What Does Fair Isaac Offer That Cadence Does Not?

Investors buy Cadence Design Systems (CDNS) for a product customers cannot easily replace. They buy Fair Isaac for the same reason. Cadence sells chip design software and grows as customers design more chips. Fair Isaac sells the FICO Score and has grown mainly by raising its price. In September 2026, the government’s Federal Housing Finance Agency said it would start using VantageScore, a cheaper rival, to set mortgage prices.

Both Companies Had Raised Their 2026 Forecasts

Both companies had raised their forecasts in late July 2026. Cadence lifted its 2026 revenue forecast to between $6.26 billion and $6.34 billion, from $6.17 billion. Fair Isaac lifted its fiscal 2026 revenue forecast to $2.53 billion. Fair Isaac raised five revenue and earnings forecasts, and Cadence raised three.

The raises came from different places. Cadence signed a multi-year engagement with Intel. But Cadence’s management said its raise reflected strength across the business, not any single customer or product. Every Cadence product group grew by double digits in the second quarter of 2026. Cadence ended that quarter with a record backlog of $8.1 billion in undelivered orders.

Fair Isaac’s growth came mostly from one product’s price. Fair Isaac’s Scores revenue grew 41% in fiscal Q3 2026, while its Software revenue grew 2%. Management said growth in scores sold to businesses came primarily from a higher price per mortgage score. Fair Isaac made its forecast two months before the government’s announcement. Fair Isaac has not reported since.

Cadence Has A Thinner Margin And Far Less Debt

Cadence keeps less of each sales dollar as operating profit than Fair Isaac does. Cadence’s operating margin over the past twelve months is 31%, against 52% for Fair Isaac. Cadence’s management expects slightly lower margins in the second half of 2026. Management said the reason is deliberate investments, not a weaker business.

Cadence owes far less than Fair Isaac. Cadence’s debt equals 2.7% of its market value, against 40% for Fair Isaac. In June 2026, Fair Isaac took a $1.5 billion term loan to pay for a share buyback.

Fair Isaac produced $961 million of free cash flow, the cash left after investment, over its last four quarters. Fair Isaac’s management said the company will use cash to pay down debt in the near term. But most of Fair Isaac’s revenue comes from Scores, the business the government’s announcement affects.

Is Cadence Ahead On P/E Or Growth?

No. Fair Isaac costs less per dollar of profit than Cadence and has grown faster. Fair Isaac trades at 18.4 times its profit of the past twelve months, against 69.7 times for Cadence. That multiple, the P/E, is what you pay for each dollar of profit. Fair Isaac’s revenue grew 24% over the past twelve months, against 14.7% for Cadence.

The profit and the revenue growth behind those figures are from the months before the government’s announcement. Fair Isaac earned that profit while the FICO Score was the only score used to set mortgage prices. The share price in Fair Isaac’s P/E is from after the announcement. Fair Isaac stock has fallen 56% over the past twelve months, while Cadence stock is down 0.2%.

On these measures Fair Isaac comes out ahead. Fair Isaac has a lower P/E, faster growth, a wider margin and more revenue and earnings forecasts raised. Cadence is better on debt. Cadence’s growth comes from every product group, while Fair Isaac’s comes mostly from one product’s price. Fair Isaac has the cash flow to start paying its debt down. Fair Isaac has not yet shown that its mortgage score price holds after the announcement.

Fair Isaac’s next report, for fiscal Q4 2026, will be its first since the announcement. Most of that quarter came before the announcement, so the later reports matter too. Scores growth well below the 41% of fiscal Q3 2026 would narrow Fair Isaac’s lead over Cadence on growth.

Does This Mean You Should Act On CDNS?

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