Cerence Inc. 10-K

Item 8. Financial Statements and Supplementary Data. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Reports of Independent Registered Public Accounting Firm (BDO USA, P.C., Boston, Massachusetts, PCAOB ID 243 ) 57 Consolidated Statements of Operations for the years ended September 30, 202 5 , 202 4 , and 202 3 60 Consolidated Statements of Comprehensive Loss for the years ended September 30, 202 5 , 202 4 , and 202 3 61 Consolidated Balance Sheets as of September 30, 202 5 and 202 4 62 Consolidated Statements of Equity for the years ended September 30, 202 5 , 202 4 , and 202 3 63 Consolidated Statements of Cash Flows for the years ended September 30, 202 5 , 202 4 , and 202 3 64 Notes to the Consolidated Financial Statements 65 56 Table of Contents Report of Independent Registered Public Accounting Firm Shareholders and Board of Directors Cerence Inc. Burlington, Massachusetts Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Cerence Inc (the “Company”) as of September 30, 2025 and 2024, the related consolidated statements of operations and comprehensive loss, consolidated statements of equity, and consolidated cash flows for each of the three years in the period ended September 30, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at September 30, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended September 30, 2025, in conformity with accounting principles generally accepted in the United States of America. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company's internal control over financial reporting as of September 30, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated November 20, 2025 expressed an unqualified opinion thereon. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates. Identification of Performance Obligations As described in Note 3 to the Company’s consolidated financial statements, certain of the Company’s revenue contracts contain multiple products and services relating to the sale of connected or embedded licenses and professional services. For these revenue contracts, the Company accounts for the individual products and services separately if they are distinct. The transaction price is allocated to the performance obligations based on their relative standalone selling prices. We determined the identification of distinct performance obligations in the recognition of revenue related to contracts that contain multiple products or services as a critical audit matter. The determination of whether multiple products or services within a contract are distinct performance obligations that should be accounted for separately requires 57 Table of Contents management to exercise significant judgment and includes a high degree of subjectivity. Auditing the identification of distinct performance obligations in certain revenue contracts involved especially challenging auditor judgment due to the nature and extent of audit effort required to address this matter. The primary procedures we performed to address this critical audit matter included: • Evaluating the design and testing operating effectiveness of certain controls relating to management’s identification and assessment of distinct performance obligations in contracts with customers. • Evaluating management’s technical accounting policies and practices including the reasonableness of management’s judgments and assumptions in the determination of whether the products and services represent distinct performance obligations. • Testing the reasonableness of the identification of distinct performance obligations through inspection of a selection of customer contracts and other source documents. /s/ BDO USA, P.C. We have served as the Company’s auditor since 2017. Boston, Massachusetts November 20, 2025 58 Table of Contents Report of Independent Registered Public Accounting Firm Shareholders and Board of Directors Cerence Inc. Burlington, Massachusetts Opinion on Internal Control over Financial Reporting We have audited Cerence Inc.’s (the “Company’s”) internal control over financial reporting as of September 30, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO criteria”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, 2025, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Company as of September 30, 2025 and 2024, the related consolidated statements of operations and comprehensive loss, consolidated statements of equity, and consolidated cash flows for each of the three years in the period ended September 30, 2025, and the related notes and our report dated November 20, 2025 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Item 9A, Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit of internal control over financial reporting in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ BDO USA, P.C. Boston, Massachusetts November 20, 2025 59 Table of Contents CERENCE INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) Year Ended September 30, 2025 2024 2023 Revenues: License $ 140,625 $ 124,746 $ 145,159 Connected services 53,358 133,444 75,071 Professional services 57,798 73,314 74,245 Total revenues 251,781 331,504 294,475 Cost of revenues: License 6,941 6,060 8,522 Connected services 21,418 24,787 22,995 Professional services 40,286 56,282 63,232 Amortization of intangible assets — 103 414 Total cost of revenues 68,645 87,232 95,163 Gross profit 183,136 244,272 199,312 Operating expenses: Research and development 97,756 121,563 123,333 Sales and marketing 21,815 21,725 27,504 General and administrative 48,770 52,468 57,903 Amortization of intangible assets 1,668 2,203 5,854 Restructuring and other costs, net 15,418 17,077 11,917 Goodwill impairment — 609,172 — Total operating expenses 185,427 824,208 226,511 Loss from operations ( 2,291 ) ( 579,936 ) ( 27,199 ) Interest income 3,853 5,353 4,471 Interest expense ( 10,223 ) ( 12,553 ) ( 14,769 ) Other (expense) income, net ( 160 ) 2,526 1,108 Loss before income taxes ( 8,821 ) ( 584,610 ) ( 36,389 ) Provision for income taxes 9,893 3,468 19,865 Net loss $ ( 18,714 ) $ ( 588,078 ) $ ( 56,254 ) Net loss per share: Basic $ ( 0.43 ) $ ( 14.12 ) $ ( 1.40 ) Diluted $ ( 0.43 ) $ ( 14.12 ) $ ( 1.40 ) Weighted-average common share outstanding: Basic 43,180 41,642 40,215 Diluted 43,180 41,642 40,215 Refer to accompanying Notes to the Consolidated Financial Statements. 60 Table of Contents CERENCE INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (In thousands) Year Ended September 30, 2025 2024 2023 Net loss $ ( 18,714 ) $ ( 588,078 ) $ ( 56,254 ) Other comprehensive income (loss): Foreign currency translation adjustments ( 97 ) 2,343 5,620 Pension adjustments, net 560 ( 539 ) ( 66 ) Unrealized (loss) gain on available-for-sale securities ( 20 ) 250 217 Total other comprehensive income (loss) 443 2,054 5,771 Comprehensive loss $ ( 18,271 ) $ ( 586,024 ) $ ( 50,483 ) Refer to accompanying Notes to the Consolidated Financial Statements. 61 Table of Contents CERENCE INC. CONSOLIDATED BALANCE SHEETS (In thousands, except per share amounts) September 30, 2025 September 30, 2024 ASSETS Current assets: Cash and cash equivalents $ 84,017 $ 121,485 Marketable securities 3,433 5,502 Accounts receivable, net of allowances of $ 68 and $ 1,614 at September 30, 2025 and September 30, 2024, respectively 58,937 62,755 Deferred costs 4,481 5,286 Prepaid expenses and other current assets 39,889 70,481 Total current assets 190,757 265,509 Long-term marketable securities — 3,453 Property and equipment, net 35,761 30,139 Deferred costs 15,501 18,051 Operating lease right of use assets 16,762 12,879 Goodwill 299,003 296,858 Intangible assets, net — 1,706 Deferred tax assets 54,207 51,398 Other assets 18,600 22,365 Total assets $ 630,591 $ 702,358 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 901 $ 3,959 Deferred revenue 51,865 52,822 Short-term operating lease liabilities 4,344 4,528 Short-term debt — 87,094 Accrued expenses and other current liabilities 44,080 68,405 Total current liabilities 101,190 216,808 Long-term debt, net of discounts and issuance costs 199,693 194,812 Deferred revenue, net of current portion 140,021 114,354 Long-term operating lease liabilities 13,083 8,803 Other liabilities 25,928 26,484 Total liabilities 479,915 561,261 Commitments and contingencies (Note 13) Stockholders' Equity: Common stock, $ 0.01 par value, 560,000 shares authorized as of September 30, 2025; 43,374 and 41,924 shares issued and outstanding as of September 30, 2025 and September 30, 2024, respectively 434 419 Accumulated other comprehensive loss ( 25,469 ) ( 25,912 ) Additional paid-in capital 1,116,165 1,088,330 Accumulated deficit ( 940,454 ) ( 921,740 ) Total stockholders' equity 150,676 141,097 Total liabilities and stockholders' equity $ 630,591 $ 702,358 Refer to accompanying Notes to the Consolidated Financial Statements. 62 Table of Contents CERENCE INC. CONSOLIDATED STATEMENTS OF EQUITY (In thousands) Common Stock Shares Amount Additional Paid-In Capital Retained Earnings (Accumulated Deficit) Accumulated Other Comprehensive Income (Loss) Total Balance at September 30, 2022 39,430 $ 394 $ 1,029,542 $ ( 283,249 ) $ ( 33,737 ) $ 712,950 Net loss — — — ( 56,254 ) — ( 56,254 ) Cumulative effect adjustment due to the adoption of ASU 2020-06 — — ( 14,371 ) 5,841 — ( 8,530 ) Other comprehensive income — — — — 5,771 5,771 Issuance of common stock 1,055 11 5,614 — — 5,625 Increase in fair value of conversion option — — 4,054 — — 4,054 Stock withheld to cover tax withholdings requirements upon stock vesting ( 62 ) ( 1 ) ( 4,893 ) — — ( 4,894 ) Stock-based compensation — — 36,153 — — 36,153 Balance at September 30, 2023 40,423 404 1,056,099 ( 333,662 ) ( 27,966 ) 694,875 Net loss — — — ( 588,078 ) — ( 588,078 ) Other comprehensive income — — — — 2,054 2,054 Issuance of common stock 1,502 15 10,886 — — 10,901 Stock withheld to cover tax withholdings requirements upon stock vesting ( 1 ) — ( 9,865 ) — — ( 9,865 ) Stock-based compensation — — 31,210 — — 31,210 Balance at September 30, 2024 41,924 419 1,088,330 ( 921,740 ) ( 25,912 ) 141,097 Net loss — — — ( 18,714 ) - ( 18,714 ) Other comprehensive income — — — — 443 443 Issuance of common stock 1,452 15 2,864 — - 2,879 Stock withheld to cover tax withholdings requirements upon stock vesting ( 2 ) — ( 2,380 ) — — ( 2,380 ) Stock-based compensation — — 27,351 — — 27,351 Balance at September 30, 2025 43,374 $ 434 $ 1,116,165 $ ( 940,454 ) $ ( 25,469 ) $ 150,676 Refer to accompanying Notes to the Consolidated Financial Statements. 63 Table of Contents CERENCE INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year Ended September 30, 2025 2024 2023 Cash flows from operating activities: Net loss $ ( 18,714 ) $ ( 588,078 ) $ ( 56,254 ) Adjustments to reconcile net loss to net cash provided by (used in) operations: Depreciation and amortization 10,549 10,630 16,038 Provision for credit loss reserve 220 3,545 3,626 Stock-based compensation 27,351 23,673 40,766 Non-cash interest expense 5,517 6,060 2,914 (Gain) loss on debt extinguishment ( 327 ) — 1,333 Deferred tax provision (benefit) 241 ( 4,658 ) 7,597 Goodwill impairment — 609,172 — Unrealized foreign currency transaction gain ( 2,561 ) ( 1,454 ) ( 3,393 ) Other, net 2,363 ( 68 ) ( 3,388 ) Changes in operating assets and liabilities: Accounts receivable ( 1,398 ) 11,760 ( 16,964 ) Prepaid expenses and other assets 32,137 ( 12,466 ) 28,192 Deferred costs 3,884 4,801 3,194 Accounts payable ( 3,150 ) ( 12,555 ) 5,774 Accrued expenses and other liabilities ( 18,237 ) 27,874 ( 408 ) Deferred revenue 23,298 ( 61,040 ) ( 21,529 ) Net cash provided by operating activities 61,173 17,196 7,498 Cash flows from investing activities: Capital expenditures ( 14,356 ) ( 4,996 ) ( 5,124 ) Purchases of marketable securities — — ( 18,025 ) Sale and maturities of marketable securities 5,512 11,112 30,324 Other investing activities ( 1,710 ) ( 1,737 ) ( 1,355 ) Net cash (used in) provided by investing activities ( 10,554 ) 4,379 5,820 Cash flows from financing activities: Principal payments of short-term debt ( 87,089 ) — — Proceeds from revolving credit facility — — 24,700 Payments of revolver credit facility — — ( 24,700 ) Proceeds from long-term debt, net of discount — — 210,000 Payments for long-term debt issuance costs — ( 419 ) ( 17,176 ) Principal payments of long-term debt — — ( 198,438 ) Common stock repurchases for tax withholdings for net settlement of equity awards ( 2,380 ) ( 9,865 ) ( 4,894 ) Principal payment of lease liabilities arising from a finance lease ( 411 ) ( 392 ) ( 451 ) Proceeds from the issuance of common stock 2,879 10,901 5,625 Net cash (used in) provided by financing activities ( 87,001 ) 225 ( 5,334 ) Effect of foreign currency exchange rates on cash and cash equivalents ( 1,086 ) ( 1,469 ) ( 1,677 ) Net change in cash and cash equivalents ( 37,468 ) 20,331 6,307 Cash and cash equivalents at beginning of period 121,485 101,154 94,847 Cash and cash equivalents at end of period $ 84,017 $ 121,485 $ 101,154 Supplemental information: Cash paid for income taxes $ 6,706 $ 10,180 $ 11,185 Cash paid for interest $ 5,555 $ 6,028 $ 11,570 Refer to accompanying Notes to the Consolidated Financial Statements. 64 Table of Contents CERENCE INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. Organization History On October 1, 2019, (the “Distribution Date”), Nuance Communications, Inc. (“Nuance” or “the Parent”), a leading provider of speech and language solutions for businesses and consumers around the world, completed the complete legal and structural separation and distribution to its stockholders of all of the outstanding shares of our common stock, and its consolidated subsidiaries, in a tax free spin-off (the “Spin-Off”). The distribution was made in the amount of one share of our common stock for every eight shares of Nuance common stock (the “Distribution”) owned by Nuance’s stockholders as of 5:00 p.m. Eastern Time on September 17, 2019, the record date of the Distribution. In connection with the Distribution, on September 30, 2019, we filed an Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware, which became effective on October 1, 2019. Our Amended and Restated By-laws also became effective on October 1, 2019. On October 2, 2019, our common stock began regular-way trading on the Nasdaq Global Select Market under the ticker symbol CRNC. Business Cerence Inc. (referred to in this Annual Report on Form 10-K as “we,” “our,” “us,” “ourselves,” the “Company” or “Cerence”) is a global, premier provider of AI-powered assistants and innovations for connected and autonomous vehicles. Our customers include nearly all major automobile original equipment manufacturers (“OEMs”), or their tier 1 suppliers worldwide. We deliver our solutions on a white-label basis, enabling our customers to deliver customized virtual assistants with unique, branded personalities and ultimately strengthening the bond between automobile brands and end users. We generate revenue primarily by selling software licenses and cloud-connected services. In addition, we generate professional services revenue from our work with OEMs and suppliers during the design, development and deployment phases of the vehicle model lifecycle and through maintenance and enhancement projects. 2. Summary of Significant Accounting Policies (a) Basis of Presentation The accompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”). The consolidated financial statements reflect all adjustments considered necessary for a fair presentation of the consolidated results of operations and financial position for the fiscal years presented. All such adjustments are of a normal recurring nature. (b) Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company, as well as those of our wholly owned subsidiaries. All significant intercompany transactions and balances are eliminated in consolidation. (c) Use of Estimates The Consolidated Financial Statements are prepared in accordance with GAAP, which requires management to make estimates and assumptions. These estimates, judgments and assumptions can affect the reported amounts in the financial statements and the footnotes thereto. Actual results could differ materially from these estimates. On an ongoing basis, we evaluate our estimates, assumptions and judgments. Significant estimates inherent to the preparation of financial statements include: revenue recognition; the allowances for credit losses; accounting for deferred costs; accounting for internally developed software; the valuation of goodwill and intangible assets; accounting for stock-based compensation; accounting for income taxes; accounting for leases; and loss contingencies. We base our estimates on historical experience, market participant fair value considerations, projected future cash flows, and various other factors that are believed to be reasonable under the circumstances. Actual amounts could differ significantly from these estimates. 