What changed in this filing

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Item 1A. Risk Factors

2025-11-07 compared with 2024-11-06 · 84 added, 82 removed, 345 unchanged (32% of the section changed)

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We have increasingly focused our Software segment’s business strategy on investing significant development resources to enable substantially all of our software to run on FICO ® Platform, our modular software offering designed to enable advanced analytics and decisioning use cases.

This business strategy is designed to enable us to increase our business by selling multiple connectable and extensible products to clients, as well as to enable the development of custom client solutions and to allow our clients to more easily expand their usage and the use cases they enable over time.

The market may be unreceptive to our general business approach, including being unreceptive to our cloud-based offerings, unreceptive to purchasing multiple products from us, or unreceptive to our customized solutions.

This business strategy is designed to enable us to increase our business by selling multiple connectable and extensible products to clients, and to allow our clients to more easily expand their usage and the use cases they enable over time.

The market may be unreceptive to our general business approach, including being unreceptive to our cloud-based offerings and unreceptive to purchasing multiple products from us.

As we continue to pursue this business strategy, we may experience volatility in our Software segment’s revenues and operating results caused by various factors, including the differences in revenue recognition treatment and timing between our cloud-based offerings and on-premises software licenses, the timing of investments and other expenditures necessary to develop and operate our cloud-based offerings, and the adoption of new sales, delivery and distribution methods.

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• changes in the business analytics industry;

• changes in technology;

• changes in technology, including increased use of artificial intelligence (“AI”);

• our inability to obtain or use key data for our products;

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• our inability to obtain regulatory approvals for our products and services, including credit score models;

• the increasing availability of free or relatively inexpensive consumer credit, credit score and other information from public or commercial sources;

• the increasing availability of free or relatively inexpensive consumer credit, credit score and other information from public or commercial sources, including those that use AI technologies;

• failure to execute our selling approach;

• inability to successfully sell our products in new vertical markets.

If we are unable to successfully develop new products or new versions of products, or if we experience defects, failures or delays associated with the introduction of new products or of new versions of products, our business could suffer serious harm.

Our growth and the success of our business strategy depend upon our ability to develop and sell new products and new versions of products, including the development and sale of our cloud-based product offerings and our scoring solutions.

If we are unable to develop new or enhanced products, or if we are not successful in introducing new or enhanced products, we may not be able to grow our business or growth may occur more slowly than we anticipate.

Our ability to increase our revenues depends to some extent upon introducing new products and services, upon introducing enhancements and improvements to existing products and services and upon entering new markets for products and services.

If we are unable to successfully develop, or if the marketplace does not accept, new, enhanced or improved products and services, or if we experience defects, failures or delays associated with the introduction of new, enhanced or improved products or services, our business could suffer serious harm.

Our revenue growth and the success of our business strategy depend upon our ability to enhance and improve existing products and services, and to continue to introduce new products and services that keep pace with technological developments, satisfy increasingly sophisticated customer requirements and achieve market acceptance.

If we are unable to develop new, enhanced or improved products and services, including those that utilize AI technologies, or if we are not successful in introducing such products and services, we may not be able to grow our business or growth may occur more slowly than we anticipate.

In addition, significant undetected errors or delays in new products or new versions of products may affect market acceptance of our products and could harm our business, financial condition or results of operations.

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We have also experienced errors or “bugs” in our software products, despite testing prior to release of the products.

Software errors in our products could affect the ability of our products to work with other hardware or software products, could delay the development or release of new products or new versions of products, and could adversely affect market acceptance of our products.

These errors could affect the ability of our products to work with other hardware or software products, could delay the development or release of new products or new versions of products, and could adversely affect market acceptance of our products.

Errors or defects in our products that are significant, or are perceived to be significant, could result in rejection of our products, damage to our reputation, loss of revenues, diversion of development resources, an increase in product liability claims, and increases in service and support costs and warranty claims.

