LEASES
The Group leases its office space and warehouse facilities under non-cancelable leases with various expiration dates. The Group also has equipment that is leased under non-cancelable finance leases. The Group considers various factors such as market conditions and the terms of any renewal options that may exist to determine whether it will renew or replace the lease. In the event the Group is reasonably certain to exercise the option to extend a lease, the Group will include the extended terms in the operating lease right-of-use asset and operating lease liability. Certain fulfillment center storage shelves and certain forklifts used in the fulfillment centers are leased under finance leases, which have a fixed lease term of one to five years from the lease commencement dates. Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Group recognizes lease expense for these leases on a straight-line basis over the lease term.
The gross amounts of assets and liabilities related to both operating and finance leases were as follows:
| | | | | | | | | | | | | | | | | |
| | | December 31, |
| Balance Sheet Caption | | 2025 | | 2024 |
| | | (In thousands) |
| Assets: | | | | | |
| Operating lease right-of-use assets | Operating lease right-of-use assets | | $ | 431,455 | | | $ | 451,930 | |
| Finance lease right-of-use assets | Property and equipment, net | | 1,277 | | | 546 | |
| Total right-of-use assets | | | $ | 432,732 | | | $ | 452,476 | |
| | | | | | | | | | | | | | | | | |
| | | December 31, |
| Balance Sheet Caption | | 2025 | | 2024 |
| | | (In thousands) |
| Liabilities: | | | | | |
| Current: | | | | | |
| Operating lease liabilities | Current operating lease liabilities | | $ | (100,326) | | | $ | (88,521) | |
| Finance lease liabilities | Accrued expenses and other current liabilities | | (344) | | | (140) | |
| Non-current: | | | | | |
| Operating lease liabilities | Operating lease liabilities, non-current | | (368,321) | | | (395,235) | |
| Finance lease liabilities | Finance lease obligations, non-current | | (690) | | | (382) | |
| Total lease liabilities | | | $ | (469,681) | | | $ | (484,278) | |
The components of lease cost were as follows:
| | | | | | | | | | | |
| Year ended December 31, |
| 2025 | | 2024 |
| (In thousands) |
| Operating lease cost | $ | 113,355 | | | $ | 102,841 | |
| Finance lease cost | | | |
| Amortization of right-of-use assets | 205 | | 436 |
| Interest on lease liabilities | 63 | | 153 |
| Short-term lease costs | 242 | | 699 |
| Total | $ | 113,865 | | | $ | 104,129 | |
Lease terms and discount rates are as follows:
| | | | | | | | | | | |
| December 31, |
| 2025 | | 2024 |
| Weighted average remaining lease term (years): | | | |
| Operating leases | 4.68 | | 5.41 |
| Finance leases | 3.46 | | 3.62 |
| Weighted average discount rate: | | | |
| Operating leases | 3.29 | % | | 3.22 | % |
| Finance leases | 7.57 | % | | 10.54 | % |
Future minimum lease payments as of December 31, 2025, including rental payments for lease renewal options the Group is reasonably certain to exercise were as follows:
| | | | | | | | | | | |
| | Operating leases | | Finance leases |
| | (In thousands) |
| Maturity of Lease Liabilities | | | |
| 2026 | $ | 115,861 | | | $ | 395 | |
| 2027 | 116,269 | | | 291 | |
| 2028 | 109,594 | | | 206 | |
| 2029 | 79,262 | | | 155 | |
| 2030 | 41,946 | | | 86 | |
| Thereafter | 53,123 | | | — | |
| Total lease payments | 516,055 | | | 1,133 | |
| Less: imputed interest | (47,408) | | | (99) | |
| Present value of lease liabilities | $ | 468,647 | | | $ | 1,034 | |
Supplemental cash flow information related to leases was as follows:
| | | | | | | | | | | |
| Year ended December 31, |
| 2025 | | 2024 |
| (In thousands) |
| Cash paid for amounts included in the measurement of lease liabilities | | | |
| Operating cash flows from operating leases | $ | 108,018 | | | $ | 74,729 | |
| Operating cash flows from finance leases | 63 | | | 153 | |
| Financing cash flows from finance leases | 377 | | | 1,726 | |
| Right-of-use assets obtained in exchange for lease obligations * | | | |
| Operating leases | 74,059 | | | 143,259 | |
| Finance leases | $ | 1,080 | | | $ | 767 | |
*This supplemental non-cash disclosure for right of use assets obtained in exchange for new lease liabilities refers to an increase in lease liabilities associated with obtaining new right of use assets.
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.