2/24/2018 S-1 Table of Contents The revolving credit facility contains customary conditions to borrowing, events of default and covenants, including covenants that restrict the Company’s ability to incur indebtedness, grant liens, make distributions to holders of the Company or its subsidiaries’ equity interests, make investments, or engage in transactions with its affiliates. In addition, the revolving credit facility contains financial covenants, including a consolidated leverage ratio covenant and a minimum liquidity balance of $100.0 million, which includes any available borrowing capacity. The Company was in compliance with the covenants of the 2014 revolving credit facility as of December 31, 2016, and the revolving credit facility as of December 31, 2017. As of December 31, 2016, the Company had an aggregate of $48.7 million of letters of credit outstanding under the 2014 revolving credit facility. As of December 31, 2017, the Company had an aggregate of $82.6 million of letters of credit outstanding under the revolving credit facility. The Company’s total available borrowing capacity under the 2014 revolving credit facility was $451.3 million as of December 31, 2016. The Company’s total available borrowing capacity under the revolving credit facility was $517.4 million as of December 31, 2017. The Company’s letters of credit expire between April of 2019 and April of 2022. Note 10. Commitments and Contingencies Leases The Company has entered into various non­cancelable operating lease agreements for certain offices and datacenters with contractual lease periods expiring at various dates through 2033. The facility lease agreements generally provide for escalating rental payments and for options to renew, which could increase future minimum lease payments if exercised. The Company recognizes rent expense on a straight­line basis over the lease period and accounts for the difference between straight­line rent and actual lease payments as deferred rent. Gross rent expense was $49.7 million, $67.9 million, $71.0 million for the years ended December 31, 2015, 2016, and 2017, respectively. Sublease income, which is recorded as a reduction of rental expense, was $0.1 million, $4.5 million, and $10.6 million for the years ended December 31, 2015, 2016, and 2017, respectively. Sublease income in excess of the Company’s original lease obligation is split with the original lessor per the terms of the sublease agreement, with the Company’s portion recorded to other income (expense), net. Other commitments include payments to third­party vendors for services related to the Company’s infrastructure, infrastructure warranty contracts, payments related to the imputed financing obligation for its previous headquarters, asset retirement obligations for office modifications, and a note payable related to financing of infrastructure. As described in Note 4, “Property and Equipment”, the Company is considered the deemed owner of a floor in its previous corporate headquarters, for accounting purposes, as part of a build­to­suit lease agreement. In June 2011, the Company initially recorded a building asset and an imputed financing obligation for its obligation to the legal owner in the amount of $36.6 million. In connection with this lease, the Company is obligated to pay $8.6 million in lease payments over the next two years as of December 31, 2017. The imputed financing obligation on the Company’s consolidated balance sheets totaled $29.5 million and $27.4 million at December 31, 2016 and 2017, respectively. The current portion of the imputed financing obligation totaled $2.4 million and $2.6 million as of December 31, 2016 and 2017, respectively, and is classified within accrued and other current liabilities. The non­current portion of the imputed financing obligation totaled $27.1 million and $24.8 million as of December 31, 2016 and 2017, respectively, and is classified within other non­current liabilities. In 2015, the Company entered into a note payable arrangement with a vendor to finance infrastructure totaling $11.9 million. The note payable is classified within accrued and other current liabilities. The term of the arrangement is thirty­six months and will end in the fourth quarter of 2018. Payments including interest towards the note payable totaled $4.3 million in each of the years ended December 31, 2016 and 2017. The total remaining obligation including interest was $7.5 million and $3.6 million as of December 31, 2016 and 2017, respectively. The note payable is included in other commitments in the table below. F­23 https://www.sec.gov/Archives/edgar/data/1467623/000119312518055809/d451946ds1.htm 213/235