Quarterly report pursuant to Section 13 or 15(d)

Leases

v3.22.2.2
Leases
9 Months Ended
Sep. 30, 2022
Leases  
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