0000950170-23-019744 | 10-Q | XBRL Viewer

Leases (Tables)

6 Months Ended

Mar. 31, 2023

Summary of Lease Term and Incremental Borrowing Rates for Leases

The following table presents certain information related to lease term and incremental borrowing rates for leases as of March 31, 2023 and September 30, 2022:


	March 31, 2023			September 30, 2022
Weighted-average remaining lease term (in months):
Operating leases		40.8			46.5
Finance leases		30.5			35.6
Weighted-average discount rate:
Operating leases		4.1	%		3.7	%
Finance leases		4.4	%		4.4	%

Summary of Lease Expense

The following table presents lease expense for the three and six months ended March 31, 2023 and 2022 (dollars in thousands):


	Three Months Ended March 31,						Six Months Ended March 31,
	2023			2022			2023			2022
Finance lease costs:
Amortization of right of use asset	$	108		$	109		$	216		$	218
Interest on lease liability		10			13			20			27
Operating lease cost		1,645			1,949			3,331			3,507
Variable lease cost		808			812			1,499			1,689
Sublease income		(48	)		(47	)		(93	)		(95	)
Total lease cost	$	2,523		$	2,836		$	4,973		$	5,346

Summary of Undiscounted Future Minimum Lease Payments Under Non-cancelable Leases

The table below reconciles the undiscounted future minimum lease payments under non-cancelable leases to the total lease liabilities recognized on the Condensed Consolidated Balance Sheet as of March 31, 2023 (dollars in thousands):


Year Ending September 30,	Operating Leases			Financing Leases			Total
2023	$	3,372		$	207		$	3,579
2024		6,102			417			6,519
2025		4,235			362			4,597
2026		1,980			53			2,033
2027		1,524			—			1,524
Thereafter		825			—			825
Total future minimum lease payments	$	18,038		$	1,039		$	19,077
Less effects of discounting		(1,086	)		(45	)		(1,131	)
Total lease liabilities	$	16,952		$	994		$	17,946
Reported as of March 31, 2023
Short-term lease liabilities	$	6,003		$	387		$	6,390
Long-term lease liabilities		10,949			607			11,556
Total lease liabilities	$	16,952		$	994		$	17,946

Stockholders' Equity - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended			6 Months Ended
	Oct. 02, 2019	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2021	Mar. 31, 2023	Mar. 31, 2022	Sep. 30, 2022
Class Of Stock [Line Items]
Common stock reserved for issuance	6,350,000
Common stock, par value	$ 0.01	$ 0.01			$ 0.01		$ 0.01
Increase in shares available for issuance, description	The shares available for issuance will automatically increase on January 1st of each year, by the lesser of (A) 3% of the number of shares of Common Stock outstanding as of the close of business on the immediately preceding December 31st; and (B) the number of shares of Common Stock determined by the Board on or prior to such date for such year.
Increase in shares available for issuance expressed as percentage of number of shares of common stock outstanding	3.00%
Stock-based compensation		$ 12,355	$ 10,926		$ 24,827	$ 16,767
Due to the Resignation of Former CEO
Class Of Stock [Line Items]
Stock-based compensation				$ 4,000
Due to the Resignation of Former CFO and General Counsel
Class Of Stock [Line Items]
Stock-based compensation			2,400
Net of Forfeitures, Due to the Resignation of Former CEO
Class Of Stock [Line Items]
Stock-based compensation				$ 5,000
Net of Forfeitures, Due to the Resignation of Former CFO and General Counsel
Class Of Stock [Line Items]
Stock-based compensation			$ 200
2019 Equity Incentive Plan
Class Of Stock [Line Items]
Common stock reserved for issuance	5,300,000
2019 Employee Stock Purchase Plan
Class Of Stock [Line Items]
Common stock reserved for issuance	1,050,000

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands	Mar. 31, 2023	Sep. 30, 2022
Statement of Financial Position [Abstract]
Accounts receivable allowances	$ 3,921	$ 157
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	560,000	560,000
Common stock, shares issued	40,292	39,430
Common stock, shares outstanding	40,292	39,430

Earnings Per Share - Additional Information (Details) - 3.00% Convertible Senior Notes Due 2025	6 Months Ended
	Mar. 31, 2023 USD ($)
Earnings Per Share [Line Items]
Debt instrument conversion ratio	26.7271
Conversion of notes to common stock per principal amount	$ 1,000

Significant Accounting Policies (Policies)

6 Months Ended

Mar. 31, 2023

Accounting Policies [Abstract]

Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company, as well as those of our wholly owned subsidiaries. All significant intercompany transactions and balances are eliminated in consolidation.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnote disclosures required by GAAP for complete financial statements.

The condensed consolidated financial statements reflect all adjustments considered necessary for a fair presentation of the consolidated results of operations and financial position for the interim periods presented. All such adjustments are of a normal recurring nature. The results of operations for the three and six months ended March 31, 2023 are not necessarily indicative of the results to be expected for any other interim period or for the fiscal year ending September 30, 2023. These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes contained in our Annual Report on Form 10-K for the fiscal year ended September 30, 2022.

Use of Estimates

The financial statements are prepared in accordance with GAAP, which requires management to make estimates and assumptions. These estimates, judgments and assumptions can affect the reported amounts in the financial statements and the footnotes thereto. Actual results could differ materially from these estimates.

On an ongoing basis, we evaluate our estimates, assumptions and judgments. Significant estimates inherent to the preparation of financial statements include: revenue recognition; allowance for credit losses; accounting for deferred costs; accounting for internally developed software; the valuation of goodwill and intangible assets; accounting for business combinations; accounting for stock-based compensation; accounting for income taxes; accounting for leases; accounting for convertible debt; and loss contingencies. We base our estimates on historical experience, market participant fair value considerations, projected future cash flows, and various other factors that are believed to be reasonable under the circumstances. Actual amounts could differ significantly from these estimates.

Concentration of Risk

Financial instruments that potentially subject us to significant concentrations of credit risk primarily consist of trade accounts receivable. We perform ongoing credit evaluations of our customers’ financial condition and limit the amount of credit extended when deemed appropriate. Two customers accounted for 12.0% and 10.5%, respectively, of our Accounts receivable, net balance at March 31, 2023. One customer accounted for 17.4% of our Accounts receivable, net balance at September 30, 2022.

Allowance for Credit Losses

We are exposed to credit losses primarily through our sales of software licenses and services to customers. We determine credit ratings for each customer in our portfolio based upon public information and information obtained directly from our customers. A credit limit for each customer is established and in certain cases we may require collateral or prepayment to mitigate credit risk. Our expected loss methodology is developed using historical collection experience, current customer credit information, current and future economic and market conditions and a review of the current status of the customer's account balances. We monitor our ongoing credit exposure through reviews of customer balances against contract terms and due dates, current economic conditions, and dispute resolution. Estimated credit losses are written off in the period in which the financial asset is no longer collectible.

The change in the allowance for credit losses for the six months ended March 31, 2023 is as follows (dollars in thousands):


	Allowance for Credit Losses
Balance as of September 30, 2022	$	371
Credit loss provision		3,626
Effect of foreign currency translation		140
Balance as of March 31, 2023	$	4,137

Recently Adopted Accounting Standards

In August 2020, the FASB issued ASU No. 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, (“ASU 2020-06”). ASU 2020-06 simplifies the accounting for debt with conversion options, revises the criteria for applying the derivatives scope exception for contracts in an entity’s own equity, and improves the consistency for the calculation of earnings per share. We adopted ASU 2020-06 on October 1, 2022 using the modified retrospective approach. As a result, the 3.00% Convertible Senior Notes due 2025 (the “Notes”) are no longer bifurcated into separate liability and equity components. The adoption does not have a material impact on our Condensed Consolidated Statements of Operations and Cash Flows.

The following tables summarize the impact of adopting ASU 2020-06 on the Condensed Consolidated Balance Sheet as of October 1, 2022 (dollars in thousands):


	As of October 1, 2022
	As Previously Reported			Impact of Adoption of ASU 2020-06			As Adjusted
Assets:
Deferred tax assets	$	51,989		$	2,463		$	54,452

Liabilities:
Long-term debt, net of discounts and issuance costs	$	259,436		$	10,994		$	270,430

Equity:
Additional paid-in capital	$	1,029,542		$	(14,371	)	$	1,015,171
Accumulated deficit	$	(283,249	)	$	5,841		$	(277,408	)

Significant Accounting Policies (Tables)

6 Months Ended

Mar. 31, 2023

Accounting Policies [Abstract]

Summary of Change in Allowance for Credit Losses

The change in the allowance for credit losses for the six months ended March 31, 2023 is as follows (dollars in thousands):


	Allowance for Credit Losses
Balance as of September 30, 2022	$	371
Credit loss provision		3,626
Effect of foreign currency translation		140
Balance as of March 31, 2023	$	4,137

Summarize the impact of adopting ASU 2020-06

The following tables summarize the impact of adopting ASU 2020-06 on the Condensed Consolidated Balance Sheet as of October 1, 2022 (dollars in thousands):


	As of October 1, 2022
	As Previously Reported			Impact of Adoption of ASU 2020-06			As Adjusted
Assets:
Deferred tax assets	$	51,989		$	2,463		$	54,452

Liabilities:
Long-term debt, net of discounts and issuance costs	$	259,436		$	10,994		$	270,430

Equity:
Additional paid-in capital	$	1,029,542		$	(14,371	)	$	1,015,171
Accumulated deficit	$	(283,249	)	$	5,841		$	(277,408	)

Restructuring and Other Costs, Net (Tables)

6 Months Ended

Mar. 31, 2023

Restructuring and Related Activities [Abstract]

Schedule of Accrual Activity Relating to Restructuring Reserves

The following table sets forth accrual activity relating to restructuring reserves for the six months ended March 31, 2023 (dollars in thousands):


	Personnel			Facilities			Restructuring Subtotal			Other			Total
Balance at September 30, 2022	$	1,277		$	1,600		$	2,877		$	2,277		$	5,154
Restructuring and other costs, net		6,420			343			6,763			3,140			9,903
Non-cash adjustments		—			(327	)		(327	)		—			(327	)
Cash payments		(5,509	)		(299	)		(5,808	)		(3,790	)		(9,598	)
Effect of foreign currency translation		(5	)		11			6			—			6
Balance at March 31, 2023	$	2,183		$	1,328		$	3,511		$	1,627		$	5,138

Schedule of Restructuring and Other Costs, Net

The following table sets forth restructuring and other costs, net recognized for the three and six months ended March 31, 2023 and 2022 (dollars in thousands):


	Three Months Ended March 31,				Six Months Ended March 31,
	2023		2022		2023		2022

Personnel	$	3,371	$	13	$	6,420	$	250
Facilities		150		170		343		367
Restructuring subtotal		3,521		183		6,763		617
Other		2,193		291		3,140		4,772
Restructuring and other costs, net	$	5,714	$	474	$	9,903	$	5,389

Restructuring and Other Costs, Net - Schedule of Restructuring and Other Costs, Net (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2023	Mar. 31, 2022
Restructuring Cost And Reserve [Line Items]
Restructuring and other costs, net	$ 5,714	$ 474	$ 9,903	$ 5,389
Personnel
Restructuring Cost And Reserve [Line Items]
Restructuring and other costs, net	3,371	13	6,420	250
Facilities
Restructuring Cost And Reserve [Line Items]
Restructuring and other costs, net	150	170	343	367
Restructuring Subtotal
Restructuring Cost And Reserve [Line Items]
Restructuring and other costs, net	3,521	183	6,763	617
Other
Restructuring Cost And Reserve [Line Items]
Restructuring and other costs, net	$ 2,193	$ 291	$ 3,140	$ 4,772

Long-Term Debt - Summary of Maturities of Borrowing Obligations (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Oct. 01, 2022	Sep. 30, 2022
Debt Instrument [Line Items]
2023	$ 6,250
2024	12,500
2025	262,500
Total before unamortized discount and issuance costs and current portion	281,250
Less: unamortized discount and issuance costs	(4,063)
Less: current portion of long-term debt	(12,500)		$ (10,938)
Total long-term debt	264,687	$ 270,430	$ 259,436
Senior Facilities
Debt Instrument [Line Items]
2023	6,250
2024	12,500
2025	87,500
Total before unamortized discount and issuance costs and current portion	106,250
Less: unamortized discount and issuance costs	(1,517)
Less: current portion of long-term debt	(12,500)
Total long-term debt	92,233
Convertible Senior Notes
Debt Instrument [Line Items]
2025	175,000
Total before unamortized discount and issuance costs and current portion	175,000
Less: unamortized discount and issuance costs	(2,546)
Total long-term debt	$ 172,454

Income Taxes - Components of the Provision for Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2023	Mar. 31, 2022
Income Tax Disclosure [Abstract]
Domestic	$ 618	$ 233	$ 369	$ 1,670
Foreign	3,088	3,212	4,587	2,074
Provision for income taxes	$ 3,706	$ 3,445	$ 4,956	$ 3,744
Effective income tax rate	(16.60%)	116.00%	(21.30%)	16.80%

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details

Significant Accounting Policies - Additional Information (Details) - Customer	6 Months Ended	12 Months Ended
	Mar. 31, 2023	Sep. 30, 2022	Jun. 02, 2020
Significant Accounting Policies [Line Items]
ASU 2020-06, Adoption Date	Oct. 01, 2022
ASU 2020-06
Significant Accounting Policies [Line Items]
Accounting standard adopted ASU 2020-06	true
3.00% Convertible Senior Notes Due 2025
Significant Accounting Policies [Line Items]
Debt instrument, interest rate	3.00%	3.00%	3.00%
3.00% Convertible Senior Notes Due 2025 \| ASU 2020-06
Significant Accounting Policies [Line Items]
Debt instrument, interest rate	3.00%
Concentration of Credit Risk \| Accounts Receivable, Net
Significant Accounting Policies [Line Items]
Number of major customers	2	1
Concentration of Credit Risk \| Accounts Receivable, Net \| Customer One
Significant Accounting Policies [Line Items]
Concentration risk, percentage	12.00%	17.40%
Concentration of Credit Risk \| Accounts Receivable, Net \| Customer Two
Significant Accounting Policies [Line Items]
Concentration risk, percentage	10.50%

Long-Term Debt (Tables)

6 Months Ended

Mar. 31, 2023

Debt Disclosure [Abstract]

Schedule of Long-Term Debt

Long-term debt consisted of the following (in thousands):


	March 31, 2023			September 30, 2022
3.00% Convertible Senior Notes due 2025, net of unamortized discount of $0 and $11,264, respectively, and deferred issuance costs of $2,546 and $2,832, respectively. Effective interest rate 3.70% and 6.29%, respectively.	$	172,454		$	160,904
Senior Credit Facilities, net of unamortized discount of $1,390 and $1,310, respectively, and deferred issuance costs of $127 and $158, respectively. Effective interest rate 8.41% and 5.37%, respectively.		104,733			109,470
Total debt	$	277,187		$	270,374
Less: current portion		(12,500	)		(10,938	)
Total long-term debt	$	264,687		$	259,436

Summary of Maturities of Borrowing Obligations

The following table summarizes the maturities of our borrowing obligations as of March 31, 2023 (in thousands):


Fiscal Year	Convertible Senior Notes			Senior Facilities			Total
2023	$	—		$	6,250		$	6,250
2024		—			12,500			12,500
2025		175,000			87,500			262,500
Total before unamortized discount and issuance costs and current portion	$	175,000		$	106,250		$	281,250
Less: unamortized discount and issuance costs		(2,546	)		(1,517	)		(4,063	)
Less: current portion of long-term debt		—			(12,500	)		(12,500	)
Total long-term debt	$	172,454		$	92,233		$	264,687

Schedule of Interest Expense Related to Notes

The interest expense recognized related to the Notes for the three and six months ended March 31, 2023 and 2022 was as follows (dollars in thousands):


	Three Months Ended March 31,				Six Months Ended March 31,
	2023		2022		2023		2022
Contractual interest expense	$	1,294	$	1,294	$	2,616	$	2,616
Amortization of debt discount		-		919		-		1,843
Amortization of issuance costs		276		231		556		463
Total interest expense related to the Notes	$	1,570	$	2,444	$	3,172	$	4,922

Fair Value Measurements (Tables)

6 Months Ended

Mar. 31, 2023

Fair Value Disclosures [Abstract]

Summary of Financial Assets that are Measured at Fair Value and Indicates the Fair Value Hierarchy of the Valuation Inputs

The following table presents information about our financial assets that are measured at fair value and indicates the fair value hierarchy of the valuation inputs used (dollars in thousands) as of:


	March 31, 2023
	Fair Value		Cash and Cash Equivalents		Marketable Securities
Level 1:
Money market funds $62,219 at cost (a)	$	62,219	$	62,219	$	-
Government securities $6,193 at cost (a,b)		6,132		299		5,833
Level 2:
Government securities $6,085 at cost (b)		6,080		-		6,080
Time deposits, $4,016 at cost (a)		4,016		4,016		-
Commercial paper, $1,982 at cost (b)		1,982		-		1,982
Corporate bonds, $13,520 at cost (b)		13,442		-		13,442
Debt securities, $2,000 at cost (c)		2,669		-		-
Total assets	$	96,540	$	66,534	$	27,337


	September 30, 2022
	Fair Value		Cash and Cash Equivalents		Marketable Securities
Level 1:
Money market funds $59,146 at cost (a)	$	59,138	$	59,138	$	-
Government securities $4,976 at cost (b)		4,892		-		4,892
Level 2:
Government securities $2,377 at cost (b)		2,361		-		2,361
Time deposits, $1,472 at cost (a)		1,472		1,472		-
Commercial paper, $7,648 at cost (b)		7,647		-		7,647
Corporate bonds, $17,328 at cost (b)		17,001		-		17,001
Debt securities, $2,000 at cost (c)		2,000		-		-
Total assets	$	94,511	$	60,610	$	31,901

(a)

Money market funds and other highly liquid investments with original maturities of 90 days or less are included within Cash and cash equivalents in the Condensed Consolidated Balance Sheets.

