Leases
The Company’s lease portfolio includes both real estate and non-real estate type leases which are accounted for as either finance or operating leases. Real estate leases generally include office and warehouse facilities and non-real estate leases generally include office equipment and machinery. The Company determines if a contract is or contains a lease at inception. The Company’s leases have remaining lease terms of less than one to less than six years.
In connection with two of the Company’s facility leases, the Company is required to obtain irrevocable letters of credit in lieu of security deposits. The letters of credit totaled $1.5 million and $2.5 million as of December 31, 2025 and 2024, respectively, and expire within a set number of days after the expirations of the facilities leases. In connection with one of the Company’s office facility lease, following the fourth year of the lease, the letter of credit balance can be reduced annually by a stated amount in the lease agreement, so long as the Company complies with certain covenants. In connection with the Company’s warehouse lease, the letter of credit balance is reduced annually by a stated amount in the lease agreement, so long as the Company complies with certain covenants.
The components of lease expense were as follows (in thousands):
| | | | | | | | | | | | | | | | | |
| For the year ended December 31, |
| 2025 | | 2024 | | 2023 |
| Finance lease expense: | | | | | |
| Amortization | $ | — | | | $ | 8 | | | $ | 50 | |
| | | | | |
| Operating lease expense: | | | | | |
| | | | | |
Operating lease expense(1) | 7,195 | | | 7,168 | | | 7,168 | |
| Sublease income | (2,006) | | | (2,006) | | | (2,006) | |
| Total lease expense, net | $ | 5,189 | | | $ | 5,170 | | | $ | 5,212 | |
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(1) Represents the straight-line lease expense of operating leases, inclusive of amortization of ROU assets and the interest component of operating lease liabilities.
Based on the nature of the ROU assets, amortization of finance leases and amortization of operating ROU assets, operating lease expense and other lease expense are recorded within either cost of revenue or selling, general and administrative expenses and interest on finance lease liabilities is recorded within interest and other expense, net in the consolidated statements of comprehensive loss.
The following tables set forth the amount of lease assets and lease liabilities included in the Company’s consolidated balance sheets (in thousands):
| | | | | | | | | | | | | | | | | | | | |
| | | | As of December 31, |
| Assets | | Financial Statement Line Item | | 2025 | | 2024 |
| | | | | | |
| Operating lease assets | | Operating lease right-of-use asset | | $ | 11,351 | | | $ | 17,239 | |
| Total lease assets | | | | $ | 11,351 | | | $ | 17,239 | |
| Liabilities | | | | |
| Current | | | | | | |
| | | | | | |
| Operating lease liabilities | | Accrued expenses | | 9,042 | | | 8,541 | |
| Non-current | | | | | | |
| | | | | | |
| Operating lease liabilities | | Operating lease liabilities, net of current portion | | 4,919 | | | 13,197 | |
| Total lease liabilities | | | | $ | 13,961 | | | $ | 21,738 | |
Supplemental information related to the Company’s leases for the year ended December 31, 2025 was as follows:
| | | | | | | | | | | |
| For the year ended December 31, |
| 2025 | | 2024 |
| Weighted-average remaining lease term (in years) | | | |
| | | |
| Operating leases | 1.8 | | 2.5 |
| Weighted-average discount rate | | | |
| | | |
| Operating leases | 2.45 | % | | 2.29 | % |
| Cash paid for amounts included in the measurement of lease liabilities (in thousands) | | | |
| | | |
| Operating cash flows used in operating leases | $ | 8,943 | | | $ | 8,105 | |
| Financing cash flows used in finance leases | $ | 1 | | | $ | 19 | |
During the year ended December 31, 2025, ROU assets obtained in exchange for new operating lease liabilities were $0.8 million. During the year ended December 31, 2025, the Company did not have any finance leases.
Future minimum lease payments required under operating leases as of December 31, 2025, were as follows (in thousands):
| | | | | | | |
| Operating Leases | | |
| 2026 | $ | 9,291 | | | |
| 2027 | 4,414 | | | |
| 2028 | 184 | | | |
| 2029 | 190 | | | |
| 2030 | 195 | | | |
| Thereafter | 67 | | | |
| Future minimum lease payments | $ | 14,341 | | | |
| Less: Amount representing interest | (380) | | | |
| Present value of future lease payments | $ | 13,961 | | | |