SMITH MICRO SOFTWARE, INC. Leases Disclosure

14. Leases

 

The Company leases office space and equipment. The Company determines if a contract is a lease at the inception of the arrangement and reviews all options to extend, terminate, or purchase its right-of-use assets at the inception of the lease and accounts for these options when they are reasonably certain of being exercised.

 

Leases with an initial term of greater than twelve months are recorded on the consolidated balance sheet. Lease expense is recognized on a straight-line basis over the lease term.

 

The Company’s lease contracts generally do not provide a readily determinable implicit rate. For these contracts, the estimated incremental borrowing rate is based on information available at the inception of the lease.

 

Operating lease cost was $1.6 million for each of the years ended  December 31, 2025 and 2024, respectively. Cash payments for lease liabilities were $1.5 million and $1.6 million for the years ended  December 31, 2025 and 2024, respectively.

 

Operating lease assets and liabilities are summarized as follows (in thousands):

 

		Year Ended December 31,
		2025				2024
Right-of-use assets		$	1,119			$	2,367
				​				​
Current lease liabilities		$	914			$	1,279
Long-term lease liabilities			417				1,287
Total lease liabilities		$	1,331			$	2,566

 

The Company recognized noncash increases for the right-of-use assets obtained in exchange for the new operating lease liabilities in the amount of $1.0 million for  December 31, 2024.   There were no noncash right-of-use asset transactions for year ended December 31, 2025. Subsequent to year end the Company executed a lease renewal and will recognize a noncash increase for the right-of-use asset obtained in exchange for a new operating lease liability of approximately $1.0 million for December 31, 2026.  

 

The maturity of operating lease liabilities is presented in the following table (in thousands):

 

​	​	As of December 31, 2025		​
2026	​	$	979	​
2027	​	​	377	​
2028	​	​	61	​
Total lease payments	​	​	1,417	​
Less imputed interest	​	​	86	​
Present value of lease liabilities	​	$	1,331	​

 

Additional information relating to the Company’s operating leases follows:

 

		As of December 31, 2025				As of December 31, 2024
Weighted average remaining lease term (years)			1.4				1.98
Weighted average discount rate			8.2	%			7.5	%