Leases

12 Months Ended

Dec. 31, 2022

Note 10. Leases

The Company adopted ASC 842 as of January 1, 2022. The Company leases facilities under non-cancelable operating lease agreements with varying terms that range from one to 10 years. In addition, some of these leases have renewal options for up to five years. The Company determines if an arrangement contains a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, and operating lease liabilities on the Company's consolidated balance sheets. The Company does not have any finance leases.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of the Company's leases do not 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 future payments. Variable lease payments are expensed as incurred and are not included within the ROU asset and lease liability calculation. Optional periods to extend a lease under renewal options are included in the lease term when it is reasonably certain that the option will be exercised. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company does not account for lease components (e.g., fixed payments including rent) separately from the non-lease components (e.g., common-area maintenance costs).

The following table summarizes the impacts of adopting Topic 842 on the Company's consolidated balance sheets as of January 1, 2022 (in thousands):


	As Reported Balance as of January 1, 2022		Adjustments due to Topic 842			As Adjusted Balance as of January 1, 2022
Assets
Operating lease right-of-use assets	$	—	$	23,091		$	23,091

Liabilities
Accrued expenses and other liabilities	$	27,032	$	(1,514	)	$	25,518
Operating lease liability, current portion	$	—	$	4,948		$	4,948
Operating lease liability, less current portion	$	—	$	19,657		$	19,657

Operating lease cost was $6.4 million for the year ended December 31, 2022. Variable lease cost and short-term lease cost were immaterial during the year ended December 31, 2022. Future minimum lease payments at December 31, 2022 under the Company's non-cancellable leases were as follows:


For the year ending December 31,
2023	$	6,727
2024		6,356
2025		6,434
2026		5,785
2027		2,088
Thereafter		158
Total future minimum lease payments		27,548
Less: Imputed interest		(2,192	)
Present value of future minimum lease payments		25,356
Less: Current portion of operating lease liability		(5,851	)
Operating lease liabilities - noncurrent	$	19,505

The following table presents supplemental information for the Company's non-cancellable operating leases for the year ended December 31, 2022 (in thousands, except for weighted average and percentage data):


Weighted average remaining lease term	4.21
Weighted average discount rate		3.98	%
Cash paid for amounts included in the measurement of lease liabilities	$	4,949
Noncash right-of-use assets obtained in exchange for operating lease obligations(1)	$	2,936

(1) Amount includes (i) $3.5 million related to the Company entering into new non-cancellable operating lease agreements during 2022 and (ii) partially offset by a noncash reduction of $0.6 million related to the remeasurement of the existing Noida, India lease due to a change in the lease term of the agreement.

Rent expense was $3.9 million and $3.4 million for the year ended December 31, 2021 and 2020, respectively.

Future minimum lease payments under non-cancelable leases as of December 31, 2021 under ASC 840 were (in thousands):


For the year ending December 31,
2022	$	3,927
2023		3,843
2024		3,649
2025		3,434
2026		3,007
Thereafter		809
Total minimum lease payments	$	18,669