Commitments and Contingencies

12 Months Ended

Jun. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

Leases

On July 1, 2019, we adopted the new accounting standard related to leases. We determine if any arrangement is, or contains, a lease at its inception based on whether or not we have the right to control the asset during the contract period. We are a lessee in any lease contract when we obtain the right to control the asset.

We determine the lease term by assuming the exercise of renewal options that are reasonably certain to be exercised. Leases with a lease term of a year or less at inception are not reflected in our balance sheet and those lease costs are expensed on a straight-line basis over the respective term. Leases with a term greater than a year are reflected as non-current ROU assets and current and non-current lease liabilities in our consolidated balance sheets. Current lease liabilities are classified as a component of accrued expenses and other current liabilities.

As the implicit interest rate in our leases is generally not known, we use our incremental borrowing rate as the discount rate for purposes of determining the present value of our lease liabilities. Our determination of the incremental borrowing rate takes into consideration the expected term of the lease, the effect of the currency in which the lease is denominated and the rate of interest we would expect to incur on a collateralized debt instrument. At June 30, 2020, our weighted average discount rate utilized for our leases was 5.0%.

When our contracts contain lease and non-lease elements, we account for both as a single lease component.

We lease our principal office facility in Portsmouth, NH under a non-cancelable operating lease expiring in 2027. We have two five-year options to further extend the term of this lease. Rent expense is fixed for the base term of the lease and we are required to pay certain incremental operating costs above the base rent.

We lease office space in cities worldwide under facility leases that expire at various dates. We are typically required to pay certain incremental operating costs above the base rent for our facility leases. Our leases may include periodic payment adjustments based on changes in applicable price indexes. To the extent the adjustment is considered a fixed payment it is included in the measurement of the ROU asset and lease liability, otherwise it is recognized in the period incurred. We also have a variety of data center locations and, to a lesser extent, vehicle and equipment leases. Our facility leases represent the substantial majority of our operating leases and often include renewal options that we can exercise unilaterally. At June 30, 2020, renewal options ranged from 3 months to 10 years.

At June 30, 2020, our operating leases had a weighted average remaining lease term of 5.7 years and we had no material capital leases.

Additional information of our lease activity, as of and for the twelve months ended June 30, is as follows:


	For the twelve months ended
Operating leases:	June 30, 2020
	(in thousands)
Operating lease cost	$	7,573
Short-term lease cost	585
Variable lease cost	2,058
Sublease income	(360)
Total lease cost	$	9,856


	June 30, 2020
	(in thousands)
Right-of-use assets, net	$	24,712

Operating lease liabilities, current ⁽¹⁾	$	6,804
Operating lease liabilities, non-current	20,670
Total operating lease liabilities	$	27,474

——————

⁽¹⁾Included as a component of accrued expenses and other current liabilities.


	For the twelve months ended
	June 30, 2020
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities	$	7,684
Right-of-use assets obtained in exchange for lease obligations	$	4,582

Remaining maturities of lease liabilities at June 30, 2020 were as follows:


	Operating Leases
For the year ending June 30,	(in thousands)
2021	$	7,938
2022	6,571
2023	4,791
2024	2,960
2025	2,671
Thereafter	7,222
Total lease payments	32,153
Less imputed interest	(4,679)
Total lease liabilities	$	27,474

Prior to the adoption of the new lease accounting standard, rent expense, including the effects of rent escalation clauses or certain landlord concessions, was recognized on a straight-line basis over the lease term. Rent expense, net of sublease income, for the fiscal years ended June 30, 2019 and 2018 was $6.3 million and $6.5 million, respectively.

Future minimum lease payments under non-cancelable operating leases at June 30, 2019 were as follows:


	(in thousands)
2020	$	5,612
2021	5,672
2022	4,967
2023	3,690
2024	2,913
2025 and thereafter	11,665
	$	34,519

Long Term Service Arrangements

We have entered into service agreements with initial minimum commitments ranging between one and four years that expire between the fiscal years 2021 and 2024, primarily for software licenses, hosting services and disaster recovery services. In addition to the base terms, we have certain options to extend the terms of the service agreements. Payments are fixed for the initial terms and are subject to increase in the event that we elect to extend the service.

Future minimum annual commitments under our long term service arrangements as of June 30, 2020 are as follows:


	(in thousands)
2021	$	10,216
2022	5,621
2023	714
2024	504

	$	17,055

Legal Matters

We are, from time to time, a party to legal proceedings and claims that arise out of the ordinary course of our business. We are not currently a party to any material legal proceedings.