0001558370-18-006955 | 10-K | XBRL Viewer

Document and Entity Information - USD ($) $ in Billions	12 Months Ended
Document and Entity Information - USD ($) $ in Billions	Jun. 30, 2018	Aug. 03, 2018	Dec. 31, 2017
Document and Entity Information
Entity Registrant Name	Paylocity Holding Corp
Entity Central Index Key	0001591698
Document Type	10-K
Document Period End Date	Jun. 30, 2018
Amendment Flag	false
Current Fiscal Year End Date	--06-30
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$ 1.4
Entity Common Stock, Shares Outstanding		52,767,163
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	FY

Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2018	Jun. 30, 2017
Current assets:
Cash and cash equivalents	$ 137,193	$ 103,468
Accounts receivable, net	3,453	2,040
Prepaid expenses and other	11,980	14,879
Total current assets before funds held for clients	152,626	120,387
Funds held for clients	1,225,614	942,459
Total current assets	1,378,240	1,062,846
Long-term prepaid expenses	1,504	1,535
Capitalized internal-use software, net	21,094	17,394
Property and equipment, net	62,029	40,756
Intangible assets, net	13,002	8,907
Goodwill	9,590	6,003
Deferred income tax assets, net	22,140
Total assets	1,507,599	1,137,441
Current liabilities:
Accounts payable	2,990	2,046
Accrued expenses	42,241	30,301
Total current liabilities before client fund obligations	45,231	32,347
Client fund obligations	1,225,614	942,459
Total current liabilities	1,270,845	974,806
Deferred rent	22,812	14,621
Other long-term liabilities	1,118
Deferred income tax liabilities, net		401
Total liabilities	1,294,775	989,828
Stockholders' equity:
Preferred stock, $0.001 par value, 5,000 authorized, no shares issued and outstanding at June 30, 2017 and 2018
Common stock, $0.001 par value, 155,000 shares authorized at June 30, 2017 and 2018; 51,738 shares issued and outstanding at June 30, 2017 and 52,758 shares issued and outstanding at June 30, 2018	53	52
Additional paid-in capital	219,588	192,837
Accumulated deficit	(6,678)	(45,276)
Accumulated other comprehensive loss	(139)
Total stockholders' equity	212,824	147,613
Total liabilities and stockholders' equity	$ 1,507,599	$ 1,137,441

Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Thousands	Jun. 30, 2018	Jun. 30, 2017
Unaudited Consolidated Balance Sheets
Preferred Stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred Stock, shares authorized	5,000	5,000
Preferred Stock, shares issued	0	0
Preferred Stock, shares outstanding	0	0
Common Stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common Stock, shares authorized	155,000	155,000
Common Stock, shares issued	52,758	51,738
Common Stock, shares outstanding	52,758	51,738

Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Revenues:
Recurring fees	$ 354,432	$ 284,817	$ 217,416
Interest income on funds held for clients	9,093	3,631	2,688
Total recurring revenues	363,525	288,448	220,104
Implementation services and other	14,002	11,562	10,597
Total revenues	377,527	300,010	230,701
Cost of revenues:
Recurring revenues	104,009	85,399	66,131
Implementation services and other	45,188	38,588	31,954
Total cost of revenues	149,197	123,987	98,085
Gross profit	228,330	176,023	132,616
Operating expenses:
Sales and marketing	95,484	77,506	61,832
Research and development	37,645	29,098	26,736
General and administrative	79,252	62,123	47,598
Total operating expenses	212,381	168,727	136,166
Operating income (loss)	15,949	7,296	(3,550)
Other income (expense)	802	73	(124)
Income (loss) before income taxes	16,751	7,369	(3,674)
Income tax expense (benefit)	(21,847)	651	177
Net income (loss)	38,598	6,718	(3,851)
Other comprehensive loss, net of tax
Unrealized losses on securities, net of tax	(139)
Total other comprehensive loss, net of tax	(139)
Comprehensive income (loss)	$ 38,459	$ 6,718	$ (3,851)
Net income (loss) per share:
Basic (in dollars per share)	$ 0.74	$ 0.13	$ (0.08)
Diluted (in dollars per share)	$ 0.70	$ 0.12	$ (0.08)
Weighted-average shares used in computing net income (loss) per share:
Basic (in shares)	52,425	51,415	50,913
Diluted (in shares)	54,887	54,057	50,913

Consolidated Statements of Changes in Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Accumulated Other Comprehensive Loss	Total
Balance at Jun. 30, 2015	$ 51	$ 155,672	$ (48,143)		$ 107,580
Balance (in shares) at Jun. 30, 2015	50,703
Increase (Decrease) in Stockholders' Equity
Stock-based compensation		18,641			18,641
Stock options exercised		6,197			6,197
Stock options exercised (in shares)	536
Issuance of common stock upon vesting of restricted stock units (in shares)	120
Issuance of common stock under employee stock purchase plan		2,991			2,991
Issuance of common stock under employee stock purchase plan (in shares)	102
Net settlement for taxes and/or exercise price related to equity awards		(11,986)			(11,986)
Net settlement for taxes and/or exercise price related to equity awards (in shares)	(329)
Net income (loss)			(3,851)		(3,851)
Balance at Jun. 30, 2016	$ 51	171,515	(51,994)		119,572
Balance (in shares) at Jun. 30, 2016	51,132
Increase (Decrease) in Stockholders' Equity
Stock-based compensation		28,507			28,507
Stock options exercised	$ 1	8,550			8,551
Stock options exercised (in shares)	691
Issuance of common stock upon vesting of restricted stock units (in shares)	255
Issuance of common stock under employee stock purchase plan		3,677			3,677
Issuance of common stock under employee stock purchase plan (in shares)	127
Net settlement for taxes and/or exercise price related to equity awards		(19,859)			(19,859)
Net settlement for taxes and/or exercise price related to equity awards (in shares)	(467)
Excess tax benefits from stock-based compensation		447			447
Net income (loss)			6,718		6,718
Balance at Jun. 30, 2017	$ 52	192,837	(45,276)		$ 147,613
Balance (in shares) at Jun. 30, 2017	51,738				51,738
Increase (Decrease) in Stockholders' Equity
Stock-based compensation		32,378			$ 32,378
Stock options exercised	$ 1	8,001			8,002
Stock options exercised (in shares)	839
Issuance of common stock upon vesting of restricted stock units (in shares)	452
Issuance of common stock under employee stock purchase plan		4,304			4,304
Issuance of common stock under employee stock purchase plan (in shares)	108
Net settlement for taxes and/or exercise price related to equity awards		(17,932)			(17,932)
Net settlement for taxes and/or exercise price related to equity awards (in shares)	(379)
Unrealized losses on securities, net of tax				$ (139)	(139)
Net income (loss)			38,598		38,598
Balance at Jun. 30, 2018	$ 53	$ 219,588	$ (6,678)	$ (139)	$ 212,824
Balance (in shares) at Jun. 30, 2018	52,758				52,758

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Cash flows from operating activities:
Net income (loss)	$ 38,598	$ 6,718	$ (3,851)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Stock-based compensation expense	30,354	26,734	17,563
Depreciation and amortization expense	30,202	21,027	13,873
Deferred income tax expense (benefit)	(21,870)	152	150
Provision for doubtful accounts	296	113	159
Net accretion of discounts and amortization of premiums on available-for-sale securities	(443)
Net realized losses on sales of available-for-sale securities	2
Loss on disposal of equipment	227	253	712
Changes in operating assets and liabilities:
Accounts receivable	(1,494)	(472)	(725)
Prepaid expenses and other	(2,141)	(2,074)	(3,270)
Accounts payable	740	219	72
Accrued expenses	11,641	6,465	8,310
Tenant improvement allowance	11,754	2,845
Net cash provided by operating activities	97,866	61,980	32,993
Cash flows from investing activities:
Purchases of available-for-sale securities from funds held for clients	(196,594)
Proceeds from sales and maturities of available-for-sale securities from funds held for clients	73,044
Net change in funds held for clients' cash and cash equivalents	(158,394)	297,163	(648,403)
Capitalized internal-use software costs	(15,638)	(13,641)	(8,391)
Purchases of property and equipment	(21,676)	(21,338)	(16,083)
Lease allowances used for tenant improvements	(11,754)	(2,845)
Acquisition of business, net of cash acquired	(8,346)		(483)
Net cash provided by (used in) investing activities	(339,358)	259,339	(673,360)
Cash flows from financing activities:
Net change in client fund obligations	281,467	(297,163)	648,403
Proceeds from exercise of stock options		34	137
Proceeds from employee stock purchase plan	4,304	3,677	2,991
Taxes paid related to net share settlement of equity awards	(10,554)	(11,342)	(5,926)
Excess tax benefits from stock-based compensation		447
Net cash provided by (used in) financing activities	275,217	(304,347)	645,605
Net Change in Cash and Cash Equivalents	33,725	16,972	5,238
Cash and Cash Equivalents-Beginning of Year	103,468	86,496	81,258
Cash and Cash Equivalents-End of Year	137,193	103,468	86,496
Supplemental Disclosure of Non-Cash Investing and Financing Activities
Build-out allowances received from landlords	1,956		1,888
Purchase of property and equipment and internal-use software, accrued but not paid	659	667	607
Supplemental Disclosure of Cash Flow Information
Cash paid (refunds received) for income taxes	$ (53)	$ 28	$ 3

Organization and Description of Business	12 Months Ended
Organization and Description of Business	Jun. 30, 2018
Organization and Description of Business
Organization and Description of Business	(1) Organization and Description of Business Paylocity Holding Corporation (the “Company”) is a cloud-based provider of payroll and human capital management software solutions for medium-sized organizations. Services are provided in a Software-as-a-Service (“SaaS”) delivery model utilizing the Company’s cloud-based platform. Payroll services include collection, remittance and reporting of payroll liabilities to the appropriate federal, state and local authorities.

Summary of Significant Accounting Policies

12 Months Ended

Jun. 30, 2018

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

(2) Summary of Significant Accounting Policies

(a) Basis of Presentation, Consolidation, and Use of Estimates

The accompanying consolidated financial statements of the Company have been prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”).

The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Future events and their effects cannot be predicted with certainty; accordingly, accounting estimates require the exercise of judgment. Accounting estimates used in the preparation of these consolidated financial statements change as new events occur, as more experience is acquired, as additional information is obtained and as the operating environment changes.

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

(b) Concentrations of Risk

The Company regularly maintains cash balances that exceed Federal Depository Insurance Corporation limits. No individual client represents 10% or more of total revenues. For all periods presented, 100% of total revenues were generated by clients in the United States.

The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.

(d) Funds Held For Clients, Corporate Investments and Client Fund Obligations

The Company obtains funds from clients in advance of performing payroll and payroll tax filing services on behalf of those clients. Funds held for clients represent assets that are used solely for the purposes of satisfying the obligations to remit funds relating to payroll and payroll tax filing services. The Company has classified funds held for clients as a current asset since these funds are held solely for the purposes of satisfying the client fund obligations. Funds held for clients is primarily comprised of cash and cash equivalents invested in demand deposit accounts. Starting in July 2017, the Company also invested a portion of its funds held for clients in marketable securities.

Marketable securities classified as available-for-sale are recorded at fair value on the consolidated balance sheets. Unrealized gains and losses, net of applicable income taxes, are reported as other comprehensive income (loss) in the consolidated statements of operations and comprehensive income (loss). Interest on marketable securities included in funds held for clients is reported as interest income on funds held for clients on the consolidated statements of operations and comprehensive income (loss).

The Company reviews the composition of its portfolio for any available-for-sale security that has a fair value that falls below its amortized cost. If any security fits this criterion, the Company further evaluates whether other-than-temporary impairment exists by considering whether the Company has the intent and ability to retain the security for a period of time sufficient enough to allow for anticipated fair value recovery. The Company did not record any other-than-temporary impairment charges during the year ended June 30, 2018.

Client fund obligations represent the Company’s contractual obligations to remit funds to satisfy clients’ payroll and tax payment obligations and are recorded in the accompanying balance sheets at the time that the Company obtains funds from clients. The client fund obligations represent liabilities that will be repaid within one year of the balance sheet date.

(e) Accounts Receivable

Accounts receivable are recorded at the invoiced amount and do not bear interest. Amounts collected on trade accounts receivable are included in net cash provided by operating activities in the statements of cash flows. The Company maintains an allowance for doubtful accounts reflecting estimated potential losses in its accounts receivable portfolio. In establishing the required allowance, management considers historical losses adjusted to take into account current market conditions and the Company’s clients’ financial conditions, the amount of receivables in dispute, the current receivables aging and current payment patterns. The Company reviews its allowance for doubtful accounts quarterly. Past due balances over 60 days and over a specified amount are reviewed individually for collectability. All other balances are reviewed on a pooled basis. Account balances are charged off against the allowance after all commercially reasonable means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance-sheet credit exposure related to its clients.

Activity in the allowance for doubtful accounts was as follows:


	For the Years Ended June 30,
	2016		2017		2018
Balance at the beginning of the year	$	149	$	193	$	266
Charged to expense		159		113		296
Write-offs		(115)		(40)		(187)
Balance at the end of the year	$	193	$	266	$	375

(f) Prepaid Expenses and Other Assets

Prepaid expenses and other assets consist primarily of tenant improvement allowance receivable from landlord, prepaid licensing fees, prepaid insurance premiums, deposits with vendors, corporate investments and time clocks available for sale or lease.

(g) Capitalized Internal-Use Software

The Company applies Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 350-40, Intangibles—Goodwill and Other—Internal-Use Software, to the accounting for costs of internal-use software. Internal-use software costs are capitalized when application development begins, it is probable that the project will be completed, and the software will be used as intended. Costs associated with preliminary project stage activities, training, maintenance and all other post implementation stage activities are expensed as incurred. The Company also capitalizes certain costs related to specific upgrades and enhancements when it is probable the expenditures will result in significant additional functionality. The capitalization policy provides for the capitalization of certain payroll costs for employees who are directly associated with developing internal-use software as well as certain external direct costs, such as consulting fees. Capitalized employee costs are limited to the time directly spent on such projects.

