Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Dec. 31, 2020 | Feb. 02, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Dec. 31, 2020 | |
Document Transition Report | false | |
Entity File Number | 0-18059 | |
Entity Registrant Name | PTC Inc. | |
Entity Incorporation, State or Country Code | MA | |
Entity Tax Identification Number | 04-2866152 | |
Entity Address, Address Line One | 121 Seaport Boulevard | |
Entity Address, City or Town | Boston | |
Entity Address, State or Province | MA | |
Entity Address, Postal Zip Code | 02210 | |
City Area Code | 781 | |
Local Phone Number | 370-5000 | |
Title of 12(b) Security | Common Stock, $.01 par value per share | |
Trading Symbol | PTC | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 116,810,418 | |
Amendment Flag | false | |
Entity Central Index Key | 0000857005 | |
Current Fiscal Year End Date | --09-30 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q1 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2020 | Sep. 30, 2020 |
ASSETS | ||
Cash and cash equivalents | $ 398,697 | $ 275,458 |
Short-term marketable securities | 0 | 28,129 |
Accounts receivable, net of allowance for doubtful accounts of $519 and $543 at December 31, 2020 and September 30, 2020, respectively | 415,835 | 415,221 |
Prepaid expenses | 72,877 | 69,408 |
Other current assets | 48,795 | 45,231 |
Total current assets | 936,204 | 833,447 |
Property and equipment, net | 98,278 | 101,499 |
Goodwill | 1,635,281 | 1,625,786 |
Acquired intangible assets, net | 225,896 | 237,570 |
Long-term marketable securities | 0 | 30,970 |
Deferred tax assets | 186,536 | 190,963 |
Operating right-of-use lease assets | 145,252 | 149,933 |
Other assets | 221,441 | 212,570 |
Total assets | 3,448,888 | 3,382,738 |
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||
Accounts payable | 30,015 | 24,910 |
Accrued expenses and other current liabilities | 123,197 | 96,313 |
Accrued compensation and benefits | 94,389 | 101,087 |
Accrued income taxes | 9,808 | 7,011 |
Deferred revenue | 424,701 | 416,804 |
Short-term lease obligations | 30,128 | 34,635 |
Total current liabilities | 712,238 | 680,760 |
Long-term debt | 987,857 | 1,005,314 |
Deferred tax liabilities | 11,852 | 12,431 |
Deferred revenue | 9,354 | 9,661 |
Long-term lease obligations | 176,318 | 180,388 |
Other liabilities | 56,340 | 55,936 |
Total liabilities | 1,953,959 | 1,944,490 |
Commitments and contingencies (Note 15) | ||
Stockholders’ equity: | ||
Preferred stock, $0.01 par value; 5,000 shares authorized; none issued | 0 | 0 |
Common stock, $0.01 par value; 500,000 shares authorized; 116,664 and 116,125 shares issued and outstanding at December 31, 2020 and September 30, 2020, respectively | 1,167 | 1,161 |
Additional paid-in capital | 1,623,379 | 1,602,728 |
Accumulated deficit | (38,752) | (62,267) |
Accumulated other comprehensive loss | (90,865) | (103,374) |
Total stockholders’ equity | 1,494,929 | 1,438,248 |
Total liabilities and stockholders’ equity | $ 3,448,888 | $ 3,382,738 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands | Dec. 31, 2020 | Sep. 30, 2020 |
Current assets: | ||
Allowance for doubtful accounts | $ 519 | $ 543 |
Stockholders’ equity: | ||
Preferred stock, par value (in USD per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value (in USD per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 116,664,000 | 116,125,000 |
Common stock, shares outstanding | 116,664,000 | 116,125,000 |
Consolidated Statements Of Oper
Consolidated Statements Of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Dec. 31, 2020 | Dec. 28, 2019 | |
Revenue: | ||
Revenue | $ 429,050 | $ 356,110 |
Cost of revenue: | ||
Cost of revenue | 86,830 | 87,405 |
Gross margin | 342,220 | 268,705 |
Operating expenses: | ||
Sales and marketing | 124,725 | 107,604 |
Research and development | 70,835 | 65,308 |
General and administrative | 49,528 | 44,557 |
Amortization of acquired intangible assets | 6,547 | 6,777 |
Restructuring and other charges, net | 247 | 14,034 |
Total operating expenses | 251,882 | 238,280 |
Operating income | 90,338 | 30,425 |
Interest expense | (11,518) | (12,098) |
Other income (expense), net | (1,413) | 704 |
Income before income taxes | 77,407 | 19,031 |
Provision (benefit) for income taxes | 53,892 | (16,424) |
Net income | $ 23,515 | $ 35,455 |
Earnings per share—Basic | $ 0.20 | $ 0.31 |
Earnings per share—Diluted | $ 0.20 | $ 0.31 |
Weighted-average shares outstanding—Basic | 116,401 | 115,190 |
Weighted-average shares outstanding—Diluted | 117,605 | 115,691 |
License | ||
Revenue: | ||
Revenue | $ 177,175 | $ 123,430 |
Cost of revenue: | ||
Cost of revenue | 13,256 | 13,173 |
Support and cloud services | ||
Revenue: | ||
Revenue | 216,245 | 190,936 |
Cost of revenue: | ||
Cost of revenue | 38,342 | 38,928 |
Software | ||
Revenue: | ||
Revenue | 393,420 | 314,366 |
Cost of revenue: | ||
Cost of revenue | 51,598 | 52,101 |
Professional services | ||
Revenue: | ||
Revenue | 35,630 | 41,744 |
Cost of revenue: | ||
Cost of revenue | $ 35,232 | $ 35,304 |
Consolidated Statements Of Comp
Consolidated Statements Of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2020 | Dec. 28, 2019 | |
Statement Of Income And Comprehensive Income [Abstract] | ||
Net income | $ 23,515 | $ 35,455 |
Other comprehensive income, net of tax: | ||
Hedge loss arising during the period, net of tax benefit of $0 million and $1.1 million in the first quarter of 2021 and 2020, respectively | (6,779) | (3,343) |
Foreign currency translation adjustment, net of tax of $0 for each period | 19,975 | 10,147 |
Unrealized loss on marketable securities, net of tax of $0 for each period | (307) | (7) |
Amortization of net actuarial pension loss included in net income, net of tax of $0.3 million and $0.3 million in the first quarter of 2021 and 2020, respectively | 732 | 674 |
Change in unamortized pension loss during the period related to changes in foreign currency | (1,112) | (622) |
Other comprehensive income | 12,509 | 6,849 |
Comprehensive income | $ 36,024 | $ 42,304 |
Consolidated Statements Of Co_2
Consolidated Statements Of Comprehensive Income (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 31, 2020 | Dec. 28, 2019 | |
Statement Of Income And Comprehensive Income [Abstract] | ||
Hedge loss arising during the period, net of tax benefit | $ 0 | $ 1.1 |
Foreign currency translation adjustment, net of tax | 0 | 0 |
Unrealized loss on marketable securities, net of tax | 0 | 0 |
Amortization of net actuarial pension loss included in net income, tax | $ 0.3 | $ 0.3 |
Consolidated Statements Of Cash
Consolidated Statements Of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2020 | Dec. 28, 2019 | |
Cash flows from operating activities: | ||
Net income | $ 23,515 | $ 35,455 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 18,835 | 19,588 |
Amortization of right-of-use lease assets | 9,391 | 8,757 |
Stock-based compensation | 46,088 | 27,936 |
Other non-cash items, net | (331) | (1,223) |
Changes in operating assets and liabilities, excluding the effects of acquisitions: | ||
Accounts receivable | 10,315 | 34,314 |
Accounts payable and accrued expenses | 12,381 | (11,959) |
Accrued compensation and benefits | (9,252) | (3,563) |
Deferred revenue | (851) | (34,952) |
Accrued income taxes | 44,537 | (42,702) |
Other current assets and prepaid expenses | 4,288 | (1,974) |
Operating lease liabilities | (9,501) | (393) |
Other noncurrent assets and liabilities | (35,653) | (21,772) |
Net cash provided by operating activities | 113,762 | 7,512 |
Cash flows from investing activities: | ||
Additions to property and equipment | (2,857) | (4,707) |
Purchases of short- and long-term marketable securities | (7,562) | (5,592) |
Proceeds from sales of short- and long-term marketable securities | 56,170 | 0 |
Proceeds from maturities of short- and long-term marketable securities | 9,861 | 5,499 |
Acquisitions of businesses, net of cash acquired | 0 | (467,749) |
Purchases of investments | (1,000) | 0 |
Purchase of intangible assets | (550) | 0 |
Settlement of net investment hedges | (7,359) | (870) |
Net cash provided by (used in) investing activities | 46,703 | (473,419) |
Cash flows from financing activities: | ||
Borrowings under credit facility | 0 | 455,000 |
Repayments of borrowings under credit facility | (18,000) | 0 |
Debt issuance costs | 0 | (1,005) |
Payments of withholding taxes in connection with stock-based awards | (24,500) | (22,849) |
Payments on principal for financing leases | (279) | 0 |
Net cash provided by (used in) financing activities | (42,779) | 431,146 |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 5,553 | 1,991 |
Net change in cash, cash equivalents, and restricted cash | 123,239 | (32,770) |
Cash, cash equivalents, and restricted cash, beginning of period | 275,960 | 270,689 |
Cash, cash equivalents, and restricted cash, end of period | 399,199 | 237,919 |
Supplemental disclosure of non-cash financing activities: | ||
Withholding taxes in connection with stock-based awards, accrued | $ (931) | $ 0 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholder's Equity - USD ($) shares in Thousands, $ in Thousands | Total | Cumulative Effect Period of Adoption Adjustment | Net Investment Hedging | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated DeficitCumulative Effect Period of Adoption Adjustment | Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive LossNet Investment Hedging |
Beginning balance at Sep. 30, 2019 | $ 1,201,998 | $ (1,572) | $ 1,149 | $ 1,502,949 | $ (191,390) | $ (1,572) | $ (110,710) | ||
Beginning balance (in shares) at Sep. 30, 2019 | 114,899 | ||||||||
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate201602Member | us-gaap:AccountingStandardsUpdate201602Member | |||||||
Common stock issued for employee stock-based awards | $ 9 | (9) | |||||||
Common stock issued for employee stock-based awards (in shares) | 903 | ||||||||
Shares surrendered by employees to pay taxes related to stock-based awards | (22,849) | $ (3) | (22,846) | ||||||
Shares surrendered by employees to pay taxes related to stock-based awards (in shares) | (308) | ||||||||
Compensation expense from stock-based awards | 27,936 | 27,936 | |||||||
Net income | 35,455 | 35,455 | |||||||
Unrealized loss on net investment hedges, net of tax | $ (3,343) | $ (3,343) | |||||||
Foreign currency translation adjustment | 10,147 | 10,147 | |||||||
Unrealized loss on available-for-sale securities, net of tax | (7) | (7) | |||||||
Change in pension benefits, net of tax | 52 | 52 | |||||||
Ending balance at Dec. 28, 2019 | 1,247,817 | $ 1,155 | 1,508,030 | (157,507) | (103,861) | ||||
Ending balance (in shares) at Dec. 28, 2019 | 115,494 | ||||||||
Beginning balance at Sep. 30, 2020 | $ 1,438,248 | $ 1,161 | 1,602,728 | (62,267) | (103,374) | ||||
Beginning balance (in shares) at Sep. 30, 2020 | 116,125 | 116,125 | |||||||
Common stock issued for employee stock-based awards | $ 8 | (8) | |||||||
Common stock issued for employee stock-based awards (in shares) | 802 | ||||||||
Shares surrendered by employees to pay taxes related to stock-based awards | $ (25,431) | $ (2) | (25,429) | ||||||
Shares surrendered by employees to pay taxes related to stock-based awards (in shares) | (263) | ||||||||
Compensation expense from stock-based awards | 46,088 | 46,088 | |||||||
Net income | 23,515 | 23,515 | |||||||
Unrealized loss on net investment hedges, net of tax | $ (6,779) | $ (6,779) | |||||||
Foreign currency translation adjustment | 19,975 | 19,975 | |||||||
Unrealized loss on available-for-sale securities, net of tax | (307) | (307) | |||||||
Change in pension benefits, net of tax | (380) | (380) | |||||||
Ending balance at Dec. 31, 2020 | $ 1,494,929 | $ 1,167 | $ 1,623,379 | $ (38,752) | $ (90,865) | ||||
Ending balance (in shares) at Dec. 31, 2020 | 116,664 | 116,664 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Dec. 31, 2020 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Basis of Presentation | 1. Basis of Presentation General The accompanying unaudited condensed consolidated financial statements include the accounts of PTC Inc. and its wholly owned subsidiaries and have been prepared by management in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) and in accordance with the rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. While we believe that the disclosures presented are adequate in order to make the information not misleading, these unaudited quarterly financial statements should be read in conjunction with our annual consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2020. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting only of those of a normal recurring nature, necessary for a fair statement of our financial position, results of operations and cash flows at the dates and for the periods indicated. The September 30, 2020 Consolidated Balance Sheet included herein is derived from our audited consolidated financial statements. Unless otherwise indicated, all references to a year mean our fiscal year, which ends on September 30. In the first quarter of 2021, we changed our fiscal calendar from thirteen-week quarters ending on a Saturday to three-month quarters ending on the last calendar day of the third month. There was no change to our fiscal year-end. We do not expect that this change will materially impact comparability of our financial results for fiscal years 2021 and 2020. Because our fiscal year-end did not change, we were not required to file a transition report. Risks and Uncertainties - COVID-19 Pandemic In December 2019, the virus that causes COVID-19 surfaced. The virus has spread worldwide, including the United States, and has been declared a pandemic by the World Health Organization. The COVID-19 pandemic has significantly impacted global economic activity and has created macroeconomic uncertainty. We assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to us and the unknown future impacts of COVID-19 as of December 31, 2020 and through the date of this report. The accounting matters assessed included, but were not limited to, our allowance for doubtful accounts, stock-based compensation, the carrying value of our goodwill and other long-lived assets, financial assets, valuation allowances for tax assets and revenue recognition. While our assessment did not result in a material impact to our consolidated financial statements as of and for the quarter ended December 31, 2020, our future assessment could result in material impacts to our consolidated financial statements in future reporting periods. Recently Adopted Accounting Pronouncements Intangibles—Goodwill and Other—Internal-Use Software In August 2018, the FASB issued Accounting Standards Update (ASU) 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract, which aligns the requirements for capitalizing implementation costs in cloud computing arrangements with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. We adopted the new standard prospectively effective October 1, 2020. As a result of the adoption, we are required to capitalize certain costs related to the implementation of cloud computing arrangements. Capitalized costs related to cloud computing arrangements for the three months ended December 31, 2020, which are included in other current assets on the Consolidated Balance Sheets, were not material. Financial Instruments — In June 2016, the FASB issued ASU 2016-13, Financial Instruments — We adopted the new standard effective October 1, 2020, with no impact on our Pending Accounting Pronouncements Reference Rate Reform In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The ASU provides optional guidance for contract modifications and certain hedging relationships associated with the transition from reference rates that are expected to be discontinued. ASU 2020-04 is effective for all entities upon issuance through December 31, 2022. We are still evaluating the impact, but do not expect the standard to have a material impact on our consolidated financial statements. Income Taxes In December 2019, the FASB issued Accounting Standards Update ASU 2019-12, Income Taxes (Topic 740) on Simplifying the Accounting for Income Taxes. The decisions reflected in ASU 2019-12 update specific areas of ASC 740, Income Taxes |
Revenue from Contracts with Cus
Revenue from Contracts with Customers | 3 Months Ended |
Dec. 31, 2020 | |
Revenue From Contract With Customer [Abstract] | |
