Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Mar. 31, 2019 | Apr. 26, 2019 | |
Document and Entity Information | ||
Entity Registrant Name | Paylocity Holding Corp | |
Entity Central Index Key | 0001591698 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
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 | 52,973,817 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2019 | Jun. 30, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 90,856 | $ 137,193 |
Corporate investments | 48,159 | 732 |
Accounts receivable, net | 5,137 | 3,453 |
Deferred contract costs | 19,765 | |
Prepaid expenses and other | 21,922 | 11,248 |
Total current assets before funds held for clients | 185,839 | 152,626 |
Funds held for clients | 1,722,309 | 1,225,614 |
Total current assets | 1,908,148 | 1,378,240 |
Capitalized internal-use software, net | 24,584 | 21,094 |
Property and equipment, net | 64,893 | 62,029 |
Intangible assets, net | 11,314 | 13,002 |
Goodwill | 9,590 | 9,590 |
Long-term deferred contract costs | 73,701 | |
Long-term prepaid expenses and other | 2,766 | 1,504 |
Deferred income tax assets, net | 22,140 | |
Total assets | 2,094,996 | 1,507,599 |
Current liabilities: | ||
Accounts payable | 5,344 | 2,990 |
Accrued expenses | 48,396 | 42,241 |
Total current liabilities before client fund obligations | 53,740 | 45,231 |
Client fund obligations | 1,722,309 | 1,225,614 |
Total current liabilities | 1,776,049 | 1,270,845 |
Deferred rent | 29,907 | 22,812 |
Other long-term liabilities | 1,925 | 1,118 |
Deferred income tax liabilities, net | 890 | |
Total liabilities | 1,808,771 | 1,294,775 |
Stockholders' equity: | ||
Preferred stock, $0.001 par value, 5,000 authorized, no shares issued and outstanding at June 30, 2018 and March 31, 2019 | ||
Common stock, $0.001 par value, 155,000 shares authorized at June 30, 2018 and March 31, 2019; 52,758 shares issued and outstanding at June 30, 2018 and 52,964 shares issued and outstanding at March 31, 2019 | 53 | 53 |
Additional paid-in capital | 196,574 | 219,588 |
Retained earnings (accumulated deficit) | 89,576 | (6,678) |
Accumulated other comprehensive income (loss) | 22 | (139) |
Total stockholders' equity | 286,225 | 212,824 |
Total liabilities and stockholders' equity | $ 2,094,996 | $ 1,507,599 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Thousands | Mar. 31, 2019 | 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 | 52,964 | 52,758 |
Common Stock, shares outstanding | 52,964 | 52,758 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2019 | Mar. 31, 2018 | |
Revenues: | ||||
Revenues from Contracts | $ 133,355 | $ 333,096 | ||
Interest income on funds held for clients | 6,197 | $ 2,719 | 14,164 | $ 6,119 |
Total recurring revenues | 136,173 | 108,576 | 340,176 | 270,562 |
Total revenues | 139,552 | 113,407 | 347,260 | 280,911 |
Cost of revenues: | ||||
Total cost of revenues | 39,745 | 38,652 | 113,757 | 110,451 |
Gross profit | 99,807 | 74,755 | 233,503 | 170,460 |
Operating expenses: | ||||
Sales and marketing | 27,699 | 26,004 | 80,687 | 68,782 |
Research and development | 12,688 | 9,058 | 36,886 | 27,227 |
General and administrative | 23,208 | 19,228 | 68,915 | 53,338 |
Total operating expenses | 63,595 | 54,290 | 186,488 | 149,347 |
Operating income | 36,212 | 20,465 | 47,015 | 21,113 |
Other income | 540 | 215 | 1,155 | 465 |
Income before income taxes | 36,752 | 20,680 | 48,170 | 21,578 |
Income tax expense (benefit) | 8,726 | (18,497) | 4,588 | (18,573) |
Net income | 28,026 | 39,177 | 43,582 | 40,151 |
Other comprehensive income (loss), net of tax | ||||
Unrealized gains (losses) on securities, net of tax | 161 | (61) | 161 | (171) |
Total other comprehensive income (loss), net of tax | 161 | (61) | 161 | (171) |
Comprehensive income | $ 28,187 | $ 39,116 | $ 43,743 | $ 39,980 |
Net income per share: | ||||
Basic (in dollars per share) | $ 0.53 | $ 0.74 | $ 0.82 | $ 0.77 |
Diluted (in dollars per share) | $ 0.51 | $ 0.71 | $ 0.79 | $ 0.73 |
Weighted-average shares used in computing net income per share: | ||||
Basic (in shares) | 52,934 | 52,615 | 52,880 | 52,334 |
Diluted (in shares) | 55,465 | 55,030 | 55,280 | 54,717 |
Recurring fees | ||||
Revenues: | ||||
Revenues from Contracts | $ 129,976 | $ 105,857 | $ 326,012 | $ 264,443 |
Cost of revenues: | ||||
Total cost of revenues | 32,365 | 26,982 | 92,802 | 76,711 |
Implementation services and other | ||||
Revenues: | ||||
Revenues from Contracts | 3,379 | 4,831 | 7,084 | 10,349 |
Cost of revenues: | ||||
Total cost of revenues | $ 7,380 | $ 11,670 | $ 20,955 | $ 33,740 |
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 |
Balance at Jun. 30, 2017 | $ 52 | $ 192,837 | $ (45,276) | $ 147,613 | |
Balance (in shares) at Jun. 30, 2017 | 51,738 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Stock-based compensation | 23,345 | 23,345 | |||
Stock options exercised | $ 1 | 7,161 | 7,162 | ||
Stock options exercised (in shares) | 772 | ||||
Issuance of common stock upon vesting of restricted stock units (in shares) | 425 | ||||
Issuance of common stock under employee stock purchase plan | 2,045 | 2,045 | |||
Issuance of common stock under employee stock purchase plan (in shares) | 53 | ||||
Net settlement for taxes and/or exercise price related to equity awards | (15,597) | (15,597) | |||
Net settlement for taxes and/or exercise price related to equity awards (in shares) | (339) | ||||
Unrealized gains (losses) on securities, net of tax | $ (171) | (171) | |||
Net income | 40,151 | 40,151 | |||
Balance at Mar. 31, 2018 | $ 53 | 209,791 | (5,125) | (171) | 204,548 |
Balance (in shares) at Mar. 31, 2018 | 52,649 | ||||
Balance at Dec. 31, 2017 | $ 53 | 202,512 | (44,302) | (110) | 158,153 |
Balance (in shares) at Dec. 31, 2017 | 52,590 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Stock-based compensation | 8,017 | 8,017 | |||
Stock options exercised | 1,422 | 1,422 | |||
Stock options exercised (in shares) | 103 | ||||
Issuance of common stock upon vesting of restricted stock units (in shares) | 11 | ||||
Net settlement for taxes and/or exercise price related to equity awards | (2,160) | (2,160) | |||
Net settlement for taxes and/or exercise price related to equity awards (in shares) | (55) | ||||
Unrealized gains (losses) on securities, net of tax | (61) | (61) | |||
Net income | 39,177 | 39,177 | |||
Balance at Mar. 31, 2018 | $ 53 | 209,791 | (5,125) | (171) | 204,548 |
Balance (in shares) at Mar. 31, 2018 | 52,649 | ||||
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 | 30,817 | $ 30,817 | |||
Stock options exercised | 4,140 | 4,140 | |||
Stock options exercised (in shares) | 329 | ||||
Issuance of common stock upon vesting of restricted stock units (in shares) | 623 | ||||
Issuance of common stock under employee stock purchase plan | 2,824 | 2,824 | |||
Issuance of common stock under employee stock purchase plan (in shares) | 58 | ||||
Net settlement for taxes and/or exercise price related to equity awards | (25,804) | (25,804) | |||
Net settlement for taxes and/or exercise price related to equity awards (in shares) | (362) | ||||
Repurchases of common shares | (34,991) | (34,991) | |||
Repurchases of common shares (in shares) | (442) | ||||
Unrealized gains (losses) on securities, net of tax | 161 | 161 | |||
Net income | 43,582 | 43,582 | |||
Balance at Mar. 31, 2019 | $ 53 | 196,574 | 89,576 | 22 | $ 286,225 |
Balance (in shares) at Mar. 31, 2019 | 52,964 | 52,964 | |||
Balance at Dec. 31, 2018 | $ 53 | 189,473 | 61,550 | (139) | $ 250,937 |
Balance (in shares) at Dec. 31, 2018 | 52,887 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Stock-based compensation | 9,972 | 9,972 | |||
Stock options exercised | 1,483 | 1,483 | |||
Stock options exercised (in shares) | 117 | ||||
Issuance of common stock upon vesting of restricted stock units (in shares) | 19 | ||||
Net settlement for taxes and/or exercise price related to equity awards | (4,354) | (4,354) | |||
Net settlement for taxes and/or exercise price related to equity awards (in shares) | (59) | ||||
Unrealized gains (losses) on securities, net of tax | 161 | 161 | |||
Net income | 28,026 | 28,026 | |||
Balance at Mar. 31, 2019 | $ 53 | $ 196,574 | 89,576 | $ 22 | $ 286,225 |
Balance (in shares) at Mar. 31, 2019 | 52,964 | 52,964 | |||
Increase (Decrease) in Stockholders' Equity | |||||
Cumulative effect of change in accounting policy (adoption of Topic 606) | $ 52,672 | $ 52,672 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | [1] | |
Cash flows from operating activities: | |||
Net income | $ 43,582 | $ 40,151 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Stock-based compensation expense | 28,837 | 21,891 | |
Depreciation and amortization expense | 25,213 | 20,640 | |
Deferred income tax expense (benefit) | 4,584 | (18,603) | |
Provision for doubtful accounts | 220 | 149 | |
Net accretion of discounts and amortization of premiums on available-for-sale securities | (1,607) | (234) | |
Net realized losses on sales of available-for-sale securities | 0 | 2 | |
Loss on disposal of equipment | 399 | 160 | |
Changes in operating assets and liabilities: | |||
Accounts receivable | (1,904) | (1,278) | |
Deferred contract costs | (25,359) | ||
Prepaid expenses and other | (1,485) | (1,678) | |
Accounts payable | 596 | 429 | |
Accrued expenses | 5,299 | 1,762 | |
Tenant improvement allowance | 784 | 5,952 | |
Net cash provided by operating activities | 79,159 | 69,343 | |
Cash flows from investing activities: | |||
Purchases of available-for-sale securities and other | (210,374) | (126,065) | |
Proceeds from sales and maturities of available-for-sale securities | 161,306 | 51,292 | |
Capitalized internal-use software costs | (14,706) | (11,442) | |
Purchases of property and equipment | (9,621) | (9,374) | |
Lease allowances used for tenant improvements | (784) | (7,086) | |
Acquisition of business, net of cash and funds held for clients' cash and cash equivalents | 0 | (6,658) | |
Net cash used in investing activities | (74,179) | (109,333) | |
Cash flows from financing activities: | |||
Net change in client fund obligations | 496,695 | 403,375 | |
Repurchases of common shares | (34,991) | ||
Proceeds from exercise of stock options | 85 | ||
Proceeds from employee stock purchase plan | 2,824 | 2,045 | |
Taxes paid related to net share settlement of equity awards | (21,749) | (9,060) | |
Net cash provided by financing activities | 442,864 | 396,360 | |
Net change in cash, cash equivalents and funds held for clients' cash and cash equivalents | 447,844 | 356,370 | |
Cash, cash equivalents and funds held for clients' cash and cash equivalents—beginning of period | 1,239,731 | 1,045,927 | |
Cash, cash equivalents and funds held for clients' cash and cash equivalents—end of period | 1,687,575 | 1,402,297 | |
