0001558370-18-008347 | 10-Q | XBRL Viewer

Document and Entity Information - shares	3 Months Ended
Sep. 30, 2018	Oct. 26, 2018
Document and Entity Information
Entity Registrant Name	Paylocity Holding Corp
Entity Central Index Key	0001591698
Document Type	10-Q
Document Period End Date	Sep. 30, 2018
Amendment Flag	false
Current Fiscal Year End Date	--06-30
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		52,798,602
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1

Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2018	Jun. 30, 2018
Current assets:
Cash and cash equivalents	$ 63,662	$ 137,193
Corporate investments	21,225	732
Accounts receivable, net	2,992	3,453
Deferred contract costs	16,215
Prepaid expenses and other	14,220	11,248
Total current assets before funds held for clients	118,314	152,626
Funds held for clients	1,168,156	1,225,614
Total current assets	1,286,470	1,378,240
Capitalized internal-use software, net	22,034	21,094
Property and equipment, net	61,823	62,029
Intangible assets, net	12,439	13,002
Goodwill	9,590	9,590
Long-term deferred contract costs	59,061
Long-term prepaid expenses and other	3,132	1,504
Deferred income tax assets, net	9,554	22,140
Total assets	1,464,103	1,507,599
Current liabilities:
Accounts payable	3,559	2,990
Accrued expenses	35,678	42,241
Total current liabilities before client fund obligations	39,237	45,231
Client fund obligations	1,168,156	1,225,614
Total current liabilities	1,207,393	1,270,845
Deferred rent	22,660	22,812
Other long-term liabilities	1,424	1,118
Total liabilities	1,231,477	1,294,775
Stockholders' equity:
Preferred stock, $0.001 par value, 5,000 authorized, no shares issued and outstanding at June 30, 2018 and September 30, 2018
Common stock, $0.001 par value, 155,000 shares authorized at June 30, 2018 and September 30, 2018; 52,758 shares issued and outstanding at June 30, 2018 and 52,796 shares issued and outstanding at September 30, 2018	53	53
Additional paid-in capital	176,851	219,588
Retained earnings (accumulated deficit)	55,846	(6,678)
Accumulated other comprehensive loss	(124)	(139)
Total stockholders' equity	232,626	212,824
Total liabilities and stockholders' equity	$ 1,464,103	$ 1,507,599

Consolidated Statements of Operations and Comprehensive Income - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Revenues:
Revenue	$ 97,002
Interest income on funds held for clients	3,502	$ 1,617
Total recurring revenues	99,263	78,911
Total revenues	100,504	81,500
Cost of revenues:
Total cost of revenues	35,942	34,959
Gross profit	64,562	46,541
Operating expenses:
Sales and marketing	26,418	21,180
Research and development	11,400	8,895
General and administrative	22,968	15,951
Total operating expenses	60,786	46,026
Operating income	3,776	515
Other income	269	109
Income before income taxes	4,045	624
Income tax expense (benefit)	(5,807)	81
Net income	9,852	543
Other comprehensive income (loss)
Unrealized gains (losses) on securities, net of tax	15	(5)
Total other comprehensive income (loss)	15	(5)
Comprehensive income	$ 9,867	$ 538
Net income per share:
Basic (in dollars per share)	$ 0.19	$ 0.01
Diluted (in dollars per share)	$ 0.18	$ 0.01
Weighted-average shares used in computing net income per share:
Basic (in shares)	52,865	51,893
Diluted (in shares)	55,487	54,610
Recurring fees
Revenues:
Revenue	$ 95,761	$ 77,294
Cost of revenues:
Total cost of revenues	29,231	24,091
Implementation services and other
Revenues:
Revenue	1,241	2,589
Cost of revenues:
Total cost of revenues	$ 6,711	$ 10,868

Consolidated Statements of Changes in Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands	Common Stock	Additional Paid-in Capital	Retained Earnings (Accumulated Deficit)	Accumulated Other Comprehensive Loss	Total
Increase (Decrease) in Stockholders' Equity
Cumulative effect of change in accounting policy (adoption of Topic 606) \| Topic 606			$ 52,672		$ 52,672
Balance at Jun. 30, 2018	$ 53	$ 219,588	(6,678)	$ (139)	$ 212,824
Balance (in shares) at Jun. 30, 2018	52,758				52,758
Increase (Decrease) in Stockholders' Equity
Stock-based compensation		10,050			$ 10,050
Stock options exercised		2,241			2,241
Stock options exercised (in shares)	182
Issuance of common stock upon vesting of restricted stock units (in shares)	579
Net settlement for taxes and/or exercise price related to equity awards		(20,037)			(20,037)
Net settlement for taxes and/or exercise price related to equity awards (in shares)	(281)
Repurchases of common shares		(34,991)			(34,991)
Repurchases of common shares (in shares)	(442)
Unrealized gains (losses) on securities, net of tax				15	15
Net income			9,852		9,852
Balance at Sep. 30, 2018	$ 53	$ 176,851	$ 55,846	$ (124)	$ 232,626
Balance (in shares) at Sep. 30, 2018	52,796				52,796

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Cash flows from operating activities:
Net income	$ 9,852	$ 543
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation expense	9,425	6,606
Depreciation and amortization expense	8,232	6,673
Deferred income tax expense (benefit)	(5,809)	37
Provision for doubtful accounts	30	4
Net accretion of discounts and amortization of premiums on available-for-sale securities	(407)	(108)
Loss on disposal of equipment	241	31
Changes in operating assets and liabilities:
Accounts receivable	431	(529)
Deferred contract costs	(7,169)
Prepaid expenses and other	(853)	(305)
Accounts payable	(415)	(101)
Accrued expenses	(6,214)	(6,304)
Tenant improvement allowance		1,656
Net cash provided by operating activities	7,344	8,203
Cash flows from investing activities:
Purchases of available-for-sale securities	(75,804)	(58,844)
Proceeds from sales and maturities of available-for-sale securities	56,446	421
Net change in funds held for clients' cash and cash equivalents	55,844	59,001
Capitalized internal-use software costs	(5,001)	(3,751)
Purchases of property and equipment	(2,428)	(2,693)
Lease allowances used for tenant improvements		(1,466)
Net cash provided by (used in) investing activities	29,057	(7,332)
Cash flows from financing activities:
Net change in client fund obligations	(57,458)	(470)
Repurchases of common shares	(34,679)
Proceeds from exercise of stock options	85
Taxes paid related to net share settlement of equity awards	(17,880)	(6,470)
Net cash used in financing activities	(109,932)	(6,940)
Net Change in Cash and Cash Equivalents	(73,531)	(6,069)
Cash and Cash Equivalents - Beginning of Period	137,193	103,468
Cash and Cash Equivalents - End of Period	63,662	97,399
Supplemental Disclosure of Non-Cash Investing and Financing Activities
Purchase of property and equipment and internal-use software, accrued but not paid	1,064	4,317
Repurchases of common shares, accrued but not paid	313
Supplemental Disclosure of Cash Flow Information
Cash paid for income taxes, net of refunds	$ 351	$ 53

Summary of Significant Accounting Policies

3 Months Ended

Sep. 30, 2018

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

(2) Summary of Significant Accounting Policies

(a) Consolidation and Use of Estimates

These unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The unaudited consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

The preparation of consolidated financial statements in conformity with 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.

(b) Interim Unaudited Consolidated Financial Information

The accompanying unaudited consolidated financial statements and notes have been prepared in accordance with GAAP and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, the interim financial information includes all adjustments of a normal recurring nature necessary for a fair presentation of the Company’s financial position, results of operations, changes in stockholders’ equity and cash flows. The results of operations for the three months ended September 30, 2018 are not necessarily indicative of the results for the full year or the results for any future periods. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes for the year ended June 30, 2018 included in the Company’s Annual Report on Form 10-K filed with the SEC on August 10, 2018.

The Company adopted ASU 2014-09, Revenue from Contracts with Customers (“Topic 606”) effective as of July 1, 2018. Topic 606 requires revenue to be recognized when an entity transfers control of goods or services to a customer in an amount that reflects the consideration to which a company expects to be entitled to for those goods or services. To achieve this core principle, the Company recognizes revenue from contracts with customers based on the following five steps:

Identify the contract with a customer;

Identify the performance obligations in the contract;

Determine the transaction price;

Allocate the transaction price to performance obligations in the contract; and

Recognize revenue when or as the Company satisfies a performance obligation.