Revenue from Contracts with Customers | 2. Revenue from Contracts with Customers Contract Assets and Contract Liabilities (in thousands) December 31, 2020 September 30, 2020 Contract asset $ 12,016 $ 11,984 Deferred revenue $ 434,055 $ 426,465 As of December 31, 2020, $7.0 million of our contract assets are expected to be transferred to receivables within the next 12 months and therefore are included in other current assets. The remainder is included in other long-term assets and expected to be transferred within the next 24 months. Approximately $5.3 million of the September 30, 2020 contract asset balance was transferred to receivables during the three months ended December 31, 2020 as a result of the right to payment becoming unconditional. Additions to contract assets of approximately $5.3 million related to revenue recognized in the period, net of billings. The majority of the contract asset balance relates to two large professional services contracts with invoicing terms based on performance milestones. There were no impairments of contract assets during the three months ended December 31, 2020. During the three months ended December 31, 2020, we recognized $193.4 million of revenue that was included in deferred revenue as of September 30, 2020 and there were additional deferrals of $201.0 million, primarily related to new billings. For subscription contracts, we generally invoice customers annually. The balance of total short- and long-term receivables as of December 31, 2020 was $529.9 million, compared to total short- and long-term receivables as of September 30, 2020 of $511.3 million. Our multi-year, non-cancellable on-premises subscription contracts provide customers with an annual right to exchange software within the subscription with other software. Although the exchange right is limited to software products within a similar product grouping, the exchange right is not limited to products with substantially similar features and functionality as those originally delivered. We determined that this right to exchange previously delivered software for different software represents variable consideration to be accounted for as a liability. We have identified a standard portfolio of contracts with common characteristics and applied the expected value method of determining variable consideration associated with this right. Additionally, where there are isolated situations that are outside of the standard portfolio of contracts due to contract size, longer contract duration, or other unique contractual terms, we use the most likely amount method to determine the amount of variable consideration. In both circumstances, the variable consideration included in the transaction price is constrained to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. As of December 31, 2020 and September 30, 2020, the total refund liability was $37.7 million and $34.5 million, respectively, primarily associated with the annual right to exchange on-premises subscription software. We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. Effective October 1, 2020, we adopted ASC 326, Financial Instruments—Credit Losses, which replaces the incurred loss impairment model with an expected loss model that requires the use of forward-looking information to calculate credit loss estimates. In determining the adequacy of the allowance for doubtful accounts, management specifically analyzes individual accounts receivable, historical bad debts, customer concentrations, customer credit-worthiness, current economic conditions, and accounts receivable aging trends. Our allowance for doubtful accounts on trade accounts receivable was $0.5 million as of December 31, 2020 and September 30, 2020. Uncollectible trade accounts receivable written-off and bad debt expense were immaterial in the first quarter of 2021. Costs to Obtain or Fulfill a Contract We recognize an asset for the incremental costs of obtaining a contract with a customer if the benefit of those costs is expected to be longer than one year. These deferred costs (primarily commissions) are amortized proportionately related to revenue over five years, which is generally longer than the term of the initial contract because of anticipated renewals as commissions for renewals are not commensurate with commissions related to our initial contracts. As of December 31, 2020 and September 30, 2020, deferred costs of $36.7 million and $33.9 million, respectively, were included in other current assets and $74.7 million and $72.9 million, respectively, were included in other assets (non-current). Amortization expense related to costs to obtain a contract with a customer was $10.4 million and $7.7 million in the three months ended December 31, 2020 and December 28, 2019, respectively. There were no impairments of the contract cost asset in the three months ended December 31, 2020 and December 28, 2019. Remaining Performance Obligations Our contracts with customers include amounts allocated to performance obligations that will be satisfied at a later date. As of December 31, 2020, the amounts include additional performance obligations of $434.1 million recorded in deferred revenue and $941.4 million that are not yet recorded in the Consolidated Balance Sheets. We expect to recognize approximately 85% of the total $1,375.5 million over the next 24 months, with the remaining amount thereafter. Certain of our multi-year subscription contracts with start dates on or after October 1, 2018 contain a limited annual cancellation right. For such cancellable subscription contracts, we consider each annual period a discrete contract. Early in the fourth quarter of 2019, we discontinued offering the cancellation right for substantially all new contracts. Remaining performance obligations do not include the cancellable value for subscriptions which contain this clause. Disaggregation of Revenue (in thousands) Three months ended December 31, 2020 December 28, 2019 Recurring revenue $ 384,957 $ 305,368 Perpetual license 8,463 8,998 Professional services 35,630 41,744 Total revenue $ 429,050 $ 356,110 For further disaggregation of revenue by geographic region and product group see Note 11. Segment and Geographic Information |
Restructuring and Other Charges
Restructuring and Other Charges | 3 Months Ended |
Dec. 31, 2020 | |
Restructuring And Related Activities [Abstract] | |
Restructuring and Other Charges | 3. Restructuring and Other Charges Restructuring and other charges, net includes restructuring charges (credits), headquarters relocation charges, and impairment and accretion expense charges related to the lease assets of exited facilities. Refer to Note 14. Leases For the three months ended December 31, 2020, restructuring and other charges, net totaled $0.2 million, of which $0.1 million is attributable to restructuring charges and $0.1 million is related to exited facilities. For the three months ended December 28, 2019, restructuring and other charges, net totaled $14.0 million, of which $13.8 million is attributable to restructuring charges and $0.2 million is related to headquarters relocation charges. Restructuring Charges During the first quarter of 2020, we initiated a restructuring program as part of a realignment associated with expected synergies and operational efficiencies related to the Onshape acquisition. The restructuring plan resulted in charges of $30.8 million through fiscal year 2020 for termination benefits associated with approximately 250 employees. During the three months ended December 31, 2020, we incurred charges of $0.2 million in connection with this restructuring plan. The following table summarizes restructuring accrual activity for the three months ended December 31, 2020: (in thousands) Employee severance and related benefits Facility closures and related costs Total October 1, 2020 $ 3,992 $ 5,995 $ 9,987 Charges to operations, net 160 (29 ) 131 Cash disbursements (2,733 ) (687 ) (3,420 ) Foreign exchange impact 42 12 54 Accrual, December 31, 2020 $ 1,461 $ 5,291 $ 6,752 The following table summarizes restructuring accrual activity for the three months ended December 28, 2019: (in thousands) Employee severance and related benefits Facility closures and related costs Total October 1, 2019 $ 298 $ 30,788 $ 31,086 ASC 842 adoption — (16,462 ) (16,462 ) Charges to operations, net 13,631 127 13,758 Cash disbursements (58 ) (873 ) (931 ) Foreign exchange impact 156 (1 ) 155 Accrual, December 28, 2019 $ 14,027 $ 13,579 $ 27,606 The accrual for employee severance and related benefits is included in accrued compensation and benefits in the Consolidated Balance Sheets. Of the accrual for facility closures and related costs, as of December 31, 2020, $2.7 million is included in accrued expenses and other current liabilities and $2.6 million is included in other liabilities in the Consolidated Balance Sheets. |
Stock-based Compensation
Stock-based Compensation | 3 Months Ended |
Dec. 31, 2020 | |
Share Based Compensation Allocation And Classification In Financial Statements [Abstract] | |
Stock-Based Compensation | 4. Stock-based Compensation Our equity incentive plan provides for grants of nonqualified and incentive stock options, common stock, restricted stock, restricted stock units (RSUs) and stock appreciation rights to employees, directors, officers and consultants. We award RSUs as our principal equity incentive awards, including performance-based awards that are earned based on achievement of performance criteria established by the Compensation Committee of our Board of Directors. Each RSU represents the contingent right to receive one share of our common stock. For performance-based awards, we recognize stock-based compensation based on expected achievement of performance criteria. We measure the cost of employee services received in exchange for RSU awards based on the fair value of the RSU awards on the date of grant. That cost is recognized over the period during which an employee is required to provide service in exchange for the award. We account for forfeitures as they occur, rather than estimate expected forfeitures. Our employee stock purchase plan (ESPP) allows eligible employees to contribute up to 10% of their base salary, up to a maximum of $25,000 per year and subject to other plan limitations, toward the purchase of our common stock at a discounted price. The purchase price of the shares on each purchase date is equal to 85% of the lower of the fair market value of our common stock on the first and last trading days of each offering period. The ESPP is qualified under Section 423 of the Internal Revenue Code. We estimate the fair value of each purchase right under the ESPP on the date of grant using the Black-Scholes option valuation model and use the straight-line attribution approach to record the expense over the six-month offering period. The following table shows restricted stock unit activity for the three months ended December 31, 2020: (in thousands, except grant date fair value data) Number of RSUs Weighted-Average Grant Date Fair Value Per RSU Balance of outstanding restricted stock units, October 1, 2020 3,509 $ 79.13 Granted (1) 925 $ 100.20 Vested (801 ) $ 79.41 Forfeited or not earned (36 ) $ 78.79 Balance of outstanding restricted stock units, December 31, 2020 3,597 $ 84.61 (1) Restricted stock granted includes 33,000 shares from prior period TSR awards that were earned upon achievement of the performance criteria and vested in November 2020. (in thousands) Restricted Stock Units Grant Period Performance- based RSUs (1) Service-based RSUs (2) Total Shareholder Return RSUs (3) First three months of 2021 90 712 90 (1) The performance-based RSUs were granted to our executives and are eligible to vest based upon annual increasing performance measures over a three-year (2) The service-based RSUs were granted to employees, including our executive officers. Substantially all service-based RSUs will vest in three substantially equal annual installments on or about the anniversary of the date of grant. (3) The Total Shareholder Return RSUs (TSR RSUs) were granted to our executives pursuant to the terms described below. The number of TSR RSUs that vest over the three-year The weighted-average fair value of the TSR RSUs was $124.04 per target RSU on the grant date. The fair value of the TSR RSUs was determined using a Monte Carlo simulation model, a generally accepted statistical technique used to simulate a range of possible future stock prices for PTC and the peer group. The method uses a risk-neutral framework to model future stock price movements based upon the risk-free rate of return, the historical volatility of each entity, and the pairwise correlations of each entity being modeled. The fair value for each simulation is the product of the payout percentage determined by PTC’s TSR rank against the peer group, the projected price of PTC stock, and a discount factor based on the risk-free rate. The significant assumptions used in the Monte Carlo simulation model were as follows: Average volatility of peer group 41.5 % Risk free interest rate 0.21 % Dividend yield — % Compensation expense recorded for our stock-based awards is classified in our Consolidated Statements of Operations as follows: (in thousands) Three months ended December 31, 2020 December 28, 2019 Cost of license revenue $ 20 $ — Cost of support and cloud services revenue 2,302 1,486 Cost of professional services revenue 2,112 1,557 Sales and marketing 14,999 7,452 Research and development 8,443 6,932 General and administrative 18,212 10,509 Total stock-based compensation expense $ 46,088 $ 27,936 Stock-based compensation expense includes $1.9 million in the first quarter of 2021 and $1.5 million in the first quarter of 2020 related to the ESPP. |
Earnings per Share (EPS) and Co
Earnings per Share (EPS) and Common Stock | 3 Months Ended |
Dec. 31, 2020 | |
Earnings Per Share And Common Stock [Abstract] | |
Earnings per Share (EPS) and Common Stock | 5. Earnings per Share (EPS) and Common Stock EPS Basic EPS is calculated by dividing net income by the weighted-average number of shares outstanding during the period. Diluted EPS is calculated by dividing net income by the weighted-average number of shares outstanding plus the dilutive effect, if any, of outstanding RSUs using the treasury stock method. The calculation of the dilutive effect of outstanding equity awards under the treasury stock method includes consideration of unrecognized compensation expense as additional proceeds. The following table presents the calculation for both basic and diluted EPS: (in thousands, except per share data) Three months ended December 31, 2020 December 28, 2019 Net income $ 23,515 $ 35,455 Weighted-average shares outstanding—Basic 116,401 115,190 Dilutive effect of restricted stock units 1,204 501 Weighted-average shares outstanding—Diluted 117,605 115,691 Earnings per share—Basic $ 0.20 $ 0.31 Earnings per share—Diluted $ 0.20 $ 0.31 There were 0.1 million anti-dilutive shares for the three months ended December 31, 2020. There were 1.3 million anti-dilutive shares for the three months ended December 28, 2019. Common Stock Repurchases Our Articles of Organization authorize us to issue up to 500 million shares of our common stock. Our Board of Directors has authorized us to repurchase up to $1 billion of our common stock in the period October 1, 2020 through September 30, 2023. We did not repurchase any shares in the first quarter of 2021 or the first quarter of 2020. All shares of our common stock repurchased are automatically restored to the status of authorized and unissued. |
Acquisitions
Acquisitions | 3 Months Ended |
Dec. 31, 2020 | |
Business Combinations [Abstract] | |
