Segment Information

9 Months Ended

Jun. 30, 2024

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.

The following tables summarize segment information for the quarters and nine-month periods ended June 30, 2024 and 2023:

	Quarter Ended June 30, 2024
	Scores		Software		Unallocated Corporate Expenses		Total
	(In thousands)
Segment revenues:
On-premises and SaaS software	$	—	$	183,785	$	—	$	183,785
Professional services	—		22,614		—		22,614
Scores	241,450		—		—		241,450
Total segment revenues	241,450		206,399		—		447,849
Segment operating expense	(28,461)		(136,059)		(50,368)		(214,888)
Segment operating income	$	212,989	$	70,340	$	(50,368)	232,961
Unallocated share-based compensation expense							(42,435)
Unallocated amortization expense							(275)
Operating income							190,251
Unallocated interest expense, net							(26,868)
Unallocated other income, net							3,935
Income before income taxes							$	167,318
Depreciation and amortization	$	129	$	2,553	$	18	$	2,700

	Quarter Ended June 30, 2023
	Scores		Software		Unallocated Corporate Expenses		Total
	(In thousands)
Segment revenues:
On-premises and SaaS software	$	—	$	172,059	$	—	$	172,059
Professional services	—		24,851		—		24,851
Scores	201,778		—		—		201,778
Total segment revenues	201,778		196,910		—		398,688
Segment operating expense	(24,779)		(121,261)		(42,347)		(188,387)
Segment operating income	$	176,999	$	75,649	$	(42,347)	210,301
Unallocated share-based compensation expense							(32,995)
Unallocated amortization expense							(275)
Operating income							177,031
Unallocated interest expense, net							(24,545)
Unallocated other income, net							5,301
Income before income taxes							$	157,787
Depreciation and amortization	$	107	$	2,093	$	16	$	2,216

	Nine Months Ended June 30, 2024
	Scores		Software		Unallocated Corporate Expenses		Total
	(In thousands)
Segment revenues:
On-premises and SaaS software	$	—	$	529,633	$	—	$	529,633
Professional services	—		63,637		—		63,637
Scores	670,447		—		—		670,447
Total segment revenues	670,447		593,270		—		1,263,717
Segment operating expense	(76,596)		(403,646)		(136,742)		(616,984)
Segment operating income	$	593,851	$	189,624	$	(136,742)	646,733
Unallocated share-based compensation expense							(109,457)
Unallocated amortization expense							(825)
Operating income							536,451
Unallocated interest expense, net							(77,123)
Unallocated other income, net							11,314
Income before income taxes							$	470,642
Depreciation and amortization	$	317	$	6,250	$	46	$	6,613

	Nine Months Ended June 30, 2023
	Scores		Software		Unallocated Corporate Expenses		Total
	(In thousands)
Segment revenues:
On-premises and SaaS software	$	—	$	471,203	$	—	$	471,203
Professional services	—		74,348		—		74,348
Scores	578,273		—		—		578,273
Total segment revenues	578,273		545,551		—		1,123,824
Segment operating expense	(69,177)		(369,270)		(119,612)		(558,059)
Segment operating income	$	509,096	$	176,281	$	(119,612)	565,765
Unallocated share-based compensation expense							(89,750)
Unallocated amortization expense							(825)
Unallocated gain on product line asset sale							1,941
Operating income							477,131
Unallocated interest expense, net							(71,242)
Unallocated other income, net							7,270
Income before income taxes							$	413,159
Depreciation and amortization	$	396	$	7,790	$	58	$	8,244