Shares of Fair Isaac Corporation (FICO), the company behind the FICO credit score model, plummeted 6.46% in after-hours trading on Wednesday, despite reporting strong fourth-quarter financial results. The significant drop came as the company's fiscal 2026 guidance fell short of analysts' expectations, raising concerns about future growth prospects.

Fair Isaac reported impressive Q4 numbers, with revenue rising 14% to $515.8 million, surpassing analysts' forecasts of $513.3 million. Net income for the quarter reached $155.0 million, or $6.42 per share, up from $135.7 million, or $5.44 per share, in the same period last year. Adjusted earnings per share of $7.74 also beat Wall Street estimates of $7.32. The company's credit score business saw a notable 25% increase in sales, driven by higher mortgage origination scores unit prices.

However, the positive quarterly results were overshadowed by Fair Isaac's fiscal 2026 outlook. The company projects full-year sales of $2.35 billion, below the $2.39 billion Wall Street consensus. Additionally, while Fair Isaac raised its adjusted earnings per share guidance to $38.17, it still fell short of analysts' expectations of $39.05. This conservative outlook, coupled with increasing competition in the mortgage industry, appears to have spooked investors. The Federal Housing Finance Agency's recent decision to allow rival VantageScore to be used for mortgage lending has challenged Fair Isaac's long-standing monopoly in the sector, adding to market concerns about the company's future growth trajectory.