Item 1. Unaudited Financial Statements

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Item 1. Unaudited Financial Statements

FAIR ISAAC CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


	March 31, 2025		September 30, 2024
	(In thousands, except par value data)
Assets
Current assets:
Cash and cash equivalents	$	146,641	$	150,667
Accounts receivable, net	492,542		426,642
Prepaid expenses and other current assets	85,727		40,104
Total current assets	724,910		617,413
Marketable securities	45,400		45,289
Property and equipment, net	50,552		38,465
Operating lease right-of-use assets	27,572		29,580
Goodwill	779,279		782,752

Deferred income taxes	99,674		86,513
Other assets	108,366		117,872
Total assets	$	1,835,753	$	1,717,884
Liabilities and Stockholders’ Deficit
Current liabilities:
Accounts payable	$	24,059	$	22,473
Accrued compensation and employee benefits	76,511		106,103
Other accrued liabilities	55,892		79,812
Deferred revenue	171,780		156,897
Current maturities on debt	15,000		15,000
Total current liabilities	343,242		380,285
Long-term debt	2,513,179		2,194,021
Operating lease liabilities	20,816		21,963
Other liabilities	82,568		84,294
Total liabilities	2,959,805		2,680,563
Commitments and contingencies
Stockholders’ deficit:
Preferred stock ($0.01 par value; 1,000 shares authorized; none issued and outstanding)	—		—
Common stock ($0.01 par value; 200,000 shares authorized, 88,857 shares issued and 24,352 and 24,392 shares outstanding at March 31, 2025 and September 30, 2024, respectively)	244		244
Additional paid-in-capital	1,251,784		1,366,572
Treasury stock, at cost (64,505 and 64,465 shares at March 31, 2025 and September 30, 2024, respectively)	(6,490,817)		(6,138,736)
Retained earnings	4,216,013		3,900,870
Accumulated other comprehensive loss	(101,276)		(91,629)
Total stockholders’ deficit	(1,124,052)		(962,679)
Total liabilities and stockholders’ deficit	$	1,835,753	$	1,717,884

See accompanying notes.

FAIR ISAAC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(Unaudited)


	Quarter Ended March 31,				Six Months Ended March 31,
	2025		2024		2025		2024
	(In thousands, except per share data)
Revenues:
On-premises and SaaS software	$	183,826	$	177,180	$	369,837	$	345,848
Professional services	17,870		19,744		36,152		41,023
Scores	297,039		236,885		532,714		428,997
Total revenues	498,735		433,809		938,703		815,868
Operating expenses:
Cost of revenues	87,630		86,946		174,975		170,407
Research and development	45,037		40,880		90,182		83,515
Selling, general and administrative	120,420		110,867		248,370		215,196
Amortization of intangible assets	—		275		—		550


Total operating expenses	253,087		238,968		513,527		469,668
Operating income	245,648		194,841		425,176		346,200
Interest expense, net	(31,378)		(26,093)		(60,866)		(50,255)
Other income (expense), net	(1,254)		3,986		(1,165)		7,379
Income before income taxes	213,016		172,734		363,145		303,324
Provision for income taxes	50,401		42,935		48,002		52,460
Net income	162,615		129,799		315,143		250,864
Other comprehensive income (loss):
Foreign currency translation adjustments	6,407		(4,157)		(9,647)		4,546
Comprehensive income	$	169,022	$	125,642	$	305,496	$	255,410
Earnings per share:
Basic	$	6.67	$	5.23	$	12.92	$	10.12
Diluted	$	6.59	$	5.16	$	12.73	$	9.96
Shares used in computing earnings per share:
Basic	24,389		24,819		24,383		24,791
Diluted	24,685		25,154		24,756		25,186

See accompanying notes.

