9. Leases
The Company rents office space and equipment under non-cancelable operating leases with various expiration dates through fiscal year 2034. Certain lease agreements include varying terms, escalation clauses and renewal rights. The Company does not assume renewals in its determination of the lease term unless the renewals are deemed to be reasonably certain at lease commencement. The Company’s lease agreements generally do not contain any material residual value guarantees or material restrictive covenants.
The components of lease costs and other information related to leases were as follows (in thousands):
| | | | | | | | | | | | | | | | | |
| | Fiscal Year Ended June 30, |
| | 2025 | | 2024 | | 2023 |
Operating lease costs | $ | 43,720 | | | $ | 41,426 | | | $ | 50,134 | |
| Variable lease costs | 14,781 | | | 11,908 | | | 13,094 | |
| Total lease costs | $ | 58,501 | | | $ | 53,334 | | | $ | 63,228 | |
| | | | | |
| Weighted average remaining lease term (in years) | 5 | | 6 | | 7 |
| Weighted average discount rate | 3.1 | % | | 2.9 | % | | 2.5 | % |
Supplemental cash flow information related to operating leases were as follows (in thousands):
| | | | | | | | | | | | | | | | | |
| Fiscal Year Ended June 30, |
| | 2025 | | 2024 | | 2023 |
| Cash payments for operating leases | $ | 52,981 | | | $ | 49,803 | | | $ | 41,493 | |
| Right-of-use assets obtained in exchange for new operating lease liabilities | $ | 34,717 | | | $ | 23,265 | | | $ | 3,580 | |
Future lease payments under non-cancelable operating leases with initial lease terms in excess of one year included in the Company’s lease liabilities as of June 30, 2025 were as follows (in thousands):
| | | | | | | | |
| Fiscal years: | | Operating Lease Payments |
| 2026 | | $ | 57,056 | |
| 2027 | | 57,224 | |
| 2028 | | 56,667 | |
| 2029 | | 46,237 | |
| 2030 | | 16,188 | |
| Thereafter | | 38,743 | |
| Total future operating lease payments | | 272,115 | |
| Less: imputed interest | | (20,468) | |
| Total lease liability balance | | $ | 251,647 | |
During fiscal year 2023, in addition to operating lease costs disclosed above, the Company recorded an impairment charge of $52.7 million in aggregate for operating lease right-of-use assets as part of the Company’s lease consolidation efforts.
The Company entered into an Agreement for Lease (the “AFL”) for the Australian HQ Property in March 2022. Following the completion of the development of the Australian HQ Property, the AFL requires the Company to enter into a lease agreement for the planned headquarters office space. The lease is expected to commence in fiscal year 2027 and will continue for fifteen years, with the Company’s option to extend the term for up to two additional ten-year periods. Future lease payments are approximately $912.3 million as of June 30, 2025, for the initial term of fifteen years. Please refer to Note 4, “Investments,” for details of the transaction.
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.