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, 2020

~~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.)

~~Delaware~~325 Corporate Drive				~~02-0433294~~03801-6808
~~(State or other jurisdiction of~~ ~~incorporation or organization)~~ Portsmouth,		~~(I.R.S. Employer~~ ~~Identification No.)~~
New Hampshire
~~325 Corporate Drive~~ ~~Portsmouth, New Hampshire~~			~~03801-6808~~
(Address of principal executive offices)	(Zip Code)

(603)436-0700

(Registrant’s telephone number, including area code)

Bottomline Technologies (de), Inc.

(Former name, former address and former fiscal year, if changed since last report)

——————

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~~filer

☒

~~Accelerated Filer~~

☐

~~Non-Accelerated Filer~~Non-accelerated filer

☐

~~☐ (Do not check if a smaller~~Smaller reporting ~~company)~~company

~~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 31, 2018~~October 30, 2020 was ~~40,680,451.~~

45,113,592.

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

~~FORM10-Q~~

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

Table of Contents~~TABLE OF CONTENTS~~

BOTTOMLINE TECHNOLOGIES, INC.

FORM 10-Q

FOR THE FISCAL QUARTER ENDED SEPTEMBER 30, 2020

TABLE OF CONTENTS

~~Page~~

PART I

Page

Item 1.

Unaudited Condensed Consolidated Financial Statements

Item 2.

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

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Item 4.

Controls and Procedures

PART II

Item 1.

Legal Proceedings

Item 1A.

Risk Factors

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Item 5.

Item 6.

PART I. FINANCIAL INFORMATION

~~Item 1.~~

~~Financial Statements~~

~~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

Item 1. Financial Statements


Bottomline Technologies, Inc.
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
	September 30,		June 30,
	2020		2020

ASSETS
Current assets:
Cash and cash equivalents	$	187,215	$	194,832
Cash held for customers	7,144		6,304
Marketable securities	10,210		10,209
Accounts receivable net of allowances for doubtful accounts of $1,363 at September 30, 2020 and $1,336 at June 30, 2020	69,056		69,970
Prepaid expenses and other current assets	30,930		28,328
Total current assets	304,555		309,643
Property and equipment, net	67,953		67,155
Operating lease right-of-use assets, net	25,197		24,712
Goodwill	220,899		205,713
Intangible assets, net	160,813		154,111
Other assets	34,836		31,803
Total assets	$	814,253	$	793,137
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	11,947	$	13,422
Accrued expenses and other current liabilities	45,204		48,198
Customer account liabilities	7,144		6,304
Deferred revenue	69,781		82,074
Total current liabilities	134,076		149,998
Borrowings under credit facility	180,000		180,000
Deferred revenue, non-current	15,479		13,959
Operating lease liabilities, non-current	21,312		20,670
Deferred income taxes	9,862		8,656
Other liabilities	31,108		27,520
Total liabilities	391,837		400,803
Stockholders' equity
Preferred Stock, $.001 par value:
Authorized shares-4,000; issued and outstanding shares-NaN	0		0
Common Stock, $.001 par value:
Authorized shares-100,000; issued shares- 48,560 at September 30, 2020 and 48,147 at June 30, 2020; outstanding shares- 42,660 at September 30, 2020 and 42,172 at June 30, 2020	49		48
Additional paid-in-capital	783,457		764,906
Accumulated other comprehensive loss	(39,381)		(48,675)
Treasury stock: 5,900 shares at September 30, 2020 and 5,975 shares at June 30, 2020, at cost	(141,544)		(143,333)
Accumulated deficit	(180,165)		(180,612)
Total stockholders' equity	422,416		392,334
Total liabilities and stockholders' equity	$	814,253	$	793,137

See accompanying notes.

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

~~Unaudited Condensed Consolidated Statements~~

Table 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 )

Contents


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

	Three Months Ended September 30,
	2020		2019

Revenues:
Subscriptions	$	90,384	$	80,066
Software licenses	977		2,576
Service and maintenance	20,564		24,825
Other	440		709
Total revenues	112,365		108,176
Cost of revenues:
Subscriptions	35,218		32,765
Software licenses	90		161
Service and maintenance	10,916		13,053
Other	309		516
Total cost of revenues	46,533		46,495
Gross profit	65,832		61,681
Operating expenses:
Sales and marketing	25,743		25,688
Product development and engineering	18,499		18,349
General and administrative	13,626		13,345
Amortization of acquisition-related intangible assets	5,029		4,950
Total operating expenses	62,897		62,332
Income (loss) from operations	2,935		(651)
Other expense, net	(780)		(713)
Income (loss) before income taxes	2,155		(1,364)
Provision for income taxes	(1,764)		(3)
Net income (loss)	$	391	$	(1,367)

Basic and diluted net income (loss) per share	$	0.01	$	(0.03)

Shares used in computing net income (loss) per share:
Basic	42,457		41,487
Diluted	42,771		41,487
Other comprehensive income (loss), net of tax:
Unrealized loss on available for sale securities	(25)		(3)
Change in fair value on interest rate hedging instruments	446		(677)
Minimum pension liability adjustments	(233)		180
Foreign currency translation adjustments	9,106		(5,879)
Other comprehensive income (loss), net of tax:	9,294		(6,379)
Comprehensive income (loss)	$	9,685	$	(7,746)

See accompanying notes.

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

~~Unaudited Condensed Consolidated Statements~~

Table 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 $ —

Contents


Bottomline Technologies, Inc.
Unaudited Condensed Consolidated Statements of Stockholders' Equity
(in thousands)
Three Months Ended September 30, 2020
	Common Stock		Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss)	Treasury Stock		Accumulated Deficit	Total Stockholders' Equity
	Shares	Amount			Shares	Amount
Balance at June 30, 2020	48,147	$48	$764,906	$(48,675)	5,975	$(143,333)	$(180,612)	$392,334
Issuance of common stock for employee stock purchase plan and upon exercise of stock options	0	—	379	—	(75)	1,789	—	2,168
Vesting of restricted stock awards	247	1	—	—	—	—	—	1
Issuance of common stock in connection with acquisition	166	0	8,183	—	—	—	—	8,183
Stock compensation plan expense	—	—	9,989	—	—	—	—	9,989




Minimum pension liability adjustments, net of tax	—	—	—	(233)	—	—	—	(233)
Net income	—	—	—	—	—	—	391	391


Cumulative effect of adoption of current expected credit loss accounting standard	—	—	—	—	—	—	56	56
Unrealized loss on available for sale securities, net of tax	—	—	—	(25)	—	—	—	(25)
Change in fair value on interest rate hedging instruments	—	—	—	446	—	—	—	446
Foreign currency translation adjustment	—	—	—	9,106	—	—	—	9,106
Balance at September 30, 2020	48,560	$49	$783,457	$(39,381)	5,900	$(141,544)	$(180,165)	$422,416


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			Shares	Amount
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	0	—	—	—	—	—	0
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

Table of Contents


Bottomline Technologies, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
	Three Months Ended September 30,
	2020		2019

Operating activities:
Net income (loss)	$	391	$	(1,367)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Amortization of acquisition-related intangible assets	5,029		4,950
Stock-based compensation plan expense	9,973		11,044
Depreciation and other amortization	7,699		6,092

Deferred income tax expense (benefit)	227		(368)
Provision for allowances on accounts receivable	89		67
Amortization of debt issuance costs	103		103

Amortization of premium (discount) on investments	5		(28)
(Gain) loss on other investments	(48)		0
Loss on disposal of equipment	15		35
(Gain) loss on foreign exchange	(53)		259
Changes in operating assets and liabilities:
Accounts receivable	2,349		11,025
Prepaid expenses and other current assets	(1,971)		(3,268)
Operating lease right-of-use asset, net	303		975
Other assets	(1,164)		(1,077)
Accounts payable	(824)		1,214
Accrued expenses	(1,565)		(571)
Operating lease liabilities	146		(823)
Customer account liabilities	563		1,609
Deferred revenue	(13,484)		(11,969)
Other liabilities	127		210
Net cash provided by operating activities	7,910		18,112
Investing activities:
Acquisition of businesses and assets, net of cash acquired	(9,892)		0
Purchases of other investments	0		(87)



Issuance of note receivable	(1,600)		0
Purchases of available-for-sale securities	(2,929)		(6,274)
Proceeds from sales of available-for-sale securities	2,900		3,700
Capital expenditures, including capitalization of software costs	(8,628)		(11,449)


Net cash used in investing activities	(20,149)		(14,110)
Financing activities:
Repurchase of common stock	0		(10,005)


Repayment of notes payable	0		(182)


Proceeds from exercise of stock options and employee stock purchase plan	2,168		2,174
Net cash provided by (used in) financing activities	2,168		(8,013)
Effect of exchange rate changes on cash	3,294		(1,970)
Decrease in cash, cash equivalents and restricted cash	(6,777)		(5,981)
Cash, cash equivalents and restricted cash at beginning of period	201,136		97,801
Cash, cash equivalents and restricted cash at end of period	$	194,359	$	91,820

Cash and cash equivalents at end of period	$	187,215	$	84,751
Cash held for customers at end of period	7,144		7,069
Cash, cash equivalents and restricted cash at end of period	$	194,359	$	91,820
Supplemental disclosures of non-cash investing activities:
Issuance of common stock in connection with acquisition	$	8,183	$	0

Table of Contents

See accompanying notes.

Table of Contents

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

Notes to Unaudited Condensed Consolidated Financial Statements

~~December 31, 2017~~

September 30, 2020

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, 2020 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).~~2021, particularly in light of the novel coronavirus (COVID-19) pandemic and the effect it is having on the domestic and global economies. For further information, refer to the consolidated 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.~~

2020.

Note 2—Recent Accounting Pronouncements

Recently Adopted Pronouncements

~~Cloud Computing Arrangements:~~

Financial Instruments - Credit Losses:In ~~April 2015,~~June 2016, the ~~Financial Accounting Standards Board (FASB)~~FASB issued an accounting standard update ~~which provides guidance as~~that replaces the incurred loss impairment model with an expected loss model for financial assets held at amortized cost, eliminates the concept of other-than-temporary impairment and requires credit losses associated with available-for-sale debt securities to ~~whether~~be recorded through an allowance rather than 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, howreduction in the amortized cost basis of the security. The changes are expected to ~~account for such arrangements.~~result in earlier recognition of credit losses associated with financial assets, including trade accounts receivable. We adopted this standard ~~effective~~on July 1, ~~2016~~2020, on a ~~prospective basis.~~ modified retrospective basis, with the cumulative-effect accounting consequence recorded as an adjustment to the opening balance of accumulated deficit as of the effective date. 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~~ asset for all leases with terms longer than twelve months. The pattern of recognition of lease related revenue and expenses will be dependent on its classification. The updated 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 of our fiscal year ending June 30, 2020) with early adoption permitted; adoption is on a modified retrospective basis. We anticipate that the adoption of this standard will have 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 this standard on our financial statements.

~~Financial 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 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.

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 requirement to compare the carrying value of goodwill ~~impairment test.~~against its implied fair value. 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~~We adopted this standard ~~is effective for us~~ on July 1, 2020 ~~(the first quarter of our fiscal year 2021) on a prospective basis, with early~~and do not expect the adoption ~~permitted for periods beginning on or after January 1, 2017. We are currently evaluating the impact~~ of this standard to have a material impact on our financial ~~statements and the timing of adoption.~~

~~Defined Benefit Plan Expenses:~~statements.

Income Taxes:In ~~March 2017,~~December 2019, the FASB issued an accounting standard update ~~that~~related to simplifying the accounting for income taxes by eliminating certain exceptions related to intraperiod tax allocations, basis differences for changes in ownership interest in equity method investments and the calculation of interim period income ~~statement presentation~~tax. The standard also simplifies other aspects of ~~defined benefit plan expense by requiring separation between operating expense (service cost component) andnon-operating~~ ~~expense (all other components of net periodic defined benefit cost). Under the revised~~accounting for taxes. We adopted this 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). We do not currently believe that~~2020 and the adoption ~~of this standard will~~did not have a material impact on our financial statements.

Note 3—Revenue Recognition

Remaining Performance Obligations

The transaction price we allocate to remaining performance obligations that are unsatisfied, or partially unsatisfied, as of September 30, 2020 represents contracted revenue that will be recognized in future periods. Our future performance obligations consist primarily of SaaS / stand-ready performance obligations relating to future periods, contracted but uncompleted professional services obligations and support and maintenance obligations. During the three months ended September 30, 2020 and 2019, the amount of revenue recognized from performance obligations satisfied in prior periods was not significant.

Revenue allocated to remaining performance obligations was $416.4 million as of September 30, 2020 of which we expect to recognize approximately $147.6 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.

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Contract Assets and Liabilities

The table below presents our accounts receivable, contract assets and deferred revenue balances as of September 30, 2020 and June 30, 2020.


	September 30,	June 30,
	2020	2020	$ Change
	(in thousands)

Contract assets	4,704	3,646	1,058
Deferred revenue	85,260	96,033	(10,773)

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 recognition periods of one year or less and other assets for contract assets with recognition periods greater than one year. We assess outstanding accounts receivable and contract assets for credit loss on an ongoing basis. In estimating credit loss, we pool accounts with similar risk characteristics. Accounts that do not share the same risk characteristics are assessed for credit loss on an individual basis. The allowance for credit loss is based on historical loss data, customer specific information, current market conditions and expected future economic conditions. Historically, our bad debt expense has not been significant but could be adversely affected in future periods due to the impact of the COVID-19 pandemic.

Deferred revenue consists of billings or customer payments in excess of amounts recognized as revenue.

The decrease in deferred revenue at September 30, 2020 as compared to June 30, 2020 reflects 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, 2020 and 2019, we recognized $40.3 million and $34.0 million in revenue from amounts that were included in deferred revenue as of June 30, 2020 and 2019, respectively.

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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, 2020 and June 30, ~~2017,~~2020, 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, 2020 June 30, 2020
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) $ 342 $ 0 $ 0 $ 342 $ 354 $ 0 $ 0 $ 354
Available for sale securities - Debt
U.S. Corporate $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Government - U.S. treasury securities 0 10,147 0 10,147 0 10,148 0 10,148
Total available for sale securities $ 0 $ 10,147 $ 0 $ 10,147 $ 0 $ 10,148 $ 0 $ 10,148
Preferential conversion feature (long-term) $ 0 $ 0 $ 532 $ 532 $ 0 $ 0 $ 0 $ 0
Other investments (long-term) 0 0 550 550 0 0 514 514
Total assets $ 342 $ 10,147 $ 1,082 $ 11,571 $ 354 $ 10,148 $ 514 $ 11,016
Liabilities
Interest rate swap (short-term) $ 0 $ 1,638 $ 0 $ 1,638 $ 0 $ 1,631 $ 0 $ 1,631
Interest rate swap (long-term) $ 0 $ 2,995 $ 0 $ 2,995 $ 0 $ 3,448 $ 0 $ 3,448
Total liabilities $ 0 $ 4,633 $ 0 $ 4,633 $ 0 $ 5,079 $ 0 $ 5,079

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, notes receivable, contract assets, accounts payable, customer account liabilities, acertain derivative ~~interest rate swap as more fully described in~~~~Note 11 Derivative Instruments~~instruments, assets related to deposits made to fund future requirements associated with Israeli severance arrangements and debt drawn on our Credit ~~Facility as more fully described in~~~~Note 10 Indebtedness~~.Facility. Fair value information for each of these instruments is as follows:

• Cash and cash equivalents, cash ~~and cash equivalents~~ held for customers, accounts receivable, notes receivable, contract assets, accounts payable and customer account liabilities fair ~~value approximates~~values approximate their carrying values, due to the ~~short-term nature~~expected duration 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, 2020 and June 30, ~~2017,~~2020, 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

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securities classified as available for sale. We assess securities with an amortized cost basis in excess of estimated fair value for credit loss. As of September 30, 2020 and June 30, 2020, the unrealized losses associated with available for sale securities was not material. No credit loss has been recorded as we do not intend to sell the investments prior to recovering their amortized costs basis.

• We have certain derivative instruments accounted for at fair value. We hold a convertible note with a preferential conversion feature which qualifies as a derivative instrument. The fair value assumptions consider the nature of the conversion feature and the expected timeline to a qualifying conversion event. We are also a party to interest rate swap instruments. 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 $1.0 million at ~~both December 31, 2017~~September 30, 2020 and June 30, ~~2017,~~2020, respectively, which approximated their fair value.

• We ~~have~~hold certain other investments accounted for at ~~cost.~~fair value. The fair value of these investments was $0.6 million and $0.5 million at September 30, 2020 and June 30, 2020, respectively. We also have certain other investments for which there is no readily determinable fair value. The carrying value of these investments was ~~$7.7~~$0.5 million at ~~both December 31, 2017~~September 30, 2020 and June 30, ~~2017 and are reported as a component of our other assets. These investments~~2020, respectively. Investments for which we cannot readily determine fair value 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 $180 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, 2020, 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, 2020 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

2020.


