Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Sep. 30, 2018 | Oct. 26, 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 | Sep. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --06-30 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 52,798,602 | |
Document Fiscal Year Focus | 2,019 | |
Document Fiscal Period Focus | Q1 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2018 | Jun. 30, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 63,662 | $ 137,193 |
Corporate investments | 21,225 | 732 |
Accounts receivable, net | 2,992 | 3,453 |
Deferred contract costs | 16,215 | |
Prepaid expenses and other | 14,220 | 11,248 |
Total current assets before funds held for clients | 118,314 | 152,626 |
Funds held for clients | 1,168,156 | 1,225,614 |
Total current assets | 1,286,470 | 1,378,240 |
Capitalized internal-use software, net | 22,034 | 21,094 |
Property and equipment, net | 61,823 | 62,029 |
Intangible assets, net | 12,439 | 13,002 |
Goodwill | 9,590 | 9,590 |
Long-term deferred contract costs | 59,061 | |
Long-term prepaid expenses and other | 3,132 | 1,504 |
Deferred income tax assets, net | 9,554 | 22,140 |
Total assets | 1,464,103 | 1,507,599 |
Current liabilities: | ||
Accounts payable | 3,559 | 2,990 |
Accrued expenses | 35,678 | 42,241 |
Total current liabilities before client fund obligations | 39,237 | 45,231 |
Client fund obligations | 1,168,156 | 1,225,614 |
Total current liabilities | 1,207,393 | 1,270,845 |
Deferred rent | 22,660 | 22,812 |
Other long-term liabilities | 1,424 | 1,118 |
Total liabilities | 1,231,477 | 1,294,775 |
Stockholders' equity: | ||
Preferred stock, $0.001 par value, 5,000 authorized, no shares issued and outstanding at June 30, 2018 and September 30, 2018 | ||
Common stock, $0.001 par value, 155,000 shares authorized at June 30, 2018 and September 30, 2018; 52,758 shares issued and outstanding at June 30, 2018 and 52,796 shares issued and outstanding at September 30, 2018 | 53 | 53 |
Additional paid-in capital | 176,851 | 219,588 |
Retained earnings (accumulated deficit) | 55,846 | (6,678) |
Accumulated other comprehensive loss | (124) | (139) |
Total stockholders' equity | 232,626 | 212,824 |
Total liabilities and stockholders' equity | $ 1,464,103 | $ 1,507,599 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Thousands | Sep. 30, 2018 | Jun. 30, 2018 |
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 | 52,796 | 52,758 |
Common Stock, shares outstanding | 52,796 | 52,758 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Revenues: | ||
Revenue | $ 97,002 | |
Interest income on funds held for clients | 3,502 | $ 1,617 |
Total recurring revenues | 99,263 | 78,911 |
Total revenues | 100,504 | 81,500 |
Cost of revenues: | ||
Total cost of revenues | 35,942 | 34,959 |
Gross profit | 64,562 | 46,541 |
Operating expenses: | ||
Sales and marketing | 26,418 | 21,180 |
Research and development | 11,400 | 8,895 |
General and administrative | 22,968 | 15,951 |
Total operating expenses | 60,786 | 46,026 |
Operating income | 3,776 | 515 |
Other income | 269 | 109 |
Income before income taxes | 4,045 | 624 |
Income tax expense (benefit) | (5,807) | 81 |
Net income | 9,852 | 543 |
Other comprehensive income (loss) | ||
Unrealized gains (losses) on securities, net of tax | 15 | (5) |
Total other comprehensive income (loss) | 15 | (5) |
Comprehensive income | $ 9,867 | $ 538 |
Net income per share: | ||
Basic (in dollars per share) | $ 0.19 | $ 0.01 |
Diluted (in dollars per share) | $ 0.18 | $ 0.01 |
Weighted-average shares used in computing net income per share: | ||
Basic (in shares) | 52,865 | 51,893 |
Diluted (in shares) | 55,487 | 54,610 |
Recurring fees | ||
Revenues: | ||
Revenue | $ 95,761 | $ 77,294 |
Cost of revenues: | ||
Total cost of revenues | 29,231 | 24,091 |
Implementation services and other | ||
Revenues: | ||
Revenue | 1,241 | 2,589 |
Cost of revenues: | ||
Total cost of revenues | $ 6,711 | $ 10,868 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands | Common Stock | Additional Paid-in Capital | Retained Earnings (Accumulated Deficit) | Accumulated Other Comprehensive Loss | Total |
Increase (Decrease) in Stockholders' Equity | |||||
Cumulative effect of change in accounting policy (adoption of Topic 606) | Topic 606 | $ 52,672 | $ 52,672 | |||
Balance at Jun. 30, 2018 | $ 53 | $ 219,588 | (6,678) | $ (139) | $ 212,824 |
Balance (in shares) at Jun. 30, 2018 | 52,758 | 52,758 | |||
Increase (Decrease) in Stockholders' Equity | |||||
Stock-based compensation | 10,050 | $ 10,050 | |||
Stock options exercised | 2,241 | 2,241 | |||
Stock options exercised (in shares) | 182 | ||||
Issuance of common stock upon vesting of restricted stock units (in shares) | 579 | ||||
Net settlement for taxes and/or exercise price related to equity awards | (20,037) | (20,037) | |||
Net settlement for taxes and/or exercise price related to equity awards (in shares) | (281) | ||||
Repurchases of common shares | (34,991) | (34,991) | |||
Repurchases of common shares (in shares) | (442) | ||||
Unrealized gains (losses) on securities, net of tax | 15 | 15 | |||
Net income | 9,852 | 9,852 | |||
Balance at Sep. 30, 2018 | $ 53 | $ 176,851 | $ 55,846 | $ (124) | $ 232,626 |
Balance (in shares) at Sep. 30, 2018 | 52,796 | 52,796 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash flows from operating activities: | ||
Net income | $ 9,852 | $ 543 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Stock-based compensation expense | 9,425 | 6,606 |
Depreciation and amortization expense | 8,232 | 6,673 |
Deferred income tax expense (benefit) | (5,809) | 37 |
Provision for doubtful accounts | 30 | 4 |
Net accretion of discounts and amortization of premiums on available-for-sale securities | (407) | (108) |
Loss on disposal of equipment | 241 | 31 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 431 | (529) |
Deferred contract costs | (7,169) | |
Prepaid expenses and other | (853) | (305) |
Accounts payable | (415) | (101) |
Accrued expenses | (6,214) | (6,304) |
Tenant improvement allowance | 1,656 | |
Net cash provided by operating activities | 7,344 | 8,203 |
Cash flows from investing activities: | ||
Purchases of available-for-sale securities | (75,804) | (58,844) |
Proceeds from sales and maturities of available-for-sale securities | 56,446 | 421 |
Net change in funds held for clients' cash and cash equivalents | 55,844 | 59,001 |
Capitalized internal-use software costs | (5,001) | (3,751) |
Purchases of property and equipment | (2,428) | (2,693) |
Lease allowances used for tenant improvements | (1,466) | |
Net cash provided by (used in) investing activities | 29,057 | (7,332) |
Cash flows from financing activities: | ||
Net change in client fund obligations | (57,458) | (470) |
Repurchases of common shares | (34,679) | |
Proceeds from exercise of stock options | 85 | |
Taxes paid related to net share settlement of equity awards | (17,880) | (6,470) |
Net cash used in financing activities | (109,932) | (6,940) |
Net Change in Cash and Cash Equivalents | (73,531) | (6,069) |
Cash and Cash Equivalents - Beginning of Period | 137,193 | 103,468 |
Cash and Cash Equivalents - End of Period | 63,662 | 97,399 |
Supplemental Disclosure of Non-Cash Investing and Financing Activities | ||
Purchase of property and equipment and internal-use software, accrued but not paid | 1,064 | 4,317 |
Repurchases of common shares, accrued but not paid | 313 | |
Supplemental Disclosure of Cash Flow Information | ||
Cash paid for income taxes, net of refunds | $ 351 | $ 53 |
Organization and Description of
Organization and Description of Business | 3 Months Ended |
Sep. 30, 2018 | |
Organization and Description of Business | |
Organization and Description of Business | (1) Organization and Description of Business Paylocity Holding Corporation (the “Company”) 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 | 3 Months Ended |
Sep. 30, 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. 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. The Company began investing corporate funds in available-for-sale securities during the first quarter of fiscal 2019 and as a result, reclassified $732 as of June 30, 2018 from prepaid expenses and other on the unaudited consolidated balance sheets to corporate investments for comparability purposes in order to conform to the current year’s presentation. (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 months ended September 30, 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, 2018 included in the Company’s Annual Report on Form 10-K filed with the SEC on August 10, 2018. (c) Revenue Recognition The Company adopted ASU 2014-09, Revenue from Contracts with Customers (“Topic 606”) effective as of July 1, 2018. Topic 606 requires revenue to be recognized when an entity transfers control of goods or services to a customer in an amount that reflects the consideration to which a company expects to be entitled to for those goods or services. To achieve this core principle, the Company recognizes revenue from contracts with customers based on the following five steps: 1) Identify the contract with a customer; 2) Identify the performance obligations in the contract; 3) Determine the transaction price; 4) Allocate the transaction price to performance obligations in the contract; and 5) Recognize revenue when or as the Company satisfies a performance obligation. The Company derives its revenue from contracts predominantly from recurring and non-recurring service fees. While the majority of its agreements are generally cancellable by the client on 60 days’ notice or less, the Company began entering into term arrangements in fiscal 2018, which are generally two years long. Recurring fees are derived from payroll, timekeeping, and HR-related cloud-based computing services as follows: · Payroll processing and related services, including payroll reporting and tax filing services are delivered on a weekly, biweekly, semi-monthly, or monthly basis depending upon the payroll frequency of the client and on an annual basis if a client selects W-2 preparation and processing services, · Time and attendance reporting services, including time clock rentals, are delivered on a monthly basis, and · Cloud-based HR software solutions, including employee administration and benefits enrollment and administration, are delivered on a monthly basis. The majority of the Company’s recurring fees are satisfied over time as services are provided. The performance obligations related to payroll services are satisfied upon the processing of the client’s payroll with the fee charged and collected based on a per employee per payroll frequency fee. The performance obligations related to time and attendance services and HR related services are satisfied over time each month with the fee charged and collected based on a per employee per month fee. For subscription based fees which can include payroll, time and attendance and HR related services, the Company recognizes the applicable recurring fees over time each month with the fee charged and collected based on a per employee per month fee. The Company has certain optional performance obligations that are satisfied at a point in time including the sales of time clocks and W-2 services. Non-recurring service fees consist mainly of nonrefundable implementation fees, which involve setting the client up in, and loading data into, the Company’s cloud-based applications. These implementation activities are considered set-up activities. The Company has determined that the nonrefundable upfront fees provide certain clients with a material right to renew the contract. Implementation fees are deferred and amortized generally over a period up to 24 months. Sales taxes collected from clients and remitted to governmental authorities where applicable are accounted for on a net basis and therefore are excluded from revenues in the statements of operations and comprehensive income. Interest income collected on funds held for clients is recognized in recurring revenues when earned as the collection, holding and