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What changed in ThredUp Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of ThredUp Inc.'s 2022 and 2023 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 2023 report.

+291 added−302 removedSource: 10-K (2024-03-05) vs 10-K (2023-03-07)

Top changes in ThredUp Inc.'s 2023 10-K

291 paragraphs added · 302 removed · 231 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

26 edited+2 added−2 removed30 unchanged
Biggest changeOur buyers generally pay us upfront when they purchase an item. We recognize revenue from our Remix platform primarily through direct product sales. We anticipate that over time revenue from the Remix platform will migrate to become primarily consignment sales as we introduce and expand the Clean Out Kit model that we pioneered in the United States market.
Biggest changeOur buyers generally pay us upfront when they purchase an item. 4 Table of Contents We recognize revenue from our Remix platform primarily through direct product sales.
Competitors offering the same or similar goods or services include: • secondhand marketplaces, such as eBay Inc., Mercari, Inc., Poshmark, Inc., The RealReal, Inc., Vinted and Vestiaire Collective; • large online retailers, such as Amazon.com, Inc., Target Corporation, Kohl’s Corporation and Walmart Inc.; and • off-price retailers, such as Burlington Stores, Inc., Ross Stores, Inc. and The TJX Companies, Inc.
Competitors offering the same or similar goods or services include: • secondhand marketplaces, such as eBay, Goodwill, Mercari, Poshmark, The RealReal, Vinted and Vestiaire Collective; • large online retailers, such as Amazon.com, Inc., Target Corporation, Kohl’s Corporation and Walmart Inc.; and • off-price retailers, such as Burlington Stores, Inc., Ross Stores, Inc. and The TJX Companies, Inc.
We drive continuous operational efficiency through proprietary technology and ongoing automation of our infrastructure. Our existing United States-based distribution centers are located in Arizona, Georgia, Pennsylvania, and Texas.
We drive continuous operational efficiency through proprietary technology and ongoing automation of our infrastructure. Our existing United States-based processing and distribution centers are located in Arizona, Georgia, Pennsylvania, and Texas.
While we do not anticipate a reduction in force due to conflict in Ukraine, we anticipate that at least some of our Ukrainian IT specialists may be unable to work while the conflict is unresolved. 7 Table of Contents Our human capital resources objective is to cultivate a high-performing team by recruiting, retaining, incentivizing and integrating our existing and new employees and professional contractors.
While we do not anticipate a reduction in force due to conflict in Ukraine, we anticipate that at least some of our Ukrainian IT specialists may be unable to work while the military conflict is unresolved. 6 Table of Contents Our human capital resources objective is to cultivate a high-performing team by recruiting, retaining, incentivizing and integrating our existing and new employees and professional contractors.
Similarly, apparel, shoes and accessories sold by us are also subject to import regulations in the United States concerning the use of wildlife products for commercial and non-commercial trade, including the United States Fish and Wildlife Service. We do not estimate any significant capital expenditures for environmental control matters either in the current fiscal year or in the near future.
Similarly, apparel, shoes and accessories sold by us are also subject to import regulations in the United States concerning the use of wildlife products for commercial and non-commercial trade, including the United States Fish and Wildlife Service. We do not estimate any significant capital expenditures for environmental control matters either in 2023 or in the near future.
We generate revenue primarily from items that are sold to buyers on our websites and mobile app and from integration and service fees charged in connection with our RaaS offerings. 5 Table of Contents Our revenue is comprised of consignment sales and direct product sales.
We generate revenue primarily from items that are sold to buyers on our websites and mobile app and from integration and service fees charged in connection with our RaaS offerings. Our revenue is comprised of consignment sales and direct product sales.
In addition, our proprietary algorithm technologies, other than those incorporated into a patent application, are protected by trade secret laws. We also hold trademarks in the United States as well as in other jurisdictions. “THREDUP” and “Think Secondhand First” are our registered trademarks in the United States.
In addition, our proprietary algorithm technologies, other than those incorporated into a patent application, are protected by trade secret laws. 5 Table of Contents We also hold trademarks in the United States as well as in other jurisdictions. “THREDUP” and “Think Secondhand First” are our registered trademarks in the United States.
See the section titled “Risk Factors—Risks Relating To Our Business and Industry—The market in which we participate is competitive and rapidly changing, and if we do not compete effectively with established companies as well as new market entrants our business, results of operations and financial condition could be harmed.” We compete primarily on the basis of buyer and seller experience, product quality and assortment, breadth of brand offering, convenience and price.
See the section titled “Risk Factors—Risks Relating To Our Business and Industry—The market in which we participate is competitive and rapidly changing, and if we do not compete effectively with established companies as well as new market entrants or maintain and develop strategic relationships with third parties, our business, results of operations and financial condition could be harmed.” We compete primarily on the basis of buyer and seller experience, product quality and assortment, breadth of brand offering, convenience and price.
These patents are intended to protect our proprietary inventions relevant to our business. We continually review our development efforts to assess the existence and patentability of new intellectual property. We intend to pursue additional patent protection to the extent we believe it would be beneficial and cost effective.
We have patents issued in the United States. These patents are intended to protect our proprietary inventions relevant to our business. We continually review our development efforts to assess the existence and patentability of new intellectual property. We intend to pursue additional patent protection to the extent we believe it would be beneficial and cost effective.
We have methodically scaled operating capacity and revenue, while increasing gross profit and improving our operating performance. • During the year ended December 31, 2022, our buyers placed 6.5 million Orders, up 22% as compared to the same period in 2021. Competition Although we have built a scaled and highly differentiated platform and managed marketplace, we face intense competition.
We have methodically scaled operating capacity and revenue, while increasing gross profit and improving our operating performance. During the year ended December 31, 2023, our buyers placed 6.9 million Orders, up 6.2% as compared to the same period in 2022. Competition Although we have built a scaled and highly differentiated platform and managed marketplace, we face intense competition.
As of December 31, 2022, we operated distribution centers that could collectively hold more than 7.3 million items in locations across the United States and Europe. Our operations are highly scalable, and we have the ability to process more than 100,000 unique SKUs per day across our existing distribution center footprint.
As of December 31, 2023, we operated distribution centers that could collectively hold more than 12.0 million items in locations across the United States and Europe. Our operations are highly scalable, and we have the ability to process more than 100,000 unique SKUs per day across our existing distribution center footprint.
Human Capital Resources As of December 31, 2022, we had 2,416 employees and professional contractors, including 2,011 distribution center employees. To our knowledge, none of our employees is represented by a labor union or covered by a collective bargaining agreement. We have not experienced any work stoppages and we consider our relations with our employees to be good.
Human Capital Resources As of December 31, 2023, we had 2,377 employees and professional contractors, including 1,984 distribution center employees. To our knowledge, none of our employees is represented by a labor union or covered by a collective bargaining agreement. We have not experienced any work stoppages and we consider our relations with our employees to be good.
Item 1. Business thredUP operates one of the world’s largest online resale platforms for apparel, shoes and accessories. Our mission is to inspire a new generation of consumers to think secondhand first.
Item 1. Business ThredUp operates one of the world’s largest online resale platforms for apparel, shoes and accessories. Our mission is to inspire the world to think secondhand first.
As of December 31, 2022, 60% of our senior leadership team, which includes executives, senior vice presidents, vice presidents, senior directors, directors and general managers of operations, identifies as female and 26% of our senior leadership team identifies as minority, including 3% as Black or Latinx.
As of December 31, 2023, 63% of our senior leadership team, which includes executives, senior vice presidents, vice presidents, senior directors, directors and general managers of operations, identifies as female and 21% of our senior leadership team identifies as minority, including 4% as Black or Latinx.
We take it from there and do the work to make those accepted items available for resale. In addition to our core marketplace, some of the world’s leading brands and retailers are already taking advantage of our Resale-as-a-Service (“RaaS”) offering, which allows them to conveniently offer a scalable closet clean out service and/or resale shop to their customers.
In addition to our core marketplace, some of the world’s leading brands and retailers are already taking advantage of our Resale-as-a-Service (“RaaS”) offering, which allows them to conveniently offer a scalable closet clean out service and/or resale shop to their customers.
Our marketplaces enable buyers to browse and purchase resale items for primarily women’s and kids’ apparel, shoes and accessories across a wide range of price points. Buyers love shopping value, premium and luxury brands all in one place, at up to 90% off estimated retail prices.
The marketplaces we have built enable buyers in the United States (“U.S.”) and in Europe to browse and purchase resale items for primarily apparel, shoes and accessories across a wide range of price points. Buyers love shopping value, premium and luxury brands all in one place, at up to 90% off estimated retail price.
This suite of offerings is called “Resale 360” and enables our RaaS clients to drive incremental revenue and access new customers while promoting a circular business model. As of December 31, 2022, we worked with 42 RaaS clients, including GAP, Hot Topic, Madewell, Reformation, Tommy Hilfiger, Torrid, and Walmart.
This suite of offerings is called “Resale 360” and enables our RaaS clients to drive incremental revenue and access new customers while promoting a circular business model. As of December 31, 2023, we worked with over 50 RaaS clients, including Gap, Reformation, Madewell, Abercrombie, Cuyana and Hollister.
We believe that a unique perspective is critical to solving complex problems and inspiring a new generation of consumers to think secondhand first. Overall, as of December 31, 2022, 66% of our workforce identifies as female and 72% of our workforce identifies as minority, including 58% as Black or Latinx.
We believe that a unique perspective is critical to solving complex problems and inspiring the world to think secondhand first. Overall, as of December 31, 2023, 67% of our workforce identifies as female and 73% of our workforce identifies as minority, including 59% as Black or Latinx.
We rely on a combination of patents, trademarks, copyrights, trade secrets, license agreements, confidentiality procedures, non-disclosure agreements, employee disclosure and invention assignment agreements, as well as other legal and contractual rights, to establish and protect our proprietary rights. 6 Table of Contents We have patents issued in the United States.
Intellectual Property We believe that our intellectual property rights are valuable and important to our business. We rely on a combination of patents, trademarks, copyrights, trade secrets, license agreements, confidentiality procedures, non-disclosure agreements, employee disclosure and invention assignment agreements, as well as other legal and contractual rights, to establish and protect our proprietary rights.
This platform is powering the rapidly emerging resale economy, one of the fastest growing sectors in retail, according to a GlobalData market survey conducted in February 2022. thredUP’s proprietary operating platform is the foundation for our managed marketplace, where we have bridged online and offline technology to make the buying and selling of tens of millions of unique items easy and fun.
ThredUp’s proprietary operating platform is the foundation for our managed marketplace, where we have bridged online and offline technology to make the buying and selling of tens of millions of unique items easy and fun.
We also have registered domain names for websites that we use in our business, such as www.thredup.com and other variations.
Other trademarks and trade names referred to in this annual report are the property of their respective owners. We also have registered domain names for websites that we use in our business, such as www.thredup.com and other variations.
We have additional registered trademarks in the United States and “THREDUP” is registered in certain other non-United States jurisdictions. We will pursue additional trademark registrations to the extent we believe they would be beneficial and cost-effective. Other trademarks and trade names referred to in this annual report are the property of their respective owners.
We have additional registered trademarks in the United States and “THREDUP” is registered in certain other non-United States jurisdictions. We also hold European Union trademarks for our Remix logo. We will pursue additional trademark registrations to the extent we believe they would be beneficial and cost-effective.
We have built a differentiated and defensible operating platform to enable resale at scale, combining: • Distributed Processing Infrastructure. Our infrastructure is purpose-built for “single SKU” logistics, meaning that virtually every item processed is unique, came from or belongs to an individual seller and is individually tracked using its own stock keeping unit (“SKU”).
Our infrastructure is purpose-built for “single SKU” logistics, meaning that the vast majority of items processed are unique, came from or belong to an individual seller and is individually tracked using its own stock keeping unit (“SKU”).
We also leverage data to power efficient customer acquisition and lifetime engagement, and to provide a personalized shopping experience.
We also leverage data to power efficient customer acquisition and lifetime engagement, and to provide a personalized shopping experience. ThredUp’s data science portfolio leverages machine learning algorithms, predictive analytics, and other artificial intelligence technologies to identify trends, anomalies and correlations, provide alerts and initiate business processes.
In mid-2021, we began structuring our RaaS offerings as sources of revenue. RaaS clients typically pay an upfront integration fee as well as ongoing service fees which are then recorded to consignment revenue.
We anticipate that over time revenue from the Remix platform will increasingly involve consignment sales as we have started to transition it to the Clean Out Kit model we pioneered in the United States market. Revenue from our RaaS offerings typically includes an upfront integration fee as well as ongoing service fees which are then recorded to consignment revenue.
We believe RaaS will accelerate the growth of this emerging category and form the backbone of the modern resale experience domestically and internationally. In 2021, we acquired Remix Global AD (“Remix”), a fashion resale company headquartered in Sofia, Bulgaria, which further expands our reach to the European customer.
We believe RaaS will accelerate the growth of this emerging category and form the backbone of the modern resale experience domestically and internationally. We have built a differentiated and defensible operating platform to enable resale at scale, combining: • Distributed Processing Infrastructure.
Removed
With this acquisition, we added a complementary operational infrastructure and an experienced management team to enable our expansion into Europe. In addition, Remix’s product assortment extends our resale offering to include men’s items and items sourced from a variety of supply channels, such as wholesale supply.
Added
This platform is powering the rapidly emerging resale economy, one of the fastest growing sectors in retail, according to a GlobalData market survey conducted in January 2023.
Removed
Intellectual Property We believe that our intellectual property rights are valuable and important to our business.
Added
We take it from there and do the work to make those accepted items available for resale. In addition to Clean Out Kits, ThredUp also sources inventory from a variety of supply channels, such as wholesale supply in Europe.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

133 edited+36 added−39 removed353 unchanged
Biggest changeWe may not be able to achieve and maintain profitability. • We may require additional capital to support business growth, and this capital might not be available or may be available only by diluting existing stockholders or on undesirable terms. • We have a limited operating history in an evolving industry, which makes it difficult to forecast our revenue, plan our expenses and evaluate our business and future prospects. • We may experience quarterly fluctuations in our results of operations due to a number of factors that make our future results difficult to predict and could cause our results of operations to fall below analyst or investor expectations. • We may not be able to expand our distribution center operations, attract and retain personnel to efficiently and effectively manage the operations required to process, itemize, list, sell, pack and ship secondhand and resale items or identify and lease distribution centers in geographic regions that enable us to effectively scale our operations. • Material weaknesses in our internal control over financial reporting may cause us to fail to timely and accurately report our financial results or result in a material misstatement of our consolidated financial statements. • The global COVID-19 pandemic has had and may continue to have an adverse impact on our business, results of operations and financial condition. • Compromises of our data security could cause us to incur unexpected expenses and may materially harm our reputation and results of operations. • Our advertising activity and strategic RaaS offerings may fail to efficiently drive growth in buyers and sellers, which could harm our business, results of operations and financial condition. • The market price of our Class A common stock may be volatile or may decline regardless of our operating performance, and you could lose all or part of your investment. • The dual-class structure of our common stock has the effect of concentrating voting control with those stockholders who held our capital stock prior to our Initial Public Offering (“IPO”), including our directors, executive officers and their respective affiliates.
Biggest changeWe may not be able to achieve and maintain profitability. • We may require additional capital to support business growth, and this capital might not be available or may be available only by diluting existing stockholders or on undesirable terms. • We have a limited operating history in an evolving industry, which makes it difficult to forecast our revenue, plan our expenses and evaluate our business and future prospects. • We may experience quarterly fluctuations in our results of operations due to a number of factors that make our future results difficult to predict and could cause our results of operations to fall below analyst or investor expectations. • Our advertising activity and strategic RaaS offerings may fail to efficiently drive growth in buyers and sellers, which could harm our business, results of operations and financial condition. • We may not be able to expand our distribution center operations, attract and retain personnel to efficiently and effectively manage the operations required to process, itemize, list, sell, pack and ship secondhand and resale items or identify and lease distribution centers in geographic regions that enable us to effectively scale our operations. • Compromises of our data security could cause us to incur unexpected expenses and may materially harm our reputation and results of operations. • The market price of our Class A common stock may be volatile or may decline regardless of our operating performance, and you could lose all or part of your investment. • The dual-class structure of our common stock has the effect of concentrating voting control with those stockholders who held our capital stock prior to our Initial Public Offering (“IPO”), including our directors, executive officers and their respective affiliates.
We believe our ability to compete depends on many factors, many of which are beyond our control, including: • attracting and retaining buyers and sellers and increasing the volume of secondhand items they buy and sell; 11 Table of Contents • further developing our data science and automation capabilities; • maintaining favorable brand recognition; • effectively delivering our marketplaces to buyers and sellers; • identifying and delivering authentic, high-quality secondhand items; • maintaining and increasing the amount, diversity and quality of brands and secondhand items that we offer; • our ability to expand the means through which we acquire and offer secondhand items for resale; • the price at which secondhand items accepted onto our marketplaces are offered; • fluctuations in inventories held by primary sellers and related fluctuations in promotional activities and merchandise discounting; • the speed and cost at which we can process and make available secondhand items and deliver purchased secondhand items to our buyers; and • the ease with which our buyers and sellers can supply, purchase and return secondhand items.
We believe our ability to compete depends on many factors, many of which are beyond our control, including: • cost effectively attracting and retaining buyers and sellers and increasing the volume of secondhand items they buy and sell; 10 Table of Contents • further developing our data science and automation capabilities; • maintaining favorable brand recognition; • effectively delivering our marketplaces to buyers and sellers; • identifying and delivering authentic, high-quality secondhand items; • maintaining and increasing the amount, diversity and quality of brands and secondhand items that we offer; • our ability to expand the means through which we acquire and offer secondhand items for resale; • the price at which secondhand items accepted onto our marketplaces are offered; • fluctuations in inventories held by primary sellers and related fluctuations in promotional activities and merchandise discounting; • the speed and cost at which we can process and make available secondhand items and deliver purchased secondhand items to our buyers; and • the ease with which our buyers and sellers can supply, purchase and return secondhand items.
If we fail to generate a sufficient amount of high-quality and desirable secondhand items, our business, results of operations and financial condition could be harmed. Our success depends on our ability to cost-effectively attract high-quality secondhand items by attracting new sellers and retaining existing sellers, such that they choose thredUP to list their items.
If we fail to attract a sufficient amount of high-quality and desirable secondhand items, our business, results of operations and financial condition could be harmed. Our success depends on our ability to cost-effectively attract high-quality secondhand items by attracting new sellers and retaining existing sellers, such that they choose ThredUp to list their items.
Any failure to implement and maintain effective internal control over financial reporting also could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we will eventually be required to include in our periodic reports that will be filed with the SEC.
Any failure to maintain effective internal control over financial reporting also could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we will eventually be required to include in our periodic reports that will be filed with the SEC.
We store the majority of the secondhand items we offer through our marketplaces in our current distribution centers in Arizona, Georgia, Pennsylvania and Texas. Our distribution centers, as well as our headquarters, are located in areas that have a history of natural disasters, including severe weather events, rendering our distribution centers vulnerable to damage.
We store the majority of the secondhand items we offer through our marketplaces in our current processing and distribution centers in Arizona, Georgia, Pennsylvania and Texas. Our processing and distribution centers, as well as our headquarters, are located in areas that have a history of natural disasters, including severe weather events, rendering our distribution centers vulnerable to damage.
We have experienced, and may continue to experience, rapid growth in certain recent periods, which has placed, and may continue to place, significant demands on our management and our operational and financial resources. Additionally, our organizational structure is becoming more complex as we scale our operational, financial and management controls as well as our reporting systems and procedures.
We have experienced, and may continue to experience, growth in certain recent periods, which has placed, and may continue to place, significant demands on our management and our operational and financial resources. Additionally, our organizational structure is becoming more complex as we scale our operational, financial and management controls as well as our reporting systems and procedures.
We will continue to monitor developments related to the CPRA and anticipate additional costs and expenses associated with CPRA compliance. Additionally, the CCPA has prompted other states, including Virginia, Colorado, Connecticut and Utah to propose and enact similar laws and regulations relating to privacy.
We will continue to monitor developments related to the CCPA and anticipate additional costs and expenses associated with CCPA compliance. Additionally, the CCPA has prompted other states, including Virginia, Colorado, Connecticut and Utah to propose and enact similar laws and regulations relating to privacy.
Our business and financial condition could be adversely affected by unfavorable changes in or interpretations of existing laws, rules and regulations or the promulgation of new laws, rules and regulations applicable to us and our business, including those relating to the internet and e-commerce, such as geo-blocking and other geographically based restrictions, internet advertising and price display, consumer protection, anti-corruption, antitrust and competition, economic and trade sanctions, tax, banking, data security, network and information systems security, data protection, privacy and escheatment.
Our business and financial condition could be adversely affected by unfavorable changes in or interpretations of existing laws, rules and regulations or the promulgation of new laws, rules and regulations applicable to us and our business, including those relating to the internet and e-commerce, such as geo-blocking and other geographically based restrictions, internet advertising and price display, consumer protection, anti-corruption, antitrust and competition, economic and trade sanctions, tax, banking, data security, network and information systems security, data protection, privacy and escheatment and unclaimed property.
This ownership will limit or preclude your ability to influence corporate matters, including the election of directors, amendments of our organizational documents, and any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transactions requiring stockholder approval, and that may depress the trading price of our Class A common stock. 9 Table of Contents Risks Relating to Our Business and Industry Our continued growth depends on attracting new, and retaining existing, buyers.
This ownership will limit or preclude your ability to influence corporate matters, including the election of directors, amendments of our organizational documents, and any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transactions requiring stockholder approval, and that may depress the trading price of our Class A common stock. 8 Table of Contents Risks Relating to Our Business and Industry Our continued growth depends on attracting new, and retaining existing, buyers.
The successful assertion of one or more large claims against us that exceed available insurance coverage or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could harm our business, results of operations, financial condition and reputation. 24 Table of Contents Our use and other processing of personal information and other data is subject to laws and regulations relating to privacy, data protection and information security.
The successful assertion of one or more large claims against us that exceed available insurance coverage or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could harm our business, results of operations, financial condition and reputation. 22 Table of Contents Our use and other processing of personal information and other data is subject to laws and regulations relating to privacy, data protection and information security.
If we need additional capital and cannot raise it on acceptable terms, or at all, we may not be able to, among other things: • develop our marketplace services; • expand our categories of secondhand and resale goods; • enhance our operating infrastructure; and 36 Table of Contents • expand the markets in which we operate and potentially acquire complementary businesses and technologies.
If we need additional capital and cannot raise it on acceptable terms, or at all, we may not be able to, among other things: • develop our marketplace services; 33 Table of Contents • expand our categories of secondhand and resale goods; • enhance our operating infrastructure; and • expand the markets in which we operate and potentially acquire complementary businesses and technologies.
In that event, the market price of our Class A common stock could decline, and you could lose part or all of your investment. 8 Table of Contents Risk Factor Summary Our business is subject to numerous risks and uncertainties, including those highlighted in this section titled “Risk Factors” and summarized below.
In that event, the market price of our Class A common stock could decline, and you could lose part or all of your investment. 7 Table of Contents Risk Factor Summary Our business is subject to numerous risks and uncertainties, including those highlighted in this section titled “Risk Factors” and summarized below.
These risks include, but are not limited to, the following: • Our continued growth depends on attracting new, and retaining existing, buyers. • If we fail to generate a sufficient amount of high-quality and desirable secondhand items, our business, results of operations and financial condition could be harmed. • Our business, including our costs and supply of secondhand items, is subject to risks associated with sourcing, itemizing, warehousing and shipping. • We have experienced rapid growth in many of our recent periods and those growth rates may not be indicative of our future growth.
These risks include, but are not limited to, the following: • Our continued growth depends on attracting new, and retaining existing, buyers. • If we fail to attract a sufficient amount of high-quality and desirable secondhand items, our business, results of operations and financial condition could be harmed. • Our business, including our costs and supply of secondhand items, is subject to risks associated with sourcing, itemizing, warehousing and shipping. • We have experienced growth in many of our recent periods and those growth rates may not be indicative of our future growth.
Our quarterly results of operations have in the past and may in the future fluctuate from quarter to quarter as a result of a number of factors, many of which are outside of our control and may be difficult to predict, including, but not limited to: • the level of supply and demand for secondhand items; • fluctuations in the levels or quality of secondhand items on our marketplaces; • fluctuations in capacity as we expand our operations; • our success in engaging existing buyers and sellers and attracting new buyers and sellers; • our ability to meet the expectations of sellers that we will process their Clean Out Kits in a timely manner; • the amount and timing of our operating expenses; 14 Table of Contents • the timing of expenses and recognition of revenue; • the timing and success of new partnerships, RaaS relationships, retail offerings and referral programs; • the impact of competitive developments and our response to those developments; • our ability to manage our existing business and future growth; • actual or reported disruptions or defects in our online marketplace, such as actual or perceived privacy or data security breaches; • economic and market conditions, particularly those affecting our industry; • fluctuations in inventories held by primary sellers and related fluctuations in promotional activities and merchandise discounting; • our ability to effectively manage our international operations; • the impact of market volatility and economic downturns, including those caused by outbreaks of disease, such as the COVID-19 pandemic, on our business; • adverse litigation judgments, other dispute-related settlement payments or other litigation-related costs; • regulatory fines; • changes in, and continuing uncertainty in relation to, the legislative or regulatory environment; • legal and regulatory compliance costs; • the number of new employees and professional contractors added; • the timing of the grant or vesting of equity awards to employees, directors, contractors or consultants; • pricing pressure as a result of competition, economic conditions, shipment delays or otherwise, including as a result of the effects of the COVID-19 pandemic; • costs and timing of expenses related to the acquisition of talent, technologies, intellectual property or businesses, including potentially significant amortization costs and possible write-downs; • public health crises, including the COVID-19 pandemic; and • general economic conditions throughout the world, including the inflation and interest rate environment, military conflicts, including Russia’s invasion of Ukraine, and geopolitical uncertainty and instability.
Our quarterly results of operations have in the past and may in the future fluctuate from quarter to quarter as a result of a number of factors, many of which are outside of our control and may be difficult to predict, including, but not limited to: • the level of supply and demand for secondhand items; • fluctuations in the levels or quality of secondhand items on our marketplaces; • fluctuations in capacity as we expand our operations; • our success in engaging existing buyers and sellers and cost effectively attracting new buyers and sellers; • our ability to meet the expectations of sellers that we will process their Clean Out Kits in a timely manner; • the amount and timing of our operating expenses; • the timing of expenses and recognition of revenue; • the timing and success of new partnerships, RaaS relationships, retail offerings and referral programs; • the impact of competitive developments and our response to those developments; • our ability to manage our existing business and future growth; 13 Table of Contents • actual or reported disruptions or defects in our online marketplace, such as actual or perceived privacy or data security breaches; • economic and market conditions, particularly those affecting our industry; • fluctuations in inventories held by primary sellers and related fluctuations in promotional activities and merchandise discounting; • our ability to effectively manage our international operations; • the impact of market volatility and economic downturns, including those caused by outbreaks of disease, such as the COVID-19 pandemic, on our business; • adverse litigation judgments, other dispute-related settlement payments or other litigation-related costs; • regulatory fines; • changes in, and continuing uncertainty in relation to, the legislative or regulatory environment; • legal and regulatory compliance costs; • the number of new employees and professional contractors added; • the timing of the grant or vesting of equity awards to employees, directors, contractors or consultants; • pricing pressure as a result of competition, economic conditions, shipment delays or otherwise; • costs and timing of expenses related to the acquisition of talent, technologies, intellectual property or businesses, including potentially significant amortization costs and possible write-downs; • public health crises, including the COVID-19 pandemic; and • general economic conditions throughout the world, including the inflation and interest rate environment, military conflicts, including Russia’s invasion of Ukraine, the Israel-Hamas war, other conflicts in the Middle East, and geopolitical uncertainty and instability.
General accepted accounting principles (“GAAP”) is subject to interpretation by the Financial Accounting Standards Board, the SEC and various bodies formed to promulgate and interpret appropriate accounting principles. A change in these principles or interpretations could have a significant effect on our reported financial results and could affect the reporting of transactions completed before the announcement of a change.
