our investor presentation on page 10. The difference lies in FICO's decades of experience developing predictive credit risk models and how FICO transforms that data into a more accurate assessment of default risk.

That predictive advantage has meaningful implications across the mortgage ecosystems. For lenders and originators, a more predictive score enables better risk assessment, more confident lending decisions, improved portfolio performance, and the ability to responsibly expand access for borrowers.

For investors and capital markets participants, stronger default prediction supports more accurate risk measurement, pricing confidence, and ultimately a more resilient housing finance system. For consumers, it enables more precise risk-based pricing, broader access to credit, and better borrowing outcomes.

The FICO Score 10 T adopter program provides lenders with historical data and makes FICO Score 10 T available at no additional cost alongside classic FICO, enabling production testing and validation within existing workflows. Ecosystem participants actively opt in, and FICO works directly with them to evaluate and prepare for production deployment.

The program has grown to 70 lenders spanning both conforming and non-conforming mortgage markets. The program now represents about 55% of the volume generated by the top 50 mortgage originators, $587 billion in eligible annual originations based on 2025 HMDA data, and more than $1.87 trillion in eligible annual servicing.

Complementing the adopter program, FICO has expanded the technology infrastructure supporting FICO Score 10 T adoption. To further streamline implementation and deployment, FICO Score 10 T is now integrated into Optimal Blue's market-leading mortgage platform and LoanPass's automated product pricing and eligibility platform.

These integrations enable lenders to leverage the industry's most predictive credit score throughout the mortgage lifecycle, including loan eligibility, pricing, hedging, trading, and portfolio evaluation. This allows lenders to adopt FICO Score 10 T using the platforms and workflows they already rely on today.

Now, turning to UltraFICO, we recently announced the general availability of the next-generation UltraFICO score developed in partnership with Plaid. The new score combines the FICO Score with consumer-permissioned cash flow data from Plaid's network of more than 12,000 financial institutions, giving lenders a more complete view of credit risk on the same score scale they already use today.

Our initial target market for this score is subprime and near-prime consumers across card, personal loan, and auto lending. Our analysis shows that 79% of non-prime applicants with a history of positive account balances saw higher scores under UltraFICO, reflecting the score's ability to recognize positive financial behavior that isn't captured by traditional credit file data for this population.

We also found a 7% relative increase in approvals with no incremental risk and a 15% relative performance lift for prime applicants with limited credit histories, showing that predictiveness improves beyond what traditional credit scoring alone can capture. Since general availability began just this past May, we're still in the early days of adoption.

A pipeline of lender interest exists today, as we continue to build that pipeline, we expect to onboard clients for testing. Another strategic priority is the FICO Mortgage Direct Licensing Program, which is still under review by the GSEs.

This remains the key milestone for the program to go live and for lenders to realize cost savings through performance model pricing. Lender interest in the program remains strong, and we continue to expand reseller participation.

We've signed direct license agreements with partners and resellers representing about 60% of mortgage volume, and we're in active negotiations with the remaining material resellers that would bring us closer to 90% of mortgage volume once finalized. This past quarter, we hosted FICO World 2026, where customers and partners echoed a consistent theme: AI adoption is accelerating at an unprecedented pace, reshaping how businesses operate and how consumers interact with financial institutions.

Three structural forces are driving this shift: the need to operationalize AI at enterprise scale, rising regulatory demands for governance and explainability, and evolving customer expectations for personalized real-time decisions as AI agents emerge. For our customers, the real challenge is not investing in AI or experimenting with AI; it's turning their AI investments into business outcomes and measuring business value while keeping every decision governed, explainable, and auditable.

Customers are answering this challenge by integrating FICO Platform, the world's leading AI decisioning platform for the financial services industry, into their enterprise architecture and building their business solutions on FICO Platform. The FICO Platform is differentiated by a number of things.

First, FICO leverages 70 years of domain expertise in financial services. Second, FICO Platform benefits from proprietary datasets, such as our fraud consortium data spanning thousands of financial institutions.

Third, FICO Platform clients that leverage multiple use cases benefit from a compounding feedback loop that can create a more complete picture of the customer utilizing the always-on and always-available AI-powered customer profile engine. Fourth, our FICO Platform architecture enables responsible AI through decisions that are auditable, transparent, and explainable, allowing clients to more easily adhere to governance and regulatory requirements.

Fifth, FICO Platform decisioning capabilities are deeply embedded into enterprise workflows, delivering complex decisions in real time at scale in milliseconds and with a high degree of reliability. Our investments are focused on development and distribution of market-leading and differentiated intellectual property.

These include the development of FICO Platform and technology such as focused sequence models and focused language models. This requires limited capex as we leverage cloud providers for scalability.

