XML 33 R17.htm IDEA: XBRL DOCUMENT
v3.24.1

Commitments and Contingencies | 12 Months Ended
--- | ---
Dec. 31, 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 terms of t hese 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 2024 and 2026. Finance leases are included in property and equipment, net on the Company’s consolidated balance sheets. As of December 31, 2023, the weighted average remaining lease term for finance lease and lease financing obligation agreements was approximately 1.7 years and the weighted average discount rate for finance leases was 11.0%. As of December 31, 2022, the weighted average remaining lease term for finance lease and lease financing obligation agreements was approximately 2 years and the weighted average discount rate for finance leases was 10.2%. The following table presents information regarding assets acquired through finance lease and lease financing obligation agreements, which are related to sale-leaseback agreements (in millions):
|  | For the Years Ended December 31,
|  | 2023 |  | 2022
Depreciation expense |  | $15.4 |  | $13.2
Total finance lease costs |  | $16.9 |  | $16.1
Total interest expense included in finance lease costs |  | $2.8 |  | $3.9
Total lease financing obligation costs |  | $1.8 |  | $1.4
Total interest expense included in lease financing obligation costs |  | $0.4 |  | $0.3
Cash paid on interest on finance lease and lease financing obligations |  | $3.2 |  | $3.8
Depreciation expense on assets acquired through the Company’s finance leases and lease financing obligations is included in cost of revenue in its consolidated statements of operations. During the year ended December 31, 2023, the Company entered into two sale-leaseback arrangements with vendors to provide an aggregate of $4.5 million in cash proceeds for previously purchased hard drives and related equipment. The Company concluded the related lease arrangements would be classified as a lease financing obligation as the Company was reasonably certain to exercise the purchase option within the arrangement. Therefore, the transaction was deemed a failed sale-leaseback and was accounted for as a financing arrangement. The assets continue to be depreciated over their useful lives, and payments are allocated between interest expense and repayment of the financing liability. The Company did not enter into any new sale-leaseback arrangements during the year ended December 31, 2022. The future minimum commitments for these finance leases and lease financing obligations as of December 31, 2023 were as follows (in thousands):
Year Ending December 31, |  | Finance leases |  | Lease financing obligations |  | Total
2024 |  | $ | 16,983 |  |  | $ | 3,917 |  |  | $ | 20,900 |
2025 |  | 8,534 |  |  | 2,914 |  |  | 11,448 |
2026 |  | 2,768 |  |  | — |  |  | 2,768 |
2027 |  | 6 |  |  | — |  |  | 6 |
2028 |  | — |  |  | — |  |  | — |
Thereafter |  | — |  |  | — |  |  | — |
Total future minimum lease and financing commitments |  | 28,291 |  |  | 6,831 |  |  | 35,122 |
Less imputed interest |  | (2,430) |  |  | (890) |  |  | (3,320) |
Total liability |  | $ | 25,861 |  |  | $ | 5,941 |  |  | $ | 31,802 |
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 2024 and 2031. The Company does not have a material amount of short-term leases as of December 31, 2023. In July 2023, the Company entered into an operating lease agreement for purposes of consolidating and moving out of two offices into one office, resulting in the recognition of $5.3 million of operating right-of-use assets and $5.2 million of operating lease liabilities, current and non-current, on its consolidated balance sheets. A s of December 31, 2023, the weighted average remaining lease term for operating leases was approximately 5.5 years and the weighted average discount rate for operating leases was approximately 7.1%. As of December 31, 2022, the weighted average remaining lease term for operating leases was approximately 5.6 years and the weighted average discount rate for operating leases was approximately 5.4%. The future minimum commitments for these operating leases as of December 31, 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, |  |
2024 |  | $ | 2,398 |
2025 |  | 2,002 |
2026 |  | 2,056 |
2027 |  | 2,118 |
2028 |  | 2,073 |
Thereafter |  | 1,479 |
Total future minimum operating lease commitments |  | 12,126 |
Less imputed interest |  | (2,097) |
Total |  | $ | 10,029 |
Non-lease components included in the Company’s co-location 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 co-location lease agreements, such as, the price of utilities as compared to its tangible data center footprint within each co-location facility. The future minimum commitments for the Company’s non-cancellable contractual obligations as of December 31, 2023 for non-lease components were as follows (in thousands):
Year Ending December 31, |  |
2024 |  | $ | 4,240 |
2025 |  | 2,623 |
2026 |  | 2,603 |
2027 |  | 2,679 |
2028 |  | 2,764 |
Thereafter |  | 3,310 |
Total future minimum commitments |  | $ | 18,219 |
The following table presents information regarding the Company’s operating leases (in millions). Total operating lease cost does not include costs related to services.
|  | For the Years Ended December 31,
|  | 2023 |  | 2022
Rental expense for both lease and non-lease components |  | $8.1 |  | $6.5
Rental expense for both lease and non-lease components included in cost of revenue |  | $6.8 |  | $4.9
Rental expense related to lease components |  | $3.1 |  | $3.3
Total operating lease cost |  | $10.6 |  | $7.7
Total operating lease cost of $10.6 million for the year ended December 31, 2023 includes $1.8 million of variable lease costs and $0.7 million of short-term lease costs. Total operating lease cost of $7.7 million for the year ended December 31, 2022 includes $0.9 million of variable lease costs and $0.2 million of short-term lease costs. Other Contractual Commitments Other non-cancellable commitments relate mainly to service agreements used to facilitate the Company’s infrastructure operations. As of December 31, 2023, the Company had non-cancelable purchase commitments of $1.2 million and $0.6 million payable during the years ending December 31, 2024 and 2025, respectively. During 2023, the Company made payments of $0.2 million to a related party, Meaningful Works, for marketing services per terms of an agreement. An executive officer of Meaningful Works is an immediate family member of the Company’s CEO. As of December 31, 2023, the scope of services has been completed per terms of the agreement. 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 contributed $1.9 million and $1.6 million to the 401(k) plan for the years ended December 31, 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. On July 15, 2022, the Company received a demand letter from the investors that participated in the Simple Agreement for Future Equity (“SAFE”) agreement in August 2021 related to a contractual dispute in connection with the SAFE transaction. The investors sought a refund of their original investment of $10.0 million. In February 2023, the Company settled with the SAFE holders for a full release of all claims related to the SAFE transaction for a one-time payment in the amount of $1.5 million in aggregate. The $1.5 million settlement is included as a general and administrative expense in the Company’s consolidated statements of operations during the year ended December 31, 2022. One of the SAFE holders, TMT Investments PLC (“TMT”), a beneficial holder of more than 5% of the Company’s capital stock, was a party to the settlement and received a pro-rata payment of $0.3 million as part of the SAFE settlement. Accrued VAT Liability The Company has calculated a liability for uncollected and unpaid VAT, which is generally assessed by various taxing authorities 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 $1.3 million and $1.2 million as of December 31, 2023 and 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 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