Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Mar. 31, 2021 | Apr. 30, 2021 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2021 | |
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 $0.001 per share | |
Trading Symbol | PCTY | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 54,479,322 | |
Entity Central Index Key | 0001591698 | |
Current Fiscal Year End Date | --06-30 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Unaudited Consolidated Balance
Unaudited Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2021 | Jun. 30, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 175,453 | $ 250,851 |
Corporate investments | 6,823 | 34,556 |
Accounts receivable, net | 9,211 | 4,923 |
Deferred contract costs | 40,721 | 32,332 |
Prepaid expenses and other | 14,198 | 13,188 |
Total current assets before funds held for clients | 246,406 | 335,850 |
Funds held for clients | 2,051,914 | 1,327,304 |
Total current assets | 2,298,320 | 1,663,154 |
Capitalized internal-use software, net | 42,704 | 36,501 |
Property and equipment, net | 62,187 | 66,737 |
Operating lease right-of-use assets | 45,112 | 48,658 |
Intangible assets, net | 14,055 | 13,360 |
Goodwill | 33,184 | 21,655 |
Long-term deferred contract costs | 156,943 | 125,711 |
Long-term prepaid expenses and other | 3,773 | 4,917 |
Deferred income tax assets | 7,274 | 4,955 |
Total assets | 2,663,552 | 1,985,648 |
Current liabilities: | ||
Accounts payable | 3,319 | 1,755 |
Accrued expenses | 83,139 | 79,881 |
Total current liabilities before client fund obligations | 86,458 | 81,636 |
Client fund obligations | 2,051,914 | 1,327,304 |
Total current liabilities | 2,138,372 | 1,408,940 |
Long-term debt | 100,000 | |
Long-term operating lease liabilities | 68,661 | 73,299 |
Other long-term liabilities | 1,910 | 1,747 |
Deferred income tax liabilities | 8,754 | |
Total liabilities | 2,208,943 | 1,592,740 |
Stockholders' equity: | ||
Preferred stock, $0.001 par value, 5,000 authorized, no shares issued and outstanding at June 30, 2020 and March 31, 2021 | ||
Common stock, $0.001 par value, 155,000 shares authorized at June 30, 2020 and March 31, 2021; 53,792 shares issued and outstanding at June 30, 2020 and 54,451 shares issued and outstanding at March 31, 2021 | 54 | 54 |
Additional paid-in capital | 231,208 | 227,907 |
Retained earnings | 223,208 | 164,272 |
Accumulated other comprehensive income | 139 | 675 |
Total stockholders' equity | 454,609 | 392,908 |
Total liabilities and stockholders' equity | $ 2,663,552 | $ 1,985,648 |
Unaudited Consolidated Balanc_2
Unaudited Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Thousands | Mar. 31, 2021 | Jun. 30, 2020 |
Unaudited Consolidated Balance Sheets | ||
Preferred Stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred Stock, shares authorized | 5,000 | 5,000 |
Preferred Stock, shares issued | 0 | 0 |
Preferred Stock, shares outstanding | 0 | 0 |
Common Stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common Stock, shares authorized | 155,000 | 155,000 |
Common Stock, shares issued | 54,451 | 53,792 |
Common Stock, shares outstanding | 54,451 | 53,792 |
Unaudited Consolidated Statemen
Unaudited Consolidated Statements of Operations and Comprehensive Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Revenues: | ||||
Recurring and other revenue | $ 184,927 | $ 167,095 | $ 465,195 | $ 416,948 |
Interest income on funds held for clients | 1,126 | 4,551 | 2,981 | 13,792 |
Total revenues | 186,053 | 171,646 | 468,176 | 430,740 |
Cost of revenues | 57,326 | 48,081 | 160,248 | 136,135 |
Gross profit | 128,727 | 123,565 | 307,928 | 294,605 |
Operating expenses: | ||||
Sales and marketing | 40,055 | 37,801 | 115,504 | 112,051 |
Research and development | 18,458 | 15,612 | 56,443 | 45,416 |
General and administrative | 31,071 | 22,411 | 87,038 | 77,283 |
Total operating expenses | 89,584 | 75,824 | 258,985 | 234,750 |
Operating income | 39,143 | 47,741 | 48,943 | 59,855 |
Other income (expense) | (207) | 435 | (843) | 1,194 |
Income before income taxes | 38,936 | 48,176 | 48,100 | 61,049 |
Income tax expense (benefit) | 2,102 | 8,044 | (10,836) | 1,544 |
Net income | 36,834 | 40,132 | 58,936 | 59,505 |
Other comprehensive loss, net of tax | (126) | (182) | (536) | (214) |
Comprehensive income | $ 36,708 | $ 39,950 | $ 58,400 | $ 59,291 |
Net income per share: | ||||
Basic (in dollars per share) | $ 0.68 | $ 0.75 | $ 1.09 | $ 1.11 |
Diluted (in dollars per share) | $ 0.65 | $ 0.72 | $ 1.05 | $ 1.07 |
Weighted-average shares used in computing net income per share: | ||||
Basic (in shares) | 54,415 | 53,629 | 54,244 | 53,486 |
Diluted (in shares) | 56,414 | 55,953 | 56,338 | 55,760 |
Unaudited Consolidated Statem_2
Unaudited Consolidated Statement of Changes in Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total |
Balance at Jun. 30, 2019 | $ 53 | $ 207,982 | $ 99,817 | $ 112 | $ 307,964 |
Balance (in shares) at Jun. 30, 2019 | 53,075 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Stock-based compensation | 36,191 | 36,191 | |||
Stock options exercised | 1,707 | 1,707 | |||
Stock options exercised (in shares) | 153 | ||||
Issuance of common stock upon vesting of restricted stock units | $ 1 | (1) | |||
Issuance of common stock upon vesting of restricted stock units (in shares) | 708 | ||||
Issuance of common stock under employee stock purchase plan | 3,961 | 3,961 | |||
Issuance of common stock under employee stock purchase plan (in shares) | 45 | ||||
Net settlement for taxes and/or exercise price related to equity awards | (34,739) | (34,739) | |||
Net settlement for taxes and/or exercise price related to equity awards (in shares) | (321) | ||||
Unrealized losses on securities, net of tax | (214) | (214) | |||
Net income | 59,505 | 59,505 | |||
Balance at Mar. 31, 2020 | $ 54 | 215,101 | 159,322 | (102) | 374,375 |
Balance (in shares) at Mar. 31, 2020 | 53,660 | ||||
Balance at Dec. 31, 2019 | $ 54 | 212,240 | 119,190 | 80 | 331,564 |
Balance (in shares) at Dec. 31, 2019 | 53,573 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Stock-based compensation | 10,051 | 10,051 | |||
Stock options exercised | 1,318 | 1,318 | |||
Stock options exercised (in shares) | 130 | ||||
Issuance of common stock upon vesting of restricted stock units (in shares) | 20 | ||||
Net settlement for taxes and/or exercise price related to equity awards | (8,508) | (8,508) | |||
Net settlement for taxes and/or exercise price related to equity awards (in shares) | (63) | ||||
Unrealized losses on securities, net of tax | (182) | (182) | |||
Net income | 40,132 | 40,132 | |||
Balance at Mar. 31, 2020 | $ 54 | 215,101 | 159,322 | (102) | 374,375 |
Balance (in shares) at Mar. 31, 2020 | 53,660 | ||||
Balance at Jun. 30, 2020 | $ 54 | 227,907 | 164,272 | 675 | $ 392,908 |
Balance (in shares) at Jun. 30, 2020 | 53,792 | 53,792 | |||
Increase (Decrease) in Stockholders' Equity | |||||
Stock-based compensation | 48,896 | $ 48,896 | |||
Stock options exercised | 2,477 | 2,477 | |||
Stock options exercised (in shares) | 338 | ||||
Issuance of common stock upon vesting of restricted stock units (in shares) | 622 | ||||
Issuance of common stock under employee stock purchase plan | 6,100 | 6,100 | |||
Issuance of common stock under employee stock purchase plan (in shares) | 60 | ||||
Net settlement for taxes and/or exercise price related to equity awards | (54,172) | (54,172) | |||
Net settlement for taxes and/or exercise price related to equity awards (in shares) | (361) | ||||
Unrealized losses on securities, net of tax | (536) | (536) | |||
Net income | 58,936 | 58,936 | |||
Balance at Mar. 31, 2021 | $ 54 | 231,208 | 223,208 | 139 | $ 454,609 |
Balance (in shares) at Mar. 31, 2021 | 54,451 | 54,451 | |||
Balance at Dec. 31, 2020 | $ 54 | 221,525 | 186,374 | 265 | $ 408,218 |
Balance (in shares) at Dec. 31, 2020 | 54,370 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Stock-based compensation | 16,663 | 16,663 | |||
Stock options exercised | 545 | 545 | |||
Stock options exercised (in shares) | 104 | ||||
Issuance of common stock upon vesting of restricted stock units (in shares) | 14 | ||||
Net settlement for taxes and/or exercise price related to equity awards | (7,525) | (7,525) | |||
Net settlement for taxes and/or exercise price related to equity awards (in shares) | (37) | ||||
Unrealized losses on securities, net of tax | (126) | (126) | |||
Net income | 36,834 | 36,834 | |||
Balance at Mar. 31, 2021 | $ 54 | $ 231,208 | $ 223,208 | $ 139 | $ 454,609 |
Balance (in shares) at Mar. 31, 2021 | 54,451 | 54,451 |
Unaudited Consolidated Statem_3
Unaudited Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Cash flows from operating activities: | ||
Net income | $ 58,936 | $ 59,505 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Stock-based compensation expense | 46,947 | 34,348 |
Depreciation and amortization expense | 32,070 | 27,832 |
Deferred income tax expense (benefit) | (10,656) | 1,544 |
Provision for credit losses | 213 | 232 |
Net accretion of discounts and amortization of premiums on available-for-sale securities | 315 | (1,673) |
Amortization of debt issuance costs | 127 | 113 |
Other | 545 | 331 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (4,495) | (1,635) |
Deferred contract costs | (39,621) | (37,829) |
Prepaid expenses and other | (2,531) | 68 |
Accounts payable | 1,592 | 863 |
Accrued expenses and other | 2,318 | 3,096 |
Net cash provided by operating activities | 85,760 | 86,795 |
Cash flows from investing activities: | ||
Purchases of available-for-sale securities and other | (400,343) | |
Proceeds from sales and maturities of available-for-sale securities | 82,488 | 250,791 |
Capitalized internal-use software costs | (21,664) | (19,213) |
Purchases of property and equipment | (8,155) | (14,578) |
Acquisition of business, net of cash acquired | (14,992) | |
Net cash provided by (used in) investing activities | 37,677 | (183,343) |
Cash flows from financing activities: | ||
Net change in client fund obligations | 724,610 | 334,707 |
Repayment of credit facility | (100,000) | |
Proceeds from exercise of stock options | 146 | |
Proceeds from employee stock purchase plan | 6,100 | 3,961 |
Taxes paid related to net share settlement of equity awards | (51,828) | (33,136) |
Payment of debt issuance costs | (56) | (675) |
Net cash provided by financing activities | 578,972 | 304,857 |
Net change in cash, cash equivalents and funds held for clients' cash and cash equivalents | 702,409 | 208,309 |
Cash, cash equivalents and funds held for clients' cash and cash equivalents-beginning of period | 1,492,133 | 1,426,143 |
Cash, cash equivalents and funds held for clients' cash and cash equivalents-end of period | 2,194,542 | 1,634,452 |
Supplemental Disclosure of Non-Cash Investing and Financing Activities | ||
Liabilities assumed for acquisition | 281 | |
Supplemental Disclosure of Cash Flow Information | ||
Cash paid for interest | 820 | 115 |
Cash paid (refunds received) for income taxes | (222) | 24 |
Reconciliation of cash, cash equivalents and funds held for clients' cash and cash equivalents to the Unaudited Consolidated Balance Sheets | ||
Cash and cash equivalents | 175,453 | 114,325 |
Funds held for clients' cash and cash equivalents | 2,019,089 | 1,520,127 |
Total cash, cash equivalents and funds held for clients' cash and cash equivalents | $ 2,194,542 | $ 1,634,452 |
Organization and Description of
Organization and Description of Business | 9 Months Ended |
Mar. 31, 2021 | |
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 | 9 Months Ended |
Mar. 31, 2021 | |
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 These unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The unaudited consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Future events, 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 may change as new events occur, more experience and additional information is acquired, and the operating environment evolves, including the ongoing impact of COVID-19. (b) Interim Unaudited Consolidated Financial Information The accompanying unaudited consolidated financial statements and notes have been prepared in accordance with GAAP and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, the interim financial information includes all adjustments of a normal recurring nature necessary for a fair presentation of the Company’s financial position, results of operations, changes in stockholders’ equity and cash flows. The results of operations for three or nine months ended March 31, 2021 are not necessarily indicative of the results for the full year or the results for any future periods. The impact of the COVID - - (c) Income Taxes Income taxes are accounted for in accordance with ASC 740, Income Taxes, using the asset and liability method. The Company’s provision for income taxes is based on the annual effective rate method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and 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. The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If the Company determines that it would be able to realize its deferred tax assets in the future in excess of their net-recorded amount, it would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. (d) Recently Adopted Accounting Standards In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires the measurement and recognition of expected credit losses for financial instruments held at amortized cost, including trade receivables. Under ASU 2016-13, the Company assesses its allowance for credit losses on accounts receivable by taking into consideration current economic conditions, reasonable and supportable forecasts, as well as past experience including historical write-off trends and client-specific circumstances. The new standard also eliminated the concept of other-than-temporary impairment and requires expected credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. The Company adopted this standard effective July 1, 2020, using a modified retrospective approach, and the adoption did not have a material impact on the Company’s financial statements. 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. The Company adopted this standard on July 1, 2020, and removed or modified disclosure requirements retrospectively to all periods presented, whereas any new requirements are being applied prospectively from the adoption date. 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. The Company adopted ASU 2019-12 on July 1, 2020, and the adoption of this standard did not have a material impact on the Company’s financial statements. (e) Recently Issued Accounting Standards 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 | 9 Months Ended |
Mar. 31, 2021 | |
Revenue | |
Revenue | (3) Revenue 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 also has term arrangements, which are generally two years in length. Recurring fees are derived from payroll, timekeeping, and HR-related cloud-based computing services. 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. 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. Disaggregation of 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: Three Months Ended Nine Months Ended March 31, March 31, 2020 2021 2020 2021 Recurring fees $ 161,266 $ 178,711 $ 402,605 $ 448,864 Implementation services and other 5,829 6,216 14,343 16,331 Total revenues from contracts $ 167,095 $ 184,927 $ 416,948 $ 465,195 Deferred revenue The timing of revenue recognition for recurring revenue is consistent with the timing of invoicing as they occur simultaneously based on the client’s payroll frequency or by month for subscription-based fees. As such, the Company does not recognize contract assets or liabilities related to recurring revenue. The nonrefundable upfront fees related to implementation services are invoiced with the client’s first payroll period. The Company defers and amortizes these nonrefundable upfront fees generally over a period up to 24 months based on the type of contract. The following table summarizes the changes in deferred revenue (i.e. contract liability) related to these nonrefundable upfront fees as follows: Three Months Ended Nine Months Ended March 31, March 31, 2020 2021 2020 2021 Balance at beginning of the period $ 6,853 $ 7,065 $ 6,289 $ 8,434 Deferral of revenue 6,099 5,821 12,342 11,811 Revenue recognized (3,992) (4,097) (9,671) (11,456) Balance at end of the period $ 8,960 $ 8,789 $ 8,960 $ 8,789 Deferred revenue related to these nonrefundable upfront fees are recorded within Accrued expenses and Other long-term liabilities on the Unaudited Consolidated Balance Sheets. The Company expects to recognize these deferred revenue balances of $3,389 in fiscal 2021, $4,425 in fiscal 2022 and $975 in fiscal 2023 and 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 and the related amortization expense for these deferred contract costs: Three Months Ended March 31, 2020 Beginning Capitalized Ending Balance Costs Amortization Balance Costs to obtain a new contract $ 92,848 $ 15,141 $ (5,738) $ 102,251 Costs to fulfill a contract 32,685 7,483 (1,491) 38,677 Total $ 125,533 $ 22,624 $ (7,229) $ 140,928 Three Months Ended March 31, 2021 Beginning Capitalized Ending Balance Costs Amortization Balance Costs to obtain a new contract $ 125,817 $ 17,315 $ (7,390) $ 135,742 Costs to fulfill a contract 55,657 8,872 (2,607) 61,922 Total $ 181,474 $ 26,187 $ (9,997) $ 197,664 Nine Months Ended March 31, 2020 Beginning Capitalized Ending Balance Costs Amortization Balance Costs to obtain a new contract $ 82,103 $ 36,027 $ (15,879) $ 102,251 Costs to fulfill a contract 20,996 21,348 (3,667) 38,677 Total $ 103,099 $ 57,375 $ (19,546) $ 140,928 Nine Months Ended March 31, 2021 Beginning Capitalized Ending Balance Costs Amortization Balance Costs to obtain a new contract $ 113,575 $ 43,026 $ (20,859) $ 135,742 Costs to fulfill a contract 44,468 24,376 (6,922) 61,922 Total $ 158,043 $ 67,402 $ (27,781) $ 197,664 Deferred contract costs are recorded within Deferred contract costs and Long-term deferred contract costs on the Unaudited Consolidated Balance Sheets. Amortization of deferred contract costs is recorded in Cost of revenues, Sales and marketing, and General and administrative in the Unaudited Consolidated Statements of Operations and Comprehensive Income. Remaining Performance Obligations The balance of the Company’s remaining performance obligations related to minimum monthly fees on its term-based contracts was approximately $47,582 as of March 31, 2021, which will be generally recognized over the next 24 months . This balance excludes 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. |
