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 (PCAOB ID No. 34 ) 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’ Equity (Deficit) 67 Consolidated Statements of Cash Flows 68 Notes to Consolidated Financial Statements 70 62 Table of Contents 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, 2022 and 2021, the related consolidated statements of operations, comprehensive loss, convertible preferred stock and stockholders' equity (deficit), and cash flows, for each of the three years in the period ended June 30, 2022, 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, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2022, in conformity with accounting principles generally accepted in the United States of America. 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 9, 2022 We have served as the Company's auditor since 2018. 63 Table of Contents INTAPP, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) June 30, 2022 June 30, 2021 Assets Current assets: Cash and cash equivalents $ 50,783 $ 37,636 Restricted cash 3,528 3,827 Accounts receivable, net of allowance for doubtful accounts of $ 918 and $ 764 as of June 30, 2022 and 2021, respectively 66,947 48,573 Unbilled receivables, net 6,763 6,840 Other receivables, net 3,199 858 Prepaid expenses 5,984 9,591 Deferred commissions, current 10,187 6,551 Total current assets 147,391 113,876 Property and equipment, net 12,283 10,674 Goodwill 269,103 262,270 Intangible assets, net 48,430 52,349 Deferred commissions, noncurrent 14,755 10,414 Other assets 2,451 10,244 Total assets $ 494,413 $ 459,827 Liabilities, Convertible Preferred Stock and Stockholders’ Equity (Deficit) Current liabilities: Accounts payable $ 4,220 $ 2,198 Accrued compensation 40,004 29,218 Accrued expenses 8,774 9,953 Deferred revenue, net 142,768 107,893 Other current liabilities 27,753 22,621 Total current liabilities 223,519 171,883 Deferred tax liabilities 2,099 5,705 Deferred revenue, noncurrent 2,712 1,908 Other liabilities 10,201 18,170 Debt, net — 275,593 Total liabilities 238,531 473,259 Commitments and contingencies (Note 8) Convertible preferred stock, $ 0.001 par value per share, zero and 19,870,040 shares authorized as of June 30, 2022 and 2021, respectively; zero and 19,034,437 shares issued and outstanding as of June 30, 2022 and 2021, respectively; liquidation preference of $ 0 and $ 203,340 as of June 30, 2022 and 2021, respectively — 144,148 Stockholders’ equity (deficit): Preferred stock, $ 0.001 par value per share, 50,000,000 and zero shares authorized as of June 30, 2022 and 2021, respectively; no shares issued or outstanding as of June 30, 2022 and 2021 — — Common stock, $ 0.001 par value per share, 700,000,000 and 65,000,000 shares authorized as of June 30, 2022 and 2021, respectively; 62,739,497 and 29,444,577 shares issued and outstanding as of June 30, 2022 and 2021, respectively 63 29 Additional paid-in capital 643,227 128,943 Accumulated other comprehensive loss ( 1,672 ) ( 494 ) Accumulated deficit ( 385,736 ) ( 286,058 ) Total stockholders’ equity (deficit) 255,882 ( 157,580 ) Total liabilities, convertible preferred stock and stockholders’ equity (deficit) $ 494,413 $ 459,827 See accompanying notes to consolidated financial statements. 64 Table of Contents INTAPP, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) Year Ended June 30, 2022 2021 2020 Revenues SaaS and support $ 192,980 $ 144,075 $ 114,125 Subscription license 44,202 45,963 48,427 Total recurring revenues 237,182 190,038 162,552 Professional services 34,889 24,595 24,300 Total revenues 272,071 214,633 186,852 Cost of revenues SaaS and support 51,177 40,644 37,677 Total cost of recurring revenues 51,177 40,644 37,677 Professional services 47,906 33,730 32,847 Restructuring — — 765 Total cost of revenues 99,083 74,374 71,289 Gross profit 172,988 140,259 115,563 Operating expenses: Research and development 74,412 50,853 42,090 Sales and marketing 111,905 69,948 58,898 General and administrative 86,127 42,418 28,491 Restructuring — — 2,894 Total operating expenses 272,444 163,219 132,373 Operating loss ( 99,456 ) ( 22,960 ) ( 16,810 ) Loss on debt extinguishment ( 2,407 ) — — Interest expense ( 274 ) ( 24,608 ) ( 27,856 ) Other income (expense), net ( 976 ) 1,276 ( 896 ) Net loss before income taxes ( 103,113 ) ( 46,292 ) ( 45,562 ) Income tax benefit (expense) 3,435 ( 472 ) ( 353 ) Net loss ( 99,678 ) ( 46,764 ) ( 45,915 ) Less: cumulative dividends allocated to preferred stockholders — ( 15,584 ) ( 14,048 ) Net loss attributable to common stockholders $ ( 99,678 ) $ ( 62,348 ) $ ( 59,963 ) Net loss per share attributable to common stockholders, basic and diluted $ ( 1.63 ) $ ( 2.23 ) $ ( 2.49 ) Weighted-average shares used to compute net loss per share attributable to common stockholders, basic and diluted 61,267 27,950 24,109 See accompanying notes to consolidated financial statements. 65 Table of Contents INTAPP, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (in thousands) Year Ended June 30, 2022 2021 2020 Net loss $ ( 99,678 ) $ ( 46,764 ) $ ( 45,915 ) Other comprehensive income (loss): Foreign currency translation adjustments ( 1,178 ) 1,173 ( 328 ) Other comprehensive income (loss) ( 1,178 ) 1,173 ( 328 ) Comprehensive loss $ ( 100,856 ) $ ( 45,591 ) $ ( 46,243 ) See accompanying notes to consolidated financial statements. 66 Table of Contents INTAPP, INC. CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) (in thousands, except share data) Convertible Preferred Stock Common Stock Additional Paid-in Accumulated Other Comprehensive Accumulated Total Stockholders' Shares Amount Shares Amount Capital Loss Deficit Equity (Deficit) 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 ) Conversion of convertible preferred stock to common stock upon initial public offering ( 19,034,437 ) ( 144,148 ) 19,034,437 19 144,129 — — 144,148 Issuance of common stock upon initial public offering, net of offering costs of $ 9,767 — — 12,075,000 12 282,979 — — 282,991 Issuance of common stock upon exercise of stock options — — 1,565,043 2 10,209 — — 10,211 Vesting of early exercised stock options — — — — 2,214 — — 2,214 Vesting of performance stock units and restricted stock units, net of shares withheld for taxes — — 551,568 1 ( 3,924 ) — — ( 3,923 ) Issuance of common stock under employee stock purchase plan — — 68,872 — 1,163 — — 1,163 Stock-based compensation — — — — 77,514 — — 77,514 Foreign currency translation adjustments — — — — — ( 1,178 ) — ( 1,178 ) Net loss — — — — — — ( 99,678 ) ( 99,678 ) Balance as of June 30, 2022 — $ — 62,739,497 $ 63 $ 643,227 $ ( 1,672 ) $ ( 385,736 ) $ 255,882 See accompanying notes to consolidated financial statements. 