v3.25.1
Leases
 3 Months Ended
Mar. 31, 2025
Leases [Abstract]  
Leases Leases
The Company has lease arrangements, both as a lessor and a lessee, and makes assumptions and judgments when assessing contracts for lease components, determining lease classifications, and calculating ROU asset and lease liability values. These assumptions and judgements may include the useful lives and fair values of the leased assets, the implicit rate underlying the Company’s leases, the Company’s incremental borrowing rate, or the Company’s intent to exercise or not exercise options available in lease contracts.
Lease expense and other information for the periods presented consisted of the following (in thousands, except terms and rates):
Three Months Ended March 31,
20252024
Lease expense
Finance lease expense:
Amortization of right-of-use assets$1,788 $1,820 
Interest on lease liabilities347 318 
Operating lease expense1,386 1,423 
Short-term lease expense10 8 
Variable lease expense88 47 
Total lease expense$3,619 $3,616 
Supplemental cash flow information
Finance leases:
Operating cash outflow from finance leases$347 $318 
Financing cash outflow from finance leases$1,773 $1,787 
Finance lease liabilities arising from obtaining finance lease right-of-use assets$2,177 $1,871 
Operating leases:
Operating cash outflow from operating leases$1,416 $1,431 
Operating lease liabilities arising from obtaining operating lease right-of-use assets$— $149 
Other information as of March 31, 2025
Finance leases:
Weighted-average remaining lease term (years)1.9
Weighted-average discount rate11.1 %
Operating leases:
Weighted-average remaining lease term (years)7.8
Weighted-average discount rate3.9 %
Operating leases
The Company as the Lessee
The Company leases office space for its headquarters under a non-cancelable operating lease agreement which expires in January 2033. Though the Company will consider renewal options on its lease as it nears expiration, the Company has not recognized any renewal options as part of the current lease term as it is not reasonably certain that it will exercise its option as of March 31, 2025. The rate implicit in the Company’s operating lease is not readily determinable. Thus, the Company uses its incremental borrowing rate to discount lease payments to present value. The incremental borrowing rate is the rate incurred to borrow on a collateralized basis, and is based on the Company’s secured line of credit, which may be adjusted for the specific terms and collateral of the lease. The operating lease agreement does not contain any residual value guarantees or other restrictions or covenants that would cause the Company to incur additional significant financial obligations. The office space lease agreement contains non-lease components, which represent charges for common area maintenance, taxes and utilities. The Company has elected the practical expedient on not separating lease components from non-lease components.
The Company has other leases for office space with terms less than twelve months from contract inception and no options to purchase the underlying asset. These agreements are accounted for as short-term leases in accordance with ASC 842.
Total rent expense for office space leases was $1.4 million for each of the three months ended March 31, 2025 and 2024, and is reported gross of sublease income received.
Future maturities of remaining lease payments included in the measurement of operating lease liabilities as of March 31, 2025 are as follows (in thousands):
Years ending December 31,
2025$4,284 
20265,843 
20275,989 
20286,139 
20296,292 
Thereafter20,403 
Total48,950 
Less: imputed interest(6,881)
Present value of operating lease obligations$42,069 
The Company as the Lessor
The Company provides varying quantities of phone hardware to customers without adjustments to the base subscription price. The Company is deemed a lessor in these arrangements. For the three months ended March 31, 2025 and 2024, the Company recorded lease revenues associated with phone hardware of $1.5 million and $1.1 million, respectively.
In April 2023, the Company entered into a Sublease Agreement for the fourth floor of its corporate headquarters in Lehi, Utah. During each of the three months ended March 31, 2025 and 2024, the Company recorded sublease revenues associated with this agreement of $0.2 million. These revenues are included in other income (expense) on the condensed consolidated statements of operations and comprehensive loss.
Finance leases
The Company is the lessee in all of its finance lease arrangements. In June 2016, the Company began financing its purchases of phone hardware through lease agreements classified as finance leases. As of March 31, 2025 the Company had 94 executed and active lease agreements, respectively, for phone hardware with maturity dates ranging from April 2025 to March 2028. As of March 31, 2025, the gross value of phone hardware acquired under these finance leases approximated $21.1 million. Amortization expense on finance-leased phone hardware was $1.8 million for each of the three months ended March 31, 2025 and 2024, which is included in the depreciation expense referenced in Note 5.
