What changed in this filing

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Item 1. Financial Statements

2022-01-27 compared with 2021-08-03 · 263 added, 296 removed, 303 unchanged (65% of the section changed)

18 unchanged sentences

Total assets $ 1,463,310 $ 1,567,776

Liabilities and Stockholders’ Equity

Liabilities and Stockholders’ Deficit

Current liabilities:

10 unchanged sentences

Commitments and contingencies

Stockholders’ equity:

Stockholders’ deficit:

Preferred stock ($ 0.01 par value;

2 unchanged sentences

Common stock ($ 0.01 par value;

200,000 shares authorized, 88,857 shares issued and 28,386 and 29,096 shares outstanding at June 30, 2021 and September 30, 2020, respectively)

200,000 shares authorized, 88,857 shares issued and 26,509 and 27,568 shares outstanding at December 31, 2021 and September 30, 2021, respectively)

Additional paid-in-capital 1,208,365 1,237,348

Treasury stock, at cost ( 60,471 and 59,761 shares at June 30, 2021 and September 30, 2020, respectively)

Treasury stock, at cost ( 62,348 and 61,289 shares at December 31, 2021 and September 30, 2021, respectively)

( 4,339,039 ) ( 3,857,855 )

1 unchanged sentence

Accumulated other comprehensive loss ( 77,992 ) ( 75,854 )

Total stockholders’ equity 124,838 331,082

Total liabilities and stockholders’ equity $ 1,589,155 $ 1,606,240

Total stockholders’ deficit ( 538,299 ) ( 110,942 )

Total liabilities and stockholders’ deficit $ 1,463,310 $ 1,567,776

See accompanying notes.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

Quarter Ended June 30, Nine Months Ended June 30,

2021 2020 2021 2020

Quarter Ended December 31,

(In thousands, except per share data)

Transactional and maintenance $ 288,078 $ 246,829 $ 821,147 $ 707,905

On-premises and SaaS software $ 126,338 $ 126,455

Professional services 26,536 41,308

License 14,188 23,269 45,675 76,738

Scores 169,487 144,651

Total revenues 322,361 312,414

4 unchanged sentences

Amortization of intangible assets 544 937

Restructuring and impairment charges — — — 3,104

Gains on product line asset sales and business divestiture — ( 7,334 )

17 unchanged sentences

FAIR ISAAC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Common Stock Additional

Paid-in-Capital Treasury Stock Retained Earnings Accumulated Other

Comprehensive Loss Total

Stockholders’ Equity

(In thousands) Shares Par Value

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

Share-based compensation — — 30,004 — — — 30,004

Issuance of treasury stock under employee stock plans 46 1 ( 532 ) 2,604 — — 2,073

Repurchases of common stock ( 489 ) ( 5 ) ( 40,000 ) ( 245,978 ) — — ( 285,983 )

Net income — — — — 151,198 — 151,198

Foreign currency translation adjustments — — — — — 4,243 4,243

Balance at June 30, 2021 28,386 $ 284 $ 1,171,164 $ ( 3,482,483 ) $ 2,499,423 $ ( 63,550 ) $ 124,838

Common Stock Additional

Paid-in-Capital Treasury Stock Retained Earnings Accumulated Other

Comprehensive Loss Total

Stockholders’ Equity

(In thousands) Shares Par Value

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

Share-based compensation — — 22,264 — — — 22,264

Issuance of treasury stock under employee stock plans 74 1 ( 3,764 ) 3,716 — — ( 47 )

Repurchases of common stock ( 157 ) ( 2 ) — ( 53,988 ) — — ( 53,990 )

Net income — — — — 64,076 — 64,076

Foreign currency translation adjustments — — — — — 832 832

Balance at June 30, 2020 28,999 $ 290 $ 1,187,717 $ ( 2,980,437 ) $ 2,133,933 $ ( 94,217 ) $ 247,286

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

Common Stock Additional

1 unchanged sentence

Comprehensive Loss Total

Stockholders’ Equity

Stockholders’ Deficit

(In thousands) Shares Par Value

5 unchanged sentences

Foreign currency translation adjustments — — — — — ( 2,138 ) ( 2,138 )

Balance at June 30, 2021 28,386 $ 284 $ 1,171,164 $ ( 3,482,483 ) $ 2,499,423 $ ( 63,550 ) $ 124,838

Balance at December 31, 2021 26,509 $ 265 $ 1,208,365 $ ( 4,339,039 ) $ 2,670,102 $ ( 77,992 ) $ ( 538,299 )

Common Stock Additional

9 unchanged sentences

Foreign currency translation adjustments — — — — — 17,048 17,048

Balance at June 30, 2020 28,999 $ 290 $ 1,187,717 $ ( 2,980,437 ) $ 2,133,933 $ ( 94,217 ) $ 247,286

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

See accompanying notes.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended June 30,

Quarter Ended December 31,

(In thousands)

5 unchanged sentences

Deferred income taxes 3,905 ( 298 )

Net gain on marketable securities ( 4,706 ) ( 998 )

