Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Dec. 31, 2023 | Jan. 31, 2024 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Dec. 31, 2023 | |
Document Fiscal Year Focus | 2024 | |
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 | 83-4177087 | |
Entity Address Address Line1 | 25 Mall Road | |
Entity Address Address Line2 | Suite 416 | |
Entity Address City Or Town | Burlington | |
Entity Address State Or Province | MA | |
Entity Address Postal Zip Code | 01803 | |
City Area Code | 857 | |
Local Phone Number | 362-7300 | |
Title of 12(b) Security | Common Stock, par value $0.01 per share | |
Trading Symbol | CRNC | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 41,674,637 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Revenues: | ||
Total revenues | $ 138,335 | $ 83,658 |
Cost of revenues: | ||
Amortization of intangible assets | 103 | 103 |
Total cost of revenues | 26,335 | 26,183 |
Gross profit | 112,000 | 57,475 |
Operating expenses: | ||
Research and development | 33,306 | 29,494 |
Sales and marketing | 6,071 | 9,162 |
General and administrative | 12,793 | 14,257 |
Amortization of intangible assets | 545 | 2,350 |
Restructuring and other costs, net | 705 | 4,189 |
Total operating expenses | 53,420 | 59,452 |
Income (loss) from operations | 58,580 | (1,977) |
Interest income | 1,432 | 870 |
Interest expense | (3,236) | (3,514) |
Other income (expense), net | 1,422 | 3,713 |
Income (loss) before income taxes | 58,198 | (908) |
Provision for income taxes | 34,341 | 1,250 |
Net income (loss) | $ 23,857 | $ (2,158) |
Net income (loss) per share: | ||
Basic | $ 0.58 | $ (0.05) |
Diluted | $ 0.53 | $ (0.05) |
Weighted-average common share outstanding: | ||
Basic | 41,186 | 39,962 |
Diluted | 49,255 | 39,962 |
License | ||
Revenues: | ||
Total revenues | $ 20,823 | $ 45,417 |
Cost of revenues: | ||
Total cost of revenues | 1,604 | 1,614 |
Connected Services | ||
Revenues: | ||
Total revenues | 96,820 | 18,394 |
Cost of revenues: | ||
Total cost of revenues | 7,303 | 6,542 |
Professional Services | ||
Revenues: | ||
Total revenues | 20,692 | 19,847 |
Cost of revenues: | ||
Total cost of revenues | $ 17,325 | $ 17,924 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Statement of Comprehensive Income [Abstract] | ||
Net income (loss) | $ 23,857 | $ (2,158) |
Other comprehensive income: | ||
Foreign currency translation adjustments | 4,280 | 9,162 |
Pension adjustments, net | 27 | 26 |
Net unrealized gains on available-for-sale securities | 163 | 99 |
Total other comprehensive income | 4,470 | 9,287 |
Comprehensive income | $ 28,327 | $ 7,129 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2023 | Sep. 30, 2023 |
Current assets: | ||
Cash and cash equivalents | $ 98,736 | $ 101,154 |
Marketable securities | 9,784 | 9,211 |
Accounts receivable, net of allowances of $4,050 and $4,044 | 58,693 | 61,270 |
Deferred costs | 5,568 | 6,935 |
Prepaid expenses and other current assets | 55,580 | 47,157 |
Total current assets | 228,361 | 225,727 |
Long-term marketable securities | 7,755 | 10,607 |
Property and equipment, net | 32,625 | 34,013 |
Deferred costs | 19,849 | 20,299 |
Operating lease right of use assets | 12,347 | 11,961 |
Goodwill | 906,396 | 900,342 |
Intangible assets, net | 3,374 | 3,875 |
Deferred tax assets | 16,607 | 46,601 |
Other assets | 37,594 | 44,165 |
Total assets | 1,264,908 | 1,297,590 |
Current liabilities: | ||
Accounts payable | 19,179 | 16,873 |
Deferred revenue | 43,392 | 77,068 |
Short-term operating lease liabilities | 5,676 | 5,434 |
Accrued expenses and other current liabilities | 51,732 | 48,718 |
Total current liabilities | 119,979 | 148,093 |
Long-term debt, net of discounts and issuance costs | 277,419 | 275,951 |
Deferred revenue, net of current portion | 100,913 | 145,531 |
Long-term operating lease liabilities | 8,066 | 7,947 |
Other liabilities | 27,398 | 25,193 |
Total liabilities | 533,775 | 602,715 |
Commitments and contingencies (Note 12) | ||
Stockholders' Equity: | ||
Common stock, $0.01 par value, 560,000 shares authorized; 41,237 and 40,423 shares issued and outstanding, respectively | 412 | 404 |
Accumulated other comprehensive (loss) income | (23,496) | (27,966) |
Additional paid-in capital | 1,064,022 | 1,056,099 |
Accumulated deficit | (309,805) | (333,662) |
Total stockholders' equity | 731,133 | 694,875 |
Total liabilities and stockholders' equity | $ 1,264,908 | $ 1,297,590 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2023 | Sep. 30, 2023 |
Statement of Financial Position [Abstract] | ||
Accounts receivable allowances | $ 4,050 | $ 4,044 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 560,000,000 | 560,000,000 |
Common stock, shares issued | 41,237,000 | 40,423,000 |
Common stock, shares outstanding | 41,237,000 | 40,423,000 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) - USD ($) shares in Thousands, $ in Thousands | Total | Cumulative Effect, Period of Adoption, Adjustment | Common Stock | Additional Paid-in-Capital | Additional Paid-in-Capital Cumulative Effect, Period of Adoption, Adjustment | Accumulated Deficit | Accumulated Deficit Cumulative Effect, Period of Adoption, Adjustment | Accumulated Other Comprehensive Loss |
Balance at Sep. 30, 2022 | $ 712,950 | $ (8,530) | $ 394 | $ 1,029,542 | $ (14,371) | $ (283,249) | $ 5,841 | $ (33,737) |
Balance (in shares) at Sep. 30, 2022 | 39,430 | |||||||
Accounting Standards Update [Extensible Enumeration] | us-gaap:AccountingStandardsUpdate202006CumulativeEffectPeriodOfAdoptionMember | |||||||
Net Income (Loss) | $ (2,158) | (2,158) | ||||||
Other comprehensive income | 9,287 | 9,287 | ||||||
Issuance of common stock | 1,723 | $ 7 | 1,716 | |||||
Issuance of common stock, (in shares) | 644 | |||||||
Stock withheld to cover tax withholdings requirements upon stock vesting | (2,643) | $ (1) | (2,642) | |||||
Stock withheld to cover tax withholdings requirements upon stock vesting, (in shares) | (57) | |||||||
Stock-based compensation | 9,222 | 9,222 | ||||||
Balance at Dec. 31, 2022 | 719,851 | $ 400 | 1,023,467 | (279,566) | (24,450) | |||
Balance (in shares) at Dec. 31, 2022 | 40,017 | |||||||
Balance at Sep. 30, 2023 | 694,875 | $ 404 | 1,056,099 | (333,662) | (27,966) | |||
Balance (in shares) at Sep. 30, 2023 | 40,423 | |||||||
Net Income (Loss) | 23,857 | 23,857 | ||||||
Other comprehensive income | 4,470 | 4,470 | ||||||
Issuance of common stock | 6,201 | $ 8 | 6,193 | |||||
Issuance of common stock, (in shares) | 814 | |||||||
Stock withheld to cover tax withholdings requirements upon stock vesting | (6,209) | (6,209) | ||||||
Stock-based compensation | 7,939 | 7,939 | ||||||
Balance at Dec. 31, 2023 | $ 731,133 | $ 412 | $ 1,064,022 | $ (309,805) | $ (23,496) | |||
Balance (in shares) at Dec. 31, 2023 | 41,237 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 23,857 | $ (2,158) |
Adjustments to reconcile net income (loss) to net cash used in operations: | ||
Depreciation and amortization | 2,686 | 5,008 |
Stock-based compensation | 8,380 | 12,472 |
Non-cash interest expense | 1,468 | 444 |
Deferred tax provision (benefit) | 30,298 | (164) |
Unrealized foreign currency transaction gains | (2,012) | (6,084) |
Other | 382 | 104 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 4,933 | (16,651) |
Prepaid expenses and other assets | 1,170 | 3,261 |
Deferred costs | 2,589 | 1,586 |
Accounts payable | 2,382 | 7,820 |
Accrued expenses and other liabilities | 3,712 | (255) |
Deferred revenue | (82,660) | (7,501) |
Net cash used in operating activities | (2,815) | (2,118) |
Cash flows from investing activities: | ||
Capital expenditures | (931) | (683) |
Purchases of marketable securities | (7,081) | |
Sale and maturities of marketable securities | 2,442 | 9,500 |
Other investing activities | (322) | (219) |
Net cash provided by investing activities | 1,189 | 1,517 |
Cash flows from financing activities: | ||
Payments for long-term debt issuance costs | 0 | (403) |
Principal payments of long-term debt | (1,563) | |
Common stock repurchases for tax withholdings for net settlement of equity awards | (6,209) | (2,643) |
Principal payment of lease liabilities arising from a finance lease | (122) | (165) |
Proceeds from the issuance of common stock | 6,201 | 1,723 |
Net cash used in financing activities | (130) | (3,051) |
Effects of exchange rate changes on cash and cash equivalents | (662) | (538) |
Net change in cash and cash equivalents | (2,418) | (4,190) |
Cash and cash equivalents at beginning of period | 101,154 | 94,847 |
Cash and cash equivalents at end of period | 98,736 | 90,657 |
Supplemental information: | ||
Cash paid for income taxes | 3,104 | 2,459 |
Cash paid for interest | $ 3,003 | $ 4,341 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Pay vs Performance Disclosure | ||
Net Income (Loss) | $ 23,857 | $ (2,158) |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Dec. 31, 2023 shares | |
Trading Arrangements, by Individual | |
Material Terms of Trading Arrangement | Our policy governing transactions in our securities by directors, officers and employees permits our officers, directors and certain other persons to enter into trading plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. Generally, under these trading plans, the individual relinquishes control over the transactions once the trading plan is put into place. Accordingly, sales under these plans may occur at any time, including possibly before, simultaneously with, or immediately after significant events involving our company. During the three-month period ended December 31, 2023, Stefan Ortmanns , Chief Executive Officer and a director of the Company, and Thomas L. Beaudoin , Chief Financial Officer and a director of the Company, entered into trading plans on December 14, 2023 and December 21, 2023 , respectively (each, a “Plan” and collectively, the “Plans”) covering periods after the date of this Quarterly Report in accordance with our policy governing transactions in our securities. Each Plan is intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act. Dr. Ortmann’s Plan provides for the sale of up to 179,693 shares of our common stock and will be terminated on the earlier of (a) November 1, 2024 , (b) the first date on which all trades have been executed, and (c) the date notice to terminate is provided. Mr. Beaudoin’s Plan provides for the sale of up to 60,000 shares of our common stock less any shares withheld to cover tax withholding obligations and will be terminated on the earlier of (a) February 7, 2025 , (b) the first date on which all trades have been executed, and (c) the date notice to terminate is provided. Generally, under these trading plans, the individual relinquishes control over the transactions once the trading plan is put into place. Accordingly, sales under these Plans may occur at any time, including possibly before, simultaneously with, or immediately after significant events involving our company. We anticipate that, as permitted by Rule 10b5-1 and our policy governing transactions in our securities, some or all of our officers, directors and employees may establish trading plans in the future. We intend to disclose the names of executive officers and directors who establish a trading plan in compliance with Rule 10b5-1 and Regulation S-K, Item 408(a) and the requirements of our policy governing transactions in our securities in our future quarterly and annual reports on Form 10-Q and 10-K filed with the SEC. However, we undertake no obligation to update or revise the information provided herein, including for revision or termination of an established trading plan, other than in such quarterly and annual reports. |
Stefan Ortmanns | |
Trading Arrangements, by Individual | |
Name | Stefan Ortmanns |
Title | Chief Executive Officer |
Rule 10b5-1 Arrangement Adopted | true |
Adoption Date | December 14, 2023 |
Termination Date | November 1, 2024 |
Aggregate Available | 179,693 |
Thomas L. Beaudoin | |
Trading Arrangements, by Individual | |
Name | Thomas L. Beaudoin |
Title | Chief Financial Officer |
Rule 10b5-1 Arrangement Adopted | true |
Adoption Date | December 21, 2023 |
Termination Date | February 7, 2025 |
Aggregate Available | 60,000 |
Business Overview
Business Overview | 3 Months Ended |
Dec. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business Overview | Note 1. Business Overview Business Cerence Inc. (referred to in this Quarterly Report on Form 10-Q as “we,” “our,” “us,” “ourselves,” the “Company” or “Cerence”) is a global, premier provider of AI-powered assistants and innovations for connected and autonomous vehicles. Our customers include all major automobile original equipment manufacturers (“OEMs”), or their tier 1 suppliers worldwide. We deliver our solutions on a white-label basis, enabling our customers to deliver customized virtual assistants with unique, branded personalities and ultimately strengthening the bond between automobile brands and end users. We generate revenue primarily by selling software licenses and cloud-connected services. In addition, we generate professional services revenue from our work with OEMs and suppliers during the design, development and deployment phases of the vehicle model lifecycle and through maintenance and enhancement projects. |
Significant Accounting Policies
Significant Accounting Policies | 3 Months Ended |
Dec. 31, 2023 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Note 2. Significant Accounting Policies Principles of Consolidation The accompanying unaudited condensed consolidated financial statements include the accounts of the Company, as well as those of our wholly owned subsidiaries. All significant intercompany transactions and balances are eliminated in consolidation. Basis of Presentation The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnote disclosures required by GAAP for complete financial statements. The condensed consolidated financial statements reflect all adjustments considered necessary for a fair presentation of the consolidated results of operations and financial position for the interim periods presented. All such adjustments are of a normal recurring nature. The results of operations for the three months ended December 31, 2023 are not necessarily indicative of the results to be expected for any other interim period or for the fiscal year ending September 30, 2024. These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes contained in our Annual Report on Form 10-K for the fiscal year ended September 30, 2023 . Use of Estimates The financial statements are prepared in accordance with GAAP, which requires management to make estimates and assumptions. These estimates, judgments and assumptions can affect the reported amounts in the financial statements and the footnotes thereto. Actual results could differ materially from these estimates. On an ongoing basis, we evaluate our estimates, assumptions and judgments. Significant estimates inherent to the preparation of financial statements include: revenue recognition; allowance for credit losses; accounting for deferred costs; accounting for internally developed software; the valuation of goodwill and intangible assets; accounting for business combinations; accounting for stock-based compensation; accounting for income taxes; accounting for leases; accounting for convertible debt; and loss contingencies. We base our estimates on historical experience, market participant fair value considerations, projected future cash flows, and various other factors that are believed to be reasonable under the circumstances. Actual amounts could differ significantly from these estimates. Concentration of Risk Financial instruments that potentially subject us to significant concentrations of credit risk primarily consist of trade accounts receivable. We perfo rm ongoing credit evaluations of our customers’ financial condition and limit the amount of credit extended when deemed appropriate. Two customers accounted for 11.8 % and 10.7 % of our Accounts receivable, net balance at December 31, 2023 . Two customers accounte d for 10.8 % and 10.1 % o f our Accounts receivable, net balance at September 30, 2023 . Allowance for Credit Losses We are exposed to credit losses primarily through our sales of software licenses and services to customers. We determine credit ratings for each customer in our portfolio based upon public information and information obtained directly from our customers. A credit limit for each customer is established and in certain cases we may require collateral or prepayment to mitigate credit risk. Our expected loss methodology is developed using historical collection experience, current customer credit information, current and future economic and market conditions and a review of the current status of the customer's account balances. We monitor our ongoing credit exposure through reviews of customer balances against contract terms and due dates, current economic conditions, and dispute resolution. Estimated credit losses are written off in the period in which the financial asset is no longer collectible. The change in the allowance for credit losses for the three months ended December 31, 2023 is as follows (dollars in thousands): Allowance for Credit Losses Balance as of September 30, 2023 $ 4,131 Effect of foreign currency translation 9 Balance as of December 31, 2023 $ 4,140 Inventory Inventory, consisting primarily of finished goods related to our Cerence Link product, is accounted for using the first in, first out method, and is valued at the lower of cost and net realizable value. Inventory is included within Prepaid expenses and other current assets. As of December 31, 2023 and September 30, 2023, inventory was $ 0.9 million a nd $ 0.5 million, respectively. Recently Adopted Accounting Standards None. Issued Accounting Standards Not Yet Adopted In November 2023, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”), to expand reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments in the ASU require that a public entity disclose, on an annual and interim basis, significant segment expenses that are regularly provided to an entity's chief operating decision maker (“CODM”), a description of other segment items by reportable segment, and any additional measures of a segment's profit or loss used by the CODM when deciding how to allocate resources. ASU 2023-07 applies to entities with a single reportable segment. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. A public entity should apply ASU 2023-07 retrospectively to all prior periods presented in the financial statements, with early adoption permitted. We are currently in the process of evaluating the effects of this pronouncement on our condensed consolidated financial statements and disclosures. In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which requires greater disaggregation of income tax disclosures related to the income tax rate reconciliation and income taxes paid and is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued. The amendments should be applied on a prospective basis although retrospective application is permitted. We are currently in the process of evaluating the effects of this pronouncement on our condensed consolidated financial statements and disclosures. |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Dec. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Note 3. Revenue Recognition We primarily derive revenue from the following sources: (1) royalty-based software license arrangements, (2) connected services, and (3) professional services. Revenue is reported net of applicable sales and use tax, value-added tax and other transaction taxes imposed on the related transaction including mandatory government charges that are passed through to our customers. We account for a contract when both parties have approved and committed to the contract, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. (a) Disaggregated Revenue Revenues, classified by the major geographic region in which our customers are located, for the three months ended December 31, 2023 and 2022 (dollars in thousands): Three Months Ended December 31, 2023 2022 Revenues: United States $ 99,469 $ 21,356 Other Americas 84 26 Germany 19,133 18,164 Other Europe, Middle East and Africa 4,775 3,672 Japan 5,623 25,841 Other Asia-Pacific 9,251 14,599 Total net revenues $ 138,335 $ 83,658 For the three months ended December 31, 2022, revenues within China were $ 9.6 million, which were over 10 % of revenues. Revenues relating to one customer accounted for $ 78.4 million, or 56.7 % of revenues for the three months ended December 31, 2023. On October 31, 2023, we entered into an early termination agreement relating to a legacy contract acquired by Nuance Communications Inc. (“Nuance”) through a 2013 acquisition. Previously the term of the contract ended on December 31, 2025, whereas the agreement signed on October 31, 2023, updated the termination date to December 31, 2023. There is no cash flow associated with this legacy contract. The effect of this change is to accelerate $ 67.8 million of deferred revenue into the first quarter of fiscal year 2024. Revenues relating to two customers accounted for $ 21.4 million, or 25.6 %, and $ 10.0 million, or 12.0 % , of revenues for the three months ended December 31, 2022. (b) Contract Acquisition Costs We are required to capitalize certain contract acquisition costs. The capitalized costs primarily relate to paid commissions. 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, 2023 and September 30, 2023 , we had $ 8.0 million of contract acquisition costs. We had amortization expense of $ 0.7 million and $ 0.8 million related to these costs during the three months ended December 31, 2023 and 2022 , respectively. There was no impairment related to contract acquisition costs . (c) 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. The current and noncurrent portions of capitalized contract fulfillment costs are presented as Deferred costs. We had amortization e xpense of $ 4.1 million and $ 2.7 million related to these costs during the three months ended December 31, 2023 and 2022, respectively. There was no impairment related to contract costs capitalized. (d) 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. Accounts receivable, net as of September 30, 2023 and 2022 was $ 61.3 million and $ 45.1 million, respectively. We maintain an allowance for credit losses to provide for the estimated amount of receivables and contract assets that may not be collected. Our contract assets and liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period. Contract assets include unbilled amounts from long-term contracts when revenue recognized exceeds the amount billed to the customer, and right to payment is not solely subject to the passage of time. The current and noncurrent portions of contract assets are included in Prepaid expenses and other current assets and Other assets, respectively. The table below shows significant changes in contract assets (dollars in thousands): Contract assets Balance as of September 30, 2023 $ 56,708 Revenues recognized but not billed 8,865 Amounts reclassified to Accounts receivable, net ( 11,987 ) Effect of foreign currency translation 2,531 Balance as of December 31, 2023 $ 56,117 Our contract liabilities, which we present as deferred revenue, consist of advance payments and billings in excess of revenues recognized. We classify deferred revenue as current or noncurrent based on when we expect to recognize the revenues. The table below shows significant changes in deferred revenue (dollars in thousands): Deferred revenue Balance as of September 30, 2023 $ 222,599 Amounts billed but not recognized 23,525 Revenue recognized ( 105,634 ) Effect of foreign currency translation 3,815 Balance as of December 31, 2023 $ 144,305 (e) Remaining Performance Obligations The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied at December 31, 2023 (dollars in thousands): Within One Two to Five Greater Total Total revenue $ 102,682 $ 81,132 $ 22,034 $ 205,848 The table above includes fixed remaining performance obligations and does not include contingent usage-based activities, such as royalties and usage-based connected services. On October 31, 2023, we entered into an early termination agreement relating to a legacy contract acquired by Nuance through a 2013 acquisition. Previously the term of the contract ended on December 31, 2025, whereas the agreement signed on October 31, 2023, updated the termination date to December 31, 2023. There is no cash flow associated with this legacy contract. The effect of this change is to accelerate $ 67.8 million of deferred revenue into the first quarter of fiscal year 2024. We provided services to a separate customer, who in turn provided services to our legacy customer. Our customer terminated services on October 31, 2023. There is no cash flow associated with this contract. The effect of this termination is to accelerate $ 9.9 million of deferred revenue into the first quarter of fiscal year 2024. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Dec. 31, 2023 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Note 4. Earnings Per Share Basic earnings per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during the period, increased to include the number of shares of common stock that would have been outstanding had potential dilutive shares of common stock been issued. The dilutive effect of restricted stock units is reflected in diluted net income (loss) per share by applying the treasury stock method. The dilutive effect of the Notes (as defined in Note 14) is reflected in net income (loss) per share by application of the “if-converted” method. The “if-converted” method is only assumed in periods where such application would be dilutive. In applying the “if-converted” method for diluted net income (loss) per share, we would assume conversion of the Notes at the respective conversion ratio as further described in Note 14. Assumed converted shares of our common stock are weighted for the period the Notes were outstanding. The following table presents the reconciliation of the numerator and denominator for calculating net income (loss) per share: Three Months Ended December 31, in thousands, except per share data 2023 2022 Numerator: Net income (loss) - basic $ 23,857 $ ( 2,158 ) Interest on the Notes, net of tax 2,250 - Net income (loss) - diluted $ 26,107 $ ( 2,158 ) Denominator: Weighted average common shares outstanding - basic 41,186 39,962 Dilutive effect of contingently issuable stock awards 574 - Dilutive effect of the Notes 7,495 - Weighted average common shares outstanding - diluted 49,255 39,962 Net income (loss) per common share: Basic $ 0.58 $ ( 0.05 ) Diluted $ 0.53 $ ( 0.05 ) We exclude weighted-average potential shares from the calculations of diluted net income (loss) per share during the applicable periods when their inclusion is anti-dilutive. The following table sets forth potential shares that were considered anti-dilutive during the three months ended December 31, 2023 and 2022. Three Months Ended December 31, in thousands 2023 2022 Contingently issuable stock awards - 103 Conversion option of our Notes - 4,677 |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Dec. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Note 5. Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Valuation techniques must maximize the use of observable inputs and minimize the use of unobservable inputs. When determining fair value measurements for assets and liabilities recorded at fair value, we consider the principal or most advantageous market in which we would transact and consider assumptions that market participants would use in pricing the asset or liability. The classification of a financial asset or liability within the hierarchy is based upon the lowest level input that is significant to the fair value measurement as of the measurement date as follows: • Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities. • Level 2 - Inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the assets or liabilities. • Level 3 - Unobservable inputs that are supported by little or no market activity. The following table presents information about our financial assets that are measured at fair value and indicates the fair value hierarchy of the valuation inputs used (dollars in thousands) as of: December 31, 2023 Fair Value Cash and Cash Equivalents Marketable Securities Level 1: Money market funds $ 65,753 at cost (a) $ 65,753 $ 65,753 $ - Government securities $ 2,897 at cost (b) 2,879 - 2,879 Level 2: Government securities $ 5,065 at cost (b) 5,058 - 5,058 Time deposits, $ 8,295 at cost (a) 8,295 8,295 - Corporate bonds, $ 9,633 at cost (b) 9,602 - 9,602 Debt securities, $ 2,000 at cost (c) 2,909 - - Total assets $ 94,496 $ 74,048 $ 17,539 September 30, 2023 Fair Value Cash and Cash Equivalents Marketable Securities Level 1: Money market funds $ 66,349 at cost (a) $ 66,349 $ 66,349 $ - Government securities $ 4,421 at cost (b) 4,375 - 4,375 Level 2: Government securities $ 5,046 at cost (b) 5,000 - 5,000 Time deposits, $ 8,536 at cost (a) 8,536 8,536 - Commercial paper, $ 496 at cost (b) 496 - 496 Corporate bonds, $ 10,073 at cost (b) 9,947 - 9,947 Debt securities, $ 2,000 at cost (c) 2,847 - - Total assets $ 97,550 $ 74,885 $ 19,818 (a) Money market funds and other highly liquid investments with original maturities of 90 days or less are included within Cash and cash equivalents in the Condensed Consolidated Balance Sheets. (b) Government securities, commercial paper and corporate bonds with original maturities greater than 90 days are included within Marketable securities in the Condensed Consolidated Balance Sheets and classified as current or noncurrent based upon whether the maturity of the financial asset is less than or greater than 12 months. (c) Debt securities within the Condensed Consolidated Balance Sheets are classified as current or noncurrent based upon whether the maturity of the financial asset is less than or greater than 12 months. During the three months ended December 31, 2023 and 2022, we recorded unrealized gains related to our marketable securities of $ 0.2 million and $ 0.1 million, respectively, within Accumulated other comprehensive loss. The carrying amounts of certain financial instruments, including cash held in banks, accounts receivable, and accounts payable, approximate fair value due to their short-term maturities and are excluded from the fair value tables above. Derivative financial instruments are recognized at fair value using quoted forward rates and prices and classified within Level 2 of the fair value hierarchy. See Note 6 – Derivative Financial Instruments for additional details. Long-term debt The estimated fair value of our Long-term debt is determined by Level 2 inputs and is based on observable market data including prices for similar instruments. As of December 31, 2023 and September 30, 2023 , the estimated fair value of our Notes was $ 233.1 million and $ 257.4 million, respectively. The Notes are recorded at face value less transaction costs on our Condensed Consolidated Balance Sheets. Equity securities We have equity securities in a privately held company obtained as part of a non-cash transaction. These equity securities are recognized at fair value and are classified within Level 2 of the fair value hierarchy. We have non-controlling equity investments in privately held companies. We evaluated the equity investments under the voting model and concluded consolidation was not applicable. We accounted for the investments by electing the measurement alternative for investments without readily determinable fair values and for which we do not have the ability to exercise significant influence. The non-marketable equity securities are carried at cost less any impairment, plus or minus adjustments resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer, which is recorded within the Condensed Consolidated Statements of Operations. Investments without readily determinable fair values w ere $ 2.6 million as of December 31, 2023 and September 30, 2023. The investments are included within Other assets on the Condens ed Consolidated Balance Sheets. No impairment was recorded for the three months ended December 31, 2023 and 2022. |
Derivative Financial Instrument
Derivative Financial Instruments | 3 Months Ended |