Business Combinations
Business Combinations | 9 Months Ended |
Mar. 31, 2021 | |
Business Combinations | |
Business Combinations | (4) Business Combinations In November 2020, the Company acquired all of the shares outstanding of Samepage Labs Inc. (“Samepage”) through a merger for purchase price consideration of $15,018, which was paid in cash upon closing. Samepage offers digital collaboration tools including task management, file sharing, real-time collaboration and more. This transaction expands the Company’s product functionality in these areas and demonstrates its commitment to building a modern workforce suite of solutions that meet the needs of HR teams and employees. 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 and liabilities at their fair value as of the date of acquisition, with the excess recorded to goodwill. The preliminary allocation of the purchase price is approximately $11,529 of goodwill, $3,167 of proprietary technology and other immaterial assets and liabilities. 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. In April 2020, the Company acquired all of the shares outstanding of VidGrid Inc. (“VidGrid”). During the second quarter of fiscal 2021, the Company completed its purchase accounting for this acquisition and did not record any changes to the preliminary purchase price allocation. Refer to Note 6 of the audited consolidated financial statements included in the Annual Report on Form 10-K for the fiscal year ended June 30, 2020 for additional details on the acquisition of VidGrid. |
Balance Sheet Information
Balance Sheet Information | 9 Months Ended |
Mar. 31, 2021 | |
Balance Sheet Information | |
Balance Sheet Information | (5) Balance Sheet Information The following tables provide details of selected consolidated balance sheet items: Activity in the allowance for credit losses related to accounts receivable was as follows: Balance at June 30, 2020 617 Charged to expense 213 Write-offs (66) Balance at March 31, 2021 $ 764 Capitalized internal-use software and accumulated amortization were as follows: June 30, March 31, 2020 2021 Capitalized internal-use software $ 119,178 $ 142,654 Accumulated amortization (82,677) (99,950) Capitalized internal-use software, net $ 36,501 $ 42,704 Amortization of capitalized internal-use software costs is included in Cost of revenues and amounted to $4,926 and $6,005 for the three months ended March 31, 2020 and 2021, respectively, and $14,073 and $17,273 for the nine months ended March 31, 2020 and 2021, respectively. Property and equipment, net consist of the following: June 30, March 31, 2020 2021 Office equipment $ 4,619 $ 5,208 Computer equipment 42,936 47,078 Furniture and fixtures 12,723 13,104 Software 6,609 6,627 Leasehold improvements 46,192 46,518 Time clocks rented by clients 4,967 5,124 Total 118,046 123,659 Accumulated depreciation (51,309) (61,472) Property and equipment, net $ 66,737 $ 62,187 Depreciation expense amounted to $4,082 and $3,966 for the three months ended March 31, 2020 and 2021, respectively, and $12,071 and $11,985 for the nine months ended March 31, 2020 and 2021, respectively. The following table summarizes changes in goodwill during the nine months ended March 31, 2021: Balance at June 30, 2020 $ 21,655 Additions attributable to current year acquisition 11,529 Balance at March 31, 2021 $ 33,184 Refer to Note 4 for further details on the current year acquisition. The Company’s amortizable intangible assets and estimated useful lives are as follows: June 30, March 31, Useful 2020 2021 Life Client relationships $ 19,200 $ 19,200 5 - 9 years Proprietary technology 2,962 6,129 5 years Non-solicitation agreements 1,350 1,600 2 - 4 years Trade name 350 440 5 years Total 23,862 27,369 Accumulated amortization (10,502) (13,314) Intangible assets, net $ 13,360 $ 14,055 Amortization expense for acquired intangible assets was $563 and $1,028 for the three months ended March 31, 2020 and 2021, respectively and $1,688 and $2,812 for the nine months ended March 31, 2020 and 2021, respectively. Future amortization expense for acquired intangible assets as of March 31, 2021 is as follows: Remainder of fiscal 2021 $ 1,028 Fiscal 2022 4,093 Fiscal 2023 3,919 Fiscal 2024 2,914 Fiscal 2025 1,860 Thereafter 241 Total $ 14,055 The components of accrued expenses were as follows: June 30, March 31, 2020 2021 Accrued payroll and personnel costs $ 53,284 $ 53,767 Operating lease liabilities 8,083 7,834 Deferred revenue 8,777 9,620 Other 9,737 11,918 Total accrued expenses $ 79,881 $ 83,139 |
Corporate Investments and Funds
Corporate Investments and Funds Held for Clients | 9 Months Ended |
Mar. 31, 2021 | |
Corporate Investments and Funds Held for Clients | |
Corporate Investments and Funds Held for Clients | (6) Corporate Investments and Funds Held for Clients Corporate investments and funds held for clients consist of the following: 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 (1) 122,266 911 — 123,177 Total investments $ 1,614,399 $ 911 $ — $ 1,615,310 (1) 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. March 31, 2021 Gross Gross Amortized unrealized unrealized Type of Issue cost gains losses Fair value Cash and cash equivalents $ 175,453 $ — $ — $ 175,453 Funds held for clients' cash and cash equivalents 2,019,089 — — 2,019,089 Available-for-sale securities: Corporate bonds 19,341 116 — 19,457 Asset-backed securities 20,122 69 — 20,191 Total available-for-sale securities (2) 39,463 185 — 39,648 Total investments $ 2,234,005 $ 185 $ — $ 2,234,190 (2) Included within the fair value of total available-for-sale securities above is $6,823 of corporate investments and $32,825 of funds held for clients. Cash and cash equivalents and funds held for clients’ cash and cash equivalents include demand deposit accounts and money market funds at June 30, 2020 and March 31, 2021. All of the Company’s available-for-sale securities had expected maturities of one year or less at March 31, 2021. Classification of investments on the unaudited consolidated balance sheets is as follows: June 30, March 31, 2020 2021 Cash and cash equivalents $ 250,851 $ 175,453 Corporate investments 34,556 6,823 Funds held for clients 1,327,304 2,051,914 Long-term prepaid expenses and other 2,599 — Total investments $ 1,615,310 $ 2,234,190 There were no available-for-sale securities in an unrealized loss position at June 30, 2020 or March 31, 2021. The Company regularly reviews the composition of its portfolio to determine the existence of credit impairment. The Company did not recognize any credit impairment losses during the nine months ended March 31, 2021. All securities in the Company’s portfolio held an A-1 rating or better as of March 31, 2021. The Company did not make any material reclassification adjustments out of accumulated other comprehensive income for realized gains and losses on the sale of available-for-sale securities during the three or nine months ended March 31, 2020 or 2021. Gross realized gains and losses on the sale of available-for-sale securities were immaterial for both three and nine months ended March 31, 2020 and 2021. |
Fair Value Measurement
Fair Value Measurement | 9 Months Ended |
Mar. 31, 2021 | |
Fair Value Measurement | |
