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Leases

9 Months Ended

Sep. 30, 2024

7. Leases

The Company’s lease portfolio for the three and nine months ended September 30, 2024 includes office leases for its current headquarters location and other locations, vehicle leases for its salesforce representatives, and leases for computer and office equipment.

The Company’s headquarters office lease and vehicle leases require letters of credit totaling $1.2 million to secure the Company’s obligations under the lease agreements. The letters of credit are maintained under a subfacility of the revolving credit agreement (Note 9).

Lease cost is recognized on a straight-line basis over the lease term. The components of lease cost for the three and nine months ended September 30, 2024 and 2023 are as follows (in thousands):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Operating lease cost	$	627	$	627	$	1,880	$	1,880
Short-term lease cost		335		314		1,080		854
Total lease cost	$	962	$	941	$	2,960	$	2,734

Supplemental information related to leases for the periods reported is as follows:


	Nine Months Ended
	September 30,
	2024			2023
Cash paid for amounts included in the measurement of lease liabilities (in thousands)	$	2,338		$	2,292
Weighted-average remaining lease term of operating leases (in years)		5.7			6.7
Weighted-average discount rate of operating leases		5.8	%		5.8	%

Summer Street Lease

In June 2019, the Company entered into a non-cancelable operating lease (the “Summer Street Lease”) for approximately 39,000 square feet of office space on the 23^rd floor of 100 Summer Street, Boston, Massachusetts, which has been the Company’s headquarters since October 2019. The Summer Street Lease terminates on June 11, 2030 and includes a 2% annual rent escalation, free rent periods, a tenant improvement allowance, and an option to extend the term of the lease for an additional five years at a market base rental rate. The extension option is not included in the lease term used for the measurement of the lease, as it is not reasonably certain to be exercised. The lease expense, inclusive of the escalating rent payments and lease incentives, is recognized on a straight-line basis over the lease term.

At lease commencement, the Company recorded a right-of-use asset and a lease liability using an incremental borrowing rate of 5.8%. At September 30, 2024, the balances of the right-of-use asset and operating lease liability were $11.4 million and $16.1 million, respectively. At December 31, 2023, the balances of the right-of-use asset and operating lease liability were $12.6 million and $17.7 million, respectively.

Lease costs recorded during the three and nine months ended September 30, 2024 were $0.6 million and $1.9 million, respectively.

Future minimum lease payments under the Summer Street Lease as of September 30, 2024 are as follows (in thousands):


2024 ⁽¹⁾	$	788
2025		3,189
2026		3,252
2027		3,317
2028		3,384
2029 and thereafter		4,902
Total future minimum lease payments		18,832
Less: present value adjustment		(2,777)
Operating lease liabilities		16,055
Less: current portion of operating lease liabilities		(3,173)
Operating lease liabilities, net of current portion	$	12,882

(1)	For the three months ending December 31, 2024.