FAIR ISAAC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(Unaudited)


	Common Stock			Additional Paid-in-Capital		Treasury Stock		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Deficit
(In thousands)	Shares	Par Value
Balance at December 31, 2024	24,443	$	244	$	1,201,828	$	(6,285,951)	$	4,053,398	$	(107,683)	$	(1,138,164)
Share-based compensation	—	—		41,704		—		—		—		41,704
Issuance of treasury stock under employee stock plans	21	1		8,252		2,143		—		—		10,396
Repurchases of common stock	(112)	(1)		—		(207,009)		—		—		(207,010)
Net income	—	—		—		—		162,615		—		162,615
Foreign currency translation adjustments	—	—		—		—		—		6,407		6,407
Balance at March 31, 2025	24,352	$	244	$	1,251,784	$	(6,490,817)	$	4,216,013	$	(101,276)	$	(1,124,052)

	Common Stock			Additional Paid-in-Capital		Treasury Stock		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Deficit
(In thousands)	Shares	Par Value
Balance at December 31, 2023	24,879	$	249	$	1,239,131	$	(5,380,827)	$	3,509,124	$	(93,442)	$	(725,765)
Share-based compensation	—	—		35,448		—		—		—		35,448
Issuance of treasury stock under employee stock plans	18	—		6,998		1,566		—		—		8,564
Repurchases of common stock	(144)	(1)		—		(179,548)		—		—		(179,549)
Net income	—	—		—		—		129,799		—		129,799
Foreign currency translation adjustments	—	—		—		—		—		(4,157)		(4,157)
Balance at March 31, 2024	24,753	$	248	$	1,281,577	$	(5,558,809)	$	3,638,923	$	(97,599)	$	(735,660)

	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, 2024	24,392	$	244	$	1,366,572	$	(6,138,736)	$	3,900,870	$	(91,629)	$	(962,679)
Share-based compensation	—	—		82,358		—		—		—		82,358
Issuance of treasury stock under employee stock plans	151	2		(197,146)		14,676		—		—		(182,468)
Repurchases of common stock	(191)	(2)		—		(366,757)		—		—		(366,759)
Net income	—	—		—		—		315,143		—		315,143
Foreign currency translation adjustments	—	—		—		—		—		(9,647)		(9,647)
Balance at March 31, 2025	24,352	$	244	$	1,251,784	$	(6,490,817)	$	4,216,013	$	(101,276)	$	(1,124,052)

	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, 2023	24,770	$	248	$	1,350,713	$	(5,324,865)	$	3,388,059	$	(102,145)	$	(687,990)
Share-based compensation	—	—		67,022		—		—		—		67,022
Issuance of treasury stock under employee stock plans	205	2		(136,158)		17,307		—		—		(118,849)
Repurchases of common stock	(222)	(2)		—		(251,251)		—		—		(251,253)
Net income	—	—		—		—		250,864		—		250,864
Foreign currency translation adjustments	—	—		—		—		—		4,546		4,546
Balance at March 31, 2024	24,753	$	248	$	1,281,577	$	(5,558,809)	$	3,638,923	$	(97,599)	$	(735,660)

See accompanying notes.

FAIR ISAAC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended March 31,
	2025		2024
	(In thousands)
Cash flows from operating activities:
Net income	$	315,143	$	250,864
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	6,950		6,178
Share-based compensation	82,358		67,022
Deferred income taxes	(12,781)		(13,041)
Net (gain) loss on marketable securities	3,174		(6,727)
Non-cash operating lease costs	5,213		6,772
Provision for doubtful accounts	990		838

Net loss on sales and abandonment of property and equipment	70		408
Changes in operating assets and liabilities:
Accounts receivable	(66,718)		(72,661)
Prepaid expenses and other assets	(43,213)		(12,490)
Accounts payable	1,796		(579)
Accrued compensation and employee benefits	(28,183)		(34,170)
Other liabilities	(14,016)		(5,049)
Deferred revenue	18,132		5,790
Net cash provided by operating activities	268,915		193,155
Cash flows from investing activities:
Purchases of property and equipment	(2,960)		(5,403)
Capitalized internal-use software costs	(13,638)		(5,380)
Proceeds from sales of marketable securities	1,495		15,571
Purchases of marketable securities	(4,780)		(16,828)



Net cash used in investing activities	(19,883)		(12,040)
Cash flows from financing activities:
Proceeds from revolving line of credit and term loans	450,000		255,000
Payments on revolving line of credit and term loans	(132,500)		(74,500)



