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Fair Value Measurements
 6 Months Ended
Dec. 31, 2024
Fair Value Disclosures [Abstract]  
Fair Value Measurements
5.
Fair Value Measurements

A three-tier fair value hierarchy is utilized to prioritize the inputs used in measuring fair value. The hierarchy gives the highest priority to quoted prices in active markets (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels are defined as follows:

•
Level 1 Inputs - unadjusted quoted prices in active markets for identical assets or liabilities;
•
Level 2 Inputs - quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument; and
•
Level 3 Inputs - unobservable inputs reflecting the Company’s own assumptions in measuring the asset or liability at fair value.

 

The following table presents the Company’s fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis (in thousands):

 

December 31, 2024

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Certificates of deposit

 

$

—

 

 

$

118

 

 

$

—

 

 

$

118

 

Foreign currency derivatives

 

 

—

 

 

 

36

 

 

 

—

 

 

 

36

 

Total assets measured at fair value

 

$

—

 

 

$

154

 

 

$

—

 

 

$

154

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency derivatives

 

$

—

 

 

$

342

 

 

$

—

 

 

$

342

 

Total liabilities measured at fair value

 

$

—

 

 

$

342

 

 

$

—

 

 

$

342

 

 

June 30, 2024

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Certificates of deposit

 

$

—

 

 

$

3,216

 

 

$

—

 

 

$

3,216

 

Foreign currency derivatives

 

 

—

 

 

 

18

 

 

 

—

 

 

 

18

 

Total assets measured at fair value

 

$

—

 

 

$

3,234

 

 

$

—

 

 

$

3,234

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency derivatives

 

$

—

 

 

$

71

 

 

$

—

 

 

$

71

 

Total liabilities measured at fair value

 

$

—

 

 

$

71

 

 

$

—

 

 

$

71

 

Level 1 Assets and Liabilities:

The Company’s financial instruments consist of cash, accounts receivable, accounts payable, and accrued liabilities. The Company states accounts receivable, accounts payable, and accrued liabilities at their carrying value, which approximates fair value due to the short time to the expected receipt or payment.

Level 2 Assets and Liabilities:

The Company's level 2 assets consist of certificates of deposit and derivative instruments. Certificates of deposit do not have regular market pricing and are considered Level 2. The fair value of derivative instruments under the Company’s foreign exchange forward contracts are estimated based on valuations provided by alternative pricing sources supported by observable inputs, which is considered Level 2.

As of December 31, 2024 and June 30, 2024, the Company had investment in certificates of deposit of $0.1 million and $3.2 million, respectively, with maturity of three months at the date of purchase, which are recorded as cash equivalents in the condensed consolidated balance sheets. The Company considers these cash equivalents to be available-for-sale and, as of December 31, 2024 and June 30, 2024, their fair value approximated their amortized cost.

As of December 31, 2024 and June 30, 2024, the Company had foreign exchange forward contracts that were not designated as hedging instruments with notional principal amounts of $55.0 million and $31.3 million, respectively. Changes in the fair value of these foreign exchange forward contracts not designated as hedging instruments are included in “Other income (expense), net” in the condensed consolidated statements of operations. For the three months ended December 31, 2024 and 2023, the net gains and losses recorded in the condensed consolidated statement of operations from these contracts were net losses of $2.1 million and net gains of $0.4 million, respectively. For the six months ended December 31, 2024 and 2023, the net gains and losses recorded in the condensed consolidated statement of operations were net losses of $1.3 million and net gains of $0.3 million, respectively. As of December 31, 2024 and June 30, 2024, there were no outstanding foreign exchange forward contracts that were designated as hedging instruments. See Note 12, Derivatives and Hedging, for additional information.

The fair value of borrowings under the 2023 Credit Agreement (as defined in Note 7) is estimated based on valuations provided by alternative pricing sources supported by observable inputs which is considered Level 2. Since the interest rate is variable in the 2023 Credit Agreement, the fair value approximates the face amount of the Company’s indebtedness of $185.0 million and $190.0 million as of December 31, 2024 and June 30, 2024, respectively.

Level 3 Assets and Liabilities:

Certain of the Company’s assets, including intangible assets and goodwill, are measured at fair value on a non-recurring basis if impairment is indicated.

As of December 31, 2024 and June 30, 2024, the Company did not have any assets or liabilities that were considered Level 3.

There were no transfers of assets or liabilities between Level 1, Level 2, or Level 3 during the three and six months ended December 31, 2024 and 2023. There were no impairments recorded for the three and six months ended December 31, 2024 and 2023.