Segment Information

9 Months Ended

Jun. 30, 2020

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

• 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 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 and nine-month periods ended June 30, 2020 and 2019:

	Quarter Ended June 30, 2020
	Applications			Scores			Decision Management Software			Unallocated Corporate Expenses			Total
	(In thousands)
Segment revenues:
Transactional and maintenance	$	98,476		$	130,268		$	18,085		$	—		$	246,829
Professional services	32,364			58			11,211			—			43,633
License	10,620			1,224			11,425			—			23,269
Total segment revenues	141,460			131,550			40,721			—			313,731
Segment operating expense	(111,061		)	(21,333		)	(43,839		)	(31,315		)	(207,548		)
Segment operating income (loss)	$	30,399		$	110,217		$	(3,118	)	$	(31,315	)	106,183
Unallocated share-based compensation expense													(22,264		)
Unallocated amortization expense													(1,048		)
Operating income													82,871
Unallocated interest expense, net													(11,223		)
Unallocated other income, net													4,560
Income before income taxes													$	76,208
Depreciation expense	$	5,091		$	176		$	1,156		$	28		$	6,451

	Quarter Ended June 30, 2019
	Applications			Scores			Decision Management Software			Unallocated Corporate Expenses			Total
	(In thousands)
Segment revenues:
Transactional and maintenance	$	100,385		$	112,949		$	12,706		$	—		$	226,040
Professional services	33,989			392			10,213			—			44,594
License	31,263			1,805			10,547			—			43,615
Total segment revenues	165,637			115,146			33,466			—			314,249
Segment operating expense	(113,400		)	(15,850		)	(42,229		)	(36,019		)	(207,498		)
Segment operating income (loss)	$	52,237		$	99,296		$	(8,763	)	$	(36,019	)	106,751
Unallocated share-based compensation expense													(19,595		)
Unallocated amortization expense													(1,448		)
Operating income													85,708
Unallocated interest expense, net													(10,111		)
Unallocated other income, net													2,457
Income before income taxes													$	78,054
Depreciation expense	$	4,800		$	130		$	1,027		$	222		$	6,179

	Nine Months Ended June 30, 2020
	Applications			Scores			Decision Management Software			Unallocated Corporate Expenses			Total
	(In thousands)
Segment revenues:
Transactional and maintenance	$	295,102		$	365,324		$	47,479		$	—		$	707,905
Professional services	101,521			1,141			32,901			—			135,563
License	37,294			9,371			30,073			—			76,738
Total segment revenues	433,917			375,836			110,453			—			920,206
Segment operating expense	(338,527		)	(54,705		)	(141,838		)	(99,310		)	(634,380		)
Segment operating income (loss)	$	95,390		$	321,131		$	(31,385	)	$	(99,310	)	285,826
Unallocated share-based compensation expense													(68,197		)
Unallocated amortization expense													(4,046		)
Unallocated restructuring and acquisition-related													(3,104		)
Operating income													210,479
Unallocated interest expense, net													(32,245		)
Unallocated other income, net													2,333
Income before income taxes													$	180,567
Depreciation expense	$	13,993		$	433		$	3,300		$	361		$	18,087

	Nine Months Ended June 30, 2019
	Applications			Scores			Decision Management Software			Unallocated Corporate Expenses			Total
	(In thousands)
Segment revenues:
Transactional and maintenance	$	294,624		$	300,133		$	37,255		$	—		$	632,012
Professional services	101,432			1,994			32,531			—			135,957
License	59,055			3,105			24,610			—			86,770
Total segment revenues	455,111			305,232			94,396			—			854,739
Segment operating expense	(332,641		)	(45,499		)	(122,175		)	(104,779		)	(605,094		)
Segment operating income (loss)	$	122,470		$	259,733		$	(27,779	)	$	(104,779	)	249,645
Unallocated share-based compensation expense													(61,931		)
Unallocated amortization expense													(4,453		)
Operating income													183,261
Unallocated interest expense, net													(29,795		)
Unallocated other income, net													1,718
Income before income taxes													$	155,184
Depreciation expense	$	14,259		$	387		$	2,988		$	684		$	18,318

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

	Quarter Ended June 30, 2020
Reportable Segments	On-Premises		SaaS		Scores		Total		Percentage
	(Dollars in thousands)
Applications	$	76,493	$	64,967	$	—	$	141,460	45	%
Scores	—		—		131,550		131,550		42	%
Decision Management Software	29,063		11,658		—		40,721		13	%
Total	$	105,556	$	76,625	$	131,550	$	313,731	100	%

	Quarter Ended June 30, 2019
Reportable Segments	On-Premises		SaaS		Scores		Total		Percentage
	(Dollars in thousands)
Applications	$	102,673	$	62,964	$	—	$	165,637	53	%
Scores	—		—		115,146		115,146		37	%
Decision Management Software	27,138		6,328		—		33,466		10	%
Total	$	129,811	$	69,292	$	115,146	$	314,249	100	%

	Nine Months Ended June 30, 2020
Reportable Segments	On-Premises		SaaS		Scores		Total		Percentage
	(Dollars in thousands)
Applications	$	238,812	$	195,105	$	—	$	433,917	47	%
Scores	—		—		375,836		375,836		41	%
Decision Management Software	81,589		28,864		—		110,453		12	%
Total	$	320,401	$	223,969	$	375,836	$	920,206	100	%

	Nine Months Ended June 30, 2019
Reportable Segments	On-Premises		SaaS		Scores		Total		Percentage
	(Dollars in thousands)
Applications	$	273,579	$	181,532	$	—	$	455,111	53	%
Scores	—		—		305,232		305,232		36	%
Decision Management Software	76,472		17,924		—		94,396		11	%
Total	$	350,051	$	199,456	$	305,232	$	854,739	100	%

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

	Quarter Ended June 30, 2020
Reportable Segments	North America		Latin America		Europe, Middle East and Africa		Asia Pacific		Total
	(In thousands)
Applications	$	78,639	$	12,069	$	34,175	$	16,577	$	141,460
Scores	128,686		113		1,505		1,246		131,550
Decision Management Software	23,164		4,626		8,427		4,504		40,721
Total	$	230,489	$	16,808	$	44,107	$	22,327	$	313,731

	Quarter Ended June 30, 2019
Reportable Segments	North America		Latin America		Europe, Middle East and Africa		Asia Pacific		Total
	(In thousands)
Applications	$	88,210	$	7,088	$	54,171	$	16,168	$	165,637
Scores	110,728		768		2,191		1,459		115,146
Decision Management Software	14,930		5,448		8,680		4,408		33,466
Total	$	213,868	$	13,304	$	65,042	$	22,035	$	314,249

	Nine Months Ended June 30, 2020
Reportable Segments	North America		Latin America		Europe, Middle East and Africa		Asia Pacific		Total
	(In thousands)
Applications	$	243,005	$	31,258	$	108,230	$	51,424	$	433,917
Scores	362,132		3,016		4,763		5,925		375,836
Decision Management Software	59,758		14,876		22,612		13,207		110,453
Total	$	664,895	$	49,150	$	135,605	$	70,556	$	920,206

	Nine Months Ended June 30, 2019
Reportable Segments	North America		Latin America		Europe, Middle East and Africa		Asia Pacific		Total
	(In thousands)
Applications	$	256,385	$	32,011	$	119,971	$	46,744	$	455,111
Scores	293,292		2,650		5,197		4,093		305,232
Decision Management Software	45,354		14,000		21,977		13,065		94,396
Total	$	595,031	$	48,661	$	147,145	$	63,902	$	854,739