Leases

12 Months Ended

Dec. 31, 2022

On January 1, 2019, the Company adopted the new lease accounting standard using the modified retrospective transition method applied at the effective date of the standard. The Company has elected to utilize the package of practical expedients at the time of adoption, which allows the Company to (1) not reassess whether any expired or existing contracts are or contain leases, (2) not reassess the lease classification of any expired or existing leases, and (3) not reassess initial direct costs for any existing leases. The Company also has elected to utilize the short-term lease recognition exemption and, for those leases that qualified, the Company did not recognize right-of-use (“ROU”) assets or lease liabilities.

Lease Costs

For the years ended December 31, 2022, 2021, and 2020, the Company recorded operating lease costs of corporate offices, excluding subleases, in the consolidated statements of comprehensive income (loss) as follows (in thousands):


Operating lease costs recorded within:	Year Ended December 31, 2022		Year Ended December 31, 2021		Year Ended December 31, 2020
Cost of revenue	$	12	$	62	$	489
Sales and marketing	583		1,356		1,680
Technology and development	1,104		2,082		2,420
General and administrative	3,837		2,793		2,887
Total operating lease costs	$	5,536	$	6,293	$	7,476

The Company did not include short term or variable lease costs in the table above as these amounts were immaterial. The Company made cash payments of $6.7 million, $7.2 million and $8.3 million for the years ended December 31, 2022, 2021, and 2020, respectively, which were included in cash flows from operating activities within the consolidated statements of cash flows. The Company’s operating leases have a weighted average remaining lease term of 4.9 years and weighted average discount rate of 5.8%.

For its subleases, the Company recorded contra rent expense of $3.4 million, $1.1 million and $1.2 million for the years ended December 31, 2022, 2021, and 2020, respectively.

The Company recognized ROU asset group impairment charges of $1.7 million and $2.1 million for the years ended December 31, 2021 and 2020, respectively, reducing the carrying value of the related lease assets to its estimated fair value. Fair value was estimated using an income approach based on management’s forecast of future cash flows expected to be derived based on current sublease market rent. The impairment charge is included in general and administrative expenses in the consolidated statements of comprehensive income (loss).

In June 2022, TrueCar signed a lease amendment to exit certain floors of a leased office space effective July 31, 2022 and to settle the asset retirement obligation associated with exiting the leased space for a lower amount than previously recognized. To account for the reduction in lease term, TrueCar remeasured the lease liability, using the incremental borrowing rate in place at the date of modification, with a corresponding reduction to the right of use asset. A total gain of $0.8 million was recognized which

included the $0.6 million difference in reduction of lease liability of $3.7 million and right-of-use asset of $3.1 million and the $0.2 million gain on settlement of the asset retirement obligation.

The existing operating leases have remaining lease terms ranging from 0.6 to 7.1 years. Certain lease agreements contain options to renew, with renewal terms that generally extend the lease terms by 3 to 5 years for each option.

Lease Commitments

Future undiscounted lease payments for the Company’s operating lease liabilities, a reconciliation of these payments to its operating lease liabilities, and related sublease income at December 31, 2022 are as follows (in thousands):


Years ended December 31,
2023	$	5,627
2024	6,248
2025	5,978
2026	2,853
2027	1,986
Thereafter	3,923
Total lease payments	$	26,615
Less: imputed interest	(3,601)
Total lease liabilities (discounted)	$	23,014


Year ended December 31,	Sublease Income
2023	$	3,698
2024	4,006
2025	3,505
2026	654
2027	56
Thereafter	—
Total sublease income	$	11,919