Segment Information

12 Months Ended

Sep. 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, financial crimes compliance, 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, SaaS applications through the FICO^® Analytic Cloud or AWS.

• Scores. This segment includes our business-to-business scoring solutions and services, our business-to-consumer scoring solutions and services including 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 worldwide, 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. Decision management software is currently delivered as part of the FICO^® Decision Management Platform and is increasingly being adopted to connect decisioning solutions or previously disconnected use cases. These tools are available to our customers as on-premises software, through the FICO^® Analytic Cloud or 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 and acquisition-related 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 fiscal 2020, 2019 and 2018: 

	Year Ended September 30, 2020
	Applications			Scores			Decision Management Software			Unallocated Corporate Expenses			Total
	(In thousands)
Segment revenues:
Transactional and maintenance	$	393,994		$	517,024		$	62,915		$	—		$	973,933
Professional services	136,677			1,600			44,763			—			183,040
License	71,375			9,923			56,291			—			137,589
Total segment revenues	602,046			528,547			163,969			—			1,294,562
Segment operating expense	(448,505		)	(74,237		)	(187,444		)	(144,704		)	(854,890		)
Segment operating income (loss)	$	153,541		$	454,310		$	(23,475	)	$	(144,704	)	$	439,672
Unallocated share-based compensation expense													(93,681		)
Unallocated amortization expense													(4,993		)
Unallocated restructuring and impairment charges													(45,029		)
Operating income													295,969
Unallocated interest expense, net													(42,177		)
Unallocated other income, net													3,208
Income before income taxes													$	257,000
Depreciation expense	$	18,021		$	617		$	4,397		$	418		$	23,453

	Year Ended September 30, 2019
	Applications			Scores			Decision Management Software			Unallocated Corporate Expenses			Total
	(In thousands)
Segment revenues:
Transactional and maintenance	$	395,398		$	415,288		$	50,262		$	—		$	860,948
Professional services	137,258			2,157			44,680			—			184,095
License	72,378			3,732			38,930			—			115,040
Total segment revenues	605,034			421,177			133,872			—			1,160,083
Segment operating expense	(443,872		)	(59,821		)	(168,988		)	(144,755		)	(817,436		)
Segment operating income (loss)	$	161,162		$	361,356		$	(35,116	)	$	(144,755	)	342,647
Unallocated share-based compensation expense													(82,973		)
Unallocated amortization expense													(6,126		)
Operating income													253,548
Unallocated interest expense, net													(39,752		)
Unallocated other income, net													2,276
Income before income taxes													$	216,072
Depreciation expense	$	18,766		$	498		$	4,036		$	904		$	24,204

	Year Ended September 30, 2018
	Applications			Scores			Decision Management Software			Unallocated Corporate Expenses			Total
	(In thousands)
Segment revenues:
Transactional and maintenance	$	372,283		$	331,662		$	46,658		$	—		$	750,603
Professional services	142,736			1,900			32,274			—			176,910
License	49,356			2,308			20,969			—			72,633
Total segment revenues	564,375			335,870			99,901			—			1,000,146
Segment operating expense	(420,411		)	(63,452		)	(134,261		)	(125,255		)	(743,379		)
Segment operating income (loss)	$	143,964		$	272,418		$	(34,360	)	$	(125,255	)	256,767
Unallocated share-based compensation expense													(74,814		)
Unallocated amortization expense													(6,594		)
Operating income													175,359
Unallocated interest expense, net													(31,311		)
Unallocated other income, net													12,884
Income before income taxes													$	156,932
Depreciation expense	$	15,651		$	555		$	5,471		$	956		$	22,633

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

	Year Ended September 30, 2020
Reportable Segments	On-Premises		SaaS		Scores		Total		Percentage
	(Dollars in thousands)
Applications	$	340,702	$	261,344	$	—	$	602,046	46	%
Scores	—		—		528,547		528,547		41	%
Decision Management Software	125,269		38,700		—		163,969		13	%
Total	$	465,971	$	300,044	$	528,547	$	1,294,562	100	%

