Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Jun. 30, 2020 | Jul. 30, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2020 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
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 | 15 Wayside Road | |
Entity Address City Or Town | Burlington | |
Entity Address State Or Province | MA | |
Entity Address Postal Zip Code | 01803 | |
City Area Code | 857 | |
Local Phone Number | 362-7300 | |
Title of 12(b) Security | Common Stock, par value $0.01 per share | |
Trading Symbol | CRNC | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 36,722,585 |
CONSOLIDATED AND COMBINED STATE
CONSOLIDATED AND COMBINED STATEMENT OF OPERATIONS (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Revenues: | ||||
Total revenues | $ 74,810 | $ 77,569 | $ 238,764 | $ 220,357 |
Cost of revenues: | ||||
Amortization of intangible assets | 2,063 | 1,979 | 6,408 | 6,175 |
Total cost of revenues | 27,603 | 23,675 | 82,267 | 72,326 |
Gross profit | 47,207 | 53,894 | 156,497 | 148,031 |
Operating expenses: | ||||
Research and development | 22,041 | 22,975 | 66,898 | 69,344 |
Sales and marketing | 9,180 | 8,232 | 24,829 | 27,476 |
General and administrative | 14,261 | 6,237 | 36,456 | 17,647 |
Amortization of intangible assets | 3,120 | 3,132 | 9,376 | 9,396 |
Restructuring and other costs, net | 3,301 | 9,691 | 13,725 | 17,147 |
Acquisition-related costs | 366 | 783 | ||
Total operating expenses | 51,903 | 50,633 | 151,284 | 141,793 |
(Loss) income from operations | (4,696) | 3,261 | 5,213 | 6,238 |
Interest income | 38 | 563 | ||
Interest expense | (5,546) | (19,043) | ||
Other income (expense), net | (20,446) | (150) | (20,366) | 100 |
(Loss) income before income taxes | (30,650) | 3,111 | (33,633) | 6,338 |
(Benefit from) provision for income taxes | (2,469) | 1,341 | (6,185) | 1,859 |
Net (loss) income | $ (28,181) | $ 1,770 | $ (27,448) | $ 4,479 |
Net (loss) income per share: | ||||
Basic | $ (0.77) | $ 0.05 | $ (0.76) | $ 0.12 |
Diluted | $ (0.77) | $ 0.05 | $ (0.76) | $ 0.12 |
Weighted-average common share outstanding: | ||||
Basic | 36,509 | 36,391 | 36,315 | 36,391 |
Diluted | 36,509 | 36,391 | 36,315 | 36,391 |
License | ||||
Revenues: | ||||
Total revenues | $ 32,454 | $ 43,961 | $ 117,843 | $ 127,287 |
Cost of revenues: | ||||
Total cost of revenues | 820 | 521 | 2,344 | 1,428 |
Connected Services | ||||
Revenues: | ||||
Total revenues | 24,996 | 19,717 | 71,148 | 55,830 |
Cost of revenues: | ||||
Total cost of revenues | 7,191 | 8,232 | 24,742 | 28,591 |
Professional Services | ||||
Revenues: | ||||
Total revenues | 17,360 | 13,891 | 49,773 | 37,240 |
Cost of revenues: | ||||
Total cost of revenues | $ 17,529 | $ 12,943 | $ 48,773 | $ 36,132 |
CONSOLIDATED AND COMBINED STA_2
CONSOLIDATED AND COMBINED STATEMENT OF COMPREHENSIVE (LOSS) INCOME (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Statement Of Income And Comprehensive Income [Abstract] | ||||
Net (loss) income | $ (28,181) | $ 1,770 | $ (27,448) | $ 4,479 |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustments | 6,382 | 1,768 | 4,002 | (1,412) |
Pension adjustments | 16 | (138) | 1,032 | 229 |
Total other comprehensive income (loss) | 6,398 | 1,630 | 5,034 | (1,183) |
Comprehensive (loss) income | $ (21,783) | $ 3,400 | $ (22,414) | $ 3,296 |
CONSOLIDATED AND COMBINED BALAN
CONSOLIDATED AND COMBINED BALANCE SHEET - USD ($) $ in Thousands | Jun. 30, 2020 | Sep. 30, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 132,844 | |
Accounts receivable, net of allowances of $1,406 and $865 at June 30, 2020 and September 30, 2019, respectively | 62,566 | $ 65,787 |
Deferred costs | 6,679 | 9,195 |
Prepaid expenses and other current assets | 34,389 | 17,343 |
Total current assets | 236,478 | 92,325 |
Property and equipment, net | 28,366 | 20,113 |
Deferred costs | 36,913 | 32,428 |
Operating lease right of use assets | 19,547 | |
Goodwill | 1,121,616 | 1,119,329 |
Intangible assets, net | 50,152 | 65,561 |
Deferred tax assets | 160,140 | 150,629 |
Other assets | 15,863 | 3,444 |
Total assets | 1,669,075 | 1,483,829 |
Current liabilities: | ||
Accounts payable | 11,637 | 16,687 |
Deferred revenue | 116,894 | 88,233 |
Short-term operating lease liabilities | 5,727 | |
Short-term debt | 6,250 | |
Accrued expenses and other current liabilities | 54,672 | 24,194 |
Total current liabilities | 195,180 | 129,114 |
Long-term debt | 267,172 | |
Deferred revenue, net of current portion | 219,197 | 265,051 |
Long-term operating lease liabilities | 16,305 | |
Other liabilities | 32,528 | 21,536 |
Total liabilities | 730,382 | 415,701 |
Commitments and contingencies (Note 10) | ||
Stockholders' Equity: | ||
Common stock, $0.01 par value, 600,000 shares authorized as of June 30, 2020; 36,520 shares issued and outstanding as of June 30, 2020 | 366 | |
Net parent investment | 1,097,127 | |
Accumulated other comprehensive loss | (8,237) | (28,999) |
Additional paid-in capital | 974,012 | |
Accumulated deficit | (27,448) | |
Total stockholders' equity | 938,693 | 1,068,128 |
Total liabilities and stockholders' equity | $ 1,669,075 | $ 1,483,829 |
CONSOLIDATED AND COMBINED BAL_2
CONSOLIDATED AND COMBINED BALANCE SHEET (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2020 | Sep. 30, 2019 |
Statement Of Financial Position [Abstract] | ||
Accounts receivable allowances | $ 1,406 | $ 865 |
Common stock, par value | $ 0.01 | |
Common stock, shares authorized | 600,000,000 | |
Common stock, shares issued | 36,520,000 | |
Common stock, shares outstanding | 36,520,000 |
CONSOLIDATED AND COMBINED STA_3
CONSOLIDATED AND COMBINED STATEMENT OF EQUITY AND CHANGES IN PARENT COMPANY EQUITY (Unaudited) - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in-Capital | Accumulated (Deficit) Earnings | Net Parent Investment | Accumulated Other Comprehensive Loss |
Balance at Sep. 30, 2018 | $ 993,319 | $ 1,017,276 | $ (23,957) | |||
Accumulated adjustment related to the adoption | ASC 606 | 6,974 | 6,974 | ||||
Net (loss) income | 4,479 | 4,479 | ||||
Other comprehensive income (loss) | (1,183) | (1,183) | ||||
Net transfer to Parent | (38,713) | (38,713) | ||||
Balance at Jun. 30, 2019 | 964,876 | 990,016 | (25,140) | |||
Balance at Mar. 31, 2019 | 983,186 | 1,009,956 | (26,770) | |||
Net (loss) income | 1,770 | 1,770 | ||||
Other comprehensive income (loss) | 1,630 | 1,630 | ||||
Net transfer to Parent | (21,710) | (21,710) | ||||
Balance at Jun. 30, 2019 | 964,876 | 990,016 | (25,140) | |||
Balance at Sep. 30, 2019 | 1,068,128 | 1,097,127 | (28,999) | |||
Net (loss) income | (27,448) | $ (27,448) | ||||
Other comprehensive income (loss) | 5,034 | 5,034 | ||||
Distribution to Parent | (152,978) | (152,978) | ||||
Net (decrease) increase in net parent investment | 11,453 | (4,275) | 15,728 | |||
Reclassification of net parent investment in Cerence | $ 939,874 | $ (939,874) | ||||
Issuance of common stock at separation | $ 364 | (364) | ||||
Issuance of common stock at separation, (in shares) | 36,391 | |||||
Stock issued pursuant to employee stock plans | (1,613) | $ 2 | (1,615) | |||
Stock issued pursuant to employee stock plans, (in shares) | 129 | |||||
Convertible Senior Notes conversion feature | 14,369 | 14,369 | ||||
Stock-based compensation | 21,748 | 21,748 | ||||
Balance at Jun. 30, 2020 | 938,693 | $ 366 | 974,012 | (27,448) | (8,237) | |
Balance (in shares) at Jun. 30, 2020 | 36,520 | |||||
Balance at Mar. 31, 2020 | 936,379 | $ 365 | 949,916 | 733 | (14,635) | |
Balance (in shares) at Mar. 31, 2020 | 36,458 | |||||
Net (loss) income | (28,181) | (28,181) | ||||
Other comprehensive income (loss) | 6,398 | 6,398 | ||||
Stock issued pursuant to employee stock plans | (695) | $ 1 | (696) | |||
Stock issued pursuant to employee stock plans, (in shares) | 62 | |||||
Convertible Senior Notes conversion feature | 14,369 | 14,369 | ||||
Stock-based compensation | 10,423 | 10,423 | ||||
Balance at Jun. 30, 2020 | $ 938,693 | $ 366 | $ 974,012 | $ (27,448) | $ (8,237) | |
Balance (in shares) at Jun. 30, 2020 | 36,520 |
CONSOLIDATED AND COMBINED STA_4
CONSOLIDATED AND COMBINED STATEMENT OF EQUITY AND CHANGES IN PARENT COMPANY EQUITY (Unaudited) (Parenthetical) $ in Thousands | 3 Months Ended | 9 Months Ended |
Jun. 30, 2020USD ($) | Jun. 30, 2020USD ($) | |
Statement Of Stockholders Equity [Abstract] | ||
Convertible senior notes, net of taxes | $ 4,678 | $ 4,678 |
Convertible senior notes, issuance costs | $ 629 | $ 629 |
CONSOLIDATED AND COMBINED STA_5
CONSOLIDATED AND COMBINED STATEMENT OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Cash flows from operating activities: | ||
Net (loss) income | $ (27,448) | $ 4,479 |
Adjustments to reconcile net (loss) income to net cash provided by operations: | ||
Depreciation and amortization | 22,704 | 21,522 |
Provision for doubtful accounts | 525 | |
Stock-based compensation | 32,954 | 21,195 |
Non-cash interest expense | 4,025 | |
Loss on debt extinguishment | 19,279 | |
Deferred tax benefit | (12,572) | (469) |
Changes in operating assets and liabilities: | ||
Accounts receivable | 3,853 | (7,368) |
Prepaid expenses and other assets | (21,328) | (5,513) |
Deferred costs | (749) | 1,876 |
Accounts payable | (170) | 6,674 |
Accrued expenses and other liabilities | 19,283 | 4,441 |
Deferred revenue | (21,779) | 21,822 |
Net cash provided by operating activities | 18,577 | 68,659 |
Cash flows from investing activities: | ||
Capital expenditures | (16,075) | (2,868) |
Net cash used in investing activities | (16,075) | (2,868) |
Cash flows from financing activities: | ||
Net transaction with Parent | 12,964 | (65,791) |
Distribution to Parent | (152,978) | |
Proceeds from long-term debt, net of discount | 547,719 | |
Payments for long-term debt issuance costs | (5,765) | |
Principal payments of long-term debt | (270,000) | |
Common stock repurchases for tax withholdings for net settlement of equity awards | (1,613) | |
Principal payment of lease liabilities arising from a finance lease | (96) | |
Net cash provided by (used in) financing activities | 130,231 | (65,791) |
Effects of exchange rate changes on cash and cash equivalents | 111 | |
Net change in cash and cash equivalents | 132,844 | |
Cash and cash equivalents at end of period | 132,844 | |
Supplemental information: | ||
Cash paid for income taxes | 931 | $ 2,329 |
Cash paid for interest | $ 14,344 |
Business Overview
Business Overview | 9 Months Ended |
Jun. 30, 2020 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Business Overview | Note 1. Business Overview History On October 1, 2019, (the “Distribution Date”), Nuance Communications (“Nuance”), a leading provider of speech and language solutions for businesses and consumers around the world, completed the complete legal and structural separation and distribution to its stockholders of all of the outstanding shares of our common stock, and its consolidated subsidiaries, in a tax free spin-off (which we refer to as the “Spin-Off”). The distribution was made in the amount of one share of our common stock for every eight shares of Nuance common stock (which we refer to as the “Distribution”) owned by Nuance’s stockholders as of 5:00 p.m. Eastern Time on September 17, 2019, the record date of the Distribution. In connection with the Distribution, on September 30, 2019, we filed an Amended and Restated Certificate of Incorporation (the “Charter”) with the Secretary of State of the State of Delaware, which became effective on October 1, 2019. Our Amended and Restated By-laws also became effective on October 1, 2019. On October 2, 2019, our common stock began regular-way trading on the Nasdaq Global Select Market under the ticker symbol CRNC. Business Cerence Inc. (referred to in this Quarterly Report on Form 10-Q as “we,” “our,” “us,” “ourselves,” the “Company” or “Cerence”) is a global, premier provider of AI-powered assistants and innovations for connected and autonomous vehicles. Our customers include all major automobile original equipment manufacturers (“OEMs”), or their tier 1 suppliers worldwide. We deliver our solutions on a white-label basis, enabling our customers to deliver customized virtual assistants with unique, branded personalities and ultimately strengthening the bond between automobile brands and end users. We generate revenue primarily by selling software licenses and cloud-connected services. In addition, we generate professional services revenue from our work with OEMs and suppliers during the design, development and deployment phases of the vehicle model lifecycle and through maintenance and enhancement projects. COVID-19 Update In December 2019, a novel strain of coronavirus, now known as COVID-19 (“COVID-19”), was reported in Wuhan, China and has since extensively impacted the global health and economic environment. In January 2020, the World Health Organization (“WHO”) declared it a Public Health Emergency of International Concern. On February 28, 2020, the WHO raised its assessment of the COVID-19 threat from high to very high at a global level due to the continued increase in the number of cases and affected countries, and on March 11, 2020, the WHO characterized COVID-19 as a pandemic. As a result of the COVID-19 pandemic, local, state, and national governments responded to the spread of COVID-19 by implementing various forms of social distancing and shelter-in-place orders to citizens, which has limited economic activity. These extreme measures to slow the spread of COVID-19 have negatively impacted businesses of all sizes, including the automotive industry and its suppliers. Automotive production and shipments ceased or were not operating at full capacity in order to ensure the safety of workers. During the three months ended June 30, 2020, local, state, and national governments began a phased reopening of their respective economies. As a result, automotive production and shipments began to resume with the implementation of robust safety measures, including health assessment measures, personal protective equipment, and facility modifications to increase social distancing. Given the declines in automotive production and shipments, the COVID-19 pandemic has had a material impact on our billings and revenue recognized from licenses and billings from connected services, which may also continue beyond fiscal 2020. We have taken numerous steps in our approach to addressing the COVID-19 pandemic. We have shifted a portion of our R&D and engineering workforces to support our professional service teams and their successful completion of customer project milestones to help mitigate the decline in revenues. We reduced expenses by limiting discretionary spending, reducing third-party contractors, deferring the hiring of new employees and implementing a reduction in our workforce. In order to further conserve cash outflows, we implemented temporary reductions in salaries for our current named executive officers and other senior executives. We implemented our business continuity plans and our crisis response team is in place to respond to changes in our environment. At the onset of the COVID-19 pandemic, we instructed employees across 18 different countries and 24 office locations to work from home on a temporary basis. In accordance with local, state, and national guidelines, we have started reopening our offices to allow employees to return to work at their option. Given our investment in web-based applications and tools, we have experienced minimal declines in workforce efficiency to date as a result of employees working remotely. In addition, we have instituted strict restrictions on travel for all employees. The full extent to which the ongoing COVID-19 pandemic adversely affects our financial performance will depend on future developments, many of which are outside of our control, are highly uncertain and cannot be predicted, including, but not limited to, the duration and spread of the pandemic, its severity, the effectiveness of actions to contain the virus or treat its impact and how quickly and to what extent normal economic and operating conditions can resume. The COVID-19 pandemic could also result in additional governmental restrictions and regulations, which could adversely affect our business and financial results. In addition, a recession, depression or other sustained adverse market impact resulting from COVID-19 could materially and adversely affect our business, our access to needed capital and liquidity, and the value of our common stock. Even after the COVID-19 pandemic has lessened or subsided, we may continue to experience adverse impacts on our business and financial performance as a result of its global economic impact. |
Significant Accounting Policies