We continue to deliver healthy year-over-year growth in bookings, ARR, DBNRR, and enterprise platform clients, demonstrating real-world value for our customers and tangible results from our investments. Our near-term focus has been on driving top-line growth, while our long-term focus is on driving margin expansion.

We've advanced two initiatives that will support these objectives. First, in July, we expanded our collaboration with Accenture by pairing the FICO Platform with Accenture's experience in risk, AI, and industry operations.

This partnership will help enterprises turn investments into real business results: faster decisions, stronger risk controls, and outcomes that hold up under regulatory scrutiny. Our immediate focus is go-to-market and enablement with a phased-in geographic rollout.

Second, later this calendar year, we anticipate the general availability of our next-generation FICO Platform, which includes our enterprise fraud solution. With incremental IP and expanded distribution, we anticipate greater penetration of FICO Platform within our current 500-named target accounts and an expansion of our operating market beyond those accounts.

I'll now pass this to Steve to provide further financial details.

Thanks, Will, and good afternoon, everyone. As Will mentioned, our Scores segment revenues for the quarter were $459 million, up 41% from the prior year.

As shown on page 17 of our presentation, B2B revenues were up 49%, primarily attributable to a higher mortgage origination score unit price. In the prior-year quarter, FICO recognized approximately $16 million on a multiyear US license renewal on our insurance score product.

Normalizing for that deal, Scores revenues were up 49% and B2B revenues grew 59%, respectively. Our B2C revenues were up 5% versus the prior year.

In our mortgage origination scores business, third-quarter volumes grew low single digit versus the prior year, while mortgage originations revenues were up 97% from the prior year. Mortgage origination revenues accounted for 71% of B2B revenues and 62% of total Scores revenues.

Auto originations revenues were up 15%, while credit card, personal loan, and other originations revenues were up 9% from the prior year. For your reference, page 18 of our presentation provides quarterly trending for Scores segment metrics.

Turning to our Software segment, our Software ACV bookings for the quarter were $29 million, as shown on page 19 of the presentation. On a trailing 12-month basis, ACV bookings reached $128 million this quarter, an increase of 39% from the same period last year.

We continue to see strong growth in our sales pipeline. Our total Software ARR, as shown on page 20, was $816 million, a 10% increase over the prior year.

Platform ARR grew 62% versus the prior year to $413 million and represented 51% of our total Q3 '26 ARR, while non-platform declined 17% to $403 million for the quarter. For the first time, platform ARR dollars exceed non-platform ARR dollars, marking an important milestone that reflects the successful execution of our long-term strategy and the returns we are realizing from our strategic investments.

Excluding migrations, platform ARR growth was in the mid-30% range, reflecting strong execution in new customer wins as well as expanded use cases and volumes from existing customers. In our non-platform business, ARR declined year over year, driven mostly by migrations and, to a lesser extent, end-of-life products.

Our dollar-based net retention rate in the quarter was 109%, platform NRR was 148%, while our non-platform NRR was 82%. Platform NRR was driven by a combination of new use cases, increased usage of existing use cases, and migrations.

Third-quarter Software segment revenues, detailed on page 21, were $215 million, up 2% versus the prior year. Within the segment, our SaaS revenues grew 21%, driven by continued strength in FICO Platform.

Our on-premises revenues declined 16%, driven by lower point-in-time revenue as we had fewer non-platform license renewal opportunities compared to the prior-year quarter. Our professional services revenues declined 24%, as the prior-year quarter includes revenue from the completion of a large deal milestone.

Normalizing for point-in-time revenue and professional services revenue, the Software segment revenues grew 10% versus the prior year. Platform revenues exceeded non-platform revenues for the first time in FICO history.

Year-over-year platform revenues grew 66%, driven by success in our land-and-expand strategy. Excluding migrations, platform revenues grew in the high 30% range.

Non-platform revenues declined 25%, driven by migrations and lower point-in-time revenue. As a reminder, platform and non-platform revenues exclude professional services revenues.

From a regional perspective, 91% of total company revenues this quarter were derived from our Americas region, which is the combination of our North America and Latin America regions. Our EMEA region generated 6% of revenues and the Asia-Pacific region delivered 3%.

Operating expenses for the quarter, as shown on page 22, were $312 million this quarter compared to $289 million in the prior year, an increase of 8% quarter over quarter, driven by marketing for FICO World and some personnel expenses. Our updated guidance includes fourth-quarter operating expenses that are modestly higher than in our third quarter due to incremental front-end loaded marketing expenses to support the launch of our new partnership with Accenture, as well as some anticipated one-time restructuring charges.

Our non-GAAP operating margin, as shown on page 23, was 62% for the quarter compared with 57% in the same quarter last year. We delivered year-over-year non-GAAP operating margin expansion of 479 basis points.