Our ability to increase our revenues will depend to some extent upon introducing new products and services and upon introducing enhancements and improvements to existing products and services.

If the marketplace does not accept these new, enhanced or improved products and services, our revenues may decline.

To increase our revenues, we must enhance and improve existing products and services, and continue to introduce new products and services that keep pace with technological developments, satisfy increasingly sophisticated customer requirements and achieve market acceptance.

We believe much of the future growth of our business and the success of our business strategy will rest on our ability to continue to expand into newer markets for our products and services.

Our use of AI in the development of our products and our incorporation of AI features into some of our products could introduce errors, defects, or delays impacting our ability to successfully develop new products.

We also believe that much of the future growth of our business and the success of our business strategy may depend on our ability to continue to expand into newer markets for our products and services.

Such areas are relatively new to our product development and sales and marketing personnel.

Products and services that we plan to market in the future are in various stages of development.

We cannot assure you that the marketplace will accept these products and services.

If our current or potential customers are not willing to switch to or adopt our new products and services, either as a result of the quality of these products and services or due to other factors, such as economic conditions, our revenues will decrease.

If these newer markets are not willing to adopt our products and services, either as a result of the quality of these products and services or due to other factors, such as economic conditions, our revenues may decrease.

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.

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In addition, the U.S.

and other key international economies have periodically experienced downturns in which economic activity is impacted by falling demand for a variety of goods and services, increased volatility of interest rates, fluctuating rates of inflation, restricted credit, poor liquidity, reduced corporate profitability, volatility in credit, equity and foreign exchange markets, bankruptcies and overall uncertainty with respect to the economy.

and other key international economies periodically experience downturns in which economic activity is impacted by falling demand for a variety of goods and services, increased volatility of interest rates, fluctuating rates of inflation, restricted credit, poor liquidity, reduced corporate profitability, volatility in credit, trade policies and tariffs, equity and foreign exchange markets, bankruptcies and overall uncertainty with respect to the economy.

The potential for economic disruption presents considerable risks to our business, including potential bankruptcies or credit deterioration of financial institutions with which we have substantial relationships.

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Periods of global economic uncertainty experienced in the past have produced substantial stress, volatility, illiquidity and disruption of global credit and other financial markets, resulting in the bankruptcy or acquisition of, or government assistance to, several major domestic and international financial institutions.

The potential for future stress and disruptions, including in connection with geopolitical tensions, military conflicts, the level of inflation and the volatility of interest rates, presents considerable risks to our businesses and operations.

The potential for future stress and disruptions, including in connection with geopolitical tensions, military conflicts, trade policies and tariffs, the level of inflation and the volatility of interest rates, presents considerable risks to our businesses and operations.

These risks include potential bankruptcies or credit deterioration of financial institutions, many of which are our customers.

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There can be no assurance that we will be able to prevent future revenue contraction or effectively promote future revenue growth in our businesses.

While we expand our sales into international markets, the risks are greater as these markets are also experiencing substantial disruption and we are less well-known in them.

While we expand our sales into international markets, the risks are greater as some of these markets have experienced and may in the future experience substantial disruption and we are less well-known in them.

If use of the FICO ® Score by Fannie Mae and Freddie Mac were to cease or decline, it could have a material adverse effect on our revenues, results of operations and stock price.

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If other credit score models are approved for use with mortgages delivered to Fannie Mae and Freddie Mac, or the FICO Score is not approved for continued use with those mortgages, it could have a material adverse effect on our revenues, results of operations and stock price.

Other changes implemented by FHFA, Fannie Mae or Freddie Mac could also affect the demand for FICO Scores and thus could have similar adverse effects on our business, including, for example, a change permitting mortgage originators to underwrite loans using credit scores from only two of the three national consumer reporting agencies (a “bi-merge report”) rather than from all three (a “tri-merge report”).

