10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 _____________________________________________

Form 10-Q

 _____________________________________________

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended December 31, 2021

Or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 000-27038

 _____________________________________________

NUANCE COMMUNICATIONS, INC.

(Exact name of registrant as specified in its charter)

 _____________________________________________

DE		94-3156479
(State or Other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
1 Wayside Road
Burlington,	MA	01803
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code:

(781) 565-5000

 _____________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.001	NUAN	Nasdaq Stock Market LLC

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer," “accelerated filer," “smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer	☒	Accelerated Filer	☐
Non-accelerated Filer	☐	Smaller Reporting Company	☐
		Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.      ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

The number of shares of the Registrant’s Common Stock, outstanding as of January 31, 2022 was 319,385,728.

NUANCE COMMUNICATIONS, INC.

TABLE OF CONTENTS

 

		Page
PART I: FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements:
	Consolidated Statements of Operations for the three months ended December 31, 2021 and 2020	1
	Consolidated Statements of Comprehensive (Loss) Income for the three months ended December 31, 2021 and 2020	2
	Consolidated Balance Sheets at December 31, 2021 and September 30, 2021	3
	Consolidated Statements of Stockholders’ Equity for the three months ended December 31, 2021 and 2020	4
	Consolidated Statements of Cash Flows for the three months ended December 31, 2021 and 2020	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	41
Item 4.	Controls and Procedures	42
PART II: OTHER INFORMATION
Item 1.	Legal Proceedings	43
Item 1A.	Risk Factors	43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 3.	Defaults Upon Senior Securities	43
Item 4.	Mine Safety Disclosures	43
Item 5.	Other Information	43
Item 6.	Exhibits	43
Exhibit Index		44
Signatures		45
Certifications

NUANCE COMMUNICATIONS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended December 31,
	2021		2020
	(Unaudited)
	(In thousands, except per share amounts)
Revenues:
Hosting and professional services	$	213,732	$	195,832
Product and licensing	47,472		86,037
Maintenance and support	60,231		63,884
Total revenues	321,435		345,753
Cost of revenues:
Hosting and professional services	121,254		105,615
Product and licensing	6,690		14,415
Maintenance and support	6,718		7,486
Amortization of intangible assets	5,215		4,262
Total cost of revenues	139,877		131,778
Gross profit	181,558		213,975
Operating expenses:
Research and development	68,166		56,457
Sales and marketing	84,002		65,405
General and administrative	35,517		41,145
Amortization of intangible assets	6,754		10,531
Acquisition-related costs, net	1,248		325
Restructuring and other charges, net	8,506		8,566
Total operating expenses	204,193		182,429
(Loss) income from operations	(22,635)		31,546
Other income (expense):
Interest income	22		228
Interest expense	(12,661)		(23,014)
Other income, net	1,265		497
(Loss) income before income taxes	(34,009)		9,257
Provision for income taxes	23,550		2,303
Net (loss) income from continuing operations	(57,559)		6,954
Net income from discontinued operations	—		7,941
Net (loss) income	$	(57,559)	$	14,895
Net (loss) income per common share - basic:
Continuing operations	$	(0.18)	$	0.02
Discontinued operations	—		0.03
Total net (loss) income per basic common share	$	(0.18)	$	0.05
Net (loss) income per common share - diluted:
Continuing operations	$	(0.18)	$	0.02
Discontinued operations	—		0.03
Total net (loss) income per diluted common share	$	(0.18)	$	0.05
Weighted average common shares outstanding:
Basic	317,359		283,818
Diluted	317,359		314,210

See accompanying notes.

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NUANCE COMMUNICATIONS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

	Three Months Ended December 31,
	2021		2020
	(Unaudited)
	(In thousands)
Net (loss) income	$	(57,559)	$	14,895
Other comprehensive (loss) income:
Foreign currency translation adjustment	(2,653)		15,814
Pension adjustments	35		14
Unrealized loss on marketable securities	(7)		(29)
Total other comprehensive (loss) income, net	(2,625)		15,799
Comprehensive (loss) income	$	(60,184)	$	30,694

See accompanying notes.

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NUANCE COMMUNICATIONS, INC.

CONSOLIDATED BALANCE SHEETS 

	December 31, 2021		September 30, 2021
	(Unaudited)
	(In thousands, except per share amounts)
ASSETS
Current assets:
Cash and cash equivalents	$	91,949	$	187,307
Marketable securities	—		22,168
Accounts receivable, less allowances for doubtful accounts of $9,536 and $10,073	180,171		162,292
Prepaid expenses and other current assets	203,684		231,778
Total current assets	475,804		603,545
Land, building and equipment, net	147,704		146,660
Goodwill	2,154,658		2,155,270
Intangible assets, net	116,002		128,331
Right-of-use assets	77,905		82,666
Deferred tax assets	45,927		45,927
Other assets	218,557		224,254
Total assets	$	3,236,557	$	3,386,653
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	348,669	$	372,999
Contingent and deferred acquisition payments	1,882		2,148
Accounts payable	75,326		90,120
Accrued expenses and other current liabilities	154,276		222,340
Deferred revenue	261,010		240,742
Total current liabilities	841,163		928,349
Long-term debt	495,185		494,925
Deferred revenue, net of current portion	99,505		108,317
Deferred tax liabilities	27,723		12,019
Operating lease liabilities	80,444		85,290
Other liabilities	76,915		77,781
Total liabilities	1,620,935		1,706,681
Commitments and contingencies (Note 16)
Mezzanine Equity	40,723		45,038
Stockholders’ equity:
Common stock, $0.001 par value per share; 560,000 shares authorized; 322,582 and 319,402 shares issued and 318,831 and 315,651 shares outstanding, respectively	323		319
Additional paid-in capital	2,055,139		2,054,994
Treasury stock, at cost (3,751 shares)	(16,788)		(16,788)
Accumulated other comprehensive loss	(107,274)		(104,649)
Accumulated deficit	(356,501)		(298,942)
Total stockholders’ equity	1,574,899		1,634,934
Total liabilities and stockholders’ equity	$	3,236,557	$	3,386,653

See accompanying notes.

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NUANCE COMMUNICATIONS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the three months ended December 31, 2021

	Common Stock			Additional Paid-In Capital		Treasury Stock			Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders' Equity
	Shares	Amount				Shares	Amount
	(In thousands)
Balance at September 30, 2021	319,402	$	319	$	2,054,994	(3,751)	$	(16,788)	$	(104,649)	$	(298,942)	$	1,634,934
Issuance of common stock under employee stock plans	3,875	4		60		—	—		—		—		64
Cancellation of restricted stock, and repurchase of common stock at cost for employee tax withholding	(1,549)	(1)		(85,374)		—	—		—		—		(85,375)
Stock-based compensation	—	—		81,361		—	—		—		—		81,361
Equity portion of convertible debt puttable	—	—		4,315		—	—		—		—		4,315
Redemption of Convertible Notes(a)	854	1		(217)		—	—		—		—		(216)
Net loss	—	—		—		—	—		—		(57,559)		(57,559)
Other comprehensive loss	—	—		—		—	—		(2,625)		—		(2,625)
Balance at December 31, 2021	322,582	$	323	$	2,055,139	(3,751)	$	(16,788)	$	(107,274)	$	(356,501)	$	1,574,899

For the three months ended December 31, 2020

	Common Stock			Additional Paid-In Capital		Treasury Stock			Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders' Equity
	Shares	Amount				Shares	Amount
	(In thousands)
Balance at September 30, 2020	286,703	$	287	$	1,550,568	(3,751)	$	(16,788)	$	(117,918)	$	(272,216)	$	1,143,933
Issuance of common stock under employee stock plans	3,117	3		(3)		—	—		—		—		—
Cancellation of restricted stock, and repurchase of common stock at cost for employee tax withholding	(1,151)	(1)		(43,702)		—	—		—		—		(43,703)
Stock-based compensation	—	—		75,455		—	—		—		—		75,455
Equity portion of convertible debt puttable	—	—		(53,343)		—	—		—		—		(53,343)
Net income	—	—		—		—	—		—		14,895		14,895
Other comprehensive income	—	—		—		—	—		15,799		—		15,799
Balance at December 31, 2020	288,669	$	289	$	1,528,975	(3,751)	$	(16,788)	$	(102,119)	$	(257,321)	$	1,153,036

__________

(a) According to ASC 470-20, cash consideration paid to repurchase and retire our convertible notes was first allocated to debt component based on the actual fair value on the trading date, and the remaining consideration was allocated to additional paid-in capital.

See accompanying notes.

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NUANCE COMMUNICATIONS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three Months Ended December 31,
	2021		2020
	(Unaudited)
	(In thousands)
Cash flows from operating activities:
Net (loss) income from continuing operations	$	(57,559)	$	6,954
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation	11,019		7,993
Amortization	11,969		14,793
Stock-based compensation	38,399		34,906
Non-cash interest expense	4,144		12,324
Deferred tax provision (benefit)	14,386		(5,435)
Loss on extinguishment of debt	215		—
Other	651		3,028
Changes in operating assets and liabilities, excluding effects of acquisitions:
Accounts receivable	(19,354)		(40,023)
Prepaid expenses and other assets	40,930		(5,892)
Accounts payable	(14,934)		11,636
Accrued expenses and other liabilities	(29,480)		(9,480)
Deferred revenue	13,464		23,814
Net cash provided by operating activities - continuing operations	13,850		54,618
Net cash provided by operating activities - discontinued operations	—		6,570
Net cash provided by operating activities	13,850		61,188
Cash flows from investing activities:
Capital expenditures	(12,394)		(17,400)
Purchases of marketable securities and other investments	—		(41,366)
Proceeds from sales and maturities of marketable securities and other investments	22,162		37,582
Payments for business and asset acquisitions, net of cash acquired	(5,375)		(250)
Other	209		(545)
Net cash provided by (used in) investing activities	4,602		(21,979)
Cash flows from financing activities:
Repurchase and redemption of debt	(28,646)		—
Payments for taxes related to net share settlement of equity awards	(82,763)		(43,729)
Other financing activities	(78)		(6)
Net cash used in financing activities	(111,487)		(43,735)
Effects of exchange rate changes on cash and cash equivalents	(2,323)		2,739
Net decrease in cash and cash equivalents	(95,358)		(1,787)
Cash and cash equivalents at beginning of period	187,307		301,233
Cash and cash equivalents at end of period	$	91,949	$	299,446

See accompanying notes.

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NUANCE COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Presentation

Nuance Communications, Inc. ("we", "Nuance", "our", "us", or the "Company") is a pioneer and leader in conversational and cognitive artificial intelligence ("AI") innovations that bring intelligence to everyday work and life. Our solutions and technologies can understand, analyze and respond to human language to increase productivity and amplify human intelligence. Our solutions are used by businesses in the healthcare, financial services, telecommunications and travel industries, among others. We had three reportable segments as of December 31, 2021: Healthcare, Enterprise, and Other. See Note 18 for a description of each of these segments.

Although we believe the disclosures included herein are adequate to ensure that the condensed consolidated financial statements are fairly presented, certain information and footnote disclosures to the financial statements have been condensed or omitted in accordance with the rules and regulations of the SEC. Accordingly, the condensed consolidated financial statements and the footnotes included herein should be read in conjunction with the audited financial statements and the footnotes included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2021. The results of operations for the interim periods presented are not necessarily indicative of the results for the entire fiscal year or any future period.

On April 11, 2021, we entered into an Agreement and Plan of Merger (the " Merger Agreement") with Microsoft Corporation ("Microsoft"). Subject to the terms and conditions of the Merger Agreement, Microsoft has agreed to acquire Nuance for $56.00 per share in an all-cash transaction. Pursuant to the Merger Agreement, a wholly-owned subsidiary of Microsoft will merge with and into Nuance (the "Merger") with Nuance surviving as a wholly-owned subsidiary of Microsoft. As a result of the Merger, we will cease to be a publicly traded company. We have agreed to various customary covenants and agreements, including, among others, agreements to conduct our business in the ordinary course during the period between the execution of the Merger Agreement and the effective time of the Merger. We do not believe these restrictions will prevent us from meeting our debt service obligations, ongoing costs of operations, working capital needs, or capital expenditure requirements. The acquisition has been approved by Nuance’s shareholders, and we expect it to close by the end of the first calendar quarter of 2022, subject to the satisfaction of certain regulatory approvals and other customary closing conditions.

For additional information related to the Merger Agreement, please refer to the definitive proxy statement previously filed with the Securities and Exchange Commission ("SEC") and other relevant materials in connection with the transaction that we will file with the SEC and which will contain important information about Nuance and the Merger.

As more fully described in Note 11, during the first quarter of fiscal year 2022, our common stock price exceeded 130% of the applicable conversion price for each of our convertible debentures for at least 20 trading days during the 30 consecutive trading days ending December 31, 2021. As a result, the holders of our 1.25% 2025 Debentures and 1.0% 2035 Debentures have the right to convert all or any portion of their debentures between January 1, 2022 and March 31, 2022. All of our convertible notes with a total net book value of $348.7 million were included within current liabilities as of December 31, 2021.

Should any holders elect to convert, the principal amount of the convertible debentures would be payable in cash, and any amount payable in excess of the principal amount would be paid in cash or shares of our common stock at our election. During the first quarter of fiscal year 2022, holders of our 1.5% 2035 Debentures exercised their right to convert and we redeemed $25.1 million notional amount for $25.1 million in cash and 0.8 million shares of common stock. Following these redemptions, none of the 1.5% 2035 Debentures remain outstanding. Additionally, during the first quarter of fiscal year 2022, holders of our 1.0% 2035 Debentures exercised their right to convert $2.3 million notional amount for $2.3 million in cash and 0.1 million shares of common stock, and holders of our 1.25% 2025 Debentures exercised their right to convert $1.2 million notional amount for $1.2 million in cash and 0.04 million shares of common stock. As part of these redemptions, we transferred non-cash consideration in the form of shares of common stock valued at $41.9 million for the 1.5% 2035 Debentures, $3.0 million for the 1.0% 2035 Debentures, and $2.2 million for the 1.25% 2025 Debentures. As of December 31, 2021, $128.0 million in aggregate principal amount of the 1.0% 2035 Debentures and $261.4 million in aggregate principal amount of the 1.25% 2025 Debentures remained outstanding.

Our convertible debentures are actively traded in the open market. The 1.25% 2025 Debentures trade at a price consistently in excess of their conversion values. Therefore, we believe that it is uneconomic, and thus unlikely, for the holders of the 1.25% 2025 Debentures to early exercise their conversion rights. In the event that holders of any of our debentures presented an amount for settlement that exceeded our then available sources of liquidity, we may need to obtain additional financing, which we believe would be available to us based upon our assessment of the prevailing market and business conditions and our experience of successful capital raising activities.

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NUANCE COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2. Summary of Significant Accounting Policies

Issued Accounting Standards Not Yet Adopted

From time to time, new accounting pronouncements are issued by the FASB and are adopted by us as of the specified effective dates. Unless otherwise discussed, such pronouncements did not have or will not have a significant impact on our consolidated financial position, results of operations or cash flows, or do not apply to our operations.

Convertible Notes

In August 2020, the FASB issued ASU 2020-06, "Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity," which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The new guidance eliminates two of the three models in Accounting Standards Codification ("ASC") 470-202 that require separating embedded conversion features from convertible instruments. As a result, only conversion features accounted for under the substantial premium model in ASC 470-20 and those that require bifurcation in accordance with ASC 815-153 will be accounted for separately. For contracts in an entity’s own equity, the new guidance eliminates some of the requirements in ASC 815-404 for equity classification. The guidance also addresses how convertible instruments are accounted for in the diluted earnings per share calculation and requires enhanced disclosures about the terms of convertible instruments and contracts in an entity’s own equity. The guidance will be effective for annual periods beginning after December 15, 2021, and interim periods therein. Early adoption is permitted for all entities for fiscal periods beginning after December 15, 2020, including interim periods within the same fiscal year. Entities are allowed to adopt the guidance using either the modified or full retrospective approach. We are currently assessing the provisions of the guidance and the impact on our condensed consolidated financial statements.

Business Combinations

In August 2021, the FASB issued ASU 2021-08, "Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers," which improves the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to: (1) recognition of an acquired contract liability, and (2) payment terms and their effect on subsequent revenue recognized by the acquirer. The new guidance requires that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. The guidance will be effective for annual periods beginning after December 15, 2022, and interim periods therein. Early adoption is permitted for all entities, including interim periods within the same fiscal year. We are currently assessing the provisions of the guidance and the impact on our condensed consolidated financial statements.

3. Revenue Recognition

We derive revenue from the following sources: (1) hosting services, (2) software licenses, including royalties, (3) maintenance and support ("M&S"), (4) professional services, and (5) sale of hardware. Revenue is reported net of applicable sales and use tax, value-added tax and other transaction taxes imposed on the related transaction including mandatory government charges that are passed through to our customers. We account for a contract when both parties have approved and committed to the contract, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and the collectability of the consideration is probable.

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

We recognize revenue after applying the following five steps:

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

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

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

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NUANCE COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

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

We allocate the transaction price of the arrangement based on the relative estimated standalone selling price ("SSP") of each distinct performance obligation. In determining SSP, we maximize observable inputs and consider a number of data points, including:

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

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

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

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

We only include estimated amounts of variable consideration in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. We reduce transaction prices for estimated returns and other allowances that represent variable consideration under ASU No. 2014-09, "Revenue from Contracts with Customers: Topic 606" ("ASC 606"), which we estimate based on historical return experience and other relevant factors and record a reduction to revenue and accounts receivable. Other forms of contingent revenue or variable consideration are infrequent.

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

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

Certain products are sold through distributors or resellers. Certain distributors and resellers have been granted right of return and selling incentives which are accounted for as variable consideration when estimating the amount of revenue to be recognized. Returns and credits are estimated at the contract inception and updated at the end of each reporting period as additional information becomes available. In accordance with the practical expedient in ASC 606-10-10-4, we apply a portfolio approach to estimate the variable consideration associated with this group of customers.

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

Shipping and handling activities are not considered a contract performance obligation. We record shipping and handling costs billed to customers as revenue with offsetting costs recorded as cost of revenue.

Performance Obligations

Hosting

Hosting services, which allow our customers to use the hosted software over the contract period without taking possession of the software, are provided on a usage basis as consumed or on a fixed fee subscription basis. Our hosting contract terms generally range from one to five years.

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

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NUANCE COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Subscription-based revenue represents a single promise to stand-ready to provide access to our hosting services. Revenue is recognized over time on a ratable basis over the hosting contract term, which generally ranges from one to five years.

Software Licenses

On-premise software licenses sold with non-distinct professional services to customize and/or integrate the underlying software are accounted for as a combined performance obligation. Revenue from the combined performance obligation is recognized over time based upon the progress towards completion of the project, which is measured based on the labor hours already incurred to date as compared to the total estimated labor hours.

Revenue from distinct on-premise software licenses, which do not require professional services to customize and/or integrate the software license, is recognized at the point in time when the software is made available to the customer and control is transferred.

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

Maintenance and Support

Our M&S contracts generally include telephone support and the right to receive unspecified upgrades and updates on a when-and-if available basis. M&S revenue is recognized over time on a ratable basis over the contract period because we transfer control evenly by providing a stand-ready service.

Professional Services

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

Hardware

Hardware revenue is recognized at the point in time when control is transferred to the customer, which is typically upon delivery.

Significant Judgments

Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. Our license contracts often include professional services to customize and/or integrate the licenses into the customer’s environment. Judgment is required to determine whether the license is considered distinct and accounted for separately, or not distinct and accounted for together with professional services.

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

From time to time, we may enter into arrangements with third party suppliers to resell products or services. In such cases, we evaluate whether we are the principal (i.e. report revenues on a gross basis) or agent (i.e. report revenues on a net basis). In doing so, we first evaluate whether we control the good or service before it is transferred to the customer. If we control the good or service before it is transferred to the customer, we are the principal; if not, we are the agent. Generally, we control a promised good or service before transferring that good or service to the customer and act as the principal to the transaction. Determining whether we control the good or service before it is transferred to the customer may require judgment.

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Disaggregated Revenue

We disaggregate revenue from contracts with customers by reportable segment and products and services as this presentation depicts the timing, risks and uncertainty of our revenue streams, which is also in line with how we manage our businesses, assess performance, and determine management compensation. Our disaggregated revenue from continuing operations is as follows (dollars in thousands):

	Three Months Ended December 31,
	2021								2020
	Hosting and professional services		Product and licensing		Maintenance and support		Total		Hosting and professional services		Product and licensing		Maintenance and support		Total
Healthcare	$	136,297	$	34,696	$	29,407	$	200,400	$	110,803	$	54,783	$	33,746	$	199,332
Enterprise	73,760		12,659		30,808		117,227		78,741		30,286		30,125		139,152
Other	3,675		117		16		3,808		6,288		968		13		7,269
Total revenues	$	213,732	$	47,472	$	60,231	$	321,435	$	195,832	$	86,037	$	63,884	$	345,753

Hardware revenue comprised approximately $7.3 million of total product and licensing revenue for the three months ended December 31, 2021, and $6.6 million of total product and licensing revenue for the three months ended December 31, 2020.

Contract Acquisition Costs

We are required to capitalize certain contract acquisition costs under ASC 606. The capitalized costs primarily relate to paid commissions and other direct, incremental costs to acquire customer contracts. In accordance with the practical expedient in ASC 606-10-10-4, we apply a portfolio approach to estimate contract acquisition costs for groups of customer contracts. We elect to apply the practical expedient in ASC 340-40-25-4 and will expense contract acquisition costs as incurred where the expected period of benefit is one year or less. Sales commissions paid on renewal maintenance and support are not commensurate with sales commissions paid on the initial maintenance and support contract. Contract acquisition costs are deferred and amortized on a straight-line basis over the period of benefit, which we have estimated to be between one and five years. The period of benefit was determined based on an average customer contract term, expected contract renewals, changes in technology and our ability to retain customers including canceled contracts. Contract acquisition costs are classified as current or noncurrent assets based on when the expense will be recognized. The current and noncurrent portions of contract acquisition costs are included in Prepaid expenses and other current assets, and Other assets, respectively. As of December 31, 2021, we had $49.4 million of current contract acquisition costs and $91.9 million of noncurrent contract acquisition costs. As of September 30, 2021, we had $40.5 million of current contract acquisition costs and $86.1 million of noncurrent contract acquisition costs. Commission expense is primarily included in sales and marketing expense on the consolidated statements of operations. We had amortization expense of $7.0 million and $4.7 million related to contract acquisition costs for the three months ended December 31, 2021 and 2020, respectively. There was no impairment related to commission costs capitalized.

Capitalized Contract Costs

We capitalize incremental costs incurred to fulfill our contracts that (1) relate directly to the contract, (2) are expected to generate resources that will be used to satisfy our performance obligation under the contract, and (3) are expected to be recovered through revenue generated under the contract. Our capitalized costs consist primarily of setup costs, such as costs to stand-up, customize, and develop applications for each customer. These costs are incurred to satisfy our stand-ready obligation to provide access to our connected offerings. The contract costs are expensed to cost of revenue as we satisfy our stand-ready obligation over the contract term, which we estimate to be between one and five years. The contract term estimation was determined based on an average customer contract term, expected contract renewals, changes in technology, and our ability to retain customers including canceled contracts. We classify capitalized contract costs as current or noncurrent based on the timing of when we expect to recognize the expense. The current and noncurrent portions of capitalized contract fulfillment costs are included in Prepaid expenses and other current assets, and Other assets, respectively. As of December 31, 2021, we had $22.8 million of short-term contract costs included with Prepaid expenses and other current assets and $35.5 million of long-term costs included within Other assets. As of September 30, 2021, we had $21.3 million of short-term contract costs included with Prepaid expenses and other current assets and $35.3 million of long-term costs within Other assets.

Trade Accounts Receivable and Contract Balances

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We classify our right to consideration in exchange for deliverables as either a receivable or a contract asset. A receivable is a right to consideration that is unconditional (i.e. only the passage of time is required before payment is due). We present such receivables in Accounts receivable, net in our consolidated balance sheets at their net estimated realizable value. We maintain an allowance for doubtful accounts to provide for the estimated amount of receivables that may not be collected. The allowance is based upon an assessment of customer creditworthiness, historical payment experience, the age of outstanding receivables and other applicable factors.

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

Contract assets include unbilled amounts from long-term contracts when revenue recognized exceeds the amount billed to the customer, and right to payment is not solely subject to the passage of time. The current and noncurrent portions of contract assets are included in Prepaid expenses and other current assets, and Other assets. As of December 31, 2021, we had $65.2 million of current contract assets and $73.9 million of noncurrent contract assets. As of September 30, 2021, we had $72.6 million of current contract assets and $88.9 million of noncurrent contract assets. The table below shows significant changes in contract assets of continuing operations (dollars in thousands):

	Contract assets
Balance as of September 30, 2021	$	161,512
Revenues recognized but not billed	73,228
Amounts reclassified to accounts receivable	(95,632)
Balance at December 31, 2021	$	139,108

Our contract liabilities, or Deferred revenue, consist of advance payments and billings in excess of revenues recognized. We classify Deferred revenue as current or noncurrent based on when we expect to recognize the revenues. As of December 31, 2021, we had $360.5 million of Deferred revenue. The table below shows significant changes in Deferred revenue (dollars in thousands):

	Deferred revenue
Balance as of September 30, 2021	$	349,059
Amounts bill but not recognized	200,167
Revenue recognized	(188,711)
Balance at December 31, 2021	$	360,515

Remaining Performance Obligations

The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied as of December 31, 2021 (dollars in thousands):

	Within One Year		Two to Four Years		Greater than Four Years		Total
Total revenue	$	745,007	$	993,659	$	42,923	$	1,781,589

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

4. Disposition of Businesses

Disposition of Our Medical Transcription and EHR Implementation businesses

On November 17, 2020, we entered into a definitive agreement (the “Agreement”) to sell our medical transcription and electronic healthcare record ("EHR") implementation businesses (the "Business") to Assured Healthcare Partners and Aeries Technology Group (together, the “Buyer”). Pursuant to the Agreement, we sold and transferred, and the Buyer purchased and acquired, (a) the shares of certain subsidiaries through which we operate a portion of the Business and (b) certain assets used in or related to the Business; and the Buyer assumed certain liabilities related to such assets of the Business, subject to certain exclusions and indemnities as set forth in the Agreement.

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On March 1, 2021, we completed the sale of the Business and received approximately $29.8 million in cash, subject to post-closing finalization of the adjustments set forth in the Agreement. As a result, we recorded a loss of $12.5 million, which is included within net income (loss) from discontinued operations in fiscal year 2021. There are a number of working capital and other adjustments under the Agreement and related ancillary agreements. We do not believe that post-closing working capital adjustments under the Agreement, if any, will have a material impact on our results of operations.

For all periods presented, the Businesses' results of operations have been included within discontinued operations in our condensed consolidated financial statements.

The following table summarizes the results of the discontinued operations (dollars in thousands):

	Three Months Ended December 31,
	2021	2020
	Medical Transcription and EHR Implementation	Medical Transcription and EHR Implementation
Major line items constituting net income of discontinued operations:
Revenue	N/A	$	47,650
Cost of revenue	N/A	29,152
Research and development	N/A	1,298
Sales and marketing	N/A	908
General and administrative	N/A	12
Amortization of intangible assets	N/A	2,444
Restructuring and other charges, net	N/A	4,438
Income from discontinued operations before income taxes	N/A	9,398
Provision for income taxes	N/A	1,457
Net income from discontinued operations	N/A	$	7,941
Supplemental information:
Depreciation	N/A	$	1,063
Amortization	N/A	$	2,444
Stock compensation	N/A	$	287
Capital expenditures	N/A	$	57

5. Business Acquisitions

As part of our business strategy, we have acquired, and may acquire in the future, certain businesses and technologies primarily to expand our products and service offerings.

Fiscal Year 2021 Acquisitions

For the fiscal year ended September 30, 2021, we completed one acquisition in our Healthcare segment for a total cash consideration of $45.2 million. As a result, we recognized goodwill of $27.4 million and intangible assets of $19.7 million related to technology with a useful life of 5.0 years. The results of operations of the acquired entity have been included within our consolidated statement of operations from the acquisition date. The acquisition was not material to our condensed consolidated financial statements.

Acquisition-Related Costs, net

Acquisition-related costs include costs related to business and asset acquisitions. These costs consist of (i) transition and integration costs, including retention payments, transitional employee costs and earn-out payments, and other costs related to integration activities; (ii) professional service fees, including financial advisory, legal, accounting, and other outside services incurred in connection with acquisition activities, and disputes and regulatory matters related to acquired entities; and (iii) fair value adjustments to acquisition-related contingencies.

A summary of acquisition-related costs, net is as follows (dollars in thousands):

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	Three Months Ended December 31,
	2021		2020
Transition and integration costs	$	1,238	$	72
Professional service fees	10		253
Total	$	1,248	$	325

6. Goodwill and Intangible Assets

The changes in the carrying amount of goodwill by reportable segment for the three months ended December 31, 2021 are as follows (dollars in thousands): 

Goodwill

	Healthcare		Enterprise		Other		Total
Balance as of September 30, 2021	$	1,453,836	$	688,163	$	13,271	$	2,155,270
Purchase accounting adjustments	150		—		—		150
Effect of foreign currency translation	(1,745)		896		87		(762)
Balance at December 31, 2021	$	1,452,241	$	689,059	$	13,358	$	2,154,658

Other Intangible Assets

The changes in the carrying amount of intangible assets for the three months ended December 31, 2021 are as follows (dollars in thousands):

	Intangible Assets
Balance at September 30, 2021	$	128,331
Amortization	(11,969)
Effect of foreign currency translation	(360)
Balance at December 31, 2021	$	116,002

7. Financial Instruments and Hedging Activities

Derivatives Not Designated as Hedges

Forward Currency Contracts

We have operations in a number of international locations where currency exchange rates can be volatile. We utilize foreign currency forward contracts to mitigate the risks associated with changes in foreign currency exchange rates so that our exposure to foreign currencies will be mitigated or offset by the gains or losses on the foreign currency forward contracts. Generally, we enter into such contracts for less than 90 days and have no cash requirements until maturity. As of December 31, 2021 and September 30, 2021, we had outstanding contracts with a total notional value of $75.1 million and $52.5 million, respectively.

We did not designate any forward contracts as hedging instruments for the three months ended December 31, 2021 or 2020. Therefore, changes in fair value of foreign currency forward contracts were recognized within Other income, net in our consolidated statements of operations. The cash flows related to the settlement of forward contracts not designated as hedging instruments are included in cash flows from investing activities within our consolidated statement of cash flows.

A summary of the derivative instruments is as follows (dollars in thousands):

Derivatives Not Designated as Hedges	Balance Sheet Classification	Fair Value
		December 31, 2021		September 30, 2021
Foreign currency forward contracts	Prepaid expenses and other current assets	$	129	$	112
Foreign currency forward contracts	Accrued expenses and other current liabilities	$	(105)	$	(49)

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A summary of other income (expense), net related to foreign currency forward contracts for the three months ended December 31, 2021 and 2020 is as follows (dollars in thousands):

	Income Statement Classification	Three Months Ended December 31,
Derivatives Not Designated as Hedges	(Income) Loss Recognized	2021		2020
Foreign currency forward contracts	Other income (expense), net	$	175	$	(548)

8. Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. Valuation techniques must maximize the use of observable inputs and minimize the use of unobservable inputs. When determining 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.

The determination of the applicable level within the hierarchy of a particular financial asset or liability depends on the lowest level of inputs that are significant to the fair value measurement as of the measurement date as follows:

•Level 1: Quoted prices for identical assets or liabilities in active markets.

•Level 2: Observable inputs other than those described as Level 1.

•Level 3: Unobservable inputs that are supportable by little or no market activities and are based on significant assumptions and estimates.

Assets and liabilities measured at fair value on a recurring basis as of December 31, 2021 and September 30, 2021 consisted of the following (dollars in thousands):

	December 31, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds (a)	$	60,144	$	—	$	—	$	60,144
Time deposits (b)	—		1,000		—		1,000
Foreign currency exchange contracts (b)	—		129		—		129
Total assets at fair value	$	60,144	$	1,129	$	—	$	61,273
Liabilities:
Foreign currency exchange contracts (b)	$	—	$	(105)	$	—	$	(105)
Total liabilities at fair value	$	—	$	(105)	$	—	$	(105)

	September 30, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds (a)	$	113,186	$	—	$	—	$	113,186
Time deposits (b)	—		13,889		—		13,889
Commercial paper, $18,633 at cost (b)	—		18,668		—		18,668
Foreign currency exchange contracts (b)	—		112		—		112
Total assets at fair value	$	113,186	$	32,669	$	—	$	145,855
Liabilities:
Foreign currency exchange contracts (b)	$	—	$	(49)	$	—	$	(49)
Total liabilities at fair value	$	—	$	(49)	$	—	$	(49)

__________

(a)Money market funds and time deposits with original maturity of 90 days or less are included within cash and cash equivalents in the consolidated balance sheets and are valued at quoted market prices in active markets.

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(b)Time deposits, commercial paper, corporate notes and bonds, and foreign currency exchange contracts are recorded at fair market values, which are determined based on the most recent observable inputs for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active or are directly or indirectly observable. Time deposits are generally for terms of one year or less. Commercial paper and corporate notes and bonds generally mature within three years and had a weighted average maturity of 0.21 years as of September 30, 2021.

The estimated fair value of our long-term debt approximated $1,547.5 million (face value $889.4 million) as of December 31, 2021 and $1,620.3 million (face value $918.0 million) as of September 30, 2021 based on Level 2 measurements. The fair value of each borrowing was estimated using the average of the bid and ask trading quotes at each respective reporting date. There was no balance outstanding under our revolving credit agreement as of December 31, 2021 or September 30, 2021.

Additionally, contingent acquisition payments are recorded at fair values upon the acquisition and are remeasured in subsequent reporting periods with the changes in fair values recorded within acquisition-related costs, net. Such payments are contingent upon the achievement of specified performance targets and are valued using the option pricing model with Monte Carlo simulation or the probability-weighted discounted cash flow model (Level 3 measurement).

The following table provides a summary of changes in the aggregate fair value of the contingent acquisition payments for all periods presented (dollars in thousands):

	Three Months Ended December 31,
	2021		2020
Balance at beginning of period	$	—	$	1,796
Payments and foreign currency translation	—		51
Balance at end of period	$	—	$	1,847

As of December 31, 2021, we do not have any required payments based upon any specified performance targets being achieved.