Acquisitions | 6. Acquisitions Acquisition-related costs in the first quarter of 2021 totaled $3.9 million, compared to $7.1 million in the first quarter of 2020. These costs are classified in general and administrative expenses in the accompanying Consolidated Statements of Operations. Acquisition-related costs include direct costs of potential and completed acquisitions (e.g., investment banker fees and professional fees, including legal and valuation services) and expenses related to acquisition integration activities (e.g., professional fees and severance). In addition, subsequent adjustments to our initial estimated amount of contingent consideration associated with specific acquisitions are included within acquisition-related charges. Our results of operations include the results of acquired businesses beginning on their respective acquisition date. Our results of operations for the reported periods, if presented on a pro forma basis, would not differ materially from our reported results. Onshape On November 1, 2019, we completed our acquisition of Onshape Inc. pursuant to the Agreement and Plan of Merger dated as of October 23, 2019 by and among Onshape Inc., OPAL Acquisition Corporation and the Stockholder Representative named therein, the material terms of which are described in the Form 8-K filed by PTC on October 23, 2019 and which is filed as Exhibit 1.1 to that Form 8-K. PTC paid approximately $469 million, net of cash acquired of $7.5 million, for Onshape, which amount we borrowed under our existing credit facility. The acquisition of Onshape did not add material revenue in 2020. The acquisition of Onshape has been accounted for as a business combination. Assets acquired and liabilities assumed have been recorded at their estimated fair values as of the acquisition date. The fair values of intangible assets were based on valuations using a discounted cash flow model which requires the use of significant estimates and assumptions, including estimating future revenues and costs. The excess of the purchase price over the tangible assets, identifiable intangible assets and assumed liabilities was recorded as goodwill. The purchase price allocation resulted in $364.9 million of goodwill, $56.8 million of customer relationships, $47.3 million of purchased software, $3.6 million of trademarks and $4.1 million of other net liabilities. The acquired customer relationships, purchased software, and trademarks are being amortized over useful lives of 10 years, 16 years, and 15 years, respectively, based on the expected benefit pattern of the assets. The acquired goodwill was allocated to our software products segment and will not be deductible for income tax purposes. The resulting amount of goodwill reflects the expected value that will be created by the expected acceleration of CAD and PLM growth, especially in the low end of the market, and participation in expected future growth of the CAD and PLM SaaS market. In addition, over the longer term, we anticipate building products based on the Onshape SaaS technology platform, which is the basis for Atlas. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Dec. 31, 2020 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | 7. Goodwill and Intangible Assets We have two operating and reportable segments: (1) Software Products and (2) Professional Services. We assess goodwill for impairment at the reporting unit level. Our reporting units are determined based on the components of our operating segments that constitute a business for which discrete financial information is available and for which operating results are regularly reviewed by segment management. Our reporting units are the same as our operating segments. As of December 31, 2020, goodwill and acquired intangible assets in the aggregate attributable to our Software Products segment was $1,815.7 million and attributable to our Professional Services segment was $45.5 million. As of September 30, 2020, goodwill and acquired intangible assets in the aggregate attributable to our Software Products segment was $1,818.1 million and attributable to our Professional Services segment was $45.3 million. Acquired intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. We evaluate goodwill for impairment in the third quarter of our fiscal year, or on an interim basis if an event occurs or circumstances change that would, more likely than not, reduce the fair value of a reporting segment below its carrying value. Factors we consider important, on an overall company basis and segment basis, when applicable, that could trigger an impairment review include significant under-performance relative to historical or projected future operating results, significant changes in our use of the acquired assets or the strategy for our overall business, significant negative industry or economic trends, a significant decline in our stock price for a sustained period and a reduction of our market capitalization relative to net book value. We completed our annual goodwill impairment review as of June 27, 2020 based on a quantitative assessment. To conduct these tests of goodwill, the fair value of the reporting unit is compared to its carrying value. If the reporting unit’s carrying value exceeds its fair value, we record an impairment loss equal to the difference between the carrying value of goodwill and its estimated fair value. We estimate the fair values of our reporting units using discounted cash flow valuation models. Those models require estimates of future revenues, profits, capital expenditures, working capital, terminal values based on revenue multiples, and discount rates for each reporting unit. We estimate these amounts by evaluating historical trends ; current budgets and operating plans , including consideration of the impact of the COVID-19 pandemic on our future results ; and industry data . The estimated fair value of each reporting unit exceed ed its carrying value as of June 27, 2020. Through December 31 , 2020, there were no events or changes in circumstances that indicated that the carrying values of goodwill or acquired intangible assets may not be recoverable. Goodwill and acquired intangible assets consisted of the following: (in thousands) December 31, 2020 September 30, 2020 Gross Carrying Amount Accumulated Amortization Net Book Value Gross Carrying Amount Accumulated Amortization Net Book Value Goodwill (not amortized) $ 1,635,281 $ 1,625,786 Intangible assets with finite lives (amortized): Purchased software $ 446,336 $ 317,753 $ 128,583 $ 443,275 $ 309,124 $ 134,151 Capitalized software 22,877 22,877 — 22,877 22,877 — Customer lists and relationships 423,719 332,787 90,932 418,953 322,092 96,861 Trademarks and trade names 22,854 16,473 6,381 22,687 16,129 6,558 Other 4,082 4,082 — 4,017 4,017 — Total intangible assets with finite lives $ 919,868 $ 693,972 $ 225,896 $ 911,809 $ 674,239 $ 237,570 Total goodwill and acquired intangible assets $ 1,861,177 $ 1,863,356 Goodwill Changes in goodwill presented by reportable segments were as follows: (in thousands) Software Products Professional Services Total Balance, October 1, 2020 $ 1,583,316 $ 42,470 $ 1,625,786 Foreign currency translation adjustment 9,247 248 9,495 Balance, December 31, 2020 $ 1,592,563 $ 42,718 $ 1,635,281 Amortization of Intangible Assets The aggregate amortization expense for intangible assets with finite lives is classified in our Consolidated Statements of Operations as follows: (in thousands) Three months ended December 31, 2020 December 28, 2019 Amortization of acquired intangible assets $ 6,547 $ 6,777 Cost of license revenue 6,267 6,799 Total amortization expense $ 12,814 $ 13,576 |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Dec. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 8. Fair Value Measurements Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, we consider the principal or most advantageous market in which we would transact and consider assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. GAAP prescribes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. There are three levels of inputs that may be used to measure fair value: • Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities; • Level 2: inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or • Level 3: unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Time deposits and corporate notes/bonds are classified within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets. The principal market in which we execute our foreign currency derivatives is the institutional market in an over-the-counter environment with a relatively high level of price transparency. The market participants usually are large financial institutions. Our foreign currency derivatives’ valuation inputs are based on quoted prices and quoted pricing intervals from public data sources and do not involve management judgment. These contracts are typically classified within Level 2 of the fair value hierarchy. Our significant financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2020 and September 30, 2020 were as follows: (in thousands) December 31, 2020 Level 1 Level 2 Level 3 Total Financial assets: Cash equivalents $ 202,004 $ — $ — $ 202,004 Derivative instruments — 1,745 — 1,745 Convertible note — — 1,000 1,000 Total financial assets $ 202,004 $ 1,745 $ 1,000 $ 204,749 Financial liabilities: Forward contracts — 913 — 913 Total financial liabilities $ — $ 913 $ — $ 913 (in thousands) September 30, 2020 Level 1 Level 2 Level 3 Total Financial assets: Cash equivalents $ 105,299 $ — $ — $ 105,299 Marketable securities: Corporate notes/bonds 59,099 — — 59,099 Derivative instruments — 903 — 903 Total financial assets $ 164,398 $ 903 $ — $ 165,301 Financial liabilities: Forward contracts — 1,073 — 1,073 Total financial liabilities $ — $ 1,073 $ — $ 1,073 Non-Marketable Equity and Level 3 Debt Investments We account for non-marketable equity investments at cost, less any impairment, plus or minus adjustments resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. We monitor non-marketable equity investments for events that could indicate that the investments are impaired, such as deterioration in the investee's financial condition and business forecasts, and lower valuations in recent or proposed financings. Changes in fair value of non-marketable equity investments are recorded in other income (expense), net on the Consolidated Statements of Operations. The carrying value of our non-marketable equity investments is recorded in other assets on the Consolidated Balance Sheets and totaled $8.9 million as of both December 31, 2020 and September 30, 2020. In the first quarter of 2021, we invested $1.0 million into a non-marketable convertible note. This debt security is classified as available-for-sale and is included in other assets on the Consolidated Balance Sheet. The following table provides a summary of changes in the fair value of our Level 3 investment for the three months ended December 31, 2020 (in thousands): Balance, October 1, 2020 $ — Investment 1,000 Balance, December 31, 2020 $ 1,000 |
Marketable Securities
Marketable Securities | 3 Months Ended |
Dec. 31, 2020 | |
Marketable Securities [Abstract] | |
Marketable Securities | 9. Marketable Securities We did not hold any marketable securities as of December 31, 2020. In December 2020, we sold our remaining marketable securities to partially fund the Arena acquisition, resulting in proceeds of $56.2 million. Neither gross realized gains nor gross realized losses related to the sale were material. The amortized cost and fair value of marketable securities as of September 30, 2020 were as follows: (in thousands) September 30, 2020 Amortized cost Gross unrealized gains Gross unrealized losses Fair value Corporate notes/bonds $ 58,793 $ 323 $ (17 ) $ 59,099 The following table summarizes the fair value and gross unrealized losses aggregated by category and the length of time that individual securities had been in a continuous unrealized loss position as of September 30, 2020: (in thousands) September 30, 2020 Less than twelve months Greater than twelve months Total Fair Value Gross unrealized loss Fair Value Gross unrealized loss Fair Value Gross unrealized loss Corporate notes/bonds $ 9,841 $ (17 ) $ — $ — $ 9,841 $ (17 ) The following table presents our marketable securities by contractual maturity date as of September 30, 2020: (in thousands) September 30, 2020 Amortized cost Fair value Due in one year or less $ 27,727 $ 27,899 Due after one year through three years 31,066 31,200 Total $ 58,793 $ 59,099 |
Derivative Financial Instrument
Derivative Financial Instruments | 3 Months Ended |
Dec. 31, 2020 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | 10. Derivative Financial Instruments Our earnings and cash flows are subject to fluctuations due to changes in foreign currency exchange rates. Our most significant foreign currency exposures relate to Western European countries, Japan, China, Israel, India and Sweden. Our foreign currency risk management strategy is principally designed to mitigate the future potential financial impact of changes in the U.S. Dollar value of anticipated transactions and balances denominated in foreign currency resulting from changes in foreign currency exchange rates. We enter into derivative transactions, specifically foreign currency forward contracts and options, to manage the exposures to foreign currency exchange risk in order to reduce earnings volatility. We do not enter into derivatives transactions for trading or speculative purposes. The following table shows our derivative instruments measured at gross fair value as reflected in the Consolidated Balance Sheets: (in thousands) Fair Value of Derivatives Designated As Hedging Instruments Fair Value of Derivatives Not Designated As Hedging Instruments December 31, 2020 September 30, 2020 December 31, 2020 September 30, 2020 Derivative assets (1) Forward Contracts $ 583 $ 3 $ 620 $ 900 Options $ — $ — $ 542 $ — Derivative liabilities (2) Forward Contracts $ — $ 306 $ 913 $ 767 (1) As of December 31, 2020 and September 30, 2020, current derivative assets of $1.7 million and $0.9 million, respectively, are recorded in other current assets in the Consolidated Balance Sheets. (2) As of December 31, 2020 and September 30, 2020, current derivative liabilities of $0.9 million and $1.1 million, respectively, are recorded in accrued expenses and other current liabilities in the Consolidated Balance Sheets. Non-Designated Hedges We hedge our net foreign currency monetary assets and liabilities primarily resulting from foreign currency denominated receivables and payables with foreign exchange forward contracts to reduce the risk that our earnings and cash flows will be adversely affected by changes in foreign currency exchange rates. These contracts have maturities of up to approximately three months. Generally, we do not designate these foreign currency forward contracts as hedges for accounting purposes and changes in the fair value of these instruments are recognized immediately in earnings. Because we enter into forward contracts only as an economic hedge, any gain or loss on the underlying foreign-denominated balance would be offset by the loss or gain on the forward contract. Gains and losses on forward contracts and foreign denominated receivables and payables are included in other income (expense), net. We hedge our forecasted U.S. Dollar cash flows with foreign exchange options to reduce the risk that they would be adversely affected by changes in Euro exchange rates. These contracts have maturities of up to approximately ten months. We do not designate these foreign currency options as hedges for accounting purposes and changes in the fair value of these instruments are recognized immediately in earnings. Because we enter into options only as an economic hedge, any loss on the underlying Euro-denominated forecasted plan rate would be offset by the gain on the put option. Gains on put options are included in other income (expense), net. As of December 31, 2020 and September 30, 2020, we had outstanding forward contracts and options with notional amounts equivalent to the following: Currency Hedged (in thousands) December 31, 2020 September 30, 2020 Canadian / U.S. Dollar $ 5,696 $ 6,847 Euro / U.S. Dollar (1) 569,595 390,673 British Pound / U.S. Dollar 7,525 6,328 Israeli Shekel / U.S. Dollar 9,468 9,503 Japanese Yen / U.S. Dollar 29,174 50,379 Swiss Franc / U.S. Dollar 8,969 12,874 Swedish Krona / U.S. Dollar 9,189 18,871 Chinese Renminbi / U.S. Dollar 11,698 5,415 Taiwanese Dollar / U.S. Dollar 4,195 1,482 All other 11,268 10,090 Total $ 666,777 $ 512,462 (1) As of December 31, 2020, $380.9 million of the Euro to U.S. Dollar outstanding notional amount relates to forward contracts and $188.7 million relates to options. As of September 30, 2020, all of the Euro to U.S. Dollar outstanding notional amount relates to forward contracts. The following table shows the effect of our non-designated hedges in the Consolidated Statements of Operations for the three months ended December 31, 2020 and December 28, 2019: (in thousands) Three months ended Location of Loss December 31, 2020 December 28, 2019 Net realized and unrealized loss, excluding the underlying foreign currency exposure being hedged Other income (expense), net $ (1,587 ) $ (536 ) In the three months ended December 31, 2020, foreign currency losses, net were $1.8 million. In the three months ended December 28, 2019, there were no gains or losses on foreign currency. Net Investment Hedges We translate balance sheet accounts of subsidiaries with foreign functional currencies into the U.S. Dollar using the exchange rate at each balance sheet date. Resulting translation adjustments are reported as a component of accumulated other comprehensive loss on the Consolidated Balance Sheets. We designate certain foreign exchange forward contracts as net investment hedges against exposure on translation of balance sheet accounts of Euro functional subsidiaries. Net investment hedges partially offset the impact of foreign currency translation adjustment recorded in accumulated other comprehensive loss on the Consolidated Balance Sheets. All foreign exchange forward contracts are carried at fair value on the Consolidated Balance Sheets and the maximum duration of net investment hedge foreign exchange forward contracts is approximately three months. Net investment hedge relationships are designated at inception, and effectiveness is assessed retrospectively on a quarterly basis using the net equity position of Euro functional subsidiaries. As the forward contracts are highly effective in offsetting exchange rate exposure, we record changes in these net investment hedges in accumulated other comprehensive loss and subsequently reclassify them to foreign currency translation adjustment in accumulated other comprehensive loss at the time of forward contract maturity. Changes in the fair value of foreign exchange forward contracts due to changes in time value are excluded from the assessment of effectiveness. Our derivatives are not subject to any credit contingent features. We manage credit risk with counterparties by trading among several counterparties and we review our counterparties’ credit at least quarterly. As of December 31, 2020 and September 30, 2020, we had outstanding forward contracts designated as net investment hedges with notional amounts equivalent to the following: Currency Hedged (in thousands) December 31, 2020 September 30, 2020 Euro / U.S. Dollar $ 188,981 $ 164,885 The following table shows the effect of our derivative instruments designated as net investment hedges in the Consolidated Statements of Operations for the three months ended December 31, 2020 and December 28, 2019: (in thousands) Three months ended Location of Gain (Loss) December 31, 2020 December 28, 2019 Gain (loss) recognized in OCI OCI $ 580 $ (3,565 ) Gain (loss) reclassified from OCI OCI 2,942 (762 ) Gain recognized, excluded portion Other income (expense), net 307 1,229 As of December 31, 2020, we estimate that all amounts reported in accumulated other comprehensive loss will be applied against exposed balance sheet accounts upon translation within the next three months. Offsetting Derivative Assets and Liabilities We have entered into master netting arrangements for our forward contracts that allow net settlements under certain conditions. Although netting is permitted, it is currently our policy and practice to record all derivative assets and liabilities on a gross basis in the Consolidated Balance Sheets. The following table sets forth the offsetting of derivative assets as of December 31, 2020: (in thousands) Gross Amounts Offset in the Consolidated Balance Sheets Gross Amounts Not Offset in the Consolidated Balance Sheets As of December 31, 2020 Gross Amount of Recognized Assets Gross Amounts Offset in the Consolidated Balance Sheets Net Amounts of Assets Presented in the Consolidated Balance Sheets Financial Instruments Cash Collateral Received Net Amount Forward Contracts $ 1,203 $ — $ 1,203 $ (913 ) $ — $ 290 The following table sets forth the offsetting of derivative liabilities as of December 31, 2020: (in thousands) Gross Amounts Offset in the Consolidated Balance Sheets Gross Amounts Not Offset in the Consolidated Balance Sheets As of December 31, 2020 Gross Amount of Recognized Liabilities Gross Amounts Offset in the Consolidated Balance Sheets Net Amounts of Liabilities Presented in the Consolidated Balance Sheets Financial Instruments Cash Collateral Pledged Net Amount Forward Contracts $ 913 $ — $ 913 $ (913 ) $ — $ — |
