Document and Entity Information
Document and Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Jun. 30, 2019 | Aug. 02, 2019 | Dec. 31, 2018 | |
Document and Entity Information | |||
Entity Registrant Name | Paylocity Holding Corp | ||
Entity Central Index Key | 0001591698 | ||
Document Type | 10-K | ||
Document Period End Date | Jun. 30, 2019 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --06-30 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 2 | ||
Entity Common Stock, Shares Outstanding | 53,082,006 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2019 | Jun. 30, 2018 | |
Current assets: | |||
Cash and cash equivalents | $ 132,476 | $ 137,193 | [1] |
Corporate investments | 29,314 | 732 | |
Accounts receivable, net | 4,358 | 3,453 | |
Deferred contract costs | 21,677 | ||
Prepaid expenses and other | 13,895 | 11,248 | |
Total current assets before funds held for clients | 201,720 | 152,626 | |
Funds held for clients | 1,394,469 | 1,225,614 | |
Total current assets | 1,596,189 | 1,378,240 | |
Capitalized internal-use software, net | 27,486 | 21,094 | |
Property and equipment, net | 70,056 | 62,029 | |
Intangible assets, net | 10,751 | 13,002 | |
Goodwill | 9,590 | 9,590 | |
Long-term deferred contract costs | 81,422 | ||
Long-term prepaid expenses and other | 1,975 | 1,504 | |
Deferred income tax assets, net | 6,472 | 22,140 | |
Total assets | 1,803,941 | 1,507,599 | |
Current liabilities: | |||
Accounts payable | 3,954 | 2,990 | |
Accrued expenses | 57,625 | 42,241 | |
Total current liabilities before client fund obligations | 61,579 | 45,231 | |
Client fund obligations | 1,394,469 | 1,225,614 | |
Total current liabilities | 1,456,048 | 1,270,845 | |
Deferred rent | 31,263 | 22,812 | |
Other long-term liabilities | 1,723 | 1,118 | |
Deferred income tax liabilities, net | 6,943 | ||
Total liabilities | 1,495,977 | 1,294,775 | |
Stockholders' equity: | |||
Preferred stock, $0.001 par value, 5,000 authorized, no shares issued and outstanding at June 30, 2018 and June 30, 2019 | |||
Common stock, $0.001 par value, 155,000 shares authorized at June 30, 2018 and June 30, 2019; 52,758 shares issued and outstanding at June 30, 2018 and 53,075 shares issued and outstanding at June 30, 2019 | 53 | 53 | |
Additional paid-in capital | 207,982 | 219,588 | |
Retained earnings (accumulated deficit) | 99,817 | (6,678) | |
Accumulated other comprehensive income (loss) | 112 | (139) | |
Total stockholders' equity | 307,964 | 212,824 | |
Total liabilities and stockholders' equity | $ 1,803,941 | $ 1,507,599 | |
[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).” |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Thousands | Jun. 30, 2019 | Jun. 30, 2018 |
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 | 53,075 | 52,758 |
Common Stock, shares outstanding | 53,075 | 52,758 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Income - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Revenues: | |||
Revenues from Contracts | $ 447,752 | ||
Interest income on funds held for clients | 19,881 | $ 9,093 | $ 3,631 |
Total recurring revenues | 456,836 | 363,525 | 288,448 |
Total revenues | 467,633 | 377,527 | 300,010 |
Cost of revenues: | |||
Total cost of revenues | 153,851 | 149,197 | 123,987 |
Gross profit | 313,782 | 228,330 | 176,023 |
Operating expenses: | |||
Sales and marketing | 112,599 | 95,484 | 77,506 |
Research and development | 50,329 | 37,645 | 29,098 |
General and administrative | 94,630 | 79,252 | 62,123 |
Total operating expenses | 257,558 | 212,381 | 168,727 |
Operating income | 56,224 | 15,949 | 7,296 |
Other income | 1,822 | 802 | 73 |
Income before income taxes | 58,046 | 16,751 | 7,369 |
Income tax expense (benefit) | 4,223 | (21,847) | 651 |
Net income | 53,823 | 38,598 | 6,718 |
Other comprehensive income (loss), net of tax | |||
Unrealized gains (losses) on securities, net of tax | 251 | (139) | |
Total other comprehensive income (loss), net of tax | 251 | (139) | |
Comprehensive income | $ 54,074 | $ 38,459 | $ 6,718 |
Net income per share: | |||
Basic (in dollars per share) | $ 1.02 | $ 0.74 | $ 0.13 |
Diluted (in dollars per share) | $ 0.97 | $ 0.70 | $ 0.12 |
Weighted-average shares used in computing net income per share: | |||
Basic (in shares) | 52,914 | 52,425 | 51,415 |
Diluted (in shares) | 55,414 | 54,887 | 54,057 |
Recurring fees | |||
Revenues: | |||
Revenues from Contracts | $ 436,955 | $ 354,432 | $ 284,817 |
Cost of revenues: | |||
Total cost of revenues | 125,211 | 104,009 | 85,399 |
Implementation services and other | |||
Revenues: | |||
Revenues from Contracts | 10,797 | 14,002 | 11,562 |
Cost of revenues: | |||
Total cost of revenues | $ 28,640 | $ 45,188 | $ 38,588 |
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 Income (Loss) | Total |
Balance at Jun. 30, 2016 | $ 51 | $ 171,515 | $ (51,994) | $ 119,572 | |
Balance (in shares) at Jun. 30, 2016 | 51,132 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Stock-based compensation | 28,507 | 28,507 | |||
Stock options exercised | $ 1 | 8,550 | 8,551 | ||
Stock options exercised (in shares) | 691 | ||||
Issuance of common stock upon vesting of restricted stock units (in shares) | 255 | ||||
Issuance of common stock under employee stock purchase plan | 3,677 | 3,677 | |||
Issuance of common stock under employee stock purchase plan (in shares) | 127 | ||||
Net settlement for taxes and/or exercise price related to equity awards | (19,859) | (19,859) | |||
Net settlement for taxes and/or exercise price related to equity awards (in shares) | (467) | ||||
Excess tax benefits from stock-based compensation | 447 | 447 | |||
Net income | 6,718 | 6,718 | |||
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 | 32,378 | 32,378 | |||
Stock options exercised | $ 1 | 8,001 | 8,002 | ||
Stock options exercised (in shares) | 839 | ||||
Issuance of common stock upon vesting of restricted stock units (in shares) | 452 | ||||
Issuance of common stock under employee stock purchase plan | 4,304 | 4,304 | |||
Issuance of common stock under employee stock purchase plan (in shares) | 108 | ||||
Net settlement for taxes and/or exercise price related to equity awards | (17,932) | (17,932) | |||
Net settlement for taxes and/or exercise price related to equity awards (in shares) | (379) | ||||
Unrealized gains (losses) on securities, net of tax | $ (139) | (139) | |||
Net income | 38,598 | 38,598 | |||
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 | 41,525 | $ 41,525 | |||
Stock options exercised | 4,882 | 4,882 | |||
Stock options exercised (in shares) | 378 | ||||
Issuance of common stock upon vesting of restricted stock units (in shares) | 660 | ||||
Issuance of common stock under employee stock purchase plan | 5,982 | 5,982 | |||
Issuance of common stock under employee stock purchase plan (in shares) | 116 | ||||
Net settlement for taxes and/or exercise price related to equity awards | (29,004) | (29,004) | |||
Net settlement for taxes and/or exercise price related to equity awards (in shares) | (395) | ||||
Repurchases of common shares | (34,991) | (34,991) | |||
Repurchases of common shares (in shares) | (442) | ||||
Unrealized gains (losses) on securities, net of tax | 251 | 251 | |||
Net income | 53,823 | 53,823 | |||
Balance at Jun. 30, 2019 | $ 53 | $ 207,982 | 99,817 | $ 112 | $ 307,964 |
Balance (in shares) at Jun. 30, 2019 | 53,075 | 53,075 | |||
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 | 12 Months Ended | |||||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | ||||
Cash flows from operating activities: | ||||||
Net income | $ 53,823 | $ 38,598 | [1] | $ 6,718 | [1] | |
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Stock-based compensation expense | 38,765 | 30,354 | [1] | 26,734 | [1] | |
Depreciation and amortization expense | 34,564 | 30,202 | [1] | 21,027 | [1] | |
Deferred income tax expense (benefit) | 4,134 | (21,870) | [1] | 152 | [1] | |
Provision for doubtful accounts | 283 | 296 | [1] | 113 | [1] | |
Net accretion of discounts and amortization of premiums on available-for-sale securities | (2,230) | (443) | [1] | |||
Net realized losses on sales of available-for-sale securities | [1] | 2 | ||||
Loss on disposal of equipment | 454 | 227 | [1] | 253 | [1] | |
Changes in operating assets and liabilities: | ||||||
Accounts receivable | (1,188) | (1,494) | [1] | (472) | [1] | |
Deferred contract costs | (34,992) | |||||
Prepaid expenses and other | 389 | (2,141) | [1] | (2,074) | [1] | |
Accounts payable | (75) | 740 | [1] | 219 | [1] | |
Accrued expenses | 13,625 | 11,641 | [1] | 6,465 | [1] | |
Tenant improvement allowance | 7,480 | 11,754 | [1] | 2,845 | [1] | |
Net cash provided by operating activities | 115,032 | 97,866 | [1] | 61,980 | [1] | |
Cash flows from investing activities: | ||||||
Purchases of available-for-sale securities and other | (250,685) | (196,597) | [1] | |||
Proceeds from sales and maturities of available-for-sale securities | 246,243 | 73,044 | [1] | |||
Capitalized internal-use software costs | (20,142) | (15,638) | [1] | (13,641) | [1] | |
Purchases of property and equipment | (11,280) | (21,676) | [1] | (21,338) | [1] | |
Lease allowances used for tenant improvements | (7,480) | (11,754) | [1] | (2,845) | [1] | |
Acquisition of business, net of cash and funds held for clients' cash and cash equivalents | [1] | (6,658) | ||||
Net cash used in investing activities | (43,344) | (179,279) | [1] | (37,824) | [1] | |
Cash flows from financing activities: | ||||||
Net change in client fund obligations | 168,855 | 281,467 | [1] | (297,163) | [1] | |
Payment of contingent consideration | (1,000) | |||||
Repurchases of common shares | (34,991) | |||||
Proceeds from exercise of stock options | 85 | 34 | [1] | |||
Proceeds from employee stock purchase plan | 5,982 | 4,304 | [1] | 3,677 | [1] | |
Taxes paid related to net share settlement of equity awards | (24,207) | (10,554) | [1] | (11,342) | [1] | |
Excess tax benefits from stock-based compensation | [1] | 447 | ||||
Net cash provided by (used in) financing activities | 114,724 | 275,217 | [1] | (304,347) | [1] | |
Net change in cash, cash equivalents and funds held for clients' cash and cash equivalents | 186,412 | 193,804 | [1] | (280,191) | [1] | |
Cash, cash equivalents and funds held for clients' cash and cash equivalents—beginning of period | [1] | 1,239,731 | 1,045,927 | 1,326,118 | ||
Cash, cash equivalents and funds held for clients' cash and cash equivalents—end of period | 1,426,143 | 1,239,731 | [1] | 1,045,927 | [1] | |
Supplemental Disclosure of Non-Cash Investing and Financing Activities | ||||||
Build-out allowances received from landlords | 1,264 | 1,956 | [1] | |||
Purchase of property and equipment and internal-use software, accrued but not paid | 4,260 | 659 | [1] | 667 | [1] | |
Supplemental Disclosure of Cash Flow Information | ||||||
Cash paid (refunds received) for income taxes | 412 | (53) | [1] | 28 | [1] | |
Reconciliation of cash, cash equivalents and funds held for clients' cash and cash equivalents to the Consolidated Balance Sheets | ||||||
Cash and cash equivalents | 132,476 | 137,193 | [1] | 103,468 | [1] | |
Funds held for clients' cash and cash equivalents | 1,293,667 | 1,102,538 | [1] | 942,459 | [1] | |
Total cash, cash equivalents and funds held for clients’ cash and cash equivalents | $ 1,426,143 | $ 1,239,731 | [1] | $ 1,045,927 | [1] | |
[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 | 12 Months Ended |
Jun. 30, 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. The Company’s comprehensive product suite delivers a unified platform that allows clients to make strategic decisions in the areas of payroll, core HR, workforce management, talent and benefits. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Jun. 30, 2019 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | (2) Summary of Significant Accounting Policies (a) Basis of Presentation, Consolidation, and Use of Estimates The accompanying consolidated financial statements of the Company have been prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (“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 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 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 consolidated balance sheets to Corporate investments in order to conform to the current year’s presentation. (b) Concentrations of Risk The Company regularly maintains cash balances that exceed Federal Depository Insurance Corporation limits. No individual client represents 10% or more of total revenues. For all periods presented, 100% of total revenues were generated by clients in the United States. (c) Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. (d) Funds Held For Clients, Corporate Investments and Client Fund Obligations The Company obtains funds from clients in advance of performing payroll and payroll tax filing services on behalf of those clients. Funds held for clients represent assets that are used solely for the purposes of satisfying the obligations to remit funds relating to payroll and payroll tax filing services. The Company has classified funds held for clients as a current asset since these funds are held solely for the purposes of satisfying the client fund obligations. Funds held for clients is primarily comprised of cash and cash equivalents invested in demand deposit accounts. The Company also invests a portion of its funds held for clients and corporate funds in marketable securities. Marketable securities classified as available-for-sale are recorded at fair value on the consolidated balance sheets. Unrealized gains and losses, net of applicable income taxes, are reported as other comprehensive income (loss) in the consolidated statements of operations and comprehensive income. Interest on marketable securities included in funds held for clients is reported as interest income on funds held for clients and interest on corporate investments is reported as other income on the consolidated statements of operations and comprehensive income, respectively. The Company reviews the composition of its portfolio for any available-for-sale security that has a fair value that falls below its amortized cost. If any security fits this criterion, the Company further evaluates whether other-than-temporary impairment exists by considering whether the Company has the intent and ability to retain the security for a period of time sufficient enough to allow for anticipated fair value recovery. The Company did not record any other-than-temporary impairment charges during the years ended June 30, 2018 or 2019. Client fund obligations represent the Company’s contractual obligations to remit funds to satisfy clients’ payroll and tax payment obligations and are recorded in the accompanying balance sheets at the time that the Company obtains funds from clients. The client fund obligations represent liabilities that will be repaid within one year of the balance sheet date. (e) Accounts Receivable Accounts receivable are recorded at the invoiced amount and do not bear interest. Amounts collected on trade accounts receivable are included in net cash provided by operating activities in the statements of cash flows. The Company maintains an allowance for doubtful accounts reflecting estimated potential losses in its accounts receivable portfolio. In establishing the required allowance, management considers historical losses adjusted to take into account current market conditions and the Company’s clients’ financial conditions, the amount of receivables in dispute, the current receivables aging and current payment patterns. The Company reviews its allowance for doubtful accounts quarterly. Past due balances over 60 days and over a specified amount are reviewed individually for collectability. All other balances are reviewed on a pooled basis. Account balances are charged off against the allowance after all commercially reasonable means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance-sheet credit exposure related to its clients. Activity in the allowance for doubtful accounts was as follows: For the Years Ended June 30, 2017 2018 2019 Balance at the beginning of the year $ 193 $ 266 $ 375 Charged to expense 113 296 283 Write-offs (40) (187) (185) Balance at the end of the year $ 266 $ 375 $ 473 (f) Prepaid Expenses and Other Assets Prepaid expenses and other assets consist primarily of prepaid licensing fees, prepaid insurance premiums, deposits with vendors, and time clocks available for sale or lease. (g) Capitalized Internal-Use Software The Company applies Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 350-40, Intangibles—Goodwill and Other—Internal-Use Software, to the accounting for costs of internal-use software. Internal-use software costs are capitalized when module development begins, it is probable that the project will be completed, and the software will be used as intended. Costs associated with preliminary project stage activities, training, maintenance and all other post implementation stage activities are expensed as incurred. The Company also capitalizes certain costs related to specific upgrades and enhancements when it is probable the expenditures will result in significant additional functionality. The capitalization policy provides for the capitalization of certain payroll costs for employees who are directly associated with developing internal-use software as well as certain external direct costs, such as consulting fees. Capitalized employee costs are limited to the time directly spent on such projects. Capitalized internal-use software costs are amortized on a straight-line basis over the estimated useful lives, generally over a 24 or 36-month period. Management evaluates the useful lives of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. (h) Property and Equipment and Long-Lived Assets Property and equipment are stated at cost. Depreciation on property and equipment is calculated on the straight-line method over the estimated useful lives of the assets, generally three to seven years for most classes of assets, or over the term of the related lease for leasehold improvements. Long-lived assets, such as property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group to be tested for possible impairment, the Company first compares the undiscounted cash flows expected to be generated by that asset or asset group to its carrying amount. If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying amount exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. (i) Intangible Assets, Net of Accumulated Amortization Intangible assets are comprised primarily of acquired client relationships and are reported net of accumulated amortization on the consolidated balance sheets. Client relationships use the straight-line method of amortization over a seven or nine-year time frame from the date of acquisition, while non-solicitation agreements use the straight-line method of amortization over the term of the related agreements. The Company tests intangible assets for potential impairment when events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. (j) Goodwill Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Goodwill is not amortized, but instead is tested for impairment at the reporting unit level. If the fair value of the reporting unit is less than its carrying amount, the Company would record an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, but the loss recognized should not exceed the amount of goodwill allocated to the reporting unit. The Company performs its annual impairment review of goodwill in its fiscal fourth quarter or when a triggering event occurs between annual impairment tests. No impairment was recorded in fiscal 2017, 2018 or 2019 as a result of the Company’s qualitative assessments over its single reporting segment. (k) Deferred Rent The Company has operating lease agreements for its office space, which contain provisions for future rent increases, periods of rent abatement and build-out allowances. The Company records monthly rent expense for each lease equal to the total payments due over the lease term, divided by the number of months of the lease term. Build-out allowances are recorded as part of leasehold improvements and the incentive is amortized over the lease term against depreciation. The difference between recorded rent expense and the amount paid is included in Accrued expenses and Deferred rent in the accompanying consolidated balance sheets. (l) Income Taxes Income taxes are accounted for under the asset and liability 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 operating loss 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. Deferred tax assets may be reduced by a valuation allowance to the extent we determine it is more likely than not that some portion or all of the deferred tax assets will not be realized. Management judgment is required in determining the period in which the reversal of a valuation allowance should occur. The Company is required to consider all available evidence, both positive and negative, such as historical levels of income and future forecasts of taxable income among other items, in determining whether a full or partial release of its valuation allowance is required. The Company is also required to schedule future taxable income in accordance with accounting standards that address income taxes to assess the appropriateness of a valuation allowance, which further requires the exercise of significant management judgment. The Company’s accounting for deferred tax consequences represents the best estimate of those future events. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. When applicable, the Company records interest and penalties as an element of income tax expense. Refer to Note 11 for additional information on income taxes. (m) 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 also 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 in length. 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 modules. 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 on the consolidated statements of operations and comprehensive income, disaggregates revenue by recurring fees and implementation services and other, representing the major categories of revenue: Year Ended June 30, 2019 Recurring fees $ 436,955 Implementation services and other 10,797 Total revenues from contracts $ 447,752 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: Year Ended June 30, 2019 Balance at beginning of the year $ — Deferral of revenue 13,254 Revenue recognized (6,965) Balance at end of the year $ 6,289 Deferred revenue related to these nonrefundable upfront fees are recorded within accrued expenses and other long-term liabilities on the consolidated balance sheets. The Company expects to recognize these deferred revenue balances of $4,738 in fiscal 2020, $1,418 in fiscal 2021, and $133 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(s), 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 Year Ended June 30, 2019 Beginning Capitalized Ending Balance Costs Amortization Balance Costs to obtain a new contract $ 68,107 $ 30,994 $ (16,998) $ 82,103 Costs to fulfill a contract — 22,739 (1,743) 20,996 Total $ 68,107 $ 53,733 $ (18,741) $ 103,099 Deferred contract costs are recorded within deferred contract costs and long-term deferred contract costs on the 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 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 $43,181 as of June 30, 2019, which will be generally recognized over the next 24 months. (n) Cost of Revenues Cost of revenues consists primarily of the cost of recurring revenues and implementation services. Cost of recurring revenues consist primarily of costs to provide recurring services and support to the Company’s clients and includes amortization of capitalized internal-use software. The Company expenses these costs when incurred. Cost of implementation services and other consist primarily of costs to provide implementation and other services. Such costs were previously expensed when incurred, but after the adoption of Topic 606 and ASC 340-40, cost of revenues for implementation services for the Company’s proprietary products are amortized over a period of 7 years. (o) Advertising Advertising costs are expensed as incurred. Advertising costs amounted to $199, $179 and $283 for the years ended June 30, 2017, 2018 and 2019, respectively. (p) Stock-Based Compensation The Company recognizes all employee stock-based compensation as a cost in the financial statements. Equity-classified awards, including those under the 2014 Employee Stock Purchase Plan (“ESPP”), are measured at the grant date fair value of the award and expense is recognized, net of assumed forfeitures, on a straight-line basis over the requisite service period for each separately vesting portion of the award. For stock options and estimated shares purchasable under the ESPP, the Company estimates grant date fair value using the Black-Scholes option-pricing model and periodically updates the assumed forfeiture rates for actual experience over their vesting term or the term of the ESPP purchase period. (q) Commitments and Contingencies Liabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. (r) Segment Information The Company’s chief operating decision maker reviews the financial results of the Company in total when evaluating financial performance and for purposes of allocating resources. The Company has thus determined that it operates in a single cloud-based software solution reporting segment. (s) 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 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 observed that third party implementation activity had continued to decrease over time and at the same time, the Company had invested in proprietary modules 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 modules 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 standalone value for implementation activities. This adjustment was recorded through retained earnings (accumulated deficit) in the statement of changes in stockholder’s equity upon adoption on July 1, 2018. The Company also finalized the treatment of costs of obtaining and fulfilling a new contract under the new standard. The Company is now required to defer these costs and amortize them over the expected period of benefit, which it has determined to be 7 years. The Company recognized the cumulative effect related to the deferral of the costs of obtaining new contracts of $50,481, net of deferred taxes, which was recorded through retained earnings (accumulated deficit) in the statement of changes in stockholder’s equity upon adoption on July 1, 2018. The cumulative effect of the changes made to the July 1, 2018 balance sheet due to the adoption of Topic 606 were as follows: As Reported Adjustments Balances at June 30, 2018 due to Topic 606 July 1, 2018 Balance Sheet Assets Deferred contract costs $ — $ 14,783 $ 14,783 Prepaid expenses and other 11,248 1,730 12,978 Long-term deferred contract costs — 53,324 53,324 Long-term prepaid expenses and other 1,504 1,226 2,730 Deferred income tax assets, net 22,140 (18,391) 3,749 Stockholders' Equity Retained earnings (accumulated deficit) (6,678) 52,672 45,994 The following table summarizes the impact from the adoption of Topic 606 on the Company’s consolidated statements of operations and comprehensive income: Year Ended June 30, 2019 As Reported Balances under Impact from (Topic 606) ASC 605 Adoption Statement of Operations Revenues Recurring fees $ 436,955 $ 438,685 $ (1,730) Implementation services and other 10,797 4,786 6,011 Cost of Revenues Implementation services and other 28,640 49,252 (20,612) Operating expenses Sales and marketing 112,599 126,331 (13,732) General and administrative 94,630 95,278 (648) Income tax expense (benefit) 4,223 (5,964) 10,187 Net income 53,823 24,737 29,086 The following table summarizes the impact from the adoption of Topic 606 on the Company’s consolidated balance sheet: June 30, 2019 As Reported Balances under Impact from (Topic 606) ASC 605 Adoption Balance Sheet Assets Deferred contract costs $ 21,677 $ — $ 21,677 Prepaid expenses and other 13,895 12,823 1,072 Long-term deferred contract costs 81,422 — 81,422 Long-term prepaid expenses and other 1,975 1,821 154 Deferred income tax assets, net 6,472 28,107 (21,635) Liabilities Accrued expenses 57,625 54,541 3,084 Other long-term liabilities 1,723 10,818 (9,095) Deferred income tax liabilities, net 6,943 — 6,943 Stockholders' Equity Retained earnings (accumulated deficit) 99,817 18,059 81,758 The following table summarizes the impact from the adoption of Topic 606 on the Company’s consolidated statement of cash flows: Year Ended June 30, 2019 As Reported Balances under Impact from (Topic 606) ASC 605 Adoption Statement of Cash Flows Net income $ 53,823 $ 24,737 $ 29,086 Adjustments to reconcile net income to net cash provided by operating activities: Deferred income tax expense (benefit) 4,134 (6,053) 10,187 Changes in operating assets and liabilities: Deferred contract costs (34,992) — (34,992) Prepaid expenses and other 389 (1,341) 1,730 Accrued expenses 13,625 19,636 (6,011) Net cash provided by operating activities 115,032 115,032 — 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, the Company reclassified certain amounts previously reported on the statement of cash flows for the years ending June 30, 2017 and 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 and comprehensive income 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 “Tax 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 Tax Act. The Company recognized provisional income tax effects of the Tax Act during fiscal 2018 in accordance with SAB 118, and completed its accounting under the Tax Act in December 2018. Refer to Note 11 for additional information. (t) Recently Issued Accounting Standards In February 2016, the FASB issued ASU 2016-02, Leases , which requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. 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 Company plans to adopt the new standard when it is effective on July 1, 2019 using the modified retrospective method and the transition relief guidance provided by the FASB in ASU 2018-11. 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. The Company plans to elect the package of practical expedients and not reassess prior conclusions on whether contracts are or contain a lease, lease classification, and initial direct costs. In addition, the Company plans to adopt the lessee practical expedient to combine lease and non-lease components for all asset classes. The Company will also elect to not recognize right-of-use assets and lease liabilities for leases with a term of 12 months or less. While the Company continue |
Corporate Investments and Funds
Corporate Investments and Funds Held for Clients | 12 Months Ended |
Jun. 30, 2019 | |
Corporate Investments and Funds Held for Clients | |
Corporate Investments and Funds Held for Clients | (3) 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. June 30, 2019 Gross Gross Amortized unrealized unrealized Type of Issue cost gains losses Fair value Cash and cash equivalents $ 132,478 $ — $ (2) $ 132,476 Funds held for clients' cash and cash equivalents 1,293,673 — (6) 1,293,667 Available-for-sale securities: Commercial paper 63,397 33 (2) 63,428 Corporate bonds 27,044 59 (4) 27,099 Asset-backed securities 26,488 55 (3) 26,540 U.S. treasury securities 13,736 21 - 13,757 Total available-for-sale securities (2) 130,665 168 (9) 130,824 Total investments $ 1,556,816 $ 168 $ (17) $ 1,556,967 (2) Included within the fair value of total available-for-sale securities above is $30,022 of corporate investments and $100,802 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 consolidated balance sheets to Corporate investments in order to conform to the current year’s presentation. Cash and cash equivalents and funds held for clients’ cash and cash equivalents included demand deposit accounts, money market funds, commercial paper and short-term U.S. treasury securities as of June 30, 2018 and 2019. Classification of investments on the consolidated balance sheets is as follows: June 30, June 30, 2018 2019 Cash and cash equivalents $ 137,193 $ 132,476 Corporate investments 732 29,314 Funds held for clients 1,225,614 1,394,469 Long-term prepaid expenses and other — 708 Total investments $ 1,363,539 $ 1,556,967 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 June 30, 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 $ (2) $ 19,055 $ — $ — $ (2) $ 19,055 Corporate bonds (1) 1,500 (3) 3,701 (4) 5,201 Asset-backed securities (1) 386 (2) 2,958 (3) 3,344 Total available-for-sale securities $ (4) $ 20,941 $ (5) $ 6,659 $ (9) $ 27,600 The Company did not make any material reclassification adjustments out of accumulated other comprehensive income (loss) for realized gains and losses on the sale of available-for-sale securities during the years ended June 30, 2018 or 2019. Gross realized gains and losses on the sale of available-for-sale securities were immaterial for the years ended June 30, 2018 and 2019. 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 income (loss) during the years ended June 30, 2018 or 2019, nor does it believe that OTTI exists in its portfolio as of June 30, 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 June 30, 2019. Expected maturities of available-for-sale securities at June 30, 2019 are as follows: Amortized cost Fair value One year or less $ 123,116 $ 123,238 One year to two years 7,549 7,586 Total available-for-sale securities $ 130,665 $ 130,824 |
Fair Value Measurement
Fair Value Measurement | 12 Months Ended |
Jun. 30, 2019 | |
Fair Value Measurement | |
Fair Value Measurement | (4) Fair Value Measurement The Company applies the fair value measurement and disclosure provisions of ASC 820, Fair Value Measurements and Disclosures, and ASU 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: · Level 1—Quoted prices in active markets for identical assets and liabilities. · Level 2—Quoted prices in active markets for similar assets and liabilities, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. · Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. The Company measures any cash and cash equivalents, accounts receivable, accounts payable and client fund obligations at fair value on a recurring basis using Level 1 inputs. The Company considers the recorded value of these financial assets and liabilities to approximate the fair value of the respective assets and liabilities at June 30, 2018 and June 30, 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 US 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 2019, and the Company did not transfer assets between Levels during the years ended June 30, 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 $ — June 30, 2019 Total Level 1 Level 2 Level 3 Cash and cash equivalents $ 132,476 $ 116,387 $ 16,089 $ — Funds held for clients' cash and cash equivalents 1,293,667 1,244,856 48,811 — Available-for-sale securities: Commercial paper 63,428 — 63,428 — Corporate bonds 27,099 — 27,099 — Asset-backed securities 26,540 — 26,540 — U.S. treasury securities 13,757 — 13,757 — Total available-for-sale securities 130,824 — 130,824 — Total investments $ 1,556,967 $ 1,361,243 $ 195,724 $ — |
