FICO
Fair Isaac
Recurring SaaS
★ Quality 81/100Price today
$932.26
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A monopoly position
This company has a competitive advantage so strong that its rivals find it practically impossible to replicate.
What this business is made of
The business
FICO is the stamp of approval every American bank needs to press onto its paperwork.
Fair Isaac sells the FICO score, the credit standard that lenders and the three credit bureaus in the US use to decide who gets a loan. It charges for every score pulled —mortgage origination, cards, autos— and licenses its decision software platform by subscription. Of the $2.0B in revenue, Scores is the highest-margin segment.
The FICO score is embedded in regulation, government-backed mortgage contracts, and the habits of the entire credit industry. Switching standards would require millions of players to rebuild their models all at once —nobody wants to go first. With 82% gross margin and the power to raise prices per pull, the business is essentially a toll on American credit.
Revenue history
From $1.3B to $2.0B in 4 years. The business grows steadily.
Where each $100 of sales goes
Revenue $2.0B · FY2025
Of every $100 in sales, $67 goes to costs and operations; $33 is left as net profit (33% margin).
Catalysts and risks
Per-score price hikes in mortgage origination: each bump of a few dollars falls almost entirely to FCF given the zero marginal cost.
Recovery in mortgage origination volume when rates drop —the segment most sensitive to the cycle.
Expansion of subscription decision software, which diversifies beyond the score toll.
$3.1B in debt against $0.1B in cash: a leveraged structure that stings if rates stay high.
Regulatory/political risk —the FHFA is already pushing alternative models (VantageScore) in government-backed mortgages.
Demanding valuation: 26x FCF prices in perfect growth, leaving little room for error.
Charlie's note
“A toll on every loan in America —that's the kind of business you want to own as long as nobody has an incentive to touch the standard. The price pays for the quality; here the only serious enemy wears a suit and works in Washington.”
Analysis · June 2026
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