Home > Comparison > Technology > FICO vs PEGA
The strategic rivalry between Fair Isaac Corporation and Pegasystems Inc. shapes the evolution of the software application industry. Fair Isaac operates as a data-driven analytics powerhouse focused on decision management and scoring solutions. Pegasystems, by contrast, emphasizes enterprise software with a strong focus on customer engagement and process automation. This analysis will evaluate which business model delivers superior risk-adjusted returns, guiding investors aiming for durable growth in the technology sector.
Table of contents
Companies Overview
Fair Isaac Corporation and Pegasystems Inc. shape key niches in the enterprise software market, each driving innovation with distinct approaches.
Fair Isaac Corporation: Analytics and Decision Automation Leader
Fair Isaac Corporation leads in analytic software and data management. Its revenue stems from two main segments: Scores, offering business-to-business and consumer scoring solutions, and Software, delivering decision management platforms for marketing, fraud detection, and customer management. In 2026, the firm strategically focuses on enhancing modular analytics to automate and optimize client decision processes globally.
Pegasystems Inc.: Customer Engagement and Automation Innovator
Pegasystems Inc. excels in enterprise software applications centered on customer engagement and digital process automation. It generates revenue by licensing and supporting platforms like Pega Infinity and Pega Platform, which unify customer service, sales automation, and intelligent automation. The 2026 strategy emphasizes cloud-based delivery and expanding its footprint in financial services and healthcare industries.
Strategic Collision: Similarities & Divergences
Both companies operate in the software-application sector but diverge in focus; Fair Isaac emphasizes decision analytics, while Pegasystems prioritizes customer engagement and process automation. Their primary battleground is enterprise digital transformation, where predictive analytics meets workflow automation. Investors face contrasting profiles: Fair Isaac offers a data-driven moat, while Pegasystems leans on platform versatility and service integration.
Income Statement Comparison
This data dissects the core profitability and scalability of both corporate engines to reveal who dominates the bottom line:
| Metric | Fair Isaac Corporation (FICO) | Pegasystems Inc. (PEGA) |
|---|---|---|
| Revenue | 1.99B | 1.50B |
| Cost of Revenue | 354M | 391M |
| Operating Expenses | 712M | 983M |
| Gross Profit | 1.64B | 1.11B |
| EBITDA | 951M | 185M |
| EBIT | 936M | 149M |
| Interest Expense | 134M | 7M |
| Net Income | 652M | 99M |
| EPS | 26.9 | 0.58 |
| Fiscal Year | 2025 | 2024 |
Income Statement Analysis: The Bottom-Line Duel
This income statement comparison reveals which company drives superior efficiency and profitability through their core operations.
Fair Isaac Corporation (FICO) Analysis
FICO exhibits strong revenue growth, rising from $1.32B in 2021 to nearly $2B in 2025. Net income surged 66% over five years, reaching $652M in 2025. Its gross margin stays robust at 82%, while net margin expanded to 33%, reflecting disciplined cost control and operational leverage. The 2025 figures show accelerating momentum and margin expansion.
Pegasystems Inc. (PEGA) Analysis
PEGA’s revenue climbed steadily from $1.02B in 2020 to $1.50B in 2024. Net income recovered dramatically from a $346M loss in 2022 to nearly $99M profit in 2024. Gross margin holds at a healthy 74%, but net margin remains slim at 6.6%. The latest year demonstrates strong earnings rebound and margin improvement, though profitability lags FICO’s scale.
Margin Dominance vs. Earnings Recovery
FICO leads with superior margins and consistent net income growth, showcasing efficient capital deployment. PEGA impresses with a sharp turnaround from losses to profitability but still trails in overall margin strength. Investors seeking steady profitability may prefer FICO’s profile, while those favoring rapid earnings recovery might watch PEGA’s progress closely.
Financial Ratios Comparison
These vital ratios act as a diagnostic tool to expose the underlying fiscal health, valuation premiums, and capital efficiency of the companies compared:
| Ratios | Fair Isaac Corporation (FICO) | Pegasystems Inc. (PEGA) |
|---|---|---|
| ROE | -37.3% | 16.9% |
| ROIC | 52.96% | 7.40% |
| P/E | 55.6 | 80.1 |
| P/B | -20.8 | 13.6 |
| Current Ratio | 0.83 | 1.23 |
| Quick Ratio | 0.83 | 1.23 |
| D/E | -1.76 | 0.94 |
| Debt-to-Assets | 164.6% | 31.1% |
| Interest Coverage | 6.92 | 18.1 |
| Asset Turnover | 1.07 | 0.85 |
| Fixed Asset Turnover | 21.2 | 14.4 |
| Payout Ratio | 0% | 10.3% |
| Dividend Yield | 0% | 0.13% |
| Fiscal Year | 2025 | 2024 |
Efficiency & Valuation Duel: The Vital Signs
Financial ratios serve as a company’s DNA, exposing hidden risks and revealing operational strengths critical for investors.
