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Leases

6 Months Ended

Jun. 30, 2025

Note 13. Leases

As of June 30, 2025, the Company had operating leases primarily for its various offices, the manufacturing facilities of ESS Metron and E4A Solutions, a ground lease for the Rockdale Facility, and the Kentucky Facility data center, all of which expire on various dates through January 2032.

As of June 30, 2025 and December 31, 2024, operating lease right-of-use assets were $30.8 million and $27.5 million, respectively, and operating lease liabilities were $31.1 million and $28.5 million, respectively.

The following table presents the components of the Company’s lease expense. Ground and facilities lease expenses are included in Cost of revenue and office lease expenses are included in Selling, general, and administrative on the Condensed Consolidated Statements of Operations:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2025		2024		2025		2024
Operating lease cost	$	1,917	$	1,231	$	3,499	$	2,429
Variable lease cost		102		150		199		260
Total lease expense	$	2,019	$	1,381	$	3,698	$	2,689

The following table presents supplemental lease information:


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2025			2024			2025			2024
Operating leases net operating cash outflows	$	2,779		$	1,007		$	4,038		$	1,216
Right-of-use assets exchanged for new operating lease liabilities	$	—		$	—		$	5,962		$	2,118
Weighted-average remaining lease term – operating leases		5.5			6.8			5.5			6.8
Weighted-average discount rate – operating leases		7.3	%		6.8	%		7.3	%		6.8	%

The following table presents the Company’s future minimum operating lease payments as of June 30, 2025:


	Ground lease		Office and other leases		Total
Remainder of 2025	$	1,028	$	1,449	$	2,477
2026		2,119		4,028		6,147
2027		2,183		3,433		5,616
2028		2,249		2,989		5,238
2029		2,316		2,275		4,591
Thereafter		5,053		2,106		7,159
Total undiscounted lease payments		14,948		16,280		31,228
Less present value discount		(3,273)		3,193		(80)
Present value of lease liabilities	$	11,675	$	19,473	$	31,148