The Company derives its revenue from contracts predominantly from recurring and non-recurring service fees. 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 two years long. Recurring fees are derived from payroll, timekeeping, and HR-related cloud-based computing services as follows:

Payroll processing and related services, including payroll reporting and tax filing services are 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, are delivered on a monthly basis, and

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

The majority of the Company’s recurring fees are satisfied over time as services are provided. The performance obligations related to payroll services are satisfied upon the processing of the client’s payroll with the fee charged and collected based on a per employee per payroll frequency fee. The performance obligations related to time and attendance services and HR related services are satisfied over time each month with the fee charged and collected based on a per employee per month fee. For subscription based fees which can include payroll, time and attendance and HR related services, the Company recognizes the applicable recurring fees over time each month with the fee charged and collected based on a per employee per month fee. The Company has certain optional performance obligations that are satisfied at a point in time including the sales of time clocks and W-2 services.

Non-recurring service fees consist mainly of nonrefundable implementation fees, which involve setting the client up in, and loading data into, the Company’s cloud-based applications. These implementation activities are considered set-up activities. The Company has determined that the nonrefundable upfront fees provide certain clients with a material right to renew the contract. Implementation fees are deferred and amortized generally over a period up to 24 months.

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.

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 components of providing these services.

The following table, consistent with the presentation of its unaudited consolidated statements of operations and comprehensive income, disaggregates revenue by recurring fees and implementation services and other, which it believes represents the major categories of revenue:


	Three Months Ended
	September 30, 2018
Recurring fees	$	95,761
Implementation services and other		1,241
Total revenues from contracts	$	97,002

Deferred revenue

The timing of revenue recognition for recurring revenue is consistent with the timing of invoicing as they occur simultaneously upon the client payroll-processing period or by month. As such, the Company does not recognize contract assets or liabilities related to recurring revenue.

The nonrefundable upfront fees related to implementation services are invoiced with the client’s first payroll period. The Company defers these nonrefundable upfront fees generally over a period up to 24 months based on the type of contract. The following table summarizes the changes in deferred revenue (i.e. contract liability) related to these nonrefundable upfront fees as follows:


	Three Months Ended
	September 30, 2018
Balance at July 1, 2018	$	—
Deferral of revenue		2,518
Revenue recognized		(499)
Balance at September 30, 2018	$	2,019

Deferred revenue related to these nonrefundable upfront fees are recorded within accrued expenses and other long-term liabilities on the unaudited consolidated balance sheets. The Company expects to recognize these deferred revenue balances of $1,382 in fiscal 2019, $504 in fiscal 2020, and $133 thereafter.

Deferred contract costs

The Company defers certain selling and commission costs that meet the capitalization criteria under ASC 340-40, which prior to the adoption of Topic 606 were previously expensed as incurred. The Company also capitalizes certain costs to fulfill a contract related to its proprietary products if they are identifiable, generate or enhance resources used to satisfy future performance obligations and are expected to be recovered under ASC 340-40. As discussed in Note 2(e), the Company determined that implementation services related to its proprietary products are not separate performance obligations for contracts entered into after July 1, 2018. Implementation fees are treated as nonrefundable upfront fees and the related implementation costs are required to be capitalized and amortized over the expected period of benefit, which is the period in which the Company expects to recover the costs and enhance its ability to satisfy future performance obligations.

The Company utilizes the portfolio approach to account for both the cost of obtaining a contract and the cost of fulfilling a contract. These capitalized costs are amortized over the expected period of benefit, which has been determined to be over 7 years based on the Company’s average client life and other qualitative factors, including rate of technological changes. The Company does not incur any additional costs to obtain or fulfill contracts upon renewal. The Company recognizes additional selling and commission costs and fulfillment costs when an existing client purchases additional services. These additional costs only relate to the additional services purchased and do not relate to the renewal of previous services.

The following table presents the deferred contract costs balances and the related amortization expense for these deferred contract costs:


	Beginning						Ending
	Balance		Capitalized				Balance
	July 1, 2018		Costs		Amortization		September 30, 2018
Costs to obtain a new contract	$	68,107	$	5,711	$	(3,885)	$	69,933
Costs to fulfill a contract		—		5,474		(131)		5,343
Total	$	68,107	$	11,185	$	(4,016)	$	75,276

Deferred contract costs are recorded within deferred contract costs and long-term deferred contract costs on the unaudited consolidated balance sheets. Amortization of deferred contracts costs is recorded in implementation services and other cost of revenue, sales and marketing, and general and administrative in the unaudited consolidated statements of operations and comprehensive income.

Remaining Performance Obligations

The Company has applied the practical expedients as allowed under Topic 606 and elects not to disclose the value of unsatisfied performance obligations for contracts that have an original expected duration of one year or less and contracts for which the variable consideration is allocated entirely to wholly unsatisfied performance obligations. The Company’s remaining performance obligations related to minimum monthly fees on its term based contracts was approximately $29,000 as of September 30, 2018, which will be generally recognized over the next 24 months.

(d) Income Taxes

Income taxes are accounted for in accordance with ASC 740, Income Taxes, using the asset and liability method. The Company’s provision for income taxes is based on the annual effective rate 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 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. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If the Company determines that it would be able to realize its deferred tax assets in the future in excess of their net-recorded amount, it would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.

(e) Recently Adopted Accounting Standards

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). Topic 606 supersedes a majority of existing revenue recognition guidance under 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. The standard also provides guidance on the recognition of costs related to obtaining and fulfilling a contract under Subtopic 340-40, Other Assets and Deferred Costs – Contracts with Customers. The Company adopted the new standard, including subsequent amendments and Subtopic 340-40, effective as of July 1, 2018 using the modified retrospective method of transition, which limited the application of the new standard only to contracts that were not completed as of the effective date. The adoption of Topic 606 did not have a material impact in the timing or amount of revenue recognized. However, it did have a material impact on its unaudited consolidated balance sheet due to the deferral of costs of obtaining and fulfilling a contract as detailed below. The Company has updated its control framework for new internal controls and has updated existing controls relating to the new standard.

Under the legacy revenue standard through fiscal 2018, the Company accounted for implementation and recurring services each as a separate unit of account. The Company was 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 determined that from July 1, 2018 forward it no longer had 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 eliminated the ability of third parties to perform implementation services. Similarly, the Company determined that these implementation services are not a separate performance obligation under Topic 606 for contracts entered into after July 1, 2018 and the associated implementation fees are treated as nonrefundable upfront fees which are deferred and amortized over a period of time instead of recognized upon completion. The Company recognized $2,191, net of deferred taxes, of contract assets for implementation fees related to open contracts as of July 1, 2018 which began when the Company was still able to establish stand-alone value for implementation activities. This adjustment was recorded through retained earnings (accumulated deficit) in the statement of changes in stockholder’s equity upon adoption on July 1, 2018.

The Company also finalized the treatment of costs of obtaining and fulfilling a new contract under the new standard. The Company is now required to defer these costs and amortize them over the expected period of benefit, which it has determined to be 7 years. The Company recognized the cumulative effect related to the deferral of the costs of obtaining new contracts of $50,481, net of deferred taxes, which was recorded through retained earnings (accumulated deficit) in the statement of changes in stockholder’s equity upon adoption on July 1, 2018.

The cumulative effect of the changes made to the July 1, 2018 balance sheet due to the adoption of Topic 606 were as follows:


	As Reported		Adjustments		Balances at
	June 30, 2018		due to Topic 606		July 1, 2018
Balance Sheet
Assets
Deferred contract costs	$	—	$	14,783	$	14,783
Prepaid expenses and other		11,248		1,730		12,978
Long-term deferred contract costs		—		53,324		53,324
Long-term prepaid expenses and other		1,504		1,226		2,730
Deferred income tax assets, net		22,140		(18,391)		3,749
Stockholders' Equity
Retained earnings (accumulated deficit)		(6,678)		52,672		45,994

The following table summarizes the impact from the adoption of Topic 606 on the Company’s unaudited consolidated statement of operations and comprehensive income:


	Three Months Ended September 30, 2018
	As Reported		Balances under		Impact from
	(Topic 606)		ASC 605		Adoption
Statement of Operations
Revenues
Recurring fees	$	95,761	$	96,197	$	(436)
Implementation services and other		1,241		800		441
Cost of Revenues
Implementation services and other		6,711		11,956		(5,245)
Operating expenses
Sales and marketing		26,418		28,209		(1,791)
General and administrative		22,968		23,101		(133)
Income tax expense (benefit)		(5,807)		(7,664)		1,857
Net income		9,852		4,535		5,317

