Intapp(INTA) - 2024 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This part presents the company's unaudited financial statements, management's analysis, and key risk disclosures Item 1. Financial Statements (Unaudited) Presents the unaudited condensed consolidated financial statements and accompanying notes for the period Condensed Consolidated Balance Sheets Balance Sheet Summary | Metric | Dec 31, 2023 (in thousands) | Jun 30, 2023 (in thousands) | Change | | :-------------------------- | :-------------------------- | :-------------------------- | :----- | | Cash and cash equivalents | $166,357 | $130,377 | +$35,980 | | Total current assets | $284,098 | $254,839 | +$29,259 | | Total assets | $653,528 | $628,907 | +$24,621 | | Total current liabilities | $259,143 | $259,349 | -$206 | | Total liabilities | $281,871 | $287,699 | -$5,828 | | Total stockholders' equity | $371,657 | $341,208 | +$30,449 | Condensed Consolidated Statements of Operations Operations Summary | Metric (in thousands) | 3 Months Ended Dec 31, 2023 | 3 Months Ended Dec 31, 2022 | Change (YoY) | 6 Months Ended Dec 31, 2023 | 6 Months Ended Dec 31, 2022 | Change (YoY) | | :-------------------- | :-------------------------- | :-------------------------- | :----------- | :-------------------------- | :-------------------------- | :----------- | | Total revenues | $103,933 | $84,692 | +22.7% | $205,508 | $164,230 | +25.1% | | SaaS and support revenue | $77,109 | $61,605 | +25.2% | $150,170 | $118,418 | +26.8% | | Total recurring revenues | $91,252 | $72,584 | +25.7% | $178,216 | $141,645 | +25.8% | | Gross profit | $73,164 | $57,907 | +26.3% | $143,166 | $112,111 | +27.7% | | Operating loss | $(11,082) | $(19,428) | -42.9% | $(25,047) | $(38,574) | -35.1% | | Net loss | $(9,213) | $(19,754) | -53.4% | $(24,534) | $(39,808) | -38.4% | | Net loss per share (basic & diluted) | $(0.13) | $(0.31) | -58.1% | $(0.35) | $(0.63) | -44.4% | Condensed Consolidated Statements of Comprehensive Loss Comprehensive Loss Summary | Metric (in thousands) | 3 Months Ended Dec 31, 2023 | 3 Months Ended Dec 31, 2022 | 6 Months Ended Dec 31, 2023 | 6 Months Ended Dec 31, 2022 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net loss | $(9,213) | $(19,754) | $(24,534) | $(39,808) | | Foreign currency translation adjustments | $352 | $651 | $61 | $(27) | | Comprehensive loss | $(8,861) | $(19,103) | $(24,473) | $(39,835) | Condensed Consolidated Statements of Stockholders' Equity Stockholders' Equity Changes | Metric (in thousands) | Balance as of Jun 30, 2023 | Issuance of common stock upon exercise of stock options | Issuance of common stock under employee stock purchase plan | Stock-based compensation | Net loss | Balance as of Dec 31, 2023 | | :-------------------- | :------------------------- | :---------------------------------------------------- | :-------------------------------------------------------- | :----------------------- | :------- | :------------------------- | | Common Stock (Amount) | $69 | $2 | $0 | $0 | $0 | $72 | | Additional Paid-in Capital | $797,639 | $17,934 | $1,725 | $35,265 | $0 | $852,558 | | Accumulated Deficit | $(455,161) | $0 | $0 | $0 | $(24,534) | $(479,695) | | Total Stockholders' Equity | $341,208 | $17,936 | $1,725 | $35,265 | $(24,534) | $371,657 | Condensed Consolidated Statements of Cash Flows Cash Flow Summary | Metric (in thousands) | 6 Months Ended Dec 31, 2023 | 6 Months Ended Dec 31, 2022 | Change | | :------------------------------------------ | :-------------------------- | :-------------------------- | :----- | | Net cash provided by operating activities | $23,647 | $13,347 | +$10,300 | | Net cash used in investing activities | $(4,807) | $(4,395) | -$412 | | Net cash provided by (used in) financing activities | $16,329 | $(10,342) | +$26,671 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $35,372 | $(1,741) | +$37,113 | | Cash, cash equivalents and restricted cash - end of period | $166,557 | $52,570 | +$113,987 | Notes to Unaudited Condensed