Company Quick10K Filing
Bottomline Technologies
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$0.00 42 $1,928
10-Q 2020-02-07 Quarter: 2019-12-31
10-Q 2019-11-08 Quarter: 2019-09-30
10-K 2019-08-29 Annual: 2019-06-30
10-Q 2019-05-10 Quarter: 2019-03-31
10-Q 2019-02-08 Quarter: 2018-12-31
10-Q 2018-11-09 Quarter: 2018-09-30
10-K 2018-08-29 Annual: 2018-06-30
10-Q 2018-05-08 Quarter: 2018-03-31
10-Q 2018-02-08 Quarter: 2017-12-31
10-Q 2017-11-07 Quarter: 2017-09-30
10-K 2017-08-28 Annual: 2017-06-30
10-Q 2017-05-09 Quarter: 2017-03-31
10-Q 2017-02-08 Quarter: 2016-12-31
10-Q 2016-11-08 Quarter: 2016-09-30
10-K 2016-08-29 Annual: 2016-06-30
10-Q 2016-05-09 Quarter: 2016-03-31
10-Q 2016-02-08 Quarter: 2015-12-31
10-Q 2015-11-06 Quarter: 2015-09-30
10-K 2015-08-28 Annual: 2015-06-30
10-Q 2015-05-08 Quarter: 2015-03-31
10-Q 2015-02-06 Quarter: 2014-12-31
10-Q 2014-11-07 Quarter: 2014-09-30
10-K 2014-08-28 Annual: 2014-06-30
10-Q 2014-05-09 Quarter: 2014-03-31
10-Q 2014-02-10 Quarter: 2013-12-31
10-Q 2013-11-12 Quarter: 2013-09-30
10-K 2013-08-29 Annual: 2013-06-30
10-Q 2013-05-08 Quarter: 2013-03-31
10-Q 2013-02-08 Quarter: 2012-12-31
10-Q 2012-11-08 Quarter: 2012-09-30
10-K 2012-08-27 Annual: 2012-06-30
10-Q 2012-05-10 Quarter: 2012-03-31
10-Q 2012-02-07 Quarter: 2011-12-31
10-Q 2011-11-08 Quarter: 2011-09-30
10-K 2011-09-09 Annual: 2011-06-30
10-Q 2011-05-06 Quarter: 2011-03-31
10-Q 2011-02-07 Quarter: 2011-02-07
10-Q 2010-11-08 Quarter: 2010-11-08
10-K 2010-09-10 Annual: 2010-06-30
10-Q 2010-05-07 Quarter: 2010-05-07
10-Q 2010-02-08 Quarter: 2010-02-08
8-K 2020-01-30 Earnings, Exhibits
8-K 2019-11-21 Officers, Shareholder Vote, Exhibits
8-K 2019-11-21 Other Events, Exhibits
8-K 2019-11-08 Earnings, Exhibits
8-K 2019-09-12 Officers
8-K 2019-08-08 Earnings, Exhibits
8-K 2019-06-03 M&A, Exhibits
8-K 2019-05-03 Enter Agreement
8-K 2019-05-02 Earnings, Exhibits
8-K 2019-03-06 M&A, Exhibits
8-K 2019-01-31 Earnings, Exhibits
8-K 2018-11-15 Officers, Shareholder Vote, Exhibits
8-K 2018-11-08 Earnings, Exhibits
8-K 2018-08-09 Earnings, Exhibits
8-K 2018-05-03 Earnings, Exhibits
8-K 2018-02-01 Earnings, Exhibits
EPAY 2019-12-31
Part I. Financial Information
Item 1. Financial Statements
Note 1-Basis of Presentation
Note 2-Recent Accounting Pronouncements
Note 3-Revenue Recognition
Note 4-Fair Value
Note 5-Business Acquisitions
Note 6-Net Income per Share
Note 7-Operations By Segments and Geographic Areas
Note 8-Income Taxes
Note 9-Goodwill and Other Intangible Assets
Note 10-Commitments and Contingencies
Note 11-Indebtedness
Note 12-Derivative Instruments
Note 13-Postretirement and Other Employee Benefits
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 6. Exhibits
EX-10.3 jospehlmullenletteragr.htm
EX-31.1 epay-311fy20q2.htm
EX-31.2 epay-312fy20q2.htm
EX-32.1 epay-321fy20q2.htm
EX-32.2 epay-322fy20q2.htm

Bottomline Technologies Earnings 2019-12-31

EPAY 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Comparables ($MM TTM)
Ticker M Cap Assets Liab Rev G Profit Net Inc EBITDA EV G Margin EV/EBITDA ROA
CVLT 2,013 802 430 695 573 -3 14 1,636 82% 118.3 -0%
SPSC 1,655 427 82 273 182 32 46 1,505 67% 33.0 7%
EPAY 1,714 679 304 428 244 9 31 1,622 57% 52.1 1%
LPSN 2,538 492 329 213 156 -69 -53 2,333 73% -43.7 -14%
PRGS 1,818 860 527 408 336 50 103 1,972 83% 19.2 6%
VRNS 1,891 298 200 182 156 -64 -60 1,838 86% -30.4 -22%
BAND 1,545 321 51 171 79 4 2 1,352 46% 728.6 1%
SAIL 1,698 935 514 200 152 -14 -6 1,227 76% -219.2 -1%
ZUO 1,689 331 164 206 106 -60 -51 1,636 51% -32.4 -18%
SEND 1,722 245 48 105 79 -4 5 1,540 75% 333.4 -2%

Document
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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 December 31, 2019
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: 0-25259
——————
Bottomline Technologies (de), Inc.

(Exact name of registrant as specified in its charter)
——————
Delaware
02-0433294
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
 
 
 
325 Corporate Drive
03801-6808
    Portsmouth,
New Hampshire
 
(Address of principal executive offices)
(Zip Code)
 
(603) 436-0700
(Registrant’s telephone number, including area code)
——————
Securities registered pursuant to Section 12(b) of the Act:
Title of each class:
Trading Symbol(s):
Name of each exchange on which registered:
Common Stock, $.001 par value per share
EPAY
The Nasdaq 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, a 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 filer
Accelerated filer
 
 
 
 
Non-accelerated filer
Smaller 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 Exchange Act).    Yes      No     
The number of shares outstanding of the registrant’s common stock as of January 31, 2020 was 44,007,641.



Table of Contents


2

Table of Contents

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Bottomline Technologies (de), Inc.
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
 
 
December 31,
 
June 30,
 
 
2019
 
2019
 
 

 
 
ASSETS
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
80,817

 
$
92,164

Cash held for customers
 
8,475

 
5,637

Marketable securities
 
10,153

 
7,541

Accounts receivable net of allowances for doubtful accounts of $893 at December 31, 2019 and $824 at June 30, 2019
 
67,946

 
77,285

Prepaid expenses and other current assets
 
29,451

 
30,434

Total current assets
 
196,842

 
213,061

Property and equipment, net
 
71,616

 
54,541

Operating lease right-of-use assets, net
 
24,294

 

Goodwill
 
208,836

 
206,101

Intangible assets, net
 
161,695

 
168,349

Other assets
 
31,648

 
27,177

Total assets
 
$
694,931

 
$
669,229

LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
15,940

 
$
10,947

Accrued expenses and other current liabilities
 
42,739

 
33,945

Customer account liabilities
 
8,475

 
5,637

Deferred revenue
 
65,166

 
75,097

Total current liabilities
 
132,320

 
125,626

Borrowings under credit facility
 
100,000

 
110,000

Deferred revenue, non-current
 
13,286

 
17,062

Operating lease liabilities, non-current
 
20,988

 

Deferred income taxes
 
7,420

 
10,345

Other liabilities
 
24,983

 
26,819

Total liabilities
 
298,997

 
289,852

Stockholders' equity
 
 
 
 
Preferred Stock, $.001 par value:
 
 
 