Other changes implemented by FHFA, Fannie Mae or Freddie Mac could also affect the demand for FICO Scores and thus could have similar adverse effects on our business, including, for example, the change announced by the FHFA Director in July 2025 permitting mortgage originators to choose the credit score they submit with mortgages delivered to Fannie Mae and Freddie Mac or a potential future change permitting mortgage originators to underwrite loans using credit scores from fewer than three national consumer reporting agencies.

The ability of our FICO Score to compete effectively in the U.S.

mortgage market may be constrained by the pricing and other business practices of the consumer reporting agencies, which could have a material adverse effect on our revenues, results of operations and stock price.

We are subject to significant competition in the markets in which we operate, and our products and pricing strategies, and those of our competitors, could decrease our product sales and market share.

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• in-house analytic and systems developers;

• neural network developers and artificial intelligence system builders;

• developers and providers of neural networks, machine learning, and AI systems;

• fraud solutions providers;

• scoring model builders;

• providers of credit reports and credit scores;

• providers of credit reports and credit scores, including consumer reporting agencies;

• software companies supplying predictive analytic modeling, rules, or analytic development tools;

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Many of our products are sold by distributors or partners, and we intend to continue to market and distribute our products through these existing distributor and partner relationships, as well as invest resources to develop additional sales, distribution and marketing relationships.

Our Scores segment relies on, among others, Experian, TransUnion and Equifax.

Failure of our existing and future distributors to generate significant revenues or otherwise perform their expected services or functions, demands by such distributors to change the terms on which they offer our products, or our failure to establish additional distribution or sales and marketing alliances, could have a material adverse effect on our business, operating results and financial condition.

In addition, certain of our distributors presently compete with us and may compete with us in the future, either by developing competitive products themselves or by distributing competitive offerings.

For example, our Scores segment relies on, among others, Experian, TransUnion and Equifax.

Failure of our existing and future distributors or partners to generate significant revenues or otherwise perform their expected services or functions, demands by such distributors or partners to change the terms on which they offer our products, or our failure to establish additional distribution or sales and marketing alliances, could have a material adverse effect on our business, operating results and financial condition.

In addition, certain of our distributors and partners presently compete with us and may compete with us in the future, either by developing competitive products themselves or by distributing competitive offerings.

For example, Experian, TransUnion and Equifax have developed a credit scoring product to compete directly with our products and are actively selling that product.

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Any disclosure, loss, invalidity of, or failure to protect our intellectual property could negatively impact our competitive position, and ultimately, our business.

The extent to which our intellectual property rights can be protected differs by jurisdiction, and is rapidly evolving with respect to AI technologies.

There can be no assurance that our protection of our intellectual property rights in the U.S.

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government, the results of research may be made public by the government, limiting our competitive advantage with respect to future products based on our research.

If we are unable to access new markets or develop new sales and distribution channels, our business and growth prospects could suffer.

We expect our future growth to depend, in part, on the sale of products and service solutions in industries and markets we do not currently serve.

We also expect to grow our business by delivering our solutions through additional sales and distribution channels.

If we fail to penetrate these industries and markets to the degree we anticipate, or if we fail to develop additional sales and distribution channels, we may not be able to grow our business, growth may occur more slowly than we anticipate, or our revenues and profits may decline.

If we fail to keep up with rapidly changing technologies, our products could become less competitive or obsolete.

In our markets, technology changes rapidly, and there are continuous improvements in computer hardware, network operating systems, programming tools, programming languages, operating systems, database technologies, cloud-based technologies and the use of the Internet.

For example, artificial intelligence technologies, including generative artificial intelligence, and their use are currently undergoing rapid change.

For example, AI technologies, including generative AI, and their use are currently undergoing rapid change.

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.

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• initiate new product introductions in a way that minimizes the impact of customers delaying purchases of existing products in anticipation of new product releases;

• influence and respond to emerging industry standards and other technological changes.

• influence and respond to emerging industry standards and other technological changes, including relating to AI.

Our reengineering efforts may cause our growth prospects and profitability to suffer.

