Segment Information

3 Months Ended

Dec. 31, 2020

Segment Reporting [Abstract]

Segment Information

Segment InformationWe 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, software-as-a-service (“SaaS”) applications through the FICO® Analytic Cloud or Amazon Web Services (“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 and services are either distributed through major credit reporting agencies worldwide or sold to our 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. Some of our 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 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, nor capital expenditures where depreciation amounts are allocated to the segments from their internal cost centers as described above.

The following tables summarize segment information for the quarters ended December 31, 2020 and 2019:

	Quarter Ended December 31, 2020
	Applications		Scores		Decision Management Software		Unallocated Corporate Expenses		Total
	(In thousands)
Segment revenues:
Transactional and maintenance	$	97,731	$	138,590	$	15,829	$	—	$	252,150
Professional services	30,605		117		10,703		—		41,425
License	7,025		5,944		5,870		—		18,839
Total segment revenues	135,361		144,651		32,402		—		312,414
Segment operating expense	(99,859)		(21,626)		(47,220)		(30,253)		(198,958)
Segment operating income (loss)	$	35,502	$	123,025	$	(14,818)	$	(30,253)	113,456
Unallocated share-based compensation expense									(25,132)
Unallocated amortization expense									(937)
Unallocated gain on sale of product line assets									7,334
Operating income									94,721
Unallocated interest expense, net									(9,641)
Unallocated other income, net									2,880
Income before income taxes									$	87,960
Depreciation expense	$	4,374	$	194	$	984	$	33	$	5,585

	Quarter Ended December 31, 2019
	Applications		Scores		Decision Management Software		Unallocated Corporate Expenses		Total
	(In thousands)
Segment revenues:
Transactional and maintenance	$	98,837	$	107,446	$	14,091	$	—	$	220,374
Professional services	34,023		264		9,738		—		44,025
License	19,318		7,428		7,359		—		34,105
Total segment revenues	152,178		115,138		31,188		—		298,504
Segment operating expense	(116,010)		(17,712)		(50,645)		(34,210)		(218,577)
Segment operating income (loss)	$	36,168	$	97,426	$	(19,457)	$	(34,210)	79,927
Unallocated share-based compensation expense									(23,145)
Unallocated amortization expense									(1,796)
Unallocated restructuring and impairment charges									(3,104)
Operating income									51,882
Unallocated interest expense, net									(9,768)
Unallocated other expense, net									(219)
Income before income taxes									$	41,895
Depreciation expense	$	4,349	$	116	$	986	$	225	$	5,676

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

	Quarter Ended December 31, 2020
Reportable Segments	On-Premises		SaaS		Scores		Total		Percentage
	(Dollars in thousands)
Applications	$	71,220	$	64,141	$	—	$	135,361	43	%
Scores	—		—		144,651		144,651		46	%
Decision Management Software	22,778		9,624		—		32,402		11	%
Total	$	93,998	$	73,765	$	144,651	$	312,414	100	%

	Quarter Ended December 31, 2019
Reportable Segments	On-Premises		SaaS		Scores		Total		Percentage
	(Dollars in thousands)
Applications	$	85,978	$	66,200	$	—	$	152,178	51	%
Scores	—		—		115,138		115,138		39	%
Decision Management Software	23,679		7,509		—		31,188		10	%
Total	$	109,657	$	73,709	$	115,138	$	298,504	100	%

Information about disaggregated revenue by primary geographical markets was as follows:

	Quarter Ended December 31, 2020
Reportable Segments	North America		Latin America		Europe, Middle East and Africa		Asia Pacific		Total
	(In thousands)
Applications	$	79,337	$	9,227	$	35,257	$	11,540	$	135,361
Scores	140,410		303		1,713		2,225		144,651
Decision Management Software	16,547		2,913		8,578		4,364		32,402
Total	$	236,294	$	12,443	$	45,548	$	18,129	$	312,414

	Quarter Ended December 31, 2019
Reportable Segments	North America		Latin America		Europe, Middle East and Africa		Asia Pacific		Total
	(In thousands)
Applications	$	85,466	$	9,517	$	39,784	$	17,411	$	152,178
Scores	110,197		284		1,538		3,119		115,138
Decision Management Software	15,587		4,333		7,265		4,003		31,188
Total	$	211,250	$	14,134	$	48,587	$	24,533	$	298,504