What changed in this filing

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Item 1. Financial Statements

2021-05-05 compared with 2021-01-28 · 190 added, 110 removed, 420 unchanged (42% of the section changed)

8 unchanged sentences

Prepaid expenses and other current assets 40,335 42,504

Assets held for sale 48,843 —

Total current assets 551,818 534,078

15 unchanged sentences

Current maturities on debt 225,000 95,000

Liabilities related to assets held for sale 23,989 —

Total current liabilities 500,561 414,511

9 unchanged sentences

Common stock ($ 0.01 par value;

200,000 shares authorized, 88,857 shares issued and 29,236 and 29,096 shares outstanding at December 31, 2020 and September 30, 2020, respectively)

200,000 shares authorized, 88,857 shares issued and 28,829 and 29,096 shares outstanding at March 31, 2021 and September 30, 2020, respectively)

Additional paid-in-capital 1,181,692 1,218,583

Treasury stock, at cost ( 59,621 and 59,761 shares at December 31, 2020 and September 30, 2020, respectively)

Treasury stock, at cost ( 60,028 and 59,761 shares at March 31, 2021 and September 30, 2020, respectively)

( 3,239,109 ) ( 2,997,856 )

6 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

Quarter Ended December 31,

Quarter Ended March 31, Six Months Ended March 31,

2021 2020 2021 2020

(In thousands, except per share data)

17 unchanged sentences

Net income 68,674 58,288 155,166 113,209

Other comprehensive gain:

Other comprehensive gain (loss):

Foreign currency translation adjustments ( 1,846 ) ( 19,056 ) 15,202 ( 4,964 )

14 unchanged sentences

(In thousands) Shares Par Value

Balance at September 30, 2020 29,096 $ 291 $ 1,218,583 $ ( 2,997,856 ) $ 2,193,059 $ ( 82,995 ) $ 331,082

Balance at December 31, 2020 29,236 $ 292 $ 1,145,893 $ ( 3,035,668 ) $ 2,279,551 $ ( 65,947 ) $ 324,121

Share-based compensation — — 28,206 — — — 28,206

3 unchanged sentences

Foreign currency translation adjustments — — — — — ( 1,846 ) ( 1,846 )

Balance at March 31, 2021 28,829 $ 288 $ 1,181,692 $ ( 3,239,109 ) $ 2,348,225 $ ( 67,793 ) $ 223,303

Common Stock Additional

Paid-in-Capital Treasury Stock Retained Earnings Accumulated Other

Comprehensive Loss Total

Stockholders’ Equity

(In thousands) Shares Par Value

Balance at December 31, 2019 29,186 $ 292 $ 1,148,190 $ ( 2,843,097 ) $ 2,011,569 $ ( 75,993 ) $ 240,961

Share-based compensation — — 22,788 — — — 22,788

Issuance of treasury stock under employee stock plans 186 2 ( 1,761 ) 8,930 — — 7,171

Repurchases of common stock ( 290 ) ( 3 ) — ( 95,998 ) — — ( 96,001 )

Net income — — — — 58,288 — 58,288

Foreign currency translation adjustments — — — — — ( 19,056 ) ( 19,056 )

Balance at March 31, 2020 29,082 $ 291 $ 1,169,217 $ ( 2,930,165 ) $ 2,069,857 $ ( 95,049 ) $ 214,151

Common Stock Additional

9 unchanged sentences

Foreign currency translation adjustments — — — — — 15,202 15,202

Balance at December 31, 2019 29,186 $ 292 $ 1,148,190 $ ( 2,843,097 ) $ 2,011,569 $ ( 75,993 ) $ 240,961

Balance at March 31, 2021 28,829 $ 288 $ 1,181,692 $ ( 3,239,109 ) $ 2,348,225 $ ( 67,793 ) $ 223,303