Net (gain) loss on marketable securities 592 ( 1,768 )

Non-cash operating lease costs 4,115 4,000

15 unchanged sentences

Proceeds from product line asset sales and business divestiture 2,257 8,291

(Purchase of) distribution from equity investment ( 210 ) 55

Purchase of equity investment — ( 210 )

Net cash provided by (used in) investing activities ( 1,272 ) 3,862

Cash flows from financing activities:

Proceeds from revolving line of credit 429,000 193,000

Payments on revolving line of credit ( 208,000 ) ( 435,000 )

Proceeds from revolving line of credit and term loan 620,000 116,000

Payments on revolving line of credit and term loan ( 788,000 ) ( 80,000 )

Proceeds from issuance of senior notes 550,000 —

3 unchanged sentences

Taxes paid related to net share settlement of equity awards ( 47,024 ) ( 85,678 )

Repurchases of common stock including prepayment under accelerated share repurchase agreement ( 541,205 ) ( 210,000 )

Repurchases of common stock ( 482,755 ) ( 50,011 )

Net cash used in financing activities ( 155,429 ) ( 99,808 )

Effect of exchange rate changes on cash ( 1,377 ) 5,267

Increase in cash and cash equivalents 80,218 19,247

Decrease in cash and cash equivalents ( 33,197 ) ( 12,732 )

Cash and cash equivalents, beginning of period 195,354 157,394

1 unchanged sentence

Supplemental disclosures of cash flow information:

Cash paid for income taxes, net of refunds of $ 289 and $ 1,552 during the nine months ended June 30, 2021, and 2020, respectively

Cash paid for income taxes, net of refunds of $ 72 and $ 221 during the quarters ended December 31, 2021 and 2020, respectively

$ 1,570 $ 3,186

2 unchanged sentences

Purchase of property and equipment included in accounts payable $ 67 $ 13

Finance lease obligations incurred $ — $ 6,489

Unsettled repurchases of common stock $ 18,870 $ —

See accompanying notes.

3 unchanged sentences

Fair Isaac Corporation

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 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.”

Fair Isaac Corporation (NYSE:

FICO) (together with its consolidated subsidiaries, the “Company,” which may also be referred to in this report as “we,” “us,” “our,” or “FICO”) is a leading applied analytics company.

We were founded in 1956 on the premise that data, used intelligently, can improve business decisions.

Today, FICO’s software and the widely used FICO ® Score operationalize analytics, enabling thousands of businesses in nearly 120 countries to uncover new opportunities, make timely decisions that matter, and execute them at scale.

Most leading banks and credit card issuers rely on our solutions, as do insurers, retailers, telecommunications providers, automotive companies, public agencies, and organizations in other industries.

We also serve consumers through online services that enable people to access and understand their FICO Scores — the standard measure in the U.S.

of consumer credit risk — empowering them to increase financial literacy and manage their financial health.

Principles of Consolidation and Basis of Presentation

6 unchanged sentences

All intercompany accounts and transactions have been eliminated.

During the fourth quarter of our fiscal 2021, we consolidated our operating segment structure from three to two by merging Applications and Decision Management Software segments into the new Software segment.

As a result, we modified the presentation of our segment financial information with retrospective application to all prior periods presented.

Refer to Note 18 - Segment Reporting to the consolidated financial statements included in Part II.

Item 8 of our 2021 Annual Report on Form 10-K for further information.

In addition, effective beginning in the fourth quarter of fiscal 2021, we changed the classification of revenue from transactional and maintenance, professional services, and license to on-premises and SaaS software, professional services and scores, which is reflected in our condensed consolidated statements of income and comprehensive income, as well as our disclosures on disaggregation of revenue, to better align with our business strategy.

Previously reported amounts in the condensed consolidated statements of income and comprehensive income and notes to the condensed consolidated financial statements were adjusted to conform to the current presentation.

Use of Estimates

We make estimates and assumptions that affect the amounts reported in the financial statements and the disclosures made in the accompanying notes.

For example, we use estimates in determining the collectibility of accounts receivable;

the appropriate levels of various accruals;

variable considerations included in the transaction price for our customer contracts;

For example, we use estimates in determining the appropriate levels of various accruals;

variable considerations included in the transaction price and standalone selling price of each performance obligation for our customer contracts;

labor hours in connection with fixed-fee service contracts;

9 unchanged sentences

New Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2018-15, Intangibles—Goodwill and Other (Topic 350):

Internal-Use Software (“ASU 2018-15”).

ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a cloud computing arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software.

We adopted ASU 2018-15 in the first quarter of our fiscal 2021 and the adoption did not have a significant impact on our condensed consolidated financial statements.

In June 2016, the FASB issued ASU No.

2016-13, Financial Instruments—Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments and subsequent amendments to the initial guidance:

ASU 2018-19, ASU 2019-04, ASU 2019-05 and ASU 2019-11 (collectively, “Topic 326”).

Topic 326 requires measurement and recognition of expected credit losses for financial assets held.

