10-Q 1 cdk-20220331.htm 10-Q cdk-20220331
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q

(Mark One)
        QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
or
        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission File Number 001-36486

CDK Global, Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware46-5743146
(State or Other Jurisdiction of Incorporation or Organization)(I.R.S. Employer Identification No.)
1950 Hassell Road,Hoffman Estates,IL60169
(Address of Principal Executive Offices)(Zip Code)
(847) 397-1700
Registrant’s Telephone Number, Including Area Code

__________________________________________
Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report
Securities registered pursuant to Section 12(b) of the Act: 
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 Par ValueCDKNASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days Yes ☒ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No 
The number of shares outstanding of the registrant’s common stock as of April 29, 2022 was 116,699,802.




Table of Contents

1


Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
CDK Global, Inc.
Consolidated Statements of Operations
(In millions, except per share amounts)
(Unaudited)
Three Months EndedNine Months Ended
March 31,March 31,
2022202120222021
Revenue$459.7 $433.1 $1,336.4 $1,253.1 
Expenses:  
Cost of revenue241.2 221.3 697.8 653.7 
Selling, general and administrative expenses98.6 90.2 295.3 263.8 
Litigation provision   12.0 
Total expenses339.8 311.5 993.1 929.5 
Operating earnings119.9 121.6 343.3 323.6 
Interest expense(22.3)(32.2)(66.0)(101.2)
Gain (loss) on extinguishment of debt (2.2)2.1 (2.2)
Loss from equity method investment(3.0)(19.6)(5.6)(24.8)
Other income, net1.4 3.6 8.4 32.3 
Earnings before income taxes96.0 71.2 282.2 227.7 
Provision for income taxes(25.9)(24.1)(75.1)(73.8)
Net earnings from continuing operations70.1 47.1 207.1 153.9 
Net (loss) earnings from discontinued operations(2.4)815.8 (0.3)837.1 
Net earnings67.7 862.9 206.8 991.0 
Less: net earnings attributable to noncontrolling interest1.6 2.0 5.3 6.1 
Net earnings attributable to CDK$66.1 $860.9 $201.5 $984.9 
Net earnings (loss) attributable to CDK per share - basic:
Continuing operations$0.58 $0.37 $1.70 $1.21 
Discontinued operations(0.02)6.69  6.87 
Total net earnings attributable to CDK per share - basic$0.56 $7.06 $1.70 $8.08 
Net earnings (loss) attributable to CDK per share - diluted:
Continuing operations$0.58 $0.36 $1.68 $1.21 
Discontinued operations(0.02)6.64  6.83 
Total net earnings attributable to CDK per share - diluted$0.56 $7.00 $1.68 $8.04 
Weighted average common shares outstanding:
Basic117.1 122.0 118.8 121.9 
Diluted118.1 122.9 119.7 122.5 

See notes to the consolidated financial statements.
2


CDK Global, Inc.
Consolidated Statements of Comprehensive Income
(In millions)
(Unaudited)
Three Months EndedNine Months Ended
March 31,March 31,
2022202120222021
Net earnings$67.7 $862.9 $206.8 $991.0 
Total other comprehensive income (loss):
Currency translation adjustments0.5 37.6 (1.5)98.0 
Unrealized gain on available-for-sale security  0.2  
Total other comprehensive income (loss)0.5 37.6 (1.3)98.0 
Comprehensive income68.2 900.5 205.5 1,089.0 
Less: comprehensive income attributable to noncontrolling interest1.6 2.0 5.3 6.1 
Comprehensive income attributable to CDK$66.6 $898.5 $200.2 $1,082.9 

See notes to the consolidated financial statements.

