TheRealReal, Inc. 10-K

Item 9A. Controls and Procedures. Evaluation of Disclosure Controls and Procedures Our management, with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2025. Based on this evaluation, our CEO and CFO concluded that, as of December 31, 2025, our disclosure controls and procedures were effective at the reasonable assurance level in ensuring that (a) the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms, and (b) such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Management’s Annual Report on Internal Control Over Financial Reporting Management, including our CEO and CFO, is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external purposes in accordance with U.S. GAAP. Under the supervisi on and with the participation of our management, including our CEO and CFO, we have conducted an evaluation of the effectiveness of our internal control over financial reporting based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on evaluatio n under these criteria, management determined that our internal control over financial reporting was effective as of December 31, 2025 . KPMG LLP, our independent registered public accounting firm, has audited management's assertion on the effectiveness of our internal control over financial reporting as of December 31, 2025, as stated in their report which is included in Part IV —Financial Statements and Supplementary Data, of this Annual Report on Form 10-K. 51 Table of Contents Changes in Internal Control Over Financial Reporting There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the year ended December 31, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Inherent Limitations on Effectiveness of Controls Our management, including our Chief Executive Officer and our Chief Financial Officer, believes that our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives and are effective at the reasonable assurance level. However, our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by the collusion of two or more people or by management override of controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. Item 9B. Other Information. Rule 10b5-1 Trading Plans During the fiscal quarter ended December 31, 2025, none of our directors or officers adopted or terminated a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement," as those terms are defined in Regulation S-K, Item 408. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. Not applicable. 52 Table of Contents PART III Item 10. Directors, Executive Officers and Corporate Governance. Information required by this Item is incorporated herein by reference to our proxy statement for our 2026 annual meeting of stockholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2025 (the “Proxy Statement”). Item 11. Executive Compensation. The information required by this Item is incorporated herein by reference to our Proxy Statement. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The information required by this Item is incorporated herein by reference to our Proxy Statement. Item 13. Certain Relationships and Related Transactions, and Director Independence. The information required by this Item is incorporated herein by reference to our Proxy Statement. Item 14. Principal Accounting Fees and Services. Our independent registered public accounting firm is KPMG LLP , San Francisco, CA , Auditor ID: 185 . The information required by this Item is incorporated herein by reference to our Proxy Statement. 53 Table of Contents PART IV Item 15. Exhibits, Financial Statement Schedules. (a) Please refer to the Financial Statements, Notes to Financial Statements and the Exhibit Index in this Form 10-K which is incorporated herein by reference. (b) Please refer to the Exhibit Index in this Form 10-K which is incorporated herein by reference. Item 16. Form 10-K Summary None. 54 Table of Contents Exhibit Index Incorporated by Reference Exhibit Number Description Form File No. Exhibit Filing Date Filed Herewith 3.1 Form of Amended and Restated Certificate of Incorporation of The RealReal, Inc., as currently in effect. S-1 333-231891 3.2 June 17, 2019 3.2 Form of Amended and Restated Bylaws of The RealReal, Inc. as currently in effect. S-1 333-231891 3.4 June 6, 2019 4.1 Form of Common Stock Certificate. S-1 333-231891 4.1 June 17, 2019 4.2 Seventh Amended and Restated Investor Rights Agreement, dated March 22, 2019 among The RealReal, Inc. and certain holders of its capital stock. S-1 333-231891 4.7 May 31, 2019 4.3 Description of Securities. 10-Q 001-38953 4.2 August 7, 2020 4.4 Indenture dated March 8, 2021, between The RealReal, Inc. and U.S. Bank National Association as Trustee, including form of 1.00% Convertible Senior Note due 2028. 8-K 001-38953 4.1 March 8, 2021 4.5 Form of 1.00% Convertible Senior Note due 2028 (included in Exhibit 4.1). 8-K 001-38953 4.1 March 8, 2021 4.6 Indenture, dated as of February 10, 2025, by and between The RealReal, Inc. and U.S. Bank 8-K 001-38953 4.1 February 10, 2025 4.7 Form of 4.00% Convertible Senior Note due 2031 (included as Exhibit A to Exhibit 4.1) 8-K 001-38953 4.2 February 10, 2025 10.1+ The RealReal, Inc. 2011 Equity Incentive Plan and related form agreements. S-1 333-231891 10.1 May 31, 2019 10.2# Loan and Security Agreement dated as of September 19, 2013 by and between The RealReal, Inc. and Square 1 Bank. S-1 333-231891 10.3 May 31, 2019 10.3# First Amendment to Loan and Security Agreement dated as of March 13, 2014 by and between The RealReal, Inc. and Square 1 Bank. S-1 333-231891 10.4 May 31, 2019 10.4# Second Amendment to Loan and Security Agreement dated as of August 5, 2014 by and between The RealReal, Inc. and Square 1 Bank. S-1 333-231891 10.5 May 31, 2019 10.5# Third Amendment to Loan and Security Agreement dated as of September 25, 2014 by and between The RealReal, Inc. and Square 1 Bank. S-1 333-231891 10.6 May 31, 2019 10.6# Fourth Amendment to Loan and Security Agreement dated as of December 28, 2015 by and between The RealReal, Inc. and Pacific Western Bank. S-1 333-231891 10.7 May 31, 2019 55 Table of Contents Incorporated by Reference Exhibit Number Description Form File No. Exhibit Filing Date Filed Herewith 10.7# Fifth Amendment to Loan and Security Agreement dated as of July 18, 2016 by and between The RealReal, Inc. and Pacific Western Bank. S-1 333-231891 10.8 May 31, 2019 10.8# Sixth Amendment to Loan and Security Agreement dated as of September 16, 2016 by and between The RealReal, Inc. and Pacific Western Bank. S-1 333-231891 10.9 May 31, 2019 10.9# Seventh Amendment to Loan and Security Agreement dated as of March 28, 2017 by and between The RealReal, Inc. and Pacific Western Bank. S-1 333-231891 10.10 May 31, 2019 10.10# Eighth Amendment to Loan and Security Agreement dated as of July 27, 2017 by and between The RealReal, Inc. and Pacific Western Bank. S-1 333-231891 10.11 May 31, 2019 10.11# Ninth Amendment to Loan and Security Agreement dated as of March 5, 2018 by and between The RealReal, Inc. and Pacific Western Bank. S-1 333-231891 10.12 May 31, 2019 10.12# Tenth Amendment to Loan and Security Agreement dated as of July 25, 2018 by and between The RealReal, Inc. and Pacific Western Bank. S-1 333-231891 10.13 May 31, 2019 10.13# Eleventh Amendment to Loan and Security Agreement dated as of August 9, 2018 by and between The RealReal, Inc. and Pacific Western Bank. S-1 333-231891 10.14 May 31, 2019 10.14# Twelfth Amendment to Loan and Security Agreement dated as of December 19, 2018 by and between The RealReal, Inc. and Pacific Western Bank. S-1 333-231891 10.15 May 31, 2019 10.15# Lease Agreement dated as of March 18, 2014 by and between The RealReal, Inc. and 35 Enterprise Avenue, L.L.C. S-1 333-231891 10.16 May 31, 2019 10.16# Lease Modification Agreement dated as of March 8, 2018 by and between The RealReal, Inc. and 35 Enterprise Avenue, L.L.C. S-1 333-231891 10.17 May 31, 2019 10.17# Lease Agreement dated as of June 5, 2018 by and between The RealReal, Inc. and Hartz Enterprise LLC. S-1 333-231891 10.19 May 31, 2019 10.18# Lease Agreement dated as of September 14, 2018 by and between The RealReal, Inc. and Prologis Perth Amboy Associates, LLC. S-1 333-231891 10.20 May 31, 2019 10.19+ The RealReal, Inc. 2019 Equity Incentive Plan. S-1 333-231891 10.21 June 17, 2019 56 Table of Contents Incorporated by Reference Exhibit Number Description Form File No. Exhibit Filing Date Filed Herewith 10.20+ The RealReal, Inc. Employee Stock Purchase Plan. S-1 333-231891 10.22 June 17, 2019 10.21+ The RealReal, Inc. 2019 Equity Incentive Plan Stock Option Agreement and related form agreements. 10-Q 001-38953 10.1 August 14, 2019 10.22+ The RealReal, Inc. Employee Stock Purchase Plan, as amended and restated on February 19, 2020. 10-K 001-38953 10.25 March 11, 2020 10.23+ The RealReal, Inc. 2019 Equity Incentive Plan for Non-Employee Director Deferred Restricted Stock Unit Award Agreement and Deferral Election Form 10-Q 011-38953 10.1 November 7, 2023 10.24 Form of Base Capped Call Confirmation, dated June 10, 2020 between The RealReal, Inc. and each of the Counterparties. 8-K 001-38953 10.1 June 16, 2020 10.25 Form of Additional Capped Call Confirmation, dated June 18, 2020 between The RealReal, Inc. and each of the Capped Call Counterparties. 8-K 001-38953 10.1 June 23, 2020 10.26# Lease Agreement dated as of November 2, 2020 by and between The RealReal, Inc. and Liberty Property Limited Partnership. 10-Q 001-38953 10.1 November 10, 2020 10.27 Form of Base Capped Call Confirmation, dated March 8, 2021 between The RealReal, Inc. and each of the Counterparties. 8-K 001-38953 10.1 March 8, 2021 10.28 Form of Additional Capped Call Confirmation, dated March 12, 2021 between The RealReal, Inc. and each of the Capped Call Counterparties. 8-K 001-38953 10.1 March 16, 2021 10.29+ Form of Severance and Change in Control Agreement approved by the Company’s board of directors on May 5, 2021. 10-Q 001-38953 10.1 May 10, 2021 10.30+ The RealReal, Inc. 2019 Equity Incentive Plan Performance-Based Restricted Stock Unit Award Agreement 10-K 001-38953 10.34 February 28, 2022 10.31+ The RealReal, Inc. 2019 Equity Incentive Plan Restricted Stock Unit Award 10-Q 001-38953 10.1 August 9, 2022 10.32+ Form of Indemnification Agreement entered into by and between The RealReal, Inc. and its directors and executive officers. 10-K 001-38953 10.35 February 28, 2023 10.33+ Form of Stand-Alone Restricted Stock Unit Award Agreement, by and between the Company and Luke Friang. S-8 333-270281 99.3 March 3, 2023 57 Table of Contents Incorporated by Reference Exhibit Number Description Form File No. Exhibit Filing Date Filed Herewith 10.34+ Offer Letter by and between The RealReal, Inc. and Ajay Gopal dated February 19, 2024. 8-K 001-38953 10.1 February 21, 2024 10.35* Form of Exchange Agreement by and between The RealReal Inc. and the Noteholder, as defined therein, dated February 29, 2024. 10-K 001-38953 10.41 March 1, 2024 10.36 Indenture by and between The RealReal, Inc., the Guarantors party thereto and Glas Trust Company LLC dated February 29, 2024. 10-K 001-38953 10.42 March 1, 2024 10.37 Warrant Agency Agreement by and between The RealReal, Inc., Computershare, In., and Computershare Trust Company, N.A. dated February 29, 2024. 10-K 001-38953 10.43 March 1, 2024 10.38 Security Agreement among The RealReal, Inc., the Pledgors and GLAS Trust Company LLC, as Notes Collateral Agent, 10-Q 001-38953 10.5 May 7, 2024 10.39+ Letter re: Promotion to President and Chief Executive Officer, dated October 28, 2024, by and between The RealReal, Inc. and Rati Sahi Levesque. 10-Q 001-38953 10.1 November 4, 2024 10.40+ Amended and Restated Severance and Change-in-Control Agreement, dated October 28, 2024, by and between The RealReal, Inc. and Rati Sahi Levesque. 10-Q 001-38953 10.2 November 4, 2024 10.41+ Separation Agreement, dated October 28, 2024, by and between The RealReal, Inc. and John E. Koryl. 10-Q 001-38953 10.3 November 4, 2024 10.42+ Form of Severance and Change in Control Agreement approved by the Company’s board of directors on October 29, 2024. 10-Q 001-38953 10.4 November 4, 2024 10.43* Exchange Agreement, dated as of February 10, 2025, by and among The RealReal, Inc. and the Noteholder Parties 8-K 001-38953 10.1 February 10, 2025 10.44+ Separation Agreement, dated August 4, 2025, by and between The RealReal, Inc. and Chatelle Lynch. 10-Q 001-38953 10.1 August 7, 2025 10.45* Form of Exchange Agreement, dated as of August 20, 2025, by and among The RealReal, Inc. and the Noteholder Parties. 8-K 001-38953 10.1 August 21, 2025 19 The RealReal, Inc. Insider Trading Policy. 10-K 001-38953 19 February 21, 2025 23.1 Consent of KPMG LLP, Independent Registered Public Accounting Firm X 31.1 Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. X 58 Table of Contents Incorporated by Reference Exhibit Number Description Form File No. Exhibit Filing Date Filed Herewith 31.2 Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. X 32.1 Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. X 32.2 Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. X 97 The RealReal, Inc. Clawback Policy . 10-K 001-38953 March 1, 2024 101.INS XBRL Instance Document X 101.SCH XBRL Taxonomy Extension Schema Document X 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document X 101.DEF XBRL Taxonomy Extension Definition Linkbase Document X 101.LAB XBRL Taxonomy Extension Label Linkbase Document X 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document X 104 Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, and 101.PRE). ___________________________________________ + Indicates management contract or compensatory plan. # Certain information contained in this agreement has been omitted because it both (i) is not material and (ii) would be competitively harmful if publicly disclosed. * Certain schedules and exhibits omitted pursuant to Item 601(a)(5) of Regulation S-K promulgated by the SEC. The Company agrees to furnish supplementally a copy of any omitted schedule or exhibit to the SEC upon request. 59 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized . The RealReal, Inc. Date: February 26, 2026 By: /s/ Ajay Madan Gopal Ajay Madan Gopal Chief Financial Officer Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated. Name Title Date /s/ Rati Sahi Levesque Chief Executive Officer and Director February 26, 2026 Rati Sahi Levesque (Principal Executive Officer) /s/ Ajay Madan Gopal Chief Financial Officer February 26, 2026 Ajay Madan Gopal (Principal Financial Officer) /s/ Steve Lo Senior Vice President, Chief Accounting Officer February 26, 2026 Steve Lo (Principal Accounting Officer) /s/ Caretha Coleman Director February 26, 2026 Caretha Coleman /s/ Karen Katz Director February 26, 2026 Karen Katz /s/ Rob Krolik Director February 26, 2026 Rob Krolik /s/ Niki Leondakis Director February 26, 2026 Niki Leondakis /s/ James Miller Director February 26, 2026 James Miller /s/ Mark McCaffrey Director February 26, 2026 Mark McCaffrey 60 Table of Contents INDEX TO FINANCIAL STATEMENTS Reports of Independent Registered Public Accounting Firm 62 Balance Sheets as of December 31, 202 5 and 202 4 65 Statements of Operations for the Years ended December 31, 2 025, 2024 and 2023 66 Statements of Stockholders’ Equity (Deficit) for the Years ended December 31, 2025, 2024 and 2023 67 Statements of Cash Flows for the Years ended December 31, 2025, 2024 and 2023 68 Notes to Financial Statements 70 61 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors The RealReal, Inc.: Opinion on the Financial Statements We have audited the accompanying balance sheets of The RealReal, Inc. (the Company) as of December 31, 2025 and 2024, the related statements of operations, stockholders’ equity (deficit), and cash flows for each of the years in the three-year period ended December 31, 2025, and the related notes (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 26, 2026 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Sufficiency of the audit evidence over the IT elements of revenue recognition As discussed in Note 2 to the financial statements, the Company recognizes consignment revenue by providing a service to sell pre-owned luxury goods on behalf of consignors to buyers through its online marketplace and retail stores. Direct revenue is recognized from the sale of Company-owned inventory on its online marketplace and retail stores. The Company reported $692.8 million in total revenue for the year ended December 31, 2025. We identified the evaluation of the sufficiency of audit evidence over the information technology (IT) elements of revenue recognition as a critical audit matter. A high degree of complex auditor judgment was required to evaluate the nature and extent of audit evidence obtained related to consignment and direct revenue due to the complexity and number of IT systems. IT professionals with specialized skills and knowledge were required to understand and assess the Company’s internally developed IT systems used in the revenue recognition process. 