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 March 31, 2023 and September 30, 2022:


	March 31, 2023			September 30, 2022
Weighted-average remaining lease term (in months):
Operating leases		40.8			46.5
Finance leases		30.5			35.6
Weighted-average discount rate:
Operating leases		4.1	%		3.7	%
Finance leases		4.4	%		4.4	%

Lease costs for minimum lease payments is recognized on a straight-line basis over the lease term. For operating leases, costs are included within Cost of revenues, Research and development, Sales and marketing, and General and administrative lines on the Condensed Consolidated Statements of Operations. For financing leases, amortization of the finance right of use assets is included within Research and development, Sales and marketing, and General and administrative lines on the Condensed Consolidated Statements of Operations, and interest expense is included within Interest expense.

The following table presents lease expense for the three and six months ended March 31, 2023 and 2022 (dollars in thousands):


	Three Months Ended March 31,						Six Months Ended March 31,
	2023			2022			2023			2022
Finance lease costs:
Amortization of right of use asset	$	108		$	109		$	216		$	218
Interest on lease liability		10			13			20			27
Operating lease cost		1,645			1,949			3,331			3,507
Variable lease cost		808			812			1,499			1,689
Sublease income		(48	)		(47	)		(93	)		(95	)
Total lease cost	$	2,523		$	2,836		$	4,973		$	5,346

For operating leases, the related cash payments are included in the operating cash flows on the Condensed Consolidated Statements of Cash Flows. For the three months ended March 31, 2023 and 2022, cash payments related to operating leases were $1.6 million and $1.8 million, respectively, and $3.4 million for the six months ended March 31, 2023 and 2022. For financing leases, the related cash payments for the principal portion of the lease liability are included in the financing cash flows on the Condensed Consolidated Statement of Cash Flows and the related cash payments for the interest portion of the lease liability are included within the operating section of the Condensed Consolidated Statement of Cash Flows. For the three months ended March 31, 2023 and 2022, cash payments related to financing leases were $0.2 million and $0.1 million, respectively, of which an immaterial amount related to the interest portion of the lease liability. For the six months ended March 31, 2023 and 2022, cash payments related to financing leases were $0.3 million, of which an immaterial amount related to the interest portion of the lease liability. For the three months ended March 31, 2023 and 2022, right of use assets obtained in exchange for lease obligations were $0.4 million and $3.9 million, respectively, and $2.9 million and $7.0 million for the six months ended March 31, 2023 and 2022.

The table below reconciles the undiscounted future minimum lease payments under non-cancelable leases to the total lease liabilities recognized on the Condensed Consolidated Balance Sheet as of March 31, 2023 (dollars in thousands):


Year Ending September 30,	Operating Leases			Financing Leases			Total
2023	$	3,372		$	207		$	3,579
2024		6,102			417			6,519
2025		4,235			362			4,597
2026		1,980			53			2,033
2027		1,524			—			1,524
Thereafter		825			—			825
Total future minimum lease payments	$	18,038		$	1,039		$	19,077
Less effects of discounting		(1,086	)		(45	)		(1,131	)
Total lease liabilities	$	16,952		$	994		$	17,946
Reported as of March 31, 2023
Short-term lease liabilities	$	6,003		$	387		$	6,390
Long-term lease liabilities		10,949			607			11,556
Total lease liabilities	$	16,952		$	994		$	17,946