Fair Isaac Shares Drop Despite Earnings Beat Amid Pricing Concerns

Fair Isaac Corporation (FICO) saw its shares plummet 9.3% on Thursday, despite reporting a second-quarter earnings beat. Revenue grew 19.8% to $536.4 million, with adjusted EPS surging 37.1% to $8.57. The divergence between performance and stock reaction highlights investor skepticism about the sustainability of recent price hikes.

The company's Core Scores segment, accounting for 60% of revenue, grew 34% year-over-year, buoyed by a 41% mortgage score price increase implemented last November. Meanwhile, the Software segment eked out just 3% growth. Management raised full-year EPS guidance but left revenue projections unchanged—a red flag for markets attuned to top-line momentum.

This disconnect underscores a fundamental truth in financial markets: transient pricing advantages rarely translate into lasting multiple expansion. As mortgage originations remain depressed, FICO's ability to maintain premium pricing without volume erosion faces serious scrutiny.