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What changed in Revolve Group, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Revolve Group, Inc.'s 2024 and 2025 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 2025 report.

+368 added−334 removedSource: 10-K (2026-02-25) vs 10-K (2025-02-25)

Top changes in Revolve Group, Inc.'s 2025 10-K

368 paragraphs added · 334 removed · 295 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeThey look to social media and digital content from brands and influencers, as well as dialogue within their social network, as their source of inspiration and discovery and to inform their purchasing decisions. These influences can have a more powerful impact than traditional advertising methods because personal tastes and preferences are communicated in a more authentic way.
Biggest changeMore than older generations of consumers, they frequently seek an emotional connection with brands that are unique and on-trend and resonate with their values. They look to social media and digital content from brands and influencers, as well as dialogue within their social network, as their source of inspiration and discovery and to inform their purchasing decisions.
We intend to evaluate and test physical retail as a potential growth driver over the long term, building on our early success in leveraging physical retail locations to increase brand awareness and acquire new customers. Continue to Innovate .
We intend to continue to evaluate and test physical retail as a potential growth driver over the long term, building on our early success in leveraging physical retail locations to increase brand awareness and acquire new customers. Continue to Innovate .
In connection with our initial public offering, or IPO, on June 6, 2019, Revolve Group, LLC converted into a Delaware corporation pursuant to a statutory conversion and changed its name to Revolve Group, Inc. so that the top-tier entity in our corporate structure was a corporation rather than a limited liability company.
In connection with our initial public 15 offering, or IPO, on June 6, 2019, Revolve Group, LLC converted into a Delaware corporation pursuant to a statutory conversion and changed its name to Revolve Group, Inc. so that the top-tier entity in our corporate structure was a corporation rather than a limited liability company.
Our fulfillment and logistics team oversees order fulfillment, ensuring that orders are efficiently and accurately processed, packed, shipped and delivered to customers. We continually invest in automation and our fulfillment center network to optimize fulfillment center workflow in an effort to maintain and improve our customer experience and gain cost efficiencies.
Our fulfillment and logistics team oversees order fulfillment, ensuring that orders are efficiently and accurately processed, packed, shipped and delivered to customers. We continually invest in automation and our fulfillment center 13 network to optimize fulfillment center workflow in an effort to maintain and improve our customer experience and gain cost efficiencies.
The algorithms we use in our fulfillment centers enable us to efficiently position inventory, including strategically directing products returned by customers to the optimal fulfillment center location 12 and giving customers the ability to pre-order merchandise items that are in the process of being returned to our fulfillment centers.
The algorithms we use in our fulfillment centers enable us to efficiently position inventory, including strategically directing products returned by customers to the optimal fulfillment center location and giving customers the ability to pre-order merchandise items that are in the process of being returned to our fulfillment centers.
Our human capital resources objectives are focused on the retention, development and safety of our existing employees and the recruitment of new employees. We are focused on building a team and culture that is diverse, respectful, socially engaged, digital-first, high energy, results driven and collaborative.
Our human capital resources objectives are focused on the retention, development and safety of our existing employees and the recruitment of new employees. We are focused on building a team and culture that is respectful, socially engaged, digital-first, high energy, results driven and collaborative.
We complement our social media and community-driven brand marketing with sophisticated performance marketing efforts, including paid search and product listing ads, affiliate marketing, paid social, retargeting, personalized email and SMS marketing and mobile “push” communications through our mobile applications. Deep Connection with Our Loyal Customers .
We complement our social media and community-driven brand marketing with sophisticated performance marketing efforts, including paid search and product listing ads, affiliate marketing, paid social, retargeting, personalized email and SMS marketing and mobile “push” communications through our mobile applications. 9 Deep Connection with Our Loyal Customers .
We are increasingly leveraging artificial intelligence, or AI, and machine learning to drive growth and efficiency throughout our operations, including to optimize our product assortment and personalize our website experience through advanced search and product recommendations. Pursue Strategic Acquisitions and Investments .
We are increasingly leveraging artificial intelligence, or AI, and machine learning to drive growth and efficiency throughout our operations, including to optimize our product assortment and personalize our website experience through advanced search and product recommendations. Pursue Strategic Acquisitions, Investments and Partnerships .
Our algorithms optimize pricing based on demand, automatically identify and re-order best sellers based on purchase trends and browsing feedback, and optimize the depth of available inventory to maximize margins and net sales at full price. • Marketing .
Our algorithms optimize pricing based on demand, automatically identify and re-order best sellers based on purchase trends and browsing feedback, and optimize the depth of available inventory to maximize our margins and net sales at full price. 12 • Marketing .
Our strong net revenue retention rates and high average order values drive attractive customer lifetime value that enables us to invest in customer acquisition and long-term brand building activities. 9 Unique Owned Brand Platform .
Our strong net revenue retention rates and high average order values drive attractive customer lifetime value that enables us to invest in customer acquisition and long-term brand building activities. Unique Owned Brand Platform .
Our data-driven merchandising approach allows us to offer a broad yet curated assortment of on-trend apparel, footwear, beauty, accessories and home products while managing fashion and inventory risk. We employ a “read and react” model that combines quantitative and qualitative decision-making to identify trends, curate assortments, facilitate our merchandise planning and re-order processes, and manage pricing.
Our data-driven merchandising approach allows us to offer a broad yet curated assortment of on-trend apparel, footwear, beauty and accessories while managing fashion and inventory risk. We employ a “read and react” model that combines quantitative and qualitative decision-making to identify trends, curate assortments, facilitate our merchandise planning and re-order processes, and manage pricing.
We optimize our assortment through the development of a portfolio of 29 owned brands that span multiple categories. We apply market insights and proprietary data analytics to identify gaps and emerging trends within the marketplace. We then develop new styles for existing brands or launch new brands with a unique aesthetic or category focus to address these areas.
We optimize our assortment through the development of a portfolio of 28 owned brands that span multiple categories. We apply market insights and proprietary data analytics to identify gaps and emerging trends within the marketplace. We then develop new styles for existing brands or launch new brands with a unique aesthetic or category focus to address these areas.
Our efficient operations allow us to ship over 96% of orders on the same day if placed before 3:00 p.m. Eastern Time. We are also able to ship to and service customers in over 150 countries and territories and offer shipping within two to three business days for customers representing over 80% of our international sales.
Our efficient operations allow us to ship over 97% of orders on the same day if placed before 3:00 p.m. Eastern Time. We are also able to ship to and service customers in over 150 countries and territories and offer shipping within two to three business days for customers representing over 80% of our international sales.
We intend to deepen our existing customer relationships to improve our already strong revenue retention and increase our wallet share through enhancing our customer experience, engaging with consumers in ways that address more aspects of their daily life, and expanding our loyalty program, brand ambassador program and preferred customer program for high-value consumers. Enhance and Broaden Our Offering .
We intend to deepen our existing customer relationships to improve our already strong revenue retention and increase our wallet share through enhancing our customer experience, engaging with consumers in ways that address more aspects of their daily life, and expanding our loyalty program and preferred customer program for high-value consumers. Enhance and Broaden Our Offering .
Although the apparel, footwear, beauty, accessories and home sectors are large, we believe the next-generation consumer remains underserved. Conventional national retailers aim to cater to a broad demographic with widely recognized brands, but they often lag in adapting to changing trends and have subpar customer service.
Although the apparel, footwear, beauty and accessories sectors are large, we believe the next-generation consumer remains underserved. 8 Conventional national retailers aim to cater to a broad demographic with widely recognized brands, but they often lag in adapting to changing trends and have subpar customer service.
Information contained in, or that can be accessed through, our website is not a part of, and is not incorporated into, this report . 15
Information contained in, or that can be accessed through, our website is not a part of, and is not incorporated into, this report .
We have built a portfolio of 29 owned brands, each crafted with unique attributes with pricing similar to that of premium third-party brands, supported by dedicated marketing investments. We believe our consumers perceive these as highly desirable, independent brands, rather than private labels or house brands.
We have built a portfolio of 28 owned brands, each crafted with unique attributes with pricing similar to that of premium third-party brands, supported by dedicated marketing investments. We believe our consumers perceive these as highly desirable, independent brands, rather than private labels or house brands.
We intend to further localize and improve the shopping experience and merchandise selection for our international customers and leverage the global reach of our brand and our worldwide network of influencers to accelerate growth outside of the United States. 10 Grow our Owned Brand Offering .
We intend to further localize and improve the shopping experience and merchandise selection for our international customers and leverage the global reach of our brands and our worldwide network of influencers to accelerate growth outside of the United States. Grow our Owned Brand Offering .
We offer a broad yet curated assortment of over 110,000 apparel and footwear styles, as well as accessories, beauty and home products, presented in a visually compelling manner to encourage discovery and engagement. Since our inception, we have attracted and maintained strong relationships with a diversified group of premium lifestyle and luxury brands, from emerging designers to globally recognized brands.
We offer a broad yet curated assortment of over 140,000 apparel and footwear styles, as well as accessories and beauty products, presented in a visually compelling manner to encourage discovery and engagement. Since our inception, we have attracted and maintained strong relationships with a diversified group of premium lifestyle and luxury brands, from emerging designers to globally recognized brands.
We define net sales at full price as sales with a price of not less than 95% of the full retail price. Our powerful brands and innovative marketing strategy connect with the growing next-generation customer demographics.
We define net sales at full price as sales with a price of not less than 95% of the full retail price. Our powerful brands and innovative marketing strategy connect with the growing next-generation customer demographic.
Proprietary, Scalable Technology Platform and Robust Data Net . Our proprietary, scalable technology, data analytics and artificial intelligence and machine learning-supported platform efficiently and seamlessly manages our merchandising, marketing, website experience, fulfillment, product development, sourcing, and pricing decisions.
Our proprietary, scalable technology, data analytics and artificial intelligence and machine learning-supported platform efficiently and seamlessly manages our merchandising, marketing, website experience, fulfillment, product development, sourcing, and pricing decisions.
Our dynamic platform connects a deeply engaged community of millions of consumers, thousands of global fashion influencers and over 1,400 emerging, established and owned brands.
Our dynamic platform connects a deeply engaged community of millions of consumers, thousands of global fashion influencers and over 1,600 emerging, established and owned brands.
We may pursue strategic acquisitions and investments that we believe will be complementary to our business and operations, including opportunities that can help us promote our brands across new and existing categories, channels, demographics and geographies, expand our product offerings, improve our technology infrastructure, and enhance the customer experience.
We have and may continue to pursue strategic acquisitions, investments and partnerships that we believe will be complementary to our business and operations, including opportunities that can help us expand our brands across new and existing categories, channels, demographics and geographies, expand our product offerings, improve our technology infrastructure, and enhance the customer experience.
Unlike traditional private label offerings, our owned brands command pricing similar to premium third-party brands due to their brand equity, as demonstrated by their collective social media following, which exceeded 4.2 million followers on Instagram and TikTok as of December 31, 2024.
Unlike traditional private label offerings, our owned brands command pricing similar to premium third-party brands due to their brand equity, as demonstrated by their collective social media following, which exceeded 4.3 million followers on Instagram and TikTok as of December 31, 2025.
Our talent acquisition efforts combined with retention of our employee base yielded positive results and allowed us to grow our headcount from just over 1,000 employees at the end of 2019 to over 1,600 employees at the end of 2024. We attribute this success to our strong brand and efficient recruitment process.
Our talent acquisition efforts combined with retention of our employee base yielded positive results and allowed us to grow our headcount from just over 1,000 employees at the end of 2019 to over 1,600 employees at the end of 2025. We attribute this success to our strong brand and effective recruitment process.
Our online presence includes the collective following of over 12.1 million Instagram and TikTok followers across REVOLVE, FWRD and our individual owned brands as of December 31, 2024. We complement our powerful social media and influencer marketing with a robust digital performance marketing strategy.
Our online presence includes the collective following of over 12.4 million Instagram and TikTok followers across REVOLVE, FWRD and our individual owned brands as of December 31, 2025. We complement our powerful social media and influencer marketing with a robust digital performance marketing strategy.
As a trusted premium lifestyle brand and a go-to online source for discovery and inspiration, we deliver exceptional service and an engaging customer experience with a vast yet curated offering totaling over 110,000 apparel and footwear styles, as well as beauty, accessories and home products.
As a trusted premium lifestyle brand and a go-to online source for discovery and inspiration, we deliver exceptional service and an engaging customer experience with a vast yet curated offering totaling over 140,000 apparel and footwear styles, as well as beauty and accessories.
Through more than 20 years of continued investment in technology, data analytics and innovative marketing and merchandising strategies, we have built a powerful platform and brand that we believe is connecting with the next generation of consumers and is redefining fashion retail for the 21st century.
Through more than 20 years of investment in technology, data analytics and innovative marketing and merchandising strategies, we have built a powerful platform and brand that we believe is connecting with the next generation of consumers and is redefining fashion retail.
We have a proven history of leveraging our technology platform to expand capacity and increase service levels in a capital-efficient manner. We will continue to evaluate opportunities to enhance our platform in the United States and internationally. 13 Human Capital As of December 31, 2024, we had 1,632 employees worldwide, most of whom are employed in the United States.
We have a proven history of leveraging our technology platform to expand capacity and increase service levels in a capital-efficient manner. We will continue to evaluate opportunities to enhance our platform in the United States and internationally. Human Capital As of December 31, 2025, we had 1,664 employees worldwide, most of whom are employed in the United States.
Furthermore, by introducing new products almost daily in limited quantities, we create a sense of urgency for our customers. As a result, sales of products at full retail price represented approximately 82%, 79%, 85%, 87% and 77% of total net sales in 2024, 2023, 2022, 2021 and 2020, respectively. Our Brands .
Furthermore, by introducing new products almost daily in limited quantities, we create a sense of urgency for our customers. As a result, sales of products at full retail price represented approximately 81%, 82% and 79% of total net sales in 2025, 2024 and 2023, respectively. Our Brands .
As a result, we will continue to invest in attracting new customers to the REVOLVE community. Continue to Increase Customer Loyalty and Wallet Share .
As a result, we will continue to invest in attracting new customers. 10 Continue to Increase Customer Loyalty and Wallet Share .
Our approach facilitates constant newness, with over 1,900 new styles launched per week on average in 2024. Illustrating the efficacy of our data-driven merchandising, in 2024, approximately 82% of our net sales were at full price, which we believe is appreciably higher than industry benchmarks.
Our approach facilitates constant newness, with over 2,400 new styles launched per week on average in 2025. Illustrating the efficacy of our data-driven merchandising, in 2025, approximately 81.4% of our net sales were at full price, which we believe is appreciably higher than industry benchmarks.
Our trademarks, including domain names, are material to our business and brand identity. 14 Government Regulation Our business is subject to a number of domestic and foreign laws and regulations that affect companies conducting business on the Internet, many of which are still evolving and could be interpreted in ways that could harm our business.
Government Regulation Our business is subject to a number of domestic and foreign laws and regulations that affect companies conducting business on the Internet, many of which are still evolving and could be interpreted in ways that could harm our business.
In 2024, our owned brands represented five out of our top ten brands in the REVOLVE segment and contributed 18.2% of the REVOLVE segment’s net sales. 7 Representative REVOLVE Owned Brands Our Industry Large and Growing Addressable Market. We participate in the large and growing apparel, footwear, beauty, accessories and home product sectors.
In 2025, our owned brands represented four out of our top ten brands in the REVOLVE segment and contributed 19.8% of the REVOLVE segment’s net sales. 7 Representative REVOLVE Owned Brands Our Industry Large and Growing Addressable Market. We participate in the large and growing apparel, footwear, beauty and accessories product sectors.
We face significant competition from eCommerce websites, including apparel and accessories-oriented eCommerce websites as well as the eCommerce websites of traditional retailers and premium and luxury brands. We also face competition from brick-and-mortar stores and boutiques, including traditional retailers as well as fashion boutiques.
We face significant competition from eCommerce websites, including apparel and accessories-oriented eCommerce websites as well as the eCommerce websites of traditional retailers and premium and luxury brands.
