Leases

The Company leases its corporate offices, retail spaces and authentication centers under various noncancelable operating leases with terms ranging from one year to fifteen years.

The Company recorded operating lease costs of $21.5 million, $20.9 million and $22.8 million for the years ended December 31, 2025, 2024 and 2023, respectively. The Company incurred $5.5 million of variable lease costs for the years ended December 31, 2025, 2024 and $5.2 million for the year ended December 31, 2023, which is comprised primarily of the Company’s proportionate share of operating expenses, property taxes and insurance.

Due to the office and store closures in the year ended December 31, 2023, the Company reviewed its right-of-use assets for impairment. Impairment losses are measured and recorded for the excess of carrying value over its fair value, estimated based on expected future cash flows using discount rate and other quantitative and qualitative factors. As a result, the Company recorded $31.1 million related to the impairment of certain office and store right-of-use assets during the year ended December 31, 2023. No impairment charges were recorded during the years ended December 31, 2025 and December 31, 2024. The impairment charges are included in restructuring in the statements of operations.

During the year ended December 31, 2023, the Company entered into agreements to amend certain of its operating leases. The Company treated the lease termination amendments as lease modifications for accounting purposes as of the applicable effective dates of such terminations which resulted in a decrease of $7.7 million to the related lease liabilities, and a decrease of $1.4 million to the related right-of-use assets for the year ended December 31, 2023. The Company

recorded a net gain on the lease terminations of $0.7 million during the year ended December 31, 2023. The net gain on lease terminations is included in restructuring in the statements of operations.

As of December 31, 2025, maturities of operating lease liabilities by fiscal year for the Company’s operating leases are as follows (in thousands):


Fiscal Year	Amount
2026	$	30,063
2027	26,610
2028	23,707
2029	13,384
2030	8,254
Thereafter	2,611
Total future minimum payments (1)	$	104,629
Less: Imputed interest	(13,191)
Present value of operating lease liabilities	$	91,438

(1) Total future minimum payments excludes $2.1 million of future payments required under a signed lease agreement that has not yet commenced.

Supplemental cash flow information related to the Company’s operating leases are as follows (in thousands):


	Year ended December 31,
	2025		2024		2023
Operating cash flows used for operating leases	$	28,807	$	27,939	$	34,118
Operating lease assets obtained in exchange for operating lease liabilities (including remeasurement of right-of-use assets and lease liabilities due to lease modifications)	$	4,997	$	4,558	$	6,272

The weighted average remaining lease term and discount rate for the Company’s operating leases are as follows:


	As of December 31, 2025		As of December 31, 2024
Weighted average remaining lease term	3.9 years		4.6 years
Weighted average discount rate	7.0	%	6.2	%

The Company has leases for certain vehicles and equipment that are classified as finance leases. The finance lease right-of-use asset and finance lease liabilities for these vehicle and equipment leases are immaterial as of December 31, 2025 and 2024.

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.

TheRealReal, Inc. Leases Disclosure

About Leases Disclosures

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