Document and Entity Information
Document and Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Jun. 30, 2020 | Jul. 31, 2020 | Dec. 31, 2019 | |
Document and Entity Information | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Jun. 30, 2020 | ||
Document Transition Report | false | ||
Entity File Number | 001-36348 | ||
Entity Registrant Name | PAYLOCITY HOLDING CORPORATION | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 46-4066644 | ||
Entity Address, Address Line One | 1400 American Lane | ||
Entity Address, City or Town | Schaumburg | ||
Entity Address, State or Province | IL | ||
Entity Address, Postal Zip Code | 60173 | ||
City Area Code | 847 | ||
Local Phone Number | 463-3200 | ||
Title of 12(b) Security | Common Stock, par value $0.001 per share | ||
Trading Symbol | PCTY | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 4.2 | ||
Entity Common Stock, Shares Outstanding | 53,813,482 | ||
Entity Central Index Key | 0001591698 | ||
Current Fiscal Year End Date | --06-30 | ||
Document Fiscal Year Focus | 2020 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2020 | Jun. 30, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 250,851 | $ 132,476 |
Corporate investments | 34,556 | 29,314 |
Accounts receivable, net | 4,923 | 4,358 |
Deferred contract costs | 32,332 | 21,677 |
Prepaid expenses and other | 13,188 | 13,895 |
Total current assets before funds held for clients | 335,850 | 201,720 |
Funds held for clients | 1,327,304 | 1,394,469 |
Total current assets | 1,663,154 | 1,596,189 |
Capitalized internal-use software, net | 36,501 | 27,486 |
Property and equipment, net | 66,737 | 70,056 |
Operating lease right-of-use assets | 48,658 | |
Intangible assets, net | 13,360 | 10,751 |
Goodwill | 21,655 | 9,590 |
Long-term deferred contract costs | 125,711 | 81,422 |
Long-term prepaid expenses and other | 4,917 | 1,975 |
Deferred income tax assets | 4,955 | 6,472 |
Total assets | 1,985,648 | 1,803,941 |
Current liabilities: | ||
Accounts payable | 1,755 | 3,954 |
Accrued expenses | 79,881 | 57,625 |
Total current liabilities before client fund obligations | 81,636 | 61,579 |
Client fund obligations | 1,327,304 | 1,394,469 |
Total current liabilities | 1,408,940 | 1,456,048 |
Long-term debt | 100,000 | |
Deferred rent | 31,263 | |
Long-term operating lease liabilities | 73,299 | |
Other long-term liabilities | 1,747 | 1,723 |
Deferred income tax liabilities | 8,754 | 6,943 |
Total liabilities | 1,592,740 | 1,495,977 |
Stockholders' equity: | ||
Preferred stock, $0.001 par value, 5,000 authorized, no shares issued and outstanding at June 30, 2019 and June 30, 2020 | ||
Common stock, $0.001 par value, 155,000 shares authorized at June 30, 2019 and June 30, 2020; 53,075 shares issued and outstanding at June 30, 2019 and 53,792 shares issued and outstanding at June 30, 2020 | 54 | 53 |
Additional paid-in capital | 227,907 | 207,982 |
Retained earnings | 164,272 | 99,817 |
Accumulated other comprehensive income | 675 | 112 |
Total stockholders' equity | 392,908 | 307,964 |
Total liabilities and stockholders' equity | $ 1,985,648 | $ 1,803,941 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Thousands | Jun. 30, 2020 | Jun. 30, 2019 |
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 |
Common Stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common Stock, shares authorized | 155,000 | 155,000 |
Common Stock, shares issued | 53,792 | 53,075 |
Common Stock, shares outstanding | 53,792 | 53,075 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Income - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | |
Revenues: | |||
Recurring and other revenue | $ 546,212 | $ 447,752 | $ 368,434 |
Interest income on funds held for clients | 15,117 | 19,881 | 9,093 |
Total revenues | 561,329 | 467,633 | 377,527 |
Cost of revenues | 182,010 | 153,851 | 149,197 |
Gross profit | 379,319 | 313,782 | 228,330 |
Operating expenses: | |||
Sales and marketing | 145,134 | 112,599 | 95,484 |
Research and development | 62,766 | 50,329 | 37,645 |
General and administrative | 105,248 | 94,630 | 79,252 |
Total operating expenses | 313,148 | 257,558 | 212,381 |
Operating income | 66,171 | 56,224 | 15,949 |
Other income | 947 | 1,822 | 802 |
Income before income taxes | 67,118 | 58,046 | 16,751 |
Income tax expense (benefit) | 2,663 | 4,223 | (21,847) |
Net income | 64,455 | 53,823 | 38,598 |
Other comprehensive income (loss), net of tax | |||
Unrealized gains (losses) on securities, net of tax | 563 | 251 | (139) |
Total other comprehensive income (loss), net of tax | 563 | 251 | (139) |
Comprehensive income | $ 65,018 | $ 54,074 | $ 38,459 |
Net income per share: | |||
Basic (in dollars per share) | $ 1.20 | $ 1.02 | $ 0.74 |
Diluted (in dollars per share) | $ 1.15 | $ 0.97 | $ 0.70 |
Weighted-average shares used in computing net income per share: | |||
Basic (in shares) | 53,547 | 52,914 | 52,425 |
Diluted (in shares) | 55,807 | 55,414 | 54,887 |
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, 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 | ||||
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 | |||
Stock-based compensation | 49,890 | 49,890 | |||
Stock options exercised | 3,079 | 3,079 | |||
Stock options exercised (in shares) | 270 | ||||
Issuance of common stock upon vesting of restricted stock units | $ 1 | (1) | |||
Issuance of common stock upon vesting of restricted stock units (in shares) | 735 | ||||
Issuance of common stock under employee stock purchase plan | 8,901 | 8,901 | |||
Issuance of common stock under employee stock purchase plan (in shares) | 97 | ||||
Net settlement for taxes and/or exercise price related to equity awards | (41,944) | (41,944) | |||
Net settlement for taxes and/or exercise price related to equity awards (in shares) | (385) | ||||
Unrealized gains (losses) on securities, net of tax | 563 | 563 | |||
Net income | 64,455 | 64,455 | |||
Balance at Jun. 30, 2020 | $ 54 | $ 227,907 | $ 164,272 | $ 675 | $ 392,908 |
Balance (in shares) at Jun. 30, 2020 | 53,792 | 53,792 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | |
Cash flows from operating activities: | |||
Net income | $ 64,455 | $ 53,823 | $ 38,598 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Stock-based compensation expense | 47,493 | 38,765 | 30,354 |
Depreciation and amortization expense | 37,913 | 34,564 | 30,202 |
Deferred income tax expense (benefit) | 2,754 | 4,134 | (21,870) |
Provision for doubtful accounts | 309 | 283 | 296 |
Net accretion of discounts and amortization of premiums on available-for-sale securities | (1,836) | (2,230) | (443) |
Net realized losses on sales of available-for-sale securities | 2 | ||
Amortization of debt issuance costs | 154 | ||
Loss on disposal of equipment | 395 | 454 | 227 |
Changes in operating assets and liabilities: | |||
Accounts receivable | (732) | (1,188) | (1,494) |
Deferred contract costs | (54,944) | (34,992) | |
Prepaid expenses and other | (196) | 389 | (2,141) |
Accounts payable | (806) | (75) | 740 |
Accrued expenses | 13,625 | ||
Accrued expenses and other | 17,696 | 13,625 | 11,641 |
Tenant improvement allowance | 7,480 | 11,754 | |
Net cash provided by operating activities | 112,655 | 115,032 | 97,866 |
Cash flows from investing activities: | |||
Purchases of available-for-sale securities and other | (400,343) | (250,685) | (196,597) |
Proceeds from sales and maturities of available-for-sale securities | 410,593 | 246,243 | 73,044 |
Capitalized internal-use software costs | (25,715) | (20,142) | (15,638) |
Purchases of property and equipment | (16,578) | (11,280) | (21,676) |
Lease allowances used for tenant improvements | (7,480) | (11,754) | |
Acquisition of business, net of cash acquired | (16,714) | (6,658) | |
Net cash used in investing activities | (48,757) | (43,344) | (179,279) |
Cash flows from financing activities: | |||
Net change in client fund obligations | (67,165) | 168,855 | 281,467 |
Borrowings under credit facility | 100,000 | ||
Payment of contingent consideration | (1,000) | ||
Repurchases of common shares | (34,991) | ||
Proceeds from exercise of stock options | 85 | ||
Proceeds from employee stock purchase plan | 8,901 | 5,982 | 4,304 |
Taxes paid related to net share settlement of equity awards | (38,943) | (24,207) | (10,554) |
Payment of debt issuance costs | (701) | ||
Net cash provided by financing activities | 2,092 | 114,724 | 275,217 |
Net change in cash, cash equivalents and funds held for clients' cash and cash equivalents | 65,990 | 186,412 | 193,804 |
Cash, cash equivalents and funds held for clients' cash and cash equivalents-beginning of year | 1,426,143 | 1,239,731 | 1,045,927 |
Cash, cash equivalents and funds held for clients' cash and cash equivalents-end of year | 1,492,133 | 1,426,143 | 1,239,731 |
Supplemental Disclosure of Non-Cash Investing and Financing Activities | |||
Build-out allowances received from landlords | 1,264 | 1,956 | |
Purchase of property and equipment and internal-use software, accrued but not paid | 164 | 4,260 | 659 |
Liabilities assumed for acquisition | 674 | ||
Supplemental Disclosure of Cash Flow Information | |||
Cash paid for interest | 438 | ||
Cash paid (refunds received) for income taxes | 84 | 412 | (53) |
Reconciliation of cash, cash equivalents and funds held for clients' cash and cash equivalents to the Consolidated Balance Sheets | |||
Cash and cash equivalents | 250,851 | 132,476 | 137,193 |
Funds held for clients' cash and cash equivalents | 1,241,282 | 1,293,667 | 1,102,538 |
Total cash, cash equivalents and funds held for clients' cash and cash equivalents | $ 1,492,133 | $ 1,426,143 | $ 1,239,731 |
Organization and Description of
Organization and Description of Business | 12 Months Ended |
Jun. 30, 2020 | |
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, 2020 | |
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, including the impact from the outbreak of the novel coronavirus disease (“COVID-19”), 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. Beginning in fiscal 2020, the Company simplified the presentation of revenue and cost of revenues on its Consolidated Statements of Operations and Comprehensive Income. The line items “Recurring fees” and “Implementation services and other” have been combined into one revenue line: “Recurring and other revenue”. Likewise, the line items “Cost of revenues - recurring revenues” and “Cost of revenues - implementation services and other” have been combined into one line: “Cost of revenues”. The Company changed the presentation of revenue and cost of revenues as Implementation services and other has become a smaller component of its overall revenue mix due to the human capital management (“HCM”) suite becoming a larger part of the portfolio. Previously reported results for the years ended June 30, 2018 and 2019 have been reclassified to conform to the current 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, 2019 or 2020. 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, 2018 2019 2020 Balance at the beginning of the year $ 266 $ 375 $ 473 Charged to expense 296 283 309 Write-offs (187) (185) (165) Balance at the end of the year $ 375 $ 473 $ 617 (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”) Topic 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 (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 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, proprietary technology, trade name and non-solicitation agreements and are reported net of accumulated amortization on the Consolidated Balance Sheets. Client relationships use the straight-line method of amortization over a five proprietary (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 2018, 2019 or 2020 as a result of the Company’s qualitative assessments over its single reporting segment. (k) Leases The Company adopted Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) (“Topic 842”), effective July 1, 2019. The Company determines if an arrangement is a lease at inception. Operating leases are included in Operating lease right-of-use assets, Accrued expenses, and Long-term operating lease liabilities in the Consolidated Balance Sheets. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. In determining the present value of lease payments, the Company uses its incremental borrowing rate based on the information available at the lease commencement date. The operating lease right-of-use assets also include any lease payments made at or before the commencement date and are reduced by any lease incentives received. The Company’s lease terms may include options to extend or not terminate the lease when it is reasonably certain that it will exercise any such options. For the majority of its leases, the Company concluded that it is not reasonably certain that any renewal options would be exercised, and, therefore, the amounts are not recognized as part of Operating lease right- of-use assets nor Operating lease liabilities. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Lease expense is recognized on a straight-line basis over the expected lease term. The Company’s most significant leases are real estate leases of office space. The remaining operating leases are primarily comprised of leases of printers and other equipment. For all leases, the Company has elected the practical expedient permitted under Topic 842 to combine lease and non-lease components. As a result, non-lease components, such as common area or equipment maintenance charges, are accounted for as a single lease element. The Company does not have any finance leases. Fixed lease expense payments are recognized on a straight-line basis over the lease term. Variable lease payments vary because of changes in facts or circumstances occurring after the commencement date, other than the passage of time, and are often due to changes in an external market rate or the value of an index (e.g. Consumer Price Index). Certain of the Company’s operating lease agreements include variable payments that are passed through by the landlord, such as insurance, taxes, and common area maintenance, payments based on the usage of the asset, and rental payments adjusted periodically for inflation. Variable payments are expensed as incurred and included within variable rent expense. The Company’s lease agreements do not contain material residual value guarantees, restrictions, or covenants. (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 13 for additional information on income taxes. (m) Revenue Recognition The Company applies Accounting Standards Codification Topic 606, 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) 2) 3) 4) 5) 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. (n) Cost of Revenues (o) Advertising Advertising costs are expensed as incurred. Advertising costs amounted to $179, $283 and $1,023 for the years ended June 30, 2018, 2019 and 2020, 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 (s) Recently Adopted Accounting Standards The Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606), 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. 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. In addition, the Company is required to defer costs of obtaining and fulfilling a new contract 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 February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) , The Company adopted the new standard on July 1, 2019 Adoption of the new standard resulted in the Company recording operating lease ROU assets and operating lease liabilities of $52,083 and $83,852, respectively, as of July 1, 2019. The ROU assets were recorded net of $31,769 in deferred rent adjustments that were previously recorded in Accrued expenses and Deferred rent on the Consolidated Balance Sheets as of June 30, 2019. The adoption of this standard did not result in any cumulative-effect adjustments to Retained earnings. Additionally, there was no impact on the Company’s Consolidated Statements of Operations and Comprehensive Income or the Consolidated Statements of Cash Flows as a result of the adoption of Topic 842 for the years ended June 30, 2018 and 2019. Refer to Note 2(k) and Note 12 for additional disclosures over the Company’s leases. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provides optional practical expedients and exceptions for applying GAAP to contracts and transactions, including debt agreements, affected by interest rate reform as regulators discontinue the use of the London Interbank Offered Rate (LIBOR) and other similar reference rates. This standard is effective for contract modifications made as of March 12, 2020 through December 31, 2022, on a prospective basis. The Company adopted this standard upon its issuance, and it did not have a material impact on the Company’s financial statements. (t) Recently Issued Accounting Standards 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 adopted ASU 2018-13 on July 1, 2020, and the adoption of this standard did not have a material impact on the Company’s financial statements. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”) which provides guidance to reduce complexity in certain areas of accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and simplifies various aspects of the current guidance to promote consistent application of the standard among reporting entities. This standard is effective for fiscal years beginning after December 15, 2020 with early adoption permitted. The Company adopted ASU 2019-12 effective July 1, 2020, and the adoption of this standard did not have a material impact on the Company’s financial statements. 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. |
Revenue
Revenue | 12 Months Ended |
Jun. 30, 2020 | |
Revenue | |
Revenue | (3) Revenue The following table disaggregates revenue by Recurring fees and Implementation services and other, which the Company believes depicts the nature, amount and timing of its revenue: Year Ended June 30, 2019 2020 Recurring fees $ 436,955 $ 526,267 Implementation services and other 10,797 19,945 Total revenues from contracts $ 447,752 $ 546,212 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 2020 Balance at beginning of the year $ — $ 6,289 Deferral of revenue 13,254 15,998 Revenue recognized (6,965) (13,853) Balance at end of the year $ 6,289 $ 8,434 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 $6,689 in fiscal 2021, $1,587 in fiscal 2022, and $158 thereafter. Deferred contract costs The Company defers certain selling and commission costs that meet the capitalization criteria under ASC 340-40. 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. 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: 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 Year Ended June 30, 2020 Beginning Capitalized Ending Balance Costs Amortization Balance Costs to obtain a new contract $ 82,103 $ 53,529 $ (22,057) $ 113,575 Costs to fulfill a contract 20,996 28,893 (5,421) 44,468 Total $ 103,099 $ 82,422 $ (27,478) $ 158,043 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 Cost of revenues, 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 $47,601 as of June 30, 2020, which will be generally recognized over the next 24 months . |
Corporate Investments and Funds
Corporate Investments and Funds Held for Clients | 12 Months Ended |
Jun. 30, 2020 | |
Corporate Investments and Funds Held for Clients | |
Corporate Investments and Funds Held for Clients | (4) Corporate Investments and Funds Held for Clients Corporate investments and funds held for clients consist of the following: June 30, 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 (1) 130,665 168 (9) 130,824 Total investments $ 1,556,816 $ 168 $ (17) $ 1,556,967 (1) 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. June 30, 2020 Gross Gross Amortized unrealized unrealized Type of Issue cost gains losses Fair value Cash and cash equivalents $ 250,851 $ — $ — $ 250,851 Funds held for clients' cash and cash equivalents 1,241,282 — — 1,241,282 Available-for-sale securities: Commercial paper 6,643 6 — 6,649 Corporate bonds 44,343 414 — 44,757 Asset-backed securities 49,978 424 — 50,402 U.S. treasury securities 21,302 67 — 21,369 Total available-for-sale securities (2) 122,266 911 — 123,177 Total investments $ 1,614,399 $ 911 $ — $ 1,615,310 (2) Included within the fair value of total available-for-sale securities above is $37,155 of Corporate investments and $86,022 of Funds held for clients. Cash and cash equivalents and funds held for clients’ cash and cash equivalents included demand deposit accounts, money market funds, commercial paper and U.S. treasury securities with original maturities of three months or less as of June 30, 2019 and 2020. Classification of investments on the consolidated balance sheets is as follows: June 30, June 30, 2019 2020 Cash and cash equivalents $ 132,476 $ 250,851 Corporate investments 29,314 34,556 Funds held for clients 1,394,469 1,327,304 Long-term prepaid expenses and other 708 2,599 Total investments $ 1,556,967 $ 1,615,310 Available-for-sale securities that have been in an unrealized loss position for a period of less and greater than 12 months as of June 30, 2019 are as follows: 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, 2019 or 2020. Gross realized gains and losses on the sale of available-for-sale securities were immaterial for the years ended June 30, 2018, 2019 or 2020. 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, 2019 or 2020 nor does it believe that OTTI exists in its portfolio as of June 30, 2020. Amortized cost Fair value One year or less $ 106,647 $ 107,293 One year to two years 15,619 15,884 Total available-for-sale securities $ 122,266 $ 123,177 |
Fair Value Measurement
Fair Value Measurement | 12 Months Ended |
Jun. 30, 2020 | |
Fair Value Measurement | |
Fair Value Measurement | (5) Fair Value Measurement The Company applies the fair value measurement and disclosure provisions of ASC 820, Fair Value Measurements and Disclosures, and ASU 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: ● Level 1—Quoted prices in active markets for identical assets and liabilities. ● Level 2—Quoted prices in active markets for similar assets and liabilities, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. ● Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. The Company measures 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, 2019 and 2020 based upon the short-term nature of these assets and liabilities. Marketable securities, consisting of securities classified as available-for-sale as well as certain cash equivalents, are recorded at fair value on a recurring basis using Level 2 inputs obtained from an independent pricing service. Available-for-sale securities include commercial paper, corporate bonds, asset-backed securities and U.S. treasury securities. The independent pricing service utilizes a variety of inputs including benchmark yields, broker/dealer quoted prices, reported trades, issuer spreads as well as other available market data. The Company, on a sample basis, validates the pricing from the independent pricing service against another third-party pricing source for reasonableness. The Company has not adjusted any prices obtained by the independent pricing service, as it believes they are appropriately valued. There were no available-for-sale securities classified in Level 3 of the fair value hierarchy at June 30, 2019 or 2020, and the Company did not transfer assets between Levels during the years ended June 30, 2019 or 2020. The fair value level for the Company’s cash and cash equivalents and available-for-sale securities is as follows: 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 $ — June 30, 2020 Total Level 1 Level 2 Level 3 Cash and cash equivalents $ 250,851 $ 250,851 $ — $ — Funds held for clients' cash and cash equivalents 1,241,282 1,241,282 — — Available-for-sale securities: Commercial paper 6,649 — 6,649 — Corporate bonds 44,757 — 44,757 — Asset-backed securities 50,402 — 50,402 — U.S. treasury securities 21,369 — 21,369 — Total available-for-sale securities 123,177 — 123,177 — Total investments $ 1,615,310 $ 1,492,133 $ 123,177 $ — The Company determined that the carrying value of long-term debt under its revolving credit facility approximates fair value, which is classified as Level 2, because interest rates associated with the borrowings reflect market rates. |
Business Combinations
Business Combinations | 12 Months Ended |
Jun. 30, 2020 | |
Business Combinations | |
Business Combinations | (6) Business Combinations In April 2020, the Company acquired all of the shares outstanding of VidGrid, Inc. (“VidGrid”) through a merger for purchase price consideration of $17,256. VidGrid, Inc. is a leading video platform provider that enables peer-to-peer video learning courses, transforming video into two-way communication. This transaction expands the Company’s product functionality around workplace video communication and reaffirms its commitment to stronger employee collaboration, engagement and retention while helping clients prepare for the workplaces of the future. The Company paid $15,506 upon closing and deposited an additional $1,750 to be held in escrow for fifteen months after the acquisition date for potential indemnification claims. 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, with the excess recorded to goodwill. The fair values of assets acquired and liabilities assumed may change over the measurement period as additional information is received. The primary area that is subject to change is deferred taxes. The measurement period will end no later than one year from the acquisition date. The following table summarizes the preliminary allocation of the purchase price for VidGrid: April 3, 2020 Proprietary technology $ 2,962 Client relationships 1,070 Non-solicitation agreements 750 Trade name 350 Goodwill 12,065 Other assets acquired 733 Liabilities assumed (674) Total purchase price $ 17,256 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. The goodwill associated with this acquisition is not deductible for income tax purposes. Direct costs related to the acquisition were recorded as General and administrative expenses as incurred. |
Capitalized Internal-Use Softwa
Capitalized Internal-Use Software | 12 Months Ended |
Jun. 30, 2020 | |
Capitalized Internal-Use Software. | |
Capitalized Internal-Use Software | (7) Capitalized Internal-Use Software Capitalized internal-use software and accumulated amortization were as follows: Year ended June 30, 2019 2020 Capitalized internal-use software $ 90,991 $ 119,178 Accumulated amortization (63,505) (82,677) Capitalized internal-use software, net $ 27,486 $ 36,501 Amortization of capitalized internal-use software amounted to $14,315, $16,921 and $19,261 for the years ended June 30, 2018, 2019 and 2020, respectively and is included in Cost of revenues. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Jun. 30, 2020 | |
Property and Equipment. | |
Property and Equipment | (8) Property and Equipment The major classes of property and equipment are as follows as of June 30: Year ended June 30, 2019 2020 Office equipment $ 4,406 $ 4,619 Computer equipment 36,798 42,936 Furniture and fixtures 11,857 12,723 Software 6,332 6,609 Leasehold improvements 44,350 46,192 Time clocks rented by clients 4,679 4,967 Total 108,422 118,046 Accumulated depreciation (38,366) (51,309) Property and equipment, net $ 70,056 $ 66,737 Depreciation expense amounted to $14,192, $15,392 and $16,129 for the years ended June 30, 2018, 2019 and 2020, respectively. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Jun. 30, 2020 | |
Goodwill and Intangible Assets | |
Goodwill and Intangible Assets | (9) Goodwill and Intangible Assets Balance at June 30, 2019 $ 9,590 Additions attributable to current year acquisition 12,065 Balance at June 30, 2020 $ 21,655 Refer to Note 6 for further details on the current year acquisition. The Company’s amortizable intangible assets and estimated useful lives are as follows: June 30, June 30, Useful 2019 2020 Life Client relationships $ 18,130 $ 19,200 5 - 9 years Proprietary technology — 2,962 5 years Non-solicitation agreements 600 1,350 2 - 4 years Trade name — 350 5 years Total 18,730 23,862 Accumulated amortization (7,979) (10,502) Intangible assets, net $ 10,751 $ 13,360 Amortization expense for acquired intangible assets was $1,695, $2,251 and $2,523 for the years ended June 30, 2018, 2019 and 2020, respectively. Future amortization expense for acquired intangible assets is as follows, as of June 30, 2020: Fiscal 2021 $ 3,377 Fiscal 2022 3,358 Fiscal 2023 3,185 Fiscal 2024 2,232 Fiscal 2025 1,208 Total $ 13,360 |
Accrued Expenses
Accrued Expenses | 12 Months Ended |
Jun. 30, 2020 | |
Accrued Expenses | |
Accrued Expenses | (10) Accrued Expenses The components of accrued expenses are as follows: Year ended June 30, 2019 2020 Accrued payroll and personnel costs $ 39,095 $ 53,284 Operating lease liabilities 1,482 8,083 Deferred revenue 5,572 8,777 Other 11,476 9,737 Total accrued expenses $ 57,625 $ 79,881 |
Debt
Debt | 12 Months Ended |
Jun. 30, 2020 | |
Debt | |
Debt | (11) Debt 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 secured revolving credit facility (the “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 certain approvals and satisfying other requirements. The credit facility is scheduled to expire in July 2024, and any borrowings outstanding will mature and be payable upon such expiration. In April 2020, the Company borrowed $100,000 under the credit facility, which remained outstanding as of June 30, 2020. The Company incurred interest expense related to this borrowing at an average interest rate of 1.38%. The proceeds of any borrowings 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 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 London Interbank Offered Rate (“LIBOR”) revolving loans. Any borrowings under the credit facility generally bear interest, at the Company’s option, at a rate per annum determined by reference to either the 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. Additionally, the Company is required to pay certain commitment, letter of credit fronting and letter of credit participation fees on available and/or undrawn portions of the credit facility. Under the credit facility, the Company is required to comply with certain customary affirmative and negative covenants, including a requirement 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. As of June 30, 2020, the Company was in compliance with all of the aforementioned covenants. |
Leases
Leases | 12 Months Ended |
Jun. 30, 2020 | |
Leases | |
Leases | (12) 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 July 2020 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 2020 through July 2024. The components of operating lease expense were as follows: Year Ended June 30, 2020 Operating lease cost $ 9,686 Short-term lease cost 40 Variable lease cost 3,167 Total lease costs $ 12,893 The classification of the Company’s operating lease right-of-use assets, operating lease liabilities and other supplemental information related to the Company’s operating leases are as follows: June 30, 2020 Operating lease right-of-use assets $ 48,658 Accrued expenses $ 8,083 Long-term operating lease liabilities $ 73,299 Weighted-average remaining lease term (years) 10.32 Weighted-average discount rate 3.83 % The following table summarizes supplemental cash flow information related to the Company’s operating leases: Year Ended June 30, 2020 Cash paid for amounts included in the measurement of operating lease liabilities $ 10,374 Operating lease assets obtained in exchange for new liabilities $ 3,123 The undiscounted cash flows for future maturities of the Company’s operating lease liabilities and the reconciliation to the balance of operating lease liabilities reflected on the Company’s balance sheet are as follows as of June 30, 2020: Fiscal 2021 $ 10,978 Fiscal 2022 9,700 Fiscal 2023 9,324 Fiscal 2024 9,307 Fiscal 2025 9,246 Thereafter 50,967 Total undiscounted cash flows 99,522 Less: Present value discount (18,140) Total operating lease liabilities $ 81,382 As of June 30, 2020, the Company had not entered into any leases that had not yet commenced. Rental expense for operating leases in accordance with ASC 840, Leases, (“Topic 840”) was $8,242 and $9,752 for the years ended June 30, 2018 and 2019, respectively. Future minimum lease payments under non-cancellable operating leases (with initial or remaining terms in excess of one year) as of June 30, 2019 under Topic 840 were as follows: Fiscal 2020 $ 10,449 Fiscal 2021 11,150 Fiscal 2022 9,500 Fiscal 2023 8,840 Fiscal 2024 8,838 Thereafter 59,401 Total minimum lease payments $ 108,178 |
Income Taxes
Income Taxes | 12 Months Ended |
Jun. 30, 2020 | |
Income Taxes | |
Income Taxes | (13) Income Taxes (a) Income Taxes Income tax expense (benefit) for the years ended June 30, 2018, 2019 and 2020 consists of the following: Year ended June 30, 2018 2019 2020 Current taxes U.S. federal $ 294 $ — $ — State and local 364 90 (92) Deferred taxes: U.S. federal (15,167) 5,449 403 State and local (7,338) (1,316) 2,352 Total income tax expense (benefit) $ (21,847) $ 4,223 $ 2,663 (b) Tax Rate Reconciliation Income tax expense (benefit) differed from the amounts computed by applying the U.S. federal income tax rate of 27.6% for the years ended June 30, 2018, and 21% for the years ended June 30, 2019 and 2020 to pretax income as a result of the following: Year ended June 30, 2018 2019 2020 Income tax expense (benefit) at statutory federal rate 27.6 % 21.0 % 21.0 % Increase (reduction) in income taxes resulting from: Research and development and other credits (6.6) (3.0) (3.2) Non-deductible expenses 4.6 1.3 1.6 Change in valuation allowance (136.0) 0.3 5.2 Effect of Tax Cuts and Jobs Act 51.5 — — Stock-based compensation expense (58.3) (10.4) (18.3) State and local income taxes, net of federal income tax benefit (13.5) (2.0) (1.8) Other 0.3 0.1 (0.5) (130.4) % 7.3 % 4.0 % The effective tax rate for the years ended June 30, 2019 and 2020 was 7.3% and 4.0%, respectively, on pre-tax income of $58,046 and $67,118, respectively. The decrease in the effective tax rate is primarily due to increased deductions related to stock compensation offset by an increase to the valuation allowance. (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, 2019 and 2020 are presented below. Year ended June 30, 2019 2020 Deferred tax assets: Deferred rent $ 1,963 $ — Operating lease liability — 21,041 Accrued expenses 4,344 9,915 Stock-based compensation 10,373 13,351 Net operating loss carryforwards 9,980 13,596 Federal and state tax credits 11,977 16,714 Intangible assets 385 — Total deferred tax assets 39,022 74,617 Valuation allowance (502) (3,967) Net deferred tax assets 38,520 70,650 Deferred tax liabilities: Deferred contract costs (27,116) (41,229) Operating lease right-of-use assets — (12,607) Research and development costs (6,294) (8,563) Intangible assets — (781) Depreciation (5,581) (11,269) Total deferred tax liabilities (38,991) (74,449) Net deferred tax asset (liability) $ (471) $ (3,799) 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, 2020, the Company maintains a valuation allowance of $3,967 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, 2020, the Company has gross net operating loss carryforwards for federal income tax purposes of approximately $55,801, of which $35,736 expire from 2034 2038 2021 2040 . The remaining also has gross federal and state research and development tax credits and other state credit carryforwards of approximately $16,714, which expire between 2021 2040 The Company had no unrecognized tax benefits as of June 30, 2018, 2019 and 2020, 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 subsidiaries, files a consolidated federal income tax return. For years before fiscal year ended June 30, 2017, 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 2017 to the extent the Company utilized tax attributes carried forward from those prior years. The statute of limitations on state filings is generally three |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Jun. 30, 2020 | |
Stockholders' Equity | |
Stockholders' Equity | (14) 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, 2020 | |
Benefit Plans | |
Benefit Plans | (15) 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 not As of June 30, 2020, the Company had 12,400 shares allocated to the plans, of which 2,881 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, 2020: Number of Available for grant at July 1, 2019 9,759 RSUs granted (658) Shares withheld in settlement of taxes and/or exercise price 385 Forfeitures 110 Shares removed (77) Available for grant at June 30, 2020 9,519 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, 2018 2019 2020 Cost of revenues $ 4,218 $ 5,027 $ 5,637 Sales and marketing 7,295 7,631 13,960 Research and development 3,748 5,325 7,182 General and administrative 15,093 20,782 20,714 Total stock-based compensation expense $ 30,354 $ 38,765 $ 47,493 In addition, the Company capitalized $2,024, $2,760 and $2,397 of stock-based compensation expense in its capitalized internal-use software costs in the years ended June 30, 2018, 2019 and 2020, respectively. Under the 2008 and 2014 Plans, the exercise price of each option cannot be less than the fair value of a share of common stock on the grant date. The options typically vest ratably over a three- 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, 2019 1,525 $ 12.24 3.95 $ 124,373 Options exercised (270) $ 11.39 Balance at June 30, 2020 1,255 $ 12.43 2.96 $ 167,406 Options vested and exercisable at June 30, 2020 1,255 $ 12.43 2.96 $ 167,406 There were no stock options granted during the years ended June 30, 2018, 2019 or 2020. The total intrinsic value of options exercised during the years ended June 30, 2018, 2019 and 2020 was $34,083, $24,920 and $29,791, respectively. As of June 30, 2020, the Company had recognized all stock-based compensation cost related to outstanding stock options and all outstanding options had vested. 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 Units Weighted RSU balance at July 1, 2019 1,813 $ 53.78 RSUs granted 658 $ 99.72 RSUs vested (735) $ 50.25 RSUs forfeited (110) $ 62.60 RSU balance at June 30, 2020 1,626 $ 73.96 RSUs expected to vest at June 30, 2020 1,448 $ 72.15 At June 30, 2020, there was $40,367 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 1.88 years. The total excess income tax benefits for stock-based compensation arrangements was $33,443, $41,195 and $67,816 for the years ended June 30, 2018, 2019 and 2020, 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 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 As of June 30, 2020, a total of 898 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) January 1, 2020 . The Company issued a total of 97 shares upon the completion of its six-month offering periods ending November 15, 2019 and May 15, 2020. The Company recorded compensation expense attributable to the ESPP of $1,331, $1,949 and $3,235 for the years ended June 30, 2018, 2019 and 2020, 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, 2018 2019 2020 Valuation assumptions: Expected dividend yield 0 % 0 % 0 % Expected volatility 28.3 - 39.1 % 33.5 - 38.6 % 38.6 - 72.2 % Expected term (years) 0.5 0.5 0.5 Risk‑free interest rate 1.02 - 2.10 % 2.10 - 2.48 % 0.15 - 2.44 % (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 $4,632, $5,693 and $7,914 for the years ended June 30, 2018, 2019 and 2020, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies | |
Commitments and Contingencies | (16) 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. The Company has, without admitting any liability or wrongdoing, reached an agreement to settle this matter. The settlement of this claim did not have a material impact to the Company’s financial position, results of operations, or liquidity. 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, 2020 | |
Net Income Per Share | |
Net Income Per Share | (17) 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, 2018 2019 2020 Numerator: Net income $ 38,598 $ 53,823 $ 64,455 Denominator: Weighted-average shares used in computing net income per share: Basic 52,425 52,914 53,547 Weighted-average effect of potentially dilutive shares: Employee stock options, restricted stock units and employee stock purchase plan shares 2,462 2,500 2,260 Diluted 54,887 55,414 55,807 Net income per share: Basic $ 0.74 $ 1.02 $ 1.20 Diluted $ 0.70 $ 0.97 $ 1.15 The following table summarizes the outstanding 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, 2018 2019 2020 Restricted stock units 92 69 23 Employee stock purchase plan shares — 13 — Total 92 82 23 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, 2020 | |
Selected Quarterly Financial Data (unaudited) | |
Selected Quarterly Financial Data (unaudited) | (18) Selected Quarterly Financial Data (unaudited) The following tables set forth selected unaudited quarterly statements of operations data for the years ended June 30, 2019 and 2020. 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 Quarter Ended September 30, December 31, 2019 2019 March 31, 2020 June 30, 2020 Consolidated Statements of Operations Data Revenues $ 126,720 $ 132,374 $ 171,646 $ 130,589 Gross profit $ 84,090 $ 86,950 $ 123,565 $ 84,714 Operating income $ 6,000 $ 6,114 $ 47,741 $ 6,316 Net income $ 13,906 $ 5,467 $ 40,132 $ 4,950 Net income per share: Basic $ 0.26 $ 0.10 $ 0.75 $ 0.09 Diluted $ 0.25 $ 0.10 $ 0.72 $ 0.09 Weighted-average shares used in computing net income per share: Basic 53,287 53,542 53,629 53,731 Diluted 55,713 55,826 55,953 55,970 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Jun. 30, 2020 | |
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, including the impact from the outbreak of the novel coronavirus disease (“COVID-19”), 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. Beginning in fiscal 2020, the Company simplified the presentation of revenue and cost of revenues on its Consolidated Statements of Operations and Comprehensive Income. The line items “Recurring fees” and “Implementation services and other” have been combined into one revenue line: “Recurring and other revenue”. Likewise, the line items “Cost of revenues - recurring revenues” and “Cost of revenues - implementation services and other” have been combined into one line: “Cost of revenues”. The Company changed the presentation of revenue and cost of revenues as Implementation services and other has become a smaller component of its overall revenue mix due to the human capital management (“HCM”) suite becoming a larger part of the portfolio. Previously reported results for the years ended June 30, 2018 and 2019 have been reclassified to conform to the current 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, 2019 or 2020. 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, 2018 2019 2020 Balance at the beginning of the year $ 266 $ 375 $ 473 Charged to expense 296 283 309 Write-offs (187) (185) (165) Balance at the end of the year $ 375 $ 473 $ 617 |
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”) Topic 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 |
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 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, proprietary technology, trade name and non-solicitation agreements and are reported net of accumulated amortization on the Consolidated Balance Sheets. Client relationships use the straight-line method of amortization over a five proprietary |
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 2018, 2019 or 2020 as a result of the Company’s qualitative assessments over its single reporting segment. |
Leases | (k) Leases The Company adopted Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) (“Topic 842”), effective July 1, 2019. The Company determines if an arrangement is a lease at inception. Operating leases are included in Operating lease right-of-use assets, Accrued expenses, and Long-term operating lease liabilities in the Consolidated Balance Sheets. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. In determining the present value of lease payments, the Company uses its incremental borrowing rate based on the information available at the lease commencement date. The operating lease right-of-use assets also include any lease payments made at or before the commencement date and are reduced by any lease incentives received. The Company’s lease terms may include options to extend or not terminate the lease when it is reasonably certain that it will exercise any such options. For the majority of its leases, the Company concluded that it is not reasonably certain that any renewal options would be exercised, and, therefore, the amounts are not recognized as part of Operating lease right- of-use assets nor Operating lease liabilities. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Lease expense is recognized on a straight-line basis over the expected lease term. The Company’s most significant leases are real estate leases of office space. The remaining operating leases are primarily comprised of leases of printers and other equipment. For all leases, the Company has elected the practical expedient permitted under Topic 842 to combine lease and non-lease components. As a result, non-lease components, such as common area or equipment maintenance charges, are accounted for as a single lease element. The Company does not have any finance leases. Fixed lease expense payments are recognized on a straight-line basis over the lease term. Variable lease payments vary because of changes in facts or circumstances occurring after the commencement date, other than the passage of time, and are often due to changes in an external market rate or the value of an index (e.g. Consumer Price Index). Certain of the Company’s operating lease agreements include variable payments that are passed through by the landlord, such as insurance, taxes, and common area maintenance, payments based on the usage of the asset, and rental payments adjusted periodically for inflation. Variable payments are expensed as incurred and included within variable rent expense. The Company’s lease agreements do not contain material residual value guarantees, restrictions, or covenants. |
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 13 for additional information on income taxes. |
Revenue Recognition | (m) Revenue Recognition The Company applies Accounting Standards Codification Topic 606, 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) 2) 3) 4) 5) 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. |
Cost of Revenues | (n) Cost of Revenues |
Advertising | (o) Advertising Advertising costs are expensed as incurred. Advertising costs amounted to $179, $283 and $1,023 for the years ended June 30, 2018, 2019 and 2020, 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 |
Recently Adopted Accounting Standards | (s) Recently Adopted Accounting Standards The Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606), 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. 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. In addition, the Company is required to defer costs of obtaining and fulfilling a new contract 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 February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) , The Company adopted the new standard on July 1, 2019 Adoption of the new standard resulted in the Company recording operating lease ROU assets and operating lease liabilities of $52,083 and $83,852, respectively, as of July 1, 2019. The ROU assets were recorded net of $31,769 in deferred rent adjustments that were previously recorded in Accrued expenses and Deferred rent on the Consolidated Balance Sheets as of June 30, 2019. The adoption of this standard did not result in any cumulative-effect adjustments to Retained earnings. Additionally, there was no impact on the Company’s Consolidated Statements of Operations and Comprehensive Income or the Consolidated Statements of Cash Flows as a result of the adoption of Topic 842 for the years ended June 30, 2018 and 2019. Refer to Note 2(k) and Note 12 for additional disclosures over the Company’s leases. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provides optional practical expedients and exceptions for applying GAAP to contracts and transactions, including debt agreements, affected by interest rate reform as regulators discontinue the use of the London Interbank Offered Rate (LIBOR) and other similar reference rates. This standard is effective for contract modifications made as of March 12, 2020 through December 31, 2022, on a prospective basis. The Company adopted this standard upon its issuance, and it did not have a material impact on the Company’s financial statements. |
Recently Issued Accounting Standards | (t) Recently Issued Accounting Standards 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 adopted ASU 2018-13 on July 1, 2020, and the adoption of this standard did not have a material impact on the Company’s financial statements. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”) which provides guidance to reduce complexity in certain areas of accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and simplifies various aspects of the current guidance to promote consistent application of the standard among reporting entities. This standard is effective for fiscal years beginning after December 15, 2020 with early adoption permitted. The Company adopted ASU 2019-12 effective July 1, 2020, and the adoption of this standard did not have a material impact on the Company’s financial statements. 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, 2020 | |
Summary of Significant Accounting Policies | |
Schedule of activity in the allowance for doubtful accounts | For the Years Ended June 30, 2018 2019 2020 Balance at the beginning of the year $ 266 $ 375 $ 473 Charged to expense 296 283 309 Write-offs (187) (185) (165) Balance at the end of the year $ 375 $ 473 $ 617 |
Schedule of the cumulative effect of the adoption of ASC 606 on the prior year opening 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 prior 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 — |
Revenue (Tables)
Revenue (Tables) | 12 Months Ended |
Jun. 30, 2020 | |
Revenue | |
Schedule of disaggregation of revenue | Year Ended June 30, 2019 2020 Recurring fees $ 436,955 $ 526,267 Implementation services and other 10,797 19,945 Total revenues from contracts $ 447,752 $ 546,212 |
Schedule of changes in deferred revenue related to nonrefundable upfront fees | Year Ended June 30, 2019 2020 Balance at beginning of the year $ — $ 6,289 Deferral of revenue 13,254 15,998 Revenue recognized (6,965) (13,853) Balance at end of the year $ 6,289 $ 8,434 |