65 Table of Contents (d) Revenue Recognition We primarily derive revenue from the following sources: (1) royalty-based software license arrangements, (2) connected services, and (3) professional services. Revenue is reported net of applicable sales and use tax, value-added tax and other transaction taxes imposed on the related transaction including mandatory government charges that are passed through to our customers. We account for a contract when both parties have approved and committed to the contract, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. See Note 3 – Revenue Recognition for additional details. (e) Cash and Cash Equivalents Cash and cash equivalents include cash on hand and highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less. (f) Marketable Securities Marketable securities consist of commercial paper, government securities and corporate bonds. We classify our marketable securities as available-for-sale at the time of purchase and reevaluate such classification as of each balance sheet date. We may sell these securities at any time for use in current operations even if they have not yet reached maturity. We classify our marketable securities as either short-term or long-term based on the nature of each security. We record marketable securities at fair value, with the unrealized gains or losses included within Accumulated other comprehensive loss on the Consolidated Balance Sheets until realized. Interest income earned from our marketable securities is reported within Interest income on the Consolidated Statements of Operations. We evaluate our marketable securities to assess whether those with unrealized loss positions are other than temporarily impaired. We consider impairment to be other than temporary if it is related to deterioration in credit risk or if it is likely we will sell the securities before the recovery of their cost basis. Realized gains and losses and declines in value judged to be other than temporary are determined based on the specific identification method and are reported in Other income (expense), net on the Consolidated Statements of Operations. (g) Inventory Inventory, consisting primarily of finished goods related to our Cerence Link product, is accounted for using the first in, first out method, and is valued at the lower of cost and net realizable value. Inventory is included within Prepaid expenses and other current assets. As of September 30, 2025 and September 30, 2024, inventory was $ 1.1 million and $ 1.0 million, respectively. (h) Goodwill Goodwill represents the excess of the purchase price in a business combination over the fair value of net assets acquired. Goodwill is not amortized but tested annually for impairment or when indicators of impairment are present. The test for goodwill impairment involves a qualitative assessment of impairment indicators. If indicators are present, a quantitative test of impairment is performed. Goodwill impairment, if any, is determined by comparing the reporting unit’s fair value to its carrying value. An impairment loss is recognized in an amount equal to the excess of the reporting unit’s carrying value over its fair value, up to the amount of goodwill allocated to the reporting unit. Goodwill is tested for impairment annually on July 1, the first day of the fourth quarter of the fiscal year. We believe our Chief Executive Officer (“CEO”) is our chief operating decision maker (“CODM”). Our CEO manages the business on a consolidated basis and regularly reviews consolidated financial information for the purposes of making operating decisions, assessing our financial performance and allocating resources. Accordingly, we have concluded that we have one operating segment. For the purpose of testing goodwill for impairment, all goodwill acquired in a business combination is assigned to one or more reporting units. A reporting unit represents an operating segment or a component within an operating segment for which discrete financial information is available and is regularly reviewed by segment management for performance assessment and resource allocation. Components of similar economic characteristics are aggregated into one reporting unit for the purpose of goodwill impairment assessment. Reporting units are identified annually and re-assessed periodically for recent acquisitions or any changes in segment reporting structure. Upon consideration of our components, we have concluded that we have one reporting unit. 66 Table of Contents The fair value of a reporting unit is generally determined using a combination of the income approach and the market approach. For the income approach, fair value is determined based on the present value of estimated future after-tax cash flows, discounted at an appropriate risk-adjusted rate. We use our internal forecasts to estimate future after-tax cash flows and estimate the long-term growth rates based on our most recent views of the long-term outlook for each reporting unit. Actual results may differ from those assumed in our forecasts. We derive our discount rates using a capital asset pricing model and analyzing published rates for industries relevant to our reporting units to estimate the weighted average cost of capital. We adjust the discount rates for the risks and uncertainty inherent in the respective businesses and in our internally developed forecasts. For the market approach, we use a valuation technique in which values are derived based on valuation multiples of comparable publicly traded companies. We assess each valuation methodology based upon the relevance and availability of the data at the time we perform the valuation and weight the methodologies appropriately. On July 1, 2025, we completed the annual impairment testing of our goodwill. We elected to rely on a qualitative assessment and as a result we determined it is more likely than not that the fair value of our reporting unit is greater than its carrying amount. Accordingly, no goodwill impairment was recorded for the fiscal year ended September 30, 2025. At March 31, 2024, we concluded indicators of impairment were present due to the current macroeconomic conditions, including declines in our stock price. The fair value of our reporting unit was determined using a combination of the income approach and the market approach. We weighted the methodologies appropriately to estimate a fair value of approximately $ 463.4 million as of March 31, 2024. The carrying value of our reporting unit exceeded the estimated fair value. Based upon the results of the impairment test, we recorded a goodwill impairment charge of $ 252.1 million during the three months ended March 31, 2024. At June 30, 2024, we concluded indicators of impairment were present due to the current macroeconomic conditions, including declines in our stock price. The fair value of our reporting unit was determined using a combination of the income approach and the market approach. We weighted the methodologies appropriately to estimate a fair value of approximately $ 154.2 million as of June 30, 2024. The carrying value of our reporting unit exceeded the estimated fair value. Based upon the results of the impairment test, we recorded a goodwill impairment charge of $ 357.1 million during the three months ended June 30, 2024. On July 1, 2024, we concluded that a quantitative goodwill impairment test was not necessary as of July 1, 2024, as the June 30, 2024 quantitative analysis was deemed applicable. Based upon the results of the above impairment tests, our goodwill impairment charges total $ 609.2 million on the Consolidated Statement of Operations for the fiscal year ended September 30, 2024. On July 1, 2023, we completed the annual impairment testing of our goodwill. We elected to rely on a qualitative assessment and as a result we determined it is more likely than not that the fair value of our reporting unit is greater than its carrying amount. Due to the update of our multi-year target plan, we concluded that indicators of impairment were present and performed a quantitative impairment test as of September 30, 2023. The fair value of our reporting unit was determined using a combination of the income approach and the market approach. For the income approach, fair value was determined based on the present value of estimated future after-tax cash flows using our multi-year target plan, discounted at an appropriate risk-adjusted rate. For the market approach, we used a valuation technique in which values were derived based on valuation multiples of comparable publicly traded companies. We weighted the methodologies appropriately to estimate a fair value as of September 30, 2023. The estimated fair value exceeded the carrying value. Based upon the results of the impairment test, no goodwill impairment was recorded as of September 30, 2023. (i) Segment Information We operate as one reportable and operating segment in accordance with Accounting Standards Codification (“ASC”) Topic 280, Segment Reporting. Our CODM is our CEO, who manages the business on a consolidated basis and regularly reviews consolidated financial information for the purposes of making operating decisions, assessing our financial performance and allocating resources. No other measures of performance other than our consolidated reporting of Net (loss) income or its components as presented in our consolidated financial statements herein are regularly reviewed by the CODM for the purpose of making operating decisions, assessing financial performance or allocating resources. 67 Table of Contents (j) Long-Lived Assets with Definite Lives Our long-lived assets consist principally of technology and patents, customer relationships, internally developed software, property and equipment. Customer relationships are amortized over their estimated economic lives based on the pattern of economic benefits expected to be generated from the use of the asset. Other definite-lived assets are amortized over their estimated economic lives using the straight-line method. The remaining useful lives of long-lived assets are re-assessed periodically for any events and circumstances that may change the future cash flows expected to be generated from the long-lived asset or asset group. Internally developed software consists of capitalized costs incurred during the application development stage, which include costs to design the software configuration and interfaces, coding, installation and testing. Costs incurred during the preliminary project stage, along with post-implementation stages of internally developed software, are expensed as incurred. Internally developed software costs that have been capitalized are typically amortized over the estimated useful life, commencing with the date when an asset is ready for its intended use. Equipment is stated at cost and depreciated over the estimated useful life. Leasehold improvements are depreciated over the shorter of the related remaining lease term or the estimated useful life. Depreciation is computed using the straight-line method. Repair and maintenance costs are expensed as incurred. The cost and related accumulated depreciation of sold or retired assets are removed from the accounts and any gain or loss is included in the results of operations for the period. Long-lived assets with definite lives are tested for impairment whenever events or changes in circumstances indicate the carrying value of a specific asset or asset group may not be recoverable. We assess the recoverability of long-lived assets with definite lives at the asset group level. Asset groups are determined based upon the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. When the asset group is also a reporting unit, goodwill assigned to the reporting unit is also included in the carrying amount of the asset group. For the purpose of the recoverability test, we compare the total undiscounted future cash flows from the use and disposition of the assets with its net carrying amount. When the carrying value of the asset group exceeds the undiscounted future cash flows, the asset group is deemed to be impaired. The amount of the impairment loss represents the excess of the asset or asset group’s carrying value over its estimated fair value, which is generally determined based upon the present value of estimated future pre-tax cash flows that a market participant would expect from use and disposition of the long-lived asset or asset group. There was no impairment of long-lived assets during the years ended September 30, 2025, 2024, and 2023. (k) Allowance for Credit Losses We are exposed to credit losses primarily through our sales of software licenses and services to customers. We determine credit ratings for each customer in our portfolio based upon public information and information obtained directly from our customers. A credit limit for each customer is established and in certain cases we may require collateral or prepayment to mitigate credit risk. Our expected loss methodology is developed using historical collection experience, current customer credit information, current and future economic and market conditions and a review of the current status of the customer's account balances. We monitor our ongoing credit exposure through reviews of customer balances against contract terms and due dates, current economic conditions, and dispute resolution. Estimated credit losses are written off in the period in which the financial asset is no longer collectible. The change in the allowance for credit losses for the fiscal year ended September 30, 2025, 2024, and 2023 is as follows (dollars in thousands): 68 Table of Contents Allowance for Credit Losses Balance as of September 30, 2022 $ 371 Credit loss provision 3,626 Foreign exchange impact on ending balance 134 Balance as of September 30, 2023 4,131 Credit loss provision 3,545 Write-offs, net of recoveries ( 6,073 ) Foreign exchange impact on ending balance 11 Balance as of September 30, 2024 1,614 Credit loss provision 220 Write-offs, net of recoveries ( 1,758 ) Foreign exchange impact on ending balance ( 8 ) Balance as of September 30, 2025 $ 68 (l) Research and Development Research and development (“R&D”) costs related to software that is or will be sold or licensed externally to third-parties, or for which a substantive plan exists to sell or license such software in the future, incurred subsequent to the establishment of technological feasibility, but prior to the general release of the product, are capitalized and amortized to cost of revenue over the estimated useful life of the related products. We have determined that technological feasibility is reached shortly before the general release of the software products. Costs incurred after technological feasibility is established have not been material. R&D costs are otherwise expensed as incurred. (m) Income Taxes We account for income taxes using the assets and liabilities method, as prescribed by ASC No. 740, Income Taxes , or ASC 740. Deferred Taxes Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amount of assets and liabilities and their respective tax bases. The method also requires the recognition of future tax benefits such as net operating loss carryforwards, to the extent that realization of such benefits is more likely than not after consideration of all available evidence. As the income tax returns are not due and filed until after the completion of our annual financial reporting requirements, the amounts recorded for the current period reflect estimates for the tax-based activity for the period. In addition, estimates are often required with respect to, among other things, the appropriate state and foreign income tax rates to use, the potential utilization of operating loss carry-forwards and valuation allowance required, if any, for tax assets that may not be realizable in the future. Tax laws and tax rates vary substantially in these jurisdictions and are subject to change given the political and economic climate. We report and pay income tax based on operational results and applicable law. Our tax provision contemplates tax rates currently enacted to determine both our current and deferred tax positions. Any significant fluctuations in rates or changes in tax laws could cause our estimates of taxes we anticipate either paying or recovering in the future to change. Such changes could lead to either increases or decreases in our effective tax rates. We have historically estimated the future tax consequences of certain items, including accruals that cannot be deducted for income tax purposes until such expenses are paid or the related assets are disposed. We believe the procedures and estimates used in our accounting for income taxes are reasonable and in accordance with established tax law. The income tax estimates used have not resulted in material adjustments to income tax expense in subsequent period when the estimates are adjusted to the actual filed tax return amounts. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be recovered or settled. With respect to earnings expected to be indefinitely reinvested offshore, we do not accrue tax for the repatriations of such foreign earnings. 69 Table of Contents Valuation Allowance We regularly review our deferred tax assets for recoverability considering historical profitability, projected future taxable income, the expected timing of the reversals of existing temporary differences and tax planning strategies. In assessing the need for a valuation allowance, we consider both positive and negative evidence related to the likelihood of realization of the deferred tax assets. The weight given to the positive and negative evidence is commensurate with the extent to which the evidence may be objectively verified. If positive evidence regarding projected future taxable income, exclusive of reversing taxable temporary differences, existed it would be difficult for it to outweigh objective negative evidence of recent financial reporting losses. Uncertain Tax Positions We operate in multiple jurisdictions through wholly owned subsidiaries and our global structure is complex. The estimates of our uncertain tax positions involve judgments and assessment of the potential tax implications related to legal entity restructuring, intercompany transfers and acquisitions or divestitures. We recognize tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. Our tax positions are subject to audit by taxing authorities across multiple global jurisdictions and the resolution of such audits may span multiple years. Tax laws are complex and often subject to varied interpretations, accordingly, the ultimate outcome with respect to taxes we may owe may differ from the amounts recognized. (n) Accumulated Other Comprehensive Loss The components of accumulated other comprehensive loss, reflected in the Consolidated Statements of Equity, consists of the following (dollars in thousands): September 30, 2025 2024 Foreign currency translation adjustments $ ( 26,026 ) $ ( 25,932 ) Net unrealized gains (losses) on post-retirement benefits 549 ( 11 ) Net unrealized gains on available-for-sale securities 8 31 Accumulated other comprehensive loss $ ( 25,469 ) $ ( 25,912 ) No income tax provisions or benefits are recorded for foreign currency translation adjustments as the undistributed earnings in our foreign subsidiaries are expected to be indefinitely reinvested. (o) Concentration of Risk Financial instruments that potentially subject us to significant concentrations of credit risk primarily consist of trade accounts receivable. We perform ongoing credit evaluations of our customers’ financial condition and limit the amount of credit extended when deemed appropriate. One customer accounted for 11.3 % of our Accounts receivable, net balance at September 30, 2025. One customer accounted for 21.4 % of our Accounts receivable, net balance at September 30, 2024. (p) Foreign Currency Translation The functional currency of a foreign subsidiary is generally the local currency. We translate the financial statements of foreign subsidiaries to U.S. dollars using month-end exchange rates for assets and liabilities, and average rates for the reporting period for revenues, costs, and expenses. We record translation gains and losses in Accumulated other comprehensive loss as a component of stockholders’ equity. We record net foreign exchange transaction gains and losses resulting from the conversion of the transaction currency to the functional currency within Other (expense) income, net. Foreign currency transaction (gains) losses for the fiscal years ended September 30, 2025, 2024 and 2023 were $( 1.6 ) million, $( 1.8 ) million, and $ 2.3 million, respectively. (q) Stock-Based Compensation Stock-based compensation primarily consists of restricted stock units with service or market/performance conditions. Equity awards are measured at the fair market value of the underlying stock at the grant date. We recognize 70 Table of Contents stock compensation expense using the straight-line attribution method over the requisite service period. We record forfeitures as they occur. For performance-based restricted stock units, the compensation cost is recognized based on the number of units expected to vest upon the achievement of the performance conditions. Shares are issued on the vesting dates net of the applicable statutory tax withholding to be paid by us on behalf of our employees. As a result, fewer shares are issued to the employee than the number of awards outstanding. We record a liability for the tax withholding to be paid by us as a reduction to Additional paid-in capital. We record any income tax effect related to stock-based awards through the Consolidated Statements of Operations. Excess tax benefits are recognized as deferred tax assets upon settlement and are subject to regular review for valuation allowance, when applicable. (r) Leases We have entered into a number of facility and equipment leases which qualify as operating leases under GAAP. We also have a limited number of equipment leases that qualify as financing leases. We determine if contracts with vendors represent a lease or have a lease component under GAAP at contract inception. Our leases have remaining terms ranging from less than one year to six years . Some of our leases include options to extend or terminate the lease prior to the end of the agreed upon lease term. For purposes of calculating lease liabilities, lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise such options. Operating lease right of use assets and liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the lease commencement date. As our leases generally do not provide an implicit rate, we use an estimated incremental borrowing rate in determining the present value of future payments. The incremental borrowing rate represents an estimate of the interest rate we would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease within a particular location and currency environment. Operating leases are included in Operating lease right of use assets, Short-term operating lease liabilities, and Long-term operating lease liabilities on our Consolidated Balance Sheets as of September 30, 2025 and 2024. Finance leases are included in Property and equipment, net, Accrued expenses and other current liabilities, and Other liabilities on our Consolidated Balance Sheets as of September 30, 2025 and 2024. Lease costs for minimum lease payments is recognized on a straight-line basis over the lease term. For operating leases, costs are included within Cost of revenues, Research and development, Sales and marketing, and General and administrative lines on the Consolidated Statements of Operations. For financing leases, amortization of the finance right of use assets is included within Research and Development, Sales and marketing, and General and administrative lines on the Consolidated Statements of Operations, and interest expense is included within Interest expense. For operating leases, the related cash payments are included in the operating cash flows on the Consolidated Statements of Cash Flows. For financing leases, the related cash payments for the principal portion of the lease liability are included in the financing cash flows on the Consolidated Statement of Cash Flows and the related cash payments for the interest portion of the lease liability are included within the operating section of the Consolidated Statement of Cash Flows. (s) Convertible Debt In accordance with ASU 2020-06, we record our convertible debt at face value less unamortized issuance costs. Issuance costs are amortized to Interest expense in our Consolidated Statements of Operations using the effective interest method over the contractual term of the convertible debt. We assess the short-term and long-term classification of our convertible debt on each balance sheet date. Whenever the holders have a contractual right to convert, the carrying amount of the convertible debt is reclassified to current liabilities. Prior to the adoption of ASU 2020-06: (i) we bifurcate the debt and equity (the contingently convertible feature) components of our convertible debt instruments in a manner that reflects our nonconvertible debt borrowing rate at the time of issuance; (ii) the equity components of our convertible debt instruments were recorded within stockholders’ equity with an allocated issuance premium or discount; (iii) the debt issuance premium or discount was amortized to Interest expense in our Consolidated Statements of Operations using the effective interest method over the contractual term of the convertible debt. We assess the short-term and long-term classification of our convertible debt on each balance sheet date. Whenever the holders have a contractual right to convert, the carrying amount of the convertible debt is reclassified to current liabilities, with the corresponding equity component classified from additional paid-in capital to mezzanine equity, as needed. 71 Table of Contents (t) Net Loss Per Share Basic net loss per share is computed using the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed using the weighted-average number of common shares, giving effect to potentially dilutive securities outstanding during the period. Potentially dilutive securities consist of restricted stock units, contingently issuable shares, and potential issuance of stock upon conversion of our Notes, as more fully described in Note 17. The dilutive effect of the Notes is reflected in net loss per share by application of the “if-converted” method. The “if-converted” method is only assumed in periods where such application would be dilutive. In applying the “if-converted” method for diluted net loss per share, we would assume conversion of the Notes at the respective ratio as further described in Note 17. Assumed converted shares of our common stock are weighted for the period the Notes were outstanding. (u) Recently Adopted Accounting Standards In November 2023, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”), which requires enhanced disclosures of segment information on an annual and interim basis. We adopted this standard during the fiscal year ended September 30, 2025. Refer to Note 2, (i) Segment information, for additional segment reporting information. (v) 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 will not have a significant impact on our consolidated financial position, results of operations or cash flows, or do not apply to our operations. In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which requires greater disaggregation of income tax disclosures related to the income tax rate reconciliation and income taxes paid and is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued. The amendments should be applied on a prospective basis although retrospective application is permitted. We are currently in the process of evaluating the effects of this pronouncement on our consolidated financial statements and disclosures. In November 2024, the FASB issued ASU 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” (“ASU 2024-03”), which requires disclosure about the types of costs and expenses included in certain expense captions presented on the income statement. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted, and may be applied either prospectively or retrospectively. We are currently evaluating this pronouncement to determine its impact on our disclosures. In July 2025, the FASB issued ASU 2025-05, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (ASU 2025-05)", which introduces targeted relief to reduce complexity and cost when estimating expected credit losses for current accounts receivable and current contract assets arising from revenue transactions accounted for under Topic 606. Currently, guidance requires entities to incorporate macroeconomic forecasts in determining expected credit loss estimates. The current provision provides relief for these aforementioned credit losses by utilizing a practical expedient available to all entities, allowing an entity to assume that current conditions as of the balance sheet date remain unchanged over the remaining life of an asset; assuming they develop reasonable and supportable forecasts as part of estimating expected credit losses. This removes the requirement to rely on macroeconomic forecasts. Additionally, if selected, an accounting policy election permits eligible entities to consider post-balance sheet collection activity when estimating expected credit losses. This will be effective for fiscal years starting after December 15, 2025, with early adoption permissible on a prospective basis. We are currently evaluating this pronouncement to determine its impact on our disclosures. In September 2025, the FASB issued ASU 2025-06, "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software", which removes all references to prescriptive and sequential software development stages. It will now require entities to start capitalizing software cost when management has authorized and committed to funding the software project and it is probable that the project will be completed and the software will be used to perform the function intended. The standard also specifies that the disclosures in "Subtopic 360-10, Property Plant, and Equipment" are required for all capitalized internal-use software 72 Table of Contents costs. This will be effective for fiscal years starting after December 15, 2027, with early adoption permissible on a prospective basis. We are currently evaluating this pronouncement to determine its impact on our disclosures. 3. Revenue Recognition We primarily derive revenue from the following sources: (1) royalty-based software or intellectual property “IP” license arrangements, (2) connected services, and (3) professional services. Revenue is reported net of applicable sales and use tax, value-added tax and other transaction taxes imposed on the related transaction including mandatory government charges that are passed through to our customers. We account for a contract when both parties have approved and committed to the contract, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. Our arrangements with customers may contain multiple products and services. We account for individual products and services separately if they are distinct—that is, if a product or service is separately identifiable from other items in the contract and if a customer can benefit from it on its own or with other resources that are readily available to the customer. We recognize revenue after applying the following five steps for arrangements with customers within the scope of ASC 606: • 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, when possible. Since prices vary from customer to customer based on customer relationship, volume discount and contract type, in instances where the SSP is not directly observable, we estimate SSP by considering a number of data points, including cost of developing and supplying each performance obligation; types of offerings; and gross margin objectives and pricing practices, such as contractually stated prices, discounts offered, and applicable price lists. We only include estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. When allocating the transaction price under ASC 606, estimates related to variable consideration, which are typically related to usage-based volume estimates, are evaluated based on various assessments such as historical data, current market conditions and other relevant factors. Other forms of contingent revenue or variable consideration are infrequent. Revenue is recognized when control of these product or services are transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those products or services. We assess the timing of the transfer of products or services to the customer as compared to the timing of payments to determine whether a significant financing component exists. In accordance with the practical expedient in ASC 606-10-32-18, we do not assess the existence of a significant financing component when the difference between payment and transfer of deliverables is a year or less. If the difference in timing arises for reasons other than the provision of finance to either the customer or us, no financing component is deemed to exist. The primary purpose of our invoicing terms is to provide customers with simplified and predictable ways of purchasing our services, not to receive or provide financing from or to customers. We do not consider set-up fees nor other upfront fees paid by our customers to represent a financing component. Reimbursements for out-of-pocket costs generally include, but are not limited to, costs related to transportation, lodging and meals. When applicable, revenue from reimbursed out-of-pocket costs is accounted for as variable consideration. 73 Table of Contents (a) Performance Obligations Licenses Embedded software and technology licenses operate without access to external networks and information. Embedded licenses sold with non-distinct professional services to customize and/or integrate the underlying software and technology are accounted for as a combined performance obligation. Revenue from the combined performance obligation is recognized over time based upon the progress towards completion of the project, which is measured based on the labor hours already incurred to date as compared to the total estimated labor hours. Revenue from distinct embedded software and technology 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 and technology is made available to the customer and control is transferred. For income statement presentation purposes, we separate distinct embedded license revenue from professional services revenue by allocating the transaction price based on their relative SSPs. Revenue from embedded software and technology licenses sold on a royalty basis, where the license of non-exclusive intellectual property is the predominant item to which the royalty relates, is recognized in the period the usage occurs in accordance with ASC 606-10-55-65(A). For royalty arrangements that include fixed consideration related to usage guarantees, the fixed consideration is recognized when the software is made available to the customer. Connected Services Connected services, which allow our customers to use the hosted software over the contract period without taking possession of the software, are provided on a usage basis as consumed or on a fixed fee subscription basis. Our connected services contract terms generally range from one to five years . As each day of providing services is substantially the same and the customer simultaneously receives and consumes the benefits as access is provided, we have determined that our usage basis connected services arrangements are a single performance obligation comprised of a series of distinct services. These services include variable consideration, typically a function of usage. We recognize revenue as each distinct service period is performed (i.e., recognized as incurred). Fixed fee subscription basis revenue represents a single promise to stand-ready to provide access to our connected services. We recognize revenue over time on a ratable basis over the respective hosting subscription term. Our connected service arrangements generally include services to develop, customize, and stand-up applications for each customer. In determining whether these services are distinct, we consider the dependence of the cloud service on the up-front development and stand-up, as well as availability of the services from other vendors. We have concluded that the up-front development, stand-up and customization services are not distinct performance obligations, and as such, revenue for these activities is recognized over the period during which the cloud-connected services are provided, and is included within Connected services revenue. There can be instances where the customer purchases a software license that allows them to take possession of the software to enable hosting by the customer or a third-party. For such arrangements, the performance obligation of the license is completed at a point in time once the customer takes possession of the software. Professional Services Revenue from distinct professional services, including training, is recognized over time based upon the progress towards completion of the project, which is measured based on the labor hours already incurred to date as compared to the total estimated labor hours. (b) Significant Judgments Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. Our license contracts often include professional services to customize and/or integrate the licenses into the customer’s environment. Judgment is required to determine whether the license is considered distinct and accounted for separately, or not distinct and accounted for together with professional services. Furthermore, hybrid contracts that contain both embedded and connected license and professional 74 Table of Contents services are analyzed to determine if the products and services are distinct or have stand-alone functionality to determine the revenue treatment. We allocate the transaction price of the arrangement based on the relative estimated SSP of each distinct performance obligation. Judgment is required to determine the SSP for each distinct performance obligation. In determining SSP, we maximize observable inputs, when possible. Since our prices vary from customer to customer based on customer relationship, volume discount and contract type, there are instances where the SSP is not directly observable. In such instances, we estimate SSP by considering a number of data points, including cost of developing and supplying each performance obligation; types of offerings; and gross margin objectives and pricing practices, such as contractually stated prices, discounts offered, and applicable price lists. These factors may vary over time, depending upon the unique facts and circumstances related to each deliverable. We review the SSP for each distinct performance obligation on a periodic basis, or when the underlying factors are deemed to have changed, and make updates when appropriate. (c) Disaggregated Revenue Revenues, classified by the major geographic region in which our customers are located, for the fiscal years ended September 30, 2025, 2024 and 2023 (dollars in thousands): Year Ended September 30, 2025 2024 2023 Revenues: United States $ 38,718 $ 139,441 $ 87,120 Other Americas 1,292 623 244 Germany 79,229 94,050 87,211 Other Europe, Middle East and Africa 27,094 18,018 15,603 Japan 37,415 42,466 40,122 Other Asia-Pacific 68,033 36,906 64,175 Total net revenues $ 251,781 $ 331,504 $ 294,475 Revenues relating to two customers accounted for $ 32.1 million, or 12.7 %, and $ 25.8 million, or 10.3 % of total net revenues for the fiscal year ended September 30, 2025. Revenues relating to one customer accounted for $ 84.2 million, or 25.4 % of total net revenues for the fiscal year ended September 30, 2024. Revenues relating to one customer accounted for $ 42.1 million, or 14.3 %, of total net revenues for the fiscal year ended September 30, 2023. (d) Contract Acquisition Costs Capitalized costs primarily relate to paid commissions. In accordance with the practical expedient in ASC 606-10-10-4, we apply a portfolio approach to estimate contract acquisition costs for groups of customer contracts. We elect to apply the practical expedient in ASC 340-40-25-4 and will expense contract acquisition costs as incurred where the expected period of benefit is one year or less. Contract acquisition costs are deferred and amortized on a straight-line basis over the period of benefit, which we have estimated to be, on average, between one and eight years . The period of benefit was determined based on an average customer contract term, expected contract renewals, changes in technology and our ability to retain customers, including canceled contracts. We assess the amortization term for all major transactions based on specific facts and circumstances. Contract acquisition costs are classified as current or noncurrent assets based on when the expense will be recognized. The current and noncurrent portions of contract acquisition costs are included in Prepaid expenses and other current assets, and in Other assets, respectively. As of September 30, 2025 and 2024, we had $ 5.3 million and $ 7.1 million of contract acquisition costs. We had amortization expense of $ 2.3 million, $ 3.8 million and $ 3.8 million related to these costs during the fiscal years ended September 30, 2025, 2024 and 2023, respectively. There was no impairment related to contract acquisition costs. (e) Capitalized Contract Costs We capitalize incremental costs incurred to fulfill our contracts that (i) relate directly to the contract, (ii) are expected to generate resources that will be used to satisfy our performance obligation under the contract, and (iii) are 75 Table of Contents expected to be recovered through revenue generated under the contract. Our capitalized costs consist primarily of setup costs, such as costs to standup, customize and develop applications for each customer, which are incurred to satisfy our stand-ready obligation to provide access to our connected offerings. These contract costs are expensed to cost of revenue as we satisfy our stand-ready obligation over the contract term which we estimate to be between one and eight years , on average. The contract term was determined based on an average customer contract term, expected contract renewals, changes in technology, and our ability to retain customers, including canceled contracts. We classify these costs as current or noncurrent based on the timing of when we expect to recognize the expense. The current and noncurrent portions of capitalized contract fulfillment costs are presented as Deferred costs. We had amortization expense of $ 6.0 million, $ 8.9 million and $ 9.9 million related to these costs during the fiscal years ended September 30, 2025, 2024 and 2023, respectively. There was no impairment related to contract costs capitalized. (f) Trade Accounts Receivable and Contract Balances We classify our right to consideration in exchange for deliverables as either a receivable or a contract asset. A receivable is a right to consideration that is unconditional (i.e. only the passage of time is required before payment is due). We present such receivables in Accounts receivable, net in our Consolidated Balance Sheets at their net estimated realizable value. Accounts receivable, net as of September 30, 2025, 2024, and 2023 were $ 58.9 million, $ 62.8 million, and $ 61.3 million. We maintain an allowance for credit losses to provide for the estimated amount of receivables and contract assets that may not be collected. 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, respectively. The table below shows significant changes in contract assets (dollars in thousands): Contract assets Balance as of September 30, 2023 $ 56,708 Revenues recognized but not billed 33,037 Amounts reclassified to accounts receivable, net ( 63,073 ) Write-off of contract assets ( 5,995 ) Foreign exchange impact on ending balance 1,542 Balance as of September 30, 2024 22,219 Revenues recognized but not billed 28,448 Amounts reclassified to accounts receivable, net ( 36,511 ) Foreign exchange impact on ending balance ( 178 ) Balance as of September 30, 2025 $ 13,978 During the fiscal year ended September 30, 2024, we recorded a $ 6.1 million provision relating to the bankruptcy of one fitness equipment manufacturer, of which $ 6.0 million relates to a contract asset and $ 0.1 million relates to a trade receivable. Our contract liabilities, which we present as deferred revenue, consist of advance payments and billings in excess of revenues recognized. We classify deferred revenue as current or noncurrent based on when we expect to recognize the revenues. The table below shows significant changes in deferred revenue (dollars in thousands): 76 Table of Contents Deferred revenue Balance as of September 30, 2023 $ 222,599 Amounts billed but not recognized 109,201 Revenue recognized ( 169,970 ) Foreign exchange impact on ending balance 5,346 Balance as of September 30, 2024 167,176 Amounts billed but not recognized 99,644 Revenue recognized ( 81,004 ) Foreign exchange impact on ending balance 6,070 Balance as of September 30, 2025 $ 191,886 (g) Remaining Performance Obligations The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied at September 30, 2025 (dollars in thousands): Within One Year Two to Five years Greater than Five Years Total Total revenue $ 79,552 $ 85,649 $ 58,320 $ 223,521 The table above includes fixed remaining performance obligations and does not include contingent usage-based activities, such as royalties and usage-based connected services. On October 31, 2023, we entered into an early termination agreement relating to a legacy contract acquired by Nuance through a 2013 acquisition. Previously the term of the contract ended on December 31, 2025, whereas the agreement signed on October 31, 2023, updated the termination date to December 31, 2023. There was no cash flow associated with this legacy contract. The effect of this change was to accelerate $ 67.8 million of deferred revenue into fiscal year 2024. We provided services to a separate customer, who in turn provided services to our legacy customer. Our customer terminated services on October 31, 2023. There was no cash flow associated with this contract. The effect of this termination was to accelerate $ 9.9 million of deferred revenue into fiscal year 2024. 4. Earnings Per Share Basic earnings per share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing net loss 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 is reflected in diluted net loss per share by applying the treasury stock method. The dilutive effect of the Notes (as defined in Note 17) is reflected in net loss per share by application of the “if-converted” method. The “if-converted” method is only assumed in periods where such application would be dilutive. In applying the “if-converted” method for diluted net loss per share, we would assume conversion of the Notes at the respective conversion ratio as further described in Note 17. Assumed converted shares of our common stock are weighted for the period the Notes were outstanding. 77 Table of Contents The following table presents the reconciliation of the numerator and denominator for calculating net loss per share: September 30, in thousands, except per share data 2025 2024 2023 Numerator: Net loss $ ( 18,714 ) $ ( 588,078 ) $ ( 56,254 ) Denominator: Weighted average common shares outstanding - basic and diluted 43,180 41,642 40,215 Net loss per common share: Basic $ ( 0.43 ) $ ( 14.12 ) $ ( 1.40 ) Diluted $ ( 0.43 ) $ ( 14.12 ) $ ( 1.40 ) We exclude weighted-average potentially issuable shares from the calculations of diluted net loss per share during the applicable periods because their inclusion would have been anti-dilutive. The following table sets forth potential shares that were considered anti-dilutive for the fiscal years ended September 30, 2025, 2024 and 2023: Year Ended September 30, in thousands 2025 2024 2023 Restricted stock awards 981 — 273 Contingently issuable stock awards 384 232 150 Conversion option of our Notes 6,401 7,495 5,402 5. 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 fair value measurements for assets and liabilities 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 in pricing the asset or liability. The classification of a financial asset or liability within the hierarchy is based upon the lowest level input that is significant to the fair value measurement as of the measurement date as follows: • Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities. • Level 2 - Inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the assets or liabilities. • Level 3 - Unobservable inputs that are supported by little or no market activity. The following table presents information about our financial assets that are measured at fair value and indicates the fair value hierarchy of the valuation inputs used (dollars in thousands) as of: 78 Table of Contents September 30, 2025 Fair Value Cash and Cash Equivalents Marketable Securities Level 1: Money market funds $ 20,898 at cost (a) $ 20,898 $ 20,898 $ — Level I Government Securities $ 1,003 at cost (b) 1,006 — $ 1,006 Corporate bonds, $ 2,017 at cost (b) 2,022 — 2,022 Level 2: Level II Government securities $ 405 at cost (b) 405 — 405 Time deposits, $ 3,040 at cost (a) 3,040 3,040 — Convertible debt, $ 0 at cost (c) 770 — — Total assets $ 28,141 $ 23,938 $ 3,433 September 30, 2024 Fair Value Cash and Cash Equivalents Marketable Securities Level 1: Money market funds $ 77,785 at cost (a) $ 77,785 $ 77,785 $ — Level 2: Government securities $ 3,940 at cost (b) 3,950 — 3,950 Time deposits, $ 3,700 at cost (a) 3,700 3,700 — Corporate bonds, $ 4,984 at cost (b) 5,005 — 5,005 Convertible debt, $ 2,000 at cost (c) 3,099 — — Total assets $ 93,539 $ 81,485 $ 8,955 (a) Money market funds and other highly liquid investments with original maturities of 90 days or less are included within Cash and cash equivalents in the Consolidated Balance Sheets. (b) Government securities, commercial paper and corporate bonds with original maturities greater than 90 days are included within Marketable securities in the Consolidated Balance Sheets and classified as current or noncurrent based upon whether the maturity of the financial asset is less than or greater than 12 months. (c) Debt securities are classified as current or long-term within the Consolidated Balance Sheet based upon whether the maturity of the financial asset is less than or greater than 12 months. During the fiscal years ended September 30, 2025, 2024, and 2023, we recorded unrealized gains related to our marketable securities of less than $ 0.1 million, $ 0.3 million, and $ 0.2 million, respectively, within Accumulated other comprehensive loss. During the year ended September 30, 2025, in the course of our periodic review of our investments, we observed a deterioration in the market conditions with respect to a single investment in convertible notes. Accordingly, we performed a fair value assessment of our investment in the convertible notes, resulting in a write down of $ 2.4 million, recognized in other (expense) income, net. The carrying amounts of certain financial instruments, including cash held in banks, accounts receivable, and accounts payable, approximate fair value due to their short-term maturities and are excluded from the fair value tables above. Derivative financial instruments are recognized at fair value using quoted forward rates and prices and classified within Level 2 of the fair value hierarchy. See Note 6 – Derivative Financial Instruments for additional details. Long-term debt The estimated fair value of our Long-term debt is determined by Level 1 inputs and is based on observable market data including prices for similar instruments. As of September 30, 2025 and 2024, the estimated fair value of our Notes was $ 174.2 million and $ 184.8 million, respectively. The Notes are recorded at face value less unamortized debt discount and transaction costs on our Consolidated Balance Sheets. The carrying amount of the Senior Credit Facilities (as defined in Note 17) approximates fair value given the underlying interest rate applied to such amounts outstanding is currently set to the prevailing market rate. 79 Table of Contents Assets and Liabilities Measured at Fair Value on a Non-recurring Basis We measure certain assets at fair value on a non-recurring basis, primarily goodwill, intangible assets, and long-lived assets. These assets were initially measured and recognized at amounts equal to the fair value determined as of the date of acquisition or purchase and are subject to changes in value only for foreign currency translation and impairment. See Note 2 - Summary of Significant Accounting Policies for additional information on impairment assessments and related Level 3 inputs for goodwill, indefinite-lived intangible assets and long-lived assets. Equity securities We have a non-controlling equity investment in a privately held company. We evaluated the equity investment under the voting model and concluded consolidation was not applicable. We accounted for the investment by electing the measurement alternative for investments without readily determinable fair values. The non-marketable equity investment is carried at cost less any impairment, plus or minus adjustments resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer, which is recorded within the Consolidated Statements of Operations. Investments without readily determinable fair values were $ 2.6 million and $ 2.6 million as of September 30, 2025 and 2024, respectively. These investments are included within Other assets on the Consolidated Balance Sheets. Impairment related to investments without readily determinable fair values was $ 0.5 million during the fiscal year ended September 30, 2023. No impairment was recorded for the fiscal years ended September 2025 and 2024. 6. Derivative Financial Instruments We operate internationally and, in the normal course of business, are exposed to fluctuations in foreign currency exchange rates related to third-party vendor and intercompany payments for goods and services within our non-U.S. subsidiaries. We use foreign exchange forward contracts that are not designated as hedges to manage currency risk. The contracts can have maturities up to three years . As of September 30, 2025 and 2024, the total notional amount of forward contracts was $ 16.7 million and $ 59.1 million, respectively. As of September 30, 2025 and 2024, the weighted-average remaining maturity of these instruments was approximately 6.0 and 9.9 months, respectively. The following table summarizes the fair value and presentation in the Consolidated Balance Sheets for derivative instruments as of September 30, 2025 and 2024 (dollars in thousands): Fair Value Derivatives not designated as hedges Classification September 30, 2025 September 30, 2024 Foreign currency forward contracts Prepaid expenses and other current assets $ 16 $ 65 Foreign currency forward contracts Other assets — 68 Foreign currency forward contracts Accrued expenses and other current liabilities 974 691 Foreign currency forward contracts Other liabilities 97 163 The following tables display a summary of the loss related to foreign currency forward contracts within the Consolidated Statements of Operations for the fiscal years ended September 30, 2025, 2024 and 2023 (dollars in thousand): Loss recognized in earnings Year Ended September 30, Derivatives not designated as hedges Classification 2025 2024 2023 Foreign currency forward contracts Other income, net $ ( 1,321 ) $ ( 1,062 ) $ ( 2,492 ) 7. Goodwill and Intangible Assets (a) Goodwill For the fiscal year ended September 30, 2025, we recorded a non-cash out-of-period adjustment resulting in an increase of $ 3.8 million to deferred tax assets to correct an error related to a prior period, with an offset to goodwill shown as an adjustment. See Note 16 – Income Taxes for additional details. The changes in the carrying amount of goodwill for the fiscal years ended September 30, 2025 and 2024 were as follows (dollars in thousands): 80 Table of Contents Total Balance as of September 30, 2023 $ 900,342 Goodwill impairment ( 609,172 ) Effect of foreign currency translation 5,688 Balance as of September 30, 2024 296,858 Effect of foreign currency translation 5,934 Goodwill adjustment ( 3,789 ) Balance as of September 30, 2025 $ 299,003 (b) Intangible Assets, Net The following tables summarizes the gross carrying amounts and accumulated amortization of intangible assets by major class (dollars in thousands): September 30, 2025 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted Average Remaining Life (Years) Customer relationships $ 110,236 $ ( 110,236 ) $ — 0 Technology and patents 90,502 ( 90,502 ) — 0 Total $ 200,738 $ ( 200,738 ) $ — September 30, 2024 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted Average Remaining Life (Years) Customer relationships $ 108,659 $ ( 106,953 ) $ 1,706 0.5 Technology and patents 90,042 ( 90,042 ) — 0 Total $ 198,701 $ ( 196,995 ) $ 1,706 Amortization expense related to intangible assets in the aggregate amounted to $ 1.7 million, $ 2.3 million, and $ 6.3 million for the fiscal years ended September 30, 2025, 2024, and 2023, respectively, in the accompanying Consolidated Statements of Operations. As of September 30, 2025, our intangible assets were fully amortized. 8. Property and Equipment, Net Property and equipment, net consisted of the following (dollars in thousands): Useful Life September 30, (In years) 2025 2024 Machinery and equipment 3 - 5 $ 14,952 $ 14,297 Computers, software and equipment 3 - 5 64,874 65,748 Leasehold improvements 2 - 15 5,610 9,457 Furniture and fixtures 5 - 7 2,736 3,646 Finance leases 3,424 3,428 Construction in progress 8,218 1,090 Subtotal 99,814 97,666 Less: accumulated depreciation ( 64,053 ) ( 67,527 ) Total $ 35,761 $ 30,139 As of September 30, 2025 and 2024, the net book value of capitalized internal-use software costs was $ 14.7 million and $ 16.9 million, respectively, which are included within computers, software, and equipment. Depreciation expense for the fiscal years ended September 30, 2025, 2024, and 2023 was $ 8.9 million, $ 8.3 million, and $ 9.8 million, 81 Table of Contents respectively, which included amortization expense of $ 3.0 million, $ 2.7 million, and $ 4.0 million, respectively, for internally developed software costs. The following table presents our property and equipment, net by geography at September 30, 2025 and 2024 (dollars in thousands): September 30, 2025 2024 Long-lived assets: United States $ 31,116 $ 23,903 Germany 1,169 1,440 Canada 1,237 1,321 Other countries 2,239 3,475 Total long-lived assets $ 35,761 $ 30,139 9. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following (dollars in thousands): September 30, 2025 2024 Compensation $ 30,719 $ 18,755 Legal settlement $ — $ 30,000 Professional fees 4,657 4,015 Cost of revenue related liabilities 2,007 2,864 Interest payable 788 1,735 Sales and other taxes payable 1,777 3,668 Other 4,132 7,368 Total $ 44,080 $ 68,405 The $ 30.0 million legal settlement for the fiscal year ended September 30, 2024 relates to the settlement of the Securities Action (as defined in Note 13). The entire settlement amount was funded by insurance proceeds for which a receivable was recorded within Prepaid and other current assets. See Note 13 - Commitment and Contingencies for additional details. 10. Restructuring and Other Costs, Net Restructuring and other costs, net include restructuring expenses as well as other charges that are unusual in nature, are the result of unplanned events, and arise outside of the ordinary course of our business. The following table sets forth the fiscal year ended September 30, activity relating to restructuring charges (dollars in thousands): 82 Table of Contents Personnel Facilities Restructuring Subtotal Other Total Balance at September 30, 2022 $ 1,277 $ 1,600 $ 2,877 $ 2,277 $ 5,154 Restructuring and other costs, net 7,778 460 8,238 3,679 11,917 Non-cash adjustment — ( 486 ) ( 486 ) 3,300 2,814 Cash payments ( 8,498 ) ( 551 ) ( 9,049 ) ( 9,256 ) ( 18,305 ) Foreign exchange impact on ending balance ( 8 ) 10 2 — 2 Balance at September 30, 2023 549 1,033 1,582 — 1,582 Restructuring and other costs, net 13,410 73 13,483 3,594 17,077 Non-cash adjustment — ( 534 ) ( 534 ) ( 300 ) ( 834 ) Cash payments ( 10,231 ) ( 569 ) ( 10,800 ) ( 2,722 ) ( 13,522 ) Foreign exchange impact on ending balance 30 ( 3 ) 27 — 27 Balance at September 30, 2024 3,758 — 3,758 572 4,330 Restructuring and other costs, net 12,070 — 12,070 3,348 15,418 Non-cash adjustment ( 2,963 ) — ( 2,963 ) — ( 2,963 ) Cash payments ( 12,850 ) — ( 12,850 ) ( 984 ) ( 13,834 ) Foreign exchange impact on ending balance 41 — 41 ( 7 ) 34 Balance at September 30, 2025 $ 56 $ — $ 56 $ 2,929 $ 2,985 Fiscal Year 2025 For the fiscal year ended September 30, 2025, we recorded restructuring and other costs, net of $ 15.4 million, which included a $ 12.1 million severance charge related to the elimination of personnel, of which $ 3.0 million related to the stock-based compensation expense for the termination of former senior management employees, and a $ 3.3 million charge relating to our transformation initiatives. We are focused on pursuing actions intended to position the Company to deliver on our generative AI and large language model product roadmap and also deliver improved financial results which include process optimization efforts and cost reductions. On September 5, 2025, we announced the 2025 Plan. We currently estimate cash charges of approximately $ 7.4 million to $ 7.6 million, primarily in severance and related costs, with the majority expected to be incurred in the first quarter of fiscal 2026. Due to ongoing negotiations with labor unions and other applicable laws and regulations as of September 30, 2025, we did not meet the recognition criteria required to record a liability for estimated severance benefits, such as communication of definitive severance terms to affected employees, or that negotiations may result in significant changes to the 2025 Plan as communicated. During fiscal year 2025, we incurred an immaterial amount of professional fees directly associated with the execution of the plan, including works‑council consultations, which are recognized as incurred and presented within “Restructuring and other costs, net.” Actual amounts may differ materially due to required works‑council consultations and other legal requirements. Fiscal Year 2024 For the fiscal year ended September 30, 2024, we recorded restructuring and other costs, net of $ 17.1 million, which included a $ 13.4 million severance charge related to the elimination of personnel, of which $ 8.1 million related to the 2024 Plan, $ 2.8 million of consulting costs relating to our transformation initiatives, and $ 0.8 million of other one-time charges. Fiscal Year 2023 For the fiscal year ended September 30, 2023, we recorded restructuring and other costs, net of $ 11.9 million, which included a $ 7.8 million severance charge related to the elimination of personnel, $ 3.8 million of third-party fees relating to the modification of the 2025 Notes, and a $ 0.5 million charge resulting from the closure of facilities that will no longer be utilized. 83 Table of Contents 11. Leases We have entered into a number of facility and equipment leases which qualify as operating leases under GAAP. We also have a limited number of equipment leases that qualify as finance leases. We determine if contracts with vendors represent a lease or have a lease component under GAAP at contract inception. Our leases have remaining terms ranging from less than one year to six years . Some of our leases include options to extend or terminate the lease prior to the end of the agreed upon lease term. For purposes of calculating lease liabilities, lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise such options. Operating lease right of use assets and liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the lease commencement date. As our leases generally do not provide an implicit rate, we use an estimated incremental borrowing rate in determining the present value of future payments. The incremental borrowing rate represents an estimate of the interest rate we would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease within a particular location and currency environment. The following table presents certain information related to lease term and incremental borrowing rates for leases as of September 30, 2025 and 2024: September 30, 2025 September 30, 2024 Weighted-average remaining lease term (in months): Operating leases 46.9 46.0 Finance leases 3.4 13.4 Weighted-average discount rate: Operating leases 7.2 % 6.6 % Finance leases 4.4 % 4.4 % The following table presents the lease-related assets and liabilities reported in the Consolidated Balance Sheets as of September 30, 2025 and 2024 (dollars in thousands): Classification September 30, 2025 September 30, 2024 Assets Operating lease assets Operating lease right of use assets $ 16,762 $ 12,879 Finance lease assets Property and equipment, net 63 410 Total lease assets $ 16,825 $ 13,289 Liabilities Current Operating Short-term operating lease liabilities $ 4,344 $ 4,528 Finance Accrued expenses and other current liabilities 53 394 Noncurrent Operating Long-term operating lease liabilities $ 13,083 $ 8,803 Finance Other liabilities — 53 Total lease liability $ 17,480 $ 13,778 The following table presents lease expense for the fiscal years ended September 30, 2025, 2024 and 2023 (dollars in thousands): 84 Table of Contents Year Ended September 30, 2025 2024 2023 Finance lease costs: Amortization of right of use asset $ 348 $ 415 $ 432 Interest on lease liability 7 22 37 Operating lease cost 6,642 6,226 6,489 Variable lease cost 1,117 2,550 3,120 Sublease income ( 206 ) ( 216 ) ( 195 ) Total lease cost $ 7,908 $ 8,997 $ 9,883 For the fiscal years ended September 30, 2025, 2024 and 2023 cash payments related to operating leases were $ 6.7 million, $ 6.6 million and $ 6.6 million, respectively. For the fiscal years ended September 30, 2025, 2024 and 2023, cash payments related to financing leases were $ 0.4 million, $ 0.4 million and $ 0.4 million, respectively, of which an immaterial amount related to the interest portion of the lease liability. For the fiscal years ended September 30, 2025, 2024 and 2023 right of use assets obtained in exchange for lease obligations were $ 5.9 million, $ 5.8 million and $ 2.9 million, respectively. The table below reconciles the undiscounted future minimum lease payments under non-cancelable leases to the total lease liabilities recognized on the Consolidated Balance Sheet as of September 30, 2025 (dollars in thousands): Year Ending September 30, Operating Leases Financing Leases Total 2026 5,581 53 5,634 2027 5,546 — 5,546 2028 4,556 — 4,556 2029 3,171 — 3,171 2030 1,122 — 1,122 Thereafter 110 — 110 Total future minimum lease payments $ 20,086 $ 53 $ 20,139 Less effects of discounting ( 2,659 ) — ( 2,659 ) Total lease liabilities $ 17,427 $ 53 $ 17,480 Reported as of September 30, 2025 Short-term lease liabilities $ 4,344 $ 53 $ 4,397 Long-term lease liabilities 13,083 — 13,083 Total lease liabilities $ 17,427 $ 53 $ 17,480 12. Stockholders’ Equity Share-based Compensation Plans Per the Amended and Restated Certificate of Incorporation, which was adopted on October 1, 2019, 600,000,000 shares of capital stock have been authorized, consisting of 40,000,000 shares of Preferred Stock, par value $ 0.01 per share, or (“Preferred Stock”), and 560,000,000 shares of Common Stock, par value $ 0.01 per share (“Common Stock”). On October 2, 2019, we registered the issuance of 6,350,000 shares of Common Stock, consisting of 5,300,000 shares of Common Stock reserved under the Cerence 2019 Equity Incentive Plan, (“Equity Incentive Plan”), and 1,050,000 shares of Common Stock that are reserved for issuance under the Cerence 2019 Employee Stock Purchase Plan (“ESPP”). The Equity Incentive Plan provides for the grant of incentive stock options, stock awards, stock units, stock appreciation rights, and certain other stock-based awards. The shares available for issuance will automatically increase on January 1st of each year, by the lesser of (A) three percent ( 3 %) of the number of shares of Common Stock outstanding as of the close of business on the immediately preceding December 31st; and (B) the number of shares of Common Stock determined by the Board on or prior to such date for such year. Awards issued under the Equity Incentive Plan may not have a term greater than ten years from the date of grant. On March 4, 2024, we registered the issuance of 600,000 shares of Common Stock, reserved for issuance under the Cerence Inc. 2024 Inducement Plan. On October 6, 2024, we adopted Amendment No. 1 to the Cerence Inc. 2024 Inducement Plan, which increased the number of authorized shares of our 85 Table of Contents Common Stock available for issuance under the 2024 Inducement Plan from 600,000 to 3,000,000 . On November 29, 2024, we adopted Amendment No. 2 to the Inducement Plan, which increased the number of authorized shares of our common stock available for issuance under the Inducement Plan from 3,000,000 to 4,500,000 . Restricted Awards The fair value of Restricted Awards, including Restricted Stock Units and Restricted Stock, is measured based upon the market price of the underlying common stock as of the date of grant. Restricted Awards generally vest over a period of three years . We also include certain Restricted Awards with vesting solely dependent on the achievement of specified performance targets. The fair value of Restricted Awards is amortized to expense over the awards applicable requisite service period. In the event that the employees’ employment with us terminates, or in the case of awards with only performance targets, if those targets are not met, any unvested shares are forfeited. In fiscal years ended September 30, 2025, 2024 and 2023, we withheld payroll taxes totaling $ 2.4 million, $ 9.9 million and $ 4.9 million, respectively, related to the vesting of Restricted Awards. Restricted Units are not included in issued and outstanding common stock until the shares are vested and released. The table below summarizes activity related to Restricted Stock Units: Non-Vested Restricted Stock Units Time-Based Shares Performance- Based Shares Total Shares Weighted- Average Grant-Date Fair Value Weighted- Average Remaining Contractual Term (years) Aggregate Intrinsic Value (in thousands) Non-vested at September 30, 2024 2,587,386 1,119,437 3,706,823 $ 23.51 Granted 3,364,449 2,130,431 5,494,880 $ 10.22 Vested ( 1,133,338 ) ( 267,890 ) ( 1,401,228 ) $ 28.59 Forfeited ( 468,284 ) ( 682,792 ) ( 1,151,076 ) $ 21.31 Non-vested at September 30, 2025 4,350,213 2,299,186 6,649,399 $ 12.99 Expected to vest 6,649,399 $ 12.99 0.98 $ 82 Employee Stock Purchase Plan On October 2, 2019, we adopted the ESPP and approved 1,050,000 shares for issuance under this plan. The ESPP is administered by our Board of Directors’ Compensation Committee. The ESPP provides for the issuance of shares of our common stock to participating employees. At the end of each designated offering period, which occurs every six months on February 15 and August 15, employees can elect to purchase shares of our common stock with contributions of up to 12 % of their base pay, accumulated via payroll deductions, at an amount equal to 85 % of the lower of our stock price on (i) the first day of the offering period, or (ii) the last day of the offering period. We use the Black-Scholes option pricing model to calculate the fair value of shares issued under the ESPP. The Black-Scholes model relies on a number of key assumptions to calculate estimated fair values. Expected volatility is based on the historical volatility of our common stock, and the expected term represents the period of time the ESPP purchase rights are expected to be outstanding and approximates the offering period. The risk-free interest rate is based on yields on U.S. Treasury Securities with a maturity similar to the estimated expected term of the ESPP purchase rights. We assume no expected dividends. The following table sets forth the weighted-average key assumptions and fair value results for shares issued under the ESPP during the fiscal years ended September 30, 2025, 2024 and 2023: 86 Table of Contents Year Ended September 30, 2025 2024 2023 Expected dividend yield 0.00 % 0.00 % 0.00 % Risk-free interest rate 4.13 % 5.33 % 3.95 % Expected volatility 96.43 % 50.45 % 65.71 % Expected life (in years) 0.50 0.50 0.50 Weighted-average fair value of shares issued (per share) $ 6.12 $ 6.69 $ 9.73 The following table sets forth the quantities and average prices of shares issued under the ESPP for the fiscal years ended September 30, 2025, 2024 and 2023: Year Ended September 30, 2025 2024 2023 Shares issued under the ESPP 50,020 171,753 88,625 Average price of shares issued $ 6.12 $ 7.93 $ 20.58 Stock-based Compensation During the fiscal years ended September 30, 2025, 2024 and 2023, we recognize stock-based compensation expenses over the requisite service periods. Our share-based awards are classified within equity. Stock-based compensation for the anticipated Restricted Awards has been adjusted to reflect our estimated achievement under the modified targets and is recorded prospectively over the requisite service period. The amounts included in the Consolidated Statements of Operations related to stock-based compensation are as follows (dollars in thousands): Year Ended September 30, 2025 2024 2023 Cost of connected services $ 292 $ 288 $ 445 Cost of professional services 1,869 2,345 3,258 Research and development 9,930 10,449 17,167 Sales and marketing 3,237 2,199 3,454 General and administrative 9,060 8,392 16,442 Restructuring and other costs, net 2,963 — — Total $ 27,351 $ 23,673 $ 40,766 During the fiscal year ended September 30, 2025, we recorded $ 2.6 million in stock-based compensation due to the termination of employment of our former CEO and the resulting vesting of certain stock-based awards in Restructuring and other costs, net. During the fiscal year ended September 30, 2025, we recorded $ 0.4 million in stock-based compensation due to the termination of employment of a former senior management employee and the resulting vesting of certain stock-based awards in Restructuring and other costs, net. 13. Commitments and Contingencies Litigation and Other Claims Similar to many companies in the software industry, we are involved in a variety of claims, demands, suits, investigations and proceedings that arise from time to time relating to matters incidental to the ordinary course of our business, including at times actions with respect to contracts, intellectual property, employment, benefits and securities matters. At each balance sheet date, we evaluate contingent liabilities associated with these matters in accordance with ASC 450 “Contingencies.” 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 estimates are based only on the best information available at the time. Due to the inherent uncertainties involved in claims and legal proceedings and in estimating losses that may arise, actual outcomes may differ from our estimates. Contingencies deemed not probable or for which losses were not 87 Table of Contents 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 of September 30, 2025, accrued losses were not material to our consolidated financial statements, and we do not expect any pending matter to have a material impact on our consolidated financial statements. City of Miami Fire Fighters’ and Police Officers’ Retirement Trust Action On February 25, 2022, a purported shareholder class action captioned as City Of Miami Fire Fighters’ and Police Officers’ Retirement Trust v. Cerence Inc., et al. (the “Securities Action”) was filed in the United States District Court for the District of Massachusetts, naming the Company and two of its former officers as defendants. Following the court’s selection of a lead plaintiff and lead counsel, an amended complaint was filed on July 26, 2022 alleging classwide claims of material misrepresentations and/or omissions of material fact in the Company’s public disclosures during the period from November 16, 2020 to February 4, 2022, in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder. On December 18, 2024, the Court granted final approval of a settlement of the claims in the Securities Action for $ 30.0 million, which was paid for by insurance proceeds. Derivative Actions On May 10 and 12, 2022, respectively, plaintiffs William Shafer and Peter Morse filed shareholder derivative complaints in the United States District Court for the District of Massachusetts on behalf of Cerence Inc. against defendants (and former officers) Sanjay Dhawan and Mark J. Gallenberger as well as board members Arun Sarin, Thomas Beaudoin, Marianne Budnik, Sanjay Jha, Kristi Ann Matus, Alfred Nietzel and then-current CEO and board member Stefan Ortmanns. These actions are premised on factual contentions substantially similar to those made in the Securities Action and contain substantially similar legal contentions. As such, on June 13, 2022, at the parties’ request, the court consolidated these derivative actions into a single action and appointed co-lead counsel for plaintiffs in that consolidated action. On February 3, 2025, defendants filed a motion to dismiss on the grounds of demand futility and failure to state a claim. On June 18, 2025, the Court granted the motion without leave to amend. Three shareholder derivative complaints making factual and legal contentions substantially similar to those raised in the consolidated federal derivative action were also filed in the Delaware Court of Chancery: the first filed on October 19, 2022 by plaintiff Melinda Hipp against the defendants named in the consolidated federal derivative action and board member Douglas Davis, the second filed on August 17, 2023 by plaintiff Catherine Fleming against the defendants named in the consolidated federal derivative action, and the third filed on July 10, 2024 by plaintiff Alberto Goncalves against the defendants named in the consolidated federal derivative action. On October 20, 2023, Ms. Hipp voluntarily dismissed her action with prejudice. On July 22, 2025, Mr. Goncalves's action was dismissed without prejudice at his request. On July 31, 2025, Ms. Fleming's action was dismissed without prejudice by stipulation of the parties. A.P., a minor, by and through her guardian, Carlos Pena and Carlos Pena Action On March 24, 2023, plaintiffs A.P., a minor, by and through her guardian, Carlos Pena, and Carlos Pena, each individually and on behalf of similarly situated individuals filed a purported class action lawsuit in the Circuit Court of Cook County, Illinois, Chancery Division (Case. No. 2023CH02866 (Cir. Ct. Cook Cnty. 2023)). The case was removed to Federal Court (Case No. 1:23CV2667 (N.D. Ill.)), and then severed and remanded back in part, so there are two pending cases. Plaintiffs subsequently amended the federal complaint twice, with the latest second amended complaint, filed on July 13, 2023, adding plaintiffs Randolph Freshour and Vincenzo Allan, each also filing individually and on behalf of similarly situated individuals. Plaintiffs allege that Cerence violated the Illinois Biometric Information Privacy Act (“BIPA”), 740 ILCS 14/1 et seq. through Cerence’s Drive Platform technology, which is integrated in various automobiles. The named plaintiffs allegedly drove or rode in a vehicle with Cerence’s Drive Platform technology. Across both cases, plaintiffs allege that Cerence violated: (1) BIPA Section 15(a) by possessing biometrics without any public written policy for their retention or destruction; (2) BIPA Section 15(b) by collecting, capturing, or obtaining biometrics without written notice or consent; (3) BIPA Section 15(c) by profiting from biometrics obtained from Plaintiffs and putative class members; and (4) BIPA Section 15(d) by disclosing biometrics to third party companies without consent. Cerence filed motions to dismiss both cases. On February 27, 2024, the Circuit Court issued an order denying Cerence's motion to dismiss. On April 16, 2024, Cerence filed its answer and affirmative defenses, a motion to certify the Court’s order on Cerence’s motion to dismiss, and a motion to stay. Thereafter, in exchange for Cerence withdrawing its motions to certify and stay, plaintiffs filed amended complaints in both the Circuit Court and Federal Court, which 1) dismissed some plaintiffs and 2) amended the class definition to include Illinois individuals who owned, leased, and/or created user profiles for vehicles with Cerence's "voice recognition technology" (rather than anyone in Illinois whose "voiceprint" was collected or stored by Cerence). Cerence filed its answers in both and the parties concluded fact discovery. The parties are now briefing class certification, which briefing is scheduled to be complete on December 15, 2025. On November 3, 2025, plaintiffs moved to stay the Federal Court case pending the Circuit Court's ruling on class certification. Plaintiffs are seeking statutory 88 Table of Contents damages of $ 5,000 for each willful and/or reckless violation of BIPA and, alternatively, damages of $ 1,000 for each negligent violation of BIPA. Given the uncertainty of litigation, the preliminary stage of the case, and the legal standards that must be met for, among other things, class certification and success on the merits, we cannot estimate the reasonably possible loss or range of loss that may result from this action. Samsung Electronics Co. Ltd and Samsung Electronics America, Inc. On October 13, 2023, Cerence filed its first patent infringement complaint against Samsung alleging infringement of five Cerence patents (hereinafter referred to as “Samsung I”). On March 15, 2024, Cerence filed its second patent infringement complaint against Samsung alleging infringement of four additional Cerence patents (hereinafter referred to as “Samsung II”). In its responsive pleading to Samsung II, on July 10, 2024, Samsung asserted counterclaims, alleging infringement of U.S. Patent Nos. 10,395,657; 10,720,162; 11,823,682; and 9,583,103 against the Cerence Assistant. Samsung sought damages, including trebled damages, and its costs and fees. On September 4, 2024, Cerence filed its answer denying the allegations and counterclaims of invalidity and noninfringement. Trial for Samsung I was scheduled to begin in October 2025 and trial for Samsung II was scheduled to begin in April 2026. On October 28, 2025 Samsung and Cerence resolved these disputes by entering into a cross-license agreement, which, among other things, resulted in Samsung agreeing to pay Cerence a one-time lump sum payment in the total amount of $ 49.5 million, due within 30 days. The cross-license agreement requires that each party is responsible for bearing their own costs for any associated legal fees incurred as a result of the alleged complaints and negotiations resulting in the dispute resolution. As a result, our final receipt of the one-time lump-sum payment will result in us incurring approximately $ 24.6 million in legal fees. Guarantees and Other We include indemnification provisions in the contracts we enter with customers and business partners. Generally, these provisions require us to defend claims arising out of our products’ infringement of third-party intellectual property rights, breach of contractual obligations and/or unlawful or otherwise culpable conduct. The indemnity obligations generally cover damages, costs and attorneys’ fees arising out of such claims. In most, but not all cases, our total liability under such provisions is limited to either the value of the contract or a specified, agreed-upon amount. In some cases, our total liability under such provisions is unlimited. In many, but not all cases, the term of the indemnity provision is perpetual. While the maximum potential amount of future payments we could be required to make under all the indemnification provisions is unlimited, we believe the estimated fair value of these provisions is minimal due to the low frequency with which these provisions have been triggered. We indemnify our directors and officers to the fullest extent permitted by Delaware law, which provides among other things, indemnification to directors and officers for expenses, judgments, fines, penalties and settlement amounts incurred by such persons in their capacity as a director or officer of the Company, regardless of whether the individual is serving in any such capacity at the time the liability or expense is incurred. Additionally, in connection with certain acquisitions, we agreed to indemnify the former officers and members of the boards of directors of those companies, on similar terms as described above, for a period of six years from the acquisition date. In certain cases, we purchase director and officer insurance policies related to these obligations, which fully cover the six-year period. To the extent that we do not purchase a director and officer insurance policy for the full period of any contractual indemnification, and such directors and officers do not have coverage under separate insurance policies, we would be required to pay for costs incurred, if any, as described above. As of September 30, 2025, our letters of credit in connection with security deposits for facility leases totaled $ 0.7 million in the aggregate. These letters of credit have various terms and expire during fiscal year 2026 and beyond, while some of the letters of credit may automatically renew based on the terms of the underlying agreements. 14. Pension and Other Post-Retirement Benefits Defined Contribution Plans We have established a retirement savings plan under Section 401(k) of the Internal Revenue Code (the “401(k) Plan”). The 401(k) Plan covers substantially all of our U.S. employees who meet minimum age and service requirements, and allows participants to defer a portion of their annual compensation on a pre-tax basis. We match 50 % of employee contributions up to 6 % of eligible salary. We incurred charges for contributions to these 401(k) defined contribution plans of $ 0.4 million, $ 0.5 million, and $ 0.5 million for the fiscal years ended September 30, 2025, 2024 and 2023, respectively. 89 Table of Contents Defined Benefit Pension Plans We sponsor certain defined benefit pension plans that are offered primarily by our foreign subsidiaries. Many of these plans are required by local regulatory requirements. We may deposit funds for these plans with insurance companies, third party trustees or into government-managed accounts consistent with local regulatory requirements, as applicable. The total defined benefit plan pension expenses incurred for these plans were $ 0.7 million, $ 0.3 million, and $ 0.5 million for the fiscal years ended September 30, 2025, 2024 and 2023, respectively. Our aggregate projected benefit obligation and aggregate net liability for defined benefit plans as of September 30, 2025 was $ 12.8 million and $ 6.2 million, as of September 30, 2024 was $ 12.2 million and $ 6.2 million, and as of September 30, 2023 was $ 11.8 million and $ 5.5 million, respectively. For the fiscal year ended September 30, 2024, we recognized a curtailment and settlement benefit of $ 0.4 million related to restructuring programs. For the fiscal years ended September 30, 2025, 2024 and 2023, charges for contributions to defined benefit pension plans were not material to the Consolidated Statements of Operations. 15. Relationship with Parent and Related Entities In connection with the Spin-Off, we entered into several agreements with Nuance that set forth the principal actions taken or to be taken in connection with the Spin-Off and that govern the relationship of the parties following the Spin-Off, including the following: • Separation and Distribution Agreement : We entered into a Separation and Distribution Agreement with Nuance in advance of the Distribution. The Separation and Distribution Agreement sets forth our agreements with Nuance regarding the principal actions to be taken in connection with the Spin-Off. It also sets forth other agreements that govern aspects of our relationship with Nuance following the Spin-Off. • Tax Matters Agreement : We entered into a Tax Matters Agreement with Nuance that governs the respective rights, responsibilities and obligations of Nuance and us after the Distribution with respect to all tax matters (including tax liabilities, tax attributes, tax returns and tax contests). • Transition Services Agreement :We entered into a Transition Services Agreement pursuant to which Nuance will provide us, and we will provide Nuance, with certain specified services for a limited time to help ensure an orderly transition following the Distribution. • Employee Matters Agreement :We entered into an Employee Matters Agreement with Nuance that addresses employment and employee compensation and benefits matters. The Employee Matters Agreement addresses the allocation and treatment of assets and liabilities relating to employees and compensation and benefit plans and programs in which our employees participated prior to the Spin-Off. • Intellectual Property Agreemen t:We entered into an Intellectual Property Agreement with Nuance, pursuant to which we granted to Nuance, and Nuance granted to us, perpetual, non-exclusive, royalty-free licenses to certain patents and technology, as well as certain other intellectual property that have historically been shared between us and Nuance. • Transitional Trademark License Agreement :We entered into a Transitional Trademark License Agreement with Nuance, pursuant to which Nuance granted us a non-exclusive, royalty free license to continue using certain of Nuance’s trademarks, trade names and service marks with respect to the “Nuance” and “Dragon” brands in connection with the sale, marketing and other commercialization of our products and services. • OEM and Distribution License Agreements : We entered into four OEM and Distribution License Agreements with Nuance. Under three of the four agreements, Cerence licenses to Nuance designated Cerence technologies for Nuance’s internal use and for distribution to Nuance end-users and resellers. On May 6, 2025, Cerence filed a lawsuit alleging copyright infringement and breach of contract against Nuance and Microsoft related in part to their continued use of Cerence's text-to-speech after the expiration of one of those agreements, which lawsuit is pending. Under the final agreement, Nuance licenses to Cerence designated Nuance 90 Table of Contents technologies for Cerence’s internal use and for distribution to Cerence end-users and resellers. All agreements contain customary commercial terms for arrangements of this nature. 16. Income Taxes Provision for income taxes The components of loss before income taxes are as follows (dollars in thousands): Year Ended September 30, 2025 2024 2023 Domestic $ ( 26,686 ) $ ( 524,632 ) $ ( 24,524 ) Foreign 17,865 ( 59,978 ) ( 11,865 ) Loss before income taxes $ ( 8,821 ) $ ( 584,610 ) $ ( 36,389 ) The components of provision for income taxes are as follows (dollars in thousands): Year Ended September 30, 2025 2024 2023 Current: Federal $ 575 $ ( 561 ) $ 611 State 38 32 38 Foreign 9,039 8,655 11,619 Total current 9,652 8,126 12,268 Deferred: Federal ( 393 ) ( 4,596 ) 7,941 State 1,107 219 ( 1,164 ) Foreign ( 473 ) ( 281 ) 820 Total deferred 241 ( 4,658 ) 7,597 Provision for income taxes $ 9,893 $ 3,468 $ 19,865 Effective income tax rate ( 112.1 ) % ( 0.6 ) % ( 54.6 ) % The provision for income taxes differed from the amount computed by applying the federal statutory rate to our loss before income taxes as follows (dollars in thousands): Year Ended September 30, 2025 2024 2023 Federal tax provision at statutory rate $ ( 1,848 ) $ ( 122,768 ) $ ( 7,633 ) State tax, net of federal benefit 904 199 ( 890 ) Foreign tax rate and other foreign related tax items 4,370 3,230 3,203 Uncertain tax positions 1,289 1,681 4,202 Stock-based compensation 3,708 1,953 4,734 Global intangible low-taxed income 809 ( 1,601 ) 7,464 Goodwill impairment — 114,863 — Change in valuation allowance ( 23,320 ) ( 1,763 ) 27,101 Executive compensation 1,351 183 991 Non-deductible expenditures 968 835 211 R&D credits ( 2,254 ) ( 1,531 ) ( 588 ) Intangible property transfers — — ( 18,930 ) Capital losses — 8,187 — Enacted changes in tax laws or rates 23,916 — — Provision for income taxes $ 9,893 $ 3,468 $ 19,865 91 Table of Contents The effective income tax rate is based upon the income for the year, the composition of the income in different countries, and adjustments, if any, for the potential tax consequences, benefits or resolutions of audits or other tax contingencies. Our effective tax rate may be adversely affected by earnings being lower than anticipated in countries where we have lower statutory tax rates and higher than anticipated in countries where we have higher statutory tax rates. Our effective tax rate for the fiscal year 2025 differed from the U.S. federal statutory rate of 21.0 %, primarily due to the tax impacts of stock-based compensation, research credits, and our composition of jurisdictional earnings. During the fiscal year ended September 30, 2025, we recorded a non-cash out-of-period adjustment of $ 3.8 million to increase deferred tax assets and decrease goodwill to correct an error related to a prior period. Management evaluated this error under SAB No. 99 and SAB No. 108 and determined it was not material to prior annual or interim periods. Therefore, the correction was recorded in the current period's financial statements rather than by restating prior periods. Our effective tax rate for the fiscal year 2024 differed from the U.S. federal statutory rate of 21.0 %, primarily due to impairment of book goodwill, the tax impacts of stock-based compensation, U.S. inclusions of foreign taxable income, valuation allowance on foreign loss carryforwards, and our composition of jurisdictional earnings. The effective tax rate for the fiscal year 2023 differed from the U.S. federal statutory rate of 21.0 %, primarily due to the tax impacts of stock-based compensation, U.S. inclusions of foreign taxable income, valuation allowance on foreign loss carryforwards, and our composition of jurisdictional earnings. The intangible property transfers deferred tax benefit was offset by a change in valuation allowance deferred tax expense. As of September 30, 2025, we have not provided taxes on undistributed earnings of our foreign subsidiaries, which may be subject to foreign withholding taxes upon repatriation, as we consider these earnings indefinitely reinvested. Our indefinite reinvestment determination is based on the future operational and capital requirements of our domestic and foreign operations. We expect our international cash and cash equivalents and marketable securities will continue to be used for our foreign operations and therefore do not anticipate repatriating these funds. As of September 30, 2025, it is not practical to calculate the unrecognized deferred tax liability on these earnings due to the complexities of the utilization of foreign tax credits and other tax assets. 92 Table of Contents Deferred tax assets (liabilities) consist of the following as of September 30, 2025 and 2024 (dollars in thousands): September 30, 2025 2024 Deferred tax assets: Net operating loss carryforwards $ 39,503 $ 40,155 Federal credit carryforwards 7,072 7,380 Accrued expenses and other reserves 5,962 3,119 Deferred revenue 39,186 37,508 Acquired intangibles 88,686 110,844 Interest limitations carryforward 6,651 9,456 Operating lease liabilities 4,219 3,714 Depreciation 29,374 25,394 Deferred compensation 660 1,028 Pension obligation 479 462 Other 3,812 3,873 Total deferred tax assets 225,604 242,933 Valuation allowance for deferred tax assets ( 150,996 ) ( 167,314 ) Deferred tax assets $ 74,608 $ 75,619 Deferred tax liabilities: Depreciation $ ( 6,617 ) $ ( 5,006 ) Acquired intangibles ( 2,716 ) ( 6,889 ) Operating lease right of use assets ( 4,009 ) ( 3,557 ) Deferred costs ( 5,430 ) ( 7,691 ) Other ( 1,731 ) ( 1,656 ) Total deferred tax liabilities ( 20,503 ) ( 24,799 ) Net deferred tax assets $ 54,105 $ 50,820 Deferred income taxes arise from temporary differences between the tax and financial statement recognition of revenue and expenses. We regularly assess the need for a valuation allowance against our deferred tax assets. In evaluating whether it is more likely than not that some or all of our deferred tax assets will not be realized, we consider all available positive and negative evidence. We maintain a valuation allowance against these deferred tax assets until we believe it is more likely than not that they will be realized. If sufficient positive evidence arises in the future indicating that all or a portion of the deferred tax assets meet the more likely than not standard, the valuation allowance would be reversed accordingly in the period that such determination is made. As of September 30, 2025, we have $ 151.0 million in valuation allowance against our net foreign deferred tax assets. As of September 30, 2024, we have $ 167.3 million in valuation allowance against our net foreign deferred tax assets. The change in valuation allowance of $( 16.3 ) million included income tax provision of $( 23.3 ) million, cumulative translation adjustments of $ 7.1 million, and other comprehensive income of $( 0.1 ) million. The remaining deferred tax assets after valuation allowances are primarily domestic. For each of the periods shown, we have domestic financial taxable income resulting from permanent differences between domestic loss before income taxes and taxable income. Based on the level of historical financial taxable income and projections for future financial taxable income over the periods for which these deferred tax assets are deductible, we believe that it is more likely than not that we will realize the benefits of the domestic deductible differences. As of September 30, 2025, we have immaterial U.S. federal net operating loss (“NOL”) carryforwards, we have state NOL carryforwards of $ 8.3 million, and foreign NOL carryforwards of $ 453.8 million, before uncertain tax positions of $ 284.2 million. As of September 30, 2024, we have immaterial U.S. federal net operating loss (“NOL”) carryforwards, state NOL carryforwards of $ 9.8 million, and foreign NOL carryforwards of $ 433.6 million, before uncertain tax positions of $ 270.2 million. These carryforwards will expire at various dates beginning in 2026 and extending up to an unlimited period. As of September 30, 2025 and 2024, unlimited federal NOLs are immaterial and immaterial, respectively, and unlimited Netherlands NOLs are $ 387.6 million and $ 360.7 million, respectively. 93 Table of Contents As of September 30, 2025, we have U.S. federal research and development carryforwards and foreign tax credit carryforwards of $ 4.1 million, before uncertain tax positions of $ 3.9 million, state research and development credits of $ 0.5 million, and foreign research and development credits of $ 9.1 million. As of September 30, 2024, we have U.S. federal research and development carryforwards and foreign tax credit carryforwards of $ 7.0 million, before uncertain tax positions of $ 5.2 million, state research and development credits of $ 0.3 million, and foreign research and development credits of $ 7.2 million. These carryforwards will expire at various dates beginning in 2026 and extending up to 2042. Uncertain Tax Positions ASC 740 prescribes the accounting for uncertainty in income taxes recognized in the financial statements. We regularly assess the outcome of potential examinations in each of the taxing jurisdictions when determining the adequacy of the amount of unrecognized tax benefit recorded. We recognize tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit which is more likely than not to be realized upon ultimate settlement. We recognize interest and penalties related to unrecognized tax positions in our provision for (benefit from) income taxes line of our Consolidated Statements of Operations. The aggregate changes in the balance of our gross unrecognized tax benefits were as follows (dollars in thousands): September 30, 2025 2024 Balance at the beginning of the year $ 87,400 $ 85,172 Beginning balance adjustment 3,169 4,018 Increases related to tax positions taken from prior periods — 216 Decreases related to tax positions taken from prior periods ( 1,283 ) ( 2,272 ) Increases related to tax positions taken during current period 406 484 Decreases for tax settlements and lapse in statutes ( 442 ) ( 218 ) Balance at the end of the year $ 89,250 $ 87,400 As of September 30, 2025 and 2024, beginning balance adjustments include cumulative translation adjustments of $ 3.2 million and $ 4.0 million, respectively. As of September 30, 2025, $ 89.3 million of the unrecognized tax benefits, if recognized, would impact our effective tax rate. We do not expect a significant change in the amount of unrecognized tax benefits within the next 12 months. We recognized interest related to uncertain tax positions in our provision for (benefit from) income taxes of $ 1.3 million, $ 1.3 million and $ 0.6 million during fiscal years 2025, 2024 and 2023 respectively. We recorded interest of $ 6.3 million and $ 5.6 million as of September 30, 2025 and 2024, respectively. On July 4, 2025, the One Big Beautiful Bill Act (the "Act") was signed into law. Certain provisions of the Act were applicable to us beginning in 2025 while other provisions will become effective beginning in fiscal 2026 and 2027. The impact of the Act is not material to our year ended September 30, 2025 consolidated financial statements. We continue to evaluate the future impact of these tax law changes. We are subject to U.S. federal income tax, various state and local taxes and international income taxes in numerous jurisdictions. The 2016 through 2024 tax years remain open for all purposes of examination by the IRS and other taxing authorities in material jurisdictions. 17. Long-Term Debt Long-term debt consisted of the following (in thousands): 94 Table of Contents September 30, 2025 Description Maturity Date Convertible Debt Coupon Rate Effective Interest Rate Principal Unamortized Discount Deferred Issuance Costs Carrying Value 2025 Modified Notes 7/1/2028 1.50 % 5.52 % 87,500 ( 1,862 ) ( 7,106 ) 78,532 2028 Notes 7/1/2028 1.50 % 1.91 % 122,500 — ( 1,339 ) 121,161 Total debt $ 210,000 $ ( 1,862 ) $ ( 8,445 ) 199,693 Less: current portion of long-term debt — Total long-term debt $ 199,693 September 30, 2024 Description Maturity Date Convertible Debt Coupon Rate Effective Interest Rate Principal Unamortized Discount Deferred Issuance Costs Carrying Value 2025 Modified Notes 6/1/2025 3.00 % 3.70 % $ 87,500 $ — $ ( 406 ) $ 87,094 2025 Modified Notes 7/1/2028 1.50 % 8.55 % 87,500 ( 2,777 ) ( 10,602 ) 74,121 2028 Notes 7/1/2028 1.50 % 1.91 % 122,500 — ( 1,809 ) 120,691 Total debt $ 297,500 $ ( 2,777 ) $ ( 12,817 ) 281,906 Less: current portion of long-term debt ( 87,094 ) Total long-term debt $ 194,812 The following table summarizes the maturities of our borrowing obligations as of September 30, 2025 (in thousands): Fiscal Year 2028 Notes 2025 Modified Notes Total 2026 $ — $ — $ — 2027 — — — 2028 122,500 87,500 210,000 2029 — — — 2030 — — — Thereafter — — — Total before unamortized discount and issuance costs and current portion $ 122,500 $ 87,500 $ 210,000 Less: unamortized discount and issuance costs ( 1,339 ) ( 8,968 ) ( 10,307 ) Less: current portion of long-term debt — — — Total long-term debt $ 121,161 $ 78,532 $ 199,693 1.50 % Senior Convertible Notes due 2028 On June 26, 2023, we issued $ 190.0 million in aggregate principal amount of 1.50 % Convertible Senior Notes due 2028 (the “2028 Notes”), which are governed by an indenture (the “2028 Indenture”), between us and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”), in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). On July 3, 2023, we issued an additional $ 20.0 million in aggregate principal amount of 2028 Notes. The net proceeds from the issuance of the 2028 Notes were $ 193.2 million after deducting transaction costs. The 2028 Notes are senior, unsecured obligations and accrue interest payable semiannually in arrears on January 1 and July 1 of each year at a rate of 1.50 % per year. The 2028 Notes will mature on July 1, 2028, unless earlier converted, redeemed, or repurchased. The 2028 Notes are convertible into cash, shares of our common stock or a combination of cash and shares of our common stock, at our election. 95 Table of Contents A holder of 2028 Notes may convert all or any portion of its 2028 Notes at its option at any time prior to the close of business on the business day immediately preceding April 3, 2028 only under the following circumstances: (1) during any fiscal quarter commencing after the fiscal quarter ending on September 30, 2023 (and only during such fiscal quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130 % of the conversion price on each applicable trading day; (2) during the five business day period after any ten consecutive trading day period (the “measurement period”) in which the “trading price” (as defined in the 2028 Indenture) per $1,000 principal amount of 2028 Notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price of our common stock and the conversion rate on each such trading day; (3) if we call such 2028 Notes for redemption, at any time prior to the close of business on the business day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events. On or after April 3, 2028 until the close of business on the second scheduled trading day immediately preceding the maturity date, a holder may convert all or any portion of its 2028 Notes at any time, regardless of the foregoing circumstances. The conversion rate is 24.5586 shares of our common stock per $1,000 principal amount of 2028 Notes (equivalent to an initial conversion price of approximately $ 40.72 per share of our common stock). The conversion rate is subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. In addition, following certain corporate events that occur prior to the maturity date or if we deliver a notice of redemption, we will, in certain circumstances, increase the conversion rate for a holder who elects to convert its 2028 Notes in connection with such a corporate event or convert its 2028 Notes called for redemption in connection with such notice of redemption, as the case may be. We may not redeem the 2028 Notes prior to July 6, 2026. We may redeem for cash all or any portion of the 2028 Notes (subject to certain limitations), at our option, on a redemption date occurring on or after July 6, 2026 and on or before the 31st scheduled trading day immediately before the maturity date, if the last reported sale price of our common stock has been at least 130 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which we provide notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100 % of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the 2028 Notes. If we undergo a “fundamental change”, subject to certain conditions, holders may require us to repurchase for cash all or any portion of their 2028 Notes at a fundamental change repurchase price equal to 100 % of the principal amount of the 2028 Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date. The 2028 Indenture contains customary terms and covenants, including that upon certain events of default occurring and continuing, either the Trustee or the holders of not less than 25 % in aggregate principal amount of the 2028 Notes then outstanding may declare the entire principal amount of all the 2028 Notes plus accrued special interest, if any, to be immediately due and payable. In connection with the offering of the 2028 Notes, we repurchased $ 87.5 million in aggregate principal amount of the 2025 Notes in a privately negotiated transaction. We specifically negotiated the repurchase of the 2025 Notes with investors who concurrently purchased the 2028 Notes. We evaluated the transaction to determine whether the exchange should be accounted for as a modification or extinguishment under the provisions of ASC 470-50, which allows for an exchange of debt instruments between the same debtor and creditor to be accounted for as a modification so long as the instruments do not have substantially different terms. Because the concurrent redemption of the 2025 Notes and a portion of issuance of the 2028 Notes were executed with the same investors, we evaluated the transaction as a debt modification, on a creditor by creditor basis. The repurchase of the 2025 Notes and issuance of the 2028 Notes were deemed to not have substantially different terms on the basis that (1) the present value of the cash flows under the terms of the new debt instrument were less than 10 % different from the present value of the remaining cash flows under the terms of the original instrument and (2) the fair value of the conversion feature did not change by more than 10 % of the carrying value of the 2025 Notes, and therefore, the repurchase of the 2025 Notes was accounted for as a debt modification. As a result, $ 87.5 million of the 2028 Notes are considered a modification of the 2025 Notes and are included in the balances of the 2025 Notes (the “2025 Modified Notes” and together with the 2028 Notes, the “Notes”) that were not repurchased as part of the transaction. We recorded $ 14.3 million of fees paid directly to the lenders as deferred debt issuance costs, and $ 3.8 million of fees paid to third-parties were expensed in the period. As of September 30, 2025, the carrying amount of the 2025 Modified Notes was $ 78.5 million, net of unamortized costs of $ 9.0 million. If a convertible debt instrument is modified or exchanged in a transaction that is not accounted for as an extinguishment, an increase in the fair value of the embedded conversion option shall reduce the carrying amount of the 96 Table of Contents debt instrument with a corresponding increase in Additional paid-in capital. We recognized the increase in the fair value of the embedded conversion feature of $ 4.1 million as Additional paid-in capital and an equivalent discount that reduced the carrying value of the 2025 Modified Notes. We accounted for $ 122.5 million of the 2028 Notes that were not negotiated with the investors of the 2025 Notes, as a single liability. We incurred transaction costs of $ 2.4 million relating to the issuance of the 2028 Notes, which were recorded as a direct deduction from the face amount of the 2028 Notes and are being amortized as interest expense over the term of the 2028 Notes using the interest method. As of September 30, 2025, the carrying amount of the 2028 Notes was $ 121.2 million and unamortized issuance costs of $ 1.3 million. As of September 30, 2025 and September 30, 2024, the if-converted value of the 2028 Notes was $ 85.0 million and $ 113.0 million, respectively, less than its principal amount. The conditional conversion feature of the 2028 Notes was not triggered during the fiscal year ended September 30, 2025. As of September 30, 2025, the 2028 Notes were not convertible. As of the date of this report, no 2028 Notes have been converted by the holders. Whether any of the 2028 Notes will be converted in future quarters will depend on the satisfaction of one or more of the conversion conditions in the future. If one or more holders elect to convert their 2028 Notes at a time when any such 2028 Notes are convertible, unless we elect to satisfy our conversion obligation by delivering solely shares of our common stock (other than paying cash in lieu of delivering any fractional shares), we would be required to settle a portion or all of our conversion obligation through the payment of cash, which could adversely affect our liquidity. 3.00 % Senior Convertible Notes due 2025 On June 2, 2020, we issued $ 175.0 million in aggregate principal amount of 3.00 % Convertible Senior Notes due 2025 (the “2025 Notes”), including the initial purchasers’ exercise in full of their option to purchase $ 25.0 million principal amount of the 2025 Notes, which are governed by an indenture (the “2025 Indenture”), between us and the Trustee, in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The net proceeds from the issuance of the 2025 Notes were $ 169.8 million after deducting transaction costs. The 2025 Notes were senior, unsecured obligations and accrued interest payable semiannually in arrears on June 1 and December 1 of each year, at a rate of 3.00 % per year. During the year ended September 30, 2025, we repurchased $ 27.4 million aggregate principal amount of our 2025 Notes for $ 27.0 million in cash, including accrued interest and fees, via privately negotiated transactions with certain holders. The repurchased 2025 Notes were subsequently cancelled and retired, resulting in a gain on extinguishment of debt of $ 0.3 million. The remaining outstanding principal balance on the 2025 Notes and accrued interest of $ 61.0 million was repaid in its entirety at maturity during the three months ended June 30, 2025. The interest expense recognized related to the Notes for the fiscal years ended September 30, 2025, 2024 and 2023 were as follows (dollars in thousands): Year Ended September 30, 2025 2024 2023 Contractual interest expense $ 4,547 $ 5,776 $ 5,383 Amortization of debt discount 916 1,019 258 Amortization of issuance costs 4,289 4,936 2,119 Total interest expense related to the Notes $ 9,752 $ 11,731 $ 7,760 Senior Credit Facilities On June 12, 2020 (the “Financing Closing Date”), we entered into a Credit Agreement, by and among the Borrower, the lenders and issuing banks party thereto and Wells Fargo Bank, N.A., as administrative agent (the “Credit Agreement”), consisting of a four-year senior secured term loan facility in the aggregate principal amount of $ 125.0 million (the “Term Loan Facility”). The net proceeds from the issuance of the Term Loan Facility were $ 123.0 million. We also entered into a senior secured first-lien revolving credit facility in an aggregate principal amount of $ 50.0 million (the “Revolving Facility” and, together with the Term Loan Facility, the “Senior Credit Facilities”), which may be drawn on in the event that our working capital and other cash needs are not supported by our operating cash flow. 97 Table of Contents In connection with the issuance of the 2028 Notes, in the third quarter of fiscal year 2023, we borrowed $ 24.7 million under our Revolving Facility and paid $ 106.3 million towards our Term Loan Facility. As a result, we recorded $ 104.9 million extinguishment of debt and $ 1.3 million loss on the extinguishment of debt. All principal and interest on the Term Loan Facility have been paid in full. As of September 30, 2025 and September 30, 2024, there were no amounts outstanding under the Revolver Facility. On December 31, 2024, we terminated the Credit Agreement. On the date of termination, there were no revolving loans outstanding under the Credit Agreement. As a result of the Credit Agreement termination, we will not have access to the Revolving Facility and we will not be subject to the applicable Credit Agreement covenants. Total interest expense relating to the Senior Credit Facilities for the fiscal years ended September 30, 2025, 2024 and 2023 were $ 0.4 million, $ 0.4 million, $ 6.7 million, respectively, reflecting the coupon and accretion of the discount. 18. Subsequent Events In preparing the consolidated financial statements, management has evaluated subsequent events through the date of filing of this report on Form 10-K for recognition and/or disclosure purposes. Based on this evaluation, we have determined that there were no events that have occurred that require recognition or disclosure, other than certain events and transactions that have been disclosed elsewhere in these consolidated financial statements. 98 Table of Contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. Not Applicable.