Capitalized internal-use software costs are amortized on a straight-line basis over the estimated useful lives, generally over a 24 or 36-month period. Management evaluates the useful lives of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets.

(h) Property and Equipment and Long-Lived Assets

Property and equipment are stated at cost. Depreciation on property and equipment is calculated on the straight-line method over the estimated useful lives of the assets, generally three to seven years for most classes of assets, or over the term of the related lease for leasehold improvements.

Long-lived assets, such as property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group to be tested for possible impairment, the Company first compares the undiscounted cash flows expected to be generated by that asset or asset group to its carrying amount. If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying amount exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary.

(i) Intangible Assets, Net of Accumulated Amortization

Intangible assets are comprised primarily of client relationship acquisitions and are reported net of accumulated amortization on the consolidated balance sheets. Client relationships use the straight-line method of amortization over a seven or nine-year time frame from the date of acquisition, while non-solicitation agreements use the straight-line method of amortization over the term of the related agreements. The Company tests intangible assets for potential impairment when events or changes in circumstances indicate that the carrying value of such assets may not be recoverable.

(j) Goodwill

Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Goodwill is not amortized, but instead is tested for impairment at the reporting unit level. The Company adopted ASU 2017-04, Intangibles – Goodwill and Other for its annual goodwill impairment test performed during fiscal 2018. Based on the new standard, if the fair value of the reporting unit is less than its carrying amount, the Company would record an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, but the loss recognized should not exceed the amount of goodwill allocated to the reporting unit.

The Company performs its annual impairment review of goodwill in its fiscal fourth quarter or when a triggering event occurs between annual impairment tests. No impairment was recorded in fiscal 2016, 2017 or 2018 as a result of the Company’s qualitative assessments over its single reporting segment.

(k) Deferred Rent

The Company has operating lease agreements for its office space, which contain provisions for future rent increases, periods of rent abatement and build-out allowances. The Company records monthly rent expense for each lease equal to the total payments due over the lease term, divided by the number of months of the lease term. Build-out allowances are recorded as part of leasehold improvements and the incentive is amortized over the lease term against depreciation. The difference between recorded rent expense and the amount paid is included in “Accrued expenses” and “Deferred rent” in the accompanying consolidated balance sheets.

(l) Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

Valuation allowances are provided when necessary to reduce deferred tax assets to the amount more likely than not to be realized. Significant management judgment is required in determining the period in which the reversal of a valuation allowance should occur. The Company is required to consider all available evidence, both positive and negative, such as historical levels of income and future forecasts of taxable income among other items, in determining whether a full or partial release of its valuation allowance is required. The Company is also required to schedule future taxable income in accordance with accounting standards that address income taxes to assess the appropriateness of a valuation allowance, which further requires the exercise of significant management judgment.

The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties as an element of income tax expense.

Refer to Note 11 for additional information on income taxes.

(m) Revenue Recognition

The Company recognizes revenue in accordance with ASC 605-25, Revenue Recognition—Multiple Element Arrangements, Accounting Standards Update No. 2009-13, Multiple-Deliverable Revenue Arrangements (“ASU 2009‑13”), and Staff Accounting Bulletin 104, Revenue Recognition. Revenue is recognized when there is persuasive evidence that an arrangement exists, delivery has occurred, the fee is fixed or determinable and collection of the revenue is probable.

The Company derives its revenue predominantly from recurring fees and non-recurring service fees. Recurring fees are collected under agreements for payroll, timekeeping, HR-related cloud-based computing services and monthly time clock rentals. While the majority of its agreements are generally cancellable by the client on 60 days’ notice or less, the Company began entering into term arrangements in fiscal 2018, which are generally over two years in length. Non-recurring service fees consist mainly of implementation and custom reporting services. Such fees are billed to clients and revenue is recorded upon completion of the service. The Company’s agreements do not include general rights of return and do not provide clients with the right to take possession of the software supporting the services being provided. As such, the agreements are accounted for as service contracts.

Interest income collected on funds held for clients is recognized in recurring revenues when earned as the collection, holding and remittance of these funds are critical components of providing these services.

Most multiple-element arrangements include a short implementation services phase, which involves establishing the client within and loading data into the Company’s cloud-based applications. Major recurring fees included in multiple-element arrangements include:

Payroll processing and related services, including payroll reporting and tax filing services delivered on a weekly, biweekly, semi-monthly, or monthly basis depending upon the payroll frequency of the client and on an annual basis if a client selects W-2 preparation and processing services,

Time and attendance reporting services, including time clock rentals, delivered on a monthly basis, and

Cloud-based HR software solutions, including employee administration and benefits enrollment and administration, delivered on a monthly basis.

For each agreement, the Company evaluates whether the individual deliverables qualify as separate units of accounting. If one or more of the deliverables does not have standalone value upon delivery, the deliverables that do not have standalone value are generally combined and treated as a single unit of accounting by frequency of occurrence for the product category involved such as biweekly payroll or monthly timekeeping services. Revenues for arrangements treated as a single unit of accounting are generally recognized within the same month that the services are rendered.

In determining whether implementation services can be accounted for separately from recurring revenues, the Company considers the nature of the implementation services and the availability of the implementation services from other vendors. The Company was able to establish standalone value for implementation activities based on the historical activity of third-party vendors that performed these services and as such, accounts for such implementation services separate from the recurring revenues.

If the recurring services have standalone value upon delivery, the Company accounts for each separately and revenues are recognized as services are delivered with allocation of consideration based on the relative selling price method as established in ASU 2009-13. That method requires the selling price of each element in a multiple-deliverable arrangement to be based on, in descending order: (i) vendor specific objective evidence of fair value (“VSOE”), (ii) third-party evidence of fair value (“TPE”) or (iii) management’s best estimate of the selling price (“BESP”).

The Company is not able to establish VSOE because the deliverables are sold across an insufficiently narrow range of prices on a stand-alone basis and is also not able to establish TPE because no third-party offerings are reasonably comparable to the Company’s offerings. The Company thus established its BESP by service offering, requiring the use of significant estimates and judgment. The Company considers numerous factors, including the nature of the deliverables themselves and the pricing and discounting practices utilized by the Company’s sales force. Arrangement consideration is allocated to each deliverable based on the established BESP and subject to the limitation that because the arrangements are cancellable with 60 days’ or less notice or additional consideration is contingent on the delivery of future services, recurring revenue is not allocated to any deliverable until the consideration has been earned, typically with each payroll cycle or monthly, depending on the service.

Revenues generated from sales through partners or utilizing partner services are recognized in accordance with the appropriate accounting guidance of ASC 605-45, Principal Agent Considerations. The Company reports revenue generated through partners or utilizing partner services at the gross amount billed to clients when (i) the Company is the primary obligor, (ii) the Company has latitude to establish the price charged and (iii) the Company bears the credit risk in the transaction.

Sales taxes collected from clients and remitted to governmental authorities where applicable are accounted for on a net basis and therefore are excluded from revenues in the statements of operations and comprehensive income (loss).

(n) Cost of Revenues

Cost of revenues consists primarily of the cost of recurring revenues and implementation services, which are expensed when incurred. Cost of revenues for recurring revenues consists primarily of costs to provide recurring services and support to the Company’s clients, and includes amortization of capitalized internal-use software. Cost of revenues for implementation services and other consists primarily of costs to provide implementation and other services.

(o) Advertising

Advertising costs are expensed as incurred. Advertising costs amounted to $219, $199 and $179 for the years ended June 30, 2016, 2017 and 2018, respectively.

(p) Stock-Based Compensation

The Company recognizes all employee stock-based compensation as a cost in the financial statements. Equity-classified awards, including those under the 2014 Employee Stock Purchase Plan (“ESPP”), are measured at the grant date fair value of the award and expense is recognized, net of assumed forfeitures, on a straight-line basis over the requisite service period for each separately vesting portion of the award. For stock options and estimated shares purchasable under the ESPP, the Company estimates grant date fair value using the Black-Scholes option-pricing model and periodically updates the assumed forfeiture rates for actual experience over their vesting term or the term of the ESPP purchase period.

(q) Commitments and Contingencies

Liabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred.

(r) Segment Information

The Company’s chief operating decision maker reviews the financial results of the Company in total when evaluating financial performance and for purposes of allocating resources. The Company has thus determined that it operates in a single cloud-based software solution reporting segment.

(s) Recently Adopted Accounting Standards

In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation (Topic 718) (“ASU 2016-09”) which modifies accounting for excess tax benefits and tax deficiencies, forfeitures, and employer tax withholding requirements. ASU 2016-09 also clarifies certain classifications on the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, with early adoption permitted. The Company adopted this standard effective July 1, 2017, and it resulted in an increase to the Company’s gross net operating loss of $30,783. As of December 31, 2017, the adoption of this standard did not have a material impact on its consolidated financial statements and disclosures due to the Company’s valuation allowance on deferred tax assets. However, during the third quarter of fiscal 2018, the Company released its valuation allowance and as a result, the Company recorded a significant increase in deferred tax assets due to excess tax benefits from employee stock exercises. Refer to Note 11 for additional information on the release of the valuation allowance and the impact of excess tax benefits from employee stock exercises. The Company will continue to estimate forfeitures at each reporting period, rather than electing an accounting policy change to record the impact of such forfeitures as they occur.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805) (“ASU 2017-01”) which clarifies the definition of a business. ASU 2017-01 provides guidance to assist entities in evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. It is effective, on a prospective basis, for fiscal years beginning after December 15, 2017, with early adoption permitted. The Company adopted this standard effective January 1, 2018. The adoption of ASU 2017-01 did not have a material impact on the Company’s consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350) (“ASU 2017-04”), which eliminated Step 2 of the goodwill impairment test, which required the impairment charge to be measured as a difference between the implied fair value of goodwill against its carrying amount. Instead, an entity measures goodwill impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The Company adopted this standard for the annual goodwill impairment test performed during fiscal 2018. The adoption of ASU 2017-04 did not have a material impact on the Company’s financial statements.

In March 2018, the FASB issued ASU 2018-05, Income Taxes (Topic 740) (“ASU 2018-05”) which incorporates the SEC’s Staff Accounting Bulletin 118 (“SAB 118”) issued on December 22, 2017. SAB 118 provides for a provisional measurement period for entities to finalize their accounting for certain income tax effects related to the Tax Cuts and Jobs Act (the “Act”), not to exceed one year from enactment of the new tax law. Entities are permitted to utilize reasonable estimates until they have finished analyzing the effects of the Act. The Company recognized provisional income tax effects of the Act during fiscal 2018 in accordance with SAB 118, and expects to complete its accounting under the Act by the end of December 2018. Refer to Note 11 for additional information.

(t) Recently Issued Accounting Standards

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). ASU 2014-09 supersedes a majority of existing revenue recognition guidance under US GAAP, and requires companies to recognize revenue when it transfers goods or services to a customer in an amount that reflects the consideration to which a company expects to be entitled. Companies may need to apply more judgment and estimation techniques or methods while recognizing revenue, which could result in additional disclosures to the financial statements. In addition, in March 2016, April 2016, May 2016 and December 2016 the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) (“ASU 2016-08”), ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing (“ASU 2016-10”), ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients (“ASU 2016-12”) and ASU 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers (“ASU 2016-20”), respectively, to amend certain guidance in ASU 2014-09. Topic 606 allows for either a retrospective or modified retrospective transition method. ASU 2014-09 was originally effective for fiscal years beginning after December 15, 2016. In July 2015, the FASB approved a one-year deferral of ASU 2014-09 and all amendments to it, with a new effective date for fiscal years beginning after December 15, 2017 with early adoption permitted as of the original effective date. The Company will adopt the new standard in its fiscal year beginning July 1, 2018 using the modified retrospective method of transition, which limits the application of the new standard only to contracts that were not completed as of the effective date of July 1, 2018. The Company is in the process of finalizing its accounting conclusions around the new standard as well as finalizing the impacts of the disclosure requirements and transition adjustments on its consolidated financial statements. The estimated impact is described below. The Company is also nearly complete in updating its existing internal controls and processes as it relates to the new standard.

Under the current revenue standard through fiscal 2018, the Company accounts for implementation and recurring services each as a separate unit of account. The Company has been able to establish standalone value for implementation services as supported by the activity of third-party resellers and other vendors that performed certain implementation services. The Company has observed that third party implementation activity has continued to decrease over time and at the same time, the Company has invested in proprietary applications and processes that impact implementation activities. The Company has determined that from July 1, 2018 forward it will no longer have a sufficient basis to establish standalone value of implementations for its proprietary products due to the culmination of the changes to the Company’s applications and processes that eliminate the ability of third parties to perform implementation services. Similarly, the Company determined that these implementation services are not a separate performance obligation under the new standard for contracts entered into after July 1, 2018 and the associated implementation fees will be treated as nonrefundable upfront fees which will be deferred and amortized over a period of time instead of recognized upon completion.

The Company also has assessed the treatment of certain costs under the new standard and currently expects that there will be a material impact in the manner in which it treats both costs of obtaining new contracts (i.e., selling and commission costs) and direct costs of fulfillment. The Company will be required to defer these costs and amortize them over the expected period of benefit, which it has determined to be 7 years. The Company estimates that the cumulative effect related to the deferral of the costs of obtaining new contracts will be approximately $51,000, net of deferred taxes, which will be recorded through Accumulated Deficit in the Statement of Changes in Stockholder’s Equity upon adoption on July 1, 2018.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”) which amends various aspects of existing guidance for leases. ASU 2016-02 requires an entity to recognize assets and liabilities arising from a lease with terms greater than twelve months, along with additional qualitative and quantitative disclosures. ASU 2016-02 also requires the use of the modified retrospective method, which will require adjustment to all comparative periods presented. In March 2018, the FASB affirmed its proposed ASU, Leases (Topic 842): Targeted Improvements, which provides an additional transition method allowing an entity to apply the new lease accounting and disclosure requirements only for the year of adoption with the comparative periods continuing to be in accordance with current GAAP. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. While the Company is still assessing the impact of the new standard, it expects the adoption of this standard will have a material effect on its consolidated balance sheets. The Company is evaluating the transition methods and will adopt this new standard in its fiscal year beginning July 1, 2019.