Supplemental Disclosure of Non-Cash Investing and Financing Activities | |||
Purchase of property and equipment and internal-use software, accrued but not paid | 3,529 | 2,832 | |
Supplemental Disclosure of Cash Flow Information | |||
Cash paid for income taxes, net of refunds | 375 | 17 | |
Reconciliation of cash, cash equivalents and funds held for clients' cash and cash equivalents to the Consolidated Balance Sheets | |||
Cash and cash equivalents | 90,856 | 129,530 | |
Funds held for clients' cash and cash equivalents | 1,596,719 | 1,272,767 | |
Total cash, cash equivalents and funds held for clients’ cash and cash equivalents | $ 1,687,575 | $ 1,402,297 | |
[1] | Certain amounts have been reclassified to reflect the adoption of Accounting Standards Update (“ASU”) No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force).” |
Organization and Description of
Organization and Description of Business | 9 Months Ended |
Mar. 31, 2019 | |
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 | 9 Months Ended |
Mar. 31, 2019 | |
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 and nine months ended March 31, 2019 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 Accounting Standards Update (“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 Nine Months Ended March 31, 2019 March 31, 2019 Recurring fees $ 129,976 $ 326,012 Implementation services and other 3,379 7,084 Total revenues from contracts $ 133,355 $ 333,096 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 and amortizes 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 Nine Months Ended March 31, 2019 March 31, 2019 Balance at beginning of period $ 3,623 $ — Deferral of revenue 4,730 10,243 Revenue recognized (2,354) (4,244) Balance at end of period $ 5,999 $ 5,999 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 $2,142 in fiscal 2019, $2,876 in fiscal 2020, $881 in fiscal 2021 and $100 thereafter. Deferred contract costs The Company defers certain selling and commission costs that meet the capitalization criteria under ASC 340-40, which were expensed as incurred prior to the adoption of Topic 606. 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 tables present the deferred contract costs balances and the related amortization expense for these deferred contract costs: For the Three Months Ended March 31, 2019 Beginning Capitalized Ending Balance Costs Amortization Balance Costs to obtain a new contract $ 71,476 $ 10,544 $ (4,386) $ 77,634 Costs to fulfill a contract 10,787 5,583 (538) 15,832 Total $ 82,263 $ 16,127 $ (4,924) $ 93,466 For the Nine Months Ended March 31, 2019 Beginning Capitalized Ending Balance Costs Amortization Balance Costs to obtain a new contract $ 68,107 $ 21,890 $ (12,363) $ 77,634 Costs to fulfill a contract — 16,833 (1,001) 15,832 Total $ 68,107 $ 38,723 $ (13,364) $ 93,466 Deferred contract costs are recorded within deferred contract costs and long-term deferred contract costs on the unaudited consolidated balance sheets. Amortization of deferred contract 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 $40,962 as of March 31, 2019, 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 tables summarize the impact from the adoption of Topic 606 on the Company’s unaudited consolidated statements of operations and comprehensive income: Three Months Ended March 31, 2019 As Reported Balances under Impact from (Topic 606) ASC 605 Adoption Statement of Operations Revenues Recurring fees $ 129,976 $ 130,403 $ (427) Implementation services and other 3,379 1,314 2,065 Cost of Revenues Implementation services and other 7,380 12,324 (4,944) Operating expenses Sales and marketing 27,699 33,740 (6,041) General and administrative 23,208 23,426 (218) Income tax expense (benefit) 8,726 5,403 3,323 Net income 28,026 18,508 9,518 Nine Months Ended March 31, 2019 As Reported Balances under Impact from (Topic 606) ASC 605 Adoption Statement of Operations Revenues Recurring fees $ 326,012 $ 327,311 $ (1,299) Implementation services and other 7,084 3,412 3,672 Cost of Revenues Implementation services and other 20,955 36,494 (15,539) Operating expenses Sales and marketing 80,687 90,034 (9,347) General and administrative 68,915 69,388 (473) Income tax expense (benefit) 4,588 (2,589) 7,177 Net income 43,582 23,027 20,555 The following table summarizes the impact from the adoption of Topic 606 on the Company’s unaudited consolidated balance sheet: March 31, 2019 As Reported Balances under Impact from (Topic 606) ASC 605 Adoption Balance Sheet Assets Deferred contract costs $ 19,765 $ — $ 19,765 Prepaid expenses and other 21,922 20,516 1,406 Long-term deferred contract costs 73,701 — 73,701 Long-term prepaid expenses and other 2,766 2,515 251 Deferred income tax assets, net — 24,678 (24,678) Liabilities Accrued expenses 48,396 45,178 3,218 Other long-term liabilities 1,925 8,815 (6,890) Deferred income tax liabilities, net 890 — 890 Stockholders' Equity Retained earnings (accumulated deficit) 89,576 16,349 73,227 The following table summarizes the impact from the adoption of Topic 606 on the Company’s unaudited consolidated statement of cash flows: Nine Months Ended March 31, 2019 As Reported Balances under Impact from (Topic 606) ASC 605 Adoption Statement of Cash Flows Net income $ 43,582 $ 23,027 $ 20,555 Adjustments to reconcile net income to net cash provided by operating activities: Deferred income tax expense (benefit) 4,584 (2,593) 7,177 Changes in operating assets and liabilities: Deferred contract costs (25,359) — (25,359) Prepaid expenses and other (1,485) (2,784) 1,299 Accrued expenses 5,299 8,971 (3,672) Net cash provided by operating activities 79,159 79,159 — In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash: a consensus of the FASB Emerging Issues Task Force (“ASU 2016-18”), which requires that the statement of cash flows explain the change during a reporting period in total of cash, cash equivalents, and amounts generally described as restricted cash and restricted cash equivalents. Effective July 1, 2018, the Company adopted ASU 2016-18 on a retrospective basis and now includes funds held for clients’ cash and cash equivalents as a component of total cash, cash equivalents and funds held for clients’ cash and cash equivalents in the consolidated statement of cash flows. As a result, it reclassified certain amounts on its previously reported unaudited statement of cash flows for the nine-month period ending March 31, 2018 to conform to the requirements of the new standard. The adoption of this standard had no impact to the Company’s balance sheets, statements of operations or statements of changes in stockholders’ equity. 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 completed its accounting under the Act in December 2018. Refer to Note 8 for additional information. In August 2018, the SEC issued a final rule which requires public companies to disclose the changes in each caption of stockholders’ equity and non-controlling interests for the current and comparative year-to-date periods, with subtotals for each interim period and the amount of dividends per share for each class of shares. This rule is effective for interim periods beginning after November 5, 2018, with early adoption permitted. The Company has included this disclosure beginning with its fiscal quarter ended March 31, 2019. (f) Recently Issued Accounting Standards In February 2016, the FASB established Topic 842, Leases, by issuing ASU 2016-02, which requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU 2018-10, Codification Improvements to Topic 842, Leases; and ASU 2018-11, Targeted Improvements. The new standard establishes a right-of-use model (“ROU”) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. The new standard is effective on July 1, 2019, with early adoption permitted. A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application. An entity may choose to use either (1) its effective date or (2) the beginning of the earliest comparative period presented in the financial statements as its date of initial application. If an entity chooses the second option, the transition requirements for existing leases also apply to leases entered into between the date of initial application and the effective date. The entity must also recast its comparative period financial statements and provide the disclosures required by the new standard for the comparative periods. The Company expects to adopt the new standard on July 1, 2019 and use the effective date as the date of initial application. Consequently, financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before July 1, 2019. While the Company continues to assess all of the effects of adoption, it currently believes the most significant effects relate to (1) the recognition of new ROU assets and lease liabilities on the balance sheet for operating leases; and (2) providing significant new disclosures about leasing activities. The Company expects to elect the ‘package of practical expedients’, which permits the Company not to reassess under the new standard the prior conclusions about lease identification, lease classification and initial direct costs. 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 plans to adopt this standard at the effective date and does not expect any material impact from 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 | 9 Months Ended |
Mar. 31, 2019 | |
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 220 Write-offs (132) Balance at March 31, 2019 $ 463 Capitalized internal-use software and accumulated amortization were as follows: June 30, March 31, 2018 2019 Capitalized internal-use software $ 67,678 $ 84,022 Accumulated amortization (46,584) (59,438) Capitalized internal-use software, net $ 21,094 $ 24,584 Amortization of capitalized internal-use software costs is included in Cost of Revenues-Recurring Revenues and amounted to $3,655 and $4,224 for the three months ended March 31, 2018 and 2019, respectively, and $10,358 and $12,854 for the nine months ended March 31, 2018 and 2019, respectively. Property and equipment, net consist of the following: June 30, March 31, 2018 2019 Office equipment $ 3,743 $ 4,439 Computer equipment 29,768 33,893 Furniture and fixtures 10,382 10,789 Software 5,965 6,310 Leasehold improvements 36,366 42,442 Time clocks rented by clients 4,534 4,617 Total 90,758 102,490 Accumulated depreciation (28,729) (37,597) Property and equipment, net $ 62,029 $ 64,893 Depreciation expense amounted to $3,189 and $3,626 for the three months ended March 31, 2018 and 2019, respectively, and $9,206 and $10,671 for the nine months ended March 31, 2018 and 2019, respectively. The Company’s amortizable intangible assets and estimated useful lives are as follows: June 30, March 31, Useful 2018 2019 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) (7,416) Intangible assets, net $ 13,002 $ 11,314 Amortization expense for acquired intangible assets was $358 and $562 for the three months ended March 31, 2018 and 2019, respectively, and $1,076 and $1,688 for the nine months ended March 31, 2018 and 2019, respectively. Future amortization expense for acquired intangible assets is as follows, as of March 31, 2019: Remainder of fiscal 2019 $ 563 Fiscal 2020 2,251 Fiscal 2021 2,251 Fiscal 2022 2,232 Fiscal 2023 2,118 Thereafter 1,899 Total $ 11,314 The components of accrued expenses were as follows: June 30, March 31, 2018 2019 Accrued payroll and personnel costs $ 31,206 $ 31,355 Lease exit obligations 2,143 1,122 Deferred revenue 654 5,246 Other 8,238 10,673 Total accrued expenses $ 42,241 $ 48,396 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 (1,823) Adjustments 94 Balance at March 31, 2019 $ 1,532 |
