Lease

6 Months Ended

Jun. 30, 2024

The Company determines if an arrangement is or contains a lease at inception, which is the date on which the terms of the contract are agreed to, and the agreement creates enforceable rights and obligations. Under Topic 842, a contract is or contains a lease when (i) explicitly or implicitly identified assets have been deployed in the contract and (ii) the customer obtains substantially all of the economic benefits from the use of that underlying asset and directs how and for what purpose the asset is used during the term of the contract. The Company also considers whether its service arrangements include the right to control the use of an asset.

The Company leases office facilities and equipment from unrelated parties under operating lease agreements that have initial terms ranging from 1 to 7.25 years. Some leases include one or more options to renew, generally at the Company's sole discretion, with renewal terms that can extend the lease term up to 5 years. In addition, certain leases contain termination options, where the rights to terminate are held by either the Company, the lessor, or both parties. These options to extend or terminate a lease are included in the lease terms when it is reasonably certain that the Company will exercise that option. The Company’s leases generally do not contain any material restrictive covenants. The Company is a sub-lessor in an agreement with a term of 3 years.

Operating lease cost is recognized on a straight-line basis over the lease term. The components of lease expense are as follows (in thousands):


	Six months ended June 30,
	2024		2023
Operating lease cost	$	1,433	$	1,596
Short-term lease cost	580		368
Total lease cost	$	2,013	$	1,964

For the three and six months ended June 30, 2024, sublease income was $0 and $57,000 recorded as other income.

Supplemental cash flow information related to leases is as follows (in thousands):


	Six months ended June 30,
	2024		2023
Cash paid for amounts included in measurement of lease liabilities:
Operating cash outflows - payments on operating leases	$	1,511	$	1,595

Right-of-use assets obtained in exchange for new lease obligations:
Operating leases	$	—	$	—

Supplemental balance sheet information related to leases is as follows (in thousands):


	June 30, 2024		December 31, 2023
Operating lease right-of-use assets	$	9,328	$	10,853
Included in other current liabilities:
Operating lease liabilities, current	$	2,407	$	2,444
Operating lease liabilities, noncurrent	8,113		9,479
Total operating lease liabilities	$	10,520	$	11,923

Weighted-average remaining lease term - operating leases:	4.32		4.68

Weighted-average discount rate - operating leases:	2.7%		2.7%

Future undiscounted cash flows for each of the next five years and thereafter and reconciliation to the lease liabilities recognized on the balance sheet as of June 30, 2024 is as follows (in thousands):


2024 (excluding the three months ended June 30, 2024)	$	1,362
2025	2,550
2026	2,504
2027	2,315
2028	2,047
Thereafter	348
Total lease payments	$	11,126
Less imputed interest	(606)
Total present value of lease liabilities	$	10,520