(b)

Government securities, commercial paper and corporate bonds with original maturities greater than 90 days are included within Marketable securities in the Condensed Consolidated Balance Sheets and classified as current or noncurrent based upon whether the maturity of the financial asset is less than or greater than 12 months.

(c)

Debt securities are included within Prepaid and other current assets and Other assets in the Condensed Consolidated Balance Sheets and classified as current or noncurrent based upon whether the maturity of the financial asset is less than or greater than 12 months. During the second quarter of fiscal year 2023, we obtained debt securities in a privately held company as part of a non-cash transaction.

- Definition

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

+ References + Details

Earnings Per Share - Schedule of Potential Shares Considered Antidilutive (Details) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2023	Mar. 31, 2022
Restricted Stock Unit Awards
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive shares	382	292
Contingently Issuable Stock Awards
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive shares	103		90
Conversion Option of our Convertible Senior Notes
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive shares	4,677	4,677	4,677	4,677

Accrued Expenses and Other Liabilities (Tables)

6 Months Ended

Mar. 31, 2023

Accrued Liabilities and Other Liabilities [Abstract]

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (dollars in thousands):


	March 31, 2023		September 30, 2022

Compensation	$	22,189	$	19,710
Sales and other taxes payable		7,905		4,598
Cost of revenue related liabilities		4,470		4,257
Professional fees		3,808		3,866
Interest payable		1,818		1,828
Other		12,508		13,731
Total	$	52,698	$	47,990

Revenue Recognition - Summary of Estimated Revenue Expected to be Recognized in Future Related to Performance Obligations Unsatisfied or Partially Unsatisfied (Details) $ in Thousands	Mar. 31, 2023 USD ($)
Remaining Performance Obligations
Total revenue	$ 321,568
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2023-04-01
Remaining Performance Obligations
Total revenue	$ 155,413
Remaining performance obligation, expected timing of satisfaction, period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2024-01-01
Remaining Performance Obligations
Total revenue	$ 141,968
Remaining performance obligation, expected timing of satisfaction, period	4 years
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2028-01-01
Remaining Performance Obligations
Total revenue	$ 24,187
Remaining performance obligation, expected timing of satisfaction, period

Revenue Recognition - Additional Information (Details)	3 Months Ended			6 Months Ended		12 Months Ended
Revenue Recognition - Additional Information (Details)	Mar. 31, 2023 USD ($) Customer	Dec. 31, 2022	Mar. 31, 2022 USD ($) Customer	Mar. 31, 2023 USD ($) Customer	Mar. 31, 2022 USD ($) Customer	Sep. 30, 2022 USD ($)
Disaggregation Of Revenue [Line Items]
Revenues	$ 68,393,000		$ 86,280,000	$ 152,051,000	$ 180,706,000
Minimum purchase commitment deals of revenue			19,900,000		40,100,000
Distribution period				5 years
Contract acquisition costs	8,400,000					$ 8,300,000
Contract acquisition cost, amortization	800,000		500,000	$ 1,600,000	1,100,000
Contract acquisition cost, impairment				0
Capitalized contract cost, amortization	2,500,000		2,700,000	5,200,000	5,500,000
Capitalized contract cost, impairment				0
Customer One
Disaggregation Of Revenue [Line Items]
Revenues	10,800,000		21,900,000	22,400,000	46,200,000
Customer Two
Disaggregation Of Revenue [Line Items]
Revenues	7,200,000		10,200,000	20,800,000	28,100,000
United States
Disaggregation Of Revenue [Line Items]
Revenues	21,742,000		21,955,000	43,098,000	57,084,000
Germany
Disaggregation Of Revenue [Line Items]
Revenues	24,627,000		23,131,000	42,791,000	42,640,000
Japan
Disaggregation Of Revenue [Line Items]
Revenues	5,738,000		$ 25,413,000	31,579,000	$ 51,489,000
China
Disaggregation Of Revenue [Line Items]
Revenues	$ 7,000,000.0			$ 16,700,000
Revenues \| Customer Concentration Risk
Disaggregation Of Revenue [Line Items]
Number of customers accounted for revenues \| Customer	2		2	2	2
Revenues \| Customer Concentration Risk \| Customer One
Disaggregation Of Revenue [Line Items]
Percentage of revenue	15.80%		25.40%	14.70%	25.50%
Revenues \| Customer Concentration Risk \| Customer Two
Disaggregation Of Revenue [Line Items]
Percentage of revenue	10.50%		11.80%	13.70%	15.60%
Minimum
Disaggregation Of Revenue [Line Items]
Connected services contract term				1 year
Contract acquisition cost, deferred and amortized over benefit period				1 year
Contract term	1 year			1 year
Minimum \| Revenues \| China \| Geographic Concentration Risk
Disaggregation Of Revenue [Line Items]
Percentage of revenue		10.00%
Maximum
Disaggregation Of Revenue [Line Items]
Connected services contract term				5 years
Contract acquisition costs, expected benefit period				1 year
Contract acquisition cost, deferred and amortized over benefit period				8 years
Contract term	8 years			8 years

Commitments and Contingencies

6 Months Ended

Mar. 31, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 12. Commitments and Contingencies

Litigation and Other Claims

Similar to many companies in the software industry, we are involved in a variety of claims, demands, suits, investigations and proceedings that arise from time to time relating to matters incidental to the ordinary course of our business, including at times actions with respect to contracts, intellectual property, employment, benefits and securities matters. At each balance sheet date, we evaluate contingent liabilities associated with these matters in accordance with ASC 450 “Contingencies.” If the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated, we accrue a liability for the estimated loss. Significant judgments are required for the determination of probability and the range of the outcomes, and estimates are based only on the best information available at the time. Due to the inherent uncertainties involved in claims and legal proceedings and in estimating losses that may arise, actual outcomes may differ from our estimates. Contingencies deemed not probable or for which losses were not estimable in one period may become probable, or losses may become estimable in later periods, which may have a material impact on our results of operations and financial position. As of March 31, 2023, accrued losses were not material to our condensed consolidated financial statements, and we do not expect any pending matter to have a material impact on our condensed consolidated financial statements.

City of Miami Fire Fighters' and Police Officers' Retirement Trust Action

On February 25, 2022, a purported shareholder class action captioned as City Of Miami Fire Fighters’ And Police Officers’ Retirement Trust v. Cerence Inc. et al. (the "Securities Action") was filed in the United States District Court for the District of Massachusetts, naming the Company and two of its former officers as defendants. Following the court's selection of a lead plaintiff and lead counsel, an amended complaint was filed on July 26, 2022. The plaintiff claims to be suing on behalf of anyone who purchased the Company’s common stock between November 16, 2020 and February 4, 2022. The lawsuit alleges that material misrepresentations and/or omissions of material fact regarding the Company’s operations, financial performance and prospects were made in the Company’s public disclosures during the period from November 16, 2020 to February 4, 2022, in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder. The plaintiff seeks unspecified monetary damages on behalf of the putative class and an award of costs and expenses, including attorney’s fees. We intend to defend the claims vigorously. Cerence has filed a motion to dismiss, which is fully briefed. Given the uncertainty of litigation, the preliminary stage of the case, and the legal standards that must be met for, among other things, class certification and success on the merits, we cannot estimate the reasonably possible loss or range of loss that may result from this action.

Derivative Actions

On May 10 and 12, 2022, respectively, plaintiffs William Shafer and Peter Morse filed shareholder derivative complaints in the United States District Court for the District of Massachusetts on behalf of Cerence Inc. against defendants (and former officers) Sanjay Dwahan and Mark J. Gallenberger as well as board members Arun Sarin, Thomas Beaudoin, Marianne Budnik, Sanjay Jha, Kristi Ann Matus, Alfred Nietzel and current CEO and board member Stefan Ortmanns. These actions contain substantially similar factual and legal contentions and, as such, on June 13, 2022, at the parties' request, the court consolidated these derivative actions into a single action (the "Consolidated Derivative Action") and appointed Co-Lead Counsel for plaintiffs. In addition, the parties agreed to

stay the Consolidated Derivative Action pending a ruling on the motion to dismiss in the Securities Action, and the court has ordered that stay.

On October 19, 2022, plaintiff Melinda Hipp filed a shareholder derivative complaint in the Delaware Court of Chancery on behalf of Cerence Inc. against the defendants named in the Consolidated Derivative Action and board member Douglas Davis. This complaint makes factual and legal contentions substantially similar to those made in the Consolidated Derivative Actions. This case has been stayed pending a ruling on the motion to dismiss in the Securities Action.

Given the uncertainty of litigation, the preliminary stage of the cases, and the legal standards that must be met for, among other things, derivative standing and success on the merits, we cannot estimate the reasonably possible loss or range of loss that may result from these derivative action

A.P, a minor, by and through her guardian, Carlos Pena and Carlos Pena Action

On March 24, 2023, plaintiffs A.P., a minor, by and through her guardian, Carlos Pena, and Carlos Pena, each individually and on behalf of similarly situated individuals filed a purported class action lawsuit in the Circuit Court of Cook County, Illinois, Chancery Division. The case caption is Pena v. Cerence Inc., Case. No. 2023CH02866 (Cir. Ct. Cook Cnty. 2023). Plaintiffs allege that Cerence violated the Illinois Biometric Information Privacy Act (“BIPA”), 740 ILCS 14/1 et seq. through Cerence’s Drive Platform technology, which is integrated in various automobiles. The named plaintiffs allegedly drove or rode in a Volkswagen with Cerence’s Drive Platform technology. Plaintiffs allege that Cerence violated: (1) BIPA Section 15(a) by possessing biometrics without any public written policy for their retention or destruction; (2) BIPA Section 15(b) by collecting, capturing, or obtaining biometrics without written notice or consent; (3) BIPA Section 15(c) by profiting from biometrics obtained from Plaintiffs and putative class members; and (4) BIPA Section 15(d) by disclosing biometrics to third party companies without consent. Plaintiffs are seeking statutory damages of $5,000 for each willful and/or reckless violation of BIPA and, alternatively, damages of $1,000 for each negligent violation of BIPA. Given the uncertainty of litigation, the preliminary stage of the case, and the legal standards that must be met for, among other things, class certification and success on the merits, we cannot estimate the reasonably possible loss or range of loss that may result from this action.

Guarantees and Other

We include indemnification provisions in the contracts we enter with customers and business partners. Generally, these provisions require us to defend claims arising out of our products’ infringement of third-party intellectual property rights, breach of contractual obligations and/or unlawful or otherwise culpable conduct. The indemnity obligations generally cover damages, costs and attorneys’ fees arising out of such claims. In most, but not all cases, our total liability under such provisions is limited to either the value of the contract or a specified, agreed-upon amount. In some cases, our total liability under such provisions is unlimited. In many, but not all cases, the term of the indemnity provision is perpetual. While the maximum potential amount of future payments we could be required to make under all the indemnification provisions is unlimited, we believe the estimated fair value of these provisions is minimal due to the low frequency with which these provisions have been triggered.

We indemnify our directors and officers to the fullest extent permitted by Delaware law, which provides among other things, indemnification to directors and officers for expenses, judgments, fines, penalties and settlement amounts incurred by such persons in their capacity as a director or officer of the Company, regardless of whether the individual is serving in any such capacity at the time the liability or expense is incurred. Additionally, in connection with certain acquisitions, we agreed to indemnify the former officers and members of the boards of directors of those companies, on similar terms as described above, for a period of six years from the acquisition date. In certain cases, we purchase director and officer insurance policies related to these obligations, which fully cover the six-year period. To the extent that we do not purchase a director and officer insurance policy for the full period of any contractual indemnification, and such directors and officers do not have coverage under separate insurance policies, we would be required to pay for costs incurred, if any, as described above.

As of March 31, 2023, we have a $0.9 million letter of credit that is used as a security deposit in connection with our leased Bellevue, Washington office space. In the event of default on the underlying lease, the landlord would be eligible to draw against the letter of credit. The letter of credit is subject to aggregate reductions, provided that we are not in default under the underlying lease. We also have letters of credit in connection with security deposits for other facility leases totaling $0.5 million in the aggregate. These letters of credit have various terms and expire during fiscal year 2023 and beyond, while some of the letters of credit may automatically renew based on the terms of the underlying agreements.

Leases - Summary of Lease Term and Incremental Borrowing Rates for Leases (Details)	Mar. 31, 2023	Sep. 30, 2022
Weighted-average remaining lease term (in months):
Operating leases	40 months 24 days	46 months 15 days
Finance leases	30 months 15 days	35 months 18 days
Weighted-average discount rate:
Operating leases	4.10%	3.70%
Finance leases	4.40%	4.40%

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2023	Mar. 31, 2022
Revenues:
Total revenues	$ 68,393	$ 86,280	$ 152,051	$ 180,706
Cost of revenues:
Amortization of intangible assets	104	897	207	2,776
Total cost of revenues	25,014	24,306	51,197	48,533
Gross profit	43,379	61,974	100,854	132,173
Operating expenses:
Research and development	28,494	29,976	57,988	55,768
Sales and marketing	8,217	8,309	17,379	14,188
General and administrative	19,177	13,800	33,434	21,327
Amortization of intangible assets	2,394	3,135	4,744	6,289
Restructuring and other costs, net	5,714	474	9,903	5,389
Total operating expenses	63,996	55,694	123,448	102,961
(Loss) income from operations	(20,617)	6,280	(22,594)	29,212
Interest income	1,163	83	2,033	173
Interest expense	(4,003)	(3,360)	(7,517)	(6,787)
Other income (expense), net	1,074	(34)	4,787	(286)
(Loss) income before income taxes	(22,383)	2,969	(23,291)	22,312
Provision for income taxes	3,706	3,445	4,956	3,744
Net (loss) income	$ (26,089)	$ (476)	$ (28,247)	$ 18,568
Net (loss) income per share:
Basic	$ (0.65)	$ (0.01)	$ (0.70)	$ 0.48
Diluted	$ (0.65)	$ (0.01)	$ (0.70)	$ 0.47
Weighted-average common share outstanding:
Basic	40,219	39,189	40,088	39,013
Diluted	40,219	39,189	40,088	39,586
License
Revenues:
Total revenues	$ 30,800	$ 46,308	$ 76,217	$ 93,158
Cost of revenues:
Total cost of revenues	2,209	386	3,823	1,107
Connected Services
Revenues:
Total revenues	18,926	19,326	37,320	47,485
Cost of revenues:
Total cost of revenues	6,114	5,651	12,656	11,375
Professional Services
Revenues:
Total revenues	18,667	20,646	38,514	40,063
Cost of revenues:
Total cost of revenues	$ 16,587	$ 17,372	$ 34,511	$ 33,275

Goodwill and Other Intangible Assets (Tables)

6 Months Ended

Mar. 31, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Changes in Carrying Amount of Goodwill

The changes in the carrying amount of goodwill for the six months ended March 31, 2023 are as follows (dollars in thousands):


	Total
Balance as of September 30, 2022	$	890,802
Effect of foreign currency translation		13,248
Balance as of March 31, 2023	$	904,050

Summary of Gross Carrying Amounts and Accumulated Amortization of Intangible Assets by Major Class

The following tables summarizes the gross carrying amounts and accumulated amortization of intangible assets by major class (dollars in thousands):


	March 31, 2023
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted Average Remaining Life (Years)
Customer relationships	$	107,913	$	(102,925	)	$	4,988		2.0
Technology and patents		89,752		(89,441	)		311		0.7
Total	$	197,665	$	(192,366	)	$	5,299


	September 30, 2022
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted Average Remaining Life (Years)
Customer relationships	$	104,498	$	(95,315	)	$	9,183		1.7
Technology and patents		88,600		(88,083	)		517		1.2
Total	$	193,098	$	(183,398	)	$	9,700

- Definition

Tabular disclosure of goodwill by reportable segment and in total which includes a rollforward schedule.