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of other recently issued standards that are not yet effective will not have a material impact on the Company’s consolidated financial statements upon adoption.

Funds Held for Clients and Corporate Investments

12 Months Ended

Jun. 30, 2018

Funds Held For Clients And Corporate Investments [Abstract]

Funds Held for Clients and Corporate Investments

(3) Funds Held for Clients and Corporate Investments

Investments consist of the following as of June 30, 2018:


			Gross		Gross
	Amortized		unrealized		unrealized
Type of Issue	cost		gains		losses		Fair value
Funds held for clients' cash and cash equivalents	$	1,102,541	$	—	$	(3)	$	1,102,538
Available-for-sale securities:
Commercial paper		50,703		3		(4)		50,702
Corporate bonds		37,508		8		(134)		37,382
Asset-backed securities		25,901		1		(55)		25,847
U.S. treasury securities		9,879		—		(2)		9,877
Total available-for-sale securities		123,991		12		(195)		123,808
Investments	$	1,226,532	$	12	$	(198)	$	1,226,346

Funds held for clients’ cash and cash equivalents included demand deposit accounts, commercial paper and money market funds as of June 30, 2018.

Classification of investments on the consolidated balance sheets is as follows:


	Year ended June 30,
	2017		2018
Funds held for clients	$	942,459	$	1,225,614
Prepaid expenses and other		—		732
Total investments	$	942,459	$	1,226,346

Available-for-sale securities that have been in an unrealized loss position for a period of less than 12 months as of June 30, 2018 had fair market values as follows:


	Gross
	unrealized
	losses		Fair value
Commercial paper	$	(4)	$	23,657
Corporate bonds		(134)		29,122
Asset-backed securities		(55)		17,960
U.S. treasury securities		(2)		4,933
Total available-for-sale securities	$	(195)	$	75,672

As the Company started investing funds held for clients in available-for-sale securities during the year ended June 30, 2018, no securities have been in an unrealized loss position for more than 12 months. The Company did not make any material reclassification adjustments out of accumulated other comprehensive loss for realized gains and losses on the sale of available-for-sale securities during the year ended June 30, 2018. Gross realized gains and losses on the sale of available-for-sale securities were immaterial for the year ended June 30, 2018.

The Company regularly reviews the composition of its portfolio to determine the existence of other-than-temporary-impairment (“OTTI”). The Company did not recognize any OTTI charges in accumulated other comprehensive loss during the year ended June 30, 2018, nor does it believe that OTTI exists in its portfolio as of June 30, 2018. The Company plans to retain the securities in an unrealized loss position for a period of time sufficient enough to recover their amortized cost basis or until their maturity date. The Company believes that the unrealized losses on these securities were not due to deterioration in credit risk. The securities in an unrealized loss position held an A-1 rating or better as of June 30, 2018.

Expected maturities of available-for-sale securities at June 30, 2018 are as follows:


	Amortized
	cost		Fair value
One year or less	$	99,420	$	99,319
One year to two years		22,571		22,487
Two years to three years		2,000		2,002
Total available-for-sale securities	$	123,991	$	123,808

Fair Value Measurements

12 Months Ended

Jun. 30, 2018

Fair Value Measurement

Fair Value Measurement

(4) Fair Value Measurement

The Company applies the fair value measurement and disclosure provisions of ASC 820, Fair Value Measurements and Disclosures, and ASU 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

Level 1—Quoted prices in active markets for identical assets and liabilities.

Level 2—Quoted prices in active markets for similar assets and liabilities, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

The Company measures any cash and cash equivalents, accounts receivable, accounts payable and client fund obligations at fair value on a recurring basis using Level 1 inputs. The Company considers the recorded value of these financial assets and liabilities to approximate the fair value of the respective assets and liabilities at June 30, 2017 and June 30, 2018 based upon the short-term nature of these assets and liabilities.

Marketable securities, consisting of securities classified as available-for-sale as well as certain cash equivalents, are recorded at fair value on a recurring basis using Level 2 inputs obtained from an independent pricing service. Available-for-sale securities include commercial paper, corporate bonds, asset-backed securities and US treasury securities. The independent pricing service utilizes a variety of inputs including benchmark yields, broker/dealer quoted prices, reported trades, issuer spreads as well as other available market data. The Company, on a sample basis, validates the pricing from the independent pricing service against another third-party pricing source for reasonableness. The Company has not adjusted any prices obtained by the independent pricing service, as it believes they are appropriately valued. There were no available-for-sale securities classified in Level 3 of the fair value hierarchy at June 30, 2018, and the Company did not transfer assets between Levels during the year ended June 30, 2018. The Company did not hold any marketable securities at June 30, 2017.

The fair value level for the funds held for clients’ cash and cash equivalents and available-for-sale securities as of June 30, 2018 is as follows:


	Total		Level 1		Level 2		Level 3
Funds held for clients' cash and cash equivalents	$	1,102,538	$	1,076,414	$	26,124	$	—
Available-for-sale securities:
Commercial paper		50,702		—		50,702		—
Corporate bonds		37,382		—		37,382		—
Asset-backed securities		25,847		—		25,847		—
U.S. treasury securities		9,877		—		9,877		—
Total available-for-sale securities		123,808		—		123,808		—
Investments	$	1,226,346	$	1,076,414	$	149,932	$	—

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Business Combinations

12 Months Ended

Jun. 30, 2018

Business Combinations

Business Combinations

(5) Business Combinations

In March 2018, the Company acquired substantially all the assets of BeneFLEX HR Resources, Inc. (“BeneFLEX”), a third party employee benefits administrator, for $9,346, net of cash acquired. BeneFLEX administers employee benefit plans, including flexible spending accounts, health savings accounts, health reimbursement accounts, COBRA, and others. The Company paid $8,346 upon closing and may be required to pay an additional $1,000 subject to BeneFLEX attaining certain revenue targets and in the absence of indemnity claims. This acquisition expands the portfolio of services available to the Company’s clients by allowing it to provide additional benefit administration solutions to its clients, prospects, and broker partners.

The Company accounts for business combinations in accordance with ASC 805 (Business Combinations). The Company recorded the acquisition using the acquisition method of accounting and recognized assets at their fair value as of the date of acquisition. The Company determined the fair value of identifiable intangible assets acquired primarily by using an income approach.

The following table summarizes the allocation of the purchase price for BeneFLEX:


	At March 8, 2018
Goodwill	$	3,587
Client relationships		5,550
Non-solicitation agreements		240
Net liabilities assumed		(31)
Total purchase price	$	9,346

The results from this acquisition have been included in the Company’s consolidated financial statements since the closing of the acquisition. Pro forma information has not been presented because the effect of the acquisition is not material to the Company’s consolidated financial statements. Goodwill will be amortized over a period of 15 years for income tax purposes. Direct costs related to the acquisitions were recorded as general and administrative expenses as incurred.

Capitalized Internal-Use Software

12 Months Ended

Jun. 30, 2018

Capitalized Internal-Use Software.

Capitalized Internal-Use Software

(6) Capitalized Internal-Use Software

Capitalized internal-use software and accumulated amortization were as follows:


	Year ended June 30,
	2017		2018
Capitalized internal-use software	$	49,663	$	67,678
Accumulated amortization		(32,269)		(46,584)
Capitalized internal-use software, net	$	17,394	$	21,094

Amortization of capitalized internal-use software amounted to $5,446, $9,447 and $14,315 for the years ended June 30, 2016, 2017 and 2018, respectively and is included in Cost of Revenues—Recurring Revenues.

Property and Equipment

12 Months Ended

Jun. 30, 2018

Property and Equipment.

Property and Equipment

(7) Property and Equipment

The major classes of property and equipment are as follows as of June 30:


	Year ended June 30,
	2017		2018
Office equipment	$	3,591	$	3,743
Computer equipment		24,411		29,768
Furniture and fixtures		7,547		10,382
Software		4,954		5,965
Leasehold improvements		21,426		36,366
Time clocks rented by clients		4,240		4,534
Total		66,169		90,758
Accumulated depreciation		(25,413)		(28,729)
Property and equipment, net	$	40,756	$	62,029

Depreciation expense amounted to $6,905, $10,068 and $14,192 for the years ended June 30, 2016, 2017 and 2018, respectively.

Goodwill and Intangible Assets

12 Months Ended

Jun. 30, 2018

Goodwill and Intangible Assets

Goodwill and Intangible Assets

(8) Goodwill and Intangible Assets

The following table summarizes changes in goodwill during the year ended June 30, 2018:


Balance at June 30, 2017	$	6,003
Additions attributable to current year acquisition		3,587
Balance at June 30, 2018	$	9,590

The Company’s amortizable intangible assets and estimated useful lives are as follows:



	June 30,		June 30,		Useful
	2017		2018		Life
Client relationships	$	12,580	$	18,130	7 - 9 years
Non-solicitation agreements		360		600	2 - 4 years
Total		12,940		18,730
Accumulated amortization		(4,033)		(5,728)
Intangible assets, net	$	8,907	$	13,002

The increase in goodwill and intangible assets is related to the acquisition of BeneFLEX as discussed in Note 5. Amortization expense for acquired intangible assets was $1,522, $1,512 and $1,695 for the years ended June 30, 2016, 2017 and 2018, respectively. Future amortization expense for acquired intangible is as follows, as of June 30, 2018:


Year ending June 30,
2019	$	2,251
2020		2,251
2021		2,251
2022		2,232
2023		2,118
Thereafter		1,899
Total	$	13,002

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

+ References + Details

Accrued Expenses

12 Months Ended

Jun. 30, 2018

Accrued Expenses

Accrued Expenses

(9) Accrued Expenses

The components of accrued expenses are as follows:


	Year ended June 30,
	2017		2018
Accrued payroll and personnel costs	$	25,131	$	31,206
Lease exit obligations		—		2,143
Other		5,170		8,892
Total accrued expenses	$	30,301	$	42,241

Leases

12 Months Ended

Jun. 30, 2018

Leases

Leases

(10) Leases

The Company primarily leases office space in Illinois, California, Florida, Idaho, New Jersey, New Hampshire, New York, Michigan and Missouri under non-cancellable operating leases expiring on various dates from July 2018 through October 2032. The leases provide for increasing annual base rents and oblige the Company to fund proportionate share of operating expenses and, in certain cases, real estate taxes. The Company also leases various types of office and production related equipment under non-cancellable operating leases expiring on various dates from January 2019 through June 2022.

In June 2016, the Company entered into a lease for approximately 310 rentable square feet of office space located in Schaumburg, Illinois. The Company currently utilizes the leased premises as its headquarters, relocating from its previous headquarters in Arlington Heights, Illinois in the fourth quarter of fiscal 2018. The lease provided for phased delivery and commencement dates, and the Company commenced each phase on the following dates: Phase I (June 1, 2017), Phase II (November 1, 2017) and Phase III (July 1, 2018). The Company expects to commence Phase IV on July 1, 2019 with the actual commencement date subject to timely delivery of the premises by the landlord. Under the terms of the lease, the Company receives a tenant improvement allowance equal to $65.00 per rentable square foot and a 12-month rent abatement period for each lease phase. The lease began on the Phase I commencement date (June 1, 2017) and will end on October 31, 2032 with two subsequent five-year renewal options.

In February 2017, the Company entered into a lease for approximately 62 rentable square feet of office space located in Meridian, Idaho. The Company uses the leased premises to accommodate the continued expansion of its employee base in the western region of the United States. The lease provided for phased delivery and commencement dates and the Company commenced Phase I on July 2, 2018. The Company expects to commence Phase II on February 1, 2020 with the actual commencement date subject to timely delivery of the premises by the landlord. Under the terms of the lease, the Company receives a tenant improvement allowance equal to $50.00 per rentable square foot and a 3-month rent abatement period for each lease phase. The lease began on the Phase I commencement date (July 2, 2018) and will end on July 31, 2028 with four subsequent five-year renewal options.

In June 2018, the Company ceased using approximately 110 rentable square feet of its former headquarters in Arlington Heights, Illinois in conjunction with relocating to its new Schaumburg, Illinois headquarters. As a result, the Company recognized $2,336 in early lease exit costs that are included in general and administrative expense in its consolidated statements of operations and comprehensive income (loss).

The following table is a summary of the changes in the remaining lease obligation related to the former headquarters, which is recorded in accrued expenses and other long-term liabilities on the consolidated balance sheet. The difference between the lease exit costs recognized in general and administrative expense as discussed above and the remaining lease obligation relates to the write-off of deferred rent recorded in prior periods.


Balance at June 30, 2017	$	—
Additions		3,446
Payments		(199)
Adjustments		14
Balance at June 30, 2018	$	3,261

Minimum rent payments under operating leases are recognized on a straight-line basis over the term of the lease including any periods of free rent and future rent increases. Rental expense for operating leases, including amortization of leasehold improvements, was $5,596, $8,571 and $12,293 for the years ended June 30, 2016, 2017 and 2018, respectively.

