Significant Accounting Policies (Policies)

12 Months Ended

Jun. 30, 2020

Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation

        The consolidated financial statements include our accounts and the accounts of our subsidiaries, all of which are wholly owned. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates in the Preparation of Consolidated Financial Statements

Use of Estimates in the Preparation of Consolidated Financial Statements

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Estimates include, but are not limited to, revenue recognition, allowances for doubtful accounts, recoverability of deferred tax assets, determining the fair value associated with acquired assets and liabilities including acquired performance obligations, intangible asset and goodwill impairment, pension benefit obligations, accruals for uncertain tax positions and certain other of our accrued liabilities. Actual results could differ from those estimates.

Foreign Currency Translation

Foreign Currency Translation

        We have international subsidiaries in Europe, the Asia-Pacific region and Canada, whose functional currencies are typically the local currencies. Assets and liabilities of all of our international subsidiaries have been translated into U.S. dollars at year-end exchange rates, and results of operations and cash flows have been translated at the average exchange rates in effect during the year. Gains or losses resulting from foreign currency translation where the local currency is the functional currency are included as a component of accumulated other comprehensive income (loss). Foreign currency transaction gains and losses are included in results of operations as incurred and are not significant to our overall operations.

Cash and Cash Equivalents

Cash and Cash Equivalents

        We consider all highly liquid instruments with an original maturity of three months or less to be cash equivalents. The carrying value of these instruments approximates their fair value. At June 30, 2020, our cash equivalents consisted of demand deposit accounts and money market funds.

Cash Held for Customers and Customer Account Liabilities

Cash Held for Customers and Customer Account Liabilities

        At June 30, 2020 and 2019, our consolidated balance sheets included $6.3 million and $5.6 million, respectively, of cash held for customers and a corresponding liability in the same amount. Cash held for customers and customer account liabilities arise from a portion of our UK operations where we collect client funds and hold them for a short transient period before ultimately disbursing the amounts and settling the corresponding liability. Cash we hold on behalf of clients is segregated from our other corporate cash accounts and is not available for use by us other than to settle the corresponding client liability.

Marketable Securities

Marketable Securities

        All marketable securities must be classified as one of the following: held to maturity, available for sale, or trading. At June 30, 2020, we held $10.2 million of marketable securities which consisted of U.S. corporate and government debt securities.

        Our held to maturity investments, all of which mature within one year, are recorded at amortized cost and interest income is recognized in earnings when earned. The cost of securities sold is determined based on the specific identification method. At June 30, 2020 and 2019, the amortized cost of our held-to-maturity investments approximated their fair value.

        Our securities classified as available for sale are recorded at fair value, with all unrealized gains or losses recorded as a component of accumulated other comprehensive income (loss). At June 30, 2020 and 2019, all of our available for sale securities had

maturities of less than one year. The cost of securities sold is determined based on the specific identification method. At June 30, 2020 and 2019, the net unrealized gain associated with securities classified as available for sale was not significant.

Other Investments

Other Investments        We have certain other investments recorded at fair value. In circumstances where there is no readily determinable fair value, these investments are recorded at cost, less impairment (if any) plus or minus adjustments for observable price changes. The aggregate carrying value of these investments was $1.0 million and $0.7 million at June 30, 2020 and 2019, respectively, and they are reported as a component of our other assets. At June 30, 2020, we reviewed the carrying value of these investments and concluded that they were not impaired. We are unable to exercise significant influence or control over the investees underlying any of these investments.

Concentration of Credit Risk

Concentration of Credit Risk

        Financial instruments that potentially subject us to significant concentrations of credit risk consist of cash and cash equivalents and accounts receivable. We had approximately $185.5 million of cash and cash equivalents invested with six financial institutions at June 30, 2020. Balances of cash and cash equivalents are typically in excess of any insurance, such as FDIC coverage, that may protect our deposits.

        Our accounts receivable are reported in our consolidated balance sheets net of allowances for uncollectible accounts. We believe that the concentration of credit risk with respect to accounts receivable is limited due to the large number of companies and diverse industries comprising our customer base. On-going credit evaluations are performed, generally with a focus on new customers or customers with whom we have had no prior collections history, and collateral is generally not required. We maintain reserves for potential losses based on customer specific situations as well as our historic experience and such losses, in the aggregate, have not historically exceeded our expectations.