+ References

Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 50
-Paragraph 1
-Subparagraph (h)
-URI https://asc.fasb.org/extlink&oid=121556970&loc=d3e13816-109267

Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 50
-Paragraph 1
-Subparagraph (c)
-URI https://asc.fasb.org/extlink&oid=121556970&loc=d3e13816-109267

Reference 3: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 50
-Paragraph 1
-Subparagraph (g)
-URI https://asc.fasb.org/extlink&oid=121556970&loc=d3e13816-109267

Reference 4: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 50
-Paragraph 1
-URI https://asc.fasb.org/extlink&oid=121556970&loc=d3e13816-109267

Reference 5: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 50
-Paragraph 1
-Subparagraph (e)
-URI https://asc.fasb.org/extlink&oid=121556970&loc=d3e13816-109267

Reference 6: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 50
-Paragraph 1
-Subparagraph (d)
-URI https://asc.fasb.org/extlink&oid=121556970&loc=d3e13816-109267

Reference 7: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 50
-Paragraph 1A
-URI https://asc.fasb.org/extlink&oid=121556970&loc=SL108378252-109267

Reference 8: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 50
-Paragraph 1
-Subparagraph (f)
-URI https://asc.fasb.org/extlink&oid=121556970&loc=d3e13816-109267

Reference 9: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 50
-Paragraph 1
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=121556970&loc=d3e13816-109267

Reference 10: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 50
-Paragraph 2
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=121556970&loc=d3e13854-109267

Reference 11: http://www.xbrl.org/2003/role/exampleRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 55
-Paragraph 24
-URI https://asc.fasb.org/extlink&oid=122137925&loc=d3e14258-109268

Reference 12: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 50
-Paragraph 1
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=121556970&loc=d3e13816-109267

+ Details

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) - USD ($) shares in Thousands, $ in Thousands	Total	Cumulative Effect, Period of Adoption, Adjustment	Common Stock	Additional Paid-in-Capital	Additional Paid-in-Capital Cumulative Effect, Period of Adoption, Adjustment	(Accumulated Deficit) Retained Earnings	(Accumulated Deficit) Retained Earnings Cumulative Effect, Period of Adoption, Adjustment	Accumulated Other Comprehensive Income (Loss)
Balance at Sep. 30, 2021	$ 1,031,945		$ 381	$ 1,002,353		$ 27,577		$ 1,634
Balance (in shares) at Sep. 30, 2021			38,025
Net (loss) income	18,568					18,568
Other comprehensive income (loss)	(10,717)							(10,717)
Issuance of common stock	34,840		$ 13	34,827
Issuance of common stock, (in shares)			1,425
Stock withheld to cover tax withholdings requirements upon stock vesting	(47,826)		$ (1)	(47,825)
Stock withheld to cover tax withholdings requirements upon stock vesting, (in shares)			(145)
Stock-based compensation	29,376			29,376
Balance at Mar. 31, 2022	1,056,186		$ 393	1,018,731		46,145		(9,083)
Balance (in shares) at Mar. 31, 2022			39,305
Balance at Dec. 31, 2021	1,049,501		$ 392	1,006,205		46,621		(3,717)
Balance (in shares) at Dec. 31, 2021			39,162
Net (loss) income	(476)					(476)
Other comprehensive income (loss)	(5,366)							(5,366)
Issuance of common stock	2,701		$ 1	2,700
Issuance of common stock, (in shares)			144
Stock withheld to cover tax withholdings requirements upon stock vesting	(1,538)			(1,538)
Stock withheld to cover tax withholdings requirements upon stock vesting, (in shares)			(1)
Stock-based compensation	11,364			11,364
Balance at Mar. 31, 2022	1,056,186		$ 393	1,018,731		46,145		(9,083)
Balance (in shares) at Mar. 31, 2022			39,305
Balance at Sep. 30, 2022	$ 712,950	$ (8,530)	$ 394	1,029,542	$ (14,371)	(283,249)	$ 5,841	(33,737)
Balance (in shares) at Sep. 30, 2022			39,430
Accounting Standards Update [Extensible Enumeration]	us-gaap:AccountingStandardsUpdate202006CumulativeEffectPeriodOfAdoptionMember
Net (loss) income	$ (28,247)					(28,247)
Other comprehensive income (loss)	10,364							10,364
Issuance of common stock	4,394		$ 10	4,384
Issuance of common stock, (in shares)			920
Stock withheld to cover tax withholdings requirements upon stock vesting	(4,430)		$ (1)	(4,429)
Stock withheld to cover tax withholdings requirements upon stock vesting, (in shares)			(58)
Stock-based compensation	22,922			22,922
Balance at Mar. 31, 2023	709,423		$ 403	1,038,048		(305,655)		(23,373)
Balance (in shares) at Mar. 31, 2023			40,292
Balance at Dec. 31, 2022	719,851		$ 400	1,023,467		(279,566)		(24,450)
Balance (in shares) at Dec. 31, 2022			40,017
Net (loss) income	(26,089)					(26,089)
Other comprehensive income (loss)	1,077							1,077
Issuance of common stock	2,671		$ 3	2,668
Issuance of common stock, (in shares)			276
Stock withheld to cover tax withholdings requirements upon stock vesting	(1,787)			(1,787)
Stock withheld to cover tax withholdings requirements upon stock vesting, (in shares)			(1)
Stock-based compensation	13,700			13,700
Balance at Mar. 31, 2023	$ 709,423		$ 403	$ 1,038,048		$ (305,655)		$ (23,373)
Balance (in shares) at Mar. 31, 2023			40,292

Accrued Expenses and Other Liabilities - Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Sep. 30, 2022
Accrued Liabilities and Other Liabilities [Abstract]
Compensation	$ 22,189	$ 19,710
Sales and other taxes payable	7,905	4,598
Cost of revenue related liabilities	4,470	4,257
Professional fees	3,808	3,866
Interest payable	1,818	1,828
Other	12,508	13,731
Total	$ 52,698	$ 47,990

Revenue Recognition

6 Months Ended

Mar. 31, 2023

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Note 3. Revenue Recognition

We primarily derive revenue from the following sources: (1) royalty-based software license arrangements, (2) connected services, and (3) professional services. Revenue is reported net of applicable sales and use tax, value-added tax and other transaction taxes imposed on the related transaction including mandatory government charges that are passed through to our customers. We account for a contract when both parties have approved and committed to the contract, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable.

Our arrangements with customers may contain multiple products and services. We account for individual products and services separately if they are distinct—that is, if a product or service is separately identifiable from other items in the contract and if a customer can benefit from it on its own or with other resources that are readily available to the customer.

We currently recognize revenue after applying the following five steps:

•

identification of the contract, or contracts, with a customer;

•

identification of the performance obligations in the contract, including whether they are distinct within the context of the contract;

•

determination of the transaction price, including the constraint on variable consideration;

•

allocation of the transaction price to the performance obligations in the contract; and

•

recognition of revenue when, or as, performance obligations are satisfied.

We allocate the transaction price of the arrangement based on the relative estimated standalone selling price (“SSP”) of each distinct performance obligation. In determining SSP, we maximize observable inputs, when possible. Since prices vary from customer to customer based on customer relationship, volume discount and contract type, in instances where the SSP is not directly observable, we estimate SSP by considering a number of data points, including cost of developing and supplying each performance obligation; types of offerings; and gross margin objectives and pricing practices, such as contractually stated prices, discounts offered, and applicable price lists.

We only include estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. We reduce transaction prices for estimated returns and other allowances that represent variable consideration under Accounting Standards Codification (“ASC”) 606, which we estimate based on historical return experience and other relevant factors, and record a corresponding refund liability as a component of Accrued expenses and other current liabilities. Other forms of contingent revenue or variable consideration are infrequent.

Revenue is recognized when control of these products or services are transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those products or services.

We assess the timing of the transfer of products or services to the customer as compared to the timing of payments to determine whether a significant financing component exists. In accordance with the practical expedient in ASC 606-10-32-18, we do not assess the existence of a significant financing component when the difference between payment and transfer of deliverables is a year or less. If the difference in timing arises for reasons other than the provision of finance to either the customer or us, no financing component is deemed to exist. The primary purpose of our invoicing terms is to provide customers with simplified and predictable ways of purchasing our services, not to receive or provide financing from or to customers. We do not consider set-up fees nor other upfront fees paid by our customers to represent a financing component.

Reimbursements for out-of-pocket costs generally include, but are not limited to, costs related to transportation, lodging and meals. Revenue from reimbursed out-of-pocket costs is accounted for as variable consideration.

(a) Performance Obligations

Licenses

Embedded software and technology licenses operate without access to external networks and information. Embedded licenses sold with non-distinct professional services to customize and/or integrate the underlying software and technology are accounted for as a combined performance obligation. Revenue from the combined performance obligation is recognized over time based upon the progress towards completion of the project, which is measured based on the labor hours already incurred to date as compared to the total estimated labor hours.

Revenue from distinct embedded software and technology licenses, which do not require professional services to customize and/or integrate the software license, is recognized at the point in time when the software and technology is made available to the customer and control is transferred. For income statement presentation purposes, we separate distinct embedded license revenue from professional services revenue based on their relative SSPs.

Revenue from embedded software and technology licenses sold on a royalty basis, where the license of non-exclusive intellectual property is the predominant item to which the royalty relates, is recognized in the period the usage occurs in accordance with ASC 606-10-55-65(A).

For royalty arrangements that include fixed consideration related to minimum purchase commitment deals, the fixed consideration is recognized when the software is made available to the customer.

Connected Services

Connected services, which allow our customers to use the hosted software over the contract period without taking possession of the software, are provided on a usage basis as consumed or on a fixed fee subscription basis. Subscription basis revenue represents a single promise to stand-ready to provide access to our connected services. Our connected services contract terms generally range from one to five years.

As each day of providing services is substantially the same and the customer simultaneously receives and consumes the benefits as access is provided, we have determined that our connected services arrangements are a single performance obligation comprised of a series of distinct services. These services include variable consideration, typically a function of usage. We recognize revenue as each distinct service period is performed (i.e., recognized as incurred).

Our connected service arrangements generally include services to develop, customize, and stand-up applications for each customer. In determining whether these services are distinct, we consider dependence of the cloud service on the up-front development and stand-up, as well as availability of the services from other vendors. We have concluded that the up-front development, stand-up and customization services are not distinct performance obligations, and as such, revenue for these activities is recognized over the period during which the cloud-connected services are provided, and is included within connected services revenue. There can be instances where the customer purchases a software license that allows them to take possession of the software to enable hosting by the customer or a third-party. For such arrangements, the performance obligation of the license is completed at a point in time once the customer takes possession of the software.

Professional Services

Revenue from distinct professional services, including training, is recognized over time based upon the progress towards completion of the project, which is measured based on the labor hours already incurred to date as compared to the total estimated labor hours.

(b) Significant Judgments

Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. Our license contracts often include professional services to customize and/or integrate the licenses into the customer’s environment. Judgment is required to determine whether the license is considered distinct and accounted for separately, or not distinct and accounted for together with professional services. Furthermore, hybrid contracts that contain both embedded and connected license and professional services are analyzed to determine if the products and services are distinct or have stand-alone functionality to determine the revenue treatment.

We allocate the transaction price of the arrangement based on the relative estimated SSP of each distinct performance obligation. Judgment is required to determine the SSP for each distinct performance obligation. In determining SSP, we maximize observable inputs, when possible. Since our prices vary from customer to customer based on customer relationship, volume discount and contract type, there are instances where the SSP is not directly observable. In such instances, we estimate SSP by considering a number of data points, including cost of developing and supplying each performance obligation; types of offerings; and gross margin objectives and pricing practices, such as contractually stated prices, discounts offered, and applicable price lists. These factors may vary over time, depending upon the unique facts and circumstances related to each deliverable. We review the SSP for each distinct performance obligation on a periodic basis, or when the underlying factors are deemed to have changed, and make updates when appropriate.

Revenues, classified by the major geographic region in which our customers are located, for the three and six months ended March 31, 2023 and 2022 (dollars in thousands):


	Three Months Ended March 31,				Six Months Ended March 31,
	2023		2022		2023		2022
Revenues:
United States	$	21,742	$	21,955	$	43,098	$	57,084
Other Americas		28		35		54		37
Germany		24,627		23,131		42,791		42,640
Other Europe, Middle East and Africa		3,512		2,567		7,184		6,530
Japan		5,738		25,413		31,579		51,489
Other Asia-Pacific		12,746		13,179		27,345		22,926
Total net revenues	$	68,393	$	86,280	$	152,051	$	180,706

For the three and six months ended March 31, 2023, revenues within China were $7.0 million and $16.7 million, respectively, which were over 10% of revenues.

Revenues relating to two customers accounted for $10.8 million, or 15.8%, and $7.2 million, or 10.5%, of revenues for the three months ended March 31, 2023. Revenues relating to two customers accounted for $22.4 million, or 14.7%, and $20.8 million, or 13.7%, of revenues for the six months ended March 31, 2023.

Revenues relating to two customers accounted for $21.9 million, or 25.4%, and $10.2 million, or 11.8%, of revenues for the three months ended March 31, 2022. Revenues relating to two customers accounted for $46.2 million, or 25.5%, and $28.1 million, or 15.6%, of revenues for the six months ended March 31, 2022. During the three and six months ended March 31, 2022, certain existing variable long-term contracts with our largest customer were converted into minimum purchase commitment deals. The estimated future revenue related to these long-term contracts was previously included in our variable backlog, which includes estimated future revenue from variable forecasted royalties related to our embedded and connected businesses. These minimum purchase commitment deals accounted for $19.9 million and $40.1 million of revenue for the three and six months ended March 31, 2022, respectively. The cash associated with these deals is expected to be collected over the distribution period, which could be up to five years.

(d) Contract Acquisition Costs

In conjunction with the adoption of ASC 606, we are required to capitalize certain contract acquisition costs. The capitalized costs primarily relate to paid commissions. In accordance with the practical expedient in ASC 606-10-10-4, we apply a portfolio approach to estimate contract acquisition costs for groups of customer contracts. We elect to apply the practical expedient in ASC 340-40-25-4 and will expense contract acquisition costs as incurred where the expected period of benefit is one year or less. Contract acquisition costs are deferred and amortized on a straight-line basis over the period of benefit, which we have estimated to be, on average, between one and eight years. The period of benefit was determined based on an average customer contract term, expected contract renewals, changes in technology and our ability to retain customers, including canceled contracts. We assess the amortization term for all major transactions based on specific facts and circumstances. Contract acquisition costs are classified as current or noncurrent assets based on when the expense will be recognized. The current and noncurrent portions of contract acquisition costs are included in Prepaid expenses and other current assets and Other assets, respectively. As of March 31, 2023 and September 30, 2022, we had $8.4 million and $8.3 million of contract acquisition costs, respectively. We had amortization expense of $0.8 million and $0.5 million related to these costs during the three months ended March 31, 2023 and 2022, respectively, and $1.6 million and $1.1 million for the six months ended March 31, 2023 and 2022, respectively. There was no impairment related to contract acquisition costs.

(e) Capitalized Contract Costs

We capitalize incremental costs incurred to fulfill our contracts that (i) relate directly to the contract, (ii) are expected to generate resources that will be used to satisfy our performance obligation under the contract, and (iii) are expected to be recovered through revenue generated under the contract. Our capitalized costs consist primarily of setup costs, such as costs to standup, customize and develop applications for each customer, which are incurred to satisfy our stand-ready obligation to provide access to our connected offerings. These contract costs are expensed to cost of revenue as we satisfy our stand-ready obligation over the contract term which we estimate to be between one and eight years, on average. The contract term was determined based on an average customer contract term, expected contract renewals, changes in technology, and our ability to retain customers, including canceled contracts. We classify these costs as current or noncurrent based on the timing of when we expect to recognize the expense. The current and noncurrent portions of capitalized contract fulfillment costs are presented as Deferred costs.

We had amortization expense of $2.5 million and $2.7 million related to these costs during the three months ended March 31, 2023 and 2022, respectively, and $5.2 million and $5.5 million for the six months ended March 31, 2023 and 2022, respectively. There was no impairment related to contract costs capitalized.

(f) Trade Accounts Receivable and Contract Balances

We classify our right to consideration in exchange for deliverables as either a receivable or a contract asset. A receivable is a right to consideration that is unconditional (i.e., only the passage of time is required before payment is due). We present such receivables in Accounts receivable, net at their net estimated realizable value. We maintain an allowance for credit losses to provide for the estimated amount of receivables and contract assets that may not be collected.

Our contract assets and liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period.

Contract assets include unbilled amounts from long-term contracts when revenue recognized exceeds the amount billed to the customer, and right to payment is not solely subject to the passage of time. The current and noncurrent portions of contract assets are included in Prepaid expenses and other current assets and Other assets, respectively. The table below shows significant changes in contract assets (dollars in thousands):


	Contract assets
Balance as of September 30, 2022	$	76,292
Revenues recognized but not billed		21,955
Amounts reclassified to Accounts receivable, net		(33,375	)
Effect of foreign currency translation		6,591
Balance as of March 31, 2023	$	71,463

Our contract liabilities, which we present as Deferred revenue, consist of advance payments and billings in excess of revenues recognized. We classify deferred revenue as current or noncurrent based on when we expect to recognize the revenues. The table below shows significant changes in deferred revenue (dollars in thousands):


	Deferred revenue
Balance as of September 30, 2022	$	238,634
Amounts billed but not recognized		42,217
Revenue recognized		(52,377	)
Effect of foreign currency translation		7,743
Balance as of March 31, 2023	$	236,217

(g) Remaining Performance Obligations

The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied at March 31, 2023 (dollars in thousands):


	Within One Year		Two to Five Years		Greater than Five Years		Total
Total revenue	$	155,413	$	141,968	$	24,187	$	321,568

The table above includes fixed backlogs and does not include variable backlogs derived from contingent usage-based activities, such as royalties and usage-based connected services.