Fair Value Measurement | (7) Fair Value Measurement Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: ● Level 1—Quoted prices in active markets for identical assets and liabilities. ● Level 2—Quoted prices in active markets for similar assets and liabilities, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. ● Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. The Company measures certain cash and cash equivalents, accounts receivable, accounts payable and client fund obligations at fair value on a recurring basis using Level 1 inputs. The Company considers the recorded value of these financial assets and liabilities to approximate the fair value of the respective assets and liabilities at June 30, 2020 and March 31, 2021 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, 2020 or March 31, 2021. The fair value level for the Company’s cash and cash equivalents and available-for-sale securities is as follows: 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 $ — March 31, 2021 Total Level 1 Level 2 Level 3 Cash and cash equivalents $ 175,453 $ 175,453 $ — $ — Funds held for clients' cash and cash equivalents 2,019,089 2,019,089 — — Available-for-sale securities: Corporate bonds 19,457 — 19,457 — Asset-backed securities 20,191 — 20,191 — Total available-for-sale securities 39,648 — 39,648 — Total investments $ 2,234,190 $ 2,194,542 $ 39,648 $ — |
Debt
Debt | 9 Months Ended |
Mar. 31, 2021 | |
Debt | |
Debt | (8) 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 mature in July 2024. As of June 30, 2020, the Company had $100,000 in borrowings outstanding under the credit facility, which was repaid during the third quarter of fiscal 2021. 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 will 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 March 31, 2021, the Company was in compliance with all of the aforementioned covenants. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Mar. 31, 2021 | |
Stock-Based Compensation | |
Stock-Based Compensation | (9) Stock-Based Compensation The Company maintains a 2008 Equity Incentive Plan (the “2008 Plan”) and a 2014 Equity Incentive Plan (the “2014 Plan”) pursuant to which the Company has reserved shares of its common stock for issuance to its employees, directors and non-employee third parties. The 2014 Plan serves as the successor to the 2008 Plan and permits the granting of restricted stock units and other equity incentives at the discretion of the compensation committee of the Company’s board of directors. No new awards have been or will be issued under the 2008 Plan since the effective date of the 2014 Plan. Outstanding awards under the 2008 Plan continue to be subject to the terms and conditions of the 2008 Plan. The number of shares of common stock reserved for issuance under the 2014 Plan may increase each calendar year, continuing through and including January 1, 2024. The number of shares added each year may be equal to the lesser of (a) four and five tenths percent (4.5%) of the number of shares of common stock of the Company issued and outstanding on the immediately preceding December 31, or (b) an amount determined by the Company’s board of directors. The Company’s board of directors approved the increase in the number of common shares in reserve for issuance under the 2014 Plan by 1,000 shares, effective January 1, 2021. As of March 31, 2021, the Company had 12,685 shares allocated to the plans, of which 2,391 shares were subject to outstanding options or awards. Generally, the Company issues previously unissued shares for the exercise of stock options or vesting of awards; however, shares previously subject to 2014 Plan grants or awards that are forfeited or net settled at exercise or release may be reissued to satisfy future issuances. The following table summarizes changes in the number of shares available for grant under the Company’s equity incentive plans during the nine months ended March 31, 2021: Number of Available for grant at July 1, 2020 9,519 January 1, 2021 Evergreen provision increase 1,000 RSUs granted (483) MSUs granted (58) Shares withheld in settlement of taxes and/or exercise price 361 Forfeitures 71 Shares removed (116) Available for grant at March 31, 2021 10,294 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”), market share units (“MSUs”) and the Employee Stock Purchase Plan is included in the following line items in the accompanying unaudited consolidated statements of operations and comprehensive income: Three Months Ended March 31, Nine Months Ended March 31, 2020 2021 2020 2021 Cost of revenues $ 1,362 $ 1,972 $ 4,057 $ 5,773 Sales and marketing 3,466 3,938 10,813 11,783 Research and development 1,899 2,602 4,945 7,570 General and administrative 2,789 7,499 14,533 21,821 Total stock-based compensation expense $ 9,516 $ 16,011 $ 34,348 $ 46,947 In addition, the Company capitalized $535 and $652 of stock-based compensation expense in its capitalized internal-use software costs in the three months ended March 31, 2020 and 2021, respectively, and $1,843 and $1,949 during the nine months ended March 31, 2020 and 2021, respectively. In August 2020, the Company’s board of directors approved the Company’s fiscal 2021 annual operating plan to reflect the operating and financial impacts of the COVID-19 pandemic. In connection and alignment with the board’s approval of the updated operating plan, the compensation committee of the Company’s board of directors approved the modification of the performance targets for vesting of the performance-based restricted stock units granted in fiscal 2020. The Company recorded $1,776 and $4,560 in stock-based compensation expense during the three and nine months ended March 31, 2021, respectively, related to these modified performance-based restricted stock units. There were no stock options granted during the nine months ended March 31, 2020 or 2021. The table below presents stock option activity during the nine months ended March 31, 2021: Outstanding Options Weighted Weighted average average remaining Aggregate Number of exercise contractual intrinsic shares price term (years) value Balance at July 1, 2020 1,255 $ 12.43 2.96 $ 167,406 Options exercised (338) $ 7.35 Balance at March 31, 2021 917 $ 14.30 2.38 $ 151,959 Options vested and exercisable at March 31, 2021 917 $ 14.30 2.38 $ 151,959 The total intrinsic value of options exercised was $16,164 and $20,975 during the three months ended March 31, 2020 and 2021, respectively and $18,244 and $58,252 during the nine months ended March 31, 2020 and 2021, respectively. The Company grants 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 The following table represents restricted stock unit activity during the nine months ended March 31, 2021: Units Weighted RSU balance at July 1, 2020 1,626 $ 73.96 RSUs granted 483 $ 134.17 RSUs vested (622) $ 64.97 RSUs forfeited (71) $ 86.65 RSU balance at March 31, 2021 1,416 $ 99.54 RSUs expected to vest at March 31, 2021 1,325 $ 98.77 At March 31, 2021, there was $68,517 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 1.82 years. The Company also grants MSUs under the 2014 Plan with terms determined at the discretion of the Committee. In August 2020, the Company granted approximately 58 MSUs with a grant date fair value of $178.04. The actual number of MSUs that will be eligible to vest is based on the achievement of a relative total shareholder return (“TSR”) target as compared to the TSR realized by each of the companies comprising the Russell 3000 Index over an approximately three-year period. The MSUs cliff-vest at the end of the TSR measurement period, and up to 200% of the target number of shares subject to each MSU are eligible to be earned. The Company estimated the grant date fair value of the MSUs using a Monte Carlo simulation model that included the following assumptions: Expected dividend yield 0 % Expected volatility 52.0 % Expected term (years) 3.04 Risk‑free interest rate 0.18 % At March 31, 2021, there was $7,272 of total unrecognized compensation cost, net of estimated forfeitures, related to unvested MSUs. That cost is expected to be recognized over a period of 2.42 years. |
Litigation
Litigation | 9 Months Ended |
Mar. 31, 2021 | |
Litigation | |
Litigation | (10) Litigation On November 16, 2020, a potential class action complaint was filed against the Company with the Circuit Court of Cook County alleging that the Company violated the Illinois Biometric Information Privacy Act. The complaint seeks statutory damages, attorney’s fees and other costs. This claim is still in its earliest stages and the Company is unable to estimate any reasonably possible loss, or range of loss, with respect to this matter. The Company intends to vigorously defend against this lawsuit. |
Income Taxes
Income Taxes | 9 Months Ended |
Mar. 31, 2021 | |
Income Taxes | |
Income Taxes | (11) Income Taxes On March 11, 2021, the President signed the American Rescue Plan Act of 2021 into law. The bill complements the provisions set forth in the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and the Consolidated Appropriations Act, 2021, which were signed into law on March 27, 2020, and December 27, 2020, respectively. While the Company continues to analyze the relevant provisions of the American Rescue Plan, CARES Act and Appropriations Act, it does not expect the provisions of the legislation to have a significant impact on the Company’s income taxes. The Company’s quarterly provision for income taxes is based on the annual effective rate method. The Company’s quarterly provision for income taxes also includes the tax impact of certain unusual or infrequently occurring items, if any, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, and other discrete items in the interim period in which they occur. The Company’s effective tax rate was 16.7% and 5.4% for the three months ended March 31, 2020 and 2021, respectively. The Company’s effective tax rate for the three months ended March 31, 2020 and March 31, 2021 was lower than the federal statutory rate of 21% primarily due to excess tax benefits from employee stock-based compensation and research and development tax credits. The Company’s effective tax rate was 2.5% and (22.5)% for the nine months ended March 31, 2020 and 2021, respectively. The Company’s effective tax rate for the nine months ended March 31, 2020 and March 31, 2021 was lower than the federal statutory rate of 21% primarily due to excess tax benefits from employee stock-based compensation and research and development tax credits, partially offset by an increase in valuation allowance. |
Net Income Per Share
Net Income Per Share | 9 Months Ended |
Mar. 31, 2021 | |
Net Income Per Share | |
Net Income Per Share | (12) Net Income Per Share Basic net income per common share is computed using the weighted-average number of common shares outstanding during the period. Diluted net income per share is computed using the weighted-average number of common shares outstanding during the period and, if dilutive, potential common shares outstanding during the period. The Company’s potential common shares consist of the incremental common shares issuable upon the exercise of stock options, the release of restricted stock units and market share units, and the shares purchasable via the employee stock purchase plan as of the balance sheet date. The following table presents the calculation of basic and diluted net income per share: Three Months Ended Nine Months Ended March 31, March 31, 2020 2021 2020 2021 Numerator: Net income $ 40,132 $ 36,834 $ 59,505 $ 58,936 Denominator: Weighted-average shares used in computing net income per share: Basic 53,629 54,415 53,486 54,244 Weighted-average effect of potentially dilutive shares: Employee stock options, restricted stock units, market share units and employee stock purchase plan shares 2,324 1,999 2,274 2,094 Diluted 55,953 56,414 55,760 56,338 Net income per share: Basic $ 0.75 $ 0.68 $ 1.11 $ 1.09 Diluted $ 0.72 $ 0.65 $ 1.07 $ 1.05 The Company excluded 6 and 1 outstanding RSUs from the diluted per share calculations during the three months ended March 31, 2020 and 2021, respectively, and 17 and 13 outstanding RSUs from the diluted per share calculations during the nine months ended March 31, 2020 and 2021, respectively, because to include them would have been anti-dilutive. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Mar. 31, 2021 | |
Summary of Significant Accounting Policies | |
Basis of Presentation, Consolidation and Use of Estimates | (a) Basis of Presentation, Consolidation and Use of Estimates These unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The unaudited consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Future events, 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 may change as new events occur, more experience and additional information is acquired, and the operating environment evolves, including the ongoing impact of COVID-19. |
Interim Unaudited Consolidated Financial Information | (b) Interim Unaudited Consolidated Financial Information The accompanying unaudited consolidated financial statements and notes have been prepared in accordance with GAAP and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, the interim financial information includes all adjustments of a normal recurring nature necessary for a fair presentation of the Company’s financial position, results of operations, changes in stockholders’ equity and cash flows. The results of operations for three or nine months ended March 31, 2021 are not necessarily indicative of the results for the full year or the results for any future periods. The impact of the COVID - - |
Income Taxes | (c) Income Taxes Income taxes are accounted for in accordance with ASC 740, Income Taxes, using the asset and liability method. The Company’s provision for income taxes is based on the annual effective rate method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and 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. The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If the Company determines that it would be able to realize its deferred tax assets in the future in excess of their net-recorded amount, it would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. |
Recently Adopted Accounting Standards | (d) Recently Adopted Accounting Standards In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires the measurement and recognition of expected credit losses for financial instruments held at amortized cost, including trade receivables. Under ASU 2016-13, the Company assesses its allowance for credit losses on accounts receivable by taking into consideration current economic conditions, reasonable and supportable forecasts, as well as past experience including historical write-off trends and client-specific circumstances. The new standard also eliminated the concept of other-than-temporary impairment and requires expected credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. The Company adopted this standard effective July 1, 2020, using a modified retrospective approach, and the adoption did not have a material impact on the Company’s financial statements. 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. The Company adopted this standard on July 1, 2020, and removed or modified disclosure requirements retrospectively to all periods presented, whereas any new requirements are being applied prospectively from the adoption date. 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. The Company adopted ASU 2019-12 on July 1, 2020, and the adoption of this standard did not have a material impact on the Company’s financial statements. |
Recently Issued Accounting Standards | (e) Recently Issued Accounting Standards 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 (Tables)
Revenue (Tables) | 9 Months Ended |
Mar. 31, 2021 | |
Revenue | |
Schedule of disaggregation of revenue | Three Months Ended Nine Months Ended March 31, March 31, 2020 2021 2020 2021 Recurring fees $ 161,266 $ 178,711 $ 402,605 $ 448,864 Implementation services and other 5,829 6,216 14,343 16,331 Total revenues from contracts $ 167,095 $ 184,927 $ 416,948 $ 465,195 |
Schedule of changes in deferred revenue related to nonrefundable upfront fees | Three Months Ended Nine Months Ended March 31, March 31, 2020 2021 2020 2021 Balance at beginning of the period $ 6,853 $ 7,065 $ 6,289 $ 8,434 Deferral of revenue 6,099 5,821 12,342 11,811 Revenue recognized (3,992) (4,097) (9,671) (11,456) Balance at end of the period $ 8,960 $ 8,789 $ 8,960 $ 8,789 |
Schedule of deferred contract costs and the related amortization expense | Three Months Ended March 31, 2020 Beginning Capitalized Ending Balance Costs Amortization Balance Costs to obtain a new contract $ 92,848 $ 15,141 $ (5,738) $ 102,251 Costs to fulfill a contract 32,685 7,483 (1,491) 38,677 Total $ 125,533 $ 22,624 $ (7,229) $ 140,928 Three Months Ended March 31, 2021 Beginning Capitalized Ending Balance Costs Amortization Balance Costs to obtain a new contract $ 125,817 $ 17,315 $ (7,390) $ 135,742 Costs to fulfill a contract 55,657 8,872 (2,607) 61,922 Total $ 181,474 $ 26,187 $ (9,997) $ 197,664 Nine Months Ended March 31, 2020 Beginning Capitalized Ending Balance Costs Amortization Balance Costs to obtain a new contract $ 82,103 $ 36,027 $ (15,879) $ 102,251 Costs to fulfill a contract 20,996 21,348 (3,667) 38,677 Total $ 103,099 $ 57,375 $ (19,546) $ 140,928 Nine Months Ended March 31, 2021 Beginning Capitalized Ending Balance Costs Amortization Balance Costs to obtain a new contract $ 113,575 $ 43,026 $ (20,859) $ 135,742 Costs to fulfill a contract 44,468 24,376 (6,922) 61,922 Total $ 158,043 $ 67,402 $ (27,781) $ 197,664 |
Balance Sheet Information (Tabl
