Leases (Policies)

9 Months Ended

Jun. 30, 2022

Leases

The Company has operating leases primarily for corporate offices, and other operating leases for data centers and certain equipment. The Company determines whether an arrangement is or contains a lease based on facts and circumstances present at the inception of the arrangement. The Company recognizes lease expense on a straight-line basis over the lease term. The Company's leases have remaining lease terms of less than one year to approximately thirteen years, some of which include options to extend the leases for up to five years, and some of which include the option to terminate the leases upon advanced notice of 60 days or more. If the Company is reasonably certain they will exercise an option to extend or terminate the lease, the time period covered by the extension or termination option is included in the lease term.

Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected lease term. The interest rate implicit in the lease contracts is typically not readily determinable. As such, the Company utilizes the appropriate incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term at an amount equal to the lease payments in a similar economic environment. Certain adjustments to the right-of-use asset may be required for items such as incentives received. The Company has lease agreements with lease and non-lease components, which are accounted for combined as one lease component.

Operating lease costs are recognized on a straight-line basis over the term of the lease. The components of total lease expense for fiscal years 2022, 2021, and 2020 were as follows:


	Nine-Month Period Ended June 30,	Year Ended September 30,
	2022	2021	2020
Operating lease expense	4,769	6,365	3,521
Variable lease expense	518	797	345
Short term lease expense	723	889	620

The following table summarizes the balances of the Company’s operating lease right-of-use assets and operating lease liabilities as of June 30, 2022 and September 30, 2021:


	June 30, 2022	September 30, 2021
Operating lease right-of-use assets	78,286	46,048
Current operating lease liabilities	7,191	5,744
Non-current operating lease liabilities	71,933	41,114

There was an increase in operating lease right-of-use asset of $32.2 million for the fiscal year ended June 30, 2022, which was primarily due to the Heritage AspenTech acquisition.

The weighted-average remaining lease term for operating leases was 9 years and 7.6 years and the weighted-average discount rate was 3.0% and 2.2% as of June 30, 2022 and September 30, 2021, respectively.

The following table represents the future maturities of the Company's operating lease liabilities as of June 30, 2022:


	June 30, 2022
Year Ending June 30,	(Dollars in Thousands)
2023	$	3,658
2024	14,587
2025	13,504
2026	8,865
2027	6,452
Thereafter	42,728
Total lease payments	89,794
Less: imputed interest	(10,670)
	$	79,124