Payments on finance leases	(3,016)		(1,400)
Proceeds from issuance of treasury stock under employee stock plans	16,062		14,937
Taxes paid related to net share settlement of equity awards	(198,531)		(133,786)
Repurchases of common stock	(379,738)		(243,473)
Net cash used in financing activities	(247,723)		(183,222)
Effect of exchange rate changes on cash	(5,335)		996
Decrease in cash and cash equivalents	(4,026)		(1,111)
Cash and cash equivalents, beginning of period	150,667		136,778
Cash and cash equivalents, end of period	$	146,641	$	135,667
Supplemental disclosures of cash flow information:
Cash paid for income taxes, net of refunds of $663 and $320 during the six-month periods ended March 31, 2025 and 2024, respectively	$	92,213	$	53,757
Cash paid for interest	$	60,939	$	50,331
Supplemental disclosures of non-cash investing and financing activities:
Purchase of property and equipment included in accounts payable	$	14	$	439
Unsettled repurchases of common stock	$	412	$	7,780
Finance lease obligations incurred	$	—	$	9,400

See accompanying notes.

FAIR ISAAC CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Nature of Business

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 in the United States (“U.S.”) of consumer credit risk — empowering them to increase financial literacy and manage their financial health.

Principles of Consolidation and Basis of Presentation

We have prepared the accompanying unaudited interim condensed consolidated financial statements in accordance with the instructions to Form 10-Q and the applicable accounting guidance. Consequently, we have not necessarily included all information and footnotes required for audited financial statements. In our opinion, the accompanying unaudited interim condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments, except as otherwise indicated) necessary for a fair presentation of our financial position and results of operations. These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with our audited consolidated financial statements and notes thereto presented in our Annual Report on Form 10-K for the fiscal year ended September 30, 2024. The interim financial information contained in this report is not necessarily indicative of the results to be expected for any other interim period or for the entire fiscal year.

The condensed 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 condensed consolidated 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.

New Accounting Pronouncements

Recent Accounting Pronouncements Not Yet 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. The standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, which means that it will be effective for our annual periods beginning October 1, 2024, and our interim periods 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 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.

We do not expect that any other recently issued accounting pronouncements will have a significant effect on our consolidated financial statements.

2. 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 March 31, 2025 and September 30, 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 March 31, 2025 and September 30, 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 March 31, 2025 and September 30, 2024.

The following tables represent financial assets that we measured at fair value on a recurring basis at March 31, 2025 and September 30, 2024:


March 31, 2025	Active Markets for Identical Instruments (Level 1)		Fair Value as of March 31, 2025
	(In thousands)
Assets:
Cash equivalents (1)	$	4,848	$	4,848
Marketable securities (2)	45,400		45,400
Total	$	50,248	$	50,248

September 30, 2024	Active Markets for Identical Instruments (Level 1)		Fair Value as of September 30, 2024
	(In thousands)
Assets:
Cash equivalents (1)	$	7,899	$	7,899
Marketable securities (2)	45,289		45,289
Total	$	53,188	$	53,188

(1)Included in cash and cash equivalents on our condensed consolidated balance sheets at March 31, 2025 and September 30, 2024. Not included in these tables are cash deposits of $141.8 million and $142.8 million at March 31, 2025 and September 30, 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 condensed consolidated balance sheets at March 31, 2025 and September 30, 2024.

See Note 6 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 quarters and six-month periods ended March 31, 2025 and 2024.

3. 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 (expense), net. The forward contracts are not designated as hedges and are marked to market through other income (expense), 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 March 31, 2025 and September 30, 2024:


	March 31, 2025
	Contract Amount				Fair Value
	Foreign Currency		USD		USD
	(In thousands)
Sell foreign currency:

Euro (EUR)	EUR	8,500	$	9,234	$	—
Buy foreign currency:
British pound (GBP)	GBP	16,026	$	20,800	$	—
Singapore dollar (SGD)	SGD	6,971	$	5,200	$	—


	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 March 31, 2025 and September 30, 2024; therefore, their fair value was $0 on each of these dates.

