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Leases

9 Months Ended

Sep. 30, 2025

Leases [Abstract]

Leases

Leases

The Company generally enters into finance lease arrangements to obtain hard drives and related equipment for its data center operations. The terms of these agreements generally 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. Finance leases are generally secured by the underlying leased equipment. The Company's finance leases have original lease periods expiring between 2025 and 2029. Financing lease right-of-use assets are included in property and equipment, net in the Company’s condensed consolidated balance sheets.

The Company leases data center spaces and office space under non-cancelable operating leases with various expiration dates. Certain lease agreements include renewal options to extend the lease term at a price to be determined upon exercise. These options are not reasonably certain to be exercised and therefore are not factored in the determination of lease payments. Contingent rental payments are generally not included in the Company’s lease agreements. The Company’s

lease agreements do not contain any material residual value guarantees or restrictive covenants. The Company's leases have original lease periods expiring between 2026 and 2033.

The weighted average remaining lease terms and discount rates as of September 30, 2025 and December 31, 2024 were as follows:

			September 30, 2025												December 31, 2024
			Operating leases						Finance Leases(1)						Operating leases						Finance Leases(1)
Remaining lease term			5.6 years						2.4 years						4.4 years						1.9 years
Discount rate			6.9		%				12.3		%				7.2		%				11.9		%

________________

(1) Includes lease financing obligation costs.

The following table presents the components of lease expense (in thousands):

			Three Months Ended September 30,												Nine Months Ended September 30,
			2025						2024(1)						2025						2024
Finance lease costs
Depreciation expense(2)			$	2,033					$	3,775					$	6,879					$	11,831
Interest expense			$	792					$	596					$	2,325					$	1,770
Lease financing obligation costs
Depreciation expense(2)			$	246					$	666					$	1,088					$	2,000
Interest expense			$	39					$	154					$	211					$	549
Operating lease costs
Rental expense related to lease components			$	1,779					$	929					$	4,248					$	2,285
Rental expense related to non-lease components(3)			914						1,227						3,140						3,768
Variable lease costs			1,240						1,034						3,557						2,945
Total operating lease costs			$	3,933					$	3,190					$	10,945					$	8,998
Total included in cost of revenue			$	3,730					$	2,893					$	10,275					$	8,122
Total included in general and administrative expense			$	203					$	297					670						$	876

________________

(1) The presentation of prior period data has been revised to conform to current year presentation. There have been no changes to the reported amounts, rather certain amounts have been disaggregated to further improve clarity and transparency.

(2) Substantially all of the 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.

(3) Non-lease components are related to non-tangible utilities and services used in the Company’s co-location data center spaces, which are not recorded on the Company’s condensed consolidated balance sheets. The Company used judgment and third-party data in determining the stand-alone price for allocating consideration to lease and non-lease components under these co-location lease agreements, such as the price of utilities as compared to its tangible data center footprint within each co-location facility.

The following table presents supplemental cash flow information relating to the Company’s leases (in thousands):

			Nine Months Ended September 30,
			2025						2024
Operating cash flows
Cash paid for interest on finance lease and lease financing obligations			$	2,626					$	2,319
Cash paid for operating lease liabilities			$	4,144					$	2,041
Non-cash items
Equipment acquired through finance leases			$	19,901					$	11,355
Right-of-use assets obtained in exchange for operating lease obligations			$	12,469					$	7,457

The future minimum commitments for finance leases and lease financing obligations as of September 30, 2025 were as follows (in thousands):

Year Ending December 31,			Finance leases						Lease financing obligations						Total
Remainder of 2025			$	4,949					$	502					$	5,451
2026			16,484						249						16,733
2027			12,163						—						12,163
2028			4,315						—						4,315
2029			3,081						—						3,081
Total future minimum lease and financing commitments			40,992						751						41,743
Less imputed interest			(6,258)						(25)						(6,283)
Total finance lease and lease financing obligation liabilities			$	34,734					$	726					$	35,460

As of September 30, 2025, the Company's future minimum obligations for operating leases and non-cancellable contractual commitments related to non-lease components were as follows (in thousands):

