0001564590-21-052757 | 10-Q | XBRL Viewer

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Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Sep. 30, 2021	Oct. 26, 2021
Cover [Abstract]
Entity Registrant Name	NEXTGEN HEALTHCARE, INC.
Trading Symbol	NXGN
Entity Central Index Key	0000708818
Document Type	10-Q
Document Period End Date	Sep. 30, 2021
Amendment Flag	false
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--03-31
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Shell Company	false
Entity Emerging Growth Company	false
Entity Current Reporting Status	Yes
Entity File Number	001-12537
Entity Tax Identification Number	95-2888568
Entity Address, Address Line One	3525 Piedmont Rd.
Entity Address, Address Line Two	NE
Entity Address, Address Line Three	Building 6, Suite 700
Entity Address, City or Town	Atlanta
Entity Address, State or Province	GA
Entity Address, Postal Zip Code	30305
City Area Code	(404)
Local Phone Number	467-1500
Entity Interactive Data Current	Yes
Title of 12(b) Security	Common Stock, $0.01 Par Value
Security Exchange Name	NASDAQ
Entity Incorporation, State or Country Code	DE
Document Quarterly Report	true
Document Transition Report	false
Entity Common Stock, Shares Outstanding		68,387,405

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2021	Mar. 31, 2021
Current assets:
Cash and cash equivalents	$ 75,303	$ 73,295
Restricted cash and cash equivalents	6,261	5,280
Accounts receivable, net	71,988	77,541
Contract assets	20,521	19,481
Income taxes receivable	9,066	765
Prepaid expenses and other current assets	27,574	31,282
Total current assets	210,713	207,644
Equipment and improvements, net	12,030	14,539
Capitalized software costs, net	41,570	41,474
Operating lease assets	14,431	18,446
Deferred income taxes, net	19,445	19,474
Contract assets, net of current	1,991	1,976
Intangibles, net	30,502	36,700
Goodwill	267,212	267,212
Other assets	37,628	37,021
Total assets	635,522	644,486
Current liabilities:
Accounts payable	12,687	11,378
Contract liabilities	53,506	52,863
Accrued compensation and related benefits	34,053	50,374
Income taxes payable	201	584
Operating lease liabilities	11,290	12,735
Other current liabilities	59,440	52,699
Total current liabilities	171,177	180,633
Deferred compensation	7,275	6,620
Operating lease liabilities, net of current	14,646	18,453
Other noncurrent liabilities	7,148	7,136
Total liabilities	200,246	212,842
Commitments and contingencies (Note 15)
Shareholders' equity:
$0.01 par value; authorized 100,000 shares; issued and outstanding 68,394 and 67,069 shares at September 30, 2021 and March 31, 2021, respectively	684	671
Additional paid-in capital	311,793	304,263
Accumulated other comprehensive loss	(1,912)	(1,924)
Retained earnings	124,711	128,634
Total shareholders' equity	435,276	431,644
Total liabilities and shareholders' equity	$ 635,522	$ 644,486

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Sep. 30, 2021	Mar. 31, 2021
Statement Of Financial Position [Abstract]
Common stock, par value (in USD per share)	$ 0.01	$ 0.01
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	68,394,000	67,069,000
Common stock, shares outstanding	68,394,000	67,069,000

Condensed Consolidated Statements of Net Income (Loss) and Comprehensive Income (Loss) (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Revenues:
Total revenues	$ 149,286	$ 140,002	$ 295,370	$ 270,881
Cost of revenue:
Amortization of capitalized software costs and acquired intangible assets	7,969	9,961	16,053	19,860
Total cost of revenue	72,698	68,950	145,439	135,319
Gross profit	76,588	71,052	149,931	135,562
Operating expenses:
Selling, general and administrative	63,891	41,950	112,377	82,687
Research and development costs, net	18,518	17,692	37,839	35,914
Amortization of acquired intangible assets	881	1,112	1,762	2,224
Impairment of assets	1,195		1,577
Restructuring costs			539	2,562
Total operating expenses	84,485	60,754	154,094	123,387
Income (loss) from operations	(7,897)	10,298	(4,163)	12,175
Interest income	17	12	29	18
Interest expense	(320)	(1,135)	(637)	(2,242)
Other expense, net	(12)	(18)	(34)	(2)
Income (loss) before provision for (benefit of) income taxes	(8,212)	9,157	(4,805)	9,949
Provision for (benefit of) income taxes	(1,441)	(1,298)	(882)	318
Net income (loss)	(6,771)	10,455	(3,923)	9,631
Other comprehensive income:
Foreign currency translation, net of tax	50	102	12	89
Comprehensive income (loss)	$ (6,721)	$ 10,557	$ (3,911)	$ 9,720
Net income (loss) per share:
Basic	$ (0.10)	$ 0.16	$ (0.06)	$ 0.14
Diluted	$ (0.10)	$ 0.16	$ (0.06)	$ 0.14
Weighted-average shares outstanding:
Basic	67,406	66,688	67,291	66,493
Diluted	67,406	66,689	67,291	66,493
Recurring
Revenues:
Total revenues	$ 135,609	$ 125,691	$ 267,990	$ 245,213
Cost of revenue:
Cost of revenue excluding amortization of capitalized software costs and acquired intangible assets	57,119	52,906	114,279	103,335
Software, Hardware, and Other Non-recurring
Revenues:
Total revenues	13,677	14,311	27,380	25,668
Cost of revenue:
Cost of revenue excluding amortization of capitalized software costs and acquired intangible assets	$ 7,610	$ 6,083	$ 15,107	$ 12,124