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-URI https://asc.fasb.org/topic&trid=49130388

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Stockholders' Equity - Schedule of Non-vested Restricted Stock Units (Details) $ / shares in Units, $ in Thousands	6 Months Ended
	Mar. 31, 2023 USD ($) $ / shares shares
Time-Based Restricted Stock Units
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Non-vested, Shares, Beginning balance	996,016
Non-vested, Shares, Granted	2,386,993
Non-vested, Shares, Vested	(790,513)
Non-vested, Shares, Forfeited	(82,788)
Non-vested, Shares, Ending balance	2,509,708
Performance-Based Restricted Stock Units
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Non-vested, Shares, Beginning balance	434,995
Non-vested, Shares, Granted	1,237,319
Non-vested, Shares, Vested	(79,986)
Non-vested, Shares, Forfeited	(229,661)
Non-vested, Shares, Ending balance	1,362,667
Restricted Stock Units
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Non-vested, Shares, Beginning balance	1,431,011
Non-vested, Shares, Granted	3,624,312
Non-vested, Shares, Vested	(870,499)
Non-vested, Shares, Forfeited	(312,449)
Non-vested, Shares, Ending balance	3,872,375
Non-vested, Shares, Expected to vest	3,872,375
Non-vested, Weighted-Average Grant-Date Fair Value, Beginning balance \| $ / shares	$ 62.49
Non-vested, Weighted-Average Grant-Date Fair Value, Granted \| $ / shares	19.39
Non-vested, Weighted-Average Grant-Date Fair Value, Vested \| $ / shares	58.24
Non-vested, Weighted-Average Grant-Date Fair Value, Forfeited \| $ / shares	54.13
Non-vested, Weighted-Average Grant-Date Fair Value, Ending balance \| $ / shares	33.07
Non-vested, Weighted-Average Grant-Date Fair Value, Expected to vest \| $ / shares	$ 33.07
Non-vested, Weighted-Average Remaining Contractual Term (years), Expected to vest	1 year 8 months 4 days
Non-vested, Aggregate Intrinsic Value, Expected to vest \| $	$ 108,736

Leases - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2023	Mar. 31, 2022
Lessee Lease Description [Line Items]
Operating lease, existence of option to extend			true
Operating lease, option to extend			Some of our leases include options to extend or terminate the lease prior to the end of the agreed upon lease term. For purposes of calculating lease liabilities, lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise such options.
Operating lease, existence of option to terminate			true
Operating lease, option to terminate			Some of our leases include options to extend or terminate the lease prior to the end of the agreed upon lease term. For purposes of calculating lease liabilities, lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise such options.
Cash payments related to operating leases	$ 1.6	$ 1.8	$ 3.4	$ 3.4
Cash payments related to financing leases	0.2	0.1	0.3	0.3
Right of use assets obtained in exchange for lease obligations	$ 0.4	$ 3.9	$ 2.9	$ 7.0
Minimum
Lessee Lease Description [Line Items]
Operating lease remaining term	1 year		1 year
Maximum
Lessee Lease Description [Line Items]
Operating lease remaining term	6 years		6 years

Goodwill and Other Intangible Assets - Intangible Assets, Net - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2023	Mar. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense related to intangible assets	$ 2.5	$ 4.0	$ 5.0	$ 9.1
Expected amortization of intangible assets for remainder of 2023	$ 1.3		$ 1.3

Revenue Recognition - Summary of Revenues Classified by Major Geographic Region (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2023	Mar. 31, 2022
Revenues:
Total net revenues	$ 68,393	$ 86,280	$ 152,051	$ 180,706
United States
Revenues:
Total net revenues	21,742	21,955	43,098	57,084
Other Americas
Revenues:
Total net revenues	28	35	54	37
Germany
Revenues:
Total net revenues	24,627	23,131	42,791	42,640
Other Europe, Middle East and Africa
Revenues:
Total net revenues	3,512	2,567	7,184	6,530
Japan
Revenues:
Total net revenues	5,738	25,413	31,579	51,489
Other Asia-Pacific
Revenues:
Total net revenues	$ 12,746	$ 13,179	$ 27,345	$ 22,926

- Definition

Amount, excluding tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value added and excise.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 30
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
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-URI https://asc.fasb.org/extlink&oid=6472922&loc=d3e499488-122856

+ Details

Leases - Summary of Lease Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2023	Mar. 31, 2022
Finance lease costs:
Amortization of right of use asset	$ 108	$ 109	$ 216	$ 218
Interest on lease liability	10	13	20	27
Operating lease cost	1,645	1,949	3,331	3,507
Variable lease cost	808	812	1,499	1,689
Sublease income	(48)	(47)	(93)	(95)
Total lease cost	$ 2,523	$ 2,836	$ 4,973	$ 5,346

Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Mar. 31, 2023	May 01, 2023
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2023
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--09-30
Document Quarterly Report	true
Document Transition Report	false
Entity File Number	001-39030
Entity Registrant Name	CERENCE INC.
Entity Central Index Key	0001768267
Entity Incorporation State Country Code	DE
Entity Tax Identification Number	83-4177087
Entity Address Address Line1	1 Burlington Woods Drive
Entity Address Address Line2	Suite 301A
Entity Address City Or Town	Burlington
Entity Address State Or Province	MA
Entity Address Postal Zip Code	01803
City Area Code	857
Local Phone Number	362-7300
Title of 12(b) Security	Common Stock, par value $0.01 per share
Trading Symbol	CRNC
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		40,309,111

Fair Value Measurements - Summary of Financial Assets that are Measured at Fair Value and Indicates the Fair Value Hierarchy of the Valuation Inputs (Parenthetical) (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Sep. 30, 2022
Money Market Funds \| Level 1
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Marketable securities, cost	$ 62,219	$ 59,146
Government Securities \| Level 1
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Marketable securities, cost	6,193	4,976
Government Securities \| Level 2
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Marketable securities, cost	6,085	2,377
Time Deposits \| Level 2
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Marketable securities, cost	4,016	1,472
Commercial Paper \| Level 2
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Marketable securities, cost	1,982	7,648
Corporate Debt Securities \| Level 2
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Marketable securities, cost	13,520	17,328
Debt Securities \| Level 2
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Marketable securities, cost	$ 2,000	$ 2,000

Accrued Expenses and Other Liabilities

6 Months Ended

Mar. 31, 2023

Accrued Liabilities and Other Liabilities [Abstract]

Accrued Expenses and Other Liabilities

Note 9. Accrued Expenses and Other Liabilities

Accrued expenses and other current liabilities consisted of the following (dollars in thousands):


	March 31, 2023		September 30, 2022

Compensation	$	22,189	$	19,710
Sales and other taxes payable		7,905		4,598
Cost of revenue related liabilities		4,470		4,257
Professional fees		3,808		3,866
Interest payable		1,818		1,828
Other		12,508		13,731
Total	$	52,698	$	47,990

Long-Term Debt - Schedule of Long-Term Debt (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Oct. 01, 2022	Sep. 30, 2022
Debt Instrument [Line Items]
Total debt	$ 277,187		$ 270,374
Less: current portion	(12,500)		(10,938)
Total long-term debt	264,687	$ 270,430	259,436
3.00% Convertible Senior Notes Due 2025
Debt Instrument [Line Items]
Total debt	172,454		160,904
Total long-term debt	172,454
Senior Credit Facilities
Debt Instrument [Line Items]
Total debt	104,733		$ 109,470
Less: current portion	(12,500)
Total long-term debt	$ 92,233

- Definition

Amount, excluding unamortized premium (discount) and debt issuance cost, of long-term debt. Excludes lease obligation.

+ References + Details

Restructuring and Other Costs, Net

6 Months Ended

Mar. 31, 2023

Restructuring and Related Activities [Abstract]

Restructuring and Other Costs, Net

Note 10. Restructuring and Other Costs, Net

Restructuring and other costs, net includes restructuring expenses as well as other charges that are unusual in nature, are the result of unplanned events, and arise outside of the ordinary course of our business. The following table sets forth accrual activity relating to restructuring reserves for the six months ended March 31, 2023 (dollars in thousands):


	Personnel			Facilities			Restructuring Subtotal			Other			Total
Balance at September 30, 2022	$	1,277		$	1,600		$	2,877		$	2,277		$	5,154
Restructuring and other costs, net		6,420			343			6,763			3,140			9,903
Non-cash adjustments		—			(327	)		(327	)		—			(327	)
Cash payments		(5,509	)		(299	)		(5,808	)		(3,790	)		(9,598	)
Effect of foreign currency translation		(5	)		11			6			—			6
Balance at March 31, 2023	$	2,183		$	1,328		$	3,511		$	1,627		$	5,138

The following table sets forth restructuring and other costs, net recognized for the three and six months ended March 31, 2023 and 2022 (dollars in thousands):


	Three Months Ended March 31,				Six Months Ended March 31,
	2023		2022		2023		2022

Personnel	$	3,371	$	13	$	6,420	$	250
Facilities		150		170		343		367
Restructuring subtotal		3,521		183		6,763		617
Other		2,193		291		3,140		4,772
Restructuring and other costs, net	$	5,714	$	474	$	9,903	$	5,389

Fiscal Year 2023

For the three months ended March 31, 2023, we recorded restructuring and other costs, net of $5.7 million, which included a $3.4 million severance charge related to the elimination of personnel, a $0.2 million charge resulting from the closure of facilities that will no longer be utilized, and $2.2 million related to other one-time charges.

For the six months ended March 31, 2023, we recorded restructuring and other costs, net of $9.9 million, which included a $6.4 million severance charge related to the elimination of personnel, a $0.3 million charge resulting from the closure of facilities that will no longer be utilized, and $3.1 million related to other one-time charges.

Fiscal Year 2022

For the three months ended March 31, 2022, we recorded restructuring and other costs, net of $0.5 million, which included $0.3 million related to one-time charges and a $0.2 million charge resulting from the closure of facilities that will no longer be utilized.

For the six months ended March 31, 2022, we recorded restructuring and other costs, net of $5.4 million, which included $4.0 million, net of $5.0 million in forfeitures, in stock-based compensation due to the resignation of our former CEO and the resulting modification of certain stock-based awards, a $0.3 million severance charge related to the elimination of personnel, and a $0.4 million charge resulting from the closure of facilities that will no longer be utilized.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2023	Mar. 31, 2022
Statement of Comprehensive Income [Abstract]
Net (loss) income	$ (26,089)	$ (476)	$ (28,247)	$ 18,568
Other comprehensive income (loss):
Foreign currency translation adjustments	939	(5,295)	10,101	(10,684)
Pension adjustments, net	(55)	61	(29)	134
Net unrealized gains (loss) on available-for-sale securities	193	(132)	292	(167)
Total other comprehensive income (loss)	1,077	(5,366)	10,364	(10,717)
Comprehensive (loss) income	$ (25,012)	$ (5,842)	$ (17,883)	$ 7,851

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
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-Name Accounting Standards Codification
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Fair Value Measurements

6 Months Ended

Mar. 31, 2023

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 5. Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Valuation techniques must maximize the use of observable inputs and minimize the use of unobservable inputs. When determining fair value measurements for assets and liabilities recorded at fair value, we consider the principal or most advantageous market in which we would transact and consider assumptions that market participants would use in pricing the asset or liability.

The classification of a financial asset or liability within the hierarchy is based upon the lowest level input that is significant to the fair value measurement as of the measurement date as follows:

•

Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities.

•

Level 2 - Inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the assets or liabilities.

•

Level 3 - Unobservable inputs that are supported by little or no market activity.

The following table presents information about our financial assets that are measured at fair value and indicates the fair value hierarchy of the valuation inputs used (dollars in thousands) as of:


	March 31, 2023
	Fair Value		Cash and Cash Equivalents		Marketable Securities
Level 1:
Money market funds $62,219 at cost (a)	$	62,219	$	62,219	$	-
Government securities $6,193 at cost (a,b)		6,132		299		5,833
Level 2:
Government securities $6,085 at cost (b)		6,080		-		6,080
Time deposits, $4,016 at cost (a)		4,016		4,016		-
Commercial paper, $1,982 at cost (b)		1,982		-		1,982
Corporate bonds, $13,520 at cost (b)		13,442		-		13,442
Debt securities, $2,000 at cost (c)		2,669		-		-
Total assets	$	96,540	$	66,534	$	27,337


	September 30, 2022
	Fair Value		Cash and Cash Equivalents		Marketable Securities
Level 1:
Money market funds $59,146 at cost (a)	$	59,138	$	59,138	$	-
Government securities $4,976 at cost (b)		4,892		-		4,892
Level 2:
Government securities $2,377 at cost (b)		2,361		-		2,361
Time deposits, $1,472 at cost (a)		1,472		1,472		-
Commercial paper, $7,648 at cost (b)		7,647		-		7,647
Corporate bonds, $17,328 at cost (b)		17,001		-		17,001
Debt securities, $2,000 at cost (c)		2,000		-		-
Total assets	$	94,511	$	60,610	$	31,901

(a)

Money market funds and other highly liquid investments with original maturities of 90 days or less are included within Cash and cash equivalents in the Condensed Consolidated Balance Sheets.

(b)

(c)

During the three and six months ended March 31, 2023, we recorded unrealized gains related to our marketable securities of $0.2 million and $0.3 million, respectively, within Accumulated other comprehensive loss. During the three and six months ended March 31, 2022, we recorded unrealized losses related to our marketable securities of $0.1 million and $0.2 million, respectively, within Accumulated other comprehensive loss.

The carrying amounts of certain financial instruments, including cash held in banks, accounts receivable, and accounts payable, approximate fair value due to their short-term maturities and are excluded from the fair value tables above.

Derivative financial instruments are recognized at fair value and are classified within Level 2 of the fair value hierarchy. See Note 6 – Derivative Financial Instruments for additional details.

Long-term debt

The estimated fair value of our Long-term debt is determined by Level 2 inputs and is based on observable market data including prices for similar instruments. As of March 31, 2023 and September 30, 2022, the estimated fair value of our Notes was $179.7 million and $155.3 million, respectively. The Notes are recorded at face value less transaction costs on our Condensed Consolidated Balance Sheets. The carrying amount of the Senior Credit Facilities (as defined in Note 14) approximates fair value given the underlying interest rate applied to such amounts outstanding is currently set to the prevailing market rate.

Equity securities

During the second quarter of fiscal year 2023, we obtained equity securities in a privately held company as part of a non-cash transaction. These equity securities are recognized at fair value and are classified within Level 2 of the fair value hierarchy.

We have non-controlling equity investments in privately held companies. We evaluated the equity investments under the voting model and concluded consolidation was not applicable. We accounted for the investments by electing the measurement alternative for investments without readily determinable fair values and for which we do not have the ability to exercise significant influence. The non-marketable equity securities are carried at cost less any impairment, plus or minus adjustments resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer, which is recorded within the Condensed Consolidated Statements of Operations.

Investments without readily determinable fair values were $3.1 million as of March 31, 2023 and September 30, 2022, respectively. The investments are included within Other assets on the Condensed Consolidated Balance Sheets. There have been no adjustments to the carrying value of the investments resulting from impairments or observable price changes.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Leases

6 Months Ended

Mar. 31, 2023

Leases [Abstract]

Leases

Note 8. Leases

We have entered into a number of facility and equipment leases which qualify as operating leases under GAAP. We also have a limited number of equipment leases that qualify as finance leases. We determine if contracts with vendors represent a lease or have a lease component under GAAP at contract inception. Our leases have remaining terms ranging from less than one year to six years. Some of our leases include options to extend or terminate the lease prior to the end of the agreed upon lease term. For purposes of calculating lease liabilities, lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise such options.

Operating lease right of use assets and liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the lease commencement date. As our leases generally do not provide an implicit rate, we use an estimated incremental borrowing rate in determining the present value of future payments. The incremental borrowing rate represents an estimate of the interest rate we would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease within a particular location and currency environment.

The following table presents certain information related to lease term and incremental borrowing rates for leases as of March 31, 2023 and September 30, 2022:


	March 31, 2023			September 30, 2022
Weighted-average remaining lease term (in months):
Operating leases		40.8			46.5
Finance leases		30.5			35.6
Weighted-average discount rate:
Operating leases		4.1	%		3.7	%
Finance leases		4.4	%		4.4	%

Lease costs for minimum lease payments is recognized on a straight-line basis over the lease term. For operating leases, costs are included within Cost of revenues, Research and development, Sales and marketing, and General and administrative lines on the Condensed Consolidated Statements of Operations. For financing leases, amortization of the finance right of use assets is included within Research and development, Sales and marketing, and General and administrative lines on the Condensed Consolidated Statements of Operations, and interest expense is included within Interest expense.

The following table presents lease expense for the three and six months ended March 31, 2023 and 2022 (dollars in thousands):


	Three Months Ended March 31,						Six Months Ended March 31,
	2023			2022			2023			2022
Finance lease costs:
Amortization of right of use asset	$	108		$	109		$	216		$	218
Interest on lease liability		10			13			20			27
Operating lease cost		1,645			1,949			3,331			3,507
Variable lease cost		808			812			1,499			1,689
Sublease income		(48	)		(47	)		(93	)		(95	)
Total lease cost	$	2,523		$	2,836		$	4,973		$	5,346

For operating leases, the related cash payments are included in the operating cash flows on the Condensed Consolidated Statements of Cash Flows. For the three months ended March 31, 2023 and 2022, cash payments related to operating leases were $1.6 million and $1.8 million, respectively, and $3.4 million for the six months ended March 31, 2023 and 2022. For financing leases, the related cash payments for the principal portion of the lease liability are included in the financing cash flows on the Condensed Consolidated Statement of Cash Flows and the related cash payments for the interest portion of the lease liability are included within the operating section of the Condensed Consolidated Statement of Cash Flows. For the three months ended March 31, 2023 and 2022, cash payments related to financing leases were $0.2 million and $0.1 million, respectively, of which an immaterial amount related to the interest portion of the lease liability. For the six months ended March 31, 2023 and 2022, cash payments related to financing leases were $0.3 million, of which an immaterial amount related to the interest portion of the lease liability. For the three months ended March 31, 2023 and 2022, right of use assets obtained in exchange for lease obligations were $0.4 million and $3.9 million, respectively, and $2.9 million and $7.0 million for the six months ended March 31, 2023 and 2022.