Our average order value was $302 in 2024, which is reflective of our focus on premium merchandise and our differentiation from mass market, low price or value-based retailers.
Our average order value was $299 in 2025, which is reflective of our focus on premium merchandise sold primarily at full price and our differentiation from mass market, low price or value-based retailers.
Our trademark registrations and applications, which we have filed in the United States and in various jurisdictions outside the United States, have focused primarily on the REVOLVE and FWRD word marks and those marks associated with our unique individual owned brands.
Our trademark registrations and applications, which we have filed in the United States and in various jurisdictions outside the United States, have focused primarily on the REVOLVE and FWRD word marks and those marks associated with our unique individual owned brands. Our trademarks, including domain names, are material to our business and brand identity.
These efforts typically lead to higher earned media value relative to that of our competitors. We have a global network of thousands of influencers who regularly create branded REVOLVE and FWRD content. We believe we are a preferred partner for influencers, as their association with REVOLVE and FWRD enhances their personal brands through our exclusive events and premium product offering.
We have a global network of thousands of influencers who regularly create branded REVOLVE and FWRD content. We believe we are a preferred partner for influencers, as their association with REVOLVE and FWRD enhances their personal brands through our exclusive events and premium product offering.
We update our sites almost daily with a constant flow of fresh, high-quality, authentic content to provide an inspiring and engaging experience for our customers, driving frequent visits to our sites and helping to promote the discovery of new, relevant brands and products.
These brand relationships provide customers with breadth across product categories and styles, while reinforcing our position as the destination for discovery. 11 We update our sites almost daily with a constant flow of fresh, high-quality, authentic content to provide an inspiring and engaging experience for our customers, driving frequent visits to our sites and helping to promote the discovery of new, relevant brands and products.
The following table sets forth the number of employees by team as of December 31, 2024: Team As of December 31, 2024 Fulfillment and logistics 779 Customer service 187 Owned brand design and development 158 Merchandising and planning 124 Creative photography, studio and editorial 116 Marketing 62 Technology and data science 56 Retail 37 Other 113 Total 1,632 Competition The online and offline retail markets generally, as well as the premium lifestyle and luxury product markets more specifically, are highly competitive and rapidly evolving.
The following table sets forth the number of employees by team as of December 31, 2025: Team As of December 31, 2025 Fulfillment and logistics 805 Customer service 184 Owned brand design and development 173 Merchandising and planning 120 Creative photography, studio and editorial 114 Marketing 61 Technology and data science 58 Retail 35 Other 114 Total 1,664 Competition The online and offline retail markets generally, as well as the premium lifestyle and luxury product markets more specifically, are highly competitive and rapidly evolving.
The broad reach of our social media–driven marketing and events generates consumer appeal and credibility for our owned brands, expanding our reach and driving incremental traffic to our sites. Net sales of owned brands represented 18.2%, 20.0%, 22.4%, 20.1% and 26.7% of REVOLVE segment net sales for 2024, 2023, 2022, 2021 and 2020, respectively.
The broad reach of our social media–driven marketing and events generates consumer appeal and credibility for our owned brands, expanding our reach and driving incremental traffic to our sites. Net sales of owned brands represented 19.8%, 18.2% and 20.0% of REVOLVE segment net sales for 2025, 2024 and 2023, respectively. Proprietary, Scalable Technology Platform and Robust Data Net .
We use machine learning and artificial intelligence to optimize our assortment and personalize the website experience through advanced search and product recommendations. • Merchandising .
We use machine learning and artificial intelligence to optimize our assortment and personalize the website experience through advanced search and product recommendations and to drive efficiencies in our inventory, fulfillment, owned brand design and back office functions. • Merchandising .
We believe that favorable demographic trends, the continued shift to digital channels and continued innovation in fashion and customer experience will drive long-term growth in our addressable market. Growth in Digital Channels.
We believe that favorable demographic trends and continued innovation in fashion and customer experience will drive long-term growth in our addressable market. Continued Expansion of Digital Channels Coincides with Growing Consumer Interest in Omnichannel Retail Experiences.
Specialty boutiques, while highly curated, often offer a narrow assortment and are limited in their reach. Many pure-play digital retailers tend to deliver a purely transactional customer experience, lacking original fashion content and style guidance essential for fostering inspiration and discovery. 8 Our Competitive Strengths Leading Destination for Premium Fashion for the Next-Generation Consumer .
Specialty boutiques, while highly curated, often offer a narrow assortment and are limited in their reach. Many pure-play digital retailers tend to deliver a purely transactional customer experience, lacking original fashion content and style guidance essential for fostering inspiration and discovery. Financial Challenges Experienced by Many High-Profile Competitors Create an Opportunity to Expand Market Share.
We believe we are the leading U.S. online destination targeted towards next-generation consumers seeking premium fashion. In 2024, we generated $1.1 billion in net sales, served 2.7 million active customers, offered over 1,400 brands and delivered over 210,000 unique styles, which we believe makes us one of the largest standalone fashion eCommerce businesses in the United States.
In 2025, we generated $1.2 billion in net sales, served 2.8 million active customers, offered over 1,600 brands and delivered over 230,000 unique styles, which we believe makes us one of the largest standalone fashion eCommerce businesses in the United States.
Intellectual Property We primarily protect our intellectual property through the trademark, copyright and trade secret laws of the United States. As of December 31, 2024, we owned over 760 trademark registrations, over 70 trademark applications and over 90 Internet domain names.
We believe we compete favorably across these factors when taken as a whole. Intellectual Property We primarily protect our intellectual property through the trademark, copyright and trade secret laws of the United States. As of December 31, 2025, we owned over 770 trademark registrations, over 40 trademark applications and over 120 Internet domain names.
This evolution in consumer behavior accompanies a significant transition of purchasing power to the Millennial generation. According to U.S. Federal Reserve data, the Millennials’ share of U.S. household net worth during the first nine months of 2024 more than doubled compared to the same period in 2019. We Believe There is an Opportunity to Better Serve Next-Generation Consumers.
Federal Reserve data, the Millennials’ share of U.S. household net worth during the first half of 2025 nearly tripled compared to the same period in 2019. We Believe There is an Opportunity to Better Serve Next-Generation Consumers.
We have built a large community of influencer and brand partners, including thousands of influencers enrolled in our proprietary brand ambassador program, as well as some of the most influential celebrities in the world such as our FWRD Creative Director, Kendall Jenner.
We have built a large community of influencer and brand partners, including thousands of influencers enrolled in our proprietary brand ambassador program, as well as some of the most influential celebrities in the world. Through our strong brand, deep relationships and history of mutually beneficial partnerships, we believe we are the partner of choice for influencers worldwide.
We compete based on product selection, differentiation and curation, brand quality and strength of brand relationships, relevance, convenience, ease of use and consumer experience, including order fulfillment and shipping timeliness and return policies. We believe we compete favorably across these factors when taken as a whole.
We also face competition from brick-and-mortar stores and boutiques, including traditional retailers as well as fashion boutiques. 14 We compete based on product selection, differentiation and curation, brand quality and strength of brand relationships, relevance, convenience, ease of use and consumer experience, including order fulfillment and shipping timeliness and return policies.
Our Marketing Approach We leverage a variety of marketing and advertising programs to build our brands, drive traffic to our websites and mobile applications, acquire new customers and engage with our existing customers. 11 We are a leader in experiential and influencer marketing, using social media channels and cultural events designed to deliver authentic aspirational experiences featuring our premium merchandise to attract and retain customers.
Our Marketing Approach We leverage a variety of marketing and advertising programs to build our brands, drive traffic to our websites and mobile applications, acquire new customers and engage with our existing customers.
Through our strong brand, deep relationships and history of mutually beneficial partnerships, we believe we have become a partner of choice for influencers worldwide. These marketing efforts deliver authentic, aspirational experiences and lifestyle content that drive long-term loyalty and engagement with our community of brands, customers and influencers.
These marketing efforts deliver authentic, aspirational experiences and lifestyle content that drive long-term loyalty and engagement with our community of brands, customers and influencers. We complement our experiential brand marketing with sophisticated, data-driven performance marketing to drive customer acquisition and retention — key contributors to our customer lifetime value.
The nature of consumer engagement with brands and retailers is evolving in tandem with the continued transition to digital channels. Next-generation consumers often aspire to express their individual style through fashion and beauty. More than older generations of consumers, they frequently seek an emotional connection with brands that are unique and on-trend and resonate with their values.
The nature of consumer engagement with brands and retailers continues to evolve as consumers increasingly interact with brands across a combination of digital and physical channels. Next-generation consumers often aspire to express their individual style through fashion and beauty.
Over the past several years, consumers have increasingly used digital channels to make purchases, a trend supported by innovation in the digital shopping experience and by the closure of tens of thousands of physical retail stores in recent years.
Over time, consumers have increasingly used digital channels to make purchases, a trend supported by innovation in the digital shopping experiences, including on mobile devices enabling consumers to discover, browse and purchase anytime from anywhere. In 2025, customer orders placed through mobile devices represented 77.2% of our total orders.
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We complement our experiential brand marketing with sophisticated, data-driven performance marketing, the combination of which drives customer acquisition and retention that are key drivers of our customer lifetime value.
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Nonetheless, the majority of total retail sales still occur in physical stores and many consumers prefer omnichannel retail experiences. Younger customer demographics particularly embrace the opportunity to touch and feel products during in-person shopping experiences, while also shopping through online channels. Media Consumption and Shopping Behaviors of Next-Generation Consumers.
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Mobile sales in particular have rapidly increased as consumers leverage advances in technology, further enhancing their ability to discover, browse and purchase anytime from anywhere. In 2024, customer orders placed through mobile devices represented 73.7% of our total orders. Media Consumption and Shopping Behaviors of Next-Generation Consumers.
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These influences can have a more powerful impact than traditional advertising methods because personal tastes and preferences are communicated in a more authentic way. This evolution in consumer behavior accompanies a significant transition of purchasing power to the Millennial generation. According to U.S.
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These brand relationships provide customers with breadth across product categories and styles, while reinforcing our position as the destination for discovery.
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In recent years, several key participants in luxury fashion retail have filed for bankruptcy protection, or the international equivalent, impacting luxury brand partners and millions of consumers. This industry disruption creates opportunity for financially stronger competitors, such as REVOLVE and FWRD, to invest in market share capture, supported by consistent profitability and cash flow generation.
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Our Competitive Strengths Leading Destination for Premium Fashion for the Next-Generation Consumer . We believe we are the leading U.S. online destination targeted towards next-generation consumers seeking premium fashion.
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We are a leader in experiential and influencer marketing, using social media channels and cultural events designed to deliver authentic aspirational experiences featuring our premium merchandise to attract and retain customers. These efforts typically lead to higher earned media value relative to that of our competitors.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeExisting and future regulations and laws could impede the growth of the Internet, eCommerce or mobile commerce. These regulations and laws may involve online payments, taxes, tariffs, privacy, data protection, data security, anti-spam, content protection, website accessibility, Internet neutrality, artificial intelligence, automated decision making, electronic contracts and communications, consumer protection, and gift cards.
Biggest changeWe are subject to general business regulations and laws as well as regulations and laws specifically governing the Internet and eCommerce, including but not limited to regulations and laws involving pricing practices and online payments, taxes, privacy, data protection, data security, anti-spam, content protection, website accessibility, Internet neutrality, AI, automated decision-making, electronic contracts and communications, consumer protection, gift cards, marketplace scope or ownership, intermediary liability protections, online platform liability, content moderation, online child safety, marketplace seller regulation, packaging and recycling requirements, seller certification and representative requirements, and know-your-customer/business.
We may incur such expenses or make such investments in advance of expected sales and such expected sales may not occur. Our failure to adequately and effectively staff our fulfillment centers, through third parties or with our own employees, could adversely affect our customer experience and operating results. We operate three fulfillment centers located in California and Pennsylvania.
We may incur such expenses or make such investments in advance of expected sales and such expected sales may not occur. Our failure to adequately and effectively staff our fulfillment centers, with our own employees or through third parties, could adversely affect our customer experience and operating results. We operate three fulfillment centers located in California and Pennsylvania.
It is possible that general business regulations and laws, or those specifically governing the Internet or eCommerce, may subject us to inconsistent obligations across jurisdictions. We strive to comply with all applicable laws, and compliance is often complex and/or operationally challenging.
It is possible that general business regulations and laws, or those specifically governing the Internet or eCommerce, may subject us to inconsistent obligations across jurisdictions. We strive to comply with all applicable laws, and compliance is often complex and operationally challenging.
Our bylaws provide that, unless we consent in writing to the selection of an alternative forum, the sole and exclusive forum for (1) any derivative action or proceeding brought on our behalf, (2) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, stockholders, officers or other employees to us or our stockholders, (3) any action arising pursuant to any provision of the Delaware General Corporation Law, our certificate of incorporation or our bylaws or (4) any other action asserting a claim that is governed by the internal affairs doctrine shall be the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, another State court in Delaware or the federal district court for the District of Delaware), except for any claim as to which such court determines that there is an indispensable party not subject to the jurisdiction of such court (and the indispensable party does not consent to the personal jurisdiction of such court within ten days following such determination), which is vested in the exclusive jurisdiction of a court or forum other than such court or for which such court does not have subject matter jurisdiction.
Our bylaws provide that, unless we consent in writing to the selection of an alternative forum, the sole and exclusive forum for (1) any derivative action or proceeding brought on our behalf, (2) any action asserting a claim of 50 breach of a fiduciary duty owed by any of our directors, stockholders, officers or other employees to us or our stockholders, (3) any action arising pursuant to any provision of the Delaware General Corporation Law, our certificate of incorporation or our bylaws or (4) any other action asserting a claim that is governed by the internal affairs doctrine shall be the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, another State court in Delaware or the federal district court for the District of Delaware), except for any claim as to which such court determines that there is an indispensable party not subject to the jurisdiction of such court (and the indispensable party does not consent to the personal jurisdiction of such court within ten days following such determination), which is vested in the exclusive jurisdiction of a court or forum other than such court or for which such court does not have subject matter jurisdiction.
In addition, our future growth and our results of operations could suffer if we experience difficulties in integrating our mobile applications into mobile devices, if problems arise with our relationships with providers of mobile operating systems or mobile application download stores, such as those of Apple Inc. or Alphabet Inc., if those providers impose restrictions on the data collection or use practices or other functionality of our applications, if our applications receive unfavorable treatment compared to competing applications, such as the order of our products in the Apple App Store, or if we face increased costs to distribute or have customers use our mobile applications.
In addition, our future growth and our results of operations could suffer if we experience difficulties in integrating our mobile applications into mobile devices, if problems arise with our relationships with providers of mobile operating systems or mobile application download stores, such as those of Apple Inc. or Alphabet Inc., if those providers impose restrictions on the data collection or use practices or other functionality of our applications, if our applications receive unfavorable treatment compared to competing applications, such as the order of our products in the Apple App Store, 29 or if we face increased costs to distribute or have customers use our mobile applications.
Demand may be affected by macroeconomic factors such as high inflation and low consumer confidence, public health crises, wars and other geopolitical tensions, seasonality, new product launches, rapid changes in product cycles and pricing, product defects, promotions, changes in consumer spending patterns, changes in consumer tastes with respect to our products, and various other factors, such as political instability and social unrest, and our consumers may not purchase products in the quantities that we expect.
Demand may be affected by macroeconomic factors such as high inflation and low consumer confidence, public health crises, wars and other geopolitical tensions, new product launches, rapid changes in product cycles and pricing, product defects, promotions, changes in consumer spending patterns, changes in consumer tastes with respect to our products, and various other factors, such as political instability and social unrest, and our consumers may not purchase products in the quantities that we expect.
As such, these requirements may have a material adverse effect on our business, financial condition and results of operations. 32 Further, the laws and regulations that govern the status and classification of independent contractors and other similar non-employee services providers are subject to change and divergent interpretations by various authorities, which can create uncertainty and unpredictability for us.
