Leases
The Company leases real estate facilities under non-cancelable operating leases with various expiration dates through fiscal 2034. The Company has no lease agreements that are classified as finance leases.
The components of lease costs, lease term, and discount rate for operating leases are as follows:
| | | | | | | | | | | | | | | | | |
| Year Ended January 31, |
| 2025 | | 2024 | | 2023 |
| Operating lease costs (in thousands) | $ | 39,681 | | | $ | 40,897 | | | $ | 36,542 | |
| Short-term lease costs (in thousands) | 1,842 | | | 3,488 | | | 2,946 | |
| Variable lease costs (in thousands) | (491) | | | 2,663 | | | 2,269 | |
| Total lease costs | $ | 41,032 | | | $ | 47,048 | | | $ | 41,757 | |
| | | | | |
| Weighted-average remaining lease term (in years) | 7.9 | | 8.8 | | 10.2 |
| Weighted-average discount rate | 9.5 | % | | 9.5 | % | | 9.6 | % |
Supplemental cash flow information related to operating leases are as follows (in thousands):
| | | | | | | | | | | | | | | | | |
| Year Ended January 31, |
| 2025 | | 2024 | | 2023 |
| Cash paid for amounts included in the measurement of operating lease liabilities | $ | 41,621 | | | $ | 41,389 | | | $ | 34,816 | |
| Right-of-use assets obtained in exchange for new operating lease liabilities | $ | 8,534 | | | $ | 29,887 | | | $ | 17,809 | |
| Right-of-use reductions related to operating lease impairments | $ | 6,708 | | | $ | 4,900 | | | $ | — | |
Future minimum lease payments (net of tenant improvement receivables) under non-cancelable operating leases with initial lease terms in excess of one year included in the Company’s total operating lease liabilities as of January 31, 2025, are as follows (in thousands):
| | | | | |
| Fiscal year ending January 31, | Operating Lease Payments (Net) |
| 2026 | $ | 41,716 | |
| 2027 | 41,379 | |
| 2028 | 39,787 | |
| 2029 | 36,784 | |
| 2030 and thereafter | 162,729 | |
| Total undiscounted operating lease payments | 322,395 | |
| Less: imputed interest | (98,596) | |
| Total operating lease liabilities | $ | 223,799 | |
During the years ended January 31, 2025 and 2024, the Company executed subleases for a portion of its corporate office space in San Francisco, California. The Company evaluated the associated asset group for impairment, which included the ROU assets and underlying property and equipment for the lease. The Company compared the expected future undiscounted cash flows to the carrying value and determined the respective asset group was not recoverable. The Company calculated the fair value based on the present value of the estimated cash flows from the subleases for the remaining lease terms and compared the estimated fair value to its carrying value, which resulted in a $6.8 million and $5.0 million, respectively, consolidated impairment charge. The fair value of the operating lease ROU assets and associated property and equipment was estimated as of the sublease execution date using Level 3 inputs based on an income approach by converting future sublease cash inflows and outflows to a single present value. Estimated cash flows were discounted at a rate commensurate with the inherent risks associated with the asset group to arrive at an estimate of fair value. The impairment charge was included in general and administrative expenses in the consolidated statements of operations.
The subleases entered into during the years ended January 31, 2025 and 2024 have a lease term of four and five years, respectively, and have been classified as operating leases by the Company. Sublease income was $1.8 million and $0.8 million for the year ended January 31, 2025 and 2024, respectively. There was no sublease income for the year ended January 31, 2023. The Company recognizes sublease income as a reduction of lease expense in the Company’s consolidated statements of operations.
As of January 31, 2025, the Company has commitments of $2.3 million for an operating lease that has not yet commenced, and therefore is not included in the ROU asset or operating lease liabilities. The foregoing operating lease will commence in the fourth quarter of fiscal 2026, with a lease term of seven years.
Operating lease amounts in the table above do not include sublease income payments of $10.0 million. As of January 31, 2025, the future total minimum sublease payments to be received were as follows (in thousands):
| | | | | |
| Fiscal year ending January 31, | Sublease Payments to be Received |
| 2026 | $ | 2,437 | |
| 2027 | 2,777 | |
| 2028 | 2,861 | |
| 2029 | 1,877 | |
| |
| Total sublease income to be received | $ | 9,952 | |