Schedule of deferred contract costs and the related amortization expense | 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 Year Ended June 30, 2020 Beginning Capitalized Ending Balance Costs Amortization Balance Costs to obtain a new contract $ 82,103 $ 53,529 $ (22,057) $ 113,575 Costs to fulfill a contract 20,996 28,893 (5,421) 44,468 Total $ 103,099 $ 82,422 $ (27,478) $ 158,043 |
Corporate Investments and Fun_2
Corporate Investments and Funds Held For Clients (Tables) | 12 Months Ended |
Jun. 30, 2020 | |
Corporate Investments and Funds Held for Clients | |
Schedule of corporate investments and 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 (1) 130,665 168 (9) 130,824 Total investments $ 1,556,816 $ 168 $ (17) $ 1,556,967 (1) 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. June 30, 2020 Gross Gross Amortized unrealized unrealized Type of Issue cost gains losses Fair value Cash and cash equivalents $ 250,851 $ — $ — $ 250,851 Funds held for clients' cash and cash equivalents 1,241,282 — — 1,241,282 Available-for-sale securities: Commercial paper 6,643 6 — 6,649 Corporate bonds 44,343 414 — 44,757 Asset-backed securities 49,978 424 — 50,402 U.S. treasury securities 21,302 67 — 21,369 Total available-for-sale securities (2) 122,266 911 — 123,177 Total investments $ 1,614,399 $ 911 $ — $ 1,615,310 (2) Included within the fair value of total available-for-sale securities above is $37,155 of Corporate investments and $86,022 of Funds held for clients. |
Schedule of the classification of investments | June 30, June 30, 2019 2020 Cash and cash equivalents $ 132,476 $ 250,851 Corporate investments 29,314 34,556 Funds held for clients 1,394,469 1,327,304 Long-term prepaid expenses and other 708 2,599 Total investments $ 1,556,967 $ 1,615,310 |
Schedule of available-for-sale securities that have been in an unrealized loss position for less than and greater than 12 months | 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 $ 106,647 $ 107,293 One year to two years 15,619 15,884 Total available-for-sale securities $ 122,266 $ 123,177 |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 12 Months Ended |
Jun. 30, 2020 | |
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, 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 $ — June 30, 2020 Total Level 1 Level 2 Level 3 Cash and cash equivalents $ 250,851 $ 250,851 $ — $ — Funds held for clients' cash and cash equivalents 1,241,282 1,241,282 — — Available-for-sale securities: Commercial paper 6,649 — 6,649 — Corporate bonds 44,757 — 44,757 — Asset-backed securities 50,402 — 50,402 — U.S. treasury securities 21,369 — 21,369 — Total available-for-sale securities 123,177 — 123,177 — Total investments $ 1,615,310 $ 1,492,133 $ 123,177 $ — |
Business Combinations (Tables)
Business Combinations (Tables) | 12 Months Ended |
Jun. 30, 2020 | |
Business Combinations | |
Summary of the preliminary allocation of the purchase price of the business combination | April 3, 2020 Proprietary technology $ 2,962 Client relationships 1,070 Non-solicitation agreements 750 Trade name 350 Goodwill 12,065 Other assets acquired 733 Liabilities assumed (674) Total purchase price $ 17,256 |
Capitalized Internal-Use Soft_2
Capitalized Internal-Use Software (Tables) | 12 Months Ended |
Jun. 30, 2020 | |
Capitalized Internal-Use Software. | |
Schedule of capitalized internal-use software and accumulated amortization | Year ended June 30, 2019 2020 Capitalized internal-use software $ 90,991 $ 119,178 Accumulated amortization (63,505) (82,677) Capitalized internal-use software, net $ 27,486 $ 36,501 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Jun. 30, 2020 | |
Property and Equipment. | |
Schedule of property and equipment, net | Year ended June 30, 2019 2020 Office equipment $ 4,406 $ 4,619 Computer equipment 36,798 42,936 Furniture and fixtures 11,857 12,723 Software 6,332 6,609 Leasehold improvements 44,350 46,192 Time clocks rented by clients 4,679 4,967 Total 108,422 118,046 Accumulated depreciation (38,366) (51,309) Property and equipment, net $ 70,056 $ 66,737 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Jun. 30, 2020 | |
Goodwill and Intangible Assets | |
Schedule of changes in goodwill | Balance at June 30, 2019 $ 9,590 Additions attributable to current year acquisition 12,065 Balance at June 30, 2020 $ 21,655 |
Schedule of amortizable intangible assets and estimated useful lives | June 30, June 30, Useful 2019 2020 Life Client relationships $ 18,130 $ 19,200 5 - 9 years Proprietary technology — 2,962 5 years Non-solicitation agreements 600 1,350 2 - 4 years Trade name — 350 5 years Total 18,730 23,862 Accumulated amortization (7,979) (10,502) Intangible assets, net $ 10,751 $ 13,360 |
Schedule of future amortization expense for acquired intangible assets | Fiscal 2021 $ 3,377 Fiscal 2022 3,358 Fiscal 2023 3,185 Fiscal 2024 2,232 Fiscal 2025 1,208 Total $ 13,360 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 12 Months Ended |
Jun. 30, 2020 | |
Accrued Expenses | |
Schedule of components of accrued expenses | Year ended June 30, 2019 2020 Accrued payroll and personnel costs $ 39,095 $ 53,284 Operating lease liabilities 1,482 8,083 Deferred revenue 5,572 8,777 Other 11,476 9,737 Total accrued expenses $ 57,625 $ 79,881 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Jun. 30, 2020 | |
Leases | |
Schedule of components of operating lease expense | Year Ended June 30, 2020 Operating lease cost $ 9,686 Short-term lease cost 40 Variable lease cost 3,167 Total lease costs $ 12,893 |
Schedule of the classification of operating lease right-of-use assets and operating lease liabilities and other supplemental information related to operating leases | June 30, 2020 Operating lease right-of-use assets $ 48,658 Accrued expenses $ 8,083 Long-term operating lease liabilities $ 73,299 Weighted-average remaining lease term (years) 10.32 Weighted-average discount rate 3.83 % |
Schedule of supplemental cash flow information related to operating leases | Year Ended June 30, 2020 Cash paid for amounts included in the measurement of operating lease liabilities $ 10,374 Operating lease assets obtained in exchange for new liabilities $ 3,123 |
Schedule of future maturities of operating lease liabilities and the reconciliation to the balance of operating lease liabilities | Fiscal 2021 $ 10,978 Fiscal 2022 9,700 Fiscal 2023 9,324 Fiscal 2024 9,307 Fiscal 2025 9,246 Thereafter 50,967 Total undiscounted cash flows 99,522 Less: Present value discount (18,140) Total operating lease liabilities $ 81,382 |
Schedule of future minimum lease payments under non-cancellable operating leases under Topic 840 | Future minimum lease payments under non-cancellable operating leases (with initial or remaining terms in excess of one year) as of June 30, 2019 under Topic 840 were as follows: Fiscal 2020 $ 10,449 Fiscal 2021 11,150 Fiscal 2022 9,500 Fiscal 2023 8,840 Fiscal 2024 8,838 Thereafter 59,401 Total minimum lease payments $ 108,178 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Jun. 30, 2020 | |
Income Taxes | |
Schedule of income tax expense | Year ended June 30, 2018 2019 2020 Current taxes U.S. federal $ 294 $ — $ — State and local 364 90 (92) Deferred taxes: U.S. federal (15,167) 5,449 403 State and local (7,338) (1,316) 2,352 Total income tax expense (benefit) $ (21,847) $ 4,223 $ 2,663 |
Schedule of tax rate reconciliation by applying the U.S. federal income tax rate to pretax income (loss) | Year ended June 30, 2018 2019 2020 Income tax expense (benefit) at statutory federal rate 27.6 % 21.0 % 21.0 % Increase (reduction) in income taxes resulting from: Research and development and other credits (6.6) (3.0) (3.2) Non-deductible expenses 4.6 1.3 1.6 Change in valuation allowance (136.0) 0.3 5.2 Effect of Tax Cuts and Jobs Act 51.5 — — Stock-based compensation expense (58.3) (10.4) (18.3) State and local income taxes, net of federal income tax benefit (13.5) (2.0) (1.8) Other 0.3 0.1 (0.5) (130.4) % 7.3 % 4.0 % |
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, 2019 2020 Deferred tax assets: Deferred rent $ 1,963 $ — Operating lease liability — 21,041 Accrued expenses 4,344 9,915 Stock-based compensation 10,373 13,351 Net operating loss carryforwards 9,980 13,596 Federal and state tax credits 11,977 16,714 Intangible assets 385 — Total deferred tax assets 39,022 74,617 Valuation allowance (502) (3,967) Net deferred tax assets 38,520 70,650 Deferred tax liabilities: Deferred contract costs (27,116) (41,229) Operating lease right-of-use assets — (12,607) Research and development costs (6,294) (8,563) Intangible assets — (781) Depreciation (5,581) (11,269) Total deferred tax liabilities (38,991) (74,449) Net deferred tax asset (liability) $ (471) $ (3,799) |
Benefit Plans (Tables)
Benefit Plans (Tables) | 12 Months Ended |
Jun. 30, 2020 | |
Benefit Plans | |
Schedule of changes in the number of shares available for grant under equity incentive plans | Number of Available for grant at July 1, 2019 9,759 RSUs granted (658) Shares withheld in settlement of taxes and/or exercise price 385 Forfeitures 110 Shares removed (77) Available for grant at June 30, 2020 9,519 |
Schedule of stock-based compensation expense related to stock options, restricted stock units and the Employee Stock Purchase Plan | Year ended June 30, 2018 2019 2020 Cost of revenues $ 4,218 $ 5,027 $ 5,637 Sales and marketing 7,295 7,631 13,960 Research and development 3,748 5,325 7,182 General and administrative 15,093 20,782 20,714 Total stock-based compensation expense $ 30,354 $ 38,765 $ 47,493 |
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, 2019 1,525 $ 12.24 3.95 $ 124,373 Options exercised (270) $ 11.39 Balance at June 30, 2020 1,255 $ 12.43 2.96 $ 167,406 Options vested and exercisable at June 30, 2020 1,255 $ 12.43 2.96 $ 167,406 |
Schedule of restricted stock unit activity | Units Weighted RSU balance at July 1, 2019 1,813 $ 53.78 RSUs granted 658 $ 99.72 RSUs vested (735) $ 50.25 RSUs forfeited (110) $ 62.60 RSU balance at June 30, 2020 1,626 $ 73.96 RSUs expected to vest at June 30, 2020 1,448 $ 72.15 |
Schedule of weighted average assumptions used for estimating grant date fair value of the ESPP | Year ended June 30, 2018 2019 2020 Valuation assumptions: Expected dividend yield 0 % 0 % 0 % Expected volatility 28.3 - 39.1 % 33.5 - 38.6 % 38.6 - 72.2 % Expected term (years) 0.5 0.5 0.5 Risk‑free interest rate 1.02 - 2.10 % 2.10 - 2.48 % 0.15 - 2.44 % |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 12 Months Ended |
Jun. 30, 2020 | |
Net Income Per Share | |
Schedule of calculation of basic and diluted net income per share | Year ended June 30, 2018 2019 2020 Numerator: Net income $ 38,598 $ 53,823 $ 64,455 Denominator: Weighted-average shares used in computing net income per share: Basic 52,425 52,914 53,547 Weighted-average effect of potentially dilutive shares: Employee stock options, restricted stock units and employee stock purchase plan shares 2,462 2,500 2,260 Diluted 54,887 55,414 55,807 Net income per share: Basic $ 0.74 $ 1.02 $ 1.20 Diluted $ 0.70 $ 0.97 $ 1.15 |
Summary of anti-dilutive securities | Year ended June 30, 2018 2019 2020 Restricted stock units 92 69 23 Employee stock purchase plan shares — 13 — Total 92 82 23 |
Selected Quarterly Financial _2
Selected Quarterly Financial Data (unaudited) (Tables) | 12 Months Ended |
Jun. 30, 2020 | |
Selected Quarterly Financial Data (unaudited) | |
Schedule of selected unaudited quarterly statements of operations data | 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 Quarter Ended September 30, December 31, 2019 2019 March 31, 2020 June 30, 2020 Consolidated Statements of Operations Data Revenues $ 126,720 $ 132,374 $ 171,646 $ 130,589 Gross profit $ 84,090 $ 86,950 $ 123,565 $ 84,714 Operating income $ 6,000 $ 6,114 $ 47,741 $ 6,316 Net income $ 13,906 $ 5,467 $ 40,132 $ 4,950 Net income per share: Basic $ 0.26 $ 0.10 $ 0.75 $ 0.09 Diluted $ 0.25 $ 0.10 $ 0.72 $ 0.09 Weighted-average shares used in computing net income per share: Basic 53,287 53,542 53,629 53,731 Diluted 55,713 55,826 55,953 55,970 |
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, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | |
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 in accumulated other comprehensive income | $ 0 | $ 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 the beginning of the year | $ 473 | 375 | 266 |
Charged to expense | 309 | 283 | 296 |
Write-offs | (165) | (185) | (187) |
Balance at the end of the year | $ 617 | $ 473 | $ 375 |
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% |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Capitalized Internal-Use Software (Details) - Internal-Use Software | 12 Months Ended |
Jun. 30, 2020 | |
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, 2020 | |
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, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | |
Goodwill | |||
Impairment loss | $ 0 | $ 0 | $ 0 |
Proprietary technology | |||
Intangible assets, net of accumulated amortization | |||
Estimated useful lives | 5 years | ||
Trade name | |||
Intangible assets, net of accumulated amortization | |||
Estimated useful lives | 5 years | ||
Minimum | Client relationships | |||
Intangible assets, net of accumulated amortization | |||
Estimated useful lives | 5 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 (Details) | 12 Months Ended |
Jun. 30, 2020 | |
Revenue from contracts terms | |
Period of term arrangements | 2 years |
Deferred contract costs | |
Amortization period of capitalized contract costs | 7 years |
Cost of revenues | |
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 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Advertising, Segment Information (Details) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2020USD ($)segment | Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | |
Advertising | |||
Advertising costs | $ | $ 1,023 | $ 283 | $ 179 |
Segment Information | |||
Number of reporting segments | segment | 1 |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Cumulative effect of balance sheet changes (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Jun. 30, 2019 | Jul. 01, 2018 | Jun. 30, 2018 |
Recently Adopted Accounting Standards | ||||
Amortization period of capitalized contract costs | 7 years | |||
Assets | ||||
Deferred contract costs | $ 32,332 | $ 21,677 | $ 14,783 | |
Prepaid expenses and other | 13,188 | 13,895 | 12,978 | |
Long-term deferred contract costs | 125,711 | 81,422 | 53,324 | |
Long-term prepaid expenses and other | 4,917 | 1,975 | 2,730 | |
Deferred income tax assets | 4,955 | 6,472 | 3,749 | |
Stockholders' equity: | ||||
Retained earnings | $ 164,272 | 99,817 | 45,994 | |
Contract Assets For Implementation Fees related to open contracts, net of deferred taxes | Topic 606 | ||||
Stockholders' equity: | ||||
Retained earnings | 2,191 | |||
Deferral Of Costs to Obtain a New Contract, net of deferred taxes | Topic 606 | ||||
Stockholders' equity: | ||||
Retained earnings | 50,481 | |||
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 | (21,635) | (18,391) | ||
Stockholders' equity: | ||||
Retained earnings | 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 | 28,107 | 22,140 | ||
Stockholders' equity: | ||||
Retained earnings | $ 18,059 | $ (6,678) |
Summary of Significant Accou_11
Summary of Significant Accounting Policies - Impact on Balance Sheet (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Jun. 30, 2019 | Jul. 01, 2018 | Jun. 30, 2018 |
Assets | ||||
Deferred contract costs | $ 32,332 | $ 21,677 | $ 14,783 | |
Prepaid expenses and other | 13,188 | 13,895 | 12,978 | |
Long-term deferred contract costs | 125,711 | 81,422 | 53,324 | |
Long-term prepaid expenses and other | 4,917 | 1,975 | 2,730 | |
Deferred income tax assets | 4,955 | 6,472 | 3,749 | |
Liabilities | ||||
Accrued expenses | 79,881 | 57,625 | ||
Other long-term liabilities | 1,747 | 1,723 | ||
Deferred income tax liabilities, net | 8,754 | 6,943 | ||
Stockholders' equity: | ||||
Retained earnings | $ 164,272 | 99,817 | 45,994 | |
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 | (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 | 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 | 28,107 | 22,140 | ||
Liabilities | ||||
Accrued expenses | 54,541 | |||
Other long-term liabilities | 10,818 | |||
Stockholders' equity: | ||||
Retained earnings | $ 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, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | |
Revenues: | |||||||||||
Recurring and other revenue | $ 546,212 | $ 447,752 | $ 368,434 | ||||||||
Cost of revenues | |||||||||||
Cost of revenues | 182,010 | 153,851 | 149,197 | ||||||||
Operating expenses: | |||||||||||
Sales and marketing | 145,134 | 112,599 | 95,484 | ||||||||
General and administrative | 105,248 | 94,630 | 79,252 | ||||||||
Income tax expense (benefit) | 2,663 | 4,223 | (21,847) | ||||||||
Net income | $ 4,950 | $ 40,132 | $ 5,467 | $ 13,906 | $ 10,241 | $ 28,026 | $ 5,704 | $ 9,852 | 64,455 | 53,823 | $ 38,598 |
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: | |||||||||||
Recurring and other revenue | 526,267 | 436,955 | |||||||||
Recurring fees | Impact from Adoption | Topic 606 | |||||||||||
Revenues: | |||||||||||
Recurring and other revenue | (1,730) | ||||||||||
Recurring fees | Balances under ASC 605 | |||||||||||
Revenues: | |||||||||||
Recurring and other revenue | 438,685 | ||||||||||
Implementation services and other | |||||||||||
Revenues: | |||||||||||
Recurring and other revenue | $ 19,945 | 10,797 | |||||||||
Cost of revenues | |||||||||||
Cost of revenues | 28,640 | ||||||||||
Implementation services and other | Impact from Adoption | Topic 606 | |||||||||||
Revenues: | |||||||||||
Recurring and other revenue | 6,011 | ||||||||||
Cost of revenues | |||||||||||
Cost of revenues | (20,612) | ||||||||||
Implementation services and other | Balances under ASC 605 | |||||||||||
Revenues: | |||||||||||
Recurring and other revenue | 4,786 | ||||||||||
Cost of revenues | |||||||||||
Cost of revenues | $ 49,252 |
Summary of Significant Accou_13
Summary of Significant Accounting Policies - Impact on Cash Flow Statement (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | |
Cash Flows | |||
Net income | $ 64,455 | $ 53,823 | $ 38,598 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Deferred income tax expense (benefit) | 2,754 | 4,134 | (21,870) |
Changes in operating assets and liabilities: | |||
Deferred contract costs | (54,944) | (34,992) | |
Prepaid expenses and other | (196) | 389 | (2,141) |
Accrued expenses | 13,625 | ||
Net cash provided by operating activities | $ 112,655 | 115,032 | $ 97,866 |
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 |
Summary of Significant Accou_14
Summary of Significant Accounting Policies - Adjustments for Adoption (Details) - USD ($) $ in Thousands | Jul. 01, 2019 | Jun. 30, 2020 |
Recently adopted accounting standards | ||
Operating lease right-of-use assets | $ 48,658 | |
Operating lease liabilities | $ 81,382 | |
Topic 842 | ||
Recently adopted accounting standards | ||
Change in Accounting Principle, Accounting Standards Update, Adopted [true false] | true | |
Change in Accounting Principle, Accounting Standards Update, Transition Option Elected [Fixed List] | Modified Retrospective | |
Practical expedients package adopted | true | |
Practical expedient single lease component adopted | true | |
Operating lease right-of-use assets | $ 52,083 | |
Operating lease liabilities | 83,852 | |
Deferred rent adjustments included in net ROU assets | 31,769 | |
Impact of adoption on unaudited consolidated statements of operations and comprehensive income or the unaudited statement of cash flows | $ 0 |
Revenue - Disaggregation (Detai
Revenue - Disaggregation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | |
Disaggregation of revenue | |||
Recurring and other revenue | $ 546,212 | $ 447,752 | $ 368,434 |
Recurring fees | |||
Disaggregation of revenue | |||
Recurring and other revenue | 526,267 | 436,955 | |
Implementation services and other | |||
Disaggregation of revenue | |||
Recurring and other revenue | $ 19,945 | $ 10,797 |
Revenue - Deferred Revenue (Det
Revenue - Deferred Revenue (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Changes in deferred revenue related to nonrefundable upfront fees | ||
Balance at beginning of the year | $ 6,289 | |
Deferral of revenue | 15,998 | $ 13,254 |
Revenue recognized | (13,853) | (6,965) |
Balance at end of the year | 8,434 | $ 6,289 |
Deferred revenue from nonrefundable upfront fees expected to be recognized in fiscal 2021 | 6,689 | |
Deferred revenue from nonrefundable upfront fees expected to be recognized in fiscal 2022 | 1,587 | |
Deferred revenue from nonrefundable upfront fees expected to be recognized thereafter | $ 158 | |
Maximum | ||
Revenue | ||
Recognition period of nonrefundable upfront implementation fees | 24 months |
Revenue - Deferred contract cos
Revenue - Deferred contract costs (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Deferred contract costs | ||
Amortization period of capitalized contract costs | 7 years | |
Beginning Balance | $ 103,099 | $ 68,107 |
Capitalized Costs | 82,422 | 53,733 |
Amortization | (27,478) | (18,741) |
Ending Balance | 158,043 | 103,099 |
Costs To Obtain A New Contract | ||
Deferred contract costs | ||
Beginning Balance | 82,103 | 68,107 |
Capitalized Costs | 53,529 | 30,994 |
Amortization | (22,057) | (16,998) |
Ending Balance | 113,575 | 82,103 |
Costs to Fulfill A Contract | ||
Deferred contract costs | ||
Beginning Balance | 20,996 | |
Capitalized Costs | 28,893 | 22,739 |
Amortization | (5,421) | (1,743) |
Ending Balance | $ 44,468 | $ 20,996 |
Revenue - Performance Obligatio
Revenue - Performance Obligations (Details) $ in Thousands | Jun. 30, 2020USD ($) |
Remaining Performance Obligations | |
Minimum value of unsatisfied performance obligations on term-based contracts | $ 47,601 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-04-01 | |
Remaining Performance Obligations | |
Remaining performance obligation period | 24 months |
Corporate Investments and Fun_3
Corporate Investments and Funds Held For Clients - Reconciliation (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 |
Corporate Investments and Funds Held for Clients | |||
Amortized cost of cash and cash equivalents | $ 250,851 | $ 132,478 | |
Cash and cash equivalents, gross unrealized gains | |||
Cash and cash equivalents, gross unrealized losses | (2) | ||
Fair value of cash and cash equivalents | 250,851 | 132,476 | $ 137,193 |
Amortized cost of funds held for clients' cash and cash equivalents | 1,241,282 | 1,293,673 | |
Funds held for clients' cash and cash equivalents, gross unrealized gains | |||
Funds held for clients' cash and cash equivalents, gross unrealized losses | (6) | ||
Fair value of funds held for clients' cash and cash equivalents | 1,241,282 | 1,293,667 | $ 1,102,538 |
Available-for-sale securities | |||
Amortized cost | 122,266 | 130,665 | |
Gross unrealized gains | 911 | 168 | |
Gross unrealized losses | (9) | ||
Fair value | 123,177 | 130,824 | |
Total investments at amortized cost | 1,614,399 | 1,556,816 | |
Total investments gross unrealized gain | 911 | 168 | |
Total investments gross unrealized loss | (17) | ||
Total investments at fair value | 1,615,310 | 1,556,967 | |
Commercial paper | |||
Available-for-sale securities | |||
Amortized cost | 6,643 | 63,397 | |
Gross unrealized gains | 6 | 33 | |
Gross unrealized losses | (2) | ||
Fair value | 6,649 | 63,428 | |
Corporate bonds | |||
Available-for-sale securities | |||
Amortized cost | 44,343 | 27,044 | |
Gross unrealized gains | 414 | 59 | |
Gross unrealized losses | (4) | ||
Fair value | 44,757 | 27,099 | |
Asset-backed securities | |||
Available-for-sale securities | |||
Amortized cost | 49,978 | 26,488 | |
Gross unrealized gains | 424 | 55 | |
Gross unrealized losses | (3) | ||
Fair value | 50,402 | 26,540 | |
U.S. treasury securities | |||
Available-for-sale securities | |||
Amortized cost | 21,302 | 13,736 | |
Gross unrealized gains | 67 | 21 | |
Fair value | 21,369 | 13,757 | |
Corporate investments | |||
Available-for-sale securities | |||
Fair value | 37,155 | 30,022 | |
Funds held for clients | |||
Available-for-sale securities | |||
Fair value | $ 86,022 | $ 100,802 |
Corporate Investments and Fun_4
Corporate Investments and Funds Held For Clients - Classification (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | |
Corporate Investments and Funds Held for Clients | |||
Cash and cash equivalents | $ 250,851 | $ 132,476 | $ 137,193 |
Corporate investments | 34,556 | 29,314 | |
Funds held for clients | 1,327,304 | 1,394,469 | |
Long-term prepaid expenses and other | 2,599 | 708 | |
Total investments at fair value | 1,615,310 | 1,556,967 | |
Available-for-sale securities | |||
Unrealized loss on available-for-sale securities in a loss position for less than 12 months | (4) | ||
Fair market value of available-for-sale securities in an unrealized loss position less than 12 months | 20,941 | ||
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) | ||
Total fair value | 27,600 | ||
Gross realized gains and losses on the sale of available-for-sale securities | 0 | 0 | 0 |
OTTI in accumulated other comprehensive income | 0 | 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 | $ 0 |
Commercial paper | |||
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 | 19,055 | ||
Total gross unrealized losses | (2) | ||
Total fair value | 19,055 | ||
Corporate bonds | |||
Available-for-sale securities | |||
