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Leases

12 Months Ended

Jan. 31, 2020

Finance Lease

In December 2017, the Company entered into a lease agreement for 106,230 rentable square feet of office space (the “Premises”) to accommodate its growing employee base in New York City. The Company received delivery of the Premises on January 1, 2018 to commence construction to renovate the Premises. Total estimated aggregate base rent payments over the initial 12-year term of the lease are $87.3 million and payments began in July 2019. The Company has the option to extend the term of the lease by an additional 5 years.

As a result of the Company’s involvement during the construction period, whereby the Company had certain indemnification obligations related to the construction, the Company was considered, for accounting purposes only, the owner of the construction project under build-to-suit lease accounting. Refer to Note 4, Property and Equipment, net for further details.

On September 4, 2018, construction of the Premises was completed. The Company evaluated whether to de-recognize the build-to-suit asset and liability under the “sale-leaseback” accounting guidance. The Company concluded that it lacks transferability of the risks and rewards of ownership and therefore did not meet with the requirements for sale-leaseback accounting. Accordingly, the Company accounts for the New York City office lease as a financing arrangement.

The Company vacated its former office space as of September 30, 2018, prior to the expiration of the lease on December 31, 2018. The remaining rent payable, deferred rent and associated leasehold improvements for the former office space were expensed in full on September 30, 2018 and resulted in a charge of $1.5 million recorded as a general and administrative operating expense in the Company’s consolidated statement of operations. As of January 31, 2019, there was no liability associated with the former office space.

Operating Leases

The Company has entered into non-cancelable operating leases, primarily related to rental of office space expiring through 2029. The Company recognizes operating lease costs on a straight-line basis over the term of the agreement, taking into account adjustments for market provisions such as free or escalating base monthly rental payments or deferred payment terms such as rent holidays that defer the commencement date of the required payments. The Company may receive renewal or expansion options, leasehold improvement allowances or other incentives on certain lease agreements.

In August 2016, the Company amended an existing irrevocable, standby letter of credit with Silicon Valley Bank for $0.5 million to serve as a security deposit for the Company’s former headquarters lease in New York City. The amendment reduced the letter of credit from $1.1 million to $0.5 million. In February 2019, the Company terminated its standby letter of credit after vacating the former NYC office space, as discussed above under Financing Leases.

In January 2017, the Company entered into an irrevocable, standby letter of credit with Silicon Valley Bank for $0.4 million, expiring April 2023, to serve as a security deposit for the Company’s lease in Texas. In October 2017, the Company entered into an irrevocable, standby letter of credit with Silicon Valley Bank for $0.2 million, which subsequently increased in March 2020 to $0.5 million, expiring March 2026, to serve as a security deposit for the Company’s lease in Australia. In October 2019, the Company entered into an irrevocable, standby letter of credit with Silicon Valley Bank for $0.3 million, expiring October 2025, to serve as a security deposit for the Company’s additional office space in New York City, as described further below.

Lease Costs

The components of the Company’s lease costs included in its consolidated statement of operations were as follows (in thousands):



	January 31, 2020
Finance lease cost:
Amortization of finance lease right-of-use assets	$	3,976
Interest on finance lease liabilities	3,639
Operating lease cost	4,712
Short-term lease cost	2,229
Total lease cost	$	14,556

Total rent expense related to financing and operating leases under the previous lease guidance was $10.7 million and $9.1 million for the years ended January 31, 2019 and 2018, respectively.

Balance Sheet Components

The balances of the Company’s finance and operating leases were recorded on the consolidated balance sheet as follows (in thousands):



	January 31, 2020
Finance Lease:
Property and equipment, net	$	39,411
Other accrued liabilities (current)	4,633
Other liabilities, non-current	59,257
Operating Leases:
Operating lease right-of-use assets	$	11,147
Operating lease liabilities (current)	3,750
Operating lease liabilities, non-current	8,113

Supplemental Information

The following table presents supplemental information related to the Company’s finance and operating leases (in thousands, except weighted-average information):



	January 31, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance lease	$	1,817
Operating cash flows from operating leases	4,450
Financing cash flows from finance lease	1,915
Right-of-use assets obtained in exchange for lease obligations:
Finance lease	$	—
Operating leases	3,930
Weighted-average remaining lease term (in years):
Finance lease	9.9
Operating leases	4.2
Weighted-average discount rate:
Finance lease	5.6		%
Operating leases	6.2		%

Maturities of Lease Liabilities

Future minimum lease payments under non-cancelable finance and operating leases on an annual undiscounted cash flow basis as of January 31, 2020 were as follows (in thousands):



Year Ending January 31,	Finance Lease			Operating Leases
2021	$	8,073		$	4,352
2022	8,073			2,935
2023	8,073			2,708
2024	8,073			1,266
2025	8,445			848
Thereafter	42,829			1,377
Total minimum payments	83,566			13,486
Less imputed interest	(19,676		)	(1,623		)
Present value of future minimum lease payments	63,890			11,863
Less current obligations under leases	(4,633		)	(3,750		)
Non-current lease obligations	$	59,257		$	8,113

Excluded in the lease obligation table above is a new agreement to lease an additional 21,000 square feet of office space in New York City, which will be recognized as an operating lease upon the lease commencement date. The Company entered into this agreement in October 2019 and expects the lease to commence on or around April 2020 for a term of five years with no renewal period. The total estimated aggregate base rent payments are $8.1 million with payments beginning four months subsequent to the commencement date.

In December 2019, the Company entered into a new agreement to lease approximately 40,000 square feet of office space in Dublin, Ireland, which will be recognized as an operating lease upon the lease commencement date. Accordingly, this lease is also excluded from the lease obligation table above. The Company expects the lease to commence on or around June 2020 for a term of 12 years with two five-year renewal options. The total estimated aggregate base rent payments, excluding the renewal options, for the Dublin office space are approximately $27.0 million.

Future minimum lease payments under non-cancelable financing and operating leases, based on the previous lease accounting standard, as of January 31, 2019 were as follows (in thousands):



Year Ending January 31,	Financing Lease		Operating Leases
2020	$	3,732	$	4,578
2021	8,073		3,765
2022	8,073		2,277
2023	8,073		2,224
2024	8,073		922
Thereafter	51,274		2,149
Total minimum payments	$	87,298	$	15,915

Leases