Leases
In April 2024, we entered into a six-year sublease (the “Sublease”) with Zuora, Inc. for office space located at 101 Redwood Shores Parkway, Redwood City, California, effective from July 1, 2024. The leased property became our new headquarters effective August 1, 2024. The portion of the premises subject to the Sublease is 50,632 rentable square feet. The Sublease commenced on June 1, 2024 due to early access rights and will end on June 30, 2030. We are obligated to pay a base rent of an average of $1.5 million annually over the term of the lease. As a result of the agreement, we recorded a right-of-use asset and corresponding lease liability related to the leased property based on the present value of future lease payments.
In December 2025, we exercised an expansion option (the “Expansion Sublease”) with Zuora, Inc. for additional office space located at 101 Redwood Shores Parkway, Redwood City, California. The portion of the premises subject to the Expansion Sublease is 40,884 rentable square feet. The Expansion Sublease will commence during the first quarter of 2026 and will end on the same date as the Sublease, June 30, 2030. We are obligated to pay an additional base rent of an average of $1.0 million annually over the term of the lease. On the commencement date, we will record a right-of-use asset and corresponding lease liability related to the expansion premises based on the present value of future lease payments.
As the operating leases for our facilities do not provide sufficient information to determine the implicit borrowing rate, we calculated the present value of remaining lease payments using a discount rate equal to the interest rate we would pay on a collateralized loan with monthly payments and a term equal to the monthly payments and remaining term of our lease. Operating lease right-of-use assets also include any rent paid prior to the commencement date, less any lease incentives received. We recognize operating lease payments as expenses using the straight-line method over the term of the lease.
Operating lease expense, including variable lease costs for the years ended December 31, 2025, 2024 and 2023 was $2.5 million, $3.0 million and $2.4 million, respectively. Variable lease costs for the year ended December 31, 2025 was $1.2 million, primarily related to common area maintenance and other administrative expenses.
Supplemental information related to operating leases was as follows (in thousands, except weighted average amounts):
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2025 | | 2024 | | 2023 |
| Cash paid for operating lease liabilities | $ | 1,382 | | | $ | 1,358 | | | $ | 2,391 | |
| Recognition of right-of-use asset in exchange for lease liability | $ | — | | | $ | 5,745 | | | $ | 297 | |
| Weighted-average remaining lease term | 54 months | | 66 months | | 6 months |
| Weighted-average discount rate | 8.5 | % | | 8.5 | % | | 8.0 | % |
As of December 31, 2025, future minimum lease payments under non-cancelable operating leases were as follows (in thousands):
| | | | | |
| 2026 | $ | 1,551 | |
| 2027 | 1,598 | |
| 2028 | 1,646 | |
| 2029 | 1,695 | |
| 2030 | 860 | |
| Total operating lease payments | 7,350 | |
| Less imputed interest | (1,243) | |
| Present value of operating lease liabilities | $ | 6,107 | |