3


CDK Global, Inc.
Consolidated Balance Sheets
(In millions, except par values)
(Unaudited)
March 31,June 30,
20222021
Assets
Current assets: 
Cash and cash equivalents$120.3 $157.0 
Accounts receivable, net241.6 236.4 
Other current assets145.6 168.9 
Total current assets507.5 562.3 
Property, plant and equipment, net of accumulated depreciation of $244.6 and $236.4, respectively
73.4 71.8 
Other assets479.8 448.7 
Goodwill1,438.2 1,297.1 
Intangible assets, net383.7 332.7 
Total assets$2,882.6 $2,712.6 
Liabilities and Stockholders' Equity  
Current liabilities:  
Current maturities of long-term debt and finance lease liabilities$10.2 $7.1 
Accounts payable25.9 29.0 
Accrued expenses and other current liabilities226.8 188.1 
Litigation liability34.0 34.0 
Accrued payroll and payroll-related expenses79.5 81.5 
Deferred revenue28.2 28.6 
Total current liabilities 404.6 368.3 
Long-term liabilities:
  Debt and finance lease liabilities1,777.6 1,586.5 
  Deferred income taxes117.2 111.4 
  Deferred revenue37.0 40.4 
  Other liabilities99.4 111.1 
Total liabilities2,435.8 2,217.7 
Stockholders' Equity:  
Preferred stock, $0.01 par value: 50.0 shares authorized; none issued and outstanding
  
Common stock, $0.01 par value: 650.0 shares authorized; 160.3 and 160.3 shares issued, respectively; 116.7 and 121.5 shares outstanding, respectively
1.6 1.6 
Additional paid-in capital733.3 715.1 
Retained earnings2,144.4 1,997.4 
Treasury stock, at cost: 43.6 and 38.8 shares, respectively
(2,517.9)(2,306.0)
Accumulated other comprehensive income71.4 72.7 
Total CDK stockholders' equity432.8 480.8 
Noncontrolling interest14.0 14.1 
Total stockholders' equity446.8 494.9 
Total liabilities and stockholders' equity$2,882.6 $2,712.6 
See notes to the consolidated financial statements.
4


CDK Global, Inc.
Consolidated Statements of Cash Flows
(In millions)
(Unaudited)
Nine Months Ended
March 31,
20222021
Cash Flows from Operating Activities
Net earnings$206.8 $991.0 
Less: net (loss) earnings from discontinued operations(0.3)837.1 
Net earnings from continuing operations207.1 153.9 
Adjustments to reconcile net earnings from continuing operations to cash flows provided by operating activities, continuing operations:
Depreciation and amortization91.7 71.1 
(Gain) loss on extinguishment of debt(2.1)2.2 
Loss from equity method investment5.6 24.8 
Deferred income taxes1.3 0.7 
Stock-based compensation expense45.6 31.7 
Other5.5 7.0 
Changes in assets and liabilities, net of effect from acquisitions of businesses:  
Accounts receivable(3.3)(5.1)
Other assets(7.4)(43.8)
Accounts payable(10.6)(4.8)
Accrued expenses and other liabilities(8.9)16.2 
Net cash flows provided by operating activities, continuing operations324.5 253.9 
Net cash flows provided by (used in) operating activities, discontinued operations(2.1)6.9 
Net cash flows provided by operating activities322.4 260.8 
Cash Flows from Investing Activities
Capital expenditures(10.8)(15.2)
Capitalized software(83.7)(51.0)
Acquisitions of businesses, net of cash acquired(154.2)(18.1)
Net cash flows used in investing activities, continuing operations(248.7)(84.3)
Net cash flows provided by investing activities, discontinued operations1.9 1,380.9 
Net cash flows provided by (used in) investing activities(246.8)1,296.6 
Cash Flows from Financing Activities
Net proceeds (repayments) from revolving credit facilities190.0 (15.0)
Repayments of long-term debt and lease liabilities(5.7)(578.0)
Dividends paid to stockholders(53.3)(54.8)
Repurchases of common stock(229.1) 
Proceeds from exercises of stock options 2.1 
Withholding tax payments for stock-based compensation awards(8.9)(4.5)
Dividend payments to noncontrolling owners(5.4)(6.2)
Net cash flows used in financing activities, continuing operations(112.4)(656.4)
Net cash flows used in financing activities, discontinued operations  
Net cash flows used in financing activities(112.4)(656.4)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash, including cash classified as current assets held for sale(0.7)21.1 
5


Net change in cash, cash equivalents, and restricted cash, including cash classified as current assets held for sale(37.5)922.1 
Net change in cash classified in current assets held for sale 134.9 
Net change in cash, cash equivalents, and restricted cash(37.5)1,057.0 
Cash, cash equivalents, and restricted cash, beginning of period177.2 97.3 
Cash, cash equivalents, and restricted cash, end of period$139.7 $1,154.3 

Nine Months Ended
March 31,
20222021
Reconciliation of cash, cash equivalents, and restricted cash to the Consolidated Balance Sheets
Cash and cash equivalents$120.3 $1,131.8 
Restricted cash in funds held for clients included in other current assets19.4 22.5 
Total cash, cash equivalents, and restricted cash$139.7 $1,154.3 
Supplemental Disclosures
Cash paid for:
Income taxes and foreign withholding taxes, net of refunds, continuing operations$52.9 $62.7 
Interest56.1 81.7 
Non-cash investing and financing activities, continuing operations:
Capitalized property and equipment obtained under lease11.3 12.7 
Lease liabilities incurred (11.3)(12.7)
Capital expenditures and capitalized software, accrued not paid7.3 0.3 


See notes to the consolidated financial statements.
6


CDK Global, Inc.
Consolidated Statements of Stockholders' Equity
(In millions)
(Unaudited)

Three Months Ended March 31, 2022
Common StockAdditional Paid-in CapitalRetained EarningsTreasury StockAccumulated Other Comprehensive IncomeTotal CDK Stockholders' EquityNon-controlling InterestTotal Stockholders' Equity
Shares IssuedAmount
Balance as of December 31, 2021160.3 $1.6 $719.8 $2,096.1 $(2,486.0)$70.9 $402.4 $14.0 $416.4 
Net earnings— — — 66.1 — — 66.1 1.6 67.7 
Foreign currency translation adjustments— — — — — 0.5 0.5 — 0.5 
Stock-based compensation expense and related dividend equivalents— — 15.9 (0.3)— — 15.6 — 15.6 
Common stock issued for the exercise and vesting of stock-based compensation awards, net— — (2.4)— 1.6 — (0.8)— (0.8)
Dividends paid to stockholders ($0.15 per share)
— — — (17.5)— — (17.5)— (17.5)
Repurchases of common stock— — — — (33.5)— (33.5)— (33.5)
Dividend payments to noncontrolling owners— — — — — — — (1.6)(1.6)
Balance as of March 31, 2022160.3 $1.6 $733.3 $2,144.4 $(2,517.9)$71.4 $432.8 $14.0 $446.8 


Three Months Ended March 31, 2021
Common StockAdditional Paid-in CapitalRetained EarningsTreasury StockAccumulated Other Comprehensive IncomeTotal CDK Stockholders' EquityNon-controlling InterestTotal Stockholders' Equity
Shares IssuedAmount
Balance as of December 31, 2020160.3 $1.6 $696.3 $1,124.4 $(2,295.3)$34.5 $(438.5)$13.3 $(425.2)
Net earnings— — — 860.9 — — 860.9 2.0 862.9 
Foreign currency translation adjustments— — — — — 37.6 37.6 — 37.6 
Stock-based compensation expense and related dividend equivalents— — 9.3 (0.4)— — 8.9 — 8.9 
Common stock issued for the exercise and vesting of stock-based compensation awards, net— — (0.6)— 0.4 — (0.2)— (0.2)
Dividends paid to stockholders ($0.15 per share)
— — — (18.3)— — (18.3)— (18.3)
Balance as of March 31, 2021160.3 $1.6 $705.0 $1,966.6 $(2,294.9)$72.1 $450.4 $15.3 $465.7 

See notes to the consolidated financial statements.







7


CDK Global, Inc.
Consolidated Statements of Stockholders' Equity (Deficit)
(In millions)
(Unaudited)

Nine Months Ended March 31, 2022
Common StockAdditional Paid-in CapitalRetained EarningsTreasury StockAccumulated Other Comprehensive IncomeTotal CDK Stockholders' EquityNon-controlling InterestTotal Stockholders' Equity
Shares IssuedAmount
Balance as of June 30, 2021160.3 $1.6 $715.1 $1,997.4 $(2,306.0)$72.7 $480.8 $14.1 $494.9 
Net earnings— — — 201.5 — — 201.5 5.3 206.8 
Foreign currency translation adjustments— — — — — (1.5)(1.5)— (1.5)
Unrealized gain on available-for-sale security— — — — — 0.2 0.2 — 0.2 
Stock-based compensation expense and related dividend equivalents— — 44.3 (1.2)— — 43.1 — 43.1 
Common stock issued for the exercise and vesting of stock-based compensation awards, net— — (26.1)— 17.2 — (8.9)— (8.9)
Dividends paid to stockholders ($0.45 per share)
— — — (53.3)— — (53.3)— (53.3)
Repurchases of common stock— — — — (229.1)— (229.1)— (229.1)
Dividend payments to noncontrolling owners— — — — — — — (5.4)(5.4)
Balance as of March 31, 2022160.3 $1.6 $733.3 $2,144.4 $(2,517.9)$71.4 $432.8 $14.0 $446.8 


Nine Months Ended March 31, 2021
Common StockAdditional Paid-in CapitalRetained EarningsTreasury StockAccumulated Other Comprehensive IncomeTotal CDK Stockholders' EquityNon-controlling InterestTotal Stockholders' Equity
Shares IssuedAmount
Balance as of June 30, 2020160.3 $1.6 $687.9 $1,045.5 $(2,305.2)$(25.9)$(596.1)$15.4 $(580.7)
Cumulative impact of ASC 326 - current expected credit losses, net of tax— — — (8.2)— — (8.2)— (8.2)
Net earnings— — — 984.9 — — 984.9 6.1 991.0 
Foreign currency translation adjustments— — — — — 98.0 98.0 — 98.0 
Stock-based compensation expense and related dividend equivalents— — 29.8 (0.8)— — 29.0 — 29.0 
Common stock issued for the exercise and vesting of stock-based compensation awards, net— — (12.7)— 10.3 — (2.4)— (2.4)
Dividends paid to stockholders ($0.45 per share)
— — — (54.8)— — (54.8)— (54.8)
Dividend payments to noncontrolling owners— — — — — — — (6.2)(6.2)
Balance as of March 31, 2021160.3 $1.6 $705.0 $1,966.6 $(2,294.9)$72.1 $450.4 $15.3 $465.7 