The effective tax rate for the quarter was 24.6%. We expect a full-year operating tax rate of 25% to 26% and an effective tax rate of around 24%.

At the end of the quarter, we had $305 million in cash and marketable investments. Our total debt at quarter-end was $5.58 billion with a weighted average interest rate of 5.64%.

This includes the June issuance of a $1.5 billion term loan to fund the accelerated share repurchase. As a result, we expect fourth-quarter interest expense to be higher than in the third quarter.

As of June 30th, 2026, 60% of our debt was held in senior notes, while 40% of our debt was held in term loans or a balance on our revolving line of credit, both of which are repayable at any time. As Will highlighted, we had a record quarter for returning capital to our shareholders through buybacks.

As shown on page 25, in Q3, we repurchased 1.705 million shares for a total cost of $1.96 billion. In the near term, we will be using cash to pay down debt; beyond that, we continue to view share repurchases as an attractive use of cash.

With that, I'll turn it back to Will for his closing comments.

Thanks, Steve. Elevated interest rates and ongoing affordability challenges continue to weigh on the mortgage market, keeping loan originations below historical norms.

While the macro environment remains fluid, our strategy, innovation, and execution remain disciplined and consistent. I'm quite pleased to report that today we're raising our full-year guidance as we enter the fourth quarter.

As shown on page 26 of our presentation, revenue guidance is now $2.53 billion, an increase of 20% versus prior year. GAAP net income guidance is now $850 million, with GAAP earnings per share of $36.86, an increase of 30% and 39%, respectively.

Non-GAAP net income guidance is now $979 million, with non-GAAP earnings per share of $42.43. Those are increases of 33% and 42%, respectively.

With that, I'll turn the call back to Dave and we'll open up for Q&A.

Thanks, Will. This concludes our prepared remarks, and we're now ready to take questions.

Operator, please open the lines.

Thank you. Good evening, guys.

I just had a question on the DLP program that you said is under review by the GSEs. I believe one of them had already signed off, just trying to appreciate why or what the next steps for the other one are.

Then, with respect to that, you talked about the signed agreements with 60% resellers representing 60% of the US mortgage volumes. Are they also interested specifically in the performance fee model, just looking for that incremental color?

Yes. With respect to the DLP, not a lot of new news.

We're literally waiting on certification from one of the GSEs so that we can go live. The operational stuff is all set up, ready to go.

As we've pointed out, we have agreements already covering 60% of the reseller volume. We are also very close to signing two additional resellers.

We're literally waiting for their okay. In terms of interest from the resellers in the performance model, yes, there's significant interest in the performance model.

They are anxious to get it out into the marketplace. We think it's going to be very beneficial.

Okay. Then, just on the release of the 10 T data, just curious, I don't know if you guys have had any feedback worth sharing from the industry or your clients in terms of that versus the other alternatives out there.

Thank you.

They now have an opportunity to test the 10 T data, as provided by the GSEs. Although we'd like to see 10 T approved sooner rather than later, there is kind of an elapsed time between releasing the data and doing the analysis and then approving 10 T.

There's a lot of interest. As you know from my earlier remarks today, third parties like Milliman and others have done the analysis, and 10 T is more predictive than Vantage, pure and simple.

There's a lot of market demand for it.

Hey, good afternoon and thanks for taking my questions. As there's now some data out there that shows VantageScore gaining some share in the MBS market.

I'm curious from the lenders that are in that pilot program, are you seeing them drop FICO pulls at any point in the mortgage process, or are they simply pulling the same number of FICO scores and just also adding in a VantageScore and then maybe when it's time to submit that loan to the GSE, they're submitting with a VantageScore? Thank you.

Yeah.

Jason, that's a very good question. To take a step back, you know that we're not crazy about lender's choice as a policy.

We think it's bad policy because it encourages gaming. That's the primary reason that one might consider buying a VantageScore is to try to deliver to a consumer a better rate when some of the time the VantageScore produce is higher than the FICO Score.

We knew that gaming was going to happen, and that's what we're seeing is that it is happening. To your specific question, are we seeing volume loss?

No, we are not, which suggests that they're pulling both scores. You have to pull both scores if you're trying to do the gaming.

You need both scores to figure out which one is going to deliver bigger benefits to the consumer. There's not a lot of surprise in what we're seeing.

You got a two-score system which has its own kind of structural problems. You have the gaming that you would expect.

You have the most sophisticated biggest players experimenting with it. I guess the thing to remember is you need to pull both a FICO Score and a VantageScore if you're going to do the gaming.

A VantageScore by itself doesn't really get you there. I guess just to round it out, we're not seeing volume loss.

I don't think it's instead of. The VantageScore is additive to the market.

