Leases Leases (Notes)

6 Months Ended

Dec. 31, 2021

LEASESThe Company determines if an arrangement is a lease at inception. The lease term begins on the commencement date, which is the date the Company takes possession of the property and may include options to extend or terminate the lease when it is reasonably certain that the option will be exercised. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Lease agreements with lease and non-lease

components are accounted for as a single lease component for all asset classes, which are comprised of real estate leases and equipment leases. ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Since the Company’s leases do not typically provide an implicit rate, the Company uses its incremental borrowing rate based upon the information available at commencement date. The determination of the incremental borrowing rate requires judgment and is determined by using the Company’s current unsecured borrowing rate, adjusted for various factors such as collateralization and term to align with the terms of the lease.

The Company leases certain office space, data centers and equipment with remaining terms of 1 to 12 years. Certain leases contain renewal options for varying periods, which are at the Company’s sole discretion. For leases where the Company is reasonably certain to exercise a renewal option, such option periods have been included in the determination of the Company’s ROU assets and lease liabilities. Certain leases require the Company to pay taxes, insurance, maintenance, and other operating expenses associated with the leased asset. Such amounts are not included in the measurement of the lease liability to the extent they are variable in nature. Variable lease costs are recognized as a variable lease expense when incurred.

At December 31, 2021, and June 30, 2021, the Company had operating lease assets of $51,888 and $55,977 and financing lease assets of $124 and $188, respectively. At December 31, 2021, total operating lease liabilities of $56,653 were comprised of current operating lease liabilities of $11,623 and noncurrent operating lease liabilities of $45,030, and total financing lease liabilities of $129 were comprised of current financing lease liabilities of $103 and noncurrent financing lease liabilities of $26. At June 30, 2021, total operating lease liabilities of $60,828 were comprised of current operating lease liabilities of $11,460 and noncurrent operating lease liabilities of $49,368, and total financing lease liabilities of $193 were comprised of current financing lease liabilities of $110 and noncurrent financing lease liabilities of $83.

Operating lease assets are included within other non-current assets and operating lease liabilities are included within accrued expenses (current portion) and other long-term liabilities (noncurrent portion) in the Company’s condensed consolidated balance sheet. Operating lease assets were recorded net of accumulated amortization of $27,625 and $23,813 as of December 31, 2021, and June 30, 2021, respectively. Financing lease assets are included within property and equipment, net and financing lease liabilities are included within notes payable (current portion) and long-term debt (noncurrent portion) in the Company’s condensed consolidated balance sheet. Financing lease assets were recorded net of accumulated amortization of $206 and $153 as of December 31, 2021, and June 30, 2021, respectively.

Operating lease costs for the three months ended December 31, 2021, and 2020, were $3,327 and $3,766, respectively. Financing lease costs for the three months ended December 31, 2021, and 2020, were $27 and $30, respectively. Total operating and financing lease costs for the respective quarters included variable lease costs of approximately $441 and $809, respectively. Operating lease costs for the six months ended December 31, 2021, and 2020, were $6,759 and $7,675, respectively. Financing lease costs for the six months ended December 31, 2021, and 2020, were $55 and $30, respectively. Total operating and financing lease costs for the respective fiscal year-to-date periods included variable lease costs of approximately $840 and $2,189. Operating and financing lease expense are included within cost of services, research and development, and selling, general and administrative expense, dependent upon the nature and use of the ROU asset, in the Company’s condensed consolidated statement of income.

For the six months ended December 31, 2021, and 2020, the Company had operating cash flows for payments on operating leases of $6,802 and $6,872, respectively, and ROU assets obtained in exchange for operating lease liabilities of $1,870 and $4,485, respectively. Financing cash flows for payments on financing leases for the six months ended December 31, 2021, and 2020, were $55 and $63, respectively.

As of December 31, 2021, and June 30, 2021, the weighted average remaining lease term for the Company's operating leases was 77 months and 81 months, respectively, and the weighted average discount rate was 2.62% and 2.67%, respectively. As of December 31, 2021, and June 30, 2021, the weighted average remaining lease term for the Company's financing leases was 15 months and 21 months, respectively. The weighted average discount rate for the Company's financing leases was 2.36% and 2.39% as of December 31, 2021, and June 30, 2021, respectively.

Maturity of Lease Liabilities under ASC 842

Future minimum rental payments on operating leases with initial non-cancellable lease terms in excess of one year were due as follows at December 31, 2021*:


Due Dates (fiscal year)	Future Minimum Rental Payments

2022 (remaining period)	6,617
2023	12,089
2024	10,029
2025	7,266
2026	6,342
Thereafter	19,388
Total lease payments	$	61,731
Less: interest	(5,078)
Present value of lease liabilities	$	56,653

*Financing leases were immaterial to the fiscal quarter, so a maturity of lease liabilities table has only been included for operating leases.

Lease payments included $5,464 related to options to extend lease terms that are reasonably certain of being exercised. At December 31, 2021, the Company had $60 in legally binding lease payments for one lease that was signed but not yet commenced. The lease commencement date is March 1, 2022, and the lease term is 36 months.