FAIR ISAAC CORP (FICO)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

FORWARD-LOOKING STATEMENTS

Statements contained in this report that are not statements of historical fact are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “PSLRA”). In addition, certain statements in our future filings with the Securities and Exchange Commission (“SEC”), in press releases, and in oral and written statements made by us or with our approval that are not statements of historical fact constitute forward-looking statements within the meaning of the PSLRA. Examples of forward-looking statements include, but are not limited to: (i) projections of revenue, income or loss, expenses, earnings or loss per share, the payment or nonpayment of dividends, share repurchases, capital structure and other statements concerning future financial performance; (ii) statements of our plans and objectives by our management or Board of Directors, including those relating to products or services, research and development, and the sufficiency of capital resources; (iii) statements of assumptions underlying such statements, including those related to economic conditions; (iv) statements regarding results of business combinations or strategic divestitures; (v) statements regarding business relationships with vendors, customers or collaborators, including the proportion of revenues generated from international as opposed to domestic customers; and (vi) statements regarding products and services, their characteristics, performance, sales potential or effect in use by customers. Words such as “believes,” “anticipates,” “expects,” “intends,” “targeted,” “should,” “potential,” “goals,” “strategy,” “outlook,” “plan,” “estimated,” “will,” variations of these terms and similar expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those in such statements. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to, those described in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended September 30, 2025 and in subsequent filings with the SEC. The performance of our business and our securities may be adversely affected by these factors and by other factors common to other businesses and investments, or to the general economy. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date they are made. We disclaim any intent or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Readers should carefully review the disclosures and the risk factors described in this and other documents we file from time to time with the SEC, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

OVERVIEW

We were founded in 1956 on the premise that data, used intelligently, can improve business decisions. Today, FICO’s software and the widely used FICO® Score operationalize analytics, enabling thousands of businesses in more than 80 countries to uncover new opportunities, make timely decisions that matter, and execute them at scale. Most leading banks and credit card issuers rely on our solutions, as do insurers, retailers, telecommunications providers, automotive lenders, consumer reporting agencies, public agencies, and organizations in other industries. We also serve consumers through online services that enable people to access and understand their FICO® Scores — the standard measure of consumer credit risk in the United States (“U.S.”) — empowering them to increase financial literacy and manage their financial health.

Our business consists of two operating segments: Scores and Software.

Our Scores segment includes our business-to-business (“B2B”) scoring solutions and services which give our clients access to predictive credit and other scores that can be easily integrated into their transaction streams and decision-making processes. This segment also includes our business-to-consumer (“B2C”) scoring solutions, including our myFICO.com subscription offerings.

Our Software segment includes pre-configured analytic and decision management solutions designed for a specific type of business need or process — such as account origination, customer management, customer engagement, fraud detection, and marketing — as well as associated professional services. This segment also includes FICO® Platform, a modular software offering designed to support advanced analytic and decision use cases, as well as stand-alone analytic and decisioning software that can be configured by our customers to address a wide variety of business use cases. Our offerings are available to our customers as software-as-a-service (“SaaS”) or as on-premises software.

Highlights from the quarter and nine months ended June 30, 2026

•Total revenues were $674.2 million during the quarter ended June 30, 2026, a 26% increase from the quarter ended June 30, 2025, and $1.9 billion during the nine months ended June 30, 2026, a 27% increase from the nine months ended June 30, 2025.

19

Table of Contents

•Revenues for our Scores segment were $458.9 million during the quarter ended June 30, 2026, a 41% increase from the quarter ended June 30, 2025, and $1.2 billion during the nine months ended June 30, 2026, a 45% increase from the nine months ended June 30, 2025.

•Annual Recurring Revenue for our Software segment as of June 30, 2026 was $815.8 million, a 10% increase from June 30, 2025.

•Dollar-Based Net Retention Rate for our Software segment was 109% as of June 30, 2026.

•Operating income was $362.6 million during the quarter ended June 30, 2026, a 38% increase from the quarter ended June 30, 2025, and $999.1 million during the nine months ended June 30, 2026, a 45% increase from the nine months ended June 30, 2025.

