Segment Information

3 Months Ended

Dec. 31, 2022

Segment Reporting [Abstract]

Segment Information

Segment Information

We are organized into two reportable segments: Scores and Software. Although we sell solutions and services to a large number of end user product and industry markets, our reportable business segments reflect the primary method in which management organizes and evaluates internal financial information to make operating decisions and assess performance.

•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, 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 chief operating decision maker (“CODM”), who is 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, 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.

We have recast certain prior period amounts within this note to conform to the way we internally managed and monitored segment performance during the current fiscal year, reflecting immaterial movements of business activities between segments and changes in cost allocations.

The following tables summarize segment information for the quarters ended December 31, 2022 and 2021:

	Quarter Ended December 31, 2022
	Scores		Software		Unallocated Corporate Expenses		Total
	(In thousands)
Segment revenues:
On-premises and SaaS software	$	—	$	144,560	$	—	$	144,560
Professional services	—		22,322		—		22,322
Scores	177,988		—		—		177,988
Total segment revenues	177,988		166,882		—		344,870
Segment operating expense	(21,296)		(121,117)		(34,082)		(176,495)
Segment operating income	$	156,692	$	45,765	$	(34,082)	168,375
Unallocated share-based compensation expense							(29,702)
Unallocated amortization expense							(275)
Unallocated gain on product line asset sale							1,941
Operating income							140,339
Unallocated interest expense, net							(22,800)
Unallocated other income, net							364
Income before income taxes							$	117,903
Depreciation expense	$	151	$	2,974	$	22	$	3,147

	Quarter Ended December 31, 2021
	Scores		Software		Unallocated Corporate Expenses		Total
	(In thousands)
Segment revenues:
On-premises and SaaS software	$	—	$	126,338	$	—	$	126,338
Professional services	—		26,536		—		26,536
Scores	169,487		—		—		169,487
Total segment revenues	169,487		152,874		—		322,361
Segment operating expense	(21,164)		(118,037)		(37,152)		(176,353)
Segment operating income	$	148,323	$	34,837	$	(37,152)	146,008
Unallocated share-based compensation expense							(29,878)
Unallocated amortization expense							(544)
Operating income							115,586
Unallocated interest expense, net							(12,195)
Unallocated other income, net							1,429
Income before income taxes							$	104,820
Depreciation expense	$	192	$	3,877	$	29	$	4,098