Leases

6 Months Ended

Jun. 30, 2024

The Company, acting as a lessee, has operating leases and finance leases primarily relating to office space, data centers and office equipment. The leases have remaining lease terms of 0.3 years to 15.1 years, some of which include options to extend the leases in 0.1 to 10 year increments for up to 15 years. Renewal periods are included in the lease term only when renewal is reasonably certain, which is a high threshold and requires management to apply judgment to determine the appropriate lease term. Certain leases also include periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise the termination option. The Company measures its lease payments by including fixed rental payments and, where relevant, variable rental payments tied to an index, such as the Consumer Price Index. Payments for leases in place before the date of adoption of ASC 842, Leases were determined based on previous leases guidance. The Company recognizes lease expense for its operating leases on a straight-line basis over the lease term, and variable lease expense not included in the lease payment measurement is recognized as incurred. Interest expense on finance leases is recognized using the effective interest method over the lease term.

Pursuant to the accounting policy election, leases with an initial term of twelve months or less are not recognized on the balance sheet. The short-term lease expense over the period reasonably reflects the Company’s short-term lease commitments.

ASC 842, Leases requires the Company to make certain assumptions and judgments in applying the guidance, including determining whether an arrangement includes a lease, determining the term of a lease when the contract has renewal or cancellation provisions, and determining the discount rate.

The Company determines whether an arrangement is a lease or includes a lease at the contract inception by evaluating whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. If the Company has the right to obtain substantially all of the economic benefits from, and can direct the use of, the identified asset for a period of time, the Company accounts for the identified asset as a lease. The Company has elected the practical expedient to not separate lease and non-lease components for all leases other than real estate leases. The primary non-lease component that is combined with a lease component represents operating expenses, such as utilities, maintenance or management fees.

As the rate implicit in the lease is not usually available, the Company used an incremental borrowing rate based on the information available at the adoption of ASC 842 in determining the present value of lease payments for existing leases. The Company has elected to use a portfolio approach for the incremental borrowing rate, applying corporate bond rates to the leases. The Company calculated the appropriate rates with reference to the lease term and lease currency. The Company uses information available at the lease commencement date to determine the incremental borrowing rate for any new leases.

As of June 30, 2024, the Company did not have any leases that have not yet commenced but that create significant rights and obligations.

Supplemental information related to the Company’s operating and financing leases are as follows (dollar amounts in thousands):


	Classification in Unaudited Condensed Consolidated Statements of Financial Condition	June 30, 2024		December 31, 2023
Assets
Operating lease ROU assets	Other assets	$	121,788	$	124,165
Finance lease ROU assets	Fixed assets, net	$	3,611	$	4,264
Liabilities
Operating lease liabilities	Accounts payable, accrued and other liabilities	$	146,043	$	149,640
Finance lease liabilities	Accounts payable, accrued and other liabilities	$	3,996	$	4,721


	June 30, 2024		December 31, 2023
Weighted-average remaining lease term
Operating leases (years)	7.0		7.3
Finance leases (years)	2.9		3.4
Weighted-average discount rate
Operating leases	4.9	%	5.0	%
Finance leases	4.3	%	4.3	%

The components of lease expense are as follows (in thousands):


	Classification in Unaudited Condensed Consolidated Statements of Operations	Three Months Ended June 30,				Six Months Ended June 30,
		2024		2023		2024		2023
Operating lease cost1	Occupancy and equipment	$	8,153	$	7,993	$	16,598	$	16,846
Finance lease cost
Amortization on ROU assets	Occupancy and equipment	$	326	$	326	$	653	$	653
Interest on lease liabilities	Interest expense	$	44	$	56	$	91	$	116

__________________________

1Short-term lease expense was not material for the three and six months ended June 30, 2024 and 2023.

The following table shows the Company’s maturity analysis of its operating and finance lease liabilities (in thousands):


	June 30, 2024
	Operating leases		Finance leases
2024 (excluding the six months ended June 30, 2024)	$	16,693	$	785
2025	29,900		1,448
2026	22,941		1,290
2027	21,661		627
2028	15,371		—
Thereafter	79,387		—
Total	$	185,953	$	4,150
Interest	(39,910)		(154)
Total	$	146,043	$	3,996

The following table shows cash flow information related to lease liabilities (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
Cash paid for amounts included in the measurement of lease liabilities	2024		2023		2024		2023
Operating cash flows from operating lease liabilities	$	9,581	$	8,485	$	18,944	$	18,089
Operating cash flows from finance lease liabilities	$	44	$	56	$	91	$	116
Financing cash flows from finance lease liabilities	$	318	$	305	$	633	$	608