Segment Information

9 Months Ended

Jun. 30, 2022

Segment Reporting [Abstract]

Segment Information

Segment Information

During the fourth quarter of our fiscal 2021, we reevaluated our operating segments to better align with how our chief operating decision maker (“CODM”), who is our Chief Executive Officer, evaluates performance and allocates resources. The key factors evaluated included our evolving platform strategies, our go-to market considerations, and sales of our product lines and businesses during fiscal 2021, and in particular the divestiture of our Collections and Recovery (“C&R”) business in June 2021, among others. As a result, we consolidated our operating segment structure from three to two by merging Applications and Decision Management Software segments into the new Software segment. Based on this change, we determined we have two reportable segments and revised prior comparative periods to conform to the current period segment presentation. The new segments are as follows:

•Scores. This segment includes our business-to-business (“B2B”) scoring solutions and services which give our clients access to predictive credit and other scores that can be easily integrated into their transaction streams and decision-making processes. This segment also includes our business-to-consumer (“B2C”) scoring solutions, including our myFICO.com subscription offerings.

•Software. This segment includes pre-configured analytic and decision management solutions designed for a specific type of business need or process — such as account origination, customer management, customer engagement, fraud detection, financial crimes compliance, and marketing — as well as associated professional services. This segment also includes FICO® Platform, a modular software offering designed to support advanced analytic and decision use cases, as well as stand-alone analytic and decisioning software that can be configured by our customers to address a wide variety of business use cases. These offerings are available to our customers as SaaS or as on-premises software.

Our CODM 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, IT infrastructure, 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 CODM 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-month periods ended June 30, 2022 and 2021:

	Quarter Ended June 30, 2022
	Scores		Software		Unallocated Corporate Expenses		Total
	(In thousands)
Segment revenues:
On-premises and SaaS software	$	—	$	142,537	$	—	$	142,537
Professional services	—		27,074		—		27,074
Scores	179,355		—		—		179,355
Total segment revenues	179,355		169,611		—		348,966
Segment operating expense	(19,207)		(122,048)		(38,015)		(179,270)
Segment operating income	$	160,148	$	47,563	$	(38,015)	169,696
Unallocated share-based compensation expense							(28,549)
Unallocated amortization expense							(532)
Operating income							140,615
Unallocated interest expense, net							(18,721)
Unallocated other expense, net							(1,000)
Income before income taxes							$	120,894
Depreciation expense	$	182	$	3,565	$	26	$	3,773

	Quarter Ended June 30, 2021
	Scores		Software		Unallocated Corporate Expenses		Total
	(In thousands)
Segment revenues:
On-premises and SaaS software	$	—	$	130,230	$	—	$	130,230
Professional services	—		35,752		—		35,752
Scores	172,202		—		—		172,202
Total segment revenues	172,202		165,982		—		338,184
Segment operating expense	(25,418)		(145,796)		(33,820)		(205,034)
Segment operating income	$	146,784	$	20,186	$	(33,820)	133,150
Unallocated share-based compensation expense							(30,761)
Unallocated amortization expense							(810)
Unallocated gains on product line asset sales and business divestiture							92,805
Operating income							194,384
Unallocated interest expense, net							(10,018)
Unallocated other income, net							3,526
Income before income taxes							$	187,892
Depreciation expense	$	159	$	4,854	$	38	$	5,051

	Nine Months Ended June 30, 2022
	Scores		Software		Unallocated Corporate Expenses		Total
	(In thousands)
Segment revenues:
On-premises and SaaS software	$	—	$	417,963	$	—	$	417,963
Professional services	—		77,975		—		77,975
Scores	532,584		—		—		532,584
Total segment revenues	532,584		495,938		—		1,028,522
Segment operating expense	(62,217)		(360,582)		(109,483)		(532,282)
Segment operating income	$	470,367	$	135,356	$	(109,483)	496,240
Unallocated share-based compensation expense							(86,363)
Unallocated amortization expense							(1,619)
Operating income							408,258
Unallocated interest expense, net							(48,127)
Unallocated other expense, net							(1,932)
Income before income taxes							$	358,199
Depreciation expense	$	563	$	11,249	$	83	$	11,895

	Nine Months Ended June 30, 2021
	Scores		Software		Unallocated Corporate Expenses		Total
	(In thousands)
Segment revenues:
On-premises and SaaS software	$	—	$	382,236	$	—	$	382,236
Professional services	—		114,151		—		114,151
Scores	485,572		—		—		485,572
Total segment revenues	485,572		496,387		—		981,959
Segment operating expense	(69,221)		(438,317)		(97,465)		(605,003)
Segment operating income	$	416,351	$	58,070	$	(97,465)	376,956
Unallocated share-based compensation expense							(84,099)
Unallocated amortization expense							(2,692)
Unallocated gains on product line asset sales and business divestiture							100,139
Operating income							390,304
Unallocated interest expense, net							(29,602)
Unallocated other income, net							6,974
Income before income taxes							$	367,676
Depreciation expense	$	520	$	15,224	$	116	$	15,860