Balance Sheet Information (Tables) | 9 Months Ended |
Mar. 31, 2021 | |
Balance Sheet Information | |
Schedule of activity in the allowance for credit losses related to accounts receivable | Balance at June 30, 2020 617 Charged to expense 213 Write-offs (66) Balance at March 31, 2021 $ 764 |
Schedule of capitalized internal-use software and accumulated amortization | June 30, March 31, 2020 2021 Capitalized internal-use software $ 119,178 $ 142,654 Accumulated amortization (82,677) (99,950) Capitalized internal-use software, net $ 36,501 $ 42,704 |
Schedule of property and equipment, net | June 30, March 31, 2020 2021 Office equipment $ 4,619 $ 5,208 Computer equipment 42,936 47,078 Furniture and fixtures 12,723 13,104 Software 6,609 6,627 Leasehold improvements 46,192 46,518 Time clocks rented by clients 4,967 5,124 Total 118,046 123,659 Accumulated depreciation (51,309) (61,472) Property and equipment, net $ 66,737 $ 62,187 |
Schedule of changes in goodwill | Balance at June 30, 2020 $ 21,655 Additions attributable to current year acquisition 11,529 Balance at March 31, 2021 $ 33,184 |
Schedule of amortizable intangible assets and estimated useful lives | June 30, March 31, Useful 2020 2021 Life Client relationships $ 19,200 $ 19,200 5 - 9 years Proprietary technology 2,962 6,129 5 years Non-solicitation agreements 1,350 1,600 2 - 4 years Trade name 350 440 5 years Total 23,862 27,369 Accumulated amortization (10,502) (13,314) Intangible assets, net $ 13,360 $ 14,055 |
Schedule of future amortization expense for acquired intangible assets | Remainder of fiscal 2021 $ 1,028 Fiscal 2022 4,093 Fiscal 2023 3,919 Fiscal 2024 2,914 Fiscal 2025 1,860 Thereafter 241 Total $ 14,055 |
Schedule of components of accrued expenses | June 30, March 31, 2020 2021 Accrued payroll and personnel costs $ 53,284 $ 53,767 Operating lease liabilities 8,083 7,834 Deferred revenue 8,777 9,620 Other 9,737 11,918 Total accrued expenses $ 79,881 $ 83,139 |
Corporate Investments and Fun_2
Corporate Investments and Funds Held For Clients (Tables) | 9 Months Ended |
Mar. 31, 2021 | |
Corporate Investments and Funds Held for Clients | |
Schedule of corporate investments and 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 (1) 122,266 911 — 123,177 Total investments $ 1,614,399 $ 911 $ — $ 1,615,310 (1) 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. March 31, 2021 Gross Gross Amortized unrealized unrealized Type of Issue cost gains losses Fair value Cash and cash equivalents $ 175,453 $ — $ — $ 175,453 Funds held for clients' cash and cash equivalents 2,019,089 — — 2,019,089 Available-for-sale securities: Corporate bonds 19,341 116 — 19,457 Asset-backed securities 20,122 69 — 20,191 Total available-for-sale securities (2) 39,463 185 — 39,648 Total investments $ 2,234,005 $ 185 $ — $ 2,234,190 (2) Included within the fair value of total available-for-sale securities above is $6,823 of corporate investments and $32,825 of funds held for clients. |
Schedule of the classification of investments | June 30, March 31, 2020 2021 Cash and cash equivalents $ 250,851 $ 175,453 Corporate investments 34,556 6,823 Funds held for clients 1,327,304 2,051,914 Long-term prepaid expenses and other 2,599 — Total investments $ 1,615,310 $ 2,234,190 |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 9 Months Ended |
Mar. 31, 2021 | |
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, 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 $ — March 31, 2021 Total Level 1 Level 2 Level 3 Cash and cash equivalents $ 175,453 $ 175,453 $ — $ — Funds held for clients' cash and cash equivalents 2,019,089 2,019,089 — — Available-for-sale securities: Corporate bonds 19,457 — 19,457 — Asset-backed securities 20,191 — 20,191 — Total available-for-sale securities 39,648 — 39,648 — Total investments $ 2,234,190 $ 2,194,542 $ 39,648 $ — |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Mar. 31, 2021 | |
Stock-Based Compensation | |
Schedule of changes in the number of shares available for grant under equity incentive plans | Number of Available for grant at July 1, 2020 9,519 January 1, 2021 Evergreen provision increase 1,000 RSUs granted (483) MSUs granted (58) Shares withheld in settlement of taxes and/or exercise price 361 Forfeitures 71 Shares removed (116) Available for grant at March 31, 2021 10,294 |
Schedule of stock-based compensation expense related to stock options, restricted stock units, market share units and the Employee Stock Purchase Plan | Three Months Ended March 31, Nine Months Ended March 31, 2020 2021 2020 2021 Cost of revenues $ 1,362 $ 1,972 $ 4,057 $ 5,773 Sales and marketing 3,466 3,938 10,813 11,783 Research and development 1,899 2,602 4,945 7,570 General and administrative 2,789 7,499 14,533 21,821 Total stock-based compensation expense $ 9,516 $ 16,011 $ 34,348 $ 46,947 |
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, 2020 1,255 $ 12.43 2.96 $ 167,406 Options exercised (338) $ 7.35 Balance at March 31, 2021 917 $ 14.30 2.38 $ 151,959 Options vested and exercisable at March 31, 2021 917 $ 14.30 2.38 $ 151,959 |
Schedule of restricted stock unit activity | Units Weighted RSU balance at July 1, 2020 1,626 $ 73.96 RSUs granted 483 $ 134.17 RSUs vested (622) $ 64.97 RSUs forfeited (71) $ 86.65 RSU balance at March 31, 2021 1,416 $ 99.54 RSUs expected to vest at March 31, 2021 1,325 $ 98.77 |
Summary of the assumptions used for estimating the grant date fair value of MSUs | Expected dividend yield 0 % Expected volatility 52.0 % Expected term (years) 3.04 Risk‑free interest rate 0.18 % |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 9 Months Ended |
Mar. 31, 2021 | |
Net Income Per Share | |
Schedule of calculation of basic and diluted net income per share | Three Months Ended Nine Months Ended March 31, March 31, 2020 2021 2020 2021 Numerator: Net income $ 40,132 $ 36,834 $ 59,505 $ 58,936 Denominator: Weighted-average shares used in computing net income per share: Basic 53,629 54,415 53,486 54,244 Weighted-average effect of potentially dilutive shares: Employee stock options, restricted stock units, market share units and employee stock purchase plan shares 2,324 1,999 2,274 2,094 Diluted 55,953 56,414 55,760 56,338 Net income per share: Basic $ 0.75 $ 0.68 $ 1.11 $ 1.09 Diluted $ 0.72 $ 0.65 $ 1.07 $ 1.05 |
Revenue - Disaggregation (Detai
Revenue - Disaggregation (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Revenue | ||||
Period of term arrangements not cancellable by client | 2 years | |||
Disaggregation of revenue | ||||
Recurring and other revenue | $ 184,927 | $ 167,095 | $ 465,195 | $ 416,948 |
Maximum | ||||
Revenue | ||||
Period of notice to cancel by client | 60 days | |||
Amortization period of nonrefundable upfront implementation fees | 24 months | |||
Recurring fees | ||||
Disaggregation of revenue | ||||
Recurring and other revenue | 178,711 | 161,266 | $ 448,864 | 402,605 |
Implementation services and other | ||||
Disaggregation of revenue | ||||
Recurring and other revenue | $ 6,216 | $ 5,829 | $ 16,331 | $ 14,343 |
Revenue - Deferred Revenue (Det
Revenue - Deferred Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Changes in deferred revenue related to nonrefundable upfront fees | ||||
Balance at beginning of the period | $ 7,065 | $ 6,853 | $ 8,434 | $ 6,289 |
Deferral of revenue | 5,821 | 6,099 | 11,811 | 12,342 |
Revenue recognized | (4,097) | (3,992) | (11,456) | (9,671) |
Balance at end of the period | 8,789 | $ 8,960 | $ 8,789 | $ 8,960 |
Maximum | ||||
Revenue | ||||
Amortization period of nonrefundable upfront implementation fees | 24 months | |||
Implementation services and other | ||||
Changes in deferred revenue related to nonrefundable upfront fees | ||||
Deferred revenue from nonrefundable upfront fees expected to be recognized in fiscal 2021 | 3,389 | $ 3,389 | ||
Deferred revenue from nonrefundable upfront fees expected to be recognized in fiscal 2022 | 4,425 | 4,425 | ||
Deferred revenue from nonrefundable upfront fees expected to be recognized in fiscal 2023 and thereafter | $ 975 | $ 975 |
Revenue - Deferred contract cos
Revenue - Deferred contract costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Deferred contract costs | ||||
Amortization period of capitalized contract costs | 7 years | 7 years | ||
Beginning Balance | $ 181,474 | $ 125,533 | $ 158,043 | $ 103,099 |
Capitalized Costs | 26,187 | 22,624 | 67,402 | 57,375 |
Amortization | (9,997) | (7,229) | (27,781) | (19,546) |
Ending Balance | 197,664 | 140,928 | 197,664 | 140,928 |
Costs to obtain a new contract | ||||
Deferred contract costs | ||||
Beginning Balance | 125,817 | 92,848 | 113,575 | 82,103 |
Capitalized Costs | 17,315 | 15,141 | 43,026 | 36,027 |
Amortization | (7,390) | (5,738) | (20,859) | (15,879) |
Ending Balance | 135,742 | 102,251 | 135,742 | 102,251 |
Costs to fulfill a contract | ||||
Deferred contract costs | ||||
Beginning Balance | 55,657 | 32,685 | 44,468 | 20,996 |
Capitalized Costs | 8,872 | 7,483 | 24,376 | 21,348 |
Amortization | (2,607) | (1,491) | (6,922) | (3,667) |
Ending Balance | $ 61,922 | $ 38,677 | $ 61,922 | $ 38,677 |
Revenue - Performance Obligatio
Revenue - Performance Obligations (Details) $ in Thousands | Mar. 31, 2021USD ($) |
Remaining Performance Obligations | |
Minimum value of unsatisfied performance obligations on term-based contracts | $ 47,582 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-04-01 | |
Remaining Performance Obligations | |
Remaining performance obligation period | 24 months |
Business Combinations (Details)
Business Combinations (Details) - USD ($) $ in Thousands | 1 Months Ended | ||
Nov. 30, 2020 | Mar. 31, 2021 | Jun. 30, 2020 | |
Business Combinations | |||
Goodwill | $ 33,184 | $ 21,655 | |
Intangible assets | 27,369 | 23,862 | |
Proprietary technology | |||
Business Combinations | |||
Intangible assets | 6,129 | $ 2,962 | |
Samepage Labs Inc | |||
Business Combinations | |||
Purchase price consideration | $ 15,018 | ||
Goodwill | 11,529 | ||
Samepage Labs Inc | Proprietary technology | |||
Business Combinations | |||
Intangible assets | $ 3,167 |
Balance Sheet Information - All
Balance Sheet Information - Allowance for Credit Losses for Accounts Receivable, Capitalized Internal-Use Software and Property, Plant and Equipment (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | Jun. 30, 2020 | |
Activity in the allowance for credit losses | |||||
Balance at the beginning of the period | $ 617 | ||||
Charged to expense | 213 | $ 232 | |||
Write-offs | (66) | ||||
Balance at the end of the period | $ 764 | 764 | |||
Capitalized internal-use software and accumulated amortization | |||||
Capitalized internal-use software | 142,654 | 142,654 | $ 119,178 | ||
Accumulated amortization | (99,950) | (99,950) | (82,677) | ||
Capitalized internal-use software, net | 42,704 | 42,704 | 36,501 | ||
Property and equipment, net | |||||
Property and equipment, gross | 123,659 | 123,659 | 118,046 | ||
Accumulated depreciation | (61,472) | (61,472) | (51,309) | ||
Property and equipment, net | 62,187 | 62,187 | 66,737 | ||
Depreciation expense | 3,966 | $ 4,082 | 11,985 | 12,071 | |
Changes in goodwill | |||||
Balance at the beginning of the period | 21,655 | ||||
Additions attributable to current year acquisition | 11,529 | ||||
Balance at the end of the period | 33,184 | 33,184 | |||
Cost of revenues | |||||
Capitalized internal-use software and accumulated amortization | |||||
Amortization of capitalized internal-use software | 6,005 | $ 4,926 | 17,273 | $ 14,073 | |
Office equipment | |||||
Property and equipment, net | |||||
Property and equipment, gross | 5,208 | 5,208 | 4,619 | ||
Computer equipment | |||||
Property and equipment, net | |||||
Property and equipment, gross | 47,078 | 47,078 | 42,936 | ||
Furniture and fixtures | |||||
Property and equipment, net | |||||
Property and equipment, gross | 13,104 | 13,104 | 12,723 | ||
Software | |||||
Property and equipment, net | |||||
Property and equipment, gross | 6,627 | 6,627 | 6,609 | ||
Leasehold improvements | |||||
Property and equipment, net | |||||
Property and equipment, gross | 46,518 | 46,518 | 46,192 | ||
Time clocks rented by clients | |||||
Property and equipment, net | |||||
Property and equipment, gross | $ 5,124 | $ 5,124 | $ 4,967 |
Balance Sheet Information - Int
Balance Sheet Information - Intangible Assets And Accrued Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | Jun. 30, 2020 | |
Amortizable intangible assets | |||||
Intangible assets, gross | $ 27,369 | $ 27,369 | $ 23,862 | ||
Accumulated amortization | (13,314) | (13,314) | (10,502) | ||
Intangible assets, net | 14,055 | 14,055 | 13,360 | ||
Amortization expense for acquired intangible assets | 1,028 | $ 563 | 2,812 | $ 1,688 | |
Future amortization expense for acquired intangible assets | |||||
Remainder of fiscal 2021 | 1,028 | 1,028 | |||
Fiscal 2022 | 4,093 | 4,093 | |||
Fiscal 2023 | 3,919 | 3,919 | |||
Fiscal 2024 | 2,914 | 2,914 | |||
Fiscal 2025 | 1,860 | 1,860 | |||
Thereafter | 241 | 241 | |||
Intangible assets, net | 14,055 | 14,055 | 13,360 | ||
Components of accrued expenses | |||||
Accrued payroll and personnel costs | 53,767 | 53,767 | 53,284 | ||
Operating lease liabilities | 7,834 | 7,834 | 8,083 | ||
Deferred revenue | 9,620 | 9,620 | 8,777 | ||
Other | 11,918 | 11,918 | 9,737 | ||
Total accrued expenses | 83,139 | 83,139 | 79,881 | ||
Client relationships | |||||
Amortizable intangible assets | |||||
Intangible assets, gross | 19,200 | $ 19,200 | 19,200 | ||
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, gross | 6,129 | $ 6,129 | 2,962 | ||
Useful life | 5 years | ||||
Non-solicitation agreements | |||||
Amortizable intangible assets | |||||
Intangible assets, gross | 1,600 | $ 1,600 | 1,350 | ||
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, gross | $ 440 | $ 440 | $ 350 | ||
Useful life | 5 years |
Corporate Investments and Fun_3
Corporate Investments and Funds Held For Clients - Reconciliation (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Jun. 30, 2020 | Mar. 31, 2020 |
Corporate Investments and Funds Held for Clients | |||
Amortized cost of cash and cash equivalents | $ 175,453 | $ 250,851 | |
Fair value of cash and cash equivalents | 175,453 | 250,851 | $ 114,325 |
Amortized cost of funds held for clients' cash and cash equivalents | 2,019,089 | 1,241,282 | |
Fair value of funds held for clients' cash and cash equivalents | 2,019,089 | 1,241,282 | $ 1,520,127 |
Available-for-sale securities | |||
Amortized cost | 39,463 | 122,266 | |
Gross unrealized gains | 185 | 911 | |
Fair value | 39,648 | 123,177 | |
Total investments at amortized cost | 2,234,005 | 1,614,399 | |
Total investments gross unrealized gains | 185 | 911 | |
Total investments at fair value | 2,234,190 | 1,615,310 | |
Commercial paper | |||
Available-for-sale securities | |||
Amortized cost | 6,643 | ||
Gross unrealized gains | 6 | ||
Fair value | 6,649 | ||
Corporate bonds | |||
Available-for-sale securities | |||
Amortized cost | 19,341 | 44,343 | |
Gross unrealized gains | 116 | 414 | |
Fair value | 19,457 | 44,757 | |
Asset-backed securities | |||
Available-for-sale securities | |||
Amortized cost | 20,122 | 49,978 | |
Gross unrealized gains | 69 | 424 | |
Fair value | 20,191 | 50,402 | |
U.S. treasury securities | |||
Available-for-sale securities | |||
Amortized cost | 21,302 | ||
Gross unrealized gains | 67 | ||
Fair value | 21,369 | ||
Corporate investments | |||
Available-for-sale securities | |||
Fair value | 6,823 | 37,155 | |
Funds held for clients | |||
Available-for-sale securities | |||
Fair value | $ 32,825 | $ 86,022 |
Corporate Investments and Fun_4
Corporate Investments and Funds Held For Clients - Classification (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | Jun. 30, 2020 | |
Corporate Investments and Funds Held for Clients | |||||
Cash and cash equivalents | $ 175,453 | $ 114,325 | $ 175,453 | $ 114,325 | $ 250,851 |
Corporate investments | 6,823 | 6,823 | 34,556 | ||
Funds held for clients | 2,051,914 | 2,051,914 | 1,327,304 | ||
Long-term prepaid expenses and other | 2,599 | ||||
Total investments at fair value | 2,234,190 | 2,234,190 | 1,615,310 | ||
Available-for-sale securities | |||||
Available-for-sale securities in an unrealized loss position | 0 | 0 | $ 0 | ||
Gross realized gains and losses on the sale of available-for-sale securities | 0 | 0 | 0 | 0 | |
Credit impairment losses | 0 | ||||
Reclassification out of Accumulated Other Comprehensive Income | |||||
Available-for-sale securities | |||||
Gross realized gains and losses on the sale of available-for-sale securities | $ 0 | $ 0 | $ 0 | $ 0 |
Fair Value Measurement (Details
Fair Value Measurement (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Jun. 30, 2020 | Mar. 31, 2020 |
Fair value measurement | |||
Cash and cash equivalents | $ 175,453 | $ 250,851 | $ 114,325 |
Funds held for clients' cash and cash equivalents | 2,019,089 | 1,241,282 | $ 1,520,127 |
Total investments at fair value | 2,234,190 | 1,615,310 | |
Available-for-sale securities: | |||
Total available-for-sale securities | 39,648 | 123,177 | |
Level 1 | |||
Fair value measurement | |||
Cash and cash equivalents | 175,453 | 250,851 | |
Funds held for clients' cash and cash equivalents | 2,019,089 | 1,241,282 | |
Total investments at fair value | 2,194,542 | 1,492,133 | |
Level 2 | |||
Fair value measurement | |||
Total investments at fair value | 39,648 | 123,177 | |
Available-for-sale securities: | |||