Corporate Investments and Funds
Corporate Investments and Funds Held for Clients | 9 Months Ended |
Mar. 31, 2019 | |
Corporate Investments and Funds Held for Clients | |
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 March 31, 2019 Gross Gross Amortized unrealized unrealized Type of Issue cost gains losses Fair value Cash and cash equivalents $ 90,860 $ — $ (4) $ 90,856 Funds held for clients' cash and cash equivalents 1,596,721 — (2) 1,596,719 Available-for-sale securities: Commercial paper 92,844 16 (12) 92,848 Corporate bonds 31,637 39 (21) 31,655 Asset-backed securities 37,725 30 (13) 37,742 U.S. treasury securities 12,461 — (2) 12,459 Total available-for-sale securities (2) 174,667 85 (48) 174,704 Total investments $ 1,862,248 $ 85 $ (54) $ 1,862,279 (2) Included within the fair value of total available-for-sale securities above is $49,114 of corporate investments and $125,590 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 March 31, 2019. Classification of investments on the unaudited consolidated balance sheets is as follows: June 30, March 31, 2018 2019 Cash and cash equivalents $ 137,193 $ 90,856 Corporate investments 732 48,159 Funds held for clients 1,225,614 1,722,309 Long-term prepaid expenses and other — 955 Total investments $ 1,363,539 $ 1,862,279 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 March 31, 2019 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 $ (12) $ 58,454 $ — $ — $ (12) $ 58,454 Corporate bonds (3) 2,753 (18) 10,087 (21) 12,840 Asset-backed securities (1) 5,497 (12) 4,872 (13) 10,369 U.S. treasury securities (2) 12,459 — — (2) 12,459 Total available-for-sale securities $ (18) $ 79,163 $ (30) $ 14,959 $ (48) $ 94,122 The Company regularly reviews the composition of its portfolio to determine the existence of other-than-temporary-impairment (“OTTI”). The Company did not recognize any OTTI charges in accumulated other comprehensive loss during the three or nine months ended March 31, 2018 or 2019, nor does it believe that OTTI exists in its portfolio as of March 31, 2019. The Company plans to retain the securities in an unrealized loss position for a period of time sufficient enough to recover their amortized cost basis or until their maturity date. The Company believes that the unrealized losses on these securities were not due to deterioration in credit risk. The securities in an unrealized loss position held an A-1 rating or better as of March 31, 2019. The Company did not make any material reclassification adjustments out of accumulated other comprehensive loss for realized gains and losses on the sale of available-for-sale securities during the three or nine months ended March 31, 2018 or 2019. Gross realized gains and losses on the sale of available-for-sale securities were immaterial for both the three and nine months ended March 31, 2018 and 2019. Expected maturities of available-for-sale securities at March 31, 2019 are as follows: Amortized cost Fair value One year or less $ 164,169 $ 164,174 One year to two years 8,998 9,025 Two years to three years 1,500 1,505 Total available-for-sale securities $ 174,667 $ 174,704 |
Fair Value Measurement
Fair Value Measurement | 9 Months Ended |
Mar. 31, 2019 | |
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 March 31, 2019 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 March 31, 2019, and the Company did not transfer assets between Levels during the nine months ended March 31, 2018 or 2019. 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 $ — March 31, 2019 Total Level 1 Level 2 Level 3 Cash and cash equivalents $ 90,856 $ 64,850 $ 26,006 $ — Funds held for clients' cash and cash equivalents 1,596,719 1,575,810 20,909 — Available-for-sale securities: Commercial paper 92,848 — 92,848 — Corporate bonds 31,655 — 31,655 — Asset-backed securities 37,742 — 37,742 — U.S. treasury securities 12,459 — 12,459 — Total available-for-sale securities 174,704 — 174,704 — Total investments $ 1,862,279 $ 1,640,660 $ 221,619 $ — 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 | 9 Months Ended |
Mar. 31, 2019 | |
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 may increase each calendar year, continuing through and including January 1, 2024. The number of shares added each year may be equal to the lesser of (a) four and five tenths percent (4.5%) of the number of shares of common stock of the Company issued and outstanding on the immediately preceding December 31, or (b) an amount determined by the Company’s board of directors. The Company’s board of directors determined that it would not increase the number of shares in reserve for issuance under the 2014 Plan as of January 1, 2019. As of March 31, 2019, the Company had 13,157 shares allocated to the plans, of which 3,423 shares were subject to outstanding options or awards. Generally, the Company issues previously unissued shares for the exercise of stock options or vesting of awards; however, shares previously subject to 2014 Plan grants or awards that are forfeited or net settled at exercise or release may be reissued to satisfy future issuances. The following table summarizes changes in the number of shares available for grant under the Company’s equity incentive plans during the nine months ended March 31, 2019: Number of Available for grant at July 1, 2018 10,030 RSUs granted (760) Shares withheld in settlement of taxes and/or exercise price 362 Forfeitures 171 Shares removed (69) Available for grant at March 31, 2019 9,734 Shares removed represents forfeitures of shares and shares withheld in settlement of taxes and/or payment of exercise price related to grants made under the 2008 Plan. As noted above, no new awards will be issued under the 2008 Plan. Stock-based compensation expense related to stock options, restricted stock units (“RSUs”), and the Employee Stock Purchase Plan (as described below) is included in the following line items in the accompanying unaudited consolidated statements of operations and comprehensive income: Three Months Ended March 31, Nine Months Ended March 31, 2018 2019 2018 2019 Cost of revenue – recurring $ 728 $ 784 $ 2,084 $ 2,519 Cost of revenue – implementation services and other 358 408 1,107 1,215 Sales and marketing 1,537 1,799 5,680 5,496 Research and development 926 1,287 2,742 4,025 General and administrative 3,918 5,035 10,278 15,582 Total stock-based compensation expense $ 7,467 $ 9,313 $ 21,891 $ 28,837 In addition, the Company capitalized $550 and $659 of stock-based compensation expense in its capitalized internal-use software costs in the three months ended March 31, 2018 and 2019, respectively, and $1,454 and $1,980 in the nine months ended March 31, 2018 and 2019, respectively. Under the 2008 and 2014 Plans, the exercise price of each option cannot be less than the fair value of a share of common stock on the grant date. The options typically vest ratably over a three or four year period and expire 10 years from the grant date. Stock-based compensation expense for the fair value of the options at their grant date is recognized ratably over the vesting schedule for each separately vesting portion of the award. There were no stock options granted during the nine months ended March 31, 2018 or 2019. The table below presents stock option activity during the nine months ended March 31, 2019: 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 exercised (329) $ 12.60 Options forfeited (4) $ 20.78 Balance at March 31, 2019 1,574 $ 12.33 4.22 $ 120,972 Options exercisable at March 31, 2019 1,547 $ 11.93 4.18 $ 119,496 Options vested and expected to vest at March 31, 2019 1,573 $ 12.32 4.22 $ 120,944 The total intrinsic value of options exercised was $3,758 and $7,197 during the three months ended March 31, 2018 and 2019, respectively, and $31,013 and $20,901 during the nine months ended March 31, 2018 and 2019, respectively. At March 31, 2019, there was $37 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 0.38 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 nine months ended March 31, 2019: Units Weighted RSU balance at July 1, 2018 1,879 $ 43.39 RSUs granted 760 $ 66.42 RSUs vested (623) $ 41.23 RSUs forfeited (167) $ 48.08 RSU balance at March 31, 2019 1,849 $ 53.19 RSUs expected to vest at March 31, 2019 1,705 $ 53.09 At March 31, 2019, there was $44,513 of total unrecognized compensation cost, net of estimated forfeitures, related to unvested restricted stock units granted. That cost is expected to be recognized over a weighted average period of 1.87 years. (b) Employee Stock Purchase Plan Under the Company’s Employee Stock Purchase Plan (“ESPP”), the Company can grant stock purchase rights to all eligible employees during specific offering periods not to exceed twenty-seven months. Each offering period will begin on the trading day closest to May 16 and November 16 of each year. Shares are purchased through employees’ payroll deductions, up to a maximum of 10% of employees’ compensation for each purchase period, at a purchase price equal to 85% of the lesser of the fair market value of the Company’s common stock at the first trading day of the applicable offering period or the purchase date. Participants may purchase up to $25 worth of common stock or 2 shares of common stock in any one year. The ESPP is considered compensatory and results in compensation expense. As of March 31, 2019, a total of 1,053 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 may increase each calendar year, continuing through and including January 1, 2024. The number of shares added each year may be equal to the lesser of (a) 400, (b) seventy-five one hundredths percent (0.75%) of the number of shares of common stock of the Company issued and outstanding on the immediately preceding December 31, or (c) an amount determined by the Company’s board of directors. The Company’s board of directors determined that it would not increase the number of shares in reserve for issuance under the ESPP as of January 1, 2019. The Company issued 58 shares upon the completion of its six-month offering period ending November 15, 2018. The Company recorded compensation expense attributable to the ESPP of $323 and $516 for the three months ended March 31, 2018 and 2019, respectively, and $971 and $1,401 for the nine months ended March 31, 2018 and 2019, respectively, which is included in the summary of stock-based compensation expense above. The grant date fair value of the ESPP offering periods was estimated using the following weighted average assumptions: Nine Months Ended March 31, 2018 2019 Valuation assumptions: Expected dividend yield % % Expected volatility 28.3 - 39.1 % 33.5 - 38.3 % Expected term (years) 0.5 0.5 Risk ‑ free interest rate 1.02 - 1.35 % 2.10 - 2.48 % (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 $1,276 and $1,604 for the three months ended March 31, 2018 and 2019, respectively, and $3,382 and $4,138 for the nine months ended March 31, 2018 and 2019, respectively. |