Common Stock Additional

Paid-in-Capital Treasury Stock Retained Earnings Accumulated Other

Comprehensive Loss Total

Stockholders’ Equity

(In thousands) Shares Par Value

Balance at September 30, 2019 28,944 $ 289 $ 1,225,365 $ ( 2,802,450 ) $ 1,956,648 $ ( 90,085 ) $ 289,767

Share-based compensation — — 45,933 — — — 45,933

Issuance of treasury stock under employee stock plans 596 6 ( 102,081 ) 28,291 — — ( 73,784 )

Repurchases of common stock ( 458 ) ( 4 ) — ( 156,006 ) — — ( 156,010 )

Net income — — — — 113,209 — 113,209

Foreign currency translation adjustments — — — — — ( 4,964 ) ( 4,964 )

Balance at March 31, 2020 29,082 $ 291 $ 1,169,217 $ ( 2,930,165 ) $ 2,069,857 $ ( 95,049 ) $ 214,151

See accompanying notes.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Quarter Ended December 31,

Six Months Ended March 31,

(In thousands)

5 unchanged sentences

Deferred income taxes ( 287 ) ( 1,213 )

Net gain on marketable securities ( 1,768 ) ( 944 )

Net (gain) loss on marketable securities ( 2,669 ) 2,526

Non-cash operating lease costs 8,005 10,000

28 unchanged sentences

Effect of exchange rate changes on cash 4,021 ( 4,017 )

Increase (decrease) in cash and cash equivalents ( 12,732 ) 4,790

Increase in cash and cash equivalents 40,442 2,540

Cash and cash equivalents, beginning of period 157,394 106,426

1 unchanged sentence

Supplemental disclosures of cash flow information:

Cash paid for income taxes, net of refunds of $ 221 and $ 154 during the quarters ended December 31, 2020, and 2019, respectively

Cash paid for income taxes, net of refunds of $ 288 and $ 1,538 during the six months ended March 31, 2021, and 2020, respectively

$ 18,131 $ 4,475

2 unchanged sentences

Purchase of property and equipment included in accounts payable $ 388 $ 1,920

Unsettled repurchases of common stock $ 4,866 $ 8,002

Finance lease obligations incurred $ — $ 5,148

5 unchanged sentences

Incorporated under the laws of the State of Delaware, Fair Isaac Corporation (“FICO”) is a provider of analytic, software and data management products and services that enable businesses to automate, improve and connect decisions.

FICO provides a range of analytical solutions, credit scoring and credit account management products and services to banks, credit reporting agencies, credit card processing agencies, insurers, retailers, healthcare organizations and public agencies.

FICO provides a range of analytic solutions, credit scoring and credit account management products and services to banks, credit reporting agencies, credit card processing agencies, insurers, retailers, healthcare organizations and public agencies.

In this Quarterly Report on Form 10-Q, Fair Isaac Corporation is referred to as “FICO,” “we,” “us,” “our,” or “the Company.”

42 unchanged sentences

Our Level 1 assets are comprised of money market funds and certain marketable securities.

We did not have any liabilities that are valued using inputs identified under a Level 1 hierarchy as of December 31, 2020 and September 30, 2020.

We did not have any liabilities that are valued using inputs identified under a Level 1 hierarchy as of March 31, 2021 and September 30, 2020.

• Level 2 - uses inputs other than quoted prices included in Level 1 that are either directly or indirectly observable through correlation with market data.

2 unchanged sentences

and inputs to valuation models or other pricing methodologies that do not require significant judgment because the inputs used in the model, such as interest rates and volatility, can be corroborated by readily observable market data.

We did not have any assets that are valued using inputs identified under a Level 2 hierarchy as of December 31, 2020 and September 30, 2020.

We did not have any assets that are valued using inputs identified under a Level 2 hierarchy as of March 31, 2021 and September 30, 2020.

We measure the fair value of our senior notes based on Level 2 inputs, which include quoted market prices and interest rate spreads of similar securities.

1 unchanged sentence

Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques, and significant management judgment or estimation.