Year Ending September 30,	Operating Leases			Financing Leases			Total
2023	$	3,372		$	207		$	3,579
2024		6,102			417			6,519
2025		4,235			362			4,597
2026		1,980			53			2,033
2027		1,524			—			1,524
Thereafter		825			—			825
Total future minimum lease payments	$	18,038		$	1,039		$	19,077
Less effects of discounting		(1,086	)		(45	)		(1,131	)
Total lease liabilities	$	16,952		$	994		$	17,946
Reported as of March 31, 2023
Short-term lease liabilities	$	6,003		$	387		$	6,390
Long-term lease liabilities		10,949			607			11,556
Total lease liabilities	$	16,952		$	994		$	17,946

Earnings Per Share - Schedule of Reconciliation of Basic Shares to Diluted Shares (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2023	Mar. 31, 2022
Numerator:
Net (loss) income - basic and diluted	$ (26,089)	$ (476)	$ (28,247)	$ 18,568
Denominator:
Weighted average common shares outstanding - basic	40,219	39,189	40,088	39,013
Dilutive effect of restricted stock awards				573
Weighted average common shares outstanding - diluted	40,219	39,189	40,088	39,586
Net (loss) income per common share:
Basic	$ (0.65)	$ (0.01)	$ (0.70)	$ 0.48
Diluted	$ (0.65)	$ (0.01)	$ (0.70)	$ 0.47

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

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+ Details

- Definition

The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

+ References

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+ Details

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

+ Details

Long-Term Debt - Schedule of Long-Term Debt (Parenthetical) (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Mar. 31, 2023	Sep. 30, 2022	Jun. 02, 2020
Senior Credit Facilities
Debt Instrument [Line Items]
Debt Instrument, unamortized discount	$ 1,390	$ 1,310
Debt instrument, deferred issuance costs	$ 127	$ 158
Debt instrument, effective interest rate	8.41%	5.37%
3.00% Convertible Senior Notes Due 2025
Debt Instrument [Line Items]
Debt instrument, interest rate	3.00%	3.00%	3.00%
Debt instrument, maturity year	2025	2025
Debt Instrument, unamortized discount	$ 0	$ 11,264
Debt instrument, deferred issuance costs	$ 2,546	$ 2,832
Debt instrument, effective interest rate	3.70%	6.29%

Derivative Financial Instruments - Summary of Fair Value and Presentation in Condensed Consolidated Balance Sheet for Derivative Instruments (Details) - Foreign Currency Forward Contracts - Not Designated - USD ($) $ in Thousands	Mar. 31, 2023	Sep. 30, 2022
Prepaid Expenses and Other Current Assets
Derivatives Fair Value [Line Items]
Derivative instrument assets at fair value	$ 484	$ 1,627
Other Assets
Derivatives Fair Value [Line Items]
Derivative instrument assets at fair value	93	660
Accrued Expenses and Other Current Liabilities
Derivatives Fair Value [Line Items]
Derivative instrument liabilities at fair value	1,422	1,812
Other Liabilities
Derivatives Fair Value [Line Items]
Derivative instrument liabilities at fair value	$ 561	$ 711

Significant Accounting Policies - Summarize the impact of adopting ASU 2020-06 (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Oct. 01, 2022	Sep. 30, 2022
Summary Of Significant Accounting Policies [Line Items]
Deferred tax assets	$ 54,387	$ 54,452	$ 51,989
Long-term debt, net of discounts and issuance costs	264,687	270,430	259,436
Additional paid-in capital	1,038,048	1,015,171	1,029,542
Accumulated deficit	$ (305,655)	(277,408)	$ (283,249)
As Previously Reported
Summary Of Significant Accounting Policies [Line Items]
Deferred tax assets		51,989
Long-term debt, net of discounts and issuance costs		259,436
Additional paid-in capital		1,029,542
Accumulated deficit		(283,249)
Revision of Prior Period, Adjustment \| ASU 2020-06
Summary Of Significant Accounting Policies [Line Items]
Deferred tax assets		2,463
Long-term debt, net of discounts and issuance costs		10,994
Additional paid-in capital		(14,371)
Accumulated deficit		$ 5,841

Goodwill and Other Intangible Assets - Summary of Gross Carrying Amounts and Accumulated Amortization of Intangible Assets by Major Class (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Mar. 31, 2023	Sep. 30, 2022
Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 197,665	$ 193,098
Accumulated Amortization	(192,366)	(183,398)
Net Carrying Amount	5,299	9,700
Customer Relationships
Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	107,913	104,498
Accumulated Amortization	(102,925)	(95,315)
Net Carrying Amount	$ 4,988	$ 9,183
Weighted Average Remaining Life (Years)	2 years	1 year 8 months 12 days
Technology and Patents
Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 89,752	$ 88,600
Accumulated Amortization	(89,441)	(88,083)
Net Carrying Amount	$ 311	$ 517
Weighted Average Remaining Life (Years)	8 months 12 days	1 year 2 months 12 days

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Cash flows from operating activities:
Net (loss) income	$ (28,247)	$ 18,568
Adjustments to reconcile net (loss) income to net cash provided by operations:
Depreciation and amortization	10,033	13,574
Provision for (benefit from) credit loss reserve	3,626	(418)
Stock-based compensation	24,827	16,767
Non-cash interest expense	910	2,595
Deferred tax (benefit)	(422)	(2,162)
Unrealized foreign currency transaction (gain) losses	(6,461)	2,320
Other	(608)	184
Changes in operating assets and liabilities:
Accounts receivable	(14,836)	(3,557)
Prepaid expenses and other assets	13,014	(36,354)
Deferred costs	2,559	2,896
Accounts payable	7,864	6,293
Accrued expenses and other liabilities	2,930	(2,115)
Deferred revenue	(10,752)	(11,848)
Net cash provided by operating activities	4,437	6,743
Cash flows from investing activities:
Capital expenditures	(2,077)	(9,985)
Purchases of marketable securities	(11,045)	(13,115)
Sale and maturities of marketable securities	15,900	16,453
Payments for equity investments		(584)
Other investing activities	(552)	1,266
Net cash provided by (used in) investing activities	2,226	(5,965)
Cash flows from financing activities:
Payments for long-term debt issuance costs	(403)
Principal payments of long-term debt	(4,688)	(3,126)
Common stock repurchases for tax withholdings for net settlement of equity awards	(4,430)	(46,423)
Principal payment of lease liabilities arising from a finance lease	(316)	(246)
Proceeds from the issuance of common stock	4,394	33,459
Net cash used in financing activities	(5,443)	(16,336)
Effects of exchange rate changes on cash and cash equivalents	(690)	(1,051)
Net change in cash and cash equivalents	530	(16,609)
Cash and cash equivalents at beginning of period	94,847	128,428
Cash and cash equivalents at end of period	95,377	111,819
Supplemental information:
Cash paid for income taxes	4,053	6,594
Cash paid for interest	$ 6,492	$ 4,151

Revenue Recognition - Summary of Significant Changes in Deferred Revenue (Details) $ in Thousands	6 Months Ended
	Mar. 31, 2023 USD ($)
Revenue from Contract with Customer [Abstract]
Balance	$ 238,634
Amounts billed but not recognized	(42,217)
Revenue recognized	(52,377)
Effect of foreign currency translation	7,743
Balance	$ 236,217

Goodwill and Other Intangible Assets

6 Months Ended

Mar. 31, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

Note 7. Goodwill and Other Intangible Assets

(a) Goodwill

We believe our Chief Executive Officer (“CEO”) is our chief operating decision maker (“CODM”). Our CEO approves all major decisions, including reorganizations and new business initiatives. Our CODM reviews routine consolidated operating information and makes decisions on the allocation of resources at this level, as such, we have concluded that we have one operating segment.

All goodwill is assigned to one or more reporting units. A reporting unit represents an operating segment or a component within an operating segment for which discrete financial information is available and is regularly reviewed by segment management for performance assessment and resource allocation. Upon consideration of our components, we have concluded that our goodwill is associated with one reporting unit.

On March 31, 2023, we concluded that no goodwill impairment indicators were present. We will continue to monitor the impacts of the COVID-19 pandemic on our reporting unit fair value. The full extent to which the ongoing COVID-19 pandemic could adversely affect our financial performance will depend on future developments, many of which are outside of our control.

The changes in the carrying amount of goodwill for the six months ended March 31, 2023 are as follows (dollars in thousands):


	Total
Balance as of September 30, 2022	$	890,802
Effect of foreign currency translation		13,248
Balance as of March 31, 2023	$	904,050

(b) Intangible Assets, Net

The following tables summarizes the gross carrying amounts and accumulated amortization of intangible assets by major class (dollars in thousands):


	March 31, 2023
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted Average Remaining Life (Years)
Customer relationships	$	107,913	$	(102,925	)	$	4,988		2.0
Technology and patents		89,752		(89,441	)		311		0.7
Total	$	197,665	$	(192,366	)	$	5,299


	September 30, 2022
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted Average Remaining Life (Years)
Customer relationships	$	104,498	$	(95,315	)	$	9,183		1.7
Technology and patents		88,600		(88,083	)		517		1.2
Total	$	193,098	$	(183,398	)	$	9,700

Amortization expense related to intangible assets in the aggregate was $2.5 million and $4.0 million for the three months ended March 31, 2023 and 2022, respectively, and $5.0 million and $9.1 million for the six months ended March 31, 2023 and 2022, respectively. We expect amortization of intangible assets to be approximately $1.3 million for the remainder of fiscal year 2023.

Derivative Financial Instruments - Summary of (Loss) Income Related to Foreign Forward Currency Contracts (Details) - Foreign Exchange Forward Contracts - Not Designated - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2023	Mar. 31, 2022
Derivative Instruments Gain Loss [Line Items]
(Loss) income recognized in earnings	$ (313)	$ 1,347	$ (1,766)	$ 2,464
Derivative, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration]	Other Nonoperating Income (Expense)	Other Nonoperating Income (Expense)	Other Nonoperating Income (Expense)	Other Nonoperating Income (Expense)

Derivative Financial Instruments (Tables)

6 Months Ended

Mar. 31, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Summary of Fair Value and Presentation in Condensed Consolidated Balance Sheet for Derivative Instruments

The following table summarizes the fair value and presentation in the Condensed Consolidated Balance Sheet for derivative instruments as of March 31, 2023 and September 30, 2022 (dollars in thousands):


		Fair Value
Derivatives not designated as hedges	Classification	March 31, 2023		September 30, 2022
Foreign currency forward contracts	Prepaid expenses and other current assets	$	484	$	1,627
Foreign currency forward contracts	Other assets		93		660
Foreign currency forward contracts	Accrued expenses and other current liabilities		1,422		1,812
Foreign currency forward contracts	Other liabilities		561		711

Summary of (Loss) Income Related to Foreign Currency Forward Contracts

The following tables display a summary of the (loss) income related to foreign currency forward contracts for the three and six months ended March 31, 2023 and 2022 (dollars in thousand):


		(Loss) income recognized in earnings
		Three Months Ended March 31,					Six Months Ended March 31,
Derivatives not designated as hedges	Classification	2023			2022		2023			2022
Foreign currency forward contracts	Other income (expense), net	$	(313	)	$	1,347	$	(1,766	)	$	2,464

Fair Value Measurements - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2023	Mar. 31, 2022	Sep. 30, 2022
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Unrealized gains to marketable securities	$ 0.2	$ (0.1)	$ 0.3	$ (0.2)
Equity investments without readily determinable fair values	3.1		3.1		$ 3.1
Estimated Fair Value \| Level 2
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair value of notes	$ 179.7		$ 179.7		$ 155.3

Commitments and Contingencies - Additional Information (Details) - USD ($)		6 Months Ended
	Mar. 24, 2023	Mar. 31, 2023
Loss Contingencies [Line Items]
Loss contingency, lawsuit filing date	March 24, 2023
Loss contingency, statutory damages	$ 5,000
Indemnification period for former officers and members of the boards of directors		6 years
Bellevue, Washington Office Space
Loss Contingencies [Line Items]
Letter of credit as security deposit		$ 900,000
Other Facility
Loss Contingencies [Line Items]
Letter of credit as security deposit		$ 500,000
Negligent Violation
Loss Contingencies [Line Items]
Loss contingency, statutory damages	$ 1,000

Revenue Recognition - Summary of Significant Changes in Contract Assets (Details) $ in Thousands	6 Months Ended
	Mar. 31, 2023 USD ($)
Revenue from Contract with Customer [Abstract]
Balance	$ 76,292
Revenues recognized but not billed	21,955
Amounts reclassified to Accounts receivable, net	(33,375)
Effect of foreign currency translation	6,591
Balance	$ 71,463

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2023	Sep. 30, 2022
Current assets:
Cash and cash equivalents	$ 95,377	$ 94,847
Marketable securities	11,661	20,317
Accounts receivable, net of allowances of $3,921 and $157	61,449	45,073
Deferred costs	7,709	7,098
Prepaid expenses and other current assets	55,663	60,184
Total current assets	231,859	227,519
Long-term marketable securities	15,676	11,584
Property and equipment, net	35,630	37,707
Deferred costs	21,207	22,451
Operating lease right of use assets	15,298	14,702
Goodwill	904,050	890,802
Intangible assets, net	5,299	9,700
Deferred tax assets	54,387	51,989
Other assets	52,041	52,039
Total assets	1,335,447	1,318,493
Current liabilities:
Accounts payable	18,992	10,372
Deferred revenue	75,765	72,662
Short-term operating lease liabilities	6,003	5,071
Short-term debt	12,500	10,938
Accrued expenses and other current liabilities	52,698	47,990
Total current liabilities	165,958	147,033
Long-term debt, net of discounts and issuance costs	264,687	259,436
Deferred revenue, net of current portion	160,452	165,972
Long-term operating lease liabilities	10,949	11,375
Other liabilities	23,978	21,727
Total liabilities	626,024	605,543
Commitments and contingencies (Note 12)
Stockholders' Equity:
Common stock, $0.01 par value, 560,000 shares authorized; 40,292 and 39,430 shares issued and outstanding, respectively	403	394
Accumulated other comprehensive (loss) income	(23,373)	(33,737)
Additional paid-in capital	1,038,048	1,029,542
Accumulated deficit	(305,655)	(283,249)
Total stockholders' equity	709,423	712,950
Total liabilities and stockholders' equity	$ 1,335,447	$ 1,318,493

Goodwill and Other Intangible Assets - Changes in Carrying Amount of Goodwill (Details) $ in Thousands	6 Months Ended
	Mar. 31, 2023 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
Balance as of September 30, 2022	$ 890,802
Effect of foreign currency translation	13,248
Balance as of December 31, 2022	$ 904,050

- Definition

Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.

+ References + Details

Revenue Recognition (Tables)

6 Months Ended

Mar. 31, 2023

Revenue from Contract with Customer [Abstract]

Summary of Revenues Classified by Major Geographic Region

Revenues, classified by the major geographic region in which our customers are located, for the three and six months ended March 31, 2023 and 2022 (dollars in thousands):


	Three Months Ended March 31,				Six Months Ended March 31,
	2023		2022		2023		2022
Revenues:
United States	$	21,742	$	21,955	$	43,098	$	57,084
Other Americas		28		35		54		37
Germany		24,627		23,131		42,791		42,640
Other Europe, Middle East and Africa		3,512		2,567		7,184		6,530
Japan		5,738		25,413		31,579		51,489
Other Asia-Pacific		12,746		13,179		27,345		22,926
Total net revenues	$	68,393	$	86,280	$	152,051	$	180,706

Summary of Significant Changes in Contract Assets and Deferred Revenue

The table below shows significant changes in contract assets (dollars in thousands):


	Contract assets
Balance as of September 30, 2022	$	76,292
Revenues recognized but not billed		21,955
Amounts reclassified to Accounts receivable, net		(33,375	)
Effect of foreign currency translation		6,591
Balance as of March 31, 2023	$	71,463

The table below shows significant changes in deferred revenue (dollars in thousands):


	Deferred revenue
Balance as of September 30, 2022	$	238,634
Amounts billed but not recognized		42,217
Revenue recognized		(52,377	)
Effect of foreign currency translation		7,743
Balance as of March 31, 2023	$	236,217

Summary of Estimated Revenue Expected to be Recognized in Future Related to Performance Obligations Unsatisfied or Partially Unsatisfied


	Within One Year		Two to Five Years		Greater than Five Years		Total
Total revenue	$	155,413	$	141,968	$	24,187	$	321,568

Derivative Financial Instruments - Additional Information (Details) - Foreign Exchange Forward Contracts - Not Designated - USD ($) $ in Millions	6 Months Ended	12 Months Ended
	Mar. 31, 2023	Sep. 30, 2022
Derivative [Line Items]
Derivative, notional amount	$ 116.9	$ 63.3
Derivative, weighted-average remaining maturity	11 months 18 days	10 months 15 days
Maximum
Derivative [Line Items]
Derivative, contract maturity	3 years

Earnings Per Share

6 Months Ended

Mar. 31, 2023

Earnings Per Share [Abstract]

Earnings Per Share

Note 4. Earnings Per Share

Basic earnings per share is computed by dividing net (loss) income by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing net (loss) income by the weighted-average number of shares of common stock outstanding during the period, increased to include the number of shares of common stock that would have been outstanding had potential dilutive shares of common stock been issued. The dilutive effect of restricted stock units is reflected in diluted net (loss) income per share by applying the treasury stock method.

The dilutive effect of the Notes (as defined in Note 14) is reflected in net (loss) income per share by application of the “if-converted” method. The “if-converted” method is only assumed in periods where such application would be dilutive. In applying the “if-converted” method for diluted net (loss) income per share, we would assume conversion of the Notes at a ratio of 26.7271 shares of our common stock per $1,000 principal amount of the Notes. Assumed converted shares of our common stock are weighted for the period the Notes were outstanding.

The following table presents the reconciliation of the numerator and denominator for calculating net (loss) income per share:


	Three Months Ended March 31,						Six Months Ended March 31,
in thousands, except per share data	2023			2022			2023			2022

Numerator:
Net (loss) income - basic and diluted	$	(26,089	)	$	(476	)	$	(28,247	)	$	18,568

Denominator:
Weighted average common shares outstanding - basic		40,219			39,189			40,088			39,013
Dilutive effect of restricted stock awards		-			-			-			573
Weighted average common shares outstanding - diluted		40,219			39,189			40,088			39,586

Net (loss) income per common share:
Basic	$	(0.65	)	$	(0.01	)	$	(0.70	)	$	0.48
Diluted	$	(0.65	)	$	(0.01	)	$	(0.70	)	$	0.47

We exclude weighted-average potential shares from the calculations of diluted net (loss) income per share during the applicable periods when their inclusion is anti-dilutive. The following table sets forth potential shares that were considered anti-dilutive during the three and six months ended March 31, 2023 and 2022.


	Three Months Ended March 31,				Six Months Ended March 31,
in thousands	2023		2022		2023		2022
Restricted stock unit awards		382		292		-		-
Contingently issuable stock awards		103		-		90		-
Conversion option of our Convertible Senior Notes		4,677		4,677		4,677		4,677

Restructuring and Other Costs, Net - Schedule of Accrual Activity Relating to Restructuring Reserves (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2023	Mar. 31, 2022
Restructuring Cost And Reserve [Line Items]
Balance at September 30, 2022			$ 5,154
Restructuring and other costs, net	$ 5,714	$ 474	9,903	$ 5,389
Non-cash adjustments			(327)
Cash payments			(9,598)
Effect of foreign currency translation			6
Balance at March 31, 2023	5,138		5,138
Personnel
Restructuring Cost And Reserve [Line Items]
Balance at September 30, 2022			1,277
Restructuring and other costs, net	3,371	13	6,420	250
Cash payments			(5,509)
Effect of foreign currency translation			(5)
Balance at March 31, 2023	2,183		2,183
Facilities
Restructuring Cost And Reserve [Line Items]
Balance at September 30, 2022			1,600
Restructuring and other costs, net	150	170	343	367
Non-cash adjustments			(327)
Cash payments			(299)
Effect of foreign currency translation			11
Balance at March 31, 2023	1,328		1,328
Restructuring Subtotal
Restructuring Cost And Reserve [Line Items]
Balance at September 30, 2022			2,877
Restructuring and other costs, net	3,521	183	6,763	617
Non-cash adjustments			(327)
Cash payments			(5,808)
Effect of foreign currency translation			6
Balance at March 31, 2023	3,511		3,511
Other
Restructuring Cost And Reserve [Line Items]
Balance at September 30, 2022			2,277
Restructuring and other costs, net	2,193	$ 291	3,140	$ 4,772
Cash payments			(3,790)
Balance at March 31, 2023	$ 1,627		$ 1,627

Long-Term Debt - Schedule of Interest Expense Related to Notes (Details) - 3.00% Convertible Senior Notes Due 2025 - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2023	Mar. 31, 2022
Debt Instrument [Line Items]
Contractual interest expense	$ 1,294	$ 1,294	$ 2,616	$ 2,616
Amortization of debt discount		919		1,843
Amortization of issuance costs	276	231	556	463
Total interest expense related to the Notes	$ 1,570	$ 2,444	$ 3,172	$ 4,922

Income Taxes

6 Months Ended

Mar. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Note 13. Income Taxes

The components of (loss) income before income taxes are as follows (dollars in thousands):


	Three Months Ended March 31,						Six Months Ended March 31,
	2023			2022			2023			2022

Domestic	$	(15,919	)	$	(3,009	)	$	(9,866	)	$	14,199
Foreign		(6,464	)		5,978			(13,425	)		8,113
(Loss) income before income taxes	$	(22,383	)	$	2,969		$	(23,291	)	$	22,312

The components of the provision for income taxes are as follows (dollars in thousands):


	Three Months Ended March 31,						Six Months Ended March 31,
	2023			2022			2023			2022

Domestic	$	618		$	233		$	369		$	1,670
Foreign		3,088			3,212			4,587			2,074
Provision for income taxes	$	3,706		$	3,445		$	4,956		$	3,744
Effective income tax rate		(16.6	)%		116.0	%		(21.3	)%		16.8	%

The effective tax rates for the periods presented are based upon estimated income for the fiscal year and the statutory tax rates enacted in the jurisdictions in which we operate. For all periods presented, the effective tax rate differs from the 21.0% statutory U.S. tax rate due to the impact of the nondeductible stock-based compensation and our mix of jurisdictional earnings and related differences in foreign statutory tax rates.