Dec. 31, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | Note 6. Derivative Financial Instruments We operate internationally and, in the normal course of business, are exposed to fluctuations in foreign currency exchange rates related to third-party vendor and intercompany payments for goods and services within our non-U.S. subsidiaries. We use foreign exchange forward contracts that are not designated as hedges to manage currency risk. The contracts can have maturities up to three years . As of December 31, 2023 and September 30, 2023, the total notional amount of forward contracts was $ 98.3 million an d $ 98.0 million, respectively. As of December 31, 2023 and September 30, 2023, the weighted-average remaining maturity of these instruments was approxim ately 11.5 and 1 1.6 months, respectively. The following table summarizes the fair value and presentation in the Condensed Consolidated Balance Sheet for derivative instruments as of December 31, 2023 and September 30, 2023 (dollars in thousands): Fair Value Derivatives not designated as hedges Classification December 31, 2023 September 30, 2023 Foreign currency forward contracts Prepaid expenses and other current assets $ 358 $ 477 Foreign currency forward contracts Other assets 113 256 Foreign currency forward contracts Accrued expenses and other current liabilities 1,430 1,613 Foreign currency forward contracts Other liabilities 478 460 The following tables display a summary of the loss related to foreign currency forward contracts for the three months ended December 31, 2023 and 2022 (dollars in thousand): Loss recognized in earnings Three Months Ended December 31, Derivatives not designated as hedges Classification 2023 2022 Foreign currency forward contracts Other income, net $ ( 329 ) $ ( 1,453 ) |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 3 Months Ended |
Dec. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets | Note 7. Goodwill and Other Intangible Assets (a) Goodwill We believe our Chief Executive Officer (“CEO”) is our CODM. Our CEO approves all major decisions, including reorganizations and new business initiatives. Our CODM reviews routine consolidated operating information and makes decisions on the allocation of resources at this level, as such, we have concluded that we have one operating segment. All goodwill is assigned to one or more reporting units. A reporting unit represents an operating segment or a component within an operating segment for which discrete financial information is available and is regularly reviewed by segment management for performance assessment and resource allocation. Upon consideration of our components, we have concluded that our goodwill is associated with one reporting unit. On December 31, 2023, we concluded that no goodwill impairment ind icators were present. The changes in the carrying amount of goodwill for the three months ended December 31, 2023 are as follows (dollars in thousands): Total Balance as of September 30, 2023 $ 900,342 Effect of foreign currency translation 6,054 Balance as of December 31, 2023 $ 906,396 (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, 2023 Gross Accumulated Net Weighted Average Customer relationships $ 108,285 $ ( 104,911 ) $ 3,374 1.2 Technology and patents 90,000 ( 90,000 ) - - Total $ 198,285 $ ( 194,911 ) $ 3,374 September 30, 2023 Gross Accumulated Net Weighted Average Customer relationships $ 106,713 $ ( 102,942 ) $ 3,771 1.5 Technology and patents 89,431 ( 89,327 ) 104 0.2 Total $ 196,144 $ ( 192,269 ) $ 3,875 Amortization expense related to intangible assets in the aggreg ate was $ 0.6 million and $ 2.5 million for the three months ended December 31, 2023 and 2022, respectively. We expect amortization of intangible assets to be approxima tely $ 1.6 million f or the remainder of fiscal year 2024 . |
Leases
Leases | 3 Months Ended |
Dec. 31, 2023 | |
Leases [Abstract] | |
Leases | Note 8. Leases We have entered into a number of facility and equipment leases which qualify as operating leases under GAAP. We also have a limited number of equipment leases that qualify as finance leases. The following table presents certain information related to lease term and incremental borrowing rates for leases as of December 31, 2023 and September 30, 2023: December 31, 2023 September 30, 2023 Weighted-average remaining lease term (in months): Operating leases 39.6 37.2 Finance leases 21.8 24.5 Weighted-average discount rate: Operating leases 5.6 % 5.3 % Finance leases 4.4 % 4.4 % The following table presents lease expense for the three months ended December 31, 2023 and 2022 (dollars in thousands): Three Months Ended December 31, 2023 2022 Finance lease costs: Amortization of right of use asset $ 108 $ 108 Interest on lease liability 7 10 Operating lease cost 1,628 1,686 Variable lease cost 764 691 Sublease income ( 60 ) ( 45 ) Total lease cost $ 2,447 $ 2,450 For the three months ended December 31, 2023 and 2022 , cash payments related to operating leases were $ 1.7 million and $ 1.8 million, respectively. For the three months ended December 31, 2023 and 2022 , cash payments related to financing leases were $ 0.1 million, of w hich an immaterial amount related to the interest portion of the lease liability. For the three months ended December 31, 2023 and 2022, right of use assets obtained in exchange for lease obliga tions were $ 1.5 million and $ 2.5 million, respectively. The table below reconciles the undiscounted future minimum lease payments under non-cancelable leases to the total lease liabilities recognized on the Condensed Consolidated Balance Sheet as of December 31, 2023 (dollars in thousands): Year Ending September 30, Operating Leases Financing Leases Total 2024 $ 4,854 $ 312 $ 5,166 2025 4,498 362 4,860 2026 2,320 53 2,373 2027 1,836 — 1,836 2028 946 — 946 Thereafter 746 — 746 Total future minimum lease payments $ 15,200 $ 727 $ 15,927 Less effects of discounting ( 1,458 ) ( 22 ) ( 1,480 ) Total lease liabilities $ 13,742 $ 705 $ 14,447 Reported as of December 31, 2023 Short-term lease liabilities $ 5,676 $ 398 $ 6,074 Long-term lease liabilities 8,066 307 8,373 Total lease liabilities $ 13,742 $ 705 $ 14,447 |
Accrued Expenses and Other Liab
Accrued Expenses and Other Liabilities | 3 Months Ended |
Dec. 31, 2023 | |
Accrued Liabilities and Other Liabilities [Abstract] | |
Accrued Expenses and Other Liabilities | Note 9. Accrued Expenses and Other Liabilities Accrued expenses and other current liabilities consisted of the following (dollars in thousands): December 31, 2023 September 30, 2023 Compensation $ 25,601 $ 24,997 Sales and other taxes payable 7,871 7,384 Cost of revenue related liabilities 4,189 4,326 Professional fees 3,931 3,386 Interest payable 295 1,781 Other 9,845 6,844 Total $ 51,732 $ 48,718 |
Restructuring and Other Costs,
Restructuring and Other Costs, Net | 3 Months Ended |
Dec. 31, 2023 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Other Costs, Net | Note 10. Restructuring and Other Costs, Net Restructuring and other costs, net includes restructuring expenses as well as other charges that are unusual in nature, are the result of unplanned events, and arise outside of the ordinary course of our business. The following table sets forth accrual activity relating to restructuring reserves for the three months ended December 31, 2023 (dollars in thousands): Personnel Facilities Restructuring Subtotal Other Total Balance as of September 30, 2023 $ 549 $ 1,033 $ 1,582 $ — $ 1,582 Restructuring and other costs, net 115 145 260 445 705 Non-cash adjustments — ( 174 ) ( 174 ) ( 300 ) ( 474 ) Cash payments ( 201 ) ( 127 ) ( 328 ) — ( 328 ) Effect of foreign currency translation — 13 13 — 13 Balance at December 31, 2023 $ 463 $ 890 $ 1,353 $ 145 $ 1,498 The following table sets forth restructuring and other costs, net recognized for the three months ended December 31, 2023 and 2022 (dollars in thousands): Three Months Ended December 31, 2023 2022 Personnel $ 115 $ 3,049 Facilities 145 193 Restructuring subtotal 260 3,242 Other 445 947 Restructuring and other costs, net $ 705 $ 4,189 Fiscal Year 2024 For the three months ended December 31, 2023 , we recorded restructuring and other costs, net of $ 0.7 million which included a $ 0.1 million severance charge related to the elimination of personnel, a $ 0.1 million charge resulting from the closure of facilities that will no longer be utilized, and $ 0.4 million related to other one-time charges. Fiscal Year 2023 For the three months ended December 31, 2022 , we recorded restructuring and other costs, net of $ 4.2 million, which included a $ 3.0 million severance charge related to the elimination of personnel, a $ 0.2 million charge resulting from the closure of facilities that will no longer be utilized, and $ 0.9 million related to other one-time charges. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Dec. 31, 2023 | |
Equity [Abstract] | |
Stockholders' Equity | Note 11. Stockholders’ Equity On October 2, 2019, we registered the issuance of 6,350,000 shares of Common Stock, par value $ 0.01 per share (“Common Stock”), consisting of 5,300,000 shares of Common Stock reserved for issuance upon the exercise of options granted, or in respect of awards granted, under the Cerence 2019 Equity Incentive Plan (“Equity Incentive Plan”), and 1,050,000 shares of Common Stock that are reserved for issuance under the Cerence 2019 Employee Stock Purchase Plan. The Equity Incentive Plan provides for the grant of incentive stock options, stock awards, stock units, stock appreciation rights, and certain other stock-based awards. The shares available for issuance will automatically increase on January 1st of each year, by the lesser of (A) 3 % of the number of shares of Common Stock outstanding as of the close of business on the immediately preceding December 31st; and (B) the number of shares of Common Stock determined by the Board on or prior to such date for such year. Restricted Units Information with respect to our non-vested restricted stock units for the three months ended December 31, 2023 was as follows: Non-Vested Restricted Stock Units Time-Based Performance- Total Shares Weighted- Weighted- Aggregate Non-vested at September 30, 2023 2,372,145 1,145,550 3,517,695 $ 32.52 Granted 1,698,206 297,167 1,995,373 $ 17.82 Vested ( 750,776 ) ( 63,998 ) ( 814,774 ) $ 40.39 Forfeited ( 61,594 ) ( 118,979 ) ( 180,573 ) $ 42.36 Non-vested at December 31, 2023 3,257,981 1,259,740 4,517,721 $ 24.31 Expected to vest 4,517,721 $ 24.31 1.41 $ 88,773 Stock-based Compensation Stock-based compensation was included in the following captions in our Condensed Consolidated Statements of Operations for the three months ended December 31, 2023 and 2022 (in thousands): Three Months Ended December 31, 2023 2022 Cost of connected services $ 81 $ 196 Cost of professional services 560 1,153 Research and development 3,831 4,454 Sales and marketing 718 1,660 General and administrative 3,190 5,009 $ 8,380 $ 12,472 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Dec. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 12. Commitments and Contingencies Litigation and Other Claims Similar to many companies in the software industry, we are involved in a variety of claims, demands, suits, investigations and proceedings that arise from time to time relating to matters incidental to the ordinary course of our business, including at times actions with respect to contracts, intellectual property, employment, benefits and securities matters. At each balance sheet date, we evaluate contingent liabilities associated with these matters in accordance with ASC 450 “ Contingencies .” If the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated, we accrue a liability for the estimated loss. Significant judgments are required for the determination of probability and the range of the outcomes, and estimates are based only on the best information available at the time. Due to the inherent uncertainties involved in claims and legal proceedings and in estimating losses that may arise, actual outcomes may differ from our estimates. Contingencies deemed not probable or for which losses were not estimable in one period may become probable, or losses may become estimable in later periods, which may have a material impact on our results of operations and financial position. As of December 31, 2023, accrued losses were not material to our condensed consolidated financial statements, and we do not expect any pending matter to have a material impact on our condensed consolidated financial statements. City of Miami Fire Fighters' and Police Officers' Retirement Trust Action On February 25, 2022, a purported shareholder class action captioned as City Of Miami Fire Fighters’ And Police Officers’ Retirement Trust v. Cerence Inc. et al. (the “Securities Action”) was filed in the United States District Court for the District of Massachusetts, naming the Company and two of its former officers as defendants. Following the court's selection of a lead plaintiff and lead counsel, an amended complaint was filed on July 26, 2022. The plaintiff claims to be suing on behalf of anyone who purchased the Company’s common stock between November 16, 2020 and February 4, 2022. The lawsuit alleges that material misrepresentations and/or omissions of material fact regarding the Company’s operations, financial performance and prospects were made in the Company’s public disclosures during the period from November 16, 2020 to February 4, 2022, in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder. The plaintiff seeks unspecified monetary damages on behalf of the putative class and an award of costs and expenses, including attorney’s fees. On September 9, 2022, the defendants in the Securities Action moved to dismiss the action in its entirety. That motion is now fully briefed but it has not yet been resolved. We intend to defend the claims vigorously. Given the uncertainty of litigation, the preliminary stage of the case, and the legal standards that must be met for, among other things, class certification and success on the merits, we cannot estimate the reasonably possible loss or range of loss that may result from this action. Derivative Actions On May 10 and 12, 2022, respectively, plaintiffs William Shafer and Peter Morse filed shareholder derivative complaints in the United States District Court for the District of Massachusetts on behalf of Cerence Inc. against defendants (and former officers) Sanjay Dwahan and Mark J. Gallenberger as well as board members Arun Sarin, Thomas Beaudoin, Marianne Budnik, Sanjay Jha, Kristi Ann Matus, Alfred Nietzel and current CEO and board member Stefan Ortmanns. These actions are premised on factual contentions substantially similar to those made in the Securities Action and contain substantially similar legal contentions. As such, on June 13, 2022, at the parties' request, the court consolidated these derivative actions into a single action and appointed co-lead counsel for plaintiffs in that consolidated action. The parties agreed to stay the consolidated action pending a ruling on the forthcoming motion to dismiss in the Securities Action, and the court has ordered that stay. Two shareholder derivative complaints making factual and legal contentions substantially similar to those raised in the consolidated action have been also filed in the Delaware Court of Chancery: one filed on October 19, 2022 by plaintiff Melinda Hipp against the defendants named in the consolidated action and board member Douglas Davis and one filed on August 17, 2023 by plaintiff Catherine Fleming against the defendants named in the consolidated action. The parties have respectively agreed to stay those actions pending a ruling on the motion to dismiss in the Securities Action and the courts hearing those actions have ordered those stays. Given the uncertainty of litigation, the preliminary stage of the cases, and the legal standards that must be met for, among other things, derivative standing and success on the merits, we cannot estimate the reasonably possible loss or range of loss that may result from these derivative actions. A.P., a minor, by and through her guardian, Carlos Pena and Carlos Pena Action On March 24, 2023 , plaintiffs A.P., a minor, by and through her guardian, Carlos Pena, and Carlos Pena, each individually and on behalf of similarly situated individuals filed a purported class action lawsuit in the Circuit Court of Cook County, Illinois, Chancery Division (Case. No. 2023CH02866 (Cir. Ct. Cook Cnty. 2023)). The case was removed to Federal Court (Case No. 1:23CV2667 (N.D. Ill.)), and then severed and remanded back in part, so there are two pending cases. Plaintiffs subsequently