We did not have any assets or liabilities that are valued using inputs identified under a Level 3 hierarchy as of December 31, 2020 and September 30, 2020.

The following tables represent financial assets that we measured at fair value on a recurring basis at December 31, 2020 and September 30, 2020:

December 31, 2020 Active Markets for

We did not have any assets or liabilities that are valued using inputs identified under a Level 3 hierarchy as of March 31, 2021 and September 30, 2020.

The following tables represent financial assets that we measured at fair value on a recurring basis at March 31, 2021 and September 30, 2020:

March 31, 2021 Active Markets for

Identical Instruments

(Level 1) Fair Value as of December 31, 2020

(Level 1) Fair Value as of March 31, 2021

(In thousands)

1 unchanged sentence

Marketable securities (2)

30,437 30,437

Total $ 30,631 $ 30,631

4 unchanged sentences

Cash equivalents (1)

$ 35,275 $ 35,275

Marketable securities (2)

25,513 25,513

Total $ 60,788 $ 60,788

(1) Included in cash and cash equivalents on our condensed consolidated balance sheets at December 31, 2020 and September 30, 2020.

Not included in these tables are cash deposits of $ 134.0 million and $ 122.1 million at December 31, 2020 and September 30, 2020, respectively.

(1) Included in cash and cash equivalents on our condensed consolidated balance sheets at March 31, 2021 and September 30, 2020.

Not included in these tables are cash deposits of $ 197.6 million and $ 122.1 million at March 31, 2021 and September 30, 2020, respectively.

(2) Represents securities held under a supplemental retirement and savings plan for senior management employees, which are distributed upon termination or retirement of the employees.

Included in marketable securities on our condensed consolidated balance sheets at December 31, 2020 and September 30, 2020.

Included in marketable securities on our condensed consolidated balance sheets at March 31, 2021 and September 30, 2020.

See Note 7 for the fair value of our senior notes.

There were no transfers between Level 1, Level 2, and Level 3 of the fair value hierarchy during the quarters ended December 31, 2020 and 2019.

There were no transfers between Level 1, Level 2, and Level 3 of the fair value hierarchy during the quarters and six-month periods ended March 31, 2021 and 2020.

Derivative Financial Instruments

3 unchanged sentences

We routinely enter into contracts to offset exposures denominated in the British pound, Euro, and Singapore dollar.

Foreign-currency-denominated receivable and cash balances are remeasured at foreign exchange rates in effect on the balance sheet date with the effects of changes in foreign exchange rates reported in other income, net.

The forward contracts are not designated as hedges and are marked to market through other income, net.

The forward contracts are not designated as hedges and are marked to market through other income (expense), net.

Fair value changes in the forward contracts help mitigate the changes in the value of the remeasured receivable and cash balances attributable to changes in foreign exchange rates.

The forward contracts are short-term in nature and typically have average maturities at inception of less than three months .

The following tables summarize our outstanding foreign currency forward contracts, by currency, at December 31, 2020 and September 30, 2020:

December 31, 2020

The following tables summarize our outstanding foreign currency forward contracts, by currency, at March 31, 2021 and September 30, 2020:

March 31, 2021

Contract Amount Fair Value

15 unchanged sentences

Singapore dollar (SGD) SGD 7,815 $ 5,700 $ —

The foreign currency forward contracts were entered into on December 31, 2020 and September 30, 2020, respectively;

The foreign currency forward contracts were entered into on March 31, 2021 and September 30, 2020, respectively;

therefore, their fair value was $ 0 on each of these dates.

