Leases

6 Months Ended

Jun. 30, 2023

Leases [Abstract]

Leases

Leases

We have entered into various non-cancelable operating lease agreements mostly for our offices, data centers, colocations, and land. We have also entered into various non-cancelable finance lease agreements for certain network infrastructure. Our leases have original lease periods expiring between the remainder of 2023 and 2093. Many leases include one or more options to renew. We do not assume renewals in our determination of the lease term unless the renewals are deemed to be reasonably assured. Our lease agreements generally do not contain any material residual value guarantees or material restrictive covenants.

The components of lease costs are as follows (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Finance lease cost:
Amortization of right-of-use assets	$	80	$	95	$	184	$	193
Interest	5		4		10		8
Operating lease cost	516		435		1,073		846
Variable lease cost and other, net	112		86		236		176
Total lease cost	$	713	$	620	$	1,503	$	1,223

During the three and six months ended June 30, 2023, we also recorded $138 million and $811 million, respectively, of impairment loss for operating lease right-of-use assets as a part of our facilities consolidation restructuring efforts. For additional information, see Note 3 — Restructuring.

Supplemental balance sheet information related to lease liabilities is as follows:

	June 30, 2023		December 31, 2022
Weighted-average remaining lease term:
Finance leases	14.1 years		14.4 years
Operating leases	12.3 years		12.5 years
Weighted-average discount rate:
Finance leases	3.2	%	3.1	%
Operating leases	3.4	%	3.2	%

The following is a schedule, by years, of maturities of lease liabilities as of June 30, 2023 (in millions):

	Operating Leases		Finance Leases
The remainder of 2023	$	848	$	168
2024	2,232		60
2025	2,002		61
2026	1,948		59
2027	1,933		57
Thereafter	13,362		504
Total undiscounted cash flows	22,325		909
Less: Imputed interest	(4,489)		(149)
Present value of lease liabilities (1)	$	17,836	$	760
Lease liabilities, current	$	1,396	$	181
Lease liabilities, non-current	16,440		579
Present value of lease liabilities (1)	$	17,836	$	760

____________________________________

(1)    Lease liabilities include those operating leases that we plan to sublease or abandon as a part of our facilities consolidation restructuring efforts. For additional information, see Note 3 — Restructuring.

The table above does not include lease payments that were not fixed at commencement or lease modification. As of June 30, 2023, we have additional operating and finance leases, that have not yet commenced, with lease obligations of approximately $9.62 billion and $1.25 billion, respectively, for data centers, colocations, network infrastructure and offices. These operating and finance leases will commence between the remainder of 2023 and 2028 with lease terms of greater than one year to 30 years.

Supplemental cash flow information related to leases is as follows (in millions):

	Six Months Ended June 30,
	2023		2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	994	$	779
Operating cash flows for finance leases	$	10	$	8
Financing cash flows for finance leases	$	484	$	452
Lease liabilities arising from obtaining right-of-use assets:
Operating leases	$	1,868	$	3,073
Finance leases	$	338	$	103

Leases

Leases

We have entered into various non-cancelable operating lease agreements mostly for our offices, data centers, colocations, and land. We have also entered into various non-cancelable finance lease agreements for certain network infrastructure. Our leases have original lease periods expiring between the remainder of 2023 and 2093. Many leases include one or more options to renew. We do not assume renewals in our determination of the lease term unless the renewals are deemed to be reasonably assured. Our lease agreements generally do not contain any material residual value guarantees or material restrictive covenants.

The components of lease costs are as follows (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Finance lease cost:
Amortization of right-of-use assets	$	80	$	95	$	184	$	193
Interest	5		4		10		8
Operating lease cost	516		435		1,073		846
Variable lease cost and other, net	112		86		236		176
Total lease cost	$	713	$	620	$	1,503	$	1,223

During the three and six months ended June 30, 2023, we also recorded $138 million and $811 million, respectively, of impairment loss for operating lease right-of-use assets as a part of our facilities consolidation restructuring efforts. For additional information, see Note 3 — Restructuring.

Supplemental balance sheet information related to lease liabilities is as follows:

	June 30, 2023		December 31, 2022
Weighted-average remaining lease term:
Finance leases	14.1 years		14.4 years
Operating leases	12.3 years		12.5 years
Weighted-average discount rate:
Finance leases	3.2	%	3.1	%
Operating leases	3.4	%	3.2	%

The following is a schedule, by years, of maturities of lease liabilities as of June 30, 2023 (in millions):

	Operating Leases		Finance Leases
The remainder of 2023	$	848	$	168
2024	2,232		60
2025	2,002		61
2026	1,948		59
2027	1,933		57
Thereafter	13,362		504
Total undiscounted cash flows	22,325		909
Less: Imputed interest	(4,489)		(149)
Present value of lease liabilities (1)	$	17,836	$	760
Lease liabilities, current	$	1,396	$	181
Lease liabilities, non-current	16,440		579
Present value of lease liabilities (1)	$	17,836	$	760

____________________________________

(1)    Lease liabilities include those operating leases that we plan to sublease or abandon as a part of our facilities consolidation restructuring efforts. For additional information, see Note 3 — Restructuring.

The table above does not include lease payments that were not fixed at commencement or lease modification. As of June 30, 2023, we have additional operating and finance leases, that have not yet commenced, with lease obligations of approximately $9.62 billion and $1.25 billion, respectively, for data centers, colocations, network infrastructure and offices. These operating and finance leases will commence between the remainder of 2023 and 2028 with lease terms of greater than one year to 30 years.

Supplemental cash flow information related to leases is as follows (in millions):

	Six Months Ended June 30,
	2023		2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	994	$	779
Operating cash flows for finance leases	$	10	$	8
Financing cash flows for finance leases	$	484	$	452
Lease liabilities arising from obtaining right-of-use assets:
Operating leases	$	1,868	$	3,073
Finance leases	$	338	$	103