We adopted Topic 326 in the first quarter of our fiscal 2021 and the adoption did not have a significant impact on our condensed consolidated financial statements.

Recent Accounting Pronouncements Not Yet Adopted

We do not expect that any recently issued accounting pronouncements will have a significant effect on our financial statements.

Business Divestiture

On May 4, 2021, we entered into a definitive agreement to sell our Collections and Recovery (“C&R”) business to Jonas Collections and Recovery Inc.

(“Jonas”), a company in the Jonas Software operating group of Constellation Software Inc.

The decision to sell the C&R business was the result of management’s decision to divest certain software products that are not built on the FICO Decision Management Platform.

This divestiture will allow us to focus our development and go to market resources on the growth of our Decision Management Platform products.

On June 7, 2021, we completed the sale to Jonas.

As the C&R business has the input, process and output elements defined in Accounting Standards Codification 805, Business Combinations , we concluded the sale qualified as a sale of a business.

The gain recognized from the sale was $ 92.8 million, which was recorded in gains on product line asset sales and business divestiture within the accompanying condensed consolidated statements of income and comprehensive income.

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

In October 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2021-08, “ Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers ” (“ASU 2021-08”).

ASU 2021-08 requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities from acquired contracts using the revenue recognition guidance under Accounting Standards Codification Topic 606 in order to align the recognition of a contract liability with the definition of a performance obligation.

The standard is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, which means that it will be effective for our fiscal year beginning October 1, 2023.

Early adoption is permitted.

We do not believe that adoption of ASU 2021-08 will have a significant impact on our consolidated financial statements.

We do not expect that any other recently issued accounting pronouncements will have a significant effect on our financial statements.

Fair Value Measurements

2 unchanged sentences

• Level 1 - uses unadjusted quoted prices that are available in active markets for identical assets or liabilities.

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 June 30, 2021 and September 30, 2020.

Our Level 1 assets were comprised of money market funds and certain marketable securities and our Level 1 liabilities included senior notes as of December 31, 2021 and September 30, 2021.

• 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 June 30, 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.

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

• Level 3 - uses one or more significant inputs that are unobservable and supported by little or no market activity, and that reflect the use of significant management judgment.

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 June 30, 2021 and September 30, 2020.

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

June 30, 2021 Active Markets for

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

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

December 31, 2021 Active Markets for

Identical Instruments

(Level 1) Fair Value as of

June 30, 2021

December 31, 2021

(In thousands)

8 unchanged sentences

Cash equivalents (1)

$ 35,275 $ 35,275

Marketable securities (2)

1 unchanged sentence

Total $ 32,078 $ 32,078

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

Not included in these tables are cash deposits of $ 237.4 million and $ 122.1 million at June 30, 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 June 30, 2021 and September 30, 2020.

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

Not included in these tables are cash deposits of $ 162.0 million and $ 195.2 million at December 31, 2021 and September 30, 2021, respectively.

(2) Represents securities held under a supplemental retirement and savings plan for certain officers and 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, 2021 and September 30, 2021.

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 and nine-month periods ended June 30, 2021 and 2020.

There were no transfers between Level 1, Level 2, and Level 3 of the fair value hierarchy during the quarters ended December 31, 2021 and 2020.

Derivative Financial Instruments

7 unchanged sentences

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 June 30, 2021 and September 30, 2020:

June 30, 2021

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

December 31, 2021

Contract Amount Fair Value

15 unchanged sentences

Singapore dollar (SGD) SGD 6,650 $ 4,900 $ —

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

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

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

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

Quarter Ended June 30, Nine Months Ended June 30,

2021 2020 2021 2020

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

Quarter Ended December 31,

(In thousands)

Gains (losses) on foreign currency forward contracts $ 88 $ ( 380 ) $ 3,003 $ ( 1,429 )

Gains on foreign currency forward contracts $ 562 $ 1,686

Goodwill and Intangible Assets

1 unchanged sentence

Amortization expense consisted of the following:

Quarter Ended June 30, Nine Months Ended June 30,

2021 2020 2021 2020

Quarter Ended December 31,

(In thousands)

1 unchanged sentence

Customer contracts and relationships 419 571

Trade names — 37 — 112

Non-compete agreements — 44

Total $ 544 $ 937

Estimated future intangible asset amortization expense associated with intangible assets existing at June 30, 2021 was as follows:

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

Year Ending September 30, (In thousands)

2021 (excluding the nine months ended June 30, 2021) $ 563

2022 (excluding the quarter ended December 31, 2021) $ 1,541

Total $ 3,558

The following table summarizes changes to goodwill during the nine months ended June 30, 2021, both in total and as allocated to our segments:

Applications Scores Decision Management Software Total

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

Scores Software Total

(In thousands)

1 unchanged sentence

Foreign currency translation adjustment — ( 926 ) ( 926 )

C&R business divestiture $ ( 25,596 ) $ — $ — ( 25,596 )

Balance at June 30, 2021 $ 576,473 $ 146,648 $ 70,064 $ 793,185

Balance at December 31, 2021 $ 146,648 $ 640,611 $ 787,259

Composition of Certain Financial Statement Captions

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

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

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, 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.

