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Revenue Recognition - Summary of Revenues Classified by Major Geographic Region (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Revenues:
Total net revenues	$ 77,459	$ 72,484
United States
Revenues:
Total net revenues	35,041	38,064
Other Americas
Revenues:
Total net revenues	8	354
Germany
Revenues:
Total net revenues	20,217	13,716
Other Europe, Middle East and Africa
Revenues:
Total net revenues	4,597	4,784
Japan
Revenues:
Total net revenues	11,411	9,753
Other Asia-Pacific
Revenues:
Total net revenues	$ 6,185	$ 5,813

CONSOLIDATED AND COMBINED STATEMENT OF OPERATIONS (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Revenues:
Total revenues	$ 77,459	$ 72,484
Cost of revenues:
Amortization of intangible assets	2,087	2,175
Total cost of revenues	25,934	24,207
Gross profit	51,525	48,277
Operating expenses:
Research and development	23,511	23,808
Sales and marketing	7,943	9,445
General and administrative	11,483	5,721
Amortization of intangible assets	3,131	3,132
Restructuring and other costs, net	7,554	3,127
Acquisition-related costs		235
Total operating expenses	53,622	45,468
(Loss) income from operations	(2,097)	2,809
Interest income	281
Interest expense	(6,798)
Other income (expense), net	(146)	(16)
(Loss) income before income taxes	(8,760)	2,793
Provision for income taxes	3,002	538
Net (loss) income	$ (11,762)	$ 2,255
Net (loss) income per share:
Basic	$ (0.33)	$ 0.06
Diluted	$ (0.33)	$ 0.06
Weighted-average common share outstanding:
Basic	35,995,355	36,391,445
Diluted	35,995,355	36,391,445
License
Revenues:
Total revenues	$ 40,767	$ 44,002
Cost of revenues:
Total cost of revenues	681	340
Connected Services
Revenues:
Total revenues	23,021	17,255
Cost of revenues:
Total cost of revenues	8,675	11,229
Professional Services
Revenues:
Total revenues	13,671	11,227
Cost of revenues:
Total cost of revenues	$ 14,491	$ 10,463

CONSOLIDATED AND COMBINED BALANCE SHEET - USD ($) $ in Thousands	Dec. 31, 2019	Sep. 30, 2019
Current assets:
Cash and cash equivalents	$ 113,396
Accounts receivable, net of allowances of $881 and $865 at December 31, 2019 and September 30, 2019, respectively	64,928	$ 65,787
Deferred costs	6,915	9,195
Prepaid expenses and other current assets	35,630	17,343
Total current assets	220,869	92,325
Property and equipment, net	24,070	20,113
Deferred costs	36,052	32,428
Operating lease right of use assets	19,681
Goodwill	1,122,865	1,119,329
Intangible assets, net	60,713	65,561
Deferred tax assets	164,027	150,629
Other assets	13,650	3,444
Total assets	1,661,927	1,483,829
Current liabilities:
Accounts payable	15,242	16,687
Deferred revenue	113,820	88,233
Short-term operating lease liabilities	4,986
Short-term debt	9,396
Accrued expenses and other current liabilities	51,033	24,194
Total current liabilities	194,477	129,114
Long-term debt	239,026
Deferred revenue, net of current portion	245,883	265,051
Long-term operating lease liabilities	17,040
Other liabilities	39,286	21,536
Total liabilities	735,712	415,701
Commitments and contingencies (Note 10)
Stockholders' Equity:
Common stock, $0.01 par value, 600,000,000 shares authorized as of December 31, 2019; 36,403,284 shares issued and outstanding as of December 31, 2019	364
Net parent investment		1,097,127
Accumulated other comprehensive loss	(7,441)	(28,999)
Additional paid-in capital	945,054
Accumulated deficit	(11,762)
Total stockholders' equity	926,215	1,068,128
Total liabilities and stockholders' equity	$ 1,661,927	$ 1,483,829

Accrued Expenses and Other Liabilities -Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Sep. 30, 2019
Accrued Liabilities And Other Liabilities [Abstract]
Compensation	$ 19,876	$ 13,031
Cost of revenue related liabilities	4,000	1,668
Sales and other taxes payable	13,443	219
Professional fees	4,948	3,863
Facilities related liabilities	59	273
Other	8,707	5,140
Total	$ 51,033	$ 24,194

Business Overview

3 Months Ended

Dec. 31, 2019

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Business Overview

Note 1. Business Overview

History

On October 1, 2019, or the “Distribution Date”, Nuance Communications, Inc., or “Nuance”, a leading provider of speech and language solutions for businesses and consumers around the world, completed the complete legal and structural separation and distribution to its stockholders of all of the outstanding shares of our common stock, and its consolidated subsidiaries, in a tax free spin-off (which we refer to as the “Spin-Off”). The distribution was made in the amount of one share of our common stock for every eight shares of Nuance common stock (which we refer to as the “Distribution”) owned by Nuance’s stockholders as of 5:00 p.m. Eastern Time on September 17, 2019, the record date of the Distribution.

In connection with the Distribution, on September 30, 2019, we filed an Amended and Restated Certificate of Incorporation, or the Charter, with the Secretary of State of the State of Delaware, which became effective on October 1, 2019. Our Amended and Restated By-laws also became effective on October 1, 2019. On October 2, 2019, our common stock began regular-way trading on the Nasdaq Global Select Market under the ticker symbol CRNC.

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, or 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.

Leases - Summary of Lease Expense (Details) $ in Thousands	3 Months Ended
Leases - Summary of Lease Expense (Details) $ in Thousands	Dec. 31, 2019 USD ($)
Finance lease costs:
Amortization of right-of-use asset	$ 36
Operating lease cost	1,890
Variable lease cost	309
Sublease income	(55)
Total lease cost	$ 2,180

Restructuring and Other Costs, Net

3 Months Ended

Dec. 31, 2019

Restructuring And Related Activities [Abstract]

Restructuring and Other Costs, Net

Note 8. Restructuring and Other Costs, Net

Restructuring and other costs, net include 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 such as employee severance costs, costs for consolidating duplicate facilities, and separation costs directly attributable to the Cerence business becoming a standalone public company. The following table sets forth accrual activity relating to restructuring reserves for the three months ended December 31, 2019 (dollars in thousands):

	Personnel			Facilities			Separation			Total
Balance at October 1, 2019	$	489		$	26		$	3,876		$	4,391
Restructuring and other costs, net		360			—			7,194			7,554
Cash payments		(201	)		(5	)		(3,004	)		(3,210	)
Foreign exchange impact on ending balance		8			1			—			9
Balance at December 31, 2019	$	656		$	22		$	8,066		$	8,744

	Three Months Ended December 31,
	2019								2018
	Personnel		Facilities		Separation		Total		Personnel			Facilities		Separation		Total
Restructuring charges	$	360	$	—	$	7,194	$	7,554	$	(663	)	$	2,055	$	1,735	$	3,127

For the three months ended December 31, 2019, we recorded restructuring charges of $7.6 million, which included a $0.4 million severance charge related to the elimination of personnel, and $7.2 million related to costs incurred to establish the Cerence business as a standalone public company.

For the three months ended December 31, 2018, we recorded restructuring charges of $3.1 million, which included a $0.7 million severance charge reversal related to the elimination of personnel across multiple functions, $2.1 million primarily resulting from the restructuring of facilities that will no longer be utilized, and $1.7 million related to professional services fees incurred to establish the Cerence business as a standalone public company.