•Net income was $237.2 million during the quarter ended June 30, 2026, a 30% increase from the quarter ended June 30, 2025, and $660.0 million during the nine months ended June 30, 2026, a 33% increase from the nine months ended June 30, 2025.

•Diluted EPS was $10.45 during the quarter ended June 30, 2026, a 41% increase from the quarter ended June 30, 2025, and $28.12 during the nine months ended June 30, 2026, a 40% increase from the nine months ended June 30, 2025.

•Cash flows from operating activities were $777.9 million during the nine months ended June 30, 2026, compared with $555.1 million during the nine months ended June 30, 2025.

•In June 2026, we amended our credit agreement to provide for a $1.5 billion term loan, the proceeds of which were used to fund an accelerated share repurchase agreement (“ASR Agreement”).

•Total debt balance was $5.6 billion as of June 30, 2026, compared with $3.1 billion as of September 30, 2025.

•Total share repurchases during the quarter ended June 30, 2026 were $2.3 billion, compared with $511.3 million during the quarter ended June 30, 2025, and during the nine months ended June 30, 2026 were $3.1 billion, compared with $878.1 million during the nine months ended June 30, 2025. The quarter and nine months ended June 30, 2026 included $1.5 billion paid under the ASR Agreement.

Key performance metrics for Software segment

Annual Contract Value Bookings (“ACV Bookings”)

Management regards ACV Bookings as an important indicator of future revenues, but it is not comparable to, nor is it a substitute for, an analysis of our revenues and other U.S. generally accepted accounting principles (“U.S. GAAP”) measures. We define ACV Bookings as the average annualized value of software contracts signed in the current reporting period that generate current and future on-premises and SaaS software revenue. We only include contracts with an initial term of at least 24 months and we exclude perpetual licenses and other software revenues that are non-recurring in nature. For renewals of existing software subscription contracts, we count only incremental annual revenue expected over the current contract as ACV Bookings.

ACV Bookings is calculated by dividing the total expected contract value by the contract term in years. The expected contract value equals the fixed amount — including guaranteed minimums, if any — stated in the contract, plus estimates of future usage-based fees. We develop estimates from discussions with our customers and examinations of historical data from similar products and customer arrangements. Differences between estimates and actual results occur due to variability in the estimated usage. This variability can be the result of the economic trends in our customers’ industries, individual performance of our customers relative to their competitors, and regulatory and other factors that affect the business environment in which our customers operate. For the periods presented, ACV Bookings related to estimates of future usage-based fees was approximately 20% of the total ACV Bookings amount on an annualized basis. Differences between the initial estimates of future usage-based fees and actual results historically have not been material and we do not currently expect that they will be materially different in the future.

We disclose estimated revenue expected to be recognized in the future related to remaining performance obligations in Note 8 to the accompanying condensed consolidated financial statements. However, we believe ACV Bookings is a useful supplemental measure of our business as it includes estimated revenues and future billings excluded from Note 8, such as usage-based fees and guaranteed minimums derived from our on-premises software licenses, among others.

20

Table of Contents

The following table summarizes our ACV Bookings during the periods indicated:

Annual Recurring Revenue (“ARR”)

Accounting Standards Codification Topic 606, Revenue from Contracts with Customers, requires us to recognize a significant portion of revenue from our on-premises software subscriptions at the point in time when the software is first made available to the customer, or at the beginning of the subscription term, despite the fact that our contracts typically call for billing these amounts ratably over the life of the subscription. The remaining portion of our on-premises software subscription revenue including maintenance and usage-based fees are recognized over the life of the contract. This point-in-time recognition of a portion of our on-premises software subscription revenue creates significant variability in the revenue recognized period to period based on the timing of the subscription start date and the subscription term. Furthermore, this point-in-time revenue recognition can create a significant difference between the timing of our revenue recognition and the actual customer billing under the contract. We use ARR to measure the underlying performance of our subscription-based contracts and mitigate the impact of this variability. ARR is defined as the annualized revenue run-rate of on-premises and SaaS software agreements within a quarterly reporting period, and as such, is different from the timing and amount of revenue recognized. All components of our software licensing and subscription arrangements that are not expected to recur (primarily perpetual licenses) are excluded. We calculate ARR as the quarterly recurring revenue run-rate multiplied by four.