Segment and Geographic Informat
Segment and Geographic Information | 3 Months Ended |
Dec. 31, 2020 | |
Segment Reporting [Abstract] | |
Segment and Geographic Information | 11. Segment and Geographic Information We operate within a single industry segment – computer software and related services. Operating segments as defined under GAAP are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. Our chief operating decision maker is our President and Chief Executive Officer. We have two operating and reportable segments: (1) Software Products, which includes license, subscription and related support revenue (including updates and technical support) for all our products; and (2) Professional Services, which includes consulting, implementation and training services. We do not allocate sales and marketing or general and administrative expense to our operating segments as these activities are managed on a consolidated basis. Additionally, segment profit does not include stock-based compensation, amortization of intangible assets, restructuring charges and certain other identified costs that we do not allocate to the segments for purposes of evaluating their operational performance. The revenue and profit attributable to our operating segments are summarized below. We do not produce asset information by reportable segment; therefore, it is not reported. (in thousands) Three months ended December 31, 2020 December 28, 2019 Software Products Revenue $ 393,420 $ 314,366 Operating costs (1) 105,401 102,192 Profit 288,019 212,174 Professional Services Revenue 35,630 41,744 Operating costs (2) 33,120 33,747 Profit 2,510 7,997 Total segment revenue 429,050 356,110 Total segment costs 138,521 135,939 Total segment profit 290,529 220,171 Unallocated operating expenses: Sales and marketing expenses 109,726 100,152 General and administrative expenses 27,400 26,919 Restructuring and other charges, net 247 14,034 Intangibles amortization 12,814 13,576 Stock-based compensation 46,088 27,936 Other unallocated operating expenses (3) 3,916 7,129 Total operating income 90,338 30,425 Interest expense (11,518 ) (12,098 ) Other income (expense), net (1,413 ) 704 Income before income taxes $ 77,407 $ 19,031 (1) Operating costs for the Software Products segment include all costs of software revenue and research and development costs, excluding stock-based compensation and intangible amortization. (2) Operating costs for the Professional Services segment include all costs of professional services revenue, excluding stock-based compensation. (3) Other unallocated operating expenses include acquisition-related and other transactional costs. Our international revenue is presented based on the location of our customer. Revenue for the geographic regions in which we operate is presented below. (in thousands) Three months ended December 31, 2020 December 28, 2019 Americas $ 202,279 $ 155,973 Europe 162,319 136,521 Asia Pacific 64,452 63,616 Total revenue $ 429,050 $ 356,110 |
Income Taxes
Income Taxes | 3 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 12. Income Taxes (in thousands) Three months ended December 31, 2020 December 28, 2019 Income before income taxes $ 77,407 $ 19,031 Provision (benefit) for income taxes $ 53,892 $ (16,424 ) Effective income tax rate 70 % (86 )% In the first quarter of 2021 and 2020, our effective tax rate differed from the statutory federal income tax rate of 21% due to U.S. tax reform, our corporate structure in which our foreign taxes are at a net effective tax rate lower than the U.S. rate, and the excess tax benefit related to stock-based compensation. A significant amount of our foreign earnings is generated by our subsidiaries organized in Ireland. In 2021 and 2020, the foreign rate differential predominantly relates to these Irish earnings. was impacted by the matters described below. Our first quarter of 2021 results include a charge of $35.3 million related to the effects of a tax matter in the Republic of Korea (South Korea) of $32.4 million, and the resulting impact on U.S. income taxes of $2.9 million. The charge relates to an assessment with respect to various tax issues, primarily foreign withholding taxes, under appeal in South Korea. We received an assessment of approximately $12 million from the tax authorities in South Korea in the fourth quarter of 2016 for the years 2011 to 2015 and paid the assessment in the first quarter of 2017. We appealed that assessment and believed that upon completion of the multi-level appeal process it was more likely than not that our positions would be sustained. However, in December 2020, our appeal to the Seoul High Court (an intermediate appellate court) was rejected. We have appealed this decision to the Supreme Court of the Republic of Korea. We continue to believe that our position is meritorious, and we will aggressively pursue our position with the Supreme Court. In the first quarter of 2020, we reduced our previously established U.S. valuation allowance by $21.0 million as the result of the Onshape acquisition. We have concluded, based on the weight of available evidence, that a full valuation allowance continues to be required against our U.S. net deferred tax assets as they are not more likely than not to be realized in the future. However, we believe that there is a reasonable possibility that within the next 12 months, sufficient positive evidence may become available to allow us to reach a conclusion that a significant portion of the valuation allowance will no longer be needed. Release of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period the release is recorded. However, the exact timing and amount of any valuation allowance release are subject to change on the basis of the level of profitability that we are able to actually achieve. We will continue to reassess our valuation allowance requirements each financial reporting period. In the normal course of business, PTC and its subsidiaries are examined by various taxing authorities, including the Internal Revenue Service in the U.S. We regularly assess the likelihood of additional assessments by tax authorities and provide for these matters as appropriate. We are currently under audit by tax authorities in several jurisdictions. Audits by tax authorities typically involve examination of the deductibility of certain permanent items, limitations on net operating losses and tax credits. As of December 31, 2020 and September 30, 2020, we had unrecognized tax benefits of $46.3 million and $16.1 million, respectively. If all our unrecognized tax benefits as of December 31, 2020 were to become recognizable in the future, we would record a benefit to the income tax provision of $46.3 million, which would be partially offset by an increase in the U.S. valuation allowance of $7.9 million. Although we believe our tax estimates are appropriate, the final determination of tax audits and any related litigation could result in favorable or unfavorable changes in our estimates. We believe it is reasonably possible that within the next 12 months the amount of unrecognized tax benefits related to the resolution of multi-jurisdictional tax positions could be reduced by up to $30 million. |
Debt
Debt | 3 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Debt | 13. Debt At December 31, 2020 and September 30, 2020, we had the following long-term debt obligations: (in thousands) December 31, 2020 September 30, 2020 4.000% Senior notes due 2028 $ 500,000 $ 500,000 3.625% Senior notes due 2025 500,000 500,000 Credit facility revolver (1) — 18,000 Total debt 1,000,000 1,018,000 Unamortized debt issuance costs for the senior notes (2) (12,143 ) (12,686 ) Total debt, net of issuance costs $ 987,857 $ 1,005,314 (1) Unamortized debt issuance costs related to the credit facility were $4.6 million and $4.9 million as of December 31, 2020 and September 30, 2020, respectively, and are included in other assets on the Consolidated Balance Sheets. ( 2 ) Unamortized debt issuance costs are included in long-term debt on the Consolidated Balance Sheets. Senior Notes In February 2020, we issued $500 million in aggregate principal amount of 4.0% senior, unsecured long-term debt at par value, due in 2028 (the 2028 notes) and $500 million in aggregate principal amount of 3.625% senior, unsecured long-term debt at par value, due in 2025 (the 2025 notes). As of December 31, 2020, the total estimated fair value of the 2028 and 2025 notes was approximately $525.0 million and $515.8 million, respectively, based on quoted prices for the notes on that date. We were in compliance with all the covenants for all of our senior notes as of December 31, 2020. Terms of the 2028 and 2025 Notes Interest on the 2028 and 2025 notes is payable semi-annually on February 15 and August 15. The debt indenture for the 2028 and 2025 notes includes covenants that limit our ability to, among other things, incur additional debt, grant liens on our properties or capital stock, enter into sale and leaseback transactions or asset sales, and make capital distributions. We may, on one or more occasions, redeem the 2025 and 2028 notes in whole or in part at specified redemption prices. In certain circumstances constituting a change of control, we will be required to make an offer to repurchase the notes at a purchase price equal to 101% of the aggregate principal amount of the notes, plus accrued and unpaid interest. Our ability to repurchase the notes upon such event may be limited by law, by the indenture associated with the notes, by our then-available financial resources or by the terms of other agreements to which we may be party at such time. If we fail to repurchase the notes as required by the indenture, it would constitute an event of default under the indenture which, in turn, may also constitute an event of default under other obligations. Credit Agreement In February 2020, we entered into a Third Amended and Restated Credit Agreement with JPMorgan Chase Bank, N.A., as Administrative Agent, for a new secured multi-currency bank credit facility with a syndicate of banks. The new credit facility replaced our prior credit facility. As with the prior credit facility, we expect to use the new credit facility for general corporate purposes, including acquisitions of businesses, share repurchases and working capital requirements. As of December 31, 2020, the fair value of our credit facility approximates its book value. The credit facility consists of a $1 billion revolving credit facility, which may be increased by up to an additional $500 million in the aggregate if the existing or additional lenders are willing to make such increased commitments. The maturity date of the credit facility is February 13, 2025, when all remaining amounts outstanding will be due and payable. The revolving loan commitment does not require amortization of principal and may be repaid in whole or in part prior to the scheduled maturity date at our option without penalty or premium. PTC Inc. and certain eligible foreign subsidiaries are eligible to borrow under the credit facility. The obligations under the credit facility are required to be guaranteed by PTC Inc.’s material domestic subsidiaries that become parties to the subsidiary guaranty, if any. As of the filing of this Form 10-Q, there are no subsidiary guarantors of the obligations under the credit facility. Any borrowings by eligible foreign subsidiary borrowers would be guaranteed by PTC Inc. and any subsidiary guarantors. As of the filing of this Form 10-Q, there were no borrowings by eligible foreign subsidiaries. In addition, substantially all existing and after-acquired personal property of PTC Inc. and certain of its material domestic subsidiaries that become parties to the subsidiary guaranty, if any, is or will be, in the case of such subsidiary guarantors, subject to first priority perfected liens in favor of the lenders under the credit facility. 100% of the voting equity interests of certain of PTC Inc.’s domestic subsidiaries and 65% of its material first-tier foreign subsidiaries are pledged as collateral for the obligations under the credit facility. Loans under the credit facility bear interest at variable rates which reset every 30 to 180 days depending on the rate and period selected by PTC as described below. We did not have any borrowings outstanding as of December 31, 2020, but the annual rate on new borrowings drawn in January 2021 was 2.0% (see Note 16. Subsequent Events The credit facility limits PTC’s and its subsidiaries’ ability to, among other things: incur additional indebtedness, incur liens or guarantee obligations; pay dividends (other than to PTC) and make other distributions; make investments and enter into joint ventures; dispose of assets; and engage in transactions with affiliates, except on an arms-length basis. Under the credit facility, PTC and its material domestic subsidiaries may not invest cash or property in, or loan to, PTC’s foreign subsidiaries in aggregate amounts exceeding $100 million for any purpose and an additional $200 million for acquisitions of businesses. In addition, under the credit facility, PTC and its subsidiaries must maintain the following financial ratios: • Total leverage ratio, defined as consolidated funded indebtedness to consolidated trailing four quarters EBITDA, not to exceed 4.50 to 1.00 as of the last day of any fiscal quarter; • Senior secured leverage ratio, defined as senior consolidated total indebtedness (which excludes unsecured indebtedness) to the consolidated trailing four quarters EBITDA, not to exceed 3.00 to 1.00 as of the last day of any fiscal quarter; and • Interest coverage ratio, defined as the ratio of consolidated trailing four quarters EBITDA to consolidated trailing four quarters of cash basis interest expense, of not less than 3.00 to 1.00 as of the last day of any fiscal quarter. As of December 31, 2020, our total leverage ratio was 2.03 to 1.00, our senior secured leverage ratio was 0.03 to 1.00 and our interest coverage ratio was 8.43 to 1.00 and we were in compliance with all financial and operating covenants of the credit facility. Any failure to comply with the financial or operating covenants of the credit facility would prevent PTC from being able to borrow additional funds, and would constitute a default, permitting the lenders to, among other things, accelerate the amounts outstanding, including all accrued interest and unpaid fees, under the credit facility and to terminate the credit facility. A change in control of PTC, as defined in the agreement, also constitutes an event of default, permitting the lenders to accelerate the indebtedness and terminate the credit facility. In the first quarter of 2021 and 2020, we paid $0.7 million and $16.9 million of interest on our debt, respectively. The average interest rate on borrowings outstanding during the first quarter of 2021 and 2020 was approximately 3.8% and 4.9%, respectively. |
Leases
Leases | 3 Months Ended |
Dec. 31, 2020 | |