Significant Accounting Policies | 9 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Note 2. Significant Accounting Policies Principles of Consolidation Fiscal 2020 The accompanying unaudited consolidated financial statements include the accounts of the Company, as well as those of our wholly owned subsidiaries. All significant intercompany transactions and balances are eliminated in consolidation. Fiscal 2019 All prior period information is presented on a combined basis. The combined financial statements have been derived from Nuance’s historical accounting records and are presented on a “carve-out” basis to include the historical financial position, results of operations and cash flows applicable to the Cerence business. As a direct ownership relationship did not exist among all the various business units comprising the Cerence business, Nuance’s investment in the Cerence business is shown in lieu of stockholder’s equity in the combined financial statements. The Combined Statements of Operations include all revenues and costs directly attributable to Cerence as well as an allocation of expenses related to functions and services performed by centralized parent organizations. These corporate expenses have been allocated to the Cerence business based on direct usage or benefit, where identifiable, with the remainder allocated on a pro rata basis of revenues, headcount, number of transactions or other measures as determined appropriate. The Combined Statements of Cash Flows present these corporate expenses that are cash in nature as cash flows from operating activities, as this is the nature of these costs for Nuance. Non-cash expenses allocated from Nuance include corporate depreciation and amortization and stock-based compensation included as add-back adjustments to reconcile net income to net cash provided by operations. Current and deferred income taxes and related tax expense have been determined based on the standalone results of the Cerence business by applying Accounting Standards Codification No. 740, Income Taxes (“ASC 740”), to the Cerence business’s operations in each country as if it were a separate taxpayer (i.e. following the Separate Return Methodology). The combined financial statements include the allocation of certain assets and liabilities that have historically been held at the Nuance corporate level or by shared entities but which are specifically identifiable or allocable to the Cerence business. These shared assets and liabilities have been allocated to the Cerence business on the basis of direct usage when identifiable, or allocated on a pro rata basis of revenue, headcount or other systematic measures that reflect utilization of the services provided to or benefits received by Cerence. Nuance uses a centralized approach to cash management and financing its operations. Accordingly, none of the cash, cash equivalents, marketable securities, foreign currency hedges or debt and related interest expense has been allocated to the Cerence business in the combined financial statements. Nuance’s short and long-term debt has not been pushed down to the Cerence business’s combined financial statements because the Cerence business is not the legal obligor of the debt and Nuance’s borrowings were not directly attributable to the Cerence business. Transactions between Nuance and the Cerence business are considered to be effectively settled in the combined financial statements at the time the transaction is recorded. The total net effect of the settlement of these intercompany transactions is reflected in the Combined Statements of Cash Flows as a financing activity and in the Combined Balance Sheets as net parent investment. All of the allocations and estimates in the combined financial statements are based on assumptions that management believes are reasonable. Basis of Presentation The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnote disclosures required by GAAP for complete financial statements. The consolidated financial statements reflect all adjustments considered necessary for a fair presentation of the consolidated results of operations and financial position for the interim periods presented. All such adjustments are of a normal recurring nature. The results of operations for the three and nine months ended June 30, 2020 are not necessarily indicative of the results to be expected for any other interim period or for the year ending September 30, 2020. These unaudited interim consolidated financial statements should be read in conjunction with the audited combined financial statements and notes contained in our Annual Report on Form 10-K for the year ended September 30, 2019. Use of Estimates The financial statements are prepared in accordance with GAAP, which requires management to make estimates and assumptions. These estimates, judgments and assumptions can affect the reported amounts in the financial statements and the footnotes thereto. Actual results could differ materially from these estimates. On an ongoing basis, we evaluate our estimates, assumptions and judgments. Significant estimates inherent to the preparation of financial statements include: revenue recognition; the allowances for doubtful accounts; accounting for deferred costs; accounting for internally developed software; the valuation of goodwill and intangible assets; accounting for business combinations; accounting for stock-based compensation; accounting for income taxes, deferred tax assets, and related valuation allowances; and loss contingencies. We base our estimates on historical experience, market participant fair value considerations, projected future cash flows, and various other factors that are believed to be reasonable under the circumstances. Actual amounts could differ significantly from these estimates. Cash and Cash Equivalents Cash and cash equivalents consist of cash on hand, including money-market funds with original maturities of 90 days or less. As of June 30, 2020, the estimated fair value of our money-market funds was $107.5 million. We estimated the fair value of our money-market funds from quoted prices for identical assets in active markets on the last trading day of the reporting period (Level 1). Concentration of Risk Financial instruments that potentially subject us to significant concentrations of credit risk primarily consist of trade accounts receivable. We perform ongoing credit evaluations of our customers’ financial condition and limit the amount of credit extended when deemed appropriate. One customer accounted for 18.2% of our accounts receivable, net balance at June 30, 2020. Two customers accounted for 12.9% and 10.0% of our accounts receivable, net balance at September 30, 2019. Convertible Debt We bifurcate the debt and equity (the contingently convertible feature) components of our convertible debt instruments in a manner that reflects our nonconvertible debt borrowing rate at the time of issuance. The equity components of our convertible debt instruments are recorded within stockholders’ equity with an allocated issuance premium or discount. The debt issuance premium or discount is amortized to interest expense in our consolidated statement of operations using the effective interest method over the expected term of the convertible debt. We assess the short-term and long-term classification of our convertible debt on each balance sheet date. Whenever the holders have a contractual right to convert, the carrying amount of the convertible debt is reclassified to current liabilities, with the corresponding equity component classified from additional paid-in capital to mezzanine equity. Recently Adopted Accounting Standards Leases In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, “Leases” (“ASU 2016-02”), and codified as ASC 842, which became effective for fiscal years beginning after December 15, 2018 and interim periods therein, with early adoption permitted. The guidance requires lessees to recognize on the balance sheet a right-of-use asset, representing its right to use the underlying asset for the lease term, and a lease liability for all leases with terms greater than 12 months. The guidance also requires qualitative and quantitative disclosures designed to assess the amount, timing, and uncertainty of cash flows arising from leases. In July 2018, the FASB issued ASU 2018-10, “Codification Improvements to “Topic 842, Leases” and ASU 2018-11, “Leases Topic Targeted Improvements”, which provides an additional and optional transition method whereby the new lease standard is applied at the adoption date and recognized as an adjustment to retained earnings. Additionally, in March 2019, the FASB issued ASU 2019-01, “Codification Improvements to Topic 842”, which provides guidance in the following areas: (1) determining the fair value of the underlying asset by lessors that are not manufacturers or dealers and (2) clarification of interim disclosure requirements during transition. We adopted the new standard effective October 1, 2019 under the modified retrospective transition approach. Results for reporting periods beginning after October 1, 2019 are presented under ASC 842, while prior periods have not been adjusted and continue to be reported in accordance with our historic accounting under previous GAAP. We elected the package of practical expedients permitted under the transition guidance. The new standard does not have a material impact on our consolidated statement of operations and cash flows. Approximately $2.2 million of deferred rent balances were reclassified against the costs of the right of use assets. The effects of applying ASC 842 as a cumulative-effect adjustment to retained earnings as of October 1, 2019 is immaterial. The following tables summarize the impact of adopting ASC 842 on the consolidated balance sheet as of October 1, 2019 (dollars in thousands): As of October 1, 2019 As Previously Reported Impact of Adoption of Topic ASC 842 As Adjusted Assets: Operating lease right of use assets $ — $ 19,594 $ 19,594 Liabilities: Current liabilities: Short-term operating lease liabilities $ — $ 4,863 $ 4,863 Accrued expenses and other current liabilities 24,194 (1,465 ) 22,729 Long-term operating lease liabilities - 16,883 16,883 Other liabilities $ 21,536 $ (687 ) $ 20,849 Equity: Net parent investment $ 1,097,127 $ - $ 1,097,127 Other Accounting Pronouncements In August 2018, the FASB issued ASU No. 2018-15, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract” (“ASU 2018-15”), which is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. The guidance requires that implementation costs related to a hosting arrangement that is a service contract be capitalized and amortized over the term of the hosting arrangement, starting when the module or component of the hosting arrangement is ready for its intended use. The adoption of ASU 2018-15 did not have a material impact on our consolidated financial statements. Recently Issued Accounting Pronouncements to be Adopted In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”), which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost, including trade receivables. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss model that requires the use of forward-looking information to calculate credit loss estimates. This standard is effective for interim and annual reporting periods beginning after December 15, 2019. This standard is required to be adopted using the modified retrospective basis, with a cumulative-effect adjustment to Accumulated earnings (deficit) as of the beginning of the first reporting period in which the guidance of this standard is effective. We plan to adopt this new standard in the first quarter of our fiscal 2021. We are currently evaluating the impact of the adoption of this standard on our consolidated financial statements. As of June 30, 2020, implementation efforts related to ASU 2016-13 are underway, including model development, identification of additional data needs for new reporting requirements, and drafting of accounting policies and internal controls. We believe our accounts receivable and contact assets balances fall within the scope of ASU 2016-13 and will be impacted upon adoption. We plan to use models and other estimation techniques that are sensitive to changes in economic conditions in order to estimate a reserve for financial assets. We also plan to apply qualitative factors that could be related to distinctive risk factors, changes in current economic conditions that may not be reflected in quantitatively derived results, or other relevant factors to ensure the reserve reflects our best estimate of current expected credit losses. In March 2020, the FASB issued ASU No. 2020-04 “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting,” (“ASU 2020-04”). The update provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) contract modifications on financial reporting, caused by reference rate reform. ASU 2020-04 is effective for all entities as of March 12, 2020 through December 31, 2022. We are currently evaluating the impact of the adoption of this standard on our consolidated financial statements. |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Jun. 30, 2020 | |
Revenue From Contract With Customer [Abstract] | |
Revenue Recognition | Note 3. Revenue Recognition We primarily derive revenue from the following sources: (1) royalty-based software license arrangements, (2) connected services, and (3) professional services. Revenue is reported net of applicable sales and use tax, value-added tax and other transaction taxes imposed on the related transaction including mandatory government charges that are passed through to our customers. We account for a contract when both parties have approved and committed to the contract, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. Our arrangements with customers may contain multiple products and services. We account for individual products and services separately if they are distinct—that is, if a product or service is separately identifiable from other items in the contract and if a customer can benefit from it on its own or with other resources that are readily available to the customer. We currently recognize revenue after applying the following five steps: • identification of the contract, or contracts, with a customer; • identification of the performance obligations in the contract, including whether they are distinct within the context of the contract; • determination of the transaction price, including the constraint on variable consideration; • allocation of the transaction price to the performance obligations in the contract; • recognition of revenue when, or as, performance obligations are satisfied. We allocate the transaction price of the arrangement based on the relative estimated standalone selling price (“SSP”) of each distinct performance obligation. In determining SSP, we maximize observable inputs and consider a number of data points, including: • the pricing of standalone sales (in the instances where available); • the pricing established by management when setting prices for deliverables that are intended to be sold on a standalone basis; • contractually stated prices for deliverables that are intended to be sold on a standalone basis; and • other pricing factors, such as the geographical region in which the products are sold and expected discounts based on the customer size and type. We only include estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. We reduce transaction prices for estimated returns and other allowances that represent variable consideration under ASC 606, which we estimate based on historical return experience and other relevant factors, and record a corresponding refund liability as a component of accrued expenses and other current liabilities. Other forms of contingent revenue or variable consideration are infrequent. Revenue is recognized when control of these services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services. We assess the timing of the transfer of products or services to the customer as compared to the timing of payments to determine whether a significant financing component exists. In accordance with the practical expedient in ASC 606-10-32-18, we do not assess the existence of a significant financing component when the difference between payment and transfer of deliverables is a year or less. If the difference in timing arises for reasons other than the provision of finance to either the customer or us, no financing component is deemed to exist. The primary purpose of our invoicing terms is to provide customers with simplified and predictable ways of purchasing our services, not to receive or provide financing from or to customers. We do not consider set-up fees nor other upfront fees paid by our customers to represent a financing component. Reimbursements for out-of-pocket costs generally include, but are not limited to, costs related to transportation, lodging and meals. Revenue from reimbursed out-of-pocket costs is accounted for as variable consideration. (a) Performance Obligations Licenses Software and technology licenses sold with non-distinct professional services to customize and/or integrate the underlying software and technology are accounted for as a combined performance obligation. Revenue from the combined performance obligation is recognized over time based upon the progress towards completion of the project, which is measured based on the labor hours already incurred to date as compared to the total estimated labor hours. For income statement presentation purposes, we separate license revenue from professional services revenue based on their SSPs. Revenue from distinct software and technology licenses, which do not require professional service to customize and/or integrate the software license, is recognized at the point in time when the software and technology is made available to the customer and control is transferred. Revenue from software and technology licenses sold on a royalty basis, where the license of non-exclusive intellectual property is the predominant item to which the royalty relates, is recognized in the period the usage occurs in accordance ASC 606-10-55-65(A). Connected Services Connected services, which allow our customers to use the hosted software over the contract period without taking possession of the software, are provided on a usage basis as consumed or on a fixed fee subscription basis. Subscription basis revenue represents a single promise to stand-ready to provide access to our connected services. Our connected services contract terms generally range from one to five years. As each day of providing services is substantially the same and the customer simultaneously receives and consumes the benefits as access is provided, we have determined that our connected services arrangements are a single performance obligation comprised of a series of distinct services. These services include variable consideration, typically a function of usage. We recognize revenue as each distinct service period is performed (i.e., recognized as incurred). Our connected service arrangements generally include services to develop, customize, and stand-up applications for each customer. In determining whether these services are distinct, we consider dependence of the Cloud service on the up-front development and stand-up, as well as availability of the services from other vendors. We have concluded that the up-front development, stand-up and customization services are not distinct performance obligations, and as such, revenue for these activities is recognized over the period during which the cloud-connected services are provided, and is included within connected services revenue. Professional Services Revenue from distinct professional services, including training, is recognized over time based upon the progress towards completion of the project, which is measured based on the labor hours already incurred to date as compared to the total estimated labor hours. ( b) Significant Judgments Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. Our license contracts often include professional services to customize and/or integrate the licenses into the customer’s environment. Judgment is required to determine whether the license is considered distinct and accounted for separately, or not distinct and accounted for together with professional services. Judgments are required to determine the SSP for each distinct performance obligation. When the SSP is directly observable, we estimate the SSP based upon the historical transaction