Future minimum lease payments under non-cancellable operating leases (with initial or remaining lease terms in excess of one year) as of June 30, 2018 are:


Year ending June 30,
2019	$	8,909
2020		9,077
2021		10,126
2022		8,803
2023		8,345
Later years, through 2032		67,225
Total minimum lease payments	$	112,485

Income Taxes

12 Months Ended

Jun. 30, 2018

Income Taxes

Income Taxes

(11) Income Taxes

(a) Income Taxes

Income tax expense (benefit) for the years ended June 30, 2016, 2017 and 2018 consists of the following:


	Year ended June 30,
	2016		2017		2018
Current taxes
U.S. federal	$	—	$	—	$	294
State and local		27		500		364
Deferred taxes:
U.S. federal		136		137		(15,167)
State and local		14		14		(7,338)
Total income tax expense (benefit)	$	177	$	651	$	(21,847)

(b) Tax Rate Reconciliation

Income tax expense (benefit) differed from the amounts computed by applying the U.S. federal income tax rate of 34% for the years ended June 30, 2016 and 2017, and 27.55% for the year ended June 30, 2018 to pretax income (loss) as a result of the following:


	Year ended June 30,
	2016		2017		2018
Income tax expense (benefit) at statutory federal rate	$	(1,249)	$	2,503	$	4,615
Increase (reduction) in income taxes resulting from:
Research and development credit, net of federal income tax benefit		(504)		(1,025)		(1,101)
Non-deductible expenses		557		685		1,531
Change in valuation allowance		2,590		(1,349)		(22,771)
Effect of Tax Cuts and Jobs Act						8,626
Stock-based compensation expense						(10,527)
State and local income taxes, net of federal income tax benefit		(432)		(196)		(2,262)
Other		(785)		33		42
	$	177	$	651	$	(21,847)

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at June 30, 2017 and 2018 are presented below.


	Year ended June 30,
	2017		2018
Deferred tax assets:
Deferred rent	$	1,090	$	1,177
Accrued expenses		2,290		2,709
Stock-based compensation		11,034		10,833
Net operating loss carryforwards		253		10,775
Research and development and other credits		4,984		7,674
Intangible assets		256		271
Other		129		146
Total deferred tax assets		20,036		33,585
Valuation allowance		(8,689)		(355)
Net deferred tax assets		11,347		33,230
Deferred tax liabilities:
Research and development costs		(5,649)		(4,711)
Depreciation		(6,099)		(6,379)
Total deferred tax liabilities		(11,748)		(11,090)
Net deferred tax asset (liability)	$	(401)	$	22,140

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized through the generation of future taxable income. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods), projected future taxable income and tax-planning strategies in making this assessment. The Company established a valuation allowance in fiscal 2014 on all of its net deferred tax assets except for deferred tax liabilities associated with indefinite-lived intangible assets, given that the Company determined that it was more likely than not that the Company would not recognize the benefits of its net operating loss carryforwards prior to their expiration. The Company continued to record a valuation allowance through the first six months of fiscal 2018. In the third quarter of fiscal 2018, management concluded that all of the valuation allowance for the Company’s U.S. federal deferred tax assets and substantially all state deferred tax assets was no longer needed. This is primarily due to three years’ cumulative income through the third quarter of fiscal 2018 and the forecast of future taxable income. At March 31, 2018, based on the evaluation of positive and negative evidence, management believed it is more likely than not that the net deferred tax assets will be realized for all federal and substantially all state purposes. Accordingly, management recognized a non-recurring tax benefit of $22,585 related to the valuation allowance reversal. As of June 30, 2018, the Company continues to maintain a valuation allowance of $355 for certain state tax benefits. Such assessment may change in the future as further evidence becomes available.

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 was signed into law. Over the long term, the Company generally expects to benefit from the lower statutory rates provided by the Act and is currently assessing all other aspects relevant to the Company. The Company operates solely in the United States; therefore, the international provisions of the Act do not apply. In accordance with ASC 740, during the second quarter the Company modified its current federal statutory rate for the year to account for the rate change. At that time, the Company recorded a $156 income tax benefit attributable to the rate change effect on the deferred tax liability for indefinite-lived intangible assets.

In response to the Act, the SEC subsequently issued SAB 118 (later codified into ASU 2018-05) allowing registrants to record provisional amounts to the extent a company’s accounting for the Act is incomplete. Pursuant to disclosure under SAB 118, revaluation of deferred taxes as of December 22, 2017 is incomplete. The Company has recorded provisional estimated tax expense of $8,626 related to the rate change and additional limitations on executive compensation. As the Company released substantially all of its valuation allowance against its deferred taxes, this expense is included in the income tax (benefit) for the year. As of June 30, 2018, the Company is still analyzing the impact of the Act with respect to limitations on the deductibility of executive compensation and certain aspects of bonus depreciation expense. The Company needs additional time to finalize its estimates and expects additional guidance to be issued by the Internal Revenue Service before the assessment of the impact of the Act can be completed. The Company currently expects to complete its accounting for the effects of the Act by the end of December 2018.

At June 30, 2018, the Company has gross net operating loss carryforwards for federal income tax purposes of approximately $45,839 and state income tax purposes of approximately $18,409. The federal NOL carryforwards expire from 2029 to 2038. The state NOL carryforwards expire from 2019 to 2038. The Company also has gross federal and state research and development tax credit and other state credit carryforwards of approximately $7,674, which expire between 2018 and 2038.

The Company had no unrecognized tax benefits as of June 30, 2016, 2017 and 2018, respectively.

The Company files income tax returns with the United States federal government and various state jurisdictions. Certain tax years remain open for federal and state tax reporting jurisdictions in which the Company does business due to net operating loss carryforwards and tax credits unutilized from such years or utilized in a period remaining open for audit under normal statute of limitations relating to income tax liabilities. The Company, including its domestic subsidiary, files a consolidated federal income tax return. For years before 2014 (fiscal year ended June 30, 2015), the Company is no longer subject to U.S. federal examination; however, the Internal Revenue Service (IRS) has the ability to review years prior to 2014 to the extent the Company utilized tax attributes carried forward from those prior years. The statute of limitations on state filings is generally three to four years.

Stockholders' Equity	12 Months Ended
Stockholders' Equity	Jun. 30, 2018
Stockholders' Equity
Stockholders' Equity	(12) Stockholders’ Equity Common Stock Holders of common stock are entitled to one vote per share and to receive dividends, when declared. The holders have no preemptive or other subscription rights and there are no redemption or sinking fund provisions with respect to such shares.

Benefit Plans

12 Months Ended

Jun. 30, 2018

Benefit Plans

Benefit Plans

(13) Benefit Plans

(a) Equity Incentive Plans

The Company maintains a 2008 Equity Incentive Plan (the “2008 Plan”) and a 2014 Equity Incentive Plan (the “2014 Plan”) pursuant to which the Company has reserved shares of its common stock for issuance to its employees, directors and non-employee third parties. The 2014 Plan serves as the successor to the 2008 Plan and permits the granting of options to purchase common stock and other equity incentives at the discretion of the compensation committee of the Company’s board of directors. No new awards have been or will be issued under the 2008 Plan since the effective date of the 2014 Plan. Outstanding awards under the 2008 Plan continue to be subject to the terms and conditions of the 2008 Plan. The number of shares of common stock reserved for issuance under the 2014 Plan will increase automatically each calendar year, continuing through and including January 1, 2024 (the “Evergreen provision”). The number of shares added each year will be equal to the lesser of (a) four and five tenths percent (4.5%) of the number of shares of common stock of the Company issued and outstanding on the immediately preceding December 31, or (b) an amount determined by the Company’s board of directors. The Company’s board of directors determined that, effective January 1, 2018, it would increase the number of common shares in reserve for issuance under the 2014 Plan by 2,367 shares.

As of June 30, 2018, the Company had 13,816 shares allocated to the plans, of which 3,786 shares were subject to outstanding options or awards. Generally, the Company issues previously unissued shares for the exercise of stock options or vesting of awards; however, shares previously subject to 2014 Plan grants or awards that are forfeited or net settled at exercise or release may be reissued to satisfy future issuances.

The following table summarizes the changes in the number of shares available for grant under the Company’s equity incentive plans during the year ended June 30, 2018:


		Number of Shares
Available for grant at July 1, 2017		8,227
January 1, 2018 Evergreen provision increase		2,367
RSUs granted		(929)
Shares withheld in settlement of taxes and/or exercise price		379
Forfeitures		58
Shares removed		(72)
Available for grant at June 30, 2018		10,030

Shares removed represents forfeitures of shares and shares withheld in settlement of taxes and/or payment of exercise price related to grants made under the 2008 Plan. As noted above, no new awards will be issued under the 2008 Plan.

Stock-based compensation expense related to stock options, restricted stock units (“RSUs”), and the Employee Stock Purchase Plan (as described below) is included in the following line items in the accompanying audited consolidated statements of operations and comprehensive income (loss):


	Year ended June 30,
	2016		2017		2018
Cost of revenue – recurring	$	1,648	$	2,162	$	2,830
Cost of revenue – non-recurring		1,127		1,357		1,388
Sales and marketing		4,441		6,287		7,295
Research and development		2,789		3,086		3,748
General and administrative		7,558		13,842		15,093
Total stock-based compensation expense	$	17,563	$	26,734	$	30,354

In addition, the Company capitalized $1,078, $1,773 and $2,024 of stock-based compensation expense in its capitalized internal-use software costs in the years ended June 30, 2016, 2017 and 2018, respectively.

In June 2017, Peter McGrail ceased to serve as the Company’s Chief Financial Officer, but continued to serve as an employee of the Company. In connection with Mr. McGrail’s modified employment arrangement, the compensation committee of the Board of Directors approved modifications to terms of the unvested equity awards granted to Mr. McGrail. Any awards held by Mr. McGrail that were subject to time-based vesting became fully-vested upon his death in August 2017. Additionally, any performance-based restricted stock unit (“PSU”) awards held by Mr. McGrail will continue to vest and settle based upon actual achievement of previously-established performance metrics, with Mr. McGrail receiving a pro-rata share of the PSU awards based on the number of days Mr. McGrail was employed over the vesting period. As a result of these award modifications, the Company recognized $2,925 in additional stock-based compensation expense for the fiscal year ended June 30, 2017, which was included in general and administrative expense in the Company’s consolidated statements of operations and comprehensive income (loss).

Under the 2008 and 2014 Plans, the exercise price of each option cannot be less than the fair value of a share of common stock on the grant date. The options typically vest ratably over a three or four year period and expire 10 years from the grant date. Stock-based compensation expense for the fair value of the options at their grant date is recognized ratably over the vesting schedule for each separately vesting portion of the award.

The Company values stock options using the Black-Scholes option-pricing model, which requires the input of subjective assumptions, including the risk-free interest rate, expected life, expected stock price volatility and dividend yield. The risk-free interest rate assumption is based upon observed interest rates for U.S. Treasury securities consistent with the expected term of the Company’s employee stock options. The expected life represents the period of time the stock options are expected to be outstanding and is based on the simplified method. Under the simplified method, the expected life of an option is presumed to be the mid-point between the vesting date and the end of the contractual term. As the Company has a limited history of trading as a public company, the Company utilizes the simplified method due to the lack of sufficient historical exercise data to provide a reasonable basis upon which to otherwise estimate the expected life of the stock options. Therefore, the expected volatility is based on historical volatilities for publicly traded stock of comparable companies over the estimated expected life of the stock options. The Company assumed no dividend yield because it does not expect to pay dividends in the near future, which is consistent with the Company’s history of not paying dividends.

There were no stock options granted during the years ended June 30, 2017 or 2018. The following table summarizes the assumptions used for estimating the fair value of stock options granted for the year ended June 30, 2016:


Valuation assumptions:
Expected dividend yield	0	%
Expected volatility	34.0	%
Expected term (years)	6.25
Risk-free interest rate	1.83	%

Stock option activity during the periods indicated is as follows:


	Outstanding Options
				Weighted
		Weighted		average
		average		remaining	Aggregate
	Number of	exercise		contractual	intrinsic
	shares	price		term (years)	value
Balance at July 1, 2017	2,751	$	11.54	5.69	$	92,556
Options forfeited	(5)	$	18.41
Options exercised	(839)	$	9.54
Balance at June 30, 2018	1,907	$	12.40	5.00	$	88,595
Options exercisable at June 30, 2018	1,781	$	11.18	4.89	$	84,935
Options vested and expected to vest at June 30, 2018	1,905	$	12.37	5.00	$	88,538

There were no stock options granted during the years ended June 30, 2017 or 2018. The weighted average grant date fair value of options granted during the year ended June 30, 2016 was $12.92. The total intrinsic value of options exercised during the years ended June 30, 2016, 2017 and 2018 was $13,362, $20,802 and $34,083, respectively. At June 30, 2018, there was $152 of total unrecognized compensation cost, net of estimated forfeitures, related to unvested stock options granted under the Plan. That cost is expected to be recognized over a weighted average period of 0.84 years.

The following table summarizes information about stock options outstanding and stock options exercisable at June 30, 2018:


	Options Outstanding				Options Exercisable
Price Range	Number of shares	Weighted average remaining contractual term	Weighted average exercise price		Number of shares	Weighted average exercise price
$2.28 to $3.58	73	2.92	$	2.28	73	$	2.28
$3.59 to $5.96	847	4.14	$	4.88	847	$	4.88
$5.97 to $12.02	127	5.02	$	7.04	127	$	7.04
$12.03 to $20.90	521	5.72	$	17.00	521	$	17.00
$20.91 to $35.28	339	6.47	$	28.32	213	$	27.50
Total	1,907	5.00	$	12.40	1,781	$	11.18

The Company may also grant RSUs under the 2014 Plan with terms determined at the discretion of the compensation committee of the Company’s board of directors. RSUs generally vest over three or four years following the grant date. Certain RSU awards have time-based vesting conditions while other RSUs vest based on the achievement of certain revenue and Adjusted EBITDA targets in future fiscal years. The following table represents restricted stock unit activity during the year ended June 30, 2018:


	Units	Weighted average grant date fair value
RSU balance at July 1, 2017	1,455	$	39.96
RSUs granted	929	$	46.61
RSUs vested	(452)	$	39.30
RSUs forfeited	(53)	$	42.08
RSU balance at June 30, 2018	1,879	$	43.39
RSUs expected to vest at June 30, 2018	1,667	$	43.23

At June 30, 2018, there was $29,656 of total unrecognized compensation cost, net of estimated forfeitures, related to unvested restricted stock units granted. That cost is expected to be recognized over a weighted average period of 1.85 years.