Gains on derivative financial instruments are recorded in our condensed consolidated statements of income and comprehensive income as a component of other income (expense), net, and consisted of the following:

Quarter Ended December 31,

Gains (losses) on derivative financial instruments were recorded in our condensed consolidated statements of income and comprehensive income as a component of other income (expense), net, and consisted of the following:

Quarter Ended March 31, Six Months Ended March 31,

2021 2020 2021 2020

(In thousands)

Gains on foreign currency forward contracts $ 1,686 $ 1,145

Gains (losses) on foreign currency forward contracts $ 1,229 $ ( 2,194 ) $ 2,915 $ ( 1,049 )

Goodwill and Intangible Assets

1 unchanged sentence

Amortization expense consisted of the following:

Quarter Ended December 31,

Quarter Ended March 31, Six Months Ended March 31,

2021 2020 2021 2020

(In thousands)

4 unchanged sentences

Total $ 945 $ 1,202 $ 1,882 $ 2,998

Estimated future intangible asset amortization expense associated with intangible assets existing at December 31, 2020 was as follows:

Estimated future intangible asset amortization expense associated with intangible assets existing at March 31, 2021 was as follows:

Year Ending September 30, (In thousands)

2021 (excluding the quarter ended December 31, 2020) $ 2,742

2021 (excluding the six months ended March 31, 2021) $ 1,804

Total $ 7,437

The following table summarizes changes to goodwill during the quarter ended December 31, 2020, both in total and as allocated to our segments:

The following table summarizes changes to goodwill during the six months ended March 31, 2021, both in total and as allocated to our segments:

Applications Scores Decision Management Software Total

2 unchanged sentences

Foreign currency translation adjustment 3,679 — 1,040 4,719

Balance at December 31, 2020 $ 601,372 $ 146,648 $ 69,757 $ 817,777

Reclassified as assets held for sale ( 27,960 ) — — ( 27,960 )

Balance at March 31, 2021 $ 572,523 $ 146,648 $ 69,952 $ 789,123

Composition of Certain Financial Statement Captions

The following table presents the composition of property and equipment, net and other assets at December 31, 2020 and September 30, 2020:

The following table presents the composition of property and equipment, net and other assets at March 31, 2021 and September 30, 2020:

2021 September 30,

10 unchanged sentences

Revolving Line of Credit

We have a $ 400 million unsecured revolving line of credit with a syndicate of banks that expires on May 8, 2023 with an option to increase it by another $ 100 million.

We have a $ 400 million unsecured revolving line of credit with a syndicate of banks that expires on May 8, 2023 with an option to increase it, subject to lender approval, by another $ 100 million.

Proceeds from the credit facility can be used for working capital and general corporate purposes and may also be used for the refinancing of existing debt, acquisitions and the repurchase of our common stock.

5 unchanged sentences

The credit agreement also contains other covenants typical of unsecured facilities.

As of December 31, 2020, we had $ 131.0 million in borrowings outstanding at a weighted-average interest rate of 1.284 % and were in compliance with all financial covenants under this credit facility.

As of March 31, 2021, we had $ 225.0 million in borrowings outstanding at a weighted-average interest rate of 1.236 % and were in compliance with all financial covenants under this credit facility.

On May 8, 2018, we issued $ 400 million of senior notes in a private offering to qualified institutional investors (the “2018 Senior Notes”).

3 unchanged sentences

The indentures for the Senior Notes contain certain covenants typical of unsecured obligations.

The following table presents the face values and fair values for the Senior Notes at December 31, 2020 and September 30, 2020:

December 31, 2020 September 30, 2020

The following table presents the face values and fair values for the Senior Notes at March 31, 2021 and September 30, 2020:

March 31, 2021 September 30, 2020

Face Value (*) Fair Value Face Value (*) Fair Value

3 unchanged sentences

Total $ 750,000 $ 799,000 $ 750,000 $ 800,750

(*) The carrying value of the Senior Notes was the face value reduced by the net debt issuance costs of $ 10.2 million and $ 10.6 million at December 31, 2020 and September 30, 2020, respectively.

(*) The carrying value of the Senior Notes was the face value reduced by the net debt issuance costs of $ 9.8 million and $ 10.6 million at March 31, 2021 and September 30, 2020, respectively.