Makes the market bigger.

Got it. That's very helpful.

That all makes sense. Can you also just comment on the mortgage originations revenue growth decelerated on a year-over-year basis.

It was also down quarter over quarter. I'm sure part of it was just mortgage volume being a bit softer in 3Q, I assume that was the case.

Any other comments on what's driving that? I don't know if you could give us any sort of framework for how to think about 4Q, just a level-set expectations here.

Thanks.

That's a great question. If you look on a year-over-year basis, we were up we said low single-digit volumes, which I think is pretty much in line if you take all the bureaus together and average them, that's probably what you'd get, or take them as a total total universe.

I think what we're what we're seeing is, similar volumes to what the bureaus are seeing. There definitely was a slowdown as the bureaus talked about as well.

As as rates tick up, the volumes do slow down. That that's what happened there on the on the year-over-year basis, and that's also what caused the quarter quarter over quarter.

Again, it's it's really just about the the slowdown in the mortgage market as rates crept up.

A follow-up on the last question. Maybe this is just rehashing old news.

The 127% growth that you had last quarter, it was always hard to get there based upon market volume and based upon a $10 versus $4.95 price. Was there anything else that was inflating that number, or is there anything like timing, I know it's an annual calendar year rate card, but anything on when timing of the pricing actually took effect last year versus this year, anything like that?

I think there's some of the timing piece, and I think there's some of how maybe our quarter cut-off versus what the bureau quarter cut-offs are. When you have markets that are moving very rapidly, when rates are moving, every week could have different kind of volumes.

I think you might see some of that. We don't have access to their underlying data that they report, I can't tell you.

All I can tell you is the scores that were pulled by us on a year-over-year basis and what we charge for them. That's really it.

I think the shorter you parse apart the segments, if you get down to week by week, it's probably even less or month by month, there's less correlation, and especially when the markets are moving like they are. Over time, it all works out.

There are some quarters here and there where you see anomalies like last quarter was.

Okay. That's it.

Thank you.

Hi. Thanks for taking my question.

I was wondering, Will, you mentioned that, of course, you're not seeing any volume loss. I'm just wondering, given you are pretty much all of the market, how easy is it for you to actually monitor any sort of evidence of volume loss in that regard?

It's not that easy. Honestly, it's not that easy.

Relative to our forecasts and expectations, we're not seeing it.

I think you can see that in our numbers for the full quarter that we just did. The volumes we saw are pretty much aligned with the volumes that the bureaus reported on a year-over-year basis.

We're pretty confident in that.

We try and get it on a lot of different factors. We see public mortgage data.

We try to triangulate as much as we can. We're not going to have exact numbers, but we're pretty confident that what we're seeing is representative of what's happening.

Great. Thanks.

Just following up on the other segments, the auto, card, and personal loans, could you just give us a bit of color as to how things are progressing there in terms of your sort of pricing initiatives, testing, elasticity of the market, et cetera? Thanks.

Yeah. It's obviously early in the year for us to be suggesting where the pricing will go for next year.

As we are constantly exploring where and how to get revenue growth. Each year, we get a little bit better at getting more precise, more surgical, identifying the pockets where it creates the least amount of pain, has the least amount of market reaction.

We're obviously working our way through those things this year as we always do. No final decisions have been made about any of the sectors, frankly, about mortgage or auto or card or personal.

It's early days. Yes, lots of analysis going on.

Our pricing team, our strategy team are working on all these things. Really nothing to share with you right now.

Thank you. Just switching gears over to platform, can you maybe talk about just the next-generation platform, and just the client conversations you're having in terms of the uptake?

Obviously, it seems like there's some clients that are moving from non-platform to platform as well. Just any color on the dynamics.

Is that something that we should just expect to accelerate as more features, functionality, and GA go forward, or how should we think about that?

Yes, that's exactly what you should expect is for it to continue to accelerate. We've got tremendous interest and tremendous uptake.

You can see in our numbers tremendous platform growth. We do continue to release into the market new features and functionality that just increase the use cases and, with that, the utility of the platform because it's all, as I said earlier, it's reinforcing.

The more use cases you have on the platform, the more value you get out of it, the lower cost it is to bring on additional functionality. Our whole land-and-expand strategy is built around that.

It's like get started and then work with our customers to get the full benefit out of it. We absolutely see more growth.

I guess just following on from that, now that platform is larger than non-platform, and you're also seeing some volatility from the licensing component, would you start considering end of life certain products at this point or how do we think about that? Understanding the strategy here,

so. Absolutely.

We've talked in the past about our end of life and our migration strategy, and in quarters past, what we've said is that we're not forcing migration, we're not cannibalizing legacy to achieve growth in the new platform. That remains true.