Net Income Per Share
Net Income Per Share | 9 Months Ended |
Mar. 31, 2019 | |
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 Nine Months Ended March 31, March 31, 2018 2019 2018 2019 Numerator: Net income $ 39,177 $ 28,026 $ 40,151 $ 43,582 Denominator: Weighted-average shares used in computing net income per share: Basic 52,615 52,934 52,334 52,880 Weighted-average effect of potentially dilutive shares: Employee stock options, restricted stock units and employee stock purchase plan shares 2,415 2,531 2,383 2,400 Diluted 55,030 55,465 54,717 55,280 Net income per share: Basic $ 0.74 $ 0.53 $ 0.77 $ 0.82 Diluted $ 0.71 $ $ 0.73 $ 0.79 The Company excluded 28 and 18 outstanding RSUs from the diluted per share calculation during the three months ended March 31, 2018 and 2019, respectively, and 121 and 49 outstanding RSUs from the diluted per share calculation during the nine months ended March 31, 2018 and 2019, 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. The Company completed the repurchase program during the first quarter of fiscal 2019 and repurchased 442 shares for $34,991. All shares of common stock repurchased were retired. |
Income Taxes
Income Taxes | 9 Months Ended |
Mar. 31, 2019 | |
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 $(18,497) and $8,726 for the three months ended March 31, 2018 and 2019, respectively, and $(18,573) and $4,588 for the nine months ended March 31, 2018 and 2019, respectively. The Company’s effective tax rates for the three and nine months ended March 31, 2018 differed from statutory rates primarily due to the release of substantially all of the Company’s valuation allowance and excess tax benefits from employee stock exercises partially offset by the estimated impacts of the Tax Cuts and Jobs Act of 2017 (the “Act”). The Company’s effective tax rates for the three and nine months ended March 31, 2019 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 March 31, 2019, 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 was completed during the second quarter of fiscal 2019 with no additional adjustments made. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Mar. 31, 2019 | |
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 and nine months ended March 31, 2019 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 Accounting Standards Update (“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 Nine Months Ended March 31, 2019 March 31, 2019 Recurring fees $ 129,976 $ 326,012 Implementation services and other 3,379 7,084 Total revenues from contracts $ 133,355 $ 333,096 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 and amortizes 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 Nine Months Ended March 31, 2019 March 31, 2019 Balance at beginning of period $ 3,623 $ — Deferral of revenue 4,730 10,243 Revenue recognized (2,354) (4,244) Balance at end of period $ 5,999 $ 5,999 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 $2,142 in fiscal 2019, $2,876 in fiscal 2020, $881 in fiscal 2021 and $100 thereafter. Deferred contract costs The Company defers certain selling and commission costs that meet the capitalization criteria under ASC 340-40, which were expensed as incurred prior to the adoption of Topic 606. 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 tables present the deferred contract costs balances and the related amortization expense for these deferred contract costs: For the Three Months Ended March 31, 2019 Beginning Capitalized Ending Balance Costs Amortization Balance Costs to obtain a new contract $ 71,476 $ 10,544 $ (4,386) $ 77,634 Costs to fulfill a contract 10,787 5,583 (538) 15,832 Total $ 82,263 $ 16,127 $ (4,924) $ 93,466 For the Nine Months Ended March 31, 2019 Beginning Capitalized Ending Balance Costs Amortization Balance Costs to obtain a new contract $ 68,107 $ 21,890 $ (12,363) $ 77,634 Costs to fulfill a contract — 16,833 (1,001) 15,832 Total $ 68,107 $ 38,723 $ (13,364) $ 93,466 Deferred contract costs are recorded within deferred contract costs and long-term deferred contract costs on the unaudited consolidated balance sheets. Amortization of deferred contract 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 $40,962 as of March 31, 2019, 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 tables summarize the impact from the adoption of Topic 606 on the Company’s unaudited consolidated statements of operations and comprehensive income: Three Months Ended March 31, 2019 As Reported Balances under Impact from (Topic 606) ASC 605 Adoption Statement of Operations Revenues Recurring fees $ 129,976 $ 130,403 $ (427) Implementation services and other 3,379 1,314 2,065 Cost of Revenues Implementation services and other 7,380 12,324 (4,944) Operating expenses Sales and marketing 27,699 33,740 (6,041) General and administrative 23,208 23,426 (218) Income tax expense (benefit) 8,726 5,403 3,323 Net income 28,026 18,508 9,518 Nine Months Ended March 31, 2019 As Reported Balances under Impact from (Topic 606) ASC 605 Adoption Statement of Operations Revenues Recurring fees $ 326,012 $ 327,311 $ (1,299) Implementation services and other 7,084 3,412 3,672 Cost of Revenues Implementation services and other 20,955 36,494 (15,539) Operating expenses Sales and marketing 80,687 90,034 (9,347) General and administrative 68,915 69,388 (473) Income tax expense (benefit) 4,588 (2,589) 7,177 Net income 43,582 23,027 20,555 The following table summarizes the impact from the adoption of Topic 606 on the Company’s unaudited consolidated balance sheet: March 31, 2019 As Reported Balances under Impact from (Topic 606) ASC 605 Adoption Balance Sheet Assets Deferred contract costs $ 19,765 $ — $ 19,765 Prepaid expenses and other 21,922 20,516 1,406 Long-term deferred contract costs 73,701 — 73,701 Long-term prepaid expenses and other 2,766 2,515 251 Deferred income tax assets, net — 24,678 (24,678) Liabilities Accrued expenses 48,396 45,178 3,218 Other long-term liabilities 1,925 8,815 (6,890) Deferred income tax liabilities, net 890 — 890 Stockholders' Equity Retained earnings (accumulated deficit) 89,576 16,349 73,227 The following table summarizes the impact from the adoption of Topic 606 on the Company’s unaudited consolidated statement of cash flows: Nine Months Ended March 31, 2019 As Reported Balances under Impact from (Topic 606) ASC 605 Adoption Statement of Cash Flows Net income $ 43,582 $ 23,027 $ 20,555 Adjustments to reconcile net income to net cash provided by operating activities: Deferred income tax expense (benefit) 4,584 (2,593) 7,177 Changes in operating assets and liabilities: Deferred contract costs (25,359) — (25,359) Prepaid expenses and other (1,485) (2,784) 1,299 Accrued expenses 5,299 8,971 (3,672) Net cash provided by operating activities 79,159 79,159 — In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash: a consensus of the FASB Emerging Issues Task Force (“ASU 2016-18”), which requires that the statement of cash flows explain the change during a reporting period in total of cash, cash equivalents, and amounts generally described as restricted cash and restricted cash equivalents. Effective July 1, 2018, the Company adopted ASU 2016-18 on a retrospective basis and now includes funds held for clients’ cash and cash equivalents as a component of total cash, cash equivalents and funds held for clients’ cash and cash equivalents in the consolidated statement of cash flows. As a result, it reclassified certain amounts on its previously reported unaudited statement of cash flows for the nine-month period ending March 31, 2018 to conform to the requirements of the new standard. The adoption of this standard had no impact to the Company’s balance sheets, statements of operations or statements of changes in stockholders’ equity. 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 completed its accounting under the Act in December 2018. Refer to Note 8 for additional information. In August 2018, the SEC issued a final rule which requires public companies to disclose the changes in each caption of stockholders’ equity and non-controlling interests for the current and comparative year-to-date periods, with subtotals for each interim period and the amount of dividends per share for each class of shares. This rule is effective for interim periods beginning after November 5, 2018, with early adoption permitted. The Company has included this disclosure beginning with its fiscal quarter ended March 31, 2019. |
Recently Issued Accounting Standards | (f) Recently Issued Accounting Standards In February 2016, the FASB established Topic 842, Leases, by issuing ASU 2016-02, which requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU 2018-10, Codification Improvements to Topic 842, Leases; and ASU 2018-11, Targeted Improvements. The new standard establishes a right-of-use model (“ROU”) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. The new standard is effective on July 1, 2019, with early adoption permitted. A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application. An entity may choose to use either (1) its effective date or (2) the beginning of the earliest comparative period presented in the financial statements as its date of initial application. If an entity chooses the second option, the transition requirements for existing leases also apply to leases entered into between the date of initial application and the effective date. The entity must also recast its comparative period financial statements and provide the disclosures required by the new standard for the comparative periods. The Company expects to adopt the new standard on July 1, 2019 and use the effective date as the date of initial application. Consequently, financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before July 1, 2019. While the Company continues to assess all of the effects of adoption, it currently believes the most significant effects relate to (1) the recognition of new ROU assets and lease liabilities on the balance sheet for operating leases; and (2) providing significant new disclosures about leasing activities. The Company expects to elect the ‘package of practical expedients’, which permits the Company not to reassess under the new standard the prior conclusions about lease identification, lease classification and initial direct costs. 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 plans to adopt this standard at the effective date and does not expect any material impact from 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. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Mar. 31, 2019 | |