See notes to the consolidated financial statements.
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CDK Global, Inc.
Notes to the Consolidated Financial Statements
(Tabular amounts in millions, except per share amounts)
(Unaudited)
Note 1. Basis of Presentation
Description of Business. CDK Global, Inc. (the "Company" or "CDK") is a leading provider of retail technology and software as a service ("SaaS") solutions that help dealers and auto manufacturers run their businesses more efficiently, drive improved profitability and create frictionless purchasing and ownership experiences for consumers. Today, CDK serves over 15,000 retail locations in North America.
Basis of Preparation. The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect assets, liabilities, revenue, and expenses that are reported in the accompanying financial statements and footnotes thereto. Actual results may differ from those estimates and assumptions.
The accompanying consolidated financial statements reflect all adjustments which, in the opinion of management, are necessary for a fair presentation of the results for the interim periods. Interim financial results are not necessarily indicative of financial results for a full year. The financial statements in this Quarterly Report on Form 10-Q should be read in conjunction with the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2021 (the "Annual Report").
Note 2. Summary of Significant Accounting Policies
The Company's significant accounting policies are described in the aforementioned Annual Report. Included below are certain updates to those policies.
Funds Receivable and Funds Held for Clients and Client Fund Obligations. Funds receivable and funds held for clients represent amounts received or expected to be received from clients in advance of performing titling and registration services on behalf of those clients. These amounts are classified in other current assets on the Consolidated Balance Sheets. The total amount due to remit for titling and registration obligations with the department of motor vehicles is recorded to client fund obligations which is classified as accrued expenses and other current liabilities on the Consolidated Balance Sheets. Funds receivable was $42.0 million and $42.7 million, and funds held for clients was $19.4 million and $20.2 million as of March 31, 2022 and June 30, 2021, respectively. Client fund obligations were $61.4 million and $62.9 million as of March 31, 2022 and June 30, 2021, respectively.
Internal Use Software and Computer Software to be Sold, Leased, or Otherwise Marketed. The Company incurred expenses to research, develop, and deploy new and enhanced solutions of $23.6 million and $19.4 million for the three months ended March 31, 2022 and 2021, respectively, and $59.7 million and $55.7 million for the nine months ended March 31, 2022 and 2021, respectively. These expenses were classified in cost of revenue on the Consolidated Statements of Operations. Additionally, the Company had cash flows used for qualifying capitalized software development cost of $83.7 million and $51.0 million for the nine months ended March 31, 2022 and 2021, respectively.
Fair Value of Financial Instruments. Cash and cash equivalents, accounts receivable, other current assets, accounts payable, and other current liabilities are reflected on the Consolidated Balance Sheets at cost, which approximates fair value due to the short-term nature of these instruments. The carrying value of the Company's revolving credit facility (as described in Note 10 - Debt), including accrued interest, approximates fair value based on the Company's current estimated incremental borrowing rate for similar types of arrangements.
Investments. The carrying amount of equity investments, included in other assets on the Consolidated Balance Sheets include $21.0 million and $20.0 million as of March 31, 2022 and June 30, 2021, respectively, related to equity investments that are accounted for under the cost method as they do not have a readily determinable fair value. The remaining investments, which are accounted for under the equity method, totaled $25.3 million and $30.4 million as of March 31, 2022 and June 30, 2021, respectively.
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Note 3. New Accounting Pronouncements
Recently Adopted Accounting Pronouncements. In December 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes," ("ASU 2019-12"), which simplifies the accounting for income taxes in various areas. ASU 2019-12 is effective for public business entities for fiscal years beginning after December 15, 2020, including interim periods therein. The Company adopted ASU 2019-12 on July 1, 2021. The adoption of the new standard did not have a material impact on the Company's consolidated financial statements.
In October 2021, the FASB issued ASU No. 2021-08 "Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts With Customers" ("ASU 2021-08"). ASU 2021-08 requires companies to apply "Revenue from Contracts with Customers (Topic 606)" ("ASC 606") when recognizing and measuring contract assets and contract liabilities acquired in a business combination. ASU 2021-08 is effective for fiscal years beginning after December 15, 2022 and interim periods within those fiscal years. Early adoption is permitted. The Company elected to adopt ASU 2021-08 effective October 1, 2021. ASU 2021-08 will apply to all business combinations that occur during fiscal year ended June 30, 2022. The adoption of the new standard did not have a material impact on the Company's consolidated financial statements.
Recently Issued Accounting Pronouncements. In July 2021, the FASB issued ASU No. 2021-05 "Leases (Topic 842): Lessors — Certain Leases with Variable Lease Payments," ("ASU 2021-05"). ASU 2021-05 requires lessors to classify leases as operating leases if they have variable lease payments that do not depend on an index or rate and would have selling losses if they were classified as sales-type or direct financing leases. ASU 2021-05 is effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. The Company does not expect the adoption to have a material impact on its consolidated financial statements.
