Note 7. Commitments and Contingencies

Letters of Credit

As of July 31, 2018 and January 31, 2018, we had letters of credit in the aggregate amount of $26.8 million and $26.4 million, respectively, in connection with our operating leases, which were primarily issued under the available sublimit of $30.0 million in conjunction with a secured credit agreement entered on November 27, 2017. Refer to Note 8 for additional details related to the secured credit agreement mentioned.

Leases

We have entered into various non-cancellable operating lease agreements for certain of our offices and datacenters with lease periods expiring primarily between fiscal years 2020 and 2029. Certain of these arrangements have free or escalating rent payment provisions and optional renewal clauses. We are also committed to pay a portion of the actual operating expenses under certain of these lease agreements. These operating expenses are not included in the table below.

We also entered into various capital lease arrangements to obtain servers and related equipment for our operations. These agreements typically have an initial term of three to four years. The leases are secured by the underlying leased servers and related equipment.

As of July 31, 2018, future minimum lease payments under non-cancellable capital and operating leases are as follows (in thousands):

Years ending January 31:	Capital Leases			Operating Leases, net of Sublease Income
Remainder of 2019	$	12,135		$	17,442
2020		19,343			35,855
2021		15,290			36,576
2022		7,436			34,350
2023		961			26,453
Thereafter		—			143,298
Total minimum lease payments	$	55,165		$	293,974
Less: amount representing interest		(2,047	)
Present value of minimum lease payments	$	53,118

We sublease certain floors of our headquarters and San Francisco office. These subleases have terms ranging from 25 to 55 months that will expire at various dates by fiscal year 2023. Non-cancellable sublease proceeds for the years ending January 31, 2019, 2020, 2021, 2022, and 2023 of $3.8 million, $7.7 million, $7.0 million, $5.0 million, and $4.2 million, respectively, are included in the table above.

We establish assets and liabilities for the present value of estimated future costs to return certain of our leased facilities to their original condition. Such assets are depreciated over the lease period into operating expense, and the recorded liabilities are accreted to the future value of the estimated restoration costs. We did not have material asset retirement obligations as of July 31, 2018 and January 31, 2018.

We recognize rent expense under our operating leases on a straight-line basis. Rent expense totaled $8.3 million and $6.9 million, net of sublease income of $2.1 million and $1.9 million for the three months ended July 31, 2018 and 2017, respectively, and rent expense totaled $16.6 million and $12.2 million, net of sublease income of $4.0 million and $3.7 million for the six months ended July 31, 2018 and 2017, respectively.

Purchase Obligations

As of July 31, 2018, future payments under non-cancellable contractual purchases, which relate primarily to infrastructure services, datacenter operations, and sales and marketing activities, are as follows (in thousands):

Years ending January 31:
Remainder of 2019	$	21,845
2020		46,594
2021		11,383
2022		1,514
2023		851
Thereafter		694
	$	82,881

Legal Matters

From time to time, we are a party to litigation and subject to claims that arise in the ordinary course of business. We investigate these claims as they arise and accrue estimates for resolution of legal and other contingencies when losses are probable and estimable. Although the results of litigation and claims cannot be predicted with certainty, we believe there was not at least a reasonable possibility that we had incurred a material loss with respect to such loss contingencies as of July 31, 2018.

Indemnification

We include service level commitments to our customers warranting certain levels of uptime reliability and performance and permitting those customers to receive credits in the event that we fail to meet those levels. In addition, our customer contracts often include (i) specific obligations that we maintain the availability of the customer’s data through our service and that we secure customer content against unauthorized access or loss, and (ii) indemnity provisions whereby we indemnify our customers for third-party claims asserted against them that result from our failure to maintain the availability of their content or securing the same from unauthorized access or loss. To date, we have not incurred any material costs as a result of such commitments.

Our arrangements generally include certain provisions for indemnifying customers against liabilities if our products or services infringe a third party’s intellectual property rights. It is not possible to determine the maximum potential amount under these indemnification obligations due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. To date, we have not incurred any material costs as a result of such obligations and have not accrued any material liabilities related to such obligations on the condensed consolidated financial statements. In addition, we indemnify our officers, directors and certain key employees while they are serving in good faith in their respective capacities. To date, there have been no claims under any indemnification provisions.