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If our reengineering efforts are not successful over the long term, our revenues, results of operations and business may suffer.

If we are unable to access new markets or develop new sales and distribution channels, our business and growth prospects could suffer.

We expect our future growth to depend, in part, on the sale of products and service solutions in industries and markets we do not currently serve.

We also expect to grow our business by delivering our solutions through additional sales and distribution channels.

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.

We have acquired, and may in the future acquire, companies, businesses, products, services and technologies.

Acquisitions involve significant risks and uncertainties, including:

• our ongoing business may be disrupted and our management’s attention may be diverted by acquisition, transition or integration activities;

• 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, or otherwise not realize the expected return, which could adversely affect our business or operating results;

• we may be unable to retain the key employees, customers and other business partners of the acquired operation;

• we may have difficulties entering new markets where we have no or limited direct prior experience or where competitors may have stronger market positions;

• our operating results or financial condition may be adversely impacted by known or unknown contingent liabilities, other liabilities or claims we assume in an acquisition or that are imposed on us as a result of an acquisition, including claims by government agencies or authorities, terminated employees, current or former customers, former stockholders or other third parties;

• we could incur material charges in connection with the impairment of goodwill or other assets that we acquire;

• a company that we acquire may have experienced a security incident that it has yet to discover, investigate and remediate, may have other cybersecurity vulnerabilities, or may have unsophisticated security measures, any of which we might not identify in a timely manner and which could spread more broadly to other parts of our company during the integration effort;

• we may incur material charges as a result of acquisition costs or costs incurred in combining and/or operating the acquired business that are greater than anticipated;

• we may not realize the anticipated increase in our revenues from an acquisition for a number of reasons, including if a larger than predicted number of customers decline to renew their contracts, if we are unable to incorporate the acquired technologies or products with our existing product lines in a uniform manner, if we are unable to sell the acquired products to our customer base or if contract models of an acquired company or changes in accounting treatment do not allow us to recognize revenues on a timely basis;

• our use of cash to pay for acquisitions may limit other potential uses of our cash, including stock repurchases, and retirement of outstanding indebtedness;

• to the extent we issue a significant amount of equity securities in connection with future acquisitions, existing stockholders may be diluted and earnings per share may decrease.

Because acquisitions are inherently risky, our transactions may not be successful and may have a material adverse effect on our business, results of operations, financial condition or cash flows.

Acquisitions of businesses having a significant presence outside the U.S.

will increase our exposure to the risks of conducting operations in international markets.

There can be no assurance that strategic divestitures will provide business benefits.

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If we do not successfully manage the risks associated with divestitures, our business, financial condition, and results of operations could be adversely affected as the potential strategic benefits may not be realized or may take longer to realize than expected.

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.

We have acquired, and may in the future acquire, companies, businesses, products, services and technologies.

Acquisitions involve significant risks and uncertainties, including:

• our ongoing business may be disrupted and our management’s attention may be diverted by acquisition, transition or integration activities;

• an acquisition may not further our business strategy as we expected, we may not integrate acquired operations or technology as successfully as we expected or we may overpay for our investments, or otherwise not realize the expected return, which could adversely affect our business or operating results;

• we may be unable to retain the key employees, customers and other business partners of the acquired operation;

• we may have difficulties entering new markets where we have no or limited direct prior experience or where competitors may have stronger market positions;

• our operating results or financial condition may be adversely impacted by known or unknown claims or liabilities we assume in an acquisition or that are imposed on us as a result of an acquisition, including claims by government agencies or authorities, terminated employees, current or former customers, former stockholders or other third parties;

• we could incur material charges in connection with the impairment of goodwill or other assets that we acquire;

• a company that we acquire may have experienced a security incident that it has yet to discover, investigate and remediate which we might not be identify in a timely manner and which could spread more broadly to other parts of our company during the integration effort;

• we may incur material charges as a result of acquisition costs, costs incurred in combining and/or operating the acquired business, or liabilities assumed in the acquisition that are greater than anticipated;

• our use of cash to pay for acquisitions may limit other potential uses of our cash, including stock repurchases, and retirement of outstanding indebtedness;

• to the extent we issue a significant amount of equity securities in connection with future acquisitions, existing stockholders may be diluted and earnings per share may decrease.