Condensed Consolidated Statement of Stockholders' Equity (Unaudited) - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Loss
Balance at Mar. 31, 2020	$ 400,494	$ 661	$ 282,857	$ 119,119	$ (2,143)
Balance, Shares at Mar. 31, 2020		66,134
Common stock issued under stock plans, net of shares withheld for taxes	(1,408)	$ 6	(1,414)
Common stock issued under stock plans, net of shares withheld for taxes, Shares		535
Stock-based compensation	5,393		5,393
Other comprehensive income:
Translation adjustments	(13)				(13)
Net income (loss)	(824)			(824)
Balance at Jun. 30, 2020	403,642	$ 667	286,836	118,295	(2,156)
Balance, Shares at Jun. 30, 2020		66,669
Balance at Mar. 31, 2020	400,494	$ 661	282,857	119,119	(2,143)
Balance, Shares at Mar. 31, 2020		66,134
Other comprehensive income:
Translation adjustments	89
Net income (loss)	9,631
Balance at Sep. 30, 2020	419,591	$ 667	292,228	128,750	(2,054)
Balance, Shares at Sep. 30, 2020		66,734
Balance at Jun. 30, 2020	403,642	$ 667	286,836	118,295	(2,156)
Balance, Shares at Jun. 30, 2020		66,669
Common stock issued under stock plans, net of shares withheld for taxes	(45)		(45)
Common stock issued under stock plans, net of shares withheld for taxes, Shares		65
Stock-based compensation	5,437		5,437
Other comprehensive income:
Translation adjustments	102				102
Net income (loss)	10,455			10,455
Balance at Sep. 30, 2020	419,591	$ 667	292,228	128,750	(2,054)
Balance, Shares at Sep. 30, 2020		66,734
Balance at Mar. 31, 2021	431,644	$ 671	304,263	128,634	(1,924)
Balance, Shares at Mar. 31, 2021		67,069
Common stock issued under stock plans, net of shares withheld for taxes	(2,298)	$ 3	(2,301)
Common stock issued under stock plans, net of shares withheld for taxes, Shares		293
Stock-based compensation	6,412		6,412
Other comprehensive income:
Translation adjustments	(38)				(38)
Net income (loss)	2,848			2,848
Balance at Jun. 30, 2021	438,568	$ 674	308,374	131,482	(1,962)
Balance, Shares at Jun. 30, 2021		67,362
Balance at Mar. 31, 2021	431,644	$ 671	304,263	128,634	(1,924)
Balance, Shares at Mar. 31, 2021		67,069
Other comprehensive income:
Translation adjustments	12
Net income (loss)	(3,923)
Balance at Sep. 30, 2021	435,276	$ 684	311,793	124,711	(1,912)
Balance, Shares at Sep. 30, 2021		68,394
Balance at Jun. 30, 2021	438,568	$ 674	308,374	131,482	(1,962)
Balance, Shares at Jun. 30, 2021		67,362
Common stock issued under stock plans, net of shares withheld for taxes	(1,794)	$ 10	(1,804)
Common stock issued under stock plans, net of shares withheld for taxes, Shares		1,032
Stock-based compensation	5,223		5,223
Other comprehensive income:
Translation adjustments	50				50
Net income (loss)	(6,771)			(6,771)
Balance at Sep. 30, 2021	$ 435,276	$ 684	$ 311,793	$ 124,711	$ (1,912)
Balance, Shares at Sep. 30, 2021		68,394

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

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- Definition

Total of all stockholders' equity (deficit) items, net of receivables from officers, directors, owners, and affiliates of the entity which are attributable to the parent. The amount of the economic entity's stockholders' equity attributable to the parent excludes the amount of stockholders' equity which is allocable to that ownership interest in subsidiary equity which is not attributable to the parent (noncontrolling interest, minority interest). This excludes temporary equity and is sometimes called permanent equity.