Future minimum lease payments for the Company’s finance leases as of March 31, 2025 were as follows (in thousands):
Years ending December 31,
2025$6,154 
20265,447 
20273,024 
2028392 
2029— 
Thereafter— 
Total15,017 
Less: amounts representing interest(1,636)
Present value of finance lease obligations$13,381 
Leases Leases
The Company has lease arrangements, both as a lessor and a lessee, and makes assumptions and judgments when assessing contracts for lease components, determining lease classifications, and calculating ROU asset and lease liability values. These assumptions and judgements may include the useful lives and fair values of the leased assets, the implicit rate underlying the Company’s leases, the Company’s incremental borrowing rate, or the Company’s intent to exercise or not exercise options available in lease contracts.
Lease expense and other information for the periods presented consisted of the following (in thousands, except terms and rates):
Three Months Ended March 31,
20252024
Lease expense
Finance lease expense:
Amortization of right-of-use assets$1,788 $1,820 
Interest on lease liabilities347 318 
Operating lease expense1,386 1,423 
Short-term lease expense10 8 
Variable lease expense88 47 
Total lease expense$3,619 $3,616 
Supplemental cash flow information
Finance leases:
Operating cash outflow from finance leases$347 $318 
Financing cash outflow from finance leases$1,773 $1,787 
Finance lease liabilities arising from obtaining finance lease right-of-use assets$2,177 $1,871 
Operating leases:
Operating cash outflow from operating leases$1,416 $1,431 
Operating lease liabilities arising from obtaining operating lease right-of-use assets$— $149 
Other information as of March 31, 2025
Finance leases:
Weighted-average remaining lease term (years)1.9
Weighted-average discount rate11.1 %
Operating leases:
Weighted-average remaining lease term (years)7.8
Weighted-average discount rate3.9 %
Operating leases
The Company as the Lessee
The Company leases office space for its headquarters under a non-cancelable operating lease agreement which expires in January 2033. Though the Company will consider renewal options on its lease as it nears expiration, the Company has not recognized any renewal options as part of the current lease term as it is not reasonably certain that it will exercise its option as of March 31, 2025. The rate implicit in the Company’s operating lease is not readily determinable. Thus, the Company uses its incremental borrowing rate to discount lease payments to present value. The incremental borrowing rate is the rate incurred to borrow on a collateralized basis, and is based on the Company’s secured line of credit, which may be adjusted for the specific terms and collateral of the lease. The operating lease agreement does not contain any residual value guarantees or other restrictions or covenants that would cause the Company to incur additional significant financial obligations. The office space lease agreement contains non-lease components, which represent charges for common area maintenance, taxes and utilities. The Company has elected the practical expedient on not separating lease components from non-lease components.
The Company has other leases for office space with terms less than twelve months from contract inception and no options to purchase the underlying asset. These agreements are accounted for as short-term leases in accordance with ASC 842.
Total rent expense for office space leases was $1.4 million for each of the three months ended March 31, 2025 and 2024, and is reported gross of sublease income received.
Future maturities of remaining lease payments included in the measurement of operating lease liabilities as of March 31, 2025 are as follows (in thousands):
Years ending December 31,
2025$4,284 
20265,843 
20275,989 
20286,139 
20296,292 
Thereafter20,403 
Total48,950 
Less: imputed interest(6,881)
Present value of operating lease obligations$42,069 
The Company as the Lessor
The Company provides varying quantities of phone hardware to customers without adjustments to the base subscription price. The Company is deemed a lessor in these arrangements. For the three months ended March 31, 2025 and 2024, the Company recorded lease revenues associated with phone hardware of $1.5 million and $1.1 million, respectively.
In April 2023, the Company entered into a Sublease Agreement for the fourth floor of its corporate headquarters in Lehi, Utah. During each of the three months ended March 31, 2025 and 2024, the Company recorded sublease revenues associated with this agreement of $0.2 million. These revenues are included in other income (expense) on the condensed consolidated statements of operations and comprehensive loss.
Finance leases
The Company is the lessee in all of its finance lease arrangements. In June 2016, the Company began financing its purchases of phone hardware through lease agreements classified as finance leases. As of March 31, 2025 the Company had 94 executed and active lease agreements, respectively, for phone hardware with maturity dates ranging from April 2025 to March 2028. As of March 31, 2025, the gross value of phone hardware acquired under these finance leases approximated $21.1 million. Amortization expense on finance-leased phone hardware was $1.8 million for each of the three months ended March 31, 2025 and 2024, which is included in the depreciation expense referenced in Note 5.
Future minimum lease payments for the Company’s finance leases as of March 31, 2025 were as follows (in thousands):
Years ending December 31,
2025$6,154 
20265,447 
20273,024 
2028392 
2029— 
Thereafter— 
Total15,017 
Less: amounts representing interest(1,636)
Present value of finance lease obligations$13,381