UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

——————

FORM10-Q

——————

(Mark One)

☒	~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~December 31, 2017~~

September 30, 2019

~~TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period fromto

Commission file number:0-25259

——————

Bottomline Technologies (de), Inc.

(Exact name of registrant as specified in its charter)

——————



Delaware			02-0433294
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
		~~(I.R.S. Employer~~ ~~Identification No.)~~

325 Corporate Drive	03801-6808
Portsmouth,	New Hampshire		~~03801-6808~~
(Address of principal executive offices)			(Zip Code)

~~(603)~~

(603) 436-0700

(Registrant’s telephone number, including area code)

——————

Securities registered pursuant to Section 12(b) of the Act:



Title of each class:	Trading Symbol(s):	Name of each exchange on which registered:
Common Stock, $.001 par value per share	EPAY	The Nasdaq Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate website, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of RegulationS-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule12b-2 of the Exchange Act.


~~Large Accelerated Filer~~		☒		~~Accelerated Filer~~		☐

~~Non-Accelerated Filer~~Large accelerated filer	☒	~~☐ (Do not check if a smaller reporting company)~~		~~Smaller Reporting Company~~	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company		☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act). Yes ☐No ☒

The number of shares outstanding of the registrant’s common stock as of ~~January~~October 31, ~~2018~~2019 was ~~40,680,451.~~

~~BOTTOMLINE TECHNOLOGIES (de), INC.~~

~~FORM10-Q~~

~~FOR THE FISCAL QUARTER ENDED DECEMBER 31, 2017~~

~~TABLE OF CONTENTS~~

43,965,634.


				~~Page~~
~~PART I~~

BOTTOMLINE TECHNOLOGIES (de), INC.

FORM 10-Q
FOR THE FISCAL QUARTER ENDED SEPTEMBER 30, 2019
TABLE OF CONTENTS

PART I		Page

Item 1.		Unaudited Condensed Consolidated Financial Statements			3

Item 2.		~~Management’s~~Management's Discussion and Analysis of Financial Condition and Results of Operations			21
			23
Item 3.		Quantitative and Qualitative Disclosures about Market Risk			31
			30
Item 4.		Controls and Procedures			31
			30
PART II

Item 1.		Legal Proceedings			32

Item 1A.		Risk Factors			32

Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds			32

Item 6.	Exhibits	~~Exhibits~~33
	SIGNATURE	33

		~~SIGNATURE~~34			34

PART I. FINANCIAL INFORMATION

~~Item 1.~~

~~Financial Statements~~

Item 1. Financial Statements



Bottomline Technologies (de), Inc.
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
	September 30,			June 30,
	2019			2019

ASSETS
Current assets:
Cash and cash equivalents	$	84,751		$	92,164
Cash held for customers	7,069			5,637
Marketable securities	10,137			7,541
Accounts receivable net of allowances for doubtful accounts of $850 at September 30, 2019 and $824 at June 30, 2019	65,409			77,285
Prepaid expenses and other current assets	33,043			30,434
Total current assets	200,409			213,061
Property and equipment, net	60,528			54,541
Operating lease right-of-use assets, net	25,224			—
Goodwill	204,396			206,101
Intangible assets, net	160,749			168,349
Other assets	28,090			27,177
Total assets	$	679,396		$	669,229
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	11,569		$	10,947
Accrued expenses and other current liabilities	41,336			33,945
Customer account liabilities	7,069			5,637
Deferred revenue	63,213			75,097
Total current liabilities	123,187			125,626
Borrowings under credit facility	110,000			110,000
Deferred revenue, non-current	15,870			17,062
Operating lease liabilities, non-current	21,993			—
Deferred income taxes	8,652			10,345
Other liabilities	24,758			26,819
Total liabilities	304,460			289,852
Stockholders' equity
Preferred Stock, $.001 par value:
Authorized shares-4,000; issued and outstanding shares-none	—			—
Common Stock, $.001 par value:
Authorized shares-100,000; issued shares-47,385 at September 30, 2019 and 46,995 at June 30, 2019; outstanding shares-41,532 at September 30, 2019 and 41,315 at June 30, 2019	47			47
Additional paid-in-capital	733,312			721,438
Accumulated other comprehensive loss	(49,972		)	(43,593		)
Treasury stock: 5,853 shares at September 30, 2019 and 5,680 shares at June 30, 2019, at cost	(135,701		)	(127,095		)
Accumulated deficit	(172,750		)	(171,420		)
Total stockholders' equity	374,936			379,377
Total liabilities and stockholders' equity	$	679,396		$	669,229

See accompanying notes.



Bottomline Technologies (de), Inc.
Unaudited Condensed Consolidated Statements of Comprehensive Loss
(in thousands, except per share amounts)

	Three Months Ended September 30,
	2019			2018

Revenues:
Subscriptions	$	80,066		$	69,768
Software licenses	2,576			4,512
Service and maintenance	24,825			27,405
Other	709			752
Total revenues	108,176			102,437
Cost of revenues:
Subscriptions	32,765			31,669
Software licenses	161			231
Service and maintenance	13,053			12,706
Other	516			524
Total cost of revenues	46,495			45,130
Gross profit	61,681			57,307
Operating expenses:
Sales and marketing	25,688			23,022
Product development and engineering	18,349			16,565
General and administrative	13,345			13,865
Amortization of acquisition-related intangible assets	4,950			5,326
Total operating expenses	62,332			58,778
Loss from operations	(651		)	(1,471		)
Other expense, net	(713		)	(781		)
Loss before income taxes	(1,364		)	(2,252		)
(Provision for) benefit from income taxes	(3		)	1,334
Net loss	$	(1,367	)	$	(918	)
Basic and diluted net loss per share:	$	(0.03	)	$	(0.02	)
Shares used in computing basic and diluted net loss per share:	41,487			39,689
Other comprehensive loss, net of tax:
Unrealized loss on available for sale securities	(3		)	(2		)
Change in fair value on interest rate hedging instruments	(677		)	327
Minimum pension liability adjustments	180			(46		)
Foreign currency translation adjustments	(5,879		)	(1,367		)
Other comprehensive loss, net of tax:	(6,379		)	(1,088		)
Comprehensive loss	$	(7,746	)	$	(2,006	)

See accompanying notes.



Bottomline Technologies (de), Inc.
Unaudited Condensed Consolidated Statements of Stockholders' Equity
(in thousands)
Three Months Ended September 30, 2019
	Common Stock		Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss)	Treasury Stock		Accumulated Deficit	Total Stockholders' Equity
	Shares	Amount	Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss)	Shares	Amount	Accumulated Deficit	Total Stockholders' Equity
Balance at June 30, 2019	46,995	$47	$721,438	$(43,593)	5,680	$(127,095)	$(171,420)	$379,377
Issuance of common stock for employee stock purchase plan and upon exercise of stock options	13	—	775	—	(60)	1,399	—	2,174
Vesting of restricted stock awards	377	—	—	—	—	—	—	—
Repurchase of common stock to be held in treasury	—	—	—	—	233	(10,005)	—	(10,005)
Stock compensation plan expense	—	—	11,099	—	—	—	—	11,099
Minimum pension liability adjustments, net of tax	—	—	—	180	—	—	—	180
Net loss	—	—	—	—	—	—	(1,367)	(1,367)
Cumulative effect of adoption of updated lease standard	—	—	—	—	—	—	37	37
Unrealized loss on available for sale securities, net of tax	—	—	—	(3)	—	—	—	(3)
Change in fair value on interest rate hedging instruments	—	—	—	(677)	—	—	—	(677)
Foreign currency translation adjustment	—	—	—	(5,879)	—	—	—	(5,879)
Balance at September 30, 2019	47,385	$47	$733,312	$(49,972)	5,853	$(135,701)	$(172,750)	$374,936



Three Months Ended September 30, 2018
	Common Stock		Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss)	Treasury Stock		Accumulated Deficit	Total Stockholders' Equity
	Shares	Amount	Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss)	Shares	Amount	Accumulated Deficit	Total Stockholders' Equity
Balance at June 30, 2018	44,834	$45	$678,549	$(30,633)	5,806	$(129,914)	$(207,115)	$310,932
Issuance of common stock for employee stock purchase plan and upon exercise of stock options	17	—	20	—	(76)	1,698	—	1,718
Vesting of restricted stock awards	390	—	—	—	—	—	—	—
Stock compensation plan expense	—	—	12,361	—	—	—	—	12,361
Warrant settlements	895	1	(5)	—	—	—	—	(4)
Minimum pension liability adjustments, net of tax	—	—	—	(46)	—	—	—	(46)
Net loss	—	—	—	—	—	—	(918)	(918)
Cumulative effect of adoption of updated revenue recognition standard	—	—	—	—	—	—	26,263	26,263
Unrealized loss on available for sale securities	—	—	—	(2)	—	—	—	(2)
Change in fair value on interest rate hedging instruments	—	—	—	327	—	—	—	327
Foreign currency translation adjustment	—	—	—	$(1,367)	—	—	—	$(1,367)
Balance at September 30, 2018	46,136	$46	$690,925	$(31,721)	5,730	$(128,216)	$(181,770)	$349,264



Bottomline Technologies (de), Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)

	Three Months Ended September 30,
	2019			2018
Operating activities:
Net loss	$	(1,367	)	$	(918	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Amortization of acquisition-related intangible assets	4,950			5,326
Stock-based compensation plan expense	11,044			12,342
Depreciation and other amortization	6,092			5,640
Gain on sale of cost-method investment	—			(237		)
Deferred income tax benefit	(368		)	(1,794		)
Provision for allowances on accounts receivable	67			44
Amortization of debt issuance costs	103			104
Amortization of discount on investments	(28		)	(37		)
Loss on disposal of equipment	35			592
Loss on foreign exchange	259			126
Changes in operating assets and liabilities:
Accounts receivable	11,025			5,239
Prepaid expenses and other current assets	(3,268		)	(2,031		)
Operating lease right-of-use asset, net	975			—
Other assets	(1,077		)	(955		)
Accounts payable	1,214			246
Accrued expenses	(571		)	(2,828		)
Operating lease liabilities	(823		)	—
Customer account liabilities	1,609			496
Deferred revenue	(11,969		)	(9,086		)
Other liabilities	210			(287		)
Net cash provided by operating activities	18,112			11,982
Investing activities:
Acquisition of businesses and assets, net of cash and restricted cash acquired	—			(8,895		)
Purchases of other investments	(87		)	—
Proceeds from sale of cost-method investment	—			237
Purchases of available-for-sale securities	(6,274		)	(2,665		)
Proceeds from sales of available-for-sale securities	3,700			2,700
Capital expenditures, including capitalization of software costs	(11,449		)	(8,378		)
Net cash used in investing activities	(14,110		)	(17,001		)
Financing activities:
Repurchase of common stock	(10,005		)	—
Repayment of amounts borrowed under revolving credit facility	—			(40,000		)
Repayment of notes payable	(182		)	(183		)
Settlement of warrants	—			(4		)
Debt issuance costs related to credit facility	—			(597		)
Proceeds from exercise of stock options and employee stock purchase plan	2,174			1,718
Net cash used in financing activities	(8,013		)	(39,066		)
Effect of exchange rate changes on cash	(1,970		)	(946		)
Decrease in cash, cash equivalents and restricted cash	(5,981		)	(45,031		)
Cash, cash equivalents and restricted cash at beginning of period	97,801			124,613
Cash, cash equivalents and restricted cash at end of period	$	91,820		$	79,582

Cash and cash equivalents at end of period	$	84,751		$	76,371



Cash held for customers at end of period	7,069		3,211
Cash, cash equivalents and restricted cash at end of period	$	91,820	$	79,582
Supplemental disclosures of non-cash financing activities:
Issuance of common stock upon settlement of the warrants	$	—	$	55,796

See accompanying notes.

Bottomline Technologies (de), Inc.

~~Unaudited Condensed Consolidated Balance Sheets~~

~~(in thousands)~~

   December 31, June 30,
   2017 2017
ASSETS

Current assets:

Cash and cash equivalents
   $ 64,051 $ 124,569
Cash and cash equivalents, held for customers
   3,481 —
Marketable securities
   10,004 1,973
Accounts receivable net of allowances for doubtful accounts of $973 at December 31, 2017 and $923 at June 30, 2017
   78,073 64,244
Prepaid expenses and other current assets
   18,556 16,807


Total current assets
   174,165 207,593
Property and equipment, net
   27,199 26,195
Goodwill
   202,083 194,700
Intangible assets, net
   173,266 171,280
Other assets
   18,058 17,671


Total assets
   $ 594,771 $ 617,439


LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable
   $ 10,268 $ 9,013
Accrued expenses and other current liabilities
   28,411 29,179
Customer account liabilities
   3,481 —
Deferred revenue
   59,835 74,113
Convertible senior notes
   —   183,682


Total current liabilities
   101,995 295,987
Borrowings under credit facility
   150,000 —
Deferred revenue,non-current
   25,172 22,047
Deferred income taxes
   13,452 15,433
Other liabilities
   22,202 22,016


Total liabilities
   312,821 355,483
Stockholders’ equity

Preferred Stock, $.001 par value:

Authorizedshares-4,000; issued and outstanding shares-none
   —   —
Common Stock, $.001 par value:

Authorizedshares-100,000; issuedshares-44,075 at December 31, 2017 and 42,797 at June 30, 2017; outstandingshares-38,197 at December 31, 2017 and 37,443 at June 30, 2017
   44 43
Additionalpaid-in-capital
   660,701 624,001
Accumulated other comprehensive loss
   (29,671 ) (32,325 )
Treasury stock: 5,878 shares at December 31, 2017 and 5,354 shares at June 30, 2017, at cost
   (131,528 ) (113,071 )
Accumulated deficit
   (217,596 ) (216,692 )


Total stockholders’ equity
   281,950 261,956


Total liabilities and stockholders’ equity
   $ 594,771 $ 617,439

~~See accompanying notes.~~

~~Bottomline Technologies (de), Inc.~~

~~Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)~~

~~(in thousands, except per share amounts)~~

   Three Months Ended
December 31, Six Months Ended
December 31,
   2017 2016 2017 2016
Revenues:

Subscriptions and transactions
   $ 63,187 $ 55,644 $ 123,901 $ 107,776
Software licenses
   2,620 3,492 4,985 5,613
Service and maintenance
   28,433 25,920 55,775 53,593
Other
   955 1,672 1,830 2,830


Total revenues
   95,195 86,728 186,491 169,812
Cost of revenues:

Subscriptions and transactions
   27,201 24,782 54,612 48,668
Software licenses
   229 196 399 324
Service and maintenance
   12,968 13,416 25,200 26,701
Other
   701 1,178 1,368 2,056


Total cost of revenues
   41,099 39,572 81,579 77,749


Gross profit
   54,096 47,156 104,912 92,063
Operating expenses:

Sales and marketing
   21,396 19,325 40,701 38,200
Product development and engineering
   13,892 13,082 27,707 26,017
General and administrative
   10,981 11,772 22,810 24,476
Amortization of acquisition-related intangible assets
   5,702 6,090 10,890 12,375
Goodwill impairment charge
   —   7,529 —   7,529


Total operating expenses
   51,971 57,798 102,108 108,597


Income (loss) from operations
   2,125 (10,642 ) 2,804 (16,534 )
Other expense, net
   (3,532 ) (4,182 ) (7,995 ) (8,117 )


Loss before income taxes
   (1,407 ) (14,824 ) (5,191 ) (24,651 )
Income tax benefit
   4,495 4,478 4,038 3,797


Net income (loss)
   $ 3,088 $ (10,346 ) $ (1,153 ) $ (20,854 )


Net income (loss) per share:

Basic
   $ 0.08 $ (0.27 ) $ (0.03 ) $ (0.55 )


Diluted
   $ 0.08 $ (0.27 ) $ (0.03 ) $ (0.55 )


Shares used in computing net income (loss) per share:

Basic
   38,087 37,769 37,908 37,854


Diluted
   39,344 37,769 37,908 37,854


Other comprehensive income (loss), net of tax:

Unrealized loss on available for sale securities
   (3 ) (49 ) (3 ) (106 )
Unrealized gain on interest rate hedging transactions (net of income tax provision of $248 for the three and six months ended December 31, 2017)
   604 —   369 —
Minimum pension liability adjustments
   38 610 142 625
Foreign currency translation adjustments
   773 (8,402 ) 2,146 (9,459 )


Other comprehensive income (loss), net of tax:
   1,412 (7,841 ) 2,654 (8,940 )


Comprehensive income (loss)
   $ 4,500 $ (18,187 ) $ 1,501 $ (29,794 )

~~See accompanying notes.~~

~~Bottomline Technologies (de), Inc.~~

~~Unaudited Condensed Consolidated Statements of Cash Flows~~

~~(in thousands)~~

   Six Months Ended
December 31,
   2017 2016
Operating activities:

Net loss
   $ (1,153 ) $ (20,854 )
Adjustments to reconcile net loss to net cash provided by operating activities:

Amortization of acquisition-related intangible assets
   10,890 12,375
Stock compensation expense
   16,540 16,855
Depreciation and other amortization
   9,543 8,241
Goodwill impairment charge
   —   7,529
Deferred income tax benefit
   (4,745 ) (5,200 )
Provision for allowances on accounts receivable
   75 14
Amortization of debt issuance costs
   711 618
Amortization of debt discount
   5,574 6,208
Amortization of premium (discount) on investments
   (5 ) 148
Gain (loss) on disposal of equipment
   (10 ) 36
Gain on foreign exchange
   (26 ) (122 )
Changes in operating assets and liabilities:

Accounts receivable
   (12,326 ) 2,519
Prepaid expenses and other current assets
   (1,089 ) (956 )
Other assets
   926 520
Accounts payable
   (145 ) (209 )
Accrued expenses
   (1,932 ) 305
Deferred revenue
   (12,443 ) (11,155 )
Other liabilities
   (697 ) 706


Net cash provided by operating activities
   9,688 17,578
Investing activities:

Acquisition of businesses, net of cash acquired
   (13,747 ) —
Purchase ofavailable-for-sale securities
   (9,935 ) (8,833 )
Proceeds from sales ofavailable-for-sale securities
   1,903 28,178
Capital expenditures, including capitalization of software costs
   (9,137 ) (15,345 )
Proceeds from disposal of property and equipment
   10 —


Net cash provided by (used in) investing activities
   (30,906 ) 4,000
Financing activities:

Repurchase of common stock
   —   (14,971 )
Repayment of convertible senior notes
   (189,750 ) —
Amounts borrowed under revolving credit facility
   150,000 —
Repayment of notes payable
   (2,204 ) —
Debt issuance costs related to credit facility
   —   (2,137 )
Proceeds from exercise of stock options and employee stock purchase plan
   1,705 1,412


Net cash used in financing activities
   (40,249 ) (15,696 )
Effect of exchange rate changes on cash
   949 (3,444 )


Increase (decrease) in cash and cash equivalents
   (60,518 ) 2,438
Cash and cash equivalents at beginning of period
   124,569 97,174


Cash and cash equivalents at end of period
   $ 64,051 $ 99,612


Supplemental disclosures ofnon-cash financing activities:

Issuance of note payable to seller in connection with acquisition
   $ 1,836 $ —
Issuance of common stock upon conversion of convertible senior notes
   $ 19,736 $ —
Receipt of common stock upon settlement of Note Hedges
   $ 19,964 $ —

~~See accompanying notes.~~

~~Bottomline Technologies (de), Inc.~~

Notes to Unaudited Condensed Consolidated Financial Statements

~~December 31, 2017~~

September 30, 2019

Note 1—Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Bottomline Technologies (de), Inc. (referred to below as we, us, our or Bottomline) have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form10-Q and Article 10 of RegulationS-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States ~~(U.S. GAAP)~~(GAAP) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals and adjustments) considered necessary for a fair presentation of the interim financial information have been included. Operating results for the three ~~and six~~ months ended ~~December 31, 2017~~September 30, 2019 are not necessarily indicative of the results that may be expected for any other interim period or for the fiscal year ending June 30, ~~2018 (fiscal year 2018).~~2020. For further information, refer to the financial statements and footnotes included in the Annual Report on Form10-K as filed with the Securities and Exchange Commission ~~(SEC)~~ on August ~~28, 2017.~~

29, 2019.

Note 2—Recent Accounting Pronouncements

Recently Adopted Pronouncements

~~Cloud Computing Arrangements:~~

Leases:In ~~April 2015,~~February 2016, the Financial Accounting Standards Board (FASB) issued an accounting standard update which provides guidance as to whether a cloud computing arrangement (e.g., software as a service, platform as a service, infrastructure as a service, and other similar arrangements) includes a software license and, based on that determination, how to account for such arrangements. We adopted this standard effective July 1, 2016 on a prospective basis. The adoption of this standard did not have a material impact on our financial statements. In December 2016, the FASB issued a technical update to this standard, clarifying that any software license within the scope of this accounting standard shall be accounted for as an intangible asset by the licensee. We adopted the technical update on July 1, 2017, and reclassified software licenses from property and equipment, net to intangible assets, net in our consolidated balance sheets for all periods presented. The total amount reclassified in our June 30, 2017 consolidated balance sheet was $29.1 million.

~~Share-Based Compensation~~: In March 2016, the FASB issued an accounting standard update intended to simplify several areas of accounting for share-based compensation arrangements, including the income tax impact of excess tax benefits and tax deficiencies, accounting for forfeitures, statutory tax withholding requirements and the presentation of excess tax benefits in the statement of cash flows. We adopted this standard on July 1, 2017 (the first quarter of our fiscal year 2018). Upon adoption of this standard, excess tax benefits of $0.2 million were recognized as a component of our net deferred tax assets, with an offsetting cumulative effect adjustment recorded as a reduction to our accumulated deficit in our consolidated balance sheet. Please refer to~~Note 7 Income Taxes~~ ~~for additional discussion of the recognition of excess tax benefits.~~

We adopted the cash flow presentation of excess tax benefits retrospectively, which resulted in the reclassification of excess tax benefits associated with stock compensation of $0.06 million from financing activities to operating activities for the six months ended December 31, 2016 in our consolidated statement of cash flows.

The new standard also allows companies to make an accounting policy election to either estimate expected forfeitures or account for them as they occur, and we have elected to continue to estimate forfeitures.

~~Consolidation:~~In October 2016, the FASB issued an accounting standard update to remove the requirement that a single decision maker consider, in its assessment of primary beneficiary, its indirect interest held through related parties under common control to be the equivalent of a direct interest in a variable interest entity (VIE). Instead, indirect interest held through related parties under common control will be included in the primary beneficiary assessment based on proportionate basis, consistent with the indirect interest held through other parties. We adopted this standard effective July 1, 2017. The adoption of this standard did not have an impact on our financial statements.

~~Accounting Pronouncements to be Adopted~~

~~Revenue Recognition:~~ In May 2014, the FASB issued an accounting standard update which provides for new revenue recognition guidance, superseding nearly all existing revenue recognition guidance. The core principle of the new guidance is to recognize revenue when promised goods or services are transferred to customers, in an amount that reflects the consideration which the vendor expects to receive for those goods or services. The new standard is expected to require significantly more judgment and estimation within the revenue recognition process than required under existing U.S. GAAP, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to separate performance obligations. The new standard is also expected to significantly increase the financial statement disclosure related to revenue recognition. This standard is currently effective for us on July 1, 2018 (the first quarter of our fiscal year ending June 30, 2019) using one of two methods of adoption, subject to the election of certain practical expedients: (i) retrospective to each prior reporting period presented, with the option to elect certain practical expedients as defined within the standard; or (ii) modified retrospective with the cumulative effect of initially applying the standard recognized at the date of initial application inclusive of certain additional disclosures.

We are continuing to evaluate the expected impact of this standard on our consolidated financial statements and currently plan to adopt the standard using the modified retrospective method. While our assessment of the impact of this standard is not complete, we currently believe that the most significant impacts will be in certain areas:

Under the new standard, vendor specific objective evidence (VSOE) will no longer be required to determine the fair value of elements in a software arrangement. As a result, the absence of VSOE in certain software arrangements will no longer result in strict revenue deferral. Absent a change in how we license our products, we believe that this will result in greater~~up-front~~ ~~recognition of software revenue for certain of our license arrangements.~~

Under the new standard, certain expenses we incur will require deferral and recognition over the period in which revenue is recognized, subject to certain exceptions. We believe that this will result in the deferral of certain fulfillment costs associated with our SaaS offerings which would then be recognized as expense over a multi-year period; such costs are expensed directly as incurred today.

Under the new standard, costs to obtain a contract, including sales commissions, will be capitalized and amortized on a basis that is consistent with the transfer of goods and services to its customer. We anticipate that this will result in the deferral of certain commission related costs that, today, are expensed as incurred.

Significantly enhanced financial statement disclosures related to revenue, including information related to the allocation of transaction price across undelivered performance obligations, will be required.

However, we are unable to quantify the impact of these outcomes at this time, nor can we ensure that our continuing analysis and interpretation of the standard will result in these financial reporting outcomes or additional material impacts could be identified.

~~Financial Instruments—Classification and Measurement:~~In January 2016, the FASB issued an accounting standard update which requires, among other things, that entities measure equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) at fair value, with changes in fair value recognized in earnings. Under the standard, entities will no longer be able to recognize unrealized holding gains and losses on equity securities classified as available for sale as a component of other comprehensive income (OCI). Subject to certain exceptions, entities will be able to elect to record equity investments without readily determinable fair values at cost, less impairment, plus or minus adjustments for observable price changes, with all such changes recognized in earnings. This new standard does not change the guidance for classifying and measuring investments in debt securities and loans. The standard is effective for us on July 1, 2018 (the first quarter of our fiscal year 2019) on a prospective basis. We are currently evaluating the anticipated impact of this standard on our financial statements. We have certain cost method investments of $7.7 million at December 31, 2017, and to the extent that there are observable price changes following the date of adoption, the accounting for these investments could be affected.

~~Leases:~~~~In February 2016, the FASB~~ issued an accounting standard update which requires balance sheet recognition of a lease liability and a correspondingright-of-use (ROU) asset for all leases ~~with terms longer than twelve months.~~unless, as a policy election, a lessee elects not to apply the standard to short-term leases. The pattern of recognition of lease related revenue and expenses will be dependent on its classification. ~~The updated~~We adopted the standard ~~requires additional disclosures to enable users of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. This standard is effective for us~~ on July 1, 2019 ~~(the first quarter~~and elected the package of practical expedients which permitted us not to reassess prior conclusions regarding lease identification, lease classification and treatment of initial direct costs. For all asset classes, we adopted the lessee practical expedient to combine lease and non-lease components and made a policy election not to recognize a ROU asset or lease liability for leases with a term less than twelve months. We also availed ourselves of the adoption expedient not to adjust our ~~fiscal year ending June 30, 2020) with early~~comparative period financial statements for the effects of the new standard or make additional disclosures for periods prior to the effective date.

The adoption ~~permitted;~~of the new lease standard resulted in the recognition of operating right-of-use assets and operating lease liabilities of $26.7 million and $29.0 million, respectively, in our consolidated balance sheet. The difference between the right-of-use assets and lease liabilities is primarily related to the reclassification of deferred rent on our balance sheet at the date of adoption. The adoption isof this standard did not have a material impact on ~~a modified retrospective basis. We anticipate that~~our consolidated statements of comprehensive loss or consolidated statements of cash flows.

Please refer to Note 10 Commitments and Contingencies for discussion of the adoption of this new standard.

Derivatives and Hedging: In August 2017, the FASB issued an accounting standard ~~will have~~update that more closely aligns the results of cash flow and fair value hedge accounting with risk management activities through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results in the financial statements. The guidance expands hedge accounting for both nonfinancial and financial risk components and refines the measurement of hedge results to better reflect an entity's hedging strategies. In October 2018, the FASB issued an accounting standard update to expand the list of United States benchmark interest rates permitted in the application of hedge accounting. The revised standard allows the use of the Overnight Index Swap rate based on the Secured Overnight Financing Rate as a ~~material impact to our consolidated balance sheet due to the recognition of right of use assets and lease liabilities; however, we are still evaluating the anticipated impact of~~U.S. benchmark interest rate for hedge accounting purposes. We adopted this standard effective July 1, 2019 and it did not have an impact on our financial statements.

Share-Based Compensation - Nonemployee Share-Based Payment Accounting:In June 2018, the FASB issued an accounting standard update to simplify the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees. Under the revised standard, measurement of nonemployee awards will be fixed at the grant date by estimating the fair value of the equity instruments to be issued. Additionally, during the vesting period, nonemployee awards that contain a performance condition that affects the quantity or other terms of the award will be measured based on the probable outcome. Upon adoption, entities must recognize a cumulative-effect adjustment to retained earnings as of the beginning of the annual period of adoption for equity-classified nonemployee awards for which a measurement date has not been established and liability-classified nonemployee awards that have not been settled. We adopted this standard effective July 1, 2019 and it did not have an impact on our financial statements.

Accounting Pronouncements to be Adopted

Financial ~~Instruments—~~Instruments - Credit Losses: In June 2016, the FASB issued an accounting standard update that introduces a new forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments including trade receivables. The estimate of expected credit losses will require entities to incorporate historical information, current information and reasonable and supportable forecasts. This standard also expands the disclosure requirements to enable users of financial statements to understand the entity’s assumptions, models and methods for estimating expected credit losses. This standard is effective for us on

July 1, 2020, ~~(the first quarter of our fiscal year 2021)~~ with early application permitted. We are currently evaluating the anticipated impact of this standard on our financial ~~statements.~~

~~Statement~~statements as well as timing of ~~Cash Flows:~~In August and November of 2016, the FASB issued updates to the accounting standard which addresses the classification and presentation of certain cash receipts, cash payments and restricted cash in the statement of cash flows. The standard is effective for us on July 1, 2018 (the first quarter of our fiscal year 2019) and requires a retrospective approach. Early adoption is permitted, including adoption in an interim period. We are currently evaluating the anticipated impact of this standard on our financial statements.

adoption.

Goodwill Impairment:In January 2017, the FASB issued an accounting standard update to simplify the test for goodwill impairment which removes step 2 from the goodwill impairment test. Under the revised standard, an entity will perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The loss should not exceed the total amount of goodwill allocated to the reporting unit. The standard is effective for us on July 1, 2020 ~~(the first quarter of our fiscal year 2021)~~ on a prospective basis, with early adoption ~~permitted for periods beginning on or after January 1, 2017. We are currently evaluating the impact of this standard on our financial statements and the timing of adoption.~~

~~Defined Benefit Plan Expenses:~~In March 2017, the FASB issued an accounting standard update that changes the income statement presentation of defined benefit plan expense by requiring separation between operating expense (service cost component) and~~non-operating~~ ~~expense (all other components of net periodic defined benefit cost). Under the revised standard, the operating expense component will be reported with similar compensation costs, while thenon-operating~~ components will be reported in Other Income and Expense. In addition, only the service cost component is eligible for capitalization as part of an asset such as property, plant and equipment. This standard is effective for us on July 1, 2018 (the first quarter of our fiscal year 2019).permitted. We do not currently ~~believe that~~expect the adoption of this standard ~~will~~to have a material impact on our financial ~~statements.~~

statements and we do not expect to early adopt the standard.

Note 3—Revenue Recognition

Disaggregation of Revenue

The tables below present our revenue disaggregated by major product category and the related financial statement classification of revenue for the three months ended September 30, 2019 and 2018.



	Three Months Ended September 30, 2019
	Settlement Network Solutions ⁽¹⁾		Legal Spend Management Solutions ⁽¹⁾		Banking Solutions		Payments and Transactional Documents		Healthcare ⁽²⁾		Other ⁽²⁾		Total
	(in thousands)
Financial statement classification:
Subscriptions	$	27,247	$	20,574	$	18,373	$	12,880	$	844	$	148	$	80,066
Software licenses	187		—		516		1,327		195		351		2,576
Service and maintenance	4,821		—		5,280		11,871		829		2,024		24,825
Other	—		—		—		693		16		—		709
Total revenues	$	32,255	$	20,574	$	24,169	$	26,771	$	1,884	$	2,523	$	108,176



	Three Months Ended September 30, 2018
	Settlement Network Solutions ⁽¹⁾		Legal Spend Management Solutions ⁽¹⁾		Banking Solutions		Payments and Transactional Documents		Healthcare ⁽²⁾		Other ⁽²⁾		Total
	(in thousands)
Financial statement classification:
Subscriptions	$	24,282	$	18,396	$	15,666	$	10,569	$	826	$	29	$	69,768
Software licenses	572		—		1,326		2,154		419		41		4,512
Service and maintenance	6,325		—		5,260		12,759		898		2,163		27,405
Other	—		—		—		752		—		—		752
Total revenues	$	31,179	$	18,396	$	22,252	$	26,234	$	2,143	$	2,233	$	102,437

——————

⁽¹⁾ Cloud Solutions segment

⁽²⁾ Other segment

Remaining Performance Obligations

The transaction price allocated to remaining performance obligations that are unsatisfied, or partially unsatisfied, as of September 30, 2019 represents contracted revenue that will be recognized in future periods. Our future performance obligations consist primarily of SaaS hosting/subscription obligations relating to future periods, contracted but uncompleted professional services obligations and support and maintenance obligations. During the three months ended September 30, 2019 and 2018, the amount of revenue recognized from performance obligations satisfied in prior periods was not significant.

Revenue allocated to remaining performance obligations was $391.2 million as of September 30, 2019 of which we expect to recognize approximately $149.0 million over the next twelve months and the remainder thereafter. We exclude from our measure of remaining performance obligations amounts related to future transactional or usage-based fees for which the value of services transferred to the customer will correspond to the amount we will invoice for those services.

Contract Assets and Liabilities

The table below presents our accounts receivable, contract assets and deferred revenue balances as of June 30, 2019 and September 30, 2019.



	September 30,		June 30,
	2019		2019		$ Change
	(in thousands)
Accounts receivable	$	65,409	$	77,285	$	(11,876	)
Contract assets	5,747		5,135		612
Deferred revenue	79,083		92,159		(13,076		)

Accounts receivable include amounts related to our contractual right to consideration for both completed and partially completed performance obligations, including amounts that may not have been invoiced. Contract assets arise when we recognize revenue in excess of amounts billed to the customer and the right to payment is contingent on conditions other than simply the passage of time, such as the future completion of a related performance obligation. Contract assets are classified in our consolidated balance sheets as other current assets for those contract assets with amortization periods of one year or less and other assets for contract assets with amortization periods greater than one year. Deferred revenue consists of billings or customer payments in excess of amounts recognized as revenue.

The decrease in deferred revenue at September 30, 2019 as compared to June 30, 2019 reflects the impact on deferred revenue of our recognition of revenue from maintenance contracts, a significant portion of which are billed on a calendar year basis, as well as the impact of foreign exchange changes.

For the three months ended September 30, 2019 and 2018, we recognized $34.0 million and $27.1 million in revenue from amounts that were included in deferred revenue as of June 30, 2019 and 2018, respectively.

Note 4—Fair Value

Fair Values of Assets and Liabilities

We measure fair value at 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. In determining fair value, the assumptions that market participants would use in pricing an asset or liability (the inputs) are based on a tiered fair value hierarchy consisting of three levels, as follows:

Level 1: Observable inputs such as quoted prices for identical assets or liabilities in active markets.

Level 2: Other inputs that are observable directly or indirectly, such as quoted prices for similar instruments in active markets or for similar markets that are not active.

Level 3: Unobservable inputs for which there is little or no market data and which require us to develop our own assumptions about how market participants would price the asset or liability.

Valuation techniques for assets and liabilities include methodologies such as the market approach, the income approach or the cost approach, and may use unobservable inputs such as projections, estimates and management’s interpretation of current market data. These unobservable inputs are only utilized to the extent that observable inputs are not available or cost-effective to obtain.

At ~~December 31, 2017~~September 30, 2019 and June 30, ~~2017,~~2019, our assets and liabilities measured at fair value on a recurring basis were as follows:

   December 31, 2017    June 30, 2017
   Fair Value Measurements
Using Input Types       Fair Value Measurements
Using Input Types
   Level 1    Level 2    Level 3    Total    Level 1    Level 2    Level 3    Total
   (in thousands)
Assets

Money market funds (cash and cash equivalents)
   $ 89    $ —      $ —      $ 89    $ 593    $ —      $ —      $ 593
Available for sale securities—Debt

U.S. Corporate
   $ —      $ 3,475    $ —      $ 3,475    $ —      $ 1,906    $ —      $ 1,906
Government—U.S.
   —      6,461    —      6,461    —      —      —      —
















Total available for sale securities
   $ —      $ 9,936    $ —      $ 9,936    $ —      $ 1,906    $ —      $ 1,906
Derivative interest rate swap
   $ —      $ 782    $ —      $ 782    $ —      $ —      $ —      $ —
Liabilities

Derivative interest rate swap
   $ —      $ 165    $ —      $ 165    $ —      $ —      $ —      $ —

September 30, 2019 June 30, 2019
Fair Value Measurements Using Input Types Fair Value Measurements Using Input Types
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
(in thousands)
Assets
Money market funds (cash and cash equivalents) $ 263
$ —
$ —
$ 263
$ 2,807
$ —
$ —
$ 2,807
Available for sale securities - Debt
Government - U.S. —
10,077
—
10,077
—
7,479
—
7,479
Total assets $ 263
$ 10,077
$ —
$ 10,340
$ 2,807
$ 7,479
$ —
$ 10,286
Liabilities
Short-term derivative interest rate swap $ —
$ 233
$ —
$ 233
$ —
$ 37
$ —
$ 37
Long-term derivative interest rate swap $ —
$ 1,729
$ —
$ 1,729
$ —
$ 1,248
$ —
$ 1,248
Total liabilities $ —
$ 1,962
$ —
$ 1,962
$ —
$ 1,285
$ —
$ 1,285

Fair Value of Financial Instruments

We have certain financial instruments which consist of cash and cash equivalents, cash and cash equivalents held for customers, marketable securities, accounts receivable, accounts payable, customer account liabilities, a derivative interest rate ~~swap as more fully described in~~~~Note 11 Derivative Instruments~~swaps and debt drawn on our Credit Facility ~~as more fully described in~~(see Note ~~10 Indebtedness~~11). Fair value information for each of these instruments is as follows:

Cash and cash equivalents, cash and cash equivalents held for customers, accounts receivable, accounts payable and customer account liabilities fair ~~value~~values approximates their carrying values, due to the short-term nature of these instruments.

Marketable securities classified as held to maturity, all of which mature within one year, are recorded at amortized cost, which at ~~December 31, 2017~~September 30, 2019 and June 30, ~~2017,~~2019, approximated fair value.

Marketable debt securities classified as available for sale are recorded at fair value. Unrealized gains and losses are included as a component of other accumulated ~~other~~ comprehensive ~~loss~~income (loss) in stockholders’ equity, net of tax. We use the specific identification method to determine any realized gains or losses from the sale of our marketable debt securities classified as available for sale.

The fair value of our derivative interest rate ~~swap is~~swaps are based on the present value of projected cash flows that will occur over the life of the ~~instrument,~~instruments, after considering certain contractual terms ~~of the arrangement.~~and counterparty credit risk.

The carrying value of assets related to deposits we have made to fund future requirements associated with Israeli severance arrangements was ~~$1.5~~$1.1 million and $1.2 million at ~~both December 31, 2017~~September 30, 2019 and June 30, ~~2017,~~2019, respectively, which approximated their fair value.

We have certain other investments ~~accounted~~ for ~~at cost.~~which there is no readily determinable fair value. The carrying value of these investments was ~~$7.7~~$0.8 million and $0.7 million at ~~both December 31, 2017~~September 30, 2019 and June 30, ~~2017~~2019, respectively, and they are reported as a component of our other assets. These investments are recorded at cost, less ~~any write-downs~~impairment (if any), plus or minus adjustments for ~~other-than-temporary impairment charges. To determine the~~observable price changes.

We have borrowings of $110 million against our Credit Facility. The fair value of these ~~investments, we use all available financial information including information based on recent or pending third-party equity investments in these entities. In certain instances,~~borrowings, which are classified as Level 2, approximates their carrying value at September 30, 2019, as the instrument carries a ~~cost method investment’s fair value may not be estimated if there are no identified events or changes in circumstances that would indicate a significant adverse effect on the fair value~~variable rate of ~~the investment and to do so would be impractical, and as a result, we have not estimated the fair value of these investments.~~interest which reflects current market rates.

•

~~We have borrowings of $150 million against our Credit Facility (refer to~~~~Note 10 Indebtedness~~ for a discussion of this credit agreement). The fair value of these borrowings, which are classified as Level 2, approximates their carrying value at December 31, 2017, as the instrument carries a variable rate of interest and reflects current market rates.

Marketable Securities

The table below presents information regarding our marketable securities by major security type as of ~~December 31, 2017~~September 30, 2019 and June 30, ~~2017.~~

   December 31, 2017    June 30, 2017
   Held to
Maturity    Available
for Sale    Total    Held to
Maturity    Available
for Sale    Total
   (in thousands)
Marketable securities:

Corporate and other debt securities
   $ 68    $ 9,936    $ 10,004    $ 67    $ 1,906    $ 1,973












Total marketable securities
   $ 68    $ 9,936    $ 10,004    $ 67    $ 1,906    $ 1,973

2019.



	September 30, 2019						June 30, 2019
	Held to Maturity		Available for Sale		Total		Held to Maturity		Available for Sale		Total
	(in thousands)
Marketable securities:
Corporate and other debt securities	$	60	$	10,077	$	10,137	$	62	$	7,479	$	7,541
Total marketable securities	$	60	$	10,077	$	10,137	$	62	$	7,479	$	7,541

The following table summarizes the estimated fair value of our investments in available for sale marketable securities classified by the contractual maturity date of the securities:

   December 31, 2017
   (in thousands)
Due within 1 year
   $ 9,936
Due in 1 year through 5 years
   —


Total
   $ 9,936



	September 30, 2019
	(in thousands)
Due within 1 year	$	10,077
Due in 1 year through 5 years	—
Total	$	10,077

All of our available for sale marketable securities are ~~included in~~classified as current assets as we do not have the positive intent to hold these investments until maturity and view these investments as available to fund current operations. At December 31, 2017, the difference between the fair value of our available for sale securities and their amortized cost was not significant.

assets.

The following table presents the aggregate fair values and gross unrealized losses for those available for sale investments that were in an unrealized loss position as of ~~December 31, 2017~~September 30, 2019 and June 30, ~~2017,~~2019, respectively, aggregated by investment category and the length of time that individual securities have been in a continuous loss position:

   At December 31, 2017    At June 30, 2017
   Less than 12 Months
   Fair Value    Unrealized Loss    Fair Value    Unrealized Loss
   (in thousands)
U.S. Corporate
   $ 3,475    $ (2 )    $ 1,628    $ (1 )
Government—U.S.
   6,461    (4 )    —      —








Total
   $ 9,936    $ (6 )    $ 1,628    $ (1 )



	At September 30, 2019					At June 30, 2019
	Less than 12 Months
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
	(in thousands)
Government—U.S.	$	1,991	$	(1	)	$	800	$	(1	)
Total	$	1,991	$	(1	)	$	800	$	(1	)

Note ~~4—Acquisitions~~5—Business and ~~Other Investments~~

~~First Capital Cashflow Ltd.~~

Asset Acquisitions

Fiscal Year 2019

During the fiscal year ended June 30, 2019, we completed 3 business acquisitions for aggregate purchase consideration of $24.5 million.

BankSight Software Systems

On ~~October 4, 2017,~~June 3, 2019, we acquired ~~First Capital Cashflow Ltd. (FCC)~~the remaining capital stock of BankSight Software Systems, Inc. (BankSight) for ~~10.5~~$2.8 million ~~British Pound Sterling (approximately $13.9 million based on the exchange rate in effect at the acquisition date)~~ in cash and ~~42,080~~the issuance of 40,000 shares of our common stock. The ~~shares, which were issued to the selling stockholders of FCC who became employees of Bottomline, have~~common stock had vesting conditions tied to the continued ~~employment; as such~~employment of a prior stockholder of BankSight and was therefore excluded from the ~~shares are compensatory and~~purchase price allocation. Prior to the acquisition, we ~~will record share-based payment expense over the underlying stock vesting period of five years. FCC is headquartered and operates~~had a pre-existing relationship with BankSight in the ~~United Kingdom and is~~form of a ~~provider~~minority investment in preferred stock of transaction settlement solutions. The acquisition is expected to strengthen our payment solution capabilities and further enhance our ability to provide secure, scalable technology solutions that enable customers to adapt to and leverage changesBankSight in the ~~business payments environment.~~

~~For~~amount of $3.5 million. The carrying value of our prior investment approximated its fair value at the ~~period ended December 31, 2017,~~time of our ~~consolidated balance sheet reflects $3.5~~acquisition and the total fair value we paid to acquire the outstanding capital stock of BankSight, $6.3 million, was allocated to assets acquired and liabilities assumed. BankSight’s operating results are included in our Banking Solutions segment from the date of ~~cash~~the acquisition forward and ~~cash equivalents held~~did not have a material impact on our revenue or net income (loss).

At September 30, 2019 we were still obtaining fair value estimates for ~~customers and a corresponding $3.5 million of customer account liabilities. Cash and cash equivalents held for customers and customer account liabilities arise as aby-product~~ ~~of FCC’s operations as it is customary to collect client funds and hold them for a short transient period before ultimately disbursing~~ the amounts and settling the corresponding liability. Cash we hold on behalf of clients is segregated from our other corporate cash accounts and is not available for use by us other than to settle the corresponding client liability.

intangible assets acquired. In the preliminary allocation of the purchase price ~~which is preliminary~~ at ~~December 31, 2017,~~September 30, 2019, we recorded $4.7 million of goodwill. The goodwill is not deductible for income tax purposes and arose principally due to the anticipated future benefits arising from the acquisition. Identifiable intangible assets of ~~$10.5~~$1.7 million, consisting primarily of ~~customer~~technology related ~~and other intangible~~ assets, are being amortized over a weighted average estimated useful life of ~~eleven~~11 years. ~~FCC’s~~

Experian Limited

On March 6, 2019, we acquired certain technology assets and customer related assets from Experian Limited (Experian) for 9.5 million British Pound Sterling (approximately $12.6 million based on the exchange rate in effect at the acquisition date). In the allocation of the purchase price, we recorded $1.7 million of goodwill, which is not deductible for income tax purposes, which arose principally due to the anticipated future benefits arising from the acquisition. Identifiable intangible assets of $12.8 million, consisting primarily of customer related assets, are being amortized over a weighted average estimated useful life of 11 years. Experian’s operating results are included in ~~the~~our Payments and Transactional Documents segment from the date of the acquisition forward and did not have a material impact on our revenue or ~~earnings.~~

~~Decillion~~

net income (loss).

In May 2019 we were notified by the United Kingdom's (UK) Competition and Markets Authority (CMA) that it was reviewing our acquisition of these assets from Experian to assess whether the acquisition could result in a substantial lessening of competition. We have since been in an iterative process with the CMA, answering questions about the nature of assets acquired and the overall markets in which the assets will be deployed. The CMA review process is in its second and final phase which is scheduled to conclude in April 2020.

There is a range of possible outcomes to the CMA's review, from clearance of the acquisition to, in a worst-case, divestiture of the acquired asset set; with a range of options in between. While we cannot with certainty predict the outcome of this process, we do not believe that the ultimate outcome will have a material effect on our operating results, financial position or cash flows.

Microgen Banking Systems Limited

On ~~August 14, 2017,~~July 2, 2018, we acquired ~~Singapore-based Decillion Group (Decillion)~~Microgen Banking Systems Limited (Microgen), a UK-based BACS payment company, for ~~total consideration of 6.2~~6.9 million ~~Singapore Dollars~~British Pound Sterling (approximately ~~$4.6~~$9.1 million based on the exchange rate in effect at the acquisition date), consisting of cash of $2.8 million and a note payable of $1.8 million. The note is payable in equal installments over ten quarters starting during the three months ended September 30, 2017. Decillion is a financial messaging solution provider in the Asia Pacific region. Headquartered in Singapore, Decillion has offices in Australia, China, Indonesia, Malaysia and Thailand and they operate a SWIFT service bureau which connects more than 130 financial institutions and corporations to the SWIFT community. This acquisition expands the depth and breadth of our financial messaging solutions, particularly in the Asia Pacific region.

In the allocation of the purchase price, which is preliminary at December 31, 2017, we recorded $1.4 million of goodwill. The goodwill is not deductible for income tax purposes and arose principally due to anticipated future benefits arising from the acquisition. Identifiable intangible assets of $2.4 million, consisting of customer related intangible assets, are being amortized over their estimated useful life of twelve years. Decillion’s. Microgen’s operating results ~~have been~~are included in our ~~Cloud Solutions~~Payments and Transactional Documents segment from the date of the acquisition forward and did not have a material impact on our revenue or ~~earnings.~~

~~Acquisition expenses~~net income (loss).

EMEA Headquarters

In January 2019, we purchased a building in Reading, UK for a base purchase price of ~~approximately $0.8~~16 million ~~were expensed during the six months ended December 31, 2017 related to the Decillion and FCC acquisitions, principally as a component of general and administrative expense.~~

~~Other Investments~~

~~In December 2015, we made a $3.5~~British Pound Sterling (approximately $20.7 million investment in preferred stock of a privately held, early-stage technology company. We have the ability to exercise significant influence over this company; however, we have no ability to exercise control. Investments in common stock or~~in-substance~~ common stock, through which an investor has the ability to exercise significant influence over the operating or financial policies of the investee, are accounted for under the equity method of accounting.~~In-substance~~ ~~common stock is an investment that has risk and reward characteristics that are substantially similar to an entity’s common stock. The preferred stock underlying our investment is notin-substance~~ common stock as its terms include a substantive liquidation preference not available to common stockholders. Accordingly, we account for this investment under the cost method of accounting, subject to periodic review for impairment. Impairment losses, to the extent occurring, would be recorded as an operating expense in the period incurred. Our maximum investment exposure, which is determined based on the ~~cost of our investment, was $3.5 million as of~~exchange rate in effect at the acquisition date), funded with existing cash on hand. When it is ready for its intended use, which we expect will be during the quarter ending December 31, ~~2017 and is located within other assets on~~2019, the building will ultimately replace our ~~consolidated balance sheet. There were no indicators of impairment identified~~current Reading, UK building as ~~of December 31, 2017.~~

We concluded that this company is a VIE as it lacks sufficient equity to finance its activities. However, we also concluded that we are not the primary beneficiary of the VIE as we do not have the power to exert control or direct the activities that most significantly impact the VIE’s economic performance. As we have determined we are not the primary beneficiary, consolidation of the VIE is not required.

our European headquarters.

Note 5—6—Net ~~Income (Loss)~~Loss Per Share

The following table sets forth the computation of basic and diluted net ~~income (loss)~~loss per share:

   Three Months Ended
December 31,    Six Months Ended
December 31,
   2017    2016    2017    2016
   (in thousands, except per share amounts)
Numerator—basic and diluted:

Net income (loss)
   $ 3,088    $ (10,346 )    $ (1,153 )    $ (20,854 )








Denominator:

Shares used in computing basic net income (loss) per share attributable to common stockholders
   38,087    37,769    37,908    37,854








Impact of dilutive securities
   1,257    —      —      —








Shares used in computing diluted net income (loss) per share attributable to common stockholders
   39,344    37,769    37,908    37,854








Basic net income (loss) per share attributable to common stockholders
   $ 0.08    $ (0.27 )    $ (0.03 )    $ (0.55 )








Diluted net income (loss) per share attributable to common stockholders
   $ 0.08    $ (0.27 )    $ (0.03 )    $ (0.55 )



	Three Months Ended September 30,
	2019			2018
	(in thousands, except per share amounts)
Numerator - basic and diluted:
Net loss	$	(1,367	)	$	(918	)
Denominator:
Shares used in computing basic and diluted net loss per share attributable to common stockholders	41,487			39,689
Basic and diluted net loss per share attributable to common stockholders	$	(0.03	)	$	(0.02	)

For the ~~six~~three months ended ~~December 31, 2017,~~September 30, 2019, approximately ~~2.8~~2.3 million shares of unvested restricted stock and stock options were excluded from the calculation of diluted earnings per share as their effect on the calculation would have been anti-dilutive.

For the three ~~and six~~ months ended ~~December 31, 2016,~~September 30, 2018, approximately ~~3.0~~2.8 million ~~and 3.1 million~~ shares ~~respectively,~~ of unvested restricted stock and stock options and warrants for up to 85 thousand shares of our common stock were excluded from the calculation of diluted earnings per share as their effect on the calculation would have been anti-dilutive.

Note 6—7—Operations by Segments and Geographic Areas

Segment Information

Operating segments are the components of our business for which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Our chief operating decision maker is our chief executive officer. Our operating segments are generally organized ~~principally~~ by the type of product or service offered and by geography. During the quarter ended December 31, 2017 we changed the name of one of our reportable segments to Banking Solutions from Digital Banking, and that name change is reflected in the discussion that follows.

Similar operating segments have been aggregated into ~~four~~4 reportable segments as follows:

Cloud Solutions. Our Cloud Solutions segment provides customers ~~predominately~~ with SaaS technology offerings that facilitate electronic payment, electronic invoicing, and spend management. Our legal spend management solutions, which enable customers to create more efficient processes for managing invoices generated by outside law firms while offering insight into important legal spend factors such as expense monitoring and outside counsel performance, are included within this segment. This segment also incorporates our settlement network solutions (financial messaging andPaymode-X). Our settlement network solutions are highly scalable, secure and cost effective and facilitate cash payment and transaction settlement between businesses, their vendors and banks. Revenue within this segment is generally recognized on a subscription or transaction basis or ratably over the ~~estimated life of the customer relationship.~~

contract term.

Banking Solutions. Our Banking Solutions segment provides solutions that are specifically designed for banking and financial institution customers. Our Banking ~~Solution~~Solutions products are ~~now~~ sold predominantly on a ~~subscription~~hosted basis, ~~which~~with revenue recorded over time. This has the effect of contributing to recurring ~~subscription and transaction~~ revenue and the revenue predictability of future periods, but ~~which also delays~~results in revenue recognition over a longer ~~period.~~

period than a traditional on-premise software license transaction.

Payments and Transactional Documents. Our Payments and Transactional Documents segment ~~is a supplier of software products that provide a range of~~supplies financial business process management software solutions, including making and collecting payments, sending

and receiving invoices, and generating and storing business documents. This segment also provides a range of standard professional services and equipment and supplies that complement and enhance our core software products. ~~Revenue associated with the aforementioned products and services~~When licensed for on-premise deployment, software license revenue is typically recorded upon ~~delivery. However, if~~delivery of the software and commencement of the license term. In hosted arrangements, we ~~license products on a subscription basis,~~typically record revenue over time. Professional services revenue is ~~typically~~normally recorded as we perform the work and software support and maintenance revenue is recorded ratably over the ~~subscription period or the expected life of the customer relationship.~~

support period.

Other. Our Other segment consists of our healthcare and cyber fraud and risk management ~~operating segments.~~solutions. Our cyber fraud and risk management solutionsnon-invasively monitor, replay and analyze user behavior to flag and even stop suspicious activity in real time. Our healthcare solutions for patient registration, electronic signature, mobile document and payments allow healthcare organizations to improve business efficiencies, reduce costs and improve care quality. ~~When licensed on a~~Software revenue for perpetual ~~license basis, revenue for~~licenses of our cyber fraud and risk management and healthcare products is typically recorded upon delivery ~~with~~of the ~~exception~~software and commencement of ~~software maintenance which is normally recorded ratably over a twelve-month period. When products are licensed on a subscription basis,~~the license term. Professional services revenue is ~~normally~~recorded as we perform the work and software support and maintenance revenue is recorded ratably over the ~~subscription period.~~

support period which is normally twelve months.

Periodically a sales person in one operating segment will sell products and services that are typically sold within a different operating segment. In such cases, the transaction is generally recorded by the operating segment to which the sales person is assigned. Accordingly, segment results can include the results of transactions that have been allocated to a specific segment based on the contributing sales resources, rather than the nature of the product or service. Conversely, a transaction can be recorded by the operating segment primarily responsible for delivery to the customer, even if the sales person is assigned to a different operating segment.

Our chief operating decision maker assesses segment performance based on a variety of factors that normally include segment revenue and a segment measure of profit or loss. Each segment’s measure of profit or loss is on apre-tax basis and excludes certain items as presented in our reconciliation of the measure of total segment profit to GAAP ~~loss~~income (loss) before income taxes that follows. There are no inter-segment sales; accordingly, the measure of segment revenue and profit or loss reflects only revenues from external customers. The costs of certain corporate level expenses, primarily general and administrative expenses, are allocated to our operating segments based on a percentage of the segment’s revenues.

We do not track or assign our assets by operating segment.

Segment information for the three ~~and six~~ months ended ~~December 31, 2017~~September 30, 2019 and ~~2016~~2018 according to the segment descriptions above, is as follows:

   Three Months Ended
December 31,    Six Months Ended
December 31,
   2017    2016    2017    2016
   (in thousands)
Segment revenue:

Cloud Solutions⁽¹⁾
   $ 44,518    $ 38,032    $ 86,962    $ 73,589
Banking Solutions
   20,954    19,464    42,275    37,650
Payments and Transactional Documents
   25,343    24,815    48,392    49,661
Other
   4,380    4,417    8,862    8,912








Total segment revenue
   $ 95,195    $ 86,728    $ 186,491    $ 169,812








Segment measure of profit (loss):

Cloud Solutions
   $ 9,650    $ 6,778    $ 19,034    $ 12,231
Banking Solutions
   1,148    1,043    3,309    1,068
Payments and Transactional Documents
   7,734    7,617    14,094    15,193
Other
   (903 )    (913 )    (1,387 )    (1,358 )








Total measure of segment profit
   $ 17,629    $ 14,525    $ 35,050    $ 27,134

⁽¹⁾

Revenues from our legal spend management solutions were $16.1 million and $14.7 million for the three months ended December 31, 2017 and 2016, respectively. Revenues from our settlement network solutions were $28.4 million and $23.3 million for the three months ended December 31, 2017 and 2016, respectively. Revenues from our legal spend management solutions were $31.6 million and $27.7 million for the six months ended December 31, 2017 and 2016, respectively. Revenues from our settlement network solutions were $55.4 million and $45.9 million for the six months ended December 31, 2017 and 2016, respectively.



	Three Months Ended September 30,
	2019			2018
	(in thousands)
Segment revenue:
Cloud Solutions	$	52,829		$	49,575
Banking Solutions	24,169			22,252
Payments and Transactional Documents	26,771			26,234
Other	4,407			4,376
Total segment revenue	$	108,176		$	102,437
Segment measure of profit (loss):
Cloud Solutions	$	11,107		$	10,292
Banking Solutions	535			2,062
Payments and Transactional Documents	7,701			8,081
Other	(1,866		)	(1,013		)
Total measure of segment profit	$	17,477		$	19,422

A reconciliation of the measure of total segment profit to GAAP loss before income taxes is as follows:

   Three Months Ended
December 31,    Six Months Ended
December 31,
   2017    2016    2017    2016
   (in thousands)
Total measure of segment profit
   $ 17,629    $ 14,525    $ 35,050    $ 27,134
Less:

Amortization of acquisition-related intangible assets
   (5,702 )    (6,090 )    (10,890 )    (12,375 )
Goodwill impairment charge
   —      (7,529 )    —      (7,529 )
Stock-based compensation expense
   (8,080 )    (8,656 )    (16,540 )    (16,855 )
Acquisition and integration-related expenses
   (380 )    (522 )    (1,372 )    (1,771 )
Restructuring benefit
   —      —      9    —
Minimum pension liability adjustments
   (3 )    (264 )    (38 )    (541 )
Global ERP system implementation and other costs
   (1,339 )    (2,106 )    (3,415 )    (4,597 )
Other expense, net
   (3,532 )    (4,182 )    (7,995 )    (8,117 )








Loss before income taxes
   $ (1,407 )    $ (14,824 )    $ (5,191 )    $ (24,651 )



	Three Months Ended September 30,
	2019			2018
	(in thousands)
Total measure of segment profit	$	17,477		$	19,422
Less:
Amortization of acquisition-related intangible assets	(4,950		)	(5,326		)
Stock-based compensation plan expense	(11,044		)	(12,342		)
Acquisition and integration-related expenses	(1,697		)	(883		)
Restructuring benefit (expense)	25			(577		)
Other non-core benefit	14			—
Global ERP system implementation and other costs	(224		)	(1,581		)
Other expense, net of pension adjustments	(965		)	(965		)
Loss before income taxes	$	(1,364	)	$	(2,252	)

The following depreciation and other amortization expense amounts are included in the measure of segment ~~profit (loss):~~

   Three Months Ended
December 31,    Six Months Ended
December 31,
   2017    2016    2017    2016
   (in thousands)
Depreciation and other amortization expense:

Cloud Solutions
   $ 2,535    $ 1,860    $ 4,978    $ 3,700
Banking Solutions
   1,537    1,436    3,029    2,806
Payments and Transactional Documents
   705    749    1,344    1,554
Other
   98    109    192    181








Total depreciation and other amortization expense
   $ 4,875    $ 4,154    $ 9,543    $ 8,241

profit:

Three Months Ended September 30,
2019 2018
(in thousands)
Depreciation and other amortization expense:
Cloud Solutions $ 3,155
$ 2,929
Banking Solutions 2,095
1,856
Payments and Transactional Documents 659
758
Other 183
97
Total depreciation and other amortization expense $ 6,092
$ 5,640

Geographic Information

We have presented geographic information about our revenues below. This presentation allocates revenue based on the point of sale, not the location of the customer. Accordingly, we derive revenues from geographic locations based on the location of the customer that would vary from the geographic areas listed here; particularly in respect of financial institution customers located in Australia for which the point of sale was ~~North America and customers located in Africa for which~~ the ~~point of sale was the Middle East.~~

   Three Months Ended
December 31,    Six Months Ended
December 31,
   2017    2016    2017    2016
   (in thousands)
North America
   $ 59,036    $ 56,190    $ 116,606    $ 106,712
United Kingdom
   22,468    19,313    42,539    40,144
Continental Europe
   10,120    9,182    20,531    18,534
Asia-Pacific and Middle East
   3,571    2,043    6,815    4,422








Total revenues from unaffiliated customers
   $ 95,195    $ 86,728    $ 186,491    $ 169,812

United States.



	Three Months Ended September 30,
	2019		2018
	(in thousands)
Revenues from unaffiliated customers:
United States	$	69,020	$	62,881
United Kingdom	24,967		24,367
Switzerland	9,760		9,993
Other	4,429		5,196
Total revenues from unaffiliated customers	$	108,176	$	102,437

Long-lived assets based on geographical location, excluding deferred tax assets and intangible assets, were as follows:

   At December 31,    At June 30,
   2017    2017
   (in thousands)
Long-lived assets:

North America
   $ 36,211    $ 35,569
United Kingdom
   5,767    5,188
Continental Europe
   921    1,208
Asia-Pacific and Middle East
   2,357    1,901




Total long-lived assets
   $ 45,256    $ 43,866



	At September 30,		At June 30,
	2019		2019
	(in thousands)
Long-lived assets:
United States	$	62,476	$	44,357
United Kingdom	39,020		32,035
Other	12,325		5,326
Total long-lived assets	$	113,821	$	81,718

Note 7—8—Income Taxes

The income tax expense we record in any interim period is based on our estimated effective tax rate for the fiscal year for those tax jurisdictions in which we can reliably estimate ~~our effective tax~~that rate. The calculation of our estimated effective tax rate requires an estimate ofpre-tax income by tax jurisdiction as well as total tax expense for the fiscal year. Accordingly, ~~this~~our annual estimated effective tax rate is subject to adjustment if ~~in subsequent interim periods,~~ there are changes to our initial estimates of total tax expense orpre-tax income, including the mix of income by jurisdiction. For those tax jurisdictions for which we are unable to reliably estimate an overall effective tax rate, we calculate income tax expense based upon the actual effective tax rate for theyear-to-date period.

~~The Tax Cuts and Jobs Act (the “Tax Act”) was signed into U.S. law on December 22, 2017 and makes broad and complex changes to the U.S. tax code. This legislation contains a variety of~~

Provision for Income Taxes

We recorded income tax ~~changes, including a reduction to the federal corporate income tax rate from 35% to 21%, a repeal~~expense of ~~the corporate alternative minimum tax, aone-time~~ ~~transition tax on accumulated foreign earnings (if any), a move to a territorial tax system, a limitation on the tax deductibility of interest expense~~$3,000 and an acceleration of tax deductions for qualifying capital expenditures. As discussed in more detail below, at December 31, 2017, we have not completed our accounting for the tax effects of enactment of the Tax Act.

~~The Tax Act resulted in three immediate consequences to us, as follows:~~

•

~~Assessing whether we would incur any tax liability under theone-time~~ ~~transition tax. Under the Tax Act,un-repatriated~~ ~~foreign earnings post-1986 are subject to aone-time~~ transition tax, at rates that vary depending on the composition of foreign assets. Based on our calculations and estimates to date, we do not expect to incur any transition tax liability as we believe we are in an accumulated deficit position with respect to our foreign subsidiaries. Accordingly, we have not provided for any such tax liability as of December 31, 2017.

•

~~Re-valuing~~ ~~our U.S. deferred tax balances to reflect lower income tax rates~~. Deferred tax assets and deferred tax liabilities are recorded based on the income tax rates expected to be in effect when book and tax basis differences reverse. We are in a net U.S. deferred tax liability position. As such, upon~~re-valuation~~ ~~to lower projected future income tax rates, we wrote down the carrying value of our net deferred tax liabilities and recognized anon-recurring~~ ~~income tax benefit of $3.7 million in the quarter ended December 31, 2017.~~

•

~~Recognizing the ability to recover amounts paid for alternative minimum tax~~. The Tax Act eliminated the alternative minimum tax calculation and provided for the ability to recover certain amounts previously paid for such tax. Based on our preliminary calculations, we expect to receive a tax refund of $0.7 million and we recognized a~~non-recurring~~ ~~income tax benefit for this amount in the quarter ended December 31, 2017.~~

All of our accounting calculations, estimates and financial reporting positions for consequences arising from the Tax Act are incomplete and preliminary as of December 31, 2017. In particular, we are completing our assessment of~~un-repatriated~~ foreign earnings, our calculation of refundable alternative minimum tax, our permanent reinvestment assertions and our assessment of the required valuation allowance against our U.S. deferred tax assets in light of the changes under the Tax Act and the indefinite nature of net operating losses arising after January 1, 2018. Our~~on-going~~ ~~analysis could result in subsequent period adjustments to the preliminary amounts recordedto-date.~~ In addition, our financial reporting conclusions may also be affected as we gain a more thorough understanding of the tax law. Any required future adjustment would be recorded in the subsequent period in which we determine that an adjustment is required.

~~We have not changed our permanent reinvestment assertions as of the period ended December 31, 2017.~~

~~We recorded~~ an income tax benefit of ~~$4.5~~$1.3 million for ~~each of~~ the three months ended ~~December 31, 2017~~September 30, 2019 and ~~2016.~~2018, respectively. In the three months ended September 30, 2019, the income tax expense recorded was principally associated with the U.S. deferred tax consequences arising from our acquisition of BankSight, offset by an income tax benefit attributable to our loss before income tax for the three months ended September 30, 2019. The income tax benefit for the three

months ended ~~December 31, 2017 includes the discrete tax benefit of $4.4 million relating to the consequences of the Tax Act as discussed above. Additionally, we recorded an income tax benefit~~September 30, 2018 was principally associated with our ~~Swiss~~U.S. and Israeli operations, offset ~~in part~~ by income tax expense principally associated with our ~~U.S.~~UK and UKSwiss operations. Tax expense associated with our U.S. operations arose primarily as a result of deferred tax expense for goodwill that is deductible for tax purposes but not amortized for financial reporting purposes. The income tax benefit for the three months ended December 31, 2016 was due to a discrete tax benefit in Switzerland of $4.5 million related to the impairment of its investment in Intellinx Ltd. (a wholly owned subsidiary). We also recorded tax expense associated with our U.S. and UK operations, offset by a tax benefit associated with our Swiss and Israeli operations.

We recorded an income tax benefit of $4.0 million and $3.8 million for the six months ended December 31, 2017 and 2016, respectively. The income tax benefit for the six months ended December 31, 2017 includes the discrete tax benefit of $4.4 million relating to the consequences of the Tax Act as discussed above. Additionally, we recorded income tax expense principally associated with our U.S. and UK operations, offset in part by a tax benefit associated with our Swiss and Israeli operations. Tax expense associated with our U.S. operations arose primarily as a result of deferred tax expense for goodwill that is deductible for tax purposes but not amortized for financial reporting purposes. The income tax benefit for the six months ended December 31, 2016 was due to a discrete tax benefit in Switzerland of $4.5 million related to the impairment of its investment in Intellinx Ltd. We also recorded tax expense associated with our U.S. and UK operations, offset by a tax benefit associated with our Swiss and Israeli operations.

We currently anticipate that our unrecognized tax benefits will decrease within the next twelve months by approximately $0.4 million as a result of the expiration of certain statutes of limitations associated with intercompany transactions subject to tax in multiple jurisdictions.

We record a deferred tax asset if we believe that it is more likely than not that we will realize a future tax benefit. Ultimate realization of any deferred tax asset is dependent on our ability to generate sufficient future taxable income in the appropriate tax jurisdiction before the expiration of carryforward periods, if any. Our assessment of deferred tax asset recoverability considers many different factors including historical and projected operating results, the reversal of existing deferred tax liabilities that provide a source of future taxable income, the impact of current tax planning strategies and the availability of future tax planning strategies. We establish a valuation allowance against any deferred tax asset for which we are unable to conclude that recoverability is more likely than not.

Effective July 1, 2017, we adopted a new accounting standard intended to simplify certain aspects of accounting for share-based compensation arrangements, including the associated income tax consequences. Upon adoption, excess tax benefits associated with share-based compensation arrangements that previously were only recognized for financial reporting purposes when they actually reduced currently payable income taxes were recognized as deferred tax assets, net of any required valuation allowance. Accordingly, after adoption, we recognized the following:

��

   (in thousands)
Increase to deferred tax assets for excess tax benefits
   $ 17,393
Increase to deferred tax asset valuation allowance
   (17,144 )


Net increase to deferred tax assets
   $ 249

~~This net increase to our deferred tax assets was recorded as a cumulative effect adjustment, reducing the accumulated deficit in our consolidated balance sheet.~~

During the quarter ended December 31, 2017 we reduced the carrying value of our U.S. deferred tax assets (including the corresponding impact to the valuation allowance) and our U.S. deferred tax liabilities to reflect the impact of lower income tax rates under the Tax Act.

At ~~December 31, 2017,~~September 30, 2019, we had a total valuation allowance of ~~$39.8~~$33.4 million against our deferred tax assets given the uncertainty of recoverability of these amounts. The change in our valuation allowance during the six months ended December 31, 2017 includes the valuation allowance provided against excess tax benefits associated with share-based payment arrangements and the preliminary reduction to valuation allowance due the change in the U.S. federal corporate income tax rate, as discussed above.

In November 2016, the Internal Revenue Service commenced an audit on our U.S. federal tax return for the fiscal year ended June 30, 2015. We do not expect this audit to have a material impact on our financial statements.

Note 8—9—Goodwill and Other Intangible Assets

Goodwill and acquired intangible assets are initially recorded at fair value and tested periodically for impairment. We perform an impairment test of goodwill during the fourth quarter of each fiscal year or sooner, if indicators of potential impairment arise.

At ~~December 31, 2017,~~September 30, 2019, the carrying value of goodwill for all of our reporting units was ~~$202.1 million, and the carrying value of goodwill in our Intellinx reporting unit was $4.4 million, which we believe to be at a heightened risk of impairment. Please refer to~~ ~~Note 7. Goodwill and Other Intangible Assets~~ ~~to our consolidated financial statements included in Item 8 of our Annual Report in Form10-K~~ ~~for the fiscal year ended June 30, 2017 for more information regarding our accumulated impairment losses and goodwill balances.~~

Effective July 1, 2017, we adopted an accounting standard update requiring that software be classified as an intangible asset rather than an element of property and equipment. Intangible asset information as of June 30, 2017 has been recast in the table that follows, to reflect this change.

$204.4 million.

The following tables set forth the information for intangible assets subject to amortization and for intangible assets not subject to amortization.

   As of December 31, 2017
   Gross Carrying
Amount    Accumulated
Amortization    Net Carrying
Value    Weighted Average
Remaining Life
   (in thousands)    (in years)
Amortized intangible assets:

Customer related
   $ 203,379    $ (129,527 )    $ 73,852    8.8
Core technology
   130,777    (78,954 )    51,823    8.5
Other intangible assets
   22,098    (16,442 )    5,656    5.5
Capitalized software development costs
   17,693    (4,765 )    12,928    4.5
Software⁽¹⁾
   58,501    (29,494 )    29,007    4.6







Total
   $ 432,448    $ (259,182 )    $ 173,266





Unamortized intangible assets:

Goodwill
         202,083



Total intangible assets
         $ 375,349

   As of June 30, 2017
   Gross Carrying
Amount    Accumulated
Amortization    Net Carrying
Value    Weighted Average
Remaining Life
   (in thousands)    (in years)
Amortized intangible assets:

Customer related
   $ 190,965    $ (122,698 )    $ 68,267    8.7
Core technology
   130,572    (74,452 )    56,120    8.8
Other intangible assets
   20,591    (15,691 )    4,900    6.6
Capitalized software development costs
   16,304    (3,423 )    12,881    5.0
Software⁽¹⁾
   54,489    (25,377 )    29,112    3.5







Total
   $ 412,921    $ (241,641 )    $ 171,280





Unamortized intangible assets:

Goodwill
         194,700



Total intangible assets
         $ 365,980



	As of September 30, 2019
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Value		Weighted Average Remaining Life
	(in thousands)							(in years)
Amortized intangible assets:
Customer related	$	216,921	$	(146,367	)	$	70,554	8.1
Core technology	130,977		(91,160		)	39,817		7.3
Other intangible assets	21,827		(19,084		)	2,743		4.9
Capitalized software development costs	24,065		(10,971		)	13,094		2.8
Software ⁽¹⁾	71,954		(37,413		)	34,541		4.0
Total	$	465,744	$	(304,995	)	$	160,749
Unamortized intangible assets:
Goodwill						204,396
Total intangible assets						$	365,145



	As of June 30, 2019
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Value		Weighted Average Remaining Life
	(in thousands)							(in years)
Amortized intangible assets:
Customer related	$	219,893	$	(145,144	)	$	74,749	8.5
Core technology	130,226		(90,017		)	40,209		7.4
Other intangible assets	25,712		(19,030		)	6,682		5.0
Capitalized software development costs	23,213		(10,006		)	13,207		3.0
Software ⁽¹⁾	72,018		(38,516		)	33,502		4.2
Total	$	471,062	$	(302,713	)	$	168,349
Unamortized intangible assets:
Goodwill						206,101
Total intangible assets						$	374,450

——————


⁽¹⁾	Software includes purchased software and software developed for internal use.

Estimated amortization expense for the remainder of fiscal year ~~2018~~2020 and subsequent fiscal years for acquired intangible assets, capitalized software development costs and software, in each case that have been placed in service as of September 30, 2019, is as follows:

   Acquired Intangible
Assets    Capitalized Software
Development Costs    Software
   (in thousands)
Remaining 2018
   $ 11,481    $ 1,434    4,329
2019
   20,439    2,868    7,687
2020
   18,100    2,868    5,990
2021
   16,358    2,869    3,740
2022
   14,187    2,869    2,476
2023 and thereafter
   50,766    —      3,400



	Acquired Intangible Assets		Capitalized Software Development Costs		Software
	(in thousands)
Remaining 2020	$	14,862	$	2,915	$	8,111
2021	18,493		3,887		7,568
2022	16,588		3,887		5,755
2023	15,179		1,033		3,875
2024	13,521		376		2,413
2025 and thereafter	34,471		—		1,548

Each period, for capitalized software development costs, we evaluate whether amortization expense using a ratio of revenue in the period to total expected revenue over the product’s expected useful life would result in greater amortization than as calculated under a straight-line methodology and, if that were to occur, amortization in that period would be accelerated accordingly.

The following table represents a rollforward of our goodwill balances, by reportable ~~segment, as follows:~~

   Cloud Solutions    Banking
Solutions    Payments and
Transactional
Documents    Other    Total
   (in thousands)
Balance at June 30, 2017⁽¹⁾
   $ 90,069    $ 35,880    $ 60,557    $ 8,194    $ 194,700
Goodwill acquired during the period
   1,377    —      4,739    —      6,116
Impact of foreign currency translation
   447    —      820    —      1,267










Balance at December 31, 2017⁽¹⁾
   $ 91,893    $ 35,880    $ 66,116    $ 8,194    $ 202,083

segment:



	Cloud Solutions			Banking Solutions		Payments and Transactional Documents			Other		Total
	(in thousands)
Balance at June 30, 2019 ⁽¹⁾	$	90,307		$	39,451	$	68,149		$	8,194	$	206,101
Measurement period adjustment ⁽²⁾	—			1,136		—			—		1,136
Impact of foreign currency translation	(1,296		)	—		(1,545		)	—		(2,841		)
Balance at September 30, 2019 ⁽¹⁾	$	89,011		$	40,587	$	66,604		$	8,194	$	204,396

——————


⁽¹⁾	Other goodwill balance is net of $7.5 million accumulated impairment ~~losses.~~losses, recorded previously.

⁽²⁾
The measurement period adjustment during the three months ended September 30, 2019 relates to our BankSight acquisition. See Note 5 Business and Asset Acquisitions.

There can be no assurance that there will not be impairment charges in future periods as a result of future impairment reviews. To the extent that future impairment charges occur, it would likely have a material impact on our financial results.

Note 9—10—Commitments and Contingencies

~~Legal Matters~~

~~In May 2017,~~

Leases

On July 1, 2019, we ~~received notification from~~adopted the new accounting standard related to leases. We determine if any arrangement is, or contains, a ~~customer alleging~~lease at its inception based on whether or not we have the right to control the asset during the contract period. We are a ~~warranty claim associated~~lessee in any lease contract when we obtain the right to control the asset.

We determine the lease term by assuming the exercise of options that are reasonably certain. Leases with ~~software~~a lease term of 12 months or less at inception are not reflected in our balance sheet and those lease costs are expensed on a straight-line basis over the respective term. Leases with a term greater than 12 months are reflected as non-current right-of-use assets and current and non-current lease liabilities in our consolidated balance sheets. Current lease liabilities are classified as a component of accrued expenses and other current liabilities.

As the implicit interest rate in our leases is generally not known, we ~~licensed~~use our incremental borrowing rate as the discount rate for purposes of determining the present value of our lease liabilities. Our determination of the incremental borrowing rate takes into consideration the expected term of the lease, the effect of the currency in which the lease is denominated and the rate of interest we would expect to ~~them~~incur on a collateralized debt instrument. At September 30, 2019, our weighted average discount rate was 4.9%.

When our contracts contain lease and fixed payment non-lease components, we account for both components as a single lease component.

We lease office space in ~~September 2013. Their claim seeks recovery of $1.269 million in software, professional services and support fees, inclusive of related sales tax. On September 22, 2017,~~cities worldwide under facility leases that expire at various dates. We are typically required to pay certain incremental operating costs above the customer commenced arbitration proceedings in connection with the claim and an arbitration date has been set for May 2018. We believe the claim is without merit and intend to vigorously defend ourselves. At December 31, 2017 we had not accruedbase rent for any ~~losses associated with this matter~~facility lease. We also have a variety of data center locations and, to a lesser extent, vehicle and equipment leases. Our facility leases represent the substantial majority of our operating leases and often include renewal options that we can exercise unilaterally. At September 30, 2019, renewal options ranged from 3 months to 10 years.

At September 30, 2019, all of our leases were operating leases and had a weighted average remaining lease term of 6.4 years.

Additional information of our lease activity, as of and for the three months ended September 30, 2019 is as follows:



Operating leases:	Three Months Ended September 30, 2019
	(in thousands)
Operating lease cost	$	1,916
Short-term lease cost	212
Variable lease cost	495
Sublease income	(124		)
Total lease cost	$	2,499



	Three Months Ended September 30, 2019
	(in thousands)
Right-of-use assets, net	$	25,224

Operating lease liabilities, current ⁽¹⁾	$	6,045
Operating lease liabilities, non-current	21,993
Total operating lease liabilities	$	28,038

——————


⁽¹⁾	Included as a component of accrued expenses and other current liabilities.



	Three Months Ended September 30, 2019
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities	$	1,764
Right-of-use assets obtained in exchange for lease obligations	$	262

Maturities of lease liabilities at September 30, 2019 were as follows:



For the year ending June 30,	Operating Leases
	(in thousands)
2020	$	5,437
2021	7,015
2022	4,992
2023	3,528
2024	2,671
Thereafter	9,632
Total lease payments	33,275
Less imputed interest	(5,237		)
Total lease liabilities	$	28,038

As of September 30, 2019, we dohave additional operating leases that have not ~~believe a loss is probable.~~

yet commenced of $2.7 million. These operating leases will commence by fiscal year 2021 and have lease terms of 3 years to 12 years.

Legal Matters

We are, from time to time, a party to legal proceedings and claims that arise out of the ordinary course of our business. We are not currently a party to any material legal proceedings.

Note ~~10—~~11—Indebtedness

Credit Agreement

~~On December 9, 2016, we (as borrower) and certain of our existing and future domestic material restricted subsidiaries (the Guarantors) entered into~~

We are party to a credit agreement (the Credit Agreement) ~~with Bank of America, N.A. and certain other lenders (the Lenders)~~ that provides for a ~~five-year~~ revolving credit facility in the amount of up to $300 million (the Credit Facility).

~~Under the Credit Agreement, we also~~ and that expires in July 2023. We have the right to request an increase of the aggregate commitments under the Credit Facility by up to $150 million, ~~without the consent of any Lenders not participating in such increase,~~ subject to specified conditions.

The proceeds of the Credit Facility may be used for lawful corporate purposes of Bottomline and its subsidiaries, including acquisitions, share buybacks, capital expenditures, the repayment or refinancing of indebtedness, redemption of our 1.5% Convertible Senior Notes that matured on December 1, 2017 (the Notes) and general corporate purposes. The Credit Facility is available for the issuance of up to $20 At September 30, 2019, we owed $110 million ~~of letters of credit and up to $20 million of swing line loans. The Credit Facility will terminate on December 8, 2021.~~

~~Loans outstanding~~ under the Credit Facility will bear interest, at our option, at either (i) a Eurodollar rate plus a margin of between 1.50% and 2.25% (which is initially 1.75%) based on the Consolidated Net Leverage Ratio (as defined in the Credit Agreement), or (ii) a base rate plus a margin of between 0.50% and 1.25% (which is initially 0.75%) based on the Consolidated Net Leverage Ratio. Loans under the Credit Agreement may be prepaid at par and commitments under the Credit Agreement may be reduced at any time, in whole or in part, without premium or penalty (except for LIBOR breakage costs).

The Credit Facility is guaranteed by the Guarantors and is secured by substantially all of our domestic assets and those of the Guarantors, including a pledge of all of the shares of capital stock of the Guarantors and 65% of the shares of the capital stock of our first-tier foreign subsidiaries or those of any Guarantor, in each case subject to certain exceptions as set forth in the Credit Agreement. The collateral does not include, among other things, any real property or the capital stock or any assets of any unrestricted subsidiary.

Facility.

The Credit Agreement contains customary representations, warranties and covenants, including, but not limited to, material adverse events, specified restrictions on indebtedness, liens, investments, acquisitions, sales of assets, dividends and other restricted payments, and transactions with affiliates. We are required to comply with (a) a maximum consolidated net leverage ratio of 3.75 to 1.00, stepping down to 3.50 to 1.00 for the quarter ending June 30, ~~2018;~~2020; and (b) a minimum consolidated interest coverage ratio of 3.00 to 1.00; and (c) a minimum liquidity requirement at all times that the Notes are outstanding, where the outstanding principal amount of the Notes must not exceed the sum of the unutilized availability under the Credit Agreement plus our domestic cash and marketable securities.

1.00. The Credit Agreement also contains customary events of default and related cure provisions. ~~In the case of a continuing event of default, the administrative agent would be entitled to exercise various remedies on behalf of the Lenders, including the acceleration of any outstanding loans.~~

~~During the three months ended December 31, 2017, we borrowed $150 million against the Credit Facility to finance the repayment of a portion of the principal balance of the Notes.~~

As of ~~December 31, 2017,~~September 30, 2019, we were in compliance with ~~the covenants associated with the Credit Facility.~~

~~Convertible Senior Notes~~

all covenants.

Note Payable

On ~~December 1,~~August 14, 2017, we ~~repaid the aggregate principal balance~~acquired Singapore-based Decillion Group (Decillion) for total consideration of ~~$189.8~~6.2 million ~~of our convertible senior notes which were issued on December 12, 2012. We borrowed $150~~Singapore Dollars (approximately $4.6 million ~~under our Credit Facility and used $39.8 million of cash on hand to fund the settlement of the Notes.~~

The principal balance of the Notes was required to be settled in cash. However, we were permitted at our election to settle any conversion obligation in excess of the principal portion in cash, shares of our common stock, or a combination of cash and shares of our common stock. Upon the maturity of the Notes, we elected to settle the conversion premium with shares of our common stock and, accordingly, issued approximately 0.6 million shares with a fair value of $33.54 per share. The impact of the share issuance was recorded entirely within stockholder’s equity in our consolidated balance sheet and we recorded no gain or lossbased on the ~~settlement of~~exchange rate in effect at the ~~Notes.~~

~~The following table sets forth total interest expense related to the Notes:~~

   Three Months Ended
December 31, Six Months Ended
December 31,
   2017 2016 2017 2016
   (in thousands)
Contractual interest expense (cash)
   $ 482 $ 712 $ 1,194 $ 1,424
Amortization of debt discount(non-cash)
   2,271 3,132 5,574 6,208
Amortization of debt issue costs(non-cash)
   198 296 494 592


   $ 2,951 $ 4,140 $ 7,262 $ 8,224


Effective interest rate of the liability component
   8.54 % 8.10 % 8.45 % 8.04 %

~~Note Hedges~~

In December 2012, we entered into privately negotiated transactions to purchase hedge instruments (the Note Hedges), covering approximately 6.3 million shares of our common stock. The Note Hedges, subject to anti-dilution provisions substantially similar to those of the Notes, had a strike price that corresponds to the conversion price of the Notes, were exercisable by us upon any conversion under the Notes and expired on December 1, 2017. On December 1, 2017, in connection with the maturity of the Notes, we redeemed a portion of the Note Hedges and received from the Note Hedge counterparties approximately 0.6 million shares of our common stock with a fair value $33.54 per share. The impact of the share redemption was recorded as treasury stock in our consolidated balance sheet and we recorded no gain or loss on the redemption of these shares. The redemption of these shares offset the dilution that otherwise would have occurred as a result of the common stock we issued upon the settlement of the Notes.

~~Warrants~~

In December 2012, we received aggregate proceeds of $25.8 million, net of issue costs, from the sale of warrants (the Warrants), for the purchase of up to 6.3 million shares of our common stock, subject to antidilution adjustments, at a strike price of $40.04 per share. The Warrants are exercisable in equal tranches over a period of 150 days beginning on March 1, 2018, and ending on October 18, 2018.

~~The Warrants are transactions that are separate from the terms of the Notes and the Note Hedges, and holders of the Notes and Note Hedges have no rights with respect to the Warrants.~~

~~Note Payable~~

acquisition date). We financed a portion of the ~~Decillion~~ purchase price for our acquisition of Decillion by entering into a note payable for 2.5 million Singapore Dollars (approximately $1.8 million based on the exchange rate in effect at the acquisition date). The note is payable in equal installments over ~~ten~~10 quarters, ~~starting during~~with the ~~three months ended September 30, 2017. Please refer to~~~~Note 4 Acquisitions and Other Investments~~ ~~for additional discussion of our Decillion acquisition.~~

~~Note 11—Derivative Instruments~~

~~Note Hedges, Conversion Feature and Warrants~~

~~During~~final installment due in the ~~three months~~quarter ended December 31, ~~2017, in connection with the maturity of the Notes, we settled the~~ 2019.

Note ~~Hedges and Conversion Feature as discussed in~~~~Note 10 Indebtedness~~~~. The remaining derivative instruments related to the Notes at December 31, 2017 consist of the Warrants, also discussed in~~~~Note 10 Indebtedness~~~~. The Warrants continue to meet the classification requirements for inclusion within stockholders’ equity and as such they were not subject to fair valuere-measurement.~~ We are required to assess whether we continue to meet the stockholders’ equity classification requirements. If in any future period we failed to satisfy those requirements, we would be required to reclassify the derivative instruments out of stockholders’ equity, to either assets or liabilities depending on their nature, and record those instruments at fair value with changes in fair value reflected in earnings.

12—Derivative Instruments

Cash Flow Hedges

Interest Rate Swap

~~On July 10, 2017, we entered into an~~ Agreements

We utilize interest rate swap agreements to hedge our exposure to interest rate risk. At September 30, 2019, we had 2 outstanding interest rate swap agreements with notional values of $100 million and $80 million.

The ~~agreement has a~~ notional value of ~~$100.0 million, was effective as of December 1, 2017 and expires on December 1, 2021. The notional amount of the~~each interest rate swap ~~matches~~agreement is expected to match the corresponding principal amount of a portion of our borrowings under the Credit ~~Agreement with the Lenders.~~Facility.

The $100 million notional value agreement is effective as of December 1, 2017 and expires on December 1, 2021. During ~~the term of the agreement,~~this period, we have a fixed interest rate of 1.9275 percent on the notional amount and Citizens Bank, National Association, as counterparty to the agreement, will pay us interest at a floating rate based on the 1 monthUSD-LIBOR-BBA swap rate on the notional amount. Interest payments are made quarterly on a net settlement basis.

The $80 million notional value agreement is effective as of December 1, 2021 and expires on July 16, 2023. During this period, we have a fixed interest rate of 2.125 percent on the notional amount and Bank of America, N.A., as counterparty to the agreement,

will pay us interest at a floating rate based on the 1 month USD-LIBOR-BBA swap rate on the notional amount. Interest payments will be made monthly on a net settlement basis.

We designated the interest rate ~~swap~~swaps as a hedging ~~instrument~~instruments and itthey qualified for hedge accounting upon inception and at ~~December 31, 2017.~~September 30, 2019. To continue to qualify for hedge accounting, the ~~instrument~~instruments must retain a “highly effective” ability to hedge interest rate risk for borrowings under the Credit ~~Agreement.~~Facility. We are required to test hedge effectiveness at the end of each financial reporting period. If a derivative qualifies for hedge accounting, changes in fair value of the hedge instrument ~~will be~~are recognized in accumulated other comprehensive income (loss) (AOCI) and subsequently reclassified into earnings in the period that the hedged transaction affects earnings. The reclassification into earnings ~~will be~~is recorded as a component of our interest expense within other expense, net. If the instrument were to lose some or all of its hedge effectiveness, changes in fair value for the “ineffective” portion of the instrument would be recorded immediately in earnings.

The fair values of the ~~gross asset and gross liability of our~~ interest rate ~~swap~~swaps and their respective locations in our consolidated balance ~~sheet~~sheets at ~~December 31, 2017~~September 30, 2019 and June 30, 2019 were as follows:

Description

Balance Sheet Location
   December 31, 2017
      (in thousands)
Derivative interest rate swap

Derivative asset
   Other assets    $ 782
Derivative liability
   Accrued expenses and other current liabilities    $ 165



Description	Balance Sheet Location	September 30, 2019		June 30, 2019
Derivative interest rate swaps		(in thousands)
Short-term derivative liability	Accrued expenses and other current liabilities	$	233	$	37
Long-term derivative liability	Other liabilities	$	1,729	$	1,248

The following ~~tables~~table presents the effect of the derivative interest rate ~~swap~~swaps in our consolidated statement of comprehensive ~~income (loss)~~loss for the three ~~and six~~ months ended ~~December 31, 2017.~~

   Amount of Gain (Loss) Recognized in OCI on
Derivative Instruments (Effective Portion)    Amount of Gain (Loss) Reclassified from AOCI
into Net Income (Loss) (Effective Portion)
   Three Months Ended December 31,    Three Months Ended December 31,
   2017    2016    2017    2016
   (in thousands)
Derivative interest rate swap
   $ 804    $ —      $ (48 )    $ —

   Amount of Gain (Loss) Recognized in OCI on
Derivative Instruments (Effective Portion)    Amount of Gain (Loss) Reclassified from AOCI
into Net Income (Loss) (Effective Portion)
   Six Months Ended December 31,    Six Months Ended December 31,
   2017    2016    2017    2016
   (in thousands)
Derivative interest rate swap
   $ 569    $ —      $ (48 )    $ —

September 30, 2019 and 2018.



	Gain (Loss) in AOCI June 30, 2019			Amount of Gain (Loss) Recognized in OCI on Derivative Instruments (Effective Portion)			Amount of (Gain) Loss Reclassified from AOCI into Net Loss (Effective Portion) ⁽¹⁾			Gain (Loss) in AOCI September 30, 2019
	(in thousands)
Derivative interest rate swap	$	(1,285	)	$	(595	)	$	(82	)	$	(1,962	)

	Gain (Loss) in AOCI June 30, 2018			Amount of Gain (Loss) Recognized in OCI on Derivative Instruments (Effective Portion)			Amount of (Gain) Loss Reclassified from AOCI into Net Loss (Effective Portion) ⁽¹⁾			Gain (Loss) in AOCI September 30, 2018
	(in thousands)
Derivative interest rate swap	$	2,590		$	368		$	(41	)	$	2,917

——————


⁽¹⁾	Recorded as interest income (expense) within other expense, net in our unaudited consolidated statements of comprehensive income (loss).

During the three ~~and six~~ months ended ~~December 31, 2017,~~September 30, 2019, we concluded that no0 portion of the ~~hedge~~hedges was ineffective.

~~As of December 31, 2017, there was $0.6 million of unrealized gain in accumulated other comprehensive loss.~~

We ~~do not~~ expect to reclassify ~~any~~approximately $0.3 million of this unrealized ~~gain~~loss from ~~accumulated other comprehensive loss~~AOCI to earnings over the next twelve months.

Note ~~12—~~13—Postretirement and Other Employee Benefits

Defined Benefit Pension Plan

We sponsor a ~~retirement~~defined benefit pension plan for our Swiss-based employees (the Swiss pension plan) that is governed by local regulatory requirements. This plan includes certain minimum benefit guarantees that, under U.S. GAAP, require defined benefit plan accounting.

Net periodic pension costs for the Swiss pension plan included the following components:

   Three Months Ended
December 31,    Six Months Ended
December 31,
   2017    2016    2017    2016
   (in thousands)
Components of net periodic cost

Service cost
   $ 624    $ 732    $ 1,264    $ 1,482
Interest cost
   87    31    176    63
Prior service credit
   (22 )    (22 )    (45 )    (45 )
Net actuarial loss
   54    161    109    326
Expected return on plan assets
   (294 )    (219 )    (595 )    (443 )








Net periodic cost
   $ 449    $ 683    $ 909    $ 1,383



	Three Months Ended September 30,
	2019			2018
	(in thousands)
Components of net periodic cost
Service cost	$	724		$	645
Interest cost	56			116
Prior service credit	(77		)	(78		)
Net actuarial loss	118			56
Expected return on plan assets	(307		)	(353		)
Net periodic cost	$	514		$	386

The components of net periodic pension cost other than current service cost are presented within other expense, net in our unaudited consolidated statements of comprehensive income (loss).

~~Item 2.~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Quarterly Report on Form10-Q contains forward-looking statements that involve risks and uncertainties. The statements contained in this report that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). Without limiting the foregoing, the words may, will, should, could, expects, plans, intends, anticipates, believes, estimates, predicts, potential and similar expressions are intended to identify forward-looking statements. All forward-looking statements included in this Quarterly Report on Form10-Q are based on information available to us up to and including the date of this report, and we assume no obligation to update any such forward-looking statements. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth below under Management’s Discussion and Analysis of Financial Condition and Results of Operations and Part II. Item 1A. Risk Factors and elsewhere in this Quarterly Report on Form10-Q. You should carefully review those factors and also carefully review the risks outlined in other documents that we file from time to time with the Securities and Exchange Commission (SEC), including Part II. Item 1A. Risk Factors in our Annual Report on Form10-K for the fiscal year ended June 30, ~~2017.~~

2019.

In the management discussion that follows, we have highlighted those changes and operating ~~factors~~events that were the primary factors affecting period to period fluctuations. The remainder of the change in period to period fluctuations from that which is specifically ~~disclosed~~discussed arises from various individually insignificant items.

Overview

We help make complex business payments simple, smart and secure. Corporations and banks rely on us for domestic and international payments, efficient cash management, automated workflows for payment processing and bill review, and ~~state of the art~~ fraud detection, behavioral analytics and regulatory compliance solutions. ~~The majority of our revenues are derived from offerings sold as SaaS-based solutions and paid for on a subscription and transaction basis.~~

We operate ~~cloud-based~~ settlement networks that facilitate electronic payments and transaction settlement between businesses, their vendors and banks. We offer ~~cloud andon-premise~~ solutions that banks use to provide payment, cash management and treasury capabilities to their business customers, as well as solutions that ~~banks and credit unions~~financial institutions use to facilitate customer acquisition and ~~growth. We offer~~to grow profitable customer relationships through intelligent engagement. Our legal spend management solutions ~~that~~ help manage and determine the right amount to pay for legal services and claims vendor expenditures for insurance companies and other large ~~corporate~~ consumers of outside legal ~~services. Our corporate~~services as well as related tools and analytics for the law firms themselves. Corporate customers rely on our solutions to automate ~~their~~ payment and accounts payable processes and to streamline and manage the production and retention of electronic documents. ~~Our healthcare customers use our solutions to streamline financial processes, particularly the patient enrollment process.~~ We also offer ~~comprehensive~~ cyber fraud and risk management solutions that are designed tonon-invasively monitor and analyze user behavior and payment transactions to flag behavioral and data anomalies and other suspicious activity.

Our solutions are designed to complement, leverage and extend our customers’ existing information systems, accounting applications and banking relationships so that they can be deployed quickly and efficiently. To help our customers realize the maximum value from our products and meet their specific business requirements, we also provide professional services for ~~installation,~~ training, consulting and product enhancement.

Financial Highlights

For the ~~six~~three months ended ~~December 31, 2017,~~September 30, 2019, our revenue increased to ~~$186.5~~$108.2 million from ~~$169.8~~$102.4 million in the same period of the prior fiscal year. This revenue increase was attributable to revenue increases in our Cloud Solutions segment of $13.4 million and Banking Solutions segment of $4.6 million, offset in part by decreased revenue in our Payments and Transactional Documents segment of $1.3 million. Increased revenue from our legal spend management and settlement network solutions accounted for the revenue increase in our Cloud Solutions segment. The Banking Solutions segment’s revenue increase was primarily due to increased services revenue and increased subscription and transaction revenue from our cloud based solutions. The revenue decrease in our Payments and Transactional Documents segment was related to lower European software license revenue and service and maintenance revenue in our payment and document automation products. Our revenue for the ~~six~~three months ended ~~December 31, 2017~~September 30, 2019 was ~~favorably~~unfavorably impacted by ~~$1.8~~$1.5 million due to the impact of foreign currency exchange rates primarily related to the British Pound Sterling, which ~~appreciated~~depreciated against the U.S. Dollar as compared to the same period of the prior fiscal year.

The revenue increase was attributable to revenue increases in our Cloud Solutions segment of $3.3 million and our Banking Solutions segment of $1.9 million. Increased revenue from our legal spend management and Paymode-X settlement network solutions accounted for the revenue increase in our Cloud Solutions segment. The Banking Solutions segment's revenue increase was primarily due to new customer engagements and platform go-lives, as customers continued to deploy our solutions.

We incurred a net loss of ~~$1.2~~$1.4 million in the ~~six~~three months ended ~~December 31, 2017~~September 30, 2019 compared to a net loss of ~~$20.9~~$0.9 million in the same period of the prior fiscal year. Our net loss for the ~~six~~three months ended ~~December 31, 2017~~September 30, 2019 was ~~reduced~~impacted by ~~the impact of increased gross margins of $12.8 million and decreased~~an increase in operating expenses of ~~$6.5~~$3.6 million and an increase in provision for income taxes of $1.3 million, partially offset by gross profit expansion of $4.4 million. The increase in gross margins was ~~primarily~~ driven by increases in revenue in our Cloud Solutions and Banking Solutions segments. The ~~decrease~~increase in ~~our~~ operating expenses was ~~due~~ primarily to the absence of a goodwill impairment charge of $7.5 million we incurred during the three months ended December 31, 2016, a decrease in amortization of acquisition-related intangible assets of $1.5 million and decreased global enterprise resource planning (ERP) implementation and other costs of $1.2 million, partially offsetdriven by ~~an increase in~~increased sales and

marketing costs of ~~$2.5~~$2.7 million and increased product development and engineering costs of ~~$1.7 million. Our operating expenses for~~$1.8 million as we continued to invest in new product innovation.

In the ~~six~~three months ended December 31, 2017 were unfavorably impacted by $0.6 million due to the impact of foreign currency exchange rates primarily related to the British Pound Sterling which appreciated against the U.S. Dollar as compared to the same period of the prior fiscal year.

~~In the six months ended December 31, 2017,~~September 30, 2019, we derived approximately ~~38%~~36% of our revenue from customers located outside of North America, principally in the United Kingdom (UK), continental Europe and the Asia-Pacific region.

We expect future revenue growth to be driven primarily by our banking ~~legal spend management~~ and ~~settlement network~~cloud solutions.

Over the past several years we have made strategic investments in innovative new technology offerings that we believe will enhance our competitive position, help us win new business, drive subscription revenue growth and expand our operating margins. We ~~believe~~expect to continue to make investments in our suite of products so that ~~these initiatives have positioned us effectively for revenue growth in future years.~~

we can continue to offer innovative, feature-rich technology solutions to our customers.

Critical Accounting Policies and Significant Judgments and Estimates

We believe that several accounting policies are important to understanding our historical and future performance. We refer to these policies as critical because ~~these specific~~they involve areas ~~generally~~of financial reporting that require us to make judgments and estimates about matters that are uncertain at the time we make the estimate and different ~~estimates—~~estimates - which also would have been ~~reasonable—~~reasonable - could have been used.

The critical accounting policies and estimates we identified in our most recent Annual Report on Form10-K for the fiscal year ended June 30, ~~2017~~2019 related to revenue recognition, the valuation of goodwill and intangible assets, the valuation of acquired deferred revenue, capitalized software costs and income taxes. There have been no ~~material~~ changes to the critical accounting policies from those we disclosed in Part II. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form10-K for the fiscal year ended June 30, ~~2017.~~ 2019.

It is important that the discussion of our operating results that follows be read in conjunction with the critical accounting policies disclosed in Part II. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form10-K, as filed with the SEC on August ~~28, 2017.~~

29, 2019, as updated above.

Recent Accounting Pronouncements

For information with respect to recent accounting pronouncements and the impact of these pronouncements on our consolidated financial statements, please refer toNote 2 Recent Accounting Pronouncements to our unaudited consolidated financial statements included in Part I. Item 1 of this Quarterly Report on Form10-Q.

Results of Operations

Three ~~and Six~~ Months Ended ~~December 31, 2017~~September 30, 2019 Compared to the Three ~~and Six~~ Months Ended ~~December 31, 2016~~

September 30, 2018

Segment Information

Operating segments are components of an enterprise for which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Our chief operating decision maker is our chief executive officer.

Our operating segments are organized principally by the type of product or service offered and by geography. Similar operating segments have been aggregated into four reportable segments: Cloud Solutions, Banking Solutions, Payments and Transactional Documents and Other.

The following tables represent our segment revenues and our segment measure of profit (loss):

   Three Months Ended
December 31, Increase (Decrease)
Between Periods Six Months Ended
December 31, Increase (Decrease)
Between Periods
   2017 2016 $ Change
Inc (Dec) % Change
Inc (Dec) 2017 2016 $ Change
Inc (Dec) % Change
Inc (Dec)
   (Dollars in thousands)
Segment revenue:

Cloud Solutions
   $ 44,518 $ 38,032 $ 6,486 17.1 % $ 86,962 $ 73,589 $ 13,373 18.2 %
Banking Solutions
   20,954 19,464 1,490 7.7 % 42,275 37,650 4,625 12.3 %
Payments and Transactional Documents
   25,343 24,815 528 2.1 % 48,392 49,661 (1,269 ) (2.6 )%
Other
   4,380 4,417 (37 ) (0.8 )% 8,862 8,912 (50 ) (0.6 )%


Total revenues
   $ 95,195 $ 86,728 $ 8,467 9.8 % $ 186,491 $ 169,812 $ 16,679 9.8 %


Segment measure of profit (loss):

Cloud Solutions
   $ 9,650 $ 6,778 $ 2,872 42.4 % $ 19,034 $ 12,231 $ 6,803 55.6 %
Banking Solutions
   1,148 1,043 105 10.1 % 3,309 1,068 2,241 209.8 %
Payments and Transactional Documents
   7,734 7,617 117 1.5 % 14,094 15,193 (1,099 ) (7.2 )%
Other
   (903 ) (913 ) 10 1.1 % (1,387 ) (1,358 ) (29 ) (2.1 )%


Total measure of segment profit
   $ 17,629 $ 14,525 $ 3,104 21.4 % $ 35,050 $ 27,134 $ 7,916 29.2 %



	Three Months Ended September 30,						Increase (Decrease) Between Periods
	2019			2018			$ Change Inc (Dec)			% Change Inc (Dec)
	(Dollars in thousands)
Segment revenue:
Cloud Solutions	$	52,829		$	49,575		$	3,254		6.6	%
Banking Solutions	24,169			22,252			1,917			8.6	%
Payments and Transactional Documents	26,771			26,234			537			2.0	%
Other	4,407			4,376			31			0.7	%
Total segment revenue	$	108,176		$	102,437		$	5,739		5.6	%

Segment measure of profit (loss):
Cloud Solutions	$	11,107		$	10,292		$	815		7.9	%
Banking Solutions	535			2,062			(1,527		)	(74.1	)%
Payments and Transactional Documents	7,701			8,081			(380		)	(4.7	)%
Other	(1,866		)	(1,013		)	(853		)	(84.2	)%
Total measure of segment profit	$	17,477		$	19,422		$	(1,945	)	(10.0	)%

A reconciliation of the measure of total segment profit to GAAP loss before income taxes is as follows:

Three Months Ended September 30,
2019 2018
(in thousands)
Total measure of segment profit $ 17,477
$ 19,422
Less:
Amortization of acquisition-related intangible assets (4,950 ) (5,326 )
Stock-based compensation plan expense (11,044 ) (12,342 )
Acquisition and integration-related expenses (1,697 ) (883 )
Restructuring benefit (expense) 25
(577 )
Other non-core benefit 14
—
Global ERP system implementation and other costs (224 ) (1,581 )
Other expense, net of pension adjustments (965 ) (965 )
Loss before income taxes $ (1,364 ) $ (2,252 )

Cloud Solutions

Revenues from our Cloud Solutions segment increased ~~$6.5~~$3.3 million for the three months ended December 31, 2017 as compared to the same period in the prior fiscal year, inclusive of a favorable impact of foreign currency exchange rates of $0.5 million, due primarily to increased revenue of $5.1 million from our settlement network solutions and $1.4 million from our legal spend management solutions. Segment profit increased $2.9 million for the three months ended December 31, 2017September 30, 2019 as compared to the same period in the prior fiscal year, due primarily to the revenue increase described above, partially offset by increased cost of revenues of $2.4 million and increased operating expenses of $1.2 million primarily related to increased sales and marketing costs.

Revenues from our Cloud Solutions segment increased $13.4 million for the six months ended December 31, 2017 as compared to the same period in the prior fiscal year, inclusive of a favorable impact of foreign currency exchange rates of $0.7 million, due primarily to increased revenue of ~~$9.5~~$2.2 million ~~from our settlement network solutions and $3.9 million from our legal spend management solutions. Segment profit increased $6.8 million for the six months ended December 31, 2017 as compared to~~

the same period in the prior fiscal year, due primarily to the revenue increase described above, partially offset by increased cost of revenues of $4.4 million and increased operating expenses of $2.2 million. We expect revenue and profit for the Cloud Solutions segment to increase in fiscal year 2018 as compared to the prior fiscal year, as a result of increased revenue from our legal spend management solutions and $1.1 million from our settlement network solutions.

~~Banking Solutions~~

~~Revenues from our Banking Solutions segment~~ Segment profit increased ~~$1.5~~$0.8 million for the three months ended December 31, 2017 as compared to the same period in the prior fiscal year, due primarily to increased services revenue of $2.2 million, partially offset by decreased subscriptions and transactions revenue of $0.7 million. Segment profit increased $0.1 million for the three months ended December 31, 2017September 30, 2019 as compared to the same period in the prior fiscal year, due primarily to the revenue increase described above, partially offset by increased cost of revenues of $0.7 million primarily related to subscriptions costs and increased operating expenses of $1.7 million related to increased sales and marketing ~~expenses~~costs. We expect revenue and profit for the Cloud Solutions segment to increase in fiscal year 2020 as a result of ~~$0.7 million.~~

increased revenue from our legal spend management and our Paymode-X and financial messaging settlement network solutions.

Banking Solutions

Revenues from our Banking Solutions segment increased ~~$4.6~~$1.9 million for the ~~six~~three months ended ~~December 31, 2017~~September 30, 2019 as compared to the same period in the prior fiscal year, due ~~primarily~~ to increased ~~services~~subscriptions revenue of ~~$3.6~~$2.7 million, partially offset by decreased software license revenue of ~~$0.7~~$0.8 million ~~and~~as we continued to emphasize sales of our hosted solutions. The increase in subscriptions ~~and transactions~~ revenue ~~of $0.4 million.~~was primarily related to customers going live on our hosted platform. Segment profit ~~increased $2.2~~decreased $1.5 million for the ~~six~~three months ended ~~December 31, 2017~~September 30, 2019 as compared to the same period in the prior fiscal year, due ~~primarily~~ to ~~the revenue increase described above, partially offset by~~ increased operating

expenses associated with sales and marketing and product development and engineering expenses and cost of revenues of ~~$2.0~~$2.5 million and ~~increased sales and marketing expenses of $0.5 million.~~$0.9 million, respectively. We expect revenue to continue to increase and profit to decrease slightly for the Banking Solutions segment ~~to increase, and profit for the Banking Solutions segment to remain relatively consistent,~~ in fiscal year ~~2018~~2020 as compared to ~~the prior~~ fiscal year 2019 as ~~a result of our continued deployment of our newer banking solutions.~~

we continue to invest in product development.

Payments and Transactional Documents

Revenues from our Payments and Transactional Documents segment increased $0.5 million for the three months ended ~~December 31, 2017~~September 30, 2019 as compared to the same period in the prior fiscal year, ~~inclusive of a favorable impact of foreign currency exchange rates of $1.1 million,~~ due primarily to increased ~~subscription and transactions~~subscriptions revenue of ~~$2.4~~$2.3 million from our ~~European~~ payments and transactional documents solutions, partially offset by decreased ~~software licenses revenue of $1.0 million, decreased~~ service and maintenance revenue of ~~$0.4~~$0.9 million and decreased ~~other~~software license revenue of ~~$0.4~~$0.8 million. The ~~segment~~decrease in maintenance revenue was driven by the continued focus of converting our customers to our hosted and subscription based solutions rather than deployed, perpetual license solutions. Segment profit ~~increase of $0.1~~decreased $0.4 million for the three months ended ~~December 31, 2017,~~September 30, 2019 as compared to the same period in the prior fiscal year, ~~inclusive of a favorable impact of foreign currency exchange rates of $0.4 million, was~~due primarily ~~attributable~~ to ~~the revenue increase described above, as well as decreased cost of revenues of $0.7 million, partially offset by~~ increased ~~sales and marketing~~operating expenses of ~~$0.8~~$0.5 million ~~and~~primarily related to increased product development and engineering ~~expenses of $0.3 million.~~

~~Revenues from our~~and sales and marketing costs. We expect revenue to increase and profit to remain consistent for the Payments and Transactional Documents segment in fiscal year 2020.

Other

Revenues from our Other segment remained consistent for the three months ended September 30, 2019 as compared to the same period in the prior fiscal year. Segment profit decreased ~~$1.3~~$0.9 million for the ~~six~~three months ended ~~December 31, 2017~~September 30, 2019 as compared to the same period in the prior fiscal year, ~~inclusive of a favorable impact of foreign currency exchange rates of $1.1 million,~~ due primarily to ~~decreased service and maintenance~~increased professional services cost of revenue of ~~$2.0~~$0.6 million ~~decreased software license~~associated with our cyber fraud and risk management solutions. We expect Other segment revenue ~~of $1.6 million~~to remain consistent and ~~decreased other revenue of $0.7 million, partially offset~~profit to decrease in fiscal year 2020.

Revenues by category



	Three Months Ended September 30,						Increase (Decrease) Between Periods
	2019			2018			$ Change Inc (Dec)			% Change Inc (Dec)
	(Dollars in thousands)
Revenues:
Subscriptions	$	80,066		$	69,768		$	10,298		14.8	%
Software licenses	2,576			4,512			(1,936		)	(42.9	)%
Service and maintenance	24,825			27,405			(2,580		)	(9.4	)%
Other	709			752			(43		)	(5.7	)%
Total revenues	$	108,176		$	102,437		$	5,739		5.6	%

As % of total revenues:
Subscriptions	74.0		%	68.1		%
Software licenses	2.4		%	4.4		%
Service and maintenance	22.9		%	26.8		%
Other	0.7		%	0.7		%
Total revenues	100.0		%	100.0		%

Subscriptions

Revenues from subscriptions increased ~~subscriptions and transactions revenue of $3.1 million. The segment profit decrease of $1.1~~$10.3 million for the ~~six~~three months ended December 31, 2017, as compared to the same period in the prior fiscal year, inclusive of a favorable impact of foreign currency exchange rates of $0.5 million, was primarily attributable to the revenue decrease described above, as well as increased sales and marketing expenses of $1.2 million, partially offset by decreased cost of revenues of $1.6 million. We expect revenue for the Payments and Transactional Documents segment to increase and profit to increase slightly in fiscal year 2018 as compared to the prior fiscal year, as a result of increased sales of our payment and document automation solutions.

~~Other~~

~~Revenues and profit from our Other segment remained relatively consistent for the three and six months ended December 31, 2017~~September 30, 2019 as compared to the same period in the prior fiscal year. The overall revenue increase was driven by increases in revenue from our Cloud Solutions, Banking Solutions and Payments and Transactional Documents segments of $5.1 million, $2.7 million and $2.3 million, respectively, due to the impact of customers going live on our hosted platforms and the impact of customers converting to subscription based solutions. We expect ~~Other segment revenue and profit~~subscriptions revenues to increase ~~slightly,~~ in fiscal year ~~2018~~2020 as compared to the prior fiscal year ~~principally as the result of increased sales of~~due to revenue increases in our ~~cyber fraud~~legal spend management solutions, our Paymode-X and ~~risk management products.~~

~~Revenues by category~~

   Three Months Ended
December 31, Increase (Decrease)
Between Periods Six Months Ended
December 31, Increase (Decrease)
Between Periods
   2017 2016 $ Change
Inc (Dec) % Change
Inc (Dec) 2017 2016 $ Change
Inc (Dec) % Change
Inc (Dec)
   (Dollars in thousands)
Revenues:

Subscriptions and transactions
   $ 63,187 $ 55,644 $ 7,543 13.6 % $ 123,901 $ 107,776 $ 16,125 15.0 %
Software licenses
   2,620 3,492 (872 ) (25.0 )% 4,985 5,613 (628 ) (11.2 )%
Service and maintenance
   28,433 25,920 2,513 9.7 % 55,775 53,593 2,182 4.1 %
Other
   955 1,672 (717 ) (42.9 )% 1,830 2,830 (1,000 ) (35.3 )%


Total revenues
   $ 95,195 $ 86,728 $ 8,467 9.8 % $ 186,491 $ 169,812 $ 16,679 9.8 %


As % of total revenues:

Subscriptions and transactions
   66.4 % 64.2 % 66.4 % 63.5 %
Software licenses
   2.8 % 4.0 % 2.7 % 3.3 %
Service and maintenance
   29.9 % 29.9 % 29.9 % 31.6 %
Other
   0.9 % 1.9 % 1.0 % 1.6 %


Total revenues
   100.0 % 100.0 % 100.0 % 100.0 %

~~Subscriptions~~financial messaging settlement network solutions and ~~Transactions~~

our banking solutions platforms.

Software Licenses

Revenues from ~~subscriptions and transactions increased $7.5~~software licenses decreased $1.9 million for the three months ended ~~December 31, 2017~~September 30, 2019 as compared to the same period in the prior fiscal ~~year, inclusive of a favorable impact of foreign currency exchange rates of $0.8 million.~~year. The overall revenue ~~increase~~decrease was due principally to ~~increases~~decreases in revenue from our ~~Cloud Solutions segment and~~ Payments and Transactional Documents segment of ~~$5.9~~$0.8 million and ~~$2.4 million, respectively, partially offset by a decrease in revenue~~ from our Banking Solutions segment of ~~$0.7~~$0.8 million.

We expect

software license revenues to decrease in fiscal year 2020, as we continue to emphasize our cloud based solutions rather than on-premise software deployments.

Service and Maintenance

Revenues from ~~subscriptions~~service and ~~transactions increased $16.1~~maintenance decreased $2.6 million for the ~~six~~three months ended ~~December 31, 2017~~September 30, 2019 as compared to the same period in the prior fiscal ~~year, inclusive of a favorable impact of foreign currency exchange rates of $0.8 million.~~year. The overall revenue ~~increase~~decrease was due principally to ~~increases~~decreases in revenue from our Cloud Solutions segment of $1.5 million and Payments and Transactional Documents segment of ~~$12.6~~$0.9 million, in each case reflecting the continued conversion of customers to our hosted and ~~$3.1 million, respectively.~~subscription based solutions rather than deployed, perpetual-license solutions. We expect ~~subscriptions~~service and ~~transactions~~maintenance revenues ~~to increase~~will decrease in fiscal year ~~2018 as compared to the prior fiscal year, primarily~~2020 as a result of ~~the revenue contribution from our legal spend management solutions and settlement network solutions and revenue increases in our Banking Solutions segment.~~

~~Software Licenses~~

~~Revenues from software licenses~~ decreased $0.9 million for the three months ended December 31, 2017 as compared to the same period in the prior fiscal year, inclusive of a favorable impact of foreign currency exchange rates of $0.1 million, primarily as a result of decreasedservices revenue from our Payments and Transactional Documents ~~segment of $1.0 million.~~

Revenues from software licenses decreased $0.6 million for the six months ended December 31, 2017 as compared to the same period in the prior fiscal year, inclusive of a favorable impact of foreign currency exchange rates of $0.1 million, primarily as a result of decreased revenue from our European payments and ~~transactional documents solutions of $1.5 million, partially offset by increased revenue from our~~ Banking Solutions ~~segment~~segments and ~~Other segment of $0.7 million~~financial messaging solutions, primarily due to our continued emphasis on subscription and ~~$0.3 million, respectively. We expect software license revenues to decrease slightly in fiscal year 2018 as compared to the prior fiscal year.~~

~~Service and Maintenance~~

Revenues from service and maintenance increased $2.5 million for the three months ended December 31, 2017 as compared to the same period in the prior fiscal year, inclusive of a favorable impact of foreign currency exchange rates of $0.7 million. The overall revenue increase was primarily the result of increased revenue from our Banking Solutions segment of $2.2 million.

Revenues from service and maintenance increased $2.2 million for the six months ended December 31, 2017 as compared to the same period in the prior fiscal year, inclusive of a favorable impact of foreign currency exchange rates of $0.9 million. The overall revenue increase was primarily the result of increased revenue from our Banking Solutions and Cloud Solutions segment of $3.5 million and $0.7 million, respectively, partially offset by decreased revenue from our Payments and Transactional Documents segment of $2.0 million. We expect that service and maintenance revenues will increase slightly in fiscal year 2018 as compared to the prior fiscal year.

cloud based solutions.

Other

Our other revenues consist principally of equipment and supplies sales, which remained minor components of our overall revenue. We expect that other revenues will ~~decrease slightly~~remain relatively consistent in fiscal year ~~2018 as compared to the prior fiscal year.~~

2020.

Cost of revenues by category

   Three Months Ended
December 31, Increase (Decrease)
Between Periods Six Months Ended
December 31, Increase (Decrease)
Between Periods
   2017 2016 $ Change
Inc (Dec) % Change
Inc (Dec) 2017 2016 $ Change
Inc (Dec) % Change
Inc (Dec)
   (Dollars in thousands)
Cost of revenues:

Subscriptions and transactions
   $ 27,201 $ 24,782 $ 2,419 9.8 % $ 54,612 $ 48,668 $ 5,944 12.2 %
Software licenses
   229 196 33 16.8 % 399 324 75 23.1 %
Service and maintenance
   12,968 13,416 (448 ) (3.3 )% 25,200 26,701 (1,501 ) (5.6 )%
Other
   701 1,178 (477 ) (40.5 )% 1,368 2,056 (688 ) (33.5 )%


Total cost of revenues
   $ 41,099 $ 39,572 $ 1,527 3.9 % $ 81,579 $ 77,749 $ 3,830 4.9 %


Gross Profit ($)
   $ 54,096 $ 47,156 $ 6,940 14.7 % $ 104,912 $ 92,063 $ 12,849 14.0 %
Gross Profit (%)
   56.8 % 54.4 % 56.3 % 54.2 %
As % of total revenues:

Subscriptions and transactions
   28.6 % 28.6 % 29.3 % 28.7 %
Software licenses
   0.2 % 0.2 % 0.2 % 0.2 %
Service and maintenance
   13.6 % 15.5 % 13.5 % 15.7 %
Other
   0.8 % 1.3 % 0.7 % 1.2 %


Total cost of revenues
   43.2 % 45.6 % 43.7 % 45.8 %

Three Months Ended September 30, Increase (Decrease)
Between Periods
2019 2018 $ Change Inc (Dec) % Change Inc (Dec)
(Dollars in thousands)
Cost of revenues:
Subscriptions $ 32,765
$ 31,669
$ 1,096
3.5 %
Software licenses 161
231
(70 ) (30.3 )%
Service and maintenance 13,053
12,706
347
2.7 %
Other 516
524
(8 ) (1.5 )%
Total cost of revenues $ 46,495
$ 45,130
$ 1,365
3.0 %
Gross Profit ($) $ 61,681
$ 57,307
$ 4,374
7.6 %
Gross Profit (%) 57.0 % 55.9 %

Subscriptions ~~and Transactions~~

Subscriptions ~~and transactions~~ costs include salaries and other related costs for our professional services teams as well as costs related to our hosting infrastructure such as depreciation and facilities related expenses. Subscriptions ~~and transactions~~ costs decreased ~~slightly~~ to ~~43%~~41% of ~~subscription and transactions~~subscriptions revenues in the three months ended ~~December 31, 2017~~September 30, 2019 as compared to 45% of subscriptions ~~and transactions~~ revenues in the three months ended ~~December 31, 2016.~~

~~Subscriptions and transactions costs decreased slightly~~September 30, 2018 due to ~~44% of subscription and transactions revenues in~~ the ~~six months ended December 31, 2017 compared to 45% of subscriptions and transactions revenues in the six months ended December 31, 2016.~~continued revenue expansion from our hosted solutions. We expect ~~that~~ subscriptions ~~and transactions~~ costs as a percentage of subscriptions ~~and transactions~~ revenues will ~~remain relatively consistent~~continue to decrease in fiscal year ~~2018~~2020 as ~~compared to the prior fiscal year.~~

a result of increased revenue contribution from our cloud-based banking, legal spend management and Paymode-X solutions and payments and transactional document solutions.

Software Licenses

Software license costs consist of expenses incurred by us to ~~manufacture, package and~~ distribute our software products and related documentation and costs of licensing third party software that is incorporated into or sold with certain of our products. Software license costs ~~increased slightly to 9% of software license revenues in the three months ended December 31, 2017 as compared to~~remained consistent at 6% of software license revenues in the three months ended ~~December 31, 2016. Software license costs increased slightly~~September 30, 2019 as compared to 8%5% of software license revenues in the ~~six~~three months ended December 31, 2017 as compared to 6% of software license revenues in the six months ended December 31, 2016. The increase in software license costs as a percent of software license revenues for the three and six months ended December 31, 2017 as compared to the same periods in the prior fiscal year was due primarily to a reduction in revenues from our European payments and transactional documents solutions and relatively unchanged cost of revenues.September 30, 2018. We expect ~~that~~ software license costs as a percentage of software license revenues will remain relatively consistent in fiscal year ~~2018 as compared to the prior fiscal year.~~

2020.

Service and Maintenance

Service and maintenance costs include salaries and other related costs for our customer service, maintenance and help desk support staffs, as well as third party contractor expenses used to complement our professional services team. Service and maintenance costs ~~decreased~~increased to 53% of service and maintenance revenues in the three months ended September 30, 2019 as compared to 46% of service and maintenance revenues in the three months ended ~~December 31, 2017 as compared~~September 30, 2018 due primarily to ~~52% of service and maintenance revenues in the three months ended December 31, 2016. Service and maintenance~~

costs decreased to 45% of service and maintenance revenues in the six months ended December 31, 2017 as compared to 50% of service and maintenance revenues in the six months ended December 31, 2016. The decrease in service and maintenance costs as a percent of service and maintenance revenues for the three and six months ended December 31, 2017 as compared to the same periods in the prior fiscal year was driven principally by gross margin improvement in our Banking Solutions segment. We expect thatincreased service and maintenance costs as a percentage of service and maintenance ~~revenues~~revenue from our European payments and transactional documents solutions. We expect that service and maintenance costs will ~~decrease slightly as customersgo-live~~ ~~on the banking solutions platforms~~remain relatively consistent in fiscal year ~~2018 as compared to the prior fiscal year.~~

2020.

Other

Other costs include the costs associated with equipment and supplies that we resell, as well as freight, shipping and postage costs associated with the delivery of our ~~products and~~products. These remain minor components of our business. We expect ~~that~~ other costs as a percentage of other revenues will remain relatively consistent in fiscal year ~~2018 as compared to the prior fiscal year.~~

2020.

Operating Expenses

   Three Months Ended
December 31, Increase (Decrease)
Between Periods Six Months Ended
December 31, Increase (Decrease)
Between Periods
   2017 2016 $ Change
Inc (Dec) % Change
Inc (Dec) 2017 2016 $ Change
Inc (Dec) % Change
Inc (Dec)
   (Dollars in thousands)
Operating expenses:

Sales and marketing
   $ 21,396 $ 19,325 $ 2,071 10.7 % $ 40,701 $ 38,200 $ 2,501 6.5 %
Product development and engineering
   13,892 13,082 810 6.2 % 27,707 26,017 1,690 6.5 %
General and administrative
   10,981 11,772 (791 ) (6.7 )% 22,810 24,476 (1,666 ) (6.8 )%
Amortization of acquisition-related intangible assets
   5,702 6,090 (388 ) (6.4 )% 10,890 12,375 (1,485 ) (12.0 )%
Goodwill impairment charge
   —   7,529 (7,529 ) (100.0 )% —   7,529 (7,529 ) (100.0 )%


Total operating expenses
   $ 51,971 $ 57,798 $ (5,827 ) (10.1 )% $ 102,108 $ 108,597 $ (6,489 ) (6.0 )%


As % of total revenues:

Sales and marketing
   22.5 % 22.3 % 21.8 % 22.5 %
Product development and engineering
   14.6 % 15.1 % 14.9 % 15.3 %
General and administrative
   11.5 % 13.6 % 12.2 % 14.4 %
Amortization of acquisition-related intangible assets
   6.0 % 7.0 % 5.8 % 7.3 %
Goodwill impairment charge
   — % 8.7 % — % 4.4 %


Total operating expenses
   54.6 % 66.7 % 54.7 % 63.9 %

Three Months Ended September 30, Increase (Decrease)
Between Periods
2019 2018 $ Change Inc (Dec) % Change Inc (Dec)
(Dollars in thousands)
Operating expenses:
Sales and marketing $ 25,688
$ 23,022
$ 2,666
11.6 %
Product development and engineering 18,349
16,565
1,784
10.8 %
General and administrative 13,345
13,865
(520 ) (3.8 )%
Amortization of acquisition-related intangible assets 4,950
5,326
(376 ) (7.1 )%
Total operating expenses $ 62,332
$ 58,778
$ 3,554
6.0 %

As % of total revenues:
Sales and marketing 23.7 % 22.5 %
Product development and engineering 17.0 % 16.2 %
General and administrative 12.3 % 13.5 %
Amortization of acquisition-related intangible assets 4.6 % 5.2 %
Total operating expenses 57.6 % 57.4 %

Sales and Marketing

Sales and marketing expenses consist primarily of salaries and other related costs for sales and marketing personnel, sales commissions, travel, public relations and marketing materials and trade show participation. Sales and marketing expenses increased in the three months ended ~~December 31, 2017~~September 30, 2019 as compared to the three months ended ~~December 31, 2016~~September 30, 2018 due primarily to an increase in employee related costs of ~~$1.7~~$1.6 million ~~due in part to the impact of our recent acquisitions.~~

~~Sales~~ and ~~marketing expenses~~ increased ~~in the six months ended December 31, 2017 as compared to the six months ended December 31, 2016 due primarily to an increase in employee~~marketing related costs of ~~$2.1 million due in part to the impact of our recent acquisitions.~~$0.6 million. We expect sales and marketing expenses as a percentage of total revenue will ~~remain relatively consistent~~increase in fiscal year ~~2018 as compared to the prior fiscal year.~~

2020.

Product Development and Engineering

Product development and engineering expenses consist primarily of personnel costs to support product development, which consists of enhancements and revisions to our ~~products based on customer feedback and general marketplace demands.~~products. Product development and engineering expenses in the three ~~and six~~ months ended ~~December 31, 2017~~September 30, 2019 as compared to the three ~~and six~~ months ended ~~December 31, 2016~~September 30, 2018 increased principally as a result of an increase in headcount related ~~costs.~~costs of $1.7 million as we continued to invest in the deployment of innovative, feature-rich products. We expect product development and engineering expenses as a percentage of total revenues will ~~remain relatively consistent~~increase in fiscal year ~~2018 as compared to the prior fiscal year.~~

2020.

General and Administrative

General and administrative expenses consist primarily of salaries and other related costs for operations and finance employees and legal and accounting services. General and administrative expenses decreased in the three months ended ~~December 31, 2017~~September 30, 2019 as compared to the three months ended ~~December 31, 2016~~September 30, 2018 due primarily to a decrease in global ERP implementation and other costs ~~associated with our global internal system implementations~~ of ~~$0.8 million.~~

General and administrative expenses decreased in the six months ended December 31, 2017 as compared to the six months ended December 31, 2016 due primarily to a decrease in costs associated with our global internal system implementations of $1.2$1.4 million and a decrease in ~~acquisition and integration-related~~restructuring expenses of ~~$0.4~~$0.6 million, partially offset by an increase in acquisition related costs of $1.4 million and an increase in facilities related costs of $0.5 million. We expect general and administrative expenses as a percentage of total revenues will ~~decrease slightly~~remain consistent in fiscal year ~~2018 as compared to the prior fiscal year, primarily as a result of decreased global internal system implementation costs.~~

2020.

Amortization of Acquisition-related Intangible Assets

We amortize our acquired intangible assets in proportion to the estimated rate at which the asset provides economic benefit to us. Accordingly, amortization expense rates are often higher in the earlier periods of an asset’s estimated life. The decrease in amortization expense in the three ~~and six~~ months ended ~~December 31, 2017~~September 30, 2019 as compared to the three ~~and six~~ months ended ~~December 31, 2016~~September 30, 2018 occurred as a result of the impact of amortization rates decreasing over the underlying asset lives. We expect that total amortization expense for acquired intangible assets for the remainder of fiscal year ~~2018~~2020 will be approximately ~~$11.5~~$14.9 million.

~~Goodwill Impairment Charge~~

~~In the six months ended December 31, 2016, we recorded a $7.5 million goodwill impairment charge as a result of an impairment test conducted for one of our reporting units. Please refer to~~ ~~Note 7. Goodwill and Other Intangible Assets~~ ~~to our consolidated financial statements included in Item 8 of our Annual Report in Form10-K~~ ~~for the fiscal year ended June 30, 2017 for more information regarding our accumulated impairment losses and goodwill balances.~~

Other Expense, Net

   Three Months Ended
December 31, Increase (Decrease)
Between Periods Six Months Ended
December 31, Increase (Decrease)
Between Periods
   2017 2016 $ Change
Inc (Dec) % Change
Inc (Dec) 2017 2016 $ Change
Inc (Dec) % Change
Inc (Dec)
   (Dollars in thousands)
Interest income
   $ 63 $ 129 $ (66 ) (51.2 )% $ 117 $ 283 $ (166 ) (58.7 )%
Interest expense
   (3,668 ) (4,143 ) 475 11.5 % (8,257 ) (8,183 ) (74 ) (0.9 )%
Other income (expense), net
   73 (168 ) 241 143.5 % 145 (217 ) 362 166.8 %


Other expense, net
   $ (3,532 ) $ (4,182 ) $ 650 15.5 % $ (7,995 ) $ (8,117 ) $ 122 1.5 %



	Three Months Ended September 30,						Increase (Decrease) Between Periods
	2019			2018			$ Change Inc (Dec)			% Change Inc (Dec)
	(Dollars in thousands)
Interest income	$	223		$	134		$	89		66.4	%
Interest expense	(750		)	(1,121		)	371			33.1	%
Other (expense) income, net	(186		)	206			(392		)	(190.3	)%
Other expense, net	$	(713	)	$	(781	)	$	68		8.7	%

Other expense, net decreased ~~$0.7~~$0.1 million for the three months ended ~~December 31, 2017 and $0.1 million for the six months ended December 31, 2017~~September 30, 2019 as compared to the same ~~periods~~period in the prior fiscal ~~year, respectively, primarily due to decreases in the amortization of debt discount costs upon the maturity of our Notes during the quarter ended December 31, 2017.~~

year.

Provision for Income Taxes

We recorded income tax expense of $3,000 and an income tax benefit of ~~$4.5~~$1.3 million ~~for each of the three months ended December 31, 2017 and 2016. The income tax benefit~~ for the three months ended December 31, 2017 includes a provisional discrete tax benefit of $4.4 million relating to the enactment of the Tax Act in the United States. The income tax benefit for the three months ended December 31, 2016 includes a discrete tax benefit in Switzerland of $4.5 million related to the impairment of its investment in Intellinx Ltd. (a wholly owned subsidiary). We recorded an income tax benefit of $4.0 millionSeptember 30, 2019 and ~~$3.8 million for the six months ended December 31, 2017 and 2016,~~2018, respectively. Please refer toNote 78 Income Taxes to our unaudited consolidated financial statements included in Part I. Item 1 of this Quarterly Report on Form10-Q for further discussion.

Liquidity and Capital Resources

~~On December 9, 2016, we (as borrower) and certain of our domestic subsidiaries (as guarantors) entered into~~

We are party to a credit agreement with Bank of America, N.A. and certain other lenders ~~which~~that provides for a ~~five-year revolving~~ credit facility in the amount of up to $300 million (the Credit Facility). ~~On December 1, 2017, we repaid~~We have the right to request an increase to the aggregate ~~principal balance~~commitments to the Credit Facility of ~~$189.8 million of our Notes which were issued on December 12, 2012. We financed the repayment of the principal balance of the Notes through a combination of cash on hand and with borrowings of~~up to $150 million, ~~under~~subject to specified conditions. The Credit Facility expires in July 2023. At September 30, 2019, borrowings were $110 million and we were in compliance with all covenants associated with the Credit Facility. In connection with the maturity of the Notes, we issued to the Note holders approximately 0.6 million shares of our common stock to satisfy the Notes’ conversion premium. Simultaneously, we redeemed a portion of the Note Hedges and received from the Note Hedge counterparties approximately 0.6 million shares of our common stock. Please refer to~~Note 10 Indebtedness~~ ~~to our unaudited consolidated financial statements included in Item 1 of this Quarterly Report on Form10-Q~~ ~~for further discussion.~~

We have financed our operations primarily from cash provided by operating activities, the sale of our common stock ~~the issuance of the Notes in December 2012~~ and ~~borrowings under the Credit Facility.~~debt proceeds. We have historically generated positive operating cash flows. ~~Accordingly, we~~We believe that the cash generated from our operations and the cash and cash equivalents we have on hand will be sufficient to meet our operating requirements for the foreseeable future. If our existing cash resources along with cash generated from operations is insufficient to satisfy our ~~funding~~operating requirements, we may need to sell additional equity or debt securities or seek other financing arrangements.

~~As of December 31, 2017, we were in compliance with the covenants associated with the Credit Facility.~~

One of our financial goals is to maintain and improve our capital structure. The key metrics we focus on in assessing the strength of our liquidity and a summary of our cash activity for the ~~six~~three months ended ~~December 31, 2017~~September 30, 2019 and ~~2016~~2018 are summarized in the tables below:

   December 31,    June 30,
   2017    2017
   (in thousands)
Cash and cash equivalents
   $ 64,051    $ 124,569
Marketable securities
   10,004    1,973
Borrowings under credit facility
   150,000    —
Convertible senior notes⁽¹⁾
   —      183,682

⁽¹⁾	~~The Notes are shown on our Consolidated Balance Sheets at their carrying value, which represents the principal balance of $189.8 million less unamortized discount and debt issuance costs.~~

   Six Months Ended
December 31,
   2017    2016
   (in thousands)
Cash provided by operating activities
   $ 9,688    $ 17,578
Cash provided by (used in) investing activities
   (30,906 )    4,000
Cash used in financing activities
   (40,249 )    (15,696 )
Effect of exchange rates on cash
   949    (3,444 )

September 30, June 30,
2019 2019
(in thousands)
Cash and cash equivalents $ 84,751
$ 92,164
Marketable securities 10,137
7,541
Borrowings under credit facility 110,000
110,000

Three Months Ended September 30,
2019 2018
(in thousands)
Cash provided by operating activities $ 18,112
$ 11,982
Cash used in investing activities (14,110 ) (17,001 )
Cash used in financing activities (8,013 ) (39,066 )
Effect of exchange rates on cash (1,970 ) (946 )

Cash, cash equivalents and marketable securities.At ~~December 31, 2017,~~September 30, 2019, our cash and cash equivalents of ~~$64.1~~$84.8 million consisted primarily of cash deposits held at major banks and money market funds. The ~~$60.5~~$7.4 million decrease in cash and cash equivalents at ~~December 31, 2017~~September 30, 2019 from June 30, ~~2017~~2019 was primarily due to ~~the repayment~~cash used to repurchase shares of ~~the Notes~~our common stock of ~~$189.8~~$10.0 million, ~~offset by $150.0 million borrowed under our Credit Facility; business acquisitions, net of~~ cash ~~acquired, of $13.7 million; purchases ofavailable-for-sale~~ ~~securities of $9.9 million; and~~used to fund capital expenditures, including capitalization of software costs of ~~$9.1~~$11.4 million and purchases

of available for sale securities of $6.3 million, partially offset by cash generated from operations of ~~$9.7~~$18.1 million and proceeds from sales of available for sale securities of $3.7 million.

Cash, cash equivalents and marketable securities included approximately ~~$43.0~~$56.9 million held by our foreign subsidiaries as of ~~December 31, 2017. Our current intention is~~September 30, 2019. We continue to permanently reinvest ~~these amounts in~~ the ~~growth~~earnings, if any, of our international subsidiaries other than the UK and Switzerland and therefore we do not provide for U.S. income taxes that could result from the distribution of foreign ~~operations.~~earnings from our international subsidiaries other than the UK and Switzerland. If our reinvestment plans change based on future events and we decide to repatriate ~~these~~ amounts from our international subsidiaries other than the UK and Switzerland to fund our domestic operations, ~~we could be~~those amounts would generally become subject to state tax in the U.S. to the extent there were cumulative profits in the foreign ~~withholding taxes.~~

subsidiary from which the distribution to the U.S. was made.

Cash and cash equivalents held by our foreign subsidiaries are denominated in currencies other than U.S. Dollars. ~~Increases~~Decreases primarily in the foreign currency exchange rate of the British Pound Sterling to the U.S. Dollar decreased our overall cash balances by approximately $2.0 million for the three months ended September 30, 2019. Further changes in the foreign currency exchange rates of the British Pound and Euro to the U.S. Dollar increased our overall cash balances by approximately $0.9 million for the six months ended December 31, 2017. Further changes in the foreign currency exchange rates of theseSterling and other currencies could have a significant effect on our overall cash ~~balances. However,~~balances, however, we continue to believe that our existing cash balances, even in light of the foreign currency volatility we frequently experience, are adequate to meet our operating requirements for the foreseeable future.

Operating Activities. Operating cash flow is derived by adjusting our net income or loss fornon-cash operating items, such as depreciation and amortization, stock-based compensation plan expense, deferred income tax benefits or expenses, and impairment ~~charges;~~charges and changes in operating assets and liabilities, which reflect timing differences between the receipt and payment of cash associated with transactions and when they are recognized in our results of operations. Cash generated from operations ~~decreased~~

increased by ~~$7.9~~$6.1 million in the ~~six~~three months ended ~~December 31, 2017 versus~~September 30, 2019 as compared to the same period in the prior fiscal year. The ~~decrease~~increase was primarily related to ~~a decrease~~an increase in cash flows from accounts ~~receivable~~receivables of ~~$14.8 million, accrued expenses of $2.2 million, other liabilities of $1.4 million, deferred revenue of $1.3 million andnon-cash~~ ~~adjustments to our net loss of $8.2 million, partially offset by a decrease in our net loss of $19.7~~$5.8 million.

At December 31, 2017, we had U.S. net operating loss carryforwards of $105.6 million, which expire at various times through fiscal year 2038, Switzerland net operating losses of $19.8 million, which expire in fiscal year 2024, and other foreign net operating loss carryforwards of $26.8 million, primarily in Europe and Israel, which have no statutory expiration date. We also have approximately $6.2 million of research and development tax credit carryforwards available, which expire at various points through fiscal year 2038. Our operating losses and tax credit carryforwards may be subject to limitations under provisions of the Internal Revenue Code.

~~At December 31, 2017,~~September 30, 2019, a substantial portion of our deferred tax assets have been reserved since, given the available evidence, it was deemed more likely than not that these deferred tax assets would not be realized.

Investing Activities. Investing cash flows consist primarily of capital expenditures, inclusive of capitalized software costs, investment purchases and sales and cash used for the acquisition of businesses and assets. The ~~$34.9~~$2.9 million decrease in net cash ~~provided by~~used in investing activities for the ~~six~~three months ended ~~December 31, 2017 versus~~September 30, 2019 as compared to the same period in the prior fiscal year was primarily due to ~~a decrease in proceeds from sale~~the absence of~~available-for-sale~~ ~~securities of $26.3 million and~~ cash used to fund business acquisitions, net of cash acquired, of ~~$13.7~~$8.9 million partially offset by ~~a decrease~~an increase in capital expenditures of ~~$6.2~~$3.1 million and an increase in the purchase of available for sale securities of $3.6 million.

Financing Activities. Financing cash flows consist primarily of repurchases of common stock, issuance and repayment of debt, and proceeds from the sale of shares of common stock through employee equity incentive plans. ~~The $24.6 million increase~~

Contractual Obligations

For the three months ended September 30, 2019, there have been no material changes to the contractual obligations disclosed in ~~cash used in financing activities~~Item 7 of our Annual Report on Form 10-K for the ~~six months ended December 31, 2017 as compared to the same period in the prior~~ fiscal year was primarily due to the repayment of the Notes of $189.8 million, net of $150.0 million borrowed under our Credit Facility, and further offset by a decrease in cash used to repurchase our common stock of $15.0 million.

~~Contractual Obligations~~

~~Following is a summary of future payments that we are required to make under existing contractual obligations as of December 31, 2017:~~

   Payment Due by Fiscal Year
   2018    2019-2020    2021-2022    Thereafter    Total
   (in thousands)
Credit Facility

Principal payment
   $ —      $ —      $ 150,000    $ —      $ 150,000
Interest payments⁽¹⁾
   2,590    10,424    7,501    —      20,515
Commitment fee⁽²⁾
   188    750    541    —      1,479
Note payable
   374    1,122    —      —      1,496
Operating leases
   2,938    9,795    6,968    6,476    26,177
Purchase commitments
   4,398    6,053    92    —      10,543










Total contractual obligations
   $ 10,488    $ 28,144    $ 165,102    $ 6,476    $ 210,210

⁽¹⁾	The Credit Facility carries a variable rate of interest. Interest payments were estimated using the applicable interest rate as of December 31, 2017 net of the impact of the interest rate swap we entered into on July 10, 2017.

⁽²⁾	The Credit Facility agreement includes a commitment fee, which we have included in the table above, based on the applicable interest rate as of December 31, 2017 and our unborrowed capacity of $150 million.

Purchase orders are not included in the table above. Our purchase orders represent authorizations to purchase rather than binding agreements. The contractual obligation amounts in the table above are associated with agreements that are enforceable and legally binding and that specify all significant terms, including: fixed or minimum services to be used; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Obligations under contract that we can cancel without a significant penalty are not included in the table above.

ended June 30, 2019.

Our estimate of unrecognized tax benefits for which cash settlement may be required ~~in the amount~~is $1.6 million. As of ~~$1.4 million, has been excluded from the table above. These amounts have been excluded because, as of December 31, 2017,~~September 30, 2019, we are unable to estimate the timing of future cash outflows, if any, associated with these liabilities as we do not currently anticipate settling any of these tax positions with cash payment in the foreseeable future.

The contractual obligations table above also excludes our estimate of the contributions we will make to our Swiss defined benefit pension plan in fiscal year 2018, which is $1.6 million based on foreign exchange rates in effect on December 31, 2017. We have not disclosed contributions for periods after fiscal year 2018, as those amounts are subject to future changes.

Off-Balance Sheet Arrangements

We did not have anyoff-balance sheet arrangements during the three months ended ~~December 31, 2017.~~

September 30, 2019.

~~Item 3.~~

~~Quantitative and Qualitative Disclosures about Market Risk~~

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to a variety of risks, including interest rate changes, foreign currency exchange rate fluctuations, and derivative instruments classification. We have not entered into any foreign currency hedging transactions or other instruments to minimize our exposure to foreign currency exchange rate fluctuations nor do we presently plan to in the future. On August 14, 2017, we acquired Decillion Solutions Pte Ltd, which is headquartered in Singapore and also has operations in Indonesia, Australia, China, Malaysia and Thailand. The foreign currency exchange rate risk posed in these regions is not material to our consolidated financial statements, given the limited operations in these countries.

