Intapp, Inc. 10-K

Item 8. Financial Statements and Supplementary Data Intapp, Inc. Index to consolidated financial statements Page Report of Independent Registered Public Accounting Firm 63 Consolidated Financial Statements: Consolidated Balance Sheets 64 Consolidated Statements of Operations 65 Consolidated Statements of Comprehensive Loss 66 Consolidated Statements of Convertible Preferred Stock and Stockholders’ Deficit 67 Consolidated Statements of Cash Flows 68 Notes to Consolidated Financial Statements 69 62 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Intapp, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Intapp, Inc. and subsidiaries (the "Company") as of June 30, 2021 and 2020, the related consolidated statements of operations, comprehensive loss, convertible preferred stock and stockholders’ deficit, and cash flows, for each of the three years in the period ended June 30, 2021, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2021, in conformity with accounting principles generally accepted in the United States of America. Change in Accounting Principle As discussed in Note 2 to the financial statements, the Company has changed its method of accounting for revenue in fiscal year 2021 due to the adoption of Accounting Standards Codification Topic 606, Revenue from Contracts with Customers , and all subsequent amendments (collectively, “ASC 606”). The Company adopted ASC 606 using the full retrospective approach. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ Deloitte & Touche LLP San Jose, California September 15, 2021 We have served as the Company’s auditor since 2018. 63 Intapp, Inc . C ONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) June 30, 2020 2021 (As adjusted)* Assets Current assets: Cash and cash equivalents $ 37,636 $ 42,052 Restricted cash 3,827 1,107 Accounts receivable, net 48,573 23,003 Unbilled receivables, net 6,840 8,578 Other receivables, net 858 1,144 Prepaid expenses 9,591 3,675 Deferred commissions, current 6,551 4,837 Total current assets 113,876 84,396 Property and equipment, net 10,674 8,172 Goodwill 262,270 227,992 Intangible assets, net 52,349 46,806 Deferred commissions, noncurrent 10,414 8,240 Other assets 10,244 1,406 Total assets $ 459,827 $ 377,012 Liabilities, convertible preferred stock and stockholders’ deficit Current liabilities: Accounts payable $ 2,198 $ 4,129 Accrued compensation 29,218 18,100 Accrued expenses 9,953 3,588 Deferred revenue, net 107,893 79,721 Other current liabilities 22,621 11,269 Total current liabilities 171,883 116,807 Deferred tax liabilities 5,705 2,616 Long-term deferred revenue, net 1,908 842 Other liabilities 18,170 3,805 Debt, net 275,593 279,458 Total liabilities 473,259 403,528 Commitments and contingencies (Note 7) Convertible preferred stock, $0.001 par value per share, 19,870,040 shares authorized as of June 30, 2021 and 2020; 19,034,437 shares issued and outstanding as of June 30, 2021 and 2020; liquidation preference of $203,340 and $187,756 as of June 30, 2021 and 2020, respectively 144,148 144,148 Stockholders’ deficit Common stock, $0.001 par value per share, 65,000,000 and 60,000,000 shares authorized as of June 30, 2021 and 2020, respectively; 29,444,577 and 24,331,569 shares issued and outstanding as of June 30, 2021 and 2020, respectively 29 24 Additional paid-in capital 128,943 69,178 Accumulated other comprehensive loss (494 ) (1,667 ) Accumulated deficit (286,058 ) (238,199 ) Total stockholders’ deficit (157,580 ) (170,664 ) Total liabilities, convertible preferred stock and stockholders’ deficit $ 459,827 $ 377,012 * As adjusted to reflect the impact of the full retrospective adoption of ASC 606. See Note 2 for a summary of adjustments. See accompanying notes to consolidated financial statements. 64 Intapp, Inc. C ONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) Year ended June 30, 2021 2020 (As adjusted)* 2019 (As adjusted)* Revenues SaaS and support $ 144,075 $ 114,125 $ 73,997 Subscription license 45,963 48,427 48,939 Total recurring revenues 190,038 162,552 122,936 Professional services 24,595 24,300 20,287 Total revenues 214,633 186,852 143,223 Cost of revenues SaaS and support 40,644 37,677 23,170 Total cost of recurring revenues 40,644 37,677 23,170 Professional services 33,730 32,847 21,723 Restructuring — 765 — Total cost of revenues 74,374 71,289 44,893 Gross profit 140,259 115,563 98,330 Operating expenses: Research and development 50,853 42,090 28,826 Sales and marketing 69,948 58,898 44,889 General and administrative 42,418 28,491 28,718 Restructuring — 2,894 — Total operating expenses 163,219 132,373 102,433 Operating loss (22,960 ) (16,810 ) (4,103 ) Interest expense (24,608 ) (27,856 ) (19,944 ) Other income (expense), net 1,276 (896 ) (898 ) Net loss before income taxes (46,292 ) (45,562 ) (24,945 ) Income tax benefit (expense) (472 ) (353 ) 7,806 Net loss (46,764 ) (45,915 ) (17,139 ) Less: cumulative dividends allocated to preferred stockholders (15,584 ) (14,048 ) (12,044 ) Net loss attributable to common stockholders $ (62,348 ) $ (59,963 ) $ (29,183 ) Net loss per share attributable to common stockholders, basic and diluted $ (2.23 ) $ (2.49 ) $ (1.25 ) Weighted-average shares used to compute net loss per share attributable to common stockholders, basic and diluted 27,950 24,109 23,339 * As adjusted to reflect the impact of the full retrospective adoption of ASC 606. See Note 2 for a summary of adjustments. See accompanying notes to consolidated financial statements. 65 Intapp, Inc. C ONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (in thousands) Year ended June 30, 2021 2020 (As adjusted)* 2019 (As adjusted)* Net loss $ (46,764 ) $ (45,915 ) $ (17,139 ) Other comprehensive income (loss): Foreign currency translation adjustments 1,173 (328 ) (334 ) Other comprehensive income (loss) 1,173 (328 ) (334 ) Comprehensive loss $ (45,591 ) $ (46,243 ) $ (17,473 ) * As adjusted to reflect the impact of the full retrospective adoption of ASC 606. See Note 2 for a summary of adjustments. See accompanying notes to consolidated financial statements. 66 Intapp, Inc. C ONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT (in thousands, except share data) Convertible preferred stock Common stock Shares Amount Shares Amount Additional paid-in capital Accumulated other comprehensive loss Accumulated deficit (as adjusted)* Stockholders' deficit (as adjusted)* Balance as of July 1, 2018(1) 17,762,379 $ 127,692 23,182,571 $ 23 $ 55,785 $ (1,005 ) $ (172,784 ) $ (117,981 ) Issuance of common stock — — 250,000 — 3,000 — — 3,000 Stock option exercises — — 608,487 1 2,885 — — 2,886 Stock-based compensation — — — — 2,921 — — 2,921 Foreign currency translation adjustments — — — — — (334 ) — (334 ) Net loss — — — — — — (17,139 ) (17,139 ) Balance as of June 30, 2019 17,762,379 127,692 24,041,058 24 64,591 (1,339 ) (189,923 ) (126,647 ) Issuance of Series A-1 convertible preferred stock, net of issuance costs of $81 1,272,058 16,456 — — — — — — Repurchase of shares and fully vested options — — (184,251 ) — (405 ) — (2,361 ) (2,766 ) Stock option exercises — — 474,762 — 1,736 — — 1,736 Stock-based compensation — — — — 3,256 — — 3,256 Foreign currency translation adjustments — — — — — (328 ) — (328 ) Net loss — — — — — — (45,915 ) (45,915 ) Balance as of June 30, 2020 19,034,437 144,148 24,331,569 24 69,178 (1,667 ) (238,199 ) (170,664 ) Issuance of common stock, net of issuance costs of $169 — — 2,432,545 2 29,018 — — 29,020 Repurchase of shares — — (200,000 ) — (797 ) — (1,095 ) (1,892 ) Stock option exercises — — 2,880,463 3 13,483 — — 13,486 Stock-based compensation — — — — 18,061 — — 18,061 Foreign currency translation adjustments — — — — — 1,173 — 1,173 Net loss — — — — — — (46,764 ) (46,764 ) Balance as of June 30, 2021 19,034,437 $ 144,148 29,444,577 $ 29 $ 128,943 $ (494 ) $ (286,058 ) $ (157,580 ) * As adjusted to reflect the impact of the full retrospective adoption of ASC 606. See Note 2 for a summary of adjustments. (1) The adjusted balance as of July 1, 2018 includes $27.6 million of cumulative effects of changes in accounting principle for the full retrospective adoption of ASC 606. See accompanying notes to consolidated financial statements. 67 Intapp, Inc. C ONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Year ended June 30, 2021 2020 (As adjusted)* 2019 (As adjusted)* Cash Flows from Operating Activities Net loss $ (46,764 ) $ (45,915 ) $ (17,139 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 13,365 12,767 9,054 Amortization of deferred financing costs 1,135 1,140 782 Provision for doubtful accounts 424 974 1,078 Stock-based compensation 18,061 3,256 2,921 Tax benefit for business combinations — — (8,016 ) Deferred income taxes (455 ) (294 ) — Other 20 — — Changes in operating assets and liabilities, net of business combinations: Accounts and other receivables (26,042 ) 7,744 (14,026 ) Unbilled receivables, current 1,738 (3,805 ) (3,781 ) Prepaid expenses and other assets (4,672 ) 393 (3,488 ) Deferred commissions (3,888 ) (3,403 ) (3,841 ) Accounts payable and accrued liabilities 10,680 (1,281 ) 10,039 Deferred revenue, net 28,787 17,975 18,870 Other liabilities (2,138 ) 9,039 2,483 Net cash used in operating activities (9,749 ) (1,410 ) (5,064 ) Cash Flows from Investing Activities Purchases of property and equipment (2,473 ) (2,638 ) (2,373 ) Capitalized internal-use software costs (2,526 ) (2,496 ) (1,922 ) Business combinations, net of cash acquired (20,605 ) — (190,310 ) Net cash used in investing activities (25,604 ) (5,134 ) (194,605 ) Cash Flows from Financing Activities Proceeds from borrowings — 15,000 281,000 Payments on borrowings (5,000 ) (5,000 ) (78,000 ) Shareholder contribution — 1,820 — Proceeds from issuance of convertible preferred stock, net of issuance costs — 16,456 — Proceeds from stock option exercises 15,686 1,736 2,886 Proceeds from common stock issuance 29,020 — 3,000 Repurchase of shares and fully vested options (1,892 ) (2,766 ) — Payments for deferred offering costs (5,410 ) — — Payments for debt financing costs — — (4,610 ) Net cash provided by financing activities 32,404 27,246 204,276 Effect of foreign exchange rates on cash and cash equivalents 1,253 (161 ) (187 ) Net increase (decrease) in cash, cash equivalents and restricted cash (1,696 ) 20,541 4,420 Cash, cash equivalents and restricted cash - beginning of period 43,159 22,618 18,198 Cash, cash equivalents and restricted cash - end of period $ 41,463 $ 43,159 $ 22,618 Reconciliation of cash, cash equivalents and restricted cash to the consolidated balance sheets Cash and cash equivalents $ 37,636 $ 42,052 $ 21,501 Restricted cash 3,827 1,107 1,117 Total cash, cash equivalents and restricted cash $ 41,463 $ 43,159 $ 22,618 Supplemental Disclosures of Cash Flow Information Cash paid for interest $ 24,139 $ 22,143 $ 17,654 Cash paid for income taxes 522 182 97 Non-cash investing and financing activities Deferred offering costs in accounts payable and accrued liabilities 3,990 — — Acquisition holdback in other liabilities 2,126 — — Fair value of contingent considerations in accrued and other liabilities 23,502 — — Business combinations, net of cash acquired: Cash paid $ 21,925 $ — $ 193,729 Cash acquired (1,320 ) — (3,419 ) Total consideration $ 20,605 $ — $ 190,310 * As adjusted to reflect the impact of the full retrospective adoption of ASC 606. See Note 2 for a summary of adjustments. See accompanying notes to consolidated financial statements. 68 Intapp, Inc. Notes to Consolidated Financial Statements 1. Description of business Intapp, Inc. (Intapp), formerly known as LegalApp Holdings, Inc., was incorporated in Delaware on November 27, 2012 to facilitate the acquisition of Integration Appliance, Inc. which became a wholly owned subsidiary of Intapp, Inc. on December 21, 2012. LegalApp Holdings, Inc. changed its name to Intapp, Inc. in February 2021. Intapp has no significant assets or operations other than the ownership of Integration Appliance, Inc. Integration Appliance, Inc. is a leading provider of industry-specific, cloud-based software solutions for the professional and financial services industry globally. The Company empowers private capital, investment banking, legal, accounting, and consulting firms with the technology they need to meet rapidly changing client, investor, and regulatory requirements, deliver the right insights to the right professionals, replace legacy systems, and operate more competitively. The Company serves clients primarily in the United States, United Kingdom and Australian markets. References to “the Company,” “us,” “we,” or “our” in these consolidated financial statements refer to the consolidated operations of Intapp and its consolidated subsidiaries. Initial public offering On July 2, 2021, the Company completed its Initial Public Offering (“IPO”), in which it sold 10,500,000 shares of common stock at a public offering price of $26.00 per share for net proceeds of $245.2 million after deducting underwriting discounts of $18.4 million and estimated offering costs of $9.4 million. Upon the closing of the IPO, all outstanding shares of Series A and Series A-1 convertible preferred stock automatically converted into 19,034,437 shares of common stock on a one-for-one basis. On July 8, 2021, the underwriters of the Company’s IPO exercised in full their right to purchase an additional 1,575,000 shares of common stock at the public offering price of $26.00 per share, resulting in additional net proceeds of $38.2 million after deducting underwriting discounts of $2.8 million. The consolidated financial statements as of June 30, 2021, including share and per share amounts, do not give effect to the IPO and related conversion of convertible preferred stock as they were completed subsequent to June 30, 2021. See Note 15, Subsequent events for further details . 