Segment Information

12 Months Ended

Sep. 30, 2016

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.

• 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 (formerly“Tools”). This segment is composed of analytic and decision management software tools that clients can use to create their own custom decision management applications, our new 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.

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 2016, 2015 and 2014:

	Year Ended September 30, 2016
	Applications			Scores			Decision Management Software			Unallocated Corporate Expenses			Total
	(In thousands)
Segment revenues:
Transactional and maintenance	$	328,472		$	233,655		$	43,792		$	—		$	605,919
Professional services	138,775			4,185			26,778			—			169,738
License	65,395			3,219			37,085			—			105,699
Total segment revenues	532,642			241,059			107,655			—			881,356
Segment operating expense	(364,371		)	(55,975		)	(111,315		)	(110,612		)	(642,273		)
Segment operating income (loss)	$	168,271		$	185,084		$	(3,660	)	$	(110,612	)	$	239,083
Unallocated share-based compensation expense													(55,509		)
Unallocated amortization expense													(13,982		)
Operating income													169,592
Unallocated interest expense, net													(26,633		)
Unallocated other income, net													1,610
Income before income taxes													$	144,569
Depreciation expense	$	11,852		$	814		$	3,657		$	1,328		$	17,651

	Year Ended September 30, 2015
	Applications			Scores			Decision Management Software			Unallocated Corporate Expenses			Total
	(In thousands)
Segment revenues:
Transactional and maintenance	$	320,596		$	200,426		$	43,210		$	—		$	564,232
Professional services	124,562			2,901			24,310			—			151,773
License	81,116			3,680			37,980			—			122,776
Total segment revenues	526,274			207,007			105,500			—			838,781
Segment operating expense	(366,666		)	(55,793		)	(111,850		)	(89,744		)	(624,053		)
Segment operating income (loss)	$	159,608		$	151,214		$	(6,350	)	$	(89,744	)	214,728
Unallocated share-based compensation expense													(45,308		)
Unallocated amortization expense													(13,673		)
Unallocated restructuring and acquisition-related expenses													(18,242		)
Operating income													137,505
Unallocated interest expense, net													(29,150		)
Unallocated other income, net													883
Income before income taxes													$	109,238
Depreciation expense	$	13,861		$	921		$	3,087		$	2,347		$	20,216

	Year Ended September 30, 2014
	Applications			Scores			Decision Management Software			Unallocated Corporate Expenses			Total
	(In thousands)
Segment revenues:
Transactional and maintenance	$	313,316		$	178,023		$	36,224		$	—		$	527,563
Professional services	121,100			2,784			25,950			—			149,834
License	69,840			5,662			36,086			—			111,588
Total segment revenues	504,256			186,469			98,260			—			788,985
Segment operating expense	(334,762		)	(44,187		)	(94,057		)	(101,551		)	(574,557		)
Segment operating income	$	169,494		$	142,282		$	4,203		$	(101,551	)	214,428
Unallocated share-based compensation expense													(36,362		)
Unallocated amortization expense													(11,917		)
Unallocated restructuring and acquisition-related expenses													(4,281		)
Operating income													161,868
Unallocated interest expense, net													(28,550		)
Unallocated other expense, net													(187		)
Income before income taxes													$	133,131
Depreciation expense	$	14,451		$	851		$	2,752		$	2,661		$	20,715

Our revenues and percentage of revenues by reportable market segments were as follows for fiscal 2016, 2015 and 2014, the majority of which were derived from the sale of products and services within the banking (including consumer credit) industry:

	Year Ended September 30,
	2016				2015				2014
	(Dollars in thousands)
Applications	$	532,642	61	%	$	526,274	63	%	$	504,256	64	%
Scores	241,059		27	%	207,007		25	%	186,469		24	%
Decision Management Software	107,655		12	%	105,500		12	%	98,260		12	%
Total	$	881,356	100	%	$	838,781	100	%	$	788,985	100	%

Within our Applications segment our fraud solutions accounted for 20%, 23% and 23% of total revenues in each of fiscal 2016, 2015 and 2014, respectively, and our customer management solutions accounted for 9%, 9% and 10% of total revenues, in each of these periods, respectively.

Our revenues and percentage of revenues on a geographical basis are summarized below for fiscal 2016, 2015 and 2014:

	Year Ended September 30,
	2016				2015				2014
	(Dollars in thousands)
United States	$	567,443	64	%	$	505,109	60	%	$	457,270	58	%
United Kingdom	86,485		10	%	93,855		11	%	98,784		12	%
Other countries	227,428		26	%	239,817		29	%	232,931		30	%
Total	$	881,356	100	%	$	838,781	100	%	$	788,985	100	%

During fiscal 2016, 2015 and 2014, no individual customer accounted for 10% or more of our total revenues; however, we derive a substantial portion of revenues from our contracts with the three major credit reporting agencies, TransUnion, Equifax and Experian. Revenues collectively generated by agreements with these customers accounted for 19%, 16% and 15% of our total revenues in fiscal 2016, 2015 and 2014, respectively. At September 30, 2016 and 2015, 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, 2016 and 2015. At September 30, 2016 and 2015, no individual country outside the U.S. accounted for 10% or more of total consolidated net property and equipment.

	September 30,
	2016				2015
	(Dollars in thousands)
United States	$	36,083	80	%	$	29,949	78	%
International	9,039		20	%	8,259		22	%
Total	$	45,122	100	%	$	38,208	100	%