Leases [Abstract] | |
Leases | 14. Leases We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use assets and operating lease obligations on our Consolidated Balance Sheets. Our operating leases are primarily for office space, cars, servers, and office equipment. We made an election not to separate lease components from non-lease components for office space, servers and office equipment. Finance leases are included in property and equipment, accrued expenses and other current liabilities, and other liabilities on our Consolidated Balance Sheets. Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the leases. Right-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we generally use our incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term as that of the lease payments at commencement date. The right-of-use assets include any lease payments made and exclude lease incentives received. Operating lease expense is recognized on a straight-line basis over the lease term. Our operating leases expire at various dates through 2037. Our lease terms may include periods under options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Certain lease agreements contain variable payments, which are expensed as incurred and not included in the lease assets and liabilities. These variable payments include insurance, taxes, consumer price index payments, and payments for maintenance and utilities. Our headquarters are located at 121 Seaport Boulevard, Boston, Massachusetts (the Boston lease). The Boston lease is for approximately 250,000 square feet and runs from January 1, 2019 through June 30, 2037. Base rent for the first year of the lease is $11.0 million and increases by $1 per square foot per year thereafter ($0.3 million per year). Base rent first became payable on July 1, 2020. In addition to the base rent, we are required to pay our pro rata portions of building operating costs and real estate taxes (together, “Additional Rent”). We are currently paying approximately $7.1 million annually of Additional Rent. The lease provides for $25 million in landlord funding for leasehold improvements ($100 per square foot). The leasehold improvement funding provision was fully utilized by us and was reflected as a derecognition adjustment to the right-of-use asset in October 2020. In February 2019, we subleased a portion of our headquarters through June 30, 2022. We will receive approximately $9.1 million in sublease income over the course of the lease. The components of lease cost reflected in the Consolidated Statement of Operations for the three months ended December 31, 2020 and December 28, 2019 were as follows: (in thousands) Three months ended December 31, 2020 December 28, 2019 Operating lease cost $ 9,391 $ 8,757 Short-term lease cost 548 1,874 Variable lease cost 2,387 1,914 Sublease income (1,084 ) (1,012 ) Total lease cost $ 11,242 $ 11,533 Supplemental cash flow and right-of-use assets information for the three months ended December 31, 2020 and December 28, 2019 was as follows: (in thousands) Three months ended December 31, 2020 December 28, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 14,060 $ 5,498 Financing cash flows from financing leases $ 279 $ — Right-of-use assets obtained in exchange for new lease obligations: Operating leases $ 594 $ 5,380 Financing leases $ — $ 1,500 Supplemental balance sheet information related to the leases as of December 31, 2020 was as follows: As of December 31, 2020 Weighted-average remaining lease term - operating leases 12.5 years Weighted-average remaining lease term - financing leases 4.75 years Weighted-average discount rate - operating leases 5.6 % Weighted-average discount rate - financing leases 3.0 % Maturities of lease liabilities as of December 31, 2020 are as follows: (in thousands) Operating Leases Remainder of 2021 $ 32,718 2022 31,181 2023 22,246 2024 20,294 2025 17,360 Thereafter 170,423 Total future lease payments $ 294,222 Less: imputed interest (87,776 ) Total $ 206,446 Exited (Restructured) Facilities As of Note 3. Restructuring and Other Charges In determining the amount of right-of-use assets for restructured facilities, we are required to estimate such factors as future vacancy rates, the time required to sublet properties and sublease rates. Updates to these estimates may result in revisions to the value of right-of-use assets recorded. The amounts recorded are based on the net present value of estimated sublease income. In the first quarter of 2021 and 2020, we made payments of $3.8 million and $2.4 million, respectively, related to lease costs for exited facilities. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Dec. 31, 2020 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 15. Commitments and Contingencies Legal and Regulatory Matters Korean Tax Audit We continue to appeal an assessment from the tax authorities in South Korea. In the first quarter of 2021, we recorded a charge of $35.3 million associated with this matter. See Note 12. Income Taxes Legal Proceedings On September 17, 2020, three individual plaintiffs filed a putative class action lawsuit against PTC, the Investment Committee for the PTC Inc. 401(k) Plan (“Plan”), and the Board of Directors in the U.S. District Court for the District of Massachusetts alleging claims regarding the Plan. Plaintiffs allege that the defendants breached their fiduciary duties under the Employee Retirement Income Security Act of 1974 ("ERISA") in the oversight of the Plan, principally by selecting and retaining certain investment options despite their higher fees and costs than other available investment options, causing participants in the Plan to pay excessive recordkeeping fees and suffer lower returns on their investments, and by failing to monitor other fiduciaries. The plaintiffs seek unspecified damages on behalf of a class of Plan participants from September 17, 2014 through the date of any judgment. PTC has filed its respon se to the complaint and is defend ing the case vigorously. We are currently unable to reasonably estimate what effect the ultimate outcome might have, if any, on our financial position, results of operations or cash flows. We are subject to various other legal proceedings and claims that arise in the ordinary course of business. We do not believe that resolving the legal proceedings and claims that we are currently subject to will have a material adverse impact on our financial condition, results of operations or cash flows. However, the results of legal proceedings cannot be predicted with certainty. Should any of these legal proceedings and claims be resolved against us, the operating results for a reporting period could be adversely affected. Accruals In addition to the matters listed above, we are subject to legal claims against us in the ordinary course of business. Guarantees and Indemnification Obligations We enter into standard indemnification agreements in the ordinary course of our business. Under such agreements with our business partners or customers, we indemnify, hold harmless, and agree to reimburse the indemnified party for losses suffered or incurred by the indemnified party, generally in connection with patent, copyright or other intellectual property infringement claims by any third party with respect to our products, claims relating to property damage or personal injury resulting from the performance of services by us or our subcontractors and data breaches. The maximum potential amount of future payments we could be required to make under indemnification agreements for intellectual property and damage and injury claims is unlimited; in most cases the maximum potential amount for indemnification for data breaches is capped in those contracts. Historically, our costs to defend lawsuits or settle claims relating to such indemnity agreements have been minimal and, accordingly, we believe the estimated fair value of liabilities under these agreements is immaterial. We warrant that our software products will perform in all material respects in accordance with our standard published specifications in effect at the time of delivery of the licensed products for a specified period of time. Additionally, we generally warrant that our consulting services will be performed consistent with generally accepted industry standards. In most cases, liability for these warranties is capped. If necessary, we would provide for the estimated cost of product and service warranties based on specific warranty claims and claim history; however, we have not incurred significant cost under our product or services warranties. As a result, we believe the estimated fair value of these liabilities is immaterial. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Dec. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | 16. Subsequent Events Acquisition On January 15, 2021, we acquired Arena Solutions, creators of a Software as a Service (SaaS) product lifecycle management (PLM) solution, for approximately $715 million, net of cash acquired. The acquisition, together with Onshape, our SaaS CAD offering, is expected to accelerate our ability to attract new customers with a suite of SaaS-based product offerings and position the company to capitalize on the SaaS market opportunity. Borrowings under Credit Facility In January 2021, we borrowed $600 million under our existing credit facility to acquire Arena, bringing our total outstanding indebtedness to approximately $1.6 billion. |
Revenue from Contracts with C_2
Revenue from Contracts with Customers (Tables) | 3 Months Ended |
Dec. 31, 2020 | |
Revenue From Contract With Customer [Abstract] | |
Schedule of Contract Assets and Liabilities | Contract Assets and Contract Liabilities (in thousands) December 31, 2020 September 30, 2020 Contract asset $ 12,016 $ 11,984 Deferred revenue $ 434,055 $ 426,465 |
Disaggregation of Revenue | Disaggregation of Revenue (in thousands) Three months ended December 31, 2020 December 28, 2019 Recurring revenue $ 384,957 $ 305,368 Perpetual license 8,463 8,998 Professional services 35,630 41,744 Total revenue $ 429,050 $ 356,110 |
Restructuring and Other Charg_2
Restructuring and Other Charges (Tables) | 3 Months Ended |
Dec. 31, 2020 | |
Restructuring And Related Activities [Abstract] | |
Schedule of Restructuring Reserve by Type of Cost | The following table summarizes restructuring accrual activity for the three months ended December 31, 2020: (in thousands) Employee severance and related benefits Facility closures and related costs Total October 1, 2020 $ 3,992 $ 5,995 $ 9,987 Charges to operations, net 160 (29 ) 131 Cash disbursements (2,733 ) (687 ) (3,420 ) Foreign exchange impact 42 12 54 Accrual, December 31, 2020 $ 1,461 $ 5,291 $ 6,752 The following table summarizes restructuring accrual activity for the three months ended December 28, 2019: (in thousands) Employee severance and related benefits Facility closures and related costs Total October 1, 2019 $ 298 $ 30,788 $ 31,086 ASC 842 adoption — (16,462 ) (16,462 ) Charges to operations, net 13,631 127 13,758 Cash disbursements (58 ) (873 ) (931 ) Foreign exchange impact 156 (1 ) 155 Accrual, December 28, 2019 $ 14,027 $ 13,579 $ 27,606 |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 3 Months Ended |
Dec. 31, 2020 | |
Share Based Compensation Allocation And Classification In Financial Statements [Abstract] | |
Schedule of Restricted Stock Unit Activity | The following table shows restricted stock unit activity for the three months ended December 31, 2020: (in thousands, except grant date fair value data) Number of RSUs Weighted-Average Grant Date Fair Value Per RSU Balance of outstanding restricted stock units, October 1, 2020 3,509 $ 79.13 Granted (1) 925 $ 100.20 Vested (801 ) $ 79.41 Forfeited or not earned (36 ) $ 78.79 Balance of outstanding restricted stock units, December 31, 2020 3,597 $ 84.61 (1) Restricted stock granted includes 33,000 shares from prior period TSR awards that were earned upon achievement of the performance criteria and vested in November 2020. |
Schedule of Restricted Stock Unit Grants for the Period | (in thousands) Restricted Stock Units Grant Period Performance- based RSUs (1) Service-based RSUs (2) Total Shareholder Return RSUs (3) First three months of 2021 90 712 90 (1) The performance-based RSUs were granted to our executives and are eligible to vest based upon annual increasing performance measures over a three-year (2) The service-based RSUs were granted to employees, including our executive officers. Substantially all service-based RSUs will vest in three substantially equal annual installments on or about the anniversary of the date of grant. (3) The Total Shareholder Return RSUs (TSR RSUs) were granted to our executives pursuant to the terms described below. |
Schedule of Valuation Assumptions | The significant assumptions used in the Monte Carlo simulation model were as follows: Average volatility of peer group 41.5 % Risk free interest rate 0.21 % Dividend yield — % |
Schedule of Classification of Compensation Expense | Compensation expense recorded for our stock-based awards is classified in our Consolidated Statements of Operations as follows: (in thousands) Three months ended December 31, 2020 December 28, 2019 Cost of license revenue $ 20 $ — Cost of support and cloud services revenue 2,302 1,486 Cost of professional services revenue 2,112 1,557 Sales and marketing 14,999 7,452 Research and development 8,443 6,932 General and administrative 18,212 10,509 Total stock-based compensation expense $ 46,088 $ 27,936 |
Earnings per Share (EPS) and _2
Earnings per Share (EPS) and Common Stock (Tables) | 3 Months Ended |
Dec. 31, 2020 | |
Earnings Per Share And Common Stock [Abstract] | |
Earnings per Share Basic and Diluted | The following table presents the calculation for both basic and diluted EPS: (in thousands, except per share data) Three months ended December 31, 2020 December 28, 2019 Net income $ 23,515 $ 35,455 Weighted-average shares outstanding—Basic 116,401 115,190 Dilutive effect of restricted stock units 1,204 501 Weighted-average shares outstanding—Diluted 117,605 115,691 Earnings per share—Basic $ 0.20 $ 0.31 Earnings per share—Diluted $ 0.20 $ 0.31 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Dec. 31, 2020 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill and Acquired Intangible Assets | Goodwill and acquired intangible assets consisted of the following: (in thousands) December 31, 2020 September 30, 2020 Gross Carrying Amount Accumulated Amortization Net Book Value Gross Carrying Amount Accumulated Amortization Net Book Value Goodwill (not amortized) $ 1,635,281 $ 1,625,786 Intangible assets with finite lives (amortized): Purchased software $ 446,336 $ 317,753 $ 128,583 $ 443,275 $ 309,124 $ 134,151 Capitalized software 22,877 22,877 — 22,877 22,877 — Customer lists and relationships 423,719 332,787 90,932 418,953 322,092 96,861 Trademarks and trade names 22,854 16,473 6,381 22,687 16,129 6,558 Other 4,082 4,082 — 4,017 4,017 — Total intangible assets with finite lives $ 919,868 $ 693,972 $ 225,896 $ 911,809 $ 674,239 $ 237,570 Total goodwill and acquired intangible assets $ 1,861,177 $ 1,863,356 |
Schedule of Changes in Goodwill by Reportable Segments | Changes in goodwill presented by reportable segments were as follows: (in thousands) Software Products Professional Services Total Balance, October 1, 2020 $ 1,583,316 $ 42,470 $ 1,625,786 Foreign currency translation adjustment 9,247 248 9,495 Balance, December 31, 2020 $ 1,592,563 $ 42,718 $ 1,635,281 |
Schedule of Aggregate Amortization Expense for Intangible Assets with Finite Lives | The aggregate amortization expense for intangible assets with finite lives is classified in our Consolidated Statements of Operations as follows: (in thousands) Three months ended December 31, 2020 December 28, 2019 Amortization of acquired intangible assets $ 6,547 $ 6,777 Cost of license revenue 6,267 6,799 Total amortization expense $ 12,814 $ 13,576 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Dec. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value, by Balance Sheet Grouping | Our significant financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2020 and September 30, 2020 were as follows: (in thousands) December 31, 2020 Level 1 Level 2 Level 3 Total Financial assets: Cash equivalents $ 202,004 $ — $ — $ 202,004 Derivative instruments — 1,745 — 1,745 Convertible note — — 1,000 1,000 Total financial assets $ 202,004 $ 1,745 $ 1,000 $ 204,749 Financial liabilities: Forward contracts — 913 — 913 Total financial liabilities $ — $ 913 $ — $ 913 (in thousands) September 30, 2020 Level 1 Level 2 Level 3 Total Financial assets: Cash equivalents $ 105,299 $ — $ — $ 105,299 Marketable securities: Corporate notes/bonds 59,099 — — 59,099 Derivative instruments — 903 — 903 Total financial assets $ 164,398 $ 903 $ — $ 165,301 Financial liabilities: Forward contracts — 1,073 — 1,073 Total financial liabilities $ — $ 1,073 $ — $ 1,073 |
Summary of Changes in Fair Value of Level 3 Investment | The following table provides a summary of changes in the fair value of our Level 3 investment for the three months ended December 31, 2020 (in thousands): Balance, October 1, 2020 $ — Investment 1,000 Balance, December 31, 2020 $ 1,000 |