The following table

[Excerpt truncated for page length; source filing is linked above.]

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) includes the following: a business overview that provides a high-level summary of our strategies and initiatives, highlights from fiscal year 2025 and key performance metrics for our Software segment; a more detailed analysis of our results of operations; our capital resources and liquidity, which discusses key aspects of our statements of cash flows, changes in our balance sheets and our financial commitments; and a summary of our critical accounting estimates that involve a significant level of estimation uncertainty. Our MD&A should be read in conjunction with Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K. The following discussion contains forward-looking statements that are subject to risks and uncertainties. Actual results may differ from those referred to herein due to a number of factors, including but not limited to risks described in Item 1A, Risk Factors, in this Annual Report on Form 10-K.

Our MD&A focuses on discussion of year-over-year comparisons between fiscal 2025 and fiscal 2024. Discussion of fiscal 2023 results and year-over-year comparisons between fiscal 2024 and fiscal 2023 that are not included in this Annual Report on Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended September 30, 2024.

BUSINESS OVERVIEW

Strategies and Initiatives

In fiscal 2025, our B2B scoring solutions, including the flagship FICO® Score, continued to be the standard measure of consumer credit risk in the U.S. The adoption of our most predictive scores, FICO® Score 10 and FICO® Score 10 T, gained increased traction for non-conforming mortgages and was approved for conforming mortgages by the Federal Housing Finance Agency for enterprise credit scoring requirements. In addition, we launched FICO® Score 10 BNPL and FICO® Score 10 T BNPL, the first credit scores from a leading credit scoring provider to incorporate Buy Now, Pay Later (“BNPL”) data. These innovative scores represent a significant advancement in credit scoring, accounting for the growing importance of BNPL loans in the U.S. credit ecosystem. Internationally, we launched a FICO Score in Kenya, which leverages TransUnion data and CreditVision variables to redefine risk management and help expand access to financial services across Kenya. In fiscal 2025, in support of our B2C business and financial inclusion, we launched the FICO® Score Mortgage Simulator, which is the only simulator in the market built by FICO data scientists and powered by the FICO Score algorithm. We also introduced our Lenders Leading Financial Inclusion program that aims to expand credit access for underserved communities and we hosted free Score A Better Future® financial education workshops for students and adults from traditionally underserved communities.

During fiscal 2025, the strategy for our Software segment continued to advance and drive growth through our platform-first products. We expanded our FICO® Platform reach, both by geography and customer type, with the launch of FICO® Marketplace, enabling organizations to operationalize analytics, power customer connections, and make decisions at scale. Marketplace offers easy access to data, artificial intelligence (“AI”) models, optimization tools, decision rulesets, and machine learning models, which deliver enterprise business outcomes from AI. We continue to innovate and bring new capabilities to FICO Platform, demonstrating its value with new customers and expanding use cases with existing customers and partners. We announced newly granted patents around advancing responsible AI, machine learning, and applied intelligence technology. Additionally, we continue to expand our FICO® Educational Analytics Challenge program that was created to empower students and help educate the next generation of data scientists.

We also continued to enhance stockholder value by returning cash to stockholders through our stock repurchase program. During fiscal 2025, we repurchased 0.8 million shares at a total repurchase price of $1.4 billion.

Highlights from Fiscal 2025

•Total revenues were $2.0 billion during fiscal 2025, a 16% increase from fiscal 2024.

•Revenues for our Scores segment were $1.2 billion during fiscal 2025, a 27% increase from fiscal 2024.

•Annual Recurring Revenue for our Software segment as of September 30, 2025 was $747.3 million, a 4% increase from September 30, 2024.

•Dollar-Based Net Retention Rate for our Software segment was 102% as of September 30, 2025.

•Operating income was $924.9 million during fiscal 2025, a 26% increase from fiscal 2024.

•Net income was $651.9 million during fiscal 2025, a 27% increase from fiscal 2024.

•Diluted EPS was $26.54 during fiscal 2025, a 30% increase from fiscal 2024.