Effective Tax Rate

The effective income tax rate was 1.7 % and ( 31.1 )% during the quarters ended December 31, 2020 and 2019, respectively.

The effective income tax rates were 25.2 % and 6.7 % during the quarters ended March 31, 2021 and 2020, respectively, and 13.7 % and ( 8.5 )% during the six months ended March 31, 2021 and 2020, respectively.

The provision for income taxes during interim quarterly reporting periods is based on our estimates of the effective tax rates for the full fiscal year.

The effective tax rate in any quarter can also be affected positively or negatively by adjustments that are required to be reported in the specific quarter of resolution.

The effective tax rates for the quarters ended December 31, 2020 and 2019 were both impacted by the recording of excess tax benefits relating to stock awards.

The impact is dependent upon grants of stock-based compensation and the future stock price in relation to the fair value of awards on the grant date.

The increase in stock price for awards that vested in December 2019 was significantly larger than the increase in stock price for the awards that vested in December 2020.

The total unrecognized tax benefit for uncertain tax positions was estimated to be $ 9.0 million and $ 8.0 million at December 31, 2020 and September 30, 2020, respectively.

The effective tax rates for the six months ended March 31, 2021 and 2020 were both impacted by the recording of excess tax benefits relating to stock awards.

In addition, stock exercises during the quarter and six months ended March 31, 2020 resulted in an additional increase in excess benefits.

The total unrecognized tax benefit for uncertain tax positions was estimated to be $ 10.2 million and $ 8.0 million at March 31, 2021 and September 30, 2020, respectively.

We recognize interest expense related to unrecognized tax benefits and penalties as part of the provision for income taxes in our condensed consolidated statements of income and comprehensive income.

We accrued interest of $ 0.5 million and $ 0.4 million related to unrecognized tax benefits as of December 31, 2020 and September 30, 2020, respectively.

Stock-Based Employee Benefit Plans

We maintain the 2012 Long-Term Incentive Plan (the “2012 Plan”) under which we grant equity awards, including stock options, stock appreciation rights, restricted stock awards, stock unit awards and other stock-based awards.

All employees, consultants and advisors of FICO or any subsidiary, as well as all non-employee directors, are eligible to receive awards under the 2012 Plan.

Stock option awards have a maximum term of seven years .

In general, stock option awards and restricted stock unit awards not subject to market or performance conditions vest annually over four years .

Restricted stock unit awards subject to market or performance conditions generally vest annually over three years based on the achievement of specified criteria.

We maintain the 2019 Employee Stock Purchase Plan (the “2019 Purchase Plan”) under which we are authorized to issue up to 1,000,000 shares of our common stock to eligible employees.

Employees have up to 15 % of their eligible pay withheld through payroll deductions to purchase FICO common stock during semi-annual offering periods.

The purchase price of the stock is 85 % of the closing sales price of FICO common stock on the last trading day of each offering period.

Offering period means the approximately six-month long periods commencing (a) on the first trading day on or after September 1 and terminating on the last trading day in the following February, and (b) on the first trading day on or after March 1 and terminating on the last trading day in the following August.

Stock Options

The following table summarizes option activity during the quarter ended December 31, 2020:

Shares Weighted-average Exercise Price Weighted-average Remaining Contractual Term Aggregate Intrinsic Value

(In thousands) (In years) (In thousands)

Outstanding at September 30, 2020 246 $ 166.80

Granted 12 506.91

Outstanding at December 31, 2020 258 $ 182.79 3.75 $ 84,688

Exercisable at December 31, 2020 188 $ 140.06 3.05 $ 69,796

Vested or expected to vest at December 31, 2020 255 $ 180.76 3.72 $ 84,191

Restricted Stock Units

The following table summarizes restricted stock unit activity during the quarter ended December 31, 2020:

Shares Weighted-average Grant-date Fair Value

(In thousands)