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+ Details

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Cash flows from operating activities:
Net income (loss)	$ (3,923)	$ 9,631
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of capitalized software costs	11,617	9,853
Amortization of debt issuance costs	254	355
Amortization of other intangibles	6,198	12,232
Change in fair value of contingent consideration		50
Deferred income taxes	29	(27)
Depreciation	3,781	3,937
Excess tax deficiency from share-based compensation	640	941
Impairment of assets	1,577
Loss on disposal of equipment and improvements	77
Non-cash operating lease costs	3,087	3,421
Provision for bad debts	679	1,399
Share-based compensation	11,635	10,830
Changes in assets and liabilities:
Accounts receivable	4,874	3,505
Contract assets	(1,055)	(2,481)
Accounts payable	1,108	(3,756)
Contract liabilities	643	(8,344)
Accrued compensation and related benefits	(16,321)	8,348
Income taxes	(9,324)	(2,083)
Deferred compensation	655	840
Operating lease liabilities	(5,360)	(5,224)
Other assets and liabilities	9,608	4,605
Net cash provided by operating activities	20,479	48,032
Cash flows from investing activities:
Additions to capitalized software costs	(11,713)	(12,083)
Additions to equipment and improvements	(1,685)	(764)
Acquisition related working capital adjustment payments		(206)
Net cash used in investing activities	(13,398)	(13,053)
Cash flows from financing activities:
Proceeds from line of credit		50,000
Repayments on line of credit		(115,000)
Proceeds from issuance of shares under employee plans	1,109	798
Payments for taxes related to net share settlement of equity awards	(5,201)	(2,251)
Net cash used in financing activities	(4,092)	(66,453)
Net increase (decrease) in cash, cash equivalents, and restricted cash	2,989	(31,474)
Cash, cash equivalents, and restricted cash at beginning of period	78,575	140,319
Cash, cash equivalents, and restricted cash at end of period	81,564	108,845
Supplemental disclosures of cash flow information:
Cash paid for income taxes	7,827	1,566
Cash refunds from income taxes	19	107
Cash paid for interest	190	1,905
Cash paid for amounts included in the measurement of operating lease liabilities	5,914	6,264
Operating lease assets obtained in exchange for operating lease liabilities	197	3,107
Accrued purchases of equipment and improvements	$ 201	$ 57

Summary of Significant Accounting Policies

6 Months Ended

Sep. 30, 2021

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

1. Summary of Significant Accounting Policies

Principles of Consolidation. The condensed consolidated financial statements include the accounts of NextGen Healthcare, Inc. and its wholly-owned subsidiaries (collectively, the “Company”). Each of the terms “we,” “us,” or “our” as used herein refers collectively to the Company, unless otherwise stated. All intercompany accounts and transactions have been eliminated.

Basis of Presentation. The accompanying unaudited condensed consolidated financial statements as of September 30, 2021 and for the three and six months ended September 30, 2021 have been prepared in accordance with the requirements of Quarterly Report on Form 10-Q and Article 10 of the Securities and Exchange Commission Regulation S-X and therefore do not include all information and notes which would be presented were such condensed consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements presented in our Annual Report on Form 10-K for the fiscal year ended March 31, 2021. In the opinion of management, the accompanying condensed consolidated financial statements reflect all adjustments which are necessary for a fair statement of the results of operations and cash flows for the periods presented. The results of operations for such interim periods are not necessarily indicative of results of operations to be expected for the full year.

References to amounts in the condensed consolidated financial statement sections are in thousands, except shares and per share data, unless otherwise specified.

Share-Based Compensation. The following table summarizes total share-based compensation expense included in the condensed consolidated statements of net income (loss) and comprehensive income (loss) for the three and six months ended September 30, 2021 and 2020:

	Three Months Ended September 30,						Six Months Ended September 30,
	2021			2020			2021			2020
Costs and expenses:
Cost of revenue	$	554		$	589		$	1,058		$	1,013
Research and development costs		1,110			1,026			2,153			1,943
Selling, general and administrative		3,559			3,822			8,424			7,874
Total share-based compensation		5,223			5,437			11,635			10,830
Income tax benefit		(1,151	)		(1,305	)		(2,733	)		(2,569	)
Decrease in net income	$	4,072		$	4,132		$	8,902		$	8,261

Recently Adopted Accounting Pronouncements. Recently adopted accounting pronouncements are discussed below or in the notes, where applicable.

