XML 27 R16.htm IDEA: XBRL DOCUMENT
v3.23.2

Commitments and Contingencies | 6 Months Ended
--- | ---
Jun. 30, 2023
Commitments and Contingencies Disclosure [Abstract] |
Commitments and Contingencies | Commitments and Contingencies Finance Leases and Lease Financing Obligations The Company enters into finance lease arrangements to obtain hard drives and related equipment for its data center operations. The term of these agreements primarily range from three to four years and certain of these arrangements have optional renewals to extend the term of the lease generally at a fixed price. Contingent rental payments are generally not included in the Company’s finance lease agreements. Finance leases are generally secured by the underlying leased equipment. The Company's finance leases have original lease periods expiring between 2023 and 2026. Finance leases are included in property and equipment, net on the Company’s condensed consolidated balance sheet. A s of June 30, 2023, the weighted average remaining lease term for finance lease and lease financing obligation agreements was approximately 1.8 years and the weighted average discount rate for finance leases was approximately 10.2%. For the Company’s assets acquired through finance lease and lease financing obligation agreements, which are related to sale-leaseback agreements, depreciation expense was $3.7 million and $3.2 million for the three months ended June 30, 2023 and 2022, respectively, and was $7.2 million and $6.2 million for the six months ended June 30, 2023 and 2022, respectively. Depreciation expense on assets acquired through the Company’s finance leases and lease financing obligations is included in cost of revenue in its condensed consolidated statements of operations. There have been no material changes to the Company’s finance lease and lease financing obligation commitments during the six months ended June 30, 2023. During the three months ended June 30, 2023, total finance lease costs were $4.1 million, of which interest expense was approximately $0.7 million, and total lease financing obligation costs were $0.3 million, of which interest expense was approximately $0.1 million. During the three months ended June 30, 2022, total finance lease costs were $3.8 million, of which interest expense was approximately $0.8 million, and total lease financing obligation costs were $0.3 million, of which interest expense was approximately $0.1 million. During the six months ended June 30, 2023, total finance lease costs were $8.2 million, of which interest expense was approximately $1.5 million, and total lease financing obligation costs were $0.7 million, of which interest expense was approximately $0.2 million. During the six months ended June 30, 2022, the total finance lease costs were $7.3 million, of which interest expense was approximately $1.7 million, and total lease financing obligation costs were $0.7 million, of which interest expense was approximately $0.2 million. The cash paid for interest on interest on finance lease and lease financing obligations was $1.6 million and $1.9 million for the six months ended June 30, 2023 and 2022, respectively. Operating Leases The Company leases its facilities for data centers and office space under non-cancelable operating leases with various expiration dates. Certain lease agreements include renewal options to extend the lease term at a price to be determined upon exercise. These options are not reasonably certain to be exercised and therefore are not factored into the determination of lease payments. Contingent rental payments are generally not included in the Company’s lease agreements. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. Th e Company's leases have original lease periods expiring between 2023 and 2031. The Company did not have a material amount of short-term leases as of June 30, 2023. As of June 30, 2023, the weighted average remaining lease term for operating leases was approximately 5.9 years and the weighted average discount rate for operating leases was approximately 6.1%. The future minimum commitments for these operating leases as of June 30, 2023 were as follows (in thousands), which excludes amounts allocated to services under operating lease agreements that are considered non-lease components:
Year Ending December 31, |  |
Remaining of 2023 |  | $ | 912 |
2024 |  | 1,273 |
2025 |  | 847 |
2026 |  | 867 |
2027 |  | 892 |
Thereafter |  | 2,076 |
Total future minimum operating lease commitments |  | 6,867 |
Less imputed interest |  | (1,137) |
Total liability |  | $ | 5,730 |
Non-lease components included in the Company’s colocation lease agreements are related to non-tangible utilities and services used in its data center operations. The Company used judgment and third-party data in determining the stand-alone price for allocating consideration to lease and non-lease components under these colocation lease agreements, such as, the price of utilities as compared to its tangible data center footprint within each colocation facility. The future minimum commitments for the Company’s non-cancellable contractual obligations as of June 30, 2023 for non-lease components were as follows (in thousands):
Year Ending December 31, |  |
Remaining of 2023 |  | $ | 2,593 |
2024 |  | 4,164 |
2025 |  | 2,569 |
2026 |  | 2,536 |
2027 |  | 2,611 |
Thereafter |  | 6,179 |
Total future minimum commitments |  | $ | 20,652 |
Rental expense related to the Company’s operating leases for both lease and non-lease components was $1.7 million and $1.4 million for the three months ended June 30, 2023 and 2022, of which $1.4 million and $1.1 million is included in cost of revenue in its condensed consolidated statement of operations, respectively. Rental expense related to lease components was $0.7 million and $0.6 million for the three months ended June 30, 2023 and 2022, respectively. Total operating lease cost was $2.6 million and $1.8 million for the three months ended June 30, 2023 and 2022, respectively, which does not include costs related to services. Rental expense related to the Company’s operating leases for both lease and non-lease components was $3.5 million and $2.8 million for the six months ended June 30, 2023 and 2022, of which $2.6 million and $2.1 million is included in cost of revenue in its condensed consolidated statement of operations, respectively. Rental expense related to lease components was $1.5 million and $1.2 million for the six months ended June 30, 2023 and 2022, respectively. Total operating lease cost was $5.3 million and $3.5 million, for the six months ended June 30, 2023 and 2022, respectively, which does not include costs related to services. Other Contractual Commitments Other non-cancellable commitments relate mainly to service agreements used to facilitate the Company’s infrastructure operations. As of June 30, 2023, the Company had non-cancelable purchase commitments of $4.5 million and $0.5 million payable during the years ending December 31, 2023 and 2024, respectively. 401(k) Plan The Company sponsors a 401(k) defined contribution plan covering all eligible U.S. employees. Contributions to the 401(k) plan are discretionary. The Company contribut ed $0.5 million and $0.4 million to the 401(k) plan during the three months ended June 30, 2023 and 2022, respectively, and $0.9 million and $0.7 million for the six months ended June 30, 2023 and 2022, respectively. Legal Matters The Company is involved from time to time in various claims and legal actions arising in the ordinary course of business. While it is not feasible to predict or determine the ultimate outcome of these matters, the Company believes that none of its current legal proceedings are likely to have a material adverse effect on its financial position, results of operations or cash flows. However, the results of legal proceedings are inherently unpredictable and litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources, and other factors. Accrued VAT Liability The Company has calculated a liability for uncollected and unpaid VAT, which is generally assessed by various taxing auth orities on services the Company provides to its customers. The Company accrues an amount that it considers probable to be collected and can be reasonably estimated. Based on the Company’s analysis, its total accrual for VAT tax payable was $1.0 million and $1.2 million as of June 30, 2023 and December 31, 2022, respectively. Indemnification The Company enters into indemnification provisions under agreements with other parties from time to time in the ordinary course of business. The Company has agreed in certain circumstances to indemnify and defend the indemnified party for claims and related losses suffered or incurred by the indemnified party from third-party claims due to the Company’s activities or non-compliance with certain representations and warranties made by the Company. It is not possible to determine the maximum potential loss under these indemnification provisions due to the Company’s limited history of prior indemnification claims and the unique facts and circumstances involved in each particular provision. No losses have been recorded in the condensed consolidated statements of operations in connection with the indemnification provisions.

X
- References No definition available. + Details
Name: | us-gaap_CommitmentsAndContingenciesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for commitments and contingencies. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 440 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 4 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482648/440-10-50-4 Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef -Topic 450 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//450/tableOfContent Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 954 -SubTopic 440 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480327/954-440-50-1 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 440 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 4 -Subparagraph (c) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482648/440-10-50-4 Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 440 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//440/tableOfContent + Details
Name: | us-gaap_CommitmentsAndContingenciesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration