Leases

12 Months Ended

Mar. 31, 2020

As described in Note 2, the Company adopted ASU 2016-2, Leases, (Topic 842) as of April 1, 2019. Prior period amounts have not been adjusted and continue to be reported in accordance with historical accounting under Topic 840.

The Company leases 40,232 square feet of office space located in Brisbane, California pursuant to a lease agreement, as amended, that expires in May 2026. The Company has the option to extend the lease term for an additional seven years but is not reasonably certain that it will exercise the option and has therefore excluded it from the lease term. The lease agreement, as amended, required the Company to deliver an irrevocable standby letter of credit in the amount of $0.5 million to the landlord, the amount of which is subject to reduction to approximately $0.2 million if certain conditions are met.

During October 2019, the Company entered into a Sublease Agreement (“sublease”) for an additional 20,116 square feet of office space within the same building as its current corporate office space located in Brisbane, California. The sublease term expires in February 2024. The sublease required the Company to deliver an irrevocable standby letter of credit to the sublessor for the duration of the lease in the amount of $0.2 million.

The Company currently has no other significant operating, financing, or short-term leases.

The Company recognizes rent expense on a straight-line basis over the noncancelable term of its operating leases. Prior to the adoption of Topic 842, under Topic 840, rent expense was $2.1 million and $0.9 million for the years ended March 31, 2019 and 2018, respectively. For the year ended March 31, 2020, the components of operating lease expense for the Company’s Brisbane, California office space were as follows (in thousands):



	Amount
Operating lease cost	$	2,496
Variable lease cost ⁽¹⁾	225
Total operating lease cost	$	2,721

⁽¹⁾ Variable lease cost includes common area maintenance and utilities costs which are not included in operating lease liabilities and which are expensed as incurred.

Certain information related to the Company’s operating lease right-of-use assets and operating lease liabilities for its Brisbane, California office space was as follows for the year ended March 31, 2020 (in thousands):



	Amount
Cash paid for operating lease liabilities	$	2,289
Operating lease right-of-use assets obtained in exchange for new operating lease liabilities	$	12,237

As of March 31, 2020, the Company’s operating leases for its Brisbane, California office space had a weighted average remaining lease term of 5.7 years and a weighted average discount rate of 12.3%.

As of March 31, 2020, maturities of operating lease liabilities for the Company’s Brisbane, California office space were as follows (in thousands):



Years Ended March 31,
2021	$	2,939
2022	3,028
2023	3,127
2024	3,053
2025	2,409
Thereafter	2,898
Total lease payments	17,454
Less imputed interest ⁽¹⁾	(4,942		)
Present value of future minimum lease payments	12,512
Less operating lease liability, current portion	(1,516		)
Operating lease liability, long-term portion	$	10,996

⁽¹⁾ The Company’s lease agreements do not provide an implicit rate. The imputed interest was determined using the Company’s incremental borrowing rate, which represents an estimated rate of interest that it would have to pay to borrow equivalent funds on a collateralized basis over a similar term at the lease inception date.