Marketable Securities (Tables)
Marketable Securities (Tables) | 3 Months Ended |
Dec. 31, 2020 | |
Marketable Securities [Abstract] | |
Marketable Securities | The amortized cost and fair value of marketable securities as of September 30, 2020 were as follows: (in thousands) September 30, 2020 Amortized cost Gross unrealized gains Gross unrealized losses Fair value Corporate notes/bonds $ 58,793 $ 323 $ (17 ) $ 59,099 |
Unrealized Gain (Loss) on Investments | The following table summarizes the fair value and gross unrealized losses aggregated by category and the length of time that individual securities had been in a continuous unrealized loss position as of September 30, 2020: (in thousands) September 30, 2020 Less than twelve months Greater than twelve months Total Fair Value Gross unrealized loss Fair Value Gross unrealized loss Fair Value Gross unrealized loss Corporate notes/bonds $ 9,841 $ (17 ) $ — $ — $ 9,841 $ (17 ) |
Investments Classified by Contractual Maturity Date | The following table presents our marketable securities by contractual maturity date as of September 30, 2020: (in thousands) September 30, 2020 Amortized cost Fair value Due in one year or less $ 27,727 $ 27,899 Due after one year through three years 31,066 31,200 Total $ 58,793 $ 59,099 |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 3 Months Ended |
Dec. 31, 2020 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The following table shows our derivative instruments measured at gross fair value as reflected in the Consolidated Balance Sheets: (in thousands) Fair Value of Derivatives Designated As Hedging Instruments Fair Value of Derivatives Not Designated As Hedging Instruments December 31, 2020 September 30, 2020 December 31, 2020 September 30, 2020 Derivative assets (1) Forward Contracts $ 583 $ 3 $ 620 $ 900 Options $ — $ — $ 542 $ — Derivative liabilities (2) Forward Contracts $ — $ 306 $ 913 $ 767 (1) As of December 31, 2020 and September 30, 2020, current derivative assets of $1.7 million and $0.9 million, respectively, are recorded in other current assets in the Consolidated Balance Sheets. (2) As of December 31, 2020 and September 30, 2020, current derivative liabilities of $0.9 million and $1.1 million, respectively, are recorded in accrued expenses and other current liabilities in the Consolidated Balance Sheets. |
Schedule of Notional Amounts of Outstanding Forward Contracts and Options | As of December 31, 2020 and September 30, 2020, we had outstanding forward contracts and options with notional amounts equivalent to the following: Currency Hedged (in thousands) December 31, 2020 September 30, 2020 Canadian / U.S. Dollar $ 5,696 $ 6,847 Euro / U.S. Dollar (1) 569,595 390,673 British Pound / U.S. Dollar 7,525 6,328 Israeli Shekel / U.S. Dollar 9,468 9,503 Japanese Yen / U.S. Dollar 29,174 50,379 Swiss Franc / U.S. Dollar 8,969 12,874 Swedish Krona / U.S. Dollar 9,189 18,871 Chinese Renminbi / U.S. Dollar 11,698 5,415 Taiwanese Dollar / U.S. Dollar 4,195 1,482 All other 11,268 10,090 Total $ 666,777 $ 512,462 As of December 31, 2020 and September 30, 2020, we had outstanding forward contracts designated as net investment hedges with notional amounts equivalent to the following: Currency Hedged (in thousands) December 31, 2020 September 30, 2020 Euro / U.S. Dollar $ 188,981 $ 164,885 |
Schedule of Net Gains and Losses on Foreign Currency Exposures | The following table shows the effect of our non-designated hedges in the Consolidated Statements of Operations for the three months ended December 31, 2020 and December 28, 2019: (in thousands) Three months ended Location of Loss December 31, 2020 December 28, 2019 Net realized and unrealized loss, excluding the underlying foreign currency exposure being hedged Other income (expense), net $ (1,587 ) $ (536 ) The following table shows the effect of our derivative instruments designated as net investment hedges in the Consolidated Statements of Operations for the three months ended December 31, 2020 and December 28, 2019: (in thousands) Three months ended Location of Gain (Loss) December 31, 2020 December 28, 2019 Gain (loss) recognized in OCI OCI $ 580 $ (3,565 ) Gain (loss) reclassified from OCI OCI 2,942 (762 ) Gain recognized, excluded portion Other income (expense), net 307 1,229 |
Schedule of Offsetting Assets | The following table sets forth the offsetting of derivative assets as of December 31, 2020: (in thousands) Gross Amounts Offset in the Consolidated Balance Sheets Gross Amounts Not Offset in the Consolidated Balance Sheets As of December 31, 2020 Gross Amount of Recognized Assets Gross Amounts Offset in the Consolidated Balance Sheets Net Amounts of Assets Presented in the Consolidated Balance Sheets Financial Instruments Cash Collateral Received Net Amount Forward Contracts $ 1,203 $ — $ 1,203 $ (913 ) $ — $ 290 |
Schedule of Offsetting Liabilities | The following table sets forth the offsetting of derivative liabilities as of December 31, 2020: (in thousands) Gross Amounts Offset in the Consolidated Balance Sheets Gross Amounts Not Offset in the Consolidated Balance Sheets As of December 31, 2020 Gross Amount of Recognized Liabilities Gross Amounts Offset in the Consolidated Balance Sheets Net Amounts of Liabilities Presented in the Consolidated Balance Sheets Financial Instruments Cash Collateral Pledged Net Amount Forward Contracts $ 913 $ — $ 913 $ (913 ) $ — $ — |
Segment and Geographic Inform_2
Segment and Geographic Information (Tables) | 3 Months Ended |
Dec. 31, 2020 | |
Segment Reporting [Abstract] | |
Summary of Revenue and Profit Attributable to Our Operating Segments | The revenue and profit attributable to our operating segments are summarized below. We do not produce asset information by reportable segment; therefore, it is not reported. (in thousands) Three months ended December 31, 2020 December 28, 2019 Software Products Revenue $ 393,420 $ 314,366 Operating costs (1) 105,401 102,192 Profit 288,019 212,174 Professional Services Revenue 35,630 41,744 Operating costs (2) 33,120 33,747 Profit 2,510 7,997 Total segment revenue 429,050 356,110 Total segment costs 138,521 135,939 Total segment profit 290,529 220,171 Unallocated operating expenses: Sales and marketing expenses 109,726 100,152 General and administrative expenses 27,400 26,919 Restructuring and other charges, net 247 14,034 Intangibles amortization 12,814 13,576 Stock-based compensation 46,088 27,936 Other unallocated operating expenses (3) 3,916 7,129 Total operating income 90,338 30,425 Interest expense (11,518 ) (12,098 ) Other income (expense), net (1,413 ) 704 Income before income taxes $ 77,407 $ 19,031 (1) Operating costs for the Software Products segment include all costs of software revenue and research and development costs, excluding stock-based compensation and intangible amortization. (2) Operating costs for the Professional Services segment include all costs of professional services revenue, excluding stock-based compensation. (3) Other unallocated operating expenses include acquisition-related and other transactional costs. |
Summary of Revenue for Geographic Regions | Our international revenue is presented based on the location of our customer. Revenue for the geographic regions in which we operate is presented below. (in thousands) Three months ended December 31, 2020 December 28, 2019 Americas $ 202,279 $ 155,973 Europe 162,319 136,521 Asia Pacific 64,452 63,616 Total revenue $ 429,050 $ 356,110 |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Summary of Income Taxes | (in thousands) Three months ended December 31, 2020 December 28, 2019 Income before income taxes $ 77,407 $ 19,031 Provision (benefit) for income taxes $ 53,892 $ (16,424 ) Effective income tax rate 70 % (86 )% |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Obligations | At December 31, 2020 and September 30, 2020, we had the following long-term debt obligations: (in thousands) December 31, 2020 September 30, 2020 4.000% Senior notes due 2028 $ 500,000 $ 500,000 3.625% Senior notes due 2025 500,000 500,000 Credit facility revolver (1) — 18,000 Total debt 1,000,000 1,018,000 Unamortized debt issuance costs for the senior notes (2) (12,143 ) (12,686 ) Total debt, net of issuance costs $ 987,857 $ 1,005,314 (1) Unamortized debt issuance costs related to the credit facility were $4.6 million and $4.9 million as of December 31, 2020 and September 30, 2020, respectively, and are included in other assets on the Consolidated Balance Sheets. ( 2 ) Unamortized debt issuance costs are included in long-term debt on the Consolidated Balance Sheets. |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Dec. 31, 2020 | |
Leases [Abstract] | |
Components of Lease Cost | The components of lease cost reflected in the Consolidated Statement of Operations for the three months ended December 31, 2020 and December 28, 2019 were as follows: (in thousands) Three months ended December 31, 2020 December 28, 2019 Operating lease cost $ 9,391 $ 8,757 Short-term lease cost 548 1,874 Variable lease cost 2,387 1,914 Sublease income (1,084 ) (1,012 ) Total lease cost $ 11,242 $ 11,533 Supplemental cash flow and right-of-use assets information for the three months ended December 31, 2020 and December 28, 2019 was as follows: (in thousands) Three months ended December 31, 2020 December 28, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 14,060 $ 5,498 Financing cash flows from financing leases $ 279 $ — Right-of-use assets obtained in exchange for new lease obligations: Operating leases $ 594 $ 5,380 Financing leases $ — $ 1,500 Supplemental balance sheet information related to the leases as of December 31, 2020 was as follows: As of December 31, 2020 Weighted-average remaining lease term - operating leases 12.5 years Weighted-average remaining lease term - financing leases 4.75 years Weighted-average discount rate - operating leases 5.6 % Weighted-average discount rate - financing leases 3.0 % |
Schedule of Maturities of Lease Liabilities | Maturities of lease liabilities as of December 31, 2020 are as follows: (in thousands) Operating Leases Remainder of 2021 $ 32,718 2022 31,181 2023 22,246 2024 20,294 2025 17,360 Thereafter 170,423 Total future lease payments $ 294,222 Less: imputed interest (87,776 ) Total $ 206,446 |
Revenue from Contracts with C_3
Revenue from Contracts with Customers - Schedule of Contract Assets and Contract Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Sep. 30, 2020 |
Revenue From Contract With Customer [Abstract] | ||
Contract asset | $ 12,016 | $ 11,984 |
Deferred revenue | $ 434,055 | $ 426,465 |
Revenue from Contracts with C_4
Revenue from Contracts with Customers - Additional Information (Details) - USD ($) | 3 Months Ended | ||
Dec. 31, 2020 | Dec. 28, 2019 | Sep. 30, 2020 | |
Revenue from External Customer [Line Items] | |||
Contract with customer, asset, expected to be transferred to receivables within the next 12 months and therefore | $ 7,000,000 | ||
Contract with customer, asset, reclassified to receivable | 5,300,000 | ||
Contract with customer, asset, increase in contract assets related to revenue recognized | 5,300,000 | ||
Impairments of the contract cost asset | 0 | $ 0 | |
Deferred revenue, revenue recognized | 193,400,000 | ||
Deferred revenue, additions | 201,000,000 | ||
Short term and long term accounts receivable | 529,900,000 | $ 511,300,000 | |
Refund liability | 37,700,000 | 34,500,000 | |
Allowance for doubtful accounts receivable | 500,000 | 500,000 | |
Amortization expense related to costs to obtain a contract with a customer | 10,400,000 | $ 7,700,000 | |
Deferred revenue | 434,055,000 | 426,465,000 | |
Revenue, remaining performance obligation, amount | 1,375,500,000 | ||
Unrecorded | |||
Revenue from External Customer [Line Items] | |||
Revenue, remaining performance obligation, amount | 941,400,000 | ||
Other Current Assets | |||
Revenue from External Customer [Line Items] | |||
Capitalized contract cost, net | 36,700,000 | 33,900,000 | |
Other Assets | |||
Revenue from External Customer [Line Items] | |||
Capitalized contract cost, net | $ 74,700,000 | $ 72,900,000 |
Revenue from Contracts with C_5
Revenue from Contracts with Customers - Remaining Performance Obligations - Additional Information (Details) - Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2021-01-01 | Dec. 31, 2020 |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, expected timing of satisfaction, percentage | 85.00% |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 24 months |
Revenue from Contracts with C_6
Revenue from Contracts with Customers - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2020 | Dec. 28, 2019 | |
Disaggregation Of Revenue [Line Items] | ||
Revenue | $ 429,050 | $ 356,110 |
Recurring revenue | ||
Disaggregation Of Revenue [Line Items] | ||
Revenue | 384,957 | 305,368 |
Perpetual license | ||
Disaggregation Of Revenue [Line Items] | ||
Revenue | 8,463 | 8,998 |
Professional services | ||
Disaggregation Of Revenue [Line Items] | ||
Revenue | $ 35,630 | $ 41,744 |
Restructuring and Other Charg_3
Restructuring and Other Charges - Additional Information (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2020USD ($) | Dec. 28, 2019USD ($) | Sep. 30, 2020USD ($)Employee | Sep. 30, 2019USD ($) | |
Restructuring Cost And Reserve [Line Items] | ||||
Restructuring and other charges, net | $ (247) | $ (14,034) | ||
Restructuring charges | (131) | (13,758) | ||
Restructuring Reserve | 6,752 | 27,606 | $ 9,987 | $ 31,086 |
Impairment and Accretion Exited Lease Facilities | ||||
Restructuring Cost And Reserve [Line Items] | ||||
Restructuring charges, exited facilities | (100) | |||
Prior Headquarters Relocation Charge | ||||
Restructuring Cost And Reserve [Line Items] | ||||
Restructuring and other charges, net | (200) | |||
Employee Severance and Related Benefits | ||||
Restructuring Cost And Reserve [Line Items] | ||||
Restructuring charges | (160) | (13,631) | ||
Restructuring Reserve | 1,461 | 14,027 | 3,992 | 298 |
Employee Severance and Related Benefits | Restructuring Plan 2020 | ||||
Restructuring Cost And Reserve [Line Items] | ||||
Restructuring charges | (200) | $ (30,800) | ||
Number of employees | Employee | 250 | |||
Facility Closures | ||||
Restructuring Cost And Reserve [Line Items] | ||||
Restructuring charges | 29 | (127) | ||
Restructuring Reserve | 5,291 | $ 13,579 | $ 5,995 | $ 30,788 |
Facility Closures | Accrued Expenses and Other Current Liabilities | ||||
Restructuring Cost And Reserve [Line Items] | ||||
Restructuring Reserve | 2,700 | |||
Facility Closures | Other Noncurrent Liabilities | ||||
Restructuring Cost And Reserve [Line Items] | ||||
Restructuring Reserve | $ 2,600 |
Restructuring and Other Charg_4
Restructuring and Other Charges - Schedule of Restructuring Reserve (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2020 | Dec. 28, 2019 | Sep. 30, 2020 | |
Restructuring Reserve [Roll Forward] | |||
Restructuring reserve, beginning balance | $ 9,987 | $ 31,086 | $ 31,086 |
Charges to operations, net | 131 | 13,758 | |
Cash disbursements | (3,420) | (931) | |
Foreign exchange impact | 54 | 155 | |
Restructuring reserve, ending balance | 6,752 | 27,606 | 9,987 |
Accounting Standards Update 2016-02 | |||
Restructuring Reserve [Roll Forward] | |||
ASC 842 adoption | (16,462) | ||
Employee Severance and Related Benefits | |||
Restructuring Reserve [Roll Forward] | |||
Restructuring reserve, beginning balance | 3,992 | 298 | 298 |
Charges to operations, net | 160 | 13,631 | |
Cash disbursements | (2,733) | (58) | |
Foreign exchange impact | 42 | 156 | |
Restructuring reserve, ending balance | 1,461 | 14,027 | 3,992 |
Employee Severance and Related Benefits | Accounting Standards Update 2016-02 | |||
Restructuring Reserve [Roll Forward] | |||
ASC 842 adoption | 0 | ||
Facility Closures | |||
Restructuring Reserve [Roll Forward] | |||
Restructuring reserve, beginning balance | 5,995 | 30,788 | 30,788 |
Charges to operations, net | (29) | 127 | |
Cash disbursements | (687) | (873) | |
Foreign exchange impact | 12 | (1) | |
Restructuring reserve, ending balance | $ 5,291 | 13,579 | $ 5,995 |
Facility Closures | Accounting Standards Update 2016-02 | |||
Restructuring Reserve [Roll Forward] | |||
ASC 842 adoption | $ (16,462) |
Stock-based Compensation - Addi
Stock-based Compensation - Additional Information (Details) $ / shares in Units, shares in Thousands | 3 Months Ended | |
Dec. 31, 2020USD ($)shares / unit$ / sharesshares | Dec. 28, 2019USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Common Stock Issuable per Restricted Stock Unit | shares / unit | 1 | |
ESPP maximum contribution percentage | 10.00% | |
ESPP maximum contribution amount by employee | $ 25,000 | |
ESPP purchase price as a % of stock price | 85.00% | |
Stock-based compensation | $ 46,088,000 | $ 27,936,000 |
ESPP | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation | $ 1,900,000 | $ 1,500,000 |
TSR Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Granted, shares | shares | 90 | |
Vesting period | 3 years | |
Weighted average fair value per share | $ / shares | $ 124.04 | |