Because acquisitions are inherently risky, our transactions may not be successful and may have a material adverse effect on our business, results of operations, financial condition or cash flows.

Acquisitions of businesses having a significant presence outside the U.S.

will increase our exposure to the risks of conducting operations in international markets.

Our revenues, results of operations and overall financial performance may be negatively impacted by health epidemics or other disease outbreaks.

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Many of our products are provided by us through the Internet.

We may be exposed to additional cybersecurity threats as we migrate our software solutions and data from our legacy systems to cloud-based solutions.

We are exposed to additional cybersecurity threats as we continue to migrate our software solutions and data from our legacy systems to cloud-based solutions.

We operate in an environment of significant risk of cybersecurity incidents resulting from unintentional events or deliberate attacks by third parties or insiders, which may involve exploiting security vulnerabilities or sophisticated attack methods.

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Attacks or other threats to our supply chain for such software and materials may render us unable to provide assurances of the origin of such software and materials, and could put us at risk of distributing software or other materials that may cause harm to ourselves, our customers or other third parties.

In addition, increased attention on and use of artificial intelligence increases the risk of cyber-attacks and data breaches, which can occur more quickly and evolve more rapidly when artificial intelligence is used.

Further, use of artificial intelligence by our employees, whether authorized or unauthorized, increases the risk that our intellectual property and other proprietary information will be unintentionally disclosed.

Cybersecurity breaches could expose us to a risk of loss, the unauthorized disclosure of consumer or customer information, significant litigation, regulatory fines, penalties, loss of customers or reputational damage, indemnity obligations and other liability.

In addition, increased attention on and use of AI increases the risk of cyber-attacks and data breaches, which can occur more quickly and evolve more rapidly when AI is used.

Further, use of AI by our employees, whether authorized or unauthorized, increases the risk that our intellectual property and other proprietary information will be unintentionally disclosed.

Cybersecurity breaches, including those that impact our third-party vendors and other security providers, could expose us to a risk of loss, the unauthorized disclosure of consumer or customer information, significant litigation, regulatory fines, penalties, loss of customers or reputational damage, indemnity obligations and other liability.

There is no assurance that the programs, technologies and processes that we have put in place in an effort to maintain the security and protection of our non-public information and that of our customers will be fully implemented, complied with or effective.

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Because a successful breach of our computer systems, software, networks or other technology asset could occur and persist for an extended period of time before being detected, we may not be able to immediately address the consequences of a cybersecurity incident.

Malicious third parties may also conduct attacks designed to temporarily deny customers, distributors and vendors access to our systems and services.

Malicious third parties may also conduct attacks designed to temporarily deny customers, distributors and vendors access to our systems and services, and may demand payment by us in order to restore access.

Cybersecurity breaches experienced by our vendors, by our distributors, by our customers, by companies that we acquire, or by us may trigger governmental notice requirements and public disclosures, which may lead to widespread negative publicity, statutory damages, and lawsuits filed by individuals impacted by cybersecurity breaches under privacy and cybersecurity statutes that create rights of action.

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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.

Our ability to provide reliable products and services to our customers depends on the efficient and uninterrupted operation of our data centers, information technology and communication systems, and increasingly those of our external service providers.

Our ability to provide reliable products and services to our customers depends on the efficient and uninterrupted operation of our and our external service providers’ data centers, information technology and communication systems.

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.

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Any one or more of the foregoing occurrences could have a material adverse effect on our reputation, business, financial condition, cash flows and results of operations.

The failure to obtain certain forms of model construction data from our customers or others could harm our business.

The failure to obtain certain forms of data from our customers or others for our use in product development could harm our business.