Summary of Significant Accounting Policies | |
Schedule of disaggregated revenue from customers | Three Months Ended Nine Months Ended March 31, 2019 March 31, 2019 Recurring fees $ 129,976 $ 326,012 Implementation services and other 3,379 7,084 Total revenues from contracts $ 133,355 $ 333,096 |
Schedule of changes in deferred revenue | Three Months Ended Nine Months Ended March 31, 2019 March 31, 2019 Balance at beginning of period $ 3,623 $ — Deferral of revenue 4,730 10,243 Revenue recognized (2,354) (4,244) Balance at end of period $ 5,999 $ 5,999 |
Schedule of deferred contract costs and the related amortization expense | For the Three Months Ended March 31, 2019 Beginning Capitalized Ending Balance Costs Amortization Balance Costs to obtain a new contract $ 71,476 $ 10,544 $ (4,386) $ 77,634 Costs to fulfill a contract 10,787 5,583 (538) 15,832 Total $ 82,263 $ 16,127 $ (4,924) $ 93,466 For the Nine Months Ended March 31, 2019 Beginning Capitalized Ending Balance Costs Amortization Balance Costs to obtain a new contract $ 68,107 $ 21,890 $ (12,363) $ 77,634 Costs to fulfill a contract — 16,833 (1,001) 15,832 Total $ 68,107 $ 38,723 $ (13,364) $ 93,466 |
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 tables summarize the impact from the adoption of Topic 606 on the Company’s unaudited consolidated statements of operations and comprehensive income: Three Months Ended March 31, 2019 As Reported Balances under Impact from (Topic 606) ASC 605 Adoption Statement of Operations Revenues Recurring fees $ 129,976 $ 130,403 $ (427) Implementation services and other 3,379 1,314 2,065 Cost of Revenues Implementation services and other 7,380 12,324 (4,944) Operating expenses Sales and marketing 27,699 33,740 (6,041) General and administrative 23,208 23,426 (218) Income tax expense (benefit) 8,726 5,403 3,323 Net income 28,026 18,508 9,518 Nine Months Ended March 31, 2019 As Reported Balances under Impact from (Topic 606) ASC 605 Adoption Statement of Operations Revenues Recurring fees $ 326,012 $ 327,311 $ (1,299) Implementation services and other 7,084 3,412 3,672 Cost of Revenues Implementation services and other 20,955 36,494 (15,539) Operating expenses Sales and marketing 80,687 90,034 (9,347) General and administrative 68,915 69,388 (473) Income tax expense (benefit) 4,588 (2,589) 7,177 Net income 43,582 23,027 20,555 The following table summarizes the impact from the adoption of Topic 606 on the Company’s unaudited consolidated balance sheet: March 31, 2019 As Reported Balances under Impact from (Topic 606) ASC 605 Adoption Balance Sheet Assets Deferred contract costs $ 19,765 $ — $ 19,765 Prepaid expenses and other 21,922 20,516 1,406 Long-term deferred contract costs 73,701 — 73,701 Long-term prepaid expenses and other 2,766 2,515 251 Deferred income tax assets, net — 24,678 (24,678) Liabilities Accrued expenses 48,396 45,178 3,218 Other long-term liabilities 1,925 8,815 (6,890) Deferred income tax liabilities, net 890 — 890 Stockholders' Equity Retained earnings (accumulated deficit) 89,576 16,349 73,227 The following table summarizes the impact from the adoption of Topic 606 on the Company’s unaudited consolidated statement of cash flows: Nine Months Ended March 31, 2019 As Reported Balances under Impact from (Topic 606) ASC 605 Adoption Statement of Cash Flows Net income $ 43,582 $ 23,027 $ 20,555 Adjustments to reconcile net income to net cash provided by operating activities: Deferred income tax expense (benefit) 4,584 (2,593) 7,177 Changes in operating assets and liabilities: Deferred contract costs (25,359) — (25,359) Prepaid expenses and other (1,485) (2,784) 1,299 Accrued expenses 5,299 8,971 (3,672) Net cash provided by operating activities 79,159 79,159 — |
Balance Sheet Information (Tabl
Balance Sheet Information (Tables) | 9 Months Ended |
Mar. 31, 2019 | |
Balance Sheet Information | |
Schedule of activity in allowance for doubtful accounts | Balance at June 30, 2018 $ 375 Charged to expense 220 Write-offs (132) Balance at March 31, 2019 $ 463 |
Schedule of capitalized internal-use software and accumulated amortization | June 30, March 31, 2018 2019 Capitalized internal-use software $ 67,678 $ 84,022 Accumulated amortization (46,584) (59,438) Capitalized internal-use software, net $ 21,094 $ 24,584 |
Schedule of property and equipment, net | June 30, March 31, 2018 2019 Office equipment $ 3,743 $ 4,439 Computer equipment 29,768 33,893 Furniture and fixtures 10,382 10,789 Software 5,965 6,310 Leasehold improvements 36,366 42,442 Time clocks rented by clients 4,534 4,617 Total 90,758 102,490 Accumulated depreciation (28,729) (37,597) Property and equipment, net $ 62,029 $ 64,893 |
Schedule of amortizable intangible assets and estimated useful lives | June 30, March 31, Useful 2018 2019 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) (7,416) Intangible assets, net $ 13,002 $ 11,314 |
Schedule of future amortization expense for acquired intangible assets | Future amortization expense for acquired intangible assets is as follows, as of March 31, 2019: Remainder of fiscal 2019 $ 563 Fiscal 2020 2,251 Fiscal 2021 2,251 Fiscal 2022 2,232 Fiscal 2023 2,118 Thereafter 1,899 Total $ 11,314 |
Schedule of components of accrued expenses | June 30, March 31, 2018 2019 Accrued payroll and personnel costs $ 31,206 $ 31,355 Lease exit obligations 2,143 1,122 Deferred revenue 654 5,246 Other 8,238 10,673 Total accrued expenses $ 42,241 $ 48,396 |
Schedule of the changes in the remaining lease exit obligations | Balance at June 30, 2018 $ 3,261 Payments (1,823) Adjustments 94 Balance at March 31, 2019 $ 1,532 |
Corporate Investments and Fun_2
Corporate Investments and Funds Held For Clients (Tables) | 9 Months Ended |
Mar. 31, 2019 | |
Corporate Investments and Funds Held for Clients | |
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 March 31, 2019 Gross Gross Amortized unrealized unrealized Type of Issue cost gains losses Fair value Cash and cash equivalents $ 90,860 $ — $ (4) $ 90,856 Funds held for clients' cash and cash equivalents 1,596,721 — (2) 1,596,719 Available-for-sale securities: Commercial paper 92,844 16 (12) 92,848 Corporate bonds 31,637 39 (21) 31,655 Asset-backed securities 37,725 30 (13) 37,742 U.S. treasury securities 12,461 — (2) 12,459 Total available-for-sale securities (2) 174,667 85 (48) 174,704 Total investments $ 1,862,248 $ 85 $ (54) $ 1,862,279 (2) Included within the fair value of total available-for-sale securities above is $49,114 of corporate investments and $125,590 of funds held for clients |
Tabular disclosure of the classification of investments | June 30, March 31, 2018 2019 Cash and cash equivalents $ 137,193 $ 90,856 Corporate investments 732 48,159 Funds held for clients 1,225,614 1,722,309 Long-term prepaid expenses and other — 955 Total investments $ 1,363,539 $ 1,862,279 |
Schedule of available-for-sale securities that have been in an unrealized loss position for less than and greater 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 March 31, 2019 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 $ (12) $ 58,454 $ — $ — $ (12) $ 58,454 Corporate bonds (3) 2,753 (18) 10,087 (21) 12,840 Asset-backed securities (1) 5,497 (12) 4,872 (13) 10,369 U.S. treasury securities (2) 12,459 — — (2) 12,459 Total available-for-sale securities $ (18) $ 79,163 $ (30) $ 14,959 $ (48) $ 94,122 |
Schedule of expected maturities of available-for-sale securities | Expected maturities of available-for-sale securities at March 31, 2019 are as follows: Amortized cost Fair value One year or less $ 164,169 $ 164,174 One year to two years 8,998 9,025 Two years to three years 1,500 1,505 Total available-for-sale securities $ 174,667 $ 174,704 |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 9 Months Ended |
Mar. 31, 2019 | |
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 $ — March 31, 2019 Total Level 1 Level 2 Level 3 Cash and cash equivalents $ 90,856 $ 64,850 $ 26,006 $ — Funds held for clients' cash and cash equivalents 1,596,719 1,575,810 20,909 — Available-for-sale securities: Commercial paper 92,848 — 92,848 — Corporate bonds 31,655 — 31,655 — Asset-backed securities 37,742 — 37,742 — U.S. treasury securities 12,459 — 12,459 — Total available-for-sale securities 174,704 — 174,704 — Total investments $ 1,862,279 $ 1,640,660 $ 221,619 $ — |
Benefit Plans (Tables)
Benefit Plans (Tables) | 9 Months Ended |
Mar. 31, 2019 | |
Benefit Plans | |
Summary of changes in shares available for grant under equity incentive plans | Number of Available for grant at July 1, 2018 10,030 RSUs granted (760) Shares withheld in settlement of taxes and/or exercise price 362 Forfeitures 171 Shares removed (69) Available for grant at March 31, 2019 9,734 |
Schedule of stock-based compensation expense related to stock options, restricted stock units and the Employee Stock Purchase Plan | Three Months Ended March 31, Nine Months Ended March 31, 2018 2019 2018 2019 Cost of revenue – recurring $ 728 $ 784 $ 2,084 $ 2,519 Cost of revenue – implementation services and other 358 408 1,107 1,215 Sales and marketing 1,537 1,799 5,680 5,496 Research and development 926 1,287 2,742 4,025 General and administrative 3,918 5,035 10,278 15,582 Total stock-based compensation expense $ 7,467 $ 9,313 $ 21,891 $ 28,837 |
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 exercised (329) $ 12.60 Options forfeited (4) $ 20.78 Balance at March 31, 2019 1,574 $ 12.33 4.22 $ 120,972 Options exercisable at March 31, 2019 1,547 $ 11.93 4.18 $ 119,496 Options vested and expected to vest at March 31, 2019 1,573 $ 12.32 4.22 $ 120,944 |
