What changed in this filing

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Item 1. Financial Statements

2025-12-11 compared with 2025-09-11 · 152 added, 120 removed, 570 unchanged (32% of the section changed)

13 unchanged sentences

Other non-current assets

LIABILITIES AND STOCKHOLDERS’ DEFICIT

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

Accounts payable and accrued expenses

13 unchanged sentences

Commitments and contingencies (Note 14)

Stockholders’ deficit:

Preferred stock—$ 0.0001 par value per share, 10,000,000 shares authorized, no shares issued or outstanding as of August 2, 2025 and February 1, 2025

Common stock— $ 0.0001 par value per share, 180,000,000 shares authorized, 18,744,120 shares issued and outstanding as of August 2, 2025;

Stockholders’ equity (deficit)

Preferred stock—$ 0.0001 par value per share, 10,000,000 shares authorized, no shares issued or outstanding as of November 1, 2025 and February 1, 2025

Common stock— $ 0.0001 par value per share, 180,000,000 shares authorized, 18,776,949 shares issued and outstanding as of November 1, 2025;

18,726,116 shares issued and outstanding as of February 1, 2025

2 unchanged sentences

Accumulated deficit

Total stockholders’ deficit

Total liabilities and stockholders’ deficit

Total stockholders’ equity (deficit)

Total liabilities and stockholders’ equity (deficit)

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

FINANCIAL INFORMATION

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CONDENSED CONSOLIDATED STATEMENTS OF INCOME

THREE MONTHS ENDED

SIX MONTHS ENDED

NINE MONTHS ENDED

(in thousands, except share and per share amounts)

15 unchanged sentences

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

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FINANCIAL INFORMATION

1 unchanged sentence

THREE MONTHS ENDED

SIX MONTHS ENDED

NINE MONTHS ENDED

(in thousands)

Net gain from foreign currency translation

Net gain (loss) from foreign currency translation

Comprehensive income

1 unchanged sentence

FINANCIAL INFORMATION

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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

THREE MONTHS ENDED

2 unchanged sentences

INCOME (LOSS)

EQUITY (DEFICIT)

(in thousands, except share amounts)

Balances—May 3, 2025

Balances—August 2, 2025

Stock-based compensation

Issuance of restricted stock

Vested and delivered restricted stock units

Exercise of stock options

Net gain from foreign currency translation

Net loss from foreign currency translation

Balances—November 1, 2025

Balances—August 3, 2024

Balances—May 4, 2024

Stock-based compensation

Issuance of restricted stock

Vested and delivered restricted stock units

Exercise of stock options

Net gain from foreign currency translation

Balances—August 3, 2024

SIX MONTHS ENDED

Settlement of convertible senior notes

Net loss from foreign currency translation

Balances—November 2, 2024

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FINANCIAL INFORMATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) (continued)

NINE MONTHS ENDED

COMPREHENSIVE

1 unchanged sentence

INCOME (LOSS)

EQUITY (DEFICIT)

(in thousands, except share amounts)

5 unchanged sentences

Net gain from foreign currency translation

Balances—August 2, 2025

Balances—November 1, 2025

Balances—February 3, 2024

3 unchanged sentences

Exercise of stock options

Settlement of convertible senior notes

Net gain from foreign currency translation

Balances—August 3, 2024

Balances—November 2, 2024

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

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FINANCIAL INFORMATION

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

SIX MONTHS ENDED

NINE MONTHS ENDED

(in thousands)

7 unchanged sentences

Product recall

Deferred income taxes

Share of equity method investments (income) loss—net

22 unchanged sentences

FINANCIAL INFORMATION

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

SIX MONTHS ENDED

NINE MONTHS ENDED

(in thousands)

4 unchanged sentences

Repayments under real estate loans

Repayments of convertible senior notes

Debt issuance costs

Principal payments under finance lease agreements—net of tenant allowances

Repurchases of common stock—inclusive of excise taxes paid

Proceeds from exercise of stock options

9 unchanged sentences

Landlord asset additions in accounts payable and accrued expenses at period-end

Excise tax from share repurchases in accounts payable and accrued expenses at period-end

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

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FINANCIAL INFORMATION

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

4 unchanged sentences

We offer merchandise assortments across a number of categories, including furniture, lighting, textiles, bathware, décor, outdoor and garden, and baby, child and teen furnishings.

As of August 2, 2025, we operated a total of 71 RH Galleries and 43 RH Outlet stores, one RH Guesthouse, one RH Interior Design Office and 14 Waterworks Showrooms throughout the United States, Canada, the United Kingdom, Germany, Belgium and Spain.