However, there's a tremendous benefit to FICO in simplifying our product set, our catalog. We have some products that are old in the tooth that really should be end of life.

We're finally getting around to doing it. We have the capacity to move our customers on those older products to newer, better products that are going to wind up, well, to the platform and to the functionality they get with the platform, and they'll be able to get more functionality at a lower cost.

Long answer to your question, but yes, we have an active end-of-life strategy that we're working through.

Thanks for taking my question. I just wanted to follow up on that earlier question around the VantageScore market share in conforming loans.

If we look at some of the bigger players there, particularly UWM and Rocket, the market share for VantageScore seems to be closer to 20%. I understand it's both pulls initially, but are they still using both pulls when they close the loan, and also the pace of adoption, how does that compare to what your expectations were?

Any thoughts around what FICO can do to regain the market share? Thanks.

Yeah. I I think, first of all, we have a week of numbers that have a two handle on them, okay?

That so, it will take some time for us to really digest and see what the steady state is. That said, we don't anticipate a lot more than the 20s or we don't anticipate more than the 20s for Vantage share because, as I said earlier, it's really tied to the gaming.

When you do the math on what percent of the time a consumer is advantaged by using a higher VantageScore than a FICO Score, that that number, which in our minds represents a theoretical maximum, is in the 20s. I, I think we'll just have to wait and see how things play out.

I think it is a reality that Vantage is is selling scores and is or or sending them along with FICO scores, I should say. The and gaming is a reality, and we're going to have gaming.

That that the the rules the rules of the road, the environment that we're operating in is a gaming environment. The FHFA has put it in place, the GSEs have accepted it, and so that's the world we have.

I, I think we can we should all do our own math, but I can tell you our math says that the the number is in the 20s.

That's very helpful color. From a pricing strategy perspective, is there things that FICO can implement to help influence that going forward, or does that change your pricing strategy for '27 or going forward?

Thanks.

Of course there are many, many things that FICO can do, and we're not in a position to share them on this call. Of course we have a lot of work going on in the strategy for everything we do: for how we monetize our IP, for how we set our prices, for what features and functionality we put in the products.

All of that is on the table, and so we have lots of degrees of freedom in how to respond.

Yes. Hi, thank you.

First, I just wanted to ask about the revenue guidance raise, cuz it seems like it was pretty significant relative to what it should be this quarter, and so I'm wondering if there's anything out of the ordinary, maybe you're expecting some licensing revenues in the fourth quarter or maybe you had previously assumed the direct program would come through and that might cause a lag in revenue. Just a bit more color on what led to the revenue guidance raise.

I think it's more the latter. We had planned that if the DLP was to go live with the performance piece, that we would push more revenues out, so, as the year goes along, that hasn't happened yet.

There's that piece. I think frankly, actually the mortgage market has been better than what we had originally guided to, and our volumes are better than what we had originally guided to.

There were a lot of concerns about rates, and rates haven't gone down, but they haven't gotten worse. The mortgage market's held up fairly decently.

For a period of time, it actually popped a little bit, but now it's back to kind of low single-digit growth. That's really where it's coming from.

Understood. Thank you.

Then just to follow up on the Vantage pilot, I guess with 10 T sort of in the picture now, how are you thinking things will evolve? Are you anticipating a separate pilot for 10 T?

Would lenders pull kind of all three scores for gaming purposes? Just curious on how you expect things to evolve from here.

That's a great point, Faiza. It really is, because if we have a three-score market, then there's an incentive to pull all three scores and see which one produces the best outcome for the consumer.

How it will actually shake out, it's hard to say. It's hard to imagine retiring classic not anytime soon.

Most likely 10 T will come into the mix and you'll have classic and Vantage and 10 T. You're absolutely right.

That's kind of a score shopping environment.

Sorry, just to follow up on that. Would 10 T be an additional price or would you offer it for free alongside FICO classic?

As today, we have a tremendous amount of volume in our 10 T pilot program, right? 55%, I said earlier.

So, 10 T is increasingly being used. 10 T is the most predictive score.

If you care about credit risk, 10 T is the answer. If you care about gaming, 10 T might be the answer some of the time, classic might be the answer some of the time, and Vantage might be the answer some of the time, and that's a gaming world.

In terms of how we price it and how we bundle it, today, as we bundle 10 T with classic, and if you pay for classic, you get 10 T free. I would imagine we would continue to do something like that because we want to encourage adoption.

That said, we have not made final pricing decisions. Everything's on the table.

One could easily imagine a revenue jump at FICO if we were to charge separately for the two, but that's not the current plan. The current plan is more of continuing with the bundle as we have it today.

Hey, guys. Hope you're well.