9. Accrued Expenses and Other Current Liabilities

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

	December 31, 2021		September 30, 2021
Compensation	$	78,335	$	133,194
Cost of revenue related liabilities	22,517		24,976
Accrued interest payable	2,341		9,038
Consulting and professional fees	14,623		18,130
Sales and marketing incentives	1,201		1,294
Sales and other taxes payable	8,120		8,016
Operating lease obligations	22,870		24,522
Other	4,269		3,170
Total	$	154,276	$	222,340

10. Restructuring and Other Charges, net

Restructuring and other charges, net include restructuring expenses together with other charges that are unusual in nature, are the result of unplanned events, and arise outside of the ordinary course of our business.

The following table represents the roll forward of restructuring liabilities for the three months ended December 31, 2021 (dollars in thousands): 

	Personnel		Facilities		Total
Balance at September 30, 2021	$	444	$	16,946	$	17,390
Restructuring charges, net	3,195		195		3,390
Non-cash adjustment	—		(152)		(152)
Cash payments	(2,792)		(1,638)		(4,430)
Balance at December 31, 2021	$	847	$	15,351	$	16,198

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The table below presents the Restructuring and other charges, net associated with each segment, but excluded from calculation of each segment's profit (dollars in thousands):

	Three Months Ended December 31,
	2021										2020
	Personnel		Facilities		Total Restructuring		Other Charges		Total		Personnel		Facilities		Total Restructuring		Other Charges		Total
Healthcare	$	1,804	$	125	$	1,929	$	—	$	1,929	$	2,632	$	567	$	3,199	$	—	$	3,199
Enterprise	450		249		699		—		699		1,182		2,472		3,654		—		3,654
Other	—		(138)		(138)		—		(138)		—		29		29		—		29
Corporate	941		(41)		900		5,116		6,016		975		3		978		706		1,684
Total	$	3,195	$	195	$	3,390	$	5,116	$	8,506	$	4,789	$	3,071	$	7,860	$	706	$	8,566

Fiscal Year 2022

For the three months ended December 31, 2021, we recorded restructuring charges of $3.4 million, which included $3.2 million related to the termination of approximately 81 employees and $0.2 million of charges related to closing certain idle facilities. These actions were part of our strategic initiatives focused on investment rationalization, process optimization and cost reduction as we continue to evaluate the geographic footprint of our offices and facilities. We expect the remaining outstanding severance of $0.8 million to be substantially paid during fiscal year 2022, and the remaining $15.4 million in lease payments to be made through fiscal year 2027, in accordance with the terms of the applicable leases.

Additionally, for the three months ended December 31, 2021, we recorded approximately $5.0 million of expenses related to the acquisition of Nuance by Microsoft, and $0.1 million of insurance recoveries.

Fiscal Year 2021

For the three months ended December 31, 2020, we recorded restructuring charges of $7.9 million, which included $4.8 million related to the termination of approximately 57 employees and a $3.1 million charge related to closing certain idle facilities. These actions were part of our strategic initiatives focused on investment rationalization, process optimization and cost reduction as we continue to evaluate the geographic footprint of our offices and facilities.

Additionally, for the three months ended December 31, 2020, we recorded $0.7 million in professional services expenses related to other corporate initiatives.

11. Debt

As of December 31, 2021 and September 30, 2021, we had the following borrowing obligations (dollars in thousands): 

	December 31, 2021		September 30, 2021
5.625% Senior Notes due 2026, net of deferred issuance costs of $3.1 million and $3.2 million, respectively. Effective interest rate 5.625%.	$	496,918	$	496,764
1.000% Convertible Debentures due 2035, net of unamortized discount of $5.5 million and $7.0 million, respectively, and deferred issuance costs of $0.3 million and $0.3 million, respectively. Effective interest rate 5.622%.	122,185		122,948
1.250% Convertible Debentures due 2025, net of unamortized discount of $33.6 million and $36.1 million, respectively, and deferred issuance costs of $1.4 million and $1.5 million, respectively. Effective interest rate 5.578%.	226,484		225,067
1.500% Convertible Debentures due 2035, net of unamortized discount of $0.1 million, as of September 30, 2021. Effective interest rate 5.394%.	—		24,984
Deferred issuance costs related to our Revolving Credit Facility	(1,733)		(1,839)
Total debt	843,854		867,924
Less: current portion (a)	(348,669)		(372,999)
Total long-term debt	$	495,185	$	494,925

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__________

(a) As of December 31, 2021, the holders have the right to convert all or any portion of the 1.25% 2025 Debentures and 1.0% 2035 Debentures between January 1, 2022 and March 31, 2022. As a result, the net carrying amounts of the convertible debentures were included in current liabilities as of December 31, 2021.

The following table summarizes the maturities of our borrowing obligations as of December 31, 2021 (dollars in thousands):

Fiscal Year	Convertible Debentures (a)		Senior Notes		Total
2022	$	389,392			$	389,392
2023	—		—		—
2024	—		—		—
2025	—		—		—
2026	—		—		—
Thereafter	—		500,000		500,000
Total before unamortized discount	389,392		500,000		889,392
Less: unamortized discount and issuance costs	(40,723)		(4,815)		(45,538)
Total debt	$	348,669	$	495,185	$	843,854

__________

(a) As more fully described below, as of December 31, 2021, the holders have the right to convert all or any portion of the 1.25% 2025 Debentures and 1.0% 2035 Debentures between January 1, 2022 and March 31, 2022. As a result, these convertible debentures were treated as if they were due in fiscal year 2022.

5.625% Senior Notes due 2026

In December 2016, we issued $500.0 million aggregate principal amount of 5.625% Senior Notes due on December 15, 2026 (the "2026 Senior Notes") in a private placement. The proceeds from the 2026 Senior Notes were approximately $495.0 million, net of issuance costs, and we used the proceeds to repurchase a portion of our then outstanding 5.375% Senior Notes due 2020. The 2026 Senior Notes bear interest at 5.625% per year, payable in cash semi-annually in arrears.

The 2026 Senior Notes are unsecured senior obligations and are guaranteed on an unsecured senior basis by certain of our domestic subsidiaries ("Subsidiary Guarantors"). The 2026 Senior Notes and the guarantees rank equally in right of payment with all of our and the Subsidiary Guarantors’ existing and future unsecured senior debt and rank senior in right of payment to all of our and the Subsidiary Guarantors’ future unsecured subordinated debt. The 2026 Senior Notes and guarantees effectively rank junior to all our secured debt and that of the Subsidiary Guarantors to the extent of the value of the collateral securing such debt and to all liabilities, including trade payables, of our subsidiaries that have not guaranteed the 2026 Senior Notes.

At any time, we may redeem all or a portion of the 2026 Senior Notes at certain redemption prices expressed as percentages of the principal amount, plus accrued and unpaid interest to, but excluding, the redemption date.

Upon the occurrence of a change in control or sale of substantially all assets, we must offer to repurchase the 2026 Senior Notes at a price equal to 100% in the case of an asset sale, or 101% in the case of a change of control, of the principal amount plus accrued and unpaid interest to, but excluding, the repurchase date.

1.0% Convertible Debentures due 2035

In December 2015, we issued $676.5 million in aggregate principal amount of 1.0% Senior Convertible Debentures due in 2035 (the "1.0% 2035 Debentures") in a private placement. Total proceeds were $663.8 million, net of issuance costs, and we used a portion to repurchase $38.3 million in aggregate principal on our 2.75% Senior Convertible Debentures due in 2031 (the “2.75% 2031 Debentures”) and to repay the aggregate principal balance of $472.5 million on our term loan under the amended and restated credit agreement. The 1.0% 2035 Debentures bear interest at 1.0% per year, payable in cash semi-annually in arrears. In addition to ordinary interest and default additional interest, beginning with the semi-annual interest period commencing on December 15, 2022, contingent interest will accrue during any regular semi-annual interest period where the average trading price of our 1.0% 2035 Debentures for the ten trading day period immediately preceding the first day of such semi-annual period is greater than or equal to $1,200 per $1,000 principal amount of our 1.0% 2035 Debentures, in which case, contingent interest will accrue at a rate of 0.50% per annum of such average trading price. The 1.0% 2035 Debentures mature on December 15, 2035, subject to the right of the holders to require us to redeem the 1.0% 2035 Debentures on December 15, 2022, 2027, or 2032. The 1.0% 2035 Debentures are general senior unsecured obligations and rank equally in right of payment

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with all of our existing and future unsecured, unsubordinated indebtedness and senior in right of payment to any indebtedness that is contractually subordinated to the 1.0% 2035 Debentures. The 1.0% 2035 Debentures will be effectively subordinated to indebtedness and other liabilities of our subsidiaries.

We account separately for the liability and equity components of the 1.0% 2035 Debentures in accordance with authoritative guidance for convertible debt instruments that may be settled in cash upon conversion. The guidance requires the carrying amount of the liability component to be estimated by measuring the fair value of a similar liability that does not have an associated conversion feature and record the remainder in stockholders’ equity. At issuance, we allocated $495.4 million to long-term debt, and $181.1 million has been recorded as additional paid-in capital, which is being amortized to interest expense using the effective interest rate method through December 2022.

If converted, the principal amount of the 1.0% 2035 Debentures is payable in cash and any amounts payable in excess of the principal amount will be paid in cash or shares of our common stock, at our election. The conversion of the 1.0% 2035 Debentures will be based upon a conversion ratio of 41.4576 common shares per $1,000 principal amount, subject to adjustments. Conversion is only allowed in the following circumstances and to the following extent: (i) prior to June 15, 2035, on any date during any fiscal quarter (and only during such fiscal quarter) if the closing sale price of our common stock was more than 130% of the then current conversion price for at least 20 trading days in the period of the 30 consecutive trading days ending on the last trading day of the previous fiscal quarter; (ii) during the five consecutive business-day period following any five consecutive trading-day period in which the trading price for $1,000 principal amount of the 1.0% 2035 Debentures for each day during such five trading-day period was less than 98% of the closing sale price of our common stock multiplied by the then current conversion rate; (iii) upon the occurrence of specified corporate transactions, as described in the indenture for the 1.0% 2035 Debentures; or (iv) at the option of the holder at any time on or after June 15, 2035. Additionally, we may redeem the 1.0% 2035 Debentures, in whole or in part, on or after December 20, 2022 for cash at a price equal to 100% of the principal amount of the 1.0% 2035 Debentures to be purchased plus any accrued and unpaid interest, including any additional interest to, but excluding, the repurchase date. Each holder shall have the right, at such holder’s option, to require us to repurchase all or any portion of the 1.0% 2035 Debentures held by such holder on December 15, 2022, December 15, 2027, or December 15, 2032 at par plus accrued and unpaid interest. If we undergo a fundamental change or non-stock change of control (as described in the indenture for the 1.0% 2035 Debentures) prior to maturity, holders will have the option to require us to repurchase all or any portion of their debentures for cash at a price equal to 100% of the principal amount of the 1.0% 2035 Debentures to be purchased plus any accrued and unpaid interest.

During the third quarter of fiscal year 2021, we induced the exchange of $457.0 million notional amount of our 1.0% 2035 Debentures for $5.0 million in cash and 18.9 million shares of common stock, of which we allocated $435.1 million to debt and $567.1 million to equity. Also, in connection with the redemptions, we wrote off $32.4 million of unamortized discount and $1.4 million of unamortized costs. As a result, we recorded a $15.0 million loss associated with the redemptions, of which $3.1 million represents the inducement expense and $1.9 million represents the interest earned at the time of settlement, based upon the guidance in ASC 470-20. Additionally, as part of these redemptions we transferred non-cash consideration in the form of shares of common stock valued at $1,002.2 million.

Also, during the fourth quarter of fiscal year 2021, holders of our 1.0% 2035 Debentures exercised their right to convert $89.2 million notional amount for $89.2 million in cash and 2.1 million shares of common stock, of which we allocated $85.4 million to debt and $117.6 million to equity. Also, in connection with the conversions, we wrote off $5.6 million of unamortized discount and $0.3 million of unamortized costs. As a result, we recorded a $2.1 million loss associated with the conversions. Additionally, as part of these conversions we transferred non-cash consideration in the form of shares of common stock valued at $113.8 million.

Additionally, during the first quarter of fiscal year 2022, holders of our 1.0% 2035 Debentures exercised their right to convert $2.3 million notional amount for $2.3 million in cash and 0.1 million shares of common stock, of which we allocated $2.2 million to debt and $3.1 million to equity. Also, in connection with the conversions, we wrote off $0.1 million of unamortized discount. As a result, we recorded an immaterial loss associated with the conversions. Additionally, as part of these conversions we transferred non-cash consideration in the form of shares of common stock valued at $3.0 million. Following the redemptions, $128.0 million in aggregate principal amount of the 1.0% 2035 Debentures remained outstanding as of December 31, 2021.

The 1.0% 2035 Debentures were convertible as of December 31, 2021, as our common stock price exceeded the conversion threshold price of 130% of the applicable conversion price per share for at least 20 trading days during the 30 consecutive trading days ending December 31, 2021. As a result, the holders of our 1.0% 2035 Debentures have the right to convert all or

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any portion of their debentures between January 1, 2022 and March 31, 2022. The holders previously had the right to convert all or any portion of their debentures at the aforementioned conversion ratio beginning January 1, 2021 through December 31, 2021.

As of December 31, 2021, holders have exercised their right to convert $23.5 million notional amount of our 1.0% 2035 Debentures for an estimated $23.5 million in cash and 0.5 million shares of common stock for an estimated total consideration of $53.8 million. The settlement of these conversions occurred in the second quarter of fiscal year 2022. The net carrying amount of the 1.0% 2035 Debentures was included within the current portion of long-term debt, and $5.8 million has been reclassified from permanent equity to mezzanine equity. As of December 31, 2021, the if-converted value of the 1.0% 2035 Debentures exceeded its principal amount by $165.5 million.

1.25% Convertible Debentures due 2025

In March 2017, we issued $350.0 million in aggregate principal amount of 1.25% Senior Convertible Debentures due in 2025 (the "1.25% 2025 Debentures") in a private placement. The proceeds were approximately $343.6 million, net of issuance costs. We used a portion of the proceeds to repurchase 5.8 million shares of our common stock for $99.1 million and $17.8 million in aggregate principal on our 2.75% 2031 Debentures. The 1.25% 2025 Debentures bear interest at 1.25% per year, payable in cash semi-annually in arrears, beginning on October 1, 2017. The 1.25% 2025 Debentures mature on April 1, 2025. The 1.25% 2025 Debentures are general senior unsecured obligations and rank equally in right of payment with all of our existing and future unsecured, unsubordinated indebtedness and senior in right of payment to any indebtedness that is contractually subordinated to the 1.25% 2025 Debentures. The 1.25% 2025 Debentures will be effectively subordinated to indebtedness and other liabilities of our subsidiaries.

We account separately for the liability and equity components of the 1.25% 2025 Debentures in accordance with authoritative guidance for convertible debt instruments that may be settled in cash upon conversion. The guidance requires the carrying amount of the liability component to be estimated by measuring the fair value of a similar liability that does not have an associated conversion feature and record the remainder in stockholders’ equity. At issuance, we allocated $252.1 million to long-term debt, and $97.9 million has been recorded as additional paid-in capital, which is being amortized to interest expense using the effective interest rate method through April 1, 2025.

If converted, the principal amount of the 1.25% 2025 Debentures is payable in cash and any amounts payable in excess of the principal amount will be paid in cash or shares of our common stock, at our election. The conversion of the 1.25% 2025 Debentures will be based upon a conversion ratio of 50.7957 common shares per $1,000 principal amount, subject to adjustments. Conversion is only allowed in the following circumstances and to the following extent: (i) prior to October 1, 2024, on any date during any fiscal quarter (and only during such fiscal quarter) if the closing sale price of our common stock was more than 130% of the then current conversion price for at least 20 trading days in the period of the 30 consecutive trading days ending on the last trading day of the previous fiscal quarter; (ii) at any time on or after October 1, 2024; (iii) during the five consecutive business-day period immediately following any five consecutive trading-day period in which the trading price for $1,000 principal amount of the 1.25% 2025 Debentures for each day during such five trading-day period was less than 98% of the closing sale price of our common stock multiplied by the then current conversion rate; or (iv) upon the occurrence of specified corporate transactions, as described in the indenture for the 1.25% 2025 Debentures. We may not redeem the 1.25% 2025 Debentures prior to the maturity date. If we undergo a fundamental change or non-stock change of control (as described in the indenture for the 1.25% 2025 Debentures) prior to maturity, holders will have the option to require us to repurchase all or any portion of their debentures for cash at a price equal to 100% of the principal amount of the 1.25% 2025 Debentures to be purchased plus any accrued and unpaid interest.

During the second quarter of fiscal year 2020, we repurchased $87.3 million notional amount of our 1.25% 2025 Debentures for $112.3 million, of which we allocated $72.8 million to debt and $39.5 million to equity. Also, in connection with the repurchases, we wrote off $16.7 million of unamortized discount and $0.7 million of unamortized costs. As a result, we recorded a $2.8 million loss associated with the repurchases.

Additionally, during the first quarter of fiscal year 2022, holders of our 1.25% 2025 Debentures exercised their right to convert $1.2 million notional amount for $1.2 million in cash and 0.04 million shares of common stock, of which we allocated $1.1 million to debt and $2.3 million to equity. Also, in connection with the conversions, we wrote off $0.2 million of unamortized discount. As a result, we recorded an immaterial loss associated with the conversions. Additionally, as part of these conversions we transferred non-cash consideration in the form of shares of common stock valued at $2.2 million. Following the redemptions, $261.4 million in aggregate principal amount of the 1.25% 2025 Debentures remained outstanding as of December 31, 2021.

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The 1.25% 2025 Debentures were convertible as of December 31, 2021, as our common stock price exceeded the conversion threshold price of 130% of the applicable conversion price per share for at least 20 trading days during the 30 consecutive trading days ending December 31, 2021. As a result, the holders of our 1.25% 2025 Debentures have the right to convert all or any portion of their debentures between January 1, 2022 and March 31, 2022. The holders previously had the right to convert all or any portion of their debentures at the aforementioned conversion ratio beginning October 1, 2020 through December 31, 2021. As of December 31, 2021, the net carrying amount of the 1.25% 2025 Debentures was included within the current portion of long-term debt, and $34.9 million has been reclassified from permanent equity to mezzanine equity. As of December 31, 2021, the if-converted value of the 1.25% 2025 Debentures exceeded its principal amount by $473.2 million.

1.50% Convertible Debentures due 2035

In June 2015, we issued $263.9 million in aggregate principal amount of 1.5% Senior Convertible Debentures due in 2035 in exchange for $256.2 million in aggregate principal amount of our 2.75% 2031 Debentures. Total proceeds, net of issuance costs, were $253.2 million. The 1.5% 2035 Debentures were issued at 97.09% of the principal amount, which resulted in a discount of $7.7 million. The 1.5% 2035 Debentures bore interest at 1.5% per year, payable in cash semi-annually in arrears. In addition to ordinary interest and default additional interest, beginning with the semi-annual interest period commencing on November 1, 2021, contingent interest accrued during any regular semi-annual interest period where the average trading price of our 1.5% 2035 Debentures for the ten trading day period immediately preceding the first day of such semi-annual period was greater than or equal to $1,200 per $1,000 principal amount of our 1.5% 2035 Debentures, in which case, contingent interest accrued at a rate of 0.50% per annum of such average trading price.

During the second quarter of fiscal year 2020, we repurchased $36.5 million notional amount of 1.5% 2035 Debentures for $41.3 million, of which we allocated $34.7 million to debt and $6.6 million to equity based upon ASC 470-20. Also, in connection with the repurchases, we wrote off $2.5 million of unamortized discount and $0.1 million of unamortized costs. As a result, we recorded a $0.8 million loss associated with the repurchases.

During the third quarter of fiscal year 2021, we induced the exchange of $64.9 million notional amount of 1.5% 2035 Debentures for $0.5 million in cash and 3.2 million shares of common stock, of which we allocated $64.2 million to debt and $102.5 million to equity. Also, in connection with the redemptions, we wrote off $1.4 million of unamortized discount. As a result, we recorded a $1.1 million loss associated with the redemptions, of which $0.4 million represents the inducement expense and $0.1 million represents the interest earned at the time of settlement, based upon the guidance in ASC 470-20. Additionally, as part of these redemptions we transferred non-cash consideration in the form of shares of common stock valued at $166.7 million.

The 1.5% 2035 Debentures were convertible during the period October 1, 2021 through November 4, 2021, as our common stock price exceeded the conversion threshold price of 130% of the applicable conversion price per share for at least 20 trading days during the 30 consecutive trading days ending September 30, 2021. The holders previously had the right to convert all or any portion of their debentures at the aforementioned conversion ratio beginning October 1, 2020 through November 4, 2021.

Further, during the third and fourth quarter of fiscal year 2021, holders of our 1.5% 2035 Debentures exercised their right to convert $137.4 million notional amount for $137.4 million in cash and 4.1 million shares of common stock, of which we allocated $136.0 million to debt and $225.1 million to equity. Also, in connection with the conversions, we wrote off $2.4 million of unamortized discount and $0.1 million of unamortized costs. As a result, we recorded a $1.1 million loss associated with the conversions. Additionally, as part of these conversions we transferred non-cash consideration in the form of shares of common stock valued at $223.7 million.

On September 29, 2021, we issued a notice calling for redemption all of our outstanding 1.5% 2035 Debentures, pursuant to which the holders had the right to receive cash at a price equal to 100% of the principal amount of the 1.5% 2035 Debentures plus any accrued and unpaid interest, including any additional interest to, but excluding, the repurchase date of November 5th, 2021. In lieu of redemption, holders had the right to convert all or any portion of their debentures at the aforementioned conversion ratio until the close of business on November 4, 2021. Upon the conclusion of the conversion period on November 4, 2021, holders of $25.0 million notional amount exercised their right to convert. Additionally, we redeemed the remaining outstanding $0.1 million 1.5% 2035 Debentures for $0.1 million in cash. On November 5, 2021, we settled all of the outstanding 1.5% 2035 Debentures for $25.1 million in cash and 0.8 million shares of common stock. As part of these conversions we transferred non-cash consideration in the form of shares of common stock valued at $41.9 million. Following these redemptions and conversions, none of the 1.5% 2035 Debentures remain outstanding.

Revolving Credit Facility

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On July 31, 2020, we amended our revolving credit agreement (the "Amended Revolving Credit Agreement") to, among other things, extend the expiration from April 15, 2021 to April 15, 2022. The Amended Revolving Credit Agreement provided for aggregate borrowing commitments of $242.5 million (the "Revolving Credit Facility"), including the revolving facility loans, the swingline loans and issuance of letters of credit. The borrowing outstanding under the Revolving Credit Facility bore interest at either (i) LIBOR plus an applicable margin of 1.50% or 1.75%, or (ii) the alternative base rate plus an applicable margin of 0.50% or 0.75%. The Revolving Credit Facility was secured by substantially all our assets. The Amended Revolving Credit Agreement contained customary affirmative and negative covenants and conditions to borrowing, as well as customary events of default. At any time that there were any outstanding borrowings (excluding up to $25,000,000 of issued and undrawn Letters of Credit) under the Revolving Credit Facility, we were required to maintain a Consolidated Senior Secured Leverage Ratio (as defined in the Amended Revolving Credit Agreement) not exceeding 4.00 to 1.00.

On February 4, 2021, we entered into a new revolving credit agreement (the "New Revolving Credit Agreement"), which replaced the existing Amended Revolving Credit Agreement. The New Revolving Credit Agreement expires February 4, 2026, and has an aggregate borrowing commitment of $300.0 million, including revolving loans and letters of credit (the "New Revolving Credit Facility"). The New Revolving Credit Facility bears interest at either (i) LIBOR plus an applicable margin of 1.50% or 1.75%, or (ii) the alternative base rate plus an applicable margin of 0.50% or 0.75%. The New Revolving Credit Facility is secured by substantially all our assets and substantially all assets of certain of our domestic subsidiaries that guarantee our obligations under the New Revolving Credit Agreement. The New Revolving Credit Agreement contains customary affirmative and negative covenants and conditions to borrowing, as well as customary events of default. Among other things, we are required to maintain a Consolidated Senior Secured Leverage Ratio (as defined in the New Revolving Credit Agreement) not exceeding 4.00 to 1.00. We were in compliance with all the debt covenants as of December 31, 2021.

As of December 31, 2021, after taking into account the outstanding letters of credit of $1.9 million, we had $298.1 million available for borrowing under the New Revolving Credit Facility.

12. Stockholders' Equity

Share Repurchases

On April 29, 2013, our Board of Directors approved a share repurchase program for up to $500.0 million, which was increased by $500.0 million on April 29, 2015. On August 1, 2018, our Board of Directors approved an additional $500.0 million under our share repurchase program. Under the terms of the share repurchase program, we have the ability to repurchase shares from time to time through a variety of methods, which may include open market purchases, privately negotiated transactions, block trades, accelerated stock repurchase transactions, or any combination of such methods. The share repurchase program does not require us to acquire any specific number of shares and may be modified, suspended, extended or terminated by us at any time without prior notice. The timing and the amount of any purchases are subject to our assessment of the prevailing market conditions, general economic conditions, capital allocation alternatives, and other factors.

We did not repurchase any shares of our common stock for the three months ended December 31, 2021 and 2020. Since the commencement of the program, we have repurchased 73.8 million shares for $1,238.8 million. As of December 31, 2021, approximately $261.2 million remained available for future repurchases under the program.

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13. Net (Loss) Income Per Share

The following table sets forth the computation for basic and diluted net (loss) income per share (in thousands, except per share amounts): 

	Three Months Ended December 31,
	2021		2020
Numerator:
Net (loss) income from continuing operations	$	(57,559)	$	6,954
Net income from discontinued operations	—		7,941
Net (loss) income	$	(57,559)	$	14,895
Denominator:
Weighted average common shares outstanding — basic	317,359		283,818
Dilutive effect of convertible instruments	—		21,636
Dilutive effect of employee stock compensation plans(a)	—		8,756
Weighted average common shares outstanding — diluted	317,359		314,210
Net (loss) income per common share - basic:
Continuing operations	$	(0.18)	$	0.02
Discontinued operations	—		0.03
Total net (loss) income per basic common share	$	(0.18)	$	0.05
Net (loss) income per common share - diluted:
Continuing operations	$	(0.18)	$	0.02
Discontinued operations	—		0.03
Total net (loss) income per diluted common share	$	(0.18)	$	0.05
Anti-dilutive equity instruments excluded from the calculation	—		580
Contingently issuable awards excluded from the calculation	112		—

__________

(a)Certain performance-based awards were excluded from the determination of dilutive net (loss) income per share as the conditions were not met at the end of the reporting period.

14. Stock-Based Compensation

On January 22, 2020, our shareholders adopted our 2020 Stock Plan (the "2020 Stock Plan") and as of such date, we ceased granting awards under our amended and restated 2000 Stock Plan (the "2000 Stock Plan"). Additionally, since adoption of the 2020 Stock Plan, we also no longer grant awards under our amended and restated 1995 Directors Stock Plan (the "1995 Directors Stock Plan"), and all non-employee directors are awarded grants under the 2020 Stock Plan. Outstanding awards under our 2000 Stock Plan that are forfeited or returned to the Company for satisfaction of taxes, are transferred to the 2020 Stock Plan and may be used for future issuance. The 2020 Stock Plan (i) grants the Company's compensation committee the discretionary authority over the plan; (ii) makes employees, directors, consultants, and advisors of the Company and its subsidiaries eligible to receive awards; (iii) sets the number of shares of common stock that may be issued in satisfaction of awards to be 9,000,000 shares, plus the number of shares that become available for issuance under the 2000 Stock Plan; and (iv) identifies the annual limits on shares granted to each individual and the types of awards permissible.

As of December 31, 2021, we had 11.4 million shares available for future grants under the 2020 Stock Plan. We recognize stock-based compensation expenses over the requisite service periods. Our share-based awards are classified within equity upon issuance.

The amounts included in the consolidated statements of operations related to stock-based compensation are as follows (dollars in thousands): 

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	Three Months Ended December 31,
	2021		2020
Cost of hosting and professional services	$	7,206	$	6,563
Cost of product and licensing	29		75
Cost of maintenance and support	471		426
Research and development	9,364		8,440
Sales and marketing	11,710		8,943
General and administrative	9,619		10,459
Total	$	38,399	$	34,906

Stock Options

The table below summarizes activities related to stock options for the three months ended December 31, 2021:

	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value (a)
Outstanding at September 30, 2021	9,355	$	17.18
Exercised	(3,700)	$	17.18
Outstanding at December 31, 2021	5,655	$	17.18	0.3 years	$	0.2	million
Exercisable at December 31, 2021	5,655	$	17.18	0.3 years	$	0.2	million
Exercisable at December 31, 2020	9,355	$	17.18	1.3 years	$	0.3	million

__________

(a)The aggregate intrinsic value in this table represents any excess of the closing market price of our common stock as of December 31, 2021 ($55.32) over the exercise price of the underlying options.

The aggregate intrinsic values of stock options exercised during the three months ended December 31, 2021 and 2020 were de minimis.

Restricted Stock Units and Performance Stock Units

Restricted units and performance stock units are not included in issued and outstanding common stock until the units are vested and underlying shares are released. The purchase price for vested restricted units is $0.001 per share. The table below summarizes activities relating to restricted units and performance stock units for the three months ended December 31, 2021:

	Number of Shares Underlying Restricted Units — Performance-Based Awards	Number of Shares Underlying Restricted Units — Time-Based Awards
Outstanding at September 30, 2021	2,463,921	4,655,825
Granted (a)	880,362	1,796,045
Earned/released	(1,760,724)	(2,110,257)
Forfeited	(5,601)	(34,455)
Outstanding at December 31, 2021	1,577,958	4,307,158
Weighted average remaining recognition period of outstanding Restricted Units	1.2 years	1.8 years
Unrecognized stock-based compensation expense of outstanding Restricted Units	$21.1 million	$122.3 million
Aggregate intrinsic value of outstanding Restricted Units (b)	$87.3 million	$238.3 million

__________

(a)For the three months ending December 31, 2021, there were no performance-based restricted units granted. The granted performance-based restricted units for the period are a result of the performance-based restricted units vesting above their specified targets in our first quarter of fiscal year 2022.

(b)The aggregate intrinsic value in this table represents any excess of the closing market price of our common stock as of December 31, 2021 ($55.32) over the purchase price of the underlying restricted units.

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A summary of the weighted-average grant-date fair value of restricted units granted, and the aggregate intrinsic value of restricted units vested during the periods noted is as follows: 

	Three Months Ended December 31,
	2021		2020
Weighted-average grant-date fair value per share	$	55.18	$	37.26
Total intrinsic value of shares vested (in millions)	$	213.4	$	119.4

Performance-based restricted units outstanding as of December 31, 2021 include performance goals based on total shareholder return relative to a peer index and a revenue growth metric (for awards granted in November 2020) during the performance period. The awards actually earned will be up to two hundred percent of the target number of the performance-based restricted units. Compensation expense related to performance-based restricted units aligned to the total shareholder return is recorded on a straight-line basis over the performance period of the award. The grant date fair value for performance-based restricted units aligned to total shareholder return is determined using a Monte Carlo simulation model. Below is a summary of key assumptions of the valuation:

	Three Months Ended December 31,
	2021	2020
Dividend yield	N/A	0.0%
Expected volatility	N/A	34.95%
Risk-free interest rate	N/A	0.21%
Expected term (in years)	N/A	3.00

15. Income Taxes

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

	Three Months Ended December 31,
	2021		2020
Domestic	$	(58,889)	$	(4,995)
Foreign	24,880		14,252
(Loss) income before income taxes	$	(34,009)	$	9,257

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

	Three Months Ended December 31,
	2021			2020
Domestic	$	21,229		$	(2,892)
Foreign	2,321			5,195
Provision for income taxes	$	23,550		$	2,303
Effective tax rate	(69.2)		%	24.9		%

The effective income tax rate is based upon the income for the year, the geographic mix of our income, the composition of the income in different countries, changes relating to valuation allowances and the potential tax consequences of resolving audits or other tax contingencies.

Our effective income tax rate was (69.2)% for the three months ended December 31, 2021, compared to 24.9% for the three months ended December 31, 2020. The effective tax rate for the three months ended December 31, 2021 differed from the U.S. federal statutory rate of 21.0% primarily due to the base erosion anti-abuse tax, the composition of the mix in income in different countries, offset by the change in valuation allowance. The effective tax rate for the three months ended December 31, 2020 differed from the U.S. federal statutory rate of 21.0% primarily due to the base erosion anti-abuse tax offset by a change in the valuation allowance in the United States.

On October 8, 2021, we received an interim decision from the Administrative Court of the Canton of Zurich in Switzerland (the “Swiss Appeals Court”) regarding our appeal of certain proposed income tax adjustments related to a 2011 IP transfer and business restructuring by a Swiss subsidiary. Although the Swiss Appeals Court upheld a tax assessment related to the IP

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transfer, it remanded our case to a lower court in Switzerland for further factual development and consideration of other issues. As of the quarter ending December 31, 2021, the lower court proceeding has not commenced. We currently believe it is reasonably possible that the case could be resolved in the next 12 months. We disagree with the tax authorities' position and intend to vigorously defend our position in the lower court proceedings. If we prevail, there would be no incremental financial exposure; however, if the position of the Swiss tax authorities is ultimately upheld on all matters, we could be required to pay up to $60 million, the majority of which could affect our earnings.

Valuation Allowances

As of December 31, 2021 and September 30, 2021, we had a full valuation allowance against net domestic deferred tax assets and certain foreign deferred tax assets. We intend to maintain valuation allowances on these deferred tax assets until there is sufficient evidence to support the release of all or some portion of these allowances. A significant portion of our domestic deferred tax assets relate to U.S. net operating losses. We continue to believe negative evidence for the release of some or all of the allowances outweighs positive evidence after considering recent profitability trends and the disposition of the medical transcription and EHR implementation businesses. We continue to evaluate all sources of domestic taxable income including both the reversal of existing deferred tax liabilities and the likelihood that we could sustain pretax profitability in the future. As of December 31, 2021, we believe that there is a reasonable possibility that within the next twelve months these sources of taxable income may become sufficient positive evidence to support a conclusion that a substantial portion of the domestic valuation allowance, excluding capital losses, could be released.

