Segment Information

9 Months Ended

Jun. 30, 2016

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 and nine months ended June 30, 2016 and 2015:

	Quarter Ended June 30, 2016
	Applications			Scores			Tools			Unallocated Corporate Expenses			Total
	(In thousands)
Segment revenues:
Transactional and maintenance	$	82,925		$	59,781		$	11,180		$	—		$	153,886
Professional services	36,560			822			6,922			—			44,304
License	22,080			527			17,981			—			40,588
Total segment revenues	141,565			61,130			36,083			—			238,778
Segment operating expense	(92,532		)	(14,321		)	(30,476		)	(29,240		)	(166,569		)
Segment operating income	$	49,033		$	46,809		$	5,607		$	(29,240	)	72,209
Unallocated share-based compensation expense													(13,404		)
Unallocated amortization expense													(3,486		)
Operating income													55,319
Unallocated interest expense, net													(6,781		)
Unallocated other income, net													1,752
Income before income taxes													$	50,290
Depreciation expense	$	2,961		$	211		$	947		$	354		$	4,473

	Quarter Ended June 30, 2015
	Applications			Scores			Tools			Unallocated Corporate Expenses			Total
	(In thousands)
Segment revenues:
Transactional and maintenance	$	79,731		$	54,255		$	10,709		$	—		$	144,695
Professional services	31,009			615			6,374			—			37,998
License	16,394			884			9,395			—			26,673
Total segment revenues	127,134			55,754			26,478			—			209,366
Segment operating expense	(90,228		)	(14,736		)	(28,554		)	(20,773		)	(154,291		)
Segment operating income (loss)	$	36,906		$	41,018		$	(2,076	)	$	(20,773	)	55,075
Unallocated share-based compensation expense													(12,166		)
Unallocated amortization expense													(3,599		)
Unallocated restructuring and acquisition-related													(2,256		)
Operating income													37,054
Unallocated interest expense, net													(7,360		)
Unallocated other income, net													770
Income before income taxes													$	30,464
Depreciation expense	$	3,734		$	258		$	834		$	621		$	5,447

	Nine Months Ended June 30, 2016
	Applications			Scores			Tools			Unallocated Corporate Expenses			Total
	(In thousands)
Segment revenues:
Transactional and maintenance	$	244,659		$	174,263		$	32,779		—			$	451,701
Professional services	95,405			2,682			19,711			—			117,798
License	43,559			1,303			31,171			—			76,033
Total segment revenues	383,623			178,248			83,661			—			645,532
Segment operating expense	(267,924		)	(42,580		)	(82,890		)	(75,184		)	(468,578		)
Segment operating income	$	115,699		$	135,668		$	771		$	(75,184	)	176,954
Unallocated share-based compensation expense													(41,704		)
Unallocated amortization expense													(10,573		)
Operating income													124,677
Unallocated interest expense, net													(20,320		)
Unallocated other income, net													1,853
Income before income taxes													$	106,210
Depreciation expense	$	8,413		$	573		$	2,582		$	986		$	12,554

	Nine Months Ended June 30, 2015
	Applications			Scores			Tools			Unallocated Corporate Expenses			Total
	(In thousands)
Segment revenues:
Transactional and maintenance	$	238,597		$	145,006		$	31,185		—			$	414,788
Professional services	90,500			2,369			18,273			—			111,142
License	47,923			2,257			29,915			—			80,095
Total segment revenues	377,020			149,632			79,373			—			606,025
Segment operating expense	(274,157		)	(42,246		)	(86,080		)	(62,145		)	(464,628		)
Segment operating income (loss)	$	102,863		$	107,386		$	(6,707	)	$	(62,145	)	141,397
Unallocated share-based compensation expense													(32,762		)
Unallocated amortization expense													(10,046		)
Unallocated restructuring and acquisition-related													(2,256		)
Operating income													96,333
Unallocated interest expense, net													(22,283		)
Unallocated other income, net													771
Income before income taxes													$	74,821
Depreciation expense	$	10,948		$	702		$	2,424		$	1,973		$	16,047