Earnings Per Share

6 Months Ended

Mar. 31, 2020

Earnings Per Share [Abstract]

Earnings Per Share

Note 4. Earnings Per Share

Basic earnings per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during the period, increased to include the number of shares of common stock that would have been outstanding had potential dilutive shares of common stock been issued. The dilutive effect of restricted stock units are reflected in diluted net income per share by applying the treasury stock method. There were no Cerence equity awards outstanding prior to the Spin-Off, thus the computation of basic and diluted earnings per common share (“EPS”) for all prior periods disclosed was calculated using the shares issued in connection with the Spin-Off totaling 36.4 million shares.  

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

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

	Three Months Ended March 31,				Six Months Ended March 31,
in thousands	2020		2019		2020		2019
Basic shares		36,441		36,391		36,218		36,391
Effect of dilutive shares		951		—		475		—
Diluted shares		37,392		36,391		36,693		36,391