Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2015 | Apr. 21, 2015 | |
Document and Entity Information | ||
Entity Registrant Name | ASPEN TECHNOLOGY INC /DE/ | |
Entity Central Index Key | 929940 | |
Document Type | 10-Q | |
Document Period End Date | 31-Mar-15 | |
Amendment Flag | FALSE | |
Current Fiscal Year End Date | -24 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 85,384,032 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q3 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Mar. 31, 2015 | Mar. 31, 2014 |
Revenue: | ||||
Subscription and software | $102,543 | $91,309 | $300,002 | $258,916 |
Services and other | 8,756 | 12,278 | 26,213 | 31,005 |
Total revenue | 111,299 | 103,587 | 326,215 | 289,921 |
Cost of revenue: | ||||
Subscription and software | 5,404 | 5,332 | 15,813 | 14,974 |
Services and other | 6,905 | 9,956 | 21,142 | 24,835 |
Total cost of revenue | 12,309 | 15,288 | 36,955 | 39,809 |
Gross profit | 98,990 | 88,299 | 289,260 | 250,112 |
Operating expenses: | ||||
Selling and marketing | 23,160 | 24,267 | 67,599 | 71,376 |
Research and development | 20,323 | 21,791 | 52,548 | 52,641 |
General and administrative | 13,776 | 10,839 | 36,227 | 33,732 |
Total operating expenses, net | 57,259 | 56,897 | 156,374 | 157,749 |
Income from operations | 41,731 | 31,402 | 132,886 | 92,363 |
Interest income | 122 | 275 | 389 | 969 |
Interest expense | -1 | -6 | -8 | -32 |
Other income (expense), net | 414 | -472 | 354 | -1,807 |
Income before provision for income taxes | 42,266 | 31,199 | 133,621 | 91,493 |
Provision for income taxes | 14,096 | 10,356 | 46,020 | 32,388 |
Net income | $28,170 | $20,843 | $87,601 | $59,105 |
Net income per common share: | ||||
Basic (in dollars per share) | $0.32 | $0.23 | $0.98 | $0.64 |
Diluted (in dollars per share) | $0.32 | $0.22 | $0.97 | $0.63 |
Weighted average shares outstanding: | ||||
Basic (in shares) | 87,355 | 92,414 | 89,509 | 92,891 |
Diluted (in shares) | 87,853 | 93,365 | 90,121 | 93,951 |
CONSOLIDATED_STATEMENTS_OF_COM
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Mar. 31, 2015 | Mar. 31, 2014 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Net income | $28,170 | $20,843 | $87,601 | $59,105 |
Other comprehensive income (loss): | ||||
Net unrealized gains (losses) on available for sale securities, net of tax effects of ($28) and $14 for the three and nine months ended March 31, 2015, and $5 and ($42) for the three and nine months ended March 31, 2014 | 53 | -10 | -25 | 78 |
Foreign currency translation adjustments | -1,846 | -70 | -4,321 | 1,263 |
Total other comprehensive income (loss) | -1,793 | -80 | -4,346 | 1,341 |
Comprehensive income | $26,377 | $20,763 | $83,255 | $60,446 |
CONSOLIDATED_STATEMENTS_OF_COM1
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Mar. 31, 2015 | Mar. 31, 2014 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Net unrealized gains (losses) on available for sale securities, tax effects | ($28) | $5 | $14 | ($42) |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Mar. 31, 2015 | Jun. 30, 2014 |
In Thousands, unless otherwise specified | ||
Current assets: | ||
Cash and cash equivalents | $143,962 | $199,526 |
Short-term marketable securities | 71,848 | 67,619 |
Accounts receivable, net | 28,084 | 38,532 |
Current portion of installments receivable, net | 380 | 640 |
Unbilled services | 1,134 | 1,656 |
Prepaid expenses and other current assets | 7,397 | 10,567 |
Prepaid income taxes | 682 | 605 |
Current deferred tax assets | 4,918 | 10,537 |
Total current assets | 258,405 | 329,682 |
Long-term marketable securities | 9,140 | 31,270 |
Non-current installments receivable, net | 250 | 811 |
Property, equipment and leasehold improvements, net | 18,459 | 7,588 |
Computer software development costs, net | 1,161 | 1,390 |
Goodwill | 17,026 | 19,276 |
Non-current deferred tax assets | 11,120 | 12,765 |
Other non-current assets | 1,504 | 5,190 |
Total assets | 317,065 | 407,972 |
Current liabilities: | ||
Accounts payable | 3,369 | 412 |
Accrued expenses and other current liabilities | 34,751 | 34,984 |
Income taxes payable | 1,709 | 2,168 |
Current deferred revenue | 236,025 | 228,940 |
Total current liabilities | 275,854 | 266,504 |
Non-current deferred revenue | 37,813 | 45,942 |
Other non-current liabilities | 30,192 | 11,850 |
Commitments and contingencies (Note 11) | ||
Series D redeemable convertible preferred stock | ||
$0.10 par value-Authorized- 3,636 shares as of March 31, 2015 and June 30, 2014 Issued and outstanding- none as of March 31, 2015 and June 30, 2014 | 0 | 0 |
Stockholders' equity: | ||
Common stock, $0.10 par value- Authorized-210,000,000 shares Issued- 101,390,162 shares at March 31, 2015 and 101,033,740 shares at June 30, 2014 Outstanding- 86,038,275 shares at March 31, 2015 and 91,661,850 shares at June 30, 2014 | 10,139 | 10,103 |
Additional paid-in capital | 622,266 | 591,324 |
Accumulated deficit | -176,433 | -264,034 |
Accumulated other comprehensive income | 5,026 | 9,372 |
Treasury stock, at cost-15,351,887 shares of common stock at March 31, 2015 and 9,371,890 shares at June 30, 2014 | -487,792 | -263,089 |
Total stockholders' equity (deficit) | -26,794 | 83,676 |
Total liabilities and stockholders' equity (deficit) | $317,065 | $407,972 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Mar. 31, 2015 | Jun. 30, 2014 |
CONSOLIDATED BALANCE SHEETS | ||
Series D redeemable convertible preferred stock, par value (in dollars per share) | $0.10 | $0.10 |
Series D redeemable convertible preferred stock, Authorized | 3,636 | 3,636 |
Series D redeemable convertible preferred stock, Issued | 0 | 0 |
Series D redeemable convertible preferred stock, outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $0.10 | $0.10 |
Common stock, Authorized | 210,000,000 | 210,000,000 |
Common stock, Issued | 101,390,162 | 101,033,740 |
Common stock, Outstanding | 86,038,275 | 91,661,850 |
Treasury stock, shares | 15,351,887 | 9,371,890 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Cash flows from operating activities: | ||
Net income | $87,601 | $59,105 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 4,616 | 3,855 |
Net foreign currency (gains) losses | -2,715 | 1,444 |
Stock-based compensation | 11,122 | 11,102 |
Deferred income taxes | 21,317 | 25,827 |
Provision for bad debts | -471 | 751 |
Tax benefits from stock based compensation | 21,843 | 137 |
Excess tax benefits from stock-based compensation | -21,843 | -137 |
Other non-cash operating activities | 1,401 | 1,358 |
Changes in assets and liabilities: | ||
Accounts receivable | 10,897 | 5,717 |
Unbilled services | 485 | 667 |
Prepaid expenses, prepaid income taxes, and other assets | 4,762 | 4,327 |
Installments receivable | 822 | 11,933 |
Accounts payable, accrued expenses, and other liabilities | -1,198 | -1,248 |
Deferred revenue | -222 | 17,051 |
Net cash provided by operating activities | 138,417 | 141,889 |
Cash flows from investing activities: | ||
Purchases of marketable securities | -50,065 | -35,542 |
Maturities of marketable securities | 66,923 | 33,362 |
Purchases of property, equipment and leasehold improvements | -5,914 | -2,630 |
Purchase of technology intangibles | 0 | -400 |
Capitalized computer software development costs | -315 | -601 |
Net cash provided by (used in) investing activities | 10,629 | -5,811 |
Cash flows from financing activities: | ||
Exercises of stock options | 2,046 | 7,475 |
Repurchases of common stock | -222,878 | -88,919 |
Payments of tax withholding obligations related to restricted stock | -3,874 | -5,935 |
Excess tax benefits from stock-based compensation | 21,843 | 137 |
Net cash used in financing activities | -202,863 | -87,242 |
Effect of exchange rate changes on cash and cash equivalents | -1,747 | 215 |
(Decrease) increase in cash and cash equivalents | -55,564 | 49,051 |
Cash and cash equivalents, beginning of period | 199,526 | 132,432 |
Cash and cash equivalents, end of period | 143,962 | 181,483 |
Supplemental disclosure of cash flow information: | ||
Income taxes paid, net | 2,933 | 5,717 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Landlord improvement allowance included in leasehold improvements and deferred rent liability | 6,064 | 0 |
Purchases of property, equipment and leasehold improvements included in accounts payable and accrued expenses | 1,913 | 0 |
Common stock repurchases included in accrued expenses | $2,450 | $0 |
Interim_Unaudited_Consolidated
Interim Unaudited Consolidated Financial Statements | 9 Months Ended |
Mar. 31, 2015 | |
Interim Unaudited Consolidated Financial Statements | |
Interim Unaudited Consolidated Financial Statements | |
1. Interim Unaudited Consolidated Financial Statements | |
The accompanying interim unaudited consolidated financial statements of Aspen Technology, Inc. and its subsidiaries have been prepared on the same basis as our annual consolidated financial statements. We have omitted certain information and footnote disclosures normally included in our annual consolidated financial statements. Such interim unaudited consolidated financial statements have been prepared in conformity with U.S. Generally Accepted Accounting Principles (GAAP), as defined in the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 270, Interim Reporting, for interim financial information and with the instructions to Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. It is suggested that these unaudited consolidated financial statements be read in conjunction with the audited consolidated financial statements for the year ended June 30, 2014, which are contained in our Annual Report on Form 10-K, as previously filed with the U.S. Securities and Exchange Commission (SEC). In the opinion of management, all adjustments, consisting of normal and recurring adjustments, considered necessary for a fair presentation of the financial position, results of operations, and cash flows at the dates and for the periods presented have been included and all intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the three and nine months ended March 31, 2015 are not necessarily indicative of the results to be expected for the subsequent quarter or for the full fiscal year. | |
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. | |
Unless the context requires otherwise, references to we, our and us refer to Aspen Technology, Inc. and its subsidiaries. | |
Reclassifications | |
Certain line items in prior period financial statements have been reclassified to conform to the current period presentations. | |
Significant_Accounting_Policie
Significant Accounting Policies | 9 Months Ended | |||
Mar. 31, 2015 | ||||
Significant Accounting Policies | ||||
Significant Accounting Policies | ||||
2. Significant Accounting Policies | ||||
(a)Overview of Licensing Model Changes | ||||
Transition to the aspenONE Licensing Model | ||||
Prior to fiscal 2010, we offered term or perpetual licenses to specific products, or specifically defined sets of products, which we refer to as point products. The majority of our license revenue was recognized under an “upfront revenue model,” in which the net present value of the aggregate license fees was recognized as revenue upon shipment of the point products. Customers typically received one year of post-contract software maintenance and support, or SMS, with their license agreements and then could elect to renew SMS annually. Revenue from SMS was recognized ratably over the period in which the SMS was delivered. | ||||
In fiscal 2010, we introduced the following changes to our licensing model: | ||||
(i)We began offering our software on a subscription basis, allowing our customers access to all products within a licensed suite (aspenONE Engineering or aspenONE Manufacturing and Supply Chain). SMS is included for the entire term of the arrangement and customers are entitled to any software products or updates introduced into the licensed suite. We refer to this license arrangement as our aspenONE licensing model. | ||||
(ii)We began to include SMS for the entire term on our point product term arrangements. | ||||
Beginning in fiscal 2012, we introduced our Premier Plus SMS offering to provide more value to our customers. As a part of this offering, customers receive 24x7 support, faster response times, dedicated technical advocates and access to web-based training modules. | ||||
Revenue related to our aspenONE licensing model and to term point product license arrangements with Premier Plus SMS is recognized over the term of the arrangement on a ratable basis. The changes to our licensing model introduced in fiscal 2010 did not change the method or timing of customer billings or cash collections. | ||||
Impact of Licensing Model Changes | ||||
The principal accounting implications of the changes to our licensing model in fiscal 2010 are as follows: | ||||
· | Prior to fiscal 2010, the majority of our license revenue was recognized on an upfront basis. Since the upfront model resulted in the net present value of multiple years of future installments being recognized at the time of shipment, the changes to our licensing model resulted in a reduction in our software license revenue for fiscal 2010, 2011 and 2012 as compared to the fiscal years preceding our licensing model changes. These changes did not impact the incurrence or timing of our expenses, and there was no corresponding expense reduction to offset the lower revenue, resulting in operating losses for fiscal 2010, 2011 and 2012. By fiscal 2013, a sufficient number of license arrangements had been renewed on the aspenONE licensing model to generate ratable revenue sufficient to support an operating profit. | |||
· | Since fiscal 2010, revenue from annually renewable SMS arrangements (“legacy SMS revenue”) has decreased, and been offset by a corresponding increase in subscription and software revenue as customers have transitioned to our aspenONE licensing model. Under our aspenONE licensing model and for point product arrangements with Premier Plus SMS included for the full contract term, the entire arrangement fee, including the SMS component, is included within subscription and software revenue. | |||
· | Installment payments from aspenONE agreements and from point product arrangements with SMS included for the contract term are not considered fixed or determinable, and as a result, are not included in installments receivable. Accordingly, our installments receivable balance has decreased as licenses previously executed under our upfront revenue model reached the end of their terms. | |||