amended the federal complaint twice, with the latest second amended complaint, filed on July 13, 2023, adding plaintiffs Randolph Freshour and Vincenzo Allan, each also filing individually and on behalf of similarly situated individuals. Plaintiffs allege that Cerence violated the Illinois Biometric Information Privacy Act (“BIPA”), 740 ILCS 14/1 et seq. through Cerence’s Drive Platform technology, which is integrated in various automobiles. The named plaintiffs allegedly drove or rode in a vehicle with Cerence’s Drive Platform technology. Across both cases, plaintiffs allege that Cerence violated: (1) BIPA Section 15(a) by possessing biometrics without any public written policy for their retention or destruction; (2) BIPA Section 15(b) by collecting, capturing, or obtaining biometrics without written notice or consent; (3) BIPA Section 15(c) by profiting from biometrics obtained from Plaintiffs and putative class members; and (4) BIPA Section 15(d) by disclosing biometrics to third party companies without consent. Cerence has filed motions to dismiss both cases. Plaintiffs are seeking statutory damages of $ 5,000 for each willful and/or reckless violation of BIPA and, alternatively, damages of $ 1,000 for each negligent violation of BIPA. Given the uncertainty of litigation, the preliminary stage of the case, and the legal standards that must be met for, among other things, class certification and success on the merits, we cannot estimate the reasonably possible loss or range of loss that may result from this action. Guarantees and Other We include indemnification provisions in the contracts we enter with customers and business partners. Generally, these provisions require us to defend claims arising out of our products’ infringement of third-party intellectual property rights, breach of contractual obligations and/or unlawful or otherwise culpable conduct. The indemnity obligations generally cover damages, costs and attorneys’ fees arising out of such claims. In most, but not all cases, our total liability under such provisions is limited to either the value of the contract or a specified, agreed-upon amount. In some cases, our total liability under such provisions is unlimited. In many, but not all cases, the term of the indemnity provision is perpetual. While the maximum potential amount of future payments we could be required to make under all the indemnification provisions is unlimited, we believe the estimated fair value of these provisions is minimal due to the low frequency with which these provisions have been triggered. We indemnify our directors and officers to the fullest extent permitted by Delaware law, which provides among other things, indemnification to directors and officers for expenses, judgments, fines, penalties and settlement amounts incurred by such persons in their capacity as a director or officer of the Company, regardless of whether the individual is serving in any such capacity at the time the liability or expense is incurred. Additionally, in connection with certain acquisitions, we agreed to indemnify the former officers and members of the boards of directors of those companies, on similar terms as described above, for a period of six years from the acquisition date. In certain cases, we purchase director and officer insurance policies related to these obligations, which fully cover the six-year period. To the extent that we do not purchase a director and officer insurance policy for the full period of any contractual indemnification, and such directors and officers do not have coverage under separate insurance policies, we would be required to pay for costs incurred, if any, as described above. As of December 31, 2023 , we have a $ 0.9 million letter of credit that is used as a security deposit in connection with our leased Bellevue, Washington office space. In the event of default on the underlying lease, the landlord would be eligible to draw against the letter of credit. The letter of credit is subject to aggregate reductions, provided that we are not in default under the underlying lease. We also have letters of credit in connection with security deposits for other facility leases totaling $ 0.6 million in the aggregate. These letters of credit have various terms and expire during fiscal year 2024 and beyond, while some of the letters of credit may automatically renew based on the terms of the underlying agreements. |
Income Taxes
Income Taxes | 3 Months Ended |
Dec. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 13. Income Taxes The components of income (loss) before income taxes are as follows (dollars in thousands): Three Months Ended December 31, 2023 2022 Domestic $ 65,636 $ 6,053 Foreign ( 7,438 ) ( 6,961 ) Income (loss) before income taxes $ 58,198 $ ( 908 ) The components of the provision for income taxes are as follows (dollars in thousands): Three Months Ended December 31, 2023 2022 Domestic $ 29,078 $ ( 249 ) Foreign 5,263 1,499 Provision for income taxes $ 34,341 $ 1,250 Effective income tax rate 59.0 % ( 137.7 )% The effective tax rates for the periods presented are based upon estimated income for the fiscal year and the statutory tax rates enacted in the jurisdictions in which we operate. For all periods presented, the effective tax rate differs from the 21.0 % statutory U.S. tax rate due to the impact of the nondeductible stock-based compensation and our mix of jurisdictional earnings and related differences in foreign statutory tax rates. Our effective tax rate for the three months ended December 31, 2023 was 59.0 % compared to negative 137.7 % for the three months ended December 31, 2022. Consequently, our provision for income taxes for the three months ended December 31, 2023 was $ 34.3 million , a net change of $ 33.0 million from a provision for income taxes of $ 1.3 million for the three months ended December 31, 2022. This difference was attributable to the change in income tax expense related to foreign valuation allowance. Starting with fiscal year 2023, the Tax Cuts and Jobs Act of 2017 eliminated the option to deduct research and development expenditures in the current year. It requires us to amortize U.S. R&D expenses over five years and foreign R&D expenses over 15 years . The change in deductibility of the foreign research and development expenditures increases our tested income included in the Global Intangible Low Tax Income (“GILTI”). This led to an increase in our overall effective tax rate for the three months ended December 31, 2023 and 2022. Deferred tax assets and liabilities are measured using the statutory tax rates and laws expected to apply to taxable income in the years in which the temporary differences are expected to reverse. Valuation allowances are provided against net deferred tax assets if, based upon all available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and the timing of the temporary differences becoming deductible. Management considers, among other available information, scheduled reversals of deferred tax liabilities, projected future taxable income, limitations of availability of net operating loss carryforwards, and other matters in making this assessment. |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Dec. 31, 2023 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Note 14. Long-Term Debt Long-term debt consisted of the following (in thousands): December 31, 2023 Description Maturity Date Convertible Debt Coupon Rate Effective Interest Rate Principal Unamortized Discount Deferred Issuance Costs Carrying Value 2025 Modified Notes 6/1/2025 3.00 % 3.70 % $ 87,500 $ - $ ( 846 ) $ 86,654 2025 Modified Notes 7/1/2028 1.50 % 8.70 % 87,500 ( 3,545 ) ( 13,534 ) 70,421 2028 Notes 7/1/2028 1.50 % 1.91 % 122,500 - ( 2,156 ) 120,344 Total debt $ 297,500 $ ( 3,545 ) $ ( 16,536 ) 277,419 Less: current portion of long-term debt — Total long-term debt $ 277,419 September 30, 2023 Description Maturity Date Convertible Debt Coupon Rate Effective Interest Rate Principal Unamortized Discount Deferred Issuance Costs Carrying Value 2025 Modified Notes 6/1/2025 3.00 % 3.70 % $ 87,500 $ - $ ( 992 ) $ 86,508 2025 Modified Notes 7/1/2028 1.50 % 8.75 % 87,500 ( 3,796 ) ( 14,490 ) 69,214 2028 Notes 7/1/2028 1.50 % 1.91 % 122,500 - ( 2,271 ) 120,229 Total debt $ 297,500 $ ( 3,796 ) $ ( 17,753 ) 275,951 Less: current portion of long-term debt — Total long-term debt $ 275,951 The following table summarizes the maturities of our borrowing obligations as of December 31, 2023 (in thousands): Fiscal Year 2028 Notes 2025 Modified Notes Total 2024 $ — $ — $ — 2025 — 87,500 87,500 2026 — — — 2027 — — — 2028 122,500 87,500 210,000 Thereafter — — — Total before unamortized discount and issuance costs and current portion $ 122,500 $ 175,000 $ 297,500 Less: unamortized discount and issuance costs ( 2,156 ) ( 17,925 ) ( 20,081 ) Less: current portion of long-term debt — — — Total long-term debt $ 120,344 $ 157,075 $ 277,419 1.50% Senior Convertible Notes due 2028 On June 26, 2023, we issued $ 190.0 million in aggregate principal amount of 1.50 % Convertible Senior Notes due 2028 (the “2028 Notes”), which are governed by an indenture (the “2028 Indenture”), between us and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”), in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). On July 3, 2023, we issued a n additional $ 20.0 million in aggregate principal amount of 2028 Notes. The initial net proceeds from the issuance of the 2028 Notes we re $ 193.2 million a fter deducting transaction costs. The 2028 Notes are senior, unsecured obligations and accrue interest payable semiannually in arrears on January 1 and July 1 of each year at a rate of 1.50 % per year. The 2028 Notes will mature on July 1, 2028 , unless earlier converted, redeemed, or repurchased. The 2028 Notes are convertible into cash, shares of our common stock or a combination of cash and shares of our common stock, at our election. A holder of 2028 Notes may convert all or any portion of its 2028 Notes at its option at any time prior to the close of business on the business day immediately preceding April 3, 2028 only under the following circumstances: (1) during any fiscal quarter commencing after the fiscal quarter ending on September 30, 2023 (and only during such fiscal quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130 % of the conversion price on each applicable trading day; (2) during the five business day period after any ten consecutive trading day period (the “measurement period”) in which the “trading price” (as defined in the 2028 Indenture) per $ 1,000 principal amount of 2028 Notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price of our common stock and the conversion rate on each such trading day; (3) if we call such 2028 Notes for redemption, at any time prior to the close of business on the business day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events. On or after April 3, 2028 until the close of business on the second scheduled trading day immediately preceding the maturity date, a holder may convert all or any portion of its 2028 Notes at any time, regardless of the foregoing circumstances. The conversion rate is 24.5586 shares of our common stock per $ 1,000 principal amount of 2028 Notes (equivalent to an initial conversion price of approximately $ 40.72 per share of our common stock). The conversion rate is subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. In addition, following certain corporate events that occur prior to the maturity date or if we deliver a notice of redemption, we will, in certain circumstances, increase the conversion rate for a holder who elects to convert its 2028 Notes in connection with such a corporate event or convert its 2028 Notes called for redemption in connection with such notice of redemption, as the case may be. We may not redeem the 2028 Notes prior to July 6, 2026. We may redeem for cash all or any portion of the 2028 Notes (subject to certain limitations), at our option, on a redemption date occurring on or after July 6, 2026 and on or before the 31st scheduled trading day immediately before the maturity date, if the last reported sale price of our common stock has been at least 130 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which we provide notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100 % of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the 2028 Notes. If we undergo a “fundamental change”, subject to certain conditions, holders may require us to repurchase for cash all or any portion of their 2028 Notes at a fundamental change repurchase price equal to 100 % of the principal amount of the 2028 Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date. The 2028 Indenture contains customary terms and covenants, including that upon certain events of default occurring and continuing, either the Trustee or the holders of not less than 25 % in aggregate principal amount of the 2028 Notes then outstanding may declare the entire principal amount of all the 2028 Notes plus accrued special interest, if any, to be immediately due and payable. In connection with the offering of the 2028 Notes, we repurchased $ 87.5 million in aggregate principal amount of the 2025 Notes in a privately negotiated transaction. We specifically negotiated the repurchase of the 2025 Notes with investors who concurrently purchased the 2028 Notes. We evaluated the transaction to determine whether the exchange should be accounted for as a modification or extinguishment under the provisions of ASC 470-50, which allows for an exchange of debt instruments between the same debtor and creditor to be accounted for as a modification so long as the instruments do not have substantially different terms. Because the concurrent redemption of the 2025 Notes and a portion of issuance of the 2028 Notes were executed with the same investors, we evaluated the transaction as a debt modification, on a creditor by creditor basis. The repurchase of the 2025 Notes and issuance of the 2028 Notes were deemed to not have substantially different terms on the basis that (1) the present value of the cash flows under the terms of the new debt instrument were less than 10 % different from the present value of the remaining cash flows under the terms of the original instrument and (2) the fair value of the conversion feature did not change by more than 10 % of the carrying value of the 2025 Notes, and therefore, the repurchase of the 2025 Notes was accounted for as a debt modification. As a result, $ 87.5 million of the 2028 Notes are considered a modification of the 2025 Notes and are included in the balances of the 2025 Notes along with the remaining $ 87.5 million of the 2025 Notes (together the “2025 Modified Notes” and together with the 2028 Notes, the “Notes”) that were not repurchased as part of the transaction. We recorded $ 14.3 million of fees paid directly to the lenders as deferred debt issuance costs, and $ 3.8 million of fees paid to third-parties were expensed in the period. As of December 31, 2023 , the carrying amount of the 2025 Modified Notes was $ 157.1 million, net of unamortized costs of $ 17.9 million. If a convertible debt instrument is modified or exchanged in a transaction that is not accounted for as an extinguishment, an increase in the fair value of the embedded conversion option shall reduce the carrying amount of the debt instrument with a corresponding increase in Additional paid-in capital. We recognized the increase in the fair value of the embedded conversion feature of $ 4.1 million as Additional paid-in capital and an equivalent discount that reduced the carrying value of the 2025 Modified Notes. We accounted for $ 122.5 million of the 2028 Notes, that were not negotiated with the investors of the 2025 Notes, as a single liability. We incurred transaction costs of $ 2.4 million relating to the issuance of the 2028 Notes, which were recorded as a direct deduction from the face amount of the 2028 Notes and are being amortized as interest expense over th e term of the 2028 Notes using the interest method. As of December 31, 2023, the carrying amount of the 2028 Notes was $ 120.3 million and unamortized issuance costs of $ 2.2 million. As of December 31, 2023, the 2028 Notes were not convertible. As of December 31, 2023 and September 30, 2023, the if-converted value of the 2028 Notes wa s $ 63.4 million an d $ 61.2 million, respectively, l ess than its principal amount. 