Leases

6 Months Ended

Jan. 31, 2023

Leases [Abstract]

Leases

NOTE 7. LEASES

We have operating leases for offices, research and development facilities and datacenters and finance leases for certain datacenter equipment. Our leases have remaining lease terms of one year to approximately seven years, some of which include options to renew or terminate. We do not include renewal options in the lease terms for calculating our lease liability, as we are not reasonably certain that we will exercise these renewal options at the time of the lease commencement. Our lease agreements do not contain any residual value guarantees or restrictive covenants.

Total operating lease cost was $10.8 million and $21.7 million for the three and six months ended January 31, 2022, respectively, and $11.2 million and $21.9 million for the three and six months ended January 31, 2023, respectively, excluding short-term lease costs, variable lease costs and sublease income, each of which were not material. Variable lease costs primarily include common area maintenance charges. Total finance lease cost was $0.6 million and $1.1 million for the three and six months ended January 31, 2022, respectively, and $1.1 million and $1.8 million for the three and six months ended January 31, 2023, respectively.

During the six months ended January 31, 2023, we signed agreements to early exit certain office spaces in the United States and the Netherlands. The reductions in the lease terms resulted in decreases to the carrying amounts of the operating lease liabilities and the operating lease right-of-use assets on our condensed consolidated balance sheet as of January 31, 2023. In addition, we recorded $0.8 million and $1.7 million of expense in our condensed consolidated statements of operations for the three and six months ended January 31, 2023, respectively.

Supplemental balance sheet information related to leases is as follows:

	As of
	July 31, 2022			January 31, 2023
	(in thousands)
Operating leases:
Operating lease right-of-use assets, gross	$	188,060		$	191,509
Accumulated amortization		(69,320	)		(84,798	)
Operating lease right-of-use assets, net	$	118,740		$	106,711
Operating lease liabilities—current	$	39,801		$	34,101
Operating lease liabilities—non-current		89,782			80,585
Total operating lease liabilities	$	129,583		$	114,686
Weighted average remaining lease term (in years):		5.1			5.0
Weighted average discount rate:		5.7	%		5.8	%

	As of
	July 31, 2022			January 31, 2023
	(in thousands)
Finance leases:
Finance lease right-of-use assets, gross (1)	$	13,501		$	12,879
Accumulated amortization (1)		(3,053	)		(3,793	)
Finance lease right-of-use assets, net (1)	$	10,448		$	9,086
Finance lease liabilities—current (2)	$	2,685		$	2,525
Finance lease liabilities—non-current (3)		7,806			7,042
Total finance lease liabilities	$	10,491		$	9,567
Weighted average remaining lease term (in years):		3.9			3.6
Weighted average discount rate:		5.9	%		6.2	%

(1)Included in the condensed consolidated balance sheets within property and equipment, net.

(2)Included in the condensed consolidated balance sheets within accrued expenses and other current liabilities.

(3)Included in the condensed consolidated balance sheets within other liabilities—non-current.

Supplemental cash flow and other information related to leases is as follows:

	Three Months Ended January 31,				Six Months Ended January 31,
	2022		2023		2022		2023
	(in thousands)
Cash paid for amounts included in the measurement of    lease liabilities:
Operating cash flows from operating leases	$	12,081	$	11,914	$	25,557	$	23,763
Financing cash flows from finance leases	$	104	$	488	$	323	$	2,344
Lease liabilities arising from obtaining right-of-use assets:
Operating leases	$	—	$	4,625	$	3,950	$	5,971
Finance leases	$	3,873	$	1,543	$	3,873	$	1,543

The undiscounted cash flows for our operating lease liabilities as of January 31, 2023 were as follows:

Fiscal Year Ending July 31:	Operating Leases			Finance Leases			Total
	(in thousands)
2023	$	19,718		$	1,447		$	21,165
2024		31,266			3,059			34,325
2025		18,341			3,059			21,400
2026		14,698			2,357			17,055
2027		13,463			647			14,110
Thereafter		38,720			116			38,836
Total lease payments		136,206			10,685			146,891
Less: imputed interest		(21,520	)		(1,118	)		(22,638	)
Total lease obligation		114,686			9,567			124,253
Less: current lease obligations		(34,101	)		(2,525	)		(36,626	)
Long-term lease obligations	$	80,585		$	7,042		$	87,627

As of January 31, 2023, we did not have any additional operating lease commitments for office leases that have not yet commenced.