Fair Isaac Corporation
FICO shows a strong net margin of 32.75%, signaling robust profitability, but suffers from a deeply negative ROE at -37.34%, indicating shareholder returns are under pressure. Its high P/E of 55.64 suggests the stock is expensive, while a zero dividend yield means capital is likely reinvested into R&D, supporting growth but raising concerns on immediate returns.
Pegasystems Inc.
PEGA posts a modest net margin of 6.63% and a positive ROE of 16.94%, reflecting moderate profitability and reasonable shareholder value creation. The stock trades at a stretched P/E of 80.12, implying high growth expectations. A minimal dividend yield of 0.13% points to limited income returns, with reinvestment focused on research and development to drive future expansion.
Premium Valuation vs. Operational Safety
FICO’s impressive margins contrast with its negative ROE and stretched valuation, exposing risk despite operational efficiency. PEGA offers steadier ROE and manageable margins but at an even higher valuation multiple. Investors seeking growth and innovation might lean toward PEGA’s profile, while those prioritizing operational strength face a more complex risk-reward balance with FICO.
Which one offers the Superior Shareholder Reward?
Fair Isaac Corporation (FICO) does not pay dividends but generates robust free cash flow (about 31.8/share in 2025) with no payout ratio, reinvesting heavily for growth. Pegasystems Inc. (PEGA) yields a modest 0.13%, paying a small dividend with a 10–15% payout ratio, but shows weaker profitability and less free cash flow per share (~2/share). FICO’s aggressive buyback and reinvestment strategy outpaces PEGA’s dividend and limited buybacks. I conclude FICO offers a more sustainable total return profile in 2026, driven by superior cash flow generation and disciplined capital allocation.
Comparative Score Analysis: The Strategic Profile
The radar chart reveals the fundamental DNA and trade-offs of Fair Isaac Corporation and Pegasystems Inc.:
Fair Isaac shows a polarized profile with strong asset utilization (ROA 5) but struggles with equity returns (ROE 1) and balance sheet leverage (Debt/Equity 1). Pegasystems offers a more balanced approach, excelling in ROE (5) and ROA (5) while maintaining moderate leverage (3). Pegasystems also commands better valuation metrics (P/E 2 vs. 1), indicating a stronger strategic position overall.
Bankruptcy Risk: Solvency Showdown
Fair Isaac’s Altman Z-Score of 12.2 surpasses Pegasystems’ 9.3, signaling superior financial safety and a more robust buffer against economic downturns:
Financial Health: Quality of Operations
Pegasystems edges out with a Piotroski score of 8, reflecting very strong operational quality, while Fair Isaac’s 7 indicates strong but comparatively weaker internal metrics:
How are the two companies positioned?
This section dissects FICO and PEGA’s operational DNA by comparing their revenue distribution and internal dynamics. The goal is to confront their economic moats to reveal which model ensures the most resilient competitive advantage today.
Revenue Segmentation: The Strategic Mix
This visual comparison dissects how Fair Isaac Corporation and Pegasystems Inc. diversify their income streams and where their primary sector bets lie:
Fair Isaac leans heavily on two segments: Scores at $1.17B and Applications at $822M in 2025, showing moderate diversification. Pegasystems displays a broader mix, with Pega Cloud anchoring $1.13B, followed by Subscription License at $398M and Maintenance at $341M in 2024. Pegasystems pivots on cloud and subscription economies, reducing concentration risk. Fair Isaac’s reliance on Scores suggests exposure to credit cycle volatility, while Pegasystems benefits from recurring revenue stability.