3.00% Senior Convertible Notes due 2025 On June 2, 2020, we issued $ 175.0 million in aggregate principal amount of 3.00 % Convertible Senior Notes due 2025 (the “2025 Notes”), including the initial purchasers’ exercise in full of their option to purchase $ 25.0 million principal amount of the 2025 Notes, which are governed by an indenture (the “2025 Indenture”), between us and the Trustee, in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act. The net proceeds from the issuance of the 2025 Notes were $ 169.8 million after deducting transaction costs. The 2025 Notes are senior, unsecured obligations and accrue interest payable semiannually in arrears on June 1 and December 1 of each year at a rate of 3.00 % per year. The 2025 Notes will mature on June 1, 2025 , unless earlier converted, redeemed, or repurchased. The 2025 Notes are convertible into cash, shares of our common stock or a combination of cash and shares of our common stock, at our election. As of December 31, 2023 and September 30, 2023, the if-converted value of the 2025 Modified Notes wa s $ 86.8 million and $ 83.6 million, respectively, les s than its principal amount. A holder of 2025 Notes may convert all or any portion of its 2025 Notes at its option at any time prior to the close of business on the business day immediately preceding March 1, 2025 only under the following circumstances: (1) during any fiscal quarter commencing after the fiscal quarter ending on September 30, 2020 (and only during such fiscal quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130 % of the conversion price on each applicable trading day; (2) during the five business day period after any ten consecutive trading day period (the “measurement period”) in which the “trading price” (as defined in the 2025 Indenture) per $ 1,000 principal amount of 2025 Notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price of our common stock and the conversion rate on each such trading day; (3) if we call such 2025 Notes for redemption, at any time prior to the close of business on the business day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events. On or after March 1, 2025 until the close of business on the second scheduled trading day immediately preceding the maturity date, a holder may convert all or any portion of its 2025 Notes at any time, regardless of the foregoing circumstances. The conversion rate is 26.7271 shares of our common stock per $ 1,000 principal amount of 2025 Notes (equivalent to an initial conversion price of approximately $ 37.42 per share of our common stock). The conversion rate is subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. In addition, following certain corporate events that occur prior to the maturity date or if we deliver a notice of redemption, we will, in certain circumstances, increase the conversion rate for a holder who elects to convert its 2025 Notes in connection with such a corporate event or convert its 2025 Notes called for redemption in connection with such notice of redemption, as the case may be. We may not redeem the 2025 Notes prior to June 5, 2023. We may redeem for cash all or any portion of the 2025 Notes, at our option, on a redemption date occurring on or after June 5, 2023 and on or before the 31st scheduled trading day immediately before the maturity date, if the last reported sale price of our common stock has been at least 130 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which we provide notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100 % of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the 2025 Notes. See “1.50% Senior Convertible Notes due 2028” section above for discussion on modification of the 2025 Notes as part of the offering of the 2028 Notes. The interest expense recognized related to the Notes for the three months ended December 31, 2023 and 2022 was as follows (dollars in thousands): Three Months Ended December 31, 2023 2022 Contractual interest expense $ 1,442 $ 1,322 Amortization of debt discount 251 - Amortization of issuance costs 1,217 280 Total interest expense related to the Notes $ 2,910 $ 1,602 The conditional conversion feature of the Notes was not triggered during the three months ended December 31, 2023. As of December 31, 2023, the Notes were not convertible. As of this Quarterly Report, no Notes have been converted by the holders. Whether any of the Notes will be converted in future quarters will depend on the satisfaction of one or more of the conversion conditions in the future. If one or more holders elect to convert their Notes at a time when any such Notes are convertible, unless we elect to satisfy our conversion obligation by delivering solely shares of our common stock (other than paying cash in lieu of delivering any fractional shares), we would be required to settle a portion or all of our conversion obligation through the payment of cash, which could adversely affect our liquidity. Senior Credit Facilities On June 12, 2020 (the “Financing Closing Date”), we entered into a Credit Agreement, by and among the Borrower, the lenders and issuing banks party thereto and Wells Fargo Bank, N.A., as administrative agent (the “Credit Agreement”), consisting of a four-year senior secured term loan facility in the aggregate principal amount of $ 125.0 million (the “Term Loan Facility”). The net proceeds from the issuance of the Term Loan Facility were $ 123.0 million. We also entered into a senior secured first-lien revolving credit facility in an aggregate principal amount of $ 50.0 million (the “Revolving Facility” and, together with the Term Loan Facility, the “Senior Credit Facilities”), which may be drawn on in the event that our working capital and other cash needs are not supported by our operating cash flow. In connection with the issuance of the 2028 Notes, in the third quarter of fiscal year 2023, we borrowed $ 24.7 million under our Revolving Facility and paid $ 106.3 million towards our Term Loan Facility. As a result, we recorded $ 104.9 million extinguishment of debt and $ 1.3 million loss on the extinguishment of debt. All principal and interest on the Term Loan Facility have been paid in full. As of December 31, 2023 and September 30, 2023, there were no amounts outstanding under the Revolver Facility. 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 respec t of our and our subsidiaries’ equity interests. In addition, the Credit Agreement contains financial covenants, each tested quarterly, (1) a net secured leverage ratio of not greater than 3.25 to 1.00; (2) a net total leverage ratio of not greater than 4.25 to 1.00; and (3) minimum liquidity of at least $ 75 million. The Credit Agreement also contains events of default customary for financings of t his type, including certain customary change of control events. On November 22, 2022 (the “Amendment No. 2 Effective Date”), we entered into Amendment No. 2 to the Credit Agreement (“Amendment No. 2”). Amendment No. 2 modified certain financial covenants between the fiscal quarter ended March 31, 2023 to the fiscal quarter ended December 31, 2023 (the "covenant adjustment period"). During the covenant adjustment period, each tested quarterly, we are required to maintain (1) a net secured leveraged ratio of not greater than 4.25 to 1.00; (2) minimum liquidity of at least $ 125 million; and (3) aggregate capital expenditures less than $ 7.5 million. The net total leverage ratio will be waived during the covenant adjustment period. At the conclusion of the covenant adjustment period, the original financial covenants will resume. As of December 31, 2023 and September 30, 2023, we were in compliance with all Credit Agreement covenants. Total interest expense relating to the Senior Credit Facilities for the three months ended December 31, 2023 and 2022 was $ 0.1 million and $ 1.9 million, respec tively. Amounts reflect the coupon and accretion of the discount. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 3 Months Ended |
Dec. 31, 2023 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The accompanying unaudited condensed consolidated financial statements include the accounts of the Company, as well as those of our wholly owned subsidiaries. All significant intercompany transactions and balances are eliminated in consolidation. |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnote disclosures required by GAAP for complete financial statements. The condensed consolidated financial statements reflect all adjustments considered necessary for a fair presentation of the consolidated results of operations and financial position for the interim periods presented. All such adjustments are of a normal recurring nature. The results of operations for the three months ended December 31, 2023 are not necessarily indicative of the results to be expected for any other interim period or for the fiscal year ending September 30, 2024. These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes contained in our Annual Report on Form 10-K for the fiscal year ended September 30, 2023 . |
Use of Estimates | Use of Estimates The financial statements are prepared in accordance with GAAP, which requires management to make estimates and assumptions. These estimates, judgments and assumptions can affect the reported amounts in the financial statements and the footnotes thereto. Actual results could differ materially from these estimates. On an ongoing basis, we evaluate our estimates, assumptions and judgments. Significant estimates inherent to the preparation of financial statements include: revenue recognition; allowance for credit losses; accounting for deferred costs; accounting for internally developed software; the valuation of goodwill and intangible assets; accounting for business combinations; accounting for stock-based compensation; accounting for income taxes; accounting for leases; accounting for convertible debt; and loss contingencies. We base our estimates on historical experience, market participant fair value considerations, projected future cash flows, and various other factors that are believed to be reasonable under the circumstances. Actual amounts could differ significantly from these estimates. |
Concentration of Risk | Concentration of Risk Financial instruments that potentially subject us to significant concentrations of credit risk primarily consist of trade accounts receivable. We perfo rm ongoing credit evaluations of our customers’ financial condition and limit the amount of credit extended when deemed appropriate. Two customers accounted for 11.8 % and 10.7 % of our Accounts receivable, net balance at December 31, 2023 . Two customers accounte d for 10.8 % and 10.1 % o f our Accounts receivable, net balance at September 30, 2023 . |
Allowance for Credit Losses | Allowance for Credit Losses We are exposed to credit losses primarily through our sales of software licenses and services to customers. We determine credit ratings for each customer in our portfolio based upon public information and information obtained directly from our customers. A credit limit for each customer is established and in certain cases we may require collateral or prepayment to mitigate credit risk. Our expected loss methodology is developed using historical collection experience, current customer credit information, current and future economic and market conditions and a review of the current status of the customer's account balances. We monitor our ongoing credit exposure through reviews of customer balances against contract terms and due dates, current economic conditions, and dispute resolution. Estimated credit losses are written off in the period in which the financial asset is no longer collectible. The change in the allowance for credit losses for the three months ended December 31, 2023 is as follows (dollars in thousands): Allowance for Credit Losses Balance as of September 30, 2023 $ 4,131 Effect of foreign currency translation 9 Balance as of December 31, 2023 $ 4,140 |
Inventory | Inventory Inventory, consisting primarily of finished goods related to our Cerence Link product, is accounted for using the first in, first out method, and is valued at the lower of cost and net realizable value. Inventory is included within Prepaid expenses and other current assets. As of December 31, 2023 and September 30, 2023, inventory was $ 0.9 million a nd $ 0.5 million, respectively. |
Recently Adopted Accounting Standards | Recently Adopted Accounting Standards None. |
Issued Accounting Standards Not Yet Adopted | Issued Accounting Standards Not Yet Adopted In November 2023, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”), to expand reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments in the ASU require that a public entity disclose, on an annual and interim basis, significant segment expenses that are regularly provided to an entity's chief operating decision maker (“CODM”), a description of other segment items by reportable segment, and any additional measures of a segment's profit or loss used by the CODM when deciding how to allocate resources. ASU 2023-07 applies to entities with a single reportable segment. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. A public entity should apply ASU 2023-07 retrospectively to all prior periods presented in the financial statements, with early adoption permitted. We are currently in the process of evaluating the effects of this pronouncement on our condensed consolidated financial statements and disclosures. In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which requires greater disaggregation of income tax disclosures related to the income tax rate reconciliation and income taxes paid and is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued. The amendments should be applied on a prospective basis although retrospective application is permitted. We are currently in the process of evaluating the effects of this pronouncement on our condensed consolidated financial statements and disclosures. |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 3 Months Ended |
Dec. 31, 2023 | |
Accounting Policies [Abstract] | |
Summary of Change in Allowance for Credit Losses | The change in the allowance for credit losses for the three months ended December 31, 2023 is as follows (dollars in thousands): Allowance for Credit Losses Balance as of September 30, 2023 $ 4,131 Effect of foreign currency translation 9 Balance as of December 31, 2023 $ 4,140 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Dec. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Summary of Revenues Classified by Major Geographic Region | Revenues, classified by the major geographic region in which our customers are located, for the three months ended December 31, 2023 and 2022 (dollars in thousands): Three Months Ended December 31, 2023 2022 Revenues: United States $ 99,469 $ 21,356 Other Americas 84 26 Germany 19,133 18,164 Other Europe, Middle East and Africa 4,775 3,672 Japan 5,623 25,841 Other Asia-Pacific 9,251 14,599 Total net revenues $ 138,335 $ 83,658 |
Summary of Significant Changes in Contract Assets and Deferred Revenue | The table below shows significant changes in contract assets (dollars in thousands): Contract assets Balance as of September 30, 2023 $ 56,708 Revenues recognized but not billed 8,865 Amounts reclassified to Accounts receivable, net ( 11,987 ) Effect of foreign currency translation 2,531 Balance as of December 31, 2023 $ 56,117 The table below shows significant changes in deferred revenue (dollars in thousands): Deferred revenue Balance as of September 30, 2023 $ 222,599 Amounts billed but not recognized 23,525 Revenue recognized ( 105,634 ) Effect of foreign currency translation 3,815 Balance as of December 31, 2023 $ 144,305 |
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, 2023 (dollars in thousands): Within One Two to Five Greater Total Total revenue $ 102,682 $ 81,132 $ 22,034 $ 205,848 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Dec. 31, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Reconciliation of Basic Shares to Diluted Shares | The following table presents the reconciliation of the numerator and denominator for calculating net income (loss) per share: Three Months Ended December 31, in thousands, except per share data 2023 2022 Numerator: Net income (loss) - basic $ 23,857 $ ( 2,158 ) Interest on the Notes, net of tax 2,250 - Net income (loss) - diluted $ 26,107 $ ( 2,158 ) Denominator: Weighted average common shares outstanding - basic 41,186 39,962 Dilutive effect of contingently issuable stock awards 574 - Dilutive effect of the Notes 7,495 - Weighted average common shares outstanding - diluted 49,255 39,962 Net income (loss) per common share: Basic $ 0.58 $ ( 0.05 ) Diluted $ 0.53 $ ( 0.05 ) |