The following table summarizes the impact from the adoption of Topic 606 on the Company’s unaudited consolidated balance sheet:


	Three Months Ended September 30, 2018
	As Reported		Balances under		Impact from
	(Topic 606)		ASC 605		Adoption
Balance Sheet
Assets
Deferred contract costs	$	16,215	$	—	$	16,215
Prepaid expenses and other		14,220		12,506		1,714
Long-term deferred contract costs		59,061		—		59,061
Long-term prepaid expenses and other		3,132		2,326		806
Deferred income tax assets, net		9,554		29,802		(20,248)
Liabilities
Accrued expenses		35,678		34,479		1,199
Other long-term liabilities		1,424		3,064		(1,640)
Stockholders' Equity
Retained earnings (accumulated deficit)		55,846		(2,143)		57,989

The following table summarizes the impact from the adoption of Topic 606 on the Company’s unaudited consolidated statement of cash flows:


	Three Months Ended September 30, 2018
	As Reported		Balances under		Impact from
	(Topic 606)		ASC 605		Adoption
Statement of Cash Flows
Net income	$	9,852	$	4,535	$	5,317
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income tax expense (benefit)		(5,809)		(7,666)		1,857
Changes in operating assets and liabilities:
Deferred contract costs		(7,169)		—		(7,169)
Prepaid expenses and other		(853)		(1,289)		436
Accrued expenses		(6,214)		(5,773)		(441)
Net cash provided by operating activities		7,344		7,344		—

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 8 for additional information.

(f) Recently Issued Accounting Standards

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 guidance by issuing ASU 2018-01, 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. In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases, and ASU 2018-11, Leases (Topic 842): Targeted Improvements to amend and clarify the original guidance established in the new lease standard. ASU 2016-02, including all of its amendments, 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.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which amends the requirements for fair value measurement disclosures. ASU 2018-13 removes, modifies or adds certain disclosure requirements under GAAP. This standard is effective for fiscal years beginning after December 15, 2019, with early adoption permitted. Any new disclosure requirements must be applied on a prospective basis in the interim and annual periods of initial adoption; all removed or modified requirements must be applied retrospectively to all periods presented. The Company is assessing the impact of ASU 2018-13 including the timing and method of adoption.

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.

Balance Sheet Information

3 Months Ended

Sep. 30, 2018

Balance Sheet Information

Balance Sheet Information

(3) Balance Sheet Information

The following tables provide details of selected consolidated balance sheet items:

Activity in the allowance for doubtful accounts was as follows:


Balance at June 30, 2018	$	375
Charged to expense		30
Write-offs		(29)
Balance at September 30, 2018	$	376

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


	June 30,		September 30,
	2018		2018
Capitalized internal-use software	$	67,678	$	72,830
Accumulated amortization		(46,584)		(50,796)
Capitalized internal-use software, net	$	21,094	$	22,034

Amortization of capitalized internal-use software costs is included in Cost of Revenues-Recurring Revenues and amounted to $3,389 and $4,212 for the three months ended September 30, 2017 and 2018, respectively.

Property and equipment, net consist of the following:


	June 30,		September 30,
	2018		2018
Office equipment	$	3,743	$	3,965
Computer equipment		29,768		31,239
Furniture and fixtures		10,382		10,274
Software		5,965		6,181
Leasehold improvements		36,366		36,910
Time clocks rented by clients		4,534		4,508
Total		90,758		93,077
Accumulated depreciation		(28,729)		(31,254)
Property and equipment, net	$	62,029	$	61,823

Depreciation expense amounted to $2,925 and $3,457 for the three months ended September 30, 2017 and 2018, respectively.

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



	June 30,		September 30,		Useful
	2018		2018		Life
Client relationships	$	18,130	$	18,130	7 - 9 years
Non-solicitation agreements		600		600	2 - 4 years
Total		18,730		18,730
Accumulated amortization		(5,728)		(6,291)
Intangible assets, net	$	13,002	$	12,439

Amortization expense for acquired intangible assets was $359 and $563 for the three months ended September 30, 2017 and 2018, respectively.

Future amortization expense for acquired intangible assets is as follows, as of September 30, 2018:


Remainder of fiscal 2019	$	1,688
Fiscal 2020		2,251
Fiscal 2021		2,251
Fiscal 2022		2,232
Fiscal 2023		2,118
Thereafter		1,899
Total	$	12,439

The components of accrued expenses were as follows:


	June 30,		September 30,
	2018		2018
Accrued payroll and personnel costs	$	31,206	$	21,883
Lease exit obligations		2,143		1,808
Other		8,892		11,987
Total accrued expenses	$	42,241	$	35,678

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. The following table is a summary of the changes in the remaining lease exit obligations related to the Company’s former headquarters, which is recorded in accrued expenses and other long-term liabilities on the unaudited consolidated balance sheets:


Balance at June 30, 2018	$	3,261
Payments		(604)
Adjustments		38
Balance at September 30, 2018	$	2,695

Corporate Investments and Funds Held for Clients

3 Months Ended

Sep. 30, 2018

Funds Held For Clients And Corporate Investments [Abstract]

Corporate Investments and Funds Held for Clients

(4) Corporate Investments and Funds Held for Clients

Corporate investments and funds held for clients consist of the following:


	June 30, 2018
			Gross		Gross
	Amortized		unrealized		unrealized
Type of Issue	cost		gains		losses		Fair value
Cash and cash equivalents	$	137,193	$	—	$	—	$	137,193
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 (1)		123,991		12		(195)		123,808
Total investments	$	1,363,725	$	12	$	(198)	$	1,363,539

(1)

Included within the fair value of total available-for-sale securities above is $732 of corporate investments and $123,076 of funds held for clients


	September 30, 2018
			Gross		Gross
	Amortized		unrealized		unrealized
Type of Issue	cost		gains		losses		Fair value
Cash and cash equivalents	$	63,663	$	—	$	(1)	$	63,662
Funds held for clients' cash and cash equivalents		1,046,696		—		(5)		1,046,691
Available-for-sale securities:
Commercial paper		56,651		1		(18)		56,634
Corporate bonds		32,268		11		(91)		32,188
Asset-backed securities		38,711		4		(44)		38,671
U.S. treasury securities		16,126		—		(24)		16,102
Total available-for-sale securities (2)		143,756		16		(177)		143,595
Total investments	$	1,254,115	$	16	$	(183)	$	1,253,948

(2)

Included within the fair value of total available-for-sale securities above is $22,130 of corporate investments and $121,465 of funds held for clients

The Company began investing corporate funds in available-for-sale securities during the first quarter of fiscal 2019 and as a result, reclassified $732 as of June 30, 2018 from prepaid expenses and other on the unaudited consolidated balance sheets to corporate investments for comparability purposes in order to conform to the current year’s presentation. Cash and cash equivalents and funds held for clients’ cash and cash equivalents include demand deposit accounts, money market funds and commercial paper as of June 30, 2018 and September 30, 2018.

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


	June 30,		September 30,
	2018		2018
Cash and cash equivalents	$	137,193	$	63,662
Corporate investments		732		21,225
Funds held for clients		1,225,614		1,168,156
Long-term prepaid expenses and other		—		905
Total investments	$	1,363,539	$	1,253,948

Available-for-sale securities that have been in an unrealized loss position for a period of less and greater than 12 months are as follows:


	June 30, 2018
	Securities in an				Securities in an
	unrealized loss				unrealized loss
	position for less				position for greater
	than 12 months				than 12 months				Total
	Gross				Gross				Gross
	unrealized				unrealized				unrealized
	losses		Fair value		losses		Fair value		losses		Fair value
Commercial paper	$	(4)	$	23,657	$	—	$	—	$	(4)	$	23,657
Corporate bonds		(134)		29,122		—		—		(134)		29,122
Asset-backed securities		(55)		17,960		—		—		(55)		17,960
U.S. treasury securities		(2)		4,933		—		—		(2)		4,933
Total available-for-sale securities	$	(195)	$	75,672	$	—	$	—	$	(195)	$	75,672


	September 30, 2018
	Securities in an				Securities in an
	unrealized loss				unrealized loss
	position for less				position for greater
	than 12 months				than 12 months				Total
	Gross				Gross				Gross
	unrealized				unrealized				unrealized
	losses		Fair value		losses		Fair value		losses		Fair value
Commercial paper	$	(18)	$	46,006	$	—	$	—	$	(18)	$	46,006
Corporate bonds		(70)		21,357		(21)		4,814		(91)		26,171
Asset-backed securities		(40)		28,332		(4)		1,064		(44)		29,396
U.S. treasury securities		(24)		16,102		—		—		(24)		16,102
Total available-for-sale securities	$	(152)	$	111,797	$	(25)	$	5,878	$	(177)	$	117,675

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 three months ended September 30, 2017 or 2018, nor does it believe that OTTI exists in its portfolio as of September 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 September 30, 2018.

