Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Mar. 31, 2018 | Apr. 27, 2018 | |
Document and Entity Information | ||
Entity Registrant Name | Paylocity Holding Corp | |
Entity Central Index Key | 1,591,698 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --06-30 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 52,653,118 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2018 | Jun. 30, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 129,530 | $ 103,468 |
Accounts receivable, net | 3,384 | 2,040 |
Prepaid expenses and other | 16,921 | 14,879 |
Total current assets before funds held for clients | 149,835 | 120,387 |
Funds held for clients | 1,347,522 | 942,459 |
Total current assets | 1,497,357 | 1,062,846 |
Long-term prepaid expenses | 1,022 | 1,535 |
Capitalized internal-use software, net | 20,002 | 17,394 |
Property and equipment, net | 50,380 | 40,756 |
Intangible assets, net | 13,457 | 8,907 |
Goodwill | 9,754 | 6,003 |
Deferred income tax assets, net | 18,906 | |
Total assets | 1,610,878 | 1,137,441 |
Current liabilities: | ||
Accounts payable | 2,371 | 2,046 |
Accrued expenses | 35,474 | 30,301 |
Total current liabilities before client fund obligations | 37,845 | 32,347 |
Client fund obligations | 1,347,522 | 942,459 |
Total current liabilities | 1,385,367 | 974,806 |
Deferred rent | 20,963 | 14,621 |
Deferred income tax liabilities, net | 401 | |
Total liabilities | 1,406,330 | 989,828 |
Stockholders' equity: | ||
Preferred stock, $0.001 par value, 5,000 authorized, no shares issued and outstanding at June 30, 2017 and March 31, 2018 | ||
Common stock, $0.001 par value, 155,000 shares authorized at June 30, 2017 and March 31, 2018; 51,738 shares issued and outstanding at June 30, 2017 and 52,649 shares issued and outstanding at March 31, 2018 | 53 | 52 |
Additional paid-in capital | 209,791 | 192,837 |
Accumulated deficit | (5,125) | (45,276) |
Accumulated other comprehensive loss | (171) | |
Total stockholders' equity | 204,548 | 147,613 |
Total liabilities and stockholders' equity | $ 1,610,878 | $ 1,137,441 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Thousands | Mar. 31, 2018 | Jun. 30, 2017 |
Unaudited Consolidated Balance Sheets | ||
Preferred Stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred Stock, shares authorized | 5,000 | 5,000 |
Preferred Stock, shares issued | 0 | 0 |
Preferred Stock, shares outstanding | 0 | 0 |
Common Stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common Stock, shares authorized | 155,000 | 155,000 |
Common Stock, shares issued | 52,649 | 51,738 |
Common Stock, shares outstanding | 52,649 | 51,738 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | |
Revenues: | ||||
Recurring fees | $ 105,857 | $ 85,314 | $ 264,443 | $ 212,581 |
Interest income on funds held for clients | 2,719 | 1,041 | 6,119 | 2,489 |
Total recurring revenues | 108,576 | 86,355 | 270,562 | 215,070 |
Implementation services and other | 4,831 | 3,918 | 10,349 | 8,879 |
Total revenues | 113,407 | 90,273 | 280,911 | 223,949 |
Cost of revenues: | ||||
Recurring revenues | 26,982 | 22,436 | 76,711 | 62,255 |
Implementation services and other | 11,670 | 9,646 | 33,740 | 28,569 |
Total cost of revenues | 38,652 | 32,082 | 110,451 | 90,824 |
Gross profit | 74,755 | 58,191 | 170,460 | 133,125 |
Operating expenses: | ||||
Sales and marketing | 26,004 | 21,242 | 68,782 | 56,988 |
Research and development | 9,058 | 6,969 | 27,227 | 21,492 |
General and administrative | 19,228 | 15,100 | 53,338 | 43,915 |
Total operating expenses | 54,290 | 43,311 | 149,347 | 122,395 |
Operating income | 20,465 | 14,880 | 21,113 | 10,730 |
Other income (expense) | 215 | (47) | 465 | (4) |
Income before income taxes | 20,680 | 14,833 | 21,578 | 10,726 |
Income tax expense (benefit) | (18,497) | 32 | (18,573) | 164 |
Net income | 39,177 | 14,801 | 40,151 | 10,562 |
Other comprehensive loss, net of tax | ||||
Unrealized losses on securities, net of tax | (61) | (171) | ||
Total other comprehensive loss, net of tax | (61) | (171) | ||
Comprehensive income | $ 39,116 | $ 14,801 | $ 39,980 | $ 10,562 |
Net income per share: | ||||
Basic (in dollars per share) | $ 0.74 | $ 0.29 | $ 0.77 | $ 0.21 |
Diluted (in dollars per share) | $ 0.71 | $ 0.27 | $ 0.73 | $ 0.20 |
Weighted-average shares used in computing net income per share: | ||||
Basic (in shares) | 52,615 | 51,447 | 52,334 | 51,353 |
Diluted (in shares) | 55,030 | 54,002 | 54,717 | 53,987 |
Consolidated Statement of Chang
Consolidated Statement of Changes in Stockholders' Equity - 9 months ended Mar. 31, 2018 - USD ($) shares in Thousands, $ in Thousands | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total |
Balance at Jun. 30, 2017 | $ 52 | $ 192,837 | $ (45,276) | $ 147,613 | |
Balance (in shares) at Jun. 30, 2017 | 51,738 | 51,738 | |||
Increase (Decrease) in Stockholders' Equity | |||||
Stock-based compensation | 23,345 | $ 23,345 | |||
Stock options exercised | $ 1 | 7,161 | 7,162 | ||
Stock options exercised (in shares) | 772 | ||||
Issuance of common stock upon vesting of restricted stock units (in shares) | 425 | ||||
Issuance of common stock under employee stock purchase plan | 2,045 | 2,045 | |||
Issuance of common stock under employee stock purchase plan (in shares) | 53 | ||||
Net settlement for taxes and/or exercise price related to equity awards | (15,597) | (15,597) | |||
Net settlement for taxes and/or exercise price related to equity awards (in shares) | (339) | ||||
Unrealized losses on securities, net of tax | $ (171) | (171) | |||
Net income | 40,151 | 40,151 | |||
Balance at Mar. 31, 2018 | $ 53 | $ 209,791 | $ (5,125) | $ (171) | $ 204,548 |
Balance (in shares) at Mar. 31, 2018 | 52,649 | 52,649 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Cash flows from operating activities: | ||
Net income | $ 40,151 | $ 10,562 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Stock-based compensation expense | 21,891 | 18,695 |
Depreciation and amortization expense | 20,640 | 14,685 |
Deferred income tax expense (benefit) | (18,603) | 127 |
Provision for doubtful accounts | 149 | 47 |
Net accretion of discounts and amortization of premiums on available-for-sale securities | (234) | |
Net realized losses on sales of available-for-sale securities | 2 | |
Loss on disposal of equipment | 160 | 225 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (1,278) | (543) |
Prepaid expenses and other | (1,678) | (1,802) |
Accounts payable | 429 | (145) |
Accrued expenses | 1,762 | 1,484 |
Tenant improvement allowance | 5,952 | |
Net cash provided by operating activities | 69,343 | 43,335 |
Cash flows from investing activities: | ||
Purchases of available-for-sale securities from funds held for clients | (126,223) | |
Proceeds from sales and maturities of available-for-sale securities from funds held for clients | 51,292 | |
Net change in funds held for clients' cash and cash equivalents | (328,462) | 69,281 |
Capitalized internal-use software costs | (11,442) | (10,073) |
Purchases of property and equipment | (9,374) | (13,916) |
Lease allowances used for tenant improvements | (7,086) | |
Acquisition of business, net of cash acquired | (8,346) | |
Net cash provided by (used in) investing activities | (439,641) | 45,292 |
Cash flows from financing activities: | ||
Net change in client fund obligations | 403,375 | (69,281) |
Proceeds from employee stock purchase plan | 2,045 | 1,823 |
Taxes paid related to net share settlement of equity awards | (9,060) | (6,215) |
Net cash provided by (used in) financing activities | 396,360 | (73,673) |
Net Change in Cash and Cash Equivalents | 26,062 | 14,954 |
Cash and Cash Equivalents-Beginning of Period | 103,468 | 86,496 |
Cash and Cash Equivalents-End of Period | 129,530 | 101,450 |
Supplemental Disclosure of Non-Cash Investing and Financing Activities | ||
Purchase of property and equipment and internal-use software, accrued but not paid | 2,832 | 1,714 |
Supplemental Disclosure of Cash Flow Information | ||
Cash paid for income taxes, net of refunds | $ 17 | $ 41 |
Organization and Description of
Organization and Description of Business | 9 Months Ended |
Mar. 31, 2018 | |
Organization and Description of Business | |
Organization and Description of Business | (1) Organization and Description of Business Paylocity Holding Corporation (the “Company”), through its wholly owned subsidiary, Paylocity Corporation, is a cloud-based provider of payroll and human capital management software solutions for medium-sized organizations. Services are provided in a Software-as-a-Service (“SaaS”) delivery model utilizing the Company’s cloud-based platform. Payroll services include collection, remittance and reporting of payroll liabilities to the appropriate federal, state and local authorities. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Mar. 31, 2018 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | (2) Summary of Significant Accounting Policies (a) Consolidation and Use of Estimates These unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The unaudited consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the allowance for doubtful accounts, internal-use software, valuation and useful lives of long-lived assets, definite-lived intangibles, goodwill, incurred but not reported medical and dental claims, stock-based compensation, valuation of deferred income tax assets and liabilities and the best estimate of selling price for revenue recognition purposes. Future events and their effects cannot be predicted with certainty; accordingly, accounting estimates require the exercise of judgment. Accounting estimates used in the preparation of these consolidated financial statements change as new events occur, as more experience is acquired, as additional information is obtained and as the operating environment changes. (b) Interim Unaudited Consolidated Financial Information The accompanying unaudited consolidated financial statements and notes have been prepared in accordance with GAAP and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, the interim financial information includes all adjustments of a normal recurring nature necessary for a fair presentation of the Company’s financial position, results of operations, changes in stockholders’ equity and cash flows. The results of operations for the three and nine months ended March 31, 2018 are not necessarily indicative of the results for the full year or the results for any future periods. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes for the year ended June 30, 2017 included in the Company’s Annual Report on Form 10-K filed with the SEC on August 11, 2017. (c) Funds Held For Clients and Corporate Investments Funds held for clients is primarily comprised of cash and cash equivalents invested in demand deposit accounts. Starting in July 2017, the Company also invested a portion of its funds held for clients in marketable securities. Marketable securities classified as available-for-sale are recorded at fair value on the consolidated balance sheets. Unrealized gains and losses, net of applicable income taxes, are reported as other comprehensive income (loss) in the consolidated statements of operations and comprehensive income. Interest on marketable securities included in funds held for clients is reported as interest income on funds held for clients on the consolidated statements of operations and comprehensive income. The Company reviews the composition of its portfolio for any available-for-sale security that has a fair value that falls below its amortized cost. If any security fits this criterion, the Company further evaluates whether other-than-temporary impairment exists by considering whether the Company has the intent and ability to retain the security for a period of time sufficient enough to allow for anticipated fair value recovery. The Company did not record any other-than-temporary impairment charges during the three or nine months ended March 31, 2018. (d) Income Taxes Income taxes are accounted for in accordance with ASC 740, Income Taxes , using the asset and liability method. The Company’s provision for income taxes through December 31, 2017 and fiscal 2017 was based on the discrete effective tax rate method. In the third quarter of fiscal 2018 upon the release of the valuation allowance, the Company utilized the annual effective tax rate method to estimate and record tax expense for pre-tax income. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If the Company determines that it would be able to realize its deferred tax assets in the future in excess of their net-recorded amount, it would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. (e) Recently Adopted Accounting Standards In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation (Topic 718) (“ASU 2016-09”) which modifies accounting for excess tax benefits and tax deficiencies, forfeitures, and employer tax withholding requirements. ASU 2016-09 also clarifies certain classifications on the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, with early adoption permitted. The Company adopted this standard effective July 1, 2017, and it resulted in an increase to the Company’s gross net operating loss of $30,783. As of December 31, 2017, the adoption of this standard did not have a material impact on its consolidated financial statements and disclosures due to the Company’s valuation allowance on deferred tax assets. However, during the third quarter of fiscal 2018, the Company released its valuation allowance and as a result, the Company recorded a significant increase in deferred tax assets due to excess tax benefits from employee stock exercises. Refer to Note 9 for additional information on the release of the valuation allowance and the impact of excess tax benefits from employee stock exercises. The Company will continue to estimate forfeitures at each reporting period, rather than electing an accounting policy change to record the impact of such forfeitures as they occur. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805) (“ASU 2017-01”) which clarifies the definition of a business. ASU 2017-01 provides guidance to assist entities in evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. It is effective, on a prospective basis, for fiscal years beginning after December 15, 2017, with early adoption permitted. The Company adopted this standard effective January 1, 2018. The adoption of ASU 2017-01 did not have a material impact on the Company’s consolidated financial statements. In March 2018, the FASB issued ASU 2018-05, Income Taxes (Topic 740) (“ASU 2018-05”) which incorporates the SEC’s Staff Accounting Bulletin 118 (“SAB 118”) issued on December 22, 2017. SAB 118 provides for a provisional measurement period for entities to finalize their accounting for certain income tax effects related to the Tax Cuts and Jobs Act (the “Act”), not to exceed one year from enactment of the new tax law. Entities are permitted to utilize reasonable estimates until they have finished analyzing the effects of the Act. The Company recognized the income tax effects of the Act in the second and third quarter of fiscal 2018 in accordance with SAB 118. Refer to Note 9 for additional information. (f) Recently Issued Accounting Standards In May 2014, the Financial Accounting Standards Board (FASB) issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). ASU 2014-09 supersedes a majority of existing revenue recognition guidance under US GAAP, and requires companies to recognize revenue when it transfers goods or services to a customer in an amount that reflects the consideration to which a company expects to be entitled. Companies may need to apply more judgment and estimation techniques or methods while recognizing revenue, which could result in additional disclosures to the financial statements. In addition, in March 2016, April 2016, May 2016 and December 2016 the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) (“ASU 2016-08”), ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing (“ASU 2016-10”), ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients (“ASU 2016-12”) and ASU 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers (“ASU 2016-20”), respectively, to amend certain guidance in ASU 2014-09. Topic 606 allows for either a retrospective or cumulative effect transition method. ASU 2014-09 was originally effective for fiscal years beginning after December 15, 2016. In July 2015, the FASB approved a one-year deferral of ASU 2014-09 and all amendments to it, with a new effective date for fiscal years beginning after December 15, 2017 with early adoption permitted as of the original effective date. The Company currently expects to adopt the new standard in its fiscal year beginning July 1, 2018 using the full retrospective method. While the impact the new revenue recognition standard will have on its consolidated financial statements and disclosures has not yet been fully assessed, the Company currently expects that there will be a material impact in the manner in which it treats certain costs of obtaining new contracts (i.e., selling and commission costs). The new standard will require the Company to defer these costs and amortize them versus its current treatment of expensing these costs as incurred. The Company is continuing to evaluate all potential impacts as well as the changes required for systems, processes and internal controls to meet the new standard’s reporting and disclosure requirements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”) which amends various aspects of existing guidance for leases. ASU 2016-02 requires an entity to recognize assets and liabilities arising from a lease with terms greater than twelve months, along with additional qualitative and quantitative disclosures. ASU 2016-02 also requires the use of the modified retrospective method, which will require adjustment to all comparative periods presented. In March 2018, the FASB affirmed its proposed ASU, Leases (Topic 842): Targeted Improvements, which provides an additional transition method allowing an entity to apply the new lease accounting and disclosure requirements only for the year of adoption with the comparative periods continuing to be in accordance with current GAAP. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is currently assessing the potential effects of these changes to its consolidated financial statements as well as evaluating the transition methods and expects to adopt this new standard in its fiscal year beginning July 1, 2019. From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of other recently issued standards that are not yet effective will not have a material impact on the Company’s consolidated financial statements upon adoption. |
Business Combinations
Business Combinations | 9 Months Ended |
Mar. 31, 2018 | |
Business Combinations | |
Business Combinations | (3) Business Combinations In March 2018, the Company acquired substantially all the assets of BeneFLEX HR Resources, Inc. (“BeneFLEX”), a third party employee benefits administrator, for $9,346, net of cash acquired. BeneFLEX administers employee benefit plans, including flexible spending accounts, health savings accounts, health reimbursement accounts, COBRA, and others. The Company paid $8,346 upon closing and may be required to pay an additional $1,000 subject to BeneFLEX attaining certain revenue targets and in the absence of indemnity claims. This acquisition expands the portfolio of services available to the Company’s clients by allowing it to provide additional benefit administration solutions to its clients, prospects, and broker partners. The Company accounts for business combinations in accordance with ASC 805, Business Combinations. The Company recorded the acquisition using the acquisition method of accounting and recognized assets at their fair value as of the date of acquisition. The Company based the preliminary allocation of the purchase price on estimates and assumptions that are subject to change within the purchase price allocation period, which is generally one year from the acquisition date. The primary areas of the purchase price allocation that are not yet finalized relate to the measurement of identifiable intangible assets and the finalization of net working capital adjustments. The Company determined the estimated fair value of identifiable intangible assets acquired primarily by using an income approach. The following table summarizes the preliminary allocation of the purchase price for BeneFLEX: Goodwill $ 3,751 Client relationships 5,386 Non-solicitation agreements 240 Net liabilities assumed (31) Total Purchase Price $ 9,346 The results from this acquisition have been included in the Company’s consolidated financial statements since the closing of the acquisition. Pro forma information has not been presented because the effect of the acquisition is not material to the Company’s consolidated financial statements. Goodwill will be amortized over a period of 15 years for income tax purposes. |
Balance Sheet Information
Balance Sheet Information | 9 Months Ended |
Mar. 31, 2018 | |
