What changed in this filing

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Item 1. Financial Statements

2025-06-12 compared with 2024-12-12 · 199 added, 302 removed, 427 unchanged (54% of the section changed)

9 unchanged sentences

Operating lease right-of-use assets

Tradenames, trademarks and other intangible assets

Tradenames, trademarks and other intangible assets—net

Deferred tax assets

4 unchanged sentences

Deferred revenue and customer deposits

Convertible senior notes due 2024—net

Operating lease liabilities

8 unchanged sentences

Deferred tax liabilities

Other non-current obligations

Other non-current liabilities

Total liabilities

1 unchanged sentence

Stockholders’ deficit:

Preferred stock—$ 0.0001 par value per share, 10,000,000 shares authorized, no shares issued or outstanding as of November 2, 2024 and February 3, 2024

Common stock— $ 0.0001 par value per share, 180,000,000 shares authorized, 18,600,291 shares issued and outstanding as of November 2, 2024;

Preferred stock—$ 0.0001 par value per share, 10,000,000 shares authorized, no shares issued or outstanding as of May 3, 2025 and February 1, 2025

Common stock— $ 0.0001 par value per share, 180,000,000 shares authorized, 18,732,265 shares issued and outstanding as of May 3, 2025;

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

6 unchanged sentences

FINANCIAL INFORMATION

2024 THIRD QUARTER FORM 10-Q | 3

2025 FIRST QUARTER FORM 10-Q | 3

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

THREE MONTHS ENDED

NINE MONTHS ENDED

(in thousands, except share and per share amounts)

1 unchanged sentence

Selling, general and administrative expenses

Income from operations

Operating income

Other expenses

Interest expense—net

Other expense—net

Other (income) expense—net

Total other expenses

1 unchanged sentence

Income tax expense (benefit)

Income before equity method investments

Share of equity method investments loss—net

Loss before equity method investments

Share of equity method investments (income) loss—net

Net income (loss)

4 unchanged sentences

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

4 | 2024 THIRD QUARTER FORM 10-Q

FINANCIAL INFORMATION

2025 FIRST QUARTER FORM 10-Q | 4

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

THREE MONTHS ENDED

NINE MONTHS ENDED

(in thousands)

4 unchanged sentences

FINANCIAL INFORMATION

2024 THIRD QUARTER FORM 10-Q | 5

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

2025 FIRST QUARTER FORM 10-Q | 5

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

THREE MONTHS ENDED

TREASURY STOCK

COMPREHENSIVE

1 unchanged sentence

INCOME (LOSS)

EQUITY (DEFICIT)

(in thousands, except share amounts)

Balances—August 3, 2024

Stock-based compensation

Issuance of restricted stock

Vested and delivered restricted stock units

Exercise of stock options

Settlement of convertible senior notes

Comprehensive loss

Balances—November 2, 2024

Balances—July 29, 2023

Stock-based compensation

Vested and delivered restricted stock units

Exercise of stock options

Repurchase of common stock—including excise tax

Retirement of treasury stock

Comprehensive loss

Balances—October 28, 2023

6 | 2024 THIRD QUARTER FORM 10-Q

FINANCIAL INFORMATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (continued)

NINE MONTHS ENDED

TREASURY STOCK

COMPREHENSIVE

STOCKHOLDERS'

INCOME (LOSS)

EQUITY (DEFICIT)

(in thousands, except share amounts)

Balances—February 1, 2025

Stock-based compensation

Issuance of restricted stock

Vested and delivered restricted stock units

Exercise of stock options

Settlement of convertible senior notes

Comprehensive income

Balances—November 2, 2024

Balances—January 28, 2023

Net gain from foreign currency translation

Balances—May 3, 2025

Balances—February 3, 2024

Stock-based compensation

2 unchanged sentences

Exercise of stock options

Settlement of convertible senior notes

Repurchase of common stock—including excise tax

( 3,887,965 )

( 1,261,690 )

Retirement of treasury stock

( 1,251,314 )

( 3,887,965 )

Comprehensive loss

Balances—October 28, 2023

Net loss from foreign currency translation

Balances—May 4, 2024

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

FINANCIAL INFORMATION

2024 THIRD QUARTER FORM 10-Q | 7

2025 FIRST QUARTER FORM 10-Q | 6

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

NINE MONTHS ENDED

THREE MONTHS ENDED

(in thousands)

CASH FLOWS FROM OPERATING ACTIVITIES

Adjustments to reconcile net income to net cash provided by operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization

1 unchanged sentence

Stock-based compensation expense

Asset impairments

Non-cash finance lease interest expense

Deferred income taxes

Share of equity method investments loss—net

Share of equity method investments (income) loss—net

Distribution of return on equity method investment

Other non-cash items

13 unchanged sentences

Equity method investments

Acquisition of intangible asset

Receipt of promissory note repayment from equity method investee

Distribution of return of equity method investment

Proceeds from insurance recoveries

Net cash used in investing activities

8 | 2024 THIRD QUARTER FORM 10-Q

FINANCIAL INFORMATION

2025 FIRST QUARTER FORM 10-Q | 7

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

NINE MONTHS ENDED

THREE MONTHS ENDED

(in thousands)

1 unchanged sentence

Borrowings under asset based credit facility

Repayments under asset based credit facility

Repayments under term loans

Repayments under real estate loans

Repayments under promissory and equipment security notes

Repayments of convertible senior notes

Principal payments under finance lease agreements—net of tenant allowances

Repurchases of common stock—inclusive of excise taxes paid

( 1,252,899 )

Proceeds from exercise of stock options

Tax withholdings related to issuance of stock-based awards

Net cash provided by (used in) financing activities

( 1,278,386 )

Net cash used in financing activities

Effects of foreign currency exchange rate translation on cash

Net decrease in cash and cash equivalents and restricted cash

( 1,129,108 )

Cash and cash equivalents and restricted cash

Beginning of period—cash and cash equivalents

Beginning of period—restricted cash

Beginning of period—cash and cash equivalents and restricted cash

End of period—cash and cash equivalents

End of period—restricted cash

End of period—cash and cash equivalents and restricted cash

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents

Beginning of period

End of period

Non-cash transactions

4 unchanged sentences

FINANCIAL INFORMATION

2024 THIRD QUARTER FORM 10-Q | 9

2025 FIRST QUARTER FORM 10-Q | 8

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 November 2, 2024, we operated a total of 71 RH Galleries and 38 RH Outlet stores, one RH Guesthouse and 14 Waterworks Showrooms throughout the United States and Canada as well as in the United Kingdom, Germany, Belgium and Spain.

We also have sourcing operations in Shanghai and Hong Kong.

As of May 3, 2025, we operated a total of 68 RH Galleries and 42 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.

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 November 2, 2024, and the results of operations for the three and nine months ended November 2, 2024 and October 28, 2023.

Our current fiscal year, which consists of 52 weeks, ends on February 1, 2025 (“fiscal 2024”).

The condensed consolidated financial statements include our accounts and those of our wholly-owned subsidiaries, as well as the financial information of variable interest entities (“VIEs”) where we represent the primary beneficiary and have the power to direct the activities that most significantly impact the entity’s performance.

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 May 3, 2025, and the results of operations for the three months ended May 3, 2025 and May 4, 2024.

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

Accordingly, all intercompany balances and transactions have been eliminated through the consolidation process.

Certain information and disclosures normally included in the notes to annual consolidated financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) have been condensed or omitted for purposes of these interim condensed consolidated financial statements.

The preparation of our condensed consolidated financial statements, in conformity with GAAP, requires our senior leadership team to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period.

The preparation of the condensed consolidated financial statements, in conformity with GAAP, requires our senior leadership team to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period.

Actual results could differ from those estimates and such differences could be material to the condensed consolidated financial statements.

1 unchanged sentence

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 our condensed consolidated financial statements as of and for the three and nine months ended November 2, 2024.

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 our condensed consolidated financial statements in future reporting periods.

Our current assessment of these estimates is included in the condensed consolidated financial statements as of and for the three months ended May 3, 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 nine months ended November 2, 2024, presented herein, are not necessarily indicative of the results to be expected for the full fiscal year.

10 | 2024 THIRD QUARTER FORM 10-Q

The results of operations for the three months ended May 3, 2025, presented herein, are not necessarily indicative of the results to be expected for the full fiscal year.

FINANCIAL INFORMATION

2025 FIRST QUARTER FORM 10-Q | 9

NOTE 2—RECENTLY ISSUED ACCOUNTING STANDARDS

New Accounting Standards or Updates Adopted

Joint Venture Formations:

Recognition and Initial Measurement

In August 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-05—Business Combinations—Joint Venture Formations (Subtopic 805-60):

Recognition and Initial Measurement (“ASU 2023-05”).

ASU 2023-05 applies to the formation of a “joint venture” or a “corporate joint venture” and requires a joint venture to initially measure all contributions received upon its formation at fair value.

The guidance does not impact accounting by the venturers.

We adopted this new guidance in the first quarter of fiscal 2025 on a prospective basis.

While ASU 2023-05 is not currently applicable to us because our existing arrangements in variable interest entities do not meet the definition of joint ventures in the updated standard, we will apply this guidance to any future arrangements we enter into that meet the definition of a joint venture.

New Accounting Standards or Updates Not Yet Adopted

Segment Reporting:

Improvements to Reportable Segment Disclosures

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ ASU”) 2023-07—Improvements to Reportable Segment Disclosures .

This new guidance is designed to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 on a retrospective basis.

Early adoption is permitted.

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

Income Taxes:

Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09 — Improvements to Income Tax Disclosures .

In December 2023, the FASB issued ASU 2023-09—Improvements to Income Tax Disclosures (“ASU 2023-09”) .

This new guidance is designed to enhance the transparency and decision usefulness of income tax disclosures.

1 unchanged sentence

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

Early adoption is permitted.

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

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

Income Statement:

2 unchanged sentences

This new guidance is designed to improve financial reporting by requiring public business entities to disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods, including amounts and qualitative descriptions of inventory purchases, employee compensation, depreciation and intangible asset amortization, among other requirements.

ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim reporting periods beginning after December 15, 2027, on a prospective basis.

Early adoption is permitted.

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

In January 2025, the FASB issued ASU 2025-01—Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) :

Clarifying the Effective Date , which clarifies that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027.

The guidance is required to be adopted on a prospective basis and early adoption is permitted.

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

FINANCIAL INFORMATION

2025 FIRST QUARTER FORM 10-Q | 10

NOTE 3—PREPAID EXPENSE AND OTHER ASSETS

Prepaid expense and other current assets consist of the following:

Prepaid expense and other current assets consisted of the following:

(in thousands)

Prepaid expenses

Capitalized catalog costs

Vendor deposits

Federal and state tax receivable (1)

Tenant allowance receivable

Vendor deposits

Value added tax (VAT) receivable

Capitalized catalog costs

Tenant allowance receivable

Capitalized cloud computing costs

Right of return asset for merchandise

2 unchanged sentences

Total prepaid expense and other current assets

(1) Represents promissory notes, including principal and accrued interest, due from an affiliate of the managing member of the Aspen LLCs (as defined below).

(1) Includes $ 19 million as of both periods related to a federal tax receivable from a carryback claim .

(2) Represents promissory notes, including principal and accrued interest, due from an affiliate of the managing member of the Aspen LLCs.

