| Leases |
7. Leases
The following table presents the cumulative effect of the changes made to the Condensed Consolidated Balance Sheet as of January 1, 2022 as a result of the adoption of ASC 842:
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
December 31, 2021 |
|
Adjustments due to ASC 842 |
|
January 1, 2022 |
Prepaid expenses and other current assets |
|
$ |
23,295 |
|
$ |
(229) |
|
$ |
23,066 |
Other non-current assets |
|
$ |
2,780 |
|
$ |
(496) |
|
$ |
2,284 |
Operating lease right-of-use assets, net |
|
$ |
— |
|
$ |
78,827 |
|
$ |
78,827 |
Operating lease liabilities, current |
|
$ |
— |
|
$ |
4,885 |
|
$ |
4,885 |
Operating lease liabilities, non-current |
|
$ |
— |
|
$ |
74,677 |
|
$ |
74,677 |
Other current liabilities |
|
$ |
6,716 |
|
$ |
(614) |
|
$ |
6,102 |
Other non-current liabilities |
|
$ |
3,209 |
|
$ |
(847) |
|
$ |
2,362 |
The following table presents lease cost, cash paid for amounts included in the measurement of lease liabilities, weighted-average remaining lease terms, and weighted-average discount rates for finance and operating leases for the three and nine months ended September 30, 2022.
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
(in thousands) |
|
September 30, 2022 |
|
September 30, 2022 |
Lease cost: |
|
|
|
|
|
|
Operating lease cost (1) |
|
$ |
2,641 |
|
$ |
8,266 |
Finance lease cost |
|
|
|
|
|
|
Depreciation of finance lease assets (2) |
|
|
244 |
|
|
946 |
Interest on finance lease liabilities (3) |
|
|
32 |
|
|
111 |
Short-term lease cost (1) |
|
|
304 |
|
|
832 |
Sublease income (1) |
|
|
(267) |
|
|
(356) |
Total lease cost |
|
$ |
2,954 |
|
$ |
9,799 |
|
|
|
|
|
|
|
Other information: |
|
|
|
|
|
|
Cash paid for amounts included in the measurement of lease liabilities |
|
|
|
|
|
|
Operating cash outflows from operating leases |
|
$ |
1,385 |
|
$ |
3,704 |
Operating cash outflows from finance leases |
|
$ |
24 |
|
$ |
96 |
Financing cash outflows from finance leases |
|
$ |
379 |
|
$ |
1,286 |
|
(1) |
Included in Cost of revenue, Sales, marketing and customer support, Product development and General and administrative expenses in the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income. |
|
(2) |
Included in Depreciation and amortization in the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income. |
|
(3) |
Included in Interest expense in the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income. |
The following table presents weighted-average remaining lease terms and weighted-average discount rates for finance and operating leases as of September 30, 2022:
|
|
|
|
|
September 30, 2022 |
Weighted-average remaining lease term - operating leases (in years) |
|
14.2 |
Weighted-average remaining lease term - finance leases (in years) |
|
1.8 |
Weighted-average discount rate - operating leases |
|
4.5% |
Weighted-average discount rate - finance leases |
|
3.7% |
Maturities of lease liabilities for the remainder of 2022 and the years through 2028 and thereafter are as follows:
|
|
|
|
|
|
|
|
|
September 30, 2022 |
(in thousands) |
|
Operating Leases |
|
Finance Leases |
2022 (for remaining three months) |
|
$ |
1,426 |
|
$ |
665 |
2023 |
|
|
6,825 |
|
|
1,938 |
2024 |
|
|
7,805 |
|
|
598 |
2025 |
|
|
7,097 |
|
|
169 |
2026 |
|
|
6,463 |
|
|
— |
2027 |
|
|
6,337 |
|
|
— |
2028 and thereafter |
|
|
80,610 |
|
|
— |
Total lease payments |
|
|
116,563 |
|
|
3,370 |
Less amount representing interest |
|
|
(35,392) |
|
|
(106) |
Present value of total lease payments |
|
$ |
81,171 |
|
$ |
3,264 |
The Company entered into an agreement to sublease its leased office space located in New York, NY (“Sublease Transaction”) as the Company transitions into a new headquarters. The sublease triggered an Operating lease right-of-use asset impairment of $1.5 million recorded in General and administrative expenses in the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income. The fair value of the Operating lease right-of-use asset was determined as of May 27, 2022 using the transaction price per the Sublease Transaction executed agreement. The fair value measurement represents a Level 1 input.
ASC 840 Comparative Disclosures
The following tables, which were included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, present the Company’s future minimum lease payments under ASC 840 for all operating leases as of December 31, 2021. Future minimum lease payments differ from the future lease liability recognized under ASC 842, as the operating lease liability recognized under ASC 842 discounts the lease payments while the minimum operating lease payments presented below are not discounted.
Operating Leases
|
|
|
|
|
|
Year Ending |
(in thousands) |
|
December 31, |
2022 |
|
$ |
5,463 |
2023 |
|
|
4,381 |
2024 |
|
|
681 |
2025 |
|
|
439 |
2026 |
|
|
294 |
Thereafter |
|
|
76 |
|
|
$ |
11,334 |
Commitments
On November 29, 2021, the Company entered into a non-cancellable contractual agreement to lease office space in New York, New York. The lease term for this office space commenced in January 2022 and will end in July 2038. The Company expects to move into the property in the fourth quarter of 2022 and at that time, the office space will become DoubleVerify’s new corporate headquarters.
|
|
|
|
|
|
Year Ending |
(in thousands) |
|
December 31, |
2022 |
|
$ |
— |
2023 |
|
|
1,735 |
2024 |
|
|
5,987 |
2025 |
|
|
6,077 |
2026 |
|
|
6,168 |
Thereafter |
|
|
86,872 |
|
|
$ |
106,839 |
|