•Cash flow from operating activities was $778.8 million during fiscal 2025, compared with $633.0 million during fiscal 2024.

36

Table of Contents

•Cash and cash equivalents were $134.1 million as of September 30, 2025, compared with $150.7 million as of September 30, 2024.

•We issued $1.5 billion of senior notes and used the net proceeds to repay all the outstanding balances on our term loans. We also amended our credit agreement to increase our borrowing capacity under the unsecured revolving line of credit to $1.0 billion and extended its maturity. Total debt balance was $3.1 billion as of September 30, 2025, compared with $2.2 billion as of September 30, 2024.

•Total share repurchases during fiscal 2025 were $1.4 billion, compared with $0.8 billion during fiscal 2024.

Key performance metrics for Software segment

Annual Contract Value Bookings (“ACV Bookings”)

Management regards ACV Bookings as an important indicator of future revenues, but it is not comparable to, nor is it a substitute for, an analysis of our revenues and other U.S. generally accepted accounting principles (“U.S. GAAP”) measures. We define ACV Bookings as the average annualized value of software contracts signed in the current reporting period that generate current and future on-premises and SaaS software revenue. We only include contracts with an initial term of at least 24 months and we exclude perpetual licenses and other software revenues that are non-recurring in nature. For renewals of existing software subscription contracts, we count only incremental annual revenue expected over the current contract as ACV Bookings.

ACV Bookings is calculated by dividing the total expected contract value by the contract term in years. The expected contract value equals the fixed amount — including guaranteed minimums, if any — stated in the contract, plus estimates of future usage-based fees. We develop estimates from discussions with our customers and examinations of historical data from similar products and customer arrangements. Differences between estimates and actual results occur due to variability in the estimated usage. This variability can be the result of the economic trends in our customers’ industries, individual performance of our customers relative to their competitors, and regulatory and other factors that affect the business environment in which our customers operate. For the periods presented, ACV Bookings related to estimates of future usage-based fees was approximately 30% of the total ACV Bookings amount on an annualized basis. Differences between the initial estimates of future usage-based fees and actual results historically have not been material and we do not currently expect that they will be materially different in the future.

We disclose estimated revenue expected to be recognized in the future related to remaining performance obligations in Note 9 to the accompanying consolidated financial statements. However, we believe ACV Bookings is a useful supplemental measure of our business as it includes estimated revenues and future billings excluded from Note 9, such as usage-based fees and guaranteed minimums derived from our on-premises software licenses, among others.

The following table summarizes our ACV Bookings during the periods indicated:

Annual Recurring Revenue (“ARR”)

Accounting Standards Codification Topic 606, Revenue from Contracts with Customers, requires us to recognize a significant portion of revenue from our on-premises software subscriptions at the point in time when the software is first made available to the customer, or at the beginning of the subscription term, despite the fact that our contracts typically call for billing these amounts ratably over the life of the subscription. The remaining portion of our on-premises software subscription revenue including maintenance and usage-based fees are recognized over the life of the contract. This point-in-time recognition of a portion of our on-premises software subscription revenue creates significant variability in the revenue recognized period to period based on the timing of the subscription start date and the subscription term. Furthermore, this point-in-time revenue recognition can create a significant difference between the timing of our revenue recognition and the actual customer billing under the contract. We use ARR to measure the underlying performance of our subscription-based contracts and mitigate the impact of this variability. ARR is defined as the annualized revenue run-rate of on-premises and SaaS software agreements within a quarterly reporting period, and as such, is different from the timing and amount of revenue recognized. All components of our software licensing and subscription arrangements that are not expected to recur (primarily perpetual licenses) are excluded. We calculate ARR as the quarterly recurring revenue run-rate multiplied by four.

37

Table of Contents

The following table summarizes our ARR for on-premises and SaaS software exiting each of the dates presented:

Dollar-Based Net Retention Rate (“DBNRR”)

We consider DBNRR to be an important measure of our success in retaining and growing revenue from our existing customers. To calculate DBNRR for any period, we compare the ARR at the end of the prior comparable quarter (“base ARR”) to the ARR from that same cohort of customer

[Excerpt truncated for page length; the complete text is on the linked full-MD&A page.]