· | The amount of our deferred revenue has increased as more revenue from our term license portfolio has been recognized on a ratable basis. | |||
(b)Revenue Recognition | ||||
We generate revenue from the following sources: (1) licensing software products and SMS; and (2) providing professional services and training. We sell our software products to end users under fixed-term and perpetual licenses. As a standard business practice, we offer extended payment term options for our fixed-term license arrangements, which are generally payable on an annual basis. Many of our fixed-term license agreements include product mixing rights that allow customers the flexibility to change or alternate the use of multiple products included in the license arrangement after those products are delivered to the customer. We refer to these arrangements as token arrangements. Tokens are fixed units of measure. The amount of software usage is limited by the number of tokens purchased by the customer. | ||||
Four basic criteria must be satisfied before software license revenue can be recognized: persuasive evidence of an arrangement between us and an end user; delivery of our product has occurred; the fee for the product is fixed or determinable; and collection of the fee is probable. | ||||
Persuasive evidence of an arrangement—We use a signed contract as evidence of an arrangement for software licenses and SMS. For professional services we use a signed contract and a work proposal to evidence an arrangement. In cases where both a signed contract and a purchase order are required by the customer, we consider both taken together as evidence of the arrangement. | ||||
Delivery of our product—Software and the corresponding access keys are generally delivered to customers electronically or via disk media with standard shipping terms of FOB Origin. Our software license agreements do not contain conditions for acceptance. | ||||
Fee is fixed or determinable—We assess whether a fee is fixed or determinable at the outset of the arrangement. Significant judgment is involved in making this assessment. | ||||
Under our upfront revenue model, we are able to demonstrate that the fees are fixed or determinable for all arrangements, including those for our term licenses that contain extended payment terms. We have an established history of collecting under the terms of these contracts without providing concessions to customers. In addition, we also assess whether a contract modification to an existing term arrangement constitutes a concession. In making this assessment, significant analysis is performed to ensure that no concessions are given. Our software license agreements do not include a right of return or exchange. For license arrangements executed under the upfront revenue model, we recognize license revenue upon delivery of the software product, provided all other revenue recognition requirements are met. | ||||
We cannot assert that the fees under our aspenONE licensing model and point product arrangements with Premier Plus SMS are fixed or determinable because the rights provided to customers, and the economics of the arrangements, are not comparable to our transactions with other customers under the upfront revenue model. As a result, the amount of revenue recognized for these arrangements is limited by the amount of customer payments that become due. | ||||
Collection of fee is probable—We assess the probability of collecting from each customer at the outset of the arrangement based on a number of factors, including the customer’s payment history, its current creditworthiness, economic conditions in the customer’s industry and geographic location, and general economic conditions. If in our judgment collection of a fee is not probable, revenue is recognized as cash is collected, provided all other conditions for revenue recognition have been met. | ||||
Vendor-Specific Objective Evidence of Fair Value | ||||
We have established VSOE for certain SMS offerings, professional services, and training, but not for our software products or our Premier Plus SMS offering. We assess VSOE for SMS, professional services, and training, based on an analysis of standalone sales of the offerings using the bell-shaped curve approach. We do not have a history of selling our Premier Plus SMS offering to customers on a standalone basis, and as a result are unable to establish VSOE for this deliverable. As of July 1, 2014, we are no longer able to establish VSOE for legacy SMS offerings sold with our perpetual license arrangements. As a result, all perpetual license agreements that include legacy SMS entered into subsequent to June 30, 2014 are being recognized ratably over the legacy SMS service period. Loss of VSOE on legacy SMS offerings sold with our perpetual license arrangements did not have a material impact on our revenue during the three and nine months ended March 31, 2015. | ||||
We allocate the arrangement consideration among the elements included in our multi-element arrangements using the residual method. Under the residual method, the VSOE of the undelivered elements is deferred and the remaining portion of the arrangement fee is recognized as revenue upon delivery of the software, assuming all other revenue recognition criteria are met. If VSOE does not exist for an undelivered element in an arrangement, revenue is deferred until such evidence does exist for the undelivered elements, or until all elements are delivered, whichever is earlier. Under the upfront revenue model, the residual license fee is recognized upon delivery of the software provided all other revenue recognition criteria were met. Arrangements that qualified for upfront recognition during fiscal 2014 and prior periods included sales of perpetual licenses, amendments to existing legacy term arrangements and renewals of legacy term arrangements. | ||||
Subscription and Software Revenue | ||||
Subscription and software revenue consists of product and related revenue from our (i) aspenONE licensing model, including Premier Plus SMS; (ii) point product arrangements with our Premier Plus SMS offering included for the contract term; (iii) legacy arrangements including (a) amendments to existing legacy term arrangements, (b) renewals of legacy term arrangements and (c) legacy arrangements that are being recognized over time as a result of not previously meeting one or more of the requirements for recognition under the upfront revenue model; (iv) legacy SMS arrangements; and (v) perpetual arrangements. | ||||
When a customer elects to license our products under our aspenONE licensing model, our Premier Plus SMS offering is included for the entire term of the arrangement and the customer receives, for the term of the arrangement, the right to any new unspecified future software products and updates that may be introduced into the licensed aspenONE software suite. Due to our obligation to provide unspecified future software products and updates, we are required to recognize revenue ratably over the term of the arrangement, once the other revenue recognition criteria noted above have been met. | ||||
Our point product arrangements with Premier Plus SMS include SMS for the term of the arrangement. Since we do not have VSOE for our Premier Plus SMS offering, the SMS element of our point product arrangements is not separable. As a result, revenue associated with point product arrangements with Premier Plus SMS included for the contract term is recognized ratably over the term of the arrangement, once the other revenue recognition criteria have been met. | ||||
Perpetual and legacy term license arrangements do not include the same rights as those provided to customers under the aspenONE licensing model and point product arrangements with Premier Plus SMS. Legacy SMS revenue is generated from legacy SMS offerings provided in support of perpetual and legacy term license arrangements. Customers typically receive SMS for one year and then can elect to renew SMS annually. During fiscal 2014 and prior periods, we had VSOE for certain legacy SMS offerings sold with perpetual and term license arrangements and could therefore separate the undelivered elements. Accordingly, license fee revenue for perpetual and legacy term license arrangements was recognized upon delivery of the software products using the residual method, provided all other revenue recognition requirements were met. VSOE of fair value for the undelivered SMS component sold with our perpetual and term license arrangements was deferred and subsequently amortized into revenue ratably over the contractual term of the SMS arrangement. As of July 1, 2014, we are no longer able to establish VSOE for our legacy SMS offerings sold with our perpetual license arrangements. As a result, all perpetual license agreements that include legacy SMS entered into subsequent to June 30, 2014 are being recognized ratably over the legacy SMS service period. Loss of VSOE on legacy SMS offerings sold with our perpetual license arrangements did not have a material impact on revenue during the three and nine months ended March 31, 2015. | ||||
Services and Other Revenue | ||||
Professional Services Revenue | ||||
Professional services are provided to customers on a time-and-materials (T&M) or fixed-price basis. We recognize professional services fees for our T&M contracts based upon hours worked and contractually agreed-upon hourly rates. Revenue from fixed-price engagements is recognized using the proportional performance method based on the ratio of costs incurred to the total estimated project costs. Project costs are typically expensed as incurred. The use of the proportional performance method is dependent upon our ability to reliably estimate the costs to complete a project. We use historical experience as a basis for future estimates to complete current projects. Additionally, we believe that costs are the best available measure of performance. Out-of-pocket expenses which are reimbursed by customers are recorded as revenue. | ||||
In certain circumstances, professional services revenue may be recognized over a time period longer than the period over which the services are performed. If the costs to complete a project are not estimable or the completion is uncertain, the revenue is recognized upon completion of the services. In circumstances in which professional services are sold as a single arrangement with, or in contemplation of, a new aspenONE license or point product arrangement with Premier Plus SMS, revenue is deferred and recognized on a ratable basis over the longer of (i) the period the services are performed or (ii) the license term. | ||||
We have occasionally been required to commit unanticipated additional resources to complete projects, which resulted in losses on those contracts. Provisions for estimated losses on contracts are made during the period in which such losses become probable and can be reasonably estimated. | ||||
Training Revenue | ||||
We provide training services to our customers, including on-site, Internet-based and customized training. Revenue is recognized in the period in which the services are performed. In circumstances in which training services are sold as a single arrangement with, or in contemplation of, a new aspenONE license or point product arrangement with Premier Plus SMS, revenue is deferred and recognized on a ratable basis over the longer of (i) the period the services are performed or (ii) the license term. | ||||
Deferred Revenue | ||||
Deferred revenue includes amounts billed or collected in advance of revenue recognition, including arrangements under the aspenONE licensing model, point product arrangements with Premier Plus SMS, legacy SMS arrangements, professional services, and training. Under the aspenONE licensing model and for point product arrangements with Premier Plus SMS, VSOE does not exist for the undelivered elements, and as a result the arrangement fees are recognized ratably (i.e., on a subscription basis) over the term of the license. Deferred revenue is recorded as each invoice becomes due. | ||||
For arrangements under the upfront revenue model, a portion of the arrangement fee is generally recorded as deferred revenue due to the inclusion of an undelivered element, typically our legacy SMS offering or professional services. The amount of revenue allocated to undelivered elements is based on the VSOE for those elements using the residual method, and is earned and recognized as revenue as each element is delivered. | ||||
(c) Loss Contingencies | ||||
We accrue estimated liabilities for loss contingencies arising from claims, assessments, litigation and other sources when it is probable that a liability has been incurred and the amount of the claim, assessment or damages can be reasonably estimated. We believe that we have sufficient accruals to cover any obligations resulting from claims, assessments or litigation that have met these criteria. Please refer to Note 11 for discussion of these matters and related liability accruals. | ||||
(d)Foreign Currency Transactions | ||||
Foreign currency exchange gains and (losses) generated from the settlement and remeasurement of transactions denominated in currencies other than the functional currency of our subsidiaries are recognized in our results of operations as incurred as a component of other income (expense), net. Net foreign currency gains (losses) were $0.4 million during each three-month and nine-month period ended March 31, 2015 and ($0.5) million and ($1.8) million during the three and nine months periods ended March 31, 2014, respectively. | ||||
(e)Recently Issued Accounting Pronouncements | ||||
In May 2014, FASB issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers. ASU No. 2014-09 was issued by the FASB as a part of the joint project with the International Accounting Standards Board to clarify revenue recognition principles and develop a common revenue standard for GAAP and International Financial Reporting Standards. | ||||
ASU No. 2014-09 is effective for the fiscal years, and interim periods within those years, beginning after December 15, 2016. Early adoption of ASU No. 2014-09 is not permitted. The amendments included within ASU No. 2014-09 should be applied by using one of the following methods: | ||||