Interest on amounts borrowed under the credit facility is based on (i) a base rate, which is the greater of (a) the prime rate, (b) the Federal Funds rate plus 0.500 % and (c) the one-month LIBOR rate plus 1.000 %, plus, in each case, an applicable margin, or (ii) an adjusted LIBOR rate plus an applicable margin.

We have a $ 600 million unsecured revolving line of credit with a syndicate of banks that expires on August 19, 2026 .

Borrowings under 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.

Interest on amounts borrowed under the credit facility is based on (i) an adjusted base rate, which is the greater of (a) the prime rate, (b) the Federal Funds rate plus 0.500 %, and (c) the one-month LIBOR rate plus 1.000 %, plus, in each case, an applicable margin, or (ii) an adjusted LIBOR rate plus an applicable margin.

The applicable margin for base rate borrowings ranges from 0 % to 0.750 % and for LIBOR borrowings ranges from 1.000 % to 1.750 %, and is determined based on our consolidated leverage ratio.

In addition, we must pay credit facility fees.

The credit facility contains certain restrictive covenants including maintaining a maximum consolidated leverage ratio of 3.25 on an average trailing four-quarter basis, subject to a step up to 3.75 following certain permitted acquisitions;

The credit facility contains certain restrictive covenants including maintaining a maximum consolidated leverage ratio of 3.50 , subject to a step up to 4.00 following certain permitted acquisitions;

and a minimum interest coverage ratio of 3.00 .

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

As of June 30, 2021, we had $ 316.0 million in borrowings outstanding at a weighted-average interest rate of 1.216 % and were in compliance with all financial covenants under this credit facility.

On October 20, 2021, we amended our credit agreement to provide for the issuance of a $ 300 million term loan, increasing the total capacity of the agreement to $ 900 million.

The term loan is subject to the same pricing and covenants as the revolving line of credit and matures at the expiration of the facility on August 19, 2026.

The term loan requires principal payments in consecutive quarterly installments of $ 3.75 million on the last business day of each quarter, commencing on March 31, 2022.

As of December 31, 2021, we had $ 50.0 million in borrowings outstanding under the revolving credit facility at a weighted-average interest rate of 1.352 %, and $ 300.0 million in outstanding balance of the term loan at an interest rate of 1.354 %, of which $ 285.0 million was classified as a long-term liability and recorded in long-term debt within the accompanying condensed consolidated balance sheets.

We were in compliance with all financial covenants under this credit facility as of December 31, 2021.

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

The 2018 Senior Notes require interest payments semi-annually at a rate of 5.25 % per annum and will mature on May 15, 2026 .

On December 6, 2019, we issued $ 350 million of senior notes in a private offering to qualified institutional investors (the “2019 Senior Notes,” and with the 2018 Senior Notes, the “Senior Notes”).

On December 6, 2019, we issued $ 350 million of senior notes in a private offering to qualified institutional investors (the “2019 Senior Notes”).

The 2019 Senior Notes require interest payments semi-annually at a rate of 4.00 % per annum and will mature on June 15, 2028 .

On December 17, 2021, we issued $ 550 million of additional senior notes of the same class as the 2019 Senior Notes in a private offering to qualified institutional investors (the “2021 Senior Notes,” and collectively with the 2018 Senior Notes and the 2019 Senior Notes, the “Senior Notes”).

The 2021 Senior Notes require interest payments semi-annually at a rate of 4.00 % per annum and will mature on June 15, 2028 , the same date as the 2019 Senior Notes.

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 June 30, 2021 and September 30, 2020:

June 30, 2021 September 30, 2020

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

December 31, 2021 September 30, 2021

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

1 unchanged sentence

The 2018 Senior Notes 400,000 437,000 400,000 453,000

The 2019 Senior Notes 350,000 359,625 350,000 358,750

The 2019 Senior Notes and the 2021 Senior Notes 900,000 920,250 350,000 357,000

Total $ 1,300,000 $ 1,357,250 $ 750,000 $ 810,000

(*) The carrying value of the Senior Notes was the face value reduced by the net debt issuance costs of $ 9.4 million and $ 10.6 million at June 30, 2021 and September 30, 2020, respectively.

Accelerated Share Repurchase

We have authorization to make repurchases of shares of our common stock from time to time in the open market or in negotiated transactions.

As part of the broader share repurchase program, we entered into an accelerated share repurchase agreement (“ASR Agreement”) with Wells Fargo on June 17, 2021 to repurchase $ 200.0 million of our common stock.

The ASR Agreement was accounted for as two separate transactions (1) a repurchase of common stock and (2) an equity-linked contract on our own stock.

Pursuant to the ASR Agreement, we paid $ 200.0 million to Wells Fargo and received an initial delivery of 319,400 shares of common stock, which approximated 80 percent of the total number of expected shares to be repurchased under the ASR Agreement.

The final number of shares to be repurchased and the average price paid per share will be determined upon the expected settlement of the agreement during the fourth quarter of fiscal 2021.

The final number of shares to be repurchased will be based on the volume-weighted average price of our common stock over the duration of the ASR Agreement, less a discount.

The equity-linked contract for the remaining $ 40.0 million, representing remaining shares to be delivered by Wells Fargo under the ASR Agreement, was recorded as a reduction to stockholders’ equity as of June 30, 2021.

(*) The carrying value of the Senior Notes was the face value reduced by the net debt issuance costs of $ 15.8 million and $ 9.0 million at December 31, 2021 and September 30, 2021, respectively.

Revenue from Contracts with Customers

Disaggregation of Revenue

The following tables provide information about disaggregated revenue by primary geographical market:

Quarter Ended December 31, 2021

Scores Software Total Percentage

(Dollars in thousands)

Americas $ 165,712 $ 99,185 $ 264,897 82 %

Europe, Middle East and Africa 1,493 37,398 38,891 12 %

Asia Pacific 2,282 16,291 18,573 6 %

Total $ 169,487 $ 152,874 $ 322,361 100 %

Quarter Ended December 31, 2020

Scores Software Total Percentage

(Dollars in thousands)

Americas $ 140,713 $ 108,024 $ 248,737 79 %

Europe, Middle East and Africa 1,713 43,678 45,391 15 %

Asia Pacific 2,225 16,061 18,286 6 %

Total $ 144,651 $ 167,763 $ 312,414 100 %

The following table provides information about disaggregated revenue for our Software segment by deployment method:

Quarter Ended December 31, Percentage of revenues

2021 2020 2021 2020

(Dollars in thousands)

On-premises software $ 57,295 $ 66,482 45 % 53 %

SaaS software 69,043 59,973 55 % 47 %

Total $ 126,338 $ 126,455 100 % 100 %

The following table provides information about disaggregated revenue for our Software segment by product features:

Quarter Ended December 31, Percentage of revenues

2021 2020 2021 2020

(Dollars in thousands)

Platform software (*) $ 22,072 $ 14,125 17 % 11 %

Non-platform software 104,266 112,330 83 % 89 %

Total $ 126,338 $ 126,455 100 % 100 %

(*) The FICO platform software is a set of interoperable services which use software assets owned and/or governed by FICO for building solutions and which conform to FICO architectural standards based on key elements of Cloud Native Computing design principles.

These standards encompass shared security context and pre-integration using FICO standard application programming interfaces for all services.

The following table provides information about disaggregated revenue for our Software segment by timing of revenue recognition:

Quarter Ended December 31, Percentage of revenues

2021 2020 2021 2020

(Dollars in thousands)

Software recognized at a point time (1)

$ 7,159 $ 12,894 6 % 10 %

Software recognized over contract term (2)

119,179 113,561 94 % 90 %

Total $ 126,338 $ 126,455 100 % 100 %

(1) Includes license portion of our on-premises subscription software and perpetual license, both of which are recognized when the software is made available to the customer, or at the start of the subscription.

(2) Includes maintenance portion and usage-based fees of our on-premises subscription software, maintenance revenue on perpetual licenses, as well as SaaS revenue.

The following table provides information about disaggregated revenue for our Scores segment by distribution method:

Quarter Ended December 31, Percentage of revenues

2021 2020 2021 2020

(Dollars in thousands)

Business-to-business Scores $ 112,968 $ 100,144 67 % 69 %

Business-to-consumer Scores 56,519 44,507 33 % 31 %

Total $ 169,487 $ 144,651 100 % 100 %

We derive a substantial portion of revenues from our contracts with the three major consumer reporting agencies, TransUnion, Equifax and Experian.

Revenues collectively generated by agreements with these customers accounted for 38 % and 34 % of our total revenues in the quarters ended December 31, 2021 and 2020, respectively, with two consumer reporting agencies each contributing more than 10% of our total revenues in each of the quarters ended December 31, 2021 and 2020.

Contract Balances

We record a receivable when we satisfy a performance obligation prior to invoicing if only the passage of time is required before payment is due or if we have an unconditional right to consideration before we satisfy a performance obligation.

We record a contract asset when we satisfy a performance obligation prior to invoicing but our right to consideration is conditional.

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

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

December 31, 2021 September 30, 2021

(In thousands)

Billed $ 138,608 $ 198,305

Unbilled 156,132 155,408

294,740 353,713

allowance for doubtful accounts ( 4,282 ) ( 4,154 )

Net receivables 290,458 349,559

long-term receivables * ( 30,297 ) ( 37,452 )

Short-term receivables * $ 260,161 $ 312,107

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

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 are as follows:

Quarter Ended December 31,

(In thousands)

Deferred revenues, beginning balance (*) $ 110,763 $ 122,141

Revenue recognized that was included in the deferred revenues balance at the beginning of the period ( 45,942 ) ( 47,793 )

Increases due to billings, excluding amounts recognized as revenue during the period 38,515 48,441

Deferred revenues, ending balance (*) $ 103,336 $ 122,789

(*) Deferred revenues at December 31, 2021 included current portion of $ 98.4 million and long-term portion of $ 4.9 million that were recorded in deferred revenue and other liabilities, respectively, within the condensed consolidated balance sheets.