16. Commitments and Contingencies

Litigation and Other Claims

Similar to many companies in the software industry, we are involved in a variety of claims, demands, suits, investigations and proceedings that arise from time to time relating to matters incidental to the ordinary course of our business, including actions with respect to contracts, intellectual property, employment, benefits and securities matters. At each balance sheet date, we evaluate contingent liabilities associated with these matters in accordance with ASC 450 "Contingencies". If the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated, we accrue a liability for the estimated loss. Significant judgments are required for the determination of probability and the range of the outcomes, and the estimates are based only on the information available at the time. Due to the inherent uncertainties involved in claims, legal proceedings, and in estimating the losses that may arise, actual outcomes may differ from our estimates. Contingencies deemed not probable or for which losses were not estimable in one period may become probable, or losses may become estimable in later periods which may have a material impact on our results of operations and financial position. As additional information becomes available, we reassess the potential liability related to our pending claims and litigation and may revise our estimates. As of December 31, 2021, accrued losses were not material to our condensed consolidated financial statements, and we do not expect any pending matter to have a material impact on our condensed consolidated financial statements.

Guarantees and Other

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

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

25

NUANCE COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

policy for the full period of any contractual indemnification, and such directors and officers do not have coverage under separate insurance policies, we would be required to pay for costs incurred, if any, as described above.

Contingencies

The Company is subject to contingencies which arise through the ordinary course of business. All material liabilities of which management were aware are properly reflected in the financial statements as of December 31, 2021 and September 30, 2021.

Microsoft Acquisition Contingencies

On April 11, 2021, we entered into a Merger Agreement with Microsoft, subject to the terms of which Microsoft has agreed to acquire Nuance. The consummation of the Merger remains subject to customary closing conditions including satisfaction of certain regulatory approvals. The acquisition has been approved by Nuance’s shareholders, and we expect it to close by the end of the first calendar quarter of 2022, subject to the satisfaction of certain regulatory approvals and other customary closing conditions. As part of the transaction, Nuance expects to incur liabilities of approximately $114 million that are contingent on the deal consummation. These liabilities include banker fees, legal fees, and certain retention bonuses.

17. Operating Leases

Operating Leases

We have various operating leases for office space, data centers, office equipment and automobiles around the world with lease terms expiring between 2022 and 2030.

We determine if an arrangement is a lease at inception. The current portion of our operating lease liabilities is included in accrued expenses and other current liabilities and the long-term portion is included in operating lease liabilities.

Operating lease assets and liabilities are recognized at the present value of the future lease payments at the lease commencement date. The interest rate used to determine the present value of the future lease payments is our incremental borrowing rate. Due to the interest rate implicit in most of our leases not being readily determinable, our incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in economic environments where the leased asset is located. Operating lease assets also include any prepaid lease payments and lease incentives. Our lease terms include periods under options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Operating lease expense is recognized on a straight-line basis over the lease term.

Our lease agreements generally contain lease and non-lease components. Non-lease components primarily include payments for maintenance and utilities. We combine fixed payments for non-lease components with our lease payments and account for them together as a single lease component which increases the amount of our lease assets and liabilities. Payments under our lease arrangements are primarily fixed. Variable rents, if any, are expensed as incurred.

As of December 31, 2021, our operating leases had a weighted average remaining lease term of 4.1 years and a weighted average discount rate of 3.8%. 

Future lease payments under operating leases as of December 31, 2021 were as follows (dollars in thousands):

Fiscal Year	Operating Leases		Operating leases under restructuring		Total
2022	$	16,622	$	4,401	$	21,023
2023	16,291		4,227		20,518
2024	13,912		2,727		16,639
2025	12,479		1,583		14,062
2026	11,280		1,379		12,659
Thereafter	30,016		463		30,479
Total	$	100,600	$	14,780	$	115,380

As of December 31, 2021, we have subleased certain office space that is included in the above table to third parties. As of December 31, 2021, the aggregate sublease income to be recognized during the remaining lease terms is $10.1 million, with approximately an average of $1.8 million annually for each of the next five fiscal years and approximately $1.1 million thereafter.

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NUANCE COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Our operating lease cost was approximately $6.0 million for the three months ended December 31, 2021, and $7.2 million for the three months ended December 31, 2020. Operating lease payments included within operating cash flows were $7.6 million for the three months ended December 31, 2021, and $7.7 million for the three months ended December 31, 2020.

18. Segment and Geographic Information

Our Chief Operating Decision Maker ("CODM") regularly reviews segment revenues and segment profits for performance evaluation and resources allocation. Segment revenues include certain acquisition-related adjustments for revenues that would otherwise have been recognized without the acquisition. Segment profits reflect controllable costs directly related to each segment and the allocation of certain corporate expenses such as corporate sales and marketing expenses and research and development project costs that benefit multiple segments. Certain items such as stock-based compensation, amortization of intangible assets, acquisition-related costs, net, restructuring and other charges, net, other expenses, net and certain unallocated corporate expenses are excluded from segment profits, which allow for more meaningful comparisons to the financial results of the historical operations for performance evaluation and resources allocation by our CODM.

•The Healthcare segment is primarily engaged in providing clinical speech and clinical language understanding solutions that improve the clinical documentation process, from capturing the complete patient record to improving clinical documentation and quality measures for reimbursement.

•The Enterprise segment is primarily engaged in using speech, natural language understanding, and artificial intelligence to provide automated customer solutions and services for voice, mobile, web and messaging channels.

•The Other segment consists primarily of voicemail transcription services.

As more fully described in Note 4, on November 17, 2020, we entered into the Agreement to sell the Business, comprised of our medical transcription and EHR implementation businesses. Effective the first quarter of fiscal year 2021, the results of operations of the Business are included within discontinued operations for all periods presented. Our Healthcare segment revenue and segment profit for the historical periods have been recast to reflect the forementioned change.

We do not track our assets by segment. Consequently, it is not practical to show assets or depreciation by segment. The following table presents segment results along with a reconciliation of segment profit to (Loss) income before income taxes (dollars in thousands): 

	Three Months Ended December 31,
	2021		2020
Segment revenues:
Healthcare	$	200,400	$	199,332
Enterprise	117,227		139,152
Other	3,808		7,269
Total segment revenues	$	321,435	$	345,753
Segment profit:
Healthcare	$	43,139	$	74,812
Enterprise	18,725		41,468
Other	2,011		4,971
Total segment profit	$	63,875	$	121,251
Corporate expenses and other, net	(26,388)		(31,115)
Stock-based compensation	(38,399)		(34,906)
Amortization of intangible assets	(11,969)		(14,793)
Acquisition-related costs, net	(1,248)		(325)
Restructuring and other charges, net	(8,506)		(8,566)
Other expenses, net	(11,374)		(22,289)
(Loss) income before income taxes	$	(34,009)	$	9,257

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NUANCE COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

No country outside of the United States provided greater than 10% of our total revenues. Revenues, classified by the major geographic areas in which our customers are located, were as follows (dollars in thousands): 

	Three Months Ended December 31,
	2021		2020
United States	$	259,776	$	272,598
International	61,659		73,155
Total revenues	$	321,435	$	345,753

19. Supplemental Cash Flow Information

Cash paid for Interest and Income Taxes:

	Three Months Ended December 31,
	2021		2020
	(Dollars in thousands)
Interest paid	$	15,214	$	21,087
Income taxes paid	$	2,582	$	2,738

20. COVID-19 Pandemic

The novel coronavirus ("COVID-19") pandemic has disrupted economic markets, and the future economic impact, duration and spread of COVID-19 is still uncertain at this time. The COVID-19 pandemic may continue to adversely impact our business, results of operations, cash flows and financial condition. While we have not experienced significant disruptions to our ability to conduct business thus far as a result of the pandemic, we are currently conducting business with substantial modifications to employee travel, employee work locations, virtualization or cancellation of customer and employee events, and remote sales, implementation, and support activities, among other modifications.

The full extent to which the coronavirus pandemic will impact our business, operations, and financial results in the future will depend on numerous evolving factors and may not be accurately predicted at this time.

21. Subsequent Events

In addition to the debt holder exercises disclosed in Note 11, subsequent to our period end of December 31, 2021, certain debt holders have exercised their right to convert $2.1 million notional amount of our 1.0% 2035 Debentures for an estimated $2.1 million in cash and 0.1 million shares of common stock for an estimated total consideration of $4.7 million. The settlement of these conversions is expected to occur in the second quarter of fiscal year 2022.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following Management’s Discussion and Analysis is intended to help the reader understand the results of operations and financial condition of our business. Management’s Discussion and Analysis is provided as a supplement to, and should be read in conjunction with, our condensed consolidated financial statements and the accompanying notes to the condensed consolidated financial statements.

CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks, uncertainties and assumptions that, if they never materialize or if they prove incorrect, could cause our consolidated results to differ materially from those expressed or implied by such forward-looking statements. These forward-looking statements include predictions regarding:

•potential disruption to our business caused by the proposed acquisition of us by Microsoft;

•our ability to complete the Merger in a timely manner or at all;

•our future bookings, revenues, cost of revenues, research and development expenses, selling, general and administrative expenses, amortization of intangible assets and gross margin;

•our strategy relating to our segments;

•our programs to reduce costs and optimize processes;

•market trends;

•technological advancements;

•the potential of future product releases;

•our product development plans and the timing, amount and impact of investments in research and development;

•future acquisitions, divestitures and other strategic transactions, and anticipated benefits from such transactions;

•international operations and localized versions of our products; 

•the impact of the COVID-19 pandemic; and

•the conduct, timing and outcome of legal proceedings and litigation matters.

You can identify these and other forward-looking statements by the use of words such as "may," "will," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "intends," "potential," "continue" or the negative of such terms, or other comparable terminology. Forward-looking statements also include the assumptions underlying or relating to any of the foregoing statements. Our actual results could differ materially from those anticipated in these forward-looking statements for many reasons, including the risks described in Item 1A — "Risk Factors" and elsewhere in this Quarterly Report on Form 10-Q.

You should not place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. We undertake no obligation to publicly release any revisions to the forward-looking statements or reflect events or circumstances after the date of this document.

OVERVIEW

Business Overview

We are a pioneer and leader in conversational and cognitive AI innovations that bring intelligence to everyday work and life. Our solutions and technologies can understand, analyze and respond to human language to increase productivity and amplify human intelligence. Our solutions are used by businesses in the healthcare, financial services, telecommunications and travel industries, among others. We see several trends in our markets, including (i) the growing adoption of cloud-based, connected services and highly interactive mobile applications, (ii) deeper integration of virtual assistant capabilities and services, and (iii) the continued expansion of our core technology portfolio including automated speech recognition, natural language

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understanding, semantic processing, domain-specific reasoning, dialog management capabilities, AI, and voice biometric speaker authentication. We report our business in three segments, Healthcare, Enterprise, and Other.

•Healthcare. Our healthcare segment provides intelligent systems that support a more natural and insightful approach to clinical documentation, freeing clinicians to spend more time caring for patients and helping care teams and health organizations drive meaningful financial and clinical outcomes. Our principal solutions include Dragon Medical Cloud-based solutions, Computer-Assisted Physician Documentation, Diagnostic Imaging Solutions, Nuance® Dragon Ambient eXperience™, Clinical Documentation Improvement and Coding.

•Enterprise. Our Enterprise segment is a leading provider of AI-powered intelligent customer engagement solutions and services, which enable enterprises and contact centers to enhance and automate customer service and sales engagement. Our principal solutions include interactive voice response, intelligent engagement, digital messaging and security & biometric solutions, delivered via on-premise and/or cloud.

•Other. Our Other segment currently consists primarily of voicemail transcription services.

•Discontinued Operations. On November 17, 2020, we entered into the Agreement to sell our medical transcription and electronic healthcare record implementation businesses. On March 1, 2021, we completed the sale of the Business and received proceeds of approximately $29.8 million, subject to certain customary post-closing adjustments. For all periods presented, the Business' results of operations have been included within discontinued operations in our consolidated financial statements.

Acquisition of Nuance Communications, Inc. by Microsoft Corporation

On April 11, 2021, we entered into a Merger Agreement with Microsoft. Subject to the terms and conditions of the Merger Agreement, Microsoft has agreed to acquire Nuance for $56.00 per share in an all-cash transaction. Pursuant to the Merger Agreement, following consummation of the Merger, Nuance will be a wholly-owned subsidiary of Microsoft. As a result of the Merger, we will cease to be a publicly traded company. We have agreed to various customary covenants and agreements, including, among others, agreements to conduct our business in the ordinary course during the period between the execution of the Merger Agreement and the effective time of the Merger. We do not believe these restrictions will prevent us from meeting our debt service obligations, ongoing costs of operations, working capital needs, or capital expenditure requirements. If the Merger Agreement is terminated under certain specified circumstances, we will be required to pay Microsoft a termination fee of $515.0 million. The consummation of the Merger remains subject to customary closing conditions, including satisfaction of certain regulatory approvals and other customary closing conditions. The acquisition has been approved by Nuance’s shareholders, and we expect it to close by the end of the first calendar quarter of 2022, subject to the satisfaction of certain regulatory approvals and other customary closing conditions.

For additional information related to the Merger Agreement, please refer to the definitive proxy statement previously filed with the SEC and other relevant materials in connection with the transaction that we will file with the SEC and which will contain important information about Nuance and the Merger.

Key Metrics

In evaluating the financial condition and operating performance of our business, management focuses on revenue, net (loss) income, gross margins, operating margins, cash flow from operations, and changes in deferred revenue. A summary of key financial metrics for the three months ended December 31, 2021, as compared to the three months ended December 31, 2020, is as follows:

•Total revenues were $321.4 million for the three months ended December 31, 2021, as compared to $345.8 million for the three months ended December 31, 2020;

•Net loss from continuing operations for the three months ended December 31, 2021 was $57.6 million, compared to net income from continuing operations of $7.0 million for the three months ended December 31, 2020;

•Gross margins for the three months ended December 31, 2021 were 56.5%, compared to 61.9% for the three months ended December 31, 2020;

•Operating margins for the three months ended December 31, 2021 were (7.0)%, compared to 9.1% for three months ended December 31, 2020; and

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•Operating cash flows from continuing operations decreased by $40.8 million to $13.9 million for the three months ended December 31, 2021, compared to $54.6 million for the three months ended December 31, 2020.

RESULTS OF OPERATIONS

Total Revenues

The following tables show total revenues by product type and by geographic location, based on the location of our customers, in dollars and percentage change (dollars in millions): 

	Three Months Ended December 31,				Dollar Change		Percent Change
	2021		2020
Hosting and professional services	$	213.7	$	195.8	$	17.9	9.1	%
Product and licensing	47.5		86.0		(38.6)		(44.8)	%
Maintenance and support	60.2		63.9		(3.7)		(5.7)	%
Total revenues	$	321.4	$	345.8	$	(24.3)	(7.0)	%
United States	$	259.8	$	272.6	$	(12.8)	(4.7)	%
International	61.7		73.2		(11.5)		(15.7)	%
Total revenues	$	321.4	$	345.8	$	(24.3)	(7.0)	%

The geographic split was 81% of total revenues in the United States and 19% internationally for the three months ended December 31, 2021, as compared to 79% of total revenues in the United States and 21% internationally for the three months ended December 31, 2020.

Hosting and Professional Services Revenue

Hosting revenue primarily relates to delivering on-demand hosted services, such as medical transcription and automated customer care applications, over a specified term. Professional services revenue primarily consists of consulting, implementation and training services for customers. The following table shows hosting and professional services revenue, in dollars and as a percentage of total revenues (dollars in millions): 

	Three Months Ended December 31,						Dollar Change		Percent Change
	2021			2020
Hosting revenue	$	191.2		$	167.3		$	23.9	14.3	%
Professional services revenue	22.5			28.5			(6.0)		(20.9)	%
Hosting and professional services revenue	$	213.7		$	195.8		$	17.9	9.1	%
As a percentage of total revenue	66.5		%	56.6		%

Three Months Ended December 31, 2021 compared to Three Months Ended December 31, 2020

Hosting revenue for the three months ended December 31, 2021 increased by $23.9 million, or 14.3%, primarily due to a $26.8 million increase in Healthcare, driven by the growth in our Dragon Medical Cloud solutions and our continued transition from a license model to a cloud-based model. As a percentage of total revenue, hosting revenue increased from 48.4% to 59.5% for the three months ended December 31, 2021.

Professional services revenue for the three months ended December 31, 2021 decreased by $6.0 million, or 20.9%, primarily due to a $4.7 million decrease in Enterprise, driven by an accelerated transition from an on-premise license model to a recurring, cloud-based model, as well as the timing of customer projects for our Voice Engagement suite of products. As a percentage of total revenue, professional services revenue decreased from 8.2% to 7.0% for the three months ended December 31, 2021.

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Product and Licensing Revenue

Product and licensing revenue primarily consist of sales and licenses of our technology. The following table shows product and licensing revenue, in dollars and as a percentage of total revenues (dollars in millions): 

	Three Months Ended December 31,						Dollar Change		Percent Change
	2021			2020
Product and licensing revenue	$	47.5		$	86.0		$	(38.6)	(44.8)	%
As a percentage of total revenue	14.8		%	24.9		%

Three Months Ended December 31, 2021 compared to Three Months Ended December 31, 2020

Product and licensing revenue for the three months ended December 31, 2021 decreased by $38.6 million, or 44.8%, primarily due to a $20.1 million decrease in Healthcare and a $17.6 million decrease in Enterprise. Healthcare product and licensing revenue decreased primarily due to a wind down of a non-strategic, legacy term license contract that did not renew, and our ongoing transition from term licenses to cloud-based solutions. Enterprise product and licensing revenue decreased primarily due to the timing of certain license contracts and the accelerated transition from an on-premise license model to a recurring, cloud-based model. As a percentage of total revenue, product and licensing revenue decreased from 24.9% to 14.8% for the three months ended December 31, 2021.

Maintenance and Support Revenue

Maintenance and support revenue primarily consist of technical support and maintenance services. The following table shows maintenance and support revenue, in dollars and as a percentage of total revenues (dollars in millions): 

	Three Months Ended December 31,						Dollar Change		Percent Change
	2021			2020
Maintenance and support revenue	$	60.2		$	63.9		$	(3.7)	(5.7)	%
As a percentage of total revenue	18.7		%	18.5		%

Three Months Ended December 31, 2021 compared to Three Months Ended December 31, 2020

Maintenance and support revenue for the three months ended December 31, 2021 decreased by $3.7 million, or 5.7%, primarily due to a $4.3 million decrease in Healthcare, driven by the continued transition from software sold with maintenance and support to cloud-based solutions, and a legacy contract that did not renew. As a percentage of total revenue, maintenance and support revenue increased from 18.5% to 18.7% for the three months ended December 31, 2021.

COSTS AND EXPENSES

Cost of Hosting and Professional Services Revenue

Cost of hosting and professional services revenue primarily consists of compensation for services personnel, outside consultants and overhead, as well as the hardware, infrastructure and communications fees that support our hosting solutions. The following table shows the cost of hosting and professional services revenue, in dollars and as a percentage of professional services and hosting revenue (dollars in millions): 

	Three Months Ended December 31,						Dollar Change		Percent Change
	2021			2020
Cost of hosting and professional services revenue	$	121.3		$	105.6		$	15.6	14.8	%
As a percentage of professional services and hosting revenue	56.7		%	53.9		%

Three Months Ended December 31, 2021 compared to Three Months Ended December 31, 2020

Cost of hosting and professional services revenue for the three months ended December 31, 2021 increased by $15.6 million, or 14.8%, primarily driven by increased employee headcount to support the continued growth and expansion of our cloud-based solutions. Gross margin decreased by 2.8 percentage points primarily due to an increase in hosting cost of revenue related to an increased headcount in the Dragon Medical suite of products.

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Cost of Product and Licensing Revenue

Cost of product and licensing revenue primarily consists of material and fulfillment costs, manufacturing and operations costs and third-party royalty expenses. The following table shows the cost of product and licensing revenue, in dollars and as a percentage of product and licensing revenue (dollars in millions): 

	Three Months Ended December 31,						Dollar Change		Percent Change
	2021			2020
Cost of product and licensing revenue	$	6.7		$	14.4		$	(7.7)	(53.6)	%
As a percentage of product and licensing revenue	14.1		%	16.8		%

Three Months Ended December 31, 2021 compared to Three Months Ended December 31, 2020

Cost of product and licensing revenue for the three months ended December 31, 2021 decreased by $7.7 million, or 53.6%, primarily due to a non-strategic legacy term license contract that was not renewed in our Healthcare segment. Gross margin increased by 2.7 percentage points, primarily due to lower licensing revenue being offset by even lower licensing costs.

Cost of Maintenance and Support Revenue

Cost of maintenance and support revenue primarily consists of compensation for product support personnel and overhead. The following table shows the cost of maintenance and support revenue, in dollars and as a percentage of maintenance and support revenue (dollars in millions): 

	Three Months Ended December 31,						Dollar Change		Percent Change
	2021			2020
Cost of maintenance and support revenue	$	6.7		$	7.5		$	(0.8)	(10.3)	%
As a percentage of maintenance and support revenue	11.2		%	11.7		%

Three Months Ended December 31, 2021 compared to Three Months Ended December 31, 2020

Cost of maintenance and support revenue for the three months ended December 31, 2021 decreased by $0.8 million, or 10.3%. Gross margins increased by 0.5 percentage points primarily driven by lower Healthcare maintenance and support costs, consistent with the continued shift to cloud-based solutions.

Research and Development Expense

Research and development ("R&D") expense primarily consists of salaries, benefits, and overhead relating to engineering staff as well as third party engineering costs. The following table shows R&D expense, in dollars and as a percentage of total revenues (dollars in millions): 

	Three Months Ended December 31,						Dollar Change		Percent Change
	2021			2020
Research and development expense	$	68.2		$	56.5		$	11.7	20.7	%
As a percentage of total revenue	21.2		%	16.3		%

Three Months Ended December 31, 2021 compared to Three Months Ended December 31, 2020

R&D expense increased by $11.7 million, or 20.7%, primarily due to a higher employee headcount as we continued to invest in our core technologies to power new products and solutions.

Sales and Marketing Expense

Sales and marketing expense include salaries and benefits, commissions, advertising, direct mail, public relations, tradeshow costs and other costs of marketing programs, travel expenses associated with our sales organization and overhead. The following table shows sales and marketing expense, in dollars and as a percentage of total revenues (dollars in millions): 

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	Three Months Ended December 31,						Dollar Change		Percent Change
	2021			2020
Sales and marketing expense	$	84.0		$	65.4		$	18.6	28.4	%
As a percentage of total revenue	26.1		%	18.9		%

Three Months Ended December 31, 2021 compared to Three Months Ended December 31, 2020

Sales and marketing expense for the three months ended December 31, 2021 increased by $18.6 million, or 28.4%, primarily due to a higher employee headcount to support our continued growth in our strategic investments, and increased traveling and entertainment expenses.

General and Administrative Expense

General and administrative ("G&A") expense primarily consists of personnel costs for administration, finance, human resources, general management, fees for external professional advisers including accountants and attorneys, and provisions for doubtful accounts. The following table shows G&A expense, in dollars and as a percentage of total revenues (dollars in millions): 

	Three Months Ended December 31,						Dollar Change		Percent Change
	2021			2020
General and administrative expense	$	35.5		$	41.1		$	(5.6)	(13.7)	%
As a percentage of total revenue	11.0		%	11.9		%

Three Months Ended December 31, 2021 compared to Three Months Ended December 31, 2020

G&A expense decreased by $5.6 million, or 13.7%, primarily due to continued impacts of our cost savings initiatives.

Amortization of Intangible Assets

Amortization of acquired patents and technologies are included within cost of revenue and the amortization of acquired customer and contractual relationships, non-compete agreements, acquired trade names and trademarks, and other intangibles are included within Operating expenses. Customer relationships are amortized based upon the pattern in which the economic benefits of the customer relationships are expected to be realized. Other identifiable intangible assets are amortized on a straight-line basis over their estimated useful lives. Amortization expense was recorded as follows (dollars in millions): 

	Three Months Ended December 31,				Dollar Change		Percent Change
	2021		2020
Cost of revenue	$	5.2	$	4.3	$	1.0	22.4	%
Operating expenses	6.8		10.5		(3.8)		(35.9)	%
Total amortization expense	$	12.0	$	14.8	$	(2.8)	(19.1)	%

The decrease in total amortization of intangible assets for the three months ended December 31, 2021, as compared to the prior-year period, was primarily due to certain intangible assets that became fully amortized or fully written off during fiscal year 2021 and the first quarter of fiscal year 2022.

Acquisition-Related Costs, Net

Acquisition-related costs include costs related to business and asset acquisitions. These costs consist of (i) transition and integration costs, including retention payments, transitional employee costs, earn-out payments, and other costs related to integration activities; (ii) professional service fees, including financial advisory, legal, accounting, and other outside services incurred in connection with acquisition activities, and disputes and regulatory matters related to acquired entities; and (iii) fair value adjustments to acquisition-related contingencies. A summary of the Acquisition-related cost, net is as follows (dollars in millions): 

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	Three Months Ended December 31,				Dollar Change		Percent Change
	2021		2020
Transition and integration costs	$	1.2	$	0.1	$	1.2	1,619.4	%
Professional service fees	—		0.3		(0.2)		(96.0)	%
Total Acquisition-related costs, net	$	1.2	$	0.3	$	0.9	284.0	%

The increase in acquisition-related cost, net for the three months ended December 31, 2021, as compared to the prior-year period, was primarily due to certain retention bonuses being earned as part of an acquisition that was completed in the second quarter of fiscal year 2021.

Restructuring and Other Charges, Net

Restructuring and other charges, net include restructuring expenses together with other charges that are unusual in nature, are the result of unplanned events, or arise outside of the ordinary course of our business. While restructuring and other charges, net are excluded from segment profits, the table below presents the restructuring and other charges, net associated with each segment (dollars in thousands):

	Three Months Ended December 31,
	2021										2020
	Personnel		Facilities		Total Restructuring		Other Charges		Total		Personnel		Facilities		Total Restructuring		Other Charges		Total
Healthcare	$	1,804	$	125	$	1,929	$	—	$	1,929	$	2,632	$	567	$	3,199	$	—	$	3,199
Enterprise	450		249		699		—		699		1,182		2,472		3,654		—		3,654
Other	—		(138)		(138)		—		(138)		—		29		29		—		29
Corporate	941		(41)		900		5,116		6,016		975		3		978		706		1,684
Total	$	3,195	$	195	$	3,390	$	5,116	$	8,506	$	4,789	$	3,071	$	7,860	$	706	$	8,566

Fiscal Year 2022

For the three months ended December 31, 2021, we recorded restructuring charges of $3.4 million, which included $3.2 million related to the termination of approximately 81 employees and $0.2 million of charges related to closing certain idle facilities. These actions were part of our strategic initiatives focused on investment rationalization, process optimization and cost reduction as we continue to evaluate the geographic footprint of our offices and facilities. We expect the remaining outstanding severance of $0.8 million to be substantially paid during fiscal year 2022, and the remaining $15.4 million in lease payments to be made through fiscal year 2027, in accordance with the terms of the applicable leases.

Additionally, for the three months ended December 31, 2021, we recorded approximately $5.0 million of expenses related to the acquisition of Nuance by Microsoft, and $0.1 million of insurance recoveries.

Fiscal Year 2021

For the three months ended December 31, 2020, we recorded restructuring charges of $7.9 million, which included $4.8 million related to the termination of approximately 57 employees and a $3.1 million charge related to closing certain idle facilities. These actions were part of our strategic initiatives focused on investment rationalization, process optimization and cost reduction as we continue to evaluate the geographic footprint of our offices and facilities.

Additionally, for the three months ended December 31, 2020, we recorded $0.7 million in professional services expenses related to other corporate initiatives.

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Other Income (Expense), Net

A summary is as follows (dollars in millions): 

	Three Months Ended December 31,				Dollar Change		Percent Change
	2021		2020
Interest income	$	—	$	0.2	$	(0.2)	(90.4)	%
Interest expense	(12.7)		(23.0)		10.4		(45.0)	%
Other income, net	1.3		0.5		0.8		154.5	%
Total other expense, net	$	(11.4)	$	(22.3)	$	10.9	(49.0)	%

Interest income for the three months ended December 31, 2021 decreased primarily due to lower yields and decreases in cash and marketable securities for the current year period.

Interest expense for the three months ended December 31, 2021 decreased as we had aggregate redemptions of $521.9 million notional amounts of the 1.0% and 1.5% Convertible Debentures, and holders of our 1.0% and 1.5% Convertible Debentures exercised their right to convert an aggregate of $226.6 million notional amount during fiscal year 2021. Additionally, during the first quarter of fiscal year 2022, we had aggregate redemptions of $28.6 million notional amounts of our 1.5% 2035 Debentures, 1.0% 2035 Debentures, and 1.25% 2025 Debentures.

Other income, net for the three months ended December 31, 2021 increased primarily due to indemnification charges related to historical dispositions and certain investments.

Provision for Income Taxes

The following table shows the provision for income taxes on continuing operations and the effective income tax rate (dollars in millions):

	Three Months Ended December 31,						Dollar Change		Percent Change
	2021			2020
Provision for income taxes	$	23.6		$	2.3		$	21.2	922.6	%
Effective income tax rate	(69.2)		%	24.9		%

The effective income tax rate is based upon the income for the year, the geographic mix of our income, the composition of the income in different countries, changes relating to valuation allowances and the potential tax consequences of resolving audits or other tax contingencies.

Our effective income tax rate was (69.2)% for the three months ended December 31, 2021, compared to 24.9% for the three months ended December 31, 2020. The effective tax rate for the three months ended December 31, 2021 differed from the U.S. federal statutory rate of 21.0% primarily due to the base erosion anti-abuse tax, the composition of the mix in income in different countries, offset by the change in valuation allowance. The effective tax rate for the three months ended December 31, 2020 differed from the U.S. federal statutory rate of 21.0% primarily due to the base erosion anti-abuse tax offset by a change in the valuation allowance in the United States.

Valuation Allowances

As of December 31, 2021 and September 30, 2021, we had a full valuation allowance against net domestic deferred tax assets and certain foreign deferred tax assets. We intend to maintain valuation allowances on these deferred tax assets until there is sufficient evidence to support the release of all or some portion of these allowances. A significant portion of our domestic deferred tax assets relate to U.S. net operating losses. We continue to believe negative evidence for the release of some or all of the allowances outweighs positive evidence after considering recent profitability trends and the disposition of the medical transcription and EHR implementation businesses. We continue to evaluate all sources of domestic taxable income including both the reversal of existing deferred tax liabilities and the likelihood that we could sustain pretax profitability in the future. As of December 31, 2021, we believe that there is a reasonable possibility that within the next twelve months these sources of taxable income may become sufficient positive evidence to support a conclusion that a substantial portion of the domestic valuation allowance, excluding capital losses, could be released.

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Net Income from Discontinued Operations

Disposition of Our Medical Transcription and EHR Implementation businesses

On November 17, 2020, we entered into the Agreement to sell the Business to Assured Healthcare Partners and Aeries Technology Group. Pursuant to the Agreement, we sold and transferred, and the Buyer purchased and acquired, (a) the shares of certain subsidiaries through which we operate a portion of the Business and (b) certain assets used in or related to the Business; and the Buyer assumed certain liabilities related to such assets of the Business, subject to certain exclusions and indemnities as set forth in the Agreement.

On March 1, 2021, we completed the sale of the Business and received approximately $29.8 million in cash, subject to post-closing finalization of the adjustments set forth in the Agreement. As a result, we recorded a loss of $12.5 million, which is included within net income from discontinued operations in fiscal year 2021. There are a number of working capital and other adjustments under the Agreement and related ancillary agreements. We do not believe that post-closing working capital adjustments under the Agreement, if any, will have a material impact on our results of operations.

For all periods presented, the Businesses' results of operations have been included within discontinued operations in our condensed consolidated financial statements.

SEGMENT ANALYSIS

The following table presents certain financial information about our operating segments (dollars in millions):

	Three Months Ended December 31,						Change		Percent Change
	2021			2020
Segment Revenues (a):
Healthcare	$	200.4		$	199.3		$	1.1	0.5	%
Enterprise	117.2			139.2			(21.9)		(15.8)	%
Other	3.8			7.3			(3.5)		(47.6)	%
Total segment revenues	$	321.4		$	345.8		$	(24.3)	(7.0)	%
Segment Profit:
Healthcare	$	43.1		$	74.8		$	(31.7)	(42.3)	%
Enterprise	18.7			41.5			(22.7)		(54.8)	%
Other	2.0			5.0			(3.0)		(59.5)	%
Total segment profit	$	63.9		$	121.3		$	(57.4)	(47.3)	%
Segment Profit Margin:
Healthcare	21.5		%	37.5		%	(16.0)
Enterprise	16.0		%	29.8		%	(13.8)
Other	52.8		%	68.4		%	(15.6)
Total segment profit margin	19.9		%	35.1		%	(15.2)

__________

(a)Segment revenues differ from reported revenues due to certain revenue adjustments related to acquisitions that would otherwise have been recognized but for the purchase accounting treatment of the business combinations. These revenues are included to allow for more complete comparisons to the financial results of historical operations and in evaluating management performance.

Segment Revenues

Three Months Ended December 31, 2021 compared to Three Months Ended December 31, 2020

•Healthcare segment revenue increased by $1.1 million, or 0.5%, driven primarily by growth in our Dragon Medical and DAX cloud solutions, partly offset by a decline in Coding. Revenue from Dragon Medical cloud and DAX cloud-based solutions increased by $23.1 million, or 28.6%, to $103.6 million for the three months ended December 31, 2021 from $80.6 million for the three months ended December 31, 2020, primarily due to the continued market penetration and customer transition to Dragon Medical One.

•Enterprise segment revenue decreased by $21.9 million, or 15.8%, primarily driven an accelerated transition from an on-premise license model to a recurring, cloud-based model and the timing of certain license contracts.

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•Other segment revenue decreased by $3.5 million, or 47.6%, as we continue to wind down our Other segment.