Business Combinations
Business Combinations | 12 Months Ended |
Jun. 30, 2019 | |
Business Combinations | |
Business Combinations | (5) Business Combinations In March 2018, the Company acquired substantially all the assets of BeneFLEX HR Resources, Inc. (“BeneFLEX”), a third party employee benefits administrator, for $7,658, net of cash and funds held for clients’ cash and cash equivalents acquired. BeneFLEX administers employee benefit plans, including flexible spending accounts, health savings accounts, health reimbursement accounts, COBRA, and others. The Company paid $6,658 upon closing and paid an additional $1,000 in fiscal 2019 based on BeneFLEX having attained certain revenue targets. This acquisition expanded the portfolio of services available to the Company’s clients by allowing it to provide additional benefit administration solutions to its clients, prospects, and broker partners. The Company accounts for business combinations in accordance with ASC 805 ( Business Combinations ). The Company recorded the acquisition using the acquisition method of accounting and recognized assets at their fair value as of the date of acquisition. The Company determined the fair value of identifiable intangible assets acquired primarily by using an income approach. The following table summarizes the allocation of the purchase price for BeneFLEX: At March 8, 2018 Goodwill $ 3,587 Client relationships 5,550 Non-solicitation agreements 240 Net liabilities assumed (1,719) Total purchase price $ 7,658 The results from this acquisition have been included in the Company’s consolidated financial statements since the closing of the acquisition. Pro forma information was not presented because the effect of the acquisition was not material to the Company’s consolidated financial statements. Goodwill associated with this acquisition is amortized over a period of 15 years for income tax purposes. Direct costs related to the acquisitions were recorded as General and administrative expenses as incurred. |
Capitalized Internal-Use Softwa
Capitalized Internal-Use Software | 12 Months Ended |
Jun. 30, 2019 | |
Capitalized Internal-Use Software. | |
Capitalized Internal-Use Software | (6) Capitalized Internal-Use Software Capitalized internal-use software and accumulated amortization were as follows: Year ended June 30, 2018 2019 Capitalized internal-use software $ 67,678 $ 90,991 Accumulated amortization (46,584) (63,505) Capitalized internal-use software, net $ 21,094 $ 27,486 Amortization of capitalized internal-use software amounted to $9,447, $14,315 and $16,921 for the years ended June 30, 2017, 2018 and 2019, respectively and is included in Cost of revenues—Recurring revenues. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Jun. 30, 2019 | |
Property and Equipment. | |
Property and Equipment | (7) Property and Equipment The major classes of property and equipment are as follows as of June 30: Year ended June 30, 2018 2019 Office equipment $ 3,743 $ 4,406 Computer equipment 29,768 36,798 Furniture and fixtures 10,382 11,857 Software 5,965 6,332 Leasehold improvements 36,366 44,350 Time clocks rented by clients 4,534 4,679 Total 90,758 Accumulated depreciation (28,729) (38,366) Property and equipment, net $ 62,029 $ 70,056 Depreciation expense amounted to $10,068, $14,192 and $15,392 for the years ended June 30, 2017, 2018 and 2019, respectively. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Jun. 30, 2019 | |
Goodwill and Intangible Assets | |
Goodwill and Intangible Assets | (8) Goodwill and Intangible Assets There were no changes to goodwill between the year ended June 30, 2018 and June 30, 2019. The Company’s amortizable intangible assets and estimated useful lives are as follows: June 30, June 30, 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) (7,979) Intangible assets, net $ 13,002 $ 10,751 Amortization expense for acquired intangible assets was $1,512, $1,695 and $2,251 for the years ended June 30, 2017, 2018 and 2019, respectively. Future amortization expense for acquired intangible assets is as follows, as of June 30, 2019: Year ending June 30, 2020 $ 2,251 2021 2,251 2022 2,232 2023 2,118 2024 1,356 Thereafter 543 Total $ 10,751 |
Accrued Expenses
Accrued Expenses | 12 Months Ended |
Jun. 30, 2019 | |
Accrued Expenses | |
Accrued Expenses | (9) Accrued Expenses The components of accrued expenses are as follows: Year ended June 30, 2018 2019 Accrued payroll and personnel costs $ 31,206 $ 39,095 Lease exit obligations 2,143 1,482 Deferred revenue 654 5,572 Other 8,238 11,476 Total accrued expenses $ 42,241 $ 57,625 |
Leases
Leases | 12 Months Ended |
Jun. 30, 2019 | |
Leases | |
Leases | (10) Leases The Company primarily leases office space in Illinois, Florida, Idaho and other U.S. states under non-cancellable operating leases expiring on various dates from August 2019 through October 2032. The leases provide for increasing annual base rents and oblige the Company to fund its proportionate share of operating expenses and, in certain cases, real estate taxes. The Company also leases various types of office and production related equipment under non-cancellable operating leases expiring on various dates from July 2019 through July 2024. In June 2016, the Company entered into a lease for approximately 310 rentable square feet of office space located in Schaumburg, Illinois. The Company currently utilizes the leased premises as its headquarters, relocating from its previous headquarters in Arlington Heights, Illinois in the fourth quarter of fiscal 2018. In connection with relocating to its new headquarters, the Company ceased using approximately 126 rentable square feet of its former headquarters in fiscal 2018 and fiscal 2019 and exited the office space lease prior to the lease’s contractual termination. The Company recognized $2,336 and $423 in early lease exit costs during the years ended June 30, 2018 and 2019, respectively, that are included in General and administrative expense in its consolidated statements of operations and comprehensive income. In February 2017, the Company entered into a lease for approximately 62 rentable square feet of office space located in Meridian, Idaho. The Company uses the leased premises to accommodate the continued expansion of its employee base in the western region of the United States. The lease provided for phased delivery and commencement dates and the Company commenced Phase I on July 2, 2018. The Company expects to commence Phase II on February 1, 2020 with the actual commencement date subject to timely delivery of the premises by the landlord. Under the terms of the lease, the Company receives a tenant improvement allowance equal to $50.00 per rentable square foot and a 3-month rent abatement period for each lease phase. The lease began on the Phase I commencement date (July 2, 2018) and will end on July 31, 2028 with four subsequent five-year renewal options. The following table is a summary of the changes in the remaining lease obligation related to the former headquarters, which is recorded in accrued expenses and other long-term liabilities on the consolidated balance sheet. The difference between the lease exit costs recognized in General and administrative expense as discussed above and the remaining lease obligation relates to the write-off of deferred rent recorded in prior periods. Balance at June 30, 2018 $ 3,261 Additions 611 Payments (2,336) Adjustments 111 Balance at June 30, 2019 $ 1,647 Minimum rent payments under operating leases are recognized on a straight-line basis over the term of the lease including any periods of free rent and future rent increases. Rental expense for operating leases, including amortization of leasehold improvements, was $8,571, $12,293 and $13,698 for the years ended June 30, 2017, 2018 and 2019, respectively. Future minimum lease payments under non-cancellable operating leases (with initial or remaining lease terms in excess of one year) as of June 30, 2019 are: Year ending June 30, 2020 $ 10,449 2021 11,150 2022 9,500 2023 8,840 2024 8,838 Later years, through 2032 59,401 Total minimum lease payments $ 108,178 |
Income Taxes
Income Taxes | 12 Months Ended |
Jun. 30, 2019 | |
Income Taxes | |
Income Taxes | (11) Income Taxes (a) Income Taxes Income tax expense (benefit) for the years ended June 30, 2017, 2018 and 2019 consists of the following: Year ended June 30, 2017 2018 2019 Current taxes U.S. federal $ — $ 294 $ — State and local 500 364 90 Deferred taxes: U.S. federal 137 (15,167) 5,449 State and local 14 (7,338) (1,316) Total income tax expense (benefit) $ 651 $ (21,847) $ 4,223 (b) Tax Rate Reconciliation Income tax expense (benefit) differed from the amounts computed by applying the U.S. federal income tax rate of 34% for the years ended June 30, 2017, and 27.55% for the year ended June 30, 2018 and 21% for the year ended June 30, 2019 to pretax income (loss) as a result of the following: Year ended June 30, 2017 2018 2019 Income tax expense (benefit) at statutory federal rate 34.0 % 27.6 % 21.0 % Increase (reduction) in income taxes resulting from: Research and development credit, net of federal income tax benefit (13.9) (6.6) (3.0) Non-deductible expenses 9.3 4.6 1.3 Change in valuation allowance (18.3) (136.0) 0.3 Effect of Tax Cuts and Jobs Act — 51.5 — Stock-based compensation expense — (58.3) (10.4) State and local income taxes, net of federal income tax benefit (2.7) (13.5) (2.0) Other 0.4 0.3 0.1 8.8 % (130.4) % 7.3 % The effective tax rate for the years ended June 30, 2018 and 2019 was (130.4)% and 7.3%, respectively, on pre-tax income of $16,751 and $58,046, respectively. The increase in the effective tax rate is primarily due to the increase to pre-tax income and non-recurring $22,771 benefit resulting from the release of the valuation allowance in fiscal year 2018, partially offset by the reduced federal rate and non-recurring detriment of $8,626 from tax reform in fiscal year 2018. (c) Components of Deferred Tax Assets and Liabilities The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at June 30, 2018 and 2019 are presented below. Year ended June 30, 2018 2019 Deferred tax assets: Deferred rent $ 1,177 $ 1,963 Accrued expenses 2,709 4,250 Stock-based compensation 10,833 10,373 Net operating loss carryforwards 10,775 9,980 Federal and state tax credits 7,674 11,977 Intangible assets 271 385 Other 146 94 Total deferred tax assets 33,585 39,022 Valuation allowance (355) (502) Net deferred tax assets 33,230 38,520 Deferred tax liabilities: Deferred contract costs — (27,116) Research and development costs (4,711) (6,294) Depreciation (6,379) (5,581) Total deferred tax liabilities (11,090) (38,991) Net deferred tax asset (liability) $ 22,140 $ (471) Succeeding multiple years of recording a full valuation allowance, the Company concluded in the third quarter of fiscal 2018, 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. At 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 could be realized for all federal and substantially all state purposes. Accordingly, the Company recognized a non-recurring tax benefit of $22,771 related to the valuation allowance reversal. As of June 30, 2019, the Company continues to maintain a valuation allowance of $502 for certain state tax benefits which may not be realized. Such assessment may change in the future as further evidence becomes available. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) was signed into law. The Tax Act reduced the U.S. federal corporate income tax rate from 35% to 21%. Following the passage of the Tax Act and in accordance with ASC 740, companies were required to re-measure deferred tax balances using the new enacted tax rates. During fiscal year 2018, the Company recorded a one-time net $8,626 tax expense to revalue its net deferred tax assets to the newly enacted federal statutory rate. The Company generally expects to benefit from the lower statutory rates provided by the Tax Act. 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. At June 30, 2019, the Company has gross net operating loss carryforwards for federal income tax purposes of approximately $41,810, of which $40,018 expire from 2029 to 2038. The Company has gross net operating loss carryforwards for state income tax purposes of approximately $19,636, of which $18,435 expire from 2020 to 2039. The remaining $2,993 federal and state net operating loss carryforwards have an indefinite utilization period. The Company also has gross federal and state research and development tax credit and other state credit carryforwards of approximately $11,977, which expire between 2020 and 2039. The Company had no unrecognized tax benefits as of June 30, 2017, 2018 and 2019, respectively. The Company files income tax returns with the United States federal government and various state jurisdictions. Certain tax years remain open for federal and state tax reporting jurisdictions in which the Company does business due to net operating loss carryforwards and tax credits unutilized from such years or utilized in a period remaining open for audit under normal statute of limitations relating to income tax liabilities. The Company, including its domestic subsidiary, files a consolidated federal income tax return. For years before fiscal year ended June 30, 2016, the Company is no longer subject to U.S. federal examination; however, the Internal Revenue Service (IRS) has the ability to review years prior to fiscal year 2016 to the extent the Company utilized tax attributes carried forward from those prior years. The statute of limitations on state filings is generally three to four years. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Jun. 30, 2019 | |
Stockholders' Equity | |
Stockholders' Equity | (12) Stockholders’ Equity Common Stock Holders of common stock are entitled to one vote per share and to receive dividends, when declared. The holders have no preemptive or other subscription rights and there are no redemption or sinking fund provisions with respect to such shares. |
Benefit Plans
Benefit Plans | 12 Months Ended |
Jun. 30, 2019 | |
Benefit Plans | |
Benefit Plans | (13) Benefit Plans (a) Equity Incentive Plans 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 restricted stock units 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 June 30, 2019, the Company had 13,097 shares allocated to the plans, of which 3,338 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 the changes in the number of shares available for grant under the Company’s equity incentive plans during the year ended June 30, 2019: Number of Available for grant at July 1, 2018 10,030 RSUs granted (782) Shares withheld in settlement of taxes and/or exercise price 395 Forfeitures 192 Shares removed (76) Available for grant at June 30, 2019 9,759 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 consolidated statements of operations and comprehensive income: Year ended June 30, 2017 2018 2019 Cost of revenue – recurring $ 2,162 $ 2,830 $ 3,388 Cost of revenue – implementation services and other 1,357 1,388 1,639 Sales and marketing 6,287 7,295 7,631 Research and development 3,086 3,748 5,325 General and administrative 13,842 15,093 20,782 Total stock-based compensation expense $ 26,734 $ 30,354 $ 38,765 In addition, the Company capitalized $1,773, $2,024 and $2,760 of stock-based compensation expense in its capitalized internal-use software costs in the years ended June 30, 2017, 2018 and 2019, respectively. In June 2017, Peter McGrail ceased to serve as the Company’s Chief Financial Officer, but continued to serve as an employee of the Company. In connection with Mr. McGrail’s modified employment arrangement, the compensation committee of the Board of Directors approved modifications to terms of the unvested equity awards granted to Mr. McGrail. Any awards held by Mr. McGrail that were subject to time-based vesting became fully-vested upon his death in August 2017. Additionally, any performance-based restricted stock unit (“PSU”) awards held by Mr. McGrail will continue to vest and settle based upon actual achievement of previously-established performance metrics, with Mr. McGrail receiving a pro-rata share of the PSU awards based on the number of days Mr. McGrail was employed over the vesting period. As a result of these award modifications, the Company recognized $2,925 in additional stock-based compensation expense for the fiscal year ended June 30, 2017, which was included in General and administrative expense in the Company’s consolidated statements of operations and comprehensive income. 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. The Company values stock options using the Black-Scholes option-pricing model, which requires the input of subjective assumptions, including the risk-free interest rate, expected life, expected stock price volatility and dividend yield. The risk-free interest rate assumption is based upon observed interest rates for U.S. Treasury securities consistent with the expected term of the Company’s employee stock options. The expected life represents the period of time the stock options are expected to be outstanding and is based on the simplified method. Under the simplified method, the expected life of an option is presumed to be the mid-point between the vesting date and the end of the contractual term. As the Company has a limited history of trading as a public company, the Company utilizes the simplified method due to the lack of sufficient historical exercise data to provide a reasonable basis upon which to otherwise estimate the expected life of the stock options. Therefore, the expected volatility is based on historical volatilities for publicly traded stock of comparable companies over the estimated expected life of the stock options. The Company assumed no dividend yield because it does not expect to pay dividends in the near future, which is consistent with the Company’s history of not paying dividends. Stock option activity during the periods indicated is as follows: 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 (378) $ 12.92 Options forfeited (4) $ 20.78 Balance at June 30, 2019 1,525 $ 12.24 3.95 $ 124,373 Options exercisable at June 30, 2019 1,497 $ 11.82 3.91 $ 122,770 Options vested and expected to vest at June 30, 2019 1,524 $ 12.24 3.95 $ 124,362 There were no stock options granted during the years ended June 30, 2017, 2018 or 2019. The total intrinsic value of options exercised during the years ended June 30, 2017, 2018 and 2019 was $20,802, $34,083 and $24,920, respectively. At June 30, 2019, total unrecognized compensation cost, net of estimated forfeitures, related to unvested stock options granted under the Plan was immaterial. 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 three or 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 and Adjusted EBITDA targets in future fiscal years. The following table represents restricted stock unit activity during the year ended June 30, 2019: Units Weighted RSU balance at July 1, 2018 1,879 $ 43.39 RSUs granted 782 $ 67.13 RSUs vested (660) $ 41.52 RSUs forfeited (188) $ 48.83 RSU balance at June 30, 2019 1,813 $ 53.78 RSUs expected to vest at June 30, 2019 1,689 $ 53.67 At June 30, 2019, there was $36,226 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 1.85 years. The total excess income tax benefits for stock-based compensation arrangements was $15,130, $33,443 and $41,195 for the years ended June 30, 2017, 2018 and 2019, respectively, and were recognized through income tax expense. (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 June 30, 2019, a total of 995 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 a total of 116 shares upon the completion of its six-month offering periods ending November 15, 2018 and May 15, 2019. The Company recorded compensation expense attributable to the ESPP of $1,263, $1,331 and $1,949 for the years ended June 30, 2017, 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: Year ended June 30, 2017 2018 2019 Valuation assumptions: Expected dividend yield % % % Expected volatility 38.9 - 53.4 % 28.3 - 39.1 % 33.5 - 38.6 % Expected term (years) 0.5 0.5 0.5 Risk‑free interest rate 0.28 - 1.02 % 1.02 - 2.10 % 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 $3,667, $4,632 and $5,693 for the years ended June 30, 2017, 2018 and 2019, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies | |
Commitments and Contingencies | (14) Commitments and Contingencies (a) Employment Agreements The Company has employment agreements with certain of its key officers. The agreements allow for minimum annual compensation increases, participation in equity incentive plans and bonuses for annual performance as well as certain change of control events as defined in the agreements. (b) Litigation On July 12, 2019, a former employee filed a class and collective action complaint under federal and state law alleging that certain employees of the Company were misclassified as salaried exempt employees. The complaint seeks unpaid overtime and other damages. This claim is still in its earliest stages and the Company is unable to estimate any reasonably possible loss, or range of loss, with respect to these matters. The Company intends to vigorously defend against this lawsuit. From time to time, the Company is subject to litigation arising in the ordinary course of business. Many of these matters are covered in whole or in part by insurance. In the opinion of the Company’s management, the ultimate disposition of any matters currently outstanding or threatened will not have a material adverse effect on the Company’s financial position, results of operations, or liquidity. However, these matters are subject to inherent uncertainties and could materially impact the Company’s financial position, results of operations, or liquidity based on the final disposition of these matters. |
Net Income Per Share
Net Income Per Share | 12 Months Ended |
Jun. 30, 2019 | |
Net Income Per Share | |
Net Income Per Share | (15) Net Income Per Share Basic net income per 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: Year ended June 30, 2017 2018 2019 Numerator: Net income $ 6,718 $ 38,598 $ 53,823 Denominator: Weighted-average shares used in computing net income per share: Basic 51,415 52,425 52,914 Weighted-average effect of potentially dilutive shares: Employee stock options, restricted stock units and employee stock purchase plan shares 2,642 2,462 2,500 Diluted 54,057 54,887 55,414 Net income per share: Basic $ 0.13 $ 0.74 $ 1.02 Diluted $ 0.12 $ 0.70 $ 0.97 The following table summarizes the outstanding employee stock options, restricted stock units and employee stock purchase plan shares as of the balance sheet date that were excluded from the diluted per share calculation for the periods presented because to include them would have been anti-dilutive: Year ended June 30, 2017 2018 2019 Employee stock options 145 — — Restricted stock units 627 92 69 Employee stock purchase plan shares 14 — 13 Total 786 92 82 In August 2018, the Company announced that its board of directors approved a program to repurchase up to $35,000 of the Company’s common stock, with authorization through August 14, 2019. During the first quarter of fiscal 2019, the Company completed the repurchase program and repurchased 442 shares for $34,991. All shares of common stock repurchased were retired. |
Selected Quarterly Financial Da
Selected Quarterly Financial Data (unaudited) | 12 Months Ended |
Jun. 30, 2019 | |
Selected Quarterly Financial Data (unaudited) | |
Selected Quarterly Financial Data (unaudited) | (16) Selected Quarterly Financial Data (unaudited) The following tables set forth selected unaudited quarterly statements of operations data for the years ended June 30, 2018 and 2019. Quarter Ended September 30, December 31, 2017 2017 March 31, 2018 June 30, 2018 Consolidated Statements of Operations Data Revenues $ 81,500 $ 86,004 $ 113,407 $ 96,616 Gross profit $ 46,541 $ 49,164 $ 74,755 $ 57,870 Operating income (loss) $ 515 $ 133 $ 20,465 $ (5,164) Net income (loss) $ 543 $ 431 $ 39,177 $ (1,553) Net income (loss) per share: Basic $ 0.01 $ 0.01 $ 0.74 $ (0.03) Diluted $ 0.01 $ 0.01 $ 0.71 $ (0.03) Weighted-average shares used in computing net income (loss) per share: Basic 51,893 52,502 52,615 52,699 Diluted 54,610 54,818 55,030 52,699 Quarter Ended September 30, December 31, 2018 2018 March 31, 2019 June 30, 2019 Consolidated Statements of Operations Data Revenues $ 100,504 $ 107,204 $ 139,552 $ 120,373 Gross profit $ 64,562 $ 69,134 $ 99,807 $ 80,279 Operating income $ 3,776 $ 7,027 $ 36,212 $ 9,209 Net income $ 9,852 $ 5,704 $ 28,026 $ 10,241 Net income per share: Basic $ 0.19 $ 0.11 $ 0.53 $ 0.19 Diluted $ 0.18 $ 0.10 $ 0.51 $ 0.18 Weighted-average shares used in computing net income per share: Basic 52,865 52,842 52,934 53,017 Diluted 55,487 55,081 55,465 55,692 |
Subsequent Events
Subsequent Events | 12 Months Ended |
Jun. 30, 2019 | |
Subsequent Events | |
Subsequent Events | (17) Subsequent Events In July 2019, the Company entered into a five-year revolving credit agreement with PNC Bank, National Association and other lenders, which is secured by substantially all of the Company’s assets, subject to certain restrictions. The revolving credit agreement provides for a senior revolving credit facility, under which the Company may borrow up to $250,000, which may be increased to up to $375,000, subject to obtaining additional lender commitments and satisfying other requirements. The revolving credit facility is scheduled to mature in July 2024, and no amounts have been drawn to date. Borrowings under the senior revolving credit facility will generally bear interest, at the Company’s option, at a rate per annum determined by reference to either the London Interbank Offered Rate (“LIBOR”) (or a replacement index for the LIBOR rate) or an adjusted base rate, in each case plus an applicable margin ranging from 0.875% to 1.375% and 0.0% to 0.375%, respectively, based on the then-applicable net senior secured leverage ratio. In addition, the Company is required to pay certain fees, including (i) a quarterly commitment fee at a rate ranging from 0.10% to 0.175% per annum on the daily amount of the undrawn portion of the revolving commitments under the Facility, based on the then-applicable net senior secured leverage ratio, and (ii) a letter of credit fronting fee at a rate of 0.125% per annum on the daily amount available to be drawn under each letter of credit and a letter of credit participation fees at a rate ranging from 0.875% to 1.375% per annum on the daily undrawn amount of all outstanding letters of credit and unreimbursed disbursements relating to letters of credit, based on the then-applicable net senior secured leverage ratio. The proceeds from any borrowings under the revolving credit facility are to be used to fund working capital, capital expenditures and general corporate purposes, including permitted acquisitions, permitted investments, permitted distributions and share repurchases. The Company may generally borrow, prepay and reborrow under the revolving credit facility and terminate or reduce the lenders’ commitments at any time prior to revolving credit facility expiration without a premium or a penalty, other than customary “breakage” costs with respect to LIBOR revolving loans. Under the revolving credit agreement, the Company is required to maintain a maximum net total leverage ratio of not greater than 4.00 to 1.00, a maximum net senior secured leverage ratio of not greater than 3.50 to 1.00 and a minimum interest coverage ratio of not less than 3.00 to 1.00. Additionally, the revolving credit agreement contains customary affirmative and negative covenants, including covenants limiting the ability of the Company to, among other things, grant liens, incur or guaranty debt, effect certain mergers, make investments, dispose of assets, enter into certain transactions, including swap agreements, pay dividends or distributions on their capital stock, make changes in fiscal year or organizational documents, grant negative pledges and enter into transactions with affiliates, in each case subject to customary exceptions for similar credit facilities. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Jun. 30, 2019 | |
Summary of Significant Accounting Policies | |
Basis of Presentation, Consolidation, and Use of Estimates | (a) Basis of Presentation, Consolidation, and Use of Estimates The accompanying consolidated financial statements of the Company have been prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (“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 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 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 consolidated balance sheets to Corporate investments in order to conform to the current year’s presentation. |
Concentrations of Risk | (b) Concentrations of Risk The Company regularly maintains cash balances that exceed Federal Depository Insurance Corporation limits. No individual client represents 10% or more of total revenues. For all periods presented, 100% of total revenues were generated by clients in the United States. |
Cash and Cash Equivalents | (c) Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. |
Funds Held For Clients, Corporate Investments and Client Fund Obligations | (d) Funds Held For Clients, Corporate Investments and Client Fund Obligations The Company obtains funds from clients in advance of performing payroll and payroll tax filing services on behalf of those clients. Funds held for clients represent assets that are used solely for the purposes of satisfying the obligations to remit funds relating to payroll and payroll tax filing services. The Company has classified funds held for clients as a current asset since these funds are held solely for the purposes of satisfying the client fund obligations. Funds held for clients is primarily comprised of cash and cash equivalents invested in demand deposit accounts. The Company also invests a portion of its funds held for clients and corporate funds in marketable securities. Marketable securities classified as available-for-sale are recorded at fair value on the consolidated balance sheets. Unrealized gains and losses, net of applicable income taxes, are reported as other comprehensive income (loss) in the consolidated statements of operations and comprehensive income. Interest on marketable securities included in funds held for clients is reported as interest income on funds held for clients and interest on corporate investments is reported as other income on the consolidated statements of operations and comprehensive income, respectively. The Company reviews the composition of its portfolio for any available-for-sale security that has a fair value that falls below its amortized cost. If any security fits this criterion, the Company further evaluates whether other-than-temporary impairment exists by considering whether the Company has the intent and ability to retain the security for a period of time sufficient enough to allow for anticipated fair value recovery. The Company did not record any other-than-temporary impairment charges during the years ended June 30, 2018 or 2019. Client fund obligations represent the Company’s contractual obligations to remit funds to satisfy clients’ payroll and tax payment obligations and are recorded in the accompanying balance sheets at the time that the Company obtains funds from clients. The client fund obligations represent liabilities that will be repaid within one year of the balance sheet date. |
Accounts Receivable | (e) Accounts Receivable Accounts receivable are recorded at the invoiced amount and do not bear interest. Amounts collected on trade accounts receivable are included in net cash provided by operating activities in the statements of cash flows. The Company maintains an allowance for doubtful accounts reflecting estimated potential losses in its accounts receivable portfolio. In establishing the required allowance, management considers historical losses adjusted to take into account current market conditions and the Company’s clients’ financial conditions, the amount of receivables in dispute, the current receivables aging and current payment patterns. The Company reviews its allowance for doubtful accounts quarterly. Past due balances over 60 days and over a specified amount are reviewed individually for collectability. All other balances are reviewed on a pooled basis. Account balances are charged off against the allowance after all commercially reasonable means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance-sheet credit exposure related to its clients. Activity in the allowance for doubtful accounts was as follows: For the Years Ended June 30, 2017 2018 2019 Balance at the beginning of the year $ 193 $ 266 $ 375 Charged to expense 113 296 283 Write-offs (40) (187) (185) Balance at the end of the year $ 266 $ 375 $ 473 |
Prepaid Expenses and Other Assets | (f) Prepaid Expenses and Other Assets Prepaid expenses and other assets consist primarily of prepaid licensing fees, prepaid insurance premiums, deposits with vendors, and time clocks available for sale or lease. |
Capitalized Internal-Use Software | (g) Capitalized Internal-Use Software The Company applies Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 350-40, Intangibles—Goodwill and Other—Internal-Use Software, to the accounting for costs of internal-use software. Internal-use software costs are capitalized when module development begins, it is probable that the project will be completed, and the software will be used as intended. Costs associated with preliminary project stage activities, training, maintenance and all other post implementation stage activities are expensed as incurred. The Company also capitalizes certain costs related to specific upgrades and enhancements when it is probable the expenditures will result in significant additional functionality. The capitalization policy provides for the capitalization of certain payroll costs for employees who are directly associated with developing internal-use software as well as certain external direct costs, such as consulting fees. Capitalized employee costs are limited to the time directly spent on such projects. Capitalized internal-use software costs are amortized on a straight-line basis over the estimated useful lives, generally over a 24 or 36-month period. Management evaluates the useful lives of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. |
Property and Equipment and Long-Lived Assets | (h) Property and Equipment and Long-Lived Assets Property and equipment are stated at cost. Depreciation on property and equipment is calculated on the straight-line method over the estimated useful lives of the assets, generally three to seven years for most classes of assets, or over the term of the related lease for leasehold improvements. Long-lived assets, such as property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group to be tested for possible impairment, the Company first compares the undiscounted cash flows expected to be generated by that asset or asset group to its carrying amount. If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying amount exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. |