As of November 1, 2025, we operated a total of 73 RH Galleries and 43 RH Outlet stores, one RH Guesthouse, one RH Interior Design Office and 14 Waterworks Showrooms throughout the United States, Canada and Europe.

We also have sourcing operations in Shanghai.

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements have been prepared from our records and, in our senior leadership team’s opinion, include all adjustments, consisting of normal recurring adjustments, necessary to fairly state our financial position as of August 2, 2025, and the results of operations for the three and six months ended August 2, 2025 and August 3, 2024.

The accompanying unaudited interim condensed consolidated financial statements have been prepared from our records and, in our senior leadership team’s opinion, include all adjustments, consisting of normal recurring adjustments, necessary to fairly state our financial position as of November 1, 2025, and the results of operations for the three and nine months ended November 1, 2025 and November 2, 2024.

Our current fiscal year, which consists of 52 weeks, ends on January 31, 2026 (“fiscal 2025”).

6 unchanged sentences

The accounting estimates and other matters we have assessed include, but were not limited to, sales return reserve, inventory reserve, allowance for doubtful accounts, goodwill, and intangible and other long-lived assets.

Our current assessment of these estimates is included in the condensed consolidated financial statements as of and for the three and six months ended August 2, 2025.

Our current assessment of these estimates is included in the condensed consolidated financial statements as of and for the three and nine months ended November 1, 2025.

As additional information becomes available to us, our future assessment of these estimates, as well as other factors, could change and the results of any such change could materially and adversely impact the condensed consolidated financial statements in future reporting periods.

These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended February 1, 2025 (the “2024 Form 10-K”).

The results of operations for the three and six months ended August 2, 2025, presented herein, are not necessarily indicative of the results to be expected for the full fiscal year.

The results of operations for the three and nine months ended November 1, 2025, presented herein, are not necessarily indicative of the results to be expected for the full fiscal year.

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FINANCIAL INFORMATION

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NOTE 2—RECENTLY ISSUED ACCOUNTING STANDARDS

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ASU 2023-09 is effective for fiscal years beginning after December 15, 2024.

We are currently assessing the impact that adopting this ASU will have on our fiscal 2025 annual consolidated financial statements.

We expect to include additional disclosures within the annual financial statements for the fiscal year ended January 31, 2026 to comply with the requirements of ASU 2023-09.

Income Statement:

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ASU 2025-05 is effective for fiscal years beginning after December 15, 2025.

We are currently assessing the impact that adopting this ASU will have on our fiscal 2025 annual consolidated financial statements.

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We are currently assessing the impact that adopting this ASU will have on the condensed consolidated financial statements.

Intangibles — Goodwill and Other — Internal-Use Software:

Improvements to Accounting for Internal-Use Software

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 (“ASU 2025-06”).

This new guidance amends guidance related to accounting for internal-use software development costs and clarifies the criteria for capitalization.

ASU 2025-06 is effective for fiscal years beginning after December 15, 2027.

We are currently assessing the impact that adopting this ASU will have on the condensed consolidated financial statements.

FINANCIAL INFORMATION

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NOTE 3—BUSINESS COMBINATION

On July 8, 2025, we acquired a home furnishings business operating under the brand names of Formations and Dennis & Leen for total consideration of $ 32 million, funded through available cash.

The transaction was accounted for as a business combination under ASC 805— Business Combinations .

The transaction was accounted for as a business combination under Accounting Standards Codification (“ASC”) 805— Business Combinations .

We believe that this addition to the RH platform further positions us as a leader in the luxury design market as we continue to enhance the RH product assortment.

During the three and six months ended August 2, 2025, we incurred $ 1.5 million and $ 2.2 million, respectively, of acquisition-related costs associated with the transaction.

During the nine months ended November 1, 2025, we incurred $ 2.3 million of acquisition-related costs associated with the transaction.

These costs include fees associated with financial, legal and accounting advisors, and are included in selling, general and administrative expenses on the condensed consolidated statements of income.

11 unchanged sentences

Pro forma results of the acquired business have not been presented as the results were not considered material to our condensed consolidated financial statements for all periods presented and would not have been material had the acquisition occurred at the beginning of fiscal 2024.

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FINANCIAL INFORMATION

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NOTE 4—PREPAID EXPENSE AND OTHER ASSETS

4 unchanged sentences

Vendor deposits

Capitalized cloud computing costs

Capitalized catalog costs

Tenant allowance receivable

Capitalized cloud computing costs

Right of return asset for merchandise

14 unchanged sentences

Deferred financing fees

Vendor deposits—non-current

Other non-current assets

Total other non-current assets

(1) Presented net of accumulated amortization of $ 36 million and $ 30 million as of August 2, 2025 and February 1, 2025, respectively.