Schedule of restricted stock unit activity | Units Weighted RSU balance at July 1, 2018 1,879 $ 43.39 RSUs granted 760 $ 66.42 RSUs vested (623) $ 41.23 RSUs forfeited (167) $ 48.08 RSU balance at March 31, 2019 1,849 $ 53.19 RSUs expected to vest at March 31, 2019 1,705 $ 53.09 |
Summary of weighted average assumptions used for estimating grant date fair value of the ESPP | Nine Months Ended March 31, 2018 2019 Valuation assumptions: Expected dividend yield % % Expected volatility 28.3 - 39.1 % 33.5 - 38.3 % Expected term (years) 0.5 0.5 Risk ‑ free interest rate 1.02 - 1.35 % 2.10 - 2.48 % |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 9 Months Ended |
Mar. 31, 2019 | |
Net Income Per Share | |
Schedule of calculation of basic and diluted net income per share | Three Months Ended Nine Months Ended March 31, March 31, 2018 2019 2018 2019 Numerator: Net income $ 39,177 $ 28,026 $ 40,151 $ 43,582 Denominator: Weighted-average shares used in computing net income per share: Basic 52,615 52,934 52,334 52,880 Weighted-average effect of potentially dilutive shares: Employee stock options, restricted stock units and employee stock purchase plan shares 2,415 2,531 2,383 2,400 Diluted 55,030 55,465 54,717 55,280 Net income per share: Basic $ 0.74 $ 0.53 $ 0.77 $ 0.82 Diluted $ 0.71 $ $ 0.73 $ 0.79 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Current Presentation and Revenue Recognition (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2019 | Mar. 31, 2018 | Jun. 30, 2018 | |
Current presentation | |||||
Amount of prepaid expenses and other reclassified to corporate investments for comparability | $ 732 | ||||
Revenue from contracts terms | |||||
Period of term arrangements | 2 years | ||||
Disaggregation of revenue | |||||
Revenues from Contracts | $ 133,355 | $ 333,096 | |||
Deferred contract costs | |||||
Amortization period of capitalized contract costs | 7 years | 7 years | |||
Beginning Balance | $ 82,263 | $ 68,107 | |||
Capitalized Costs | 16,127 | 38,723 | |||
Amortization | (4,924) | (13,364) | |||
Ending Balance | 93,466 | $ 93,466 | |||
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 | |||||
Revenue from contracts terms | |||||
Notice period to cancel agreement | 60 days | ||||
Deferred and amortized period of implementation fees | 24 months | ||||
Costs To Obtain A New Contract | |||||
Deferred contract costs | |||||
Beginning Balance | 71,476 | $ 68,107 | |||
Capitalized Costs | 10,544 | 21,890 | |||
Amortization | (4,386) | (12,363) | |||
Ending Balance | 77,634 | 77,634 | |||
Costs to Fulfill A Contract | |||||
Deferred contract costs | |||||
Beginning Balance | 10,787 | 0 | |||
Capitalized Costs | 5,583 | 16,833 | |||
Amortization | (538) | (1,001) | |||
Ending Balance | 15,832 | 15,832 | |||
Recurring fees | |||||
Disaggregation of revenue | |||||
Revenues from Contracts | 129,976 | $ 105,857 | 326,012 | $ 264,443 | |
Remaining Performance Obligations | |||||
Minimum value of unsatisfied performance obligations on term-based contracts | 40,962 | 40,962 | |||
Implementation services and other | |||||
Disaggregation of revenue | |||||
Revenues from Contracts | 3,379 | $ 4,831 | 7,084 | $ 10,349 | |
Changes in deferred revenue related to nonrefundable upfront fees | |||||
Balance at beginning of period | 3,623 | 0 | |||
Deferral of revenue | 4,730 | 10,243 | |||
Revenue recognized | (2,354) | (4,244) | |||
Balance at end of period | $ 5,999 | 5,999 | |||
Deferred revenue expected to be recognized in fiscal 2019 | 2,142 | ||||
Deferred revenue expected to be recognized in fiscal 2020 | 2,876 | ||||
Deferred revenue expected to be recognized in fiscal 2021 | 881 | ||||
Deferred revenue expected to be recognized thereafter | $ 100 | ||||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-04-01 | Recurring fees | |||||
Remaining Performance Obligations | |||||
Remaining performance obligation period | 24 months | 24 months |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Adjustments for Adoption (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Jul. 01, 2018 | Jun. 30, 2018 |
Changes related to contracts with customers, assets and liabilities | |||
Retained earnings (accumulated deficit) | $ 89,576 | $ 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) | $ 73,227 | $ 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_6
Summary of Significant Accounting Policies - Cumulative effect of balance sheet changes (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Jul. 01, 2018 | Jun. 30, 2018 |
Assets | |||
Deferred contract costs | $ 19,765 | $ 14,783 | |
Prepaid expenses and other | 21,922 | 12,978 | $ 11,248 |
Long-term deferred contract costs | 73,701 | 53,324 | |
Long-term prepaid expenses and other | 2,766 | 2,730 | 1,504 |
Deferred income tax assets, net | 3,749 | 22,140 | |
Stockholders' equity: | |||
Retained earnings (accumulated deficit) | 89,576 | $ 45,994 | (6,678) |
Impact from Adoption | Topic 606 | |||
Assets | |||
Deferred contract costs | 19,765 | 14,783 | |
Prepaid expenses and other | 1,406 | 1,730 | |
Long-term deferred contract costs | 73,701 | 53,324 | |
Long-term prepaid expenses and other | 251 | 1,226 | |
Deferred income tax assets, net | (24,678) | (18,391) | |
Stockholders' equity: | |||
Retained earnings (accumulated deficit) | 73,227 | $ 52,672 | |
Balances under ASC 605 | |||
Assets | |||
Prepaid expenses and other | 20,516 | ||
Long-term prepaid expenses and other | 2,515 | ||
Deferred income tax assets, net | 24,678 | ||
Stockholders' equity: | |||
Retained earnings (accumulated deficit) | $ 16,349 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Impact on Statement of Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2019 | Mar. 31, 2018 | |
Revenues: | ||||
Revenues from Contracts | $ 133,355 | $ 333,096 | ||
Cost of revenues: | ||||
Total cost of revenues | 39,745 | $ 38,652 | 113,757 | $ 110,451 |
Operating expenses: | ||||
Sales and marketing | 27,699 | 26,004 | 80,687 | 68,782 |
General and administrative | 23,208 | 19,228 | 68,915 | 53,338 |
Income tax expense (benefit) | 8,726 | (18,497) | 4,588 | (18,573) |
Net income | 28,026 | 39,177 | 43,582 | 40,151 |
Impact from Adoption | Topic 606 | ||||
Operating expenses: | ||||
Sales and marketing | (6,041) | (9,347) | ||
General and administrative | (218) | (473) | ||
Income tax expense (benefit) | 3,323 | 7,177 | ||
Net income | 9,518 | 20,555 | ||
Balances under ASC 605 | ||||
Operating expenses: | ||||
Sales and marketing | 33,740 | 90,034 | ||
General and administrative | 23,426 | 69,388 | ||
Income tax expense (benefit) | 5,403 | (2,589) | ||
Net income | 18,508 | 23,027 | ||
Recurring fees | ||||
Revenues: | ||||
Revenues from Contracts | 129,976 | 105,857 | 326,012 | 264,443 |
Cost of revenues: | ||||
Total cost of revenues | 32,365 | 26,982 | 92,802 | 76,711 |
Recurring fees | Impact from Adoption | Topic 606 | ||||
Revenues: | ||||
Revenues from Contracts | (427) | (1,299) | ||
Recurring fees | Balances under ASC 605 | ||||
Revenues: | ||||
Revenues from Contracts | 130,403 | 327,311 | ||
Implementation services and other | ||||
Revenues: | ||||
Revenues from Contracts | 3,379 | 4,831 | 7,084 | 10,349 |
Cost of revenues: | ||||
Total cost of revenues | 7,380 | $ 11,670 | 20,955 | $ 33,740 |
Implementation services and other | Impact from Adoption | Topic 606 | ||||
Revenues: | ||||
Revenues from Contracts | 2,065 | 3,672 | ||
Cost of revenues: | ||||
Total cost of revenues | (4,944) | (15,539) | ||
Implementation services and other | Balances under ASC 605 | ||||
Revenues: | ||||
Revenues from Contracts | 1,314 | 3,412 | ||
Cost of revenues: | ||||
Total cost of revenues | $ 12,324 | $ 36,494 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Impact on Balance Sheet (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Jul. 01, 2018 | Jun. 30, 2018 |
Assets | |||
Deferred contract costs | $ 19,765 | $ 14,783 | |
Prepaid expenses and other | 21,922 | 12,978 | $ 11,248 |
Long-term deferred contract costs | 73,701 | 53,324 | |
Long-term prepaid expenses and other | 2,766 | 2,730 | 1,504 |
Deferred income tax assets, net | 3,749 | 22,140 | |
Liabilities | |||
Accrued expenses | 48,396 | 42,241 | |
Other long-term liabilities | 1,925 | 1,118 | |
Deferred income tax liabilities, net | 890 | ||
Stockholders' equity: | |||
Retained earnings (accumulated deficit) | 89,576 | $ 45,994 | (6,678) |
Impact from Adoption | Topic 606 | |||
Assets | |||
Deferred contract costs | 19,765 | 14,783 | |
Prepaid expenses and other | 1,406 | 1,730 | |
Long-term deferred contract costs | 73,701 | 53,324 | |
Long-term prepaid expenses and other | 251 | 1,226 | |
Deferred income tax assets, net | (24,678) | (18,391) | |
Liabilities | |||
Accrued expenses | 3,218 | ||
Other long-term liabilities | (6,890) | ||
Deferred income tax liabilities, net | 890 | ||
Stockholders' equity: | |||
Retained earnings (accumulated deficit) | 73,227 | $ 52,672 | |
Balances under ASC 605 | |||
Assets | |||
Prepaid expenses and other | 20,516 | ||
Long-term prepaid expenses and other | 2,515 | ||
Deferred income tax assets, net | 24,678 | ||
Liabilities | |||
Accrued expenses | 45,178 | ||
Other long-term liabilities | 8,815 | ||
Stockholders' equity: | |||
Retained earnings (accumulated deficit) | $ 16,349 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Impact on Cash Flow Statement (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | [1] | |
Cash Flows | |||
Net income | $ 43,582 | $ 40,151 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Deferred income tax expense (benefit) | 4,584 | (18,603) | |
Changes in operating assets and liabilities: | |||
Deferred contract costs | (25,359) | ||
Prepaid expenses and other | (1,485) | (1,678) | |
Accrued expenses | 5,299 | 1,762 | |
Net cash provided by operating activities | 79,159 | $ 69,343 | |
Impact from Adoption | Topic 606 | |||
Cash Flows | |||
Net income | 20,555 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Deferred income tax expense (benefit) | 7,177 | ||
Changes in operating assets and liabilities: | |||
Deferred contract costs | (25,359) | ||
Prepaid expenses and other | 1,299 | ||
Accrued expenses | (3,672) | ||
Balances under ASC 605 | |||
Cash Flows | |||
Net income | 23,027 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Deferred income tax expense (benefit) | (2,593) | ||
Changes in operating assets and liabilities: | |||
Prepaid expenses and other | (2,784) | ||
Accrued expenses | 8,971 | ||
Net cash provided by operating activities | $ 79,159 | ||
[1] | Certain amounts have been reclassified to reflect the adoption of Accounting Standards Update (“ASU”) No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force).” |
Balance Sheet Information - All
Balance Sheet Information - Allowance for Doubtful Accounts, Capitalized Internal-Use Software and Property, Plant and Equipment (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2019 | Mar. 31, 2018 | Jun. 30, 2018 | ||