prices, adjusted for geographic considerations, customer classes, and customer relationship profiles. In instances where the SSP is not directly observable, we determine the SSP using information that may include market conditions and other observable inputs. We may have more than one SSP for individual products and services due to the stratification of those products and services by customers and circumstances. In these instances, we may use information such as the size of the customer and geographic region in determining the SSP. Determining the SSP for performance obligations which we never sell separately also requires significant judgment. In estimating the SSP, we consider the likely price that would have resulted from established pricing practices had the deliverable been offered separately and the prices a customer would likely be willing to pay. (c) Disaggregated Revenue Revenues, classified by the major geographic region in which our customers are located, for the three and nine months ended June 30, 2020 and 2019 (dollars in thousands): Three Months Ended June 30, Nine Months Ended June 30, 2020 2019 2020 2019 Revenues: United States $ 27,674 $ 29,303 $ 99,220 $ 96,997 Other Americas 8 334 16 966 Germany 21,082 22,287 61,401 51,117 Other Europe, Middle East and Africa 6,868 5,773 20,093 15,917 Japan 11,727 15,840 38,656 33,578 Other Asia-Pacific 7,451 4,032 19,378 21,782 Total net revenues $ 74,810 $ 77,569 $ 238,764 $ 220,357 Revenues within the United States, Germany, and Japan accounted for more than 10% of revenue for all periods presented. Revenues relating to three customers accounted for $19.2 million, or 25.7%, $8.0 million, or 10.7%, and $7.8 million, or 10.5%, of revenues for the three months ended June 30, 2020. Revenues relating to one customer accounted for $56.4 million, or 23.6%, of revenues for the nine months ended June 30, 2020. Two customers accounted for $17.0 million, or 21.9%, and $8.5 million, or 11.0%, for the three months ended June 30, 2019. Two customers accounted for $44.9 million, or 20.4%, and $24.3 million, or 11.0%, of revenues for the nine months ended June 30, 2019. (d) Contract Acquisition Costs In conjunction with the adoption of ASC 606, we are required to capitalize certain contract acquisition costs. The capitalized costs primarily relate to paid commissions. In accordance with the practical expedient in ASC 606-10-10-4, we apply a portfolio approach to estimate contract acquisition costs for groups of customer contracts. We elect to apply the practical expedient in ASC 340-40-25-4 and will expense contract acquisition costs as incurred where the expected period of benefit is one year or less. Contract acquisition costs are deferred and amortized on a straight-line basis over the period of benefit, which we have estimated to be, on average, between one and eight years. The period of benefit was determined based on an average customer contract term, expected contract renewals, changes in technology and our ability to retain customers, including canceled contracts. We assess the amortization term for all major transactions based on specific facts and circumstances. Contract acquisition costs are classified as current or noncurrent assets based on when the expense will be recognized. The current and noncurrent portions of contract acquisition costs are included in prepaid expenses and other current assets, and in other assets, respectively. As of June 30, 2020, we had $4.7 million of contract acquisition costs. We had amortization expense of $0.3 million and $0.9 million related to these costs during the three and nine months ended June 30, 2020, respectively. There was no impairment related to contract acquisition costs. (e) Capitalized Contract Costs We capitalize incremental costs incurred to fulfill our contracts that (i) relate directly to the contract, (ii) are expected to generate resources that will be used to satisfy our performance obligation under the contract, and (iii) are expected to be recovered through revenue generated under the contract. Our capitalized costs consist primarily of setup costs, such as costs to standup, customize and develop applications for each customer, which are incurred to satisfy our stand-ready obligation to provide access to our connected offerings. These contract costs are expensed to cost of revenue as we satisfy our stand-ready obligation over the contract term which we estimate to be between one and eight years, on average. The contract term was determined based on an average customer contract term, expected contract renewals, changes in technology, and our ability to retain customers, including canceled contracts. We classify these costs as current or noncurrent based on the timing of when we expect to recognize the expense. The current and noncurrent portions of capitalized contract fulfillment costs are presented as deferred costs. As of June 30, 2020, we had $43.6 million of capitalized contract costs. We had amortization expense of $4.0 million and $9.3 million related to these costs during the three and nine months ended June 30, 2020, respectively. There was no impairment related to contract costs capitalized. (f) Trade Accounts Receivable and Contract Balances We classify our right to consideration in exchange for deliverables as either a receivable or a contract asset. A receivable is a right to consideration that is unconditional (i.e. only the passage of time is required before payment is due). We present such receivables in accounts receivable, net at their net estimated realizable value. We maintain an allowance for doubtful accounts to provide for the estimated amount of receivables that may not be collected. The allowance is based upon an assessment of customer creditworthiness, historical payment experience, the age of outstanding receivables and other applicable factors. Our contract assets and liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period. Contract assets include unbilled amounts from long-term contracts when revenue recognized exceeds the amount billed to the customer, and right to payment is not solely subject to the passage of time. Contract assets are included in prepaid expenses and other current assets. The table below shows significant changes in contract assets (dollars in thousands): Contract assets Balance as of October 1, 2019 $ 9,219 Revenues recognized but not billed 40,962 Amounts reclassified to accounts receivable, net (24,980 ) Balance as of June 30, 2020 $ 25,201 Our contract liabilities, which we present as deferred revenue, consist of advance payments and billings in excess of revenues recognized. We classify deferred revenue as current or noncurrent based on when we expect to recognize the revenues. The table below shows significant changes in deferred revenue (dollars in thousands): Deferred revenue Balance as of October 1, 2019 $ 353,284 Amounts billed but not recognized 76,100 Revenue recognized (93,293 ) Balance as of June 30, 2020 $ 336,091 (g) Remaining Performance Obligations The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied at June 30, 2020 (dollars in thousands): Within One Year Two to Five Years Greater than Five Years Total Total revenue $ 154,390 $ 189,095 $ 60,020 $ 403,505 The table above includes fixed backlogs and does not include variable backlogs derived from contingent usage-based activities, such as royalties and usage-based connected services. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Note 4. Earnings Per Share Basic earnings per share is computed by dividing net (loss) income by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing net (loss) income by the weighted-average number of shares of common stock outstanding during the period, increased to include the number of shares of common stock that would have been outstanding had potential dilutive shares of common stock been issued. The dilutive effect of restricted stock units are reflected in diluted net (loss) income per share by applying the treasury stock method. Due to the net loss recognized for the three and nine months ended June 30, 2020, there were no dilutive shares. The dilutive effect of the Notes (as defined in Note 12) is reflected in net (loss) income per share by application of the “if-converted” method. The “if-converted” method is only assumed in periods where such application would be dilutive. In applying the “if-converted” method for diluted net income per share, we would assume conversion of the Notes at a ratio of 26.7271 shares of our common stock per $1,000 principal amount of the Notes. Assumed converted shares of our common stock are weighted for the period the Notes were outstanding. The shares of common stock underlying the conversion option of our Notes were not included in the calculation of diluted loss per share for the three and nine month ended June 30, 2020 due to their anti-dilutive impact as a result of our net loss position for the periods presented. There were no Cerence equity awards outstanding prior to the Spin-Off, thus the computation of basic and diluted earnings per common share (“EPS”) for all prior periods disclosed was calculated using the shares issued in connection with the Spin-Off totaling 36.4 million shares. The following table presents the reconciliation of the numerator and denominator for calculating net (loss) income per share: Three Months Ended June 30, Nine Months Ended June 30, in thousands, except per share data 2020 2019 2020 2019 Numerator: Net (loss) income - basic and diluted (28,181 ) 1,770 (27,448 ) 4,479 Denominator: Weighted average common shares outstanding - basic 36,509 36,391 36,315 36,391 Dilutive effect of restricted stock awards - - - - Dilutive effect of contingently issuable stock awards - - - - Dilutive effect of the Notes - - - - Weighted average common shares outstanding - diluted 36,509 36,391 36,315 36,391 Net (loss) income per common share: Basic (0.77 ) 0.05 (0.76 ) 0.12 Diluted (0.77 ) 0.05 (0.76 ) 0.12 We exclude weighted-average potential shares from the calculations of diluted net (loss) income per share during the applicable periods because their inclusion would have been anti-dilutive. The following table set forth potential shares that were considered anti-dilutive at June 30, 2020 and for the three and nine months ended June 30, 2019: June 30, Three Months Ended June 30, Nine Months Ended June 30, in thousands 2020 2019 2019 Restricted stock awards 2,533 - - Contingently issuable stock awards 522 - - Conversion option of our Notes 4,677 - - |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 9 Months Ended |
Jun. 30, 2020 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets | Note 5. Goodwill and Other Intangible Assets (a) Goodwill The determination of operating segments is the first step in determining reportable segments. To be an operating segment, the operating results of the component are regularly reviewed by the chief operating decision maker (“CODM”) in order to assess the performance of the individual segment and make decisions about resources to be allocated to the segment. The function of the CODM is to allocate resources to and assess the operating results of the operating segments of an entity. We believe our Chief Executive Officer (“CEO”) is our CODM. Our CEO approves all major decisions, including reorganizations and new business initiatives. Our CEO assesses performance on a routine basis and make decisions on resource allocations. The CODM must have discrete financial information available in order to assess performance and make resource allocation decisions. Goodwill represents the excess of the purchase price in a business combination over the fair value of net assets acquired. Goodwill has been allocated to Cerence based upon its relative fair value as of March 31, 2018, when Cerence became a reporting unit of Nuance. Goodwill is reported at the reporting unit level. A reporting unit is an operating segment, or one level below the operating segment, referred to as a component. The determination of whether the reporting unit should be identified at the operating segment or component level is based upon whether the component constitutes a business for which discrete financial information is available and regularly reviewed by segment management. Upon consideration of the discrete financial information reviewed by our CODM, we have concluded that our goodwill is associated with one reporting unit. Goodwill is not amortized but tested annually for impairment or when interim indicators of impairment are present. Upon our adoption of ASU 2017-04, " Simplifying the Test for Goodwill Impairment On July 1, 2019, our goodwill was assessed for impairment as a reporting unit of Nuance. On July 1, 2019, the fair value of our reporting unit was determined using a combination of the income approach and the market approach. We assessed each valuation methodology based upon the relevance and availability of the data at the time and weighted the methodologies appropriately to calculate a fair value which exceeded the carrying value of our reporting unit by more than 50%. On March 31, 2020, we concluded that goodwill impairment indicators were present due to the macroeconomic conditions driven by the COVID-19 pandemic and the anticipated negative impact on our license revenue and connected services billings, therefore we performed an interim quantitative impairment test. The fair value of our reporting unit was determined using a combination of the income approach and the market approach. For the income approach, fair value was determined based on the present value of estimated future after-tax cash flows, discounted at an appropriate risk-adjusted rate. We used our internal forecasts, which were revised to reflect the anticipated impact of the COVID-19 pandemic, to estimate future after-tax cash flows and estimate the long-term growth rates based on our most recent views of the long-term outlook for our reporting unit. For the market approach, we used a valuation technique in which values were derived based on valuation multiples of comparable publicly traded companies. We weighted the methodologies appropriately to estimate a fair value of approximately $951 million as of March 31, 2020. The estimated fair value exceeded the $936 million carrying value of our reporting unit by approximately $15 million, or 2% of the carrying value. Based upon the results of the impairment test, no goodwill impairment was recorded as of March 31, 2020. On June 30, 2020, we concluded that no goodwill impairment indicators were present. We will continue to monitor the impacts of the COVID-19 pandemic on our reporting unit fair value. The full extent to which the ongoing COVID-19 pandemic could adversely affect our financial performance will depend on future developments, many of which are outside of our control. The changes in the carrying amount of goodwill for the nine months ended June 30, 2020 are as follows (dollars in thousands): Total Balance as of October 1, 2019 $ 1,119,329 Effect of foreign currency translation 2,287 Balance as of June 30, 2020 $ 1,121,616 (b) Intangible Assets, Net Due to the macroeconomic conditions driven by the COVID-19 pandemic and the anticipated negative impact on our license revenue and connected services billings, we concluded that indicators of impairment were present and performed an interim test for recoverability of our long-lived asset group as of March 31, 2020. Based upon the results of the recoverability test, we determined that the carrying amounts of the long-lived asset group were considered recoverable, concluding the test and resulting in no impairment of our long-lived asset group as of March 31, 2020. As of June 30, 2020, there were no indicators of impairment present related to our long-lived asset group. The following tables summarizes the gross carrying amounts and accumulated amortization of intangible assets by major class (dollars in thousands): June 30, 2020 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted Remaining Life (Years) Customer relationships $ 108,805 $ (71,551 ) $ 37,254 3.2 Technology and patents 90,022 (77,124 ) 12,898 1.8 Total $ 198,827 $ (148,675 ) $ 50,152 September 30, 2019 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted Average Remaining Life (Years) Customer relationships $ 104,783 $ (58,568 ) $ 46,215 4.0 Technology and patents 116,757 (97,411 ) 19,346 2.5 Total $ 221,540 $ (155,979 ) $ 65,561 Amortization expense related to intangible assets in the aggregate was $5.2 million and $5.1 million for the three months ended June 30, 2020 and 2019, respectively, and $15.8 million and $15.6 million for the nine months ended June 30, 2020 and 2019, respectively. We expect amortization of intangible assets to be approximately $5.0 million for the remainder of 2020. |
Leases
Leases | 9 Months Ended |
Jun. 30, 2020 | |
Leases [Abstract] | |