Consolidated Financial Statements Note 1. Description of Business - Intapp, Inc is a leading provider of industry-specific, cloud-based software solutions for the global professional and financial services industry[26] - The company empowers private capital, investment banking, legal, accounting, and consulting firms with technology to operate competitively, deliver insights, and meet regulatory requirements[26] - Clients are primarily located in the United States and the United Kingdom[26] Note 2. Summary of Significant Accounting Policies - The unaudited condensed consolidated financial statements are prepared in accordance with GAAP and SEC interim reporting requirements, consistent with annual statements[27] - Significant accounting estimates include revenue recognition, allowance for credit losses, depreciable lives of assets, fair value of stock-based awards, and contingent consideration liabilities[29] - The company will be deemed a large accelerated filer as of June 30, 2024, due to its market value exceeding $700 million, resulting in the loss of emerging growth company status benefits[57][193] - Adopted ASU No 2016-13 (Financial Instruments – Credit Losses) on July 1, 2023, with no material impact on financial statements[58] - New accounting pronouncements not yet adopted include ASU No 2023-07 (Segment Reporting) and ASU No 2023-09 (Income Taxes), both expected to impact disclosures[59][60] Note 3. Revenues Revenue by Geography (in thousands) | Geography | 3 Months Ended Dec 31, 2023 | 3 Months Ended Dec 31, 2022 | 6 Months Ended Dec 31, 2023 | 6 Months Ended Dec 31, 2022 | | :-------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | United States | $73,163 | $57,887 | $143,018 | $113,539 | | United Kingdom | $13,829 | $13,511 | $28,555 | $26,523 | | Rest of the world | $16,941 | $13,294 | $33,935 | $24,168 | | Total | $103,933 | $84,692 | $205,508 | $164,230 | - Approximately $447.6 million of revenues is expected to be recognized from remaining performance obligations as of December 31, 2023, with 58% over the next 12 months[65] - During the six months ended December 31, 2023, the company recognized $125.1 million in revenue pertaining to deferred revenue as of June 30, 2023[63] Note 4. Goodwill and Intangible Assets Goodwill | Metric | Dec 31, 2023 (in thousands) | Jun 30, 2023 (in thousands) | | :-------------------------- | :-------------------------- | :-------------------------- | | Goodwill | $278,955 | $278,890 | Intangible Assets, Net | Intangible Asset | Dec 31, 2023 (in thousands) | Jun 30, 2023 (in thousands) | | :--------------------- | :-------------------------- | :-------------------------- | | Client relationships | $22,218 | $24,559 | | Non-compete agreements | $1,198 | $1,524 | | Trademarks and trade names | $6,942 | $7,235 | | Core technology | $7,134 | $9,244 | | Backlog | $446 | $695 | | Total Intangible assets, net | $37,938 | $43,257 | Future Amortization of Intangible Assets | Fiscal Year Ending June 30, | Amount (in thousands) | | :-------------------------- | :-------------------- | | 2024 (remaining 6 months) | $4,890 | | 2025 | $7,506 | | 2026 | $5,090 | | 2027 | $4,925 | | 2028 | $4,428 | | 2029 and thereafter | $6,416 | | Total remaining amortization | $33,255 | Note 5. Fair Value Measurements Assets Measured at Fair Value (Dec 31, 2023) | Asset | Level 1 (in thousands) | Level 2 (in thousands) | Level 3 (in thousands) | Total (in thousands) | | :-------------- | :--------------------- | :--------------------- | :--------------------- | :------------------- | | Money market funds | $76,665 | $— | $— | $76,665 | Liabilities Measured at Fair Value | Liability | Dec 31, 2023 (in thousands) | Jun 30, 2023 (in thousands) | | :------------------------------------------ | :-------------------------- | :-------------------------- | | Liability for contingent consideration, current | $1,550 | $2,364 | | Liability for contingent consideration, non-current | $1,931 | $4,317 | | Total financial liabilities | $3,481 | $6,681 | Changes in Fair Value of Contingent Consideration | Metric | 6 Months Ended Dec 31, 2023 (in thousands) | 6 Months Ended Dec 31, 2022 (in thousands) | | :------------------------------------------ | :----------------------------------------- | :----------------------------------------- | | Balance, beginning of period | $6,681 | $13,835 | | Payment of contingent consideration | $(985) | $(9,299) | | Change in fair value of contingent consideration | $(2,215) | $(232) | | Effect of foreign currency exchange rate changes | $— | $(410) | | Balance, end of period | $3,481 | $3,894 | Note 6. Property and Equipment Property and Equipment, Net | Asset Category | Dec 31, 2023 (in thousands) | Jun 30, 2023 (in thousands) | | :-------------------------- | :-------------------------- | :-------------------------- | | Computer equipment and software | $2,698 | $2,290 | | Capitalized internal-use software | $20,053 | $16,978 | | Furniture and office equipment | $2,390 | $2,433 | | Leasehold improvements | $5,840 | $5,897 | | Construction in progress | $491 | $386 | | Total property and equipment | $31,472 | $27,984 | | Less: accumulated depreciation and amortization | $(14,161) | $(11,618) | | Property and equipment, net | $17,311 | $16,366 | - The company capitalized $3.1 million of costs related to internal-use software during the six months ended December 31, 2023[77] Note 7. Leases - Weighted-average remaining lease term for operating leases was 5.8 years as of December 31, 2023, with a weighted-average discount rate of 7.1%[81] Operating Lease Liabilities | Metric | Amount (in thousands) | | :---------------------------------- | :-------------------- | | Present value of operating lease liabilities (Dec 31, 2023) | $19,031 | - In February 2024, the company entered into a six-year lease agreement for an office space in New York City with total undiscounted base rent of approximately $7.3 million[82][177] Note 8. Commitments and Contingencies - The company has a remaining commitment of $101.0 million for Microsoft cloud services as of December 31, 2023, under an agreement that concludes at the end of December 2028[84] - The company is not currently a party to any litigation whose outcome is believed to have a material adverse effect on its business, operating results, or financial condition[85] Note 9. Debt - The company has a five-year, senior secured revolving credit facility of $100.0 million with JPMorgan Chase Bank, N.A, which was undrawn as of December 31, 2023[86][89] - The company was in compliance with all covenants under the Credit Agreement as of December 31, 2023[88] Note 10. Stockholders' Equity and Stock-Based Compensation Shares Reserved for Issuance (as of Dec 31, 2023) | Category | Shares (in thousands) | | :-------------------------- | :-------------------- | | Outstanding stock options | 8,345 | | Unvested PSUs and RSUs | 6,168 | | Reserved for ESPP | 2,820 | | Reserved for future stock award grants | 5,567 | | Total | 22,900 | Stock-Based Compensation Expense | Category | 3 Months Ended Dec 31, 2023 (in thousands) | 3 Months Ended Dec 31, 2022 (in thousands) | 6 Months Ended Dec 31, 2023 (in thousands) | 6 Months Ended Dec 31, 2022 (in thousands) | | :-------------------------- | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | | Cost of SaaS and support | $586 | $546 | $1,127 | $831 | | Cost of professional services | $1,432 | $1,145 | $2,765 | $1,893 | | Research and development | $4,468 | $4,646 | $9,114 | $6,780 | | Sales and marketing | $4,888 | $6,352 | $10,227 | $12,105 | | General and administrative | $5,134 | $7,579 | $12,032 | $14,427 | | Total stock-based compensation | $16,508 | $20,268 | $35,265 | $36,036 | - As of December 31, 2023, there was approximately $129.4 million of unrecognized compensation cost related to unvested stock-based awards, expected to be recognized over a weighted-average period of approximately 2.6 years[98] Note 11. Income Taxes Income Tax Expense | Period | 2023 (in thousands) | 2022 (in