Long Term Debt - Summary of Maturities of Borrowing Obligations (Details) $ in Thousands	Dec. 31, 2019 USD ($)
Debt Instrument [Line Items]
Less: current portion of long-term debt	$ 9,396
Total long-term debt	239,026
Senior Facilities
Debt Instrument [Line Items]
2020	7,047
2021	9,396
2022	27,000
2023	27,000
2024	199,557
Total before unamortized discount	270,000
Less: unamortized discount and issuance costs	21,578
Less: current portion of long-term debt	9,396
Total long-term debt	$ 239,026

Restructuring and Other Costs, Net - Schedule of Accrual Activity Relating to Restructuring Reserves (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Restructuring Cost and Reserve [Line Items]
Balance at October 1, 2019	$ 4,391
Restructuring and other costs, net	7,554	$ 3,127
Cash payments	(3,210)
Foreign exchange impact on ending balance	9
Balance at December 31, 2019	8,744
Personnel
Restructuring Cost and Reserve [Line Items]
Balance at October 1, 2019	489
Restructuring and other costs, net	360	(663)
Cash payments	(201)
Foreign exchange impact on ending balance	8
Balance at December 31, 2019	656
Facilities
Restructuring Cost and Reserve [Line Items]
Balance at October 1, 2019	26
Restructuring and other costs, net		2,055
Cash payments	(5)
Foreign exchange impact on ending balance	1
Balance at December 31, 2019	22
Spin-Off
Restructuring Cost and Reserve [Line Items]
Balance at October 1, 2019	3,876
Restructuring and other costs, net	7,194	$ 1,735
Cash payments	(3,004)
Balance at December 31, 2019	$ 8,066

Goodwill and Other Intangible Assets (Tables)

3 Months Ended

Dec. 31, 2019

Goodwill And Intangible Assets Disclosure [Abstract]

Changes in Carrying Amount of Goodwill

The changes in the carrying amount of goodwill as of December 31, 2019 are as follows (dollars in thousands):

	Total
Balance as of October 1, 2019	$	1,119,329
Acquisitions		—
Effect of foreign currency translation		3,536
Balance as of December 31, 2019	$	1,122,865

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):

	December 31, 2019
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted Average Remaining Life (Years)
Customer relationships	$	108,863	$	(65,369	)	$	43,494		3.7
Technology and patents		90,174		(72,955	)		17,219		2.3
Total	$	199,037	$	(138,324	)	$	60,713

	September 30, 2019
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted Average Remaining Life (Years)
Customer relationships	$	104,783	$	(58,568	)	$	46,215		4.0
Technology and patents		116,757		(97,411	)		19,346		2.5
Total	$	221,540	$	(155,979	)	$	65,561

Goodwill and Other Intangible Assets - Additional Information - (Details) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Goodwill And Intangible Assets Disclosure [Abstract]
Amortization expense related to intangible assets	$ 5.2	$ 5.3
Expected amortization of intangible assets for remainder of 2020	$ 15.5

Long Term Debt - Additional Information (Details) - Credit Agreement		3 Months Ended
	Oct. 01, 2019 USD ($)	Dec. 31, 2019 USD ($)
Debt Instrument [Line Items]
Pledge equity interests in foreign subsidiaries	65.00%
Principal payments commencement date	Mar. 31, 2020
Debt Instrument, interest rate description		Interest accrues on outstanding borrowings under the Senior Facilities at a rate of either a base rate (as defined in the Credit Agreement) plus 5.00% or a LIBOR rate (as defined in the Credit Agreement) plus 6.00%.
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 a financial covenant requiring the maintenance of a net first lien leverage ratio of not greater than 6.00 to 1.00. The Credit Agreement also contains events of default customary for financings of this type, including certain customary change of control events.
Debt instrument, covenant compliance		As of December 31, 2019, we were in compliance with the Credit Agreement covenants.
Maximum
Debt Instrument [Line Items]
First lien leverage ratio	6.00
Base Rate
Debt Instrument [Line Items]
Debt Instrument, basis spread on variable rate	5.00%
LIBOR
Debt Instrument [Line Items]
Debt Instrument, basis spread on variable rate	6.00%
Five-year Senior Secured Term Loan Facility
Debt Instrument [Line Items]
Debt instrument term	5 years
Credit facility maximum borrowing capacity	$ 270,000,000
Credit facility maximum borrowing capacity for cash distribution/cash flow needs	$ 110,000,000
Debt instrument, frequency of periodic principal payments		quarterly
Debt instrument periodic payments equivalent percentage of annual amount on original principal amount during first two years	3.50%
Debt instrument periodic payments equivalent percentage of annual amount on original principal amount after two years	10.00%
Interest expense		$ 6,800,000
Debt instrument, prepayment premium percentage	1.00%
Five-year Senior Secured Term Loan Facility \| Nuance Communications Inc,
Debt Instrument [Line Items]
Credit facility maximum borrowing capacity for cash distribution/cash flow needs	$ 153,000,000
54-month Senior Secured First-lien Revolving Credit Facility
Debt Instrument [Line Items]
Debt instrument term	54 months
Credit facility maximum borrowing capacity	$ 75,000,000
Outstanding amount under credit facility		$ 0

Earnings Per Share (Tables)

3 Months Ended

Dec. 31, 2019

Earnings Per Share [Abstract]

Schedule of Reconciliation of Basic Shares to Diluted Shares

The following is a reconciliation of basic shares to diluted shares:

	December 31,
in thousands	2019		2018
Basic shares		35,995		36,391
Effect of dilutive shares		—		—
Diluted shares		35,995		36,391

Leases - Summary of Undiscounted Future Minimum Lease Payments Under Non-cancelable Leases (Details) $ in Thousands	Dec. 31, 2019 USD ($)
Operating Leases
2020 (excluding three months ended December 31, 2019)	$ 5,003
2021	5,862
2022	4,934
2023	3,681
2024	3,380
Thereafter	4,113
Total future minimum lease payments	26,973
Less effects of discounting	(4,947)
Total lease liabilities	22,026
Short-term lease liabilities	4,986
Long-term lease liabilities	17,040
Financing Leases
2020 (excluding three months ended December 31, 2019)	12
Total future minimum lease payments	12
Total lease liabilities	12
Short-term lease liabilities	$ 12

Restructuring and Other Costs, Net - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Restructuring Cost and Reserve [Line Items]
Restructuring charges (reversal)	$ 7,554	$ 3,127
Severance Charge
Restructuring Cost and Reserve [Line Items]
Restructuring charges (reversal)	360	(663)
Professional Services Fees
Restructuring Cost and Reserve [Line Items]
Restructuring charges (reversal)	$ 7,194	1,735
Facilities Restructuring
Restructuring Cost and Reserve [Line Items]
Restructuring charges (reversal)		$ 2,055

Stockholder's Equity - Additional Information (Details) - $ / shares	3 Months Ended
	Dec. 31, 2019	Oct. 02, 2019	Oct. 01, 2019
Class Of Stock [Line Items]
Capital stock, shares authorized			600,000,000
Preferred stock, shares authorized			40,000,000
Preferred stock, par value per share			$ 0.01
Common stock, shares authorized	600,000,000		560,000,000
Common stock, par value per share	$ 0.01		$ 0.01
Common stock reserved for issuance		6,350,000
Restricted Stock Units
Class Of Stock [Line Items]
Stock issued in connection with the Spin-Off	1,208,931
2019 Equity Incentive Plan
Class Of Stock [Line Items]
Common stock reserved for issuance		5,300,000
Share-based compensation arrangement by share-based payment award, terms of award	Awards issued under the Plan may not have a term greater than ten years from the date of grant.
2019 Equity Incentive Plan \| Maximum
Class Of Stock [Line Items]
Share-based compensation arrangement by share-based payment award, expected term	10 years
2019 Employee Stock Purchase Plan
Class Of Stock [Line Items]
Common stock reserved for issuance		1,050,000

Leases - Summary of Lease Term and Incremental Borrowing Rates for Leases (Details)	Dec. 31, 2019
Weighted-average remaining lease term (in months):
Operating leases	59 months 21 days
Finance leases	1 month
Weighted-average discount rate:
Operating leases	8.00%
Finance leases	10.60%

Income Taxes - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Income Tax Disclosure [Line Items]
Effective income tax rate	(34.30%)	19.30%
U.S. federal statutory rates	21.00%	21.00%
Income tax expense (benefit)	$ 3,002	$ 538
Netherlands
Income Tax Disclosure [Line Items]
Income tax expense (benefit)	$ (5,000)

Income Taxes

3 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Income Taxes

Note 11. Income Taxes

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

	Three Months Ended December 31,
	2019			2018
Domestic	$	(7,128	)	$	(2,069	)
Foreign		(1,632	)		4,862
(Loss) income before income taxes	$	(8,760	)	$	2,793

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

	Three Months Ended December 31,
	2019			2018
Domestic	$	(3,218	)	$	(491	)
Foreign		6,220			1,029
Provision for income taxes	$	3,002		$	538
Effective income tax rate		(34.3	)%		19.3	%

The effective tax rates were estimated based upon estimated income for the year, and the composition of the income in different countries. Our aggregate income tax rate in foreign jurisdictions is lower than our income tax rate in the United States. Our effective tax rate may be adversely affected by earnings being lower than anticipated in countries where we have lower statutory tax rates and higher than anticipated in countries where we have higher statutory tax rates.