The total excess income tax benefits for stock-based compensation arrangements was $8,228, $15,130 and $33,443 for the years ended June 30, 2016, 2017 and 2018, respectively. As described in Note 2, the Company adopted ASU 2016-09 as of July 1, 2017. As a result, the Company recognized these tax benefits through income tax expense instead of additional paid-in capital.

(b) Employee Stock Purchase Plan

Under the Company’s Employee Stock Purchase Plan (“ESPP”), the Company can grant stock purchase rights to all eligible employees during specific offering periods not to exceed twenty-seven months. Each offering period will begin on the trading day closest to May 16 and November 16 of each year. Shares are purchased through employees’ payroll deductions, up to a maximum of 10% of employees’ compensation for each purchase period, at a purchase price equal to 85% of the lesser of the fair market value of the Company’s common stock at the first trading day of the applicable offering period or the purchase date. Participants may purchase up to $25 worth of common stock or 2 shares of common stock in any one year. The ESPP is considered compensatory and results in compensation expense.

As of June 30, 2018, a total of 1,111 shares of common stock were reserved for future issuances under the ESPP. The number of shares of common stock reserved for issuance under the ESPP will increase automatically each calendar year, continuing through and including January 1, 2024. The number of shares added each year will be equal to the lesser of (a) 400, (b) seventy-five one hundredths percent (0.75%) of the number of shares of common stock of the Company issued and outstanding on the immediately preceding December 31, or (c) an amount determined by the Company’s board of directors. The Company’s board of directors determined that, effective January 1, 2018, it would increase the number of common shares in reserve for issuance under the ESPP by 395 shares.

The Company issued a total of 108 shares upon the completion of its six-month offering periods ending November 15, 2017 and May 15, 2018. The Company recorded compensation expense attributable to the ESPP of $1,069, $1,263 and $1,331 for the years ended June 30, 2016, 2017 and 2018, respectively, which is included in the summary of stock-based compensation expense above. The grant date fair value of the ESPP offering periods was estimated using the following weighted average assumptions:



	Year ended June 30,
	2016		2017		2018
Valuation assumptions:
Expected dividend yield	0	%	0	%	0	%
Expected volatility	44.1 - 53.4	%	38.9 - 53.4	%	28.3 - 39.1	%
Expected term (years)	0.5		0.5		0.5
Risk-free interest rate	0.11 - 0.31	%	0.28 - 1.02	%	1.02 - 2.10	%

The Company maintains a 401(k) plan with a matching provision that covers all eligible employees. Up to December 31, 2015, the Company matched 50% of the employees’ contributions up to 6% of their gross pay. Effective January 1, 2016, the Company increased its match to 50% of employees’ contributions up to 8% of their gross pay. Contributions were $2,717, $3,667 and $4,632 for the years ended June 30, 2016, 2017 and 2018, respectively.

Commitments and Contingencies	12 Months Ended
Commitments and Contingencies	Jun. 30, 2018
Commitments and Contingencies
Commitments and Contingencies	(14) Commitments and Contingencies (a) Employment Agreements The Company has employment agreements with certain of its key officers. The agreements allow for minimum annual compensation increases, participation in equity incentive plans and bonuses for annual performance as well as certain change of control events as defined in the agreements. (b) Litigation From time to time, the Company is subject to litigation arising in the ordinary course of business. Many of these proceedings are covered in whole or in part by insurance. In the opinion of the Company’s management, the ultimate disposition of any matters currently outstanding or threatened will not have a material adverse effect on the Company’s financial position, results of operations, or liquidity.

Net Income (Loss) Per Share

12 Months Ended

Jun. 30, 2018

Net Income (Loss) Per Share

Net Income Per Share

(15) Net Income (Loss) Per Share

Basic net income (loss) per share is computed using the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per share is computed using the weighted-average number of common shares outstanding during the period and, if dilutive, potential common shares outstanding during the period. The Company’s potential common shares consist of the incremental common shares issuable upon the exercise of stock options, the release of restricted stock units and the shares purchasable via the employee stock purchase plan as of the balance sheet date.

The following table presents the calculation of basic and diluted net income (loss) per share:


	Year ended June 30,
	2016		2017		2018
Numerator:
Net income (loss)	$	(3,851)	$	6,718	$	38,598

Denominator:
Weighted-average shares used in computing net income (loss) per share:
Basic		50,913		51,415		52,425
Weighted-average effect of potentially dilutive shares:
Employee stock options, restricted stock units and employee stock purchase plan shares		—		2,642		2,462
Diluted		50,913		54,057		54,887

Net income (loss) per share:
Basic	$	(0.08)	$	0.13	$	0.74
Diluted	$	(0.08)	$	0.12	$	0.70

The following table summarizes the outstanding employee stock options, restricted stock units and employee stock purchase plan shares as of the balance sheet date that were excluded from the diluted per share calculation for the periods presented because to include them would have been anti-dilutive:



	Year ended June 30,
	2016	2017	2018
Employee stock options	3,464	145	—
Restricted stock units	1,003	627	92
Employee stock purchase plan shares	15	14	—
Total	4,482	786	92

Selected Quarterly Financial Data (unaudited)

12 Months Ended

Jun. 30, 2018

Selected Quarterly Financial Data (unaudited)

Selected Quarterly Financial Data (unaudited)

(16) Selected Quarterly Financial Data (unaudited)

The following tables set forth selected unaudited quarterly statements of operations data for each of the eight quarters in the years ended June 30, 2017 and 2018.


	Quarter Ended
	September 30,		December 31,
	2016		2016		March 31, 2017		June 30, 2017
Consolidated Statements of Operations Data
Revenues	$	65,022	$	68,654	$	90,273	$	76,061
Gross profit	$	36,663	$	38,271	$	58,191	$	42,898
Operating income (loss)	$	(2,507)	$	(1,643)	$	14,880	$	(3,434)
Net income (loss)	$	(2,568)	$	(1,671)	$	14,801	$	(3,844)
Net income (loss) per share:
Basic	$	(0.05)	$	(0.03)	$	0.29	$	(0.07)
Diluted	$	(0.05)	$	(0.03)	$	0.27	$	(0.07)
Weighted-average shares used in computing net income (loss) per share:
Basic		51,231		51,384		51,447		51,602
Diluted		51,231		51,384		54,002		51,602


	Quarter Ended
	September 30,		December 31,
	2017		2017		March 31, 2018		June 30, 2018
Consolidated Statements of Operations Data
Revenues	$	81,500	$	86,004	$	113,407	$	96,616
Gross profit	$	46,541	$	49,164	$	74,755	$	57,870
Operating income (loss)	$	515	$	133	$	20,465	$	(5,164)
Net income (loss)	$	543	$	431	$	39,177	$	(1,553)
Net income (loss) per share:
Basic	$	0.01	$	0.01	$	0.74	$	(0.03)
Diluted	$	0.01	$	0.01	$	0.71	$	(0.03)
Weighted-average shares used in computing net income (loss) per share:
Basic		51,893		52,502		52,615		52,699
Diluted		54,610		54,818		55,030		52,699

Subsequent Events	12 Months Ended
Subsequent Events	Jun. 30, 2018
Subsequent Events
Subsequent Events	(17) Subsequent Events On August 9, 2018, the Company announced that its Board of Directors approved a stock repurchase plan under which it is authorized to purchase (in the aggregate) up to $35,000 of its issued and outstanding common stock, over a 12-month period. Shares may be repurchased from time-to-time in open market transactions at prevailing market prices or privately negotiated transactions. The actual timing, number and value of shares repurchased will depend on the market price of its common stock, general market conditions and other corporate and economic considerations.

Summary of Significant Accounting Policies (Policies)

12 Months Ended

Jun. 30, 2018

Summary of Significant Accounting Policies

Basis of Presentation, Consolidation, and Use of Estimates

(a) Basis of Presentation, Consolidation, and Use of Estimates

The accompanying consolidated financial statements of the Company have been prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”).

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Concentrations of Risk

(b) Concentrations of Risk

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.

Funds Held For Clients, Corporate Investments and Client Fund Obligations

(d) Funds Held For Clients, Corporate Investments and Client Fund Obligations

Accounts Receivable

(e) Accounts Receivable

Activity in the allowance for doubtful accounts was as follows:


	For the Years Ended June 30,
	2016		2017		2018
Balance at the beginning of the year	$	149	$	193	$	266
Charged to expense		159		113		296
Write-offs		(115)		(40)		(187)
Balance at the end of the year	$	193	$	266	$	375

Prepaid Expenses and Other Assets

(f) Prepaid Expenses and Other Assets

Capitalized Internal-Use Software

(g) Capitalized Internal-Use Software

Property and Equipment and Long-Lived Assets

(h) Property and Equipment and Long-Lived Assets

Intangible Assets, Net of Accumulated Amortization

(i) Intangible Assets, Net of Accumulated Amortization

Goodwill

(j) Goodwill

Deferred Rent

(k) Deferred Rent

Income Taxes

(l) Income Taxes

Refer to Note 11 for additional information on income taxes.

Revenue Recognition

(m) Revenue Recognition

Time and attendance reporting services, including time clock rentals, delivered on a monthly basis, and

Cloud-based HR software solutions, including employee administration and benefits enrollment and administration, delivered on a monthly basis.

Cost of Revenues

(n) Cost of Revenues

Advertising

(o) Advertising

Advertising costs are expensed as incurred. Advertising costs amounted to $219, $199 and $179 for the years ended June 30, 2016, 2017 and 2018, respectively.

Stock-Based Compensation

(p) Stock-Based Compensation

Commitments and Contingencies

(q) Commitments and Contingencies

Segment Information

(r) Segment Information

Recently Adopted Accounting Standards

(s) Recently Adopted Accounting Standards

Recently Issued Accounting Standards

(t) Recently Issued Accounting Standards

Summary of Significant Accounting Policies (Tables)

12 Months Ended

Jun. 30, 2018

Summary of Significant Accounting Policies

Schedule of activity in allowance for doubtful accounts


	For the Years Ended June 30,
	2016		2017		2018
Balance at the beginning of the year	$	149	$	193	$	266
Charged to expense		159		113		296
Write-offs		(115)		(40)		(187)
Balance at the end of the year	$	193	$	266	$	375

Funds Held For Clients And Corporate Investments (Tables)

12 Months Ended

Jun. 30, 2018

Funds Held For Clients And Corporate Investments [Abstract]

Schedule of investments


			Gross		Gross
	Amortized		unrealized		unrealized
Type of Issue	cost		gains		losses		Fair value
Funds held for clients' cash and cash equivalents	$	1,102,541	$	—	$	(3)	$	1,102,538
Available-for-sale securities:
Commercial paper		50,703		3		(4)		50,702
Corporate bonds		37,508		8		(134)		37,382
Asset-backed securities		25,901		1		(55)		25,847
U.S. treasury securities		9,879		—		(2)		9,877
Total available-for-sale securities		123,991		12		(195)		123,808
Investments	$	1,226,532	$	12	$	(198)	$	1,226,346

Classification of investments on the consolidated balance sheets


	Year ended June 30,
	2017		2018
Funds held for clients	$	942,459	$	1,225,614
Prepaid expenses and other		—		732
Total investments	$	942,459	$	1,226,346

Schedule of available-for-sale securities that have been in an unrealized loss position for less than 12 months


	Gross
	unrealized
	losses		Fair value
Commercial paper	$	(4)	$	23,657
Corporate bonds		(134)		29,122
Asset-backed securities		(55)		17,960
U.S. treasury securities		(2)		4,933
Total available-for-sale securities	$	(195)	$	75,672

Schedule of expected maturities of available-for-sale securities


	Amortized
	cost		Fair value
One year or less	$	99,420	$	99,319
One year to two years		22,571		22,487
Two years to three years		2,000		2,002
Total available-for-sale securities	$	123,991	$	123,808

Fair Value Measurements (Tables)

12 Months Ended

Jun. 30, 2018

Fair Value Measurement

Schedule of fair value level for funds held for clients cash and cash equivalents and available-for-sale securities measured on a recurring basis


	Total		Level 1		Level 2		Level 3
Funds held for clients' cash and cash equivalents	$	1,102,538	$	1,076,414	$	26,124	$	—
Available-for-sale securities:
Commercial paper		50,702		—		50,702		—
Corporate bonds		37,382		—		37,382		—
Asset-backed securities		25,847		—		25,847		—
U.S. treasury securities		9,877		—		9,877		—
Total available-for-sale securities		123,808		—		123,808		—
Investments	$	1,226,346	$	1,076,414	$	149,932	$	—

Business Combinations (Tables)

12 Months Ended

Jun. 30, 2018

Business Combinations

Summary of fair value of the assets acquired at the date of acquisition

The following table summarizes the allocation of the purchase price for BeneFLEX:


	At March 8, 2018
Goodwill	$	3,587
Client relationships		5,550
Non-solicitation agreements		240
Net liabilities assumed		(31)
Total purchase price	$	9,346

Capitalized Internal-Use Software (Tables)

12 Months Ended

Jun. 30, 2018

Capitalized Internal-Use Software.

Schedule of capitalized internal-use software and accumulated amortization


	Year ended June 30,
	2017		2018
Capitalized internal-use software	$	49,663	$	67,678
Accumulated amortization		(32,269)		(46,584)
Capitalized internal-use software, net	$	17,394	$	21,094

Property and Equipment (Tables)

12 Months Ended

Jun. 30, 2018

Property and Equipment.