62 Table of Contents The following are the primary procedures we performed to address this critical audit matter. We applied auditor judgment to determine the nature and extent of procedures to be performed over the IT elements of revenue recognition. We involved IT professionals with specialized skills and knowledge, who assisted in: • gaining an understanding of the systems used in the Company’s recognition of revenue • evaluating the design and testing the operating effectiveness of certain internal controls related to the IT applications used in the revenue recognition process. This included IT controls, IT application controls, data configurations, and interface controls over the transfer of relevant data between systems. We performed a software-assisted data analysis to test the relationships among certain revenue transactions. On a sample basis, we also tested certain revenue transactions by comparing the recorded amounts to underlying documentation. We evaluated the sufficiency of audit evidence obtained by assessing the results of procedures performed, including the appropriateness of the nature and extent of such evidence. /s/ KPMG LLP We have served as the Company’s auditor since 2013. San Francisco, California February 26, 2026 63 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors The RealReal, Inc.: Opinion on Internal Control Over Financial Reporting We have audited The RealReal, Inc.'s (the Company) internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the balance sheets of the Company as of December 31, 2025 and 2024, the related statements of operations, stockholders’ equity (deficit), and cash flows for each of the years in the three-year period ended December 31, 2025, and the related notes (collectively, the financial statements), and our report dated February 26, 2026 expressed an unqualified opinion on those financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Report of Independent Registered Public Accounting Firm. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ KPMG LLP San Francisco, California February 26, 2026 64 Table of Contents THE REALREAL, INC. Balance Sheets (In thousands, except share and per share data) December 31, 2025 December 31, 2024 Assets Current assets Cash and cash equivalents $ 151,231 $ 172,212 Accounts receivable 23,822 13,961 Inventory, net 30,843 23,583 Prepaid expenses and other current assets 21,595 22,913 Total current assets 227,491 232,669 Property and equipment, net 96,148 94,443 Operating lease right-of-use assets 64,641 75,714 Restricted cash 14,808 14,911 Other assets 5,945 5,358 Total assets $ 409,033 $ 423,095 Liabilities and Stockholders’ Deficit Current liabilities Accounts payable $ 14,565 $ 11,004 Accrued consignor payable 111,497 89,718 Operating lease liabilities, current portion 24,645 22,835 Convertible Senior Notes, net, current portion — 26,653 Other accrued and current liabilities 113,533 98,466 Total current liabilities 264,240 248,676 Operating lease liabilities, net of current portion 66,793 85,790 Convertible Senior Notes, net 230,833 276,807 Non-convertible notes, net 140,980 134,470 Warrant liability 114,353 78,584 Other noncurrent liabilities 7,352 6,144 Total liabilities 824,551 830,471 Commitments and contingencies (Note 12) Stockholders’ deficit: Common stock, $ 0.00001 par value; 500,000,000 shares authorized as of December 31, 2025 and December 31, 2024; 118,318,917 and 111,242,479 shares issued and outstanding as of December 31, 2025 and December 31, 2024, respectively 1 1 Additional paid-in capital 880,107 846,450 Accumulated deficit ( 1,295,626 ) ( 1,253,827 ) Total stockholders’ deficit ( 415,518 ) ( 407,376 ) Total liabilities and stockholders’ deficit $ 409,033 $ 423,095 The accompanying notes are an integral part of these financial statements. 65 Table of Contents THE REALREAL, INC. Statements of Operations (In thousands, except share and per share data) Years Ended December 31, 2025 2024 2023 Revenue: Consignment revenue $ 535,877 $ 473,396 $ 415,572 Direct revenue 91,091 64,580 79,160 Shipping services revenue 65,877 62,508 54,572 Total revenue 692,845 600,484 549,304 Cost of revenue: Cost of consignment revenue 56,582 53,801 58,120 Cost of direct revenue 70,682 55,809 74,343 Cost of shipping services revenue 48,759 43,353 40,563 Total cost of revenue 176,023 152,963 173,026 Gross profit 516,822 447,521 376,278 Operating expenses: Marketing 63,251 55,256 58,275 Operations and technology 275,916 260,827 257,041 Selling, general and administrative 201,589 187,737 183,793 Restructuring charges — 196 43,462 Total operating expenses 540,756 504,016 542,571 Loss from operations ( 23,934 ) ( 56,495 ) ( 166,293 ) Change in fair value of warrant liability ( 35,769 ) ( 68,167 ) — Gain on extinguishment of debt 40,785 4,177 — Interest income 4,257 7,943 8,805 Interest expense ( 27,701 ) ( 21,384 ) ( 10,701 ) Other income, net 926 — — Loss before provision for income taxes ( 41,436 ) ( 133,926 ) ( 168,189 ) Provision for income taxes 363 276 283 Net loss attributable to common stockholders $ ( 41,799 ) $ ( 134,202 ) $ ( 168,472 ) Net loss per share attributable to common stockholders, basic $ ( 0.36 ) $ ( 1.24 ) $ ( 1.65 ) Net loss per share attributable to common stockholders, diluted $ ( 0.70 ) $ ( 1.24 ) $ ( 1.65 ) Weighted average shares used to compute net loss per share attributable to common stockholders, basic 114,871,414 107,878,366 101,806,000 Weighted average shares used to compute net loss per share attributable to common stockholders, diluted 116,512,265 107,878,366 101,806,000 The accompanying notes are an integral part of these financial statements. 66 Table of Contents THE REALREAL, INC. Statements of Stockholders’ Equity (Deficit) (In thousands, except share amounts) Common Stock Additional Paid-in Capital Accumulated Deficit Total Stockholders’ Equity (Deficit) Shares Amount Balance as of December 31, 2022 99,088,172 $ 1 $ 781,060 $ ( 951,153 ) $ ( 170,092 ) Issuance of common stock upon exercise of options 8,511 — 19 — 19 Issuance of common stock upon vesting of restricted stock units, net of shares withheld for employee taxes 4,708,141 — ( 690 ) — ( 690 ) Issuance of common stock for exercises under ESPP 865,676 — 886 — 886 Stock-based compensation expense — — 35,050 — 35,050 Net loss — — — ( 168,472 ) ( 168,472 ) Balance as of December 31, 2023 104,670,500 $ 1 $ 816,325 $ ( 1,119,625 ) $ ( 303,299 ) Settlement of capped calls — — 396 — 396 Issuance of common stock upon exercise of options 136,658 — 376 — 376 Issuance of common stock upon vesting of restricted stock units, net of shares withheld for employee taxes 5,868,967 — ( 1,646 ) — ( 1,646 ) Issuance of common stock for exercises under ESPP 566,354 — 1,413 — 1,413 Stock-based compensation expense — — 29,586 — 29,586 Net loss — — — ( 134,202 ) ( 134,202 ) Balance as of December 31, 2024 111,242,479 $ 1 $ 846,450 $ ( 1,253,827 ) $ ( 407,376 ) Settlement of capped calls — — 1,907 — 1,907 Issuance of common stock upon exercise of options 221,028 — 1,030 — 1,030 Issuance of common stock upon vesting of restricted stock units, net of shares withheld for employee taxes 6,426,435 — ( 160 ) — ( 160 ) Issuance of common stock for exercises under ESPP 428,975 — 1,652 — 1,652 Stock-based compensation expense — — 29,228 — 29,228 Net loss — — — ( 41,799 ) ( 41,799 ) Balance as of December 31, 2025 118,318,917 $ 1 $ 880,107 $ ( 1,295,626 ) $ ( 415,518 ) The accompanying notes are an integral part of these financial statements. 67 Table of Contents THE REALREAL, INC. Statements of Cash Flows (in thousands) Year Ended December 31, 2025 2024 2023 Cash flows from operating activities: Net loss $ ( 41,799 ) $ ( 134,202 ) $ ( 168,472 ) Adjustments to reconcile net loss to cash provided by (used in) operating activities: Depreciation and amortization 33,004 33,100 31,695 Stock-based compensation expense 28,943 29,082 34,273 Reduction of operating lease right-of-use assets 16,070 15,192 16,746 Bad debt expense 2,607 2,498 1,962 Non-cash interest expense 8,179 8,684 — Issuance costs allocated to liability classified warrants — 374 — Accretion of debt discounts and issuance costs 2,206 2,127 2,573 Property, plant, equipment, and right-of-use asset impairments — — 39,739 Provision for inventory write-downs and shrinkage 2,214 2,590 9,783 Gain on debt extinguishment ( 40,785 ) ( 4,177 ) — Change in fair value of warrant liability 35,769 68,167 — Loss (gain) related to warehouse fire, net ( 95 ) 740 — Other adjustments ( 39 ) ( 165 ) ( 515 ) Changes in operating assets and liabilities: Accounts receivable ( 12,468 ) 767 ( 6,981 ) Inventory, net ( 9,474 ) ( 3,677 ) 10,938 Prepaid expenses and other current assets ( 796 ) 701 2,001 Other assets ( 701 ) 76 ( 3,050 ) Operating lease liability ( 22,184 ) ( 20,883 ) ( 26,478 ) Accounts payable 1,613 910 ( 425 ) Accrued consignor payable 21,779 11,470 ( 4,421 ) Other accrued and current liabilities 12,663 13,090 ( 464 ) Other noncurrent liabilities 304 382 ( 172 ) Net cash provided by (used in) operating activities 37,010 26,846 ( 61,268 ) Cash flow from investing activities: Insurance proceeds related to warehouse fire 2,309 461 — Capitalized proprietary software development costs ( 12,889 ) ( 11,800 ) ( 12,951 ) Purchases of property and equipment ( 18,644 ) ( 14,248 ) ( 29,177 ) Net cash used in investing activities ( 29,224 ) ( 25,587 ) ( 42,128 ) Cash flow from financing activities: Proceeds from exercise of stock options 1,030 376 19 Proceeds from issuance of stock in connection with the Employee Stock Purchase Program 1,652 1,413 886 Repayment of 2025 Notes ( 26,749 ) — — Taxes paid related to restricted stock vesting ( 160 ) ( 1,646 ) ( 679 ) Cash received from settlement of Capped Calls in conjunction with the Note Exchanges 1,907 396 — Issuance costs paid related to the Note Exchanges ( 6,550 ) ( 5,298 ) — Net cash (used in) provided by financing activities ( 28,870 ) ( 4,759 ) 226 Net decrease in cash, cash equivalents, and restricted cash ( 21,084 ) ( 3,500 ) ( 103,170 ) Cash, cash equivalents, and restricted cash Beginning of period 187,123 190,623 293,793 End of period $ 166,039 $ 187,123 $ 190,623 68 Table of Contents Supplemental disclosures of cash flow information Cash paid for interest $ 17,463 $ 10,680 $ 8,127 Cash paid for income taxes 331 200 227 Supplemental disclosures of non-cash investing and financing activities Property and equipment additions not yet paid in cash 3,480 1,818 1,757 Capitalized proprietary software development costs not yet paid in cash 978 654 1,122 Stock-based compensation capitalized to proprietary software development costs 318 504 777 Liability classified warrants issued in connection with the 2024 Note Exchange — 10,417 — Net decrease in principal amount of debt due to the 2024 Note Exchange — ( 17,232 ) — Net decrease in principal amount of debt due to the February 2025 Note Exchange ( 36,656 ) — — Net decrease in principal amount of debt due to the August 2025 Note Exchange ( 6,084 ) — — Tax withholding liability for restricted stock — — 11 The accompanying notes are an integral part of these financial statements. 69 Table of Contents THE REALREAL, INC. Notes to Financial Statements Note 1. Description of Business and Basis of Presentation Organization and Description of Business The RealReal, Inc. (the “Company”) is an online marketplace for authenticated, consigned luxury goods across multiple categories, including women’s fashion, men’s fashion, and jewelry and watches. The Company was incorporated in the state of Delaware on March 29, 2011 and is headquartered in San Francisco, California. Basis of Presentation The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and, in the opinion of management, reflect all adjustments necessary to state fairly the Company’s financial position, results of operations, stockholders’ equity (deficit), and cash flows for the periods presented. For the years ended 2025, 2024 and 2023, comprehensive loss is equal to net loss as the Company has no other comprehensive income (loss) item in the periods presented. The Company’s functional and reporting currency is the U.S. dollar. Note 2. Summary of Significant Accounting Policies Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of expenses during the reporting period. Significant items subject to such estimates and assumptions include those related to revenue recognition, including the returns reserve, standalone selling price related to consignment revenue transactions, valuation of inventory, software development costs, stock-based compensation, fair value of warrant liability, initial fair value of non-convertible notes issued in the 2024 Note Exchange (see Note 6 — Non-convertible Notes, Net), initial fair value of convertible notes issued in the 2025 Notes Exchanges (see Note 7 — Convertible Senior Notes, Net), incremental borrowing rates related to lease liability, valuation of deferred taxes, and other contingencies. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could differ from those estimates. Net Loss per Share Attributable to Common Stockholders The Company follows the two-class method when computing net loss per common share when shares are issued that meet the definition of participating securities. The two-class method determines net loss per common share for each class of common stock and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income (loss) available or attributable to common stockholders for the period to be allocated between common stock and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. The Company’s Convertible Senior Notes (as defined below) are participating securities as they give the holders the right to receive dividends if dividends or distributions declared to the common stockholders is equal to or greater than the last reported sale price of the Company’s common stock on the trading day immediately preceding the ex-dividend date for such dividend or distribution as if the instruments had been converted into shares of common stock. No undistributed earnings were allocated to the participating securities as the contingent event is not satisfied as of the reporting date. Basic net loss per share attributable to common stockholders is calculated by dividing the net loss for the period by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by giving effect to all potentially dilutive securities outstanding for the period using the treasury stock method or the if-converted method, as applicable, based on the nature of such securities. Segments The Company has one operating segment and one reportable segment as its chief operating decision maker, the Chief Executive Officer (the "CODM"), reviews financial information on a consolidated basis for purposes of allocating 70 Table of Contents resources and evaluating financial performance. All long-lived assets are located in the United States and substantially all revenue is attributed to consignors and buyers based in the United States. Revenue Recognition The Company generates revenue from the sale of pre-owned luxury goods through its online marketplace and retail stores. Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. The Company enters into contracts that include products and services that are capable of being distinct and accounted for as separate performance obligations as described below. The transaction price requires an allocation across consignment services, sales of Company-owned inventory, and shipping services. Estimation is required in the determination of the services' stand-alone selling price (“SSP”). Consignment Revenue The Company provides a service to sell pre-owned luxury goods on behalf of consignors to buyers through its online marketplace and retail stores. The Company retains a percentage of the proceeds received as payment for its consignment service, which the Company refers to as its take rate. SSP is estimated using observable stand-alone consignment sales which are conducted without shipping services. The Company reports consignment revenue on a net basis as an agent and not the gross amount collected from the buyer. Title to the consigned goods remains with the consignor until transferred to the buyer upon purchase of the consigned goods and expiration of the allotted return period. The Company does not take title of consigned goods at any time except in certain cases where returned goods become Company-owned inventory or the Company buys goods directly from a vendor or consignor. The Company recognizes consignment revenue upon purchase of the consigned good by the buyer as its performance obligation of providing consignment services to the consignor is satisfied at that point. Consignment revenue is recognized net of estimated returns, cancellations, buyer incentives and adjustments. The Company recognizes a returns reserve based on historical experience, which is recorded in other accrued and current liabilities on the balance sheets (see Note 5 — Balance Sheet Components). Sales tax assessed by governmental authorities is excluded from revenue. Certain transactions provide consignors with a material right resulting from the tiered consignor commission plan. Under this plan, the amount an individual consignor receives for future sales of consigned goods may be dependent on previous consignment sales for that consignor within his/her consignment period. Accordingly, in certain consignment transactions, a small portion of the Company’s consignment revenue is allocated to such material right using the portfolio method and recorded as deferred revenue, which is recorded in other accrued and current liabilities on the balance sheets. The impact of the deferral has not been material to the financial statements. The Company also generates subscription revenue from monthly memberships allowing buyers early access to shop for luxury goods. The buyers receive the early access and other benefits over the term of the subscription period, which represents a single stand-ready performance obligation. Therefore, the subscription fees paid by the buyer are recognized over the monthly subscription period. Subscription revenue was not material in 2025, 2024, and 2023. Direct Revenue The Company generates direct revenue from the sale of Company-owned inventory. The Company recognizes direct revenue on a gross basis upon shipment of the purchased good to the buyer as the Company acts as the principal in the transaction. SSP is estimated using observable stand-alone sales of Company-owned inventory which are conducted without shipping services, when available, or a market assessment approach. Direct revenue is recognized net of estimated returns, buyer incentives and adjustments. Sales tax assessed by governmental authorities is excluded from revenue. Cost of direct revenue is also recognized upon shipment to the buyer in an amount equal to that paid to the consignor from the original consignment sale, an amount equal to that paid as a direct purchase from a third party, or the lower of cost of the inventory purchased and its net realizable value. Shipping Services Revenue The Company provides a service to ship purchased items to buyers and a service to ship items from buyers back to the Company. The Company determines itself to be the principal in this arrangement. The Company charges a fee to buyers for this service and has elected to treat shipping and handling activities performed as a separate performance obligation. For shipping services revenue, the Company's SSP is estimated using a market approach considering external and internal data points on the stand-alone sales price of the shipping service. All outbound shipping and handling costs for buyers are 71 Table of Contents accounted for as cost of shipping services and recognized as the shipping activity occurs. The Company also generates shipping services revenue from the shipping fees for consigned products returned by buyers to the Company within policy. The Company recognizes shipping revenue and associated costs over time as the shipping activity occurs, which is generally one to three days after shipment. Incentives Incentives, which include platform-wide discounts and buyer incentives, may periodically be offered to buyers. Platform-wide discounts are made available to all buyers on the online marketplace. Buyer incentives apply to specific buyers and consist of coupons or promotions that offer credits in connection with purchases on the Company’s platform, and do not impact the commissions paid to consignors. These are treated as a reduction of consignment revenue and direct revenue. Additionally, the Company periodically offers commission exceptions to the standard consignment rates to consignors to optimize its supply. These are treated as a reduction of consignment revenue at the time of sale. The Company may offer a certain type of buyer incentive in the form of site credits to buyers on current transactions to be applied towards future transactions, which are included in other accrued and current liabilities on the balance sheets. Contract Liabilities The Company’s contractual liabilities primarily consist of deferred revenue for material rights primarily related to the tiered consignor commission plan, which are recognized as revenue using a portfolio approach based on the pattern of exercise, and certain buyer incentives. Contract liabilities are recorded in other accrued and current liabilities on the balance sheets and are generally expected to be recognized within one year. Contract liabilities were immaterial as of December 31, 2025 and December 31, 2024. Cost of Revenue Cost of consignment revenue consists of credit card fees, packaging, customer service personnel-related costs, website hosting services, and consignor inventory adjustments relating to lost or damaged products. Cost of direct revenue consists of the cost of goods sold, credit card fees, packaging, customer service personnel-related costs, website hosting services, and inventory adjustments. Cost of shipping services revenue consists of the outbound shipping and handling costs to deliver purchased items to buyers, the shipping costs for consigned products returned by buyers to the Company within policy, and an allocation of the credit card fees associated with the shipping fee charged. Marketing Marketing expense is comprised of the cost of acquiring new consignors and buyers for our online platform and physical stores, including the cost of television, digital and direct mail advertising. Marketing expense also includes personnel-related costs, including stock-based compensation, of employees engaged in these activities. Advertising costs are expensed as incurred and were $ 48.6 million, $ 42.9 million, and $ 48.4 million in 2025, 2024, and 2023, respectively. Operations and Technology Operations and technology expense is comprised of costs associated with the authentication, merchandising and fulfillment of goods sold through our online marketplace and retail stores, as well as general information technology expense. The principal component of operations and technology expense is personnel-related costs, including stock-based compensation, of employees engaged in these activities. Operations and technology expense also includes allocated facility and overhead costs, costs related to our retail stores, facility supplies, inbound consignment shipping costs, and depreciation of hardware and equipment, as well as research and development expense for technology associated with managing and improving our operations. In 2025, 2024, and 2023, the Company capitalized proprietary software developments costs of $ 13.5 million, $ 11.8 million, and $ 13.3 million, respectively. As such, operations and technology expense also includes amortization of capitalized technology development costs, which is taken on straight-line basis over three years once the technology is ready for its intended use. Selling, General and Administrative Selling, general and administrative expense is principally comprised of the personnel-related costs for employees involved in sales, finance and administration, and includes stock-based compensation expense. Selling, general and administrative expense also includes allocated facility and overhead costs and professional services, including accounting and legal advisors. 72 Table of Contents Stock-based Compensation The Company incurs stock-based compensation expense from stock options, restricted stock units (“RSUs”), performance based restricted stock units (“PSUs”) subject to performance or market conditions, and employee stock purchase plan (“ESPP”) purchase rights. Stock-based compensation expense related to employees and nonemployees is measured based on the grant-date fair value of the awards. The Company estimates the fair value of stock options granted and the purchase rights issued under the ESPP using the Black-Scholes option pricing model. The fair value of RSUs is estimated based on the fair market value of the Company’s common stock on the date of grant, which is determined based on the closing price of the Company’s common stock. Compensation expense is recognized in the statements of operations over the period during which the employee is required to perform services in exchange for the award (the vesting period of the applicable award) using the straight-line method for awards with only a service condition. To determine the grant-date fair value of the Company's stock-based payment awards for PSUs subject to performance conditions, the quoted stock price on the date of grant is used. The stock-based compensation expense for PSUs with performance conditions is recognized based on the estimated number of shares that the Company expects will vest and is adjusted on a quarterly basis using the estimated achievement of financial performance targets. For PSUs subject to market conditions, the grant-date fair value is determined using the Monte Carlo simulation model which utilizes multiple input variables to estimate the probability that market conditions will be achieved. These variables include the Company's expected stock price volatility over the expected term of the award, the risk-free interest rate for the expected term of the award, and expected dividends. For PSUs with market conditions, the stock-based compensation expense is recognized on a tranche by tranche basis over the requisite service period using the fair value derived from the Monte Carlo simulation model. The compensation expense will be recognized regardless of whether the market condition is ever satisfied, provided the requisite service period is satisfied. For all awards, the Company accounts for forfeitures as they occur. Cash, Cash Equivalents and Restricted Cash The Company considers all highly liquid investments purchased with original maturities of three months or less from the purchase date to be cash equivalents. Cash equivalents primarily consist of investments in short-term money market funds. Restricted cash consists of cash deposited with a financial institution as collateral for the Company’s letters of credit for its facility leases and the Company’s credit cards. The Company had $ 14.8 million and $ 14.9 million in restricted cash as of December 31, 2025 and 2024, respectively. The following table provides a reconciliation of cash, cash equivalents and restricted cash for the periods presented that sum to the total of the same amounts shown in the statements of cash flows (in thousands): December 31, 2025 December 31, 2024 December 31, 2023 Cash and cash equivalents $ 151,231 $ 172,212 $ 175,709 Restricted cash 14,808 14,911 14,914 Total cash, cash equivalents and restricted cash $ 166,039 $ 187,123 $ 190,623 Accounts Receivable Accounts receivables are recorded at the amounts billed to buyers and do not bear interest. Accounts receivables result from transactions with payment processors, the majority of which are settled within two business days. Inventory, Net Inventory consists of finished goods arising from goods returned after the title has transferred from the buyer to the Company as well as finished goods from direct purchases from vendors and consignors. The cost of inventory is an amount equal to that paid to the consignor or vendors. Inventory is valued at the lower of cost and net realizable value using the specific identification method and the Company records provisions, as appropriate, to write down obsolete and excess inventory to estimated net realizable value. After the inventory value is reduced, adjustments are not made to increase it from the estimated net realizable value. Additionally, inventory is recorded net of an allowance for shrinkage which represents the risk of physical loss of inventory. Provisions for inventory shrinkage are estimated based on historical experience and are adjusted based upon physical inventory counts. Provisions to write down inventory to net realizable value and provisions for inventory shrinkage were $ 2.2 million and $ 2.6 million during the year ended December 31, 2025 and 2024, respectively. 