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Leases
3 Months Ended
Apr. 30, 2020
Leases [Abstract]  
Leases

Note 5. Leases

We have entered into various non-cancellable operating lease agreements for certain of our offices and data centers with lease periods expiring primarily between fiscal years 2022 and 2029. Certain of these arrangements have free or escalating rent payment provisions and optional renewal or termination clauses. Our operating leases typically include variable lease payments, which are primarily comprised of common area maintenance and utility charges for our offices and power and network connections for our data centers, that are determined based on actual consumption. Our operating lease agreements do not contain any residual value guarantees, covenants, or other restrictions.  

We also entered into various finance lease arrangements to obtain servers and related equipment for our data center operations. These agreements are primarily for four years and certain of these arrangements have optional renewal or termination clauses. The leases are secured by the underlying leased servers and related equipment.

We sublease certain floors of our Redwood City, San Francisco, and London offices. Our current subleases have total lease terms ranging from 31 to 96 months that will expire at various dates by fiscal year 2025.

The components of lease cost, which were included in operating expenses in our condensed consolidated statements of operations, were as follows (in thousands):

 

 

 

Three Months Ended

 

 

 

April 30,

 

 

 

2020

 

 

2019

 

Finance lease cost:

 

 

 

 

 

 

 

 

Amortization of finance lease right-of-use assets

 

$

13,106

 

 

$

8,623

 

Interest on finance lease liabilities

 

 

1,526

 

 

 

685

 

Operating lease cost, gross

 

 

13,117

 

 

 

11,791

 

Variable lease cost, gross

 

 

2,724

 

 

 

2,868

 

Sublease income

 

 

(2,808

)

 

 

(2,764

)

Total lease cost (1)

 

$

27,665

 

 

$

21,203

 

 

(1)

Short-term lease cost was not material for the periods presented and is not included in the table above.

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

 

 

 

Three Months Ended

 

 

 

April 30,

 

 

 

2020

 

 

2019

 

Cash paid for amounts included in the measurement of lease liabilities

 

 

 

 

 

 

 

 

Operating cash flows for operating leases

 

$

13,514

 

 

$

11,358

 

Operating cash flows for finance leases

 

 

1,997

 

 

 

759

 

Financing cash flows for finance leases

 

 

17,356

 

 

 

9,154

 

Right-of-use assets obtained in exchange of lease obligations (1)

 

 

 

 

 

 

 

 

Operating leases

 

$

29,347

 

 

$

229,355

 

Finance leases

 

 

14,825

 

 

 

21,414

 

 

(1)

Amounts disclosed for the three months ended April 30, 2019 include the adoption impact of ASC Topic 842 on the opening balance sheet as of February 1, 2019.

Supplemental information related to the remaining lease term and discount rate was as follows:

 

 

 

April 30,

 

 

 

2020

 

 

2019

 

Weighted-average remaining lease term (in years)

 

 

 

 

 

 

 

 

Operating leases

 

 

6.29

 

 

 

7.22

 

Finance leases

 

 

2.83

 

 

 

2.94

 

 

 

 

 

 

 

 

 

 

Weighted-average discount rate

 

 

 

 

 

 

 

 

Operating leases

 

 

5.26

%

 

 

5.39

%

Finance leases

 

 

4.42

%

 

 

3.62

%

 

As of April 30, 2020, maturities of our operating and finance lease liabilities, which do not include short-term leases and variable lease payments, are as follows (in thousands):

 

Years ending January 31:

 

Operating Leases (1)

 

 

Finance Leases

 

Remainder of 2021

 

$

43,547

 

 

$

44,672

 

2022

 

 

58,146

 

 

 

46,908

 

2023

 

 

46,657

 

 

 

37,448

 

2024

 

 

46,191

 

 

 

15,435

 

2025

 

 

30,411

 

 

 

137

 

Thereafter

 

 

89,038

 

 

 

 

Total lease payments

 

$

313,990

 

 

$

144,600

 

Less: imputed interest

 

$

(49,033

)

 

$

(9,181

)

Present value of total lease liabilities

 

$

264,957

 

 

$

135,419

 

 

(1)

Non-cancellable sublease proceeds for the remainder of the fiscal year ending January 31, 2021 and the fiscal years ending January 31, 2022, 2023, 2024, and 2025 of $6.7 million, $9.1 million, $8.3 million, $2.2 million, and $2.2 million, respectively, are not included in the table above.

As of April 30, 2020, we had an operating lease for one of our office spaces that had not commenced with aggregated undiscounted future payments of $9.4 million. This operating lease will commence during fiscal year 2021 and has a lease term of 6 years and therefore, we did not reflect this lease on the condensed consolidated balance sheet as of April 30, 2020 and in the tables above. We did not have any finance leases that have not yet commenced as of April 30, 2020.

We establish assets and liabilities for the present value of estimated future costs to return certain of our leased facilities to their original condition. Such assets are depreciated over the lease period into operating expense, and the recorded liabilities are accreted to the future value of the estimated restoration costs. As of April 30, 2020 and 2019, we recorded $3.1 million and $2.7 million, respectively, in other long-term liabilities related to the present value of our estimated asset retirement obligation for our headquarters facility. The accretion expense, which was included in operating expenses in our condensed consolidated statements of operations, was not material for all periods presented.