Our effective tax rate for the three months ended March 31, 2023 was negative 16.6% compared to 116.0% for the three months ended March 31, 2022. Consequently, our provision for income taxes for the three months ended March 31, 2023 was $3.7 million, a net change of $0.3 million from a provision for income taxes of $3.4 million for the three months ended March 31, 2022. This difference was attributable to our composition of jurisdiction earnings and U.S. inclusions of foreign taxable income.

Our effective tax rate for the six months ended March 31, 2023 was negative 21.3% compared to 16.8% for the six months ended March 31, 2022. Consequently, our provision for income taxes for the six months ended March 31, 2023 was $5.0 million, a net change of $1.3 million from a provision for income taxes of $3.7 million for the six months ended March 31, 2022. This difference was attributable to our composition of jurisdiction earnings, U.S. inclusions of foreign taxable income, and a tax benefit recorded as a result of an increase to the enacted Netherlands income tax rate in the first quarter of fiscal year 2022.

Starting with fiscal year 2023, the Tax Cuts and Jobs Act of 2017 eliminated the option to deduct research and development expenditures in the current year. It requires us to amortize U.S. expenses over five years and foreign expenses over 15 years. The change in deductibility of the foreign research and development expenditures increases our tested income included in the Global Intangible Low Tax Income (“GILTI”). This led to an increase in our overall effective tax rate for the three and six months ended March 31, 2023.

Deferred tax assets and liabilities are measured using the statutory tax rates and laws expected to apply to taxable income in the years in which the temporary differences are expected to reverse. Valuation allowances are provided against net deferred tax assets if, based upon all available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and the timing of the temporary differences becoming deductible. Management considers, among other available information, scheduled reversals of deferred tax liabilities, projected future taxable income, limitations of availability of net operating loss carryforwards, and other matters in making this assessment.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 21
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 11.C)
-URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 17
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SAB TOPIC 6.I.5.Q1)
-URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 14
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 270
-Section 50
-Paragraph 1
-URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-URI https://asc.fasb.org/topic&trid=2144680

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 30
-Section 50
-Paragraph 2
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(h)(2))
-URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

+ Details

Leases - Summary of Undiscounted Future Minimum Lease Payments Under Non-cancelable Leases (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Sep. 30, 2022
Operating Leases
2023	$ 3,372
2024	6,102
2025	4,235
2026	1,980
2027	1,524
Thereafter	825
Total future minimum lease payments	18,038
Less effects of discounting	(1,086)
Total lease liabilities	16,952
Short-term lease liabilities	6,003	$ 5,071
Long-term lease liabilities	10,949	$ 11,375
Financing Leases
2023	207
2024	417
2025	362
2026	53
2027	0
Thereafter	0
Total future minimum lease payments	1,039
Less effects of discounting	(45)
Total lease liabilities	994
Short-term lease liabilities	387
Long-term lease liabilities	607
Total
2023	3,579
2024	6,519
2025	4,597
2026	2,033
2027	1,524
Thereafter	825
Total future minimum lease payments	19,077
Less effects of discounting	(1,131)
Total lease liabilities	17,946
Short-term lease liabilities	6,390
Long-term lease liabilities	$ 11,556

Long-Term Debt - Additional Information (Details)					2 Months Ended	3 Months Ended			6 Months Ended		12 Months Ended
Long-Term Debt - Additional Information (Details)	Nov. 22, 2022 USD ($)	Dec. 17, 2020	Jun. 12, 2020 USD ($)	Jun. 02, 2020 USD ($) Days $ / shares shares	Nov. 22, 2022 USD ($)	Mar. 31, 2023 USD ($)	Dec. 31, 2022	Mar. 31, 2022 USD ($)	Mar. 31, 2023 USD ($)	Mar. 31, 2022 USD ($)	Dec. 31, 2023 USD ($)	Sep. 30, 2022 USD ($)
Debt Instrument [Line Items]
Long-Term Debt						$ 277,187,000			$ 277,187,000			$ 270,374,000
Senior Credit Facilities
Debt Instrument [Line Items]
Long-Term Debt						104,733,000			104,733,000			109,470,000
Debt unamortized issuance costs, net						127,000			127,000			$ 158,000
Minimum liquidity						75,000,000			$ 75,000,000
Debt instrument, covenant description									The Credit Agreement contains certain affirmative and negative covenants customary for financings of this type that, among other things, limit our and our subsidiaries’ ability to incur additional indebtedness or liens, to dispose of assets, to make certain fundamental changes, to designate subsidiaries as unrestricted, to make certain investments, to prepay certain indebtedness and to pay dividends, or to make other distributions or redemptions/repurchases, in respect of our and our subsidiaries’ equity interests. In addition, the Credit Agreement contains financial covenants, each tested quarterly, (1) a net secured leverage ratio of not greater than 3.25 to 1.00; (2) a net total leverage ratio of not greater than 4.25 to 1.00; and (3) minimum liquidity of at least $75 million. The Credit Agreement also contains events of default customary for financings of this type, including certain customary change of control events.
Amended Senior Credit Facilities
Debt Instrument [Line Items]
Debt Instrument, interest rate description									revised certain interest rates in the Credit Agreement. Following delivery of a compliance certificate for the first full fiscal quarter after the Amendment No. 1 Effective Date, the applicable margins for the revolving credit and term facilities is subject to a pricing grid based upon the net total leverage ratio as follows (i) if the net total leverage ratio is greater than 3.00 to 1.00, the applicable margin is LIBOR plus 3.00% or ABR plus 2.00%; (ii) if the net total leverage ratio is less than or equal to 3.00 to 1.00 but greater than 2.50 to 1.00, the applicable margin is LIBOR plus 2.75% or ABR plus 1.75%; (iii) if the net total leverage ratio is less than or equal to 2.50 to 1.00 but greater than 2.00 to 1.00, the applicable margin is LIBOR plus 2.50% or ABR plus 1.50%; (iv) if the net total leverage ratio is less than or equal to 2.00 to 1.00 but greater than 1.50 to 1.00, the applicable margin is LIBOR plus 2.25% or ABR plus 1.25%; and (v) if the net total leverage ratio is less than or equal to 1.50 to 1.00, the applicable margin is LIBOR plus 2.20% or ABR plus 1.00%. As a result of Amendment No. 1, the applicable LIBOR floor was reduced from 0.50% to 0.00%.
Description of unused line fee									In addition, the quarterly commitment fee required to be paid based on the unused portion of the revolving facility is subject to a pricing grid based upon the net total leverage ratio as follows (i) if the net total leverage ratio is greater than 3.00 to 1.00, the unused line fee is 0.500%; (ii) if the net total leverage ratio is less than or equal to 3.00 to 1.00 but greater than 2.50 to 1.00, the unused line fee is 0.450%; (iii) if the net total leverage ratio is less than or equal to 2.50 to 1.00 but greater than 2.00 to 1.00, the unused line fee is 0.400%; (iv) if the net total leverage ratio is less than or equal to 2.00 to 1.00 but greater than 1.50 to 1.00, the unused line fee is 0.350%; and (v) if the net total leverage ratio is less than or equal to 1.50 to 1.00, the unused line fee is 0.300%.
Amended Senior Credit Facilities \| LIBOR
Debt Instrument [Line Items]
Debt Instrument, basis spread on variable rate		0.00%	0.50%					2.25%		2.25%
Credit Agreement Amendment Two
Debt Instrument [Line Items]
Payment of refinancing fees to lender	$ 400,000				$ 400,000
Payment of refinancing fees to third party	$ 100,000
Debt Instrument, interest rate description									Amendment No. 2 revised certain interest rates in the Credit Agreement. The applicable margins for the revolving credit and term facilities is subject to a pricing grid based upon the net total leverage ratio as follows (i) if the net total leverage ratio is greater than 3.00 to 1.00, the applicable margin is SOFR plus 10 basis point credit spread adjustment plus 3.00% or ABR plus 2.00%; (ii) if the net total leverage ratio is less than or equal to 3.00 to 1.00 but greater than 2.50 to 1.00, the applicable margin is SOFR plus 10 basis point credit spread adjustment plus 2.75% or ABR plus 1.75%; (iii) if the net total leverage ratio is less than or equal to 2.50 to 1.00 but greater than 2.00 to 1.00, the applicable margin is SOFR plus 10 basis point credit spread adjustment plus 2.50% or ABR plus 1.50%; (iv) if the net total leverage ratio is less than or equal to 2.00 to 1.00 but greater than 1.50 to 1.00, the applicable margin is SOFR plus 10 basis point credit spread adjustment plus 2.25% or ABR plus 1.25%; and (v) if the net total leverage ratio is less than or equal to 1.50 to 1.00, the applicable margin is SOFR plus 10 basis point credit spread adjustment plus 2.20% or ABR plus 1.00%. During the covenant adjustment period, and until the delivery of a compliance certificate for the first full fiscal quarter after the covenant adjustment period, the applicable margin will be SOFR plus 10 basis point credit spread adjustment plus 3.00% or ABR plus 2.00%. For the three and six months ended March 31, 2022, the interest rate was LIBOR plus 2.25%. Prior to the Amendment No. 2 Effective Date, the interest rate was LIBOR plus 2.25%. From the Amendment No. 2 Effective Date until the quarter ended December 31, 2022, the interest rate was SOFR plus a credit spread adjustment of 10 basis points plus 2.25%. For the three months ended March 31, 2023, the interest rate was SOFR plus a credit adjustment of 10 basis points plus 3.00%. Total interest expense relating to the Senior Credit Facilities for the three months ended March 31, 2023 and 2022 was $2.3 million and $0.9 million, respectively, and $4.2 million and $1.8 million for the six months ended March 31, 2023 and 2022, respectively. Amounts reflect the coupon and accretion of the discount.
Interest expense						2,300,000		$ 900,000	$ 4,200,000	$ 1,800,000
Minimum liquidity						$ 125,000,000			$ 125,000,000
Credit Agreement Amendment Two \| Forecast
Debt Instrument [Line Items]
Maximum Capital Expenditures Amount											$ 7,500,000
Credit Agreement Amendment Two \| LIBOR
Debt Instrument [Line Items]
Debt Instrument, basis spread on variable rate					2.25%
Credit Agreement Amendment Two \| SOFR
Debt Instrument [Line Items]
Debt Instrument, basis spread on variable rate	0.10%					0.10%	0.10%
Credit Agreement Amendment Two \| Base Rate
Debt Instrument [Line Items]
Debt Instrument, basis spread on variable rate	2.00%
Credit Agreement Amendment Two \| SOFR plus 10 basis Point Credit Spread
Debt Instrument [Line Items]
Debt Instrument, basis spread on variable rate	3.00%
Maximum \| Senior Credit Facilities
Debt Instrument [Line Items]
Net leverage ratio						4.25			4.25
Net secured leverage ratio									3.25%
Maximum \| Credit Agreement Amendment Two \| Forecast
Debt Instrument [Line Items]
Net secured leverage ratio											4.25%
Maximum \| Credit Agreement Amendment Two \| LIBOR
Debt Instrument [Line Items]
Debt Instrument, basis spread on variable rate						3.00%	2.25%
3.00% Convertible Senior Notes Due 2025
Debt Instrument [Line Items]
Aggregate principal amount				$ 175,000,000.0
Debt instrument, interest rate				3.00%		3.00%			3.00%			3.00%
Debt Instrument, option to purchase additional principal amount				$ 25,000,000.0
Proceeds from issuance of notes				$ 169,800,000
Debt instrument, maturity date				Jun. 01, 2025
Debt instrument, conversion initial rate \| shares				26.7271
Debt instrument, convertible principal amount				$ 1,000
Debt instrument, conversion price \| $ / shares				$ 37.42
Debt instrument convertible, if-converted value of the Notes less than its principal amount									$ 43,600,000
Carrying amount of equity component, net of taxes and transaction costs						$ 0			0			$ 14,400,000
Debt instrument, convertible trading days \| Days				20
Debt instrument, convertible consecutive trading days \| Days				30
Debt instrument, convertible conversion price percentage				130.00%
Debt instrument, convertible maximum conversion price percentage				98.00%
Debt instrument, redemption price percentage of principal amount				100.00%
Debt instrument, sinking fund				$ 0
Long-Term Debt						172,454,000			172,454,000			160,904,000
Debt unamortized issuance costs, net						2,546,000			2,546,000			$ 2,832,000
Interest expense						1,570,000		$ 2,444,000	3,172,000	$ 4,922,000
3.00% Convertible Senior Notes Due 2025 \| Minimum
Debt Instrument [Line Items]
Debt instrument, convertible trading days \| Days				20
Debt instrument, convertible conversion price percentage				130.00%
Four Year Senior Secured Term Loan Facility \| Senior Credit Facilities
Debt Instrument [Line Items]
Debt instrument term			4 years
Credit facility maximum borrowing capacity			$ 125,000,000.0
Net proceeds from issuance of credit facility			123,000,000.0
Four Year Senior Secured Term Loan Facility \| Amended Senior Credit Facilities
Debt Instrument [Line Items]
Debt instrument periodic payments equivalent percentage of annual amount on original principal amount during first two years		1.25%
Debt instrument periodic payments equivalent percentage of annual amount on original principal amount after two years		2.50%
Senior Secured First-lien Revolving Credit Facility \| Senior Credit Facilities
Debt Instrument [Line Items]
Credit facility maximum borrowing capacity			$ 50,000,000.0
Outstanding amount under credit facility						$ 0			$ 0
Net Leverage Ratio Greater Than 3.00 \| Amended Senior Credit Facilities
Debt Instrument [Line Items]
Net leverage ratio		3.00
Unused line fee percentage		50.00%
Net Leverage Ratio Greater Than 3.00 \| Amended Senior Credit Facilities \| LIBOR
Debt Instrument [Line Items]
Debt Instrument, basis spread on variable rate		3.00%
Net Leverage Ratio Greater Than 3.00 \| Amended Senior Credit Facilities \| Base Rate
Debt Instrument [Line Items]
Debt Instrument, basis spread on variable rate		2.00%
Net Leverage Ratio Greater Than 3.00 \| Credit Agreement Amendment Two
Debt Instrument [Line Items]
Net leverage ratio	3.00				3.00
Net Leverage Ratio Greater Than 3.00 \| Credit Agreement Amendment Two \| SOFR
Debt Instrument [Line Items]
Debt Instrument, basis spread on variable rate	0.10%
Net Leverage Ratio Greater Than 3.00 \| Credit Agreement Amendment Two \| Base Rate
Debt Instrument [Line Items]
Debt Instrument, basis spread on variable rate	2.00%
Net Leverage Ratio Greater Than 3.00 \| Credit Agreement Amendment Two \| SOFR plus 10 basis Point Credit Spread
Debt Instrument [Line Items]
Debt Instrument, basis spread on variable rate	3.00%
Net Leverage Ratio Less Than or Equal to 3.00 but Greater Than 2.50 \| Amended Senior Credit Facilities
Debt Instrument [Line Items]
Unused line fee percentage		45.00%
Net Leverage Ratio Less Than or Equal to 3.00 but Greater Than 2.50 \| Amended Senior Credit Facilities \| LIBOR
Debt Instrument [Line Items]
Debt Instrument, basis spread on variable rate		2.75%
Net Leverage Ratio Less Than or Equal to 3.00 but Greater Than 2.50 \| Amended Senior Credit Facilities \| Base Rate
Debt Instrument [Line Items]
Debt Instrument, basis spread on variable rate		1.75%
Net Leverage Ratio Less Than or Equal to 3.00 but Greater Than 2.50 \| Credit Agreement Amendment Two \| SOFR
Debt Instrument [Line Items]
Debt Instrument, basis spread on variable rate	0.10%
Net Leverage Ratio Less Than or Equal to 3.00 but Greater Than 2.50 \| Credit Agreement Amendment Two \| Base Rate
Debt Instrument [Line Items]
Debt Instrument, basis spread on variable rate	1.75%
Net Leverage Ratio Less Than or Equal to 3.00 but Greater Than 2.50 \| Credit Agreement Amendment Two \| SOFR plus 10 basis Point Credit Spread
Debt Instrument [Line Items]
Debt Instrument, basis spread on variable rate	2.75%
Net Leverage Ratio Less Than or Equal to 3.00 but Greater Than 2.50 \| Maximum \| Amended Senior Credit Facilities
Debt Instrument [Line Items]
Net leverage ratio		3.00
Net Leverage Ratio Less Than or Equal to 3.00 but Greater Than 2.50 \| Maximum \| Credit Agreement Amendment Two
Debt Instrument [Line Items]
Net leverage ratio	3.00				3.00
Net Leverage Ratio Less Than or Equal to 3.00 but Greater Than 2.50 \| Minimum \| Amended Senior Credit Facilities
Debt Instrument [Line Items]
Net leverage ratio		2.50
Net Leverage Ratio Less Than or Equal to 3.00 but Greater Than 2.50 \| Minimum \| Credit Agreement Amendment Two
Debt Instrument [Line Items]
Net leverage ratio	2.50				2.50
Net Leverage Ratio Less Than or Equal to 2.50 but Greater Than 2.00 \| Amended Senior Credit Facilities
Debt Instrument [Line Items]
Unused line fee percentage		40.00%
Net Leverage Ratio Less Than or Equal to 2.50 but Greater Than 2.00 \| Amended Senior Credit Facilities \| LIBOR
Debt Instrument [Line Items]
Debt Instrument, basis spread on variable rate		2.50%
Net Leverage Ratio Less Than or Equal to 2.50 but Greater Than 2.00 \| Amended Senior Credit Facilities \| Base Rate
Debt Instrument [Line Items]
Debt Instrument, basis spread on variable rate		1.50%
Net Leverage Ratio Less Than or Equal to 2.50 but Greater Than 2.00 \| Credit Agreement Amendment Two \| SOFR
Debt Instrument [Line Items]
Debt Instrument, basis spread on variable rate	0.10%
Net Leverage Ratio Less Than or Equal to 2.50 but Greater Than 2.00 \| Credit Agreement Amendment Two \| Base Rate
Debt Instrument [Line Items]
Debt Instrument, basis spread on variable rate	1.50%
Net Leverage Ratio Less Than or Equal to 2.50 but Greater Than 2.00 \| Credit Agreement Amendment Two \| SOFR plus 10 basis Point Credit Spread
Debt Instrument [Line Items]
Debt Instrument, basis spread on variable rate	2.50%
Net Leverage Ratio Less Than or Equal to 2.50 but Greater Than 2.00 \| Maximum \| Amended Senior Credit Facilities
Debt Instrument [Line Items]
Net leverage ratio		2.50
Net Leverage Ratio Less Than or Equal to 2.50 but Greater Than 2.00 \| Maximum \| Credit Agreement Amendment Two
Debt Instrument [Line Items]
Net leverage ratio	2.50				2.50
Net Leverage Ratio Less Than or Equal to 2.50 but Greater Than 2.00 \| Minimum \| Amended Senior Credit Facilities
Debt Instrument [Line Items]
Net leverage ratio		2.00
Net Leverage Ratio Less Than or Equal to 2.50 but Greater Than 2.00 \| Minimum \| Credit Agreement Amendment Two
Debt Instrument [Line Items]
Net leverage ratio	2.00				2.00
Net Leverage Ratio Less Than or Equal to 2.00 but Greater Than 1.50 \| Amended Senior Credit Facilities
Debt Instrument [Line Items]
Unused line fee percentage		35.00%
Net Leverage Ratio Less Than or Equal to 2.00 but Greater Than 1.50 \| Amended Senior Credit Facilities \| LIBOR
Debt Instrument [Line Items]
Debt Instrument, basis spread on variable rate		2.25%
Net Leverage Ratio Less Than or Equal to 2.00 but Greater Than 1.50 \| Amended Senior Credit Facilities \| Base Rate
Debt Instrument [Line Items]
Debt Instrument, basis spread on variable rate		1.25%
Net Leverage Ratio Less Than or Equal to 2.00 but Greater Than 1.50 \| Credit Agreement Amendment Two \| SOFR
Debt Instrument [Line Items]
Debt Instrument, basis spread on variable rate	0.10%
Net Leverage Ratio Less Than or Equal to 2.00 but Greater Than 1.50 \| Credit Agreement Amendment Two \| Base Rate
Debt Instrument [Line Items]
Debt Instrument, basis spread on variable rate	1.25%
Net Leverage Ratio Less Than or Equal to 2.00 but Greater Than 1.50 \| Credit Agreement Amendment Two \| SOFR plus 10 basis Point Credit Spread
Debt Instrument [Line Items]
Debt Instrument, basis spread on variable rate	2.25%
Net Leverage Ratio Less Than or Equal to 2.00 but Greater Than 1.50 \| Maximum \| Amended Senior Credit Facilities
Debt Instrument [Line Items]
Net leverage ratio		2.00
Net Leverage Ratio Less Than or Equal to 2.00 but Greater Than 1.50 \| Maximum \| Credit Agreement Amendment Two
Debt Instrument [Line Items]
Net leverage ratio	2.00				2.00
Net Leverage Ratio Less Than or Equal to 2.00 but Greater Than 1.50 \| Minimum \| Amended Senior Credit Facilities
Debt Instrument [Line Items]
Net leverage ratio		1.50
Net Leverage Ratio Less Than or Equal to 2.00 but Greater Than 1.50 \| Minimum \| Credit Agreement Amendment Two
Debt Instrument [Line Items]
Net leverage ratio	1.50				1.50
Net Leverage Ratio Less Than or Equal to 1.50 \| Amended Senior Credit Facilities
Debt Instrument [Line Items]
Net leverage ratio		1.50
Unused line fee percentage		30.00%
Net Leverage Ratio Less Than or Equal to 1.50 \| Amended Senior Credit Facilities \| LIBOR
Debt Instrument [Line Items]
Debt Instrument, basis spread on variable rate		2.20%
Net Leverage Ratio Less Than or Equal to 1.50 \| Amended Senior Credit Facilities \| Base Rate
Debt Instrument [Line Items]
Debt Instrument, basis spread on variable rate		1.00%
Net Leverage Ratio Less Than or Equal to 1.50 \| Credit Agreement Amendment Two
Debt Instrument [Line Items]
Net leverage ratio	1.50				1.50
Net Leverage Ratio Less Than or Equal to 1.50 \| Credit Agreement Amendment Two \| SOFR
Debt Instrument [Line Items]
Debt Instrument, basis spread on variable rate	0.10%
Net Leverage Ratio Less Than or Equal to 1.50 \| Credit Agreement Amendment Two \| Base Rate
Debt Instrument [Line Items]
Debt Instrument, basis spread on variable rate	1.00%
Net Leverage Ratio Less Than or Equal to 1.50 \| Credit Agreement Amendment Two \| SOFR plus 10 basis Point Credit Spread
Debt Instrument [Line Items]
Debt Instrument, basis spread on variable rate	2.20%