2. Summary of accounting policies Basis of presentation and principles of consolidation The consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and reflect the consolidated results of operations, financial position, and cash flows of the Company and its consolidated subsidiaries, after eliminating all inter-company transactions and balances. Use of estimates The preparation of the accompanying consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported and disclosed in the consolidated financial statements and accompanying notes. Those estimates and assumptions include, but are not limited to, revenue recognition including determination of the standalone selling price (“SSP”) of the deliverables included in multiple deliverable revenue arrangements; the depreciable lives of long-lived assets including intangible assets; the expected useful life of deferred commissions; the fair value of common stock used in stock-based compensation; the fair value of assets acquired and liabilities assumed in business combination; goodwill and long-lived assets impairment assessment; the fair value of contingent consideration liabilities; valuation allowance on deferred tax assets; uncertain tax positions; and loss contingencies. The Company evaluates estimates and assumptions on an ongoing basis using historical experience and other factors including those resulting from the impacts of the COVID-19 pandemic and adjusts those estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ from these estimates, and those differences could be material to the consolidated financial statements. 69 Segment information Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (CODM) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s Chief Executive Officer is the Company’s CODM. The CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance. As such, the Company has determined that it operates in one operating segment. The Company’s property and equipment are primarily located in the United States. Information about geographic revenues are included in Note 3. Revenue recognition The Company’s revenues are derived from contracts with our clients. The majority of the Company’s revenues are derived from the sale of our software as a service (“SaaS”) solutions and subscriptions to our term software applications, including support services, as well as the provision of professional services for the implementation of our solutions. The Company accounts for revenues in accordance with Accounting Standards Codification 606, Revenue from Contracts with Customers (“ASC 606”), which the Company adopted on July 1, 2020 using the full retrospective method of adoption. The Company adjusted historical periods to include results as if the new revenue standard was applied to all of our client contracts as of the initial application date and the consolidated financial statements present revenues and contract costs in accordance with ASC 606 for all periods presented. The core principle of ASC 606 is to recognize revenues upon the transfer of control of services or products to customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services or products. The Company applies the following framework to recognize revenues: Identification of the contract, or contracts, with our clients The Company considers the terms and conditions of written contracts and its customary business practices in identifying its contracts under ASC 606. The Company determines it has a contract with a client when the contract is approved, each party’s rights regarding the services and products to be transferred can be identified, payment terms for the services and products can be identified, the client has the ability and intent to pay, and the contract has commercial substance. The Company evaluates whether two or more contracts entered within close proximity with one another should be combined and accounted for as a single contract. The Company also evaluates the client’s ability and intent to pay, which is based on a variety of factors, including the client’s historical payment experience or, in the case of a new client, credit and financial information pertaining to the client. Identification of the performance obligation in the contract Performance obligations promised in a contract are identified based on the services or products that will be transferred to the client that are both: i . capable of being distinct, whereby the client can benefit from the service or product either on its own or together with other resources that are readily available from the Company or third parties, and ii. distinct in the context of the contract, whereby the transfer of the services or products is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised services or products, the Company applies judgment to determine whether promised services or products are capable of being distinct and distinct in the context of the contract. If these criteria are not met, the promised services or products are accounted for as a combined performance obligation. The Company derives its revenues primarily from the following four sources, which represent the performance obligations of the Company: i . Sales of SaaS under subscription arrangements : revenue derived from subscriptions to our SaaS solutions; ii. Sales of subscriptions to our licenses: software revenues derived from the sale of term licenses to clients; 70 iii. Support activities: support activities that consist of email and phone support, bug fixes, and rights to unspecified software updates and upgrades released on a when, and if, available basis during the support term; and iv. Sales of professional services: services related to the implementation and configuration of the Company’s SaaS offerings and software licenses. SaaS and subscription licenses are generally sold as annual or multi-year initial terms with automatic annual renewal provisions on expiration of the initial term. Support for subscription licenses follows the same contract periods as the initial or renewal term. Professional services related to implementation and configuration activities are typically time and materials contracts. Determination of the transaction price The transaction price is determined based on the consideration to which the Company expects to be entitled in exchange for transferring services and products to the client. Variable consideration is estimated and included in the transaction price if, in the Company’s judgment, it is probable that no significant future reversal of cumulative revenues under the contract will occur. In instances where the timing of revenue recognition differs from the timing of invoicing, the Company has determined that contracts generally do not include a significant financing component. The primary purpose of the Company’s invoicing terms is to provide clients with simplified and predictable ways of purchasing the Company’s products and services, not to receive financing from clients or to provide clients with financing. Allocation of the transaction price to the performance obligations in the contract If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on its relative SSP. The majority of the Company’s contracts contain multiple performance obligations, such as when subscription licenses are sold with support and professional services. Some of the Company’s performance obligations have observable inputs that are used to determine the SSP of those distinct performance obligations. Where SSP is not directly observable, the Company determines the SSP using information that may include market conditions and other observable inputs. Recognition of revenues when, or as, the Company satisfies a performance obligation The Company recognizes revenues as control of the services or products is transferred to a client, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services or products. The Company is principally responsible for the satisfaction of its distinct performance obligations, which are satisfied either at a point in time or over a period of time. The Company records revenues net of applicable sales taxes collected. Sales taxes collected from clients are recorded as part of accounts payable in the accompanying consolidated balance sheets and are remitted to state and local taxing jurisdictions based on the filing requirements of each jurisdiction. Performance obligations satisfied at a point in time Subscription licenses The Company has concluded that its sale of term licenses to clients (“subscription licenses”) provides the client with the right to functional intellectual property (“IP”) and are distinct performance obligations from which the client can benefit on a stand-alone basis. The transaction price allocated to subscription license arrangements is recognized as revenues at a point in time when control is transferred to the client, which generally occurs at the time of delivery or upon commencement of the renewal term. Subscription license fees are generally payable in advance on an annual basis over the term of the license arrangement, which is typically noncancelable. Performance obligations satisfied over a period of time SaaS and support as well as professional services arrangements comprise the majority of distinct performance obligations that are satisfied over a period of time. 71 SaaS and support The transaction price allocated to SaaS subscription arrangements is recognized as revenues over time throughout the term of the contract as the services are provided on a continuous basis, beginning after the SaaS environment is provisioned and made available to clients. The Company’s SaaS subscriptions are generally one to three years in duration, with the majority being one year. Consideration from SaaS arrangements is typically billed in advance on an annual basis. The Company’s subscription license sales include noncancelable support which entitle clients to receive technical support and software updates, on a when and if available basis, during the term of the subscription license agreement. Technical support and software updates are considered distinct from the related subscription licenses but accounted for as a single stand ready performance obligation as they each constitute a series of distinct services that are substantially the same and have the same pattern of transfer to the client. The transaction price allocated to support is recognized as revenue over time on a straight-line basis over the term of the support contract which corresponds to the underlying subscription license agreement. Consideration for support services is typically billed in advance on an annual basis. In some instances, the client may purchase premium support services which are generally priced as a percentage of the associated subscription license. Professional services The Company’s professional services revenues are primarily comprised of implementation, configuration and upgrade services. The Company has determined that professional services provided to clients represent distinct performance obligations. These services may be provided on a stand-alone basis or bundled with other performance obligations, including SaaS arrangements, subscription licenses, and support services. The transaction price allocated to these performance obligations is recognized as revenue over time as the services are performed. The professional services engagements are billed to clients on a time and materials basis and are recognized as invoiced. In instances where professional services arrangements are sold on a fixed price basis, revenues are recognized over time using an input measure of time incurred to date relative to total estimated time to be incurred at project completion. Professional services arrangements sold on a time and materials basis are generally invoiced monthly in arrears and those sold on a fixed fee basis are invoiced upon the achievement of project milestones. The Company records reimbursable out-of-pocket expenses associated with professional services contracts in both revenues and cost of revenues. Contract modifications Contracts may be modified to account for changes in contract scope or price. The Company considers contract modifications to exist when the modification either creates new rights or obligations or changes the existing enforceable rights and obligations of either party. Contract modifications are accounted for prospectively when it results in the promise to deliver additional products and services that are distinct and contract price does not increase by an amount that reflects standalone selling price for the new goods or services. Balance sheet presentation Contracts with our clients are reflected in the consolidated balance sheets as follows: • Accounts receivable, net represents amounts billed to clients in accordance with contract terms for which payment has not yet been received. It is presented net of the allowance for doubtful accounts as part of current assets in the consolidated balance sheets. • Unbilled receivables, net represents amounts that are unbilled due to agreed-upon contractual terms in which billing occurs subsequent to revenue recognition. This generally occurs in multi-year subscription license arrangements where control of the software license is transferred at the inception of the contract, but the client is invoiced annually in advance over the term of the license. Unbilled receivables are presented net of the allowance for doubtful accounts, if applicable, in the consolidated balance sheets with the long-term portion included in other assets. Under ASC 606, these balances represent contract assets. 