Segment Profit

Three Months Ended December 31, 2021 compared to Three Months Ended December 31, 2020

•Healthcare segment profit decreased by $31.7 million, or 42.3%, primarily driven by relatively flat revenue growth being more than offset by higher cost of sales and operating expenses, resulting from an increased employee headcount to support the continued growth and expansion of our cloud-based solutions. Segment profit margin decreased by 16.0 percentage points to 21.5%, primarily driven by the increased expenses and relatively flat revenues.

•Enterprise segment profit decreased by $22.7 million, or 54.8%, primarily driven by lower licensing segment revenue and increased R&D operating expenses. Segment profit margin decreased by 13.8 percentage points to 16.0%, primarily due to lower segment revenues, and higher operating expenses.

•Other segment profit decreased by $3.0 million, or 59.5%, as we continue to wind down our Other segment. Segment profit margin decreased by 15.6 percentage points to 52.8%.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

We had cash and cash equivalents and marketable securities of $91.9 million as of December 31, 2021, a decrease of $117.5 million from $209.5 million as of September 30, 2021. Our working capital, defined as total current assets less total current liabilities, was $(365.4) million as of December 31, 2021, compared to $(324.8) million as of September 30, 2021. Our working capital included $348.7 million and $373.0 million convertible debt as of December 31, 2021 and September 30, 2021, respectively. As of December 31, 2021, we had $298.1 million available for borrowing under our revolving credit facility. We believe that our existing sources of liquidity are sufficient to support our operating needs, capital requirements and any debt service requirements for the next twelve months.

Cash and cash equivalents and marketable securities held by our international operations totaled $23.3 million as of December 31, 2021 and $35.7 million as of September 30, 2021. We utilize a variety of financing strategies to ensure that our worldwide cash is available to meet our liquidity needs. We expect the cash held overseas to be permanently invested in our international operations, and our U.S. operation to be funded through its own operating cash flows, cash and marketable securities within the U.S., and if necessary, borrowing under our revolving credit facility.

Acquisition of Nuance Communications, Inc. by Microsoft Corporation

On April 11, 2021, we entered into a Merger Agreement with Microsoft. Subject to the terms and conditions of the Merger Agreement, Microsoft has agreed to acquire Nuance for $56.00 per share in an all-cash transaction. Pursuant to the Merger Agreement, following consummation of the Merger Nuance will be a wholly-owned subsidiary of Microsoft. As a result of the Merger, we will cease to be a publicly traded company. We have agreed to various customary covenants and agreements, including, among others, agreements to conduct our business in the ordinary course during the period between the execution of the Merger Agreement and the effective time of the Merger. We do not believe these restrictions will prevent us from meeting our debt service obligations, ongoing costs of operations, working capital needs, or capital expenditure requirements. The Merger has been approved by Nuance’s shareholders, and we expect it to close by the end of the first calendar quarter of 2022, subject to the satisfaction of certain regulatory approvals and other customary closing conditions.

For additional information related to the Merger Agreement, please refer to the definitive proxy statement previously filed with the SEC and other relevant materials in connection with the transaction that we will file with the SEC and which will contain important information about Nuance and the Merger.

Convertible Debentures

During the first quarter of fiscal year 2022, our common stock price exceeded 130% of the applicable conversion price for each of our convertible debentures for at least 20 trading days during the 30 consecutive trading days ending December 31, 2021. As a result, the holders of our 1.25% 2025 Debentures and 1.0% 2035 Debentures have the right to convert all or any portion of their debentures between January 1, 2022 and March 31, 2022. All of our convertible notes with a total net book value of $348.7 million were included within current liabilities as of December 31, 2021.

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Should any holders elect to convert, the principal amount of the convertible debentures would be payable in cash, and any amount payable in excess of the principal amount would be paid in cash or shares of our common stock at our election. During the first quarter of fiscal year 2022, holders of our 1.5% 2035 Debentures exercised their right to convert and we redeemed $25.1 million notional amount for $25.1 million in cash and 0.8 million shares of common stock. Following these redemptions, none of the 1.5% 2035 Debentures remain outstanding. Additionally, during the first quarter of fiscal year 2022, holders of our 1.0% 2035 Debentures exercised their right to convert $2.3 million notional amount for $2.3 million in cash and 0.1 million shares of common stock, and holders of our 1.25% 2025 Debentures exercised their right to convert $1.2 million notional amount for $1.2 million in cash and 0.04 million shares of common stock. As part of these redemptions, we transferred non-cash consideration in the form of shares of common stock valued at $41.9 million for the 1.5% 2035 Debentures, $3.0 million for the 1.0% 2035 Debentures, and $2.2 million for the 1.25% 2025 Debentures. As of December 31, 2021, $128.0 million in aggregate principal amount of the 1.0% 2035 Debentures and $261.4 million in aggregate principal amount of the 1.25% 2025 Debentures remained outstanding.

Our convertible debentures are actively traded in the open market. The 1.25% 2025 Debentures trade at a price consistently in excess of their conversion values. Therefore, we believe that it is uneconomic, and thus unlikely, for the holders of the 1.25% 2025 Debentures to early exercise their conversion rights. In the event that holders of any of our debentures presented an amount for settlement that exceeded our then available sources of liquidity, we may need to obtain additional financing, which we believe would be available to us based upon our assessment of the prevailing market and business conditions and our experience of successful capital raising activities.

Net Cash Provided by Operating Activities

Cash provided by operating activities for the three months ended December 31, 2021 was $13.9 million, a decrease of $47.3 million from $61.2 million cash provided for the three months ended December 31, 2020. The decrease was primarily due to:

•A decrease of $51.3 million in cash provided due to lower income before non-cash charges; and

•A decrease of $10.4 million in cash provided from changes in deferred revenue. Deferred revenue had a positive effect of $13.5 million on operating cash flows for the three months ended December 31, 2021, as compared to a positive effect of $23.8 million for the three months ended December 31, 2020; and

•A decrease of $6.6 million in cash flows provided from discontinued operations; offset in part by,

•An increase of $20.9 million in cash provided due to favorable changes in working capital, primarily due to the timing of cash collections and cash payments.

Net Cash Provided by (Used in) Investing Activities

Cash provided by investing activities for the three months ended December 31, 2021 was $4.6 million, an increase of $26.6 million from $22.0 million cash used for the three months ended December 31, 2020. The increase was primarily due to:

•An increase of $25.9 million in net proceeds from the sale and purchase of marketable securities and other investments; and

•A decrease of $5.0 million in cash used for capital expenditures; and

•An increase of $0.8 million in cash provided by other investing activities; offset in part by,

•An increase of $5.1 million in cash used for payments for business and asset acquisitions.

Net Cash Used in Financing Activities

Cash used in financing activities for the three months ended December 31, 2021 was $111.5 million, an increase of $67.8 million from $43.7 million cash used for the three months ended December 31, 2020. The increase was primarily due to:

•An increase of $28.6 million in cash used for the repayment and redemption of debt; and

•An increase of $39.0 million in cash used for payments for taxes related to net share settlement of equity awards.

Debt

For a detailed description of the terms and restrictions of the debt and revolving credit facility, see Note 11 to the accompanying condensed consolidated financial statements. For the three months ended December 31, 2021, we spent approximately $28.6 million in cash and issued 0.9 million shares of common stock for the redemption of debt. During the first quarter of

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fiscal year 2022, holders of our 1.5% 2035 Debentures exercised their right to convert and we redeemed $25.1 million notional amount for $25.1 million in cash and 0.8 million shares of common stock, holders of our 1.0% 2035 Debentures exercised their right to convert $2.3 million notional amount for $2.3 million in cash and 0.1 million shares of common stock, and holders of our 1.25% 2025 Debentures exercised their right to convert $1.2 million notional amount for $1.2 million in cash and 0.04 million shares of common stock.

Additionally, certain debt holders have exercised their right to convert Debentures that did not settle as of December 31, 2021. Holders of our 1.0% 2035 Debentures redeemed $25.6 million notional amount for an estimated $25.6 million in cash and 0.6 million shares of common stock for an estimated total consideration of $58.5 million. The settlement of these conversions is expected to occur in the second quarter of fiscal year 2022.

As of December 31, 2021, we were in compliance with all the debt covenants. We may from time to time, depending on market and business conditions, repurchase outstanding debt in the open market or by private negotiation. We expect to incur cash interest payments of $16.2 million for the remainder of fiscal year 2022, based on the stated yields and the outstanding debt principals as of December 31, 2021. We expect to fund our debt service requirements through existing sources of liquidity and our operating cash flows.

Share Repurchase Program

On April 29, 2013, our Board of Directors approved a share repurchase program for up to $500.0 million, which was increased by $500.0 million on April 29, 2015. On August 1, 2018, our Board of Directors approved an additional $500.0 million under our share repurchase program. Under the terms of the share repurchase program, we have the ability to repurchase shares from time to time through a variety of methods, which may include open market purchases, privately negotiated transactions, block trades, accelerated stock repurchase transactions, or any combination of such methods. The share repurchase program does not require us to acquire any specific number of shares and may be modified, suspended, extended or terminated by us at any time without prior notice. The timing and the amount of any purchases are subject to our assessment of the prevailing market conditions, general economic conditions, capital allocation alternatives, and other factors.

We did not repurchase any shares of our common stock for the three months ended December 31, 2021 and 2020. Since the commencement of the program, we have repurchased 73.8 million shares for $1,238.8 million. As of December 31, 2021, approximately $261.2 million remained available for future repurchases under the program.

Off-Balance Sheet Arrangements, Contractual Obligations

Contractual Obligations

The following table outlines our contractual payment obligations (dollars in millions):

	Contractual Payments Due in Fiscal Year
Contractual Obligations	Total		Remainder of 2022		2023 and 2024		2025 and 2026		Thereafter
Convertible debentures (1)	$	389.4	$	389.4	$	—	$	—	$	—
Senior notes (2)	500.0		—		—		—		500.0
Interest payable on long-term debt (3)	151.2		16.2		63.0		57.9		14.1
Letters of credit (4)	1.9		1.9		—		—		—
Lease obligations and other liabilities:
Operating leases (5)	100.6		16.6		30.2		23.8		30.0
Operating leases under restructuring	14.9		4.4		7.0		3.0		0.5
Purchase commitments for inventory, property and equipment (6)	54.2		47.8		6.4		—		—
Total contractual cash obligations	$	1,212.2	$	476.3	$	106.6	$	84.7	$	544.6

__________

(1)As of December 31, 2021, the holders have the right to convert all or any portion of the 1.25% 2025 Debentures and 1.0% 2035 Debentures between January 1, 2022 and March 31, 2022. As a result, these convertible debentures were treated as if they were due in fiscal year 2022.

(2)The repayment schedule reflects the outstanding principal amount of our 5.625% senior notes due 2026 as of December 31, 2021.

(3)Interest per annum is due and payable semi-annually and is determined based on the outstanding principal as of December 31, 2021, the stated interest rate of each debt instrument and the assumed redemption dates discussed above.

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(4)Letters of credit are in place primarily to secure future operating lease payments.

(5)Obligations include contractual lease commitments related to facilities that have subsequently been subleased. As of December 31, 2021, we have subleased certain facilities with total sublease income of $10.1 million through fiscal year 2027.

(6)These amounts include non-cancelable purchase commitments for property and equipment as well as inventory in the normal course of business to fulfill customer backlog. We entered into an agreement with Microsoft in October of 2019 for their Azure cloud computing service with a minimum commitment of $175.0 million. This contract is expected to be in effect through fiscal year 2024.

Total unrecognized tax benefits as of December 31, 2021 were $61.3 million. Other than a possible change for the Swiss Court tax proceedings discussed further in Note 15, we do not expect any other significant change in the amount of unrecognized tax benefits within the next twelve months.

Contingent Liabilities and Commitments

Certain acquisition payments to selling stockholders were contingent upon the achievement of predetermined performance targets over a period of time after the acquisition. Such contingent payments were recorded at estimated fair values upon the acquisition and re-measured in subsequent reporting periods. As of December 31, 2021, we do not have any requirements to pay any selling stockholders based upon the achievement of any specified performance goals. In addition, certain deferred compensation payments to selling stockholders contingent upon their continued employment after the acquisition were recorded as compensation expense over the requisite service period. Additionally, as of December 31, 2021, the remaining deferred payment obligations of $13.6 million to certain former stockholders, which are contingent upon their continued employment, will be recognized ratably as compensation expense over the remaining requisite service periods.

Microsoft Acquisition Contingent Consideration

On April 11, 2021, we entered into a Merger Agreement with Microsoft, subject to the terms of which Microsoft has agreed to acquire Nuance. The consummation of the Merger remains subject to customary closing conditions including satisfaction of certain regulatory approvals. The acquisition has been approved by Nuance’s shareholders, and we expect it to close by the end of the first calendar quarter of 2022, subject to the satisfaction of certain regulatory approvals and other customary closing conditions. As part of the transaction, Nuance expects to incur liabilities of approximately $114 million that are contingent on the deal consummation. These liabilities include banker fees, legal fees, and certain retention bonuses.

CRITICAL ACCOUNTING POLICIES

Our critical accounting policies are included in the "Critical Accounting Policies" section of "Management’s Discussion and Analysis of Financial Condition and Results of Operations" included in the Form 10-K for the fiscal year ended September 30, 2021. There has been no material change to our critical accounting policies since September 30, 2021.

RECENTLY ADOPTED ACCOUNTING STANDARDS AND ISSUED ACCOUNTING STANDARDS NOT YET ADOPTED

See Note 2 to the accompanying condensed consolidated financial statements for a discussion of the recently adopted and issued accounting standards.

Item 3.Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risk from changes in foreign currency exchange rates, interest rates and equity prices which could affect operating results, financial position and cash flows. We manage our exposure to these market risks through our regular operating and financing activities and, when appropriate, through the use of derivative financial instruments.

Exchange Rate Sensitivity

We are exposed to changes in foreign currency exchange rates. Any foreign currency transaction, defined as a transaction denominated in a currency other than the local functional currency, will be reported in the functional currency at the applicable exchange rate in effect at the time of the transaction. A change in the value of the functional currency compared to the foreign currency of the transaction will have either a positive or negative impact on our financial position and results of operations.

Assets and liabilities of our foreign entities are translated into U.S. dollars at exchange rates in effect at the balance sheet date and income and expense items are translated at average rates for the applicable period. Therefore, the change in the value of the

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U.S. dollar compared to foreign currencies will have either a positive or negative effect on our financial position and results of operations. Historically, our primary exposure has related to transactions denominated in the euro, British pound, Brazilian real, Canadian dollar, and Indian rupee.

Periodically, we enter into forward exchange contracts to hedge against foreign exchange rate fluctuations. As of December 31, 2021, we had not designated any contracts as fair value or cash flow hedges. The contracts generally have a maturity of less than 90 days. As of December 31, 2021, the notional contract amount of outstanding foreign currency exchange contracts was $75.1 million.

Interest Rate Sensitivity

We are exposed to interest rate risk as a result of our cash and cash equivalents and marketable securities.

At December 31, 2021, we held approximately $91.9 million of cash and cash equivalents and marketable securities consisting of cash, money-market funds, bank deposits and a separately managed investment portfolio. Assuming a one percentage point increase in interest rates, our interest income on our investments classified as cash and cash equivalents and marketable securities would increase by approximately $0.9 million per annum, based on the balances of cash and cash equivalents and marketable securities as of December 31, 2021.

Convertible Debentures

The fair values of our convertible debentures are dependent on the price and volatility of our common stock as well as movements in interest rates. The fair market values of these debentures will generally increase as the market price of our common stock increases and will decrease as the market price of our common stock decreases. The fair market values of these debentures will generally increase as interest rates fall and decrease as interest rates rise. The market value and interest rate changes affect the fair market values of these debentures, but do not impact our financial position, results of operations or cash flows due to the fixed nature of the debt obligations. However, increases in the value of our common stock above the stated trigger price for each issuance for a specified period of time may provide the holders of these debentures the right to convert each bond using a conversion ratio and payment method as defined in the debenture agreement.

The following table summarizes the fair value and conversion value of our convertible debentures, and the estimated increase in fair value and conversion value with a hypothetical 10% increase in the stock price of $55.32 as of December 31, 2021 (dollars in millions):

	December 31, 2021
	Fair value		Conversion value		Increase to fair value		Increase to conversion value
1.0% 2035 Debentures	$	293.1	$	293.5	$	29.9	$	29.3
1.25% 2025 Debentures	$	738.3	$	734.6	$	72.1	$	73.5

Item 4.Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act")) designed to ensure that information we are required to disclose in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

We have evaluated the effectiveness of the design and operation of our disclosure controls and procedures under the supervision of, and with the participation of, management, including our Chief Executive Officer and Chief Financial Officer, as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective to meet the requirements of Rules 13a-15(f) and 15d-15(f) under the Exchange Act.

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Changes in Internal Control Over Financial Reporting

There have been no material changes in our internal controls over financial reporting during the three months ended December 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

Part II. Other Information

Item 1. Legal Proceedings

This information is included in Note 16, Commitments and Contingencies, in the accompanying notes to the unaudited condensed consolidated financial statements and is incorporated herein by reference from Item 1 of Part I.

Item 1A. Risk Factors

Item 1A of our Annual Report on Form 10-K for the year ended September 30, 2021 set forth information relating to important risks and uncertainties that could materially affect our business, financial condition or operating results. Those risk factors, in addition to the other information set forth in this report, continue to be relevant to an understanding of our business, financial condition and operating results for the three months ended December 31, 2021. There have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K for the year ended September 30, 2021.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

The following is a summary of our share repurchases for the three months ended December 31, 2021:

Period	Total Number of Shares Purchased	Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Program (1)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program(1)
October 1, 2021 - October 31, 2021	—	—	—	$261.2 Million
November 1, 2021 - November 30, 2021	—	—	—	$261.2 Million
December 1, 2021 - December 31, 2021	—	—	—	$261.2 Million
Total	—		—

__________

(1) On April 29, 2013, our Board of Directors approved a share repurchase program for up to $500.0 million, which was increased by $500.0 million on April 29, 2015. On August 1, 2018, our Board of Directors approved additional $500.0 million under our share repurchase program. As of December 31, 2021, approximately $261.2 million remained available for future repurchases under the program.

For the majority of restricted stock units granted to employees, the number of shares issued on the date the restricted stock units vest is net of the minimum statutory income withholding tax requirements that we pay in cash to the applicable taxing authorities on behalf of our employees. We do not consider these transactions to be common stock repurchases.

Item 3.Defaults Upon Senior Securities

None.

Item 4.Mine Safety Disclosures

Not applicable.

Item 5.Other Information

None.

Item 6.Exhibits

The exhibits listed on the Exhibit Index are filed or incorporated by reference (as stated therein) as part of this Quarterly Report on Form 10-Q.

43

EXHIBIT INDEX

 

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	File No.	Exhibit	Filing Date	Filed Herewith
3.1	Amended and Restated Certificate of Incorporation of the Registrant.	10-Q	000-27038	3.2	5/11/2001
3.2	Certificate of Amendment of the Amended and Restated Certificate of Incorporation of the Registrant.	10-Q	000-27038	3.1	8/9/2004
3.3	Certificate of Ownership and Merger.	8-K	000-27038	3.1	10/19/2005
3.4	Certificate of Amendment of the Amended and Restated Certificate of Incorporation of the Registrant, as amended.	S-3	333-142182	3.3	4/18/2007
3.5	Amended and Restated Bylaws of the Registrant.	10-K	001-36056	3.4	11/7/2019
3.6	Bylaws Amendment.	8-K	000-27038	3.1	4/13/2021
31.1	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) or 15d-14(a).					X
31.2	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) or 15d-14(a).					X
32.1	Certification Pursuant to 18 U.S.C. Section 1350.					X
101	The following materials from Nuance Communications, Inc.’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2021, formatted in XBRL (Inline Extensible Business Reporting Language): (i) the Consolidated Statements of Operations, (ii) the Consolidated Statements of Comprehensive Loss, (iii) the Consolidated Balance Sheets, (iv) the Consolidated Statements of Cash Flows, and (v) Notes to Unaudited Condensed Consolidated Financial Statements.					X
104	The cover page of the Quarterly Report on Form 10-Q for the quarter ended December 31, 2021 formatted in Inline XBRL (included in Exhibit 101)

44

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Quarterly Report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized, in the Town of Burlington, Commonwealth of Massachusetts, on February 7, 2022.

Nuance Communications, Inc.
By:	/s/ Daniel D. Tempesta
	Daniel D. Tempesta
	Executive Vice President and Chief Financial Officer

45

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO

SECTION 302(A) OF THE SARBANES-OXLEY ACT OF 2002

I, Mark Benjamin, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Nuance Communications, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:	/s/ Mark Benjamin
	Mark Benjamin
	Chief Executive Officer

February 7, 2022

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO

SECTION 302(A) OF THE SARBANES-OXLEY ACT OF 2002

I, Daniel D. Tempesta, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Nuance Communications, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:	/s/ Daniel D. Tempesta
	Daniel D. Tempesta
	Executive Vice President and Chief Financial Officer

February 7, 2022

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Mark Benjamin, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Nuance Communications, Inc. on Form 10-Q for the period ended December 31, 2021 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such Quarterly Report on Form 10-Q fairly presents in all material respects the financial condition and results of operations of Nuance Communications, Inc.

By:	/s/ Mark Benjamin
	Mark Benjamin
	Chief Executive Officer

February 7, 2022

I, Daniel D. Tempesta, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Nuance Communications, Inc. on Form 10-Q for the period ended December 31, 2021 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such Quarterly Report on Form 10-Q fairly presents in all material respects the financial condition and results of operations of Nuance Communications, Inc.

By:	/s/ Daniel D. Tempesta
	Daniel D. Tempesta
	Executive Vice President and Chief Financial Officer

February 7, 2022

XML

Cover Page - shares	3 Months Ended
	Dec. 31, 2021	Jan. 31, 2022
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Dec. 31, 2021
Document Transition Report	false
Entity File Number	000-27038
Entity Registrant Name	NUANCE COMMUNICATIONS, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	94-3156479
Entity Address, Address Line One	1 Wayside Road
Entity Address, City or Town	Burlington,
Entity Address, State or Province	MA
Entity Address, Postal Zip Code	01803
City Area Code	781
Local Phone Number	565-5000
Title of each class	Common stock, par value $0.001
Trading Symbol(s)	NUAN
Name of each exchange on which registered	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		319,385,728
Amendment Flag	false
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q1
Entity Central Index Key	0001002517
Current Fiscal Year End Date	--09-30

XML

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Revenues:
Hosting and professional services	$ 213,732	$ 195,832
Product and licensing	47,472	86,037
Maintenance and support	60,231	63,884
Total revenues	321,435	345,753
Cost of revenues:
Hosting and professional services	121,254	105,615
Product and licensing	6,690	14,415
Maintenance and support	6,718	7,486
Amortization of intangible assets	5,215	4,262
Total cost of revenues	139,877	131,778
Gross profit	181,558	213,975
Operating expenses:
Research and development	68,166	56,457
Sales and marketing	84,002	65,405
General and administrative	35,517	41,145
Amortization of intangible assets	6,754	10,531
Acquisition-related costs, net	1,248	325
Restructuring and other charges, net	8,506	8,566
Total operating expenses	204,193	182,429
(Loss) income from operations	(22,635)	31,546
Other income (expense):
Interest income	22	228
Interest expense	(12,661)	(23,014)
Other income, net	1,265	497
(Loss) income before income taxes	(34,009)	9,257
Provision for income taxes	23,550	2,303
Net (loss) income from continuing operations	(57,559)	6,954
Net income from discontinued operations	0	7,941
Net (loss) income	$ (57,559)	$ 14,895
Net (loss) income per common share - basic:
Continuing operations (in dollars per share)	$ (0.18)	$ 0.02
Discontinued operations (in dollars per share)	0	0.03
Total net (loss) income per basic common share (in dollars per share)	(0.18)	0.05
Net (loss) income per common share - diluted:
Continuing operations (in dollars per share)	(0.18)	0.02
Discontinued operations (in dollars per share)	0	0.03
Total net (loss) income per diluted common share (in dollars per share)	$ (0.18)	$ 0.05
Weighted average common shares outstanding:
Basic (in shares)	317,359	283,818
Diluted (in shares)	317,359	314,210

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Statement of Comprehensive Income [Abstract]
Net (loss) income	$ (57,559)	$ 14,895
Other comprehensive (loss) income:
Foreign currency translation adjustment	(2,653)	15,814
Pension adjustments	35	14
Unrealized loss on marketable securities	(7)	(29)
Total other comprehensive (loss) income, net	(2,625)	15,799
Comprehensive (loss) income	$ (60,184)	$ 30,694

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2021	Sep. 30, 2021
Current assets:
Cash and cash equivalents	$ 91,949	$ 187,307
Marketable securities	0	22,168
Accounts receivable, less allowances for doubtful accounts of $9,536 and $10,073	180,171	162,292
Prepaid expenses and other current assets	203,684	231,778
Total current assets	475,804	603,545
Land, building and equipment, net	147,704	146,660
Goodwill	2,154,658	2,155,270
Intangible assets, net	116,002	128,331
Right-of-use assets	77,905	82,666
Deferred tax assets	45,927	45,927
Other assets	218,557	224,254
Total assets	3,236,557	3,386,653
Current liabilities:
Current portion of long-term debt	348,669	372,999
Contingent and deferred acquisition payments	1,882	2,148
Accounts payable	75,326	90,120
Accrued expenses and other current liabilities	154,276	222,340
Deferred revenue	261,010	240,742
Total current liabilities	841,163	928,349
Long-term debt	495,185	494,925
Deferred revenue, net of current portion	99,505	108,317
Deferred tax liabilities	27,723	12,019
Operating lease liabilities	80,444	85,290
Other liabilities	76,915	77,781
Total liabilities	1,620,935	1,706,681
Commitments and contingencies (Note 16)
Mezzanine Equity	40,723	45,038
Stockholders’ equity:
Common stock, $0.001 par value per share; 560,000 shares authorized; 322,582 and 319,402 shares issued and 318,831 and 315,651 shares outstanding, respectively	323	319
Additional paid-in capital	2,055,139	2,054,994
Treasury stock, at cost (3,751 shares)	(16,788)	(16,788)
Accumulated other comprehensive loss	(107,274)	(104,649)
Accumulated deficit	(356,501)	(298,942)
Total stockholders’ equity	1,574,899	1,634,934
Total liabilities and stockholders’ equity	$ 3,236,557	$ 3,386,653

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2021	Sep. 30, 2021
Current assets:
Accounts receivable, allowances for doubtful accounts	$ 9,536	$ 10,073
Stockholders’ equity:
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	560,000,000	560,000,000
Common stock, shares issued (in shares)	322,582,000	319,402,000
Common stock, shares outstanding (in shares)	318,831,000	315,651,000
Treasury stock, shares (in shares)	3,751,000	3,751,000

XML

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY - USD ($) shares in Thousands, $ in Thousands		Total	Common Stock	Additional Paid-In Capital	Treasury Stock	Accumulated Other Comprehensive Loss	Accumulated Deficit
Beginning balance (in shares) at Sep. 30, 2020			286,703		3,751
Beginning balance at Sep. 30, 2020		$ 1,143,933	$ 287	$ 1,550,568	$ (16,788)	$ (117,918)	$ (272,216)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock under employee stock plans (in shares)			3,117
Issuance of common stock under employee stock plans		0	$ 3	(3)
Cancellation of restricted stock, and repurchase of common stock at cost for employee tax withholding (in shares)			(1,151)
Cancellation of restricted stock, and repurchase of common stock at cost for employee tax withholding		(43,703)	$ (1)	(43,702)
Stock-based compensation		75,455		75,455
Equity portion of convertible debt puttable		(53,343)		(53,343)
Net (loss) income		14,895					14,895
Other comprehensive income (loss)		15,799				15,799
Ending balance (in shares) at Dec. 31, 2020			288,669		3,751
Ending balance at Dec. 31, 2020		1,153,036	$ 289	1,528,975	$ (16,788)	(102,119)	(257,321)
Beginning balance (in shares) at Sep. 30, 2021			319,402		3,751
Beginning balance at Sep. 30, 2021		1,634,934	$ 319	2,054,994	$ (16,788)	(104,649)	(298,942)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock under employee stock plans (in shares)			3,875
Issuance of common stock under employee stock plans		64	$ 4	60
Cancellation of restricted stock, and repurchase of common stock at cost for employee tax withholding (in shares)			(1,549)
Cancellation of restricted stock, and repurchase of common stock at cost for employee tax withholding		(85,375)	$ (1)	(85,374)
Stock-based compensation		81,361		81,361
Equity portion of convertible debt puttable		4,315		4,315
Redemption of Convertible Notes (in shares)	[1]		854
Redemption of Convertible Notes	[1]	(216)	$ 1	(217)
Net (loss) income		(57,559)					(57,559)
Other comprehensive income (loss)		(2,625)				(2,625)
Ending balance (in shares) at Dec. 31, 2021			322,582		3,751
Ending balance at Dec. 31, 2021		$ 1,574,899	$ 323	$ 2,055,139	$ (16,788)	$ (107,274)	$ (356,501)

[1] According to ASC 470-20, cash consideration paid to repurchase and retire our convertible notes was first allocated to debt component based on the actual fair value on the trading date, and the remaining consideration was allocated to additional paid-in capital.

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Cash flows from operating activities:
Net (loss) income from continuing operations	$ (57,559)	$ 6,954
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation	11,019	7,993
Amortization	11,969	14,793
Stock-based compensation	38,399	34,906
Non-cash interest expense	4,144	12,324
Deferred tax provision (benefit)	14,386	(5,435)
Loss on extinguishment of debt	215	0
Other	651	3,028
Changes in operating assets and liabilities, excluding effects of acquisitions:
Accounts receivable	(19,354)	(40,023)
Prepaid expenses and other assets	40,930	(5,892)
Accounts payable	(14,934)	11,636
Accrued expenses and other liabilities	(29,480)	(9,480)
Deferred revenue	13,464	23,814
Net cash provided by operating activities - continuing operations	13,850	54,618
Net cash provided by operating activities - discontinued operations	0	6,570
Net cash provided by operating activities	13,850	61,188
Cash flows from investing activities:
Capital expenditures	(12,394)	(17,400)
Purchases of marketable securities and other investments	0	(41,366)
Proceeds from sales and maturities of marketable securities and other investments	22,162	37,582
Payments for business and asset acquisitions, net of cash acquired	(5,375)	(250)
Other	209	(545)
Net cash provided by (used in) investing activities	4,602	(21,979)
Cash flows from financing activities:
Repurchase and redemption of debt	(28,646)	0
Payments for taxes related to net share settlement of equity awards	(82,763)	(43,729)
Other financing activities	(78)	(6)
Net cash used in financing activities	(111,487)	(43,735)
Effects of exchange rate changes on cash and cash equivalents	(2,323)	2,739
Net decrease in cash and cash equivalents	(95,358)	(1,787)
Cash and cash equivalents at beginning of period	187,307	301,233
Cash and cash equivalents at end of period	$ 91,949	$ 299,446

XML

Organization and Presentation

3 Months Ended

Dec. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Presentation

Organization and Presentation

Nuance Communications, Inc. ("we", "Nuance", "our", "us", or the "Company") is a pioneer and leader in conversational and cognitive artificial intelligence ("AI") innovations that bring intelligence to everyday work and life. Our solutions and technologies can understand, analyze and respond to human language to increase productivity and amplify human intelligence. Our solutions are used by businesses in the healthcare, financial services, telecommunications and travel industries, among others. We had three reportable segments as of December 31, 2021: Healthcare, Enterprise, and Other. See Note 18 for a description of each of these segments.

Although we believe the disclosures included herein are adequate to ensure that the condensed consolidated financial statements are fairly presented, certain information and footnote disclosures to the financial statements have been condensed or omitted in accordance with the rules and regulations of the SEC. Accordingly, the condensed consolidated financial statements and the footnotes included herein should be read in conjunction with the audited financial statements and the footnotes included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2021. The results of operations for the interim periods presented are not necessarily indicative of the results for the entire fiscal year or any future period.

On April 11, 2021, we entered into an Agreement and Plan of Merger (the " Merger Agreement") with Microsoft Corporation ("Microsoft"). Subject to the terms and conditions of the Merger Agreement, Microsoft has agreed to acquire Nuance for $56.00 per share in an all-cash transaction. Pursuant to the Merger Agreement, a wholly-owned subsidiary of Microsoft will merge with and into Nuance (the "Merger") with Nuance surviving as a wholly-owned subsidiary of Microsoft. As a result of the Merger, we will cease to be a publicly traded company. We have agreed to various customary covenants and agreements, including, among others, agreements to conduct our business in the ordinary course during the period between the execution of the Merger Agreement and the effective time of the Merger. We do not believe these restrictions will prevent us from meeting our debt service obligations, ongoing costs of operations, working capital needs, or capital expenditure requirements. The acquisition has been approved by Nuance’s shareholders, and we expect it to close by the end of the first calendar quarter of 2022, subject to the satisfaction of certain regulatory approvals and other customary closing conditions.

For additional information related to the Merger Agreement, please refer to the definitive proxy statement previously filed with the Securities and Exchange Commission ("SEC") and other relevant materials in connection with the transaction that we will file with the SEC and which will contain important information about Nuance and the Merger.

As more fully described in Note 11, during the first quarter of fiscal year 2022, our common stock price exceeded 130% of the applicable conversion price for each of our convertible debentures for at least 20 trading days during the 30 consecutive trading days ending December 31, 2021. As a result, the holders of our 1.25% 2025 Debentures and 1.0% 2035 Debentures have the right to convert all or any portion of their debentures between January 1, 2022 and March 31, 2022. All of our convertible notes with a total net book value of $348.7 million were included within current liabilities as of December 31, 2021.

Should any holders elect to convert, the principal amount of the convertible debentures would be payable in cash, and any amount payable in excess of the principal amount would be paid in cash or shares of our common stock at our election. During the first quarter of fiscal year 2022, holders of our 1.5% 2035 Debentures exercised their right to convert and we redeemed $25.1 million notional amount for $25.1 million in cash and 0.8 million shares of common stock. Following these redemptions, none of the 1.5% 2035 Debentures remain outstanding. Additionally, during the first quarter of fiscal year 2022, holders of our 1.0% 2035 Debentures exercised their right to convert $2.3 million notional amount for $2.3 million in cash and 0.1 million shares of common stock, and holders of our 1.25% 2025 Debentures exercised their right to convert $1.2 million notional amount for $1.2 million in cash and 0.04 million shares of common stock. As part of these redemptions, we transferred non-cash consideration in the form of shares of common stock valued at $41.9 million for the 1.5% 2035 Debentures, $3.0 million for the 1.0% 2035 Debentures, and $2.2 million for the 1.25% 2025 Debentures. As of December 31, 2021, $128.0 million in aggregate principal amount of the 1.0% 2035 Debentures and $261.4 million in aggregate principal amount of the 1.25% 2025 Debentures remained outstanding.