Refer to Note 5— Variable Interest Entities .

FINANCIAL INFORMATION

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Other non-current assets consist of the following:

Other non-current assets consisted of the following:

(in thousands)

7 unchanged sentences

Total other non-current assets

(1) Presented net of accumulated amortization of $ 27 million and $ 19 million as of November 2, 2024 and February 3, 2024, respectively.

(1) Presented net of accumulated amortization of $ 33 million and $ 30 million as of May 3, 2025 and February 1, 2025, respectively.

FINANCIAL INFORMATION

2025 FIRST QUARTER FORM 10-Q | 11

NOTE 4—GOODWILL, TRADENAMES, TRADEMARKS AND OTHER INTANGIBLE ASSETS

Goodwill, tradenames, trademarks and other intangible assets activity for the RH Segment and Waterworks consists of the following:

Goodwill, tradenames, trademarks and other intangible assets for the RH Segment and Waterworks consisted of the following:

TRADEMARKS AND

5 unchanged sentences

Foreign currency translation

November 2, 2024

(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.

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

12 | 2024 THIRD QUARTER FORM 10-Q

FINANCIAL INFORMATION

2025 FIRST QUARTER FORM 10-Q | 12

NOTE 5—VARIABLE INTEREST ENTITIES

1 unchanged sentence

In fiscal 2022, we formed eight privately-held limited liability companies (each, a “Member LLC” and collectively, the “Member LLCs” or the “consolidated variable interest entities”) for real estate development activities related to our Gallery transformation and global expansion strategies.

The carrying amounts and classification of the Member LLCs’ assets and liabilities included in the condensed consolidated balance sheets were as follows:

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

As of May 3, 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.

The carrying amounts and classification of the VIEs’ assets and liabilities included in the condensed consolidated balance sheets were as follows:

(in thousands)

7 unchanged sentences

Total current liabilities

Real estate loans—net (2)

Real estate loan—net (2)

Other non-current obligations

Total liabilities

(1) Includes $ 59 million and $ 77 million of construction in progress as of November 2, 2024 and February 3, 2024, respectively.

(2) Real estate loans are secured by the assets of each respective Member LLC and the associated creditors do not have recourse against RH’s general assets.

Excludes $ 0.3 million and $ 0.1 million of current obligations related to such loans that are included in other current liabilities on the condensed consolidated balance sheets as of November 2, 2024 and February 3, 2024, respectively.

On August 3, 2022, a Member LLC as the borrower executed a Secured Promissory Note (the “Secured Promissory Note”) with a third-party in an aggregate principal amount equal to $ 2.0 million with a maturity date of August 1, 2032.

The Secured Promissory Note bears interest at a fixed rate per annum equal to 6.00 % .

(1) Includes $ 57 million and $ 54 million of construction in progress as of May 3, 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.

The Promissory Note bears interest at a fixed rate per annum equal to 5.37 % until September 15, 2027, on which date the interest rate will reset based on the five-year treasury rate plus 2.00 % , subject to a total interest rate floor of 3.00 % .

The Promissory Note is secured by the assets of the Member LLC and the creditor does not have recourse against RH’s general assets.

Equity Method Investments

Equity method investments primarily represent our membership interests in three privately-held limited liability companies in Aspen, Colorado (each, an “Aspen LLC” and collectively, the “Aspen LLCs”) that were formed for the purpose of acquiring, developing, operating and selling certain real estate projects in Aspen, Colorado.

As of November 2, 2024, we have made capital contributions of approximately $ 146 million to the Aspen LLCs.

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

FINANCIAL INFORMATION

2024 THIRD QUARTER FORM 10-Q | 13

Our maximum exposure to loss is the carrying value of each of the equity method investments as of November 2, 2024.

During the three and nine months ended November 2, 2024 and October 28, 2023, we did no t receive any distributions or have any undistributed earnings of equity method investments.

2025 FIRST QUARTER FORM 10-Q | 13

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

Subsequent to the property sale, we received $ 15 million from the Aspen LLC, which consisted of $ 2.9 million for the repayment of its outstanding promissory note to us, including accrued interest, and a capital distribution of $ 13 million.

The capital distribution of $ 13 million represented a return of our contributed capital of $ 7.9 million and a return on investment of $ 4.6 million, which are included within cash flows from investing activities and cash flows from operating activities, respectively, on the condensed consolidated statements of cash flows.

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

As of May 3, 2025, we have made capital contributions of approximately $ 138 million to the two remaining Aspen LLCs.

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

Our maximum exposure to loss is the carrying value of each of the equity method investments as of May 3, 2025.

During the three months ended May 3, 2025, we did not receive any distributions or have any undistributed earnings of equity method investments related to the two remaining Aspen LLCs or the Waterworks equity method investments.

During the three months ended May 4, 2024, we did not receive any distributions or have any undistributed earnings of equity method investments.

NOTE 6—ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accounts payable and accrued expenses consist of the following:

Accounts payable and accrued expenses consisted of the following:

(in thousands)

1 unchanged sentence

Accrued compensation

Accrued occupancy

Accrued sales and use tax

Accrued occupancy

Accrued freight and duty

Accrued legal settlements (1)

Accrued professional fees

Accrued legal contingencies (1)

Excise tax payable on share repurchases

Other accrued expenses

1 unchanged sentence

(1) Refer to Note 13— Commitments and Contingencies.

Reorganization

We implemented a restructuring on March 24, 2023 that included workforce and expense reductions in order to improve and simplify our organizational structure, streamline certain aspects of our business operations and better position us for further growth.

The workforce reduction associated with the initiative included the elimination of numerous leadership and other positions throughout the organization, which affected approximately 440 roles.