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 three months ended September 30, 2017 or 2018. Gross realized gains and losses on the sale of available-for-sale securities were immaterial for both the three months ended September 30, 2017 and 2018.

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


	Amortized
	cost		Fair value
One year or less	$	126,192	$	126,062
One year to two years		16,064		16,028
Two years to three years		1,500		1,505
Total available-for-sale securities	$	143,756	$	143,595

Fair Value Measurement

3 Months Ended

Sep. 30, 2018

Fair Value Measurement

Fair Value Measurement

(5) 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 certain 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, 2018 and September 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 U.S. 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 or September 30, 2018, and the Company did not transfer assets between Levels during the three months ended September 30, 2017 or 2018.

The fair value level for the Company’s cash and cash equivalents and available-for-sale securities is as follows:


	June 30, 2018
	Total		Level 1		Level 2		Level 3
Cash and cash equivalents	$	137,193	$	137,193	$	—	$	—
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		—
Total investments	$	1,363,539	$	1,213,607	$	149,932	$	—


	September 30, 2018
	Total		Level 1		Level 2		Level 3
Cash and cash equivalents	$	63,662	$	60,215	$	3,447	$	—
Funds held for clients' cash and cash equivalents		1,046,691		1,018,208		28,483		—
Available-for-sale securities:
Commercial paper		56,634		—		56,634		—
Corporate bonds		32,188		—		32,188		—
Asset-backed securities		38,671		—		38,671		—
U.S. treasury securities		16,102		—		16,102		—
Total available-for-sale securities		143,595		—		143,595		—
Total investments	$	1,253,948	$	1,078,423	$	175,525	$	—

- 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

Benefit Plans

3 Months Ended

Sep. 30, 2018

Benefit Plans

Benefit Plans

(6) Benefit Plans

(a) Equity Incentive Plan

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 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.

As of September 30, 2018, the Company had 13,295 shares allocated to the plans, of which 3,646 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 changes in the number of shares available for grant under the Company’s equity incentive plans during the three months ended September 30, 2018:


		Number of Shares
Available for grant at July 1, 2018		10,030
RSUs granted		(715)
Shares withheld in settlement of taxes and/or exercise price		281
Forfeitures		94
Shares removed		(41)
Available for grant at September 30, 2018		9,649

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 unaudited consolidated statements of operations and comprehensive income:


	Three Months Ended September 30,
	2017		2018
Cost of revenue – recurring	$	622	$	852
Cost of revenue – non-recurring		372		386
Sales and marketing		1,938		1,697
Research and development		871		1,278
General and administrative		2,803		5,212
Total stock-based compensation expense	$	6,606	$	9,425

In addition, the Company capitalized $433 and $625 of stock-based compensation expense in its capitalized internal-use software costs in the three months ended September 30, 2017 and 2018, respectively.

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.

There were no stock options granted during the three months ended September 30, 2017 or 2018. The table below presents stock option activity during the three months ended September 30, 2018:


	Outstanding Options
				Weighted
		Weighted		average
		average		remaining	Aggregate
	Number of	exercise		contractual	intrinsic
	shares	price		term (years)	value
Balance at July 1, 2018	1,907	$	12.40	5.00	$	88,595
Options forfeited	(1)	$	35.28
Options exercised	(182)	$	12.31
Balance at September 30, 2018	1,724	$	12.40	4.76	$	117,089
Options exercisable at September 30, 2018	1,696	$	12.03	4.72	$	115,856
Options vested and expected to vest at September 30, 2018	1,723	$	12.38	4.75	$	117,035

The total intrinsic value of options exercised was $3,380 and $12,203 during the three months ended September 30, 2017 and 2018, respectively. At September 30, 2018, there was $83 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 0.88 years.

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 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 growth and Adjusted EBITDA margin targets in future fiscal years. The following table represents restricted stock unit activity during the three months ended September 30, 2018:


	Units	Weighted average grant date fair value
RSU balance at July 1, 2018	1,879	$	43.39
RSUs granted	715	$	66.22
RSUs vested	(579)	$	40.65
RSUs forfeited	(93)	$	45.26
RSU balance at September 30, 2018	1,922	$	52.63
RSUs expected to vest at September 30, 2018	1,724	$	52.45

At September 30, 2018, there was $62,022 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 2.09 years.

(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 September 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 recorded compensation expense attributable to the ESPP of $339 and $439 for the three months ended September 30, 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:


	Three Months Ended
	September 30,
	2017		2018
Valuation assumptions:
Expected dividend yield	0	%	0	%
Expected volatility	39.1	%	33.5	%
Expected term (years)	0.5		0.5
Risk‑free interest rate	1.02	%	2.10	%

The Company maintains a 401(k) plan with a matching provision that covers all eligible employees. The Company matches 50% of employees’ contributions up to 8% of their gross pay. Contributions were $1,111 and $1,394 for the three months ended September 30, 2017 and 2018, respectively.

Summary of Significant Accounting Policies (Policies)

3 Months Ended

Sep. 30, 2018

Summary of Significant Accounting Policies

Consolidation and Use of Estimates

(a) Consolidation and Use of Estimates

Interim Unaudited Consolidated Financial Information

(b) Interim Unaudited Consolidated Financial Information

Revenue Recognition

Identify the contract with a customer;

Identify the performance obligations in the contract;

Determine the transaction price;

Allocate the transaction price to performance obligations in the contract; and

Recognize revenue when or as the Company satisfies a performance obligation.

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

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


	Three Months Ended
	September 30, 2018
Recurring fees	$	95,761
Implementation services and other		1,241
Total revenues from contracts	$	97,002

Deferred revenue


	Three Months Ended
	September 30, 2018
Balance at July 1, 2018	$	—
Deferral of revenue		2,518
Revenue recognized		(499)
Balance at September 30, 2018	$	2,019

Deferred contract costs

The following table presents the deferred contract costs balances and the related amortization expense for these deferred contract costs:


	Beginning						Ending
	Balance		Capitalized				Balance
	July 1, 2018		Costs		Amortization		September 30, 2018
Costs to obtain a new contract	$	68,107	$	5,711	$	(3,885)	$	69,933
Costs to fulfill a contract		—		5,474		(131)		5,343
Total	$	68,107	$	11,185	$	(4,016)	$	75,276

Remaining Performance Obligations

Income Taxes

(d) Income Taxes

Recently Adopted Accounting Standards

(e) Recently Adopted Accounting Standards

The cumulative effect of the changes made to the July 1, 2018 balance sheet due to the adoption of Topic 606 were as follows:


	As Reported		Adjustments		Balances at
	June 30, 2018		due to Topic 606		July 1, 2018
Balance Sheet
Assets
Deferred contract costs	$	—	$	14,783	$	14,783
Prepaid expenses and other		11,248		1,730		12,978
Long-term deferred contract costs		—		53,324		53,324
Long-term prepaid expenses and other		1,504		1,226		2,730
Deferred income tax assets, net		22,140		(18,391)		3,749
Stockholders' Equity
Retained earnings (accumulated deficit)		(6,678)		52,672		45,994

The following table summarizes the impact from the adoption of Topic 606 on the Company’s unaudited consolidated statement of operations and comprehensive income:


	Three Months Ended September 30, 2018
	As Reported		Balances under		Impact from
	(Topic 606)		ASC 605		Adoption
Statement of Operations
Revenues
Recurring fees	$	95,761	$	96,197	$	(436)
Implementation services and other		1,241		800		441
Cost of Revenues
Implementation services and other		6,711		11,956		(5,245)
Operating expenses
Sales and marketing		26,418		28,209		(1,791)
General and administrative		22,968		23,101		(133)
Income tax expense (benefit)		(5,807)		(7,664)		1,857
Net income		9,852		4,535		5,317

The following table summarizes the impact from the adoption of Topic 606 on the Company’s unaudited consolidated balance sheet:


	Three Months Ended September 30, 2018
	As Reported		Balances under		Impact from
	(Topic 606)		ASC 605		Adoption
Balance Sheet
Assets
Deferred contract costs	$	16,215	$	—	$	16,215
Prepaid expenses and other		14,220		12,506		1,714
Long-term deferred contract costs		59,061		—		59,061
Long-term prepaid expenses and other		3,132		2,326		806
Deferred income tax assets, net		9,554		29,802		(20,248)
Liabilities
Accrued expenses		35,678		34,479		1,199
Other long-term liabilities		1,424		3,064		(1,640)
Stockholders' Equity
Retained earnings (accumulated deficit)		55,846		(2,143)		57,989

