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Commitments and Contingencies | 6 Months Ended
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Jun. 30, 2024
Commitments and Contingencies Disclosure [Abstract] |
Commitments and Contingencies | Commitments and Contingencies 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 did not have material short-term leases as of June 30, 2024. As of June 30, 2024, the weighted average remaining lease term for operating leases was approximately 5.2 years and the weighted average discount rate for operating leases was approximately 7.2%. As of December 31, 2023, the weighted average remaining lease term for operating leases was 5.5 years and the weighted average discount rate for operating leases was approximately 7.1%. The future minimum commitments for these operating leases as of June 30, 2024 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, |  |
Remainder of 2024 |  | $ | 1,215 |
2025 |  | 2,054 |
2026 |  | 2,056 |
2027 |  | 2,118 |
2028 |  | 2,073 |
Thereafter |  | 1,479 |
Total future minimum operating lease commitments |  | 10,995 |
Less imputed interest |  | (1,757) |
Total liability |  | $ | 9,238 |
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, which are not recorded on the Company’s condensed consolidated balance sheets. 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, 2024 for non-lease components were as follows (in thousands):
Year Ending December 31, |  |
Remainder of 2024 |  | $ | 1,647 |
2025 |  | 2,623 |
2026 |  | 2,603 |
2027 |  | 2,679 |
2028 |  | 2,757 |
Thereafter |  | 3,573 |
Total future minimum commitments |  | $ | 15,882 |
The following table presents information regarding the Company’s operating leases (in thousands). Total operating lease cost does not include costs related to services.
|  | Three Months Ended June 30, |  | Six Months Ended June 30,
|  | 2024 |  | 2023 |  | 2024 |  | 2023
Rental expense for both lease and non-lease components |  | $ | 1,914 |  |  | $ | 1,745 |  |  | $ | 3,897 |  |  | $ | 3,494 |
Rental expense for both lease and non-lease components included in cost of revenue |  | $ | 1,621 |  |  | $ | 1,377 |  |  | $ | 3,311 |  |  | $ | 2,611 |
Rental expense related to lease components |  | $ | 665 |  |  | $ | 735 |  |  | $ | 1,356 |  |  | $ | 1,474 |
Total operating lease cost |  | $ | 2,826 |  |  | $ | 2,598 |  |  | $ | 5,809 |  |  | $ | 5,347 |
As of June 30, 2024, the Company had entered into an operating lease agreement that had not yet commenced with lease obligations of $4.4 million. The operating lease is expected to commence in the third quarter of 2024 with a non-cancellable lease term of approximately 6.7 years. In July 2024, the Company entered into an operating lease agreement related to one of its current data center facilities. The Company’s future minimum commitment under this agreement totals approximately $5.6 million and extends through 2029. Other Contractual Commitments Other non-cancellable commitments relate mainly to service agreements used to facilitate the Company’s infrastructure operations. As of June 30, 2024, the Company had non-cancelable purchase commitments of $0.7 million and $0.6 million payable during the remainder of the year ending December 31, 2024 and the year ending December 31, 2025, respectively. During the six months ended June 30, 2024, 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 June 30, 2024, the scope of services has not 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 contribut ed $0.5 million to the 401(k) plan for each of the three months ended June 30, 2024 and 2023, respectively, and $1.0 million and $0.9 million for the six months ended June 30, 2024 and 2023, 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 there are not any current legal proceedings that 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 payable was $1.1 million and $1.3 million as of June 30, 2024 and December 31, 2023, 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.

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