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Our operating expenses may increase substantially in the foreseeable future to the extent necessary that we may hire additional employees, invest in expanding our seller and buyer base and deepening our existing seller and buyer relationships, expand across and within product verticals, increase our marketing efforts and brand awareness, and invest in expanding our international operations.
−Removed: In addition, as a public company, we have and will continue to incur significant legal, accounting, and other expenses that we did not incur as a private company.
−Removed: These expenditures will make it more difficult for us to achieve and maintain profitability.
Our efforts to grow our business may be more costly than we expect, and we may not be able to increase our revenue enough to offset our higher operating expenses.
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If we are not able to achieve and maintain profitability, the value of our company and our common stock could decline significantly, and you could lose some or all of your investment.
−Removed: Our annual and quarterly results of operations have fluctuated from period to period and may do so in the future, which could cause our stock price to fluctuate and the value of your investment to decline.
−Removed: Our quarterly and annual net revenue and results of operations have historically fluctuated from period to period, and our future results of operations may vary significantly from quarter to quarter due to a variety of factors, many of which are beyond our control.
−Removed: You should not rely on period-to-period comparisons of our results of operations as an indication of our future performance.
−Removed: Factors that may cause fluctuations in our quarterly results of operations include, but are not limited to, the following:
−Removed: • fluctuations in net revenue generated from sales of luxury design products through our online marketplace;
−Removed: • our success in attracting sellers and buyers to, and retaining sellers and buyers on, our online marketplace, and our ability to do so in a cost-efficient manner;
+Added: Our net revenue and results of operations fluctuate within each quarter and from quarter to quarter, causing our stock price to fluctuate and making our financial results difficult to predict.
+Added: Our quarterly and annual net revenue and results of operations, as well as our key metrics, have historically fluctuated from period to period, with net revenue of $88.3 million, $84.7 million, and $96.8 million during the fiscal years ended December 31, 2024, 2023, and 2022, respectively.
+Added: Our future net revenue or results of operations may vary significantly from quarter to quarter, due to a variety of factors, many of which are beyond our control.
+Added: These fluctuations could cause our stock price to change significantly or experience declines.
+Added: You should not rely on period-to-period comparisons of our net revenue or results of operations as an indication of our future performance.
+Added: Factors that may cause fluctuations in our quarterly results of operations, many of which are beyond our control, include, but are not limited to, the following:
+Added: • fluctuations in net revenue generated from sales of luxury design items through our online marketplace;
+Added: • our success in attracting and retaining sellers and buyers to and on our online marketplace, and our ability to do so in a cost-efficient manner;
• our ability to attract users to our website and convert users to Active Buyers on our online marketplace;
+Added: • Active Buyers with multiple unique email accounts that are undetected and in violation of our terms of service as we could be overestimating the number of Active Buyers;
• the amount and timing of our operating expenses;
−Removed: • our ability to continue to source and make luxury design products available on our online marketplace;
−Removed: • the timing and success of new services, features, and offerings we introduce through our e-commerce platform, including our recently launched auction transaction format;
+Added: • our ability to continue to source and provide available luxury design items on our online marketplace;
+Added: • the timing and success of new services, features, and offerings we introduce through our e-commerce platform;
• our ability to compete successfully;
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• changes in our key metrics or the methods used to calculate our key metrics;
−Removed: • seasonality, including seasonal buying patterns, which may vary from quarter to quarter or year to year;
−Removed: • changes in laws, regulations, or accounting principles that impact our business;
+Added: • more challenging comparisons to prior periods as our net revenue grows;
+Added: • a decrease in the growth of our overall market or market saturation;
+Added: • our failure to capitalize on growth opportunities;
+Added: • seasonality, including seasonal buying patterns, which vary from quarter to quarter or year to year;
+Added: • changes in laws, regulations, governmental policies, or accounting principles that impact our business, business partners or customers;
• disruptions or defects in our e-commerce platform, such as service interruptions or privacy or data security breaches;
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• our ability to hire and retain talented employees and professional contractors at all levels of our business;
−Removed: • the changing consumer behaviors as a result of the post COVID-19 pandemic or other events, such as geopolitical crises, which may cause significant economic or social disruption;
−Removed: • our ability to successfully manage previously-minted NFTs that remain available for sale and to anticipate and manage the risks associated therewith;
−Removed: • economic and market conditions, particularly those affecting the luxury design products industry, such as fluctuations in inflation and interest rates or supply chain or global shipping disruptions.
−Removed: Further, we make certain assumptions when planning our expenses based on our expected revenue based in part on historical results.
+Added: • the changing consumer behaviors and factors that affect consumer behaviors and spending, such as economic conditions, inflationary pressures, interest rates, discretionary spending patterns, employment levels, instability in the housing market, geopolitical crises, or significant economic or social disruption;
+Added: • economic and market conditions, particularly those affecting the luxury design items industry, such as fluctuations in inflation and interest rates or supply chain or global shipping disruptions.
+Added: 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, financial condition, and results of operations will be harmed, and we may not be able to achieve or maintain profitability.
+Added: Further, these and other factors may cause our net revenue and results of operations to fall below our expectations or the expectations of market analysts and investors in future periods, which could cause the market price of our common stock to decline substantially.
+Added: Any decline in the market price of our common stock would cause the value of your investment to decline.
+Added: Our business is affected by seasonality and, if we experience lower than expected net revenue during an anticipated season, our results of operations and financial condition for that year may be impacted, which could substantially harm our business, results of operations, and financial condition.
+Added: Our business is subject to seasonal fluctuations, and, as a result, we make certain assumptions when planning our expenses based on our expected revenue based in part on historical results.
Because our operating expenses are relatively fixed in the short term, any failure to achieve our revenue expectations would have a direct, adverse effect on our results of operations.
If actual results differ from our estimates, the trading price of our common stock may decline.
−Removed: In addition, in the past, we have generally recognized higher net revenue in the fourth quarter.
+Added: We have generally recognized higher net revenue in the fourth quarter.
In anticipation of increased activity during the fourth quarter, we may incur significant additional expenses, including additional marketing and staffing in our support operations.
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In the future, our seasonal sales patterns may become more pronounced, may strain our personnel, and may cause a shortfall in net revenue related to expenses in a given period, which could substantially harm our business, results of operations, and financial condition.
−Removed: If we are unable to accomplish any of these tasks, our net revenue and revenue growth will be harmed.
−Removed: 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, financial condition, and results of operations will be harmed, and we may not be able to achieve or maintain profitability.
−Removed: Further, these and other factors may cause our net revenue and results of operations to fall below the expectations of market analysts and investors in future periods, which could cause the market price of our common stock to decline substantially.
−Removed: Any decline in the market price of our common stock would cause the value of your investment to decline.
−Removed: Our historical growth may not be indicative of our future growth and our net revenue growth rate may decelerate compared to prior years.
−Removed: We have experienced fluctuations in our net revenue growth, with net revenue of $84.7 million, $96.8 million, and $102.7 million during the fiscal years ended December 31, 2023, 2022, and 2021, respectively.
−Removed: You should not rely on our net revenue for any previous quarterly or annual period as any indication of our net revenue or revenue growth in future periods.
−Removed: As we grow our business, our net revenue growth rates have and may in the future decelerate compared to prior years for a number of reasons, which may include more challenging comparisons to prior periods as our net revenue grows, slowing demand for our online marketplace, increasing competition, a decrease in the growth of our overall market or market saturation, and our failure to capitalize on growth opportunities.
−Removed: In addition, notwithstanding the general increase in online transactions, including for luxury purchases, our growth rates are likely to experience increased volatility, and may decelerate, in future periods.
−Removed: If we fail to generate a sufficient volume of listings of luxury design products on our online marketplace, our ability to grow our business and market share would suffer.
−Removed: Our success depends on our ability to cost-effectively attract, retain, and grow relationships with sellers, and in turn, the volume of luxury design products listed and sold through our online marketplace.
−Removed: We cannot be certain that these efforts will
−Removed: attract more sellers, induce sellers to list and sell more luxury design products on our online marketplace or yield a sufficient return on investment.
−Removed: Moreover, sellers may choose not to continue to list with us or list items as frequently.
−Removed: Our historical seller marketplace services revenue may not be indicative of future revenue.
−Removed: We are highly selective in the sellers we allow onto our online marketplace and sellers must undergo a thorough vetting process with our vetting specialists before they are allowed to join our online marketplace.
−Removed: As a result, we may have difficulty identifying sellers who meet our standards for providing luxury design products and our customer service requirements.
+Added: Our ability to grow our business and market share depend on our ability to attract and maintain an active community of sellers and buyers and to ensure a sufficient volume of listings on our online marketplace.
+Added: Our business growth and market success depend on our ability to cost-effectively attract, retain, and grow relationships with active sellers and buyers, and in turn, the volume of luxury design items listed and sold through our online marketplace.
+Added: We cannot be certain that our efforts will attract more sellers, induce sellers to list and sell more luxury design items on our online marketplace, or yield a sufficient return on investment.
+Added: Moreover, sellers may be dissatisfied with their experience and choose not to continue to list with us or list items as frequently, or they may stop referring others to us.
+Added: Similarly, we cannot be certain that our efforts will attract more buyers, induce more buyers to purchase on our online marketplace, or yield a sufficient
+Added: return on investment.
+Added: If existing buyers have a negative experience or if the interest in buying luxury design items declines, they may make fewer purchases or they may stop referring others to us.
+Added: To expand our buyer base, we must appeal to and attract buyers of luxury design items and convert users to Active Buyers on our online marketplace.
+Added: New buyers may not purchase through our online marketplace as frequently or spend as much with us as existing buyers.
+Added: As a result, the revenue generated from new buyer transactions may not be as high as the revenue generated from transactions with our existing buyers.
+Added: Our historical performance for Active Buyers may not be indicative of future performance in new Active Buyers.
+Added: Failure to attract new buyers and to maintain relationships with existing buyers, or to convert users to Active Buyers on our online marketplace, would harm our results of operations and our ability to attract and retain sellers.
+Added: Even if we are able to attract new sellers and buyers to replace any that we lose, they may not maintain the same level of activity and generate the same level of revenue.
+Added: If we are unable to retain existing, or attract new, sellers and buyers, our growth prospects would be harmed, which could substantially harm our business, results of operations, and financial condition.
+Added: Further, our historical seller marketplace services revenue may not be indicative of future revenue.
+Added: We are highly selective in the sellers we allow onto our online marketplace and sellers undergo an evaluation by our in-house experts to vet the integrity of their listings before they are allowed to join our online marketplace.
+Added: As a result, we may have difficulty identifying sellers who meet our standards for providing luxury design items and our customer service requirements.
If we fail to attract new sellers or drive continued or increased listings, our ability to grow our business and our results of operations would suffer.
See “Risk Factors—Risks Related to Our Business and Industry—We rely, in part, on sellers to provide a positive experience to buyers.”
−Removed: Further, our vetting specialists curate luxury design products through a variety of methods, including meeting with potential sellers and working with leading estates and foundations.
−Removed: The process of identifying and hiring vetting specialists with the combination of skills and attributes required in these roles can be difficult and can require significant time.
−Removed: If we are not successful in attracting and retaining qualified vetting specialists, the quantity and quality of the luxury design products sold through our online marketplace may be negatively impacted, which would harm our business and results of operations.
We may expand our business through acquisitions of other businesses, products, or technologies, which have required, could continue to require, and may require significant management attention, could disrupt our business, dilute stockholder value, adversely affect our operating results, and/or prove to be unsuccessful.
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For example, in May 2019, we acquired Design Manager, a project management and accounting software company for interior designers.
−Removed: In June 2022, we sold 100% of our equity interest in Design Manager.
+Added: Also, in June 2022, we sold 100% of our equity interest in Design Manager.
Acquisitions may divert management’s time and focus from operating our business.
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We may not succeed in addressing these or other risks, which could harm our business and results of operations.
−Removed: If we are unable to establish the authenticity of the items listed and sold through our online marketplace, our business, brand, and reputation could suffer.
−Removed: We have built a trusted online marketplace with a reputation for authentic luxury design products as a result of our extensive vetting process.
+Added: Our ability to establish the authenticity of items listed and sold through our online marketplace is essential to maintaining our business, brand, and reputation.
+Added: Failure to do so may adversely affect customer trust and pose risks to our operations and standing in the market.
+Added: We have built a trusted online marketplace with a reputation for authentic luxury design items as a result of our evaluations by in-house experts to vet the integrity of sellers’ listings.
Our success depends on our ability to accurately and cost-effectively determine whether an item offered for listing, such as a piece of jewelry or work of art, is an authentic product.
−Removed: Our sellers undergo a comprehensive evaluation by our vetting specialists to ensure the integrity of their business practices.
+Added: We seek to reassure buyers that the items they are purchasing meet our marketplace standards.
+Added: Our sellers undergo a comprehensive evaluation by our vetting specialists to ensure the quality of their inventory.
Our vetting specialists come from many of the leading auction and retail houses, brands, and industry recognized art and design businesses.
−Removed: We also seek to reassure buyers that the items they are purchasing meet the highest marketplace standards.
−Removed: Our vetting process is led by experts with degrees in fine art, gemology, restoration, and art, with certificates in appraisal services, jewelry expertise, and connoisseurship, among others.
We also seek to proactively resolve issues through communication and follow-up.
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From time to time, counterfeit goods have been and may be listed on our online marketplace.
−Removed: While we have invested heavily in our seller vetting process as described above, we cannot be certain that we will accurately authenticate every item that is listed with us.
+Added: While we have invested heavily in our seller vetting process as described above, we cannot accurately authenticate every item that is listed with us.
As the sophistication of counterfeiters increases, it may be increasingly difficult to identify counterfeit products.
In many cases, we refund the cost of a product to a buyer if we determine that the item is not authentic.
−Removed: The sale of any counterfeit goods may damage our reputation as a trusted online marketplace for authenticated, luxury design products, which may impact our ability to attract and maintain repeat sellers and buyers.
−Removed: Additionally, we may be subject to allegations that an antique, vintage, or other luxury design product we listed and sold through our online marketplace is not authentic.
+Added: The sale of any counterfeit goods may damage our reputation as a trusted online marketplace for authenticated, luxury design items, which may impact our ability to attract and maintain repeat sellers and buyers.
+Added: Additionally, we may be subject to allegations that an antique, vintage, or other luxury design item we listed and sold through our online marketplace is not authentic.
Such controversy could negatively impact our reputation and brand and harm our business and results of operations.
If we are unable to maintain the quality and authenticity of the items listed on our online marketplace, our ability to retain and attract sellers and buyers could be impaired and our reputation, brand, and business could suffer.
−Removed: We may be subject to claims that items listed on our online marketplace are counterfeit, infringing, hazardous, or illegal, or otherwise subject to regulation or cultural patrimony considerations.
+Added: Items listed on our online marketplace may be subject to claims of being counterfeit, infringing, hazardous, illegal, or otherwise subject to regulations or cultural patrimony considerations.
+Added: Addressing such claims can result in operational, legal, and reputational challenges.
Although we do not create or take possession of the items listed on our online marketplace, we have from time to time received, and may in the future receive, communications alleging that items listed on our online marketplace infringe third-party copyrights, trademarks, patents, or other intellectual property rights, or that items we list from our sellers contain materials such as fur, python, ivory, and other exotic animal product components, that are subject to regulation or cultural patrimony considerations, or that may be deemed hazardous or illegal.
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Under current U.S.
−Removed: copyright law and the Communications Decency Act, we may benefit from statutory safe harbor provisions that protect us from liability for content posted by our sellers and buyers.
+Added: copyright law and the Communications
+Added: Decency Act, we may benefit from statutory safe harbor provisions that protect us from liability for content posted by our sellers and buyers.
However, trademark and patent laws do not include similar statutory provisions and liability for these forms of intellectual property is often determined by court decisions.
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If a governmental authority determines that we have aided and abetted the infringement of third-party intellectual property rights or the sale of counterfeit goods or if legal changes result in us potentially being liable for actions by sellers on our online marketplace, we could face regulatory, civil, or criminal penalties.
−Removed: Successful claims by third-party rights owners
−Removed: could require us to pay substantial damages or refrain from permitting any further listing of the relevant items.
+Added: Successful claims by third-party rights owners could require us to pay substantial damages or refrain from permitting any further listing of the relevant items.
These types of claims could force us to modify our business practices, which could lower our revenue, increase our costs, or make our platform less user-friendly.
Moreover, public perception that counterfeit or other unauthorized items are common on our online marketplace, even if factually incorrect, could result in negative publicity and damage to our reputation.
−Removed: If we are deemed to be liable for fraudulent or unlawful activities of sellers who list stolen items on our online marketplace, our business and reputation could suffer.
−Removed: Despite our vetting process, we may fail to prevent the listing of stolen goods on our online marketplace.
+Added: Liability for fraudulent or unlawful activities by sellers, including the listing of stolen items on our online marketplace, poses risks to our business and reputation.
+Added: Despite our vetting process and contractual requirements prohibiting the listing of stolen or otherwise illegal products, from time to time, the listing of stolen goods on our online marketplace may occur.
Government regulators and law enforcement officials may allege that our services violate, or aid and abet violations of certain laws, including laws restricting or prohibiting the transferability and, by extension, the resale, of stolen goods.
−Removed: Our form of seller agreement includes a representation that the seller has the necessary right and title to the luxury design products the seller may list, and we include such a rule and requirement in our terms of service prohibiting the listing of stolen or otherwise illegal products.
−Removed: In addition, we have implemented other protective measures to detect such products.
−Removed: If these measures prove inadequate, we may be required to spend substantial resources to take additional protective measures which could negatively impact our operations.
+Added: We may be required to spend substantial resources to take additional protective measures which could negatively impact our operations.
Any costs incurred as a result of potential liability relating to the alleged or actual sale of stolen goods could harm our business.
−Removed: In addition, negative publicity relating to the actual or perceived listing or sale of stolen goods using our services could damage our reputation and make our sellers and buyers reluctant to use our services.
+Added: In addition, negative publicity relating to the actual or perceived listing or sale of stolen goods using our services could damage our reputation and discourage our sellers and buyers from using our services.
We could face liability for such unlawful activities.
Despite measures taken by us to detect stolen goods, to cooperate fully with law enforcement, and to respond to inquiries regarding potentially stolen goods, any resulting claims or liabilities could harm our business.
−Removed: Our growth depends on our ability to attract and maintain an active community of sellers and buyers.
−Removed: In order to increase revenue and to achieve and maintain profitability, we must expand our seller and buyer network.
−Removed: We must also encourage sellers to list items and encourage buyers to purchase items through our online marketplace.
−Removed: If existing sellers are dissatisfied with their experience on our platform, they may stop listing items on our online marketplace and may stop referring others to us.
−Removed: Similarly, if existing buyers have a negative experience or if the interest in buying luxury design products declines, they may make fewer purchases and they may stop referring others to us.
−Removed: Under these circumstances, we may have difficulty attracting new sellers and buyers without incurring additional marketing expense.
−Removed: To expand our buyer base, we must appeal to and attract buyers of luxury design products and convert users to Active Buyers on our online marketplace.
−Removed: New buyers may not purchase through our online marketplace as frequently or spend as much with us as existing buyers.
−Removed: As a result, the revenue generated from new buyer transactions may not be as high as the revenue generated from transactions with our existing buyers.
−Removed: Our historical performance for Active Buyers may not be indicative of future performance in new Active Buyers.
−Removed: Failure to attract new buyers and to maintain relationships with existing buyers, or to convert users to Active Buyers on our online marketplace, would harm our results of operations and our ability to attract and retain sellers.
−Removed: Even if we are able to attract new sellers and buyers to replace those we lose, they may not maintain the same level of activity and generate the same level of revenue.
−Removed: If we are unable to retain existing, or attract new, sellers and buyers, our growth prospects would be harmed and our business could be harmed.
−Removed: Our growth will also depend on the continued and increased acceptance of e-commerce and online shopping by buyers of luxury design products.
−Removed: Although we have seen increased acceptance of online transactions in the luxury design products sector, including as a result of the COVID-19 pandemic, we cannot predict whether this trend will continue.
−Removed: Further, if sellers and buyers elect to transact business through in-person interactions instead of through our online marketplace, our revenue could be negatively impacted and our business could be harmed.
We rely, in part, on sellers to provide a positive experience to buyers, which includes limited disruptions in service by sellers.
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A perception that our levels of responsiveness and seller and buyer support are inadequate could have similar results.
−Removed: Further, any disruption in the operations of a substantial number of sellers, such as interruptions in delivery services, disruption due to public health crises, such as the COVID-19 pandemic, natural disasters, inclement weather, or political unrest, could also result in negative experiences for a substantial number of buyers.
+Added: Further, any disruption in the operations of a substantial number of sellers, such as interruptions in delivery services or disruption due to public health crises, natural disasters, inclement weather, or political unrest, could also result in negative experiences for a substantial number of buyers.
If buyers do not have a positive experience transacting business on our online marketplace for any reason, or if we or our sellers fail to provide a high level of customer support and responsiveness, it could harm our reputation and our business.
−Removed: Sellers rely on shipping services to deliver orders received through our online marketplace and if the items sold through our online marketplace are not delivered on time, in proper condition, or at all, our business and reputation could suffer.
−Removed: Sellers work with a number of third-party services to deliver their items to buyers, including FedEx, UPS, and the United States Postal Service.
+Added: Shipping and logistics are critical to our business, and delays, failures, or issues with the condition of items delivered through our online marketplace harm our business and reputation.
+Added: We and our sellers work with a number of third-party services to deliver their items to buyers, including DHL, FedEx, UPS, and the United States Postal Service.
Anything that prevents timely delivery of goods to buyers could harm sellers and could negatively affect our reputation.
−Removed: Delays or interruptions may be caused by events that are beyond the control of the delivery services, such as inclement weather, natural disasters, transportation disruptions, delays in customs inspections, terrorism, public health crises such as the COVID-19 pandemic, or labor unrest.
−Removed: For example, in the event a potential third-party strike occurs, this may cause orders to be lost or delivered late, which could result in canceled customer orders, reduced GMV and net revenue, and negatively impact net loss.
+Added: Delays or interruptions may be caused by events that are beyond the control of the delivery services, such as inclement weather, natural disasters, transportation disruptions, delays in customs inspections, terrorism, war, geopolitical tension, public health crises, or labor unrest.
+Added: For example, a third-party strike may result in increased shipping costs and buyer accommodations and may cause orders to be lost or delivered late, which could result in canceled customer orders, reduced GMV and net revenue, and negatively impact net loss.
It is possible that a potential third-party strike could also result in increased shipping costs and buyer accommodations.
These potential impacts may have a material adverse effect on our business, financial condition, including on our financial statements of operations and cash flow, operating results, and liquidity.
−Removed: The delivery services could also be affected by industry consolidation, insolvency, or government shut-downs.
+Added: The delivery services could also be affected by industry consolidation, insolvency, or government shutdowns.
Although we have agreements with certain delivery services that enable us to provide pre-paid shipping labels as a convenience to sellers, our agreements do not require these providers to offer delivery services to sellers.
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If the items sold through our online marketplace are not delivered in proper condition, on a timely basis or at shipping rates that buyers are willing to pay, our reputation and our business could be adversely affected.
−Removed: We operate in an evolving industry and our past results may not be indicative of future operating performance.
−Removed: Our online marketplace represents a substantial departure from the traditional market for luxury design products.
−Removed: The online market for luxury design products may not continue to develop in a manner that we expect or that otherwise would be favorable to our business.
−Removed: Changes in our market make it difficult to assess our future performance.
−Removed: Our future success will depend in large part upon our ability to, among other things:
−Removed: • cost-effectively acquire and engage with new and existing sellers and buyers and increase listings of luxury design products through our online marketplace;
−Removed: • scale our revenue and achieve the operating efficiencies necessary to achieve and maintain profitability;
−Removed: • increase awareness of our brand;
−Removed: • anticipate and respond to changing seller and buyer preferences;
−Removed: • manage and improve our business processes in response to changing business needs;
−Removed: • anticipate and respond to macroeconomic changes generally, including changes in the market for luxury design products and fluctuating shipping costs;
−Removed: • effectively scale our operations while maintaining high service quality and seller and buyer satisfaction;
−Removed: • avoid or manage interruptions in our business from information technology downtime, cybersecurity breaches, and other factors affecting our physical and digital infrastructure;
−Removed: • provide responsive, timely, and effective customer support through all phases of transactions conducted through our online marketplace;
−Removed: • maintain the quality of our technology and operations infrastructure;
−Removed: • expand internationally and manage our international operations;
−Removed: • develop new technology, services, or features to enhance the seller and buyer experience;
−Removed: • comply with regulations applicable to our business.
−Removed: If we fail to address the risks and difficulties that we face, including those associated with the challenges listed above as well as those described elsewhere in this “Risk Factors” section, our business and our results of operations would suffer.
If we do not compete effectively, our results of operations and market position could suffer.
−Removed: The market for luxury design products is highly competitive.
−Removed: We compete with a broad range of vendors of new and pre-owned luxury design products, including traditional brick-and-mortar entities, such as department stores, branded luxury goods stores, and specialty retailers, and entities providing access to more unique luxury goods, such as galleries, boutiques, independent retail stores, and auction houses.
−Removed: We also compete with the online offerings of these traditional retail competitors, resale players focused on niche or single categories, as well as technology-enabled online marketplaces that may offer the same
−Removed: or similar goods and services that we offer.
−Removed: We believe our current primary competitors include Amazon, eBay, Etsy Inc., Restoration Hardware, Inc., Wayfair Inc., Christie’s Inc., and Sotheby’s, Inc.
+Added: The market for luxury design items is highly competitive.
+Added: We compete with a broad range of vendors of new and pre-owned luxury design items, including traditional brick-and-mortar entities, such as department stores, branded luxury goods stores, and specialty retailers, and entities providing access to more unique luxury goods, such as galleries, boutiques, independent retail stores, and auction houses.
+Added: We also compete with the online offerings of these traditional retail competitors, resale players focused on niche or single categories, as well as technology-enabled online marketplaces that may offer the same or similar goods and services that we offer.
We believe our ability to compete depends on many factors within and beyond our control, including:
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• maintaining favorable brand recognition and effectively delivering our online marketplace to sellers and buyers;
−Removed: • identifying and delivering authentic luxury design products;
−Removed: • the amount, diversity, and quality of luxury design products that we or our competitors offer;
−Removed: • our ability to expand the verticals for luxury design products listed on our online marketplace;
−Removed: • the price at which listed, authenticated luxury design products through our online marketplace are offered;
−Removed: • the speed and cost at which we can authenticate and make available listed luxury design products;
−Removed: • the ease with which our sellers can list and sell, and our buyers can purchase and return, luxury design products sold and purchased on our online marketplace.
+Added: • identifying and delivering authentic luxury design items;
+Added: • the amount, diversity, and quality of luxury design items that we or our competitors offer;
+Added: • our ability to expand the verticals for luxury design items listed on our online marketplace;
+Added: • the price at which listed, authenticated luxury design items through our online marketplace are offered;
+Added: • the speed and cost at which we can authenticate and make available listed luxury design items;
+Added: • the ease with which our sellers can list and sell, and our buyers can purchase and return, luxury design items sold and purchased on our online marketplace.
Failure to adequately meet these demands may cause us to lose potential sellers and buyers which could harm our business.
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Some of our competitors may have greater resources than we do, which may allow them to derive greater revenue and profits from their existing buyer bases, attract sellers at lower costs, or respond more quickly than we can to new or emerging technologies and changes in consumer shopping behavior.
−Removed: These competitors may engage in more extensive technology development efforts, enter the business of online listing of luxury design products, undertake more far-reaching marketing campaigns and adopt more aggressive pricing policies, which may allow them to build larger seller or buyer bases or generate revenue from their existing seller and buyer bases more effectively than we do.
+Added: These competitors may engage in more extensive technology development efforts, enter the business of online listing of luxury design items, undertake more far-reaching marketing campaigns and adopt more aggressive pricing policies, which may allow them to build larger seller or buyer bases or generate revenue from their existing seller and buyer bases more effectively than we do.
If we fail to compete effectively, our business, results of operations, and market share may suffer.
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We estimate this reserve based on historical return trends.
−Removed: The introduction of new products in the retail market, changes in seller return policies, changes in consumer confidence, or other competitive and general economic conditions may cause actual returns to exceed our reserve for returns.
+Added: The introduction of new products in the retail market, changes in seller return policies, changes in laws, legislation, or regulations governing returns, changes in consumer confidence, or other competitive and general economic conditions may cause actual returns to exceed our reserve for returns.
Any significant increase in returns that exceeds our reserves could adversely affect our net revenue and results of operations.
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The provision for transaction losses also includes bad debt expense associated with our accounts receivable balance.
−Removed: Transaction loss expense associated with our buyer protection program accounted for approximately 87%, 85%, and 81% of the provision for transaction losses in the fiscal years ended December 31, 2023, 2022, and 2021, respectively, with discretionary buyer reimbursements, which are part of the buyer protection program, constituting a small portion thereof.
+Added: Transaction loss expense associated with our buyer protection program accounted for approximately 70%, 87%, and 85%, of the provision for transaction losses in the years ended December 31, 2024, 2023, and 2022, respectively, with discretionary buyer reimbursements, which are part of the buyer protection program, constituting a small portion thereof.
However, our historical experience may not be indicative of future trends and transaction loss expense associated with our buyer protection program, including buyer reimbursements, or bad debt expense may increase or fluctuate from period to period.
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If our allowance for transaction losses is insufficient, it could adversely affect our results of operations.
−Removed: Our metrics and market estimates used to evaluate our performance are subject to inherent challenges in measurement, and real or perceived inaccuracies in those estimates may harm our reputation and negatively affect our business.
−Removed: The metrics we use to evaluate our growth, measure our performance, and make strategic decisions are calculated using internal company data and assumption and estimates, and have not been validated by a third party.
−Removed: Certain metrics presented in this Annual Report on Form 10-K and other SEC filings are used by us in managing our business.
−Removed: Our metrics and market estimates may differ from estimates published by third parties or from similarly titled metrics of our competitors or peers due to differences in methodology or the assumptions on which we rely.
−Removed: Additionally, the metrics and forecasts relating to the size and expected growth of our addressable market may prove to be inaccurate.
−Removed: However, we believe that these figures are reasonable
−Removed: estimates, and we take measures to improve their accuracy, such as eliminating known fictitious or duplicate accounts.
−Removed: There are, nonetheless, inherent challenges in gathering accurate data across large online and mobile populations.
−Removed: For example, there may be individuals who have multiple email accounts in violation of our terms of service.
−Removed: If individuals have multiple unique email addresses that are undetected, then we could be overestimating the number of Active Buyers.
−Removed: Even if the markets in which we compete meet the size estimates and growth forecasted, our business could fail to grow at similar rates, if at all.
−Removed: If securities analysts or investors do not consider our market metrics to be accurate representations of our business, or if we discover material inaccuracies in such estimates, then the market price of our common stock could decline, our reputation and brand could be harmed, and our business, financial condition, and results of operations could be adversely affected.
−Removed: Our business and results of operations may be more susceptible to other macroeconomic conditions or trends due to our reliance on consumer discretionary spending.
−Removed: Our business and results of operations are subject to industry and global economic conditions and their impact on consumer discretionary spending, particularly in the market for luxury design products.
−Removed: If general economic conditions deteriorate in the United States or in other markets where we operate, consumer discretionary spending may decline and demand for the luxury design products available on our online marketplace may be reduced.
+Added: Our business and results of operations are sensitive to changes in or uncertainty about economic conditions in the U.S.
+Added: and international markets that impact consumer spending, including consumer discretionary spending.
+Added: Our business and results of operations are sensitive to changes in or uncertainty about industry and global economic conditions and their impact on consumer discretionary spending, particularly in the market for luxury design items.
+Added: An economic downturn or recession, or slowing or stalled recovery therefrom in the United States or in other markets where we operate, may have a material adverse effect on our business, financial condition, or results of operations.
+Added: Our buyers may have less money for discretionary spending and may stop or reduce their purchases of our products or switch to our competitors, reducing demand for the luxury design items available on our online marketplace.
This would cause sales through our online marketplace to decline and adversely impact our business.
−Removed: Exchange rates may also impact sales, with a strong U.S.
−Removed: dollar dampening demand for goods denominated in dollars from buyers outside the United States.
−Removed: Consumer purchases of luxury design products have generally declined during periods of economic uncertainty, when disposable income is reduced or when there is a reduction in consumer confidence.
−Removed: Other factors that may negatively influence consumer spending on luxury design products include unemployment levels, higher consumer debt levels, reductions in net worth, declines in asset values, market uncertainty, home foreclosures and reductions in home values, fluctuating interest rates and credit availability, changes to monetary policy, volatile currency exchange rates, fluctuating fuel and other energy costs, fluctuating commodity prices, government shutdowns, financial distress caused by recent or potential bank failures and the associated bank crisis and concerns about the stability and liquidity of certain financial institutions, volatility or disruption in the capital markets, and general uncertainty regarding the overall future political and economic environment.
−Removed: Economic conditions may also be affected by global health crises, such as the COVID-19 pandemic, natural disasters, such as earthquakes, hurricanes, floods, severe storms, and wildfires, and wars, social unrest, political tensions, or other unexpected events, which may include further embargoes, regional instability and geopolitical shifts, that may adversely impact our business and operating results to an extent that cannot be predicted.
−Removed: For example, the continued turmoil resulting from the various ongoing wars or conflicts could have a depressing effect on the global economy, which could dampen our business activity by reducing the demand for luxury design products.
−Removed: Such economic uncertainty and decrease in the rate of purchases of luxury design products may slow the rate at which sellers choose to list their items with us, which could result in a decrease of items available through our online marketplace.
−Removed: Additionally, adverse economic changes could reduce consumer confidence, and could thereby negatively affect our operating results.
−Removed: In the event of a prolonged economic downturn or acute recession, significant inflation, or supply chain shortages, consumer spending habits could be adversely affected, and our business, financial condition, and results of operations could be harmed.
+Added: Consumer purchases of luxury design items have generally declined during periods of economic uncertainty, when disposable income is reduced, or when there is a reduction in consumer confidence.
+Added: Other factors that may negatively influence consumer spending on luxury design items include unemployment levels, inflation, volatile exchange rates, higher taxes, reduced access to credit, higher consumer debt levels, reductions in net worth, declines in asset values, home foreclosures and reductions in home values, fluctuating interest rates, changes to economic policy, fluctuating fuel and other energy costs, fluctuating commodity prices, government shutdowns, financial distress caused by bank failures, concerns about the stability and liquidity of certain financial institutions, volatility or disruption in the capital markets, a global health pandemic, international trade disputes, or geopolitical instability.
+Added: Economic conditions may also be affected by global health crises, natural disasters, such as earthquakes, hurricanes, floods, severe storms, and wildfires, and wars, social unrest, political tensions, or other unexpected events, which may include further embargoes, regional instability, and geopolitical shifts that may adversely impact our business and operating results to an extent that cannot be predicted.
+Added: Such economic uncertainty and decrease in the rate of purchases of luxury design items may slow the rate at which sellers choose to list their items with us, which could result in a decrease of items available through our online marketplace.
+Added: There is also a risk that if prolonged economic downturn or acute recession or uncertainty persist for a long time or worsen, consumers may make long-lasting changes to their spending habits, including less frequent discretionary purchases on a more permanent basis.
+Added: These and other macroeconomic factors could adversely affect our business, financial condition, and results of operations.
We may incur expenses or delays relating to such events outside of our control, which could have a material adverse impact on our business, operating results, and financial condition.
−Removed: Even without changes in economic conditions, the demand for the items listed on our online marketplace is dependent on consumer preferences.
−Removed: Consumer preferences can change quickly and may differ across generations and cultures.
−Removed: If demand for the luxury design products that sellers offer through our online marketplace declines, our business would be harmed.
−Removed: National retailers and brands set their own retail prices and promotional discounts on new luxury design products, which could adversely affect our value proposition to our buyers.
−Removed: National retailers and brands set pricing for new luxury design products.
−Removed: Although the luxury design products available through our online marketplace are generally exclusive, one-of-a-kind products, promotional pricing by these parties may nonetheless adversely affect the value of luxury design products listed with us, and, in turn, our GMV and results of operations.
−Removed: In order to attract buyers to our online marketplace, the prices for the luxury design products sold through our online marketplace may need to be lowered in order to compete with these pricing strategies, which could negatively affect GMV and in turn, our net revenue.
+Added: National retailers and brands set their own retail prices and promotional discounts on new luxury design items, which could adversely affect our value proposition to our buyers.
+Added: National retailers and brands set pricing for new luxury design items.
+Added: Although the luxury design items available through our online marketplace are generally exclusive, one-of-a-kind products, promotional pricing by these parties may nonetheless adversely affect the value of luxury design items listed with us, and, in turn, our GMV and results of operations.
+Added: In order to attract buyers to our online marketplace, the prices for the luxury design items sold through our online marketplace may need to be lowered in order to compete with these pricing strategies, which could negatively affect GMV and in turn, our net revenue.
Any of the foregoing risks could adversely affect our business, financial condition, and results of operations.
If we fail to successfully anticipate and respond to changing preferences among our sellers and buyers, our ability to grow our business and our results of operations may suffer.
−Removed: Our success is in large part dependent upon our ability to anticipate and identify trends in the market for luxury design products in a timely manner and to curate and obtain listings of luxury design products that address those trends.
+Added: Our success is in large part dependent upon our ability to anticipate and identify trends in the market for luxury design items in a timely manner and to curate and obtain listings of luxury design items that address those trends.
+Added: Consumer preferences can change quickly and may differ across generations and cultures.
We use data science to predict seller and buyer preferences, and there can be no assurance that our data science will accurately anticipate seller or buyer requirements.
−Removed: Lead times relating to these changing preferences may make it difficult for us to respond rapidly to
−Removed: new or changing trends.
−Removed: We have begun to expand our offerings and the impact on our business from these new offerings is not clear as it is difficult to accurately predict seller and buyer preferences.
−Removed: To the extent we do not accurately predict the evolving preferences of our buyers or are unable to identify and vet sellers of luxury design products who address such buyer preferences, our ability to grow our business and our results of operations would suffer.
+Added: Lead times relating to these changing preferences may make it difficult for us to respond rapidly to new or changing trends.
+Added: To the extent we do not accurately predict the evolving preferences of our buyers or are unable to identify sellers of luxury design items who address such buyer preferences, our ability to grow our business and our results of operations would suffer.
If we fail to successfully expand our business model to encompass additional product verticals in a timely and cost-effective manner, our ability to increase our market share would suffer, which in turn could negatively impact our business, financial condition, and results of operations.
−Removed: We intend to deepen our penetration in our existing verticals for luxury design products and continue to explore additional verticals to serve existing, and attract new, sellers and buyers.
+Added: We intend to deepen our penetration in our existing verticals for luxury design items and continue to explore additional verticals to serve existing, and attract new, sellers and buyers.
If these additional verticals do not attract new sellers or buyers, our revenue may fall short of expectations, our brand and reputation could suffer, and we may incur expenses that are not offset by revenue.
−Removed: In addition, our business may suffer if we are unable to attract new and repeat sellers that supply the necessary high-end, appropriately priced, and in-demand luxury design products in these additional verticals, and these verticals may also have a different range of margin profiles than the pieces currently sold through our online marketplace.
−Removed: Additionally, as we enter new verticals, potential sellers may demand lower commissions than our current verticals, which would adversely affect our take rate and results of operations.
+Added: In addition, our business may suffer if we are unable to attract new and repeat sellers that supply the necessary high-end, appropriately priced, and in-demand luxury design items in these additional verticals, and these verticals may also have a different range of margin profiles than the pieces currently sold through our online marketplace.
+Added: Additionally, as we enter new verticals, potential sellers may demand lower commissions than our current verticals, which would adversely
+Added: affect our take rate and results of operations.
Expansion of our offerings may also strain our management and operational resources, specifically the need to hire and manage additional authentication and market experts.
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An important goal of our brand promotion strategy is establishing trust with our seller and buyer network.
−Removed: Maintaining our brand will depend largely on our ability to continue providing our sellers with service that is consistent with the level of quality associated with the luxury design products they are listing and on the quality of our vetting specialists who represent our brand to new and existing sellers.
−Removed: Our vetting specialists cultivate relationships with our seller base and vet the luxury design products that our sellers want to list.
+Added: Maintaining our brand will depend largely on our ability to continue providing our sellers with service that is consistent with the level of quality associated with the luxury design items they are listing and on the quality of our vetting specialists who represent our brand to new and existing sellers.
+Added: Our vetting specialists cultivate relationships with our seller base and vet the luxury design items that our sellers want to list.
While we do assess the qualifications of all vetting specialists, this may not prevent illegal, improper, or otherwise inappropriate actions, such as theft, from occurring in connection with our services.
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For buyers, maintaining our brand requires that we foster trust through authentication and responsive and effective customer service, as well as ensuring that we have vetted sellers.
−Removed: If we fail to provide sellers or buyers with the service and experience they expect, or experience seller or buyer complaints or negative publicity about our online marketplace services, merchandise, delivery times or customer support, whether justified or not, the value of our brand would be harmed and our business may suffer.
+Added: If we fail to provide sellers or buyers with the service and experience they expect, or if we receive seller or buyer complaints or negative publicity about our online marketplace services, merchandise, delivery times or customer support, whether justified or not, the value of our brand would be harmed and our business may suffer.
If our marketing efforts are not effective, our ability to grow our business and maintain or expand our market share could suffer.
Maintaining and promoting awareness of our online marketplace is important to our ability to retain existing, and to attract new, sellers and buyers.
−Removed: To facilitate our future growth and profitability, we are investing in our advertising, promotion, public relations, and marketing programs.
+Added: To help facilitate our future growth and profitability, we are investing in our advertising, promotion, public relations, and marketing programs.
These brand promotion activities may not yield increased revenue and the efficacy of these activities will depend on a number of factors, including our ability to do the following:
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We may adjust or re-allocate our advertising spend across channels, product verticals, and geographic markets to optimize the effectiveness of these activities.
−Removed: We expect to increase advertising spend in future periods to continue driving our growth.
+Added: We may increase advertising spend in future periods to continue driving our growth.
Implementing new marketing and advertising strategies also could increase the risk of devoting significant capital and other resources to endeavors that do not prove to be cost effective or provide a meaningful return on investment.
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If search engines change their algorithms, terms of service, display, or the featuring of search results, determine we are out of compliance with their terms of service or if competition increases for advertisements, we may be unable to cost-effectively add sellers and buyers to our website and apps.
−Removed: Our relationships with our marketing vendors are not long-term in nature and do not require any specific performance commitments.
+Added: Our relationships with our marketing vendors are not long-term in nature and do not
+Added: require any specific performance commitments.
In addition, many of our online advertising vendors provide advertising services to other companies, including companies with whom we may compete.
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In addition, we have in the past experienced, and may in the future experience, slower growth rates.
−Removed: For example, our net revenue decreased in the year ended December 31, 2023 as compared to the year ended December 31, 2022.
Although we continue to focus on growth and are evaluating various approaches and alternatives to execute on our business strategies, the outcome of such evaluation or impact of any subsequent actions, if any, is uncertain.
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We may require additional capital to support business growth, and we may be unable to obtain additional capital on acceptable terms, if at all, and any additional financing may dilute existing stockholders.
−Removed: We believe that our existing cash, cash equivalents and short-term investments, together with any cash generated from operations, will be enough to meet our anticipated cash needs for at least the next 12 months.
+Added: We believe that our existing cash, cash equivalents, and short-term investments will be enough to meet our anticipated cash needs for at least the next 12 months.
We may require additional capital to grow our business, including the need to develop our online marketplace services, expand across and within product verticals, enhance our operating infrastructure, expand the markets in which we operate, and potentially acquire complementary businesses and technologies.
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If we are unable to obtain financing on terms satisfactory to us when we require it, our ability to continue to support our business growth and to respond to business challenges could be significantly limited, and our business and prospects could suffer.
−Removed: If we fail to attract and retain key personnel on our executive team or to effectively manage leadership succession, our business, financial condition, and results of operations could be adversely impacted.
−Removed: Our success depends in part on our ability to attract and retain key personnel on our executive team, including our Chief Executive Officer, David S.
−Removed: Senior employees have left our company in the past and others may in the future.
−Removed: We often cannot anticipate such departures, and may not be able to promptly replace key leadership personnel.
−Removed: The loss of one or more of our key personnel or the inability to promptly identify a suitable successor to a key role could have an adverse effect on our business.
−Removed: Our key personnel are generally employed on an “at-will” basis.
Our strategic initiatives to reduce our cost structure towards cash flow positive operations could have long-term adverse effects on our business operations, and we may not realize the operational or financial benefits from such actions, including achieving our cash flow positive operations .
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This cost-reduction initiative could materially and adversely affect our business, cash flows, results of operations, profitability, and financial condition, due to factors beyond our control, including if our subtenant fails to make lease payments or otherwise defaults on their obligation to us as we could incur such payment obligations to our landlord and we may not be successful in realizing our anticipated savings and efficiencies.
−Removed: Additionally, in June 2023, we announced a workforce reduction designed to reduce our operating costs and realign our investment priorities.
−Removed: We may not effectively execute on, or achieve the stated goals of, this or future workforce reductions.
−Removed: For example, the reduction in workforce may result in unintended consequences and costs, such as the loss of institutional knowledge and expertise, attrition beyond the intended number of employees, and decreased employee morale.
−Removed: In addition, while positions have been eliminated, certain functions necessary to our operations remain.
−Removed: We may be unsuccessful in distributing the duties and obligations of departed employees among our remaining employees and may need incur additional and unanticipated costs to rehire or hire new
−Removed: personnel to perform such duties or may need to conduct additional reductions in workforce as we further redistribute such duties.
+Added: Additionally, in June 2023 and again in January 2025, we completed workforce reductions designed to reduce our operating costs and realign our investment priorities.
+Added: We may not effectively execute on, or achieve the stated goals of, any future workforce reductions.
+Added: For example, reductions in workforce may result in unintended consequences and costs, such as the loss of institutional knowledge and expertise, attrition beyond the intended number of employees, and decreased employee morale.
+Added: In addition, while certain positions may be eliminated, other functions necessary to our operations remain.
+Added: We may be unsuccessful in distributing the duties and obligations of departed employees among our remaining employees and may need to incur additional and unanticipated costs to rehire or hire new personnel to perform such duties or may need to conduct additional reductions in workforce as we further redistribute such duties.
If we are unable to realize the anticipated benefits, or experience significant adverse consequences, from any of our cost-reduction initiatives, our business, financial condition, and results of operations may be materially adversely affected.
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We have made substantial investments to expand to markets outside of the United States and continued expansion in markets outside of the United States may require significant additional financial investment.
−Removed: For example, in the year ended December 31, 2023, we launched localized sites in Italy and Spain, which may require significant financial investments to maintain.
−Removed: These investments include marketing to attract and retain new sellers and buyers, developing localized services and web platforms, forming relationships with third-party service providers, supporting operations in multiple countries, and potentially acquiring companies based outside the United States and integrating those companies with our operations.
+Added: These investments include marketing to attract and retain new sellers and buyers, developing localized services and web platforms, forming relationships with third-party service providers, supporting operations in multiple countries, and potentially acquiring companies based
+Added: outside the United States and integrating those companies with our operations.
These expansion efforts may not be successful and as a result, our business, results of operations, financial condition, and brand could suffer.
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We have in the past incurred and may in the future incur losses from various types of fraudulent transactions, including the use of stolen credit card numbers and claims that a buyer did not authorize a purchase.
−Removed: In addition to the direct costs of these losses, if the fraud is related to credit card transactions and becomes excessive, it could result in us paying higher fees or losing
−Removed: the right to accept credit cards for payment.
−Removed: Under current credit card practices, we are liable for fraudulent credit card transactions because we do not obtain a cardholder’s signature.
+Added: In addition to the direct costs of these losses, if the fraud is related to credit card transactions and becomes excessive, it could result in us paying higher fees or losing the right to accept credit cards for payment.
+Added: Under current credit card practices, we may be found liable for fraudulent credit card transactions if we do not collect certain information from buyers, such as credit verification value numbers or cardholder signatures upon delivery of purchases.
Our failure to adequately prevent fraudulent transactions could damage our reputation, result in litigation or regulatory action or lead to expenses that could substantially impact our results of operations.
+Added: Our business depends on continued and unimpeded access to the Internet, mobile networks, and third-party services.
+Added: To access our online marketplace, our sellers and buyers rely on access to the Internet or mobile networks.
+Added: We also depend on widely adopted third-party platforms to reach our customers, such as popular mobile, social, search, and advertising offerings.
+Added: Internet service providers may choose to disrupt or degrade access to our online marketplace or increase the cost of such access.
+Added: Similarly, to download our mobile applications, application store providers must allow our applications to be listed.
+Added: Internet service providers or application store providers could also attempt to charge us for providing access to our online marketplace.
+Added: Additionally, the adoption of any laws or regulations that adversely affect the popularity or growth in use of or access to the Internet or mobile networks or our services, including laws or regulations that undermine open and neutrally administered Internet access, could decrease user demand for our service offerings and increase our cost of doing business.
+Added: In May 2024, the Federal Communications Commission (the “FCC”) released an order reclassifying broadband Internet access service as a telecommunication service rather than an information service, subject to the jurisdiction of the FCC under Title II of the Communications Act, reinstating the network neutrality rules it adopted in 2015 and then overturned in 2017.
+Added: On January 2, 2025, however, the U.S.
+Added: Court of Appeals for the Sixth Circuit issued a decision invalidating the reclassification and the network neutrality rules.
+Added: Outside of the United States, government regulation of the Internet, including the idea of network neutrality, may be developing or non-existent.
+Added: As a result, we could face discriminatory or anti-competitive practices that could impede our and sellers’ growth prospects, our buyer’s access to our platform, increase our costs, and harm our business.
+Added: Any significant disruption in service provided by, or termination of our relationship with, third parties that host our website, mobile app, or process payments made by buyers to sellers on our online marketplace could damage our reputation and result in loss of sellers and buyers, which in turn would harm our business and results of operations.
+Added: Our brand and ability to attract and retain sellers and buyers depends, in part, on the reliable performance of our cloud-hosted servers, network infrastructure and content delivery process.
+Added: If the services provided by third parties are disrupted or if we are unable to maintain and scale the technology underlying our platform, our operations and business could suffer.
+Added: The volume of traffic and activity on our online marketplace spikes on certain days and during certain periods of the year, such as during the fourth quarter due to the seasonality of our business, and any interruption would be particularly problematic if it were to occur at such a high-volume time.
+Added: The software and operation of the technology underlying our platform is expensive and complex, and we could experience operational failures.
+Added: If we fail to accurately predict the rate or timing of the growth of our platform, we may be required to incur significant additional costs to maintain reliability.
+Added: These costs could include, but are not limited to, adding additional hosting capacity or platforms, additional network providers, web application firewalls or other bot-mitigation technologies or additional content distribution networks.
+Added: Additionally, as we rely on a fast, secure, and stable Internet, we could be required to adapt to any changes to global standards.
+Added: We have experienced, and expect that in the future we will experience, interruptions, delays, and outages in service and availability from time to time due to a variety of factors, including infrastructure changes, human or software errors, website hosting disruptions, capacity constraints, and lack of network connectivity in one or more regions, which affect the availability of services on our platform and prevent or inhibit the ability of sellers and buyers to access our online marketplace or complete purchases on our online marketplace and app.
+Added: Third-party providers host much of our technology infrastructure.
+Added: Any disruption in their services, or any failure of our providers to handle the demands of our online marketplace could significantly harm our business and damage our reputation.
+Added: Third-party providers also have systems that are constantly evolving, it is difficult to predict the challenges that we may encounter in developing our platform for use in conjunction with such third-party systems, and we may not be able to modify our integrations to assure its compatibility with the systems of other third parties following any of their changes to their systems.
+Added: Further, if we experience failures in our technology infrastructure or do not expand our technology infrastructure successfully, then our ability to attract and retain sellers and buyers and our growth prospects and our business would suffer.
+Added: We do not have control over the operations of the facilities of these third-party providers that we use.
+Added: These facilities may be vulnerable to damage or interruption from natural disasters, cybersecurity attacks, terrorist attacks, power outages and similar events or acts of misconduct.
Our payments system depends on third-party providers and is subject to evolving laws and regulations.
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Any change in these rules and requirements could make it difficult or impossible for us to comply.
−Removed: If we fail to recruit and retain specialized employees and contractors, our business and operations could suffer.
−Removed: Our ability to attract, retain and motivate employees and contractors, including our in-house vetting specialists, is important to our success.
−Removed: Other companies, including our competitors, may be successful in recruiting and hiring our employees and contractors, and it may be difficult for us to find suitable replacements on a timely basis or on competitive terms.
−Removed: In addition, we may face challenges in connection with recruiting, hiring, and retaining qualified engineers and IT staff to support our operations.
−Removed: Qualified individuals are limited and in high demand, and we may incur significant costs to attract, develop and motivate them.
−Removed: Further, our future work environment strategy is continuing to evolve and may not meet the needs of our existing and potential future employees and they may prefer work models offered by other companies.
−Removed: If we fail to recruit and retain specialized employees and contractors, our ability to grow our business and our operations could suffer.
−Removed: If we experience labor disputes or other disruption, it could harm our operations.
−Removed: None of our employees are currently represented by a union.
−Removed: If our employees decide to form or affiliate with a union, we cannot predict the negative effects such future organizational activities will have on our business and operations.
−Removed: If we were to become subject to work stoppages, we could experience disruption in our operations, including delays in technology development, customer servicing and shipping, and increases in our labor costs which could materially adversely affect our business, financial condition, or results of operations.
−Removed: Economic, political, and market conditions, including geopolitical risks, could result in increased market volatility and uncertainty, which could negatively impact our business, financial condition, and results of operations.
−Removed: Our business, financial condition, and results of operations are sensitive to changes in general economic conditions, including interest rates, consumer credit conditions, consumer debt levels, consumer confidence, unemployment rates, economic growth, rates of inflation (or concerns about deflation), supply chain disruptions, impacts of current geopolitical conflicts or instability and the uncertain nature, magnitude, and duration of political instability and military hostilities in multiple geographies, including recent military invasions, the potential effects of sanctions limitations, retaliatory cyber-attacks on the world economy and markets, and potential shipping delays, and other macroeconomic factors.
−Removed: For example, if our shipping carriers are unable to fulfill orders in impacted regions, as has been the case, the resultant disruptions to our delivery chain could negatively affect the timely delivery of our other orders, which could adversely affect our business and reputation.
−Removed: In addition, we rely on our payment processors to understand the destination of our payments to sellers.
−Removed: If our payment
−Removed: processors fail to follow newly imposed sanctions limitations, we may be at risk of being deemed to have violated such sanctions limitations.
−Removed: In addition, if we are overly conservative in our approach to canceling or pausing orders in impacted regions due to general instability in the area, the value of our brand could be harmed, which could negatively impact our business, financial condition, and results of operations.
−Removed: We have transitioned to being a flexible work model company, which could have a negative impact on the execution of our business plans and operations and create productivity, connectivity, and oversight challenges.
−Removed: As a result of the COVID-19 pandemic, we transitioned to an almost fully remote work environment.
−Removed: More recently, we re-opened our offices, and implemented a flexible work model that we anticipate will have us continue to operate on a significantly remote and geographically (including internationally) dispersed basis for the foreseeable future.
−Removed: This remote and dispersed work environment could have a negative impact on the execution of our business plans and operations and create productivity, connectivity, and oversight challenges.
−Removed: For example, if a natural disaster, power outage, connectivity issue, or other event occurs that impacts our employees’ ability to work remotely, it may be difficult or, in certain cases, impossible, for us to continue our business for a substantial period of time.
−Removed: The increase in remote working may also result in consumer privacy, IT security, and fraud vulnerabilities, which, if exploited, could result in significant recovery costs and harm to our reputation.
−Removed: Operating in a fully or predominantly remote work environment and providing and maintaining the operational infrastructure necessary to support a remote work environment also present significant challenges to maintaining compliance with state requirements such as employee income tax withholding, remittance and reporting, payroll registration, and workers’ compensation insurance.
−Removed: It may also negatively impact our corporate culture, including employee engagement and productivity.
−Removed: Public health crises, such as the COVID-19 pandemic, have impacted, and may continue to impact, our business, key metrics, and results of operations in volatile and unpredictable ways.
−Removed: Although the COVID-19 pandemic has subsided to a significant extent, its continued and future impact on our business, key metrics, and results of operations depend on future developments that are uncertain and unpredictable.
−Removed: For example, a resurgence of the COVID-19 pandemic or the emergence of another widespread public health crisis could adversely impact our business if our employees or our partners’ or third-party service providers’ employees become ill and are unable to perform their duties, and our operations, internet, or mobile networks, or the operations of one or more of our third-party service providers, is impacted.
−Removed: In addition, we may experience a decline in the supply of luxury design products available through our online marketplace if our sellers face difficulty sourcing products in the event of any extended lockdowns or similar restrictions or measures implemented in response to a public health crisis.
−Removed: Any prolonged economic downturn due to a public health crisis (or otherwise) may negatively impact demand for luxury design products, including as a result of any significant or extended reduction in disposable incomes across our buyer base, and may result in global shipping disruptions.
−Removed: More generally, a public health crisis (or otherwise) could adversely affect economies and financial markets and lead to an economic downturn, which could harm our business, financial condition, and results of operations.
−Removed: Our NFT platform (utilizing Ether, a cryptocurrency generated using the Ethereum protocol) may expose us to legal, regulatory, and other risks.
−Removed: Given the nascent and evolving nature of cryptocurrencies and NFTs, we may be unable to accurately anticipate or adequately address such risks or the potential impact of such risks.
−Removed: Although we ceased further investment in our NFT platform in January 2023, the occurrence of any such risks could adversely affect our business and reputation.
−Removed: In August 2021, we announced the launch of our NFT platform where creators can make blockchain-encrypted design items, such as artwork, available as NFTs for digital purchase through 1stDibs, utilizing Ethereum, a blockchain technology.
−Removed: NFTs are digital assets recorded on a blockchain ledger for verification of authenticity and ownership of a unique digital asset, such as artwork.
−Removed: In January 2023, we determined to cease further investment in the NFT platform;
−Removed: however, previously-minted NFTs remain available for sale.
−Removed: Given the increased scrutiny of digital assets as well as cryptocurrencies for regulatory and anti-money laundering purposes, it is possible that the United States and other jurisdictions will engage in increased scrutiny and regulation of NFTs and our business.
−Removed: As NFTs are a relatively new and emerging type of digital asset, the regulatory, commercial, and legal framework governing NFTs (as well as cryptocurrencies) is likely to evolve both in the United States and internationally and implicates issues regarding a range of matters, including, but not limited to, intellectual property rights, privacy and cybersecurity, fraud, anti-money laundering, sanctions, and currency, commodity, and securities law implications.
−Removed: Although we ceased further investment in our NFT platform, the occurrence of any such risks could adversely affect our business and reputation.
+Added: We rely on Amazon Web Services (AWS) for a substantial portion of the computing, storage, data processing, networking, and other services for our online marketplace.
+Added: A significant disruption of or interference with our use of AWS would negatively impact our operations and seriously harm our business.
+Added: AWS provides a distributed computing infrastructure as a service platform for our online marketplace’s business operations.
+Added: Our primary production environment and data centers are on AWS, increasing our reliance on cloud infrastructure.
+Added: Any transition of the cloud services currently provided by AWS to another cloud provider would be difficult to implement and would cause us to incur significant time and expense.
+Added: Our products and services rely in significant part on continued access to, and the continued stability, reliability, and flexibility of AWS.
+Added: Any significant disruption of, or interference with, our use of AWS would negatively impact our operations, and our business would be seriously harmed.
+Added: In addition, if hosting costs increase over time and if we require more computing or storage capacity, our costs could increase disproportionately.
+Added: If we are unable to grow our revenues faster than the cost of utilizing the services of AWS or similar providers, our business and financial condition could be adversely affected.
If our insurance coverage is insufficient or our insurers are unable to meet their obligations, our insurance may not mitigate the risks facing our business.
We contract for insurance to cover a number of risks and potential liabilities.
−Removed: Our insurance policies cover areas such as general liability, errors and omissions liability, employment liability, business interruptions, data breach, crime, product liability and directors’ and officers’ liability.
−Removed: For certain types of business risk, we may not be able to, or may choose not to, acquire
+Added: Our insurance policies cover areas such as general liability, errors and omissions liability, employment liability, business interruptions, data breach, crime, product liability, property damage, and directors’ and officers’ liability.
+Added: For certain types of business risk, we may not be able to, or may choose not to, acquire insurance.
In addition, we may not obtain enough insurance to adequately mitigate the risks we face, or we may have to pay high premiums and/or deductibles for the coverage we do obtain.
−Removed: Additionally, if any of our insurers becomes insolvent, it would be unable to pay any claims that we make.
+Added: For example, we may not have adequate insurance coverage related to the actions of sellers on our platforms or for security incidents or data breaches.
+Added: In evolving areas such as platform products liability, court decisions suggest that different jurisdictions may take differing positions on the scope of e-commerce platform liability for seller products.
+Added: In some circumstances, a platform might be held liable for violations of applicable legal regimes by sellers and their products, such as intellectual property laws, privacy and security laws, product regulation, or consumer protection laws.
+Added: Court decisions and regulatory changes in these areas may shift quickly, both in the United States and worldwide, and our insurance may be inadequate or unavailable to protect us from existing or newly developing legal risks.
+Added: Finally, while some sellers on our platforms may be insured for some or all of these risks, many small businesses do not carry any or sufficient insurance, and, even if a seller is insured, the insurance may not cover the relevant loss.
+Added: These factors may lead to increased costs for insurance, our increased liability, increased requirements or liability on sellers on our platforms, changes to our marketplaces or business model, or other damage to our brands and reputation.
Our cash, cash equivalents and short-term investments may be exposed to failure of our banking institutions.
−Removed: While we seek to minimize our exposure to third-party losses of our cash, cash equivalents and short-term investments, our cash held in non-interest bearing and interest-bearing accounts may exceed any applicable Federal Deposit Insurance Corporation (“FDIC”) insurance limits.
+Added: While we seek to minimize our exposure to third-party losses of our cash, cash equivalents and short-term investments, our cash held in non-interest bearing and interest-bearing accounts that may exceed any applicable Federal Deposit Insurance Corporation (“FDIC”) insurance limits.
Should events, including limited liquidity, defaults, non-performance, or other adverse developments occur with respect to the banks or other financial institutions that hold our funds, or that affect financial institutions or the financial services industry generally, or concerns or rumors about any events of these kinds or other similar risks, our liquidity may be adversely affected.
−Removed: For example, on March 10, 2023, Silicon Valley Bank (“SVB”) was unable to continue their operations and the Federal Deposit Insurance Corporation was appointed as receiver for SVB and created the National Bank of Santa Clara to hold the deposits of SVB after SVB was unable to continue their operations.
+Added: For example, on March 10, 2023, Silicon Valley Bank (“SVB”) was unable to continue their operations and the FDIC was appointed as receiver for SVB and created the National Bank of Santa Clara to hold the deposits of SVB after SVB was unable to continue their operations.
Although we did not have any material funds in SVB or other institutions that have been closed, we cannot guarantee that the banks or other financial institutions that hold our funds will not experience similar issues.
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Any such loss or limitation on our cash, cash equivalents and short-term investments would adversely affect our business.
−Removed: Risks Related to Privacy, Cybersecurity, and Infrastructure
+Added: Risks Related to Human Capital
+Added: If we fail to attract and retain key personnel on our executive team or to effectively manage leadership succession, our business, financial condition, and results of operations could be adversely impacted.
+Added: Our success depends in part on our ability to attract and retain key personnel on our executive team, including our Chief Executive Officer, David S.
+Added: Senior employees have left our company in the past and others may in the future.
+Added: We often cannot anticipate such departures, and may not be able to promptly replace key leadership personnel.
+Added: The loss of one or more of our key personnel or the inability to promptly identify a suitable successor to a key role could have an adverse effect on our business.
+Added: Our key personnel are generally employed on an “at-will” basis.
+Added: If we fail to recruit and retain specialized employees and contractors, our business and operations could suffer.
+Added: Our ability to attract, retain, and motivate employees and contractors is important to our success.
+Added: In addition, we may face challenges in connection with timely recruiting, hiring, and retaining qualified engineers to support our operations;
+Added: and, other companies, including our competitors, may be successful in recruiting and hiring our employees and contractors.
+Added: Qualified individuals are limited and in high demand, and we may incur significant costs to attract, develop and motivate them.
+Added: Further, our future work environment strategy is continuing to evolve and may not meet the needs of our existing and potential future employees and they may prefer work models offered by other companies.
+Added: If we fail to recruit and retain specialized employees and contractors, our ability to grow our business and our operations could suffer.
+Added: If we experience labor disputes or other disruption, it could harm our operations.
+Added: None of our employees are currently represented by a union.
+Added: If our employees decide to form or affiliate with a union, we cannot predict the negative effects such future organizational activities will have on our business and operations.
+Added: If we were to become subject to work stoppages, we could experience disruption in our operations, including delays in technology development, customer servicing and shipping, and increases in our labor costs which could materially adversely affect our business, financial condition, or results of operations.
+Added: Risks Related to Data Privacy and Cybersecurity, and Infrastructure
+Added: Our use and other processing of personal information and other data is subject to laws and obligations relating to privacy and data protection, and our failure to comply with such laws and obligations could harm our business.
+Added: Complex local, state, federal, and international laws, rules, and regulations apply to the collection, receiving, use, storing, retention, protection, security, disclosure, transfer, and other processing or handling of personal data about individuals, including our users and employees around the world.
+Added: These privacy and data protection laws, rules, and regulations are quickly evolving, and we expect that there will continue to be new proposed laws, rules, regulations, and industry standards concerning privacy, data protection, and information security in the United States, UK, EU, and other jurisdictions in which we operate.
+Added: See “Risk Factors--Risks Related to Legal, Regulatory Matters and Litigation--Expanding and evolving regulations in the areas of privacy and user data protection could create technological, economic, and cross-border business impediments to our business and those of our sellers.” If we fall short of our data protection obligations in countries in which we operate, we could face potential liability, regulatory investigations, and costly litigation, which may not be adequately covered by insurance.
+Added: We have been incurring, and expect that we will continue to incur, costs related to compliance with such current and new local, state, federal, or international laws.
+Added: In addition, any actual or perceived failure by us to comply with these laws, regulations, or other obligations may lead to significant fines, penalties, regulatory investigations, lawsuits, significant costs for remediation, damage to our reputation, or other liabilities.
+Added: government has announced that it is reviewing the need for even greater regulation for the collection of information concerning consumer behavior on the Internet and mobile platforms, including regulation aimed at restricting certain targeted advertising practices, the use of location data and disclosures of privacy practices in the online and mobile environments, including with respect to online and mobile applications.
+Added: In addition, state governments are engaged in similar legislative and regulatory activities.
+Added: For example, the California Consumer Privacy Act (the “CCPA”) requires certain disclosures to California consumers regarding a business’ data processing activities, provides data privacy rights to California consumers, including the right to request a copy from a covered company of the personal information collected about them, the right to request deletion of such personal information, and the right to request to opt-out of certain sales of such personal information, and entails new operational requirements for covered companies to afford California consumers such rights.
+Added: The CCPA establishes significant penalties for noncompliance.
+Added: The California Privacy Rights Act (the “CPRA”), effective as of January 1, 2023, significantly modifies the CCPA, including by imposing additional obligations on covered companies and expanding consumers’ rights with respect to certain sensitive personal information and rights to object to sharing information for behavioral advertising purposes, potentially resulting in further uncertainty and requiring us to incur additional costs and expenses in an effort to comply.
+Added: Comprehensive privacy legislation imposing similar obligations has been passed in nearly 20 additional states.
+Added: Additionally, there has been discussion in Congress of a new comprehensive federal data protection and privacy law that, if passed, could create conflicting requirements and compliance with which could increase our potential liability, add layers of complexity to compliance in the U.S.
+Added: market, increase our compliance costs, and adversely affect our business.
+Added: In addition, all 50 states have laws that include obligations to provide notification of security breaches of computer databases that contain personal information to affected individuals, state officers, and others.
+Added: Aspects of these U.S.
+Added: state privacy laws and other laws and regulations relating to data protection, privacy, and information security, as well as their enforcement, remain unclear, and we may be required to modify our practices in an effort to comply with them.
+Added: Similarly, the UK General Data Protection Regulation and Data Protection Act 2018 (collectively, the “UK GDPR”) and the EU’s General Data Protection Regulation (“GDPR”) (the EU GDPR and UK GDPR together referred to as the “GDPR”), impose stringent data protection and privacy requirements on businesses in relation to the collection, processing, sharing,
+Added: disclosure, transfer, and other use of personal data of EU and UK data subjects.
+Added: Complying with the GDPR remains an onerous and potentially costly obligation as interpretations of the specific requirements emerge through the courts, enforcement decisions and regulatory guidance.
+Added: In addition, the evolving framework governing the transfer of personal data subject to the GDPR to non-adequate jurisdictions presents significant challenges (e.g., where an EU seller or buyer transfers personal data to us in the U.S.) due to data localization requirements or limitations on cross-border data flows.
+Added: In particular, the European Economic Area (“EEA”) and the UK have significantly restricted the transfer of personal information to the United States and other countries whose privacy laws they generally believe are inadequate.
+Added: Other jurisdictions may adopt similarly stringent interpretations of their data localization and cross-border data transfer laws, creating additional compliance hurdles for businesses.
+Added: Current Standard Contractual Clauses (“SCCs”), adopted by the European Commission in 2021, are limited to transfers where the data importer is not subject to the GDPR.
+Added: This has left organizations without a clear legal framework for transfers between entities both subject to the GDPR, creating legal uncertainty and operational challenges.
+Added: Additionally, interpretations of GDPR provisions by courts, along with the enforcement of national laws in EU member states, add complexity and potential inconsistencies in compliance requirements.
+Added: The European Commission plans to address this gap by introducing new SCCs by the second quarter of 2025, following a public consultation in late 2024.
+Added: Additionally, companies that transfer personal information out of the EEA and UK to other jurisdictions, particularly to the United States, are subject to increased scrutiny from regulators, individual litigants, and activist groups.
+Added: Some European regulators have ordered certain companies to suspend or permanently cease certain transfers of personal information out of Europe for allegedly violating the EU GDPR’s cross-border data transfer limitations.
+Added: Until new SCCs are adopted and clear guidance is provided, there remains considerable uncertainty surrounding the future trajectory of the perception of such transfers and businesses face heightened risks, including regulatory scrutiny, enforcement actions, and legal disputes stemming from conflicting interpretations of these requirements or from inconsistencies from one jurisdiction to another, subject to differing interpretations and may be interpreted to conflict with our practices.
+Added: Additionally, we are, and will continue to be, bound by contractual requirements applicable to our collection, use, processing and disclosure of various types of data, such as via Data Processing Addenda, including personal information, and may be bound by, or voluntarily comply with, self-regulatory or other industry standards relating to these matters.
+Added: Any failure or perceived failure by us or any third parties with which we do business to comply with these laws, rules and regulations, or with other obligations to which we or such third parties are or may become subject, may result in actions against us by governmental entities, private claims and litigation, the expenditure of legal and other costs and of substantial time and resources, and fines, penalties or other liabilities.
+Added: Any such action would be expensive to defend, may require the expenditure of substantial legal and other costs and substantial time and resources, and likely would damage our reputation and adversely affect our business and results of operations.
+Added: As such, delays or shortcomings in the adoption of new SCCs or continued legal uncertainty could exacerbate these risks, adversely affecting our business, financial condition, and operational outcomes.
+Added: In many jurisdictions, enforcement actions and consequences for non-compliance with protection, privacy, and information security laws and regulations are rising.
+Added: In the U.S., possible consequences for non-compliance include enforcement actions in response to rules and regulations promulgated under the authority of federal agencies and state attorneys general and legislatures and consumer protection agencies.
+Added: In the EU, data protection authorities may impose large penalties for violations of the data protection laws, including potential fines of up to €20 million or 4% of annual global revenue, whichever is greater.
+Added: The authorities have shown a willingness to impose significant fines and issue orders preventing the processing of personal data on non-compliant businesses.
+Added: Data subjects also have a private right of action, as do consumer associations, to lodge complaints with supervisory authorities, seek judicial remedies, and obtain compensation for damages resulting from violations of applicable data protection laws.
+Added: In addition, privacy advocates and industry groups have regularly proposed, and may propose in the future, self-regulatory standards that may legally or contractually apply to us.
+Added: If we fail to follow these standards, even if no seller or buyer information is compromised, we may incur significant fines or experience a significant increase in costs.
+Added: Further, in view of new or modified federal, state, or foreign laws and regulations, industry standards, contractual obligations and other legal obligations, or any changes in their interpretation, we may find it necessary or desirable to fundamentally change our business activities and practices or to expend significant resources to modify our product and otherwise adapt to these changes.
+Added: We may be unable to make such changes and modifications in a commercially reasonable manner or at all, and our ability to develop new products and features could be limited.
+Added: Privacy, data protection and information security concerns, whether valid or not valid, may inhibit the use and growth of our online marketplace, particularly in certain foreign countries.
If sensitive information about our sellers and buyers or other third parties with whom we transact business is disclosed, or if we or our third-party providers are subject to cyber-attacks, use of our online marketplace could be curtailed, we may be exposed to liability, and our reputation would suffer.
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Further, if we or our third-party service providers experience security breaches that result in online marketplace performance or availability problems or the loss or unauthorized disclosure of personal and other sensitive information, people may become unwilling to provide us the information necessary to set up seller and buyer accounts, and we could be subject to third-party lawsuits, regulatory fines, or other action or liability.
−Removed: Existing sellers and buyers may also stop listing new items for sale or decrease their purchases or close
−Removed: their accounts altogether.
+Added: Existing sellers and buyers may also stop listing new items for sale or decrease their purchases or close their accounts altogether.
Further, any reputational damage resulting from breach of our security measures could create distrust of our company by sellers and buyers.
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We cannot be certain that our insurance coverage will be adequate for data handling or data security liabilities, that insurance will continue to be available to us on economically reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim.
−Removed: 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 have a material and adverse effect on our business, including our financial condition, results of operations, and reputation.
−Removed: Our use and other processing of personal information and other data is subject to laws and obligations relating to privacy and data protection, and our failure to comply with such laws and obligations could harm our business.
−Removed: Numerous state, federal and international laws, rules and regulations govern privacy, data protection and the collection, use and protection of personal information and other types of data we collect, use, disclose and otherwise process.
−Removed: These laws, rules and regulations are constantly evolving, and we expect that there will continue to be new proposed laws, regulations and industry standards concerning privacy, data protection and information security in the United States, the EU and other jurisdictions.
−Removed: For example, California enacted legislation in June 2018, the California Consumer Privacy Act (the “CCPA”), which provides data privacy rights for California consumers and new operational requirements for covered companies.
−Removed: The CCPA provides that covered companies must provide new disclosures to California consumers and afford such consumers new data privacy rights, that include the right to request a copy from a covered company of the personal information collected about them, the right to request deletion of such personal information, and the right to request to opt-out of certain sales of such personal information.
−Removed: The California Privacy Rights Act (the “CPRA”), effective as of January 1, 2023, significantly modifies the CCPA, including by imposing additional obligations on covered companies and expanding consumers’ rights with respect to certain sensitive personal information and rights to object to sharing information for behavioral advertising purposes, potentially resulting in further uncertainty and requiring us to incur additional costs and expenses in an effort to comply.
−Removed: The CPRA also creates a new state agency that will be vested with authority to implement and enforce the CCPA and the CPRA.
−Removed: Additionally, the Virginia Consumer Data Protection Act, effective from January 1, 2023, the Colorado Privacy Act and the Connecticut Data Privacy Act, both effective from July 1, 2023, and the Utah Consumer Privacy Act, effective from December 31, 2023, each impose similar requirements on covered businesses.
−Removed: New privacy laws have also recently been passed in Indiana (Indiana Consumer Data Protection Act), Iowa (Iowa Consumer Data Protection Act), Montana (Montana Consumer Data Privacy Act), and Tennessee (Tennessee Information Protection Act), which will become effective between 2024 and 2026.
−Removed: There are a number of additional proposals for U.S.
−Removed: federal and state privacy laws that, if passed, could increase our potential liability, add layers of complexity to compliance in the U.S.
−Removed: market, increase our compliance costs, and adversely affect our business.
−Removed: In addition, all 50 states have laws, including obligations to provide notification of security breaches of computer databases that contain personal information to affected individuals, state officers, and others.
−Removed: Aspects of these U.S.
−Removed: state privacy laws and other laws and regulations relating to data protection, privacy, and information security, as well as their enforcement, remain unclear, and we may be required to modify our practices in an effort to comply with them.
−Removed: Similarly, the European Commission adopted a General Data Protection Regulation that became fully effective on May 25, 2018, imposing stringent EU data protection requirements on businesses processing personal data of EU and UK data subjects, respectively.
−Removed: The GDPR is wide-ranging in scope and imposes numerous additional requirements on companies that process personal data, including requiring that lawful bases exist for all processing of personal data, requiring disclosures to individuals
−Removed: regarding data processing activities, requiring that safeguards are implemented to protect the security of personal data, creating mandatory data breach notification requirements in certain circumstances, and requiring that certain measures (including contractual obligations) are taken when engaging third-party processors or transferring data overseas.
−Removed: The GDPR also provides individuals with various rights in respect of their personal data, including rights of access, erasure, portability, rectification, restriction, and objection.
−Removed: Complying with the GDPR remains an onerous and potentially costly obligation as interpretations of the specific requirements emerge through the courts, enforcement decisions and regulatory guidance.
−Removed: In addition, where personal data subject to the GDPR is transferred to non-adequate jurisdictions (e.g., where an EU seller or buyer transfers personal data to us in the U.S.), there is still considerable uncertainty surrounding the future trajectory of the perception of such transfers by EU courts and data protection authorities following the decision on July 16, 2020 by the Court of Justice of the EU in its Case C-311/18 Data Protection Commissioner v Facebook Ireland and Maximillian Schrems and associated enforcement action by certain EU data protection authorities (such as the Irish Data Protection Commission in May 2023).
−Removed: The European Commission issued an adequacy decision in respect of the EU-U.S.
−Removed: Data Privacy Framework on July 10, 2023, permitting transfers of personal data from the EU to U.S.
−Removed: organizations certified under the Framework, without additional transfer mechanisms.
−Removed: However, legal challenges to the validity of this adequacy decision have already been lodged in the EU, with further challenges expected.
−Removed: Similar data privacy laws, rules, and regulations in other countries may also impact our business.
−Removed: We cannot yet fully determine the impact these or future laws, rules, and regulations may have on our business or operations.
−Removed: These laws, rules and regulations may be inconsistent from one jurisdiction to another, subject to differing interpretations and may be interpreted to conflict with our practices.
−Removed: Additionally, we may be bound by contractual requirements applicable to our collection, use, processing and disclosure of various types of data, including personal information, and may be bound by, or voluntarily comply with, self-regulatory or other industry standards relating to these matters.
−Removed: Any failure or perceived failure by us or any third parties with which we do business to comply with these laws, rules and regulations, or with other obligations to which we or such third parties are or may become subject, may result in actions against us by governmental entities, private claims and litigation, the expenditure of legal and other costs and of substantial time and resources, and fines, penalties or other liabilities.
−Removed: Any such action would be expensive to defend, may require the expenditure of substantial legal and other costs and substantial time and resources, and likely would damage our reputation and adversely affect our business and results of operations.
−Removed: In many jurisdictions, enforcement actions and consequences for non-compliance with protection, privacy, and information security laws and regulations are rising.
−Removed: In the U.S., possible consequences for non-compliance include enforcement actions in response to rules and regulations promulgated under the authority of federal agencies and state attorneys general and legislatures and consumer protection agencies.
−Removed: In the EU, data protection authorities may impose large penalties for violations of the data protection laws, including potential fines of up to €20 million or 4% of annual global revenue, whichever is greater.
−Removed: The authorities have shown a willingness to impose significant fines and issue orders preventing the processing of personal data on non-compliant businesses.
−Removed: Data subjects also have a private right of action, as do consumer associations, to lodge complaints with supervisory authorities, seek judicial remedies, and obtain compensation for damages resulting from violations of applicable data protection laws.
−Removed: In addition, privacy advocates and industry groups have regularly proposed, and may propose in the future, self-regulatory standards that may legally or contractually apply to us.
−Removed: If we fail to follow these standards, even if no seller or buyer information is compromised, we may incur significant fines or experience a significant increase in costs.
−Removed: Further, in view of new or modified federal, state or foreign laws and regulations, industry standards, contractual obligations and other legal obligations, or any changes in their interpretation, we may find it necessary or desirable to fundamentally change our business activities and practices or to expend significant resources to modify our product and otherwise adapt to these changes.
−Removed: We may be unable to make such changes and modifications in a commercially reasonable manner or at all, and our ability to develop new products and features could be limited.
−Removed: Privacy, data protection and information security concerns, whether valid or not valid, may inhibit the use and growth of our online marketplace, particularly in certain foreign countries.
−Removed: Use of social media, emails, and push notifications may harm our reputation or subject us to fines or other penalties.
−Removed: We use social media, emails, and push notifications as part of our omni-channel approach to marketing and communications with sellers and buyers.
+Added: 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
+Added: deductible or co-insurance requirements, could have a material and adverse effect on our business, including our financial condition, results of operations, and reputation.
+Added: Use of social media, emails, phone calls, text messages, and push notifications may harm our reputation or subject us to fines or other penalties.
+Added: We use social media, emails, phone calls, text messages, and push notifications as part of our omni-channel approach to marketing and communications with sellers and buyers.
As laws and regulations evolve to govern the use of these channels, the failure by us, our employees, or third parties acting at our direction to comply with applicable laws and regulations in the use of these channels could adversely affect our reputation or subject us to fines or other penalties.
+Added: For example, under the federal Telephone Consumer Protection Act (the “TCPA”), we face potential exposure to liability for certain types of telephonic communication with customers, including, but not limited to, text messages to mobile phones.
+Added: Under the TCPA, plaintiffs may seek actual monetary loss or statutory damages of $500 per violation, whichever is greater, and courts may treble the damage award for willful or knowing violations.
+Added: We are regularly subject to class-action lawsuits, as well as individual lawsuits, containing allegations that our businesses violated the TCPA.
+Added: These lawsuits, and other private lawsuits not currently alleged as class actions, seek damages (including statutory damages) and injunctive relief, among other remedies.
+Added: While a 2021 Supreme Court decision narrowed the applicability of the TCPA’s restrictions, plaintiffs continue to test the boundaries of the decision, and a few states, including Florida and Oklahoma, have adopted TCPA-like laws that similarly provide for statutory damages and a private right of action.
+Added: Additional states may follow suit.
+Added: A determination that there have been violations of the TCPA or other communications-based statutes could expose us to significant damage awards that could, individually or in the aggregate, materially harm our business.
In addition, our employees or third parties acting at our direction may knowingly or inadvertently make use of social media in ways that could lead to the loss or infringement of intellectual property, as well as the public disclosure of proprietary, confidential, or sensitive personal information of our business, employees, consumers, or others.
Information concerning us or our sellers and buyers, whether accurate or not, may be posted on social media platforms at any time and may have an adverse impact on our brand, reputation, or business.
−Removed: Additionally, we have been, and may in the future be, subject to negative press or public allegations, including on
−Removed: social media, regarding the authenticity of our offerings.
−Removed: Any material failure or perceived failure in our authentication operating could cause buyers and sellers to lose confidence in our platform and adversely affect our revenue.
The harm may be immediate without affording us an opportunity for redress or correction and could have a material adverse effect on our reputation, business, results of operations, financial condition, and prospects.
−Removed: If we fail to successfully expand the features, services, and offerings on our online marketplace, our ability to grow our business may suffer.
−Removed: Our industry is characterized by rapidly changing technology, new service and feature introductions, and changing seller and buyer demands.
−Removed: We spend substantial time and resources creating new features, services, and offerings to attract new constituents to our online marketplace and to open new sales channels for sellers.
−Removed: Our efforts to expand the features, services, and offerings on our online marketplace could fail for many reasons, including lack of acceptance by existing or new constituents, our failure to market these features, services, and offerings effectively to new constituents, or negative publicity related to our features, services, and offerings.
−Removed: For example, we launched 1stDibs Auctions to provide additional opportunities to optimize price discovery and leverage alternative payment methods.
−Removed: We may not be able to educate and/or commercialize buyers and sellers about how to use this new purchase format, which differs from our historical transaction models and may create confusion.
−Removed: Our new initiatives may not drive increases in revenue, may require substantial investment and planning, and may bring us more directly into competition with companies that are better established or have greater resources than we do.
−Removed: They may require additional investment of time and resources in the development and training of our personnel and our sellers and buyers.
−Removed: Further, our efforts to diversify and expand our features, services, and offerings involve significant technological risk, such as encountering software bugs, defects, or errors in connection with the introduction of new or enhanced features of our technology platform.
−Removed: If we are unable to cost-effectively expand our features, services, and offerings, then our growth prospects and competitive position may be harmed.
−Removed: Any significant disruption in service provided by, or termination of our relationship with, third parties that host our website and mobile app and process payments made by buyers or to sellers on our online marketplace could damage our reputation and result in loss of sellers and buyers, which in turn would harm our business and results of operations.
−Removed: Our brand and ability to attract and retain sellers and buyers depends in part on the reliable performance of our cloud-hosted servers, network infrastructure and content delivery process.
−Removed: If the services provided by third parties are disrupted or if we are unable to maintain and scale the technology underlying our platform, our operations and business could suffer.
−Removed: The volume of traffic and activity on our online marketplace spikes on certain days and during certain periods of the year, such as during the fourth quarter due to the seasonality of our business, and any interruption would be particularly problematic if it were to occur at such a high-volume time.
−Removed: The software and operation of the technology underlying our platform is expensive and complex, and we could experience operational failures.
−Removed: If we fail to accurately predict the rate or timing of the growth of our platform, we may be required to incur significant additional costs to maintain reliability.
−Removed: These costs could include, but are not limited to, adding additional hosting capacity or platforms, additional network providers, web application firewalls or other bot-mitigation technologies or additional content distribution networks.
−Removed: Additionally, as we rely on a fast, secure, and stable Internet, we could be required to adapt to any changes to global standards.
−Removed: We have experienced, and expect that in the future we will experience, interruptions, delays, and outages in service and availability from time to time due to a variety of factors, including infrastructure changes, human or software errors, website hosting disruptions, and capacity constraints, and lack of network connectivity in one or more regions, which could affect the availability of services on our platform and prevent or inhibit the ability of buyers to access our online marketplace or complete purchases on our online marketplace and app.
−Removed: Third-party providers host much of our technology infrastructure.
−Removed: Any disruption in their services, or any failure of our providers to handle the demands of our online marketplace could significantly harm our business and damage our reputation.
−Removed: Third-party providers also have systems that are constantly evolving, it is difficult to predict the challenges that we may encounter in developing our platform for use in conjunction with such third-party systems, and we may not be able to modify our integrations to assure its compatibility with the systems of other third parties following any of their changes to their systems.
−Removed: Further, if we experience failures in our technology infrastructure or do not expand our technology infrastructure successfully, then our ability to attract and retain sellers and buyers and our growth prospects and our business would suffer.
−Removed: We do not have control over the operations of the facilities of these third-party providers that we use.
−Removed: These facilities may be vulnerable to damage or interruption from natural disasters, cybersecurity attacks, terrorist attacks, power outages and similar events or acts of misconduct.
−Removed: Our business depends on continued and unimpeded access to the Internet and mobile networks.
−Removed: To access our online marketplace, our sellers and buyers rely on access to the Internet.
−Removed: Internet service providers may choose to disrupt or degrade access to our online marketplace or increase the cost of such access.
−Removed: Similarly, to download our mobile applications, application store providers must allow our applications to be listed.
−Removed: Internet service providers or
−Removed: application store providers could also attempt to charge us for providing access to our online marketplace.
−Removed: The adoption of any laws or regulations that adversely affect the popularity or growth in use of the Internet or our services, including laws or regulations that undermine open and neutrally administered Internet access, could decrease user demand for our service offerings and increase our cost of doing business.
−Removed: In January 2018, the Federal Communications Commission (the “FCC”) released an order reclassifying broadband Internet access as an information service, subject to certain provisions of Title I of the Communications Act.
−Removed: Among other things, the order eliminates rules adopted in 2015 that prohibited broadband providers from blocking, impairing, or degrading access to legal content, applications, services, or non-harmful devices, or engaging in the practice of “paid prioritization” of content or services by Internet service providers (e.g., the favoring of some lawful internet traffic over other traffic in exchange for higher payments).
−Removed: The order was contested and affirmed in federal court, and the parties declined to appeal the decision to the Supreme Court.
−Removed: A number of states have also enacted or are considering legislation or executive actions that would regulate the conduct of broadband providers.
−Removed: On July 9, 2021, President Biden signed an executive order which, among other things, instructed the FCC to restore the net neutrality rules.
−Removed: We cannot predict whether the FCC order or state initiatives will be modified, overturned, or vacated by legal action of the court, federal or state legislation, or the FCC.
−Removed: If net neutrality rules are not implemented, or Internet service providers engage in blocking, throttling, or paid prioritization or similar practices, our business, financial condition, and results of operations could be materially and adversely affected.
−Removed: Outside of the United States, government regulation of the Internet, including the idea of network neutrality, may be developing or non-existent.
−Removed: As a result, we could face discriminatory or anti-competitive practices that could impede both our and sellers’ growth prospects, increase our costs and harm our business.
+Added: If the use of “cookie” tracking technologies is further restricted, regulated, or blocked, or if changes in technology cause cookies to become less reliable or acceptable as a means of tracking consumer behavior, the amount or accuracy of internet user information we collect would decrease, which could harm our business and operating results.
+Added: Cookies are small data files that are sent by websites and stored locally on an internet user’s computer or mobile device.
+Added: We, and third parties who work on our behalf, collect data via cookies that is used to track the behavior of visitors to our sites, to provide a more personal and interactive experience, and to increase the effectiveness of our marketing.
+Added: However, internet users can easily disable, delete, and block cookies directly through browser settings or through other software, browser extensions, or hardware platforms that physically block cookies from being created and stored.
+Added: Privacy regulations restrict how we deploy our cookies and this could potentially increase the number of internet users that choose to proactively disable cookies on their systems or cause or business partners, service providers, or vendors to no longer maintain their cookie processes.
+Added: We may have to develop alternative systems to determine our clients’ behavior, customize their online experience, or efficiently market to them if clients block cookies or regulations introduce additional barriers to collecting cookie data.
Climate change may have an adverse impact on our business.
−Removed: Risks related to rapid climate change may have an increasingly adverse impact on our business, our sellers’ businesses, and our buyers in the longer term.
+Added: Risks related to rapid climate change may have an increasingly adverse impact on our business, our sellers’ businesses, and our buyers.
Any of our primary locations and the locations of our buyers and sellers may be vulnerable to the adverse effects of climate change.
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and elsewhere have the potential to disrupt our business and the transactions consummated between our sellers and buyers, which could have a material adverse effect on our financial condition and results of operations.
−Removed: Risks Related to Regulatory Matters and Litigation
+Added: Risks Related to Legal, Regulatory Matters and Litigation
Our business is subject to a large number of U.S.
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Some providers of consumer devices and web browsers have implemented, or have announced plans to implement, ways to block tracking technologies which, if widely adopted, could also result in online tracking methods becoming significantly less effective.
−Removed: Any reduction in our ability to make effective use of such technologies could harm our ability to personalize the
−Removed: experience of buyers, increase our costs and limit our ability to attract new, and retain existing, sellers and buyers on cost-effective terms.
+Added: Any reduction in our ability to make effective use of such technologies could harm our ability to personalize the experience of buyers, increase our costs and limit our ability to attract new, and retain existing, sellers and buyers on cost-effective terms.
As a result, our business could be adversely affected.
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We monitor these laws and regulations and adjust our business practices as warranted to comply.
−Removed: We list luxury design products from numerous sellers located throughout the United States and from over 90 countries, and the items listed by our sellers may contain materials such as fur, python, ivory, and other exotic animal product components, that are subject to regulation or cultural patrimony considerations.
+Added: We list luxury design items from numerous sellers located throughout the United States and from over 75 countries, and the items listed by our sellers may contain materials such as fur, python, ivory, and other exotic animal product components, that are subject to regulation or cultural patrimony considerations.
Our standard seller terms and conditions require sellers to comply with applicable laws when listing their items.
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We could also be subject to fines or other penalties which in the aggregate could harm our business.
−Removed: Additionally, the luxury design products our sellers sell could be subject to recalls and other remedial actions and product safety, labeling, and licensing concerns may require us to voluntarily remove selected items from our online marketplace.
+Added: Additionally, the luxury design items our sellers sell could be subject to recalls and other remedial actions and product safety, labeling, and licensing concerns may require us to voluntarily remove selected items from our online marketplace.
Such recalls or voluntary removal of items can result in, among other things, lost sales, diverted resources, potential harm to our reputation, and increased customer service costs and legal expenses, which could harm our results of operations.
−Removed: Some of the luxury design products sold through our online marketplace on behalf of our sellers may expose us to product liability claims and litigation or regulatory action relating to personal injury, environmental, or property damage.
+Added: Some of the luxury design items sold through our online marketplace on behalf of our sellers may expose us to product liability claims and litigation or regulatory action relating to personal injury, environmental, or property damage.
We cannot be certain that our insurance coverage will be adequate for liabilities actually incurred or that insurance will continue to be available to us on economically reasonable terms or at all.
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embargoed or sanctioned countries and regions, governments, persons, and entities.
+Added: We may also be subject to new or changing import and export laws and regulations in connection with the change in administration or otherwise, or actions by foreign governments in response to the same.
In addition, various countries regulate the import of certain technology and have enacted or could enact laws that could limit our ability to provide sellers and buyers access to our online marketplace or could limit our sellers’ and buyers’ ability to access or use our services in those countries.
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If we fail to comply with these laws and regulations or are found to be in violation of U.S.
−Removed: sanctions or export control laws, including by facilitating unlawful transactions, we and certain of our employees could be subject to civil or
−Removed: criminal penalties, including the possible loss of export privileges and fines.
+Added: sanctions or export control laws, including by facilitating unlawful transactions, we and certain of our employees could be subject to civil or criminal penalties, including the possible loss of export privileges and fines.
We may also be adversely affected through penalties, reputational harm, loss of access to certain markets, or otherwise.
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Although we take precautions to prevent violations of these laws, our exposure for violating these laws increases as our international presence expands and as we increase sales and operations in foreign jurisdictions.
−Removed: The increasing impact of and focus on ESG matters could increase our costs, harm our reputation, harm our relationships with employees, and adversely affect our financial results.
−Removed: There has been increased focus, including by consumers, investors, employees, and other stakeholders, as well as by governmental and non-governmental organizations, on ESG matters.
−Removed: We intend to operate in line with our guiding principles and focus on the long-term sustainability of our business.
−Removed: From time to time, we may announce certain initiatives, including goals, regarding our focus areas, which may include environmental and sustainability matters, responsible sourcing, social investments and inclusion and diversity.
−Removed: We aim to create more economic opportunity for sellers, greater diversity in our workforce, and build long-term resilience by reducing our carbon footprint.
−Removed: Any failure by us to meet our commitments with regard to environmental, sustainability, responsible sourcing, social, and inclusion and diversity matters could negatively affect our brand, including harming our relationship with our employees, employee engagement, and retention, the willingness of our sellers and buyers to do business with us, or investors’ willingness to purchase or hold shares of our common stock, any of which could adversely affect our business, financial performance, and growth.
−Removed: Our reputation could be damaged if we, our sellers, and other relevant parties do not (or are perceived not to) act responsibly regarding ESG standards, or if we fail to appropriately respond to concerns raised by our consumers, investors, and other interested persons, which could have a material adverse effect on our business, financial condition, and results of operations.
−Removed: The costs to achieving our ESG goals, and the costs or potential impact from business decisions informed by ESG matters could have a material adverse effect on our business and financial condition.
−Removed: In addition, standards regarding ESG matters could develop and become more onerous for us to comply with, which could also result in costs that have a material adverse effect on our business and financial condition.
−Removed: We may become involved in claims, lawsuits, government investigations, and other proceedings that could adversely affect our business, financial condition, and results of operations.
−Removed: From time to time, we may become involved in litigation matters, such as matters incidental to the ordinary course of our business, including intellectual property, commercial, employment, class action, whistleblower, accessibility, and other litigation and claims, and governmental and other regulatory investigations and proceedings.
−Removed: Such matters can be time-consuming, divert management’s attention and resources, cause us to incur significant expenses or liability, or require us to change our business practices.
+Added: Claims, lawsuits, government investigations, judgments, settlements, and other legal proceedings could adversely affect our business, financial condition, and results of operations.
+Added: From time to time, we have, and may in the future, become involved in legal proceedings, claims, or litigation matters, such as matters incidental to the ordinary course of our business, including intellectual property, commercial, employment, class action, whistleblower, accessibility, and other litigation and claims, and governmental and other regulatory investigations and proceedings.
+Added: Such matters, whether meritorious or not, can be time-consuming, divert management’s attention and resources, cause us to incur significant expenses or liability, damage our reputation, or require us to change our business
Further, our general liability insurance may not cover all potential claims made against us or be sufficient to indemnify us for all liability that may be imposed.
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Data protection has become a significant issue in the United States, countries in the European Union, and in many other countries in which we operate.
−Removed: In addition to the actual and potential changes in data protection laws described elsewhere in
−Removed: these Risk Factors, global developments in privacy and data security regulations have changed and may continue to change some of the ways we, our sellers, vendors, and other third parties collect, use, and share personal information and other proprietary or confidential information, and have created and will continue to create additional compliance obligations for us and our sellers, vendors, and other third parties.
−Removed: In the European Union, the E.U.
−Removed: General Data Protection Regulation (“GDPR”) contains strict requirements for processing the personal data of individuals residing in E.U.
−Removed: member states, the European Economic Area (“EEA”), and certain additional territories.
+Added: In addition to the actual and potential changes in data protection laws described elsewhere in these Risk Factors, global developments in privacy and data security regulations have changed and may continue to change some of the ways we, our sellers, vendors, and other third parties collect, use, and share personal information and other proprietary or confidential information, and have created and will continue to create additional compliance obligations for us and our sellers, vendors, and other third parties.
+Added: In the European Union, the GDPR contains strict requirements for processing the personal data of individuals residing in E.U.
+Added: member states, the EEA, and certain additional territories.
The GDPR contains numerous requirements, including robust obligations on data controllers and data processors, greater rights for data subjects, including, for example, the “right to be forgotten,” and increased data portability, access, and redress rights for E.U.
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Due to the GDPR and the implementation following Brexit of the U.K.
−Removed: General Data Protection Regulation (“U.K.
−Removed: GDPR”) (i.e., a version of the GDPR as implemented into U.K.
−Removed: law that combines the GDPR and the U.K.
−Removed: Data Protection Act of 2018), we may experience difficulty retaining or obtaining new E.U.
+Added: GDPR, we may experience difficulty retaining or obtaining new E.U.
sellers, or current and new sellers may limit their selling into the European Union, due to the legal requirements, compliance cost, potential risk exposure, and uncertainty for them about their own compliance obligations with respect to the GDPR and U.K.
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We could face potential liability, regulatory investigation, and costly litigation, which may not be adequately covered by insurance.
−Removed: In the United States, rules and regulations governing data privacy and security include those promulgated under the authority of the Federal Trade Commission Act, the Electronic Communications Privacy Act, the Computer Fraud and Abuse Act, California’s California Consumer Privacy Act of 2018 (“CCPA”) and California Privacy Rights Act of 2020 (“CPRA”), and other state and federal laws relating to privacy, consumer protection, and data security.
+Added: In the United States, rules and regulations governing data privacy and security include those promulgated under the authority of the Federal Trade Commission Act, the Electronic Communications Privacy Act, the Computer Fraud and Abuse Act, the CCPA and CPRA, and other state and federal laws relating to privacy, consumer protection, and data security.
The CCPA and CPRA, and other recent and/or proposed state privacy laws, include requirements regarding the handling of personal information of consumers and households, including compliance and record keeping obligations, the right to request access to and deletion of their personal information, and the right to opt out of the sale and other uses of their personal information.
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Any actual or perceived failure by us to comply with these laws, regulations, or other obligations may lead to significant fines, penalties, regulatory investigations, lawsuits, significant costs for remediation, damage to our reputation, or other liabilities.
−Removed: For example, under the GDPR alone, noncompliance could result in fines of up to 20 million Euros or up to 4% of the annual global revenue of the noncompliant company, whichever is greater.
−Removed: We may not be entirely successful in our compliance efforts due to various factors either within our control (such as limited internal resource allocation) or outside our control (such as a lack of vendor cooperation, new regulatory interpretations, or lack of regulatory guidance in respect of certain requirements).
+Added: See “Risk Factors—Risks Related to Data Privacy and Cybersecurity, and Infrastructure—Our use and other processing of personal information and other data is subject to laws and obligations relating to privacy and data protection, and our failure to comply with such laws and obligations
+Added: could harm our business.” We may not be entirely successful in our compliance efforts due to various factors either within our control (such as limited internal resource allocation) or outside our control (such as a lack of vendor cooperation, new regulatory interpretations, or lack of regulatory guidance in respect of certain requirements).
We also publish privacy policies and other documentation regarding our collection, processing, use, and disclosure of personal data.
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Moreover, despite our efforts, we may not be successful in achieving compliance, such as if our employees or vendors fail to comply with our published policies and documentation.
−Removed: We are or may also be subject to the terms of our own and third-party external and internal privacy and security policies, codes, representations, certifications, industry standards, publications and frameworks and contractual obligations to third parties related to privacy,
−Removed: information security, including contractual obligations to indemnify and hold harmless third parties from the costs or consequences of non-compliance with data protection laws, or other obligations.
+Added: We are or may also be subject to the terms of our own and third-party external and internal privacy and security policies, codes, representations, certifications, industry standards, publications and frameworks and contractual obligations to third parties related to privacy, information security, including contractual obligations to indemnify and hold harmless third parties from the costs or consequences of non-compliance with data protection laws, or other obligations.
Our sellers and vendors may have been and may now and in the future be subject to similar privacy requirements, which may significantly increase costs and resources dedicated to their compliance with such requirements.
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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.
−Removed: Third parties may challenge any patents, copyrights, trademarks, and other intellectual property and proprietary rights owned or held by us or may knowingly or unknowingly infringe, misappropriate or otherwise violate our patents, copyrights, trademarks, and/or other proprietary rights.
−Removed: We may be required to spend significant resources to monitor and protect our intellectual property rights, and the efforts we take to protect our proprietary rights may not be sufficient.
−Removed: Even if we do detect violations, we may need to engage in litigation to enforce our intellectual property rights.
−Removed: Any enforcement efforts we undertake, including litigation, could be time-consuming and expensive and could divert our management’s attention away from standard business operations.
−Removed: In addition, our efforts may be met with defenses and counterclaims challenging the validity and/or enforceability of our intellectual property rights or may result in a court determining that our intellectual property rights are unenforceable.
−Removed: If we are unable to cost-effectively protect our intellectual property rights, then our business could be
+Added: Third parties have challenged and likely will continue to challenge our copyrights, trademarks, and other intellectual property and proprietary rights owned or held by us, or may knowingly or unknowingly infringe, misappropriate, or otherwise violate our copyrights, trademarks, or other proprietary rights.
+Added: We allocate resources, and may be required to allocate significant resources, to monitor and protect our intellectual property rights, and the efforts we take to protect our proprietary rights may not always be sufficient.
+Added: When violations occur, or if we detect violations, enforcing our intellectual property rights often requires pre-litigation tactics and may require litigation, which can be time-consuming, expensive, and divert management’s attention from standard business operations.
+Added: Although our enforcement efforts have not frequently encountered defenses or counterclaims challenging the validity or enforceability of our intellectual property rights, such challenges remain a risk.
+Added: Courts may still determine that some of our intellectual property rights are unenforceable.
+Added: If we are unable to cost-effectively protect our intellectual property rights, then our business could be harmed.
An adverse decision in any of these legal actions could limit our ability to assert our intellectual property or proprietary rights, limit the value of our intellectual property or proprietary rights, or otherwise negatively impact our business, financial condition, and results of operations.
If the protection of our intellectual property and proprietary rights is inadequate to prevent use or misappropriation by third parties, the value of our brand and other intangible assets may be diminished, competitors may be able to more effectively mimic our service and methods of operations, the perception of our business and service to existing or potential sellers and buyers may become confused in the marketplace, and our ability to attract sellers and buyers may be adversely affected.
−Removed: We may be subject to intellectual property claims, which are extremely costly to defend, could require us to pay significant damages and could limit our ability to use certain technologies in the future.
−Removed: We may receive notices that claim we have infringed, misappropriated, or misused other parties’ intellectual property rights.
+Added: Intellectual property claims, which can be extremely costly to defend, could require us to pay significant damages and could limit our ability to use certain technologies in the future.
+Added: There is considerable intellectual property development activity in our market.
+Added: Additionally, it is common for individuals and groups to purchase patents and other intellectual property assets for the purpose of making claims of infringement to extract licenses or settlements from companies like ours.
+Added: Furthermore, we may be sued by third parties who seek to target us for actions taken by our sellers on our platform.
+Added: From time to time, we receive notices that claim we have infringed, misappropriated, or misused other parties’ intellectual property rights.
To the extent we gain greater public recognition, we may face a higher risk of being the subject of intellectual property claims.
Third-party intellectual property rights may cover significant aspects of our technologies or business methods or block us from expanding our offerings.
−Removed: Any intellectual property claims against us, with or without merit, could be time consuming and expensive to settle or litigate and could divert the attention of our management.
−Removed: Litigation regarding intellectual property rights is inherently uncertain due to the complex issues involved, and we may not be successful in defending ourselves in such matters.
−Removed: Many potential litigants, including some of our competitors and patent holding companies, have the ability to dedicate substantial resources to enforcing their intellectual property rights.
+Added: Intellectual property claims against us, with or without merit, could be time-consuming and expensive to settle or litigate and could divert the attention of our management.
+Added: Litigation regarding intellectual property rights is inherently uncertain due to the complex issues involved, and we may not always be successful in defending ourselves in such matters.
+Added: Potential litigants, including some of our competitors and patent holding companies, have the ability to dedicate substantial resources to enforcing their intellectual property rights.
Any claims successfully brought against us could subject us to significant liability for damages and we may be required to stop using technology or other intellectual property alleged to be in violation of a third party’s rights.
−Removed: We also might be required to seek a license for third-party intellectual property.
+Added: We also might be required to seek a costly license for third-party intellectual property.
Even if a license is available, we could be required to pay significant royalties or submit to unreasonable terms, which would increase our operating expenses.
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If our internal control over financial reporting or our disclosure controls and procedures are not effective, we may not be able to accurately report our financial results, prevent fraud or file our periodic reports in a timely manner, which may cause investors to lose confidence in our reported financial information and may lead to a decline in our stock price.
−Removed: We have been a private company and, as such, we have not been subject to the internal control and financial reporting requirements applicable to a publicly traded company.
We are required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act following the later of the date we are deemed to be an “accelerated filer” or a “large accelerated filer,” each as defined in the Exchange Act, or the date we are no longer an “emerging growth company,” as defined in the JOBS Act.
−Removed: In addition, as a public company, we will be subject to Section 404(a), which requires us to include a report on our internal controls, including an assessment of the effectiveness of our internal controls and financial reporting procedures.
+Added: In addition, as a public company, we are subject to Section 404(a), which requires us to include a report on our internal controls, including an assessment of the effectiveness of our internal controls and financial reporting procedures.
Section 404 of the Sarbanes-Oxley Act (“Section 404”) requires that we maintain effective internal control over financial reporting and disclosure controls and procedures.
In particular, we must perform system and process evaluations, document our controls and perform testing of our key controls over financial reporting to allow management and our independent public accounting firm to report on the effectiveness of our internal control over financial reporting.
−Removed: Our testing, or the subsequent testing by our independent public accounting firm, may reveal deficiencies in our internal control over financial reporting that
−Removed: are deemed to be material weaknesses.
+Added: Our testing, or the subsequent testing by our independent public accounting firm, may reveal deficiencies in our internal control over financial reporting that are deemed to be material weaknesses.
If we are not able to comply with the requirements of Section 404 in a timely manner, or if we or our accounting firm identify deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the market price of our stock would likely decline and we could be subject to lawsuits, sanctions, or investigations by regulatory authorities, which would require additional financial and management resources.
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We are an emerging growth 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 common stock less attractive to investors.
−Removed: We are an “emerging growth company,” as defined in the JOBS Act.
−Removed: We intend to take advantage of certain exemptions under the JOBS Act from various public company reporting requirements, including not being required to have our internal control over financial reporting audited by our independent registered public accounting firm pursuant to Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and any golden parachute payments not previously approved.
+Added: We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).
+Added: We are taking advantage of certain exemptions under the JOBS Act from various public company reporting requirements, including not being required to have our internal control over financial reporting audited by our independent registered public accounting firm pursuant to Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and any golden parachute payments not previously approved.
We may take advantage of these exemptions for up to five years or until we are no longer an “emerging growth company,” whichever is earlier.
+Added: We currently expect to cease to be an emerging growth company as of December 31, 2026, the last day of the fiscal year following the fifth anniversary of our IPO.
+Added: Accordingly, we will likely become subject to additional disclosure and reporting requirements and related increased compliance costs.
In addition, Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of an extended transition period for complying with new or revised accounting standards.
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Accordingly, our consolidated financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards.
−Removed: We cannot predict if investors will find our common stock less attractive if we choose to rely on any of the exemptions afforded to emerging growth companies.
If some investors find our common stock less attractive because we rely on any of these exemptions, there may be a less active trading market for our common stock and the market price of our common stock may be more volatile.
We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) in which the fifth anniversary of the completion of our IPO, (b) in which we have total annual gross revenue of at least $1.235 billion or (c) in which we become a large accelerated filer, which means that we have been public for at least 12 months, have filed at least one annual report and the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last day of our then-most recently completed second fiscal quarter, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.
−Removed: We may not be able to manage our transition effectively or efficiently to a public company.
−Removed: We have incurred, and will continue to incur, significant legal, accounting, and other expenses that we did not incur as a private company.
−Removed: Our management team and other personnel will need to devote a substantial amount of time to, and we may not effectively or efficiently manage, our transition into a public company.
−Removed: For example, we are now subject to the reporting requirements of the Exchange Act, the applicable requirements of the Sarbanes-Oxley Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act, and the rules and regulations of the SEC and Nasdaq.
−Removed: To comply with the various requirements applicable to public companies, we must maintain effective disclosure and financial controls and corporate governance practices.
+Added: Our operations as a public company require substantial costs and substantial management attention, and we may not be able to manage our operations as a public company effectively or efficiently.
+Added: As a public company, we have incurred, and expect to continue to incur, significant legal, accounting, and other expenses, and we must maintain effective disclosure and financial controls and corporate governance practices.
+Added: Our management team and other personnel devote a substantial amount of time to, and we may not effectively, or efficiently manage our operations as
+Added: a public company, including our compliance with laws and regulations applicable to public companies.
+Added: For example, we are subject to the reporting requirements of the Exchange Act, the applicable requirements of the Sarbanes-Oxley Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act, and the rules and regulations of the SEC and Nasdaq.
If, notwithstanding our efforts to comply with these laws, regulations, and standards, we fail to comply, regulatory authorities may initiate legal proceedings against us and our business may be harmed.
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As such, we intend to continue to invest resources to comply with evolving laws, regulations and standards, and this investment has resulted, and may continue to result in, increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities.
−Removed: Many members of our management and other personnel have limited experience managing a public company and preparing public filings.
−Removed: In addition, our management and other personnel have had, and may in the future need to divert attention from other business matters, to devote substantial time to the reporting and other requirements applicable to a public company.
−Removed: In particular, we have incurred, and expect to continue to incur, significant expense and devote substantial management effort to complying with the requirements of Section 404.
−Removed: We have hired, and intend to hire, additional accounting and finance personnel with system implementation experience and expertise regarding compliance with the Sarbanes-Oxley Act.
−Removed: be unable to locate and hire qualified professionals with requisite technical and public company experience when and as needed.
−Removed: In addition, new employees will require time and training to learn our business and operating processes and procedures.
−Removed: If we are unable to recruit and retain additional finance personnel or if our finance and accounting team is unable for any reason to respond adequately to the increased demands that will result from being a public company, the quality and timeliness of our financial reporting may suffer, which could result in the identification of material weaknesses in our internal controls.
−Removed: Any consequences resulting from inaccuracies or delays in our reported consolidated financial statements could cause our stock price to decline and could harm our business, financial condition, and results of operations.
−Removed: If we fail to strengthen our financial reporting systems, infrastructure, and internal control over financial reporting to meet the demands that will be placed upon us as a public company, including the requirements of the Sarbanes-Oxley Act, we may be unable to report our financial results timely and accurately or prevent fraud.
−Removed: We expect to incur significant expense and devote substantial management effort toward ensuring compliance with Section 404.
−Removed: As a result of becoming a public company, we are, and will become, subject to additional regulatory compliance requirements, including Section 404, and if we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud.
−Removed: The rules and regulations such as the Sarbanes-Oxley Act have increased our legal and finance compliance costs and made some activities more time-consuming and costly.
−Removed: For example, Section 404 requires that our management report on, and our independent auditors attest to, the effectiveness of our internal control structure and procedures for financial reporting.
−Removed: Beginning with our second annual report following our IPO, we will be required to provide a management report on internal control over financial reporting.
+Added: We are subject to regulatory compliance requirements, including Section 404 of the Sarbanes-Oxley Act, and if we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud.
+Added: Section 404 requires that our management report on, and our independent auditors attest to, the effectiveness of our internal control structure and procedures for financial reporting.
+Added: Since our second annual report following our IPO, we have been required to provide a management report on internal control over financial reporting.
However, our auditors will not be required to formally attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 until we are no longer an “emerging growth company,” as defined in the JOBS Act.
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Section 404 compliance may divert internal resources and will take a significant amount of time and effort to complete.
−Removed: We may not be able to successfully complete the procedures and certification and attestation requirements of Section 404 by the time we will be required to do so.
−Removed: Implementing these changes may take a significant amount of time and may require specific compliance training of our personnel.
+Added: Implementing and maintaining effective internal controls has taken, and in the future will likely take, a significant amount of time and may require specific compliance training of our personnel.
+Added: We have incurred, and expect to continue to incur, significant expense and devote substantial management effort to complying with the requirements of Section 404 of the Sarbanes-Oxley Act.
+Added: For example, we have hired, and may in the future need to hire, additional accounting and finance personnel with system implementation experience and expertise regarding compliance with the Sarbanes-Oxley Act.
+Added: We may be unable to identify and hire qualified professionals with requisite technical and public company experience when and as needed.
+Added: In addition, new employees will require time and training to learn our business and operating processes and procedures.
+Added: If we are unable to recruit and retain additional finance personnel as needed, or if we fail to maintain, or strengthen as needed, our financial reporting systems, infrastructure, and internal control over financial reporting, the quality and timeliness of our financial reporting may suffer, which could result in the identification of significant deficiencies or material weaknesses in our internal controls.
+Added: Any consequences resulting from inaccuracies or delays in our reported consolidated financial statements could cause our stock price to decline and could harm our business, financial condition, and results of operations.
+Added: We expect to continue to incur significant expense and devote substantial management effort toward ensuring compliance with Section 404.
In the future, we may discover areas of our internal controls that need improvement.
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Wayfair, Inc.
−Removed: et al (“Wayfair”), that online sellers can be required to collect sales tax despite not having a physical presence in the state of the customer.
+Added: et al (“Wayfair”), that online sellers can be required to collect sales tax despite not having a physical presence in the state of the
In response to Wayfair, or otherwise, state or local governments and taxing authorities may adopt, or begin to enforce, laws requiring us to calculate, collect and remit taxes on sales in their jurisdictions.
−Removed: In addition, our transition to an almost fully remote work environment in response to the COVID-19 pandemic may result in an increased number of states in which we have employees, which may result in sales tax obligations that we did not previously have.
+Added: In addition, almost fully remote work environment can result in an increased number of states in which we have employees, which may result in sales tax obligations that we did not previously have.
While we believe that we collect and remit sales taxes in every state that requires sales taxes to be collected, including states where we do not have a physical presence, the adoption of new laws by, or a successful assertion by the taxing authorities of, one or more state or local governments requiring us to collect taxes where we presently do not do so, or to collect more taxes in a jurisdiction in which we currently do collect some taxes, could result in substantial tax liabilities, including taxes on past sales, as well as penalties and interest.
−Removed: The imposition by state governments and 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
−Removed: not impose similar obligations on our competitors, and decrease our future sales, which could harm our business and results of operations.
+Added: The imposition by state governments and 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 harm our business and results of operations.
Our business and our sellers may be subject to sales tax, value-added tax (“VAT”), provincial taxes, goods and services tax, and other taxes.
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In many cases, the ultimate tax determination is uncertain because it is not clear how existing statutes apply to our business or to sellers’ businesses.
−Removed: For example, it is unclear whether sales tax statutes on digital goods apply to NFTs.
One or more states, the federal government, or other countries may seek to impose additional reporting, record-keeping, or indirect tax collection obligations on businesses like ours that facilitate online commerce.
−Removed: For example, the U.S.
−Removed: Congress considered the “Marketplace Fairness Act,” which would have granted states the authority to require certain online merchants to collect sales tax on online sales at the time a transaction is completed.
−Removed: Although this legislation was not passed, there is no assurance that it, or similar legislation, will not be re-introduced or adopted in the future.
−Removed: In addition, EU reforms to the VAT obligations for business to consumer e-commerce sellers and marketplaces went into effect in July 2021.
−Removed: In connection with these reforms, certain marketplaces will become the deemed supplier when they facilitate certain cross-border business to consumer transactions of their third-party sellers.
+Added: In addition, under EU VAT obligations for business to consumer e-commerce sellers and marketplaces, certain marketplaces are the deemed supplier when they facilitate certain cross-border business to consumer transactions of their third-party sellers.
As a result, marketplaces may be liable to collect, report, and remit the VAT due from the consumer.
−Removed: The United Kingdom has implemented similar VAT marketplace rules, which went into effect in January 2021 and, in certain situations, may make facilitating marketplaces liable for the VAT collections for their overseas sellers.
+Added: The United Kingdom has similar VAT marketplace rules, and, in certain situations, may make facilitating marketplaces liable for the VAT collections for their overseas sellers.
We continually monitor changes, such as these, which could materially affect our business operations.
New taxes, both domestically and internationally, could also require us or sellers to incur substantial costs to capture data and collect and remit taxes.
−Removed: If such obligations were imposed, the additional costs associated with tax collection, remittance, and audit requirements could make selling through our online marketplace less attractive and more costly for sellers, which could harm our business.
−Removed: Our facilitation of transactions in cryptocurrencies such as Ether on our NFT platform exposes us to risks under U.S.
−Removed: and foreign tax laws.
−Removed: Although under U.S.
−Removed: federal tax laws, cryptocurrencies are currently considered property versus currency, we are obligated to report transactions involving cryptocurrencies in U.S.
−Removed: dollars and must determine their fair market value on each transaction date.
−Removed: federal taxing authorities have issued limited guidance on cryptocurrency transactions.
−Removed: The current guidance treats the use of cryptocurrency to purchase a NFT as a taxable disposition of the cryptocurrency, which subjects the holder to taxable gain that such holder must report for federal and state tax purposes.
−Removed: Similarly, a seller of an NFT is subject to tax on the sale of the NFT.
−Removed: Congress is currently proposing legislation that could require us to report such transactions to the IRS.
−Removed: Our failure to accurately record or report the cryptocurrency and NFT sales transacted through our NFT platform, or held by us, would expose us to adverse tax consequences, penalties, and interest.
−Removed: Moreover, the IRS, in connection with audits of cryptocurrency exchanges, has successfully sued to obtain account holder transaction and tax information.
−Removed: The applicability of tax laws in the United States and foreign jurisdictions with respect to cryptocurrency and NFTs will continue to evolve.
−Removed: This uncertainty increases the risk of non-compliance with tax laws, which in turn could result in adverse tax consequences, penalties, investigations or audits, litigation, account holder lawsuits, or the need to revise or restate our financial statements and associated consequences therewith, among other things.
−Removed: We ceased further investment in our NFT platform in January 2023.
−Removed: However, because previously-minted NFTs remain available for sale on our platform, any of the foregoing could adversely affect our business and reputation.
+Added: Such obligations add additional costs associated with tax collection, remittance, and audit requirements, which could make selling through our online marketplace less attractive and more costly for sellers, which could harm our business
Application of existing tax laws, rules or regulations are subject to interpretation by taxing authorities.
+Added: We are subject to income taxation at the federal, state, and local levels in the U.S.
+Added: and also various international jurisdictions.
The application of income and other tax laws is subject to interpretation.
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We may experience fluctuations in our tax obligations and effective tax rate.
−Removed: We are subject to taxation in the United States and in numerous other jurisdictions.
−Removed: We record tax expense based on current tax payments and our estimates of future tax payments, which may include reserves for estimates of probable settlements of tax
+Added: We are subject to taxation in the United States and in other jurisdictions.
+Added: We record tax expense based on current tax payments and our estimates of future tax payments, which may include reserves for estimates of probable settlements of tax audits.
At any time, multiple tax years could be subject to audit by various taxing jurisdictions.
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federal, state, and local taxing authorities are currently reviewing the appropriate treatment of companies engaged in Internet commerce and considering changes to existing tax or other laws that could levy sales, income, consumption, use, or other taxes relating to our activities, and/or impose obligations on us to collect such taxes.
−Removed: If such tax or other laws, rules, or regulations are amended, or if new unfavorable laws, rules or regulations are enacted, the results could increase our tax payments or other obligations, prospectively or retrospectively, subject us to interest and penalties, decrease the demand for our services if we pass on such costs to our sellers or buyers, result in increased costs to update or expand our technical or administrative infrastructure, or effectively limit the scope of our business activities if we decided not to conduct business in particular jurisdictions.
+Added: If such tax or other laws, rules, or regulations are amended, or if new unfavorable laws, rules or regulations are enacted, the
+Added: results could increase our tax payments or other obligations, prospectively or retrospectively, subject us to interest and penalties, decrease the demand for our services if we pass on such costs to our sellers or buyers, result in increased costs to update or expand our technical or administrative infrastructure, or effectively limit the scope of our business activities if we decided not to conduct business in particular jurisdictions.
As a result, these changes may have a material adverse effect on our business, results of operations, financial condition, and prospects.
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No additional ownership changes have occurred through the date of the most recent study.
+Added: We are in the process of updating the formal study through December 31, 2024 to determine if any ownership changes within the meaning of IRC Section 382 and 383 have occurred.
It is possible that we may experience an ownership change as a result of this study.
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Risks Related to Our Common Stock
−Removed: An active trading market for our common stock may not develop or be sustained and the price of our common stock could be volatile.
−Removed: Declines in the price of our common stock could subject us to litigation.
−Removed: Prior to our IPO, there was no public market for our common stock.
−Removed: An active market in our common stock may not develop or, if it does develop, it may not be sustainable or liquid enough for investors to sell their shares.
−Removed: The market prices of the securities of other newly public companies have historically been highly volatile and markets in general have been highly volatile in light of the impacts from global adverse economic, political, or market conditions, including changes resulting from increases in inflation or interest rates, consumer credit conditions, consumer debt levels, consumer confidence, supply chain disruptions, and geopolitical instability.
−Removed: Our stock price may be volatile and may decline, resulting in a loss of some or all of your investment.
−Removed: For example, our common stock has traded both above and below our initial public offering (“IPO”) price.
+Added: The price of our common stock has in the past been, and in the future may be, volatile, and you may lose all or part of your investment.
+Added: Our stock price has in the past been, and in the future may be, volatile and has experienced declines in the past and may experience future declines.
+Added: As a result, you may not be able to resell your shares at or above the price at which your shares were acquired.
+Added: The stock market in general has been highly volatile in light of the impacts from global adverse economic, political, or market conditions, including changes resulting from increases in inflation or interest rates, consumer credit conditions, consumer debt levels, employment rates, consumer confidence, supply chain disruptions, and geopolitical instability.
+Added: Our stock price has fluctuated significantly in the past and will likely fluctuate in the future and may decline, resulting in a loss of some or all of your investment.
+Added: For example, our common stock has traded both above and below our IPO price.
The trading price and volume of our common stock could fluctuate significantly in response to numerous factors, many of which are beyond our control, including:
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• failure of securities analysts to initiate or maintain coverage of us, changes in financial estimates or ratings by any securities analysts who follow us, or our failure to meet these estimates or the expectations of investors;
−Removed: • events or factors resulting from war or other outbreak of hostilities, geopolitical tensions, acts of terrorism, global health crises, such as the COVID-19 pandemic, responses to these events, or the perception that any such factors or events may occur;
+Added: • events or factors resulting from war or other outbreak of hostilities, geopolitical tensions, acts of terrorism, global health crises, such as the recent COVID-19 pandemic, responses to these events, or the perception that any such factors or events may occur;
• announcements of new services or offerings, strategic alliances, or significant agreements or other developments by us or our competitors;
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• actual or anticipated developments in our business or our competitors’ businesses or the competitive landscape generally;
−Removed: • new laws or regulations, new interpretations of existing laws, or regulations applicable to our business;
+Added: • new or changes in laws or regulations or governmental policies, or, new interpretations of existing laws or regulations applicable to our business;
• litigation or other claims against us;
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• any other factors discussed in this Annual Report on Form 10-K.
−Removed: In addition, if the market for technology stocks or the stock market in general experiences a loss of investor confidence, the price of our common stock, whether due to any of the foregoing factors or otherwise, could decline for reasons unrelated to our
−Removed: business, results of operations, or financial condition.
+Added: In addition, if the market for technology stocks or the stock market in general experiences a loss of investor confidence, the price of our common stock, whether due to any of the foregoing factors or otherwise, could decline for reasons unrelated to our business, results of operations, or financial condition.
The price of our common stock might also decline in reaction to events that affect other companies, even if those events do not directly affect us.
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If we are the subject of such litigation, it could result in substantial costs and could divert our management’s attention and resources, which could adversely affect our business.
−Removed: Moreover, because of these fluctuations, comparing our results of operations on a period-to-period basis may not be meaningful.
−Removed: You should not rely on our past results as an indication of our future performance.
−Removed: This variability and unpredictability could also result in our failing to meet the expectations of industry or financial analysts or investors for any period.
−Removed: If our net revenue or results of operations fall below the expectations of analysts or investors or below any forecasts we may provide to the market, or if the forecasts we provide to the market are below the expectations of analysts or investors, the price of our common stock could decline substantially.
−Removed: Such a stock price decline could occur even when we have met any previously publicly stated net revenue or earnings forecasts that we may provide.
Sales of a substantial number of shares of our common stock in the public market, such as the perception that sales might occur, could cause the price of our common stock to decline.
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Sales of securities by any of these stockholders or the perception that such sales could occur could adversely affect the trading price of our common stock.
+Added: We may issue additional common stock, convertible securities, or other equity in the future.
+Added: We also expect to issue common stock to our employees, directors, and other service providers pursuant to our equity incentive plans.
+Added: Additionally, as part of our business strategy, we may acquire or make investments in complementary companies, products or technologies and issue equity securities to pay for any such acquisition or investment.
+Added: Any such issuances could be dilutive to investors and could cause the price of our common stock to decline.
+Added: New investors in such issuances could also receive rights senior to those of holders of our common stock.
We cannot guarantee that our share repurchase program will be fully consummated or that it will enhance long-term stockholder value.
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In addition, this program will diminish our cash reserves.
−Removed: Future sales and issuances of our common stock or rights to purchase common stock could result in additional dilution to our stockholders and could cause the price of our common stock to decline.
−Removed: We may issue additional common stock, convertible securities, or other equity in the future.
−Removed: We also expect to issue common stock to our employees, directors, and other service providers pursuant to our equity incentive plans.
−Removed: Additionally, as part of our business strategy, we may acquire or make investments in complementary companies, products or technologies and issue equity securities to pay for any such acquisition or investment.
−Removed: Any such issuances could be dilutive to investors and could cause the price of our common stock to decline.
−Removed: New investors in such issuances could also receive rights senior to those of holders of our common stock.
Our actual results of operations may not meet our guidance and investor expectations, which would likely cause our stock price to decline.
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With or without our guidance, analysts, and other investors may publish expectations regarding our business, financial condition, and results of operations.
−Removed: We do not accept any responsibility for any projections or reports published by
−Removed: any such third parties.
+Added: We do not accept any responsibility for any projections or reports published by any such third parties.
Guidance is necessarily speculative in nature, and it can be expected that some or all of the assumptions of the guidance furnished by us will not materialize or will vary significantly from actual results.
+Added: Our operating results with respect to one or more certain financial measures have in the past, and in the future may, come in below expectations, including market or analyst expectations.
Any change in previously released guidance or in our practice of releasing guidance could materially and adversely affect the trading price of our common stock.
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• require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent;
−Removed: • specify that special meetings of our stockholders can be called only by our board of directors, the Chairperson of our board of directors (“Chairperson”), or our Chief Executive Officer;
+Added: • specify that special meetings of our stockholders can be called only by our board of directors, the Chairperson of our board of directors, or our Chief Executive Officer;
• establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for election to our board of directors, which requires, without limitation, compliance with Rule 14a-19 under the Exchange Act, as applicable;
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.