Super Micro Computer, Inc.SMCI
Super Micro Computer, Inc. Leases Disclosure
Note 9. Leases
We lease offices, warehouses and other premises, vehicles, and certain equipment under non-cancelable operating leases. Operating lease expense recognized, and supplemental cash flow information related to operating leases for the years ended June 30, 2025, 2024, and 2023 were as follows (in thousands):
| Years Ended June 30, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Operating lease expense (including expense for lease agreements with related parties of $742, $450, and $561 for the years ended June 30, 2025, 2024, and 2023, respectively) | $ | 22,977 | $ | 9,983 | $ | 8,299 | |||||||||||
Cash payments for operating leases (including payments to related parties of $726, $406, and $524 for the years ended June 30, 2025, 2024, and 2023 , respectively) | $ | 17,849 | $ | 9,343 | $ | 8,275 | |||||||||||
| New operating lease assets obtained in exchange for operating lease liabilities | $ | 276,170 | $ | 32,581 | $ | 3,197 | |||||||||||
During the years ended June 30, 2025, 2024 and 2023, our costs related to short-term lease arrangements for real estate and non-real estate assets were immaterial. Variable lease payments expensed in the years ended June 30, 2025, 2024, and 2023 were $3.4 million, $2.3 million, and $1.8 million, respectively.
As of June 30, 2025 and June 30, 2024, the Operating lease ROU assets recorded within other assets on the consolidated balance sheets were $293.7 million and $34.6 million, respectively.
As the interest rate in the lease contract is typically not readily available, we estimate the incremental borrowing rate considering credit notching approach based on information available at lease commencement. As of June 30, 2025, the weighted average remaining lease term for operating leases was 9.1 years and the weighted average discount rate was 5.8%. As of June 30, 2024, the weighted average remaining lease term for operating leases was 4.7 years and the weighted average discount rate was 5.1%. The short-term portion of the lease liability is included in accrued liabilities and the long-term portion of the lease liability is included in other long-term liabilities on the consolidated balance sheets.
In June 2024, we entered into a lease agreement for a 21 megawatt (“MW”) data center co-location space located in Vernon, California (the “Data Center Space”) that will expire on October 31, 2035. We do not have an option to extend (or to terminate) the lease. The lease agreement consists of three tranches, with the first tranche of 6 MW having commenced on January 24, 2025, and the second tranche of 9 MW commenced on May 12, 2025 and the third tranche of 6 MW expected to commence in October 2025. The Data Center Space lease has escalating base rent due to base rate ($/MW/Month) increase in every 12 months from service commencement date. During the first twelve months of initial term, we have no obligation to pay base rent in excess of base rent ramp maximum amount. The ROU asset and lease liability associated with the commencement of three tranches totaling $211.9 million, were recorded during the year ended June 30, 2025. The lease agreement includes variable lease payments related to power consumption charges. Variable lease payments not dependent on a rate or index associated with our leases are recognized when the event, activity, or circumstance in the lease agreement on which those payments are assessed as probable. Variable lease payments are presented as operating expenses in the consolidated statement of operations.
Simultaneously, we entered into a sublicense agreement with an unrelated party to sublease the entire space in Vernon, California (the “Sublicense”). The Sublicense term coincides with our Data Center Space lease. We accounted for the lease as an operating lease and the sublicense as a sublease under Accounting Standards Codification Topic 842, Leases. The Sublicense did not relieve our original obligation under the Data Center Space lease, and therefore we did not adjust the operating lease ROU asset and related liability. Sublicense income is recognized on a straight-line basis and the rental income is included in other income, net on the consolidated statements of operations. For the year ended June 30, 2025, we recorded $8.0 million rental income. As of June 30, 2025, the future total minimum sublicense receipts expected to be received are as follows (in thousands):
| Fiscal Year: | Future minimum sublicense receipts(1) | |||||||
2026 | $ | 24,684 | ||||||
| 2027 | 27,459 | |||||||
| 2028 | 28,255 | |||||||
| 2029 | 29,132 | |||||||
2030 | 30,006 | |||||||
2031 and beyond | 169,980 | |||||||
| Total sublicense receipts - Lessor | $ | 309,516 | ||||||
(1) The table does not include amounts pertaining to leases that have not yet commenced.
The future undiscounted fixed non-cancelable payment obligation and future minimum sublicense receipts pertaining to the remaining tranche that has not yet commenced as of June 30, 2025 is approximately $117.7 million and $124.8 million, respectively.
We hold an equity investment of $92.5 million in the sub-licensee, which is classified under investments in privately held companies and recorded in other assets on the consolidated balance sheets. The sub-licensee does not meet the criteria of a related party. Additionally, the sub-licensee has been our customer, and we concluded that equity investment agreements and sub-licensing agreement are separate from revenue contracts as all transactions have been recorded at the respective fair values.
Additionally, the warehouse lease in San Jose, California commenced on May 1, 2025 for 66 months, expiring in October, 2030. In connection with this lease, we recorded $14.3 million ROU asset and lease liability to the consolidated balance sheets as of June 30, 2025.
Maturities of operating lease liabilities under non-cancelable operating lease arrangements as of June 30, 2025, were as follows (in thousands):
| Fiscal Year: | Maturities of operating leases(1) | |||||||
2026 | $ | 39,846 | ||||||
2027 | 43,938 | |||||||
2028 | 43,218 | |||||||
2029 | 43,635 | |||||||
2030 | 44,866 | |||||||
2031 and beyond | 182,932 | |||||||
| Total future lease payments | 398,435 | |||||||
| Less: Imputed interest | (96,878) | |||||||
| Present value of operating lease liabilities | 301,557 | |||||||
| Less: Current portion | (21,189) | |||||||
| $ | 280,368 | |||||||
(1) The table does not include amounts pertaining to leases that have not yet commenced.
Related party leases
We have entered into lease agreements with related parties. See Note 10, “Related Party Transactions” in the notes to the consolidated financial statements for further discussion.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Aug 28, 2025 | Showing above |
| 2024 | Feb 25, 2025 | |
| 2023 | Aug 28, 2023 | |
| 2022 | Aug 29, 2022 | |
| 2021 | Aug 27, 2021 | |
| 2020 | Aug 31, 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.