Financial Instruments

Financial Instruments        The fair value of our financial instruments, which includes cash and cash equivalents, cash held for customers, marketable securities, accounts receivable, accounts payable, customer account liabilities, derivative interest rate swaps and debt drawn under our Credit Facility, as defined in Note 11 Indebtedness, are based on assumptions concerning the amount and timing of estimated future cash flows and assumed discount rates reflecting varying degrees of perceived risk.

Accounts Receivable

Accounts Receivable

        Accounts receivable includes unbilled receivables of approximately $6.5 million and $6.9 million at June 30, 2020 and 2019, respectively. Unbilled receivables include revenues recognized for which billings have not yet been presented to the customers.

Property and Equipment

Property and Equipment

        Property and equipment are stated at cost, net of depreciation. Depreciation is recorded on a straight-line basis over the estimated useful lives of the assets as follows:

Property, equipment, furniture, fixtures and vehicles	3-7 years
Technical equipment	3-5 years
Building (Theale, Reading, England)	40 years
Leasehold improvements	Lower of estimated life or remaining lease term

        Periodically, we may assign a life outside of the general range of useful lives noted here if a particular asset’s estimated period of use falls outside of the normal range.

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

        We initially record other acquired intangible assets at their estimated fair values and we review these assets periodically for impairment. Goodwill represents the excess of the purchase price over the fair value of identifiable tangible and intangible assets acquired and liabilities assumed in a business combination and is tested at least annually for impairment; historically during our fourth quarter.

        Our specifically identifiable intangible assets, which consist principally of customer related assets and core technology, are reported net of accumulated amortization and are amortized over their estimated useful lives at amortization rates that are proportional to each asset’s estimated economic benefit. We review the carrying value of these intangible assets annually, or more frequently if indicators of impairment are present.

        In performing our review of the recoverability of goodwill and other intangible assets we consider several factors, including whether there have been significant changes in legal factors or the overall business climate that could affect the underlying value of an asset. We also consider whether there is an expectation that the asset will be sold or disposed of before the end of its originally estimated useful life. In the case of goodwill, we must estimate the fair value of the reporting unit to which the goodwill is assigned. If as a result of examining any of these factors we conclude that the carrying value of goodwill or any other intangible asset exceeds its estimated fair value or undiscounted cash flows, respectively, we will recognize an impairment charge.

        Purchased software is classified as an intangible asset and is amortized on a straight-line basis over its estimated useful life, typically ranging from 3 to 5 years.

Advertising Costs

Advertising Costs        We expense advertising costs as incurred.

Shipping And Handling Costs

Shipping and Handling Costs

        We expense all shipping, handling and delivery costs in the period incurred, generally as a component of other cost of revenues.

Commissions Expense

Commissions Expense        Excluding certain arrangements within our Banking Solutions segment, for which software commissions are earned as revenue is recorded over the period of project performance, substantially all software commissions are earned in the month in which a customer order is received. Commissions associated with professional services are typically earned in the month that services are rendered. Commissions associated with post-contract customer support arrangements and subscription-based arrangements are typically earned when the customer is billed for the underlying contractual period or in the period the order is received. Commissions are normally paid within thirty days of the month in which they are earned. Prior to the adoption of the new revenue standard, commissions were expensed as incurred. Under the new revenue standard, we capitalize commission costs in connection with obtaining a contract if the period of benefit is greater than a year and we expect to recover the costs through future contract revenues. We expense any capitalized costs ratably over the estimated period of benefit. Commission costs are recorded as a component of sales and marketing expense

Research and Development Expenditures

Research and Development Expenditures

        Research and development costs incurred prior to the establishment of technological feasibility (for software to be sold, leased or otherwise marketed), or prior to application development (for internal-use software), are expensed as incurred and are reported as product development and engineering operating expenses in our statements of comprehensive income (loss).

Debt Issuance Costs

Debt Issuance Costs

        We incurred certain third party costs in connection with the Credit Facility, principally related to underwriting and legal fees. These costs are included in other assets on our consolidated balance sheets and are being amortized to interest expense ratably over the term of the Credit Facility.