Catch-Up Provision | TSR Units | Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Granted, shares | shares | 179 | |
Percentage of number of RSUs | 100.00% | |
Catch-Up Provision | Maximum Two Times | TSR Units | Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of RSUs | two times |
Stock-based Compensation - Sche
Stock-based Compensation - Schedule of Restricted Stock Unit Activity (Details) - Restricted Stock Units (RSUs) shares in Thousands | 3 Months Ended |
Dec. 31, 2020$ / sharesshares | |
Number of RSUs | |
Balance of outstanding restricted stock units, beginning, Shares | shares | 3,509 |
Granted, shares | shares | 925 |
Vested, Shares | shares | (801) |
Forfeited or not earned, Shares | shares | (36) |
Balance of outstanding restricted stock units, ending, Shares | shares | 3,597 |
Weighted- Average Grant Date Fair Value Per RSU | |
Balance of outstanding restricted stock units, beginning (in USD per share) | $ / shares | $ 79.13 |
Granted (in USD per share) | $ / shares | 100.20 |
Vested (in USD per share) | $ / shares | 79.41 |
Forfeited or not earned (in USD per share) | $ / shares | 78.79 |
Balance of outstanding restricted stock units, ending (in USD per share) | $ / shares | $ 84.61 |
Stock-based Compensation - Sc_2
Stock-based Compensation - Schedule of Restricted Stock Unit Activity (Parenthetical) (Details) shares in Thousands | Nov. 30, 2020shares |
Prior Period TSR Awards | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Granted, shares | 33 |
Stock-based Compensation - Sc_3
Stock-based Compensation - Schedule of Restricted Stock Unit Grants for the Period (Details) shares in Thousands | 3 Months Ended |
Dec. 31, 2020shares | |
Performance-Based Restricted Stock Units | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Granted, shares | 90 |
Service-Based Restricted Stock Units | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Granted, shares | 712 |
TSR Units | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Granted, shares | 90 |
Stock-based Compensation - Sc_4
Stock-based Compensation - Schedule of Restricted Stock Unit Grants for the Period (Parenthetical) (Details) shares in Thousands | 3 Months Ended |
Dec. 31, 2020Installmentshares | |
Performance-Based Restricted Stock Units | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting period | 3 years |
Granted, shares | 90 |
Number of equal annual installments | Installment | 3 |
Performance-Based Restricted Stock Units | Maximum | Catch-Up Provision | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Granted, shares | 179 |
Performance-Based Restricted Stock Units | Maximum Two Times | Maximum | Catch-Up Provision | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of RSUs | two times |
Service-Based Restricted Stock Units | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Granted, shares | 712 |
Number of equal annual installments | Installment | 3 |
Stock-based Compensation - Sc_5
Stock-based Compensation - Schedule of Valuation Assumptions (Details) | 3 Months Ended |
Dec. 31, 2020 | |
Volatility Assumptions [Abstract] | |
Average volatility of peer group | 41.50% |
Risk free interest rate | 0.21% |
Dividend yield | 0.00% |
Stock-based Compensation - Sc_6
Stock-based Compensation - Schedule of Classification of Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2020 | Dec. 28, 2019 | |
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||
Total stock-based compensation expense | $ 46,088 | $ 27,936 |
Sales and marketing | ||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||
Total stock-based compensation expense | 14,999 | 7,452 |
Research and development | ||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||
Total stock-based compensation expense | 8,443 | 6,932 |
General and administrative | ||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||
Total stock-based compensation expense | 18,212 | 10,509 |
License | Cost of Sales | ||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||
Total stock-based compensation expense | 20 | 0 |
Support and cloud services | Cost of Sales | ||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||
Total stock-based compensation expense | 2,302 | 1,486 |
Professional services | Cost of Sales | ||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||
Total stock-based compensation expense | $ 2,112 | $ 1,557 |
Earnings per Share (EPS) and _3
Earnings per Share (EPS) and Common Stock - Earnings per Share Basic and Diluted (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Dec. 31, 2020 | Dec. 28, 2019 | |
Earnings Per Share And Common Stock [Abstract] | ||
Net income | $ 23,515 | $ 35,455 |
Weighted-average shares outstanding—Basic | 116,401 | 115,190 |
Dilutive effect of restricted stock units | 1,204 | 501 |
Weighted-average shares outstanding—Diluted | 117,605 | 115,691 |
Earnings per share—Basic | $ 0.20 | $ 0.31 |
Earnings per share—Diluted | $ 0.20 | $ 0.31 |
Earnings per Share (EPS) and _4
Earnings per Share (EPS) and Common Stock - Additional Information (Details) - USD ($) | 3 Months Ended | ||
Dec. 31, 2020 | Dec. 28, 2019 | Sep. 30, 2020 | |
Earnings Per Share And Common Stock [Abstract] | |||
Stock option restricted shares and restricted stock units excluded from computation of EPS, shares | 100,000 | 1,300,000 | |
Common stock, shares authorized | 500,000,000 | 500,000,000 | |
Stock repurchase program, authorized amount | $ 1,000,000,000 | ||
Stock repurchased during period, value | $ 0 | $ 0 |
Acquisitions - Additional Infor
Acquisitions - Additional Information (Details) - USD ($) $ in Millions | Nov. 01, 2019 | Dec. 31, 2020 | Dec. 28, 2019 |
Business Acquisition [Line Items] | |||
Business combination, acquisition related costs | $ 3.9 | $ 7.1 | |
Onshape | |||
Business Acquisition [Line Items] | |||
Business combination, consideration transferred | $ 469 | ||
Cash acquired from acquisition | 7.5 | ||
Goodwill, acquired | 364.9 | ||
Liabilities | 4.1 | ||
Onshape | Customer Lists | |||
Business Acquisition [Line Items] | |||
Finite-lived intangible assets acquired | 56.8 | ||
Onshape | Purchased Software | |||
Business Acquisition [Line Items] | |||
Finite-lived intangible assets acquired | 47.3 | ||
Onshape | Trademarks | |||
Business Acquisition [Line Items] | |||
Finite-lived intangible assets acquired | $ 3.6 | ||
Onshape | Maximum | Customer Lists | |||
Business Acquisition [Line Items] | |||
Acquired finite-lived intangible asset, weighted average useful life | 10 years | ||
Onshape | Maximum | Purchased Software | |||
Business Acquisition [Line Items] | |||
Acquired finite-lived intangible asset, weighted average useful life | 16 years | ||
Onshape | Maximum | Trademarks | |||
Business Acquisition [Line Items] | |||
Acquired finite-lived intangible asset, weighted average useful life | 15 years |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Additional Information (Details) $ in Thousands | 3 Months Ended | |
Dec. 31, 2020USD ($)Segment | Sep. 30, 2020USD ($) | |
Number of operating segments | Segment | 2 | |
Number of reportable segments | Segment | 2 | |
Intangible assets | $ 1,861,177 | $ 1,863,356 |
Software Products | ||
Intangible assets | 1,815,700 | 1,818,100 |
Professional Services | ||
Intangible assets | $ 45,500 | $ 45,300 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Schedule of Goodwill and Acquired Intangible Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Sep. 30, 2020 |
Goodwill (not amortized) | $ 1,635,281 | $ 1,625,786 |
Intangible assets with finite lives (amortized), Gross Carrying Amount | 919,868 | 911,809 |
Intangible assets with finite lives (amortized), Accumulated Amortization | 693,972 | 674,239 |
Intangible assets with finite lives (amortized), Net Book Value | 225,896 | 237,570 |
Intangible Assets, Net (Including Goodwill) | 1,861,177 | 1,863,356 |
Purchased Software | ||
Intangible assets with finite lives (amortized), Gross Carrying Amount | 446,336 | 443,275 |
Intangible assets with finite lives (amortized), Accumulated Amortization | 317,753 | 309,124 |
Intangible assets with finite lives (amortized), Net Book Value | 128,583 | 134,151 |
Capitalized Software | ||
Intangible assets with finite lives (amortized), Gross Carrying Amount | 22,877 | 22,877 |
Intangible assets with finite lives (amortized), Accumulated Amortization | 22,877 | 22,877 |
Intangible assets with finite lives (amortized), Net Book Value | 0 | 0 |
Customer Lists and Relationships | ||
Intangible assets with finite lives (amortized), Gross Carrying Amount | 423,719 | 418,953 |
Intangible assets with finite lives (amortized), Accumulated Amortization | 332,787 | 322,092 |
Intangible assets with finite lives (amortized), Net Book Value | 90,932 | 96,861 |
Trademarks and Trade Names | ||
Intangible assets with finite lives (amortized), Gross Carrying Amount | 22,854 | 22,687 |
Intangible assets with finite lives (amortized), Accumulated Amortization | 16,473 | 16,129 |
Intangible assets with finite lives (amortized), Net Book Value | 6,381 | 6,558 |
Other | ||
Intangible assets with finite lives (amortized), Gross Carrying Amount | 4,082 | 4,017 |
Intangible assets with finite lives (amortized), Accumulated Amortization | 4,082 | 4,017 |
Intangible assets with finite lives (amortized), Net Book Value | $ 0 | $ 0 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Schedule of Changes in Goodwill by Reportable Segments (Details) $ in Thousands | 3 Months Ended |
Dec. 31, 2020USD ($) | |
Goodwill [Line Items] | |
Balance, October 1, 2020 | $ 1,625,786 |
Foreign currency translation adjustment | 9,495 |
Balance, December 31, 2020 | 1,635,281 |
Software Products | |
Goodwill [Line Items] | |
Balance, October 1, 2020 | 1,583,316 |
Foreign currency translation adjustment | 9,247 |
Balance, December 31, 2020 | 1,592,563 |
Professional Services | |
Goodwill [Line Items] | |
Balance, October 1, 2020 | 42,470 |
Foreign currency translation adjustment | 248 |
Balance, December 31, 2020 | $ 42,718 |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets - Schedule of Aggregate Amortization Expense for Intangible Assets with Finite Lives (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2020 | Dec. 28, 2019 | |
Goodwill And Intangible Assets Disclosure [Abstract] | ||
Amortization of acquired intangible assets | $ 6,547 | $ 6,777 |
Cost of license revenue | 6,267 | 6,799 |
Total amortization expense | $ 12,814 | $ 13,576 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Financial Assets and Liabilities Measured at Fair Value (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Sep. 30, 2020 |
Financial assets: | ||
Cash equivalents | $ 202,004 | $ 105,299 |
Marketable securities: | 59,099 | |
Derivative instruments | 1,745 | 903 |
Convertible note | 1,000 | |
Total financial assets | 204,749 | 165,301 |
Financial liabilities: | ||
Forward contracts | 913 | 1,073 |
Total financial liabilities | 913 | 1,073 |
Corporate notes/bonds | ||
Financial assets: | ||
Marketable securities: | 59,099 | |
Level 1 | ||
Financial assets: | ||
Cash equivalents | 202,004 | 105,299 |
Derivative instruments | 0 | 0 |
Convertible note | 0 | |
Total financial assets | 202,004 | 164,398 |
Financial liabilities: | ||
Forward contracts | 0 | 0 |
Total financial liabilities | 0 | 0 |
Level 1 | Corporate notes/bonds | ||
Financial assets: | ||
Marketable securities: | 59,099 | |
Level 2 | ||
Financial assets: | ||
Cash equivalents | 0 | 0 |
Derivative instruments | 1,745 | 903 |
Convertible note | 0 | |
Total financial assets | 1,745 | 903 |
Financial liabilities: | ||
Forward contracts | 913 | 1,073 |
Total financial liabilities | 913 | 1,073 |
Level 2 | Corporate notes/bonds | ||
Financial assets: | ||
Marketable securities: | 0 | |
Level 3 | ||
Financial assets: | ||
Cash equivalents | 0 | 0 |
Derivative instruments | 0 | 0 |
Convertible note | 1,000 | |
Total financial assets | 1,000 | 0 |
Financial liabilities: | ||
Forward contracts | 0 | 0 |
Total financial liabilities | $ 0 | 0 |
Level 3 | Corporate notes/bonds | ||
Financial assets: | ||
Marketable securities: | $ 0 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Sep. 30, 2020 |
Fair Value Disclosures [Abstract] | ||
Cost method investments | $ 8.9 | $ 8.9 |
Amount invested into non-marketable convertible note | $ 1 |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of Changes in Fair Value of Level 3 Investment (Details) - Level 3 $ in Thousands | 3 Months Ended |
Dec. 31, 2020USD ($) | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Balance, October 1, 2020 | $ 0 |
Investment | 1,000 |
Balance, December 31, 2020 | $ 1,000 |
Marketable Securities - Additio
Marketable Securities - Additional Information (Details) - USD ($) | 3 Months Ended | |
Dec. 31, 2020 | Dec. 28, 2019 | |
Marketable Securities [Abstract] | ||
Marketable securities held | $ 0 | |
Proceeds from sale of marketable securities | $ 56,170,000 | $ 0 |
Marketable Securities (Amortize
Marketable Securities (Amortized Cost and Fair Value of Marketable Securities) (Details) $ in Thousands | Sep. 30, 2020USD ($) |
Debt Securities, Available-for-sale [Line Items] | |
Amortized cost | $ 58,793 |
Fair value | 59,099 |
Corporate notes/bonds | |
Debt Securities, Available-for-sale [Line Items] | |
Amortized cost | 58,793 |
Gross unrealized gains | 323 |
Gross unrealized losses | (17) |
Fair value | $ 59,099 |
Marketable Securities (Schedule
Marketable Securities (Schedule of Fair Value and Gross Unrealized Losses) (Details) - Corporate notes/bonds $ in Thousands | Sep. 30, 2020USD ($) |
Debt Securities, Available-for-sale [Line Items] | |
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months, Fair Value | $ 9,841 |
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss | (17) |
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer, Fair Value | 0 |
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss | 0 |
Debt Securities, Available-for-sale, Unrealized Loss Position, Fair Value | 9,841 |
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss | $ (17) |
Marketable Securities (Schedu_2
Marketable Securities (Schedule of Available-for-sale Marketable Securities by Contractual Maturity Date) (Details) $ in Thousands | Sep. 30, 2020USD ($) |
Investments Debt And Equity Securities [Abstract] | |
Due in one year or less, amortized cost | $ 27,727 |
Due after one year through three years, amortized cost | 31,066 |
Amortized cost | 58,793 |
Due in one year or less, fair value | 27,899 |
Due after one year through three years, fair value | 31,200 |
Total Fair value | $ 59,099 |
Derivative Financial Instrume_3
Derivative Financial Instruments - Schedule of Derivative Financial Instruments at Gross Fair Value (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Sep. 30, 2020 |
Designated as Hedging Instrument | Forward Contracts | ||
Derivative [Line Items] | ||
Gross Amount of Recognized Assets | $ 583 | $ 3 |
Gross Amount of Recognized Liabilities | 0 | 306 |
Designated as Hedging Instrument | Options | ||
Derivative [Line Items] | ||
Gross Amount of Recognized Assets | 0 | 0 |
Not Designated as Hedging Instrument | Forward Contracts | ||
Derivative [Line Items] | ||
Fair Value of Derivatives Not Designated As Hedging Instruments | 620 | 900 |
Fair Value of Derivatives Not Designated As Hedging Instruments | 913 | 767 |
Not Designated as Hedging Instrument | Options | ||
Derivative [Line Items] | ||
Fair Value of Derivatives Not Designated As Hedging Instruments | $ 542 | $ 0 |
Derivative Financial Instrume_4
Derivative Financial Instruments - Schedule of Derivative Financial Instruments at Gross Fair Value (Parentheticals) (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Sep. 30, 2020 |
Other Current Assets | ||
Derivative [Line Items] | ||
Gross Amount of Recognized Assets | $ 1.7 | $ 0.9 |
Other Current Liabilities | Forward Contracts | ||
Derivative [Line Items] | ||
Gross Amount of Recognized Liabilities | $ 0.9 | $ 1.1 |
Derivative Financial Instrume_5
Derivative Financial Instruments - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 31, 2020 | Dec. 28, 2019 | |
Derivative [Line Items] | ||
Gain (Loss) on Foreign Currency Derivative Instruments Not Designated as Hedging Instruments | $ (1.8) | $ 0 |
Maximum | Forward Contracts | Not Designated as Hedging Instrument | ||
Derivative [Line Items] | ||
Derivative maturity | 3 months | |
Maximum | Forward Contracts | Designated as Hedging Instrument | Net Investment Hedging | ||
Derivative [Line Items] | ||
Derivative maturity | 3 months | |
Maximum | Foreign Exchange Options | Not Designated as Hedging Instrument | ||
Derivative [Line Items] | ||
Derivative maturity | 10 months |
Derivative Financial Instrume_6
Derivative Financial Instruments - Schedule of Notional Amounts of Outstanding Forward Contracts and Options (Details) - Not Designated as Hedging Instrument - Foreign Exchange Forward Contract and Options - USD ($) $ in Thousands | Dec. 31, 2020 | Sep. 30, 2020 |
Derivative [Line Items] | ||
Notional amount | $ 666,777 | $ 512,462 |
Canadian / U.S. Dollar | ||
Derivative [Line Items] | ||
Notional amount | 5,696 | 6,847 |
Euro / U.S. Dollar | ||
Derivative [Line Items] | ||
Notional amount | 569,595 | 390,673 |
British Pound / U.S. Dollar | ||
Derivative [Line Items] | ||
Notional amount | 7,525 | 6,328 |
Israeli Shekel / U.S. Dollar | ||