Leases | Note 6. Leases We have entered into a number of facility leases to support our research and development activities, sales operations, and other corporate and administrative functions in North America, Europe, and Asia, which qualify as operating leases under GAAP. We also have a limited number of equipment leases that also qualify as operating leases. We determine if contracts with vendors represent a lease or have a lease component under GAAP at contract inception. As part of our acquisition of Voicebox Technologies Corporation (“Voicebox”), we assumed certain leases for various equipment, which we have accounted for as finance leases. Our leases have remaining terms ranging from less than one year to eight years. Some of our leases include options to extend or terminate the lease prior to the end of the agreed upon lease term. For purposes of calculating lease liabilities, lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise such options. Operating lease right of use assets and liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the lease commencement date. As our leases generally do not provide an implicit rate, we use an estimated incremental borrowing rate in determining the present value of future payments. The incremental borrowing rate represents an estimate of the interest rate we would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease within a particular location and currency environment. The following table presents certain information related to lease term and incremental borrowing rates for leases as of June 30, 2020: June 30, 2020 Weighted-average remaining lease term (in months): Operating leases 54.2 Finance leases 5.0 Weighted-average discount rate: Operating leases 8.0 % Finance leases 8.4 % The following table presents the lease-related assets and liabilities reported in the consolidated balance sheet as of June 30, 2020 (dollars in thousands): Classification June 30, 2020 Assets Operating lease assets Operating lease right of use assets $ 19,547 Finance lease assets Property and equipment, net 187 Total lease assets $ 19,734 Liabilities Current Operating Short-term operating lease liabilities $ 5,727 Finance Accrued expenses and other current liabilities 49 Noncurrent Operating Long-term operating lease liabilities $ 16,305 Finance Other liabilities — Total lease liability $ 22,081 Lease costs for minimum lease payments is recognized on a straight-line basis over the lease term. For operating leases, costs are included within cost of revenues, research and development, marketing and selling, and general and administrative lines on the consolidated statements of operations. For financing leases, amortization of the finance right-of-use assets is included within research and development, marketing and selling, and general and administrative lines on the consolidated statements of operations, and interest expense is included within the other income (expense), net. The following table presents lease expense for the three and nine months ended June 30, 2020 (dollars in thousands): Three months ended June 30, 2020 Nine months ended June 30, 2020 Finance lease costs: Amortization of right-of-use asset $ 33 $ 102 Interest on lease liability 1 3 Operating lease cost 2,209 6,059 Short-term lease cost - - Variable lease cost 347 1,021 Sublease income (47 ) (157 ) Total lease cost $ 2,543 $ 7,028 For operating leases, the related cash payments are included in the operating cash flows on the consolidated statements of cash flows. For the three and nine months ended June 30, 2020, cash payments related to operating leases were $2.1 million and $5.7 million, respectively. For financing leases, the related cash payments for the principal portion of the lease liability are included in the financing cash flows on the consolidated statement of cash flows and the related cash payments for the interest portion of the lease liability are included within the operating section of the consolidated statement of cash flows. For the three months ended June 30, 2020, cash payments related to financing leases were immaterial. For the nine months ended June 30, 2020, cash payments related to financing leases were $0.1 million, of which an immaterial amount related to the interest portion of the lease liability. The table below reconciles the undiscounted future minimum lease payments under non-cancelable leases with terms of more than one year to the total lease liabilities recognized on the consolidated balance sheet as of June 30, 2020 (dollars in thousands): Year Ending September 30, Operating Leases Financing Leases 2020 (excluding nine months ended June 30, 2020) $ 2,089 $ 30 2021 6,757 20 2022 5,628 — 2023 4,178 — 2024 3,735 — Thereafter 4,060 — Total future minimum lease payments $ 26,447 $ 50 Less effects of discounting (4,415 ) (1 ) Total lease liabilities $ 22,032 $ 49 Reported as of June 30, 2020 Short-term lease liabilities $ 5,727 $ 49 Long-term lease liabilities 16,305 — Total lease liabilities $ 22,032 $ 49 The future minimum lease commitments under non-cancelable leases at September 30, 2019 were as follows (dollars in thousands): Year Ending September 30, 2020 $ 6,323 2021 5,421 2022 4,493 2023 3,237 2024 2,922 Thereafter 4,039 Total $ 26,435 |
Accrued Expenses and Other Liab
Accrued Expenses and Other Liabilities | 9 Months Ended |
Jun. 30, 2020 | |
Accrued Liabilities And Other Liabilities [Abstract] | |
Accrued Expenses and Other Liabilities | Note 7. Accrued Expenses and Other Liabilities Accrued expenses and other current liabilities consisted of the following (dollars in thousands): June 30, 2020 September 30, 2019 Compensation $ 31,499 $ 13,031 Cost of revenue related liabilities 4,283 1,668 Sales and other taxes payable 12,055 219 Professional fees 3,160 3,863 Facilities related liabilities 194 273 Other 3,481 5,140 Total $ 54,672 $ 24,194 |
Restructuring and Other Costs,
Restructuring and Other Costs, Net | 9 Months Ended |
Jun. 30, 2020 | |
Restructuring And Related Activities [Abstract] | |
Restructuring and Other Costs, Net | Note 8. Restructuring and Other Costs, Net Restructuring and other costs, net include restructuring expenses as well as other charges that are unusual in nature, are the result of unplanned events, and arise outside of the ordinary course of our business such as employee severance costs, costs for consolidating duplicate facilities, and separation costs directly attributable to the Cerence business becoming a standalone public company. The following table sets forth accrual activity relating to restructuring reserves for the nine months ended June 30, 2020 (dollars in thousands): Personnel Facilities Separation Total Balance at October 1, 2019 $ 489 $ 26 $ 3,876 $ 4,391 Restructuring and other costs, net 3,133 — 10,592 13,725 Cash payments (2,429 ) (15 ) (12,267 ) (14,711 ) Foreign exchange impact on ending balance (3 ) — — (3 ) Balance at June 30, 2020 $ 1,190 $ 11 $ 2,201 $ 3,402 The following table sets forth restructuring and other costs recognized for the three and nine months ended June 30, 2020 and 2019 (dollars in thousands): Three Months Ended June 30, Nine Months Ended June 30, 2020 2019 2020 2019 Personnel $ 2,452 $ 490 $ 3,133 $ 47 Facilities — 31 — 1,705 Separation 849 9,170 10,592 15,395 Restructuring and other costs, net $ 3,301 $ 9,691 $ 13,725 $ 17,147 Fiscal Year 2020 For the three months ended June 30, 2020, we recorded restructuring charges of $3.3 million, which included a $2.5 million severance charge related to the elimination of personnel, and $0.8 million related to the costs incurred to establish the Cerence business as a standalone public company. For the nine months ended June 30, 2020, we recorded restructuring charges of $13.7 million, which included a $3.1 million severance charge related to the elimination of personnel, and $10.6 million related to costs incurred to establish the Cerence business as a standalone public company. Fiscal Year 2019 For the three months ended June 30, 2019, we recorded restructuring charges of $9.7 million, which included a $0.5 million severance charge related to the elimination of personnel across multiple functions, and $9.2 million related to professional services fees incurred to establish the Cerence business as a standalone public company. For the nine months ended June 30, 2019, we recorded restructuring charges of $17.1 million, which included a $1.7 million charge resulting from the restructuring of facilities that will no longer be utilized, and $15.4 million related to professional services fees incurred to establish the Cerence business as a standalone public company. |
Stockholder's Equity
Stockholder's Equity | 9 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
Stockholder's Equity | Note 9. Stockholder’s Equity Per the Amended and Restated Certificate of Incorporation, which was adopted on October 1, 2019, 600,000,000 shares of capital stock have been authorized, consisting of 40,000,000 shares of Preferred Stock, par value $0.01 per share, or Preferred Stock, and 560,000,000 shares of Common Stock, par value $0.01 per share (“Common Stock”). On October 2, 2019, we registered the issuance of 6,350,000 shares of Common Stock, consisting of 5,300,000 shares of Common Stock reserved for issuance upon the exercise of options granted, or in respect of awards granted, under the Cerence 2019 Equity Incentive Plan, (“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. Awards issued under the Plan may not have a term greater than ten years from the date of grant. In connection with the Spin-Off from Nuance, all outstanding Nuance restricted stock units and performance stock units held by Cerence employees were cancelled, and Cerence regranted such employees economically equivalent restricted stock units of Cerence. 1,208,931 restricted stock units were issued by Cerence in connection with the Spin-Off. Restricted Units Information with respect to our non-vested restricted stock units for the nine months ended June 30, 2020 was as follows: Non-Vested Restricted Stock Units Time-Based Shares Performance- Based Shares Total Shares Weighted- Average Grant-Date Fair Value Weighted- Average Remaining Contractual Term (years) Aggregate Intrinsic Value (in thousands) Non-vested at October 1, 2019 — — — $ — Granted 2,733,884 776,096 3,509,980 $ 17.59 Vested (207,939 ) — (207,939 ) $ 16.88 Forfeited (45,633 ) (5,506 ) (51,139 ) $ 17.30 Non-vested at June 30, 2020 2,480,312 770,590 3,250,902 $ 17.63 1.06 $ 132,756 Expected to vest 3,250,902 $ 17.63 1.06 $ 132,756 Stock-based Compensation In May 2020, we modified the performance targets for certain of the restricted stock units issued pursuant to our 2019 Equity Incentive Plan at the beginning of fiscal 2020. Stock-based compensation for the anticipated restricted stock units has been adjusted to reflect our estimated achievement under the modified targets and is recorded prospectively over the requisite service period. Stock-based compensation was included in the following captions in our consolidated statements of operations for the three and nine months ended June 30, 2020 and combined statement of operations for the three and nine months ended June 30, 2019 (in thousands): Three Months Ended June 30, Nine Months Ended June 30, 2020 2019 2020 2019 Cost of licensing $ — $ 6 $ — $ 14 Cost of connected services 423 96 963 713 Cost of professional services 1,718 225 3,022 733 Research and development 5,001 4,600 9,924 11,344 Sales and marketing 3,223 1,319 6,589 4,353 General and administrative 7,060 1,582 12,456 4,038 $ 17,425 $ 7,828 $ 32,954 $ 21,195 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Jun. 30, 2020 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 10. Commitments and Contingencies Litigation and Other Claims Similar to many companies in the software industry, we are involved in a variety of claims, demands, suits, investigations and proceedings that arise from time to time relating to matters incidental to the ordinary course of our business, including at times actions with respect to contracts, intellectual property, employment, benefits and securities matters. At each balance sheet date, we evaluate contingent liabilities associated with these matters in accordance with ASC 450 “ Contingencies 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 June 30, 2020, we have a $2.2 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 $0.3 million in the aggregate. These letters of credit have various terms and expire during fiscal 2021 and beyond, while some of the letters of credit may automatically renew based on the terms of the underlying agreements. |
Income Taxes
Income Taxes | 9 Months Ended |
Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 11. Income Taxes The components of (loss) income before income taxes are as follows (dollars in thousands): Three Months Ended June 30, Nine Months Ended June 30, 2020 2019 2020 2019 Domestic $ (37,807 ) $ 6,434 $ (42,875 ) $ 85 Foreign 7,157 (3,323 ) 9,242 6,253 (Loss) income before income taxes $ (30,650 ) $ 3,111 $ (33,633 ) $ 6,338 The components of (benefit from) provision for income taxes are as follows (dollars in thousands): Three Months Ended June 30, Nine Months Ended June 30, 2020 2019 2020 2019 Domestic $ (6,076 ) $ 1,819 $ (6,867 ) $ 5 Foreign 3,607 (478 ) 682 1,854 (Benefit from) provision for income taxes $ (2,469 ) $ 1,341 $ (6,185 ) $ 1,859 Effective income tax rate 8.1 % 43.1 % 18.4 % 29.3 % The Coronavirus Aid, Relief, and Economic Security Act (“CARES ACT”) became law on March 27, 2020. The CARES ACT was in response to the market volatility and instability resulting from the COVID-19 pandemic and includes provisions to support individuals and businesses in the form of loans, grants, and tax changes, among other types of relief. The CARES ACT did not have a material impact on our (benefit from) provision for income taxes during the period. The effective tax rates were estimated based upon estimated income for the year, and the composition of the income in different countries. Our aggregate income tax rate in foreign jurisdictions is lower than our income tax rate in the United States. Our effective tax rate may be adversely affected by earnings being lower than anticipated in countries where we have lower statutory tax rates and higher than anticipated in countries where we have higher statutory tax rates. Our effective income tax rate was 8.1% for the three months ended June 30, 2020, compared to 43.1% for the three months ended June 30, 2019. The effective rate for the three months ended June 30, 2020 differed from the U.S. federal statutory rate of 21.0%, primarily due to our composition of jurisdiction earnings and U.S. inclusions of foreign taxable income as a result of 2017 tax laws changes. The effective tax rate for the three months ended June 30, 2019 differed from the U.S. federal statutory rate of 21.0% primarily due to our earnings in foreign jurisdictions. Our effective income tax rate was 18.4% for the nine months ended June 30, 2020, compared to 29.3% for the nine months ended June 30, 2019. The effective tax rate for the nine months ended June 30, 2020 differed from the U.S. federal statutory rate of 21.0%, primarily due to our composition of jurisdictional earnings, U.S. inclusions of foreign taxable income as a result of 2017 tax laws changes, and an income tax benefit of approximately $5.0 million related to an increase in tax rates in the Netherlands enacted in the first quarter. The effective tax rate for the nine months ended June 30, 2019 differed from the U.S. federal statutory rate of 21.0% primarily due to our earnings in foreign jurisdictions. |
Long Term Debt
Long Term Debt | 9 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Long Term Debt | Note 12. Long-Term Debt Long-term debt consisted of the following (in thousands): June 30, 2020 September 30, 2019 3.00% Convertible Senior Notes due 2025, net of unamortized discount of $19,400 and deferred issuance costs of $4,898 at June 30, 2020. Effective interest rate 6.29%. $ 150,702 $ — Senior Credit Facilities, net of unamortized discount of $1,942 and deferred issuance costs of $337 at June 30, 2020. Effective interest rate 4.03%. 122,720 — Total debt $ 273,422 $ — Less: current portion (6,250 ) — Total long-term debt $ 267,172 $ — The following table summarizes the maturities of our borrowing obligations as of June 30, 2020 (in thousands): Fiscal Year Convertible Senior Notes Senior Facilities Total 2020 $ — $ 1,562 $ 1,562 2021 — 6,250 6,250 2022 — 7,813 7,813 2023 — 12,500 12,500 2024 — 96,875 96,875 Thereafter 175,000 — 175,000 Total before unamortized discount and issuance costs and current portion $ 175,000 $ 125,000 $ 300,000 Less: unamortized discount and issuance costs (24,298 ) (2,280 ) (26,578 ) Less: current portion of long-term debt — (6,250 ) (6,250 ) Total long-term debt $ 150,702 $ 116,470 $ 267,172 3.00% Senior Convertible Notes due 2025 On June 2, 2020, in an effort to refinance our debt structure, we issued $175.0 million in aggregate principal amount of 3.00% Convertible Senior Notes due 2025 (the “Notes”), including the initial purchasers’ exercise in full of their option to purchase an additional $25.0 million principal amount of the Notes, between the Company and U.S. Bank National Association, as trustee (the “Trustee”), in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The net proceeds from the issuance of the Notes were $169.8 million after deducting transaction costs. We used net proceeds from the issuance of the Notes to repay a portion of our indebtedness under the Credit Agreement, dated October 1, 2019, by and among the Company, the lenders and issuing banks party thereto and Barclays Bank PLC, as administrative agent (the “Existing Facility”). The Notes are senior, unsecured obligations and will accrue interest payable semiannually in arrears on June 1 and December 1 of each year, beginning on December 1, 2020, at a rate of 3.00% per year. The Notes will mature on June 1, 2025, unless earlier converted, redeemed, or repurchased. The Notes are convertible into cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election. A holder of Notes may convert all or any portion of its Notes at its option at any time prior to the close of business on the business day immediately preceding March 1, 2025 only under the following circumstances: (1) during any fiscal quarter commencing after the fiscal quarter ending on September 30, 2020 (and only during such fiscal quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any ten consecutive trading day period (the “measurement period”) in which the “trading price” per $1,000 principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day; (3) if we calls such Notes for redemption, at any time prior to the close of business on the business day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events. On or after March 1, 2025 until the close of business on the second scheduled trading day immediately preceding the maturity date, a holder may convert all or any portion of its Notes at any time, regardless of the foregoing. The conversion rate will initially be 26.7271 shares of our common stock per $1,000 principal amount of Notes (equivalent to an initial conversion price of approximately $37.42 per share of our common stock). The conversion rate is subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. In addition, following certain corporate events that occur prior to the maturity date or if we delivers a notice of redemption, we will, in certain circumstances, increase the conversion rate for a holder who elects to convert its Notes in connection with such a corporate event or convert its Notes called for redemption in connection with such notice of redemption, as the case may be. We may not redeem the Notes prior to June 5, 2023. We may redeem for cash all or any portion of the Notes, at our option, on a redemption date occurring on or after June 5, 2023 and on or before the 31st scheduled trading day immediately before the maturity date, if the last reported sale price of our common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which we provides notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provides notice of redemption at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the Notes. If we undergo a “fundamental change”, subject to certain