Unrealized loss on available-for-sale securities in a loss position for less than 12 months | (1) | ||
Fair market value of available-for-sale securities in an unrealized loss position less than 12 months | 1,500 | ||
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) | ||
Total fair value | 5,201 | ||
Asset-backed securities | |||
Available-for-sale securities | |||
Unrealized loss on available-for-sale securities in a loss position for less than 12 months | (1) | ||
Fair market value of available-for-sale securities in an unrealized loss position less than 12 months | 386 | ||
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) | ||
Total fair value | $ 3,344 |
Corporate Investments and Fun_5
Corporate Investments and Funds Held For Clients - Maturities (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Jun. 30, 2019 |
Expected maturities of available-for-sale securities, amortized cost | ||
One year or less | $ 106,647 | |
One year to two years | 15,619 | |
Total available-for-sale securities | 122,266 | $ 130,665 |
Expected maturities of available-for-sale securities, fair value | ||
One year or less | 107,293 | |
One year to two years | 15,884 | |
Total available-for-sale securities | $ 123,177 | $ 130,824 |
Fair Value Measurement (Details
Fair Value Measurement (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 |
Fair value measurement | |||
Cash and cash equivalents | $ 250,851 | $ 132,476 | $ 137,193 |
Funds held for clients' cash and cash equivalents | 1,241,282 | 1,293,667 | $ 1,102,538 |
Total investments at fair value | 1,615,310 | 1,556,967 | |
Available-for-sale securities: | |||
Total available-for-sale securities | 123,177 | 130,824 | |
Fair value asset transfers | |||
Transfers from level 1 to level 2 | 0 | 0 | |
Transfers from level 2 to level 1 | 0 | 0 | |
Level 1 | |||
Fair value measurement | |||
Cash and cash equivalents | 250,851 | 116,387 | |
Funds held for clients' cash and cash equivalents | 1,241,282 | 1,244,856 | |
Total investments at fair value | 1,492,133 | 1,361,243 | |
Available-for-sale securities: | |||
Total 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 | ||
Total investments at fair value | 123,177 | 195,724 | |
Available-for-sale securities: | |||
Total available-for-sale securities | 123,177 | 130,824 | |
Level 3 | |||
Available-for-sale securities: | |||
Total available-for-sale securities | 0 | 0 | |
Commercial paper | |||
Available-for-sale securities: | |||
Total available-for-sale securities | 6,649 | 63,428 | |
Commercial paper | Level 2 | |||
Available-for-sale securities: | |||
Total available-for-sale securities | 6,649 | 63,428 | |
Corporate bonds | |||
Available-for-sale securities: | |||
Total available-for-sale securities | 44,757 | 27,099 | |
Corporate bonds | Level 2 | |||
Available-for-sale securities: | |||
Total available-for-sale securities | 44,757 | 27,099 | |
Asset-backed securities | |||
Available-for-sale securities: | |||
Total available-for-sale securities | 50,402 | 26,540 | |
Asset-backed securities | Level 2 | |||
Available-for-sale securities: | |||
Total available-for-sale securities | 50,402 | 26,540 | |
U.S. treasury securities | |||
Available-for-sale securities: | |||
Total available-for-sale securities | 21,369 | 13,757 | |
U.S. treasury securities | Level 2 | |||
Available-for-sale securities: | |||
Total available-for-sale securities | $ 21,369 | $ 13,757 |
Business Combinations (Details)
Business Combinations (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2018 | Apr. 03, 2020 | Jun. 30, 2019 | |
Business Combinations | ||||
Total purchase price, net of cash acquired | $ 16,714 | $ 6,658 | ||
Goodwill | 21,655 | $ 9,590 | ||
Finite-lived intangible assets | 23,862 | 18,730 | ||
Proprietary technology | ||||
Business Combinations | ||||
Finite-lived intangible assets | 2,962 | |||
Client relationships | ||||
Business Combinations | ||||
Finite-lived intangible assets | 19,200 | 18,130 | ||
Non-solicitation agreements | ||||
Business Combinations | ||||
Finite-lived intangible assets | 1,350 | $ 600 | ||
Trade name | ||||
Business Combinations | ||||
Finite-lived intangible assets | 350 | |||
VidGrid, Inc. | ||||
Business Combinations | ||||
Purchase price consideration | 17,256 | |||
Cash paid on closing of acquisition | 15,506 | |||
Additional amount deposited in escrow | $ 1,750 | |||
Term for potential indemnification claims, since acquisition date | 15 months | |||
Goodwill | $ 12,065 | |||
Other assets acquired | 733 | |||
Liabilities assumed | (674) | |||
Total purchase price | 17,256 | |||
VidGrid, Inc. | Proprietary technology | ||||
Business Combinations | ||||
Finite-lived intangible assets | 2,962 | |||
VidGrid, Inc. | Client relationships | ||||
Business Combinations | ||||
Finite-lived intangible assets | 1,070 | |||
VidGrid, Inc. | Non-solicitation agreements | ||||
Business Combinations | ||||
Finite-lived intangible assets | 750 | |||
VidGrid, Inc. | Trade name | ||||
Business Combinations | ||||
Finite-lived intangible assets | $ 350 |
Capitalized Internal-Use Soft_3
Capitalized Internal-Use Software (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | |
Capitalized internal-use software and accumulated amortization | |||
Capitalized internal-use software | $ 119,178 | $ 90,991 | |
Accumulated amortization | (82,677) | (63,505) | |
Capitalized internal-use software, net | 36,501 | 27,486 | |
Cost of revenue - recurring | |||
Capitalized internal-use software and accumulated amortization | |||
Amortization of capitalized internal-use software | $ 19,261 | $ 16,921 | $ 14,315 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | |
Property and equipment | |||
Property and equipment, gross | $ 118,046 | $ 108,422 | |
Accumulated depreciation | (51,309) | (38,366) | |
Property and equipment, net | 66,737 | 70,056 | |
Depreciation expense | 16,129 | 15,392 | $ 14,192 |
Office equipment | |||
Property and equipment | |||
Property and equipment, gross | 4,619 | 4,406 | |
Computer equipment | |||
Property and equipment | |||
Property and equipment, gross | 42,936 | 36,798 | |
Furniture and fixtures | |||
Property and equipment | |||
Property and equipment, gross | 12,723 | 11,857 | |
Software | |||
Property and equipment | |||
Property and equipment, gross | 6,609 | 6,332 | |
Leasehold improvements | |||
Property and equipment | |||
Property and equipment, gross | 46,192 | 44,350 | |
Time clocks rented by clients | |||
Property and equipment | |||
Property and equipment, gross | $ 4,967 | $ 4,679 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | |
Changes in goodwill | |||
Balance at the beginning of the year | $ 9,590 | ||
Additions attributable to current period acquisition | 12,065 | ||
Balance at the end of the year | 21,655 | $ 9,590 | |
Amortizable intangible assets | |||
Intangible assets | 23,862 | 18,730 | |
Accumulated amortization | (10,502) | (7,979) | |
Intangible assets, net | 13,360 | 10,751 | |
Amortization expense for acquired intangible assets | 2,523 | 2,251 | $ 1,695 |
Future amortization expense for acquired intangible assets | |||
Fiscal 2021 | 3,377 | ||
Fiscal 2022 | 3,358 | ||
Fiscal 2023 | 3,185 | ||
Fiscal 2024 | 2,232 | ||
Fiscal 2025 | 1,208 | ||
Intangible assets, net | 13,360 | 10,751 | |
Client relationships | |||
Amortizable intangible assets | |||
Intangible assets | $ 19,200 | 18,130 | |
Client relationships | Minimum | |||
Amortizable intangible assets | |||
Useful life | 5 years | ||
Client relationships | Maximum | |||
Amortizable intangible assets | |||
Useful life | 9 years | ||
Proprietary technology | |||
Amortizable intangible assets | |||
Intangible assets | $ 2,962 | ||
Useful life | 5 years | ||
Non-solicitation agreements | |||
Amortizable intangible assets | |||
Intangible assets | $ 1,350 | $ 600 | |
Non-solicitation agreements | Minimum | |||
Amortizable intangible assets | |||
Useful life | 2 years | ||
Non-solicitation agreements | Maximum | |||
Amortizable intangible assets | |||
Useful life | 4 years | ||
Trade name | |||
Amortizable intangible assets | |||
Intangible assets | $ 350 | ||
Useful life | 5 years |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Jun. 30, 2019 |
Components of accrued expenses | ||
Accrued payroll and personnel costs | $ 53,284 | $ 39,095 |
Operating lease liabilities | $ 8,083 | $ 1,482 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Total accrued expenses | Total accrued expenses |
Deferred revenue | $ 8,777 | $ 5,572 |
Other | 9,737 | 11,476 |
Total accrued expenses | $ 79,881 | $ 57,625 |
Debt (Details)
Debt (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |
Apr. 30, 2020 | Jul. 31, 2019 | Jun. 30, 2020 | |
Debt | |||
Amount drawn on revolving line of credit | $ 100,000 | ||
Five-year revolving credit agreement | Senior secured debt | |||
Debt | |||
Term of credit agreement | 5 years | ||
Maximum borrowing capacity | $ 250,000 | ||
Maximum borrowing capacity, subject to additional lender commitments and satisfaction of other requirements | $ 375,000 | ||
Amount drawn on revolving line of credit | $ 100,000 | ||
Average interest rate | 1.38% | ||
Five-year revolving credit agreement | Senior secured debt | Minimum | |||
Debt | |||
Interest coverage ratio | 3 | ||
Five-year revolving credit agreement | Senior secured debt | Maximum | |||
Debt | |||
Net total leverage ratio | 4 | ||
Senior secured leverage ratio | 3.50 | ||
Five-year revolving credit agreement | Senior secured debt | LIBOR | Minimum | |||
Debt | |||
Margin on base rate | 0.875% | ||
Five-year revolving credit agreement | Senior secured debt | LIBOR | Maximum | |||
Debt | |||
Margin on base rate | 1.375% | ||
Five-year revolving credit agreement | Senior secured debt | Adjusted base rate | Minimum | |||
Debt | |||
Margin on base rate | 0.00% | ||
Five-year revolving credit agreement | Senior secured debt | Adjusted base rate | Maximum | |||
Debt | |||
Margin on base rate | 0.375% |
Leases - Operating lease compon
Leases - Operating lease components (Details) $ in Thousands | 12 Months Ended |
Jun. 30, 2020USD ($) | |
Components of operating lease expense: | |
Operating lease cost | $ 9,686 |
Short-term lease cost | 40 |
Variable lease cost | 3,167 |
Total lease costs | $ 12,893 |
Leases - Operating lease ROU as
Leases - Operating lease ROU assets, operating lease liabilities and other supplemental information (Details) $ in Thousands | Jun. 30, 2020USD ($) |
Operating leases: | |
Operating lease right-of-use assets | $ 48,658 |
Accrued expenses | 8,083 |
Long-term operating lease liabilities | $ 73,299 |
Weighted-average remaining lease term (years) | 10 years 3 months 25 days |
Weighted-average discount rate | 3.83% |
Leases - Supplemental cash flow
Leases - Supplemental cash flow information (Details) $ in Thousands | 12 Months Ended |
Jun. 30, 2020USD ($) | |
Operating leases: | |
Cash paid for amounts included in the measurement of operating lease liabilities | $ 10,374 |
Operating lease assets obtained in exchange for new liabilities | $ 3,123 |
Leases - Leases - Future maturi
Leases - Leases - Future maturities and leases that had not yet commenced (Details) $ in Thousands | Jun. 30, 2020USD ($) |
Undiscounted cash flows for future maturities of operating lease liabilities and the reconciliation to the balance of operating lease liabilities | |
Fiscal 2021 | $ 10,978 |
Fiscal 2022 | 9,700 |
Fiscal 2023 | 9,324 |
Fiscal 2024 | 9,307 |
Fiscal 2025 | 9,246 |
Thereafter | 50,967 |
Total undiscounted cash flows | 99,522 |
Less: Present value discount | (18,140) |
Total operating lease liabilities | $ 81,382 |
Leases - Future minimum lease p
Leases - Future minimum lease payments and rent expense under Topic 840 (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Leases | ||
Rental expense for operating leases under Topic 840 | $ 9,752 | $ 8,242 |
Future minimum lease payments under Topic 840 | ||
Fiscal 2020 | 10,449 | |
Fiscal 2021 | 11,150 | |
Fiscal 2022 | 9,500 | |
Fiscal 2023 | 8,840 | |
Fiscal 2024 | 8,838 | |
Thereafter | 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, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Current taxes | |||||
U.S. federal | $ 294 | ||||
State and local | $ (92) | $ 90 | 364 | ||
Deferred taxes: | |||||
U.S. federal | 403 | 5,449 | (15,167) | ||
State and local | 2,352 | (1,316) | (7,338) | ||
Total income tax expense (benefit) | 2,663 | 4,223 | (21,847) | ||
Tax Rate Reconciliation | |||||
Pre-tax income | $ 67,118 | $ 58,046 | 16,751 | ||
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% | 21.00% | 27.60% | 35.00% | |
Increase (reduction) in income taxes resulting from: | |||||
Research and development credit and other credits | (3.20%) | (3.00%) | (6.60%) | ||
Non-deductible expenses | 1.60% | 1.30% | 4.60% | ||
Change in valuation allowance | 5.20% | 0.30% | (136.00%) | ||
