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Leases
 3 Months Ended
Mar. 31, 2023
Leases [Abstract]  
Leases Leases
The Company leases certain facilities and equipment under non-cancelable operating and finance leases which expire at various dates through 2031. Office and equipment leases are typically for terms of three to ten years and generally provide renewal options for terms up to an additional five years. The Company determines if an arrangement is a lease at inception. Short-term leases are defined as leases that have a term of 12 months or less and do not include an option to purchase the underlying asset or include an option to purchase the underlying asset that the Company is not reasonably certain to exercise.

The Company accounts for short-term leases by recognizing the lease payments in general and administrative expenses in the Condensed Consolidated Statements of Income. Short-term lease expense is recognized on a straight-line basis over the term of the lease and associated variable lease payments are recognized in the period in which the obligation for the payments is incurred.

Operating lease assets represent the right to use an underlying asset for the lease term, and operating lease liabilities represent the obligation to make lease payments arising from the lease. These assets and liabilities are recognized based on the present value of future payments over the lease term at the commencement date. The Company uses a collateralized incremental borrowing rate based on the information available at the commencement date to determine the present value of future payments. Operating leases typically require payment of certain non-lease costs, such as real estate taxes, common area maintenance and insurance. These components comprise the majority of the Company’s variable lease costs and are excluded from the present value of lease liabilities unless an event occurs that results in the payments becoming fixed for the remaining term. The remaining lease and non-lease components are accounted for together as a single lease component for all underlying classes of assets. Operating lease assets are adjusted for lease incentives, initial direct costs, impairments and exit or disposal costs.
The Company accounts for operating leases greater than one year by recognizing the lease payments in general and administrative expenses in the Condensed Consolidated Statements of Income. Operating lease costs are recognized on a straight-line basis from the commencement date to the end of the lease term. Amortization on finance lease right-of-use assets are included in general and administrative expenses in the Condensed Consolidated Statements of Income. Interest on finance lease right-of-use assets, if any, is included in interest expense in the Condensed Consolidated Statements of Income. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The components of lease expense, recorded in cost of revenues and general and administrative expenses on the
Condensed Consolidated Statements of Income, were as follows (in thousands):
Three Months Ended March 31,
20232022
Operating lease cost$669 $628 
Short-term lease cost394 440 
Finance lease cost
Amortization of right-of-use assets301 302 
Total lease cost$1,364 $1,370 

Supplemental balance sheet information related to leases is as follows (in thousands):
March 31, 2023December 31, 2022
Lease-related assets and liabilities
Operating lease right-of-use assets$7,459 $7,875 
Finance lease right-of-use assets (1)
1,132 1,427 
Total right-of-use assets$8,591 $9,302 
Operating lease liabilities, current$2,818 $2,793 
Operating lease liabilities, noncurrent13,379 13,877 
Total operating lease liabilities$16,197 $16,670 
(1) The full amount of the finance leases were prepaid. Therefore, there is no corresponding lease liability associated with the finance right-of-use assets.

Supplemental cash flow information related to leases is as follows (in thousands):
Three Months Ended March 31,
20232022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$727 $648 
Right-of-use assets obtained in exchange for lease obligations:
Operating leases$— $1,316 

Other supplemental operating lease information consists of the following:
March 31, 2023December 31, 2022
Operating leases:
Weighted average remaining lease term7.4 years7.6 years
Weighted average discount rate4.8 %4.6 %
Maturities of operating lease liabilities as of March 31, 2023 are as follows (in thousands):
 
Operating Leases
Fiscal Year:
2023 (remainder)
$2,183 
20242,826 
20252,389 
20262,461 
20272,534 
Thereafter8,166 
Total lease payments$20,559 
Less: Imputed interest(4,362)
Present value of operating lease liabilities$16,197 

Significant Judgments
Discount Rate
The majority of the Company’s leases are discounted using the Company’s incremental borrowing rate as the rate implicit in the lease is not readily determinable. Rates are obtained from various large banks to determine the appropriate incremental borrowing rate each quarter for collateralized loans with a maturity similar to the lease term.

Options
The lease term is generally the minimum noncancelable period of the lease. The Company does not include option periods unless the Company determined it is reasonably certain of exercising the option at inception or when a triggering event occurs.

Facility lease
On October 28, 2021, Ziff Davis (the “Assignor”) and Consensus (the “Assignee”) entered into the Assignment and First Amendment to Office Lease (the “Amendment”) with the NREA-TRC 700 LLC (the “Landlord”), in regard to the lease which was previously entered into on April 24, 2019 between the Assignor and the Landlord for certain office space located at 700 South Flower Street, Los Angeles, California (the “Lease”). The lease has an expiration date of January 31, 2031. The Amendment granted the Landlord’s consent to the assignment of the Lease by the Assignor to Assignee.
Leases Leases
The Company leases certain facilities and equipment under non-cancelable operating and finance leases which expire at various dates through 2031. Office and equipment leases are typically for terms of three to ten years and generally provide renewal options for terms up to an additional five years. The Company determines if an arrangement is a lease at inception. Short-term leases are defined as leases that have a term of 12 months or less and do not include an option to purchase the underlying asset or include an option to purchase the underlying asset that the Company is not reasonably certain to exercise.

The Company accounts for short-term leases by recognizing the lease payments in general and administrative expenses in the Condensed Consolidated Statements of Income. Short-term lease expense is recognized on a straight-line basis over the term of the lease and associated variable lease payments are recognized in the period in which the obligation for the payments is incurred.

Operating lease assets represent the right to use an underlying asset for the lease term, and operating lease liabilities represent the obligation to make lease payments arising from the lease. These assets and liabilities are recognized based on the present value of future payments over the lease term at the commencement date. The Company uses a collateralized incremental borrowing rate based on the information available at the commencement date to determine the present value of future payments. Operating leases typically require payment of certain non-lease costs, such as real estate taxes, common area maintenance and insurance. These components comprise the majority of the Company’s variable lease costs and are excluded from the present value of lease liabilities unless an event occurs that results in the payments becoming fixed for the remaining term. The remaining lease and non-lease components are accounted for together as a single lease component for all underlying classes of assets. Operating lease assets are adjusted for lease incentives, initial direct costs, impairments and exit or disposal costs.
The Company accounts for operating leases greater than one year by recognizing the lease payments in general and administrative expenses in the Condensed Consolidated Statements of Income. Operating lease costs are recognized on a straight-line basis from the commencement date to the end of the lease term. Amortization on finance lease right-of-use assets are included in general and administrative expenses in the Condensed Consolidated Statements of Income. Interest on finance lease right-of-use assets, if any, is included in interest expense in the Condensed Consolidated Statements of Income. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The components of lease expense, recorded in cost of revenues and general and administrative expenses on the
Condensed Consolidated Statements of Income, were as follows (in thousands):
Three Months Ended March 31,
20232022
Operating lease cost$669 $628 
Short-term lease cost394 440 
Finance lease cost
Amortization of right-of-use assets301 302 
Total lease cost$1,364 $1,370 

Supplemental balance sheet information related to leases is as follows (in thousands):
March 31, 2023December 31, 2022
Lease-related assets and liabilities
Operating lease right-of-use assets$7,459 $7,875 
Finance lease right-of-use assets (1)
1,132 1,427 
Total right-of-use assets$8,591 $9,302 
Operating lease liabilities, current$2,818 $2,793 
Operating lease liabilities, noncurrent13,379 13,877 
Total operating lease liabilities$16,197 $16,670 
(1) The full amount of the finance leases were prepaid. Therefore, there is no corresponding lease liability associated with the finance right-of-use assets.

Supplemental cash flow information related to leases is as follows (in thousands):
Three Months Ended March 31,
20232022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$727 $648 
Right-of-use assets obtained in exchange for lease obligations:
Operating leases$— $1,316 

Other supplemental operating lease information consists of the following:
March 31, 2023December 31, 2022
Operating leases:
Weighted average remaining lease term7.4 years7.6 years
Weighted average discount rate4.8 %4.6 %
Maturities of operating lease liabilities as of March 31, 2023 are as follows (in thousands):
 
Operating Leases
Fiscal Year:
2023 (remainder)
$2,183 
20242,826 
20252,389 
20262,461 
20272,534 
Thereafter8,166 
Total lease payments$20,559 
Less: Imputed interest(4,362)
Present value of operating lease liabilities$16,197 

Significant Judgments
Discount Rate
The majority of the Company’s leases are discounted using the Company’s incremental borrowing rate as the rate implicit in the lease is not readily determinable. Rates are obtained from various large banks to determine the appropriate incremental borrowing rate each quarter for collateralized loans with a maturity similar to the lease term.

Options
The lease term is generally the minimum noncancelable period of the lease. The Company does not include option periods unless the Company determined it is reasonably certain of exercising the option at inception or when a triggering event occurs.

Facility lease
On October 28, 2021, Ziff Davis (the “Assignor”) and Consensus (the “Assignee”) entered into the Assignment and First Amendment to Office Lease (the “Amendment”) with the NREA-TRC 700 LLC (the “Landlord”), in regard to the lease which was previously entered into on April 24, 2019 between the Assignor and the Landlord for certain office space located at 700 South Flower Street, Los Angeles, California (the “Lease”). The lease has an expiration date of January 31, 2031. The Amendment granted the Landlord’s consent to the assignment of the Lease by the Assignor to Assignee.