INNODATA INC Leases Disclosure
8. Operating Leases
The Company has various lease agreements for its offices and service delivery centers. The Company has determined that the risks and benefits related to the leased properties are retained by the lessors. Accordingly, these are accounted for as operating leases.
These lease agreements are for terms ranging from to eleven years and, in most cases, provide for rental escalations ranging from 1.75% to 15%. Most of these agreements are renewable at the mutual consent of the parties to the contract.
The Company recognizes an operating lease liability and right-of-use asset in compliance with current lease accounting standard ASC 842. The amount of right-of-use asset is equal to the present value of the remaining lease payments discounted using the incremental borrowing rate of each respective country. Modifications, if any are recalculated and corresponding adjustments are made to the carrying values of both the lease liability and right-of-use assets.
A right-of-use asset is measured as the amount of the lease liability adjusted for the amount of deferred straight-line rent, prepaid rent and lease incentive allowances previously recognized.
The table below summarizes the amounts recognized in the financial statements related to operating leases for the years presented (in thousands):
| Year Ended December 31 | |||||
| 2025 | | 2024 | |||
Rent expense for long-term operating leases | $ | 1,345 | $ | 1,257 | ||
Rent expense for short-term leases |
| 208 |
| 178 | ||
Total rent expense | $ | 1,553 | $ | 1,435 | ||
The following table presents the maturity profile of the Company’s operating lease liabilities based on the contractual undiscounted payments with a reconciliation of these amounts to the remaining net present value of the operating lease liability reported in the consolidated balance sheet as of December 31, 2025 (in thousands):
Year | Amount | ||
2026 | $ | 1,567 | |
2027 |
| 1,566 | |
2028 |
| 1,165 | |
2029 | 722 | ||
2030 | 192 | ||
2031 and thereafter |
| - | |
Total lease payments |
| 5,212 | |
Less: Interest |
| (782) | |
Net present value of lease liabilities | $ | 4,430 | |
Current portion | $ | 1,202 | |
Long-term portion |
| 3,228 | |
Total | $ | 4,430 | |
The weighted average remaining lease terms and discount rates for all of our operating leases as of December 31, 2025 were as follows:
Weighted-average lease term remaining | | 38 months | |
Weighted-average discount rate |
| 9.14 | % |
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 24, 2025 | |
| 2023 | Mar 4, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2021 | Mar 24, 2022 | |
| 2020 | Mar 15, 2021 | |
| 2019 | Mar 16, 2020 | |
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.