Derivative [Line Items] | ||
Notional amount | 9,468 | 9,503 |
Japanese Yen / U.S. Dollar | ||
Derivative [Line Items] | ||
Notional amount | 29,174 | 50,379 |
Swiss Franc / U.S. Dollar | ||
Derivative [Line Items] | ||
Notional amount | 8,969 | 12,874 |
Swedish Krona / U.S. Dollar | ||
Derivative [Line Items] | ||
Notional amount | 9,189 | 18,871 |
Chinese Renminbi / U.S. Dollar | ||
Derivative [Line Items] | ||
Notional amount | 11,698 | 5,415 |
Taiwanese Dollar / U.S. Dollar | ||
Derivative [Line Items] | ||
Notional amount | 4,195 | 1,482 |
All other | ||
Derivative [Line Items] | ||
Notional amount | $ 11,268 | $ 10,090 |
Derivative Financial Instrume_7
Derivative Financial Instruments - Schedule of Notional Amounts of Outstanding Forward Contracts and Options (Parenthetical) (Details) - Not Designated as Hedging Instrument - Euro / U.S. Dollar $ in Millions | Dec. 31, 2020USD ($) |
Foreign Exchange Forward | |
Derivative [Line Items] | |
Notional amount | $ 380.9 |
Options | |
Derivative [Line Items] | |
Notional amount | $ 188.7 |
Derivative Financial Instrume_8
Derivative Financial Instruments - Schedule of Derivative Instruments and Hedging Activities Disclosures (Details) - Foreign Exchange Forward - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2020 | Dec. 28, 2019 | |
Not Designated as Hedging Instrument | Other income (expense), net | ||
Derivative Instruments Gain Loss [Line Items] | ||
Net realized and unrealized loss, excluding the underlying foreign currency exposure being hedged | $ (1,587) | $ (536) |
Designated as Hedging Instrument | Net Investment Hedging | ||
Derivative Instruments Gain Loss [Line Items] | ||
Gain (loss) recognized in OCI | 580 | (3,565) |
Gain (loss) reclassified from OCI | 2,942 | (762) |
Designated as Hedging Instrument | Other income (expense), net | Net Investment Hedging | ||
Derivative Instruments Gain Loss [Line Items] | ||
Gain recognized, excluded portion | $ 307 | $ 1,229 |
Derivative Financial Instrume_9
Derivative Financial Instruments - Schedule of Notional Amounts of Outstanding Forward Contracts (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Sep. 30, 2020 |
Euro / U.S. Dollar | Foreign Exchange Forward | Designated as Hedging Instrument | Net Investment Hedging | ||
Derivative [Line Items] | ||
Notional amount | $ 188,981 | $ 164,885 |
Derivative Financial Instrum_10
Derivative Financial Instruments - Schedule of Offsetting Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Sep. 30, 2020 |
Derivative [Line Items] | ||
Net Amounts of Assets Presented in the Consolidated Balance Sheets | $ 1,745 | $ 903 |
Foreign Currency Forwards | ||
Derivative [Line Items] | ||
Gross Amount of Recognized Assets | 1,203 | |
Gross Amounts Offset in the Consolidated Balance Sheets | 0 | |
Net Amounts of Assets Presented in the Consolidated Balance Sheets | 1,203 | |
Gross Amounts Not Offset in the Consolidated Balance Sheets, Financial Instruments | (913) | |
Gross Amounts Not Offset in the Consolidated Balance Sheets, Cash Collateral Received | 0 | |
Net Amount | $ 290 |
Derivative Financial Instrum_11
Derivative Financial Instruments - Schedule of Offsetting Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Sep. 30, 2020 |
Derivative [Line Items] | ||
Net Amounts of Liabilities Presented in the Consolidated Balance Sheets | $ 913 | $ 1,073 |
Foreign Currency Forwards | ||
Derivative [Line Items] | ||
Gross Amount of Recognized Liabilities | 913 | |
Gross Amounts Offset in the Consolidated Balance Sheets | 0 | |
Net Amounts of Liabilities Presented in the Consolidated Balance Sheets | 913 | |
Gross Amounts Not Offset in the Consolidated Balance Sheets, Financial Instruments | (913) | |
Gross Amounts Not Offset in the Consolidated Balance Sheets, Cash Collateral Pledged | 0 | |
Net Amount | $ 0 |
Segment and Geographic Inform_3
Segment and Geographic Information - Additional Information (Details) | 3 Months Ended |
Dec. 31, 2020Segment | |
Segment Reporting [Abstract] | |
Number of operating segments | 2 |
Number of reportable segments | 2 |
Segment and Geographic Inform_4
Segment and Geographic Information - Summary of Revenue and Profit Attributable to Our Operating Segments (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2020 | Dec. 28, 2019 | |
Segment Reporting Revenue Reconciling Item [Line Items] | ||
Revenue | $ 429,050 | $ 356,110 |
Operating costs | 86,830 | 87,405 |
Gross margin | 342,220 | 268,705 |
Sales and marketing | 124,725 | 107,604 |
General and administrative | 49,528 | 44,557 |
Restructuring and other charges, net | 247 | 14,034 |
Intangibles amortization | 12,814 | 13,576 |
Operating income | 90,338 | 30,425 |
Interest expense | (11,518) | (12,098) |
Other income (expense), net | (1,413) | 704 |
Income before income taxes | 77,407 | 19,031 |
Operating Segments | ||
Segment Reporting Revenue Reconciling Item [Line Items] | ||
Revenue | 429,050 | 356,110 |
Operating costs | 138,521 | 135,939 |
Gross margin | 290,529 | 220,171 |
Unallocated | ||
Segment Reporting Revenue Reconciling Item [Line Items] | ||
Sales and marketing | 109,726 | 100,152 |
General and administrative | 27,400 | 26,919 |
Restructuring and other charges, net | 247 | 14,034 |
Intangibles amortization | 12,814 | 13,576 |
Stock-based compensation | 46,088 | 27,936 |
Other unallocated operating expenses | 3,916 | 7,129 |
Software Products | Operating Segments | ||
Segment Reporting Revenue Reconciling Item [Line Items] | ||
Revenue | 393,420 | 314,366 |
Operating costs | 105,401 | 102,192 |
Gross margin | 288,019 | 212,174 |
Professional Services | Operating Segments | ||
Segment Reporting Revenue Reconciling Item [Line Items] | ||
Revenue | 35,630 | 41,744 |
Operating costs | 33,120 | 33,747 |
Gross margin | $ 2,510 | $ 7,997 |
Segment and Geographic Inform_5
Segment and Geographic Information - Summary of Revenue for Geographic Regions (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2020 | Dec. 28, 2019 | |
Segment Reporting Revenue Reconciling Item [Line Items] | ||
Total revenue | $ 429,050 | $ 356,110 |
Americas | ||
Segment Reporting Revenue Reconciling Item [Line Items] | ||
Total revenue | 202,279 | 155,973 |
Europe | ||
Segment Reporting Revenue Reconciling Item [Line Items] | ||
Total revenue | 162,319 | 136,521 |
Asia-Pacific | ||
Segment Reporting Revenue Reconciling Item [Line Items] | ||
Total revenue | $ 64,452 | $ 63,616 |
Income Taxes - Summary of Incom
Income Taxes - Summary of Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2020 | Dec. 28, 2019 | |
Income Tax Disclosure [Abstract] | ||
Income before income taxes | $ 77,407 | $ 19,031 |
Provision (benefit) for income taxes | $ 53,892 | $ (16,424) |
Effective income tax rate | 70.00% | (86.00%) |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | |||
Dec. 31, 2020 | Dec. 28, 2019 | Sep. 30, 2016 | Sep. 30, 2020 | |
Income Tax Disclosure [Line Items] | ||||
Federal statutory income tax rate | 21.00% | 21.00% | ||
Charge related to effects of Non US Jurisdiction Tax Matter | $ 35.3 | |||
US Income taxes on repatriated foreign earnings | 2.9 | |||
Unrecognized tax benefits | 46.3 | $ 16.1 | ||
Income tax provision upon recognition of unrecognized tax benefit | 46.3 | |||
Unrecognized tax benefits that would impact valuation allowance | 7.9 | |||
Potential decrease in unrecognized tax benefits | 30 | |||
Onshape | ||||
Income Tax Disclosure [Line Items] | ||||
Reduction of valuation allowance | $ 21 | |||
KOREA, REPUBLIC OF | ||||
Income Tax Disclosure [Line Items] | ||||
Charge related to effects of unrecognized tax benefit | $ 32.4 | |||
Income tax examination, estimate of possible loss | $ 12 |
Debt - Schedule of Long-term De
Debt - Schedule of Long-term Debt Obligations (Details) - USD ($) | Dec. 31, 2020 | Sep. 30, 2020 | Feb. 13, 2020 |
Debt Instrument [Line Items] | |||
Total debt | $ 1,000,000,000 | $ 1,018,000,000 | |
Unamortized debt issuance costs for the senior notes | (12,143,000) | (12,686,000) | |
Total debt, net of issuance costs | 987,857,000 | 1,005,314,000 | |
4.000% Senior Notes Due 2028 | |||
Debt Instrument [Line Items] | |||
Senior Notes | $ 500,000,000 | ||
3.625% Senior Notes Due 2025 | |||
Debt Instrument [Line Items] | |||
Senior Notes | $ 500,000,000 | ||
Long-term Debt [Member] | Line of Credit | |||
Debt Instrument [Line Items] | |||
Credit facility revolver | 0 | 18,000,000 | |
Long-term Debt [Member] | 4.000% Senior Notes Due 2028 | |||
Debt Instrument [Line Items] | |||
Senior Notes | 500,000,000 | 500,000,000 | |
Long-term Debt [Member] | 3.625% Senior Notes Due 2025 | |||
Debt Instrument [Line Items] | |||
Senior Notes | $ 500,000,000 | $ 500,000,000 |
Debt - Schedule of Long-term _2
Debt - Schedule of Long-term Debt Obligations (Parenthetical) (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Sep. 30, 2020 |
Debt Instrument [Line Items] | ||
Unamortized Debt Issuance Expense | $ 12,143 | $ 12,686 |
Other Noncurrent Assets | Line of Credit | ||
Debt Instrument [Line Items] | ||
Unamortized Debt Issuance Expense | $ 4,600 | $ 4,900 |
Debt - Senior Notes - Additiona
Debt - Senior Notes - Additional Information (Details) - USD ($) $ in Millions | Feb. 13, 2020 | Dec. 31, 2020 |
Senior Notes | ||
Debt Instrument [Line Items] | ||
Redemption price, percentage | 101.00% | |
4.000% Senior Notes Due 2028 | ||
Debt Instrument [Line Items] | ||
Senior Notes | $ 500 | |
Interest rate | 4.00% | |
4.000% Senior Notes Due 2028 | Senior Notes | ||
Debt Instrument [Line Items] | ||
Fair value amount | $ 525 | |
3.625% Senior Notes Due 2025 | ||
Debt Instrument [Line Items] | ||
Senior Notes | $ 500 | |
Interest rate | 3.625% | |
3.625% Senior Notes Due 2025 | Senior Notes | ||
Debt Instrument [Line Items] | ||
Fair value amount | $ 515.8 |
Debt - Credit Agreement - Addit
Debt - Credit Agreement - Additional Information (Details) - USD ($) | 3 Months Ended | |||||
Dec. 31, 2020 | Dec. 28, 2019 | Feb. 04, 2021 | Jan. 31, 2021 | Sep. 30, 2020 | Feb. 13, 2020 | |
Debt Instrument [Line Items] | ||||||
Credit facility amount | $ 1,000,000,000 | |||||
Voting interest in domestic subsidiaries pledged against credit facility | 100.00% | |||||
Voting interest in foreign subsidiaries pledged against credit facility | 65.00% | |||||
Leverage ratio, actual | 2.03 | |||||
Senior debt leverage ratio, actual | 0.03 | |||||
Fixed charge coverage ratio, actual | 8.43 | |||||
Periodic interest payment | $ 700,000 | $ 16,900,000 | ||||
Interest rate during period | 3.80% | 4.90% | ||||
Foreign Subsidiary | Subsequent Event | ||||||
Debt Instrument [Line Items] | ||||||
Long-term portion of long term debt | $ 0 | |||||
Line of Credit | ||||||
Debt Instrument [Line Items] | ||||||
Line of credit facility, maximum borrowing capacity expansion amount | $ 500,000,000 | |||||
Credit facility maturity date | Feb. 13, 2025 | |||||
Basis spread on Federal Reserve Bank of New York (FRBNY) rate | 0.50% | |||||
Basis spread on adjusted LIBOR | 1.00% | |||||
Investment limit in foreign subsidiaries | $ 100,000,000 | |||||
Cash investment limit for acquisition of business | $ 200,000,000 | |||||
Total leverage ratio | 4.50 | |||||
Senior secured leverage ratio | 3 | |||||
Minimum fixed charge coverage ratio allowed under debt covenant | 3 | |||||
Line of Credit | Long-term Debt | ||||||
Debt Instrument [Line Items] | ||||||
Long-term portion of long term debt | $ 0 | $ 18,000,000 | ||||
Line of Credit | Minimum | ||||||
Debt Instrument [Line Items] | ||||||
Variable interest rate, length of time between updates | 30 days | |||||
Credit facility commitment fees percentage | 0.175% | |||||
Line of Credit | Minimum | London Interbank Offered Rate (LIBOR) | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate | 1.25% | |||||
Line of Credit | Minimum | Base Rate | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate | 0.25% | |||||
Line of Credit | Maximum | ||||||
Debt Instrument [Line Items] | ||||||
Variable interest rate, length of time between updates | 180 days | |||||
Credit facility commitment fees percentage | 0.30% | |||||
Line of Credit | Maximum | London Interbank Offered Rate (LIBOR) | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate | 1.75% | |||||
Line of Credit | Maximum | Base Rate | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate | 0.75% | |||||
Line of Credit | Subsequent Event | Long-term Debt | ||||||
Debt Instrument [Line Items] | ||||||
Annual rate on new borrowings drawn | 2.00% |
Leases - Additional Information
Leases - Additional Information (Details) | 3 Months Ended | |||
Dec. 31, 2020USD ($)ft² | Dec. 28, 2019USD ($) | Sep. 30, 2020USD ($) | Feb. 28, 2019USD ($) | |
Lessee Lease Description [Line Items] | ||||
Boston Lease Square Feet | ft² | 250,000 | |||
Boston lease year one payments | $ 11,000,000 | |||
Boston lease per square foot annual increase | 1 | |||
Boston lease annual increase | 300,000 | |||
Boston lease building operating cost amount estimate year one | 7,100,000 | |||
Boston lease leasehold improvement allowance | 25,000,000 | |||
Boston lease leasehold improvement allowance per square foot | 100 | |||
Payments to be received as sublease income | $ 9,100,000 | |||
Operating right-of-use lease assets | 145,252,000 | $ 149,933,000 | ||
Operating lease, liability | 206,446,000 | |||
Lease Cost | ||||
Operating cash flows from operating leases | 14,060,000 | $ 5,498,000 | ||
Facility Closures and Related Costs | ||||
Lessee Lease Description [Line Items] | ||||
Operating lease liability, net. restructured facilities | 7,600,000 | $ 11,300,000 | ||
Operating right-of-use lease assets | 2,600,000 | |||
Operating lease, liability | 10,200,000 | |||
Lease Cost | ||||
Operating cash flows from operating leases | 3,800,000 | $ 2,400,000 | ||
Facility Closures and Related Costs | Operating Lease Short Term Lease Obligation | ||||
Lessee Lease Description [Line Items] | ||||
Operating lease, liability | 6,600,000 | |||
Facility Closures and Related Costs | Operating Lease Long Term Lease Obligation | ||||
Lessee Lease Description [Line Items] | ||||
Operating lease, liability | 3,600,000 | |||
Sublease Income Committed | ||||
Lessee Lease Description [Line Items] | ||||
Sublease income assumed | 2,300,000 | |||
Sublease Income Estimated Uncommitted | ||||
Lessee Lease Description [Line Items] | ||||
Sublease income assumed | $ 300,000 |
Leases - Components of Lease Co
Leases - Components of Lease Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2020 | Dec. 28, 2019 | |
Lease Cost | ||
Operating lease cost | $ 9,391 | $ 8,757 |
Short-term lease cost | 548 | 1,874 |
Variable lease cost | 2,387 | 1,914 |
Sublease income | (1,084) | (1,012) |
Total lease cost | $ 11,242 | $ 11,533 |
Leases - Schedule of Supplement
Leases - Schedule of Supplemental Cash Flow and Right of Use Assets Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2020 | Dec. 28, 2019 | |
Leases [Abstract] | ||
Operating cash flows from operating leases | $ 14,060 | $ 5,498 |
Financing cash flows from financing leases | 279 | 0 |
Right-of-use assets obtained in exchange for new lease obligations, operating leases | 594 | 5,380 |
Right-of-use assets obtained in exchange for new lease obligations, financing leases | $ 0 | $ 1,500 |
Leases - Schedule of Suppleme_2
Leases - Schedule of Supplemental Balance Sheet Information Related to Leases (Details) | Dec. 31, 2020 |
Leases [Abstract] | |
Weighted-average remaining lease term - operating leases | 12 years 6 months |
Weighted-average remaining lease term - financing leases | 4 years 9 months |
Weighted-average discount rate - operating leases | 5.60% |
Weighted-average discount rate - financing leases | 3.00% |
Leases - Schedule of Maturities
Leases - Schedule of Maturities of Lease Liabilities (Details) $ in Thousands | Dec. 31, 2020USD ($) |
Operating Lease (ASC 842) | |
Remainder of 2021 | $ 32,718 |
2022 | 31,181 |
2023 | 22,246 |
2024 | 20,294 |
2025 | 17,360 |
Thereafter | 170,423 |
Total future lease payments | 294,222 |
Less: imputed interest | (87,776) |
Total | $ 206,446 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) $ in Millions | 3 Months Ended |
Dec. 31, 2020USD ($)Plantiff | |
Loss Contingencies [Line Items] | |
Charge related to effects of Non US Jurisdiction Tax Matter | $ | $ 35.3 |
Putative Class Action | |
Loss Contingencies [Line Items] | |
Lawsuit filing date | September 17, 2020 |
Number of plaintiffs | Plantiff | 3 |
Lawsuit action domicile | U.S. District Court for the District of Massachusetts |
Plaintiffs claim | The plaintiffs seek unspecified damages on behalf of a class of Plan participants from September 17, 2014 through the date of any judgment. |
Subsequent Events - Additional
Subsequent Events - Additional Information (Details) - USD ($) $ in Thousands | Jan. 15, 2021 | Jan. 31, 2021 | Dec. 31, 2020 | Dec. 28, 2019 |
Subsequent Event [Line Items] | ||||
Borrowings under credit facility | $ 0 | $ 455,000 | ||
Subsequent Event | Arena Solutions | ||||
Subsequent Event [Line Items] | ||||
Payments to acquire business, net of cash | $ 715,000 | |||
Total outstanding indebtedness | $ 1,600,000 | |||
Subsequent Event | Arena Solutions | Line of Credit | ||||
Subsequent Event [Line Items] | ||||
Borrowings under credit facility | $ 600,000 |