Gains (losses) on derivative financial instruments were recorded in our condensed consolidated statements of income and comprehensive income as a component of other income (expense), net, and consisted of the following:


	Quarter Ended March 31,				Six Months Ended March 31,
	2025		2024		2025		2024
	(In thousands)
Gains (losses) on foreign currency forward contracts	$	502	$	(180)	$	(882)	$	361

4. Goodwill

The following table summarizes changes to goodwill during the six months ended March 31, 2025, both in total and as allocated to our segments. As of March 31, 2025, there was no accumulated goodwill impairment loss.


	Scores		Software		Total
	(In thousands)
Balance at September 30, 2024	$	146,648	$	636,104	$	782,752


Foreign currency translation adjustment	—		(3,473)		(3,473)

Balance at March 31, 2025	$	146,648	$	632,631	$	779,279

5. Composition of Certain Financial Statement Captions

The following table presents the composition of prepaid expenses and other current assets at March 31, 2025 and September 30, 2024:


	March 31, 2025		September 30, 2024
	(In thousands)
Prepaid expenses and other current assets:
Prepaid income taxes	$	44,927	$	3,154
Other	40,800		36,950
Total	$	85,727	$	40,104

The following table presents the composition of property and equipment, net at March 31, 2025 and September 30, 2024:


	March 31, 2025		September 30, 2024
	(In thousands)
Property and equipment, net:
Property and equipment	$	86,998	$	99,408
Internal-use software	30,305		16,510
Less: accumulated depreciation and amortization	(66,751)		(77,453)
Total	$	50,552	$	38,465

The following table presents the composition of other accrued liabilities at March 31, 2025 and September 30, 2024:


	March 31, 2025		September 30, 2024
	(In thousands)
Other accrued liabilities:
Interest payable	$	22,155	$	21,663
Other	33,737		58,149
Total	$	55,892	$	79,812

6. Debt

The following table represents our debt at carrying value at March 31, 2025 and September 30, 2024:


	March 31, 2025		September 30, 2024
	(In thousands)
Current maturities on debt:
The $300 Million Term Loan	$	15,000	$	15,000
Long-term debt:
Revolving line of credit	535,000		210,000
The $300 Million Term Loan	236,250		243,750
The $450 Million Term Loan	450,000		450,000
The 2018 Senior Notes	400,000		400,000
The 2019 Senior Notes and the 2021 Senior Notes	900,000		900,000
Less: debt issuance costs	(8,071)		(9,729)
Long-term debt	2,513,179		2,194,021
Total debt	$	2,528,179	$	2,209,021

Revolving Line of Credit and Term Loans

We have a $600 million unsecured revolving line of credit, a $300 million unsecured term loan (the “$300 Million Term Loan”), and a $450 million unsecured term loan (the “$450 Million Term Loan”) with a syndicate of banks that mature on August 19, 2026. Borrowings under the revolving line of credit and the term loans 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. The $300 Million Term Loan requires principal payments in consecutive quarterly installments of $3.75 million on the last business day of each quarter. We have no obligation to make scheduled principal payments on the $450 Million Term Loan prior to the maturity date, but may prepay the $450 Million Term Loan, without premium or penalty, in whole or in part. Interest rates on amounts borrowed under the revolving line of credit and the term loans 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) one-month adjusted term Secured Overnight Financing Rate (“SOFR”) plus 1%, plus, in each case, an applicable margin, or (ii) an adjusted term 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). Adjusted term SOFR is defined as term SOFR for the relevant interest period plus a SOFR adjustment of 0.10% per annum. 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 revolving line of credit and the term loans contain 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 a minimum interest coverage ratio of 3.0 to 1.0. The credit agreement also contains other covenants typical of unsecured credit facilities.

As of March 31, 2025, we had $535.0 million in borrowings outstanding under the revolving line of credit at a weighted-average interest rate of 5.673%, $251.3 million in outstanding balance of the $300 Million Term Loan at an interest rate of 5.650%, and $450.0 million in outstanding balance of the $450 Million Term Loan at an interest rate of 5.647%. We were in compliance with all financial covenants under the credit agreement as of March 31, 2025.

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,” and collectively with the 2018 Senior Notes and the 2019 Senior Notes, the “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.

The indentures for the Senior Notes contain certain covenants typical of unsecured obligations and we were in compliance as of March 31, 2025.