Intangible Assets, Net of Accumulated Amortization | (i) Intangible Assets, Net of Accumulated Amortization Intangible assets are comprised primarily of acquired client relationships and are reported net of accumulated amortization on the consolidated balance sheets. Client relationships use the straight-line method of amortization over a seven or nine-year time frame from the date of acquisition, while non-solicitation agreements use the straight-line method of amortization over the term of the related agreements. The Company tests intangible assets for potential impairment when events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. |
Goodwill | (j) Goodwill Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Goodwill is not amortized, but instead is tested for impairment at the reporting unit level. If the fair value of the reporting unit is less than its carrying amount, the Company would record an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, but the loss recognized should not exceed the amount of goodwill allocated to the reporting unit. The Company performs its annual impairment review of goodwill in its fiscal fourth quarter or when a triggering event occurs between annual impairment tests. No impairment was recorded in fiscal 2017, 2018 or 2019 as a result of the Company’s qualitative assessments over its single reporting segment. |
Deferred Rent | (k) Deferred Rent The Company has operating lease agreements for its office space, which contain provisions for future rent increases, periods of rent abatement and build-out allowances. The Company records monthly rent expense for each lease equal to the total payments due over the lease term, divided by the number of months of the lease term. Build-out allowances are recorded as part of leasehold improvements and the incentive is amortized over the lease term against depreciation. The difference between recorded rent expense and the amount paid is included in Accrued expenses and Deferred rent in the accompanying consolidated balance sheets. |
Income Taxes | (l) Income Taxes Income taxes are accounted for under the asset and liability 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 operating loss 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. Deferred tax assets may be reduced by a valuation allowance to the extent we determine it is more likely than not that some portion or all of the deferred tax assets will not be realized. Management judgment is required in determining the period in which the reversal of a valuation allowance should occur. The Company is required to consider all available evidence, both positive and negative, such as historical levels of income and future forecasts of taxable income among other items, in determining whether a full or partial release of its valuation allowance is required. The Company is also required to schedule future taxable income in accordance with accounting standards that address income taxes to assess the appropriateness of a valuation allowance, which further requires the exercise of significant management judgment. The Company’s accounting for deferred tax consequences represents the best estimate of those future events. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. When applicable, the Company records interest and penalties as an element of income tax expense. Refer to Note 11 for additional information on income taxes. |
Revenue Recognition | (m) 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 also 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 in length. 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 modules. 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 on the consolidated statements of operations and comprehensive income, disaggregates revenue by recurring fees and implementation services and other, representing the major categories of revenue: Year Ended June 30, 2019 Recurring fees $ 436,955 Implementation services and other 10,797 Total revenues from contracts $ 447,752 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: Year Ended June 30, 2019 Balance at beginning of the year $ — Deferral of revenue 13,254 Revenue recognized (6,965) Balance at end of the year $ 6,289 Deferred revenue related to these nonrefundable upfront fees are recorded within accrued expenses and other long-term liabilities on the consolidated balance sheets. The Company expects to recognize these deferred revenue balances of $4,738 in fiscal 2020, $1,418 in fiscal 2021, and $133 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(s), 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 Year Ended June 30, 2019 Beginning Capitalized Ending Balance Costs Amortization Balance Costs to obtain a new contract $ 68,107 $ 30,994 $ (16,998) $ 82,103 Costs to fulfill a contract — 22,739 (1,743) 20,996 Total $ 68,107 $ 53,733 $ (18,741) $ 103,099 Deferred contract costs are recorded within deferred contract costs and long-term deferred contract costs on the 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 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 $43,181 as of June 30, 2019, which will be generally recognized over the next 24 months. |
Cost of Revenues | (n) Cost of Revenues Cost of revenues consists primarily of the cost of recurring revenues and implementation services. Cost of recurring revenues consist primarily of costs to provide recurring services and support to the Company’s clients and includes amortization of capitalized internal-use software. The Company expenses these costs when incurred. Cost of implementation services and other consist primarily of costs to provide implementation and other services. Such costs were previously expensed when incurred, but after the adoption of Topic 606 and ASC 340-40, cost of revenues for implementation services for the Company’s proprietary products are amortized over a period of 7 years. |
Advertising | (o) Advertising Advertising costs are expensed as incurred. Advertising costs amounted to $199, $179 and $283 for the years ended June 30, 2017, 2018 and 2019, respectively. |
Stock-Based Compensation | (p) Stock-Based Compensation The Company recognizes all employee stock-based compensation as a cost in the financial statements. Equity-classified awards, including those under the 2014 Employee Stock Purchase Plan (“ESPP”), are measured at the grant date fair value of the award and expense is recognized, net of assumed forfeitures, on a straight-line basis over the requisite service period for each separately vesting portion of the award. For stock options and estimated shares purchasable under the ESPP, the Company estimates grant date fair value using the Black-Scholes option-pricing model and periodically updates the assumed forfeiture rates for actual experience over their vesting term or the term of the ESPP purchase period. |
Commitments and Contingencies | (q) Commitments and Contingencies Liabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. |
Segment Information | (r) Segment Information The Company’s chief operating decision maker reviews the financial results of the Company in total when evaluating financial performance and for purposes of allocating resources. The Company has thus determined that it operates in a single cloud-based software solution reporting segment. |
Recently Adopted Accounting Standards | (s) 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 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 observed that third party implementation activity had continued to decrease over time and at the same time, the Company had invested in proprietary modules 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 modules 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 standalone value for implementation activities. This adjustment was recorded through retained earnings (accumulated deficit) in the statement of changes in stockholder’s equity upon adoption on July 1, 2018. The Company also finalized the treatment of costs of obtaining and fulfilling a new contract under the new standard. The Company is now required to defer these costs and amortize them over the expected period of benefit, which it has determined to be 7 years. The Company recognized the cumulative effect related to the deferral of the costs of obtaining new contracts of $50,481, net of deferred taxes, which was recorded through retained earnings (accumulated deficit) in the statement of changes in stockholder’s equity upon adoption on July 1, 2018. The cumulative effect of the changes made to the July 1, 2018 balance sheet due to the adoption of Topic 606 were as follows: As Reported Adjustments Balances at June 30, 2018 due to Topic 606 July 1, 2018 Balance Sheet Assets Deferred contract costs $ — $ 14,783 $ 14,783 Prepaid expenses and other 11,248 1,730 12,978 Long-term deferred contract costs — 53,324 53,324 Long-term prepaid expenses and other 1,504 1,226 2,730 Deferred income tax assets, net 22,140 (18,391) 3,749 Stockholders' Equity Retained earnings (accumulated deficit) (6,678) 52,672 45,994 The following table summarizes the impact from the adoption of Topic 606 on the Company’s consolidated statements of operations and comprehensive income: Year Ended June 30, 2019 As Reported Balances under Impact from (Topic 606) ASC 605 Adoption Statement of Operations Revenues Recurring fees $ 436,955 $ 438,685 $ (1,730) Implementation services and other 10,797 4,786 6,011 Cost of Revenues Implementation services and other 28,640 49,252 (20,612) Operating expenses Sales and marketing 112,599 126,331 (13,732) General and administrative 94,630 95,278 (648) Income tax expense (benefit) 4,223 (5,964) 10,187 Net income 53,823 24,737 29,086 The following table summarizes the impact from the adoption of Topic 606 on the Company’s consolidated balance sheet: June 30, 2019 As Reported Balances under Impact from (Topic 606) ASC 605 Adoption Balance Sheet Assets Deferred contract costs $ 21,677 $ — $ 21,677 Prepaid expenses and other 13,895 12,823 1,072 Long-term deferred contract costs 81,422 — 81,422 Long-term prepaid expenses and other 1,975 1,821 154 Deferred income tax assets, net 6,472 28,107 (21,635) Liabilities Accrued expenses 57,625 54,541 3,084 Other long-term liabilities 1,723 10,818 (9,095) Deferred income tax liabilities, net 6,943 — 6,943 Stockholders' Equity Retained earnings (accumulated deficit) 99,817 18,059 81,758 The following table summarizes the impact from the adoption of Topic 606 on the Company’s consolidated statement of cash flows: Year Ended June 30, 2019 As Reported Balances under Impact from (Topic 606) ASC 605 Adoption Statement of Cash Flows Net income $ 53,823 $ 24,737 $ 29,086 Adjustments to reconcile net income to net cash provided by operating activities: Deferred income tax expense (benefit) 4,134 (6,053) 10,187 Changes in operating assets and liabilities: Deferred contract costs (34,992) — (34,992) Prepaid expenses and other 389 (1,341) 1,730 Accrued expenses 13,625 19,636 (6,011) Net cash provided by operating activities 115,032 115,032 — 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, the Company reclassified certain amounts previously reported on the statement of cash flows for the years ending June 30, 2017 and 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 and comprehensive income 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 “Tax 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 Tax Act. The Company recognized provisional income tax effects of the Tax Act during fiscal 2018 in accordance with SAB 118, and completed its accounting under the Tax Act in December 2018. Refer to Note 11 for additional information. |
Recently Issued Accounting Standards | (t) Recently Issued Accounting Standards In February 2016, the FASB issued ASU 2016-02, Leases , which requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. 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 Company plans to adopt the new standard when it is effective on July 1, 2019 using the modified retrospective method and the transition relief guidance provided by the FASB in ASU 2018-11. 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. The Company plans to elect the package of practical expedients and not reassess prior conclusions on whether contracts are or contain a lease, lease classification, and initial direct costs. In addition, the Company plans to adopt the lessee practical expedient to combine lease and non-lease components for all asset classes. The Company will also elect to not recognize right-of-use assets and lease liabilities for leases with a term of 12 months or less. 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. Upon adoption, the Company expects to recognize lease liabilities ranging between $82,000 and $87,000. 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) | 12 Months Ended |
Jun. 30, 2019 | |
Summary of Significant Accounting Policies | |
Schedule of activity in the allowance for doubtful accounts | For the Years Ended June 30, 2017 2018 2019 Balance at the beginning of the year $ 193 $ 266 $ 375 Charged to expense 113 296 283 Write-offs (40) (187) (185) Balance at the end of the year $ 266 $ 375 $ 473 |
Schedule of disaggregated revenue from customers | Year Ended June 30, 2019 Recurring fees $ 436,955 Implementation services and other 10,797 Total revenues from contracts $ 447,752 |
Schedule of changes in deferred revenue | Year Ended June 30, 2019 Balance at beginning of the year $ — Deferral of revenue 13,254 Revenue recognized (6,965) Balance at end of the year $ 6,289 |
Schedule of deferred contract costs and the related amortization expense | For the Year Ended June 30, 2019 Beginning Capitalized Ending Balance Costs Amortization Balance Costs to obtain a new contract $ 68,107 $ 30,994 $ (16,998) $ 82,103 Costs to fulfill a contract — 22,739 (1,743) 20,996 Total $ 68,107 $ 53,733 $ (18,741) $ 103,099 |
Schedule of the cumulative effect of the adoption of ASC 606 on prior year balance sheet | As Reported Adjustments Balances at June 30, 2018 due to Topic 606 July 1, 2018 Balance Sheet Assets Deferred contract costs $ — $ 14,783 $ 14,783 Prepaid expenses and other 11,248 1,730 12,978 Long-term deferred contract costs — 53,324 53,324 Long-term prepaid expenses and other 1,504 1,226 2,730 Deferred income tax assets, net 22,140 (18,391) 3,749 Stockholders' Equity Retained earnings (accumulated deficit) (6,678) 52,672 45,994 |
Schedule of the impact of adoption of ASC 606 on current period financial statements | The following table summarizes the impact from the adoption of Topic 606 on the Company’s consolidated statements of operations and comprehensive income: Year Ended June 30, 2019 As Reported Balances under Impact from (Topic 606) ASC 605 Adoption Statement of Operations Revenues Recurring fees $ 436,955 $ 438,685 $ (1,730) Implementation services and other 10,797 4,786 6,011 Cost of Revenues Implementation services and other 28,640 49,252 (20,612) Operating expenses Sales and marketing 112,599 126,331 (13,732) General and administrative 94,630 95,278 (648) Income tax expense (benefit) 4,223 (5,964) 10,187 Net income 53,823 24,737 29,086 The following table summarizes the impact from the adoption of Topic 606 on the Company’s consolidated balance sheet: June 30, 2019 As Reported Balances under Impact from (Topic 606) ASC 605 Adoption Balance Sheet Assets Deferred contract costs $ 21,677 $ — $ 21,677 Prepaid expenses and other 13,895 12,823 1,072 Long-term deferred contract costs 81,422 — 81,422 Long-term prepaid expenses and other 1,975 1,821 154 Deferred income tax assets, net 6,472 28,107 (21,635) Liabilities Accrued expenses 57,625 54,541 3,084 Other long-term liabilities 1,723 10,818 (9,095) Deferred income tax liabilities, net 6,943 — 6,943 Stockholders' Equity Retained earnings (accumulated deficit) 99,817 18,059 81,758 The following table summarizes the impact from the adoption of Topic 606 on the Company’s consolidated statement of cash flows: Year Ended June 30, 2019 As Reported Balances under Impact from (Topic 606) ASC 605 Adoption Statement of Cash Flows Net income $ 53,823 $ 24,737 $ 29,086 Adjustments to reconcile net income to net cash provided by operating activities: Deferred income tax expense (benefit) 4,134 (6,053) 10,187 Changes in operating assets and liabilities: Deferred contract costs (34,992) — (34,992) Prepaid expenses and other 389 (1,341) 1,730 Accrued expenses 13,625 19,636 (6,011) Net cash provided by operating activities 115,032 115,032 — |
Corporate Investments and Fun_2
Corporate Investments and Funds Held For Clients (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Corporate Investments and Funds Held for Clients | |
Schedule of corporate investments and funds held for clients | 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. June 30, 2019 Gross Gross Amortized unrealized unrealized Type of Issue cost gains losses Fair value Cash and cash equivalents $ 132,478 $ — $ (2) $ 132,476 Funds held for clients' cash and cash equivalents 1,293,673 — (6) 1,293,667 Available-for-sale securities: Commercial paper 63,397 33 (2) 63,428 Corporate bonds 27,044 59 (4) 27,099 Asset-backed securities 26,488 55 (3) 26,540 U.S. treasury securities 13,736 21 - 13,757 Total available-for-sale securities (2) 130,665 168 (9) 130,824 Total investments $ 1,556,816 $ 168 $ (17) $ 1,556,967 (2) Included within the fair value of total available-for-sale securities above is $30,022 of corporate investments and $100,802 of funds held for clients. |