 
Authorized shares-4,000; issued and outstanding shares-none
 

 

Common Stock, $.001 par value:
 
 
 
 
Authorized shares-100,000; issued shares-47,645 at December 31, 2019 and 46,995 at June 30, 2019; outstanding shares-41,697 at December 31, 2019 and 41,315 at June 30, 2019
 
48

 
47

Additional paid-in-capital
 
744,359

 
721,438

Accumulated other comprehensive loss
 
(37,631
)
 
(43,593
)
Treasury stock: 5,948 shares at December 31, 2019 and 5,680 shares at June 30, 2019, at cost
 
(140,701
)
 
(127,095
)
Accumulated deficit
 
(170,141
)
 
(171,420
)
Total stockholders' equity
 
395,934

 
379,377

Total liabilities and stockholders' equity
 
$
694,931

 
$
669,229



3

Table of Contents

See accompanying notes.


Table of Contents

Bottomline Technologies (de), Inc.
Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)
(in thousands, except per share amounts)
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended December 31,
 
Six Months Ended December 31,
 
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
Subscriptions
 
$
84,085

 
$
71,288

 
$
164,151

 
$
141,056

Software licenses
 
2,800

 
5,665

 
5,376

 
10,177

Service and maintenance
 
24,061

 
26,786

 
48,886

 
54,191

Other
 
745

 
1,107

 
1,454

 
1,859

Total revenues
 
111,691

 
104,846

 
219,867

 
207,283

Cost of revenues:
 
 
 
 
 
 
 
 
Subscriptions
 
33,449

 
31,352

 
66,214

 
63,021

Software licenses
 
157

 
210

 
318

 
441

Service and maintenance
 
12,929

 
12,528

 
25,982

 
25,234

Other
 
504

 
891

 
1,020

 
1,415

Total cost of revenues
 
47,039

 
44,981

 
93,534

 
90,111

Gross profit
 
64,652

 
59,865

 
126,333

 
117,172

Operating expenses:
 
 
 
 
 
 
 
 
Sales and marketing
 
26,988

 
22,585

 
52,676

 
45,607

Product development and engineering
 
18,279

 
16,815

 
36,628

 
33,380

General and administrative
 
14,761

 
11,904

 
28,106

 
25,769

Amortization of acquisition-related intangible assets
 
5,213

 
5,253

 
10,163

 
10,579

Total operating expenses
 
65,241

 
56,557

 
127,573

 
115,335

Income (loss) from operations
 
(589
)
 
3,308

 
(1,240
)
 
1,837

Other expense, net
 
(582
)
 
(858
)
 
(1,295
)
 
(1,639
)
Income (loss) before income taxes
 
(1,171
)
 
2,450

 
(2,535
)
 
198

Benefit from income taxes
 
3,780

 
3,519

 
3,777

 
4,853

Net income
 
$
2,609

 
$
5,969

 
$
1,242

 
$
5,051

Net income per share:
 
 
 
 
 
 
 
 
Basic
 
$
0.06

 
$
0.15

 
$
0.03

 
$
0.13

Diluted
 
$
0.06

 
$
0.14

 
$
0.03

 
$
0.12

Shares used in computing net income per share:
 
 
 
 
 
 
 
 
Basic
 
41,693

 
40,635

 
41,590

 
40,162

Diluted
 
42,092

 
41,739

 
41,917

 
41,662

Other comprehensive income (loss), net of tax:
 
 
 
 
 
 
 
 
Unrealized gain (loss) on available for sale securities
 

 
8

 
(3
)
 
6

Change in fair value on interest rate hedging instruments
 
569

 
(1,438
)
 
(108
)
 
(1,111
)
Minimum pension liability adjustments
 
(172
)
 
(10
)
 
8

 
(56
)
Foreign currency translation adjustments
 
11,944

 
(2,543
)
 
6,065

 
(3,910
)
Other comprehensive income (loss), net of tax:
 
12,341

 
(3,983
)
 
5,962

 
(5,071
)
Comprehensive income (loss)
 
$
14,950

 
$
1,986

 
$
7,204

 
$
(20
)

See accompanying notes.

