RESTRUCTURING AND FACILITIES CONSOLIDATION INITIATIVES

3 Months Ended

Mar. 31, 2023

Restructuring and Related Activities [Abstract]

RESTRUCTURING AND FACILITIES CONSOLIDATION INITIATIVES

The Company recorded restructuring and related expense aggregating $6.9 million and $4.8 million in the three months ended March 31, 2023 and 2022, respectively. Restructuring and related expense includes restructuring expense (primarily severance and related costs), estimated future variable lease costs for vacated properties with no intent or ability of sublease, and accelerated rent amortization expense.

For restructuring events that involve lease assets and liabilities, the Company applies lease reassessment and modification guidance and evaluates the right-of-use assets for potential impairment. If the Company plans to exit all or distinct portions of a facility and does not have the ability or intent to sublease, the Company will accelerate the amortization of each of those lease components through the vacate date. The accelerated amortization is recorded as a component of Restructuring and related expense in the Company's condensed consolidated statements of operations. Related variable lease expenses will continue to be expensed as incurred through the vacate date, at which time the Company will reassess the liability balance to ensure it appropriately reflects the remaining liability associated with the premises and record a liability for the estimated future variable lease costs.

Accelerated amortization of lease assets is recognized from the date that the Company commences the plan to fully or partially vacate a facility, for which there is no intent or ability to enter into a sublease, through the final vacate date. Accelerated amortization of lease assets that are included as a component of restructuring and related expense are excluded

from the restructuring accrual activity tables below, as the liability for lease payments for these facilities is included as a component of current and noncurrent Operating lease liabilities in the Company's condensed consolidated balance sheets at March 31, 2023 and December 31, 2022 (see Note 16). The Company may incur additional future expense if it is unable to sublease other locations included in the Company's facilities consolidation initiatives.

Restructuring and related expense for the three months ended March 31, 2023 and 2022 was comprised of the following (in thousands):



	Three months ended
	March 31, 2023		March 31, 2022
Severance and related costs	$	5,708	$	4,122
Variable and other facilities-related costs	1,006		$	692
Accelerated amortization of lease assets due to cease-use	223		$	—
	$	6,937	$	4,814

2023 Restructuring Plan

On February 22, 2023, the Company's Board of Directors approved a strategic restructuring program (the "2023 Restructuring Plan") to streamline the Company's operations in order to support the Company's investment in critical growth areas. The 2023 Restructuring Plan is expected to include, among other things, charges related to a consolidation of facilities and a workforce reduction. Any potential positions eliminated in countries outside the United States are subject to local law and consultation requirements.

The Company recorded restructuring and related expense of $5.7 million in the three months ended March 31, 2023 in connection with the 2023 Restructuring Plan entirely for severance related costs. A summary of the 2023 Restructuring Plan accrual activity for the three months ended March 31, 2023 is as follows (in thousands):


	Balance at January 1, 2023		Initiatives charged to expense		Cash payments		Net transfer to operating lease accounts		Balance at March 31, 2023
Severance	$	—	$	5,708	$	(2,540)	$	—	$	3,168

2022 Restructuring Plan

On February 14, 2022, the Company's Board of Directors approved a strategic restructuring program (the "2022 Restructuring Plan") to streamline the Company's operations in order to support the Company's investment in critical growth areas. The 2022 Restructuring Plan includes, among other things, charges related to a consolidation of facilities and a workforce reduction. Any positions eliminated in countries outside the United States are subject to local law and consultation requirements.

The Company recorded restructuring and related expense of $1.2 million and $4.2 million in the three months ended March 31, 2023 and 2022, respectively, in connection with the 2022 Restructuring Plan. The amount for the three months ended March 31, 2023 was comprised of $1.0 million for variable and other facilities-related costs, and $0.2 million for accelerated amortization of lease assets no longer being used with no ability or intent to sublease. The amount for the three months ended March 31, 2022 was for severance and related costs for approximately 50 employees. A summary of the 2022 Restructuring Plan accrual activity for the three months ended March 31, 2023 is as follows (in thousands):


	Balance at January 1, 2023		Initiatives charged to expense		Cash payments		Net transfer to operating lease accounts		Balance at March 31, 2023
Severance	$	1,164	$	—	$	(353)	$	—	$	811
Variable and other facilities-related costs	890		1,006		(1,114)		—		782
Facilities - Accel Amort	—		223		—		(223)		—
	$	2,054	$	1,229	$	(1,467)	$	(223)	$	1,593

Balance Sheet Classification

The current portions of accrued restructuring were $4.1 million and $1.3 million at March 31, 2023 and December 31, 2022, respectively, and are included as components of Accrued expenses in the consolidated balance sheets. The long-term portions of accrued restructuring are included as components of Other long-term liabilities in the consolidated balance sheets. The long-term portions of accrued restructuring were $1.9 million and $2.0 million at March 31, 2023 and December 31, 2022, respectively.