Finance Leases and Lease Financing Obligations

9 Months Ended

Sep. 30, 2024

Finance Leases and Lease Financing Obligations

The Company enters into finance lease arrangements to obtain hard drives and related equipment for its data center operations. The term of these agreements primarily range from two to four years and certain of these arrangements have optional renewals to extend the term of the lease generally at a fixed price. Contingent rental payments are generally not included in the Company’s finance lease agreements. Finance leases are generally secured by the underlying leased equipment. The Company's finance leases have original lease periods expiring between 2024 and 2027. Finance leases are included in property and equipment, net on the Company’s condensed consolidated balance sheets.

As of September 30, 2024, the weighted average remaining lease term for finance lease and lease financing obligation agreements was 1.8 years and the weighted average discount rate for finance leases was 11.3%. As of December 31, 2023, the weighted average remaining lease term for finance lease and lease financing obligation agreements was 1.7 years and the weighted average discount rate for finance leases was approximately 11.0%.

The following table presents information regarding assets acquired through finance lease and lease financing obligation agreements, which are related to sale-leaseback agreements (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023

Depreciation expense	$	3,775	$	3,932	$	11,831	$	11,157
Total finance lease costs	$	3,704	$	4,390	$	11,601	$	12,547
Total interest expense included in finance lease costs	$	596	$	718	$	1,770	$	2,170
Total lease financing obligation costs	$	820	$	325	$	2,549	$	1,003
Total interest expense included in lease financing obligation costs	$	154	$	64	$	549	$	223
Cash paid on interest on finance lease and lease financing obligations	$	750	$	783	$	2,319	$	2,393

Depreciation expense on assets acquired through the Company’s finance leases and lease financing obligations is included in cost of revenue in its condensed consolidated statements of operations and comprehensive loss.

The future minimum commitments for these finance leases and lease financing obligations as of September 30, 2024 were as follows (in thousands):


Year Ending December 31,	Finance leases		Lease financing obligations		Total
Remainder of 2024	$	5,068	$	803	$	5,871
2025	13,079		2,921		16,000
2026	7,145		—		7,145
2027	2,431		—		2,431
2028	—		—		—
Thereafter	—		—		—
Total future minimum lease and financing commitments	27,723		3,724		31,447
Less imputed interest	(2,710)		(336)		(3,046)
Total finance lease and lease financing obligation liabilities	$	25,013	$	3,388	$	28,401