remittance of these funds are components of providing these services. The following table, consistent with the presentation of its unaudited consolidated statements of operations and comprehensive income, disaggregates revenue by recurring fees and implementation services and other, which it believes represents the major categories of revenue: Three Months Ended September 30, 2018 Recurring fees $ 95,761 Implementation services and other 1,241 Total revenues from contracts $ 97,002 Deferred revenue The timing of revenue recognition for recurring revenue is consistent with the timing of invoicing as they occur simultaneously upon the client payroll-processing period or by month. As such, the Company does not recognize contract assets or liabilities related to recurring revenue. The nonrefundable upfront fees related to implementation services are invoiced with the client’s first payroll period. The Company defers these nonrefundable upfront fees generally over a period up to 24 months based on the type of contract. The following table summarizes the changes in deferred revenue (i.e. contract liability) related to these nonrefundable upfront fees as follows: Three Months Ended September 30, 2018 Balance at July 1, 2018 $ — Deferral of revenue 2,518 Revenue recognized (499) Balance at September 30, 2018 $ 2,019 Deferred revenue related to these nonrefundable upfront fees are recorded within accrued expenses and other long-term liabilities on the unaudited consolidated balance sheets. The Company expects to recognize these deferred revenue balances of $1,382 in fiscal 2019, $504 in fiscal 2020, and $133 thereafter. Deferred contract costs The Company defers certain selling and commission costs that meet the capitalization criteria under ASC 340-40, which prior to the adoption of Topic 606 were previously expensed as incurred. The Company also capitalizes certain costs to fulfill a contract related to its proprietary products if they are identifiable, generate or enhance resources used to satisfy future performance obligations and are expected to be recovered under ASC 340-40. As discussed in Note 2(e), the Company determined that implementation services related to its proprietary products are not separate performance obligations for contracts entered into after July 1, 2018. Implementation fees are treated as nonrefundable upfront fees and the related implementation costs are required to be capitalized and amortized over the expected period of benefit, which is the period in which the Company expects to recover the costs and enhance its ability to satisfy future performance obligations. The Company utilizes the portfolio approach to account for both the cost of obtaining a contract and the cost of fulfilling a contract. These capitalized costs are amortized over the expected period of benefit, which has been determined to be over 7 years based on the Company’s average client life and other qualitative factors, including rate of technological changes. The Company does not incur any additional costs to obtain or fulfill contracts upon renewal. The Company recognizes additional selling and commission costs and fulfillment costs when an existing client purchases additional services. These additional costs only relate to the additional services purchased and do not relate to the renewal of previous services. The following table presents the deferred contract costs balances and the related amortization expense for these deferred contract costs: Beginning Ending Balance Capitalized Balance July 1, 2018 Costs Amortization September 30, 2018 Costs to obtain a new contract $ 68,107 $ 5,711 $ (3,885) $ 69,933 Costs to fulfill a contract — 5,474 (131) 5,343 Total $ 68,107 $ 11,185 $ (4,016) $ 75,276 Deferred contract costs are recorded within deferred contract costs and long-term deferred contract costs on the unaudited consolidated balance sheets. Amortization of deferred contracts costs is recorded in implementation services and other cost of revenue, sales and marketing, and general and administrative in the unaudited consolidated statements of operations and comprehensive income. Remaining Performance Obligations The Company has applied the practical expedients as allowed under Topic 606 and elects not to disclose the value of unsatisfied performance obligations for contracts that have an original expected duration of one year or less and contracts for which the variable consideration is allocated entirely to wholly unsatisfied performance obligations. The Company’s remaining performance obligations related to minimum monthly fees on its term based contracts was approximately $29,000 as of September 30, 2018, which will be generally recognized over the next 24 months. (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 is based on the annual effective rate method. 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 May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). Topic 606 supersedes a majority of existing revenue recognition guidance under 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. The standard also provides guidance on the recognition of costs related to obtaining and fulfilling a contract under Subtopic 340-40, Other Assets and Deferred Costs – Contracts with Customers. The Company adopted the new standard, including subsequent amendments and Subtopic 340-40, effective as of July 1, 2018 using the modified retrospective method of transition, which limited the application of the new standard only to contracts that were not completed as of the effective date. The adoption of Topic 606 did not have a material impact in the timing or amount of revenue recognized. However, it did have a material impact on its unaudited consolidated balance sheet due to the deferral of costs of obtaining and fulfilling a contract as detailed below. The Company has updated its control framework for new internal controls and has updated existing controls relating to the new standard. Under the legacy revenue standard through fiscal 2018, the Company accounted for implementation and recurring services each as a separate unit of account. The Company was able to establish standalone value for implementation services as supported by the activity of third-party resellers and other vendors that performed certain implementation services. The Company has observed that third party implementation activity has continued to decrease over time and at the same time, the Company has invested in proprietary applications and processes that impact implementation activities. The Company determined that from July 1, 2018 forward it no longer had a sufficient basis to establish standalone value of implementations for its proprietary products due to the culmination of the changes to the Company’s applications and processes that eliminated the ability of third parties to perform implementation services. Similarly, the Company determined that these implementation services are not a separate performance obligation under Topic 606 for contracts entered into after July 1, 2018 and the associated implementation fees are treated as nonrefundable upfront fees which are deferred and amortized over a period of time instead of recognized upon completion. The Company recognized $2,191, net of deferred taxes, of contract assets for implementation fees related to open contracts as of July 1, 2018 which began when the Company was still able to establish stand-alone value for implementation activities. This adjustment was recorded through retained earnings (accumulated deficit) in the statement of changes in stockholder’s equity upon adoption on July 1, 2018. The Company also finalized the treatment of costs of obtaining and fulfilling a new contract under the new standard. The Company is now required to defer these costs and amortize them over the expected period of benefit, which it has determined to be 7 years. The Company recognized the cumulative effect related to the deferral of the costs of obtaining new contracts of $50,481, net of deferred taxes, which was recorded through retained earnings (accumulated deficit) in the statement of changes in stockholder’s equity upon adoption on July 1, 2018. The cumulative effect of the changes made to the July 1, 2018 balance sheet due to the adoption of Topic 606 were as follows: As Reported Adjustments Balances at June 30, 2018 due to Topic 606 July 1, 2018 Balance Sheet Assets Deferred contract costs $ — $ 14,783 $ 14,783 Prepaid expenses and other 11,248 1,730 12,978 Long-term deferred contract costs — 53,324 53,324 Long-term prepaid expenses and other 1,504 1,226 2,730 Deferred income tax assets, net 22,140 (18,391) 3,749 Stockholders' Equity Retained earnings (accumulated deficit) (6,678) 52,672 45,994 The following table summarizes the impact from the adoption of Topic 606 on the Company’s unaudited consolidated statement of operations and comprehensive income: Three Months Ended September 30, 2018 As Reported Balances under Impact from (Topic 606) ASC 605 Adoption Statement of Operations Revenues Recurring fees $ 95,761 $ 96,197 $ (436) Implementation services and other 1,241 800 441 Cost of Revenues Implementation services and other 6,711 11,956 (5,245) Operating expenses Sales and marketing 26,418 28,209 (1,791) General and administrative 22,968 23,101 (133) Income tax expense (benefit) (5,807) (7,664) 1,857 Net income 9,852 4,535 5,317 The following table summarizes the impact from the adoption of Topic 606 on the Company’s unaudited consolidated balance sheet: Three Months Ended September 30, 2018 As Reported Balances under Impact from (Topic 606) ASC 605 Adoption Balance Sheet Assets Deferred contract costs $ 16,215 $ — $ 16,215 Prepaid expenses and other 14,220 12,506 1,714 Long-term deferred contract costs 59,061 — 59,061 Long-term prepaid expenses and other 3,132 2,326 806 Deferred income tax assets, net 9,554 29,802 (20,248) Liabilities Accrued expenses 35,678 34,479 1,199 Other long-term liabilities 1,424 3,064 (1,640) Stockholders' Equity Retained earnings (accumulated deficit) 55,846 (2,143) 57,989 The following table summarizes the impact from the adoption of Topic 606 on the Company’s unaudited consolidated statement of cash flows: Three Months Ended September 30, 2018 As Reported Balances under Impact from (Topic 606) ASC 605 Adoption Statement of Cash Flows Net income $ 9,852 $ 4,535 $ 5,317 Adjustments to reconcile net income to net cash provided by operating activities: Deferred income tax expense (benefit) (5,809) (7,666) 1,857 Changes in operating assets and liabilities: Deferred contract costs (7,169) — (7,169) Prepaid expenses and other (853) (1,289) 436 Accrued expenses (6,214) (5,773) (441) Net cash provided by operating activities 7,344 7,344 — 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 provisional income tax effects of the Act during fiscal 2018 in accordance with SAB 118, and expects to complete its accounting under the Act by the end of December 2018. Refer to Note 8 for additional information. (f) Recently Issued Accounting Standards 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 guidance by issuing ASU 2018-01, 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. In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases, and ASU 2018-11, Leases (Topic 842): Targeted Improvements to amend and clarify the original guidance established in the new lease standard. ASU 2016-02, including all of its amendments, is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. While the Company is still assessing the impact of the new standard, it expects the adoption of this standard will have a material effect on its consolidated balance sheets. The Company is evaluating the transition methods and will adopt this new standard in its fiscal year beginning July 1, 2019. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which amends the requirements for fair value measurement disclosures. ASU 2018-13 removes, modifies or adds certain disclosure requirements under GAAP. This standard is effective for fiscal years beginning after December 15, 2019, with early adoption permitted. Any new disclosure requirements must be applied on a prospective basis in the interim and annual periods of initial adoption; all removed or modified requirements must be applied retrospectively to all periods presented. The Company is assessing the impact of ASU 2018-13 including the timing and method of adoption. 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. |