Schedule of property and equipment


	Year ended June 30,
	2017		2018
Office equipment	$	3,591	$	3,743
Computer equipment		24,411		29,768
Furniture and fixtures		7,547		10,382
Software		4,954		5,965
Leasehold improvements		21,426		36,366
Time clocks rented by clients		4,240		4,534
Total		66,169		90,758
Accumulated depreciation		(25,413)		(28,729)
Property and equipment, net	$	40,756	$	62,029

Goodwill and Intangible Assets (Tables)

12 Months Ended

Jun. 30, 2018

Goodwill and Intangible Assets

Schedule of changes in goodwill


Balance at June 30, 2017	$	6,003
Additions attributable to current year acquisition		3,587
Balance at June 30, 2018	$	9,590

Schedule of amortizable intangible assets before amortization expense



	June 30,		June 30,		Useful
	2017		2018		Life
Client relationships	$	12,580	$	18,130	7 - 9 years
Non-solicitation agreements		360		600	2 - 4 years
Total		12,940		18,730
Accumulated amortization		(4,033)		(5,728)
Intangible assets, net	$	8,907	$	13,002

Schedule of future amortization expense for acquired intangible assets


Year ending June 30,
2019	$	2,251
2020		2,251
2021		2,251
2022		2,232
2023		2,118
Thereafter		1,899
Total	$	13,002

Accrued Expenses (Tables)

12 Months Ended

Jun. 30, 2018

Accrued Expenses

Schedule of components of accrued expenses


	Year ended June 30,
	2017		2018
Accrued payroll and personnel costs	$	25,131	$	31,206
Lease exit obligations		—		2,143
Other		5,170		8,892
Total accrued expenses	$	30,301	$	42,241

Leases (Tables)

12 Months Ended

Jun. 30, 2018

Leases

Schedule of the changes in the lease exit obligation


Balance at June 30, 2017	$	—
Additions		3,446
Payments		(199)
Adjustments		14
Balance at June 30, 2018	$	3,261

Schedule of future minimum lease payments under non-cancellable operating leases


Year ending June 30,
2019	$	8,909
2020		9,077
2021		10,126
2022		8,803
2023		8,345
Later years, through 2032		67,225
Total minimum lease payments	$	112,485

Income Taxes (Tables)

12 Months Ended

Jun. 30, 2018

Income Taxes

Schedule of income tax expense


	Year ended June 30,
	2016		2017		2018
Current taxes
U.S. federal	$	—	$	—	$	294
State and local		27		500		364
Deferred taxes:
U.S. federal		136		137		(15,167)
State and local		14		14		(7,338)
Total income tax expense (benefit)	$	177	$	651	$	(21,847)

Schedule of tax rate reconciliation by applying the U.S. federal income tax rate to pretax income (loss)


	Year ended June 30,
	2016		2017		2018
Income tax expense (benefit) at statutory federal rate	$	(1,249)	$	2,503	$	4,615
Increase (reduction) in income taxes resulting from:
Research and development credit, net of federal income tax benefit		(504)		(1,025)		(1,101)
Non-deductible expenses		557		685		1,531
Change in valuation allowance		2,590		(1,349)		(22,771)
Effect of Tax Cuts and Jobs Act						8,626
Stock-based compensation expense						(10,527)
State and local income taxes, net of federal income tax benefit		(432)		(196)		(2,262)
Other		(785)		33		42
	$	177	$	651	$	(21,847)

Schedule of tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities


	Year ended June 30,
	2017		2018
Deferred tax assets:
Deferred rent	$	1,090	$	1,177
Accrued expenses		2,290		2,709
Stock-based compensation		11,034		10,833
Net operating loss carryforwards		253		10,775
Research and development and other credits		4,984		7,674
Intangible assets		256		271
Other		129		146
Total deferred tax assets		20,036		33,585
Valuation allowance		(8,689)		(355)
Net deferred tax assets		11,347		33,230
Deferred tax liabilities:
Research and development costs		(5,649)		(4,711)
Depreciation		(6,099)		(6,379)
Total deferred tax liabilities		(11,748)		(11,090)
Net deferred tax asset (liability)	$	(401)	$	22,140

Benefit Plans (Tables)

12 Months Ended

Jun. 30, 2018

Benefit Plans

Summary of shares available for grant under equity incentive plans


		Number of Shares
Available for grant at July 1, 2017		8,227
January 1, 2018 Evergreen provision increase		2,367
RSUs granted		(929)
Shares withheld in settlement of taxes and/or exercise price		379
Forfeitures		58
Shares removed		(72)
Available for grant at June 30, 2018		10,030

Schedule of stock-based compensation expense related to stock options, restricted stock units and the Employee Stock Purchase Plan


	Year ended June 30,
	2016		2017		2018
Cost of revenue – recurring	$	1,648	$	2,162	$	2,830
Cost of revenue – non-recurring		1,127		1,357		1,388
Sales and marketing		4,441		6,287		7,295
Research and development		2,789		3,086		3,748
General and administrative		7,558		13,842		15,093
Total stock-based compensation expense	$	17,563	$	26,734	$	30,354

Summary of the assumptions used for estimating the fair value of stock options granted


Valuation assumptions:
Expected dividend yield	0	%
Expected volatility	34.0	%
Expected term (years)	6.25
Risk-free interest rate	1.83	%

Schedule of stock option activity


	Outstanding Options
				Weighted
		Weighted		average
		average		remaining	Aggregate
	Number of	exercise		contractual	intrinsic
	shares	price		term (years)	value
Balance at July 1, 2017	2,751	$	11.54	5.69	$	92,556
Options forfeited	(5)	$	18.41
Options exercised	(839)	$	9.54
Balance at June 30, 2018	1,907	$	12.40	5.00	$	88,595
Options exercisable at June 30, 2018	1,781	$	11.18	4.89	$	84,935
Options vested and expected to vest at June 30, 2018	1,905	$	12.37	5.00	$	88,538

Schedule of stock options outstanding and stock options exercisable


	Options Outstanding				Options Exercisable
Price Range	Number of shares	Weighted average remaining contractual term	Weighted average exercise price		Number of shares	Weighted average exercise price
$2.28 to $3.58	73	2.92	$	2.28	73	$	2.28
$3.59 to $5.96	847	4.14	$	4.88	847	$	4.88
$5.97 to $12.02	127	5.02	$	7.04	127	$	7.04
$12.03 to $20.90	521	5.72	$	17.00	521	$	17.00
$20.91 to $35.28	339	6.47	$	28.32	213	$	27.50
Total	1,907	5.00	$	12.40	1,781	$	11.18

Schedule of restricted stock unit activity


	Units	Weighted average grant date fair value
RSU balance at July 1, 2017	1,455	$	39.96
RSUs granted	929	$	46.61
RSUs vested	(452)	$	39.30
RSUs forfeited	(53)	$	42.08
RSU balance at June 30, 2018	1,879	$	43.39
RSUs expected to vest at June 30, 2018	1,667	$	43.23

Summary of weighted average assumptions used for estimating grant date fair value of ESPP



	Year ended June 30,
	2016		2017		2018
Valuation assumptions:
Expected dividend yield	0	%	0	%	0	%
Expected volatility	44.1 - 53.4	%	38.9 - 53.4	%	28.3 - 39.1	%
Expected term (years)	0.5		0.5		0.5
Risk-free interest rate	0.11 - 0.31	%	0.28 - 1.02	%	1.02 - 2.10	%

Net income (Loss) Per Share (Tables)

12 Months Ended

Jun. 30, 2018

Net Income (Loss) Per Share

Schedule of calculation of basic net income (loss) per share


	Year ended June 30,
	2016		2017		2018
Numerator:
Net income (loss)	$	(3,851)	$	6,718	$	38,598

Denominator:
Weighted-average shares used in computing net income (loss) per share:
Basic		50,913		51,415		52,425
Weighted-average effect of potentially dilutive shares:
Employee stock options, restricted stock units and employee stock purchase plan shares		—		2,642		2,462
Diluted		50,913		54,057		54,887

Net income (loss) per share:
Basic	$	(0.08)	$	0.13	$	0.74
Diluted	$	(0.08)	$	0.12	$	0.70

Summary of anti-dilutive securities



	Year ended June 30,
	2016	2017	2018
Employee stock options	3,464	145	—
Restricted stock units	1,003	627	92
Employee stock purchase plan shares	15	14	—
Total	4,482	786	92

Selected Quarterly Financial Data (unaudited) (Tables)

12 Months Ended

Jun. 30, 2018

Selected Quarterly Financial Data (unaudited)

Schedule of selected unaudited quarterly statements of operations data


	Quarter Ended
	September 30,		December 31,
	2016		2016		March 31, 2017		June 30, 2017
Consolidated Statements of Operations Data
Revenues	$	65,022	$	68,654	$	90,273	$	76,061
Gross profit	$	36,663	$	38,271	$	58,191	$	42,898
Operating income (loss)	$	(2,507)	$	(1,643)	$	14,880	$	(3,434)
Net income (loss)	$	(2,568)	$	(1,671)	$	14,801	$	(3,844)
Net income (loss) per share:
Basic	$	(0.05)	$	(0.03)	$	0.29	$	(0.07)
Diluted	$	(0.05)	$	(0.03)	$	0.27	$	(0.07)
Weighted-average shares used in computing net income (loss) per share:
Basic		51,231		51,384		51,447		51,602
Diluted		51,231		51,384		54,002		51,602


	Quarter Ended
	September 30,		December 31,
	2017		2017		March 31, 2018		June 30, 2018
Consolidated Statements of Operations Data
Revenues	$	81,500	$	86,004	$	113,407	$	96,616
Gross profit	$	46,541	$	49,164	$	74,755	$	57,870
Operating income (loss)	$	515	$	133	$	20,465	$	(5,164)
Net income (loss)	$	543	$	431	$	39,177	$	(1,553)
Net income (loss) per share:
Basic	$	0.01	$	0.01	$	0.74	$	(0.03)
Diluted	$	0.01	$	0.01	$	0.71	$	(0.03)
Weighted-average shares used in computing net income (loss) per share:
Basic		51,893		52,502		52,615		52,699
Diluted		54,610		54,818		55,030		52,699

Summary of Significant Accounting Policies - Concentration of Risk, Accounts Receivable (Details) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Funds Held For Clients, Corporate Investments and Client Fund Obligations
Period of Repayment of Client Fund Obligation Liabilities	1 year
Other than temporary impairment losses
OTTI recognized in AOCI	$ 0
Accounts Receivable
Number of days past due before a balance will be reviewed for collectability	60 days
Activity in allowance for doubtful accounts
Balance at beginning of period	$ 266	$ 193	$ 149
Charged to expense	296	113	159
Write-offs	(187)	(40)	(115)
Balance at end of period	$ 375	$ 266	$ 193
Total Revenue \| Customer Concentration Risk \| Major Customer With Ten Percent Or More Of Benchmark
Concentrations of Risk
Percentage of total revenues	0.00%
Total Revenue \| Geographic Concentration Risk \| UNITED STATES
Concentrations of Risk
Percentage of total revenues	100.00%

Summary of Significant Accounting Policies - Capitalized Internal-Use Software (Details) - Capitalized internal-use software	12 Months Ended
	Jun. 30, 2018
Minimum
Capitalized internal-use software
Estimated useful lives	24 months
Maximum
Capitalized internal-use software
Estimated useful lives	36 months

Summary of Significant Accounting Policies - PP&E (Details)	12 Months Ended
	Jun. 30, 2018
Minimum
Property and Equipment and Long-Lived Assets
Estimated useful lives of the assets	3 years
Maximum
Property and Equipment and Long-Lived Assets
Estimated useful lives of the assets	7 years

Summary of Significant Accounting Policies - Goodwill and Other Intangible Assets (Details) $ in Thousands	12 Months Ended
	Jun. 30, 2018 USD ($) segment	Jun. 30, 2017 USD ($)	Jun. 30, 2016 USD ($)
Goodwill and other intangible assets, net of accumulated amortization
Goodwill, Impairment Loss	$ 0	$ 0	$ 0
Advertising
Advertising costs	$ 179	$ 199	$ 219
Segment Information
Number of reporting segments \| segment	1
Minimum
Revenue Recognition
Period of contract arrangement	2 years
Minimum \| Client relationships
Goodwill and other intangible assets, net of accumulated amortization
Estimated useful lives	7 years
Maximum
Revenue Recognition
Period of notice days given for cancellation of agreement	60 days
Maximum \| Client relationships
Goodwill and other intangible assets, net of accumulated amortization
Estimated useful lives	9 years

Summary of Significant Accounting Policies - Recently Adopted and Recently Issued ASUs (Details) $ in Thousands	12 Months Ended
	Jun. 30, 2018 USD ($)
ASU 2016-09
Recently adopted accounting standards
Increase in gross net operating loss	$ (30,783)
ASC 606
Recently issued accounting standards
Expected period of benefit	7 years
Estimated cumulative effect of cost deferrals, net	$ 51,000

Funds Held For Clients And Corporate Investments - Reconciliation (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Jun. 30, 2017
Funds Held For Clients And Corporate Investments [Line Items]
Amortized cost of funds held for clients' cash and cash equivalents	$ 1,102,541
Funds held for clients' cash and cash equivalents, gross unrealized losses	3
Fair value of funds held for clients' cash and cash equivalents	1,102,538
Available-for-sale Debt Securities
Amortized cost	123,991
Gross unrealized gains	12
Gross unrealized losses	(195)
Fair value	123,808
Total investments at amortized cost	1,226,532
Total investments gross unrealized gain	12
Total investments gross unrealized loss	(198)
Total investments at fair value	1,226,346	$ 942,459
Commercial paper
Available-for-sale Debt Securities
Amortized cost	50,703
Gross unrealized gains	3
Gross unrealized losses	(4)
Fair value	50,702
Corporate bonds
Available-for-sale Debt Securities
Amortized cost	37,508
Gross unrealized gains	8
Gross unrealized losses	(134)
Fair value	37,382
Asset-backed securities
Available-for-sale Debt Securities
Amortized cost	25,901
Gross unrealized gains	1
Gross unrealized losses	(55)
Fair value	25,847
U.S. treasury securities
Available-for-sale Debt Securities
Amortized cost	9,879
Gross unrealized losses	(2)
Fair value	$ 9,877