Retrospectively to each prior reporting period presented. The entity may elect any of the practical expedients described in ASU No. 2014-09 when applying this method. | ||||
Retrospectively with the cumulative effect of initially applying ASU No. 2014-09 recognized at the date of initial application. In the reporting periods that include the date of the initial application of ASU No. 2014-09, the entity should disclose the amount by which each financial statement line item is affected by the application of ASU No. 2014-09 in the current reporting period as compared to the guidance that was in effect before the change. | ||||
We expect to adopt ASU No. 2014-09 during the first quarter of fiscal 2018. We are currently evaluating the impact of ASU No. 2014-09 on our financial position, results of operations and cash flows. | ||||
(f)Other | ||||
For further information with regard to our “Significant Accounting Policies,” please refer to Note 2 of our Consolidated Financial Statements and Notes thereto included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2014. | ||||
Marketable_Securities
Marketable Securities | 9 Months Ended | |||||||||||||
Mar. 31, 2015 | ||||||||||||||
Marketable Securities | ||||||||||||||
Marketable Securities | ||||||||||||||
3. Marketable Securities | ||||||||||||||
The amortized cost and unrealized holding gains (losses) on our marketable securities were as follows as of March 31, 2015 and June 30, 2014: | ||||||||||||||
Fair Value | Cost | Unrealized | Unrealized | |||||||||||
Gains | Losses | |||||||||||||
(Dollars in Thousands) | ||||||||||||||
March 31, 2015: | ||||||||||||||
U.S. corporate bonds | $ | 71,848 | $ | 71,863 | $ | 13 | $ | (28 | ) | |||||
Total short-term marketable securities | $ | 71,848 | $ | 71,863 | $ | 13 | $ | (28 | ) | |||||
U.S. corporate bonds | $ | 9,140 | $ | 9,152 | $ | 2 | $ | (14 | ) | |||||
Total long-term marketable securities | $ | 9,140 | $ | 9,152 | $ | 2 | $ | (14 | ) | |||||
June 30, 2014: | ||||||||||||||
U.S. corporate bonds | $ | 67,619 | $ | 67,587 | $ | 39 | $ | (7 | ) | |||||
Total short-term marketable securities | $ | 67,619 | $ | 67,587 | $ | 39 | $ | (7 | ) | |||||
U.S. corporate bonds | $ | 31,270 | $ | 31,290 | $ | 1 | $ | (21 | ) | |||||
Total long-term marketable securities | $ | 31,270 | $ | 31,290 | $ | 1 | $ | (21 | ) | |||||
Our marketable securities were classified as available-for-sale and reported at fair value on the unaudited consolidated balance sheets. Net unrealized gains (losses) were reported as a separate component of accumulated other comprehensive income, net of tax. Realized gains and (losses) on investments were recognized in earnings as incurred. Our investments consisted primarily of investment grade fixed income corporate debt securities with maturity dates ranging from April 2015 through August 2016 as of March 31, 2015 and from July 2014 through May 2016 as of June 30, 2014. | ||||||||||||||
We review our marketable securities for impairment at each reporting period to determine if any of our securities have experienced an other-than-temporary decline in fair value in accordance with the provisions of ASC Topic 320, Investments- Debt and Equity Securities. We consider factors, such as the length of time and extent to which the market value has been less than the cost, the financial condition and near-term prospects of the issuer, our intent to sell, and whether it is more likely than not we will be required to sell the investment before recovery of its amortized cost basis. If we believe that an other-than-temporary decline in fair value has occurred, we write down the investment to fair value and recognize the credit loss in earnings and the non-credit loss in accumulated other comprehensive income. As of March 31, 2015 and 2014, our marketable securities were not considered other-than-temporarily impaired and, as such, we did not recognize impairment losses during the three and nine months periods then ended. Unrealized losses were attributable to changes in interest rates. | ||||||||||||||
Goodwill
Goodwill | 9 Months Ended | ||||
Mar. 31, 2015 | |||||
Goodwill | |||||
Goodwill | |||||
4. Goodwill | |||||
During fiscal 2014, we re-aligned our reporting units to reflect our revised operating and reportable segment structure (refer to Note 12). Prior to fiscal 2014, we had three reporting units: license; SMS, training and other; and professional services. During fiscal 2014, we re-aligned our reporting units into subscription and software; and services. As a result of this re-alignment, goodwill assigned to the subscription and software reporting unit included combined goodwill of the license; and SMS, training and other reporting units. The carrying amount of goodwill of the services reporting unit was zero at March 31, 2015, June 30, 2014 and June 30, 2013 and consisted of fully impaired gross goodwill of $5.1 million. | |||||
The changes in the carrying amount of goodwill for our subscription and software reporting unit during the nine months ended March 31, 2015 and fiscal year ended June 30, 2014 were as follows: | |||||
Amount | |||||
(Dollars in | |||||
Thousands) | |||||
Balance as of June 30, 2013: | |||||
Goodwill | $ | 84,701 | |||
Accumulated impairment losses | (65,569 | ) | |||
$ | 19,132 | ||||
Effect of currency translation | 144 | ||||
Balance as of June 30, 2014: | |||||
Goodwill | $ | 84,845 | |||
Accumulated impairment losses | (65,569 | ) | |||
$ | 19,276 | ||||
Effect of currency translation | (2,250 | ) | |||
Balance as of March 31, 2015: | |||||
Goodwill | $ | 82,595 | |||
Accumulated impairment losses | (65,569 | ) | |||
$ | 17,026 | ||||
We test goodwill for impairment annually (or more often if impairment indicators arise), at the reporting unit level. We first assess qualitative factors to determine whether the existence of events or circumstances indicates that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If we determine, based on this assessment, that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, we perform the two-step goodwill impairment test. The first step requires us to determine the fair value of the reporting unit and compare it to the carrying amount, including goodwill, of such reporting unit. If the fair value exceeds the carrying amount, no impairment loss is recognized. However, if the carrying amount of the reporting unit exceeds its fair value, the goodwill of the unit may be impaired. The amount of impairment, if any, is measured based upon the implied fair value of goodwill at the valuation date. | |||||
Fair value of a reporting unit is determined using a combined weighted average of a market-based approach (utilizing fair value multiples of comparable publicly traded companies) and an income-based approach (utilizing discounted projected cash flows). In applying the income-based approach, we would be required to make assumptions about the amount and timing of future expected cash flows, growth rates and appropriate discount rates. The amount and timing of future cash flows would be based on our most recent long-term financial projections. The discount rate we would utilize would be determined using estimates of market participant risk-adjusted weighted-average costs of capital and reflect the risks associated with achieving future cash flows. | |||||
We have elected December 31st as the annual impairment assessment date and perform additional impairment tests if triggering events occur. We performed our annual impairment test for the subscription and software reporting unit as of December 31, 2014, and, based upon the results of our qualitative assessment, determined that it was not likely that its fair value was less than its carrying amount. As such, we did not perform the two-step goodwill impairment test and did not recognize impairment losses as a result of our analysis. If an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value, goodwill will be evaluated for impairment between annual tests. No triggering events indicating goodwill impairment occurred during the three and nine months ended March 31, 2015. | |||||
Income_Taxes
Income Taxes | 9 Months Ended |
Mar. 31, 2015 | |
Income Taxes | |
Income Taxes | |
5. Income Taxes | |
The effective tax rate for the periods presented was primarily the result of income earned in the U.S., taxed at U.S. federal and state statutory income tax rates, income earned in foreign tax jurisdictions taxed at the applicable rates, as well as the impact of permanent differences between book and tax income. | |
Our effective tax rate for the three months ended March 31, 2015 was 33.4% as compared to 33.2% for the corresponding period of the prior fiscal year. Our effective tax rate for the nine months ended March 31, 2015 was 34.4% as compared to 35.4% for the corresponding period of the prior fiscal year. During the three and nine months ended March 31, 2015 and 2014, our income tax expense was driven primarily by pre-tax profitability in our domestic and foreign operations and the impact of permanent items, including non-deductible stock-based compensation expense, slightly offset by a benefit from a U.S. domestic production activity deduction. Our effective tax rate for the three and nine months ended March 31, 2015 and 2014 differed from the U.S. federal statutory income tax rate primarily as a result of the impact of the permanent items. | |
We use the “with and without” ordering approach to calculate our tax provision. This methodology requires us to utilize all other tax attributes before recognizing excess tax benefits. Excess tax benefits are generated when the deductible value of stock-based compensation for income tax purposes exceeds the value recognized for financial statement purposes. Excess tax benefits are not included as a component of deferred tax assets. When realized, excess tax benefits reduce income taxes payable and increase additional paid in capital. In our unaudited consolidated statements of cash flows, the excess tax benefits of $21.8 million and $0.1 million were reported as sources of cash flows from financing activities with offsetting reductions to cash flows from operating activities during the nine months ended March 31, 2015 and 2014, respectively. | |
Deferred income taxes are recognized based on temporary differences between the financial statement and tax bases of assets and liabilities. Deferred tax assets and liabilities are measured using the statutory tax rates and laws expected to apply to taxable income in the years in which the temporary differences are expected to reverse. Valuation allowances are provided against net deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and the timing of the temporary differences becoming deductible. Management considers, among other available information, scheduled reversals of deferred tax liabilities, projected future taxable income, limitations of availability of net operating loss carryforwards, and other matters in making this assessment. | |
We do not provide deferred taxes on unremitted earnings of foreign subsidiaries since we intend to indefinitely reinvest those earnings either currently or sometime in the foreseeable future. Unrecognized provisions for taxes on undistributed earnings of foreign subsidiaries, which are considered indefinitely reinvested, are not material to our consolidated financial position or results of operations. | |
Fair_Value
Fair Value | 9 Months Ended |
Mar. 31, 2015 | |
Fair Value | |
Fair Value | |
6. Fair Value | |
We determine fair value by utilizing a fair value hierarchy that ranks the quality and reliability of the information used in its determination. Fair values determined using “Level 1 inputs” utilize unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access. Fair values determined using “Level 2 inputs” utilize data points that are observable, such as quoted prices, interest rates and yield curves for similar assets and liabilities. | |
Cash equivalents of $121.3 million and $175.9 million as of March 31, 2015 and June 30, 2014, respectively, were reported at fair value utilizing quoted market prices in identical markets, or “Level 1 inputs.” Our cash equivalents consist of short-term, highly liquid investments with remaining maturities of three months or less when purchased. | |
Marketable securities of $81.0 million and $98.9 million as of March 31, 2015 and June 30, 2014, respectively, were reported at fair value calculated in accordance with the market approach, utilizing market consensus pricing models with quoted prices that were directly or indirectly observable, or “Level 2 inputs.” | |
Financial instruments not measured or recorded at fair value in the accompanying unaudited consolidated financial statements consist of accounts receivable, installments receivable and accounts payable. The estimated fair value of these financial instruments approximates their carrying value. | |
Supplementary_Balance_Sheet_In
Supplementary Balance Sheet Information | 9 Months Ended | ||||||||||
Mar. 31, 2015 | |||||||||||
Supplementary Balance Sheet Information | |||||||||||
Supplementary Balance Sheet Information | |||||||||||
7. Supplementary Balance Sheet Information | |||||||||||
Our accounts receivable, net of the related allowance for doubtful accounts, were as follows as of March 31, 2015 and June 30, 2014: | |||||||||||
Gross | Allowance | Net | |||||||||
(Dollars in Thousands) | |||||||||||
March 31, 2015: | |||||||||||
Accounts receivable | $ | 30,136 | $ | (2,052 | ) | $ | 28,084 | ||||
$ | 30,136 | $ | (2,052 | ) | $ | 28,084 | |||||
June 30, 2014: | |||||||||||
Accounts receivable | $ | 41,997 | $ | (3,465 | ) | $ | 38,532 | ||||
$ | 41,997 | $ | (3,465 | ) | $ | 38,532 | |||||
Property, equipment and leasehold improvements in the accompanying unaudited consolidated balance sheets consisted of the following: | |||||||||||
March 31, | June 30, | ||||||||||
2015 | 2014 | ||||||||||
(Dollars in Thousands) | |||||||||||
Property, equipment and leasehold improvements - at cost: | |||||||||||
Computer equipment | $ | 11,410 | $ | 11,772 | |||||||
Purchased software | 23,370 | 23,720 | |||||||||
Furniture & fixtures | 6,377 | 4,530 | |||||||||
Leasehold improvements | 12,264 | 3,448 | |||||||||
