Fair Isaac Corporation

Capital structure and performance · Financial performance volatility

Our financial results and key metrics fluctuate within each quarter and from quarter to quarter, making our future revenue, annual recurring revenue ('ARR'), and financial results difficult to predict, which may cause us to miss analyst expectations and may cause the price of our common stock to decline.

Market and investment · Market volatility and economic cycles

Our stock price has been subject to fluctuations, and will likely continue to be subject to fluctuations, or may decline, regardless of our operating performance... Broad market fluctuations, as well as industry-specific and general economic conditions, may negatively affect our business.

International and currency · International operations and emerging markets

In operations outside the U.S., we are subject to additional risks that may harm our business, financial condition or results of operations... During fiscal 2025, 23% of our revenues were derived from business outside the U.S... Accordingly, our future operating results could be negatively affected by a variety of factors arising out of international commerce, some of which are beyond our control.

Capital structure and performance · Financial performance volatility

Our quarterly financial results and key metrics have fluctuated in the past and will continue to do so in the future. These fluctuations could cause our stock price to change significantly or experience declines.

Core operations · Operational disruption and business continuity

If we experience business interruptions or failure of our information technology and communication systems, the availability of our products and services could be interrupted which could adversely affect our reputation, business and financial condition... Any disruption of or interference with our use of data centers, information technology or communication systems of our external service providers would adversely affect our operations and our business.

Human capital and workforce · Talent acquisition and retention

The failure to recruit and retain qualified personnel could hinder our ability to successfully manage our business... The labor market for these individuals, particularly in the complex disciplines of enterprise platform sales, software engineering, data science, AI and cybersecurity, is very competitive due to the limited number of people available with the necessary skills.

Innovation and product development · Intellectual property protection and infringement

We will continue to rely upon proprietary technology rights, and if we are unable to protect them, our business could be harmed... This protection of our proprietary technology is limited, and our proprietary technology could be used by others without our consent.

Strategic execution · Strategic transformation and turnaround risks

Our reengineering efforts may cause our growth prospects and profitability to suffer... Our reengineering efforts may not be successful over the long term should we fail to reduce expenses or increase revenues to anticipated levels or at all.

Strategic execution · Merger acquisition and divestiture risks

Our acquisition activities may disrupt our ongoing business and may involve increased expenses, and we may not realize the financial and strategic goals contemplated at the time of a transaction... an acquisition may not further our business strategy as we expected, we may not integrate acquired operations, systems or technology as successfully as we expected or we may overpay for our investments.

Customer and revenue · Customer concentration and key customer dependence

We rely on relatively few customers, as well as our contracts with the three major consumer reporting agencies, for a significant portion of our revenues and profits... We also derive a substantial portion of our Scores segment revenues and operating income from our contracts with the three major consumer reporting agencies in the U.S., Experian, TransUnion and Equifax.

Market position and competition · Competitive pressure and market share loss

We are subject to significant competition in the markets in which we operate... The market for our solutions is intensely competitive and is constantly changing, and we expect competition to persist and intensify... Many of our existing and anticipated competitors have greater financial, technical, marketing, professional services and other resources than we do.

Cybersecurity and data protection · Data privacy and protection regulations

Many U.S. and foreign jurisdictions have passed, or are currently contemplating, a variety of consumer protection, data privacy, and cyber and data security laws and regulations that may relate to our business... The costs and other burdens of compliance with such laws and regulations, along with the potential for increased regulatory actions, could negatively impact the use and adoption of our solutions and reduce overall demand for them.

Digital transformation and innovation · Artificial intelligence and automation

The European Commission has finalized the EU AI Act, which establishes requirements for the provision and use of products that leverage AI systems, including in credit scoring... Other countries, as well as the executive branch of the U.S. government and a number of U.S. states, are considering or have implemented laws, regulations or standards applicable to the provision and use of AI technologies.

Digital transformation and innovation · Technology obsolescence and evolution

If we fail to keep up with rapidly changing technologies, our products could become less competitive or obsolete... If we fail to enhance our current products and develop new products in response to changes in technology or industry standards, or if we fail to bring product enhancements or new product developments to market quickly enough, our products could rapidly become less competitive or obsolete.

Digital transformation and innovation · Technology obsolescence and evolution

In our markets, technology changes rapidly, and there are continuous improvements in computer hardware, network operating systems, programming tools, and cloud-based technologies. If we fail to enhance our current products and develop new products in response to changes in technology or industry standards, our products could rapidly become less competitive or obsolete.

Economic and market conditions · Economic recession and downturns

Material adverse developments in global economic conditions, or the occurrence of certain other world events, could affect demand for our products and services and harm our business... Various factors contribute to the uncertain economic environment, including geopolitical tensions, military conflicts, the level and volatility of interest rates, the level of inflation, an actual recession or fears of a recession, trade policies and tariffs.

Natural and catastrophic events · Pandemic and public health crises

Our revenues, results of operations and overall financial performance may be negatively impacted by health epidemics or other disease outbreaks... Health epidemics or disease outbreaks could impact the rate of spending on our solutions and could adversely affect our customers' ability or willingness to purchase our products and services.

Tax and financial reporting · Tax compliance and changes in tax law

If we experience changes in tax laws or adverse outcomes resulting from examination of our income tax returns, it could adversely affect our results of operations... Our future effective tax rates could be adversely affected by changes in tax laws, by our ability to generate taxable income in foreign jurisdictions in order to utilize foreign tax losses.

Legal and litigation · Intellectual property disputes

If we are subject to infringement claims, it could harm our business... Products in the industry segments in which we compete, including software products, are often subject to claims of patent and other intellectual property infringement, and such claims could increase as the number of products and competitors in our industry segments grow.

Industry regulation · Regulatory compliance and changes

Laws and governmental regulation affect how our business is conducted and subject us to the possibility of government supervision or enforcement. Laws and regulations that may affect our business include privacy and security laws, financial regulatory reform, consumer protection laws, fair lending laws, and cybersecurity requirements.