Leases

12 Months Ended

Dec. 31, 2024

4. Leases

As of December 31, 2024, our lease portfolio consists entirely of operating leases for corporate offices. Our operating leases have remaining lease terms with various expiration dates through 2031, and some leases include options to extend the term for up to an additional 10 years.

Right-of-Use (“ROU”) Assets and Lease Liabilities

At the inception of an arrangement, we determine whether the arrangement is or contains a lease based on the unique facts and circumstances present and the classification of the lease. Operating leases with a term greater than one year are recognized on the consolidated balance sheets as ROU assets, lease liabilities, and long-term lease liabilities. ROU assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. We have elected not to recognize on our consolidated balance sheets leases with a term of one year or less.

Lease liabilities and their corresponding ROU assets are recorded based on the present value of lease payments over the expected lease term. The implicit rates within most of our leases are generally not determinable; therefore, we estimate our incremental borrowing rate to determine the present value of lease payments. The determination of our incremental borrowing rate requires judgment and is estimated for each lease based on the rate we would have to pay for a collateralized loan with the same terms as the lease. We consider various factors, including our level of collateralization, estimated credit rating, and the currency in which the lease is denominated. Operating lease ROU assets also include any lease prepayments, offset by lease incentives. Certain of our leases include options to extend or terminate the lease. An option to extend the lease is considered in connection with determining the ROU asset and lease liability when it is reasonably certain we will exercise that option.

Lease Costs

Expense for operating leases is recognized on a straight-line basis over the lease term as an operating expense. We have lease agreements which require payments for lease and non-lease components (i.e., common area maintenance) that are accounted for as a single lease component. Variable lease payment amounts that cannot be determined at the commencement of the lease such as maintenance costs, utilities, and service charges are not included in right-of-use (“ROU”) assets or lease liabilities but rather are expensed as incurred and recorded as variable lease expense. We often receive customary incentives from our landlords such as tenant improvement allowances (“TIAs”) and rent abatement periods, which effectively reduce total lease payments owed for the leases.

The following table sets forth the components of lease expense for the years ended December 31, 2024, 2023, and 2022 (in thousands, exclusive of sublease income):


	Year Ended December 31,
	2024		2023		2022
Operating lease cost	$	9,519	$	9,056	$	6,950



Short-term lease cost	1,513		1,444		583
Variable lease cost	5,238		4,230		3,817
Total	$	16,270	$	14,730	$	11,350

Sublease income totaled $1.3 million, $1.3 million, and $0.4 million for the years ended December 31, 2024, 2023, and 2022 respectively.

Lease Impairment Charges

In connection with headcount reductions approved in June 2024 and our continued efforts to streamline operations and maximize efficiencies, we initiated supplemental actions to reduce the footprint of our leased office spaces. Pursuant to these initiatives, we amended and extended the terms of our existing sublease agreement and are seeking a sublease for an additional floor within our corporate headquarters facility.

During the year ended December 31, 2024, we recorded non-cash lease impairment charges of $5.5 million within general and administrative expenses in our consolidated statements of operations. These charges represented the amount the carrying value of two asset groups, consisting of two separate floors within our corporate headquarters facility, exceeded their estimated fair values. The fair values of the two asset groups were

measured using discounted cash flow models based on market rents and sublease incomes projected over the remaining lease terms. No impairment charges were incurred during the years ended December 31, 2023 and 2022.

Supplemental Lease Information

Supplemental balance sheet information related to operating leases as of December 31, 2024 and 2023 is presented in the following table (in thousands, except for lease term and discount rate):


	As of December 31,
	2024			2023
Right-of-use assets for operating leases	$	31,081		$	39,975

Operating lease liabilities, current	$	12,378		$	11,698
Operating lease liabilities, net of current portion	52,189			59,067
Total operating lease liabilities	$	64,567		$	70,765

Weighted average remaining lease term (in years)	6.5			7.4

Weighted average discount rate	9.4		%	9.4		%

Supplemental cash flow and expense information related to operating leases for the years ended December 31, 2024, 2023, and 2022 is shown below (in thousands):


	Year Ended December 31,
	2024		2023		2022

Operating cash outflows for operating leases	$	12,179	$	8,865	$	7,073



Amortization of operating lease ROU assets	3,179		2,676		1,495
Interest expense on operating lease liabilities	6,340		6,380		5,406

No TIA reimbursements were received during the year ended December 31, 2024. For each of the years ended December 31, 2023 and 2022, TIA reimbursements totaled $2.6 million.

A summary of our future minimum lease commitments under non-cancellable leases as of December 31, 2024 is shown below (in thousands):


	Operating Leases
2025	$	12,898
2026	13,219
2027	13,469
2028	12,420
2029	11,968
Thereafter	22,871
Total lease payments	86,845
Less: imputed interest	(22,278)
Total	$	64,567