67 Table of Contents INTAPP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Year Ended June 30, 2022 2021 2020 Cash Flows from Operating Activities: Net loss $ ( 99,678 ) $ ( 46,764 ) $ ( 45,915 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 16,742 13,365 12,767 Amortization of deferred financing costs 114 1,135 1,140 Provision for doubtful accounts 541 424 974 Stock-based compensation 77,514 18,061 3,256 Loss on debt extinguishment 2,407 — — Change in fair value of contingent consideration, including unrealized foreign exchange gain ( 2,776 ) — — Payment of contingent consideration in excess of acquisition date fair value ( 279 ) — — Deferred income taxes ( 4,237 ) ( 455 ) ( 294 ) Other 32 20 — Changes in operating assets and liabilities, net of business combinations: Accounts receivable ( 18,205 ) ( 26,042 ) 7,744 Unbilled receivables, current 1,347 1,738 ( 3,805 ) Prepaid expenses and other assets 905 ( 4,672 ) 393 Deferred commissions ( 7,977 ) ( 3,888 ) ( 3,403 ) Accounts payable and accrued liabilities 15,589 10,680 ( 1,281 ) Deferred revenue, net 35,345 28,787 17,975 Other liabilities ( 3,148 ) ( 2,138 ) 9,039 Net cash provided by (used in) operating activities 14,236 ( 9,749 ) ( 1,410 ) Cash Flows from Investing Activities: Purchases of property and equipment ( 554 ) ( 2,473 ) ( 2,638 ) Capitalized internal-use software costs ( 4,233 ) ( 2,526 ) ( 2,496 ) Business combinations, net of cash acquired ( 2,500 ) ( 20,605 ) — Net cash used in investing activities ( 7,287 ) ( 25,604 ) ( 5,134 ) Cash Flows from Financing Activities: Proceeds from borrowings — — 15,000 Payments on borrowings ( 278,000 ) ( 5,000 ) ( 5,000 ) Shareholder contribution — — 1,820 Proceeds from initial public offering, net of underwriting discounts 292,758 — — Payments for deferred offering costs ( 4,358 ) ( 5,410 ) — Proceeds from common stock issuance — 29,020 — Proceeds from issuance of convertible preferred stock, net of issuance costs — — 16,456 Proceeds from stock option exercises 10,211 15,686 1,736 Proceeds from employee stock purchase plan 1,163 — — Payments related to tax withholding for vested equity awards ( 3,923 ) — — Payments of deferred financing costs ( 769 ) — — Payments of contingent consideration ( 10,435 ) — — Repurchase of shares and fully vested options — ( 1,892 ) ( 2,766 ) Net cash provided by financing activities 6,647 32,404 27,246 Effect of foreign currency exchange rate changes on cash and cash equivalents ( 748 ) 1,253 ( 161 ) Net increase (decrease) in cash, cash equivalents and restricted cash 12,848 ( 1,696 ) 20,541 Cash, cash equivalents and restricted cash - beginning of period 41,463 43,159 22,618 Cash, cash equivalents and restricted cash - end of period $ 54,311 $ 41,463 $ 43,159 Reconciliation of cash, cash equivalents and restricted cash to the consolidated balance sheets: Cash and cash equivalents $ 50,783 $ 37,636 $ 42,052 Restricted cash 3,528 3,827 1,107 Total cash, cash equivalents and restricted cash $ 54,311 $ 41,463 $ 43,159 68 Table of Contents Supplemental Disclosures of Cash Flow Information: Cash paid for interest $ 5,950 $ 24,139 $ 22,143 Cash paid for income taxes $ 864 $ 522 $ 182 Non-cash investing and financing activities: Purchases of property and equipment in accounts payable and accrued liabilities $ 28 $ — $ — Deferred offering costs in accounts payable and accrued liabilities $ — $ 3,990 $ — Conversion of convertible preferred stock to common stock upon initial public offering $ 144,148 $ — $ — Vesting of early exercised stock options $ 2,214 $ — $ — Deferred consideration in other liabilities $ 10,390 $ — $ — Acquisition holdbacks in other liabilities $ 1,500 $ 2,126 $ — Fair value of contingent consideration in accrued and other liabilities $ 4,126 $ 23,502 $ — Business combinations, net of cash acquired: Cash paid $ 2,500 $ 21,925 $ — Cash acquired — ( 1,320 ) — Total consideration $ 2,500 $ 20,605 $ — See accompanying notes to consolidated financial statements. 69 Table of Contents Intapp, Inc. Notes to Consolidated Financial Statements Note 1. Description of Business Intapp, Inc. (“Intapp” or the “Company”), 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. The Company is a leading provider of industry-specific, cloud-based software solutions for the global professional and financial services industry. 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 $ 244.8 million after deducting underwriting discounts of $ 18.4 million and offering costs of $ 9.8 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. Prior to the IPO, deferred offering costs, which primarily consist of direct incremental legal and accounting fees relating to the IPO, were capitalized and recorded in other assets on the consolidated balance sheet as of June 30, 2021. Upon the consummation of the IPO, these costs were reclassified into additional paid-in capital as a reduction of the net proceeds received from the IPO. Note 2. Summary of Significant 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; allowance for doubtful accounts; the depreciable lives of long-lived assets including intangible assets; the expected useful life of deferred commissions; the fair value of stock-based awards; the fair value of assets acquired and liabilities assumed in business combinations; goodwill and long-lived assets impairment assessment; the fair value of contingent consideration liabilities; valuation allowances 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. 70 Table of Contents 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 is 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 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; 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 71 Table of Contents 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 in other current liabilities 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. 