The following table summarizes the impact from the adoption of Topic 606 on the Company’s unaudited consolidated statement of cash flows:


	Three Months Ended September 30, 2018
	As Reported		Balances under		Impact from
	(Topic 606)		ASC 605		Adoption
Statement of Cash Flows
Net income	$	9,852	$	4,535	$	5,317
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income tax expense (benefit)		(5,809)		(7,666)		1,857
Changes in operating assets and liabilities:
Deferred contract costs		(7,169)		—		(7,169)
Prepaid expenses and other		(853)		(1,289)		436
Accrued expenses		(6,214)		(5,773)		(441)
Net cash provided by operating activities		7,344		7,344		—

- Definition

Disclosure of accounting policy for income taxes, which may include its accounting policies for recognizing and measuring deferred tax assets and liabilities and related valuation allowances, recognizing investment tax credits, operating loss carryforwards, tax credit carryforwards, and other carryforwards, methodologies for determining its effective income tax rate and the characterization of interest and penalties in the financial statements.

+ References + Details

Summary of Significant Accounting Policies (Tables)

3 Months Ended

Sep. 30, 2018

Summary of Significant Accounting Policies

Schedule of disaggregated revenue from customers


	Three Months Ended
	September 30, 2018
Recurring fees	$	95,761
Implementation services and other		1,241
Total revenues from contracts	$	97,002

Schedule of changes in deferred revenue


	Three Months Ended
	September 30, 2018
Balance at July 1, 2018	$	—
Deferral of revenue		2,518
Revenue recognized		(499)
Balance at September 30, 2018	$	2,019

Schedule of deferred contract costs and the related amortization expense


	Beginning						Ending
	Balance		Capitalized				Balance
	July 1, 2018		Costs		Amortization		September 30, 2018
Costs to obtain a new contract	$	68,107	$	5,711	$	(3,885)	$	69,933
Costs to fulfill a contract		—		5,474		(131)		5,343
Total	$	68,107	$	11,185	$	(4,016)	$	75,276

Schedule of the cumulative effect of the adoption of ASC 606 on prior year balance sheet


	As Reported		Adjustments		Balances at
	June 30, 2018		due to Topic 606		July 1, 2018
Balance Sheet
Assets
Deferred contract costs	$	—	$	14,783	$	14,783
Prepaid expenses and other		11,248		1,730		12,978
Long-term deferred contract costs		—		53,324		53,324
Long-term prepaid expenses and other		1,504		1,226		2,730
Deferred income tax assets, net		22,140		(18,391)		3,749
Stockholders' Equity
Retained earnings (accumulated deficit)		(6,678)		52,672		45,994

Schedule of the impact of adoption of ASC 606 on current period financial statements

The following table summarizes the impact from the adoption of Topic 606 on the Company’s unaudited consolidated statement of operations and comprehensive income:


	Three Months Ended September 30, 2018
	As Reported		Balances under		Impact from
	(Topic 606)		ASC 605		Adoption
Statement of Operations
Revenues
Recurring fees	$	95,761	$	96,197	$	(436)
Implementation services and other		1,241		800		441
Cost of Revenues
Implementation services and other		6,711		11,956		(5,245)
Operating expenses
Sales and marketing		26,418		28,209		(1,791)
General and administrative		22,968		23,101		(133)
Income tax expense (benefit)		(5,807)		(7,664)		1,857
Net income		9,852		4,535		5,317

The following table summarizes the impact from the adoption of Topic 606 on the Company’s unaudited consolidated balance sheet:


	Three Months Ended September 30, 2018
	As Reported		Balances under		Impact from
	(Topic 606)		ASC 605		Adoption
Balance Sheet
Assets
Deferred contract costs	$	16,215	$	—	$	16,215
Prepaid expenses and other		14,220		12,506		1,714
Long-term deferred contract costs		59,061		—		59,061
Long-term prepaid expenses and other		3,132		2,326		806
Deferred income tax assets, net		9,554		29,802		(20,248)
Liabilities
Accrued expenses		35,678		34,479		1,199
Other long-term liabilities		1,424		3,064		(1,640)
Stockholders' Equity
Retained earnings (accumulated deficit)		55,846		(2,143)		57,989

The following table summarizes the impact from the adoption of Topic 606 on the Company’s unaudited consolidated statement of cash flows:


	Three Months Ended September 30, 2018
	As Reported		Balances under		Impact from
	(Topic 606)		ASC 605		Adoption
Statement of Cash Flows
Net income	$	9,852	$	4,535	$	5,317
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income tax expense (benefit)		(5,809)		(7,666)		1,857
Changes in operating assets and liabilities:
Deferred contract costs		(7,169)		—		(7,169)
Prepaid expenses and other		(853)		(1,289)		436
Accrued expenses		(6,214)		(5,773)		(441)
Net cash provided by operating activities		7,344		7,344		—

Balance Sheet Information (Tables)

3 Months Ended

Sep. 30, 2018

Balance Sheet Information

Schedule of activity in allowance for doubtful accounts


Balance at June 30, 2018	$	375
Charged to expense		30
Write-offs		(29)
Balance at September 30, 2018	$	376

Schedule of capitalized internal-use software and accumulated amortization


	June 30,		September 30,
	2018		2018
Capitalized internal-use software	$	67,678	$	72,830
Accumulated amortization		(46,584)		(50,796)
Capitalized internal-use software, net	$	21,094	$	22,034

Schedule of property and equipment


	June 30,		September 30,
	2018		2018
Office equipment	$	3,743	$	3,965
Computer equipment		29,768		31,239
Furniture and fixtures		10,382		10,274
Software		5,965		6,181
Leasehold improvements		36,366		36,910
Time clocks rented by clients		4,534		4,508
Total		90,758		93,077
Accumulated depreciation		(28,729)		(31,254)
Property and equipment, net	$	62,029	$	61,823

Schedule of intangible assets



	June 30,		September 30,		Useful
	2018		2018		Life
Client relationships	$	18,130	$	18,130	7 - 9 years
Non-solicitation agreements		600		600	2 - 4 years
Total		18,730		18,730
Accumulated amortization		(5,728)		(6,291)
Intangible assets, net	$	13,002	$	12,439

Schedule of future amortization expense for acquired intangible assets

Future amortization expense for acquired intangible assets is as follows, as of September 30, 2018:


Remainder of fiscal 2019	$	1,688
Fiscal 2020		2,251
Fiscal 2021		2,251
Fiscal 2022		2,232
Fiscal 2023		2,118
Thereafter		1,899
Total	$	12,439

Schedule of components of accrued expenses


	June 30,		September 30,
	2018		2018
Accrued payroll and personnel costs	$	31,206	$	21,883
Lease exit obligations		2,143		1,808
Other		8,892		11,987
Total accrued expenses	$	42,241	$	35,678

Schedule of the changes in the lease exit obligation


Balance at June 30, 2018	$	3,261
Payments		(604)
Adjustments		38
Balance at September 30, 2018	$	2,695

Corporate Investments and Funds Held For Clients (Tables)

3 Months Ended

Sep. 30, 2018

Funds Held For Clients And Corporate Investments [Abstract]

Schedule of investments


	June 30, 2018
			Gross		Gross
	Amortized		unrealized		unrealized
Type of Issue	cost		gains		losses		Fair value
Cash and cash equivalents	$	137,193	$	—	$	—	$	137,193
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 (1)		123,991		12		(195)		123,808
Total investments	$	1,363,725	$	12	$	(198)	$	1,363,539

(1)

Included within the fair value of total available-for-sale securities above is $732 of corporate investments and $123,076 of funds held for clients


	September 30, 2018
			Gross		Gross
	Amortized		unrealized		unrealized
Type of Issue	cost		gains		losses		Fair value
Cash and cash equivalents	$	63,663	$	—	$	(1)	$	63,662
Funds held for clients' cash and cash equivalents		1,046,696		—		(5)		1,046,691
Available-for-sale securities:
Commercial paper		56,651		1		(18)		56,634
Corporate bonds		32,268		11		(91)		32,188
Asset-backed securities		38,711		4		(44)		38,671
U.S. treasury securities		16,126		—		(24)		16,102
Total available-for-sale securities (2)		143,756		16		(177)		143,595
Total investments	$	1,254,115	$	16	$	(183)	$	1,253,948