The following table presents the face values and fair values for the Senior Notes at March 31, 2025 and September 30, 2024:


	March 31, 2025				September 30, 2024
	Face Value		Fair Value		Face Value		Fair Value
	(In thousands)
The 2018 Senior Notes	$	400,000	$	398,500	$	400,000	$	399,500
The 2019 Senior Notes and the 2021 Senior Notes	900,000		856,125		900,000		864,000
Total	$	1,300,000	$	1,254,625	$	1,300,000	$	1,263,500

7. Revenue from Contracts with Customers

Disaggregation of Revenue

The following tables provide information about disaggregated revenue by primary geographical market:


	Quarter Ended March 31, 2025
	Scores		Software		Total		Percentage
	(Dollars in thousands)
Americas	$	291,982	$	137,020	$	429,002	86	%
Europe, Middle East and Africa	1,667		41,733		43,400		9	%
Asia Pacific	3,390		22,943		26,333		5	%
Total	$	297,039	$	201,696	$	498,735	100	%


	Quarter Ended March 31, 2024
	Scores		Software		Total		Percentage
	(Dollars in thousands)
Americas	$	233,723	$	130,294	$	364,017	84	%
Europe, Middle East and Africa	1,278		40,979		42,257		10	%
Asia Pacific	1,884		25,651		27,535		6	%
Total	$	236,885	$	196,924	$	433,809	100	%


	Six Months Ended March 31, 2025
	Scores		Software		Total		Percentage
	(Dollars in thousands)
Americas	$	524,948	$	283,929	$	808,877	86	%
Europe, Middle East and Africa	3,544		76,215		79,759		9	%
Asia Pacific	4,222		45,845		50,067		5	%
Total	$	532,714	$	405,989	$	938,703	100	%

	Six Months Ended March 31, 2024
	Scores		Software		Total		Percentage
	(Dollars in thousands)
Americas	$	418,671	$	263,856	$	682,527	84	%
Europe, Middle East and Africa	2,586		76,039		78,625		9	%
Asia Pacific	7,740		46,976		54,716		7	%
Total	$	428,997	$	386,871	$	815,868	100	%

The following table provides information about disaggregated revenue for on-premises and SaaS software within our Software segment by deployment method:


	Quarter Ended March 31,				Percentage of revenues				Six Months Ended March 31,				Percentage of revenues
	2025		2024		2025		2024		2025		2024		2025		2024
	(Dollars in thousands)
On-premises software	$	82,300	$	79,697	45	%	45	%	$	165,135	$	152,169	45	%	44	%
SaaS software	101,526		97,483		55	%	55	%	204,702		193,679		55	%	56	%
Total	$	183,826	$	177,180	100	%	100	%	$	369,837	$	345,848	100	%	100	%

The following table provides information about disaggregated revenue for on-premises and SaaS software within our Software segment by product features:


	Quarter Ended March 31,				Percentage of revenues				Six Months Ended March 31,				Percentage of revenues
	2025		2024		2025		2024		2025		2024		2025		2024
	(Dollars in thousands)
Platform software	$	56,464	$	47,325	31	%	27	%	$	110,286	$	92,498	30	%	27	%
Non-platform software	127,362		129,855		69	%	73	%	259,551		253,350		70	%	73	%
Total	$	183,826	$	177,180	100	%	100	%	$	369,837	$	345,848	100	%	100	%

The following table provides information about disaggregated revenue for on-premises and SaaS software within our Software segment by timing of revenue recognition:


	Quarter Ended March 31,				Percentage of revenues				Six Months Ended March 31,				Percentage of revenues
	2025		2024		2025		2024		2025		2024		2025		2024
	(Dollars in thousands)
Software recognized at a point in time (1)	$	25,609	$	20,177	14	%	11	%	$	48,417	$	33,959	13	%	10	%
Software recognized over contract term (2)	158,217		157,003		86	%	89	%	321,420		311,889		87	%	90	%
Total	$	183,826	$	177,180	100	%	100	%	$	369,837	$	345,848	100	%	100	%

(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.