We'll start with the 10 T question, of course. There have been a bunch of analyses out there of classic FICO versus Vantage and whether or not there is a meaningful coupon differential.

Obviously, when you look at one VantageScore at a certain given number, say at an 800, of course there's a differential versus a FICO at 800 for a mortgage loan given the presumably shadow LLPA grid that exists for them. Then when you correct for those sorts of factors, it seems that a lot of the spread goes away, at least by some of our team's analysis.

How do you think about the mortgage level and then the pool level spreads for firms that are using the competitor score?

That's a great question, and frankly, I'd refer you back to your own MBS traders to really get the insights there. As a matter of theory, there's a lot less history with Vantage.

Vantage has never been through a down cycle. There's more uncertainty around it.

Investors, if they're rational, should penalize paper that's not as well understood. That's the theory behind the 30 basis point estimate that we've kind of talked about in the past.

How it will really shake out is hard to say. It really kind of depends on the rationality of the market.

Now, today, Vantage is such a small part of the market that it's not clear that any of it is really providing real signal. As what has been securitized with Vantage is largely mixed in to much bigger FICO pools.

I would just encourage you to talk to your traders and see what they say. They are rational, and so as they dig into this, well, I think we ought to see the differential appear.

All right, thank you. Then maybe thinking about the monetization across the Scores business holistically, Will, obviously, there's a price point for the FICO in mortgage applications.

There are entire pools of the market where I think you guys would say you're pretty under-monetized and even under-penetrated. Rental comes to my mind, but maybe something else comes to your mind, overseas perhaps.

How are you thinking about maybe at some point, the mortgage market does reach an equilibrium on FICO pricing, I don't know when it is, but how are you thinking about the next leg or future legs of monetization for Scores holistically and what might that look like?

I very much appreciate that question because too often people think about our Scores IP as being single-threaded through mortgage, and yes, obviously, we have a lot of mortgage concentration, but we do have a lot of opportunity in other verticals and we have a lot of opportunity with new scores that rely on different datasets that can score new populations and provide new avenues for us to make money. We're working on all those things.

I mentioned UltraFICO and our partnership with Plaid. UltraFICO is a next-generation score.

It's a consumer-permissioned score that captures everything that you get today in a FICO Score, the credit file data and everything, all the caloric value that you get out of the credit file, but it augments it with cash flow data. When you do that, you get much better insights.

That's very much a next-generation score. It's not widely adopted.

We're just getting going now, and the adoption curve for new scores, it can take four years for a new score to really get established. We are very much driving ahead with UltraFICO 2.

There's an UltraFICO 3 that's being readied that has some additional functionality. That's one example.

There's also FICO 11 in the lab. We're constantly innovating, constantly trying to figure out how are we going to get a little more signal.

There really are limits to how much more signal you can derive from the credit file. It's been pretty well picked over, and so we tend to focus on other datasets to get more predictive power.

Great. Good afternoon.

Thank you for taking the questions. Want to just start off on the DLP program.

I know gaming has come up several times in this call already, but I guess just how have those conversations with potential lenders gone? I guess do you think there might be any slowdown in adoption from that by people that are gaming given that, at least right now, if they buy from the bureaus, they can get the VantageScore for free and save the buck?

I guess just any thought on if gaming would impact the adoption curve on DLP would be good.

Yeah. It's a good question.

We don't think so. We think that the benefits of the performance model with DLP are pretty significant from a cost standpoint.

What it really does is encourages more customer acquisition, more speculative effort to identify potential borrowers. It broadens the market.

It create more access. It does all those kinds of things which are very desirable to the big lenders.

We see continued interest in it, and I don't think the gaming is going to put any kind of a damper on it.

Okay. That's helpful.

Thank you. Then I guess just a quick follow-up on capital return.

Obviously, good to see the ASR, big signal. I think you guys have said a couple times now that kind of prioritizing leverage reduction in the near term.

I guess should we interpret that as that you'll likely be more or less totally out of the market for the next couple quarters or any color there on how much you guys want to prioritize and for how long you guys will be prioritizing debt versus incremental buybacks?

We drive I mean we have a lot of free cash flow, we delever pretty quickly. We'll see.

We'll update you next quarter on what it looks like then, and we'll determine where we're at. It's probably not likely we're going to buy any, shares, additional shares beyond what's already in the ASR this quarter.

Then, when we give our next quarter results, we'll we'll talk about where we are there and, because we do delever pretty quickly. This this this is an acceleration certainly of our buyback, but you've also seen our, our EBITDA and our cash generation grow pretty dramatically.

We we're delivering delevering even quicker than we normally would.

Hi, thanks. Good afternoon.

You're on the cusp of having your 10 T score go live pending DLP approval. Can you share feedback you've received from lenders on 10 T's pricing, including the funding fee component?