Balance Sheet Information
Balance Sheet Information | 3 Months Ended |
Sep. 30, 2018 | |
Balance Sheet Information | |
Balance Sheet Information | (3) 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, 2018 $ 375 Charged to expense 30 Write-offs (29) Balance at September 30, 2018 $ 376 Capitalized internal-use software and accumulated amortization were as follows: June 30, September 30, 2018 2018 Capitalized internal-use software $ 67,678 $ 72,830 Accumulated amortization (46,584) (50,796) Capitalized internal-use software, net $ 21,094 $ 22,034 Amortization of capitalized internal-use software costs is included in Cost of Revenues-Recurring Revenues and amounted to $3,389 and $4,212 for the three months ended September 30, 2017 and 2018, respectively. Property and equipment, net consist of the following: June 30, September 30, 2018 2018 Office equipment $ 3,743 $ 3,965 Computer equipment 29,768 31,239 Furniture and fixtures 10,382 10,274 Software 5,965 6,181 Leasehold improvements 36,366 36,910 Time clocks rented by clients 4,534 4,508 Total 90,758 93,077 Accumulated depreciation (28,729) (31,254) Property and equipment, net $ 62,029 $ 61,823 Depreciation expense amounted to $2,925 and $3,457 for the three months ended September 30, 2017 and 2018, respectively. The Company’s amortizable intangible assets and estimated useful lives are as follows: June 30, September 30, Useful 2018 2018 Life Client relationships $ 18,130 $ 18,130 7 - 9 years Non-solicitation agreements 600 600 2 - 4 years Total 18,730 18,730 Accumulated amortization (5,728) (6,291) Intangible assets, net $ 13,002 $ 12,439 Amortization expense for acquired intangible assets was $359 and $563 for the three months ended September 30, 2017 and 2018, respectively. Future amortization expense for acquired intangible assets is as follows, as of September 30, 2018: Remainder of fiscal 2019 $ 1,688 Fiscal 2020 2,251 Fiscal 2021 2,251 Fiscal 2022 2,232 Fiscal 2023 2,118 Thereafter 1,899 Total $ 12,439 The components of accrued expenses were as follows: June 30, September 30, 2018 2018 Accrued payroll and personnel costs $ 31,206 $ 21,883 Lease exit obligations 2,143 1,808 Other 8,892 11,987 Total accrued expenses $ 42,241 $ 35,678 In June 2018, the Company ceased using approximately 110 rentable square feet of its former headquarters in Arlington Heights, Illinois in conjunction with relocating to its new Schaumburg, Illinois headquarters. The following table is a summary of the changes in the remaining lease exit obligations related to the Company’s former headquarters, which is recorded in accrued expenses and other long-term liabilities on the unaudited consolidated balance sheets: Balance at June 30, 2018 $ 3,261 Payments (604) Adjustments 38 Balance at September 30, 2018 $ 2,695 |
Corporate Investments and Funds
Corporate Investments and Funds Held for Clients | 3 Months Ended |
Sep. 30, 2018 | |
Funds Held For Clients And Corporate Investments [Abstract] | |
Corporate Investments and Funds Held for Clients | (4) Corporate Investments and Funds Held for Clients Corporate investments and funds held for clients consist of the following: June 30, 2018 Gross Gross Amortized unrealized unrealized Type of Issue cost gains losses Fair value Cash and cash equivalents $ 137,193 $ — $ — $ 137,193 Funds held for clients' cash and cash equivalents 1,102,541 — (3) 1,102,538 Available-for-sale securities: Commercial paper 50,703 3 (4) 50,702 Corporate bonds 37,508 8 (134) 37,382 Asset-backed securities 25,901 1 (55) 25,847 U.S. treasury securities 9,879 — (2) 9,877 Total available-for-sale securities (1) 123,991 12 (195) 123,808 Total investments $ 1,363,725 $ 12 $ (198) $ 1,363,539 (1) Included within the fair value of total available-for-sale securities above is $732 of corporate investments and $123,076 of funds held for clients September 30, 2018 Gross Gross Amortized unrealized unrealized Type of Issue cost gains losses Fair value Cash and cash equivalents $ 63,663 $ — $ (1) $ 63,662 Funds held for clients' cash and cash equivalents 1,046,696 — (5) 1,046,691 Available-for-sale securities: Commercial paper 56,651 1 (18) 56,634 Corporate bonds 32,268 11 (91) 32,188 Asset-backed securities 38,711 4 (44) 38,671 U.S. treasury securities 16,126 — (24) 16,102 Total available-for-sale securities (2) 143,756 16 (177) 143,595 Total investments $ 1,254,115 $ 16 $ (183) $ 1,253,948 (2) Included within the fair value of total available-for-sale securities above is $22,130 of corporate investments and $121,465 of funds held for clients The Company began investing corporate funds in available-for-sale securities during the first quarter of fiscal 2019 and as a result, reclassified $732 as of June 30, 2018 from prepaid expenses and other on the unaudited consolidated balance sheets to corporate investments for comparability purposes in order to conform to the current year’s presentation. Cash and cash equivalents and funds held for clients’ cash and cash equivalents include demand deposit accounts, money market funds and commercial paper as of June 30, 2018 and September 30, 2018. Classification of investments on the unaudited consolidated balance sheets is as follows: June 30, September 30, 2018 2018 Cash and cash equivalents $ 137,193 $ 63,662 Corporate investments 732 21,225 Funds held for clients 1,225,614 1,168,156 Long-term prepaid expenses and other — 905 Total investments $ 1,363,539 $ 1,253,948 Available-for-sale securities that have been in an unrealized loss position for a period of less and greater than 12 months are as follows: June 30, 2018 Securities in an Securities in an unrealized loss unrealized loss position for less position for greater than 12 months than 12 months Total Gross Gross Gross unrealized unrealized unrealized losses Fair value losses Fair value losses Fair value Commercial paper $ (4) $ 23,657 $ — $ — $ (4) $ 23,657 Corporate bonds (134) 29,122 — — (134) 29,122 Asset-backed securities (55) 17,960 — — (55) 17,960 U.S. treasury securities (2) 4,933 — — (2) 4,933 Total available-for-sale securities $ (195) $ 75,672 $ — $ — $ (195) $ 75,672 September 30, 2018 Securities in an Securities in an unrealized loss unrealized loss position for less position for greater than 12 months than 12 months Total Gross Gross Gross unrealized unrealized unrealized losses Fair value losses Fair value losses Fair value Commercial paper $ (18) $ 46,006 $ — $ — $ (18) $ 46,006 Corporate bonds (70) 21,357 (21) 4,814 (91) 26,171 Asset-backed securities (40) 28,332 (4) 1,064 (44) 29,396 U.S. treasury securities (24) 16,102 — — (24) 16,102 Total available-for-sale securities $ (152) $ 111,797 $ (25) $ 5,878 $ (177) $ 117,675 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 months ended September 30, 2017 or 2018, nor does it believe that OTTI exists in its portfolio as of September 30, 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 September 30, 2018. 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 months ended September 30, 2017 or 2018. Gross realized gains and losses on the sale of available-for-sale securities were immaterial for both the three months ended September 30, 2017 and 2018. Expected maturities of available-for-sale securities at September 30, 2018 are as follows: Amortized cost Fair value One year or less $ 126,192 $ 126,062 One year to two years 16,064 16,028 Two years to three years 1,500 1,505 Total available-for-sale securities $ 143,756 $ 143,595 |
Fair Value Measurement
Fair Value Measurement | 3 Months Ended |
Sep. 30, 2018 | |
Fair Value Measurement | |
Fair Value Measurement | (5) 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 certain 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, 2018 and September 30, 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 commercial paper, corporate bonds, asset-backed securities and U.S. treasury securities. 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 June 30, 2018 or September 30, 2018, and the Company did not transfer assets between Levels during the three months ended September 30, 2017 or 2018. The fair value level for the Company’s cash and cash equivalents and available-for-sale securities is as follows: June 30, 2018 Total Level 1 Level 2 Level 3 Cash and cash equivalents $ 137,193 $ 137,193 $ — $ — Funds held for clients' cash and cash equivalents 1,102,538 1,076,414 26,124 — Available-for-sale securities: Commercial paper 50,702 — 50,702 — Corporate bonds 37,382 — 37,382 — Asset-backed securities 25,847 — 25,847 — U.S. treasury securities 9,877 — 9,877 — Total available-for-sale securities 123,808 — 123,808 — Total investments $ 1,363,539 $ 1,213,607 $ 149,932 $ — September 30, 2018 Total Level 1 Level 2 Level 3 Cash and cash equivalents $ 63,662 $ 60,215 $ 3,447 $ — Funds held for clients' cash and cash equivalents 1,046,691 1,018,208 28,483 — Available-for-sale securities: Commercial paper 56,634 — 56,634 — Corporate bonds 32,188 — 32,188 — Asset-backed securities 38,671 — 38,671 — U.S. treasury securities 16,102 — 16,102 — Total available-for-sale securities 143,595 — 143,595 — Total investments $ 1,253,948 $ 1,078,423 $ 175,525 $ — The Company began investing corporate funds in available-for-sale securities during the first quarter of fiscal 2019 and as a result, reclassified $732 as of June 30, 2018 from prepaid expenses and other on the unaudited consolidated balance sheets to corporate investments for comparability purposes in order to conform to the current year’s presentation. |
Benefit Plans
Benefit Plans | 3 Months Ended |
Sep. 30, 2018 | |
Benefit Plans | |
Benefit Plans | (6) 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 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. As of September 30, 2018, the Company had 13,295 shares allocated to the plans, of which 3,646 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 three months ended September 30, 2018: Number of Available for grant at July 1, 2018 10,030 RSUs granted (715) Shares withheld in settlement of taxes and/or exercise price 281 Forfeitures 94 Shares removed (41) Available for grant at September 30, 2018 9,649 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 September 30, 2017 2018 Cost of revenue – recurring $ 622 $ 852 Cost of revenue – non-recurring 372 386 Sales and marketing 1,938 1,697 Research and development 871 1,278 General and administrative 2,803 5,212 Total stock-based compensation expense $ 6,606 $ 9,425 In addition, the Company capitalized $433 and $625 of stock-based compensation expense in its capitalized internal-use software costs in the three months ended September 30, 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 three months ended September 30, 2017 or 2018. The table below presents stock option activity during the three months ended September 30, 2018: Outstanding Options Weighted Weighted average average remaining Aggregate Number of exercise contractual intrinsic shares price term (years) value Balance at July 1, 2018 1,907 $ 12.40 5.00 $ 88,595 Options forfeited (1) $ 35.28 Options exercised (182) $ 12.31 Balance at September 30, 2018 1,724 $ 12.40 4.76 $ 117,089 Options exercisable at September 30, 2018 1,696 $ 12.03 4.72 $ 115,856 Options vested and expected to vest at September 30, 2018 1,723 $ 12.38 4.75 $ 117,035 The total intrinsic value of options exercised was $3,380 and $12,203 during the three months ended September 30, 2017 and 2018, respectively. At September 30, 2018, there was $83 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 0.88 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 RSUs vest based on the achievement of certain revenue growth and Adjusted EBITDA margin targets in future fiscal years. The following table represents restricted stock unit activity during the three months ended September 30, 2018: Units Weighted RSU balance at July 1, 2018 1,879 $ 43.39 RSUs granted 715 $ 66.22 RSUs vested (579) $ 40.65 RSUs forfeited (93) $ 45.26 RSU balance at September 30, 2018 1,922 $ 52.63 RSUs expected to vest at September 30, 2018 1,724 $ 52.45 At September 30, 2018, there was $62,022 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 2.09 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 September 30, 2018, a total of 1,111 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 recorded compensation expense attributable to the ESPP of $339 and $439 for the three months ended September 30, 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: Three Months Ended September 30, 2017 2018 Valuation assumptions: Expected dividend yield % % Expected volatility 39.1 % 33.5 % Expected term (years) 0.5 0.5 Risk ‑ free interest rate 1.02 % 2.10 % (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 $1,111 and $1,394 for the three months ended September 30, 2017 and 2018, respectively. |