Our effective income tax rate was (34.3)% for the three months ended December 31, 2019, compared to 19.3% for the three months ended December 31, 2018. The effective tax rate for the three months ended December 31, 2019 differed from the U.S. federal statutory rate of 21.0%, primarily due to our composition of jurisdictional earnings, U.S. inclusions of foreign taxable income as a result of 2017 tax laws changes, and an income tax benefit of approximately $5.0 million related to an increase in tax rates in the Netherlands enacted in the first quarter. The effective tax rate for the three months ended December 31, 2018 differed from the U.S. federal statutory rate of 21.0% primarily due to our earnings in foreign jurisdictions.

Leases - Summary of Lease-related Assets and Liabilities Reported in the Consolidated Balance Sheet (Details) $ in Thousands	Dec. 31, 2019 USD ($)
ASSETS
Operating lease right of use assets	$ 19,681
Finance lease assets	$ 253
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List]	us-gaap:PropertyPlantAndEquipmentNet
Total lease assets	$ 19,934
Current liabilities:
Short-term operating lease liabilities	4,986
Finance	$ 12
Finance Lease, Liability, Current, Statement of Financial Position [Extensible List]	us-gaap:AccruedLiabilitiesAndOtherLiabilities
Noncurrent
Long-term operating lease liabilities	$ 17,040
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List]	us-gaap:OtherLiabilitiesNoncurrent
Total lease liability	$ 22,038

Leases

3 Months Ended

Dec. 31, 2019

Leases [Abstract]

Leases

Note 6. Leases

We have entered into a number of facility leases to support our research and development activities, sales operations, and other corporate and administrative functions in North America, Europe, and Asia, which qualify as operating leases under GAAP. We also have a limited number of equipment leases that also qualify as operating leases. We determine if contracts with vendors represent a lease or have a lease component under GAAP at contract inception. As part of our acquisition of Voicebox Technologies, or Voicebox, we assumed certain leases for various equipment, which we have accounted for as finance leases. Our leases have remaining terms ranging from less than one year to eight 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 December 31, 2019:

	December 31, 2019
Weighted-average remaining lease term (in months):
Operating leases		59.7
Finance leases		1.0
Weighted-average discount rate:
Operating leases		8.0	%
Finance leases		10.6	%

The following table presents the lease-related assets and liabilities reported in the consolidated balance sheet as of December 31, 2019 (in thousands):

	Classification	December 31, 2019
Assets
Operating lease assets	Operating lease right of use assets	$	19,681
Finance lease assets	Property and equipment, net		253
Total lease assets		$	19,934

Liabilities
Current
Operating	Short-term operating lease liabilities	$	4,986
Finance	Accrued expenses and other current liabilities		12
Noncurrent
Operating	Long-term operating lease liabilities	$	17,040
Finance	Other liabilities		—
Total lease liability		$	22,038

Lease costs for minimum lease payments is recognized on a straight-line basis over the lease term. For operating leases, costs are included within research and development, marketing and selling, and general and administrative lines on the consolidated statements of operations. For financing leases, amortization of the finance right-of-use assets is included within research and development, marketing and selling, and general and administrative lines on the consolidated statements of operations, and interest expense is included within the other income (expense), net.

The following table presents lease expense for the three months ended December 31, 2019 (in thousands):

	Three months ended December 31, 2019
Finance lease costs:
Amortization of right-of-use asset	$	36
Interest on lease liability		-
Operating lease cost		1,890
Short-term lease cost		-
Variable lease cost		309
Sublease income		(55	)
Total lease cost	$	2,180

For operating leases, the related cash payments are included in the operating cash flows on the consolidated statements of cash flows. For the three months ended December 31, 2019, cash payments related to operating leases were $1.7 million. For financing leases, the related cash payments for the principal portion of the lease liability are included in the financing cash flows on the 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 consolidated statement of cash flows. For the three months ended December 31, 2019, cash payments related to financing leases were $0.1 million, of which an immaterial amount related to the interest portion of the lease liability.

The table below reconciles the undiscounted future minimum lease payments under non-cancelable leases with terms of more than one year to the total lease liabilities recognized on the condensed consolidated balance sheets as of December 31, 2019 (in thousands):

Year Ending September 30,	Operating Leases			Financing Leases
2020 (excluding three months ended December 31, 2019)	$	5,003		$	12
2021		5,862			—
2022		4,934			—
2023		3,681			—
2024		3,380			—
Thereafter		4,113			—
Total future minimum lease payments	$	26,973		$	12
Less effects of discounting		(4,947	)		—
Total lease liabilities	$	22,026		$	12
Reported as of December 31, 2019
Short-term lease liabilities	$	4,986		$	12
Long-term lease liabilities		17,040			—
Total lease liabilities	$	22,026		$	12

The future minimum lease commitments under non-cancelable leases at September 30, 2019 were as follows (in thousands):

Year Ending September 30,
2020	$	6,323
2021		5,421
2022		4,493
2023		3,237
2024		2,922
Thereafter		4,039
Total	$	26,435

Significant Accounting Policies (Tables)

3 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Summary of Adopting ASC 842 on Consolidated Balance Sheet

The following tables summarize the impact of adopting ASC 842 on the consolidated balance sheet as of October 1, 2019 (dollars in thousands):

	As of October 1, 2019
	As Previously Reported		Impact of Adoption of Topic ASC 842			As Adjusted
Assets:
Operating lease right of use assets	$	—	$	19,594		$	19,594

Liabilities:
Current liabilities:
Short-term operating lease liabilities	$	—	$	4,863		$	4,863
Accrued expenses and other current liabilities		24,194		(1,465	)		22,729
Long-term operating lease liabilities		-		16,883			16,883
Other liabilities	$	21,536	$	(687	)	$	20,849

Equity:
Net parent investment	$	1,097,127	$	-		$	1,097,127

Accrued Expenses and Other Liabilities

3 Months Ended

Dec. 31, 2019

Accrued Liabilities And Other Liabilities [Abstract]

Accrued Expenses and Other Liabilities

Note 7. Accrued Expenses and Other Liabilities

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

	December 31, 2019		September 30, 2019
Compensation	$	19,876	$	13,031
Cost of revenue related liabilities		4,000		1,668
Sales and other taxes payable		13,443		219
Professional fees		4,948		3,863
Facilities related liabilities		59		273
Other		8,707		5,140
Total	$	51,033	$	24,194

Restructuring and Other Costs, Net - Schedule of Restructuring Charges (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Restructuring Cost and Reserve [Line Items]
Restructuring charges	$ 7,554	$ 3,127
Personnel
Restructuring Cost and Reserve [Line Items]
Restructuring charges	360	(663)
Facilities
Restructuring Cost and Reserve [Line Items]
Restructuring charges		2,055
Spin-Off
Restructuring Cost and Reserve [Line Items]
Restructuring charges	$ 7,194	$ 1,735

Revenue Recognition - Summary of Estimated Revenue Expected to be Recognized in Future Related to Performance Obligations Unsatisfied or Partially Unsatisfied (Details 1) $ in Thousands	Dec. 31, 2019 USD ($)
Revenue Performance Obligation [Abstract]
Total revenue	$ 410,993

