LEASES

12 Months Ended

Dec. 31, 2023

Leases [Abstract]

LEASES

LEASES

We lease office facilities for use in our operations, as well as transportation and other equipment. Most of our leases are non-cancelable operating lease agreements with remaining terms of one to 11 years. Some of these leases include options to extend for up to six years. We have no finance leases and one related party lessor agreement (see Note 20, "Related party transactions") as of December 31, 2023. Right-of-use lease assets and lease liabilities for our operating leases are recorded in the consolidated balance sheets. We incurred lease restructuring costs, resulting in an additional $6.4 million and $1.7 million of operating lease costs during 2023 and 2022, respectively.

The components of operating lease expense were as follows:

Lease Costs	Years ended December 31,
	2023		2022		2021
Operating lease cost	$	19,468	$	14,743	$	11,095
Short-term lease cost	2,121		2,166		2,308
Variable lease cost	1,009		1,047		1,659
Net lease cost	$	22,598	$	17,956	$	15,062

Supplemental information related to leases is as follows:

Other Information	Years ended December 31,
	2023			2022			2021
Cash flows:
Cash paid amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases	$	12,555		$	13,562		$	11,432
Right-of-use assets obtained in exchange for lease obligations (non-cash):
Operating leases	$	3,383		$	25,171		$	20,140
Lease term and discount rate:
Weighted average remaining lease term (years)	7			7			6
Weighted average discount rate	1.59		%	1.57		%	1.81		%

As of December 31, 2023, maturities of lease liabilities were as follows:

Year ending December 31,	Amount
2024	$	11,482
2025	10,059
2026	7,551
2027	6,232
2028	3,919
Thereafter	13,960
Total lease payments	53,203
Less: Interest	(2,321)
Present value of operating lease liabilities	$	50,882

Rental Income from third parties

We own office buildings in Bangor, Falmouth and Yarmouth, 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 2024 and 2028, 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 $2.1 million in 2023, $1.7 million in 2022, and $1.2 million in 2021. Rental income is included in hardware and other revenue on the consolidated statements of income. Future minimum operating rental income based on contractual agreements is as follows:

Year ending December 31,	Amount
2024	$	3,049
2025	2,317
2026	1,171
2027	913
2028	734
Thereafter	—
Total	$	8,184

As of December 31, 2023, we had no additional significant operating or finance leases that had not yet commenced.

LEASES

LEASES

We lease office facilities for use in our operations, as well as transportation and other equipment. Most of our leases are non-cancelable operating lease agreements with remaining terms of one to 11 years. Some of these leases include options to extend for up to six years. We have no finance leases and one related party lessor agreement (see Note 20, "Related party transactions") as of December 31, 2023. Right-of-use lease assets and lease liabilities for our operating leases are recorded in the consolidated balance sheets. We incurred lease restructuring costs, resulting in an additional $6.4 million and $1.7 million of operating lease costs during 2023 and 2022, respectively.

The components of operating lease expense were as follows:

Lease Costs	Years ended December 31,
	2023		2022		2021
Operating lease cost	$	19,468	$	14,743	$	11,095
Short-term lease cost	2,121		2,166		2,308
Variable lease cost	1,009		1,047		1,659
Net lease cost	$	22,598	$	17,956	$	15,062

Supplemental information related to leases is as follows:

Other Information	Years ended December 31,
	2023			2022			2021
Cash flows:
Cash paid amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases	$	12,555		$	13,562		$	11,432
Right-of-use assets obtained in exchange for lease obligations (non-cash):
Operating leases	$	3,383		$	25,171		$	20,140
Lease term and discount rate:
Weighted average remaining lease term (years)	7			7			6
Weighted average discount rate	1.59		%	1.57		%	1.81		%

As of December 31, 2023, maturities of lease liabilities were as follows:

Year ending December 31,	Amount
2024	$	11,482
2025	10,059
2026	7,551
2027	6,232
2028	3,919
Thereafter	13,960
Total lease payments	53,203
Less: Interest	(2,321)
Present value of operating lease liabilities	$	50,882

Rental Income from third parties

We own office buildings in Bangor, Falmouth and Yarmouth, 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 2024 and 2028, 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 $2.1 million in 2023, $1.7 million in 2022, and $1.2 million in 2021. Rental income is included in hardware and other revenue on the consolidated statements of income. Future minimum operating rental income based on contractual agreements is as follows:

Year ending December 31,	Amount
2024	$	3,049
2025	2,317
2026	1,171
2027	913
2028	734
Thereafter	—
Total	$	8,184

As of December 31, 2023, we had no additional significant operating or finance leases that had not yet commenced.