LEASES
The Company has operating lease agreements for its office space, retail stores, fulfillment center and fulfillment center equipment. The Company’s lease agreements have initial terms that expire between 2028 and 2035. Certain of the Company’s lease agreements include rent abatement periods, escalating rent payment provisions, and provide for an option to extend or terminate the lease.
On December 9, 2025, the Company entered into a first amendment (the “First Lease Amendment”) to the lease of its headquarters in Santa Monica, California (the “Building”), dated as of November 26, 2018, which was originally expected to expire by its terms on January 31, 2030. The First Lease Amendment provides, among other things, that the Company will relocate from the ground floor and into a different office space on the fourth floor of the Building and for an extension of the lease term as described therein. The Company accounted for the First Lease Amendment as a lease modification under ASC 842.
The Company had a sublease agreement classified as an operating lease for additional office space, which expired in January 2026.
The operating lease and sublease agreements included in the measurement of lease liabilities do not reflect options to extend or terminate, as the Company does not consider the exercise of these options to be reasonably certain. The Company’s lease and sublease agreements do not contain any material residual value guarantees or material restrictive covenants.
The Company recognizes operating lease expense on a straight-line basis over the lease term. Operating lease expense for the years ended December 31, 2025, 2024, and 2023 was $13.4 million, $11.6 million, and $4.2 million, respectively. Short-term lease expense for the years ended December 31, 2025 and 2024, and 2023 was $2.3 million, $6.4 million, and $9.2 million, respectively.
Cash payments included in the measurement of operating lease liabilities were $12.7 million for the year ended December 31, 2025. Right of use assets obtained in exchange for operating lease liabilities were $16.6 million for the year ended December 31, 2025.
As the rates implicit in the Company’s outstanding leases are not determinable, the Company uses its incremental borrowing rate based on information available on the lease commencement date to determine the present value of lease payments.
The weighted-average remaining lease term and weighted-average discount rate related to the Company’s operating leases at December 31, 2025 were as follows:
| | | | | |
| Weighted-average remaining lease term | 6.0 years |
| Weighted-average discount rate | 7.2 | % |
Future undiscounted lease payments, and a reconciliation of these payments to the Company’s operating lease liabilities at December 31, 2025, were as follows (in thousands):
| | | | | |
| Year ended December 31, | |
| 2026 | $ | 11,384 | |
| 2027 | 13,452 | |
| 2028 | 13,841 | |
| 2029 | 10,235 | |
| 2030 | 10,537 | |
| Thereafter | 15,431 | |
| Total lease payments | $ | 74,880 | |
| Less: Imputed interest | (14,876) | |
| Total lease liabilities | $ | 60,004 | |