Net Income Per Share
Net Income Per Share | 3 Months Ended |
Sep. 30, 2018 | |
Net Income Per Share | |
Net Income Per Share | (7) 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 September 30, 2017 2018 Numerator: Net income $ 543 $ 9,852 Denominator: Weighted-average shares used in computing net income per share: Basic 51,893 52,865 Weighted-average effect of potentially dilutive shares: Employee stock options, restricted stock units and employee stock purchase plan shares 2,717 2,622 Diluted 54,610 55,487 Net income per share: Basic $ 0.01 $ 0.19 Diluted $ 0.01 $ 0.18 The Company excluded 816 and 687 outstanding RSUs from the diluted per share calculations during the three months ended September 30, 2017 and 2018, respectively, because to include them would have been anti-dilutive. In August 2018, the Company announced that its board of directors approved a program to repurchase up to $35,000 of the Company’s common stock, with authorization through August 14, 2019. During the three months ended September 30, 2018, the Company completed the repurchase program and repurchased 442 shares for $34,991. All shares of common stock repurchased were retired. |
Income Taxes
Income Taxes | 3 Months Ended |
Sep. 30, 2018 | |
Income Taxes | |
Income Taxes | (8) Income Taxes The Company’s quarterly provision for income taxes is based on the annual effective rate method. 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 $81 and $(5,807) for the three months ended September 30, 2017 and 2018, respectively. The Company’s effective tax rates for the three months ended September 30, 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 rate for the three months ended September 30, 2018 differed from statutory rates primarily due to excess tax benefits from employee stock exercises partially offset by various permanent adjustments. 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 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 was 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 believed it was more likely than not that the net deferred tax assets would be realized for all federal and state purposes with the exception of deferred tax assets associated with certain state tax credits that have a limited carryforward period. As of September 30, 2018, the Company continued to maintain a valuation allowance of $355 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. 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 of fiscal 2018, the Company modified its current federal statutory rate for the year to account for the rate change. In December 2017, the staff of the SEC issued guidance under Staff Accounting Bulletin No. 118 (later codified into ASU 2018-05), “Income Tax Accounting Implications of the Tax Cuts and Jobs Act,” allowing taxpayers to record provisional amounts for reasonable estimates when they do not have the necessary information available, prepared or analyzed in reasonable detail to complete their accounting for certain income tax effects of the Tax Act. The SEC also issued rules that would allow for a measurement period of up to one year after the enactment date of the Tax Act to finalize the related tax impacts. The Company’s analysis is complete except for provisional amounts that were determined in accordance with ASU 2018-05 related to certain equity compensation agreements. However, any changes as a result of further guidance related to this topic are not expected to have a material impact on the provisional amounts. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Sep. 30, 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. 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. The Company began investing corporate funds in available-for-sale securities during the first quarter of fiscal 2019 and as a result, reclassified $732 as of June 30, 2018 from prepaid expenses and other on the unaudited consolidated balance sheets to corporate investments for comparability purposes in order to conform to the current year’s presentation. |
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 months ended September 30, 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, 2018 included in the Company’s Annual Report on Form 10-K filed with the SEC on August 10, 2018. |
Revenue Recognition | (c) Revenue Recognition The Company adopted ASU 2014-09, Revenue from Contracts with Customers (“Topic 606”) effective as of July 1, 2018. Topic 606 requires revenue to be recognized when an entity transfers control of goods or services to a customer in an amount that reflects the consideration to which a company expects to be entitled to for those goods or services. To achieve this core principle, the Company recognizes revenue from contracts with customers based on the following five steps: 1) Identify the contract with a customer; 2) Identify the performance obligations in the contract; 3) Determine the transaction price; 4) Allocate the transaction price to performance obligations in the contract; and 5) Recognize revenue when or as the Company satisfies a performance obligation. The Company derives its revenue from contracts predominantly from recurring and non-recurring service fees. While the majority of its agreements are generally cancellable by the client on 60 days’ notice or less, the Company began entering into term arrangements in fiscal 2018, which are generally two years long. Recurring fees are derived from payroll, timekeeping, and HR-related cloud-based computing services as follows: · Payroll processing and related services, including payroll reporting and tax filing services are delivered on a weekly, biweekly, semi-monthly, or monthly basis depending upon the payroll frequency of the client and on an annual basis if a client selects W-2 preparation and processing services, · Time and attendance reporting services, including time clock rentals, are delivered on a monthly basis, and · Cloud-based HR software solutions, including employee administration and benefits enrollment and administration, are delivered on a monthly basis. The majority of the Company’s recurring fees are satisfied over time as services are provided. The performance obligations related to payroll services are satisfied upon the processing of the client’s payroll with the fee charged and collected based on a per employee per payroll frequency fee. The performance obligations related to time and attendance services and HR related services are satisfied over time each month with the fee charged and collected based on a per employee per month fee. For subscription based fees which can include payroll, time and attendance and HR related services, the Company recognizes the applicable recurring fees over time each month with the fee charged and collected based on a per employee per month fee. The Company has certain optional performance obligations that are satisfied at a point in time including the sales of time clocks and W-2 services. Non-recurring service fees consist mainly of nonrefundable implementation fees, which involve setting the client up in, and loading data into, the Company’s cloud-based applications. These implementation activities are considered set-up activities. The Company has determined that the nonrefundable upfront fees provide certain clients with a material right to renew the contract. Implementation fees are deferred and amortized generally over a period up to 24 months. Sales taxes collected from clients and remitted to governmental authorities where applicable are accounted for on a net basis and therefore are excluded from revenues in the statements of operations and comprehensive income. Interest income collected on funds held for clients is recognized in recurring revenues when earned as the collection, holding and remittance of these funds are components of providing these services. The following table, consistent with the presentation of its unaudited consolidated statements of operations and comprehensive income, disaggregates revenue by recurring fees and implementation services and other, which it believes represents the major categories of revenue: Three Months Ended September 30, 2018 Recurring fees $ 95,761 Implementation services and other 1,241 Total revenues from contracts $ 97,002 Deferred revenue The timing of revenue recognition for recurring revenue is consistent with the timing of invoicing as they occur simultaneously upon the client payroll-processing period or by month. As such, the Company does not recognize contract assets or liabilities related to recurring revenue. The nonrefundable upfront fees related to implementation services are invoiced with the client’s first payroll period. The Company defers these nonrefundable upfront fees generally over a period up to 24 months based on the type of contract. The following table summarizes the changes in deferred revenue (i.e. contract liability) related to these nonrefundable upfront fees as follows: Three Months Ended September 30, 2018 Balance at July 1, 2018 $ — Deferral of revenue 2,518 Revenue recognized (499) Balance at September 30, 2018 $ 2,019 Deferred revenue related to these nonrefundable upfront fees are recorded within accrued expenses and other long-term liabilities on the unaudited consolidated balance sheets. The Company expects to recognize these deferred revenue balances of $1,382 in fiscal 2019, $504 in fiscal 2020, and $133 thereafter. Deferred contract costs The Company defers certain selling and commission costs that meet the capitalization criteria under ASC 340-40, which prior to the adoption of Topic 606 were previously expensed as incurred. The Company also capitalizes certain costs to fulfill a contract related to its proprietary products if they are identifiable, generate or enhance resources used to satisfy future performance obligations and are expected to be recovered under ASC 340-40. As discussed in Note 2(e), the Company determined that implementation services related to its proprietary products are not separate performance obligations for contracts entered into after July 1, 2018. Implementation fees are treated as nonrefundable upfront fees and the related implementation costs are required to be capitalized and amortized over the expected period of benefit, which is the period in which the Company expects to recover the costs and enhance its ability to satisfy future performance obligations. The Company utilizes the portfolio approach to account for both the cost of obtaining a contract and the cost of fulfilling a contract. These capitalized costs are amortized over the expected period of benefit, which has been determined to be over 7 years based on the Company’s average client life and other qualitative factors, including rate of technological changes. The Company does not incur any additional costs to obtain or fulfill contracts upon renewal. The Company recognizes additional selling and commission costs and fulfillment costs when an existing client purchases additional services. These additional costs only relate to the additional services purchased and do not relate to the renewal of previous services. The following table presents the deferred contract costs balances and the related amortization expense for these deferred contract costs: Beginning Ending Balance Capitalized Balance July 1, 2018 Costs Amortization September 30, 2018 Costs to obtain a new contract $ 68,107 $ 5,711 $ (3,885) $ 69,933 Costs to fulfill a contract — 5,474 (131) 5,343 Total $ 68,107 $ 11,185 $ (4,016) $ 75,276 Deferred contract costs are recorded within deferred contract costs and long-term deferred contract costs on the unaudited consolidated balance sheets. Amortization of deferred contracts costs is recorded in implementation services and other cost of revenue, sales and marketing, and general and administrative in the unaudited consolidated statements of operations and comprehensive income. Remaining Performance Obligations The Company has applied the practical expedients as allowed under Topic 606 and elects not to disclose the value of unsatisfied performance obligations for contracts that have an original expected duration of one year or less and contracts for which the variable consideration is allocated entirely to wholly unsatisfied performance obligations. The Company’s remaining performance obligations related to minimum monthly fees on its term based contracts was approximately $29,000 as of September 30, 2018, which will be generally recognized over the next 24 months. |