Revenue Recognition - Additional Information (Details)	3 Months Ended
Revenue Recognition - Additional Information (Details)	Dec. 31, 2019 USD ($) Segment Customer	Dec. 31, 2018 USD ($) Customer
Disaggregation Of Revenue [Line Items]
Number of reportable segments \| Segment	1
Revenues	$ 77,459,000	$ 72,484,000
Contract acquisition costs	2,100,000
Contract acquisition cost, amortization	200,000
Contract acquisition cost, impairment	0
Capitalized contract cost, net	43,000,000
Capitalized contract cost, amortization	2,700,000
Capitalized contract cost, impairment	0
Customer One
Disaggregation Of Revenue [Line Items]
Revenues	18,000,000	13,500,000
Customer Two
Disaggregation Of Revenue [Line Items]
Revenues		8,100,000
United States
Disaggregation Of Revenue [Line Items]
Revenues	35,041,000	38,064,000
Germany
Disaggregation Of Revenue [Line Items]
Revenues	20,217,000	13,716,000
Japan
Disaggregation Of Revenue [Line Items]
Revenues	$ 11,411,000	$ 9,753,000
Revenues \| Customer Concentration Risk
Disaggregation Of Revenue [Line Items]
Number of customers accounted for revenues \| Customer	1	2
Revenues \| Customer Concentration Risk \| Customer One
Disaggregation Of Revenue [Line Items]
Percentage of revenue	23.20%	18.70%
Revenues \| Customer Concentration Risk \| Customer Two
Disaggregation Of Revenue [Line Items]
Percentage of revenue		11.20%
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
Minimum \| Revenues \| United States \| Geographic Concentration Risk
Disaggregation Of Revenue [Line Items]
Percentage of revenue	10.00%	10.00%
Minimum \| Revenues \| Germany \| Geographic Concentration Risk
Disaggregation Of Revenue [Line Items]
Percentage of revenue	10.00%	10.00%
Minimum \| Revenues \| Japan \| Geographic Concentration Risk
Disaggregation Of Revenue [Line Items]
Percentage of revenue	10.00%	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	5 years
Contract term	5 years

Earnings Per Share - Schedule of Reconciliation of Basic Shares to Diluted Shares (Details) - shares	3 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Earnings Per Share [Abstract]
Basic shares	35,995,355	36,391,445
Diluted shares	35,995,355	36,391,445

Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Dec. 31, 2019	Feb. 07, 2020
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Dec. 31, 2019
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q1
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	83-4719946
Entity Address Address Line1	15 Wayside Road
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	Non-accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		36,438,513

Business Overview - Additional Information (Details)		3 Months Ended
Business Overview - Additional Information (Details)	Oct. 01, 2019	Dec. 31, 2019
Business Overview [Line Items]
Entity incorporation state country code		DE
Entity incorporation, date of incorporation		Oct. 01, 2019
Nuance Communications Inc, \| Spin-Off
Business Overview [Line Items]
Distribution date	Oct. 01, 2019
Conversion ratio, description		The distribution was made in the amount of one share of our common stock for every eight shares of Nuance common stock (which we refer to as the “Distribution”) owned by Nuance’s stockholders as of 5:00 p.m. Eastern Time on September 17, 2019, the record date of the Distribution.
Conversion ratio	0.125

Significant Accounting Policies (Policies)

3 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Principals of Consolidation

Fiscal 2020

The accompanying unaudited 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.

Fiscal 2019

All prior period information is presented on a combined basis. The combined financial statements have been derived from Nuance’s historical accounting records and are presented on a “carve-out” basis to include the historical financial position, results of operations and cash flows applicable to the Cerence business. As a direct ownership relationship did not exist among all the various business units comprising the Cerence business, Nuance’s investment in the Cerence business is shown in lieu of stockholder’s equity in the combined financial statements.

The Combined Statements of Operations include all revenues and costs directly attributable to Cerence as well as an allocation of expenses related to functions and services performed by centralized parent organizations. These corporate expenses have been allocated to the Cerence business based on direct usage or benefit, where identifiable, with the remainder allocated on a pro rata basis of revenues, headcount, number of transactions or other measures as determined appropriate. The Combined Statements of Cash Flows present these corporate expenses that are cash in nature as cash flows from operating activities, as this is the nature of these costs for Nuance. Non-cash expenses allocated from Nuance include corporate depreciation and amortization and stock-based compensation included as add-back adjustments to reconcile net income to net cash provided by operations. Current and deferred income taxes and related tax expense have been determined based on the standalone results of the Cerence business by applying Accounting Standards Codification No. 740, Income Taxes (“ASC 740”), to the Cerence business’s operations in each country as if it were a separate taxpayer (i.e. following the Separate Return Methodology).

The combined financial statements include the allocation of certain assets and liabilities that have historically been held at the Nuance corporate level or by shared entities but which are specifically identifiable or allocable to the Cerence business. These shared assets and liabilities have been allocated to the Cerence business on the basis of direct usage when identifiable, or allocated on a pro rata basis of revenue, headcount or other systematic measures that reflect utilization of the services provided to or benefits received by Cerence. Nuance uses a centralized approach to cash management and financing its operations. Accordingly, none of the cash, cash equivalents, marketable securities, foreign currency hedges or debt and related interest expense has been allocated to the Cerence business in the combined financial statements. Nuance’s short and long-term debt has not been pushed down to the Cerence business’s combined financial statements because the Cerence business is not the legal obligor of the debt and Nuance’s borrowings were not directly attributable to the Cerence business.

Transactions between Nuance and the Cerence business are considered to be effectively settled in the combined financial statements at the time the transaction is recorded. The total net effect of the settlement of these intercompany transactions is reflected in the Combined Statements of Cash Flows as a financing activity and in the Combined Balance Sheets as net parent investment. All of the allocations and estimates in the combined financial statements are based on assumptions that management believes are reasonable.

Basis of Presentation

The accompanying unaudited 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 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 months ended December 31, 2019 are not necessarily indicative of the results to be expected for any other interim period or for the year ending September 30, 2020. These unaudited interim consolidated financial statements should be read in conjunction with the audited combined financial statements and notes contained in our Annual Report on Form 10-K for the year ended September 30, 2019.

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; the allowances for doubtful accounts; 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, deferred tax assets, and related valuation allowances; 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.

Recently Adopted Accounting Standards

Leases

In February 2016, the FASB issued ASU No. 2016-02, “Leases” (“ASU 2016-02”), and codified as ASC 842, which became effective for fiscal years beginning after December 15, 2018 and interim periods therein, with early adoption permitted. The guidance requires lessees to recognize on the balance sheet a right-of-use, or ROU, asset, representing its right to use the underlying asset for the lease term, and a lease liability for all leases with terms greater than 12 months. The guidance also requires qualitative and quantitative disclosures designed to assess the amount, timing, and uncertainty of cash flows arising from leases.

In July 2018, the FASB issued ASU 2018-10, “Codification Improvements to “Topic 842, Leases” and ASU 2018-11, “Leases Topic Targeted Improvements”, which provides an additional and optional transition method whereby the new lease standard is applied at the adoption date and recognized as an adjustment to retained earnings. Additionally, in March 2019, the FASB issued ASU 2019-01, “Codification Improvements to Topic 842”, which provides guidance in the following areas: (1) determining the fair value of the underlying asset by lessors that are not manufacturers or dealers and (2) clarification of interim disclosure requirements during transition.

We adopted the new standard effective October 1, 2019 under the modified retrospective transition approach. Results for reporting periods beginning after October 1, 2019 are presented under ASC 842, while prior periods have not been adjusted and continue to be reported in accordance with our historic accounting under previous GAAP. We elected the package of practical expedients permitted under the transition guidance. The new standard does not have a material impact on our consolidated statement of operations and cash flows. Approximately $2.2 million of deferred rent balances were reclassified against the costs of the right of use assets. The effects of applying ASC 842 as a cumulative-effect adjustment to retained earnings as of October 1, 2019 is immaterial.

The following tables summarize the impact of adopting ASC 842 on the consolidated balance sheet as of October 1, 2019 (dollars in thousands):

	As of October 1, 2019
	As Previously Reported		Impact of Adoption of Topic ASC 842			As Adjusted
Assets:
Operating lease right of use assets	$	—	$	19,594		$	19,594

Liabilities:
Current liabilities:
Short-term operating lease liabilities	$	—	$	4,863		$	4,863
Accrued expenses and other current liabilities		24,194		(1,465	)		22,729
Long-term operating lease liabilities		-		16,883			16,883
Other liabilities	$	21,536	$	(687	)	$	20,849

Equity:
Net parent investment	$	1,097,127	$	-		$	1,097,127

Other Accounting Pronouncements

In August 2018, the FASB issued ASU No. 2018-15, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract”, which is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. The guidance requires that implementation costs related to a hosting arrangement that is a service contract be capitalized and amortized over the term of the hosting arrangement, starting when the module or component of the hosting arrangement is ready for its intended use. The adoption of ASU 2018-15 did not have a material impact on our consolidated financial statements.

CONSOLIDATED AND COMBINED STATEMENT OF COMPREHENSIVE LOSS (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Statement Of Income And Comprehensive Income [Abstract]
Net (loss) income	$ (11,762)	$ 2,255
Other comprehensive income (loss):
Foreign currency translation adjustments	4,904	(3,707)
Pension adjustments	926	322
Total other comprehensive income (loss)	5,830	(3,385)
Comprehensive loss	$ (5,932)	$ (1,130)

- Definition

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

+ References + Details

CONSOLIDATED AND COMBINED STATEMENT OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Cash flows from operating activities:
Net (loss) income	$ (11,762)	$ 2,255
Adjustments to reconcile net (loss) income to net cash provided by operations:
Depreciation and amortization	7,359	7,346
Stock-based compensation	8,969	6,574
Non-cash interest expense	1,332
Deferred tax benefit	(4,928)	(1,986)
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable	1,691	(7,878)
Prepaid expenses and other assets	(18,193)	6,777
Deferred costs	(192)	7
Accounts payable	905	(883)
Accrued expenses and other liabilities	22,210	1,117
Deferred revenue	2,065	3,371
Net cash provided by operating activities	9,456	16,700
Cash flows from investing activities:
Capital expenditures	(3,612)	(498)
Net cash used in investing activities	(3,612)	(498)
Cash flows from financing activities:
Net transaction with Parent	11,384	(16,202)
Distribution to Parent	(152,978)
Proceeds from long-term debt, net of discount	249,705
Payments for long-term debt issuance costs	(515)
Common stock repurchases for tax withholdings for net settlement of equity awards	(141)
Principal payment of lease liabilities arising from a finance lease	(55)
Net cash provided by (used in) financing activities	107,400	(16,202)
Effects of exchange rate changes on cash and cash equivalents	152
Net change in cash and cash equivalents	113,396
Cash and cash equivalents at end of period	113,396
Supplemental information:
Cash paid for income taxes	1,472	$ 2,899
Cash paid for interest	$ 3,676

Revenue Recognition - Summary of Estimated Revenue Expected to be Recognized in Future Related to Performance Obligations Unsatisfied or Partially Unsatisfied (Details) $ in Thousands	Dec. 31, 2019 USD ($)
Remaining Performance Obligations
Total revenue	$ 410,993
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2020-01-01
Remaining Performance Obligations
Total revenue	$ 156,695
Remaining performance obligation, expected timing of satisfaction, period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2021-01-01
Remaining Performance Obligations
Total revenue	$ 155,875
Remaining performance obligation, expected timing of satisfaction, period	4 years
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2025-01-01
Remaining Performance Obligations
Total revenue	$ 98,423
Remaining performance obligation, expected timing of satisfaction, period

Leases (Tables)

3 Months Ended

Dec. 31, 2019

Leases [Abstract]

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 December 31, 2019:

	December 31, 2019
Weighted-average remaining lease term (in months):
Operating leases		59.7
Finance leases		1.0
Weighted-average discount rate:
Operating leases		8.0	%
Finance leases		10.6	%

Summary of lease-related Assets and Liabilities Reported in the Consolidated Balance Sheet

The following table presents the lease-related assets and liabilities reported in the consolidated balance sheet as of December 31, 2019 (in thousands):

	Classification	December 31, 2019
Assets
Operating lease assets	Operating lease right of use assets	$	19,681
Finance lease assets	Property and equipment, net		253
Total lease assets		$	19,934

Liabilities
Current
Operating	Short-term operating lease liabilities	$	4,986
Finance	Accrued expenses and other current liabilities		12
Noncurrent
Operating	Long-term operating lease liabilities	$	17,040
Finance	Other liabilities		—
Total lease liability		$	22,038

Summary of Lease Expense

The following table presents lease expense for the three months ended December 31, 2019 (in thousands):

	Three months ended December 31, 2019
Finance lease costs:
Amortization of right-of-use asset	$	36
Interest on lease liability		-
Operating lease cost		1,890
Short-term lease cost		-
Variable lease cost		309
Sublease income		(55	)
Total lease cost	$	2,180

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

Year Ending September 30,	Operating Leases			Financing Leases
2020 (excluding three months ended December 31, 2019)	$	5,003		$	12
2021		5,862			—
2022		4,934			—
2023		3,681			—
2024		3,380			—
Thereafter		4,113			—
Total future minimum lease payments	$	26,973		$	12
Less effects of discounting		(4,947	)		—
Total lease liabilities	$	22,026		$	12
Reported as of December 31, 2019
Short-term lease liabilities	$	4,986		$	12
Long-term lease liabilities		17,040			—
Total lease liabilities	$	22,026		$	12

Summary of Future Minimum Lease Commitments Under Non-cancelable Leases

The future minimum lease commitments under non-cancelable leases at September 30, 2019 were as follows (in thousands):

Year Ending September 30,
2020	$	6,323
2021		5,421
2022		4,493
2023		3,237
2024		2,922
Thereafter		4,039
Total	$	26,435

Significant Accounting Policies - Summary of Adopting ASC 842 on Consolidated Balance Sheet (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Oct. 01, 2019	Sep. 30, 2019
ASSETS
Operating lease right of use assets	$ 19,681
Current liabilities:
Short-term operating lease liabilities	4,986
Accrued expenses and other current liabilities	51,033		$ 24,194
Long-term operating lease liabilities	17,040
Other liabilities	$ 39,286		21,536
Stockholders' Equity:
Net parent investment			$ 1,097,127
Topic ASC 842
ASSETS
Operating lease right of use assets		$ 19,594
Current liabilities:
Short-term operating lease liabilities		4,863
Accrued expenses and other current liabilities		22,729
Long-term operating lease liabilities		16,883
Other liabilities		20,849
Stockholders' Equity:
Net parent investment		1,097,127
As Previously Reported
Current liabilities:
Accrued expenses and other current liabilities		24,194
Other liabilities		21,536
Stockholders' Equity:
Net parent investment		1,097,127
Restatement Adjustment \| Topic ASC 842
ASSETS
Operating lease right of use assets		19,594
Current liabilities:
Short-term operating lease liabilities		4,863
Accrued expenses and other current liabilities		(1,465)
Long-term operating lease liabilities		16,883
Other liabilities		$ (687)

Commitments and Contingencies

3 Months Ended

Dec. 31, 2019

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 10. 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 December 31, 2019, accrued losses were not material to our consolidated financial statements, and we do not expect any pending matter to have a material impact on our consolidated financial statements.

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.

Accrued Expenses and Other Liabilities (Tables)

3 Months Ended

Dec. 31, 2019

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):

	December 31, 2019		September 30, 2019
Compensation	$	19,876	$	13,031
Cost of revenue related liabilities		4,000		1,668
Sales and other taxes payable		13,443		219
Professional fees		4,948		3,863
Facilities related liabilities		59		273
Other		8,707		5,140
Total	$	51,033	$	24,194

Stockholder's Equity

3 Months Ended

Dec. 31, 2019

Equity [Abstract]

Stockholder's Equity

Note 9. Stockholder’s Equity

Per the Amended and Restated Certificate of Incorporation, which was adopted on October 1, 2019, 600,000,000 shares of capital stock have been authorized, consisting of 40,000,000 shares of Preferred Stock, par value $0.01 per share, or Preferred Stock, and 560,000,000 shares of Common Stock, par value $0.01 per share, or Common Stock.

On October 2, 2019, we registered the issuance of 6,350,000 shares of 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, or Equity Incentive Plan, and 1,050,000 shares of Common Stock that are reserved for issuance under the Cerence 2019 Employee Stock Purchase Plan, or the ESPP.

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. Awards issued under the Plan may not have a term greater than ten years from the date of grant.

In connection with the Spin-Off from Nuance, all outstanding Nuance restricted stock units and performance stock units held by Cerence employees were cancelled, and Cerence regranted such employees economically equivalent restricted stock units of Cerence. 1,208,931 restricted stock units were issued by Cerence in connection with the Spin-Off.

Restricted Units

Information with respect to our non-vested restricted stock units for the three months ended December 31, 2019 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 October 1, 2019		—			—		—		$	—
Granted		2,668,702			768,192		3,436,894		$	16.19
Vested		(21,022	)		—		(21,022	)	$	17.74
Forfeited		(10,004	)		—		(10,004	)	$	17.74
Non-vested at December 31, 2019		2,637,676			768,192		3,405,868		$	16.18		1.48	$	77,063
Expected to vest							3,405,868		$	16.18		1.48	$	77,063

Stock-based Compensation

Stock-based compensation was included in the following captions in our consolidated statements of operations for the three months ended December 31, 2019 and combined statement of operations for the three months ended December 31, 2018 (in thousands):

	Three Months Ended December 31,
	2019		2018
Cost of licensing	$	—	$	5
Cost of connected services		352		128
Cost of professional services		871		247
Research and development		2,975		3,454
Sales and marketing		1,590		1,468
General and administrative		3,181		1,272
	$	8,969	$	6,574

Revenue Recognition (Tables)

3 Months Ended

Dec. 31, 2019

Revenue From Contract With Customer [Abstract]

Summary of Revenues Classified by Major Geographic Region

Through the evaluation of the discrete financial information that is reviewed by the chief operating decision maker (our chief executive officer), we have determined that we have one reportable segment.

Revenues, classified by the major geographic region in which our customers are located, for the three months ended December 31, 2019 and 2018 (dollars in thousands):

	Three Months Ended December 31,
	2019		2018
Revenues:
United States	$	35,041	$	38,064
Other Americas		8		354
Germany		20,217		13,716
Other Europe, Middle East and Africa		4,597		4,784
Japan		11,411		9,753
Other Asia-Pacific		6,185		5,813
Total net revenues	$	77,459	$	72,484

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 October 1, 2019	$	9,219
Revenues recognized but not billed		19,524
Amounts reclassified to accounts receivable, net		(5,765	)
Balance as of December 31, 2019	$	22,978

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

	Deferred revenue
Balance as of October 1, 2019	$	353,284
Amounts billed but not recognized		31,663
Revenue recognized		(25,244	)
Balance as of December 31, 2019	$	359,703

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

The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied at December 31, 2019 (dollars in thousands):

Within One

Year

Two to Five

Years

Greater

than

Five Years

Total

Total revenue

156,695

155,875

98,423

410,993

CONSOLIDATED AND COMBINED BALANCE SHEET (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2019	Sep. 30, 2019
Statement Of Financial Position [Abstract]
Accounts receivable allowances	$ 881	$ 865
Common stock, par value	$ 0.01
Common stock, shares authorized	600,000,000
Common stock, shares issued	36,403,284
Common stock, shares outstanding	36,403,284

Stockholder's Equity - Schedule of Stock-based Compensation (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation	$ 8,969	$ 6,574
Cost of Licensing
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation		5
Cost of Connected Services
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation	352	128
Cost of Professional Services
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation	871	247
Research and Development
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation	2,975	3,454
Sales and Marketing
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation	1,590	1,468
General and Administrative
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation	$ 3,181	$ 1,272

Long Term Debt

3 Months Ended

Dec. 31, 2019

Debt Disclosure [Abstract]

Long Term Debt

Note 12. Long Term Debt

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

	December 31, 2019		September 30, 2019
Senior Facilities, net of unamortized debt issuance costs and discount of $21,578 at December 31, 2019	$	248,422	$	—
Less: current portion		9,396		—
Total long-term debt	$	239,026	$	—

The following table summarizes the maturities of our borrowing obligations as of December 31, 2019 (in thousands):

Fiscal Year	Senior Facilities
2020	$	7,047
2021		9,396
2022		27,000
2023		27,000
2024		199,557
Thereafter		—
Total before unamortized discount		270,000
Less: unamortized discount and issuance costs		21,578
Less: current portion of long-term debt		9,396
Total long-term debt	$	239,026

Senior Facilities

On October 1, 2019, in connection with the Spin-Off, Cerence entered into a Credit Agreement, by and among Cerence, the lenders and issuing banks party thereto and Barclays Bank PLC, as administrative agent (the “Credit Agreement”) consisting of a five-year senior secured term loan facility in the aggregate principal amount of $270.0 million, which was primarily intended to finance a cash distribution of approximately $153.0 million to Nuance and provide approximately $110.0 million initial support for the cash flow needs of the Cerence business. We also entered into a 54-month senior secured first-lien revolving credit facility in an aggregate principal amount of $75.0 million, which shall be drawn on in the event that our working capital and other cash needs are not supported by our operating cash flow. As of December 31, 2019, there were no amounts outstanding under the revolving credit facility.

Cerence’s obligations under the Credit Agreement are jointly and severally guaranteed by certain of our existing and future direct and indirect wholly owned domestic subsidiaries, subject to certain exceptions customary for financings of this type. All obligations are secured by substantially all of our tangible and intangible personal property and material real property, including a perfected first-priority pledge of all (or, in the case of foreign subsidiaries or subsidiaries (“FSHCO”) that own no material assets other than equity interests in foreign subsidiaries that are “controlled foreign corporations” or other FSHCOs, 65%) of the equity securities of our subsidiaries held by any loan party, subject to certain customary exceptions and limitations.

Cerence is obligated to make quarterly principal payments on the last business day of each quarter in an aggregate annual amount equal to 3.5% of the original principal amount of the Term Loan Facility during the first two years of the Term Loan Facility, and 10% of the original principal amount of the Term Loan Facility thereafter, with the balance payable at the maturity date. Quarterly principal payments will commence on March 31, 2020. Interest accrues on outstanding borrowings under the Senior Facilities at a rate of either a base rate (as defined in the Credit Agreement) plus 5.00% or a LIBOR rate (as defined in the Credit Agreement) plus 6.00%. Interest payments with respect to the Senior Facilities are required either on a quarterly basis (for ABR loans) or at the end of each interest period (for LIBOR loans) or, if the duration of the applicable interest period exceeds three months, then every three months. Total interest expense for the three months ended December 31, 2019 was $6.8 million, reflecting the coupon and accretion of the discount.

Borrowings under the Credit Agreement are prepayable at Cerence’s option without premium or penalty, subject to a 1.00% prepayment premium in connection with any repricing transaction for the term loan facility in the first six months after the closing date. Cerence may request to extend the maturity date of all or a portion of the Senior Facilities subject to certain conditions customary for financings of this type. The Credit Agreement also contains certain mandatory prepayment provisions in the event that Cerence incurs certain types of indebtedness or receives net cash proceeds from certain non-ordinary course asset sales or other dispositions of property or generates positive excess cash flow, in each case subject to terms and conditions customary for financings of this type.

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 a financial covenant requiring the maintenance of a net first lien leverage ratio of not greater than 6.00 to 1.00. The Credit Agreement also contains events of default customary for financings of this type, including certain customary change of control events. As of December 31, 2019, we were in compliance with the Credit Agreement covenants.

Income Taxes - Components of (Loss) Income Before Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Income Tax Disclosure [Abstract]
Domestic	$ (7,128)	$ (2,069)
Foreign	(1,632)	4,862
(Loss) income before income taxes	$ (8,760)	$ 2,793

Stockholder's Equity (Tables)

3 Months Ended

Dec. 31, 2019

Equity [Abstract]

Schedule of Non-vested Restricted Stock Units

Information with respect to our non-vested restricted stock units for the three months ended December 31, 2019 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 October 1, 2019		—			—		—		$	—
Granted		2,668,702			768,192		3,436,894		$	16.19
Vested		(21,022	)		—		(21,022	)	$	17.74
Forfeited		(10,004	)		—		(10,004	)	$	17.74
Non-vested at December 31, 2019		2,637,676			768,192		3,405,868		$	16.18		1.48	$	77,063
Expected to vest							3,405,868		$	16.18		1.48	$	77,063

Schedule of Stock-based Compensation

	Three Months Ended December 31,
	2019		2018
Cost of licensing	$	—	$	5
Cost of connected services		352		128
Cost of professional services		871		247
Research and development		2,975		3,454
Sales and marketing		1,590		1,468
General and administrative		3,181		1,272
	$	8,969	$	6,574

