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Fair Value Measurements

9 Months Ended

Apr. 30, 2023

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 8—Fair Value Measurements

The following table presents the balance of assets and liabilities measured at fair value on a recurring basis:

		Level 1 (1)				Level 2 (2)				Level 3 (3)				Total
		(in thousands)
April 30, 2023
Debt securities		$	30,552			$	11,435			$	—			$	41,987
Equity investments included in current assets			5,776				—				—				5,776
Equity investments included in noncurrent assets			—				2,500				1,238				3,738
Total		$	36,328			$	13,935			$	1,238			$	51,501

Acquisition consideration included in:
Other current liabilities		$	—			$	—			$	(2,351	)		$	(2,351	)
Other noncurrent liabilities			—				—				(2,773	)			(2,773	)
Total		$	—			$	—			$	(5,124	)		$	(5,124	)

July 31, 2022
Debt securities		$	13,734			$	8,569			$	—			$	22,303
Equity investments included in current assets			17,091				—				—				17,091
Equity investments included in noncurrent assets			—				1,730				1,132				2,862
Total		$	30,825			$	10,299			$	1,132			$	42,256

Acquisition consideration included in:
Other current liabilities		$	—			$	—			$	(2,578	)		$	(2,578	)
Other noncurrent liabilities			—				—				(5,968	)			(5,968	)
Total		$	—			$	—			$	(8,546	)		$	(8,546	)

(1)	– quoted prices in active markets for identical assets or liabilities

(2)	– observable inputs other than quoted prices in active markets for identical assets and liabilities

(3)	– no observable pricing inputs in the market

At April 30, 2023 and July 31, 2022, the Company had $3.1 million and $3.2 million, respectively, in investments in hedge funds, which were included in noncurrent “Equity investments” in the accompanying consolidated balance sheets. The Company’s investments in hedge funds were accounted for using the equity method, therefore they were not measured at fair value.

The following table summarizes the change in the balance of the Company’s assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3):

		2023				2022				2023				2022
		Three Months Ended April 30,								Nine Months Ended April 30,
		2023				2022				2023				2022
		(in thousands)
Balance, beginning of period		$	1,225			$	2,261			$	1,132			$	2,465
Total gains (losses) recognized in “Other expense, net”			13				(130	)			106				(334	)

Balance, end of period		$	1,238			$	2,131			$	1,238			$	2,131

Change in unrealized gains or losses for the period included in earnings for assets held at the end of the period		$	—			$	—			$	—			$	—

The following table summarizes the change in the balance of the Company’s liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3):

		2023				2022				2023				2022
		Three Months Ended April 30,								Nine Months Ended April 30,
		2023				2022				2023				2022
		(in thousands)
Balance, beginning of period		$	6,609			$	703			$	8,546			$	1,025
Transfer into Level 3 from acquisitions			—				7,849				—				7,849
Payments			(1,800	)			—				(2,175	)			—
Total losses (gains) included in:
“Other operating expense, net”			216				—				(1,349	)			(303	)
Interest expense included in “Interest income, net”			97				—				97				—
“Foreign currency translation adjustment”			2				(4	)			5				(23	)

Balance, end of period		$	5,124			$	8,548			$	5,124			$	8,548

Change in unrealized gains or losses for the period included in earnings for liabilities held at the end of the period		$	—			$	—			$	—			$	—

In the nine months ended April 30, 2023, the Company paid an aggregate of $2.2 million in contingent consideration related to prior acquisitions. In addition, in the nine months ended April 30, 2023, the Company determined that the requirements for a portion of the contingent consideration payments related to the acquisition of Leaf would not be met, and, in the nine months ended April 30, 2022, the Company determined that the requirements for a contingent consideration payment related to an acquisition in December 2019 would not be met before the expiration date. The Company recorded gains of $1.6 million and $0.3 million in the nine months ended April 30, 2023 and 2022, respectively, on the write-off of these contingent consideration payment obligations, which were included in “Other operating expense, net” in the accompanying consolidated statements of income. Also, in the three and nine months ended April 30, 2023, the Company increased the estimated fair value of acquisition-related contingent consideration by $0.2 million, which was included in “Other operating expense, net” in the accompanying consolidated statements of income. There were no other changes in the estimated fair value of contingent consideration in the nine months ended April 30, 2023 and 2022.

Fair Value of Other Financial Instruments

The estimated fair value of the Company’s other financial instruments was determined using available market information or other appropriate valuation methodologies. However, considerable judgment is required in interpreting these data to develop estimates of fair value. Consequently, the estimates are not necessarily indicative of the amounts that could be realized or would be paid in a current market exchange.

Cash and cash equivalents, restricted cash and cash equivalents, other current assets, customer deposits, and other current liabilities. At April 30, 2023 and July 31, 2022, the carrying amount of these assets and liabilities approximated fair value because of the short period of time to maturity. The fair value estimates for cash, cash equivalents, and restricted cash and cash equivalents were classified as Level 1 and other current assets, customer deposits, and other current liabilities were classified as Level 2 of the fair value hierarchy.

Other assets and other liabilities. At April 30, 2023 and July 31, 2022, the carrying amount of these assets and liabilities approximated fair value. The fair values were estimated based on the Company’s assumptions, which were classified as Level 3 of the fair value hierarchy.

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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