73 Table of Contents Return reserves, which reduce revenue and cost of sales, are estimated using historical experience. Liabilities for return allowances are included in other accrued and current liabilities on the balance sheets and were $ 28.1 million and $ 22.4 million as of December 31, 2025 and 2024. Included in inventory on the Company’s balance sheets are assets totaling $ 5.1 million and $ 4.8 million as of December 31, 2025 and 2024, respectively, for the rights to recover products from customers associated with its liabilities for return reserves. Property and Equipment, Net Property and equipment, net is recorded at cost less accumulated depreciation and amortization. Depreciation and amortization are recorded on a straight-line basis over the estimated useful lives of the respective assets. Repair and maintenance costs are expensed as incurred. The estimated useful lives of our assets are as follows: Proprietary software 3 years Furniture and equipment 3 - 5 years Vehicles 5 years Leasehold improvements Shorter of lease term or estimated useful life Software Development Costs Proprietary software includes the costs of developing the Company’s internal proprietary business platform and automation projects. The Company capitalizes qualifying proprietary software development costs that are incurred during the application development stage. Capitalization of costs begins when two criteria are met: (1) the preliminary project stage is completed and (2) it is probable that the software will be completed and used for its intended function. Such costs are capitalized in the period incurred. Capitalization ceases and amortization begins when the software is substantially complete and ready for its intended use, including the completion of all significant testing. Costs related to preliminary project activities and post-implementation operating activities are expensed as incurred. Impairment of Long-lived Assets The carrying amounts of long-lived assets, including right-of-use assets, property and equipment, net and capitalized proprietary software, are periodically reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable or that the useful life is shorter than originally estimated. Recoverability of assets to be held and used is measured by comparing the carrying amount of assets to future undiscounted net cash flows the assets are expected to generate over their remaining life. If the assets are considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired assets. If the useful life is shorter than originally estimated, the Company amortizes the remaining carrying value over the revised shorter useful life. Leases Contracts that have been determined to convey the right to use an identified asset are evaluated for classification as an operating or finance lease. For the Company’s operating leases, the Company records a lease liability based on the present value of the lease payments at lease inception, using the applicable incremental borrowing rate. The Company estimates the incremental borrowing rate by developing its own synthetic credit rating, corresponding yield curve, and the terms of each lease at the lease commencement date. The corresponding right-of-use asset is recorded based on the corresponding lease liability at lease inception, adjusted for payments made to the lessor at or before the commencement date, initial direct costs incurred and any tenant incentives allowed for under the lease. The Company does not include optional renewal terms or early termination provisions unless the Company is reasonably certain such options would be exercised at the inception of the lease. Operating lease right-of-use assets, current portion of operating lease liabilities, and operating lease liabilities, net of current portion are included on the Company’s balance sheet. The Company has elected the practical expedients that allows for the combination of lease components and non-lease components and to record short-term leases as lease expense on a straight-line basis on the statements of operations. Variable lease payments are recorded as expense as they are incurred. 74 Table of Contents The Company has finance leases for vehicles and equipment, and the amounts of finance lease right-of-use assets and finance lease liabilities have been immaterial to date. Debt The Company initially recognizes incurred debt, net of any discounts, premiums and issuance costs related to the debt offering. All debt issuance costs are presented as a direct deduction from the related principal debt amounts on the balance sheet. Debt obligations due within 12 months are classified as current liabilities. Debt discounts, premiums and issuance costs are amortized to interest expense over the estimated life of the related debt using the effective interest method. When multiple instruments are issued in the same transaction, the Company allocates any issuance costs to the instruments on the same basis as the allocation of proceeds. Issuance costs allocated to instruments measured at fair value are expensed in the period incurred. Capped Call Transactions In June 2020 and March 2021, in connection with the issuance of its Convertible Senior Notes, the Company entered into capped call transactions (see Note 7 - Convertible Senior Notes, Net). The capped call transactions are expected generally to reduce the potential dilution to the holders of the Company’s common stock upon any conversion of the Convertible Senior Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted Convertible Senior Notes, with such reduction and/or offset subject to a cap based on the cap price. The Capped Calls (as defined below) are classified in stockholders’ equity as a reduction to additional paid-in capital and are not subsequently remeasured as long as the conditions for equity classification continue to be met. The Company monitors the conditions for equity classification, which continue to be met as of December 31, 2025. Debt Issuance Costs Debt issuance costs, which consist of direct incremental legal, consulting, banking and accounting fees related to the anticipated debt offering, are amortized to interest expense over the estimated life of the related debt based on the effective interest method. The Company presents debt issuance costs as a direct deduction from the related principal debt amounts on the balance sheet, and are all amortized to interest expense over the estimated remaining life of the related debt. Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in loss in the period of enactment. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. Concentrations of Credit Risks Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash, cash equivalents, restricted cash and accounts receivable. At times, such amount may exceed federally-insured limits. The Company is closely monitoring ongoing events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions or other companies in the financial services industry or the financial services industry generally. The Company reduces credit risk by placing its cash, cash equivalents, restricted cash and investments with major financial institutions with high credit ratings within the United States. The Company has not experienced any realized losses on cash, cash equivalents and restricted cash to date; however, no assurances can be provided. As of December 31, 2025 and December 31, 2024, there were no customers that represented 10% or more of the Company’s accounts receivable balance and there were no customers that individually exceeded 10% of the Company’s total revenue for each of the years ended December 31, 2025, 2024, and 2023. Recently Adopted Accounting Pronouncements 75 Table of Contents In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures. The amendments of this update are related to the rate reconciliation and income taxes paid, requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. The Company has adopted this ASU as of December 31, 2025 prospectively to the current period. Prior period disclosures have not been adjusted to reflect the new disclosure requirements. Refer to Note 13. Income Taxes in the accompanying notes to the financial statements for further detail. Recently Issued Accounting Pronouncements In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses, which requires companies to disclose in the notes to the financial statements the disaggregation of certain expense categories included within the income statement expense captions. The standard is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027 on a prospective basis with optional retrospective application. Early adoption is permitted. The Company is currently assessing the impact that adopting this new accounting standard will have on its financial statements. In November 2024, the FASB issued ASU 2024-04, Debt with Conversion and Other Options. This new guidance is designed to clarify requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. This standard is effective for fiscal years beginning after December 15, 2025 and for interim periods within fiscal years beginning after December 15, 2026. Early adoption is permitted. The Company is currently assessing the impact that adopting this new accounting standard will have on its financial statements. In September 2025, the FASB issued ASU 2025-06, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. This ASU provides updated guidance clarifying the capitalization of costs related to internal-use software, including enhanced guidance on cloud computing arrangements. ASU 2025-06 is effective for annual periods beginning after December 15, 2027, and interim periods within those fiscal years, with early adoption permitted. The Company is currently assessing the impact that adopting this new accounting standard will have on its financial statements. In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities. The amendments in this update establish the accounting for a government grant received by a business entity. The guidance is effective for fiscal years beginning after December 15, 2028, with early adoption permitted. The Company is currently assessing the impact that adopting this new accounting standard will have on its financial statements. In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which clarifies the guidance in Topic 270 to improve the consistency of interim financial reporting. The ASU provides a comprehensive list of required interim disclosures and introduces a disclosure principle requiring entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. ASU 2025-11 is effective for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years, with early adoption permitted. The Company is currently assessing the impact that adopting this new accounting standard will have on its financial statements. Note 3. Cash and Cash Equivalents The following tables summarize the estimated value of the Company’s cash and cash equivalents (in thousands) and do not include restricted cash. There are no unrealized gains or losses related to the restricted cash balance. December 31, 2025 Amortized Cost Unrealized Gain Unrealized Loss Fair Value Cash and cash equivalents: Cash $ 25,683 $ — $ — $ 25,683 Money market funds 125,548 — — 125,548 Total cash and cash equivalents $ 151,231 $ — $ — $ 151,231 76 Table of Contents December 31, 2024 Amortized Cost Unrealized Gain Unrealized Loss Fair Value Cash and cash equivalents: Cash $ 24,870 $ — $ — $ 24,870 Money market funds 147,342 — — 147,342 Total cash and cash equivalents $ 172,212 $ — $ — $ 172,212 Note 4. Fair Value Measurement Assets and liabilities recorded at fair value on a recurring basis on the balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows: Level 1—Observable inputs such as unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. Level 2—Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the asset or liability. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. There were no transfers between Level 1, Level 2 or Level 3 of the fair value hierarchy during the periods presented. Assets and Liabilities Measured at Fair Value on a Recurring Basis The following tables set forth the Company's financial instruments on the balance sheet that were measured at fair value on a recurring basis for the period indicated by level within the fair value hierarchy (in thousands): December 31, 2025 Level 1 Level 2 Level 3 Total Financial assets: Money market funds $ 125,548 $ — $ — $ 125,548 Total $ 125,548 $ — $ — $ 125,548 Financial liabilities: Warrants $ — $ — $ 114,353 $ 114,353 Total $ — $ — $ 114,353 $ 114,353 December 31, 2024 Level 1 Level 2 Level 3 Total Financial assets: Money market funds $ 147,342 $ — $ — $ 147,342 Total $ 147,342 $ — $ — $ 147,342 Financial liabilities: Warrants $ — $ — $ 78,584 $ 78,584 Total $ — $ — $ 78,584 $ 78,584 Fair Value Measurements of Other Financial Instruments 77 Table of Contents The following table presents the carrying amounts and estimated fair values of the financial instruments that are not recorded at fair value on the balance sheets (in thousands): December 31, 2025 December 31, 2024 Net Carrying Amount Estimated Fair Value Net Carrying Amount Estimated Fair Value 2025 Notes $ — $ — $ 26,653 $ 26,493 2028 Notes $ 47,703 $ 45,152 $ 276,807 $ 216,291 2029 Notes $ 140,980 $ 153,712 $ 134,470 $ 140,889 2031 Notes $ 183,130 $ 280,269 $ — $ — During the period ended June 30, 2025, the Company repaid the outstanding principal amount of the 3.00 % Convertible Senior Notes due 2025 (the "2025 Notes") at maturity. The outstanding principal amounts of the 1.00 % Convertible Senior Notes due 2028 (the "2028 Notes"), 4.25 %/ 8.75 % PIK/cash senior secured notes due 2029 (the “2029 Notes”) and 4.00 % Convertible Senior Notes due 2031 (the “2031 Notes” and, together with the 2028 Notes, and the 2029 Notes, the "Notes") are $ 48.2 million, $ 143.8 million and $ 190.1 million, respectively. The difference between the principal amounts of such notes and their respective net carrying amounts are the unamortized debt issuance costs and debt premiums. For the periods presented, the fair value of the 2025 Notes, the 2028 Notes, the 2029 Notes and the 2031 Notes, which differs from their carrying value, is determined based on the quoted bid prices of such notes in an over-the counter market using the latest trading information of the reporting period. Fair Value Measurement of Warrants In connection with the 2024 Note Exchange (defined in Note 6 – Non-convertible Notes, Net), the Company issued warrants (the "Warrants") to the participants in the 2024 Note Exchange to acquire an aggregate of up to 7,894,737 shares (subject to adjustment in accordance with the terms of the Warrants) of the Company’s common stock to the holders of the Exchanged Notes at an exercise price of $ 1.71 , subject to certain cashless exercise provisions and adjustment in accordance with the terms of the Warrants. The Warrants are exercisable from the date of issuance until they expire on March 1, 2029. The Warrants are accounted for as liabilities under ASC 480 since the Warrants may be required to be settled in cash in case of a fundamental change, which could occur outside of the Company’s control. Changes in fair value are recognized within change in fair value of warrant liability on the Company’s statements of operations. Issuance costs allocated to the Warrants are included in selling, general and administrative on the Company’s statements of operations. The aggregate fair value of the Warrants for the periods presented was determined using a Black-Scholes Model with the following inputs: December 31, 2025 December 31, 2024 Stock price $ 15.78 $ 10.93 Exercise price $ 1.71 $ 1.71 Expected life in years 3.17 4.17 Expected volatility 93.51 % 96.75 % Expected dividends — % — % Discount rate 3.55 % 4.38 % The following table presents the activity related to the Warrants for each of the years presented: December 31, 2025 December 31, 2024 Beginning balance $ 78,584 $ — Issuance of warrants — 10,417 Change in fair value 35,769 68,167 Ending balance $ 114,353 $ 78,584 78 Table of Contents Note 5. Balance Sheet Components Property and Equipment, Net Property and equipment, net is recorded at cost less accumulated depreciation and amortization. Depreciation and amortization are recorded on a straight-line basis over the estimated useful lives of the respective assets. Property and equipment, net consists of the following (in thousands): December 31, 2025 December 31, 2024 Proprietary software $ 42,529 $ 47,416 Furniture and equipment 66,996 51,959 Automobiles 2,056 2,036 Leasehold improvements 93,723 88,840 Property and equipment, gross 205,304 190,251 Less: accumulated depreciation and amortization ( 109,156 ) ( 95,808 ) Property and equipment, net $ 96,148 $ 94,443 Depreciation and amortization expense on property and equipment was $ 32.9 million, $ 32.7 million, and $ 31.0 million for the years ended December 31, 2025, 2024 and 2023, respectively. During the year ended December 31, 2023, the Company recorded $ 8.6 million of impairment of leasehold improvements and disposal of fixed assets related to the closures of several of its office and retail locations as part of the savings plan the Company implemented. The impairment charges are included in restructuring in the statements of operations. The Company did not record impairment of leasehold improvements or disposal of fixed assets related to the savings plan during the years ended December 31, 2024 and December 31, 2025. Other Accrued and Current Liabilities Other accrued and current liabilities consist of the following (in thousands): December 31, 2025 December 31, 2024 Returns reserve $ 28,117 $ 22,409 Accrued compensation 28,173 24,749 Accrued sales tax and other taxes 9,929 9,727 Site credit and gift card liability 20,302 15,542 Accrued marketing and outside services 8,632 6,403 Accrued shipping 3,230 3,270 Accrued interest 7,168 4,996 Deferred revenue 3,108 2,441 Other 4,874 8,929 Other accrued and current liabilities $ 113,533 $ 98,466 Note 6. Non-convertible Notes, Net 2024 Note Exchange On February 29, 2024, the Company entered into exchange agreements with certain holders of its 2025 Notes and 2028 Notes to exchange (i) $ 145.8 million in aggregate principal amount of the 2025 Notes and (ii) $ 6.5 million in aggregate principal amount of the 2028 Notes (together, the “2024 Exchanged Notes”) for $ 135.0 million in aggregate principal amount of the Company’s 2029 Notes, pursuant to an indenture (the “2024 Note Exchange”). The 2029 Notes bear interest at a rate of 13.00 % per annum, consisting of cash interest at a rate of 8.75 % per annum payable semi-annually in arrears and payment in-kind (“PIK”) interest at a rate of 4.25 % per annum payable semi-annually . During the years ended December 31, 2025 and December 31, 2024, $ 5.9 million and $ 2.9 million was added to the principal amounts 79 Table of Contents outstanding due to accrued PIK interest, respectively. The 2029 Notes will mature on the earlier of (a) March 1, 2029 and (b) any date, if any, on or after December 1, 2027 on which (a) the aggregate principal amount of the 2028 Notes then outstanding is greater than $ 20 million and (b) the difference between (i) the amount of unrestricted cash and cash equivalents held by the Company and its subsidiaries (if any) as of such date of determination and (ii) the aggregate principal amount of 2028 Notes outstanding as of such date of determination is less than $ 75 million. In connection with the 2024 Note Exchange, the Company issued the Warrants (see Note 4 – Fair Value Measurement for further details on the terms of the Warrants). As a result of the 2024 Note Exchange, the Company’s principal debt balance decreased $ 17.2 million as of the closing date of the 2024 Note Exchange. As the terms of the 2029 Notes were deemed to have substantially different terms from the 2024 Exchanged Notes, the 2024 Note Exchange was accounted for as an extinguishment of the 2024 Exchanged Notes. In connection with debt extinguishment accounting, the Company recorded a gain of $ 4.2 million as the difference between the carrying amount of the 2024 Exchanged Notes and the fair value of the 2029 Notes. Included in the recorded gain are unamortized debt discounts and issuance costs related to the 2024 Exchanged Notes and the fair value of the Warrants as they represent fees paid to certain holders of its 2025 Notes and 2028 Notes in connection with the 2024 Note Exchange. The Company allocated issuance costs to the Warrants and the 2029 Notes based on relative fair value. The Company allocated $ 0.4 million of issuance costs to the Warrants with the balance being allocated to the 2029 Notes. Issuance costs related to the 2029 Notes are being amortized to interest expense through the expected maturity of the 2029 Notes at an effective interest rate of 13.35 %. The indenture governing the 2029 Notes (the "2029 Notes Indenture") contains certain covenants, which include (i) a covenant by the Company not to permit liquidity (calculated as the sum of (a) unused commitments then available to be drawn under any revolving credit facility, delayed draw term loan facility or qualified securitization financing permitted thereunder (after giving effect to any borrowing base or similar limitations), plus (b) the amount of unrestricted cash and cash equivalents held by the Company and its subsidiaries (if any)) to be less than $ 25 million as of the last day of any month, (ii) limitations on the Company’s and certain of its future subsidiaries’ (if any) ability to, among other things, (a) grant or incur liens securing indebtedness, (b) incur assume or guarantee additional indebtedness, (c) enter into transactions with affiliates, (d) sell or otherwise dispose of assets, including capital stock of subsidiaries, (e) make certain restricted payments or other investments, or (f) pay dividends or make other distributions (including loans and other advances and (iii) limitations, in the case of the Company and any future guarantor (if any), to consolidate, amalgamate or merge with or into, or sell all or substantially all of its assets to, another person. As of December 31, 2025 the Company was in compliance with such covenants. The 2029 Notes Indenture sets forth certain events of default after which the 2029 Notes may be declared immediately due and payable and sets forth certain types of bankruptcy or insolvency events of default involving the Company or its subsidiaries. The 2029 Notes are guaranteed by certain of the Company’s future wholly-owned domestic subsidiaries (if any) on a senior secured basis. The 2029 Notes and the guarantees (if any), together with any future indebtedness secured on a pari passu basis with the 2029 Notes and the guarantees (if any), are secured by a first priority lien on substantially all of the assets of the Company and the guarantors (if any), subject to certain exceptions. On or after March 1, 2025, the Company may redeem the 2029 Notes at its option, in whole at any time or in part from time to time, at the following redemption prices (expressed as percentages of principal amount) plus accrued and unpaid interest, to, but excluding, the applicable redemption date (subject to the right of holders of record of the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the following periods: March 1, 2025 to (but excluding) March 1, 2026 - 113.0 %; March 1, 2026 to (but excluding) October 1, 2026 - 106.5 %; and October 1, 2026 and thereafter - 100.0 %. A schedule of the Company's future maturities for the 2029 Notes with interest components included in principal, is as follows (in thousands): 80 Table of Contents Amount Fiscal Year 2029 Notes 2026 through 2028 $ — 2029 166,631 Total expected payments at maturity 166,631 Less unamortized debt issuance costs and debt premium, net ( 2,844 ) Less amounts related to PIK interest ( 22,807 ) Net carrying amount $ 140,980 Note 7. Convertible Senior Notes, Net February 2025 Note Exchange On February 10, 2025, the Company entered into an exchange agreement with certain holders of its 2028 Notes to exchange $ 183.3 million in aggregate principal amount of the 2028 Notes (the “February 2025 Exchanged Notes”) for $ 146.7 million in aggregate principal amount of the Company's 2031 Notes, pursuant to an indenture (such exchange, the “February 2025 Note Exchange” and, together with the August 2025 Note Exchange and the 2024 Note Exchange, the "Note Exchanges" and such indenture, the "2031 Notes Indenture"). As a result of the February 2025 Note Exchange, the Company's principal debt balance decreased $ 36.7 million as of the closing date of the February 2025 Note Exchange. The Company did not receive any cash connected to the February 2025 Note Exchange. The 2031 Notes bear cash interest at a rate of 4.00 % per annum payable semi-annually in arrears; provided that, solely with respect to the interest payment due on August 15, 2025, the 2031 Notes will bear additional cash interest at the rate of 1.25 % per year from September 1, 2024 to but excluding February 10, 2025, which interest will be paid in consideration for the accrued and unpaid interest on the February 2025 Exchanged Notes. As the terms of the 2031 Notes issued on February 10, 2025 were deemed to have substantially different terms from the February 2025 Exchanged Notes, the February 2025 Note Exchange was accounted for as an extinguishment of the February 2025 Exchanged Notes. In connection with debt extinguishment accounting, the Company recorded a gain of $ 37.1 million as the difference between the carrying amount of the February 2025 Exchanged Notes and the fair value of the 2031 Notes issued in the February 2025 Note Exchange. Included in the recorded gain are unamortized debt discounts and issuance costs related to the February 2025 Exchanged Notes. The Company recorded $ 5.2 million of issuance costs related to the 2031 Notes issued in connection with the February 2025 Note Exchange, which are being amortized to interest expense through the expected maturity of the 2031 Notes at an effective interest rate of 4.79 %. The 2031 Notes Indenture does not contain any financial covenants; it does contain customary covenants and events of default. August 2025 Note Exchange On August 20, 2025, the Company entered into an exchange agreement with certain holders of its 2028 Notes to exchange $ 49.5 million in aggregate principal amount of the 2028 Notes (the “August 2025 Exchanged Notes”, and together with the "February 2025 Exchanged Notes", the "2025 Exchanged Notes") for $ 43.4 million in aggregate principal amount of the Company's 2031 Notes, pursuant to the 2031 Notes Indenture (such exchange, the “August 2025 Note Exchange”, and together with the "February 2025 Note Exchange", the "2025 Note Exchanges"). As a result of the August 2025 Note Exchange, the Company's principal debt balance decreased $ 6.1 million as of the closing date of the August 2025 Note Exchange. The Company did not receive any cash connected to the August 2025 Note Exchange. As the terms of the 2031 Notes issued on August 20, 2025 were deemed to have substantially different terms from the August 2025 Exchanged Notes, the August 2025 Note Exchange was accounted for as an extinguishment of the August 2025 Exchanged Notes. In connection with debt extinguishment accounting, the Company recorded a gain of $ 3.7 million as the difference between the carrying amount of the August 2025 Exchanged Notes and the fair value of the 2031 Notes issued in the August 2025 Note Exchange. Included in the recorded gain are unamortized debt discounts and issuance costs related to the August 2025 Exchanged Notes. 81 Table of Contents The Company recorded $ 1.3 million of issuance costs related to the 2031 Notes issued in connection with the August 2025 Note Exchange, which are being amortized to interest expense through the expected maturity of the 2031 Notes at an effective interest rate of 3.79 %. The 2031 Notes issued on August 20, 2025, together with the 2031 Notes previously issued by the Company on February 10, 2025, will form a single class of $ 190.1 million aggregate principal amount of 2031 Notes and will mature on February 15, 2031. As of December 31, 2025, the carrying amount of the 2031 Notes is $ 183.1 million, net of unamortized issuance costs and debt discount, net of $ 6.9 million. The 2031 Notes were classified as long-term liabilities as of December 31, 2025. 2025 Notes, 2028 Notes and 2031 Notes In June 2020, the Company issued an aggregate principal amount of $ 172.5 million of its 2025 Notes, pursuant to an indenture, in a private offering to qualified institutional buyers. In February 2024, certain of the 2025 Notes were extinguished in connection with the 2024 Note Exchange (see Note 6 — Non-convertible Notes, Net). On June 15, 2025, the 2025 Notes matured, and the Company repaid the outstanding principal amount and accrued interest in full. The total cash payment upon maturity of the 2025 Notes was $ 27.2 million. Upon maturity, the 2025 Notes were retired, and no obligations remain under the indenture governing the 2025 Notes. In March 2021, the Company issued an aggregate principal amount of $ 287.5 million of its 2028 Notes, pursuant to an indenture, in a private offering to qualified institutional buyers. The 2028 Notes will mature on March 1, 2028, unless earlier redeemed or repurchased by the Company or converted. In connection with the 2024 Note Exchange and 2025 Note Exchanges, certain of the 2028 Notes were extinguished. At issuance, the Company received net proceeds from the 2028 Notes offering of approximately $ 278.1 million, after deducting the initial purchasers’ discount and commission and offering expenses. The Company used approximately $ 33.7 million of the net proceeds from the 2028 Notes offering to fund the net cost of entering into the capped call transactions described below. The Company intends to use the remainder of the net proceeds for general corporate purposes. The 2025 Notes which accrued interest at a rate of 3.00 % per annum, payable semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2020, matured on June 15, 2025. At maturity, the Company repaid the outstanding principal and accrued interest in full. The 2028 Notes accrue interest at a rate of 1.00 % per annum, payable semi-annually in arrears on March 1 and September 1 of each year, beginning on September 1, 2021. The initial conversion rate applicable to the 2028 Notes is 31.4465 shares of common stock per $1,000 principal amount of 2028 Notes (which is equivalent to an initial conversion price of approximately $ 31.80 per share of the Company’s common stock). The 2031 Notes accrue interest at a rate of 4.00 % per annum, payable semi-annually in arrears on February 15 and August 15 of each year, beginning on August 15, 2025; provided that, solely with respect to the interest payment due on August 15, 2025, the 2031 Notes will bear additional cash interest at the rate of 1.25 % per year from September 1, 2024 to but excluding February 10, 2025, which interest will be paid in consideration for the accrued and unpaid interest on the February 2025 Exchanged Notes. The initial conversion rate applicable to the 2031 Notes is 95.5795 shares of common stock per $1,000 principal amount of 2031 Notes (which is equivalent to an initial conversion price of approximately $ 10.46 per share of the Company’s common stock). The conversion rate for the Convertible Senior Notes is subject to adjustment upon the occurrence of certain specified events but will not be adjusted for accrued and unpaid interest. In addition, upon the occurrence of a corporate event, the Company will, in certain circumstances, increase the conversion rate by a number of additional shares for a holder that elects to convert any of its Convertible Senior Notes in connection with such corporate event. The 2028 Notes will be redeemable, in whole or in part, at the Company's option at any time, and from time to time, on or after March 5, 2025, in each case if the last reported sale price per share of the Company’s common stock exceeds 130 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which the Company provides notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately before the date the Company sends the related redemption notice. The 2031 Notes will be redeemable, in whole or in part, at the Company’s option at any time, and from time to time, on or after February 15, 2028, to, but excluding, February 15, 2030, if the last reported sale price per share of the Company’s common stock has been at least 120 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately before the date the Company provides notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately 82 Table of Contents before the date the Company provides notice of redemption. In addition, the 2031 Notes will be redeemable, in whole or in part, at the Company’s option at any time, and from time to time, on or after February 15, 2030 (such redemption, a “2031 Notes Par Redemption”). Calling any Convertible Senior Note for redemption, other than a 2031 Notes Par Redemption, will constitute a make-whole fundamental change (as defined in the applicable indenture governing each of the Convertible Senior Notes) with respect to that Convertible Senior Note, in which case the conversion rate applicable to the conversion of that Convertible Senior Note will be increased in certain circumstances if it is converted after it is called for redemption. Prior to December 1, 2027, in the case of the 2028 Notes, and November 15, 2030, in the case of the 2031 Notes, the applicable Convertible Senior Notes will be convertible only under the following circumstances: • During any calendar quarter (and only during such calendar quarter) (in the case of the 2031 Notes, commencing after the calendar quarter ending on June 30, 2025), if, the last reported sale price per share of the Company’s common stock exceeds 130 %, in the case of the 2028 Notes, or 125 % in the case of the 2031 Notes, of the applicable conversion price on each applicable trading day for at least 20 trading days (whether or not consecutive) during the 30 consecutive trading day period ending on, and including, the last trading day of the immediately preceding calendar quarter; • During the five business day period after any five consecutive trading day period in which, for each day of that period, the trading price per $1,000 principal amount of Convertible Senior Notes for such trading day was less than 98 % of the product of the last reported sale price of the Company’s common stock and the applicable conversion rate on such trading day; • Upon the occurrence of specified corporate transactions; or • If the Company calls any Convertible Senior Notes for redemption. On and after December 1, 2027, in the case of the 2028 Notes, and November 15, 2030, in the case of the 2031 Notes, until the close of business on the scheduled trading day immediately preceding the maturity date, holders may convert all or a portion of their Convertible Senior Notes, in multiples of $1,000 principal amount, at any time, regardless of the foregoing circumstances. Upon conversion, the Convertible Senior Notes will be settled, at the Company’s election, in cash, shares of the Company’s common stock, or a combination of cash and shares of the Company’s common stock. As of December 31, 2025 , the conditions allowing holders to convert the 2031 Notes were met; however, the conditions for the 2028 Notes were not met. The Convertible Senior Notes are unsecured and unsubordinated obligations of the Company and will rank senior in right of payment to any of future indebtedness of the Company that is expressly subordinated in right of payment to the Convertible Senior Notes; rank equal in right of payment to any existing and future unsecured indebtedness of the Company that is not so subordinated; be effectively subordinated in right of payment to any secured indebtedness of the Company to the extent of the value of the assets securing such indebtedness; and be structurally subordinated to all existing and future indebtedness and other liabilities and obligations incurred by future subsidiaries of the Company. If bankruptcy, insolvency, or reorganization occurs with respect to the Company (and not solely with respect to a significant subsidiary of the Company), then the principal amount of, and all accrued and unpaid interest on, the entire amount of the applicable series of the Convertible Senior Notes then outstanding will immediately become due and payable without any further action or notice by any person. If an event of default (other than bankruptcy, insolvency, or reorganization with respect to the Company and not solely with respect to a significant subsidiary of the Company) occurs and is continuing, then, with the exception of certain reporting events of default, the trustee, by notice to the Company, or noteholders of at least 25 % of the aggregate principal amount of the applicable series of the Convertible Senior Notes, then outstanding, by notice to us and the trustee, may declare the principal amount of, and all accrued and unpaid interest on, all of the 2028 Notes or 2031 Notes, as applicable, then outstanding to become due and payable immediately. The carrying amount of the 2028 Notes is $ 47.7 million as of December 31, 2025, with principal of $ 48.2 million, net of unamortized issuance costs of $ 0.5 million. The 2028 Notes were classified as long term liabilities as of December 31, 2025. The issuance costs related to the 2028 Notes are being amortized to interest expense over the expected life of the 2028 Notes or approximately its seven-year term at an effective interest rate of 1.45 %. The carrying amount of the 2031 Notes is $ 183.1 million as of December 31, 2025, with a principal of $ 190.1 million, net of the $ 5.8 million unamortized issuance costs and debt discount, net of $ 1.2 million. The 2031 Notes were classified as long-term liabilities as of December 31, 2025. 83 Table of Contents The following table sets forth the amounts recorded in interest expense related to the 2025 Notes as of the dates indicated (in thousands): Year Ended December 31, 2025 2024 2023 Contractual interest expense $ 368 $ 1,531 $ 5,175 Amortization of debt issuance costs 97 383 1,268 Total interest and amortization expense $ 465 $ 1,914 $ 6,443 The following table sets forth the amounts recorded in interest expense related to the 2028 Notes as of the dates indicated (in thousands): Year Ended December 31, 2025 2024 2023 Contractual interest expense $ 841 $ 2,821 $ 2,875 Amortization of debt issuance costs 443 1,308 1,305 Total interest and amortization expense $ 1,284 $ 4,129 $ 4,180 The following table sets forth the amounts recorded in interest expense related to the 2031 Notes as of the dates indicated (in thousands): Year Ended December 31, 2025 2024 2023 Contractual interest expense $ 5,831 $ — $ — Amortization of debt issuance costs 1,095 — — Total interest and amortization expense $ 6,926 $ — $ — A schedule of the Company's future maturities for the Convertible Senior Notes, is as follows (in thousands): Amount Fiscal Year 2028 Notes 2031 Notes 2026 $ — $ — 2027 — — 2028 — — 2029 48,201 — 2030 — — 2031 — 190,079 Total principal payments $ 48,201 $ 190,079 Less unamortized debt issuance costs ( 498 ) ( 6,949 ) Net carrying amount $ 47,703 $ 183,130 Capped Call Transactions with Respect to the 2025 Notes and 2028 Notes In connection with the issuance of the 2025 Notes and 2028 Notes, including the initial purchasers’ exercise of the option to purchase additional 2025 Notes and 2028 Notes, the Company entered into capped call transactions with respect to its common stock with certain financial institutions (collectively, the “Counterparties”). The Company paid an aggregate amount of approximately $ 22.5 million to the Counterparties in connection with the 2025 Notes capped call transactions (the “2025 Capped Calls”) and $ 33.7 million to the Counterparties in connection with the 2028 Notes capped call transactions and (the “2028 Capped Calls” and, together with the 2025 Capped Calls, the “Capped Calls”). The 2025 Capped Calls and 2028 Capped Calls initially covered approximately 9,705,454 shares and 9,040,869 shares of the Company’s common stock at a strike price that corresponds to the initial conversion price of the 2025 Notes and the 2028 Notes, respectively. The 2025 Capped Calls and the 2028 Capped Calls are subject to anti-dilution adjustments that are intended to be substantially identical to those in the 2025 Notes and the 2028 Notes, as applicable, and are exercisable upon conversion of the 2025 Notes or the 2028 Notes, as applicable. The Capped Calls are subject to adjustment upon the 84 Table of Contents occurrence of specified extraordinary events affecting the Company, including merger events, tender offer and announcement events. In addition, the Capped Calls are subject to certain specified additional disruption events that may give rise to a termination of the Capped Calls, including nationalization, insolvency or delisting, changes in law, failures to deliver, insolvency filings and hedging disruptions. The 2025 Capped Calls settle in components, which settlement commenced on April 16, 2025 with the last component having expired on June 12, 2025. The initial 2025 Capped Calls entered into in connection with the issuance of the 2025 Notes expired upon the maturity of the 2025 Notes on June 15, 2025. The 2028 Capped Calls settle in components commencing on December 31, 2027 with the last component scheduled to expire on February 28, 2028. The cap price of the 2025 Capped Call is initially $ 27.88 per share, which represents a premium of 100.0 % over the closing price of the Company’s common stock of $ 13.94 per share on June 10, 2020, and is subject to certain adjustments under the terms of the capped call transactions. The cap price of the 2028 Capped Call is initially $ 48.00 per share, which represents a premium of 100.0 % over the closing price of the Company’s common stock of $ 24.00 per share on March 3, 2021, and is subject to certain adjustments under the terms of the capped call transactions. The Company expects to receive from the Counterparties a number of shares of the Company’s common stock or, at the Company’s election (subject to certain conditions), cash, with an aggregate market value (or, in the case of cash settlement, in an amount) approximately equal to the product of such excess times the number of shares of the Company’s common stock relating to the 2028 Capped Calls being exercised. These Capped Call instruments meet the conditions outlined in ASC 815-40 to be classified in stockholders’ equity, are not accounted for as derivatives, and are not subsequently remeasured as long as the conditions for equity classification continue to be met. The Company initially recorded a reduction to additional paid-in capital of approximately $ 22.5 million and $ 33.7 million related to the premium payments for the 2025 Capped Call and 2028 Capped Call transactions, respectively. The Company received $ 0.4 million, $ 1.5 million and $ 0.4 million in cash in connection with settling certain Capped Calls in connection with the 2024 Note Exchange, February 2025 Note Exchange and August 2025 Note Exchange, respectively. After giving effect to such settlements, the 2028 Capped Calls outstanding cover approximately 1,515,752 shares of the Company's common stock. As the Capped Calls were equity classified, the proceeds from settlement of these Capped Calls were recorded to additional paid in capital. Note 8. Common Stock The Company had reserved shares of common stock for issuance, on an as-converted basis, as follows: December 31, 2025 December 31, 2024 Options issued and outstanding 634,564 917,370 Outstanding restricted stock units 9,803,430 14,305,562 Shares available for grant under the 2019 equity incentive plan 8,326,328 5,490,650 Shares available for issuance under 2019 ESPP 3,706,291 4,135,266 Warrants to purchase common stock 7,894,737 7,894,737 Total 30,365,350 32,743,585 Note 9. Share-based Compensation Plans 2019 Equity Incentive Plan In connection with the Company’s initial public offering, the Company adopted the 2019 Equity Incentive Plan (the “2019 Plan”). The 2019 Plan allows the Company to grant stock options, stock appreciation rights, restricted stock, restricted stock units and performance awards to participants. Subject to the terms and conditions of the 2019 Plan, the initial number of shares authorized for grants under the 2019 Plan is 8,000,000 . These available shares increase annually by an amount equal to the lesser of 8,000,000 shares, 5 % of the number of shares of the Company’s common stock outstanding on the immediately preceding December 31, or the number of shares determined by the Company’s board of directors. 85 Table of Contents The Company’s board of directors approved an increase of shares available for grant under the 2019 Plan by 4,465,083 shares on May 5, 2021, by 4,648,003 shares on February 23, 2022, by 4,954,409 shares on February 13, 2023, by 5,233,525 shares on February 20, 2024, and by 5,562,473 shares on February 12, 2025. Activity under the Company’s stock option plan is set forth below: Number of Options Weighted- Average Exercise Price Per Share Weighted- Average Remaining Contractual Life (years) Aggregate Intrinsic Value (in thousands) Balances at December 31, 2024 917,370 8.44 3.5 $ 3,445 Options granted — — Options exercised ( 232,173 ) 5.03 Options cancelled ( 50,633 ) 8.12 Balances at December 31, 2025 634,564 9.71 2.9 4,489 Options vested and exercisable— December 31, 2025 634,564 9.71 2.9 4,489 There were no stock options granted in 2025, 2024 and 2023. The aggregate intrinsic value of options exercised for the years ended December 31, 2025, 2024 and 2023 was $ 1.6 million, $ 0.3 million and zero , respectively. The aggregate intrinsic value of options exercised is the difference between the fair value of the underlying common stock on the date of exercise and the exercise price for in-the-money stock options. In March 2023, the Company granted PSUs under the 2019 Plan subject to the achievement of both market and service conditions to certain employees of the Company . The number of shares of the Company's common stock issued upon settlement will depend on the achievement of approved market conditions and continuous service with the Company. The PSUs are eligible to vest in three tranches over a five-year performance period. The PSUs are measured using the Monte Carlo simulation to obtain the fair value at the date of grant based on the probability that the market conditions will be met. The compensation expense associated with the PSUs is based on the fair value and is recognized over the requisite service period. The compensation expense will be recognized regardless of whether the market condition is ever satisfied, provided the requisite service period is satisfied. The Company granted PSUs with financial performance targets to certain employees of the Company in 2024 and 2025. The number of shares of the Company's common stock issued upon settlement will depend on the achievement of financial metrics relative to the approved performance targets, and can range from 0 % to 200 % of the target amount. The PSUs are subject to continuous service with the Company and will vest after approximately three years from the grant date. The PSUs are measured using the fair value at the date of grant. The compensation expense associated with PSUs is recognized based on the estimated number of shares that the Company expects will vest and may be adjusted based on interim estimates of performance against the performance condition. Inducement Grants The Company granted stock-based awards outside of the 2019 Plan to certain executives. These awards were granted as inducements material to their commencement of employment and entry into offer letters with the Company, in accordance with Nasdaq Listing Rule 5635(c)(4). The inducement pool consisted of a total of 5,625,000 shares of the Company's common stock, which included (a) 2,050,000 shares of PSUs that are eligible to vest based on market and service conditions in four tranches over a five-year performance period and (b) 3,575,000 shares of RSUs generally subject to the same terms and conditions as grants that are made under the 2019 Plan. The activity in the inducement pool is included in the summary of RSU activity table below. 86 Table of Contents RSUs A summary of RSU activity for the year ended December 31, 2025 is as follows: Number of Shares Restricted Stock Units Weighted- Average Grant Date Fair Value Aggregate Intrinsic Value (in thousands) Unvested December 31, 2024 14,305,562 $ 3.48 $ 156,360 Granted 4,361,664 6.73 Vested ( 6,446,275 ) 4.13 Forfeited ( 2,417,521 ) 4.24 Unvested December 31, 2025 9,803,430 $ 4.31 $ 154,698 Included in the table above for the year ended December 31, 2025 are 457,627 PSUs granted, 198,000 PSUs vested, and 154,718 PSUs forfeited. The weighted average grant date fair value per share of the PSUs granted, vested and forfeited in the year ended December 31, 2025 was $ 7.78 , $ 2.87 and $ 7.97 , respectively. The total fair value as of the respective vesting dates of RSUs that vested during the year ended December 31, 2025 was $ 53.3 million . Employee Stock Purchase Plan In connection with the Company’s initial public offering, the Company adopted the Employee Stock Purchase Plan (the “ESPP”). The Employee Stock Purchase Plan permits employees to purchase shares of common stock during six-month offering periods at a purchase price equal to the lesser of (1) 85 % of the fair market value of a share of common stock on the first business day of such offering period and (2) 85 % of the fair market value of a share of common stock on the last business day of such offering period. The initial number of shares of common stock that could be issued under the employee stock purchase plan was 1,750,000 shares. These available shares increase by an amount equal to the lesser of 1,750,000 shares, 1 % of the number of shares of common stock outstanding on the immediately preceding December 31, or the number of shares determined by the Company’s board of directors. The Company's board of directors approved an increase in the shares available for grant under the ESPP by 893,016 shares on May 5, 2021, by 929,601 shares on February 23, 2022, by 990,882 shares on February 13, 2023, by 1,046,705 shares on February 20, 2024, and by 1,112,424 shares on February 12, 2025. During the years ended December 31, 2025, 2024 and 2023, employees purchased 428,975 , 566,354 , and 865,676 shares, respectively, at an average price of $ 3.85 , $ 2.49 and $ 1.02 , respectively. As of December 31, 2025, the Company had an immaterial amount of unrecognized stock-based compensation cost related to purchase rights under the employee stock purchase plan. Stock-based Compensation In determining the fair value of the stock-based awards, the Company uses the Black-Scholes option-pricing model and assumptions discussed below. Fair Value of Common Stock— The fair value of the shares of common stock has historically been determined by the Company’s board of directors as there was no public market for the common stock. Subsequent to our IPO, the fair value per share of common stock is the closing price of the Company’s common stock as reported on the applicable grant date. Expected Term —The expected term represents the period that the Company’s stock options are expected to be outstanding and is determined using the simplified method (based on the mid-point between the vesting date and the end of the contractual term) as the Company has concluded that its stock option exercise history does not provide a reasonable basis upon which to estimate expected term . 87 Table of Contents Volatility —Because the Company was privately held and did not have an active trading market for its common stock for a sufficient period of time, the expected volatility was estimated based on the average volatility for comparable publicly-traded companies, over a period equal to the expected term of the stock option grants. Risk-free Rate —The risk-free rate assumption is based on the U.S. Treasury zero coupon issues in effect at the time of grant for periods corresponding with the expected term of the option. Dividends —The Company has never paid dividends on its common stock and does not anticipate paying dividends on common stock. Therefore, the Company uses an expected dividend yield of zero. The following assumptions were used to estimate the fair value of stock options granted in 2019, as there were no stock options granted in 2025, 2024 and 2023: Year Ended December 31, 2019 Expected term (in years) 5.0 – 6.1 Expected volatility 44.2 % – 47.8 % Average risk-free rate 1.9 % – 2.6 % Dividend yield — As of December 31, 2025, the Company had approximately $ 34.1 million of unrecognized stock-based compensation expense related to RSUs and PSUs, which the Company expects to recognize over the remaining weighted-average vesting period of approximately 1.7 years. As of December 31, 2025, the Company had no unrecognized stock-based compensation expense related to options. Total stock-based compensation expense by function was as follows (in thousands): Year Ended December 31, 2025 2024 2023 Marketing $ 1,064 $ 932 $ 1,550 Operations and technology 9,380 9,930 12,534 Selling, general and administrative 18,499 18,220 20,189 Total $ 28,943 $ 29,082 $ 34,273 During the years ended December 31, 2025, 2024 and 2023, the Company capitalized $ 0.3 million, $ 0.5 million, and $ 0.8 million of stock-based compensation expense to proprietary software, respectively. Note 10. Leases The Company leases its corporate offices, retail spaces and authentication centers under various noncancelable operating leases with terms ranging from one year to fifteen years . The Company recorded operating lease costs of $ 21.5 million, $ 20.9 million and $ 22.8 million for the years ended December 31, 2025, 2024 and 2023, respectively. The Company incurred $ 5.5 million of variable lease costs for the years ended December 31, 2025, 2024 and $ 5.2 million for the year ended December 31, 2023, which is comprised primarily of the Company’s proportionate share of operating expenses, property taxes and insurance. Due to the office and store closures in the year ended December 31, 2023, the Company reviewed its right-of-use assets for impairment. Impairment losses are measured and recorded for the excess of carrying value over its fair value, estimated based on expected future cash flows using discount rate and other quantitative and qualitative factors. As a result, the Company recorded $ 31.1 million related to the impairment of certain office and store right-of-use assets during the year ended December 31, 2023. No impairment charges were recorded during the years ended December 31, 2025 and December 31, 2024. The impairment charges are included in restructuring in the statements of operations. During the year ended December 31, 2023, the Company entered into agreements to amend certain of its operating leases. The Company treated the lease termination amendments as lease modifications for accounting purposes as of the applicable effective dates of such terminations which resulted in a decrease of $ 7.7 million to the related lease liabilities, and a decrease of $ 1.4 million to the related right-of-use assets for the year ended December 31, 2023. The Company 88 Table of Contents recorded a net gain on the lease terminations of $ 0.7 million during the year ended December 31, 2023. The net gain on lease terminations is included in restructuring in the statements of operations. As of December 31, 2025, maturities of operating lease liabilities by fiscal year for the Company’s operating leases are as follows (in thousands): Fiscal Year Amount 2026 $ 30,063 2027 26,610 2028 23,707 2029 13,384 2030 8,254 Thereafter 2,611 Total future minimum payments (1) $ 104,629 Less: Imputed interest ( 13,191 ) Present value of operating lease liabilities $ 91,438 (1) Total future minimum payments excludes $ 2.1 million of future payments required under a signed lease agreement that has not yet commenced. Supplemental cash flow information related to the Company’s operating leases are as follows (in thousands): Year ended December 31, 2025 2024 2023 Operating cash flows used for operating leases $ 28,807 $ 27,939 $ 34,118 Operating lease assets obtained in exchange for operating lease liabilities (including remeasurement of right-of-use assets and lease liabilities due to lease modifications) $ 4,997 $ 4,558 $ 6,272 The weighted average remaining lease term and discount rate for the Company’s operating leases are as follows: As of December 31, 2025 As of December 31, 2024 Weighted average remaining lease term 3.9 years 4.6 years Weighted average discount rate 7.0 % 6.2 % The Company has leases for certain vehicles and equipment that are classified as finance leases. The finance lease right-of-use asset and finance lease liabilities for these vehicle and equipment leases are immaterial as of December 31, 2025 and 2024. Note 11. Restructuring In February 2023, the Company announced a savings plan to reduce its real estate presence and operating expenses through closure of certain retail and office locations and workforce reduction. For the year ended December 31, 2023, the Company recognized $ 43.5 million in restructuring which consisted of right-of-use asset impairment charge of $ 31.1 million, leasehold improvements impairment charge of $ 8.6 million, employee severance of $ 3.0 million, and other related charges of $ 1.5 million, partially offset by a $ 0.7 million gain on lease terminations. The Company recorded an immaterial amount of restructuring for the year ended December 31, 2024 and no restructuring expense was recorded for the year ended December 31, 2025. The restructuring related charges were recorded on a separate line item in the Company's statements of operations. Note 12. Commitments and Contingencies Fire at Secaucus, New Jersey Authentication Center In May 2024, the Company experienced a fire at one of its authentication centers in Secaucus, New Jersey. The damage was primarily limited to fixed assets, leasehold improvements, supplies, and consigned and owned inventories. The Company maintains property, cargo, general liability and business interruption insurance coverage. 89 Table of Contents During the year ended December 31, 2025, the Company received all remaining insurance recoveries related to the 2024 warehouse fire. T he Company recorded a net gain related to the fire of $ 0.1 million for the year ended December 31, 2025. T he Company recorded a loss related to the fire, net of insurance recoveries, of $ 0.7 million for the year ended December 31, 2024 within Operations and Technology on the statements of operations. As of December 31, 2025, the Company has no outstanding insurance receivables. As of December 31, 2024, the Company recorded $ 2.5 million of insurance receivables within prepaid and other current assets on the balance sheet. The Company has received $ 3.7 million and $ 3.9 million in payments from insurers towards its claims to cover impacts of the fire during the years ended December 31, 2025 and December 31, 2024, respectively. For the year ended December 31, 2025 and December 31, 2024, $ 1.4 million and $ 3.4 million of the payments were included within net cash flows from operating activities, respectively, and $ 2.3 million and $ 0.5 million of the payments are included within net cash flows from investing activities in the statements of cash flows, respectively, due to the nature of the insurance payments. Noncancelable Purchase Commitments Our contractual commitments primarily consist of software and other services in the ordinary course of business that are noncancellable with varying expiration dates through 2029. As of December 31, 2025, the future minimum payments under the Company’s noncancelable purchase commitments were as follows (in thousands): Year Ending December 31, Purchase Commitments 2026 $ 9,199 2027 6,697 2028 930 2029 420 2030 — Total future minimum payments $ 17,246 Contingencies From time to time, the Company is subject to, and it is presently involved in, litigation and other legal proceedings and from time to time, the Company receives inquiries from government agencies. Accounting for contingencies requires the Company to use judgment related to both the likelihood of a loss and the estimate of the amount or range of loss. The Company records a loss contingency when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Company discloses material contingencies when a loss is not probable but reasonably possible. On November 14, 2018, Chanel, Inc. sued the Company in the U.S. District Court for the Southern District of New York. The Complaint alleged federal and state law claims of trademark infringement, unfair competition, and false advertising. On February 1, 2019, Chanel, Inc. filed its First Amended Complaint that included substantially similar claims against the Company. On March 4, 2019, the Company filed a Motion to Dismiss the First Amended Complaint, which was granted in part and dismissed in part on March 30, 2020. The surviving claims against the Company include trademark infringement under 15 U.S.C. § 1114, false advertising under 15 U.S.C. § 1125, and unfair competition under New York common law. On May 29, 2020, the Company filed its Answer to the Amended Complaint. On November 3, 2020, the Company sought leave to amend its Answer to assert counterclaims against Chanel, Inc. for violations of the Sherman Act, 15 U.S.C. §§ 1 & 2, the Donnelly Act, N.Y. Gen. Bus. Law. § 340, and New York common law. The motion for leave to amend was granted on February 24, 2021. On February 25, 2021, the Company filed its First Amended Answer, Affirmative Defenses and Counterclaims against Chanel. The Company’s Counterclaims allege violations of the Sherman Act, 15 U.S.C. §§ 1 & 2, the Donnelly Act, N.Y. Gen. Bus. Law. § 340, and New York common law. On March 18, 2021, Chanel moved to dismiss the Company’s Counterclaims and moved to strike the Company’s unclean hands affirmative defense. Decisions on Chanel’s motion to dismiss and motion strike are pending. The parties agreed to a stay in April 2021 to engage in settlement discussions. After several mediation sessions, the parties were unable to reach a resolution, and the stay was lifted in November 2021. Chanel then sought a partial stay of discovery on the Company's counterclaims and unclean hands defense while Chanel's motion to dismiss and strike those claims are pending, and on March 10, 2022, the Court granted Chanel's request. The parties have continued to engage in fact discovery regarding Chanel's counterfeiting and false advertising claims against the Company. Fact discovery was scheduled to be completed by August 15, 2023. However, on July 19, 2023, the Court ordered a stay of the case at the parties’ request to enable the parties to attempt mediation again. The parties engaged in settlement discussions moderated by the mediator over the course of two years but were unable to reach a settlement or any reasonable range. On October 6, 2025, the stay was lifted, and the parties appeared for a conference before the magistrate judge to discuss a schedule for the remainder of the litigation on October 14, 2025. With the parties’ consent, the magistrate judge will hold a settlement conference to facilitate further discussions between the parties on March 5, 2026. The final outcome of this litigation, including our liability, if any, with respect to 90 Table of Contents Chanel’s claims, is uncertain. An unfavorable outcome in this or similar litigation could adversely affect the Company’s business and could lead to other similar lawsuits. The Company is not able to predict or reasonably estimate the ultimate outcome or loss or range of possible losses relating to this claim. Beginning on September 10, 2019, purported shareholder class action complaints were filed against the Company, its officers and directors and the underwriters of its IPO in the San Mateo Superior Court, Marin County Superior Court, and the United States District Court for the Northern District of California. On July 27, 2021, the Company reached an agreement in principle to settle the shareholder class action. On November 5, 2021, plaintiff filed the executed stipulation of settlement and motion for preliminary approval of the settlement with the federal court. On March 24, 2022, the court entered an order preliminarily approving the settlement. On July 28, 2022, the court entered an order finally approving the settlement and dismissing the case. The financial terms of the stipulation of settlement provide that the Company will pay $ 11.0 million within thirty ( 30 ) days of the later of preliminary approval of the settlement or plaintiff’s counsel providing payment instructions. The Company paid the settlement amount on March 29, 2022 with available resources and recorded approximately $ 11.0 million for the year ended December 31, 2021 under our Operating expenses as a Legal settlement. One of the plaintiffs in the Marin County case opted out of the federal settlement and is pursuing the claim in Marin County Superior Court. The stay of the state court case has been lifted, and the opt out plaintiff filed an amended complaint on October 31, 2022 alleging putative class claims under the Securities Act of 1933 (the “Securities Act”) on behalf of the two shareholders who opted out of the settlement and those who purchased stock from November 21, 2019 through March 9, 2020, based on purported new revelations. The claims are for alleged violations of Sections 11 and 15 of the Securities Act. On February 23, 2024, plaintiff filed a motion for class certification. . On July 22, 2025, the court entered an order denying the motion for class certification. On September 19, 2025, plaintiff filed a notice of appeal of the class certification decision, which appeal remains pending. While the Company intends to defend vigorously against this litigation, there can be no assurance that the Company will be successful in its defense. For this reason, the Company cannot currently estimate the loss or range of possible losses it may experience in connection with this litigation. Indemnifications In the ordinary course of business, the Company may provide indemnifications of varying scope and terms to vendors, directors, officers and other parties with respect to certain matters including, but not limited to, losses arising out of the breach of such agreements, intellectual property infringement claims made by third parties and other liabilities relating to or arising from the Company's various services, or its acts or omissions. The Company has not incurred any material costs as a result of such indemnifications and have not accrued any liabilities related to such obligations in its financial statements. 91 Table of Contents Note 13. Income Taxes Domestic and international pre-tax loss consists of the following (in thousands): Year Ended December 31, 2025 2024 2023 United States $ ( 41,436 ) $ ( 133,926 ) $ ( 168,189 ) International — — — Loss before income taxes $ ( 41,436 ) $ ( 133,926 ) $ ( 168,189 ) The components of the Company’s income tax provision were as follows (in thousands): Year Ended December 31, 2025 2024 2023 Current: Federal $ — $ — $ — State 363 276 283 Total current tax expense 363 276 283 Deferred: Federal — — — State — — — Total deferred tax expense — — — Total provision for income taxes $ 363 $ 276 $ 283 Rate Reconciliation The Company adopted ASU 2023-09 'Income Taxes (Topic 740): Improvements to Income Tax Disclosures' on a prospective basis beginning with the year December 31, 2025. The following table presents required disclosure pursuant to ASU 2023-09 and reconciles the Company's U.S. Federal statutory income tax amount and rate to its actual effective amount and rate for the year ended December 31, 2025: Year Ended December 31, 2025 (in thousands) Percent Tax at federal statutory rate $ ( 8,834 ) 21.0 % State taxes, net of federal effect (1) 363 ( 0.9 ) % Tax credits Research and development credits ( 410 ) 1.0 % Valuation allowance 2,664 ( 6.3 ) % Nondeductible Items Section 162(m) compensation limitation 3,609 ( 8.6 ) % Warrant liability fair value adjustment 7,512 ( 17.9 ) % Other contributing items 1,444 ( 3.5 ) % Other adjustments ( 106 ) 0.3 % Stock-based compensation ( 5,879 ) 14.0 % Effective tax rate $ 363 ( 0.9 ) % (1) State taxes in Texas make up the majority (greater than 50%) of the tax effect in this category. The following table presents the required disclosures prior to the Company's adoption of ASU 2023-09 and reconciles the U.S. federal statutory income tax rate to the actual global effective income tax rate for the years ended December 31, 2024 and December 31, 2023 (in thousands): 92 Table of Contents Year Ended December 31, 2024 2023 Tax at federal statutory rate $ ( 28,144 ) $ ( 35,290 ) State taxes, net of federal effect ( 7,627 ) ( 9,554 ) Stock-based compensation 3,192 8,956 Non-deductible items 1,988 504 Tax credits ( 169 ) ( 531 ) Warrant liability fair value adjustment 18,333 — Provision to return adjustments ( 1,927 ) 9,259 Valuation allowance 14,651 26,501 Other ( 21 ) 438 Provision for income taxes $ 276 $ 283 Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts for income tax purposes. The Company’s significant components of deferred tax assets and liabilities are as follows (in thousands): December 31, 2025 2024 Deferred tax assets: Net operating loss carryforwards $ 230,874 $ 230,303 Fixed assets and intangibles 13,695 10,461 Capitalized research and development 13,936 18,679 Accruals and reserves 22,398 18,685 Stock options 1,169 1,536 Operating lease liabilities 24,361 29,424 Capped calls 14,241 15,011 Tax credits 3,248 2,738 Other 4,914 4,621 Gross deferred tax assets 328,836 331,458 Less: valuation allowance ( 308,210 ) ( 306,948 ) Total deferred tax assets 20,626 24,510 Deferred tax liabilities: Operating lease right-of-use assets ( 18,332 ) ( 21,641 ) Other ( 2,294 ) ( 2,869 ) Gross deferred tax liabilities ( 20,626 ) ( 24,510 ) Net deferred tax assets $ — $ — In assessing the realizability of deferred tax assets, the Company evaluates all available positive and negative evidence by considering whether it is more likely than not that some portion or all of the deferred tax assets will not be recognized. The ultimate realization of deferred tax assets is dependent upon future taxable income, future reversals of existing taxable temporary difference, taxable income in carryback years and tax-planning strategies. The Company believes it is more likely than not that the deferred tax assets in the U.S. will not be realized; accordingly, a valuation allowance has been established against the Company's U.S. deferred tax assets. The net change in the valuation allowance for the years ended December 31, 2025 and December 31, 2024 was an increase of $ 1.3 million and an increase of $ 14.7 million, respectively. As of December 31, 2025 and 2024, the Company has a net operating loss carryforward of $ 869.7 million and $ 861.8 million for federal tax purposes, respectively, and $ 812.1 million and $ 818.6 million for state tax purposes, respectively. If not utilized, these losses will expire beginning in 2026 for state tax purposes. However, beginning in tax year 2018 and forward, the Federal law has changed such that net operating losses generated after December 31, 2017 may 93 Table of Contents be carried forward indefinitely. Accordingly, $ 159.4 million of the federal net operating losses will begin to expire in 2033. However, $ 710.4 million of the federal net operating losses will not expire. As of December 31, 2025 and 2024, the Company has a credit carryforward of $ 6.0 million and $ 4.7 million for federal tax purposes, respectively, and $ 0.9 million and $ 1.0 million for state tax purposes, respectively. If not utilized, these credits will expire beginning in 2041 for federal tax purposes and do not expire for state tax purposes. The Internal Revenue Code of 1986, as amended, imposes restrictions on the utilization of net operating losses in the event of an “ownership change” of a corporation. Accordingly, a company’s ability to use net operating losses may be limited as prescribed under Internal Revenue Code Section 382 (“IRC Section 382”). Events which may cause limitations in the amount of the net operating losses that the Company may use in any one year include, but are not limited to, a cumulative ownership change of more than 50% over a three-year period. Utilization of the federal and state net operating losses may be subject to substantial annual limitation due to the ownership change limitations provided by the IRC Section 382 and similar state provisions. The Tax Reform Act of 1986 limits the use of net operating losses and tax credit carryforwards in certain situations where changes occur in the stock ownership of a company. During 2019 and 2025, the Company analyzed whether any of the reported net operating losses would be limited because of these rules. Based on the analysis the Company believes $ 3.3 million of the Federal and $ 2.1 million of California net operating losses will not be available to offset future taxable income because of the limitation. The reported net operating losses have been adjusted based on this analysis. The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal, state and local, jurisdictions, where applicable. As of December 31, 2025 and 2024, all years generally remain open to examination. Additionally, net operating loss carryforwards are subject to examination by the Internal Revenue Service and the California Franchise Tax Board for up to three and four years, respectively, after utilization. Uncertain Income Tax Positions The following table reflects the changes to the Company's unrecognized tax benefits (in thousands): December 31, 2025 2024 Unrecognized tax benefits beginning balance $ 2,847 $ 2,678 Increases related to current year tax positions 495 169 Increases related to prior year tax positions 278 — Unrecognized tax benefits ending balance $ 3,620 $ 2,847 As of December 31, 2025 and 2024, the Company had unrecognized tax benefits of $ 3.6 million and $ 2.8 million, respectively, none of which, if recognized, would favorably impact the Company’s effective tax rate. The unrecognized tax benefits relate to federal and state research and development credits. The Company's policy is to include interest and penalties as a component to the statements of operations, however there were no associated interest and penalties during the years ended December 31, 2025 and 2024. The Company estimates that there will be no material changes in its uncertain tax positions in the next 12 months. 94 Table of Contents The Company adopted ASU 2023-09 on a prospective basis for the year ended December 31, 2025 and has included the following table as a result of its adoption, which presents income taxes paid (net of refunds received) for the year ended December 31, 2025 (in thousands): Year Ended December 31, 2025 Federal $ — State and Local 331 Texas 185 All other states 146 Foreign — Income tax, net of amounts refunded $ 331 The amount of cash income taxes paid by the Company during the years ended December 31, 2024 and December 31, 2023 was $ 0.2 million. On July 4, 2025, the U.S. government enacted The One Big Beautiful Bill Act of 2025 ("OBBBA") which includes, among other provisions, changes to the U.S. corporate income tax system including the allowance of immediate expensing of qualifying research and development expenses and permanent extensions of certain provisions within the Tax Cuts and Jobs Act. Certain provisions are effective for the Company beginning in 2025. The Company determined that the OBBBA did not have a material impact on the financial statements for the year ended December 31, 2025. Note 14. Net Loss Per Share Attributable to Common Stockholders A reconciliation of the numerator and denominator used in the calculation of the basic and diluted net loss per share attributable to common stockholders is as follows (in thousands, except share and per share data): Year Ended December 31, 2025 2024 2023 Numerator Net loss attributable to common stockholders, basic $ ( 41,799 ) $ ( 134,202 ) $ ( 168,472 ) Effect of gain on debt extinguishment ( 40,785 ) — — Effect of coupon interest and amortization expense related to the 2025 Exchanged Notes 740 — — Net loss attributable to common stockholders, diluted $ ( 81,844 ) $ ( 134,202 ) $ ( 168,472 ) Denominator Weighted-average common shares outstanding used to calculate net loss per share attributable to common stockholders, basic 114,871,414 107,878,366 101,806,000 Effect of dilutive 2025 Exchanged Notes 1,640,851 — — Weighted-average common shares outstanding used to calculate net loss per share attributable to common stockholders, diluted 116,512,265 107,878,366 101,806,000 Net loss per share attributable to common stockholders: Basic $ ( 0.36 ) $ ( 1.24 ) $ ( 1.65 ) Diluted $ ( 0.70 ) $ ( 1.24 ) $ ( 1.65 ) 95 Table of Contents The following securities were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented, because including them would have been anti-dilutive (on an as-converted basis): December 31, 2025 2024 2023 Options to purchase common stock 634,564 917,370 1,119,676 Restricted stock units 9,803,430 14,305,562 12,695,176 Estimated shares issuable under the Employee Stock Purchase Plan 68,879 248,523 367,074 Assumed conversion of anti-dilutive Convertible Senior Notes 19,687,744 10,342,056 18,746,323 Warrants to purchase common stock 7,894,737 7,894,737 — Total 38,089,354 33,708,248 32,928,249 Note 15. Retirement Plan The Company has a defined-contribution 401(k) retirement plan covering substantially all of its employees. Eligible employees are permitted to contribute up to an amount not to exceed an annual statutory maximum. The Company matches employee contributions at a rate of 25 % of vested contributions, up to a maximum of $ 2,000 per participant per year. The Company’s contributions to the 401(k) plan were $ 1.7 million, $ 1.4 million, and $ 0.8 million for the years ended December 31, 2025, 2024, and 2023, respectively. Note 16. Segment Information The Company has one reportable segment as its CODM reviews financial information on a consolidated basis. The Company generates revenue from the sale of pre-owned luxury goods through its online marketplace and retail stores. Revenue is comprised of consignment revenue, direct revenue, and shipping services revenue. The Company does not have intra-entity sales or transfers. The CODM assesses performance and allocates resources based on net loss, as reported on the statements of operations. Net loss is used to monitor budget versus actual results. The CODM does not evaluate operating segments using asset or liability information. The following table presents selected financial information with respect to the Company's single operating segment (in thousands): 96 Table of Contents Year Ended December 31, 2025 2024 2023 Total revenue $ 692,845 $ 600,484 $ 549,304 Less: Cost of consignment revenue 56,582 53,801 58,120 Cost of direct revenue 70,682 55,809 74,343 Cost of shipping services revenue 48,759 43,353 40,563 Total cost of revenue 176,023 152,963 173,026 Gross Profit 516,822 447,521 376,278 Less: People costs 308,966 283,002 274,229 Software and purchased services 116,049 108,866 104,454 Occupancy expense 38,661 37,295 37,718 Depreciation and amortization (1) 32,465 32,764 31,695 Stock-based compensation 28,943 29,082 34,273 Administration and other segment expenses (2) 13,961 12,811 16,740 Restructuring and one time expenses (3) 1,711 196 43,462 Total operating expenses 540,756 504,016 542,571 Change in fair value of warrant liability ( 35,769 ) ( 68,167 ) — Gain on extinguishment of debt 40,785 4,177 — Interest income 4,257 7,943 8,805 Interest expense ( 27,701 ) ( 21,384 ) ( 10,701 ) Other income (expense), net 926 — — Provision for income taxes ( 363 ) ( 276 ) ( 283 ) Net loss attributable to common stockholders $ ( 41,799 ) $ ( 134,202 ) $ ( 168,472 ) (1) Expenses reported in operating expenses, excludes depreciation and amortization recorded in cost of revenue. (2) Administration and other segment expenses include insurance, supplies, and taxes. (3) Restructuring and one time expenses for the year ended December 31, 2025 and 2024 consist of employee severance charges. For the year ended December 31, 2023 restructuring and one time expenses consists of impairment of right-of-use assets and property and equipment, employee severance charges, gain on lease terminations, and other charges. 97