5

Table of Contents

Bottomline Technologies (de), Inc.
Unaudited Condensed Consolidated Statements of Stockholders' Equity
(in thousands)
Three Months Ended December 31, 2019
 
Common Stock
 
Additional Paid-in Capital
 
Accumulated Other Comprehensive Income (Loss)
 
Treasury Stock
 
Accumulated Deficit
 
Total Stockholders' Equity
Shares
 
Amount
Shares
 
Amount
Balance at September 30, 2019
47,385
 
$47
 
$733,312
 
$(49,972)
 
5,853
 
$(135,701)
 
$(172,750)
 
$374,936
Issuance of common stock for employee stock purchase plan and upon exercise of stock options
 
 
1
 
 
 
 
 
1
Vesting of restricted stock awards
260
 
1
 
 
 
 
 
 
1
Repurchase of common stock to be held in treasury
 
 
 
 
95
 
(5,000)
 
 
(5,000)
Stock compensation plan expense
 
 
11,046
 
 
 
 
 
11,046
Minimum pension liability adjustments, net of tax
 
 
 
(172)
 
 
 
 
(172)
Net income
 
 
 
 
 
 
2,609
 
2,609
Change in fair value on interest rate hedging instruments
 
 
 
569
 
 
 
 
569
Foreign currency translation adjustment
 
 
 
11,944
 
 
 
 
11,944
Balance at December 31, 2019
47,645
 
$48
 
$744,359
 
$(37,631)
 
5,948
 
$(140,701)
 
$(170,141)
 
$395,934
Three Months Ended December 31, 2018
 
Common Stock
 
Additional Paid-in Capital
 
Accumulated Other Comprehensive Income (Loss)
 
Treasury Stock
 
Accumulated Deficit
 
Total Stockholders' Equity
Shares
 
Amount
Shares
 
Amount
Balance at September 30, 2018
46,136
 
$46
 
$690,925
 
$(31,721)
 
5,730
 
$(128,216)
 
$(181,770)
 
$349,264
Issuance of common stock for employee stock purchase plan and upon exercise of stock options
2
 
 
20
 
 
 
 
 
20
Vesting of restricted stock awards
293
 
 
 
 
 
 
 
Stock compensation plan expense
 
 
9,575
 
 
 
 
 
9,575
Warrant settlements
37
 
 
 
 
 
 
 
Minimum pension liability adjustments, net of tax
 
 
 
(10)
 
 
 
 
(10)
Net income
 
 
 
 
 
 
5,969
 
5,969
Unrealized gain on available for sale securities, net of tax
 
 
 
8
 
 
 
 
8
Change in fair value on interest rate hedging instruments
 
 
 
(1,438)
 
 
 
 
(1,438)
Foreign currency translation adjustment
 
 
 
(2,543)
 
 
 
 
(2,543)
Balance at December 31, 2018
46,468
 
$46
 
$700,520
 
$(35,704)
 
5,730
 
$(128,216)
 
$(175,801)
 
$360,845


6

Table of Contents

Six Months Ended December 31, 2019
 
Common Stock
 
Additional Paid-in Capital
 
Accumulated Other Comprehensive Income (Loss)
 
Treasury Stock
 
Accumulated Deficit
 
Total Stockholders' Equity
Shares
 
Amount
 
 
 
Shares
 
Amount
 
 
Balance at June 30, 2019
46,995
 
47
 
721,438
 
(43,593)
 
5,680
 
(127,095)
 
(171,420)
 
379,377
Issuance of common stock for employee stock purchase plan and upon exercise of stock options
13
 
 
776
 
 
(60)
 
1,399
 
 
2,175
Vesting of restricted stock awards
637
 
1
 
 
 
 
 
 
1
Repurchase of common stock to be held in treasury
 
 
 
 
328
 
(15,005)
 
 
(15,005)
Stock compensation plan expense
 
 
22,145
 
 
 
 
 