	Year Ended September 30, 2019
Reportable Segments	On-Premises		SaaS		Scores		Total		Percentage
	(Dollars in thousands)
Applications	$	360,105	$	244,929	$	—	$	605,034	52	%
Scores	—		—		421,177		421,177		36	%
Decision Management Software	108,447		25,425		—		133,872		12	%
Total	$	468,552	$	270,354	$	421,177	$	1,160,083	100	%

	Year Ended September 30, 2018
Reportable Segments	On-Premises		SaaS		Scores		Total		Percentage
	(Dollars in thousands)
Applications	$	337,162	$	227,213	$	—	$	564,375	56	%
Scores	—		—		335,870		335,870		34	%
Decision Management Software	86,172		13,729		—		99,901		10	%
Total	$	423,334	$	240,942	$	335,870	$	1,000,146	100	%

We derive a significant portion of revenues internationally, and 32%, 34%, and 35% of total consolidated revenues were derived from clients outside the U.S. during fiscal 2020, 2019 and 2018, respectively. Information about disaggregated revenue by primary geographical markets was as follows:

	Year Ended September 30, 2020
Reportable Segments	North America		Latin America		Europe, Middle East and Africa		Asia Pacific		Total
	(In thousands)
Applications	$	331,290	$	40,047	$	157,793	$	72,916	$	602,046
Scores	511,333		3,576		6,385		7,253		528,547
Decision Management Software	87,305		18,674		39,406		18,584		163,969
Total	$	929,928	$	62,297	$	203,584	$	98,753	$	1,294,562

	Year Ended September 30, 2019
Reportable Segments	North America		Latin America		Europe, Middle East and Africa		Asia Pacific		Total
	(In thousands)
Applications	$	338,990	$	42,656	$	155,539	$	67,849	$	605,034
Scores	404,778		4,591		6,359		5,449		421,177
Decision Management Software	63,397		18,040		33,288		19,147		133,872
Total	$	807,165	$	65,287	$	195,186	$	92,445	$	1,160,083

	Year Ended September 30, 2018
Reportable Segments	North America		Latin America		Europe, Middle East and Africa		Asia Pacific		Total
	(In thousands)
Applications	$	318,836	$	39,136	$	141,358	$	65,045	$	564,375
Scores	328,990		1,366		3,989		1,525		335,870
Decision Management Software	53,184		5,035		24,245		17,437		99,901
Total	$	701,010	$	45,537	$	169,592	$	84,007	$	1,000,146

Within our Applications segment our fraud solutions accounted for 15%, 18% and 17% of total revenues in each of fiscal 2020, 2019 and 2018, respectively, and our customer communication services accounted for 8%, 9% and 10% of total revenues in each of these periods, respectively.

Revenue generated from a single customer or a group of customers which represented 10% or greater of total revenue are summarized below for fiscal 2020, 2019 and 2018: 

	Year Ended September 30,
	2020				2019				2018
	(Dollars in thousands)
Experian	$	181,036	14	%	$	148,037	13	%	$	109,097	11	%
TransUnion and Equifax	239,166		18	%	183,523		16	%	142,179		14	%
Other customers	874,360		68	%	828,523		71	%	748,870		75	%
Total	$	1,294,562	100	%	$	1,160,083	100	%	$	1,000,146	100	%

At September 30, 2020 and 2019, no individual customer accounted for 10% or more of total consolidated receivables.

Our property and equipment, net, on a geographical basis are summarized below at September 30, 2020 and 2019:

	September 30,
	2020				2019
	(Dollars in thousands)
United States	$	29,375	63	%	$	38,058	72	%
United Kingdom	8,776		19	%	7,801		15	%
Other countries	8,268		18	%	7,168		13	%
Total	$	46,419	100	%	$	53,027	100	%