Fair Value Measurements

6 Months Ended

Mar. 31, 2021

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTSFinancial assets and liabilities are classified in the following fair value hierarchy based on the lowest level input that is significant to the fair value measurement: Level 1 (unadjusted quoted prices in active markets for identical assets or liabilities); Level 2 (observable market inputs, other than quoted prices included in Level 1); and Level 3 (unobservable inputs that cannot be corroborated by observable market data).

5. FAIR VALUE MEASUREMENTS (CONTINUED)

The following tables provide information by level for financial liabilities that are measured at fair value on a recurring basis (in thousands):

	Total Fair Value at		Fair Value Measurements Using  Inputs Considered as
	March 31, 2021		Level 1		Level 2		Level 3
Liabilities:
Preliminary contingent consideration on acquired business	$	8,000	$	—	$	—	$	8,000
Total liabilities measured at fair value	$	8,000	$	—	$	—	$	8,000

	Total Fair Value at		Fair Value Measurements Using  Inputs Considered as
	September 30, 2020		Level 1		Level 2		Level 3
Liabilities:
Contingent consideration on acquired business	$	4,228	$	—	$	—	$	4,228
Total liabilities measured at fair value	$	4,228	$	—	$	—	$	4,228

In connection with our acquisition of Bluenica Corporation ("Bluenica") in October 2015, we agreed to make contingent earn-out payments over a period of up to 4 years, subject to achieving specified revenue thresholds for sales of Bluenica products. We paid the final installment of $2.9 million during the third quarter of fiscal 2020.

In connection with our acquisition of Accelerated Concepts, Inc. ("Accelerated") in January 2018, we agreed to make contingent earn-out payments if specified revenue thresholds for sales of Accelerated products were achieved. We paid the first installment payment of $3.5 million in the third quarter of fiscal 2019. The earn-out period for this acquisition ended on January 22, 2020. We paid the final installment of $2.4 million in the third quarter of fiscal 2020.

In connection with our acquisition of Opengear, we agreed to make contingent payments, based upon certain revenue thresholds (see Note 2 to the condensed consolidated financial statements). We paid the first installment of $0.9 million during the third quarter of fiscal 2020. We paid the final installment of $10.0 million during the second quarter of fiscal 2021.

In connection with our acquisition of Haxiot, we agreed to make contingent earn-out payments, based upon certain revenue thresholds (see Note 2 to the condensed consolidated financial statements). Due to the timing of the acquisition, we recorded a preliminary amount of the contingent consideration of $8.0 million at March 31, 2021 which is subject to change as part of our completion of purchase accounting.

The following table presents a reconciliation of the contingent consideration liability measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (in thousands):

	Three months ended March 31,				Six months ended March 31,
	2021		2020		2021		2020
Fair value at beginning of period	$	10,000	$	14,766	$	4,228	$	5,407
Contingent consideration recognized for acquired business	8,000		(4,000)		8,000		5,100
Contingent consideration payments	(10,000)		—		(10,000)		—
Change in fair value of contingent consideration	—		(387)		5,772		(128)
Fair value at end of period	$	8,000	$	10,379	$	8,000	$	10,379

The change in fair value of contingent consideration reflects our estimates of the probabilities of achieving the relevant targets and is discounted based on our estimated discount rate. Due to the timing of the acquisition, the fair value of the contingent consideration at March 31, 2021 is preliminary and based on the probability of achieving the specified revenue thresholds at 100% for Haxiot.