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Item 1A. Risk Factors

2024-02-27 compared with 2023-02-23 · 338 added, 375 removed, 628 unchanged (53% of the section changed)

Investing in our Class A common stock involves certain risks.

You should carefully consider the following risk factors, in addition to the other information contained in this report, including the section of this report captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations”

and our consolidated financial statements and related notes thereto.

If any of the events described in the following risk factors or the risks described elsewhere in this report occurs, our business, operating results and financial condition could be seriously harmed.

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Economic downturns and other macroeconomic conditions or trends may adversely affect consumer discretionary spending and our business, operating results and financial condition.

Our business and operating results are subject to global economic conditions and their impact on consumer discretionary spending.

Some of the factors that may negatively influence consumer spending include COVID-19 outbreaks and resulting restrictions, war, high levels of unemployment, higher consumer debt levels, reductions in net worth, declines in asset values and related market uncertainty, home foreclosures and reductions in home values, increasing inflationary pressures, fluctuating interest rates and credit availability, fluctuating currency exchange rates, fluctuating fuel and other energy costs, fluctuating commodity prices and general uncertainty regarding the overall future political and economic environment and social unrest.

Our business and operating results are subject to macroeconomic conditions and trends and their direct and indirect impacts on consumer discretionary spending in the markets in which we operate.

Some of the factors and events that have negatively influenced consumer spending, and may do so in the future, include inflationary pressures, fluctuating interest rates and credit availability, public health crises, such as the COVID-19 pandemic, high levels of unemployment, high consumer debt levels, reductions in net worth, declines in asset values and related market uncertainty, reductions in home values and home foreclosures, resumption of student loan payments, adverse developments affecting the financial services industry, labor strikes, fluctuating currency exchange rates, fluctuating fuel and other energy costs, fluctuating commodity prices, wars and conflicts in Ukraine/Russia, Israel/Gaza and the Middle East, other geopolitical tensions, general uncertainty regarding the overall future political and economic environment, and social unrest.

Economic conditions in certain regions may also be affected by natural disasters, such as earthquakes, hurricanes, tropical storms and wildfires.

Consumer purchases of discretionary items, including the merchandise that we offer, generally decline during periods of economic uncertainty when disposable income is reduced or when there is a reduction in consumer confidence.

Adverse economic changes reduce consumer confidence and have, and in the future could, negatively affect our operating results.

In challenging and uncertain economic environments, we cannot predict when macroeconomic

uncertainty may arise, whether or when such circumstances may improve or worsen or what impact such circumstances could have on our business.

Furthermore, economic downturns could lead to reduced liquidity, decreases in the market price of our securities and decreases in the fair market value of our financial or other assets, any of which could have a material adverse effect on our business, operating results and financial condition.

Adverse economic changes reduce consumer confidence and could negatively affect our operating results.

We cannot predict when macroeconomic uncertainty may arise, whether or when such circumstances may improve or worsen or what impact such circumstances could have on our business.

Furthermore, economic downturns could lead to reduced liquidity, decreases in the market price of our Class A common stock and decreases in the fair market value of our financial or other assets, any of which could have a material adverse effect on our business, operating results and financial condition.

If we fail to effectively manage our growth, our business, financial condition and operating results could be harmed.

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To attract top talent, we offer, and expect to continue to offer, competitive compensation and benefits packages before we can validate the productivity of new employees.

We may also elect to increase compensation levels to remain competitive in attracting and retaining talented employees.

We may also elect to increase compensation levels to remain competitive in attracting and retaining

talented employees.

We may not be able to hire new employees quickly enough to meet our needs.

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Our business requires us to manage a large volume of inventory effectively.

We add new apparel, footwear, accessories and beauty and home products to our sites every week and we depend on our forecasts of demand for and popularity of various products to make purchase decisions and to manage our inventory.

We add new apparel, footwear, beauty, accessories and home products to our sites every week and we depend on our forecasts of demand for and popularity of various products to make purchase decisions and to manage our inventory.

Demand for products, however, is difficult to forecast and can change significantly between the time inventory is ordered and the date of sale, resulting in higher inventory levels that may adversely impact our operating results, or insufficient inventory that may adversely impact the conversion of demand for our merchandise.

Demand may be affected by macroeconomic factors such as inflation, consumer confidence and events like the COVID-19 pandemic, seasonality, new product launches, rapid changes in product cycles and pricing, product defects, promotions, changes in consumer spending patterns, changes in consumer tastes with respect to our products and other factors, political instability and social unrest, and our consumers may not purchase products in the quantities that we expect.

Demand may be affected by macroeconomic factors such as high inflation and low consumer confidence, events such as the COVID-19 pandemic and wars, seasonality, new product launches, rapid changes in product cycles and pricing, product defects, promotions, changes in consumer spending patterns, changes in consumer tastes with respect to our products, and various other factors, such as political instability and social unrest, and our consumers may not purchase products in the quantities that we expect.

Seasonality in our business has not historically followed that of traditional retailers which typically experience concentration of net sales in the fourth quarter in connection with the holidays.

We believe our historical results have been impacted by a pattern of increased sales leading up to #REVOLVEfestival in April and during May and June, which results in peak sales during the second quarter of each year.

We have traditionally experienced seasonally slower activity during the first quarter.

If we are unable to manage inventory at the right levels and with the appropriate assortment during these seasonal fluctuations or if the seasonality of our business changes, the conversion of consumer demand may be adversely impacted.

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In addition, our ability to meet customer demand may be negatively impacted by a shortage in inventory or appropriate assortment due to reduced inventory purchases or disruptions in the supply chain.

Historically, a majority of our owned brand products and a substantial portion of the products we

source from third parties have been manufactured in China.

The COVID-19 pandemic and other factors and events have impacted, and will continue to impact, our supply chain and may delay or prevent and may also increase the cost to manufacture or transport product that is sourced in China.

Pressures continued at various times throughout 2022, with lockdowns in parts of China resulting in further disruptions to production, shipping and other commercial activity.

Other factors, such as a worsening of US-China relations, could also impact our supply chain and negatively impact the cost to source from China.

Historically, a majority of our owned brand products and a substantial portion of the products we source from third parties have been manufactured in China.

Various factors and events outside of our control impact our supply chain and may delay or prevent our manufacturing and may also increase the cost to manufacture or transport product that is sourced in China.

In addition, the worsening of U.S.-China relations could also impact our supply chain and negatively impact the cost to source from China.

While we seek to further diversify our supply chain and sourcing, we may not be able to diversify in a cost-effective manner, or at all, which may materially and adversely affect our business, financial condition and operating results.

In addition, the supply chain worldwide has been impacted by COVID-19, Russia’s war against Ukraine, labor shortages and other factors and therefore, diversification of the supply chain and sourcing may not yield the targeted benefits.

In addition, the supply chain worldwide has been negatively impacted by events such as wars and geopolitical tensions, the COVID-19 pandemic, labor shortages and other factors, and diversification of the supply chain and sourcing therefore may not yield the targeted benefits.

Merchandise returns could harm our business.

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We generally accept merchandise returns for full refund if returned within 60 days of the original purchase date and merchandise may be exchanged up to 90 days from the original purchase date.

Due to our liberal return policy and consumer behavior, we may experience heightened levels of returns such as those that we experienced in the second, third and fourth quarters of 2022, which have and may continue to negatively impact our operating results and financial position.

We have and may continue to experience increased levels of returns due to changes in consumer shopping behavior and discretionary spending as a result of changes in macroeconomic conditions or consumer confidence in future economic conditions, including levels of unemployment, the size and timing of federal stimulus programs, salaries and wage rates, increasing inflation, rising interest rates, recession and fears of recession, housing costs, energy and fuel costs, income tax rates and the timing of tax refunds, consumer perceptions of personal well-being and security, availability of consumer credit and consumer debt levels.

Consumer confidence, shopping behavior and spending have been and may continue to be negatively impacted by many factors beyond our control, including the COVID-19 pandemic and related economic impacts, supply chain disruptions, inflation, increasing interest rates and Russia’s war against Ukraine, which may adversely affect our business, operating results and financial condition.

Consumer spending habits for the merchandise we sell are affected by many factors beyond our control.

Currently, the repercussions from the ongoing COVID-19 pandemic present significant risks and uncertainty.

There is significant uncertainty over potential changes in consumer behavior and shopping patterns as the pandemic continues and as different regions experience new surges.

Pressures continued at various times throughout 2022, with lockdowns in parts of China resulting in further disruptions to production, shipping and other commercial activity.

Russia’s war against Ukraine has resulted in the imposition of unprecedented, potentially prolonged, economic sanctions on Russia and other responses from the United States and other countries.

This has also resulted in significant macroeconomic consequences, risks and uncertainties, including increased fuel and energy prices and depressed financial markets.

Other factors affecting consumers’

disposable income and confidence in future economic conditions include levels of unemployment, the size and timing of federal stimulus programs, salaries and wage rates, prevailing economic conditions, increasing inflation, rising interest rates, recession and fears of recession, housing costs, energy and fuel costs, income tax rates and the timing of tax refunds, consumer perceptions of personal well-being and security, availability of consumer credit and consumer debt levels.

The COVID-19 pandemic, Russia’s war against Ukraine and other potential, adverse developments in any of these areas, could lead to a reduction in the demand for our merchandise, increase our cost of goods, freight cost and payroll costs, decrease our inventory turnover, cause greater markdowns and otherwise adversely affect our business, operating results and financial condition.

The COVID-19 pandemic has materially adversely affected, and may continue to adversely affect, our business, financial position, results of operations and growth prospects.

The COVID-19 pandemic has had, and may continue to have, severe negative repercussions across local, state and national economies, financial markets and our industry.