72 • Contract costs consist principally of client acquisition costs (sales commissions). The Company classifies deferred commissions as current or non-current on our consolidated balance sheets based on the timing of when the Company expect s to recognize the expense. • Deferred revenue, net represents amounts that have been invoiced to the client for which the Company has the right to invoice, but that have not been recognized as revenues because the related products or services have not been transferred to the client. Deferred revenue that will be realized within twelve months of the balance sheet date is classified as current. The remaining deferred revenue is presented as non-current. Under ASC 606, these balances represent contract liabilities. The Company may receive consideration from its clients in advance of performance on a portion of the contract and, on another portion of the contract, perform in advance of receiving consideration. Contract assets and liabilities related to rights and obligations in a contract are interdependent. Therefore, contract assets and liabilities are presented net at the contract level, as either a single contract asset or a single contract liability, in the consolidated balance sheets. Contract costs Contract costs consist of two components, client acquisition costs and costs to fulfill a contract. The Company’s client acquisition costs consist primarily of commissions paid to its sales team. Commissions related to client acquisition are capitalized and amortized over the expected benefit period of four years. Commissions related to subscription licenses are expensed when control of the license is transferred to clients and commissions related to SaaS and support revenues are expensed on a straight-line basis over four years. The Company determines the expected useful life based on an estimated benefit period by evaluating our technology development life cycle, expected client relationship period and other factors. Amortization of deferred commissions is included in sales and marketing expense in the consolidated statements of operations. Costs to fulfill a contract, or fulfillment costs, are only capitalized if they relate directly to a contract with a client, the costs generate or enhance resources that will be used to satisfy performance obligations in the future, and the costs are expected to be recoverable. The Company has not capitalized any fulfillment costs as of June 30, 2021 and 2020. Cost of revenues Cost of revenues consists primarily of costs related to providing SaaS and professional services to the Company’s clients, including personnel costs (salaries, bonuses and benefits, and stock-based compensation) and related expenses for client support and services personnel, as well as cloud infrastructure costs, third-party expenses, depreciation of fixed assets, amortization of capitalized software development costs and amortization associated with acquired intangible assets, and allocated overhead. The Company does not have any cost of revenues related to subscription licenses. Research and development costs Research and development costs comprise costs associated with the development of software products for sale. Research and development costs related to the development of software products for sale are charged to expense until technological feasibility has been established. Costs incurred thereafter are capitalized until the product is generally made available. The Company considers technological feasibility to be reached at approximately the same time a product is generally available to clients. The major components of research and development costs include salaries, bonuses and benefits, stock-based compensation, costs of third-party services, and allocations of various overhead and occupancy costs. Restricted cash Restricted cash represents amounts held as collateral under certain facility lease agreements and company credit cards and amounts held back related to a business combination. 73 Accounts receivable and allowance for doubtful accounts Accounts receivable are recorded at invoiced amounts, net of allowance for doubtful accounts. The Company evaluates the collectability of its accounts receivable based on known collection risks and historical experience, and maintains an allowance for doubtful accounts for estimated losses resulting from its clients failing to make required payments for subscriptions or services rendered. Sufficiency of the allowance is assessed based upon knowledge of credit-worthiness of our clients, review of historical receivable and reserves trends and other pertinent information. Actual future losses from uncollectible accounts may differ from these estimates. Accounts receivable, net consist of the following (in thousands): June 30, 2021 2020 (As adjusted)* Accounts receivable $ 49,337 $ 23,965 Less: Allowance for doubtful accounts (764 ) (962 ) Accounts receivable, net $ 48,573 $ 23,003 * As adjusted to reflect the impact of the full retrospective adoption of ASC 606. See Note 2 for a summary of adjustments. The movements in the allowance for doubtful accounts were not significant for any of the periods presented. Property and equipment, net Property and equipment, net are stated at cost, less accumulated depreciation and amortization. Construction-in-progress primarily consists of leasehold improvements that have not yet been placed into service for their intended use. Depreciation and amortization are calculated using the straight-line method over the estimated useful lives of the related assets. Depreciation on property and equipment, excluding leasehold improvements, ranges from three to five years. Leasehold improvements are amortized using the straight-line method over the shorter of the estimated useful lives of the respective assets or the lease term. When assets are sold, or otherwise disposed of, the cost and related accumulated depreciation and amortization are removed from the balance sheet and any gain or loss is reflected in operating expenses. Maintenance and repair costs that do not extend the useful life of the assets are expensed as incurred. Capitalized software development costs Costs related to software acquired, developed, or modified solely to meet the Company’s internal requirements, with no substantive plans to market such software at the time of development, or costs related to development of our hosted SaaS products are capitalized during the application development stage. The Company capitalized $2.5 million, $2.5 million and $1.9 million of costs related to software developed for internal use during the fiscal years ended June 30, 2021, 2020 and 2019, respectively, and amortized $1.2 million, $0.6 million and $0.1 million during the fiscal years ended June 30, 2021, 2020 and 2019, respectively. The net book value of capitalized software development costs was $5.0 million and $3.6 million as of June 30, 2021 and 2020, respectively, and is included in property and equipment, net. Deferred offering costs Deferred offering costs, which primarily consist of direct incremental legal and accounting fees relating to the IPO, are capitalized. The deferred offering costs will be offset against IPO proceeds upon the consummation of the offering. A total of $9.4 million was recorded in other assets on the consolidated balance sheet as of June 30, 2021, and no amounts were deferred as of June 30, 2020. 74 Goodwill and acquired intangible assets Goodwill represents the excess purchase price over fair value of net tangible and identifiable intangible assets acquired in a business combination. Goodwill is tested for impairment on an annual basis during the fourth quarter or whenever events or changes in circumstances indicate the carrying amount of the goodwill may not be recoverable. The Company has determined that it is comprised of one reporting unit for purposes of its annual impairment evaluation. As part of the annual goodwill impairment test, the Company first performs a qualitative assessment to determine whether further impairment testing is necessary. If, as a result of its qualitative assessment, it is more-likely-than-not that the fair value of our reporting unit is less than its carrying amounts, the quantitative impairment test will be required. There was no impairment of goodwill recorded for the fiscal years ended June 30, 2021, 2020 and 2019. Intangible assets resulting from the acquisition of entities are estimated by the Company based on the fair value of assets received. Acquired intangible assets consist of client relationships, noncompete agreements, trademarks and trade names and core technology. Certain assets are being amortized on a straight-line basis over the period of expected benefit with no calculated residual value, as follows: Description Period Client relationships 9 to 15 years Noncompete agreements 3 to 5 years Trademarks and trade names 5 years to indefinite Core technology 3 to 5 years Impairment assessment of long-lived assets The Company reviews long-lived assets, which include property plant and equipment and finite long-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset (or asset group) may not be recoverable or that the useful life is shorter than what was originally estimated. Recoverability of assets to be held and used is measured by comparing the carrying amount of each asset group to the undiscounted future net cash flows expected to be generated by the asset group over its remaining life. If the carrying amount of the asset group exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset group exceeds the fair value of the asset group. If the useful life is shorter than originally estimated, the remaining carrying value is amortized over the new shorter useful life. No impairment charge was recorded during the fiscal years ended June 30, 2021, 2020 and 2019. Business combinations Business combinations are accounted for using the acquisition method of accounting. The Company uses best estimates and assumptions to assign fair value to tangible and intangible assets acquired and liabilities assumed at the acquisition date. Such estimates are inherently uncertain and subject to refinement. The Company continues to collect information and reevaluate these estimates and assumptions and record any adjustments to the preliminary estimates to goodwill provided that the Company is within the measurement period. Upon the conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the consolidated statements of operations. Expenses incurred in connection with a business combination are expensed as incurred. Contingent consideration liabilities arising from business combinations are initially measured at fair value on the acquisition date. Each reporting period thereafter, these obligations are revalued and increases or decreases to the fair value are recorded as adjustments to general and administrative expense in the consolidated statements of operations. Fair value of financial instruments The Company applies authoritative guidance for fair value measurements and disclosures for financial assets and liabilities measured on a recurring basis and nonfinancial assets and liabilities. Assets and liabilities recorded at fair value are categorized based upon the level of judgment associated with the inputs used to measure their fair value. 75 Stock-based compensation Compensation expense related to stock-based awards made to employees, consultants and directors are calculated based on the fair value of stock-based awards on the date of grant. The Company determines the grant date fair value of our stock option awards using the Black-Scholes option pricing model and restricted stock units based on the fair value of the Company’s common stock on the date of grant. The related stock-based compensation is recognized on a straight-line basis, over the period in which a participant is required to provide service in exchange for the stock-based awards, which is generally four years. Stock-based compensation expense is recognized in the consolidated statements of operations based on awards ultimately expected to vest. The Company recognizes forfeitures of stock-based awards as they occur. This valuation model for stock-based compensation expense requires the Company to make assumptions and judgments about the variables used in the calculation, including the expected term (weighted-average period of time that the options granted are expected to be outstanding), the volatility of the Company’s common stock and an assumed risk-free interest rate. No compensation cost is recorded for stock-based awards that do not vest. The Company uses historical experience and future expectations to determine the expected term and volatility is based on an average of the historical volatilities of the common stock of public companies with characteristics similar to those of the Company. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected life of the option. The Company has issued performance-based stock options and performance stock units that vest based upon continued service through the vesting term and achievement of certain annual recurring revenues targets established by the Board of Directors for a predetermined period. The Company measures stock-based compensation expense for performance-based stock options based on the estimated grant date fair value determined using the Black-Scholes valuation model. The Company measures the fair value of the performance stock units based on the fair value of the Company’s common stock on the date of grant. The Company recognizes compensation expense for such awards in the period in which it becomes probable that the performance target will be achieved. Leases and deferred rent The Company leases all of its office space. Leases are evaluated and classified as operating or capital leases for financial reporting purposes. Certain of the lease agreements contain rent holidays and rent escalation provisions. For purposes of recognizing these lease incentives on a straight-line basis over the term of the lease, the Company uses the date of initial possession to begin amortization and records the difference between the rent paid and the straight-line rent expense as deferred rent which is classified in other liabilities. Lease renewal periods are considered on a lease-by-lease basis and are generally not included in the period of straight-line recognition. Advertising expense Advertising costs are expensed as incurred. Advertising expense was not significant for the fiscal years ended June 30, 2021, 2020 and 2019. Foreign currency The functional currency for all of our foreign subsidiaries is the U.S. dollar, except Rekoop Ltd., which uses the British pound. The Company translates the foreign functional currency financial statements to U.S. dollars for those entities that do not have U.S. dollars as their functional currency using the exchange rates at the balance sheet date for assets and liabilities, the period average exchange rates for revenues and expenses, and the historical exchange rates for equity transactions. The effects of foreign currency translation adjustments are recorded in other comprehensive loss. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the local functional currency are recorded as foreign currency transaction adjustments in the consolidated statements of operations. 76 Accumulated other comprehensive loss Accumulated other comprehensive loss, which is reported in the accompanying consolidated statements of stockholders’ deficit, consists of net loss and foreign currency translation adjustments. The Company’s other comprehensive loss consists of changes in the cumulative effect of translation of financial statements of certain wholly owned foreign subsidiaries. Concentrations of credit risk and significant clients Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and accounts receivable. The Company maintains its cash with high quality financial institutions. The Company is exposed to credit risk for cash held in financial institutions in the event of a default to the extent that such amounts recorded on the balance sheet are in excess of amounts that are insured by the Federal Deposit Insurance Corporation (“FDIC”). No client individually accounted for 10% or more of the Company’s revenues for the fiscal years ended June 30, 2021, 2020 and 2019. As of June 30, 2021, one client individually accounted for 25% of the Company’s total accounts receivable. As of June 30, 2020, no client individually accounted for 10% or more of the Company’s total accounts receivable. Deferred financing costs The Company presents debt issuance costs as a deduction from the associated debt obligation. The Company capitalizes costs associated with the issuance of debt instruments and amortizes these costs over the term of the debt agreement using the effective interest method. Income taxes The Company accounts for income taxes using the asset and liability method. Under this method, deferred income tax assets and liabilities are recorded based on the estimated future tax effects of differences between the financial statement and income tax basis of existing assets and liabilities. These differences are measured using the enacted statutory tax rates that are expected to apply to taxable income for the years in which differences are expected to reverse. The Company recognizes the effect on deferred income taxes of a change in tax rates in the period that includes the enactment date. The Company records a valuation allowance to reduce its deferred tax assets to the net amount that it believes is more-likely-than-not to be realized. Management considers all available evidence, both positive and negative, including historical levels of income, expectations and risks associated with estimates of future taxable income and ongoing tax planning strategies in assessing the need for a valuation allowance. The Company operates in various tax jurisdictions and is subject to audit by various tax authorities. The Company provides for tax contingencies whenever it is deemed probable that a tax asset has been impaired or a tax liability has been incurred for events such as tax claims or changes in tax laws. Tax contingencies are based upon their technical merits, relative tax law, and the specific facts and circumstances as of each reporting period. The Company establishes liabilities or reduce assets for uncertain tax positions when the Company believes certain tax positions are not more likely than not of being sustained if challenged. Changes in facts and circumstances could result in material changes to the amounts recorded for such tax contingencies. Restructuring Costs associated with management-approved restructuring activities, including reductions in headcount, exiting a market or consolidation of facilities are recognized when they are incurred. The Company records a liability for employee termination benefits either when it is probable that an employee is entitled to them and the amount of the benefits can be reasonably estimated or when management has communicated the termination plan to employees and actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. Restructuring charges are separately identified and included within the consolidated statements of operations and are classified according to the nature of the costs within cost of revenues or operating expenses. 77 Net loss per share attributable to common stockholders The Company follows the two-class method when computing net loss per common share when shares are issued that meet the definition of participating securities. The two-class method determines net loss per common share for each class of common stock and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income available to common stockholders for the period to be allocated between common stock and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. The Company’s convertible preferred stock contractually entitles the holders of such shares to participate in dividends but does not contractually require the holders of such shares to participate in the Company’s losses. The Company’s basic net loss per share is calculated by dividing net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock outstanding for the period, without consideration of potentially dilutive securities. The diluted net income (loss) per share is calculated by giving effect to all potentially dilutive securities outstanding for the period using the treasury stock method or the if-converted method based on the nature of such securities. For periods in which the Company reports net losses, diluted net loss per common share attributable to common stockholders is the same as basic net loss per common share attributable to common stockholders, because potentially dilutive common shares are not assumed to have been issued if their effect is anti-dilutive. Recent accounting pronouncements The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it is (i) no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, the consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. The JOBS Act does not preclude an emerging growth company from early adopting new or revised accounting standards. Recently adopted accounting pronouncements In May 2014, the FASB issued accounting guidance related to revenue recognition, Accounting Standard Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (ASC 606). ASC 606 supersedes the existing revenue recognition guidance in “Revenue Recognition (ASC 605)”. The new revenue recognition standard provides a unified model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers, who are our clients, in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. ASC 606 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than are required under existing GAAP, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation, among others. ASC 606 also provides guidance on the recognition of costs related to obtaining client contracts. The Company adopted ASC 606 on July 1, 2020 using the full retrospective method of adoption, adjusting historical periods to include results as if the new revenue standard was applied to all client contracts as of the initial application date. The Company applied the following practical expedients on adoption provided by the new standard: • For completed contracts that have variable consideration, the Company used the transaction price at the date the contract was completed rather than estimating variable consideration. • No disclosure of amounts of consideration allocated to the remaining performance obligations for all reporting periods presented before the date of the initial application. 78 The consolidated financial statements are in accordance with ASC 606 for all periods presented. The adoption of the new standard primarily impacted the Company’s accounting as follows: • Upfront recognition of revenues for the Company’s subscription licenses upon delivery of the license, as compared to over-time recognition under ASC 605. As a result, under ASC 606, the allocated transaction price under a subscription license that the Company reasonably expects to collect are recognized upon the transfer of control of the subscription license, which is generally when made available to a client. • Incremental costs to obtain a contract have been capitalized and are amortized over on an expected period of benefit on a systematic basis that is consistent with the transfer to the client of the goods or services to which the asset relates. Most of the Company’s commission expenses meet this definition. In contrast, under ASC 605, costs to obtain a contract were capitalized and amortized ratably over the estimated contract period. Select consolidated statements of operations line items, which reflect the adoption of the new standard are as follows (in thousands, except per share data): Year ended June 30, 2020 2019 As As As As reported Adjustments adjusted reported Adjustments adjusted Revenues $ 182,377 $ 4,475 $ 186,852 $ 131,848 $ 11,375 $ 143,223 Gross profit 111,088 4,475 115,563 86,955 11,375 98,330 Operating expenses: Sales and marketing 59,648 (750 ) 58,898 45,307 (418 ) 44,889 Operating loss (22,035 ) 5,225 (16,810 ) (15,896 ) 11,793 (4,103 ) Net loss (51,140 ) 5,225 (45,915 ) (28,932 ) 11,793 (17,139 ) Net loss per share attributable to common stockholders, basic and diluted (2.70 ) 0.21 (2.49 ) (1.76 ) 0.51 (1.25 ) Select consolidated balance sheet line items, which reflect the adoption of the new standard are as follows (in thousands): Year ended June 30, 2020 As As reported Adjustment adjusted Assets: Accounts receivable, net $ 33,223 $ (10,220 ) $ 23,003 Unbilled receivables, net — 8,578 8,578 Deferred commissions, current 5,494 (657 ) 4,837 Deferred commissions, noncurrent 2,956 5,284 8,240 Other assets 893 513 1,406 Liabilities: Deferred revenue, net 119,018 (39,297 ) 79,721 Long-term deferred revenue, net 2,638 (1,796 ) 842 Stockholders’ deficit: Accumulated deficit (282,790 ) 44,591 (238,199 ) 79 Select consolidated statements of cash flows line items, which reflect the adoption of the new standard are as follows (in thousands): Year ended June 30, 2020 2019 As As As As reported Adjustment adjusted reported Adjustment adjusted Cash Flows from Operating Activities Net loss $ (51,140 ) $ 5,225 $ (45,915 ) $ (28,932 ) $ 11,793 $ (17,139 ) Adjustments to reconcile net loss to net cash used in operating activities: Changes in operating assets and liabilities: Accounts and other receivables 11,673 (3,929 ) 7,744 (18,075 ) 4,049 (14,026 ) Unbilled receivables, current — (3,805 ) (3,805 ) — (3,781 ) (3,781 ) Prepaid expenses and other assets (580 ) 973 393 (2,495 ) (993 ) (3,488 ) Deferred commissions (2,653 ) (750 ) (3,403 ) (3,423 ) (418 ) (3,841 ) Deferred revenue, net 15,689 2,286 17,975 29,520 (10,650 ) 18,870 Net cash used in operating activities (1,410 ) — (1,410 ) (5,064 ) — (5,064 ) In August 2018, the FASB issued ASU No. 2018-15, Intangibles – Goodwill and Other – Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which clarifies the accounting for implementation costs in cloud computing arrangements. The new standard aligns the treatment of implementation costs incurred by customers in cloud computing arrangements that are service contacts with the treatment of similar costs incurred to develop or obtain internal-use software. Under the new standard, implementation costs are deferred and presented in the same financial statement caption on the consolidated balance sheet as a prepayment of related arrangement fees. The deferred costs are recognized over the term of the arrangement in the same financial statement caption in the consolidated income statement as the related fees of the arrangement. The Company early adopted this guidance in the first quarter of fiscal year 2021 on a prospective basis and the adoption of this guidance did not have a material impact on its consolidated financial statements and related disclosures. Recently issued accounting pronouncements In February 2016, the FASB issued ASU No. 2016-02, Leases . The guidance requires lessees to put most leases on their balance sheets but recognize the expenses on their income statements in a manner similar to current practice. The guidance states that a lessee would recognize a lease liability for the obligation to make lease payments and a right-of-use asset for the right to use the underlying asset for the lease term. The new standard is effective for the Company for fiscal periods beginning after December 15, 2021 and early adoption is permitted. The Company expects to recognize lease liabilities and right-of-use assets related to its operating leases upon adoption of the standard. The Company is evaluating the impact of this ASU on its financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses , which requires the establishment of an allowance for estimated credit losses on financial assets, including trade and other receivables, at each reporting date. The guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is evaluating the impact of this ASU on its financial statements. 