The following table provides information about disaggregated revenue for our Scores segment by distribution method:


	Quarter Ended March 31,				Percentage of revenues				Six Months Ended March 31,				Percentage of revenues
	2025		2024		2025		2024		2025		2024		2025		2024
	(Dollars in thousands)
Business-to-business Scores	$	242,494	$	185,508	82	%	78	%	$	424,885	$	325,950	80	%	76	%
Business-to-consumer Scores	54,545		51,377		18	%	22	%	107,829		103,047		20	%	24	%
Total	$	297,039	$	236,885	100	%	100	%	$	532,714	$	428,997	100	%	100	%

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 52% and 47% of our total revenues in the quarters ended March 31, 2025 and 2024, respectively, with all three consumer reporting agencies each contributing more than 10% of our total revenues in each of the quarters ended March 31, 2025 and 2024. Revenues collectively generated by agreements with these customers accounted for 49% and 43% of our total revenues in the six months ended March 31, 2025 and 2024, respectively, with all three consumer reporting agencies each contributing more than 10% of our total revenues in each of the six months ended March 31, 2025 and 2024. At March 31, 2025 and September 30, 2024, three individual customers and one individual customer accounted for 10% or more of total consolidated receivables, respectively.

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.

Receivables at March 31, 2025 and September 30, 2024 consisted of the following:


	March 31, 2025		September 30, 2024
	(In thousands)
Billed	$	301,667	$	264,942
Unbilled	234,462		210,795
	536,129		475,737
Less: allowance for doubtful accounts	(7,506)		(6,454)
Net receivables	528,623		469,283
Less: long-term receivables (*)	(36,081)		(42,641)
Short-term receivables (*)	$	492,542	$	426,642

(*) Short-term receivables and long-term receivables were recorded in accounts receivable, net and other assets, respectively, within the accompanying condensed consolidated balance sheets.

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:


	Six Months Ended March 31, 2025
	(In thousands)
Deferred revenues, beginning balance (*)	$	160,209
Revenue recognized that was included in the deferred revenues balance at the beginning of the period	(115,568)
Increases due to billings, excluding amounts recognized as revenue during the period	130,404
Deferred revenues, ending balance (*)	$	175,045

(*) Deferred revenues at March 31, 2025 included current portion of $171.8 million and long-term portion of $3.2 million that were recorded in deferred revenue and other liabilities, respectively, within the condensed consolidated balance sheets. Deferred revenues at September 30, 2024 included current portion of $156.9 million and long-term portion of $3.3 million that were recorded in deferred revenue and other liabilities, respectively, within the condensed consolidated balance sheets.

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.

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 $512.5 million as of March 31, 2025, approximately 50% of which we expect to recognize over the next 14 months and the remainder thereafter. Revenue allocated to remaining performance obligations was $507.3 million as of September 30, 2024.

8. Income Taxes

Effective Tax Rate

The effective income tax rate was 23.7% and 24.9% during the quarters ended March 31, 2025 and 2024, respectively, and 13.2% and 17.3% during the six months ended March 31, 2025 and 2024, respectively. The provision for income taxes during interim quarterly reporting periods is based on our estimates of the effective tax rates for the full fiscal year. The effective tax rate in any quarter can also be affected positively or negatively by adjustments that are required to be reported in the specific quarter of resolution.

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. FICO continues to monitor these legislative developments and does not expect Pillar Two to have material impacts on its fiscal 2025 consolidated financial statements.

The total unrecognized tax benefit for uncertain tax positions was estimated to be $22.3 million and $19.9 million at March 31, 2025 and September 30, 2024, respectively. We recognize interest expense related to unrecognized tax benefits and penalties as part of the provision for income taxes in our condensed consolidated statements of income and comprehensive income. We accrued interest of $2.5 million and $1.7 million related to unrecognized tax benefits as of March 31, 2025 and September 30, 2024, respectively.