Significant Accounting Policies

3 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Significant Accounting Policies

Note 2. Significant Accounting Policies

Principals of Consolidation

Fiscal 2020

Fiscal 2019

Basis of Presentation

Use of Estimates

Recently Adopted Accounting Standards

Leases

The following tables summarize the impact of adopting ASC 842 on the consolidated balance sheet as of October 1, 2019 (dollars in thousands):

	As of October 1, 2019
	As Previously Reported		Impact of Adoption of Topic ASC 842			As Adjusted
Assets:
Operating lease right of use assets	$	—	$	19,594		$	19,594

Liabilities:
Current liabilities:
Short-term operating lease liabilities	$	—	$	4,863		$	4,863
Accrued expenses and other current liabilities		24,194		(1,465	)		22,729
Long-term operating lease liabilities		-		16,883			16,883
Other liabilities	$	21,536	$	(687	)	$	20,849

Equity:
Net parent investment	$	1,097,127	$	-		$	1,097,127

Other Accounting Pronouncements

Earnings Per Share

3 Months Ended

Dec. 31, 2019

Earnings Per Share [Abstract]

Earnings Per Share

Note 4. Earnings Per Share

Basic earnings per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing net 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 are reflected in diluted net income per share by applying the treasury stock method. Due to the net loss recognized for the three months ended December 31, 2019, there were no dilutive shares. There were no Cerence equity awards outstanding prior to the Spin-Off, thus the computation of basic and diluted earnings per common share (EPS) for all prior periods disclosed was calculated using the shares issued in connection with the Spin-Off totaling 36.4 million shares.

The numerator for both basic and diluted EPS is net (loss) income.

The following is a reconciliation of basic shares to diluted shares:

	December 31,
in thousands	2019		2018
Basic shares		35,995		36,391
Effect of dilutive shares		—		—
Diluted shares		35,995		36,391

Commitments and Contingencies - Additional Information (Details)	3 Months Ended
	Dec. 31, 2019
Commitments And Contingencies Disclosure [Abstract]
Indemnification period for former officers and members of the boards of directors	6 years

Leases - Additional Information (Details) $ in Thousands	3 Months Ended
Leases - Additional Information (Details) $ in Thousands	Dec. 31, 2019 USD ($)
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.
Undiscounted future minimum lease payments under non-cancelable, term	1 year
Cash payments related to operating leases	$ 1,700
Cash payments related to financing leases	$ 55
Minimum
Lessee Lease Description [Line Items]
Operating lease remaining term	1 year
Maximum
Lessee Lease Description [Line Items]
Operating lease remaining term	8 years

Income Taxes (Tables)

3 Months Ended

Dec. 31, 2019

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 December 31,
	2019			2018
Domestic	$	(7,128	)	$	(2,069	)
Foreign		(1,632	)		4,862
(Loss) income before income taxes	$	(8,760	)	$	2,793

Components of Provision for Income Taxes

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

	Three Months Ended December 31,
	2019			2018
Domestic	$	(3,218	)	$	(491	)
Foreign		6,220			1,029
Provision for income taxes	$	3,002		$	538
Effective income tax rate		(34.3	)%		19.3	%

Stockholder's Equity - Schedule of Non-vested Restricted Stock Units (Details) $ / shares in Units, $ in Thousands	3 Months Ended
	Dec. 31, 2019 USD ($) $ / shares shares
Time-Based Restricted Stock Units
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Non-vested, Shares, Granted	2,668,702
Non-vested, Shares, Vested	(21,022)
Non-vested, Shares, Forfeited	(10,004)
Non-vested, Shares, Ending balance	2,637,676
Performance-Based Restricted Stock Units
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Non-vested, Shares, Granted	768,192
Non-vested, Shares, Ending balance	768,192
Restricted Stock Units
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Non-vested, Shares, Granted	3,436,894
Non-vested, Shares, Vested	(21,022)
Non-vested, Shares, Forfeited	(10,004)
Non-vested, Shares, Ending balance	3,405,868
Non-vested, Shares, Expected to vest	3,405,868
Non-vested, Weighted-Average Grant-Date Fair Value, Granted \| $ / shares	$ 16.19
Non-vested, Weighted-Average Grant-Date Fair Value, Vested \| $ / shares	17.74
Non-vested, Weighted-Average Grant-Date Fair Value, Forfeited \| $ / shares	17.74
Non-vested, Weighted-Average Grant-Date Fair Value, Ending balance \| $ / shares	16.18
Non-vested, Weighted-Average Grant-Date Fair Value, Expected to vest \| $ / shares	$ 16.18
Non-vested, Weighted-Average Remaining Contractual Term (years), Balance	1 year 5 months 23 days
Non-vested, Weighted-Average Remaining Contractual Term (years), Expected to vest	1 year 5 months 23 days
Non-vested, Aggregate Intrinsic Value, Balance \| $	$ 77,063
Non-vested, Aggregate Intrinsic Value, Expected to vest \| $	$ 77,063

Restructuring and Other Costs, Net (Tables)

3 Months Ended

Dec. 31, 2019

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 three months ended December 31, 2019 (dollars in thousands):

	Personnel			Facilities			Separation			Total
Balance at October 1, 2019	$	489		$	26		$	3,876		$	4,391
Restructuring and other costs, net		360			—			7,194			7,554
Cash payments		(201	)		(5	)		(3,004	)		(3,210	)
Foreign exchange impact on ending balance		8			1			—			9
Balance at December 31, 2019	$	656		$	22		$	8,066		$	8,744

Schedule of Restructuring Charges

	Three Months Ended December 31,
	2019								2018
	Personnel		Facilities		Separation		Total		Personnel			Facilities		Separation		Total
Restructuring charges	$	360	$	—	$	7,194	$	7,554	$	(663	)	$	2,055	$	1,735	$	3,127

CONSOLIDATED AND COMBINED STATEMENT OF EQUITY AND CHANGES IN PARENT COMPANY EQUITY (Unaudited) - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in-Capital	Accumulated Deficit	Net Parent Investment	Accumulated Other Comprehensive Loss
Balance at Sep. 30, 2018	$ 993,319				$ 1,017,276	$ (23,957)
Accumulated adjustment related to the adoption \| ASC 606	4,735				4,735
Net (loss) income	2,255				2,255
Other comprehensive income (loss)	(3,385)					(3,385)
Balance at Dec. 31, 2018	996,924				1,024,266	(27,342)
Balance at Sep. 30, 2019	1,068,128				1,097,127	(28,999)
Net (loss) income	(11,762)			$ (11,762)
Other comprehensive income (loss)	5,830					5,830
Distribution to Parent	(152,978)				(152,978)
Net (decrease) increase in net parent investment	11,453				(4,275)	15,728
Reclassification of net parent investment in Cerence			$ 939,874		$ (939,874)
Issuance of common stock at separation		$ 364	(364)
Issuance of common stock at separtion, (in shares)		36,391
Stock issued pursuant to employee stock plans	(141)	$ 0	(141)
Stock issued pursuant to employee stock plans, (in shares)		12
Stock-based compensation	5,685		5,685
Balance at Dec. 31, 2019	$ 926,215	$ 364	$ 945,054	$ (11,762)		$ (7,441)
Balance (in shares) at Dec. 31, 2019		36,403

Earnings Per Share - Additional Information (Details) - shares	3 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Earnings Per Share [Line Items]
Diluted	35,995,355	36,391,445
Common stock, shares issued	36,403,284
Spin-Off
Earnings Per Share [Line Items]
Diluted	0
Common stock, shares issued	36,400,000

Significant Accounting Policies - Additional Information (Details) $ in Millions	3 Months Ended
	Dec. 31, 2019 USD ($)
Accounting Policies [Abstract]
Deferred rent reclassified as right of use assets	$ 2.2

Goodwill and Other Intangible Assets - Changes in Carrying Amount of Goodwill (Details) $ in Thousands	3 Months Ended
	Dec. 31, 2019 USD ($)
Goodwill And Intangible Assets Disclosure [Abstract]
Balance as of October 1, 2019	$ 1,119,329
Effect of foreign currency translation	3,536
Balance as of December 31, 2019	$ 1,122,865