Our convertible debentures are actively traded in the open market. The 1.25% 2025 Debentures trade at a price consistently in excess of their conversion values. Therefore, we believe that it is uneconomic, and thus unlikely, for the holders of the 1.25% 2025 Debentures to early exercise their conversion rights. In the event that holders of any of our debentures presented an amount for settlement that exceeded our then available sources of liquidity, we may need to obtain additional financing, which we believe would be available to us based upon our assessment of the prevailing market and business conditions and our experience of successful capital raising activities.

XML

Summary of Significant Accounting Policies

3 Months Ended

Dec. 31, 2021

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Issued Accounting Standards Not Yet Adopted

From time to time, new accounting pronouncements are issued by the FASB and are adopted by us as of the specified effective dates. Unless otherwise discussed, such pronouncements did not have or will not have a significant impact on our consolidated financial position, results of operations or cash flows, or do not apply to our operations.

Convertible Notes

In August 2020, the FASB issued ASU 2020-06, "Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity," which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The new guidance eliminates two of the three models in Accounting Standards Codification ("ASC") 470-202 that require separating embedded conversion features from convertible instruments. As a result, only conversion features accounted for under the substantial premium model in ASC 470-20 and those that require bifurcation in accordance with ASC 815-153 will be accounted for separately. For contracts in an entity’s own equity, the new guidance eliminates some of the requirements in ASC 815-404 for equity classification. The guidance also addresses how convertible instruments are accounted for in the diluted earnings per share calculation and requires enhanced disclosures about the terms of convertible instruments and contracts in an entity’s own equity. The guidance will be effective for annual periods beginning after December 15, 2021, and interim periods therein. Early adoption is permitted for all entities for fiscal periods beginning after December 15, 2020, including interim periods within the same fiscal year. Entities are allowed to adopt the guidance using either the modified or full retrospective approach. We are currently assessing the provisions of the guidance and the impact on our condensed consolidated financial statements.

Business Combinations

In August 2021, the FASB issued ASU 2021-08, "Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers," which improves the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to: (1) recognition of an acquired contract liability, and (2) payment terms and their effect on subsequent revenue recognized by the acquirer. The new guidance requires that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. The guidance will be effective for annual periods beginning after December 15, 2022, and interim periods therein. Early adoption is permitted for all entities, including interim periods within the same fiscal year. We are currently assessing the provisions of the guidance and the impact on our condensed consolidated financial statements.

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Revenue Recognition

3 Months Ended

Dec. 31, 2021

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Revenue Recognition

We derive revenue from the following sources: (1) hosting services, (2) software licenses, including royalties, (3) maintenance and support ("M&S"), (4) professional services, and (5) sale of hardware. Revenue is reported net of applicable sales and use tax, value-added tax and other transaction taxes imposed on the related transaction including mandatory government charges that are passed through to our customers. We account for a contract when both parties have approved and committed to the contract, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and the collectability of the consideration is probable.

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

We recognize revenue after applying the following five steps:

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

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

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

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

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

We allocate the transaction price of the arrangement based on the relative estimated standalone selling price ("SSP") of each distinct performance obligation. In determining SSP, we maximize observable inputs and consider a number of data points, including:

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

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

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

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

We only include estimated amounts of variable consideration in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. We reduce transaction prices for estimated returns and other allowances that represent variable consideration under ASU No. 2014-09, "Revenue from Contracts with Customers: Topic 606" ("ASC 606"), which we estimate based on historical return experience and other relevant factors and record a reduction to revenue and accounts receivable. Other forms of contingent revenue or variable consideration are infrequent.

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

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

Certain products are sold through distributors or resellers. Certain distributors and resellers have been granted right of return and selling incentives which are accounted for as variable consideration when estimating the amount of revenue to be recognized. Returns and credits are estimated at the contract inception and updated at the end of each reporting period as additional information becomes available. In accordance with the practical expedient in ASC 606-10-10-4, we apply a portfolio approach to estimate the variable consideration associated with this group of customers.

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

Shipping and handling activities are not considered a contract performance obligation. We record shipping and handling costs billed to customers as revenue with offsetting costs recorded as cost of revenue.

Performance Obligations

Hosting

Hosting services, which allow our customers to use the hosted software over the contract period without taking possession of the software, are provided on a usage basis as consumed or on a fixed fee subscription basis. Our hosting contract terms generally range from one to five years.

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

Subscription-based revenue represents a single promise to stand-ready to provide access to our hosting services. Revenue is recognized over time on a ratable basis over the hosting contract term, which generally ranges from one to five years.

Software Licenses

On-premise software licenses sold with non-distinct professional services to customize and/or integrate the underlying software are accounted for as a combined performance obligation. Revenue from the combined performance obligation is recognized over time based upon the progress towards completion of the project, which is measured based on the labor hours already incurred to date as compared to the total estimated labor hours.

Revenue from distinct on-premise software licenses, which do not require professional services to customize and/or integrate the software license, is recognized at the point in time when the software is made available to the customer and control is transferred.

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

Maintenance and Support

Our M&S contracts generally include telephone support and the right to receive unspecified upgrades and updates on a when-and-if available basis. M&S revenue is recognized over time on a ratable basis over the contract period because we transfer control evenly by providing a stand-ready service.

Professional Services

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

Hardware

Hardware revenue is recognized at the point in time when control is transferred to the customer, which is typically upon delivery.

Significant Judgments

Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. Our license contracts often include professional services to customize and/or integrate the licenses into the customer’s environment. Judgment is required to determine whether the license is considered distinct and accounted for separately, or not distinct and accounted for together with professional services.

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

From time to time, we may enter into arrangements with third party suppliers to resell products or services. In such cases, we evaluate whether we are the principal (i.e. report revenues on a gross basis) or agent (i.e. report revenues on a net basis). In doing so, we first evaluate whether we control the good or service before it is transferred to the customer. If we control the good or service before it is transferred to the customer, we are the principal; if not, we are the agent. Generally, we control a promised good or service before transferring that good or service to the customer and act as the principal to the transaction. Determining whether we control the good or service before it is transferred to the customer may require judgment.

Disaggregated Revenue

We disaggregate revenue from contracts with customers by reportable segment and products and services as this presentation depicts the timing, risks and uncertainty of our revenue streams, which is also in line with how we manage our businesses, assess performance, and determine management compensation. Our disaggregated revenue from continuing operations is as follows (dollars in thousands):

	Three Months Ended December 31,
	2021								2020
	Hosting and professional services		Product and licensing		Maintenance and support		Total		Hosting and professional services		Product and licensing		Maintenance and support		Total
Healthcare	$	136,297	$	34,696	$	29,407	$	200,400	$	110,803	$	54,783	$	33,746	$	199,332
Enterprise	73,760		12,659		30,808		117,227		78,741		30,286		30,125		139,152
Other	3,675		117		16		3,808		6,288		968		13		7,269
Total revenues	$	213,732	$	47,472	$	60,231	$	321,435	$	195,832	$	86,037	$	63,884	$	345,753

Hardware revenue comprised approximately $7.3 million of total product and licensing revenue for the three months ended December 31, 2021, and $6.6 million of total product and licensing revenue for the three months ended December 31, 2020.

Contract Acquisition Costs

We are required to capitalize certain contract acquisition costs under ASC 606. The capitalized costs primarily relate to paid commissions and other direct, incremental costs to acquire customer contracts. In accordance with the practical expedient in ASC 606-10-10-4, we apply a portfolio approach to estimate contract acquisition costs for groups of customer contracts. We elect to apply the practical expedient in ASC 340-40-25-4 and will expense contract acquisition costs as incurred where the expected period of benefit is one year or less. Sales commissions paid on renewal maintenance and support are not commensurate with sales commissions paid on the initial maintenance and support contract. Contract acquisition costs are deferred and amortized on a straight-line basis over the period of benefit, which we have estimated to be between one and five years. The period of benefit was determined based on an average customer contract term, expected contract renewals, changes in technology and our ability to retain customers including canceled contracts. Contract acquisition costs are classified as current or noncurrent assets based on when the expense will be recognized. The current and noncurrent portions of contract acquisition costs are included in Prepaid expenses and other current assets, and Other assets, respectively. As of December 31, 2021, we had $49.4 million of current contract acquisition costs and $91.9 million of noncurrent contract acquisition costs. As of September 30, 2021, we had $40.5 million of current contract acquisition costs and $86.1 million of noncurrent contract acquisition costs. Commission expense is primarily included in sales and marketing expense on the consolidated statements of operations. We had amortization expense of $7.0 million and $4.7 million related to contract acquisition costs for the three months ended December 31, 2021 and 2020, respectively. There was no impairment related to commission costs capitalized.

Capitalized Contract Costs

We capitalize incremental costs incurred to fulfill our contracts that (1) relate directly to the contract, (2) are expected to generate resources that will be used to satisfy our performance obligation under the contract, and (3) are expected to be recovered through revenue generated under the contract. Our capitalized costs consist primarily of setup costs, such as costs to stand-up, customize, and develop applications for each customer. These costs are incurred to satisfy our stand-ready obligation to provide access to our connected offerings. The contract costs are expensed to cost of revenue as we satisfy our stand-ready obligation over the contract term, which we estimate to be between one and five years. The contract term estimation was determined based on an average customer contract term, expected contract renewals, changes in technology, and our ability to retain customers including canceled contracts. We classify capitalized contract costs as current or noncurrent based on the timing of when we expect to recognize the expense. The current and noncurrent portions of capitalized contract fulfillment costs are included in Prepaid expenses and other current assets, and Other assets, respectively. As of December 31, 2021, we had $22.8 million of short-term contract costs included with Prepaid expenses and other current assets and $35.5 million of long-term costs included within Other assets. As of September 30, 2021, we had $21.3 million of short-term contract costs included with Prepaid expenses and other current assets and $35.3 million of long-term costs within Other assets.

Trade Accounts Receivable and Contract Balances

We classify our right to consideration in exchange for deliverables as either a receivable or a contract asset. A receivable is a right to consideration that is unconditional (i.e. only the passage of time is required before payment is due). We present such receivables in Accounts receivable, net in our consolidated balance sheets at their net estimated realizable value. We maintain an allowance for doubtful accounts to provide for the estimated amount of receivables that may not be collected. The allowance is based upon an assessment of customer creditworthiness, historical payment experience, the age of outstanding receivables and other applicable factors.

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

Contract assets include unbilled amounts from long-term contracts when revenue recognized exceeds the amount billed to the customer, and right to payment is not solely subject to the passage of time. The current and noncurrent portions of contract assets are included in Prepaid expenses and other current assets, and Other assets. As of December 31, 2021, we had $65.2 million of current contract assets and $73.9 million of noncurrent contract assets. As of September 30, 2021, we had $72.6 million of current contract assets and $88.9 million of noncurrent contract assets. The table below shows significant changes in contract assets of continuing operations (dollars in thousands):

	Contract assets
Balance as of September 30, 2021	$	161,512
Revenues recognized but not billed	73,228
Amounts reclassified to accounts receivable	(95,632)
Balance at December 31, 2021	$	139,108

Our contract liabilities, or Deferred revenue, consist of advance payments and billings in excess of revenues recognized. We classify Deferred revenue as current or noncurrent based on when we expect to recognize the revenues. As of December 31, 2021, we had $360.5 million of Deferred revenue. The table below shows significant changes in Deferred revenue (dollars in thousands):

	Deferred revenue
Balance as of September 30, 2021	$	349,059
Amounts bill but not recognized	200,167
Revenue recognized	(188,711)
Balance at December 31, 2021	$	360,515

Remaining Performance Obligations

The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied as of December 31, 2021 (dollars in thousands):

	Within One Year		Two to Four Years		Greater than Four Years		Total
Total revenue	$	745,007	$	993,659	$	42,923	$	1,781,589

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

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Disposition of Businesses

3 Months Ended

Dec. 31, 2021

Discontinued Operations and Disposal Groups [Abstract]

Disposition of Businesses

Disposition of Businesses

Disposition of Our Medical Transcription and EHR Implementation businesses

On November 17, 2020, we entered into a definitive agreement (the “Agreement”) to sell our medical transcription and electronic healthcare record ("EHR") implementation businesses (the "Business") to Assured Healthcare Partners and Aeries Technology Group (together, the “Buyer”). Pursuant to the Agreement, we sold and transferred, and the Buyer purchased and acquired, (a) the shares of certain subsidiaries through which we operate a portion of the Business and (b) certain assets used in or related to the Business; and the Buyer assumed certain liabilities related to such assets of the Business, subject to certain exclusions and indemnities as set forth in the Agreement.

On March 1, 2021, we completed the sale of the Business and received approximately $29.8 million in cash, subject to post-closing finalization of the adjustments set forth in the Agreement. As a result, we recorded a loss of $12.5 million, which is included within net income (loss) from discontinued operations in fiscal year 2021. There are a number of working capital and other adjustments under the Agreement and related ancillary agreements. We do not believe that post-closing working capital adjustments under the Agreement, if any, will have a material impact on our results of operations.

For all periods presented, the Businesses' results of operations have been included within discontinued operations in our condensed consolidated financial statements.

The following table summarizes the results of the discontinued operations (dollars in thousands):

	Three Months Ended December 31,
	2021	2020
	Medical Transcription and EHR Implementation	Medical Transcription and EHR Implementation
Major line items constituting net income of discontinued operations:
Revenue	N/A	$	47,650
Cost of revenue	N/A	29,152
Research and development	N/A	1,298
Sales and marketing	N/A	908
General and administrative	N/A	12
Amortization of intangible assets	N/A	2,444
Restructuring and other charges, net	N/A	4,438
Income from discontinued operations before income taxes	N/A	9,398
Provision for income taxes	N/A	1,457
Net income from discontinued operations	N/A	$	7,941
Supplemental information:
Depreciation	N/A	$	1,063
Amortization	N/A	$	2,444
Stock compensation	N/A	$	287
Capital expenditures	N/A	$	57

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Business Acquisitions

3 Months Ended

Dec. 31, 2021

Business Combinations [Abstract]

Business Acquisitions

Business Acquisitions

As part of our business strategy, we have acquired, and may acquire in the future, certain businesses and technologies primarily to expand our products and service offerings.

Fiscal Year 2021 Acquisitions

For the fiscal year ended September 30, 2021, we completed one acquisition in our Healthcare segment for a total cash consideration of $45.2 million. As a result, we recognized goodwill of $27.4 million and intangible assets of $19.7 million related to technology with a useful life of 5.0 years. The results of operations of the acquired entity have been included within our consolidated statement of operations from the acquisition date. The acquisition was not material to our condensed consolidated financial statements.

Acquisition-Related Costs, net

Acquisition-related costs include costs related to business and asset acquisitions. These costs consist of (i) transition and integration costs, including retention payments, transitional employee costs and earn-out payments, and other costs related to integration activities; (ii) professional service fees, including financial advisory, legal, accounting, and other outside services incurred in connection with acquisition activities, and disputes and regulatory matters related to acquired entities; and (iii) fair value adjustments to acquisition-related contingencies.

A summary of acquisition-related costs, net is as follows (dollars in thousands):

	Three Months Ended December 31,
	2021		2020
Transition and integration costs	$	1,238	$	72
Professional service fees	10		253
Total	$	1,248	$	325

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Goodwill and Intangible Assets

3 Months Ended

Dec. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Goodwill and Intangible Assets

The changes in the carrying amount of goodwill by reportable segment for the three months ended December 31, 2021 are as follows (dollars in thousands): 

Goodwill

	Healthcare		Enterprise		Other		Total
Balance as of September 30, 2021	$	1,453,836	$	688,163	$	13,271	$	2,155,270
Purchase accounting adjustments	150		—		—		150
Effect of foreign currency translation	(1,745)		896		87		(762)
Balance at December 31, 2021	$	1,452,241	$	689,059	$	13,358	$	2,154,658

Other Intangible Assets

The changes in the carrying amount of intangible assets for the three months ended December 31, 2021 are as follows (dollars in thousands):

	Intangible Assets
Balance at September 30, 2021	$	128,331
Amortization	(11,969)
Effect of foreign currency translation	(360)
Balance at December 31, 2021	$	116,002

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Financial Instruments and Hedging Activities

3 Months Ended

Dec. 31, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Financial Instruments and Hedging Activities

Financial Instruments and Hedging Activities

Derivatives Not Designated as Hedges

Forward Currency Contracts

We have operations in a number of international locations where currency exchange rates can be volatile. We utilize foreign currency forward contracts to mitigate the risks associated with changes in foreign currency exchange rates so that our exposure to foreign currencies will be mitigated or offset by the gains or losses on the foreign currency forward contracts. Generally, we enter into such contracts for less than 90 days and have no cash requirements until maturity. As of December 31, 2021 and September 30, 2021, we had outstanding contracts with a total notional value of $75.1 million and $52.5 million, respectively.

We did not designate any forward contracts as hedging instruments for the three months ended December 31, 2021 or 2020. Therefore, changes in fair value of foreign currency forward contracts were recognized within Other income, net in our consolidated statements of operations. The cash flows related to the settlement of forward contracts not designated as hedging instruments are included in cash flows from investing activities within our consolidated statement of cash flows.

A summary of the derivative instruments is as follows (dollars in thousands):

Derivatives Not Designated as Hedges	Balance Sheet Classification	Fair Value
		December 31, 2021		September 30, 2021
Foreign currency forward contracts	Prepaid expenses and other current assets	$	129	$	112
Foreign currency forward contracts	Accrued expenses and other current liabilities	$	(105)	$	(49)

A summary of other income (expense), net related to foreign currency forward contracts for the three months ended December 31, 2021 and 2020 is as follows (dollars in thousands):

	Income Statement Classification	Three Months Ended December 31,
Derivatives Not Designated as Hedges	(Income) Loss Recognized	2021		2020
Foreign currency forward contracts	Other income (expense), net	$	175	$	(548)

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Fair Value Measurements

3 Months Ended

Dec. 31, 2021

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. Valuation techniques must maximize the use of observable inputs and minimize the use of unobservable inputs. When determining 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.

The determination of the applicable level within the hierarchy of a particular financial asset or liability depends on the lowest level of inputs that are significant to the fair value measurement as of the measurement date as follows:

•Level 1: Quoted prices for identical assets or liabilities in active markets.

•Level 2: Observable inputs other than those described as Level 1.

•Level 3: Unobservable inputs that are supportable by little or no market activities and are based on significant assumptions and estimates.

Assets and liabilities measured at fair value on a recurring basis as of December 31, 2021 and September 30, 2021 consisted of the following (dollars in thousands):

	December 31, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds (a)	$	60,144	$	—	$	—	$	60,144
Time deposits (b)	—		1,000		—		1,000
Foreign currency exchange contracts (b)	—		129		—		129
Total assets at fair value	$	60,144	$	1,129	$	—	$	61,273
Liabilities:
Foreign currency exchange contracts (b)	$	—	$	(105)	$	—	$	(105)
Total liabilities at fair value	$	—	$	(105)	$	—	$	(105)

	September 30, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds (a)	$	113,186	$	—	$	—	$	113,186
Time deposits (b)	—		13,889		—		13,889
Commercial paper, $18,633 at cost (b)	—		18,668		—		18,668
Foreign currency exchange contracts (b)	—		112		—		112
Total assets at fair value	$	113,186	$	32,669	$	—	$	145,855
Liabilities:
Foreign currency exchange contracts (b)	$	—	$	(49)	$	—	$	(49)
Total liabilities at fair value	$	—	$	(49)	$	—	$	(49)

__________

(a)Money market funds and time deposits with original maturity of 90 days or less are included within cash and cash equivalents in the consolidated balance sheets and are valued at quoted market prices in active markets.

(b)Time deposits, commercial paper, corporate notes and bonds, and foreign currency exchange contracts are recorded at fair market values, which are determined based on the most recent observable inputs for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active or are directly or indirectly observable. Time deposits are generally for terms of one year or less. Commercial paper and corporate notes and bonds generally mature within three years and had a weighted average maturity of 0.21 years as of September 30, 2021.

The estimated fair value of our long-term debt approximated $1,547.5 million (face value $889.4 million) as of December 31, 2021 and $1,620.3 million (face value $918.0 million) as of September 30, 2021 based on Level 2 measurements. The fair value of each borrowing was estimated using the average of the bid and ask trading quotes at each respective reporting date. There was no balance outstanding under our revolving credit agreement as of December 31, 2021 or September 30, 2021.

Additionally, contingent acquisition payments are recorded at fair values upon the acquisition and are remeasured in subsequent reporting periods with the changes in fair values recorded within acquisition-related costs, net. Such payments are contingent upon the achievement of specified performance targets and are valued using the option pricing model with Monte Carlo simulation or the probability-weighted discounted cash flow model (Level 3 measurement).

The following table provides a summary of changes in the aggregate fair value of the contingent acquisition payments for all periods presented (dollars in thousands):

	Three Months Ended December 31,
	2021		2020
Balance at beginning of period	$	—	$	1,796
Payments and foreign currency translation	—		51
Balance at end of period	$	—	$	1,847

As of December 31, 2021, we do not have any required payments based upon any specified performance targets being achieved.

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Accrued Expenses and Other Current Liabilities

3 Months Ended

Dec. 31, 2021

Payables and Accruals [Abstract]

Accrued Expenses and Other Current Liabilities

Accrued Expenses and Other Current Liabilities

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

	December 31, 2021		September 30, 2021
Compensation	$	78,335	$	133,194
Cost of revenue related liabilities	22,517		24,976
Accrued interest payable	2,341		9,038
Consulting and professional fees	14,623		18,130
Sales and marketing incentives	1,201		1,294
Sales and other taxes payable	8,120		8,016
Operating lease obligations	22,870		24,522
Other	4,269		3,170
Total	$	154,276	$	222,340

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Restructuring and Other Charges, net

3 Months Ended

Dec. 31, 2021

Restructuring and Related Activities [Abstract]

Restructuring and Other Charges, net

Restructuring and Other Charges, net

Restructuring and other charges, net include restructuring expenses together with other charges that are unusual in nature, are the result of unplanned events, and arise outside of the ordinary course of our business.

The following table represents the roll forward of restructuring liabilities for the three months ended December 31, 2021 (dollars in thousands): 

	Personnel		Facilities		Total
Balance at September 30, 2021	$	444	$	16,946	$	17,390
Restructuring charges, net	3,195		195		3,390
Non-cash adjustment	—		(152)		(152)
Cash payments	(2,792)		(1,638)		(4,430)
Balance at December 31, 2021	$	847	$	15,351	$	16,198

The table below presents the Restructuring and other charges, net associated with each segment, but excluded from calculation of each segment's profit (dollars in thousands):

	Three Months Ended December 31,
	2021										2020
	Personnel		Facilities		Total Restructuring		Other Charges		Total		Personnel		Facilities		Total Restructuring		Other Charges		Total
Healthcare	$	1,804	$	125	$	1,929	$	—	$	1,929	$	2,632	$	567	$	3,199	$	—	$	3,199
Enterprise	450		249		699		—		699		1,182		2,472		3,654		—		3,654
Other	—		(138)		(138)		—		(138)		—		29		29		—		29
Corporate	941		(41)		900		5,116		6,016		975		3		978		706		1,684
Total	$	3,195	$	195	$	3,390	$	5,116	$	8,506	$	4,789	$	3,071	$	7,860	$	706	$	8,566

Fiscal Year 2022

For the three months ended December 31, 2021, we recorded restructuring charges of $3.4 million, which included $3.2 million related to the termination of approximately 81 employees and $0.2 million of charges related to closing certain idle facilities. These actions were part of our strategic initiatives focused on investment rationalization, process optimization and cost reduction as we continue to evaluate the geographic footprint of our offices and facilities. We expect the remaining outstanding severance of $0.8 million to be substantially paid during fiscal year 2022, and the remaining $15.4 million in lease payments to be made through fiscal year 2027, in accordance with the terms of the applicable leases.

Additionally, for the three months ended December 31, 2021, we recorded approximately $5.0 million of expenses related to the acquisition of Nuance by Microsoft, and $0.1 million of insurance recoveries.

Fiscal Year 2021

For the three months ended December 31, 2020, we recorded restructuring charges of $7.9 million, which included $4.8 million related to the termination of approximately 57 employees and a $3.1 million charge related to closing certain idle facilities. These actions were part of our strategic initiatives focused on investment rationalization, process optimization and cost reduction as we continue to evaluate the geographic footprint of our offices and facilities.

Additionally, for the three months ended December 31, 2020, we recorded $0.7 million in professional services expenses related to other corporate initiatives.

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Debt

3 Months Ended

Dec. 31, 2021

Debt Disclosure [Abstract]

Debt

Debt

As of December 31, 2021 and September 30, 2021, we had the following borrowing obligations (dollars in thousands): 

	December 31, 2021		September 30, 2021
5.625% Senior Notes due 2026, net of deferred issuance costs of $3.1 million and $3.2 million, respectively. Effective interest rate 5.625%.	$	496,918	$	496,764
1.000% Convertible Debentures due 2035, net of unamortized discount of $5.5 million and $7.0 million, respectively, and deferred issuance costs of $0.3 million and $0.3 million, respectively. Effective interest rate 5.622%.	122,185		122,948
1.250% Convertible Debentures due 2025, net of unamortized discount of $33.6 million and $36.1 million, respectively, and deferred issuance costs of $1.4 million and $1.5 million, respectively. Effective interest rate 5.578%.	226,484		225,067
1.500% Convertible Debentures due 2035, net of unamortized discount of $0.1 million, as of September 30, 2021. Effective interest rate 5.394%.	—		24,984
Deferred issuance costs related to our Revolving Credit Facility	(1,733)		(1,839)
Total debt	843,854		867,924
Less: current portion (a)	(348,669)		(372,999)
Total long-term debt	$	495,185	$	494,925

__________

(a) As of December 31, 2021, the holders have the right to convert all or any portion of the 1.25% 2025 Debentures and 1.0% 2035 Debentures between January 1, 2022 and March 31, 2022. As a result, the net carrying amounts of the convertible debentures were included in current liabilities as of December 31, 2021.

The following table summarizes the maturities of our borrowing obligations as of December 31, 2021 (dollars in thousands):

Fiscal Year	Convertible Debentures (a)		Senior Notes		Total
2022	$	389,392			$	389,392
2023	—		—		—
2024	—		—		—
2025	—		—		—
2026	—		—		—
Thereafter	—		500,000		500,000
Total before unamortized discount	389,392		500,000		889,392
Less: unamortized discount and issuance costs	(40,723)		(4,815)		(45,538)
Total debt	$	348,669	$	495,185	$	843,854

__________

(a) As more fully described below, as of December 31, 2021, the holders have the right to convert all or any portion of the 1.25% 2025 Debentures and 1.0% 2035 Debentures between January 1, 2022 and March 31, 2022. As a result, these convertible debentures were treated as if they were due in fiscal year 2022.

5.625% Senior Notes due 2026

In December 2016, we issued $500.0 million aggregate principal amount of 5.625% Senior Notes due on December 15, 2026 (the "2026 Senior Notes") in a private placement. The proceeds from the 2026 Senior Notes were approximately $495.0 million, net of issuance costs, and we used the proceeds to repurchase a portion of our then outstanding 5.375% Senior Notes due 2020. The 2026 Senior Notes bear interest at 5.625% per year, payable in cash semi-annually in arrears.

The 2026 Senior Notes are unsecured senior obligations and are guaranteed on an unsecured senior basis by certain of our domestic subsidiaries ("Subsidiary Guarantors"). The 2026 Senior Notes and the guarantees rank equally in right of payment with all of our and the Subsidiary Guarantors’ existing and future unsecured senior debt and rank senior in right of payment to all of our and the Subsidiary Guarantors’ future unsecured subordinated debt. The 2026 Senior Notes and guarantees effectively rank junior to all our secured debt and that of the Subsidiary Guarantors to the extent of the value of the collateral securing such debt and to all liabilities, including trade payables, of our subsidiaries that have not guaranteed the 2026 Senior Notes.

At any time, we may redeem all or a portion of the 2026 Senior Notes at certain redemption prices expressed as percentages of the principal amount, plus accrued and unpaid interest to, but excluding, the redemption date.

Upon the occurrence of a change in control or sale of substantially all assets, we must offer to repurchase the 2026 Senior Notes at a price equal to 100% in the case of an asset sale, or 101% in the case of a change of control, of the principal amount plus accrued and unpaid interest to, but excluding, the repurchase date.

1.0% Convertible Debentures due 2035

In December 2015, we issued $676.5 million in aggregate principal amount of 1.0% Senior Convertible Debentures due in 2035 (the "1.0% 2035 Debentures") in a private placement. Total proceeds were $663.8 million, net of issuance costs, and we used a portion to repurchase $38.3 million in aggregate principal on our 2.75% Senior Convertible Debentures due in 2031 (the “2.75% 2031 Debentures”) and to repay the aggregate principal balance of $472.5 million on our term loan under the amended and restated credit agreement. The 1.0% 2035 Debentures bear interest at 1.0% per year, payable in cash semi-annually in arrears. In addition to ordinary interest and default additional interest, beginning with the semi-annual interest period commencing on December 15, 2022, contingent interest will accrue during any regular semi-annual interest period where the average trading price of our 1.0% 2035 Debentures for the ten trading day period immediately preceding the first day of such semi-annual period is greater than or equal to $1,200 per $1,000 principal amount of our 1.0% 2035 Debentures, in which case, contingent interest will accrue at a rate of 0.50% per annum of such average trading price. The 1.0% 2035 Debentures mature on December 15, 2035, subject to the right of the holders to require us to redeem the 1.0% 2035 Debentures on December 15, 2022, 2027, or 2032. The 1.0% 2035 Debentures are general senior unsecured obligations and rank equally in right of payment

with all of our existing and future unsecured, unsubordinated indebtedness and senior in right of payment to any indebtedness that is contractually subordinated to the 1.0% 2035 Debentures. The 1.0% 2035 Debentures will be effectively subordinated to indebtedness and other liabilities of our subsidiaries.

We account separately for the liability and equity components of the 1.0% 2035 Debentures in accordance with authoritative guidance for convertible debt instruments that may be settled in cash upon conversion. The guidance requires the carrying amount of the liability component to be estimated by measuring the fair value of a similar liability that does not have an associated conversion feature and record the remainder in stockholders’ equity. At issuance, we allocated $495.4 million to long-term debt, and $181.1 million has been recorded as additional paid-in capital, which is being amortized to interest expense using the effective interest rate method through December 2022.

If converted, the principal amount of the 1.0% 2035 Debentures is payable in cash and any amounts payable in excess of the principal amount will be paid in cash or shares of our common stock, at our election. The conversion of the 1.0% 2035 Debentures will be based upon a conversion ratio of 41.4576 common shares per $1,000 principal amount, subject to adjustments. Conversion is only allowed in the following circumstances and to the following extent: (i) prior to June 15, 2035, on any date during any fiscal quarter (and only during such fiscal quarter) if the closing sale price of our common stock was more than 130% of the then current conversion price for at least 20 trading days in the period of the 30 consecutive trading days ending on the last trading day of the previous fiscal quarter; (ii) during the five consecutive business-day period following any five consecutive trading-day period in which the trading price for $1,000 principal amount of the 1.0% 2035 Debentures for each day during such five trading-day period was less than 98% of the closing sale price of our common stock multiplied by the then current conversion rate; (iii) upon the occurrence of specified corporate transactions, as described in the indenture for the 1.0% 2035 Debentures; or (iv) at the option of the holder at any time on or after June 15, 2035. Additionally, we may redeem the 1.0% 2035 Debentures, in whole or in part, on or after December 20, 2022 for cash at a price equal to 100% of the principal amount of the 1.0% 2035 Debentures to be purchased plus any accrued and unpaid interest, including any additional interest to, but excluding, the repurchase date. Each holder shall have the right, at such holder’s option, to require us to repurchase all or any portion of the 1.0% 2035 Debentures held by such holder on December 15, 2022, December 15, 2027, or December 15, 2032 at par plus accrued and unpaid interest. If we undergo a fundamental change or non-stock change of control (as described in the indenture for the 1.0% 2035 Debentures) prior to maturity, holders will have the option to require us to repurchase all or any portion of their debentures for cash at a price equal to 100% of the principal amount of the 1.0% 2035 Debentures to be purchased plus any accrued and unpaid interest.

During the third quarter of fiscal year 2021, we induced the exchange of $457.0 million notional amount of our 1.0% 2035 Debentures for $5.0 million in cash and 18.9 million shares of common stock, of which we allocated $435.1 million to debt and $567.1 million to equity. Also, in connection with the redemptions, we wrote off $32.4 million of unamortized discount and $1.4 million of unamortized costs. As a result, we recorded a $15.0 million loss associated with the redemptions, of which $3.1 million represents the inducement expense and $1.9 million represents the interest earned at the time of settlement, based upon the guidance in ASC 470-20. Additionally, as part of these redemptions we transferred non-cash consideration in the form of shares of common stock valued at $1,002.2 million.

Also, during the fourth quarter of fiscal year 2021, holders of our 1.0% 2035 Debentures exercised their right to convert $89.2 million notional amount for $89.2 million in cash and 2.1 million shares of common stock, of which we allocated $85.4 million to debt and $117.6 million to equity. Also, in connection with the conversions, we wrote off $5.6 million of unamortized discount and $0.3 million of unamortized costs. As a result, we recorded a $2.1 million loss associated with the conversions. Additionally, as part of these conversions we transferred non-cash consideration in the form of shares of common stock valued at $113.8 million.

Additionally, during the first quarter of fiscal year 2022, holders of our 1.0% 2035 Debentures exercised their right to convert $2.3 million notional amount for $2.3 million in cash and 0.1 million shares of common stock, of which we allocated $2.2 million to debt and $3.1 million to equity. Also, in connection with the conversions, we wrote off $0.1 million of unamortized discount. As a result, we recorded an immaterial loss associated with the conversions. Additionally, as part of these conversions we transferred non-cash consideration in the form of shares of common stock valued at $3.0 million. Following the redemptions, $128.0 million in aggregate principal amount of the 1.0% 2035 Debentures remained outstanding as of December 31, 2021.