Accumulated depreciation | (34,962 | ) | (35,882 | ) | |||||||
Property, equipment and leasehold improvements - net | $ | 18,459 | $ | 7,588 | |||||||
Accrued expenses and other current liabilities in the accompanying unaudited consolidated balance sheets consisted of the following: | |||||||||||
March 31, | June 30, | ||||||||||
2015 | 2014 | ||||||||||
(Dollars in Thousands) | |||||||||||
Royalties and outside commissions | $ | 2,936 | $ | 3,596 | |||||||
Payroll and payroll-related | 14,053 | 19,347 | |||||||||
Other | 17,762 | 12,041 | |||||||||
Total accrued expenses and other current liabilities | $ | 34,751 | $ | 34,984 | |||||||
Other non-current liabilities in the accompanying unaudited consolidated balance sheets consisted of the following: | |||||||||||
March 31, | June 30, | ||||||||||
2015 | 2014 | ||||||||||
(Dollars in Thousands) | |||||||||||
Deferred rent (1) | $ | 5,294 | $ | 402 | |||||||
Other (2) | 24,898 | 11,448 | |||||||||
Total other non-current liabilities | $ | 30,192 | $ | 11,850 | |||||||
-1 | During the nine months ended March 31, 2015, we received $6.1 million of landlord-funded leasehold improvements related to our new principal executive offices located in Bedford, Massachusetts. The landlord-funded leasehold improvements were recorded as property, plant and equipment and deferred rent in our unaudited consolidated balance sheets as of March 31, 2015 and are being amortized as a reduction to rent expense over the life of the lease. During fiscal 2014, we determined that $1.5 million of improvements made to the Bedford, Massachusetts offices were owned by the landlord. As of June 30, 2014, the $1.5 million of improvements were recorded within other non-current assets in our consolidated balance sheets and were reclassified as a reduction to deferred rent during the second quarter of fiscal 2015 when we occupied the facility. The unamortized balance of the improvements amounted to $1.4 million as of March 31, 2015 and was presented as a reduction of deferred rent during the period then ended. The improvements will be amortized as additional rent expense over the life of the lease. Please refer to Note 11 for further information on the lease. | ||||||||||
-2 | Other was comprised primarily of our net reserve for uncertain tax positions of $23.0 million and $9.3 million as of March 31, 2015 and June 30, 2014, respectively. We account for unrecognized tax benefits in accordance with ASU No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. In accordance with ASU 2013-11, deferred tax assets should be presented net of liabilities for uncertain tax positions provided there are specific deferred tax assets available to settle the uncertain income tax liabilities. As of June 30, 2014, we had sufficient deferred tax assets available to settle a portion of our reserve for uncertain tax positions, and consequently, only a portion of our total reserve for uncertain tax positions was reported as a non-current liability in our consolidated balance sheets. As of December 31, 2014, we no longer had deferred tax assets available to net against our reserve for uncertain tax positions, and, as a result, the total reserve for uncertain tax positions was presented as a non-current liability in our unaudited consolidated balance sheets as of December 31, 2014 and March 31, 2015. Our total reserve for uncertain tax positions was approximately $23.0 million and $21.2 million as of March 31, 2015 and June 30, 2014, respectively. | ||||||||||
StockBased_Compensation
Stock-Based Compensation | 9 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Stock-Based Compensation | |||||||||||||||||
Stock-Based Compensation | |||||||||||||||||
8. Stock-Based Compensation | |||||||||||||||||
Stock Compensation Plans and General Award Terms | |||||||||||||||||
We have issued stock options and restricted stock units (RSUs) to our employees and outside directors, pursuant to our 2005 Stock Incentive Plan (the 2005 Plan) and our 2010 Equity Incentive Plan (the 2010 Plan). The 2005 Plan was approved by the stockholders on May 26, 2005 and expired on March 31, 2015. | |||||||||||||||||
Option awards are granted with an exercise price equal to the market closing price of our stock on the trading day prior to the grant date; those options generally vest over four years and expire within 7 or 10 years of grant. RSUs generally vest over four years. Historically, our practice has been to settle stock option exercises and RSU vesting through newly-issued shares. | |||||||||||||||||
Stock-Based Compensation Accounting | |||||||||||||||||
We recognize stock-based compensation expense on a straight-line basis, net of forfeitures, over the requisite service period for time-vested awards. Our share-based awards are accounted for as equity instruments. Our policy is to issue new shares upon the exercise of stock awards. | |||||||||||||||||
We utilize the Black-Scholes option valuation model for estimating the fair value of options granted. The Black-Scholes option valuation model incorporates assumptions regarding expected stock price volatility, the expected life of the option, the risk-free interest rate, dividend yield and the market value of our common stock. The expected stock price volatility is determined based on our stock’s historic prices over a period commensurate with the expected life of the award. The expected life of an option represents the period for which options are expected to be outstanding as determined by historic option exercises and post-vesting cancellations. The risk-free interest rate is based on the U.S. Treasury yield curve for notes with terms approximating the expected life of the options granted. The expected dividend yield is zero, based on our history and expectation of not paying dividends on common shares. | |||||||||||||||||
The weighted average estimated fair value of option awards granted during the three months ended March 31, 2015 and 2014 was $11.55 and $17.09, respectively. The weighted average estimated fair value of option awards granted during the nine months ended March 31, 2015 and 2014 was $13.44 and $11.55, respectively. | |||||||||||||||||
We utilized the Black-Scholes option valuation model with the following weighted average assumptions: | |||||||||||||||||
Nine Months Ended | |||||||||||||||||
March 31, | |||||||||||||||||
2015 | 2014 | ||||||||||||||||
Risk-free interest rate | 1.5 | % | 1.3 | % | |||||||||||||
Expected dividend yield | 0.0 | % | 0.0 | % | |||||||||||||
Expected life (in years) | 4.6 | 4.6 | |||||||||||||||
Expected volatility factor | 35.0 | % | 39.4 | % | |||||||||||||
The stock-based compensation expense and its classification in the unaudited consolidated statements of operations for the three and nine months ended March 31, 2015 and 2014 were as follows: | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
March 31, | March 31, | ||||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||||
(Dollars in Thousands) | |||||||||||||||||
Recorded as expenses: | |||||||||||||||||
Cost of services and other | $ | 336 | $ | 282 | $ | 1,014 | $ | 910 | |||||||||
Selling and marketing | 778 | 832 | 2,282 | 2,653 | |||||||||||||
Research and development | 959 | 1,523 | 2,923 | 3,267 | |||||||||||||
General and administrative | 1,383 | 927 | 4,903 | 4,272 | |||||||||||||
Total stock-based compensation | $ | 3,456 | $ | 3,564 | $ | 11,122 | $ | 11,102 | |||||||||
A summary of stock option and RSU activity under all equity plans for the nine months ended March 31, 2015 is as follows: | |||||||||||||||||
Stock Options | Restricted Stock Units | ||||||||||||||||
Shares | Weighted | Weighted | Aggregate | Shares | Weighted | ||||||||||||
Average | Average | Intrinsic Value | Average | ||||||||||||||
Exercise | Remaining | (in 000’s) | Grant Date | ||||||||||||||
Price | Contractual | Fair Value | |||||||||||||||
Term | |||||||||||||||||
Outstanding at June 30, 2014 | 1,246,528 | $ | 20.3 | 7.14 | $ | 32,543 | 617,269 | $ | 25.74 | ||||||||
Granted | 310,978 | 42.65 | 367,618 | 42.64 | |||||||||||||
Settled (RSUs) | (308,930 | ) | 27.3 | ||||||||||||||
Exercised | (155,183 | ) | 13.19 | ||||||||||||||
Cancelled / Forfeited | (36,803 | ) | 25.37 | (37,137 | ) | 26.83 | |||||||||||
Outstanding at March 31, 2015 | 1,365,520 | $ | 26.06 | 7.26 | $ | 18,395 | 638,820 | $ | 34.65 | ||||||||
Vested and exercisable at March 31, 2015 | 835,215 | $ | 20.59 | 6.44 | $ | 15,268 | — | ||||||||||
Vested and expected to vest as of March 31, 2015 | 1,301,415 | $ | 25.66 | 7.2 | $ | 17,989 | 561,709 | $ | 34.72 | ||||||||
The weighted average grant-date fair value of RSUs granted during the three months ended March 31, 2015 and 2014 was $35.23 and $43.70, respectively. The weighted average grant-date fair value of RSUs granted during the nine months ended March 31, 2015 and 2014 was $42.64 and $33.05, respectively. Total fair value of shares vested from RSU grants during the three months ended March 31, 2015 and 2014 was $3.8 million and $4.8 million, respectively. Total fair value of shares vested from RSU grants during the nine months ended March 31, 2015 and 2014 was $11.5 million and $17.0 million, respectively. | |||||||||||||||||
At March 31, 2015, the total future unrecognized compensation cost related to stock options and RSUs was $5.4 million and $19.3 million, respectively, and is expected to be recorded over a weighted average period of 2.6 years and 2.7 years, respectively. | |||||||||||||||||
The total intrinsic value of options exercised during the three months ended March 31, 2015 and 2014 was $1.1 million and $7.6 million, respectively. The total intrinsic value of options exercised during the nine months ended March 31, 2015 and 2014 was $4.1 million and $16.8 million, respectively. We received $2.0 million and $7.5 million in cash proceeds from option exercises during the nine months ended March 31, 2015 and 2014, respectively. We paid $3.9 million and $5.9 million for withholding taxes on vested RSUs during the nine months ended March 31, 2015 and 2014, respectively. | |||||||||||||||||
As of March 31, 2015, common stock reserved for future issuance or settlement under the 2010 Plan was 5.6 million shares. The 2005 Plan expired on March 31, 2015. As of March 31, 2015, there were 542,859 stock options and RSUs outstanding that were issued under the 2005 Plan prior to its expiration date. These awards will be settled in common stock upon option exercises or RSUs vesting. | |||||||||||||||||
Stockholders_Equity
Stockholders' Equity | 9 Months Ended |
Mar. 31, 2015 | |
Stockholders' Equity | |
Stockholders' Equity | |
9. Stockholders’ Equity (Deficit) | |
Stock Repurchases | |
On January 28, 2015, we publicly announced a share repurchase program for up to $450 million worth of our common stock and terminated the previous program that had been approved by the Board of Directors on April 23, 2014. The previous program had an authorized value of up to $200 million and remaining capacity of approximately $27.4 million when terminated. The timing and amount of any shares repurchased are based on market conditions and other factors. All shares of our common stock repurchased have been recorded as treasury stock under the cost method. | |
We repurchased 5,979,997 shares of our common stock for $224.7 million during the nine months ended March 31, 2015. We repurchased 3,110,114 shares of our common stock for $121.8 million during fiscal 2014. As of March 31, 2015, the remaining dollar value under the stock repurchase program approved on January 28, 2015 was $375.0 million. | |
Accumulated Other Comprehensive Income | |
As of March 31, 2015 and 2014, accumulated other comprehensive income was comprised of foreign translation adjustments of $5.0 million and $8.6 million and net unrealized (losses) gains on available for sale securities of less than ($0.1 million) and less than $0.1 million, respectively. As of December 31, 2014 and 2013, accumulated other comprehensive income was comprised of foreign translation adjustments of $6.9 million and $8.6 million and net unrealized gains (losses) on available for sale securities of ($0.1 million) and less than $0.1 million, respectively. | |
As of June 30, 2014 and 2013, accumulated other comprehensive income was comprised of foreign translation adjustments of $9.4 million and $7.3 million and net unrealized gains (losses) on available for sale securities of less than $0.1 million and ($0.1 million), respectively. | |
Net_Income_Per_Share
Net Income Per Share | 9 Months Ended | |||||||||||||
Mar. 31, 2015 | ||||||||||||||
Net Income Per Share | ||||||||||||||
Net Income Per Share | ||||||||||||||
10. Net Income Per Share | ||||||||||||||
Basic income per share is determined by dividing net income by the weighted average common shares outstanding during the period. Diluted income per share is determined by dividing net income by diluted weighted average shares outstanding during the period. Diluted weighted average shares reflect the dilutive effect, if any, of potential common shares. To the extent their effect is dilutive, employee equity awards and other commitments to be settled in common stock are included in the calculation of diluted net income per share based on the treasury stock method. | ||||||||||||||
The calculations of basic and diluted net income per share and basic and dilutive weighted average shares outstanding for the three and nine months ended of March 31, 2015 and 2014 were as follows: | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
March 31, | March 31, | |||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||
(Dollars and Shares in Thousands, Except per Share Data) | ||||||||||||||
Net income | $ | 28,170 | $ | 20,843 | $ | 87,601 | $ | 59,105 | ||||||
Weighted average shares outstanding | 87,355 | 92,414 | 89,509 | 92,891 | ||||||||||
Dilutive impact from: | ||||||||||||||
Share-based payment awards | 498 | 951 | 612 | 1,060 | ||||||||||
Dilutive weighted average shares outstanding | 87,853 | 93,365 | 90,121 | 93,951 | ||||||||||
Income per share | ||||||||||||||
Basic | $ | 0.32 | $ | 0.23 | $ | 0.98 | $ | 0.64 | ||||||
Dilutive | $ | 0.32 | $ | 0.22 | $ | 0.97 | $ | 0.63 | ||||||