72 Table of Contents 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. 73 Table of Contents • 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 up to 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, 2022 and 2021. 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. Advertising Costs Advertising costs are expensed as incurred. Advertising expense was $ 1.3 million for the fiscal year ended June 30, 2022 and was not significant for each of the fiscal years ended June 30, 2021 and 2020. 74 Table of Contents 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 stock option awards and stock purchase rights under the Employee Stock Purchase Plan (ESPP) 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 for stock option awards and restricted stock units is recognized in the consolidated statements of operations 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 . The Company recognizes compensation expense related to ESPP over the respective offering period, which is 18 to 24 months . 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-based stock units that vest based upon continued service through the vesting term and achievement of certain annual recurring revenues and annual contract value 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-based 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. Compensation expense for awards that contain performance conditions is calculated using the graded vesting method and the portion of expense recognized in any period may fluctuate depending on changing estimates of the achievement of the performance conditions. Restricted Cash Restricted cash represents amounts held as collateral under certain facility lease agreements and amounts held back related to a business combination. 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. Changes in the allowance for doubtful accounts are recorded as general and administrative expense in the consolidated statements of operations and were not significant for any of the periods presented. 75 Table of Contents Property and Equipment Property and equipment are stated at cost, less accumulated depreciation and amortization. Construction-in-progress primarily consists of the construction or development of property and equipment 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 two to seven 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 Internal-Use Software 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. Once the products are available for general release, capitalized costs are amortized to cost of revenue on a straight-line basis over its estimated useful life, which is generally four years . Capitalized internal-use software development costs are recorded in property and equipment on the Company’s consolidated balance sheets. 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 at least annually during the fourth quarter or whenever events or changes in circumstances indicate that 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 performs a quantitative assessment to determine whether a goodwill impairment shall be recognized. If, as a result of its quantitative assessment, the carrying amount of the reporting unit is more than its fair value, an impairment charge in the amount of such excess is recorded to goodwill. 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, non-compete agreements, trademarks and trade names, core technology and backlog. 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 Non-compete agreements 4 – 5 years Trademarks and trade names 5 years to indefinite Core technology 4 to 5 years Backlog 2 years Impairment Assessment of Long-lived Assets The Company reviews long-lived assets, which include property 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. 76 Table of Contents 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. 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. 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 reflected in stockholders’ equity (deficit) as a component of accumulated other comprehensive loss. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are recorded as foreign currency transaction adjustments within other income (expense) in the consolidated statements of operations. Accumulated Other Comprehensive Loss Accumulated other comprehensive loss, which is reported in the accompanying consolidated statements of stockholders’ equity (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”). 77 Table of Contents No client individually accounted for 10% or more of the Company’s revenues for the fiscal years ended June 30, 2022, 2021 and 2020. As of June 30, 2022 and 2021, one client individually accounted for 20 % and 25 % of the Company’s total accounts receivable, respectively. 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 more likely than not of not being sustained if challenged. Changes in facts and circumstances could result in material changes to the amounts recorded for such tax contingencies. 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 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 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. 78 Table of Contents Recently A dopted A ccounting P ronouncements In October 2021, the FASB issued Accounting Standards Update (“ASU”) No. 2021-08, Business Combinations (ASC 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires contract assets and contract liabilities (i.e., unearned revenue) acquired in a business combination to be recognized and measured in accordance with ASC 606. Before the adoption of this standard, the Company recognized contract assets and contract liabilities at the acquisition date based on fair value estimates, which historically has resulted in a reduction to unearned revenue on the balance sheet. ASU 2021-08 is effective for emerging growth companies following private company adoption dates in fiscal years beginning after December 15, 2023, and for interim periods within those fiscal years, and early adoption is permitted. The Company early adopted this standard in the fourth quarter of fiscal year 2022. The adoption