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Commitments and Contingencies
 9 Months Ended
Sep. 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. The Company's leases have original lease periods expiring between 2025 and 2031. The Company had no short-term leases as of September 30, 2024.
As of September 30, 2024, the weighted average remaining lease term for operating leases was approximately 4.6 years and the weighted average discount rate for operating leases was approximately 7.0%. 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 September 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$1,493 
2025$4,547 
2026$4,034 
2027$3,042 
2028$3,024 
Thereafter$2,852 
Total future minimum operating lease commitments$18,992 
Less imputed interest$(2,697)
Total liability$16,295 

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 September 30, 2024 for non-lease components were as follows (in thousands):

Year Ending December 31,
Remainder of 2024$1,196 
2025$4,808 
2026$4,340 
2027$3,337 
2028$3,416 
Thereafter$4,251 
Total future minimum commitments$21,348 

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 September 30,Nine Months Ended September 30,
2024202320242023
Rental expense for both lease and non-lease components$2,155 $2,130 $6,053 $6,165 
Rental expense for both lease and non-lease components included in cost of revenue$1,862 $1,818 $5,173 $5,152 
Rental expense related to lease components$929 $719 $2,285 $2,174 
Total operating lease cost$3,190 $2,583 $8,998 $7,930 
In September 2024, the Company entered into an operating lease agreement that had not yet commenced with lease obligations of $1.1 million. The operating lease is expected to commence in the fourth quarter of 2024 with a non-cancellable lease term of approximately 3 years. In addition, in July 2024, the Company entered into an operating lease agreement with lease obligations of $6.0 million, which partially commenced in the third quarter of 2024. The remaining obligation of $1.4 million under this lease is expected to commence in the fourth quarter of 2024. The operating lease has a non-cancellable lease term of approximately 5 years.

Other Contractual Commitments
Other non-cancellable commitments relate mainly to service agreements used to facilitate the Company’s infrastructure operations. As of September 30, 2024, the Company had non-cancelable purchase commitments of $0.3 million and $0.9 million payable during the remainder of the year ending December 31, 2024 and the year ending December 31, 2025, respectively.

During the nine months ended September 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 September 30, 2024, 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 $0.5 million to the 401(k) plan for each of the three months ended September 30, 2024 and 2023, respectively, and $1.5 million and $1.4 million for the nine months ended September 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.
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 and comprehensive loss in connection with the indemnification provisions.