We have explored the performance model and the funding fee component with lenders. As you can imagine, there's some like it and some don't like it so much.

We know that there's appetite for it. I think that is one of the driving forces behind DLP adoption will be the opportunity to get the funding fee model and performance model.

Is it for everyone? No, not everyone will love it.

Particularly if you don't pull many scores per closed loan, it's less attractive. That kind of goes without saying.

Got it. Very helpful.

Thank you.

Hey, thank you so much. Just on the Software business, was wondering if you could talk about the retention rate dynamics.

Is that the best way to think about that, just land and expand? Then on the ACV bookings, are you still expecting those to accelerate in 2H versus 1H?

Thank you.

In reverse order, bookings, yes, we see continued acceleration. The first part of your question is, yeah, land and expand is very much our strategy.

You see it in the DBNRR. We are doing a little more migration now than we were, say, three or four quarters ago.

Some of our CCS business is migrating. There's a bit more migration, and that's why you saw the legacy retention rate go down.

On balance, we're pretty happy with the way it's all playing out. 146% DBNRR on the platform business, and that being now the bigger half of our business, that's pretty good.

We have very, very low churn.

Thank you. For the follow-up, just on the recent trigger lead legislation, we heard that shook things up between the pre-qual market and the hard inquiry market.

Was just wondering to what extent that impacted the mortgage volume side of your business.

We haven't seen a lot. There's a little.

We notice a bit, but I wouldn't say anything dramatic.

Hi, good afternoon. Thank you for taking my questions.

Going back to Software, you mentioned booking was strong, platform ARR growth accelerated, but non-platform was weak. Should we expect this kind of divergence continue?

Because the delta was pretty high. I'm just thinking about how to think about this going forward.

Yes. The short answer is yes.

We had held off on migrating legacy to platform for many, many quarters, partly because we didn't have the capacity to handle it on the new platform. We were so busy bringing on new customers.

Again, kind of going back to one of the earlier questions about end of life, there really are some legacy offerings that ought to be wound down over the next several years. We're actively doing it, and we're going to give our customers a better alternative on the platform.

Yes, I would say you will continue to see the divergence that you're seeing right now. We don't think it's a bad thing.

As long as on balance, we're going up, I think we're pretty happy. We will have continued migrations.

We have a plan for migrations. We have a team that makes sure that they go smoothly.

All that said, I don't want you to get the impression that the growth in platform is being driven by us cannibalizing the legacy, because the truth is our pipeline is growing. It's expanding, it's growing, the land-and-expand strategy works, and we have a lot of new.

Unlike a year ago, two years ago, some amount of the platform growth is coming from migration.

Got it. That's helpful.

Then quickly on the VantageScore pilot program, I'm wondering if 10 T is actually dependent on the VantageScore pilot, or there's a path to run both in parallel? If 10 T is further delayed, how would that impact the implementation of other FICO score you just mentioned, like UltraFICO 2 or FICO 11?

Thanks.

Obviously, the FHFA and the GSEs are going to have to decide when they approve 10 T. It's approved, but when they accept it, right?

That's on them, and that's their schedule. That said, we know that 10 T is absolutely the best score in the world for measuring credit default risk.

You're seeing it in the non-conforming market. You're seeing tremendous adoption of 10 T in the non-conforming market.

To the extent people care about credit default, 10 T is the answer. When the GSEs and the agency side decide that they want to mix that in is up to them.

I think that they are actively working on it. I think they want it out there.

It's going to take a certain amount of time for them to get comfortable. They just released the data, it's going to take them a little while.

Hey, good afternoon, guys. Thank you for taking my question.

Just one for me on the direct license program and in terms of the remaining resellers that are still out there to be signed up. Just wondering if you can give us kind of an update on where the process stands with those two, and maybe what's unique about them that's maybe taking a little bit longer.

Thanks.

We have two big ones that are signed. We have two big ones that are almost signed, very, very close.

Then we have the tail. That's where we stand.

We're pretty close.

Oh, thank you.

Hi, thanks for taking my questions. On Software, I was wondering how impactful partnerships like Accenture are for platform growth?

Does it significantly help FICO Platform's customer reach, and is there any particular type of customer that you're targeting in terms of geography or size?

Sean, thank you for that question. We have talked for many years about FICO's challenge in distribution.

We're IP-rich and distribution-poor. We've always had so much more IP than we can sell with our direct sales force.

It's not quite as true today as it was in the past, but still true. For several years now, we've been very focused on how do we partner with SIs who can take our IP to market with us, for us, different approaches.

We are super pleased to now be in this significant strategic partnership with one of the top SIs in the world where they're going to be going to market with us with our IP and their capabilities. They have relationships that we don't have.