Effect of Tax Cuts and Jobs Act | 51.50% | ||||
Stock-based compensation expense | (18.30%) | (10.40%) | (58.30%) | ||
State and local income taxes, net of federal income tax benefit | (1.80%) | (2.00%) | (13.50%) | ||
Other | (0.50%) | 0.10% | 0.30% | ||
Total effective income tax rate | 4.00% | 7.30% | (130.40%) | ||
Deferred tax assets: | |||||
Deferred rent | $ 1,963 | ||||
Operating lease liability | $ 21,041 | ||||
Accrued expenses | 9,915 | 4,344 | |||
Stock-based compensation | 13,351 | 10,373 | |||
Net operating loss carryforwards | 13,596 | 9,980 | |||
Federal and state tax credits | 16,714 | 11,977 | |||
Intangible assets | 385 | ||||
Total deferred tax assets | 74,617 | 39,022 | |||
Valuation allowance | (3,967) | (502) | |||
Net deferred tax assets | 70,650 | 38,520 | |||
Deferred tax liabilities: | |||||
Deferred contract costs | (41,229) | (27,116) | |||
Operating lease right-of-use assets | (12,607) | ||||
Research and development costs | (8,563) | (6,294) | |||
Intangible assets | (781) | ||||
Depreciation | (11,269) | (5,581) | |||
Total deferred tax liabilities | (74,449) | (38,991) | |||
Net deferred tax liability | (3,799) | $ (471) | |||
Effect of Tax Cuts and Jobs Act of 2017, Accounting Incomplete, Provisional | |||||
Provisional amount of income tax expense attributable to a revaluation of deferred tax assets from change in tax rate | $ 0 | ||||
State | |||||
Deferred tax assets: | |||||
Valuation allowance | $ (3,967) |
Income Taxes - Carryforwards (D
Income Taxes - Carryforwards (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | |
Unrecognized Tax Benefits | |||
Unrecognized tax benefits | $ 0 | $ 0 | $ 0 |
Federal And State | |||
Operating loss carryforwards | |||
Net operating loss carryforwards with indefinite utilization periods | 26,020 | ||
Federal | |||
Operating loss carryforwards | |||
Net operating loss carryforwards | 55,801 | ||
Net operating loss carryforwards that will expire | $ 35,736 | ||
Federal | Minimum | |||
Operating loss carryforwards | |||
Expiration date for net operating losses | Jun. 30, 2034 | ||
Federal | Maximum | |||
Operating loss carryforwards | |||
Expiration date for net operating losses | Jun. 30, 2038 | ||
State | |||
Operating loss carryforwards | |||
Net operating loss carryforwards | $ 32,262 | ||
Net operating loss carryforwards that will expire | $ 26,307 | ||
State | Minimum | |||
Operating loss carryforwards | |||
Expiration date for net operating losses | Jun. 30, 2021 | ||
Unrecognized Tax Benefits | |||
Statute of limitations on filings | 3 years | ||
State | Maximum | |||
Operating loss carryforwards | |||
Expiration date for net operating losses | Jun. 30, 2040 | ||
Unrecognized Tax Benefits | |||
Statute of limitations on filings | 4 years | ||
Research and development and other | Federal And State | |||
Tax credit carryforwards | |||
Tax credit carryforwards | $ 16,714 | ||
Research and development and other | Federal And State | Minimum | |||
Tax credit carryforwards | |||
Expiration date for tax credit carryforwards | Jun. 30, 2021 | ||
Research and development and other | Federal And State | Maximum | |||
Tax credit carryforwards | |||
Expiration date for tax credit carryforwards | Jun. 30, 2040 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) | 12 Months Ended |
Jun. 30, 2020item | |
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, 2020 | Jun. 30, 2020 |
Equity Incentive Plans | ||
Equity Incentive Plans | ||
Number of shares of common stock reserved for issuance | 12,400 | |
Number of shares allocated but not yet issued that are subject to outstanding options or awards | 2,881 | |
2008 Plan | ||
Equity Incentive Plans | ||
Awards issued (in shares) | 0 | |
Awards issuable (in shares) | 0 | |
2014 Plan | ||
Equity Incentive Plans | ||
Potential number of additional shares available for grant each year (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) - Equity Incentive Plans shares in Thousands | 12 Months Ended |
Jun. 30, 2020shares | |
Shares Available for Grant | |
Balance at the beginning of the year | 9,759 |
RSUs granted | (658) |
Shares withheld in settlement of taxes and/or exercise price | 385 |
Forfeitures | 110 |
Shares removed | (77) |
Balance at the end of the year | 9,519 |
Benefit Plans - Compensation Ex
Benefit Plans - Compensation Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | |
Benefit Plans | |||
Total stock-based compensation expense | $ 47,493 | $ 38,765 | $ 30,354 |
Stock-based compensation expense capitalized in internal-use software costs | 2,397 | 2,760 | 2,024 |
Cost of revenues | |||
Benefit Plans | |||
Total stock-based compensation expense | 5,637 | 5,027 | 4,218 |
Sales and marketing | |||
Benefit Plans | |||
Total stock-based compensation expense | 13,960 | 7,631 | 7,295 |
Research and development | |||
Benefit Plans | |||
Total stock-based compensation expense | 7,182 | 5,325 | 3,748 |
General and administrative | |||
Benefit Plans | |||
Total stock-based compensation expense | $ 20,714 | $ 20,782 | $ 15,093 |
Benefit Plans - Stock Option Ac
Benefit Plans - Stock Option Activity (Details) - Stock options - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | |
Vesting period | |||
Expiration period | 10 years | ||
Options Outstanding, Number of Shares | |||
Balance at the beginning of the year | 1,525 | ||
Options granted | 0 | 0 | 0 |
Options exercised | (270) | ||
Balance at the end of the year | 1,255 | 1,525 | |
Options Outstanding, Weighted average exercise price | |||
Balance at the beginning of the period (in dollars per share) | $ 12.24 | ||
Options exercised (in dollars per share) | 11.39 | ||
Balance at the end of the period (in dollars per share) | $ 12.43 | $ 12.24 | |
Options Additional Disclosures | |||
Weighted average remaining contractual term | 2 years 11 months 15 days | 3 years 11 months 12 days | |
Aggregate intrinsic value at the beginning of the year | $ 124,373 | ||
Weighted average remaining contractual term of options vested and exercisable at the end of the year (years) | 2 years 11 months 15 days | ||
Aggregate intrinsic value at the end of the year | $ 167,406 | $ 124,373 | |
Options vested and exercisable at the end of the year (in shares) | 1,255 | ||
Options vested and exercisable at the end of the year, weighted average exercise price (in dollars per share) | $ 12.43 | ||
Options vested and exercisable intrinsic value | $ 167,406 | ||
Total intrinsic value of options exercised | $ 29,791 | $ 24,920 | $ 34,083 |
Minimum | |||
Vesting period | |||
Vesting period | 3 years | ||
Maximum | |||
Vesting period | |||
Vesting period | 4 years |
Benefit Plans - RSU activity (D
Benefit Plans - RSU activity (Details) - Restricted stock units - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | |
Unrecognized Compensation Costs Not yet Recognized, Net of Estimated Forfeitures | |||
Total unrecognized compensation cost, net of estimated forfeitures related to unvested RSUs | $ 40,367 | ||
Weighted average period to recognize unrecognized compensation cost | 1 year 10 months 17 days | ||
Excess income tax benefits | |||
Excess income tax benefits for stock-based compensation arrangements recognized through income tax expense | $ 67,816 | $ 41,195 | $ 33,443 |
RSUs Outstanding Rollforward, Units | |||
RSU Balance at the beginning of the year | 1,813 | ||
RSUs granted | 658 | ||
RSUs vested | (735) | ||
RSUs forfeited | (110) | ||
RSU Balance at the end of the year | 1,626 | 1,813 | |
RSUs expected to vest at the end of the year | 1,448 | ||
RSUs Outstanding, Weighted average grant date fair value | |||
RSU Balance at the beginning of the year | $ 53.78 | ||
RSUs granted | 99.72 | ||
RSUs vested | 50.25 | ||
RSUs forfeited | 62.60 | ||
RSU Balance at the end of the year | 73.96 | $ 53.78 | |
RSUs expected to vest at the end of the year | $ 72.15 | ||
Minimum | |||
Equity Incentive Plans | |||
Vesting period | 3 years | ||
Maximum | |||
Equity Incentive Plans | |||
Vesting period | 4 years |
Benefit Plans - ESPP Informatio
Benefit Plans - ESPP Information (Details) - USD ($) shares in Thousands, $ in Thousands | Jan. 01, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 |
Equity Incentive Plans | ||||
Stock-based compensation expense | $ 47,493 | $ 38,765 | $ 30,354 | |
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 | 898 | |||
Actual increase in number of shares reserved for issuance | 0 | |||
Potential number of additional shares reserved for issuance each year | 400 | |||
Potential number of additional shares reserved for issuance each year (as percent) | 0.75% | |||
Number of shares issued | 97 | |||
Stock-based compensation expense | $ 3,235 | $ 1,949 | $ 1,331 | |
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 | 38.60% | 33.50% | 28.30% | |
Risk-free interest rate | 0.15% | 2.10% | 1.02% | |
Employee stock purchase plan shares | Maximum | ||||
Equity Incentive Plans | ||||
Offering period | 27 months | |||
Valuation assumptions: | ||||
Expected volatility | 72.20% | 38.60% | 39.10% | |
Risk-free interest rate | 2.44% | 2.48% | 2.10% |
Benefit Plans - 401(k) Plan (De
Benefit Plans - 401(k) Plan (Details) - USD ($) $ in Thousands | Jan. 01, 2016 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 |
Benefit Plans | ||||
401(k) Plan Matching contributions by the Company as percentage of employees' contributions | 50.00% | |||
401(k) Plan Maximum contributions by the Company as percentage of employees' gross pay | 8.00% | |||
401(k) Plan contributions | $ 7,914 | $ 5,693 | $ 4,632 |
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, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | Aug. 31, 2018 | |
Anti-dilutive securities excluded from diluted per share calculation | ||||||||||||
Anti-dilutive securities excluded | 23 | 82 | 92 | |||||||||
Numerator: | ||||||||||||
Net income | $ 64,455 | $ 53,823 | $ 38,598 | |||||||||
Weighted-average shares used in computing net income per share: | ||||||||||||
Basic (in shares) | 53,731 | 53,629 | 53,542 | 53,287 | 53,017 | 52,934 | 52,842 | 52,865 | 53,547 | 52,914 | 52,425 | |
Weighted-average effect of potentially dilutive shares: | ||||||||||||
Employee stock options, restricted stock units and employee stock purchase plan shares | 2,260 | 2,500 | 2,462 | |||||||||
Diluted (in shares) | 55,970 | 55,953 | 55,826 | 55,713 | 55,692 | 55,465 | 55,081 | 55,487 | 55,807 | 55,414 | 54,887 | |
Net income per share: | ||||||||||||
Basic (in dollars per share) | $ 0.09 | $ 0.75 | $ 0.10 | $ 0.26 | $ 0.19 | $ 0.53 | $ 0.11 | $ 0.19 | $ 1.20 | $ 1.02 | $ 0.74 | |
Diluted (in dollars per share) | $ 0.09 | $ 0.72 | $ 0.10 | $ 0.25 | $ 0.18 | $ 0.51 | $ 0.10 | $ 0.18 | $ 1.15 | $ 0.97 | $ 0.70 | |
Stock Repurchase Program | ||||||||||||
Repurchases of common shares | $ 34,991 | $ 34,991 | ||||||||||
Maximum | ||||||||||||
Stock Repurchase Program | ||||||||||||
Maximum value of issued and outstanding common stock eligible for repurchase under the stock repurchase program | $ 35,000 | |||||||||||
Restricted stock units | ||||||||||||
Anti-dilutive securities excluded from diluted per share calculation | ||||||||||||
Anti-dilutive securities excluded | 23 | 69 | 92 | |||||||||
Employee stock purchase plan shares | ||||||||||||
Anti-dilutive securities excluded from diluted per share calculation | ||||||||||||
Anti-dilutive securities excluded | 13 | |||||||||||
Common Stock | ||||||||||||
Stock Repurchase Program | ||||||||||||
Repurchases of common shares (in shares) | 442 | 442 |
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, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | |
Consolidated Statements of Operations Data | |||||||||||
Revenues | $ 130,589 | $ 171,646 | $ 132,374 | $ 126,720 | $ 120,373 | $ 139,552 | $ 107,204 | $ 100,504 | $ 561,329 | $ 467,633 | $ 377,527 |
Gross profit | 84,714 | 123,565 | 86,950 | 84,090 | 80,279 | 99,807 | 69,134 | 64,562 | 379,319 | 313,782 | 228,330 |
Operating income | 6,316 | 47,741 | 6,114 | 6,000 | 9,209 | 36,212 | 7,027 | 3,776 | 66,171 | 56,224 | 15,949 |
Net income | $ 4,950 | $ 40,132 | $ 5,467 | $ 13,906 | $ 10,241 | $ 28,026 | $ 5,704 | $ 9,852 | $ 64,455 | $ 53,823 | $ 38,598 |
Net income per share: | |||||||||||
Basic (in dollars per share) | $ 0.09 | $ 0.75 | $ 0.10 | $ 0.26 | $ 0.19 | $ 0.53 | $ 0.11 | $ 0.19 | $ 1.20 | $ 1.02 | $ 0.74 |
Diluted (in dollars per share) | $ 0.09 | $ 0.72 | $ 0.10 | $ 0.25 | $ 0.18 | $ 0.51 | $ 0.10 | $ 0.18 | $ 1.15 | $ 0.97 | $ 0.70 |
Weighted-average shares used in computing net income per share: | |||||||||||
Basic (in shares) | 53,731 | 53,629 | 53,542 | 53,287 | 53,017 | 52,934 | 52,842 | 52,865 | 53,547 | 52,914 | 52,425 |
Diluted (in shares) | 55,970 | 55,953 | 55,826 | 55,713 | 55,692 | 55,465 | 55,081 | 55,487 | 55,807 | 55,414 | 54,887 |