LEASES

9 Months Ended

Mar. 31, 2023

We enter into operating leases, both domestically and internationally, for certain facilities, automobiles, data centers and equipment for use in the ordinary course of business. The duration of the majority of these leases generally ranges from 1 to 10 years, some of which include options to extend for an additional 3 to 5 years after the initial term. Additionally, the land upon which our headquarters in Waterloo, Ontario, Canada is located is leased from the University of Waterloo for a period of 49 years beginning in December 2005, with an option to renew for an additional term of 49 years. Leases with an initial term of 12 months or less are not recorded on our Condensed Consolidated Balance Sheets.

As part of the Micro Focus Acquisition, we acquired $164.4 million of operating lease liabilities along with the respective right of use assets and $12.9 million of finance lease liabilities along with the respective finance lease receivable. The finance lease liabilities are comprised of equipment lease arrangements with an average duration of 4 to 5 years of which all are currently being sublet.

The following illustrates the Condensed Consolidated Balance Sheets information related to leases:


		As of March 31, 2023		As of June 30, 2022
Operating Leases	Balance Sheet Location
Operating lease right of use assets	Operating lease right of use assets	$	297,640	$	198,132

Operating lease liabilities (current)	Operating lease liabilities	$	94,015	$	56,380
Operating lease liabilities (noncurrent)	Long-term operating lease liabilities	286,025		198,695
Total operating lease liabilities		$	380,040	$	255,075

Finance Leases
Finance lease receivables (current)	Prepaid expenses and other current assets	$	4,589	$	—
Finance lease receivables (noncurrent)	Other assets	6,705		—
Total finance lease receivables		$	11,294	$	—

Finance lease liabilities (current)	Accounts payable and accrued liabilities	$	5,362	$	—
Finance lease liabilities (noncurrent)	Accrued liabilities	6,739		—
Total finance lease liabilities		$	12,101	$	—

The weighted average remaining lease term and discount rate for the periods indicated below were as follows:


	As of March 31, 2023		As of June 30, 2022
Weighted-average remaining lease term
Operating leases	5.78 years		6.13 years
Finance leases	2.59 years		0 years
Weighted-average discount rate
Operating leases	4.42	%	2.95	%
Finance leases	5.62	%	—

The following illustrates the various components of lease costs for the period indicated:


	Three Months Ended March 31,				Nine Months Ended March 31,
	2023		2022		2023		2022
Operating lease cost	$	20,923	$	16,158	$	49,225	$	47,121
Short-term lease cost	1,696		223		2,253		532
Variable lease cost	1,204		891		2,404		2,056
Sublease income	(3,018)		(3,087)		(8,834)		(6,945)
Total lease cost	$	20,805	$	14,185	$	45,048	$	42,764

The following table presents supplemental information relating to cash flows arising from lease transactions. Cash payments made for variable lease costs and short-term leases are not included in the measurement of lease liabilities, and, as such, are excluded from the amounts below:


	Nine Months Ended March 31,
	2023		2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating leases	$	62,282	$	53,200
Finance leases	$	989	$	—
Right of use assets obtained in exchange for new lease liabilities:
Operating leases (1) (2)	$	28,579	$	24,880

______________________

(1)The nine months ended March 31, 2023 excludes the impact of $129.3 million of right of use assets obtained through the Micro Focus Acquisition. See Note 19 “Acquisitions” for further details including the finalization of the purchase price allocation for the Micro Focus Acquisition.

(2)The nine months ended March 31, 2022 excludes the impact of $8.1 million of right of use assets obtained through the acquisition of Zix Corporation. See Note 19 “Acquisitions” for further details including the finalization of the purchase price allocation for the acquisition of Zix Corporation.

The following table presents the future minimum lease payments under our leases liabilities as of March 31, 2023:


Fiscal years ending June 30,	Operating Leases		Finance Leases
2023 (three months ended)	$	28,363	$	1,475
2024	104,554		5,720
2025	80,842		3,366
2026	57,657		1,938
2027	49,011		459
Thereafter	107,344		—
Total lease payments	$	427,771	$	12,958
Less: Imputed interest	(47,731)		(857)
Total	$	380,040	$	12,101

Operating lease maturity amounts included in the table above do not include sublease income expected to be received under our various sublease agreements with third parties. Under the agreements initiated with third parties, we expect to receive sublease income of $3.5 million over the remainder of Fiscal 2023 and $46.8 million thereafter.