did not have a material impact to its consolidated financial statements. Accounting Pronouncements Not Yet Adopted In February 2016, the FASB issued ASU No. 2016-02, Leases (ASC 842) . The guidance requires lessees to put most leases on their balance sheets but recognize the expenses in 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 on July 1, 2022. The Company intends to adopt this standard using the modified retrospective approach in which the Company is not required to restate the comparative prior periods. The Company expects to recognize total right-of-use assets in the range of $ 20.0 million to $ 22.0 million, with corresponding operating lease liabilities in the range of $ 23.0 million to $ 26.0 million on the consolidated balance sheet upon the adoption of the standard. The right-of-use assets are net of adjustments in the range of $ 3.0 million to $ 4.0 million consisting of prepayments, deferred rent and accrued lease incentives related to its operating leases as of the effective date. 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 the Company beginning July 1, 2023. The Company is evaluating the impact of this ASU on its financial statements. 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 beginning July 1, 2022. The Company does not expect that the adoption of the new standard will have a material impact on the consolidated financial statements. Note 3. Revenues Disaggregation of Revenues Revenues by geography were as follows (in thousands): Year Ended June 30, 2022 2021 2020 United States $ 188,971 $ 151,261 $ 135,269 United Kingdom 45,025 37,449 32,890 Rest of the world 38,075 25,923 18,693 Total $ 272,071 $ 214,633 $ 186,852 No country other than those listed above accounted for 10% or more of the Company’s revenues during the fiscal years ended June 30, 2022, 2021 and 2020. 79 Table of Contents Client Contract — Related Balance Sheet Amounts Deferred Commissions The following table summarizes the activity of deferred commissions (in thousands): Year Ended June 30, 2022 2021 Beginning balance $ 16,965 $ 13,077 Additions 16,929 9,862 Recognition of deferred commissions ( 8,952 ) ( 5,974 ) Ending balance $ 24,942 $ 16,965 Contract Balances The Company’s contract assets and liabilities were as follows (in thousands): June 30, 2022 June 30, 2021 Unbilled accounts receivable, net (1) $ 6,922 $ 6,925 Deferred revenue, net 145,480 109,801 (1) The long-term portion of $ 159 and $ 85 as of June 30, 2022 and 2021, respectively, is included in other assets . There was no allowance for doubtful accounts associated with unbilled receivables as of June 30, 2022 and 2021. During the fiscal year ended June 30, 2022, the Company recognized $ 108.2 million in revenue pertaining to deferred revenue as of June 30, 2021. 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, 2022, approximately $ 349.7 million of revenues is expected to be recognized from remaining performance obligations with approximately 54 % over the next 12 months and the remainder thereafter. Note 4. Business Combinations Billstream On June 13, 2022 , the Company acquired the assets of Billstream, a pre-billing automation and workflow solution, from legal operations specialist Wilson Allen. The solution leverages advanced technology to simplify the preparation and validation of prebills and proforma invoices, enhancing the OnePlace Operations & Finance suite to create a comprehensive billing and time tracking software solution. The transaction has been accounted for as a business combination. The total consideration for the acquisition was $ 18.5 million, which consisted of initial cash consideration of $ 2.5 million paid at closing, deferred purchase consideration of $ 10.4 million, payable in the third quarter of fiscal year 2023, contingent consideration estimated at $ 4.1 million and amounts held back in the amount of $ 1.5 million. The contingent consideration will be payable based upon the achievement of certain performance measures, calculated as of September 30, 2023. The goodwill balance is primarily attributable to the expected revenue opportunities with the Company’s applications and services offerings, assets acquired and acquired workforce. 80 Table of Contents Acquisition-related transaction costs of $ 0.2 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, 2022. The following table summarizes the preliminary allocation of the consideration to the fair values of the assets acquired and liabilities assumed at the acquisition date (in thousands): Amount Cash paid $ 2,500 Deferred consideration 10,390 Holdback 1,500 Fair value of contingent consideration 4,126 Total purchase consideration 18,516 Goodwill 7,974 Non-compete agreement 300 Core technology 2,200 Client relationships 6,600 Backlog 500 Net assets acquired 942 Total $ 18,516 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. 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, 2022. We have paid $ 10.7 million of this contingent consideration during fiscal year 2022 and expect to pay $ 9.7 million in full consideration for the remaining contingent consideration in the first quarter of fiscal year 2023. 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. 81 Table of Contents 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 Non-compete 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 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. Note 5. Goodwill and Intangible Assets Goodwill Changes in the carrying amounts of goodwill were as follows (in thousands): Year Ended June 30, 2022 2021 Balance, beginning of period $ 262,270 $ 227,992 Goodwill acquired during the period 7,974 33,230 Foreign currency translation adjustment ( 1,141 ) 1,048 Balance, end of period $ 269,103 $ 262,270 No impairment of goodwill has been recorded for the fiscal years ended June 30, 2022, 2021 and 2020. Intangible Assets Intangible assets acquired through business combinations consisted of the following (in thousands): June 30, 2022 Useful Life (In years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Client relationships 9 to 15 $ 47,600 $ ( 19,789 ) $ 27,811 Non-compete agreements 4 to 5 4,407 ( 2,871 ) 1,536 Trademarks and trade names Indefinite 4,683 — 4,683 Trademarks