Leases

3 Months Ended

Mar. 31, 2020

Leases [Abstract]

Leases

4. Leases

Leases as Lessee

We use leasing as a source of financing for certain data center facilities and related equipment. We currently operate one data center facility, along with various equipment and fiber optic transmission cabling, that are subject to finance leases. The remaining terms of our finance leases range from one to eighteen years. Our finance lease associated with the data center includes multiple extension option periods, some of which were included in the lease term as we are reasonably certain to exercise those extension options. Our other finance leases typically do not have options to extend the initial lease term.

We currently lease six other facilities under operating lease agreements for various data centers, our corporate headquarters and additional office space. Our leases have remaining lease terms ranging from four to seven years. We have options to extend the initial lease term on nearly all of these leases. Additionally, we have one ground lease for our Santa Clara property that is considered an operating lease which is scheduled to expire in 2052.

Components of lease expense were as follows (unaudited and in thousands):

	Three months ended
	March 31, 2020		March 31, 2019
Finance lease cost:
Amortization of assets	$	1,038	$	386
Interest on lease liabilities		489		245
Operating lease expense:
Operating lease cost		2,263		3,333
Variable lease cost		264		210
Sublease income		(48)		(46)
Total lease costs	$	4,006	$	4,128

Leases as lessor

Our lease revenue contains both minimum lease payments as well as variable lease payments. See Note 2 – ‘Summary of Significant Accounting Policies’ for further details of our revenue streams and associated accounting treatment. The components of our lease revenue were as follows (unaudited and in thousands):

	Three months ended
	March 31,		March 31,
	2020		2019
Lease revenue:
Minimum lease revenue	$	107,485	$	98,596
Variable lease revenue (primarily recoveries from customers)		12,596		10,793
Total lease revenue	$	120,081	$	109,389