LeasesThe Company has office and commercial leases in North America, Europe and Asia. These leases have remaining lease terms of 1 to 11 years, some of which have an option to extend the lease for up to 5 years. All of the Company's leases are operating leases.
The components of lease expense were as follows:
| | | | | | | | | | | | | | | | | | | | | |
| | | Years ended |
| | | | | December 31, 2025 | | December 31, 2024 | | December 31, 2023 |
| | | | | | | | | |
| | | | | (in US $ millions) |
| Operating lease expense | | | | | 23 | | | 16 | | | 31 | |
| Variable lease expense, including non-lease components | | | | | 15 | | | 25 | | | 17 | |
| Total lease expense | | | | | 38 | | | 41 | | | 48 | |
As of December 31, 2025, the weighted average remaining lease term is 9 years and the weighted average discount rate is 3.6% (December 31, 2024 - 9 years and 3.4%).
Net sublease income for the year ended December 31, 2025 was $7 million (December 31, 2024 - $6 million, December 31, 2023 - $4 million), which is recorded as an offset within the total lease expense disclosed above.
During the years ended December 31, 2025 and December 31, 2023, the Company terminated office spaces for which it has ceased use. This resulted in impairment charges to its operating lease right-of-use assets, leasehold improvements and operating lease liabilities of $13 million (December 31, 2023 - $38 million). These impairment charges were their carrying values as of the impairment measurement date, as required under ASC 360, Property, Plant and Equipment. These charges were recorded within "General and administrative" in the consolidated statements of operations and comprehensive income.
During the year ended December 31, 2023, as part of the sales of Shopify's logistics businesses, the Company's warehouse leases were assigned in connection with the divested businesses and are no longer recognized on the Company's consolidated balance sheets. However, the Company retained the guarantee of certain leases and entered into an indemnification agreement, governing the liability obligations in connection with these guarantees.
Maturities of lease liabilities as of December 31, 2025 were as follows:
| | | | | | | | | | | |
| Fiscal Year | Operating Leases | | | | | | |
| | | | | | | |
| | | | | | | |
| (in US $ millions) | | | | | | |
| 2026 | 29 | | | | | | | |
| 2027 | 50 | | | | | | | |
| 2028 | 49 | | | | | | | |
| 2029 | 39 | | | | | | | |
| 2030 | 36 | | | | | | | |
| Thereafter | 166 | | | | | | | |
| Total future minimum payments | 369 | | | | | | | |
| | | | | | | |
| Minimum payments related to variable lease payments, including non-lease components | (151) | | | | | | | |
| Imputed interest | (30) | | | | | | | |
| Total operating lease liabilities | 188 | | | | | | | |
Operating lease maturity amounts included in the table above do not include sublease proceeds expected to be received under our various sublease agreements with third parties. Under the agreements initiated with third parties, the Company expects to receive sublease proceeds of $7 million in 2026 and $145 million in the years 2027, 2028, 2029 and thereafter.
During the year ended December 31, 2025, the Company recognized $1 million of operating lease liabilities arising from obtaining operating lease right-of-use assets (December 31, 2024 - $7 million). The Company paid $34 million for amounts included in the measurement of operating lease liabilities included in cash flow from operating activities (December 31, 2024 - $35 million).