and trade names 5 to 10 7,822 ( 4,190 ) 3,632 Core technology 4 to 5 49,219 ( 38,936 ) 10,283 Backlog 2 500 ( 15 ) 485 Intangible assets, net $ 114,231 $ ( 65,801 ) $ 48,430 82 Table of Contents June 30, 2021 Useful Life (In years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Client relationships 9 to 15 $ 41,000 $ ( 15,879 ) $ 25,121 Non-compete 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 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 management’s analysis included the following: • Revenues and expense forecasts were based on trends of historical performance and management’s estimate of future performance. • Estimated future cash flows were discounted using a weighted-average cost of capital. Amortization expense related to acquired intangible assets was recognized as follows (in thousands): Year Ended June 30, 2022 2021 2020 Cost of SaaS and support $ 7,877 $ 6,783 $ 7,371 Sales and marketing 5,214 4,052 3,968 General and administrative 428 35 — Total amortization expense $ 13,519 $ 10,870 $ 11,339 There was no impairment of intangible assets recorded during the fiscal years ended June 30, 2022, 2021 and 2020. As of June 30, 2022, the estimated future amortization expense of acquired intangible assets for each of the five succeeding fiscal years and thereafter is as follows (in thousands): Fiscal Year Ending June 30, Amount 2023 $ 10,598 2024 9,104 2025 6,451 2026 4,271 2027 4,245 2028 and thereafter 9,078 Total remaining amortization $ 43,747 Note 6. Fair Value Measurements 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). 83 Table of Contents 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, 2022 Level 1 Level 2 Level 3 Total Liabilities: Liability for contingent consideration, current portion $ — $ — $ 9,709 $ 9,709 Liability for contingent consideration, non-current portion — — 4,126 4,126 Total $ — $ — $ 13,835 $ 13,835 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 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. The fair value of the contingent consideration was initially estimated using the Monte Carlo simulation and included key assumptions used by management related to the estimated probability of occurrence and discount rates. These inputs are unobservable in the market and therefore categorized as level 3 inputs as defined above. 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. In connection with the acquisition of Repstor in June 2021, the Company recorded contingent consideration liabilities representing the amounts payable to former Repstor shareholders based upon the achievement of certain performance measures. 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. During fiscal year ended June 30, 2022, $ 10.7 million was paid to the former shareholders of Repstor. In connection with the acquisition of Billstream in June 2022, the Company recorded a contingent consideration liability of $ 4.1 million on the acquisition date for the estimated fair value of the contingent consideration. The fair value was measured based on the probability of achieving certain performance measures pursuant to the acquisition agreement. The liability was included in other liabilities on the consolidated balance sheet as of June 30, 2022. Changes in the fair value of contingent consideration liabilities during fiscal year ended June 30, 2022 were as follows (in thousands): Amount Balance as of June 30, 2021 $ 23,502 Contingent consideration accrued at acquisition 4,126 Payment of contingent consideration ( 10,714 ) Change in fair value of contingent consideration ( 639 ) Effect of foreign currency exchange rate changes ( 2,440 ) Balance as of June 30, 2022 $ 13,835 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 expected receipt or payment. 84 Table of Contents Note 7. Property and Equipment Property and equipment, net, consisted of the following (in thousands): June 30, 2022 June 30, 2021 Computer equipment and software $ 1,197 $ 1,751 Capitalized internal-use software 11,076 6,843 Furniture and office equipment 1,959 2,189 Leasehold improvements 5,284 5,417 Construction in progress 281 — Total property and equipment 19,797 16,200 Less: accumulated depreciation and amortization ( 7,514 ) ( 5,526 ) Property and equipment, net $ 12,283 $ 10,674 Depreciation expense, excluding the amortization of capitalized internal-use software development costs, was $ 1.3 million, $ 1.3 million and $ 0.8 million for fiscal years ended June 30, 2022, 2021 and 2020, respectively. The Company capitalized $ 4.2 million, $ 2.5 million and $ 2.5 million of costs related to software developed for internal use during the fiscal years ended June 30, 2022, 2021 and 2020, respectively. Amortization expense related to capitalized internal-use software was $ 1.9 million, $ 1.2 million and $ 0.6 million for fiscal years ended June 30, 2022, 2021 and 2020, respectively. The net book value of capitalized software development costs was $ 7.3 million and $ 5.0 million as of June 30, 2022 and 2021, respectively. Note 8. Commitments and Contingencies Operating Leases The Company leases the majority of its office space in the U.S., U.K., Singapore and Ukraine under non-cancelable operating lease agreements, which have various expiration dates through June 2030 . 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, 2022, 2021 and 2020 was $ 9.0 million, $ 8.4 million and $ 7.8 million, respectively. In April 2022, the Company entered into a lease agreement to lease an office space in the U.K. for an eight-year term ending June 2030 . The total commitment under this lease is approximately $ 9.8 million. As of June 30, 2022, future minimum lease payments under non-cancelable operating leases are as follows (in thousands): Year ending June 30, Amount 2023 $ 7,882 2024 3,625 2025 3,311 2026 3,359 2027 2,721 2028 and thereafter 9,379 Total future minimum lease payments $ 30,277 85 Table of Contents Other Purchase Commitments The Company’s other purchase commitments primarily consist of third-party cloud services, support fees and software subscriptions to support operations i n the ordinary course of business. Future minimum payments under the Company’s non-cancelable purchase commitments as of June 30, 2022 