Note 4. Discontinued Operations
International Business. On March 1, 2021, the Company completed its sale of the CDK International business ("International Business") to Francisco Partners. The Company provided limited services to Francisco Partners to assist in the integration of the International Business through February 2022. The financial results are presented in net earnings from discontinued operations in the Consolidated Statements of Operations for all periods presented.
Digital Marketing Business. On April 21, 2020, the Company completed its sale of the Digital Marketing Business to Sincro LLC, a newly formed company owned by Ansira Partners, Inc., which is a subsidiary of Advent International.
The following table summarizes the comparative financial results of discontinued operations which are presented in net earnings from discontinued operations in the Consolidated Statements of Operations:
Three Months EndedNine Months Ended
March 31,March 31,
2022202120222021
Revenue$ $62.9 $ $223.5 
Cost of revenue 25.4  100.8 
Selling, general and administrative expenses0.2 37.3 0.9 83.6 
Restructuring expenses   11.2 
Operating earnings (loss)(0.2)0.2 (0.9)27.9 
Interest expense   (0.1)
Other income, net 2.2  2.5 
Earnings (loss) before income taxes(0.2)2.4 (0.9)30.3 
Gain on sale of the International Business 965.6 1.9 965.6 
Provision for income taxes(2.2)(157.2)(1.3)(164.6)
Net earnings (loss) from discontinued operations - International Business$(2.4)$810.8 $(0.3)$831.3 
Net earnings from discontinued operations - Digital Marketing Business$ $5.0 $ $5.8 
Net earnings (loss) from discontinued operations$(2.4)$815.8 $(0.3)$837.1 
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Note 5. Acquisition
Salty Dot, Inc. On October 1, 2021, the Company acquired all of the outstanding equity of Salty Dot, Inc.("Salty"), a privately held automobile insurance technology solution provider. The acquisition is being recorded using the acquisition method of accounting, which requires, among other things, the assets acquired and liabilities assumed to be recognized at their respective fair values as of the acquisition date. Under the acquisition method, total consideration was determined to be $181.6 million, subject to customary adjustments. Total consideration includes the fair value of contingent payments. The fair value of contingent payments, determined using an option pricing model, was estimated at $23.7 million as of the acquisition date. The range of contingent payments is zero to $147.0 million with the final amount dependent on the achievement of certain revenue and gross margin milestones over the 3-year period following acquisition.
The following table summarizes the amounts recognized for assets acquired and liabilities assumed as of the acquisition date, subject to the finalized purchase price allocation:
Cash and cash equivalents$6.2 
Intangible assets38.1 
Other assets0.9 
Other liabilities(4.7)
Total identifiable net assets$40.5 
Goodwill141.1 
Total consideration$181.6 
The intangible assets acquired primarily relate to software that is being amortized over a useful life of 8 years. The goodwill resulting from this acquisition reflects expected synergies resulting from adding Salty products and processes to the Company's portfolio. The acquired goodwill is not deductible for tax purposes.
The results of operations for Salty has been included in the Consolidated Statements of Operations from the date of acquisition.
Note 6. Revenue
Contract Balances
Accounts Receivable
A receivable is recorded when an unconditional right to invoice and receive payment exists, such that only the passage of time is required before payment of consideration is due. The Company receives payments from customers based upon contractual billing schedules. Payment terms can vary by contract, but the period between invoicing and when payments are due is not significant. The timing of revenue recognition may differ from the timing of invoicing to customers. Included in accounts receivable on the Consolidated Balance Sheets are unbilled receivable balances which have not yet been invoiced. As of March 31, 2022, the balance of accounts receivable, net of allowances for doubtful accounts, was $241.6 million, inclusive of unbilled receivables of $1.5 million. As of June 30, 2021, the balance of accounts receivable, net of allowances for doubtful accounts, was $236.4 million, inclusive of unbilled receivables of $1.8 million.
Contract Assets
A contract asset is recognized when a conditional right to consideration exists and transfer of control has occurred. Contract assets are typically related to subscription contracts where the transaction price allocated to the satisfied performance obligation exceeds the value of billings to-date. Contract assets are reported in a net position on a contract-by-contract basis and are included in other current assets for the current portion and other assets for the long-term portion on the Consolidated Balance Sheets. The Company regularly reviews contract asset balances for impairment, considering factors such as historical experience, credit-worthiness, age of the balance, and other economic or business factors. Refer to Note 8 – Allowance for Credit Losses for more information about credit losses. Contract asset impairments were not significant in the nine months ended March 31, 2022 and 2021. Contract assets were $60.0 million and $64.3 million as of March 31, 2022 and June 30, 2021, respectively.
Deferred Revenue
The Company's deferred revenue primarily consists of payments received from customers, or such consideration that is contractually due, in advance of providing the product or performing services. Deferred revenue is reported in a net position on a contract-by-contract basis at the end of each reporting period. As of March 31, 2022 and June 30, 2021, the deferred revenue
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balance was $65.2 million and $69.0 million, respectively. For the nine months ended March 31, 2022 and 2021, the Company recognized revenue of $61.8 million and $75.0 million, respectively, related to its deferred revenue.