Schedule of Potential Shares Considered Antidilutive | The following table sets forth potential shares that were considered anti-dilutive during the three months ended December 31, 2023 and 2022. Three Months Ended December 31, in thousands 2023 2022 Contingently issuable stock awards - 103 Conversion option of our Notes - 4,677 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Dec. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
Summary of Financial Assets that are Measured at Fair Value and Indicates the Fair Value Hierarchy of the Valuation Inputs | The following table presents information about our financial assets that are measured at fair value and indicates the fair value hierarchy of the valuation inputs used (dollars in thousands) as of: December 31, 2023 Fair Value Cash and Cash Equivalents Marketable Securities Level 1: Money market funds $ 65,753 at cost (a) $ 65,753 $ 65,753 $ - Government securities $ 2,897 at cost (b) 2,879 - 2,879 Level 2: Government securities $ 5,065 at cost (b) 5,058 - 5,058 Time deposits, $ 8,295 at cost (a) 8,295 8,295 - Corporate bonds, $ 9,633 at cost (b) 9,602 - 9,602 Debt securities, $ 2,000 at cost (c) 2,909 - - Total assets $ 94,496 $ 74,048 $ 17,539 September 30, 2023 Fair Value Cash and Cash Equivalents Marketable Securities Level 1: Money market funds $ 66,349 at cost (a) $ 66,349 $ 66,349 $ - Government securities $ 4,421 at cost (b) 4,375 - 4,375 Level 2: Government securities $ 5,046 at cost (b) 5,000 - 5,000 Time deposits, $ 8,536 at cost (a) 8,536 8,536 - Commercial paper, $ 496 at cost (b) 496 - 496 Corporate bonds, $ 10,073 at cost (b) 9,947 - 9,947 Debt securities, $ 2,000 at cost (c) 2,847 - - Total assets $ 97,550 $ 74,885 $ 19,818 (a) Money market funds and other highly liquid investments with original maturities of 90 days or less are included within Cash and cash equivalents in the Condensed Consolidated Balance Sheets. (b) Government securities, commercial paper and corporate bonds with original maturities greater than 90 days are included within Marketable securities in the Condensed Consolidated Balance Sheets and classified as current or noncurrent based upon whether the maturity of the financial asset is less than or greater than 12 months. (c) Debt securities within the Condensed Consolidated Balance Sheets are classified as current or noncurrent based upon whether the maturity of the financial asset is less than or greater than 12 months. |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 3 Months Ended |
Dec. 31, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Summary of Fair Value and Presentation in Condensed Consolidated Balance Sheet for Derivative Instruments | The following table summarizes the fair value and presentation in the Condensed Consolidated Balance Sheet for derivative instruments as of December 31, 2023 and September 30, 2023 (dollars in thousands): Fair Value Derivatives not designated as hedges Classification December 31, 2023 September 30, 2023 Foreign currency forward contracts Prepaid expenses and other current assets $ 358 $ 477 Foreign currency forward contracts Other assets 113 256 Foreign currency forward contracts Accrued expenses and other current liabilities 1,430 1,613 Foreign currency forward contracts Other liabilities 478 460 |
Summary of Loss Related to Foreign Currency Forward Contracts | The following tables display a summary of the loss related to foreign currency forward contracts for the three months ended December 31, 2023 and 2022 (dollars in thousand): Loss recognized in earnings Three Months Ended December 31, Derivatives not designated as hedges Classification 2023 2022 Foreign currency forward contracts Other income, net $ ( 329 ) $ ( 1,453 ) |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 3 Months Ended |
Dec. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Changes in Carrying Amount of Goodwill | The changes in the carrying amount of goodwill for the three months ended December 31, 2023 are as follows (dollars in thousands): Total Balance as of September 30, 2023 $ 900,342 Effect of foreign currency translation 6,054 Balance as of December 31, 2023 $ 906,396 |
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, 2023 Gross Accumulated Net Weighted Average Customer relationships $ 108,285 $ ( 104,911 ) $ 3,374 1.2 Technology and patents 90,000 ( 90,000 ) - - Total $ 198,285 $ ( 194,911 ) $ 3,374 September 30, 2023 Gross Accumulated Net Weighted Average Customer relationships $ 106,713 $ ( 102,942 ) $ 3,771 1.5 Technology and patents 89,431 ( 89,327 ) 104 0.2 Total $ 196,144 $ ( 192,269 ) $ 3,875 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Dec. 31, 2023 | |
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, 2023 and September 30, 2023: December 31, 2023 September 30, 2023 Weighted-average remaining lease term (in months): Operating leases 39.6 37.2 Finance leases 21.8 24.5 Weighted-average discount rate: Operating leases 5.6 % 5.3 % Finance leases 4.4 % 4.4 % |
Summary of Lease Expense | The following table presents lease expense for the three months ended December 31, 2023 and 2022 (dollars in thousands): Three Months Ended December 31, 2023 2022 Finance lease costs: Amortization of right of use asset $ 108 $ 108 Interest on lease liability 7 10 Operating lease cost 1,628 1,686 Variable lease cost 764 691 Sublease income ( 60 ) ( 45 ) Total lease cost $ 2,447 $ 2,450 |
Summary of Undiscounted Future Minimum Lease Payments Under Non-cancelable Leases | The table below reconciles the undiscounted future minimum lease payments under non-cancelable leases to the total lease liabilities recognized on the Condensed Consolidated Balance Sheet as of December 31, 2023 (dollars in thousands): Year Ending September 30, Operating Leases Financing Leases Total 2024 $ 4,854 $ 312 $ 5,166 2025 4,498 362 4,860 2026 2,320 53 2,373 2027 1,836 — 1,836 2028 946 — 946 Thereafter 746 — 746 Total future minimum lease payments $ 15,200 $ 727 $ 15,927 Less effects of discounting ( 1,458 ) ( 22 ) ( 1,480 ) Total lease liabilities $ 13,742 $ 705 $ 14,447 Reported as of December 31, 2023 Short-term lease liabilities $ 5,676 $ 398 $ 6,074 Long-term lease liabilities 8,066 307 8,373 Total lease liabilities $ 13,742 $ 705 $ 14,447 |
Accrued Expenses and Other Li_2
Accrued Expenses and Other Liabilities (Tables) | 3 Months Ended |
Dec. 31, 2023 | |
Accrued Liabilities and Other Liabilities [Abstract] | |
Accrued Expenses and Other Current Liabilities | Accrued expenses and other current liabilities consisted of the following (dollars in thousands): December 31, 2023 September 30, 2023 Compensation $ 25,601 $ 24,997 Sales and other taxes payable 7,871 7,384 Cost of revenue related liabilities 4,189 4,326 Professional fees 3,931 3,386 Interest payable 295 1,781 Other 9,845 6,844 Total $ 51,732 $ 48,718 |
Restructuring and Other Costs_2
Restructuring and Other Costs, Net (Tables) | 3 Months Ended |
Dec. 31, 2023 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Accrual Activity Relating to Restructuring Reserves | The following table sets forth accrual activity relating to restructuring reserves for the three months ended December 31, 2023 (dollars in thousands): Personnel Facilities Restructuring Subtotal Other Total Balance as of September 30, 2023 $ 549 $ 1,033 $ 1,582 $ — $ 1,582 Restructuring and other costs, net 115 145 260 445 705 Non-cash adjustments — ( 174 ) ( 174 ) ( 300 ) ( 474 ) Cash payments ( 201 ) ( 127 ) ( 328 ) — ( 328 ) Effect of foreign currency translation — 13 13 — 13 Balance at December 31, 2023 $ 463 $ 890 $ 1,353 $ 145 $ 1,498 |
Schedule of Restructuring and Other Costs, Net | The following table sets forth restructuring and other costs, net recognized for the three months ended December 31, 2023 and 2022 (dollars in thousands): Three Months Ended December 31, 2023 2022 Personnel $ 115 $ 3,049 Facilities 145 193 Restructuring subtotal 260 3,242 Other 445 947 Restructuring and other costs, net $ 705 $ 4,189 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Dec. 31, 2023 | |
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, 2023 was as follows: Non-Vested Restricted Stock Units Time-Based Performance- Total Shares Weighted- Weighted- Aggregate Non-vested at September 30, 2023 2,372,145 1,145,550 3,517,695 $ 32.52 Granted 1,698,206 297,167 1,995,373 $ 17.82 Vested ( 750,776 ) ( 63,998 ) ( 814,774 ) $ 40.39 Forfeited ( 61,594 ) ( 118,979 ) ( 180,573 ) $ 42.36 Non-vested at December 31, 2023 3,257,981 1,259,740 4,517,721 $ 24.31 Expected to vest 4,517,721 $ 24.31 1.41 $ 88,773 |
Schedule of Stock-based Compensation | Stock-based compensation was included in the following captions in our Condensed Consolidated Statements of Operations for the three months ended December 31, 2023 and 2022 (in thousands): Three Months Ended December 31, 2023 2022 Cost of connected services $ 81 $ 196 Cost of professional services 560 1,153 Research and development 3,831 4,454 Sales and marketing 718 1,660 General and administrative 3,190 5,009 $ 8,380 $ 12,472 |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Dec. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Components of Income (Loss) Before Income Taxes | The components of income (loss) before income taxes are as follows (dollars in thousands): Three Months Ended December 31, 2023 2022 Domestic $ 65,636 $ 6,053 Foreign ( 7,438 ) ( 6,961 ) Income (loss) before income taxes $ 58,198 $ ( 908 ) |
Components of the Provision for Income Taxes | The components of the provision for income taxes are as follows (dollars in thousands): Three Months Ended December 31, 2023 2022 Domestic $ 29,078 $ ( 249 ) Foreign 5,263 1,499 Provision for income taxes $ 34,341 $ 1,250 Effective income tax rate 59.0 % ( 137.7 )% The effective tax rates for the periods presented are based upon estimated income for the fiscal year and the statutory tax rates enacted in the jurisdictions in which we operate. For all periods presented, the effective tax rate differs from the 21.0 % statutory U.S. tax rate due to the impact of the nondeductible stock-based compensation and our mix of jurisdictional earnings and related differences in foreign statutory tax rates. |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 3 Months Ended |
Dec. 31, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Long-Term Debt | Long-term debt consisted of the following (in thousands): December 31, 2023 Description Maturity Date Convertible Debt Coupon Rate Effective Interest Rate Principal Unamortized Discount Deferred Issuance Costs Carrying Value 2025 Modified Notes 6/1/2025 3.00 % 3.70 % $ 87,500 $ - $ ( 846 ) $ 86,654 2025 Modified Notes 7/1/2028 1.50 % 8.70 % 87,500 ( 3,545 ) ( 13,534 ) 70,421 2028 Notes 7/1/2028 1.50 % 1.91 % 122,500 - ( 2,156 ) 120,344 Total debt $ 297,500 $ ( 3,545 ) $ ( 16,536 ) 277,419 Less: current portion of long-term debt — Total long-term debt $ 277,419 September 30, 2023 Description Maturity Date Convertible Debt Coupon Rate Effective Interest Rate Principal Unamortized Discount Deferred Issuance Costs Carrying Value 2025 Modified Notes 6/1/2025 3.00 % 3.70 % $ 87,500 $ - $ ( 992 ) $ 86,508 2025 Modified Notes 7/1/2028 1.50 % 8.75 % 87,500 ( 3,796 ) ( 14,490 ) 69,214 2028 Notes 7/1/2028 1.50 % 1.91 % 122,500 - ( 2,271 ) 120,229 Total debt $ 297,500 $ ( 3,796 ) $ ( 17,753 ) 275,951 Less: current portion of long-term debt — Total long-term debt $ 275,951 |
Summary of Maturities of Borrowing Obligations | The following table summarizes the maturities of our borrowing obligations as of December 31, 2023 (in thousands): Fiscal Year 2028 Notes 2025 Modified Notes Total 2024 $ — $ — $ — 2025 — 87,500 87,500 2026 — — — 2027 — — — 2028 122,500 87,500 210,000 Thereafter — — — Total before unamortized discount and issuance costs and current portion $ 122,500 $ 175,000 $ 297,500 Less: unamortized discount and issuance costs ( 2,156 ) ( 17,925 ) ( 20,081 ) Less: current portion of long-term debt — — — Total long-term debt $ 120,344 $ 157,075 $ 277,419 |
Schedule of Interest Expense Related to Notes | The interest expense recognized related to the Notes for the three months ended December 31, 2023 and 2022 was as follows (dollars in thousands): Three Months Ended December 31, 2023 2022 Contractual interest expense $ 1,442 $ 1,322 Amortization of debt discount 251 - Amortization of issuance costs 1,217 280 Total interest expense related to the Notes $ 2,910 $ 1,602 |
Significant Accounting Polici_4
Significant Accounting Policies - Additional Information (Details) $ in Millions | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2023 USD ($) Customer | Sep. 30, 2023 USD ($) Customer | Jun. 02, 2020 | |
Significant Accounting Policies [Line Items] | |||
Inventories | $ | $ 0.9 | $ 0.5 | |
3.00% Convertible Senior Notes Due 2025 | |||
Significant Accounting Policies [Line Items] | |||
Debt instrument, interest rate | 3% | 3% | 3% |
Concentration of Credit Risk | Accounts Receivable, Net | |||
Significant Accounting Policies [Line Items] | |||
Number of major customers | Customer | 2 | 2 | |
Concentration of Credit Risk | Accounts Receivable, Net | Customer One | |||
Significant Accounting Policies [Line Items] | |||
Concentration risk, percentage | 11.80% | 10.80% | |
Concentration of Credit Risk | Accounts Receivable, Net | Customer Two | |||
Significant Accounting Policies [Line Items] | |||
Concentration risk, percentage | 10.70% | 10.10% |
Summary of Significant Accounti
Summary of Significant Accounting Policies - Summary of Change in Allowance for Credit Losses (Details) $ in Thousands | 3 Months Ended |
Dec. 31, 2023 USD ($) | |
Receivables [Abstract] | |
Beginning balance | $ 4,131 |
Effect of foreign currency translation | 9 |
Ending balance | $ (4,140) |
Revenue Recognition - Additiona
Revenue Recognition - Additional Information (Details) | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2023 USD ($) Customer | Dec. 31, 2022 USD ($) Customer | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | |
Disaggregation Of Revenue [Line Items] | ||||
Revenues | $ 138,335,000 | $ 83,658,000 | ||
Accounts receivable, net | 58,693,000 | $ 61,270,000 | $ 45,100,000 | |
Contract acquisition costs | 8,000,000 | $ 8,000,000 | ||
Contract acquisition cost, amortization | 700,000 | 800,000 | ||
Contract acquisition cost, impairment | 0 | |||
Capitalized contract cost, amortization | 4,100,000 | 2,700,000 | ||
Capitalized contract cost, impairment | 0 | |||
Acceleration of deferred revenue | 67,800,000 | |||
Customer One | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 78,400,000 | 21,400,000 | ||
Customer Two | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 10,000,000 | |||
Separate Customer | ||||
Disaggregation Of Revenue [Line Items] | ||||
Acceleration of deferred revenue | 9,900,000 | |||
United States | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 99,469,000 | 21,356,000 | ||
Germany | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 19,133,000 | 18,164,000 | ||
Japan | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | $ 5,623,000 | 25,841,000 | ||
China | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | $ 9,600,000 | |||
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 | 56.70% | 25.60% | ||
Revenues | Customer Concentration Risk | Customer Two | ||||
Disaggregation Of Revenue [Line Items] | ||||
Percentage of revenue | 12% | |||
Minimum | Revenues | Geographic Concentration Risk | ||||
Disaggregation Of Revenue [Line Items] | ||||
Percentage of revenue | 10% |
Revenue Recognition - Summary o
Revenue Recognition - Summary of Revenues Classified by Major Geographic Region (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Revenues: | ||
Total net revenues | $ 138,335 | $ 83,658 |
United States | ||
Revenues: | ||
Total net revenues | 99,469 | 21,356 |
Other Americas | ||
Revenues: | ||
Total net revenues | 84 | 26 |
Germany | ||
Revenues: | ||
Total net revenues | 19,133 | 18,164 |