The reorganization was completed during the first quarter of fiscal 2023.

During the nine months ended October 28, 2023, we incurred total charges relating to the reorganization of $ 7.6 million consisting primarily of severance costs and related taxes.

As of February 3, 2024, we had an immaterial amount accrued within accounts payable and accrued expenses on the condensed consolidated balance sheets related to the reorganization, all of which was paid during the first quarter of fiscal 2024.

14 | 2024 THIRD QUARTER FORM 10-Q

FINANCIAL INFORMATION

Other current liabilities consist of the following:

2025 FIRST QUARTER FORM 10-Q | 14

Other current liabilities consisted of the following:

(in thousands)

3 unchanged sentences

Finance lease liabilities

Federal tax payable

Foreign tax payable

Other current liabilities

2 unchanged sentences

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 2, 2024 will be recognized within the next six months as the performance obligations are satisfied.

We expect that substantially all of the deferred revenue and customer deposits as of May 3, 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 2, 2024 and October 28, 2023, we recognized $ 4.6 million and $ 7.5 million, respectively, of revenue related to previous deferrals related to our gift cards .

During the nine months ended November 2, 2024 and October 28, 2023, we recognized $ 15 million and $ 19 million, respectively, of revenue related to previous deferrals related to our gift cards .

During the three months ended May 3, 2025 and May 4, 2024, we recognized $ 6.5 million and $ 6.1 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.

1 unchanged sentence

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 November 2, 2024 and February 3, 2024, supplier invoices that have been confirmed as valid under the Financing Program included in accounts payable and accrued expenses on the condensed consolidated balance sheets were $ 34 million and $ 28 million, respectively.

NOTE 7—OTHER NON-CURRENT OBLIGATIONS

Other non-current obligations consist of the following:

Liabilities under the Financing Program are included in accounts payable and accrued expenses on the condensed consolidated balance sheets.

Our confirmed obligations and activity under the Financing Program consisted of the following:

THREE MONTHS ENDED

(in thousands)

Unrecognized tax benefits

Other non-current obligations

Total other non-current obligations

Outstanding at beginning of fiscal period

Invoices confirmed

Invoices paid

Outstanding at end of fiscal period

Reorganization

We implemented and completed a restructuring in the fourth quarter of fiscal 2024 that included workforce and expense reductions in order to improve and simplify our organizational structure, streamline certain aspects of our business operations and better position us for further growth.

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

As of May 3, 2025 and February 1, 2025, we had accruals of $ 2.0 million and $ 3.4 million, respectively, included within accounts payable and accrued expenses on the condensed consolidated balance sheets related to the reorganization.

FINANCIAL INFORMATION

2024 THIRD QUARTER FORM 10-Q | 15

2025 FIRST QUARTER FORM 10-Q | 15

NOTE 7—LEASES

Lease costs—net consist of the following:

Lease costs—net consisted of the following:

THREE MONTHS ENDED

NINE MONTHS ENDED

(in thousands)

Operating lease cost (1)

Operating lease costs (1)

Finance lease costs

6 unchanged sentences

(2) Included in interest expense—net on the condensed consolidated statements of income (loss).

(3) Represents variable lease payments under operating and finance lease agreements, primarily associated with contingent rent that is based on a percentage of retail sales over contractual levels of $ 2.2 million and $ 3.2 million for the three months ended November 2, 2024 and October 28, 2023, respectively, and $ 9.7 million and $ 11 million for the nine months ended November 2, 2024 and October 28, 2023, respectively, as well as charges associated with common area maintenance of $ 2.6 million and $ 2.2 million for the three months ended November 2, 2024 and October 28, 2023, respectively, and $ 8.2 million and $ 6.8 million for the nine months ended November 2, 2024 and October 28, 2023, 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.

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.

(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 $ 4.1 million and $ 3.9 million for the three months ended May 3, 2025 and May 4, 2024, respectively, as well as charges associated with common area maintenance of $ 3.1 million and $ 2.7 million for the three months ended May 3, 2025 and May 4, 2024, respectively.

(4) Included in selling, general and administrative expenses on the condensed consolidated statements of income (loss).

16 | 2024 THIRD QUARTER FORM 10-Q

FINANCIAL INFORMATION

Lease right-of-use assets and lease liabilities consist of the following:

2025 FIRST QUARTER FORM 10-Q | 16

Lease right-of-use assets and lease liabilities consisted of the following:

(in thousands)

17 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 $ 307 million and $ 268 million as of November 2, 2024 and February 3, 2024, respectively.

(3) Includes $ 36 million and $ 37 million as of November 2, 2024 and February 3, 2024, 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 $ 335 million and $ 320 million as of May 3, 2025 and February 1, 2025, respectively.

(3) Includes $ 34 million and $ 35 million as of May 3, 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 5— Variable Interest Entities .

1 unchanged sentence

FINANCIAL INFORMATION

2024 THIRD QUARTER FORM 10-Q | 17

The maturities of lease liabilities are as follows as of November 2, 2024:

2025 FIRST QUARTER FORM 10-Q | 17

The maturities of lease liabilities were as follows as of May 3, 2025:

(in thousands)

4 unchanged sentences

(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 $ 816 million of legally binding payments under the non-cancellable term for leases signed but not yet commenced under our accounting policy as of November 2, 2024, of which $ 6.9 million, $ 40 million, $ 43 million, $ 46 million, $ 47 million and $ 50 million will be paid in the remainder of fiscal 2024, fiscal 2025, fiscal 2026, fiscal 2027, fiscal 2028 and fiscal 2029, respectively, and $ 583 million will be paid subsequent to fiscal 2029.