Income Taxes and Income Tax Uncertainties

Income Taxes and Income Tax Uncertainties

        We recognize deferred tax assets and deferred tax liabilities based on the difference between the financial reporting and tax basis of the asset or liability, measured at tax rates that are expected to be in effect when the differences reverse. A valuation allowance to reduce the carrying value of deferred tax assets is recorded if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

        In respect of income tax uncertainties, we perform a two-step analysis for all tax positions. The first step involves an evaluation of the underlying tax position based solely on technical merits (such as tax law) and the second step involves measuring the tax position based on the probability of it being sustained in the event of a tax examination. We recognize tax benefits at the largest amount that we deem more likely than not will be realized upon ultimate settlement of any tax uncertainty. Tax positions that fail to qualify for recognition are recognized in the period in which the more-likely-than-not standard has been reached, when the tax positions are resolved with the respective taxing authority or when the statute of limitations for tax examination has expired.

        We record any interest or penalties accruing in respect of uncertain tax positions as a component of income tax expense.

Share-Based Compensation

Share-Based Compensation

        We recognize expense for the estimated fair value of our share-based compensation arrangements, net of estimated award forfeitures. The expense associated with share-based payment awards is generally recognized on a straight-line basis over the award’s vesting period.

Capitalized Software Costs

Capitalized Software Costs

        Capitalization of software development costs for software that is to be sold, leased or otherwise marketed begins upon the establishment of technological feasibility. The establishment of technological feasibility and the ongoing assessment of recoverability of capitalized software development costs requires considerable judgment by us with respect to certain factors including, but not limited to, determining which projects and development activities within those projects qualify for capitalization, anticipated future revenues, estimated economic life, and changes in software and hardware technologies. Amortization of capitalized costs commence on the date of general release of the software using the greater of the straight-line method over the estimated useful life or the ratio of revenue in the period to total expected revenues over the product’s expected useful life. Capitalized software development costs are normally amortized over an estimated useful life of 5 years once the product has been released for customer use. For the fiscal years ended June 30, 2020, 2019 and 2018, we capitalized $3.0 million, $3.7 million and $3.2 million, respectively, and recorded amortization expense of $4.0 million, $3.8 million and $2.8 million, respectively, of software development costs, excluding software developed for internal use. At June 30, 2020 and 2019, the net carrying value of capitalized software excluding software developed for internal use, which is included in intangible assets, net on our consolidated balance sheets, was $12.2 million and $13.2 million, respectively.

        We capitalize certain development costs associated with internal use software incurred during the application development stage. We expense costs associated with preliminary project phase activities, training, maintenance and any post-implementation costs as incurred. For the fiscal years ended June 30, 2020, 2019 and 2018, we capitalized $11.9 million, $10.4 million and $6.3 million,

respectively, of internal use software development costs associated with our SaaS-based technology platforms. Capitalized internal use software costs are normally amortized over estimated useful lives ranging from 3 to 5 years once the related project has been completed and deployed for use. For the fiscal years ended June 30, 2020, 2019 and 2018, we recorded amortization expense of $7.2 million, $6.1 million and $5.2 million, respectively, of capitalized internal use software costs associated with our SaaS-based technology platforms. At June 30, 2020 and 2019, the net carrying value of capitalized internal use software associated with our SaaS-based technology platforms, which is included in intangible assets, net on our consolidated balance sheets, was $25.7 million and $21.1 million, respectively.

Earnings per Share

Earnings per Share

        We report both basic and diluted earnings per share. Basic earnings per share is calculated based on the weighted average number of shares of common stock outstanding and excludes the dilutive effect of warrants, stock options or any other type of convertible securities. Diluted earnings per share is calculated based on the weighted average number of shares of common stock outstanding and the dilutive effect of stock options, warrants and other types of convertible securities are included in the calculation. Dilutive securities are excluded from the diluted earnings per share calculation if their effect is anti-dilutive, such as in periods where we report a net loss.

Comprehensive Income or Loss

Comprehensive Income or Loss

        Comprehensive income or loss includes all changes in equity during a period from non-owner sources, such as net income or loss, foreign currency translation adjustments, certain pension adjustments, unrealized gains and losses on available for sale securities and unrealized gains and losses on our interest rate hedging transactions.

Recently Adopted Pronouncements and Accounting Pronouncements to be Adopted

Recently Adopted Pronouncements 

        Leases: In February 2016, the Financial Accounting Standards Board (FASB) issued an accounting standard update which requires balance sheet recognition of a lease liability and a corresponding right-of-use (ROU) asset for all leases unless, as a policy election, a lessee elects not to apply the standard to short-term leases. We adopted this standard on July 1, 2019 and elected the package of practical expedients which permitted us not to reassess prior conclusions regarding lease identification, lease classification and treatment of initial direct costs. For all asset classes, we adopted the lessee practical expedient to combine lease and non-lease components and we made a policy election not to recognize a ROU asset or lease liability for leases with a term of less than twelve months. We also availed ourselves of the adoption expedient not to adjust our prior period financial statements for the effects of the new standard or make additional disclosures for periods prior to the adoption date.

Upon adoption, we recognized operating ROU assets and operating lease liabilities of $26.7 million and $29.0 million, respectively, in our consolidated balance sheet. The difference between the ROU assets and lease liabilities is primarily related to the reclassification of deferred rent on our balance sheet at the date of adoption. The adoption of this standard did not have a material impact on our consolidated statements of comprehensive income (loss) or consolidated statements of cash flows.

Please refer to Note 10 Commitments and Contingencies for discussion of the adoption of this new standard.

Accounting Pronouncements to be Adopted

Financial Instruments - Credit Losses: In June 2016, the FASB issued an accounting standard update that replaces the incurred loss impairment model with an expected loss model for financial assets held at amortized cost, eliminates the concept of other-than-temporary impairment and requires credit losses associated with available-for-sale debt securities to be recorded through an allowance rather than a reduction in the amortized cost basis of the security. The changes are expected to result in earlier recognition of credit losses associated with financial assets. The estimate of expected credit losses will require entities to incorporate historical information, current information and reasonable and supportable forecasts. This standard also expands the disclosure requirements to enable users of financial statements to understand the entity’s assumptions, models and methods for estimating expected credit losses. We adopted this standard on July 1, 2020 on a modified retrospective basis, with the cumulative-effect accounting consequence recorded as an adjustment to the opening balance of accumulated deficit as of July 1, 2020. We do not expect the adoption of this standard to have a material impact on our financial statements.

Goodwill Impairment: In January 2017, the FASB issued an accounting standard update to simplify the test for goodwill impairment by removing the requirement to compare the carrying value of goodwill against its implied fair value. Under the revised standard, an entity will perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The loss should not exceed the total amount of goodwill allocated to the reporting unit. We adopted this standard on July 1, 2020 on a prospective basis and do not currently expect the adoption of this standard to have a material impact on our financial statements.

Income Taxes: In December 2019, the FASB issued an accounting standard update related to simplifying the accounting for income taxes by eliminating certain exceptions related to intraperiod tax allocations, basis differences for changes in ownership interest in equity method investments, and the calculation of interim period income tax. The standard also simplifies other aspects of accounting for taxes. The standard is effective for us on July 1, 2021, with early adoption permitted. We are currently evaluating the effects of this update on our financial statements, including the potential for early adoption.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

        We have certain financial instruments which consist of cash and cash equivalents, cash held for customers, marketable securities, accounts receivable, notes receivable, contract assets, accounts payable, customer account liabilities, derivative interest rate swaps and debt drawn on our Credit Facility. Fair value information for each of these instruments is as follows:

• Cash and cash equivalents, cash held for customers, accounts receivable, notes receivable, contract assets, accounts payable and customer account liabilities fair values approximate their carrying values, due to the expected duration of these instruments.

• Marketable securities classified as held to maturity, all of which mature within one year, are recorded at amortized cost, which at June 30, 2020 and June 30, 2019, approximated fair value.

• Marketable securities classified as available for sale are recorded at fair value. Unrealized gains and losses are included as a component of other accumulated comprehensive loss in stockholders’ equity, net of tax. We use the specific identification method to determine any realized gains or losses from the sale of our marketable securities classified as available for sale.

•  The fair value of our derivative interest rate swaps is based on the present value of projected cash flows that will occur over the life of the instruments, after considering certain contractual terms of the arrangements and counterparty credit risk.

•  The carrying value of assets related to deposits we have made to fund future requirements associated with Israeli severance arrangements was $1.0 million and $1.2 million at June 30, 2020 and June 30, 2019, respectively, which approximated their fair value.

•  We have certain other investments for which there is no readily determinable fair value. The carrying value of these investments was $0.5 million and $0.7 million at June 30, 2020 and June 30, 2019, respectively, and they are reported as a component of our other assets. These investments are recorded at cost, less impairment (if any) plus or minus adjustments for observable price changes.

•  We have borrowings of $180 million against our Credit Facility. The fair value of these borrowings, which are classified as Level 2, approximates their carrying value at June 30, 2020, as the instrument carries a variable rate of interest which reflects current market rates.