For the three and nine months ended March 31, 2015 and 2014, certain employee equity awards were anti-dilutive based on the treasury stock method. Additionally, during the three and nine months ended March 31, 2015, options to purchase 289,537 shares and 287,582 shares of our common stock were excluded from the computation of dilutive weighted average shares outstanding because their exercise prices ranged from $37.66 per share to $47.40 per share and were greater than the average market price of our common stock during the periods then ended. These options were outstanding as of March 31, 2015 and expire at various dates through July 31, 2024. | ||||||||||||||
The following employee equity awards were excluded from the calculation of dilutive weighted average shares outstanding because they could potentially dilute income per share in future periods and their effect would be anti-dilutive as of March 31, 2015 and 2014: | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
March 31, | March 31, | |||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||
(Shares in Thousands) | ||||||||||||||
Employee equity awards | 801 | 61 | 762 | 325 | ||||||||||
Commitments_and_Contingencies
Commitments and Contingencies | 9 Months Ended |
Mar. 31, 2015 | |
Commitments and Contingencies | |
Commitments and Contingencies | |
11. Commitments and Contingencies | |
Operating Leases | |
We lease certain facilities under non-cancellable operating leases with terms in excess of one year. Rental expense on leased facilities under operating leases was approximately $2.2 million and $1.7 million during the three months ended March 31, 2015 and 2014 and $6.0 million and $5.3 million during the nine months ended March 31, 2015 and 2014, respectively. | |
During fiscal 2014, we entered into a lease agreement for our principal executive offices located in Bedford, Massachusetts. The lease commenced on November 1, 2014, has an initial term of 10 years and five months and is for 142,673 square feet of office space. We may extend the term of the lease, subject to certain terms and conditions, for two successive terms of five years each. Base annual rent is subject to escalating payments over the term of the lease and will range between approximately $2.2 million and $3.9 million plus our proportionate share of operating expenses and real estate taxes. As of March 31, 2015, future minimum non-cancelable lease payments amounted to approximately $35.6 million over the lease term. As of March 31, 2015, estimated aggregate capital expenditures related to the build out of our office space in Bedford, Massachusetts were expected to total approximately $8.7 million, of which $7.9 million represented binding contractual obligations. As of March 31, 2015, cumulative payments under these obligations totaled approximately $6.3 million and we expect to make remaining payments of $1.6 million during fiscal 2015. We occupied 105,874 square feet of the Bedford, Massachusetts facility on November 1, 2014 and moved into the remaining 36,799 square feet of space on February 1, 2015. | |
Other | |
In the ordinary course of business, we are, from time to time, involved in lawsuits, claims, investigations, proceedings and threats of litigation, including proceedings related to intellectual property rights. These matters include an April 2004 claim by a customer that certain of our software products and implementation services failed to meet the customer’s expectations. In March 2014, a judgment was issued in favor of the claimant customer against us in the amount of approximately $2.6 million plus interest and a portion of legal fees. We have filed an appeal of the judgment. | |
While the outcome of the proceedings and claims referenced above cannot be predicted with certainty, there were no such matters, as of March 31, 2015 that, in the opinion of management, were reasonably possible to have a material adverse effect on our financial position, results of operations or cash flows. Liabilities, if applicable, related to the aforementioned matters discussed in this Note have been included in our accrued liabilities at March 31, 2015, and were not material to our financial position for the nine months period then ended. We do not believe that, as of March 31, 2015, there is a reasonable possibility of a material loss exceeding the amounts already accrued for the proceedings or matters discussed above. However, the results of litigation (including the above-referenced appeal) and claims cannot be predicted with certainty; unfavorable resolutions are possible and could materially affect our results of operations, cash flows or financial position. In addition, regardless of the outcome, litigation could have an adverse impact on us because of attorneys’ fees and costs, diversion of management resources and other factors. | |
Segment_Information
Segment Information | 9 Months Ended | |||||||||||||
Mar. 31, 2015 | ||||||||||||||
Segment Information | ||||||||||||||
Segment Information | ||||||||||||||
12. Segment Information | ||||||||||||||
Operating segments are defined as components of an enterprise that engage in business activities for which discrete financial information is available and regularly reviewed by the chief operating decision maker in deciding how to allocate resources and to assess performance. Our chief operating decision maker is our President and Chief Executive Officer. | ||||||||||||||
Prior to fiscal 2014, we had three operating and reportable segments: license; SMS, training and other; and professional services. | ||||||||||||||
During fiscal 2014, we re-aligned our operating and reportable segments into i) subscription and software; and ii) services, in order to conform our segment structure to the manner in which our President and Chief Executive Officer manages our business. | ||||||||||||||
The subscription and software segment is engaged in the licensing of process optimization software solutions and associated support services. The services segment includes professional services and training. | ||||||||||||||
The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies (refer to Note 2 in the financial statements of our Form 10-K for the year ended June 30, 2014). We do not track assets or capital expenditures by operating segments. Consequently, it is not practical to present assets, capital expenditures, depreciation or amortization by operating segments. | ||||||||||||||
The following table presents a summary of our reportable segments’ profits: | ||||||||||||||
Subscription | Services | Total | ||||||||||||
and software | ||||||||||||||
(Dollars in Thousands) | ||||||||||||||
Three Months Ended March 31, 2015 | ||||||||||||||
Segment revenue | $ | 102,543 | $ | 8,756 | $ | 111,299 | ||||||||
Segment expenses (1) | (48,887 | ) | (6,905 | ) | (55,792 | ) | ||||||||
Segment profit | $ | 53,656 | $ | 1,851 | $ | 55,507 | ||||||||
Three Months Ended March 31, 2014 | ||||||||||||||
Segment revenue | $ | 91,309 | $ | 12,278 | $ | 103,587 | ||||||||
Segment expenses (1) | (51,390 | ) | (9,956 | ) | (61,346 | ) | ||||||||
Segment profit | $ | 39,919 | $ | 2,322 | $ | 42,241 | ||||||||
Nine Months Ended March 31, 2015 | ||||||||||||||
Segment revenue | $ | 300,002 | $ | 26,213 | $ | 326,215 | ||||||||
Segment expenses (1) | (135,960 | ) | (21,142 | ) | (157,102 | ) | ||||||||
Segment profit | $ | 164,042 | $ | 5,071 | $ | 169,113 | ||||||||
Nine Months Ended March 31, 2014 | ||||||||||||||
Segment revenue | $ | 258,916 | $ | 31,005 | $ | 289,921 | ||||||||
Segment expenses (1) | (138,991 | ) | (24,835 | ) | (163,826 | ) | ||||||||
Segment profit | $ | 119,925 | $ | 6,170 | $ | 126,095 | ||||||||
-1 | Our reportable segments’ operating expenses include expenses directly attributable to the segments. Segment expenses do not include allocations of general and administrative; restructuring; interest income, net; and other (income) expense, net. As a result of the operating and reportable segments realignment, certain costs are more directly attributable to our new operating segments. Starting with fiscal 2014, segment expenses include selling and marketing, research and development, stock-based compensation and certain corporate expenses incurred in support of the segments. Prior to fiscal 2014, segment expenses included certain allocations of selling and marketing; general and administrative; and research and development and did not include restructuring and other corporate expenses incurred in support of these functions. | |||||||||||||
Reconciliation to Income Before Income Taxes | ||||||||||||||
The following table presents a reconciliation of total segment profit to income before income taxes for the three and nine months ended March 31, 2015 and 2014: | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
March 31, | March 31, | |||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||
(Dollars in Thousands) | ||||||||||||||
Total segment profit for reportable segments | $ | 55,507 | $ | 42,241 | $ | 169,113 | $ | 126,095 | ||||||
General and administrative | (13,776 | ) | (10,839 | ) | (36,227 | ) | (33,732 | ) | ||||||
Other income (expense), net | 414 | (472 | ) | 354 | (1,807 | ) | ||||||||
Interest income (net) | 121 | 269 | 381 | 937 | ||||||||||
Income before income taxes | $ | 42,266 | $ | 31,199 | $ | 133,621 | $ | 91,493 | ||||||
Significant_Accounting_Policie1
Significant Accounting Policies (Policies) | 9 Months Ended | |||
Mar. 31, 2015 | ||||
Significant Accounting Policies | ||||
Overview of Licensing Model Changes | ||||
(a)Overview of Licensing Model Changes | ||||
Transition to the aspenONE Licensing Model | ||||
Prior to fiscal 2010, we offered term or perpetual licenses to specific products, or specifically defined sets of products, which we refer to as point products. The majority of our license revenue was recognized under an “upfront revenue model,” in which the net present value of the aggregate license fees was recognized as revenue upon shipment of the point products. Customers typically received one year of post-contract software maintenance and support, or SMS, with their license agreements and then could elect to renew SMS annually. Revenue from SMS was recognized ratably over the period in which the SMS was delivered. | ||||
In fiscal 2010, we introduced the following changes to our licensing model: | ||||
(i)We began offering our software on a subscription basis, allowing our customers access to all products within a licensed suite (aspenONE Engineering or aspenONE Manufacturing and Supply Chain). SMS is included for the entire term of the arrangement and customers are entitled to any software products or updates introduced into the licensed suite. We refer to this license arrangement as our aspenONE licensing model. | ||||
(ii)We began to include SMS for the entire term on our point product term arrangements. | ||||
Beginning in fiscal 2012, we introduced our Premier Plus SMS offering to provide more value to our customers. As a part of this offering, customers receive 24x7 support, faster response times, dedicated technical advocates and access to web-based training modules. | ||||
Revenue related to our aspenONE licensing model and to term point product license arrangements with Premier Plus SMS is recognized over the term of the arrangement on a ratable basis. The changes to our licensing model introduced in fiscal 2010 did not change the method or timing of customer billings or cash collections. | ||||
Impact of Licensing Model Changes | ||||
The principal accounting implications of the changes to our licensing model in fiscal 2010 are as follows: | ||||
· | Prior to fiscal 2010, the majority of our license revenue was recognized on an upfront basis. Since the upfront model resulted in the net present value of multiple years of future installments being recognized at the time of shipment, the changes to our licensing model resulted in a reduction in our software license revenue for fiscal 2010, 2011 and 2012 as compared to the fiscal years preceding our licensing model changes. These changes did not impact the incurrence or timing of our expenses, and there was no corresponding expense reduction to offset the lower revenue, resulting in operating losses for fiscal 2010, 2011 and 2012. By fiscal 2013, a sufficient number of license arrangements had been renewed on the aspenONE licensing model to generate ratable revenue sufficient to support an operating profit. | |||
· | Since fiscal 2010, revenue from annually renewable SMS arrangements (“legacy SMS revenue”) has decreased, and been offset by a corresponding increase in subscription and software revenue as customers have transitioned to our aspenONE licensing model. Under our aspenONE licensing model and for point product arrangements with Premier Plus SMS included for the full contract term, the entire arrangement fee, including the SMS component, is included within subscription and software revenue. | |||
· | Installment payments from aspenONE agreements and from point product arrangements with SMS included for the contract term are not considered fixed or determinable, and as a result, are not included in installments receivable. Accordingly, our installments receivable balance has decreased as licenses previously executed under our upfront revenue model reached the end of their terms. | |||
· | The amount of our deferred revenue has increased as more revenue from our term license portfolio has been recognized on a ratable basis. | |||
Revenue Recognition | ||||
(b)Revenue Recognition | ||||
We generate revenue from the following sources: (1) licensing software products and SMS; and (2) providing professional services and training. We sell our software products to end users under fixed-term and perpetual licenses. As a standard business practice, we offer extended payment term options for our fixed-term license arrangements, which are generally payable on an annual basis. Many of our fixed-term license agreements include product mixing rights that allow customers the flexibility to change or alternate the use of multiple products included in the license arrangement after those products are delivered to the customer. We refer to these arrangements as token arrangements. Tokens are fixed units of measure. The amount of software usage is limited by the number of tokens purchased by the customer. | ||||
Four basic criteria must be satisfied before software license revenue can be recognized: persuasive evidence of an arrangement between us and an end user; delivery of our product has occurred; the fee for the product is fixed or determinable; and collection of the fee is probable. | ||||
