Derivative Financial Instruments

3 Months Ended

Dec. 31, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

We use derivative instruments to manage risks caused by fluctuations in foreign exchange rates. The primary objective of our derivative instruments is to protect the value of foreign-currency-denominated receivable and cash balances from the effects of volatility in foreign exchange rates that might occur prior to conversion to their respective functional currencies. We principally utilize foreign currency forward contracts, which enable us to buy and sell foreign currencies in the future at fixed exchange rates and economically offset changes in foreign exchange rates. We routinely enter into contracts to offset exposures denominated in the British pound, Euro, and Singapore dollar.

Foreign currency-denominated receivable and cash balances are remeasured at foreign exchange rates in effect on the balance sheet date with the effects of changes in foreign exchange rates reported in other income, net. The forward contracts are not designated as hedges and are marked to market through other income, net. Fair value changes in the forward contracts help mitigate the changes in the value of the remeasured receivable and cash balances attributable to changes in foreign exchange rates. The forward contracts are short-term in nature and typically have average maturities at inception of less than three months.

The following tables summarize our outstanding foreign currency forward contracts, by currency, at December 31, 2021 and September 30, 2021:


	December 31, 2021
	Contract Amount				Fair Value
	Foreign Currency		USD		USD
	(In thousands)
Sell foreign currency:

Euro (EUR)	EUR	15,900	$	18,044	$	—
Buy foreign currency:
British pound (GBP)	GBP	10,983	$	14,800	$	—
Singapore dollar (SGD)	SGD	7,405	$	5,500	$	—


	September 30, 2021
	Contract Amount				Fair Value
	Foreign Currency		USD		USD
	(In thousands)
Sell foreign currency:

Euro (EUR)	EUR	17,100	$	19,829	$	—
Buy foreign currency:
British pound (GBP)	GBP	11,467	$	15,400	$	—
Singapore dollar (SGD)	SGD	6,650	$	4,900	$	—

The foreign currency forward contracts were entered into on December 31, 2021 and September 30, 2021, respectively; therefore, their fair value was $0 on each of these dates.

Gains on derivative financial instruments were recorded in our condensed consolidated statements of income and comprehensive income as a component of other income, net, and consisted of the following:


	Quarter Ended December 31,
	2021		2020
	(In thousands)
Gains on foreign currency forward contracts	$	562	$	1,686