80 In December 2019, the FASB issued ASU No. 2019-12, Income Taxes ( ASC 740): Simplifying the Accounting for Income Taxes , which is intended to simplify the accounting for income taxes by removing certain exceptions and by updating accounting requirements around franchise taxes, goodwill recognized for tax purposes, the allocation of current and deferred tax expense among legal entities, among other minor changes. Most amendments within the standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. This new standard will be effective for the Company for fiscal years beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted. The Company is currently assessing the impact of adopting this standard on the consolidated financial statements. 3. Revenue recognition Disaggregation of revenues Revenues by geography is as follows (in thousands): Year ended June 30, 2021 2020 (As adjusted)* 2019 (As adjusted)* United States $ 151,261 $ 135,269 $ 102,736 United Kingdom 37,449 32,890 27,938 Rest of the world 25,923 18,693 12,549 Total $ 214,633 $ 186,852 $ 143,223 * As adjusted to reflect the impact of the full retrospective adoption of ASC 606. See Note 2 for a summary of adjustments. No country other than those listed above accounted for more than 10% of revenues during the fiscal years ended June 30, 2021, 2020 and 2019. Client Contract — Related Balance Sheet Amounts Deferred commissions The following table summarizes the activity of the deferred commissions (in thousands): Year ended June 30, 2021 2020 (As adjusted)* Beginning balance $ 13,077 $ 9,673 Additions 9,862 8,342 Recognition of deferred commissions (5,974 ) (4,938 ) Ending balance $ 16,965 $ 13,077 * As adjusted to reflect the impact of the full retrospective adoption of ASC 606. See Note 2 for a summary of adjustments. Contract balances The Company’s contract assets and liabilities were as follows (in thousands): June 30, 2021 2020 (As adjusted)* Unbilled accounts receivable, net (1) $ 6,925 $ 9,091 Deferred revenue, net 109,801 80,563 (1) The long-term portion of $85 and $513 as of June 30, 2021 and 2020, respectively, is included in other assets. * As adjusted to reflect the impact of the full retrospective adoption of ASC 606. See Note 2 for a summary of adjustments. 81 There was no allowance for doubtful accounts associated with unbilled receivables as of June 30, 2021 and 2020. During the fiscal year ended June 30, 2021, the Company recognized $76.2 million in revenue pertaining to deferred revenue as of the beginning of the period. Performance obligations Remaining performance obligations represent non-cancellable contracted revenues that have not yet been recognized, which includes deferred revenue and amounts that will be invoiced and recognized as revenues in future periods. Subscription services are typically satisfied over one to three years, support services are generally satisfied within one year, and professional services are typically satisfied within one year. Professional services under time and material contracts are not included in the performance obligations amount as these arrangements can be cancelled at any time. As of June 30, 2021, approximately $230.6 million of revenues is expected to be recognized from remaining performance obligations with approximately 64% over the next 12 months and approximately 36% thereafter. 4. Goodwill and intangible assets Goodwill and intangible assets acquired through business combinations consisted of the following (in thousands): June 30, 2021 Useful Life (In years) Gross Amount Accumulated Amortization Net Book Value Goodwill Indefinite $ 262,270 $ — $ 262,270 Client relationships 9 to 15 41,000 (15,879 ) 25,121 Noncompete agreements 3 to 5 4,107 (2,442 ) 1,665 Trademarks and trade names Indefinite 4,892 — 4,892 Trademarks and trade names 1 to 3 7,613 (2,902 ) 4,711 Core technology 3 to 5 47,019 (31,059 ) 15,960 Intangible assets, net $ 104,631 $ (52,282 ) $ 52,349 June 30, 2020 Useful Life (In years) Gross Amount Accumulated Amortization Net Book Value Goodwill Indefinite $ 227,992 $ — $ 227,992 Client relationships 9 to 15 32,101 (12,909 ) 19,192 Noncompete agreements 3 to 5 2,407 (2,407 ) — Trademarks and trade names Indefinite 4,892 — 4,892 Trademarks and trade names 1 to 3 7,627 (1,836 ) 5,791 Core technology 3 to 5 41,376 (24,445 ) 16,931 Intangible assets, net $ 88,403 $ (41,597 ) $ 46,806 The fair value of intangible assets was derived based on the income approach. This fair value measurement is based on significant inputs that are not observable in the market. Key assumptions utilized in the management’s analysis included the following: • Revenues and expense forecasts used in the evaluation were based on trends of historical performance and management’s estimate of future performance. • Cash flows utilized in the discounted cash flow analysis were estimated using a weighted-average cost of capital. During the year ended June 30, 2020, the Company recognized a purchase price adjustment of $0.3 million related to the OnePlace Pte Ltd. acquisition that occurred in May 2019, which increased goodwill and the net liabilities acquired. The amortization expense for intangible assets recognized for the fiscal years ended June 30, 2021, 2020 and 2019 was $10.9 million, $11.3 million and $8.4 million, respectively. 82 The changes in the gross amount of goodwill for the year s ended June 30, 202 1 and 2020 , were as follows (in thousands): Amount Balance as of June 30, 2019 $ 227,930 Foreign currency translation adjustment (243 ) Purchase price adjustment 305 Balance as of June 30, 2020 $ 227,992 Additions 33,230 Foreign currency translation adjustment 1,048 Balance as of June 30, 2021 $ 262,270 As of June 30, 2021, the estimated aggregate amortization expense for each of the five succeeding fiscal years and thereafter is as follows (in thousands): Year Ending June 30, Amount 2022 $ 13,237 2023 9,190 2024 7,707 2025 5,291 2026 3,111 2027 and thereafter 8,921 Total remaining amortization $ 47,457 Business Combinations DealCloud, Inc. On August 13, 2018, the Company acquired a 100% equity interest in DealCloud, Inc. (“DealCloud”), a cloud software company based in Charlotte, North Carolina which specializes in CRM and deal management for investment banking and private equity firms. The consideration for the acquisition consisted of cash of $123.3 million. The results of operations of DealCloud have been included in the Company’s consolidated statements of operations from the date of acquisition. The goodwill balance is primarily attributable to the expected revenue opportunities with the Company’s applications and services offerings, assets acquired and acquired workforce. Generally, the related amortization is not deductible for tax purposes. In connection with the acquisition of DealCloud, the Company incurred $1.4 million of transaction expenses, which are included in general and administrative expenses in the consolidated statements of operations for the year ended June 30, 2019. The following table summarizes the allocation of the consideration to the fair values of the assets acquired and liabilities assumed at the acquisition date (in thousands): Amount Cash paid $ 123,301 Goodwill $ 97,693 Trademarks and trade names 3,300 Core technology 18,500 Client relationships 9,300 Favorable lease agreement 190 Net liabilities acquired (inclusive of deferred tax liabilities of $6,804) (5,682 ) Total $ 123,301 83 gwabbit Inc. On March 27, 2019, the Company acquired a 100% equity interest in gwabbit, Inc. (“gwabbit”) for cash consideration of $8.0 million. The results of operations of gwabbit have been included in the Company’s consolidated statements of operations from the date of acquisition. The goodwill balance is primarily attributable to the expected revenue opportunities with the Company’s applications and services offerings, assets acquired and acquired workforce. Generally, the related amortization is not deductible for tax purposes. In association with the acquisition of gwabbit, the Company incurred $0.3 million of transaction expenses, which are included in general and administrative expenses in the consolidated statements of operations for the fiscal year ended June 30, 2019. The following table summarizes the allocation of the consideration to the fair values of the assets acquired and liabilities assumed at the acquisition date (in thousands): Amount Cash paid $ 7,954 Goodwill $ 6,874 Core technology 1,800 Client relationships 800 Net liabilities acquired (inclusive of deferred tax liabilities of $526) (1,520 ) Total $ 7,954 OnePlace Pte Ltd. On May 17, 2019, the Company acquired a 100% equity interest in OnePlace Holdings Pte. Ltd (“OnePlace”), a provider of cloud-based solutions for marketing and business development teams. The consideration for the acquisition consisted of cash of $62.5 million. The results of operations of OnePlace have been included in the Company’s consolidated statements of operations from the date of acquisition. The goodwill balance is primarily attributable to the expected revenue opportunities with the Company’s applications and services offerings, assets acquired and acquired workforce. Generally, the related amortization is not deductible for tax purposes. In association with the acquisition of OnePlace, the Company incurred $1.6 million of transaction expenses, which are included in general and administrative expenses in the consolidated statements of operations for the fiscal year ended June 30, 2019. The following table summarizes the allocation of the consideration to the fair values of the assets acquired and liabilities assumed at the acquisition date (in thousands): Amount Cash paid $ 62,474 Goodwill $ 52,562 Trademarks and tradenames 4,200 Core technology 7,100 Client relationships 3,900 Net liabilities acquired (inclusive of deferred tax liabilities of $2,584) (5,288 ) Total $ 62,474 84 Unaudited Pro Forma information The results of operations of the acquisitions of DealCloud, Gwabbit and OnePlace (the “Acquisitions”) have been included in our consolidated statements of operations from their acquisition dates. The following unaudited pro forma combined financial information presents the Company’s results for the year ended June 30, 2019 as if the Acquisitions had occurred as of July 1, 2018 (in thousands): Amount (As adjusted)* (unaudited) Pro forma revenues $ 151,389 Pro forma net loss $ (24,247 ) * As adjusted to reflect the impact of the full retrospective adoption of ASC 606. See Note 2 for a summary of adjustments. The pro forma results include the accounting effects resulting from the Acquisitions such as the amortization charges from acquired intangible assets, reversal of transaction costs and other payments directly related to the Acquisitions. The unaudited pro forma combined financial information presented does not purport to present what the actual results would have been had the Acquisitions actually occurred on July 1, 2018, nor is the information intended to project results for any future period. Repstor Ltd. On June 1, 2021, the Company acquired a 100% equity interest in Repstor, Limited (“Repstor”), a cloud software company based in Belfast, Northern Ireland that engages in the creation of Microsoft 365-based enterprise content management and team collaboration tools for the professional services industry. The total consideration for the acquisition was $47.6 million, which consisted of cash of $21.9 million paid on the acquisition date, a cash holdback of $2.1 million, and $23.6 million in the fair value of the contingent consideration based upon the achievement of certain performance measures. The cash holdback was placed into a separate account and included in restricted cash on the consolidated balance sheet as of June 30, 2021. The payments for contingent consideration are expected to be paid in cash in the third quarter of fiscal year 2022 and the first quarter of fiscal year 2023, if the performance measures are achieved. The results of operations of Repstor have been included in the Company’s consolidated statements of operations from the date of acquisition and were not material. The goodwill balance is primarily attributable to the expected revenue opportunities with the Company’s applications and services offerings, assets acquired and acquired workforce. Generally, the related amortization is not deductible for tax purposes. Acquisition-related transaction costs of $1.6 million, consisting primarily of third-party professional fees, were expensed as incurred and are included in general and administrative expenses in the Company’s consolidated statements of operations for the fiscal year ended June 30, 2021. The following table summarizes the allocation of the consideration to the fair values of the assets acquired and liabilities assumed at the acquisition date (in thousands): Amount Cash paid $ 21,925 Holdback 2,125 Fair value of contingent consideration 23,502 Total purchase consideration 47,552 Goodwill 33,230 Noncompete agreement 1,700 Core technology 5,800 Client relationships 8,900 Net liabilities acquired (inclusive of deferred tax liabilities of $3,544) (2,078 ) Total $ 47,552 85 Pro forma financial information related to this acquisition has not been presented as the effects of the acquisition described above were not material to the Company’s consolidated financial results. 