Fair Value Measurements

9 Months Ended

Mar. 31, 2024

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 5. 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).

Money market funds are classified as Level 1 as the assets are valued using quoted prices in active markets. Liabilities for contingent consideration related to business combinations are classified as Level 3 liabilities as the Company uses unobservable inputs in the valuation, specifically related to the projected total contract value generated by the acquired businesses for a distinct period of time.

The following table sets forth the Company’s financial assets that were measured at fair value on a recurring basis as of the date indicated by level within the fair value hierarchy (in thousands):

	March 31, 2024
	Level 1		Level 2		Level 3		Total
Financial assets:
Cash equivalents:
Money market funds	$	77,665	$	—	$	—	$	77,665
Total financial assets	$	77,665	$	—	$	—	$	77,665

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):

	March 31, 2024
	Level 1		Level 2		Level 3		Total
Financial Liabilities:
Liability for contingent consideration, current portion	$	—	$	—	$	3,971	$	3,971
Total financial liabilities	$	—	$	—	$	3,971	$	3,971
	June 30, 2023
	Level 1		Level 2		Level 3		Total
Financial Liabilities:
Liability for contingent consideration, current portion	$	—	$	—	$	2,364	$	2,364
Liability for contingent consideration, non-current portion	—			—		4,317		4,317
Total financial liabilities	$	—	$	—	$	6,681	$	6,681

In connection with the acquisition of Paragon Data Labs, Inc. in May 2023, the Company recorded a contingent consideration liability of $4.3 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 audited consolidated balance sheet as of June 30, 2023. The fair value of the contingent consideration was re-measured at $4.0 million and was included in other current liabilities on the unaudited condensed consolidated balance sheet as of March 31, 2024.

In connection with the acquisition of Billstream, 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 fair value of the contingent consideration was re-measured at $2.4 million and was included in other current liabilities on the audited consolidated balance sheet as of June 30, 2023. During the nine months ended March 31, 2024, the Company paid $1.0 million in full consideration for the remaining contingent consideration.

The fair value of the contingent consideration was initially estimated on the acquisition date using the Monte Carlo simulation and included key assumptions used by management related to the estimated probability of occurrence and discount rates. Subsequent changes in the fair value of the contingent consideration liabilities, resulting from management’s revision of key assumptions and estimates, have been recorded in general and administrative expenses in the unaudited condensed consolidated statements of operations. Gains and losses arising from exchange rate fluctuation on these liabilities not denominated in U.S. dollars have been included in interest and other income (expense), net on the unaudited condensed consolidated statements of operations.

Changes in the fair value of contingent consideration liabilities were as follows (in thousands):

	Nine Months Ended March 31,
	2024			2023
Balance, beginning of period	$	6,681		$	13,835
Payment of contingent consideration		(985	)		(9,299	)
Change in fair value of contingent consideration		(1,725	)		(873	)
Effect of foreign currency exchange rate changes		—			(410	)
Balance, end of period	$	3,971		$	3,253

Other financial instruments consist of accounts receivable, accounts payable, accrued expenses, accrued liabilities and other current liabilities, which are stated at their carrying value as it approximates fair value due to the short time to expected receipt or payment.