Leases

9 Months Ended

Sep. 30, 2025

We lease office facilities, transportation, and other equipment for use in our operations. Most of our leases are non-cancelable operating lease agreements with remaining terms of one to 10 years. Some of these leases include options to extend for up to six years. We have no finance leases as of September 30, 2025. Right-of-use lease assets and lease liabilities for our operating leases are recorded in the condensed consolidated balance sheets.

The components of operating lease expense were as follows:


Lease Costs	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Operating lease cost	$	3,047	$	2,284	$	7,893	$	6,695
Short-term lease cost	448		510		1,518		1,583
Variable lease cost	276		219		683		593
Net lease cost	$	3,771	$	3,013	$	10,094	$	8,871

Supplemental information related to leases is as follows:


Other Information	Nine Months Ended September 30,
	2025			2024
Cash flows:
Cash paid amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases	$	9,341		$	9,456

Right-of-use assets obtained in exchange for lease obligations (non-cash):
Operating leases	$	11,920		$	2,865

Lease term and discount rate:
Weighted average remaining lease term (years)	5.8			6.4
Weighted average discount rate	3.54		%	1.71		%

Rental income from third parties

We own office buildings in Falmouth, Yarmouth and Orono, Maine; Lubbock and Plano, Texas; Troy, Michigan; Latham, New York; Moraine, Ohio; and Kingston Springs, Tennessee. We lease space in some of these buildings to third-party tenants. The property we lease to others under operating leases consists primarily of specific facilities where one tenant obtains substantially all of the economic benefit from the asset and has the right to direct the use of the asset. These non-cancelable leases expire between 2025 and 2035, and some have options to extend the lease for up to 10 years. We determine if an arrangement is a lease at inception. None of our leases allow the lessee to purchase the leased asset.

Rental income from third-party tenants for the three and nine months ended September 30, 2025, totaled $454,000 and $2.1 million, respectively, and for the three and nine months ended September 30, 2024, totaled $809,000 and $2.4 million, respectively. Rental income is included in hardware and other revenue on the condensed consolidated statements of income. As of September 30, 2025, future minimum operating rental income based on contractual agreements is as follows:


Year ending December 31,	Amount
2025 (Remaining)	$	668
2026	2,538
2027	2,276
2028	2,029
2029	1,355
Thereafter	5,581
Total	$	14,447

Leases

The components of operating lease expense were as follows:


Lease Costs	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Operating lease cost	$	3,047	$	2,284	$	7,893	$	6,695
Short-term lease cost	448		510		1,518		1,583
Variable lease cost	276		219		683		593
Net lease cost	$	3,771	$	3,013	$	10,094	$	8,871

Supplemental information related to leases is as follows:


Other Information	Nine Months Ended September 30,
	2025			2024
Cash flows:
Cash paid amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases	$	9,341		$	9,456

Right-of-use assets obtained in exchange for lease obligations (non-cash):
Operating leases	$	11,920		$	2,865

Lease term and discount rate:
Weighted average remaining lease term (years)	5.8			6.4
Weighted average discount rate	3.54		%	1.71		%

Rental income from third parties


Year ending December 31,	Amount
2025 (Remaining)	$	668
2026	2,538
2027	2,276
2028	2,029
2029	1,355
Thereafter	5,581
Total	$	14,447

TYLER TECHNOLOGIES INC 10-Q