The 1.0% 2035 Debentures were convertible as of December 31, 2021, as our common stock price exceeded the conversion threshold price of 130% of the applicable conversion price per share for at least 20 trading days during the 30 consecutive trading days ending December 31, 2021. As a result, the holders of our 1.0% 2035 Debentures have the right to convert all or

any portion of their debentures between January 1, 2022 and March 31, 2022. The holders previously had the right to convert all or any portion of their debentures at the aforementioned conversion ratio beginning January 1, 2021 through December 31, 2021.

As of December 31, 2021, holders have exercised their right to convert $23.5 million notional amount of our 1.0% 2035 Debentures for an estimated $23.5 million in cash and 0.5 million shares of common stock for an estimated total consideration of $53.8 million. The settlement of these conversions occurred in the second quarter of fiscal year 2022. The net carrying amount of the 1.0% 2035 Debentures was included within the current portion of long-term debt, and $5.8 million has been reclassified from permanent equity to mezzanine equity. As of December 31, 2021, the if-converted value of the 1.0% 2035 Debentures exceeded its principal amount by $165.5 million.

1.25% Convertible Debentures due 2025

In March 2017, we issued $350.0 million in aggregate principal amount of 1.25% Senior Convertible Debentures due in 2025 (the "1.25% 2025 Debentures") in a private placement. The proceeds were approximately $343.6 million, net of issuance costs. We used a portion of the proceeds to repurchase 5.8 million shares of our common stock for $99.1 million and $17.8 million in aggregate principal on our 2.75% 2031 Debentures. The 1.25% 2025 Debentures bear interest at 1.25% per year, payable in cash semi-annually in arrears, beginning on October 1, 2017. The 1.25% 2025 Debentures mature on April 1, 2025. The 1.25% 2025 Debentures are general senior unsecured obligations and rank equally in right of payment with all of our existing and future unsecured, unsubordinated indebtedness and senior in right of payment to any indebtedness that is contractually subordinated to the 1.25% 2025 Debentures. The 1.25% 2025 Debentures will be effectively subordinated to indebtedness and other liabilities of our subsidiaries.

We account separately for the liability and equity components of the 1.25% 2025 Debentures in accordance with authoritative guidance for convertible debt instruments that may be settled in cash upon conversion. The guidance requires the carrying amount of the liability component to be estimated by measuring the fair value of a similar liability that does not have an associated conversion feature and record the remainder in stockholders’ equity. At issuance, we allocated $252.1 million to long-term debt, and $97.9 million has been recorded as additional paid-in capital, which is being amortized to interest expense using the effective interest rate method through April 1, 2025.

If converted, the principal amount of the 1.25% 2025 Debentures is payable in cash and any amounts payable in excess of the principal amount will be paid in cash or shares of our common stock, at our election. The conversion of the 1.25% 2025 Debentures will be based upon a conversion ratio of 50.7957 common shares per $1,000 principal amount, subject to adjustments. Conversion is only allowed in the following circumstances and to the following extent: (i) prior to October 1, 2024, on any date during any fiscal quarter (and only during such fiscal quarter) if the closing sale price of our common stock was more than 130% of the then current conversion price for at least 20 trading days in the period of the 30 consecutive trading days ending on the last trading day of the previous fiscal quarter; (ii) at any time on or after October 1, 2024; (iii) during the five consecutive business-day period immediately following any five consecutive trading-day period in which the trading price for $1,000 principal amount of the 1.25% 2025 Debentures for each day during such five trading-day period was less than 98% of the closing sale price of our common stock multiplied by the then current conversion rate; or (iv) upon the occurrence of specified corporate transactions, as described in the indenture for the 1.25% 2025 Debentures. We may not redeem the 1.25% 2025 Debentures prior to the maturity date. If we undergo a fundamental change or non-stock change of control (as described in the indenture for the 1.25% 2025 Debentures) prior to maturity, holders will have the option to require us to repurchase all or any portion of their debentures for cash at a price equal to 100% of the principal amount of the 1.25% 2025 Debentures to be purchased plus any accrued and unpaid interest.

During the second quarter of fiscal year 2020, we repurchased $87.3 million notional amount of our 1.25% 2025 Debentures for $112.3 million, of which we allocated $72.8 million to debt and $39.5 million to equity. Also, in connection with the repurchases, we wrote off $16.7 million of unamortized discount and $0.7 million of unamortized costs. As a result, we recorded a $2.8 million loss associated with the repurchases.

Additionally, during the first quarter of fiscal year 2022, holders of our 1.25% 2025 Debentures exercised their right to convert $1.2 million notional amount for $1.2 million in cash and 0.04 million shares of common stock, of which we allocated $1.1 million to debt and $2.3 million to equity. Also, in connection with the conversions, we wrote off $0.2 million of unamortized discount. As a result, we recorded an immaterial loss associated with the conversions. Additionally, as part of these conversions we transferred non-cash consideration in the form of shares of common stock valued at $2.2 million. Following the redemptions, $261.4 million in aggregate principal amount of the 1.25% 2025 Debentures remained outstanding as of December 31, 2021.

The 1.25% 2025 Debentures were convertible as of December 31, 2021, as our common stock price exceeded the conversion threshold price of 130% of the applicable conversion price per share for at least 20 trading days during the 30 consecutive trading days ending December 31, 2021. As a result, the holders of our 1.25% 2025 Debentures have the right to convert all or any portion of their debentures between January 1, 2022 and March 31, 2022. The holders previously had the right to convert all or any portion of their debentures at the aforementioned conversion ratio beginning October 1, 2020 through December 31, 2021. As of December 31, 2021, the net carrying amount of the 1.25% 2025 Debentures was included within the current portion of long-term debt, and $34.9 million has been reclassified from permanent equity to mezzanine equity. As of December 31, 2021, the if-converted value of the 1.25% 2025 Debentures exceeded its principal amount by $473.2 million.

1.50% Convertible Debentures due 2035

In June 2015, we issued $263.9 million in aggregate principal amount of 1.5% Senior Convertible Debentures due in 2035 in exchange for $256.2 million in aggregate principal amount of our 2.75% 2031 Debentures. Total proceeds, net of issuance costs, were $253.2 million. The 1.5% 2035 Debentures were issued at 97.09% of the principal amount, which resulted in a discount of $7.7 million. The 1.5% 2035 Debentures bore interest at 1.5% per year, payable in cash semi-annually in arrears. In addition to ordinary interest and default additional interest, beginning with the semi-annual interest period commencing on November 1, 2021, contingent interest accrued during any regular semi-annual interest period where the average trading price of our 1.5% 2035 Debentures for the ten trading day period immediately preceding the first day of such semi-annual period was greater than or equal to $1,200 per $1,000 principal amount of our 1.5% 2035 Debentures, in which case, contingent interest accrued at a rate of 0.50% per annum of such average trading price.

During the second quarter of fiscal year 2020, we repurchased $36.5 million notional amount of 1.5% 2035 Debentures for $41.3 million, of which we allocated $34.7 million to debt and $6.6 million to equity based upon ASC 470-20. Also, in connection with the repurchases, we wrote off $2.5 million of unamortized discount and $0.1 million of unamortized costs. As a result, we recorded a $0.8 million loss associated with the repurchases.

During the third quarter of fiscal year 2021, we induced the exchange of $64.9 million notional amount of 1.5% 2035 Debentures for $0.5 million in cash and 3.2 million shares of common stock, of which we allocated $64.2 million to debt and $102.5 million to equity. Also, in connection with the redemptions, we wrote off $1.4 million of unamortized discount. As a result, we recorded a $1.1 million loss associated with the redemptions, of which $0.4 million represents the inducement expense and $0.1 million represents the interest earned at the time of settlement, based upon the guidance in ASC 470-20. Additionally, as part of these redemptions we transferred non-cash consideration in the form of shares of common stock valued at $166.7 million.

The 1.5% 2035 Debentures were convertible during the period October 1, 2021 through November 4, 2021, as our common stock price exceeded the conversion threshold price of 130% of the applicable conversion price per share for at least 20 trading days during the 30 consecutive trading days ending September 30, 2021. The holders previously had the right to convert all or any portion of their debentures at the aforementioned conversion ratio beginning October 1, 2020 through November 4, 2021.

Further, during the third and fourth quarter of fiscal year 2021, holders of our 1.5% 2035 Debentures exercised their right to convert $137.4 million notional amount for $137.4 million in cash and 4.1 million shares of common stock, of which we allocated $136.0 million to debt and $225.1 million to equity. Also, in connection with the conversions, we wrote off $2.4 million of unamortized discount and $0.1 million of unamortized costs. As a result, we recorded a $1.1 million loss associated with the conversions. Additionally, as part of these conversions we transferred non-cash consideration in the form of shares of common stock valued at $223.7 million.

On September 29, 2021, we issued a notice calling for redemption all of our outstanding 1.5% 2035 Debentures, pursuant to which the holders had the right to receive cash at a price equal to 100% of the principal amount of the 1.5% 2035 Debentures plus any accrued and unpaid interest, including any additional interest to, but excluding, the repurchase date of November 5th, 2021. In lieu of redemption, holders had the right to convert all or any portion of their debentures at the aforementioned conversion ratio until the close of business on November 4, 2021. Upon the conclusion of the conversion period on November 4, 2021, holders of $25.0 million notional amount exercised their right to convert. Additionally, we redeemed the remaining outstanding $0.1 million 1.5% 2035 Debentures for $0.1 million in cash. On November 5, 2021, we settled all of the outstanding 1.5% 2035 Debentures for $25.1 million in cash and 0.8 million shares of common stock. As part of these conversions we transferred non-cash consideration in the form of shares of common stock valued at $41.9 million. Following these redemptions and conversions, none of the 1.5% 2035 Debentures remain outstanding.

Revolving Credit Facility

On July 31, 2020, we amended our revolving credit agreement (the "Amended Revolving Credit Agreement") to, among other things, extend the expiration from April 15, 2021 to April 15, 2022. The Amended Revolving Credit Agreement provided for aggregate borrowing commitments of $242.5 million (the "Revolving Credit Facility"), including the revolving facility loans, the swingline loans and issuance of letters of credit. The borrowing outstanding under the Revolving Credit Facility bore interest at either (i) LIBOR plus an applicable margin of 1.50% or 1.75%, or (ii) the alternative base rate plus an applicable margin of 0.50% or 0.75%. The Revolving Credit Facility was secured by substantially all our assets. The Amended Revolving Credit Agreement contained customary affirmative and negative covenants and conditions to borrowing, as well as customary events of default. At any time that there were any outstanding borrowings (excluding up to $25,000,000 of issued and undrawn Letters of Credit) under the Revolving Credit Facility, we were required to maintain a Consolidated Senior Secured Leverage Ratio (as defined in the Amended Revolving Credit Agreement) not exceeding 4.00 to 1.00.

On February 4, 2021, we entered into a new revolving credit agreement (the "New Revolving Credit Agreement"), which replaced the existing Amended Revolving Credit Agreement. The New Revolving Credit Agreement expires February 4, 2026, and has an aggregate borrowing commitment of $300.0 million, including revolving loans and letters of credit (the "New Revolving Credit Facility"). The New Revolving Credit Facility bears interest at either (i) LIBOR plus an applicable margin of 1.50% or 1.75%, or (ii) the alternative base rate plus an applicable margin of 0.50% or 0.75%. The New Revolving Credit Facility is secured by substantially all our assets and substantially all assets of certain of our domestic subsidiaries that guarantee our obligations under the New Revolving Credit Agreement. The New Revolving Credit Agreement contains customary affirmative and negative covenants and conditions to borrowing, as well as customary events of default. Among other things, we are required to maintain a Consolidated Senior Secured Leverage Ratio (as defined in the New Revolving Credit Agreement) not exceeding 4.00 to 1.00. We were in compliance with all the debt covenants as of December 31, 2021.

As of December 31, 2021, after taking into account the outstanding letters of credit of $1.9 million, we had $298.1 million available for borrowing under the New Revolving Credit Facility.

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Stockholders' Equity

3 Months Ended

Dec. 31, 2021

Equity [Abstract]

Stockholders' Equity

Stockholders' Equity

Share Repurchases

On April 29, 2013, our Board of Directors approved a share repurchase program for up to $500.0 million, which was increased by $500.0 million on April 29, 2015. On August 1, 2018, our Board of Directors approved an additional $500.0 million under our share repurchase program. Under the terms of the share repurchase program, we have the ability to repurchase shares from time to time through a variety of methods, which may include open market purchases, privately negotiated transactions, block trades, accelerated stock repurchase transactions, or any combination of such methods. The share repurchase program does not require us to acquire any specific number of shares and may be modified, suspended, extended or terminated by us at any time without prior notice. The timing and the amount of any purchases are subject to our assessment of the prevailing market conditions, general economic conditions, capital allocation alternatives, and other factors.

We did not repurchase any shares of our common stock for the three months ended December 31, 2021 and 2020. Since the commencement of the program, we have repurchased 73.8 million shares for $1,238.8 million. As of December 31, 2021, approximately $261.2 million remained available for future repurchases under the program.

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Net (Loss) Income Per Share

3 Months Ended

Dec. 31, 2021

Earnings Per Share, Basic and Diluted [Abstract]

Net (Loss) Income Per Share

Net (Loss) Income Per Share

The following table sets forth the computation for basic and diluted net (loss) income per share (in thousands, except per share amounts): 

	Three Months Ended December 31,
	2021		2020
Numerator:
Net (loss) income from continuing operations	$	(57,559)	$	6,954
Net income from discontinued operations	—		7,941
Net (loss) income	$	(57,559)	$	14,895
Denominator:
Weighted average common shares outstanding — basic	317,359		283,818
Dilutive effect of convertible instruments	—		21,636
Dilutive effect of employee stock compensation plans(a)	—		8,756
Weighted average common shares outstanding — diluted	317,359		314,210
Net (loss) income per common share - basic:
Continuing operations	$	(0.18)	$	0.02
Discontinued operations	—		0.03
Total net (loss) income per basic common share	$	(0.18)	$	0.05
Net (loss) income per common share - diluted:
Continuing operations	$	(0.18)	$	0.02
Discontinued operations	—		0.03
Total net (loss) income per diluted common share	$	(0.18)	$	0.05
Anti-dilutive equity instruments excluded from the calculation	—		580
Contingently issuable awards excluded from the calculation	112		—

__________

(a)Certain performance-based awards were excluded from the determination of dilutive net (loss) income per share as the conditions were not met at the end of the reporting period.

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Stock-Based Compensation

3 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Abstract]

Stock-Based Compensation

Stock-Based Compensation

On January 22, 2020, our shareholders adopted our 2020 Stock Plan (the "2020 Stock Plan") and as of such date, we ceased granting awards under our amended and restated 2000 Stock Plan (the "2000 Stock Plan"). Additionally, since adoption of the 2020 Stock Plan, we also no longer grant awards under our amended and restated 1995 Directors Stock Plan (the "1995 Directors Stock Plan"), and all non-employee directors are awarded grants under the 2020 Stock Plan. Outstanding awards under our 2000 Stock Plan that are forfeited or returned to the Company for satisfaction of taxes, are transferred to the 2020 Stock Plan and may be used for future issuance. The 2020 Stock Plan (i) grants the Company's compensation committee the discretionary authority over the plan; (ii) makes employees, directors, consultants, and advisors of the Company and its subsidiaries eligible to receive awards; (iii) sets the number of shares of common stock that may be issued in satisfaction of awards to be 9,000,000 shares, plus the number of shares that become available for issuance under the 2000 Stock Plan; and (iv) identifies the annual limits on shares granted to each individual and the types of awards permissible.

As of December 31, 2021, we had 11.4 million shares available for future grants under the 2020 Stock Plan. We recognize stock-based compensation expenses over the requisite service periods. Our share-based awards are classified within equity upon issuance.

The amounts included in the consolidated statements of operations related to stock-based compensation are as follows (dollars in thousands): 

	Three Months Ended December 31,
	2021		2020
Cost of hosting and professional services	$	7,206	$	6,563
Cost of product and licensing	29		75
Cost of maintenance and support	471		426
Research and development	9,364		8,440
Sales and marketing	11,710		8,943
General and administrative	9,619		10,459
Total	$	38,399	$	34,906

Stock Options

The table below summarizes activities related to stock options for the three months ended December 31, 2021:

	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value (a)
Outstanding at September 30, 2021	9,355	$	17.18
Exercised	(3,700)	$	17.18
Outstanding at December 31, 2021	5,655	$	17.18	0.3 years	$	0.2	million
Exercisable at December 31, 2021	5,655	$	17.18	0.3 years	$	0.2	million
Exercisable at December 31, 2020	9,355	$	17.18	1.3 years	$	0.3	million

__________

(a)The aggregate intrinsic value in this table represents any excess of the closing market price of our common stock as of December 31, 2021 ($55.32) over the exercise price of the underlying options.

The aggregate intrinsic values of stock options exercised during the three months ended December 31, 2021 and 2020 were de minimis.

Restricted Stock Units and Performance Stock Units

Restricted units and performance stock units are not included in issued and outstanding common stock until the units are vested and underlying shares are released. The purchase price for vested restricted units is $0.001 per share. The table below summarizes activities relating to restricted units and performance stock units for the three months ended December 31, 2021:

	Number of Shares Underlying Restricted Units — Performance-Based Awards	Number of Shares Underlying Restricted Units — Time-Based Awards
Outstanding at September 30, 2021	2,463,921	4,655,825
Granted (a)	880,362	1,796,045
Earned/released	(1,760,724)	(2,110,257)
Forfeited	(5,601)	(34,455)
Outstanding at December 31, 2021	1,577,958	4,307,158
Weighted average remaining recognition period of outstanding Restricted Units	1.2 years	1.8 years
Unrecognized stock-based compensation expense of outstanding Restricted Units	$21.1 million	$122.3 million
Aggregate intrinsic value of outstanding Restricted Units (b)	$87.3 million	$238.3 million

__________

(a)For the three months ending December 31, 2021, there were no performance-based restricted units granted. The granted performance-based restricted units for the period are a result of the performance-based restricted units vesting above their specified targets in our first quarter of fiscal year 2022.

(b)The aggregate intrinsic value in this table represents any excess of the closing market price of our common stock as of December 31, 2021 ($55.32) over the purchase price of the underlying restricted units.

A summary of the weighted-average grant-date fair value of restricted units granted, and the aggregate intrinsic value of restricted units vested during the periods noted is as follows: 

	Three Months Ended December 31,
	2021		2020
Weighted-average grant-date fair value per share	$	55.18	$	37.26
Total intrinsic value of shares vested (in millions)	$	213.4	$	119.4

Performance-based restricted units outstanding as of December 31, 2021 include performance goals based on total shareholder return relative to a peer index and a revenue growth metric (for awards granted in November 2020) during the performance period. The awards actually earned will be up to two hundred percent of the target number of the performance-based restricted units. Compensation expense related to performance-based restricted units aligned to the total shareholder return is recorded on a straight-line basis over the performance period of the award. The grant date fair value for performance-based restricted units aligned to total shareholder return is determined using a Monte Carlo simulation model. Below is a summary of key assumptions of the valuation:

	Three Months Ended December 31,
	2021	2020
Dividend yield	N/A	0.0%
Expected volatility	N/A	34.95%
Risk-free interest rate	N/A	0.21%
Expected term (in years)	N/A	3.00

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Income Taxes

3 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

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

	Three Months Ended December 31,
	2021		2020
Domestic	$	(58,889)	$	(4,995)
Foreign	24,880		14,252
(Loss) income before income taxes	$	(34,009)	$	9,257

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

	Three Months Ended December 31,
	2021			2020
Domestic	$	21,229		$	(2,892)
Foreign	2,321			5,195
Provision for income taxes	$	23,550		$	2,303
Effective tax rate	(69.2)		%	24.9		%

The effective income tax rate is based upon the income for the year, the geographic mix of our income, the composition of the income in different countries, changes relating to valuation allowances and the potential tax consequences of resolving audits or other tax contingencies.

Our effective income tax rate was (69.2)% for the three months ended December 31, 2021, compared to 24.9% for the three months ended December 31, 2020. The effective tax rate for the three months ended December 31, 2021 differed from the U.S. federal statutory rate of 21.0% primarily due to the base erosion anti-abuse tax, the composition of the mix in income in different countries, offset by the change in valuation allowance. The effective tax rate for the three months ended December 31, 2020 differed from the U.S. federal statutory rate of 21.0% primarily due to the base erosion anti-abuse tax offset by a change in the valuation allowance in the United States.

On October 8, 2021, we received an interim decision from the Administrative Court of the Canton of Zurich in Switzerland (the “Swiss Appeals Court”) regarding our appeal of certain proposed income tax adjustments related to a 2011 IP transfer and business restructuring by a Swiss subsidiary. Although the Swiss Appeals Court upheld a tax assessment related to the IP

transfer, it remanded our case to a lower court in Switzerland for further factual development and consideration of other issues. As of the quarter ending December 31, 2021, the lower court proceeding has not commenced. We currently believe it is reasonably possible that the case could be resolved in the next 12 months. We disagree with the tax authorities' position and intend to vigorously defend our position in the lower court proceedings. If we prevail, there would be no incremental financial exposure; however, if the position of the Swiss tax authorities is ultimately upheld on all matters, we could be required to pay up to $60 million, the majority of which could affect our earnings.

Valuation Allowances

As of December 31, 2021 and September 30, 2021, we had a full valuation allowance against net domestic deferred tax assets and certain foreign deferred tax assets. We intend to maintain valuation allowances on these deferred tax assets until there is sufficient evidence to support the release of all or some portion of these allowances. A significant portion of our domestic deferred tax assets relate to U.S. net operating losses. We continue to believe negative evidence for the release of some or all of the allowances outweighs positive evidence after considering recent profitability trends and the disposition of the medical transcription and EHR implementation businesses. We continue to evaluate all sources of domestic taxable income including both the reversal of existing deferred tax liabilities and the likelihood that we could sustain pretax profitability in the future. As of December 31, 2021, we believe that there is a reasonable possibility that within the next twelve months these sources of taxable income may become sufficient positive evidence to support a conclusion that a substantial portion of the domestic valuation allowance, excluding capital losses, could be released.

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Commitments and Contingencies

3 Months Ended

Dec. 31, 2021

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Litigation and Other Claims

Similar to many companies in the software industry, we are involved in a variety of claims, demands, suits, investigations and proceedings that arise from time to time relating to matters incidental to the ordinary course of our business, including actions with respect to contracts, intellectual property, employment, benefits and securities matters. At each balance sheet date, we evaluate contingent liabilities associated with these matters in accordance with ASC 450 "Contingencies". If the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated, we accrue a liability for the estimated loss. Significant judgments are required for the determination of probability and the range of the outcomes, and the estimates are based only on the information available at the time. Due to the inherent uncertainties involved in claims, legal proceedings, and in estimating the losses that may arise, actual outcomes may differ from our estimates. Contingencies deemed not probable or for which losses were not estimable in one period may become probable, or losses may become estimable in later periods which may have a material impact on our results of operations and financial position. As additional information becomes available, we reassess the potential liability related to our pending claims and litigation and may revise our estimates. As of December 31, 2021, accrued losses were not material to our condensed consolidated financial statements, and we do not expect any pending matter to have a material impact on our condensed consolidated financial statements.

Guarantees and Other

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

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

policy for the full period of any contractual indemnification, and such directors and officers do not have coverage under separate insurance policies, we would be required to pay for costs incurred, if any, as described above.

Contingencies

The Company is subject to contingencies which arise through the ordinary course of business. All material liabilities of which management were aware are properly reflected in the financial statements as of December 31, 2021 and September 30, 2021.

Microsoft Acquisition Contingencies

On April 11, 2021, we entered into a Merger Agreement with Microsoft, subject to the terms of which Microsoft has agreed to acquire Nuance. The consummation of the Merger remains subject to customary closing conditions including satisfaction of certain regulatory approvals. The acquisition has been approved by Nuance’s shareholders, and we expect it to close by the end of the first calendar quarter of 2022, subject to the satisfaction of certain regulatory approvals and other customary closing conditions. As part of the transaction, Nuance expects to incur liabilities of approximately $114 million that are contingent on the deal consummation. These liabilities include banker fees, legal fees, and certain retention bonuses.

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Operating Leases

3 Months Ended

Dec. 31, 2021

Leases [Abstract]

Operating Leases

Operating Leases

Operating Leases

We have various operating leases for office space, data centers, office equipment and automobiles around the world with lease terms expiring between 2022 and 2030.

We determine if an arrangement is a lease at inception. The current portion of our operating lease liabilities is included in accrued expenses and other current liabilities and the long-term portion is included in operating lease liabilities.

Operating lease assets and liabilities are recognized at the present value of the future lease payments at the lease commencement date. The interest rate used to determine the present value of the future lease payments is our incremental borrowing rate. Due to the interest rate implicit in most of our leases not being readily determinable, our incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in economic environments where the leased asset is located. Operating lease assets also include any prepaid lease payments and lease incentives. Our lease terms include periods under options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Operating lease expense is recognized on a straight-line basis over the lease term.

Our lease agreements generally contain lease and non-lease components. Non-lease components primarily include payments for maintenance and utilities. We combine fixed payments for non-lease components with our lease payments and account for them together as a single lease component which increases the amount of our lease assets and liabilities. Payments under our lease arrangements are primarily fixed. Variable rents, if any, are expensed as incurred.

As of December 31, 2021, our operating leases had a weighted average remaining lease term of 4.1 years and a weighted average discount rate of 3.8%. 

Future lease payments under operating leases as of December 31, 2021 were as follows (dollars in thousands):

Fiscal Year	Operating Leases		Operating leases under restructuring		Total
2022	$	16,622	$	4,401	$	21,023
2023	16,291		4,227		20,518
2024	13,912		2,727		16,639
2025	12,479		1,583		14,062
2026	11,280		1,379		12,659
Thereafter	30,016		463		30,479
Total	$	100,600	$	14,780	$	115,380

As of December 31, 2021, we have subleased certain office space that is included in the above table to third parties. As of December 31, 2021, the aggregate sublease income to be recognized during the remaining lease terms is $10.1 million, with approximately an average of $1.8 million annually for each of the next five fiscal years and approximately $1.1 million thereafter.

Our operating lease cost was approximately $6.0 million for the three months ended December 31, 2021, and $7.2 million for the three months ended December 31, 2020. Operating lease payments included within operating cash flows were $7.6 million for the three months ended December 31, 2021, and $7.7 million for the three months ended December 31, 2020.

Operating Leases

Operating Leases

Operating Leases

We have various operating leases for office space, data centers, office equipment and automobiles around the world with lease terms expiring between 2022 and 2030.

We determine if an arrangement is a lease at inception. The current portion of our operating lease liabilities is included in accrued expenses and other current liabilities and the long-term portion is included in operating lease liabilities.

Operating lease assets and liabilities are recognized at the present value of the future lease payments at the lease commencement date. The interest rate used to determine the present value of the future lease payments is our incremental borrowing rate. Due to the interest rate implicit in most of our leases not being readily determinable, our incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in economic environments where the leased asset is located. Operating lease assets also include any prepaid lease payments and lease incentives. Our lease terms include periods under options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Operating lease expense is recognized on a straight-line basis over the lease term.

Our lease agreements generally contain lease and non-lease components. Non-lease components primarily include payments for maintenance and utilities. We combine fixed payments for non-lease components with our lease payments and account for them together as a single lease component which increases the amount of our lease assets and liabilities. Payments under our lease arrangements are primarily fixed. Variable rents, if any, are expensed as incurred.

As of December 31, 2021, our operating leases had a weighted average remaining lease term of 4.1 years and a weighted average discount rate of 3.8%. 

Future lease payments under operating leases as of December 31, 2021 were as follows (dollars in thousands):

Fiscal Year	Operating Leases		Operating leases under restructuring		Total
2022	$	16,622	$	4,401	$	21,023
2023	16,291		4,227		20,518
2024	13,912		2,727		16,639
2025	12,479		1,583		14,062
2026	11,280		1,379		12,659
Thereafter	30,016		463		30,479
Total	$	100,600	$	14,780	$	115,380

As of December 31, 2021, we have subleased certain office space that is included in the above table to third parties. As of December 31, 2021, the aggregate sublease income to be recognized during the remaining lease terms is $10.1 million, with approximately an average of $1.8 million annually for each of the next five fiscal years and approximately $1.1 million thereafter.

Our operating lease cost was approximately $6.0 million for the three months ended December 31, 2021, and $7.2 million for the three months ended December 31, 2020. Operating lease payments included within operating cash flows were $7.6 million for the three months ended December 31, 2021, and $7.7 million for the three months ended December 31, 2020.

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Segment and Geographic Information

3 Months Ended

Dec. 31, 2021

Segment Reporting [Abstract]

Segment and Geographic Information

Segment and Geographic Information

Our Chief Operating Decision Maker ("CODM") regularly reviews segment revenues and segment profits for performance evaluation and resources allocation. Segment revenues include certain acquisition-related adjustments for revenues that would otherwise have been recognized without the acquisition. Segment profits reflect controllable costs directly related to each segment and the allocation of certain corporate expenses such as corporate sales and marketing expenses and research and development project costs that benefit multiple segments. Certain items such as stock-based compensation, amortization of intangible assets, acquisition-related costs, net, restructuring and other charges, net, other expenses, net and certain unallocated corporate expenses are excluded from segment profits, which allow for more meaningful comparisons to the financial results of the historical operations for performance evaluation and resources allocation by our CODM.

•The Healthcare segment is primarily engaged in providing clinical speech and clinical language understanding solutions that improve the clinical documentation process, from capturing the complete patient record to improving clinical documentation and quality measures for reimbursement.

•The Enterprise segment is primarily engaged in using speech, natural language understanding, and artificial intelligence to provide automated customer solutions and services for voice, mobile, web and messaging channels.

•The Other segment consists primarily of voicemail transcription services.

As more fully described in Note 4, on November 17, 2020, we entered into the Agreement to sell the Business, comprised of our medical transcription and EHR implementation businesses. Effective the first quarter of fiscal year 2021, the results of operations of the Business are included within discontinued operations for all periods presented. Our Healthcare segment revenue and segment profit for the historical periods have been recast to reflect the forementioned change.

We do not track our assets by segment. Consequently, it is not practical to show assets or depreciation by segment. The following table presents segment results along with a reconciliation of segment profit to (Loss) income before income taxes (dollars in thousands): 

	Three Months Ended December 31,
	2021		2020
Segment revenues:
Healthcare	$	200,400	$	199,332
Enterprise	117,227		139,152
Other	3,808		7,269
Total segment revenues	$	321,435	$	345,753
Segment profit:
Healthcare	$	43,139	$	74,812
Enterprise	18,725		41,468
Other	2,011		4,971
Total segment profit	$	63,875	$	121,251
Corporate expenses and other, net	(26,388)		(31,115)
Stock-based compensation	(38,399)		(34,906)
Amortization of intangible assets	(11,969)		(14,793)
Acquisition-related costs, net	(1,248)		(325)
Restructuring and other charges, net	(8,506)		(8,566)
Other expenses, net	(11,374)		(22,289)
(Loss) income before income taxes	$	(34,009)	$	9,257

No country outside of the United States provided greater than 10% of our total revenues. Revenues, classified by the major geographic areas in which our customers are located, were as follows (dollars in thousands): 

	Three Months Ended December 31,
	2021		2020
United States	$	259,776	$	272,598
International	61,659		73,155
Total revenues	$	321,435	$	345,753

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Supplemental Cash Flow Information

3 Months Ended

Dec. 31, 2021

Supplemental Cash Flow Elements [Abstract]

Supplemental Cash Flow Information

Supplemental Cash Flow Information

Cash paid for Interest and Income Taxes:

	Three Months Ended December 31,
	2021		2020
	(Dollars in thousands)
Interest paid	$	15,214	$	21,087
Income taxes paid	$	2,582	$	2,738

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COVID-19 Pandemic

3 Months Ended

Dec. 31, 2021

COVID-19 Pandemic [Abstract]

COVID-19 Pandemic

COVID-19 Pandemic

The novel coronavirus ("COVID-19") pandemic has disrupted economic markets, and the future economic impact, duration and spread of COVID-19 is still uncertain at this time. The COVID-19 pandemic may continue to adversely impact our business, results of operations, cash flows and financial condition. While we have not experienced significant disruptions to our ability to conduct business thus far as a result of the pandemic, we are currently conducting business with substantial modifications to employee travel, employee work locations, virtualization or cancellation of customer and employee events, and remote sales, implementation, and support activities, among other modifications.

The full extent to which the coronavirus pandemic will impact our business, operations, and financial results in the future will depend on numerous evolving factors and may not be accurately predicted at this time.

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Subsequent Events	3 Months Ended
	Dec. 31, 2021
Subsequent Events [Abstract]
Subsequent Events	Subsequent EventsIn addition to the debt holder exercises disclosed in Note 11, subsequent to our period end of December 31, 2021, certain debt holders have exercised their right to convert $2.1 million notional amount of our 1.0% 2035 Debentures for an estimated $2.1 million in cash and 0.1 million shares of common stock for an estimated total consideration of $4.7 million. The settlement of these conversions is expected to occur in the second quarter of fiscal year 2022.

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Dec. 31, 2021

Accounting Policies [Abstract]

Recently Adopted Accounting Standards and Issued Accounting Standards Not Yet Adopted

Issued Accounting Standards Not Yet Adopted

From time to time, new accounting pronouncements are issued by the FASB and are adopted by us as of the specified effective dates. Unless otherwise discussed, such pronouncements did not have or will not have a significant impact on our consolidated financial position, results of operations or cash flows, or do not apply to our operations.

Convertible Notes

In August 2020, the FASB issued ASU 2020-06, "Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity," which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The new guidance eliminates two of the three models in Accounting Standards Codification ("ASC") 470-202 that require separating embedded conversion features from convertible instruments. As a result, only conversion features accounted for under the substantial premium model in ASC 470-20 and those that require bifurcation in accordance with ASC 815-153 will be accounted for separately. For contracts in an entity’s own equity, the new guidance eliminates some of the requirements in ASC 815-404 for equity classification. The guidance also addresses how convertible instruments are accounted for in the diluted earnings per share calculation and requires enhanced disclosures about the terms of convertible instruments and contracts in an entity’s own equity. The guidance will be effective for annual periods beginning after December 15, 2021, and interim periods therein. Early adoption is permitted for all entities for fiscal periods beginning after December 15, 2020, including interim periods within the same fiscal year. Entities are allowed to adopt the guidance using either the modified or full retrospective approach. We are currently assessing the provisions of the guidance and the impact on our condensed consolidated financial statements.