Remaining Performance Obligations. A contract's transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The following information represents the total transaction price for the remaining performance obligations as of March 31, 2022 related to non-cancelable contracts, including contracts less than one year in duration, that is expected to be recognized over future periods. In each case the fiscal period represents the year ended June 30.
As of March 31, 2022, the Company had $2.6 billion of remaining performance obligations which represent contracted revenue that has not yet been recognized. The Company expects to recognize approximately $310.0 million of the remaining performance obligations as revenue during the remainder of the fiscal year ending June 30, 2022 ("fiscal 2022"), $880.0 million for fiscal 2023, $650.0 million for fiscal 2024, $410.0 million for fiscal 2025, $250.0 million for fiscal 2026, and $70.0 million thereafter. The remaining performance obligations exclude future transaction revenue where revenue is recognized as the services are rendered and in the amount to which the Company has the right to invoice.
Costs to Obtain and Fulfill a Contract. The Company capitalizes certain contract acquisition costs consisting primarily of commissions incurred when contracts are signed. The Company does not capitalize commissions related to contracts with a duration of less than one year; such commissions are expensed in selling, general and administrative expenses when incurred. Costs to fulfill contracts are capitalized when such costs are direct and related to transition or installation activities for hosted software solutions. Capitalized costs to fulfill contracts primarily include travel and employee compensation and benefit related costs for the Company's implementation and training teams. Capitalized costs to obtain a contract and most costs to fulfill a contract are amortized over a period of five years which represents the expected period of benefit of these costs. In instances where the contract term is significantly less than five years, costs to fulfill are amortized over the contract term which the Company believes best reflects the period of benefit of these costs.
As of March 31, 2022 and June 30, 2021, the Company capitalized contract acquisition and fulfillment costs of $217.7 million and $195.7 million, respectively. The Company expects that incremental commission fees incurred as a result of obtaining contracts and fulfillment costs are recoverable. During the nine months ended March 31, 2022 and 2020, the Company recognized cost amortization of $59.8 million and $54.9 million, respectively, and there were no significant impairment losses.
Revenue Disaggregation. The following table presents revenue by category for the three and nine months ended March 31, 2022 and 2021:
Three Months
Ended
Nine Months
Ended
March 31,March 31,
2022202120222021
Subscription$356.6 $332.1 $1,051.0 $984.3 
Transaction40.8 43.3 121.9 126.3 
Other62.3 57.7 163.5 142.5 
Total Revenue$459.7 $433.1 $1,336.4 $1,253.1 
The Company recognizes subscription revenue over time and substantially all transaction and other revenue at a point in time.
Note 7. Earnings per Share
The numerator for basic and diluted earnings per share is net earnings attributable to CDK. The denominator for basic and diluted earnings per share is based on the weighted average number of shares of the Company's common stock outstanding during the applicable reporting periods. Diluted earnings per share also reflects the dilutive effect of unexercised in-the-money stock options and unvested restricted stock.
The following table summarizes the components of earnings per share:
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Three Months EndedNine Months Ended
March 31,March 31,
2022202120222021
Net earnings from continuing operations attributable to CDK$68.5 $45.1 $201.8 $147.8 
Net (loss) earnings from discontinued operations(2.4)815.8 (0.3)837.1 
Net earnings attributable to CDK$66.1 $860.9 $201.5 $984.9 
Weighted average shares outstanding:
Basic117.1 122.0 118.8 121.9 
Effect of dilutive securities (1)
1.0 0.9 0.9 0.6 
Diluted118.1 122.9 119.7 122.5 
Net earnings (loss) attributable to CDK per share - basic:
Continuing operations$0.58 $0.37 $1.70 $1.21 
Discontinued operations(0.02)6.69  6.87 
Total net earnings attributable to CDK per share - basic$0.56 $7.06 $1.70 $8.08 
Net earnings (loss) attributable to CDK per share - diluted:
Continuing operations$0.58 $0.36 $1.68 $1.21 
Discontinued operations(0.02)6.64  6.83 
Total net earnings attributable to CDK per share - diluted$0.56 $7.00 $1.68 $8.04 
(1) The dilutive effect of outstanding stock options, restricted stock units, restricted stock, and performance share units is reflected in the diluted weighted average shares outstanding using the treasury stock method.
The weighted average number of shares outstanding used in the calculation of diluted earnings per share does not include the effect of anti-dilutive securities. The potential common shares excluded were 1.5 million and 0.7 million for the three months ended March 31, 2022 and 2021, respectively, and 1.4 million and 1.0 million for the nine months ended March 31, 2022 and 2021, respectively.
Note 8. Allowance for Credit Losses
Credit loss expense is included in selling, general and administrative expenses in the Consolidated Statements of Operations. The following tables provide a rollforward of the allowance for credit losses that is deducted from the amortized cost basis to present the net amount expected to be collected as of March 31, 2022 and 2021.
Accounts receivable, netOther current assetsOther assetsTotal
Balance as of June 30, 2021$6.3 $0.7 $9.2 $16.2 
Provision (release of provision) for expected credit losses0.9 (0.1)1.5 2.3 
Write-offs(4.6)  (4.6)
Other0.8   0.8 
Balance as of March 31, 2022$3.4 $0.6 $10.7 $14.7 
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Accounts receivable, netOther current assetsOther assetsTotal
Balance as of June 30, 2020$10.6 $ $ $10.6 
Cumulative-effect adjustment upon adoption0.7 0.5 8.2 9.4