APPIAN CORPAPPN
APPIAN CORP Leases Disclosure
4. Leases
As of December 31, 2025, our lease portfolio consists entirely of operating leases for corporate offices. Our operating leases have remaining lease terms with various expiration dates through 2031, and some leases include options to extend the term for up to an additional 10 years.
Right-of-Use (“ROU”) Assets and Lease Liabilities
At the inception of an arrangement, we determine whether the arrangement is or contains a lease based on the unique facts and circumstances present and the classification of the lease. Operating leases with a term greater than one year are recognized on the consolidated balance sheets as ROU assets, lease liabilities, and long-term lease liabilities. ROU assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. We have elected not to recognize on our consolidated balance sheets leases with a term of one year or less.
Lease liabilities and their corresponding ROU assets are recorded based on the present value of lease payments over the expected lease term. The implicit rates within most of our leases are generally not determinable; therefore, we estimate our incremental borrowing rate to determine the present value of lease payments. The determination of our incremental borrowing rate requires judgment and is estimated for each lease based on the rate we would have to pay for a collateralized loan with the same terms as the lease. We consider various factors, including our level of collateralization, estimated credit rating, and the currency in which the lease is denominated. Operating lease ROU assets also include any lease prepayments, offset by lease incentives. Certain of our leases include options to extend or terminate the lease. An option to extend the lease is considered in connection with determining the ROU asset and lease liability when it is reasonably certain we will exercise that option.
Lease Costs
Expense for operating leases is recognized on a straight-line basis over the lease term as an operating expense. We have lease agreements which require payments for lease and non-lease components (i.e., common area maintenance) that are accounted for as a single lease component. Variable lease payment amounts that cannot be determined at the commencement of the lease such as maintenance costs, utilities, and service charges are not included in ROU assets or operating lease liabilities but rather are expensed as incurred and recorded as variable lease expense. We often receive customary incentives from our landlords such as tenant improvement allowances (“TIAs”) and rent abatement periods, which effectively reduce total lease payments owed for the leases.
The following table sets forth the components of lease expense for the years ended December 31, 2025, 2024, and 2023 (in thousands, exclusive of sublease income):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Operating lease cost | $ | 9,582 | $ | 9,519 | $ | 9,056 | |||||||||||
| Short-term lease cost | 994 | 1,513 | 1,444 | ||||||||||||||
| Variable lease cost | 5,968 | 5,238 | 4,230 | ||||||||||||||
| Total | $ | 16,544 | $ | 16,270 | $ | 14,730 | |||||||||||
Sublease income totaled $1.2 million, $1.3 million, and $1.3 million for the years ended December 31, 2025, 2024, and 2023 respectively.
Lease Impairment Charges
In 2024, we initiated actions to reduce the footprint of our leased office spaces. For the year ended December 31, 2024, we recorded non-cash lease impairment charges of $5.5 million within general and administrative expenses in our consolidated statements of operations related to two separate floors within our corporate headquarters facility. The non-cash lease impairment charges represented the amount the carrying value of the two asset groups exceeded their estimated fair values. The fair values of the two asset groups were measured using discounted cash flow models based on market rents and sublease incomes projected over the remaining lease terms.
During the year ended December 31, 2025, we recognized an incremental $0.8 million lease impairment charge related to one of the floors within our corporate headquarters that we ceased use of during 2024. The impairment charge represents the amount the carrying value of the underlying asset exceeded its estimated fair value, which was determined by utilizing a discounted cash flow approach that incorporated lower than previously expected sublease income assumptions based on current market conditions.
No impairment charges were incurred during the year ended December 31, 2023.
Supplemental Lease Information
Supplemental balance sheet information related to operating leases as of December 31, 2025 and 2024 is presented in the following table (in thousands, except for lease term and discount rate):
| As of December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Right-of-use assets for operating leases | $ | 28,075 | $ | 31,081 | |||||||
| Operating lease liabilities, current | $ | 13,181 | $ | 12,378 | |||||||
| Operating lease liabilities, net of current portion | 45,693 | 52,189 | |||||||||
| Total operating lease liabilities | $ | 58,874 | $ | 64,567 | |||||||
| Weighted average remaining lease term (in years) | 5.5 | 6.5 | |||||||||
| Weighted average discount rate | 9.4 | % | 9.4 | % | |||||||
Supplemental cash flow and expense information related to operating leases for the years ended December 31, 2025, 2024, and 2023 is shown below (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Operating cash outflows for operating leases | $ | 13,167 | $ | 12,179 | $ | 8,865 | |||||||||||
| Amortization of operating lease ROU assets | 3,800 | 3,179 | 2,676 | ||||||||||||||
| Interest expense on operating lease liabilities | 5,782 | 6,340 | 6,380 | ||||||||||||||
No tenant improvement allowance reimbursements were received during the years ended December 31, 2025 and 2024. For the year ended December 31, 2023, TIA reimbursements totaled $2.6 million.
A summary of our future minimum lease commitments under non-cancellable operating leases as of December 31, 2025 is shown below (in thousands):
| Year Ended December 31, | |||||
| 2026 | $ | 13,808 | |||
| 2027 | 13,996 | ||||
| 2028 | 12,871 | ||||
| 2029 | 12,411 | ||||
| 2030 | 12,364 | ||||
| Thereafter | 10,543 | ||||
| Total lease payments | 75,993 | ||||
| Less: imputed interest | (17,119) | ||||
| Total | $ | 58,874 | |||
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2024 | Feb 19, 2025 | |
| 2023 | Feb 15, 2024 | |
| 2022 | Feb 16, 2023 | |
| 2021 | Feb 17, 2022 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.