In December 2019, the Financial Accounting Standards Board ("FASB") issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. ASU 2019-12 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted, including adoption in an interim period. The adoption of ASU 2019-12 on April 1, 2021 did not have a material impact on our condensed consolidated financial statements.

Recent Accounting Standards Not Yet Adopted. Recent accounting pronouncements requiring implementation in current or future periods are discussed below or in the notes, where applicable.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in ASU 2020-04 apply only to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued because of reference rate reform. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope (“ASU 2021-01”), which clarifies the application of certain optional expedients and exceptions. Topic 848 may be applied prospectively through December 31, 2022. We are currently evaluating the effect that ASU 2020-04 may have on our contracts that reference LIBOR, such as our amended and restated revolving credit agreement (see Note 9). We have not elected to apply any of the provisions of Topic 848, and we are currently in the process of evaluating the potential impact of adoption of this updated authoritative guidance on our condensed consolidated financial statements.

We do not believe that any other recently issued, but not yet effective accounting standards, if adopted, would have a material impact on our condensed consolidated financial statements.

Revenue from Contracts with Customers

6 Months Ended

Sep. 30, 2021

Revenue From Contract With Customer [Abstract]

Revenue from Contract with Customer

2. Revenue from Contracts with Customers

Revenue Recognition and Performance Obligations

We generate revenue from sales of licensing rights and subscriptions to our software solutions, hardware and third-party software products, support and maintenance, managed services, EDI, and other non-recurring services, including implementation, training, and consulting services. Our contracts with customers may include multiple performance obligations that consist of various combinations of our software solutions and related services, which are generally capable of being distinct and accounted for as separate performance obligations.

The total transaction price is allocated to each performance obligation within a contract based on estimated standalone selling prices. We generally determine standalone selling prices based on the prices charged to customers, except for certain software licenses that are based on the residual approach because their standalone selling prices are highly variable and certain maintenance customers that are based on substantive renewal rates. In instances where standalone selling price is not sufficiently observable, such as RCM services and software licenses included in our RCM arrangements, we estimate standalone selling price utilizing an expected cost plus a margin approach. When standalone selling prices are not observable, significant judgment is required in estimating the standalone selling price for each performance obligation.

Revenue is recognized when control of the promised goods or services is transferred to our customers in an amount that reflects the consideration that we expect to be entitled to in exchange for those goods or services.

We exclude sales tax from the measurement of the transaction price and record revenue net of taxes collected from customers and subsequently remitted to governmental authorities.

The following table presents our revenues disaggregated by our major revenue categories and by occurrence:

	Three Months Ended September 30,				Six Months Ended September 30,
	2021		2020		2021		2020
Recurring revenues:
Subscription services	$	41,139	$	36,867	$	79,423	$	72,227
Support and maintenance		39,004		38,076		77,490		76,623
Managed services		29,506		26,218		58,937		48,711
Electronic data interchange and data services		25,960		24,530		52,140		47,652
Total recurring revenues		135,609		125,691		267,990		245,213

Software, hardware, and other non-recurring revenues:
Software license and hardware		8,068		8,014		15,282		12,754
Other non-recurring services		5,609		6,297		12,098		12,914
Total software, hardware and other non-recurring revenues		13,677		14,311		27,380		25,668

Total revenues	$	149,286	$	140,002	$	295,370	$	270,881

Recurring revenues consists of subscription services, support and maintenance, managed services, and EDI and data services. Software, hardware, and other non-recurring revenues consists of revenue from sales of software license and hardware and certain non-recurring services, such as implementation, training, and consulting performed for clients who use our products.

We generally recognize revenue for our most significant performance obligations as follows:

Subscription services. Performance obligations involving subscription services, which include annual libraries, are satisfied over time as the customer simultaneously receives and consumes the benefits of the services throughout the contract period. Our subscription services primarily include our software-as-a-service (“SaaS”) based offerings, such as our electronic health records and practice management, mobile, patient portal, and population health management solutions. Our SaaS-based offerings may include multiple goods and services, such as providing access to our technology-based solutions together with our managed cloud hosting services. These offerings are concurrently delivered with the same pattern of transfer to our customers and are accounted for as a single performance obligation because the technology-based solutions and other goods and services included within our overall SaaS-based offerings are each individually not capable of being distinct as the customer receives benefits based on the combined offering. Our annual libraries primarily consist of providing stand-ready access to certain content, knowledgebase, databases, and SaaS-based educational tools, which are frequently updated to meet the most current standards and requirements, to be utilized in

conjunction with our core solutions. We recognize revenue related to these subscription services, including annual libraries, ratably over the respective noncancelable contract term.