conditions, holders may require us to repurchase for cash all or any portion of their Notes at a fundamental change repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date. The Notes contain 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 Notes then outstanding may declare the entire principal amount of all the Notes plus accrued special interest, if any, to be immediately due and payable. At issuance, we accounted for the Notes by allocating proceeds from the Notes into debt and equity components according to the accounting standards for convertible debt instruments that may be fully or partially settled in cash upon conversion. The initial carrying amount of the debt component, which approximates its fair value, was estimated by using an interest rate for nonconvertible debt, with terms similar to the Notes. The excess of the principal amount of the Notes over the fair value of the debt component was recorded as a debt discount and a corresponding increase in additional paid-in capital. The debt discount is accreted to the carrying value of the Notes over their expected term as interest expense using the interest method. Upon issuance of the Notes, we recorded $155.3 million as debt and $19.7 million as additional paid-in capital in stockholders’ equity. We incurred transaction costs of $5.6 million relating to the issuance of the Notes. In accounting for these costs, we allocated the costs of the offering between debt and equity in proportion to the fair value of the debt and equity recognized. The transaction costs allocated to the debt component of approximately $5.0 million were recorded as a direct deduction from the face amount of the Notes and are being amortized as interest expense over the term of the Notes using the interest method. The transaction costs allocated to the equity component of approximately $0.6 million were recorded as a decrease in additional paid-in capital. The interest expense recognized related to the Notes for the three and nine months ended June 30, 2020 was as follows (dollars in thousands): Three and Nine Months Ended June 30, 2020 Contractual interest expense $ 431 Amortization of debt discount 276 Amortization of issuance costs 70 Total interest expense related to the Notes $ 777 As of June 30, 2020, the conditions allowing holders of the Notes to convert have not been met and therefore the Notes are not yet convertible. As of June 30, 2020, the estimated fair value of our Notes was $233.7 million. We estimated the fair value based on the quoted market prices in an inactive market on the last trading day of the reporting period (Level 2). The Notes are recorded at face value less unamortized debt discount and transaction costs on our consolidated balance sheet. Senior Credit Facilities On June 12, 2020 (the “Financing Closing Date”), in connection with our effort to refinance our existing indebtedness, 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, which together with proceeds from the Convertible Senior Notes was intended to pay in full all indebtedness under the Existing Facility, and paid fees and expenses in connection with the Senior Credit Facilities. 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 shall be drawn on in the event that our working capital and other cash needs are not supported by our operating cash flow. As of June 30, 2020, there were no amounts outstanding under the Revolving Facility. Our obligations under the Credit Agreement are jointly and severally guaranteed by certain of our existing and future direct and indirect wholly owned domestic subsidiaries, subject to certain exceptions customary for financings of this type. All obligations are secured by substantially all of our tangible and intangible personal property and material real property, including a perfected first-priority pledge of all (or, in the case of foreign subsidiaries or subsidiaries (“FSHCO”) that own no material assets other than equity interests in foreign subsidiaries that are “controlled foreign corporations” or other FSHCOs, 65%) of the equity securities of our subsidiaries held by any loan party, subject to certain customary exceptions and limitations. We are obligated to make quarterly principal payments on the last day of each quarter in an aggregate annual amount equal to 5.0% of the original principal amount of the Term Loan Facility during the first two years of the Term Loan Facility, and 10% of the original principal amount of the Term Loan Facility thereafter, with the balance payable at the maturity date. Quarterly principal payments will commence on September 30, 2020. Interest accrues on outstanding borrowings under the Senior Facilities at a rate, at the option of the Borrower, of either (a) base rate determined by reference to the highest of (1) the rate of interest last quoted by The Wall Street Journal as the “prime rate” in the United States, (2) the federal funds effective rate, plus 0.5% and (3) the one month adjusted LIBOR rate, plus 1% per annum (“ABR”) or (b) an adjusted LIBOR rate (“LIBOR”) (which shall not be less than 0.50% per annum), in each case, plus an applicable margin. Initially, the applicable margin is LIBOR plus 3.00% or ABR plus 2.00%. Following delivery of a compliance certificate for the first full fiscal quarter after the Financing Closing Date, the applicable margins for the Senior Credit Facilities is subject to a pricing grid based upon the net total leverage ratio as follows (i) if the net total leverage ratio is greater than 3.00 to 1.00, the applicable margin is LIBOR plus 3.50% or ABR plus 2.50%; (ii) if the net total leverage ratio is less than or equal to 3.00 to 1.00 but greater than 2.50 to 1.00, the applicable margin is LIBOR plus 3.25% or ABR plus 2.25%; (iii) if the net total leverage ratio is less than or equal to 2.50 to 1.00 but greater than 2.00 to 1.00, the applicable margin is LIBOR plus 3.00% or ABR plus 2.00%; (iv) if the net total leverage ratio is less than or equal to 2.00 to 1.00 but greater than 1.50 to 1.00, the applicable margin is LIBOR plus 2.75% or ABR plus 1.75%; and (v) if the net total leverage ratio is less than or equal to 1.50 to 1.00, the applicable margin is LIBOR plus 2.50% or ABR plus 1.50%. Total interest expense relating to the Senior Credit Facilities for the three and nine months ended June 30, 2020 was $0.3 million, reflecting the coupon and accretion of the discount. Borrowings under the Credit Agreement are prepayable at our option without premium or penalty. We may request, and each lender may agree in its sole discretion, to extend the maturity date of all or a portion of the Senior Credit Facilities subject to certain conditions customary for financings of this type. The Credit Agreement also contains certain mandatory prepayment provisions in the event that we incur certain types of indebtedness or receives net cash proceeds from certain non-ordinary course asset sales or other dispositions of property, in each case subject to terms and conditions customary for financings of this type. The Credit Agreement contains certain affirmative and negative covenants customary for financings of this type that, among other things, limit our and our subsidiaries’ ability to incur additional indebtedness or liens, to dispose of assets, to make certain fundamental changes, to designate subsidiaries as unrestricted, to make certain investments, to prepay certain indebtedness and to pay dividends, or to make other distributions or redemptions/repurchases, in respect of our and our subsidiaries’ equity interests. In addition, the Credit Agreement contains financial covenants, each tested quarterly commencing with the quarter ended September 30, 2020, (1) a net secured leveraged 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. Existing Facilities On October 1, 2019, in connection with the Spin-Off, we entered into an Existing Facility consisting of a five-year senior secured term loan facility in the aggregate principal amount of $270.0 million. The net proceeds from the issuance of the Existing Facility were $249.7 million, which was primarily intended to finance a cash distribution of approximately $153.0 million to Nuance and provide approximately $110.0 million initial support for the cash flow needs of the Cerence business. We also entered into a 54-month senior secured first-lien revolving credit facility in an aggregate principal amount of $75.0 million, which shall be drawn on in the event that our working capital and other cash needs are not supported by our operating cash flow (the “Existing Revolving Facility” and collectively with the Existing Facility, the “Existing Facilities”). During June 2020, in connection with the issuance of the Notes and Senior Credit Facilities, we initiated prepayments towards our Existing Facilities in the amount of $267.6 million in cash. As a result, we recorded $267.6 million extinguishment of debt and $19.3 million loss on the extinguishment of debt. As of June 30, 2020, our obligations related to the Existing Facilities have been settled. Total interest expense relating to the Existing Facilities for the three and nine months ended June 30, 2020 was $4.4 million and $18.0 million, respectively, reflecting the coupon and accretion of the discount. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 9 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation Fiscal 2020 The accompanying unaudited consolidated financial statements include the accounts of the Company, as well as those of our wholly owned subsidiaries. All significant intercompany transactions and balances are eliminated in consolidation. Fiscal 2019 All prior period information is presented on a combined basis. The combined financial statements have been derived from Nuance’s historical accounting records and are presented on a “carve-out” basis to include the historical financial position, results of operations and cash flows applicable to the Cerence business. As a direct ownership relationship did not exist among all the various business units comprising the Cerence business, Nuance’s investment in the Cerence business is shown in lieu of stockholder’s equity in the combined financial statements. The Combined Statements of Operations include all revenues and costs directly attributable to Cerence as well as an allocation of expenses related to functions and services performed by centralized parent organizations. These corporate expenses have been allocated to the Cerence business based on direct usage or benefit, where identifiable, with the remainder allocated on a pro rata basis of revenues, headcount, number of transactions or other measures as determined appropriate. The Combined Statements of Cash Flows present these corporate expenses that are cash in nature as cash flows from operating activities, as this is the nature of these costs for Nuance. Non-cash expenses allocated from Nuance include corporate depreciation and amortization and stock-based compensation included as add-back adjustments to reconcile net income to net cash provided by operations. Current and deferred income taxes and related tax expense have been determined based on the standalone results of the Cerence business by applying Accounting Standards Codification No. 740, Income Taxes (“ASC 740”), to the Cerence business’s operations in each country as if it were a separate taxpayer (i.e. following the Separate Return Methodology). The combined financial statements include the allocation of certain assets and liabilities that have historically been held at the Nuance corporate level or by shared entities but which are specifically identifiable or allocable to the Cerence business. These shared assets and liabilities have been allocated to the Cerence business on the basis of direct usage when identifiable, or allocated on a pro rata basis of revenue, headcount or other systematic measures that reflect utilization of the services provided to or benefits received by Cerence. Nuance uses a centralized approach to cash management and financing its operations. Accordingly, none of the cash, cash equivalents, marketable securities, foreign currency hedges or debt and related interest expense has been allocated to the Cerence business in the combined financial statements. Nuance’s short and long-term debt has not been pushed down to the Cerence business’s combined financial statements because the Cerence business is not the legal obligor of the debt and Nuance’s borrowings were not directly attributable to the Cerence business. Transactions between Nuance and the Cerence business are considered to be effectively settled in the combined financial statements at the time the transaction is recorded. The total net effect of the settlement of these intercompany transactions is reflected in the Combined Statements of Cash Flows as a financing activity and in the Combined Balance Sheets as net parent investment. All of the allocations and estimates in the combined financial statements are based on assumptions that management believes are reasonable. |
Basis of Presentation | Basis of Presentation The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnote disclosures required by GAAP for complete financial statements. The consolidated financial statements reflect all adjustments considered necessary for a fair presentation of the consolidated results of operations and financial position for the interim periods presented. All such adjustments are of a normal recurring nature. The results of operations for the three and nine months ended June 30, 2020 are not necessarily indicative of the results to be expected for any other interim period or for the year ending September 30, 2020. These unaudited interim consolidated financial statements should be read in conjunction with the audited combined financial statements and notes contained in our Annual Report on Form 10-K for the year ended September 30, 2019. |
Use of Estimates | Use of Estimates The financial statements are prepared in accordance with GAAP, which requires management to make estimates and assumptions. These estimates, judgments and assumptions can affect the reported amounts in the financial statements and the footnotes thereto. Actual results could differ materially from these estimates. On an ongoing basis, we evaluate our estimates, assumptions and judgments. Significant estimates inherent to the preparation of financial statements include: revenue recognition; the allowances for doubtful accounts; accounting for deferred costs; accounting for internally developed software; the valuation of goodwill and intangible assets; accounting for business combinations; accounting for stock-based compensation; accounting for income taxes, deferred tax assets, and related valuation allowances; and loss contingencies. We base our estimates on historical experience, market participant fair value considerations, projected future cash flows, and various other factors that are believed to be reasonable under the circumstances. Actual amounts could differ significantly from these estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents consist of cash on hand, including money-market funds with original maturities of 90 days or less. As of June 30, 2020, the estimated fair value of our money-market funds was $107.5 million. We estimated the fair value of our money-market funds from quoted prices for identical assets in active markets on the last trading day of the reporting period (Level 1). |
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 perform ongoing credit evaluations of our customers’ financial condition and limit the amount of credit extended when deemed appropriate. One customer accounted for 18.2% of our accounts receivable, net balance at June 30, 2020. Two customers accounted for 12.9% and 10.0% of our accounts receivable, net balance at September 30, 2019. |
Convertible Debt | Convertible Debt We bifurcate the debt and equity (the contingently convertible feature) components of our convertible debt instruments in a manner that reflects our nonconvertible debt borrowing rate at the time of issuance. The equity components of our convertible debt instruments are recorded within stockholders’ equity with an allocated issuance premium or discount. The debt issuance premium or discount is amortized to interest expense in our consolidated statement of operations using the effective interest method over the expected term of the convertible debt. We assess the short-term and long-term classification of our convertible debt on each balance sheet date. Whenever the holders have a contractual right to convert, the carrying amount of the convertible debt is reclassified to current liabilities, with the corresponding equity component classified from additional paid-in capital to mezzanine equity. |
Recently Adopted Accounting Standards | Recently Adopted Accounting Standards Leases In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, “Leases” (“ASU 2016-02”), and codified as ASC 842, which became effective for fiscal years beginning after December 15, 2018 and interim periods therein, with early adoption permitted. The guidance requires lessees to recognize on the balance sheet a right-of-use asset, representing its right to use the underlying asset for the lease term, and a lease liability for all leases with terms greater than 12 months. The guidance also requires qualitative and quantitative disclosures designed to assess the amount, timing, and uncertainty of cash flows arising from leases. In July 2018, the FASB issued ASU 2018-10, “Codification Improvements to “Topic 842, Leases” and ASU 2018-11, “Leases Topic Targeted Improvements”, which provides an additional and optional transition method whereby the new lease standard is applied at the adoption date and recognized as an adjustment to retained earnings. Additionally, in March 2019, the FASB issued ASU 2019-01, “Codification Improvements to Topic 842”, which provides guidance in the following areas: (1) determining the fair value of the underlying asset by lessors that are not manufacturers or dealers and (2) clarification of interim disclosure requirements during transition. We adopted the new standard effective October 1, 2019 under the modified retrospective transition approach. Results for reporting periods beginning after October 1, 2019 are presented under ASC 842, while prior periods have not been adjusted and continue to be reported in accordance with our historic accounting under previous GAAP. We elected the package of practical expedients permitted under the transition guidance. The new standard does not have a material impact on our consolidated statement of operations and cash flows. Approximately $2.2 million of deferred rent balances were reclassified against the costs of the right of use assets. The effects of applying ASC 842 as a cumulative-effect adjustment to retained earnings as of October 1, 2019 is immaterial. The following tables summarize the impact of adopting ASC 842 on the consolidated balance sheet as of October 1, 2019 (dollars in thousands): As of October 1, 2019 As Previously Reported Impact of Adoption of Topic ASC 842 As Adjusted Assets: Operating lease right of use assets $ — $ 19,594 $ 19,594 Liabilities: Current liabilities: Short-term operating lease liabilities $ — $ 4,863 $ 4,863 Accrued expenses and other current liabilities 24,194 (1,465 ) 22,729 Long-term operating lease liabilities - 16,883 16,883 Other liabilities $ 21,536 $ (687 ) $ 20,849 Equity: Net parent investment $ 1,097,127 $ - $ 1,097,127 Other Accounting Pronouncements In August 2018, the FASB issued ASU No. 2018-15, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract” (“ASU 2018-15”), which is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. The guidance requires that implementation costs related to a hosting arrangement that is a service contract be capitalized and amortized over the term of the hosting arrangement, starting when the module or component of the hosting arrangement is ready for its intended use. The adoption of ASU 2018-15 did not have a material impact on our consolidated financial statements. |
