LEASESThe Company enters into operating leases primarily for real estate to support research and development ("R&D") sites and general office space in North America, with additional locations in Europe, China, and Canada. The Company does not currently have any finance leases. Certain leases include options to extend the lease at our discretion at the end of the lease term, or terminate the lease early subject to certain conditions and penalties. We do not include any renewal options in our lease terms for calculating our lease liabilities, as the renewal options allow us to maintain operational flexibility and we are not reasonably certain we will exercise these options.
At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the specific facts and circumstances present. Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected lease term. The interest rate implicit in lease contracts is typically not readily determinable, and as such, the Company utilizes its incremental borrowing rate as the discount rate based on information available on the lease commencement date. Our incremental borrowing rate represents the rate we would incur to borrow on a collateralized basis over a similar term for an amount equal to the lease payments in a similar economic environment. The table below includes the balances of operating lease right-of-use assets and operating lease liabilities as of December 31, 2025 and 2024 (in thousands):
| | | | | | | | | | | | | | | | | |
| Balance Sheet Classification | | December 31, 2025 | | December 31, 2024 |
| Assets | | | | | |
| | | | | |
| Operating lease right-of-use assets, net | Other non-current assets, net | | $ | 13,797 | | | $ | 15,218 | |
| Total Lease Assets | | | $ | 13,797 | | | $ | 15,218 | |
| | | | | |
| Liabilities | | | | | |
| Operating lease liabilities - Current | Other accrued expenses | | $ | 4,093 | | | $ | 3,398 | |
| Operating lease liabilities - Noncurrent | Other long-term liabilities | | 13,540 | | | 15,772 | |
| Total Lease Liabilities | | | $ | 17,633 | | | $ | 19,170 | |
The components of lease costs which were included within operating expenses in our consolidated statement of income were as follows (in thousands):
| | | | | | | | | | | |
| Year Ended December 31, |
| 2025 | 2024 | 2023 |
| Operating lease cost | $ | 4,059 | | $ | 3,982 | | $ | 3,821 | |
| Short-term lease cost | 174 | | 246 | | 388 | |
| Variable lease cost | 1,177 | | 1,376 | | 1,316 | |
| | | |
For the years ended December 31, 2025, 2024, and 2023, we did not have any sublease income. Cash paid for amounts included in the measurement of operating lease liabilities for the years ended December 31, 2025 and 2024 was $4.6 million and $4.1 million, respectively, and was included in net cash provided by operating activities in our consolidated statement of cash flows. As of December 31, 2025, the weighted average remaining operating lease term was 4.4 years and the weighted average discount rate used to determine the operating lease liabilities was 6.2%. As of December 31, 2025, there have been no leases entered into that have not yet commenced.
The maturities of our operating lease liabilities as of December 31, 2025, excluding short-term leases with terms less than 12 months, were as follows (in thousands):
| | | | | |
| Maturity of Operating Lease Liabilities | |
| 2026 | $ | 5,043 | |
| 2027 | 4,571 | |
| 2028 | 4,014 | |
| 2029 | 3,646 | |
| 2030 | 2,224 | |
| Thereafter | 630 | |
| Total lease payments | 20,128 | |
| Less: Imputed interest | (2,495) | |
| Present value of lease liabilities | $ | 17,633 | |