Support and maintenance. Performance obligations involving support and maintenance are satisfied over time as the customer simultaneously receives and consumes the benefits of the maintenance services provided. Our support and maintenance services may consist of separate performance obligations, such as unspecified upgrades or enhancements and technical support, which are considered stand-ready in nature and can be offered at various points during the service period. Since the efforts associated with the combined support and maintenance services are rendered concurrently and provided evenly throughout the service period, we consider the series of support and maintenance services to be a single performance obligation. Therefore, we recognize revenue related to these services ratably over the respective noncancelable contract term.

Managed services. Managed services consist primarily of RCM and related services, but also includes our hosting services, which we refer to as managed cloud services, transcription services, patient pay services, and certain other recurring services. Performance obligations associated with RCM services are satisfied over time as the customer simultaneously receives and consumes the benefits of the services executed throughout the contract period. The majority of service fees under our RCM arrangements are variable consideration contingent upon collections by our clients. We estimate the variable consideration which we expect to be entitled to over the noncancelable contract term associated with our RCM service arrangements. The estimate of variable consideration included in the transaction price typically involves estimating the amounts we will ultimately collect on behalf of our clients and the relative fee we charge that is generally calculated as a percentage of those collections. Inputs to these estimates include, but are not limited to, historical service fees and collections amounts, timing of historical collections relative to the timing of when claims are submitted by our clients to their respective payers, macroeconomic trends, and anticipated changes in the number of providers. Significant judgement is required when estimating the total transaction price based on the variable consideration. We may apply certain constraints when appropriate whereby we include in the transaction price estimated variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Such estimates are assessed at the contract level. RCM and related services may not be rendered evenly over the contract period as the timing of services are based on customer collections, which may vary throughout the service period. We recognize revenue for RCM based on the amount of collections received throughout the contract term as it most closely depicts our efforts to transfer our service obligations to the customer. Our managed cloud services represent a single performance obligation to provide cloud hosting services to our customers and related revenue is recognized ratably over the respective noncancelable contract term. Performance obligations related to the transcription services, patient pay services, and other recurring services are satisfied as the corresponding services are provided and revenue is recognized as such services are rendered.

Electronic data interchange and data services. Performance obligations related to EDI and other transaction processing services are satisfied at the point in time the services are rendered. The transfer of control occurs when the transaction processing services are delivered and the customer receives the benefits from the services provided.

Software license and hardware. Software license and hardware are considered point-in-time performance obligations as control is transferred to customers upon the delivery of the software license and hardware. Our software licenses are considered functional licenses, and revenue recognition generally occurs on the date of contract execution as the customer is provided with immediate access to the license. We generally determine the amount of consideration allocated to the software license performance obligation using the residual approach, except for certain RCM arrangements where the amount allocated to the software license performance obligation is determined based on estimated relative standalone selling prices. For hardware, we recognize revenue upon transfer of such hardware or devices to the customer.

Other non-recurring services. Performance obligations related to other non-recurring services, including implementation, training, and consulting services, are generally satisfied as the corresponding services are provided. Once the services have been provided to the customer, the transfer of control has occurred. Therefore, we recognize revenue as such services are rendered.

Transaction Price Allocated to Remaining Performance Obligations

As of September 30, 2021, the aggregate amount of transaction price related to remaining unsatisfied or partially unsatisfied performance obligations over the respective noncancelable contract term was approximately $531,800, of which we expect to recognize approximately 10% as services are rendered or goods are delivered, 52% over the next 12 months, and the remainder thereafter.

As of September 30, 2020, the aggregate amount of transaction price related to remaining unsatisfied or partially unsatisfied performance obligations over the respective noncancelable contract term was approximately $471,700, of which we expect to recognize approximately 10% as services are rendered or goods are delivered, 53% over the next 12 months, and the remainder thereafter.

Contract Balances

Contract balances result from the timing differences between our revenue recognition, invoicing, and cash collections. Such contract balances include accounts receivables, contract assets and liabilities, and other customer deposits and liabilities balances.

Accounts receivables include invoiced amounts where the right to receive payment is unconditional and only subject to the passage of time. Contract assets, consisting of unbilled receivables, include amounts where revenue recognized exceeds the amount invoiced to the customer and the right to payment is not solely subject to the passage of time. Contract assets are generally associated with our sales of software licenses, but may also be associated with other performance obligations such as subscription services, support and maintenance, annual libraries, and professional services, where control has been transferred to our customers but the associated payments are based on future customer collections (in the case of our RCM service arrangements) or based on future milestone payment due dates. In such instances, the revenue recognized may exceed the amount invoiced to the customer and such balances are included in contract assets since our right to receive payment is not unconditional, but rather is conditional upon customer collections or the continued functionality of the software and our ongoing support and maintenance obligations. Contract liabilities consist mainly of fees invoiced or paid by our clients for which the associated services have not been performed and revenues have not been recognized. Contract assets and contract liabilities are reported in a net position on an individual contract basis at the end of each reporting period. Contract assets are classified as current or long-term on our condensed consolidated balance sheets based on the timing of when we expect to complete the related performance obligations and invoice the customer. Contract liabilities are classified as current on our condensed consolidated balance sheets since the revenue recognition associated with the related customer payments and invoicing is expected to occur within the next twelve months.

During the three months ended September 30, 2021 and 2020, we recognized $17,607 and $19,319, respectively, of revenues that were included in the contract liability balance or invoiced to customers since the beginning of the corresponding periods. During the six months ended September 30, 2021 and 2020, we recognized $35,388 and $40,145, respectively, of revenues that were included in the contract liability balance or invoiced to customers since the beginning of the corresponding periods.

Our contracts with customers do not include any major financing components.

Costs to Obtain or Fulfill a Contract

We capitalize all incremental costs of obtaining a contract with a customer to the extent that such costs are directly related to a contract and expected to be recoverable. Our sales commissions and related sales incentives are considered incremental costs requiring capitalization. Capitalized contract costs are amortized to expense utilizing a method that is consistent with the transfer of the related goods or services to the customer. The amortization period ranges from less than one year up to five years, based on the period over which the related goods and services are transferred, including consideration of the expected customer renewals and the related useful lives of the products.

Capitalized commissions costs were $30,437 as of September 30, 2021, of which $10,880 is classified as current and included as prepaid expenses and other current assets and $19,557 is classified as long-term and included within other assets on our condensed consolidated balance sheets, based on the expected timing of expense recognition. During the three months ended September 30, 2021 and 2020, we recognized $3,056 and $2,636, respectively, of commissions expense. During the six months ended September 30, 2021 and 2020, we recognized $5,982 and $4,876, respectively, of commissions expense. Commissions expense primarily relate to the amortization of capitalized commissions costs, which is included as a selling, general and administrative expense in the condensed consolidated statements of net income (loss) and comprehensive income (loss).

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-URI http://asc.fasb.org/topic&trid=49130388

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130551-203045

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)(2)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130556-203045

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 9
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130550-203045

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (e)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 15
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130558-203045

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

+ Details

Accounts Receivable

6 Months Ended

Sep. 30, 2021

Receivables [Abstract]

Accounts Receivable

3. Accounts Receivable

Accounts receivable includes invoiced amounts where the right to receive payment is unconditional and only subject to the passage of time. Allowance for doubtful accounts are reported as a component of accounts receivable as summarized below:

	September 30, 2021			March 31, 2021
Accounts receivable, gross	$	75,641		$	81,746
Allowance for doubtful accounts		(3,653	)		(4,205	)
Accounts receivable, net	$	71,988		$	77,541

The following table represents the changes in the allowance for doubtful accounts, as of and for the three months ended September 30, 2021:

Balance as of June 30, 2021	$	(4,099	)
Additions charged to costs and expenses		(40	)
Deductions		486
Balance as of September 30, 2021	$	(3,653	)

The following table represents the changes in the allowance for doubtful accounts, as of and for the six months ended September 30, 2021:

Balance as of March 31, 2021	$	(4,205	)
Additions charged to costs and expenses		(679	)
Deductions		1,231
Balance as of September 30, 2021	$	(3,653	)

Fair Value Measurements

6 Months Ended

Sep. 30, 2021

Fair Value Disclosures [Abstract]

Fair Value Measurements

4. Fair Value Measurements

The following tables set forth by level within the fair value hierarchy our financial assets and liabilities that were accounted for at fair value on a recurring basis at September 30, 2021 and March 31, 2021:

	Balance At		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Unobservable Inputs
	September 30, 2021		(Level 1)		(Level 2)		(Level 3)
ASSETS
Cash and cash equivalents ⁽¹⁾	$	75,303	$	75,303	$	—	$	—
Restricted cash and cash equivalents		6,261		6,261		—		—
	$	81,564	$	81,564	$	—	$	—
LIABILITIES
Contingent consideration related to acquisitions	$	533	$	—	$	533	$	—
	$	533	$	—	$	533	$	—

	Balance At		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Unobservable Inputs
	March 31, 2021		(Level 1)		(Level 2)		(Level 3)
ASSETS
Cash and cash equivalents ⁽¹⁾	$	73,295	$	73,295	$	—	$	—
Restricted cash and cash equivalents		5,280		5,280		—		—
	$	78,575	$	78,575	$	—	$	—
LIABILITIES
Contingent consideration related to acquisitions	$	533	$	—	$	533	$	—
	$	533	$	—	$	533	$	—

⁽¹⁾	Cash equivalents consist primarily of money market funds.

We believe that the fair value of our other financial assets and liabilities, including accounts receivable, accounts payable, and line of credit, approximate their respective carrying values due to their nominal credit risk.

As of September 30, 2021 and March 31, 2021, the contingent consideration liability balance of $533 relates to the acquisition of Topaz Information Systems, LLC, for which we may pay up to an additional $2,000 of cash contingent consideration in the form of an earnout, subject to the achievement of certain operational targets through April 2021. The fair value of the contingent consideration liability was calculated based on actual earnout achievement through the end of the performance period.

Non-Recurring Fair Value Measurements

We have certain assets, including goodwill and other intangible assets, which are measured at fair value on a non-recurring basis and are adjusted to fair value only if an impairment charge is recognized. The categorization of the framework used to measure fair value of the assets is considered to be within the Level 3 valuation hierarchy due to the subjective nature of the unobservable inputs used.

- Definition

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.

+ References + Details

Leases

6 Months Ended

Sep. 30, 2021

Leases [Abstract]

Leases

5. Leases

Our leasing arrangements are reflected on the balance sheet as right-of-use assets and liabilities pertaining to the rights and obligations created by the leased assets.

Right-of-use lease assets and corresponding lease liabilities are recognized at commencement date based on the present value of lease payments over the expected lease term. Since the interest rate implicit in our lease arrangements is not readily determinable,

we determine an incremental borrowing rate for each lease based on the approximate interest rate on a collateralized basis with similar remaining terms and payments as of the lease commencement date to determine the present value of future lease payments. Our lease terms may include options to extend or terminate the lease. Currently, it is not reasonably certain that we will exercise those options and therefore, we utilize the initial, noncancelable, lease term to calculate the lease assets and corresponding liabilities for all our leases. We have certain insignificant short-term leases with an initial term of twelve months or less that are not recorded in our condensed consolidated balance sheets. Operating right-of-use lease assets are classified as operating lease assets on our condensed consolidated balance sheets. We determine whether an arrangement is a lease at inception and classify it as finance or operating. All of our existing material leases are classified as operating leases. Our leases do not contain any residual value guarantees.

Our lease agreements generally contain lease and non-lease components. Non-lease components primarily include payments for maintenance and utilities. We have applied the practical expedient to combine fixed payments for non-lease components with our lease payments for all of our leases and account for them together as a single lease component, which increases the amount of our lease assets and corresponding liabilities. Payments under our lease arrangements are primarily fixed, however, certain lease agreements contain variable payments, which are expensed as incurred and not included in the operating lease assets and liabilities.

Operating lease costs are recognized on a straight-line basis over the lease term and included as a selling, general and administrative expense in the condensed consolidated statements of net income (loss) and comprehensive income (loss). Total operating lease costs were $1,685 and $2,265 for the three months ended September 30, 2021 and 2020, respectively. Total operating lease costs were $3,549 and $4,535 for the six months ended September 30, 2021 and 2020, respectively.

Components of operating lease costs are summarized as follows:

	Three Months Ended September 30,						Six Months Ended September 30,
	2021			2020			2021			2020
Operating lease costs	$	1,602		$	2,093		$	3,435		$	4,184
Short-term lease costs		2			6			8			13
Variable lease costs		204			289			361			586
Less: Sublease income		(123	)		(123	)		(255	)		(248	)
Total operating lease costs	$	1,685		$	2,265		$	3,549		$	4,535

Supplemental cash flow information related to operating leases is summarized as follows:

	Three Months Ended September 30,				Six Months Ended September 30,
	2021		2020		2021		2020
Cash paid for amounts included in the measurement of operating lease liabilities	$	2,950	$	3,132	$	5,914	$	6,264
Operating lease assets obtained in exchange for operating lease liabilities		197		3,107		197		3,107

We have operating lease agreements for our offices in the United States and India with lease periods expiring between 2022 and 2026. As of September 30, 2021, our operating leases had a weighted average remaining lease term of 3.0 years and a weighted average discount rate of 3.6%. Future minimum aggregate lease payments under operating leases as of September 30, 2021 are summarized as follows:

For the year ended March 31,
2022 (remaining six months)	$	7,853
2023		8,283
2024		6,337
2025		3,824
2026		1,257
Total future lease payments		27,554
Less interest		(1,618	)
Total lease liabilities	$	25,936

In the three and six months ended September 30, 2021, we vacated portions of certain leased locations and recorded impairments of $1,195 and $1,577, respectively, to our right-of-use assets and certain related fixed assets associated with the vacated locations, or portions thereof, in Irvine, CA and Fairport, NY based on projected sublease rental income and estimated sublease commencement dates. The impairment analysis was performed at the asset group level and the impairment charge was estimated by comparing the fair value of each asset group based on the expected cash flows to its respective book value. We determined the discount rate for each asset group based on the approximate interest rate on a collateralized basis with similar remaining terms and payments as of the impairment date. Significant judgment was required to estimate the fair value of each asset group and actual results could vary from the estimates, resulting in potential future adjustments to amounts previously recorded.

Goodwill

6 Months Ended

Sep. 30, 2021

Goodwill And Intangible Assets Disclosure [Abstract]

Goodwill

6. Goodwill

We test goodwill for impairment annually during our first fiscal quarter, referred to as the annual test date. We will also test for impairment between annual test dates if an event occurs or circumstances change that would indicate the carrying amount may be impaired. Impairment testing for goodwill is performed at a reporting-unit level, which is defined as an operating segment or one level below an operating segment (referred to as a component). We operate as one segment and have a single reporting unit. The measures evaluated by our chief operating decision maker ("CODM"), consisting of the Chief Executive Officer, to assess company performance and make decisions about the allocation of resources include consolidated revenue and consolidated operating results.

We have not identified any events or circumstances as of September 30, 2021 that would require an interim goodwill impairment test.

We do not amortize goodwill as it has been determined to have an indefinite useful life. The carrying amount of goodwill as of September 30, 2021 and March 31, 2021 was $267,212.

Intangible Assets

6 Months Ended

Sep. 30, 2021

Goodwill And Intangible Assets Disclosure [Abstract]

Intangible Assets

7. Intangible Assets

Our definite-lived intangible assets, other than capitalized software development costs, are summarized as follows:

	September 30, 2021
	Customer Relationships			Trade Names			Software Technology			Total
Gross carrying amount	$	39,200		$	250		$	49,000		$	88,450
Accumulated amortization		(28,086	)		(92	)		(29,770	)		(57,948	)
Net intangible assets	$	11,114		$	158		$	19,230		$	30,502

	March 31, 2021
	Customer Relationships			Trade Names			Software Technology			Total
Gross carrying amount	$	39,200		$	250		$	91,500		$	130,950
Accumulated amortization		(26,349	)		(67	)		(67,834	)		(94,250	)
Net intangible assets	$	12,851		$	183		$	23,666		$	36,700

Amortization expense related to customer relationships and trade names recorded as operating expenses in the condensed consolidated statements of net income (loss) and comprehensive income (loss) was $881 and $1,112 for the three months ended September 30, 2021 and 2020, respectively. Amortization expense related to software technology recorded as cost of revenue was $2,218 and $4,872 for the three months ended September 30, 2021 and 2020, respectively.

Amortization expense related to customer relationships and trade names recorded as operating expenses in the condensed consolidated statements of net income (loss) and comprehensive income (loss) was $1,762 and $2,224 for the six months ended September 30, 2021 and 2020, respectively. Amortization expense related to software technology recorded as cost of revenue was $4,436 and $10,008 for the six months ended September 30, 2021 and 2020, respectively.

The following table summarizes the remaining estimated amortization of definite-lived intangible assets as of September 30, 2021:

	Estimated Remaining Amortization Expense
	Operating Expense		Cost of Revenue		Total
For the year ended March 31,
2022 (remaining six months)	$	1,762	$	4,436	$	6,198
2023		2,820		5,154		7,974
2024		2,279		3,573		5,852
2025		1,846		3,573		5,419
2026		1,377		2,251		3,628
2027 and beyond		1,188		243		1,431
Total	$	11,272	$	19,230	$	30,502

Capitalized Software Costs

6 Months Ended

Sep. 30, 2021

Research And Development [Abstract]

Capitalized Software Costs

8. Capitalized Software Costs

Our capitalized software costs are summarized as follows:

	September 30, 2021		March 31, 2021
Gross carrying amount	$	106,810	$	96,908
Accumulated amortization