Other Europe, Middle East and Africa | ||
Revenues: | ||
Total net revenues | 4,775 | 3,672 |
Japan | ||
Revenues: | ||
Total net revenues | 5,623 | 25,841 |
Other Asia-Pacific | ||
Revenues: | ||
Total net revenues | $ 9,251 | $ 14,599 |
Revenue Recognition - Summary_2
Revenue Recognition - Summary of Significant Changes in Contract Assets (Details) $ in Thousands | 3 Months Ended |
Dec. 31, 2023 USD ($) | |
Revenue from Contract with Customer [Abstract] | |
Balance | $ 56,708 |
Revenues recognized but not billed | 8,865 |
Amounts reclassified to Accounts receivable, net | (11,987) |
Effect of foreign currency translation | 2,531 |
Balance | $ 56,117 |
Revenue Recognition - Summary_3
Revenue Recognition - Summary of Significant Changes in Deferred Revenue (Details) $ in Thousands | 3 Months Ended |
Dec. 31, 2023 USD ($) | |
Revenue from Contract with Customer [Abstract] | |
Balance | $ 222,599 |
Amounts billed but not recognized | (23,525) |
Revenue recognized | (105,634) |
Effect of foreign currency translation | 3,815 |
Balance | $ 144,305 |
Revenue Recognition - Summary_4
Revenue Recognition - Summary of Estimated Revenue Expected to be Recognized in Future Related to Performance Obligations Unsatisfied or Partially Unsatisfied (Details) | Dec. 31, 2023 USD ($) |
Remaining Performance Obligations | |
Total revenue | $ 205,848 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2024-01-01 | |
Remaining Performance Obligations | |
Total revenue | $ 102,682,000 |
Remaining performance obligation, expected timing of satisfaction, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2025-01-01 | |
Remaining Performance Obligations | |
Total revenue | $ 81,132,000 |
Remaining performance obligation, expected timing of satisfaction, period | 4 years |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2029-01-01 | |
Remaining Performance Obligations | |
Total revenue | $ 22,034,000 |
Remaining performance obligation, expected timing of satisfaction, period |
Revenue Recognition - Summary_5
Revenue Recognition - Summary of Estimated Revenue Expected to be Recognized in Future Related to Performance Obligations Unsatisfied or Partially Unsatisfied (Details 1) | Dec. 31, 2023 USD ($) |
Remaining Performance Obligations | |
Total revenue | $ 205,848 |
Earnings Per Share - Schedule o
Earnings Per Share - Schedule of Reconciliation of Basic Shares to Diluted Shares (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Numerator: | ||
Net income (loss) - basic | $ 23,857 | $ (2,158) |
Interest on the Notes, net of tax | 2,250 | |
Net income (loss) - diluted | $ 26,107 | $ (2,158) |
Denominator: | ||
Weighted average common shares outstanding - basic | 41,186 | 39,962 |
Dilutive effect of contingently issuable stock awards | 574 | |
Dilutive effect of the Notes | 7,495 | |
Weighted average common shares outstanding - diluted | 49,255 | 39,962 |
Net income (loss) per common share: | ||
Basic | $ 0.58 | $ (0.05) |
Diluted | $ 0.53 | $ (0.05) |
Earnings Per Share - Schedule_2
Earnings Per Share - Schedule of Potential Shares Considered Antidilutive (Details) shares in Thousands | 3 Months Ended |
Dec. 31, 2022 shares | |
Contingently Issuable Stock Awards | |
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |
Antidilutive shares | 103 |
Conversion Option of our Notes | |
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |
Antidilutive shares | 4,677 |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of Financial Assets that are Measured at Fair Value and Indicates the Fair Value Hierarchy of the Valuation Inputs (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Sep. 30, 2023 |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Fair Value | $ 94,496 | $ 97,550 |
Cash and Cash Equivalents | 74,048 | 74,885 |
Marketable Securities | 17,539 | 19,818 |
Money Market Funds | Level 1 | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Fair Value | 65,753 | 66,349 |
Cash and Cash Equivalents | 65,753 | 66,349 |
Government Securities | Level 1 | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Fair Value | 2,879 | 4,375 |
Marketable Securities | 2,879 | 4,375 |
Government Securities | Level 2 | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Fair Value | 5,058 | 5,000 |
Marketable Securities | 5,058 | 5,000 |
Time Deposits | Level 2 | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Fair Value | 8,295 | 8,536 |
Cash and Cash Equivalents | 8,295 | 8,536 |
Commercial Paper | Level 2 | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Fair Value | 496 | |
Marketable Securities | 496 | |
Corporate Debt Securities | Level 2 | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Fair Value | 9,602 | 9,947 |
Marketable Securities | 9,602 | 9,947 |
Debt Securities | Level 2 | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Fair Value | $ 2,909 | $ 2,847 |
Fair Value Measurements - Sum_2
Fair Value Measurements - Summary of Financial Assets that are Measured at Fair Value and Indicates the Fair Value Hierarchy of the Valuation Inputs (Parenthetical) (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Sep. 30, 2023 |
Money Market Funds | Level 1 | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Marketable securities, cost | $ 65,753 | $ 66,349 |
Government Securities | Level 1 | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Marketable securities, cost | 2,897 | 4,421 |
Government Securities | Level 2 | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Marketable securities, cost | 5,065 | 5,046 |
Time Deposits | Level 2 | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Marketable securities, cost | 8,295 | 8,536 |
Commercial Paper | Level 2 | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Marketable securities, cost | 496 | |
Corporate Debt Securities | Level 2 | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Marketable securities, cost | 9,633 | 10,073 |
Debt Securities | Level 2 | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Marketable securities, cost | $ 2,000 | $ 2,000 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Details) - USD ($) | 3 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Sep. 30, 2023 | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Unrealized gains to marketable securities | $ 200,000 | $ 100,000 | |
Equity investments without readily determinable fair values | 2,600,000 | $ 2,600,000 | |
Impairment related to investments without readily determinable fair values | 0 | $ 0 | |
Estimated Fair Value | Level 2 | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Fair value of notes | $ 233,100,000 | $ 257,400,000 |
Derivative Financial Instrume_3
Derivative Financial Instruments - Additional Information (Details) - Foreign Exchange Forward Contracts - Not Designated - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Dec. 31, 2023 | Sep. 30, 2023 | |
Derivative [Line Items] | ||
Derivative, notional amount | $ 98.3 | $ 98 |
Derivative, weighted-average remaining maturity | 11 months 15 days | 11 months 18 days |
Maximum | ||
Derivative [Line Items] | ||
Derivative, contract maturity | 3 years |
Derivative Financial Instrume_4
Derivative Financial Instruments - Summary of Fair Value and Presentation in Condensed Consolidated Balance Sheet for Derivative Instruments (Details) - Foreign Currency Forward Contracts - Not Designated - USD ($) $ in Thousands | Dec. 31, 2023 | Sep. 30, 2023 |
Prepaid Expenses and Other Current Assets | ||
Derivatives Fair Value [Line Items] | ||
Derivative instrument assets at fair value | $ 358 | $ 477 |
Other Assets | ||
Derivatives Fair Value [Line Items] | ||
Derivative instrument assets at fair value | 113 | 256 |
Accrued Expenses and Other Current Liabilities | ||
Derivatives Fair Value [Line Items] | ||
Derivative instrument liabilities at fair value | 1,430 | 1,613 |
Other Liabilities | ||
Derivatives Fair Value [Line Items] | ||
Derivative instrument liabilities at fair value | $ 478 | $ 460 |
Summary of Loss Related to Fore
Summary of Loss Related to Foreign Currency Forward Contracts (Details) - Foreign Exchange Forward Contracts - Not Designated - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Derivative Instruments Gain Loss [Line Items] | ||
(Loss) income recognized in earnings | $ (329) | $ (1,453) |
Derivative, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration] | Other Nonoperating Income (Expense) | Other Nonoperating Income (Expense) |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets - Goodwill - Additional Information (Details) | 3 Months Ended |
Dec. 31, 2023 USD ($) Segment | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Number of reportable segments | 1 |
Number of Operating Segment | 1 |
Goodwill impairment | $ | $ 0 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets - Changes in Carrying Amount of Goodwill (Details) $ in Thousands | 3 Months Ended |
Dec. 31, 2023 USD ($) | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Balance as of September 30, 2023 | $ 900,342 |
Effect of foreign currency translation | 6,054 |
Balance as of December 31, 2023 | $ 906,396 |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets - Intangible Assets, Net - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense related to intangible assets | $ 0.6 | $ 2.5 |
Expected amortization of intangible assets for remainder of 2024 | $ 1.6 |
Goodwill and Other Intangible_6
Goodwill and Other Intangible Assets - Summary of Gross Carrying Amounts and Accumulated Amortization of Intangible Assets by Major Class (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Sep. 30, 2023 |
Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 198,285 | $ 196,144 |
Accumulated Amortization | (194,911) | (192,269) |
Net Carrying Amount | 3,374 | 3,875 |
Customer Relationships | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 108,285 | 106,713 |
Accumulated Amortization | (104,911) | (102,942) |
Net Carrying Amount | $ 3,374 | $ 3,771 |
Weighted Average Remaining Life (Years) | 1 year 2 months 12 days | 1 year 6 months |
Technology and Patents | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 90,000 | $ 89,431 |
Accumulated Amortization | $ (90,000) | (89,327) |
Net Carrying Amount | $ 104 | |
Weighted Average Remaining Life (Years) | 2 months 12 days |
Leases - Additional Information
Leases - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Lessee Lease Description [Line Items] | ||
Cash payments related to operating leases | $ 1.7 | $ 1.8 |
Cash payments related to financing leases | 0.1 | 0.1 |
Right of use assets obtained in exchange for lease obligations | $ 1.5 | $ 2.5 |
Leases - Summary of Lease Term
Leases - Summary of Lease Term and Incremental Borrowing Rates for Leases (Details) | Dec. 31, 2023 | Sep. 30, 2023 |
Weighted-average remaining lease term (in months): | ||
Operating leases | 39 months 18 days | 37 months 6 days |
Finance leases | 21 months 24 days | 24 months 15 days |
Weighted-average discount rate: | ||
Operating leases | 5.60% | 5.30% |
Finance leases | 4.40% | 4.40% |
Leases - Summary of Lease Expen
Leases - Summary of Lease Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Finance lease costs: | ||
Amortization of right of use asset | $ 108 | $ 108 |
Interest on lease liability | 7 | 10 |
Operating lease cost | 1,628 | 1,686 |
Variable lease cost | 764 | 691 |
Sublease income | (60) | (45) |
Total lease cost | $ 2,447 | $ 2,450 |
Leases - Summary of Undiscounte
Leases - Summary of Undiscounted Future Minimum Lease Payments Under Non-cancelable Leases (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Sep. 30, 2023 |
Operating Leases | ||
2024 | $ 4,854 | |
2025 | 4,498 | |
2026 | 2,320 | |
2027 | 1,836 | |
2028 | 946 | |
Thereafter | 746 | |
Total future minimum lease payments | 15,200 | |
Less effects of discounting | (1,458) | |
Total lease liabilities | 13,742 | |
Short-term lease liabilities | 5,676 | $ 5,434 |
Long-term lease liabilities | 8,066 | $ 7,947 |
Financing Leases | ||
2024 | 312 | |
2025 | 362 | |
2026 | 53 | |
Total future minimum lease payments | 727 | |
Less effects of discounting | (22) | |
Total lease liabilities | 705 | |
Short-term lease liabilities | 398 | |
Long-term lease liabilities | 307 | |
Total | ||
2024 | 5,166 | |
2025 | 4,860 | |
2026 | 2,373 | |
2027 | 1,836 | |
2028 | 946 | |
Thereafter | 746 | |
Total future minimum lease payments | 15,927 | |
Less effects of discounting | (1,480) | |
Total lease liabilities | 14,447 | |
Short-term lease liabilities | 6,074 | |
Long-term lease liabilities | $ 8,373 |
Accrued Expenses and Other Li_3
Accrued Expenses and Other Liabilities - Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Sep. 30, 2023 |
Accrued Liabilities and Other Liabilities [Abstract] | ||
Compensation | $ 25,601 | $ 24,997 |
Sales and other taxes payable | 7,871 | 7,384 |
Cost of revenue related liabilities | 4,189 | 4,326 |
Professional fees | 3,931 | 3,386 |
Interest payable | 295 | 1,781 |
Other | 9,845 | 6,844 |
Total | $ 51,732 | $ 48,718 |
Restructuring and Other Costs_3
Restructuring and Other Costs, Net - Schedule of Accrual Activity Relating to Restructuring Reserves (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Restructuring Cost And Reserve [Line Items] | ||
Balance as of September 30, 2023 | $ 1,582 | |
Restructuring and other costs, net | 705 | $ 4,189 |
Non-cash adjustments | 474 | |
Cash payments | (328) | |
Effect of foreign currency translation | 13 | |
Balance at December 31, 2023 | 1,498 | |
Personnel | ||
Restructuring Cost And Reserve [Line Items] | ||
Balance as of September 30, 2023 | 549 | |
Restructuring and other costs, net | 115 | 3,049 |
Cash payments | (201) | |
Balance at December 31, 2023 | 463 | |
Facilities | ||
Restructuring Cost And Reserve [Line Items] | ||
Balance as of September 30, 2023 | 1,033 | |
Restructuring and other costs, net | 145 | 193 |
Non-cash adjustments | 174 | |
Cash payments | (127) | |
Effect of foreign currency translation | 13 | |
Balance at December 31, 2023 | 890 | |
Restructuring Subtotal | ||
Restructuring Cost And Reserve [Line Items] | ||
Balance as of September 30, 2023 | 1,582 | |
Restructuring and other costs, net | 260 | 3,242 |
Non-cash adjustments | 174 | |
Cash payments | (328) | |
Effect of foreign currency translation | 13 | |
Balance at December 31, 2023 | 1,353 | |
Other | ||
Restructuring Cost And Reserve [Line Items] | ||
Restructuring and other costs, net | 445 | $ 947 |
Non-cash adjustments | 300 | |
Balance at December 31, 2023 | $ 145 |
Restructuring and Other Costs_4
Restructuring and Other Costs, Net - Schedule of Restructuring and Other Costs, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Restructuring Cost And Reserve [Line Items] | ||
Restructuring and other costs, net | $ 705 | $ 4,189 |
Personnel | ||
Restructuring Cost And Reserve [Line Items] | ||
Restructuring and other costs, net | 115 | 3,049 |
Facilities | ||
Restructuring Cost And Reserve [Line Items] | ||
Restructuring and other costs, net | 145 | 193 |
Restructuring Subtotal | ||
Restructuring Cost And Reserve [Line Items] | ||
Restructuring and other costs, net | 260 | 3,242 |
Other | ||
Restructuring Cost And Reserve [Line Items] | ||
Restructuring and other costs, net | $ 445 | $ 947 |
Restructuring and Other Costs_5
Restructuring and Other Costs, Net - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Restructuring Cost And Reserve [Line Items] | ||
Restructuring and other costs, net | $ 705 | $ 4,189 |
Severance Charge | ||
Restructuring Cost And Reserve [Line Items] | ||
Restructuring and other costs, net | 115 | 3,049 |
Facilities Closure | ||
Restructuring Cost And Reserve [Line Items] | ||
Restructuring and other costs, net | 145 | 193 |
Other One-Time Charges | ||
Restructuring Cost And Reserve [Line Items] | ||
Restructuring and other costs, net | $ 400 | $ 900 |
Stockholders' Equity - Addition
Stockholders' Equity - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |||
Oct. 02, 2019 | Dec. 31, 2023 | Dec. 31, 2022 | Sep. 30, 2023 | |
Class Of Stock [Line Items] | ||||
Common stock reserved for issuance | 6,350,000 | |||
Common stock, par value | $ 0.01 | $ 0.01 | $ 0.01 | |
Increase in shares available for issuance, description | The shares available for issuance will automatically increase on January 1st of each year, by the lesser of (A) 3% of the number of shares of Common Stock outstanding as of the close of business on the immediately preceding December 31st; and (B) the number of shares of Common Stock determined by the Board on or prior to such date for such year. | |||