thousands) | | :-------------------------- | :------------------ | :------------------ | | Three Months Ended Dec 31 | $(188) | $(466) | | Six Months Ended Dec 31 | $(601) | $(651) | - The company maintains a full valuation allowance on its federal and state net operating losses and credits[101] Note 12. Net Loss Per Share Net Loss Per Share | Period | 2023 | 2022 | | :-------------------------- | :----- | :----- | | Three Months Ended Dec 31 | $(0.13) | $(0.31) | | Six Months Ended Dec 31 | $(0.35) | $(0.63) | - Basic net loss per share is the same as diluted net loss per share because the company reported net losses for all periods presented, leading to the exclusion of 14.6 million potential common shares as anti-dilutive[104][105] Note 13. Related Party Transactions - In November 2023, the company completed a secondary offering where existing stockholders sold 5,000,000 shares of common stock; the company did not receive any proceeds from this sale[106] - The company incurred $0.6 million in costs related to the secondary offering for the six months ended December 31, 2023[106] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Provides management's perspective on financial condition, operational results, key metrics, and liquidity Overview - Intapp is a leading provider of industry-specific, cloud-based software solutions for the global professional and financial services industry[109] - The Intapp platform enhances team collaboration, digitizes complex workflows, and leverages proprietary AI to nurture relationships and originate new business[110] - The platform helps firms increase client fees and investment returns, operate more efficiently, and better manage risk and compliance[110] How We Generate Revenue - Revenues are primarily generated from software subscriptions (SaaS and on-premise term licenses with support) and non-recurring professional services for implementation and configuration[111][113] - SaaS subscription revenues are recognized ratably over the contract term, while subscription license revenues are recognized upfront for the license component and ratably for support[111] - The vast majority of future Annual Recurring Revenue (ARR) growth is expected from the sale of SaaS subscriptions[112] Key Factors Affecting Our Performance - Future growth depends on market adoption of the cloud platform, requiring the company to win new clients and expand within existing ones[114] - The company plans continued substantial investments in research and development and in sales and marketing to support growth[115] - Acquisition opportunities will continue to be evaluated to extend the platform, broaden market leadership, and add new clients[116] Key Business Metrics Annual Recurring Revenues (ARR) | Metric | Dec 31, 2023 | Dec 31, 2022 | Change (YoY) | | :---- | :----------- | :----------- | :----------- | | Annual Recurring Revenues (ARR) | $365.0 million | $301.3 million | +21% | Cloud ARR | Metric | Dec 31, 2023 | Dec 31, 2022 | Change (YoY) | | :------- | :----------- | :----------- | :----------- | | Cloud ARR | $256.1 million | $191.8 million | +34% | | % of ARR | 70% | 64% | +6 ppts | - Trailing twelve months' net revenue retention rate as of December 31, 2023, was 115%, within the expected range of 113% to 117%[122] - The company had over 2,400 clients as of December 31, 2023, with 649 clients having contracts greater than $100,000 of ARR, up from 561 clients in the prior year[123][124] Components of Our Results of Operations - Recurring revenues accounted for 87% of total revenues during the six months ended December 31, 2023[125] - Professional services, primarily for implementation and configuration, are currently loss-making after allocated overhead costs[129] - Cost of revenues is expected to increase in absolute dollars due to the expansion of the SaaS client base[130] - Research and development, sales and marketing, and general and administrative expenses are all expected to increase in absolute dollars to support continued growth[133][134][135] Results of Operations Revenues Revenue by Category | Revenue Category (in thousands) | 3 Months Ended Dec 31, 2023 | 3 Months Ended Dec 31, 2022 | Change (YoY) | 6 Months Ended Dec 31, 2023 | 6 Months Ended Dec 31, 2022 | Change (YoY) | | :------------------------------ | :-------------------------- | :-------------------------- | :----------- | :-------------------------- | :-------------------------- | :----------- | | SaaS and support | $77,109 | $61,605 | +25% | $150,170 | $118,418 | +27% | | Subscription license | $14,143 | $10,979 | +29% | $28,046 | $23,227 | +21% | | Total recurring revenues | $91,252 | $72,584 | +26% | $178,216 | $141,645 | +26% | | Professional services | $12,681 | $12,108 | +5% | $27,292 | $22,585 | +21% | | Total revenues | $103,933 | $84,692 | +23% | $205,508 | $164,230 | +25% | - SaaS and support revenue growth was driven by sales to new clients, expansion within existing clients, and client migration from on-premise to cloud solutions[143] - Subscription license revenue increased due to larger multi-year renewals, annual renewals on multi-year contracts, and CPI-based price increases[144] Cost of Revenues and Gross Profit Cost of Revenues and Gross Profit Summary | Metric (in thousands) | 3 Months Ended Dec 31, 2023 | 3 Months Ended Dec 31, 2022 | Change (YoY) | 6 Months Ended Dec 31, 2023 | 6 Months Ended Dec 31, 2022 | Change (YoY) | | :-------------------- | :-------------------------- | :-------------------------- | :----------- | :-------------------------- | :-------------------------- | :----------- | | Cost of SaaS and support | $14,416 | $12,456 | +16% | $28,829 | $24,854 | +16% | | Cost of professional services | $16,353 | $14,329 | +14% | $33,513 | $27,265 | +23% | | Total cost of revenues | $30,769 | $26,785 | +15% | $62,342 | $52,119 | +20% | | Gross profit | $73,164 | $57,907 | +26% | $143,166 | $112,111 | +28% | - The increase in cost of SaaS and support revenues was primarily due to higher cloud hosting costs and personnel-related costs[148][149] - Cost of professional services revenues increased due to higher personnel-related costs and sub-contractor costs as teams expanded to support client growth[150][151] - Gross profit improvement was mainly attributable to growth in SaaS and support revenues and an operational realignment of certain team expenses[152][153] Operating Expenses Operating Expenses Summary | Operating Expense (in thousands) | 3 Months Ended Dec 31, 2023 | 3 Months Ended Dec 31, 2022 | Change (YoY) | 6 Months Ended Dec 31, 2023 | 6 Months Ended Dec 31, 2022 | Change (YoY) | | :------------------------------- | :-------------------------- | :-------------------------- | :----------- | :-------------------------- | :-------------------------- | :----------- | | Research and development | $27,981 | $23,392 | +20% | $56,477 | $43,071 | +31% | | Sales and marketing | $35,269 | $33,538 | +5% | $69,688 | $64,850 | +7% | | General and administrative | $20,996 | $20,753 | +1% | $42,048 | $41,163 | +2% | | Lease modification and impairment | $0 | $(348) | * | $0 | $1,601 | * | | Total operating expenses | $84,246 | $77,335 | +9% | $168,213 | $150,685 | +12% | - Research and development expenses increased significantly due to higher personnel-related costs, increased contractor costs, and higher stock-based compensation[155][156] - Sales and marketing expenses rose due to increased personnel costs and marketing events, partially offset by a decrease in stock-based compensation[157][158] - General and administrative expenses increased primarily from third-party professional fees and personnel costs, partially offset by other factors[159][160] Interest and Other Income (Expense), Net Interest and Other Income (Expense), Net | Metric (in thousands) | 3 Months Ended Dec 31, 2023 | 3 Months Ended Dec 31, 2022 | Change (YoY) | 6 Months Ended Dec 31, 2023 | 6 Months Ended Dec 31, 2022 | Change (YoY) | | :-------------------------------- | :-------------------------- | :-------------------------- | :----------- | :-------------------------- | :-------------------------- | :----------- | | Interest and other income (expense), net | $2,057 | $140 | +1,369% | $1,114 | $(583) | +291% | - The significant increase in interest and other income (expense), net, was primarily driven by higher interest income from cash held in money market funds[163] Income Tax Expense Income Tax Expense | Period | 2023 (in thousands) | 2022 (in thousands) | | :-------------------------- | :------------------ | :------------------ | | Three Months Ended Dec 31 | $(188) | $(466) | | Six Months Ended Dec 31 | $(601) | $(651) | - Income tax expense was primarily attributable to income tax in U.S. state and foreign jurisdictions[164] Liquidity and Capital Resources - As of December 31, 2023, the company had $166.6 million in cash, cash equivalents, and restricted cash[165] - The company has an undrawn $100.0 million senior secured revolving credit facility with JPMorgan, and was in compliance with all covenants as of December 31, 2023[167][88] Cash Flow Activities | Cash Flow Activity (in thousands) | 6 Months Ended Dec 31, 2023 | 6 Months Ended Dec 31, 2022 | Change | | :------------------------------------------ | :-------------------------- | :-------------------------- | :----- | | Net cash provided by operating activities | $23,647 | $13,347 | +$10,300 | | Net cash used in investing activities | $(4,807) | $(4,395) | -$412 | | Net cash provided by (used in) financing activities | $16,329 | $(10,342) | +$26,671 | - Net cash provided by operating activities increased due to reduced operating loss and net cash inflow from changes in operating assets and liabilities[170] - Net cash provided by financing activities was primarily driven by $17.9 million from stock option exercises and $1.7 million from the employee stock purchase plan[174] - Management believes existing cash and credit facility will be sufficient to meet liquidity needs for at least the next twelve months[166] Non-GAAP Financial Measures - Management uses non-GAAP gross profit, non-GAAP recurring gross profit, and non-GAAP operating profit to evaluate business performance[178][179][181][183] Reconciliation of GAAP to Non-GAAP Gross Profit | Metric | 3 Months Ended Dec 31, 2023 (in thousands) | 3 Months Ended Dec 31, 2022 (in thousands) | 6 Months Ended Dec 31, 2023 (in thousands) | 6 Months Ended Dec 31, 2022 (in thousands) | | :-------------------------- | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | | GAAP gross profit | $73,164 | $57,907 | $143,166 | $112,111 | | Stock-based compensation | $2,018 | $1,691 | $3,892 | $2,724 | | Amortization of intangible assets | $1,055 | $917 | $2,110 | $2,413 | | Non-GAAP gross profit | $76,237 | $60,515 | $149,168 | $117,248 | Reconciliation of GAAP to Non-GAAP Recurring Gross Profit | Metric | 3 Months Ended Dec 31, 2023 (in thousands) | 3 Months Ended Dec 31, 2022 (in thousands) | 6 Months Ended Dec 31, 2023 (in thousands) | 6 Months Ended Dec 31, 2022 (in thousands) | | :-------------------------- | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | | Recurring gross profit | $76,836 | $60,128 | $149,387 | $116,791 | | Stock-based compensation | $586 | $546 | $1,127 | $831 | | Amortization of intangible assets | $1,055 | $917 | $2,110 | $2,413 | | Non-GAAP recurring gross profit | $78,477 | $61,591 | $152,624 | $120,035 | Reconciliation of GAAP Operating Loss to Non-GAAP Operating Profit | Metric | 3 Months Ended Dec 31, 2023 (in thousands) | 3 Months Ended Dec 31, 2022 (in thousands) | 6 Months Ended Dec 31, 2023 (in thousands) | 6 Months Ended Dec 31, 2022 (in thousands) | | :------------------------------------------ | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | | GAAP operating loss | $(11,082) | $(19,428) | $(25,047) | $(38,574) | | Stock-based compensation | $16,508 | $20,268 | $35,265 | $36,036 | | Amortization of intangible assets | $2,614 | $2,506 | $5,319 | $5,587 | | Lease modification and impairment | $0 | $(348) | $0 | $1,601 | | Change in fair value of contingent consideration | $(784) | $(232) | $(2,215) | $(232) | | Transaction costs | $350 | $42 | $678 | $201 | | Non-GAAP operating profit | $7,606 | $2,808 | $14,000 | $4,619 | Critical Accounting Policies and Estimates - There have been no significant changes to the company's critical accounting policies or estimates from those disclosed in its Annual Report on Form 10-K for the fiscal year ended June 30, 2023[188] Recent Accounting Pronouncements - Refer to Note 2 of the unaudited condensed consolidated financial statements for information regarding recent accounting pronouncements[189] Emerging Growth Company Status - The company will be deemed a large accelerated filer as of June 30, 2024, because the market value of its common stock held by non-affiliates exceeded $700 million[193] - As a result, the company will no longer qualify as an emerging growth company, losing certain reporting exemptions[193] Item 3. Quantitative and Qualitative Disclosures About Market Risk Outlines the company's exposure to foreign currency, credit, inflation, and interest rate risks - The company is exposed to foreign currency exchange risk, primarily related to the British pound, but a hypothetical 10% change in exchange rates would be immaterial[196][197] - Credit risk is routinely assessed, and no material losses from non-payment of receivables have been experienced[198] - Inflation has not had a material effect on the business, but sustained inflationary pressures could negatively impact the company[199] - Interest rate risk is primarily related to cash equivalents and an undrawn credit facility; a hypothetical 100 basis points change in interest rates would not materially impact operating results[201][202] Item 4. Controls and Procedures Details management's evaluation of disclosure controls and internal control over financial reporting - Management concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level as of December 31, 2023[203] - There were no changes in internal control over financial reporting identified during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[204] - Management acknowledges the inherent limitations of control systems, which can provide only reasonable, not absolute, assurance[205] PART II. OTHER INFORMATION Contains other required information including legal proceedings, risk factors, and exhibit filings Item 1. Legal Proceedings Reports on ordinary course legal proceedings with no expected material adverse effect - The company is subject to claims, lawsuits, and proceedings that arise in the ordinary course of business[208] - The company does not believe that any current litigation would individually or in the aggregate have a material adverse effect on its business[85][208] Item 1A. Risk Factors Confirms no material changes to risk factors disclosed in the most recent Annual Report on Form 10-K - There have been no material changes to the risk factors disclosed in the Annual Report on Form 10-K for the fiscal year ended June 30, 2023[209] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds States no unregistered sales of equity securities or use of proceeds occurred during the period - None[210] Item 3. Defaults Upon Senior Securities Confirms no defaults upon senior securities occurred - Not applicable[211] Item 4. Mine Safety Disclosures States that mine safety disclosures are not applicable - Not applicable[212] Item 5. Other Information Discloses the adoption and termination of Rule 10b5-1 trading plans by officers and directors - Ralph Baxter, Michele Murgel, and Thad Jampol entered into Rule 10b5-1 trading plans in late 2023 for the potential exercise of stock options and sale of common stock[213] - Kalyani Tandon, the former Chief Accounting Officer, terminated her Rule 10b5-1 Plan on November 13, 2023[214] Item 6. Exhibits Lists all exhibits filed with the Quarterly Report on Form 10-Q - The exhibits include certifications, a strategic advisor agreement, and Inline XBRL documents[217]