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 is based on the annual effective rate method. 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 Accounting Standards | (e) Recently Adopted Accounting Standards In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). Topic 606 supersedes a majority of existing revenue recognition guidance under 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. The standard also provides guidance on the recognition of costs related to obtaining and fulfilling a contract under Subtopic 340-40, Other Assets and Deferred Costs – Contracts with Customers. The Company adopted the new standard, including subsequent amendments and Subtopic 340-40, effective as of July 1, 2018 using the modified retrospective method of transition, which limited the application of the new standard only to contracts that were not completed as of the effective date. The adoption of Topic 606 did not have a material impact in the timing or amount of revenue recognized. However, it did have a material impact on its unaudited consolidated balance sheet due to the deferral of costs of obtaining and fulfilling a contract as detailed below. The Company has updated its control framework for new internal controls and has updated existing controls relating to the new standard. Under the legacy revenue standard through fiscal 2018, the Company accounted for implementation and recurring services each as a separate unit of account. The Company was able to establish standalone value for implementation services as supported by the activity of third-party resellers and other vendors that performed certain implementation services. The Company has observed that third party implementation activity has continued to decrease over time and at the same time, the Company has invested in proprietary applications and processes that impact implementation activities. The Company determined that from July 1, 2018 forward it no longer had a sufficient basis to establish standalone value of implementations for its proprietary products due to the culmination of the changes to the Company’s applications and processes that eliminated the ability of third parties to perform implementation services. Similarly, the Company determined that these implementation services are not a separate performance obligation under Topic 606 for contracts entered into after July 1, 2018 and the associated implementation fees are treated as nonrefundable upfront fees which are deferred and amortized over a period of time instead of recognized upon completion. The Company recognized $2,191, net of deferred taxes, of contract assets for implementation fees related to open contracts as of July 1, 2018 which began when the Company was still able to establish stand-alone value for implementation activities. This adjustment was recorded through retained earnings (accumulated deficit) in the statement of changes in stockholder’s equity upon adoption on July 1, 2018. The Company also finalized the treatment of costs of obtaining and fulfilling a new contract under the new standard. The Company is now required to defer these costs and amortize them over the expected period of benefit, which it has determined to be 7 years. The Company recognized the cumulative effect related to the deferral of the costs of obtaining new contracts of $50,481, net of deferred taxes, which was recorded through retained earnings (accumulated deficit) in the statement of changes in stockholder’s equity upon adoption on July 1, 2018. The cumulative effect of the changes made to the July 1, 2018 balance sheet due to the adoption of Topic 606 were as follows: As Reported Adjustments Balances at June 30, 2018 due to Topic 606 July 1, 2018 Balance Sheet Assets Deferred contract costs $ — $ 14,783 $ 14,783 Prepaid expenses and other 11,248 1,730 12,978 Long-term deferred contract costs — 53,324 53,324 Long-term prepaid expenses and other 1,504 1,226 2,730 Deferred income tax assets, net 22,140 (18,391) 3,749 Stockholders' Equity Retained earnings (accumulated deficit) (6,678) 52,672 45,994 The following table summarizes the impact from the adoption of Topic 606 on the Company’s unaudited consolidated statement of operations and comprehensive income: Three Months Ended September 30, 2018 As Reported Balances under Impact from (Topic 606) ASC 605 Adoption Statement of Operations Revenues Recurring fees $ 95,761 $ 96,197 $ (436) Implementation services and other 1,241 800 441 Cost of Revenues Implementation services and other 6,711 11,956 (5,245) Operating expenses Sales and marketing 26,418 28,209 (1,791) General and administrative 22,968 23,101 (133) Income tax expense (benefit) (5,807) (7,664) 1,857 Net income 9,852 4,535 5,317 The following table summarizes the impact from the adoption of Topic 606 on the Company’s unaudited consolidated balance sheet: Three Months Ended September 30, 2018 As Reported Balances under Impact from (Topic 606) ASC 605 Adoption Balance Sheet Assets Deferred contract costs $ 16,215 $ — $ 16,215 Prepaid expenses and other 14,220 12,506 1,714 Long-term deferred contract costs 59,061 — 59,061 Long-term prepaid expenses and other 3,132 2,326 806 Deferred income tax assets, net 9,554 29,802 (20,248) Liabilities Accrued expenses 35,678 34,479 1,199 Other long-term liabilities 1,424 3,064 (1,640) Stockholders' Equity Retained earnings (accumulated deficit) 55,846 (2,143) 57,989 The following table summarizes the impact from the adoption of Topic 606 on the Company’s unaudited consolidated statement of cash flows: Three Months Ended September 30, 2018 As Reported Balances under Impact from (Topic 606) ASC 605 Adoption Statement of Cash Flows Net income $ 9,852 $ 4,535 $ 5,317 Adjustments to reconcile net income to net cash provided by operating activities: Deferred income tax expense (benefit) (5,809) (7,666) 1,857 Changes in operating assets and liabilities: Deferred contract costs (7,169) — (7,169) Prepaid expenses and other (853) (1,289) 436 Accrued expenses (6,214) (5,773) (441) Net cash provided by operating activities 7,344 7,344 — 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 provisional income tax effects of the Act during fiscal 2018 in accordance with SAB 118, and expects to complete its accounting under the Act by the end of December 2018. Refer to Note 8 for additional information. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Sep. 30, 2018 | |
Summary of Significant Accounting Policies | |
Schedule of disaggregated revenue from customers | Three Months Ended September 30, 2018 Recurring fees $ 95,761 Implementation services and other 1,241 Total revenues from contracts $ 97,002 |
Schedule of changes in deferred revenue | Three Months Ended September 30, 2018 Balance at July 1, 2018 $ — Deferral of revenue 2,518 Revenue recognized (499) Balance at September 30, 2018 $ 2,019 |
Schedule of deferred contract costs and the related amortization expense | Beginning Ending Balance Capitalized Balance July 1, 2018 Costs Amortization September 30, 2018 Costs to obtain a new contract $ 68,107 $ 5,711 $ (3,885) $ 69,933 Costs to fulfill a contract — 5,474 (131) 5,343 Total $ 68,107 $ 11,185 $ (4,016) $ 75,276 |
Schedule of the cumulative effect of the adoption of ASC 606 on prior year balance sheet | As Reported Adjustments Balances at June 30, 2018 due to Topic 606 July 1, 2018 Balance Sheet Assets Deferred contract costs $ — $ 14,783 $ 14,783 Prepaid expenses and other 11,248 1,730 12,978 Long-term deferred contract costs — 53,324 53,324 Long-term prepaid expenses and other 1,504 1,226 2,730 Deferred income tax assets, net 22,140 (18,391) 3,749 Stockholders' Equity Retained earnings (accumulated deficit) (6,678) 52,672 45,994 |
Schedule of the impact of adoption of ASC 606 on current period financial statements | The following table summarizes the impact from the adoption of Topic 606 on the Company’s unaudited consolidated statement of operations and comprehensive income: Three Months Ended September 30, 2018 As Reported Balances under Impact from (Topic 606) ASC 605 Adoption Statement of Operations Revenues Recurring fees $ 95,761 $ 96,197 $ (436) Implementation services and other 1,241 800 441 Cost of Revenues Implementation services and other 6,711 11,956 (5,245) Operating expenses Sales and marketing 26,418 28,209 (1,791) General and administrative 22,968 23,101 (133) Income tax expense (benefit) (5,807) (7,664) 1,857 Net income 9,852 4,535 5,317 The following table summarizes the impact from the adoption of Topic 606 on the Company’s unaudited consolidated balance sheet: Three Months Ended September 30, 2018 As Reported Balances under Impact from (Topic 606) ASC 605 Adoption Balance Sheet Assets Deferred contract costs $ 16,215 $ — $ 16,215 Prepaid expenses and other 14,220 12,506 1,714 Long-term deferred contract costs 59,061 — 59,061 Long-term prepaid expenses and other 3,132 2,326 806 Deferred income tax assets, net 9,554 29,802 (20,248) Liabilities Accrued expenses 35,678 34,479 1,199 Other long-term liabilities 1,424 3,064 (1,640) Stockholders' Equity Retained earnings (accumulated deficit) 55,846 (2,143) 57,989 The following table summarizes the impact from the adoption of Topic 606 on the Company’s unaudited consolidated statement of cash flows: Three Months Ended September 30, 2018 As Reported Balances under Impact from (Topic 606) ASC 605 Adoption Statement of Cash Flows Net income $ 9,852 $ 4,535 $ 5,317 Adjustments to reconcile net income to net cash provided by operating activities: Deferred income tax expense (benefit) (5,809) (7,666) 1,857 Changes in operating assets and liabilities: Deferred contract costs (7,169) — (7,169) Prepaid expenses and other (853) (1,289) 436 Accrued expenses (6,214) (5,773) (441) Net cash provided by operating activities 7,344 7,344 — |
Balance Sheet Information (Tabl
Balance Sheet Information (Tables) | 3 Months Ended |
Sep. 30, 2018 | |
Balance Sheet Information | |
Schedule of activity in allowance for doubtful accounts | Balance at June 30, 2018 $ 375 Charged to expense 30 Write-offs (29) Balance at September 30, 2018 $ 376 |
Schedule of capitalized internal-use software and accumulated amortization | June 30, September 30, 2018 2018 Capitalized internal-use software $ 67,678 $ 72,830 Accumulated amortization (46,584) (50,796) Capitalized internal-use software, net $ 21,094 $ 22,034 |
