Segment Information

6 Months Ended

Mar. 31, 2017

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. This segment includes pre-configured decision management applications designed for a specific type of business problem or process — such as marketing, account origination, customer management, fraud, collections and insurance claims management — as well as associated professional services. These applications are available to our customers as on-premises software, and many are available as hosted, software-as-a-service (“SaaS”) applications through the FICO^® Analytic Cloud.

• 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.

• Decision Management Software. 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. These tools are available to our customers as on-premises software or through the FICO^® Analytic Cloud.

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, nor capital expenditures where 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 six months ended March 31, 2017 and 2016:

	Quarter Ended March 31, 2017
	Applications			Scores			Decision Management Software			Unallocated Corporate Expenses			Total
	(In thousands)
Segment revenues:
Transactional and maintenance	$	86,013		$	63,628		$	11,608		$	—		$	161,249
Professional services	32,640			994			7,650			—			41,284
License	15,684			811			9,350			—			25,845
Total segment revenues	134,337			65,433			28,608			—			228,378
Segment operating expense	(99,454		)	(14,484		)	(31,152		)	(25,223		)	(170,313		)
Segment operating income (loss)	$	34,883		$	50,949		$	(2,544	)	$	(25,223	)	58,065
Unallocated share-based compensation expense													(14,712		)
Unallocated amortization expense													(3,312		)
Operating income													40,041
Unallocated interest expense, net													(6,578		)
Unallocated other expense, net													(327		)
Income before income taxes													$	33,136
Depreciation expense	$	3,959		$	236		$	1,202		$	341		$	5,738

	Quarter Ended March 31, 2016
	Applications			Scores			Decision Management Software			Unallocated Corporate Expenses			Total
	(In thousands)
Segment revenues:
Transactional and maintenance	$	80,751		$	59,265		$	10,727		$	—		$	150,743
Professional services	31,719			1,112			6,511			—			39,342
License	9,447			739			6,407			—			16,593
Total segment revenues	121,917			61,116			23,645			—			206,678
Segment operating expense	(87,955		)	(14,090		)	(27,120		)	(21,882		)	(151,047		)
Segment operating income (loss)	$	33,962		$	47,026		$	(3,475	)	$	(21,882	)	55,631
Unallocated share-based compensation expense													(13,600		)
Unallocated amortization expense													(3,507		)
Operating income													38,524
Unallocated interest expense, net													(6,815		)
Unallocated other expense, net													435
Income before income taxes													$	32,144
Depreciation expense	$	2,708		$	185		$	1,000		$	327		$	4,220

	Six Months Ended March 31, 2017
	Applications			Scores			Decision Management Software			Unallocated Corporate Expenses			Total
	(In thousands)
Segment revenues:
Transactional and maintenance	$	170,894		$	121,880		$	22,135		$	—		$	314,909
Professional services	66,981			1,515			16,331			—			84,827
License	31,227			1,420			15,595			—			48,242
Total segment revenues	269,102			124,815			54,061			—			447,978
Segment operating expense	(199,251		)	(27,803		)	(60,237		)	(49,856		)	(337,147		)
Segment operating income (loss)	$	69,851		$	97,012		$	(6,176	)	$	(49,856	)	110,831
Unallocated share-based compensation expense													(29,231		)
Unallocated amortization expense													(6,632		)
Operating income													74,968
Unallocated interest expense, net													(12,750		)
Unallocated other expense, net													(427		)
Income before income taxes													$	61,791
Depreciation expense	$	7,827		$	502		$	2,328		$	690		$	11,347

	Six Months Ended March 31, 2016
	Applications			Scores			Decision Management Software			Unallocated Corporate Expenses			Total
	(In thousands)
Segment revenues:
Transactional and maintenance	$	161,734		$	114,482		$	21,599		$	—		$	297,815
Professional services	58,845			1,860			12,789			—			73,494
License	21,479			776			13,190			—			35,445
Total segment revenues	242,058			117,118			47,578			—			406,754
Segment operating expense	(175,392		)	(28,259		)	(52,414		)	(45,944		)	(302,009		)
Segment operating income (loss)	$	66,666		$	88,859		$	(4,836	)	$	(45,944	)	104,745
Unallocated share-based compensation expense													(28,300		)
Unallocated amortization expense													(7,087		)
Operating income													69,358
Unallocated interest expense, net													(13,539		)
Unallocated other expense, net													101
Income before income taxes													$	55,920
Depreciation expense	$	5,452		$	362		$	1,635		$	632		$	8,081