We determine if any arrangement is, or contains, a lease at its inception based on whether or not we have the right to control the asset during the contract period. We are a lessee in any lease contract when we obtain the right to control the asset.

We determine the lease term by assuming the exercise of options that are reasonably certain. Leases with a lease term of 12 months or less at inception are not reflected in our balance sheet and those lease costs are expensed on a straight-line basis over the respective term. Leases with a term greater than 12 months are reflected as non-current right-of-use (ROU) assets and current and non-current lease liabilities in our consolidated balance sheets. Current lease liabilities are classified as a component of accrued expenses and other current liabilities.

As the implicit interest rate in our leases is generally not known, we use our incremental borrowing rate as the discount rate for purposes of determining the present value of our lease liabilities. Our determination of the incremental borrowing rate takes into consideration the expected term of the lease, the effect of the currency in which the lease is denominated and the rate of interest we would expect to incur on a collateralized debt instrument. At December 31, 2021, our weighted average discount rate utilized for our leases was 6.1%

We lease office space in cities worldwide under facility leases that expire at various dates. We are typically required to pay certain incremental operating costs above the base rent for our facility leases. Our leases may include periodic payment adjustments based on changes in applicable price indexes. To the extent the adjustment is considered a fixed payment it is included in the measurement of the ROU asset and lease liability, otherwise it is recognized in the period incurred. We also have a variety of data center locations and, to a lesser extent, vehicle and equipment leases. Our facility leases represent the substantial majority of our operating leases and often include renewal options that we can exercise unilaterally. At December 31, 2021, renewal options ranged from 3 months to 10 years.


	Three Months Ended December 31,		Six Months Ended December 31,
Operating leases:	2021			2021
	(in thousands)
Operating lease cost	$	1,820		$	3,664
Short-term lease cost	100			198
Variable lease cost	340			845
Sublease income	(34)			(97)
Total lease cost	$	2,226		$	4,610


	December 31, 2021
	(in thousands)
Right-of-use assets, net	$	28,868

Operating lease liabilities, current (1)	6,663
Operating lease liabilities, non-current	27,986
Total operating lease liabilities	$	34,649


	Six Months Ended December 31,
		2021
		(in thousands)
Cash paid for amounts included in the measurement of lease liabilities		$	3,934
Right-of-use assets obtained in exchange for lease obligations		$	4,810


For the year ending June 30,	Operating Leases
	(in thousands)
2022	$	4,566
2023	7,589
2024	4,901
2025	4,286
2026	4,321
Thereafter	19,361
Total lease payments	45,024
Less imputed interest	(10,375)
Total lease liabilities	$	34,649

As of December 31, 2021, we had additional operating leases that had not yet commenced of $2.6 million. These operating leases will commence in fiscal year 2022 and have a lease term between 3 to 13 years.

On January 19, 2022, a purported stockholder of Bottomline filed a lawsuit in the United States District Court for the Southern District of New York against us and our directors, captioned Shiva Stein v. Bottomline Technologies, Inc., et al., Case No. 1:22-cv-00481 (the Stein Complaint). On January 21, 2022, a purported stockholder of Bottomline filed a lawsuit in the United States District Court for the Southern District of New York against us and our directors, captioned Jeffrey D. Justice, II v. Bottomline Technologies, Inc., et al., Case No. 1:22-cv-00586 (the Justice Complaint). On January 26, 2022, a purported stockholder of Bottomline filed a lawsuit in the United States District Court for the Southern District of New York against us and our directors, captioned Chau Le v. Bottomline Technologies, Inc., et al., Case No. 1:22-cv-00670 (the Le Complaint).

All of the complaints allege that the preliminary proxy statement issued in connection with the Merger omits material information or contains misleading disclosures and that, as a result, (i) all of the defendants violated Section 14(a) of the Securities Exchange Act of 1934 (the Exchange Act) and (ii) all of our directors violated section 20(a) of the Exchange Act. The Le Complaint also alleges that our directors breached their fiduciary duties of care, loyalty and good faith by, among other things, causing us to enter into the transactions contemplated by the Merger Agreement as a result of an inadequate sale process, agreeing to preclusive deal mechanisms and filing a materially misleading and incomplete preliminary proxy statement. The Le Complaint also alleges that we aided and abetted these purported breaches of fiduciary duties.

All of the complaints seek, among other things, (i) injunctive relief preventing the consummation of the transactions contemplated by the Merger Agreement; (ii) rescission or rescissory damages in the event the transactions contemplated by the Merger Agreement have been implemented; (iii) dissemination of a proxy statement that does not omit material information or contain any misleading disclosures; (iv) a declaration that defendants violated Sections 14(a) and/or 20(a) of the Exchange Act (except the Stein Complaint and the Le Complaint) or that our directors violated their fiduciary duties (except the Stein Complaint and the Justice Complaint); (v) to direct the defendants to account to plaintiff for all damages suffered (except the Justice Complaint); and (vi) an award of plaintiff’s expenses, including attorneys’ and experts’ fees.

In addition, a purported stockholder of Bottomline has made a demand pursuant to Section 220 of the DGCL to inspect certain books and records of ours relating to the transactions contemplated by the Merger Agreement.

We believe the claims asserted in each of the complaints are without merit. However, given the inherently unpredictable nature of litigation, we are unable to predict the possible range of outcomes of these complaints.