Balance Sheet Information | |
Balance Sheet Information | (4) Balance Sheet Information The following tables provide details of selected consolidated balance sheet items: Activity in the allowance for doubtful accounts was as follows: Balance at June 30, 2017 $ 266 Charged to expense 149 Write-offs (134) Balance at March 31, 2018 $ 281 Capitalized internal-use software and accumulated amortization were as follows: June 30, March 31, 2017 2018 Capitalized internal-use software $ 49,663 $ 62,629 Accumulated amortization (32,269) (42,627) Capitalized internal-use software, net $ 17,394 $ 20,002 Amortization of capitalized internal-use software costs is included in Cost of Revenues-Recurring Revenues and amounted to $2,573 and $3,655 for the three months ended March 31, 2017 and 2018, respectively, and $6,207 and $10,358 for the nine months ended March 31, 2017 and 2018, respectively. Property and equipment, net consist of the following: June 30, March 31, 2017 2018 Office equipment $ 3,591 $ 3,880 Computer equipment 24,411 28,526 Furniture and fixtures 7,547 8,837 Software 4,954 5,221 Leasehold improvements 21,426 32,621 Time clocks rented by clients 4,240 4,551 Total 66,169 83,636 Accumulated depreciation (25,413) (33,256) Property and equipment, net $ 40,756 $ 50,380 Depreciation expense amounted to $2,629 and $3,189 for the three months ended March 31, 2017 and 2018, respectively, and $7,336 and $9,206 for the nine months ended March 31, 2017 and 2018, respectively. Goodwill represents the excess of cost over the net tangible and identifiable intangible assets of acquired businesses. Goodwill amounts are not amortized, but rather tested for impairment at least annually. Identifiable intangible assets acquired in business combinations are recorded based on fair value at the date of acquisition and amortized over their estimated useful lives. See Note 3 for further information regarding the acquisition completed during the nine months ended March 31, 2018. The following table summarizes changes in goodwill during the nine months ended March 31, 2018: Balance at June 30, 2017 $ 6,003 Additions attributable to current period acquisition 3,751 Balance at March 31, 2018 $ 9,754 Intangible assets, net consist of the following: June 30, March 31, Useful 2017 2018 Life Client relationships $ 12,580 $ 17,966 9 years Non-solicitation agreements 360 600 2 - 4 years Total 12,940 18,566 Accumulated amortization (4,033) (5,109) Intangible assets, net $ 8,907 $ 13,457 The increase in client relationships and non-solicitation agreements is related to the acquisition of BeneFLEX as discussed in Note 3. Amortization expense for acquired intangible assets was $380 and $358 for the three months ended March 31, 2017 and 2018 respectively, and $1,142 and $1,076 for the nine months ended March 31, 2017 and 2018, respectively. Future amortization expense for acquired intangible assets is as follows, as of March 31, 2018: Remainder of fiscal 2018 $ 516 Fiscal 2019 2,056 Fiscal 2020 2,056 Fiscal 2021 2,056 Fiscal 2022 2,041 Thereafter 4,732 Total $ 13,457 The components of accrued expenses were as follows: June 30, March 31, 2017 2018 Accrued payroll and personnel costs $ 25,131 $ 25,361 Other 5,170 10,113 Total accrued expenses $ 30,301 $ 35,474 |
Funds Held for Clients and Corp
Funds Held for Clients and Corporate Investments | 9 Months Ended |
Mar. 31, 2018 | |
Funds Held For Clients And Corporate Investments [Abstract] | |
Funds Held For Clients And Corporate Investments [Text Block] | (5) Funds Held for Clients and Corporate Investments Investments consist of the following as of March 31, 2018: Gross Gross Amortized unrealized unrealized Type of Issue cost gains losses Fair value Funds held for clients' cash and cash equivalents $ 1,272,771 $ — $ (4) $ 1,272,767 Available-for-sale securities: Corporate bonds 33,958 3 (168) 33,793 Commercial paper 29,165 — (16) 29,149 Asset-backed securities 12,041 — (65) 11,976 Total available-for-sale securities 75,164 3 (249) 74,918 Investments $ 1,347,935 $ 3 $ (253) $ 1,347,685 Funds held for clients’ cash and cash equivalents included demand deposit accounts, commercial paper and money market funds as of March 31, 2018. Classification of investments on the consolidated balance sheets is as follows: March 31, 2018 Funds held for clients $ 1,347,522 Prepaid expenses and other 163 Total investments $ 1,347,685 Available-for-sale securities that have been in an unrealized loss position for a period of less than 12 months as of March 31, 2018 had fair market values as follows: Gross unrealized losses Fair value Corporate bonds $ (168) $ 31,231 Commercial paper (16) 27,291 Asset-backed securities (65) 11,976 Total $ (249) $ 70,498 As the Company started investing funds held for clients in available-for-sale securities during the nine months ended March 31, 2018, no securities have been in an unrealized loss position for more than 12 months. The Company did not make any material reclassification adjustments out of accumulated other comprehensive loss for realized gains and losses on the sale of available-for-sale securities during the three or nine months ended March 31, 2018. Gross realized gains and losses on the sale of available-for-sale securities were immaterial for both the three and nine months ended March 31, 2018. The Company regularly reviews the composition of its portfolio to determine the existence of other-than-temporary-impairment (“OTTI”). The Company did not recognize any OTTI charges in accumulated other comprehensive loss during the three or nine months ended March 31, 2018, nor does it believe that OTTI exists in its portfolio as of March 31, 2018. The Company plans to retain the securities in an unrealized loss position for a period of time sufficient enough to recover their amortized cost basis or until their maturity date. The Company believes that the unrealized losses on these securities were not due to deterioration in credit risk. The securities in an unrealized loss position held an A-1 rating or better as of March 31, 2018. Expected maturities of available-for-sale securities at March 31, 2018 are as follows: Amortized cost Fair value One year or less $ 53,150 $ 53,036 One year to two years 20,410 20,275 Two years to three years 1,604 1,607 Total available-for-sale securities $ 75,164 $ 74,918 |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Mar. 31, 2018 | |
Fair Value Measurement | |
Fair Value Measurement | (6) Fair Value Measurement The Company applies the fair value measurement and disclosure provisions of ASC 820, Fair Value Measurements and Disclosures, and ASU 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS . Fair value is defined as 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. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: · Level 1—Quoted prices in active markets for identical assets and liabilities. · Level 2—Quoted prices in active markets for similar assets and liabilities, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. · Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. The Company measures any cash and cash equivalents, accounts receivable, accounts payable and client fund obligations at fair value on a recurring basis using Level 1 inputs. The Company considers the recorded value of these financial assets and liabilities to approximate the fair value of the respective assets and liabilities at June 30, 2017 and March 31, 2018 based upon the short-term nature of these assets and liabilities. Marketable securities, consisting of securities classified as available-for-sale as well as certain cash equivalents, are recorded at fair value on a recurring basis using Level 2 inputs obtained from an independent pricing service. Available-for-sale securities include asset-backed securities, corporate bonds and commercial paper. The independent pricing service utilizes a variety of inputs including benchmark yields, broker/dealer quoted prices, reported trades, issuer spreads as well as other available market data. The Company, on a sample basis, validates the pricing from the independent pricing service against another third-party pricing source for reasonableness. The Company has not adjusted any prices obtained by the independent pricing service, as it believes they are appropriately valued. There were no available-for-sale securities classified in Level 3 of the fair value hierarchy at March 31, 2018, and the Company did not transfer assets between Levels during the nine months ended March 31, 2018. The Company did not hold any marketable securities at June 30, 2017. The fair value level for the funds held for clients’ cash and cash equivalents and available-for-sale securities as of March 31, 2018 is as follows: Total Level 1 Level 2 Level 3 Funds held for clients' cash and cash equivalents $ 1,272,767 $ 1,247,604 $ 25,163 $ — Available-for-sale securities: Corporate bonds 33,793 33,793 Commercial paper 29,149 29,149 Asset-backed securities 11,976 11,976 Total available-for-sale securities 74,918 — 74,918 — Investments $ 1,347,685 $ 1,247,604 $ 100,081 $ — |
Benefit Plans
Benefit Plans | 9 Months Ended |
Mar. 31, 2018 | |
Benefit Plans | |
