Leases

3 Months Ended

May 04, 2025

We lease office and data center facilities under non-cancelable operating lease agreements expiring through July 2032. Our lease agreements do not contain any material residual value guarantees or restrictive covenants.

We also lease certain engineering test equipment under financing agreements. These finance leases have a lease term of three to five years and contain a bargain purchase option that we have exercised or expect to exercise at the end of the respective lease terms.

The components of lease costs during the periods presented were as follows (in thousands):


	First Quarter of Fiscal
	2025		2026
Fixed operating lease cost	$	10,989	$	12,867

Variable lease cost (1)	3,592		2,033
Short-term lease cost (12 months or less)	897		1,126

Finance lease cost:
Amortization of finance lease right-of-use assets	1,100		531
Interest on finance lease liabilities	63		11
Total finance lease cost	$	1,163	$	542

Total lease cost	$	16,641	$	16,568

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(1) Variable lease cost predominantly included common area maintenance charges.

Supplemental information related to leases is as follows (in thousands):


	At the End of
	Fiscal 2025			First Quarter of Fiscal 2026
Operating leases:
Weighted-average remaining lease term (in years)	4.9			4.7
Weighted-average discount rate	7.4		%	7.4		%

Finance leases:


Finance lease right-of-use assets, net (1)	$	5,555		$	5,377

Finance lease liabilities, current (2)	$	387		$	297
Finance lease liabilities, non-current (3)	—			788
Total finance lease liabilities	$	387		$	1,085
Weighted-average remaining lease term (in years)	1.0			4.7
Weighted-average discount rate	3.3		%	5.8		%

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(1) Included in the condensed consolidated balance sheets within property and equipment, net.

(2) Included in the condensed consolidated balance sheets within accrued expenses and other liabilities.

(3) Included in the condensed consolidated balance sheets within other liabilities, non-current.

Supplemental cash flow information related to leases is as follows (in thousands):


	First Quarter of Fiscal
	2025		2026
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows for operating leases	$	9,169	$	16,369
Financing cash outflows for finance leases	$	802	$	1,046
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases	$	7,885	$	1,473
Finance leases	$	—	$	1,306

Future lease payments under our non-cancelable leases at the end of the first quarter of fiscal 2026 are as follows (in thousands):


Fiscal Years Ending	Operating Leases		Finance Leases
Remainder of 2026	$	40,882	$	64
2027	37,671		293
2028	40,038		293
2029	32,249		293
2030	28,920		293
Thereafter	24,775		—
Total future lease payments	204,535		1,236
Less: imputed interest	(33,534)		(151)
Present value of total lease liabilities	$	171,001	$	1,085

Lessor Arrangement

We, as a lessor, have entered into non-cancelable arrangements to lease our data storage solutions and subscription services. The arrangements include multiple seven-year leases that either commenced during fiscal 2025 or will commence in fiscal 2026 with total net consideration of $217.5 million. The arrangements provide an end-of-term option to purchase the leased assets for a pre-determined price.

We determined, at inception of the respective arrangements, that each of the leases include sales-type leases, an operating lease, and non-lease components. The non-lease components are comprised of subscription support services and professional services. The total net consideration for each lease was allocated to these components based on relative standalone selling price. The amounts allocated to the lease and non-lease components are accounted for in accordance with ASC 842 and ASC 606, respectively.

We recognized $7.2 million in product revenue related to a sales-type lease component during the first quarter of fiscal 2025. The associated profit was $5.3 million based on the product revenue recognized less certain costs, during the first quarter of fiscal 2025. No product revenue was recognized during the first quarter of fiscal 2026. Subscription services revenue related to the operating lease and non-lease components recognized during the first quarter of fiscal 2025 and 2026 was not material and $7.2 million.

Future minimum gross lease payments for the leases that have commenced allocated to the sales-type leases and operating lease components are as follows (in thousands). The remaining lease payments of $95.7 million allocated to the non-lease components, are excluded from the table below.


Fiscal Years Ending	Sales-Type Leases		Operating Lease
The remainder of 2026	$	7,993	$	4,095
2027	8,990		4,749
2028	11,434		2,304
2029	13,738		—
2030	13,738		—
Thereafter	20,985		—


Total future lease payments to be received	$	76,878	$	11,148