v3.25.1
Financial Instruments and Fair Value Measurements
 9 Months Ended
Mar. 31, 2025
Fair Value Disclosures [Abstract]  
Financial Instruments and Fair Value Measurements
Note 5. Financial Instruments and Fair Value Measurements

The Company classifies its financial instruments, except for its investment in an auction rate security and other investments in privately held companies, within Level 1 or Level 2 in the fair value hierarchy because the Company uses quoted prices in active markets or alternative pricing sources and models using market observable inputs to determine their fair value.

Financial Instruments Measured on a Recurring Basis

The financial instruments of the Company measured at fair value on a recurring basis are included in cash equivalents and other assets. The carrying amounts reported in the condensed consolidated balance sheets for cash and cash equivalents, accounts receivable, other assets, accounts payable and accrued liabilities approximate their fair values due to their relatively short maturities.
The following table sets forth the Company’s financial instruments as of March 31, 2025 and June 30, 2024, which are measured at fair value on a recurring basis by level within the fair value hierarchy. These are classified based on the lowest level of input that is significant to the fair value measurement (in thousands):

March 31, 2025Level 1Level 2Level 3Asset at
Fair Value
Assets
Money market funds (1)
$289 $— $— $289 
Certificates of deposit— 479 — 479 
Investment in marketable equity security3,482 — — 3,482 
Auction rate security— — 1,829 1,829 
Total assets measured at fair value$3,771 $479 $1,829 $6,079 
June 30, 2024Level 1Level 2Level 3Asset at
Fair Value
Assets
Money market funds (1)
$340 $— $— $340 
Certificates of deposit— 486 — 486 
Investment in marketable equity security3,686 — — 3,686 
Auction rate security— — 1,829 1,829 
Total assets measured at fair value$4,026 $486 $1,829 $6,341 

(1) $0.1 million and $0.1 million in money market funds are included in Cash and cash equivalents and $0.2 million and $0.2 million in money market funds are included in Restricted cash, non-current in Other assets in the condensed consolidated balance sheets as of March 31, 2025 and June 30, 2024, respectively.

The carrying amounts of money market funds and certificates of deposit approximate their fair values due to their relatively short maturities.

The investment in marketable equity security is carried at fair value using values available on a public exchange, is based on a Level 1 input, and is recorded in Prepaid expenses and other current assets in the condensed consolidated balance sheets. The unrealized gains and losses of the investment are included in earnings. For the three and nine months ended March 31, 2025, an unrealized loss of $1.3 million and an unrealized loss of $0.2 million, respectively, has been recorded in Other (expense) income, net in the condensed consolidated statement of operations. For the three and nine months ended March 31, 2024, an unrealized loss of $1.5 million and $2.3 million, respectively, has been recorded in Other (expense) income, net in the condensed consolidated statements of operations.

The Company’s investment in an auction rate security is classified as an available for sale security within Level 3 of the fair value hierarchy as the determination of its fair value was not based on observable inputs as of March 31, 2025 and June 30, 2024. The Company is using the discounted cash flow method to estimate the fair value of the auction rate security at each period end and using the following assumptions: (i) the expected yield based on observable market rate of similar securities, (ii) the security coupon rate that is reset monthly, (iii) the estimated holding period and (iv) a liquidity discount. The liquidity discount assumption is based on the management estimate of lack of marketability discount of similar securities and is determined based on the analysis of financial market trends over time, recent redemptions of securities and other market activities. The Company performed a sensitivity analysis and applying a change of either plus or minus 100 basis points in the liquidity discount would not result in a significantly higher or lower fair value measurement of the auction rate security as of March 31, 2025.

For the three and nine months ended March 31, 2025 and 2024, there were no unrealized gains and losses recognized for the auction rate security in other comprehensive income.
On a quarterly basis, the Company also evaluates the current expected credit loss by considering factors such as historical experience, market data, issuer-specific factors, and current economic conditions, and reasonable economic forecasts that affect collectability. For the three and nine months ended March 31, 2025 and 2024, the credit losses related to the Company’s investments were not material.

There were no transfers between Level 1, Level 2 or Level 3 financial instruments in the three and nine months ended March 31, 2025 and 2024.

Financial Instruments Measured at Fair Value on a Non-Recurring Basis

The Company's non-marketable equity securities consist of investments in privately held companies without readily determinable fair values and are classified as Level 2 in the fair value hierarchy. The Company accounts for these investments at cost less impairment, if any, plus or minus changes from observable price changes in orderly transactions for the identical or similar investments by the same issuer.

The Company performed a qualitative assessment to identify impairment indicators and records an impairment identified to Other (expense) income, net on the condensed consolidated statements of operations. During the three and nine months ended March 31, 2025, the Company did not record an impairment. The Company did not record an impairment during the three months ended March 31, 2024 and recorded $1.8 million of impairment during the nine months ended March 31, 2024.

As of March 31, 2025 and June 30, 2024, the Company had $54.6 million and $54.6 million of investments in privately held companies recorded in Other assets on the condensed consolidated balance sheets for which the measurement alternative was elected.

Financial Instruments Not Recorded at Fair Value

The Company estimates the fair value of outstanding debt, including its 2029 Convertible Notes and 2028 Convertible Notes for disclosure purposes on a recurring basis.

As of March 31, 2025 and June 30, 2024, our total lines of credit and term loans of $107.0 million and $476.4 million, respectively, are reported at amortized cost. The outstanding debt was categorized as Level 2 as it is not actively traded. The carrying value approximates fair value.

The estimated fair value as of March 31, 2025 of the 2029 Convertible Notes and 2028 Convertible Notes were $1,689.5 million and $730.4 million, respectively. The estimated fair value of the 2029 Convertible Notes and 2028 Convertible Notes was determined through consideration of quoted market prices. The 2029 Convertible Notes and 2028 Convertible Notes are categorized as Level 2 since their fair value was based on Level 2 inputs of quoted prices.