Annual report pursuant to Section 13 and 15(d)

LEASES

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LEASES
 12 Months Ended
Dec. 31, 2023
Leases [Abstract]  
LEASES LEASES
Lessee-type leases

The Company leases real estate, computer hardware, and vehicles for use in its operations under both operating and finance leases. The Company’s leases have remaining lease terms ranging from one to eight years. Most of these leases are non-cancelable and typically have a defined initial lease term, and some provide options to renew at the Company’s election for specified periods of time. Some leases require the Company to pay taxes, insurance, and maintenance expenses associated with the leased assets. The lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Supplemental disclosure related to operating and finance leases included on our consolidated balance sheets are set forth as follows:
December 31,
(in thousands) Classification on Consolidated Balance Sheets 2023 2022
Noncurrent assets:
Operating lease right-of-use assets Operating lease right-of-use assets $ 9,367  $ 10,019 
Finance lease right-of-use assets Property and equipment, net 127 250
Total $ 9,494  $ 10,269 
Current liabilities:
Operating lease liabilities Current portion of operating lease liabilities $ 1,446  $ 1,811 
Finance lease liabilities Accrued liabilities 106  115 
Noncurrent liabilities:
Operating lease liabilities Noncurrent portion of operating lease liabilities 9,446  9,275 
Finance lease liabilities Other noncurrent liabilities 21  135 
Total $ 11,019  $ 11,336 

The following table sets forth operating and finance lease cost for the years ended December 31, 2023 and 2022:


For the Year Ended December 31,
(in thousands) Classification on Statement of Operations 2023 2022
Operating lease cost Selling, general, and administrative expenses $ 4,120  $ 3,531 
Finance lease cost:
Amortization of leased assets Depreciation and amortization $ 241  $ 350 
Interest on lease liabilities Interest expense 9  17 
Total finance lease cost $ 250  $ 367 

The weighted-average remaining lease term and the weighted-average discount rate of our leases were as follows:

December 31,
2023 2022
Weighted average remaining lease term:
Operating leases 7.1 years 7.7 years
Finance leases 1.1 years 2.1 years
Weighted average discount rate:
Operating leases 8.0  % 7.6  %
Finance leases 5.6  % 5.5  %

The following table sets forth the future minimum lease payments under operating and finance leases subsequent to December 31, 2023:
(in thousands) Operating Leases Finance Leases
2024 $ 2,229  $ 109 
2025 2,079  25
2026 1,809  —
2027 1,832  —
2028 1,672  —
Thereafter 4,859  —
Total minimum lease payments $ 14,480  $ 134 
Interest (3,588) (7)
Total $ 10,892  $ 127 

Lessor-type leases

The Company entered into a long-term contract with a customer on August 1, 2023, which included certain hardware devices, on-site installation, maintenance, and connectivity services. The Company determined that this contract is a lease, and it is a lessor, under this contract. Ownership of the hardware devices component of the contract transfers to the lessee at the end of the 36-month lease for no additional consideration and the lease was therefore determined to be a sales-type lease. The hardware devices have no guaranteed or unguaranteed residual value, nor does the lease contain any variable consideration. The lease does not have any extension options. The remaining components of the transaction were determined to be non-lease components and are accounted for separately under the revenue recognition accounting guidance.

The components of lease income for the year ended December 31, 2023 are set forth as follows (1):

(in thousands) December 31, 2023
Selling profit $ 2,640 
Interest income (2)
$ 40 

(1) There were no lessor-type leases as of or for the year ended December 31, 2022.

(2) Interest income is included in the Company’s consolidated statement of operations in “interest income”.