Recently Issued Accounting Pronouncements to be Adopted | Recently Issued Accounting Pronouncements to be Adopted In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”), which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost, including trade receivables. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss model that requires the use of forward-looking information to calculate credit loss estimates. This standard is effective for interim and annual reporting periods beginning after December 15, 2019. This standard is required to be adopted using the modified retrospective basis, with a cumulative-effect adjustment to Accumulated earnings (deficit) as of the beginning of the first reporting period in which the guidance of this standard is effective. We plan to adopt this new standard in the first quarter of our fiscal 2021. We are currently evaluating the impact of the adoption of this standard on our consolidated financial statements. As of June 30, 2020, implementation efforts related to ASU 2016-13 are underway, including model development, identification of additional data needs for new reporting requirements, and drafting of accounting policies and internal controls. We believe our accounts receivable and contact assets balances fall within the scope of ASU 2016-13 and will be impacted upon adoption. We plan to use models and other estimation techniques that are sensitive to changes in economic conditions in order to estimate a reserve for financial assets. We also plan to apply qualitative factors that could be related to distinctive risk factors, changes in current economic conditions that may not be reflected in quantitatively derived results, or other relevant factors to ensure the reserve reflects our best estimate of current expected credit losses. In March 2020, the FASB issued ASU No. 2020-04 “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting,” (“ASU 2020-04”). The update provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) contract modifications on financial reporting, caused by reference rate reform. ASU 2020-04 is effective for all entities as of March 12, 2020 through December 31, 2022. We are currently evaluating the impact of the adoption of this standard on our consolidated financial statements. |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 9 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Summary of Adopting ASC 842 on Consolidated Balance Sheet | The following tables summarize the impact of adopting ASC 842 on the consolidated balance sheet as of October 1, 2019 (dollars in thousands): As of October 1, 2019 As Previously Reported Impact of Adoption of Topic ASC 842 As Adjusted Assets: Operating lease right of use assets $ — $ 19,594 $ 19,594 Liabilities: Current liabilities: Short-term operating lease liabilities $ — $ 4,863 $ 4,863 Accrued expenses and other current liabilities 24,194 (1,465 ) 22,729 Long-term operating lease liabilities - 16,883 16,883 Other liabilities $ 21,536 $ (687 ) $ 20,849 Equity: Net parent investment $ 1,097,127 $ - $ 1,097,127 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
Jun. 30, 2020 | |
Revenue From Contract With Customer [Abstract] | |
Summary of Revenues Classified by Major Geographic Region | Revenues, classified by the major geographic region in which our customers are located, for the three and nine months ended June 30, 2020 and 2019 (dollars in thousands): Three Months Ended June 30, Nine Months Ended June 30, 2020 2019 2020 2019 Revenues: United States $ 27,674 $ 29,303 $ 99,220 $ 96,997 Other Americas 8 334 16 966 Germany 21,082 22,287 61,401 51,117 Other Europe, Middle East and Africa 6,868 5,773 20,093 15,917 Japan 11,727 15,840 38,656 33,578 Other Asia-Pacific 7,451 4,032 19,378 21,782 Total net revenues $ 74,810 $ 77,569 $ 238,764 $ 220,357 |
Summary of Significant Changes in Contract Assets and Deferred Revenue | The table below shows significant changes in contract assets (dollars in thousands): Contract assets Balance as of October 1, 2019 $ 9,219 Revenues recognized but not billed 40,962 Amounts reclassified to accounts receivable, net (24,980 ) Balance as of June 30, 2020 $ 25,201 Deferred revenue Balance as of October 1, 2019 $ 353,284 Amounts billed but not recognized 76,100 Revenue recognized (93,293 ) Balance as of June 30, 2020 $ 336,091 |
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 June 30, 2020 (dollars in thousands): Within One Year Two to Five Years Greater than Five Years Total Total revenue $ 154,390 $ 189,095 $ 60,020 $ 403,505 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of Reconciliation of Basic Shares to Diluted Shares | The following table presents the reconciliation of the numerator and denominator for calculating net (loss) income per share: Three Months Ended June 30, Nine Months Ended June 30, in thousands, except per share data 2020 2019 2020 2019 Numerator: Net (loss) income - basic and diluted (28,181 ) 1,770 (27,448 ) 4,479 Denominator: Weighted average common shares outstanding - basic 36,509 36,391 36,315 36,391 Dilutive effect of restricted stock awards - - - - Dilutive effect of contingently issuable stock awards - - - - Dilutive effect of the Notes - - - - Weighted average common shares outstanding - diluted 36,509 36,391 36,315 36,391 Net (loss) income per common share: Basic (0.77 ) 0.05 (0.76 ) 0.12 Diluted (0.77 ) 0.05 (0.76 ) 0.12 |
Schedule of Potential Shares Considered Antidilutive | The following table set forth potential shares that were considered anti-dilutive at June 30, 2020 and for the three and nine months ended June 30, 2019: June 30, Three Months Ended June 30, Nine Months Ended June 30, in thousands 2020 2019 2019 Restricted stock awards 2,533 - - Contingently issuable stock awards 522 - - Conversion option of our Notes 4,677 - - |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 9 Months Ended |
Jun. 30, 2020 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Changes in Carrying Amount of Goodwill | The changes in the carrying amount of goodwill for the nine months ended June 30, 2020 are as follows (dollars in thousands): Total Balance as of October 1, 2019 $ 1,119,329 Effect of foreign currency translation 2,287 Balance as of June 30, 2020 $ 1,121,616 |
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): June 30, 2020 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted Remaining Life (Years) Customer relationships $ 108,805 $ (71,551 ) $ 37,254 3.2 Technology and patents 90,022 (77,124 ) 12,898 1.8 Total $ 198,827 $ (148,675 ) $ 50,152 September 30, 2019 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted Average Remaining Life (Years) Customer relationships $ 104,783 $ (58,568 ) $ 46,215 4.0 Technology and patents 116,757 (97,411 ) 19,346 2.5 Total $ 221,540 $ (155,979 ) $ 65,561 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Jun. 30, 2020 | |
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 June 30, 2020: June 30, 2020 Weighted-average remaining lease term (in months): Operating leases 54.2 Finance leases 5.0 Weighted-average discount rate: Operating leases 8.0 % Finance leases 8.4 % |
Summary of lease-related Assets and Liabilities Reported in the Consolidated Balance Sheet | The following table presents the lease-related assets and liabilities reported in the consolidated balance sheet as of June 30, 2020 (dollars in thousands): Classification June 30, 2020 Assets Operating lease assets Operating lease right of use assets $ 19,547 Finance lease assets Property and equipment, net 187 Total lease assets $ 19,734 Liabilities Current Operating Short-term operating lease liabilities $ 5,727 Finance Accrued expenses and other current liabilities 49 Noncurrent Operating Long-term operating lease liabilities $ 16,305 Finance Other liabilities — Total lease liability $ 22,081 |
Summary of Lease Expense | The following table presents lease expense for the three and nine months ended June 30, 2020 (dollars in thousands): Three months ended June 30, 2020 Nine months ended June 30, 2020 Finance lease costs: Amortization of right-of-use asset $ 33 $ 102 Interest on lease liability 1 3 Operating lease cost 2,209 6,059 Short-term lease cost - - Variable lease cost 347 1,021 Sublease income (47 ) (157 ) Total lease cost $ 2,543 $ 7,028 |
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 with terms of more than one year to the total lease liabilities recognized on the consolidated balance sheet as of June 30, 2020 (dollars in thousands): Year Ending September 30, Operating Leases Financing Leases 2020 (excluding nine months ended June 30, 2020) $ 2,089 $ 30 2021 6,757 20 2022 5,628 — 2023 4,178 — 2024 3,735 — Thereafter 4,060 — Total future minimum lease payments $ 26,447 $ 50 Less effects of discounting (4,415 ) (1 ) Total lease liabilities $ 22,032 $ 49 Reported as of June 30, 2020 Short-term lease liabilities $ 5,727 $ 49 Long-term lease liabilities 16,305 — Total lease liabilities $ 22,032 $ 49 |
Summary of Future Minimum Lease Commitments Under Non-cancelable Leases | The future minimum lease commitments under non-cancelable leases at September 30, 2019 were as follows (dollars in thousands): Year Ending September 30, 2020 $ 6,323 2021 5,421 2022 4,493 2023 3,237 2024 2,922 Thereafter 4,039 Total $ 26,435 |
Accrued Expenses and Other Li_2
Accrued Expenses and Other Liabilities (Tables) | 9 Months Ended |
Jun. 30, 2020 | |
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): June 30, 2020 September 30, 2019 Compensation $ 31,499 $ 13,031 Cost of revenue related liabilities 4,283 1,668 Sales and other taxes payable 12,055 219 Professional fees 3,160 3,863 Facilities related liabilities 194 273 Other 3,481 5,140 Total $ 54,672 $ 24,194 |
Restructuring and Other Costs_2
Restructuring and Other Costs, Net (Tables) | 9 Months Ended |
Jun. 30, 2020 | |
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 nine months ended June 30, 2020 (dollars in thousands): Personnel Facilities Separation Total Balance at October 1, 2019 $ 489 $ 26 $ 3,876 $ 4,391 Restructuring and other costs, net 3,133 — 10,592 13,725 Cash payments (2,429 ) (15 ) (12,267 ) (14,711 ) Foreign exchange impact on ending balance (3 ) — — (3 ) Balance at June 30, 2020 $ 1,190 $ 11 $ 2,201 $ 3,402 |
Schedule of Restructuring and Other Costs | The following table sets forth restructuring and other costs recognized for the three and nine months ended June 30, 2020 and 2019 (dollars in thousands): Three Months Ended June 30, Nine Months Ended June 30, 2020 2019 2020 2019 Personnel $ 2,452 $ 490 $ 3,133 $ 47 Facilities — 31 — 1,705 Separation 849 9,170 10,592 15,395 Restructuring and other costs, net $ 3,301 $ 9,691 $ 13,725 $ 17,147 |
Stockholder's Equity (Tables)
Stockholder's Equity (Tables) | 9 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
Schedule of Non-vested Restricted Stock Units | Information with respect to our non-vested restricted stock units for the nine months ended June 30, 2020 was as follows: Non-Vested Restricted Stock Units Time-Based Shares Performance- Based Shares Total Shares Weighted- Average Grant-Date Fair Value Weighted- Average Remaining Contractual Term (years) Aggregate Intrinsic Value (in thousands) Non-vested at October 1, 2019 — — — $ — Granted 2,733,884 776,096 3,509,980 $ 17.59 Vested (207,939 ) — (207,939 ) $ 16.88 Forfeited (45,633 ) (5,506 ) (51,139 ) $ 17.30 Non-vested at June 30, 2020 2,480,312 770,590 3,250,902 $ 17.63 1.06 $ 132,756 Expected to vest 3,250,902 $ 17.63 1.06 $ 132,756 |
Schedule of Stock-based Compensation | In May 2020, we modified the performance targets for certain of the restricted stock units issued pursuant to our 2019 Equity Incentive Plan at the beginning of fiscal 2020. Stock-based compensation for the anticipated restricted stock units has been adjusted to reflect our estimated achievement under the modified targets and is recorded prospectively over the requisite service period. Stock-based compensation was included in the following captions in our consolidated statements of operations for the three and nine months ended June 30, 2020 and combined statement of operations for the three and nine months ended June 30, 2019 (in thousands): Three Months Ended June 30, Nine Months Ended June 30, 2020 2019 2020 2019 Cost of licensing $ — $ 6 $ — $ 14 Cost of connected services 423 96 963 713 Cost of professional services 1,718 225 3,022 733 Research and development 5,001 4,600 9,924 11,344 Sales and marketing 3,223 1,319 6,589 4,353 General and administrative 7,060 1,582 12,456 4,038 $ 17,425 $ 7,828 $ 32,954 $ 21,195 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Components of (Loss) Income Before Income Taxes | The components of (loss) income before income taxes are as follows (dollars in thousands): Three Months Ended June 30, Nine Months Ended June 30, 2020 2019 2020 2019 Domestic $ (37,807 ) $ 6,434 $ (42,875 ) $ 85 Foreign 7,157 (3,323 ) 9,242 6,253 (Loss) income before income taxes $ (30,650 ) $ 3,111 $ (33,633 ) $ 6,338 |
Components of (Benefit from) Provision for Income Taxes | The components of (benefit from) provision for income taxes are as follows (dollars in thousands): Three Months Ended June 30, Nine Months Ended June 30, 2020 2019 2020 2019 Domestic $ (6,076 ) $ 1,819 $ (6,867 ) $ 5 Foreign 3,607 (478 ) 682 1,854 (Benefit from) provision for income taxes $ (2,469 ) $ 1,341 $ (6,185 ) $ 1,859 Effective income tax rate 8.1 % 43.1 % 18.4 % 29.3 % |
Long Term Debt (Tables)
Long Term Debt (Tables) | 9 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt | Long-term debt consisted of the following (in thousands): June 30, 2020 September 30, 2019 3.00% Convertible Senior Notes due 2025, net of unamortized discount of $19,400 and deferred issuance costs of $4,898 at June 30, 2020. Effective interest rate 6.29%. $ 150,702 $ — Senior Credit Facilities, net of unamortized discount of $1,942 and deferred issuance costs of $337 at June 30, 2020. Effective interest rate 4.03%. 122,720 — Total debt $ 273,422 $ — Less: current portion (6,250 ) — Total long-term debt $ 267,172 $ — |
Summary of Maturities of Borrowing Obligations | The following table summarizes the maturities of our borrowing obligations as of June 30, 2020 (in thousands): Fiscal Year Convertible Senior Notes Senior Facilities Total 2020 $ — $ 1,562 $ 1,562 2021 — 6,250 6,250 2022 — 7,813 7,813 2023 — 12,500 12,500 2024 — 96,875 96,875 Thereafter 175,000 — 175,000 Total before unamortized discount and issuance costs and current portion $ 175,000 $ 125,000 $ 300,000 Less: unamortized discount and issuance costs (24,298 ) (2,280 ) (26,578 ) Less: current portion of long-term debt — (6,250 ) (6,250 ) Total long-term debt $ 150,702 $ 116,470 $ 267,172 |
Schedule of Interest Expense Related to Notes | The interest expense recognized related to the Notes for the three and nine months ended June 30, 2020 was as follows (dollars in thousands): Three and Nine Months Ended June 30, 2020 Contractual interest expense $ 431 Amortization of debt discount 276 Amortization of issuance costs 70 Total interest expense related to the Notes $ 777 |
Business Overview - Additional
Business Overview - Additional Information (Details) | Oct. 01, 2019 | Jun. 30, 2020CountryOfficeLocation |
Business Overview [Line Items] | ||
Entity incorporation state country code | DE | |
Entity incorporation, date of incorporation | Oct. 1, 2019 | |
Number of countries where employees instructed to work from home | Country | 18 | |
Number of office locations instructed employees work from home | OfficeLocation | 24 | |
Nuance Communications | Spin-Off | ||
Business Overview [Line Items] | ||
Distribution date | Oct. 1, 2019 | |
Conversion ratio, description | The distribution was made in the amount of one share of our common stock for every eight shares of Nuance common stock (which we refer to as the “Distribution”) owned by Nuance’s stockholders as of 5:00 p.m. Eastern Time on September 17, 2019, the record date of the Distribution. | |
Conversion ratio | 0.125 |
Significant Accounting Polici_4
Significant Accounting Policies - Additional Information (Details) $ in Millions | 9 Months Ended | 12 Months Ended |
Jun. 30, 2020USD ($)Customer | Sep. 30, 2019Customer | |
Significant Accounting Policies [Line Items] | ||
Deferred rent reclassified as right of use assets | $ 2.2 | |
Concentration of Credit Risk | Accounts Receivable, Net | ||
Significant Accounting Policies [Line Items] | ||
Number of major customers | Customer | 1 | 2 |
Concentration risk, percentage | 18.20% | |
Concentration of Credit Risk | Accounts Receivable, Net | Customer One | ||
Significant Accounting Policies [Line Items] | ||
Concentration risk, percentage | 12.90% | |
Concentration of Credit Risk | Accounts Receivable, Net | Customer Two | ||
Significant Accounting Policies [Line Items] | ||
Concentration risk, percentage | 10.00% | |
Money-Market Funds | Level 1 | ||
Significant Accounting Policies [Line Items] | ||
Estimated fair value of cash and cash equivalents | $ 107.5 |
Significant Accounting Polici_5
Significant Accounting Policies - Summary of Adopting ASC 842 on Consolidated Balance Sheet (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Oct. 01, 2019 | Sep. 30, 2019 |
