LEASES
We lease office facilities, transportation and other equipment for use in our operations. Most of our leases are non-cancelable operating lease agreements with remaining terms of one to 10 years. Some of these leases include options to extend for up to six years. We have no finance leases as of December 31, 2025. Right-of-use lease assets and lease liabilities for our operating leases are recorded in the consolidated balance sheets. We incurred no lease restructuring costs during 2025 and 2024, and $6.4 million in 2023, respectively.
The components of operating lease expense were as follows:
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| Lease Costs | | | Years ended December 31, |
| | | 2025 | | 2024 | | 2023 |
| Operating lease cost | | | $ | 10,958 | | | $ | 9,166 | | | $ | 19,468 | |
| Short-term lease cost | | | 2,046 | | | 2,124 | | | 2,121 | |
| Variable lease cost | | | 952 | | | 768 | | | 1,009 | |
| Net lease cost | | | $ | 13,956 | | | $ | 12,058 | | | $ | 22,598 | |
Supplemental information related to leases is as follows:
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| Other Information | Years ended December 31, |
| 2025 | | 2024 | | 2023 |
Cash flows: | | | | | |
| Cash paid amounts included in the measurement of lease liabilities: | | | | | |
| Operating cash outflows from operating leases | $ | 12,368 | | | $ | 12,578 | | | $ | 12,555 | |
| | | | | |
| Right-of-use assets obtained in exchange for lease obligations (non-cash): | | | | | |
| Operating leases | $ | 13,318 | | | $ | 4,404 | | | $ | 3,383 | |
| | | | | |
| Lease term and discount rate: | | | | | |
| Weighted average remaining lease term (years) | 6 | | 6 | | 7 |
| Weighted average discount rate | 3.60 | % | | 3.22 | % | | 1.59 | % |
As of December 31, 2025, maturities of lease liabilities were as follows:
| | | | | |
| Year ending December 31, | Amount |
| 2026 | $ | 10,602 | |
| 2027 | 10,278 | |
| 2028 | 6,719 | |
| 2029 | 5,602 | |
| 2030 | 5,132 | |
| Thereafter | 9,526 | |
| Total lease payments | 47,859 | |
| Less: Interest | (4,914) | |
| Present value of operating lease liabilities | $ | 42,945 | |
Rental income from third parties
We own office buildings in Falmouth, Yarmouth and Orono, Maine; Lubbock and Plano, Texas; Troy, Michigan; Latham, New York; Moraine, Ohio; and Kingston Springs, Tennessee. We lease space in some of these buildings to third-party tenants. The property we lease to others under operating leases consists primarily of specific facilities where one tenant obtains substantially all of the economic benefit from the asset and has the right to direct the use of the asset. These non-cancelable leases expire between 2026 and 2035, and some have options to extend the lease for up to 10 years. We determine if an arrangement is a lease at inception. None of our leases allow the lessee to purchase the leased asset.
Rental income from third-party tenants was $2.7 million in 2025, $3.2 million in 2024, and $2.1 million in 2023. Rental income is included in hardware and other revenue on the consolidated statements of income. As of December 31, 2025, future minimum operating rental income based on contractual agreements is as follows:
| | | | | |
| Year ending December 31, | Amount |
| 2026 | $ | 2,538 | |
| 2027 | 2,276 | |
| 2028 | 2,029 | |
| 2029 | 1,355 | |
| 2030 | 1,385 | |
| Thereafter | 4,196 | |
| Total | $ | 13,779 | |
As of December 31, 2025, we had no additional significant operating or finance leases that had not yet commenced.