PEGASYSTEMS INCPEGA

PEGASYSTEMS INC Leases Disclosure

10-KFiled Feb 10, 20262 min read
10. LEASES
On January 1, 2025, the Company relocated its corporate headquarters to 225 Wyman Street, Waltham, Massachusetts.
Expense
(in thousands)202520242023
Fixed lease costs
$14,700 $21,422 $19,718 
Short-term lease costs1,715 1,746 2,884 
Variable lease costs
7,465 6,901 8,148 
$23,880 $30,069 $30,750 
Right of use assets and lease liabilities
(in thousands)December 31, 2025December 31, 2024
Right of use assets (1)
$60,574 $62,429 
Operating lease liabilities (2)
$15,142 $14,551 
Long-term operating lease liabilities$60,825 $67,647 
(1) Included in other long-term assets.
(2) Included in other current liabilities.
The weighted-average remaining lease term and discount rate for the Company’s leases were:
December 31, 2025December 31, 2024
Weighted-average remaining lease term5.4 years6.2 years
Weighted-average discount rate (1)
5.2 %4.8 %
(1) The rates implicit in the Company’s leases are not readily determinable. Therefore, the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate the Company would incur to borrow an amount equal to the lease payments on a collateralized basis over the lease term in a similar economic environment.
Maturities of lease liabilities:
(in thousands)December 31, 2025
2026$18,275 
202716,635 
202814,879 
202912,046 
203010,356 
Thereafter14,907 
Total lease payments87,098 
Less: imputed interest (1)
(11,131)
$75,967 
(1) Lease liabilities are measured at the present value of the remaining lease payments using a discount rate determined at lease commencement unless the discount rate is updated due to a lease reassessment event.
Cash flow information
(in thousands)20252024
Cash paid for operating leases, net of tenant improvement allowances$19,302 $18,444 
Right of use assets obtained in exchange for operating lease obligations$9,146 $16,682 

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.

Other Available Disclosures

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