Increase in shares available for issuance expressed as percentage of number of shares of common stock outstanding | 3% | |||
Stock-based compensation | $ 8,380 | $ 12,472 | ||
2019 Equity Incentive Plan | ||||
Class Of Stock [Line Items] | ||||
Common stock reserved for issuance | 5,300,000 | |||
2019 Employee Stock Purchase Plan | ||||
Class Of Stock [Line Items] | ||||
Common stock reserved for issuance | 1,050,000 |
Stockholders' Equity - Schedule
Stockholders' Equity - Schedule of Non-vested Restricted Stock Units (Details) $ / shares in Units, $ in Thousands | 3 Months Ended |
Dec. 31, 2023 USD ($) $ / shares shares | |
Time-Based Restricted Stock Units | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Non-vested, Shares, Beginning balance | 2,372,145 |
Non-vested, Shares, Granted | 1,698,206 |
Non-vested, Shares, Vested | (750,776) |
Non-vested, Shares, Forfeited | (61,594) |
Non-vested, Shares, Ending balance | 3,257,981 |
Performance-Based Restricted Stock Units | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Non-vested, Shares, Beginning balance | 1,145,550 |
Non-vested, Shares, Granted | 297,167 |
Non-vested, Shares, Vested | (63,998) |
Non-vested, Shares, Forfeited | (118,979) |
Non-vested, Shares, Ending balance | 1,259,740 |
Restricted Stock Units | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Non-vested, Shares, Beginning balance | 3,517,695 |
Non-vested, Shares, Granted | 1,995,373 |
Non-vested, Shares, Vested | (814,774) |
Non-vested, Shares, Forfeited | (180,573) |
Non-vested, Shares, Ending balance | 4,517,721 |
Non-vested, Shares, Expected to vest | 4,517,721 |
Non-vested, Weighted-Average Grant-Date Fair Value, Beginning balance | $ / shares | $ 32.52 |
Non-vested, Weighted-Average Grant-Date Fair Value, Granted | $ / shares | 17.82 |
Non-vested, Weighted-Average Grant-Date Fair Value, Vested | $ / shares | 40.39 |
Non-vested, Weighted-Average Grant-Date Fair Value, Forfeited | $ / shares | 42.36 |
Non-vested, Weighted-Average Grant-Date Fair Value, Ending balance | $ / shares | 24.31 |
Non-vested, Weighted-Average Grant-Date Fair Value, Expected to vest | $ / shares | $ 24.31 |
Non-vested, Weighted-Average Remaining Contractual Term (years), Expected to vest | 1 year 4 months 28 days |
Non-vested, Aggregate Intrinsic Value, Expected to vest | $ | $ 88,773 |
Stockholders' Equity - Schedu_2
Stockholders' Equity - Schedule of Stock-based Compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Stock-based compensation | $ 8,380 | $ 12,472 |
Cost of Connected Services | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Stock-based compensation | 81 | 196 |
Cost of Professional Services | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Stock-based compensation | 560 | 1,153 |
Research and Development | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Stock-based compensation | 3,831 | 4,454 |
Sales and Marketing | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Stock-based compensation | 718 | 1,660 |
General and Administrative | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Stock-based compensation | $ 3,190 | $ 5,009 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) - USD ($) | 3 Months Ended | |
Mar. 24, 2023 | Dec. 31, 2023 | |
Loss Contingencies [Line Items] | ||
Loss contingency, lawsuit filing date | March 24, 2023 | |
Loss contingency, statutory damages | $ 5,000 | |
Indemnification period for former officers and members of the boards of directors | 6 years | |
Bellevue, Washington Office Space | ||
Loss Contingencies [Line Items] | ||
Letter of credit as security deposit | $ 900,000 | |
Other Facility | ||
Loss Contingencies [Line Items] | ||
Letter of credit as security deposit | $ 600,000 | |
Negligent Violation | ||
Loss Contingencies [Line Items] | ||
Loss contingency, statutory damages | $ 1,000 |
Income Taxes - Components of (L
Income Taxes - Components of (Loss) Income Before Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | ||
Domestic | $ 65,636 | $ 6,053 |
Foreign | (7,438) | (6,961) |
Income (loss) before income taxes | $ 58,198 | $ (908) |
Income Taxes - Components of th
Income Taxes - Components of the Provision for Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | ||
Domestic | $ 29,078 | $ (249) |
Foreign | 5,263 | 1,499 |
Provision for income taxes | $ 34,341 | $ 1,250 |
Effective income tax rate | 59% | (137.70%) |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Income Tax Disclosure [Line Items] | ||
U.S. federal statutory rates | 21% | 21% |
Effective income tax rate | 59% | (137.70%) |
Provision for (benefit from) income taxes | $ 34,341 | $ 1,250 |
Net change in provision for income taxes | $ 33,000 | |
U.S. | ||
Income Tax Disclosure [Line Items] | ||
Research and development expenditure, maximum amortize period | 5 years | |
Foreign | ||
Income Tax Disclosure [Line Items] | ||
Research and development expenditure, maximum amortize period | 15 years |
Long-Term Debt - Schedule of Lo
Long-Term Debt - Schedule of Long-Term Debt (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Jun. 26, 2023 | Jun. 02, 2020 | Dec. 31, 2023 | Sep. 30, 2023 | |
Debt Instrument [Line Items] | ||||
Principal | $ 297,500,000 | $ 297,500,000 | ||
Unamortized Discount | (3,545,000) | (3,796,000) | ||
Deferred Issuance Costs | (16,536,000) | (17,753,000) | ||
Total debt | 277,419,000 | 275,951,000 | ||
Total long-term debt | $ 277,419,000 | $ 275,951,000 | ||
3.00% Convertible Senior Notes Due 2025 | ||||
Debt Instrument [Line Items] | ||||
Maturity date | Jun. 01, 2025 | Jun. 01, 2025 | Jun. 01, 2025 | |
Convertible debt coupon rate | 3% | 3% | 3% | |
Effective interest rate | 3.70% | 3.70% | ||
Principal | $ 175,000,000 | $ 87,500,000 | $ 87,500,000 | |
Deferred Issuance Costs | (846,000) | (992,000) | ||
Total debt | 86,654,000 | $ 86,508,000 | ||
Total long-term debt | $ 157,075,000 | |||
1.50% Convertible Senior Notes Due 2025 | ||||
Debt Instrument [Line Items] | ||||
Maturity date | Jul. 01, 2028 | Jul. 01, 2028 | ||
Convertible debt coupon rate | 1.50% | 1.50% | ||
Effective interest rate | 8.70% | 8.75% | ||
Principal | $ 87,500,000 | $ 87,500,000 | ||
Unamortized Discount | (3,545,000) | (3,796,000) | ||
Deferred Issuance Costs | (13,534,000) | (14,490,000) | ||
Total debt | $ 70,421,000 | $ 69,214,000 | ||
1.50% Convertible Senior Notes Due 2028 | ||||
Debt Instrument [Line Items] | ||||
Maturity date | Jul. 01, 2028 | Jul. 01, 2028 | Jul. 01, 2028 | |
Convertible debt coupon rate | 1.50% | 1.50% | 1.50% | |
Effective interest rate | 1.91% | 1.91% | ||
Principal | $ 190,000,000 | $ 122,500,000 | $ 122,500,000 | |
Deferred Issuance Costs | (2,156,000) | (2,271,000) | ||
Total debt | 120,344,000 | $ 120,229,000 | ||
Total long-term debt | $ 120,344,000 |
Long-Term Debt - Summary of Mat
Long-Term Debt - Summary of Maturities of Borrowing Obligations (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Sep. 30, 2023 |
Debt Instrument [Line Items] | ||
2025 | $ 87,500 | |
2028 | 210,000 | |
Total before unamortized discount and issuance costs and current portion | 297,500 | |
Less: unamortized discount and issuance costs | (20,081) | |
Total long-term debt | 277,419 | $ 275,951 |
2028 Notes | ||
Debt Instrument [Line Items] | ||
2028 | 122,500 | |
Total before unamortized discount and issuance costs and current portion | 122,500 | |
Less: unamortized discount and issuance costs | (2,156) | |
Total long-term debt | 120,344 | |
2025 Modified Notes | ||
Debt Instrument [Line Items] | ||
2025 | 87,500 | |
2028 | 87,500 | |
Total before unamortized discount and issuance costs and current portion | 175,000 | |
Less: unamortized discount and issuance costs | (17,925) | |
Total long-term debt | $ 157,075 |
Long-Term Debt - Additional Inf
Long-Term Debt - Additional Information (Details) | 3 Months Ended | 12 Months Ended | |||||||
Jun. 26, 2023 USD ($) Days $ / shares shares | Jun. 12, 2020 USD ($) | Jun. 02, 2020 USD ($) Days $ / shares shares | Dec. 31, 2023 USD ($) | Jun. 30, 2023 USD ($) | Dec. 31, 2022 USD ($) | Sep. 30, 2023 USD ($) | Jul. 03, 2023 USD ($) | Mar. 31, 2023 USD ($) | |
Debt Instrument [Line Items] | |||||||||
Aggregate principal amount | $ 297,500,000 | $ 297,500,000 | |||||||
Debt, principal amount, net | 297,500,000 | ||||||||
Long-Term Debt | 277,419,000 | 275,951,000 | |||||||
Debt unamortized issuance costs, net | 16,536,000 | 17,753,000 | |||||||
Payment on debt issuance costs | $ 0 | $ 403,000 | |||||||
Senior Credit Facilities | |||||||||
Debt Instrument [Line Items] | |||||||||
Minimum liquidity | $ 75,000,000 | ||||||||
Debt instrument, covenant description | The Credit Agreement contains certain affirmative and negative covenants customary for financings of this type that, among other things, limit our and our subsidiaries’ ability to incur additional indebtedness or liens, to dispose of assets, to make certain fundamental changes, to designate subsidiaries as unrestricted, to make certain investments, to prepay certain indebtedness and to pay dividends, or to make other distributions or redemptions/repurchases, in respect of our and our subsidiaries’ equity interests. In addition, the Credit Agreement contains financial covenants, each tested quarterly, (1) a net secured leverage ratio of not greater than 3.25 to 1.00; (2) a net total leverage ratio of not greater than 4.25 to 1.00; and (3) minimum liquidity of at least $75 million. The Credit Agreement also contains events of default customary for financings of this type, including certain customary change of control events. | ||||||||
Credit Agreement Amendment Two | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt Instrument, interest rate description | Total interest expense relating to the Senior Credit Facilities for the three months ended December 31, 2023 and 2022 was $0.1 million and $1.9 million, respectively. Amounts reflect the coupon and accretion of the discount. | ||||||||
Maximum Capital Expenditures Amount | $ 7,500,000 | ||||||||
Interest expense | $ 100,000 | $ 1,900,000 | |||||||
Minimum liquidity | $ 125,000,000 | ||||||||
Maximum | |||||||||
Debt Instrument [Line Items] | |||||||||
Percentage of the remaining cash flow of original instrument | 10% | ||||||||
Maximum | Senior Credit Facilities | |||||||||
Debt Instrument [Line Items] | |||||||||
Net leverage ratio | 4.25 | ||||||||
Net secured leverage ratio | 3.25% | ||||||||
Maximum | Credit Agreement Amendment Two | |||||||||
Debt Instrument [Line Items] | |||||||||
Net secured leverage ratio | 4.25% | ||||||||
3.00% Convertible Senior Notes Due 2025 | |||||||||
Debt Instrument [Line Items] | |||||||||
Aggregate principal amount | $ 175,000,000 | $ 87,500,000 | $ 87,500,000 | ||||||
Debt instrument, interest rate | 3% | 3% | 3% | ||||||
Debt Instrument, option to purchase additional principal amount | $ 25,000,000 | ||||||||
Debt, principal amount, net | $ 175,000,000 | ||||||||
Proceeds from issuance of notes | $ 169,800,000 | ||||||||
Debt instrument, maturity date | Jun. 01, 2025 | Jun. 01, 2025 | Jun. 01, 2025 | ||||||
Debt instrument repurchase amount | $ 87,500,000 | ||||||||
Debt instrument, conversion initial rate | shares | 26.7271 | ||||||||
Debt instrument, convertible principal amount | $ 1,000 | ||||||||
Debt instrument, conversion price | $ / shares | $ 37.42 | ||||||||
Debt instrument convertible, if-converted value of the Notes less than its principal amount | 86,800,000 | $ 83,600,000 | |||||||
Debt instrument, convertible trading days | Days | 20 | ||||||||
Debt instrument, convertible consecutive trading days | Days | 30 | ||||||||
Debt instrument, convertible conversion price percentage | 130% | ||||||||
Debt instrument, convertible maximum conversion price percentage | 98% | ||||||||
Debt instrument, redemption price percentage of principal amount | 100% | ||||||||
Debt instrument, sinking fund | $ 0 | ||||||||
Long-Term Debt | 86,654,000 | 86,508,000 | |||||||
Debt unamortized issuance costs, net | $ 846,000 | 992,000 | |||||||
3.00% Convertible Senior Notes Due 2025 | Minimum | |||||||||
Debt Instrument [Line Items] | |||||||||
Conversion feature percentage | 10% | ||||||||
Debt instrument, convertible trading days | Days | 20 | ||||||||
Debt instrument, convertible conversion price percentage | 130% | ||||||||
2025 Modified Notes | |||||||||
Debt Instrument [Line Items] | |||||||||
Aggregate principal amount | $ 87,500,000 | $ 87,500,000 | |||||||
Debt instrument, interest rate | 1.50% | 1.50% | |||||||
Debt instrument, maturity date | Jul. 01, 2028 | Jul. 01, 2028 | |||||||
Long-Term Debt | $ 70,421,000 | $ 69,214,000 | |||||||
Debt unamortized issuance costs, net | 13,534,000 | 14,490,000 | |||||||
Payment on debt issuance costs | 14,300,000 | ||||||||
Payment of refinancing fees to lender | 3,800,000 | ||||||||
1.50% Convertible Senior Notes Due 2028 | |||||||||
Debt Instrument [Line Items] | |||||||||
Aggregate principal amount | $ 190,000,000 | $ 122,500,000 | $ 122,500,000 | ||||||
Debt instrument, interest rate | 1.50% | 1.50% | 1.50% | ||||||
Debt Instrument, option to purchase additional principal amount | $ 20,000,000 | ||||||||
Debt, principal amount, net | $ 122,500,000 | ||||||||
Proceeds from issuance of notes | $ 193,200,000 | ||||||||
Debt instrument, maturity date | Jul. 01, 2028 | Jul. 01, 2028 | Jul. 01, 2028 | ||||||
Debt instrument, conversion initial rate | shares | 24.5586 | ||||||||
Debt instrument, convertible principal amount | $ 1,000 | ||||||||
Debt instrument, conversion price | $ / shares | $ 40.72 | ||||||||
Debt instrument convertible, if-converted value of the Notes less than its principal amount | $ 63,400,000 | $ 61,200,000 | |||||||
Debt instrument, convertible trading days | Days | 20 | ||||||||
Debt instrument, convertible consecutive trading days | Days | 30 | ||||||||
Debt instrument, convertible conversion price percentage | 130% | ||||||||
Debt instrument, convertible maximum conversion price percentage | 98% | ||||||||
Debt instrument, redemption price percentage of principal amount | 100% | ||||||||
Debt instrument, sinking fund | $ 0 | ||||||||
Long-Term Debt | 120,344,000 | 120,229,000 | |||||||
Debt unamortized issuance costs, net | 2,156,000 | 2,271,000 | |||||||
Payment on debt issuance costs | 2,400,000 | ||||||||
Unamortized issuance costs | 2,200,000 | ||||||||
Debt instrument, percentage of repurchase principal amount | 100% | ||||||||
1.50% Convertible Senior Notes Due 2028 | Maximum | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument covenants, percentage of aggregate principal amount payable. | 25% | ||||||||
1.50% Convertible Senior Notes Due 2028 | Minimum | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, convertible trading days | Days | 20 | ||||||||
Debt instrument, convertible conversion price percentage | 130% | ||||||||
1.50% Convertible Senior Notes Due 2028 | Additional Paid-in-Capital | |||||||||
Debt Instrument [Line Items] | |||||||||
Fair value of the embedded conversion feature | 4,100,000 | ||||||||
Modified Notes | |||||||||
Debt Instrument [Line Items] | |||||||||
Long-Term Debt | 157,100,000 | ||||||||
Debt unamortized issuance costs, net | 17,900,000 | ||||||||
Four Year Senior Secured Term Loan Facility | Senior Credit Facilities | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument term | 4 years | ||||||||
Credit facility maximum borrowing capacity | $ 125,000,000 | ||||||||
Net proceeds from issuance of credit facility | 123,000,000 | ||||||||
Senior Secured First-lien Revolving Credit Facility | Senior Credit Facilities | |||||||||
Debt Instrument [Line Items] | |||||||||
Aggregate principal amount | $ 24,700,000 | ||||||||
Credit facility maximum borrowing capacity | $ 50,000,000 | ||||||||
Credit facility borrowed | $ 0 | $ 0 | |||||||
Extinguishment of debt | 104,900,000 | ||||||||
Loss on extinguishment of debt | 1,300,000 | ||||||||
Debt repayment cost | $ 106,300,000 |
Long-Term Debt - Schedule of In
Long-Term Debt - Schedule of Interest Expense Related to Notes (Details) - 2028 and 2025 Notes - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Debt Instrument [Line Items] | ||
Contractual interest expense | $ 1,442 | $ 1,322 |
Amortization of debt discount | 251 | |
Amortization of issuance costs | 1,217 | 280 |
Total interest expense related to the Notes | $ 2,910 | $ 1,602 |