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Leases
9 Months Ended
Oct. 31, 2020
Leases [Abstract]  
Leases

Note 5. Leases

We have entered into various non-cancellable operating lease agreements for certain of our offices and data centers with lease periods expiring primarily between fiscal years 2022 and 2029. Certain of these arrangements have free or escalating rent payment provisions and optional renewal or termination clauses. Our operating leases typically include variable lease payments, which are primarily comprised of common area maintenance and utility charges for our offices and power and network connections for our data centers, that are determined based on actual consumption. Our operating lease agreements do not contain any residual value guarantees, covenants, or other restrictions.  

We have also entered into various finance lease arrangements to obtain servers and related equipment for our data center operations. These agreements are primarily for four years and certain of these arrangements have optional renewal or termination clauses. The leases are secured by the underlying leased servers and related equipment.

We sublease certain floors of our Redwood City, San Francisco, and London offices. Our current subleases have total lease terms ranging from 11 to 96 months that will expire at various dates by fiscal year 2025.

The components of lease cost, which were included in operating expenses in our condensed consolidated statements of operations, were as follows (in thousands):

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

October 31,

 

 

October 31,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Finance lease cost:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of finance lease right-of-use assets

 

$

14,102

 

 

$

11,713

 

 

$

41,027

 

 

$

29,823

 

Interest on finance lease liabilities

 

 

1,416

 

 

 

1,312

 

 

 

4,440

 

 

 

2,987

 

Operating lease cost, gross

 

 

13,552

 

 

 

12,300

 

 

 

40,095

 

 

 

36,533

 

Variable lease cost, gross

 

 

2,180

 

 

 

3,040

 

 

 

7,074

 

 

 

8,741

 

Sublease income

 

 

(2,707

)

 

 

(2,741

)

 

 

(7,888

)

 

 

(8,327

)

Total lease cost (1)

 

$

28,543

 

 

$

25,624

 

 

$

84,748

 

 

$

69,757

 

 

(1)

Short-term lease cost was not material for the periods presented and is not included in the table above.

Supplemental cash flow information related to leases was as follows (in thousands):

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

October 31,

 

 

October 31,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Cash paid for amounts included in the measurement of lease liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating cash flows for operating leases

 

$

16,121

 

 

$

11,562

 

 

$

44,276

 

 

$

35,053

 

Operating cash flows for finance leases

 

 

1,456

 

 

 

802

 

 

 

4,962

 

 

 

2,531

 

Financing cash flows for finance leases

 

 

14,584

 

 

 

7,055

 

 

 

46,159

 

 

 

26,200

 

Right-of-use assets obtained in exchange of lease obligations (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating leases

 

$

9,732

 

 

$

1,016

 

 

$

39,079

 

 

$

230,371

 

Finance leases

 

 

6,072

 

 

 

40,530

 

 

 

29,148

 

 

 

84,950

 

 

(1)

Amounts disclosed for the three and nine months ended October 31, 2019 include the adoption impact of ASC Topic 842 on the opening balance sheet as of February 1, 2019.

Supplemental information related to the remaining lease term and discount rate was as follows:

 

 

 

October 31,

 

 

 

2020

 

 

2019

 

Weighted-average remaining lease term (in years)

 

 

 

 

 

 

 

 

Operating leases

 

 

5.93

 

 

 

6.84

 

Finance leases

 

 

2.55

 

 

 

3.07

 

 

 

 

 

 

 

 

 

 

Weighted-average discount rate

 

 

 

 

 

 

 

 

Operating leases

 

 

5.26

%

 

 

5.41

%

Finance leases

 

 

4.46

%

 

 

4.29

%

 

As of October 31, 2020, maturities of our operating and finance lease liabilities, which do not include short-term leases and variable lease payments, are as follows (in thousands):

 

Fiscal years ending January 31:

 

Operating Leases (1)

 

 

Finance Leases

 

Remainder of 2021

 

$

15,157

 

 

$

15,587

 

2022

 

 

59,867

 

 

 

51,192

 

2023

 

 

49,410

 

 

 

41,418

 

2024

 

 

47,927

 

 

 

19,022

 

2025

 

 

32,269

 

 

 

1,317

 

Thereafter

 

 

91,541

 

 

 

 

Total lease payments

 

$

296,171

 

 

$

128,536

 

Less: imputed interest

 

 

(43,759

)

 

 

(7,408

)

Present value of total lease liabilities

 

$

252,412

 

 

$

121,128

 

 

(1)

Non-cancellable sublease proceeds for the remainder of the fiscal year ending January 31, 2021 and the fiscal years ending January 31, 2022, 2023, 2024, and 2025 of $1.9 million, $9.9 million, $8.3 million, $2.2 million, and $2.2 million, respectively, are not included in the table above.

As of October 31, 2020, we had two finance leases that had not commenced. These finance leases have immaterial aggregated undiscounted future payments and lease terms ranging from 1 to 3 years. These finance leases are expected to commence during the fourth quarter of fiscal year 2021 and as such, we did not reflect these leases on the condensed consolidated balance sheet as of October 31, 2020 and in the tables above. We did not have any operating leases that have not yet commenced as of October 31, 2020.

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. As of October 31, 2020 and 2019, we recorded $3.1 million and $2.8 million, respectively, in other long-term liabilities related to the present value of our estimated asset retirement obligation for our headquarters facility. The accretion expense, which was included in operating expenses in our condensed consolidated statements of operations, was not material for all periods presented.