Leases

12 Months Ended

Jul. 31, 2024

NOTE 6. LEASES

We have operating leases for offices, research and development facilities and data centers and finance leases for certain data center equipment. Our leases have remaining lease terms of one year to approximately six 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 $43.3 million, $42.4 million and $38.6 million for the fiscal years ended July 31, 2022, 2023 and 2024, 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 $2.4 million, $3.9 million, and $4.8 million for the fiscal years ended July 31, 2022, 2023 and 2024, respectively.

During fiscal 2022, we signed agreements to early exit certain office spaces in the United States. The reduction in the lease term resulted in a decrease to the carrying amount of the operating lease liability and the operating lease right-of-use asset on our consolidated balance sheet as of July 31, 2022. In addition, we recorded $0.6 million of expense in our consolidated statement of operations for the fiscal year ended July 31, 2022.

During fiscal 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 consolidated balance sheet as of July 31, 2023. In addition, we recorded $1.7 million of expense in our consolidated statement of operations for the fiscal year ended July 31, 2023.

Supplemental balance sheet information related to our leases is as follows:


	As of July 31,
	2023			2024
	(in thousands)
Operating leases:
Operating lease right-of-use assets, gross	$	181,226		$	180,843
Accumulated amortization		(87,672	)		(71,710	)
Operating lease right-of-use assets, net	$	93,554		$	109,133
Operating lease liabilities—current	$	29,567		$	24,163
Operating lease liabilities—non-current		68,940			90,359
Total operating lease liabilities	$	98,507		$	114,522
Weighted average remaining lease term (in years):		5.0			4.8
Weighted average discount rate:		6.1	%		6.4	%


	As of July 31,
	2023			2024
	(in thousands)
Finance leases:
Finance lease right-of-use assets, gross (1)	$	18,279		$	19,345
Accumulated amortization (1)		(5,558	)		(9,412	)
Finance lease right-of-use assets, net (1)	$	12,721		$	9,933
Finance lease liabilities—current (2)	$	3,518		$	3,954
Finance lease liabilities—non-current (3)		9,722			6,666
Total finance lease liabilities	$	13,240		$	10,620
Weighted average remaining lease term (in years):		3.7			2.9
Weighted average discount rate:		6.8	%		7.0	%

(1)

Included in our consolidated balance sheets within property and equipment, net.

(2)

Included in our consolidated balance sheets within accrued expenses and other current liabilities.

(3)

Included in our consolidated balance sheets within other liabilities—non-current.

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


	Fiscal Year Ended July 31,
	2022		2023		2024
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	48,509	$	46,886	$	37,973
Operating cash flows from finance leases	$	—	$	—	$	885
Financing cash flows from finance leases	$	1,089	$	4,757	$	3,601
Lease liabilities arising from obtaining right-of-use assets:
Operating leases	$	55,797	$	10,358	$	46,153
Finance leases	$	4,529	$	7,827	$	1,066

The undiscounted cash flows for our lease liabilities as of July 31, 2024 were as follows:


Fiscal Year Ending July 31:	Operating Leases			Finance Leases			Total
	(in thousands)
2025	$	30,125		$	4,576		$	34,701
2026		26,064			3,874			29,938
2027		23,780			2,164			25,944
2028		22,968			1,152			24,120
2029		17,252			41			17,293
Thereafter		13,985			—			13,985
Total lease payments		134,174			11,807			145,981
Less: imputed interest		(19,652	)		(1,187	)		(20,839	)
Total lease obligation		114,522			10,620			125,142
Less: current lease obligations		(24,163	)		(3,954	)		(28,117	)
Long-term lease obligations	$	90,359		$	6,666		$	97,025

As of July 31, 2024, we had additional operating lease commitments of approximately $2.3 million on an undiscounted basis for certain office leases that have not yet commenced. These operating leases will commence during fiscal 2025, with lease terms of approximately one year.