22,145
Minimum pension liability adjustments, net of tax
 
 
 
8
 
 
 
 
8
Net income
 
 
 
 
 
 
1,242
 
1,242
Cumulative effect of adoption of updated lease standard
 
 
 
 
 
 
37
 
37
Unrealized loss on available for sale securities, net of tax
 
 
 
(3)
 
 
 
 
(3)
Change in fair value on interest rate hedging instruments
 
 
 
(108)
 
 
 
 
(108)
Foreign currency translation adjustment
 
 
 
6,065
 
 
 
 
6,065
Balance at December 31, 2019
47,645
 
$48
 
$744,359
 
$(37,631)
 
5,948
 
$(140,701)
 
$(170,141)
 
$395,934
Six Months Ended December 31, 2018
 
Common Stock
 
Additional Paid-in Capital
 
Accumulated Other Comprehensive Income (Loss)
 
Treasury Stock
 
Accumulated Deficit
 
Total Stockholders' Equity
Shares
 
Amount
 
 
 
Shares
 
Amount
 
 
Balance at June 30, 2018
44,834
 
45
 
678,549
 
(30,633)
 
5,806
 
(129,914)
 
(207,115)
 
310,932
Issuance of common stock for employee stock purchase plan and upon exercise of stock options
19
 
 
40
 
 
(76)
 
1,698
 
 
1,738
Vesting of restricted stock awards
683
 
 
 
 
 
 
 
Stock compensation plan expense
 
 
21,936
 
 
 
 
 
21,936
Warrant settlements
932
 
1
 
(5)
 
 
 
 
 
(4)
Minimum pension liability adjustments, net of tax
 
 
 
(56)
 
 
 
 
(56)
Net income
 
 
 
 
 
 
5,051
 
5,051
Cumulative effect of adoption of updated revenue recognition standard
 
 
 
 
 
 
26,263
 
26,263
Unrealized loss on available for sale securities, net of tax
 
 
 
6
 
 
 
 
6
Change in fair value on interest rate hedging instruments
 
 
 
(1,111)
 
 
 
 
(1,111)
Foreign currency translation adjustment
 
 
 
(3,910)
 
 
 
 
(3,910)
Balance at December 31, 2018
46,468
 
$46
 
$700,520
 
$(35,704)
 
5,730
 
$(128,216)
 
$(175,801)
 
$360,845


7

Table of Contents

Bottomline Technologies (de), Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
 
 
Six Months Ended December 31,
 
 
2019
 
2018
 
 
 
 
 
Operating activities:
 
 
 
 
Net income
 
$
1,242

 
$
5,051

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Amortization of acquisition-related intangible assets
 
10,163

 
10,579

Stock-based compensation plan expense
 
22,009

 
21,891

Depreciation and other amortization
 
12,652

 
11,191

Gain on sale of cost-method investment
 

 
(237
)
Deferred income tax benefit
 
(5,619
)
 
(6,177
)
Provision for allowances on accounts receivable
 
136

 
159

Amortization of debt issuance costs
 
207

 
208

Amortization of discount on investments
 
(45
)
 
(75
)
Loss on disposal of equipment
 
76

 
594

Loss on foreign exchange
 
266

 
326

Changes in operating assets and liabilities:
 
 
 
 
Accounts receivable
 
9,818

 
8,827

Prepaid expenses and other current assets
 
822

 
(1,982
)
Operating lease right-of-use asset, net
 
2,134

 

Other assets
 
(1,583
)
 
(1,643
)
Accounts payable
 
2,510

 
403

Accrued expenses
 
414

 
(4,858
)
Operating lease liabilities
 
(1,614
)
 

Customer account liabilities
 
2,485

 
2,761

Deferred revenue
 
(14,417
)
 
(13,491
)
Other liabilities
 
432

 
(278
)
Net cash provided by operating activities
 
42,088

 
33,249

Investing activities:
 
 
 
 
Acquisition of businesses and assets, net of cash and restricted cash acquired
 

 
(8,895
)
Purchases of other investments
 
(144
)
 