Activity in allowance for doubtful accounts | ||||||
Balance at beginning of period | $ 375 | |||||
Charged to expense | 220 | $ 149 | [1] | |||
Write-offs | (132) | |||||
Balance at end of period | $ 463 | 463 | ||||
Capitalized internal-use software and accumulated amortization | ||||||
Capitalized internal-use software | 84,022 | 84,022 | $ 67,678 | |||
Accumulated amortization | (59,438) | (59,438) | (46,584) | |||
Capitalized internal-use software, net | 24,584 | 24,584 | 21,094 | |||
Property and equipment, net | ||||||
Property and equipment, gross | 102,490 | 102,490 | 90,758 | |||
Accumulated depreciation | (37,597) | (37,597) | (28,729) | |||
Property and equipment, net | 64,893 | 64,893 | 62,029 | |||
Depreciation expense | 3,626 | $ 3,189 | 10,671 | 9,206 | ||
Cost of revenue - recurring | ||||||
Capitalized internal-use software and accumulated amortization | ||||||
Amortization of capitalized internal-use software | 4,224 | $ 3,655 | 12,854 | $ 10,358 | ||
Office equipment | ||||||
Property and equipment, net | ||||||
Property and equipment, gross | 4,439 | 4,439 | 3,743 | |||
Computer equipment | ||||||
Property and equipment, net | ||||||
Property and equipment, gross | 33,893 | 33,893 | 29,768 | |||
Furniture and fixtures | ||||||
Property and equipment, net | ||||||
Property and equipment, gross | 10,789 | 10,789 | 10,382 | |||
Software | ||||||
Property and equipment, net | ||||||
Property and equipment, gross | 6,310 | 6,310 | 5,965 | |||
Leasehold improvements | ||||||
Property and equipment, net | ||||||
Property and equipment, gross | 42,442 | 42,442 | 36,366 | |||
Time clocks rented by clients | ||||||
Property and equipment, net | ||||||
Property and equipment, gross | $ 4,617 | $ 4,617 | $ 4,534 | |||
[1] | Certain amounts have been reclassified to reflect the adoption of Accounting Standards Update (“ASU”) No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force).” |
Balance Sheet Information - Int
Balance Sheet Information - Intangible Assets, Accrued Expenses and Lease Exit Obligations (Details) ft² in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2019USD ($) | Mar. 31, 2018USD ($) | Mar. 31, 2019USD ($) | Mar. 31, 2018USD ($) | Jun. 30, 2018USD ($)ft² | |
Amortizable intangible assets | |||||
Intangible assets, gross | $ 18,730 | $ 18,730 | $ 18,730 | ||
Accumulated amortization | (7,416) | (7,416) | (5,728) | ||
Intangible assets, net | 11,314 | 11,314 | 13,002 | ||
Amortization expense for acquired intangible assets | 562 | $ 358 | 1,688 | $ 1,076 | |
Future amortization expense for acquired intangible assets | |||||
Remainder of fiscal 2019 | 563 | 563 | |||
Fiscal 2020 | 2,251 | 2,251 | |||
Fiscal 2021 | 2,251 | 2,251 | |||
Fiscal 2022 | 2,232 | 2,232 | |||
Fiscal 2023 | 2,118 | 2,118 | |||
Thereafter | 1,899 | 1,899 | |||
Intangible assets, net | 11,314 | 11,314 | 13,002 | ||
Components of accrued expenses | |||||
Accrued payroll and personnel costs | 31,355 | 31,355 | 31,206 | ||
Lease exit obligations | 1,122 | 1,122 | 2,143 | ||
Deferred revenue | 5,246 | 5,246 | 654 | ||
Other | 10,673 | 10,673 | 8,238 | ||
Total accrued expenses | 48,396 | 48,396 | $ 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 | (1,823) | ||||
Adjustments | 94 | ||||
Balance at end of period | 1,532 | 1,532 | |||
Client relationships | |||||
Amortizable intangible assets | |||||
Intangible assets, gross | 18,130 | $ 18,130 | $ 18,130 | ||
Client relationships | Minimum | |||||
Amortizable intangible assets | |||||
Useful life | 7 years | ||||
Client relationships | Maximum | |||||
Amortizable intangible assets | |||||
Useful life | 9 years | ||||
Non-solicitation agreements | |||||
Amortizable intangible assets | |||||
Intangible assets, gross | $ 600 | $ 600 | $ 600 | ||
Non-solicitation agreements | Minimum | |||||
Amortizable intangible assets | |||||
Useful life | 2 years | ||||
Non-solicitation agreements | Maximum | |||||
Amortizable intangible assets | |||||
Useful life | 4 years |
Corporate Investments and Fun_3
Corporate Investments and Funds Held For Clients - Reconciliation (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Jun. 30, 2018 | Mar. 31, 2018 | [1] |
Corporate Investments and Funds Held for Clients [Line Items] | ||||
Amortized cost of cash and cash equivalents | $ 90,860 | $ 137,193 | ||
Cash and cash equivalents, gross unrealized losses | (4) | |||
Fair value of cash and cash equivalents | 90,856 | 137,193 | $ 129,530 | |
Amortized cost of funds held for clients' cash and cash equivalents | 1,596,721 | 1,102,541 | ||
Funds held for clients' cash and cash equivalents, gross unrealized losses | (2) | (3) | ||
Fair value of funds held for clients' cash and cash equivalents | 1,596,719 | 1,102,538 | $ 1,272,767 | |
Available-for-sale Securities | ||||
Amortized cost | 174,667 | 123,991 | ||
Gross unrealized gains | 85 | 12 | ||
Gross unrealized losses | (48) | (195) | ||
Fair value | 174,704 | 123,808 | ||
Total investments at amortized cost | 1,862,248 | 1,363,725 | ||
Total investments gross unrealized gain | 85 | 12 | ||
Total investments gross unrealized loss | (54) | (198) | ||
Total investments at fair value | 1,862,279 | 1,363,539 | ||
Commercial paper | ||||
Available-for-sale Securities | ||||
Amortized cost | 92,844 | 50,703 | ||
Gross unrealized gains | 16 | 3 | ||
Gross unrealized losses | (12) | (4) | ||
Fair value | 92,848 | 50,702 | ||
Corporate bonds | ||||
Available-for-sale Securities | ||||
Amortized cost | 31,637 | 37,508 | ||
Gross unrealized gains | 39 | 8 | ||
Gross unrealized losses | (21) | (134) | ||
Fair value | 31,655 | 37,382 | ||
Asset-backed securities | ||||
Available-for-sale Securities | ||||
Amortized cost | 37,725 | 25,901 | ||
Gross unrealized gains | 30 | 1 | ||
Gross unrealized losses | (13) | (55) | ||
Fair value | 37,742 | 25,847 | ||
U.S. treasury securities | ||||
Available-for-sale Securities | ||||
Amortized cost | 12,461 | 9,879 | ||
Gross unrealized losses | (2) | (2) | ||
Fair value | 12,459 | 9,877 | ||
Corporate investments | ||||
Available-for-sale Securities | ||||
Total investments at fair value | 49,114 | 732 | ||
Funds Held for Clients | ||||
Available-for-sale Securities | ||||
Total investments at fair value | $ 125,590 | $ 123,076 | ||
[1] | Certain amounts have been reclassified to reflect the adoption of Accounting Standards Update (“ASU”) No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force).” |
Corporate Investments and Fun_4
Corporate Investments and Funds Held For Clients - Classification (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2019 | Mar. 31, 2018 | 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 | $ 90,856 | $ 129,530 | [1] | $ 90,856 | $ 129,530 | [1] | 137,193 |
Corporate investments | 48,159 | 48,159 | 732 | ||||
Funds held for clients | 1,722,309 | 1,722,309 | 1,225,614 | ||||
Long-term prepaid expenses and other | 955 | 955 | |||||
Total investments at fair value | 1,862,279 | 1,862,279 | 1,363,539 | ||||
Available-for-sale securities in an unrealized loss position | |||||||
Unrealized loss on available-for-sale securities in a loss position for less than 12 months | (18) | (18) | (195) | ||||
Fair market value of available-for-sale securities in an unrealized loss position less than 12 months | 79,163 | 79,163 | 75,672 | ||||
Unrealized loss on available-for-sale securities in a loss position for greater than 12 months | (30) | (30) | |||||
Fair market value of available-for-sale securities in an unrealized loss position greater than 12 months | 14,959 | 14,959 | |||||
Total gross unrealized losses | (48) | (48) | (195) | ||||
Total fair value | 94,122 | 94,122 | 75,672 | ||||
Gross realized gains and losses on the sale of available-for-sale securities | 0 | 0 | 0 | 0 | |||
OTTI recognized in AOCI | 0 | 0 | 0 | 0 | |||
Reclassification out of Accumulated Other Comprehensive Loss | |||||||
Available-for-sale securities in an unrealized loss position | |||||||
Gross realized gains and losses on the sale of available-for-sale securities | 0 | $ 0 | 0 | $ 0 | |||
Commercial paper | |||||||
Available-for-sale securities in an unrealized loss position | |||||||
Unrealized loss on available-for-sale securities in a loss position for less than 12 months | (12) | (12) | (4) | ||||
Fair market value of available-for-sale securities in an unrealized loss position less than 12 months | 58,454 | 58,454 | 23,657 | ||||
Total gross unrealized losses | (12) | (12) | (4) | ||||
Total fair value | 58,454 | 58,454 | 23,657 | ||||
Corporate bonds | |||||||
Available-for-sale securities in an unrealized loss position | |||||||
Unrealized loss on available-for-sale securities in a loss position for less than 12 months | (3) | (3) | (134) | ||||
Fair market value of available-for-sale securities in an unrealized loss position less than 12 months | 2,753 | 2,753 | 29,122 | ||||
Unrealized loss on available-for-sale securities in a loss position for greater than 12 months | (18) | (18) | |||||
Fair market value of available-for-sale securities in an unrealized loss position greater than 12 months | 10,087 | 10,087 | |||||
Total gross unrealized losses | (21) | (21) | (134) | ||||
Total fair value | 12,840 | 12,840 | 29,122 | ||||
Asset-backed securities | |||||||
Available-for-sale securities in an unrealized loss position | |||||||
Unrealized loss on available-for-sale securities in a loss position for less than 12 months | (1) | (1) | (55) | ||||
Fair market value of available-for-sale securities in an unrealized loss position less than 12 months | 5,497 | 5,497 | 17,960 | ||||
Unrealized loss on available-for-sale securities in a loss position for greater than 12 months | (12) | (12) | |||||
Fair market value of available-for-sale securities in an unrealized loss position greater than 12 months | 4,872 | 4,872 | |||||
Total gross unrealized losses | (13) | (13) | (55) | ||||
Total fair value | 10,369 | 10,369 | 17,960 | ||||
U.S. treasury securities | |||||||
Available-for-sale securities in an unrealized loss position | |||||||
Unrealized loss on available-for-sale securities in a loss position for less than 12 months | (2) | (2) | (2) | ||||
Fair market value of available-for-sale securities in an unrealized loss position less than 12 months | 12,459 | 12,459 | 4,933 | ||||
Total gross unrealized losses | (2) | (2) | (2) | ||||
Total fair value | $ 12,459 | $ 12,459 | $ 4,933 | ||||
[1] | Certain amounts have been reclassified to reflect the adoption of Accounting Standards Update (“ASU”) No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force).” |
Corporate Investments and Fun_5
Corporate Investments and Funds Held For Clients - Maturities (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Jun. 30, 2018 |