Deferred revenues at September 30, 2021 included current portion of $ 105.4 million and long-term portion of $ 5.4 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.

In instances where the timing of revenue recognition differs from the timing of invoicing, we have determined our contracts generally do not include a significant financing component.

The primary purpose of our invoicing terms is to provide customers with simplified and predictable ways of purchasing our products and services, not to provide customers with financing or to receive financing from our customers.

Examples include multi-year on-premises licenses that are invoiced annually with revenue recognized upfront and invoicing at the beginning of a subscription term with revenue recognized ratably over the contract period.

Performance Obligations

Revenue allocated to remaining performance obligations represents contracted revenue that will be recognized in future periods, which is comprised of deferred revenue and amounts that will be invoiced and recognized as revenue in future periods.

This does not include:

• Usage-based revenue that will be recognized in future periods from on-premises software subscriptions;

• Consumption-based variable fees from SaaS software that will be recognized in the distinct service period during which it is earned;

• 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 $ 270.6 million as of December 31, 2021, approximately 50 % of which we expect to recognize over the next 16 months and the remainder thereafter.

Revenue allocated to remaining performance obligations was $ 289.0 million as of September 30, 2021.

Effective Tax Rate

The effective income tax rates were 19.5 % and 15.9 % during the quarters ended June 30, 2021 and 2020, respectively, and 16.7 % and 1.8 % during the nine months ended June 30, 2021 and 2020, respectively.

The effective income tax rate was 18.9 % and 1.7 % during the quarters ended December 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 nine months ended June 30, 2021 and 2020 were both impacted favorably by the recording of excess tax benefits relating to stock awards.

In addition, the effective tax rate for the nine months ended June 30, 2021 was increased by the tax impact of the gain on the sale of C&R business.

The total unrecognized tax benefit for uncertain tax positions was estimated to be $ 12.1 million and $ 8.0 million at June 30, 2021 and September 30, 2020, respectively.

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

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

The decrease in stock price for awards that vested in December 2021 resulted in a decreased net excess tax benefit for the quarter ended December 31, 2021.

The total unrecognized tax benefit for uncertain tax positions was estimated to be $ 11.8 million and $ 10.9 million at December 31, 2021 and September 30, 2021, 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 $ 0.6 million and $ 0.4 million related to unrecognized tax benefits as of June 30, 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 and nine-month periods ended June 30, 2021 and 2020:

Quarter Ended June 30, Nine Months Ended June 30,

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

Share-Based Employee Benefit Plans

We maintain the 2021 Long-Term Incentive Plan (the “2021 Plan”) under which we grant equity awards, including stock options, stock appreciation rights, restricted stock awards, stock unit awards and other share-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 2021 Plan.

Stock option awards have a maximum term of ten 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, 2021:

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

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

Outstanding at September 30, 2021

Granted 9 407.49

Exercised ( 7 ) 72.06

Outstanding at December 31, 2021

228 $ 218.30 3.44 $ 50,094

Exercisable at December 31, 2021

179 $ 183.75 2.94 $ 45,033

Vested or expected to vest at December 31, 2021

226 $ 216.50 3.42 $ 50,006

Restricted Stock Units

The following table summarizes restricted stock unit activity during the quarter ended December 31, 2021:

Shares Weighted-average Grant-date Fair Value

(In thousands)

Outstanding at September 30, 2021

Granted 184 407.25

Released ( 210 ) 268.95

Forfeited ( 24 ) 358.29

Outstanding at December 31, 2021

Performance Share Units

The following table summarizes performance share unit activity during the quarter ended December 31, 2021:

Shares Weighted-average Grant-date Fair Value

(In thousands)

Outstanding at September 30, 2021

Granted 43 407.49

Released ( 64 ) 344.62

Outstanding at December 31, 2021

Market Share Units

The following table summarizes market share unit activity during the quarter ended December 31, 2021:

Shares Weighted-average Grant-date Fair Value

(In thousands)

Outstanding at September 30, 2021

Granted 50 493.66

Released ( 19 ) 206.71

Outstanding at December 31, 2021

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, 2021 .

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, 2021 and 2020:

Quarter Ended December 31,

(In thousands, except per share data)

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Diluted $ 3.09 $ 2.90

Anti-dilutive stock-based awards excluded from the calculations of diluted EPS were immaterial during the periods presented.

Anti-dilutive share-based awards excluded from the calculations of diluted EPS were immaterial during the periods presented.

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 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”).

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.

During the fourth quarter of our fiscal 2021, we reevaluated our operating segments to better align with how our chief operating decision maker (“CODM”), who is our Chief Executive Officer, evaluates performance and allocates resources.

The key factors evaluated included our evolving platform strategies, our go-to market considerations, and sales of our product lines and businesses during fiscal 2021, and in particular the divestiture of our C&R business in June 2021, among others.