Business Combinations

In August 2021, the FASB issued ASU 2021-08, "Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers," which improves the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to: (1) recognition of an acquired contract liability, and (2) payment terms and their effect on subsequent revenue recognized by the acquirer. The new guidance requires that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. The guidance will be effective for annual periods beginning after December 15, 2022, and interim periods therein. Early adoption is permitted for all entities, including interim periods within the same fiscal year. We are currently assessing the provisions of the guidance and the impact on our condensed consolidated financial statements.

Revenue Recognition

Revenue Recognition

We derive revenue from the following sources: (1) hosting services, (2) software licenses, including royalties, (3) maintenance and support ("M&S"), (4) professional services, and (5) sale of hardware. Revenue is reported net of applicable sales and use tax, value-added tax and other transaction taxes imposed on the related transaction including mandatory government charges that are passed through to our customers. We account for a contract when both parties have approved and committed to the contract, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and the collectability of the consideration is probable.

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

We recognize revenue after applying the following five steps:

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

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

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

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

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

We allocate the transaction price of the arrangement based on the relative estimated standalone selling price ("SSP") of each distinct performance obligation. In determining SSP, we maximize observable inputs and consider a number of data points, including:

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

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

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

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

We only include estimated amounts of variable consideration in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. We reduce transaction prices for estimated returns and other allowances that represent variable consideration under ASU No. 2014-09, "Revenue from Contracts with Customers: Topic 606" ("ASC 606"), which we estimate based on historical return experience and other relevant factors and record a reduction to revenue and accounts receivable. Other forms of contingent revenue or variable consideration are infrequent.

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

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

Certain products are sold through distributors or resellers. Certain distributors and resellers have been granted right of return and selling incentives which are accounted for as variable consideration when estimating the amount of revenue to be recognized. Returns and credits are estimated at the contract inception and updated at the end of each reporting period as additional information becomes available. In accordance with the practical expedient in ASC 606-10-10-4, we apply a portfolio approach to estimate the variable consideration associated with this group of customers.

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

Shipping and handling activities are not considered a contract performance obligation. We record shipping and handling costs billed to customers as revenue with offsetting costs recorded as cost of revenue.

Performance Obligations

Hosting

Hosting services, which allow our customers to use the hosted software over the contract period without taking possession of the software, are provided on a usage basis as consumed or on a fixed fee subscription basis. Our hosting contract terms generally range from one to five years.

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

Subscription-based revenue represents a single promise to stand-ready to provide access to our hosting services. Revenue is recognized over time on a ratable basis over the hosting contract term, which generally ranges from one to five years.

Software Licenses

On-premise software licenses sold with non-distinct professional services to customize and/or integrate the underlying software are accounted for as a combined performance obligation. Revenue from the combined performance obligation is recognized over time based upon the progress towards completion of the project, which is measured based on the labor hours already incurred to date as compared to the total estimated labor hours.

Revenue from distinct on-premise software licenses, which do not require professional services to customize and/or integrate the software license, is recognized at the point in time when the software is made available to the customer and control is transferred.

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

Maintenance and Support

Our M&S contracts generally include telephone support and the right to receive unspecified upgrades and updates on a when-and-if available basis. M&S revenue is recognized over time on a ratable basis over the contract period because we transfer control evenly by providing a stand-ready service.

Professional Services

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

Hardware

Hardware revenue is recognized at the point in time when control is transferred to the customer, which is typically upon delivery.

Significant Judgments

Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. Our license contracts often include professional services to customize and/or integrate the licenses into the customer’s environment. Judgment is required to determine whether the license is considered distinct and accounted for separately, or not distinct and accounted for together with professional services.

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

From time to time, we may enter into arrangements with third party suppliers to resell products or services. In such cases, we evaluate whether we are the principal (i.e. report revenues on a gross basis) or agent (i.e. report revenues on a net basis). In doing so, we first evaluate whether we control the good or service before it is transferred to the customer. If we control the good or service before it is transferred to the customer, we are the principal; if not, we are the agent. Generally, we control a promised good or service before transferring that good or service to the customer and act as the principal to the transaction. Determining whether we control the good or service before it is transferred to the customer may require judgment.

Disaggregated Revenue

We disaggregate revenue from contracts with customers by reportable segment and products and services as this presentation depicts the timing, risks and uncertainty of our revenue streams, which is also in line with how we manage our businesses, assess performance, and determine management compensation. Our disaggregated revenue from continuing operations is as follows (dollars in thousands):

	Three Months Ended December 31,
	2021								2020
	Hosting and professional services		Product and licensing		Maintenance and support		Total		Hosting and professional services		Product and licensing		Maintenance and support		Total
Healthcare	$	136,297	$	34,696	$	29,407	$	200,400	$	110,803	$	54,783	$	33,746	$	199,332
Enterprise	73,760		12,659		30,808		117,227		78,741		30,286		30,125		139,152
Other	3,675		117		16		3,808		6,288		968		13		7,269
Total revenues	$	213,732	$	47,472	$	60,231	$	321,435	$	195,832	$	86,037	$	63,884	$	345,753

Hardware revenue comprised approximately $7.3 million of total product and licensing revenue for the three months ended December 31, 2021, and $6.6 million of total product and licensing revenue for the three months ended December 31, 2020.

Contract Acquisition Costs

We are required to capitalize certain contract acquisition costs under ASC 606. The capitalized costs primarily relate to paid commissions and other direct, incremental costs to acquire customer contracts. In accordance with the practical expedient in ASC 606-10-10-4, we apply a portfolio approach to estimate contract acquisition costs for groups of customer contracts. We elect to apply the practical expedient in ASC 340-40-25-4 and will expense contract acquisition costs as incurred where the expected period of benefit is one year or less. Sales commissions paid on renewal maintenance and support are not commensurate with sales commissions paid on the initial maintenance and support contract. Contract acquisition costs are deferred and amortized on a straight-line basis over the period of benefit, which we have estimated to be between one and five years. The period of benefit was determined based on an average customer contract term, expected contract renewals, changes in technology and our ability to retain customers including canceled contracts. Contract acquisition costs are classified as current or noncurrent assets based on when the expense will be recognized. The current and noncurrent portions of contract acquisition costs are included in Prepaid expenses and other current assets, and Other assets, respectively. As of December 31, 2021, we had $49.4 million of current contract acquisition costs and $91.9 million of noncurrent contract acquisition costs. As of September 30, 2021, we had $40.5 million of current contract acquisition costs and $86.1 million of noncurrent contract acquisition costs. Commission expense is primarily included in sales and marketing expense on the consolidated statements of operations. We had amortization expense of $7.0 million and $4.7 million related to contract acquisition costs for the three months ended December 31, 2021 and 2020, respectively. There was no impairment related to commission costs capitalized.

Capitalized Contract Costs

We capitalize incremental costs incurred to fulfill our contracts that (1) relate directly to the contract, (2) are expected to generate resources that will be used to satisfy our performance obligation under the contract, and (3) are expected to be recovered through revenue generated under the contract. Our capitalized costs consist primarily of setup costs, such as costs to stand-up, customize, and develop applications for each customer. These costs are incurred to satisfy our stand-ready obligation to provide access to our connected offerings. The contract costs are expensed to cost of revenue as we satisfy our stand-ready obligation over the contract term, which we estimate to be between one and five years. The contract term estimation was determined based on an average customer contract term, expected contract renewals, changes in technology, and our ability to retain customers including canceled contracts. We classify capitalized contract costs as current or noncurrent based on the timing of when we expect to recognize the expense. The current and noncurrent portions of capitalized contract fulfillment costs are included in Prepaid expenses and other current assets, and Other assets, respectively. As of December 31, 2021, we had $22.8 million of short-term contract costs included with Prepaid expenses and other current assets and $35.5 million of long-term costs included within Other assets. As of September 30, 2021, we had $21.3 million of short-term contract costs included with Prepaid expenses and other current assets and $35.3 million of long-term costs within Other assets.

Trade Accounts Receivable and Contract Balances

We classify our right to consideration in exchange for deliverables as either a receivable or a contract asset. A receivable is a right to consideration that is unconditional (i.e. only the passage of time is required before payment is due). We present such receivables in Accounts receivable, net in our consolidated balance sheets at their net estimated realizable value. We maintain an allowance for doubtful accounts to provide for the estimated amount of receivables that may not be collected. The allowance is based upon an assessment of customer creditworthiness, historical payment experience, the age of outstanding receivables and other applicable factors.

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

Contract assets include unbilled amounts from long-term contracts when revenue recognized exceeds the amount billed to the customer, and right to payment is not solely subject to the passage of time. The current and noncurrent portions of contract assets are included in Prepaid expenses and other current assets, and Other assets.

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Revenue Recognition (Tables)

3 Months Ended

Dec. 31, 2021

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

Our disaggregated revenue from continuing operations is as follows (dollars in thousands):

	Three Months Ended December 31,
	2021								2020
	Hosting and professional services		Product and licensing		Maintenance and support		Total		Hosting and professional services		Product and licensing		Maintenance and support		Total
Healthcare	$	136,297	$	34,696	$	29,407	$	200,400	$	110,803	$	54,783	$	33,746	$	199,332
Enterprise	73,760		12,659		30,808		117,227		78,741		30,286		30,125		139,152
Other	3,675		117		16		3,808		6,288		968		13		7,269
Total revenues	$	213,732	$	47,472	$	60,231	$	321,435	$	195,832	$	86,037	$	63,884	$	345,753

Changes in Contract Assets

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

	Contract assets
Balance as of September 30, 2021	$	161,512
Revenues recognized but not billed	73,228
Amounts reclassified to accounts receivable	(95,632)
Balance at December 31, 2021	$	139,108

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

	Deferred revenue
Balance as of September 30, 2021	$	349,059
Amounts bill but not recognized	200,167
Revenue recognized	(188,711)
Balance at December 31, 2021	$	360,515

Schedule of Remaining Performance Obligations

The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied as of December 31, 2021 (dollars in thousands):

	Within One Year		Two to Four Years		Greater than Four Years		Total
Total revenue	$	745,007	$	993,659	$	42,923	$	1,781,589

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Disposition of Businesses (Tables)

3 Months Ended

Dec. 31, 2021

Discontinued Operations and Disposal Groups [Abstract]

Summary of Discontinued Operations

The following table summarizes the results of the discontinued operations (dollars in thousands):

	Three Months Ended December 31,
	2021	2020
	Medical Transcription and EHR Implementation	Medical Transcription and EHR Implementation
Major line items constituting net income of discontinued operations:
Revenue	N/A	$	47,650
Cost of revenue	N/A	29,152
Research and development	N/A	1,298
Sales and marketing	N/A	908
General and administrative	N/A	12
Amortization of intangible assets	N/A	2,444
Restructuring and other charges, net	N/A	4,438
Income from discontinued operations before income taxes	N/A	9,398
Provision for income taxes	N/A	1,457
Net income from discontinued operations	N/A	$	7,941
Supplemental information:
Depreciation	N/A	$	1,063
Amortization	N/A	$	2,444
Stock compensation	N/A	$	287
Capital expenditures	N/A	$	57

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Business Combinations (Tables)

3 Months Ended

Dec. 31, 2021

Business Combinations [Abstract]

Summary of Acquisition-Related Costs, net

A summary of acquisition-related costs, net is as follows (dollars in thousands):

	Three Months Ended December 31,
	2021		2020
Transition and integration costs	$	1,238	$	72
Professional service fees	10		253
Total	$	1,248	$	325

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Goodwill and Intangible Assets (Tables)

3 Months Ended

Dec. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Changes in Carrying Amount of Goodwill

The changes in the carrying amount of goodwill by reportable segment for the three months ended December 31, 2021 are as follows (dollars in thousands): 

Goodwill

	Healthcare		Enterprise		Other		Total
Balance as of September 30, 2021	$	1,453,836	$	688,163	$	13,271	$	2,155,270
Purchase accounting adjustments	150		—		—		150
Effect of foreign currency translation	(1,745)		896		87		(762)
Balance at December 31, 2021	$	1,452,241	$	689,059	$	13,358	$	2,154,658

Changes in Carrying Amount of Intangible Assets

The changes in the carrying amount of intangible assets for the three months ended December 31, 2021 are as follows (dollars in thousands):

	Intangible Assets
Balance at September 30, 2021	$	128,331
Amortization	(11,969)
Effect of foreign currency translation	(360)
Balance at December 31, 2021	$	116,002

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Financial Instruments and Hedging Activities (Tables)

3 Months Ended

Dec. 31, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Quantitative Summary of Fair Value of Derivative Instruments

A summary of the derivative instruments is as follows (dollars in thousands):

Derivatives Not Designated as Hedges	Balance Sheet Classification	Fair Value
		December 31, 2021		September 30, 2021
Foreign currency forward contracts	Prepaid expenses and other current assets	$	129	$	112
Foreign currency forward contracts	Accrued expenses and other current liabilities	$	(105)	$	(49)

Summarized Activity of Derivative Instruments

A summary of other income (expense), net related to foreign currency forward contracts for the three months ended December 31, 2021 and 2020 is as follows (dollars in thousands):

	Income Statement Classification	Three Months Ended December 31,
Derivatives Not Designated as Hedges	(Income) Loss Recognized	2021		2020
Foreign currency forward contracts	Other income (expense), net	$	175	$	(548)

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Fair Value Measurements (Tables)

3 Months Ended

Dec. 31, 2021

Fair Value Disclosures [Abstract]

Assets and Liabilities Measured at Fair Value on Recurring Basis

Assets and liabilities measured at fair value on a recurring basis as of December 31, 2021 and September 30, 2021 consisted of the following (dollars in thousands):

	December 31, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds (a)	$	60,144	$	—	$	—	$	60,144
Time deposits (b)	—		1,000		—		1,000
Foreign currency exchange contracts (b)	—		129		—		129
Total assets at fair value	$	60,144	$	1,129	$	—	$	61,273
Liabilities:
Foreign currency exchange contracts (b)	$	—	$	(105)	$	—	$	(105)
Total liabilities at fair value	$	—	$	(105)	$	—	$	(105)

	September 30, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds (a)	$	113,186	$	—	$	—	$	113,186
Time deposits (b)	—		13,889		—		13,889
Commercial paper, $18,633 at cost (b)	—		18,668		—		18,668
Foreign currency exchange contracts (b)	—		112		—		112
Total assets at fair value	$	113,186	$	32,669	$	—	$	145,855
Liabilities:
Foreign currency exchange contracts (b)	$	—	$	(49)	$	—	$	(49)
Total liabilities at fair value	$	—	$	(49)	$	—	$	(49)

__________

(a)Money market funds and time deposits with original maturity of 90 days or less are included within cash and cash equivalents in the consolidated balance sheets and are valued at quoted market prices in active markets.

(b)Time deposits, commercial paper, corporate notes and bonds, and foreign currency exchange contracts are recorded at fair market values, which are determined based on the most recent observable inputs for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active or are directly or indirectly observable. Time deposits are generally for terms of one year or less. Commercial paper and corporate notes and bonds generally mature within three years and had a weighted average maturity of 0.21 years as of September 30, 2021.

Changes in Fair Value of Contingent Earn-Out Liabilities

The following table provides a summary of changes in the aggregate fair value of the contingent acquisition payments for all periods presented (dollars in thousands):

	Three Months Ended December 31,
	2021		2020
Balance at beginning of period	$	—	$	1,796
Payments and foreign currency translation	—		51
Balance at end of period	$	—	$	1,847

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Accrued Expenses and Other Current Liabilities (Tables)

3 Months Ended

Dec. 31, 2021

Payables and Accruals [Abstract]

Accrued Expenses and Other Current Liabilities

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

	December 31, 2021		September 30, 2021
Compensation	$	78,335	$	133,194
Cost of revenue related liabilities	22,517		24,976
Accrued interest payable	2,341		9,038
Consulting and professional fees	14,623		18,130
Sales and marketing incentives	1,201		1,294
Sales and other taxes payable	8,120		8,016
Operating lease obligations	22,870		24,522
Other	4,269		3,170
Total	$	154,276	$	222,340

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Restructuring and Other Charges, net (Tables)

3 Months Ended

Dec. 31, 2021

Restructuring and Related Activities [Abstract]

Accrual Activity Relating to Restructuring and Other Charges

The following table represents the roll forward of restructuring liabilities for the three months ended December 31, 2021 (dollars in thousands): 

	Personnel		Facilities		Total
Balance at September 30, 2021	$	444	$	16,946	$	17,390
Restructuring charges, net	3,195		195		3,390
Non-cash adjustment	—		(152)		(152)
Cash payments	(2,792)		(1,638)		(4,430)
Balance at December 31, 2021	$	847	$	15,351	$	16,198

Restructuring Charges By Segment

The table below presents the Restructuring and other charges, net associated with each segment, but excluded from calculation of each segment's profit (dollars in thousands):

	Three Months Ended December 31,
	2021										2020
	Personnel		Facilities		Total Restructuring		Other Charges		Total		Personnel		Facilities		Total Restructuring		Other Charges		Total
Healthcare	$	1,804	$	125	$	1,929	$	—	$	1,929	$	2,632	$	567	$	3,199	$	—	$	3,199
Enterprise	450		249		699		—		699		1,182		2,472		3,654		—		3,654
Other	—		(138)		(138)		—		(138)		—		29		29		—		29
Corporate	941		(41)		900		5,116		6,016		975		3		978		706		1,684
Total	$	3,195	$	195	$	3,390	$	5,116	$	8,506	$	4,789	$	3,071	$	7,860	$	706	$	8,566

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Debt (Tables)

3 Months Ended

Dec. 31, 2021

Debt Disclosure [Abstract]

Borrowing Obligations and Applicable Margin for Borrowings

As of December 31, 2021 and September 30, 2021, we had the following borrowing obligations (dollars in thousands): 

	December 31, 2021		September 30, 2021
5.625% Senior Notes due 2026, net of deferred issuance costs of $3.1 million and $3.2 million, respectively. Effective interest rate 5.625%.	$	496,918	$	496,764
1.000% Convertible Debentures due 2035, net of unamortized discount of $5.5 million and $7.0 million, respectively, and deferred issuance costs of $0.3 million and $0.3 million, respectively. Effective interest rate 5.622%.	122,185		122,948
1.250% Convertible Debentures due 2025, net of unamortized discount of $33.6 million and $36.1 million, respectively, and deferred issuance costs of $1.4 million and $1.5 million, respectively. Effective interest rate 5.578%.	226,484		225,067
1.500% Convertible Debentures due 2035, net of unamortized discount of $0.1 million, as of September 30, 2021. Effective interest rate 5.394%.	—		24,984
Deferred issuance costs related to our Revolving Credit Facility	(1,733)		(1,839)
Total debt	843,854		867,924
Less: current portion (a)	(348,669)		(372,999)
Total long-term debt	$	495,185	$	494,925

__________(a) As of December 31, 2021, the holders have the right to convert all or any portion of the 1.25% 2025 Debentures and 1.0% 2035 Debentures between January 1, 2022 and March 31, 2022. As a result, the net carrying amounts of the convertible debentures were included in current liabilities as of December 31, 2021.

Schedule of Maturities of Long-term Debt

The following table summarizes the maturities of our borrowing obligations as of December 31, 2021 (dollars in thousands):

Fiscal Year	Convertible Debentures (a)		Senior Notes		Total
2022	$	389,392			$	389,392
2023	—		—		—
2024	—		—		—
2025	—		—		—
2026	—		—		—
Thereafter	—		500,000		500,000
Total before unamortized discount	389,392		500,000		889,392
Less: unamortized discount and issuance costs	(40,723)		(4,815)		(45,538)
Total debt	$	348,669	$	495,185	$	843,854

__________

(a) As more fully described below, as of December 31, 2021, the holders have the right to convert all or any portion of the 1.25% 2025 Debentures and 1.0% 2035 Debentures between January 1, 2022 and March 31, 2022. As a result, these convertible debentures were treated as if they were due in fiscal year 2022.

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Net (Loss) Income Per Share (Tables)

3 Months Ended

Dec. 31, 2021

Earnings Per Share, Basic and Diluted [Abstract]

Schedule of Earnings Per Share

The following table sets forth the computation for basic and diluted net (loss) income per share (in thousands, except per share amounts): 

	Three Months Ended December 31,
	2021		2020
Numerator:
Net (loss) income from continuing operations	$	(57,559)	$	6,954
Net income from discontinued operations	—		7,941
Net (loss) income	$	(57,559)	$	14,895
Denominator:
Weighted average common shares outstanding — basic	317,359		283,818
Dilutive effect of convertible instruments	—		21,636
Dilutive effect of employee stock compensation plans(a)	—		8,756
Weighted average common shares outstanding — diluted	317,359		314,210
Net (loss) income per common share - basic:
Continuing operations	$	(0.18)	$	0.02
Discontinued operations	—		0.03
Total net (loss) income per basic common share	$	(0.18)	$	0.05
Net (loss) income per common share - diluted:
Continuing operations	$	(0.18)	$	0.02
Discontinued operations	—		0.03
Total net (loss) income per diluted common share	$	(0.18)	$	0.05
Anti-dilutive equity instruments excluded from the calculation	—		580
Contingently issuable awards excluded from the calculation	112		—

__________

(a)Certain performance-based awards were excluded from the determination of dilutive net (loss) income per share as the conditions were not met at the end of the reporting period.

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Stock-Based Compensation (Tables)

3 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Abstract]

Stock Based Compensation Included in Consolidated Statements of Operations

The amounts included in the consolidated statements of operations related to stock-based compensation are as follows (dollars in thousands): 

	Three Months Ended December 31,
	2021		2020
Cost of hosting and professional services	$	7,206	$	6,563
Cost of product and licensing	29		75
Cost of maintenance and support	471		426
Research and development	9,364		8,440
Sales and marketing	11,710		8,943
General and administrative	9,619		10,459
Total	$	38,399	$	34,906

Summary of Stock Options Activity

The table below summarizes activities related to stock options for the three months ended December 31, 2021:

	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value (a)
Outstanding at September 30, 2021	9,355	$	17.18
Exercised	(3,700)	$	17.18
Outstanding at December 31, 2021	5,655	$	17.18	0.3 years	$	0.2	million
Exercisable at December 31, 2021	5,655	$	17.18	0.3 years	$	0.2	million
Exercisable at December 31, 2020	9,355	$	17.18	1.3 years	$	0.3	million

__________

(a)The aggregate intrinsic value in this table represents any excess of the closing market price of our common stock as of December 31, 2021 ($55.32) over the exercise price of the underlying options.

Summary of Activity Relating to Restricted Units and Restricted Stock Awards

The table below summarizes activities relating to restricted units and performance stock units for the three months ended December 31, 2021:

	Number of Shares Underlying Restricted Units — Performance-Based Awards	Number of Shares Underlying Restricted Units — Time-Based Awards
Outstanding at September 30, 2021	2,463,921	4,655,825
Granted (a)	880,362	1,796,045
Earned/released	(1,760,724)	(2,110,257)
Forfeited	(5,601)	(34,455)
Outstanding at December 31, 2021	1,577,958	4,307,158
Weighted average remaining recognition period of outstanding Restricted Units	1.2 years	1.8 years
Unrecognized stock-based compensation expense of outstanding Restricted Units	$21.1 million	$122.3 million
Aggregate intrinsic value of outstanding Restricted Units (b)	$87.3 million	$238.3 million

__________

(a)For the three months ending December 31, 2021, there were no performance-based restricted units granted. The granted performance-based restricted units for the period are a result of the performance-based restricted units vesting above their specified targets in our first quarter of fiscal year 2022.

(b)The aggregate intrinsic value in this table represents any excess of the closing market price of our common stock as of December 31, 2021 ($55.32) over the purchase price of the underlying restricted units.

Summary of Weighted-Average Grant-Date Fair Value and Intrinsic Value of Restricted Units and Restricted Stock Awards Vested

A summary of the weighted-average grant-date fair value of restricted units granted, and the aggregate intrinsic value of restricted units vested during the periods noted is as follows: 

	Three Months Ended December 31,
	2021		2020
Weighted-average grant-date fair value per share	$	55.18	$	37.26
Total intrinsic value of shares vested (in millions)	$	213.4	$	119.4

Schedule of Key Assumptions of the Valuation

Below is a summary of key assumptions of the valuation:

	Three Months Ended December 31,
	2021	2020
Dividend yield	N/A	0.0%
Expected volatility	N/A	34.95%
Risk-free interest rate	N/A	0.21%
Expected term (in years)	N/A	3.00

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Income Taxes (Tables)

3 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Components of Benefit from Income Taxes

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

	Three Months Ended December 31,
	2021		2020
Domestic	$	(58,889)	$	(4,995)
Foreign	24,880		14,252
(Loss) income before income taxes	$	(34,009)	$	9,257

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

	Three Months Ended December 31,
	2021			2020
Domestic	$	21,229		$	(2,892)
Foreign	2,321			5,195
Provision for income taxes	$	23,550		$	2,303
Effective tax rate	(69.2)		%	24.9		%

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Operating Leases (Tables)

3 Months Ended

Dec. 31, 2021

Leases [Abstract]

Schedule of Future Minimum Rental Payments for Operating Leases

Future lease payments under operating leases as of December 31, 2021 were as follows (dollars in thousands):

Fiscal Year	Operating Leases		Operating leases under restructuring		Total
2022	$	16,622	$	4,401	$	21,023
2023	16,291		4,227		20,518
2024	13,912		2,727		16,639
2025	12,479		1,583		14,062
2026	11,280		1,379		12,659
Thereafter	30,016		463		30,479
Total	$	100,600	$	14,780	$	115,380

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Segment and Geographic Information (Tables)

3 Months Ended

Dec. 31, 2021

Segment Reporting [Abstract]

Segment Results Along with Reconciliation of Segment Profit to Income Before Income Taxes

The following table presents segment results along with a reconciliation of segment profit to (Loss) income before income taxes (dollars in thousands): 

	Three Months Ended December 31,
	2021		2020
Segment revenues:
Healthcare	$	200,400	$	199,332
Enterprise	117,227		139,152
Other	3,808		7,269
Total segment revenues	$	321,435	$	345,753
Segment profit:
Healthcare	$	43,139	$	74,812
Enterprise	18,725		41,468
Other	2,011		4,971
Total segment profit	$	63,875	$	121,251
Corporate expenses and other, net	(26,388)		(31,115)
Stock-based compensation	(38,399)		(34,906)
Amortization of intangible assets	(11,969)		(14,793)
Acquisition-related costs, net	(1,248)		(325)
Restructuring and other charges, net	(8,506)		(8,566)
Other expenses, net	(11,374)		(22,289)
(Loss) income before income taxes	$	(34,009)	$	9,257

Classification of Revenue By Major Geographic Areas

Revenues, classified by the major geographic areas in which our customers are located, were as follows (dollars in thousands): 

	Three Months Ended December 31,
	2021		2020
United States	$	259,776	$	272,598
International	61,659		73,155
Total revenues	$	321,435	$	345,753

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Supplemental Cash Flow Information (Tables)

3 Months Ended

Dec. 31, 2021

Supplemental Cash Flow Elements [Abstract]

Schedule of Cash Paid for Interest and Income Taxes

Cash paid for Interest and Income Taxes:

	Three Months Ended December 31,
	2021		2020
	(Dollars in thousands)
Interest paid	$	15,214	$	21,087
Income taxes paid	$	2,582	$	2,738

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Organization and Presentation (Details) $ / shares in Units, shares in Thousands			1 Months Ended			3 Months Ended
	Nov. 05, 2021 USD ($) shares	Nov. 04, 2021 USD ($)	Mar. 31, 2017 day	Dec. 31, 2015 USD ($) day	Jun. 30, 2015 day	Dec. 31, 2021 USD ($) segment day $ / shares shares	Sep. 30, 2021 USD ($) shares	Jun. 30, 2021 USD ($) shares	Dec. 31, 2020 USD ($)	Mar. 31, 2020 USD ($)	Mar. 13, 2017	Dec. 07, 2015
Debt Instrument [Line Items]
Number of reportable segments | segment						3
Stock price trigger						130.00%
Trading days | day						20
Consecutive trading days | day						30
Current portion of long-term debt						$ 348,669,000	$ 372,999,000
Repayments of convertible debt						28,646,000			$ 0
Aggregate principal amount						$ 889,392,000
Nuance Communications, Inc. | Microsoft Corporation
Debt Instrument [Line Items]
Acquisition cost (in dollars per share) | $ / shares						$ 56.00
Convertible Debentures 1.25% Due 2025
Debt Instrument [Line Items]
Trading days | day			5
Consecutive trading days | day			5
Stated percentage			1.25%			1.25%					1.25%
Shares converted (in shares) | shares						40
Repurchased face amount										$ 87,300,000
Converted amount						$ 1,200,000
Value of common stock consideration						2,200,000
Repayments of convertible debt						1,200,000
Aggregate principal amount						$ 261,400,000
Convertible Debentures 1.0% Due 2035
Debt Instrument [Line Items]
Trading days | day				10
Consecutive trading days | day				5
Stated percentage				1.00%		1.00%						1.00%
Shares converted (in shares) | shares						100	2,100	18,900
Repurchased face amount				$ 472,500,000		$ 2,300,000	$ 89,200,000	$ 457,000,000
Value of common stock consideration						3,000,000	113,800,000	1,002,200,000
Repayments of convertible debt						2,300,000	$ 89,200,000	$ 5,000,000
Aggregate principal amount						128,000,000
Convertible Debentures 1.5% Due 2035
Debt Instrument [Line Items]
Trading days | day					10
Stated percentage					1.50%
Repurchased face amount		$ 25,000,000								$ 36,500,000
Value of common stock consideration						41,900,000
Repayments of convertible debt		$ 100,000
Aggregate principal amount						$ 0
Convertible Debentures 1.5% Due 2035 | Debt Instrument, Redemption, Period One
Debt Instrument [Line Items]
Shares converted (in shares) | shares	800					800	4,100
Repurchased face amount						$ 25,100,000	$ 137,400,000
Value of common stock consideration							223,700,000
Repayments of convertible debt	$ 25,100,000					25,100,000	$ 137,400,000
Aggregate principal amount						$ 0

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Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Disaggregation of Revenue [Line Items]
Hosting Revenue	$ 213,732	$ 195,832
Product and licensing	47,472	86,037
Revenue, Maintenance and Support	60,231	63,884
Total revenues	321,435	345,753
Healthcare
Disaggregation of Revenue [Line Items]
Hosting Revenue	136,297	110,803
Product and licensing	34,696	54,783
Revenue, Maintenance and Support	29,407	33,746
Total revenues	200,400	199,332
Enterprise
Disaggregation of Revenue [Line Items]
Hosting Revenue	73,760	78,741
Product and licensing	12,659	30,286
Revenue, Maintenance and Support	30,808	30,125
Total revenues	117,227	139,152
Other
Disaggregation of Revenue [Line Items]
Hosting Revenue	3,675	6,288
Product and licensing	117	968
Revenue, Maintenance and Support	16	13
Total revenues	$ 3,808	$ 7,269

XML

Revenue Recognition - Narrative (Details) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Sep. 30, 2021
Disaggregation of Revenue [Line Items]
Hardware revenue	$ 7.3	$ 6.6
Current contract acquisition costs	49.4		$ 40.5
Noncurrent contract acquisition costs	91.9		86.1
Amortization expense related to contract acquisition costs	7.0	$ 4.7
Short-term contract costs	22.8		21.3
Long-term costs	35.5		35.3
Noncurrent contract assets	73.9		88.9
Current contract assets	65.2		$ 72.6
Deferred revenue	$ 360.5
Minimum
Disaggregation of Revenue [Line Items]
Hosting contract term	1 year
Contract acquisition term	1 year
Maximum
Disaggregation of Revenue [Line Items]
Hosting contract term	5 years
Contract acquisition term	5 years

XML

Revenue Recognition - Contract Assets (Details) $ in Thousands	3 Months Ended
	Dec. 31, 2021 USD ($)
Contract assets
Beginning balance	$ 161,512
Revenues recognized but not billed	73,228
Amounts reclassified to accounts receivable	(95,632)
Ending balance	$ 139,108

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Revenue Recognition - Contract Liability (Details) $ in Thousands	3 Months Ended
	Dec. 31, 2021 USD ($)
Deferred revenue
Beginning balance	$ 349,059
Amounts bill but not recognized	200,167
Revenue recognized	(188,711)
Ending balance	$ 360,515

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Revenue Recognition - Remaining Performance Obligations (Details) $ in Thousands	Dec. 31, 2021 USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Total revenue	$ 1,781,589
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Total revenue	$ 745,007
Revenue satisfaction period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Total revenue	$ 993,659
Revenue satisfaction period	3 years
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Total revenue	$ 42,923
Revenue satisfaction period

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Disposition of Businesses - Narrative (Details) - Electronic Healthcare Record Implementation Business - Disposal Group, Disposed of by Sale, Not Discontinued Operations $ in Millions	Mar. 01, 2021 USD ($)
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Proceeds from disposition of businesses, net of transaction fees	$ 29.8
Loss on disposition	$ 12.5

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Disposition of Businesses - Schedules (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Major line items constituting net income of discontinued operations:
Net income from discontinued operations	$ 0	$ 7,941
Medical Transcription and EHR Implementation
Major line items constituting net income of discontinued operations:
Revenue		47,650
Cost of revenue		29,152
Income from discontinued operations before income taxes		9,398
Provision for income taxes		1,457
Net income from discontinued operations		7,941
Supplemental information:
Depreciation		1,063
Amortization		2,444
Stock compensation		287
Capital expenditures		57
Medical Transcription and EHR Implementation | Research and development
Major line items constituting net income of discontinued operations:
Operating expenses		1,298
Medical Transcription and EHR Implementation | Sales and marketing
Major line items constituting net income of discontinued operations:
Operating expenses		908
Medical Transcription and EHR Implementation | General and administrative
Major line items constituting net income of discontinued operations:
Operating expenses		12
Medical Transcription and EHR Implementation | Amortization of intangible assets
Major line items constituting net income of discontinued operations:
Operating expenses		2,444
Medical Transcription and EHR Implementation | Restructuring and other charges, net
Major line items constituting net income of discontinued operations:
Operating expenses		$ 4,438