Strengths and Weaknesses Comparison
This table compares the Strengths and Weaknesses of Fair Isaac Corporation (FICO) and Pegasystems Inc. (PEGA):
FICO Strengths
- High net margin of 32.75%
- Strong ROIC at 52.96% above WACC
- Favorable asset and fixed asset turnover
- Diverse product segments in applications and scores
- Significant revenue from Americas region
PEGA Strengths
- Positive ROE at 16.94%
- Favorable interest coverage ratio at 21.87
- Strong quick ratio at 1.23
- Diversified revenue streams including Pega Cloud and subscriptions
- Solid global presence with balanced US and EMEA sales
FICO Weaknesses
- Negative ROE at -37.34%
- Unfavorable current ratio at 0.83
- High debt to assets ratio at 164.6%
- Unfavorable P/E of 55.64
- No dividend yield
- Heavy revenue concentration in Americas
PEGA Weaknesses
- Low net margin of 6.63%
- Unfavorable P/E and P/B ratios
- Moderate ROIC close to WACC
- Unfavorable dividend yield
- Mixed neutral liquidity metrics
FICO exhibits strong profitability and operational efficiency but faces concerns with leverage and liquidity. PEGA shows balanced global diversification and decent profitability, yet its valuation and margin metrics suggest room for improvement. Each company’s financial profile indicates distinct strategic challenges and opportunities.
The Moat Duel: Analyzing Competitive Defensibility
A structural moat is the only true shield protecting long-term profits from relentless competition and market disruption:
Fair Isaac Corporation (FICO): Data-Driven Switching Costs
FICO’s moat centers on switching costs embedded in its proprietary credit scoring models. The firm sustains high ROIC at 44%, well above WACC, reflecting strong margin stability and value creation. Expansion into advanced analytics deepens this advantage in 2026.
Pegasystems Inc. (PEGA): Platform Ecosystem Potential
PEGA’s competitive edge lies in its unified customer engagement platform, fostering network effects. However, negative ROIC relative to WACC signals value destruction despite improving profitability. Its growing cloud and automation offerings could pivot this trend in 2026.
Moat Strength: Switching Costs vs. Platform Ecosystem
FICO commands a deeper moat, proven by consistent ROIC superiority and durable value creation. PEGA’s rising profitability hints at improvement, but it currently lacks the profitability cushion to firmly defend market share.
Which stock offers better returns?
The past year saw Fair Isaac Corporation and Pegasystems Inc. deliver notable price movements, with both stocks exhibiting strong gains followed by recent declines in trading dynamics.
Trend Comparison
Fair Isaac Corporation’s stock rose 12.51% over the past 12 months, indicating a bullish trend with decelerating momentum. The highest price reached 2375.03, and recent months showed a -15.98% pullback.
Pegasystems Inc. gained 35.51% over the same period, also bullish with deceleration. It traded between 28.73 and 66.27. However, recent weeks saw a sharper decline of -23.15%, reflecting increased selling pressure.
Pegasystems outperformed Fair Isaac over the year with a higher total return. Both stocks have weakened recently, but Pegasystems still delivered superior market gains overall.
Target Prices
Analysts present a clear target consensus for both Fair Isaac Corporation and Pegasystems Inc.
| Company | Target Low | Target High | Consensus |
|---|---|---|---|
| Fair Isaac Corporation | 1,640 | 2,400 | 2,115 |
| Pegasystems Inc. | 67 | 80 | 74 |
The target consensus for Fair Isaac Corporation exceeds the current price by about 45%, signaling significant upside potential. Pegasystems’ consensus target is nearly 70% above its current price, indicating strong analyst optimism.
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How do institutions grade them?
The following tables summarize recent institutional grades for Fair Isaac Corporation and Pegasystems Inc.:
Fair Isaac Corporation Grades
This table shows updated grades and recommendations from major financial institutions for FICO.
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Needham | Maintain | Buy | 2026-01-29 |
| Jefferies | Maintain | Buy | 2026-01-16 |
| Wells Fargo | Maintain | Overweight | 2026-01-14 |
| JP Morgan | Maintain | Neutral | 2025-11-06 |
| Baird | Maintain | Outperform | 2025-11-06 |
| Jefferies | Maintain | Buy | 2025-11-06 |
| BMO Capital | Maintain | Outperform | 2025-11-06 |
| Wells Fargo | Maintain | Overweight | 2025-10-14 |
| Barclays | Maintain | Overweight | 2025-10-02 |
| Needham | Maintain | Buy | 2025-10-02 |
Pegasystems Inc. Grades
This table presents the latest institutional grades and actions for PEGA.
