Shareholders' Equity

9 Months Ended

Mar. 31, 2021

SHAREHOLDERS' EQUITY

Common Stock—As of March 31, 2021, the Company has reserved the following authorized, but unissued, shares of common stock:


Employee Stock Purchase Plan ("ESPP")						1,343,560
Stock awards outstanding under 2020 Plan						1,925,729
Stock awards available for grant under 2020 Plan						7,674,271
Options outstanding under 2003 Plan						2,102,305
Options available for grant under 2003 Plan						—
Total						13,045,865

Share-Based Compensation Plans

The Company has awards outstanding from two share-based compensation plans: the 2003 Stock Incentive Plan (the "2003 Stock Plan") and the 2020 Omnibus Incentive Plan (the "2020 Stock Plan" and, collectively with the 2003 Stock Plan, the “Stock Plans”). However, no further awards will be made under the 2003 Stock Plan. The Company's Board of Directors adopted, and shareholders approved, the 2020 Stock Plan in connection with the IPO, which provides for the grant of incentive stock options (“ISO's”), nonstatutory stock options (“NSO's”), stock appreciation rights, restricted stock awards, restricted stock unit awards ("RSU's"), performance-based cash awards ("PSU's"), and other forms of equity compensation (collectively, “stock awards”). All awards may be granted to employees, non-employee directors, and consultants of the Company and its subsidiaries and affiliates except for ISO's, which can only be granted to current employees of the Company.

The Company accounts for its share-based compensation awards in accordance with ASC 718, Compensation—Stock Compensation (“ASC 718”) which requires all share-based compensation to be recognized in the income statement based on fair value and applies to all awards granted, modified, canceled, or repurchased after the effective date.

Total share-based compensation for stock awards included in general and administrative expense in our condensed consolidated statements of comprehensive income was as follows for the periods presented:


	Three Months Ended March 31,				Nine Months Ended March 31,
(in thousands)	2021		2020		2021		2020
Share-based compensation related to:
Equity classified stock options	$	451	$	19	$	1,269	$	9,283
Equity classified RSU's	648		—		1,608		—
Equity classified PSU's	190		—		512		—
Total	$	1,289	$	19	$	3,389	$	9,283

Stock Options—The fair value of each option (for purposes of calculation of share-based compensation expense) is estimated using the Black-Scholes-Merton option pricing model that uses assumptions determined as of the date of the grant. Use of this option pricing model requires the input of subjective assumptions. These assumptions include estimating the length of time employees will retain their vested stock options before exercising them ("expected term"), the estimated volatility of the Company's common stock price over the expected term ("volatility"), the number of options that will ultimately not complete their vesting requirements ("assumed forfeitures"), the risk-free interest rate that reflects the interest rate at grant date on zero-coupon United States governmental bonds that have a remaining life similar to the expected term ("risk-free interest rate"), and the dividend yield assumption which is based on the Company's dividend payment history and management's expectations of future dividend payments ("dividend yield"). Changes in the subjective assumptions can materially affect the estimate of the fair value of share-based compensation and, consequently, the related amount recognized in the condensed consolidated statements of comprehensive income.

The Company used the following weighted-average assumptions for the stock options granted during the nine months ended March 31, 2021. There were no stock options granted during the nine months ended March 31, 2020.



			2021
Volatility			25.0%
Risk-free interest rate			0.4%
Dividend yield			—%
Assumed forfeitures			—%
Expected term (in years)			6.24
Weighted-average fair value (per share)			$4.89

The following table summarizes stock option activity under the Stock Plans for the nine months ended March 31, 2021:


	Number of Options	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value (in Thousands)
Outstanding—June 30, 2020	4,067,417	$	2.69
Options granted	1,035,181	19.25
Options exercised	(1,598,824)	0.90
Options forfeited/expired/cancelled	(12,932)	11.14
Outstanding—March 31, 2021	3,490,842	$	8.38	6.36	$	73,752
Vested and exercisable—March 31, 2021	1,947,241	$	0.98	4.16	$	55,560

As of March 31, 2021, there was $5.5 million in unrecognized compensation cost related to unvested stock options granted, which is expected to be recognized over a weighted-average period of 3.10 years.

The Company received cash of $1.8 million and $5.4 million in connection with stock options exercised, net of cashless exercises, during the nine months ended March 31, 2021 and 2020, respectively.

Restricted Stock—The following table summarizes restricted stock unit activity under the 2020 Stock Plan for the nine months ended March 31, 2021. There were no RSU's granted during the nine months ended March 31, 2020.


	Number of Restricted Stock Units	Weighted-Average Grant Date Fair Value
Unvested as of June 30, 2020	150,000	$	20.00
Granted	258,697	18.67
Vested	—	—
Cancelled	(3,879)	17.89
Unvested as of March 31, 2021	404,818	$	19.17

As of March 31, 2021, there was $6.0 million of unrecognized compensation cost related to unvested restricted stock units granted, which is expected to be recognized over a weighted-average period of 2.73 years.

Performance Stock—The following table summarizes performance stock unit activity under the 2020 Stock Plan for the nine months ended March 31, 2021. There were no PSU's granted during the nine months ended March 31, 2020.


	Number of Performance Stock Units	Weighted-Average Grant Date Fair Value
Unvested as of June 30, 2020	—	$	—
Granted	132,374	17.92
Vested	—	—
Cancelled	—	—
Unvested as of March 31, 2021	132,374	$	17.92

As of March 31, 2021, there was $1.9 million of unrecognized compensation cost related to unvested performance stock units granted, which is expected to be recognized over a weighted-average period of 2.41 years.

ESPP—The purpose of the ESPP is to provide the Company's eligible employees with an opportunity to purchase shares of its common stock through accumulated payroll deductions at 95% of the fair market value on the exercise date, but no less than the lesser of 85% of the fair market value of a share of common stock on the date the offering period commences or 85% of the fair market value of the common stock on the exercise date. At the conclusion of the six-month offering period on March 31, 2021, the Company issued 56,440 shares to its employees and recorded share-based compensation expense of $0.1 million and $0.3 million for the three and nine months ended March 31, 2021, respectively.

Secondary Offering—On March 8, 2021, the Company completed a secondary public offering ("Secondary Offering") of 10,600,000 shares of the Company’s common stock, par value $0.01 per share, by certain shareholders of the Company. The Company did not sell any shares of common stock and did not receive any

proceeds from the Secondary Offering. Therefore, the offering did not increase the number of shares of common stock that are currently outstanding.