Our business requires that we develop or obtain a reliable source of sufficient amounts of current and statistically relevant data to analyze transactions and update some of our products.

In most cases, these data must be periodically updated and refreshed to enable our products to continue to work effectively in a changing environment.

In most cases, this data must be periodically updated and refreshed to enable our products to continue to work effectively in a changing environment.

We do not own or control much of the data that we require, most of which is collected privately and maintained in proprietary databases.

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We could also become subject to increased legislative, regulatory or judicial restrictions or mandates on the collection, disclosure, transfer or use of such data, in particular if such data is not collected by our providers in a way that allows us to legally use the data.

Third parties have asserted copyright and other intellectual property interests in these data, and these assertions, if successful, could prevent us from using these data.

Third parties have asserted copyright and other intellectual property interests in this data, and these assertions, if successful, could prevent us from using this data.

We may not be successful in maintaining our relationships with these external data source providers or in continuing to obtain data from them on acceptable terms or at all.

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Our business strategy and our future success will depend in large part on our ability to attract and retain experienced sales, consulting, research and development, marketing, technical support and management personnel.

The labor market for these individuals, particularly in the complex technical disciplines of software engineering, data science, and cyber security, is very competitive due to the limited number of people available with the necessary technical skills and understanding to support our complex products and it may become more competitive with general market and economic improvement.

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 and understanding to build, sell and support our complex products and it may become more competitive with general market growth.

We cannot be certain that our compensation strategies will be perceived as competitive by current or prospective employees.

This and other competitive factors could impair our ability to recruit and retain personnel.

We have experienced past difficulty in recruiting and retaining qualified personnel, especially in these intensely competitive technical skill areas, and we may experience future difficulty in recruiting and retaining such personnel, at a time when we may need additional staff to support expanded research and development efforts, new customers and/or increased customer needs.

We have experienced past difficulty in recruiting and retaining qualified personnel, especially in these intensely competitive and technical skill areas, and we may experience future difficulty in recruiting and retaining such personnel, at a time when we may need additional staff to support expanded research and development efforts, new customers and/or increased customer needs.

We may also recruit skilled technical professionals from other countries to work in the U.S., and from the U.S.

and other countries to work abroad.

Limitations imposed by immigration laws in the U.S.

and abroad and the availability of visas in the countries where we do business could hinder our ability to attract necessary qualified personnel and harm our business and future operating results.

Limitations imposed by current and changing immigration laws in the U.S.

and abroad and the availability of visas in the countries where we do business could hinder our ability to attract and retain necessary qualified personnel and harm our business and future operating results.

There is a risk that even if we invest significant resources in attempting to attract, train and retain qualified personnel, we will not succeed in our efforts, and our business could be harmed.

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residential mortgage closing costs may affect our ability to implement price changes for FICO ® Scores used in mortgage originations and thus limit the revenues and profitability of the FICO Score.

If new laws, regulations or other governmental action affecting the FICO Score or our other products and services are implemented or carried out, it could adversely affect our business and results of operations.

There has been increased focus in the U.S.

by federal regulators such as the CFPB and the FTC, as well as the current presidential administration and some states, related to the transparency and fairness of certain fees charged to consumers and the impacts on the costs of consumer goods and services.

For example, in May 2024, the CFPB launched a public inquiry to obtain information on fees charged by providers of mortgages and related settlement services in the U.S.

residential mortgage market, including fees for credit reports and credit scores.

The CFPB indicated that it is looking into why closing costs are increasing, who is benefiting, and how costs for borrowers and lenders could be lowered.

If new laws, regulations or other governmental action result from this inquiry, or otherwise, that limit the fees that can be charged for credit scores by us, consumer reporting agencies, or end users of our FICO ® Scores, or that place other restrictions on the sale or distribution of credit scores, our ability in the future to increase pricing for FICO Scores used in mortgage originations may be impacted and thus the revenues and profitability of the FICO Score may be adversely affected and the growth of our Scores business may be constrained.