Derivative Financial Instruments

6 Months Ended

Mar. 31, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Note 6. Derivative Financial Instruments

We operate internationally and, in the normal course of business, are exposed to fluctuations in foreign currency exchange rates related to third-party vendor and intercompany payments for goods and services within our non-U.S. subsidiaries. We use foreign exchange forward contracts that are not designated as hedges to manage currency risk. The contracts can have maturities up to three years. As of March 31, 2023 and September 30, 2022, the total notional amount of forward contracts was $116.9 million and $63.3 million, respectively. As of March 31, 2023 and September 30, 2022, the weighted-average remaining maturity of these instruments was approximately 11.6 and 10.5 months, respectively.


		Fair Value
Derivatives not designated as hedges	Classification	March 31, 2023		September 30, 2022
Foreign currency forward contracts	Prepaid expenses and other current assets	$	484	$	1,627
Foreign currency forward contracts	Other assets		93		660
Foreign currency forward contracts	Accrued expenses and other current liabilities		1,422		1,812
Foreign currency forward contracts	Other liabilities		561		711

The following tables display a summary of the (loss) income related to foreign currency forward contracts for the three and six months ended March 31, 2023 and 2022 (dollars in thousand):


		(Loss) income recognized in earnings
		Three Months Ended March 31,					Six Months Ended March 31,
Derivatives not designated as hedges	Classification	2023			2022		2023			2022
Foreign currency forward contracts	Other income (expense), net	$	(313	)	$	1,347	$	(1,766	)	$	2,464

Income Taxes - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2023	Mar. 31, 2022
Income Tax Disclosure [Line Items]
U.S. federal statutory rates			21.00%	21.00%
Effective income tax rate	(16.60%)	116.00%	(21.30%)	16.80%
Provision for (benefit from) income taxes	$ 3,706	$ 3,445	$ 4,956	$ 3,744
Net change in provision for income taxes	$ 300			$ 1,300
U.S.
Income Tax Disclosure [Line Items]
Research and development expenditure, maximum amortize period			5 years
Foreign
Income Tax Disclosure [Line Items]
Research and development expenditure, maximum amortize period			15 years

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details

Income Taxes - Components of (Loss) Income Before Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2023	Mar. 31, 2022
Income Tax Disclosure [Abstract]
Domestic	$ (15,919)	$ (3,009)	$ (9,866)	$ 14,199
Foreign	(6,464)	5,978	(13,425)	8,113
(Loss) income before income taxes	$ (22,383)	$ 2,969	$ (23,291)	$ 22,312

- Definition

Amount of income (loss) from continuing operations, including income (loss) from equity method investments, before deduction of income tax expense (benefit), and income (loss) attributable to noncontrolling interest.

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+ Details

Income Taxes (Tables)

6 Months Ended

Mar. 31, 2023

Income Tax Disclosure [Abstract]

Components of (Loss) Income Before Income Taxes

The components of (loss) income before income taxes are as follows (dollars in thousands):


	Three Months Ended March 31,						Six Months Ended March 31,
	2023			2022			2023			2022

Domestic	$	(15,919	)	$	(3,009	)	$	(9,866	)	$	14,199
Foreign		(6,464	)		5,978			(13,425	)		8,113
(Loss) income before income taxes	$	(22,383	)	$	2,969		$	(23,291	)	$	22,312

Components of the Provision for Income Taxes

The components of the provision for income taxes are as follows (dollars in thousands):


	Three Months Ended March 31,						Six Months Ended March 31,
	2023			2022			2023			2022

Domestic	$	618		$	233		$	369		$	1,670
Foreign		3,088			3,212			4,587			2,074
Provision for income taxes	$	3,706		$	3,445		$	4,956		$	3,744
Effective income tax rate		(16.6	)%		116.0	%		(21.3	)%		16.8	%

Business Overview

6 Months Ended

Mar. 31, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Business Overview

Note 1. Business Overview

Business

Cerence Inc. (referred to in this Quarterly Report on Form 10-Q as “we,” “our,” “us,” “ourselves,” the “Company” or “Cerence”) is a global, premier provider of AI-powered assistants and innovations for connected and autonomous vehicles. Our customers include all major automobile original equipment manufacturers (“OEMs”), or their tier 1 suppliers worldwide. We deliver our solutions on a white-label basis, enabling our customers to deliver customized virtual assistants with unique, branded personalities and ultimately strengthening the bond between automobile brands and end users. We generate revenue primarily by selling software licenses and cloud-connected services. In addition, we generate professional services revenue from our work with OEMs and suppliers during the design, development and deployment phases of the vehicle model lifecycle and through maintenance and enhancement projects.

COVID-19 Update

In March 2020, the World Health Organization characterized COVID-19 as a pandemic. In an effort to contain COVID-19 or slow its spread, governments around the world have enacted various measures, some of which have been subsequently rescinded, modified or reinstated, including orders to close all businesses not deemed “essential,” isolate residents to their homes or places of residence, and practice social distancing.

We have taken numerous steps in our approach to addressing the COVID-19 pandemic, as described in our Annual Report on Form 10-K for the fiscal year ended September 30, 2022. We continue to closely monitor ongoing developments in connection with the COVID-19 pandemic and its impact on our business.

The full extent to which the ongoing COVID-19 pandemic adversely affects our financial performance will depend on future developments, many of which are outside of our control, are highly uncertain and cannot be predicted, including, but not limited to: the duration and scope of the pandemic; its severity; the emergence of new variants of the virus, such as Omicron; the development and availability of effective treatments and vaccines; the speed at which vaccines are administered; and how quickly and to what extent normal economic and operating conditions can resume.

The COVID-19 pandemic has resulted in, and may continue to result in, additional governmental restrictions and regulations, which has adversely affected, and may continue to adversely affect our business and financial results. We have seen, and anticipate that we will continue to see, supply chain challenges in the automotive industry related to semiconductor devices that are used in automobiles. The current macroeconomic conditions have also increased competition for qualified employees in our industry, particularly for members of our professional service teams, and we, along with automotive OEMs, face significant competition in hiring and retaining them. In addition, a recession, depression or other sustained adverse market impact resulting from COVID-19 or other market factors could materially and adversely affect our business, our access to needed capital and liquidity, and the value of our common stock. Even after the COVID-19 pandemic has lessened or subsided, we may continue to experience adverse impacts on our business and financial performance as a result of its global economic impact.

Stockholders' Equity (Tables)

6 Months Ended

Mar. 31, 2023

Equity [Abstract]

Schedule of Non-vested Restricted Stock Units

Information with respect to our non-vested restricted stock units for the six months ended March 31, 2023 was as follows:


	Non-Vested Restricted Stock Units
	Time-Based Shares			Performance- Based Shares			Total Shares			Weighted- Average Grant-Date Fair Value		Weighted- Average Remaining Contractual Term (years)		Aggregate Intrinsic Value (in thousands)
Non-vested at September 30, 2022		996,016			434,995			1,431,011		$	62.49
Granted		2,386,993			1,237,319			3,624,312		$	19.39
Vested		(790,513	)		(79,986	)		(870,499	)	$	58.24
Forfeited		(82,788	)		(229,661	)		(312,449	)	$	54.13
Non-vested at March 31, 2023		2,509,708			1,362,667			3,872,375		$	33.07
Expected to vest								3,872,375		$	33.07		1.68	$	108,736

Schedule of Stock-based Compensation

Stock-based compensation was included in the following captions in our Condensed Consolidated Statements of Operations for the three and six months ended March 31, 2023 and 2022 (in thousands):


	Three Months Ended March 31,				Six Months Ended March 31,
	2023		2022		2023		2022
Cost of connected services	$	175	$	197	$	371	$	343
Cost of professional services		1,012		1,373		2,165		2,319
Research and development		4,088		4,146		8,542		6,141
Sales and marketing		1,522		1,422		3,182		844
General and administrative		5,558		3,788		10,567		3,120
Restructuring and other costs, net		—		—		—		4,000
	$	12,355	$	10,926	$	24,827	$	16,767

Restructuring and Other Costs, Net - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2023	Mar. 31, 2022
Restructuring Cost And Reserve [Line Items]
Restructuring and other costs, net	$ 5,714	$ 474	$ 9,903	$ 5,389
Severance Charge
Restructuring Cost And Reserve [Line Items]
Restructuring and other costs, net	3,371	13	6,420	250
Facilities Closure
Restructuring Cost And Reserve [Line Items]
Restructuring and other costs, net	150	170	343	367
Other One-Time Charges
Restructuring Cost And Reserve [Line Items]
Restructuring and other costs, net	$ 2,200		$ 3,100
One-Time Charges
Restructuring Cost And Reserve [Line Items]
Restructuring and other costs, net		$ 300
Stock Based Compensation due to the Resignation of Former CEO
Restructuring Cost And Reserve [Line Items]
Restructuring and other costs, net				4,000
Stock Based Compensation, Net of Forfeitures, due to the Resignation of Former CEO
Restructuring Cost And Reserve [Line Items]
Restructuring and other costs, net				$ 5,000

Long-Term Debt

6 Months Ended

Mar. 31, 2023

Debt Disclosure [Abstract]

Long-Term Debt

Note 14. Long-Term Debt

Long-term debt consisted of the following (in thousands):


	March 31, 2023			September 30, 2022
3.00% Convertible Senior Notes due 2025, net of unamortized discount of $0 and $11,264, respectively, and deferred issuance costs of $2,546 and $2,832, respectively. Effective interest rate 3.70% and 6.29%, respectively.	$	172,454		$	160,904
Senior Credit Facilities, net of unamortized discount of $1,390 and $1,310, respectively, and deferred issuance costs of $127 and $158, respectively. Effective interest rate 8.41% and 5.37%, respectively.		104,733			109,470
Total debt	$	277,187		$	270,374
Less: current portion		(12,500	)		(10,938	)
Total long-term debt	$	264,687		$	259,436

The following table summarizes the maturities of our borrowing obligations as of March 31, 2023 (in thousands):


Fiscal Year	Convertible Senior Notes			Senior Facilities			Total
2023	$	—		$	6,250		$	6,250
2024		—			12,500			12,500
2025		175,000			87,500			262,500
Total before unamortized discount and issuance costs and current portion	$	175,000		$	106,250		$	281,250
Less: unamortized discount and issuance costs		(2,546	)		(1,517	)		(4,063	)
Less: current portion of long-term debt		—			(12,500	)		(12,500	)
Total long-term debt	$	172,454		$	92,233		$	264,687

3.00% Senior Convertible Notes due 2025

On June 2, 2020, we issued $175.0 million in aggregate principal amount of 3.00% Convertible Senior Notes due 2025 (the “Notes”), including the initial purchasers’ exercise in full of their option to purchase an additional $25.0 million principal amount of the Notes, between us and U.S. Bank National Association, as trustee (the “Trustee”), in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The net proceeds from the issuance of the Notes were $169.8 million after deducting transaction costs.

The Notes are senior, unsecured obligations and will accrue interest payable semiannually in arrears on June 1 and December 1 of each year at a rate of 3.00% per year. The Notes will mature on June 1, 2025, unless earlier converted, redeemed, or repurchased. The Notes are convertible into cash, shares of our common stock or a combination of cash and shares of our common stock, at our election. As of March 31, 2023, the if-converted value of the Notes was $43.6 million less than its principal amount.

A holder of Notes may convert all or any portion of its Notes at its option at any time prior to the close of business on the business day immediately preceding March 1, 2025 only under the following circumstances: (1) during any fiscal quarter commencing after the fiscal quarter ending on September 30, 2020 (and only during such fiscal quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any ten consecutive trading day period (the “measurement period”) in which the “trading price” per $1,000 principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day; (3) if we call such Notes for redemption, at any time prior to the close of business on the business day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events. On or after March 1, 2025 until the close of business on the second scheduled trading day immediately preceding the maturity date, a holder may convert all or any portion of its Notes at any time, regardless of the foregoing.