Outstanding at September 30, 2020 721 $ 229.10

Granted 159 506.38

Released ( 273 ) 187.57

Forfeited ( 19 ) 241.04

Outstanding at December 31, 2020 588 $ 323.15

Performance Share Units

The following table summarizes performance share unit activity during the quarter ended December 31, 2020:

Shares Weighted-average Grant-date Fair Value

(In thousands)

Outstanding at September 30, 2020 127 $ 248.97

Granted 33 506.91

Released ( 68 ) 217.36

Outstanding at December 31, 2020 92 $ 366.08

Market Share Units

The following table summarizes market share unit activity during the quarter ended December 31, 2020:

Shares Weighted-average Grant-date Fair Value

(In thousands)

Outstanding at September 30, 2020 63 $ 311.91

Granted 67 471.16

Released ( 67 ) 257.15

Outstanding at December 31, 2020 63 $ 541.41

Employee Stock Purchase Plan

As the 2019 Purchase Plan has semi-annual offering periods with shares purchased on the last trading day in the months of February and August, no shares were purchased during the quarter ended December 31, 2020.

We accrued interest of $ 0.5 million and $ 0.4 million related to unrecognized tax benefits as of March 31, 2021 and September 30, 2020, respectively.

Earnings per Share

The following table presents reconciliations for the numerators and denominators of basic and diluted earnings per share (“EPS”) for the quarters ended December 31, 2020 and 2019:

Quarter Ended December 31,

The following table presents reconciliations for the numerators and denominators of basic and diluted earnings per share (“EPS”) for the quarters and six-month periods ended March 31, 2021 and 2020:

Quarter Ended March 31, Six Months Ended March 31,

2021 2020 2021 2020

(In thousands, except per share data)

12 unchanged sentences

• 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.

This segment includes 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”).

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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

The following tables summarize segment information for the quarters and six-month periods ended March 31, 2021 and 2020:

Quarter Ended March 31, 2021

Applications Scores Decision Management Software Unallocated

10 unchanged sentences

Unallocated amortization expense ( 945 )

Operating income 101,199

Unallocated interest expense, net ( 9,943 )

Unallocated other income, net 568

Income before income taxes $ 91,824

Depreciation expense $ 4,110 $ 167 $ 902 $ 45 $ 5,224

Quarter Ended March 31, 2020

Applications Scores Decision Management Software Unallocated

Expenses Total

(In thousands)

Segment revenues:

Transactional and maintenance $ 97,789 $ 127,610 $ 15,303 $ — $ 240,702

Professional services 35,134 819 11,952 — 47,905

License 7,356 719 11,289 — 19,364

Total segment revenues 140,279 129,148 38,544 — 307,971

Segment operating expense ( 111,456 ) ( 15,660 ) ( 47,354 ) ( 33,785 ) ( 208,255 )

Segment operating income (loss) $ 28,823 $ 113,488 $ ( 8,810 ) $ ( 33,785 ) 99,716

Unallocated share-based compensation expense ( 22,788 )

Unallocated amortization expense ( 1,202 )

Operating income 75,726

Unallocated interest expense, net ( 11,254 )

Unallocated other expense, net ( 2,008 )

Income before income taxes $ 62,464

Depreciation expense $ 4,553 $ 141 $ 1,158 $ 108 $ 5,960

Six Months Ended March 31, 2021

Applications Scores Decision Management Software Unallocated

Expenses Total

(In thousands)

Segment revenues:

Transactional and maintenance $ 194,418 $ 305,802 $ 32,849 $ — $ 533,069

Professional services 58,232 820 20,167 — 79,219

License 12,225 6,748 12,514 — 31,487

Total segment revenues 264,875 313,370 65,530 — 643,775

Segment operating expense ( 202,001 ) ( 43,803 ) ( 90,520 ) ( 63,645 ) ( 399,969 )

Segment operating income (loss) $ 62,874 $ 269,567 $ ( 24,990 ) $ ( 63,645 ) 243,806

