XML 35 R16.htm IDEA: XBRL DOCUMENT v3.22.4
Leases
 12 Months Ended
Dec. 31, 2022
Lessee Disclosure [Abstract]  
Leases Leases
The Company leases real estate property under operating leases. The Company also leases networking equipment under arrangements with certain providers of IT infrastructure services which were accounted as finance leases or operating leases.
The Company’s leases do not provide a readily determinable implicit rate. Therefore, the Company estimates its incremental borrowing rate to discount the lease payments based on information available at lease commencement. The Company determines its incremental borrowing rate based on the rate of interest it would have to pay to borrow on a collateralized basis with an equal lease payment amount, over a similar term, and in a similar economic environment.
Operating Leases—The Company has entered into various non-cancelable operating leases primarily for its office facilities. The most significant leases are related to the Company's corporate headquarters in Palo Alto, California. As of December 31, 2022, the remaining lease terms varied from 1 to 7.2 years. For certain leases, the Company has an option to extend the lease term for periods varying from 2 to 5 years. These renewal options are not considered in the remaining lease term unless it is reasonably certain that the Company will exercise such options. For leases with an initial term greater than 12 months, the Company has recorded a right-of-use asset and lease liability representing the fixed component of the lease payments.
Further, the Company leases certain networking equipment, colocation space and office space under lease arrangements with terms 12 months or less, which are classified as short-term leases.
The table below presents the operating lease-related assets and liabilities (in thousands):
Year Ended December 31,
Balance Sheet Classification20222021
Operating lease right-of-use assets$60,379 $70,975 
Current operating lease liabilities$14,334 $18,392 
Non-current operating lease liabilities$54,153 $62,498 
Weighted-average remaining term (years)4.95.3
Weighted-average discount rate5.1 %5.0 %
The table below presents certain information related to the lease costs for operating leases which are allocated to cost of revenue, sales and marketing, research and development, and general and administrative expenses (in thousands):
Year Ended December 31,
202220212020
Operating lease cost$20,783 $28,676 $17,372 
Short-term lease cost1,272 9,683 8,196 
Variable lease cost1,419 7,862 2,147 
Total lease cost$23,474 $46,221 $27,715 
Cash paid for amounts included in the measurement of operating lease liabilities was $22.0 million, $25.5 million and $23.8 million for the years ended December 31, 2022, 2021 and 2020, respectively. Right-of-use assets acquired under operating leases was $7.1 million, $6.1 million and $10.8 million for the years ended December 31, 2022 , 2021 and 2020, respectively.
Finance Leases—The Company has entered into various non-cancelable finance leases primarily for networking equipment with weighted average remaining lease term of approximately 3.4 years. The Company has recorded a right-of-use asset and lease liability representing the fixed component of the lease payments.
The table below presents the finance lease-related assets and liabilities (in thousands):
Year Ended December 31,
20222021Balance Sheet Classification
Finance lease right-of-use assets$65,187 $44,575 Property and equipment, net
Current finance lease liabilities$22,304 $21,999 Accrued liabilities
Non-current finance lease liabilities$44,736 $24,085 Other non-current liabilities
Weighted-average remaining term (years)3.42.5
Weighted-average discount rate5.0 %5.0 %
The Company recognized depreciation expenses related to finance lease of networking equipment of $24.1 million, $17.8 million and $8.4 million for the years ended December 31, 2022, 2021 and 2020, respectively. The Company recognized interest expenses related to finance lease of networking equipment of $2.8 million, $1.5 million and $0.3 million for the years ended December 31, 2022, 2021 and 2020, respectively.
Cash paid for amounts included in the measurement of finance lease liabilities was $24.1 million, $15.3 million and $9.7 million for the years ended December 31, 2022, 2021 and 2020, respectively.
One of the Company’s 2020 acquired companies entered into a sublease agreement in 2017. This agreement is with an unrelated third party to occupy approximately 104,852 square feet of the Company’s office space. The Company recorded rent expense on a straight-line basis for the lease, net of sublease income. For the years ended December 31, 2022 and 2021, the Company has the following operating sublease information (in thousands):
Year Ended December 31,
20222021
Fixed sublease expense$4,736 $9,524 
Variable sublease expense1,023 1,421 
Sublease income(5,334)(9,421)
Variable sublease income(1,023)(1,407)
Net sublease (income) loss$(598)$117 
Undiscounted cash flow—The tables below reconcile the undiscounted cash flows for each of the first five years and total of the remaining years to the operating and finance lease liabilities recorded in the consolidated balance sheets (in thousands):
As of December 31, 2022
Operating
Leases		Finance
Leases		Total
202317,289 25,019 42,308 
202415,559 19,425 34,984 
202514,535 15,868 30,403 
202612,864 9,048 21,912 
202711,247 3,471 14,718 
Thereafter5,495 — 5,495 
Total lease payments76,989 72,831 149,820 
Less: amount representing interest(8,502)(5,791)(14,293)
Present value of future lease payments68,487 67,040 135,527 
Less: current obligations under leases14,334 22,304 36,638 
Non-current lease obligations$54,153 $44,736 $98,889 
In addition, the Company will receive $0.6 million of sublease income from its real estate leases in 2023.
As of December 31, 2022, the Company did not have any additional significant lease that had not yet commenced.
Leases Leases
The Company leases real estate property under operating leases. The Company also leases networking equipment under arrangements with certain providers of IT infrastructure services which were accounted as finance leases or operating leases.
The Company’s leases do not provide a readily determinable implicit rate. Therefore, the Company estimates its incremental borrowing rate to discount the lease payments based on information available at lease commencement. The Company determines its incremental borrowing rate based on the rate of interest it would have to pay to borrow on a collateralized basis with an equal lease payment amount, over a similar term, and in a similar economic environment.
Operating Leases—The Company has entered into various non-cancelable operating leases primarily for its office facilities. The most significant leases are related to the Company's corporate headquarters in Palo Alto, California. As of December 31, 2022, the remaining lease terms varied from 1 to 7.2 years. For certain leases, the Company has an option to extend the lease term for periods varying from 2 to 5 years. These renewal options are not considered in the remaining lease term unless it is reasonably certain that the Company will exercise such options. For leases with an initial term greater than 12 months, the Company has recorded a right-of-use asset and lease liability representing the fixed component of the lease payments.
Further, the Company leases certain networking equipment, colocation space and office space under lease arrangements with terms 12 months or less, which are classified as short-term leases.
The table below presents the operating lease-related assets and liabilities (in thousands):
Year Ended December 31,
Balance Sheet Classification20222021
Operating lease right-of-use assets$60,379 $70,975 
Current operating lease liabilities$14,334 $18,392 
Non-current operating lease liabilities$54,153 $62,498 
Weighted-average remaining term (years)4.95.3
Weighted-average discount rate5.1 %5.0 %
The table below presents certain information related to the lease costs for operating leases which are allocated to cost of revenue, sales and marketing, research and development, and general and administrative expenses (in thousands):
Year Ended December 31,
202220212020
Operating lease cost$20,783 $28,676 $17,372 
Short-term lease cost1,272 9,683 8,196 
Variable lease cost1,419 7,862 2,147 
Total lease cost$23,474 $46,221 $27,715 
Cash paid for amounts included in the measurement of operating lease liabilities was $22.0 million, $25.5 million and $23.8 million for the years ended December 31, 2022, 2021 and 2020, respectively. Right-of-use assets acquired under operating leases was $7.1 million, $6.1 million and $10.8 million for the years ended December 31, 2022 , 2021 and 2020, respectively.
Finance Leases—The Company has entered into various non-cancelable finance leases primarily for networking equipment with weighted average remaining lease term of approximately 3.4 years. The Company has recorded a right-of-use asset and lease liability representing the fixed component of the lease payments.
The table below presents the finance lease-related assets and liabilities (in thousands):
Year Ended December 31,
20222021Balance Sheet Classification
Finance lease right-of-use assets$65,187 $44,575 Property and equipment, net
Current finance lease liabilities$22,304 $21,999 Accrued liabilities
Non-current finance lease liabilities$44,736 $24,085 Other non-current liabilities
Weighted-average remaining term (years)3.42.5
Weighted-average discount rate5.0 %5.0 %
The Company recognized depreciation expenses related to finance lease of networking equipment of $24.1 million, $17.8 million and $8.4 million for the years ended December 31, 2022, 2021 and 2020, respectively. The Company recognized interest expenses related to finance lease of networking equipment of $2.8 million, $1.5 million and $0.3 million for the years ended December 31, 2022, 2021 and 2020, respectively.
Cash paid for amounts included in the measurement of finance lease liabilities was $24.1 million, $15.3 million and $9.7 million for the years ended December 31, 2022, 2021 and 2020, respectively.
One of the Company’s 2020 acquired companies entered into a sublease agreement in 2017. This agreement is with an unrelated third party to occupy approximately 104,852 square feet of the Company’s office space. The Company recorded rent expense on a straight-line basis for the lease, net of sublease income. For the years ended December 31, 2022 and 2021, the Company has the following operating sublease information (in thousands):
Year Ended December 31,
20222021
Fixed sublease expense$4,736 $9,524 
Variable sublease expense1,023 1,421 
Sublease income(5,334)(9,421)
Variable sublease income(1,023)(1,407)
Net sublease (income) loss$(598)$117 
Undiscounted cash flow—The tables below reconcile the undiscounted cash flows for each of the first five years and total of the remaining years to the operating and finance lease liabilities recorded in the consolidated balance sheets (in thousands):
As of December 31, 2022
Operating
Leases		Finance
Leases		Total
202317,289 25,019 42,308 
202415,559 19,425 34,984 
202514,535 15,868 30,403 
202612,864 9,048 21,912 
202711,247 3,471 14,718 
Thereafter5,495 — 5,495 
Total lease payments76,989 72,831 149,820 
Less: amount representing interest(8,502)(5,791)(14,293)
Present value of future lease payments68,487 67,040 135,527 
Less: current obligations under leases14,334 22,304 36,638 
Non-current lease obligations$54,153 $44,736 $98,889 
In addition, the Company will receive $0.6 million of sublease income from its real estate leases in 2023.
As of December 31, 2022, the Company did not have any additional significant lease that had not yet commenced.