FICO borrowed $1.5 billion for a buyback at about $1,422 a share; the stock closed at $728.85

The loan that did the buying

Fair Isaac▼−1.21% — Fair Isaac, down 1.21 percent today borrowed the full $1.5 billion of a new unsecured term loan on June 5, maturing May 15, 2028, and priced at SOFR plus 1.50% to 2.25% ¹. Three days later it paid the entire amount to Wells Fargo▲+0.08% — Wells Fargo, up 0.08 percent today Securities under an accelerated share repurchase, taking initial delivery of about 1,055,100 shares, roughly $1,422 each; the final count settles on the stock's average price over the deal's term ¹. About $500 million stayed unspent under the new $2.0 billion authorization ¹. FICO closed at $728.85 on November 8, 49% below that first tranche ².

Borrowed at the old monopoly prices

On September 29, Federal Housing Finance Agency Director Bill Pulte put VantageScore, the score owned jointly by Equifax▼−0.32% — Equifax, down 0.32 percent today, Experian and TransUnion▼−0.92% — TransUnion, down 0.92 percent today, on the same mortgage pricing grid as Classic FICO ³⁴. The stock fell 26.5%, its worst day since 1989 ³. Rocket Mortgage began defaulting eligible loans to VantageScore 4.0, which TransUnion sells at 99 cents through December 2028 against FICO's $10 pull ³⁴.

Frozen at $10 with $3.05 billion already spent

Fair Isaac froze the $10 wholesale price for 2027 on October 23 and lost another 16% ⁵. The balance sheet was built at the old prices: total debt of $5.26 billion at September 30 versus $3.06 billion a year earlier, book equity of minus $3.87 billion, and $3.05 billion of stock retired in fiscal 2026, about a tenth of the company, against $1.03 billion of free cash flow ⁶.

March had already added $1.0 billion of 6.25% notes due 2034↗ to retire $400 million of 5.25% paper due 2026: longer maturity, higher coupon ⁷. The term loan now amortizes the cost of a monopoly Fair Isaac no longer has.

The margin print leaves out two charges

The quarter looked strong: revenue up 27% to $657 million, Scores up 33% on a higher price per mortgage score ⁶. But the 61% non-GAAP operating margin excludes a $65 million antitrust settlement accrual and a $27 million charge for cutting about 15% of the workforce; on GAAP terms the operating margin was 40.6% ⁶⁸⁴.

Chief Financial Officer Steven Weber put net leverage at 3.29 times EBITDA and called the buyback pause temporary ⁸. The offsets are real: platform recurring revenue rose 72% to $453 million, direct licenses cover about 73% of mortgage reseller volume, and the FHA accepts Score 10T starting January 2027 ⁸.

December reprices both sides of the ledger

All 101 economists in a November 10 poll↗ expect a quarter-point Fed hike in December ⁹. The loan floats: after the September 30 payment it stands at $1.425 billion, and a quarter point is about $3.6 million of interest a year ⁶. The same move squeezes the originations FICO scores, a risk the company itself cited in withholding fiscal 2027 guidance ⁶.

Management will not say whether average 2027 pricing lands above or below 2026 ⁸. RBC Capital Markets' November 11 downgrade to Sector Perform, target $770↗, says less than the calendar ¹⁰: whether the last $500 million is spent before the bespoke 2027 contracts take effect, with the amortization stepping up to $112.5 million a quarter after June 30 ¹.