are as follows (in thousands): Year ending June 30, Amount 2023 $ 7,688 2024 8,630 2025 2,169 2026 1,525 2027 1,622 2028 1,082 Total purchase commitments $ 22,716 In December 2021, the Company entered into an agreement with Microsoft, pursuant to which the Company is committed to spend a minimum of $ 110.0 million on cloud services. Payments under this agreement are expected to commence in January 2023 . The committed spend period concludes at the end of December 2028 , with the Company having the option to extend any remaining commitment into a further 12 month period to the end of December 2029 . Litigation From time to time, the Company is a party to claims, lawsuits, and proceedings which arise in the ordinary course of business. The Company warrants to its customers that it has all necessary rights and licenses to the intellectual property comprised in its products and services and indemnifies those customers against intellectual property claims with respect to such products and services, so such claims, lawsuits and proceedings might in the future include claims of alleged infringement of intellectual property rights. The Company records a liability when it believes that it is probable that a loss will be incurred, and the amount of loss or range of loss can be reasonably estimated. Given the unpredictable nature of legal proceedings, the Company bases its estimate on the information available at the time of the assessment. As additional information becomes available, the Company reassesses the potential liability and may revise the estimate. The Company is not presently a party to any litigation the outcome of which, it believes, if determined adversely to the Company, would individually or in the aggregate have a material adverse effect on the business, operating results, or financial condition. Note 9. Debt As of June 30, 2021, the Company had outstanding borrowings of $ 273.0 million under a term loan and $ 5.0 million under the Prior Credit Facility. On July 12, 2021, amounts outstanding under the Prior Credit Facility were repaid in full from proceeds of the IPO. As a result of the extinguishment of the debt, a loss of $ 2.4 million related to the write-off of unamortized financing costs, has been recorded as a loss on debt extinguishment in the consolidated statement of operations for the fiscal year ended June 30, 2022. As of June 30, 2022, the Company had no outstanding borrowings under the Prior Credit Facility. On October 5, 2021, the Company entered into a Credit Agreement among the Company, the guarantors party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent (“JPMorgan”). The Credit Agreement provides for a five-year , senior secured revolving credit facility of $ 100.0 million with a sub-facility for letters of credit in the aggregate amount of up to $ 10.0 million (the “JPMorgan Credit Facility”). The Credit Agreement also provides that the Company may seek additional revolving credit commitments in an aggregate amount not to exceed $ 50.0 million, subject to certain administrative procedures, including approval by the Administrative Agent. Future borrowings under the JPMorgan Credit Facility will bear interest, at the Company’s election, at an annual rate of either (a) LIBOR plus a percentage spread (ranging from 1.75 % to 2.50 %) or (b) an alternate base rate (as described in the Credit Agreement) plus a percentage spread (ranging from 0.75 % to 1.50 %), in each case based on the Company’s total net leverage ratio. In addition, a commitment fee accrues with respect to the unused amount of the JPMorgan Credit Facility at an annual rate ranging from 0.25 % to 0.40 %, based on the Company’s total net leverage ratio. 86 Table of Contents In connection with the execution of the Credit Agreement, the Company also entered into a pledge and security agreement (the “Security Agreement”) dated as of October 5, 2021 with the subsidiaries of the Company and JPMorgan, as collateral agent for the secured parties. Under the Security Agreement, borrowings under the JPMorgan Credit Facility are secured by a first priority pledge of all of the capital stock and substantially all of the assets (excluding real estate interests) of each subsidiary of the Company and the subsidiary guarantors. The Credit Agreement provides that the Company must maintain compliance with a maximum consolidated total net leverage ratio covenant, as determined in accordance with the Credit Agreement. It also contains affirmative, negative and financial covenants, including limitations on certain other indebtedness, loans and investments, liens, mergers, asset sales, and transactions with affiliates, as well as customary events of default. The Company was in compliance with all covenants as of June 30, 2022. The Company incurred $ 0.8 million of costs directly related to the Credit Agreement, which were capitalized and are being amortized over the term of the Credit Agreement. These debt issuance costs are included in other assets on the consolidated balance sheets. As of June 30, 2022, there were no outstanding borrowings under the JPMorgan Credit Facility. Note 10. Stockholders’ Equity On July 2, 2021, in conjunction with the closing of the IPO, the Company’s Amended and Restated Certificate of Incorporation became effective, pursuant to which the Company’s authorized capital stock was increased to 700,000,000 shares of common stock, par value $ 0.001 per share, and 50,000,000 shares of preferred stock, par value $ 0.001 per share. 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. Shares of common stock reserved for future issuance were as follows (in thousands): June 30, 2022 2021 Convertible preferred stock — 19,034 Stock plans: Outstanding stock options 12,773 14,685 Unvested performance stock units and restricted stock units 4,471 3,996 Reserved for ESPP 1,398 — Reserved for future stock award grants 1,921 4,251 Total shares of common stock reserved for issuance 20,563 41,966 Note 11 . 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. 87 Table of Contents 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, 2022, there were 1,921,156 shares remained available for future grant under the 2021 Plan. 