Commitments and Contingencies

Contractual Obligations

The Company leases facilities and certain car leases under agreements accounted for as operating leases. Our leases have initial lease terms ranging from 2 years to 13 years. Payments due under the lease contracts include primarily fixed payments. Our lease terms include periods under options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Currently, there are no operating leases where we believe it is reasonable certain that we will exercise any option to extend the initial term.

The Company has evaluated its facility leases and determined which leases met the definition of the new standard in accordance with Topic 842. The Company also performed an evaluation of their other contracts with suppliers in accordance with Topic 842 and have determined that, except for the facilities and car leases described above, none of our supply contracts contain a lease. Further, the Company has made an accounting policy election to keep leases with an initial term of twelve months or less off the balance sheet. This policy applies to all classes of the underlying assets. The Company will recognize those lease payments and associated interest expense in the consolidated statement of operations evenly over the lease term.

In connection with the leases, the Company recognized an operating lease right-of-use assets of $14.8 million and an aggregate lease liability of $18.8 million in its condensed consolidated balance sheet as of March 31, 2019.

The determination of the incremental borrowing rate used to calculate the present value of the right-of-use assets and lease liabilities depends on whether an interest rate is specified in the lease or not. If the lease specifies a rate, that rate is used when calculating the present value of lease payments. If the rate is not readily determinable, which is generally the case for the Company, the Company’s incremental borrowing rate (“IBR”) as of the date of inception is used (for initial measurement, the IBR was determined as of the adoption date of the standard). The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term and amount equal to the lease payments in a similar economic environment. The Company used a ratings benchmark report against its peers in the technology sector.



	As of March 31, 2019
Operating Leases	(in thousands, except lease term and discount rate)
Right-of-use asset	$	14,817

Current operating lease liability	6,227
Long term operating lease liability	12,566
Total operating lease liability	$	18,793

Weighted Average Remaining Lease Term
Operating leases	3.3 years

Weighted Average Discount Rate
Operating leases	7		%

During the three months ended March 31, 2019, there were $1.5 million of cash payments for operating leases. The undiscounted future lease payments under the lease liability as of March 31, 2019 were as follows (amounts in thousands):



Year ending December 31:	As of March 31, 2019
2019 (remaining nine months)	$	5,390
2020	6,078
2021	4,612
2022	3,233
2023	1,313
2024 and thereafter	640
Total undiscounted lease payments	21,266
Less: present value adjustment	(2,473		)
Total operating lease liability	$	18,793

Rental expense for operating leases and other service agreements for the three months ended March 31, 2019 and 2018 was approximately $2.9 million and $2.6 million, respectively.

Employee Benefit Plans

The Company has a 401(k) defined contribution plan covering all eligible employees. In 2018, the Company provided for employer matching contributions equal to 50% of employee contributions, up to the lesser of 5% of eligible compensation or $6,000. Matching contributions are deposited into the employee’s 401(k) account and are subject to 5 year graded vesting. Beginning in 2019, the Company's 401(k) policy was changed, whereby the Company matches 100% of the first 3% of eligible compensation and 50% of the next 2% of eligible compensation. Furthermore, the match is immediately vested. Salaries and related expenses include $1.0 million and $0.5 million of employer matching contributions for the three months ended March 31, 2019 and 2018.

Letters of Credit

As of March 31, 2019, the Company has a $1.3 million letter of credit outstanding substantially in favor of a certain landlord for office space. In addition, the Company has a letter of credit totaling $0.1 million as a security deposit for the due performance by the Company of the terms and conditions of a supply contract. There were no draws against these letters of credit during the three months ended March 31, 2019.