The conversion rate will initially be 26.7271 shares of our common stock per $1,000 principal amount of Notes (equivalent to an initial conversion price of approximately $37.42 per share of our common stock). The conversion rate is subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. In addition, following certain corporate events that occur prior to the maturity date or if we deliver a notice of redemption, we will, in certain circumstances, increase the conversion rate for a holder who elects to convert its Notes in connection with such a corporate event or convert its Notes called for redemption in connection with such notice of redemption, as the case may be.

We may not redeem the Notes prior to June 5, 2023. We may redeem for cash all or any portion of the Notes, at our option, on a redemption date occurring on or after June 5, 2023 and on or before the 31st scheduled trading day immediately before the maturity date, if the last reported sale price of our common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which we provide notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the Notes.

On October 1, 2022, we adopted ASU 2020-06 based on a modified retrospective transition method. No prior-period information has been retrospectively adjusted. After the adoption of ASU 2020-06, the Notes are no longer bifurcated into a separate liability and equity component. The Notes are accounted for as a single liability. As of March 31, 2023, the carrying amount of the Notes was $172.5 million, net of unamortized issuance costs of $2.5 million. The issuance costs related to the Notes are being amortized to interest expense over the contractual term. Refer to Note 2 - Significant Accounting Policies for the impact of our adoption.

As of March 31, 2023 and September 30, 2022, the carrying amount of the equity component, net of taxes and transaction costs, was $0 and $14.4 million, respectively.

The interest expense recognized related to the Notes for the three and six months ended March 31, 2023 and 2022 was as follows (dollars in thousands):


	Three Months Ended March 31,				Six Months Ended March 31,
	2023		2022		2023		2022
Contractual interest expense	$	1,294	$	1,294	$	2,616	$	2,616
Amortization of debt discount		-		919		-		1,843
Amortization of issuance costs		276		231		556		463
Total interest expense related to the Notes	$	1,570	$	2,444	$	3,172	$	4,922

The conditional conversion feature of the Notes was not triggered during the three and six months ended March 31, 2023. As of March 31, 2023, the Notes were not convertible. As of this Quarterly Report, no Notes have been converted by the holders. Whether any of the Notes will be convertible in future quarters will depend on the satisfaction of one or more of the conversion conditions in the future. If one or more holders elect to convert their Notes at a time when any such Notes are convertible, unless we elect to satisfy our conversion obligation by delivering solely shares of our common stock (other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of our conversion obligation through the payment of cash, which could adversely affect our liquidity.

Senior Credit Facilities

On June 12, 2020 (the “Financing Closing Date”), we entered into a Credit Agreement, by and among the Borrower, the lenders and issuing banks party thereto and Wells Fargo Bank, N.A., as administrative agent (the “Credit Agreement”), consisting of a four-year senior secured term loan facility in the aggregate principal amount of $125.0 million (the “Term Loan Facility”). The net proceeds from the issuance of the Term Loan Facility were $123.0 million. We also entered into a senior secured first-lien revolving credit facility in an aggregate principal amount of $50.0 million (the “Revolving Facility” and, together with the Term Loan Facility, the “Senior Credit Facilities”), which may be drawn on in the event that our working capital and other cash needs are not supported by our operating cash flow. As of March 31, 2023, there were no amounts outstanding under the Revolving Facility.

On December 17, 2020 (the “Amendment No. 1 Effective Date”), we entered into Amendment No. 1 to the Credit Agreement (“Amendment No. 1"). Amendment No. 1 extended the scheduled maturity date of the revolving credit and term facilities from June 12, 2024 to April 1, 2025.

Amendment No. 1 revised certain interest rates in the Credit Agreement. Following delivery of a compliance certificate for the first full fiscal quarter after the Amendment No. 1 Effective Date, the applicable margins for the revolving credit and term facilities is subject to a pricing grid based upon the net total leverage ratio as follows (i) if the net total leverage ratio is greater than 3.00 to 1.00, the applicable margin is LIBOR plus 3.00% or ABR plus 2.00%; (ii) if the net total leverage ratio is less than or equal to 3.00 to 1.00 but greater than 2.50 to 1.00, the applicable margin is LIBOR plus 2.75% or ABR plus 1.75%; (iii) if the net total leverage ratio is less than or equal to 2.50 to 1.00 but greater than 2.00 to 1.00, the applicable margin is LIBOR plus 2.50% or ABR plus 1.50%; (iv) if the net total leverage ratio is less than or equal to 2.00 to 1.00 but greater than 1.50 to 1.00, the applicable margin is LIBOR plus 2.25% or ABR plus 1.25%; and (v) if the net total leverage ratio is less than or equal to 1.50 to 1.00, the applicable margin is LIBOR plus 2.20% or ABR plus 1.00%. As a result of Amendment No. 1, the applicable LIBOR floor was reduced from 0.50% to 0.00%.

In addition, the quarterly commitment fee required to be paid based on the unused portion of the revolving facility is subject to a pricing grid based upon the net total leverage ratio as follows (i) if the net total leverage ratio is greater than 3.00 to 1.00, the unused line fee is 0.500%; (ii) if the net total leverage ratio is less than or equal to 3.00 to 1.00 but greater than 2.50 to 1.00, the unused line fee is 0.450%; (iii) if the net total leverage ratio is less than or equal to 2.50 to 1.00 but greater than 2.00 to 1.00, the unused line fee is 0.400%; (iv) if the net total leverage ratio is less than or equal to 2.00 to 1.00 but greater than 1.50 to 1.00, the unused line fee is 0.350%; and (v) if the net total leverage ratio is less than or equal to 1.50 to 1.00, the unused line fee is 0.300%.

Through the fiscal quarter ending December 31, 2022, we are obligated to make quarterly principal payments in an aggregate amount equal to 1.25% of the original principal amount of the Term Loan Facility. From the fiscal quarter ending March 31, 2023 and for each fiscal quarter thereafter, we are obligated to make quarterly principal payments in an aggregate amount equal to 2.50% of the original principal amount of the Term Loan Facility, with the balance payable at the maturity date thereof.

The Credit Agreement contains certain affirmative and negative covenants customary for financings of this type that, among other things, limit our and our subsidiaries’ ability to incur additional indebtedness or liens, to dispose of assets, to make certain fundamental changes, to designate subsidiaries as unrestricted, to make certain investments, to prepay certain indebtedness and to pay dividends, or to make other distributions or redemptions/repurchases, in respect of our and our subsidiaries’ equity interests. In addition, the Credit Agreement contains financial covenants, each tested quarterly, (1) a net secured leverage ratio of not greater than 3.25 to 1.00; (2) a net total leverage ratio of not greater than 4.25 to 1.00; and (3) minimum liquidity of at least $75 million. The Credit Agreement also contains events of default customary for financings of this type, including certain customary change of control events.

On November 22, 2022 (the "Amendment No. 2 Effective Date"), we entered into Amendment No. 2 to the Credit Agreement ("Amendment No. 2"). Amendment No. 2 modified certain financial covenants between the fiscal quarter ended March 31, 2023 to the fiscal quarter ended December 31, 2023 (the "covenant adjustment period"). During the covenant adjustment period, each tested quarterly, we are required to maintain (1) a net secured leveraged ratio of not greater than 4.25 to 1.00; (2) minimum liquidity of at least $125 million; and (3) aggregate capital expenditures less than $7.5 million. The net total leverage ratio will be waived during the covenant adjustment period. At the conclusion of the covenant adjustment period, the original financial covenants will resume. As of March 31, 2023, we were in compliance with all Credit Agreement covenants.

Amendment No. 2 was accounted for a debt modification, and therefore, $0.4 million of the refinancing fees paid directly to the lender were recorded as deferred debt issuance costs, and $0.1 million of the refinance fees paid to third parties were expensed in the period.

Amendment No. 2 revised certain interest rates in the Credit Agreement. The applicable margins for the revolving credit and term facilities is subject to a pricing grid based upon the net total leverage ratio as follows (i) if the net total leverage ratio is greater than 3.00 to 1.00, the applicable margin is SOFR plus 10 basis point credit spread adjustment plus 3.00% or ABR plus 2.00%; (ii) if the net total leverage ratio is less than or equal to 3.00 to 1.00 but greater than 2.50 to 1.00, the applicable margin is SOFR plus 10 basis point credit spread adjustment plus 2.75% or ABR plus 1.75%; (iii) if the net total leverage ratio is less than or equal to 2.50 to 1.00 but greater than 2.00 to 1.00, the applicable margin is SOFR plus 10 basis point credit spread adjustment plus 2.50% or ABR plus 1.50%; (iv) if the net total leverage ratio is less than or equal to 2.00 to 1.00 but greater than 1.50 to 1.00, the applicable margin is SOFR plus 10 basis point credit spread adjustment plus 2.25% or ABR plus 1.25%; and (v) if the net total leverage ratio is less than or equal to 1.50 to 1.00, the applicable margin is SOFR plus 10 basis point credit spread adjustment plus 2.20% or ABR plus 1.00%. During the covenant adjustment period, and until the delivery of a compliance certificate for the first full fiscal quarter after the covenant adjustment period, the applicable margin will be SOFR plus 10 basis point credit spread adjustment plus 3.00% or ABR plus 2.00%.

For the three and six months ended March 31, 2022, the interest rate was LIBOR plus 2.25%. Prior to the Amendment No. 2 Effective Date, the interest rate was LIBOR plus 2.25%. From the Amendment No. 2 Effective Date until the quarter ended December 31, 2022, the interest rate was SOFR plus a credit spread adjustment of 10 basis points plus 2.25%. For the three months ended March 31, 2023, the interest rate was SOFR plus a credit adjustment of 10 basis points plus 3.00%. Total interest expense relating to the Senior Credit Facilities for the three months ended March 31, 2023 and 2022 was $2.3 million and $0.9 million, respectively, and $4.2 million and $1.8 million for the six months ended March 31, 2023 and 2022, respectively. Amounts reflect the coupon and accretion of the discount.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
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+ Details

Significant Accounting Policies

6 Months Ended

Mar. 31, 2023

Accounting Policies [Abstract]

Significant Accounting Policies

Note 2. Significant Accounting Policies

Principles of Consolidation

Basis of Presentation

Use of Estimates

Concentration of Risk

Allowance for Credit Losses

The change in the allowance for credit losses for the six months ended March 31, 2023 is as follows (dollars in thousands):


	Allowance for Credit Losses
Balance as of September 30, 2022	$	371
Credit loss provision		3,626
Effect of foreign currency translation		140
Balance as of March 31, 2023	$	4,137

Recently Adopted Accounting Standards

The following tables summarize the impact of adopting ASU 2020-06 on the Condensed Consolidated Balance Sheet as of October 1, 2022 (dollars in thousands):


	As of October 1, 2022
	As Previously Reported			Impact of Adoption of ASU 2020-06			As Adjusted
Assets:
Deferred tax assets	$	51,989		$	2,463		$	54,452

Liabilities:
Long-term debt, net of discounts and issuance costs	$	259,436		$	10,994		$	270,430

Equity:
Additional paid-in capital	$	1,029,542		$	(14,371	)	$	1,015,171
Accumulated deficit	$	(283,249	)	$	5,841		$	(277,408	)

Goodwill and Other Intangible Assets - Goodwill - Additional Information (Details)	6 Months Ended
	Mar. 31, 2023 USD ($) Segment
Goodwill and Intangible Assets Disclosure [Abstract]
Number of reportable segments	1
Number of Operating Segment	1
Goodwill impairment \| $	$ 0

Fair Value Measurements - Summary of Financial Assets that are Measured at Fair Value and Indicates the Fair Value Hierarchy of the Valuation Inputs (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Sep. 30, 2022
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair Value	$ 96,540	$ 94,511
Cash and Cash Equivalents	66,534	60,610
Marketable Securities	27,337	31,901
Money Market Funds \| Level 1
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair Value	62,219	59,138
Cash and Cash Equivalents	62,219	59,138
Government Securities \| Level 1
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair Value	6,132	4,892
Cash and Cash Equivalents	299
Marketable Securities	5,833	4,892
Government Securities \| Level 2
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair Value	6,080	2,361
Marketable Securities	6,080	2,361
Time Deposits \| Level 2
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair Value	4,016	1,472
Cash and Cash Equivalents	4,016	1,472
Commercial Paper \| Level 2
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair Value	1,982	7,647
Marketable Securities	1,982	7,647
Corporate Debt Securities \| Level 2
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair Value	13,442	17,001
Marketable Securities	13,442	17,001
Debt Securities \| Level 2
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair Value	$ 2,669	$ 2,000

Stockholders' Equity

6 Months Ended

Mar. 31, 2023

Equity [Abstract]

Stockholders' Equity

Note 11. Stockholders’ Equity

On October 2, 2019, we registered the issuance of 6,350,000 shares of Common Stock, par value $0.01 per share (“Common Stock”), consisting of 5,300,000 shares of Common Stock reserved for issuance upon the exercise of options granted, or in respect of awards granted, under the Cerence 2019 Equity Incentive Plan (“Equity Incentive Plan”), and 1,050,000 shares of Common Stock that are reserved for issuance under the Cerence 2019 Employee Stock Purchase Plan. The Equity Incentive Plan provides for the grant of incentive stock options, stock awards, stock units, stock appreciation rights, and certain other stock-based awards. The shares available for issuance will automatically increase on January 1st of each year, by the lesser of (A) 3% of the number of shares of Common Stock outstanding as of the close of business on the immediately preceding December 31st; and (B) the number of shares of Common Stock determined by the Board on or prior to such date for such year.

Restricted Units

Information with respect to our non-vested restricted stock units for the six months ended March 31, 2023 was as follows:


	Non-Vested Restricted Stock Units
	Time-Based Shares			Performance- Based Shares			Total Shares			Weighted- Average Grant-Date Fair Value		Weighted- Average Remaining Contractual Term (years)		Aggregate Intrinsic Value (in thousands)
Non-vested at September 30, 2022		996,016			434,995			1,431,011		$	62.49
Granted		2,386,993			1,237,319			3,624,312		$	19.39
Vested		(790,513	)		(79,986	)		(870,499	)	$	58.24
Forfeited		(82,788	)		(229,661	)		(312,449	)	$	54.13
Non-vested at March 31, 2023		2,509,708			1,362,667			3,872,375		$	33.07
Expected to vest								3,872,375		$	33.07		1.68	$	108,736

Stock-based Compensation

Stock-based compensation was included in the following captions in our Condensed Consolidated Statements of Operations for the three and six months ended March 31, 2023 and 2022 (in thousands):


	Three Months Ended March 31,				Six Months Ended March 31,
	2023		2022		2023		2022
Cost of connected services	$	175	$	197	$	371	$	343
Cost of professional services		1,012		1,373		2,165		2,319
Research and development		4,088		4,146		8,542		6,141
Sales and marketing		1,522		1,422		3,182		844
General and administrative		5,558		3,788		10,567		3,120
Restructuring and other costs, net		—		—		—		4,000
	$	12,355	$	10,926	$	24,827	$	16,767

During the three months ended December 31, 2021, we recorded $4.0 million, net of $5.0 million in forfeitures, in stock-based compensation due to the resignation of our former CEO and the resulting modification of certain stock-based awards in Restructuring and other costs, net. During the three months ended March 31, 2022, we recorded $2.4 million, net of $0.2 million in forfeitures, in stock-based compensation due to the retirement of our former Chief Financial Officer and resignation of our former General Counsel and the resulting modification of certain stock-based awards.

Summary of Significant Accounting Policies - Summary of Change in Allowance for Credit Losses (Details) $ in Thousands	6 Months Ended
	Mar. 31, 2023 USD ($)
Receivables [Abstract]
Beginning balance	$ 371
Credit loss provision	3,626
Effect of foreign currency translation	140
Ending balance	$ 4,137

Stockholders' Equity - Schedule of Stock-based Compensation (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2023	Mar. 31, 2022
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation	$ 12,355	$ 10,926	$ 24,827	$ 16,767
Cost of Connected Services
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation	175	197	371	343
Cost of Professional Services
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation	1,012	1,373	2,165	2,319
Research and Development
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation	4,088	4,146	8,542	6,141
Sales and Marketing
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation	1,522	1,422	3,182	844
General and Administrative
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation	5,558	3,788	10,567	3,120
Restructuring and Other Costs, Net
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation	$ 0	$ 0	$ 0	$ 4,000

Earnings Per Share (Tables)

6 Months Ended

Mar. 31, 2023

Earnings Per Share [Abstract]

Schedule of Reconciliation of Basic Shares to Diluted Shares

The following table presents the reconciliation of the numerator and denominator for calculating net (loss) income per share:


	Three Months Ended March 31,						Six Months Ended March 31,
in thousands, except per share data	2023			2022			2023			2022

Numerator:
Net (loss) income - basic and diluted	$	(26,089	)	$	(476	)	$	(28,247	)	$	18,568

Denominator:
Weighted average common shares outstanding - basic		40,219			39,189			40,088			39,013
Dilutive effect of restricted stock awards		-			-			-			573
Weighted average common shares outstanding - diluted		40,219			39,189			40,088			39,586

Net (loss) income per common share:
Basic	$	(0.65	)	$	(0.01	)	$	(0.70	)	$	0.48
Diluted	$	(0.65	)	$	(0.01	)	$	(0.70	)	$	0.47

Schedule of Potential Shares Considered Antidilutive

The following table sets forth potential shares that were considered anti-dilutive during the three and six months ended March 31, 2023 and 2022.


	Three Months Ended March 31,				Six Months Ended March 31,
in thousands	2023		2022		2023		2022
Restricted stock unit awards		382		292		-		-
Contingently issuable stock awards		103		-		90		-
Conversion option of our Convertible Senior Notes		4,677		4,677		4,677		4,677

Revenue Recognition - Summary of Estimated Revenue Expected to be Recognized in Future Related to Performance Obligations Unsatisfied or Partially Unsatisfied (Details 1) $ in Thousands	Mar. 31, 2023 USD ($)
Remaining Performance Obligations
Total revenue	$ 321,568