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 under the Company’s equity incentive plans during the fiscal years ended June 30, 2022 and 2021 was as follows (in thousands, except per share data): Number of Options Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (1) Balance as of June 30, 2020 11,228 $ 5.84 6.6 $ 42,108 Granted 6,655 15.24 Exercised ( 2,880 ) 5.45 Forfeited ( 318 ) 9.25 Balance as of June 30, 2021 14,685 $ 10.11 7.3 $ 262,762 Granted 104 32.22 Exercised ( 1,565 ) 6.52 Forfeited ( 451 ) 14.95 Outstanding as of June 30, 2022 12,773 $ 10.56 6.5 $ 65,284 Vested and exercisable as of June 30, 2022 9,650 $ 8.72 5.9 $ 60,390 Vested and expected to vest as of June 30, 2022 12,773 $ 10.56 6.5 $ 65,284 (1) Aggregate intrinsic value for stock options represents the difference between the exercise price and the per share fair value of the Company’s common stock as of the end of the period, multiplied by the number of stock options outstanding. The weighted-average grant date fair value of options granted during the fiscal years ended June 30, 2022, 2021 and 2020 was $ 12.61 , $ 6.43 and $ 3.50 , respectively. The total intrinsic value of options exercised during the fiscal years ended June 30, 2022, 2021 and 2020 was $ 28.5 million, $ 36.4 million and $ 2.6 million, respectively. During the fiscal years ended June 30, 2022, 2021 and 2020, the proceeds from option exercises totaled $ 10.2 million, $ 15.7 million and $ 1.7 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 was recorded as other current liabilities on the consolidated balance sheet as of June 30, 2021 and was reclassified into additional paid-in-capital upon the vesting of the remaining 150,000 shares on June 30, 2022. 88 Table of Contents 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 was recognized during fiscal year 2022. Performance Stock Units and Restricted Stock Units During the fiscal year ended June 30, 2022, the Company granted stock units to certain of its employees with vesting terms based on meeting certain annual recurring revenue targets and continued service. The Company also granted stock units to certain employees that vest based on continued service. Performance stock unit activity during the fiscal year ended June 30, 2022 and 2021 was as follows (in thousands): Number of Shares Weighted- Average Grant Date Fair Value Balance as of June 30, 2020 — $ — Granted 3,950 26.00 Vested — — Forfeited — — Balance as of June 30, 2021 3,950 26.00 Granted 201 35.41 Vested ( 626 ) 26.73 Forfeited ( 55 ) 27.06 Balance as of June 30, 2022 3,470 $ 26.40 Restricted stock unit activity during the fiscal year ended June 30, 2022 and 2021 was as follows (in thousands): Number of Shares Weighted- Average Grant Date Fair Value Balance as of June 30, 2020 — $ — Granted 46 26.00 Vested — — Forfeited — — Balance as of June 30, 2021 46 26.00 Granted 1,154 30.32 Vested ( 109 ) 34.97 Forfeited ( 90 ) 35.23 Balance as of June 30, 2022 1,001 $ 29.18 Stock-Based Compensation Expense Total stock-based compensation from stock-based awards during the fiscal years ended June 30, 2022, 2021 and 2020 included in the consolidated statements of operations is $ 77.5 million, $ 18.1 million and $ 3.3 million, respectively. During the fiscal years 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 89 Table of Contents 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, 2022 2021 2020 Cost of revenues Cost of SaaS and support $ 1,258 $ 250 $ 203 Cost of professional services 3,029 878 439 Research and development 17,166 4,054 1,145 Sales and marketing 25,428 6,791 1,037 General and administrative 30,633 6,593 1,315 Total stock-based compensation $ 77,514 $ 18,566 $ 4,139 As of June 30, 2022, there was approximately $ 93.3 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 2.3 years. 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, 2022 2021 2020 Expected dividend yield 0 % 0 % 0 % Risk-free interest rate 0.9 % 1 % 2 % Expected volatility 40 % 38 % 34 % Expected life (in years) 6 6 6 2021 Employee Stock Purchase Plan In June 2021, the Board of Directors adopted and shareholders approved the 2021 Employee Stock Purchase Plan ("ESPP"), which became effective as of June 29, 2021. The ESPP initially reserved 1,466,996 shares of the Company’s common stock for future issuance to participating employees. The initial offering period for the ESPP began on December 16, 2021 and will end on November 30, 2023 . Subsequent offering periods will begin on the first trading day on or after each June 1 and December 1. The first purchase date was on May 31, 2022, followed by three more purchase dates in six-month intervals thereafter during this initial offering period. 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 applicable purchase date. As of June 30, 2022, 68,872 shares have been purchased under the ESPP. The fair value of ESPP shares was estimated using the Black-Scholes option valuation model with the following weighted-average assumptions: Year Ended June 30, 2022 Expected dividend yield 0 % Risk-free interest rate 0.7 % Expected volatility 40 % Expected life (in years) 1.2 As of June 30, 2022, total unrecognized compensation expense related to the ESPP was $ 1.9 million. That cost is expected to be recognized over the remaining term of the offering periods of 1.2 years. 