Proceeds from sale of cost-method investment
 

 
237

Purchases of available-for-sale securities
 
(10,070
)
 
(7,588
)
Proceeds from sales of available-for-sale securities
 
7,500

 
9,200

Capital expenditures, including capitalization of software costs
 
(26,400
)
 
(17,028
)
Insurance proceeds received for damage to equipment
 

 
200

Net cash used in investing activities
 
(29,114
)
 
(23,874
)
Financing activities:
 
 
 
 
Repurchase of common stock
 
(14,332
)
 

Repayment of amounts borrowed under revolving credit facility
 
(10,000
)
 
(40,000
)
Repayment of notes payable
 
(365
)
 
(183
)
Settlement of warrants
 

 
(4
)
Debt issuance costs related to credit facility
 

 
(597
)
Proceeds from exercise of stock options and employee stock purchase plan
 
2,175

 
1,740

Net cash used in financing activities
 
(22,522
)
 
(39,044
)
Effect of exchange rate changes on cash
 
1,039

 
(1,923
)
Decrease in cash, cash equivalents and restricted cash
 
(8,509
)
 
(31,592
)
Cash, cash equivalents and restricted cash at beginning of period
 
97,801

 
124,613

Cash, cash equivalents and restricted cash at end of period
 
$
89,292

 
$
93,021

 
 
 
 
 
Cash and cash equivalents at end of period
 
$
80,817

 
$
87,639


8

Table of Contents

Cash held for customers at end of period
 
8,475

 
5,382

Cash, cash equivalents and restricted cash at end of period
 
$
89,292

 
$
93,021

Supplemental disclosures of non-cash financing activities:
 
 
 
 
Issuance of common stock upon settlement of the warrants
 
$

 
$
58,451


See accompanying notes.

9

Table of Contents

Bottomline Technologies (de), Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
December 31, 2019
Note 1—Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of Bottomline Technologies (de), Inc. (referred to below as we, us, our or Bottomline) have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States (GAAP) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals and adjustments) considered necessary for a fair presentation of the interim financial information have been included. Operating results for the three and six months ended December 31, 2019 are not necessarily indicative of the results that may be expected for any other interim period or for the fiscal year ending June 30, 2020. For further information, refer to the financial statements and footnotes included in the Annual Report on Form 10-K as filed with the Securities and Exchange Commission on August 29, 2019.
Note 2—Recent Accounting Pronouncements
Recently Adopted Pronouncements
Leases: In February 2016, the Financial Accounting Standards Board (FASB) issued an accounting standard update which requires balance sheet recognition of a lease liability and a corresponding right-of-use (ROU) asset for all leases unless, as a policy election, a lessee elects not to apply the standard to short-term leases. The pattern of recognition of lease related revenue and expenses are dependent on its classification. We adopted the standard on July 1, 2019 and elected the package of practical expedients which permitted us not to reassess prior conclusions regarding lease identification, lease classification and treatment of initial direct costs. For all asset classes, we adopted the lessee practical expedient to combine lease and non-lease components and made a policy election not to recognize a ROU asset or lease liability for leases with a term of less than twelve months. We also availed ourselves of the adoption expedient not to adjust our comparative period financial statements for the effects of the new standard or make additional disclosures for periods prior to the adoption date.
Upon adoption, we recognized operating ROU assets and operating lease liabilities of $26.7 million and $29.0 million, respectively, in our consolidated balance sheet. The difference between the ROU assets and lease liabilities is primarily related to the reclassification of deferred rent on our balance sheet at the date of adoption. The adoption of this standard did not have a material impact on our consolidated statements of comprehensive income (loss) or consolidated statements of cash flows.
Please refer to Note 10 Commitments and Contingencies for discussion of the adoption of this new standard.
Accounting Pronouncements to be Adopted
Financial Instruments - Credit Losses: In June 2016, the FASB issued an accounting standard update that introduces a new forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments including trade receivables. The estimate of expected credit losses will require entities to incorporate historical information, current information and reasonable and supportable forecasts. This standard also expands the disclosure requirements to enable users of financial statements to understand the entity’s assumptions, models and methods for estimating expected credit losses. We will adopt this standard on July 1, 2020 and are currently evaluating the anticipated impact of this standard on our financial statements.
Goodwill Impairment: In January 2017, the FASB issued an accounting standard update to simplify the test for goodwill impairment which removes step 2 from the goodwill impairment test. Under the revised standard, an entity will perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The loss should not exceed the total amount of goodwill allocated to the reporting unit. We will adopt this standard on July 1, 2020 on a prospective basis and do not currently expect the adoption of this standard to have a material impact on our financial statements.
Income Taxes: In December 2019, the FASB issued an accounting standard update related to simplifying the accounting for income taxes. The standard is effective for us on July 1, 2021, with early adoption permitted. We are currently in the process of evaluating the effects of this update on our financial statements, including potential early adoption.
Note 3—Revenue Recognition
Remaining Performance Obligations

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The transaction price we allocate to remaining performance obligations that are unsatisfied, or partially unsatisfied, as of December 31, 2019 represents contracted revenue that will be recognized in future periods. Our future performance obligations consist primarily of SaaS hosting/subscription obligations relating to future periods, contracted but uncompleted professional services obligations and support and maintenance obligations. During the three and six months ended December 31, 2019 and 2018, the amount of revenue recognized from performance obligations satisfied in prior periods was not significant.
Revenue allocated to remaining performance obligations was $399.2 million as of December 31, 2019 of which we expect to recognize approximately $156.2 million over the next twelve months and the remainder thereafter. We exclude from our measure of remaining performance obligations amounts related to future transactional or usage-based fees for which the value of services transferred to the customer will correspond to the amount we will invoice for those services.
Contract Assets and Liabilities
The table below presents our accounts receivable, contract assets and deferred revenue balances as of December 31, 2019 and June 30, 2019.
 
 
December 31,
 
June 30,
 
 
 
 
2019
 
2019
 
$ Change
 
 
(in thousands)
Accounts receivable
 
$
67,946

 
$
77,285

 
$
(9,339
)
Contract assets
 
2,939

 
5,135

 
(2,196
)
Deferred revenue
 
78,452

 
92,159

 
(13,707
)

Accounts receivable include amounts related to our contractual right to consideration for both completed and partially completed performance obligations, including amounts that may not have been invoiced. Contract assets arise when we recognize revenue in excess of amounts billed to the customer and the right to payment is contingent on conditions other than simply the passage of time, such as the future completion of a related performance obligation. Contract assets are classified in our consolidated balance sheets as other current assets for those contract assets with recognition periods of one year or less and other assets for contract assets with recognition periods greater than one year. Deferred revenue consists of billings or customer payments in excess of amounts recognized as revenue.
The decrease in deferred revenue at December 31, 2019 as compared to June 30, 2019 reflects the impact on deferred revenue of our recognition of revenue from maintenance contracts, a significant portion of which are billed on a calendar year basis, as well as the impact of foreign exchange changes.
For the three and six months ended December 31, 2019, we recognized $30.0 million and $64.0 million, respectively, in revenue from amounts that were included in deferred revenue as of June 30, 2019. For the three and six months ended December 31, 2018, we recognized $24.7 million and $51.8 million, respectively, in revenue from amounts that were included in deferred revenue as of July 1, 2018.