Tabular disclosure of the classification of investments | June 30, June 30, 2018 2019 Cash and cash equivalents $ 137,193 $ 132,476 Corporate investments 732 29,314 Funds held for clients 1,225,614 1,394,469 Long-term prepaid expenses and other — 708 Total investments $ 1,363,539 $ 1,556,967 |
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 June 30, 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 $ (2) $ 19,055 $ — $ — $ (2) $ 19,055 Corporate bonds (1) 1,500 (3) 3,701 (4) 5,201 Asset-backed securities (1) 386 (2) 2,958 (3) 3,344 Total available-for-sale securities $ (4) $ 20,941 $ (5) $ 6,659 $ (9) $ 27,600 |
Schedule of expected maturities of available-for-sale securities | Amortized cost Fair value One year or less $ 123,116 $ 123,238 One year to two years 7,549 7,586 Total available-for-sale securities $ 130,665 $ 130,824 |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 12 Months Ended |
Jun. 30, 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 $ — June 30, 2019 Total Level 1 Level 2 Level 3 Cash and cash equivalents $ 132,476 $ 116,387 $ 16,089 $ — Funds held for clients' cash and cash equivalents 1,293,667 1,244,856 48,811 — Available-for-sale securities: Commercial paper 63,428 — 63,428 — Corporate bonds 27,099 — 27,099 — Asset-backed securities 26,540 — 26,540 — U.S. treasury securities 13,757 — 13,757 — Total available-for-sale securities 130,824 — 130,824 — Total investments $ 1,556,967 $ 1,361,243 $ 195,724 $ — |
Business Combinations (Tables)
Business Combinations (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Business Combinations | |
Summary of the allocation of the purchase price of the business combination | The following table summarizes the allocation of the purchase price for BeneFLEX: At March 8, 2018 Goodwill $ 3,587 Client relationships 5,550 Non-solicitation agreements 240 Net liabilities assumed (1,719) Total purchase price $ 7,658 |
Capitalized Internal-Use Soft_2
Capitalized Internal-Use Software (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Capitalized Internal-Use Software. | |
Schedule of capitalized internal-use software and accumulated amortization | Year ended June 30, 2018 2019 Capitalized internal-use software $ 67,678 $ 90,991 Accumulated amortization (46,584) (63,505) Capitalized internal-use software, net $ 21,094 $ 27,486 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Property and Equipment. | |
Schedule of property and equipment, net | Year ended June 30, 2018 2019 Office equipment $ 3,743 $ 4,406 Computer equipment 29,768 36,798 Furniture and fixtures 10,382 11,857 Software 5,965 6,332 Leasehold improvements 36,366 44,350 Time clocks rented by clients 4,534 4,679 Total 90,758 Accumulated depreciation (28,729) (38,366) Property and equipment, net $ 62,029 $ 70,056 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Goodwill and Intangible Assets | |
Schedule of amortizable intangible assets before amortization expense | June 30, June 30, 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) (7,979) Intangible assets, net $ 13,002 $ 10,751 |
Schedule of future amortization expense for acquired intangible assets | Year ending June 30, 2020 $ 2,251 2021 2,251 2022 2,232 2023 2,118 2024 1,356 Thereafter 543 Total $ 10,751 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Accrued Expenses | |
Schedule of components of accrued expenses | Year ended June 30, 2018 2019 Accrued payroll and personnel costs $ 31,206 $ 39,095 Lease exit obligations 2,143 1,482 Deferred revenue 654 5,572 Other 8,238 11,476 Total accrued expenses $ 42,241 $ 57,625 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Leases | |
Schedule of the changes in the lease exit obligation | Balance at June 30, 2018 $ 3,261 Additions 611 Payments (2,336) Adjustments 111 Balance at June 30, 2019 $ 1,647 |
Schedule of future minimum lease payments under non-cancellable operating leases | Year ending June 30, 2020 $ 10,449 2021 11,150 2022 9,500 2023 8,840 2024 8,838 Later years, through 2032 59,401 Total minimum lease payments $ 108,178 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Income Taxes | |
Schedule of income tax expense | Year ended June 30, 2017 2018 2019 Current taxes U.S. federal $ — $ 294 $ — State and local 500 364 90 Deferred taxes: U.S. federal 137 (15,167) 5,449 State and local 14 (7,338) (1,316) Total income tax expense (benefit) $ 651 $ (21,847) $ 4,223 |
Schedule of tax rate reconciliation by applying the U.S. federal income tax rate to pretax income (loss) | Year ended June 30, 2017 2018 2019 Income tax expense (benefit) at statutory federal rate 34.0 % 27.6 % 21.0 % Increase (reduction) in income taxes resulting from: Research and development credit, net of federal income tax benefit (13.9) (6.6) (3.0) Non-deductible expenses 9.3 4.6 1.3 Change in valuation allowance (18.3) (136.0) 0.3 Effect of Tax Cuts and Jobs Act — 51.5 — Stock-based compensation expense — (58.3) (10.4) State and local income taxes, net of federal income tax benefit (2.7) (13.5) (2.0) Other 0.4 0.3 0.1 8.8 % (130.4) % 7.3 % |
Schedule of tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities | Year ended June 30, 2018 2019 Deferred tax assets: Deferred rent $ 1,177 $ 1,963 Accrued expenses 2,709 4,250 Stock-based compensation 10,833 10,373 Net operating loss carryforwards 10,775 9,980 Federal and state tax credits 7,674 11,977 Intangible assets 271 385 Other 146 94 Total deferred tax assets 33,585 39,022 Valuation allowance (355) (502) Net deferred tax assets 33,230 38,520 Deferred tax liabilities: Deferred contract costs — (27,116) Research and development costs (4,711) (6,294) Depreciation (6,379) (5,581) Total deferred tax liabilities (11,090) (38,991) Net deferred tax asset (liability) $ 22,140 $ (471) |
Benefit Plans (Tables)
Benefit Plans (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Benefit Plans | |
Summary of changes in the number of shares available for grant under equity incentive plans | Number of Available for grant at July 1, 2018 10,030 RSUs granted (782) Shares withheld in settlement of taxes and/or exercise price 395 Forfeitures 192 Shares removed (76) Available for grant at June 30, 2019 9,759 |
Schedule of stock-based compensation expense related to stock options, restricted stock units and the Employee Stock Purchase Plan | Year ended June 30, 2017 2018 2019 Cost of revenue – recurring $ 2,162 $ 2,830 $ 3,388 Cost of revenue – implementation services and other 1,357 1,388 1,639 Sales and marketing 6,287 7,295 7,631 Research and development 3,086 3,748 5,325 General and administrative 13,842 15,093 20,782 Total stock-based compensation expense $ 26,734 $ 30,354 $ 38,765 |
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 (378) $ 12.92 Options forfeited (4) $ 20.78 Balance at June 30, 2019 1,525 $ 12.24 3.95 $ 124,373 Options exercisable at June 30, 2019 1,497 $ 11.82 3.91 $ 122,770 Options vested and expected to vest at June 30, 2019 1,524 $ 12.24 3.95 $ 124,362 |
Schedule of restricted stock unit activity | Units Weighted RSU balance at July 1, 2018 1,879 $ 43.39 RSUs granted 782 $ 67.13 RSUs vested (660) $ 41.52 RSUs forfeited (188) $ 48.83 RSU balance at June 30, 2019 1,813 $ 53.78 RSUs expected to vest at June 30, 2019 1,689 $ 53.67 |
Summary of weighted average assumptions used for estimating grant date fair value of the ESPP | Year ended June 30, 2017 2018 2019 Valuation assumptions: Expected dividend yield % % % Expected volatility 38.9 - 53.4 % 28.3 - 39.1 % 33.5 - 38.6 % Expected term (years) 0.5 0.5 0.5 Risk‑free interest rate 0.28 - 1.02 % 1.02 - 2.10 % 2.10 - 2.48 % |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Net Income Per Share | |
Schedule of calculation of basic and diluted net income per share | Year ended June 30, 2017 2018 2019 Numerator: Net income $ 6,718 $ 38,598 $ 53,823 Denominator: Weighted-average shares used in computing net income per share: Basic 51,415 52,425 52,914 Weighted-average effect of potentially dilutive shares: Employee stock options, restricted stock units and employee stock purchase plan shares 2,642 2,462 2,500 Diluted 54,057 54,887 55,414 Net income per share: Basic $ 0.13 $ 0.74 $ 1.02 Diluted $ 0.12 $ 0.70 $ 0.97 |
Summary of anti-dilutive securities | Year ended June 30, 2017 2018 2019 Employee stock options 145 — — Restricted stock units 627 92 69 Employee stock purchase plan shares 14 — 13 Total 786 92 82 |
Selected Quarterly Financial _2
Selected Quarterly Financial Data (unaudited) (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Selected Quarterly Financial Data (unaudited) | |
Schedule of selected unaudited quarterly statements of operations data | Quarter Ended September 30, December 31, 2017 2017 March 31, 2018 June 30, 2018 Consolidated Statements of Operations Data Revenues $ 81,500 $ 86,004 $ 113,407 $ 96,616 Gross profit $ 46,541 $ 49,164 $ 74,755 $ 57,870 Operating income (loss) $ 515 $ 133 $ 20,465 $ (5,164) Net income (loss) $ 543 $ 431 $ 39,177 $ (1,553) Net income (loss) per share: Basic $ 0.01 $ 0.01 $ 0.74 $ (0.03) Diluted $ 0.01 $ 0.01 $ 0.71 $ (0.03) Weighted-average shares used in computing net income (loss) per share: Basic 51,893 52,502 52,615 52,699 Diluted 54,610 54,818 55,030 52,699 Quarter Ended September 30, December 31, 2018 2018 March 31, 2019 June 30, 2019 Consolidated Statements of Operations Data Revenues $ 100,504 $ 107,204 $ 139,552 $ 120,373 Gross profit $ 64,562 $ 69,134 $ 99,807 $ 80,279 Operating income $ 3,776 $ 7,027 $ 36,212 $ 9,209 Net income $ 9,852 $ 5,704 $ 28,026 $ 10,241 Net income per share: Basic $ 0.19 $ 0.11 $ 0.53 $ 0.19 Diluted $ 0.18 $ 0.10 $ 0.51 $ 0.18 Weighted-average shares used in computing net income per share: Basic 52,865 52,842 52,934 53,017 Diluted 55,487 55,081 55,465 55,692 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Current Presentation, Concentration of Risk, Accounts Receivable (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |||
Current presentation | |||||
Amount of prepaid expenses and other reclassified to corporate investments to conform to current year's presentation | $ 732 | ||||
Funds Held For Clients, Corporate Investments and Client Fund Obligations | |||||
Period of repayment of client fund obligations | 1 year | ||||
Other than temporary impairment losses | |||||
OTTI recognized in Accumulated Other Comprehensive Income | $ 0 | $ 0 | |||
Accounts Receivable | |||||
Number of days past due before a balance will be reviewed for collectability | 60 days | ||||
Activity in the allowance for doubtful accounts | |||||
Balance at beginning of the year | $ 375 | 266 | $ 193 | ||
Charged to expense | 283 | 296 | [1] | 113 | [1] |
Write-offs | (185) | (187) | (40) | ||
Balance at end of the year | $ 473 | $ 375 | $ 266 | ||
Total Revenue | Clients | Major Customer With Ten Percent Or More Of Benchmark | |||||
Concentrations of Risk | |||||
Percentage of total revenues | 0.00% | ||||
Total Revenue | Geographic Concentration Risk | UNITED STATES | |||||
Concentrations of Risk | |||||
Percentage of total revenues | 100.00% | ||||
[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).” |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Capitalized Internal-Use Software (Details) - Internal-Use Software | 12 Months Ended |
Jun. 30, 2019 | |
Minimum | |
Capitalized internal-use software | |
Estimated useful lives | 24 months |
Maximum | |
Capitalized internal-use software | |
Estimated useful lives | 36 months |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - PP&E (Details) | 12 Months Ended |
Jun. 30, 2019 | |
Minimum | |
Property and Equipment and Long-Lived Assets | |
Estimated useful lives of the assets | 3 years |
Maximum | |
Property and Equipment and Long-Lived Assets | |
Estimated useful lives of the assets | 7 years |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Goodwill and Other Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Goodwill | |||
Impairment loss | $ 0 | $ 0 | $ 0 |
Minimum | Client relationships | |||
Intangible assets, net of accumulated amortization | |||
Estimated useful lives | 7 years | ||
Maximum | Client relationships | |||
Intangible assets, net of accumulated amortization | |||
Estimated useful lives | 9 years |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Revenue Recognition (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Revenue from contracts terms | |||
Period of term arrangements | 2 years | ||
Disaggregation of revenue | |||
Revenues from Contracts | $ 447,752 | ||
Deferred contract costs | |||
Amortization period of capitalized contract costs | 7 years | ||
Beginning Balance | $ 68,107 | ||
Capitalized Costs | 53,733 | ||
Amortization | (18,741) | ||
Ending Balance | $ 103,099 | $ 68,107 | |
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. | ||
Cost of revenues: | |||
Type of Cost, Good or Service [Extensible List] | Implementation services and other | ||
Amortization period of cost of revenues for proprietary products | 7 years | ||
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 | $ 68,107 | ||
Capitalized Costs | 30,994 | ||
Amortization | (16,998) | ||
Ending Balance | 82,103 | 68,107 | |
Costs to Fulfill A Contract | |||
Deferred contract costs | |||
Capitalized Costs | 22,739 | ||
Amortization | (1,743) | ||
Ending Balance | 20,996 | ||
Recurring fees | |||
Disaggregation of revenue | |||
Revenues from Contracts | 436,955 | 354,432 | $ 284,817 |
Remaining Performance Obligations | |||
Minimum value of unsatisfied performance obligations on term-based contracts | 43,181 | ||
Implementation services and other | |||
Disaggregation of revenue | |||
Revenues from Contracts | 10,797 | $ 14,002 | $ 11,562 |
Changes in deferred revenue related to nonrefundable upfront fees | |||
Deferral of revenue | 13,254 | ||
Revenue recognized | (6,965) | ||
Balance at end of period | 6,289 | ||
Deferred revenue from nonrefundable upfront fees expected to be recognized in fiscal 2020 | 4,738 | ||
Deferred revenue from nonrefundable upfront fees expected to be recognized in fiscal 2021 | 1,418 | ||
Deferred revenue from nonrefundable upfront fees expected to be recognized thereafter | $ 133 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-07-01 | Recurring fees | |||
Remaining Performance Obligations | |||
Remaining performance obligation period | 24 months |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Advertising, Segment Information (Details) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2019USD ($)segment | Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | |
Advertising | |||
Advertising costs | $ | $ 283 | $ 179 | $ 199 |
Segment Information | |||
Number of reporting segments | segment | 1 |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Adjustments for Adoption (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Jul. 01, 2018 | Jun. 30, 2018 |
Changes related to contracts with customers, assets and liabilities | |||
Retained earnings (accumulated deficit) | $ 99,817 | $ 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) | $ 81,758 | 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 Accou_11
Summary of Significant Accounting Policies - Cumulative effect of balance sheet changes (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Jul. 01, 2018 | Jun. 30, 2018 |
Assets | |||
Deferred contract costs | $ 21,677 | $ 14,783 | |
Prepaid expenses and other | 13,895 | 12,978 | $ 11,248 |
Long-term deferred contract costs | 81,422 | 53,324 | |
Long-term prepaid expenses and other | 1,975 | 2,730 | 1,504 |
Deferred income tax assets, net | 6,472 | 3,749 | 22,140 |
Stockholders' equity: | |||
Retained earnings (accumulated deficit) | 99,817 | 45,994 | (6,678) |
Impact from Adoption | Topic 606 | |||
Assets | |||
Deferred contract costs | 21,677 | 14,783 | |
Prepaid expenses and other | 1,072 | 1,730 | |
Long-term deferred contract costs | 81,422 | 53,324 | |
Long-term prepaid expenses and other | 154 | 1,226 | |
Deferred income tax assets, net | (21,635) | (18,391) | |
Stockholders' equity: | |||
Retained earnings (accumulated deficit) | 81,758 | $ 52,672 | |
Balances under ASC 605 | |||
Assets | |||
Prepaid expenses and other | 12,823 | 11,248 | |
Long-term prepaid expenses and other | 1,821 | 1,504 | |
Deferred income tax assets, net | 28,107 | 22,140 | |
Stockholders' equity: | |||
Retained earnings (accumulated deficit) | $ 18,059 | $ (6,678) |
Summary of Significant Accou_12
Summary of Significant Accounting Policies - Impact on Statement of Operations and Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Revenues: | |||||||||||
Revenues from Contracts | $ 447,752 | ||||||||||
Cost of revenues: | |||||||||||
Total cost of revenues | 153,851 | $ 149,197 | $ 123,987 | ||||||||
Operating expenses: | |||||||||||
Sales and marketing | 112,599 | 95,484 | 77,506 | ||||||||
General and administrative | 94,630 | 79,252 | 62,123 | ||||||||
Income tax expense (benefit) | 4,223 | (21,847) | 651 | ||||||||
Net income | $ 10,241 | $ 28,026 | $ 5,704 | $ 9,852 | $ (1,553) | $ 39,177 | $ 431 | $ 543 | 53,823 | 38,598 | 6,718 |
Impact from Adoption | Topic 606 | |||||||||||
Operating expenses: | |||||||||||
Sales and marketing | (13,732) | ||||||||||
General and administrative | (648) | ||||||||||
Income tax expense (benefit) | 10,187 | ||||||||||
Net income | 29,086 | ||||||||||
Balances under ASC 605 | |||||||||||
Operating expenses: | |||||||||||
Sales and marketing | 126,331 | ||||||||||
General and administrative | 95,278 | ||||||||||
Income tax expense (benefit) | (5,964) | ||||||||||
Net income | 24,737 | ||||||||||
Recurring fees | |||||||||||
Revenues: | |||||||||||
Revenues from Contracts | 436,955 | 354,432 | 284,817 | ||||||||
Cost of revenues: | |||||||||||
Total cost of revenues | 125,211 | 104,009 | 85,399 | ||||||||
Recurring fees | Impact from Adoption | Topic 606 | |||||||||||
Revenues: | |||||||||||
Revenues from Contracts | (1,730) | ||||||||||
Recurring fees | Balances under ASC 605 | |||||||||||
Revenues: | |||||||||||
Revenues from Contracts | 438,685 | ||||||||||
Implementation services and other | |||||||||||
Revenues: | |||||||||||
Revenues from Contracts | 10,797 | 14,002 | 11,562 | ||||||||
Cost of revenues: | |||||||||||
Total cost of revenues | 28,640 | $ 45,188 | $ 38,588 | ||||||||
Implementation services and other | Impact from Adoption | Topic 606 | |||||||||||
Revenues: | |||||||||||
Revenues from Contracts | 6,011 | ||||||||||
Cost of revenues: | |||||||||||
Total cost of revenues | (20,612) | ||||||||||
Implementation services and other | Balances under ASC 605 | |||||||||||
Revenues: | |||||||||||
Revenues from Contracts | 4,786 | ||||||||||
Cost of revenues: | |||||||||||
Total cost of revenues | $ 49,252 |
Summary of Significant Accou_13
Summary of Significant Accounting Policies - Impact on Balance Sheet (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Jul. 01, 2018 | Jun. 30, 2018 |
Assets | |||
Deferred contract costs | $ 21,677 | $ 14,783 | |
Prepaid expenses and other | 13,895 | 12,978 | $ 11,248 |
Long-term deferred contract costs | 81,422 | 53,324 | |
Long-term prepaid expenses and other | 1,975 | 2,730 | 1,504 |
Deferred income tax assets, net | 6,472 | 3,749 | 22,140 |
Liabilities | |||
Accrued expenses | 57,625 | 42,241 | |
Other long-term liabilities | 1,723 | 1,118 | |
Deferred income tax liabilities, net | 6,943 | ||
Stockholders' equity: | |||
Retained earnings (accumulated deficit) | 99,817 | 45,994 | (6,678) |
Impact from Adoption | Topic 606 | |||
Assets | |||
Deferred contract costs | 21,677 | 14,783 | |
Prepaid expenses and other | 1,072 | 1,730 | |
Long-term deferred contract costs | 81,422 | 53,324 | |
Long-term prepaid expenses and other | 154 | 1,226 | |
Deferred income tax assets, net | (21,635) | (18,391) | |
Liabilities | |||
Accrued expenses | 3,084 | ||
Other long-term liabilities | (9,095) | ||
Deferred income tax liabilities, net | 6,943 | ||
Stockholders' equity: | |||
Retained earnings (accumulated deficit) | 81,758 | $ 52,672 | |
Balances under ASC 605 | |||
Assets | |||
Prepaid expenses and other | 12,823 | 11,248 | |
Long-term prepaid expenses and other | 1,821 | 1,504 | |
Deferred income tax assets, net | 28,107 | 22,140 | |
Liabilities | |||
Accrued expenses | 54,541 | ||
Other long-term liabilities | 10,818 | ||
Stockholders' equity: | |||
Retained earnings (accumulated deficit) | $ 18,059 | $ (6,678) |
Summary of Significant Accou_14
Summary of Significant Accounting Policies - Impact on Cash Flow Statement (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||
Jun. 30, 2019 | Jun. 30, 2018 | [1] | Jun. 30, 2017 | [1] | |
Cash Flows | |||||
Net income | $ 53,823 | $ 38,598 | $ 6,718 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||
Deferred income tax expense (benefit) | 4,134 | (21,870) | 152 | ||
Changes in operating assets and liabilities: | |||||
Deferred contract costs | (34,992) | ||||
Prepaid expenses and other | 389 | (2,141) | (2,074) | ||
Accrued expenses | 13,625 | 11,641 | 6,465 | ||
Net cash provided by operating activities | 115,032 | $ 97,866 | $ 61,980 | ||
Impact from Adoption | Topic 606 | |||||
Cash Flows | |||||
Net income | 29,086 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||
Deferred income tax expense (benefit) | 10,187 | ||||
Changes in operating assets and liabilities: | |||||
Deferred contract costs | (34,992) | ||||
Prepaid expenses and other | 1,730 | ||||
Accrued expenses | (6,011) | ||||
Balances under ASC 605 | |||||
Cash Flows | |||||
Net income | 24,737 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||
Deferred income tax expense (benefit) | (6,053) | ||||
Changes in operating assets and liabilities: | |||||
Prepaid expenses and other | (1,341) | ||||
Accrued expenses | 19,636 | ||||
Net cash provided by operating activities | $ 115,032 | ||||
[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).” |
Summary of Significant Accou_15
Summary of Significant Accounting Policies - Leases (Details) - ASU 2016-02 - Forecast $ in Thousands | Jul. 01, 2019USD ($) |
Lessee Disclosure [Abstract] | |
Lease, Practical Expedients, Package [true false] | true |
Minimum | |
Lessee Disclosure [Abstract] | |
Operating Lease, Liability | $ 82,000 |
Maximum | |
Lessee Disclosure [Abstract] | |
Operating Lease, Liability | $ 87,000 |
Corporate Investments and Fun_3
Corporate Investments and Funds Held For Clients - Reconciliation (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | [1] | |
Corporate Investments and Funds Held for Clients [Line Items] | |||||
Amortized cost of cash and cash equivalents | $ 132,478 | $ 137,193 | |||
Cash and cash equivalents, gross unrealized losses | (2) | ||||
Fair value of cash and cash equivalents | 132,476 | 137,193 | [1] | $ 103,468 | |
Amortized cost of funds held for clients' cash and cash equivalents | 1,293,673 | 1,102,541 | |||
Funds held for clients' cash and cash equivalents, gross unrealized losses | (6) | (3) | |||
Fair value of funds held for clients' cash and cash equivalents | 1,293,667 | 1,102,538 | [1] | $ 942,459 | |
Available-for-sale Securities | |||||
Amortized cost | 130,665 | 123,991 | |||
Gross unrealized gains | 168 | 12 | |||
Gross unrealized losses | (9) | (195) | |||
Fair value | 130,824 | 123,808 | |||
Total investments at amortized cost | 1,556,816 | 1,363,725 | |||
Total investments gross unrealized gain | 168 | 12 | |||
Total investments gross unrealized loss | (17) | (198) | |||
Total investments at fair value | 1,556,967 | 1,363,539 | |||
Commercial paper | |||||
Available-for-sale Securities | |||||
Amortized cost | 63,397 | 50,703 | |||
Gross unrealized gains | 33 | 3 | |||
Gross unrealized losses | (2) | (4) | |||
Fair value | 63,428 | 50,702 | |||
Corporate bonds | |||||
Available-for-sale Securities | |||||
Amortized cost | 27,044 | 37,508 | |||
Gross unrealized gains | 59 | 8 | |||
Gross unrealized losses | (4) | (134) | |||
Fair value | 27,099 | 37,382 | |||
Asset-backed securities | |||||
Available-for-sale Securities | |||||
Amortized cost | 26,488 | 25,901 | |||
Gross unrealized gains | 55 | 1 | |||
Gross unrealized losses | (3) | (55) | |||
Fair value | 26,540 | 25,847 | |||
U.S. treasury securities | |||||
Available-for-sale Securities | |||||
Amortized cost | 13,736 | 9,879 | |||
Gross unrealized gains | 21 | ||||
Gross unrealized losses | (2) | ||||
Fair value | 13,757 | 9,877 | |||
Corporate investments | |||||
Available-for-sale Securities | |||||
Fair value | 30,022 | 732 | |||
Funds Held for Clients | |||||
Available-for-sale Securities | |||||
Fair value | $ 100,802 | $ 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 | 12 Months Ended | ||||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | [1] | ||
Corporate Investments and Funds Held for Clients [Line Items] | |||||
Amount of prepaid expenses and other reclassified to corporate investments to conform to current year's presentation | $ 732 | ||||
Cash and cash equivalents | 132,476 | $ 137,193 | [1] | $ 103,468 | |
Corporate investments | 29,314 | 732 | |||
Funds held for clients | 1,394,469 | 1,225,614 | |||
Long-term prepaid expenses and other | 708 | ||||
Total investments at fair value | 1,556,967 | 1,363,539 | |||
Available-for-sale securities | |||||
Unrealized loss on available-for-sale securities in a loss position for less than 12 months | (4) | (195) | |||
Fair market value of available-for-sale securities in an unrealized loss position less than 12 months | 20,941 | 75,672 | |||
Unrealized loss on available-for-sale securities in a loss position for greater than 12 months | (5) | ||||
Fair market value of available-for-sale securities in an unrealized loss position greater than 12 months | 6,659 | ||||
Total gross unrealized losses | (9) | (195) | |||
Total fair value | 27,600 | 75,672 | |||
Gross realized gains and losses on the sale of available-for-sale securities | 0 | 0 | |||
OTTI recognized in Accumulated Other Comprehensive Income | 0 | 0 | |||
Reclassification out of Accumulated Other Comprehensive Income (Loss) | |||||
Available-for-sale securities | |||||
Gross realized gains and losses on the sale of available-for-sale securities | 0 | 0 | |||
Commercial paper | |||||
Available-for-sale securities | |||||
Unrealized loss on available-for-sale securities in a loss position for less than 12 months | (2) | (4) | |||
Fair market value of available-for-sale securities in an unrealized loss position less than 12 months | 19,055 | 23,657 | |||
Total gross unrealized losses | (2) | (4) | |||
Total fair value | 19,055 | 23,657 | |||
Corporate bonds | |||||
Available-for-sale securities | |||||
Unrealized loss on available-for-sale securities in a loss position for less than 12 months | (1) | (134) | |||
Fair market value of available-for-sale securities in an unrealized loss position less than 12 months | 1,500 | 29,122 | |||
Unrealized loss on available-for-sale securities in a loss position for greater than 12 months | (3) | ||||
Fair market value of available-for-sale securities in an unrealized loss position greater than 12 months | 3,701 | ||||
Total gross unrealized losses | (4) | (134) | |||
Total fair value | 5,201 | 29,122 | |||
Asset-backed securities | |||||
Available-for-sale securities | |||||
Unrealized loss on available-for-sale securities in a loss position for less than 12 months | (1) | (55) | |||
Fair market value of available-for-sale securities in an unrealized loss position less than 12 months | 386 | 17,960 | |||
Unrealized loss on available-for-sale securities in a loss position for greater than 12 months | (2) | ||||
Fair market value of available-for-sale securities in an unrealized loss position greater than 12 months | 2,958 | ||||
Total gross unrealized losses | (3) | (55) | |||
Total fair value | $ 3,344 | 17,960 | |||
U.S. treasury securities | |||||
Available-for-sale securities | |||||
Unrealized loss on available-for-sale securities in a loss position for less than 12 months | (2) | ||||
Fair market value of available-for-sale securities in an unrealized loss position less than 12 months | 4,933 | ||||
Total gross unrealized losses | (2) | ||||
Total fair value | $ 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 | Jun. 30, 2019 | Jun. 30, 2018 |
Expected maturities of available-for-sale securities, amortized cost | ||
One year or less | $ 123,116 | |
One year to two years | 7,549 | |
Total available-for-sale securities | 130,665 | $ 123,991 |
Expected maturities of available-for-sale securities, fair value | ||
One year or less | 123,238 | |
One year to two years | 7,586 | |
Total available-for-sale securities | $ 130,824 | $ 123,808 |
Fair Value Measurement (Details
Fair Value Measurement (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | [1] | |
Fair value measurement | |||||
Cash and cash equivalents | $ 132,476 | $ 137,193 | [1] | $ 103,468 | |
Funds held for clients' cash and cash equivalents | 1,293,667 | 1,102,538 | [1] | $ 942,459 | |
Total investments at fair value | 1,556,967 | 1,363,539 | |||
Available-for-sale securities: | |||||
Available for sale securities | 130,824 | 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 to conform to current year's presentation | 732 | ||||
Level 1 | |||||
Fair value measurement | |||||
Cash and cash equivalents | 116,387 | 137,193 | |||
Funds held for clients' cash and cash equivalents | 1,244,856 | 1,076,414 | |||
Total investments at fair value | 1,361,243 | 1,213,607 | |||
Available-for-sale securities: | |||||
Available for sale securities | 0 | 0 | |||
Level 2 | |||||
Fair value measurement | |||||
Cash and cash equivalents | 16,089 | ||||
Funds held for clients' cash and cash equivalents | 48,811 | 26,124 | |||
Total investments at fair value | 195,724 | 149,932 | |||
Available-for-sale securities: | |||||
Available for sale securities | 130,824 | 123,808 | |||
Level 3 | |||||
Available-for-sale securities: | |||||
Available for sale securities | 0 | 0 | |||
Commercial paper | |||||
Available-for-sale securities: | |||||
Available for sale securities | 63,428 | 50,702 | |||
Commercial paper | Level 2 | |||||
Available-for-sale securities: | |||||
Available for sale securities | 63,428 | 50,702 | |||
Corporate bonds | |||||
Available-for-sale securities: | |||||
Available for sale securities | 27,099 | 37,382 | |||
Corporate bonds | Level 2 | |||||
Available-for-sale securities: | |||||
Available for sale securities | 27,099 | 37,382 | |||
Asset-backed securities | |||||
Available-for-sale securities: | |||||
Available for sale securities | 26,540 | 25,847 | |||
Asset-backed securities | Level 2 | |||||
Available-for-sale securities: | |||||
Available for sale securities | 26,540 | 25,847 | |||
U.S. treasury securities | |||||
Available-for-sale securities: | |||||
Available for sale securities | 13,757 | 9,877 | |||
U.S. treasury securities | Level 2 | |||||
Available-for-sale securities: | |||||
Available for sale securities | $ 13,757 | $ 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).” |
Business Combinations (Details)
Business Combinations (Details) - USD ($) $ in Thousands | Mar. 08, 2018 | Jun. 30, 2019 | Jun. 30, 2018 |
Business Combinations | |||
Payment of contingent consideration | $ 1,000 | ||
Goodwill | 9,590 | $ 9,590 | |
Finite-lived intangible assets | 18,730 | 18,730 | |
Client relationships | |||
Business Combinations | |||
Finite-lived intangible assets | 18,130 | 18,130 | |
Non-solicitation agreements | |||
Business Combinations | |||
Finite-lived intangible assets | 600 | $ 600 | |
BeneFLEX | |||
Business Combinations | |||
Total purchase price, net of cash and funds held for clients' cash and cash equivalents acquired | $ 7,658 | ||
Payment for acquisition | 6,658 | ||
Payment of contingent consideration | $ 1,000 | ||
Goodwill | 3,587 | ||
Net liabilities assumed | (1,719) | ||
Total purchase price | $ 7,658 | ||
Goodwill amortization period for income tax purposes | 15 years | ||
BeneFLEX | Client relationships | |||
Business Combinations | |||
Finite-lived intangible assets | $ 5,550 | ||
BeneFLEX | Non-solicitation agreements | |||
Business Combinations | |||
Finite-lived intangible assets | $ 240 |
Capitalized Internal-Use Soft_3
Capitalized Internal-Use Software (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Capitalized internal-use software and accumulated amortization | |||
Capitalized internal-use software | $ 90,991 | $ 67,678 | |
Accumulated amortization | (63,505) | (46,584) | |
Capitalized internal-use software, net | 27,486 | 21,094 | |
Cost of revenue - recurring | |||
Capitalized internal-use software and accumulated amortization | |||
Amortization of capitalized internal-use software | $ 16,921 | $ 14,315 | $ 9,447 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Property and equipment | |||
Property and equipment, gross | $ 108,422 | $ 90,758 | |
Accumulated depreciation | (38,366) | (28,729) | |
Property and equipment, net | 70,056 | 62,029 | |
Depreciation expense | 15,392 | 14,192 | $ 10,068 |
Office equipment | |||
Property and equipment | |||
Property and equipment, gross | 4,406 | 3,743 | |
Computer equipment | |||
Property and equipment | |||
Property and equipment, gross | 36,798 | 29,768 | |
Furniture and fixtures | |||
Property and equipment | |||
Property and equipment, gross | 11,857 | 10,382 | |
Software | |||
Property and equipment | |||
Property and equipment, gross | 6,332 | 5,965 | |
Leasehold improvements | |||
Property and equipment | |||
Property and equipment, gross | 44,350 | 36,366 | |
Time clocks rented by clients | |||
Property and equipment | |||
Property and equipment, gross | $ 4,679 | $ 4,534 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Changes in goodwill | |||
Change in goodwill | $ 0 | ||
Amortizable intangible assets | |||
Intangible assets | 18,730 | $ 18,730 | |
Accumulated amortization | (7,979) | (5,728) | |
Intangible assets, net | 10,751 | 13,002 | |
Amortization expense for acquired intangible assets | 2,251 | 1,695 | $ 1,512 |
Future amortization expense for acquired intangible assets | |||
2020 | 2,251 | ||
2021 | 2,251 | ||
2022 | 2,232 | ||
2023 | 2,118 | ||
2024 | 1,356 | ||
Thereafter | 543 | ||
Intangible assets, net | 10,751 | 13,002 | |
Client relationships | |||
Amortizable intangible assets | |||
Intangible assets | $ 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 | $ 600 | $ 600 | |
Non-solicitation agreements | Minimum | |||
Amortizable intangible assets | |||
Useful life | 2 years | ||
Non-solicitation agreements | Maximum | |||
Amortizable intangible assets | |||
Useful life | 4 years |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Jun. 30, 2018 |
Components of accrued expenses | ||
Accrued payroll and personnel costs | $ 39,095 | $ 31,206 |
Lease exit obligations | 1,482 | 2,143 |
Deferred revenue | 5,572 | 654 |
Other | 11,476 | 8,238 |
Total accrued expenses | $ 57,625 | $ 42,241 |
Leases (Details)
Leases (Details) ft² in Thousands, $ in Thousands | 1 Months Ended | 12 Months Ended | |||
Feb. 28, 2017ft²item$ / ft² | Jun. 30, 2019USD ($)ft² | Jun. 30, 2018USD ($)ft² | Jun. 30, 2017USD ($) | Jun. 30, 2016ft² | |
Operating Leased Assets [Line Items] | |||||
Rental expense for operating leases including amortization of leasehold improvements | $ 13,698 | $ 12,293 | $ 8,571 | ||