9. Earnings per Share

The following table presents reconciliations for the numerators and denominators of basic and diluted earnings per share (“EPS”) for the quarters and six-month periods ended March 31, 2025 and 2024:


	Quarter Ended March 31,				Six Months Ended March 31,
	2025		2024		2025		2024
	(In thousands, except per share data)
Numerator for diluted and basic earnings per share:
Net income	$	162,615	$	129,799	$	315,143	$	250,864
Denominator — share:
Basic weighted-average shares	24,389		24,819		24,383		24,791
Effect of dilutive securities	296		335		373		395
Diluted weighted-average shares	24,685		25,154		24,756		25,186
Earnings per share:
Basic	$	6.67	$	5.23	$	12.92	$	10.12
Diluted	$	6.59	$	5.16	$	12.73	$	9.96

Anti-dilutive share-based awards excluded from the calculations of diluted EPS were immaterial during the periods presented.

10. Segment Information

We are organized into two reportable segments: Scores and Software. Although we sell solutions and services to 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.

Our chief operating decision maker (“CODM”), who is our Chief Executive Officer, evaluates segment financial performance based on segment revenues and segment operating income. Segment operating expenses consist of direct and indirect costs principally related to personnel, facilities, IT infrastructure, consulting, travel and depreciation. 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 the quarters and six-month periods ended March 31, 2025 and 2024:


	Quarter Ended March 31, 2025
	Scores		Software		Unallocated Corporate Expenses		Total
	(In thousands)
Segment revenues:
On-premises and SaaS software	$	—	$	183,826	$	—	$	183,826
Professional services	—		17,870		—		17,870
Scores	297,039		—		—		297,039
Total segment revenues	297,039		201,696		—		498,735
Segment operating expense	(32,069)		(138,372)		(40,942)		(211,383)
Segment operating income	$	264,970	$	63,324	$	(40,942)	287,352
Unallocated share-based compensation expense							(41,704)



Operating income							245,648
Unallocated interest expense, net							(31,378)
Unallocated other expense, net							(1,254)
Income before income taxes							$	213,016
Depreciation and amortization	$	118	$	2,340	$	18	$	2,476


	Quarter Ended March 31, 2024
	Scores		Software		Unallocated Corporate Expenses		Total
	(In thousands)
Segment revenues:
On-premises and SaaS software	$	—	$	177,180	$	—	$	177,180
Professional services	—		19,744		—		19,744
Scores	236,885		—		—		236,885
Total segment revenues	236,885		196,924		—		433,809
Segment operating expense	(24,677)		(132,762)		(45,806)		(203,245)
Segment operating income	$	212,208	$	64,162	$	(45,806)	230,564
Unallocated share-based compensation expense							(35,448)
Unallocated amortization expense							(275)


Operating income							194,841
Unallocated interest expense, net							(26,093)
Unallocated other income, net							3,986
Income before income taxes							$	172,734
Depreciation and amortization	$	107	$	2,099	$	16	$	2,222


	Six Months Ended March 31, 2025
	Scores		Software		Unallocated Corporate Expenses		Total
	(In thousands)
Segment revenues:
On-premises and SaaS software	$	—	$	369,837	$	—	$	369,837
Professional services	—		36,152		—		36,152
Scores	532,714		—		—		532,714
Total segment revenues	532,714		405,989		—		938,703
Segment operating expense	(63,973)		(281,923)		(85,273)		(431,169)
Segment operating income	$	468,741	$	124,066	$	(85,273)	507,534
Unallocated share-based compensation expense							(82,358)



Operating income							425,176
Unallocated interest expense, net							(60,866)
Unallocated other expense, net							(1,165)
Income before income taxes							$	363,145
Depreciation and amortization	$	243	$	4,792	$	36	$	5,071


	Six Months Ended March 31, 2024
	Scores		Software		Unallocated Corporate Expenses		Total
	(In thousands)
Segment revenues:
On-premises and SaaS software	$	—	$	345,848	$	—	$	345,848
Professional services	—		41,023		—		41,023
Scores	428,997		—		—		428,997
Total segment revenues	428,997		386,871		—		815,868
Segment operating expense	(48,135)		(267,587)		(86,374)		(402,096)
Segment operating income	$	380,862	$	119,284	$	(86,374)	413,772
Unallocated share-based compensation expense							(67,022)
Unallocated amortization expense							(550)


Operating income							346,200
Unallocated interest expense, net							(50,255)
Unallocated other income, net							7,379
Income before income taxes							$	303,324
Depreciation and amortization	$	188	$	3,697	$	28	$	3,913

11. 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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