Expected maturities of available-for-sale securities, amortized cost | ||
One year or less | $ 164,169 | |
One year to two years | 8,998 | |
Two years to three years | 1,500 | |
Total available-for-sale securities | 174,667 | $ 123,991 |
Expected maturities of available-for-sale securities, fair value | ||
One year or less | 164,174 | |
One year to two years | 9,025 | |
Two years to three years | 1,505 | |
Total available-for-sale securities | $ 174,704 | $ 123,808 |
Fair Value Measurement (Details
Fair Value Measurement (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Jun. 30, 2018 | Mar. 31, 2018 | |
Fair value measurement | ||||
Cash and cash equivalents | $ 90,856 | $ 137,193 | $ 129,530 | [1] |
Funds held for clients' cash and cash equivalents | 1,596,719 | 1,102,538 | 1,272,767 | [1] |
Total investments at fair value | 1,862,279 | 1,363,539 | ||
Available-for-sale securities: | ||||
Available for sale securities | 174,704 | 123,808 | ||
Fair value asset transfers | ||||
Transfers from level 1 to level 2 | 0 | 0 | ||
Transfers from level 2 to level 1 | 0 | $ 0 | ||
Amount of prepaid expenses and other reclassified to corporate investments for comparability | 732 | |||
Level 1 | ||||
Fair value measurement | ||||
Cash and cash equivalents | 64,850 | 137,193 | ||
Funds held for clients' cash and cash equivalents | 1,575,810 | 1,076,414 | ||
Total investments at fair value | 1,640,660 | 1,213,607 | ||
Level 2 | ||||
Fair value measurement | ||||
Cash and cash equivalents | 26,006 | |||
Funds held for clients' cash and cash equivalents | 20,909 | 26,124 | ||
Total investments at fair value | 221,619 | 149,932 | ||
Available-for-sale securities: | ||||
Available for sale securities | 174,704 | 123,808 | ||
Level 3 | ||||
Available-for-sale securities: | ||||
Available for sale securities | 0 | 0 | ||
Commercial paper | ||||
Available-for-sale securities: | ||||
Available for sale securities | 92,848 | 50,702 | ||
Commercial paper | Level 2 | ||||
Available-for-sale securities: | ||||
Available for sale securities | 92,848 | 50,702 | ||
Corporate bonds | ||||
Available-for-sale securities: | ||||
Available for sale securities | 31,655 | 37,382 | ||
Corporate bonds | Level 2 | ||||
Available-for-sale securities: | ||||
Available for sale securities | 31,655 | 37,382 | ||
Asset-backed securities | ||||
Available-for-sale securities: | ||||
Available for sale securities | 37,742 | 25,847 | ||
Asset-backed securities | Level 2 | ||||
Available-for-sale securities: | ||||
Available for sale securities | 37,742 | 25,847 | ||
U.S. treasury securities | ||||
Available-for-sale securities: | ||||
Available for sale securities | 12,459 | 9,877 | ||
U.S. treasury securities | Level 2 | ||||
Available-for-sale securities: | ||||
Available for sale securities | $ 12,459 | $ 9,877 | ||
[1] | Certain amounts have been reclassified to reflect the adoption of Accounting Standards Update (“ASU”) No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force).” |
Benefit Plans - General Informa
Benefit Plans - General Information (Details) shares in Thousands | 9 Months Ended |
Mar. 31, 2019shares | |
Equity Incentive Plans | |
Equity Incentive Plans | |
Number of shares of common stock reserved for issuance | 13,157 |
Number of shares allocated but not yet issued that are subject to outstanding options or awards | 3,423 |
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 | 9 Months Ended |
Mar. 31, 2019shares | |
Shares Available for Grant | |
Balance at the beginning of the period | 10,030 |
RSUs granted | (760) |
Shares withheld in settlement of taxes and/or exercise price | 362 |
Forfeitures | 171 |
Shares removed | (69) |
Balance at the end of the period | 9,734 |
Benefit Plans - Compensation Ex
Benefit Plans - Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2019 | Mar. 31, 2018 | |
Benefit Plans | ||||
Total stock-based compensation expense | $ 9,313 | $ 7,467 | $ 28,837 | $ 21,891 |
Stock-based compensation expense capitalized | 659 | 550 | 1,980 | 1,454 |
Cost of revenue - recurring | ||||
Benefit Plans | ||||
Total stock-based compensation expense | 784 | 728 | 2,519 | 2,084 |
Cost of revenue - implementation services and other | ||||
Benefit Plans | ||||
Total stock-based compensation expense | 408 | 358 | 1,215 | 1,107 |
Sales and marketing | ||||
Benefit Plans | ||||
Total stock-based compensation expense | 1,799 | 1,537 | 5,496 | 5,680 |
Research and development | ||||
Benefit Plans | ||||
Total stock-based compensation expense | 1,287 | 926 | 4,025 | 2,742 |
General and administrative | ||||
Benefit Plans | ||||
Total stock-based compensation expense | $ 5,035 | $ 3,918 | $ 15,582 | $ 10,278 |
Benefit Plans - Stock Option Ac
Benefit Plans - Stock Option Activity (Details) - Stock options - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2019 | Mar. 31, 2018 | 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 exercised | (329) | ||||
Options forfeited | (4) | ||||
Balance at the end of the period | 1,574 | 1,574 | 1,907 | ||
Options Outstanding, Weighted average exercise price | |||||
Balance at the beginning of the period (in dollars per share) | $ 12.40 | ||||
Options exercised (in dollars per share) | 12.60 | ||||
Options forfeited (in dollars per share) | 20.78 | ||||
Balance at the end of the period (in dollars per share) | $ 12.33 | $ 12.33 | $ 12.40 | ||
Options Additional Disclosures | |||||
Weighted average remaining contractual term | 4 years 2 months 19 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 2 months 5 days | ||||
Aggregate intrinsic value, at the end of the period | $ 120,972 | $ 120,972 | $ 88,595 | ||
Options exercisable at the end of the period (in shares) | 1,547 | 1,547 | |||
Options exercisable at the end of the period, weighted average exercise price (in dollars per share) | $ 11.93 | $ 11.93 | |||
Options exercisable intrinsic value | $ 119,496 | $ 119,496 | |||
Total intrinsic value of options exercised | $ 7,197 | $ 3,758 | $ 20,901 | $ 31,013 | |
Options vested and expected to vest | |||||
Number of shares | 1,573 | 1,573 | |||
Weighted average exercise price | $ 12.32 | $ 12.32 | |||
Weighted average remaining contractual term | 4 years 2 months 19 days | ||||
Aggregate intrinsic value | $ 120,944 | $ 120,944 | |||
Unrecognized Compensation Costs Not yet Recognized | |||||
Total unrecognized compensation cost, net of estimated forfeitures, related to unvested stock options | $ 37 | $ 37 | |||
Weighted average period to recognize unrecognized compensation cost | 4 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 | 9 Months Ended |
Mar. 31, 2019USD ($)$ / sharesshares | |
Unrecognized Compensation Costs Not yet Recognized | |
Total unrecognized compensation cost, net of estimated forfeitures related to unvested RSUs | $ | $ 44,513 |
Weighted average period to recognize unrecognized compensation cost | 1 year 10 months 13 days |
RSUs Outstanding Rollforward, Units | |
RSU Balance at the beginning of the period | shares | 1,879 |
RSUs granted | shares | 760 |
RSUs vested | shares | (623) |
RSUs forfeited | shares | (167) |
RSU Balance at the end of the period | shares | 1,849 |
RSUs expected to vest at the end of the period | shares | 1,705 |
RSUs Outstanding, Weighted average grant date fair value | |
RSU Balance at the beginning of the period | $ / shares | $ 43.39 |
RSUs granted | $ / shares | 66.42 |
RSUs vested | $ / shares | 41.23 |
RSUs cancelled/forfeited | $ / shares | 48.08 |
RSU Balance at the end of the period | $ / shares | 53.19 |
RSUs expected to vest at the end of the period | $ / shares | $ 53.09 |
Maximum | |
Vesting period | |
Vesting period | 4 years |
Benefit Plans - ESPP Informatio
Benefit Plans - ESPP Information (Details) - USD ($) shares in Thousands, $ in Thousands | Nov. 15, 2018 | Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2019 | Mar. 31, 2018 |
Equity Incentive Plans | |||||
Compensation expense | $ 9,313 | $ 7,467 | $ 28,837 | $ 21,891 | |
Employee stock purchase plan shares | |||||
Equity Incentive Plans | |||||
Percentage of employee compensation, maximum | 10.00% | 10.00% | |||
Percentage of fair market value as a purchase price | 85.00% | ||||
Maximum value of purchase per employee | $ 25 | ||||
Number of shares per employee, maximum | 2 | ||||
Period during which shares can be purchased | 1 year | ||||
Number of shares of common stock reserved for issuance | 1,053 | 1,053 | |||
Potential number of additional shares reserved for issuance each year | 400 | ||||
Potential percentage of additional number of shares reserved for issuance each year | 0.75% | ||||
Number of shares issued | 58 | ||||
Compensation expense | $ 516 | $ 323 | $ 1,401 | $ 971 | |
Valuation assumptions: | |||||
Expected dividend yield | 0.00% | 0.00% | |||
Expected term (years) | 6 months | 6 months | |||
Employee stock purchase plan shares | Minimum | |||||
Valuation assumptions: | |||||
Expected volatility | 33.50% | 28.30% | |||
Risk-free interest rate | 2.10% | 1.02% | |||
Employee stock purchase plan shares | Maximum | |||||
Equity Incentive Plans | |||||
Offering period | 27 months | ||||
Valuation assumptions: | |||||
Expected volatility | 38.30% | 39.10% | |||
Risk-free interest rate | 2.48% | 1.35% |
Benefit Plans - 401(k) Plan (De
Benefit Plans - 401(k) Plan (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2019 | Mar. 31, 2018 | |
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 | $ 1,604 | $ 1,276 | $ 4,138 | $ 3,382 |
Net Income Per Share (Details)
Net Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Mar. 31, 2019 | Sep. 30, 2018 | Mar. 31, 2018 | Mar. 31, 2019 | Mar. 31, 2018 | Aug. 31, 2018 | |
Numerator: | ||||||
Net income | $ 28,026 | $ 39,177 | $ 43,582 | $ 40,151 | ||
Weighted-average shares used in computing net income per share: | ||||||
Basic (in shares) | 52,934 | 52,615 | 52,880 | 52,334 | ||
Weighted-average effect of potentially dilutive shares: | ||||||
Employee stock options, restricted stock units and employee stock purchase plan shares | 2,531 | 2,415 | 2,400 | 2,383 | ||
Diluted (in shares) | 55,465 | 55,030 | 55,280 | 54,717 | ||
Net income per share: | ||||||
Basic (in dollars per share) | $ 0.53 | $ 0.74 | $ 0.82 | $ 0.77 | ||
Diluted (in dollars per share) | $ 0.51 | $ 0.71 | $ 0.79 | $ 0.73 | ||
Stock Repurchase Program | ||||||
Repurchases of common shares | $ 34,991 | $ 34,991 | ||||
Repurchases of common shares (in shares) | 442 | |||||
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 | 18 | 28 | 49 | 121 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2019 | Mar. 31, 2018 | |
Income Taxes [Line Items] | ||||
Income tax expense (benefit) | $ 8,726 | $ (18,497) | $ 4,588 | $ (18,573) |
State | ||||
Income Taxes [Line Items] | ||||
Valuation allowance | $ 355 | $ 355 |