We are a party to an interest rate swap agreements which we designated as a hedge ~~instrument~~instruments to minimize our exposure to interest rate fluctuations under our Credit Facility.

There has been no material change to our exposure to market risk from that which was disclosed in our Annual Report on Form10-K for the fiscal year ended June 30, ~~2017~~2019 as filed with the SEC on August ~~28, 2017,~~29, 2019, which is incorporated herein by reference.

~~Item 4.~~

~~Controls and Procedures~~

Item 4. Controls and Procedures

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as of ~~December 31, 2017.~~September 30, 2019. The term disclosure controls and procedures, as defined in Rules13a-15(e) and15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that

information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers as appropriate, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based on the evaluation of our disclosure controls and procedures as of ~~December 31, 2017,~~September 30, 2019, our chief executive officer and chief financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

~~In fiscal year 2018,~~

On July 1, 2019, we ~~implemented the first phase of~~adopted a ~~company-wide enterprise resource planning (ERP) system. We~~new lease accounting standard and have assessed and continued to monitor the impact of the adoption of this ~~implementation on our processes and procedures, as well as the impact~~standard on our internal ~~controls~~control over financial reporting. Where appropriate, we have made changes to our internal controls to ~~address system changes and to help~~ ensure that we maintained effective internal ~~controls~~control over financial reporting as of ~~December 31, 2017.~~

~~With the exception of the implementation of our ERP solution,~~September 30, 2019.

There were no ~~change~~additional changes in our internal control over financial reporting ~~occurred~~occurring during the fiscal quarter ended ~~December 31, 2017~~September 30, 2019 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

~~PART~~ ~~II. OTHER INFORMATION~~

PART II. OTHER INFORMATION

~~Item 1.~~

~~Legal Proceedings~~

Item 1. Legal Proceedings

We are, from time to time, a party to legal proceedings and claims that arise in the ordinary course of our business. We do not believe that there are claims or proceedings pending against us for which the ultimate resolution would have a material effect on, or require further disclosure in, our financial statements.

~~Item 1A.~~

~~Risk Factors~~

Item 1A. Risk Factors

Investing in our common stock involves a high degree of risk. You should carefully consider the risk factors identified in Part I. Item 1A. “Risk Factors” in our Annual Report onForm 10-K for the fiscal year ended June 30, ~~2017~~2019 before making an investment decision involving our common stock. These risk factors could materially affect our business, financial condition or results of operations and could cause our actual business and financial results to differ materially from those contained in forward-looking statements made in this Quarterly Report on Form10-Q or elsewhere by management from time to time. These risks and uncertainties are not the only ones facing us. Additional risks and uncertainties may also impact our business operations. ~~With~~Except for the ~~exception of the~~following additional risk ~~factor discussed below,~~factors, there have been no material changes to the risk factors disclosed in Part I. Item 1A. “Risk Factors” in our Annual Report onForm 10-K for the fiscal year ended June 30, ~~2017.~~

~~Risks Related To Our Business~~

~~Failure to comply with the regulations provided~~2019.

The formal notification by the ~~Financial Conduct Authority (FCA) for certain~~United Kingdom (UK) on March 29, 2017 of ~~our U.K. operations~~its intention to withdraw from the European Union (EU) (referred to as Brexit), could ~~adversely impact~~create disruption and uncertainty to our business,

~~First Capital Cashflow Ltd.,~~ including our relationships with our existing and future customers, suppliers and employees, which we acquired in October 2017, is subject to the regulatory framework of the FCA. This component of our operations involves holding and disbursing client funds. The FCA has significant enforcement authority, which includes but is not limited to, withdrawing an organization’s authorization, issuing fines and suspending firms from carrying out regulated activities. While we believe we have appropriate controls and procedures around these operations, any failure to comply with FCA requirements may result in disciplinary actions that could have ~~a material~~an adverse effect on our business, ~~operating~~financial results and ~~financial condition.~~

operations

In connection with Brexit, the British government is negotiating the terms of the UK’s withdrawal from, and future relationship with, the EU, including the terms of trade between the UK and the EU. The initial deadline to complete this process was March 29, 2019. That deadline has been extended several times, most recently to January 31, 2020. There remains substantial uncertainty surrounding Brexit and a possibility that the UK will leave the EU without a withdrawal agreement and associated transition period in place, which would likely cause significant market and economic disruption.

The ultimate effects of Brexit will depend on any agreements the UK makes to retain access to EU markets, either during a transitional period or more permanently, and could potentially disrupt the markets we serve and the tax jurisdictions in which we operate and create uncertainty and challenges (particularly in the near term) with respect to trading relationships between our UK subsidiary and other EU nations. Remaining EU member countries may also seek to make it more difficult for us to trade effectively or competitively in those regions. In addition, Brexit could lead to legal uncertainty and potentially divergent national laws and regulations, including with respect to employment law or data privacy, as the UK determines which EU laws to replace or replicate, which could create additional uncertainty and challenges for us.

~~Item 2.~~

~~Unregistered Sales of Equity Securities and Use of Proceeds~~

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information about purchases by us of our common stock during the quarter ended ~~December 31, 2017:~~

Period
Total Number of
Shares Purchased ⁽¹⁾⁽²⁾ Average Price Paid
per Share Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs Approximate Dollar
Value of Shares that
May Yet be
Purchased Under the
Plans or Programs
October 1, 2017—October 31, 2017
—   $ —   —   $ 20,140,000
November 1, 2017—November 30, 2017
—   —   —   20,140,000
December 1, 2017—December 31, 2017
595,216 33.54 —   20,140,000

Total
595,216 $ —   —

September 30, 2019:



Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs ⁽¹⁾	Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs
July 1, 2019 - July 31, 2019	—	$	—	—	$	—
August 1, 2019 - August 31, 2019	188,731	43.24		188,731	41,839,000
September 1, 2019 - September 30, 2019	44,664	41.18		44,664	40,000,000
Total	233,395	$	42.85	233,395

——————


⁽¹⁾	On ~~July 8, 2016~~August 5, 2019, we announced that our board of directors authorized a repurchase program of our common stock for an aggregate repurchase price not to exceed ~~$60~~$50 million. This program expires on ~~July 8, 2018.~~August 5, 2021.

⁽²⁾

On December 1, 2017, in connection with the maturity of the Notes, we redeemed a portion of the Note Hedges and received from the Note Hedge counterparties 595,216 shares of our common stock. The counterparties to the Note Hedge transactions may be deemed to be an “affiliated purchaser” and may have purchased the shares of our common stock deliverable to us upon the exercise of the options.

~~Recent Sales of Unregistered Securities~~

~~On October 4, 2017, we issued 42,080 shares of our common stock, all of which were subject to vesting conditions tied toon-going~~ employment with us, to certain of the selling stockholders of First Capital Cashflow Ltd. (FCC), in connection with our purchase of all of the outstanding equity of FCC. These shares were issued in reliance upon the exemption from the registration requirements of the Securities Act provided by Section 4(a)(2) of the Securities Act. No underwriters were involved in any such issuances.

Item 6. Exhibits

~~Item 6.~~

		Incorporated by Reference
Exhibit Number	Description	Form	File No.	Exhibit	Filing Date	Filed Herewith

31.1	Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer					X

31.2	Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer					X

32.1	Section 1350 Certification of Principal Executive Officer					X

32.2	Section 1350 Certification of Principal Financial Officer					X

101.INS	Inline XBRL Instance Document- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH**	Inline XBRL Taxonomy Extension Schema Document					X

101.CAL**	Inline XBRL Taxonomy Calculation Linkbase Document					X

101.DEF**	Inline XBRL Taxonomy Definition Linkbase Document					X

101.LAB**	Inline XBRL Taxonomy Label Linkbase Document					X

101.PRE**	Inline XBRL Taxonomy Presentation Linkbase Document					X

104	Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101)

      Incorporated by Reference
Exhibit
Number
Description
   Form    File No.    Exhibit    Filing Date    Filed
Herewith
  10.1    2009 Stock Incentive Plan, as amended    8-K    000-25259    99.2    11/20/17
  31.1    Rule13a-14(a)/15d-14(a) Certification of Principal Executive Officer                X
  31.2    Rule13a-14(a)/15d-14(a) Certification of Principal Financial Officer                X
  32.1    Section 1350 Certification of Principal Executive Officer                X
  32.2    Section 1350 Certification of Principal Financial Officer                X
101.INS**    XBRL Instance Document                X
101.SCH**    XBRL Taxonomy Extension Schema Document                X
101.CAL**    XBRL Taxonomy Calculation Linkbase Document                X
101.DEF**    XBRL Taxonomy Definition Linkbase Document                X
101.LAB**    XBRL Taxonomy Label Linkbase Document                X
101.PRE**    XBRL Taxonomy Presentation Linkbase Document                X


**	submitted electronically herewith

Attached as Exhibit 101 to this report are the following formatted in ~~XBRL (Extensible~~iXBRL (Inline Extensible Business Reporting Language): (i) Unaudited Condensed Consolidated Balance Sheets as of ~~December 31, 2017~~September 30, 2019 and June 30, ~~2017,~~2019, (ii) Unaudited Condensed Consolidated Statements of Comprehensive ~~Income (Loss)~~Loss for the three ~~and six~~ months ended ~~December 31, 2017~~September 30, 2019 and ~~2016,~~2018, (iii) Unaudited Consolidated Statements of Stockholders' Equity for the three months ended September 30, 2019 and 2018, (iv) Unaudited Condensed Consolidated Statements of Cash Flows for the ~~six~~three months ended ~~December 31, 2017~~September 30, 2019 and ~~2016~~2018 and ~~(iv)~~(v) Notes to Unaudited Condensed Consolidated Financial Statements.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Bottomline Technologies (de), Inc.



Date: ~~February~~	November 8, ~~2018~~	2019	By:		~~/s/ RICHARD~~/s/ RICHARD D. B~~OOTH~~BOOTH
				Richard D. Booth
				Chief Financial Officer and Treasurer
				~~(Principal~~(Principal Financial and Accounting Officer)


	December 31,			June 30,
	2017			2017
ASSETS
Current assets:
Cash and cash equivalents	$	64,051		$	124,569
Cash and cash equivalents, held for customers		3,481			—
Marketable securities		10,004			1,973
Accounts receivable net of allowances for doubtful accounts of $973 at December 31, 2017 and $923 at June 30, 2017		78,073			64,244
Prepaid expenses and other current assets		18,556			16,807

Total current assets		174,165			207,593
Property and equipment, net		27,199			26,195
Goodwill		202,083			194,700
Intangible assets, net		173,266			171,280
Other assets		18,058			17,671

Total assets	$	594,771		$	617,439

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	10,268		$	9,013
Accrued expenses and other current liabilities		28,411			29,179
Customer account liabilities		3,481			—
Deferred revenue		59,835			74,113
Convertible senior notes		—			183,682

Total current liabilities		101,995			295,987
Borrowings under credit facility		150,000			—
Deferred revenue,non-current		25,172			22,047
Deferred income taxes		13,452			15,433
Other liabilities		22,202			22,016

Total liabilities		312,821			355,483
Stockholders’ equity
Preferred Stock, $.001 par value:
Authorizedshares-4,000; issued and outstanding shares-none		—			—
Common Stock, $.001 par value:
Authorizedshares-100,000; issuedshares-44,075 at December 31, 2017 and 42,797 at June 30, 2017; outstandingshares-38,197 at December 31, 2017 and 37,443 at June 30, 2017		44			43
Additionalpaid-in-capital		660,701			624,001
Accumulated other comprehensive loss		(29,671	)		(32,325	)
Treasury stock: 5,878 shares at December 31, 2017 and 5,354 shares at June 30, 2017, at cost		(131,528	)		(113,071	)
Accumulated deficit		(217,596	)		(216,692	)

Total stockholders’ equity		281,950			261,956

Total liabilities and stockholders’ equity	$	594,771		$	617,439


	Three Months Ended December 31,						Six Months Ended December 31,
	2017			2016			2017			2016
Revenues:
Subscriptions and transactions	$	63,187		$	55,644		$	123,901		$	107,776
Software licenses		2,620			3,492			4,985			5,613
Service and maintenance		28,433			25,920			55,775			53,593
Other		955			1,672			1,830			2,830

Total revenues		95,195			86,728			186,491			169,812
Cost of revenues:
Subscriptions and transactions		27,201			24,782			54,612			48,668
Software licenses		229			196			399			324
Service and maintenance		12,968			13,416			25,200			26,701
Other		701			1,178			1,368			2,056

Total cost of revenues		41,099			39,572			81,579			77,749

Gross profit		54,096			47,156			104,912			92,063
Operating expenses:
Sales and marketing		21,396			19,325			40,701			38,200
Product development and engineering		13,892			13,082			27,707			26,017
General and administrative		10,981			11,772			22,810			24,476
Amortization of acquisition-related intangible assets		5,702			6,090			10,890			12,375
Goodwill impairment charge		—			7,529			—			7,529

Total operating expenses		51,971			57,798			102,108			108,597

Income (loss) from operations		2,125			(10,642	)		2,804			(16,534	)
Other expense, net		(3,532	)		(4,182	)		(7,995	)		(8,117	)

Loss before income taxes		(1,407	)		(14,824	)		(5,191	)		(24,651	)
Income tax benefit		4,495			4,478			4,038			3,797

Net income (loss)	$	3,088		$	(10,346	)	$	(1,153	)	$	(20,854	)

Net income (loss) per share:
Basic	$	0.08		$	(0.27	)	$	(0.03	)	$	(0.55	)

Diluted	$	0.08		$	(0.27	)	$	(0.03	)	$	(0.55	)

Shares used in computing net income (loss) per share:
Basic		38,087			37,769			37,908			37,854

Diluted		39,344			37,769			37,908			37,854

Other comprehensive income (loss), net of tax:
Unrealized loss on available for sale securities		(3	)		(49	)		(3	)		(106	)
Unrealized gain on interest rate hedging transactions (net of income tax provision of $248 for the three and six months ended December 31, 2017)		604			—			369			—
Minimum pension liability adjustments		38			610			142			625
Foreign currency translation adjustments		773			(8,402	)		2,146			(9,459	)

Other comprehensive income (loss), net of tax:		1,412			(7,841	)		2,654			(8,940	)

Comprehensive income (loss)	$	4,500		$	(18,187	)	$	1,501		$	(29,794	)


	December 31, 2017								June 30, 2017
	Fair Value Measurements Using Input Types								Fair Value Measurements Using Input Types
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(in thousands)
Assets
Money market funds (cash and cash equivalents)	$	89	$	—	$	—	$	89	$	593	$	—	$	—	$	593
Available for sale securities—Debt
U.S. Corporate	$	—	$	3,475	$	—	$	3,475	$	—	$	1,906	$	—	$	1,906
Government—U.S.		—		6,461		—		6,461		—		—		—		—

Total available for sale securities	$	—	$	9,936	$	—	$	9,936	$	—	$	1,906	$	—	$	1,906
Derivative interest rate swap	$	—	$	782	$	—	$	782	$	—	$	—	$	—	$	—
Liabilities
Derivative interest rate swap	$	—	$	165	$	—	$	165	$	—	$	—	$	—	$	—



	September 30, 2019								June 30, 2019
	Fair Value Measurements Using Input Types								Fair Value Measurements Using Input Types
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(in thousands)
Assets
Money market funds (cash and cash equivalents)	$	263	$	—	$	—	$	263	$	2,807	$	—	$	—	$	2,807
Available for sale securities - Debt
Government - U.S.	—		10,077		—		10,077		—		7,479		—		7,479
Total assets	$	263	$	10,077	$	—	$	10,340	$	2,807	$	7,479	$	—	$	10,286
Liabilities
Short-term derivative interest rate swap	$	—	$	233	$	—	$	233	$	—	$	37	$	—	$	37
Long-term derivative interest rate swap	$	—	$	1,729	$	—	$	1,729	$	—	$	1,248	$	—	$	1,248
Total liabilities	$	—	$	1,962	$	—	$	1,962	$	—	$	1,285	$	—	$	1,285


	December 31, 2017						June 30, 2017
	Held to Maturity		Available for Sale		Total		Held to Maturity		Available for Sale		Total
	(in thousands)
Marketable securities:
Corporate and other debt securities	$	68	$	9,936	$	10,004	$	67	$	1,906	$	1,973

Total marketable securities	$	68	$	9,936	$	10,004	$	67	$	1,906	$	1,973


	At December 31, 2017					At June 30, 2017
	Less than 12 Months
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
	(in thousands)
U.S. Corporate	$	3,475	$	(2	)	$	1,628	$	(1	)
Government—U.S.		6,461		(4	)		—		—

Total	$	9,936	$	(6	)	$	1,628	$	(1	)


	At December 31,		At June 30,
	2017		2017
	(in thousands)
Long-lived assets:
North America	$	36,211	$	35,569
United Kingdom		5,767		5,188
Continental Europe		921		1,208
Asia-Pacific and Middle East		2,357		1,901

Total long-lived assets	$	45,256	$	43,866


	(in thousands)
Increase to deferred tax assets for excess tax benefits	$	17,393
Increase to deferred tax asset valuation allowance		(17,144	)

Net increase to deferred tax assets	$	249


	As of December 31, 2017
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Value		Weighted Average Remaining Life
	(in thousands)							(in years)
Amortized intangible assets:
Customer related	$	203,379	$	(129,527	)	$	73,852		8.8
Core technology		130,777		(78,954	)		51,823		8.5
Other intangible assets		22,098		(16,442	)		5,656		5.5
Capitalized software development costs		17,693		(4,765	)		12,928		4.5
Software⁽¹⁾		58,501		(29,494	)		29,007		4.6

Total	$	432,448	$	(259,182	)	$	173,266

Unamortized intangible assets:
Goodwill							202,083

Total intangible assets						$	375,349


	As of June 30, 2017
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Value		Weighted Average Remaining Life
	(in thousands)							(in years)
Amortized intangible assets:
Customer related	$	190,965	$	(122,698	)	$	68,267		8.7
Core technology		130,572		(74,452	)		56,120		8.8
Other intangible assets		20,591		(15,691	)		4,900		6.6
Capitalized software development costs		16,304		(3,423	)		12,881		5.0
Software⁽¹⁾		54,489		(25,377	)		29,112		3.5

Total	$	412,921	$	(241,641	)	$	171,280

Unamortized intangible assets:
Goodwill							194,700

Total intangible assets						$	365,980


	Acquired Intangible Assets		Capitalized Software Development Costs		Software
	(in thousands)
Remaining 2018	$	11,481	$	1,434		4,329
2019		20,439		2,868		7,687
2020		18,100		2,868		5,990
2021		16,358		2,869		3,740
2022		14,187		2,869		2,476
2023 and thereafter		50,766		—		3,400


	Cloud Solutions		Banking Solutions		Payments and Transactional Documents		Other		Total
	(in thousands)
Balance at June 30, 2017⁽¹⁾	$	90,069	$	35,880	$	60,557	$	8,194	$	194,700
Goodwill acquired during the period		1,377		—		4,739		—		6,116
Impact of foreign currency translation		447		—		820		—		1,267

Balance at December 31, 2017⁽¹⁾	$	91,893	$	35,880	$	66,116	$	8,194	$	202,083


⁽²⁾	The measurement period adjustment during the three months ended September 30, 2019 relates to our BankSight acquisition. See Note 5 Business and Asset Acquisitions.


	Amount of Gain (Loss) Recognized in OCI on Derivative Instruments (Effective Portion)				Amount of Gain (Loss) Reclassified from AOCI into Net Income (Loss) (Effective Portion)
	Three Months Ended December 31,				Three Months Ended December 31,
	2017		2016		2017			2016
	(in thousands)
Derivative interest rate swap	$	804	$	—	$	(48	)	$	—


	Amount of Gain (Loss) Recognized in OCI on Derivative Instruments (Effective Portion)				Amount of Gain (Loss) Reclassified from AOCI into Net Income (Loss) (Effective Portion)
	Six Months Ended December 31,				Six Months Ended December 31,
	2017		2016		2017			2016
	(in thousands)
Derivative interest rate swap	$	569	$	—	$	(48	)	$	—


	Payment Due by Fiscal Year
	2018		2019-2020		2021-2022		Thereafter		Total
	(in thousands)
Credit Facility
Principal payment	$	—	$	—	$	150,000	$	—	$	150,000
Interest payments⁽¹⁾		2,590		10,424		7,501		—		20,515
Commitment fee⁽²⁾		188		750		541		—		1,479
Note payable		374		1,122		—		—		1,496
Operating leases		2,938		9,795		6,968		6,476		26,177
Purchase commitments		4,398		6,053		92		—		10,543

Total contractual obligations	$	10,488	$	28,144	$	165,102	$	6,476	$	210,210


Period	Total Number of Shares Purchased ⁽¹⁾⁽²⁾		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs
October 1, 2017—October 31, 2017		—	$	—		—	$	20,140,000
November 1, 2017—November 30, 2017		—		—		—		20,140,000
December 1, 2017—December 31, 2017		595,216		33.54		—		20,140,000

Total		595,216	$	—		—