Leases

12 Months Ended

Sep. 30, 2024

11. Leases

We have entered into a number of facility and equipment leases which qualify as operating leases under GAAP. We also have a limited number of equipment leases that qualify as finance leases. We determine if contracts with vendors represent a lease or have a lease component under GAAP at contract inception. Our leases have remaining terms ranging from less than one year to six years. Some of our leases include options to extend or terminate the lease prior to the end of the agreed upon lease term. For purposes of calculating lease liabilities, lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise such options.

Operating lease right of use assets and liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the lease commencement date. As our leases generally do not provide an implicit rate, we use an estimated incremental borrowing rate in determining the present value of future payments. The incremental borrowing rate represents an estimate of the interest rate we would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease within a particular location and currency environment.

The following table presents certain information related to lease term and incremental borrowing rates for leases as of September 30, 2024 and 2023:


	September 30, 2024			September 30, 2023
Weighted-average remaining lease term (in months):
Operating leases		46.0			37.2
Finance leases		13.4			24.5
Weighted-average discount rate:
Operating leases		6.6	%		5.3	%
Finance leases		4.4	%		4.4	%

The following table presents the lease-related assets and liabilities reported in the Consolidated Balance Sheets as of September 30, 2024 and 2023 (dollars in thousands):


	Classification	September 30, 2024		September 30, 2023
Assets
Operating lease assets	Operating lease right of use assets	$	12,879	$	11,961
Finance lease assets	Property and equipment, net		410		825
Total lease assets		$	13,289	$	12,786

Liabilities
Current
Operating	Short-term operating lease liabilities	$	4,528	$	5,434
Finance	Accrued expenses and other current liabilities		394		437
Noncurrent
Operating	Long-term operating lease liabilities	$	8,803	$	7,947
Finance	Other liabilities		53		408
Total lease liability		$	13,778	$	14,226

The following table presents lease expense for the fiscal years ended September 30, 2024, 2023 and 2022 (dollars in thousands):


	Year Ended September 30,
	2024			2023			2022
Finance lease costs:
Amortization of right of use asset	$	415		$	432		$	435
Interest on lease liability		22			37			50
Operating lease cost		6,226			6,489			6,788
Variable lease cost		2,550			3,120			3,492
Sublease income		(216	)		(195	)		(187	)
Total lease cost	$	8,997		$	9,883		$	10,578

For the fiscal years ended September 30, 2024, 2023 and 2022 cash payments related to operating leases were $6.6 million, $6.6 million and $6.7 million, respectively. For the fiscal years ended September 30, 2024, 2023 and 2022, cash payments related to financing leases were $0.4 million, $0.4 million and $0.5 million, respectively, of which an immaterial amount related to the interest portion of the lease liability. For the fiscal years ended September 30, 2024, 2023 and 2022 right of use assets obtained in exchange for lease obligations were $5.8 million, $2.9 million and $7.5 million, respectively.

The table below reconciles the undiscounted future minimum lease payments under non-cancelable leases to the total lease liabilities recognized on the Consolidated Balance Sheet as of September 30, 2024 (dollars in thousands):


Year Ending September 30,	Operating Leases			Financing Leases			Total
2025		5,282			401			5,683
2026		3,222			53			3,275
2027		2,809			—			2,809
2028		2,146			—			2,146
2029		1,389			—			1,389
Thereafter		429			—			429
Total future minimum lease payments	$	15,277		$	454		$	15,731
Less effects of discounting		(1,946	)		(7	)		(1,953	)
Total lease liabilities	$	13,331		$	447		$	13,778
Reported as of September 30, 2024
Short-term lease liabilities	$	4,528		$	394		$	4,922
Long-term lease liabilities		8,803			53			8,856
Total lease liabilities	$	13,331		$	447		$	13,778