	September 30, 2020						June 30, 2020
	Held to Maturity		Available for Sale		Total		Held to Maturity		Available for Sale		Total
	(in thousands)
Marketable securities:
Government and other debt securities	$	63	$	10,147	$	10,210	$	61	$	10,148	$	10,209
Total marketable securities	$	63	$	10,147	$	10,210	$	61	$	10,148	$	10,209

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, 2020
	(in thousands)
Due within 1 year	$	10,147
Due in 1 year through 5 years	0
Total	$	10,147

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, 2020 and June 30, ~~2017,~~2020, 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, 2020				At June 30, 2020
	Less than 12 Months
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
	(in thousands)
Government - U.S. treasury securities	$	1,917	$	(1)	$	2,012	$	(1)
Total	$	1,917	$	(1)	$	2,012	$	(1)

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

~~First Capital Cashflow Ltd.~~

~~On October 4, 2017,~~Asset Acquisitions

AnaSys AG

In July 2020 we acquired ~~First Capital Cashflow Ltd. (FCC)~~Switzerland-based AnaSys AG (AnaSys) for ~~10.5~~a total purchase price of $13.9 million. The purchase price consisted of a cash payment of 5.2 million ~~British Pound Sterling~~Swiss Francs (approximately ~~$13.9~~$5.7 million based on the foreign exchange rate in effect at the acquisition date) ~~in cash~~ and ~~42,080~~166,393 shares of our common ~~stock. The~~stock valued at $8.2 million on the closing date of the transaction. Additionally, we issued 28,000 shares ~~which were issued~~of our common stock to ~~the~~certain selling stockholders of ~~FCC who became employees of Bottomline, have~~AnaSys with vesting conditions tied to continued ~~employment; as such the~~employment with us. These shares are compensatory and we will record share-based payment expense over ~~the underlying stock~~their vesting period of five years. ~~FCC is headquartered and operates in~~

We are still obtaining fair value estimates for the United Kingdom and is a provider 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 changes inintangible assets acquired. In the ~~business payments environment.~~

For the period ended December 31, 2017, our consolidated balance sheet reflects $3.5 million of cash and cash equivalents held 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 a~~by-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.

~~In the~~preliminary allocation of the purchase price ~~which is preliminary~~ at ~~December 31, 2017,~~September 30, 2020, we recorded ~~$4.7~~ $10.6 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~~$6.3 million, consisting of customer and technology related assets, are being amortized over a weighted average estimated useful life of 13 years.

Our acquisition of AnaSys, a provider of financial messaging solutions, will extend our geographic presence in Switzerland and ~~other~~Germany and expand our customer base. The operating results of AnaSys are a component of our Cloud Solutions segment from the date of the acquisition forward.

FMR Systems, Inc.

In July 2020, we acquired customer assets and intellectual property from FMR Systems, Inc (FMR), a small corporate and commercial onboarding software provider, for a cash payment of $2.0 million and contingent future cash payments of up to $0.3 million. We will leverage FMR's technology to build a next generation commercial onboarding product.

We are still obtaining fair value estimates for the intangible assets acquired. In the preliminary allocation of the purchase price at September 30, 2020, we recorded $0.4 million of goodwill. The goodwill is deductible for income tax purposes and arose principally due to the anticipated future benefits arising from the acquisition. Identifiable intangible assets of $2.3 million, consisting primarily of technology related assets, are being amortized over a weighted average estimated useful life ~~of eleven~~of 5 years. ~~FCC’s operating results are included in the 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~~

On August 14, 2017, we acquired Singapore-based Decillion Group (Decillion) for total consideration of 6.2 million Singapore Dollars (approximately $4.6 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 operating results have been included in our Cloud Solutions segment from the date of the acquisition forward and did not have a material impact on our revenue or earnings.

Acquisition expenses of approximately $0.8 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 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 December 31, 2017 and is located within other assets on our consolidated balance sheet. There were no indicators of impairment identified 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.

Note 5—6—Net Income (Loss) Per Share

The following table sets forth the computation of basic and diluted net (loss) income ~~(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,
	2020		2019
	(in thousands, except per share amounts)
Numerator - basic and diluted:
Net income (loss)	$	391	$	(1,367)
Denominator:
Shares used in computing basic net income (loss) per share attributable to common stockholders	42,457		41,487
Impact of dilutive securities	314		0
Shares used in computing diluted net income (loss) per share attributable to common stockholders	42,771		41,487
Basic and diluted net income (loss) per share attributable to common stockholders	$	0.01	$	(0.03)

For the ~~six~~three months ended ~~December 31, 2017,~~September 30, 2019, approximately ~~2.8~~ 2.3 million shares of unvested restricted stock and shares underlying 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, approximately 3.0 million and 3.1 million shares, respectively, 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.

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~~

Table of ~~one of our reportable segments to Banking Solutions from Digital Banking, and that name change is reflected in the discussion that follows.~~

Contents

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,~~payments, electronic invoicing, and spend management. Our payment platforms (Paymode-X, PTX and financial messaging) are included in this segment. These solutions are highly scalable, secure and cost effective and facilitate cash payment and transaction settlement between businesses, their vendors and banks. 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 also 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.~~

basis.

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 hosted basis, with revenue recognized on a subscription ~~basis, which has the effect of contributing to recurring subscription and~~or transaction ~~revenue and the revenue predictability of future periods, but which also delays revenue recognition over a longer period.~~

basis.

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. If the solution is hosted by us, 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 fraud solutions and our healthcare solutions. The Other segment loss reported below is attributable to the operating results of our fraud solutions, which reflects the revenue contribution from the legacy sales channel we acquired and ~~cyber~~the burden of certain other centralized costs; however our fraud ~~and risk management~~solutions are sold as part of all of our operating segments. 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,~~focus on eliminating paper intensive processes and providing electronic signature and mobile document ~~and payments~~capabilities to allow healthcare organizations to improve ~~business efficiencies,~~efficiency and reduce ~~costs and improve care quality. When licensed on a perpetual license basis,~~costs. Software revenue for perpetual 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.

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Segment information for the three ~~and six~~ months ended ~~December 31, 2017~~September 30, 2020 and ~~2016~~2019 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,
	2020		2019
	(in thousands)
Segment revenue:
Cloud Solutions	$	64,956	$	61,022
Banking Solutions	26,190		24,169
Payments and Documents	17,396		18,578
Other	3,823		4,407
Total segment revenue	$	112,365	$	108,176
Segment measure of profit:
Cloud Solutions	$	14,597	$	13,799
Banking Solutions	2,956		535
Payments and Documents	4,100		5,009
Other	(3,107)		(1,866)
Total measure of segment profit	$	18,546	$	17,477

A reconciliation of the total measure of ~~total~~ segment profit to GAAP ~~loss~~income (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,
	2020		2019
	(in thousands)
Total measure of segment profit	$	18,546	$	17,477
Less:
Amortization of acquisition-related intangible assets	(5,029)		(4,950)
Stock-based compensation plan expense	(9,973)		(11,044)
Acquisition and integration-related expenses	(245)		(1,697)
Restructuring (expense) benefit	(70)		25
Other non-core (expense) benefit	(48)		14
Global ERP system implementation and other costs	0		(224)
Other expense, net of pension adjustments	(1,026)		(965)
Income (loss) before income taxes	$	2,155	$	(1,364)

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,
2020 2019
(in thousands)
Depreciation and other amortization expense:
Cloud Solutions $ 4,401 $ 3,594
Banking Solutions 2,752 2,095
Payments and Documents 270 220
Other 276 183
Total depreciation and other amortization expense $ 7,699 $ 6,092

Disaggregation of Revenue

The tables below present our subscriptions revenue and total revenue disaggregated by major product classification for the three months ended September 30, 2020 and 2019.

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(in thousands) Three Months Ended September 30,
2020 2019
Subscriptions Revenue Total Revenue Subscriptions Revenue Total Revenue
Payment Platforms (1)
$ 40,248 $ 44,406 $ 35,206 $ 40,448
Banking Solutions 22,985 26,190 18,373 24,169
Legal Spend Management (2)
20,550 20,550 20,574 20,574
All other (3)
6,601 21,219 5,913 22,985
Total revenues $ 90,384 $ 112,365 $ 80,066 $ 108,176
We derive the majority of our revenue from subscription arrangements. The substantial majority of our non-subscription revenue is derived from software support and maintenance fees and from professional services, with such revenue being recorded by all of our operating segments but with the largest concentration of this revenue being derived from our legacy business payments and documents products in our Payments and Documents segment.
(1) Consists of our Paymode-X, PTX and financial messaging settlement network, all of which are components of our Cloud Solutions segment.
(2) Component of our Cloud Solutions segment.
(3) Consists of our legacy business payments and documents products (which are components of our Payments and Documents segment) and revenue from our Other segment.

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

here.


	Three Months Ended September 30,
	2020		2019
	(in thousands)
Revenues from unaffiliated customers:
United States	$	68,981	$	69,020
United Kingdom	27,694		24,967
Switzerland	10,867		9,760
Other	4,823		4,429
Total revenues from unaffiliated customers	$	112,365	$	108,176

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,
	2020		2020
	(in thousands)
Long-lived assets:
United States	$	67,580	$	64,858
United Kingdom	42,663		41,835
Other	17,738		16,977
Total long-lived assets	$	127,981	$	123,670

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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 income tax changes, including a reduction to the federal corporate income tax rate from 35% to 21%, a repeal of the corporate alternative minimum tax, a~~one-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 and an acceleration of tax deductions~~

Provision 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.~~

Income Taxes

We recorded an income tax ~~benefit~~ expense of ~~$4.5~~$1.8 million ~~for each of the three months ended December 31, 2017 and 2016. The income tax benefit~~and $3,000 for the three months ended ~~December 31, 2017 includes~~September 30, 2020 and 2019, respectively. In the three months ended September 30, 2020, income tax expense was primarily attributable to our U.S., UK and Switzerland operations. In addition, we recorded discrete tax ~~benefit~~expense of ~~$4.4~~$0.7 million ~~relating~~ as a result of tax legislation enacted in the UK that increased the statutory UK tax rate from 17 percent to 19 percent which required us to re-value our net UK deferred tax liability balance to reflect this higher rate. 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 ~~the Tax Act as discussed above. Additionally, we recorded~~BankSight Software Systems, Inc., offset by an income tax benefit ~~associated with~~attributable to our ~~Swiss and Israeli operations, offset in part by~~loss before income tax expense principally associated with our U.S. and UK 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.

September 30, 2019.

We currently anticipate that our unrecognized tax benefits will decrease within the next twelve months by approximately ~~$0.4~~$0.3 million asas 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, 2020, we had a total valuation allowance ~~of $39.8~~of $36.2 million ~~against~~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.

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Note 8—9—Goodwill and Other Intangible Assets

~~Goodwill and acquired~~

Acquired intangible assets are initially recorded at fair value and tested periodically for impairment. Goodwill represents the excess of the purchase price over the fair value of identifiable tangible and intangible assets acquired and liabilities assumed in a business combination and is tested at least annually 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, 2020, 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.

$220.9 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

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


	As of September 30, 2020
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Value		Weighted Average Remaining Life
	(in thousands)						(in years)
Amortized intangible assets:
Customer related	$	229,526	$	(163,029)	$	66,497	7.7
Core technology	139,809		(100,178)		39,631		6.9
Other intangible assets	22,363		(20,296)		2,067		4.6
Capitalized software development costs	27,041		(15,181)		11,860		1.8
Software (1)	88,912		(48,154)		40,758		3.4
Total	$	507,651	$	(346,838)	$	160,813
Unamortized intangible assets:
Goodwill					220,899
Total intangible assets					$	381,712


	As of June 30, 2020
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Value		Weighted Average Remaining Life
	(in thousands)						(in years)
Amortized intangible assets:
Customer related	$	219,305	$	(157,008)	$	62,297	7.5
Core technology	135,720		(97,431)		38,289		7.2
Other intangible assets	22,099		(19,927)		2,172		4.8
Capitalized software development costs	26,222		(14,047)		12,175		2.9
Software (1)	84,493		(45,315)		39,178		3.8
Total	$	487,839	$	(333,728)	$	154,111
Unamortized intangible assets:
Goodwill					205,713
Total intangible assets					$	359,824

——————

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

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Estimated amortization expense for the remainder of fiscal year ~~2018~~2021 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, 2020, 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 2021	$	15,216	$	3,431	$	9,237
2022	18,718		4,575		9,388
2023	17,314		1,731		7,370
2024	15,511		1,001		5,733
2025	13,072		420		2,863
2026 and thereafter	28,364		7		1,330

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,~~segment:


	Cloud Solutions		Banking Solutions		Payments and Documents		Other		Total
	(in thousands)
Balance at June 30, 2020 (1)	$	117,493	$	39,516	$	40,510	$	8,194	$	205,713

Goodwill acquired during the period	10,636		398		0		0		11,034
Impact of foreign currency translation	2,040		0		2,112		0		4,152
Balance at September 30, 2020 (1)	$	130,169	$	39,914	$	42,622	$	8,194	$	220,899

——————

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

Note 10—Commitments and Contingencies

Leases

We determine if any arrangement is, or contains, a lease at its inception based on whether or not we have the right to control the asset during the contract period. We are a 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 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 ~~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

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

~~There can be no assurance that there will not be impairment charges~~non-current right-of-use (ROU) assets and current and non-current lease liabilities in ~~future periods~~our consolidated balance sheets. Current lease liabilities are classified as a ~~result~~component of ~~future impairment reviews.~~accrued expenses and other current liabilities.

As the implicit interest rate in our leases is generally not known, we 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 incur on a collateralized debt instrument. At September 30, 2020, our weighted average discount rate utilized for our leases was 5.3%.

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

We lease office space in cities worldwide under facility leases that expire at various dates. We are typically required to pay certain incremental operating costs above the base rent for our facility leases. Our leases may include periodic payment adjustments based on changes in applicable price indexes. To the extent ~~that future impairment charges occur~~the adjustment is considered a fixed payment it ~~would likely~~is included in the measurement of the ROU asset and lease liability, otherwise it is recognized in the period incurred. We also have a ~~material impact on~~variety of data center locations and, to a lesser extent, vehicle and equipment leases. Our facility leases represent the substantial majority of our ~~financial results.~~

~~Note 9—Commitments~~operating leases and ~~Contingencies~~

~~Legal Matters~~

~~In May 2017,~~often include renewal options that we ~~received notification~~can exercise unilaterally. At September 30, 2020, renewal options ranged from 3 months to 10 years.

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At September 30, 2020, our operating leases had a ~~customer alleging a warranty claim associated with software we licensed to them in September 2013. Their claim seeks recovery~~weighted average remaining lease term of ~~$1.269 million in software, professional services~~6.0 years and support fees, inclusive of related sales tax. On September 22, 2017, 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~~no material capital leases.

Additional information of our lease activity, as of and for the three months ended September 30, 2020 is as follows:


Operating leases:	Three Months Ended September 30, 2020
	(in thousands)
Operating lease cost	$	1,939
Short-term lease cost	88
Variable lease cost	539
Sublease income	(89)
Total lease cost	$	2,477


	September 30, 2020
	(in thousands)
Right-of-use assets, net	$	25,197

Operating lease liabilities, current (1)	$	7,060
Operating lease liabilities, non-current	21,312
Total operating lease liabilities	$	28,372

——————

(1) Included as a component of accrued ~~for any losses associated with this matter~~expenses and other current liabilities.


	Three Months Ended September 30, 2020
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities	$	1,921
Right-of-use assets obtained in exchange for lease obligations	$	1,906

Remaining maturities of lease liabilities at September 30, 2020 were as ~~we do not believe a loss is probable.~~

follows:


For the year ending June 30,	Operating Leases
	(in thousands)
2021	$	6,383
2022	7,105
2023	5,163
2024	3,283
2025	2,903
Thereafter	8,845
Total lease payments	33,682
Less imputed interest	(5,310)
Total lease liabilities	$	28,372

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.

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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)~~Credit Agreement) 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 an additional $150 million, ~~without the consent of any Lenders not participating in such increase,~~ subject to specified conditions.

~~The proceeds of~~ At September 30, 2020, we owed $180 million under the Credit Facility.

Borrowings under the Credit Facility may be used for lawful corporate purposes of Bottomline and its subsidiaries, including acquisitions, share ~~buybacks,~~repurchases, 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 million of letters of credit and up to $20 million of swing line loans.

The Credit ~~Facility will terminate~~Agreement contains customary representations, warranties and covenants, including, but not limited to, material adverse events, specified restrictions on ~~December 8, 2021.~~

~~Loans outstanding under the Credit Facility will bear~~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 3.50 to 1.00; and (b) a minimum consolidated interest ~~at our option, at either (i) a Eurodollar rate plus a margin~~coverage ratio 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 the3.00 to 1.00. The Credit Agreement ~~may be prepaid at par~~also contains customary events of default and ~~commitments under the Credit Agreement may be reduced at any time,~~related cure provisions. As of September 30, 2020, we were in ~~whole or in part, without premium or penalty (except for LIBOR breakage costs).~~

compliance with all covenants.

The Credit ~~Facility~~Agreement is guaranteed by ~~the Guarantors~~us (as borrower) and certain of our existing and future domestic material restricted subsidiaries (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.

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; (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.

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, we were in compliance with the covenants associated with the Credit Facility.~~

~~Convertible Senior Notes~~

On December 1, 2017, we repaid the aggregate principal balance of $189.8 million of our convertible senior notes which were issued on December 12, 2012. We borrowed $150 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 loss on the settlement of 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~~

We financed a portion of the Decillion purchase price 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 quarters starting during 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—~~12—Derivative Instruments

~~Note Hedges, Conversion Feature and Warrants~~

~~During the three months ended December 31, 2017, in connection with the maturity of the Notes, we settled the 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.

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, 2020, 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~~Facility.

The $100 million notional value agreement is effective as of December 1, 2017 and expires on December 1, 2021. During this period, the ~~Lenders. During the term of the agreement, we~~notional amount will have a fixed interest rate ~~of 1.9275 percent on the notional amount~~of 1.9275% and ~~Citizens~~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, the notional amount will have a fixed interest rate of 2.125% 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, 2020. 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~~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, 2020 and June 30, 2020 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

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Description	Balance Sheet Location	September 30, 2020		June 30, 2020
Derivative interest rate swaps		(in thousands)


Short-term derivative liability	Accrued expenses and other current liabilities	$	1,638	$	1,631
Long-term derivative liability	Other liabilities	$	2,995	$	3,448

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, 2020 and 2019.


	Gain (Loss) in AOCI June 30, 2020		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, 2020
	(in thousands)
Derivative interest rate swap	$	(5,079)	$	(6)	$	452	$	(4,633)

	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)

——————

(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, 2020, 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 $1.8 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 plan~~defined benefit pension plans for our Swiss-based employees (the Swiss pension plans) that isare governed by local regulatory requirements. ~~This plan includes~~The Swiss pension plans include certain minimum benefit guarantees that, under U.S. GAAP, require defined benefit plan accounting.

Net periodic pension costs for the Swiss pension ~~plan~~plans 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,
	2020		2019
	(in thousands)
Components of net periodic cost
Service cost	$	765	$	724
Interest cost	37		56
Prior service credit	(83)		(77)
Net actuarial loss	61		118
Expected return on plan assets	(285)		(307)
Net periodic cost	$	495	$	514

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).

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~~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.~~

2020.

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. We provide solutions that are helping to accelerate the digital transformation of business payments. 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~~payment platforms that facilitate electronic ~~payments~~payment 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~~engage intelligently with customers and ~~growth. We offer~~acquire, deepen and grow profitable relationships. 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 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.~~

activity to gain protection from internal fraud and external financial crime.

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, 2020, our revenue increased to ~~$186.5~~$112.4 million from ~~$169.8~~$108.2 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, 2020 was favorably impacted by ~~$1.8~~$2.0 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.

~~We incurred a~~ The overall revenue increase was attributable to revenue increases in our Cloud Solutions segment of $3.9 million and our Banking Solutions segment of $2.0 million, partially offset by revenue decreases in our Payments and Documents and Other segments of $1.2 million and $0.6 million, respectively. The Banking Solutions segment's revenue increase was primarily due to new customer engagements and platform go-lives, as customers continued to deploy our hosted solutions. The increased revenue from our Cloud Solutions segment was primarily due to increased subscriptions revenue from our financial messaging and PTX payment platforms.

Our net income was $0.4 million in the three months ended September 30, 2020 compared to net loss of ~~$1.2 million in the six months ended December 31, 2017 compared to a net loss of $20.9~~$1.4 million in the same period of the prior fiscal year. Our net ~~loss~~income for the ~~six~~three months ended ~~December 31, 2017~~September 30, 2020 was ~~reduced~~favorably impacted by ~~the impact~~gross profit expansion of ~~increased gross margins of $12.8~~$4.2 million, ~~and decreased~~modestly offset by increased operating expenses of ~~$6.5~~$0.6 million and an increase in provision for income taxes of $1.8 million. The increase in gross margins was primarily driven by the revenue increases ~~in revenue~~ in our Cloud Solutions and Banking Solutions segments. The ~~decrease~~increase in ~~our~~ operating expenses was ~~due~~ primarily ~~to the absence~~driven by increased general and administrative expenses of ~~a goodwill impairment charge of $7.5~~$0.3 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 offset by an increase in sales and

~~marketing costs of $2.5 million and~~ product development and engineering costs of ~~$1.7~~$0.2 million and sales and marketing costs of $0.1 million. ~~Our operating expenses for~~

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, 2020, we derived ~~approximately 38%~~approximately 39% 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 solutions.~~

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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 expect to continue to make investments in our suite of products so that we can continue to offer innovative, feature-rich technology solutions to our customers.

COVID-19

The United States and the global communities in which we operate continue to face challenges posed by the COVID-19 pandemic. We, like virtually all companies, have suspended travel for employees, temporarily closed our offices and, since mid-March 2020, have requested that our employees work remotely. We have been operating effectively under our remote work model, which we anticipate continuing for the foreseeable future to ensure the safety and well-being of our employees.

While we are operating effectively through this challenge, the full impact of COVID-19 on our business and operating results remains uncertain. There is no recent, comparable event that provides instruction to the myriad of impacts that COVID-19 may ultimately have. The consequences will depend on many factors outside of our control, including the duration and severity of the pandemic and the economic downturn that it has created.

Beginning in March 2020 we started to observe a reduction in certain of our transactional based revenue streams, principally in our Paymode-X and Legal Spend Management solutions. Since March 2020, we have observed a modest negative impact to new software license sales and professional services revenues since interacting directly with customers in either a sales setting or an on-site professional services setting is difficult in this environment. Discretionary software purchases are also being delayed or deferred in many cases. However, the majority of our revenues are recurring which we believe continues to offer significant protection from the pandemic’s economic disruptions in the short term. We continue to believe that ~~these initiatives~~our existing financial position will allow us to manage the impact of COVID-19 for the foreseeable future.

We remain very optimistic for the longer term. We have ~~positioned us effectively~~observed that one consequence of this crisis has been an increase in the demand for ~~revenue growth in future years.~~

digital transformation, particularly for the mission critical applications we provide. We are at the center of that transformation with our product set and overall market position and we plan to extend our competitive advantage through this challenge and emerge stronger than before.

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~~2020 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.~~2020.

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 for the fiscal year ended June 30, 2020, as filed with the SEC on August 28, ~~2017.~~

2020.

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, 2020 Compared to the Three ~~and Six~~ Months Ended ~~December 31, 2016~~

September 30, 2019

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.

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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 segment 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
	2020		2019		$ Change Inc (Dec)		% Change Inc (Dec)
	(Dollars in thousands)
Segment revenue:
Cloud Solutions	$	64,956	$	61,022	$	3,934	6.4	%
Banking Solutions	26,190		24,169		2,021		8.4	%
Payments and Documents	17,396		18,578		(1,182)		(6.4)	%
Other	3,823		4,407		(584)		(13.3)	%
Total segment revenue	$	112,365	$	108,176	$	4,189	3.9	%

Segment measure of profit (loss):
Cloud Solutions	$	14,597	$	13,799	$	798	5.8	%
Banking Solutions	2,956		535		2,421		452.5	%
Payments and Documents	4,100		5,009		(909)		(18.1)	%
Other	(3,107)		(1,866)		(1,241)		(66.5)	%
Total measure of segment profit	$	18,546	$	17,477	$	1,069	6.1	%

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

Three Months Ended September 30,
2020 2019
(in thousands)
Total measure of segment profit $ 18,546 $ 17,477
Less:
Amortization of acquisition-related intangible assets (5,029) (4,950)
Stock-based compensation plan expense (9,973) (11,044)
Acquisition and integration-related expenses (245) (1,697)
Restructuring expense (70) 25
Other non-core (expense) benefit (48) 14
Global ERP system implementation and other costs — (224)
Other expense, net of pension adjustments (1,026) (965)
Income (loss) before income taxes $ 2,155 $ (1,364)

Cloud Solutions

Revenues from our Cloud Solutions segment increased ~~$6.5~~$3.9 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 $0.5 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, 2020 as compared to the same period in the prior fiscal year, due ~~primarily~~ to ~~the~~increased revenue ~~increase described above,~~of $4.7 million from our financial messaging and PTX payment platforms, 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~~decreased revenue from our ~~Cloud Solutions segment~~Paymode-X payment platform of $0.8 million. Segment profit increased ~~$13.4~~$0.8 million for the ~~six~~three months ended ~~December 31, 2017~~September 30, 2020 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 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~~increases described above ~~partially~~were offset in part by ~~increased cost of revenues of $4.4 million and~~ increased operating expenses of ~~$2.2 million.~~$2.4 million related primarily to increased sales and marketing expenses and general and administrative expenses. We expect revenue and profit for the Cloud Solutions segment to increase in fiscal year ~~2018~~2021 as compared to ~~the prior~~ fiscal year 2020 as a result of increased revenue from our payment platforms and our legal spend management ~~solutions and settlement network~~ solutions.

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Banking Solutions

Revenues from our Banking Solutions segment increased ~~$1.5~~$2.0 million for the three months ended ~~December 31, 2017~~September 30, 2020 as compared to the same period in the prior fiscal year, due to increased subscriptions revenue of $4.6 million, partially offset by decreased service and maintenance revenue of $2.1 million and decreased software license revenue of $0.5 million. The increase in subscriptions revenue was primarily related to our customer base expanding on our SaaS platforms and as a result of our continued deployment of our newer banking solutions. The decrease in software license revenue was primarily driven by the evolution of our business strategy, which is focused on a subscription revenue model rather than one-time license events. Segment profit increased $2.4 million for the three months ended September 30, 2020 as compared to the same period in the prior fiscal year, primarily due to the revenue increases described and decreased operating expenses associated with sales and marketing and product development costs of $0.8 million and $0.1 million, respectively, partially offset by increased general and administrative expenses of $0.3 million. We expect revenue to continue to increase and profit to remain relatively consistent for the Banking Solutions segment in fiscal year 2021 as compared to fiscal year 2020.

Payments and Documents

Revenues from our Payments and Documents segment decreased $1.2 million for the three months ended September 30, 2020 as compared to the same period in the prior fiscal year, due primarily to ~~increased services~~decreased service and maintenance revenue of ~~$2.2~~$1.1 million and decreased software licenses revenue of $0.6 million, partially offset by ~~decreased~~increased subscriptions ~~and transactions~~ revenue of ~~$0.7~~$0.8 million. The decrease in service and maintenance revenue was driven by the continued conversion of our customers to our hosted and subscription based solutions rather than deployed, perpetual license solutions. Segment profit ~~increased $0.1~~decreased $0.9 million for the three months ended ~~December 31, 2017~~September 30, 2020 as compared to the same period in the prior fiscal year, due ~~primarily~~ to the revenue ~~increase~~decrease described above ~~partially offset by~~and increased ~~cost~~operating expenses of ~~revenues of $0.7~~$0.5 million ~~and~~primarily related to increased sales and marketing ~~expenses~~and product development and engineering costs, partially offset by decreased cost of ~~$0.7~~revenue of $0.8 million.

We expect revenue to increase and profit to remain consistent for the Payments and Documents segment in fiscal year 2021.

Other

Revenues from our ~~Banking Solutions~~Other segment ~~increased $4.6~~decreased for the three months ended September 30, 2020 as compared to the same periods in the prior fiscal year. Segment profit decreased $1.2 million for the ~~six~~three months ended ~~December 31, 2017~~September 30, 2020, as compared to the same period in the prior fiscal year primarily due ~~primarily~~ to ~~increased services revenue of $3.6 million,~~decreased software license revenue, of $0.7 million and subscriptions and transactions revenue of $0.4 million. Segment profit increased $2.2 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 $2.0 million~~revenue and increased sales and marketing, ~~expenses of $0.5 million.~~product development and engineering and general and administrative costs. We expect Other segment revenue ~~for the Banking Solutions segment~~ to ~~increase,~~remain consistent and profit ~~for the Banking Solutions segment~~ to ~~remain relatively consistent,~~decrease slightly in fiscal year ~~2018~~2021 as compared to ~~the prior~~ fiscal year ~~as a result of our continued deployment of our newer banking solutions.~~

~~Payments and Transactional Documents~~

2020.

Revenues by category


	Three Months Ended September 30,						Increase (Decrease) Between Periods
	2020			2019			$ Change Inc (Dec)		% Change Inc (Dec)
	(Dollars in thousands)
Revenues:
Subscriptions	$	90,384		$	80,066		$	10,318	12.9	%
Software licenses	977			2,576			(1,599)		(62.1)	%
Service and maintenance	20,564			24,825			(4,261)		(17.2)	%
Other	440			709			(269)		(37.9)	%
Total revenues	$	112,365		$	108,176		$	4,189	3.9	%

As % of total revenues:
Subscriptions	80.4		%	74.0		%
Software licenses	0.9		%	2.4		%
Service and maintenance	18.3		%	22.9		%
Other	0.4		%	0.7		%
Total revenues	100.0		%	100.0		%

Subscriptions

Revenues from ~~our Payments and Transactional Documents segment~~subscriptions increased ~~$0.5~~$10.3 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 $1.1 million, due primarily to increased subscription and transactions revenue of $2.4 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 million and decreased other revenue of $0.4 million. The segment profit increase of $0.1 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 $0.4 million, was 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 expenses of $0.8 million and increased product development and engineering expenses of $0.3 million.

Revenues from our Payments and Transactional Documents segment decreased $1.3 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 $1.1 million, due primarily to decreased service and maintenance revenue of $2.0 million, decreased software license revenue of $1.6 million and decreased other revenue of $0.7 million, partially offset by increased subscriptions and transactions revenue of $3.1 million. The segment profit decrease of $1.1 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 $0.5 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, 2020 as compared to the same period in the prior fiscal year. The overall revenue increase was driven by increases in subscriptions revenue from our Cloud Solutions, Banking Solutions and Payments and Documents of $5.0 million, $4.6 million and $0.8 million, respectively, due to the

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impact of customers going live on our hosted solutions and the continued impact of customers converting to subscription based solutions. We expect ~~Other segment revenue and profit~~subscriptions revenues to increase ~~slightly,~~ in fiscal year ~~2018 as compared~~2021 due to ~~the prior fiscal year, principally as the result of increased sales of~~revenue increases in our ~~cyber fraud~~Banking Solutions segment 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~~our financial messaging and ~~Transactions~~

PTX payment platforms.

Software Licenses

Revenues from ~~subscriptions and transactions increased $7.5~~software licenses decreased $1.6 million for the three months ended ~~December 31, 2017~~September 30, 2020 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 software revenue from our ~~Cloud Solutions segment and~~ Payments and ~~Transactional~~ Documents segment of ~~$5.9~~$0.6 million, ~~and $2.4 million, respectively, partially offset by a decrease in revenue from our~~ Banking Solutions segment of ~~$0.7~~$0.5 million and Other segment of $0.4 million.

The decrease in software license revenue was predominantly driven by the continued conversion of our customers to our hosted and subscription based solutions rather than deployed, perpetual license solutions. We expect software license revenues to decrease in fiscal year 2021, as we continue to emphasize our subscription based solutions rather than on-premise software deployments.

Service and Maintenance

Revenues from ~~subscriptions~~service and ~~transactions increased $16.1~~maintenance decreased $4.3 million for the ~~six~~three months ended ~~December 31, 2017~~September 30, 2020 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 $12.6 million and $3.1 million, respectively. We expect subscriptions and transactions revenues to increase in fiscal year 2018 as compared to the prior fiscal year, primarily 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 decreased 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 and Other segment of $0.7 million 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~~$2.1 million, Payments and ~~maintenance increased $2.2~~Documents Solutions segment of $1.1 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~~$1.0 million, driven by the continued conversion of our customers to our hosted and ~~$0.7 million, respectively, partially offset by~~subscription based solutions rather than deployed, perpetual license solutions. We expect service and maintenance revenues will decrease in fiscal year 2021 as a result of decreased services 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~~Banking Solutions segments and financial messaging solutions, primarily due to ~~the prior fiscal year.~~

our continued emphasis on hosted 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 in~~remain minor components of our overall revenue during fiscal year ~~2018 as compared to the prior fiscal year.~~

2021.

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
2020 2019 $ Change Inc (Dec) % Change Inc (Dec)
(Dollars in thousands)
Cost of revenues:
Subscriptions $ 35,218 $ 32,765 $ 2,453 7.5 %
Software licenses 90 161 (71) (44.1) %
Service and maintenance 10,916 13,053 (2,137) (16.4) %
Other 309 516 (207) (40.1) %
Total cost of revenues $ 46,533 $ 46,495 $ 38 0.1 %
Gross Profit ($) $ 65,832 $ 61,681 $ 4,151 6.7 %
Gross Profit (%) 58.6 % 57.0 %

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%~~39% of ~~subscription and transactions~~subscriptions revenues in the three months ended ~~December 31, 2017~~September 30, 2020 as compared to ~~45%~~41% of subscriptions ~~and transactions~~ revenues in the three months ended ~~December 31, 2016.~~

~~Subscriptions and transactions costs decreased slightly~~September 30, 2019 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~~2021 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.

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%~~as a percentage of software license revenues were 9% in the three months ended ~~December 31, 2017~~September 30, 2020 as compared to 6% of software license ~~revenues~~revenue in the three months ended ~~December 31, 2016. Software license costs increased slightly~~September 30, 2019 due to ~~8% of software license revenues in~~ the ~~six months ended December 31, 2017 as compared to 6% of software license revenues in the six months ended December 31, 2016. The increase~~decrease in software license ~~costs as a percent of~~revenue discussed above. Overall, software license ~~revenues for the three~~costs remain inconsequential 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. Wewe 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.~~

2021.

Service and Maintenance

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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 to 46% of service and maintenance revenues in the three months ended December 31, 2017 as compared 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 that service and maintenance costs as a percentage of service and maintenance revenues ~~will decrease slightly as customersgo-live~~ onremained consistent in the ~~banking solutions platforms in fiscal year 2018~~three months ended September 30, 2020 as compared to the ~~prior~~three months ended September 30, 2019 due primarily to the overall revenue decreases discussed above, offset by a decrease in cost of revenue. We expect that service and maintenance costs will remain relatively consistent in fiscal ~~year.~~

year 2021.

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.~~ business. We expect ~~that~~ other costs as a percentage of other revenues will ~~remain consistent~~decrease slightly in fiscal year ~~2018 as compared to the prior fiscal year.~~

2021.

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
2020 2019 $ Change Inc (Dec) % Change Inc (Dec)
(Dollars in thousands)
Operating expenses:
Sales and marketing $ 25,743 $ 25,688 $ 55 0.2 %
Product development and engineering 18,499 18,349 150 0.8 %
General and administrative 13,626 13,345 281 2.1 %
Amortization of acquisition-related intangible assets 5,029 4,950 79 1.6 %
Total operating expenses $ 62,897 $ 62,332 $ 565 0.9 %
As % of total revenues:
Sales and marketing 22.9 % 23.7 %
Product development and engineering 16.5 % 17.0 %
General and administrative 12.1 % 12.3 %
Amortization of acquisition-related intangible assets 4.5 % 4.6 %
Total operating expenses 56.0 % 57.6 %

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 slightly in the three months ended ~~December 31, 2017~~September 30, 2020 as compared to the three months ended ~~December 31, 2016~~September 30, 2019 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~~offset by decreased travel related costs of ~~$2.1~~$0.9 million ~~due in part to the impact~~and decreased marketing related costs of ~~our recent acquisitions.~~$0.6 million. We expect sales and marketing expenses as a percentage of total ~~revenue~~revenues will ~~remain relatively consistent~~increase in fiscal year ~~2018 as compared to the prior fiscal year.~~

2021.

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.~~as well as initiatives related to new product development. Product development and engineering expenses increased in the three ~~and six~~ months ended ~~December 31, 2017~~September 30, 2020 as compared to the three ~~and six~~ months ended ~~December 31, 2016 increased principally as a result of~~September 30, 2019 due to an increase in headcount related ~~costs.~~costs of $0.4 million as we continued to invest in the development of innovative, feature-rich products, partially offset by decreased travel related costs of $0.2 million. 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.~~

2021.

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~~increased slightly in the three months ended ~~December 31, 2017~~September 30, 2020 as compared to the three months ended ~~December 31, 2016~~September 30, 2019 due primarily to ~~a decrease~~an increase in employee related costs ~~associated with our global internal system implementations~~ of ~~$0.8 million.~~

~~General and administrative expenses~~$1.5 million offset by 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 million and a decrease in acquisition and ~~integration-related~~integration related expenses of ~~$0.4~~$1.4 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~~2021.

Table of ~~decreased global internal system implementation costs.~~

Contents

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~~increase in amortization expense in the three ~~and six~~ months ended ~~December 31, 2017~~September 30, 2020 as compared to the three ~~and six~~ months ended ~~December 31, 2016~~September 30, 2019 occurred as a result of ~~amortization rates decreasing over the underlying asset lives.~~increased expense from intangible assets associated with our recent acquisitions. We expect that total amortization expense for acquired intangible assets for the remainder of fiscal year ~~2018~~2021 will be approximately ~~$11.5~~$15.2 million.

~~Goodwill Impairment Charge~~

Other Expense, Net


	Three Months Ended September 30,				Increase (Decrease) Between Periods
	2020		2019		$ Change Inc (Dec)		% Change Inc (Dec)
	(Dollars in thousands)
Interest income	$	100	$	223	$	(123)	(55.2)	%
Interest expense	(1,258)		(750)		(508)		(67.7)	%
Other income (expense), net	378		(186)		564		303.2	%
Other expense, net	$	(780)	$	(713)	$	(67)	(9.4)	%

The components of other expense, net are as depicted above and remain minimal overall components of our operations. The increase in interest expense in the ~~six~~three months ended ~~December 31, 2016, we recorded a $7.5 million goodwill impairment charge~~September 30, 2020 as compared to September 30, 2019 is a result of an ~~impairment test conducted~~increase in borrowings under our line of credit arrangement commencing in March, 2020.

Provision for ~~one~~Income Taxes

We recorded income tax expense 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~~$1.8 million and $3,000 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 %

~~Other expense, net decreased $0.7 million for~~ the three months ended ~~December 31, 2017~~September 30, 2020 and $0.1 million for the six months ended December 31, 2017 compared to the same periods 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.

~~Provision for Income Taxes~~

We recorded an income tax benefit of $4.5 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 million and $3.8 million for the six months ended December 31, 2017 and 2016,2019, 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 an additional $150 million, ~~under the~~subject to specified conditions. The Credit ~~Facility. In connection~~Facility expires in July 2023. At September 30, 2020, borrowings were $180 million and we were in compliance 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.~~

all covenants.

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 for the periods ending September 30, 2020 and June 30, 2020 and a summary of our cash activity for the ~~six~~three months ended ~~December 31, 2017~~September 30, 2020 and ~~2016~~2019 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,
2020 2020
(in thousands)
Cash and cash equivalents $ 187,215 $ 194,832
Marketable securities 10,210 10,209
Borrowings under credit facility 180,000 180,000

Table of Contents
Three Months Ended September 30,
2020 2019
(in thousands)
Cash provided by operating activities $ 7,910 $ 18,112
Cash used in investing activities (20,149) (14,110)
Cash provided by (used in) financing activities 2,168 (8,013)
Effect of exchange rates on cash 3,294 (1,970)

Cash, cash equivalents and marketable securities.At ~~December 31, 2017,~~September 30, 2020, our cash and cash equivalents of ~~$64.1~~$187.2 million consisted primarily of cash deposits held at major banks and money market funds. The ~~$60.5~~$7.6 million decrease in cash and cash equivalents at ~~December 31, 2017~~September 30, 2020 from June 30, ~~2017~~2020 was primarily due to ~~the repayment of the Notes of $189.8 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~~$8.6 million, and cash used to fund business and asset acquisitions, net of cash acquired of $9.9 million, partially offset by cash generated from operations of ~~$9.7 million.~~

$7.9 million and the effect of foreign exchange rates on cash of $3.3 million.

Cash, cash equivalents and marketable securities included approximately ~~$43.0~~ $72.3 million held by our foreign subsidiaries as of ~~December 31, 2017. Our current intention is~~September 30, 2020. We continue to permanently reinvest ~~these amounts in~~ the ~~growth~~earnings, if any, of our international subsidiaries other than the UK, Switzerland and India 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, Switzerland and India. If our reinvestment plans change based on future events and we decide to repatriate ~~these~~ amounts from other international subsidiaries 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 primarily in the foreign currency exchange ~~rates~~rate of the British Pound ~~and Euro~~Sterling to the U.S. Dollar increased our overall cash balances by approximately ~~$0.9~~$3.3 million for the ~~six~~three months ended ~~December 31, 2017.~~September 30, 2020. Further changes in the foreign currency exchange rates of ~~these~~the British Pound Sterling 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;~~ 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

by ~~$7.9~~$10.2 million in the ~~six~~three months ended ~~December 31, 2017 versus~~September 30, 2020 as compared to the same period in the prior fiscal year. The decrease was primarily related to a decrease in cash flows generated from the change in accounts receivable of ~~$14.8~~$8.7 million ~~accrued expenses of $2.2 million, other liabilities of $1.4 million, deferred revenue of $1.3 million~~ and~~non-cash~~ ~~adjustments to our net loss of $8.2 million, partially offset by~~ a decrease in ~~our net loss~~the cash flows from the change in accounts payable of ~~$19.7~~$2.0 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, 2020, 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~~$6.0 million ~~decrease~~increase in net cash ~~provided by~~used in investing activities for the ~~six~~three months ended ~~December 31, 2017 versus the same period in the prior fiscal year was primarily due to a decrease in proceeds from sale ofavailable-for-sale~~ ~~securities of $26.3 million and cash used to fund business acquisitions, net of cash acquired, of $13.7 million, partially offset by a decrease in capital expenditures of $6.2 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 in cash used in financing activities for the six months ended December 31, 2017September 30, 2020 as compared to the same period in the prior fiscal year was primarily due to ~~the repayment of the Notes of $189.8 million,~~cash used to fund business and asset acquisitions, net of ~~$150.0~~cash acquired, of $9.9 million ~~borrowed under our Credit Facility,~~ and ~~further~~the issuance of a note receivable of $1.6 million, partially offset by a decrease in cash used ~~to repurchase~~for capital expenditures of $2.8 million and a decrease in cash used for the purchase of available for sale securities of $3.3 million.

Financing Activities. Financing cash flows consist primarily of cash inflows as a result of borrowings under our revolving credit facility and proceeds from the sale of shares of common stock through employee equity incentive plans, offset by repurchases of our common ~~stock of $15.0 million.~~

stock.

Contractual Obligations

~~Following is a summary of future payments that we are required~~

For the three months ended September 30, 2020, there have been no material changes to ~~make under existing~~the contractual obligations asdisclosed in Item 7 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~~our Annual Report on Form 10-K for 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.

fiscal year ended June 30, 2020.

Our estimate of unrecognized tax benefits for which cash settlement may be required ~~in the amount~~is $2.2 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, 2020, 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~~

Table 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.

Contents

Off-Balance Sheet Arrangements

We did not have anyoff-balance sheet arrangements during the three months ended ~~December~~ September 30, 2020.

31 ~~2017.~~

Table of Contents

~~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.~~classification and fair value changes. 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~~2020 as filed with the SEC on August 28, ~~2017, which~~2020, 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, 2020. 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, 2020, 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, we implemented the first phase of a company-wide enterprise resource planning (ERP) system. We have assessed and continued to monitor the impact of this implementation on our processes and procedures, as well as the impact on our internal controls over financial reporting. Where appropriate, we have made

No changes ~~to our internal controls to address system changes and to help ensure that we maintained effective internal controls over financial reporting as of December 31, 2017.~~

~~With the exception of the implementation of our ERP solution, no change~~ in our internal control over financial reporting occurred during the fiscal quarter ended ~~December 31, 2017~~September 30, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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

Table of Contents

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~~2020 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. The COVID-19 pandemic has created additional risks to those we normally face in operating our business, including those discussed in our Annual Report on Form 10-K for the fiscal year ended June 30, 2020. These risks and uncertainties are not the only ones facing us. Additional risks and uncertainties may also impact our business operations. ~~With the exception of the additional risk factor discussed below, there~~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 by the Financial Conduct Authority (FCA) for certain of our U.K. operations could adversely impact our business~~

First Capital Cashflow Ltd., 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 adverse effect on our business, operating results and financial condition.

2020.

~~Item 2.~~

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

~~The following table provides information about purchases by us~~

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

On August 5, 2019, we announced that our board of directors authorized a repurchase program 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 $ —   —

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

⁽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~~

for an aggregate repurchase price not to exceed $50 million. This program expires on August 5, 2021.

On ~~October 4, 2017,~~July 29, 2020, we issued ~~42,080~~166,393 shares of our common stock ~~all~~as purchase consideration in connection with our acquisition of ~~which were subject~~AnaSys AG (Anasys). We also issued 28,000 shares of our common stock to certain selling stockholders of AnaSys with vesting conditions tied to~~on-going~~ continued 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.~~us. These shares were issued in reliance upon the exemption from the registration requirements of the Securities Act of 1933, as amended (Securities Act) provided by Section 4(a)(2) of the Securities Act. No underwriters were involved in any such issuances.

Item 5. Other Information

On November 4, 2020, we filed a Certificate of Amendment to our Amended and Restated Certificate of Incorporation, as amended (the “Amended and Restated Certificate of Incorporation”), with the Secretary of State of the State of Delaware changing the name of our company from “Bottomline Technologies (de), Inc.” to “Bottomline Technologies, Inc.” effective at 4:00 p.m. Eastern Time on November 4, 2020. Under Section 242 of the Delaware General Corporation Law, the name change does not require stockholder approval. The name change does not affect the rights of our stockholders and there were no changes to the Amended and Restated Certificate of Incorporation other than to reflect the name change. Our common stock will continue to trade on The Nasdaq Global Select Market under the symbol “EPAY,” and its CUSIP number will not change.

Table of Contents

Item 6. Exhibits

~~Item 6.~~

Incorporated by Reference

Exhibit Number

Description

Form

File No.

Exhibit

Filing Date

Filed Herewith

3.1

Amended and Restated Certificate of Incorporation of the Registrant, as amended.

3.2

Amended and Restated By-Laws of the Registrant, as amended.

31.1

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

31.2

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

32.1

Section 1350 Certification of Principal Executive Officer

32.2

Section 1350 Certification of Principal Financial Officer

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

101.CAL**

Inline XBRL Taxonomy Calculation Linkbase Document

101.DEF**

Inline XBRL Taxonomy Definition Linkbase Document

101.LAB**

Inline XBRL Taxonomy Label Linkbase Document

101.PRE**

Inline XBRL Taxonomy Presentation Linkbase Document

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~~

** 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, 2020 and June 30, ~~2017,~~2020, (ii) Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) for the three ~~and six~~ months ended ~~December 31, 2017~~September 30, 2020 and ~~2016,~~2019, (iii) Unaudited Consolidated Statements of Stockholders' Equity for the three months ended September 30, 2020 and 2019, (iv) Unaudited Condensed Consolidated Statements of Cash Flows for the ~~six~~three months ended ~~December 31, 2017~~September 30, 2020 and ~~2016~~2019 and ~~(iv)~~(v) Notes to Unaudited Condensed Consolidated Financial Statements.

Table of Contents

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, Inc.

Date:

November 9, 2020

By:

~~Bottomline Technologies (de), Inc.~~ /s/ RICHARD D. BOOTH

~~Date: February 8, 2018~~

~~By:~~

~~/s/ RICHARD~~ 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, 2020								June 30, 2020
	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)	$	342	$	0	$	0	$	342	$	354	$	0	$	0	$	354
Available for sale securities - Debt
U.S. Corporate	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Government - U.S. treasury securities	0		10,147		0		10,147		0		10,148		0		10,148
Total available for sale securities	$	0	$	10,147	$	0	$	10,147	$	0	$	10,148	$	0	$	10,148
Preferential conversion feature (long-term)	$	0	$	0	$	532	$	532	$	0	$	0	$	0	$	0
Other investments (long-term)	0		0		550		550		0		0		514		514


Total assets	$	342	$	10,147	$	1,082	$	11,571	$	354	$	10,148	$	514	$	11,016
Liabilities
Interest rate swap (short-term)	$	0	$	1,638	$	0	$	1,638	$	0	$	1,631	$	0	$	1,631
Interest rate swap (long-term)	$	0	$	2,995	$	0	$	2,995	$	0	$	3,448	$	0	$	3,448
Total liabilities	$	0	$	4,633	$	0	$	4,633	$	0	$	5,079	$	0	$	5,079


	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


	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	$	—		—