Persuasive evidence of an arrangement—We use a signed contract as evidence of an arrangement for software licenses and SMS. For professional services we use a signed contract and a work proposal to evidence an arrangement. In cases where both a signed contract and a purchase order are required by the customer, we consider both taken together as evidence of the arrangement. | ||||
Delivery of our product—Software and the corresponding access keys are generally delivered to customers electronically or via disk media with standard shipping terms of FOB Origin. Our software license agreements do not contain conditions for acceptance. | ||||
Fee is fixed or determinable—We assess whether a fee is fixed or determinable at the outset of the arrangement. Significant judgment is involved in making this assessment. | ||||
Under our upfront revenue model, we are able to demonstrate that the fees are fixed or determinable for all arrangements, including those for our term licenses that contain extended payment terms. We have an established history of collecting under the terms of these contracts without providing concessions to customers. In addition, we also assess whether a contract modification to an existing term arrangement constitutes a concession. In making this assessment, significant analysis is performed to ensure that no concessions are given. Our software license agreements do not include a right of return or exchange. For license arrangements executed under the upfront revenue model, we recognize license revenue upon delivery of the software product, provided all other revenue recognition requirements are met. | ||||
We cannot assert that the fees under our aspenONE licensing model and point product arrangements with Premier Plus SMS are fixed or determinable because the rights provided to customers, and the economics of the arrangements, are not comparable to our transactions with other customers under the upfront revenue model. As a result, the amount of revenue recognized for these arrangements is limited by the amount of customer payments that become due. | ||||
Collection of fee is probable—We assess the probability of collecting from each customer at the outset of the arrangement based on a number of factors, including the customer’s payment history, its current creditworthiness, economic conditions in the customer’s industry and geographic location, and general economic conditions. If in our judgment collection of a fee is not probable, revenue is recognized as cash is collected, provided all other conditions for revenue recognition have been met. | ||||
Vendor-Specific Objective Evidence of Fair Value | ||||
We have established VSOE for certain SMS offerings, professional services, and training, but not for our software products or our Premier Plus SMS offering. We assess VSOE for SMS, professional services, and training, based on an analysis of standalone sales of the offerings using the bell-shaped curve approach. We do not have a history of selling our Premier Plus SMS offering to customers on a standalone basis, and as a result are unable to establish VSOE for this deliverable. As of July 1, 2014, we are no longer able to establish VSOE for legacy SMS offerings sold with our perpetual license arrangements. As a result, all perpetual license agreements that include legacy SMS entered into subsequent to June 30, 2014 are being recognized ratably over the legacy SMS service period. Loss of VSOE on legacy SMS offerings sold with our perpetual license arrangements did not have a material impact on our revenue during the three and nine months ended March 31, 2015. | ||||
We allocate the arrangement consideration among the elements included in our multi-element arrangements using the residual method. Under the residual method, the VSOE of the undelivered elements is deferred and the remaining portion of the arrangement fee is recognized as revenue upon delivery of the software, assuming all other revenue recognition criteria are met. If VSOE does not exist for an undelivered element in an arrangement, revenue is deferred until such evidence does exist for the undelivered elements, or until all elements are delivered, whichever is earlier. Under the upfront revenue model, the residual license fee is recognized upon delivery of the software provided all other revenue recognition criteria were met. Arrangements that qualified for upfront recognition during fiscal 2014 and prior periods included sales of perpetual licenses, amendments to existing legacy term arrangements and renewals of legacy term arrangements. | ||||
Subscription and Software Revenue | ||||
Subscription and software revenue consists of product and related revenue from our (i) aspenONE licensing model, including Premier Plus SMS; (ii) point product arrangements with our Premier Plus SMS offering included for the contract term; (iii) legacy arrangements including (a) amendments to existing legacy term arrangements, (b) renewals of legacy term arrangements and (c) legacy arrangements that are being recognized over time as a result of not previously meeting one or more of the requirements for recognition under the upfront revenue model; (iv) legacy SMS arrangements; and (v) perpetual arrangements. | ||||
When a customer elects to license our products under our aspenONE licensing model, our Premier Plus SMS offering is included for the entire term of the arrangement and the customer receives, for the term of the arrangement, the right to any new unspecified future software products and updates that may be introduced into the licensed aspenONE software suite. Due to our obligation to provide unspecified future software products and updates, we are required to recognize revenue ratably over the term of the arrangement, once the other revenue recognition criteria noted above have been met. | ||||
Our point product arrangements with Premier Plus SMS include SMS for the term of the arrangement. Since we do not have VSOE for our Premier Plus SMS offering, the SMS element of our point product arrangements is not separable. As a result, revenue associated with point product arrangements with Premier Plus SMS included for the contract term is recognized ratably over the term of the arrangement, once the other revenue recognition criteria have been met. | ||||
Perpetual and legacy term license arrangements do not include the same rights as those provided to customers under the aspenONE licensing model and point product arrangements with Premier Plus SMS. Legacy SMS revenue is generated from legacy SMS offerings provided in support of perpetual and legacy term license arrangements. Customers typically receive SMS for one year and then can elect to renew SMS annually. During fiscal 2014 and prior periods, we had VSOE for certain legacy SMS offerings sold with perpetual and term license arrangements and could therefore separate the undelivered elements. Accordingly, license fee revenue for perpetual and legacy term license arrangements was recognized upon delivery of the software products using the residual method, provided all other revenue recognition requirements were met. VSOE of fair value for the undelivered SMS component sold with our perpetual and term license arrangements was deferred and subsequently amortized into revenue ratably over the contractual term of the SMS arrangement. As of July 1, 2014, we are no longer able to establish VSOE for our legacy SMS offerings sold with our perpetual license arrangements. As a result, all perpetual license agreements that include legacy SMS entered into subsequent to June 30, 2014 are being recognized ratably over the legacy SMS service period. Loss of VSOE on legacy SMS offerings sold with our perpetual license arrangements did not have a material impact on revenue during the three and nine months ended March 31, 2015. | ||||
Services and Other Revenue | ||||
Professional Services Revenue | ||||
Professional services are provided to customers on a time-and-materials (T&M) or fixed-price basis. We recognize professional services fees for our T&M contracts based upon hours worked and contractually agreed-upon hourly rates. Revenue from fixed-price engagements is recognized using the proportional performance method based on the ratio of costs incurred to the total estimated project costs. Project costs are typically expensed as incurred. The use of the proportional performance method is dependent upon our ability to reliably estimate the costs to complete a project. We use historical experience as a basis for future estimates to complete current projects. Additionally, we believe that costs are the best available measure of performance. Out-of-pocket expenses which are reimbursed by customers are recorded as revenue. | ||||
In certain circumstances, professional services revenue may be recognized over a time period longer than the period over which the services are performed. If the costs to complete a project are not estimable or the completion is uncertain, the revenue is recognized upon completion of the services. In circumstances in which professional services are sold as a single arrangement with, or in contemplation of, a new aspenONE license or point product arrangement with Premier Plus SMS, revenue is deferred and recognized on a ratable basis over the longer of (i) the period the services are performed or (ii) the license term. | ||||
We have occasionally been required to commit unanticipated additional resources to complete projects, which resulted in losses on those contracts. Provisions for estimated losses on contracts are made during the period in which such losses become probable and can be reasonably estimated. | ||||
Training Revenue | ||||
We provide training services to our customers, including on-site, Internet-based and customized training. Revenue is recognized in the period in which the services are performed. In circumstances in which training services are sold as a single arrangement with, or in contemplation of, a new aspenONE license or point product arrangement with Premier Plus SMS, revenue is deferred and recognized on a ratable basis over the longer of (i) the period the services are performed or (ii) the license term. | ||||
Deferred Revenue | ||||
Deferred revenue includes amounts billed or collected in advance of revenue recognition, including arrangements under the aspenONE licensing model, point product arrangements with Premier Plus SMS, legacy SMS arrangements, professional services, and training. Under the aspenONE licensing model and for point product arrangements with Premier Plus SMS, VSOE does not exist for the undelivered elements, and as a result the arrangement fees are recognized ratably (i.e., on a subscription basis) over the term of the license. Deferred revenue is recorded as each invoice becomes due. | ||||
For arrangements under the upfront revenue model, a portion of the arrangement fee is generally recorded as deferred revenue due to the inclusion of an undelivered element, typically our legacy SMS offering or professional services. The amount of revenue allocated to undelivered elements is based on the VSOE for those elements using the residual method, and is earned and recognized as revenue as each element is delivered. | ||||
Loss Contingencies | ||||
(c) Loss Contingencies | ||||
We accrue estimated liabilities for loss contingencies arising from claims, assessments, litigation and other sources when it is probable that a liability has been incurred and the amount of the claim, assessment or damages can be reasonably estimated. We believe that we have sufficient accruals to cover any obligations resulting from claims, assessments or litigation that have met these criteria. Please refer to Note 11 for discussion of these matters and related liability accruals. | ||||
Foreign Currency Transactions | ||||
(d)Foreign Currency Transactions | ||||
Foreign currency exchange gains and (losses) generated from the settlement and remeasurement of transactions denominated in currencies other than the functional currency of our subsidiaries are recognized in our results of operations as incurred as a component of other income (expense), net. Net foreign currency gains (losses) were $0.4 million during each three-month and nine-month period ended March 31, 2015 and ($0.5) million and ($1.8) million during the three and nine months periods ended March 31, 2014, respectively. | ||||
Recently Issued Accounting Pronouncements | ||||
(e)Recently Issued Accounting Pronouncements | ||||
In May 2014, FASB issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers. ASU No. 2014-09 was issued by the FASB as a part of the joint project with the International Accounting Standards Board to clarify revenue recognition principles and develop a common revenue standard for GAAP and International Financial Reporting Standards. | ||||
ASU No. 2014-09 is effective for the fiscal years, and interim periods within those years, beginning after December 15, 2016. Early adoption of ASU No. 2014-09 is not permitted. The amendments included within ASU No. 2014-09 should be applied by using one of the following methods: | ||||
Retrospectively to each prior reporting period presented. The entity may elect any of the practical expedients described in ASU No. 2014-09 when applying this method. | ||||
Retrospectively with the cumulative effect of initially applying ASU No. 2014-09 recognized at the date of initial application. In the reporting periods that include the date of the initial application of ASU No. 2014-09, the entity should disclose the amount by which each financial statement line item is affected by the application of ASU No. 2014-09 in the current reporting period as compared to the guidance that was in effect before the change. | ||||
We expect to adopt ASU No. 2014-09 during the first quarter of fiscal 2018. We are currently evaluating the impact of ASU No. 2014-09 on our financial position, results of operations and cash flows. | ||||
Marketable_Securities_Tables
Marketable Securities (Tables) | 9 Months Ended | |||||||||||||
Mar. 31, 2015 | ||||||||||||||
Marketable Securities | ||||||||||||||
Summary of the fair value, the amortized cost and unrealized holding gains (losses) on marketable securities | ||||||||||||||
Fair Value | Cost | Unrealized | Unrealized | |||||||||||
Gains | Losses | |||||||||||||
(Dollars in Thousands) | ||||||||||||||
March 31, 2015: | ||||||||||||||
U.S. corporate bonds | $ | 71,848 | $ | 71,863 | $ | 13 | $ | (28 | ) | |||||
Total short-term marketable securities | $ | 71,848 | $ | 71,863 | $ | 13 | $ | (28 | ) | |||||
U.S. corporate bonds | $ | 9,140 | $ | 9,152 | $ | 2 | $ | (14 | ) | |||||
Total long-term marketable securities | $ | 9,140 | $ | 9,152 | $ | 2 | $ | (14 | ) | |||||
June 30, 2014: | ||||||||||||||
U.S. corporate bonds | $ | 67,619 | $ | 67,587 | $ | 39 | $ | (7 | ) | |||||
Total short-term marketable securities | $ | 67,619 | $ | 67,587 | $ | 39 | $ | (7 | ) | |||||
U.S. corporate bonds | $ | 31,270 | $ | 31,290 | $ | 1 | $ | (21 | ) | |||||
Total long-term marketable securities | $ | 31,270 | $ | 31,290 | $ | 1 | $ | (21 | ) | |||||
Goodwill_Tables
Goodwill (Tables) | 9 Months Ended | ||||
Mar. 31, 2015 | |||||
Goodwill | |||||
Changes in Carrying Amount of Goodwill by Reporting Unit | |||||
Amount | |||||
(Dollars in | |||||
Thousands) | |||||
Balance as of June 30, 2013: | |||||
Goodwill | $ | 84,701 | |||
Accumulated impairment losses | (65,569 | ) | |||
$ | 19,132 | ||||
Effect of currency translation | 144 | ||||
Balance as of June 30, 2014: | |||||
Goodwill | $ | 84,845 | |||
Accumulated impairment losses | (65,569 | ) | |||
$ | 19,276 | ||||
Effect of currency translation | (2,250 | ) | |||
Balance as of March 31, 2015: | |||||
Goodwill | $ | 82,595 | |||
Accumulated impairment losses | (65,569 | ) | |||
$ | 17,026 | ||||
Supplementary_Balance_Sheet_In1
Supplementary Balance Sheet Information (Tables) | 9 Months Ended | ||||||||||
Mar. 31, 2015 | |||||||||||
Supplementary Balance Sheet Information | |||||||||||
Accounts Receivable Balances | |||||||||||
Gross | Allowance | Net | |||||||||
(Dollars in Thousands) | |||||||||||
March 31, 2015: | |||||||||||
Accounts receivable | $ | 30,136 | $ | (2,052 | ) | $ | 28,084 | ||||
$ | 30,136 | $ | (2,052 | ) | $ | 28,084 | |||||
June 30, 2014: | |||||||||||
Accounts receivable | $ | 41,997 | $ | (3,465 | ) | $ | 38,532 | ||||
$ | 41,997 | $ | (3,465 | ) | $ | 38,532 | |||||
Property, Equipment and Leasehold Improvements | |||||||||||
March 31, | June 30, | ||||||||||
2015 | 2014 | ||||||||||
(Dollars in Thousands) | |||||||||||
Property, equipment and leasehold improvements - at cost: | |||||||||||
Computer equipment | $ | 11,410 | $ | 11,772 | |||||||
Purchased software | 23,370 | 23,720 | |||||||||
Furniture & fixtures | 6,377 | 4,530 | |||||||||
Leasehold improvements | 12,264 | 3,448 | |||||||||
Accumulated depreciation | (34,962 | ) | (35,882 | ) | |||||||
Property, equipment and leasehold improvements - net | $ | 18,459 | $ | 7,588 | |||||||
Accrued Expenses and Other Current Liabilities | |||||||||||
March 31, | June 30, | ||||||||||
2015 | 2014 | ||||||||||
(Dollars in Thousands) | |||||||||||
Royalties and outside commissions | $ | 2,936 | $ | 3,596 | |||||||
Payroll and payroll-related | 14,053 | 19,347 | |||||||||
Other | 17,762 | 12,041 | |||||||||
Total accrued expenses and other current liabilities | $ | 34,751 | $ | 34,984 | |||||||
Other Non-current Liabilities | |||||||||||
March 31, | June 30, | ||||||||||
2015 | 2014 | ||||||||||
(Dollars in Thousands) | |||||||||||
Deferred rent (1) | $ | 5,294 | $ | 402 | |||||||
Other (2) | 24,898 | 11,448 | |||||||||
Total other non-current liabilities | $ | 30,192 | $ | 11,850 | |||||||
-1 | During the nine months ended March 31, 2015, we received $6.1 million of landlord-funded leasehold improvements related to our new principal executive offices located in Bedford, Massachusetts. The landlord-funded leasehold improvements were recorded as property, plant and equipment and deferred rent in our unaudited consolidated balance sheets as of March 31, 2015 and are being amortized as a reduction to rent expense over the life of the lease. During fiscal 2014, we determined that $1.5 million of improvements made to the Bedford, Massachusetts offices were owned by the landlord. As of June 30, 2014, the $1.5 million of improvements were recorded within other non-current assets in our consolidated balance sheets and were reclassified as a reduction to deferred rent during the second quarter of fiscal 2015 when we occupied the facility. The unamortized balance of the improvements amounted to $1.4 million as of March 31, 2015 and was presented as a reduction of deferred rent during the period then ended. The improvements will be amortized as additional rent expense over the life of the lease. Please refer to Note 11 for further information on the lease. | ||||||||||
-2 | Other was comprised primarily of our net reserve for uncertain tax positions of $23.0 million and $9.3 million as of March 31, 2015 and June 30, 2014, respectively. We account for unrecognized tax benefits in accordance with ASU No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. In accordance with ASU 2013-11, deferred tax assets should be presented net of liabilities for uncertain tax positions provided there are specific deferred tax assets available to settle the uncertain income tax liabilities. As of June 30, 2014, we had sufficient deferred tax assets available to settle a portion of our reserve for uncertain tax positions, and consequently, only a portion of our total reserve for uncertain tax positions was reported as a non-current liability in our consolidated balance sheets. As of December 31, 2014, we no longer had deferred tax assets available to net against our reserve for uncertain tax positions, and, as a result, the total reserve for uncertain tax positions was presented as a non-current liability in our unaudited consolidated balance sheets as of December 31, 2014 and March 31, 2015. Our total reserve for uncertain tax positions was approximately $23.0 million and $21.2 million as of March 31, 2015 and June 30, 2014, respectively. | ||||||||||
StockBased_Compensation_Tables
Stock-Based Compensation (Tables) | 9 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Stock-Based Compensation | |||||||||||||||||
Weighted Average Assumptions | |||||||||||||||||
Nine Months Ended | |||||||||||||||||
March 31, | |||||||||||||||||
2015 | 2014 | ||||||||||||||||
Risk-free interest rate | 1.5 | % | 1.3 | % | |||||||||||||
Expected dividend yield | 0.0 | % | 0.0 | % | |||||||||||||
Expected life (in years) | 4.6 | 4.6 | |||||||||||||||
Expected volatility factor | 35.0 | % | 39.4 | % | |||||||||||||
Stock-based Compensation Expense | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
March 31, | March 31, | ||||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||||
(Dollars in Thousands) | |||||||||||||||||
Recorded as expenses: | |||||||||||||||||
Cost of services and other | $ | 336 | $ | 282 | $ | 1,014 | $ | 910 | |||||||||
Selling and marketing | 778 | 832 | 2,282 | 2,653 | |||||||||||||
Research and development | 959 | 1,523 | 2,923 | 3,267 | |||||||||||||
General and administrative | 1,383 | 927 | 4,903 | 4,272 | |||||||||||||
Total stock-based compensation | $ | 3,456 | $ | 3,564 | $ | 11,122 | $ | 11,102 | |||||||||
Stock Options and RSU Activity | |||||||||||||||||
Stock Options | Restricted Stock Units | ||||||||||||||||
Shares | Weighted | Weighted | Aggregate | Shares | Weighted | ||||||||||||
Average | Average | Intrinsic Value | Average | ||||||||||||||
Exercise | Remaining | (in 000’s) | Grant Date | ||||||||||||||
Price | Contractual | Fair Value | |||||||||||||||
Term | |||||||||||||||||
Outstanding at June 30, 2014 | 1,246,528 | $ | 20.3 | 7.14 | $ | 32,543 | 617,269 | $ | 25.74 | ||||||||
Granted | 310,978 | 42.65 | 367,618 | 42.64 | |||||||||||||
Settled (RSUs) | (308,930 | ) | 27.3 | ||||||||||||||
Exercised | (155,183 | ) | 13.19 | ||||||||||||||
Cancelled / Forfeited | (36,803 | ) | 25.37 | (37,137 | ) | 26.83 | |||||||||||
Outstanding at March 31, 2015 | 1,365,520 | $ | 26.06 | 7.26 | $ | 18,395 | 638,820 | $ | 34.65 | ||||||||
Vested and exercisable at March 31, 2015 | 835,215 | $ | 20.59 | 6.44 | $ | 15,268 | — | ||||||||||
Vested and expected to vest as of March 31, 2015 | 1,301,415 | $ | 25.66 | 7.2 | $ | 17,989 | 561,709 | $ | 34.72 | ||||||||
Net_Income_Per_Share_Tables
Net Income Per Share (Tables) | 9 Months Ended | |||||||||||||
Mar. 31, 2015 | ||||||||||||||
Net Income Per Share | ||||||||||||||
Calculations of Basic and Diluted Net Income (loss) per Share | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
March 31, | March 31, | |||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||
(Dollars and Shares in Thousands, Except per Share Data) | ||||||||||||||
Net income | $ | 28,170 | $ | 20,843 | $ | 87,601 | $ | 59,105 | ||||||
Weighted average shares outstanding | 87,355 | 92,414 | 89,509 | 92,891 | ||||||||||
Dilutive impact from: | ||||||||||||||
Share-based payment awards | 498 | 951 | 612 | 1,060 | ||||||||||
Dilutive weighted average shares outstanding | 87,853 | 93,365 | 90,121 | 93,951 | ||||||||||
Income per share | ||||||||||||||
Basic | $ | 0.32 | $ | 0.23 | $ | 0.98 | $ | 0.64 | ||||||
Dilutive | $ | 0.32 | $ | 0.22 | $ | 0.97 | $ | 0.63 | ||||||
Potential Common Shares Excluded From Calculation of Dilutive Weighted Average Shares Outstanding | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
March 31, | March 31, | |||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||
(Shares in Thousands) | ||||||||||||||
Employee equity awards | 801 | 61 | 762 | 325 | ||||||||||
Segment_Information_Tables
Segment Information (Tables) | 9 Months Ended | |||||||||||||
Mar. 31, 2015 | ||||||||||||||
Segment Information | ||||||||||||||
Summary of reportable segments' profits | ||||||||||||||
Subscription | Services | Total | ||||||||||||
and software | ||||||||||||||
(Dollars in Thousands) | ||||||||||||||
Three Months Ended March 31, 2015 | ||||||||||||||
Segment revenue | $ | 102,543 | $ | 8,756 | $ | 111,299 | ||||||||
Segment expenses (1) | (48,887 | ) | (6,905 | ) | (55,792 | ) | ||||||||
Segment profit | $ | 53,656 | $ | 1,851 | $ | 55,507 | ||||||||
Three Months Ended March 31, 2014 | ||||||||||||||
Segment revenue | $ | 91,309 | $ | 12,278 | $ | 103,587 | ||||||||
Segment expenses (1) | (51,390 | ) | (9,956 | ) | (61,346 | ) | ||||||||
Segment profit | $ | 39,919 | $ | 2,322 | $ | 42,241 | ||||||||
Nine Months Ended March 31, 2015 | ||||||||||||||
Segment revenue | $ | 300,002 | $ | 26,213 | $ | 326,215 | ||||||||
Segment expenses (1) | (135,960 | ) | (21,142 | ) | (157,102 | ) | ||||||||
Segment profit | $ | 164,042 | $ | 5,071 | $ | 169,113 | ||||||||
Nine Months Ended March 31, 2014 | ||||||||||||||
Segment revenue | $ | 258,916 | $ | 31,005 | $ | 289,921 | ||||||||
Segment expenses (1) | (138,991 | ) | (24,835 | ) | (163,826 | ) | ||||||||
Segment profit | $ | 119,925 | $ | 6,170 | $ | 126,095 | ||||||||
-1 | Our reportable segments’ operating expenses include expenses directly attributable to the segments. Segment expenses do not include allocations of general and administrative; restructuring; interest income, net; and other (income) expense, net. As a result of the operating and reportable segments realignment, certain costs are more directly attributable to our new operating segments. Starting with fiscal 2014, segment expenses include selling and marketing, research and development, stock-based compensation and certain corporate expenses incurred in support of the segments. Prior to fiscal 2014, segment expenses included certain allocations of selling and marketing; general and administrative; and research and development and did not include restructuring and other corporate expenses incurred in support of these functions. | |||||||||||||
Reconciliation of Total Segment Operating Profit to income Before Income Taxes | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
March 31, | March 31, | |||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||
(Dollars in Thousands) | ||||||||||||||
Total segment profit for reportable segments | $ | 55,507 | $ | 42,241 | $ | 169,113 | $ | 126,095 | ||||||
General and administrative | (13,776 | ) | (10,839 | ) | (36,227 | ) | (33,732 | ) | ||||||
Other income (expense), net | 414 | (472 | ) | 354 | (1,807 | ) | ||||||||
Interest income (net) | 121 | 269 | 381 | 937 | ||||||||||
Income before income taxes | $ | 42,266 | $ | 31,199 | $ | 133,621 | $ | 91,493 | ||||||
Significant_Accounting_Policie2
Significant Accounting Policies (Details) (USD $) | 9 Months Ended |
In Millions, unless otherwise specified | Mar. 31, 2015 |
Significant Accounting Policies | |
Period over which customers typically received SMS | 1 year |
Expense reduction to offset the lower revenue | $0 |
Concessions given on contract modification to an existing term arrangement | $0 |
Significant_Accounting_Policie3
Significant Accounting Policies (Details 2) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Mar. 31, 2015 | Mar. 31, 2014 |
Foreign Currency Transactions | ||||
Net foreign currency gains (losses) | $0.40 | ($0.50) | $0.40 | ($1.80) |
Marketable_Securities_Details
Marketable Securities (Details) (U.S. corporate bonds, USD $) | 9 Months Ended | 12 Months Ended |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Jun. 30, 2014 |
Short-term Marketable Securities | ||
Marketable Securities | ||
Fair Value | $71,848 | $67,619 |
Cost | 71,863 | 67,587 |
Unrealized Gain | 13 | 39 |
Unrealized Loss | -28 | -7 |
Long-term Marketable Securities | ||
Marketable Securities | ||
Fair Value | 9,140 | 31,270 |
Cost | 9,152 | 31,290 |
Unrealized Gain | 2 | 1 |
Unrealized Loss | ($14) | ($21) |
Goodwill_Details
Goodwill (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2015 | Jun. 30, 2014 | Jun. 30, 2013 |
item | item | segment | segment | |
segment | ||||
Goodwill | ||||
Number of Reportable Segments | 2 | 2 | 3 | |
Goodwill: | ||||
Goodwill, net, beginning balance | $19,276 | |||
Goodwill, net, ending balance | 17,026 | 17,026 | 19,276 | |
Impairment loss recognized | 0 | |||
Number of triggering events indicating goodwill impairment occurred | 0 | 0 | ||
Subscription and software | ||||
Goodwill: | ||||
Goodwill, gross, beginning balance | 84,845 | 84,701 | ||
Accumulated impairment losses, beginning balance | -65,569 | -65,569 | ||
Goodwill, net, beginning balance | 19,276 | 19,132 | ||
Effect of currency translation | -2,250 | 144 | ||
Goodwill, gross, ending balance | 82,595 | 82,595 | 84,845 | |