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| JP Morgan | Maintain | Overweight | 2025-12-05 |
| Barclays | Maintain | Equal Weight | 2025-10-23 |
| Wedbush | Maintain | Outperform | 2025-10-23 |
| RBC Capital | Maintain | Outperform | 2025-10-23 |
| Rosenblatt | Maintain | Buy | 2025-10-23 |
| DA Davidson | Upgrade | Buy | 2025-10-22 |
| Rosenblatt | Maintain | Buy | 2025-10-15 |
| Rosenblatt | Maintain | Buy | 2025-07-24 |
| Loop Capital | Maintain | Buy | 2025-07-24 |
| Citigroup | Maintain | Buy | 2025-07-24 |
Which company has the best grades?
Fair Isaac Corporation consistently receives Buy to Outperform ratings from top firms, while Pegasystems shows a broader spread from Equal Weight to Outperform. FICO’s stronger consensus may suggest higher confidence among analysts, possibly impacting investor sentiment positively.
Risks specific to each company
In the challenging 2026 market environment, these categories pinpoint the critical pressure points and systemic threats confronting both firms:
1. Market & Competition
Fair Isaac Corporation
- Dominates analytics with strong scoring solutions but faces intense competition from niche AI startups disrupting decision management.
Pegasystems Inc.
- Competes broadly in enterprise software with diversified applications but faces pressure from cloud-native platforms gaining enterprise traction.
2. Capital Structure & Debt
Fair Isaac Corporation
- High debt-to-assets ratio (165%) signals leverage risk despite strong interest coverage (7x).
Pegasystems Inc.
- Moderate leverage with debt-to-assets at 31%, supported by high interest coverage (22x), implying better balance sheet stability.
3. Stock Volatility
Fair Isaac Corporation
- Beta at 1.29 indicates above-market volatility; wide price range suggests sensitivity to sector sentiment.
Pegasystems Inc.
- Beta at 1.08 shows milder volatility; narrower price range indicates more stable trading relative to peers.
4. Regulatory & Legal
Fair Isaac Corporation
- Operates globally with exposure to data privacy regulations impacting analytics and scoring services.
Pegasystems Inc.
- Faces regulatory scrutiny in customer data management and AI usage across multiple international jurisdictions.
5. Supply Chain & Operations
Fair Isaac Corporation
- Relies on proprietary software development; risks include talent retention and technology integration challenges.
Pegasystems Inc.
- Depends on cloud infrastructure and partner networks; risks include service disruptions and vendor dependencies.
6. ESG & Climate Transition
Fair Isaac Corporation
- ESG efforts are emerging but lack full integration; climate impact is indirect but could affect client industries.
Pegasystems Inc.
- More advanced ESG disclosures; invests in sustainable cloud practices aligning with broader corporate responsibility goals.
7. Geopolitical Exposure
Fair Isaac Corporation
- Significant presence across Americas, EMEA, APAC exposes it to trade tensions and regional instability.
Pegasystems Inc.
- Also global but with a stronger footprint in the US and Europe, potentially limiting risks from emerging market volatility.
Which company shows a better risk-adjusted profile?
Fair Isaac’s highest risk stems from its stretched capital structure, despite market leadership in analytics. Pegasystems faces competitive pressure but maintains healthier leverage and operational stability. Pegasystems’ stronger Piotroski score (8 vs. 7) and safer debt profile suggest a superior risk-adjusted stance. However, both require vigilance on evolving regulatory and technological trends.
Final Verdict: Which stock to choose?
Fair Isaac Corporation’s superpower lies in its durable economic moat, driven by a high and growing ROIC that far outpaces its cost of capital. This reflects a company that efficiently converts invested capital into value, supported by strong margin expansion. A point of vigilance is its weak liquidity ratio, signaling potential short-term funding stress. FICO suits investors targeting aggressive growth with a tolerance for operational risks.
Pegasystems Inc. stands out for its strategic moat rooted in recurring revenue and steady improvements in profitability metrics. Its financial profile offers better liquidity and lower leverage than FICO, delivering enhanced stability. Although its ROIC trails FICO significantly, PEGA’s consistent earnings growth and strong financial health favor a GARP (Growth at a Reasonable Price) portfolio seeking balanced upside with moderate risk.
If you prioritize robust capital efficiency and high value creation, Fair Isaac commands attention due to its compelling moat and margin strength. However, if you seek better financial stability and a steadier growth path with less leverage, Pegasystems offers a safer profile and improving profitability. Each choice reflects a distinct investor avatar balancing growth ambitions and risk tolerance.
Disclaimer: Investment carries a risk of loss of initial capital. The past performance is not a reliable indicator of future results. Be sure to understand risks before making an investment decision.
Go Further
I encourage you to read the complete analyses of Fair Isaac Corporation and Pegasystems Inc. to enhance your investment decisions:
