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):


	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.

About Goodwill & Intangibles Disclosures

Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.

Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.

Cerence Inc. Goodwill & Intangibles Disclosure

About Goodwill & Intangibles Disclosures

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