LEASES

9 Months Ended

Dec. 31, 2023

The Company determines if an arrangement is a lease at inception. Right-of-use (ROU) assets represent the Company's right to use an underlying asset for the duration of the lease term. Lease liabilities represent the Company's contractual obligation to make lease payments over the lease term. The Company's policy is to combine lease and non-lease components and to not recognize ROU assets and lease liabilities for short-term leases. Leases with an initial term of twelve months or less are classified as short-term leases. ROU assets are recorded and recognized at commencement for the lease liability amount, plus initial direct costs incurred less lease incentives received. Lease liabilities are recorded at the present value of future lease payments over the lease term at commencement. The discount rate used is generally the Company's estimated incremental borrowing rate unless the lessor's implicit rate is readily determinable. Incremental borrowing rates are calculated periodically to estimate the rate the Company would pay to borrow the funds necessary to obtain an asset of similar value over a similar term. Lease expenses relating to operating leases are recognized on a straight-line basis over the lease term.

The Company has operating leases for administrative, research and development, sales and marketing and manufacturing facilities and equipment under various non-cancelable lease agreements. The Company's leases have remaining lease terms ranging from 1 year to 7 years. The Company's lease terms may include options to extend or terminate the lease where it is reasonably certain that the Company will exercise those options. The Company considers several economic factors when making this determination, including but not limited to, the significance of leasehold improvements incurred in the office space, the difficulty in replacing the asset, underlying contractual obligations, or specific characteristics unique to a particular lease. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The Company has an obligation to return certain leased facilities to their original condition at the end of the respective lease term. These obligations were not material to the Company's financial statements for all periods presented.

Most of the Company's lease agreements contain variable payments, primarily for common area maintenance (CAM), which are expensed as incurred and not included in the measurement of the ROU assets and lease liabilities.

The components of operating lease cost for the three and nine months ended December 31, 2023 and 2022, respectively, were as follows (in thousands):


	Three Months Ended				Nine Months Ended
	December 31,				December 31,
	2023		2022		2023		2022
Lease cost under long-term operating leases	$	3,027	$	3,078	$	9,113	$	9,285
Lease cost under short-term operating leases	402		870		1,240		2,849
Variable lease cost under short-term and long-term operating leases	941		821		3,142		2,677
Total operating lease cost	$	4,370	$	4,769	$	13,495	$	14,811

The table below presents supplemental cash flow information related to leases during the nine months ended December 31, 2023 and 2022 (in thousands):


	Nine Months Ended
	December 31,
	2023		2022
Right-of-use assets obtained in exchange for new operating lease liabilities	$	1,362	$	4,215

At December 31, 2023 and March 31, 2023, the weighted average remaining lease term in years and weighted average discount rate were as follows:


	December 31, 2023		March 31, 2023
Weighted average remaining lease term in years - operating leases	5.49		6.07

Weighted average discount rate - operating leases	4.2	%	4.2	%

Future minimum payments under non-cancellable leases at December 31, 2023 are as follows (in thousands):


Year ending March 31:
2024 (remaining three months)	$	2,552
2025	13,595
2026	11,442
2027	8,408
2028	7,288
Thereafter	15,767
Total lease payments	$	59,052
Less imputed interest	(6,175)
Present value of lease liabilities	$	52,877