TUCOWS INC /PA/ Leases Disclosure
12. Leases
We lease datacenters, corporate offices, antenna towers and fiber-optic cables under operating leases. The Company does not have any leases classified as finance leases.
Our leases have remaining lease terms of 1 year to 20 years, some of which may include options to extend the leases for up to 5 years, and some of which may include options to terminate the leases within 1 year.
The components of lease expense were as follows (Dollar amounts in thousands of U.S. dollars):
| Year Ended | Year Ended | |||||||
| December 31, 2024 | December 31, 2023 | |||||||
| Operating lease expense (leases with a total term greater than 12 months) | $ | 7,134 | $ | 5,710 | ||||
| Short-term lease expense (leases with a total term of 12 months or less) | 34 | 196 | ||||||
| Variable lease expense | 2,343 | 1,878 | ||||||
| Total lease expense | $ | 9,511 | $ | 7,784 | ||||
Lease expense is presented in general and administrative expenses and direct cost of revenues within our consolidated statements of operations and comprehensive income (loss).
Variable lease payments are determined based on specific terms and conditions outlined in the lease agreements. These may include payments for utilities, which are based on actual usage, and maintenance costs, which are determined based on expenses incurred.
Information related to leases was as follows (Dollar amounts in thousands of U.S. dollars):
| Year Ended | Year Ended | |||||||
| Supplemental cashflow information: | December 31, 2024 | December 31, 2023 | ||||||
| Operating lease - operating cash flows (fixed payments) | $ | 7,623 | $ | 6,088 | ||||
| Operating lease - operating cash flows (liability reduction) | $ | 5,940 | $ | 5,170 | ||||
| New right of use assets - operating leases | $ | 14,206 | $ | 11,388 | ||||
| Supplemental balance sheet information related to leases: | December 31, 2024 | December 31, 2023 | ||||||
| Incremental borrowing rate | 8.09 | % | 6.92 | % | ||||
| Weighted average remaining lease term |
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Maturity of lease liability as of December 31, 2024 (Dollar amounts in thousands of U.S. dollars):
| December 31, 2024 | ||||
| 2025 | $ | 7,225 | ||
| 2026 | 5,429 | |||
| 2027 | 3,880 | |||
| 2028 | 3,097 | |||
| 2029 | 3,026 | |||
| Thereafter | 32,669 | |||
| Total future lease payments | 55,326 | |||
| Less: interest | 24,277 | |||
| Total | $ | 31,049 | ||
Operating lease payments include payments under the non-cancellable term, without any additional amounts related to options to extend lease terms that are not reasonably certain of being exercised.
As of December 31, 2024, we have not entered into any lease agreements that have not yet commenced, and therefore are not included in the lease liability.
The Company has elected to use the single exchange rate approach when accounting for lease modifications. Under the single exchange rate approach, the entire right of use asset is revalued at the date of modification in the Company’s functional currency provided the re-measurement is not considered a separate contract or if the re-measurement is related to change the lease term or assessment of a lessee option to purchase the underlying asset being exercised.
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2024 | Mar 13, 2025 | Showing above |
| 2019 | Mar 4, 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.