As a result, we consolidated our operating segment structure from three to two by merging Applications and Decision Management Software segments into the new Software segment.

Based on this change, we determined we have two reportable segments and revised prior comparative periods to conform to the current period segment presentation.

The new segments are as follows:

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.

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, financial crimes compliance, 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 CODM 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 expense, amortization expense, various corporate charges and certain other income and expense measures to our segments.

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, 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 and nine-month periods ended June 30, 2021 and 2020:

Quarter Ended June 30, 2021

Applications Scores Decision Management Software Unallocated

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 ended December 31, 2021 and 2020:

Quarter Ended December 31, 2021

Scores Software Unallocated

Expenses Total

1 unchanged sentence

Segment revenues:

Transactional and maintenance $ 99,822 $ 170,415 $ 17,841 $ — $ 288,078

On-premises and SaaS software $ — $ 126,338 $ — $ 126,338

Professional services — 26,536 — 26,536

License 7,010 1,621 5,557 — 14,188

Scores 169,487 — — 169,487

Total segment revenues 169,487 152,874 — 322,361

Segment operating expense ( 21,984 ) ( 118,581 ) ( 35,788 ) ( 176,353 )

Segment operating income (loss) $ 35,429 $ 146,784 $ ( 15,243 ) $ ( 33,820 ) 133,150

Segment operating income $ 147,503 $ 34,293 $ ( 35,788 ) 146,008

Unallocated share-based compensation expense ( 29,878 )

Unallocated amortization expense ( 544 )

Unallocated gains on product line asset sales and business divestiture 92,805

Operating income 115,586

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Depreciation expense $ 192 $ 3,877 $ 29 $ 4,098

Quarter Ended June 30, 2020

Applications Scores Decision Management Software Unallocated

Expenses Total

(In thousands)

Segment revenues:

Transactional and maintenance $ 98,476 $ 130,268 $ 18,085 $ — $ 246,829

Professional services 32,364 58 11,211 — 43,633

License 10,620 1,224 11,425 — 23,269

Total segment revenues 141,460 131,550 40,721 — 313,731

Segment operating expense ( 111,061 ) ( 21,333 ) ( 43,839 ) ( 31,315 ) ( 207,548 )

Segment operating income (loss) $ 30,399 $ 110,217 $ ( 3,118 ) $ ( 31,315 ) 106,183

Unallocated share-based compensation expense ( 22,264 )

Unallocated amortization expense ( 1,048 )

Operating income 82,871

Unallocated interest expense, net ( 11,223 )

Unallocated other expense, net 4,560

Income before income taxes $ 76,208

Depreciation expense $ 5,091 $ 176 $ 1,156 $ 28 $ 6,451

Nine Months Ended June 30, 2021

Applications Scores Decision Management Software Unallocated

Quarter Ended December 31, 2020

Scores Software Unallocated

Expenses Total

1 unchanged sentence

Segment revenues:

Transactional and maintenance $ 294,240 $ 476,217 $ 50,690 $ — $ 821,147

On-premises and SaaS software $ — $ 126,455 $ — $ 126,455

Professional services — 41,308 — 41,308

License 19,235 8,369 18,071 — 45,675

Scores 144,651 — — 144,651

Total segment revenues 144,651 167,763 — 312,414

Segment operating expense ( 21,626 ) ( 147,079 ) ( 30,253 ) ( 198,958 )

Segment operating income (loss) $ 98,303 $ 416,351 $ ( 40,233 ) $ ( 97,465 ) 376,956

Segment operating income $ 123,025 $ 20,684 $ ( 30,253 ) 113,456

Unallocated share-based compensation expense ( 25,132 )

6 unchanged sentences

Depreciation expense $ 194 $ 5,358 $ 33 $ 5,585

Nine Months Ended June 30, 2020

Applications Scores Decision Management Software Unallocated

Expenses Total

(In thousands)

Segment revenues:

Transactional and maintenance $ 295,102 $ 365,324 $ 47,479 $ — $ 707,905

Professional services 101,521 1,141 32,901 — 135,563

License 37,294 9,371 30,073 — 76,738

Total segment revenues 433,917 375,836 110,453 — 920,206

Segment operating expense ( 338,527 ) ( 54,705 ) ( 141,838 ) ( 99,310 ) ( 634,380 )

Segment operating income (loss) $ 95,390 $ 321,131 $ ( 31,385 ) $ ( 99,310 ) 285,826

Unallocated share-based compensation expense ( 68,197 )

Unallocated amortization expense ( 4,046 )

Unallocated restructuring and impairment charges ( 3,104 )

Operating income 210,479

Unallocated interest expense, net ( 32,245 )

Unallocated other expense, net 2,333

Income before income taxes $ 180,567

Depreciation expense $ 13,993 $ 433 $ 3,300 $ 361 $ 18,087

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

Quarter Ended June 30, 2021

Reportable Segments On-Premises SaaS Scores Total Percentage

(Dollars in thousands)

