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Leases
12 Months Ended
Dec. 31, 2022
Leases [Abstract]  
Leases

6. Leases

We have operating leases for: (i) real estate which includes office space and our design and delivery centers; (ii) our outsourced data center environment, as discussed further in Note 11; and (iii) operating equipment. Our leases have remaining terms through 2031, some of which include options to extend the leases for up to an additional ten years. For leases commencing prior to 2019, we used the noncancelable term to calculate the related right-of-use asset and corresponding lease liability. The exercise of lease renewal options is at our sole discretion. Additionally, certain of our leases include payments that are adjusted periodically for inflation.

We have made an accounting policy election not to recognize on our Balance Sheets, leases with an initial term of twelve months or less, for any class of underlying asset. We have also made an election for real estate leases beginning in 2019 and later, not to separate the lease and non-lease components, but rather account for the entire arrangement as a single lease component (a practical expedient allowed under ASU No. 2016-02, Leases (Topic 842) (“ASC 842”)). For our outsourced data center environment agreement, we have concluded that there are lease and non-lease components, and we have allocated the consideration in the agreement on a relative stand-alone price basis. Due to the significant assumptions and judgements required in accounting for leases (to include whether a contract contains a lease, the allocation of the consideration, and the determination of the discount rate), the judgements and estimates made could have a significant effect on the amount of assets and liabilities recognized.

We sublease certain of our leased real estate to third parties. These subleases have remaining lease terms through 2031 and certain subleases have renewal terms that can extend the lease for up to an additional two years.

The components of lease expense for 2022, 2021, and 2020 was as follows (in thousands):

 

 

 

2022

 

 

2021

 

 

2020

 

Operating lease expense

 

$

21,516

 

 

$

26,131

 

 

$

26,360

 

Variable lease expense

 

 

4,103

 

 

 

4,530

 

 

 

4,518

 

Short-term lease expense

 

 

1,105

 

 

 

582

 

 

 

625

 

Sublease income

 

 

(2,246

)

 

 

(2,596

)

 

 

(2,066

)

Total net lease expense

 

$

24,478

 

 

$

28,647

 

 

$

29,437

 

 

Other information related to leases for 2022, 2021, and 2020 was as follows (in thousands, except term and discount rate):

 

 

 

2022

 

 

2021

 

 

2020

 

Supplemental Cash Flows Information:

 

 

 

 

 

 

 

 

 

Cash paid for amounts included in the measurement of
    operating lease liabilities

 

$

21,125

 

 

$

23,272

 

 

$

21,130

 

Right-of-use assets obtained in exchange for new operating
    lease liabilities

 

 

3,817

 

 

 

3,909

 

 

 

37,987

 

Weighted-average remaining lease term - operating
    leases

 

54 months

 

 

59 months

 

 

69 months

 

Weighted-average discount rate - operating
    leases

 

 

3.84

%

 

 

3.30

%

 

 

3.62

%

 

Future minimum lease payments under non-cancelable leases as of December 31, 2022 were as follows (in thousands):

 

2023

 

$

22,841

 

2024

 

 

21,352

 

2025

 

 

15,343

 

2026

 

 

6,037

 

2027

 

 

4,498

 

Thereafter

 

 

10,382

 

Total future minimum lease payments (1)

 

 

80,453

 

Less: Interest (2)

 

 

(6,234

)

Total

 

$

74,219

 

 

 

 

 

Current operating lease liabilities

 

$

21,012

 

Non-current operating lease liabilities

 

 

53,207

 

Total

 

$

74,219

 

 

(1) For leases commencing prior to 2019, minimum lease payments exclude payments for real estate taxes and non-lease components.

(2) We use our functional currency adjusted incremental borrowing rate for the discount rate.

 

As of December 31, 2022, we have one operating lease for office space that has not yet commenced of approximately $6.6 million. This operating lease will commence in 2023 with a lease term through 2033.