Schedule of property and equipment | June 30, September 30, 2018 2018 Office equipment $ 3,743 $ 3,965 Computer equipment 29,768 31,239 Furniture and fixtures 10,382 10,274 Software 5,965 6,181 Leasehold improvements 36,366 36,910 Time clocks rented by clients 4,534 4,508 Total 90,758 93,077 Accumulated depreciation (28,729) (31,254) Property and equipment, net $ 62,029 $ 61,823 |
Schedule of intangible assets | June 30, September 30, Useful 2018 2018 Life Client relationships $ 18,130 $ 18,130 7 - 9 years Non-solicitation agreements 600 600 2 - 4 years Total 18,730 18,730 Accumulated amortization (5,728) (6,291) Intangible assets, net $ 13,002 $ 12,439 |
Schedule of future amortization expense for acquired intangible assets | Future amortization expense for acquired intangible assets is as follows, as of September 30, 2018: Remainder of fiscal 2019 $ 1,688 Fiscal 2020 2,251 Fiscal 2021 2,251 Fiscal 2022 2,232 Fiscal 2023 2,118 Thereafter 1,899 Total $ 12,439 |
Schedule of components of accrued expenses | June 30, September 30, 2018 2018 Accrued payroll and personnel costs $ 31,206 $ 21,883 Lease exit obligations 2,143 1,808 Other 8,892 11,987 Total accrued expenses $ 42,241 $ 35,678 |
Schedule of the changes in the lease exit obligation | Balance at June 30, 2018 $ 3,261 Payments (604) Adjustments 38 Balance at September 30, 2018 $ 2,695 |
Corporate Investments and Fun_2
Corporate Investments and Funds Held For Clients (Tables) | 3 Months Ended |
Sep. 30, 2018 | |
Funds Held For Clients And Corporate Investments [Abstract] | |
Schedule of investments | June 30, 2018 Gross Gross Amortized unrealized unrealized Type of Issue cost gains losses Fair value Cash and cash equivalents $ 137,193 $ — $ — $ 137,193 Funds held for clients' cash and cash equivalents 1,102,541 — (3) 1,102,538 Available-for-sale securities: Commercial paper 50,703 3 (4) 50,702 Corporate bonds 37,508 8 (134) 37,382 Asset-backed securities 25,901 1 (55) 25,847 U.S. treasury securities 9,879 — (2) 9,877 Total available-for-sale securities (1) 123,991 12 (195) 123,808 Total investments $ 1,363,725 $ 12 $ (198) $ 1,363,539 (1) Included within the fair value of total available-for-sale securities above is $732 of corporate investments and $123,076 of funds held for clients September 30, 2018 Gross Gross Amortized unrealized unrealized Type of Issue cost gains losses Fair value Cash and cash equivalents $ 63,663 $ — $ (1) $ 63,662 Funds held for clients' cash and cash equivalents 1,046,696 — (5) 1,046,691 Available-for-sale securities: Commercial paper 56,651 1 (18) 56,634 Corporate bonds 32,268 11 (91) 32,188 Asset-backed securities 38,711 4 (44) 38,671 U.S. treasury securities 16,126 — (24) 16,102 Total available-for-sale securities (2) 143,756 16 (177) 143,595 Total investments $ 1,254,115 $ 16 $ (183) $ 1,253,948 (2) Included within the fair value of total available-for-sale securities above is $22,130 of corporate investments and $121,465 of funds held for clients |
Tabular disclosure of the classification of investments | June 30, September 30, 2018 2018 Cash and cash equivalents $ 137,193 $ 63,662 Corporate investments 732 21,225 Funds held for clients 1,225,614 1,168,156 Long-term prepaid expenses and other — 905 Total investments $ 1,363,539 $ 1,253,948 |
Schedule of available-for-sale securities that have been in an unrealized loss position for less than 12 months | June 30, 2018 Securities in an Securities in an unrealized loss unrealized loss position for less position for greater than 12 months than 12 months Total Gross Gross Gross unrealized unrealized unrealized losses Fair value losses Fair value losses Fair value Commercial paper $ (4) $ 23,657 $ — $ — $ (4) $ 23,657 Corporate bonds (134) 29,122 — — (134) 29,122 Asset-backed securities (55) 17,960 — — (55) 17,960 U.S. treasury securities (2) 4,933 — — (2) 4,933 Total available-for-sale securities $ (195) $ 75,672 $ — $ — $ (195) $ 75,672 September 30, 2018 Securities in an Securities in an unrealized loss unrealized loss position for less position for greater than 12 months than 12 months Total Gross Gross Gross unrealized unrealized unrealized losses Fair value losses Fair value losses Fair value Commercial paper $ (18) $ 46,006 $ — $ — $ (18) $ 46,006 Corporate bonds (70) 21,357 (21) 4,814 (91) 26,171 Asset-backed securities (40) 28,332 (4) 1,064 (44) 29,396 U.S. treasury securities (24) 16,102 — — (24) 16,102 Total available-for-sale securities $ (152) $ 111,797 $ (25) $ 5,878 $ (177) $ 117,675 |
Schedule of expected maturities of available-for-sale securities | Expected maturities of available-for-sale securities at September 30, 2018 are as follows: Amortized cost Fair value One year or less $ 126,192 $ 126,062 One year to two years 16,064 16,028 Two years to three years 1,500 1,505 Total available-for-sale securities $ 143,756 $ 143,595 |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 3 Months Ended |
Sep. 30, 2018 | |
Fair Value Measurement | |
Schedule of fair value level for cash and cash equivalents and available-for-sale securities measured on a recurring basis | June 30, 2018 Total Level 1 Level 2 Level 3 Cash and cash equivalents $ 137,193 $ 137,193 $ — $ — Funds held for clients' cash and cash equivalents 1,102,538 1,076,414 26,124 — Available-for-sale securities: Commercial paper 50,702 — 50,702 — Corporate bonds 37,382 — 37,382 — Asset-backed securities 25,847 — 25,847 — U.S. treasury securities 9,877 — 9,877 — Total available-for-sale securities 123,808 — 123,808 — Total investments $ 1,363,539 $ 1,213,607 $ 149,932 $ — September 30, 2018 Total Level 1 Level 2 Level 3 Cash and cash equivalents $ 63,662 $ 60,215 $ 3,447 $ — Funds held for clients' cash and cash equivalents 1,046,691 1,018,208 28,483 — Available-for-sale securities: Commercial paper 56,634 — 56,634 — Corporate bonds 32,188 — 32,188 — Asset-backed securities 38,671 — 38,671 — U.S. treasury securities 16,102 — 16,102 — Total available-for-sale securities 143,595 — 143,595 — Total investments $ 1,253,948 $ 1,078,423 $ 175,525 $ — |
Benefit Plans (Tables)
Benefit Plans (Tables) | 3 Months Ended |
Sep. 30, 2018 | |
Benefit Plans | |
Summary of shares available for grant under equity incentive plans | Number of Available for grant at July 1, 2018 10,030 RSUs granted (715) Shares withheld in settlement of taxes and/or exercise price 281 Forfeitures 94 Shares removed (41) Available for grant at September 30, 2018 9,649 |
Schedule of stock-based compensation expense related to stock options, restricted stock units and the Employee Stock Purchase Plan | Three Months Ended September 30, 2017 2018 Cost of revenue – recurring $ 622 $ 852 Cost of revenue – non-recurring 372 386 Sales and marketing 1,938 1,697 Research and development 871 1,278 General and administrative 2,803 5,212 Total stock-based compensation expense $ 6,606 $ 9,425 |
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, 2018 1,907 $ 12.40 5.00 $ 88,595 Options forfeited (1) $ 35.28 Options exercised (182) $ 12.31 Balance at September 30, 2018 1,724 $ 12.40 4.76 $ 117,089 Options exercisable at September 30, 2018 1,696 $ 12.03 4.72 $ 115,856 Options vested and expected to vest at September 30, 2018 1,723 $ 12.38 4.75 $ 117,035 |
Schedule of restricted stock unit activity | Units Weighted RSU balance at July 1, 2018 1,879 $ 43.39 RSUs granted 715 $ 66.22 RSUs vested (579) $ 40.65 RSUs forfeited (93) $ 45.26 RSU balance at September 30, 2018 1,922 $ 52.63 RSUs expected to vest at September 30, 2018 1,724 $ 52.45 |
Summary of weighted average assumptions used for estimating grant date fair value of ESPP | Three Months Ended September 30, 2017 2018 Valuation assumptions: Expected dividend yield % % Expected volatility 39.1 % 33.5 % Expected term (years) 0.5 0.5 Risk ‑ free interest rate 1.02 % 2.10 % |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 3 Months Ended |
Sep. 30, 2018 | |
Net Income Per Share | |
Schedule of calculation of basic net income per share | Three Months Ended September 30, 2017 2018 Numerator: Net income $ 543 $ 9,852 Denominator: Weighted-average shares used in computing net income per share: Basic 51,893 52,865 Weighted-average effect of potentially dilutive shares: Employee stock options, restricted stock units and employee stock purchase plan shares 2,717 2,622 Diluted 54,610 55,487 Net income per share: Basic $ 0.01 $ 0.19 Diluted $ 0.01 $ 0.18 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Current Presentation and Revenue Recognition (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Jun. 30, 2018 | |
Current presentation | |||
Amount of prepaid expenses and other reclassified to corporate investments for comparability | $ 732 | ||
Disaggregation of revenue | |||
Period of term arrangements | 2 years | ||
Total revenues from contracts | $ 97,002 | ||
Deferred contract costs | |||
Amortization period of capitalized contract costs | 7 years | ||
Beginning Balance | $ 68,107 | ||
Capitalized Costs | 11,185 | ||
Amortization | (4,016) | ||
Ending Balance | $ 75,276 | ||
Remaining Performance Obligations | |||
Practical expedient - remaining performance obligation | The Company has applied the practical expedients as allowed under Topic 606 and elects not to disclose the value of unsatisfied performance obligations for contracts that have an original expected duration of one year or less and contracts for which the variable consideration is allocated entirely to wholly unsatisfied performance obligations. | ||
Maximum | |||
Disaggregation of revenue | |||
Notice period to cancel agreement | 60 days | ||
Deferred and amortized period of implementation fees | 24 months | ||
Cost To Obtain A New Contract | |||
Deferred contract costs | |||
Beginning Balance | $ 68,107 | ||
Capitalized Costs | 5,711 | ||
Amortization | (3,885) | ||
Ending Balance | 69,933 | ||
Cost to Fulfill A Contract | |||
Deferred contract costs | |||
Beginning Balance | 0 | ||
Capitalized Costs | 5,474 | ||
Amortization | (131) | ||
Ending Balance | 5,343 | ||
Implementation services and other | |||
Disaggregation of revenue | |||
Total revenues from contracts | 1,241 | $ 2,589 | |
Changes in deferred revenue related to nonrefundable upfront fees | |||
Balance at beginning of period | 0 | ||
Deferral of revenue | 2,518 | ||
Revenue recognized | (499) | ||
Balance at end of period | 2,019 | ||
Deferred revenue expected to be recognized in fiscal 2019 | 1,382 | ||
Deferred revenue expected to be recognized in fiscal 2020 | 504 | ||
Deferred revenue expected to be recognized thereafter | 133 | ||
Recurring fees | |||
Disaggregation of revenue | |||
Total revenues from contracts | 95,761 | $ 77,294 | |
Remaining Performance Obligations | |||
Minimum value of unsatisfied performance obligations on term-based contracts | $ 29,000 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Revenue Recognition 2 (Details) | Sep. 30, 2018 |
Recurring fees | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-10-01 | |
Remaining Performance Obligations | |
Remaining performance obligation period | 24 months |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Adjustments for Adoption (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Jul. 01, 2018 | Jun. 30, 2018 |
Changes related to contracts with customers, assets and liabilities | |||
Retained earnings (accumulated deficit) | $ 55,846 | $ 45,994 | $ (6,678) |
Amortization period of capitalized contract costs | 7 years | ||
Impact from Adoption | Topic 606 | |||
Changes related to contracts with customers, assets and liabilities | |||
Retained earnings (accumulated deficit) | $ 57,989 | $ 52,672 | |
Contract Assets For Implementation Fees related to open contracts, net of deferred taxes | Topic 606 | |||
Changes related to contracts with customers, assets and liabilities | |||
Retained earnings (accumulated deficit) | 2,191 | ||
Deferral Of Costs to Obtain a New Contract, net of deferred taxes | Topic 606 | |||
Changes related to contracts with customers, assets and liabilities | |||
Retained earnings (accumulated deficit) | $ 50,481 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Cumulative effect of balance sheet changes (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Jul. 01, 2018 | Jun. 30, 2018 |
Assets | |||
Deferred contract costs | $ 16,215 | $ 14,783 | |
Prepaid expenses and other | 14,220 | 12,978 | $ 11,248 |
Long-term deferred contract costs | 59,061 | 53,324 | |
Long-term prepaid expenses and other | 3,132 | 2,730 | 1,504 |
Deferred income tax assets, net | 9,554 | 3,749 | 22,140 |
Stockholders' equity: | |||
Retained earnings (accumulated deficit) | 55,846 | $ 45,994 | (6,678) |
Impact from Adoption | Topic 606 | |||
Assets | |||
Deferred contract costs | 16,215 | 14,783 | |
Prepaid expenses and other | 1,714 | 1,730 | |
Long-term deferred contract costs | 59,061 | 53,324 | |
Long-term prepaid expenses and other | 806 | 1,226 | |
Deferred income tax assets, net | (20,248) | (18,391) | |
Stockholders' equity: | |||
Retained earnings (accumulated deficit) | 57,989 | $ 52,672 | |
Balances under ASC 605 | |||
Assets | |||
Prepaid expenses and other | 12,506 | ||
Long-term prepaid expenses and other | 2,326 | ||
Deferred income tax assets, net | 29,802 | ||
Stockholders' equity: | |||
Retained earnings (accumulated deficit) | $ (2,143) |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Impact on Statement of Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Revenues: | ||
Revenue | $ 97,002 | |
Cost of revenues: | ||
Total cost of revenues | 35,942 | $ 34,959 |
Operating expenses: | ||
Sales and marketing | 26,418 | 21,180 |
General and administrative | 22,968 | 15,951 |
Income tax expense (benefit) | (5,807) | 81 |
Net income | 9,852 | 543 |
Net cash provided by operating activities | 7,344 | 8,203 |
Impact from Adoption | Topic 606 | ||
Operating expenses: | ||
Sales and marketing | (1,791) | |
General and administrative | (133) | |
Income tax expense (benefit) | 1,857 | |
Net income | 5,317 | |
Balances under ASC 605 | ||
Operating expenses: | ||
Sales and marketing | 28,209 | |
General and administrative | 23,101 | |
Income tax expense (benefit) | (7,664) | |
Net income | 4,535 | |
Net cash provided by operating activities | 7,344 | |
Recurring fees | ||
Revenues: | ||
Revenue | 95,761 | 77,294 |
Cost of revenues: | ||
Total cost of revenues | 29,231 | 24,091 |
Recurring fees | Impact from Adoption | Topic 606 | ||
Revenues: | ||
Revenue | (436) | |
Recurring fees | Balances under ASC 605 | ||
Revenues: | ||
Revenue | 96,197 | |
Implementation services and other | ||
Revenues: | ||
Revenue | 1,241 | 2,589 |
Cost of revenues: | ||
Total cost of revenues | 6,711 | $ 10,868 |
Implementation services and other | Impact from Adoption | Topic 606 | ||
Revenues: | ||
Revenue | 441 | |
Cost of revenues: | ||
Total cost of revenues | (5,245) | |
Implementation services and other | Balances under ASC 605 | ||
Revenues: | ||
Revenue | 800 | |
Cost of revenues: | ||
Total cost of revenues | $ 11,956 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Impact on Balance Sheet (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Jul. 01, 2018 | Jun. 30, 2018 |
Assets | |||
Deferred contract costs | $ 16,215 | $ 14,783 | |
Prepaid expenses and other | 14,220 | 12,978 | $ 11,248 |
Long-term deferred contract costs | 59,061 | 53,324 | |
Long-term prepaid expenses and other | 3,132 | 2,730 | 1,504 |
Deferred income tax assets, net | 9,554 | 3,749 | 22,140 |
Liabilities | |||
Accrued expenses | 35,678 | 42,241 | |
Other long-term liabilities | 1,424 | 1,118 | |
Stockholders' equity: | |||
Retained earnings (accumulated deficit) | 55,846 | $ 45,994 | (6,678) |
Impact from Adoption | Topic 606 | |||
Assets | |||
Deferred contract costs | 16,215 | 14,783 | |
Prepaid expenses and other | 1,714 | 1,730 | |
Long-term deferred contract costs | 59,061 | 53,324 | |
Long-term prepaid expenses and other | 806 | 1,226 | |
Deferred income tax assets, net | (20,248) | (18,391) | |
Liabilities | |||
Accrued expenses | 1,199 | ||
Other long-term liabilities | (1,640) | ||
Stockholders' equity: | |||
Retained earnings (accumulated deficit) | 57,989 | $ 52,672 | |
Balances under ASC 605 | |||
Assets | |||
Prepaid expenses and other | 12,506 | ||
Long-term prepaid expenses and other | 2,326 | ||
Deferred income tax assets, net | 29,802 | ||
Liabilities | |||
Accrued expenses | 34,479 | ||
Other long-term liabilities | 3,064 | ||
Stockholders' equity: | |||
Retained earnings (accumulated deficit) | $ (2,143) |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Impact on Cash Flow Statement (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash Flows | ||
Net income | $ 9,852 | $ 543 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Deferred income tax expense (benefit) | (5,809) | 37 |
Changes in operating assets and liabilities: | ||
Deferred contract costs | (7,169) | |
Prepaid expenses and other | (853) | (305) |
Accrued expenses | (6,214) | (6,304) |
Net cash provided by operating activities | 7,344 | $ 8,203 |
Impact from Adoption | Topic 606 | ||
Cash Flows | ||
Net income | 5,317 | |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Deferred income tax expense (benefit) | 1,857 | |
Changes in operating assets and liabilities: | ||
Deferred contract costs | (7,169) | |
Prepaid expenses and other | 436 | |
Accrued expenses | (441) | |
Balances under ASC 605 | ||
Cash Flows | ||
Net income | 4,535 | |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Deferred income tax expense (benefit) | (7,666) | |
Changes in operating assets and liabilities: | ||
Prepaid expenses and other | (1,289) | |
Accrued expenses | (5,773) | |
Net cash provided by operating activities | $ 7,344 |
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 | ||
Sep. 30, 2018 | Sep. 30, 2017 | Jun. 30, 2018 | |
Activity in allowance for doubtful accounts | |||
Balance at beginning of period | $ 375 | ||
Charged to expense | 30 | $ 4 | |
Write-offs | (29) | ||
Balance at end of period | 376 | ||
Capitalized internal-use software and accumulated amortization | |||
Capitalized internal-use software | 72,830 | $ 67,678 | |
Accumulated amortization | (50,796) | (46,584) | |
Capitalized internal-use software, net | 22,034 | 21,094 | |
Property and equipment, net | |||
Property and equipment, gross | 93,077 | 90,758 | |
Accumulated depreciation | (31,254) | (28,729) | |
Property and equipment, net | 61,823 | 62,029 | |
Depreciation expense | 3,457 | 2,925 | |
Cost of revenue - recurring | |||
Capitalized internal-use software and accumulated amortization | |||
Amortization of capitalized internal-use software | 4,212 | $ 3,389 | |
Office equipment | |||
Property and equipment, net | |||
Property and equipment, gross | 3,965 | 3,743 | |
Computer equipment | |||
Property and equipment, net | |||
Property and equipment, gross | 31,239 | 29,768 | |
Furniture and fixtures | |||
Property and equipment, net | |||
Property and equipment, gross | 10,274 | 10,382 | |
Software | |||
Property and equipment, net | |||
Property and equipment, gross | 6,181 | 5,965 | |
Leasehold improvements | |||
Property and equipment, net | |||
Property and equipment, gross | 36,910 | 36,366 | |
Time clocks rented by clients | |||
Property and equipment, net | |||
Property and equipment, gross | $ 4,508 | $ 4,534 |
Balance Sheet Information - Int
Balance Sheet Information - Intangible Assets and Accrued Expenses (Details) ft² in Thousands, $ in Thousands | 3 Months Ended | ||
Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Jun. 30, 2018USD ($)ft² | |
Intangible assets | |||
Intangible assets | $ 18,730 | $ 18,730 | |
Accumulated amortization | (6,291) | (5,728) | |
Intangible assets, net | 12,439 | 13,002 | |
Amortization expense for acquired intangible assets | 563 | $ 359 | |
Future amortization expense for acquired intangible assets | |||
Remainder of fiscal 2019 | 1,688 | ||
2,020 | 2,251 | ||
2,021 | 2,251 | ||
2,022 | 2,232 | ||
2,023 | 2,118 | ||
Thereafter | 1,899 | ||
Intangible assets, net | 12,439 | 13,002 | |
Components of accrued expenses | |||
Accrued payroll and personnel costs | 21,883 | 31,206 | |
Lease exit obligations | 1,808 | 2,143 | |
Other | 11,987 | 8,892 | |
Total accrued expenses | 35,678 | $ 42,241 | |
Arlington Heights Lease | |||
Lease exit obligations | |||
Area under lease no longer in use | ft² | 110 | ||
Balance at beginning of period | 3,261 | ||
Payments | (604) | ||
Adjustments | 38 | ||
Balance at end of period | 2,695 | ||
Client relationships | |||
Intangible assets | |||
Intangible assets | $ 18,130 | $ 18,130 | |
Client relationships | Minimum | |||
Intangible assets | |||
Useful life | 7 years | ||
Client relationships | Maximum | |||
Intangible assets | |||
Useful life | 9 years | ||
Non-solicitation agreements | |||
Intangible assets | |||
Intangible assets | $ 600 | $ 600 | |
Non-solicitation agreements | Minimum | |||
Intangible assets | |||
Useful life | 2 years | ||
Non-solicitation agreements | Maximum | |||
Intangible assets | |||
Useful life | 4 years |
Corporate Investments and Fun_3
Corporate Investments and Funds Held For Clients - Reconciliation (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Jun. 30, 2018 |
Corporate Investments and Funds Held for Clients [Line Items] | ||
Amortized cost of cash and cash equivalents | $ 63,663 | $ 137,193 |
Cash and cash equivalents, gross unrealized losses | (1) | |
Fair value of cash and cash equivalents | 63,662 | 137,193 |
Amortized cost of funds held for clients' cash and cash equivalents | 1,046,696 | 1,102,541 |
Funds held for clients' cash and cash equivalents, gross unrealized losses | (5) | (3) |
Fair value of funds held for clients' cash and cash equivalents | 1,046,691 | 1,102,538 |
Available-for-sale Securities | ||
Amortized cost | 143,756 | 123,991 |
Gross unrealized gains | 16 | 12 |
Gross unrealized losses | (177) | (195) |
Fair value | 143,595 | 123,808 |
Total investments at amortized cost | 1,254,115 | 1,363,725 |
Total investments gross unrealized gain | 16 | 12 |
Total investments gross unrealized loss | (183) | (198) |
Total investments at fair value | 1,253,948 | 1,363,539 |
Commercial paper | ||
Available-for-sale Securities | ||
Amortized cost | 56,651 | 50,703 |
Gross unrealized gains | 1 | 3 |
Gross unrealized losses | (18) | (4) |
Fair value | 56,634 | 50,702 |
Corporate bonds | ||
Available-for-sale Securities | ||
Amortized cost | 32,268 | 37,508 |
Gross unrealized gains | 11 | 8 |
Gross unrealized losses | (91) | (134) |
Fair value | 32,188 | 37,382 |
Asset-backed securities | ||
Available-for-sale Securities | ||
Amortized cost | 38,711 | 25,901 |
Gross unrealized gains | 4 | 1 |
Gross unrealized losses | (44) | (55) |
Fair value | 38,671 | 25,847 |
U.S. treasury securities | ||
Available-for-sale Securities | ||
Amortized cost | 16,126 | 9,879 |
Gross unrealized losses | (24) | (2) |
Fair value | 16,102 | 9,877 |
Corporate investments | ||
Available-for-sale Securities | ||
Total investments at fair value | 22,130 | 732 |
Funds Held for Clients | ||
Available-for-sale Securities | ||
Total investments at fair value | $ 121,465 | $ 123,076 |
Corporate Investments and Fun_4
Corporate Investments and Funds Held For Clients - Classification (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Jun. 30, 2018 | |
Corporate Investments and Funds Held for Clients [Line Items] | |||
Amount of prepaid expenses and other reclassified to corporate investments for comparability | $ 732 | ||
Cash and cash equivalents | $ 63,662 | 137,193 | |
Corporate investments | 21,225 | 732 | |
Funds held for clients | 1,168,156 | 1,225,614 | |
Long-term prepaid expenses and other | 905 | ||
Total investments at fair value | 1,253,948 | 1,363,539 | |
Available-for-sale securities in a continuous unrealized loss position | |||
Unrealized loss on available-for-sale securities in a continuous loss position for less than 12 months | (152) | (195) | |
Fair market value of available-for-sale securities in an unrealized loss position less than 12 months | 111,797 | 75,672 | |
Unrealized loss on available-for-sale securities in a continuous loss position for greater than 12 months | (25) | ||
Fair market value of available-for-sale securities in an unrealized loss position greater than 12 months | 5,878 | ||
Total gross unrealized losses | (177) | (195) | |
Total fair value | 117,675 | 75,672 | |