(2)

Included within the fair value of total available-for-sale securities above is $22,130 of corporate investments and $121,465 of funds held for clients

Tabular disclosure of the classification of investments


	June 30,		September 30,
	2018		2018
Cash and cash equivalents	$	137,193	$	63,662
Corporate investments		732		21,225
Funds held for clients		1,225,614		1,168,156
Long-term prepaid expenses and other		—		905
Total investments	$	1,363,539	$	1,253,948

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


	June 30, 2018
	Securities in an				Securities in an
	unrealized loss				unrealized loss
	position for less				position for greater
	than 12 months				than 12 months				Total
	Gross				Gross				Gross
	unrealized				unrealized				unrealized
	losses		Fair value		losses		Fair value		losses		Fair value
Commercial paper	$	(4)	$	23,657	$	—	$	—	$	(4)	$	23,657
Corporate bonds		(134)		29,122		—		—		(134)		29,122
Asset-backed securities		(55)		17,960		—		—		(55)		17,960
U.S. treasury securities		(2)		4,933		—		—		(2)		4,933
Total available-for-sale securities	$	(195)	$	75,672	$	—	$	—	$	(195)	$	75,672


	September 30, 2018
	Securities in an				Securities in an
	unrealized loss				unrealized loss
	position for less				position for greater
	than 12 months				than 12 months				Total
	Gross				Gross				Gross
	unrealized				unrealized				unrealized
	losses		Fair value		losses		Fair value		losses		Fair value
Commercial paper	$	(18)	$	46,006	$	—	$	—	$	(18)	$	46,006
Corporate bonds		(70)		21,357		(21)		4,814		(91)		26,171
Asset-backed securities		(40)		28,332		(4)		1,064		(44)		29,396
U.S. treasury securities		(24)		16,102		—		—		(24)		16,102
Total available-for-sale securities	$	(152)	$	111,797	$	(25)	$	5,878	$	(177)	$	117,675

Schedule of expected maturities of available-for-sale securities

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


	Amortized
	cost		Fair value
One year or less	$	126,192	$	126,062
One year to two years		16,064		16,028
Two years to three years		1,500		1,505
Total available-for-sale securities	$	143,756	$	143,595

Fair Value Measurement (Tables)

3 Months Ended

Sep. 30, 2018

Fair Value Measurement

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


	June 30, 2018
	Total		Level 1		Level 2		Level 3
Cash and cash equivalents	$	137,193	$	137,193	$	—	$	—
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		—
Total investments	$	1,363,539	$	1,213,607	$	149,932	$	—


	September 30, 2018
	Total		Level 1		Level 2		Level 3
Cash and cash equivalents	$	63,662	$	60,215	$	3,447	$	—
Funds held for clients' cash and cash equivalents		1,046,691		1,018,208		28,483		—
Available-for-sale securities:
Commercial paper		56,634		—		56,634		—
Corporate bonds		32,188		—		32,188		—
Asset-backed securities		38,671		—		38,671		—
U.S. treasury securities		16,102		—		16,102		—
Total available-for-sale securities		143,595		—		143,595		—
Total investments	$	1,253,948	$	1,078,423	$	175,525	$	—

Benefit Plans (Tables)

3 Months Ended

Sep. 30, 2018

Benefit Plans

Summary of shares available for grant under equity incentive plans


		Number of Shares
Available for grant at July 1, 2018		10,030
RSUs granted		(715)
Shares withheld in settlement of taxes and/or exercise price		281
Forfeitures		94
Shares removed		(41)
Available for grant at September 30, 2018		9,649

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


	Three Months Ended September 30,
	2017		2018
Cost of revenue – recurring	$	622	$	852
Cost of revenue – non-recurring		372		386
Sales and marketing		1,938		1,697
Research and development		871		1,278
General and administrative		2,803		5,212
Total stock-based compensation expense	$	6,606	$	9,425

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, 2018	1,907	$	12.40	5.00	$	88,595
Options forfeited	(1)	$	35.28
Options exercised	(182)	$	12.31
Balance at September 30, 2018	1,724	$	12.40	4.76	$	117,089
Options exercisable at September 30, 2018	1,696	$	12.03	4.72	$	115,856
Options vested and expected to vest at September 30, 2018	1,723	$	12.38	4.75	$	117,035

Schedule of restricted stock unit activity


	Units	Weighted average grant date fair value
RSU balance at July 1, 2018	1,879	$	43.39
RSUs granted	715	$	66.22
RSUs vested	(579)	$	40.65
RSUs forfeited	(93)	$	45.26
RSU balance at September 30, 2018	1,922	$	52.63
RSUs expected to vest at September 30, 2018	1,724	$	52.45

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


	Three Months Ended
	September 30,
	2017		2018
Valuation assumptions:
Expected dividend yield	0	%	0	%
Expected volatility	39.1	%	33.5	%
Expected term (years)	0.5		0.5
Risk‑free interest rate	1.02	%	2.10	%

Summary of Significant Accounting Policies - Current Presentation and Revenue Recognition (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Jun. 30, 2018
Current presentation
Amount of prepaid expenses and other reclassified to corporate investments for comparability			$ 732
Disaggregation of revenue
Period of term arrangements	2 years
Total revenues from contracts	$ 97,002
Deferred contract costs
Amortization period of capitalized contract costs	7 years
Beginning Balance	$ 68,107
Capitalized Costs	11,185
Amortization	(4,016)
Ending Balance	$ 75,276
Remaining Performance Obligations
Practical expedient - remaining performance obligation	The Company has applied the practical expedients as allowed under Topic 606 and elects not to disclose the value of unsatisfied performance obligations for contracts that have an original expected duration of one year or less and contracts for which the variable consideration is allocated entirely to wholly unsatisfied performance obligations.
Maximum
Disaggregation of revenue
Notice period to cancel agreement	60 days
Deferred and amortized period of implementation fees	24 months
Cost To Obtain A New Contract
Deferred contract costs
Beginning Balance	$ 68,107
Capitalized Costs	5,711
Amortization	(3,885)
Ending Balance	69,933
Cost to Fulfill A Contract
Deferred contract costs
Beginning Balance	0
Capitalized Costs	5,474
Amortization	(131)
Ending Balance	5,343
Implementation services and other
Disaggregation of revenue
Total revenues from contracts	1,241	$ 2,589
Changes in deferred revenue related to nonrefundable upfront fees
Balance at beginning of period	0
Deferral of revenue	2,518
Revenue recognized	(499)
Balance at end of period	2,019
Deferred revenue expected to be recognized in fiscal 2019	1,382
Deferred revenue expected to be recognized in fiscal 2020	504
Deferred revenue expected to be recognized thereafter	133
Recurring fees
Disaggregation of revenue
Total revenues from contracts	95,761	$ 77,294
Remaining Performance Obligations
Minimum value of unsatisfied performance obligations on term-based contracts	$ 29,000

Balance Sheet Information - Allowance for Doubtful Accounts, Capitalized Internal-Use Software and Property, Plant and Equipment (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Jun. 30, 2018
Activity in allowance for doubtful accounts
Balance at beginning of period	$ 375
Charged to expense	30	$ 4
Write-offs	(29)
Balance at end of period	376
Capitalized internal-use software and accumulated amortization
Capitalized internal-use software	72,830		$ 67,678
Accumulated amortization	(50,796)		(46,584)
Capitalized internal-use software, net	22,034		21,094
Property and equipment, net
Property and equipment, gross	93,077		90,758
Accumulated depreciation	(31,254)		(28,729)
Property and equipment, net	61,823		62,029
Depreciation expense	3,457	2,925
Cost of revenue - recurring
Capitalized internal-use software and accumulated amortization
Amortization of capitalized internal-use software	4,212	$ 3,389
Office equipment
Property and equipment, net
Property and equipment, gross	3,965		3,743
Computer equipment
Property and equipment, net
Property and equipment, gross	31,239		29,768
Furniture and fixtures
Property and equipment, net
Property and equipment, gross	10,274		10,382
Software
Property and equipment, net
Property and equipment, gross	6,181		5,965
Leasehold improvements
Property and equipment, net
Property and equipment, gross	36,910		36,366
Time clocks rented by clients
Property and equipment, net
Property and equipment, gross	$ 4,508		$ 4,534

