Right-of-use Assets and Lease Liabilities

6 Months Ended

Jun. 30, 2023

Right-of-use Assets and Lease Liabilities

6. RIGHT-OF-USE ASSETS AND LEASE LIABILITIES

The Company presents the operating leases in long-term assets and current and long-term liabilities. Operating lease assets are included in the consolidated balance sheet line item “Operating right-of-use assets”. Finance lease assets are included in the consolidated balance sheet line item “Property and equipment, net”, and finance lease liabilities are presented in “Other current liabilities” and “Other long-term liabilities” in the accompanying consolidated balance sheets as of June 30, 2023 and December 31, 2022.

Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As the Company’s leases do not generally provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company’s lease agreements may have lease and non-lease components, which the Company accounts for as a single lease component. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term and variable payments are recognized in the period they are incurred. The Company’s lease agreements do not contain any residual value guarantees, and leases with an initial term of 12 months or less are not recorded on the balance sheet.

The Company determines if an arrangement is a lease at inception. Based upon such determination the Company concluded that it entered into various lease agreements in the form of technology equipment, office space rental agreements, server storage agreements, and company vehicles. The contracts expire over the next seven years.

The components of the lease expense recorded in the condensed consolidated statement of operations were as follows:


	Three Months Ended June 30, 2023		Six Months Ended June 30, 2023
Operating lease cost	$	228	$	500
Finance lease cost
Amortization of assets		48		96
Interest on lease liabilities		3		7
Short-term lease cost		43		86
Variable lease cost		43		76
Total net lease cost	$	365	$	765

Supplemental balance sheet information related to leases was as follows:


	Line Items	As of June 30, 2023		As of December 31, 2022
Assets:
Operating lease assets	Operating right-of-use assets	$	2,599	$	2,931
Finance lease assets	Property and equipment, net		302		389
Total leased assets		$	2,901	$	3,320

Liabilities:
Current
Operating	Other current liabilities	$	669	$	758
Finance	Other current liabilities		160		182
Long term
Operating	Other long-term liabilities		2,165		2,409
Finance	Other long-term liabilities		148		216
Total leased liabilities		$	3,142	$	3,565

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


	Three Months Ended June 30, 2023		Six Months Ended June 30, 2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	242	$	504
Operating cash flows from finance leases (interest)		3		7
Financing cash flows from finance leases		50		98


	As of June 30, 2023			As of December 31, 2022
Weighted average remaining lease term (in years):
Operating leases		3.5			3.8
Finance leases		2.0			2.1

Weighted average discount rate:
Operating leases		4.27	%		4.27	%
Finance leases		4.27	%		4.27	%

Maturities of lease liabilities were as follows:


	As of June 30, 2023
	Operating leases		Finance leases		Total
2023 (remaining six months)	$	400	$	94	$	494
2024		754		140		894
2025		723		52		775
2026		495		25		520
2027		277		11		288
2028 and thereafter		470		—		470
Total undiscounted lease payments		3,119		322		3,441
Present value discount		285		14		299
Present value	$	2,834	$	308	$	3,142
Lease liability, current	$	669	$	160	$	829
Lease liability, long term	$	2,165	$	148	$	2,313

As of June 30, 2023, the Company had no material additional operating and finance lease obligations related to leases that will commence in the third and fourth quarter of 2023.