ASSETS | |||
Operating lease right of use assets | $ 19,547 | ||
Current liabilities: | |||
Short-term operating lease liabilities | 5,727 | ||
Accrued expenses and other current liabilities | 54,672 | $ 24,194 | |
Long-term operating lease liabilities | 16,305 | ||
Other liabilities | $ 32,528 | 21,536 | |
Stockholders' Equity: | |||
Net parent investment | $ 1,097,127 | ||
Topic ASC 842 | |||
ASSETS | |||
Operating lease right of use assets | $ 19,594 | ||
Current liabilities: | |||
Short-term operating lease liabilities | 4,863 | ||
Accrued expenses and other current liabilities | 22,729 | ||
Long-term operating lease liabilities | 16,883 | ||
Other liabilities | 20,849 | ||
Stockholders' Equity: | |||
Net parent investment | 1,097,127 | ||
As Previously Reported | |||
Current liabilities: | |||
Accrued expenses and other current liabilities | 24,194 | ||
Other liabilities | 21,536 | ||
Stockholders' Equity: | |||
Net parent investment | 1,097,127 | ||
Restatement Adjustment | Topic ASC 842 | |||
ASSETS | |||
Operating lease right of use assets | 19,594 | ||
Current liabilities: | |||
Short-term operating lease liabilities | 4,863 | ||
Accrued expenses and other current liabilities | (1,465) | ||
Long-term operating lease liabilities | 16,883 | ||
Other liabilities | $ (687) |
Revenue Recognition - Additiona
Revenue Recognition - Additional Information (Details) | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2020USD ($)Customer | Jun. 30, 2019USD ($)Customer | Jun. 30, 2020USD ($)Customer | Jun. 30, 2019USD ($)Customer | |
Disaggregation Of Revenue [Line Items] | ||||
Revenues | $ 74,810,000 | $ 77,569,000 | $ 238,764,000 | $ 220,357,000 |
Contract acquisition costs | 4,700,000 | |||
Contract acquisition cost, amortization | 300,000 | 900,000 | ||
Contract acquisition cost, impairment | 0 | |||
Capitalized contract cost, net | 43,600,000 | 43,600,000 | ||
Capitalized contract cost, amortization | 4,000,000 | 9,300,000 | ||
Capitalized contract cost, impairment | 0 | |||
Customer One | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 19,200,000 | 17,000,000 | 56,400,000 | 44,900,000 |
Customer Two | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 8,000,000 | 8,500,000 | 24,300,000 | |
Customer Three | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 7,800,000 | |||
United States | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 27,674,000 | 29,303,000 | 99,220,000 | 96,997,000 |
Germany | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 21,082,000 | 22,287,000 | 61,401,000 | 51,117,000 |
Japan | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | $ 11,727,000 | $ 15,840,000 | $ 38,656,000 | $ 33,578,000 |
Revenues | Customer Concentration Risk | ||||
Disaggregation Of Revenue [Line Items] | ||||
Number of customers accounted for revenues | Customer | 3 | 2 | 1 | 2 |
Revenues | Customer Concentration Risk | Customer One | ||||
Disaggregation Of Revenue [Line Items] | ||||
Percentage of revenue | 25.70% | 21.90% | 23.60% | 20.40% |
Revenues | Customer Concentration Risk | Customer Two | ||||
Disaggregation Of Revenue [Line Items] | ||||
Percentage of revenue | 10.70% | 11.00% | 11.00% | |
Revenues | Customer Concentration Risk | Customer Three | ||||
Disaggregation Of Revenue [Line Items] | ||||
Percentage of revenue | 10.50% | |||
Minimum | ||||
Disaggregation Of Revenue [Line Items] | ||||
Connected services contract term | 1 year | |||
Contract acquisition cost, deferred and amortized over benefit period | 1 year | |||
Contract term | 1 year | 1 year | ||
Minimum | Revenues | United States | Geographic Concentration Risk | ||||
Disaggregation Of Revenue [Line Items] | ||||
Percentage of revenue | 10.00% | 10.00% | 10.00% | 10.00% |
Minimum | Revenues | Germany | Geographic Concentration Risk | ||||
Disaggregation Of Revenue [Line Items] | ||||
Percentage of revenue | 10.00% | 10.00% | 10.00% | 10.00% |
Minimum | Revenues | Japan | Geographic Concentration Risk | ||||
Disaggregation Of Revenue [Line Items] | ||||
Percentage of revenue | 10.00% | 10.00% | 10.00% | 10.00% |
Maximum | ||||
Disaggregation Of Revenue [Line Items] | ||||
Connected services contract term | 5 years | |||
Contract acquisition costs, expected benefit period | 1 year | |||
Contract acquisition cost, deferred and amortized over benefit period | 8 years | |||
Contract term | 8 years | 8 years |
Revenue Recognition - Summary o
Revenue Recognition - Summary of Revenues Classified by Major Geographic Region (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Revenues: | ||||
Total net revenues | $ 74,810 | $ 77,569 | $ 238,764 | $ 220,357 |
United States | ||||
Revenues: | ||||
Total net revenues | 27,674 | 29,303 | 99,220 | 96,997 |
Other Americas | ||||
Revenues: | ||||
Total net revenues | 8 | 334 | 16 | 966 |
Germany | ||||
Revenues: | ||||
Total net revenues | 21,082 | 22,287 | 61,401 | 51,117 |
Other Europe, Middle East and Africa | ||||
Revenues: | ||||
Total net revenues | 6,868 | 5,773 | 20,093 | 15,917 |
Japan | ||||
Revenues: | ||||
Total net revenues | 11,727 | 15,840 | 38,656 | 33,578 |
Other Asia-Pacific | ||||
Revenues: | ||||
Total net revenues | $ 7,451 | $ 4,032 | $ 19,378 | $ 21,782 |
Revenue Recognition - Summary_2
Revenue Recognition - Summary of Significant Changes in Contract Assets (Details) $ in Thousands | 9 Months Ended |
Jun. 30, 2020USD ($) | |
Revenue From Contract With Customer [Abstract] | |
Balance | $ 9,219 |
Revenues recognized but not billed | 40,962 |
Amounts reclassified to accounts receivable, net | (24,980) |
Balance | $ 25,201 |
Revenue Recognition - Summary_3
Revenue Recognition - Summary of Significant Changes in Deferred Revenue (Details) $ in Thousands | 9 Months Ended |
Jun. 30, 2020USD ($) | |
Revenue From Contract With Customer [Abstract] | |
Balance | $ 353,284 |
Amounts billed but not recognized | 76,100 |
Revenue recognized | (93,293) |
Balance | $ 336,091 |
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) $ in Thousands | Jun. 30, 2020USD ($) |
Remaining Performance Obligations | |
Total revenue | $ 403,505 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2020-07-01 | |
Remaining Performance Obligations | |
Total revenue | $ 154,390 |
Remaining performance obligation, expected timing of satisfaction, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2021-01-01 | |
Remaining Performance Obligations | |
Total revenue | $ 189,095 |
Remaining performance obligation, expected timing of satisfaction, period | 4 years |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2025-01-01 | |
Remaining Performance Obligations | |
Total revenue | $ 60,020 |
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) $ in Thousands | Jun. 30, 2020USD ($) |
Revenue Performance Obligation [Abstract] | |
Total revenue | $ 403,505 |
Earnings Per Share - Additional
Earnings Per Share - Additional Information (Details) | 3 Months Ended | 9 Months Ended |
Jun. 30, 2020USD ($)shares | Jun. 30, 2020USD ($)shares | |
Earnings Per Share [Line Items] | ||
Dilutive shares | $ | $ 0 | $ 0 |
Common stock, shares issued | shares | 36,520,000 | 36,520,000 |
Spin-Off | ||
Earnings Per Share [Line Items] | ||
Common stock, shares issued | shares | 36,400,000 | 36,400,000 |
3.00% Convertible Senior Notes Due 2025 | ||
Earnings Per Share [Line Items] | ||
Debt instrument conversion ratio | 26.7271 | |
Conversion of notes to common stock per principal amount | $ | $ 1,000 |
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 | 9 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Numerator: | ||||
Net (loss) income - basic and diluted | $ (28,181) | $ 1,770 | $ (27,448) | $ 4,479 |
Weighted average common shares outstanding - basic | 36,509 | 36,391 | 36,315 | 36,391 |
Weighted average common shares outstanding - diluted | 36,509 | 36,391 | 36,315 | 36,391 |
Net (loss) income per common share: | ||||
Basic | $ (0.77) | $ 0.05 | $ (0.76) | $ 0.12 |
Diluted | $ (0.77) | $ 0.05 | $ (0.76) | $ 0.12 |
Earnings Per Share - Schedule_2
Earnings Per Share - Schedule of Potential Shares Considered Antidilutive (Details) shares in Thousands | 3 Months Ended |
Jun. 30, 2020shares | |
Restricted Stock Awards | |
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |
Antidilutive shares | 2,533 |
Contingently Issuable Stock Awards | |
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |
Antidilutive shares | 522 |
Conversion Option of our Notes | |
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |
Antidilutive shares | 4,677 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets - Goodwill - Additional Information (Details) | 6 Months Ended | 9 Months Ended |
Mar. 31, 2020USD ($) | Jun. 30, 2020USD ($)Segment | |
Goodwill [Line Items] | ||
Number of reportable segments | Segment | 1 | |
Number of Operating Segment | Segment | 1 | |
Reporting unit percentage of fair value in excess of carrying value | 2.00% | |
Reporting unit, estimate fair value of goodwill | $ 951,000,000 | |
Reporting unit, amount of fair value in excess of carrying amount | 936,000,000 | |
Goodwill impairment | 0 | $ 0 |
Minimum | ||
Goodwill [Line Items] | ||
Reporting unit percentage of fair value in excess of carrying value | 50.00% | |
Reporting unit, amount of fair value in excess of carrying amount | $ 15,000,000 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets - Changes in Carrying Amount of Goodwill (Details) $ in Thousands | 9 Months Ended |
Jun. 30, 2020USD ($) | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Balance as of October 1, 2019 | $ 1,119,329 |
Effect of foreign currency translation | 2,287 |
Balance as of June 30, 2020 | $ 1,121,616 |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets - Intangible Assets, Net - Additional Information (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 9 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Mar. 31, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |||||
Impairment of long-lived asset | $ 0 | $ 0 | |||
Amortization expense related to intangible assets | $ 5,200,000 | $ 5,100,000 | 15,800,000 | $ 15,600,000 | |
Expected amortization of intangible assets for remainder of 2020 | $ 5,000,000 | $ 5,000,000 |
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 | 9 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Sep. 30, 2019 | |
Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 198,827 | $ 221,540 |
Accumulated Amortization | (148,675) | (155,979) |
Net Carrying Amount | 50,152 | 65,561 |
Customer Relationships | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 108,805 | 104,783 |
Accumulated Amortization | (71,551) | (58,568) |
Net Carrying Amount | $ 37,254 | $ 46,215 |
Weighted Average Remaining Life (Years) | 3 years 2 months 12 days | 4 years |
Technology and Patents | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 90,022 | $ 116,757 |
Accumulated Amortization | (77,124) | (97,411) |
Net Carrying Amount | $ 12,898 | $ 19,346 |
Weighted Average Remaining Life (Years) | 1 year 9 months 18 days | 2 years 6 months |
Leases - Additional Information
Leases - Additional Information (Details) $ in Thousands | 3 Months Ended | 9 Months Ended |
Jun. 30, 2020USD ($) | Jun. 30, 2020USD ($) | |
Lessee Lease Description [Line Items] | ||
Operating lease, existence of option to extend | true | |
Operating lease, option to extend | Some of our leases include options to extend or terminate the lease prior to the end of the agreed upon lease term. For purposes of calculating lease liabilities, lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise such options. | |
Operating lease, existence of option to terminate | true | |
Operating lease, option to terminate | Some of our leases include options to extend or terminate the lease prior to the end of the agreed upon lease term. For purposes of calculating lease liabilities, lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise such options. | |
Undiscounted future minimum lease payments under non-cancelable, term | 1 year | |
Cash payments related to operating leases | $ 2,100 | $ 5,700 |
Cash payments related to financing leases | $ 96 | |
Minimum | ||
Lessee Lease Description [Line Items] | ||
Operating lease remaining term | 1 year | 1 year |
Maximum | ||
Lessee Lease Description [Line Items] | ||
Operating lease remaining term | 8 years | 8 years |
Leases - Summary of Lease Term
Leases - Summary of Lease Term and Incremental Borrowing Rates for Leases (Details) | Jun. 30, 2020 |
Weighted-average remaining lease term (in months): | |
Operating leases | 54 months 6 days |
Finance leases | 5 months |
Weighted-average discount rate: | |
Operating leases | 8.00% |
Finance leases | 8.40% |
Leases - Summary of Lease-relat
Leases - Summary of Lease-related Assets and Liabilities Reported in the Consolidated Balance Sheet (Details) $ in Thousands | Jun. 30, 2020USD ($) |
ASSETS | |
Operating lease right of use assets | $ 19,547 |
Finance lease assets | $ 187 |
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | us-gaap:PropertyPlantAndEquipmentNet |
Total lease assets | $ 19,734 |
Current liabilities: | |
Short-term operating lease liabilities | 5,727 |
Finance | $ 49 |
Finance Lease, Liability, Current, Statement of Financial Position [Extensible List] | us-gaap:AccruedLiabilitiesAndOtherLiabilities |
Noncurrent | |
Long-term operating lease liabilities | $ 16,305 |
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | us-gaap:OtherLiabilitiesNoncurrent |
Total lease liability | $ 22,081 |
Leases - Summary of Lease Expen
Leases - Summary of Lease Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Jun. 30, 2020 | Jun. 30, 2020 | |
Finance lease costs: | ||
Amortization of right-of-use asset | $ 33 | $ 102 |
Interest on lease liability | 1 | 3 |
Operating lease cost | 2,209 | 6,059 |
Variable lease cost | 347 | 1,021 |
Sublease income | (47) | (157) |
Total lease cost | $ 2,543 | $ 7,028 |
Leases - Summary of Undiscounte
Leases - Summary of Undiscounted Future Minimum Lease Payments Under Non-cancelable Leases (Details) $ in Thousands | Jun. 30, 2020USD ($) |
Operating Leases | |
2020 (excluding nine months ended June 30, 2020) | $ 2,089 |
2021 | 6,757 |
2022 | 5,628 |
2023 | 4,178 |
2024 | 3,735 |
Thereafter | 4,060 |
Total future minimum lease payments | 26,447 |
Less effects of discounting | (4,415) |
Total lease liabilities | 22,032 |
Short-term lease liabilities | 5,727 |
Long-term lease liabilities | 16,305 |
Financing Leases | |
2020 (excluding nine months ended June 30, 2020) | 30 |
2021 | 20 |
Total future minimum lease payments | 50 |
Less effects of discounting | (1) |
Total lease liabilities | 49 |
Short-term lease liabilities | $ 49 |
Leases - Summary of Future Mini
Leases - Summary of Future Minimum Lease Commitments Under Non-cancelable Leases (Details) $ in Thousands | Sep. 30, 2019USD ($) |
Leases [Abstract] | |
2020 | $ 6,323 |
2021 | 5,421 |
2022 | 4,493 |
2023 | 3,237 |
2024 | 2,922 |
Thereafter | 4,039 |
Total | $ 26,435 |
Accrued Expenses and Other Li_3
Accrued Expenses and Other Liabilities -Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Sep. 30, 2019 |
Accrued Liabilities And Other Liabilities [Abstract] | ||
Compensation | $ 31,499 | $ 13,031 |
Cost of revenue related liabilities | 4,283 | 1,668 |
Sales and other taxes payable | 12,055 | 219 |
Professional fees | 3,160 | 3,863 |
Facilities related liabilities | 194 | 273 |
Other | 3,481 | 5,140 |
Total | $ 54,672 | $ 24,194 |
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 | 9 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Restructuring Cost and Reserve [Line Items] | ||||
Balance at October 1, 2019 | $ 4,391 | |||
Restructuring and other costs, net | $ 3,301 | $ 9,691 | 13,725 | $ 17,147 |
Cash payments | (14,711) | |||
Foreign exchange impact on ending balance | (3) | |||
Balance at June 30, 2020 | 3,402 | 3,402 | ||
Personnel | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Balance at October 1, 2019 | 489 | |||
Restructuring and other costs, net | 2,452 | 490 | 3,133 | 47 |
Cash payments | (2,429) | |||
Foreign exchange impact on ending balance | (3) | |||
Balance at June 30, 2020 | 1,190 | 1,190 | ||
Facilities | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Balance at October 1, 2019 | 26 | |||
Restructuring and other costs, net | 31 | 1,705 | ||
Cash payments | (15) | |||
Balance at June 30, 2020 | 11 | 11 | ||
Spin-Off | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Balance at October 1, 2019 | 3,876 | |||
Restructuring and other costs, net | 849 | $ 9,170 | 10,592 | $ 15,395 |
Cash payments | (12,267) | |||
Balance at June 30, 2020 | $ 2,201 | $ 2,201 |
Restructuring and Other Costs_4
Restructuring and Other Costs, Net - Schedule of Restructuring and Other Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring and other costs, net | $ 3,301 | $ 9,691 | $ 13,725 | $ 17,147 |
Personnel | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring and other costs, net | 2,452 | 490 | 3,133 | 47 |
Facilities | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring and other costs, net | 31 | 1,705 | ||
Spin-Off | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring and other costs, net | $ 849 | $ 9,170 | $ 10,592 | $ 15,395 |
Restructuring and Other Costs_5
Restructuring and Other Costs, Net - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges (reversal) | $ 3,301 | $ 9,691 | $ 13,725 | $ 17,147 |
Severance Charge | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges (reversal) | 2,452 | 490 | 3,133 | 47 |
Professional Services Fees | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges (reversal) | $ 849 | 9,170 | $ 10,592 | 15,395 |
Facilities Restructuring | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges (reversal) | $ 31 | $ 1,705 |
Stockholder's Equity - Addition
Stockholder's Equity - Additional Information (Details) - $ / shares | 9 Months Ended | ||
Jun. 30, 2020 | Oct. 02, 2019 | Oct. 01, 2019 | |
Class Of Stock [Line Items] | |||
Capital stock, shares authorized | 600,000,000 | ||
Preferred stock, shares authorized | 40,000,000 | ||
Preferred stock, par value per share | $ 0.01 | ||
Common stock, shares authorized | 600,000,000 | 560,000,000 | |
Common stock, par value per share | $ 0.01 | $ 0.01 | |
Common stock reserved for issuance | 6,350,000 | ||
Restricted Stock Units | |||
Class Of Stock [Line Items] | |||
Stock issued in connection with the Spin-Off | 1,208,931 | ||
2019 Equity Incentive Plan | |||
Class Of Stock [Line Items] | |||
Common stock reserved for issuance | 5,300,000 | ||
Share-based compensation arrangement by share-based payment award, terms of award | Awards issued under the Plan may not have a term greater than ten years from the date of grant. | ||
