Vroom, Inc. Leases Disclosure
12. Leases
The Company’s leasing activities primarily consist of real estate leases for its operations, primarily related to office space and equipment used in the normal course of business. The real estate leases have terms ranging from to eight years. The Company assesses whether each lease is an operating or finance lease at the lease commencement date. The Company does not have any material leases, individually or in the aggregate, classified as a finance leasing arrangement.
The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.
The Company’s real estate leases often require it to make payments for maintenance in addition to rent, as well as payments for real estate taxes and insurance. Maintenance, real estate taxes, and insurance payments are generally variable costs which are based on actual expenses incurred by the lessor. Therefore, these amounts are not included in the consideration of the contract when determining the right-of-use asset and lease liability but are reflected as variable lease expenses.
Leases with an initial term of 12 months or less are not recorded on the Company’s consolidated balance sheet and expense for these leases are recognized on a straight-line basis over the lease term.
Options to extend or terminate leases
Certain of the Company’s real estate leases include one or more options to renew, with renewal terms that can extend the lease term from to five years. The exercise of lease renewal options is at the Company’s sole discretion. If it is reasonably certain that the Company will exercise such options, the periods covered by such options are included in the lease term and are recognized as part of the Company’s right-of-use assets and lease liabilities. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.
Lease term and discount rate
The weighted-average remaining lease term and discount rate for the Company’s operating leases, excluding short-term operating leases, were 5.4 years and 8.0% as of December 31, 2025, respectively, and 6.0 years and 7.9% as of December 31, 2024, respectively.
As the rate implicit in the lease is generally not readily determinable for the Company’s operating leases, the discount rates used to determine the present value of the Company’s lease liabilities are based on the Company’s incremental borrowing rate at the lease commencement date and commensurate with the remaining lease term. The incremental borrowing rate for a lease is the rate of interest the Company would have to pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments in a similar economic environment. The Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.
Lease costs and activity
The Company’s lease costs and activity for the years ended December 31, 2025 and 2024 were as follows (in thousands):
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Period from January 15 through December 31, |
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Year Ended |
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2025 |
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2024 |
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Lease Cost |
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Operating lease cost |
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1,975 |
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|
2,063 |
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Short-term lease cost |
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65 |
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39 |
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Variable lease cost |
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637 |
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|
671 |
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Sublease income |
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(261 |
) |
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(868 |
) |
Net lease cost |
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$ |
2,416 |
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$ |
1,905 |
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Successor |
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Predecessor |
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Period from January 15 through December 31, |
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Year Ended |
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2025 |
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2024 |
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Other information |
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Cash paid for amounts included in the measurement of lease liabilities: |
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Operating cash flows from operating leases |
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$ |
1,988 |
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$ |
3,424 |
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Right-of-use assets obtained in exchange for operating lease liabilities |
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$ |
— |
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$ |
3,428 |
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Lease costs and activity for the period from January 1, 2025, to January 14, 2025, was not material.
The Company incurred impairment charges related to operating lease right-of-use assets of $4.2 million for the period from January 15, 2025, to December 31, 2025 and $2.4 million for the year ended December 31, 2024, related to costs associated with planned facility closures that will continue to be incurred under the contract for its remaining term without economic benefit to the Company.
Maturity of Lease Liabilities
The maturity of the Company’s lease liabilities on an undiscounted cash flow basis and a reconciliation to the operating lease liabilities recognized on the Company’s consolidated balance sheet as of December 31, 2025 were as follows (in thousands):
2026 |
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2,041 |
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2027 |
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2,099 |
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2028 |
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|
2,162 |
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2029 |
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1,844 |
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2030 |
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|
1,766 |
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Thereafter |
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|
1,373 |
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Total lease payments |
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|
11,285 |
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Less: interest |
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(2,143 |
) |
Present value of lease liabilities |
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$ |
9,142 |
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Operating lease liabilities |
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$ |
9,142 |
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 26, 2026 | Showing above |
| 2024 | Mar 11, 2025 | |
| 2023 | Mar 13, 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.