XML

Business Acquisitions - Narrative (Details) $ in Thousands	12 Months Ended
	Sep. 30, 2021 USD ($) business	Dec. 31, 2021 USD ($)
Business Acquisition [Line Items]
Number of acquisitions | business	1
Goodwill	$ 2,155,270	$ 2,154,658
Other Acquisitions
Business Acquisition [Line Items]
Consideration	45,200
Goodwill	27,400
Intangible assets	$ 19,700
Useful life	5 years

XML

Business Acquisitions - Components of Acquisition-Related Costs, Net (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Business Combinations [Abstract]
Transition and integration costs	$ 1,238	$ 72
Professional service fees	10	253
Total	$ 1,248	$ 325

XML

Goodwill and Intangible Assets - Goodwill, Changes in Carrying Values (Details) $ in Thousands	3 Months Ended
	Dec. 31, 2021 USD ($)
Goodwill [Roll Forward]
Beginning balance	$ 2,155,270
Purchase accounting adjustments	150
Effect of foreign currency translation	(762)
Ending balance	2,154,658
Healthcare
Goodwill [Roll Forward]
Beginning balance	1,453,836
Purchase accounting adjustments	150
Effect of foreign currency translation	(1,745)
Ending balance	1,452,241
Enterprise
Goodwill [Roll Forward]
Beginning balance	688,163
Purchase accounting adjustments	0
Effect of foreign currency translation	896
Ending balance	689,059
Other
Goodwill [Roll Forward]
Beginning balance	13,271
Purchase accounting adjustments	0
Effect of foreign currency translation	87
Ending balance	$ 13,358

XML

Goodwill and Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Intangible Assets
Beginning balance	$ 128,331
Amortization	(11,969)	$ (14,793)
Effect of foreign currency translation	(360)
Ending balance	$ 116,002

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Financial Instruments and Hedging Activities - Narrative (Details) - Derivatives Not Designated as Hedges - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2021	Sep. 30, 2021
Derivative Instruments and Hedging Activities Disclosure [Line Items]
National amount	$ 75.1	$ 52.5
Maximum
Derivative Instruments and Hedging Activities Disclosure [Line Items]
Term of foreign currency forward contracts	90 days

XML

Financial Instruments and Hedging Activities - Quantitative Summary of Fair Value of Derivative Instruments (Details) - Foreign currency forward contracts - USD ($) $ in Thousands	Dec. 31, 2021	Sep. 30, 2021
Prepaid expenses and other current assets
Derivatives, Fair Value [Line Items]
Fair Value Assets	$ 129	$ 112
Accrued expenses and other current liabilities
Derivatives, Fair Value [Line Items]
Fair Value Liabilities	$ (105)	$ (49)

XML

Financial Instruments and Hedging Activities - Summarized Activity of Derivative Instruments (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Derivatives Not Designated as Hedges | Foreign currency forward contracts | Other income (expense), net
Derivative Instruments, Gain (Loss) [Line Items]
Other income (expense), net	$ 175	$ (548)

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Fair Value Measurements - Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2021	Dec. 31, 2021
Liabilities:
Securities maturity period	3 years
Weighted average maturity	2 months 15 days
Commercial Paper
Assets:
Amount at cost	$ 18,633
Fair Value, Measurements, Recurring
Assets:
Money market funds	113,186	$ 60,144
Time deposits	13,889	1,000
Commercial paper, at cost	18,668
Foreign currency exchange contracts	112	129
Total assets at fair value	145,855	61,273
Liabilities:
Foreign currency exchange contracts	(49)	(105)
Total liabilities at fair value	(49)	(105)
Fair Value, Measurements, Recurring | Level 1
Assets:
Money market funds	113,186	60,144
Time deposits	0	0
Commercial paper, at cost	0
Foreign currency exchange contracts	0	0
Total assets at fair value	113,186	60,144
Liabilities:
Foreign currency exchange contracts	0	0
Total liabilities at fair value	0	0
Fair Value, Measurements, Recurring | Level 2
Assets:
Money market funds	0	0
Time deposits	13,889	1,000
Commercial paper, at cost	18,668
Foreign currency exchange contracts	112	129
Total assets at fair value	32,669	1,129
Liabilities:
Foreign currency exchange contracts	(49)	(105)
Total liabilities at fair value	(49)	(105)
Fair Value, Measurements, Recurring | Level 3
Assets:
Money market funds	0	0
Time deposits	0	0
Commercial paper, at cost	0
Foreign currency exchange contracts	0	0
Total assets at fair value	0	0
Liabilities:
Foreign currency exchange contracts	0	0
Total liabilities at fair value	$ 0	$ 0

XML

Fair Value Measurements - Narrative (Details) - USD ($)	Dec. 31, 2021	Sep. 30, 2021
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value	$ 1,547,500,000	$ 1,620,300,000
Face value	889,400,000	918,000,000
Revolving Credit Facility
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Balance outstanding	$ 0	$ 0

XML

Fair Value Measurements - Changes in Fair Value of Contingent Earn-Out Liabilities (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance at beginning of period	$ 0	$ 1,796
Payments and foreign currency translation	0	51
Balance at end of period	$ 0	$ 1,847

XML

Accrued Expenses and Other Current Liabilities (Detail) - USD ($) $ in Thousands	Dec. 31, 2021	Sep. 30, 2021
Payables and Accruals [Abstract]
Compensation	$ 78,335	$ 133,194
Cost of revenue related liabilities	22,517	24,976
Accrued interest payable	2,341	9,038
Consulting and professional fees	14,623	18,130
Sales and marketing incentives	1,201	1,294
Sales and other taxes payable	8,120	8,016
Operating lease obligations	22,870	24,522
Other	4,269	3,170
Total	$ 154,276	$ 222,340

XML

Restructuring and Other Charges, net - Accrual Activity Relating to Restructuring and Other Charges (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Restructuring [Roll Forward]
Beginning balance	$ 17,390
Restructuring charges, net	3,390	$ 7,860
Non-cash adjustment	(152)
Cash payments	(4,430)
Ending balance	16,198
Personnel
Restructuring [Roll Forward]
Beginning balance	444
Restructuring charges, net	3,195	4,789
Non-cash adjustment	0
Cash payments	(2,792)
Ending balance	847
Facilities
Restructuring [Roll Forward]
Beginning balance	16,946
Restructuring charges, net	195	$ 3,071
Non-cash adjustment	(152)
Cash payments	(1,638)
Ending balance	$ 15,351

XML

Restructuring and Other Charges, net - By Segment (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Restructuring Cost and Reserve [Line Items]
Restructuring charges, net	$ 3,390	$ 7,860
Total	8,506	8,566
Healthcare
Restructuring Cost and Reserve [Line Items]
Restructuring charges, net	1,929	3,199
Total	1,929	3,199
Enterprise
Restructuring Cost and Reserve [Line Items]
Restructuring charges, net	699	3,654
Total	699	3,654
Other
Restructuring Cost and Reserve [Line Items]
Restructuring charges, net	(138)	29
Total	(138)	29
Corporate Segment [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring charges, net	900	978
Total	6,016	1,684
Personnel
Restructuring Cost and Reserve [Line Items]
Restructuring charges, net	3,195	4,789
Personnel | Healthcare
Restructuring Cost and Reserve [Line Items]
Restructuring charges, net	1,804	2,632
Personnel | Enterprise
Restructuring Cost and Reserve [Line Items]
Restructuring charges, net	450	1,182
Personnel | Other
Restructuring Cost and Reserve [Line Items]
Restructuring charges, net	0	0
Personnel | Corporate Segment [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring charges, net	941	975
Facilities
Restructuring Cost and Reserve [Line Items]
Restructuring charges, net	195	3,071
Facilities | Healthcare
Restructuring Cost and Reserve [Line Items]
Restructuring charges, net	125	567
Facilities | Enterprise
Restructuring Cost and Reserve [Line Items]
Restructuring charges, net	249	2,472
Facilities | Other
Restructuring Cost and Reserve [Line Items]
Restructuring charges, net	(138)	29
Facilities | Corporate Segment [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring charges, net	(41)	3
Other Charges
Restructuring Cost and Reserve [Line Items]
Other Charges	5,116	706
Other Charges | Healthcare
Restructuring Cost and Reserve [Line Items]
Other Charges	0	0
Other Charges | Enterprise
Restructuring Cost and Reserve [Line Items]
Other Charges	0	0
Other Charges | Other
Restructuring Cost and Reserve [Line Items]
Other Charges	0	0
Other Charges | Corporate Segment [Member]
Restructuring Cost and Reserve [Line Items]
Other Charges	$ 5,116	$ 706

XML

Restructuring and Other Charges, net - Narrative (Details) $ in Thousands	3 Months Ended
	Dec. 31, 2021 USD ($) employee	Dec. 31, 2020 USD ($) employee	Sep. 30, 2021 USD ($)
Restructuring Cost and Reserve [Line Items]
Restructuring charges, net	$ 3,390	$ 7,860
Number of positions eliminated | employee	81	57
Restructuring reserve	$ 16,198		$ 17,390
Personnel
Restructuring Cost and Reserve [Line Items]
Restructuring charges, net	3,195	$ 4,789
Restructuring reserve	847		444
Facilities
Restructuring Cost and Reserve [Line Items]
Restructuring charges, net	195	3,071
Restructuring reserve	15,351		$ 16,946
Other Corporate Initiatives | Other Corporate
Restructuring Cost and Reserve [Line Items]
Restructuring charges, net	5,000
Other Charges
Restructuring Cost and Reserve [Line Items]
Insurance recoveries	100
Other charges	$ 5,116	706
Other Charges | Other Charges
Restructuring Cost and Reserve [Line Items]
Other charges		$ 700

XML

Debt - Borrowing Obligations (Details) - USD ($)	3 Months Ended
	Dec. 31, 2021	Sep. 30, 2021	Jun. 30, 2021	Dec. 31, 2020	Mar. 31, 2017	Mar. 13, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 07, 2015	Jun. 30, 2015
Debt Instrument [Line Items]
Deferred issuance costs related to our Revolving Credit Facility	$ (1,733,000)	$ (1,839,000)
Total debt	843,854,000	867,924,000
Less: current portion	(348,669,000)	(372,999,000)
Total long-term debt	495,185,000	494,925,000
Loss on extinguishment of debt	215,000			$ 0
5.625% Senior Notes due 2026
Debt Instrument [Line Items]
Senior Notes, net of deferred issuance costs	496,918,000	496,764,000					$ 500,000,000
Stated percentage							5.625%
Unamortized debt issuance expense	3,100,000	3,200,000
Effective percentage							5.625%
Convertible Debentures 1.0% Due 2035
Debt Instrument [Line Items]
Senior Notes, net of deferred issuance costs	$ 122,185,000	122,948,000
Stated percentage	1.00%							1.00%	1.00%
Unamortized debt issuance expense	$ 300,000	300,000
Unamortized discount	$ 5,500,000	7,000,000
Effective percentage	5.622%
Loss on extinguishment of debt	$ 0	2,100,000	$ 15,000,000
Convertible Debentures 1.25% Due 2025
Debt Instrument [Line Items]
Convertible Debentures, net of unamortized discount	$ 226,484,000	225,067,000
Stated percentage	1.25%				1.25%	1.25%
Unamortized debt issuance expense	$ 1,400,000	1,500,000
Unamortized discount	$ 33,600,000	36,100,000
Effective percentage	5.578%
Convertible Debentures 1.5% Due 2035
Debt Instrument [Line Items]
Convertible Debentures, net of unamortized discount	$ 0	24,984,000
Stated percentage										1.50%
Unamortized discount		$ 100,000
Effective percentage	5.394%

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Debt - Summary of Maturities (Details) - USD ($)	Dec. 31, 2021	Sep. 30, 2021	Mar. 31, 2017	Mar. 13, 2017	Dec. 31, 2015	Dec. 07, 2015
Debt Instrument [Line Items]
2022	$ 389,392,000
2023	0
2024	0
2025	0
2026	0
Thereafter	500,000,000
Total before unamortized discount	889,392,000
Less: unamortized discount and issuance costs	(45,538,000)
Total debt	843,854,000	$ 867,924,000
Convertible Debentures 1.25% Due 2025
Debt Instrument [Line Items]
Total before unamortized discount	$ 261,400,000
Stated percentage	1.25%		1.25%	1.25%
Convertible Debentures 1.0% Due 2035
Debt Instrument [Line Items]
Total before unamortized discount	$ 128,000,000
Stated percentage	1.00%				1.00%	1.00%
Convertible Debentures
Debt Instrument [Line Items]
2022	$ 389,392,000
2023	0
2024	0
2025	0
2026	0
Thereafter	0
Total before unamortized discount	389,392,000
Less: unamortized discount and issuance costs	(40,723,000)
Total debt	348,669,000
Senior Notes
Debt Instrument [Line Items]
2022
2023	0
2024	0
2025	0
2026	0
Thereafter	500,000,000
Total before unamortized discount	500,000,000
Less: unamortized discount and issuance costs	(4,815,000)
Total debt	$ 495,185,000

XML

Debt - 5.625% Senior Notes due 2026 (Details) - USD ($)	1 Months Ended
	Dec. 31, 2016	Dec. 31, 2021	Sep. 30, 2021
5.625% Senior Notes due 2026
Debt Instrument [Line Items]
Stated percentage	5.625%
Aggregate principal amount	$ 500,000,000	$ 496,918,000	$ 496,764,000
Proceeds from debt	$ 495,000,000
Effective percentage	5.625%
5.375% Senior Notes due August 15, 2020
Debt Instrument [Line Items]
Stated percentage	5.375%
Before December 15, 2021 | 5.625% Senior Notes due 2026
Debt Instrument [Line Items]
Redemption price percentage	100.00%
Change of control before December 15, 2021 | 5.625% Senior Notes due 2026
Debt Instrument [Line Items]
Redemption price percentage	101.00%

XML

Debt - 1.0% Convertible Debentures due 2035 (Details) shares in Millions	1 Months Ended		3 Months Ended
	Dec. 31, 2015 USD ($) day	Jun. 30, 2015 USD ($)	Dec. 31, 2021 USD ($) day shares	Sep. 30, 2021 USD ($) shares	Jun. 30, 2021 USD ($) shares	Dec. 31, 2020 USD ($)	Dec. 07, 2015	Oct. 24, 2011
Debt Instrument [Line Items]
Face value			$ 889,400,000	$ 918,000,000
Trading days | day			20
Consecutive trading days | day			30
Repayments of convertible debt			$ 28,646,000			$ 0
Loss on extinguishment of debt			215,000			$ 0
Total before unamortized discount			$ 889,392,000
Convertible Debentures 1.0% Due 2035
Debt Instrument [Line Items]
Stated percentage	1.00%		1.00%				1.00%
Face value	$ 676,500,000
Debt proceeds	663,800,000
Repurchased face amount	$ 472,500,000		$ 2,300,000	89,200,000	$ 457,000,000
Trading days | day	10
Contingent interest amount per principal	$ 1,200
Accrued interest rate	0.50%
Long-term debt	$ 495,400,000
Debt recorded as additional paid-in capital	$ 181,100,000
Conversion ratio	0.0414576
Consecutive business days | day	5
Consecutive trading days | day	5
Redemption price percentage	100.00%
Percentage of principal amount redeemable	100.00%
Repayments of convertible debt			$ 2,300,000	$ 89,200,000	$ 5,000,000
Shares converted (in shares) | shares			0.1	2.1	18.9
Debt repurchase allocation, debt portion			$ 2,200,000	$ 85,400,000	$ 435,100,000
Debt repurchase allocation - Equity portion			3,100,000	117,600,000	567,100,000
Unamortized discount write-off			100,000	5,600,000	32,400,000
Write-off of unamortized costs				300,000	1,400,000
Loss on extinguishment of debt			0	2,100,000	15,000,000
Inducement expense					3,100,000
Interest expense earned					1,900,000
Value of common stock consideration			3,000,000	$ 113,800,000	$ 1,002,200,000
Total before unamortized discount			128,000,000
Reclassification from permanent equity to mezzanine equity			5,800,000
Convertible Debentures 1.0% Due 2035 | Debt Instrument, Redemption, Period Two
Debt Instrument [Line Items]
Repurchased face amount			$ 23,500,000
Shares converted (in shares) | shares			0.5
Repurchase amount			$ 23,500,000
Converted amount			$ 53,800,000
Senior Convertible Debentures due in 2031
Debt Instrument [Line Items]
Stated percentage								2.75%
Repurchased face amount	$ 38,300,000
Repayments of convertible debt		$ 256,200,000
Minimum | Convertible Debentures 1.0% Due 2035
Debt Instrument [Line Items]
Percentage of stock closing price to debt conversion price	130.00%
Number of trading days	20 days		20 days
Maximum | Convertible Debentures 1.0% Due 2035
Debt Instrument [Line Items]
Percentage of stock closing price to debt conversion price	98.00%
Number of trading days	30 days		30 days
Principal amount per note	$ 1,000
If-converted value exceeding principal amount			$ 165,500,000

XML

Debt - 1.25% Convertible Debentures due 2025 (Details)	1 Months Ended		3 Months Ended	104 Months Ended
	Mar. 31, 2017 USD ($) day shares	Dec. 31, 2015 USD ($) day	Dec. 31, 2021 USD ($) day shares	Dec. 31, 2021 USD ($) shares	Sep. 30, 2021 USD ($)	Mar. 31, 2020 USD ($)	Mar. 13, 2017	Oct. 24, 2011
Debt Instrument [Line Items]
Face value			$ 889,400,000	$ 889,400,000	$ 918,000,000
Repurchased shares (in shares) | shares			0	73,800,000
Shares repurchased value				$ 1,238,800,000
Consecutive trading days | day			30
Trading days | day			20
Convertible Debentures 1.25% Due 2025
Debt Instrument [Line Items]
Stated percentage	1.25%		1.25%	1.25%			1.25%
Face value	$ 350,000,000
Debt proceeds	$ 343,600,000
Repurchased shares (in shares) | shares	5,800,000
Shares repurchased value	$ 99,100,000
Long-term debt	252,100,000
Debt recorded as additional paid-in capital	$ 97,900,000
Conversion ratio	0.0507957
Percentage of stock closing price to debt conversion price	130.00%
Consecutive business days | day		5
Consecutive trading days | day	5
Trading days | day	5
Percentage of principal amount redeemable	100.00%
Repurchased face amount						$ 87,300,000
Repurchase amount						112,300,000
Debt repurchase allocation, debt portion			$ 1,100,000	$ 1,100,000		72,800,000
Debt repurchase allocation - Equity portion			2,300,000	2,300,000		39,500,000
Unamortized discount write-off			200,000	$ 200,000		16,700,000
Unamortized costs						700,000
Loss on repurchases						$ 2,800,000
Reclassification from permanent equity to mezzanine equity			34,900,000
If-converted value exceeding principal amount			$ 473,200,000
Convertible Debentures 1.25% Due 2025 | Ending on Last Trading Day of Previous Fiscal Quarter
Debt Instrument [Line Items]
Number of consecutive trading days	30 days
Convertible Debentures 1.25% Due 2025 | Minimum
Debt Instrument [Line Items]
Number of trading days	20 days
Convertible Debentures 1.25% Due 2025 | Maximum
Debt Instrument [Line Items]
Percentage of stock closing price to debt conversion price	98.00%
Senior Convertible Debentures due in 2031
Debt Instrument [Line Items]
Stated percentage								2.75%
Repayments of debt	$ 17,800,000
Repurchased face amount		$ 38,300,000

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Debt - 1.50% Convertible Debentures due 2035 (Details) shares in Millions				1 Months Ended	3 Months Ended
	Nov. 05, 2021 USD ($) shares	Nov. 04, 2021 USD ($)	Sep. 29, 2021	Jun. 30, 2015 USD ($) day	Dec. 31, 2021 USD ($) day shares	Sep. 30, 2021 USD ($) shares	Jun. 30, 2021 USD ($) shares	Dec. 31, 2020 USD ($)	Mar. 31, 2020 USD ($)	Dec. 31, 2015 USD ($)	Oct. 24, 2011
Debt Instrument [Line Items]
Face value					$ 889,400,000	$ 918,000,000
Repayments of convertible debt					$ 28,646,000			$ 0
Trading days | day					20
Loss on extinguishment of debt					$ 215,000			$ 0
Aggregate principal amount					889,392,000
Convertible Debentures 1.5% Due 2035
Debt Instrument [Line Items]
Stated percentage				1.50%
Face value				$ 263,900,000
Repayments of convertible debt		$ 100,000
Debt proceeds				$ 253,200,000
Debt issuance, percentage of principal				97.09%
Debt discount				$ 7,700,000
Trading days | day				10
Contingent interest amount per principal				$ 1,200
Accrued interest rate				0.50%
Repurchased face amount		25,000,000							$ 36,500,000
Repurchase amount		$ 100,000							41,300,000
Debt repurchase allocation, debt portion									34,700,000
Debt repurchase allocation - Equity portion									6,600,000
Unamortized discount write-off									2,500,000
Unamortized costs									100,000
Loss on repurchases									$ 800,000
Value of common stock consideration					41,900,000
Redemption price percentage			100.00%
Aggregate principal amount					0
Convertible Debentures 1.5% Due 2035 | Debt Instrument, Redemption, Period One
Debt Instrument [Line Items]
Repayments of convertible debt	$ 25,100,000				25,100,000	137,400,000
Repurchased face amount					$ 25,100,000	137,400,000
Debt repurchase allocation, debt portion						136,000,000
Debt repurchase allocation - Equity portion						225,100,000
Unamortized discount write-off						2,400,000
Unamortized costs						100,000
Loss on repurchases						$ 1,100,000
Shares converted (in shares) | shares	0.8				0.8	4.1
Value of common stock consideration						$ 223,700,000
Aggregate principal amount					$ 0
Convertible Debentures 1.5% Due 2035 | Debt Instrument, Redemption, Period Two
Debt Instrument [Line Items]
Repayments of convertible debt							$ 500,000
Repurchased face amount							64,900,000
Debt repurchase allocation, debt portion							64,200,000
Debt repurchase allocation - Equity portion							102,500,000
Unamortized discount write-off							$ 1,400,000
Shares converted (in shares) | shares							3.2
Loss on extinguishment of debt							$ 1,100,000
Inducement expense							400,000
Interest expense earned							100,000
Stock issued							$ 166,700,000
Convertible Debentures 1.5% Due 2035 | Minimum
Debt Instrument [Line Items]
Percentage of stock closing price to debt conversion price				130.00%
Number of trading days				20 days
Senior Convertible Debentures due in 2031
Debt Instrument [Line Items]
Stated percentage											2.75%
Repayments of convertible debt				$ 256,200,000
Repurchased face amount										$ 38,300,000
Ending on Last Trading Day of Previous Fiscal Quarter | Convertible Debentures 1.5% Due 2035
Debt Instrument [Line Items]
Number of consecutive trading days				30 days

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Debt - Revolving Credit Facility (Details)	Feb. 04, 2021 USD ($)	Jul. 31, 2020 USD ($)	Dec. 31, 2021 USD ($)
Line of Credit Facility [Line Items]
Issued and undrawn letters of credit		$ 25,000,000
Revolving Credit Facility
Line of Credit Facility [Line Items]
Borrowing commitments	$ 300,000,000	$ 242,500,000	$ 298,100,000
Leverage ratio	4.00	4.00
Outstanding letters of credit			$ 1,900,000
Minimum | London Interbank Offered Rate | Revolving Credit Facility
Line of Credit Facility [Line Items]
Basis spread on variable rate	0.50%	1.50%
Minimum | Base Rate | Revolving Credit Facility
Line of Credit Facility [Line Items]
Basis spread on variable rate	1.50%	0.50%
Maximum | London Interbank Offered Rate | Revolving Credit Facility
Line of Credit Facility [Line Items]
Basis spread on variable rate	0.75%	1.75%
Maximum | Base Rate | Revolving Credit Facility
Line of Credit Facility [Line Items]
Basis spread on variable rate	1.75%	0.75%

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Stockholders' Equity (Details) - USD ($)	3 Months Ended	104 Months Ended
	Dec. 31, 2021	Dec. 31, 2021	Aug. 01, 2018	Apr. 29, 2015	Apr. 29, 2013
Equity [Abstract]
Share repurchase program authorized amount			$ 500,000,000	$ 500,000,000	$ 500,000,000
Repurchased shares (in shares)	0	73,800,000
Shares repurchased value		$ 1,238,800,000
Shares available for future repurchases amount	$ 261,200,000	$ 261,200,000

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Net (Loss) Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Numerator:
Net (loss) income from continuing operations	$ (57,559)	$ 6,954
Net income from discontinued operations	0	7,941
Net (loss) income	$ (57,559)	$ 14,895
Denominator:
Weighted average common shares outstanding — basic (in shares)	317,359	283,818
Dilutive effect of convertible instruments (in shares)	0	21,636
Dilutive effect of employee stock compensation plans (in shares)	0	8,756
Weighted average common shares outstanding — diluted (in shares)	317,359	314,210
Net (loss) income per common share - basic:
Continuing operations (in dollars per share)	$ (0.18)	$ 0.02
Discontinued operations (in dollars per share)	0	0.03
Total net (loss) income per basic common share (in dollars per share)	(0.18)	0.05
Net (loss) income per common share - diluted:
Continuing operations (in dollars per share)	(0.18)	0.02
Discontinued operations (in dollars per share)	0	0.03
Total net (loss) income per diluted common share (in dollars per share)	$ (0.18)	$ 0.05
Anti-dilutive equity instruments excluded from the calculation (in shares)	0	580
Contingently issuable awards excluded from the calculation (in shares)	112	0

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Stock-Based Compensation - Narrative (Details) - $ / shares	3 Months Ended
	Dec. 31, 2021	Sep. 30, 2021	Jan. 22, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of common stock authorized (in shares)			9,000,000
Shares available for future grants (in shares)	11,400,000
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards earned percentage	200.00%

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Stock-Based Compensation - Included in Consolidated Statements of Operations (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock based compensation	$ 38,399	$ 34,906
Cost of hosting and professional services
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock based compensation	7,206	6,563
Cost of product and licensing
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock based compensation	29	75
Cost of maintenance and support
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock based compensation	471	426
Research and development
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock based compensation	9,364	8,440
Sales and marketing
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock based compensation	11,710	8,943
General and administrative
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock based compensation	$ 9,619	$ 10,459

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Stock-Based Compensation - Summary of Stock Options Activity (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Number of Shares
Ending balance (in shares)	5,655
Exercised (in shares)		(3,700)
Beginning balance (in shares)	9,355
Exercisable (in shares)	5,655	9,355
Weighted Average Exercise Price
Beginning balance (in dollars per share)	$ 17.18
Exercised (in dollars per share)		$ 17.18
Ending balance (in dollars per share)	17.18
Exercisable (in dollars per share)	$ 17.18	$ 17.18
Weighted Average Remaining Contractual Term
Outstanding	3 months 18 days
Exercisable	3 months 18 days	1 year 3 months 18 days
Aggregate Intrinsic Value
Outstanding	$ 0.2
Exercisable	$ 0.2	$ 0.3
Closing market value of common stock (in dollars per share)	$ 55.32

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Stock-Based Compensation - Summary of Activity Relating to Restricted Units (Details) $ / shares in Units, $ in Millions	3 Months Ended
	Dec. 31, 2021 USD ($) $ / shares shares
Number of Shares Underlying Restricted Units
Closing market value of common stock (in dollars per share) | $ / shares	$ 55.32
Number of Shares Underlying Restricted Units — Performance-Based Awards
Number of Shares Underlying Restricted Units
Beginning balance, outstanding (in shares)	2,463,921
Granted (in shares)	880,362
Earned/released (in shares)	(1,760,724)
Forfeited (in shares)	(5,601)
Ending balance, outstanding (in shares)	1,577,958
Weighted average remaining recognition period of outstanding Restricted Units	1 year 2 months 12 days
Unrecognized stock-based compensation expense of outstanding Restricted Units | $	$ 21.1
Aggregate intrinsic value of outstanding Restricted Units | $	$ 87.3
Number of Shares Underlying Restricted Units — Time-Based Awards
Number of Shares Underlying Restricted Units
Beginning balance, outstanding (in shares)	4,655,825
Granted (in shares)	1,796,045
Earned/released (in shares)	(2,110,257)
Forfeited (in shares)	(34,455)
Ending balance, outstanding (in shares)	4,307,158
Weighted average remaining recognition period of outstanding Restricted Units	1 year 9 months 18 days
Unrecognized stock-based compensation expense of outstanding Restricted Units | $	$ 122.3
Aggregate intrinsic value of outstanding Restricted Units | $	$ 238.3
Performance-based restricted units
Number of Shares Underlying Restricted Units
Granted (in shares)	0

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Stock-Based Compensation - Summary of Weighted-Average Grant-Date Fair Value and Intrinsic Value of Restricted Units Vested (Details) - Restricted Stock Units - USD ($) $ / shares in Units, $ in Millions	3 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted-average grant-date fair value per share (in dollars per share)	$ 55.18	$ 37.26
Total intrinsic value of shares vested (in millions)	$ 213.4	$ 119.4

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Stock-Based Compensation - Valuation Assumptions (Details) - Restricted Stock Units	3 Months Ended
	Dec. 31, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Dividend yield	0.00%
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility	34.95%
Risk-free interest rate	0.21%
Expected term (in years)	3 years

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Income Taxes - Components of Income (Loss) Before Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Income Tax Disclosure [Abstract]
Domestic	$ (58,889)	$ (4,995)
Foreign	24,880	14,252
(Loss) income before income taxes	$ (34,009)	$ 9,257

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Income Taxes - Components of Benefit from Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Income Tax Disclosure [Abstract]
Domestic	$ 21,229	$ (2,892)
Foreign	2,321	5,195
Provision for income taxes	$ 23,550	$ 2,303
Effective tax rate	(69.20%)	24.90%

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Income Taxes - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Oct. 08, 2021
Income Tax Contingency [Line Items]
Effective tax rate	(69.20%)	24.90%
Swiss Federal Tax Administration (FTA) | Pending Litigation
Income Tax Contingency [Line Items]
Estimated possible loss			$ 60

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Commitments and Contingencies (Details) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2021	Mar. 31, 2022
Other Commitments [Line Items]
Indemnification term for former officers and directors	6 years
Future Acquisition By Microsoft Corporation | Forecast | Acquiree Business Transaction Costs
Other Commitments [Line Items]
Expected contingent liabilities		$ 114

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Operating Leases - Narrative (Details) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Leases [Abstract]
Weighted average remaining lease term	4 years 1 month 6 days
Weighted average discount rate	3.80%
Sublease income, remaining lease term amount	$ 10.1
Sublease income to be recognized, year one	1.8
Sublease income to be recognized, year two	1.8
Sublease income to be recognized, year three	1.8
Sublease income to be recognized, year four	1.8
Sublease income to be recognized, year five	1.8
Sublease income to be recognized, after year five	1.1
Operating lease cost	6.0	$ 7.2
Operating lease payments	$ 7.6	$ 7.7

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Operating Leases - Future Lease Payments (Details) $ in Thousands	Dec. 31, 2021 USD ($)
Future minimum rental payments [Line Items]
2022	$ 21,023
2023	20,518
2024	16,639
2025	14,062
2026	12,659
Thereafter	30,479
Total	115,380
Operating Leases
Future minimum rental payments [Line Items]
2022	16,622
2023	16,291
2024	13,912
2025	12,479
2026	11,280
Thereafter	30,016
Total	100,600
Operating leases under restructuring
Future minimum rental payments [Line Items]
2022	4,401
2023	4,227
2024	2,727
2025	1,583
2026	1,379
Thereafter	463
Total	$ 14,780

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Segment and Geographic Information - Segment Results Along with Reconciliation of Segment Profit to Income Before Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Segment Reporting Information [Line Items]
Total segment revenues	$ 321,435	$ 345,753
Total segment profit	63,875	121,251
Corporate expenses and other, net	(26,388)	(31,115)
Stock-based compensation	(38,399)	(34,906)
Amortization of intangible assets	(11,969)	(14,793)
Acquisition-related costs, net	(1,248)	(325)
Restructuring and other charges, net	(8,506)	(8,566)
Other expenses, net	(11,374)	(22,289)
(Loss) income before income taxes	(34,009)	9,257
Healthcare
Segment Reporting Information [Line Items]
Revenues	200,400	199,332
Total segment revenues	200,400	199,332
Total segment profit	43,139	74,812
Enterprise
Segment Reporting Information [Line Items]
Revenues	117,227	139,152
Total segment revenues	117,227	139,152
Total segment profit	18,725	41,468
Other
Segment Reporting Information [Line Items]
Revenues	3,808	7,269
Total segment revenues	3,808	7,269
Total segment profit	$ 2,011	$ 4,971

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Segment and Geographic Information - Classification of Revenue by Major Geographic Areas (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Revenues from External Customers and Long-Lived Assets [Line Items]
Total segment revenues	$ 321,435	$ 345,753
United States
Revenues from External Customers and Long-Lived Assets [Line Items]
Total segment revenues	259,776	272,598
International
Revenues from External Customers and Long-Lived Assets [Line Items]
Total segment revenues	$ 61,659	$ 73,155

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Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Supplemental Cash Flow Elements [Abstract]
Interest paid	$ 15,214	$ 21,087
Income taxes paid	$ 2,582	$ 2,738

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Subsequent Events (Details) - USD ($) $ in Thousands, shares in Millions	3 Months Ended
	Mar. 31, 2022	Dec. 31, 2021	Sep. 30, 2021	Jun. 30, 2021	Dec. 31, 2020	Dec. 31, 2015	Dec. 07, 2015
Subsequent Event [Line Items]
Repayments of convertible debt		$ 28,646			$ 0
Convertible Debentures 1.0% Due 2035
Subsequent Event [Line Items]
Stated percentage		1.00%				1.00%	1.00%
Repayments of convertible debt		$ 2,300	$ 89,200	$ 5,000
Shares converted (in shares)		0.1	2.1	18.9
Subsequent Event | Convertible Debentures 1.0% Due 2035 | Forecast
Subsequent Event [Line Items]
Converted notional amount	$ 2,100
Repayments of convertible debt	$ 2,100
Shares converted (in shares)	0.1
Converted amount	$ 4,700