Total lease payments exclude $ 843 million of legally binding payments under the non-cancellable term for leases signed but not yet commenced under our accounting policy as of May 3, 2025, of which $ 28 million, $ 38 million, $ 47 million, $ 48 million, $ 51 million and $ 51 million will be paid in the remainder of fiscal 2025, fiscal 2026, fiscal 2027, fiscal 2028, fiscal 2029 and fiscal 2030, respectively, and $ 580 million will be paid subsequent to fiscal 2030.

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

(3) Calculated using the discount rate for each lease at lease commencement.

Supplemental information related to leases consists of the following:

NINE MONTHS ENDED

Supplemental information related to leases consisted of the following:

THREE MONTHS ENDED

Weighted-average remaining lease term (years)

4 unchanged sentences

Finance leases

18 | 2024 THIRD QUARTER FORM 10-Q

FINANCIAL INFORMATION

Other information related to leases consists of the following:

NINE MONTHS ENDED

2025 FIRST QUARTER FORM 10-Q | 18

Other information related to leases consisted of the following:

THREE MONTHS ENDED

(in thousands)

8 unchanged sentences

Finance leases

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

(1) Represents the principal portion of lease payments, partially offset by tenant allowances received subsequent to lease commencement of $ 2.4 million for the nine months ended October 28, 2023.

No such amounts were received from landlords during the nine months ended November 2, 2024.

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.

Refer to the long-lived assets accounting policy in Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates.

NOTE 9—CONVERTIBLE SENIOR NOTES

$ 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”).

As of February 3, 2024, we had $ 42 million of 2024 Notes outstanding, which were classified as convertible senior notes due 2024—net within current liabilities.

Prior to June 15, 2024 , the 2024 Notes were convertible only under the following circumstances:

(1) during any calendar quarter commencing after December 31, 2019, if, for at least 20 trading days (whether or not consecutive) during the 30 consecutive trading day period ending on the last trading day of the immediately preceding calendar quarter, the last reported sale price of our common stock on such trading day is greater than or equal to 130 % of the applicable conversion price on such trading day;

(2) during the five consecutive business day period after any ten consecutive trading day period in which, for each day of that period, the trading price per $ 1,000 principal amount of 2024 Notes for such trading day was less than 98 % of the product of the last reported sale price of our common stock and the applicable conversion rate on such trading day;

or (3) upon the occurrence of specified corporate transactions.

The first condition was satisfied from the calendar quarter ended September 30, 2020 through the calendar quarter ended March 31, 2022.

However, this condition was not met for the calendar quarter ended June 30, 2022 through the calendar quarter ended June 30, 2023, but was met for the calendar quarter ended September 30, 2023.

This condition was not met for the calendar quarters ended December 31, 2023 or March 31, 2024.

On and after June 15, 2024 , until the close of business on the second scheduled trading day immediately preceding the maturity date, holders were able to convert all or a portion of their 2024 Notes at any time, regardless of the foregoing circumstances.

FINANCIAL INFORMATION

2024 THIRD QUARTER FORM 10-Q | 19

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 are no longer outstanding as of November 2, 2024.

During the nine months ended November 2, 2024, 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 shareholders’ equity (deficit) upon settlement of the 2024 Notes.

(1) Presented net of tenant allowances received subsequent to lease commencement of $ 1.4 million in the three months ended May 3, 2025.

No such amounts were received from landlords in the three months ended May 4, 2024.

NOTE 8—CREDIT FACILITIES

5 unchanged sentences

Total credit facilities

(1) Deferred financing fees associated with the asset based credit facility as of November 2, 2024 and February 3, 2024 were $ 1.8 million and $ 2.5 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 May 3, 2025 and February 1, 2025 were $ 1.3 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.

(2) Represents the Term Loan Credit Agreement (defined below), of which outstanding amounts of $ 1,920 million and $ 1,935 million were included in term loan—net on the condensed consolidated balance sheets as of November 2, 2024 and February 3, 2024, respectively, and $ 20 million was included in other current liabilities on the condensed consolidated balance sheets as of both November 2, 2024 and February 3, 2024.

(3) Represents the outstanding balance of the Term Loan B-2 (defined below) under the Term Loan Credit Agreement, of which outstanding amounts of $ 485 million and $ 489 million were included in term loan B-2—net on the condensed consolidated balance sheets as of November 2, 2024 and February 3, 2024, respectively, and $ 5.0 million was included in other current liabilities on the condensed consolidated balance sheets as of both November 2, 2024 and February 3, 2024.

(2) Represents the Term Loan Credit Agreement (defined below), of which outstanding amounts of $ 1,910 million and $ 1,915 million were included in term loan—net on the condensed consolidated balance sheets as of May 3, 2025 and February 1, 2025, respectively, and $ 20 million was included in other current liabilities on the condensed consolidated balance sheets as of both May 3, 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 $ 483 million and $ 484 million were included in term loan B-2—net on the condensed consolidated balance sheets as of May 3, 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 May 3, 2025 and February 1, 2025.

FINANCIAL INFORMATION

2025 FIRST QUARTER FORM 10-Q | 19

Asset Based Credit Facility

2 unchanged sentences

On June 28, 2017, RHI entered into the Eleventh Amended and Restated Credit Agreement (as amended prior to July 29, 2021, the “11 th A&R Credit Agreement”) by and among RHI, Restoration Hardware Canada, Inc., certain other subsidiaries of RH named therein as borrowers or guarantors, the lenders party thereto and the ABL Agent, which amended and restated the Original Credit Agreement.

20 | 2024 THIRD QUARTER FORM 10-Q

FINANCIAL INFORMATION

On July 29, 2021, RHI entered into the Twelfth Amended and Restated Credit Agreement (as amended, the “ABL Credit Agreement”) by and among RHI, Restoration Hardware Canada, Inc., certain other subsidiaries of RH named therein as borrowers or guarantors, the lenders party thereto and the ABL Agent, which amended and restated the 11 th A&R Credit Agreement.

6 unchanged sentences

As a result, actual borrowing availability under the revolving line of credit could be less than the stated amount of the revolving line of credit (as reduced by the actual borrowings and outstanding letters of credit under the revolving line of credit).

Borrowings under the revolving line of credit (other than swing line loans, which are subject to interest at the base rate) bear interest, at the borrower’s option, at either the base rate or LIBOR subject to a 0.00 % LIBOR floor (or, in the case of the Canadian borrowings, the “BA Rate” or the “Canadian Prime Rate”, as such terms are defined in the ABL Credit Agreement, for the Canadian borrowings denominated in Canadian dollars, or the “U.S.

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

The ABL Credit Agreement was amended in December 2022 to transition from LIBOR to the Secured Overnight Financing Rate (“SOFR”).

Borrowings under the revolving line of credit (other than swing line loans, which are subject to interest at the base rate) bear interest, at the borrower’s option, at either the base rate or the Secured Overnight Financing Rate (“SOFR”) subject to a 0.00 % SOFR floor (or, in the case of the Canadian borrowings, the “BA Rate” or the “Canadian Prime Rate”, as such terms are defined in the ABL Credit Agreement, for the Canadian borrowings denominated in Canadian dollars, or the “U.S.

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.

2 unchanged sentences

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

As of November 2, 2024, RHI was in compliance with the FCCR Covenant.

As of May 3, 2025, RHI was in compliance with the FCCR Covenant.

FINANCIAL INFORMATION

2025 FIRST QUARTER FORM 10-Q | 20

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 November 2, 2024, RHI had $ 190 million in outstanding borrowings and $ 364 million of availability under the revolving line of credit, net of $ 46 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 $ 304 million as of November 2, 2024.

FINANCIAL INFORMATION

2024 THIRD QUARTER FORM 10-Q | 21

As of May 3, 2025, RHI had $ 185 million in outstanding borrowings and $ 368 million of availability under the revolving line of credit, net of $ 47 million in outstanding letters of credit.

Term Loan Credit Agreement

17 unchanged sentences

The Term Loan 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, but provides for unlimited exceptions in the case of incurring indebtedness, granting of liens and making investments, dividend payments, and payments of material junior indebtedness, subject to satisfying specified leverage ratio tests.

FINANCIAL INFORMATION

2025 FIRST QUARTER FORM 10-Q | 21

The Term Loan Credit Agreement does not contain a financial maintenance covenant.

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.

22 | 2024 THIRD QUARTER FORM 10-Q

FINANCIAL INFORMATION

NOTE 9—FAIR VALUE MEASUREMENTS

2 unchanged sentences

The estimated fair value of the asset based credit facility approximates cost as the interest rate associated with the facility is variable and resets frequently (Level 2).

The estimated fair value and carrying value of the 2024 Notes, the Term Loan Credit Agreement and the real estate loans were as follows:

The estimated fair value and carrying value of the Term Loan Credit Agreement and the real estate loans were as follows:

(in thousands)

Convertible senior notes due 2024

Term loan B-2

Real estate loans

(1) The principal carrying value of the 2024 Notes excludes the discounts upon original issuance, discounts and commissions payable to the initial purchasers and third-party offering costs, as applicable.

(1) The principal carrying values of the Term Loan B and Term Loan B-2 represent the outstanding amount under each class and exclude discounts upon original issuance and third-party offering costs.

The real estate loans represent the outstanding principal balance and exclude debt issuance costs.

The fair value of the 2024 Notes was determined based on inputs that are observable in the market or that could be derived from, or corroborated with, observable market data, including the trading price of our convertible notes, when available, our stock price and interest rates based on similar debt issued by parties with credit ratings similar to ours (Level 2).

As of November 2, 2024, the fair values of the Term Loan B and Term Loan B-2 were derived from observable bid prices (Level 1).

As of February 3, 2024, the fair values of the Term Loan B and Term Loan B-2 were derived from discounted cash flows using risk-adjusted rates (Level 2).

The fair values of the Term Loan B and Term Loan B-2 were derived from observable bid prices (Level 1).

The fair values of the real estate loans were derived from discounted cash flows using risk-adjusted rates (Level 2).

2 unchanged sentences

THREE MONTHS ENDED

NINE MONTHS ENDED

(dollars in thousands)

1 unchanged sentence

Effective tax rate

The decrease in our effective tax rates for the three and nine months ended November 2, 2024 compared to the three and nine months ended October 28, 2023 is primarily attributable to reporting net income in the current year and the impact of higher net excess tax benefits from stock-based compensation in fiscal 2024.

The effective tax rate for the three months ended October 28, 2023 was impacted by reporting a net loss in the period, as well as tax benefits from the Federal Rehabilitation Tax Credit related to the San Francisco Design Gallery.

The effective tax rate for the nine months ended October 28, 2023 was also impacted by lower net excess tax benefits from stock-based compensation.

The decrease in our effective tax rate for the three months ended May 3, 2025 compared to the three months ended May 4, 2024 is primarily attributable to pre-tax net income in the current fiscal period compared to pre-tax net loss in the prior fiscal period.

The three months ended May 3, 2025 was also impacted by a net tax shortfall from stock-based compensation as compared to a net tax benefit in the three months ended May 4, 2024.

FINANCIAL INFORMATION

2024 THIRD QUARTER FORM 10-Q | 23

As of November 2, 2024, we had $ 3.1 million of unrecognized tax benefits, of which $ 2.5 million would reduce income tax expense and the effective tax rate, if recognized.

The remaining unrecognized tax benefits would offset other deferred tax assets, if recognized.