Long Term Debt - Schedule of Long-term Debt (Parenthetical) (Details) $ in Thousands	Dec. 31, 2019 USD ($)
Senior Facilities
Debt Instrument [Line Items]
Senior facilities, Unamortized debt issuance costs and discount	$ 21,578

Revenue Recognition - Summary of Significant Changes in Contract Assets (Details) $ in Thousands	3 Months Ended
	Dec. 31, 2019 USD ($)
Revenue From Contract With Customer [Abstract]
Balance	$ 9,219
Revenues recognized but not billed	19,524
Amounts reclassified to accounts receivable, net	(5,765)
Balance	$ 22,978

Leases - Summary of Future Minimum Lease Commitments Under Non-cancelable Leases (Details) $ in Thousands	Sep. 30, 2019 USD ($)
Leases [Abstract]
2020	$ 6,323
2021	5,421
2022	4,493
2023	3,237
2024	2,922
Thereafter	4,039
Total	$ 26,435

Income Taxes - Components of Provision for Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Income Tax Disclosure [Abstract]
Domestic	$ (3,218)	$ (491)
Foreign	6,220	1,029
Provision for income taxes	$ 3,002	$ 538
Effective income tax rate	(34.30%)	19.30%

Revenue Recognition

3 Months Ended

Dec. 31, 2019

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;

•

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 and consider a number of data points, including:

•

the pricing of standalone sales (in the instances where available);

•

the pricing established by management when setting prices for deliverables that are intended to be sold on a standalone basis;

•

contractually stated prices for deliverables that are intended to be sold on a standalone basis; and

•

other pricing factors, such as the geographical region in which the products are sold and expected discounts based on the customer size and type.

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 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 services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those 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

Software and technology 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. For income statement presentation purposes, we separate license revenue from professional services revenue based on their SSPs.

Revenue from distinct software and technology licenses, which do not require professional service 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.

Revenue from 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 the practical expedient in ASC 606-10-55-65(A).

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.

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.

Judgments are required to determine the SSP for each distinct performance obligation. When the SSP is directly observable, we estimate the SSP based upon the historical transaction prices, adjusted for geographic considerations, customer classes, and customer relationship profiles. In instances where the SSP is not directly observable, we determine the SSP using information that may include market conditions and other observable inputs. We may have more than one SSP for individual products and services due to the stratification of those products and services by customers and circumstances. In these instances, we may use information such as the size of the customer and geographic region in determining the SSP. Determining the SSP for performance obligations which we never sell separately also requires significant judgment. In estimating the SSP, we consider the likely price that would have resulted from established pricing practices had the deliverable been offered separately and the prices a customer would likely be willing to pay.

Revenues, classified by the major geographic region in which our customers are located, for the three months ended December 31, 2019 and 2018 (dollars in thousands):

	Three Months Ended December 31,
	2019		2018
Revenues:
United States	$	35,041	$	38,064
Other Americas		8		354
Germany		20,217		13,716
Other Europe, Middle East and Africa		4,597		4,784
Japan		11,411		9,753
Other Asia-Pacific		6,185		5,813
Total net revenues	$	77,459	$	72,484

Revenues within the United States, Germany, and Japan accounted for more than 10% of revenue for all periods presented.

Revenues relating to one customer accounted for $18.0 million, or 23.2% of revenue for the three months ended December 31, 2019. Two customers accounted for $13.5 million, or 18.7%, and $8.1 million, or 11.2% of revenue for the three months ended December 31, 2018.

(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 five 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 in other assets, respectively. As of December 31, 2019, we had $2.1 million of contract acquisition costs. We had amortization expense of $0.2 million related to these costs during the three months ended December 31, 2019. 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 five 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. As of December 31, 2019, we had $43.0 million of capitalized contract costs.

We had amortization expense of $2.7 million related to these costs during the three months ended December 31, 2019. 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 doubtful accounts to provide for the estimated amount of receivables that may not be collected. The allowance is based upon an assessment of customer creditworthiness, historical payment experience, the age of outstanding receivables and other applicable factors.

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. Contract assets are included in prepaid expenses and other current assets. The table below shows significant changes in contract assets (dollars in thousands):

	Contract assets
Balance as of October 1, 2019	$	9,219
Revenues recognized but not billed		19,524
Amounts reclassified to accounts receivable, net		(5,765	)
Balance as of December 31, 2019	$	22,978

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 October 1, 2019	$	353,284
Amounts billed but not recognized		31,663
Revenue recognized		(25,244	)
Balance as of December 31, 2019	$	359,703

(g) Remaining Performance Obligations

Within One

Year

Two to Five

Years

Greater

than

Five Years

Total

Total revenue

156,695

155,875

98,423

410,993

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.

Revenue Recognition - Summary of Significant Changes in Deferred Revenue (Details) $ in Thousands	3 Months Ended
	Dec. 31, 2019 USD ($)
Revenue From Contract With Customer [Abstract]
Balance	$ 353,284
Amounts billed but not recognized	31,663
Revenue recognized	(25,244)
Balance	$ 359,703

Long Term Debt - Schedule of Long-term Debt (Details) $ in Thousands	Dec. 31, 2019 USD ($)
Debt Instrument [Line Items]
Less: current portion	$ 9,396
Total long-term debt	239,026
Senior Facilities
Debt Instrument [Line Items]
Senior Facilities, net of unamortized debt issuance costs and discount of $21,578 at December 31, 2019	248,422
Less: current portion	9,396
Total long-term debt	$ 239,026

Long Term Debt (Tables)

3 Months Ended

Dec. 31, 2019

Debt Disclosure [Abstract]

Schedule of Long-term Debt

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

	December 31, 2019		September 30, 2019
Senior Facilities, net of unamortized debt issuance costs and discount of $21,578 at December 31, 2019	$	248,422	$	—
Less: current portion		9,396		—
Total long-term debt	$	239,026	$	—

Summary of Maturities of Borrowing Obligations

The following table summarizes the maturities of our borrowing obligations as of December 31, 2019 (in thousands):

Fiscal Year	Senior Facilities
2020	$	7,047
2021		9,396
2022		27,000
2023		27,000
2024		199,557
Thereafter		—
Total before unamortized discount		270,000
Less: unamortized discount and issuance costs		21,578
Less: current portion of long-term debt		9,396
Total long-term debt	$	239,026

Goodwill and Other Intangible Assets

3 Months Ended

Dec. 31, 2019

Goodwill And Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

Note 5. Goodwill and Other Intangible Assets

(a) Goodwill

The changes in the carrying amount of goodwill as of December 31, 2019 are as follows (dollars in thousands):

	Total
Balance as of October 1, 2019	$	1,119,329
Acquisitions		—
Effect of foreign currency translation		3,536
Balance as of December 31, 2019	$	1,122,865

(b) Intangible Assets, Net

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

	December 31, 2019
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted Average Remaining Life (Years)
Customer relationships	$	108,863	$	(65,369	)	$	43,494		3.7
Technology and patents		90,174		(72,955	)		17,219		2.3
Total	$	199,037	$	(138,324	)	$	60,713

	September 30, 2019
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted Average Remaining Life (Years)
Customer relationships	$	104,783	$	(58,568	)	$	46,215		4.0
Technology and patents		116,757		(97,411	)		19,346		2.5
Total	$	221,540	$	(155,979	)	$	65,561

Amortization expense related to intangible assets in the aggregate was $5.2 million and $5.3 million for the three months ended December 31, 2019 and 2018, respectively. We expect amortization of intangible assets to be $15.5 million for the remainder of 2020.

Goodwill and Other Intangible Assets - Summary of Gross Carrying Amounts and Accumulated Amortization of Intangible Assets by Major Class (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019
Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 199,037	$ 221,540
Accumulated Amortization	(138,324)	(155,979)
Net Carrying Amount	60,713	65,561
Customer Relationships
Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	108,863	104,783
Accumulated Amortization	(65,369)	(58,568)
Net Carrying Amount	$ 43,494	$ 46,215
Weighted Average Remaining Life (Years)	3 years 8 months 12 days	4 years
Technology and Patents
Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 90,174	$ 116,757
Accumulated Amortization	(72,955)	(97,411)
Net Carrying Amount	$ 17,219	$ 19,346
Weighted Average Remaining Life (Years)	2 years 3 months 18 days	2 years 6 months