Leases Leases (Notes)

9 Months Ended

Mar. 31, 2025

LEASES

The Company determines if an arrangement is a lease, or contains 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 5 months to 9 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 March 31, 2025, and June 30, 2024, the Company had operating lease assets of $47,085 and $53,981, respectively. At March 31, 2025, total operating lease liabilities of $53,445 were comprised of current operating lease liabilities of $9,427 and noncurrent operating lease liabilities of $44,018. At June 30, 2024, total operating lease liabilities of $59,604 were comprised of current operating lease liabilities of $8,454 and noncurrent operating lease liabilities of $51,150.

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 sheets. Operating lease assets were recorded net of accumulated amortization of $38,886 and $34,306 as of March 31, 2025, and June 30, 2024, respectively.

Operating lease costs for the three months ended March 31, 2025, and 2024, were $2,857 and $3,190, respectively. Total operating lease costs for the respective quarters included variable lease costs of $692 and $1,101, respectively. Operating lease costs for the nine months ended March 31, 2025, and 2024, were $8,649 and $7,888, respectively. Total operating lease costs for the respective fiscal year-to-date periods included variable lease costs

of $2,175 and $3,354, respectively. Operating lease expense is 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 statements of income.

For the nine months ended March 31, 2025, and 2024, the Company had operating cash flows for payments on operating leases of $7,909 and $6,855, and ROU assets obtained in exchange for operating lease liabilities of $7 and $19,222, respectively.

As of March 31, 2025, and June 30, 2024, the weighted-average remaining lease term for the Company's operating leases was 70 months and 78 months, and the weighted-average discount rate was 2.71% and 2.70%, 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 March 31, 2025:


Due Dates (fiscal year)	Future Minimum Rental Payments

2025 (remaining period)	$	2,704
2026	11,048
2027	10,455
2028	10,106
2029	7,548
Thereafter	17,667
Total lease payments	$	59,528
Less: interest	(6,083)
Present value of lease liabilities	$	53,445

Future lease payments include $5,464 related to options to extend lease terms that are reasonably certain of being exercised. At March 31, 2025, there were $2,070 of legally binding lease payments for leases signed but not yet commenced.

Lessor, Operating Leases

The Company may sublease its facilities from time to time to third parties. Sublease income is recognized on a straight-line basis over the lease term, and is included within revenue on the Company's condensed consolidated statements of income.

On September 30, 2023, the Company entered into an agreement with a third party to sublease a portion of its Elizabethtown, Kentucky facility. The commencement date of the sublease was October 1, 2023, and it had an initial term of 57 months. Sublease income for the three months ended March 31, 2025, and 2024, was $205 and $213, respectively. Sublease income for the nine months ended March 31, 2025, and 2024, was $682 and $345, respectively.

On March 21, 2025, the sublessee provided notice to terminate a portion of the sublease agreement and reduce the square footage of their subleased space effective September 30, 2025, resulting in a termination fee of $332. The remaining space not terminated will continue to be subleased under the original terms of the agreement. There have been no indications of impairment related to the underlying ROU asset for the remaining portion of the sublease.

Minimum Sublease Payments

At March 31, 2025, the future total minimum sublease payments to be received, including termination fees, were as follows:


Due Dates (fiscal year)	Future Minimum Sublease Receipts

2025 (remaining period)	$	203
2026	864
2027	448
2028	462

Total sublease receipts	$	1,977