If new laws, regulations or other governmental action affecting the FICO Score or our other products, services and solutions are implemented or carried out, it could adversely affect our business and results of operations.

There has been increased regulatory focus in the U.S.

related to the transparency and fairness of certain fees charged to consumers in connection with the closing of a residential mortgage loan, including fees for credit reports and credit scores.

If new laws, regulations or other governmental action limit the fees that can be charged for credit scores by us, consumer reporting agencies, or end users of our FICO® Scores, or that place other restrictions on the sale or distribution of credit scores, our ability in the future to increase pricing for FICO Scores used in mortgage originations may be impacted and thus the revenues and profitability of the FICO Score may be adversely affected and the growth of our Scores business may be constrained.

There has also been increased focus more broadly on laws and regulations in the U.S.

related to our business and the business of consumer reporting agencies, including by U.S.

state and federal regulators such as the CFPB, relating to policy concerns with regard to the operation of consumer reporting agencies, the sale and distribution of credit scores and credit reports, the use and accuracy of credit and alternative data, the use of credit scores and fair lending, and the use, transparency, and fairness of algorithms, artificial intelligence, and machine learning in business processes.

For example, the CFPB has indicated that it intends to issue rules under the FCRA that would extend the FCRA to certain business practices not currently subject to that statute.

state and federal regulators, relating to policy concerns with regard to the operation of consumer reporting agencies, the sale and distribution of credit scores and credit reports, the use and accuracy of credit and alternative data, the use of credit scores and fair lending, and the use, transparency, and fairness of algorithms, AI, and machine learning in business processes.

The costs and other burdens of compliance with such laws and regulations, and with new or revised laws and regulations that may be implemented addressing these topics, could negatively impact the use and adoption of our solutions, reduce overall demand for them, and harm our business, financial condition or results of operations.

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Laws and governmental regulation affect how our business is conducted and, in some cases, subject us to the possibility of government supervision or enforcement and future lawsuits arising from our products and services.

Laws and governmental regulations also influence our current and prospective customers’ activities, as well as their expectations and needs in relation to our products and services.

Laws and regulations that may affect our business and/or our current and prospective customers’ activities include, but are not limited to, those in the following significant regulatory areas:

Laws and governmental regulations also influence our current and prospective customers’ activities, as well as their expectations and needs in relation to our products and services, and may require them to flow down certain contractual obligations, exercise greater oversight, and perform more rigorous audits of their key service providers such as us.

Laws and regulations in the U.S.

and abroad that may affect our business and/or our current and prospective customers’ activities include, but are not limited to, those in the following significant regulatory areas:

• Privacy and security laws and regulations that limit the use and disclosure, require security procedures, or otherwise apply to the collection, processing, storage, use and transfer of personal data of individuals (e.g., the U.S.

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• Fair lending laws (e.g., the Equal Credit Opportunity Act and Regulation B, and the Fair Housing Act) and laws and regulations that may impose requirements relating to algorithmic fairness or accountability;

• Data and cybersecurity laws and regulations, including:

the Cybersecurity Act of 2015;

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• Laws and regulations governing the use of the Internet and social media, telemarketing, advertising, endorsements and testimonials;

• Antitrust and unfair competition laws;

• Anti-money laundering laws and regulations (e.g., the Bank Secrecy Act and the USA PATRIOT Act);

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• Laws and regulations that apply to outsourcing of services by our clients, and that set forth requirements for managing third parties (e.g., vendors, contractors, suppliers and distributors);

• Laws and regulations relating to the environmental, social and governance, or sustainability, practices of companies, including enhanced climate-related disclosure requirements from regulators, such as California and the SEC, and the E.U.’s Corporate Sustainability Reporting Directive.

• Laws and regulations relating to the environmental, social and sustainability practices of companies, including enhanced climate-related disclosure requirements from regulators, such as California’s climate disclosure rules and the E.U.’s Corporate Sustainability Reporting Directive.