Balance Sheet Information - Intangible Assets and Accrued Expenses (Details) ft² in Thousands, $ in Thousands	3 Months Ended
	Sep. 30, 2018 USD ($)	Sep. 30, 2017 USD ($)	Jun. 30, 2018 USD ($) ft²
Intangible assets
Intangible assets	$ 18,730		$ 18,730
Accumulated amortization	(6,291)		(5,728)
Intangible assets, net	12,439		13,002
Amortization expense for acquired intangible assets	563	$ 359
Future amortization expense for acquired intangible assets
Remainder of fiscal 2019	1,688
2020	2,251
2021	2,251
2022	2,232
2023	2,118
Thereafter	1,899
Intangible assets, net	12,439		13,002
Components of accrued expenses
Accrued payroll and personnel costs	21,883		31,206
Lease exit obligations	1,808		2,143
Other	11,987		8,892
Total accrued expenses	35,678		$ 42,241
Arlington Heights Lease
Lease exit obligations
Area under lease no longer in use \| ft²			110
Balance at beginning of period	3,261
Payments	(604)
Adjustments	38
Balance at end of period	2,695
Client relationships
Intangible assets
Intangible assets	$ 18,130		$ 18,130
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		$ 600
Non-solicitation agreements \| Minimum
Intangible assets
Useful life	2 years
Non-solicitation agreements \| Maximum
Intangible assets
Useful life	4 years

Corporate Investments and Funds Held For Clients - Reconciliation (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Jun. 30, 2018
Corporate Investments and Funds Held for Clients [Line Items]
Amortized cost of cash and cash equivalents	$ 63,663	$ 137,193
Cash and cash equivalents, gross unrealized losses	(1)
Fair value of cash and cash equivalents	63,662	137,193
Amortized cost of funds held for clients' cash and cash equivalents	1,046,696	1,102,541
Funds held for clients' cash and cash equivalents, gross unrealized losses	(5)	(3)
Fair value of funds held for clients' cash and cash equivalents	1,046,691	1,102,538
Available-for-sale Securities
Amortized cost	143,756	123,991
Gross unrealized gains	16	12
Gross unrealized losses	(177)	(195)
Fair value	143,595	123,808
Total investments at amortized cost	1,254,115	1,363,725
Total investments gross unrealized gain	16	12
Total investments gross unrealized loss	(183)	(198)
Total investments at fair value	1,253,948	1,363,539
Commercial paper
Available-for-sale Securities
Amortized cost	56,651	50,703
Gross unrealized gains	1	3
Gross unrealized losses	(18)	(4)
Fair value	56,634	50,702
Corporate bonds
Available-for-sale Securities
Amortized cost	32,268	37,508
Gross unrealized gains	11	8
Gross unrealized losses	(91)	(134)
Fair value	32,188	37,382
Asset-backed securities
Available-for-sale Securities
Amortized cost	38,711	25,901
Gross unrealized gains	4	1
Gross unrealized losses	(44)	(55)
Fair value	38,671	25,847
U.S. treasury securities
Available-for-sale Securities
Amortized cost	16,126	9,879
Gross unrealized losses	(24)	(2)
Fair value	16,102	9,877
Corporate investments
Available-for-sale Securities
Total investments at fair value	22,130	732
Funds Held for Clients
Available-for-sale Securities
Total investments at fair value	$ 121,465	$ 123,076

Corporate Investments and Funds Held For Clients - Classification (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Jun. 30, 2018
Corporate Investments and Funds Held for Clients [Line Items]
Amount of prepaid expenses and other reclassified to corporate investments for comparability			$ 732
Cash and cash equivalents	$ 63,662		137,193
Corporate investments	21,225		732
Funds held for clients	1,168,156		1,225,614
Long-term prepaid expenses and other	905
Total investments at fair value	1,253,948		1,363,539
Available-for-sale securities in a continuous unrealized loss position
Unrealized loss on available-for-sale securities in a continuous loss position for less than 12 months	(152)		(195)
Fair market value of available-for-sale securities in an unrealized loss position less than 12 months	111,797		75,672
Unrealized loss on available-for-sale securities in a continuous loss position for greater than 12 months	(25)
Fair market value of available-for-sale securities in an unrealized loss position greater than 12 months	5,878
Total gross unrealized losses	(177)		(195)
Total fair value	117,675		75,672
Gross realized gains and losses on the sale of available-for-sale securities	0	$ 0
OTTI recognized in AOCI	0	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	$ 0
Commercial paper
Available-for-sale securities in a continuous unrealized loss position
Unrealized loss on available-for-sale securities in a continuous loss position for less than 12 months	(18)		(4)
Fair market value of available-for-sale securities in an unrealized loss position less than 12 months	46,006		23,657
Total gross unrealized losses	(18)		(4)
Total fair value	46,006		23,657
Corporate bonds
Available-for-sale securities in a continuous unrealized loss position
Unrealized loss on available-for-sale securities in a continuous loss position for less than 12 months	(70)		(134)
Fair market value of available-for-sale securities in an unrealized loss position less than 12 months	21,357		29,122
Unrealized loss on available-for-sale securities in a continuous loss position for greater than 12 months	(21)
Fair market value of available-for-sale securities in an unrealized loss position greater than 12 months	4,814
Total gross unrealized losses	(91)		(134)
Total fair value	26,171		29,122
Asset-backed securities
Available-for-sale securities in a continuous unrealized loss position
Unrealized loss on available-for-sale securities in a continuous loss position for less than 12 months	(40)		(55)
Fair market value of available-for-sale securities in an unrealized loss position less than 12 months	28,332		17,960
Unrealized loss on available-for-sale securities in a continuous loss position for greater than 12 months	(4)
Fair market value of available-for-sale securities in an unrealized loss position greater than 12 months	1,064
Total gross unrealized losses	(44)		(55)
Total fair value	29,396		17,960
U.S. treasury securities
Available-for-sale securities in a continuous unrealized loss position
Unrealized loss on available-for-sale securities in a continuous loss position for less than 12 months	(24)		(2)
Fair market value of available-for-sale securities in an unrealized loss position less than 12 months	16,102		4,933
Total gross unrealized losses	(24)		(2)
Total fair value	$ 16,102		$ 4,933

Benefit Plans - Stock Option Activity (Details) - Stock options - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		12 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Jun. 30, 2018
Vesting period
Expiration period	10 years
Options Outstanding, Number of Shares
Balance at the beginning of the period	1,907
Options granted	0	0
Options forfeited	(1)
Options exercised	(182)
Balance at the end of the period	1,724		1,907
Options Outstanding, Weighted average exercise price
Balance at the beginning of the period (in dollars per share)	$ 12.40
Options forfeited (in dollars per share)	35.28
Options exercised (in dollars per share)	12.31
Balance at the end of the period (in dollars per share)	$ 12.40		$ 12.40
Options Additional Disclosures
Weighted average remaining contractual term	4 years 9 months 4 days		5 years
Aggregate intrinsic value, at the beginning of the period	$ 88,595
Weighted average remaining contractual term of options exercisable at the end of the period (years)	4 years 8 months 19 days
Aggregate intrinsic value, at the end of the period	$ 117,089		$ 88,595
Options exercisable at the end of the period (in shares)	1,696
Options exercisable at the end of the period, weighted average exercise price (in dollars per share)	$ 12.03
Options exercisable intrinsic value	$ 115,856
Total intrinsic value of options exercised	$ 12,203	$ 3,380
Options vested and expected to vest
Number of shares	1,723
Weighted average exercise price	$ 12.38
Weighted average remaining contractual term	4 years 9 months
Aggregate intrinsic value	$ 117,035
Unrecognized Compensation Costs Not yet Recognized
Total unrecognized compensation cost, net of estimated forfeitures, related to unvested stock options	$ 83
Weighted average period to recognize unrecognized compensation cost	10 months 17 days
Minimum
Vesting period
Vesting period	3 years
Maximum
Vesting period
Vesting period	4 years

Benefit Plans - RSU activity (Details) - RSUs $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Sep. 30, 2018 USD ($) $ / shares shares
Unrecognized Compensation Costs Not yet Recognized
Total unrecognized compensation cost, net of estimated forfeitures related to unvested RSUs \| $	$ 62,022
Weighted average period to recognize unrecognized compensation cost	2 years 1 month 2 days
RSUs Outstanding Rollforward, Units
RSU Balance at the beginning of the period \| shares	1,879
RSUs granted \| shares	715
RSUs vested \| shares	(579)
RSUs forfeited \| shares	(93)
RSU Balance at the end of the period \| shares	1,922
RSUs expected to vest at the end of the period \| shares	1,724
RSUs Outstanding, Weighted average grant date fair value
RSU Balance at the beginning of the period \| $ / shares	$ 43.39
RSUs granted \| $ / shares	66.22
RSUs vested \| $ / shares	40.65
RSUs cancelled/forfeited \| $ / shares	45.26
RSU Balance at the end of the period \| $ / shares	52.63
RSUs expected to vest at the end of the period \| $ / shares	$ 52.45
Maximum
Vesting period
Vesting period	4 years