The following table sets forth the Company’s future minimum rental receipts for this lease as of December 31, 2023 (1), the present value of which is included in “accounts receivable, net” in the Company’s consolidated balance sheets as of December 31, 2023:

(in thousands) December 31, 2023
2024 $ 989 
2025 988 
2026 787 
Total future minimum receipts $ 2,764 
Less: unearned interest income (285)
Net investment in sales-type lease $ 2,479 

(1) There were no lessor-type leases as of or for the year ended December 31, 2022.
LEASES LEASES
Lessee-type leases

The Company leases real estate, computer hardware, and vehicles for use in its operations under both operating and finance leases. The Company’s leases have remaining lease terms ranging from one to eight years. Most of these leases are non-cancelable and typically have a defined initial lease term, and some provide options to renew at the Company’s election for specified periods of time. Some leases require the Company to pay taxes, insurance, and maintenance expenses associated with the leased assets. The lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Supplemental disclosure related to operating and finance leases included on our consolidated balance sheets are set forth as follows:
December 31,
(in thousands) Classification on Consolidated Balance Sheets 2023 2022
Noncurrent assets:
Operating lease right-of-use assets Operating lease right-of-use assets $ 9,367  $ 10,019 
Finance lease right-of-use assets Property and equipment, net 127 250
Total $ 9,494  $ 10,269 
Current liabilities:
Operating lease liabilities Current portion of operating lease liabilities $ 1,446  $ 1,811 
Finance lease liabilities Accrued liabilities 106  115 
Noncurrent liabilities:
Operating lease liabilities Noncurrent portion of operating lease liabilities 9,446  9,275 
Finance lease liabilities Other noncurrent liabilities 21  135 
Total $ 11,019  $ 11,336 

The following table sets forth operating and finance lease cost for the years ended December 31, 2023 and 2022:


For the Year Ended December 31,
(in thousands) Classification on Statement of Operations 2023 2022
Operating lease cost Selling, general, and administrative expenses $ 4,120  $ 3,531 
Finance lease cost:
Amortization of leased assets Depreciation and amortization $ 241  $ 350 
Interest on lease liabilities Interest expense 9  17 
Total finance lease cost $ 250  $ 367 

The weighted-average remaining lease term and the weighted-average discount rate of our leases were as follows:

December 31,
2023 2022
Weighted average remaining lease term:
Operating leases 7.1 years 7.7 years
Finance leases 1.1 years 2.1 years
Weighted average discount rate:
Operating leases 8.0  % 7.6  %
Finance leases 5.6  % 5.5  %

The following table sets forth the future minimum lease payments under operating and finance leases subsequent to December 31, 2023:
(in thousands) Operating Leases Finance Leases
2024 $ 2,229  $ 109 
2025 2,079  25
2026 1,809  —
2027 1,832  —
2028 1,672  —
Thereafter 4,859  —
Total minimum lease payments $ 14,480  $ 134 
Interest (3,588) (7)
Total $ 10,892  $ 127 

Lessor-type leases

The Company entered into a long-term contract with a customer on August 1, 2023, which included certain hardware devices, on-site installation, maintenance, and connectivity services. The Company determined that this contract is a lease, and it is a lessor, under this contract. Ownership of the hardware devices component of the contract transfers to the lessee at the end of the 36-month lease for no additional consideration and the lease was therefore determined to be a sales-type lease. The hardware devices have no guaranteed or unguaranteed residual value, nor does the lease contain any variable consideration. The lease does not have any extension options. The remaining components of the transaction were determined to be non-lease components and are accounted for separately under the revenue recognition accounting guidance.

The components of lease income for the year ended December 31, 2023 are set forth as follows (1):

(in thousands) December 31, 2023
Selling profit $ 2,640 
Interest income (2)
$ 40 

(1) There were no lessor-type leases as of or for the year ended December 31, 2022.

(2) Interest income is included in the Company’s consolidated statement of operations in “interest income”.

The following table sets forth the Company’s future minimum rental receipts for this lease as of December 31, 2023 (1), the present value of which is included in “accounts receivable, net” in the Company’s consolidated balance sheets as of December 31, 2023:

(in thousands) December 31, 2023
2024 $ 989 
2025 988 
2026 787 
Total future minimum receipts $ 2,764 
Less: unearned interest income (285)
Net investment in sales-type lease $ 2,479 

(1) There were no lessor-type leases as of or for the year ended December 31, 2022.