2019 Equity Incentive Plan | Maximum | |||
Class Of Stock [Line Items] | |||
Share-based compensation arrangement by share-based payment award, expected term | 10 years | ||
2019 Employee Stock Purchase Plan | |||
Class Of Stock [Line Items] | |||
Common stock reserved for issuance | 1,050,000 |
Stockholder's Equity - Schedule
Stockholder's Equity - Schedule of Non-vested Restricted Stock Units (Details) $ / shares in Units, $ in Thousands | 9 Months Ended |
Jun. 30, 2020USD ($)$ / sharesshares | |
Time-Based Restricted Stock Units | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Non-vested, Shares, Granted | 2,733,884 |
Non-vested, Shares, Vested | (207,939) |
Non-vested, Shares, Forfeited | (45,633) |
Non-vested, Shares, Ending balance | 2,480,312 |
Performance-Based Restricted Stock Units | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Non-vested, Shares, Granted | 776,096 |
Non-vested, Shares, Forfeited | (5,506) |
Non-vested, Shares, Ending balance | 770,590 |
Restricted Stock Units | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Non-vested, Shares, Granted | 3,509,980 |
Non-vested, Shares, Vested | (207,939) |
Non-vested, Shares, Forfeited | (51,139) |
Non-vested, Shares, Ending balance | 3,250,902 |
Non-vested, Shares, Expected to vest | 3,250,902 |
Non-vested, Weighted-Average Grant-Date Fair Value, Granted | $ / shares | $ 17.59 |
Non-vested, Weighted-Average Grant-Date Fair Value, Vested | $ / shares | 16.88 |
Non-vested, Weighted-Average Grant-Date Fair Value, Forfeited | $ / shares | 17.30 |
Non-vested, Weighted-Average Grant-Date Fair Value, Ending balance | $ / shares | 17.63 |
Non-vested, Weighted-Average Grant-Date Fair Value, Expected to vest | $ / shares | $ 17.63 |
Non-vested, Weighted-Average Remaining Contractual Term (years), Balance | 1 year 21 days |
Non-vested, Weighted-Average Remaining Contractual Term (years), Expected to vest | 1 year 21 days |
Non-vested, Aggregate Intrinsic Value, Balance | $ | $ 132,756 |
Non-vested, Aggregate Intrinsic Value, Expected to vest | $ | $ 132,756 |
Stockholder's Equity - Schedu_2
Stockholder's Equity - Schedule of Stock-based Compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Stock-based compensation | $ 17,425 | $ 7,828 | $ 32,954 | $ 21,195 |
Cost of Licensing | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Stock-based compensation | 6 | 14 | ||
Cost of Connected Services | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Stock-based compensation | 423 | 96 | 963 | 713 |
Cost of Professional Services | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Stock-based compensation | 1,718 | 225 | 3,022 | 733 |
Research and Development | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Stock-based compensation | 5,001 | 4,600 | 9,924 | 11,344 |
Sales and Marketing | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Stock-based compensation | 3,223 | 1,319 | 6,589 | 4,353 |
General and Administrative | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Stock-based compensation | $ 7,060 | $ 1,582 | $ 12,456 | $ 4,038 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) $ in Millions | 9 Months Ended |
Jun. 30, 2020USD ($) | |
Loss Contingencies [Line Items] | |
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 | $ 2.2 |
Other Facility | |
Loss Contingencies [Line Items] | |
Letter of credit as security deposit | $ 0.3 |
Income Taxes - Components of (L
Income Taxes - Components of (Loss) Income Before Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | ||||
Domestic | $ (37,807) | $ 6,434 | $ (42,875) | $ 85 |
Foreign | 7,157 | (3,323) | 9,242 | 6,253 |
(Loss) income before income taxes | $ (30,650) | $ 3,111 | $ (33,633) | $ 6,338 |
Income Taxes - Components of (B
Income Taxes - Components of (Benefit from) Provision for Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | ||||
Domestic | $ (6,076) | $ 1,819 | $ (6,867) | $ 5 |
Foreign | 3,607 | (478) | 682 | 1,854 |
(Benefit from) provision for income taxes | $ (2,469) | $ 1,341 | $ (6,185) | $ 1,859 |
Effective income tax rate | 8.10% | 43.10% | 18.40% | 29.30% |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Income Tax Disclosure [Line Items] | ||||
Effective income tax rate | 8.10% | 43.10% | 18.40% | 29.30% |
U.S. federal statutory rates | 21.00% | 21.00% | 21.00% | 21.00% |
Income tax expense (benefit) | $ (2,469) | $ 1,341 | $ (6,185) | $ 1,859 |
Netherlands | ||||
Income Tax Disclosure [Line Items] | ||||
Income tax expense (benefit) | $ (5,000) |
Long Term Debt - Schedule of Lo
Long Term Debt - Schedule of Long-term Debt (Details) $ in Thousands | Jun. 30, 2020USD ($) |
Debt Instrument [Line Items] | |
Total debt | $ 273,422 |
Less: current portion | (6,250) |
Total long-term debt | 267,172 |
3.00% Convertible Senior Notes Due 2025 | |
Debt Instrument [Line Items] | |
Total debt | 150,702 |
Total long-term debt | 150,702 |
Senior Credit Facilities | |
Debt Instrument [Line Items] | |
Total debt | 122,720 |
Less: current portion | (6,250) |
Total long-term debt | $ 116,470 |
Long Term Debt - Schedule of _2
Long Term Debt - Schedule of Long-term Debt (Parenthetical) (Details) - USD ($) $ in Thousands | Jun. 02, 2020 | Jun. 30, 2020 |
Debt Instrument [Line Items] | ||
Debt instrument, deferred issuance costs | $ 629 | |
Senior Credit Facilities | ||
Debt Instrument [Line Items] | ||
Debt Instrument, unamortized discount | 1,942 | |
Debt instrument, deferred issuance costs | $ 337 | |
Debt instrument, effective interest rate | 4.03% | |
3.00% Convertible Senior Notes Due 2025 | ||
Debt Instrument [Line Items] | ||
Debt instrument, interest rate | 3.00% | 3.00% |
Debt instrument, maturity date | Jun. 1, 2025 | Jun. 1, 2025 |
Debt Instrument, unamortized discount | $ 19,400 | |
Debt instrument, deferred issuance costs | $ 4,898 | |
Debt instrument, effective interest rate | 6.29% |
Long Term Debt - Summary of Mat
Long Term Debt - Summary of Maturities of Borrowing Obligations (Details) $ in Thousands | Jun. 30, 2020USD ($) |
Debt Instrument [Line Items] | |
2020 | $ 1,562 |
2021 | 6,250 |
2022 | 7,813 |
2023 | 12,500 |
2024 | 96,875 |
Thereafter | 175,000 |
Total before unamortized discount and issuance costs and current portion | 300,000 |
Less: unamortized discount and issuance costs | (26,578) |
Less: current portion of long-term debt | (6,250) |
Total long-term debt | 267,172 |
Senior Facilities | |
Debt Instrument [Line Items] | |
2020 | 1,562 |
2021 | 6,250 |
2022 | 7,813 |
2023 | 12,500 |
2024 | 96,875 |
Total before unamortized discount and issuance costs and current portion | 125,000 |
Less: unamortized discount and issuance costs | (2,280) |
Less: current portion of long-term debt | (6,250) |
Total long-term debt | 116,470 |
Convertible Senior Notes | |
Debt Instrument [Line Items] | |
Thereafter | 175,000 |
Total before unamortized discount and issuance costs and current portion | 175,000 |
Less: unamortized discount and issuance costs | (24,298) |
Total long-term debt | $ 150,702 |
Long Term Debt - Additional Inf
Long Term Debt - Additional Information (Details) | Jun. 12, 2020USD ($) | Jun. 02, 2020USD ($)d$ / sharesshares | Oct. 01, 2019USD ($) | Jun. 30, 2020USD ($) | Sep. 30, 2020USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2020USD ($) |
Debt Instrument [Line Items] | |||||||
Proceeds from issuance of notes | $ 547,719,000 | ||||||
Loss on debt extinguishment | $ 19,279,000 | ||||||
Senior Credit Facilities | |||||||
Debt Instrument [Line Items] | |||||||
Pledge equity interests in foreign subsidiaries | 65.00% | ||||||
Principal payments commencement date | Sep. 30, 2020 | ||||||
Debt Instrument, interest rate description | Interest accrues on outstanding borrowings under the Senior Facilities at a rate, at the option of the Borrower, of either (a) base rate determined by reference to the highest of (1) the rate of interest last quoted by The Wall Street Journal as the “prime rate” in the United States, (2) the federal funds effective rate, plus 0.5% and (3) the one month adjusted LIBOR rate, plus 1% per annum (“ABR”) or (b) an adjusted LIBOR rate (“LIBOR”) (which shall not be less than 0.50% per annum), in each case, plus an applicable margin. Initially, the applicable margin is LIBOR plus 3.00% or ABR plus 2.00%. Following delivery of a compliance certificate for the first full fiscal quarter after the Financing Closing Date, the applicable margins for the Senior Credit Facilities is subject to a pricing grid based upon the net total leverage ratio as follows (i) if the net total leverage ratio is greater than 3.00 to 1.00, the applicable margin is LIBOR plus 3.50% or ABR plus 2.50%; (ii) if the net total leverage ratio is less than or equal to 3.00 to 1.00 but greater than 2.50 to 1.00, the applicable margin is LIBOR plus 3.25% or ABR plus 2.25%; (iii) if the net total leverage ratio is less than or equal to 2.50 to 1.00 but greater than 2.00 to 1.00, the applicable margin is LIBOR plus 3.00% or ABR plus 2.00%; (iv) if the net total leverage ratio is less than or equal to 2.00 to 1.00 but greater than 1.50 to 1.00, the applicable margin is LIBOR plus 2.75% or ABR plus 1.75%; and (v) if the net total leverage ratio is less than or equal to 1.50 to 1.00, the applicable margin is LIBOR plus 2.50% or ABR plus 1.50%. | ||||||
Interest expense | $ 300,000 | $ 300,000 | |||||
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 commencing with the quarter ended September 30, 2020, (1) a net secured leveraged 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. | ||||||
Senior Credit Facilities | Scenario Forecast | |||||||
Debt Instrument [Line Items] | |||||||
Minimum liquidity | $ 75,000,000 | ||||||
Senior Credit Facilities | Federal Funds Effective Rate | |||||||
Debt Instrument [Line Items] | |||||||
Debt Instrument, basis spread on variable rate | 0.50% | ||||||
Senior Credit Facilities | One Month Adjusted LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Debt Instrument, basis spread on variable rate | 1.00% | ||||||
Senior Credit Facilities | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Debt Instrument, basis spread on variable rate | 3.00% | ||||||
Senior Credit Facilities | Base Rate | |||||||
Debt Instrument [Line Items] | |||||||
Debt Instrument, basis spread on variable rate | 2.00% | ||||||
Existing Facility | |||||||
Debt Instrument [Line Items] | |||||||
Interest expense | $ 4,400,000 | $ 18,000,000 | |||||
Prepayments of debt | $ 267,600,000 | ||||||
Extinguishment of debt, amount | 267,600,000 | ||||||
Loss on debt extinguishment | $ 19,300,000 | ||||||
Maximum | Senior Credit Facilities | Scenario Forecast | |||||||
Debt Instrument [Line Items] | |||||||
Net leverage ratio | 4.25 | ||||||
Net secured leverage ratio | 3.25% | ||||||
Maximum | Senior Credit Facilities | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Debt Instrument, adjusted LIBOR rate | 0.50% | ||||||
3.00% Convertible Senior Notes Due 2025 | |||||||
Debt Instrument [Line Items] | |||||||
Aggregate principal amount | $ 175,000,000 | ||||||
Debt instrument, interest rate | 3.00% | 3.00% | 3.00% | 3.00% | |||
Debt Instrument, option to purchase additional principal amount | $ 25,000,000 | ||||||
Proceeds from issuance of notes | $ 169,800,000 | ||||||
Debt instrument, maturity date | Jun. 1, 2025 | Jun. 1, 2025 | |||||
Debt instrument, convertible consecutive trading days | d | 30 | ||||||
Debt instrument, convertible principal amount | $ 1,000 | ||||||
Debt instrument, convertible maximum conversion price percentage | 98.00% | ||||||
Debt instrument, conversion initial rate | shares | 26.7271 | ||||||
Debt instrument, conversion price | $ / shares | $ 37.42 | ||||||
Debt instrument, redemption price percentage of principal amount | 100.00% | ||||||
Debt instrument, sinking fund | $ 0 | ||||||
Debt instrument, percentage of repurchase principal amount | 100.00% | ||||||
Carrying value of debt | $ 155,300,000 | ||||||
Additional paid-in capital in stockholder's equity | 19,700,000 | ||||||
Transaction costs | 5,600,000 | ||||||
Transaction costs amortized as interest expense | 5,000,000 | ||||||
Transaction costs allocated to equity component recorded as decrease in additional paid-in capital | $ 600,000 | ||||||
Convertible debt, estimated fair value | $ 233,700,000 | $ 233,700,000 | $ 233,700,000 | ||||
Convertible Debt, Fair Value by Fair Value Hierarchy Level [Extensible List] | us-gaap:FairValueInputsLevel2Member | us-gaap:FairValueInputsLevel2Member | us-gaap:FairValueInputsLevel2Member | ||||
Interest expense | $ 777,000 | $ 777,000 | |||||
3.00% Convertible Senior Notes Due 2025 | Minimum | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, convertible trading days | d | 20 | ||||||
Debt instrument, convertible conversion price percentage | 130.00% | ||||||
3.00% Convertible Senior Notes Due 2025 | Maximum | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument covenants, percentage of aggregate principal amount payable. | 25.00% | ||||||
Four-year Senior Secured Term Loan Facility | Senior Credit Facilities | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument term | 4 years | ||||||
Credit facility maximum borrowing capacity | $ 125,000,000 | ||||||
Net proceeds from issuance of credit facility | $ 123,000,000 | ||||||
Debt instrument, frequency of periodic principal payments | quarterly | ||||||
Debt instrument periodic payments equivalent percentage of annual amount on original principal amount during first two years | 5.00% | ||||||
Debt instrument periodic payments equivalent percentage of annual amount on original principal amount after two years | 10.00% | ||||||
Senior Secured First-lien Revolving Credit Facility | Senior Credit Facilities | |||||||
Debt Instrument [Line Items] | |||||||
Credit facility maximum borrowing capacity | $ 50,000,000 | ||||||
Outstanding amount under credit facility | $ 0 | $ 0 | $ 0 | ||||
Net Leverage Ratio Greater Than 3.00 | Senior Credit Facilities | |||||||
Debt Instrument [Line Items] | |||||||
Net leverage ratio | 3 | ||||||
Net Leverage Ratio Greater Than 3.00 | Senior Credit Facilities | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Debt Instrument, basis spread on variable rate | 3.50% | ||||||
Net Leverage Ratio Greater Than 3.00 | Senior Credit Facilities | Base Rate | |||||||
Debt Instrument [Line Items] | |||||||
Debt Instrument, basis spread on variable rate | 2.50% | ||||||
Net Leverage Ratio Less Than or Equal to 3.00 but Greater Than 2.50 | Senior Credit Facilities | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Debt Instrument, basis spread on variable rate | 3.25% | ||||||
Net Leverage Ratio Less Than or Equal to 3.00 but Greater Than 2.50 | Senior Credit Facilities | Base Rate | |||||||
Debt Instrument [Line Items] | |||||||
Debt Instrument, basis spread on variable rate | 2.25% | ||||||
Net Leverage Ratio Less Than or Equal to 3.00 but Greater Than 2.50 | Minimum | Senior Credit Facilities | |||||||
Debt Instrument [Line Items] | |||||||
Net leverage ratio | 2.50 | ||||||
Net Leverage Ratio Less Than or Equal to 3.00 but Greater Than 2.50 | Maximum | Senior Credit Facilities | |||||||
Debt Instrument [Line Items] | |||||||
Net leverage ratio | 3 | ||||||
Net Leverage Ratio Less Than or Equal to 2.50 but Greater Than 2.00 | Senior Credit Facilities | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Debt Instrument, basis spread on variable rate | 3.00% | ||||||
Net Leverage Ratio Less Than or Equal to 2.50 but Greater Than 2.00 | Senior Credit Facilities | Base Rate | |||||||
Debt Instrument [Line Items] | |||||||
Debt Instrument, basis spread on variable rate | 2.00% | ||||||
Net Leverage Ratio Less Than or Equal to 2.50 but Greater Than 2.00 | Minimum | Senior Credit Facilities | |||||||
Debt Instrument [Line Items] | |||||||
Net leverage ratio | 2 | ||||||
Net Leverage Ratio Less Than or Equal to 2.50 but Greater Than 2.00 | Maximum | Senior Credit Facilities | |||||||
Debt Instrument [Line Items] | |||||||
Net leverage ratio | 2.50 | ||||||
Net Leverage Ratio Less Than or Equal to 2.00 but Greater Than 1.50 | Senior Credit Facilities | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Debt Instrument, basis spread on variable rate | 2.75% | ||||||
Net Leverage Ratio Less Than or Equal to 2.00 but Greater Than 1.50 | Senior Credit Facilities | Base Rate | |||||||
Debt Instrument [Line Items] | |||||||
Debt Instrument, basis spread on variable rate | 1.75% | ||||||
Net Leverage Ratio Less Than or Equal to 2.00 but Greater Than 1.50 | Minimum | Senior Credit Facilities | |||||||
Debt Instrument [Line Items] | |||||||
Net leverage ratio | 1.50 | ||||||
Net Leverage Ratio Less Than or Equal to 2.00 but Greater Than 1.50 | Maximum | Senior Credit Facilities | |||||||
Debt Instrument [Line Items] | |||||||
Net leverage ratio | 2 | ||||||
Net Leverage Ratio Less Than or Equal to 1.50 | Senior Credit Facilities | |||||||
Debt Instrument [Line Items] | |||||||
Net leverage ratio | 1.50 | ||||||
Net Leverage Ratio Less Than or Equal to 1.50 | Senior Credit Facilities | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Debt Instrument, basis spread on variable rate | 2.50% | ||||||
Net Leverage Ratio Less Than or Equal to 1.50 | Senior Credit Facilities | Base Rate | |||||||
Debt Instrument [Line Items] | |||||||
Debt Instrument, basis spread on variable rate | 1.50% | ||||||
Five-year Senior Secured Term Loan Facility | Existing Facility | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument term | 5 years | ||||||
Credit facility maximum borrowing capacity | $ 270,000,000 | ||||||
Net proceeds from issuance of credit facility | 249,700,000 | ||||||
Credit facility maximum borrowing capacity for cash distribution/cash flow needs | 110,000,000 | ||||||
Five-year Senior Secured Term Loan Facility | Existing Facility | Nuance Communications | |||||||
Debt Instrument [Line Items] | |||||||
Credit facility maximum borrowing capacity for cash distribution/cash flow needs | $ 153,000,000 | ||||||
54-month Senior Secured First-lien Revolving Credit Facility | Existing Facility | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument term | 54 months | ||||||
Credit facility maximum borrowing capacity | $ 75,000,000 |
Long Term Debt - Schedule of In
Long Term Debt - Schedule of Interest Expense Related to Notes (Details) - 3.00% Convertible Senior Notes Due 2025 - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Jun. 30, 2020 | Jun. 30, 2020 | |
Debt Instrument [Line Items] | ||
Contractual interest expense | $ 431 | $ 431 |
Amortization of debt discount | 276 | 276 |
Amortization of issuance costs | 70 | 70 |
Total interest expense related to the Notes | $ 777 | $ 777 |