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What changed in TheRealReal, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of TheRealReal, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+323 added−302 removedSource: 10-K (2025-02-21) vs 10-K (2024-03-01)

Top changes in TheRealReal, Inc.'s 2024 10-K

323 paragraphs added · 302 removed · 244 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

47 edited+7 added−22 removed27 unchanged
Biggest changeWe proactively seek feedback and guidance from our employees, who we see as our partners in building a strong organizational culture. As of December 31, 2023, we had 3,032 full-time equivalent employees. Additionally, we rely on independent contractors and temporary personnel to supplement our workforce, primarily in our authentication centers.
Biggest changeAs of December 31, 2024, we had 3,011 full-time equivalent employees. Additionally, we rely on independent contractors and temporary personnel to supplement our workforce, primarily in our authentication centers. None of our employees is represented by a labor union or covered by a collective bargaining agreement. We consider our relations with our employees to be positive.
As noted in its charter, our Compensation, Diversity and Inclusion Committee is responsible for reviewing and recommending to our board of directors compensation plans, policies and programs intended to attract, retain and appropriately reward employees, as well as provide oversight of the Company’s policies, programs, and initiatives focusing on leadership and workforce diversity and inclusion.
As noted in its charter, our Compensation, Diversity and Inclusion Committee is responsible for reviewing and recommending to our board of directors compensation plans, policies and programs intended to attract, retain and appropriately reward employees, as well as provide oversight of the Company’s policies, programs, and initiatives focusing on leadership and our workforce.
Our stores are valuable to us in multiple ways as they help us reach higher value buyers and consignors, increase lifetime value, i ncrease average order value, and lower return rates. We also benefit from increased brand awareness that accelerates overall market growth.
Our retail stores are valuable to us in multiple ways as they help us reach higher value consignors and buyers, increase lifetime value, i ncrease average order value, and lower return rates. We also benefit from increased brand awareness that accelerates overall market growth.
Since its formation, the foundation has provided annual college scholarships and supported numerous community organizations, including the Success Bound Youth Leadership Academy, the Secaucus Youth Alliance, Enterprise for Youth, Friendly House, Education Forward Arizona and the Virgil Abloh™ "Post-Modern" Scholarship Fund, which aims to preserve his vision for a more diverse and equitable fashion industry. Director Refreshment.
Since its formation, the foundation has provided annual college scholarships and supported numerous community organizations, including the Success Bound Youth Leadership Academy, the Secaucus Youth Alliance, Enterprise for Youth, Friendly House, Education Forward Arizona and the Virgil Abloh™ "Post-Modern" Scholarship Fund, which aims to preserve his vision for a more diverse and equitable fashion industry.
All consigned items are put through our authentication process and thoroughly inspected for quality and condition, which builds trust in our buyer base. This trust drives repeat purchases from our buyer base and instills confidence in first-time buyers to purchase pre-owned luxury goods. • We also operate Neighborhood and Flagship Store s.
All consigned items are put through our authentication process and thoroughly inspected for quality and condition, which builds trust in our buyer base. This trust drives repeat purchases from our buyer base and instills confidence in first-time buyers to purchase pre-owned luxury goods. • We also operate store s.
We believe we have the most rigorous authentication process in the resale luxury goods marketplace. We have highly trained gemologists, horologists, brand experts and art curators who collectively inspect thousands of items each day. All items pass through a rigorous brand-specific authentication process before they are accepted for consignment.
We believe we have the most rigorous authentication process in the resale luxury goods marketplace. We have highly trained gemologists, horologists, and brand experts who collectively inspect thousands of items each day. All items pass through a rigorous brand-specific authentication process before they are accepted for consignment.
Our Flagship Stores are typically 8,000 to 10,000 square feet with thousands of unique items for sale and are located in highly desirable, densely populated locations with strong foot traffic. Our Market The existing luxury resale market is outdated, fragmented, difficult to access and laden with counterfeit goods.
Our flagship stores are typically 8,000 to 10,000 square feet with thousands of unique items for sale and are located in highly desirable, densely populated locations with strong foot traffic. 5 Table of Contents Our Market The existing luxury resale market is outdated, fragmented, difficult to access and laden with counterfeit goods.
Our Neighborhood and Flagship Stores also offer our buyers a sophisticated shopping experience, in a beautifully designed space, where they can shop our dynamic curation of authenticated pre-owned luxury goods across all of our categories. • We build trust through our authentication process. We continue to invest and innovate in authentication, both in our people and our technology.
Our retail stores also offer our buyers a sophisticated shopping experience, in a beautifully designed space, where they can shop our dynamic curation of authenticated pre-owned luxury goods across all of our categories. • We build trust through our authentication process. We continue to invest and innovate in authentication, both in our people and our technology.
In 2023, we sold goods bearing the brands of thousands of luxury and premium designers, including highly coveted items such as rare watches and handbags. • We provide a gateway to luxury brands.
In 2024, we sold goods bearing the brands of thousands of luxury and premium designers, including highly coveted items such as rare watches and handbags. • We provide a gateway to luxury brands.
In 2023, we conducted our annual employee engagement survey to better understand employees’ sentiment across a range of topics and factors; management, teamwork, alignment, enablement and inclusion were among our top scoring factors. In 2023, our engagement efforts focused on well-being, leadership, communication, and inclusion.
In 2024, we conducted our annual employee engagement survey to better understand employees’ sentiment across a range of topics and factors; management, teamwork, inclusion, and alignment, were among our top scoring factors. In 2024, our engagement efforts focused on well-being, leadership, communication, and inclusion.
Primarily due to these challenges, a vast quantity of consignable luxury goods languishes in homes, and buyers can be 5 Table of C ontents hesitant to purchase pre-owned luxury goods. We are transforming the luxury resale experience by addressing these challenges. • We provide a seamless consignment experience enabled by our proprietary technology platform and data.
Primarily due to these challenges, a vast quantity of consignable luxury goods languishes in homes, and buyers can be hesitant to purchase pre-owned luxury goods. We are transforming the luxury resale experience by addressing these challenges. • We provide a seamless consignment experience enabled by our proprietary technology platform and data.
They consult on the consignment process and leverage data to advise consignors on pricing, expected selling time and market trends. • We deliver an end-to-end service experience. We remove friction from the consignment process by providing multiple consignment methods. We offer concierge at-home consultation and pickup, and virtual consultations with consignors via online face-to-face platforms.
They consult on the consignment process and leverage data to advise consignors on pricing, expected selling time and market trends. • We deliver an end-to-end service experience. We remove friction from the consignment process by providing multiple consignment methods. We offer concierge at-home consultation and pickup, and virtual consultations with consignors.
Our scale and global reach combined with our technology-driven online marketplace and proprietary data enable consignors to realize optimal value for their pre-owned luxury goods. In November 2022, we launched a pricing tool for our consignors that provides transparency and detail on commission rates for specific categories and other aspects of the take rate structure.
Our scale and broad reach combined with our technology-driven online marketplace and proprietary data enable consignors to realize optimal value for their pre-owned luxury goods. In November 2022, we launched a pricing tool for our consignors that provides transparency and detail on commission rates for specific categories and other aspects of the take 6 Table of Contents rate structure.
Our consignors can earn up to 90% of the proceeds from the sale of their consigned items in commissions and achieved an overall commission rate of approximately 63% in 2023. • We offer a range of payment options for consignors and businesses.
Our consignors can earn up to 90% of the proceeds from the sale of their consigned items in commissions and achieved an overall commission rate of approximately 62% in 2024. • We offer a range of payment options for consignors and businesses.
Consignors may also drop off items at our luxury consignment offices. Our Neighborhood and Flagship Stores provide an alternative location to drop off consigned items and an opportunity to interact with our authentication experts. Consignors may also utilize our complimentary shipping directly to our authentication centers. • We do the work on behalf of consignors.
Consignors may also drop off items at our luxury consignment offices. Our retail stores provide an alternative location to drop off consigned items and an opportunity to interact with our authentication experts. Consignors may also utilize our complimentary shipping service to send items directly to our authentication centers. • We do the work on behalf of consignors.
Solely for convenience, the trademarks, service marks, logos and trade names referred to in this Annual Report are without the ® and ™ symbols, but such references are not intended to indicate that we will not assert our rights in these trademarks, service marks and trade names. 11 Table of C ontents
Solely for convenience, the trademarks, service marks, logos and trade names referred to in this Annual Report are without the ® and ™ symbols, but such references are not intended to indicate that we will not assert our rights in these trademarks, service marks and trade names. 10 Table of Contents
To aid buyers in assessing the condition of items in our online marketplace, we assign items a condition level. In the first quarter of 2022, we began accepting items in “fair” condition, which tend to be listed at more accessible price points given their level of wear.
To 8 Table of Contents aid buyers in assessing the condition of items in our online marketplace, we assign each item a condition level. In the first quarter of 2022, we began accepting items in “fair” condition, which tend to be listed at more accessible price points given their level of wear.
In 2023, we launched TRR 10 Table of C ontents Secure, a smartphone security app that enables field employees to discreetly contact emergency services via multiple channels if they are in a situation that makes them feel uneasy, unsafe or uncomfortable.
In 2023, we launched TRR Secure, a smartphone security application that enables field employees to discreetly contact emergency services via multiple channels if they are in a situation that makes them feel uneasy, unsafe or uncomfortable.
As we move forward, we strive to continuously review our sustainability commitments, strategies and priorities. Recent sustainability efforts include: • Fair Condition Program. This new program has enabled us to offer more secondhand, luxury items and has the effect of increasing the total number of consigned items in the circular economy.
As we move forward, we strive to continuously review our sustainability commitments, strategies and priorities. Recent sustainability efforts include: • Fair and As-is Condition Programs. These programs have enabled us to offer more secondhand, luxury items and have the effect of increasing the total number of consigned items in the circular economy.
The top-selling luxury designers on our online marketplace include Cartier, Chanel, Christian Louboutin, Gucci, Hermès, Louis Vuitton, Prada, Rolex, Tiffany & Co. and Valentino. We offer products across multiple categories including women’s fashion, men’s fashion, jewelry and watches.
The top-selling luxury designers on our online marketplace include Cartier, Chanel, Christian Dior, Gucci, Hermès, Louis Vuitton, Prada, Rolex, Yves Saint Laurent, Tiffany & Co. and Van Cleef & Arpels. We offer products across multiple categories including women’s fashion, men’s fashion, jewelry and watches.
In 2023, demand for items in fair condition remained strong. • Sustainability Task Force. In 2020, we formed a cross-functional Sustainability Task Force to identify projects throughout the organization that have the potential to reduce our environmental impact. The Sustainability Task Force prioritizes high impact projects and aims to embed a focus on sustainability across the organization.
In 2020, we formed a cross-functional Sustainability Task Force to identify projects throughout the organization that have the potential to reduce our environmental impact. The Sustainability Task Force prioritizes high impact projects and aims to embed a focus on sustainability across the organization.
Our unique service model incentivizes consumers to consign by making the process easy. Our sales and service organization is responsible for obtaining exclusive supply for our online marketplace and retail stores. Our sales professionals generate a robust pipeline of new consignors and build lasting relationships, which cannot be easily replicated.
Our sales and service organization is responsible for obtaining exclusive supply for our online marketplace and retail stores. Our sales professionals generate a robust pipeline of new consignors and build lasting relationships, which cannot be easily replicated.
Our gemologists and horologists inspect and authenticate fine jewelry and watches, and each piece we sell comes with an authentication certificate. We utilize state-of-the-art gemological devices, including proprietary gemstone technology, to assist these experts. Additionally, across all of our categories, our experts leverage proprietary item and consignor risk scoring algorithms to assist in authentication.
We utilize state-of-the-art gemological devices, including proprietary gemstone technology, to assist these experts. Additionally, across all of our categories, our experts leverage proprietary item and consignor risk scoring algorithms to assist in authentication.
Training hours and tenure increase with expertise, with a Graduate Gemologist certification from GIA required in the highest levels of specialty in fine jewelry. Each employee receives training appropriate to the scope and nature of their role.
Progression through the authentication training program is an additional minimum of 80 hours of training and at least three months per level. Training hours and tenure increase with expertise, with a Graduate Gemologist certification from GIA required in the highest levels of specialty in fine jewelry. Each employee receives training appropriate to the scope and nature of their role.
“Get Paid Now” is a program whereby items are evaluated, authenticated and priced and the business or consignor receives payment based on this process in advance of the sale of the item. • We drive rapid monetization.
“Get Paid Now” is a program whereby select items are evaluated, authenticated and priced and the business or consignor receives payment based on this process in advance of the sale of the item. • We drive rapid monetization. Our online marketplace efficiently matches supply with demand finding optimal balance between sales velocity and consignor earnings.
Given the complexity of our inventory model, we developed specialized, proprietary applications to optimize inbound processes. We increasingly use our technology platform to automate authentication, pricing, copywriting and photo retouching for goods sold through our online marketplace. Our powerful data analytics capabilities enable us to improve both consignor and buyer experiences.
We increasingly use AI in our technology platform to automate item attribution, authentication, pricing, copywriting and photo retouching for goods sold through our online marketplace. Our powerful AI and data analytics capabilities enable us to improve both consignor and buyer experiences.
We continued to focus on employees’ overall well-being in 2023 through a range of programs that support access to care, along with resources and tools to address the following pillars of wellness: physical, mental/emotional, financial, and community. Seasonality Historically, we have observed trends in seasonality of supply and demand in our business.
We continued to focus on employees’ overall well-being in 2024 through a range of programs that support access to care, along with resources and tools to address the following pillars of wellness: physical, mental/emotional, financial, and community. Corporate Information We were incorporated in the state of Delaware in March 2011.
In early 2022, we reorganized the Sustainability Task Force into several individual working groups so we could concentrate our efforts on specific, meaningful projects, including preferred materials, transportation optimization, employee travel, employee experience and waste. In 2023, the Sustainability Task Force focused on reducing energy expenditures and limiting use of packaging materials.
The Sustainability Task Force, through several individual working groups, has concentrated its efforts on specific, meaningful topics, including preferred materials, transportation optimization, employee travel, employee experience, reducing energy expenditures, limiting use of packaging materials, and waste.
We rely on trademark, copyright, trade secrets, patents, patent applications, confidentiality agreements and other practices to protect our brands, proprietary information, technologies and processes. We primarily rely on copyright and trade secret laws to protect our proprietary technologies and processes, including the algorithms we use throughout our business.
Intellectual Property Our intellectual property, including copyrights and trademarks, is an important component of our business. We rely on trademark, copyright, trade secrets, patents, patent applications, confidentiality agreements and other practices to protect our brands, proprietary information, technologies and processes.
Our online marketplace efficiently matches supply with demand resulting in sales velocity of approximately 54% and 58% of the products on our online marketplace sold within 30 days, in 2023 and 2022 respectively. In addition to sales velocity, we measure the ratio of demand versus supply in a given period, which we refer to as our online marketplace sell-through ratio.
We sell approximately 50% of the products on our online marketplace within 30 days of being listed for sale. In addition, we measure the ratio of demand versus supply in a given period, which we refer to as our online marketplace sell-through ratio.
For example, we support our sales professionals by providing a three-week virtual onboarding sequence conducted through peer-to-peer, facilitated and self-learning sessions, followed by continuous professional development programs. In 2023, we provided a Manager Development Series to people managers in retail, sales and operations. Our authentication teams receive training based on expertise level.
For example, we support our sales professionals by providing a three-week virtual onboarding sequence conducted through peer-to-peer, facilitated and self-learning sessions, followed by continuous professional development programs . 9 Table of Contents Our authentication teams receive training based on expertise level. Entry-level authenticators receive approximately 40 to 80 hours of training depending on their specialty in fashion or fine jewelry.
We believe that creating a more sustainable future by growing the circular economy requires us to bring different perspectives. We believe that a more sustainable future is an equitable one, and that growing the circular economy requires us to unlock the power of differences and solve problems together in new and meaningful ways.
We believe that a more sustainable future is an equitable one, and that growing the circular economy requires us to unlock the power of differences and solve problems together in new and meaningful ways. We are committed to building a strong culture of trust, safety, collaboration, and belonging to fuel our purpose, people and performance. Engagement.
In addition, a meaningful share of our consignors are buyers and vice versa, which creates a differentiated flywheel that enhances the network effect of our online marketplace. We also operate retail stores, including our smaller footprint neighborhood retail stores, or Neighborhood Stores.
In addition, a meaningful share of our consignors are buyers and vice versa, which creates a differentiated flywheel that enhances the network effect of our online marketplace. We operate neighborhood retail stores which are typically 1,800 to 3,500 square feet with items for sale reflecting a selection of the Company's online assortment.
Our Neighborhood Stores are typically 1,800 to 3,500 square feet with items for sale reflecting a selection of the Company's online assortment and are located in areas we have identified as having a large amount of potential customers. In addition, we operate several larger footprint flagship stores, or Flagship Stores, in Los Angeles, California and New York, New York.
These smaller footprint neighborhood stores are located in areas we have identified as having a large amount of potential customers. In addition, we operate several larger footprint flagship stores in Los Angeles, California and New York, New York.
We support and celebrate diversity, and are committed to providing an equal employment opportunity regardless of race, color, ancestry, religion, sex, national origin, sexual orientation, age, citizenship, marital status, disability, gender identity or expression, or veteran status.
We are committed to providing an equal employment opportunity regardless of race, color, ancestry, religion, sex, national origin, sexual orientation, age, citizenship, marital status, disability, gender identity or expression, or veteran status. Strategy. We believe that creating a more sustainable future by growing the circular economy requires us to bring different perspectives together.
Our principal trademark assets include the registered trademark “The RealReal” and our logos and taglines. Our trademarks are valuable assets that support our brand and consumers’ perception of our services and merchandise.
We primarily rely on copyright and trade secret laws to protect our proprietary technologies and processes, including the algorithms we use throughout our business. Our principal trademark assets include the registered trademark “The RealReal” and our logos and taglines. Our trademarks are valuable assets that support our brand and consumers’ perception of our services and merchandise.
None of our employees is represented by a labor union or covered by a collective bargaining agreement. We consider our relations with our employees to be positive. Diversity and Inclusion We work to inspire and empower our employees to think creatively and authentically, share their ideas, bring their whole selves to work, and strive for greatness every day.
Community We work to inspire and empower our employees to think creatively and authentically, share their ideas, bring their whole selves to work, and strive for greatness every day.
This process includes, among other things, inspecting the item for attributes such as appropriate brand markings, date codes, serial tags and hologram stickers. In 2022, we implemented proprietary AI microphotography to assist in authenticating high-end handbags. As of 2023, over 50% of handbags are first-pass authenticated using AI microphotography.
This process includes, among other things, inspecting the item for attributes such as appropriate brand markings, date codes, serial tags and hologram stickers. We use proprietary artificial intelligence ("AI") microphotography to assist in authenticating multiple categories, including high-end handbags. Our gemologists and horologists inspect and authenticate fine jewelry and watches, and each piece we sell comes with an authentication certificate.
As we continue to unlock exclusive luxury supply, we aim to attract new buyers and drive repeat purchases from our existing buyers. • We offer a seamless buying experience. Buyers access our omni-channel online marketplace through our website, mobile app and retail stores, enabling them to purchase anytime, anywhere.
Buyers access our omni-channel online marketplace through our website, mobile app and retail stores, enabling them to purchase anytime, anywhere.
We offer a variety of employee training programs in addition to the DEI programs discussed above, including onboarding, technical skills training, product and services training, and managerial soft skills training. These programs include training specific to each of our business functions, enabling us to provide our consignors and buyers with a consistent luxury experience.
Talent Development and Training We believe that the training and development of our employees is critical to our long-term success. We offer a variety of employee training programs, including training specific to business functions, enabling us to provide our consignors and buyers with a consistent luxury experience.
Our online marketplace generates and aggregates hundreds of millions of unique data points, including data from approximately 1.1 billion views of items by potential buyers on our online marketplace in 2023, which we refer to as item views, and approximately 37.5 million item sales since our inception. Each consigned item also has up to 50 unique attributes.
Our online marketplace generates and aggregates hundreds of millions of unique data points, including data from approximately 44.5 million item sales since our inception. Each consigned item also has up to 50 unique attributes. Informed by this data, we have developed proprietary machine learning technology and business processes to optimize our operations, including supply sourcing, merchandising, authentication, pricing and marketing.
We aspire to operate our business with positive social and environmental impact. Our board of directors and its committees provide oversight on certain human capital matters, including our diversity and inclusion programs and initiatives.
Our board of directors and its committees provide oversight on certain human capital matters.
Our Technology Technology powers all aspects of our business, including our complex, single-SKU inventory management system. Our supply comes from thousands of individual consignors and businesses across the United States. Each item we sell is a unique, individual stock keeping unit (“single-SKU”) and is exclusively available on our online marketplace or in our retail stores.
Our Technology Technology powers all aspects of our business, including our complex, individual stock keeping unit (“single-SKU”) inventory management system. Our supply comes from thousands of individual consignors and businesses across the United States. Given the complexity of our inventory model, we developed AI enabled, specialized, proprietary 7 Table of Contents applications to optimize inbound processes.
Our Consignors By making consignment easy, convenient, reliable and fast for our consignors, we aim to unlock a vast quantity of desirable, high-quality, primarily pre-owned luxury goods. Our sales professionals remove friction from the consignment process and build lasting relationships with our consignors. In 2023, approximately 85% of our gross merchandise value ("GMV") came from repeat consignors.
For more information regarding risks of competitive factors impacting our business, see the information in “Item 1A: Risk Factors”. Our Consignors By making consignment easy, convenient, reliable and fast for our consignors, we aim to unlock a vast quantity of desirable, high-quality, primarily pre-owned luxury goods.
We rely on contractual provisions to protect our proprietary technology, brands and creative assets with consignors and buyers. Corporate Information We were incorporated in the state of Delaware in March 2011. Our principal executive offices are located at 55 Francisco Street, Suite 150, San Francisco, California 94133, and our telephone number is (855) 435-5893.
Our principal executive offices are located at 55 Francisco Street, Suite 150, San Francisco, California 94133, and our telephone number is (855) 435-5893.
Specifically, our supply increases in the third and fourth quarters, and our demand increases in the fourth quarter. As a result of this seasonality, we typically see stronger average order value (“AOV”), and more rapid sell-through in the fourth quarter. Intellectual Property Our intellectual property, including copyrights and trademarks, is an important component of our business.
As a result of this seasonality, we typically see stronger average order value (“AOV”), and more rapid sell-through in the fourth quarter. Environmental, Social and Governance Our stakeholders are essential to our business—shareholders, consignors, buyers, employees and the communities in which we do business. We aspire to operate our business with positive social and environmental impact.
Sell-through ratio is defined as GMV in the measurement period divided by the aggregate initial value of 6 Table of C ontents items added to our online marketplace in that period. In 2023 and 2022, our online marketplace sell-through ratios were 92% and 91%, respectively.
Sell-through ratio is defined as GMV in the measurement period divided by the aggregate initial value of items added to our online marketplace in that period. Our online marketplace sell-through ratio in 2024 was approximately 85%. Our Buyers We make it easy for buyers to shop our vast, yet curated selection of authenticated, primarily pre-owned luxury goods.
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Our Buyers We make it easy for buyers to shop our vast, yet curated selection of authenticated, primarily pre-owned luxury goods. In 2023, we had approximately 1 million active buyers and approximately 87% of our GMV came from repeat buyers.
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Our Competition We compete with vendors of new and pre-owned luxury goods, including branded luxury goods stores, department stores, traditional brick-and-mortar consignment stores, pawn shops, auction houses, specialty retailers, discount chains, independent retail stores, the online offerings of traditional retail competitors, resale players focused on niche or single categories, as well as technology-enabled marketplaces that may offer the same or similar luxury goods and services that we offer.
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Informed by this data, we have developed proprietary machine learning technology and business processes to optimize our operations, including supply sourcing, merchandising, authentication, pricing and marketing. 7 Table of C ontents Environmental, Social and Governance Our stakeholders are essential to our business—shareholders, consignors, buyers, employees and the communities in which we do business.
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As the market evolves, new competitors may emerge, including traditional retail competitors who expand their offerings to include resale. We are able to compete for consignors based on our strong market positioning, diverse category and brand offerings, rich data and technology, and advanced authentication capabilities and expertise. Our full service, multi-channel approach provides consignors with convenient consignment options.
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Throughout 2022 and 2023, members of the Sustainability Task Force provided periodic updates to our executives and the Corporate Governance and Nominating Committee of the Board of Directors on our progress toward achieving our goals and initiatives. • Sustainability Calculator.
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Our sales professionals remove friction from the consignment process and build lasting relationships with our consignors. In 2024, over 80% of our gross merchandise value ("GMV") came from repeat consignors. Our unique service model incentivizes consumers to consign by making the process easy.
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In 2018, we launched our Sustainability Calculator on National Consignment Day as a tool to quantify the positive impact consignment has on the planet. We developed the Sustainability Calculator to measure the greenhouse gas emissions and water footprint reduction of consignment as compared to producing new products. • National Consignment Day.
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In 2024, we had approximately 1 million active buyers and approximately 88% of our GMV came from repeat buyers. As we continue to unlock exclusive luxury supply, we aim to attract new buyers and drive repeat purchases from our existing buyers. • We offer a seamless buying experience.
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We founded National Consignment Day as a national recognition day that occurs on the first Monday of October. National Consignment Day celebrates the positive impact consigning has on the environment. • Carbon Neutral Pledge. In November 2019, we were the first company to take the pledge in the CEO Carbon Neutral Challenge issued by the CEO of Gucci.
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We rely on contractual provisions to protect our proprietary technology, brands and creative assets with consignors and buyers. Seasonality Historically, we have observed trends in seasonality of supply and demand in our business. Specifically, our supply increases in the third and fourth quarters, and our demand increases in the fourth quarter.
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We pledged to be carbon neutral in 2021, and we reached that goal in 2020 (Scope 1, Scope 2 and certain Scope 3 emissions). Our path to carbon neutrality included implementing reductions and annually offsetting emissions that cannot be eliminated. • United Nations Climate Change’s Fashion Industry Charter for Climate Action.
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In 2023, with demand for items in fair condition remaining strong, we began accepting items in “as-is” condition. Items in “as-is” condition might show extensive signs of wear and may require repair. Even if an item requires repair, it is still likely to displace the purchase of a brand-new item and avoid unnecessary waste. • Sustainability Task Force.
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In April 2019, we became the first company in the resale industry to join the United Nations Climate Change’s Fashion Industry Charter for Climate Action, which aims to limit global warming within the fashion industry and 8 Table of C ontents inspire climate action.
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In 2024, the Sustainability Task Force was reorganized to expand its capabilities and increase its membership, and focused on projects related to packaging, employee engagement, and energy efficiency at our authentication centers. Human Capital Resources Our employees are guided by our mission to empower consignors and buyers to extend the life cycle of luxury goods.
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The charter endeavors to achieve a 50% reduction in carbon emissions in the fashion industry by 2030 and net zero emissions by 2050. • ReCollections. Through our ReCollection program, we transform unwearable or damaged items into unique, premium luxury upcycled items. In 2023 and early 2024, we partnered with the Fashion Institute of Technology ("FIT").
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As part of a design and upcycling competition, we asked eight FIT students to create one-of-a-kind coats from otherwise unwearable or damaged items. The reimagined and upcycled coats were debuted and sold in January 2024. Human Capital Resources Our employees are guided by our mission to empower consignors and buyers to extend the life cycle of luxury goods.
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We are part of a diverse global community, and we aim to reflect that diversity within our team. We believe diversity and inclusion foster a collaborative culture, which fuels our ability to innovate as we work to create a more sustainable future.
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We are proud to have a diverse team, and we recognize there is opportunity for us to continue improving representation, particularly among our senior leadership.
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Below is a breakdown of how our team self-identifies as of December 31, 2023 (table does not reflect, of the total individuals surveyed, approximately 9% who chose not to self-identify, approximately 1% who identified as Native American, and approximately 1% who identified as Hawaiian or Pacific Islander): All Corporate Management Executives Board Black 15 % 13 % 7 % 0 % 13 % Hispanic/Latinx 31 % 16 % 16 % 4 % 0 % Asian 7 % 12 % 11 % 11 % 0 % Two or More Races 4 % 6 % 4 % 4 % 0 % White 33 % 42 % 50 % 63 % 87 % Female 66 % 67 % 62 % 48 % 50 % DEI Vision and Strategy.
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We aim to design equitable future through our four-pillar strategy: People, Culture, Commerce and Community. We are committed to building a strong culture of trust, safety, collaboration and belonging to fuel our purpose, people and performance.
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Since introducing our diversity, equity and inclusion (“DEI”) vision and strategy in 2021, we have taken meaningful action to follow through on those commitments, keeping our employees' voices at the center of our work, and taking a renewed look at our strategy to ensure continued alignment with our mission.
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We continue to assess self-reporting options that reflect our diverse workforce and encourage our employees to share how they self-identify, including gender identity, LGBTQ identity, veteran status, and disability status.
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Since introducing the ability for our employees to share pronouns across our technologies, approximately 62% of our total employee population has chosen to share their pronouns as of December 31, 2023 in support of allyship and gender inclusion. Employee Resource Groups .
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Our Employee Resource Groups (“ERGs”) help to engage employees and advance inclusion and belonging through opportunities for education, awareness, development, community and social connection. Since forming in 2020, our six ERGs have continued to mature and progress into impactful communities that strengthen our culture.
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In 2023, we welcomed the addition of our seventh ERG, Real Chaverim, a space for our Jewish community and allies to share knowledge and experiences. In 2023, ERG membership and participation remained strong with over 9 Table of C ontents 1,000 employees participating in programs focused on leadership, culture, well-being, mental health, and community impact.
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Our groups collaborated to host compelling conversations with diverse thought leaders and experts, test hybrid and location specific approaches for reaching our distributed workforce, and led several local service projects in our authentication centers during Earth Month in April with community partners. Culture.
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In 2023, we continued to roll out our DEI learning platform throughout our businesses in 2023, expanding access to individual contributors and enabling more employees to build and develop inclusive leadership skills through self-paced learning to better serve our people, buyers, consignors and communities.
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When searching for new directors, our board of directors has committed to including in any pool of director candidates for consideration highly qualified candidates who would bring racial, ethnic, and/or gender diversity our board of directors if chosen. Talent Development and Training We believe that the training and developm ent of our employees is critical to our long-term success.
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Entry-level authenticators receive approximately 40 to 80 hours of training depending on their specialty in fashion or fine jewelry. Progression through the authentication training program is an additional minimum of 80 hours of training and at least three months per level.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisks Related to Our Merchandising and Fulfillment 12 Table of C ontents • We may not be able to attract, train and retain specialized personnel and skilled employees. • We may not be able to identify and lease authentication centers in suitable geographic regions. • We may experience damage or destruction to our authentication centers or retail stores in which we store of the majority of the consigned luxury goods we offer through our online marketplace. • Shipping is a critical part of our business and any changes in our shipping arrangements, costs, interruptions in shipping or damage to products in transit could adversely affect our operating results. • We may be unable to successfully leverage technology to automate and drive efficiencies in our operations.
Biggest changeRisks Related to Our Merchandising and Fulfillment • We may not be able to attract, train and retain specialized personnel and skilled employees. • We may not be able to identify and lease authentication centers in suitable geographic regions. • We may experience damage or destruction to our authentication centers or retail stores in which we store of the majority of the consigned luxury goods we offer through our online marketplace. • Shipping is a critical part of our business and any changes in our shipping arrangements, costs, interruptions in shipping or damage to products in transit could adversely affect our operating results. • We may be unable to successfully leverage technology, including artificial intelligence and machine learning, to automate and drive efficiencies in our operations. 11 Table of Contents Risks Related to Data Security, Privacy and Fraud • We rely on third parties to host our website and mobile app and to process payments. • Failure of our data or cyber security could cause us to incur unexpected expenses or compromise our data assets. • We may incur significant losses from fraud.
An epidemic, pandemic or similar serious public health issue, and the measures undertaken by governmental authorities to address it, could significantly disrupt or prevent us from operating our business in the ordinary course for an extended period, and thereby, and/or along with any associated economic and/or social instability or distress, have a material adverse impact on our results of operations, cash flows and financial condition.
An epidemic, pandemic , or similar serious public health issue (a "public health issue") , and the measures undertaken by governmental authorities to address it, could significantly disrupt or prevent us from operating our business in the ordinary course for an extended period, and thereby, and/or along with any associated economic and/or social instability or distress, have a material adverse impact on our results of operations, cash flows and financial condition.
The public disclosure of our Environmental, Social and Governance ( “ ESG ” ) metrics may subject us to risks. We voluntarily report certain metrics and goals for ESG. This transparency is consistent with our commitment to operate our business with positive economic, social, and environmental impact.
The public disclosure of our Environmental, Social and Governance ( “ ESG ” ) metrics and goals may subject us to risks. We voluntarily report certain metrics and goals for ESG. This transparency is consistent with our commitment to operate our business with positive economic, social, and environmental impact.
We lease facilities to store and accommodate the logistics infrastructure required to merchandise and ship pre-owned luxury goods we sell through our online marketplace.
We lease facilities to store and accommodate the logistics infrastructure required to merchandise and ship the pre-owned luxury goods we sell through our online marketplace.
This bifurcation resulted in a debt discount for Notes. See “Note 2—Summary of Significant Accounting Policies— Convertible Senior Notes.” We used the effective interest method to amortize the debt discount to interest expense over the amortization period, which is the expected life of the Notes.
This bifurcation resulted in a debt discount for Convertible Senior Notes. See “Note 2—Summary of Significant Accounting Policies— Convertible Senior Notes.” We used the effective interest method to amortize the debt discount to interest expense over the amortization period, which is the expected life of the Convertible Senior Notes.
As we grow our business, our revenue growth rates may continue to decline in future periods due to a number of factors, including our inability to attract and retain consignors, general economic conditions, including a recession, increased market adoption against which future growth will be measured, increasing competition, slowing demand for items on our online marketplace from existing and new customers, changes to our commission structure, take rate or business model, changes in our total product mix, including as a result of our strategic shift to focus on higher value item or our failure to capitalize on growth opportunities.
As we grow our business, our revenue growth rates may continue to decline in future periods due to a number of factors, including our inability to attract and retain consignors, general economic conditions, including a recession, increased market adoption against which future growth will be measured, increasing competition, slowing demand for items on our online marketplace from existing and new customers, changes to our commission structure, take rate or business model, changes in our total product mix, including as a result of our strategic shift to focus on higher value items or our failure to capitalize on growth opportunities.
The market price of our common stock may fluctuate or decline significantly in response to numerous factors, many of which are beyond our control, including: • actual or anticipated fluctuations in our consignor or buyer base, the level of consignor and buyer engagement, revenue or other operating results; • adverse economic and market conditions, including declines in consumer discretionary spending, currency fluctuations, inflation, disruptions in the financial industry and geopolitical instability; • the research and reports that securities or industry analysts may publish about us, our business, our market or our competitors; • variations between our actual operating results and the expectations of securities analysts, investors and the financial community; • any forward-looking financial or operating information we may provide to the public or securities analysts, any changes in this information or our failure to meet expectations based on this information; • additional shares of our common stock being sold into the market by us or our existing stockholders, or the anticipation of such sales; • hedging activities by market participants; • sudden increased or decreased interest in our stock from retail investors; • substantial fluctuations in the daily trading volume of our common stock; • announcements by us or our competitors of significant products or features, technical innovations, acquisitions, strategic partnerships, joint ventures or capital commitments; • changes in operating performance and stock market valuations of companies in our industry, including our competitors; • price and volume fluctuations in the stock market, including as a result of trends in the economy; • lawsuits threatened or filed against us; • developments in new legislation and pending lawsuits or regulatory actions, including interim or final rulings by judicial or regulatory bodies; and • other events or factors, including those resulting from war or incidents of terrorism, or responses to these events or threats to public health.
The market price of our common stock may fluctuate or decline significantly in response to numerous factors, many of which are beyond our control, including: • actual or anticipated fluctuations in our consignor or buyer base, the level of consignor and buyer engagement, revenue or other operating results; • adverse economic and market conditions, including declines in consumer discretionary spending, currency fluctuations, inflation, disruptions in the financial industry and geopolitical instability; • the research and reports that securities or industry analysts may publish about us, our business, our market or our competitors; • variations between our actual operating results and the expectations of securities analysts, investors and the financial community; • any forward-looking financial or operating information we may provide to the public or securities analysts, any changes in this information or our failure to meet expectations based on this information; • additional shares of our common stock being sold into the market by us or our existing stockholders, or the anticipation of such sales; • hedging activities by market participants; 26 Table of Contents • sudden increased or decreased interest in our stock from retail investors; • substantial fluctuations in the daily trading volume of our common stock; • announcements by us or our competitors of significant products or features, technical innovations, acquisitions, strategic partnerships, joint ventures or capital commitments; • changes in operating performance and stock market valuations of companies in our industry, including our competitors; • price and volume fluctuations in the stock market, including as a result of trends in the economy; • lawsuits threatened or filed against us; • developments in new legislation and pending lawsuits or regulatory actions, including interim or final rulings by judicial or regulatory bodies; and • other events or factors, including those resulting from war or incidents of terrorism, or responses to these events or threats to public health.
Failure of our data security could cause us to incur unexpected expenses or compromise our data assets. In the ordinary course of our business, we collect, process and store certain personal information (including credit card information) and other data relating to individuals, such as our consignors, buyers and employees.
Failure of our data or cyber security could cause us to incur unexpected expenses or compromise our data assets. In the ordinary course of our business, we collect, process and store certain personal information (including credit card information) and other data relating to individuals, such as our consignors, buyers and employees.
These provisions include the following: • establish a classified board of directors so that not all directors are elected at one time; • permit the board of directors to establish the number of directors and fill any vacancies and newly-created directorships; • provide that directors may only be removed for cause; • require super-majority voting to amend some provisions in our certificate of incorporation and bylaws; • authorize the issuance of “blank check” preferred stock that our board of directors could use to implement a stockholder rights plan; • prohibit stockholders from calling special meetings of stockholders; • prohibit stockholder action by written consent; • provide that the board of directors is expressly authorized to make, alter or repeal our bylaws; • restrict the forum for certain litigation against us to Delaware; and • establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings.
These provisions include the following: • establish a classified board of directors so that not all directors are elected at one time; • permit the board of directors to establish the number of directors and fill any vacancies and newly-created directorships; • provide that directors may only be removed for cause; • require super-majority voting to amend some provisions in our certificate of incorporation and bylaws; • authorize the issuance of “blank check” preferred stock that our board of directors could use to implement a stockholder rights plan; • prohibit stockholders from calling special meetings of stockholders; • prohibit stockholder action by written consent; • provide that the board of directors is expressly authorized to make, alter or repeal our bylaws; • restrict the forum for certain litigation against us to Delaware; and 27 Table of Contents • establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings.
Some of our competitors may have greater resources than we do, which may allow them to derive greater revenue and profits from their existing buyer bases, acquire consignors at lower costs, achieve more favorable total product mixes or respond more quickly than we can to new or emerging technologies, such as artificial intelligence and machine learning, and changes in consumer shopping behavior or preferences.
Some of our competitors may have greater resources than we do, which may allow them to derive greater revenue and profits from their existing buyer bases, acquire consignors at lower costs, achieve more favorable total product mixes or respond more quickly than we can to new or emerging technologies, such as artificial intelligence, and changes in consumer shopping behavior or preferences.
Additionally, we recorded an increase to the Notes balance by an aggregate amount of $98.6 million as a result of the reversal of the separation of the convertible debt between debt and equity.
Additionally, we recorded an increase to the Convertible Senior Notes balance by an aggregate amount of $98.6 million as a result of the reversal of the separation of the convertible debt between debt and equity.
Prior to the adoption of ASU 2020-06, under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 470-20, Debt with Conversion and Other Options, we accounted for the liability and equity components of the Notes separately because the Notes may be settled entirely or partially in cash upon conversion in a manner that reflects our economic interest cost.
Prior to the adoption of ASU 2020-06, under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 470-20, Debt with Conversion and Other Options, we accounted for the liability and equity components of the Convertible Senior Notes separately because the Convertible Senior Notes may be settled entirely or partially in cash upon conversion in a manner that reflects our economic interest cost.
In addition, following adoption, we are required to calculate diluted earnings per share using the “if converted” method, which assumes that all of the Notes were converted solely into shares of common stock at the beginning of the reporting period, unless the result would be anti-dilutive, which can adversely affect our diluted earnings per share.
In addition, following adoption, we are required to calculate diluted earnings per share using the “if converted” method, which assumes that all of the Convertible Senior Notes were converted solely into shares of common stock at the beginning of the reporting period, unless the result would be anti-dilutive, which can adversely affect our diluted earnings per share.
In addition, even if holders of the Notes do not elect to convert their Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the Notes as a current rather than long-term liability, which could result in a material reduction in our net working capital.
In addition, even if holders of the Convertible Senior Notes do not elect to convert their Convertible Senior Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the Convertible Senior Notes as a current rather than long-term liability, which could result in a material reduction in our net working capital.
If one or more holders elect to convert their Notes, unless we elect to satisfy our conversion obligation by delivering shares of our common stock (other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of our conversion obligation in cash, which could adversely affect our liquidity.
If one or more holders elect to convert their Convertible Senior Notes, unless we elect to satisfy our conversion obligation by delivering shares of our common stock (other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of our conversion obligation in cash, which could adversely affect our liquidity.
The extent to which an epidemic, pandemic or similar serious public health issue could impact our business, results of operations, financial condition and liquidity will depend on numerous evolving factors, known and unknown, that we cannot predict, including the duration and scope of the epidemic, pandemic or similar public health issue; government, business and individual actions that have been and continue to be taken in response; the impact of the public health issue on national and global economic activity; disruption of the financial and labor markets, including the possibility of a national or global economic recession or depression; the limitations on operations requiring employees to perform their duties in-person, such as our warehouse operations; the potential for shipping difficulties, including delayed deliveries to our buyers; and weakened consumer demand.
The extent to which a public health issue could impact our business, results of operations, financial condition and liquidity will depend on numerous evolving factors, known and unknown, that we cannot predict, including the duration and scope of the public health issue; government, business and individual actions that have been and continue to be taken in response; the impact of the public health issue on national and global economic activity; disruption of the financial and labor markets, including the possibility of a national or global economic recession or depression; the limitations on operations requiring employees to perform their duties in-person, such as our warehouse operations; the potential for shipping difficulties, including delayed deliveries to our buyers; and weakened consumer demand.
U.S. federal, state and local taxing authorities are currently reviewing the appropriate treatment of companies engaged in Internet commerce and considering changes to existing tax or other laws that could levy sales, income, consumption, use or other taxes relating to our activities, and/or impose obligations on us to collect such taxes.
U.S. federal, state and local taxing authorities are currently reviewing the appropriate treatment of companies engaged in Internet commerce and considering changes to existing tax or other laws or may change interpretation of existing tax or other laws that could levy sales, income, consumption, use or other taxes relating to our activities, and/or impose obligations on us to collect such taxes.
While we continue to invest and innovate heavily in our authentication processes and methods, and we reject any goods we believe to be counterfeit, we cannot be certain that every counterfeit item consigned to us will be identified.
While we continue to invest and innovate heavily in our authentication processes and methods, and we reject any goods we believe to be counterfeit, we cannot be certain that every counterfeit item will be identified.
However, we adopted ASU 2020-06 as of January 1, 2022, under which we now account for the Notes as a single liability measured at their amortized cost.
However, we adopted ASU 2020-06 as of January 1, 2022, under which we now account for the Convertible Senior Notes as a single liability measured at their amortized cost.
Such recalls or voluntary removal of goods can result in, among other things, lost sales, diverted resources, potential harm to our reputation and increased customer service costs and legal expenses, which could have a material adverse effect on our operating results. 25 Table of C ontents Application of existing tax laws, rules or regulations are subject to interpretation by taxing authorities.
Such recalls or voluntary removal of goods can result in, among other things, lost sales, diverted resources, potential harm to our reputation and increased customer service costs and legal expenses, which could have a material adverse effect on our operating results. Application of existing tax laws, rules or regulations are subject to interpretation by taxing authorities.
It remains unclear how these new amendments will be interpreted or when the second round of rule making activity will conclude. The CCPA may require us to modify our data processing practices and policies and to incur substantial costs and expenses in an effort to comply.
It remains unclear how these new amendments will be interpreted or when the second round of rulemaking activity will conclude. The CCPA may require us to modify our data processing practices and policies and to incur substantial costs and expenses in an effort to comply.
The CCPA, as amended, removes the exclusion of employment data from its auspices, adds new consumer privacy rights (such as the right to correct inaccurate personal information, or the right to opt out of the “sharing” of personal information for the purposes of cross-context behavioral advertising), expands business’s obligations to secure contractual obligations from service providers and third parties, and expands business’s obligations with respect to opt-out preference signals.
The CCPA, as amended, removes the exclusion of employment data from its auspices, adds new consumer privacy rights (such as the right to correct inaccurate personal information, or the right to opt out of the “sharing” of personal information for the purposes of cross-context behavioral advertising), expands business’s obligations to secure contractual obligations from service providers and third parties, and expands business’s obligations with respect to automated opt-out 23 Table of Contents preference signals.
If such tax or other laws, rules or regulations are amended, or if new unfavorable laws, rules or regulations are enacted, the results could increase our tax payments or other obligations, prospectively or retrospectively, subject us to interest and penalties, decrease the demand for our services if we pass on such costs to our buyers or consignors, result in increased costs to update or expand our technical or administrative infrastructure or effectively limit the scope of our business activities if we decided not to conduct business in particular jurisdictions.
If such tax or other laws, rules or regulations are amended or interpretations are changed, or if new unfavorable laws, rules or regulations are enacted, the results could increase our tax payments or other obligations, prospectively or retrospectively, subject us to interest and penalties, decrease the demand for our services if we pass on such costs to our buyers or consignors, result in increased costs to update or expand our technical or administrative infrastructure or effectively limit the scope of our business activities if we 25 Table of Contents decided not to conduct business in particular jurisdictions.
No assurances can be made that declines in the market price of our common stock will not occur in the future in connection with such activity. 27 Table of C ontents Delaware law and provisions in our certificate of incorporation and bylaws could make a merger, tender offer or proxy contest difficult, thereby depressing the trading price of our common stock.
No assurances can be made that declines in the market price of our common stock will not occur in the future in connection with such activity. Delaware law and provisions in our certificate of incorporation and bylaws could make a merger, tender offer or proxy contest difficult, thereby depressing the trading price of our common stock.
National retailers and brands set their own retail prices and promotional discounts on new luxury goods, which could adversely affect our value proposition to consignors and buyers. 17 Table of C ontents National retailers and brands set pricing for new luxury goods that they sell and from time to time offer sales and promotional pricing, particularly during the fourth quarter holiday season, when we have historically made a substantial portion of our annual sales.
National retailers and brands set their own retail prices and promotional discounts on new luxury goods, which could adversely affect our value proposition to consignors and buyers. 16 Table of Contents National retailers and brands set pricing for new luxury goods that they sell and from time to time offer sales and promotional pricing, particularly during the fourth quarter holiday season, when we have historically made a substantial portion of our annual sales.
Any actual or perceived compromise of our systems or data security measures or those of third parties with whom we do business, or any failure to prevent or mitigate the loss of personal or other confidential information and delays in detecting or providing notice of any such compromise or loss could disrupt our operations, damage our reputation, cause some participants to decrease or stop their use of our online marketplace and subject us to litigation, government action, increased transaction fees, remediation costs, regulatory fines or penalties or other additional costs and liabilities that could adversely affect our business, financial condition and operating results.
Any actual or perceived compromise of our systems or data security measures or those of third parties with whom we do business, or any failure to prevent or mitigate the loss of personal or other confidential information and delays in detecting or providing notice of any such compromise or loss could disrupt our operations, damage our reputation, cause some participants to decrease or stop their use of our online marketplace and subject us to litigation, government action, increased transaction 21 Table of Contents fees, remediation costs, regulatory fines or penalties or other additional costs and liabilities, as well as reputational impact, that could adversely affect our business, financial condition and operating results.
Even if our marketing and advertising expenses result in increased sales, the increase might not offset our related expenditures. We also face the unique challenge of attracting consignors and buyers to our online marketplace who may be unfamiliar with both our brand and our consignment business 19 Table of C ontents model.
Even if our marketing and advertising expenses result in increased sales, the increase might not offset our related expenditures. We also face the unique challenge of attracting consignors and buyers to our online marketplace who may be unfamiliar with both our brand and our consignment business model.
Risks Relating to Litigation and Regulatory Uncertainty • We are currently, and may be in the future, party to lawsuits and other claims. • Our use and other processing of personal information and other data is subject to laws and obligations relating to privacy and data protection. • We pay or collect sales taxes in all jurisdictions which require such taxes. • Failure to comply with applicable laws or regulations may subject us to fines, penalties, loss of licensure, registration, facility closures or other governmental enforcement action. • Application of existing tax laws, rules or regulations are subject to interpretation by taxing authorities. • Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited. • If our internal control over financial reporting or our disclosure controls and procedures are not effective, we may not be able to accurately report our financial results, prevent fraud or file our periodic reports in a timely manner, which may cause investors to lose confidence in our reported financial information.
Risks Relating to Litigation and Regulatory Uncertainty • We are currently, and may be in the future, party to lawsuits and other claims. • Our use and other processing of personal information and other data is subject to laws and obligations. • Regulation of “cookie” tracking technologies or changes in such technologies could harm our business and operating results. • We pay or collect sales taxes in all jurisdictions which require such taxes. • Failure to comply with applicable laws or regulations may subject us to fines, penalties, loss of licensure, registration, facility closures or other governmental enforcement action. • Application of existing tax laws, rules or regulations are subject to interpretation by taxing authorities. • Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited. • If our internal control over financial reporting or our disclosure controls and procedures are not effective, we may not be able to accurately report our financial results, prevent fraud or file our periodic reports in a timely manner, which may cause investors to lose confidence in our reported financial information.
If we fail to respond to competition effectively, our business and operating results may be adversely affected. Risks Relating to Marketing and Brand Management Our success depends on the accuracy and reliability of our authentication process.
If we fail to respond to competition effectively, our business and operating results may be adversely affected. Risks Relating to Marketing and Brand Management Our success depends on the accuracy and reliability of our authentication processes and methods.
The counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various 29 Table of C ontents derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions prior to the maturity of the Notes (and are likely to do so on each exercise date of the capped call transactions), or following any termination of any portion of the capped call transactions in connection with any repurchase, redemption or early conversions of the Notes or otherwise.
The counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions prior to the maturity of the 2025 Notes and the 2028 Notes (and are likely to do so on each exercise date of the capped call transactions), or following any termination of any portion of the capped call transactions in connection with any repurchase, redemption or early conversions of the 2025 Notes and the 2028 Notes or otherwise.
Many of these factors have occurred, and may occur in the future, as a result of the COVID-19 pandemic and recent macroeconomic uncertainty, rising interest rates, inflationary pressures, credit constraints and geopolitical instability due in part to the conflict between Russia and Ukraine and the Israel-Hamas war.
Many of these factors have occurred, and may occur in the future, as a result of macroeconomic uncertainty, rising interest rates, inflationary pressures, credit constraints and geopolitical instability due in part to the conflict between Russia and Ukraine and the Israel-Hamas war.
The occurrence of any of the following risks or additional risks and uncertainties not presently known to us or that we currently believe to be immaterial could materially and adversely affect our business, financial condition or results of operations. 13 Table of C ontents Risks Relating to Our Business and Industry We have a history of losses and we may not achieve or maintain profitability in the future.
The occurrence of any of the following risks or additional risks and uncertainties not presently known to us or that we currently believe to be immaterial could materially and adversely affect our business, financial condition or results of operations. 12 Table of Contents Risks Relating to Our Business and Industry We have a history of losses and we may not achieve or maintain profitability in the future.
Risks Relating to Supply We may not be able to obtain sufficient new and recurring supply of pre-owned luxury goods. 16 Table of C ontents Our success depends on our ability to generate a consistent supply of luxury goods to sell through our stores and online marketplace. To do this we must cost-effectively attract, retain and grow relationships with consignors.
Risks Relating to Supply We may not be able to obtain sufficient new and recurring supply of pre-owned luxury goods. 15 Table of Contents Our success depends on our ability to generate a consistent supply of luxury goods to sell through our stores and online marketplace. To do this we must cost-effectively attract, retain and grow relationships with consignors.
Risks Relating to Our Strategy We may be unable to execute on our retail growth strategy. We currently operate a limited number of retail stores, including a number of Neighborhood Stores with smaller footprints. We believe that retail stores are effective at raising brand awareness with consignors and buyers and generating new supply.
Risks Relating to Our Strategy We may be unable to execute on our retail growth strategy. We currently operate a limited number of retail stores. We believe that retail stores are effective at raising brand awareness with consignors and buyers and generating new supply.
If we fail to successfully locate, hire, train and retain personnel in the future, our operations would be negatively impacted, which would have an adverse effect on our business, financial condition and operating results. 20 Table of C ontents We may not be able to identify and lease authentication centers in suitable geographic regions.
If we fail to successfully locate, hire, train and retain personnel in the future, our operations would be negatively impacted, which would have an adverse effect on our business, financial condition and operating results. 19 Table of Contents We may not be able to identify and lease authentication centers in suitable geographic regions.
This activity could also cause or avoid an increase or a decrease in the market price of our common stock. Item 1B. Unresolved Staff Comments. None.
This activity could also cause or avoid an increase or a decrease in the market price of our common stock. 30 Table of Contents Item 1B. Unresolved Staff Comments. None.
These laws, rules and regulations are constantly evolving, and we expect that there will continue to be new proposed laws, regulations and industry standards concerning privacy, data protection and information security in the United States, the EU and other jurisdictions.
These laws, rules and regulations are constantly evolving, and we expect that there will continue to be new proposed laws, regulations and industry standards concerning privacy, data protection and information security in the United States, the European Union (the "EU"), the United Kingdom (the "UK") and other jurisdictions.
If we are unable to generate such cash flow to service our debt, we may be required to adopt one or more alternatives, such as selling assets, incurring additional debt, restructuring debt or issuing additional equity on terms that may be onerous or highly dilutive. 28 Table of C ontents These alternatives may be insufficient to overcome macroeconomic conditions that may affect us.
If we are unable to generate such cash flow to service our debt, we may be required to adopt one or more alternatives, such as selling assets, incurring additional debt, restructuring debt or issuing additional equity on terms that may be onerous or highly dilutive. These alternatives may be insufficient to overcome macroeconomic conditions that may affect us.
Because our operating expenses are relatively fixed in the short 14 Table of C ontents term, any failure to achieve our revenue expectations would have a direct adverse effect on our business, financial condition, operating results and the price of our stock. We have experienced seasonal and quarterly variations in our revenue and operating results.
Because our operating expenses are relatively fixed in the short term, any 13 Table of Contents failure to achieve our revenue expectations would have a direct adverse effect on our business, financial condition, operating results and the price of our stock. We have experienced seasonal and quarterly variations in our revenue and operating results.
Transactions relating to our Notes may dilute the ownership interest of our stockholders. The conversion of some or all of our outstanding Notes would dilute the ownership interests of existing stockholders to the extent we deliver shares upon conversion of any such Notes.
Transactions relating to our Convertible Senior Notes or the Warrants may dilute the ownership interest of our stockholders. The conversion or exercise of some or all of our outstanding Convertible Senior Notes or Warrants would dilute the ownership interests of existing stockholders to the extent we deliver shares upon conversion or exercise of any such Convertible Senior Notes or Warrants.
Optimal space may become scarce, and where it is available, the lease terms offered by landlords may become increasingly competitive. Companies who have more financial resources and negotiating leverage than us may be more attractive tenants and, as a result, may outbid us for the facilities we seek.
Our capacity needs may grow as our business grows. Optimal space may become scarce, and where it is available, the lease terms offered by landlords may become increasingly competitive. Companies who have more financial resources and negotiating leverage than us may be more attractive tenants and, as a result, may outbid us for the facilities we seek.
Future amendments to the accounting treatment for the Notes, could adversely affect our financial results, the trading price of our common stock and the trading price of the Notes. The capped call transactions may affect the value of the Notes and our common stock.
Future amendments to the accounting treatment for the Convertible Senior Notes, could adversely affect our financial results, the trading price of our common stock and the trading price of the Convertible Senior Notes. The capped call transactions may affect the value of the 2025 Notes, the 2028 Notes and our common stock.
Risks Relating to Our Business and Industry • We have a history of losses and we may not be able to achieve or maintain profitability in the future. • The savings plan we implemented in February 2023 may not result in anticipated savings, could result in total costs and expenses that are greater than expected and could disrupt our business. • We may not be able to return to historic levels of revenue growth rate or effectively manage growth or new opportunities. • We may not accurately forecast revenue and appropriately plan our expenses. • We have experienced seasonal and quarterly variations in our revenue and operating results. • Greater than expected product returns may exceed our reserve for returns. • We may require additional capital to support our business growth. • Public health emergencies or outbreaks of epidemics, pandemics, or contagious diseases such as the COVID-19 pandemic have adversely affected, and could in the future, adversely affect our business and the business of our consignors and buyers. • The failure of any bank in which we deposit our funds could reduce the amount of cash we have available to pay distributions and make additional investments.
Risks Relating to Our Business and Industry • We have a history of losses and we may not be able to achieve or maintain profitability in the future. • The savings plan we implemented in February 2023 may not result in anticipated savings. • We may not return to historic levels of revenue growth rate or effectively manage growth or new opportunities. • We may not accurately forecast revenue and appropriately plan our expenses. • We have experienced seasonal and quarterly variations in our revenue and operating results. • Greater than expected product returns may exceed our reserve for returns. • We may require additional capital to support our business growth. • Public health emergencies or outbreaks of epidemics, pandemics, or contagious diseases have adversely affected, and could in the future, adversely affect our business and the business of our consignors and buyers. • The failure of any bank in which we deposit our funds could reduce the amount of cash we have available.
The new California Privacy Protection Agency completed its first round of rule making but has left many new requirements, such as data privacy and security risk assessments and the right to opt out of certain data profiling activities, for its second round of rule making, which began in March 2023.
The new California Privacy Protection Agency completed its first round of rulemaking but has left many new requirements, such as data privacy and security risk assessments and the right to opt out of certain data profiling activities, for its second round of rulemaking, which began in March 2023 and has yet to be finalized.
Additionally, adverse economic changes could reduce consumer confidence, and could thereby negatively affect our operating results. In the event of a prolonged economic downturn or acute recession, significant inflation, or decreased supply, consumer spending habits could be adversely affected, and we could experience lower than expected revenue.
Additionally, adverse economic changes could reduce consumer confidence, and could thereby negatively affect our operating results. In the event of a prolonged economic downturn or acute recession, significant inflation, or decreased supply, consumer spending habits could be adversely affected, and we could experience lower than expected revenue. Any of these developments could harm our business, financial condition and operating results.
Risks Relating to Demand • Our continued growth depends on attracting new and retaining repeat buyers. • National retailers and brands set their own retail prices and promotional discounts on new luxury goods, which could adversely affect our value proposition to consignors and buyers. • We must successfully gauge and respond to changing preferences among our consignors and buyers. • We may be unable to replicate our business model for newer categories of consigned goods or different product mixes of consigned goods. • We rely on consumer discretionary spending, which is adversely affected by economic downturns, including economic recession or depression, and other macroeconomic conditions or trends. • Our industry is highly competitive and we may not be able to compete effectively.
Risks Relating to Demand • Our continued growth depends on attracting new and retaining repeat buyers. • National retailers and brands set their own retail prices and promotional discounts on new luxury goods, which could adversely affect our value proposition to consignors and buyers. • We must successfully gauge and respond to changing preferences among our consignors and buyers. • We may be unable to replicate our business model for newer categories of goods. • We rely on consumer discretionary spending, which is adversely affected by economic downturns. • Our industry is highly competitive and we may not be able to compete effectively.
Our compliance with these and other ESG-related laws, regulations and policies could be costly, and any failure to meet our goals, change in our ESG priorities or strategies, or perception that we fail to act responsibly in the areas in which we report, may negatively affect our reputation and the value of our brand, including by impacting employee engagement and retention, the willingness of our consignors and buyers and our partners and vendors to do business with us, or investors’ willingness to purchase or hold shares of our common stock, any of which could adversely affect our business, financial performance, and growth.
Our compliance with these and other ESG-related laws, regulations and policies could be costly, and any failure to meet our goals, change in our ESG goals, priorities or strategies, change in or evolution of our methodologies for reporting ESG metrics, adjustment to previously reported information, including to reflect new or evolved methodologies for reporting ESG metrics, or perception that we fail to act responsibly in the areas in which we report, may negatively affect our reputation and the value of our brand, including by impacting employee engagement and retention, the willingness of our consignors and buyers and our partners and vendors to do business with us, or investors’ willingness to purchase or hold shares of our common stock, any of which could adversely affect our business, financial performance, and growth.
We have created our own purpose-built technology to operate our business, which may lack efficiency or become obsolete as 21 Table of C ontents we grow and we also rely on technology from third parties.
We have created our own purpose-built technology to operate our business, which may lack efficiency or become obsolete as we grow and we also rely on technology from third parties.
Given the increased regulatory focus on the use of data for advertising, we may be subject to new and unexpected regulations, including proposals for regulation of artificial intelligence or other automated decision making processes.
Given the increased legislative and regulatory enforcement focus on the use of data for advertising and artificial intelligence, we may be subject to new and unexpected regulatory interpretations and rulemaking efforts, including proposals for regulation of artificial intelligence or other automated decision-making processes.
Risks Related to Marketing and Brand Management • Our success depends on the accuracy and reliability of our authentication process. • We may not succeed in promoting and sustaining our brand. • Our marketing and advertising activity may fail to efficiently drive growth in consignors and buyers. • We rely on third parties to drive traffic to our website. • Use of social media, emails and text messages may adversely impact our reputation or subject us to fines. • The public disclosure of our Environmental, Social and Governance (“ESG”) metrics may subject us to risks.
Risks Related to Marketing and Brand Management • Our success depends on the accuracy and reliability of our authentication processes and methods. • We may not succeed in promoting and sustaining our brand. • Our marketing and advertising activity may fail to efficiently drive growth in consignors and buyers. • We rely on third parties to drive traffic to our website. • Use of social media, emails and text messages may adversely impact our reputation or subject us to fines. • The public disclosure of our ESG (as defined below) metrics and goals may subject us to risks.
If we struggle to attract new consignors and buyers to our luxury resale model, or are unable to maintain our marketing and advertising channels on cost-effective terms or replace or supplement existing marketing and advertising channels with similarly or more effective channels, our marketing and advertising expenses could increase substantially, our consignor and buyer base could be adversely affected, and our business, operating results, financial condition and brand could suffer.
If we struggle to attract new consignors and buyers to our luxury resale model, or are unable to maintain our marketing and advertising channels on cost-effective terms or replace or supplement existing marketing and advertising channels with similarly or more effective channels, our marketing and advertising expenses could increase substantially, our consignor and buyer base could be adversely affected, and our business, operating results, financial condition and brand could suffer. 18 Table of Contents We rely on third parties to drive traffic to our website.
We or our vendors, including cloud storage providers, could be the subject to attacks from computer viruses, break-ins phishing attacks, social engineering, ransomware attacks, unauthorized use, attempts to overload services with denial-of-service or other attacks, which may allow hackers or other unauthorized parties, including our employees, to gain access to personal information or other data, including payment card data or confidential business information.
We or our vendors, including cloud storage providers as well as other third parties with whom we do business, could be subject to attacks from computer viruses, break-ins phishing attacks, social engineering, ransomware attacks, unauthorized use, misconduct or usage errors by our employees, attempts to overload services with denial-of-service or other attacks, which may allow hackers or other unauthorized parties, including our employees, to gain access to personal information or other data, including payment card data or confidential business information.
These applications may become subject to account takeovers, denials of service, content scraping, or other attacks, which may result in our members' accounts being compromised. We and our vendors have faced these attacks previously and regularly must defend against or respond to such incidents.
These applications may become subject to account takeovers, denials of service, content scraping, or other attacks, which may result in our members' accounts being compromised. We and our vendors, as well as other third parties with whom we do business, have faced these attacks previously and regularly must defend against or respond to such incidents.
Recent litigation in the EU has driven significant changes in enforcement and interpretation, and w e cannot yet fully determine the impact these or future laws, rules and regulations may have on our business or operations.
Further, r ecent litigation in the EEA and the UK has driven significant changes in enforcement and interpretation, and w e cannot yet fully determine the impact these or future laws, rules and regulations may have on our business or operations.
We experienced net losses of $236.1 million, $196.4 million and $168.5 million in 2021, 2022 and 2023, respectively, and as of December 31, 2023 we had an accumulated deficit of $1,119.6 million. Our key initiatives currently include growing profitable supply, improving efficiencies, and pursuing new revenue streams.
We experienced net losses of $196.4 million, $168.5 million, and $134.2 million in 2022, 2023 and 2024, respectively, and as of December 31, 2024 we had an accumulated deficit of $1,253.8 million. Our key initiatives currently include growing profitable supply, improving efficiencies, and pursuing new revenue streams.
We compete with vendors of new and pre-owned luxury goods, including branded luxury goods stores, department stores, traditional brick-and-mortar consignment stores, pawn shops, auction houses, specialty retailers, discount chains, independent retail stores, the online offerings of traditional retail competitors, resale players focused on niche or single categories, as well as technology-enabled marketplaces that may offer the same or similar luxury goods and services that we offer.
Our industry is highly competitive and we may not be able to compete effectively. 17 Table of Contents We compete with vendors of new and pre-owned luxury goods, including branded luxury goods stores, department stores, traditional brick-and-mortar consignment stores, pawn shops, auction houses, specialty retailers, discount chains, independent retail stores, the online offerings of traditional retail competitors, resale players focused on niche or single categories, as well as technology-enabled marketplaces that may offer the same or similar luxury goods and services that we offer.
The techniques used to obtain unauthorized access or to sabotage systems change frequently and generally are not identified until they are launched against a target, and we and our vendors may be unable to anticipate these techniques or to implement adequate preventative measures.
The techniques used to obtain unauthorized access or to sabotage systems change frequently and generally are not identified until they are launched against a target, and we and our vendors, as well as other third parties with whom we do business, may be unable to anticipate these techniques or to implement adequate preventative measures.
We may be unable to make such changes and modifications in a commercially reasonable manner or at all, and our ability to develop new products and features could be limited. We pay or collect sales taxes in all jurisdictions which require such taxes.
We may be unable to make such changes and modifications in a commercially reasonable manner or at all, and our ability to develop new products and features could be limited.
Our form of consignor agreement 22 Table of C ontents includes a representation that the consignor has the necessary right and title to the goods they may consign, and we include such a rule and requirement in our terms of service prohibiting the listing of stolen or otherwise illegal products.
Our form of consignor agreement includes a representation that the consignor has the necessary right and title to the goods they may consign, and we include such a rule and requirement in our terms of service prohibiting the listing of stolen or otherwise illegal products. In addition, we have implemented protective measures to detect such products.
In addition, the risks and uncertainties described elsewhere in this “Risk Factors” section may be exacerbated by an epidemic, pandemic or similar serious public health issue. 15 Table of C ontents The failure of any bank in which we deposit our funds could reduce the amount of cash we have available to pay distributions and make additional investments.
In addition, the risks and uncertainties described elsewhere in this “Risk Factors” section may be exacerbated by a public health issue. 14 Table of Contents The failure of any bank in which we deposit our funds could reduce the amount of cash we have available to pay distributions and make additional investments.
If the Notes become convertible under the terms of the indenture, and if holders subsequently elect to convert the Notes, we could be required to deliver to them a significant number of shares of our common stock.
If the Convertible Senior Notes or Warrants become convertible or exercisable under the terms of the applicable indenture or warrant agency agreement, and if holders subsequently elect to convert or exercise the Convertible Senior Notes or Warrants, we could be required to deliver to them a significant number of shares of our common stock.
While we expect these technologies to improve productivity in many of our merchandising operations, including pricing, copywriting, authentication, photography and photo retouching, any flaws or failures of such technologies could cause interruptions in and delays to our operations which may harm our business.
While we expect these 20 Table of Contents technologies to improve productivity in many of our merchandising operations, including pricing, copywriting, authentication, photography and photo retouching, any flaws or failures of such technologies could cause interruptions in and delays to our operations which may harm our business. Artificial intelligence technologies create specific risks that require tailored oversight.
If a court were to find the exclusive-forum provision to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could harm our results of operations. Risks Related to Our Outstanding Notes We have incurred a significant amount of debt and may incur additional indebtedness in the future.
If a court were to find the exclusive-forum provision to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could harm our results of operations.
We may be unable to successfully leverage technology to automate and drive efficiencies in our operations. We are building automation, artificial intelligence, machine learning and other capabilities to drive efficiencies in our merchandising and fulfillment operations. As we continue to add capacity, capabilities and automation, our operations will become increasingly complex and challenging.
We may be unable to successfully leverage technology, including artificial intelligence and machine learning, to automate and drive efficiencies in our operations. We are building automation, artificial intelligence, machine learning and other capabilities to drive efficiencies in our merchandising and fulfillment operations.
An increasing number of states have considered or adopted laws that impose tax collection obligations on out-of-state sellers of goods. Additionally, in 2018, the Supreme Court of the United States ruled in South Dakota v.
We pay or collect sales taxes in all jurisdictions which require such taxes. 24 Table of Contents An increasing number of states have considered or adopted laws that impose tax collection obligations on out-of-state sellers of goods. Additionally, in 2018, the Supreme Court of the United States ruled in South Dakota v.
Risks Relating to Ownership of Our Common Stock The market price of our common stock may be volatile or may decline steeply or suddenly regardless of our operating performance and we may not be able to meet investor or analyst expectations. 26 Table of C ontents If you purchase shares of our common stock, you may not be able to resell those shares at or above the price you paid.
Risks Relating to Ownership of Our Common Stock The market price of our common stock may be volatile or may decline steeply or suddenly regardless of our operating performance and we may not be able to meet investor or analyst expectations.
Our online marketplace represents a substantial departure from the traditional resale market for luxury goods. While our business grew rapidly prior to the COVID-19 pandemic, the resale market for luxury goods may not continue to develop in a manner that we expect or that otherwise would be favorable to our business.
While our business grew rapidly prior to the COVID-19 pandemic, the resale market for luxury goods may not continue to develop in a manner that we expect or that otherwise would be favorable to our business. Changes in our market make it difficult to assess our future performance.
For example, in November 2018, Chanel filed a lawsuit against us in the U.S. District Court for the Southern District of New York bringing various trademark and advertising-related claims under the Lanham Act and New York state law analogues.
For example, in November 2018, Chanel filed a lawsuit against us in the U.S. District Court for the Southern District of New York bringing various trademark and advertising-related claims under the Lanham Act and New York state law analogues. The final outcome of this litigation, including our liability, if any, with respect to Chanel’s claims, is uncertain.
Risks Relating to Our Strategy • We may be unable to execute on our retail strategy. • Expansion of our operations internationally will require significant management attention and resources. • Our growth strategies may not be successfully implemented, help us achieve profitability or generate sustainable revenue and profit.
Risks Relating to Our Strategy • We may be unable to execute on our retail strategy. • Expansion of our operations internationally will require significant management attention and resources. • Our growth strategies may not be successful.
In connection with the pricing of the Notes, we entered into privately negotiated capped call transactions with certain counterparties. The capped call transactions cover the number of shares of our common stock initially underlying the Notes. The capped call transactions are expected to offset the potential dilution to our common stock upon any conversion of the Notes.
In connection with the pricing of the 2025 Notes and the 2028 Notes , we entered into privately negotiated capped call transactions with certain counterparties. The capped call transactions cover the number of shares of our common stock initially underlying the 2025 Notes and the 2028 Notes .
In connection with establishing their initial hedges of the capped call transactions, the counterparties or their respective affiliates entered into various derivative transactions with respect to our common stock.
The capped call transactions are expected to offset the potential dilution to our common stock upon any conversion of the 2025 Notes and the 2028 Notes . In connection with establishing their initial hedges of the capped call transactions, the counterparties or their respective affiliates entered into various derivative transactions with respect to our common stock.
We rely on third parties to drive traffic to our website. We rely in part on digital advertising, including search engine marketing, to promote awareness of our online marketplace, grow our business, attract new consignors and buyers and increase engagement with existing consignors and buyers.
We rely in part on digital advertising, including search engine marketing, to promote awareness of our online marketplace, grow our business, attract new consignors and buyers and increase engagement with existing consignors and buyers. In particular, we rely on search engines and major mobile app stores as important marketing channels.
The final outcome of this litigation, 23 Table of C ontents including our liability, if any, with respect to Chanel’s claims, is uncertain. An unfavorable outcome in this or similar litigation could adversely affect our business and could lead to other similar lawsuits. See “Part II, Item 1 – Legal Proceedings” for a description of the Chanel litigation.
An unfavorable outcome in this or similar litigation could adversely affect our business and could lead to other similar lawsuits. See “Part II, Item 1 – Legal Proceedings” for a description of the Chanel litigation.
For instance, from time to time, we are contacted by companies controlling brands of goods consignors sell, demanding that we cease referencing those brands in connection with such sales, whether in advertising or on our website.
Third parties may dispute the scope of that doctrine and challenge our ability to reference their intellectual property in the course of our business. For instance, from time to time, we are contacted by companies controlling brands of goods consignors sell, demanding that we cease referencing those brands in connection with such sales, whether in advertising or on our website.
The conversion of the Notes, if triggered, may adversely affect our financial condition and operating results. In the event the conditional conversion feature of the Notes is triggered, holders of the Notes will be entitled to convert their Notes at any time during specified periods at their option.
In the event the conditional conversion feature of the Convertible Senior Notes is triggered, holders of the Convertible Senior Notes will be entitled to convert their Convertible Senior Notes at any time during specified periods at their option.
If we are unable to protect our trademarks or domain names, our brand recognition and reputation would suffer, we would incur significant expense reestablishing brand equity and our operating results would be adversely impacted. Risks Relating to Litigation and Regulatory Uncertainty We are currently, and may be in the future, party to lawsuits and other claims.
If we are unable to protect our trademarks or domain names, our brand recognition and reputation would suffer, we would incur significant expense reestablishing brand equity and our operating results would be adversely impacted.
Any debt financing secured by us could involve restrictive covenants relating to our capital-raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities in the future. In addition, we may not be able to obtain additional financing on terms favorable to us, if at all.
Our 2029 Notes (as defined below) contain, and any other debt financing secured by us could also contain, restrictive covenants relating to our capital-raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities in the future.
Expansion of our operations internationally will require significant management attention and resources. While we have members from outside the United States who purchase items from our online marketplace, we have not expanded our physical operations internationally. If we choose to do so, we would need to adapt to various local cultures, languages, standards, laws and regulations and policies.
Expansion of our operations internationally will require significant management attention and resources. While we have members from outside the United States who purchase items from our online marketplace, we have not expanded our physical operations internationally.
Changes in our market make it difficult to assess our future performance. You should consider our business and prospects in light of the risks and difficulties we may encounter.
You should consider our business and prospects in light of the risks and difficulties we may encounter.
We may further discover that, despite the implementation of our workforce reduction, we may require additional capital to continue expanding our business, and we may be unable to obtain such capital on acceptable terms, if at all. In addition, our real estate reduction plan could harm our brand reputation, constrain our ability generate new supply, and reduce demand in buyers.
We may further discover that, despite the implementation of our workforce reduction, we may require additional capital to continue expanding our business, and we may be unable to obtain such capital on acceptable terms, if at all.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeIn addition, the Cybersecurity Task Force reviews the business impact and severity of potential cybersecurity incidents, as reported by our automated systems, utilization of the bug bounty program, and public reports on the threat landscape. 30 Table of C ontents For a discussion of whether and how any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have materially affected or are reasonably likely to materially affect the Company, including our business strategy and results of operations, see “Risk Factors – Risks Related to Data Security, Privacy and Fraud,” which are incorporated by reference into this Item 1C.
Biggest changeFor a discussion of whether and how any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have materially affected or are reasonably likely to materially affect the Company, including our business strategy and results of operations, see “Risk Factors – Risks Related to Data Security, Privacy and Fraud,” which are incorporated by reference into this Item 1C. 31 Table of Contents In the three most recently completed fiscal years, we have not experienced any material cybersecurity incidents and the expenses we have incurred from cybersecurity incidents were immaterial.
Our CTPO has served in this role since 2023 and has more than 20 years of experience in various senior leadership roles involving managing cybersecurity and compliance teams, including as Head of Tech and Digital at Lovevery and as Chief Technology and Product Officer at Zulilly.
Our CTPO and CISO have served in these roles since 2023. Our CTPO has more than 20 years of experience in various senior leadership roles involving managing cybersecurity and compliance teams, including as Head of Tech and Digital at Lovevery and as Chief Technology and Product Officer at Zulilly.
In 2023, our Internal Audit team completed an Enterprise Risk Assessment to identify and prioritize the most critical risks that could impact our ability to achieve our business priorities and make risk-informed strategic decisions. With management’s input, our Board and Internal Audit team have identified cybersecurity as one of the risks that merits the highest level of prioritization.
In 2024, as part of our Enterprise Risk Management Program, our Internal Audit team identified and prioritized the most critical risks that could impact our ability to achieve our business priorities and make risk-informed strategic decisions. With management’s input, our Board and Internal Audit team have identified cybersecurity as one of the risks that merits the highest level of prioritization.
In the three most recently completed fiscal years, we have not experienced any material cybersecurity incidents and the expenses we have incurred from cybersecurity incidents were immaterial. This includes penalties and settlements, of which there were none. Corporate Governance Our Board of Directors provides oversight of risks from cybersecurity threats, in coordination with our Audit Committee and management team.
This includes penalties and settlements, of which there were none. Corporate Governance Our Board of Directors provides oversight of risks from cybersecurity threats, in coordination with our Audit Committee and management team.
Added
In addition, the Cybersecurity Task Force reviews the business impact and severity of potential cybersecurity incidents, as reported by our automated systems, utilization of the bug bounty program, and public reports on the threat landscape.
Added
Our CISO has more than 20 years of experience in leadership roles focused on cybersecurity, cloud engineering, infrastructure, and technical operations, including as CISO and Head of Cloud and Infrastructure Engineering at AutoZone and as Principal Executive Advisory Consultant at Amazon Web Services.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe parties are working to schedule mediation in the first half of 2024. The final outcome of this litigation, including our liability, if any, with respect to Chanel’s claims, is uncertain. An unfavorable outcome in this or similar litigation could adversely affect the Company’s business and could lead to other similar lawsuits.
Biggest changeThe parties have continued to engage in settlement discussions facilitated by a mediator. The final outcome of this litigation, including our liability, if any, with respect to Chanel’s claims, is uncertain. An unfavorable outcome in this or similar litigation could adversely affect the Company’s business and could lead to other similar lawsuits.
The Company discloses material contingencies when a loss is not probable but reasonably possible. On November 14, 2018, Chanel, Inc. sued the Company in the U.S. District Court for the Southern District of New York. The Complaint alleged federal and state law claims of trademark infringement, unfair competition, and false advertising.
The Company discloses material contingencies when a loss is not probable but reasonably possible. 32 Table of Contents On November 14, 2018, Chanel, Inc. sued the Company in the U.S. District Court for the Southern District of New York. The Complaint alleged federal and state law claims of trademark infringement, unfair competition, and false advertising.
The claims are for alleged violations of Sections 11 and 15 of the Securities Act. On February 23, 2024, plaintiff filed a motion for class certification, which has been set for hearing on May 28, 2024. While the Company intends to defend vigorously against this litigation, there can be no assurance that the Company will be successful in its defense.
The claims are for alleged violations of Sections 11 and 15 of the Securities Act. On February 23, 2024, plaintiff filed a motion for class certification, which has been set for hearing on February 25, 2025. While the Company intends to defend vigorously against this litigation, there can be no assurance that the Company will be successful in its defense.
Accounting for contingencies requires the Company to use judgment related to both the likelihood of a loss and the estimate of the amount or range of loss. The 31 Table of C ontents Company records a loss contingency when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated.
Accounting for contingencies requires the Company to use judgment related to both the likelihood of a loss and the estimate of the amount or range of loss. The Company records a loss contingency when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated.
For this reason, the Company cannot currently estimate the loss or range of possible losses it may experience in connection with this litigation. Item 4. Mine Safety Disclosures. None. 32 Table of C ontents PART II
For this reason, the Company cannot currently estimate the loss or range of possible losses it may experience in connection with this litigation. Item 4. Mine Safety Disclosures. None. 33 Table of Contents PART II
The Company is not able to predict or reasonably estimate the ultimate outcome or possible losses relating to this claim.
The Company is not able to predict or reasonably estimate the ultimate outcome or loss or range of possible losses relating to this claim.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeRecent Sales of Unregistered Securities None. Issuer Purchases of Equity Securities None.
Biggest changeRecent Sales of Unregistered Securities None. Issuer Purchases of Equity Securities None. Item 6. Reserved 34 Table of Contents
Securities Authorized for Issuance under Equity Compensation Plans The information required by this item with respect to our equity compensation plans will be incorporated by reference to our 2024 proxy statement set forth in the section titled “Equity Compensation Plan Information” that will be filed with the SEC within 120 days of the year ended December 31, 2023 (the “Proxy Statement”).
Securities Authorized for Issuance under Equity Compensation Plans The information required by this item with respect to our equity compensation plans will be incorporated by reference to our 2025 proxy statement set forth in the section titled “Equity Compensation Plan Information” that will be filed with the SEC within 120 days of the year ended December 31, 2024 (the “Proxy Statement”).
Stockholders As of the close of business on February 20, 2024, there were 137 stockholders of record of our common stock. The actual number of holders of our common stock is greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers or other nominees.
Stockholders As of the close of business on February 14, 2025, there were 111 stockholders of record of our common stock. The actual number of holders of our common stock is greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers or other nominees.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe following table provides a reconciliation of net loss to Adjusted EBITDA (in thousands): Year Ended December 31, 2023 2022 2021 (In thousands) Adjusted EBITDA Reconciliation: Net loss $ (168,472) $ (196,445) $ (236,107) Add (deduct): Depreciation and amortization 31,695 27,669 23,531 Interest income (8,805) (3,191) (365) Interest expense 10,701 10,472 21,531 Provision for income taxes 283 172 56 EBITDA (134,598) (161,323) (191,354) Stock-based compensation (1) 34,273 46,138 48,802 CEO separation benefits (2) — 948 — CEO transition costs (3) 159 1,551 — Payroll taxes on employee stock transactions 195 451 1,168 Legal fees reimbursement benefit (4) — (1,400) (1,204) Legal settlements (5) 1,340 456 13,389 Restructuring (6) 43,462 896 2,314 Other expense, net — (171) (23) Adjusted EBITDA (55,169) (112,454) (126,908) (1) The stock-based compensation expense for the year ended December 31, 2022 includes a one-time charge of $1.0 million related to the modification of certain equity awards pursuant to the terms of the transition and separation agreement entered into with our founder, Julie Wainwright, in connection with her resignation as Chief Executive Officer ("CEO") on June 6, 2022 (the "Separation Agreement").
Biggest changeAccordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors. 49 Table of Contents The following table provides a reconciliation of net loss to Adjusted EBITDA (in thousands): Year Ended December 31, 2024 2023 2022 (In thousands) Adjusted EBITDA Reconciliation: Net loss $ (134,202) $ (168,472) $ (196,445) Add (deduct): Depreciation and amortization 33,100 31,695 27,669 Interest income (7,943) (8,805) (3,191) Interest expense (1) 21,384 10,701 10,472 Provision for income taxes 276 283 172 EBITDA (87,385) (134,598) (161,323) Stock-based compensation (2) 29,082 34,273 46,138 CEO separation benefits and transition costs (3) 782 159 2,499 Payroll taxes on employee stock transactions 371 195 451 Legal settlements (4) 600 1,340 456 Restructuring (5) 196 43,462 896 Gain on extinguishment of debt (6) (4,177) — — Change in fair value of warrant liability (7) 68,167 — — One time expenses (8) 1,672 — (1,571) Adjusted EBITDA $ 9,308 $ (55,169) $ (112,454) (1) As of December 31, 2024, interest expense includes $4.8 million of accrued PIK interest which is a non-cash interest expense.
In November 2022, we updated our take rate structure with the goals of optimizing take rate, limiting consignment of lower value items, and increasing supply of higher value items. We continue to assess the impact of our updated take rate structure and may implement further changes in the future.
In November 2022, we updated our take rate structure with the goals of optimizing take rate, limiting consignment of lower value items, and increasing supply of higher value items. We continue to assess our take rate structure and may implement further changes in the future.
(5) The legal settlement charges for the year ended December 31, 2023 reflect legal settlement expenses arising from the settlement of two former employees’ individual claims and California Private Attorney General Actions initiated against the Company on behalf of such former employees and those similarly situated.
(4) The legal settlement charges for the year ended December 31, 2023 reflect legal settlement expenses arising from the settlement of two former employees’ individual claims and California Private Attorney General Actions initiated against the Company on behalf of such former employees and those similarly situated.
Prior year comparisons for 2022 and 2021 are included in “Part II, Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
Prior year comparisons for 2023 and 2022 are included in “Part II, Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
Our future capital requirements and the adequacy of available funds will depend on many factors, including, but not limited to, those set forth under the heading “Risk Factors” in this Annual Report, and our ability to grow our revenues and the timing of investments to support growth in our business, such as the build-out of our authentication centers and, to a lesser extent, the opening of new retail stores.
Our future capital requirements will depend on many factors, including, but not limited to, those set forth under the heading “Risk Factors” in this Annual Report, and our ability to grow our revenues and the timing of investments to support growth in our business, such as the build-out of our authentication centers and, to a lesser extent, the opening of new retail stores.
Prior year comparisons are included in "Park II, Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
Prior year comparisons are included in "Park II, Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
(6) Restructuring for the year ended December 31, 2023 consists of impairment of right-of-use assets and property and equipment, employee severance charges, gain on lease terminations, and other charges, including legal and transportation expenses. Restructuring for the year ended December 31, 2022 consists of employee severance payments and benefits.
(5) Restructuring for the year ended December 31, 2023 consists of impairment of right-of-use assets and property and equipment, employee severance charges, gain on lease terminations, and other charges, including legal and transportation expenses. Restructuring for the year ended December 31, 2022 consists of employee severance payments and benefits.
The decrease was primarily driven by our planned actions to minimize vendor-purchased company-owned inventory as the margin profile of our direct revenue is lower than consignment revenue. We recognize direct revenue upon shipment of the purchased good to the buyer.
The decrease was primarily driven by our planned actions to rebalance vendor-purchased company-owned inventory as the margin profile of our direct revenue is lower than consignment revenue. We recognize direct revenue upon shipment of the purchased good to the buyer.
Marketing Marketing expense comprises the cost of acquiring and retaining consignors and buyers, including the cost of television, digital and direct mail advertising. Marketing expense also includes personnel-related costs for employees engaged in these activities. We expect these expenses to continue to decrease as a percentage of revenue.
Marketing Marketing expense comprises the cost of acquiring and retaining consignors and buyers, including the cost of television, digital and direct mail advertising. Marketing expense also includes personnel-related costs for employees engaged in these activities. We expect these expenses to continue to decrease as a percentage of revenue over the longer term.
We also generate shipping services revenue from the shipping fees for consigned products returned by our buyers to us within policy. We recognize shipping services revenue over time as the shipping activity occurs. Shipping services revenue excludes the effect of buyer incentives and sales tax.
We also generate shipping services revenue from the shipping 37 Table of Contents fees for consigned products returned by our buyers to us within policy. We recognize shipping services revenue over time as the shipping activity occurs. Shipping services revenue excludes the effect of buyer incentives and sales tax.
We do not reduce GMV to reflect product returns or order cancellations, which totaled 26.4%, 26.5%, and 26.3% of GMV in 2023, 2022, and 2021, respectively. GMV includes amounts paid for both consigned goods and our inventory net of platform-wide discounts and excludes the effect of buyer incentives, shipping fees and sales tax.
We do not reduce GMV to reflect product returns or order cancellations, which totaled 24.4%, 26.4%, and 26.5% of GMV in 2024, 2023, and 2022, respectively. GMV includes amounts paid for both consigned goods and our inventory net of platform-wide discounts and excludes the effect of buyer incentives, shipping fees and sales tax.
Our 2025 Notes will mature on June 15, 2025, unless earlier redeemed or repurchased by the Company or converted and our 2028 Notes will mature on March 1, 2028, unless earlier redeemed or repurchased by the Company or converted.
Our 2025 Notes will mature on June 15, 2025, unless earlier redeemed or repurchased by the Company or converted and our 2028 Notes will mature on March 1, 2028, unless earlier redeemed or repurchased by the Company or converted. • Non-convertible Notes.
We recognize direct revenue upon shipment of the goods sold, based on the gross purchase price net of allowances for product returns, buyer incentives and adjustments. 36 Table of C ontents Shipping Services Revenue Shipping services revenue is generated from shipping fees we charge to buyers for outbound shipping and handling activities related to delivering purchased items to our buyers.
We recognize direct revenue upon shipment of the goods sold, based on the gross purchase price net of allowances for product returns, buyer incentives and adjustments. Shipping Services Revenue Shipping services revenue is generated from shipping fees we charge to buyers for outbound shipping and handling activities related to delivering purchased items to our buyers.
Our Neighborhood and Flagship Stores provide an alternative location to drop off consigned items and an opportunity to interact with our authentication experts. Consignors may also utilize our complimentary shipping directly to our authentication centers. We leverage our proprietary transactional database and market insights from approximately 37.5 million item sales since our inception to deliver optimal pricing and rapid sell-through.
Our retail stores provide an alternative location to drop off consigned items and an opportunity to interact with our authentication experts. Consignors may also utilize our complimentary shipping directly to our authentication centers. We leverage our proprietary transactional database and market insights from approximately 44.5 million item sales since our inception to deliver optimal pricing and rapid sell-through.
We have transformed the luxury consignment experience by removing the friction and pain points inherent in the traditional consignment model. For consignors, we offer concierge at-home consultation and pickup as well as virtual consultations via online face-to-face platforms. Consignors may also drop off items at our luxury consignment offices.
We have transformed the luxury consignment experience by removing the friction and pain points inherent in the traditional consignment model. For consignors, we offer concierge at-home consultation and pickup as well as virtual consultations. Consignors may also drop off items at our luxury consignment offices.
We closely monitor our efficiency in acquiring new buyers. Our buyer acquisition cost (“BAC”) for a given period is comprised of our total advertising spend for acquiring both buyers and consignors, which is principally the cost of television, digital and direct mail advertising, divided by the number of buyers acquired in that period.
Our buyer acquisition cost (“BAC”) for a given period is comprised of our total advertising spend for acquiring both buyers and consignors, which is principally the cost of television, digital and direct mail advertising, divided by the number of buyers acquired in that period.
We expect to maintain this full valuation allowance for the foreseeable future. 39 Table of C ontents Results of Operations The results of operations presented below should be reviewed in conjunction with the financial statements and notes included elsewhere in the Annual Report.
We expect to maintain this full valuation allowance for the foreseeable future. 40 Table of Contents Results of Operations The results of operations presented below should be reviewed in conjunction with the financial statements and notes included elsewhere in the Annual Report.
These expenses may vary from year to year as a percentage of revenue, depending primarily upon when we choose to make more significant investments. We expect these expenses to continue to decrease as a percentage of revenue.
These expenses may vary from year to year as a percentage of revenue, depending primarily upon when we choose to make more significant investments. We expect these expenses to continue to decrease as a percentage of revenue over the longer term.
Our AOV reflects both the average price of items sold as well as the number of items per order. Our AOV is a key driver of our operating leverage. 37 Table of C ontents Components of our Operating Results Revenue Our revenue is comprised of consignment revenue, direct revenue, and shipping services revenue. • Consignment revenue .
Our AOV reflects both the average price of items sold as well as the number of items per order. Our AOV is a key driver of our operating leverage. 38 Table of Contents Components of our Operating Results Revenue Our revenue is comprised of consignment revenue, direct revenue and shipping services revenue. • Consignment revenue .
The decrease was primarily attributable to the 50% decrease in direct revenue compared to the prior year as a result of our planned actions to minimize vendor-purchased company-owned inventory.
The decrease was primarily attributable to the 18% decrease in direct revenue compared to the prior year as a result of our planned actions to rebalance vendor-purchased company-owned inventory.
Direct revenue gross margin decreased by 467 basis points in the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily driven by strategic liquidation of company owned inventory sold at discounted prices, which resulted in the sell through of inventory that was previously reserved.
Direct revenue gross margin increased by 750 basis points in the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily driven by strategic liquidation of company owned inventory sold at discounted prices, which resulted in the sell through of inventory that was previously reserved.
Take rates vary depending on the total value of goods sold through our online marketplace on behalf of a particular consignor as well as the category and price point of the items. In 2023 and 2022, our overall take rate on consigned goods was 37.5% and 36.0% respectively.
Take rates vary depending on the total value of goods sold through our online marketplace on behalf of a particular consignor as well as the category and price point of the items. In 2024 and 2023, our overall take rate on consigned goods was 38.4% and 37.5% respectively.
We generate revenue from orders processed through our website, mobile app and retail stores. Our omni-channel experience enables buyers to purchase anytime and anywhere. We have a global base of more than 35.2 million members as of December 31, 2023.
We generate revenue from orders processed through our website, mobile app and retail stores. Our omni-channel experience enables buyers to purchase anytime and anywhere. We have a global base of more than 38.6 million members as of December 31, 2024.
As a result of this seasonality, we typically see stronger AOV and more rapid sell-through in the fourth quarter. 35 Table of C ontents Key Financial and Operating Metrics The key operating and financial metrics that we use to assess the performance of our business are set forth below for 2023, 2022, and 2021.
As a result of this seasonality, we typically see stronger AOV and more rapid sell-through in the fourth quarter. 36 Table of Contents Key Financial and Operating Metrics The key operating and financial metrics that we use to assess the performance of our business are set forth below for 2024, 2023, and 2022.
Consignors and Buyers Consignor growth and retention . We grow our sales by increasing the supply of luxury goods offered through our consignment online marketplace. We grow our supply both by attracting new consignors and by creating lasting engagement with existing consignors. We generate leads for new consignors principally through our advertising activity.
We grow our sales by increasing the supply of luxury goods offered through our consignment online marketplace. We grow our supply both by attracting new consignors and by creating lasting engagement with existing consignors. We generate leads for new consignors through our advertising activity and through the activity of our sales team.
Total Gross Margin Our total gross margin increased by 1,072 basis point in the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily driven by the increase in higher margin consignment revenue and decrease in lower margin direct revenue. Gross margin may vary from period to period.
Total Gross Margin Our total gross margin increased by 603 basis points in the year ended December 31, 2024 compared to the year ended December 31, 2023 primarily driven by the increase in higher margin consignment revenue and decrease in lower margin direct revenue. Gross margin may vary from period to period.
Our cash requirements related to certain other non-cancellable purchase commitments associated primarily with software services and hosting arrangements, were approximately $21.5 million, of which approximately $7.9 million is expected to be paid within the next 12 months.
Our cash requirements related to certain other non-cancellable purchase commitments associated primarily with software services and hosting arrangements, were approximately $17.6 million, of which approximately $8.1 million is expected to be paid within the next 12 months.
As of December 31, 2023, our cash requirements related to our operating leases on our authentication centers, retail stores, and corporate offices that are included in our balance sheet were $146.7 million, of which $27.0 million is expected to be paid within the next 12 months. • Convertible Senior Notes.
As of December 31, 2024, our cash requirements related to our operating leases on our authentication centers, retail stores, and corporate offices that are included in our balance sheet were $124.5 million, of which $28.8 million is expected to be paid within the next 12 months. • Convertible Senior Notes.
We expect these expenses to continue to decrease as a percentage of revenue. 38 Table of C ontents Restructuring Restructuring expense is primarily comprised of right-of-use asset and fixed asset impairments, severance benefits, and other related charges, including net gain on lease terminations.
We expect these expenses to continue to decrease as a percentage of revenue over the longer term. 39 Table of Contents Restructuring Restructuring expense is primarily comprised of right-of-use asset and fixed asset impairments, severance benefits, and other related charges, including net gain on lease terminations.
As of December 31, 2023, our cash requirements related to our Convertible Senior Notes that are included on our balance sheet and the related periodic interest payments were $480.7 million, of which $8.1 million is expected to be paid within the next 12 months.
As of December 31, 2024, our cash requirements related to our Convertible Senior Notes that are included on our balance sheet and the related periodic interest payments were $287.0 million, of which $30.0 million is expected to be paid within the next 12 months.
Average Order Value (“AOV”) Average order value (“AOV”) means the average value of all orders placed across our online marketplace and retail stores, excluding the effect of buyer incentives, shipping fees and sales taxes. Our focus on luxury goods across multiple categories drives a consistently strong AOV.
We believe this metric reflects scale, brand awareness, buyer acquisition and engagement. Average Order Value (“AOV”) Average order value (“AOV”) means the average value of all orders placed across our online marketplace and retail stores, excluding the effect of buyer incentives, shipping fees and sales taxes. Our focus on luxury goods across multiple categories drives a consistently strong AOV.
We retain a portion of the proceeds received, which we refer to as our take rate. We recognize consignment revenue, net of allowances for product returns, order cancellations, buyer incentives and adjustments. We also generate revenue from subscription fees paid by buyers for early access to products. Direct Revenue Direct revenue is generated from the sales of company-owned inventory.
We recognize consignment revenue, net of allowances for product returns, order cancellations, buyer incentives and adjustments. We also generate revenue from subscription fees paid by buyers for early access to products. Direct Revenue Direct revenue is generated from the sales of company-owned inventory.
Adjusted EBITDA means net loss before interest income, interest expense, other (income) expense net, provision for income taxes, and depreciation and amortization, further adjusted to exclude stock-based compensation, payroll taxes on employee stock transactions, restructuring, CEO separation benefits, CEO transition costs, and certain one-time expenses.
Adjusted EBITDA means net loss before interest income, interest expense, provision for income taxes, and depreciation and amortization, further adjusted to exclude stock-based compensation, payroll taxes on employee stock transactions, restructuring, CEO separation benefits and transition costs, gain on extinguishment of debt, change in fair value of warrant liability and certain one time expenses.
We have a full valuation allowance for our net deferred tax assets primarily consisting of net operating loss carryforwards, accruals and reserves, stock-based compensation, fixed assets, and other book-to-tax timing differences.
Provision for Income Taxes Our provision for income taxes consists primarily of state minimum taxes in the United States. We have a full valuation allowance for our net deferred tax assets primarily consisting of net operating loss carryforwards, accruals and reserves, stock-based compensation, fixed assets, and other book-to-tax timing differences.
We principally conduct our intake, authentication, merchandising and fulfillment operations in our leased authentication centers located in Arizona and New Jersey comprising an aggregate of approximately 1.4 million square feet of space. We also operate retail stores in several geographies.
To support the future growth of our business, we continue to invest in physical infrastructure, technology and talent. We principally conduct our intake, authentication, merchandising and fulfillment operations in our leased authentication centers located in Arizona and New Jersey comprising an aggregate of approximately 1.4 million square feet of space. We also operate retail stores in several geographies.
The 2029 Notes bear cash interest at a rate of 8.75% per annum payable semi-annually in arrears and bear interest at a rate of 4.25% payable in kind. We expect that operating losses and negative cash flows from operations could continue in the foreseeable future.
The 2031 Notes bear cash interest at a rate of 4.00% per annum payable semi-annually in arrears and mature on February 15, 2031. We expect that operating losses and negative cash flows from operations could continue in the foreseeable future.
Our take rate increased to 37.5% from 36.0% during the year ended December 31, 2023 compared to last year due to the update of our consignor commission structure which went into effect on November 1, 2022. 41 Table of C ontents Direct Revenue Year Ended December 31, Change 2023 2022 Amount % (In thousands, except percentage) Direct revenue $ 79,160 $ 158,726 $ (79,566) (50) % Direct revenue decreased by $79.6 million, or 50%, in 2023 compared to 2022.
Our take rate increased to 38.4% from 37.5% during the year ended December 31, 2024 compared to last year due to the update of our consignor commission structure which went into effect on November 1, 2022. 42 Table of Contents Direct Revenue Year Ended December 31, Change 2024 2023 Amount % (In thousands, except percentage) Direct revenue $ 64,580 $ 79,160 $ (14,580) (18) % Direct revenue decreased by $14.6 million, or 18%, in 2024 compared to 2023.
As a percentage of revenue, marketing remained flat at 11% in the years ended December 31, 2023 and 2022. These expenses may vary from period to period as a percentage of revenue, depending primarily upon our marketing investments. We expect these expenses to decrease as a percentage of revenue over the longer term.
As a percentage of revenue, marketing expense decreased to 9% in 2024 from 11% and 2023. These expenses may vary from period to period as a percentage of revenue, depending primarily upon our marketing investments. We expect these expenses to decrease as a percentage of revenue over the longer term.
We believe NMV is a supplemental measure of the scale and growth of our online marketplace. Like GMV, NMV is not a proxy for revenue or revenue growth. Consignment Revenue Consignment revenue is generated from the sale of pre-owned luxury goods through our online marketplace and retail stores on behalf of consignors.
Like GMV, NMV is not a proxy for revenue or revenue growth. Consignment Revenue Consignment revenue is generated from the sale of pre-owned luxury goods through our online marketplace and retail stores on behalf of consignors. We retain a portion of the proceeds received, which we refer to as our take rate.
We monitor trends in GMV to inform budgeting and operational decisions to support and promote growth in our business and to monitor our success in adapting our business to meet the needs of our consignors and buyers. While GMV is the primary driver of our revenue, it is not a proxy for revenue or revenue growth.
We monitor trends in GMV to inform budgeting and operational decisions to support and promote growth in our business and to monitor our success in adapting our business to meet the needs of our consignors and buyers.
Year Ended December 31, 2023 2022 2021 (In thousands, except AOV and percentages) GMV $ 1,725,983 $ 1,815,983 $ 1,482,432 NMV $ 1,269,880 $ 1,335,506 $ 1,092,353 Consignment revenue $ 415,572 $ 384,979 $ 302,221 Direct revenue $ 79,160 $ 158,726 $ 120,844 Shipping services revenue $ 54,572 $ 59,788 $ 44,627 Number of orders 3,300 3,757 2,981 Take rate 37.5 % 36.0 % 34.7 % Active buyers 922 998 797 AOV $ 523 $ 483 $ 497 GMV GMV represents the total amount paid for goods across our online marketplace in a given period.
Year Ended December 31, 2024 2023 2022 (In thousands, except AOV and percentages) GMV $ 1,829,463 $ 1,725,983 $ 1,815,983 NMV $ 1,382,875 $ 1,269,880 $ 1,335,506 Consignment revenue $ 473,396 $ 415,572 $ 384,979 Direct revenue $ 64,580 $ 79,160 $ 158,726 Shipping services revenue $ 62,508 $ 54,572 $ 59,788 Number of orders 3,359 3,300 3,757 Take rate 38.4 % 37.5 % 36.0 % Active buyers 972 922 998 AOV $ 545 $ 523 $ 483 GMV GMV represents the total amount paid for goods across our online marketplace in a given period.
Net Cash Used in Investing Activities During 2023, net cash used in investing activities was $42.1 million, which consisted of $29.2 million for purchases of property and equipment, net, including leasehold improvements, and $13.0 million for capitalized proprietary software costs.
Net Cash Used in Investing Activities During 2024, net cash used in investing activities was $25.6 million, which consisted of $14.2 million for purchases of property and equipment, net, including leasehold improvements, and $11.8 million for capitalized proprietary software costs.
Recent Accounting Pronouncements See Note 2, “Summary of Significant Accounting Policies” to our financial statements included elsewhere in this Annual Report on Form 10-K for recently issued accounting pronouncements not yet adopted as of the date of this Annual Report on Form 10-K. 48 Table of C ontents Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Changes in fair value are recognized on our statements of operations. 51 Table of Contents Recent Accounting Pronouncements See Note 2, “Summary of Significant Accounting Policies” to our financial statements included elsewhere in this Annual Report on Form 10-K for recently issued accounting pronouncements not yet adopted as of the date of this Annual Report on Form 10-K. 52 Table of Contents Item 7A.
The graph below shows the percentage of GMV in each year from buyers who have participated as both buyers and consignors on our online marketplace. GMV attributable to consigning activity of such buyers is not included. Buyer acquisition cost. Our financial performance depends on effectively managing the expenses we incur to attract and retain buyers.
If we fail to continue to attract and retain our buyer base to our online marketplace, our operating results would be adversely affected. The graph below shows the percentage of GMV in each year from buyers who have participated as both buyers and consignors on our online marketplace. GMV attributable to consigning activity of such buyers is not included.
Year Ended December 31, 2023 2022 2021 (In thousands) Net cash (used in) provided by: Operating activities $ (61,268) $ (91,557) $ (142,151) Investing activities (42,128) (36,922) (43,437) Financing activities 226 4,101 252,913 Net (decrease) increase in cash and cash equivalents $ (103,170) $ (124,378) $ 67,325 Net Cash Used in Operating Activities During 2023, net cash used in operating activities was $61.3 million, which consisted of a net loss of $168.5 million, adjusted by non-cash charges of $136.3 million and cash outflows due to a net change of $29.1 million in our operating assets and liabilities.
Year Ended December 31, 2024 2023 2022 (In thousands) Net cash (used in) provided by: Operating activities $ 26,846 $ (61,268) $ (91,557) Investing activities (25,587) (42,128) (36,922) Financing activities (4,759) 226 4,101 Net decrease in cash, cash equivalents and restricted cash $ (3,500) $ (103,170) $ (124,378) Net Cash Used in Operating Activities During 2024, net cash provided by operating activities was $26.8 million, which consisted of a net loss of $134.2 million, adjusted by non-cash charges of $158.2 million and cash inflows due to a net change of $2.8 million in our operating assets and liabilities.
The net change in our operating assets and liabilities was primarily the result of cash outflows due to a decrease of $26.5 million in operating lease liabilities, a decrease of $4.4 million in consignor payables, an increase of $7.0 million in accounts receivable, and an increase of $3.1 million in other assets, partially offset by cash inflows due to a decrease of $10.9 million in inventory driven by a decrease in direct purchases of inventory from vendors.
The net change in our operating assets and liabilities was primarily the result of cash inflows due to an increase of $11.5 million in consignor payables and an increase of $13.1 million in other accrued and current liabilities, partially offset by cash outflows due to a decrease of $20.9 million in operating lease liabilities.
(2) The CEO separation benefit charges for the year ended December 31, 2022 consist of base salary, bonus and benefits for the 2022 fiscal year, as well as an additional twelve months of base salary and benefits payable to Julie Wainwright pursuant to the Separation Agreement. 47 Table of C ontents (3) The CEO transition charges for the year ended December 31, 2022 consist of general and administrative fees, including legal and recruiting expenses, as well as retention bonuses for certain executives incurred in connection with our founder's resignation on June 6, 2022.
The CEO separation benefits and transition costs for the year ended December 31, 2022 consist of separation benefits for the 2022 fiscal year, as well as general and administrative fees, including legal and recruiting expenses, as well as retention bonuses for certain executives incurred in connection with our founder's resignation on June 6, 2022.
We may seek additional equity or debt financing. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, financial condition and results of operations could be adversely affected.
We may seek additional equity or debt financing. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all.
To analyze our business performance, determine financial forecasts and help develop long-term strategic plans, we focus on the factors described below. While each of these factors presents significant opportunity for our business, collectively, they also pose important challenges that we must successfully address in order to sustain our growth, improve our operating results and achieve and maintain our profitability.
While each of these factors presents significant opportunity for our business, collectively, they also pose important challenges that we must successfully address in order to sustain our growth, improve our operating results and achieve and maintain our profitability. Consignors and Buyers Consignor growth and retention .
As a percentage of revenue, operations and technology expense increased to 47% in 2023 from 46% in 2022 due to a decrease in direct revenue. These expenses may vary from period to period as a percentage of revenue, depending primarily upon when we choose to make more significant investments.
These expenses may vary from period to period as a percentage of revenue, depending primarily upon when we choose to make more significant investments.
Cost of Direct Revenue Year Ended December 31, Change 2023 2022 Amount % (In thousands, except percentage) Cost of direct revenue $ 74,343 $ 141,661 $ (67,318) (48) % As a percent of direct revenue 94 % 89 % Cost of direct revenue decreased by $67.3 million, or 48%, in 2023 compared to 2022.
Cost of Direct Revenue Year Ended December 31, Change 2024 2023 Amount % (In thousands, except percentage) Cost of direct revenue $ 55,809 $ 74,343 $ (18,534) (25) % As a percent of direct revenue 86 % 94 % Cost of direct revenue decreased by $18.5 million, or 25%, in 2024 compared to 2023.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise requested under this item. Item 8. Financial Statements and Supplementary Data. Please refer to the Financial Statements and Notes to Financial Statements in this Form 10-K which is incorporated herein by reference. Item 9.
Quantitative and Qualitative Disclosures About Market Risk. We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise requested under this item. Item 8. Financial Statements and Supplementary Data.
The increase was primarily due to charges to reduce our real estate presence and operating expenses through the closure of certain retail and office locations and workforce reduction.
We incurred charges to reduce our real estate presence and operating expenses through the closure of certain retail and office locations and workforce reduction during 2023, which were substantially completed during 2023.
Operations and Technology Year Ended December 31, Change 2023 2022 Amount % (In thousands, except percentage) Operations and technology $ 257,041 $ 278,628 $ (21,587) (8) % Operations and technology expense decreased by $21.6 million, or 8%, in 2023 compared to 2022.
Operations and Technology Year Ended December 31, Change 2024 2023 Amount % (In thousands, except percentage) Operations and technology $ 260,827 $ 257,041 $ 3,786 1 % Operations and technology expense increased by $3.8 million, or 1%, in 2024 compared to 2023.
Marketing Year Ended December 31, Change 2023 2022 Amount % (In thousands, except percentage) Marketing $ 58,275 $ 62,988 $ (4,713) (7) % Marketing expense decreased by $4.7 million, or 7%, in 2023 compared to 2022. The decrease was primarily due to a decrease in advertising costs and lower employee compensation related expenses due to a decrease in headcount.
Marketing Year Ended December 31, Change 2024 2023 Amount % (In thousands, except percentage) Marketing $ 55,256 $ 58,275 $ (3,019) (5) % Marketing expense decreased by $3.0 million, or 5%, in 2024 compared to 2023. The decrease was primarily due to a decrease in advertising costs.
The following tables set forth our results of operations (in thousands) and such data as a percentage of revenue for the periods presented: Year Ended December 31, 2023 2022 2021 (In thousands) Revenue: Consignment revenue $ 415,572 $ 384,979 $ 302,221 Direct revenue 79,160 158,726 120,844 Shipping services revenue 54,572 59,788 44,627 Total revenue 549,304 603,493 467,692 Cost of revenue: Cost of consignment revenue 58,120 56,963 44,985 Cost of direct revenue 74,343 141,661 101,427 Cost of shipping services revenue 40,563 56,178 47,803 Total cost of revenue 173,026 254,802 194,215 Gross profit 376,278 348,691 273,477 Operating expenses: Marketing 58,275 62,988 62,749 Operations and technology 257,041 278,628 233,687 Selling, general and administrative 182,453 194,886 176,246 Restructuring 43,462 896 2,314 Legal settlement 1,340 456 13,389 Total operating expenses 542,571 537,854 488,385 Loss from operations (166,293) (189,163) (214,908) Interest income 8,805 3,191 365 Interest expense (10,701) (10,472) (21,531) Other income, net — 171 23 Loss before provision for income taxes (168,189) (196,273) (236,051) Provision for income taxes 283 172 56 Net loss $ (168,472) $ (196,445) $ (236,107) 40 Table of C ontents Year Ended December 31, 2023 2022 2021 Revenue: Consignment revenue 76 % 64 % 65 % Direct revenue 14 26 26 Shipping services revenue 10 10 9 Total revenue 100 100 100 Cost of revenue: Cost of consignment revenue 11 9 10 Cost of direct revenue 14 24 22 Cost of shipping services revenue 7 9 10 Total cost of revenue 32 42 42 Gross profit 68 58 58 Operating expenses: Marketing 11 11 13 Operations and technology 47 46 50 Selling, general and administrative 33 33 38 Restructuring 8 — — Legal settlement — — 3 Total operating expenses 99 90 104 Loss from operations (31) (32) (46) Interest income 2 1 — Interest expense (2) (2) (5) Other income, net — — — Loss before provision for income taxes (31) (33) (51) Provision for income taxes — — — Net loss (31) % (33) % (51) % Comparison of 2023 and 2022 Consignment Revenue Year Ended December 31, Change 2023 2022 Amount % (In thousands, except percentage) Consignment revenue, net $ 415,572 $ 384,979 $ 30,593 8 % Consignment revenue increased by $30.6 million, or 8%, in 2023 compared to 2022.
The following tables set forth our results of operations (in thousands) and such data as a percentage of revenue for the periods presented: Year Ended December 31, 2024 2023 2022 (In thousands) Revenue: Consignment revenue $ 473,396 $ 415,572 $ 384,979 Direct revenue 64,580 79,160 158,726 Shipping services revenue 62,508 54,572 59,788 Total revenue 600,484 549,304 603,493 Cost of revenue: Cost of consignment revenue 53,801 58,120 56,963 Cost of direct revenue 55,809 74,343 141,661 Cost of shipping services revenue 43,353 40,563 56,178 Total cost of revenue 152,963 173,026 254,802 Gross profit 447,521 376,278 348,691 Operating expenses: Marketing 55,256 58,275 62,988 Operations and technology 260,827 257,041 278,628 Selling, general and administrative 187,737 183,793 195,342 Restructuring 196 43,462 896 Total operating expenses 504,016 542,571 537,854 Loss from operations (56,495) (166,293) (189,163) Change in fair value of warrant liability (68,167) — — Gain on extinguishment of debt 4,177 — — Interest income 7,943 8,805 3,191 Interest expense (21,384) (10,701) (10,472) Other income, net — — 171 Loss before provision for income taxes (133,926) (168,189) (196,273) Provision for income taxes 276 283 172 Net loss $ (134,202) $ (168,472) $ (196,445) 41 Table of Contents Year Ended December 31, 2024 2023 2022 Revenue: Consignment revenue 79 % 76 % 64 % Direct revenue 11 14 26 Shipping services revenue 10 10 10 Total revenue 100 100 100 Cost of revenue: Cost of consignment revenue 9 11 9 Cost of direct revenue 9 14 24 Cost of shipping services revenue 7 7 9 Total cost of revenue 25 32 42 Gross profit 75 68 58 Operating expenses: Marketing 9 11 11 Operations and technology 43 47 46 Selling, general and administrative 31 33 33 Restructuring — 8 — Total operating expenses 83 99 90 Loss from operations (8) (31) (32) Change in fair value of warrant liability (11) — — Gain on extinguishment of debt 1 — — Interest income 1 2 1 Interest expense (4) (2) (2) Other income, net — — — Loss before provision for income taxes (21) (31) (33) Provision for income taxes — — — Net loss (21) % (31) % (33) % Comparison of 2024 and 2023 Consignment Revenue Year Ended December 31, Change 2024 2023 Amount % (In thousands, except percentage) Consignment revenue $ 473,396 $ 415,572 $ 57,824 14 % Consignment revenue increased by $57.8 million, or 14%, in 2024 compared to 2023.
The increase in revenue was driven primarily by an increase in consignment GMV, and improvement in our take rate during the year ended December 31, 2023. Overall GMV decreased by 5% during the year ended December 31, 2023. The decrease in GMV is driven by a decrease in direct GMV, partially offset by the increase in consignment GMV.
The increase in revenue was driven primarily by an increase in consignment GMV, a 4% increase in our AOV and a 240 basis point improvement in our take rate during the year ended December 31, 2024. Overall GMV increased by 6% during the year ended December 31, 2024.
The margin profile of our direct revenue is lower than the margin profile of our consignment revenue. 42 Table of C ontents Cost of Shipping Services Revenue Year Ended December 31, Change 2023 2022 Amount % (In thousands, except percentage) Cost of shipping services revenue $ 40,563 $ 56,178 $ (15,615) (28) % As a percent of shipping services revenue 74 % 94 % Cost of shipping services revenue decreased by $15.6 million, or 28%, in the year ended December 31, 2023 compared to the year ended December 31, 2022.
The margin profile of our direct revenue is lower than the margin profile of our consignment revenue. 43 Table of Contents Cost of Shipping Services Revenue Year Ended December 31, Change 2024 2023 Amount % (In thousands, except percentage) Cost of shipping services revenue $ 43,353 $ 40,563 $ 2,790 7 % As a percent of shipping services revenue 69 % 74 % Cost of shipping services revenue increased by $2.8 million, or 7%, in the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily due to increased cost per shipment.
We expect these expenses to decrease as a percentage of revenue over the longer term. 43 Table of C ontents Selling, General and Administrative Year Ended December 31, Change 2023 2022 Amount % (In thousands, except percentage) Selling, general and administrative $ 182,453 $ 194,886 $ (12,433) (6) % Selling, general and administrative expense decreased by $12.4 million, or 6%, in 2023 compared to 2022.
We expect these expenses to decrease as a percentage of revenue over the longer term. 44 Table of Contents Selling, General and Administrative Year Ended December 31, Change 2024 2023 Amount % (In thousands, except percentage) Selling, general and administrative $ 187,737 $ 183,793 $ 3,944 2 % Selling, general and administrative expense increased by $3.9 million, or 2%, in 2024 compared to 2023.
See Note 2—Summary of Significant Accounting Policies—Revenue Recognition—Consignment Revenue. NMV Net merchandise value (“NMV”) represents the value of sales from both consigned goods and our inventory net of platform-wide discounts less product returns and order cancellations and excludes the effect of buyer incentives, shipping fees and sales tax.
NMV NMV represents the value of sales from both consigned goods and our inventory net of platform-wide discounts less product returns and order cancellations and excludes the effect of buyer incentives, shipping fees and sales tax. We believe NMV is a supplemental measure of the scale and growth of our online marketplace.
For example, under the updated take rate structure, consignors can earn 20% commission on all sold items under $100, and up to 90% commission on watches sold for over $7,500. We launched a pricing tool for our consignors that provides detail on commission rates for specific categories and other aspects of the take rate structure.
Our take rate structure is primarily based on the category and the price point of the sold items. For example, under the current take rate structure, consignors can earn 20% commission on all sold items under $100, and up to 90% commission on watches sold for over $7,500.
We believe our existing cash and cash equivalents as of December 31, 2023 will be sufficient to meet our working capital and capital expenditures needs for at least the next 12 months.
We believe our existing cash and cash equivalents as of December 31, 2024 will be sufficient to meet our working capital and capital expenditures needs for at least the next 12 months. Our primary capital requirements include contractual obligations related to our operating leases, our indebtedness, certain non-cancellable contracts and compensation and benefits payments to support our strategic plans.
Interest Expense Year Ended December 31, Change 2023 2022 Amount % (In thousands, except percentage) Interest expense $ (10,701) $ (10,472) $ 229 2 % Interest expense increased by $0.2 million, or 2%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Interest Expense Year Ended December 31, Change 2024 2023 Amount % (In thousands, except percentage) Interest expense $ (21,384) $ (10,701) $ 10,683 100 % Interest expense increased by $10.7 million, or 100%, for the year ended December 31, 2024 compared to the year ended December 31, 2023 due to the contractual interest expense related to the 2029 Notes issued in February 2024.
In July 2019, we received net proceeds of $315.5 million upon completion of our IPO on July 2, 2019. In June 2020, we received net proceeds of $143.3 million from the issuance of our 3.00% Convertible Senior Notes due 2025 (the “2025 Notes”) and the related capped call transactions.
In June 2020, we received net proceeds of $143.3 million from the issuance of our 2025 Notes and the related capped call transactions. In March 2021, we received net proceeds of $244.5 million from our 2028 Notes and the related capped call transactions.
We convert those leads into active consignors through the activities of our sales professionals, who are trained and incentivized to identify and source high-quality, coveted luxury goods from consignors. Our sales professionals form a consultative relationship with consignors and deliver a high-quality, rapid consigning experience.
Our sales professionals, who are trained and incentivized to identify and source high-quality, coveted luxury goods, convert those leads into active consignors. Our sales professionals form a consultative relationship with consignors and deliver a high-quality, full-service consigning experience. Our existing relationships with consignors allow us to unlock valuable supply across multiple categories, including women’s fashion, men’s fashion, jewelry and watches.
Additionally, in connection with the Exchange, we issued warrants to acquire an aggregate of up to 7,894,737 shares of the Company’s common stock to the Holders. The Exchange was consummated on February 29, 2024.
The Company issued warrants to acquire an aggregate of up to 7,894,737 shares (subject to adjustment in accordance with the terms of the warrants) of the Company's common stock as part of the 2024 Note Exchange (as defined below) in February 2024.
We adjust or re-allocate our advertising in real-time to optimize our spend across channels, buyer demographics and geographies to improve our return on advertising spend. Scaling operations and technology. To support the future growth of our business, we continue to invest in physical infrastructure, talent and technology.
We adjust or re-allocate our advertising in real-time to optimize our spend across channels, buyer demographics and geographies to improve our return on advertising spend. Our BAC has declined over time, which has been driven by improving acquisition efficiencies. Scaling operations and technology.
In 2023 and 2022, repeat consignors accounted for approximately 84% and 83% of GMV, respectively. Buyer growth and retention . We grow our business by attracting and retaining buyers. We attract and retain buyers by offering highly coveted, authenticated, pre-owned luxury goods at attractive values and delivering a high-quality, luxury experience.
We attract and retain buyers by offering highly coveted, authenticated, pre-owned luxury goods at attractive values and delivering a high-quality, luxury experience. We measure our success in attracting and retaining buyers by tracking buyer satisfaction and purchasing activity over time.
Restructuring Year Ended December 31, Change 2023 2022 Amount % (In thousands, except percentage) Restructuring $ 43,462 $ 896 $ 42,566 4,751 % Restructuring increased by $42.6 million, or over 100%, in 2023 compared to 2022.
Gain on Extinguishment of Debt Year Ended December 31, Change 2024 2023 Amount % (In thousands, except percentage) Gain on extinguishment of debt $ 4,177 $ — $ 4,177 100 % Gain on extinguishment of debt increased by $4.2 million, or 100% in 2024 compared to 2023.
Other Income, Net Year Ended December 31, Change 2023 2022 Amount % (In thousands, except percentage) Other income, net $ — $ 171 $ (171) -100 % 44 Table of C ontents Other income decreased by $0.2 million, or 100%, in the year ended December 31, 2023 compared to the year ended December 31, 2022.
Change in Fair Value of Warrant Liability Year Ended December 31, Change 2024 2023 Amount % (In thousands, except percentage) Change in fair value of warrant liability $ (68,167) $ — $ (68,167) 100 % The fair value of warrant liability increased by $68.2 million, or 100% in 2024 compared to 2023.
Shipping Services Revenue Year Ended December 31, Change 2023 2022 Amount % (In thousands, except percentage) Shipping services revenue $ 54,572 $ 59,788 $ (5,216) (9) % Shipping services revenue decreased by $5.2 million, or 9%, in 2023 compared to 2022 primarily due to a decrease in the number of orders.
Shipping Services Revenue Year Ended December 31, Change 2024 2023 Amount % (In thousands, except percentage) Shipping services revenue $ 62,508 $ 54,572 $ 7,936 15 % Shipping services revenue increased by $7.9 million, or 15%, in 2024 compared to 2023 primarily due to an increase in the standard shipping fee per order.
We had restricted cash of $14.9 million as of December 31, 2023, consisting of cash deposited with a financial institution as collateral for our letters of credit, facility leases and credit cards. Since our inception, we have generated negative cash flows from operations and have primarily financed our operations through equity and convertible debt financings.
Liquidity and Capital Resources As of December 31, 2024, we had cash and cash equivalents of $172.2 million and an accumulated deficit of $1,253.8 million. We had restricted cash of $14.9 million as of December 31, 2024, consisting of cash deposited with a financial institution as collateral for our letters of credit, facility leases and credit cards.
Active Buyers Active buyers include buyers who purchased goods through our online marketplace during the 12 months ended on the last day of the period presented, irrespective of returns or cancellations. We believe this metric reflects scale, brand awareness, buyer acquisition and engagement.
Management assesses changes in take rates by monitoring the volume of GMV and take rate across each discrete commission grouping, encompassing commission tiers and exceptions. Active Buyers Active buyers include buyers who purchased goods through our online marketplace during the 12 months ended on the last day of the period presented, irrespective of returns or cancellations.
The CEO transition charges for the year ended December 31, 2023 consists of retention bonuses for certain executives incurred in connection with our founder's resignation in 2022. (4) During the year ended December 31, 2022, we received insurance reimbursement of $1.4 million related to a legal settlement expense.
(3) The CEO separation benefits and transition costs for the year ended December 31, 2024 consist of severance and benefits payable to John Koryl pursuant to his separation agreement. The CEO separation benefits and transition costs for the year ended December 31, 2023 consists of retention bonuses for certain executives incurred in connection with our founder's resignation in 2022.
Consignors are eligible to receive additional commissions based on total net sales under an added tiered commission structure. Management assesses changes in take rates by monitoring the volume of GMV and take rate across each discrete commission grouping, encompassing commission tiers and exceptions.
We launched a pricing tool for our consignors that provides detail on commission rates for specific categories and other aspects of the take rate structure. Consignors are eligible to receive additional commissions based on total net sales under an added tiered commission structure.
The decrease is primarily due to a decrease in the number of orders, and due to realizing benefits of cost savings initiatives. Shipping services revenue gross margin increased by 1,963 basis points in the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily due to decreased costs related to cost savings initiatives.
Shipping services revenue gross margin increased by 497 basis points in the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily due to the increase in the standard shipping fee per order.
The increase was primarily attributable to the 8% increase in consignment revenue compared to the prior year, partially offset by efficiencies in our cost leverage. Consignment revenue gross margin increased by 81 basis points in the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily driven by the 8% increase in consignment revenue.
Consignment revenue gross margin increased by 262 basis points in the year ended December 31, 2024 compared to the year ended December 31, 2023, driven by the improvement in take rate and the reduction in overhead costs.
As a percentage of revenue, selling, general and administrative remained flat at 33% in the years ended December 31, 2023 and 2022 . These expenses may vary from period to period as a percentage of revenue. We expect these expenses to decrease as a percentage of revenue over the long term.
The increase was primarily due to increased employee compensation related expenses due to an increase in headcount compared to the prior period. As a percentage of revenue, selling, general and administrative decreased to 31% in 2024 from 33% in 2023. These expenses may vary from period to period as a percentage of revenue.
Actual results may differ from these judgments and estimates under different assumptions or conditions and any such differences may be material. For the year ended December 31, 2023, we have not identified critical accounting estimates that involve a significant level of estimation uncertainty and would have a material impact on our results.
Actual results may differ from these judgments and estimates under different assumptions or conditions and any such differences may be material.
Under the terms of the Exchange Agreement the Holders agreed to exchange $145,751,000 aggregate principal amount of the 2025 Notes and $6,480,000 aggregate principal amount of the 2028 Notes for $135,000,000 aggregate principal amount of our new senior notes due 2029 (the “2029 Notes”, and such transaction the “Exchange”).
Under the terms of the 2025 Exchange Agreement, certain holders of the 2028 Notes agreed to exchange $183.3 million aggregate principal amount of the 2028 Notes for $146.7 million aggregate principal amount of our new 2031 Notes (the “2025 Notes Exchange”).

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