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 or the business of our customers or affect the demand for our products and services.

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Numerous other U.S.

states have considered similar privacy laws, with many of those states having passed such laws with respective effective dates ranging from 2023 through 2026.

The European Commission has finalized the EU AI Act, which establishes requirements for the provision and use of products that leverage artificial intelligence systems, including in credit scoring.

states have passed similar privacy laws, and other states are considering such legislation.

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.

The EU AI Act entered into force on August 1, 2024, and its provisions take effect between six and 36 months after that date, with most of those provisions becoming effective in 2026.

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government and a number of U.S.

states, are considering or have implemented regulations or standards applicable to the provision and use of artificial intelligence technologies.

states, are considering or have implemented laws, regulations or standards applicable to the provision and use of AI technologies.

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.

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New laws and regulations pertaining to our customers could cause them to pursue new strategies, reducing the demand for our products.

We expect there will continue to be an increased focus on laws and regulations related to our business and/or the business of our clients, including with regard to the operation of consumer reporting agencies, the collection, use, accuracy, correction and sharing of personal information, credit scoring, the use of artificial intelligence and machine learning, and algorithmic accountability and fair lending.

We expect there will continue to be an increased focus on laws and regulations related to our business and/or the business of our clients, including with regard to the operation of consumer reporting agencies, the collection, use, accuracy, correction and sharing of personal information, credit scoring, the use of AI and machine learning, and algorithmic accountability and fair lending.

If we are subject to infringement claims, it could harm our business.

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• currency fluctuations;

• unfavorable tax rules or changes in tariffs and other trade barriers;

• unfavorable tax rules;

• changes in tariffs and other trade barriers;

• the presence and acceptance of varying levels of business corruption in international markets;

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We currently have a substantial portion of our product development staff in international locations, some of which have political and developmental risks.

If such risks materialize, our business could be damaged.

For example, approximately one-third of our workforce is located in India, which could be negatively impacted by heightened tensions between India and Pakistan.

If any of such risks materialize, our business could be damaged.

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.

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Such disruptions present considerable risks to our businesses and operations.

As global economic conditions experience stress and negative volatility, or if there is an escalation in regional or global conflicts, or terrorism, we will likely experience reductions in the number of available customers and in capital expenditures by our remaining customers, longer sales cycles, deferral or delay of purchase commitments for our products and increased price competition, which may adversely affect our business, results of operations and liquidity.

As global economic conditions experience stress and negative volatility, including any stress or negative volatility related to the imposition of, and threatened imposition of, tariffs and retaliatory tariffs, economic sanctions and increased trade tensions or if there is an escalation in regional or global conflicts, or terrorism, we will likely experience reductions in the number of available customers and in capital expenditures by our remaining customers, longer sales cycles, deferral or delay of purchase commitments for our products and increased price competition, which may adversely affect our business, results of operations and liquidity.

As a result of these conditions, risks and uncertainties, we may need to modify our strategies, businesses or operations, and we may incur additional costs in order to compete in a changed business environment.

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General Risk Factors

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.

Our stock price has been subject to fluctuations due to a number of factors, including variations in our revenues and operating results.

The financial markets have at various times experienced significant price and volume fluctuations that have particularly affected the stock prices of many technology companies and financial services companies, and these fluctuations sometimes have been unrelated to the operating performance of these companies.

Broad market fluctuations, as well as industry-specific and general economic conditions, may negatively affect our business and require us to record an impairment charge related to goodwill, which could adversely affect our results of operations, stock price and business.

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.

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There can be no assurance that the outcomes from such examinations will not have an adverse effect on our operating results and financial condition.

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.

Our stock price has been subject to fluctuations due to a number of factors, including variations in our revenues and operating results.

Our anti-takeover defenses could make it difficult for another company to acquire control of FICO, thereby limiting the demand for our securities by certain types of purchasers or the price investors are willing to pay for our stock.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors