As of December 31, 2023, all of the Company’s property, equipment, and externally sourced internal-use software have been purchased with cash with the exception of amounts related to unpaid property and equipment, capitalized website development, capitalized internal-use software, capitalized hosting arrangements, and amounts related to obligations under finance leases as disclosed in the consolidated statements of cash flows. In connection with the 1001 Boylston Street Lease (as defined below), the Company expects to spend approximately $69,815, net of tenant reimbursements. As of December 31, 2023, the Company has incurred $40,561 in expenses, of which $2,891 was reimbursed as part of the tenant improvement allowance for the 1001 Boylston Street Lease. Of the total incurred expenses, $40,325 was capitalized, consisting of $39,835 in capitalized incurred expenses recognized in property and equipment, net and $490 in capitalized incurred expenses recognized in prepaid expenses, prepaid income taxes and other current assets on the consolidated balance sheets. As of December 31, 2023, the Company has also signed $46,473 in gross contract commitments, which have not yet been incurred. The Company has no other material long-term purchase obligations outstanding with any vendors or third-parties.

The Company’s material lease obligations consist of various leases for office space in: Boston, Massachusetts; Cambridge, Massachusetts; San Francisco, California; Addison, Texas; and Dublin, Ireland.

The Company has non-cancellable lease terms through 2033 for its various commenced operating leases, certain of which include the option to extend the lease term up to two additional periods of five years. Additionally, certain leases provide for annual rent increases through the terms of the leases, leasehold improvement incentives, and variable payments related to operating expenses, taxes, utilities, insurance, and maintenance expenses. Certain leases also contain non-lease components in the contract. Non-lease components relate to operating expenses, parking, utilities, and maintenance expenses.

The Company has non-cancellable lease terms through 2025 for its various operating subleases, for which the Company acts as the lessor, certain of which include the option to extend the sublease term up to one additional period of three years. Additionally, certain subleases provide for annual rent increases through the terms of the leases and variable payments related to operating expenses, taxes, parking, and utilities. Certain subleases also contain both lease and non-lease components in the contract. Non-lease components relate to operating expenses, parking, utilities, and maintenance expenses.

As of December 31, 2023, there were no material changes in the Company's leases from those disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, other than those described below.

On November 14, 2023, the Company amended its operating lease agreement in Addison, Texas, at 15601 Dallas Parkway, which was originally entered into on April 28, 2022, for the lease of 30,913 square feet of office space. The amendment relocates the existing premises from Suite 800 to Suite 900, also consisting of 30,913 square feet of office space. The lease term and payments do not change from the original agreement. The lease, as amended, provides for (i) an extension of the reimbursement deadline of the tenant improvement allowance to May 31, 2024, and (ii) an additional security deposit in the form of a restricted letter of credit, recognized in other non-current assets in the consolidated balance sheets. Since the lease amendment relocates leased space with the same landlord, the Company accounted for the amendment as a termination of the existing lease, with the difference between the right-of-use ("ROU") asset and lease liability of the existing lease included as part of the ROU asset of the new lease.

The Company’s operating lease agreement in Boston, Massachusetts, for 225,428 square feet at 1001 Boylston Street (the "1001 Boylston Street Lease") commenced on February 3, 2023 ("Delivery Date"), as the Company has been granted access to begin its build out. The “Commencement Date” of the lease term is the earlier to occur of (i) the date that is 12 months following the Delivery Date and (ii) the date that the Company first occupies the premises for the normal conduct of business for the Permitted Use (as defined in the 1001 Boylston Street Lease). The initial term will commence on the Commencement Date and expire on the date that is 180 full calendar months after the Commencement Date (plus the partial month, if any, immediately following the Commencement Date). The 1001 Boylston Street Lease provides for the option to terminate early under certain circumstances and contains options to extend the lease term for two additional periods of five years. The 1001 Boylston Street Lease provides for annual rent increases through the term of the lease, leasehold improvement incentives, and variable payments related to operating expenses, management fees, taxes, utilities, insurance, and maintenance expenses. The 1001 Boylston Street Lease also contains both lease and non-lease components. Non-lease components relate to operating expenses, parking, utilities, and maintenance expenses. The Company expects to move into the office space in 2024.

The Company’s financing lease obligations, which consist of a lease for furniture and office equipment, are immaterial.

For the years ended December 31, 2023, 2022, and 2021, the Company recognized $34,218, $16,732, and $15,844, respectively, of lease costs.

For the year ended December 31, 2023, the Company recognized $1,897 of sublease income. For the year ended December 31, 2022, the Company recognized $1,809 of sublease income. There was no sublease income for the year ended December 31, 2021.

As of December 31, 2023 and 2022, the weighted average remaining lease term was 13.1 years and 7.1 years, respectively, and the weighted average discount rate was 5.7% and 4.9%, respectively. As the Company’s leases do not provide an implicit rate, the Company uses an estimated incremental borrowing rate based on the information available at lease commencement in determining the present value of lease payments. The Company estimated the incremental borrowing rate based on the rate of interest the Company would have to pay to borrow a similar amount on a collateralized basis over a similar term. The Company has no historical debt transactions and a collateralized rate is estimated based on a group of peer companies. The Company used the incremental borrowing rate on January 1, 2019, for leases that commenced prior to that date.

As of December 31, 2023, future minimum lease payments for all leases are as follows:


Year Ending December 31,	Operating Lease Commitments
2024	$	3,150
2025		18,881
2026		22,332
2027		22,740
2028		23,160
Thereafter		208,079
Total lease payments		298,342
Less imputed interest		(103,952	)
Total	$	194,390

The table above does not include options to extend lease terms that are not reasonably certain of being exercised or leases signed but not yet commenced as of December 31, 2023. As of December 31, 2023, there were no leases signed but not commenced.

As of December 31, 2023, future minimum sublease income payments are as follows:


Year Ending December 31,	Sublease Income Payments
2024	$	2,318
2025		1,418
2026		—
2027		—
2028		—
Thereafter		—
Total	$	3,736

As of December 31, 2023, $9,627 in letters of credit associated with the Company's leases were included under the 2022 Revolver Sub-facility. During the year ended December 31, 2023, the Company canceled three letters of credit associated with the 1001 Boylston, the San Francisco, and the Cambridge (55 Cambridge Parkway) leases and reissued these letters of credit under the 2022 Revolver Sub-facility. As of December 31, 2022, all letters of credit were collateralized by cash, which was recognized as restricted cash in the consolidated balance sheets.

As of December 31, 2023, restricted cash was $2,563 and primarily related to pass-through payments from customers related to the Company's Digital Wholesale business. As of December 31, 2022, restricted cash was $14,615 and primarily related to cash held at a financial institution in an interest‑bearing cash account as collateral for the letters of credit related to the contractual provisions for the Company’s building leases and pass-through payments from customers related to the Company’s Digital Wholesale business.

As of December 31, 2023, all restricted cash was classified as a short-term asset, as disclosed in the consolidated balance sheets. As of December 31, 2022, portions of restricted cash were classified as a short-term asset and long‑term asset, as disclosed in the consolidated balance sheets. Of the letters of credit outstanding as of December 31, 2022, the Company canceled a letter of credit associated with the Cambridge (2 Canal Park) lease, however, the cash was recognized as restricted cash as of March 31, 2023, until it was released from the bank.

From time to time, the Company may become involved in legal proceedings or be subject to claims arising in the ordinary course of its business. The Company recognizes a liability when it believes that it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated. Judgment is required to determine both the probability of having incurred a liability and the estimated amount of the liability. The Company is not presently subject to any pending or threatened litigation that it believes, if determined adversely to the Company, individually, or taken together, would reasonably be expected to have a material adverse effect on its business or financial results. However, litigation is inherently unpredictable and the future outcome of legal proceedings and other contingencies may be unexpected or differ from the Company’s estimated liabilities, which could have a material adverse effect on the Company’s future financial results.

In the ordinary course of business, the Company enters into agreements with its customers, partners, and service providers that include commercial provisions with respect to licensing, infringement, guarantees, indemnification, and other common provisions.

The Company provides certain guarantees to dealers through products such as its 45-Day Guarantee and OfferGuard service offerings on the CarOffer platform, which are accounted for under ASC 460.

45-Day Guarantee is an arrangement through which a selling dealer lists a car on the CarOffer platform, and the Company provides an offer to purchase the vehicle listed at a specified price at any time over a 45-day period. This provides the seller with a put option, where they have the right, but not the obligation, to require the Company to purchase the vehicle during this window. OfferGuard is an arrangement through which a buying dealer purchases a car on the CarOffer platform, and the Company provides an offer to purchase the vehicle at a specified price between days 1 and 3, and days 42 and 45 if the dealer is not able to sell the vehicle after 42 days.

A guarantee liability is initially measured using the amount of consideration received from the dealer for the purchase of the guarantee. The initial liability is released, and guarantee income is recognized, upon the earliest of the following: the vehicle sells during the guarantee period, the seller exercises its put option during the guarantee period, or the option expires unexercised at the end of the guarantee period. Guarantee income is recognized within wholesale revenue in the consolidated income statements. Gains and losses resulting from dealers' exercise of guarantees are recognized within wholesale cost of revenue in the consolidated income statements. When it is probable and reasonably estimable that the Company will incur a loss on a vehicle that it is required to purchase, a liability and a corresponding charge to wholesale cost of revenue is recognized for the amount of the loss in the consolidated balance sheets and the consolidated income statements, respectively. Gains and losses resulting from the dealers exercise of guarantees are recognized within wholesale cost of revenue, as appropriate, in the consolidated income statements.

For the years ended December 31, 2023 and 2022 income for guarantees purchased by dealers was $1,890 and $10,026, respectively. For the year ended December 31, 2023 and 2022, the loss, net of gains, recognized within cost of revenue in the consolidated income statements resulting from dealers' exercise of guarantees was $417 and $4,568, respectively.

As of December 31, 2023, the maximum potential amount of future payments that the Company could be required to make under these guarantees was $10,158. Of the maximum potential amount of future payments, the losses that were probable were not material. As such, as of December 31, 2023, the Company had no material contingent loss liabilities.

As of December 31, 2022, the maximum potential amount of future payments that the Company could be required to make under these guarantees was $31,056. Of the maximum potential amount of future payments, the losses that were probable were not material. As such, as of December 31, 2022, the Company had no material contingent loss liabilities.

As of December 31, 2021, the maximum potential amount of future payments that the Company could be required to make under these guarantees was $76,075. Of the maximum potential amount of future payments, none were considered probable. The exercise of guarantees has historically been infrequent and even when such exercises did occur, the losses were not material. As such, as of December 31, 2021, the Company had no contingent loss liabilities.