Funds Held For Clients And Corporate Investments - Classification (Details) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Funds Held For Clients And Corporate Investments [Line Items]
Funds held for clients	$ 1,225,614	$ 942,459
Prepaid expenses and other	732
Total investments at fair value	1,226,346	$ 942,459
Available-for-sale securities in a continuous unrealized loss position
Fair market value of available-for-sale securities in an unrealized loss position less than 12 months	75,672
Unrealized loss on available-for-sale securities in a continuous loss position for less than 12 months	(195)
Available-for-sale securities in a continuous loss position for more than 12 months	0
Gross realized gains and losses on the sale of available-for-sale securities	0
OTTI recognized in AOCI	0
Reclassification out of Accumulated Other Comprehensive Loss
Available-for-sale securities in a continuous unrealized loss position
Gross realized gains and losses on the sale of available-for-sale securities	0
Commercial paper
Available-for-sale securities in a continuous unrealized loss position
Fair market value of available-for-sale securities in an unrealized loss position less than 12 months	23,657
Unrealized loss on available-for-sale securities in a continuous loss position for less than 12 months	(4)
Corporate bonds
Available-for-sale securities in a continuous unrealized loss position
Fair market value of available-for-sale securities in an unrealized loss position less than 12 months	29,122
Unrealized loss on available-for-sale securities in a continuous loss position for less than 12 months	(134)
Asset-backed securities
Available-for-sale securities in a continuous unrealized loss position
Fair market value of available-for-sale securities in an unrealized loss position less than 12 months	17,960
Unrealized loss on available-for-sale securities in a continuous loss position for less than 12 months	(55)
U.S. treasury securities
Available-for-sale securities in a continuous unrealized loss position
Fair market value of available-for-sale securities in an unrealized loss position less than 12 months	4,933
Unrealized loss on available-for-sale securities in a continuous loss position for less than 12 months	$ (2)

Funds Held For Clients And Corporate Investments - Maturities (Details) $ in Thousands	Jun. 30, 2018 USD ($)
Available-for-sale maturities, amortized cost
One year or less	$ 99,420
One year to two years	22,571
Two years to three years	2,000
Total available-for-sale securities	123,991
Available-for-sale maturities, fair value
One year or less	99,319
One year to two years	22,487
Two years to three years	2,002
Total available-for-sale securities	$ 123,808

Fair Value Measurement (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Jun. 30, 2017
Fair value measurements
Funds held for clients' cash and cash equivalents	$ 1,102,538
Available-for-sale securities:
Available for sale debt securities	123,808
Total investments at fair value	1,226,346	$ 942,459
Fair value asset transfers
Transfers from level 1 to level 2	0
Transfers from level 2 to level 1	0
Level 1
Fair value measurements
Funds held for clients' cash and cash equivalents	1,076,414
Available-for-sale securities:
Total investments at fair value	1,076,414
Level 2
Fair value measurements
Funds held for clients' cash and cash equivalents	26,124
Available-for-sale securities:
Available for sale debt securities	123,808
Total investments at fair value	149,932
Level 3
Available-for-sale securities:
Available for sale debt securities	0
Commercial paper
Available-for-sale securities:
Available for sale debt securities	50,702
Commercial paper \| Level 2
Available-for-sale securities:
Available for sale debt securities	50,702
Corporate bonds
Available-for-sale securities:
Available for sale debt securities	37,382
Corporate bonds \| Level 2
Available-for-sale securities:
Available for sale debt securities	37,382
Asset-backed securities
Available-for-sale securities:
Available for sale debt securities	25,847
Asset-backed securities \| Level 2
Available-for-sale securities:
Available for sale debt securities	25,847
U.S. treasury securities
Available-for-sale securities:
Available for sale debt securities	9,877
U.S. treasury securities \| Level 2
Available-for-sale securities:
Available for sale debt securities	$ 9,877

Business Combinations (Details) - USD ($) $ in Thousands		12 Months Ended
Business Combinations (Details) - USD ($) $ in Thousands	Mar. 08, 2018	Jun. 30, 2018	Jun. 30, 2016	Jun. 30, 2017
Business Combinations
Purchase price paid		$ 8,346	$ 483
Goodwill		9,590		$ 6,003
Finite-lived intangible assets		18,730		12,940
Client relationships
Business Combinations
Finite-lived intangible assets		18,130		12,580
Non-solicitation agreements
Business Combinations
Finite-lived intangible assets		$ 600		$ 360
BeneFLEX
Business Combinations
Total purchase price, net of cash acquired	$ 9,346
Purchase price paid	8,346
Purchase price payable	1,000
Goodwill	3,587
Net liabilities assumed	(31)
Total purchase price	$ 9,346
Goodwill amortization period for income tax purposes	15 years
BeneFLEX \| Client relationships
Business Combinations
Finite-lived intangible assets	$ 5,550
BeneFLEX \| Non-solicitation agreements
Business Combinations
Finite-lived intangible assets	$ 240

Capitalized Internal-Use Software (Details) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Capitalized internal-use software and accumulated amortization
Capitalized internal-use software	$ 67,678	$ 49,663
Accumulated amortization	(46,584)	(32,269)
Capitalized internal-use software, net	21,094	17,394
Cost of revenue - recurring
Capitalized internal-use software and accumulated amortization
Amortization of capitalized internal-use software	$ 14,315	$ 9,447	$ 5,446

Property and Equipment (Details) - USD ($) $ in Thousands	12 Months Ended
Property and Equipment (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Property and equipment
Property and equipment, gross	$ 90,758	$ 66,169
Accumulated depreciation	(28,729)	(25,413)
Property and equipment, net	62,029	40,756
Depreciation expense	14,192	10,068	$ 6,905
Office equipment
Property and equipment
Property and equipment, gross	3,743	3,591
Computer equipment
Property and equipment
Property and equipment, gross	29,768	24,411
Furniture and fixtures
Property and equipment
Property and equipment, gross	10,382	7,547
Software
Property and equipment
Property and equipment, gross	5,965	4,954
Leasehold improvements
Property and equipment
Property and equipment, gross	36,366	21,426
Time clocks rented by clients
Property and equipment
Property and equipment, gross	$ 4,534	$ 4,240

Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Changes in goodwill
Balance at beginning of the period	$ 6,003
Additions attributable to current period acquisition	3,587
Balance at end of the period	9,590	$ 6,003
Intangible assets
Intangible assets	18,730	12,940
Accumulated amortization	(5,728)	(4,033)
Intangible assets, net	13,002	8,907
Amortization expense for acquired intangible assets	1,695	1,512	$ 1,522
Future amortization expense for acquired intangible assets
2019	2,251
2020	2,251
2021	2,251
2022	2,232
2023	2,118
Thereafter	1,899
Intangible assets, net	13,002	8,907
Client relationships
Intangible assets
Intangible assets	$ 18,130	12,580
Client relationships \| Minimum
Intangible assets
Useful life	7 years
Client relationships \| Maximum
Intangible assets
Useful life	9 years
Non-solicitation agreements
Intangible assets
Intangible assets	$ 600	$ 360
Non-solicitation agreements \| Minimum
Intangible assets
Useful life	2 years
Non-solicitation agreements \| Maximum
Intangible assets
Useful life	4 years

Accrued Expenses (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Jun. 30, 2017
Components of accrued expenses
Accrued payroll and personnel costs	$ 31,206	$ 25,131
Lease exit obligations	2,143
Other	8,892	5,170
Total accrued expenses	$ 42,241	$ 30,301

Leases (Details) ft² in Thousands, $ in Thousands	1 Months Ended			12 Months Ended
Leases (Details) ft² in Thousands, $ in Thousands	Jun. 30, 2018 USD ($) ft²	Feb. 28, 2017 ft² item $ / ft²	Jun. 30, 2016 ft² item $ / ft²	Jun. 30, 2018 USD ($) ft²	Jun. 30, 2017 USD ($)	Jun. 30, 2016 USD ($) ft² item
Operating Leased Assets [Line Items]
Rental expense for operating leases				$ 12,293	$ 8,571	$ 5,596
Lease exit obligations activity
Additions				3,446
Payments				(199)
Adjustments				14
Balance at end of period	$ 3,261			$ 3,261
Leased office space \| Schaumburg Lease
Operating Leased Assets [Line Items]
Area of lease \| ft²			310			310
Tenant improvement allowance per rentable square foot \| $ / ft²			65.00
Rent abatement period per lease phase			12 months
Number of renewal options \| item			2			2
Renewal period			5 years
Leased office space \| Meridian Lease
Operating Leased Assets [Line Items]
Area of lease \| ft²		62
Tenant improvement allowance per rentable square foot \| $ / ft²		50.00
Rent abatement period per lease phase		3 months
Number of renewal options \| item		4
Renewal period		5 years
Leased office space \| Arlington Heights Lease
Operating Leased Assets [Line Items]
Area under lease no longer in use \| ft²	110			110
Early lease exit costs	$ 2,336

Leases - Future minimum lease payments (Details) $ in Thousands	Jun. 30, 2018 USD ($)
Future minimum lease payments under non-cancellable operating leases
2019	$ 8,909
2020	9,077
2021	10,126
2022	8,803
2023	8,345
Later years, through 2032	67,225
Total minimum lease payments	$ 112,485

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
Income Taxes (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Current taxes
U.S. federal			$ 294
State and local			364	$ 500	$ 27
Deferred taxes:
U.S. federal			(15,167)	137	136
State and local			(7,338)	14	14
Total income tax expense (benefit)			$ (21,847)	$ 651	$ 177
Tax Rate Reconciliation
U.S. federal income tax rate (as a percent)			27.55%	34.00%	34.00%
Income tax expense (benefit) at statutory federal rate			$ 4,615	$ 2,503	$ (1,249)
Increase (reduction) in income taxes resulting from:
Research and development credit, net of federal income tax benefit			(1,101)	(1,025)	(504)
Non-deductible expenses			1,531	685	557
Change in valuation allowance			(22,771)	(1,349)	2,590
Effect of Tax Cuts and Jobs Act			8,626
Stock-based compensation expense			(10,527)
State and local income taxes, net of federal income tax benefit			(2,262)	(196)	(432)
Other			42	33	(785)
Total income tax expense (benefit)			(21,847)	651	$ 177
Deferred tax assets:
Deferred rent			1,177	1,090
Accrued expenses			2,709	2,290
Stock-based compensation			10,833	11,034
Net operating loss carryforwards			10,775	253
Research and development and other credits			7,674	4,984
Intangible assets			271	256
Other			146	129
Total deferred tax assets			33,585	20,036
Valuation allowance			(355)	(8,689)
Net deferred tax assets			33,230	11,347
Deferred tax liabilities:
Research and development costs			(4,711)	(5,649)
Depreciation			(6,379)	(6,099)
Total deferred tax liabilities			(11,090)	(11,748)
Net deferred tax asset			$ 22,140
Net deferred tax liability				$ (401)
Period of cumulative income			3 years
Non-recurring tax benefit for valuation allowance reversal	$ 22,585
Effect of Tax Cuts and Jobs Act of 2017, Accounting Incomplete, Provisional
Tax benefit attributable to the rate change effect on the deferred tax liability for indefinite-lived intangible assets		$ 156
Provisional amount of income tax expense attributable to a revaluation of deferred tax assets from change in tax rate			$ 8,626
State
Deferred tax assets:
Valuation allowance			$ (355)

Income Taxes - Carryforwards (Details) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Unrecognized Tax Benefits
Unrecognized tax benefits	$ 0	$ 0	$ 0
Federal
Operating loss carryforwards
Net operating loss carryforwards	$ 45,839
Federal \| Minimum
Operating loss carryforwards
Expiration date for net operating losses	Jun. 30, 2029
Federal \| Maximum
Operating loss carryforwards
Expiration date for net operating losses	Jun. 30, 2038
State
Operating loss carryforwards
Net operating loss carryforwards	$ 18,409
State \| Minimum
Operating loss carryforwards
Expiration date for net operating losses	Jun. 30, 2019
Unrecognized Tax Benefits
Statute of limitations on filings	3 years
State \| Maximum
Operating loss carryforwards
Expiration date for net operating losses	Jun. 30, 2038
Unrecognized Tax Benefits
Statute of limitations on filings	4 years
Research and development tax credit and other state credit carryforwards
Tax credit carryforwards
Tax credit carryforwards	$ 7,674
Research and development tax credit and other state credit carryforwards \| Minimum
Tax credit carryforwards
Expiration date for tax credit carryforwards	Jun. 30, 2018
Research and development tax credit and other state credit carryforwards \| Maximum
Tax credit carryforwards
Expiration date for tax credit carryforwards	Jun. 30, 2038

Stockholders' Equity (Details)	12 Months Ended
Stockholders' Equity (Details)	Jun. 30, 2018 item
Common Stock
Stockholders' Equity
Number of common stock vote per share	1

Benefit Plans - General Information (Details) - shares shares in Thousands		12 Months Ended
	Jan. 01, 2018	Jun. 30, 2018
Equity Incentive Plans
Equity Incentive Plans
Increase in number of common shares available for grant		2,367
Number of shares of common stock reserved for issuance		13,816
Number of shares allocated but not yet issued that are subject to outstanding options or awards		3,786
2008 Plan
Equity Incentive Plans
Awards issued (in shares)		0
Awards issuable (in shares)		0
2014 incentive Plan
Equity Incentive Plans
Potential additional shares available for grant (as a percent)		4.50%
Increase in number of common shares available for grant	2,367

