Balance Sheet Components

12 Months Ended

Dec. 31, 2019

Balance Sheet Related Disclosures [Abstract]

Balance Sheet Components

Balance Sheet Components

Property and Equipment, Net

Property and equipment, net consisted of the following as of December 31, 2019 and 2018 (in thousands):

	2019		2018
Computer equipment and software	$	3,613	$	3,189
Internal-use software and platform development costs	12,726		6,287
Leasehold improvements	10,576		5,783
Office furniture and fixtures	2,454		2,545
Total property and equipment	29,369		17,804
Less: Accumulated depreciation	(7,915)		(6,989)
Property and equipment, net	$	21,454	$	10,815

Depreciation expense related to property and equipment was $2.8 million, $2.2 million, and $1.5 million for the years ended December 31, 2019, 2018, and 2017, respectively.

The Company capitalized $6.4 million, $4.0 million, and $0.5 million of internal-use software and platform development costs during the years ended December 31, 2019, 2018, and 2017, respectively.

Amortization expense related to the capitalized internal-use software and platform development costs was $1.2 million for the year ended December 31, 2019, of which $0.9 million was included in cost of revenue related to developed technology used on the platform. Amortization expense related to the capitalized internal-use software and platform development costs was $0.1 million for the year ended December 31, 2018. There was no amortization expense for the year ended December 31, 2017 related to the internal-use software and platform development costs as the underlying assets had not been placed into service as of December 31, 2017.

Intangible Assets, Net

All of the Company’s identifiable intangible assets were acquired in March 2014 from the Elance-oDesk Combination. Intangible assets, net consisted of the following (in thousands):

	As of December 31, 2019
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Trade names	$	2,293	$	2,293	$	—
User relationships	18,678		15,343		3,335
Developed technology	10,356		10,356		—
Domain names	529		529		—
Total	$	31,856	$	28,521	$	3,335

	As of December 31, 2018
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Trade names	$	2,293	$	2,293	$	—
User relationships	18,678		12,674		6,004
Developed technology	10,356		10,356		—
Domain names	529		529		—
Total	$	31,856	$	25,852	$	6,004

Total amortization expense of intangible assets was $2.7 million for each of the years ended December 31, 2019, 2018, and 2017. Amortization expense is included in general and administrative expenses. As of December 31, 2019, the remaining useful life for user relationships was 1.3 years.

As of December 31, 2019, the estimated future amortization expense for the acquired intangible assets is as follows (in thousands):

Year Ended December 31,	Estimated Amortization Expense
2020	$	2,668
2021	667
Total	$	3,335

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following as of December 31, 2019 and 2018 (in thousands):

	2019		2018
Accrued compensation and related benefits	$	5,344	$	9,314
Accrued freelancer costs	622		2,465
Accrued indirect taxes	2,401		1,630
Accrued vendor expenses	5,485		6,002
Accrued payment processing fees	832		715
Operating lease liability, current	3,214		—
Other	444		822
Total accrued expenses and other current liabilities	$	18,342	$	20,948

Operating Leases

The Company leases office space and certain equipment under various operating leases, with the vast majority of its lease portfolio consisting of operating leases for office space. The Company has also entered into arrangements where it acts as a sublessor in its leases of office space. The Company has not entered into any significant finance, sales-type, or direct financing leases.

The Company’s significant judgments include determining whether an arrangement is or contains a lease, the determination of the discount rate used to calculate the lease liability and whether or not lease incentives are reasonably certain to occur in the initial measurement of the lease liability. Operating lease assets and lease liabilities are recognized at commencement date and initially measured based on the present value of lease payments over the defined lease term. Lease expense is recognized on a straight-line basis over the lease term.

A contract is or contains an embedded lease if the contract meets all of the below criteria:

•There is an identified asset;

•The Company has the right to obtain substantially all of the economic benefit of the asset; and

•The Company has the right to direct the use of the asset.

For initial measurement of the present value of lease payments and for subsequent measurement of lease modifications, the Company is required to use the rate implicit in the lease. Since the majority of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate, which is a collateralized rate. The application of the incremental borrowing rate is performed on a lease-by-lease basis and approximates the rate at which the Company could borrow, on a secured basis for a similar term, an amount equal to its lease payments in a similar economic environment.

The Company’s leases have remaining lease terms of approximately one year to nine years, which may include the option to extend the lease. The Company includes lease payments associated with renewal options in its operating lease asset and liability only when it becomes reasonably certain the company will exercise the renewal option. The Company has not included renewal options for any of its operating leases in its determination of lease liabilities. The Company does not have lease agreements with residual value guarantees, sale leaseback terms, or material restrictive covenants. Leases with an initial term of 12 months or less are not recognized on the consolidated balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the lease term.

The following table summarizes the Company’s operating lease assets and lease liabilities as of December 31, 2019 (in thousands):

Balance Sheet Classification		As of December 31, 2019
Assets
Operating—noncurrent	Operating lease asset	$	21,908
Liabilities
Operating—current	Accrued expenses and other current liabilities	3,214
Operating—noncurrent	Operating lease liability, noncurrent	21,186
Total lease liabilities		$	24,400

Operating lease cost, inclusive of variable lease charges, for the year ended December 31, 2019 was $5.9 million. Sublease income recognized during the year ended December 31, 2019 was approximately $0.4 million. Charges related to operating leases that are variable, and therefore not included in the measurement of the lease liabilities, were $0.6 million for the year ended December 31, 2019. The Company made lease payments of $3.3 million during the year ended December 31, 2019. The Company obtained an $8.6 million operating lease asset in exchange for a new lease obligation during the year ended December 31, 2019. As of December 31, 2019, the Company had no material finance leases.

The following table shows the Company’s future lease commitments due in each of the next five years and thereafter for operating leases (in thousands):

Year Ended December 31,	Leases
2020	$	3,313
2021	3,919
2022	5,391
2023	5,796
2024	4,838
Thereafter	6,954
Total lease payments	30,211
Adjustment for discount to present value	(5,811)
Total	$	24,400

As of December 31, 2019, the Company had $2.2 million of net operating lease commitments not included in the table above for additional office space in the Company’s Chicago, Illinois office building. The lease for the additional space will commence in fiscal year 2020 with a lease term of five years.

As of December 31, 2018, future aggregate minimum lease payments under the non-cancellable operating leases were as follows (in thousands):

Year Ended December 31,	Leases (1)
2019	$	3,569
2020	4,683
2021	4,914
2022	5,052
2023	5,194
Thereafter	4,890
Less: rental payments from subleases	(363)
Total	$	27,939

⁽¹⁾ Amounts are based on Topic 840 that were superseded upon adoption of Topic 842 as of January 1, 2019.

As of and for the year ended December 31, 2019, the weighted-average remaining lease term is 6.2 years, and the weighted-average discount rate is 5.86%.