The Company enters into lease arrangements primarily for data center spaces, office spaces and for certain equipment. The Company determines if an arrangement is or contains a lease at inception. The Company recognizes a right-of-use asset and lease liability on the unaudited condensed consolidated balance sheets for all leases with a term longer than 12 months. Many of the Company’s lease agreements include options to extend the lease, which are not included in the minimum lease payments unless they are reasonably certain to be exercised at lease commencement. Rental expense related to operating leases is recognized on a straight-line basis over the lease term. Operating lease right-of-use assets are presented as right-of-use assets on the unaudited condensed consolidated balance sheets, while finance lease right-of-use assets are included within property and equipment, net.

The Company subleases certain office space that it does not intend to occupy. The sublease arrangement expires during the year 2030 and provides for escalations of lease payments in the normal course of business.

The components of lease expenses and income for the three and six months ended June 30, 2026 and 2025 are as follows (in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2026			2025			2026			2025
Operating lease cost:
Operating lease cost	$	17,468		$	24,099		$	35,417		$	48,699
Finance lease cost:
Amortization of right-of-use assets		8,663			10,723			17,474			21,440
Interest on lease liabilities		9,123			10,047			18,316			20,127
Total finance lease cost	$	17,786		$	20,770		$	35,790		$	41,567
Short-term lease cost		262			745			619			1,328
Sublease income		(507	)		(507	)		(1,014	)		(1,014	)
Total lease cost	$	35,009		$	45,107		$	70,812		$	90,580

In the Company’s unaudited condensed consolidated statements of operations, amortization of right-of-use assets under finance leases and interest on finance lease liabilities are included in depreciation and amortization and interest expense, respectively. Operating lease costs for data centers are included in cost of revenues, and operating lease costs for office leases are included in selling, marketing, general and administrative expenses in the Company’s unaudited condensed consolidated statements of operations.

For the three and six months ended June 30, 2026 and 2025, the Company did not record any impairment charges related to right-of-use assets.

On May 20, 2026, the Company entered into a Surrender Agreement with the landlord of its Hawthorne, California facility. The Company did not exercise any renewal options under the lease and surrendered the leased premises on May 31, 2026. In accordance with ASC 842, the Company derecognized the remaining lease liability and right-of-use asset associated with the lease upon termination. As a result, the Company recognized a net gain of $40.0 million during the six months ended June 30, 2026, which is included in gain on lease modification in the Company’s unaudited condensed consolidated statements of operations.

Supplemental unaudited condensed consolidated cash flow and other information related to leases is as follows (in thousands):


	Six Months Ended June 30,
	2026			2025
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used by operating leases	$	(33,647	)	$	(40,277	)
Operating cash flows used by finance leases		(18,316	)		(20,126	)
Financing cash flows used by finance leases		(6,116	)		(8,066	)

Right-of-use assets obtained in exchange for new or modified lease obligations:
Operating lease right-of-use assets	$	7,278		$	—

Derecognition of right-of-use assets
Operating leases	$	21,794		$	12,453

Derecognition of lease liabilities
Operating leases	$	61,837		$	12,504

Weighted average remaining lease term (in years) – operating leases		9.6			9.0
Weighted average remaining lease term (in years) – finance leases		17.6			17.4
Weighted average discount rate – operating leases		7.5	%		7.5	%
Weighted average discount rate – finance leases		8.4	%		9.0	%

As of June 30, 2026, maturities of lease liabilities were as follows (in thousands):


	Operating Leases			Finance Leases
Remaining portion of 2026	$	31,302		$	23,886
2027		63,649			41,513
2028		64,877			38,245
2029		62,432			39,155
2030		49,076			40,087
Thereafter		260,405			750,410
Total lease payments	$	531,741		$	933,296
Imputed interest		(172,058	)		(497,300	)
Total lease liabilities	$	359,683		$	435,996

Our leases generally have non-cancelable initial lease terms ranging from five to ten years and may include options to extend or renew the lease for additional periods. Lease payments typically consist of fixed payments, including contractual rent escalation provisions, and, for certain leases, variable lease payments. Variable lease payments are primarily based on usage or other factors specified in the lease agreements and are billed in arrears based on actual consumption. The lease arrangements do not contain purchase options.

A summary of minimum lease payments due from our customers under operating leases of colocation space within data center environments, as well as other facilities leased under triple net arrangements are shown below. These amounts do not reflect future rental revenues from renewal or replacement of existing leases unless we are reasonably certain we will exercise the option or the lessee has the sole ability to exercise the option. Reimbursements of operating expenses and variable rent increases are excluded from the table below.

The components of operating lease income for the three and six months ended June 30, 2026 and 2025 are as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Fixed lease revenue	$	56,860	$	27,835	$	107,053	$	55,414
Variable lease revenue		7,878		4,239		16,697		8,744
Total operating lease revenue	$	64,738	$	32,074	$	123,750	$	64,158

Future minimum lease receipts for operating leases under Topic 842 as of June 30, 2026 are as follows (in thousands):



Remaining portion of 2026	$	111,910
2027		226,190
2028		222,661
2029		221,085
2030		196,138
Thereafter		245,528
Total minimum lease receipts	$	1,223,512

Property and equipment, net underlying operating lease income consisted of the following as of June 30, 2026 and December 31, 2025 (in thousands):


	As of June 30,			As of December 31,
	2026			2025
Land	$	93,009		$	88,009
Buildings and improvements		424,818			423,798
Leasehold improvements		66,473			66,473
Machinery and equipment		196,135			169,427
Computer networking		280			280
Other		75			75
Property and equipment, total		780,790			748,062
Less: accumulated depreciation		(71,771	)		(47,316	)
Property and equipment, net	$	709,019		$	700,746

Depreciation on property and equipment underlying operating lease income was $12.4 million and $3.8 million, for the three months ended June 30, 2026 and 2025, respectively, and $24.5 million and $7.6 million, for the six months ended June 30, 2026 and 2025, respectively, and was included in depreciation and amortization expense on the unaudited condensed consolidated statements of operations.