Benefit Plans - Incentive Plans Activity (Details) - shares shares in Thousands		12 Months Ended
	Jan. 01, 2018	Jun. 30, 2018
Equity Incentive Plans
Shares Available for Grant
Balance at the beginning of the period		8,227
January 1, 2018 Evergreen provision increase		2,367
RSUs granted		(929)
Shares withheld in settlement of taxes and/or exercise price		379
Forfeitures		58
Shares removed		(72)
Balance at the end of the period		10,030
2014 incentive Plan
Shares Available for Grant
January 1, 2018 Evergreen provision increase	2,367

Benefit Plans - Compensation Expense (Details) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Benefit Plans
Total stock-based compensation expense	$ 30,354	$ 26,734	$ 17,563
Stock-based compensation expense capitalized	2,024	1,773	1,078
Cost of revenue - recurring
Benefit Plans
Total stock-based compensation expense	2,830	2,162	1,648
Cost of revenue - non-recurring
Benefit Plans
Total stock-based compensation expense	1,388	1,357	1,127
Sales and marketing
Benefit Plans
Total stock-based compensation expense	7,295	6,287	4,441
Research and development
Benefit Plans
Total stock-based compensation expense	3,748	3,086	2,789
General and administrative
Benefit Plans
Total stock-based compensation expense	15,093	$ 13,842	$ 7,558
Modified award agreement \| General and administrative
Benefit Plans
Total stock-based compensation expense	$ 2,925

Benefit Plans - Valuation Assumptions (Details)	12 Months Ended
Benefit Plans - Valuation Assumptions (Details)	Jun. 30, 2018	Jun. 30, 2016
Valuation assumptions:
Expected dividend yield (as a percent)		0.00%
Expected volatility (as a percent)		34.00%
Expected term (years)		6 years 3 months
Risk-free interest rate (as a percent)		1.83%
Stock options
Vesting period
Expiration period	10 years
Stock options \| Minimum
Vesting period
Vesting period	3 years
Stock options \| Maximum
Vesting period
Vesting period	4 years

Benefit Plans - Stock Option Activity (Details) - Stock options - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Vesting period
Expiration period	10 years
Options Outstanding, Number of Shares
Balance at the beginning of the period	2,751
Options granted	0	0
Options forfeited	(5)
Options exercised	(839)
Balance at the end of the period	1,907	2,751
Options Outstanding, Weighted average exercise price
Balance at the beginning of the period (in dollars per share)	$ 11.54
Options forfeited (in dollars per share)	18.41
Options exercised (in dollars per share)	9.54
Balance at the end of the period (in dollars per share)	$ 12.40	$ 11.54
Options Additional Disclosures
Weighted average remaining contractual term	5 years	5 years 8 months 9 days
Aggregate intrinsic value, at the beginning of the period	$ 92,556
Weighted average remaining contractual term of options exercisable at the end of the period (years)	4 years 10 months 21 days
Aggregate intrinsic value, at the end of the period	$ 88,595	$ 92,556
Options exercisable at the end of the period (in shares)	1,781
Options exercisable at the end of the period, weighted average exercise price (in dollars per share)	$ 11.18
Options exercisable intrinsic value	$ 84,935
Total intrinsic value of options exercised	$ 34,083	$ 20,802	$ 13,362
Options vested and expected to vest
Number of shares	1,905
Weighted average exercise price	$ 12.37
Weighted average remaining contractual term	5 years
Aggregate intrinsic value	$ 88,538
Weighted average grant date fair value
Weighted average grant date fair value of options granted (in dollars per share)			$ 12.92
Unrecognized Compensation Costs Not yet Recognized
Total unrecognized compensation cost, net of estimated forfeitures, related to unvested stock options	$ 152
Weighted average period to recognize unrecognized compensation cost	10 months 2 days
Minimum
Vesting period
Vesting period	3 years
Maximum
Vesting period
Vesting period	4 years

Benefit Plans - Stock Options Outstanding and Stock Options Exercisable 10K (Details) shares in Thousands	12 Months Ended
	Jun. 30, 2018 $ / shares shares
Stock options
Schedule of stock options outstanding and stock options exercisable
Number Outstanding at end of the period \| shares	1,907
Weighted-Average Remaining Contractual Term	5 years
Weighted-Average Exercise Price (in dollars per share)	$ 12.40
Number Exercisable at the end of the period \| shares	1,781
Weighted Average Exercise Price (in dollars per share)	$ 11.18
$2.28 - $3.58
Schedule of stock options outstanding and stock options exercisable
Exercise price range, lower limit (in dollars per share)	2.28
Exercise price range, upper limit (in dollars per share)	$ 3.58
$2.28 - $3.58 \| Stock options
Schedule of stock options outstanding and stock options exercisable
Number Outstanding at end of the period \| shares	73
Weighted-Average Remaining Contractual Term	2 years 11 months 1 day
Weighted-Average Exercise Price (in dollars per share)	$ 2.28
Number Exercisable at the end of the period \| shares	73
Weighted Average Exercise Price (in dollars per share)	$ 2.28
$3.59 - $5.96
Schedule of stock options outstanding and stock options exercisable
Exercise price range, lower limit (in dollars per share)	3.59
Exercise price range, upper limit (in dollars per share)	$ 5.96
$3.59 - $5.96 \| Stock options
Schedule of stock options outstanding and stock options exercisable
Number Outstanding at end of the period \| shares	847
Weighted-Average Remaining Contractual Term	4 years 1 month 21 days
Weighted-Average Exercise Price (in dollars per share)	$ 4.88
Number Exercisable at the end of the period \| shares	847
Weighted Average Exercise Price (in dollars per share)	$ 4.88
$5.97 - $12.02
Schedule of stock options outstanding and stock options exercisable
Exercise price range, lower limit (in dollars per share)	5.97
Exercise price range, upper limit (in dollars per share)	$ 12.02
$5.97 - $12.02 \| Stock options
Schedule of stock options outstanding and stock options exercisable
Number Outstanding at end of the period \| shares	127
Weighted-Average Remaining Contractual Term	5 years 7 days
Weighted-Average Exercise Price (in dollars per share)	$ 7.04
Number Exercisable at the end of the period \| shares	127
Weighted Average Exercise Price (in dollars per share)	$ 7.04
$12.03 to $20.90
Schedule of stock options outstanding and stock options exercisable
Exercise price range, lower limit (in dollars per share)	12.03
Exercise price range, upper limit (in dollars per share)	$ 20.90
$12.03 to $20.90 \| Stock options
Schedule of stock options outstanding and stock options exercisable
Number Outstanding at end of the period \| shares	521
Weighted-Average Remaining Contractual Term	5 years 8 months 19 days
Weighted-Average Exercise Price (in dollars per share)	$ 17.00
Number Exercisable at the end of the period \| shares	521
Weighted Average Exercise Price (in dollars per share)	$ 17.00
$20.91 to $35.28
Schedule of stock options outstanding and stock options exercisable
Exercise price range, lower limit (in dollars per share)	20.91
Exercise price range, upper limit (in dollars per share)	$ 35.28
$20.91 to $35.28 \| Stock options
Schedule of stock options outstanding and stock options exercisable
Number Outstanding at end of the period \| shares	339
Weighted-Average Remaining Contractual Term	6 years 5 months 19 days
Weighted-Average Exercise Price (in dollars per share)	$ 28.32
Number Exercisable at the end of the period \| shares	213
Weighted Average Exercise Price (in dollars per share)	$ 27.50

Benefit Plans - RSU activity (Details) - RSUs - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Vesting period
Unrecognized excess income tax benefits for stock-based compensation arrangements	$ 33,443	$ 15,130	$ 8,228
Unrecognized Compensation Costs Not yet Recognized
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Share-based Awards Other than Options	$ 29,656
Weighted average period to recognize unrecognized compensation cost	1 year 10 months 6 days
RSUs Outstanding Rollforward, Units
RSU Balance at the beginning of the period	1,455
RSUs granted	929
RSUs vested	(452)
RSUs forfeited	(53)
RSU Balance at the end of the period	1,879	1,455
RSUs expected to vest at the end of the period	1,667
RSUs Outstanding, Weighted average grant date fair value
RSU Balance at the beginning of the period	$ 39.96
RSUs granted	46.61
RSUs vested	39.30
RSUs cancelled/forfeited	42.08
RSU Balance at the end of the period	43.39	$ 39.96
RSUs expected to vest at the end of the period	$ 43.23
Minimum
Vesting period
Vesting period	3 years
Maximum
Vesting period
Vesting period	4 years

Benefit Plans - ESPP Information (Details) - USD ($) shares in Thousands, $ in Thousands		12 Months Ended
	Jan. 01, 2018	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Equity Incentive Plans
Compensation expense		$ 30,354	$ 26,734	$ 17,563
Valuation assumptions:
Expected dividend yield				0.00%
Expected volatility				34.00%
Expected term (years)				6 years 3 months
Risk-free interest rate				1.83%
Employee stock purchase plan shares
Equity Incentive Plans
Offering period		6 months
Percentage of employee compensation, maximum		10.00%
Percentage of fair market value as a purchase price		85.00%
Maximum value of purchase per employee		$ 25
Number of shares per employee, maximum		2
Period during which shares can be purchased		1 year
Number of shares of common stock reserved for issuance		1,111
Actual increase in number of shares reserved for issuance	395
Potential number of additional shares reserved for issuance each year		400
Potential percentage of additional number of shares reserved for issuance each year		0.75%
Number of shares issued		108
Compensation expense		$ 1,331	$ 1,263	$ 1,069
Valuation assumptions:
Expected dividend yield		0.00%	0.00%	0.00%
Expected term (years)		6 months	6 months	6 months
Employee stock purchase plan shares \| Minimum
Valuation assumptions:
Expected volatility		28.30%	38.90%	44.10%
Risk-free interest rate		1.02%	0.28%	0.11%
Employee stock purchase plan shares \| Maximum
Equity Incentive Plans
Offering period		27 months
Valuation assumptions:
Expected volatility		39.10%	53.40%	53.40%
Risk-free interest rate		2.10%	1.02%	0.31%

Benefit Plans - 401(k) Plan (Details) - USD ($) $ in Thousands			12 Months Ended
	Jan. 01, 2016	Dec. 31, 2015	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Benefit Plans
401(k) Plan Matching contributions by the Company as percentage of employees' contributions	50.00%	50.00%
401(k) Plan Maximum contributions by the Company as percentage of employees' gross pay	8.00%	6.00%
401(k) Plan contributions			$ 4,632	$ 3,667	$ 2,717

Net Income (Loss) Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended								12 Months Ended
	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Anti-dilutive securities excluded from diluted per share calculation
Anti-dilutive securities excluded									92	786	4,482
Numerator:
Net income (loss)									$ 38,598	$ 6,718	$ (3,851)
Weighted-average shares used in computing net income (loss) per share:
Basic (in shares)	52,699	52,615	52,502	51,893	51,602	51,447	51,384	51,231	52,425	51,415	50,913
Weighted-average effect of potentially dilutive shares:
Employee stock options, restricted stock units and employee stock purchase plan shares									2,462	2,642
Diluted (in shares)	52,699	55,030	54,818	54,610	51,602	54,002	51,384	51,231	54,887	54,057	50,913
Net income (loss) per share:
Basic (in dollars per share)	$ (0.03)	$ 0.74	$ 0.01	$ 0.01	$ (0.07)	$ 0.29	$ (0.03)	$ (0.05)	$ 0.74	$ 0.13	$ (0.08)
Diluted (in dollars per share)	$ (0.03)	$ 0.71	$ 0.01	$ 0.01	$ (0.07)	$ 0.27	$ (0.03)	$ (0.05)	$ 0.70	$ 0.12	$ (0.08)
Employee stock options
Anti-dilutive securities excluded from diluted per share calculation
Anti-dilutive securities excluded										145	3,464
RSUs
Anti-dilutive securities excluded from diluted per share calculation
Anti-dilutive securities excluded									92	627	1,003
Employee stock purchase plan shares
Anti-dilutive securities excluded from diluted per share calculation
Anti-dilutive securities excluded										14	15

Selected Quarterly Financial Data (unaudited) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended								12 Months Ended
	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Consolidated Statements of Operations Data
Revenues	$ 96,616	$ 113,407	$ 86,004	$ 81,500	$ 76,061	$ 90,273	$ 68,654	$ 65,022	$ 377,527	$ 300,010	$ 230,701
Gross profit	57,870	74,755	49,164	46,541	42,898	58,191	38,271	36,663	228,330	176,023	132,616
Operating income (loss)	(5,164)	20,465	133	515	(3,434)	14,880	(1,643)	(2,507)	15,949	7,296	(3,550)
Net income (loss)	$ (1,553)	$ 39,177	$ 431	$ 543	$ (3,844)	$ 14,801	$ (1,671)	$ (2,568)	$ 38,598	$ 6,718	$ (3,851)
Net income (loss) per share:
Basic (in dollars per share)	$ (0.03)	$ 0.74	$ 0.01	$ 0.01	$ (0.07)	$ 0.29	$ (0.03)	$ (0.05)	$ 0.74	$ 0.13	$ (0.08)
Diluted (in dollars per share)	$ (0.03)	$ 0.71	$ 0.01	$ 0.01	$ (0.07)	$ 0.27	$ (0.03)	$ (0.05)	$ 0.70	$ 0.12	$ (0.08)
Weighted-average shares used in computing net income (loss) per share:
Basic (in shares)	52,699	52,615	52,502	51,893	51,602	51,447	51,384	51,231	52,425	51,415	50,913
Diluted (in shares)	52,699	55,030	54,818	54,610	51,602	54,002	51,384	51,231	54,887	54,057	50,913

Subsequent Events (Details) - Subsequent event $ in Thousands	Aug. 09, 2018 USD ($)
Subsequent events
Period of time the stock repurchase plan is authorized	12 months
Maximum
Subsequent events
Amount of issued and outstanding common stock that may be repurchased under the stock repurchase plan	$ 35,000