(1) Presented net of accumulated amortization of $ 40 million and $ 30 million as of November 1, 2025 and February 1, 2025, respectively.

(2) Represents a federal tax receivable from a carryback claim.

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FINANCIAL INFORMATION

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NOTE 5—GOODWILL, TRADENAMES, TRADEMARKS AND OTHER INTANGIBLE ASSETS

7 unchanged sentences

Foreign currency translation

August 2, 2025

November 1, 2025

(1) Waterworks reporting unit goodwill of $ 51 million recognized upon acquisition in fiscal 2016 was fully impaired as of fiscal 2018.

(2) Presented net of an impairment charge of $ 35 million recognized in prior fiscal years.

(3) Represents amortization of patents.

(3) Represents disposals and amortization of patents.

There are no goodwill, tradenames, trademarks and other intangible assets for the Real Estate segment.

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FINANCIAL INFORMATION

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NOTE 6—VARIABLE INTEREST ENTITIES

2 unchanged sentences

In fiscal 2024, one Member LLC became a wholly-owned subsidiary and is no longer a VIE.

As of August 2, 2025 and February 1, 2025, of the remaining seven Member LLCs, we hold a 50 percent membership interest in six of the Member LLCs, and the remaining noncontrolling interest of 50 percent in each Member LLC is held by the same development partner.

As of November 1, 2025 and February 1, 2025, of the remaining seven Member LLCs, we hold a 50 percent membership interest in six of the Member LLCs, and the remaining noncontrolling interest of 50 percent in each Member LLC is held by the same development partner.

In one Member LLC, we hold approximately 75 percent membership interest with the remaining noncontrolling interest of approximately 25 percent held by the same development partner.

12 unchanged sentences

Total liabilities

(1) Includes $ 69 million and $ 54 million of construction in progress as of August 2, 2025 and February 1, 2025, respectively.

(1) Includes $ 76 million and $ 54 million of construction in progress as of November 1, 2025 and February 1, 2025, respectively.

(2) On September 9, 2022, a Member LLC as the borrower executed a Promissory Note (the “Promissory Note”) with a third-party bank in an aggregate principal amount equal to $ 16 million with a maturity date of September 9, 2032.

4 unchanged sentences

Additionally, Waterworks has membership interests in two European entities that are equity method investments.

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FINANCIAL INFORMATION

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In March 2025, the Aspen LLC in which we hold a 70 percent interest sold its sole real estate property.

2 unchanged sentences

Following this capital distribution, the remaining net assets in this Aspen LLC are immaterial.

Other than as described above, we did no t receive any distributions or have any undistributed earnings of equity method investments during the three or six months ended August 2, 2025 and August 3, 2024.

Our maximum exposure to loss is the carrying value of each of the equity method investments as of August 2, 2025.

Other than as described above, we did no t receive any distributions or have any undistributed earnings of equity method investments during the three or nine months ended November 1, 2025 and November 2, 2024.

Our maximum exposure to loss is the carrying value of each of the equity method investments as of November 1, 2025.

NOTE 7—ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

21 unchanged sentences

Total other current liabilities

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FINANCIAL INFORMATION

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Contract Liabilities

We defer revenue associated with merchandise delivered via the home-delivery channel.

We expect that substantially all of the deferred revenue and customer deposits as of August 2, 2025 will be recognized within the next six months as the performance obligations are satisfied.

In addition, we defer revenue when cash payments are received in advance of performance for unsatisfied obligations related to our gift cards.

During the three months ended August 2, 2025 and August 3, 2024, we recognized $ 5.2 million and $ 4.3 million, respectively, of revenue related to previous deferrals related to our gift cards .

During the six months ended August 2, 2025 and August 3, 2024, we recognized $ 12 million and $ 10 million, respectively, of revenue related to previous deferrals related to our gift cards .

We expect that approximately 75 percent of the remaining gift card liabilities will be recognized when the gift cards are redeemed by customers.

Supplier Finance Program

We facilitate a voluntary supply chain financing program (the “Financing Program”) with a third-party financial institution (the “Bank”) to provide participating suppliers with the opportunity to receive early payment on invoices, net of a discount charged to the supplier by the Bank.

As of August 2, 2025 and February 1, 2025, we had $ 20 million and $ 35 million, respectively, of payment obligations outstanding under the Financing Program included in accounts payable and accrued expenses on the condensed consolidated balance sheets.

As of November 1, 2025 and February 1, 2025, we had $ 21 million and $ 35 million, respectively, of payment obligations outstanding under the Financing Program included in accounts payable and accrued expenses on the condensed consolidated balance sheets.