Benefit Plans | (7) Benefit Plans (a) Equity Incentive Plan The Company maintains a 2008 Equity Incentive Plan (the “2008 Plan”) and a 2014 Equity Incentive Plan (the “2014 Plan”) pursuant to which the Company has reserved shares of its common stock for issuance to its employees, directors and non-employee third parties. The 2014 Plan serves as the successor to the 2008 Plan and permits the granting of options to purchase common stock and other equity incentives at the discretion of the compensation committee of the Company’s board of directors. No new awards have been or will be issued under the 2008 Plan since the effective date of the 2014 Plan. Outstanding awards under the 2008 Plan continue to be subject to the terms and conditions of the 2008 Plan. The number of shares of common stock reserved for issuance under the 2014 Plan will increase automatically each calendar year, continuing through and including January 1, 2024 (the “Evergreen provision”). The number of shares added each year will be equal to the lesser of (a) four and five tenths percent (4.5%) of the number of shares of common stock of the Company issued and outstanding on the immediately preceding December 31, or (b) an amount determined by the Company’s board of directors. The Company’s board of directors determined that, effective January 1, 2018, it would increase the number of common shares in reserve for issuance under the 2014 Plan by 2,367 shares. As of March 31, 2018, the Company had 13,883 shares allocated to the plans, of which 3,848 shares were subject to outstanding options or awards. Generally, the Company issues previously unissued shares for the exercise of stock options or vesting of awards; however, shares previously subject to 2014 Plan grants or awards that are forfeited or net settled at exercise or release may be reissued to satisfy future issuances. The following table summarizes changes in the number of shares available for grant under the Company’s equity incentive plans during the nine months ended March 31, 2018: Number of Available for grant at July 1, 2017 8,227 January 1, 2018 Evergreen provision increase 2,367 RSUs granted (884) Shares withheld in settlement of taxes and/or exercise price 339 Forfeitures 45 Shares removed (59) Available for grant at March 31, 2018 10,035 Shares removed represents forfeitures of shares and shares withheld in settlement of taxes and/or payment of exercise price related to grants made under the 2008 Plan. As noted above, no new awards will be issued under the 2008 Plan. Stock-based compensation expense related to stock options, restricted stock units (“RSUs”), and the Employee Stock Purchase Plan (as described below) is included in the following line items in the accompanying unaudited consolidated statements of operations and comprehensive income: Three Months Ended March 31, Nine Months Ended March 31, 2017 2018 2017 2018 Cost of revenue – recurring $ 485 $ 728 $ 1,621 $ 2,084 Cost of revenue – non-recurring 363 358 1,031 1,107 Sales and marketing 1,672 1,537 4,880 5,680 Research and development 797 926 2,461 2,742 General and administrative 2,930 3,918 8,702 10,278 Total stock-based compensation expense $ 6,247 $ 7,467 $ 18,695 $ 21,891 In addition, the Company capitalized $540 and $550 of stock-based compensation expense in its capitalized internal-use software costs in the three months ended March 31, 2017 and 2018, respectively, and $1,412 and $1,454 in the nine months ended March 31, 2017 and 2018, respectively. Under the 2008 and 2014 Plans, the exercise price of each option cannot be less than the fair value of a share of common stock on the grant date. The options typically vest ratably over a three or four year period and expire 10 years from the grant date. Stock-based compensation expense for the fair value of the options at their grant date is recognized ratably over the vesting schedule for each separately vesting portion of the award. There were no stock options granted during the nine months ended March 31, 2017 or 2018. The table below presents stock option activity during the nine months ended March 31, 2018: Outstanding Options Weighted Weighted average average remaining Aggregate Number of exercise contractual intrinsic shares price term (years) value Balance at July 1, 2017 2,751 $ 11.54 5.69 $ 92,556 Options forfeited (5) $ 18.41 Options exercised (772) $ 9.28 Balance at March 31, 2018 1,974 $ 12.40 5.26 $ 76,638 Options exercisable at March 31, 2018 1,848 $ 11.23 5.15 $ 73,936 Options vested and expected to vest at March 31, 2018 1,970 $ 12.36 5.25 $ 76,563 The total intrinsic value of options exercised was $2,813 and $3,758 during the three months ended March 31, 2017 and 2018, respectively, and $8,352 and $31,013 during the nine months ended March 31, 2017 and 2018, respectively. At March 31, 2018, there was $262 of total unrecognized compensation cost, net of estimated forfeitures, related to unvested stock options granted under the Plan. That cost is expected to be recognized over a weighted average period of 0.90 years. The Company may also grant RSUs under the 2014 Plan with terms determined at the discretion of the compensation committee of the Company’s board of directors. RSUs generally vest over four years following the grant date. Certain RSU awards have time-based vesting conditions while other RSU awards are based on the achievement of certain revenue and Adjusted EBITDA targets in future fiscal years. The following table represents restricted stock unit activity during the nine months ended March 31, 2018: Units Weighted RSU balance at July 1, 2017 1,455 $ 39.96 RSUs granted 884 $ 45.95 RSUs vested (425) $ 39.31 RSUs forfeited (40) $ 41.73 RSU balance at March 31, 2018 1,874 $ 42.89 RSUs expected to vest at March 31, 2018 1,635 $ 42.69 At March 31, 2018, there was $34,872 of total unrecognized compensation cost, net of estimated forfeitures, related to unvested restricted stock units granted. That cost is expected to be recognized over a weighted average period of 1.86 years. (b) Employee Stock Purchase Plan Under the Company’s Employee Stock Purchase Plan (“ESPP”), the Company can grant stock purchase rights to all eligible employees during specific offering periods not to exceed twenty-seven months. Each offering period will begin on the trading day closest to May 16 and November 16 of each year. Shares are purchased through employees’ payroll deductions, up to a maximum of 10% of employees’ compensation for each purchase period, at a purchase price equal to 85% of the lesser of the fair market value of the Company’s common stock at the first trading day of the applicable offering period or the purchase date. Participants may purchase up to $25 worth of common stock or 2 shares of common stock in any one year. The ESPP is considered compensatory and results in compensation expense. As of March 31, 2018, a total of 1,166 shares of common stock were reserved for future issuances under the ESPP. The number of shares of common stock reserved for issuance under the ESPP will increase automatically each calendar year, continuing through and including January 1, 2024. The number of shares added each year will be equal to the lesser of (a) 400, (b) seventy-five one hundredths percent (0.75%) of the number of shares of common stock of the Company issued and outstanding on the immediately preceding December 31, or (c) an amount determined by the Company’s board of directors. The Company’s board of directors determined that, effective January 1, 2018, it would increase the number of common shares in reserve for issuance under the ESPP by 395 shares. The Company issued 53 shares upon the completion of its six-month offering period ending November 15, 2017. The Company recorded compensation expense attributable to the ESPP of $304 and $323 for the three months ended March 31, 2017 and 2018, respectively, and $967 and $971 for the nine months ended March 31, 2017 and 2018, respectively, which is included in the summary of stock-based compensation expense above. The grant date fair value of the ESPP offering periods was estimated using the following weighted average assumptions: Nine Months Ended March 31, 2017 2018 Valuation assumptions: Expected dividend yield % % Expected volatility 38.9 - 53.4 % 28.3 - 39.1 % Expected term (years) 0.5 0.5 Risk ‑ free interest rate 0.28 - 0.61 % 1.02 - 1.35 % (c) 401(k) Plan The Company maintains a 401(k) plan with a matching provision that covers all eligible employees. The Company matches 50% of employees’ contributions up to 8% of their gross pay. Contributions were $1,055 and $1,276 for the three months ended March 31, 2017 and 2018, respectively, and $2,732 and $3,382 for the nine months ended March 31, 2017 and 2018, respectively. |
Net Income Per Share
Net Income Per Share | 9 Months Ended |
Mar. 31, 2018 | |
Net Income Per Share | |
Net Income Per Share | (8) Net Income Per Share Basic net income per common share is computed using the weighted‑average number of common shares outstanding during the period. Diluted net income per share is computed using the weighted‑average number of common shares outstanding during the period and, if dilutive, potential common shares outstanding during the period. The Company’s potential common shares consist of the incremental common shares issuable upon the exercise of stock options, the release of restricted stock units, and the shares purchasable via the employee stock purchase plan as of the balance sheet date. The following table presents the calculation of basic and diluted net income per share: Three Months Ended Nine Months Ended March 31, March 31, 2017 2018 2017 2018 Numerator: Net income $ 14,801 $ 39,177 $ 10,562 $ 40,151 Denominator: Weighted-average shares used in computing net income per share: Basic 51,447 52,615 51,353 52,334 Weighted-average effect of potentially dilutive shares: Employee stock options, restricted stock units and employee stock purchase plan shares 2,555 2,415 2,634 2,383 Diluted 54,002 55,030 53,987 54,717 Net income per share: Basic $ 0.29 $ 0.74 $ 0.21 $ 0.77 Diluted $ 0.27 $ $ 0.20 $ 0.73 The following table summarizes the outstanding employee stock options and restricted stock units as of the balance sheet date that were excluded from the diluted per share calculation for the periods presented because to include them would have been anti-dilutive: Three Months Ended Nine Months Ended March 31, March 31, 2017 2018 2017 2018 Employee stock options 145 — 145 — Restricted stock units 10 28 690 121 Total 155 28 835 121 |
Income Taxes
Income Taxes | 9 Months Ended |
Mar. 31, 2018 | |
Income Taxes | |