As of November 2, 2024, we had $ 0.4 million of exposures related to unrecognized tax benefits that are expected to decrease in the next 12 months.

In October 2017, we filed an amended federal tax return claiming a $ 5.4 million refund, however, no income tax benefit was recorded at the time due to the technical nature and amount of the refund claim.

As of the first quarter of fiscal 2024, we are no longer appealing this refund claim and have reversed the receivable and related reserve.

2025 FIRST QUARTER FORM 10-Q | 22

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 nine months ended November 2, 2024.

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

NOTE 11—NET INCOME (LOSS) PER SHARE

The weighted-average shares used for net income (loss) per share are presented in the table below.

The weighted-average shares used for net income (loss) per share were as follows:

THREE MONTHS ENDED

NINE MONTHS ENDED

Weighted-average shares—basic

Effect of dilutive stock-based awards

Effect of dilutive convertible senior notes (2)

Weighted-average shares—diluted

(1) As we reported a net loss for the three months ended October 28, 2023, the weighted-average shares outstanding for basic and diluted are the same for the corresponding period.

(2) The dilutive effect of the 2023 Notes and 2024 Notes is calculated under the if-converted method, which assumes share settlement of the entire convertible debt instrument.

The 2023 Notes and 2024 Notes matured in June 2023 and September 2024, respectively, and did not have an impact on our diluted share count post-maturity.

Refer to Note 9— Convertible Senior Notes .

(1) As we reported a net loss for the three months ended May 4, 2024, the weighted-average shares outstanding for basic and diluted are the same for the period.

The following number of options and restricted stock units, as well as shares issuable under convertible senior notes, were excluded from the calculation of diluted net income (loss) per share because their inclusion would have been anti-dilutive:

THREE MONTHS ENDED

NINE MONTHS ENDED

Restricted stock units

Convertible senior notes

24 | 2024 THIRD QUARTER FORM 10-Q

FINANCIAL INFORMATION

NOTE 14—SHARE REPURCHASE PROGRAM AND SHARE RETIREMENT

Share Repurchase Program

In 2018, our Board of Directors authorized a share repurchase program.

On June 2, 2022, the Board of Directors authorized an additional $ 2,000 million for the purchase of shares of our outstanding common stock, increasing the total authorized size of the share repurchase program to $ 2,450 million (the “Share Repurchase Program”).

We did no t repurchase any shares of our common stock under the Share Repurchase Program during the three or nine months ended November 2, 2024.

As of November 2, 2024, $ 201 million remains available for future share repurchases under this program.

In the nine months ended October 28, 2023, we repurchased 3,887,965 shares of our common stock under the Share Repurchase Program at an average price of $ 321.28 per share, for an aggregate repurchase amount of approximately $ 1,261 million, inclusive of $ 12 million of excise taxes.

The excise tax liability of $ 12 million, which was included in accounts payable and accrued expenses on the condensed consolidated balance sheets as of February 3, 2024, was paid in October 2024 and is no longer outstanding as of November 2, 2024.

Share Retirement

In the nine months ended October 28, 2023, we retired 3,887,965 shares of common stock related to shares we repurchased under the Share Repurchase Program.

As a result of this retirement, we reclassified a total of $ 10 million and $ 1,251 million from treasury stock to additional paid-in capital and retained earnings (accumulated deficit) , respectively, on the condensed consolidated balance sheets and condensed consolidated statements of stockholders’ equity (deficit) as of and for the nine months ended October 28, 2023.

Refer to the condensed consolidated statements of stockholders’ equity (deficit) for shares repurchased and subsequently retired in the nine months ended October 28, 2023.

NOTE 12—STOCK-BASED COMPENSATION

5 unchanged sentences

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 November 2, 2024, there were a total of 2,180,601 shares issuable under the 2023 Stock Incentive Plan.

FINANCIAL INFORMATION

2025 FIRST QUARTER FORM 10-Q | 23

As of May 3, 2025, there were a total of 1,968,676 shares issuable under the 2023 Stock Incentive Plan.

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

1 unchanged sentence

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

Stock Options Under the Plans

A summary of options outstanding, vested or expected to vest, and exercisable as of November 2, 2024 was as follows:

Equity Awards Under the Plans

Options outstanding, vested or expected to vest, and exercisable as of May 3, 2025 were as follows:

REMAINING TERM

(in millions)

(in thousands)

Options outstanding

1 unchanged sentence

Options exercisable

FINANCIAL INFORMATION

2024 THIRD QUARTER FORM 10-Q | 25

Stock-based compensation expense, which is included in selling, general and administrative expenses on the condensed consolidated statements of income (loss), was as follows:

THREE MONTHS ENDED

NINE MONTHS ENDED

(in thousands)

2 unchanged sentences

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 will result in aggregate non-cash stock compensation expense of $ 174 million.

Amounts presented include $ 0.9 million and $ 2.0 million in the three months ended November 2, 2024 and October 28, 2023, respectively, and $ 3.7 million and $ 7.5 million in the nine months ended November 2, 2024 and October 28, 2023, respectively, related to Mr.

Friedman’s option.

The option resulted in aggregate non-cash stock compensation expense of $ 174 million, of which $ 0.9 million and $ 1.9 million was recognized during the three months ended May 3, 2025 and May 4, 2024, respectively.

As of May 3, 2025, compensation expense for this award has been fully recognized.

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

As of November 2, 2024, the total unrecognized compensation expense and weighted average remaining term was as follows:

As of May 3, 2025, the total unrecognized compensation expense and weighted average remaining term of unvested awards were as follows:

REMAINING TERM

2 unchanged sentences

Unvested restricted stock and restricted stock units

(1) Excludes the remaining unrecognized compensation expense of $ 1.7 million related to the fully vested option grant made to Mr.