Generally accepted accounting principles (“GAAP”) is subject to interpretation by the Financial Accounting Standards Board, the SEC and various bodies formed to promulgate and interpret appropriate accounting principles. A change in these principles or interpretations could have a significant effect on our reported financial results and could affect the reporting of transactions completed before the announcement of a change.
If we fail to manage our anticipated growth and change in a manner that preserves the key aspects of our corporate culture, our employee morale, productivity and retention could suffer, which could negatively affect our brand and reputation and harm our ability to attract new buyers and sellers and to grow our business.
If we fail to manage our anticipated growth and change in a manner that preserves the key aspects of our corporate culture, our employee morale, productivity and retention could suffer, which could negatively affect our brand and reputation and harm our ability to cost effectively attract new buyers and sellers and to grow our business.
Such potential risks and constraints on the supply of items to sell on our Remix platform could lead to our business, results of operations and financial condition being harmed. 10 Table of Contents Our business, including our costs and supply of secondhand items, is subject to risks associated with sourcing, itemizing, warehousing and shipping.
Such potential risks and constraints on the supply of items to sell on our Remix platform could lead to our business, results of operations and financial condition being harmed. 9 Table of Contents Our business, including our costs and supply of secondhand items, is subject to risks associated with sourcing, itemizing, warehousing and shipping.
Such a stock price decline could occur even when we have met any previously publicly stated revenue or earnings forecasts that we may provide. 38 Table of Contents The dual-class structure of our common stock has the effect of concentrating voting control with those stockholders who held our capital stock prior to our IPO, including our directors, executive officers and their respective affiliates.
Such a stock price decline could occur even when we have met any previously publicly stated revenue or earnings forecasts that we may provide. The dual-class structure of our common stock has the effect of concentrating voting control with those stockholders who held our capital stock prior to our IPO, including our directors, executive officers and their respective affiliates.
Further, additional weaknesses in our disclosure controls and internal control over financial reporting may be discovered in the future.
Further, weaknesses in our disclosure controls and internal control over financial reporting may be discovered in the future.
We are party to an amended and restated loan and security agreement with Western Alliance Bank, which contains a number of covenants that restrict our and our subsidiaries’ ability to, among other things, incur additional indebtedness, materially change our business, convey, sell, lease, transfer or dispose of the business or our property, except under certain circumstances, merge or consolidate with other companies or acquire other companies, create or incur liens, pay any dividends on our Class A common stock, make certain investments and engage in certain other activities.
We are party to an amended and restated loan and security agreement with Western Alliance Bank, which was amended on December 14, 2023, which contains a number of covenants that restrict our and our subsidiaries’ ability to, among other things, incur additional indebtedness, materially change our business, convey, sell, lease, transfer or dispose of the business or our property, except under certain circumstances, merge or consolidate with other companies or acquire other companies, create or incur liens, pay any dividends on our Class A common stock, make certain investments and engage in certain other activities.
If we are unable to successfully leverage technology to automate and drive efficiencies in our operations, our business, results of operations and financial condition could be harmed. We are continuing to build automation, machine learning and other capabilities to drive efficiencies in our distribution center operations.
If we are unable to successfully leverage technology to automate and drive efficiencies in our operations, our business, results of operations and financial condition could be harmed. We are continuing to build automation, artificial intelligence, machine learning and other capabilities to drive efficiencies in our distribution center operations.
As litigation is inherently unpredictable, we cannot assure you that any potential claims or disputes will not harm our business, results of operations and financial condition. We are subject to anti-corruption, anti-bribery and similar laws, and non-compliance with such laws can subject us to criminal penalties or significant fines and harm our business and reputation.
As litigation is inherently unpredictable, we cannot assure you that any potential claims or disputes will not harm our business, results of operations and financial condition. 29 Table of Contents We are subject to anti-corruption, anti-bribery and similar laws, and non-compliance with such laws can subject us to criminal penalties or significant fines and harm our business and reputation.
There can be no assurance that any patents we obtain will adequately protect our inventions or survive a legal challenge, as the legal standards relating to the validity, enforceability and scope of protection of patent and other intellectual property rights are uncertain. We rely on trademark and trade dress to protect our brand.
There can be no assurance that any patents we obtain will adequately protect our inventions or survive a legal challenge, as the legal standards relating to the validity, enforceability and scope of protection of patent and other intellectual property rights are uncertain. 25 Table of Contents We rely on trademark and trade dress to protect our brand.
These risks associated with usage of open source software, such as the lack of warranties or assurances of title, cannot be eliminated, and could, if not properly addressed, negatively affect our business and results of operations. We rely on software, services and technology from other parties.
These risks associated with usage of open source software, such as the lack of warranties or assurances of title, cannot be eliminated, and could, if not properly addressed, negatively affect our business and results of operations. 26 Table of Contents We rely on software, services and technology from other parties.
System interruption and the lack of integration, redundancy and scalability in these systems and infrastructures may harm our business, results of operations and financial condition. 29 Table of Contents Our success depends, in part, on our ability to maintain the integrity of our systems and infrastructure, including our website and mobile app, information and related systems.
System interruption and the lack of integration, redundancy and scalability in these systems and infrastructures may harm our business, results of operations and financial condition. Our success depends, in part, on our ability to maintain the integrity of our systems and infrastructure, including our website and mobile app, information and related systems.
We use open source software in our marketplaces, which could negatively affect our ability to operate our business and subject us to litigation or other actions. 28 Table of Contents We use open source software to facilitate the development and operation of our marketplaces, including our website and mobile application, and may use more open source software in the future.
We use open source software in our marketplaces, which could negatively affect our ability to operate our business and subject us to litigation or other actions. We use open source software to facilitate the development and operation of our marketplaces, including our website and mobile application, and may use more open source software in the future.
Any failure to meet and address these factors could harm our business, results of operations and financial condition. 12 Table of Contents We have experienced rapid growth in many of our recent periods and those growth rates may not be indicative of our future growth.
Any failure to meet and address these factors could harm our business, results of operations and financial condition. 11 Table of Contents We have experienced growth in many of our recent periods and those growth rates may not be indicative of our future growth.
The market price of our Class A common stock has, and may in the future, fluctuate significantly in response to numerous factors, many of which are beyond our control, including: • overall performance of the equity markets and/or publicly-listed technology and retail companies; • actual or anticipated fluctuations in our revenue or other operating metrics; • our actual or anticipated operating performance and the operating performance of our competitors; • changes in the financial projections we provide to the public or our failure to meet those projections; 37 Table of Contents • failure of securities analysts to initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company or our failure to meet the estimates or the expectations of investors; • the international economy as a whole and market conditions in our industry; • adverse economic and market conditions, including declines in consumer discretionary spending, currency fluctuations, inflation and geopolitical instability; • rumors and market speculation involving us or other companies in our industry; • announcements by us or our competitors of significant innovations, new services, features or capabilities, acquisitions, strategic partnerships or investments, joint ventures or capital commitments; • new laws or regulations or new interpretations of existing laws or regulations applicable to our business, including those related to data privacy and cyber security; • actual or perceived data privacy and cybersecurity incidents impacting us or others in our industry; • lawsuits threatened or filed against us; • any major change in our board of directors, management or key personnel; • costs and timing of expenses related to the acquisition of businesses, talent, technologies or intellectual property, including potentially significant amortization costs and possible write-downs; • other events or factors, including those resulting from war (including Russia’s invasion of Ukraine), incidents of terrorism, pandemics (including the COVID-19 pandemic), elections or responses to these events; • 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; and • sales of additional shares of our Class A common stock by us or our stockholders.
The market price of our Class A common stock has, and may in the future, fluctuate significantly in response to numerous factors, many of which are beyond our control, including: • overall performance of the equity markets and/or publicly-listed technology and retail companies; • actual or anticipated fluctuations in our revenue or other operating metrics; • our actual or anticipated operating performance and the operating performance of our competitors; • changes in the financial projections we provide to the public or our failure to meet those projections; • failure of securities analysts to initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company or our failure to meet the estimates or the expectations of investors; • the international economy as a whole and market conditions in our industry; • adverse economic and market conditions, including declines in consumer discretionary spending, currency fluctuations, inflation and geopolitical instability; • rumors and market speculation involving us or other companies in our industry; • announcements by us or our competitors of significant innovations, new services, features or capabilities, acquisitions, strategic partnerships or investments, joint ventures or capital commitments; • new laws or regulations or new interpretations of existing laws or regulations applicable to our business, including those related to data privacy and cyber security; • actual or perceived data privacy and cybersecurity incidents impacting us or others in our industry; • lawsuits threatened or filed against us; • any major change in our board of directors, management or key personnel; • costs and timing of expenses related to the acquisition of businesses, talent, technologies or intellectual property, including potentially significant amortization costs and possible write-downs; • other events or factors, including those resulting from war (including Russia’s invasion of Ukraine , the Israel-Hamas war and other conflicts in the Middle East), incidents of terrorism, pandemics (including the COVID-19 pandemic), elections or responses to these events; • 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; and • sales of additional shares of our Class A common stock by us or our stockholders. 35 Table of Contents In addition, stock markets have experienced price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies.
Our NOLs may also be subject to limitations under state law. 35 Table of Contents We are an emerging growth company and a smaller reporting company, and any decision on our part to comply only with certain reduced reporting and disclosure requirements applicable to emerging growth companies could make our Class A common stock less attractive to investors.
Our NOLs may also be subject to limitations under state law. We are an emerging growth company and a smaller reporting company, and any decision on our part to comply only with certain reduced reporting and disclosure requirements applicable to emerging growth companies and smaller reporting companies could make our Class A common stock less attractive to investors.
While we were in compliance with our debt covenants as of December 31, 2022, we may not be able to maintain compliance with the covenants in the future.
While we were in compliance with our debt covenants as of December 31, 2023, we may not be able to maintain compliance with the covenants in the future.
Many of our senior personnel and other key personnel have become, or will soon become, vested in a substantial amount of stock, stock options or restricted stock units (RSUs).
Many of our senior personnel and other key personnel have become, or will soon become, vested in a substantial amount of stock, stock options or RSUs.
While the Company has experienced an ownership change since its inception, an immaterial amount of NOLs has been limited as of December 31, 2022.
While the Company has experienced an ownership change since its inception, an immaterial amount of NOLs has been limited as of December 31, 2023.
Such competitors with greater financial and operating resources may be able to respond more quickly and effectively than we can to new or changing opportunities, technologies, standards or customer requirements and derive greater revenue and profits from their existing buyer bases, adopt more aggressive pricing policies to build larger buyer or seller bases, or respond more quickly than we can to new or emerging technologies and changes in consumer shopping behavior.
Such competitors with greater financial and operating resources may be able to respond more quickly and effectively than we can to new or changing opportunities, technologies, standards or customer requirements and derive greater revenue and profits from their existing buyer bases, adopt more aggressive pricing policies to build larger buyer or seller bases, or respond more quickly than we can to new or emerging technologies, such as artificial intelligence and machine learning and changes in consumer shopping behavior.
Any claim against us, regardless of its merit, could be costly, divert management’s attention and operational resources, and harm our reputation. 32 Table of Contents Our directors and executive officers may also be subject to litigation.
Any claim against us, regardless of its merit, could be costly, divert management’s attention and operational resources, and harm our reputation. Our directors and executive officers may also be subject to litigation.
Our amended and restated certificate of incorporation and amended and restated bylaws include provisions that: • provide that our board of directors is classified into three classes of directors with staggered three-year terms; • permit our board of directors to establish the number of directors and fill any vacancies and newly-created directorships; • require super-majority voting to amend some provisions in our amended and restated certificate of incorporation and amended and restated bylaws; • authorize the issuance of “blank check” preferred stock that our board of directors could use to implement a stockholder rights plan; • provide that only the Chairperson of our board of directors, our Chief Executive Officer, President or a majority of our board of directors is authorized to call a special meeting of stockholders; • provide for a dual-class common stock structure in which holders of our Class B common stock have the ability to control the outcome of matters requiring stockholder approval, even if they own significantly less than a majority of the outstanding shares of our Class A and Class B common stock, including the election of directors and significant corporate transactions, such as a merger or other sale of our company or its assets; • prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders; • provide that the board of directors is expressly authorized to approve, alter or repeal our bylaws; and • advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings.
Our amended and restated certificate of incorporation and amended and restated bylaws include provisions that: • provide that our board of directors is classified into three classes of directors with staggered three-year terms; • permit our board of directors to establish the number of directors and fill any vacancies and newly-created directorships; • require super-majority voting to amend some provisions in our amended and restated certificate of incorporation and amended and restated bylaws; • authorize the issuance of “blank check” preferred stock that our board of directors could use to implement a stockholder rights plan; • provide that only the Chairperson of our board of directors, our Chief Executive Officer, President or a majority of our board of directors is authorized to call a special meeting of stockholders; • provide for a dual-class common stock structure in which holders of our Class B common stock have the ability to control the outcome of matters requiring stockholder approval, even if they own significantly less than a majority of the outstanding shares of our Class A and Class B common stock, including the election of directors and significant corporate transactions, such as a merger or other sale of our company or its assets; • prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders; • provide that the board of directors is expressly authorized to approve, alter or repeal our bylaws; and • advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings. 38 Table of Contents Moreover, Section 203 of the Delaware General Corporation Law may discourage, delay or prevent a change in control of our company.
Continued increases in interest rates will increase the cost of servicing our outstanding indebtedness as well as the cost of any new indebtedness we may incur, including as a result of any future refinancings, and could negatively impact our business, results of operations and financial condition.
Continued or sustained increases in interest rates will increase the cost of servicing our outstanding indebtedness as well as the cost of any new indebtedness we may incur, including as a result of any future refinancing, and could negatively impact our business, results of operations and financial condition.
The GDPR requires companies to meet stringent requirements regarding the handling of personal data of individuals in the relevant jurisdictions. The GDPR provides for substantial penalties for non-compliance, which may result in monetary penalties of up to 20 million Euros or 4% of a company’s worldwide turnover, whichever is greater.
The GDPR requires companies to meet stringent requirements regarding the handling, protection, and cross-border transfers of personal data of individuals in the relevant jurisdictions. The GDPR provides for substantial penalties for non-compliance, which may result in monetary penalties of up to 20 million Euros or 4% of a company’s worldwide turnover, whichever is greater.
We cannot predict if investors will find our Class A common stock less attractive if we choose to rely on the exemptions afforded emerging growth companies.
We cannot predict if investors will find our Class A common stock less attractive if we choose to rely on the exemptions afforded emerging growth companies and smaller reporting companies.
We have experienced a reduction in our revenue in the past due to reductions and fluctuations in the price of new retail items sold by national retailers and brands, and we anticipate similar reductions and fluctuations could occur in the future, such as due to a decrease in the price of new retail items in light of economic downturns, including in response to pandemics, such as the COVID-19 pandemic, macroeconomic uncertainty, inflation or other geopolitical instability.
We have experienced a reduction in our revenue in the past due to reductions and fluctuations in the price of new retail items sold by national retailers and brands, and we anticipate similar reductions and fluctuations could occur in the future, such as due to a decrease in the price of new retail items in light of economic downturns, macroeconomic uncertainty, inflation or other geopolitical instability.
We believe our success and revenue growth depends on a number of factors, including, but not limited to, our ability to: • attract and retain new and existing buyers and sellers and grow our supply of high-quality secondhand items for resale through our marketplaces; • scale our revenue and achieve the operating efficiencies necessary to achieve and maintain profitability; • increase buyer and seller awareness of our brand; • anticipate and respond to changing buyer and seller preferences; • manage and improve our business processes in response to changing business needs; • process Clean Out Kits from sellers on a timely basis; • improve, expand and further automate our distribution center operations and information systems; • anticipate and respond to macroeconomic changes generally, including changes in the markets for both new and secondhand retail items; • successfully compete against established companies and new market entrants, including national retailers and brands and traditional brick-and-mortar thrift stores; • effectively scale our operations while maintaining high-quality service and buyer and seller satisfaction; • hire and retain talented employees and professional contractors at all levels of our business; • avoid or manage interruptions in our business from information technology downtime, cybersecurity breaches and other factors that could affect our physical and digital infrastructure; • fulfill and deliver Orders in a timely manner and in accordance with customer expectations, which may change over time; • maintain a high level of customer service and satisfaction; • adapt to changing conditions in our industry and related to the COVID-19 pandemic and measures implemented to manage its spread; and • comply with regulations applicable to our business. 13 Table of Contents If we are unable to accomplish any of these tasks, our revenue growth will be harmed.
We believe our success and revenue growth depends on a number of factors, including, but not limited to, our ability to: • cost effectively attract and retain new and existing buyers and sellers and grow our supply of high-quality secondhand items for resale through our marketplaces; • scale our revenue and achieve the operating efficiencies necessary to achieve and maintain profitability; • increase buyer and seller awareness of our brand; • anticipate and respond to changing buyer and seller preferences; • manage and improve our business processes in response to changing business needs; • process Clean Out Kits from sellers on a timely basis; • improve, expand and further automate our distribution center operations and information systems; • anticipate and respond to macroeconomic changes generally, including changes in the markets for both new and secondhand retail items; • successfully compete against established companies and new market entrants, including national retailers and brands and traditional brick-and-mortar thrift stores; • effectively scale our operations while maintaining high-quality service and buyer and seller satisfaction; • hire and retain talented employees and professional contractors at all levels of our business; • avoid or manage interruptions in our business from information technology downtime, cybersecurity breaches and other factors that could affect our physical and digital infrastructure; • fulfill and deliver Orders in a timely manner and in accordance with customer expectations, which may change over time; • maintain a high level of customer service and satisfaction; • adapt to changing conditions in our industry ; and • comply with regulations applicable to our business.
As a result, the market price of our Class A common stock could be adversely affected. 39 Table of Contents If securities or industry analysts do not publish or cease publishing research, or publish inaccurate or unfavorable research, about our business, the market price of our Class A common stock and trading volume could be adversely affected.
If securities or industry analysts do not publish or cease publishing research, or publish inaccurate or unfavorable research, about our business, the market price of our Class A common stock and trading volume could be adversely affected.
Space in well-positioned geographic locations is becoming increasingly scarce, and where it is available, the lease terms offered by landlords are increasingly competitive, particularly in geographic locations with access to the large, qualified talent pools required for us to run our logistics infrastructure.
Space in well-positioned geographic locations has in the past, and may in the future be scarce, and where it is available, the lease terms offered by landlords are increasingly competitive, particularly in geographic locations with access to the large, qualified talent pools required for us to run our logistics infrastructure.
With many of our employees and contractors now working remotely, and as our vendors and other business partners have also moved to permanent or hybrid remote work, we and our vendors may be more vulnerable to cyberattacks.
With some of our employees and contractors now working remotely or on a hybrid schedule, and as our vendors and other business partners have also moved to permanent or hybrid remote work, we and our vendors may be more vulnerable to cyberattacks.
Weak or volatile economic conditions in the global economy or individual markets, including due to the COVID-19 pandemic, changes in gross domestic product growth, financial and credit market fluctuations, inflation, labor shortages, political turmoil, natural catastrophes, warfare and terrorist attacks on the United States and in the European region or elsewhere, and other events outside of our control could cause customers and prospective customers to reduce spending, and demand for our offerings may decline.
Weak or volatile economic conditions in the global economy or individual markets, changes in gross domestic product growth, financial and credit market fluctuations, inflation, labor shortages, political turmoil, natural catastrophes, warfare and terrorist attacks on the United States and in the European region or elsewhere, including the Israel-Hamas war and other conflicts in the Middle East, and other events outside of our control could cause customers and prospective customers to reduce spending, and demand for our offerings may decline.
As of December 31, 2022, the holders of shares of our Class B common stock collectively owned shares representing approximately 81.3% of the voting power of our outstanding capital stock, and our directors, executive officers and their affiliates beneficially owned in the aggregate 83.1% of the voting power of our capital stock.
As of December 31, 2023, the holders of shares of our Class B common stock collectively owned shares representing approximately 79.2% of the voting power of our outstanding capital stock, and our directors, executive officers and their affiliates beneficially owned in the aggregate 81.1% of the voting power of our capital stock.
Given the sustained flow of investment funds into passive strategies that seek to track certain indices, exclusion from certain stock indices would likely preclude investment by many of these funds and could make our Class A common stock less attractive to other investors.
Given the sustained flow of investment funds into passive strategies that seek to track certain indices, exclusion from certain stock indices would likely preclude investment by many of these funds and could make our Class A common stock less attractive to other investors. As a result, the market price of our Class A common stock could be adversely affected.
Some of the factors that may negatively influence consumer spending on retail items include economic downturns, high levels of unemployment, high consumer debt levels, reductions in net worth, declines in asset values, home foreclosures and reductions in home values, fluctuating interest rates and credit availability, inflation, fluctuating fuel and other energy costs, fluctuating commodity prices and general uncertainty regarding the overall future political and economic environment.
Some of the factors that may negatively influence consumer spending on retail items include economic downturns, high levels of unemployment, high consumer debt levels, reductions in net worth, declines in asset values, home foreclosures and reductions in home values, higher interest rates, limited credit availability, inflation, resumption of federal student loan payments, higher fuel and other energy costs, increased costs of logistics, higher commodity prices and general uncertainty regarding the overall future political and economic environment.
Aspects of these state privacy laws, and their interpretation, remain unclear, and we cannot yet fully predict the impact of these laws or regulations on our business or operations. Further, as our operations expand internationally, including in connection with the Remix Acquisition, we may become subject to additional laws and regulations relating to privacy and data protection.
Aspects of these state privacy laws, and their interpretation, remain unclear, and we cannot yet fully predict the impact of these laws or regulations on our business or operations. Further, as our operations expand internationally, including as a result of acquisitions, we may become subject to additional laws and regulations relating to privacy and data protection.
Our revenue was $288.4 million, $251.8 million and $186.0 million for the years ended December 31, 2022, 2021, and 2020, respectively, representing annual growth of 15% and 35%, respectively. In future periods, we may not be able to sustain or increase revenue growth rates consistent with recent history, or at all.
Our revenue was $322.0 million and $288.4 million for the years ended December 31, 2023 and 2022, respectively, representing annual growth of 12% and 15%, respectively. In future periods, we may not be able to sustain or increase revenue growth rates consistent with recent history, or at all.
We currently rely on both national and regional vendors for our shipping of purchases to buyers and the shipping of supplied secondhand items by sellers.
We currently rely on both national and regional vendors for our shipping of purchases to buyers, the shipping of supplied secondhand items by sellers and the shipping of items between our distribution centers to consolidate orders.
Economic conditions in particular regions may also be affected by natural disasters, such as earthquakes, hurricanes and wildfires; unforeseen public health crises, such as pandemics and epidemics, including the COVID-19 pandemic, political crises, such as Russia’s invasion of Ukraine, terrorist attacks, war and other incidents of political instability or other catastrophic events, whether occurring in the United States or internationally.
Economic conditions in particular regions may also be affected by natural disasters, such as earthquakes, extreme weather events and wildfires; unforeseen public health crises, such as pandemics and epidemics, including the COVID-19 pandemic; political crises, such as a government shutdown, terrorist attacks, war and other incidents of political instability, such as Russia’s invasion of Ukraine, and the Israel-Hamas war and other conflicts in the Middle East or other catastrophic events, whether occurring in the United States or internationally.
We are an emerging growth company and a smaller reporting company, and, for as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to “emerging growth companies,” including: • not being required to have our independent registered public accounting firm audit our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act; • reduced disclosure obligations regarding executive compensation in our periodic reports and annual report on Form 10-K; and • exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”) and, for as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to “emerging growth companies,” including: • not being required to have our independent registered public accounting firm audit our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act; • reduced disclosure obligations regarding executive compensation in our periodic reports and annual report on Form 10-K; and • exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. 32 Table of Contents We could be an emerging growth company for up to five years following the completion of the IPO.
In addition, our amended and restated bylaws provide that any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock is deemed to have notice of and consented to the Delaware Forum Provision and the Federal Forum Provision; provided, however, that stockholders cannot and will not be deemed to have waived our compliance with the United States federal securities laws and the rules and regulations thereunder. 41 Table of Contents The Delaware Forum Provision and the Federal Forum Provision in our amended and restated bylaws may impose additional litigation costs on stockholders in pursuing any such claims.
In addition, our amended and restated bylaws provide that any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock is deemed to have notice of and consented to the Delaware Forum Provision and the Federal Forum Provision; provided, however, that stockholders cannot and will not be deemed to have waived our compliance with the United States federal securities laws and the rules and regulations thereunder.
Travel Act, the USA PATRIOT Act, and are subject to similar anti-corruption and anti-bribery laws to the extent of the international expansion of our operations.
Travel Act, the USA PATRIOT Act, and are subject to similar anti-corruption and anti-bribery laws to the extent of the international expansion of our operations, such as our European operations in Bulgaria.
We also expect our operating expenses to increase in future periods, and if our revenue growth does not increase to offset these anticipated increases in our operating expenses, our business, results of operations and financial condition will be harmed, and we may not be able to achieve or maintain profitability.
We also expect our operating expenses to increase in future periods, and if our revenue growth does not increase to offset these anticipated increases in our operating expenses, our business, results of operations and financial condition will be harmed, and we may not be able to achieve or maintain profitability. 12 Table of Contents We have a history of losses and we anticipate increasing operating expenses in the future.
For buyers, maintaining our brand and reputation requires that we foster trust through timely and reliable fulfillment of orders, responsive and effective customer service, a broad supply of desirable brands and secondhand items and an exciting and user-friendly interface on our marketplaces and through our RaaS relationships.
An important goal of our brand promotion strategy is establishing trust with our buyers and sellers. 19 Table of Contents For buyers, maintaining our brand and reputation requires that we foster trust through timely and reliable fulfillment of orders, responsive and effective customer service, a broad supply of desirable brands and secondhand items and an exciting and user-friendly interface on our marketplaces and through our RaaS relationships.
Moreover, because of these fluctuations, comparing our results of operations on a period-to-period basis may not be meaningful. You should not rely on our past results as an indication of our future performance. This variability and unpredictability could also result in our failing to meet the expectations of industry or financial analysts or investors for any period.
You should not rely on our past results as an indication of our future performance. This variability and unpredictability could also result in our failing to meet the expectations of industry or financial analysts or investors for any period.
Further, as some of our contractors are information technology specialists in Ukraine, political turmoil, warfare, or terrorist attacks in Ukraine could negatively affect our contractors and our business. 42 Table of Contents Our international operations may subject us to exchange rate fluctuations and other currency risks.
Further, as some of our contractors are information technology specialists in Ukraine, political turmoil, warfare, or terrorist attacks in Ukraine could negatively affect our contractors and our business. Our international operations may subject us to exchange rate fluctuations and other currency risks. Assets, liabilities, revenues and related expenses of our international operations are denominated in foreign currencies.
For example, the California Consumer Privacy Act (the “CCPA”) took effect on January 1, 2020 and broadly defines personal information, imposes stringent consumer data protection requirements, gives California residents expanded privacy rights, provides for civil penalties for violations and introduces a private right of action for data breaches.
For example, the California Consumer Privacy Act of 2018 as amended by the California Privacy Rights Act (the “CCPA”) broadly defines personal information, imposes stringent consumer data protection requirements, gives California residents expanded privacy rights, provides for civil penalties for violations and introduces a private right of action for certain data breaches.
We could also be subject to fines or other penalties that could harm our business. 31 Table of Contents Additionally, supplied secondhand items could be subject to recalls and other remedial actions and product safety, labeling and licensing concerns may require us to voluntarily remove selected secondhand items from our marketplaces.
These regulations could result in increased costs or reduced revenue. We could also be subject to fines or other penalties that could harm our business. Additionally, supplied secondhand items could be subject to recalls and other remedial actions and product safety, labeling and licensing concerns may require us to voluntarily remove selected secondhand items from our marketplaces.
Conditions in our market could also change rapidly and significantly as a result of technological advancements, partnering by our competitors or continuing market consolidation or strategic changes we or our competitors make in response to the COVID-19 pandemic, and it is uncertain how our market will evolve.
Conditions in our market could also change rapidly and significantly as a result of technological advancements, partnering by our competitors or continuing market consolidation, and it is uncertain how our market will evolve.
Those enactments could harm our business operations, and our business, results of operations and financial condition. Further, application of income and tax laws is subject to interpretation and existing tax laws, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to us.
Further, application of income and tax laws is subject to interpretation and existing tax laws, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to us.
From time to time, there have been claims challenging both the use of open source software against companies that incorporate open source software into their products and whether such use is permissible under various open source licenses.
Some open source software may include generative artificial intelligence software or other software that incorporates or relies on generative artificial intelligence. From time to time, there have been claims challenging both the use of open source software against companies that incorporate open source software into their products and whether such use is permissible under various open source licenses.
Assets, liabilities, revenues and related expenses of our international operations are denominated in foreign currencies. Exchange rate fluctuations between a local currency and the U.S. dollar may negatively impact the financial conditions and operating results of our international operations when converted into U.S. dollars.
Exchange rate fluctuations between a local currency and the U.S. dollar may negatively impact the financial conditions and operating results of our international operations when converted into U.S. dollars.
In the event that we suffer a catastrophic loss of any or all of our distribution centers and the secondhand items in such facilities, our liabilities may exceed the maximum insurance coverage amount, which would harm our business and results of operations. 18 Table of Contents Shipping is a critical part of our business and any changes in our shipping arrangements or any interruptions in shipping could harm our business, results of operations and financial condition.
In the event that we suffer a catastrophic loss of any or all of our distribution centers and the secondhand items in such facilities, our liabilities may exceed the maximum insurance coverage amount, which would harm our business and results of operations.
Our advertising activities may not yield increased revenue and the efficacy of these activities will depend on a number of factors, including our ability to: • determine the effective creative message and media mix for advertising, marketing and promotional expenditures; • select the right markets, media and specific media vehicles in which to advertise; • identify the most effective and efficient level of spending in each market, media and specific media vehicle; and • effectively manage marketing costs, including creative and media expenses, to maintain acceptable buyer and seller acquisition costs.
Our advertising activities may not yield increased revenue and the efficacy of these activities will depend on a number of factors, including our ability to: • determine the effective creative message and media mix for advertising, marketing and promotional expenditures; • select the right markets, media and specific media vehicles in which to advertise; • identify the most effective and efficient level of spending in each market, media and specific media vehicle; and • effectively manage marketing costs, including creative and media expenses, to maintain acceptable buyer and seller acquisition costs. 14 Table of Contents We closely monitor the effectiveness of our advertising campaigns and changes in the advertising market, and adjust or re-allocate our advertising spend across channels, customer segments and geographic markets in real-time to optimize the effectiveness of these activities.
In May 2022, partly as a result of rising costs, we announced a price increase in standard shipping fees for our customers. In the future, however, we may not be able to pass such increases on to our customers.
In May 2022, partly as a result of rising costs, we announced a price increase in standard shipping fees for our customers. In the future, however, we may not be able to pass such increases on to our customers. Greater than expected item return rates have, and in the future could have, a negative impact on our revenue.
The imposition by state and local taxing authorities of sales tax collection obligations on out-of-state e-commerce businesses could also create additional administrative burdens for us, put us at a competitive disadvantage if they do not impose similar obligations on our competitors and decrease our future sales, which could have an adverse impact on our business and results of operations.
The imposition by state and local taxing authorities of sales tax collection obligations on out-of-state e-commerce businesses could also create additional administrative burdens for us, put us at a competitive disadvantage if they do not impose similar obligations on our competitors and decrease our future sales, which could have an adverse impact on our business and results of operations. 31 Table of Contents Changes in tax laws or regulations in the various tax jurisdictions we are subject to or adverse application of existing tax laws could increase our costs and harm our business.
We may not be able to continue to improve our distribution center operations, attract and retain personnel to efficiently and effectively manage the operations required to process, itemize, list, sell, pack and ship secondhand and resale items or identify and lease distribution centers in geographic regions that enable us to effectively scale our operations. 15 Table of Contents We lease facilities to store and accommodate the logistics infrastructure required to process, itemize, list, sell, pack and ship the secondhand and resale items we sell through our marketplaces and related channels of distribution, including our RaaS offerings.
We may not be able to continue to improve our distribution center operations, attract and retain personnel to efficiently and effectively manage the operations required to process, itemize, list, sell, pack and ship secondhand and resale items or identify and lease distribution centers in geographic regions that enable us to effectively scale our operations.
As a result, our reputation and our relationships with our buyers and sellers could be harmed, which could harm our business, results of operations and financial condition. 16 Table of Contents National retailers and brands set their own retail prices and promotional discounts on new items, which could adversely affect our value proposition to buyers and harm our business, results of operations and financial condition.
National retailers and brands set their own retail prices and promotional discounts on new items, which could adversely affect our value proposition to buyers and harm our business, results of operations and financial condition. 16 Table of Contents National retailers and brands set pricing for their own new retail items, which can include promotional discounts.
Further, natural disasters, such as earthquakes, hurricanes, tornadoes, fires, floods and other adverse weather and climate conditions; unforeseen public health crises, such as pandemics and epidemics; political crises, such as Russia’s invasion of Ukraine, terrorist attacks, war and other political instability; or other catastrophic events, whether occurring in the United States or internationally, could disrupt our operations in any of our offices and distribution centers or the operations of one or more of our third-party providers or vendors.
Further, natural disasters, such as earthquakes, hurricanes, tornadoes, fires, floods and other adverse weather and climate conditions; unforeseen public health crises, such as pandemics and epidemics; political crises, such as Russia’s invasion of Ukraine and the Israel-Hamas war, terrorist attacks, war and other political instability; or other catastrophic events, whether occurring in the United States or internationally, could disrupt our operations in any of our offices and distribution centers or the operations of one or more of our third-party providers or vendors. 17 Table of Contents Further, while we carry insurance for the secondhand and resale items in our distribution centers, the number of carriers which provide for such insurance has declined, which has resulted in increased premiums and deductibles.
As a result, it is possible that one or more of the persons or entities holding our Class B common stock could gain significant voting control as other holders of Class B common stock sell or otherwise convert their shares into Class A common stock.
As a result, it is possible that one or more of the persons or entities holding our Class B common stock could gain significant voting control as other holders of Class B common stock sell or otherwise convert their shares into Class A common stock. 36 Table of Contents We cannot predict the effect our dual-class structure may have on the market price of our Class A common stock.
National retailers and brands set pricing for their own new retail items, which can include promotional discounts. Promotional pricing by these parties may adversely affect the relative value of secondhand items offered for resale with us, and, in turn, our revenue, results of operations and financial condition.
Promotional pricing by these parties may adversely affect the relative value of secondhand items offered for resale with us, and, in turn, our revenue, results of operations and financial condition.
Adoption of such new standards and any difficulties in implementation of changes in accounting principles, including the ability to modify our accounting systems, could cause us to fail to meet our financial reporting obligations, which could result in regulatory discipline and harm investors’ confidence in us. 34 Table of Contents We could be required to collect additional sales taxes or be subject to other tax liabilities.
Adoption of such new standards and any difficulties in implementation of changes in accounting principles, including the ability to modify our accounting systems, could cause us to fail to meet our financial reporting obligations, which could result in regulatory discipline and harm investors’ confidence in us.
Use of social media, emails and text messages may adversely impact our reputation or subject us to fines or other penalties. We use social media, emails, push notifications and, in the future, will use text messages as part of our omni-channel approach to marketing.
We use social media, emails, push notifications and, in the future, will use text messages as part of our omni-channel approach to marketing.
If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate consolidated financial statements or comply with applicable regulations could be impaired.
We have previously identified a material weakness in our internal control over financial reporting in the Annual Report on Form 10-K and if we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate consolidated financial statements or comply with applicable regulations could be impaired.
We rely on a combination of intellectual property rights, contractual protections and other practices to protect our brand, proprietary information, technologies and processes. We primarily rely on patent, copyright and trade secret laws to protect our proprietary technologies and processes, including the automated operations systems and machine learning technology we use throughout our business.
We primarily rely on patent, copyright and trade secret laws to protect our proprietary technologies and processes, including the automated operations systems and machine learning technology we use throughout our business.
Additionally, we are subject to the terms of our privacy policies and notices and may be bound by contractual requirements applicable to our collection, use, processing, security and disclosure of personal information, and may be bound by or alleged to be subject to, or voluntarily comply with, self-regulatory or other industry standards relating to these matters. 25 Table of Contents Any failure or perceived failure by us or any third parties with which we do business to comply with these privacy requirements, with our posted privacy policies or with other obligations to which we or such third parties are or may become subject relating to privacy, data protection or information security, may result in investigations or enforcement actions against us by governmental entities, private claims, public statements against us by consumer advocacy groups or others, and fines, penalties or other liabilities.
Any failure or perceived failure by us or any third parties with which we do business to comply with these privacy requirements, with our posted privacy policies or with other obligations to which we or such third parties are or may become subject relating to privacy, data protection or information security, may result in investigations or enforcement actions against us by governmental entities, private claims, public statements against us by consumer advocacy groups or others, and fines, penalties or other liabilities.
We are continuing to develop and refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we will file with the SEC, is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers.
We are continuing to develop and refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we will file with the SEC, is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers. 30 Table of Contents We have previously identified control deficiencies in the design and operation of our internal control over financial reporting that constituted a material weakness, as further described in “Item 9A.
Our failure to address these risks or other issues encountered in connection with acquisitions and investments could cause us to fail to realize the anticipated benefits of these acquisitions or investments, cause us to incur unanticipated liabilities and harm our business generally.
Our failure to address these risks or other issues encountered in connection with acquisitions and investments could cause us to fail to realize the anticipated benefits of these acquisitions or investments, cause us to incur unanticipated liabilities and harm our business generally. 20 Table of Contents As an online secondhand marketplace, our success depends on the accuracy of our item acceptance process.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+0 added−0 removed9 unchanged
Biggest changeMarch 26, December 31, 2021 2021 2022 ThredUp Inc. $ 100.00 $ 63.80 $ 6.55 Nasdaq Composite $ 100.00 $ 119.08 $ 79.66 S&P Retail Select Industry $ 100.00 $ 102.68 $ 69.24 Recent Sales of Unregistered Securities None.
Biggest changeMarch 26, December 31, 2021 2021 2022 2023 ThredUp Inc. $ 100.00 $ 63.80 $ 6.55 $ 11.25 Nasdaq Composite $ 100.00 $ 119.08 $ 79.66 $ 114.25 S&P Retail Select Industry $ 100.00 $ 102.68 $ 69.24 $ 82.80 Recent Sales of Unregistered Securities None.
Performance Graph This performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that section, and shall not be deemed to be incorporated by reference into any of our filings under the Securities Act. 45 Table of Contents We have presented below the cumulative total return to our stockholders in comparison to the Nasdaq Composite Index (Nasdaq Composite) and the Standard and Poor’s Retail Select Index (S&P Retail Select Industry).
Performance Graph This performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that section, and shall not be deemed to be incorporated by reference into any of our filings under the Securities Act. 44 Table of Contents We have presented below the cumulative total return to our stockholders in comparison to the Nasdaq Composite Index (Nasdaq Composite) and the Standard and Poor’s Retail Select Index (S&P Retail Select Industry).
There has been no material change in the planned use of proceeds from the IPO as disclosed in the final prospectus filed with the SEC pursuant to Rule 424(b)(4) under the Securities Act on March 26, 2021. 46 Table of Contents On August 2, 2021, the Company issued and sold 2,000,000 shares of Class A common stock at a price of $24.25 per share in a registered public offering.
There has been no material change in the planned use of proceeds from the IPO as disclosed in the final prospectus filed with the SEC pursuant to Rule 424(b)(4) under the Securities Act on March 26, 2021. 45 Table of Contents On August 2, 2021, the Company issued and sold 2,000,000 shares of Class A common stock at a price of $24.25 per share in a registered public offering.
The aggregate net proceeds were $45.5 million, after deducting $3.3 million of underwriting discounts and commissions and offering costs. There has been no material change in the planned use of proceeds from the registered public offering completed in August 2021. Purchases of Equity Securities by the Issuer None. Item 6. [Reserved]
The aggregate net proceeds were $45.5 million, after deducting $3.3 million of underwriting discounts and commissions and offering costs. There has been no material change in the planned use of proceeds from the registered public offering completed on August 2, 2021. Purchases of Equity Securities by the Issuer None. Item 6. [Reserved]
All values assume a $100 initial investment on March 26, 2021, the date our Class A common stock began trading on the Nasdaq Global Select Market, through December 31, 2022 and data for the Nasdaq Composite and S&P Retail Select Industry over the same period assume reinvestment of dividends.
All values assume a $100 initial investment on March 26, 2021, the date our Class A common stock began trading on the Nasdaq Global Select Market, through December 31, 2023 and data for the Nasdaq Composite and S&P Retail Select Industry over the same period assume reinvestment of dividends.
There is no public trading market for our Class B common stock. Holders As of the close of business on February 27, 2023, there were 63 holders of record of our Class A common stock and 26 holders of record of our Class B common stock.
There is no public trading market for our Class B common stock. Holders As of the close of business on February 26, 2024, there were 17 holders of record of our Class A common stock and 69 holders of record of our Class B common stock.

Item 7. Management's Discussion & Analysis

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

61 edited+22 added−29 removed18 unchanged
Biggest changeMarketing Year Ended December 31, Change 2022 2021 Amount % (in thousands, except percentages) Marketing $ 64,369 $ 63,625 $ 744 1.2 % Marketing as a percentage of total revenue 22.3 % 25.3 % The $0.7 million increase in marketing expenses for the year ended December 31, 2022 as compared to the same period in 2021 was primarily due to a $4.0 million increase in personnel-related costs related to salaries, stock-based compensation and other expenses resulting from the inclusion of our European operations from October 2021 onward; a $1.3 million increase in facilities, technology and allocated costs; and a $0.3 million increase in professional services; partially offset by a $4.8 million decrease in costs of lead generation, affiliates and partnerships, and advertising. 53 Table of Contents Sales, General and Administrative Year Ended December 31, Change 2022 2021 Amount % (in thousands, except percentages) Sales, general and administrative $ 61,814 $ 48,814 $ 13,000 26.6 % Sales, general and administrative as a percentage of total revenue 21.4 % 19.4 % The $13.0 million increase in sales, general, and administrative expenses for the year ended December 31, 2022 as compared to the same period in 2021 was primarily due to a $13.8 million increase in personnel-related costs related to salaries, stock-based compensation, restructuring, our European operations and other personnel costs; and a $1.0 million increase in facilities, technology and allocated costs; partially offset by a $1.1 million decrease in professional services and $0.7 million of other corporate expenses.
Biggest changeThe increase was primarily due to a $0.8 million increase in advertising costs and a $1.1 million increase in personnel-related costs, of which $0.6 million was related to stock-based compensation expense. 51 Table of Contents Sales, General and Administrative Year Ended December 31, Change 2023 2022 Amount % (in thousands, except percentages) Sales, general and administrative $ 62,657 $ 61,814 $ 843 1.4 % Sales, general and administrative as a percentage of total revenue 19.5 % 21.4 % Sales, general, and administrative expenses increased $0.8 million or 1.4% for the year ended December 31, 2023 as compared to the same period in 2022.
We also generate revenue from the sale of our purchased inventory which we refer to as product revenue. We sell our purchased inventory mainly through our online marketplace. We recognize product revenue on a gross basis. Online sales and sales to our retail partners are recognized upon shipment of the purchased secondhand items to the buyer.
We also generate revenue from the sale of our purchased inventory which we refer to as product revenue. We sell our purchased inventory mainly through our online marketplaces. We recognize product revenue on a gross basis. Online sales and sales to our retail partners are recognized upon shipment of the purchased secondhand items to the buyer.
The estimated fair value of equity awards that contain performance conditions is expensed over the term of the award once we have determined that it is probable that performance conditions will be satisfied. We account for forfeitures as they occur. 56 Table of Contents The Black-Scholes Model considers several variables and assumptions in estimating the fair value of stock-based awards.
The estimated fair value of equity awards that contain performance conditions is expensed over the term of the award once we have determined that it is probable that performance conditions will be satisfied. We account for forfeitures as they occur. The Black-Scholes Model considers several variables and assumptions in estimating the fair value of stock-based awards.
We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates. Revenue Recognition We generate revenue primarily from the sale of secondhand women’s and kids’ apparel, shoes and accessories on behalf of sellers.
We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates. Revenue Recognition We generate revenue primarily from the sale of secondhand apparel, shoes and accessories on behalf of sellers and partners.
The fair values of Restricted Stock Units (“RSU”) are determined based on our stock price on the date of grant. The fair values of equity awards are recognized as compensation expense over the requisite service period or over the period in which the related services are received (generally the vesting period), using the straight-line method.
The fair values of RSUs are determined based on our stock price on the date of grant. The fair values of equity awards are recognized as compensation expense over the requisite service period or over the period in which the related services are received (generally the vesting period), using the straight-line method.
Based upon our current operating plans, we believe that our existing cash, cash equivalents and short-term marketable securities will be sufficient to meet our short- and long-term capital requirements and we do not anticipate expanding our distribution network to include additional locations in the near term.
Based upon our current operating plans, we believe that our existing cash, cash equivalents and short-term marketable securities will be sufficient for at least the next 12 months to meet our short- and long-term capital requirements, and we do not anticipate expanding our distribution network to include additional locations in the near term.
We believe in a sustainable fashion future and we are proud that our business model creates a positive impact to the benefit of our buyers, sellers, clients, employees, investors and the environment. Our custom-built operating platform consists of distributed processing infrastructure, proprietary software and systems and data science expertise.
Our mission is to inspire the world to think secondhand first. We believe in a sustainable fashion future and we are proud that our business model creates a positive impact to the benefit of our buyers, sellers, clients, employees, investors and the environment. Our custom-built operating platform consists of distributed processing infrastructure, proprietary software and systems and data science expertise.
See below for a reconciliation of Adjusted EBITDA loss to net loss attributable to common stockholders. Active Buyers An Active Buyer is a thredUP buyer who has made at least one purchase in the last twelve months.
See below for a reconciliation of Non-GAAP Adjusted EBITDA loss to net loss. Active Buyers An Active Buyer is a ThredUp buyer who has made at least one purchase in the last twelve months.
The core marketplace we have built in the U.S. enables buyers to browse and purchase resale items for primarily women’s and kids’ apparel, shoes and accessories across a wide range of price points. Buyers love shopping value, premium and luxury brands all in one place, at up to 90% off estimated retail price.
The marketplaces we have built enable buyers in the U.S. and in Europe to browse and purchase resale items for primarily apparel, shoes and accessories across a wide range of price points. Buyers love shopping value, premium and luxury brands all in one place, at up to 90% off estimated retail price.
We expect cost of consignment revenue to decrease and gross margin to increase as a percentage of total consignment revenue as we continue to scale our business due to our ability to drive leverage in shipping, labor and packaging.
Cost of Revenue Cost of consignment revenue Cost of consignment revenue consists of outbound shipping, outbound labor and packaging costs. We expect cost of consignment revenue to decrease and gross profit to increase as a percentage of consignment revenue as we continue to scale our business due to our ability to drive leverage in shipping, labor and packaging.
Orders Orders means the total number of orders placed by buyers across our marketplaces, including through our RaaS clients, in a given period, net of cancellations. We expect Orders to increase over time.
Orders Orders means the total number of orders placed by buyers across our marketplaces, including through our RaaS clients, in a given period, net of cancellations.
We expect operations, product and technology expenses to increase in absolute dollars in future periods to support our growth, especially as costs to increase our supply (inbound costs) are generally incurred prior to the expected revenue growth.
We expect operations, product and technology expenses to increase in absolute dollars in future periods to support our growth, especially as costs to increase our supply (inbound costs) are generally incurred prior to the expected revenue growth. Additionally, we expect to continue investing in automation and other technology improvements to support and drive efficiency in our operations.
We expect further gross margin to increase as we continue to scale our business due to our ability to drive leverage in shipping, labor and packaging. 50 Table of Contents Operating Expenses Operations, Product and Technology Operations, product and technology expenses consist primarily of distribution center operating costs and product and technology expenses.
We expect cost of product revenue to decrease and gross profit to increase as a percentage of product revenue as we continue to scale our business due to our ability to drive leverage in shipping, labor and packaging. 48 Table of Contents Operating Expenses Operations, Product and Technology Operations, product and technology expenses consist primarily of distribution center operating costs and product and technology expenses.
See the section titled “Risk Factors—Risks Relating to Our Indebtedness and Liquidity—We may require additional capital to support business growth, and this capital might not be available or may be available only by diluting existing stockholders.” 54 Table of Contents Cash Flows The following table summarizes our cash flows for the periods indicated: Year Ended December 31, 2022 2021 (in thousands) Net cash provided by (used in): Operating activities $ (52,105) $ (35,019) Investing activities 8,924 (169,576) Financing activities (3,936) 228,960 Effect of exchange rate changes on cash, cash equivalents and restricted cash (672) (64) Net change in cash, cash equivalents and restricted cash $ (47,789) $ 24,301 Changes in Cash Flows from Operating Activities Net cash used in operating activities increased $17.1 million, or 48.8%, for the year ended December 31, 2022 as compared to the same period in 2021.
See the section titled “Risk Factors—Risks Relating to Our Indebtedness and Liquidity—We may require additional capital to support business growth, and this capital might not be available or may be available only by diluting existing stockholders.” Cash Flows The following table summarizes our cash flows for the periods indicated: Year Ended December 31, 2023 2022 (in thousands) Net cash provided by (used in): Operating activities $ (22,591) $ (52,105) Investing activities 43,680 8,924 Financing activities (3,603) (3,936) Effect of exchange rate changes on cash, cash equivalents and restricted cash (68) (672) Net change in cash, cash equivalents and restricted cash $ 17,418 $ (47,789) Changes in Cash Flows from Operating Activities Net cash used in operating activities was $22.6 million for the year ended December 31, 2023 compared to the net cash used of $52.1 million same period in 2022.
We take it from there and do the work to make those items available for resale. In addition to our core marketplace, some of the world’s leading brands and retailers are already taking advantage of our RaaS offering, which allows them to conveniently offer a scalable closet clean out service and/or resale shop to their customers.
In addition to our core marketplace, some of the world’s leading brands and retailers are taking advantage of our RaaS offering, which allows them to conveniently offer a scalable closet clean out service and/or resale shop to their customers.
While these expenses may vary from period to period as a percentage of revenue, we expect them to increase in absolute dollars and decrease as a percentage of revenue over the longer term.
While these expenses may vary from period to period as a percentage of revenue, we expect them to increase in absolute dollars and decrease as a percentage of revenue over the longer term. Interest Expense Interest expense consists of interest and debt issuance costs relating to our term loan facility.
See Note 12, Commitments and Contingencies , to the Consolidated Financial Statements included in Part I, Item 8, Financial Statements and Supplementary Data , of this Annual Report on Form 10-K for additional information regarding our purchase obligations.
As of December 31, 2023, the value of our non-cancellable unconditional purchase obligations was $13.2 million. See Note 11, Commitments and Contingencies , to the Consolidated Financial Statements included in Part I, Item 8, Financial Statements and Supplementary Data , of this Annual Report on Form 10-K for additional information regarding our purchase obligations.
Non-GAAP Financial Metrics Non-GAAP Adjusted EBITDA Non-GAAP Adjusted EBITDA loss means net loss attributable to common stockholders adjusted to exclude, where applicable in a given period, stock-based compensation expense, depreciation and amortization, impairment of non-marketable equity investment, restructuring charges, interest expense, acquisition-related expenses, provision for income taxes, change in fair value of convertible preferred stock warrant liability.
Non-GAAP Financial Measures Non-GAAP Adjusted EBITDA Loss and Non-GAAP Adjusted EBITDA Loss Margin Non-GAAP Adjusted EBITDA loss means net loss adjusted to exclude, where applicable in a given period, stock-based compensation expense, depreciation and amortization, interest expense, severance and other charges, provision for income taxes, impairment of non-marketable equity investment, and acquisition-related expenses.
Our historical results are not necessarily indicative of the results that may be expected for any period in the future, and our interim results are not necessarily indicative of the results we expect for the full calendar year or any other period.
Our historical results are not necessarily indicative of the results that may be expected for any period in the future, and our interim results are not necessarily indicative of the results we expect for the full calendar year or any other period. Overview ThredUp operates one of the world’s largest online resale platforms for apparel, shoes and accessories.
See Note 9, Long-Term Debt , to the Consolidated Financial Statements included in Part II, Item 8, Financial Statements and Supplementary Data , of this Annual Report on Form 10-K for a further discussion on our Term Loan.
See Note 8, Long-Term Debt , to the Consolidated Financial Statements included in Part II, Item 8, Financial Statements and Supplementary Data , of this Annual Report on Form 10-K for a further discussion on our Term Loan. 52 Table of Contents We expect operating losses to continue in 2024 as we continue to invest in growing our business and our infrastructure.
We use Adjusted EBITDA loss, a non-GAAP metric, to evaluate and assess our operating performance and the operating leverage in our business, and for internal planning and forecasting purposes.
Non-GAAP Adjusted EBITDA loss margin represents Non-GAAP Adjusted EBITDA loss divided by Total revenue. We use Non-GAAP Adjusted EBITDA loss and Non-GAAP Adjusted EBITDA loss margin, which are non-GAAP measures, to evaluate and assess our operating performance and the operating leverage in our business, and for internal planning and forecasting purposes.
Changes in Cash Flows from Investing Activities Net cash provided by investing activities was $8.9 million for the year ended December 31, 2022 compared to net cash used in investing activities of $169.6 million for the same period in 2021.
Changes in Cash Flows from Investing Activities Net cash provided by investing activities for the year ended December 31, 2023 increased $34.8 million as compared to the same period in 2022.
Revenue is recognized when the loyalty rewards are redeemed or expire. For gift cards and site credits, we recognize breakage revenue when we determine that the redemption of gift cards and site credits is remote. Stock-Based Compensation We estimate the fair value of stock options and the ESPP at the grant date using the Black-Scholes option-pricing model (the “Black-Scholes Model”).
We recognize revenue from gift cards when the gift cards are redeemed by the customer, and we recognize breakage revenue when we determine that the redemption of gift cards is remote, which is two years after issuance. 54 Table of Contents Stock-Based Compensation We estimate the fair value of stock options and the ESPP at the grant date using the Black-Scholes option-pricing model (the “Black-Scholes Model”).
Non-GAAP Adjusted EBITDA: Non-GAAP Adjusted EBITDA loss was $43.4 million, or a negative 15.0% of revenue, for the year ended December 31, 2022 as compared to a non-GAAP Adjusted EBITDA loss of $36.5 million, or a negative 14.5% of revenue, for the same period in 2021.
Net Loss: Net loss was $71.2 million, or a negative 22.1% of revenue, for the year ended December 31, 2023 as compared to a net loss of $92.3 million, or a negative 32.0% of revenue, for the same period in 2022. 46 Table of Contents Non-GAAP Adjusted EBITDA (1) : Non-GAAP Adjusted EBITDA loss was $17.4 million, or a negative 5.4% of revenue, for the year ended December 31, 2023 as compared to a non-GAAP Adjusted EBITDA loss of $43.4 million, or a negative 15.0% of revenue, for the same period in 2022.
Our primary use of cash includes operating costs such as distribution network spend, product and technology expenses, marketing expenses, personnel expenses and other expenditures necessary to support our operations and our growth.
Our primary sources of liquidity are cash flows generated from operations, cash on hand and borrowings available under the Term Loan. Our primary use of cash includes operating costs such as distribution network spend, product and technology expenses, marketing expenses, personnel expenses and other expenditures necessary to support our operations and our growth.
As of December 31, 2022, we had cash, cash equivalents and short-term marketable securities of $104.9 million. Additionally, we have a term loan facility (“Term Loan”) under which $38.0 million remained available to be drawn as of December 31, 2022, and we were in full compliance with our debt covenants under the Term Loan as of that date.
Additionally, we have a term loan facility (“Term Loan”) under which $22.5 million remained available to be drawn as of December 31, 2023 for the purchase of certain equipment, and we were in full compliance with our debt covenants under the Term Loan as of that date.
Additionally, our primary capital expenditures are related to the set-up, expansion and/or automation of our distribution network and may be accelerated or delayed based on our operating position and business needs.
Additionally, our primary capital expenditures are related to the set-up, expansion and/or automation of our distribution network.
Consignment revenue We generate consignment revenue from the sale of secondhand women’s and kids’ apparel, shoes and accessories on behalf of sellers. We recognize consignment revenue, net of seller payouts, discounts, incentives and returns. We expect consignment revenue to continue to increase as we increase our Active Buyers and Orders and grow our business.
Consignment revenue We generate consignment revenue from the sale of secondhand apparel, shoes and accessories on behalf of sellers. We recognize consignment revenue, net of seller payouts, discounts, incentives and returns.
We believe that non-GAAP Adjusted EBITDA loss, when taken collectively with our GAAP results, may be helpful to investors because it provides consistency and comparability with past financial performance and assists in comparisons with other companies, some of which use similar non-GAAP financial information to supplement their GAAP results. 49 Table of Contents The following table provides a reconciliation of GAAP net loss attributable to common stockholders to non-GAAP Adjusted EBITDA loss: Year Ended December 31, 2022 2021 2020 (in thousands) GAAP net loss attributable to common stockholders, as reported $ (92,284) $ (63,176) $ (47,877) Stock-based compensation expense 26,817 12,959 7,336 Depreciation and amortization 14,033 9,155 5,581 Impairment of non-marketable equity investment 3,750 — — Restructuring charges 3,182 — — Interest expense 805 2,275 1,305 Acquisition and offering-related expenses 274 1,271 — Provision for income taxes 35 80 56 Change in fair value of convertible preferred stock warrant liability — 930 201 Non-GAAP Adjusted EBITDA loss $ (43,388) $ (36,506) $ (33,398) Presentation Revenue Our revenue is comprised of consignment revenue and product revenue.
We believe that Non-GAAP Adjusted EBITDA loss and Non-GAAP Adjusted EBITDA loss margin, when taken collectively with our GAAP results, may be helpful to investors because they provide consistency and comparability with past financial performance and assist in comparisons with other companies, some of which use similar non-GAAP financial information to supplement their GAAP results. 47 Table of Contents The following table provides a reconciliation of net loss to non-GAAP Adjusted EBITDA loss: Year Ended December 31, 2023 2022 (in thousands) Net loss $ (71,248) $ (92,284) Stock-based compensation expense 31,682 26,817 Depreciation and amortization 18,732 14,033 Interest expense 2,239 805 Severance and other 1,196 3,182 Provision for income taxes 19 35 Impairment of non-marketable equity investment — 3,750 Acquisition and offering-related expenses — 274 Non-GAAP Adjusted EBITDA loss $ (17,380) $ (43,388) Presentation Revenue Our revenue is comprised of consignment revenue and product revenue.
This platform is powering the rapidly emerging resale economy, one of the fastest growing sectors in retail, according to a GlobalData market survey conducted in February 2022. thredUP’s proprietary operating platform is the foundation for our managed marketplace, where we have bridged online and offline technology to make the buying and selling of tens of millions of unique items easy and fun.
ThredUp’s proprietary operating platform is the foundation for our managed marketplace, where we have bridged online and offline technology to make the buying and selling of tens of millions of unique items easy and fun.
The $1.6 million of other income, net for the year ended December 31, 2021 was primarily comprised of claim proceeds for lost shipments, offset by change in preferred stock warrants. Liquidity and Capital Resources We have historically generated negative cash flows from operations and have primarily financed our operations through private and public sales of equity securities and debt.
This increase was partially offset by a $0.8 million decrease in claim proceeds for lost shipments. Liquidity and Capital Resources We have historically generated negative cash flows from operations and have primarily financed our operations through private and public sales of equity securities and debt.
The risk-free interest rate is based on the yield available on United States Treasury zero-coupon issues similar in duration to the expected term of the equity-settled award.
The risk-free interest rate is based on the yield available on United States Treasury zero-coupon issues similar in duration to the expected term of the equity-settled award. Goodwill and Acquired Intangible Assets Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination.
The decrease in gross margin for the year ended December 31, 2022 as compared to the same period in 2021 was due to the inclusion of operating results of our European operations from October 2021 onward. Revenue from our European operations is derived from product sales with a lower gross margin.
The decrease in product gross margin for the year ended December 31, 2023 as compared to the same period in 2022 was primarily due to our European operations, which have a lower product gross margin.
Cost of product revenue Cost of product revenue mainly consists of inventory cost, inbound shipping related to the sold merchandise, outbound shipping, outbound labor, packaging costs and inventory write-downs. We expect cost of product revenue to increase in absolute dollars and decrease as a percentage of total revenue, leading to an increase in gross margin.
Cost of product revenue Cost of product revenue mainly consists of inventory cost, inbound shipping related to the sold merchandise, outbound shipping, outbound labor, packaging costs and inventory write-downs.
However, we expect that our capital expenditures will decline significantly in 2023 as we completed the first phase of our new distribution center in Texas. We may seek additional equity or debt financing.
However, we expect that our capital expenditures will be limited in 2024 as we have completed the first phase of our new distribution center in Texas.
We expect to increase sales, general and administrative expense as we grow our infrastructure to support operating as a public company and the overall growth in our business.
Sales, general and administrative also includes payment processing fees, professional fees and allocation of corporate facilities and information technology costs such as equipment, depreciation and rent. We expect to increase sales, general and administrative expense as we grow our infrastructure to support operating as a public company and the overall growth in our business.
Other Expense (Income), Net Other expense (income), net consists of non-operating income and expenses such as impairments of non-marketable equity investments, claim proceeds for lost shipments, and changes in the fair value of convertible preferred stock warrants. 51 Table of Contents Financial Results for the Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021 Revenue Year Ended December 31, Change 2022 2021 Amount % (in thousands, except percentages) Consignment revenue $ 174,994 $ 186,114 $ (11,120) (6.0) % Product revenue 113,385 65,678 47,707 72.6 % Total revenue $ 288,379 $ 251,792 $ 36,587 14.5 % Consignment revenue as a percentage of total revenue 60.7 % 73.9 % Product revenue as a percentage of total revenue 39.3 % 26.1 % Total revenue increased $36.6 million, or 14.5%, for the year ended December 31, 2022 as compared to the same period in 2021.
Other Income (Expense), Net Other income (expense), net consists of non-operating income and expenses such as interest income earned on our investments in marketable securities, impairments of non-marketable equity investments and claim proceeds for lost shipments. 49 Table of Contents Financial Results for the Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022 Revenue Year Ended December 31, Change 2023 2022 Amount % (in thousands, except percentages) Consignment revenue $ 213,609 $ 174,994 $ 38,615 22.1 % Product revenue 108,413 113,385 (4,972) (4.4) % Total revenue $ 322,022 $ 288,379 $ 33,643 11.7 % Consignment revenue as a percentage of total revenue 66.3 % 60.7 % Product revenue as a percentage of total revenue 33.7 % 39.3 % Total revenue increased $33.6 million, or 11.7%, for the year ended December 31, 2023 as compared to the same period in 2022.
Cost of Consignment Revenue Year Ended December 31, Change 2022 2021 Amount % (in thousands, except percentages) Cost of consignment revenue $ 37,015 $ 41,856 $ (4,841) (11.6) % Consignment gross margin 78.8 % 77.5 % Consignment gross margin was 78.8% and 77.5% for the years ended December 31, 2022 and 2021, respectively, or a favorable change of 130 basis points. 52 Table of Contents The increase in consignment gross margin for the year ended December 31, 2022 as compared to the same period in 2021 was primarily due to a favorable impact of outbound shipping as a result of order consolidation of 240 basis points, partially offset by an unfavorable impact of direct labor of 60 basis points and an unfavorable impact of packaging and other costs of 50 basis points.
Cost of Consignment Revenue Year Ended December 31, Change 2023 2022 Amount % (in thousands, except percentages) Cost of consignment revenue $ 39,732 $ 37,015 $ 2,717 7.3 % Consignment gross margin 81.4 % 78.8 % Consignment gross margin was 81.4% and 78.8% for the years ended December 31, 2023 and 2022, respectively, representing an increase of 260 basis points. 50 Table of Contents The increase in consignment gross margin for the year ended December 31, 2023 as compared to the same period in 2022 was primarily due to a 250 basis point decrease in outbound shipping, labor and packaging costs.
Goodwill is not subject to amortization but will be reviewed for impairment on an annual basis or more frequently if events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable. JOBS Act Accounting Election We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act (“JOBS Act”).
We review intangible assets for impairment whenever events or changes in business circumstances indicate that the carrying amounts of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. JOBS Act Accounting Election We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act (“JOBS Act”).
Loyalty points and rewards are accounted for as separate performance obligations and accrued as deferred revenue in the amount of the transaction price allocated to the points and rewards. The allocated transaction price is based on the estimated fair value per point, net of breakage. Breakage is estimated based on our historical redemption rates.
The allocated transaction price is based on the estimated fair value per point, net of breakage. Breakage is estimated based on our historical redemption rates. Revenue is recognized when the loyalty rewards are redeemed or expire.
The sales from our newly acquired European operations are primarily from sale of owned items. We recognize product revenue, net of discounts, incentives and returns. We expect product revenue to increase in absolute dollars and as a percentage of total revenue in the near term as we continue to grow our international business.
The sales from our European operations are primarily from sale of owned items. We recognize product revenue, net of discounts, incentives and returns. We expect the percentage share of product revenue to decrease in the long term as we recently transitioned our RaaS partners to the consignment model and introduced the consignment model to our European operations.
For a further discussion on our operating lease commitments and long-term debt as of December 31, 2022, see the sections above as well as Note 8, Leases , and Note 9, Long-Term Debt , to the Consolidated Financial Statements included in Part I, Item 8, Financial Statements and Supplementary Data , of this Annual Report on Form 10-K. 55 Table of Contents Indemnification Agreements In the ordinary course of business, we enter into agreements of varying scope and terms pursuant to which we agree to indemnify vendors, lessors, business partners and other parties with respect to certain matters, including, but not limited to, losses arising out of the breach of such agreements, services to be provided by us or from intellectual property infringement claims made by third parties.
Indemnification Agreements In the ordinary course of business, we enter into agreements of varying scope and terms pursuant to which we agree to indemnify vendors, lessors, business partners and other parties with respect to certain matters, including, but not limited to, losses arising out of the breach of such agreements, services to be provided by us or from intellectual property infringement claims made by third parties.
Year Ended December 31, 2022 2021 Change 2021 2020 Change (in thousands, except percentages) Active Buyers (as of period end) 1,651 1,691 (2.4) % 1,691 1,240 36.4 % Orders 6,507 5,328 22.1 % 5,328 3,965 34.4 % Total revenue $ 288,379 $ 251,792 14.5 % $ 251,792 $ 186,015 35.4 % Gross profit $ 192,338 $ 178,132 8.0 % $ 178,132 $ 128,148 39.0 % Gross margin 66.7 % 70.7 % 70.7 % 68.9 % Net loss attributable to common stockholders $ (92,284) $ (63,176) 46.1 % $ (63,176) $ (47,877) 32.0 % Net loss attributable to common stockholders margin (32.0) % (25.1) % (25.1) % (25.7) % Non-GAAP Adjusted EBITDA loss(1) $ (43,388) $ (36,506) 18.9 % $ (36,506) $ (33,398) 9.3 % Non-GAAP Adjusted EBITDA loss margin (15.0) % (14.5) % (14.5) % (18.0) % (1) Adjusted EBITDA is a non-GAAP measure which may not be comparable to similarly-titled measures used by other companies.
Year Ended December 31, 2023 2022 Change (in thousands, except percentages) Active Buyers (as of period end) 1,797 1,651 8.8 % Orders 6,910 6,507 6.2 % Total revenue $ 322,022 $ 288,379 11.7 % Gross profit $ 213,805 $ 192,338 11.2 % Gross margin 66.4 % 66.7 % Net loss $ (71,248) $ (92,284) (22.8) % Net loss margin (22.1) % (32.0) % Non-GAAP Adjusted EBITDA loss (1) $ (17,380) $ (43,388) (59.9) % Non-GAAP Adjusted EBITDA loss margin (5.4) % (15.0) % (1) Non-GAAP Adjusted EBITDA loss and Non-GAAP Adjusted EBITDA loss margin are non-GAAP measures which may not be comparable to similarly-titled measures used by other companies.
Cost of Product Revenue Year Ended December 31, Change 2022 2021 Amount % (in thousands, except percentages) Cost of product revenue $ 59,026 $ 31,804 $ 27,222 85.6 % Product gross margin 47.9 % 51.6 % Product gross margin was 47.9% and 51.6% for the years ended December 31, 2022 and 2021, or an unfavorable change of 370 basis points.
Cost of Product Revenue Year Ended December 31, Change 2023 2022 Amount % (in thousands, except percentages) Cost of product revenue $ 68,485 $ 59,026 $ 9,459 16.0 % Product gross margin 36.8 % 47.9 % Product gross margin was 36.8% and 47.9% for the years ended December 31, 2023 and 2022, respectively, representing a decrease of 1110 basis points.
Additionally, we expect to bring on additional distribution centers and continue investing in automation and other technology improvements to support and drive efficiency in our operations. These expenses may vary from period to period as a percentage of revenue, depending primarily upon when we choose to make more significant investments, including business acquisitions.
These expenses may vary from period to period as a percentage of revenue, depending primarily upon when we choose to make more significant investments, including business acquisitions. We expect these expenses to increase in absolute dollars and decrease as a percentage of revenue over the longer term due to better leverage in our operations.
Revenue for consignment sales is recognized net of seller payouts and cost of items sold, whereas for product sales, seller payouts and cost of items sold are included as a component of cost of revenue.
Consignment revenue is recognized net of seller payouts. Seller payouts related to product revenue are included as a component of cost of product revenue. As such, product revenue has a lower gross margin than consignment revenue.
The decrease in product gross margin for the year ended December 31, 2022 as compared to the same period in 2021 was primarily due to a net unfavorable impact of 800 basis points from including our European operations from October 2021 onward, which have a lower product gross margin, and an unfavorable impact of direct labor and packaging of 80 basis points, partially offset by a favorable impact of inventory costs of 280 basis points and a favorable impact of outbound shipping of 230 basis points.
The decrease in gross margin for the year ended December 31, 2023 as compared to the same period in 2022 was due to a decrease in product gross margin by 1110 basis points, primarily driven by our European operations, which have a lower gross margin.
Our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially.
Our cash flow forecast is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially.
Cost of Revenue Year Ended December 31, Change 2022 2021 Amount % (in thousands, except percentages) Cost of consignment revenue $ 37,015 $ 41,856 $ (4,841) (11.6) % Cost of product revenue 59,026 31,804 27,222 85.6 % Total cost of revenue $ 96,041 $ 73,660 $ 22,381 30.4 % Gross profit $ 192,338 $ 178,132 $ 14,206 8.0 % Gross margin 66.7 % 70.7 % Gross margin was 66.7% and 70.7% for the years ended December 31, 2022 and 2021, respectively, or an unfavorable change of 400 basis points.
Cost of Revenue Year Ended December 31, Change 2023 2022 Amount % (in thousands, except percentages) Cost of consignment revenue $ 39,732 $ 37,015 $ 2,717 7.3 % Cost of product revenue 68,485 59,026 9,459 16.0 % Total cost of revenue $ 108,217 $ 96,041 $ 12,176 12.7 % Gross profit $ 213,805 $ 192,338 $ 21,467 11.2 % Gross margin 66.4 % 66.7 % Gross margin was 66.4% and 66.7% for the years ended December 31, 2023 and 2022, respectively, representing a decrease of 30 basis points.
Active Buyers and Orders: Active Buyers totaled 1.65 million and Orders totaled 6.51 million in 2022, representing a decline of 2.4% and growth of 22.1%, respectively, compared to the prior year. 48 Table of Contents Key Financial and Operating Metrics We review a number of operating and financial metrics, including the following key business and non-GAAP metrics, to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions.
Key Financial and Operating Metrics We review a number of operating and financial metrics, including the following key business and non-GAAP metrics, to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions. These key financial and operating metrics are set forth below for the periods presented.
Sales, General and Administrative Sales, general and administrative expense consists of personnel costs for employees involved in general corporate functions, including accounting, finance, tax, legal and people services, and customer service. Sales, general and administrative also includes payment processing fees, professional fees and allocation of corporate facilities and information technology costs such as equipment, depreciation and rent.
We expect our marketing expenses to fluctuate as a percentage of revenue as we intend to increase marketing spend to drive the growth of our business. Sales, General and Administrative Sales, general and administrative expense consists of personnel costs for employees involved in general corporate functions, including accounting, finance, tax, legal and people services, and customer service.
Sales at retail stores are recognized upon checkout and sales of accepted items from goody boxes are recognized upon acceptance, which generally occurs at the same time as payment. Both consignment and product revenue are recognized net of discounts, incentives and returns. Sales tax assessed by governmental authorities is excluded from revenue.
Both consignment and product revenue are recognized net of discounts, incentives and returns. Sales tax assessed by governmental authorities is excluded from revenue. Loyalty points and rewards are accounted for as separate performance obligations and accrued as deferred revenue in the amount of the transaction price allocated to the points and rewards.
Consignment sales have a higher gross margin than product sales but made up a smaller percentage of total revenue for the year ended December 31, 2022 as compared to the same period in 2021.
The increase in revenue for the year ended December 31, 2023 as compared to the same period in 2022 was driven by a 22.1% growth in consignment revenue, partially offset by a 4.4% decrease in product revenue.
Net Loss Attributable to Common Stockholders: Net loss attributable to common stockholders was $92.3 million, or a negative 32.0% of revenue, for the year ended December 31, 2022 as compared to a net loss attributable to common stockholders of $63.2 million, or a negative 25.1% of revenue, for the same period in 2021.
Marketing Year Ended December 31, Change 2023 2022 Amount % (in thousands, except percentages) Marketing $ 66,273 $ 64,369 $ 1,904 3.0 % Marketing as a percentage of total revenue 20.6 % 22.3 % Marketing expenses increased $1.9 million or 3.0% for the year ended December 31, 2023 as compared to the same period in 2022.
Marketing costs also include an allocation of corporate facilities and information technology costs such as equipment, depreciation and rent. We expect our marketing expenses to fluctuate as a percentage of revenue as we intend to increase marketing spend to drive the growth of our business.
Marketing Marketing expense consists primarily of advertising, public relations expenditures and personnel costs for employees engaged in marketing. Marketing costs also include an allocation of corporate facilities and information technology costs such as equipment, depreciation and rent.
Product revenue We also generate product revenue from the sale of items that we own, which we refer to as our inventory. While we shifted our business to primarily consignment sales in mid-2019, historically, we purchased most of our inventory from our sellers prior to inclusion on our online marketplace.
We expect consignment revenue to continue to increase as we increase our Active Buyers and Orders, and as we recently transitioned our RaaS partners to the consignment model and introduced the consignment model to our European operations. Product revenue We also generate product revenue from the sale of items that we own, which we refer to as our inventory.
The decrease in net cash used in investing activities for the year ended December 31, 2022 was primarily due a $174.6 million decrease in net cash used to purchase marketable securities and a $23.6 million decrease in acquisitions, partially offset by a $23.4 million net increase in purchases of property and equipment.
The favorable change was primarily due to a $21.9 million increase in maturities in marketable securities and a $27.3 million decrease in purchases of property and equipment as we completed the first phase of our Texas distribution center, offset by a $14.4 million increase in purchases of marketable securities.
Interest Expense The $1.5 million decrease in interest expense for the year ended December 31, 2022 as compared to the same period in 2021 was primarily due to an increase in amounts capitalized as part of an asset and reclassified from interest expense.
Interest Expense Year Ended December 31, Change 2023 2022 Amount % (in thousands, except percentages) Interest expense $ (2,239) $ (805) $ (1,434) 178.1 % Interest expense increased $1.4 million for the year ended December 31, 2023 as compared to the same period in 2022.
The increase in net cash used in financing activities for the year ended December 31, 2022 was primarily due to a $222.2 million decrease in net proceeds from the IPO and secondary offerings in 2021, a $6.6 million increase in net repayments of debt, and a $4.2 million decrease in net proceeds from the exercise of employee stock awards.
Changes in Cash Flows from Financing Activities Net cash used in financing activities for the year ended December 31, 2023 decreased $0.3 million as compared to the same period in 2022, which was primarily due to decreased net debt repayments of $1.9 million, increased proceeds from issuance of stock-based awards of $1.0 million, partially offset by a $2.6 million of increased taxes paid related to stock-based award activity. 53 Table of Contents Contractual Obligations Our purchase obligations consist of agreements to purchase goods and services entered into in the ordinary course of business.
Operations, Product and Technology Year Ended December 31, Change 2022 2021 Amount % (in thousands, except percentages) Operations, product and technology $ 155,642 $ 128,079 $ 27,563 21.5 % Operations, product and technology as a percentage of total revenue 54.0 % 50.9 % The $27.6 million increase in operations, product and technology expenses for the year ended December 31, 2022 as compared to the same period in 2021 was primarily due to a $14.3 million increase in personnel-related costs resulting from the inclusion of our European operations from October 2021 onward, increases in employee salaries, wages and stock-based compensation, expenses associated with our distribution network, and restructuring charges; an $8.6 million increase in facilities, technology and other allocated costs resulting from the expansion of our distribution network, the inclusion of our European operations and higher technology and other costs; a $3.5 million increase in inbound shipping; and $1.1 million in amortization of acquired developed technology.
Operations, Product and Technology Year Ended December 31, Change 2023 2022 Amount % (in thousands, except percentages) Operations, product, and technology $ 156,712 $ 155,642 $ 1,070 0.7 % Operations, product, and technology as a percentage of total revenue 48.7 % 54.0 % Operations, product, and technology expenses increased $1.1 million or 0.7% for the year ended December 31, 2023 as compared to the same period in 2022.
Other Expense (Income), Net The $1.9 million of other expense, net for the year ended December 31, 2022 was primarily due to an impairment charge related to our non-marketable equity investment, partially offset by claim proceeds for lost shipments.
The net increase was primarily due to a $3.8 million decrease related to an impairment charge related to our non-marketable equity investment in 2022, a $1.7 million increase in interest income on our marketable securities due to a higher interest rate environment, and a $0.1 million foreign currency transaction gain.
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This section of this Annual Report on Form 10-K generally discusses 2022 and 2021 items and year-over-year comparisons between 2022 and 2021.
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This platform is powering the rapidly emerging resale economy, one of the fastest growing sectors in retail, according to a GlobalData market survey conducted in January 2023.
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Discussions of 2020 items and year-over-year comparisons between 2021 and 2020 that are not included in this Annual Report on Form 10-K can be found in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations , of our Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 10-K”).
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We take it from there and do the work to make those items available for resale. Aside from Clean Out Kits, ThredUp also sources inventory from a variety of supply channels, such as wholesale supply in Europe.
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Overview thredUP operates one of the world’s largest online resale platforms for apparel, shoes and accessories. Our mission is to inspire a new generation of consumers to think secondhand first.
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We believe RaaS will accelerate the growth of this emerging category and form the backbone of the modern resale experience domestically and internationally. Overview of 2023 Results Revenue: Total revenue was $322.0 million, an increase of 11.7% year-over-year. Gross Profit and Margin: Gross profit totaled $213.8 million, representing an increase of 11.2% year-over-year.
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We believe RaaS will accelerate the growth of this emerging category and form the backbone of the modern resale experience domestically and internationally. In 2021, we acquired Remix Global EAD (“Remix”), a fashion resale company based in Sofia, Bulgaria.
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Gross margin decreased by 30 basis points to 66.4% from 66.7% year-over-year.
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With this acquisition, we further expanded our reach to European customers, added a complementary operational infrastructure and added an experienced management team to enable our expansion into Europe.
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Active Buyers and Orders: Active Buyers totaled 1.8 million and Orders totaled 6.9 million in 2023, representing growth of 8.8% and 6.2%, respectively, compared to the prior year.
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In addition, Remix’s product assortment extended our resale offering to include men’s items and items sourced from a variety of supply channels, such as wholesale supply. 47 Table of Contents Recent Business Developments Macroeconomic Factors Macroeconomic factors, including inflation, increased interest rates, significant capital market volatility, the prolonged COVID-19 pandemic, global supply chain constraints, and global economic and geopolitical developments have direct and indirect impacts on our results of operations that are difficult to isolate and quantify.
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Certain interest costs in conjunction with the build-out of our distribution centers in 2022 were reclassified from interest expense and capitalized.
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These factors contributed to increases in our operating costs during 2022 primarily due to increased transportation costs and wage rates. In addition, rising fuel, utility, and food costs, rising interest rates, and recessionary fears may impact customer demand and our ability to forecast consumer spending patterns.
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The increase in total revenue was due primarily to an 8.8% increase in Active Buyers and 6.2% increase in Orders combined with a 5.1% increase in net revenue per Order.
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We expect some or all of these factors to continue to impact our operations into 2023. Foreign Currency During 2022, the U.S. dollar appreciated against major European currencies, including the Bulgarian lev. We believe the strengthening U.S. dollar had a negative impact on our European sales.
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This lower product gross margin was offset by a 250 basis point increase in consignment gross margin, primarily driven by lower shipping, labor and packaging costs.
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We are managing the currency risk related to earnings through natural hedges and have offsetting costs relating to operating our business and a regional source of supply. Therefore, changes to exchange rates have not had a significant impact to our consolidated financial results. We continue to monitor our foreign exchange exposure as we grow our business globally.
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The changes in consignment and product gross margins, coupled with the 22.1% increase in consignment revenue and the 4.4% decrease in product revenue, resulted in overall gross margin declining 30 basis points for the year ended December 31, 2023.
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We have not engaged in hedging of foreign currency transactions to date, although we may choose to do so in the future. For further details, please refer to Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk , of this Annual Report on Form 10-K.

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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 changeInflation Risk In recent months, inflation has increased significantly in the U.S. and overseas where we conduct our business, resulting in rising interest rates and fuel, labor and processing, freight and other costs that have affected our gross margin and operating expenses.
Biggest changeIf interest rates were to increase or decrease by 1% for the year and our borrowing amounts on the Term Loan remained constant, the increase or decrease to our annual interest expense would not be material . 55 Table of Contents Inflation Risk In recent months, inflation has increased significantly in the U.S. and overseas where we conduct our business, resulting in rising interest rates and fuel, labor and processing, freight and other costs that have affected our gross margin and operating expenses.
As a result, our operating results, cash flows and net investment in Remix are subject to fluctuations due to changes in foreign currency exchange rates. As of December 31, 2022, our most significant currency exposure was the Bulgarian lev.
As a result, our operating results, cash flows and net investment in Remix are subject to fluctuations due to changes in foreign currency exchange rates. As of December 31, 2023, our most significant currency exposure was the Bulgarian lev.
Due to the short- to intermediate-term nature of our investments, we have not been exposed to, nor do we anticipate being exposed to, material risks due to fluctuations in interest rates. The Term Loan bears variable interest rates tied to the prime rate, with a floor of 6.00%, and therefore carries interest rate risk.
Due to the short- to intermediate-term nature of our investments, we have not been exposed to, nor do we anticipate being exposed to, material risks due to fluctuations in interest rates. The Term Loan bears variable interest rates tied to the prime rate, with a floor of 4.75%, and therefore carries interest rate risk.
The related translation adjustments were reflected as an unfavorable foreign currency translation adjustment of $2.4 million during the year ended December 31, 2022, which was recognized in accumulated other comprehensive loss within our consolidated balance sheet.
The related translation adjustments were reflected as a favorable foreign currency translation adjustment of $0.8 million during the year ended December 31, 2023, which was recognized in accumulated other comprehensive loss within our consolidated balance sheet.
These risks primarily include: 57 Table of Contents Interest Rate Risk As of December 31, 2022, we had cash and cash equivalents of $38.0 million and marketable securities of $66.9 million, consisting primarily of money market funds, commercial paper, corporate debt securities, U.S. treasury securities and U.S. government agency bonds, which carry a degree of interest rate risk.
These risks primarily include: Interest Rate Risk As of December 31, 2023, we had cash and cash equivalents of $56.1 million and marketable securities of $8.1 million, consisting primarily of money market funds, commercial paper, U.S. treasury securities and U.S. government agency bonds, which carry a degree of interest rate risk.
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If interest rates were to increase or decrease by 1% for the year and our borrowing amounts on the Term Loan remained constant, our annual interest expense could increase or decrease by approximately $0.3 million, respectively.

Other TDUP 10-K year-over-year comparisons