Year Ending December 31,			Operating leases						Non-lease components						Total
Remainder of 2025			$	1,443					$	1,429					$	2,872
2026			6,576						4,092						10,668
2027			5,604						3,075						8,679
2028			5,266						3,081						8,347
2029			4,163						2,560						6,723
Thereafter			8,687						1,460						10,147
Total future minimum operating lease commitments			31,739						$	15,697					$	47,436
Less imputed interest			(5,518)
Total liability			$	26,221

In June 2025, the Company amended an existing lease for a data center facility to (i) extend the non-cancellable term of the original lease and (ii) expand into additional infrastructure designed to support multiple-storage offerings. This expansion is expected to commence in the second quarter of 2026 and includes a non-cancellable lease term of approximately seven years. The original lease term was also extended to align with this period.

The multi-storage data center space is considered a separate asset class from the original co-location infrastructure due to its differentiated architectural characteristics, service delivery model, and operational risk profile. The lease and non-lease components of this new asset class are combined in accordance with the Company’s established lease accounting policy. The Company’s current asset classes of operating lease agreements include rentals of (i) office space, (ii) multi-storage data center spaces, and (iii) co-location data center spaces. The Company refers to multi-storage data center spaces and co-location data center spaces collectively as “data center spaces.”

The Company accounted for the lease amendment as a modification under ASC 842. The amendment consists of two components: (i) an extension of the original lease term, which was remeasured as of the modification date, and (ii) a lease for additional, distinct space, which will be accounted for as a separate lease component and measured at its commencement date in the second quarter of 2026. The Company applied an incremental borrowing rate (“IBR”) of 6.8% to remeasure the lease liability. The IBR was estimated based on current market rates for secured borrowings with similar terms and adjusted for the Company’s credit profile. The lease amendment increased total undiscounted minimum lease payments by approximately $34.5 million, of which $17.5 million relates to the expanded space.

Lessee, Operating Leases

Leases

The Company generally enters into finance lease arrangements to obtain hard drives and related equipment for its data center operations. The terms of these agreements generally 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. Finance leases are generally secured by the underlying leased equipment. The Company's finance leases have original lease periods expiring between 2025 and 2029. Financing lease right-of-use assets are included in property and equipment, net in the Company’s condensed consolidated balance sheets.

The Company leases data center spaces and office space under non-cancelable operating leases with various expiration dates. Certain lease agreements include renewal options to extend the lease term at a price to be determined upon exercise. These options are not reasonably certain to be exercised and therefore are not factored in the determination of lease payments. Contingent rental payments are generally not included in the Company’s lease agreements. The Company’s

lease agreements do not contain any material residual value guarantees or restrictive covenants. The Company's leases have original lease periods expiring between 2026 and 2033.

The weighted average remaining lease terms and discount rates as of September 30, 2025 and December 31, 2024 were as follows:

			September 30, 2025												December 31, 2024
			Operating leases						Finance Leases(1)						Operating leases						Finance Leases(1)
Remaining lease term			5.6 years						2.4 years						4.4 years						1.9 years
Discount rate			6.9		%				12.3		%				7.2		%				11.9		%

________________

(1) Includes lease financing obligation costs.

The following table presents the components of lease expense (in thousands):

			Three Months Ended September 30,												Nine Months Ended September 30,
			2025						2024(1)						2025						2024
Finance lease costs
Depreciation expense(2)			$	2,033					$	3,775					$	6,879					$	11,831
Interest expense			$	792					$	596					$	2,325					$	1,770
Lease financing obligation costs
Depreciation expense(2)			$	246					$	666					$	1,088					$	2,000
Interest expense			$	39					$	154					$	211					$	549
Operating lease costs
Rental expense related to lease components			$	1,779					$	929					$	4,248					$	2,285
Rental expense related to non-lease components(3)			914						1,227						3,140						3,768
Variable lease costs			1,240						1,034						3,557						2,945
Total operating lease costs			$	3,933					$	3,190					$	10,945					$	8,998
Total included in cost of revenue			$	3,730					$	2,893					$	10,275					$	8,122
Total included in general and administrative expense			$	203					$	297					670						$	876

________________

(1) The presentation of prior period data has been revised to conform to current year presentation. There have been no changes to the reported amounts, rather certain amounts have been disaggregated to further improve clarity and transparency.