Lease exit obligations activity | |||||
Balance at beginning of year | 3,261 | ||||
Additions | 611 | ||||
Payments | (2,336) | ||||
Adjustments | 111 | ||||
Balance at end of year | $ 1,647 | $ 3,261 | |||
Leased office space | Schaumburg Lease | |||||
Operating Leased Assets [Line Items] | |||||
Area of lease | ft² | 310 | ||||
Leased office space | Meridian Lease | |||||
Operating Leased Assets [Line Items] | |||||
Area of lease | ft² | 62 | ||||
Tenant improvement allowance per rentable square foot | $ / ft² | 50 | ||||
Rent abatement period per lease phase | 3 months | ||||
Number of renewal options | item | 4 | ||||
Renewal period | 5 years | ||||
Leased office space | Arlington Heights Lease | |||||
Operating Leased Assets [Line Items] | |||||
Area under lease no longer in use | ft² | 126 | 126 | |||
Leased office space | Arlington Heights Lease | General and administrative | |||||
Operating Leased Assets [Line Items] | |||||
Early lease exit costs | $ 423 | $ 2,336 |
Leases - Future minimum lease p
Leases - Future minimum lease payments (Details) $ in Thousands | Jun. 30, 2019USD ($) |
Future minimum lease payments under non-cancellable operating leases | |
2020 | $ 10,449 |
2021 | 11,150 |
2022 | 9,500 |
2023 | 8,840 |
2024 | 8,838 |
Later years, through 2032 | 59,401 |
Total minimum lease payments | $ 108,178 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Current taxes | ||||
U.S. federal | $ 294 | |||
State and local | $ 90 | 364 | $ 500 | |
Deferred taxes: | ||||
U.S. federal | 5,449 | (15,167) | 137 | |
State and local | (1,316) | (7,338) | 14 | |
Total income tax expense (benefit) | 4,223 | (21,847) | 651 | |
Tax Rate Reconciliation | ||||
Pre-tax income | $ 58,046 | 16,751 | $ 7,369 | |
Non-recurring tax benefit for valuation allowance reversal | 22,771 | |||
Non-recurring tax expense to revalue net deferred tax assets from Tax Cuts and Jobs Act | $ 8,626 | |||
Income tax expense (benefit) at statutory federal rate | 21.00% | 27.60% | 34.00% | |
Increase (reduction) in income taxes resulting from: | ||||
Research and development credit, net of federal income tax benefit | (3.00%) | (6.60%) | (13.90%) | |
Non-deductible expenses | 1.30% | 4.60% | 9.30% | |
Change in valuation allowance | 0.30% | (136.00%) | (18.30%) | |
Effect of Tax Cuts and Jobs Act | 51.50% | |||
Stock-based compensation expense | (10.40%) | (58.30%) | ||
State and local income taxes, net of federal income tax benefit | (2.00%) | (13.50%) | (2.70%) | |
Other | 0.10% | 0.30% | 0.40% | |
Total effective income tax rate | 7.30% | (130.40%) | 8.80% | |
Deferred tax assets: | ||||
Deferred rent | $ 1,963 | $ 1,177 | ||
Accrued expenses | 4,250 | 2,709 | ||
Stock-based compensation | 10,373 | 10,833 | ||
Net operating loss carryforwards | 9,980 | 10,775 | ||
Federal and state tax credits | 11,977 | 7,674 | ||
Intangible assets | 385 | 271 | ||
Other | 94 | 146 | ||
Total deferred tax assets | 39,022 | 33,585 | ||
Valuation allowance | (502) | (355) | ||
Net deferred tax assets | 38,520 | 33,230 | ||
Deferred tax liabilities: | ||||
Deferred contract costs | (27,116) | |||
Research and development costs | (6,294) | (4,711) | ||
Depreciation | (5,581) | (6,379) | ||
Total deferred tax liabilities | (38,991) | (11,090) | ||
Net deferred tax asset | $ 22,140 | |||
Net deferred tax liability | (471) | |||
Effect of Tax Cuts and Jobs Act of 2017, Accounting Incomplete, Provisional | ||||
Amount of additional adjustments made per Tax Cuts and Jobs Act | $ 0 | |||
State | ||||
Deferred tax assets: | ||||
Valuation allowance | $ (502) |
Income Taxes - Carryforwards (D
Income Taxes - Carryforwards (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Unrecognized Tax Benefits | |||
Unrecognized tax benefits | $ 0 | $ 0 | $ 0 |
Federal And State | |||
Operating loss carryforwards | |||
Net operating loss carryforwards with indefinite utlization periods | 2,993 | ||
Federal | |||
Operating loss carryforwards | |||
Net operating loss carryforwards | 41,810 | ||
Net operating loss carryforwards that will expire | $ 40,018 | ||
Federal | Minimum | |||
Operating loss carryforwards | |||
Expiration date for net operating losses | Jun. 30, 2029 | ||
Federal | Maximum | |||
Operating loss carryforwards | |||
Expiration date for net operating losses | Jun. 30, 2038 | ||
State | |||
Operating loss carryforwards | |||
Net operating loss carryforwards | $ 19,636 | ||
Net operating loss carryforwards that will expire | $ 18,435 | ||
State | Minimum | |||
Operating loss carryforwards | |||
Expiration date for net operating losses | Jun. 30, 2020 | ||
Unrecognized Tax Benefits | |||
Statute of limitations on filings | 3 years | ||
State | Maximum | |||
Operating loss carryforwards | |||
Expiration date for net operating losses | Jun. 30, 2039 | ||
Unrecognized Tax Benefits | |||
Statute of limitations on filings | 4 years | ||
Research and development and other | Federal And State | |||
Tax credit carryforwards | |||
Tax credit carryforwards | $ 11,977 | ||
Research and development and other | Federal And State | Minimum | |||
Tax credit carryforwards | |||
Expiration date for tax credit carryforwards | Jun. 30, 2020 | ||
Research and development and other | Federal And State | Maximum | |||
Tax credit carryforwards | |||
Expiration date for tax credit carryforwards | Jun. 30, 2039 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) | 12 Months Ended |
Jun. 30, 2019item | |
Common Stock | |
Stockholders' Equity | |
Number of common stock vote per share | 1 |
Benefit Plans - General Informa
Benefit Plans - General Information (Details) - shares shares in Thousands | Jan. 01, 2019 | Jun. 30, 2019 |
Equity Incentive Plans | ||
Equity Incentive Plans | ||
Number of shares of common stock reserved for issuance | 13,097 | |
Number of shares allocated but not yet issued that are subject to outstanding options or awards | 3,338 | |
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% | |
Actual increase in number of common shares available for grant | 0 |
Benefit Plans - Incentive Plans
Benefit Plans - Incentive Plans Activity (Details) shares in Thousands | 12 Months Ended |
Jun. 30, 2019shares | |
Equity Incentive Plans | |
Shares Available for Grant | |
Balance at the beginning of the period | 10,030 |
RSUs granted | (782) |
Shares withheld in settlement of taxes and/or exercise price | 395 |
Forfeitures | 192 |
Balance at the end of the period | 9,759 |
2008 Plan | |
Shares Available for Grant | |
Shares removed | (76) |
Benefit Plans - Compensation Ex
Benefit Plans - Compensation Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Benefit Plans | |||
Total stock-based compensation expense | $ 38,765 | $ 30,354 | $ 26,734 |
Stock-based compensation expense capitalized for internal use software costs | 2,760 | 2,024 | 1,773 |
Cost of revenue - recurring | |||
Benefit Plans | |||
Total stock-based compensation expense | 3,388 | 2,830 | 2,162 |
Cost of revenue - implementation services and other | |||
Benefit Plans | |||
Total stock-based compensation expense | 1,639 | 1,388 | 1,357 |
Sales and marketing | |||
Benefit Plans | |||
Total stock-based compensation expense | 7,631 | 7,295 | 6,287 |
Research and development | |||
Benefit Plans | |||
Total stock-based compensation expense | 5,325 | 3,748 | 3,086 |
General and administrative | |||
Benefit Plans | |||
Total stock-based compensation expense | $ 20,782 | $ 15,093 | 13,842 |
Modified award agreement | General and administrative | |||
Benefit Plans | |||
Total stock-based compensation expense | $ 2,925 |
Benefit Plans - Valuation Assum
Benefit Plans - Valuation Assumptions (Details) - Stock options | 12 Months Ended |
Jun. 30, 2019 | |
Vesting period | |
Expiration period | 10 years |
Minimum | |
Vesting period | |
Vesting period | 3 years |
Maximum | |
Vesting period | |
Vesting period | 4 years |
Benefit Plans - Stock Option Ac
Benefit Plans - Stock Option Activity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Unrecognized Compensation Costs Not yet Recognized, Net of Estimated Forfeitures | |||
Total unrecognized compensation cost, net of estimated forfeitures, related to unvested stock options | $ 0 | ||
Stock options | |||
Vesting period | |||
Expiration period | 10 years | ||
Options Outstanding, Number of Shares | |||
Balance at the beginning of the period | 1,907 | ||
Options granted | 0 | 0 | 0 |
Options exercised | (378) | ||
Options forfeited | (4) | ||
Balance at the end of the period | 1,525 | 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) | 12.92 | ||
Options forfeited (in dollars per share) | 20.78 | ||
Balance at the end of the period (in dollars per share) | $ 12.24 | $ 12.40 | |
Options Additional Disclosures | |||
Weighted average remaining contractual term | 3 years 11 months 12 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) | 3 years 10 months 28 days | ||
Aggregate intrinsic value, at the end of the period | $ 124,373 | $ 88,595 | |
Options exercisable at the end of the period (in shares) | 1,497 | ||
Options exercisable at the end of the period, weighted average exercise price (in dollars per share) | $ 11.82 | ||
Options exercisable intrinsic value | $ 122,770 | ||
Total intrinsic value of options exercised | $ 24,920 | $ 34,083 | $ 20,802 |
Options vested and expected to vest | |||
Number of shares | 1,524 | ||
Weighted average exercise price | $ 12.24 | ||
Weighted average remaining contractual term | 3 years 11 months 12 days | ||
Aggregate intrinsic value | $ 124,362 | ||
Stock options | Minimum | |||
Vesting period | |||
Vesting period | 3 years | ||
Stock options | Maximum | |||
Vesting period | |||
Vesting period | 4 years |
Benefit Plans - RSU activity (D
Benefit Plans - RSU activity (Details) - RSUs - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Unrecognized Compensation Costs Not yet Recognized, Net of Estimated Forfeitures | |||
Total unrecognized compensation cost, net of estimated forfeitures related to unvested RSUs | $ 36,226 | ||
Weighted average period to recognize unrecognized compensation cost | 1 year 10 months 6 days | ||
Excess income tax benefits | |||
Excess income tax benefits for stock-based compensation arrangements recognized through income tax expense | $ 41,195 | $ 33,443 | $ 15,130 |
RSUs Outstanding Rollforward, Units | |||
RSU Balance at the beginning of the period | 1,879 | ||
RSUs granted | 782 | ||
RSUs vested | (660) | ||
RSUs forfeited | (188) | ||
RSU Balance at the end of the period | 1,813 | 1,879 | |
RSUs expected to vest at the end of the period | 1,689 | ||
RSUs Outstanding, Weighted average grant date fair value | |||
RSU Balance at the beginning of the period | $ 43.39 | ||
RSUs granted | 67.13 | ||
RSUs vested | 41.52 | ||
RSUs cancelled/forfeited | 48.83 | ||
RSU Balance at the end of the period | 53.78 | $ 43.39 | |
RSUs expected to vest at the end of the period | $ 53.67 | ||
Minimum | |||
Vesting period | |||
Vesting period | 3 years | ||
Maximum | |||
Vesting period | |||
Vesting period | 4 years |
Benefit Plans - ESPP Informatio
Benefit Plans - ESPP Information (Details) - USD ($) shares in Thousands, $ in Thousands | Jan. 01, 2019 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 |
Equity Incentive Plans | ||||
Compensation expense | $ 38,765 | $ 30,354 | $ 26,734 | |
Employee stock purchase plan shares | ||||
Equity Incentive Plans | ||||
Offering period | 6 months | |||
Percentage of employee compensation, maximum | 10.00% | |||
Percentage of fair market value as a purchase price | 85.00% | |||
Maximum value of purchase per employee | $ 25 | |||
Number of shares per employee, maximum | 2 | |||
Period during which shares can be purchased | 1 year | |||
Number of shares of common stock reserved for issuance | 995 | |||
Actual increase in number of shares reserved for issuance | 0 | |||
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 | 116 | |||
Compensation expense | $ 1,949 | $ 1,331 | $ 1,263 | |
Valuation assumptions: | ||||
Expected dividend yield | 0.00% | 0.00% | 0.00% | |
Expected term (years) | 6 months | 6 months | 6 months | |
Employee stock purchase plan shares | Minimum | ||||
Valuation assumptions: | ||||
Expected volatility | 33.50% | 28.30% | 38.90% | |
Risk-free interest rate | 2.10% | 1.02% | 0.28% | |
Employee stock purchase plan shares | Maximum | ||||
Equity Incentive Plans | ||||
Offering period | 27 months | |||
Valuation assumptions: | ||||
Expected volatility | 38.60% | 39.10% | 53.40% | |
Risk-free interest rate | 2.48% | 2.10% | 1.02% |
Benefit Plans - 401(k) Plan (De
Benefit Plans - 401(k) Plan (Details) - USD ($) $ in Thousands | Jan. 01, 2016 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 |
Benefit Plans | ||||
401(k) Plan Matching contributions by the Company as percentage of employees' contributions | 50.00% | |||
401(k) Plan Maximum contributions by the Company as percentage of employees' gross pay | 8.00% | |||
401(k) Plan contributions | $ 5,693 | $ 4,632 | $ 3,667 |
Net Income Per Share (Details)
Net Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||
Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | Aug. 31, 2018 | |
Anti-dilutive securities excluded from diluted per share calculation | ||||||||||||
Anti-dilutive securities excluded | 82 | 92 | 786 | |||||||||
Numerator: | ||||||||||||
Net income | $ 53,823 | $ 38,598 | $ 6,718 | |||||||||
Weighted-average shares used in computing net income per share: | ||||||||||||
Basic (in shares) | 53,017 | 52,934 | 52,842 | 52,865 | 52,699 | 52,615 | 52,502 | 51,893 | 52,914 | 52,425 | 51,415 | |
Weighted-average effect of potentially dilutive shares: | ||||||||||||
Employee stock options, restricted stock units and employee stock purchase plan shares | 2,500 | 2,462 | 2,642 | |||||||||
Diluted (in shares) | 55,692 | 55,465 | 55,081 | 55,487 | 52,699 | 55,030 | 54,818 | 54,610 | 55,414 | 54,887 | 54,057 | |
Net income per share: | ||||||||||||
Basic (in dollars per share) | $ 0.19 | $ 0.53 | $ 0.11 | $ 0.19 | $ (0.03) | $ 0.74 | $ 0.01 | $ 0.01 | $ 1.02 | $ 0.74 | $ 0.13 | |
Diluted (in dollars per share) | $ 0.18 | $ 0.51 | $ 0.10 | $ 0.18 | $ (0.03) | $ 0.71 | $ 0.01 | $ 0.01 | $ 0.97 | $ 0.70 | $ 0.12 | |
Stock Repurchase Program | ||||||||||||
Repurchases of common shares | $ 34,991 | |||||||||||
Employee stock options | ||||||||||||
Anti-dilutive securities excluded from diluted per share calculation | ||||||||||||
Anti-dilutive securities excluded | 145 | |||||||||||
RSUs | ||||||||||||
Anti-dilutive securities excluded from diluted per share calculation | ||||||||||||
Anti-dilutive securities excluded | 69 | 92 | 627 | |||||||||
Employee stock purchase plan shares | ||||||||||||
Anti-dilutive securities excluded from diluted per share calculation | ||||||||||||
Anti-dilutive securities excluded | 13 | 14 | ||||||||||
Common Stock | ||||||||||||
Stock Repurchase Program | ||||||||||||
Repurchases of common shares (in shares) | 442 | 442 | ||||||||||
Repurchases of common shares | $ 34,991 | |||||||||||
Common Stock | Maximum | ||||||||||||
Stock Repurchase Program | ||||||||||||
Maximum value of issued and outstanding common stock eligible for repurchase under the stock repurchase program | $ 35,000 |
Selected Quarterly Financial _3
Selected Quarterly Financial Data (unaudited) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Consolidated Statements of Operations Data | |||||||||||
Revenues | $ 120,373 | $ 139,552 | $ 107,204 | $ 100,504 | $ 96,616 | $ 113,407 | $ 86,004 | $ 81,500 | $ 467,633 | $ 377,527 | $ 300,010 |
Gross profit | 80,279 | 99,807 | 69,134 | 64,562 | 57,870 | 74,755 | 49,164 | 46,541 | 313,782 | 228,330 | 176,023 |
Operating income (loss) | 9,209 | 36,212 | 7,027 | 3,776 | (5,164) | 20,465 | 133 | 515 | 56,224 | 15,949 | 7,296 |
Net income (loss) | $ 10,241 | $ 28,026 | $ 5,704 | $ 9,852 | $ (1,553) | $ 39,177 | $ 431 | $ 543 | $ 53,823 | $ 38,598 | $ 6,718 |
Net income (loss) per share: | |||||||||||
Basic (in dollars per share) | $ 0.19 | $ 0.53 | $ 0.11 | $ 0.19 | $ (0.03) | $ 0.74 | $ 0.01 | $ 0.01 | $ 1.02 | $ 0.74 | $ 0.13 |
Diluted (in dollars per share) | $ 0.18 | $ 0.51 | $ 0.10 | $ 0.18 | $ (0.03) | $ 0.71 | $ 0.01 | $ 0.01 | $ 0.97 | $ 0.70 | $ 0.12 |
Weighted-average shares used in computing net income (loss) per share: | |||||||||||
Basic (in shares) | 53,017 | 52,934 | 52,842 | 52,865 | 52,699 | 52,615 | 52,502 | 51,893 | 52,914 | 52,425 | 51,415 |
Diluted (in shares) | 55,692 | 55,465 | 55,081 | 55,487 | 52,699 | 55,030 | 54,818 | 54,610 | 55,414 | 54,887 | 54,057 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent event - Five-year revolving credit agreement $ in Thousands | 1 Months Ended | |
Aug. 09, 2019USD ($) | Jul. 31, 2019USD ($) | |
Subsequent events | ||
Term of credit agreement | 5 years | |
Maximum borrowing capacity | $ 250,000 | |
Maximum borrowing capacity, subject to additional lender commitments | $ 375,000 | |
Amount drawn on revolving line of credit | $ 0 | |
Fronting fee (as a percent) | 0.125% | |
Minimum | ||
Subsequent events | ||
Commitment fee (as a percent) | 0.10% | |
Participation fees (as a percent) | 0.875% | |
Interest coverage ratio | 3 | |
Minimum | LIBOR | ||
Subsequent events | ||
Margin on base rate | 0.875% | |
Minimum | Adjusted base rate | ||
Subsequent events | ||
Margin on base rate | 0.00% | |
Maximum | ||
Subsequent events | ||
Commitment fee (as a percent) | 0.175% | |
Participation fees (as a percent) | 1.375% | |
Net total leverage ratio | 4 | |
Senior secured leverage ratio | 3.50 | |
Maximum | LIBOR | ||
Subsequent events | ||
Margin on base rate | 1.375% | |
Maximum | Adjusted base rate | ||
Subsequent events | ||
Margin on base rate | 0.375% |