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 | |
Commercial paper | |||
Available-for-sale securities in a continuous unrealized loss position | |||
Unrealized loss on available-for-sale securities in a continuous loss position for less than 12 months | (18) | (4) | |
Fair market value of available-for-sale securities in an unrealized loss position less than 12 months | 46,006 | 23,657 | |
Total gross unrealized losses | (18) | (4) | |
Total fair value | 46,006 | 23,657 | |
Corporate bonds | |||
Available-for-sale securities in a continuous unrealized loss position | |||
Unrealized loss on available-for-sale securities in a continuous loss position for less than 12 months | (70) | (134) | |
Fair market value of available-for-sale securities in an unrealized loss position less than 12 months | 21,357 | 29,122 | |
Unrealized loss on available-for-sale securities in a continuous loss position for greater than 12 months | (21) | ||
Fair market value of available-for-sale securities in an unrealized loss position greater than 12 months | 4,814 | ||
Total gross unrealized losses | (91) | (134) | |
Total fair value | 26,171 | 29,122 | |
Asset-backed securities | |||
Available-for-sale securities in a continuous unrealized loss position | |||
Unrealized loss on available-for-sale securities in a continuous loss position for less than 12 months | (40) | (55) | |
Fair market value of available-for-sale securities in an unrealized loss position less than 12 months | 28,332 | 17,960 | |
Unrealized loss on available-for-sale securities in a continuous loss position for greater than 12 months | (4) | ||
Fair market value of available-for-sale securities in an unrealized loss position greater than 12 months | 1,064 | ||
Total gross unrealized losses | (44) | (55) | |
Total fair value | 29,396 | 17,960 | |
U.S. treasury securities | |||
Available-for-sale securities in a continuous unrealized loss position | |||
Unrealized loss on available-for-sale securities in a continuous loss position for less than 12 months | (24) | (2) | |
Fair market value of available-for-sale securities in an unrealized loss position less than 12 months | 16,102 | 4,933 | |
Total gross unrealized losses | (24) | (2) | |
Total fair value | $ 16,102 | $ 4,933 |
Corporate Investments and Fun_5
Corporate Investments and Funds Held For Clients - Maturities (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Jun. 30, 2018 |
Expected maturities of available-for-sale securities, amortized cost | ||
One year or less | $ 126,192 | |
One year to two years | 16,064 | |
Two years to three years | 1,500 | |
Total available-for-sale securities | 143,756 | $ 123,991 |
Expected maturities of available-for-sale securities, fair value | ||
One year or less | 126,062 | |
One year to two years | 16,028 | |
Two years to three years | 1,505 | |
Total available-for-sale securities | $ 143,595 | $ 123,808 |
Fair Value Measurement (Details
Fair Value Measurement (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Jun. 30, 2018 |
Fair value measurement | ||
Cash and cash equivalents | $ 63,662 | $ 137,193 |
Funds held for clients' cash and cash equivalents | 1,046,691 | 1,102,538 |
Total investments at fair value | 1,253,948 | 1,363,539 |
Available-for-sale securities: | ||
Available for sale securities | 143,595 | 123,808 |
Fair value asset transfers | ||
Transfers from level 1 to level 2 | 0 | |
Transfers from level 2 to level 1 | 0 | |
Amount of prepaid expenses and other reclassified to corporate investments for comparability | 732 | |
Level 1 | ||
Fair value measurement | ||
Cash and cash equivalents | 60,215 | 137,193 |
Funds held for clients' cash and cash equivalents | 1,018,208 | 1,076,414 |
Total investments at fair value | 1,078,423 | 1,213,607 |
Level 2 | ||
Fair value measurement | ||
Cash and cash equivalents | 3,447 | |
Funds held for clients' cash and cash equivalents | 28,483 | 26,124 |
Total investments at fair value | 175,525 | 149,932 |
Available-for-sale securities: | ||
Available for sale securities | 143,595 | 123,808 |
Level 3 | ||
Available-for-sale securities: | ||
Available for sale securities | 0 | |
Commercial paper | ||
Available-for-sale securities: | ||
Available for sale securities | 56,634 | 50,702 |
Commercial paper | Level 2 | ||
Available-for-sale securities: | ||
Available for sale securities | 56,634 | 50,702 |
Corporate bonds | ||
Available-for-sale securities: | ||
Available for sale securities | 32,188 | 37,382 |
Corporate bonds | Level 2 | ||
Available-for-sale securities: | ||
Available for sale securities | 32,188 | 37,382 |
Asset-backed securities | ||
Available-for-sale securities: | ||
Available for sale securities | 38,671 | 25,847 |
Asset-backed securities | Level 2 | ||
Available-for-sale securities: | ||
Available for sale securities | 38,671 | 25,847 |
U.S. treasury securities | ||
Available-for-sale securities: | ||
Available for sale securities | 16,102 | 9,877 |
U.S. treasury securities | Level 2 | ||
Available-for-sale securities: | ||
Available for sale securities | $ 16,102 | $ 9,877 |
Benefit Plans - General Informa
Benefit Plans - General Information (Details) shares in Thousands | 3 Months Ended |
Sep. 30, 2018shares | |
Equity Incentive Plans | |
Equity Incentive Plans | |
Number of shares of common stock reserved for issuance | 13,295 |
Number of shares allocated but not yet issued that are subject to outstanding options or awards | 3,646 |
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% |
Benefit Plans - Incentive Plans
Benefit Plans - Incentive Plans Activity (Details) - Equity Incentive Plans shares in Thousands | 3 Months Ended |
Sep. 30, 2018shares | |
Shares Available for Grant | |
Balance at the beginning of the period | 10,030 |
RSUs granted | (715) |
Shares withheld in settlement of taxes and/or exercise price | 281 |
Forfeitures | 94 |
Shares removed | (41) |
Balance at the end of the period | 9,649 |
Benefit Plans - Compensation Ex
Benefit Plans - Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Benefit Plans | ||
Total stock-based compensation expense | $ 9,425 | $ 6,606 |
Stock-based compensation expense capitalized | 625 | 433 |
Cost of revenue - recurring | ||
Benefit Plans | ||
Total stock-based compensation expense | 852 | 622 |
Cost of revenue - non-recurring | ||
Benefit Plans | ||
Total stock-based compensation expense | 386 | 372 |
Sales and marketing | ||
Benefit Plans | ||
Total stock-based compensation expense | 1,697 | 1,938 |
Research and development | ||
Benefit Plans | ||
Total stock-based compensation expense | 1,278 | 871 |
General and administrative | ||
Benefit Plans | ||
Total stock-based compensation expense | $ 5,212 | $ 2,803 |
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 | 12 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | Jun. 30, 2018 | |
Vesting period | |||
Expiration period | 10 years | ||
Options Outstanding, Number of Shares | |||
Balance at the beginning of the period | 1,907 | ||
Options granted | 0 | 0 | |
Options forfeited | (1) | ||
Options exercised | (182) | ||
Balance at the end of the period | 1,724 | 1,907 | |
Options Outstanding, Weighted average exercise price | |||
Balance at the beginning of the period (in dollars per share) | $ 12.40 | ||
Options forfeited (in dollars per share) | 35.28 | ||
Options exercised (in dollars per share) | 12.31 | ||
Balance at the end of the period (in dollars per share) | $ 12.40 | $ 12.40 | |
Options Additional Disclosures | |||
Weighted average remaining contractual term | 4 years 9 months 4 days | 5 years | |
Aggregate intrinsic value, at the beginning of the period | $ 88,595 | ||
Weighted average remaining contractual term of options exercisable at the end of the period (years) | 4 years 8 months 19 days | ||
Aggregate intrinsic value, at the end of the period | $ 117,089 | $ 88,595 | |
Options exercisable at the end of the period (in shares) | 1,696 | ||
Options exercisable at the end of the period, weighted average exercise price (in dollars per share) | $ 12.03 | ||
Options exercisable intrinsic value | $ 115,856 | ||
Total intrinsic value of options exercised | $ 12,203 | $ 3,380 | |
Options vested and expected to vest | |||
Number of shares | 1,723 | ||
Weighted average exercise price | $ 12.38 | ||
Weighted average remaining contractual term | 4 years 9 months | ||
Aggregate intrinsic value | $ 117,035 | ||
Unrecognized Compensation Costs Not yet Recognized | |||
Total unrecognized compensation cost, net of estimated forfeitures, related to unvested stock options | $ 83 | ||
Weighted average period to recognize unrecognized compensation cost | 10 months 17 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) - RSUs $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended |
Sep. 30, 2018USD ($)$ / sharesshares | |
Unrecognized Compensation Costs Not yet Recognized | |
Total unrecognized compensation cost, net of estimated forfeitures related to unvested RSUs | $ | $ 62,022 |
Weighted average period to recognize unrecognized compensation cost | 2 years 1 month 2 days |
RSUs Outstanding Rollforward, Units | |
RSU Balance at the beginning of the period | shares | 1,879 |
RSUs granted | shares | 715 |
RSUs vested | shares | (579) |
RSUs forfeited | shares | (93) |
RSU Balance at the end of the period | shares | 1,922 |
RSUs expected to vest at the end of the period | shares | 1,724 |
RSUs Outstanding, Weighted average grant date fair value | |
RSU Balance at the beginning of the period | $ / shares | $ 43.39 |
RSUs granted | $ / shares | 66.22 |
RSUs vested | $ / shares | 40.65 |
RSUs cancelled/forfeited | $ / shares | 45.26 |
RSU Balance at the end of the period | $ / shares | 52.63 |
RSUs expected to vest at the end of the period | $ / shares | $ 52.45 |
Maximum | |
Vesting period | |
Vesting period | 4 years |
Benefit Plans - ESPP Informatio
Benefit Plans - ESPP Information (Details) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Equity Incentive Plans | ||
Compensation expense | $ 9,425 | $ 6,606 |
Employee stock purchase plan shares | ||
Equity Incentive Plans | ||
Percentage of employee compensation, maximum | 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 | 1,111 | |
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% | |
Compensation expense | $ 439 | $ 339 |
Valuation assumptions: | ||
Expected dividend yield | 0.00% | 0.00% |
Expected volatility | 33.50% | 39.10% |
Expected term (years) | 6 months | 6 months |
Risk-free interest rate | 2.10% | 1.02% |
Employee stock purchase plan shares | Maximum | ||
Equity Incentive Plans | ||
Offering period | 27 months |
Benefit Plans - 401(k) Plan (De
Benefit Plans - 401(k) Plan (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2018 | Sep. 30, 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 | $ 1,394 | $ 1,111 |
Net Income Per Share (Details)
Net Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Aug. 31, 2018 | |
Numerator: | |||
Net income | $ 9,852 | $ 543 | |
Weighted-average shares used in computing net income per share: | |||
Basic (in shares) | 52,865 | 51,893 | |
Weighted-average effect of potentially dilutive shares: | |||
Employee stock options, restricted stock units and employee stock purchase plan shares | 2,622 | 2,717 | |
Diluted (in shares) | 55,487 | 54,610 | |
Net income per share: | |||
Basic (in dollars per share) | $ 0.19 | $ 0.01 | |
Diluted (in dollars per share) | $ 0.18 | $ 0.01 | |
Stock Repurchase Program | |||
Repurchases of common shares | $ 34,991 | ||
Maximum | |||
Stock Repurchase Program | |||
Amount of issued and outstanding common stock that may be repurchased under the stock repurchase plan | $ 35,000 | ||
RSUs | |||
Anti-dilutive securities excluded from diluted per share calculation | |||
Anti-dilutive securities excluded | 687 | 816 | |
Common Stock | |||
Stock Repurchase Program | |||
Repurchases of common shares (in shares) | 442 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Income Taxes [Line Items] | ||
Income tax expense (benefit) | $ (5,807) | $ 81 |
State | ||
Income Taxes [Line Items] | ||
Valuation allowance | $ 355 |