90 Table of Contents Note 12. Income Taxes The components of loss before income taxes are as follows (in thousands): Year Ended June 30, 2022 2021 2020 U.S. $ ( 104,391 ) $ ( 48,063 ) $ ( 47,645 ) Foreign 1,278 1,771 2,083 Total $ ( 103,113 ) $ ( 46,292 ) $ ( 45,562 ) The income tax (benefit)/expense consists of the following (in thousands): Year Ended June 30, 2022 2021 2020 Current: Federal $ ( 48 ) $ 11 $ — State 278 117 18 Foreign 572 799 629 802 927 647 Deferred: Federal 137 — — State 131 17 ( 195 ) Foreign ( 4,505 ) ( 472 ) ( 99 ) ( 4,237 ) ( 455 ) ( 294 ) Income tax (benefit)/expense $ ( 3,435 ) $ 472 $ 353 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, 2022 2021 2020 Federal tax (benefit)/expense: At statutory rate $ ( 21,654 ) $ ( 9,721 ) $ ( 9,568 ) State tax (net of federal benefit) 140 329 30 Research and development credits 1,019 ( 358 ) ( 1,098 ) Stock-based compensation 6,828 ( 314 ) — Acquisition-related transaction costs 53 1,169 — Change in valuation allowance 10,802 9,360 10,921 Other ( 623 ) 7 68 Income tax (benefit)/expense $ ( 3,435 ) $ 472 $ 353 91 Table of Contents Deferred tax assets and liabilities are as follows (in thousands): June 30, 2022 2021 Deferred tax assets: Nondeductible accrued expenses $ 2,039 $ 1,779 Net operating loss carryforwards 30,828 17,869 Research and development credits 4,377 5,850 Stock-based compensation 9,112 3,046 Interest carryforwards 15,827 16,781 Deferred revenue 487 930 Other 320 264 Valuation allowance ( 45,338 ) ( 31,869 ) Total deferred tax assets 17,652 14,650 Deferred tax liabilities: Revenue recognition ( 2,303 ) ( 4,553 ) Deferred commissions ( 6,207 ) ( 2,781 ) Fixed assets ( 1,452 ) ( 1,030 ) Intangible assets ( 9,158 ) ( 11,991 ) Total deferred tax liabilities ( 19,120 ) ( 20,355 ) Net deferred tax liabilities $ ( 1,468 ) $ ( 5,705 ) As of June 30, 2022, the Company has federal, California and other state net operating loss carryforwards of approximately $ 120.9 million, $ 28.9 million and $ 60.2 million, respectively, which expire beginning in the year 2032 for federal and 2029 for California. As of June 30, 2022, the Company has federal and state research credits carryforwards of approximately $ 4.4 million and $ 4.2 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. Such a limitation could result in the expiration of carryforwards before they are utilized. 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, 2022 and 2021, 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 $ 45.3 million and $ 31.9 million, respectively, to reduce the carrying value of its deferred tax assets. At June 30, 2022, the Company asserts that it will not permanently reinvest its foreign earnings outside the U.S. The Company anticipates that the cash from its foreign earnings may be used to fund operations domestically, settle a portion of the outstanding debt obligations, or used for other business needs. The accumulated undistributed earnings generated by its foreign subsidiaries was approximately $ 10.9 million. Substantially all of these earnings will not be taxable upon repatriation to the United States since under the Tax Cuts and Jobs Act they will be treated as previously taxed income or benefit from the dividends received deduction. The withholding taxes related to the distributable earnings of the Company's foreign subsidiaries are not expected to be material. It is the Company’s policy to recognize interest and penalties related to income tax matters in income tax expense. As of June 30, 2022 and 2021, 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. 92 Table of Contents 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 202 1 . The following table summarizes the activity related to the Company’s unrecognized tax benefits (in thousands): June 30, 2022 2021 2020 Beginning of the year, unrecognized tax benefits $ 2,970 $ 2,783 $ 2,082 Increases (decreases), prior year tax positions 396 ( 453 ) — Increases, current year tax positions 445 640 701 End of the year, unrecognized tax benefits $ 3,811 $ 2,970 $ 2,783 As of June 30, 2022 and 2021, unrecognized tax benefits approximated $ 3.8 million and $ 3.0 million, respectively, of which no ne of the tax benefits would affect the effective tax rate if recognized. There are no interest and penalties accrued as of June 30, 2022. Note 13. Net Loss Per Share The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders for the periods indicated (in thousands, except per share data): Year Ended June 30, 2022 2021 2020 Numerator: Net loss $ ( 99,678 ) $ ( 46,764 ) $ ( 45,915 ) Less: cumulative dividends allocated to preferred stockholders — ( 15,584 ) ( 14,048 ) Net loss attributable to common stockholders $ ( 99,678 ) $ ( 62,348 ) $ ( 59,963 ) Denominator: Weighted-average shares used to compute net loss per share attributable to common stockholders, basic and diluted 61,267 27,950 24,109 Net loss per share attributable to common stockholders Basic and diluted $ ( 1.63 ) $ ( 2.23 ) $ ( 2.49 ) 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 their effect would be anti-dilutive (in thousands): As of June 30, 2022 2021 2020 Convertible preferred stock (on an if-converted basis) — 19,034 19,034 Outstanding stock options to purchase common stock 12,773 14,685 11,228 Unvested stock options exercised early — 150 — Unvested performance stock units and restricted stock units 4,471 3,996 — Shares issuable under employee stock purchase plan 18 — — Total 17,262 37,865 30,262 93 Table of Contents Note 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. Employees are immediately vested 100 % in the Company’s matching contributions. The Company incurred matching expenses of $ 3.0 million, $ 2.4 million and $ 2.2 million for the fiscal years ended June 30, 2022, 2021 and 2020, 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 $ 1.3 million, $ 0.9 million and $ 0.7 million for the fiscal years ended June 30, 2022, 2021 and 2020, respectively. Note 15. Subsequent Events Under the 2021 Plan, on July 1, 2022 and each July 1 thereafter, through (and including) July 1, 2031, the number of Shares reserved and available for issuance shall be increased by a number of Shares of up to 5 % of the number of Shares issued and outstanding calculated on a fully-diluted basis on the immediately preceding June 30, provided that our Board may act prior to July 1 of a given year to provide that the increase will be a lesser number of shares. On July 1, 2022, 3,999,369 shares were added to the 2021 Plan pursuant to the plan provision. Under the ESPP Plan, on July 1, 2022 and each July 1 thereafter through (and including) July 1, 2031, the number of shares of Common Stock reserved and available for issuance under the Plan shall be cumulatively increased by the lesser of (a) 1 % of the number of shares of Common Stock issued and outstanding calculated on a fully-diluted basis on the immediately preceding June 30; or (b) such lesser number of shares as the Administrator shall approve. On July 1, 2022, 799,873 shares were added to the ESPP Plan pursuant to the plan provision. 94 Table of Contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.