Leases |
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| Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases | Leases The Company has operating leases primarily for its offices and warehouses, including the lease for its office headquarters in San Francisco, CA (the “HQ Lease”). The HQ Lease originally commenced in February 2019, with an original term of approximately 8 years and an option to renew for an additional 5 years. In March 2024, the Company entered into an amendment to this lease agreement (the “Lease Amendment”) to provide for, among other things, a
reduction of the amount of space being leased and of the monthly lease payments owed to the lessor. The Company concluded this was a partial termination of the existing lease agreement. Under the Lease Amendment, lease payments are made monthly and are subject to annual increases of approximately 1.5%.
In connection with the execution of the Lease Amendment, the Company paid an initial $4.8 million which was determined to be consideration for the remaining space being leased and was considered in remeasuring the Company's ROU asset and lease liability upon execution of the amendment. The Lease Amendment also requires the Company to make escalating undiscounted annual base rent payments of up to $0.4 million, payable monthly. The lease term under the Lease Amendment expires in May 2027. The Company previously recognized an impairment loss on the operating lease ROU asset related to this lease of $2.3 million in the year ended of December 31, 2023 due to ceasing use of certain portions of the underlying asset. Due to the remeasurement of the remaining operating lease liability and previously-impaired operating lease ROU asset, the Company recognized a gain of $3.1 million within selling, general and administrative expense within its consolidated statements of operations for the year ended December 31, 2024.
On July 2, 2024, the Company entered into a new lease agreement for a warehouse located in Reno, NV (the “Reno Lease”). Under the Reno Lease, the Company is required to make escalating undiscounted annual base rent payments of up to $2.0 million, payable monthly. The Reno Lease commenced on August 6, 2024 and expires on November 30, 2031. The Company has determined the Reno Lease qualifies as an operating lease.
The Company’s operating leases, including the leases previously mentioned, have remaining lease terms ranging between 2 and 7 years. These leases require monthly lease payments that may be subject to annual increases throughout the lease term. The components of lease expense included in the Company’s consolidated statements of operations for the years ended December 31, 2024 and 2023, include operating lease expense of $4.4 million and $6.3 million, respectively, and variable lease expense $1.1 million and $1.2 million, respectively. Variable lease expenses are primarily related to payments made to lessors for common area maintenance, property taxes, insurance, and other operating expenses and are classified as lease expense due to the Company’s election to not separate lease and non-lease components.
Cash paid for amounts included in the measurement of operating lease liabilities for the years ended December 31, 2024 and 2023 was $9.1 million and $6.6 million, respectively, which was included in net cash used in operating activities in the Company’s consolidated statements of cash flows. The Company obtained $6.5 million and $2.4 million of new operating lease right-of-use assets obtained in exchange for new operating lease liabilities during the year ended December 31, 2024 and 2023, respectively.
Maturities of operating lease liabilities were as follows (in thousands):
The following table summarizes additional information related to operating leases for the periods indicated:
Impairment The Company recorded $1.3 million of impairment charges related to the Company’s leases during the year ended December 31, 2024. During the year ended December 31, 2023, the Company recorded $2.3 million of impairment charges on its operating lease right-of-use assets related to the Company’s corporate office space located in San Francisco, California with the impairment expense being recorded within selling, general, and administrative on the consolidated statements of operations. The Company applied a discounted cash flow method to estimate fair values of its leasehold improvements and right-of-use assets to estimate the fair value of these assets. These represented level 3 nonrecurring fair value measurements.
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