Unallocated share-based compensation expense ( 53,338 )

Unallocated amortization expense ( 1,882 )

Unallocated gain on sale of product line assets 7,334

4 unchanged sentences

Depreciation expense $ 8,484 $ 361 $ 1,886 $ 78 $ 10,809

Quarter Ended December 31, 2019

Six Months Ended March 31, 2020

Applications Scores Decision Management Software Unallocated

17 unchanged sentences

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

Quarter Ended December 31, 2020

Quarter Ended March 31, 2021

Reportable Segments On-Premises SaaS Scores Total Percentage

4 unchanged sentences

Total $ 88,469 $ 74,173 $ 168,719 $ 331,361 100 %

Quarter Ended December 31, 2019

Quarter Ended March 31, 2020

Reportable Segments On-Premises SaaS Scores Total Percentage

4 unchanged sentences

Total $ 105,188 $ 73,635 $ 129,148 $ 307,971 100 %

Six Months Ended March 31, 2021

Reportable Segments On-Premises SaaS Scores Total Percentage

(Dollars in thousands)

Applications $ 137,402 $ 127,473 $ — $ 264,875 41 %

Scores — — 313,370 313,370 49 %

Decision Management Software 45,065 20,465 — 65,530 10 %

Total $ 182,467 $ 147,938 $ 313,370 $ 643,775 100 %

Six Months Ended March 31, 2020

Reportable Segments On-Premises SaaS Scores Total Percentage

(Dollars in thousands)

Applications $ 162,319 $ 130,138 $ — $ 292,457 48 %

Scores — — 244,286 244,286 40 %

Decision Management Software 52,526 17,206 — 69,732 12 %

Total $ 214,845 $ 147,344 $ 244,286 $ 606,475 100 %

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

Quarter Ended December 31, 2020

Quarter Ended March 31, 2021

Reportable Segments North America Latin America Europe, Middle East and Africa Asia Pacific Total

4 unchanged sentences

Total $ 246,678 $ 14,781 $ 49,675 $ 20,227 $ 331,361

Quarter Ended December 31, 2019

Quarter Ended March 31, 2020

Reportable Segments North America Latin America Europe, Middle East and Africa Asia Pacific Total

4 unchanged sentences

Total $ 223,156 $ 18,208 $ 42,911 $ 23,696 $ 307,971

Six Months Ended March 31, 2021

Reportable Segments North America Latin America Europe, Middle East and Africa Asia Pacific Total

(In thousands)

Applications $ 149,454 $ 18,339 $ 70,170 $ 26,912 $ 264,875

Scores 299,457 3,043 7,355 3,515 313,370

Decision Management Software 34,061 5,842 17,698 7,929 65,530

Total $ 482,972 $ 27,224 $ 95,223 $ 38,356 $ 643,775

Six Months Ended March 31, 2020

Reportable Segments North America Latin America Europe, Middle East and Africa Asia Pacific Total

(In thousands)

Applications $ 164,366 $ 19,189 $ 74,055 $ 34,847 $ 292,457

Scores 233,446 2,903 3,258 4,679 244,286

Decision Management Software 36,594 10,250 14,185 8,703 69,732

Total $ 434,406 $ 32,342 $ 91,498 $ 48,229 $ 606,475

Contract Balances and Performance Obligations

3 unchanged sentences

We record deferred revenue when the payment is made or due before we satisfy a performance obligation.

Receivables at December 31, 2020 and September 30, 2020 consisted of the following:

Receivables at March 31, 2021 and September 30, 2020 consisted of the following:

2021 September 30,

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* Short-term receivables and long-term receivables were recorded in accounts receivable, net and other assets, respectively, within the accompanying condensed consolidated balance sheets.

Contract assets balance at December 31, 2020 and September 30, 2020 was immaterial.

Contract assets balance at March 31, 2021 and September 30, 2020 was immaterial.

