Leases

12 Months Ended

Dec. 31, 2021

Leases [Abstract]

Leases

LEASES

Effect of Standard Adoption

We adopted ASU 2016-02, Leases (Topic 842), effective January 1, 2021, using the optional transition method which allows entities to continue to apply historical accounting guidance in the comparative periods presented in the year of adoption. We elected the package of practical expedients permitted under the transition guidance within Accounting Standards Codification Topic 842 ("ASC 842") which, among other items, allowed us to carry forward the historical lease classifications. As such, we applied the modified retrospective approach as of the adoption date to those lease contracts for which we have taken possession of the property as of January 1, 2021.

Results for reporting periods beginning on or after January 1, 2021 are presented under ASC 842. Prior period amounts were not revised and continue to be reported in accordance with ASC Topic 840 ("ASC 840"), the accounting standard then in effect.

Upon transition, on January 1, 2021, we recorded the following increases (decreases) to the respective line items on the Consolidated Balance Sheet:

(in thousands)	Adjustment as of January 1, 2021
Operating lease ROU asset	$	28,044
Property, equipment and capitalized software, net	(63)
Short-term operating lease liabilities	5,118
Other current liabilities	(1,231)
Long-term operating lease liabilities	24,156
Accumulated deficit	(17)
Non-controlling interests	(46)

Nature of Leases

Under ASC 842, we determine if an arrangement is a lease at inception of the arrangement. We have entered into operating and finance lease agreements with lease periods expiring between 2022 and 2032. Operating leases primarily consist of real estate and data centers, and finance leases primarily consist of office equipment.

As of January 1, 2021, with the adoption of ASC 842, leases are included in operating lease right-of-use (“ROU”) assets and lease liabilities on our Consolidated Balance Sheets. Operating lease ROU assets and lease liabilities are recognized at the lease commencement date. Operating lease ROU assets represent our right to use an underlying asset and are based upon the lease liabilities adjusted for prepayments or accrued lease payments, initial direct costs, lease incentives, and impairment of operating lease assets. Lease liabilities represent the present value of lease payments over the lease term. The implicit rate within each lease is not readily determinable and therefore we use our incremental borrowing rate at the lease commencement date to determine the present value of the lease payments. The determination of the incremental borrowing rate requires judgement. We determined our incremental borrowing rate for each lease using indicative bank borrowing rates, adjusted for various factors including level of collateralization, term and treasury yield curves to align with the terms of the respective lease.

The Company has elected the following practical expedients for all classes of leased assets:

•Adopt the short-term lease exception for leases with terms of twelve months or less and account for them as if they were operating leases under ASC 840; and

•Apply the practical expedient of combining lease and non-lease components.

Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. We do not include any renewal options in the lease terms for calculating lease liability, as the renewal options allow us to maintain operational flexibility and we are not reasonably certain that we will exercise these renewal options at the time of lease commencement.

Lease expense for operating lease payments is recognized on a straight-line basis over the lease term.

Components of lease expense are as follows, all recorded within operating expenses in the Consolidated Statement of Operations:

(in thousands)	Twelve months ended Dec. 31, 2021
Finance lease cost (1)	$	340
Operating lease cost	7,815
Short-term lease cost (2)	474
Variable lease cost (3)	134
Sublease income	(366)
Total net lease expense	$	8,397

(1)Primarily consists of amortization of finance lease right-of-use assets and an immaterial amount of interest on finance lease liabilities recorded in operating expenses and interest expense in the consolidated statements of operations.

(2)Includes costs related to leases, which at the commencement date, have a lease term of 12 months or less.

(3)Includes costs made by the Company for the right to use an underlying asset that vary because of changes in facts or circumstances occurring after the commencement date, other than the passage of time.

We recognized rent expense of $6.7 million, $2.0 million, and $3.1 million for the twelve months ended December 31, 2020, the Successor 2019 Period, and the Predecessor 2019 Period, respectively.