Net Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Aug. 31, 2018
Numerator:
Net income	$ 9,852	$ 543
Weighted-average shares used in computing net income per share:
Basic (in shares)	52,865	51,893
Weighted-average effect of potentially dilutive shares:
Employee stock options, restricted stock units and employee stock purchase plan shares	2,622	2,717
Diluted (in shares)	55,487	54,610
Net income per share:
Basic (in dollars per share)	$ 0.19	$ 0.01
Diluted (in dollars per share)	$ 0.18	$ 0.01
Stock Repurchase Program
Repurchases of common shares	$ 34,991
Maximum
Stock Repurchase Program
Amount of issued and outstanding common stock that may be repurchased under the stock repurchase plan			$ 35,000
RSUs
Anti-dilutive securities excluded from diluted per share calculation
Anti-dilutive securities excluded	687	816
Common Stock
Stock Repurchase Program
Repurchases of common shares (in shares)	442

Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Thousands	Sep. 30, 2018	Jun. 30, 2018
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	52,796	52,758
Common Stock, shares outstanding	52,796	52,758

Organization and Description of Business	3 Months Ended
Organization and Description of Business	Sep. 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.

Income Taxes	3 Months Ended
Income Taxes	Sep. 30, 2018
Income Taxes
Income Taxes	(8) Income Taxes The Company’s quarterly provision for income taxes is based on the annual effective rate method. The Company’s quarterly provision for income taxes also includes the tax impact of certain unusual or infrequently occurring items, if any, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, and other discrete items in the interim period in which they occur. The Company recorded income tax expense (benefit) of $81 and $(5,807) for the three months ended September 30, 2017 and 2018, respectively. The Company’s effective tax rates for the three months ended September 30, 2017 differed from statutory rates primarily due to the existence of a valuation allowance recorded against the preponderance of the net deferred tax assets. The Company’s effective tax rate for the three months ended September 30, 2018 differed from statutory rates primarily due to excess tax benefits from employee stock exercises partially offset by various permanent adjustments. The Company reviews the likelihood that it will realize the benefit of its deferred tax assets and, therefore, the need for a valuation allowance on a quarterly basis. 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 was primarily due to three years’ cumulative income through the third quarter of fiscal 2018 and the forecast of future taxable income. As of March 31, 2018, based on the evaluation of positive and negative evidence, management believed it was more likely than not that the net deferred tax assets would be realized for all federal and state purposes with the exception of deferred tax assets associated with certain state tax credits that have a limited carryforward period. As of September 30, 2018, the Company continued to maintain a valuation allowance of $355 for 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. 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 of fiscal 2018, the Company modified its current federal statutory rate for the year to account for the rate change. In December 2017, the staff of the SEC issued guidance under Staff Accounting Bulletin No. 118 (later codified into ASU 2018-05), “Income Tax Accounting Implications of the Tax Cuts and Jobs Act,” allowing taxpayers to record provisional amounts for reasonable estimates when they do not have the necessary information available, prepared or analyzed in reasonable detail to complete their accounting for certain income tax effects of the Tax Act. The SEC also issued rules that would allow for a measurement period of up to one year after the enactment date of the Tax Act to finalize the related tax impacts. The Company’s analysis is complete except for provisional amounts that were determined in accordance with ASU 2018-05 related to certain equity compensation agreements. However, any changes as a result of further guidance related to this topic are not expected to have a material impact on the provisional amounts.

Summary of Significant Accounting Policies - Adjustments for Adoption (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Jul. 01, 2018	Jun. 30, 2018
Changes related to contracts with customers, assets and liabilities
Retained earnings (accumulated deficit)	$ 55,846	$ 45,994	$ (6,678)
Amortization period of capitalized contract costs	7 years
Impact from Adoption \| Topic 606
Changes related to contracts with customers, assets and liabilities
Retained earnings (accumulated deficit)	$ 57,989		$ 52,672
Contract Assets For Implementation Fees related to open contracts, net of deferred taxes \| Topic 606
Changes related to contracts with customers, assets and liabilities
Retained earnings (accumulated deficit)		2,191
Deferral Of Costs to Obtain a New Contract, net of deferred taxes \| Topic 606
Changes related to contracts with customers, assets and liabilities
Retained earnings (accumulated deficit)		$ 50,481

Benefit Plans - General Information (Details) shares in Thousands	3 Months Ended
	Sep. 30, 2018 shares
Equity Incentive Plans
Equity Incentive Plans
Number of shares of common stock reserved for issuance	13,295
Number of shares allocated but not yet issued that are subject to outstanding options or awards	3,646
2008 Plan
Equity Incentive Plans
Awards issued (in shares)	0
Awards issuable (in shares)	0
2014 Plan
Equity Incentive Plans
Potential additional shares available for grant (as a percent)	4.50%

Summary of Significant Accounting Policies - Revenue Recognition 2 (Details)	Sep. 30, 2018
Recurring fees \| Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-10-01
Remaining Performance Obligations
Remaining performance obligation period	24 months

Summary of Significant Accounting Policies - Cumulative effect of balance sheet changes (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Jul. 01, 2018	Jun. 30, 2018
Assets
Deferred contract costs	$ 16,215	$ 14,783
Prepaid expenses and other	14,220	12,978	$ 11,248
Long-term deferred contract costs	59,061	53,324
Long-term prepaid expenses and other	3,132	2,730	1,504
Deferred income tax assets, net	9,554	3,749	22,140
Stockholders' equity:
Retained earnings (accumulated deficit)	55,846	$ 45,994	(6,678)
Impact from Adoption \| Topic 606
Assets
Deferred contract costs	16,215		14,783
Prepaid expenses and other	1,714		1,730
Long-term deferred contract costs	59,061		53,324
Long-term prepaid expenses and other	806		1,226
Deferred income tax assets, net	(20,248)		(18,391)
Stockholders' equity:
Retained earnings (accumulated deficit)	57,989		$ 52,672
Balances under ASC 605
Assets
Prepaid expenses and other	12,506
Long-term prepaid expenses and other	2,326
Deferred income tax assets, net	29,802
Stockholders' equity:
Retained earnings (accumulated deficit)	$ (2,143)

Summary of Significant Accounting Policies - Impact on Cash Flow Statement (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Cash Flows
Net income	$ 9,852	$ 543
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income tax expense (benefit)	(5,809)	37
Changes in operating assets and liabilities:
Deferred contract costs	(7,169)
Prepaid expenses and other	(853)	(305)
Accrued expenses	(6,214)	(6,304)
Net cash provided by operating activities	7,344	$ 8,203
Impact from Adoption \| Topic 606
Cash Flows
Net income	5,317
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income tax expense (benefit)	1,857
Changes in operating assets and liabilities:
Deferred contract costs	(7,169)
Prepaid expenses and other	436
Accrued expenses	(441)
Balances under ASC 605
Cash Flows
Net income	4,535
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income tax expense (benefit)	(7,666)
Changes in operating assets and liabilities:
Prepaid expenses and other	(1,289)
Accrued expenses	(5,773)
Net cash provided by operating activities	$ 7,344

Corporate Investments and Funds Held For Clients - Maturities (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Jun. 30, 2018
Expected maturities of available-for-sale securities, amortized cost
One year or less	$ 126,192
One year to two years	16,064
Two years to three years	1,500
Total available-for-sale securities	143,756	$ 123,991
Expected maturities of available-for-sale securities, fair value
One year or less	126,062
One year to two years	16,028
Two years to three years	1,505
Total available-for-sale securities	$ 143,595	$ 123,808

Benefit Plans - Incentive Plans Activity (Details) - Equity Incentive Plans shares in Thousands	3 Months Ended
	Sep. 30, 2018 shares
Shares Available for Grant
Balance at the beginning of the period	10,030
RSUs granted	(715)
Shares withheld in settlement of taxes and/or exercise price	281
Forfeitures	94
Shares removed	(41)
Balance at the end of the period	9,649

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended
Income Taxes (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Sep. 30, 2017
Income Taxes [Line Items]
Income tax expense (benefit)	$ (5,807)	$ 81
State
Income Taxes [Line Items]
Valuation allowance	$ 355