Applications $ 66,505 $ 66,708 $ — $ 133,213 39 %

Scores — — 172,202 172,202 51 %

Decision Management Software 20,519 12,250 — 32,769 10 %

Total $ 87,024 $ 78,958 $ 172,202 $ 338,184 100 %

Quarter Ended June 30, 2020

Reportable Segments On-Premises SaaS Scores Total Percentage

(Dollars in thousands)

Applications $ 76,493 $ 64,967 $ — $ 141,460 45 %

Scores — — 131,550 131,550 42 %

Decision Management Software 29,063 11,658 — 40,721 13 %

Total $ 105,556 $ 76,625 $ 131,550 $ 313,731 100 %

Nine Months Ended June 30, 2021

Reportable Segments On-Premises SaaS Scores Total Percentage

(Dollars in thousands)

Applications $ 203,907 $ 194,181 $ — $ 398,088 41 %

Scores — — 485,572 485,572 49 %

Decision Management Software 65,584 32,715 — 98,299 10 %

Total $ 269,491 $ 226,896 $ 485,572 $ 981,959 100 %

Nine Months Ended June 30, 2020

Reportable Segments On-Premises SaaS Scores Total Percentage

(Dollars in thousands)

Applications $ 238,812 $ 195,105 $ — $ 433,917 47 %

Scores — — 375,836 375,836 41 %

Decision Management Software 81,589 28,864 — 110,453 12 %

Total $ 320,401 $ 223,969 $ 375,836 $ 920,206 100 %

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

Quarter Ended June 30, 2021

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

(In thousands)

Applications $ 74,718 $ 10,883 $ 34,459 $ 13,153 $ 133,213

Scores 165,264 275 2,988 3,675 172,202

Decision Management Software 13,628 4,398 10,422 4,321 32,769

Total $ 253,610 $ 15,556 $ 47,869 $ 21,149 $ 338,184

Quarter Ended June 30, 2020

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

(In thousands)

Applications $ 78,639 $ 12,069 $ 34,175 $ 16,577 $ 141,460

Scores 128,686 113 1,505 1,246 131,550

Decision Management Software 23,164 4,626 8,427 4,504 40,721

Total $ 230,489 $ 16,808 $ 44,107 $ 22,327 $ 313,731

Nine Months Ended June 30, 2021

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

(In thousands)

Applications $ 224,172 $ 29,222 $ 104,629 $ 40,065 $ 398,088

Scores 464,721 3,318 10,343 7,190 485,572

Decision Management Software 47,689 10,240 28,120 12,250 98,299

Total $ 736,582 $ 42,780 $ 143,092 $ 59,505 $ 981,959

Nine Months Ended June 30, 2020

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

(In thousands)

Applications $ 243,005 $ 31,258 $ 108,230 $ 51,424 $ 433,917

Scores 362,132 3,016 4,763 5,925 375,836

Decision Management Software 59,758 14,876 22,612 13,207 110,453

Total $ 664,895 $ 49,150 $ 135,605 $ 70,556 $ 920,206

Contract Balances and Performance Obligations

Contract Balances

We record a contract asset when we satisfy a performance obligation prior to invoicing but our right to consideration is conditional.

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

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

2021 September 30,

(In thousands)

Billed $ 157,777 $ 211,776

Unbilled 168,818 181,550

326,595 393,326

allowance for doubtful accounts ( 4,505 ) ( 5,072 )

Net receivables 322,090 388,254

long-term receivables * ( 41,492 ) ( 54,074 )

Short-term receivables * $ 280,598 334,180

* 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 June 30, 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 nine months ended June 30, 2021 were as follows:

Nine Months Ended

June 30, 2021

(In thousands)

Deferred revenues at September 30, 2020 * $ 122,141

Revenue recognized that was included in the deferred revenues balance at the beginning of the period ( 78,551 )

Increases due to billings, excluding amounts recognized as revenue during the period 78,658

Decrease due to divestiture of the C&R business ( 16,671 )

Deferred revenues at June 30, 2021 * $ 105,577

* 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 June 30, 2021 included current portion of $ 99.8 million and long-term portion of $ 5.8 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.

In instances where the timing of revenue recognition differs from the timing of invoicing, we have determined our contracts generally do not include a significant financing component.

Examples include multi-year on-premises licenses that are invoiced annually with revenue recognized upfront, and invoicing at the beginning of a SaaS subscription term with revenue recognized ratably over the contract period.

Performance Obligations

This does not include:

• Revenue that will be recognized in future periods from usage-based royalty from license sales;

• SaaS transactional revenue from variable considerations that will be recognized in the distinct service period during which it is earned;

Revenue allocated to remaining performance obligations was $ 54.9 million as of June 30, 2021, of which we expect to recognize approximately 50 % over the next 16 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.

Subsequent Events

In January 2022, our Board of Directors approved a new stock repurchase program following the completion of the previous stock repurchase program.

The new program is open-ended and authorizes repurchases of shares of our common stock up to an aggregate cost of $ 500.0 million in the open market or in negotiated transactions.

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