As such, these requirements may have a material adverse effect on our business, financial condition and results of operations. Further, the laws and regulations that govern the status and classification of independent contractors and other similar non-employee services providers are subject to change and divergent interpretations by various authorities, which can create uncertainty and unpredictability for us.
We rely on third-party suppliers, manufacturers, distributors and other vendors and they may not continue to produce products or provide services that are consistent with our standards or applicable regulatory requirements, which could harm our brand, cause consumer dissatisfaction, and require us to find alternative suppliers of our products or services. 21 We do not own or operate any manufacturing facilities.
We rely on third-party suppliers, manufacturers, distributors and other vendors and they may not continue to produce products or provide services that are consistent with our standards or applicable regulatory requirements, which could harm our brand, cause consumer dissatisfaction, and require us to find alternative suppliers of our products or services. We do not own or operate any manufacturing facilities.
These information technology systems, some of which are managed by third parties, may be susceptible to damage, disruptions or shutdowns due to failures during the process of upgrading or replacing software, databases or components, power outages, hardware failures, computer viruses, attacks by computer hackers, other security breaches and incidents, telecommunication failures, user errors or catastrophic events.
These information technology systems, some of which are managed by third parties, may be susceptible to damage, 43 disruptions or shutdowns due to failures during the process of upgrading or replacing software, databases or components, power outages, hardware failures, computer viruses, attacks by computer hackers, other security breaches and incidents, telecommunication failures, user errors or catastrophic events.
In China, for example, the Personal Information Protection Law, or PIPL, was adopted on August 20, 2021 and went into effect on November 1, 2021. The PIPL shares similarities with the GDPR, including extraterritorial application, data minimization, data 39 localization and purpose limitation requirements, as well as obligations to provide certain notices and rights to citizens of China.
In China, for example, the Personal Information Protection Law, or PIPL, was adopted on August 20, 2021 and went into effect on November 1, 2021. The PIPL shares similarities with the GDPR, including extraterritorial application, data minimization, data localization and purpose limitation requirements, as well as obligations to provide certain notices and rights to citizens of China.
If any such claim is valid, we may be compelled to cease our use of such intellectual property or other proprietary rights and pay damages, including statutory damages of up to $150,000 per work infringed in the event of willful copyright infringement. We could also 45 be subject to actual damages, the amounts of which may be difficult to quantify.
If any such claim is valid, we may be compelled to cease our use of such intellectual property or other proprietary rights and pay damages, including statutory damages of up to $150,000 per work infringed in the event of willful copyright infringement. We could also be subject to actual damages, the amounts of which may be difficult to quantify.
We recently opened an office in the Philippines to support our customer service and certain administrative functions and a small number of our employees are working remotely in other regions outside the United States. If we choose to expand further internationally, we would need to adapt to different local cultures, laws, regulations, standards and policies.
We recently opened an office in the Philippines to support our customer service and certain administrative functions and a small number of our employees and contractors are working remotely in other regions outside the United States. If we choose to expand further internationally, we would need to adapt to different local cultures, laws, regulations, standards and policies.
For example, in December 2021, a vulnerability in a popular logging software, Log4j, was publicly announced. Any of these risks could be difficult to eliminate or manage and, if not addressed, could have an adverse effect on our business and operating results. Our software is highly complex and may contain undetected errors.
For example, in December 2021, a vulnerability in a popular 44 logging software, Log4j, was publicly announced. Any of these risks could be difficult to eliminate or manage and, if not addressed, could have an adverse effect on our business and operating results. Our software is highly complex and may contain undetected errors.
Furthermore, the third parties we rely on in China may disclose our confidential information or intellectual property to competitors or third parties, which could result in the illegal distribution and sale of counterfeit versions of our products. If any of these events occur, our business, financial condition and results 35 of operations could be materially and adversely affected.
Furthermore, the third parties we rely on in China may disclose our confidential information or intellectual property to competitors or third parties, which could result in the illegal distribution and sale of counterfeit versions of our products. If any of these events occur, our business, financial condition and results of operations could be materially and adversely affected.
There are numerous other factors that could affect our tax rate, including, among others, intercompany transactions, losses incurred in jurisdictions for which we are not able to realize the related tax benefits, exercises of stock options and vesting of restricted stock units, and entry into new businesses and geographies.
There are numerous other factors that could affect our effective tax rate, including, among others, intercompany transactions, losses incurred in jurisdictions for which we are not able to realize the related tax benefits, exercises of stock options and vesting of restricted stock units, and entry into new businesses and geographies.
The safeguard on which we have primarily relied for such transfers has been use of the European Commission’s standard contractual clauses, 38 or SCCs. We have undertaken certain efforts to conform transfers of personal data from the EEA to the United States based on our understanding of current regulatory obligations and the guidance of data protection authorities.
The safeguard on which we have primarily relied for such transfers has been use of the European Commission’s standard contractual clauses, or SCCs. We have undertaken certain efforts to conform transfers of personal data from the EEA to the United States based on our understanding of current regulatory obligations and the guidance of data protection authorities.
Use of social media and influencers may materially and adversely affect our reputation or subject us to regulatory and tax obligations, fines or other penalties. We use third-party social media platforms as, among other things, marketing tools. For example, we maintain accounts on Instagram, Facebook, TikTok, Pinterest, YouTube and X.
Use of social media and influencers may materially and adversely affect our reputation or subject us to regulatory and tax obligations, fines, lawsuits or other penalties. We use third-party social media platforms as, among other things, marketing tools. For example, we maintain accounts on Instagram, Facebook, TikTok, Pinterest, YouTube and X.
Insurers may also deny us coverage as to any future claim. Any of these results could harm our growth prospects, financial condition, business and reputation. System interruptions that impair customer access to our sites or other performance failures in our technology infrastructure could damage our business, reputation and brand and substantially harm our business and results of operations.
Insurers may also deny us coverage as to any future claim. Any of these results could harm our growth prospects, financial condition, business and reputation. 42 System interruptions that impair customer access to our sites or other performance failures in our technology infrastructure could damage our business, reputation and brand and substantially harm our business and results of operations.
Furthermore, as laws and regulations and public opinion rapidly evolve to govern the use of social media platforms, our ability to use certain platforms, including TikTok in particular, as marketing tools may become limited, restricted or more expensive or complicated, which could adversely impact our business and operating results.
Furthermore, as laws and regulations and public opinion rapidly evolve to govern the use of social media platforms, our ability to use certain platforms, including TikTok in particular, as marketing tools may become limited, 20 restricted or more expensive or complicated, which could adversely impact our business and operating results.
If we are unable to acquire new customers who purchase products in numbers sufficient to grow our business, we may not be able to generate the scale necessary to drive leverage and efficiency with our suppliers, our net sales may decrease, and our business, financial condition and operating results may be materially adversely affected.
If we are unable to acquire new customers who purchase products in numbers sufficient to grow our business, we may not be able to generate the scale necessary to drive leverage and efficiency with our suppliers, our net sales may decrease, and our business, financial condition and operating results may be 21 materially adversely affected.
If our information technology systems suffer damage, disruption or shutdown and we do not effectively resolve the issues in a timely manner, our business, financial condition and results of operations may be materially and adversely affected and we could experience delays in reporting our financial results. 42 Our eCommerce operations are important to our business.
If our information technology systems suffer damage, disruption or shutdown and we do not effectively resolve the issues in a timely manner, our business, financial condition and results of operations may be materially and adversely affected and we could experience delays in reporting our financial results. Our eCommerce operations are important to our business.
These requirements may be interpreted and applied in a manner that is inconsistent from one 37 jurisdiction to another or may conflict with other rules or our practices. As a result, our practices likely have not complied or may not comply in the future with all such laws, regulations, requirements and obligations.
These requirements may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another or may conflict with other rules or our practices. As a result, our practices likely have not complied or may not comply in the future with all such laws, regulations, requirements and obligations.
As part of our ongoing business strategy, we expect we will need to continue to introduce new products in our traditional product categories of apparel, footwear, beauty, accessories and home products, while also expanding our product launches into adjacent categories in which we may have little to no operating experience.
As part of our ongoing business strategy, we expect we will need to continue to introduce new products in our traditional product categories of apparel, footwear, beauty and accessories, while also expanding our product launches into adjacent categories in which we may have little to no operating experience.
Such recalls or removal of merchandise can result in, among other things, lost sales, diverted resources, potential harm to our 31 reputation and increased customer service costs and legal expenses, which could have a material adverse effect on our operating results.
Such recalls or removal of merchandise 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.
If we are unable to retain, attract and motivate talented employees with the appropriate skills at cost-effective compensation levels or if changes to our business adversely affect morale or retention, we may not achieve our objectives and our business and 27 operating results could be adversely affected.
If we are unable to retain, attract and motivate talented employees with the appropriate skills at cost-effective compensation levels or if changes to our business adversely affect morale or retention, we may not achieve our objectives and our business and operating results could be adversely affected.
We are subject to the SEC’s rules implementing Sections 302 and 404 of the Sarbanes-Oxley Act, which require our management to certify financial and other information in our quarterly and annual reports and provide an annual 29 management report on the effectiveness of internal controls over financial reporting.
We are subject to the SEC’s rules implementing Sections 302 and 404 of the Sarbanes-Oxley Act, which require our management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of internal controls over financial reporting.
We are also required to manage numerous relationships with various suppliers, vendors and other third parties. Changes in our operations, vendor base, fulfillment centers, information technology systems or internal controls and procedures may not be adequate to support our operations.
We are also required to manage numerous relationships with various suppliers, vendors and other third parties. Changes in our operations, vendor base, fulfillment centers, information technology systems or internal controls and 19 procedures may not be adequate to support our operations.
Demand for products, however, is difficult to forecast and can change significantly between the time inventory is ordered and the date of sale, resulting in higher inventory levels that may adversely impact our operating results, or insufficient inventory that may adversely impact the conversion of demand for our merchandise.
Demand for products, however, is difficult to forecast and can change significantly between the time inventory is ordered and the date of sale, resulting in higher inventory levels that may 17 adversely impact our operating results, or insufficient inventory that may adversely impact the conversion of demand for our merchandise.
Completed and future transactions may result in unforeseen operational difficulties and expenditures associated with: • incorporating new businesses and technologies into our infrastructure; • consolidating operational and administrative functions; • coordinating outreach to our community; • maintaining morale and culture and retaining and integrating key employees; • maintaining or developing controls, procedures and policies (including effective internal control over financial reporting and disclosure controls and procedures); and • identifying and assuming liabilities related to the activities of the acquired business before the acquisition, including liabilities for violations of laws and regulations, intellectual property issues, commercial disputes, taxes and other matters.
Completed and future transactions may result in unforeseen operational difficulties and expenditures associated with: • incorporating new businesses and technologies into our infrastructure; • the allocation of resources; • consolidating operational and administrative functions; • coordinating outreach to our community; • maintaining morale and culture and retaining and integrating key employees; • maintaining or developing controls, procedures and policies (including effective internal control over financial reporting and disclosure controls and procedures); and • identifying and assuming liabilities related to the activities of the acquired business before the acquisition, including liabilities for violations of laws and regulations, intellectual property issues, commercial disputes, taxes and other matters.
Moreover, developing, testing and deploying AI systems may also increase our operating expenses due to the nature of the computing costs involved in such systems. Risks Related to Our Intellectual Property If we cannot successfully protect our intellectual property, our business would suffer.
Moreover, developing, testing and deploying AI systems may also increase our operating expenses due to the nature of the computing costs involved in such systems. 45 Risks Related to Our Intellectual Property If we cannot successfully protect our intellectual property, our business would suffer.
If our marketing efforts are not successful in promoting awareness of our brands and products, driving customer engagement or attracting new 20 customers, or if we are not able to cost-effectively manage our marketing expenses, our operating results will be adversely affected.
If our marketing efforts are not successful in promoting awareness of our brands and products, driving customer engagement or attracting new customers, or if we are not able to cost-effectively manage our marketing expenses, our operating results will be adversely affected.
For example, analysts or investors might change their models for valuing our 24 Class A common stock, we could experience short-term liquidity issues, our ability to retain or attract key personnel may diminish and other unanticipated issues may arise.
For example, analysts or investors might change their models for valuing our Class A common stock, we could experience short-term liquidity issues, our ability to retain or attract key personnel may diminish and other unanticipated issues may arise.
As part of our long-term growth plans, we may continue to acquire, invest in or partner with additional businesses, assets and technologies, and enter into commercial collaborations, which we believe could further complement or expand our business.
As part of our long-term growth plans, we have and may continue to acquire, invest in or partner with additional businesses, assets and technologies, and enter into commercial collaborations, which we believe could further complement or expand our business.
We collect and maintain significant amounts of personal data and other data relating to our customers and employees. A variety of federal, state and international laws and regulations, and certain industry standards, govern or apply to our collection, use, retention, sharing and security of consumer data.
We collect and maintain significant amounts of personal data and other data relating to our customers and employees. A variety of federal, state and international laws and regulations, and certain industry standards, govern or apply to our collection, use, retention, sharing, transfer and security of consumer data.
Further, on January 13, 2022, the Austrian data protection authority published a decision ruling that the collection of personal data and transfer to the United States through Google Analytics and other analytics and tracking tools used by website operators violates the GDPR.
On January 13, 2022, the Austrian data protection authority published a decision ruling that the collection of personal data and transfer to the United States through Google Analytics and other analytics and tracking tools used by website operators violates the GDPR.
Any of these incidents could lead to interruptions or shutdowns of our platform, loss, unavailability or corruption of data, or unauthorized access to or alteration, use, acquisition or disclosure of personal data or other sensitive information. Cyberattacks could also result in the theft of our intellectual property.
Any of these incidents could lead to interruptions or shutdowns of our platform, loss, unavailability or corruption of data, or unauthorized access to or alteration, use, acquisition or disclosure of personal data or other sensitive information. Cyberattacks could also result in the theft of 41 our intellectual property.
We expend substantial resources in the development of new high-quality products but are susceptible to counterfeiting, which may harm our 44 reputation for producing such products and force us to incur expenses in enforcing our intellectual property rights.
We expend substantial resources in the development of new high-quality products but are susceptible to counterfeiting, which may harm our reputation for producing such products and force us to incur expenses in enforcing our intellectual property rights.
Also, we might not be able to prevent third parties from registering, using or retaining domain names that interfere with our consumer communications or infringe or otherwise decrease the value of our marks, domain names and other proprietary rights.
Also, we might not be able to prevent third parties from registering, using or retaining domain names that interfere with our 46 consumer communications or infringe or otherwise decrease the value of our marks, domain names and other proprietary rights.
As new mobile devices and platforms are released, it is difficult to predict the problems we may encounter in developing applications for these alternative devices and platforms and we may 28 need to devote significant resources to the creation, support and maintenance of such applications.
As new mobile devices and platforms are released, it is difficult to predict the problems we may encounter in developing applications for these alternative devices and platforms and we may need to devote significant resources to the creation, support and maintenance of such applications.
Any errors or vulnerabilities discovered in our code after release could result in damage to our reputation, 43 loss of customers, disruption to our eCommerce channels, loss of net sales or liability for damages, any of which could adversely affect our growth prospects and our business.
Any errors or vulnerabilities discovered in our code after release could result in damage to our reputation, loss of customers, disruption to our eCommerce channels, loss of net sales or liability for damages, any of which could adversely affect our growth prospects and our business.
Sales of a substantial number of shares of our Class A common stock into the public market, particularly sales by our directors, executive officers and principal stockholders, or the perception that such sales might occur, could cause our stock price to decline.
Sales of a substantial number of shares of our Class A common stock into the public market, particularly sales by our directors, executive officers and principal stockholders, or the perception that such sales might occur, could 48 cause our stock price to decline.
Our status as a controlled company could make our Class A common stock less attractive to some investors or otherwise harm our stock price. Future securities issuances could result in significant dilution to our stockholders and impair the market price of our Class A common stock.
Our status as a controlled company could make our Class A common stock less attractive to some investors or otherwise harm our stock price. 49 Future securities issuances could result in significant dilution to our stockholders and impair the market price of our Class A common stock.
If we are unable to secure new facilities for the expansion of our fulfillment operations or to effectively control 26 expansion-related expenses, our business, prospects, financial condition and operating results could be materially and adversely affected.
If we are unable to secure new facilities for the expansion of our fulfillment operations or to effectively control expansion-related expenses, our business, prospects, financial condition and operating results could be materially and adversely affected.
From time to time, legislative proposals are made to increase the federal minimum wage in the United States, as well as the minimum wage in California and a number of other states and municipalities, and to reform entitlement programs, such as health insurance and paid leave programs.
From time to time, legislative proposals are made to increase the federal minimum wage in the United States, as well as the minimum wage in California and a number of other states and municipalities, and 28 to reform entitlement programs, such as health insurance and paid leave programs.
We and our third-party service providers may not have the resources or technical sophistication to anticipate or prevent all such cyberattacks, and we or they may 40 face difficulties or delays in identifying and responding to cyberattacks and data security breaches and incidents.
We and our third-party service providers may not have the resources or technical sophistication to anticipate or prevent all such cyberattacks, and we or they may face difficulties or delays in identifying and responding to cyberattacks and data security breaches and incidents.
Our continued success depends on our ability to anticipate, gauge and react in a timely and cost-effective manner to changes in consumer preferences for products, consumer attitudes toward our industry and brand and where and how consumers shop for those products.
Our continued success depends on our ability to anticipate, gauge and react in a timely and cost-effective manner to changes in 18 consumer preferences for products, consumer attitudes toward our industry and brand and where and how consumers shop for those products.
Our compliance with applicable provisions of Section 404 requires that we incur substantial accounting expense and expend significant management time on compliance-related issues as we implement additional practices and comply with expanded reporting requirements.
Our compliance with applicable provisions of Section 30 404 requires that we incur substantial accounting expense and expend significant management time on compliance-related issues as we implement additional practices and comply with expanded reporting requirements.
Our operating results could be adversely affected by natural disasters, such as wildfires and earthquakes, public health crises, political crises, terrorist attacks, wars and geopolitical tensions, social unrest and other catastrophic events.
Our operating results could be adversely affected by natural disasters, such as wildfires, floods and earthquakes, public health crises, political crises, terrorist attacks, wars and geopolitical tensions, social unrest and other catastrophic events.
Our systems and operations are vulnerable to damage or interruption from fire, flood, power 41 loss, telecommunications failure, terrorist attacks, cyberattacks, data loss, acts of war, break-ins, earthquakes and similar events.
Our systems and operations are vulnerable to damage or interruption from fire, flood, power loss, telecommunications failure, terrorist attacks, cyberattacks, data loss, acts of war, break-ins, earthquakes and similar events.
Aspects of these privacy statutes remain unclear, resulting in further uncertainty and potentially requiring us to modify our data practices and policies and to incur substantial additional costs and expenses in an effort to comply.
Aspects of these privacy statutes remain unclear, resulting in further uncertainty and potentially requiring us to modify our practices and policies and to incur substantial additional costs and expenses in an effort to comply.
For example, the Inflation Reduction Act of 2022, among other things, imposed a one percent excise tax on certain stock repurchases by public companies. The Organization of Economic Cooperation and Development proposed implementing a global minimum tax of fifteen percent, which has been adopted by many jurisdictions, including the UK, and is being considered by others for implementation.
For example, the Inflation Reduction Act of 2022, among other things, imposed a one percent excise tax on certain stock repurchases by public companies. The Organization of Economic Cooperation and Development, or OECD, proposed implementing a global minimum tax of fifteen percent, which has been adopted by many jurisdictions, including the UK, and is being considered by others for implementation.
If we are unable to adequately staff our fulfillment centers to meet demand or if the cost of such staffing is higher than historical or projected costs due to mandated wage increases, regulatory changes and other business limitations and restrictions, international expansion or other factors, our operating results could be harmed.
If we are unable to adequately staff our fulfillment centers to meet demand or if the cost of such staffing is higher than historical or projected costs due to mandated wage increases, labor shortages, regulatory changes and other business limitations and restrictions, international expansion or other factors, our operating results could be harmed.
We collect, transmit, store and otherwise process personal and financial information provided by our customers, such as names, email addresses, the details of transactions and credit card and other financial information. Some of our third-party service providers, such as identity verification and payment processing providers, also regularly have access to customer data.
We collect, transmit, store and otherwise process personal and financial information provided by our customers, such as names, phone numbers, email addresses, the details of transactions and credit card and other financial information. Some of our third-party service providers, such as identity verification and payment processing providers, also regularly have access to customer data.
We are subject to taxes in the United States and the UK. We record tax expense based on current tax liabilities and our estimates of future tax liabilities, which may include reserves for estimates of probable settlements of tax audits. At any one time, multiple tax years are subject to audit by various taxing jurisdictions.
We are subject to taxes in several jurisdictions, including the United States and the UK. We record tax expense based on current tax liabilities and our estimates of future tax liabilities, which may include reserves for estimates of probable settlements of tax audits. At any one time, multiple tax years are subject to audit by various taxing jurisdictions.
It is not clear how existing laws governing issues such as property ownership, libel, consumer protection, sales and other taxes, and consumer privacy apply to the Internet as many of these laws were adopted prior to the advent of the Internet and do not contemplate or address the unique issues raised by the Internet or eCommerce.
It is not always clear how existing laws governing issues such as property ownership, libel, consumer protection, sales and other taxes, and consumer privacy apply to the Internet as many of these laws were adopted prior to the advent of the Internet and do not contemplate or address 34 the unique issues raised by the Internet or eCommerce.
We may expand our business through acquisitions, strategic investments and commercial collaborations, which may divert management’s attention, be difficult to integrate, disrupt our business, dilute stockholder value, prove to be unsuccessful and adversely affect our business, operating results and financial condition.
We may expand our business through acquisitions, joint ventures, strategic investments and commercial collaborations, which may divert management’s attention, be difficult to integrate, disrupt our business, dilute stockholder value, prove to be unsuccessful and adversely affect our business, operating results and financial condition.
We have also experienced and may in the future experience increased levels of returns due to changes in consumer shopping behavior and discretionary spending as a result of changes in macroeconomic conditions or consumer confidence, including levels of unemployment, the size and timing of federal stimulus programs, salaries and wage rates, high inflation, high interest rates, recession or fears of recession, housing costs, energy and fuel costs, the resumption of student loan repayments, income tax rates and the timing of tax refunds, consumer perceptions of personal well-being and security, availability of consumer credit and consumer debt levels.
We have also experienced and may in the future experience increased levels of returns due to changes in consumer shopping behavior and discretionary spending as a result of changes in macroeconomic conditions or consumer confidence, including levels of unemployment, salaries and wage rates, high inflation, high interest rates, recession or fears of recession, housing costs, energy and fuel costs, the resumption of student loan repayments, income tax rates and the timing of tax refunds, consumer perceptions of personal well-being and security, availability of consumer credit and consumer debt levels.
The failure by us, our employees, our network of social media influencers, our sponsors or third parties acting at our direction to abide by applicable laws and regulations in the use of social media platforms or otherwise, including intellectual property laws and tax reporting and compliance requirements, could subject us to regulatory investigations, class action lawsuits, liability, taxes, fines or other penalties and have a material adverse effect on our business, financial condition and operating results.
The failure by us, our employees, our network of social media influencers, our sponsors or third parties acting at our direction to abide by applicable laws and regulations in the use of social media platforms or otherwise, including intellectual property and consumer protection laws as well as tax reporting and compliance requirements, could subject us to regulatory investigations, class action lawsuits, liability, taxes, fines or other penalties and have a material adverse effect on our business, financial condition and operating results.
Our use of artificial intelligence and machine learning could adversely affect our business and operating results. We use AI and machine learning in our business to, among other things, optimize our product assortment and personalize our website experience through advanced search and product recommendations.
Our use of AI and machine learning could adversely affect our business and operating results. We use AI and machine learning in our business to, among other things, optimize our product assortment and personalize our website experience through advanced search and product recommendations.
In addition, investigating or defending against any such allegations, actions or investigations will likely result in a materially significant diversion of management’s attention and resources and significant defense costs and other 36 professional fees.
In addition, investigating or defending against any such allegations, actions or investigations will likely result in a materially significant diversion of management’s attention and resources and significant defense costs and other 37 professional fees.
Any failure, or perceived failure, by us to comply with our privacy policies or with any federal, state or international laws, regulations, industry self-regulatory principles, industry standards or codes of conduct, regulatory guidance, orders to which we may be subject or other actual or alleged legal or contractual obligations relating to privacy, data protection, information security or consumer protection could adversely affect our reputation, brand and business, and may result in claims, proceedings or actions against us by governmental entities or others or other liabilities or require us to change our operations and/or cease or modify our use of certain data sets.
Any failure, or perceived failure, by us to comply with our privacy policies or with any federal, state or international laws, regulations, industry self-regulatory principles, industry standards or codes of conduct, regulatory guidance, orders to which we may be subject or other actual or alleged legal or contractual obligations relating to privacy, data protection, information security, consumer protection or the collection, use, retention, sharing, transfer and security of consumer data could adversely affect our reputation, brand and business, and may result in claims, proceedings or actions against us by governmental entities or others or other liabilities or require us to change our operations and/or cease or modify our use of certain data sets.
In future periods, our net sales may decline or grow more slowly than we expect. 25 We believe that the sustainability of our recent net sales growth, and potential future growth, will depend upon, among other factors, our ability to: • address the short- and long-term macroeconomic challenges by adjusting our cost structure, meeting our customers’ service expectations, shifting our marketing strategy and maintaining a relevant merchandise assortment; • identify and develop emerging, established and owned brands while maintaining the relationships and product curation with existing, established and owned brands; • acquire new customers and retain existing customers; • provide a premium shopping experience for our customers; • offer an assortment of merchandise that is attractive to consumers; • develop new features to enhance the consumer experience on our sites; • increase the frequency with which new and repeat customers purchase products on our sites through merchandising, data analytics and technology; • add new suppliers and deepen our relationships with our existing suppliers; • attract and retain personnel; • enhance and scale the systems our consumers use to interact with our sites and invest in our infrastructure platform; • target additional categories and price points beyond premium apparel for Millennial and Generation Z consumers, such as luxury, beauty and home products, and men’s apparel; • expand internationally; and • pursue strategic acquisitions and investments.
We believe that the sustainability of our recent net sales growth, and potential future growth, will depend upon, among other factors, our ability to: • address the short- and long-term macroeconomic challenges by adjusting our cost structure, meeting our customers’ service expectations, shifting our marketing strategy and maintaining a relevant merchandise assortment; • identify and develop emerging, established and owned brands while maintaining the relationships and product curation with existing, established and owned brands; • acquire new customers and retain existing customers; • provide a premium shopping experience for our customers; • offer an assortment of merchandise that is attractive to consumers; • develop new features to enhance the consumer experience on our sites; • increase the frequency with which new and repeat customers purchase products on our sites through merchandising, data analytics and technology; • add new suppliers and deepen our relationships with our existing suppliers; • attract and retain personnel; • enhance and scale the systems our consumers use to interact with our sites and invest in our infrastructure platform; • target additional categories and price points beyond premium apparel for Millennial and Generation Z consumers, such as luxury, beauty products, and men’s apparel; • expand internationally; and • pursue strategic acquisitions and investments.
In addition, continued growth in our transaction volume, as well as surges in online traffic and orders associated with promotional activities or seasonal trends in our business, place additional demands on our technology platform and could cause or exacerbate slowdowns or interruptions.
In addition, continued growth in our transaction volume, as well as surges in online traffic and orders associated with promotional activities, place additional demands on our technology platform and could cause or exacerbate slowdowns or interruptions.
Even if issued, there can be no assurance that these registered copyrights or patents will adequately protect our intellectual property or survive a legal challenge, as the legal standards relating to the validity, enforceability and scope of protection of registered copyright, patent and other intellectual property rights are uncertain.
Even if issued, there can be no assurance that these registered copyrights or patents will adequately protect our intellectual property or survive an actual or alleged legal challenge, as the legal standards relating to the validity, enforceability and scope of protection of registered copyright, patent and other intellectual property rights are uncertain.
Our principal offices and data centers and two of our fulfillment centers, including our largest fulfillment center, are located in Southern California, an area which has a history of earthquakes and wildfires, and are thus vulnerable to damage.
Our principal offices and data centers and two of our fulfillment centers, including our largest fulfillment center, are located in Southern California, an area which has a history of earthquakes, power outages, floods and wildfires, and are thus vulnerable to damage.
Any failure, or perceived failure, by us to comply with any of these laws or regulations could result in damage to our reputation, a loss in business and proceedings or actions against us by governmental entities or others.
Any failure, or perceived failure, by us to comply with any of these laws or regulations could result in damage to our reputation, a loss in business and proceedings or actions against us by governmental entities or private parties.
We may not be successful in opening new physical stores and we may not successfully identify the correct markets in which to open stores. If we are unable to cost-effectively expand our presence through brick-and-mortar stores, our operating results and reputation could be materially adversely impacted.
We have limited experience in brick-and-mortar retail. We may not be successful in opening new physical stores and we may not successfully identify the correct markets in which to open stores. If we are unable to cost-effectively expand our presence through brick-and-mortar stores, our operating results and reputation could be materially adversely impacted.
Factors that could cause fluctuations in the market price of our Class A common stock include the following: • market volatility and economic disruption caused by macroeconomic factors, including but not limited to inflation, consumer confidence and events such as natural disasters and public health crises; • actual or anticipated fluctuations in our customer base, the level of customer engagement, net sales or other operating results; • 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; • actions of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company or our failure to meet these estimates or the expectations of investors; • whether investors or securities analysts view our stock structure unfavorably, particularly our dual-class structure and the significant voting control of our executive officers, directors and their affiliates; • additional shares of our Class A common stock being sold into the market by us or our existing stockholders, or the anticipation of such sales; • repurchases of our Class A common stock pursuant to our stock repurchase program and any announcement of a termination of the program; • 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 vendors and competitors; • price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole; • 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; • imposition of fines or other remedial measures as a result of the underpayment of customs duties; and • other events or factors, including those resulting from war and geopolitical tensions, or incidents of terrorism, or responses to these events. 46 In addition, extreme price and volume fluctuations in the stock markets have affected and continue to affect many eCommerce and other technology companies’ stock prices.
Factors that could cause fluctuations in the market price of our Class A common stock include the following: • market volatility and economic disruption caused by macroeconomic factors, including but not limited to inflation, consumer confidence, tariffs and global trade instability, and events such as natural disasters and public health crises; • actual or anticipated fluctuations in our customer base, the level of customer engagement, net sales or other operating results; • 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; • actions of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company or our failure to meet these estimates or the expectations of investors; • whether investors or securities analysts view our stock structure unfavorably, particularly our dual-class structure and the significant voting control of our executive officers, directors and their affiliates; • additional shares of our Class A common stock being sold into the market by us or our existing stockholders, or the anticipation of such sales; 47 • repurchases of our Class A common stock pursuant to our stock repurchase program and any announcement of a termination of the program; • 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 vendors and competitors; • price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole; • 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; • imposition of fines or other remedial measures as a result of the underpayment of customs duties; and • other events or factors, including those resulting from war and geopolitical tensions, or incidents of terrorism, or responses to these events.
These reasons include those described in these risk factors as well as the following: • fluctuations in net sales generated from the brands on our sites, including as a result of macroeconomic factors, seasonality trends and the timing and success of large, in-person events that we host; • fluctuations in product mix, including between sites and between product categories; • our ability to effectively launch and manage new sites and brands; • fluctuations in the levels or quality of inventory; • fluctuations in the percentage of returns, full price sales, levels of markdowns and gross margins; • fluctuations in capacity as we expand our operations; • our success in engaging existing customers and attracting new customers; • the amount and timing of our operating expenses; • our ability to attract and retain personnel; • the timing and success of new products and brands we introduce; • the impact of competitive developments and our response to those developments; • our ability to manage our existing business and future growth; • inflation levels and our ability to control our costs, including employee wages and benefits, shipping costs, other selling costs and other operating expenses; • disruptions or defects in our sites, or actual or perceived privacy or data security breaches or incidents; • the effect on our business of claims, lawsuits, government investigations, other legal or regulatory proceedings or commercial or contractual disputes that we are or may become involved in; and • economic and market conditions, particularly those affecting our industry.
These reasons include those described in these risk factors as well as the following: • fluctuations in net sales generated from the brands on our sites, including as a result of macroeconomic factors and the timing and success of large, in-person events that we host; • fluctuations in product mix, including between sites and between product categories; • our ability to effectively launch and manage new sites and brands; • fluctuations in the levels or quality of inventory; • fluctuations in the percentage of returns, full price sales, levels of markdowns and gross margins; • fluctuations in the rate of U.S. tariffs imposed on goods imported from China and other countries; • fluctuations in capacity as we expand our operations; 25 • our success in engaging existing customers and attracting new customers; • the amount and timing of our operating expenses; • our ability to attract and retain personnel; • the timing and success of new products and brands we introduce; • the impact of competitive developments and our response to those developments; • our ability to manage our existing business and future growth; • inflation levels and our ability to control our costs, including employee wages and benefits, shipping costs, other variable selling costs, marketing costs and other operating expenses; • disruptions or defects in our sites, or actual or perceived privacy or data security breaches or incidents; • the effect on our business of claims, lawsuits, government investigations, other legal or regulatory proceedings or commercial or contractual disputes that we are or may become involved in; and • economic and market conditions, particularly those affecting our industry.
As a general matter, compliance with laws, regulations, and any applicable rules or guidance from self-regulatory organizations relating to privacy, data protection, information security and consumer protection may result in substantial costs and may necessitate changes to our business practices, which may compromise our growth strategy, adversely affect our ability to acquire customers, and otherwise adversely affect our business, financial condition and operating results.
As a general matter, compliance with laws, regulations, and any applicable rules or guidance from self-regulatory organizations relating to privacy, data protection, information security, consumer protection, and the collection, use, retention, sharing, transfer and security may result in substantial costs and may necessitate changes to our business practices, which may compromise our growth strategy, adversely affect our ability to acquire customers, and otherwise adversely affect our business, financial condition and operating results.
We allow our customers to return products, subject to our return policy. If the rate of merchandise returns increases significantly or if merchandise return economics become less efficient, our business, financial condition and operating results could be harmed.
Elevated merchandise returns may adversely affect our operating results and financial condition. We allow our customers to return products, subject to our return policy. If the rate of merchandise returns increases significantly or if merchandise return economics become less efficient, our business, financial condition and operating results could be harmed.
Sustained uncertainty about, or worsening of, current global economic conditions and further escalation of trade tensions between the United States and its trading partners, especially China, could result in a global economic slowdown and long-term changes to global trade, including retaliatory trade restrictions that restrict our ability to operate in China.
Sustained uncertainty about, or worsening of, current global economic conditions and further escalation of trade tensions between the United States and its trading partners, especially China, could result in a global economic slowdown and long-term changes to global trade, including trade restrictions that restrict our international operations.
We compete with department stores, specialty retailers, independent retail stores, the online offerings of these traditional retail competitors, brands that we offer that also offer their merchandise directly to the consumer, and eCommerce companies that market merchandise similar to the merchandise we offer.
The retail industry is highly competitive. We compete with department stores, specialty retailers, independent retail stores, the online offerings of these traditional retail competitors, brands that we offer that also offer their merchandise directly to the consumer, and eCommerce companies that market merchandise similar to the merchandise we offer.
The trading market for our Class A common stock will be influenced in part by the research and reports that securities or industry analysts may publish about us, our business, our market or our competitors.
The trading market for our Class A common stock is influenced in part by the research and reports that securities or industry analysts publish about us, our business, our market or our competitors.
In addition, the supply chain worldwide has in the past been, and may in the future be, negatively impacted by events such as wars and geopolitical tensions, public health crises, labor shortages, tariffs and other factors, and diversification of the supply chain and sourcing therefore may not yield the targeted benefits. Merchandise returns could harm our business.
In addition, the supply chain worldwide has in the past been, and may in the future be, negatively impacted by events such as wars and geopolitical tensions, tariffs, public health crises, labor shortages and other factors, and diversification of the supply chain and sourcing therefore may not yield the targeted benefits.
Further, our third-party manufacturers, suppliers, distributors, fulfillment centers and other vendors may: • have economic or business interests or goals that are inconsistent with ours; • take actions contrary to our instructions, requests, policies or objectives; • be unable or unwilling to fulfill their obligations under relevant purchase orders, including obligations to meet our production deadlines, quality standards, pricing guidelines and product specifications, and to comply with applicable regulations, including those regarding the safety and quality of products; • have financial difficulties, including as a result of negative economic conditions; • encounter raw material or labor shortages; • encounter increases in raw material or labor costs which may affect our procurement costs; • encounter difficulties with proper payment of custom duties or excise taxes; • misuse our confidential information or intellectual property or disclose them to competitors or third parties; • engage in activities or employ practices that may harm our reputation; and • work with, be acquired by, or come under control of, our competitors. 22 Shipping is a critical part of our business and any changes in or interruptions to our shipping arrangements, or any damage, theft or loss of inventory during shipping, could adversely affect our business and operating results.
Further, our third-party manufacturers, suppliers, distributors, fulfillment centers and other vendors may: • have economic or business interests or goals that are inconsistent with ours; • take actions contrary to our instructions, requests, policies or objectives; 23 • be unable or unwilling to fulfill their obligations under relevant purchase orders, including obligations to meet our production deadlines, quality standards, pricing guidelines and product specifications, and to comply with applicable regulations, including those regarding the safety and quality of products; • have financial difficulties, including as a result of negative economic conditions; • encounter raw material or labor shortages; • encounter increases in raw material or labor costs which may affect our procurement costs; • encounter difficulties with proper payment of custom duties or excise taxes; • misuse our confidential information or intellectual property or disclose them to competitors or third parties; • engage in activities or employ practices that may harm our reputation; and • work with, be acquired by, or come under control of, our competitors.
Outside of the EU, many countries and territories have laws, regulations, or other requirements relating to privacy, data protection, information security, localized storage of data, and consumer protection, and new countries and territories are adopting such legislation or other obligations with increasing frequency.
Outside of the EU, many countries and territories have laws, regulations, or other requirements relating to privacy, data protection, information security, localized storage of data, consumer protection, and the collection, use, 40 retention, sharing, transfer and security of consumer data, and new countries and territories are adopting such legislation or other obligations with increasing frequency.
If government authorities impose new restrictions on businesses due to future public health crises or otherwise, including ones that would require closure of our fulfillment centers, we may not be able to meet customer demand in a timely way which would have a materially adverse impact on our business, operating results, financial condition and prospects.
If government authorities increase regulation or impose new restrictions on businesses due to public health crises or otherwise, including ones that would require closure of our fulfillment centers or adversely impact our ability to hire and retain sufficient staff, we may not be able to meet customer demand in a timely way which would have a materially adverse impact on our business, operating results, financial condition and prospects.
In addition, various federal, state and foreign legislative and regulatory bodies, or self-regulatory organizations, may expand current laws or regulations, enact new laws or regulations or issue revised rules or guidance regarding privacy, data protection, information security and consumer protection.
In addition, various federal, state and foreign legislative and regulatory bodies, or self-regulatory organizations, may expand current laws or regulations, enact new laws or regulations or issue revised rules or guidance regarding privacy, data protection, information security, consumer protection, and the collection, use, retention, sharing, transfer and security.
Depending upon their duration and implementation, such executive or regulatory actions could result in a material adverse effect on our business, financial condition and results of operations. We are exposed to fluctuations in currency exchange rates, which could negatively affect our operating results. Most of our sales are denominated in U.S. dollars.
Depending on their scope and implementation, such actions could have a material adverse effect on our business, financial condition, and results of operations. We are exposed to fluctuations in currency exchange rates, which could negatively affect our operating results. Most of our sales are denominated in U.S. dollars.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe devote significant resources and designate high-level personnel, including our chief architect, who reports to our co-chief executive officer, to manage the risk assessment and mitigation process. We regularly check and improve our security measures and educate our employees about them with the help of our information technology team. Key personnel are made aware of our cybersecurity policies through trainings.
Biggest changeWe devote significant resources and designate high-level personnel, including our chief architect, who reports to our co-chief executive officer, to manage the risk assessment and mitigation process. 51 We regularly check and improve our security measures and educate our employees about them with the help of our information technology team.
For additional information regarding whether any risks from cybersecurity threats are reasonably likely to materially affect our company, including our business strategy, results of operations or financial condition, please see the section titled “Risk Factors.” 50 Governance One of the key functions of our board of directors is informed oversight of our risk management process, including risks from cybersecurity threats.
For additional information regarding whether any risks from cybersecurity threats are reasonably likely to materially affect our company, including our business strategy, results of operations or financial condition, please see the section titled “Risk Factors.” Governance One of the key functions of our board of directors is informed oversight of our risk management process, including risks from cybersecurity threats.
They keep each other informed about significant changes affecting cybersecurity , and they periodically update our board of directors or the audit committee about these changes as well as our cybersecurity risks, so that our board of directors can administer its oversight function as part of its broader oversight and risk management.
They keep each other informed about significant changes affecting cybersecurity , and they periodically update our board of directors or the audit committee about these changes as well as our cybersecurity risks, so that our board of directors can administer its oversight function as part of its broader oversight and risk management. 52
Our chief architect, who has over 15 years of experience in software engineering and has served as our chief architect for eight years, is a member of our cybersecurity committee and works to manage our cybersecurity policies and processes.
Our chief architect, who has over 16 years of experience in software engineering and has served as our chief architect for nine years, is a member of our cybersecurity committee and works to manage our cybersecurity policies and processes.
We engage third parties in connection with our risk assessment processes. We require all external service providers who may impact our cybersecurity risks to certify that they can set up and maintain proper security consistent with all applicable laws, manage security effectively for their work with us, and quickly inform us if they think their security has been breached.
We require all external service providers who may impact our cybersecurity risks to certify that they can set up and maintain proper security consistent with all applicable laws, manage security effectively for their work with us, and quickly inform us if they think their security has been breached.
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Key personnel are made aware of our cybersecurity policies through trainings. We engage third parties in connection with our risk assessment processes.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changePR OPERTIES The following table sets forth information with respect to our facilities, all of which are used by both our REVOLVE and FWRD segments: Location Type Square Footage (approximate) Lease Expiration Cerritos, California Corporate headquarters and fulfillment center 281,100 2028 Berks County, Pennsylvania Fulfillment center 95,600 2027 La Palma, California (1) Fulfillment center 75,000 2027 Los Angeles, California Office space 42,200 2028 Cerritos, California Office and studio space 37,000 2032 Los Angeles, California Office and studio space 6,100 2027 Aspen, Colorado Retail store 3,200 2026 Paris, France Office space 9,000 2032 (1) Approximately 30,000 square feet is sublet to a third-party on a month-to-month basis.
Biggest changePR OPERTIES The following table sets forth information with respect to our facilities, all of which are used by both our REVOLVE and FWRD segments: Location Type Square Footage (approximate) Lease Expiration Cerritos, California Corporate headquarters and fulfillment center 281,100 2028 Berks County, Pennsylvania Fulfillment center 95,600 2027 La Palma, California Fulfillment center 75,000 2027 Los Angeles, California Office space 42,200 2028 Cerritos, California Office and studio space 37,000 2032 Los Angeles, California Retail store 8,500 2032 Lipa City, Philippines Office space 7,900 2030 Los Angeles, California Office and studio space 6,100 2027 Aspen, Colorado Retail store 3,200 2028 We believe that our facilities are adequate for our needs and believe that we should be able to renew any of the above leases or secure similar property without an adverse impact on our operations.
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We believe that our facilities are adequate for our needs and believe that we should be able to renew any of the above leases or secure similar property without an adverse impact on our operations.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeFuture litigation may be necessary to defend ourselves and to determine the scope, enforceability and validity of third-party proprietary rights, or to establish our 51 proprietary rights.
Biggest changeFuture litigation may be necessary to defend ourselves and to determine the scope, enforceability and validity of third-party proprietary rights, or to establish our proprietary rights.
The results of any litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. Item 4. MINE SAF ETY DISCLOSURES Not applicable. 52 PAR T II
The results of any litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. Item 4. MINE SAF ETY DISCLOSURES Not applicable. 53 PAR T II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest change(in dollars) December 31, 2019 December 31, 2020 December 31, 2021 December 31, 2022 December 31, 2023 December 31, 2024 Revolve Group, Inc. $ 100.00 $ 169.77 $ 305.23 $ 121.24 $ 90.31 $ 182.41 S&P 500 $ 100.00 $ 118.40 $ 152.39 $ 124.79 $ 157.59 $ 197.02 S&P Retail Select Industry $ 100.00 $ 141.63 $ 202.49 $ 138.26 $ 168.04 $ 188.41 The graph and the table above shall not be deemed “filed” with the SEC for the purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing made by us with the SEC, regardless of any general incorporation language in such filing. 54 Item 6. [ RESERVED] 55
Biggest change(in dollars) December 31, 2020 December 31, 2021 December 31, 2022 December 31, 2023 December 31, 2024 December 31, 2025 Revolve Group, Inc. $ 100.00 $ 179.79 $ 71.41 $ 53.19 $ 107.44 $ 96.86 S&P 500 $ 100.00 $ 128.71 $ 105.40 $ 133.10 $ 166.40 $ 196.16 S&P Retail Select Industry $ 100.00 $ 142.97 $ 97.63 $ 118.65 $ 133.04 $ 143.95 The graph and the table above shall not be deemed “filed” with the SEC for the purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing made by us with the SEC, regardless of any general incorporation language in such filing. 55 Item 6. [ RESERVED] 56
The stock repurchase program is funded from available cash and cash equivalents. There were no shares of our Class A common stock repurchased during the three months ended December 31, 2024.
The stock repurchase program is funded from available cash and cash equivalents. There were no shares of our Class A common stock repurchased during the three months ended December 31, 2025.
As of December 31, 2024, the approximate dollar value of shares that may yet be repurchased under the existing stock repurchase program was $57.6 million. 53 Cumulative Stock Performance Graph The following graph and table compare the performance of (1) an investment in our Class A common stock over the period from December 31, 2019 through December 31, 2024, with (2) an investment in the S&P 500 and the S&P Retail Select Industry, in each case beginning with an investment at the closing price on December 31, 2019 and thereafter based on the closing price of the index.
As of December 31, 2025, the approximate dollar value of shares that may yet be repurchased under the existing stock repurchase program was $55.6 million. 54 Cumulative Stock Performance Graph The following graph and table compare the performance of (1) an investment in our Class A common stock over the period from December 31, 2020 through December 31, 2025, with (2) an investment in the S&P 500 and the S&P Retail Select Industry, in each case beginning with an investment at the closing price on December 31, 2020 and thereafter based on the closing price of the index.
Holders of Record As of February 18, 2025, we had one registered holder of record of our Class A common stock and two registered holders of record of our Class B common stock.
Holders of Record As of February 17, 2026, we had two registered holders of record of our Class A common stock and two registered holders of record of our Class B common stock.

Item 7. Management's Discussion & Analysis

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

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Biggest changeYear Ended December 31, 2024 2023 2022 (in thousands) Net sales $ 1,129,911 $ 1,068,719 $ 1,101,416 Cost of sales 536,638 514,520 509,093 Gross profit 593,273 554,199 592,323 Operating expenses: Fulfillment expenses 37,389 36,654 31,804 Selling and distribution expenses 195,169 197,052 190,419 Marketing expenses 167,176 171,774 181,648 General and administrative expenses 142,122 126,585 115,312 Total operating expenses 541,856 532,065 519,183 Income from operations 51,417 22,134 73,140 Other income, net (13,030 ) (15,627 ) (3,476 ) Income before income taxes 64,447 37,761 76,616 Provision for income taxes 15,676 9,614 17,919 Net income $ 48,771 $ 28,147 $ 58,697 66 Year Ended December 31, 2024 2023 2022 Net sales 100.0 % 100.0 % 100.0 % Cost of sales 47.5 48.1 46.2 Gross profit 52.5 51.9 53.8 Operating expenses: Fulfillment expenses 3.3 3.4 2.9 Selling and distribution expenses 17.3 18.4 17.3 Marketing expenses 14.8 16.1 16.5 General and administrative expenses 12.6 11.9 10.5 Total operating expenses 48.0 49.8 47.2 Income from operations 4.5 2.1 6.6 Other income, net (1.2 ) (1.4 ) (0.3 ) Income before income taxes 5.7 3.5 6.9 Provision for income taxes 1.4 0.9 1.6 Net income 4.3 % 2.6 % 5.3 % Comparison of Years Ended 2024 and 2023 Net Sales Year Ended December 31, Change 2024 2023 $ % (dollars in thousands) Net sales $ 1,129,911 $ 1,068,719 $ 61,192 5.7 % The increase in net sales for 2024 compared to 2023 was primarily due to a lower proportion of returned purchases, a 1.9% increase in the number of orders shipped, and a 1.7% increase in the average order value.
Biggest changeYear Ended December 31, 2025 2024 2023 (in thousands) Net sales $ 1,225,682 $ 1,129,911 $ 1,068,719 Cost of sales 569,898 536,638 514,520 Gross profit 655,784 593,273 554,199 Operating expenses: Fulfillment expenses 39,509 37,389 36,654 Selling and distribution expenses 209,623 195,169 197,052 Marketing expenses 175,397 167,176 171,774 General and administrative expenses 156,992 142,122 126,585 Total operating expenses 581,521 541,856 532,065 Income from operations 74,263 51,417 22,134 Other income, net (8,040 ) (13,030 ) (15,627 ) Income before income taxes 82,303 64,447 37,761 Provision for income taxes 21,157 15,676 9,614 Net income $ 61,146 $ 48,771 $ 28,147 Year Ended December 31, 2025 2024 2023 Net sales 100.0 % 100.0 % 100.0 % Cost of sales 46.5 47.5 48.1 Gross profit 53.5 52.5 51.9 Operating expenses: Fulfillment expenses 3.2 3.3 3.4 Selling and distribution expenses 17.1 17.3 18.4 Marketing expenses 14.3 14.8 16.1 General and administrative expenses 12.8 12.6 11.9 Total operating expenses 47.4 48.0 49.8 Income from operations 6.1 4.5 2.1 Other income, net (0.6 ) (1.2 ) (1.4 ) Income before income taxes 6.7 5.7 3.5 Provision for income taxes 1.7 1.4 0.9 Net income 5.0 % 4.3 % 2.6 % Comparison of Years Ended 2025 and 2024 Net Sales Year Ended December 31, Change 2025 2024 $ % (dollars in thousands) Net sales $ 1,225,682 $ 1,129,911 $ 95,771 8.5 % The increase in net sales for 2025 compared to 2024 was primarily due to a 6.9% increase in the number of orders shipped combined with a lower proportion of returned purchases, partially offset by a 1.0% decrease in the average order value. 68 Net sales in the REVOLVE segment increased 8.6% to $1,054.0 million in 2025 compared to net sales of $970.5 million in 2024.
No significant interest or penalties related to sales taxes are recognized in the accompanying consolidated financial statements. We have exposure to losses from fraudulent credit card charges. We record losses when incurred related to fraudulent charges as such amounts have historically been insignificant. Inventory Inventories are stated at the lower of cost and net realizable value.
No significant interest or penalties related to sales taxes are recognized in the accompanying consolidated financial statements. We have exposure to losses from fraudulent credit card charges. We record losses when incurred related to fraudulent charges as such amounts have historically been insignificant. 73 Inventory Inventories are stated at the lower of cost and net realizable value.
For further information on all of our significant accounting policies, please see Note 2, Significant Accounting Policies , of the accompanying notes to our consolidated financial statements included elsewhere in this report. Net Sales Revenue is primarily derived from the sale of apparel merchandise through our sites and, when applicable, shipping revenue.
For further information on all of our significant accounting policies, please see Note 2, Significant Accounting Policies , of the accompanying notes to our consolidated financial statements included elsewhere in this report. 72 Net Sales Revenue is primarily derived from the sale of apparel merchandise through our sites and, when applicable, shipping revenue.
Apple Inc. has imposed requirements for consumer disclosures regarding privacy practices, and has implemented an application tracking transparency framework that requires opt-in consent for certain types of tracking. This transparency framework was launched in April 2021 and has made it more difficult and costly to acquire and retain customers.
Additionally, Apple Inc. has imposed requirements for consumer disclosures regarding privacy practices, and has implemented an application tracking transparency framework that requires opt-in consent for certain types of tracking. This transparency framework was launched in April 2021 and has made it more difficult and costly to acquire and retain customers.
In general, positive conditions in the broader economy promote customer spending on our sites, while economic weakness, which generally results in a reduction of customer spending, may have a more pronounced negative effect on spending on our sites.
In general, positive conditions in the broader economy promote customer spending on our sites, while 61 economic weakness, which generally results in a reduction of customer spending, may have a more pronounced negative effect on spending on our sites.
The increasing share of our net sales from existing customers reflects our customer loyalty and the net sales retention behavior we see in our customer cohorts. 61 The following table presents the percentage of orders placed by and the net sales generated from existing customers.
The increasing share of our net sales from existing customers reflects our customer loyalty and the net sales retention behavior we see in our customer cohorts. The following table presents the percentage of orders placed by and the net sales generated from existing customers.
Our actual results and the timing of certain events could differ materially from those anticipated in or implied by these forward-looking statements as a result of several factors, including those discussed in the sections titled “Risk Factors” and “Forward-Looking Statements.” For discussion regarding our financial condition and results of operations for the year ended December 31, 2023 compared to the year ended December 31, 2022, refer to Part II, Item 7.
Our actual results and the timing of certain events could differ materially from those anticipated in or implied by these forward-looking statements as a result of several factors, including those discussed in the sections titled “Risk Factors” and “Forward-Looking Statements.” For discussion regarding our financial condition and results of operations for the year ended December 31, 2024 compared to the year ended December 31, 2023, refer to Part II, Item 7.
We defer revenue based on an allocation of the price of the customer purchase and the estimated 71 standalone selling price of the points earned. Revenue is recognized once the reward is redeemed or expires or once unconverted points expire.
We defer revenue based on an allocation of the price of the customer purchase and the estimated standalone selling price of the points earned. Revenue is recognized once the reward is redeemed or expires or once unconverted points expire.
We support our logistics network with proprietary algorithms to optimize inventory allocation, reduce shipping and fulfillment expenses and deliver merchandise quickly and efficiently to our customers, which allows us to ship over 96% of orders on the same day if placed before 3:00 p.m. Eastern Time.
We support our logistics network with proprietary algorithms to optimize inventory allocation, reduce shipping and fulfillment expenses and deliver merchandise quickly and efficiently to our customers, which allows us to ship over 97% of orders on the same day if placed before 3:00 p.m. Eastern Time.
As of December 31, 2024, the majority of our cash and cash equivalents was held for working capital purposes. We believe that our existing cash and cash equivalents, cash flows from operations as well as the available borrowing capacity under our line of credit will be sufficient to meet our anticipated cash needs for at least the next 12 months.
As of December 31, 2025, the majority of our cash and cash equivalents was held for working capital purposes. We believe that our existing cash and cash equivalents, cash flows from operations as well as the available borrowing capacity under our line of credit will be sufficient to meet our anticipated cash needs for at least the next 12 months.
Active customers increased during 2024 as compared to 2023 primarily due to our ability to engage with our existing customers and acquire new customers through our sales and marketing efforts. Total Orders Placed We define total orders placed as the total number of orders placed by our customers, prior to product returns, across our platform in any given period.
Active customers increased during 2025 as compared to 2024 primarily due to our ability to engage with our existing customers and acquire new customers through our sales and marketing efforts. Total Orders Placed We define total orders placed as the total number of orders placed by our customers, prior to product returns, across our platform in any given period.
Our social media and brand marketing strategy is combined with robust and sophisticated digital performance marketing activities and our proprietary brand ambassador program. Once we have attracted potential new customers to our sites, our goal is to 56 convert them into active customers and then encourage repeat purchases.
Our social media and brand marketing strategy is combined with robust and sophisticated digital performance marketing activities and our proprietary brand ambassador program. Once we have attracted potential new customers to our sites, our goal is to 57 convert them into active customers and then encourage repeat purchases.
We have maintained a high percentage of sales that occur at full price, which we believe reflects our data-driven merchandising strategy, customer acceptance of our merchandise and the 57 sense of urgency we create through frequent product introductions in limited quantities.
We have maintained a high percentage of sales that occur at full price, which we believe reflects our data-driven merchandising strategy, customer acceptance of our merchandise and the 58 sense of urgency we create through frequent product introductions in limited quantities.
In addition, any weakening of a local currency versus the U.S. dollar results in our products becoming more expensive in that local currency, which has had, and may continue to have, a negative impact on demand for our products in the geographies that use such currency.
In addition, any weakening of a local currency versus the U.S. dollar results in our products becoming more expensive in that local currency, which at times has had, and may continue to have, a negative impact on demand for our products in the geographies that use such currency.
No borrowings were outstanding as of December 31, 2024 and 2023. We are also obligated to pay other customary fees for a credit facility of this size and type, including an unused commitment fee.
No borrowings were outstanding as of December 31, 2025 and 2024. We are also obligated to pay other customary fees for a credit facility of this size and type, including an unused commitment fee.
Free Cash Flow To provide investors with additional information regarding our financial results, we have also disclosed in the table above and elsewhere in this report free cash flow, a non-GAAP financial measure that we calculate as net cash provided by operating activities less cash used in purchases of property and equipment and purchases of rental product.
Free Cash Flow To provide investors with additional information regarding our financial results, we have also disclosed in the table above and elsewhere in this report free cash flow, a non-GAAP financial measure that we calculate as net cash provided by operating activities less cash used in purchases of property and equipment, and purchases of rental product, net of proceeds from the sale of rental product.
Year Ended December 31, 2024 2023 2022 2021 2020 First quarter 24 % 26 % 26 % 20 % 25 % Second quarter 25 % 26 % 26 % 26 % 25 % Third quarter 25 % 24 % 24 % 27 % 26 % Fourth quarter 26 % 24 % 24 % 27 % 24 % Total 100 % 100 % 100 % 100 % 100 % Our business is directly affected by the behavior of consumers.
Year Ended December 31, 2025 2024 2023 2022 2021 First quarter 24 % 24 % 26 % 26 % 20 % Second quarter 25 % 25 % 26 % 26 % 26 % Third quarter 24 % 25 % 24 % 24 % 27 % Fourth quarter 26 % 26 % 24 % 24 % 27 % Total 100 % 100 % 100 % 100 % 100 % Our business is directly affected by the behavior of consumers.
Total orders placed increased in 2024 as compared to 2023 primarily due to our ability to engage with our existing customers and acquire new customers through our sales and marketing efforts.
Total orders placed increased in 2025 as compared to 2024 primarily due to our ability to engage with our existing customers and acquire new customers through our sales and marketing efforts.
Through REVOLVE, we offer an assortment of premium apparel, footwear, beauty, accessories and home products from emerging, established and owned brands. Through FWRD, we offer an assortment of curated and elevated iconic and emerging luxury brands.
Through REVOLVE, we offer an assortment of premium apparel, footwear, beauty and accessories from emerging, established and owned brands. Through FWRD, we offer an assortment of curated and elevated iconic and emerging luxury brands.
Net Cash (Used in) Provided by Financing Activities Our financing activities primarily consist of repurchases of our Class A common stock and proceeds from the exercise of stock options, when applicable.
Net Cash Used in Financing Activities Our financing activities primarily consist of repurchases of our Class A common stock and proceeds from the exercise of stock options, when applicable.
Net cash used in financing activities was $5.4 million in 2024 and was primarily attributable to repurchases of shares of our Class A common stock under our stock repurchase program, partially offset by cash proceeds from the exercise of stock options.
Net cash used in financing activities was $1.4 million in 2025 compared to $5.4 million in 2024 and was primarily attributable to repurchases of shares of our Class A common stock under our stock repurchase program, partially offset by cash proceeds from the exercise of stock options.
Our dynamic platform connects a deeply engaged community of millions of consumers, thousands of global fashion influencers and over 1,400 emerging, established and owned brands.
Our dynamic platform connects a deeply engaged community of millions of consumers, thousands of global fashion influencers and over 1,600 emerging, established and owned brands.
Through more than 20 years of continued investment in technology, data analytics and innovative marketing and merchandising strategies, we have built a powerful platform and brand that we believe is connecting with the next generation of consumers and is redefining fashion retail for the 21st century. We sell merchandise through two complementary segments, REVOLVE and FWRD, that leverage one platform.
Through more than 20 years of investment in technology, data analytics and innovative marketing and merchandising strategies, we have built a powerful platform and brand that we believe is connecting with the next generation of consumers and is redefining fashion retail. We sell merchandise through two complementary segments, REVOLVE and FWRD, that leverage one platform.
Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for year ended 2023, which was filed with the SEC on February 27, 2024. Overview REVOLVE is the next-generation fashion retailer for Millennial and Generation Z consumers.
Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for year ended 2024, which was filed with the SEC on February 25, 2025. Overview REVOLVE is the next-generation fashion retailer for Millennial and Generation Z consumers.
Year Ended December 31, 2024 2023 2022 2021 % of Orders placed by existing customers 80 % 79 % 77 % 76 % % of Net sales generated from existing customers 81 % 80 % 79 % 77 % The following chart illustrates the spending behavior of our customer cohorts over time, as reflected in customer purchases of our products annually.
Year Ended December 31, 2025 2024 2023 2022 % of Orders placed by existing customers 81 % 80 % 79 % 77 % % of Net sales generated from existing customers 83 % 81 % 80 % 79 % The following chart illustrates the spending behavior of our customer cohorts over time, as reflected in customer purchases of our products annually.
As a trusted premium lifestyle brand and a go-to online source for discovery and inspiration, we deliver exceptional service and an engaging customer experience with a vast yet curated offering totaling over 110,000 apparel and footwear styles, as well as beauty, accessories and home products.
As a trusted premium lifestyle brand and a go-to online source for discovery and inspiration, we deliver exceptional service and an engaging customer experience with a vast yet curated offering totaling over 140,000 apparel and footwear styles, as well as beauty and accessories.
Existing customers, whom we define as customers in a year who have purchased from us in any prior year, account for a greater and greater share of active customers over time. Existing customers as a percentage of total active customers were 54%, 52%, 50% and 49% for 2024, 2023, 2022 and 2021, respectively.
Existing customers, whom we define as customers in a year who have purchased from us in any prior year, account for a greater and greater share of active customers over time. Existing customers as a percentage of total active customers were 56%, 54%, 52% and 50% for 2025, 2024, 2023 and 2022, respectively.
The credit agreement also permits us, in certain circumstances, to request an increase in the facility by an additional amount of up to $25.0 million (in an initial minimum amount of $10.0 million and in increments of $5.0 million thereafter) at the same maturity, pricing and other terms.
The credit agreement also permits us, in certain circumstances, to request an increase in the facility by an additional amount of up to $25.0 million (in an initial minimum amount of $10.0 million and in increments of $5.0 million thereafter) at the same maturity, pricing and other terms as the existing revolving commitments.
Revenue recognized in net sales on breakage on store credit and gift cards was $3.3 million and $2.6 million for 2024 and 2023, respectively. Sales taxes and duties collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from net sales.
Revenue recognized in net sales on breakage on store credit and gift cards was $4.2 million and $3.3 million for 2025 and 2024, respectively. Sales taxes and duties collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from net sales.
Existing customers typically place more orders annually than new customers and at higher average order values, resulting in existing customers representing approximately 80% of orders and approximately 81% of net sales in 2024, up from 79% of orders and 80% of net sales in 2023, and 77% of orders and 79% of net sales in 2022.
Existing customers typically place more orders annually than new customers and at higher average order values, resulting in existing customers representing approximately 81% of orders and approximately 83% of net sales in 2025, up from 80% of orders and 81% of net sales in 2024, and 79% of orders and 80% of net sales in 2023.
We also offer REVOLVE products on international marketplaces such as Tmall Global, RED and Douyin in China and Nykaa Fashion in India, to expand our distribution reach in these key geographies. For 2024 and 2023, we generated $226.4 million and $198.3 million, respectively, in net sales shipped to customers internationally, or 20.0% and 18.6% of total net sales, respectively.
We also offer REVOLVE products on international marketplaces such as Tmall Global, RED and Douyin in China and Nykaa Fashion in India, to expand our distribution reach in these key geographies. For 2025 and 2024, we generated $253.3 million and $226.4 million, respectively, in net sales shipped to customers internationally, or 20.7% and 20.0% of total net sales, respectively.
Purchases of property and equipment may vary from period-to-period depending on the timing and extent of the expansion of our operations Net cash used in investing activities was $9.1 million and $4.2 million in 2024 and 2023, respectively.
Purchases of property and equipment may vary from period-to-period depending on the timing and extent of the expansion of our operations. Net cash used in investing activities was $14.9 million and $9.1 million in 2025 and 2024, respectively.
Segment and Geographic Performance Our financial results are affected by the performance across our two reporting segments, REVOLVE and FWRD, as well as across the various geographies in which we serve our customers. 63 The REVOLVE segment contributes to a majority of our net sales, representing 85.9% and 84.6% of our net sales for 2024 and 2023, respectively.
Segment and Geographic Performance Our financial results are affected by the performance across our two reporting segments, REVOLVE and FWRD, as well as across the various geographies in which we serve our customers. The REVOLVE segment contributes to a majority of our net sales, representing 86.0% and 85.9% of our net sales for 2025 and 2024, respectively.
During 2024 and 2023, net sales to customers outside of the United States were $226.4 million and $198.3 million, respectively, representing an increase of 14.2%. Net sales to customers outside of the United States are impacted by various factors including import and export taxes, currency fluctuations and other macroeconomic conditions described in “—Overall Economic Trends” above.
During 2025 and 2024, net sales to customers outside of the United States were $253.3 million and $226.4 million, respectively, representing an increase of 11.9%. Net sales to customers outside of the United States are impacted by various factors including import and export taxes, currency fluctuations and other macroeconomic conditions described in “—Overall Economic Trends” above.
Macro factors that can affect consumer confidence, shopping behavior and spending patterns, and thereby our near-term and long-term results of operations, include inflation levels, employment rates, business conditions, changes in the housing market, changes in the stock market, adverse developments affecting the financial services industry, the availability of credit, resumption of student loan payments, U.S. government stimulus payments, interest rates, foreign currency exchange rates, fuel, energy and raw material costs, supply chain 60 challenges, and wars and geopolitical tensions.
Macro factors that can affect consumer confidence, shopping behavior and spending patterns, and thereby our near-term and long-term results of operations, include tariffs imposed by the U.S. or foreign governments or a global trade war, inflation levels, employment rates, business conditions, changes in the housing market, changes in the stock market, adverse developments affecting the financial services industry, the availability of credit, resumption of student loan payments, interest rates, foreign currency exchange rates, fuel, energy and raw material costs, supply chain challenges, and wars and geopolitical tensions.
Cohort net sales retention rate is calculated as net sales attributable to a given customer cohort divided by the total net sales attributable to the same customer cohort from one year prior. Cohort net sales retention rate was 85% in 2024 compared to 77% in 2023, 97% in 2022, 120% in 2021 and 74% in 2020.
Cohort net sales retention rate is calculated as net sales attributable to a given customer cohort divided by the total net sales attributable to the same customer cohort from one year prior. Cohort net 63 sales retention rate was 89% in 2025 compared to 85% in 2024, 77% in 2023 and 97% in 2022.
Borrowings under the credit agreement accrue interest, at our option, at (1) a base rate equal to the highest of (a) the federal funds rate, plus 0.50%, (b) the prime rate and (c) an adjusted term SOFR rate determined on the basis of a one-month interest period, plus 1.00%, or (2) an adjusted term SOFR rate, subject to a floor of 0.00%, in each case, plus a margin ranging from 0.25% to 0.75% per year in the case of base rate loans, and 1.25% to 1.75% per year in the case of term SOFR rate loans.
Borrowings under the credit agreement accrue interest at a per annum rate equal to, at our option, (1) a base rate equal to the highest of (a) the federal funds rate, plus 0.50%, (b) the prime rate and (c) a term SOFR rate determined on the basis of a one-month interest period, plus 1.00%, or (2) a term SOFR rate, subject to a floor of 0.00%, in each case, plus a margin ranging from 0.25% to 0.75% per year in the case of base rate loans, and 1.25% to 1.75% per year in the case of term SOFR rate loans, depending upon availability under the credit agreement as of the most recently ended fiscal quarter.
The following table presents a reconciliation of free cash flow to net cash provided by operating activities, as well as information regarding net cash used in investing activities and net cash (used in) provided by financing activities, for each of the periods indicated: Year Ended December 31, 2024 2023 2022 (in thousands) Net cash provided by operating activities $ 26,692 $ 43,342 $ 23,436 Purchases of property and equipment (5,649 ) (4,198 ) (5,167 ) Purchases of rental product (3,038 ) — — Free cash flow $ 18,005 $ 39,144 $ 18,269 Net cash used in investing activities $ (9,114 ) $ (4,198 ) $ (5,167 ) Net cash (used in) provided by financing activities $ (5,363 ) $ (30,377 ) $ 887 59 Active Customers We define an active customer as a unique customer account from which a purchase was made across our platform at least once in the preceding 12-month period.
The following table presents a reconciliation of free cash flow to net cash provided by operating activities, as well as information regarding net cash used in investing activities and net cash used in financing activities, for each of the periods indicated: Year Ended December 31, 2025 2024 2023 (in thousands) Net cash provided by operating activities $ 59,396 $ 26,692 $ 43,342 Purchases of property and equipment (11,405 ) (5,649 ) (4,198 ) Purchases of rental product, net of proceeds from the sale of rental product (1,807 ) (3,038 ) — Free cash flow $ 46,184 $ 18,005 $ 39,144 Net cash used in investing activities $ (14,869 ) $ (9,114 ) $ (4,198 ) Net cash used in financing activities $ (1,387 ) $ (5,363 ) $ (30,377 ) 60 Active Customers We define an active customer as a unique customer account from which a purchase was made across our platform at least once in the preceding 12-month period.
Our returns reserve as of December 31, 2024 and 2023 was $69.7 million and $63.8 million, respectively, and the provisions recorded for returns were $1,544.1 million and $1,505.9 million, during 2024 and 2023, respectively. Actual levels of returns may vary from our estimates as of period ends and would be recorded in future periods.
Our returns reserve as of December 31, 2025 and 2024 was $77.0 million and $69.7 million, respectively, and the provisions recorded for returns were $1,604.1 million and $1,544.1 million, during 2025 and 2024, respectively. Actual levels of returns may vary from our estimates as of period ends and would be recorded in future periods.
The decrease in fulfillment expenses as a percentage of net sales was primarily due to an increase in average order value and a lower proportion of returned purchases.
The decrease in fulfillment expenses as a percentage of net sales was primarily due to a lower proportion of returned purchases, partially offset by a decrease in average order value.
Year Ended December 31, 2024 2023 2022 (in thousands, except average order value and percentages) Gross margin 52.5 % 51.9 % 53.8 % Adjusted EBITDA $ 69,516 $ 43,409 $ 90,234 Free cash flow $ 18,005 $ 39,144 $ 18,269 Active customers 2,668 2,543 2,340 Total orders placed 8,867 8,701 8,304 Average order value $ 302 $ 297 $ 304 Adjusted EBITDA and free cash flow are non-GAAP measures.
Year Ended December 31, 2025 2024 2023 (in thousands, except average order value and percentages) Gross margin 53.5 % 52.5 % 51.9 % Adjusted EBITDA $ 93,796 $ 69,516 $ 43,409 Free cash flow $ 46,184 $ 18,005 $ 39,144 Active customers 2,841 2,668 2,543 Total orders placed 9,477 8,867 8,701 Average order value $ 299 $ 302 $ 297 Adjusted EBITDA and free cash flow are non-GAAP measures.
During 2024 and 2023, net sales to customers in the United States were $903.5 million and $870.4 million, respectively, representing an increase of 3.8%. Net sales to customers outside of the United States contributed to 20.0% and 18.6% of our net sales for 2024 and 2023, respectively.
During 2025 and 2024, net sales to customers in the United States were $972.4 million and $903.5 million, respectively, representing an increase of 7.6%. Net sales to customers outside of the United States contributed to 20.7% and 20.0% of our net sales for 2025 and 2024, respectively.
Liquidity and Capital Resources The following table shows our cash and cash equivalents, accounts receivable and working capital as of the dates indicated: As of December 31, 2024 December 31, 2023 (in thousands) Cash and cash equivalents $ 256,600 $ 245,449 Accounts receivable, net 10,338 12,405 Working capital 364,991 338,969 (1) Working capital for all periods presented above is defined as current assets less current liabilities.
Liquidity and Capital Resources The following table shows our cash and cash equivalents, accounts receivable and working capital as of the dates indicated: As of December 31, 2025 December 31, 2024 (in thousands) Cash and cash equivalents $ 292,256 $ 256,600 Accounts receivable, net 16,561 10,338 Working capital 416,482 364,991 (1) Working capital for all periods presented above is defined as current assets less current liabilities.
Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures, including various cash flow metrics, net income and our other GAAP results. 58 A reconciliation of Adjusted EBITDA to net income is as follows: Year Ended December 31, 2024 2023 2022 (in thousands) Net income $ 48,771 $ 28,147 $ 58,697 Excluding: Other income, net (13,030 ) (15,627 ) (3,476 ) Provision for income taxes 15,676 9,614 17,919 Depreciation and amortization 4,429 5,094 4,791 Equity-based compensation 10,028 5,839 5,862 Transaction costs (1) 1,194 — — Non-routine items (2) 2,448 10,342 6,441 Adjusted EBITDA $ 69,516 $ 43,409 $ 90,234 (1) Includes legal and professional service fees related to potential and consummated strategic acquisitions and investments.
Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures, including various cash flow metrics, net income and our other GAAP results. 59 A reconciliation of Adjusted EBITDA to net income is as follows: Year Ended December 31, 2025 2024 2023 (in thousands) Net income $ 61,146 $ 48,771 $ 28,147 Excluding: Other income, net (8,040 ) (13,030 ) (15,627 ) Provision for income taxes 21,157 15,676 9,614 Depreciation and amortization 4,601 4,429 5,094 Equity-based compensation 10,566 10,028 5,839 Transaction costs (1) 2,224 1,194 — Non-routine items (2) 2,142 2,448 10,342 Adjusted EBITDA $ 93,796 $ 69,516 $ 43,409 (1) Includes legal and professional service fees related to potential and consummated strategic acquisitions and investments.
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities—Issuer’s Repurchases of Equity Securities.” Historical Cash Flows Year Ended December 31, 2024 2023 2022 (in thousands) Net cash provided by operating activities $ 26,692 $ 43,342 $ 23,436 Net cash used in investing activities (9,114 ) (4,198 ) (5,167 ) Net cash (used in) provided by financing activities (5,363 ) (30,377 ) 887 Net Cash Provided by Operating Activities Cash from operating activities consists primarily of net income adjusted for certain non-cash items, including depreciation, equity-based compensation, and the effect of changes in working capital and other activities.
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities—Issuer’s Repurchases of Equity Securities.” Historical Cash Flows Year Ended December 31, 2025 2024 2023 (in thousands) Net cash provided by operating activities $ 59,396 $ 26,692 $ 43,342 Net cash used in investing activities (14,869 ) (9,114 ) (4,198 ) Net cash used in financing activities (1,387 ) (5,363 ) (30,377 ) Net Cash Provided by Operating Activities Cash from operating activities consists primarily of net income adjusted for certain non-cash items, including depreciation, equity-based compensation, and the effect of changes in working capital and other activities. 71 We generated $59.4 million of operating cash flow in 2025 compared to $26.7 million in 2024.
Marketing Expenses Marketing expenses consist primarily of targeted online performance marketing costs, such as paid search/product listing ads, affiliate marketing, paid social, retargeting, search engine optimization, personalized email 65 and SMS marketing and mobile “push” communications through our mobile applications.
Marketing Expenses Marketing expenses consist primarily of costs to execute targeted marketing campaigns across free and paid channels, such as paid search/product listing ads, affiliate marketing, paid social, retargeting, search engine optimization, personalized email and SMS marketing, and mobile “push” communications through our mobile applications.
Furthermore, changes in the user experience on social media platforms, including a shift towards video and the level of recommended content as well as changes in privacy practices by third parties, may make it more difficult to gain customer awareness and cost effectively acquire and retain customers.
Furthermore, changes in the user experience on search, social media and other platforms, including recent developments in artificial intelligence, or AI, and the introduction of large language models, or LLMs, a shift towards video and the level of recommended content as well as changes in privacy practices by third parties, may make it more difficult to gain customer awareness and cost-effectively acquire and retain customers.
The decrease in selling and distribution expenses as a percentage of net sales was primarily due to lower shipping rates, lower proportion of returned purchases and higher average order value, partially offset by higher merchant processing fees.
The decrease in selling and distribution expenses as a percentage of net sales was primarily due to efficiencies gained in our shipping logistics and lower proportion of returned purchases, partially offset by lower average order value.
Non-routine items in 2023 included $7.5 million in legal fees and charges for two separate settled legal matters and $2.8 million related to non-routine import and export fees. Non-routine items in 2022 included $6.3 million in legal fees and charges for a settled legal matter and $0.1 million in other non-routine items.
Non-routine items in 2023 included $7.5 million in legal fees and charges for two separate settled legal matters and $2.8 million related to non-routine import and export fees.
Cost of Sales Cost of sales consists of our purchase price for merchandise sold to customers and includes import duties, net of drawback claims, and other taxes, inbound freight costs, receiving costs, defective merchandise returned from customers, inventory valuation adjustments, and other miscellaneous shrinkage.
See the section titled “—Factors Affecting Our Performance—Overall Economic Trends.” Cost of Sales Cost of sales consists of our purchase price for merchandise sold to customers and includes import duties, net of drawback claims, and other taxes, inbound freight costs, receiving costs, defective merchandise returned from customers, inventory valuation adjustments, and other miscellaneous shrinkage.
Marketing Expenses Year Ended December 31, Change 2024 2023 $ % (dollars in thousands) Marketing expenses $ 167,176 $ 171,774 $ (4,598 ) (2.7 %) Percentage of net sales 14.8 % 16.1 % The decrease in marketing expenses in 2024, as compared to 2023, was primarily due to a $8.7 million decrease in brand marketing expense, partially offset by a $4.1 million increase in performance marketing expense.
Marketing Expenses Year Ended December 31, Change 2025 2024 $ % (dollars in thousands) Marketing expenses $ 175,397 $ 167,176 $ 8,221 4.9 % Percentage of net sales 14.3 % 14.8 % The increase in marketing expenses in 2025, as compared to 2024, was due to a $16.5 million increase in performance marketing expense, partially offset by a $8.3 million decrease in brand marketing expense.
Net Cash Used in Investing Activities Our primary investing activities have consisted of purchases of property and equipment to support our fulfillment centers and our overall business growth and internally developed software for the continued development of our proprietary technology infrastructure. In addition, for 2024, our investing activities included purchases of rental product and cash paid for an acquisition.
Net Cash Used in Investing Activities Our primary investing activities have consisted of purchases of property and equipment to support our fulfillment centers and our overall business growth and internally developed software for the continued development of our proprietary technology infrastructure, leasehold improvements in our retail store locations, purchases of rental product and proceeds from sale of rental product.
The decrease in cost of sales as a percentage of net sales was primarily due to a higher percentage of full price sales, partially offset by increased inbound shipping rates and a higher mix of third-party brand sales.
The decrease in cost of sales as a percentage of net sales was primarily due to a lower mix of third-party brand sales and shallower markdowns within markdown sales, partially offset by a lower percentage of full price sales and the impact of increased import tariff rates.
Our obligations under the credit agreement are secured by substantially all of our assets.
Our obligations under the credit agreement are secured by substantially all of our assets and the assets of our subsidiaries that are borrowers or guarantors under the credit agreement.
Components of Our Results of Operations Net Sales Net sales consist primarily of sales of women’s apparel, footwear, beauty, accessories and home products. We recognize product sales at the time control is transferred to the customer, which is when the product is shipped.
Components of Our Results of Operations Net Sales Net sales consist primarily of sales of apparel, footwear, beauty and accessories. We recognize product sales at the time control is transferred to the customer, which is when the product is shipped. Net sales represent the sales of these items and shipping revenue when applicable, net of estimated returns and promotional discounts.
During 2024 and 2023, REVOLVE generated $970.5 million and $904.5 million in net sales, respectively, representing an increase of 7.3%. The net sales increase in 2024 compared to 2023 was primarily due to an increase in average order value combined with a lower proportion of returned purchases and an increase in the number of orders shipped.
During 2025 and 2024, REVOLVE generated $1,054.0 million and $970.5 million in net sales, respectively, representing an increase of 8.6%. The net sales increase in 2025 compared to 2024 was primarily due to an increase in the number of orders shipped and a lower proportion of returned purchases.
The FWRD segment contributes to a smaller portion of our overall net sales, representing 14.1% and 15.4% of our net sales for 2024 and 2023, respectively. During 2024 and 2023, FWRD generated $159.4 million and $164.2 million in net sales, respectively, representing a decrease of 2.9%.
The FWRD segment contributes to a smaller portion of our overall net sales, representing 14.0% and 14.1% of our net sales for 2025 and 2024, respectively. During 2025 and 2024, FWRD generated $171.6 million and $159.4 million in net sales, respectively, representing an increase of 7.7%.
(2) Non-routine items in 2024 included a $2.0 million non-routine loss related to a shipment theft incident, which we expect to recover in full through our insurance in future periods, and a $0.5 million charge for a settled matter related to non-routine import and export fees.
(2) Non-routine items in 2025 primarily represent an accrual for certain pending legal matters. Non-routine items in 2024 included a $2.0 million non-routine loss related to a shipment theft incident, which was recovered in full through our insurance in 2025, and a $0.5 million charge for a settled matter related to non-routine import and export fees.
We expect our cost of sales to fluctuate as a percentage of net sales primarily due to how we manage our inventory and merchandise mix. We have recently experienced and may continue to experience an increase in the cost of goods due to an increase in the cost of materials.
We expect our cost of sales to fluctuate as a percentage of net sales primarily due to how we manage our inventory and merchandise mix.
General and Administrative Expenses Year Ended December 31, Change 2024 2023 $ % (dollars in thousands) General and administrative expenses $ 142,122 $ 126,585 $ 15,537 12.3 % Percentage of net sales 12.6 % 11.9 % The increase in general and administrative expenses in 2024, as compared to 2023, was due to a $7.9 million increase in salaries and related benefits, a $6.0 million increase related to professional services and other occupancy costs, a $4.2 million increase in equity-based compensation expense, a $1.1 million increase in studio and design costs and a $4.2 million increase in other operating expenses and transaction costs, partially offset by a $7.9 million decrease in non-routine expenses.
The decrease in marketing expenses as a percentage of net sales was primarily due to efficiencies in our brand marketing investments. 69 General and Administrative Expenses Year Ended December 31, Change 2025 2024 $ % (dollars in thousands) General and administrative expenses $ 156,992 $ 142,122 $ 14,870 10.5 % Percentage of net sales 12.8 % 12.6 % The increase in general and administrative expenses in 2025, as compared to 2024, was primarily due to a $7.2 million increase related to professional services and other occupancy costs, a $5.0 million increase in salaries and related benefits and equity-based compensation expense, a $0.7 million increase in non-routine and transaction costs and a $2.0 million increase in other operating expenses.
We utilize a data-driven “read and react” buying process to merchandise and curate the latest on-trend fashion. We generally make shallow initial inventory buys and then use our proprietary technology tools to identify and re-order best sellers, taking into account customer feedback across a variety of key metrics, which allows us to manage inventory and fashion risk.
We generally make shallow initial inventory buys and then use our proprietary technology tools to identify and re-order best sellers, taking into account customer feedback across a variety of key metrics, which allows us to manage inventory and fashion risk. To ensure sufficient availability of merchandise, we generally purchase inventory in advance and frequently before apparel trends are confirmed.
Selling and Distribution Expenses Year Ended December 31, Change 2024 2023 $ % (dollars in thousands) Selling and distribution expenses $ 195,169 $ 197,052 $ (1,883 ) (1.0 %) Percentage of net sales 17.3 % 18.4 % The decrease in selling and distribution expenses in 2024, as compared to 2023, was primarily due to a $7.1 million decrease in shipping and handling costs, a $0.4 million decrease in other selling expenses, partially offset by a $5.6 million increase in merchant processing fees.
Selling and Distribution Expenses Year Ended December 31, Change 2025 2024 $ % (dollars in thousands) Selling and distribution expenses $ 209,623 $ 195,169 $ 14,454 7.4 % Percentage of net sales 17.1 % 17.3 % The increase in selling and distribution expenses in 2025, as compared to 2024, was primarily due to increases in orders placed and net sales that resulted in a $8.1 million increase in shipping and handling costs, a $2.4 million increase in customer service expenses, a $2.2 million increase in merchant processing fees and a $1.8 million increase in other selling expenses.
The increase in general and administrative expenses as a percentage of net sales was driven by growth in general and administrative expenses outpacing growth in net sales.
The slight increase in general and administrative expenses as a percentage of net sales was driven by increased investment in strategic growth initiatives and an increase in non-routine and transaction costs.
Sources of Liquidity Since our inception, we have financed our operations and capital expenditures primarily through cash flows generated by operations, private sales of equity securities, the incurrence of debt, the net proceeds we received through our IPO, as well as proceeds received from the exercise of stock options.
Sources of Liquidity Since our inception, we have financed our operations and capital expenditures primarily through cash flows generated by operations and to a much lesser extent private sales of equity securities, the incurrence of debt, the net proceeds we received through our IPO, as well as proceeds received from the exercise of stock options. 70 Line of Credit On February 2, 2026, we amended our existing credit agreement to, among other things, extend the maturity date from March 23, 2026 to February 2, 2031.
In 2024, average order value for merchandise sold through the REVOLVE and FWRD segments was approximately $281 and $666, respectively, reflecting the brands sold and typical profile of the shoppers on such sites. We believe our high average order value demonstrates the premium nature of our product assortment.
In 2025, average order value for merchandise sold through the REVOLVE and FWRD segments was approximately $279 and $640, respectively, reflecting the brands sold, category mix and typical profile of the shoppers on such sites.
The net sales decrease in 2024 compared to 2023 was primarily due to a decrease in the number of orders shipped. Net sales to customers in the United States contributed to 80.0% and 81.4% of our net sales for 2024 and 2023, respectively.
The net sales increase in 2025 compared to 2024 was primarily due to an increase in the number of orders shipped, partially offset by a lower average order value. 65 Net sales to customers in the United States contributed to 79.3% and 80.0% of our net sales for 2025 and 2024, respectively.
Other Income, Net Other income, net consists primarily of interest income on our money market funds, partially offset by foreign currency exchange gains and losses and fees associated with our line of credit. For 2024 and 2023, other income, net also includes $2.8 million and $5.1 million of insurance proceeds related to settled legal matters, respectively.
Other Income, Net Other income, net consists primarily of interest income on our money market funds, partially offset by foreign currency exchange gains and losses and fees associated with our line of credit.
Gross margin is impacted by the mix of sales at full price and markdowns, as well as the level of markdowns. Certain of our competitors and other retailers report cost of sales differently than we do. As a result, the reporting of our gross profit and gross margin may not be comparable to other companies.
See the section titled “—Factors Affecting Our Performance—Overall Economic Trends.” Certain of our competitors and other retailers report cost of sales differently than we do. As a result, the reporting of our gross profit and gross margin may not be comparable to other companies.
For a description of our leases, please see Note 5, Leases , to our consolidated financial statements included elsewhere in this report.
Contractual Obligations As of December 31, 2025, our principal contractual obligations consist of obligations under operating leases for office and fulfillment facilities. For a description of our leases, please see Note 5, Leases , to our consolidated financial statements included elsewhere in this report.
To ensure sufficient availability of merchandise, we generally purchase inventory in advance and frequently before apparel trends are confirmed. As a result, we are vulnerable to demand and pricing shifts and to suboptimal selection and timing of merchandise purchases. In the normal course of business, we incur inventory valuation adjustments, which impacts our gross margin.
As a result, we are vulnerable to demand and pricing shifts and to suboptimal selection and timing of merchandise purchases. In the normal course of business, we incur inventory valuation adjustments, which impacts our gross margin. Moreover, our inventory investments will fluctuate with the needs of our business. For example, entering new categories will require additional investments in inventory.
Net sales in the REVOLVE segment increased 7.3% to $970.5 million in 2024 compared to net sales of $904.5 million in 2023. Net sales generated from our FWRD segment decreased 2.9% to $159.4 million in 2024 as compared to net sales of $164.2 million in 2023.
Net sales generated from our FWRD segment increased 7.7% to $171.6 million in 2025 as compared to net sales of $159.4 million in 2024.
We generated $26.7 million of operating cash flow in 2024 compared to $43.3 million in 2023. The decrease in our operating cash flow was primarily due to negative impact from changes in working capital, partially offset by higher net income adjusted for certain non-cash items.
The increase in our operating cash flow was primarily due to higher net income adjusted for certain non-cash items and positive impact from changes in working capital.
Income Taxes Year Ended December 31, 2024 2023 (dollars in thousands) Income before income taxes $ 64,447 $ 37,761 Provision for income taxes 15,676 9,614 Effective tax rate 24.3 % 25.5 % 68 The decrease in the effective tax rate for 2024 compared to 2023 was primarily due to an increase in excess tax benefits related to the exercise of non-qualified stock options, partially offset by a lower proportion of foreign-derived intangible income and an increase in disallowed expenses related to Section 162(m) of the Internal Revenue Code for covered employee's compensation.
Income Taxes Year Ended December 31, 2025 2024 (dollars in thousands) Income before income taxes $ 82,303 $ 64,447 Provision for income taxes 21,157 15,676 Effective tax rate 25.7 % 24.3 % The increase in the effective tax rate in 2025, as compared to 2024, was primarily due to a decrease in excess tax benefits related to the exercise of non-qualified stock options.
Investment in our Operations and Infrastructure We have made investments over time to grow our customer base, enhance our offerings and deliver best-in-class service to our customers.
Shifts in inventory levels may result in fluctuations in the percentage of full price sales, levels of markdowns, merchandise mix, as well as gross margin. 64 Investment in our Operations and Infrastructure We have made investments over time to grow our customer base, enhance our offerings and deliver best-in-class service to our customers.
Average order value increased during 2024 as compared to 2023, primarily due to a higher percentage of sales at full price. Factors Affecting Our Performance Overall Economic Trends The overall economic environment and related changes in consumer behavior have a significant impact on our business.
Factors Affecting Our Performance Overall Economic Trends The overall economic environment and related changes in consumer behavior have a significant impact on our business.
Net sales represent the sales of these items and shipping revenue when applicable, net of estimated returns and promotional discounts. Net sales are primarily driven by growth in the number of our customers, the frequency with which customers purchase, the proportion of returned merchandise and average order value.
Net sales are primarily driven by growth in the number of our customers, the frequency with which customers purchase, the proportion of returned merchandise and average order value. Net sales may be impacted by tariffs and other changes to trade policy, particularly in the near term.
The brands we sell on our platform consist of a mix of emerging third-party, established third-party (including iconic luxury brands) and owned brands. Our product mix consists primarily of apparel, footwear, beauty, accessories and home products. Our merchandise mix across our two reporting segments carry a range of margin profiles and may cause fluctuations in our gross margin.
Our product mix consists primarily of apparel, footwear, beauty and accessories. Our merchandise mix across our two reporting segments carry a range of margin profiles and may cause fluctuations in our gross margin. Shifts in our segment mix and our broader category merchandise mix may result in fluctuations in our gross margin from period to period.
Cost of Sales Year Ended December 31, Change 2024 2023 $ % (dollars in thousands) Cost of sales $ 536,638 $ 514,520 $ 22,118 4.3 % Percentage of net sales 47.5 % 48.1 % The increase in cost of sales in 2024, as compared to 2023, was primarily due to an increase in net sales and an increase in inbound shipping expenses to receive product merchandise from vendors.
Cost of Sales Year Ended December 31, Change 2025 2024 $ % (dollars in thousands) Cost of sales $ 569,898 $ 536,638 $ 33,260 6.2 % Percentage of net sales 46.5 % 47.5 % The increase in cost of sales in 2025, as compared to 2024, was primarily due to an increase in net sales.
Additionally, in June 2023, Apple announced new software development kit, or SDK, privacy controls that it has integrated into iOS 17, which was released in September 2023, including new protections designed to limit tracking or identification of user devices.
Apple Inc. introduced new SDK privacy controls in 2023 that it integrated into iOS 17, including new protections designed to limit tracking or identification of user devices. Apple Inc. has also updated Apple Mail, including automated inbox categorization, sender-level grouping, and AI-generated email previews.
Results of Operations The following tables set forth our results of operations for the periods presented and express the relationship of certain line items as a percentage of net sales for those periods. The period-to-period comparison of financial results is not necessarily indicative of future results.
For 2024 and 2023, other income, net also includes $2.8 million and $5.1 million of insurance proceeds related to settled legal matters, respectively. 67 Results of Operations The following tables set forth our results of operations for the periods presented and express the relationship of certain line items as a percentage of net sales for those periods.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAs the U.S. dollar strengthens, prices for customers in these regions may be more expensive relative to that of competition in those markets, thus adversely impacting our demand. Furthermore, the general purchasing power of consumers in foreign countries is weakened by a stronger U.S. dollar.
Biggest changeWhen the U.S. dollar strengthens, prices for customers in these regions may be more expensive relative to that of competition in those markets, thus adversely impacting consumer demand for our products. Furthermore, the general purchasing power of consumers in foreign countries is weakened by a stronger U.S. dollar.
Foreign Currency Risk Most of our sales are denominated in U.S. dollars, and therefore, our net sales are not currently subject to significant foreign currency risk. However, our products for sale in foreign countries are generally priced in the 72 country’s local currency based on the currency exchange rate in effect at the time.
Foreign Currency Risk Most of our sales are denominated in U.S. dollars, and therefore, our net sales are not currently subject to significant foreign currency risk. However, our products for sale in foreign countries are generally priced in the country’s local currency based on the currency exchange rate in effect at the time.
Fluctuations in foreign currency exchange rates may cause us to recognize transaction gains and losses in our consolidated statements of income. To date, foreign currency transaction gains and losses have not been material to our consolidated financial statements and we have not engaged in any foreign currency hedging transactions. 73
Fluctuations in foreign currency exchange rates may cause us to recognize transaction gains and losses in our consolidated statements of income. To date, foreign currency transaction gains and losses have not been material to our consolidated financial statements and we have not engaged in any foreign currency hedging transactions.

Other RVLV 10-K year-over-year comparisons