Friedman in October 2020, which will be recognized on an accelerated basis through May 2025.

NOTE 13—COMMITMENTS AND CONTINGENCIES

We had no material off balance sheet commitments as of November 2, 2024.

We had no material off-balance sheet commitments as of May 3, 2025.

FINANCIAL INFORMATION

2025 FIRST QUARTER FORM 10-Q | 24

Contingencies

8 unchanged sentences

Accordingly, the ultimate costs to resolve litigation, including class action cases, may be substantially higher or lower than our estimates.

26 | 2024 THIRD QUARTER FORM 10-Q

FINANCIAL INFORMATION

With respect to such contingencies, we review the need for any loss contingency reserves and establish reserves when, in the opinion of our senior leadership team, it is probable that a matter would result in liability, and the amount of loss, if any, can be reasonably estimated.

15 unchanged sentences

The RH Segment and Waterworks operating segments (the “retail operating segments”) include all sales channels accessed by our customers, including sales through retail locations and outlets, including hospitality, websites, Sourcebooks, and the Trade and Contract channels.

The Real Estate segment represents operations associated with certain of our equity method investments and consolidated variable interest entities that are non-wholly-owned subsidiaries and have operations that are not directly related to RH’s operations.

The Real Estate segment represents operations associated with certain of our equity method investments and consolidated VIEs that have operations, which are not directly related to the activities of the retail operating segments.

FINANCIAL INFORMATION

2025 FIRST QUARTER FORM 10-Q | 25

The retail operating segments are strategic business units that offer products for the home furnishings customer.

1 unchanged sentence

Segment Information

We use operating income to evaluate segment profitability for the retail operating segments and to allocate resources.

Operating income is defined as net income (loss) before interest expense—net, other expense—net, income tax expense (benefit) and our share of equity method investments loss—net.

Segment operating income excludes (i) asset impairments, (ii) legal settlements, (iii) non-cash compensation amortization related to an option grant made to Mr.

Friedman in October 2020, (iv) severance costs associated with a reorganization and (v) costs associated with product recalls.

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

The CODM uses segment adjusted operating income to evaluate segment profitability for the retail operating segments and to allocate resources and analyze variances of actual performance to our forecasts when making decisions.

Operating income is defined as net income (loss) before interest expense—net, other (income) expense—net, income tax expense (benefit) and our share of equity method investments (income) loss—net.

Segment adjusted operating income excludes (i) non-cash compensation amortization related to an option grant made to Mr.

Friedman in October 2020 and (ii) legal settlements.

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.

FINANCIAL INFORMATION

2024 THIRD QUARTER FORM 10-Q | 27

The following table presents segment operating income and a reconciliation to income from operations and income (loss) before income taxes and equity method investments :

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:

THREE MONTHS ENDED

NINE MONTHS ENDED

(in thousands)

Operating income:

Total segment operating income

Asset impairments

Cost of goods sold

Advertising expense

Other segment expenses (2)

Segment adjusted operating income (1)

Non-cash compensation

Legal settlements—net

Reorganization related costs

Recall accrual

Income from operations

Operating income

Interest expense—net

Other expense—net

Other (income) expense—net

Income (loss) before income taxes and equity method investments

The following tables present selected statements of income metrics for our segments, including disaggregated net revenues:

(1) All intercompany transactions are immaterial and have been eliminated.

(2) Other segment expenses primarily include compensation and occupancy costs classified as selling, general and administrative expenses, and other general and administrative expenses.

In the three months ended May 3, 2025 and May 4, 2024, the Real Estate segment share of equity method investments, which is the measure of segment profitability reviewed by the CODM to evaluate performance internally for the Real Estate segment, was income of $ 8.3 million and loss of $ 2.8 million, respectively.

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

FINANCIAL INFORMATION

2025 FIRST QUARTER FORM 10-Q | 26

Depreciation and amortization for our segments was as follows:

THREE MONTHS ENDED

(in thousands)

Depreciation and amortization

NINE MONTHS ENDED

(in thousands)

Depreciation and amortization

In the three months ended November 2, 2024 and October 28, 2023, the Real Estate segment share of equity method investments loss was $ 1.8 million and $ 2.7 million, respectively.

In the nine months ended November 2, 2024 and October 28, 2023, the Real Estate segment share of equity method investments loss was $ 8.5 million and $ 7.7 million, respectively.

The Waterworks segment share of equity method investments loss—net was immaterial in all fiscal periods presented.

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FINANCIAL INFORMATION

The following table presents selected balance sheet metrics for our segments:

Real Estate (1)

Total depreciation and amortization

(1) There is no expense for the Real Estate segment since all assets represent construction in progress.

Balance sheet information for our segments consisted of the following:

(in thousands)

3 unchanged sentences

(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, whereby we hold a 50 percent membership interest in one entity and an approximately 25 percent membership interest in the other, and we are not the primary beneficiary of these VIEs.

We sell furniture and non-furniture products.

Furniture includes both indoor and outdoor furniture.

Non-furniture includes lighting, textiles, fittings, fixtures, surfaces, accessories and home décor, as well as our hospitality operations.

Net revenues in each category were as follows:

THREE MONTHS ENDED

NINE MONTHS ENDED

(in thousands)

Non-furniture

Total net revenues

(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 May 3, 2025.

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

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

As of November 2, 2024, we operated four retail locations in Canada, two retail locations and one outlet in the United Kingdom, two retail locations in Germany, one retail location in Belgium and one retail location in Spain.

Geographic revenues generated outside of the United States were not material in any fiscal period presented.

As of May 3, 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.

FINANCIAL INFORMATION

2024 THIRD QUARTER FORM 10-Q | 29

2025 FIRST QUARTER FORM 10-Q | 27

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