Income Taxes | (9) Income Taxes The Company’s quarterly provision for income taxes through December 31, 2017 and fiscal 2017 was based on the discrete effective tax rate method. In the third quarter of fiscal 2018 upon the release of the valuation allowance, the Company utilized the annual effective tax rate method to record the tax expense for pre-tax income through March 31, 2018. The Company’s quarterly provision for income taxes also includes the tax impact of certain unusual or infrequently occurring items, if any, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, and other discrete items in the interim period in which they occur. The Company recorded income tax expense (benefit) of $32 and $(18,497) for the three months ended March 31, 2017 and 2018 respectively, and $164 and $(18,573) for the nine months ended March 31, 2017 and 2018, respectively. The tax benefit of $18,497 recorded during the three months ended March 31, 2018 primarily includes the release of substantially all of the Company’s valuation allowance of $22,585 and the excess tax benefits recorded from employee stock exercises of $10,973 during fiscal 2018 partially offset by the estimated impacts of the Tax Cuts and Jobs Act of 2017 (the “Act”) of $9,817 and the Company’s tax provision on income before income taxes of $5,260. The Company’s effective tax rates for the three and nine months ended March 31, 2017 differed from statutory rates primarily due to the existence of a valuation allowance recorded against the preponderance of the net deferred tax assets. The Company’s effective tax rates for the three and nine months ended March 31, 2018 differed from statutory rates primarily due to the release of substantially all of the Company’s valuation allowance and excess tax benefits from employee stock exercises partially offset by the estimated impacts of the Act . The Company reviews the likelihood that it will realize the benefit of its deferred tax assets and, therefore, the need for a valuation allowance on a quarterly basis. The Company established a valuation allowance in fiscal 2014 on all of its net deferred tax assets except for deferred tax liabilities associated with indefinite-lived intangible assets, given that the Company determined that it was more likely than not that the Company would not recognize the benefits of its net operating loss carryforwards prior to their expiration. The Company has continued to record a valuation allowance through the first six months of fiscal 2018. In the third quarter of fiscal 2018, management concluded that all of the valuation allowance for the Company’s U.S. federal deferred tax assets and substantially all state deferred tax assets was no longer needed. This is primarily due to three years’ cumulative income through the third quarter of fiscal 2018 and the forecast of future taxable income. As of March 31, 2018, based on the evaluation of positive and negative evidence, management believes it is more likely than not that the net deferred tax assets will be realized for all federal and substantially all state purposes. Accordingly, management has recognized a non-recurring tax benefit of $22,585 related to the valuation allowance reversal. As of March 31, 2018, the Company continued to maintain a valuation allowance of $541 for state tax benefits. Such assessment may change in the future as further evidence becomes available. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 was signed into law. Over the long term, the Company generally expects to benefit from the lower statutory rates provided by the Act and is currently assessing all other aspects relevant to the Company. The Company operates solely in the United States; therefore, the international provisions of the Act do not apply. In accordance with ASC 740, during the second quarter the Company modified its current federal statutory rate for the year to account for the rate change. At that time, the Company recorded a $156 income tax benefit attributable to the rate change effect on the deferred tax liability for indefinite-lived intangible assets. In response to the Act, the SEC subsequently issued SAB 118 (later codified into ASU 2018-05) allowing registrants to record provisional amounts to the extent a company’s accounting for the Act is incomplete. Pursuant to disclosure under SAB 118, revaluation of deferred taxes as of December 22, 2017 is incomplete. The Company has recorded provisional estimated tax expense of $9,817 related to the rate change and additional limitations on executive compensation. As the Company released substantially all of its valuation allowance against its deferred taxes, this expense is included in the third quarter income tax (benefit). As of March 31, 2018, the Company is still analyzing the impact of the Act with respect to the appropriate period of reversal of deferred tax assets and liabilities, as well as additional limitations on the deductibility of executive compensation and on certain meals and entertainment expenses. The Company needs additional time to finalize its estimates and expects additional guidance to be issued by the Internal Revenue Service before the assessment of the impact of the Act can be completed. The Company currently expects to complete its accounting for the effects of the Act by the end of December 2018. |
Summary of Significant Accoun16
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Mar. 31, 2018 | |
Summary of Significant Accounting Policies | |
Consolidation and Use of Estimates | (a) Consolidation and Use of Estimates These unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The unaudited consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the allowance for doubtful accounts, internal-use software, valuation and useful lives of long-lived assets, definite-lived intangibles, goodwill, incurred but not reported medical and dental claims, stock-based compensation, valuation of deferred income tax assets and liabilities and the best estimate of selling price for revenue recognition purposes. Future events and their effects cannot be predicted with certainty; accordingly, accounting estimates require the exercise of judgment. Accounting estimates used in the preparation of these consolidated financial statements change as new events occur, as more experience is acquired, as additional information is obtained and as the operating environment changes. |
Interim Unaudited Consolidated Financial Information | (b) Interim Unaudited Consolidated Financial Information The accompanying unaudited consolidated financial statements and notes have been prepared in accordance with GAAP and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, the interim financial information includes all adjustments of a normal recurring nature necessary for a fair presentation of the Company’s financial position, results of operations, changes in stockholders’ equity and cash flows. The results of operations for the three and nine months ended March 31, 2018 are not necessarily indicative of the results for the full year or the results for any future periods. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes for the year ended June 30, 2017 included in the Company’s Annual Report on Form 10-K filed with the SEC on August 11, 2017. |
Funds Held For Clients and Corporate Investments | c) Funds Held For Clients and Corporate Investments Funds held for clients is primarily comprised of cash and cash equivalents invested in demand deposit accounts. Starting in July 2017, the Company also invested a portion of its funds held for clients in marketable securities. Marketable securities classified as available-for-sale are recorded at fair value on the consolidated balance sheets. Unrealized gains and losses, net of applicable income taxes, are reported as other comprehensive income (loss) in the consolidated statements of operations and comprehensive income. Interest on marketable securities included in funds held for clients is reported as interest income on funds held for clients on the consolidated statements of operations and comprehensive income. The Company reviews the composition of its portfolio for any available-for-sale security that has a fair value that falls below its amortized cost. If any security fits this criterion, the Company further evaluates whether other-than-temporary impairment exists by considering whether the Company has the intent and ability to retain the security for a period of time sufficient enough to allow for anticipated fair value recovery. The Company did not record any other-than-temporary impairment charges during the three or nine months ended March 31, 2018. |
Income Taxes | (d) Income Taxes Income taxes are accounted for in accordance with ASC 740, Income Taxes , using the asset and liability method. The Company’s provision for income taxes through December 31, 2017 and fiscal 2017 was based on the discrete effective tax rate method. In the third quarter of fiscal 2018 upon the release of the valuation allowance, the Company utilized the annual effective tax rate method to estimate and record tax expense for pre-tax income. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If the Company determines that it would be able to realize its deferred tax assets in the future in excess of their net-recorded amount, it would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. |
Recently Adopted and Recently Issued Accounting Standards | (e) Recently Adopted Accounting Standards In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation (Topic 718) (“ASU 2016-09”) which modifies accounting for excess tax benefits and tax deficiencies, forfeitures, and employer tax withholding requirements. ASU 2016-09 also clarifies certain classifications on the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, with early adoption permitted. The Company adopted this standard effective July 1, 2017, and it resulted in an increase to the Company’s gross net operating loss of $30,783. As of December 31, 2017, the adoption of this standard did not have a material impact on its consolidated financial statements and disclosures due to the Company’s valuation allowance on deferred tax assets. However, during the third quarter of fiscal 2018, the Company released its valuation allowance and as a result, the Company recorded a significant increase in deferred tax assets due to excess tax benefits from employee stock exercises. Refer to Note 9 for additional information on the release of the valuation allowance and the impact of excess tax benefits from employee stock exercises. The Company will continue to estimate forfeitures at each reporting period, rather than electing an accounting policy change to record the impact of such forfeitures as they occur. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805) (“ASU 2017-01”) which clarifies the definition of a business. ASU 2017-01 provides guidance to assist entities in evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. It is effective, on a prospective basis, for fiscal years beginning after December 15, 2017, with early adoption permitted. The Company adopted this standard effective January 1, 2018. The adoption of ASU 2017-01 did not have a material impact on the Company’s consolidated financial statements. In March 2018, the FASB issued ASU 2018-05, Income Taxes (Topic 740) (“ASU 2018-05”) which incorporates the SEC’s Staff Accounting Bulletin 118 (“SAB 118”) issued on December 22, 2017. SAB 118 provides for a provisional measurement period for entities to finalize their accounting for certain income tax effects related to the Tax Cuts and Jobs Act (the “Act”), not to exceed one year from enactment of the new tax law. Entities are permitted to utilize reasonable estimates until they have finished analyzing the effects of the Act. The Company recognized the income tax effects of the Act in the second and third quarter of fiscal 2018 in accordance with SAB 118. Refer to Note 9 for additional information. (f) Recently Issued Accounting Standards In May 2014, the Financial Accounting Standards Board (FASB) issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). ASU 2014-09 supersedes a majority of existing revenue recognition guidance under US GAAP, and requires companies to recognize revenue when it transfers goods or services to a customer in an amount that reflects the consideration to which a company expects to be entitled. Companies may need to apply more judgment and estimation techniques or methods while recognizing revenue, which could result in additional disclosures to the financial statements. In addition, in March 2016, April 2016, May 2016 and December 2016 the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) (“ASU 2016-08”), ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing (“ASU 2016-10”), ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients (“ASU 2016-12”) and ASU 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers (“ASU 2016-20”), respectively, to amend certain guidance in ASU 2014-09. Topic 606 allows for either a retrospective or cumulative effect transition method. ASU 2014-09 was originally effective for fiscal years beginning after December 15, 2016. In July 2015, the FASB approved a one-year deferral of ASU 2014-09 and all amendments to it, with a new effective date for fiscal years beginning after December 15, 2017 with early adoption permitted as of the original effective date. The Company currently expects to adopt the new standard in its fiscal year beginning July 1, 2018 using the full retrospective method. While the impact the new revenue recognition standard will have on its consolidated financial statements and disclosures has not yet been fully assessed, the Company currently expects that there will be a material impact in the manner in which it treats certain costs of obtaining new contracts (i.e., selling and commission costs). The new standard will require the Company to defer these costs and amortize them versus its current treatment of expensing these costs as incurred. The Company is continuing to evaluate all potential impacts as well as the changes required for systems, processes and internal controls to meet the new standard’s reporting and disclosure requirements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”) which amends various aspects of existing guidance for leases. ASU 2016-02 requires an entity to recognize assets and liabilities arising from a lease with terms greater than twelve months, along with additional qualitative and quantitative disclosures. ASU 2016-02 also requires the use of the modified retrospective method, which will require adjustment to all comparative periods presented. In March 2018, the FASB affirmed its proposed ASU, Leases (Topic 842): Targeted Improvements, which provides an additional transition method allowing an entity to apply the new lease accounting and disclosure requirements only for the year of adoption with the comparative periods continuing to be in accordance with current GAAP. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is currently assessing the potential effects of these changes to its consolidated financial statements as well as evaluating the transition methods and expects to adopt this new standard in its fiscal year beginning July 1, 2019. From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of other recently issued standards that are not yet effective will not have a material impact on the Company’s consolidated financial statements upon adoption. |
Business Combinations (Tables)
Business Combinations (Tables) | 9 Months Ended |
Mar. 31, 2018 | |
Business Combinations | |
Summary of preliminary allocation of the purchase price of business combination | The following table summarizes the preliminary allocation of the purchase price for BeneFLEX: Goodwill $ 3,751 Client relationships 5,386 Non-solicitation agreements 240 Net liabilities assumed (31) Total Purchase Price $ 9,346 |
Balance Sheet Information (Tabl
Balance Sheet Information (Tables) | 9 Months Ended |
Mar. 31, 2018 | |
Balance Sheet Information | |
Schedule of activity in allowance for doubtful accounts | Balance at June 30, 2017 $ 266 Charged to expense 149 Write-offs (134) Balance at March 31, 2018 $ 281 |
Schedule of capitalized internal-use software and accumulated amortization | June 30, March 31, 2017 2018 Capitalized internal-use software $ 49,663 $ 62,629 Accumulated amortization (32,269) (42,627) Capitalized internal-use software, net $ 17,394 $ 20,002 |
Schedule of property and equipment | June 30, March 31, 2017 2018 Office equipment $ 3,591 $ 3,880 Computer equipment 24,411 28,526 Furniture and fixtures 7,547 8,837 Software 4,954 5,221 Leasehold improvements 21,426 32,621 Time clocks rented by clients 4,240 4,551 Total 66,169 83,636 Accumulated depreciation (25,413) (33,256) Property and equipment, net $ 40,756 $ 50,380 |
Schedule of changes in goodwill | Balance at June 30, 2017 $ 6,003 Additions attributable to current period acquisition 3,751 Balance at March 31, 2018 $ 9,754 |
Schedule of intangible assets | June 30, March 31, Useful 2017 2018 Life Client relationships $ 12,580 $ 17,966 9 years Non-solicitation agreements 360 600 2 - 4 years Total 12,940 18,566 Accumulated amortization (4,033) (5,109) Intangible assets, net $ 8,907 $ 13,457 |
Schedule of future amortization expense for acquired intangible assets | Future amortization expense for acquired intangible assets is as follows, as of March 31, 2018: Remainder of fiscal 2018 $ 516 Fiscal 2019 2,056 Fiscal 2020 2,056 Fiscal 2021 2,056 Fiscal 2022 2,041 Thereafter 4,732 Total $ 13,457 |
Schedule of components of accrued expenses | June 30, March 31, 2017 2018 Accrued payroll and personnel costs $ 25,131 $ 25,361 Other 5,170 10,113 Total accrued expenses $ 30,301 $ 35,474 |
Funds Held For Clients And Co19
Funds Held For Clients And Corporate Investments (Tables) | 9 Months Ended |
Mar. 31, 2018 | |
Funds Held For Clients And Corporate Investments [Abstract] | |
Schedule of investments | Investments consist of the following as of March 31, 2018: Gross Gross Amortized unrealized unrealized Type of Issue cost gains losses Fair value Funds held for clients' cash and cash equivalents $ 1,272,771 $ — $ (4) $ 1,272,767 Available-for-sale securities: Corporate bonds 33,958 3 (168) 33,793 Commercial paper 29,165 — (16) 29,149 Asset-backed securities 12,041 — (65) 11,976 Total available-for-sale securities 75,164 3 (249) 74,918 Investments $ 1,347,935 $ 3 $ (253) $ 1,347,685 |
Classification of investments on the consolidated balance sheets | March 31, 2018 Funds held for clients $ 1,347,522 Prepaid expenses and other 163 Total investments $ 1,347,685 |
Schedule of available-for-sale securities that have been in an unrealized loss position for less than 12 months | Available-for-sale securities that have been in an unrealized loss position for a period of less than 12 months as of March 31, 2018 had fair market values as follows: Gross unrealized losses Fair value Corporate bonds $ (168) $ 31,231 Commercial paper (16) 27,291 Asset-backed securities (65) 11,976 Total $ (249) $ 70,498 |
Schedule of expected maturities of available-for-sale securities | Expected maturities of available-for-sale securities at March 31, 2018 are as follows: Amortized cost Fair value One year or less $ 53,150 $ 53,036 One year to two years 20,410 20,275 Two years to three years 1,604 1,607 Total available-for-sale securities $ 75,164 $ 74,918 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Mar. 31, 2018 | |
Fair Value Measurement | |
Schedule of fair value level for funds held for clients cash and cash equivalents and available-for-sale securities measured on a recurring basis | The fair value level for the funds held for clients’ cash and cash equivalents and available-for-sale securities as of March 31, 2018 is as follows: Total Level 1 Level 2 Level 3 Funds held for clients' cash and cash equivalents $ 1,272,767 $ 1,247,604 $ 25,163 $ — Available-for-sale securities: Corporate bonds 33,793 33,793 Commercial paper 29,149 29,149 Asset-backed securities 11,976 11,976 Total available-for-sale securities 74,918 — 74,918 — Investments $ 1,347,685 $ 1,247,604 $ 100,081 $ — |
Benefit Plans (Tables)
Benefit Plans (Tables) | 9 Months Ended |
Mar. 31, 2018 | |
Benefit Plans | |
Summary of shares available for grant under equity incentive plans | Number of Available for grant at July 1, 2017 8,227 January 1, 2018 Evergreen provision increase 2,367 RSUs granted (884) Shares withheld in settlement of taxes and/or exercise price 339 Forfeitures 45 Shares removed (59) Available for grant at March 31, 2018 10,035 |
Schedule of stock-based compensation expense related to stock options, restricted stock units and the Employee Stock Purchase Plan | Three Months Ended March 31, Nine Months Ended March 31, 2017 2018 2017 2018 Cost of revenue – recurring $ 485 $ 728 $ 1,621 $ 2,084 Cost of revenue – non-recurring 363 358 1,031 1,107 Sales and marketing 1,672 1,537 4,880 5,680 Research and development 797 926 2,461 2,742 General and administrative 2,930 3,918 8,702 10,278 Total stock-based compensation expense $ 6,247 $ 7,467 $ 18,695 $ 21,891 |
Schedule of stock option activity | Outstanding Options Weighted Weighted average average remaining Aggregate Number of exercise contractual intrinsic shares price term (years) value Balance at July 1, 2017 2,751 $ 11.54 5.69 $ 92,556 Options forfeited (5) $ 18.41 Options exercised (772) $ 9.28 Balance at March 31, 2018 1,974 $ 12.40 5.26 $ 76,638 Options exercisable at March 31, 2018 1,848 $ 11.23 5.15 $ 73,936 Options vested and expected to vest at March 31, 2018 1,970 $ 12.36 5.25 $ 76,563 |
Schedule of restricted stock unit activity | Units Weighted RSU balance at July 1, 2017 1,455 $ 39.96 RSUs granted 884 $ 45.95 RSUs vested (425) $ 39.31 RSUs forfeited (40) $ 41.73 RSU balance at March 31, 2018 1,874 $ 42.89 RSUs expected to vest at March 31, 2018 1,635 $ 42.69 |
Summary of weighted average assumptions used for estimating grant date fair value of ESPP | Nine Months Ended March 31, 2017 2018 Valuation assumptions: Expected dividend yield % % Expected volatility 38.9 - 53.4 % 28.3 - 39.1 % Expected term (years) 0.5 0.5 Risk ‑ free interest rate 0.28 - 0.61 % 1.02 - 1.35 % |
Net income Per Share (Tables)
Net income Per Share (Tables) | 9 Months Ended |
Mar. 31, 2018 | |
Net Income Per Share | |
Schedule of calculation of basic net income per share | Three Months Ended Nine Months Ended March 31, March 31, 2017 2018 2017 2018 Numerator: Net income $ 14,801 $ 39,177 $ 10,562 $ 40,151 Denominator: Weighted-average shares used in computing net income per share: Basic 51,447 52,615 51,353 52,334 Weighted-average effect of potentially dilutive shares: Employee stock options, restricted stock units and employee stock purchase plan shares 2,555 2,415 2,634 2,383 Diluted 54,002 55,030 53,987 54,717 Net income per share: Basic $ 0.29 $ 0.74 $ 0.21 $ 0.77 Diluted $ 0.27 $ $ 0.20 $ 0.73 |
Summary of anti-dilutive securities | Three Months Ended Nine Months Ended March 31, March 31, 2017 2018 2017 2018 Employee stock options 145 — 145 — Restricted stock units 10 28 690 121 Total 155 28 835 121 |
Summary of Significant Accoun23
Summary of Significant Accounting Policies - Recently Adopted ASUs (Details) $ in Thousands | 9 Months Ended |
Mar. 31, 2018USD ($) | |
ASU 2016-09 | |
Recently adopted accounting standards | |
Increase in gross net operating loss | $ 30,783 |
Business Combinations (Details)
Business Combinations (Details) - USD ($) $ in Thousands | 1 Months Ended | 9 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2018 | Jun. 30, 2017 | |
Business Combinations | |||
Purchase price paid | $ 8,346 | ||
Goodwill | $ 9,754 | 9,754 | $ 6,003 |
Finite-lived intangible assets | 18,566 | 18,566 | 12,940 |
Client relationships | |||
Business Combinations | |||
Finite-lived intangible assets | 17,966 | 17,966 | 12,580 |
Non-solicitation agreements | |||
Business Combinations | |||
Finite-lived intangible assets | 600 | 600 | $ 360 |
BeneFLEX | |||
Business Combinations | |||
Purchase price paid | 8,346 | ||
Purchase price payable | 1,000 | ||
Goodwill | 3,751 | 3,751 | |
Net liabilities assumed | (31) | (31) | |
Total purchase price | $ 9,346 | 9,346 | |
Goodwill amortization period for income tax purposes | 15 years | ||
BeneFLEX | Client relationships | |||
Business Combinations | |||
Finite-lived intangible assets | $ 5,386 | 5,386 | |
BeneFLEX | Non-solicitation agreements | |||
Business Combinations | |||
Finite-lived intangible assets | $ 240 | $ 240 |
Balance Sheet Information - All
Balance Sheet Information - Allowance for Doubtful Accounts, Capitalized Internal-Use Software and Property, Plant and Equipment (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | Jun. 30, 2017 | |
Activity in allowance for doubtful accounts | |||||
Balance at beginning of period | $ 266 | ||||
Charged to expense | 149 | $ 47 | |||
Write-offs | (134) | ||||
Balance at end of period | $ 281 | 281 | |||
Capitalized internal-use software and accumulated amortization | |||||
Capitalized internal-use software | 62,629 | 62,629 | $ 49,663 | ||
Accumulated amortization | (42,627) | (42,627) | (32,269) | ||
Capitalized internal-use software, net | 20,002 | 20,002 | 17,394 | ||
Property and equipment, net | |||||
Property and equipment, gross | 83,636 | 83,636 | 66,169 | ||
Accumulated depreciation | (33,256) | (33,256) | (25,413) | ||
Property and equipment, net | 50,380 | 50,380 | 40,756 | ||
Depreciation expense | 3,189 | $ 2,629 | 9,206 | 7,336 | |
Cost of revenue - recurring | |||||
Capitalized internal-use software and accumulated amortization | |||||
Amortization of capitalized internal-use software | 3,655 | $ 2,573 | 10,358 | $ 6,207 | |
Office equipment | |||||
Property and equipment, net | |||||
Property and equipment, gross | 3,880 | 3,880 | 3,591 | ||
Computer equipment | |||||
Property and equipment, net | |||||
Property and equipment, gross | 28,526 | 28,526 | 24,411 | ||
Furniture and fixtures | |||||
Property and equipment, net | |||||
Property and equipment, gross | 8,837 | 8,837 | 7,547 | ||
Software | |||||
Property and equipment, net | |||||
Property and equipment, gross | 5,221 | 5,221 | 4,954 | ||
Leasehold improvements | |||||
Property and equipment, net | |||||
Property and equipment, gross | 32,621 | 32,621 | 21,426 | ||
Time clocks rented by clients | |||||
Property and equipment, net | |||||
Property and equipment, gross | $ 4,551 | $ 4,551 | $ 4,240 |
Balance Sheet Information - Int
Balance Sheet Information - Intangible Assets and Accrued Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | Jun. 30, 2017 | |
Changes in goodwill | |||||
Balance at beginning of the period | $ 6,003 | ||||
Additions attributable to current period acquisition | 3,751 | ||||
Balance at end of the period | $ 9,754 | 9,754 | |||
Intangible assets | |||||
Intangible assets | 18,566 | 18,566 | $ 12,940 | ||
Accumulated amortization | (5,109) | (5,109) | (4,033) | ||
Intangible assets, net | 13,457 | 13,457 | 8,907 | ||
Amortization expense for acquired intangible assets | 358 | $ 380 | 1,076 | $ 1,142 | |
Future amortization expense for acquired intangible assets | |||||
Remainder of fiscal 2018 | 516 | 516 | |||
2,019 | 2,056 | 2,056 | |||
2,020 | 2,056 | 2,056 | |||
2,021 | 2,056 | 2,056 | |||
2,022 | 2,041 | 2,041 | |||
Thereafter | 4,732 | 4,732 | |||
Intangible assets, net | 13,457 | 13,457 | 8,907 | ||
Components of accrued expenses | |||||
Accrued payroll and personnel costs | 25,361 | 25,361 | 25,131 | ||
Other | 10,113 | 10,113 | 5,170 | ||
Total accrued expenses | 35,474 | 35,474 | 30,301 | ||
Client relationships | |||||
Intangible assets | |||||
Intangible assets | 17,966 | $ 17,966 | 12,580 | ||
Useful life | 9 years | ||||
Non-solicitation agreements | |||||
Intangible assets | |||||
Intangible assets | $ 600 | $ 600 | $ 360 | ||
Minimum | Non-solicitation agreements | |||||
Intangible assets | |||||
Useful life | 2 years | ||||
Maximum | Non-solicitation agreements | |||||
Intangible assets | |||||
Useful life | 4 years |
Funds Held For Clients And Co27
Funds Held For Clients And Corporate Investments - Reconciliation (Details) $ in Thousands | Mar. 31, 2018USD ($) |
Funds Held For Clients And Corporate Investments [Line Items] | |
Amortized cost of funds held for clients' cash and cash equivalents | $ 1,272,771 |
Funds held for clients' cash and cash equivalents, gross unrealized losses | 4 |
Fair value of funds held for clients' cash and cash equivalents | 1,272,767 |
Available-for-sale Debt Securities | |
Amortized cost | 75,164 |
Gross unrealized gains | 3 |
Gross unrealized losses | (249) |
Fair value | 74,918 |
Total investments at amortized cost | 1,347,935 |
Total investments gross unrealized gain | 3 |
Total investments gross unrealized loss | (253) |
Total investments at fair value | 1,347,685 |
Corporate bonds | |
Available-for-sale Debt Securities | |
Amortized cost | 33,958 |
Gross unrealized gains | 3 |
Gross unrealized losses | (168) |
Fair value | 33,793 |
Commercial paper | |
Available-for-sale Debt Securities | |
Amortized cost | 29,165 |
Gross unrealized losses | (16) |
Fair value | 29,149 |
Asset-backed securities | |
Available-for-sale Debt Securities | |
Amortized cost | 12,041 |
Gross unrealized losses | (65) |
Fair value | $ 11,976 |
Funds Held For Clients And Co28
Funds Held For Clients And Corporate Investments - Classification (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2018 | Jun. 30, 2017 | |
Funds Held For Clients And Corporate Investments [Line Items] | |||
Funds held for clients | $ 1,347,522 | $ 1,347,522 | $ 942,459 |
Prepaid expenses and other | 163 | 163 | |
Total investments at fair value | 1,347,685 | 1,347,685 | |
Available-for-sale securities in a continuous unrealized loss position | |||
Fair market value of available-for-sale securities in an unrealized loss position less than 12 months | 70,498 | 70,498 | |
Unrealized loss on available-for-sale securities in a continuous loss position for less than 12 months | 249 | ||
Available-for-sale securities in a continuous loss position for more than 12 months | 0 | 0 | |
Gross realized gains and losses on the sale of available-for-sale securities | 0 | 0 | |
OTTI recognized in AOCI | 0 | 0 | |
Reclassification out of Accumulated Other Comprehensive Loss | |||
Available-for-sale securities in a continuous unrealized loss position | |||
Gross realized gains and losses on the sale of available-for-sale securities | 0 | 0 | |
Corporate bonds | |||
Available-for-sale securities in a continuous unrealized loss position | |||
Fair market value of available-for-sale securities in an unrealized loss position less than 12 months | 31,231 | 31,231 | |
Unrealized loss on available-for-sale securities in a continuous loss position for less than 12 months | 168 | ||
Commercial paper | |||
Available-for-sale securities in a continuous unrealized loss position | |||
Fair market value of available-for-sale securities in an unrealized loss position less than 12 months | 27,291 | 27,291 | |
Unrealized loss on available-for-sale securities in a continuous loss position for less than 12 months | 16 | ||
Asset-backed securities | |||
Available-for-sale securities in a continuous unrealized loss position | |||
Fair market value of available-for-sale securities in an unrealized loss position less than 12 months | $ 11,976 | 11,976 | |
Unrealized loss on available-for-sale securities in a continuous loss position for less than 12 months | $ 65 |
Funds Held For Clients And Co29
Funds Held For Clients And Corporate Investments - Maturities (Details) $ in Thousands | Mar. 31, 2018USD ($) |
Available-for-sale maturities, amortized cost | |
One year or less | $ 53,150 |
One year to two years | 20,410 |
Two years to three years | 1,604 |
Total available-for-sale securities | 75,164 |
Available-for-sale maturities, fair value | |
One year or less | 53,036 |
One year to two years | 20,275 |
Two years to three years | 1,607 |
Total available-for-sale securities | $ 74,918 |
Fair Value Measurement (Details
Fair Value Measurement (Details) $ in Thousands | Mar. 31, 2018USD ($) |
Fair value measurements | |
Funds held for clients' cash and cash equivalents | $ 1,272,767 |
Available-for-sale securities: | |
Available for sale debt securities | 74,918 |
Total investments at fair value | 1,347,685 |
Fair value asset transfers | |
Transfers from level 1 to level 2 | 0 |
Transfers from level 2 to level 1 | 0 |
Fair Value, Inputs, Level 1 | |
Fair value measurements | |
Funds held for clients' cash and cash equivalents | 1,247,604 |
Available-for-sale securities: | |
Total investments at fair value | 1,247,604 |
Fair Value, Inputs, Level 2 | |
Fair value measurements | |
Funds held for clients' cash and cash equivalents | 25,163 |
Available-for-sale securities: | |
Available for sale debt securities | 74,918 |
Total investments at fair value | 100,081 |
Fair Value, Inputs, Level 3 | |
Available-for-sale securities: | |
Available for sale debt securities | 0 |
Corporate bonds | |
Available-for-sale securities: | |
Available for sale debt securities | 33,793 |
Corporate bonds | Fair Value, Inputs, Level 2 | |
Available-for-sale securities: | |
Available for sale debt securities | 33,793 |
Commercial paper | |
Available-for-sale securities: | |
Available for sale debt securities | 29,149 |
Commercial paper | Fair Value, Inputs, Level 2 | |
Available-for-sale securities: | |
Available for sale debt securities | 29,149 |
Asset-backed securities | |
Available-for-sale securities: | |
Available for sale debt securities | 11,976 |
Asset-backed securities | Fair Value, Inputs, Level 2 | |
Available-for-sale securities: | |
Available for sale debt securities | $ 11,976 |
Benefit Plans - General Informa
Benefit Plans - General Information (Details) - shares shares in Thousands | Jan. 01, 2018 | Mar. 31, 2018 |
Equity Incentive Plans | ||
Equity Incentive Plans | ||
Increase in number of common shares available for grant | 2,367 | |
Number of shares of common stock reserved for issuance | 13,883 | |
Number of shares subject to outstanding options or awards | 3,848 | |
2008 Plan | ||
Equity Incentive Plans | ||
Awards issued (in shares) | 0 | |
Awards issuable (in shares) | 0 | |
2014 Plan | ||
Equity Incentive Plans | ||
Potential additional shares available for grant (as a percent) | 4.50% | |
Increase in number of common shares available for grant | 2,367 |
Benefit Plans - Incentive Plans
Benefit Plans - Incentive Plans Activity (Details) - shares shares in Thousands | Jan. 01, 2018 | Mar. 31, 2018 |
Equity Incentive Plans | ||
Shares Available for Grant | ||
Balance at the beginning of the period | 8,227 | |
January 1, 2018 Evergreen provision increase | 2,367 | |
RSUs granted | (884) | |
Shares withheld in settlement of taxes and/or exercise price | 339 | |
Forfeitures | 45 | |
Balance at the end of the period | 10,035 | |
2008 Plan | ||
Shares Available for Grant | ||
Shares removed | (59) | |
2014 Plan | ||
Shares Available for Grant | ||
January 1, 2018 Evergreen provision increase | 2,367 |
Benefit Plans - Compensation Ex
Benefit Plans - Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | |
Benefit Plans | ||||
Total stock-based compensation expense | $ 7,467 | $ 6,247 | $ 21,891 | $ 18,695 |
Stock-based compensation expense capitalized | 550 | 540 | 1,454 | 1,412 |
Cost of revenue - recurring | ||||
Benefit Plans | ||||
Total stock-based compensation expense | 728 | 485 | 2,084 | 1,621 |
Cost of revenue - non-recurring | ||||
Benefit Plans | ||||
Total stock-based compensation expense | 358 | 363 | 1,107 | 1,031 |
Sales and marketing | ||||
Benefit Plans | ||||
Total stock-based compensation expense | 1,537 | 1,672 | 5,680 | 4,880 |
Research and development | ||||
Benefit Plans | ||||
Total stock-based compensation expense | 926 | 797 | 2,742 | 2,461 |
General and administrative | ||||
Benefit Plans | ||||
Total stock-based compensation expense | $ 3,918 | $ 2,930 | $ 10,278 | $ 8,702 |
Benefit Plans - Stock Option Ac
Benefit Plans - Stock Option Activity (Details) - Stock options - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | Jun. 30, 2017 | |
Vesting period | |||||
Expiration period | 10 years | ||||
Options Outstanding, Number of Shares | |||||
Balance at the beginning of the period | 2,751 | ||||
Options granted | 0 | 0 | |||
Options forfeited | (5) | ||||
Options exercised | (772) | ||||
Balance at the end of the period | 1,974 | 1,974 | 2,751 | ||
Options Outstanding, Weighted average exercise price | |||||
Balance at the beginning of the period (in dollars per share) | $ 11.54 | ||||
Options forfeited (in dollars per share) | 18.41 | ||||
Options exercised (in dollars per share) | 9.28 | ||||
Balance at the end of the period (in dollars per share) | $ 12.40 | $ 12.40 | $ 11.54 | ||
Options Additional Disclosures | |||||
Weighted average remaining contractual term | 5 years 3 months 4 days | 5 years 8 months 9 days | |||
Aggregate intrinsic value, at the beginning of the period | $ 92,556 | ||||
Weighted average remaining contractual term of options exercisable at the end of the period (years) | 5 years 1 month 24 days | ||||
Aggregate intrinsic value, at the end of the period | $ 76,638 | $ 76,638 | $ 92,556 | ||
Options exercisable at the end of the period (in shares) | 1,848 | 1,848 | |||
Options exercisable at the end of the period, weighted average exercise price (in dollars per share) | $ 11.23 | $ 11.23 | |||
Options exercisable intrinsic value | $ 73,936 | $ 73,936 | |||
Total intrinsic value of options exercised | $ 3,758 | $ 2,813 | $ 31,013 | $ 8,352 | |
Options vested and expected to vest | |||||
Number of shares | 1,970 | 1,970 | |||
Weighted average exercise price | $ 12.36 | $ 12.36 | |||
Weighted average remaining contractual term | 5 years 3 months | ||||
Aggregate intrinsic value | $ 76,563 | $ 76,563 | |||
Unrecognized Compensation Costs Not yet Recognized | |||||
Total unrecognized compensation cost, net of estimated forfeitures, related to unvested stock options | $ 262 | $ 262 | |||
Weighted average period to recognize unrecognized compensation cost | 10 months 24 days | ||||
Minimum | |||||
Vesting period | |||||
Vesting period | 3 years | ||||
Maximum | |||||
Vesting period | |||||
Vesting period | 4 years |
Benefit Plans - RSU activity (D
Benefit Plans - RSU activity (Details) - Restricted stock units $ / shares in Units, shares in Thousands, $ in Thousands | 9 Months Ended |
Mar. 31, 2018USD ($)$ / sharesshares | |
Unrecognized Compensation Costs Not yet Recognized | |
Total unrecognized compensation cost, net of estimated forfeitures | $ | $ 34,872 |
Weighted average period to recognize unrecognized compensation cost | 1 year 10 months 10 days |
RSUs Outstanding Rollforward, Units | |
RSU Balance at the beginning of the period | shares | 1,455 |
RSUs granted | shares | 884 |
RSUs vested | shares | (425) |
RSUs forfeited | shares | (40) |
RSU Balance at the end of the period | shares | 1,874 |
RSUs expected to vest at the end of the period | shares | 1,635 |
RSUs Outstanding, Weighted average grant date fair value | |
RSU Balance at the beginning of the period | $ / shares | $ 39.96 |
RSUs granted | $ / shares | 45.95 |
RSUs vested | $ / shares | 39.31 |
RSUs cancelled/forfeited | $ / shares | 41.73 |
RSU Balance at the end of the period | $ / shares | 42.89 |
RSUs expected to vest at the end of the period | $ / shares | $ 42.69 |
Maximum | |
Vesting period | |
Vesting period | 4 years |
Benefit Plans - ESPP Informatio
Benefit Plans - ESPP Information (Details) - USD ($) shares in Thousands, $ in Thousands | Jan. 01, 2018 | Nov. 15, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2018 | Mar. 31, 2017 |
Equity Incentive Plans | ||||||
Compensation expense | $ 7,467 | $ 6,247 | $ 21,891 | $ 18,695 | ||
Employee stock purchase plan shares | ||||||
Equity Incentive Plans | ||||||
Percentage of employee compensation, maximum | 10.00% | 10.00% | ||||
Percentage of fair market value as a purchase price | 85.00% | |||||
Maximum value of purchase per employee | $ 25 | |||||
Number of shares per employee, maximum | 2 | |||||
Period during which shares can be purchased | 1 year | |||||
Number of shares of common stock reserved for issuance | 1,166 | 1,166 | ||||
Actual increase in number of shares reserved for issuance | 395 | |||||
Potential number of additional shares reserved for issuance each year | 400 | |||||
Potential percentage of additional number of shares reserved for issuance each year | 0.75% | |||||
Number of shares issued | 53 | |||||
Compensation expense | $ 323 | $ 304 | $ 971 | $ 967 | ||
Valuation assumptions: | ||||||
Expected dividend yield | 0.00% | 0.00% | ||||
Expected term (years) | 6 months | 6 months | ||||
Employee stock purchase plan shares | Minimum | ||||||
Valuation assumptions: | ||||||
Expected volatility | 28.30% | 38.90% | ||||
Risk-free interest rate | 1.02% | 0.28% | ||||
Employee stock purchase plan shares | Maximum | ||||||
Equity Incentive Plans | ||||||
Offering period | 27 months | |||||
Valuation assumptions: | ||||||
Expected volatility | 39.10% | 53.40% | ||||
Risk-free interest rate | 1.35% | 0.61% |
Benefit Plans - 401(k) Plan (De
Benefit Plans - 401(k) Plan (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | |
Benefit Plans | ||||
401(k) Plan Matching contributions by the Company as percentage of employees' contributions | 50.00% | |||
401(k) Plan Maximum contributions by the Company as percentage of employees' gross pay | 8.00% | |||
401(k) Plan contributions | $ 1,276 | $ 1,055 | $ 3,382 | $ 2,732 |
Net Income Per Share (Details)
Net Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | |
Anti-dilutive securities excluded from diluted per share calculation | ||||
Anti-dilutive securities excluded | 28 | 155 | 121 | 835 |
Numerator: | ||||
Net income | $ 39,177 | $ 14,801 | $ 40,151 | $ 10,562 |
Weighted-average shares used in computing net income per share: | ||||
Basic (in shares) | 52,615 | 51,447 | 52,334 | 51,353 |
Weighted-average effect of potentially dilutive shares: | ||||
Employee stock options, restricted stock units and employee stock purchase plan shares | 2,415 | 2,555 | 2,383 | 2,634 |
Diluted (in shares) | 55,030 | 54,002 | 54,717 | 53,987 |
Net income per share: | ||||
Basic (in dollars per share) | $ 0.74 | $ 0.29 | $ 0.77 | $ 0.21 |
Diluted (in dollars per share) | $ 0.71 | $ 0.27 | $ 0.73 | $ 0.20 |
Employee stock options | ||||
Anti-dilutive securities excluded from diluted per share calculation | ||||
Anti-dilutive securities excluded | 145 | 145 | ||
Restricted stock units | ||||
Anti-dilutive securities excluded from diluted per share calculation | ||||
Anti-dilutive securities excluded | 28 | 10 | 121 | 690 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | |
Income Taxes | |||||
Income tax expense (benefit) | $ (18,497) | $ 32 | $ (18,573) | $ 164 | |
Release of valuation allowance | 22,585 | ||||
Excess tax benefits from employee stock exercises | 10,973 | ||||
Income tax provision before valuation allowance adjustment and other adjustments | 5,260 | ||||
Valuation allowance | 541 | $ 541 | |||
Effect of Tax Cuts and Jobs Act of 2017, Accounting Incomplete, Provisional | |||||
Tax benefit attributable to the rate change effect on the deferred tax liability for indefinite-lived intangible assets | $ 156 | ||||
Provisional amount of income tax expense attributable to a revaluation of deferred tax assets from change in tax rate | $ 9,817 |