Leases
Our lease portfolio primarily consists of operating leases for office space and our leases have remaining lease terms of less than 1 year to 4 years. Certain of these leases have free or escalating rent payment provisions. We recognize lease expense on a straight-line basis over the terms of the leases, although actual cash payment obligations under certain of these agreements fluctuate over the terms of the agreements. Most leases include options to renew, and the exercise of these options is at our discretion.
Subsequent to becoming a remote first workplace in the third quarter of 2022, we executed several subleases of our office space in the United States. The subleases run through the remaining term of the primary leases. As of December 31, 2025, we expect to generate a total of $10.2 million in future sublease income through January 31, 2030. Sublease income is recorded on a straight-line basis as a reduction of lease expense in our Consolidated Statements of Comprehensive Income.
We test right-of-use assets when impairment indicators are present in accordance with the asset impairment provisions of ASC 360, Property, Plant and Equipment. As a result of becoming a remote first workplace, we have assessed our occupied leased office space to identify excess space to vacate and potentially sublease. We have also periodically reassessed current market conditions in our previously vacated leased office spaces that have not yet been subleased. In instances where we determined impairment indicators were present at that time of our reassessment, we tested our right-of-use assets, including leasehold improvements, for impairment. We utilized an income approach to value the asset groups by performing a discounted cash flow analysis and determined that for certain leases the net carrying values exceeded the estimated discounted future cash flows expected to be derived from the properties based on Level 3 inputs, including current sublease market rent, future sublease market conditions and the discount rate. During the years ended December 31, 2025 and 2024 we recorded $0.9 million and $7.5 million, respectively, of impairment charges related to our operating lease right-of-use assets and property, plant and equipment in the “Impairment, restructuring and other charges” line in our Consolidated Statements of Comprehensive Income. See Note 11 — Impairment, Restructuring and Other Charges for further discussion about our asset impairment charges.
The components of operating lease costs were as follows (in thousands):
| | | | | | | | | | | | | |
| | Year Ended December 31, |
| | 2025 | | 2024 | | |
Operating lease expense | $ | 4,815 | | | $ | 5,659 | | | |
| Operating sublease income | (2,819) | | | (2,549) | | | |
| Total operating lease cost | $ | 1,996 | | | $ | 3,110 | | | |
Supplemental information related to our leases is as follows (dollars in thousands):
| | | | | | | | | | | |
| Year Ended December 31, |
| 2025 | | 2024 |
| Cash paid for amounts included in the measurement of operating lease liabilities | $ | 9,117 | | $ | 8,881 |
| Non-cash investing activities relating to operating lease right-of-use assets | $ | — | | $ | 509 |
| | | |
| | | | | | | | | | | |
| December 31, 2025 | | December 31, 2024 |
| Weighted-average remaining lease term of operating leases | 3.1 years | | 3.9 years |
| Weighted-average discount rate used to recognize operating lease right-of-use-assets | 5.7 | % | | 5.7 | % |
As of December 31, 2025, maturities of our operating lease liabilities are as follows (in thousands):
| | | | | |
| Year ending December 31, | |
| 2026 | $ | 8,374 | |
| 2027 | 6,950 | |
| 2028 | 4,998 | |
| 2029 | 3,008 | |
| 2030 | 196 | |
| Thereafter | — | |
Total lease payments (1) | 23,526 | |
| Less imputed interest | (2,127) | |
| Total | $ | 21,399 | |
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(1)Non-cancellable sublease proceeds for the years ending December 31, 2026, 2027, 2028, 2029, and 2030 of $3.1 million, $3.2 million, $3.3 million, $1.4 million and $0.1 million, respectively, are not included in the table above. There will be no sublease proceeds in the years after December 31, 2030.