    

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Note 4—Fair Value
Fair Values of Assets and Liabilities
We measure fair value at 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. In determining fair value, the assumptions that market participants would use in pricing an asset or liability (the inputs) are based on a tiered fair value hierarchy consisting of three levels, as follows:
Level 1: Observable inputs such as quoted prices for identical assets or liabilities in active markets.
Level 2: Other inputs that are observable directly or indirectly, such as quoted prices for similar instruments in active markets or for similar markets that are not active.
Level 3: Unobservable inputs for which there is little or no market data and which require us to develop our own assumptions about how market participants would price the asset or liability.
Valuation techniques for assets and liabilities include methodologies such as the market approach, the income approach or the cost approach, and may use unobservable inputs such as projections, estimates and management’s interpretation of current market data. These unobservable inputs are only utilized to the extent that observable inputs are not available or cost-effective to obtain.
At December 31, 2019 and June 30, 2019, our assets and liabilities measured at fair value on a recurring basis were as follows:
 
 
December 31, 2019
 
June 30, 2019
 
 
Fair Value Measurements Using Input Types
 
 
 
Fair Value Measurements Using Input Types
 
 
 
 
Level 1
 
Level 2
 
Level 3
 
Total
 
Level 1
 
Level 2
 
Level 3
 
Total
 
 
(in thousands)
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Money market funds (cash and cash equivalents)
 
$
292

 
$

 
$

 
$
292

 
$
2,807

 
$

 
$

 
$
2,807

Available for sale securities - Debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Government - U.S. treasury securities
 

 
10,091

 

 
10,091

 

 
7,479

 

 
7,479

Total assets
 
$
292

 
$
10,091

 
$

 
$
10,383

 
$
2,807

 
$
7,479

 
$

 
$
10,286

Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Short-term derivative interest rate swap
 
$

 
$
282

 
$

 
$
282

 
$

 
$
37

 
$

 
$
37

Long-term derivative interest rate swap
 
$

 
$
1,111

 
$

 
$
1,111

 
$

 
$
1,248

 
$

 
$
1,248

Total liabilities
 
$

 
$
1,393

 
$

 
$
1,393

 
$

 
$
1,285

 
$

 
$
1,285


Fair Value of Financial Instruments
We have certain financial instruments which consist of cash and cash equivalents, cash and cash equivalents held for customers, marketable securities, accounts receivable, accounts payable, customer account liabilities, derivative interest rate swaps and debt drawn on our Credit Facility (see Note 11 Indebtedness). Fair value information for each of these instruments is as follows:
Cash and cash equivalents, cash and cash equivalents held for customers, accounts receivable, accounts payable and customer account liabilities fair values approximates their carrying values, due to the short-term nature of these instruments.
Marketable securities classified as held to maturity, all of which mature within one year, are recorded at amortized cost, which at December 31, 2019 and June 30, 2019, approximated fair value.
Marketable debt securities classified as available for sale are recorded at fair value. Unrealized gains and losses are included as a component of other accumulated comprehensive income (loss) in stockholders’ equity, net of tax. We use the specific identification method to determine any realized gains or losses from the sale of our marketable debt securities classified as available for sale.
The fair value of our derivative interest rate swaps are based on the present value of projected cash flows that will occur over the life of the instruments, after considering certain contractual terms and counterparty credit risk.

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The carrying value of assets related to deposits we have made to fund future requirements associated with Israeli severance arrangements was $1.1 million and $1.2 million at December 31, 2019 and June 30, 2019, respectively, which approximated their fair value.
We have certain other investments for which there is no readily determinable fair value. The carrying value of these investments was $0.9 million and $0.7 million at December 31, 2019 and June 30, 2019, respectively, and they are reported as a component of our other assets. These investments are recorded at cost, less impairment (if any), plus or minus adjustments for observable price changes.
We have borrowings of $100 million against our Credit Facility. The fair value of these borrowings, which are classified as Level 2, approximates their carrying value at December 31, 2019, as the instrument carries a variable rate of interest which reflects current market rates.
Marketable Securities
The table below presents information regarding our marketable securities by major security type as of December 31, 2019 and June 30, 2019.
 
 
December 31, 2019
 
June 30, 2019
 
 
Held to Maturity
 
Available for Sale
 
Total
 
Held to Maturity
 
Available for Sale
 
Total
 
 
(in thousands)
Marketable securities:
 
 
 
 
 
 
 
 
 
 
 
 
Government and other debt securities
 
$
62

 
$
10,091

 
$
10,153

 
$
62

 
$
7,479

 
$
7,541

Total marketable securities
 
$
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