Accumulated impairment losses, ending balance | -65,569 | -65,569 | -65,569 | |
Goodwill, net, ending balance | 17,026 | 17,026 | 19,276 | |
Services | ||||
Goodwill: | ||||
Accumulated impairment losses, ending balance | -5,100 | -5,100 | -5,100 | -5,100 |
Goodwill, net, ending balance | $0 | $0 | $0 | 0 |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Mar. 31, 2015 | Mar. 31, 2014 |
Income Taxes | ||||
Effective Income Tax Rate | 33.40% | 33.20% | 34.40% | 35.40% |
Excess Tax Benefit from Share-based Compensation, Financing Activities | $21,843 | $137 |
Fair_Value_Details
Fair Value (Details) (USD $) | Mar. 31, 2015 | Jun. 30, 2014 |
Level 1 Inputs | ||
Fair Value | ||
Cash equivalents | $121,300,000 | $175,900,000 |
Level 2 Inputs | U.S. corporate bonds | ||
Fair Value | ||
Marketable Securities | $81,000,000 | $98,900,000 |
Supplementary_Balance_Sheet_In2
Supplementary Balance Sheet Information (Details) (USD $) | Mar. 31, 2015 | Jun. 30, 2014 |
In Thousands, unless otherwise specified | ||
Accounts Receivable | ||
Account receivable, Gross | $30,136 | $41,997 |
Account receivable, Allowance | -2,052 | -3,465 |
Account receivable, Net | $28,084 | $38,532 |
Supplementary_Balance_Sheet_In3
Supplementary Balance Sheet Information (Details 2) (USD $) | Mar. 31, 2015 | Jun. 30, 2014 |
In Thousands, unless otherwise specified | ||
Property, Plant and Equipment | ||
Accumulated depreciation | ($34,962) | ($35,882) |
Property, equipment and leasehold improvements-net | 18,459 | 7,588 |
Computer equipment | ||
Property, Plant and Equipment | ||
Property, equipment and leasehold improvements-at cost | 11,410 | 11,772 |
Purchased software | ||
Property, Plant and Equipment | ||
Property, equipment and leasehold improvements-at cost | 23,370 | 23,720 |
Furniture and fixtures | ||
Property, Plant and Equipment | ||
Property, equipment and leasehold improvements-at cost | 6,377 | 4,530 |
Leasehold improvements | ||
Property, Plant and Equipment | ||
Property, equipment and leasehold improvements-at cost | $12,264 | $3,448 |
Supplementary_Balance_Sheet_In4
Supplementary Balance Sheet Information (Details 3) (USD $) | 9 Months Ended | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | Jun. 30, 2014 | |
Accrued expenses and other current liabilities | |||
Royalties and outside commissions | $2,936,000 | $3,596,000 | |
Payroll and payroll-related | 14,053,000 | 19,347,000 | |
Other | 17,762,000 | 12,041,000 | |
Total accrued expenses and other liabilities | 34,751,000 | 34,984,000 | |
Other non-current liabilities | |||
Deferred rent | 5,294,000 | 402,000 | |
Other | 24,898,000 | 11,448,000 | |
Total other non-current liabilities | 30,192,000 | 11,850,000 | |
Landlord improvement allowance included in leasehold improvements and deferred rent liability | 6,064,000 | 0 | |
Leasehold improvements deemed to be owned by the landlord | 1,500,000 | ||
Leasehold improvements recorded in other non-current assets | 1,500,000 | ||
Reduction in deferred rent | 1,400,000 | ||
Net reserve for uncertain tax liabilities | 23,000,000 | 9,300,000 | |
Reserve for uncertain tax liabilities | $23,000,000 | $21,200,000 |
StockBased_Compensation_Detail
Stock-Based Compensation (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Mar. 31, 2015 | Mar. 31, 2014 | |
Stock Options | ||||
Stock Compensation Plans and General Award Terms | ||||
Award vesting period | 4 years | |||
Stock-Based Compensation Accounting | ||||
Weighted average fair value (in dollars per share) | $11.55 | $17.09 | $13.44 | $11.55 |
Risk-free interest rate (as a percent) | 1.50% | 1.30% | ||
Expected dividend yield (as a percent) | 0.00% | 0.00% | ||
Expected life | 4 years 7 months 6 days | 4 years 7 months 6 days | ||
Expected volatility factor (as a percent) | 35.00% | 39.40% | ||
Stock Options | Minimum | ||||
Stock Compensation Plans and General Award Terms | ||||
Contractual terms | 7 years | |||
Stock Options | Maximum | ||||
Stock Compensation Plans and General Award Terms | ||||
Contractual terms | 10 years | |||
Restricted Stock Units | ||||
Stock Compensation Plans and General Award Terms | ||||
Award vesting period | 4 years |
StockBased_Compensation_Detail1
Stock-Based Compensation (Details 2) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Mar. 31, 2015 | Mar. 31, 2014 |
Recorded as expenses: | ||||
Total stock-based compensation | $3,456 | $3,564 | $11,122 | $11,102 |
Cost of services and other | ||||
Recorded as expenses: | ||||
Total stock-based compensation | 336 | 282 | 1,014 | 910 |
Selling and marketing | ||||
Recorded as expenses: | ||||
Total stock-based compensation | 778 | 832 | 2,282 | 2,653 |
Research and development | ||||
Recorded as expenses: | ||||
Total stock-based compensation | 959 | 1,523 | 2,923 | 3,267 |
General and administrative | ||||
Recorded as expenses: | ||||
Total stock-based compensation | $1,383 | $927 | $4,903 | $4,272 |
StockBased_Compensation_Detail2
Stock-Based Compensation (Details 3) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Mar. 31, 2015 | Mar. 31, 2014 | Jun. 30, 2014 | |
Weighted Average Grant Date Fair Value | |||||
Payments related to tax withholding | $3,874,000 | $5,935,000 | |||
Stock Options | |||||
Stock options activity | |||||
Outstanding, beginning of period (in shares) | 1,246,528 | ||||
Granted (in shares) | 310,978 | ||||
Exercised (in shares) | -155,183 | ||||
Cancelled / Forfeited (in shares) | -36,803 | ||||
Outstanding, end of period (in shares) | 1,365,520 | 1,365,520 | 1,246,528 | ||
Vested and exercisable, end of period (in shares) | 835,215 | 835,215 | |||
Vested and expected to vest, end of period (in shares) | 1,301,415 | 1,301,415 | |||
Weighted Average Exercise Price | |||||
Outstanding, beginning of period (in dollars per share) | $20.30 | ||||
Granted (in dollars per share) | $42.65 | ||||
Exercised (in dollars per share) | $13.19 | ||||
Cancelled / Forfeited (in dollars per share) | $25.37 | ||||
Outstanding, end of period (in dollars per share) | $26.06 | $26.06 | $20.30 | ||
Vested and exercisable, end of period (in dollars per share) | $20.59 | $20.59 | |||
Vested and expected to vest, end of period (in dollars per share) | $25.66 | $25.66 | |||
Weighted Average Remaining Contractual Term | |||||
Outstanding, end of period | 7 years 3 months 4 days | 7 years 1 month 21 days | |||
Vested and exercisable, end of period | 6 years 5 months 9 days | ||||
Vested and expected to vest, end of period | 7 years 2 months 12 days | ||||
Aggregate Intrinsic Value | |||||
Outstanding, end of period | 18,395,000 | 18,395,000 | 32,543,000 | ||
Vested and exercisable, end of period | 15,268,000 | 15,268,000 | |||
Vested and expected to vest, end of period | 17,989,000 | 17,989,000 | |||
Weighted Average Grant Date Fair Value | |||||
Total unrecognized compensation cost | 5,400,000 | 5,400,000 | |||
Total unrecognized compensation cost, period of recognition | 2 years 7 months 6 days | ||||
Total intrinsic value of options exercised | 1,100,000 | 7,600,000 | 4,100,000 | 16,800,000 | |
Cash proceeds from option exercises | 2,000,000 | 7,500,000 | |||
Restricted Stock Units | |||||
Restricted stock units activity | |||||
Outstanding, beginning of period (in shares) | 617,269 | ||||
Granted (in shares) | 367,618 | ||||
Settled (in shares) | -308,930 | ||||
Cancelled / Forfeited (in shares) | -37,137 | ||||
Outstanding, end of period (in shares) | 638,820 | 638,820 | |||
Vested and expected to vest (in shares) | 561,709 | 561,709 | |||
Weighted Average Grant Date Fair Value | |||||
Outstanding, beginning of period (in dollars per share) | $25.74 | ||||
Granted (in dollars per share) | $35.23 | $43.70 | $42.64 | $33.05 | |
Settled (RSUs) (in dollars per share) | $27.30 | ||||
Cancelled / Forfeited (in dollars per share) | $26.83 | ||||
Outstanding, end of period (in dollars per share) | $34.65 | $34.65 | |||
Vested and expected to vest, end of period (in dollars per share) | $34.72 | ||||
Total fair value of shares vested from RSU grants | 3,800,000 | 4,800,000 | 11,500,000 | 17,000,000 | |
Total unrecognized compensation cost | 19,300,000 | 19,300,000 | |||
Total unrecognized compensation cost, period of recognition | 2 years 8 months 12 days | ||||
Payments related to tax withholding | $3,900,000 | $5,900,000 | |||
2010 Plan | |||||
Stock-based compensation, additional disclosures | |||||
Common stock reserved for future issuance or settlement (in shares) | 5,600,000 | 5,600,000 | |||
2005 Plan | |||||
Stock-based compensation, additional disclosures | |||||
Stock options and RSU's outstanding that were issued under the 2005 Plan prior to its expiration date | 542,859 | 542,859 |
Stockholders_Equity_Details
Stockholders' Equity (Details) (USD $) | 9 Months Ended | 12 Months Ended | ||
In Millions, except Share data, unless otherwise specified | Mar. 31, 2015 | Jun. 30, 2014 | Jan. 28, 2015 | Apr. 23, 2014 |
Stockholders' Equity | ||||
Approved stock repurchase program, authorized amount | $450 | $200 | ||
Repurchase of common stock (in shares) | 5,979,997 | 3,110,114 | ||
Repurchase of common stock, amount | 224.7 | 121.8 | ||
Remaining capacity under the stock repurchase program | $375 | $27.40 |
Stockholders_Equity_Details_2
Stockholders' Equity (Details 2) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Jun. 30, 2013 |
In Millions, unless otherwise specified | ||||||
Accumulated Other Comprehensive Income | ||||||
Foreign translation adjustments | $5 | $6.90 | $9.40 | $8.60 | $8.60 | $7.30 |
Net unrealized gains (losses) on available for sale securities | -0.1 | -0.1 | ||||
Maximum | ||||||
Accumulated Other Comprehensive Income | ||||||
Net unrealized gains (losses) on available for sale securities | ($0.10) | $0.10 | $0.10 | $0.10 |
Net_Income_Per_Share_Details
Net Income Per Share (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Mar. 31, 2015 | Mar. 31, 2014 |
Net Income Per Share | ||||
Net income | $28,170 | $20,843 | $87,601 | $59,105 |
Weighted average shares outstanding (in shares) | 87,355 | 92,414 | 89,509 | 92,891 |
Dilutive impact from: | ||||
Share-based payment awards (in shares) | 498 | 951 | 612 | 1,060 |
Dilutive weighted average shares outstanding (in shares) | 87,853 | 93,365 | 90,121 | 93,951 |
Income per share | ||||
Basic (in dollars per share) | $0.32 | $0.23 | $0.98 | $0.64 |
Dilutive (in dollars per share) | $0.32 | $0.22 | $0.97 | $0.63 |
Net_Income_Per_Share_Details_2
Net Income Per Share (Details 2) (USD $) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Mar. 31, 2015 | Mar. 31, 2014 | |
Stock Options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||||
Antidilutive securities (in shares) | 289,537 | 287,582 | ||
Exercise price range, low end of range (in dollars per share) | 37.66 | |||
Exercise price range, high end of range (in dollars per share) | 47.4 | |||
Employee Equity Awards | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||||
Antidilutive securities (in shares) | 801,000 | 61,000 | 762,000 | 325,000 |
Commitments_and_Contingencies_
Commitments and Contingencies (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
In Millions, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Mar. 31, 2015 | Mar. 31, 2014 | Jun. 30, 2014 |
Operating Leases | |||||
Rent expense | $2.20 | $1.70 | $6 | $5.30 | |
Minimum | |||||
Operating Leases | |||||
Base annual rent expense | 2.2 | ||||
Maximum | |||||
Operating Leases | |||||
Base annual rent expense | 3.9 | ||||
Office space in Bedford, Massachusetts | |||||
Operating Leases | |||||
Number of successive five-year terms for which the lease may be extended | 2 | ||||
Extension period of lease term | 5 years | ||||
Future minimum non-cancelable lease payments | 35.6 | ||||
Aggregate capital expenditures with respect to the leased premises | 8.7 | ||||
Contractual obligations | 7.9 | 7.9 | |||
Cumulative payments made on capital expenditure contractual obligations | 6.3 | ||||
Remaining payments under capital expenditure contractual obligations expected to be made in fiscal 2015 | $1.60 | ||||
Office space in Bedford, Massachusetts | Lease term commencing on November 1, 2014 | |||||
Operating Leases | |||||
Area of Real Estate Property | 142,673 | ||||
Area Of Real Estate Property Occupied | 105,874 | ||||
Initial term of lease | 10 years 5 months | ||||
Office space in Bedford, Massachusetts | Lease term commencing on February 1, 2015 | |||||
Operating Leases | |||||
Area of Real Estate Property | 36,799 |
Commitments_and_Contingencies_1
Commitments and Contingencies (Details 2) (USD $) | 1 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2015 |
item | ||
Legal Matters | ||
Judgment issued | $2.60 | |
Matters that might have a material adverse effect on financial position, results of operations or cash flows | 0 |
Segment_Information_Details
Segment Information (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Mar. 31, 2015 | Mar. 31, 2014 | Jun. 30, 2014 | Jun. 30, 2013 |
segment | segment | segment | ||||
Segment Reporting Information | ||||||
Number of operating segments | 2 | 2 | 3 | |||
Number of reportable segments | 2 | 2 | 3 | |||
Summary of operating segments | ||||||
Segment revenue | $111,299 | $103,587 | $326,215 | $289,921 | ||
Segment profit | 41,731 | 31,402 | 132,886 | 92,363 | ||
Reconciliation to Income Before Income Taxes | ||||||
General and administrative | -13,776 | -10,839 | -36,227 | -33,732 | ||
Other income (expense), net | 414 | -472 | 354 | -1,807 | ||
Interest income (net) | 121 | 269 | 381 | 937 | ||
Income before provision for income taxes | 42,266 | 31,199 | 133,621 | 91,493 | ||
Operating segments | ||||||
Summary of operating segments | ||||||
Segment expenses | -55,792 | -61,346 | -157,102 | -163,826 | ||
Segment profit | 55,507 | 42,241 | 169,113 | 126,095 | ||
Subscription and software | ||||||
Summary of operating segments | ||||||
Segment revenue | 102,543 | 91,309 | 300,002 | 258,916 | ||
Subscription and software | Operating segments | ||||||
Summary of operating segments | ||||||
Segment expenses | -48,887 | -51,390 | -135,960 | -138,991 | ||
Segment profit | 53,656 | 39,919 | 164,042 | 119,925 | ||
Services | ||||||
Summary of operating segments | ||||||
Segment revenue | 8,756 | 12,278 | 26,213 | 31,005 | ||
Services | Operating segments | ||||||
Summary of operating segments | ||||||
Segment expenses | -6,905 | -9,956 | -21,142 | -24,835 | ||
Segment profit | $1,851 | $2,322 | $5,071 | $6,170 |