Supplemental balance sheet information related to leases are as follows:

(in thousands)	Balance Sheet Location	December 31, 2021
Assets
Operating leases	Operating lease ROU assets	23,462
Finance leases	Property and equipment, net	100
Total right-of-use assets		$	23,562
Liabilities
Current liabilities:
Operating leases	Operating lease liabilities - current	$	6,126
Finance leases	Other current liabilities	103
Non-current liabilities:
Operating leases	Operating lease liabilities - non-current	19,776
Total lease liability		$	26,005

On May 12, 2020, the Company entered into a lease agreement with Wilson Tech 5 for a proposed site in Lindon, Utah, beginning in 2022. The Company will not have access to the leased premises until construction is complete, the “commencement date,” and is not deemed to be the owner during the construction period. This lease agreement expires ten years after the commencement date. The Company did not make any lease payments during the twelve months ended December 31, 2021 and 2020 under this lease. The initial base annual rent will be approximately $4.6 million beginning in mid-2022.

As of December 31, 2021, future minimum lease payments for finance and operating leases consisted of the following:

(in thousands)	Finance Leases		Operating Leases
2022	$	105	$	7,517
2023	—		7,584
2024	—		6,406
2025	—		5,039
2026	—		1,929
Thereafter	—		859
Total lease payments	$	105	$	29,334
Less: Imputed interest	(2)		(3,432)
Present value of lease liabilities	$	103	$	25,902

Supplemental cash flow information related to leases are as follows:

(in thousands)	Twelve months ended Dec. 31, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	6,652
Operating cash flows from finance leases	$	17
Financing cash flows from finance leases	$	318
Lease assets obtained in exchange for new lease obligations:
Operating leases	$	1,831

The weighted average remaining lease term and discount rate are as follows:

(in thousands)	Twelve months ended Dec. 31, 2021
Weighted average remaining lease term (in years):
Operating leases	4.2 years
Finance leases	0.4 years
Weighted average discount rate:
Operating leases	6.2	%
Finance leases	6.5	%

Leases

LEASES

Effect of Standard Adoption

We adopted ASU 2016-02, Leases (Topic 842), effective January 1, 2021, using the optional transition method which allows entities to continue to apply historical accounting guidance in the comparative periods presented in the year of adoption. We elected the package of practical expedients permitted under the transition guidance within Accounting Standards Codification Topic 842 ("ASC 842") which, among other items, allowed us to carry forward the historical lease classifications. As such, we applied the modified retrospective approach as of the adoption date to those lease contracts for which we have taken possession of the property as of January 1, 2021.

Results for reporting periods beginning on or after January 1, 2021 are presented under ASC 842. Prior period amounts were not revised and continue to be reported in accordance with ASC Topic 840 ("ASC 840"), the accounting standard then in effect.

Upon transition, on January 1, 2021, we recorded the following increases (decreases) to the respective line items on the Consolidated Balance Sheet:

(in thousands)	Adjustment as of January 1, 2021
Operating lease ROU asset	$	28,044
Property, equipment and capitalized software, net	(63)
Short-term operating lease liabilities	5,118
Other current liabilities	(1,231)
Long-term operating lease liabilities	24,156
Accumulated deficit	(17)
Non-controlling interests	(46)

Nature of Leases

Under ASC 842, we determine if an arrangement is a lease at inception of the arrangement. We have entered into operating and finance lease agreements with lease periods expiring between 2022 and 2032. Operating leases primarily consist of real estate and data centers, and finance leases primarily consist of office equipment.

As of January 1, 2021, with the adoption of ASC 842, leases are included in operating lease right-of-use (“ROU”) assets and lease liabilities on our Consolidated Balance Sheets. Operating lease ROU assets and lease liabilities are recognized at the lease commencement date. Operating lease ROU assets represent our right to use an underlying asset and are based upon the lease liabilities adjusted for prepayments or accrued lease payments, initial direct costs, lease incentives, and impairment of operating lease assets. Lease liabilities represent the present value of lease payments over the lease term. The implicit rate within each lease is not readily determinable and therefore we use our incremental borrowing rate at the lease commencement date to determine the present value of the lease payments. The determination of the incremental borrowing rate requires judgement. We determined our incremental borrowing rate for each lease using indicative bank borrowing rates, adjusted for various factors including level of collateralization, term and treasury yield curves to align with the terms of the respective lease.

The Company has elected the following practical expedients for all classes of leased assets:

•Adopt the short-term lease exception for leases with terms of twelve months or less and account for them as if they were operating leases under ASC 840; and

•Apply the practical expedient of combining lease and non-lease components.

Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. We do not include any renewal options in the lease terms for calculating lease liability, as the renewal options allow us to maintain operational flexibility and we are not reasonably certain that we will exercise these renewal options at the time of lease commencement.

Lease expense for operating lease payments is recognized on a straight-line basis over the lease term.

Components of lease expense are as follows, all recorded within operating expenses in the Consolidated Statement of Operations:

(in thousands)	Twelve months ended Dec. 31, 2021
Finance lease cost (1)	$	340
Operating lease cost	7,815
Short-term lease cost (2)	474
Variable lease cost (3)	134
Sublease income	(366)
Total net lease expense	$	8,397

(1)Primarily consists of amortization of finance lease right-of-use assets and an immaterial amount of interest on finance lease liabilities recorded in operating expenses and interest expense in the consolidated statements of operations.

(2)Includes costs related to leases, which at the commencement date, have a lease term of 12 months or less.

(3)Includes costs made by the Company for the right to use an underlying asset that vary because of changes in facts or circumstances occurring after the commencement date, other than the passage of time.

We recognized rent expense of $6.7 million, $2.0 million, and $3.1 million for the twelve months ended December 31, 2020, the Successor 2019 Period, and the Predecessor 2019 Period, respectively.

Supplemental balance sheet information related to leases are as follows:

(in thousands)	Balance Sheet Location	December 31, 2021
Assets
Operating leases	Operating lease ROU assets	23,462
Finance leases	Property and equipment, net	100
Total right-of-use assets		$	23,562
Liabilities
Current liabilities:
Operating leases	Operating lease liabilities - current	$	6,126
Finance leases	Other current liabilities	103
Non-current liabilities:
Operating leases	Operating lease liabilities - non-current	19,776
Total lease liability		$	26,005

On May 12, 2020, the Company entered into a lease agreement with Wilson Tech 5 for a proposed site in Lindon, Utah, beginning in 2022. The Company will not have access to the leased premises until construction is complete, the “commencement date,” and is not deemed to be the owner during the construction period. This lease agreement expires ten years after the commencement date. The Company did not make any lease payments during the twelve months ended December 31, 2021 and 2020 under this lease. The initial base annual rent will be approximately $4.6 million beginning in mid-2022.

As of December 31, 2021, future minimum lease payments for finance and operating leases consisted of the following:

(in thousands)	Finance Leases		Operating Leases
2022	$	105	$	7,517
2023	—		7,584
2024	—		6,406
2025	—		5,039
2026	—		1,929
Thereafter	—		859
Total lease payments	$	105	$	29,334
Less: Imputed interest	(2)		(3,432)
Present value of lease liabilities	$	103	$	25,902

Supplemental cash flow information related to leases are as follows:

(in thousands)	Twelve months ended Dec. 31, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	6,652
Operating cash flows from finance leases	$	17
Financing cash flows from finance leases	$	318
Lease assets obtained in exchange for new lease obligations:
Operating leases	$	1,831

The weighted average remaining lease term and discount rate are as follows:

(in thousands)	Twelve months ended Dec. 31, 2021
Weighted average remaining lease term (in years):
Operating leases	4.2 years
Finance leases	0.4 years
Weighted average discount rate:
Operating leases	6.2	%
Finance leases	6.5	%