We have relationships and can send work their way. It's really truly a strategic partnership for both of us.

We're super excited. I think it's the beginning of seeing the indirect side of our business grow.

I think you're going to see increasingly we'll wind up monetizing our IP through partners and not just through our direct sales force.

Got it. That's great to hear.

Then the platform net retention rate has really inflected positively this year. Is it partially due to AI and FICO's capabilities there, or are there certain platform products that are growing significantly faster than other ones?

Oh, sorry. I was saying is with the net retention rate of platform, in its trajectory, is it partially due to AI and FICO's capabilities there, or are there certain platform products that are growing significantly faster than others?

I would say yes and no. It's not yet because of AI, although we have lots of AI coming in the platform.

I'd say that the platform growth we have right now reflects the current state of the platform and the functionality and capabilities that we can bring to our customers with what we have today. They get immediate payback.

They're up and running very fast, they get immediate payback from it. The AI enhancements to the platform, if you want to call them that, are coming.

They're close. Will that result in an uptick in platform growth?

I don't know. It's certainly going to continue the growth.

There's a lot of appetite for it. We've got all kinds of great AI-driven capabilities for our customers who are on the platform.

Great, thanks so much.

terrific. Thanks so much.

Will, maybe just a question for you just following up on all the commentary in terms of gaming, potential gaming in the system. I guess anything you're seeing anecdotal whether it be discounts placed on Vantage-securitized loans, maybe that's a little hard to see because of commingling, but just anything else that suggest or that's occurring in the market?

I'm not sure I know how to interpret that question. We know that there's gaming.

We expected gaming, we're seeing gaming. We think there's a limit to how big gaming can get.

The anecdotal is what you see with Rocket and UWM. That would be your anecdotal evidence of how much is happening and who's doing it.

It is a reality that there will be gaming. The structure that's been put in place invites lenders and originators to score shop.

They will.

Okay. Thank you.

Great, thank you. First, want to ask on the performance model, given that we're almost into August here, just talk a little bit further about just the usage of it out there, the feedback that you're getting.

Where are we at on that right now, please? Yes,

just to be clear, the performance model is when is to be distributed through the direct license program with the resellers. That program is not yet live.

We thought we'd be live months ago, but it's not yet live because it's waiting on a certification from one of the GSEs. I can't speak to usage of the performance model because it's not available yet.

It's it's it's theoretical until until it gets certified. That said, are we hours away, days away, weeks away?

This isn't that hard a thing to do. The market wants the model.

It gets us, we're happy because it gets a lower price point out to the market, it makes us more competitive. The lenders who want it really want it.

The resellers want it. I, I think that we're in a waiting game here to to, get certified.

There's really no commentary you can give on the non-conforming part of the market for the usage of it? Is that all tied to the conforming piece, there's not really much uptake there either, they're just all a waiting pattern?

We have not offered it. Just to be clear, we have not offered it there.

It is to be offered through the direct license program, and that is not live yet. Okay.

My other question on the Software side, just wanted to understand this a little bit better. Obviously, your Software revenue in aggregate was up 2%.

Your on-premise and SaaS software up called 5% year-over-year. Your costs look like they're up about 12% year-over-year, similar cost growth to the March quarter.

Just what's going on there with the cost growth significantly outpacing the revenue growth?

There's a couple pieces there. On the revenue side, we have a lot less point-in-time revenue, significantly less point-in-time revenue.

That's essentially lumpiness. There's still a little bit of that lumpiness in the model.

We have less of it than we had in the past, and we'll have less going forward. There's that piece.

Then this quarter, we had a pretty significant uptick from FICO World, which was a bigger event than what we had last year. Then we had some other kind of AWS that is increased too as the SaaS piece has gone up.

We've done some investing on that side. We've done some investing and you're going to see the margin growth probably next year.

You'll start to see some growth off of that, but there is some lumpiness on the software point-in-time side that will give you some lumpiness in the margin.

Good evening. Thanks for taking my question.

Even with the DLP, the credit bureaus are likely to remain large customers for FICO. I'm just wondering if you can comment on how your relationship with them has evolved over this process and where you stand now.

Thank you.

That's a great question. We get along great with the bureaus.

They are our partners. We get a lot of revenue from them.

They are channel partners for our Scores IP. We sell into lots of other verticals with them, and it's been a strong, healthy relationship.

Then particularly with Experian, we have a big consumer business together. I would say healthy and strong relationship.

At the same time, we're now competing in mortgage scores, and that's not a secret. We're obviously doing it.

They've been pushing Vantage for 20 years, and now they're finally getting a little bit of traction in mortgage because of the lender choice program. Is that a thing that stands between us and being the best of friends?

Yes. I would say the relationships are strong, healthy, and we will compete in this space.