Total available-for-sale securities | 39,648 | 123,177 | |
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 | ||
Commercial paper | Level 2 | |||
Available-for-sale securities: | |||
Total available-for-sale securities | 6,649 | ||
Corporate bonds | |||
Available-for-sale securities: | |||
Total available-for-sale securities | 19,457 | 44,757 | |
Corporate bonds | Level 2 | |||
Available-for-sale securities: | |||
Total available-for-sale securities | 19,457 | 44,757 | |
Asset-backed securities | |||
Available-for-sale securities: | |||
Total available-for-sale securities | 20,191 | 50,402 | |
Asset-backed securities | Level 2 | |||
Available-for-sale securities: | |||
Total available-for-sale securities | $ 20,191 | 50,402 | |
U.S. treasury securities | |||
Available-for-sale securities: | |||
Total available-for-sale securities | 21,369 | ||
U.S. treasury securities | Level 2 | |||
Available-for-sale securities: | |||
Total available-for-sale securities | $ 21,369 |
Debt (Details)
Debt (Details) - Five-year revolving credit agreement - Senior secured debt - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended |
Jul. 31, 2019 | Jun. 30, 2020 | |
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 | |
Outstanding borrowings | $ 100,000 | |
Minimum | ||
Debt | ||
Interest coverage ratio | 3 | |
Maximum | ||
Debt | ||
Net total leverage ratio | 4 | |
Senior secured leverage ratio | 3.50 | |
LIBOR | Minimum | ||
Debt | ||
Margin on base rate | 0.875% | |
LIBOR | Maximum | ||
Debt | ||
Margin on base rate | 1.375% | |
Adjusted base rate | Minimum | ||
Debt | ||
Margin on base rate | 0.00% | |
Adjusted base rate | Maximum | ||
Debt | ||
Margin on base rate | 0.375% |
Stock-Based Compensation - Gene
Stock-Based Compensation - General Information (Details) - shares shares in Thousands | Jan. 01, 2021 | Mar. 31, 2021 |
Equity Incentive Plans | ||
Equity Incentive Plans | ||
Increase in number of shares available for issuance | 1,000 | |
Number of shares of common stock reserved for issuance | 12,685 | |
Number of shares allocated but not yet issued that are subject to outstanding options or awards | 2,391 | |
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% | |
Increase in number of shares available for issuance | 1,000 |
Stock-Based Compensation - Ince
Stock-Based Compensation - Incentive Plans Activity (Details) - shares shares in Thousands | Jan. 01, 2021 | Mar. 31, 2021 |
Equity Incentive Plans | ||
Shares Available for Grant | ||
Balance at the beginning of the period | 9,519 | |
January 1, 2021 Evergreen provision increase | 1,000 | |
RSUs granted | (483) | |
MSUs granted | (58) | |
Shares withheld in settlement of taxes and/or exercise price | 361 | |
Forfeitures | 71 | |
Shares removed | (116) | |
Balance at the end of the period | 10,294 | |
2014 Plan | ||
Shares Available for Grant | ||
January 1, 2021 Evergreen provision increase | 1,000 |
Stock-Based Compensation Expens
Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Benefit Plans | ||||
Total stock-based compensation expense | $ 16,011 | $ 9,516 | $ 46,947 | $ 34,348 |
Stock-based compensation expense capitalized in internal-use software costs | 652 | 535 | 1,949 | 1,843 |
Cost of revenues | ||||
Benefit Plans | ||||
Total stock-based compensation expense | 1,972 | 1,362 | 5,773 | 4,057 |
Sales and marketing | ||||
Benefit Plans | ||||
Total stock-based compensation expense | 3,938 | 3,466 | 11,783 | 10,813 |
Research and development | ||||
Benefit Plans | ||||
Total stock-based compensation expense | 2,602 | 1,899 | 7,570 | 4,945 |
General and administrative | ||||
Benefit Plans | ||||
Total stock-based compensation expense | 7,499 | $ 2,789 | 21,821 | $ 14,533 |
Modified performance-based restricted stock unit awards | ||||
Benefit Plans | ||||
Total stock-based compensation expense | $ 1,776 | $ 4,560 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Option Activity (Details) - Stock options - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | Jun. 30, 2020 | |
Options Outstanding, Number of Shares | |||||
Balance at the beginning of the period | 1,255 | ||||
Options granted | 0 | 0 | |||
Options exercised | (338) | ||||
Balance at the end of the period | 917 | 917 | 1,255 | ||
Options Outstanding, Weighted average exercise price | |||||
Balance at the beginning of the period (in dollars per share) | $ 12.43 | ||||
Options exercised (in dollars per share) | 7.35 | ||||
Balance at the end of the period (in dollars per share) | $ 14.30 | $ 14.30 | $ 12.43 | ||
Options Additional Disclosures | |||||
Weighted average remaining contractual term | 2 years 4 months 17 days | 2 years 11 months 15 days | |||
Aggregate intrinsic value at the beginning of the period | $ 167,406 | ||||
Weighted average remaining contractual term of options vested and exercisable at the end of the period (years) | 2 years 4 months 17 days | ||||
Aggregate intrinsic value at the end of the period | $ 151,959 | $ 151,959 | $ 167,406 | ||
Options vested and exercisable at the end of the period (in shares) | 917 | 917 | |||
Options vested and exercisable at the end of the period, weighted average exercise price (in dollars per share) | $ 14.30 | $ 14.30 | |||
Options vested and exercisable intrinsic value | $ 151,959 | $ 151,959 | |||
Total intrinsic value of options exercised | $ 20,975 | $ 16,164 | $ 58,252 | $ 18,244 |
Stock-Based Compensation - RSU
Stock-Based Compensation - RSU activity (Details) - Restricted stock units $ / shares in Units, shares in Thousands, $ in Thousands | 9 Months Ended |
Mar. 31, 2021USD ($)$ / sharesshares | |
Unrecognized Compensation Costs Not yet Recognized, Net of Estimated Forfeitures | |
Total unrecognized compensation cost, net of estimated forfeitures related to unvested RSUs | $ | $ 68,517 |
Weighted average period to recognize unrecognized compensation cost | 1 year 9 months 25 days |
RSUs Outstanding Rollforward, Units | |
RSU balance at the beginning of the period | shares | 1,626 |
RSUs granted | shares | 483 |
RSUs vested | shares | (622) |
RSUs forfeited | shares | (71) |
RSU balance at the end of the period | shares | 1,416 |
RSUs expected to vest at the end of the period | shares | 1,325 |
RSUs Outstanding, Weighted average grant date fair value | |
RSU balance at the beginning of the period | $ / shares | $ 73.96 |
RSUs granted | $ / shares | 134.17 |
RSUs vested | $ / shares | 64.97 |
RSUs forfeited | $ / shares | 86.65 |
RSU balance at the end of the period | $ / shares | 99.54 |
RSUs expected to vest at the end of the period | $ / shares | $ 98.77 |
Minimum | |
Equity Incentive Plans | |
Vesting period | 3 years |
Maximum | |
Equity Incentive Plans | |
Vesting period | 4 years |
Stock-Based Compensation - MSUs
Stock-Based Compensation - MSUs Information (Details) - Market share units - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 1 Months Ended | 9 Months Ended |
Aug. 31, 2020 | Mar. 31, 2021 | |
Equity Incentive Plans | ||
Number of awards granted | 58 | |
Grant date fair value | $ 178.04 | |
Vesting period | 3 years | |
Percentage of award shares eligible to vest | 200.00% | |
Valuation assumptions: | ||
Expected dividend yield | 0.00% | |
Expected volatility | 52.00% | |
Expected term (years) | 3 years 14 days | |
Risk-free interest rate | 0.18% | |
Unrecognized Compensation Costs Not yet Recognized, Net of Estimated Forfeitures | ||
Total unrecognized compensation cost, net of estimated forfeitures related to unvested MSUs | $ 7,272 | |
Weighted average period to recognize unrecognized compensation cost | 2 years 5 months 1 day |
Income Taxes (Details)
Income Taxes (Details) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Income Taxes | ||||
Effective tax rate for the period (as a percent) | 5.40% | 16.70% | (22.50%) | 2.50% |
U.S. federal income tax rate (as a percent) | 21.00% | 21.00% | 21.00% | 21.00% |
Net Income Per Share (Details)
Net Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Numerator: | ||||
Net income | $ 36,834 | $ 40,132 | $ 58,936 | $ 59,505 |
Weighted-average shares used in computing net income per share: | ||||
Basic (in shares) | 54,415 | 53,629 | 54,244 | 53,486 |
Weighted-average effect of potentially dilutive shares: | ||||
Employee stock options, restricted stock units, market share units and employee stock purchase plan shares | 1,999 | 2,324 | 2,094 | 2,274 |
Diluted (in shares) | 56,414 | 55,953 | 56,338 | 55,760 |
Net income per share: | ||||
Basic (in dollars per share) | $ 0.68 | $ 0.75 | $ 1.09 | $ 1.11 |
Diluted (in dollars per share) | $ 0.65 | $ 0.72 | $ 1.05 | $ 1.07 |
Restricted stock units | ||||
Anti-dilutive securities excluded from diluted per share calculations | ||||
Anti-dilutive securities excluded | 1 | 6 | 13 | 17 |