5. Fair Value Measurement The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows : Level 1 —Inputs are unadjusted, quoted prices in active markets for identical, assets or liabilities at the measurement date; Level 2 —Inputs are quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; Level 3 —Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). The following tables set forth the Company’s financial liabilities that were measured at fair value on a recurring basis as of the dates indicated by level within the fair value hierarchy (in thousands): June 30, 2021 Level 1 Level 2 Level 3 Total Liabilities: Term loan $ — $ 273,000 $ — $ 273,000 Revolving credit facility — 5,000 — 5,000 Liability for contingent consideration, current and non-current portion — — 23,502 23,502 Total $ — $ 278,000 $ 23,502 $ 301,502 June 30, 2020 Level 1 Level 2 Level 3 Total Liabilities: Term loan $ — $ 273,000 $ — $ 273,000 Revolving credit facility — 10,000 — 10,000 Total $ — $ 283,000 $ — $ 283,000 Based upon Level 2 inputs and the borrowing rates available to the Company for loans with similar terms and consideration of the Company’s credit risk, the carrying value of the Company’s term loan and revolving credit facility approximate their fair value. In connection with the acquisition of Repstor, the Company recorded contingent consideration liabilities representing the amounts payable to former Repstor shareholders based upon the achievement of certain performance measures. The fair value of the contingent consideration was estimated using the Monte Carlo simulation with key assumptions used by management that include the estimated probability of occurrence and discount rates. Subsequent changes in the fair value of the contingent consideration liabilities, resulting from management’s revision of key assumptions and estimates, will be recorded in general and administrative expense in the consolidated statement of operations. The current and non-current portions of these liabilities of $11.0 million and $12.5 million, respectively, are included in other current liabilities and other liabilities on the consolidated balance sheet as of June 30, 2021. The changes in the fair value of contingent consideration liabilities during fiscal year ended June 30, 2021 were not material. Other financial instruments consist of accounts receivable, accounts payable and accrued expenses and other current liabilities. Accounts receivable, accounts payable and accrued liabilities are stated at their carrying value, which approximates fair value due to the short time to the expected receipt or payment. 86 6 . Property and equipment Property and equipment consist of the following (in thousands): June 30, 2021 2020 Computer equipment and software $ 1,751 $ 1,305 Capitalized software 6,843 4,409 Furniture and office equipment 2,189 1,148 Leasehold improvements 5,417 2,395 Construction in progress — 1,729 16,200 10,986 Less: accumulated depreciation and amortization (5,526 ) (2,814 ) $ 10,674 $ 8,172 The Company recorded $2.5 million, $1.4 million and $0.6 million in depreciation and amortization expense for the fiscal years ended June 30, 2021, 2020 and 2019, respectively. 7. Commitments and contingencies Operating Leases The Company leases the majority of its office space in the U.S., U.K. and Ukraine under noncancelable operating leases, which have various expiration dates through fiscal 2031. Minimum rent payments under operating leases are recognized on a straight-line basis over the term of the lease, including any periods of free rent and rent concessions. Total rent expense for the fiscal years ended June 30, 2021, 2020 and 2019 was $8.4 million, $7.8 million and $3.5 million, respectively. As of June 30, 2021, future minimum lease payments under noncancelable operating leases are as follows (in thousands): Year ending June 30, Amount 2022 $ 8,784 2023 7,280 2024 2,756 2025 1,921 2026 1,969 2027 and thereafter 8,748 Total future minimum lease payments $ 31,458 Software and Other In the ordinary course of business, the Company enters into commitments to purchase or subscribe to software that is required to conduct its business activities. Such commitments are due as follows (in thousands): Year Ending June 30, Amount 2022 $ 1,446 2023 753 2024 252 2025 153 Total future minimum payments $ 2,604 The Company also has commitments towards its cloud hosting service providers. As of June 30, 2021, the Company had $7.2 million remaining on these commitments, including $3.5 million to be fully paid by June 2022 and $3.7 million by August 2023. 87 Litigation In the ordinary course of business, the Company often includes standard indemnification provisions in its commercial arrangements. Pursuant to these provisions, the Company may be obligated to indemnify such parties for losses or claims suffered or incurred in connection with its products, services, breach of representations or covenants, intellectual property infringement or other claims made against such parties. It is not possible to determine the maximum potential amount under these indemnification obligations due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular arrangement. The Company has never incurred material amounts under these provisions. Accordingly, the Company has no liabilities recorded for the provisions as of June 30, 2021 and 2020. 8. Debt In September 2013, the Company obtained a revolving and term credit facility (as amended, the “credit agreement”) from a lender. The revolving credit facility, as amended, (the “revolving credit facility”) provides for a maximum of $5.0 million in available credit and the term loans, as amended, (the “term loans”) provide for borrowings of $65.0 million. The credit agreement allows for letters of credit not to exceed $0.1 million. Under the revolving credit facility, amounts drawn may be repaid and reborrowed at any time during the term of the agreement. The outstanding principal amount of the draws, together with any accrued and unpaid interest shall be due and payable on the maturity date or, if earlier, on the date on which they are declared due and payable pursuant to the credit agreement. The Company may prepay the term loans at any time with an applicable prepayment premium. Any principal amount of the term loans that is repaid or prepaid may not be reborrowed. The outstanding principal amount of the term loans, together with any accrued and unpaid interest, shall be due and payable on the maturity date or, if earlier, on the date on which they are declared due and payable pursuant to the agreement. In August 2018, the Company entered into an agreement to amend the above-mentioned credit agreement to increase the total borrowing capacity to $210.0 million, consisting of $200.0 million term loan and $10.0 million revolving line of credit. In March 2019, the Company drew down $8.0 million from the revolving credit facility. The $8.0 million was fully repaid in May 2019. Further, in May 2019, the Company entered into an agreement to amend the above-mentioned credit agreement to increase the total borrowing capacity to $283.0 million, consisting of $273.0 million term loan and $10.0 million revolving line of credit. The maturity date of the credit agreement is August 2023. The revolving credit facility and term loans bear a floating rate of interest, which the Company selects at the beginning of a period between (i) a LIBOR loan, for which the interest rate is calculated as the then-current LIBOR rate, with a floor of 1.00%, plus 7.25%, and (ii) an Index Loan, for which the interest rate is calculated as the then-current Wall Street Journal Prime rate, with a floor of 2.00%, plus 6.25%. The credit facility is collateralized by substantially all assets of the Company. The credit agreement contains certain restrictive covenants which, among other things, requires the Company to meet a defined financial ratio as well as maintain a specified minimum liquidity amount. The Company is in compliance with all of the covenants as of June 30, 2021 and 2020. As of June 30, 2019, the Company had borrowed $273.0 million under the term loan and this amount was outstanding as of June 30, 2021 and 2020. During the year ended June 30, 2020, the Company borrowed and repaid amounts against the revolving credit facility, borrowing a total of $15.0 million, of which $5.0 million was repaid, resulting in an outstanding balance of $10.0 million as of June 30, 2020. During the fiscal year ended June 30, 2021, the Company repaid an additional $5.0 million on the revolving credit facility, resulting in an outstanding balance of $5.0 million as of June 30, 2021. 88 The Company incurred $4.6 million in financing costs, in connection with the two amendments mentioned above that are deferred and amortized over the term of the credit agreement in interest expense using the effective interest method. Amortization expense recognized on deferred financing costs totaled $ 1.1 million , $1.2 million and $0.8 million for the fiscal years ended June 30, 20 2 1 , 2020 and 2019 , respectively, and is included in interest expense in the consolidated statements of operations. The components of debt are as follows (in thousands): June 30, 2021 2020 Outstanding term loan facility $ 273,000 $ 273,000 Outstanding revolving credit facility 5,000 10,000 Less: deferred financing costs (2,407 ) (3,542 ) Debt, net $ 275,593 $ 279,458 Debt-related interest expense for the fiscal years ended June 30, 2021, 2020 and 2019 was $23.5 million, $26.7 million and $19.2 million, respectively, net of amortization of financing costs, and $5.8 million and $6.6 million is accrued as interest payable on the outstanding term loans and revolving credit facility as of June 30, 2021 and 2020, respectively. The weighted average interest rate for the fiscal years ended June 30, 2021, 2020 and 2019 was 8.3%, 9.6% and 9.7%, respectively. In June 2021, the Company entered into a commitment letter with JPMorgan Chase Bank, N.A. (“JPMorgan) pursuant to which JPMorgan agreed to arrange a revolving credit facility in the aggregate amount of $100.0 million, of which JPMorgan committed to providing $50.0 million. However, the terms of our financing arrangements have not yet been determined, remain under discussion, and are subject to change, including as a function of market conditions. 9. Capital stock As of June 30, 2021 and June 30, 2020, the authorized capital of the Company consists of 65,000,000 and 60,000,000 shares of common stock, respectively, and 19,870,040 shares of convertible preferred stock, of which 1,846,154 are designated as Series A-1 convertible preferred stock and 18,023,886 are designated as Series A convertible preferred stock. All classes of the Company’s stock have a par value of $0.001 per share. In conjunction with the IPO that closed on July 2, 2021, all preferred stock converted into equivalent number of shares of common stock. See Note 15, Subsequent events , for additional details. In March 2019, the Company issued 250,000 shares of common stock at $12.00 per share. In October 2019, the Company issued 923,077 shares of Series A-1 convertible preferred stock for a total amount of $12.0 million to a single investor. Additionally, under this share purchase agreement, the investor agreed to purchase 1 share of Series A-1 convertible preferred stock for each share of common stock purchased by the Company under the tender program offered to its current and former employees up to a maximum of 923,077 shares at a price of $13.00 per share. All terms remained the same as existing Series A convertible preferred stock. In October 2019, the Company launched a tender offer to repurchase up to a maximum of 923,077 shares of common stock at a price of $12.00 per share from its current and former employees. Under this program employees owning shares or fully vested options as of the record date (September 9, 2019) of the tender offer were eligible to participate. The Company repurchased 348,981 shares, of which 184,251 were shares of common stock and 164,730 were fully vested options to purchase shares of common stock. Total consideration was $3.6 million, net of proceeds from the exercise of fully vested options and includes $0.9 million of stock-based compensation costs. In November 2019, the Company issued 348,981 shares of Series A-1 convertible preferred stock to the investor under the share purchase agreement. In July and August 2020, the Company issued 2,432,545 shares of common stock at $12.00 per share for total proceeds of $29.2 million to certain existing shareholders. Additionally, the Company repurchased 200,000 shares of the Company’s common stock from the Chief Financial Officer at a price of $12.00 per share for an aggregate purchase price of $2.4 million. In anticipation of this transaction, the Company also amended its certificate of incorporation to increase its authorized number of common shares to 65,000,000. 89 In February 2021, a director of the Company exercised his option to purchase 300,000 shares of the Company’s common stock prior to vesting for an aggregate price of approximately $4.4 million. As of June 3 0 , 2021, 150,000 shares were vested upon the pricing of the IPO on June 2 9 , 2021 and the remaining 150,000 shares will vest on the first anniversary of the IPO pricing date . There were 17,762,379 shares of Series A convertible preferred stock, 1,272,058 shares of Series A-1 convertible preferred stock and 29,444,577 shares of common stock outstanding as of June 30, 2021. Shares of common stock have been reserved as of June 30, 2021 and 2020 for the following: June 30, 2021 2020 Conversion of convertible preferred stock 19,034,437 19,034,437 Stock plans: Outstanding options 14,684,809 11,227,806 Performance stock units and restricted stock units 3,996,150 — Reserved for future grants 4,250,702 3,957,205 41,966,098 34,219,448 The holders of Series A and Series A-1 convertible preferred stock have various significant rights and preferences, as follows: Dividend provisions Holders of Series A and Series A-1 are entitled to receive cumulative dividends at the per-annum rate of 8%, which are payable when and if declared by the Board of Directors. The holders of convertible preferred stock are also entitled to participate in dividends on common stock, when and if declared by the Board of Directors, based on the number of shares of common stock that would be held on an as-if-converted basis. No dividends on convertible preferred stock or common stock have been declared from inception to date. Series A cumulative unpaid and undeclared dividends are $52.1 million and $38.0 million as of June 30, 2021 and 2020, respectively. Series A-1 cumulative unpaid and undeclared dividends are $2.4 million and $1.0 million as of June 30, 2021 and 2020, respectively. Liquidation preference In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, or a “Deemed Liquidation Event” (defined as a merger or consolidation involving the Company effecting a change of control or a sale of substantially all the assets of the Company), the liquidation preference is the greater of (i) $7.445675 per share for Series A and $13.00 per share for Series A-1 plus cumulative unpaid and undeclared dividends and (ii) such amount per share as would have been payable had all shares of preferred stock been converted into common stock prior to such liquidation, dissolution, winding up or Deemed Liquidation Event, prior to any distributions to the common shareholders. Upon completion of the above distribution, the remaining assets of the Company available for distribution to shareholders will be distributed among the holders of common stock pro rata based on the number of shares held by each such holder. Conversion rights Each share of convertible preferred stock is convertible, at the option of the holder, into such number of fully paid and nonassessable shares of common stock as is determined by dividing the original issuance price for a share by the conversion price at the time in effect for such share. Each share of Series A and Series A-1 would convert into common stock on a one-for-one basis. Each share of convertible preferred stock automatically converts into the number of shares of common stock into which such shares are convertible at the then- effective conversion ratio upon the closing of a public offering in which the implied valuation is at least $1 billion and resulting in gross proceeds of at least $100 million received by the Company, or upon the consent of the holders of a majority of convertible preferred stock. 90 At any time after April 27, 2021, certain significant investors shall have the right to cause the Company to initiate a “Sale Event,” which shall mean a) a transaction or a series of related transactions where an investor who is not one of these significant shareholders acquires more than 50% of the outstanding voting power of the Company, or b) a transaction that is or could be treated as a Deemed Liquidation Event (as defined above). Voting rights On any matter presented generally to the stockholders of the Company, the holder of each share of convertible preferred stock has voting rights equal to the number of shares of common stock into which it is convertible and votes together as one class with the common stock. Each share of common stock is entitled to one vote. With respect to the election of directors of the Company, the holders of the convertible preferred stock, voting together as a separate class, have the right to elect two directors and the holders of common stock, voting together as a separate class, have the right to elect three directors. Redemption The convertible preferred stock is not subject to redemption by the Company except in the event of a Deemed Liquidation Event (as defined above). The Series A and Series A-1 convertible preferred stock do not have a defined redemption date; therefore, the redemption value is not being accreted and is only disclosed on the face of the accompanying consolidated balance sheet. The Company classified the convertible preferred stock outside of stockholders’ deficit because, in the event of certain liquidation events that are not solely within its control, the shares would become redeemable at the option of the holders. The Company did not adjust the carrying values of the convertible preferred stock to the current redemption value of such shares since a liquidation event was not probable at any of the balance sheet dates. Subsequent adjustments to increase or decrease the carrying values to the ultimate redemption value will be made only if and when it becomes probable that such a liquidation event will occur. 10 . Stock plans and stock-based compensation Amended and Restated 2012 Stock Plan In December 2012, the Company’s Board of Directors adopted, and its stockholders approved, the 2012 Stock Option and Grant Plan (the “2012 Plan”), which was amended and restated in May 2021. The Company’s 2012 Plan allows for the grant of awards in the form of: (i) incentive stock options, (ii) non-qualified stock options; (iii) restricted stock awards; (iv) unrestricted stock awards, or any combination of the foregoing. Employees, non-employee directors, and consultants of the Company are eligible to participate in the 2012 Plan. Following the IPO, no further grants will be made under the 2012 Plan and shares remaining to be granted under the 2012 Plan were transferred to the 2021 Omnibus Incentive Plan. Options outstanding under the 2012 Plan will continue to be governed by their existing terms. 2021 Omnibus Incentive Plan In June 2021, the Company’s Board of Directors adopted, and its stockholders approved, the 2021 Omnibus Incentive Plan (the “2021 Plan”), which provides for the grant of restricted shares, restricted share units, performance shares, performance share units, deferred share units, share options and share appreciation rights. All employees, non-employee directors and selected third-party service providers of the Company and its subsidiaries and affiliates are eligible to participate in the 2021 Plan. The Company initially reserved 7,093,864 shares of common stock for issuance under the 2021 Plan. As of June 30, 2021, there were 2,783,706 shares remained available for future grant under the 2021 Plan. 91 Stock options Options granted under the above-described plans generally become exercisable ratably over a four-year period following the date of grant and expire 10 years from the date of grant. The exercise price of incentive stock options granted under the plans must be at least equal to 100% of the fair value of the Company’s common stock at the date of grant, as determined by the Board of Directors. The exercise price of incentive options granted to a stockholder holding at least 10% of the combined voting power of all classes of stock must be at least 110% of the fair value of the Company’s common stock at the date of grant, as determined by the Board of Directors. Stock option activity for grants under the stock plans during the fiscal years ended June 30, 2021 and 2020 was as follows: Number of options Weighted- average exercise price Weighted- average remaining contractual term (in years) Aggregate intrinsic value (in thousands) Balance as of June 30, 2019 10,774,672 $ 5.32 7.20 $ 11,406 Granted 1,673,760 9.01 Exercised (474,762 ) 3.66 Forfeited (745,864 ) 6.73 Balance as of June 30, 2020 11,227,806 $ 5.84 6.63 $ 42,108 Granted 6,655,303 15.24 Exercised (2,880,463 ) 5.45 Forfeited (317,837 ) 9.25 Balance as of June 30, 2021 14,684,809 $ 10.11 7.33 $ 262,762 Vested and exercisable as of June 30, 2021 8,996,805 $ 7.12 6.23 $ 187,821 Unvested and early exercised as of June 30, 2021 150,000 $ 14.77 Vested and expected to vest as of June 30, 2021 14,834,809 $ 10.15 7.36 $ 264,747 The weighted-average grant date fair value of options granted during the fiscal years ended June 30, 2021, 2020 and 2019 was $6.43, $3.50 and $1.56, respectively. The total intrinsic value of options exercised during the fiscal years ended June 30, 2021, 2020 and 2019 was $36.4 million, $2.6 million and $0.8 million, respectively. During the fiscal years ended June 30, 2021, 2020 and 2019, the proceeds from option exercises totaled $15.7 million, $1.7 million and $2.9 million, respectively. The proceeds from option exercises during the fiscal year ended June 30, 2021 includes $4.4 million for 300,000 options that were exercised for shares of common stock prior to vesting and the proceeds were classified as other current liabilities on the consolidated balance sheet. Upon the effectiveness of the Company’s initial public offering on June 29, 2021, 150,000 shares vested and $2.2 million was reclassified from other current liabilities into additional paid-in-capital. The remaining $2.2 million is recorded as other current liabilities on the consolidated balance sheet as of June 30, 2021 and will be reclassified into additional paid-in-capital as the shares vest. During the fiscal year ended June 30, 2021, the Company granted 3,586,644 options with vesting terms based on continued service and meeting certain recurring annual contract value targets. The fair value of these options is recognized as compensation expense over the requisite service period using the accelerated attribution method as achievement of the performance condition is considered probable. During the fiscal year ended June 30, 2021, the Company granted a non-employee director 300,000 options with vesting terms based on continued service and completion of pricing of company stock relating to an initial public offering or a change of control of the Company occurring prior to May 31, 2022. The aggregate fair value of these options on the grant date was $1.8 million. Upon pricing of the Company shares on June 29, 2021 in connection with the IPO, $1.2 million was recognized as stock-based compensation expense. The remaining compensation cost will be recognized over the remaining service period. 92 Performance stock units and restricted stock units On June 29, 2021, upon the effectiveness of the IPO, the Company granted 3,950,000 shares of performance stock units to certain employees, which vest quarterly over a four-year period based on continued service and meeting certain annual recurring revenue targets. The fair value of these awards is based on the IPO price of $26.00 and is recognized as compensation expense over the requisite service period, using the accelerated attribution method as achievement of the performance condition is considered probable. If the performance targets are not achieved at the end of the performance period, any previously recognized compensation expense will be reversed. As of June 30, 2021, all these awards were outstanding with an aggregated intrinsic value of $110.6 million. On June 29, 2021, the Company granted 46,150 shares of restricted stock units to certain of our service providers and non-employee directors, which vest over one to three years based on continued service. The fair value of these awards is based on the IPO price of $26.00 per share and is recognized as compensation expense over the requisite service period. As of June 30, 2021, all these awards were outstanding with an aggregated intrinsic value of $1.3 million. Employee stock purchase plans In June 2021, the Board of Directors adopted and shareholders approved the 2021 Employee Stock Purchase Plan ("ESPP"), which became effective as of the effective date of the Company’s Registration Statement on Form S-1. The ESPP initially reserved 1,466,996 shares of our common stock for future issuance to participating employees. The first offering (“Initial Offering”) is expected to begin on December 1, 2021 and end on November 30, 2023. Eligible employees may purchase the Company’s common stock at a price equal to 85% of the lower of the fair market value of the Company’s common stock on the offering date or the purchase date. Stock-based compensation expense Total stock-based compensation from stock-based awards during the fiscal years ended June 30, 2021, 2020 and 2019 included in the consolidated statements of operations is $18.1 million, $3.3 million and $2.9 million, respectively. During the fiscal year ended June 30, 2021 and 2020, the Company also recognized additional stock-based compensation expense of $0.5 million and $0.8 million, respectively, relating to the buy-back of shares of common stock and fully vested options, which represents the excess between the repurchase price and the fair value of common stock and fully vested options at the date of repurchase. The Company recorded stock-based compensation expense in the consolidated statements of operations as follows (in thousands): Year ended June 30, 2021 2020 2019 Cost of revenues Cost of SaaS and support $ 250 $ 203 $ 76 Cost of professional services 878 439 117 Research and development 4,054 1,145 560 Sales and marketing 6,791 1,037 592 General and administrative 6,593 1,315 1,576 Total stock-based compensation $ 18,566 $ 4,139 $ 2,921 As of June 30, 2021, there was approximately $133.8 million of unrecognized compensation cost related to unvested stock-based awards granted, which is expected to be recognized over the weighted-average period of approximately 2.6 years. 93 The calculated fair value of stock option grants was estimated using the Black-Scholes option pricing model with the following weighted-average assumptions: Year ended June 30, 2021 2020 2019 Expected dividend yield 0 % 0 % 0 % Risk-free interest rate 1 % 2 % 3 % Expected volatility 38 % 34 % 38 % Expected life (in years) 6 6 6 11. Restructuring In April 2020, the Company undertook a re-organization and restructuring plan. The restructuring involved the organizational integration of the DealCloud acquisition and COVID-19-related headcount reductions across all functions. The Company recorded $3.7 million of restructuring charges during the fiscal year ended June 30, 2020 related to severance payments and termination benefits. The restructuring was completed as of June 30, 2020. As of June 30, 2020, the total liabilities related to the restructuring plan were $2.4 million. As of June 30, 2021, there were no remaining restructuring accruals associated with this plan. The following table presents activity for the restructuring plan during the years ended June 30, 2021 and 2020 (in thousands): Amount Balance—July 1, 2019 $ — Restructuring charges 3,659 Cash payments (1,281 ) Balance—June 30, 2020 $ 2,378 Cash payments (2,246 ) Release of accrual (132 ) Balance—June 30, 2021 $ — 12. Income Taxes The components of loss before income taxes is as follows (in thousands): Year ended June 30, 2021 2020 (As adjusted)* 2019 (As adjusted)* U.S. $ (48,063 ) $ (47,645 ) $ (23,960 ) Foreign 1,771 2,083 (985 ) $ (46,292 ) $ (45,562 ) $ (24,945 ) * As adjusted to reflect the impact of the full retrospective adoption of ASC 606. See Note 2 for a summary of adjustments. 94 The income tax (benefit)/expense consists of the following (in thousands): Year ended June 30, 2021 2020 2019 Current Federal $ 11 $ — $ (10 ) State 117 18 79 Foreign 798 628 141 926 646 210 Deferred Federal — — (7,238 ) State 17 (195 ) (638 ) Foreign (471 ) (98 ) (140 ) (454 ) (293 ) (8,016 ) Income tax (benefit)/expense $ 472 $ 353 $ (7,806 ) The income tax (benefit)/expense differs from the amount computed by applying the statutory federal income tax rate as follows (in thousands): Year ended June 30, 2021 2020 (As adjusted)* 2019 (As adjusted)* Federal tax (benefit)/expense: At statutory rate $ (9,721 ) $ (9,568 ) $ (5,239 ) Nondeductible acquisition costs — — 2 State tax (net of federal benefit) 329 30 53 Research credits (358 ) (1,098 ) (628 ) Stock-based compensation (314 ) — — Transaction costs 1,169 — — Change in valuation allowance 9,360 10,921 (2,437 ) Other 7 68 443 $ 472 $ 353 $ (7,806 ) * As adjusted to reflect the impact of the full retrospective adoption of ASC 606. See Note 2 for a summary of adjustments. 95 Deferred tax assets and liabilities are as follows (in thousands): June 30, 2021 2020 (As adjusted)* Deferred tax assets Nondeductible accrued expenses $ 1,779 $ 1,927 Net operating loss carryforwards 17,869 18,064 Research and development credit 5,850 5,476 Stock-based compensation 3,046 1,044 Interest carryforwards 16,781 11,287 Deferred revenue, net 930 587 Other 264 464 Valuation allowance (31,869 ) (20,723 ) Total deferred tax assets 14,650 18,126 Deferred tax liabilities Revenue recognition (4,553 ) (6,580 ) Deferred sales commissions (2,781 ) (3,065 ) Fixed assets (1,030 ) (724 ) Purchased intangibles (11,991 ) (10,373 ) Total deferred tax liabilities (20,355 ) (20,742 ) Net deferred tax liabilities $ (5,705 ) $ (2,616 ) * As adjusted to reflect the impact of the full retrospective adoption of ASC 606. See Note 2 for a summary of adjustments. The Company adopted ASC 606 effective July 1, 2020 using the full retrospective method of adoption and recorded an increase of $8.8 million in deferred tax liabilities related to deferred revenue and an increase of $1.0 million in deferred tax liabilities related to deferred commissions as of June 30, 2019, which was fully offset by a decrease in the valuation allowance. The Company recorded a decrease of $0.7 million in deferred tax assets and an increase in deferred tax liabilities of $6.6 million related to deferred revenue and an increase of $1.1 million in deferred tax liabilities related to deferred commissions as of June 30, 2020, which was fully offset by a decrease in the valuation allowance. As of June 30, 2021, the Company has federal, California and other state net operating loss carryforwards of approximately $70.1 million, $22.0 million and $20.9 million, respectively, which expire beginning in the year 2031 for federal and 2029 for California. As of June 30, 2021, the Company has federal and state research credits carryforwards of approximately $5.2 million and $4.1 million, respectively, expiring beginning in 2027 for federal. The state credits can be carried forward indefinitely. Federal and state tax laws impose substantial restrictions on the utilization, for tax purposes, of net operating loss and credit carryforwards in the event of an ownership change as defined in Section 382 of the Internal Revenue Code. Accordingly, the Company’s ability to utilize these carryforwards may be limited as a result of such ownership change. The limitation resulted in an immaterial amount of tax attribute carryforwards that will expire before utilization. In assessing the need for a valuation allowance, the Company considered all available evidence both positive and negative, including historical levels of income, legislative developments, expectations and risks associated with estimates of future taxable income, and prudent and feasible tax planning strategies. As a result of this analysis as of June 30, 2021 and 2020, the Company has determined that it is more likely than not that it will not realize the benefits of its deferred tax assets due to continuing losses and therefore has recorded a valuation allowance of $31.9 million and $20.7 million, respectively, to reduce the carrying value of its deferred tax assets. 96 As of June 30, 2021, the Company has accumulated undistributed earnings generated by foreign subsidiaries of approximately $ 1.6 million. The Company intends, however, to indefinitely reinvest these earnings and expect s future U.S. cash generation to be sufficient to meet future U.S. cash needs. The Company has not recognized deferred taxes related to the federal and state income taxes and foreign withholding taxes on the undistributed earnings of foreign subsidiaries indefinitely reinvested outside the United States. It is the Company’s policy to recognize interest and penalties related to income tax matters in income tax expense. As of June 30, 2021 and 2020, the Company had no accrued interest and penalties related to uncertain tax positions. The Company does not anticipate any significant increases or decreases to its unrecognized tax benefits in the next 12 months. There is no applicable lapse of the statute of limitations in the next 12 months. The Company files income tax returns in the U.S. federal jurisdiction, various state jurisdictions and various foreign jurisdictions. In the normal course of business, the Company is subject to examination by taxing authorities. The Company is not currently under audit by the Internal Revenue Service or other similar tax authorities. Our tax returns remain open to examination as follows: U.S. federal and states, all tax years; and significant foreign jurisdictions, generally 2017 through 2020 . The following table summarizes the activity related to the Company’s unrecognized tax benefits (in thousands): June 30, 2021 2020 2019 Beginning of the year, unrecognized tax benefits $ 2,783 $ 2,082 $ 1,625 Decreases, prior year tax positions (453 ) — (10 ) Increases, current year tax positions 640 701 467 End of the year, unrecognized tax benefits $ 2,970 $ 2,783 $ 2,082 As of June 30, 2021, 2020 and 2019, unrecognized tax benefits approximated $3.0 million, $2.8 million and $2.1 million, respectively, of which none of the tax benefits would affect the effective tax rate if recognized. There are no interest and penalties accrued as of June 30, 2021. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted. The CARES Act was signed into law with the intention of providing economic relief to address the effects of the COVID-19 pandemic in the United States, which had several changes to corporate income tax law. Significant changes were made to the net operating loss carryforward and carryback rules, business interest expense limitation rules under section 163(j) and other provisions. No provisions of the CARES Act are expected to have a material impact to the Company’s income tax provision for the fiscal years ended June 30, 2021 or 2020. The Company will keep monitoring the impact that the COVID-19 pandemic and/or the CARES Act will have on the Company and reflect any tax effects in the corresponding periods. 97 13. Net loss per share The following table sets forth the computation of basic and diluted net loss per share for the periods indicated (in thousands, except per share data): Year ended June 30, 2021 2020 (As adjusted)* 2019 (As adjusted)* Numerator Net loss $ (46,764 ) $ (45,915 ) $ (17,139 ) Less: cumulative dividends allocated to preferred stockholders (15,584 ) (14,048 ) (12,044 ) Net loss attributable to common stockholders $ (62,348 ) $ (59,963 ) $ (29,183 ) Denominator Weighted-average shares used to compute net loss per share attributable to common stockholders, basic and diluted 27,950 24,109 23,339 Net loss per share attributable to common stockholders Basic and diluted $ (2.23 ) $ (2.49 ) $ (1.25 ) * As adjusted to reflect the impact of the full retrospective adoption of ASC 606. See Note 2 for a summary of adjustments. Basic net loss per share is the same as diluted net loss per share because the Company reported net losses for all periods presented. The Company excluded the following potential shares of common stock from the calculation of diluted net loss per share attributable to common stockholders because these would be anti-dilutive: As of June 30, 2021 2020 2019 Convertible preferred stock (on an if-converted basis) 19,034,437 19,034,437 17,762,379 Stock options to purchase common stock 14,684,809 11,227,806 10,774,672 Unvested stock options exercised early 150,000 — — Performance stock units and restricted stock units 3,996,150 — — Total 37,865,396 30,262,243 28,537,051 14. Employee benefit plans On December 22, 2012, the Company adopted a 401(k) plan (the 401(k) Plan) for all U.S. employees who have met certain eligibility requirements. Under the 401(k) Plan, employees may elect to contribute up to 100% of their eligible compensation, subject to certain limitations. The Company may make discretionary and matching contributions to the 401(k) Plan each year for the preceding calendar year. The Company incurred matching expenses of $2.4 million, $2.2 million and $1.4 million for the fiscal years ended June 30, 2021, 2020 and 2019, respectively. The Company also offers group pension plans for all U.K. and Australian employees who have met certain eligibility requirements. The Company makes matching contributions to the group pension plans each month. The Company incurred matching expenses of $0.9 million, $0.7 million and $0.5 million for the fiscal years ended June 30, 2021, 2020 and 2019, respectively. 15. Subsequent events On July 2, 2021, immediately prior to the closing of the IPO, the Company’s amended and restated Certificate of Incorporation became effective, pursuant to which our authorized capital stock was increased to 700 million shares of common stock and 50 million shares of preferred stock. The rights and preferences of the Series A and Series A-1 convertible preferred stock described in Note 9, Capital Stock, were removed pursuant to the amendment of organizational documents relating to the IPO. On July 2, 2021, the Company completed its IPO and sold 10,500,000 shares of its common stock at a public offering price of $26.00 per share. The net proceeds to the Company were $245.2 million, after deducting the underwriters’ discounts and offering expenses payable by the Company. 98 On July 2, 2021, upon the closing of the IPO, all outstanding shares of Series A and Series A-1 convertible preferred stock were automatically converted into 19,034,437 shares of the Company’s common stock on a one-for-one basis. On July 8, 2021, the underwriters of the Company’s IPO exercised in full their right to purchase an additional 1,575,000 shares of common stock at the public offering price of $26.00 per share. The net proceeds to the Company were $38.2 million, after deducting the underwriters’ discounts. On July 12, 2021, the Company repaid the outstanding $273.0 million borrowing under the term loan and $5.0 million borrowing under the revolving credit facility from the proceeds of the IPO. As a result, the Company will recognize a loss on extinguishment of debt of $2.4 million on this date for the unamortized financing costs related to the term loan. Item 9. Changes in and Disagreements w ith Acco untants on Accounting and Financial Disclosure None.