Deferred revenue primarily relates to our maintenance and SaaS contracts billed annually in advance and generally recognized ratably over the term of the service period.

Significant changes in the deferred revenues balances during the quarter ended December 31, 2020 were as follows:

Quarter Ended

December 31, 2020

Significant changes in the deferred revenues balances during the six months ended March 31, 2021 were as follows:

Six Months Ended

March 31, 2021

(In thousands)

2 unchanged sentences

Increases due to billings, excluding amounts recognized as revenue during the period 78,945

Deferred revenues at December 31, 2020 * $ 122,789

Reclassified as liabilities related to assets held for sale $ ( 16,508 )

Deferred revenues at March 31, 2021 * $ 108,978

* Deferred revenues at September 30, 2020 included current portion of $ 115.2 million and long-term portion of $ 6.9 million that were recorded in deferred revenue and other liabilities, respectively, within the condensed consolidated balance sheets.

Deferred revenues at December 31, 2020 included current portion of $ 115.8 million and long-term portion of $ 7.0 million that were recorded in deferred revenue and other liabilities, respectively, within the condensed consolidated balance sheets.

Deferred revenues at March 31, 2021 included current portion of $ 100.4 million and long-term portion of $ 8.6 million that were recorded in deferred revenue and other liabilities, respectively, within the condensed consolidated balance sheets.

Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 to 60 days.

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• Revenue from variable considerations that will be recognized in accordance with the “right-to-invoice” practical expedient, such as fees from our professional services billed based on a time and materials basis.

Revenue allocated to remaining performance obligations was $ 337.7 million as of December 31, 2020, of which we expect to recognize approximately 50 % over the next 20 months and the remainder thereafter.

Revenue allocated to remaining performance obligations was $ 334.4 million as of March 31, 2021, of which we expect to recognize approximately 50 % over the next 20 months and the remainder thereafter.

Contingencies

4 unchanged sentences

For legal proceedings for which there is a reasonable possibility of loss (meaning those losses for which the likelihood is more than remote but less than probable), we have determined we do not have material exposure on an aggregate basis.

Assets Held for Sale

As discussed in Note 14 - Subsequent Events, we entered into an agreement to divest our Collections and Recovery business (“C&R”) on May 4th, 2021.

As a result of meeting the criteria to classify the disposal group as held for sale under ASC 360, Property, Plant, and Equipment, the C&R disposal group was classified as held for sale as of March 31, 2021.

Assets classified as held for sale are recorded at the lower of their carrying amount or fair value less costs to sell and are not depreciated or amortized.

Classification of a disposal group as held for sale occurs when sufficient authority to sell the disposal group has been obtained, the disposal group is available for immediate sale, and its sale is probable within one year.

If at any time these criteria are no longer met, the disposal group would be reclassified as held and used.

We evaluate the held for sale classification during each reporting period.

The C&R disposal group did not meet the requirements for presentation as discontinued operations and is included in income from continuing operations for the three and six months ended March 31, 2021.

We did not have any assets held for sale as of September 30, 2020.

The following table presents the carrying amounts of major classes of assets and liabilities related to assets held for sale with respect to the C&R disposal group as of March 31, 2021.

March 31, 2021

(In thousands)

Accounts receivable, net $ 18,310

Property and equipment, net 312

Goodwill 27,960

Operating lease right-of-use assets 2,261

Total assets held for sale $ 48,843

Accounts payable $ 99

Accrued compensation and employee benefits 2,131

Deferred revenue 16,508

Operating lease liabilities 5,251

Total liabilities related to assets held for sale $ 23,989

Subsequent Events

On May 4th, 2021, we signed a definitive agreement to sell our C&R business.

The transaction is expected to close in our current fiscal year, subject to customary closing conditions.

The decision to sell the C&R business was the result of management’s decision to divest non-platform businesses and focus resources on the growth of our FICO Decision Management Platform.

Our C&R business is part of the Applications segment.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements