Leases
We have entered into a number of facility and equipment leases which qualify as operating leases under GAAP. We also have a limited number of equipment leases that qualify as finance leases. We determine if contracts with vendors represent a lease or have a lease component under GAAP at contract inception. Our leases have remaining terms ranging from less than one year to six years. Some of our leases include options to extend or terminate the lease prior to the end of the agreed upon lease term. For purposes of calculating lease liabilities, lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise such options.
Operating lease right of use assets and liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the lease commencement date. As our leases generally do not provide an implicit rate, we use an estimated incremental borrowing rate in determining the present value of future payments. The incremental borrowing rate represents an estimate of the interest rate we would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease within a particular location and currency environment.
The following table presents certain information related to lease term and incremental borrowing rates for leases as of September 30, 2025 and 2024:
| | | | | | | | | | | |
| September 30, 2025 | | September 30, 2024 |
| Weighted-average remaining lease term (in months): | | | |
| Operating leases | 46.9 | | 46.0 |
| Finance leases | 3.4 | | 13.4 |
| Weighted-average discount rate: | | | |
| Operating leases | 7.2 | % | | 6.6 | % |
| Finance leases | 4.4 | % | | 4.4 | % |
The following table presents the lease-related assets and liabilities reported in the Consolidated Balance Sheets as of September 30, 2025 and 2024 (dollars in thousands):
| | | | | | | | | | | | | | | | | | | | |
| | Classification | | September 30, 2025 | | September 30, 2024 |
| Assets | | | | | | |
| Operating lease assets | | Operating lease right of use assets | | $ | 16,762 | | | $ | 12,879 | |
| Finance lease assets | | Property and equipment, net | | 63 | | | 410 | |
| Total lease assets | | | | $ | 16,825 | | | $ | 13,289 | |
| | | | | | |
| Liabilities | | | | | | |
| Current | | | | | | |
| Operating | | Short-term operating lease liabilities | | $ | 4,344 | | | $ | 4,528 | |
| Finance | | Accrued expenses and other current liabilities | | 53 | | | 394 | |
| Noncurrent | | | | | | |
| Operating | | Long-term operating lease liabilities | | $ | 13,083 | | | $ | 8,803 | |
| Finance | | Other liabilities | | — | | | 53 | |
| Total lease liability | | | | $ | 17,480 | | | $ | 13,778 | |
The following table presents lease expense for the fiscal years ended September 30, 2025, 2024 and 2023 (dollars in thousands):
| | | | | | | | | | | | | | | | | |
| Year Ended September 30, |
| 2025 | | 2024 | | 2023 |
| Finance lease costs: | | | | | |
| Amortization of right of use asset | $ | 348 | | | $ | 415 | | | $ | 432 | |
| Interest on lease liability | 7 | | | 22 | | | 37 | |
| Operating lease cost | 6,642 | | | 6,226 | | | 6,489 | |
| Variable lease cost | 1,117 | | | 2,550 | | | 3,120 | |
| Sublease income | (206) | | | (216) | | | (195) | |
| Total lease cost | $ | 7,908 | | | $ | 8,997 | | | $ | 9,883 | |
For the fiscal years ended September 30, 2025, 2024 and 2023 cash payments related to operating leases were $6.7 million, $6.6 million and $6.6 million, respectively. For the fiscal years ended September 30, 2025, 2024 and 2023, cash payments related to financing leases were $0.4 million, $0.4 million and $0.4 million, respectively, of which an immaterial amount related to the interest portion of the lease liability. For the fiscal years ended September 30, 2025, 2024 and 2023 right of use assets obtained in exchange for lease obligations were $5.9 million, $5.8 million and $2.9 million, respectively.
The table below reconciles the undiscounted future minimum lease payments under non-cancelable leases to the total lease liabilities recognized on the Consolidated Balance Sheet as of September 30, 2025 (dollars in thousands):
| | | | | | | | | | | | | | | | | | | | |
| Year Ending September 30, | | Operating Leases | | Financing Leases | | Total |
| 2026 | | 5,581 | | | 53 | | | 5,634 | |
| 2027 | | 5,546 | | | — | | | 5,546 | |
| 2028 | | 4,556 | | | — | | | 4,556 | |
| 2029 | | 3,171 | | | — | | | 3,171 | |
| 2030 | | 1,122 | | | — | | | 1,122 | |
| Thereafter | | 110 | | | — | | | 110 | |
| Total future minimum lease payments | | $ | 20,086 | | | $ | 53 | | | $ | 20,139 | |
| Less effects of discounting | | (2,659) | | | — | | | (2,659) | |
| Total lease liabilities | | $ | 17,427 | | | $ | 53 | | | $ | 17,480 | |
| Reported as of September 30, 2025 | | | | | | |
| Short-term lease liabilities | | $ | 4,344 | | | $ | 53 | | | $ | 4,397 | |
| Long-term lease liabilities | | 13,083 | | | — | | | 13,083 | |
| Total lease liabilities | | $ | 17,427 | | | $ | 53 | | | $ | 17,480 | |