(2) Substantially all of the 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.

(3) Non-lease components are related to non-tangible utilities and services used in the Company’s co-location data center spaces, which are not recorded on the Company’s condensed consolidated balance sheets. The Company used judgment and third-party data in determining the stand-alone price for allocating consideration to lease and non-lease components under these co-location lease agreements, such as the price of utilities as compared to its tangible data center footprint within each co-location facility.

The following table presents supplemental cash flow information relating to the Company’s leases (in thousands):

			Nine Months Ended September 30,
			2025						2024
Operating cash flows
Cash paid for interest on finance lease and lease financing obligations			$	2,626					$	2,319
Cash paid for operating lease liabilities			$	4,144					$	2,041
Non-cash items
Equipment acquired through finance leases			$	19,901					$	11,355
Right-of-use assets obtained in exchange for operating lease obligations			$	12,469					$	7,457

The future minimum commitments for finance leases and lease financing obligations as of September 30, 2025 were as follows (in thousands):

Year Ending December 31,			Finance leases						Lease financing obligations						Total
Remainder of 2025			$	4,949					$	502					$	5,451
2026			16,484						249						16,733
2027			12,163						—						12,163
2028			4,315						—						4,315
2029			3,081						—						3,081
Total future minimum lease and financing commitments			40,992						751						41,743
Less imputed interest			(6,258)						(25)						(6,283)
Total finance lease and lease financing obligation liabilities			$	34,734					$	726					$	35,460

As of September 30, 2025, the Company's future minimum obligations for operating leases and non-cancellable contractual commitments related to non-lease components were as follows (in thousands):

Year Ending December 31,			Operating leases						Non-lease components						Total
Remainder of 2025			$	1,443					$	1,429					$	2,872
2026			6,576						4,092						10,668
2027			5,604						3,075						8,679
2028			5,266						3,081						8,347
2029			4,163						2,560						6,723
Thereafter			8,687						1,460						10,147
Total future minimum operating lease commitments			31,739						$	15,697					$	47,436
Less imputed interest			(5,518)
Total liability			$	26,221

In June 2025, the Company amended an existing lease for a data center facility to (i) extend the non-cancellable term of the original lease and (ii) expand into additional infrastructure designed to support multiple-storage offerings. This expansion is expected to commence in the second quarter of 2026 and includes a non-cancellable lease term of approximately seven years. The original lease term was also extended to align with this period.

The multi-storage data center space is considered a separate asset class from the original co-location infrastructure due to its differentiated architectural characteristics, service delivery model, and operational risk profile. The lease and non-lease components of this new asset class are combined in accordance with the Company’s established lease accounting policy. The Company’s current asset classes of operating lease agreements include rentals of (i) office space, (ii) multi-storage data center spaces, and (iii) co-location data center spaces. The Company refers to multi-storage data center spaces and co-location data center spaces collectively as “data center spaces.”

The Company accounted for the lease amendment as a modification under ASC 842. The amendment consists of two components: (i) an extension of the original lease term, which was remeasured as of the modification date, and (ii) a lease for additional, distinct space, which will be accounted for as a separate lease component and measured at its commencement date in the second quarter of 2026. The Company applied an incremental borrowing rate (“IBR”) of 6.8% to remeasure the lease liability. The IBR was estimated based on current market rates for secured borrowings with similar terms and adjusted for the Company’s credit profile. The lease amendment increased total undiscounted minimum lease payments by approximately $34.5 million, of which $17.5 million relates to the expanded space.

X

- References

No definition available.

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- Definition

The entire disclosure for finance leases of lessee. Includes, but is not limited to, description of lessee's finance lease and maturity analysis of finance lease liability.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 842
-SubTopic 20
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org/842-20/tableOfContent

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- Definition

The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 842
-SubTopic 20
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org/842-20/tableOfContent

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