Segment Information

3 Months Ended

Dec. 31, 2015

Segment Reporting [Abstract]

Segment Information

Segment Information

We are organized into the following three operating segments, each of which is a reportable segment, to align with internal management of our worldwide business operations based on product offerings.

• Applications. Our Applications products are pre-configured decision management applications and associated professional services, designed for a specific type of business problem or process, such as marketing, account origination, customer management, fraud and insurance claims management.

• Scores. This segment includes our business-to-business scoring solutions, our myFICO^® solutions for consumers and associated professional services. Our scoring solutions give our clients access to analytics that can be easily integrated into their transaction streams and decision-making processes. Our scoring solutions are distributed through major credit reporting agencies, as well as services through which we provide our scores to clients directly.

• Tools. This segment is composed of analytic and decision management software tools that clients can use to create their own custom decision management applications, our new FICO^® Decision Management Suite, as well as associated professional services.

Our Chief Executive Officer evaluates segment financial performance based on segment revenues and segment operating income. Segment operating expenses consist of direct and indirect costs principally related to personnel, facilities, consulting, travel and depreciation. Indirect costs are allocated to the segments generally based on relative segment revenues, fixed rates established by management based upon estimated expense contribution levels and other assumptions that management considers reasonable. We do not allocate broad-based incentive expense, share-based compensation expense, restructuring expense, amortization expense, various corporate charges and certain other income and expense measures to our segments. These income and expense items are not allocated because they are not considered in evaluating the segment’s operating performance. Our Chief Executive Officer does not evaluate the financial performance of each segment based on its respective assets or capital expenditures; rather, depreciation amounts are allocated to the segments from their internal cost centers as described above.

The following tables summarize segment information for the quarters ended December 31, 2015 and 2014:

	Quarter Ended December 31, 2015
	Applications			Scores			Tools			Unallocated Corporate Expenses			Total
	(In thousands)
Segment revenues:
Transactional and maintenance	$	80,983		$	55,217		$	10,872		$	—		$	147,072
Professional services	27,126			748			6,278			—			34,152
License	12,032			37			6,783			—			18,852
Total segment revenues	120,141			56,002			23,933			—			200,076
Segment operating expense	(87,437		)	(14,169		)	(25,294		)	(24,062		)	(150,962		)
Segment operating income (loss)	$	32,704		$	41,833		$	(1,361	)	$	(24,062	)	49,114
Unallocated share-based compensation expense													(14,700		)
Unallocated amortization expense													(3,580		)
Operating income													30,834
Unallocated interest expense, net													(6,724		)
Unallocated other income, net													(334		)
Income before income taxes													$	23,776
Depreciation expense	$	2,744		$	177		$	635		$	305		$	3,861

	Quarter Ended December 31, 2014
	Applications			Scores			Tools			Unallocated Corporate Expenses			Total
	(In thousands)
Segment revenues:
Transactional and maintenance	$	78,551		$	42,937		$	9,922		$	—		$	131,410
Professional services	28,499			788			5,911			—			35,198
License	8,448			216			14,278			—			22,942
Total segment revenues	115,498			43,941			30,111			—			189,550
Segment operating expense	(88,894		)	(12,892		)	(29,539		)	(21,619		)	(152,944		)
Segment operating income (loss)	$	26,604		$	31,049		$	572		$	(21,619	)	36,606
Unallocated share-based compensation expense													(8,794		)
Unallocated amortization expense													(2,932		)
Operating income													24,880
Unallocated interest expense, net													(7,205		)
Unallocated other income, net													649
Income before income taxes													$	18,324
Depreciation expense	$	3,508		$	217		$	783		$	667		$	5,175