Leases

6 Months Ended

Jun. 30, 2019

The Company determines if an arrangement is a lease or contains a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, other accrued liabilities, and operating lease liabilities on the unaudited condensed consolidated balance sheets. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company has lease agreements with lease and non-lease components, which are generally accounted for separately. For certain office leases, the Company accounts for the lease and non-lease components as a single lease component. Lease expense is recognized on a straight-line basis over the lease term.

ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Generally the implicit rate of interest in arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The Company's incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be. The operating lease ROU asset includes any lease payments made and excludes lease incentives.

The Company's lease arrangements comprise of operating leases for office space, cars, distribution centers and equipment. The leases have remaining lease terms of 1 year to 10 years, some of which include options to extend for up to a further 5 years, and some of which include options to terminate prior to completion of the contractual lease term with or without penalties. The Company determines the duration of the lease arrangement giving thought to whether or not it is reasonably certain that the Company will exercise options to extend or terminate the lease arrangement ahead of its contractual term. The leases do not contain any material residual value guarantees.

The components of lease cost were as follows:



	Three Months Ended		Six Months Ended
	June 30, 2019		June 30, 2019
	(in thousands)
Operating lease cost	$	2,982	$	5,951
Short-term lease cost ⁽¹⁾	504		883
Total lease cost ⁽²⁾	$	3,486	$	6,834

⁽¹⁾ Included variable lease cost, which was immaterial.

⁽²⁾Included in cost of revenue, sales and marketing, research and development and general and administration in the Company’s unaudited condensed statement of operations.

Supplemental cash flow information related to leases was as follows:



	Six Months Ended
	June 30, 2019
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows relating to operating leases	$	6,179

Lease liabilities arising from obtaining right-of-use assets:
Operating leases	$	677

Supplemental balance sheet information related to leases was as follows:



	As of June 30, 2019
Weighted Average Remaining Lease Term (in years)
Operating leases	4.8

Weighted Average Discount Rate
Operating leases	3.8	%

As of June 30, 2019, maturity analysis of operating lease liabilities were as follows (in thousands):



	Operating Lease
2019 (remaining six months)	$	5,773
2020	10,184
2021	8,009
2022	7,003
2023	4,524
Thereafter	7,731
Total lease payments	43,224
Less imputed interest	(3,719		)
Total	$	39,505

As of December 31, 2018, future minimum lease payments under non-cancelable operating leases were as follows (in thousands):



	Leases ⁽¹⁾
2019	$	11,900
2020	9,986
2021	7,785
2022	6,856
2023	4,478
Thereafter	7,725
Total future minimum lease payments	$	48,730

⁽¹⁾Amounts are based on ASC 840 Leases that was superseded upon the adoption of ASC 842 Leases on January 1, 2018.