Reorganization

1 unchanged sentence

The workforce reduction associated with these initiatives included the elimination of numerous leadership and other positions throughout the organization.

During the three and six months ended August 2, 2025, we incurred total charges relating to the reorganization of $ 1.2 million, consisting primarily of severance costs and related taxes.

As of August 2, 2025 and February 1, 2025, we had accruals of $ 1.3 million and $ 3.4 million, respectively, included within accounts payable and accrued expenses on the condensed consolidated balance sheets related to the reorganizations.

During the nine months ended November 1, 2025, we incurred total charges relating to the reorganization of $ 1.2 million, consisting primarily of severance costs and related taxes.

As of November 1, 2025 and February 1, 2025, we had accruals of $ 0.8 million and $ 3.4 million, respectively, included within accounts payable and accrued expenses on the condensed consolidated balance sheets related to the reorganizations.

Contract Liabilities

We defer revenue associated with merchandise delivered via the home-delivery channel.

We expect that substantially all of the deferred revenue and customer deposits as of November 1, 2025 will be recognized within the next six months as the performance obligations are satisfied.

In addition, we defer revenue when cash payments are received in advance of performance for unsatisfied obligations related to our gift cards.

During the three months ended November 1, 2025 and November 2, 2024, we recognized $ 4.5 million and $ 4.6 million, respectively, of revenue related to previous deferrals related to our gift cards .

During the nine months ended November 1, 2025 and November 2, 2024, we recognized $ 16 million and $ 15 million, respectively, of revenue related to previous deferrals related to our gift cards .

We expect that approximately 75 percent of the remaining gift card liabilities will be recognized when the gift cards are redeemed by customers.

NOTE 8—LEASES

1 unchanged sentence

THREE MONTHS ENDED

SIX MONTHS ENDED

NINE MONTHS ENDED

(in thousands)

9 unchanged sentences

Amounts include lease cost related to variable lease payments based on an index or rate that were not included in the measurement of the initial lease liability and right-of-use asset for finance leases, which were not material in either period presented.

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FINANCIAL INFORMATION

(3) Represents variable lease payments under operating and finance lease agreements, primarily associated with contingent rent based on a percentage of retail sales over contractual levels of $ 4.0 million and $ 3.6 million for the three months ended August 2, 2025 and August 3, 2024, respectively, and $ 8.1 million and $ 7.5 million for the six months ended August 2, 2025 and August 3, 2024, respectively, as well as charges associated with common area maintenance of $ 2.4 million and $ 2.9 million for the three months ended August 2, 2025 and August 3, 2024, respectively, and $ 5.5 million and $ 5.6 million for the six months ended August 2, 2025 and August 3, 2024, respectively.

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(3) Represents variable lease payments under operating and finance lease agreements, primarily associated with contingent rent based on a percentage of retail sales over contractual levels of $ 3.5 million and $ 2.2 million for the three months ended November 1, 2025 and November 2, 2024, respectively, and $ 12 million and $ 9.7 million for the nine months ended November 1, 2025 and November 2, 2024, respectively, as well as charges associated with common area maintenance of $ 2.2 million and $ 2.6 million for the three months ended November 1, 2025 and November 2, 2024, respectively, and $ 7.7 million and $ 8.2 million for the nine months ended November 1, 2025 and November 2, 2024, respectively.

Other variable costs, which include single lease cost related to variable lease payments based on an index or rate that were not included in the measurement of the initial lease liability and right-of-use asset, were not material in any period presented.

20 unchanged sentences

(1) Includes capitalized amounts related to our completed construction activities to design and build leased assets, which are reclassified from other non-current assets upon lease commencement.

(2) Recorded net of accumulated amortization of $ 350 million and $ 320 million as of August 2, 2025 and February 1, 2025, respectively.

(3) Includes $ 34 million and $ 35 million as of August 2, 2025 and February 1, 2025, respectively, related to an RH Design Gallery lease with a landlord that is an affiliate of the managing member of the Aspen LLCs.

(2) Recorded net of accumulated amortization of $ 366 million and $ 320 million as of November 1, 2025 and February 1, 2025, respectively.

(3) Includes $ 33 million and $ 35 million as of November 1, 2025 and February 1, 2025, respectively, related to an RH Design Gallery lease with a landlord that is an affiliate of the managing member of the Aspen LLCs.

Refer to Note 6— Variable Interest Entities .

(4) Current portion of lease liabilities represents the reduction of the related lease liability over the next 12 months.

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FINANCIAL INFORMATION

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The maturities of lease liabilities were as follows as of August 2, 2025:

The maturities of lease liabilities were as follows as of November 1, 2025:

(in thousands)

2 unchanged sentences

Less—imputed interest (3)

( 1,079,699 )

Present value of lease liabilities

(1) Total lease payments include future obligations for renewal options that are reasonably certain to be exercised and are included in the measurement of the lease liability.

Total lease payments exclude $ 789 million of legally binding payments under the non-cancellable term for leases signed but not yet commenced under our accounting policy as of August 2, 2025, of which $ 15 million, $ 35 million, $ 44 million, $ 46 million, $ 48 million and $ 49 million will be paid in the remainder of fiscal 2025, fiscal 2026, fiscal 2027, fiscal 2028, fiscal 2029 and fiscal 2030, respectively, and $ 552 million will be paid subsequent to fiscal 2030.

Total lease payments exclude $ 696 million of legally binding payments under the non-cancellable term for leases signed but not yet commenced under our accounting policy as of November 1, 2025, of which $ 5.6 million, $ 29 million, $ 36 million, $ 38 million, $ 41 million and $ 41 million will be paid in the remainder of fiscal 2025, fiscal 2026, fiscal 2027, fiscal 2028, fiscal 2029 and fiscal 2030, respectively, and $ 505 million will be paid subsequent to fiscal 2030.

(2) Excludes an immaterial amount of future commitments under short-term lease agreements.

1 unchanged sentence

Supplemental information related to leases consisted of the following:

SIX MONTHS ENDED

NINE MONTHS ENDED

Weighted-average remaining lease term (years)

4 unchanged sentences

Finance leases

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FINANCIAL INFORMATION

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Other information related to leases consisted of the following:

SIX MONTHS ENDED

NINE MONTHS ENDED

(in thousands)

9 unchanged sentences

Reclassification from other non-current assets to finance lease right-of-use assets

(1) Presented net of tenant allowances received subsequent to lease commencement of $ 6.2 million in the six months ended August 2, 2025.

No such payments were received in the six months ended August 3, 2024.

(2) Right-of-use assets obtained in exchange for new operating lease liabilities exclude the impact from acquisitions of $ 4.3 million for the six months ended August 2, 2025.

(1) Presented net of tenant allowances received subsequent to lease commencement of $ 15 million in the nine months ended November 1, 2025.

We did not receive any such tenant allowances in the nine months ended November 2, 2024.

(2) Right-of-use assets obtained in exchange for new operating lease liabilities exclude the impact from acquisitions of $ 4.3 million for the nine months ended November 1, 2025.

Refer to Note 3— Business Combinations .

NOTE 9—CREDIT FACILITIES

Long-Lived Asset Impairment

During the three months ended November 2, 2024, we recognized long-lived asset impairment charges of $ 19 million for our two Design Galleries in Germany due to the asset carrying value of each location exceeding the estimated fair market value of the long-lived assets over their respective remaining lease terms, both of which end in 2027.

These impairment charges were comprised of lease right-of-use asset impairment of $ 13 million and property and equipment impairment of $ 5.6 million.

NOTE 9—CREDIT FACILITIES AND CONVERTIBLE SENIOR NOTES

The outstanding balances under our credit facilities were as follows:

4 unchanged sentences

Total credit facilities

(1) Deferred financing fees associated with the asset based credit facility as of August 2, 2025 and February 1, 2025 were $ 3.9 million and $ 1.5 million, respectively, and are included in other non-current assets on the condensed consolidated balance sheets.

(1) Deferred financing fees associated with the asset based credit facility as of November 1, 2025 and February 1, 2025 were $ 3.7 million and $ 1.5 million, respectively, and are included in other non-current assets on the condensed consolidated balance sheets.

The deferred financing fees are amortized on a straight-line basis over the life of the revolving line of credit.

1 unchanged sentence

entered into an amendment to the ABL Credit Agreement (defined below), which extended the maturity date of the revolving line of credit from July 29, 2026 to the earlier of (a) July 31, 2030 and (b) the date which is 91 days prior to the final stated maturity of the Term Loan Credit Agreement and any refinancing thereof.

(2) Represents the Term Loan Credit Agreement (defined below), of which outstanding amounts of $ 1,905 million and $ 1,915 million were included in term loan B—net on the condensed consolidated balance sheets as of August 2, 2025 and February 1, 2025, respectively, and $ 20 million was included in other current liabilities on the condensed consolidated balance sheets as of both August 2, 2025 and February 1, 2025.

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FINANCIAL INFORMATION

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(3) Represents the outstanding balance of the Term Loan B-2 (defined below) under the Term Loan Credit Agreement, of which outstanding amounts of $ 481 million and $ 484 million were included in term loan B-2—net on the condensed consolidated balance sheets as of August 2, 2025 and February 1, 2025, respectively, and $ 5.0 million was included in other current liabilities on the condensed consolidated balance sheets as of both August 2, 2025 and February 1, 2025.

(2) Represents the Term Loan Credit Agreement (defined below), of which outstanding amounts of $ 1,900 million and $ 1,915 million were included in term loan B—net on the condensed consolidated balance sheets as of November 1, 2025 and February 1, 2025, respectively, and $ 20 million was included in other current liabilities on the condensed consolidated balance sheets as of both November 1, 2025 and February 1, 2025.

(3) Represents the outstanding balance of the Term Loan B-2 (defined below) under the Term Loan Credit Agreement, of which outstanding amounts of $ 480 million and $ 484 million were included in term loan B-2—net on the condensed consolidated balance sheets as of November 1, 2025 and February 1, 2025, respectively, and $ 5.0 million was included in other current liabilities on the condensed consolidated balance sheets as of both November 1, 2025 and February 1, 2025.

Asset Based Credit Facility

15 unchanged sentences

Index Rate”, as such term is defined in the ABL Credit Agreement, or SOFR for Canadian borrowings denominated in United States dollars) plus an applicable interest rate margin, in each case.

The ABL Credit Agreement contains various restrictive and affirmative covenants, including required financial reporting, limitations on granting certain liens, limitations on making certain loans or investments, limitations on incurring additional debt, restricted payment limitations limiting the payment of dividends and certain other transactions and distributions, limitations on transactions with affiliates, along with other restrictions and limitations similar to those frequently found in credit agreements of a similar type and size.

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FINANCIAL INFORMATION

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The ABL Credit Agreement does not contain any significant financial ratio covenants or coverage ratio covenants other than a consolidated fixed charge coverage ratio (“FCCR”) covenant based on the ratio of (i) consolidated EBITDA to the amount of (ii) debt service costs plus certain other amounts, including dividends and distributions and prepayments of debt as defined in the ABL Credit Agreement (the “FCCR Covenant”).

1 unchanged sentence

The FCCR Covenant ratio is set at 1.0 and measured on a trailing twelve-month basis.

As of August 2, 2025, RHI was in compliance with the FCCR Covenant.

As of November 1, 2025, RHI was in compliance with the FCCR Covenant.

The ABL Credit Agreement requires a daily sweep of all cash receipts and collections to prepay the loans under the agreement while (i) an event of default exists or (ii) when the unused availability under the ABL Credit Agreement drops below the greater of (A) $ 40 million and (B) an amount based on 10 % of the total borrowing availability at the time.

The ABL Credit Agreement contains customary representations and warranties, events of default and other customary terms and conditions for an asset based credit facility.

As of August 2, 2025, RHI had $ 135 million in outstanding borrowings and $ 418 million of availability under the revolving line of credit, net of $ 47 million in outstanding letters of credit.

As a result of the FCCR Covenant that limits the last 10 % of borrowing availability, actual incremental borrowing available to RHI and the other affiliated parties under the revolving line of credit would be $ 358 million as of August 2, 2025.

As of November 1, 2025, RHI had $ 65 million in outstanding borrowings and $ 428 million of availability under the revolving line of credit, net of $ 48 million in outstanding letters of credit.

Term Loan Credit Agreement

10 unchanged sentences

Other than the terms relating to the Term Loan B-2, the terms of the Amended Term Loan Credit Agreement remain substantially the same as the terms of the existing Term Loan Credit Agreement, including representations and warranties, covenants and events of default.

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FINANCIAL INFORMATION

All obligations under the Term Loan B are guaranteed by certain domestic subsidiaries of RHI.

3 unchanged sentences

The Intercreditor Agreement establishes various customary inter-lender terms, including, without limitation, with respect to priority of liens, permitted actions by each party, application of proceeds, exercise of remedies in case of default, releases of liens and certain limitations on the amendment of the ABL Credit Agreement and the Term Loan Credit Agreement without the consent of the other parties.

FINANCIAL INFORMATION

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The borrowings under the Term Loan Credit Agreement may be prepaid in whole or in part at any time, subject to a prepayment premium of 1.0 % in connection with any repricing transaction within the six months following the closing date of the Term Loan Credit Agreement.

2 unchanged sentences

The Term Loan Credit Agreement contains customary representations and warranties, events of default and other customary terms and conditions for a term loan credit agreement.

$ 350 million 0.00 % Convertible Senior Notes due 2024

In September 2019, we issued in a private offering $ 350 million principal amount of 0.00 % convertible senior notes due 2024 (the “2024 Notes”).

In September 2024, upon the maturity of the 2024 Notes, the $ 42 million in aggregate principal amount of the 2024 Notes settled for $ 42 million in cash and were no longer outstanding as of February 1, 2025.

During the nine months ended November 2, 2024 through the maturity of the 2024 Notes, we issued in aggregate 39,121 shares of common stock at a par value of $ 0.0001 per share and, as a result, recognized $ 0 in additional paid-in capital on the condensed consolidated statements of stockholders’ equity (deficit) upon settlement of the 2024 Notes.

FINANCIAL INFORMATION

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NOTE 10—FAIR VALUE MEASUREMENTS

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Effective tax rate

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FINANCIAL INFORMATION

The increase in our effective tax rates for the three and six months ended August 2, 2025 compared to the three and six months ended August 3, 2024 is primarily attributable to reporting higher net income in the current year and the impact of higher net excess tax benefits from stock-based compensation in fiscal 2024.

The increase in our effective tax rates for the three and nine months ended November 1, 2025 compared to the three and nine months ended November 2, 2024 is primarily attributable to reporting higher net income in the current year and the impact of higher net excess tax benefits from stock-based compensation in fiscal 2024.

The Organization for Economic Cooperation and Development (“OECD”) proposed model rules to ensure a minimal level of taxation (commonly referred to as Pillar II) and the European Union member states have agreed to implement Pillar II’s proposed global corporate minimum tax rate of 15 % .

Many countries are actively considering, have proposed or have enacted, changes to their tax laws based upon the Pillar II proposals, which could increase our tax obligations in countries where we do business or cause us to change the way we operate our business.

To mitigate the administrative burden for multinational enterprises in complying with the OECD Global Anti-Base Erosion rules during the initial years of implementation, the OECD developed the temporary “Transitional Country-by-Country Safe Harbor.” We considered the applicable tax law changes from Pillar II implementation in the relevant countries in which we operate, and there is no material impact to our tax provision for the three and six months ended August 2, 2025.

We will continue to evaluate the impact of these tax law changes in future reporting periods.

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FINANCIAL INFORMATION

On July 4, 2025, the United States enacted tax legislation through the H.R.1 Reconciliation Act, commonly referred to as the One Big Beautiful Bill Act (the “OBBBA”), which implemented several corporate tax law changes, including, but not limited to, (1) limitations on deductions for interest expense, (2) changes to the taxation of foreign activity and (3) reinstatement of one hundred percent bonus depreciation for eligible property.

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We did not identify any material discrete tax impacts related to our beginning-of-the-year deferred tax assets and liabilities or valuation allowances due to the enactment of the OBBBA.

We are currently assessing the impact the OBBBA may have on our financial condition, results of operations, cash flows and effective tax rate, and will continue to evaluate any potential impact as additional guidance becomes available.

We will continue to monitor any future changes in our business or interpretations of the new tax law that could affect our tax position in subsequent periods.

NOTE 12—NET INCOME PER SHARE

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Weighted-average shares—basic

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Weighted-average shares—diluted

(1) The dilutive effect of the 2024 Notes is calculated under the if-converted method, which assumes share settlement of the entire convertible debt instrument.

The 2024 Notes matured in September 2024 and did not have an impact on our diluted share count post-maturity.

Refer to Note 9— Credit Facilities and Convertible Senior Notes .

The following number of options and restricted stock units were excluded from the calculation of diluted net income per share because their inclusion would have been anti-dilutive:

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Restricted stock units

FINANCIAL INFORMATION

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NOTE 13—STOCK-BASED COMPENSATION

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The 2023 Stock Incentive Plan provides for the grant of incentive stock options to our employees and the grant of non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalent rights and any combination thereof to our employees, directors and consultants and our parent and subsidiary corporations’ employees, directors and consultants.

As of August 2, 2025, there were a total of 1,909,819 shares issuable under the 2023 Stock Incentive Plan.

As of November 1, 2025, there were a total of 1,958,647 shares issuable under the 2023 Stock Incentive Plan.

Awards under the 2023 Stock Incentive Plan reduce the number of shares available for future issuance.

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Shares issued as a result of award exercises under the 2023 Stock Incentive Plan will be funded with the issuance of new shares.

FINANCIAL INFORMATION

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Equity Awards Under the Plans

Options outstanding, vested or expected to vest, and exercisable as of August 2, 2025 were as follows:

Options outstanding, vested or expected to vest, and exercisable as of November 1, 2025 were as follows:

REMAINING TERM

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(in thousands)

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Friedman an option to purchase 700,000 shares of our common stock with an exercise price equal to $ 385.30 per share under the Stock Incentive Plan.

The option resulted in aggregate non-cash stock compensation expense of $ 174 million, of which $ 0.9 million and $ 2.8 million was recognized during the six months ended August 2, 2025 and August 3, 2024, respectively .

The option resulted in aggregate non-cash stock compensation expense of $ 174 million, of which $ 0.9 million and $ 3.7 million was recognized during the nine months ended November 1, 2025 and November 2, 2024, respectively .

Compensation expense for this award was fully recognized as of the first quarter of fiscal 2025.

No stock-based compensation cost has been capitalized in the accompanying condensed consolidated financial statements.

As of August 2, 2025, the total unrecognized compensation expense and weighted average remaining term of equity awards were as follows:

As of November 1, 2025, the total unrecognized compensation expense and weighted average remaining term of equity awards were as follows:

REMAINING TERM

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Unvested restricted stock and restricted stock units

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FINANCIAL INFORMATION

NOTE 14—COMMITMENTS AND CONTINGENCIES

We had no material off-balance sheet commitments as of August 2, 2025.

We had no material off-balance sheet commitments as of November 1, 2025.

Contingencies

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In addition, we are subject to governmental and regulatory examinations, information requests, and investigations from time to time at the state and federal levels.

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FINANCIAL INFORMATION

We currently face legal proceedings that involve complex litigation, including class action cases, matters related to our employment practices, the application of state wage and hour laws, product liability and other causes of action.

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Legal costs related to such matters are expensed as incurred.

FINANCIAL INFORMATION

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NOTE 15—SEGMENT REPORTING

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While RH Segment and Waterworks have a shared senior leadership team and customer base, we have determined that their results cannot be aggregated as they do not share similar economic characteristics, as well as due to other quantitative factors.

FINANCIAL INFORMATION

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Segment Information

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Segment adjusted operating income excludes (i) certain asset impairments, (ii) product recall, (iii) severance costs associated with a reorganization, (iv) non-cash compensation amortization related to an option grant made to Mr.

Friedman in October 2020 and (v) legal settlements.

Friedman in October 2020, (v) contract termination settlement—net and (vi) legal settlements—net.

These items are excluded from segment adjusted operating income in order to provide better transparency of segment operating results.

Accordingly, these items are not presented by segment because they are excluded from the segment profitability measure that the CODM and our senior leadership team review.

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FINANCIAL INFORMATION

Segment net revenues, which represent our disaggregated net revenues in accordance with Accounting Standards Codification 606, significant segment expenses and segment adjusted operating income, by reportable segment, were as follows:

Segment net revenues, which represent our disaggregated net revenues in accordance with ASC 606, significant segment expenses and segment adjusted operating income, by reportable segment, were as follows:

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Non-cash compensation

Contract termination settlement—net

Legal settlements—net

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FINANCIAL INFORMATION

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In the three months ended August 2, 2025 and August 3, 2024, the Real Estate segment share of equity method investments loss, which is the measure of segment profitability reviewed by the CODM to evaluate performance internally for the Real Estate segment, was $ 1.7 million and $ 3.9 million, respectively.

In the six months ended August 2, 2025 and August 3, 2024, the Real Estate segment share of equity method investment operations was income of $ 6.5 million and loss of $ 6.7 million, respectively.

The share of loss from equity method investments for the Waterworks segment was immaterial in all fiscal periods presented.

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In the three months ended November 1, 2025 and November 2, 2024, the Real Estate segment share of equity method investments loss, which is the measure of segment profitability reviewed by the CODM to evaluate performance internally for the Real Estate segment, was $ 0.4 million and $ 1.8 million, respectively.

In the nine months ended November 1, 2025 and November 2, 2024, the Real Estate segment share of equity method investment operations was income of $ 6.2 million and loss of $ 8.5 million, respectively.

The share of (income) loss from equity method investments for the Waterworks segment was immaterial in all fiscal periods presented.

Depreciation and amortization for our segments was as follows:

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(2) The Waterworks reporting unit tradename is presented net of an impairment charge of $ 35 million recognized in prior fiscal years.

(3) The Waterworks segment balance represents membership interests in two European entities, one entity in which we hold a 50 percent membership interest and another entity in which we increased our membership interest from approximately 25 percent as of February 1, 2025 to approximately 28 percent as of August 2, 2025.

We are not the primary beneficiary of either of these VIEs.

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FINANCIAL INFORMATION

We are domiciled in the United States and primarily operate our retail locations and outlets in the United States.

As of August 2, 2025, we operated the following number of retail locations and outlets outside the United States:

As of November 1, 2025, we operated the following number of retail locations and outlets outside the United States:

United Kingdom

(1) Geographic revenues generated outside of the United States did not exceed 10% of total consolidated net revenues in either fiscal period presented.

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FINANCIAL INFORMATION

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements