Segment Information

3 Months Ended

Dec. 31, 2019

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.

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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 or third-party public clouds, such as those provided by Amazon Web Services (“AWS”).

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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.

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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 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 or third-party public clouds, such as those provided by AWS.

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 ended December 31, 2019 and 2018:



	Quarter Ended December 31, 2019
	Applications			Scores			Decision Management Software			Unallocated Corporate Expenses			Total
	(In thousands)
Segment revenues:
Transactional and maintenance	$	98,837		$	107,446		$	14,091		$	—		$	220,374
Professional services	34,023			264			9,738			—			44,025
License	19,318			7,428			7,359			—			34,105
Total segment revenues	152,178			115,138			31,188			—			298,504
Segment operating expense	(116,010		)	(17,712		)	(50,645		)	(34,210		)	(218,577		)
Segment operating income (loss)	$	36,168		$	97,426		$	(19,457	)	$	(34,210	)	79,927
Unallocated share-based compensation expense													(23,145		)
Unallocated amortization expense													(1,796		)
Unallocated restructuring and acquisition-related													(3,104		)
Operating income													51,882
Unallocated interest expense, net													(9,768		)
Unallocated other expense, net													(219		)
Income before income taxes													$	41,895
Depreciation expense	$	4,349		$	116		$	986		$	225		$	5,676



	Quarter Ended December 31, 2018
	Applications			Scores			Decision Management Software			Unallocated Corporate Expenses			Total
	(In thousands)
Segment revenues:
Transactional and maintenance	$	97,165		$	84,821		$	12,207		$	—		$	194,193
Professional services	31,462			701			8,645			—			40,808
License	19,032			161			8,062			—			27,255
Total segment revenues	147,659			85,683			28,914			—			262,256
Segment operating expense	(107,598		)	(13,482		)	(39,562		)	(29,254		)	(189,896		)
Segment operating income (loss)	$	40,061		$	72,201		$	(10,648	)	$	(29,254	)	72,360
Unallocated share-based compensation expense													(21,854		)
Unallocated amortization expense													(1,502		)
Operating income													49,004
Unallocated interest expense, net													(9,676		)
Unallocated other expense, net													(2,172		)
Income before income taxes													$	37,156
Depreciation expense	$	4,797		$	125		$	989		$	233		$	6,144

Information about disaggregated revenue by product deployment methods was as follows:



	Quarter Ended December 31, 2019
Reportable Segments	On-Premises		SaaS		Scores		Total		Percentage
	(Dollars in thousands)
Applications	$	85,978	$	66,200	$	—	$	152,178	51	%
Scores	—		—		115,138		115,138		39	%
Decision Management Software	23,679		7,509		—		31,188		10	%
Total	$	109,657	$	73,709	$	115,138	$	298,504	100	%



	Quarter Ended December 31, 2018
Reportable Segments	On-Premises		SaaS		Scores		Total		Percentage
	(Dollars in thousands)
Applications	$	89,595	$	58,064	$	—	$	147,659	56	%
Scores	—		—		85,683		85,683		33	%
Decision Management Software	23,609		5,305		—		28,914		11	%
Total	$	113,204	$	63,369	$	85,683	$	262,256	100	%

Information about disaggregated revenue by primary geographical markets was as follows:



	Quarter Ended December 31, 2019
Reportable Segments	North America		Latin America		Europe, Middle East and Africa		Asia Pacific		Total
	(In thousands)
Applications	$	85,466	$	9,517	$	39,784	$	17,411	$	152,178
Scores	110,197		284		1,538		3,119		115,138
Decision Management Software	15,587		4,333		7,265		4,003		31,188
Total	$	211,250	$	14,134	$	48,587	$	24,533	$	298,504



	Quarter Ended December 31, 2018
Reportable Segments	North America		Latin America		Europe, Middle East and Africa		Asia Pacific		Total
	(In thousands)
Applications	$	80,949	$	18,253	$	32,562	$	15,895	$	147,659
Scores	82,073		514		1,534		1,562		85,683
Decision Management Software	13,824		5,225		6,124		3,741		28,914
Total	$	176,846	$	23,992	$	40,220	$	21,198	$	262,256