The COVID-19 pandemic has subjected us to many risks, including the impact from:

business restrictions and social distancing mandates, which have caused us to adjust how we operate our business;

the cancellation of large, in-person brand marketing events in 2020 and 2021, including the #REVOLVEfestival, which have historically driven customer acquisition and demand for our merchandise, and the relatively increased expense and lower return from hosting smaller in-person events;

changes in consumer behavior, confidence and discretionary spending;

increased reliance on remote work arrangements;

supply chain disruptions;

increase in the cost of goods due to an increase in the cost of materials;

positive COVID-19 cases at our facilities;

a global slowdown and profound economic uncertainty.

In addition, the majority of our corporate employees continue to work remotely most days of the work week.

It is possible that continued widespread remote work arrangements may have a negative impact on our operations, the execution of our business plans, the productivity and availability of key personnel and other employees necessary to conduct our business, and on third-party service providers who perform critical services for us, or otherwise cause operational failures due to changes in our normal business practices.

If a natural disaster, power outage, connectivity issue, or other event occurred that impacted our employees’

ability to work remotely, it may be difficult or, in certain cases, impossible, for us to continue our business for a substantial period of time.

The increase in remote working may also result in privacy, data security, and fraud risks, and our understanding of applicable legal and regulatory requirements, as well as the latest guidance from regulatory authorities in connection with the COVID-19 pandemic, may be subject to legal or regulatory challenge, particularly as regulatory guidance evolves in response to future developments.

The extent of the impact of the COVID-19 pandemic on our operational and financial performance will depend on future developments, including the duration, spread and severity of the pandemic, the availability, effectiveness and uptake of vaccines for COVID-19, the emergence of new variants of COVID-19 and whether existing vaccines are effective over the long term and with respect to such variants, the actions to contain the disease or mitigate its impact, and the duration, timing and severity of the impact on customer behavior, including any recession resulting from the COVID-19 pandemic, all of which are unpredictable.

An extended period of economic disruption as a result of the COVID-19 pandemic would have a material negative impact on our business, financial position, results of operations and growth prospects.

The COVID-19 pandemic may also intensify the risks described in the other risk factors disclosed in this report.

Due to our liberal return policy and consumer behavior, we have experienced and

may continue to experience heightened levels of returns, which have and may continue to negatively impact our operating results and financial position.

We have also experienced and may continue to experience increased levels of returns due to changes in consumer shopping behavior and discretionary spending as a result of changes in macroeconomic conditions or consumer confidence, including levels of unemployment, the size and timing of federal stimulus programs, salaries and wage rates, high inflation, high interest rates, recession or fears of recession, housing costs, energy and fuel costs, the resumption of student loan repayments, income tax rates and the timing of tax refunds, consumer perceptions of personal well-being and security, availability of consumer credit and consumer debt levels.

If we are unable to anticipate and respond to changing customer preferences and shifts in fashion and industry trends in a timely and cost-effective manner, our business, financial condition and operating results could be harmed.

The retail industry is driven in part by fashion and beauty trends, which may shift quickly.

The retail apparel industry is driven in part by fashion and beauty trends, which may shift quickly.

Our continued success depends on our ability to anticipate, gauge and react in a timely and cost-effective manner to changes in consumer preferences for products, consumer attitudes toward our industry and brand and where and how consumers shop for those products.

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Our failure to anticipate, identify or react appropriately or in a timely manner to changes in customer preferences, tastes and trends or economic conditions, could lead to, among other things, missed opportunities, excess inventory or inventory shortages, markdowns, valuation adjustments, liquidations and write-offs, any of which could negatively impact our profitability and have a material adverse effect on our business, financial condition and operating results.

For example, as consumer demand trends improved in 2021 and through the first quarter of 2022, we invested heavily in inventory to meet the robust demand.

However, during the remainder of 2022, consumer demand trended down significantly, resulting in an increase in our inventory balance.

We continue to balance our inventory levels based on shifts in demand, but we may not be able to respond quickly enough to adjust our inventory position accordingly, which may have an adverse impact on our operating results.

As part of our ongoing business strategy, we expect we will need to continue to introduce new products in our traditional product categories of apparel, footwear, accessories and beauty products, while also expanding our product launches into adjacent categories in which we may have little to no operating experience.

As part of our ongoing business strategy, we expect we will need to continue to introduce new products in our traditional product categories of apparel, footwear, beauty, accessories and home products, while also expanding our product launches into adjacent categories in which we may have little to no operating experience.

The success of product launches in adjacent categories could be hampered by our relative inexperience operating in such categories, the strength of our competitors or any of the other risks referred to above.

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Our business depends on our ability to maintain a strong community of brands, engaged customers and influencers.

We may not be able to maintain and enhance our existing brand community if we receive customer or influencer complaints, negative publicity or otherwise fail to live up to consumers’

expectations, which could materially adversely affect our business, operating results and growth prospects.

Over the course of 2022, we offered over 900 emerging and established brands through REVOLVE, including 31 brands developed and owned by us, which we refer to as owned brands, and over 400 brands through FWRD.

We may not be able to maintain and enhance our existing brand community if we receive customer or influencer

complaints, negative publicity or otherwise fail to live up to consumers’ expectations, which could materially adversely affect our business, operating results and growth prospects.

Over the course of 2023, we offered over 900 emerging and established brands through REVOLVE, including 25 owned brands, and over 400 brands through FWRD.

Our ability to identify new brands and maintain and enhance our relationships with our existing brands is critical to expanding our base of customers and retaining our existing customers.

Third-party brands, particularly in the luxury sector, are increasingly limiting wholesale distribution, shifting to selling directly to the consumer.

We recently launched a handbag buyback program on FWRD, extending the life cycle of luxury handbags sold on FWRD.

In 2022, we launched a handbag buyback program on FWRD, extending the life cycle of luxury handbags sold on FWRD.

If our third-party brand partners perceive this program negatively, our relationships may be damaged and our ability to obtain future products from our brand partners may be limited.

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If we are unable to maintain an assortment of brands and styles that resonates with our customer, our operating results and brand could be negatively impacted.

A significant portion of our customers’

experience depends on third parties outside of our control, including vendors, suppliers and logistics providers such as UPS, FedEx and DHL.

If these third parties do not meet our or our customers’

expectations, our business may suffer irreparable damage.

A significant portion of our customers’ experience depends on third parties outside of our control, including vendors, suppliers and logistics providers such as UPS, FedEx and DHL.

If these third parties do not meet our or our customers’ expectations, our business may suffer irreparable damage.

In addition, macroeconomic events have negatively impacted and may continue to impact the global supply chain.

If our third-party service providers are negatively impacted and they are not able to meet our or our customers’

expectations or if rates increase, our operating

results and our brand may be negatively impacted.

If our third-party service providers are negatively impacted and they are not able to meet our or our customers’ expectations or if rates increase, our operating results and our brand may be negatively impacted.

In addition, maintaining and enhancing relationships with third-party brands may require us to make substantial investments and these investments may not be successful.

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Maintaining and enhancing our brands will depend largely on our ability to provide high quality products to our customers and a reliable, trustworthy and profitable sales channel to our vendors, which we may not do successfully.

Customer and influencer complaints or negative publicity about our sites, products, product delivery times, customer data handling and security practices, customer support, brand marketing events or other actions taken by us, especially on blogs, social media websites and our sites, could rapidly and severely diminish consumer use of our sites and consumer and supplier confidence in us and result in harm to our brands.

Customer or influencer complaints or negative publicity about our sites, products, product delivery times, customer data handling and security practices, customer support, brand marketing events or other actions taken by us, especially on blogs, social media websites and our sites, could rapidly and severely diminish consumer use of our sites and consumer and supplier confidence in us and result in harm to our brands.

We believe that much of the growth in our customer base to date has originated from social media and our influencer-driven marketing strategy.

As a result of COVID-19-related travel restrictions and social distancing measures, our ability to engage with consumers through activations such as #REVOLVEfestival, #REVOLVEaroundtheworld and other large scale in-person activities that we have used to acquire customers and drive sales were significantly reduced in 2020 and certain periods during 2021.

With the easing of restrictions, we have been able to host larger scale in-person events such as #REVOLVEfestival and the REVOLVE Gallery.

However, it is possible that these events and events like them may be less impactful in the future and our ability to conduct in-person events is uncertain.

If our shifts in marketing to address potential restrictions and changes in consumer behavior and preferences are not effective, our operating results will be adversely affected.

Over the long term, if we are not able to develop and maintain positive relationships with our large network of influencers, our ability to promote and maintain awareness of our sites and brands and leverage social media platforms to drive visits to our sites may be adversely affected.

Use of social media and influencers may materially and adversely affect our reputation or subject us to tax obligations, fines or other penalties.

Use of social media and influencers may materially and adversely affect our reputation or subject us to regulatory and tax obligations, fines or other penalties.

We use third-party social media platforms as, among other things, marketing tools.

For example, we maintain Instagram, Facebook, TikTok, Pinterest, YouTube and Twitter accounts.

For example, we maintain accounts on Instagram, Facebook, TikTok, Pinterest, YouTube and X (formerly Twitter).

We also maintain relationships with thousands of social media influencers and engage in sponsorship initiatives.

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In addition, social media platforms we use have and may continue to change their policies or algorithms, leading to shifts in the level of video and recommended content, which may impact our ability to fully optimize such platforms.

Furthermore, as laws and regulations and public opinion rapidly evolve to govern the use of social media platforms, our ability to use certain platforms, including TikTok in particular, as marketing tools may become limited or restricted, which could adversely impact our business and operating results.

Furthermore, as laws and regulations and public opinion rapidly evolve to govern the use of social media platforms, our ability to use certain platforms, including TikTok in particular, as marketing tools may become limited, restricted or more expensive or complicated, which could adversely impact our business and operating results.

The failure by us, our employees, our network of social media influencers, our sponsors or third parties acting at our direction to abide by applicable laws and regulations in the use of social media platforms or otherwise, including intellectual property laws and tax reporting and compliance requirements, could subject us to regulatory investigations, class action lawsuits, liability, taxes, fines or other penalties and have a material adverse effect on our business, financial condition and operating results.

In addition, an increase in the use of social media for product promotion and marketing may increase the risk that such content could contain problematic product or marketing claims in violation of applicable regulations.

For example, in some cases, the FTC has sought enforcement action where an endorsement has failed to clearly and conspicuously disclose a financial relationship or material connection between an influencer and an advertiser.

For example, in some cases, the Federal Trade Commission, or the FTC, has sought enforcement action where an endorsement has failed to clearly and conspicuously disclose a financial relationship or material connection between an influencer and an advertiser.

We do not prescribe what our influencers post and if we were held responsible for the content of their posts or their actions, we could be fined or forced to alter our practices, which could have an adverse impact on our business.

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Influencers with whom we maintain relationships could engage in behavior or use their platforms to communicate directly with our customers in a manner that reflects poorly on our brand and may be attributed to us or otherwise adversely affect us.

It is not possible to prevent such behavior and the precautions we take to detect this activity may not be effective in

It is not possible to prevent such behavior and the precautions we take to detect this activity may not be effective in all cases.

Our target consumers often value readily available information and often act on such information without further investigation and without regard to its accuracy.

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Our success depends on our ability to acquire customers in a cost-effective manner.

In order to expand our customer base, we must appeal to and acquire customers who have historically used other means of commerce in shopping for apparel and may prefer alternatives to our offerings, such as traditional brick-and-mortar retailers and the websites of our competitors.

We have made significant investments related to customer acquisition and expect to continue to invest significant amounts to acquire additional customers.

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however, if competition continues to increase, it may impact our operating results.

We also seek to engage with our customers and build awareness of our brands through sponsoring unique events and experiences such as #REVOLVEfestival, #REVOLVEaroundtheworld and the REVOLVE Gallery, as well as short-term pop-up retail experiences.

We also seek to engage with our customers and build awareness of our brands through sponsoring unique events and experiences, as well as short-term pop-up retail experiences.

Our marketing initiatives have and may continue to become increasingly expensive as competition increases and generating a meaningful return on those initiatives may be difficult.

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We also use paid and non-paid advertising.

We acquire and retain customers through paid search and product listing ads, affiliate marketing, paid social media marketing, retargeting, personalized email marketing and mobile “push”

communications through our mobile apps.

We acquire and retain customers through paid search and product listing ads, affiliate marketing, paid social media marketing, retargeting, personalized email marketing and mobile “push” communications through our mobile apps.

If we are unable to cost-effectively drive traffic to our sites, our ability to acquire new customers and our financial condition would suffer.

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When these third parties increase their rates or add incremental surcharges, it increases our costs.

If these third parties

continue to increase their rates and add surcharges, and we do not seek to pass them on to our customers, our financial results could be materially adversely impacted.

If these third parties continue to increase their rates and add surcharges, and we do not seek to pass them on to our customers, our financial results could be materially adversely impacted.

If we fail to retain existing customers, or fail to maintain average order value levels, we may not be able to maintain our revenue base and margins, which would have a material adverse effect on our business and operating results.

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We may not be able to pass increased prices on to customers, which could adversely affect our operating results.

As a result of supply chain challenges due to a number of factors, including the COVID-19 pandemic, Russia’s war against Ukraine, lockdowns in China, port closures and labor shortages, we have experienced delays in the manufacturing and delivery of goods to us.

As a result of supply chain challenges caused by a number of factors and events, such as the COVID-19 pandemic, wars and geopolitical tensions in Ukraine/Russia, Israel/Gaza and the Middle East, lockdowns in China, port closures, strikes and labor shortages, we have experienced or may in the future experience delays in the manufacturing and delivery of goods to us.

In the event of an extended and significant disruption in the supply of the fabrics or raw materials used in the manufacture of the merchandise we offer, we and the vendors that we work with might not be able to locate alternative suppliers of materials of comparable quality at the right time and at an acceptable price.

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We use multiple third-party suppliers and manufacturers based primarily in China and, to a lesser extent, the United States and other countries, including India, to source and manufacture all of our owned brand products.

COVID-19 outbreaks in key regions have led to and may continue to lead to the temporary closure and reduced capacity of our manufacturing partners for a period of time, which results in delayed delivery of product to us.

Pressures continued at various times throughout 2022, with lockdowns in parts of China resulting in further disruptions to production, shipping and other commercial activity.

Other factors, such as a worsening of US-China relations, could also impact our supply chain and negatively impact the cost to source from China.

Public health crises, such as the COVID-19 pandemic, have in the past

led to, and may in the future lead to, the temporary closure and reduced capacity of our manufacturing partners for a period of time, which results in delayed delivery of product to us.

In addition, the worsening of U.S.-China relations have also negatively impacted our supply chain and our cost to source from China.

While we have maintained long-standing relationships with many of our largest suppliers, we engage our third-party suppliers and manufacturers on a purchase order basis and are not party to long-term contracts with any of them.

The ability of these third parties to supply and manufacture our products may be affected by competing orders placed by other customers and the demands of those customers.

If we experience significant increases in demand, or need to replace a significant number of existing suppliers or manufacturers, there can be no assurance that additional supply and manufacturing capacity will be available when required on terms that are acceptable to us, or at all, or that any

supplier or manufacturer will allocate sufficient capacity to us in order to meet our requirements.

Furthermore, our reliance on suppliers and manufacturers outside of the United States, the number of third parties with whom we transact and the number of jurisdictions to which we sell complicates our efforts to comply with customs duties and excise taxes;

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In addition, quality control problems, such as the use of materials and delivery of products that do not meet our quality control standards and specifications or comply with applicable laws or regulations, could harm our business.

In the past, we have experienced negative press and government enforcement actions as a result of our vendors’

failure to comply with certain applicable laws and regulations, and may experience similar negative press as a result of any future non-compliance by our vendors.

In the past, we have experienced negative press and government enforcement actions as a result of our vendors’ failure to comply with certain applicable laws and regulations, and may experience similar negative press as a result of any future non-compliance by our vendors.

We do not regularly inspect these vendors and quality control problems could result in regulatory action, such as restrictions on importation, products of inferior quality or product stock outages or shortages, harming our sales and creating inventory write-downs for unusable products.

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If we are not able to negotiate acceptable pricing and other terms with these entities or if they experience capacity constraints, performance problems or other difficulties, it could negatively impact our operating results and our customer experience.

Furthermore, volatility in the global oil markets has resulted in higher fuel prices, which many shipping companies have passed on to their customers by way of increased fuel surcharges.

We have recently experienced increased shipping costs as a result, and these costs may continue to increase in the future.

We have not directly passed these increased costs on to our customers, which may adversely impact our operating results.

We may choose to directly pass such cost increases on to our customers in the future, which may impact the conversion of demand for our product.

We may not be able to pass such increases on to our customers.

In addition, our ability to receive inbound inventory efficiently and ship merchandise to customers may be negatively affected by public health crises, including the COVID-19 outbreaks, inclement weather, fire, flood, power loss, earthquakes, labor disputes, acts of war, including Russia’s war against Ukraine, or terrorism, trade embargoes, customs and tax requirements, political crises and social unrest, and similar factors.

For example, strikes at major international shipping ports have in the past impacted our supply of inventory from our vendors.

Trade disputes between the United States and China have and may continue to lead to increased tariffs on our goods and restrict the flow of our goods between the United States and China.

COVID-19 outbreaks have caused and may continue to cause delayed shipments from our manufacturing partners and other third-party suppliers.

Pressures continued at various times throughout 2022, with lockdowns in parts of China resulting in further disruptions to production, shipping and other commercial activity.

Furthermore, volatility in the global oil markets, including as a consequence of wars and geopolitical tension in the Middle East, has in the past resulted, and may in the future result, in higher fuel prices, which many shipping companies pass on to their customers by increasing fuel surcharges.

We have experienced such increased shipping costs, which may continue to increase in the future.

We have not historically passed on such increased costs to our customers, which may adversely impact our operating results.

If we were to pass such cost increases on to our customers in the future, it could adversely impact the demand for our products and we may therefore not be able to pass on such cost increases.

In addition, our ability to receive inbound inventory efficiently and ship merchandise to customers may be negatively affected by public health crises, such as the COVID-19 pandemic, inclement weather, fire, flood, power loss, earthquakes, labor disputes, acts of war, geopolitical tensions, terrorism, trade embargoes, customs and tax requirements, political crises, social unrest and other factors.

For example, strikes at major international shipping ports have in the past adversely impacted inventory supply from our vendors.

Future strikes, including at shipping ports or logistics providers may adversely impact our inventory supply and ability to ship merchandise to customers.

Increased tensions and trade disputes between the United States and China have and may continue to lead to increased tariffs on our goods and restrict the flow of our goods between the United States and China.

We are also subject to risks of damage or loss during delivery by our shipping vendors.

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These reasons include those described in these risk factors as well as the following:

fluctuations in net sales generated from the brands on our sites, including as a result of macroeconomic factors, seasonality trends and the timing and success of large, in-person events that we host, such as the #REVOLVEfestival;

• fluctuations in net sales generated from the brands on our sites, including as a result of macroeconomic factors, seasonality trends and the timing and success of large, in-person events that we host;

• fluctuations in product mix, including between sites and between product categories;

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• our ability to manage our existing business and future growth;

rising inflation and our ability to control our costs, including employee wages and benefits, shipping costs, other selling costs and other operating expenses;

• inflation levels and our ability to control our costs, including employee wages and benefits, shipping costs, other selling costs and other operating expenses;

• disruptions or defects in our sites, or actual or perceived privacy or data security breaches or incidents;

• the effect on our business of claims, lawsuits, government investigations, other legal or regulatory proceedings or commercial or contractual disputes that we are or may become involved in;

• economic and market conditions, particularly those affecting our industry.

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We track certain key operating metrics using internal data analytics tools, which have certain limitations.

In addition, we rely on data received from third parties, including third-party platforms, to track certain performance

In addition, we rely on data received from third parties, including third-party platforms, to track certain performance indicators.

Data from both such sources may include information relating to fraudulent accounts and interactions with our sites or the social media accounts of our influencers (including as a result of the use of bots or other automated or manual mechanisms to generate false impressions that are delivered through our sites or their accounts).

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In addition, we cannot be sure the same growth rates, trends and other key performance metrics are meaningful predictors of future growth.

Our business is affected by general economic and business conditions in the United States, and conditions in international markets.

Our business is affected by general economic and business conditions in the United States and in our international markets.

In addition, we experience seasonal trends in our business and our mix of product offerings is highly variable from day-to-day and quarter-to-quarter.

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A significant portion of our expenses are fixed, and as a result, we may be unable to adjust our spending in a timely manner to compensate for any unexpected shortfall in net sales.

As a result of the COVID-19 pandemic’s negative impact on our net sales, we reduced our marketing investments and certain fixed costs in 2020 and certain periods of 2021.

These short-term reductions may have a longer-term negative impact on customer acquisition and the lifetime value of our customer.

Furthermore, we may be unable to adjust our investments in a timely manner to support increasing demand and higher net sales or compensate for any incremental unexpected shortfall in net sales.

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In future periods, our net sales may decline or grow more slowly than we expect.

We believe that the sustainability of our recent revenue growth, and potential future growth, will depend upon, among other factors, our ability to:

address the short- and long-term macroeconomic challenges by adjusting our cost structure, meeting our customers’

service expectations, shifting our marketing strategy and maintaining a relevant merchandise assortment;

identify and develop new emerging, established and owned brands while maintaining the relationships and product curation with existing emerging, established and owned brands;

We believe that the sustainability of our recent net sales growth, and potential future growth, will depend upon, among other factors, our ability to:

• address the short- and long-term macroeconomic challenges by adjusting our cost structure, meeting our customers’ service expectations, shifting our marketing strategy and maintaining a relevant merchandise assortment;

• identify and develop emerging, established and owned brands while maintaining the relationships and product curation with existing, established and owned brands;

• acquire new customers and retain existing customers;

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• enhance and scale the systems our consumers use to interact with our sites and invest in our infrastructure platform;

target additional categories and price points beyond premium apparel for Millennial and Generation Z consumers, such as luxury, beauty and home products, and men’s apparel;

• target additional categories and price points beyond premium apparel for Millennial and Generation Z consumers, such as luxury, beauty and home products, and men’s apparel;

• expand internationally;

pursue strategic acquisitions.

• pursue strategic acquisitions and investments.

We cannot assure you we will be able to achieve any of the foregoing.

Our customer base may not continue to grow or may decline in the future due to increased competition, the maturation of our business or other factors.

Failure to continue our revenue growth rates could have a material adverse effect on our financial condition and operating results.

You should not rely on our historical rate of revenue growth as an indication of our future performance or the rate of growth we may experience in any new category or internationally.

Failure to continue our net sales growth rates could have a material adverse effect on our financial condition and operating results.

You should not rely on our historical rate of net sales growth as an indication of our future performance or the rate of growth we may experience in any new category or internationally.

If we do not successfully optimize, operate and manage the expansion of capacity of our fulfillment centers, our business, financial condition and operating results could be harmed.

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If we continue to add fulfillment and warehouse capabilities, add new businesses or categories with different fulfillment requirements or change the mix in products that we sell, our fulfillment network will become increasingly complex and operating it will become more challenging.

Failure to successfully address such challenges in a cost-effective and timely manner could impair our ability to timely deliver our customers’

purchases and could harm our reputation and ultimately, our business, financial condition and operating results.

Failure to successfully address such challenges in a cost-effective and timely manner could impair our ability to timely deliver our customers’ purchases and could harm our reputation and ultimately, our business, financial condition and operating results.

We operate three fulfillment centers located in California and Pennsylvania.

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If we are unable to secure new facilities for the expansion of our fulfillment operations or to effectively control expansion-related expenses, our business, prospects, financial condition and operating results could be materially and adversely affected.

If we grow faster than we anticipate, we may exceed our fulfillment center capacity sooner than we anticipate, we may experience problems fulfilling orders in a timely manner or our customers may experience delays in receiving their purchases, which could harm our reputation and our relationship with our customers, and we would need to increase our capital expenditures more than anticipated.

If we grow faster than we anticipate, we may exceed our fulfillment center capacity sooner than

we anticipate, we may experience problems fulfilling orders in a timely manner or our customers may experience delays in receiving their purchases, which could harm our reputation and our relationship with our customers, and we would need to increase our capital expenditures more than anticipated.

Many of the expenses and investments with respect to our fulfillment centers are fixed and any expansion of our fulfillment centers will require additional investment of capital.

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We may incur such expenses or make such investments in advance of expected sales and such expected sales may not occur.

Government authorities may impose more restrictions on businesses as a result of COVID-19 outbreaks or other circumstances, including ones that would require closure of our fulfillment centers.

If restrictions are imposed or if

there is a COVID-19 outbreak in our fulfillment centers, we may not be able to meet customer demand in a timely way which would have a materially adverse impact on our business, operating results, financial condition and prospects.

Our failure to adequately and effectively staff our fulfillment centers, through third parties or with our own employees, could adversely affect our customer experience and operating results.

We operate three fulfillment centers located in California and Pennsylvania.

If we are unable to adequately staff our fulfillment centers to meet demand or if the cost of such staffing is higher than historical or projected costs due to mandated wage increases, regulatory changes, COVID-19-related shelter-in-place orders and other business restrictions, international expansion or other factors, our operating results could be harmed.

If we are unable to adequately staff our fulfillment centers to meet demand or if the cost of such staffing is higher than historical or projected costs due to mandated wage increases, regulatory changes and other business limitations and restrictions, international expansion or other factors, our operating results could be harmed.

In addition, operating fulfillment centers comes with potential risks, such as workplace safety issues and employment claims for the failure or alleged failure to comply with labor laws or laws respecting union organizing activities.

Various health and safety restrictions imposed by state and local authorities in response to the COVID-19 pandemic have, in the past, adversely impacted our ability to staff our Los Angeles fulfillment center.

If government authorities re-impose restrictions on businesses, including ones that would require closure of our fulfillment centers, or if there is a COVID-19 outbreak in our fulfillment centers, we may not be able to meet customer demand in a timely way which would have a materially adverse impact on our business, operating results, financial condition and prospects.

Various health and safety restrictions imposed by state and local authorities in response to public health crises such as the COVID-19 pandemic have in the past adversely impacted our ability to staff our Los Angeles fulfillment center.

If government authorities impose new restrictions on businesses due to future public health crises or otherwise, including ones that would require closure of our fulfillment centers, we may not be able to meet customer demand in a timely way which would have a materially adverse impact on our business, operating results, financial condition and prospects.

Any such issues may result in delays in shipping times or packing quality and our reputation and operating results may be harmed.

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In addition, the loss of one or more of our key personnel or the inability to promptly identify a suitable successor to a key role could have an adverse effect on our business.

In particular, our co-chief executive officers have unique and valuable experiences leading our company from its inception through today.

In particular, our

co-chief executive officers have unique and valuable experiences leading our company from its inception through today.

If either of them was to depart or otherwise reduce their focus on our company, our business may be disrupted.

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Increased scrutiny and changing expectations from investors, customers, employees and others regarding our environmental, social and governance practices and reporting could cause us to incur additional costs, devote additional resources and expose us to additional risks, which could adversely impact our reputation, customer acquisition and retention, access to capital and employee retention.

Companies across all industries are facing increasing scrutiny related to their environmental, social and governance, or ESG, practices and reporting.

Companies across many industries are facing scrutiny related to their environmental, social and governance, or ESG, practices and reporting.

Investors, customers, employees and other stakeholders have focused increasingly on ESG practices and placed increasing importance on the implications and social cost of their investments, purchases and other interactions with companies.

For example, many investment funds focus on positive ESG business practices and sustainability scores when making investments and may consider a company’s ESG or sustainability scores as a reputational or other factor in making an investment decision.

In addition, investors, particularly institutional investors, use these scores to benchmark companies against their peers and if a company is perceived as lagging, these investors may engage with that company to improve ESG disclosure or performance and may also make voting decisions on this basis.

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In addition, new sustainability rules and regulations have been adopted and may continue to be introduced in various states and other jurisdictions, and our failure to comply with any applicable rules or regulations could lead to penalties and adversely impact our reputation, customer acquisition and retention, access to capital and employee retention.

Our operating results could be adversely affected by natural disasters, public health crises, political crises, social unrest or other catastrophic events.

Our operating results could be adversely affected by natural disasters, public health crises, political crises, wars, social unrest or other catastrophic events.

Our principal offices and data centers and two of our fulfillment centers, including our largest fulfillment center, are located in Southern California, an area which has a history of earthquakes and wildfires, and are thus vulnerable to damage.

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unforeseen public health crises, such as the COVID-19 pandemic;

political crises, such as terrorist attacks, war and other political instability;

including Russia’s war against Ukraine;

political crises;

terrorist attacks;

wars and geopolitical tensions;

worsening U.S.-China relations;

social unrest;

or other catastrophic events, whether occurring in the United States or internationally, could disrupt our operations or the operations of one or more of our third-party providers or vendors.

or other catastrophic events, whether occurring in the United States or internationally, could disrupt our operations, or the operations of one or more of our third-party providers or vendors, and adversely affect our operating results.

Customer growth and activity on mobile devices depends upon effective use of mobile operating systems, networks and standards that we do not control.

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As new mobile devices and platforms are released, it is difficult to predict the problems we may encounter in developing applications for these alternative devices and platforms and we may need to devote significant resources to the creation, support and maintenance of such applications.

In addition, our future growth and our results of operations could suffer if we experience difficulties in integrating our mobile applications into mobile devices, if problems arise with our relationships with providers of mobile operating systems or mobile application download stores, such as those of Apple Inc.

or mobile application download stores, such as those of Apple Inc.

or Google Inc., if those providers impose restrictions on the data collection or use practices or other functionality of our applications, if our applications receive unfavorable treatment compared to competing applications, such as the order of our products in the Apple App Store, or if we face increased costs to distribute or have customers use our mobile applications.

For example, Apple has imposed requirements for consumer disclosures regarding privacy practices and has implemented an application

tracking transparency framework that requires opt-in consent for certain types of tracking.

This transparency framework was launched in April 2021.

This transparency framework has and may continue to negatively impact the effectiveness of our advertising practices.

Additionally, in November 2022, Google announced that it plans to implement similar restrictions to restrict tracking activity across Android devices in early 2023.

We are further dependent on the interoperability of our sites with popular mobile operating systems that we do not control, such as iOS and Android, and any changes in such systems that degrade the functionality of our sites or give preferential treatment to competitive products could adversely affect the usage of our sites on mobile devices.

For example, Apple has imposed requirements for consumer disclosures regarding privacy practices and has implemented an application tracking transparency framework that requires opt-in consent for certain types of tracking.

This transparency framework was launched in April 2021 and has negatively impacted the effectiveness of our advertising practices.

Additionally, in June 2023, Apple announced new SDK privacy controls that it has integrated into iOS 17, which was released in September 2023, including new protections designed to limit tracking or identification of user devices.

In February 2022, Google announced its Privacy Sandbox initiative for Android, a multi-year effort expected to restrict tracking activity and limit advertisers’ ability to collect app and user data across Android devices.

We also depend on the interoperability of our sites with popular mobile operating systems that we do not control, such as iOS and Android, and any changes in such systems that degrade the functionality of our sites or give preferential treatment to competitive products could adversely affect the usage of our sites on mobile devices.

In the event that it is more difficult for our customers to access and use our sites on their mobile devices, or if our customers choose not to access or to use our sites on their mobile devices or to use mobile products that do not offer access to our sites, our customer growth could be harmed and our business, financial condition and operating results may be materially and adversely affected.

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In addition to the direct costs of such losses, if the fraud is related to credit card transactions and becomes excessive, it could potentially result in us paying higher fees or losing the right to accept credit cards for payment.

In addition, under current credit card practices, we are liable for fraudulent credit card transactions because we do not obtain a cardholder’s signature.

Our failure to adequately prevent fraudulent transactions could damage our reputation, result in litigation or regulatory action and lead to expenses that could substantially impact our operating results.

If we fail to maintain effective internal controls over financial reporting or disclosure controls and procedures, we may not be able to accurately report our financial results, prevent fraud or file our periodic reports in a timely manner, which may cause investors to lose confidence in our reported financial information and may lead to a decline in our stock price.

We are subject to the SEC’s rules implementing Sections 302 and 404 of the Sarbanes-Oxley Act, which require our management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of internal controls over financial reporting.

Additionally, we are required to obtain an annual audit of our internal controls over financial reporting from our independent registered public accounting firm under Section 404 of the Sarbanes-Oxley Act.

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Our testing of key controls over financial reporting, or the testing by our independent registered public accounting firm, may reveal deficiencies in our internal control over financial reporting that are deemed to be material weaknesses.

If we are not able to comply with the requirements of Section 404 in a timely manner, or if we or our independent registered public accounting firm identify deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the market price of our stock would likely decline and we could be subject to

lawsuits, sanctions or investigations by regulatory authorities, which would require additional financial and management resources.

We continue to invest in more robust technology and in more resources in order to manage applicable reporting requirements.

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In addition, any such changes do not guarantee that we will be effective in maintaining the adequacy of our internal controls and any failure to maintain that adequacy could prevent us from accurately reporting our financial results.

We may expand our business through acquisitions of other businesses, which may divert management’s attention and/or prove to be unsuccessful.

We may acquire businesses or technologies in the future.

Acquisitions may divert management’s time and focus from operating our business and also may require us to spend a substantial portion of our available cash, incur debt or other liabilities, amortize expenses related to intangible assets or incur write-offs of goodwill or other assets.

In addition, integrating an acquired business or technology is risky.

Completed and future acquisitions may result in unforeseen operational difficulties and expenditures associated with:

We may expand our business through acquisitions, strategic investments and commercial collaborations, which may divert management’s attention, be difficult to integrate, disrupt our business, dilute stockholder value, prove to be unsuccessful and adversely affect our business, operating results and financial condition.

As part of our long-term growth plans, we expect to acquire, invest in or partner with additional businesses, assets and technologies, and to enter into commercial collaborations, that we believe could further complement or expand our business.

Such transactions may divert management’s time and focus from operating our business, whether or not they are ultimately completed, and they also may require us to spend a substantial portion of our available cash, incur debt or other liabilities, amortize expenses related to intangible assets or incur write-offs of goodwill or other assets.

In addition, integrating acquired businesses or technologies is risky.

Completed and future transactions may result in unforeseen operational difficulties and expenditures associated with:

• incorporating new businesses and technologies into our infrastructure;

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• identifying and assuming liabilities related to the activities of the acquired business before the acquisition, including liabilities for violations of laws and regulations, intellectual property issues, commercial disputes, taxes and other matters.

Moreover, we may not benefit from our acquisitions as we expect or in the time frame we expect.

We also may issue additional equity securities in connection with an acquisition, which could cause dilution to our stockholders.

Finally, acquisitions could be viewed negatively by analysts, investors or our customers.

Moreover, we may not benefit from our acquisitions and other strategic transactions as we expect or in the time frame we expect, which could adversely affect our business, operating results and financial condition.

We also may issue additional equity securities in connection with such transactions, which could cause dilution to our stockholders.

Finally, our acquisitions and other strategic transactions could be viewed negatively by analysts, investors or customers and cause our stock price to decline.

Adverse litigation judgments or settlements resulting from legal proceedings in which we may be involved could expose us to monetary damages or limit our ability to operate our business.

We have been, are and may in the future become involved in private actions, collective actions, investigations and various other legal proceedings by customers, employees, suppliers, competitors, government agencies, law enforcement, customs officials or others.

The results of any such litigation, investigations and other legal proceedings are inherently unpredictable and expensive.

The results of any such litigation, investigations and other legal proceedings

are inherently unpredictable and expensive.

Any claims against us, whether meritorious or not, could be time-consuming, result in costly litigation, damage our reputation, require significant amounts of management time, result in impositions of fines or other remedial measures as a result of underpayment and divert significant resources.

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Risks Related to Regulation and Taxation

Any failure by us or our vendors to comply with product safety, labor or other laws, or to provide safe conditions for our or their workers may damage our reputation and brands and harm our business.

The merchandise we sell to our customers is subject to regulation by the Federal Consumer Product Safety Commission, the Federal Trade Commission, the Food and Drug Administration and similar state and international regulatory authorities.

As a result, such merchandise could be in the future subject to recalls and other remedial actions.

Product safety, labeling and licensing concerns, including consumer disclosure and warning regarding chemical exposure, may require us to voluntarily remove selected merchandise from our inventory.

Such recalls or voluntary removal of merchandise can result in, among other things, lost sales, diverted resources, potential harm to our reputation and increased customer service costs and legal expenses, which could have a material adverse effect on our operating results.

Any failure by us or our vendors to comply with trade and other regulations including importation, exportation, product safety, labeling, labor or other laws, or to provide safe conditions for our or their workers, may lead to investigations or actions by government regulators, damage our reputation and brands and harm our business.

The merchandise we sell to our customers is subject to regulation by the Federal Consumer Product Safety Commission, the FTC, the Food and Drug Administration, U.S.

Fish and Wildlife Services and other federal, state, local and international regulatory authorities.

As a result, our merchandise could become subject to recalls and other remedial actions.

Product safety, labeling and licensing regulations, including consumer disclosure and warning regarding chemical exposure, may require us to remove selected merchandise from our inventory.

Such recalls or removal of merchandise can result in, among other things, lost sales, diverted resources, potential harm to our reputation and increased customer service costs and legal expenses, which could have a material adverse effect on our operating results.

In addition, our failure to comply with such regulations has in the past, and may in the future, subject us to investigations, enforcement actions and the imposition of significant penalties and claims, which could harm our results of operations or our ability to conduct business.

Any audits and inspections by governmental agencies related to these matters could result in significant settlement amounts, damages, fines or other penalties, divert financial and management resources, and result in significant legal fees.

An unfavorable outcome of any particular proceeding could

have an adverse impact on our business, financial condition and results of operations.

In addition, the adoption of new regulations or changes in the interpretation of existing regulations may result in significant compliance costs or discontinuation of product sales and could impair the marketing of our products, resulting in significant loss of revenue.

We purchase our merchandise from numerous domestic and international vendors.

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We do not control our suppliers and manufacturers or their business and they may not comply with our guidelines or the law.

A lack of compliance could lead to reduced sales or recalls or damage

to our brand or cause us to seek alternative suppliers, which could increase our costs and result in delayed delivery of our products, product shortages or other disruptions of our operations.

In addition, we rely on our manufacturers’

and suppliers’

compliance reporting in order to comply with regulations applicable to our products.

A lack of compliance could lead to reduced sales or recalls or damage to our brand or cause us to seek alternative suppliers, which could increase our costs and result in delayed delivery of our products, product shortages or other disruptions of our operations.

In addition, we rely on our manufacturers’ and suppliers’ compliance reporting in order to comply with regulations applicable to our products.

This is further complicated by the fact that expectations of ethical business practices continually evolve and may be substantially more demanding than applicable legal requirements.

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None of our domestic employees are currently covered by a collective bargaining agreement, but any attempt by our employees to organize a labor union could result in increased legal and other associated costs.

Additionally, given the National Labor Relations Board’s “speedy election”

rule, our ability to timely and effectively address any unionizing efforts would be difficult.

Additionally, given the National Labor Relations Board’s “speedy election” rule, our ability to timely and effectively address any unionizing efforts would be difficult.

If we enter into a collective bargaining agreement with our domestic employees, the terms could materially adversely affect our costs, efficiency and ability to generate acceptable returns on the affected operations.

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For example, in California, Assembly Bill 5 codified and extended an employment classification test set forth by the California Supreme Court that established a new standard for determining employee or independent contractor status.

This bill, and other similar initiatives throughout the United States, could lead to additional challenges to the classification of influencers and models and a potential increase in claims, lawsuits, arbitration proceedings, administrative actions, government investigations and other legal and regulatory proceedings at the federal, state and municipal levels challenging the classification of any influencers or models as independent contractors.

This bill, and other similar initiatives throughout the United States, could lead to additional challenges to the classification of influencers and models and a potential

increase in claims, lawsuits, arbitration proceedings, administrative actions, government investigations and other legal and regulatory proceedings at the federal, state and municipal levels challenging the classification of any influencers or models as independent contractors.

Such regulatory scrutiny or actions over such classification practices also may create different or conflicting obligations from one jurisdiction to another.

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Regardless of the outcome, litigation and arbitration of misclassification and wage and hour claims can have an adverse impact on us because of defense and settlement costs individually and in the aggregate, dive rsion of management resources and other factors, which could have a material adverse effect on our business, financial condition and results of operations.

Failure to comply with federal, state and international laws and regulations and our contractual obligations relating to privacy, data protection and consumer protection, or the expansion of current or the enactment of new laws or regulations relating to privacy, data protection and consumer protection, could adversely affect our business and our financial condition.

We collect and maintain significant amounts of personal data and other data relating to our customers and employees.

A variety of federal, state and international laws and regulations, and certain industry standards, govern or apply to our collection, use, retention, sharing and security of consumer data.

We are subject to certain laws, regulations, contractual obligations and industry standards (including, for example, the PCI-DSS) relating to privacy, data protection, information security and consumer protection, including California’s Consumer Legal Remedies Act and unfair competition and false advertising laws, which are evolving and subject to potentially differing interpretations.

These requirements may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another or may conflict with other rules or our practices.

As a result, our practices likely have not complied or may not comply in the future with all such laws, regulations, requirements and obligations.

Any failure, or perceived failure, by us to comply with our privacy policies or with any federal, state or international laws, regulations, industry self-regulatory principles, industry standards or codes of conduct, regulatory guidance, orders to which we may be subject or other legal or contractual obligations relating to privacy, data protection, information security or consumer protection could adversely affect our reputation, brand and business, and may result in claims, proceedings or actions against us by governmental entities or others or other liabilities or require us to change our operations and/or cease or modify our use of certain data sets.

Any such claim, proceeding or action could hurt our reputation, brand and business, force us to incur significant expenses in defense of such proceedings, distract our management, increase our costs of doing business, result in a loss of customers and suppliers or an inability to process credit card payments and may result in the imposition of monetary penalties.

We may also be contractually required to indemnify and hold harmless third parties from the costs or consequences of non-compliance with any laws, regulations or other legal obligations relating to privacy or consumer protection or any inadvertent or unauthorized use or disclosure of data that we store or handle as part of operating our business.

Additionally, any failure by us to comply with the PCI-DSS may violate payment card association operating rules, applicable laws and regulations, and contractual obligations to which we are subject.

Any such failure to comply with the PCI-DSS also may subject us to fines, penalties, damages, and civil liability, or the loss of our ability to accept credit and debit card payments, any of which may materially adversely affect our business, financial condition and operating results.

Federal, state and international governmental authorities continue to evaluate the privacy implications inherent in the use of third-party “cookies”

and other methods of online tracking for behavioral advertising and other purposes.

The United States and foreign governments have enacted, have considered or are considering legislation or regulations that could significantly restrict the ability of companies and individuals to engage in these activities, such as by regulating the level of consumer notice and consent required before a company can employ cookies or other electronic tracking tools or the use of data gathered with such tools.

Additionally, some providers of consumer devices and web browsers have implemented, or announced plans to implement, means to make it easier for Internet users to prevent the placement of cookies or to block other tracking technologies, which could if widely adopted result in the use of third-party cookies and other methods of online tracking becoming significantly less effective.

Regulation of the use of these cookies and other online tracking and advertising practices, or a loss in our ability to make effective use of services that employ such technologies, could increase our costs of operations and limit our ability to track trends, optimize our product assortment or acquire new customers on cost-effective terms and consequently, materially adversely affect our business, financial condition and operating results.

For example, Apple has imposed requirements for consumer disclosures regarding privacy practices, and has implemented an application tracking transparency framework that requires opt-in consent for certain types of tracking.

This transparency framework was launched in April 2021.

This transparency framework has and may continue to negatively impact the effectiveness of our advertising practices.

Additionally, in November 2022, Google announced that it plans to implement similar restrictions to restrict tracking activity across Android devices in early 2023.

Foreign laws and regulations relating to privacy, data protection, information security, and consumer protection often are more restrictive than those in the United States.

The EU, for example, traditionally has imposed stricter obligations under its laws and regulations relating to privacy, data protection and consumer protection than the United States.

The General Data Protection Regulation, or GDPR, governs the EU’s data practices and privacy.

The GDPR requires companies to meet more stringent requirements regarding the handling of personal data of individuals in the EU than were required under predecessor EU requirements.

The GDPR provides for substantial penalties for non-compliance, which may result in monetary penalties of up to 20.0 million Euros or 4% of a company’s worldwide turnover, whichever is higher.

European privacy and data protection laws, including the GDPR, regulate the transfer of personal data from Europe, including the European Economic Area, or EEA, the UK, and Switzerland, to third countries that have not been found to provide adequate protection to such personal data, including the United States, unless the parties to the

transfer have implemented specific safeguards to protect the transferred personal information.

The safeguard on which we have primarily relied for such transfers has been use of the European Commission’s standard contractual clauses, or SCCs.

We have undertaken certain efforts to conform transfers of personal data from the European Economic Area, or the EEA, to the United States based on our understanding of current regulatory obligations and the guidance of data protection authorities.

In the “Schrems II”

decision issued by the Court of Justice of the European Union, or CJEU, on July 16, 2020, the CJEU invalidated one mechanism for cross-border personal data transfer, the EU-U.S.

Privacy Shield, and imposed additional obligations on companies relying on the SCCs to transfer personal data.

The Swiss-U.S.

Privacy Shield framework subsequently was invalidated by the Swiss Federal Data Protection and Information Commissioner.

The Schrems II decision and other developments relating to cross-border data transfer may result in European data protection regulators applying differing standards for, and requiring ad hoc verification of, transfers of personal data from Europe to the U.S.

The European Commission released a draft of revised SCCs addressing the CJEU concerns in November 2020, and on June 4, 2021, published new SCCs.

The UK has also adopted new standard contractual clauses, or the UK SCCs, which became effective on March 21, 2022.

The CJEU’s Schrems II decision, the revised SCCs and the UK SCCs, regulatory guidance and opinions, and other developments relating to cross-border data transfer may require us to implement additional contractual and technical safeguards for any personal data transferred out of the EEA, the UK and Switzerland, which may increase compliance costs, lead to increased regulatory scrutiny or liability, may require additional contractual negotiations, and may adversely impact our business, financial condition and operating results.

The UK has implemented legislation similar to the GDPR, including the UK Data Protection Act and legislation similar to the GDPR referred to as the UK GDPR, which provides for fines of up to the greater of 17.5 million British Pounds or 4% of a company’s worldwide turnover, whichever is higher.

Additionally, the relationship between the UK and the EU in relation to certain aspects of data protection law remains unclear following the UK’s exit from the EU, including with respect to regulation of data transfers between EU member states and the UK.

On June 28, 2021, the European Commission announced a decision of “adequacy”

concluding that the UK ensures an equivalent level of data protection to the GDPR, which provides some relief regarding the legality of continued personal data flows from the EEA to the UK.

Some uncertainty remains, however, as this adequacy determination must be renewed after four years and may be modified or revoked in the interim.

We cannot fully predict how the Data Protection Act, the UK GDPR, and other UK data protection laws or regulations may develop in the medium to longer term nor the effects of divergent laws and guidance regarding how data transfers to and from the UK will be regulated.

Further, the GDPR and other similar regulations require companies to give specific types of notice and in some cases seek consent from consumers and other data subjects before collecting or using their data for certain purposes, including some marketing activities.

In addition to the GDPR, the European Commission has another draft regulation in the approval process that focuses on a person’s right to conduct a private life.

The proposed legislation, known as the Regulation of Privacy and Electronic Communications, or ePrivacy Regulation, would replace the current ePrivacy Directive.

Originally planned to be adopted and implemented at the same time as the GDPR, the ePrivacy Regulation is still being negotiated.

Most recently, on February 10, 2021, the Council of the EU agreed on its version of the draft ePrivacy Regulation.

If adopted, the earliest date for entry into force is in 2023, with broad potential impact on the use of internet-based services and tracking technologies, such as cookies.

Aspects of the ePrivacy Regulation remain for negotiation between the European Commission and the Council.

We expect to incur additional costs to comply with the requirements of the ePrivacy Regulation as it is finalized for implementation.

Further, on January 13, 2022, the Austrian data protection authority published a decision ruling that the collection of personal data and transfer to the United States through Google Analytics and other analytics and tracking tools used by website operators violates the GDPR.

On February 10, 2022, the French data protection authority issued a press release announcing that the French data protection authority had issued a similar decision.

Other data protection authorities in the EU are increasingly focused on the use of online tracking tools and have indicated that they plan to issue similar rulings.

We may find it necessary or appropriate to develop or use alternative methods to replace the functionality of cookies.

Outside of the EU, many countries and territories have laws, regulations, or other requirements relating to privacy, data protection, information security, localized storage of data, and consumer protection, and new countries and territories are adopting such legislation or other obligations with increasing frequency.

In China, for example, the Personal Information Protection Law, or PIPL, was adopted on August 20, 2021 and went into effect on November 1, 2021.

The PIPL shares similarities with the GDPR, including extraterritorial application, data minimization, data localization and purpose limitation requirements, as well as obligations to provide certain notices and rights to citizens of China.

The PIPL allows for fines of up to 50 million renminbi, or 5% of a covered company’s revenue in the prior year.

More generally, many of these foreign laws and regulations may require consent from consumers for the use of data for various purposes, including marketing, which may reduce our ability to market our products.

harmonized approach to these laws and regulations globally.

Consequently, international activities and operations increase our risk of non-compliance with applicable laws and regulations, and we would increase our risk of non-compliance with applicable foreign data protection laws by expanding internationally.

We may need to change and limit the way we use personal information in operating our business, may be required to make additional investments in compliance programs, may be required to update our policies and procedures and may have difficulty maintaining a single operating model that is compliant.

In addition, various federal, state and foreign legislative and regulatory bodies, or self-regulatory organizations, may expand current laws or regulations, enact new laws or regulations or issue revised rules or guidance regarding privacy, data protection, information security and consumer protection.

For example, in 2018, California enacted the California Consumer Privacy Act, or CCPA, which, among other things, requires new disclosures to California consumers and affords such consumers new abilities to opt out of certain sales of personal information.

The CCPA, which became effective January 1, 2020, provides for civil penalties for violations, as well as a private right of action for certain data breaches that result in the loss of personal information.

This private right of action may increase the likelihood of, and risks associated with, data breach litigation.

Moreover, California voters approved the California Privacy Rights Act, or CPRA, in November 2020.

The CPRA significantly modifies the CCPA, creating obligations relating to consumer data effective as of January 1, 2022, with enforcement beginning July 1, 2023.

On March 2, 2021, Virginia enacted the Virginia Consumer Data Protection Act, or CDPA, which is effective as of January 1, 2023, and on June 8, 2021, Colorado enacted the Colorado Privacy Act, or CPA, which is effective as of July 1, 2023.

In March 2022, Utah enacted the Utah Consumer Privacy Act, or the UCPA, which is effective as of December 31, 2023.

Connecticut enacted a similar law, An Act Concerning Personal Data Privacy and Online Monitoring, on May 10, 2022, which is effective as of July 1, 2023.

These newer state statutes share similarities with the CCPA, CPRA and legislation proposed in other states.

Aspects of these privacy statutes remain unclear, resulting in further uncertainty and potentially requiring us to modify our data practices and policies and to incur substantial additional costs and expenses in an effort to comply.

As a general matter, compliance with laws, regulations, and any applicable rules or guidance from self-regulatory organizations relating to privacy, data protection, information security and consumer protection may result in substantial costs and may necessitate changes to our business practices, which may compromise our growth strategy, adversely affect our ability to acquire customers, and otherwise adversely affect our business, financial condition and operating results.

Government regulation of the Internet and eCommerce is evolving and unfavorable changes or failure by us to comply with these regulations could substantially harm our business and results of operations.

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We are subject to various governmental export control and trade sanctions laws and regulations that could impair our ability to compete in international markets or subject us to liability if we violate these controls.

In some cases, our products are subject to export control laws and regulations, including the Export Administration Regulations administered by the U.S.

Department of Commerce, and our activities are subject to trade and economic sanctions, including those administered by the U.S.

Treasury Department’s Office of Foreign Assets Control, or OFAC, which we collectively refer to as Trade Controls.

As such, a license may be required to export or re-export our products to certain countries and end users and for certain end uses.

The process for obtaining necessary licenses may be time-consuming or unsuccessful, potentially causing delays in sales or losses of sales opportunities.

In some cases, our merchandise is subject to export control laws and regulations, including the Export Administration Regulations administered by the U.S.

Department of Commerce and export regulations administered by the U.S.

Fish and Wildlife Services, and our activities are subject to trade and economic sanctions, including those administered by the U.S.

Treasury Department’s Office of Foreign Assets Control, or OFAC, which we collectively refer to as trade controls.

As such, licenses and notices may be required to export, import or re-export our products to certain countries and end users and for certain end uses.

The process for obtaining necessary licenses and making required notices may be time-consuming or unsuccessful, potentially causing delays in sales or losses of sales opportunities.

Trade controls are complex and dynamic regimes and monitoring and ensuring compliance can be challenging.

Any failure to comply with these regimes could subject us to both civil and criminal penalties, including substantial fines, possible incarceration of responsible individuals for willful violations, possible loss of our export or import privileges, and reputational harm.

In addition, investigating or defending against any such allegations, actions or investigations will likely result in a materially significant diversion of management’s attention and resources and significant defense costs and other professional fees.

We may experience fluctuations in our tax obligations and effective tax rate, which could adversely affect our operating results.

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Further, our tax liability, after-tax profitability and effective tax rate in a given financial statement period may be materially impacted by changes in tax laws, including legislation implementing changes in taxation of international business activities, changes in the mix and level of earnings by taxing jurisdictions or changes to existing accounting rules or regulations.

For example, the United States enacted the Inflation Reduction Act of 2022 which, among other provisions, imposed a one-percent excise tax on certain stock buybacks by public companies.

For example, the Inflation Reduction Act of 2022, among other things, imposed a one percent excise tax on certain stock repurchases by public companies.

The Organization of Economic Cooperation and Development proposed implementing a global minimum tax of fifteen percent, which is being adopted or considered by many jurisdictions.

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that states could impose sales tax collection obligations on out-of-state retailers even if those retailers lack any physical presence within the states imposing sales taxes.

Under Wayfair , a person requires only a “substantial nexus”

with the taxing state before the state may subject the person to sales tax collection obligations therein.

An increasing number of states, both before and after the Supreme Court’s ruling, have considered or adopted laws that attempt to impose sales tax collection obligations on out-of-state retailers.

The Supreme Court’s Wayfair decision has removed a significant impediment to the enactment of these laws and it is possible that states may seek to tax out-of-state retailers, including for prior tax years.

Under Wayfair , a person requires only a “substantial nexus” with the taxing state before the state may subject the person to sales tax collection obligations therein.

An increasing number of states, both before and after the Supreme Court’s ruling, have considered or adopted laws that attempt to impose sales tax collection obligations on out-of-state retailers.

Although we believe that we currently collect sales taxes in all states that have adopted laws imposing sales tax collection obligations on out-of-state retailers since Wayfair was decided, a successful assertion by one or more states requiring us to collect sales taxes where we presently do not do so, or to collect more taxes in a jurisdiction in which we currently do collect some sales taxes, could result in substantial tax liabilities, including taxes on past sales, as well as penalties and interest.

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With the rapid development of the Chinese economy, the cost of labor has increased and may continue to increase in the future.

Furthermore, pursuant to Chinese labor laws, employers in China are subject to various requirements when signing labor contracts, paying remuneration, determining the term of employees’

probation and unilaterally terminating labor contracts.

Furthermore, pursuant to Chinese labor laws, employers in China are subject to various requirements when signing labor contracts, paying remuneration, determining the term of employees’ probation and unilaterally terminating labor contracts.

Our results of operations will be materially and adversely affected if the labor costs of our third-party suppliers and manufacturers increase significantly.

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Operating and doing business in China and using Chinese-owned social media platforms as tools for marketing, messaging and transacting with our customers in China exposes us to political, legal and economic risks.

In particular, the political, legal and economic climate in China, both nationally and regionally, and China’s relationship with the United States, is fluid and unpredictable.

Our ability to operate and do business in China and use Chinese-owned social media platforms may be adversely affected by changes in U.S.

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If any of these events occur, our business, financial condition and results of operations could be materially and adversely affected.

See also “—Tariffs imposed by the U.S.

government or a global trade war could increase the cost of our products, which could have a material adverse effect on our business, financial condition and results of operations.”

See also “—Tariffs imposed by the U.S.

government or a global trade war could increase the cost of our products, which could have a material adverse effect on our business, financial condition and results of operations.”

In addition, the U.S.

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Depending upon their duration and implementation, such executive or regulatory actions could result in a material adverse effect on our business, financial condition and results of operations.

We are exposed to fluctuations in currency exchange rates, which could negatively affect our operating results.

Most of our sales are denominated in U.S.

However, a strengthening U.S.

dollar could increase the real cost of our products to our customers outside of the United States that pay in foreign currencies, which could adversely affect our operating results.

Fluctuations in foreign currency exchange rates may cause us to recognize transaction gains and losses in our consolidated statements of income.

If we become more exposed to currency fluctuations and are not able to successfully hedge against the risks associated with currency fluctuations, our operating results could be materially and adversely affected.

Our reliance on overseas manufacturing and supply partners, including vendors located in jurisdictions presenting an increased risk of bribery and corruption, exposes us to legal, reputational and supply chain risk through the potential for violations of federal and international anti-corruption law.

We derive a significant portion of our owned brand merchandise from third-party manufacturing and supply partners in foreign countries and territories, including countries and territories perceived to carry an increased risk of corrupt business practices.

Foreign Corrupt Practices Act, or the FCPA, prohibits U.S.

corporations and their representatives from offering, promising, authorizing or making payments to any foreign government official, government staff member, political party or political candidate in an attempt to obtain or retain business abroad.

Likewise, the SEC, the U.S.

Department of Justice, OFAC, the U.S.

Department of State, as well as other foreign regulatory authorities continue to enforce economic and trade regulations and anti‑corruption laws across industries.

trade sanctions relate to transactions with designated foreign countries and territories as well as specially targeted individuals and entities that are identified on U.S.

and other government blacklists, and those owned by them or those acting on their behalf.

Notwithstanding our efforts to conduct our operations in material compliance with these regulations, our international vendors could be determined to be our “representatives”

under the FCPA, which could expose us to potential liability for the actions of these vendors under the FCPA.

If we or our vendors were determined to have violated OFAC regulations, the FCPA, the U.K.

Bribery Act of 2010, or any of the anti-corruption and anti-bribery laws in the countries and territories where we and our vendors do business, we could suffer severe fines and

penalties, profit disgorgement, injunctions on future conduct, securities litigation, bans on transacting certain business, and other consequences that may have a material adverse effect on our business, financial condition and results of operations.

In addition, the costs we may incur in defending against any anti-corruption investigations stemming from our or our vendors’

actions could be significant.

Moreover, any actual or alleged corruption in our supply chain could carry significant reputational harms, including negative publicity, loss of good will, and decline in share price.

We are subject to the U.S.

Foreign Corrupt Practices Act, or the FCPA, the U.K.

Bribery Act of 2010, the U.S.

domestic bribery statute contained in 18 U.S.C.

§ 201 and possibly other anti-bribery and anti-corruption laws in countries outside of the United States where we conduct our activities.

Anti-corruption and anti-bribery laws have been enforced aggressively in recent years and are interpreted broadly to generally prohibit companies, and their employees, agents, representatives, business partners and third-party intermediaries, from offering, promising, authorizing or making, directly or indirectly, improper payments to any foreign government official, government staff member, political party or political candidate or private sector individual in an attempt to obtain or retain business.

Likewise, the U.S.

Department of Justice, as well as foreign regulatory authorities, continue to enforce anti‑corruption laws across industries.

We sometimes leverage third-parties to sell our products and conduct our business abroad.

We and our employees, agents, representatives, business partners and third-party intermediaries may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities and we may be held liable for the corrupt or other illegal activities of these employees, agents, representatives, business partners or third-party intermediaries even if we do not explicitly authorize such activities.

These laws also require that we keep accurate books and records and maintain internal controls and compliance procedures designed to prevent any such actions.

While we have policies and procedures to address compliance with such laws, and notwithstanding our efforts

to conduct our operations in material compliance with these regulations, we cannot assure you that all of our employees, agents, representatives, business partners or third-party intermediaries will not take actions in violation of applicable law for which we may be ultimately held responsible.

Any allegations or violations of the FCPA, the U.K.

Bribery Act of 2010 or any of the anti-corruption and anti-bribery laws in the countries and territories where we and our vendors do business, could result in severe fines and penalties, profit disgorgement, injunctions on future conduct, securities litigation, prosecution, enforcement actions, fines, damages, investigations, loss of export privileges, bans on transacting certain business, and other consequences that may have a material adverse effect on our business, financial condition, results of operations and prospects.

Moreover, any actual or alleged corruption in our supply chain could carry significant reputational harms, including negative publicity, loss of good will and decline in stock price.

Expansion of our operations internationally will require management attention and resources, involves additional risks and may be unsuccessful.

We have limited experience with operating in regions outside of the United States and do not have physical operations outside of the United States, though a small number of our employees are working remotely from outside the United States.

We have limited experience with operating in regions outside of the United States.

We recently opened an office in the Philippines to support our customer service and certain administrative functions and a small number of our employees are working remotely in other regions outside the United States.

If we choose to expand further internationally, we would need to adapt to different local cultures, laws, regulations, standards and policies.

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Furthermore, to succeed with customers in international locations, it likely will be necessary to locate fulfillment centers in foreign markets and hire local employees in those international centers and we may have to invest in these facilities before proving we can successfully run foreign operations.

We may not be successful in expanding into international markets or in generating revenue from foreign operations for a variety of reasons, including:

We may not be successful in expanding into international markets or in generating net sales from foreign operations for a variety of reasons, including:

• localization of our merchandise offerings, including translation into foreign languages and adaptation for local practices;

navigating shipping and returns in a more fragmented geography, particularly following the UK’s departure from the EU and if the EU were to lose other members or change its policies regarding the flow of goods across country borders;

• navigating shipping and returns in a more fragmented geography, particularly following the UK’s departure from the EU and if the EU were to lose other members or change its policies regarding the flow of goods across country borders;

• different consumer demand dynamics, which may make our model and the merchandise we offer less successful compared to the United States;

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• more stringent regulations relating to privacy, data protection, and data security and access to, or use of, commercial and personal information, particularly in Europe;

changes in a specific country’s or region’s political or economic conditions;

• changes in a specific country’s or region’s political or economic conditions;

• risks resulting from changes in currency exchange rates.

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More specifically, the U.S.

government has from time to time imposed significant tariffs on certain product categories imported from China, including apparel, footwear, accessories and beauty.

Such tariffs could have a significant impact on our business, particularly the REVOLVE segment, within which a large portion of the merchandise offered for sale are

manufactured in China.

government has from time to time imposed significant tariffs on certain product categories imported from China, including apparel, footwear, beauty and accessories.

Such tariffs could have a significant impact on our business, particularly the REVOLVE segment, within which a large portion of the merchandise offered for sale is manufactured in China.

While we attempt to renegotiate prices with suppliers or diversify our supply chain in response to tariffs, such efforts may not yield immediate results or may be ineffective.

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Any further deterioration in the relations between the United States and China could exacerbate these actions and other governmental intervention.

For example, the implementation of China’s national-security law in Hong Kong has created additional U.S.-China tensions and could potentially increase the risks associated with the business and operations of U.S.-based technology companies in China.

For example, the implementation of China’s national-security law in Hong Kong created additional U.S.-China tensions and similar events could potentially increase the risks associated with the business and operations of U.S.-based technology companies in China.

or foreign governments may take additional administrative, legislative, or regulatory action that could materially interfere with our ability to sell products in certain countries.

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Any alterations to our business strategy or operations made in order to adapt to or comply with any such changes would be time-consuming and expensive and certain of our competitors may be better suited to withstand or react to these changes.

We are exposed to fluctuations in currency exchange rates, which could negatively affect our operating results.

Most of our sales are denominated in U.S.

However, a strengthening U.S.

dollar could increase the real cost of our products to our customers outside of the United States that pay in foreign currencies, which could adversely affect our operating results.

Fluctuations in foreign currency exchange rates may cause us to recognize transaction gains and losses in our consolidated statements of income.

Risks Related to Privacy, Cybersecurity and Our Technology

We collect and maintain significant amounts of personal data and other data relating to our customers and employees.

A variety of federal, state and international laws and regulations, and certain industry standards, govern or apply to our collection, use, retention, sharing and security of consumer data.

These requirements may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another or may conflict with other rules or our practices.

As a result, our practices likely have not complied or may not comply in the future with all such laws, regulations, requirements and obligations.

We may also be contractually required to indemnify and hold harmless third parties from the costs or consequences of non-compliance with any laws,

regulations or other legal obligations relating to privacy or consumer protection or any inadvertent or unauthorized use or disclosure of data that we store or handle as part of operating our business.

Additionally, any failure by us to comply with the PCI-DSS may violate payment card association operating rules, applicable laws and regulations, and contractual obligations to which we are subject.

Federal, state and international governmental authorities continue to evaluate the privacy implications inherent in the use of third-party “cookies” and other methods of online tracking for behavioral advertising and other purposes.

This transparency framework was launched in April 2021.

This transparency framework has and may continue to negatively impact the effectiveness of our advertising practices.

Foreign laws and regulations relating to privacy, data protection, information security, and consumer protection often are more restrictive than those in the United States.

The EU, for example, traditionally has imposed stricter obligations under its laws and regulations relating to privacy, data protection and consumer protection than the United States.

The General Data Protection Regulation, or GDPR, governs the EU’s data practices and privacy.

The GDPR requires companies to meet more stringent requirements regarding the handling of personal data of individuals in the EU than were required under predecessor EU requirements.

The GDPR provides for substantial penalties for non-compliance, which may result in monetary penalties of up to 20.0 million Euros or 4% of a company’s worldwide turnover, whichever is higher.

The safeguard on which we have primarily relied for such transfers has been use of the European Commission’s standard contractual clauses, or SCCs.

In the “Schrems II” decision issued by the Court of Justice of the European Union, or CJEU, on July 16, 2020, the CJEU invalidated one mechanism for cross-border personal data transfer, the EU-U.S.

Privacy Shield, and imposed additional obligations on companies relying on the SCCs to transfer personal data.

The Swiss-U.S.

Privacy Shield framework subsequently was invalidated by the Swiss Federal Data Protection and Information Commissioner.

Following issuance of a U.S.

executive order, a new framework, the EU-U.S.

Data Privacy Framework, or DPF, was created.

Following an adequacy decision issued by the European Commission on July 10, 2023, the DPF, along with a UK extension to the DPF that allows the transfer of personal data from the UK to the U.S., or the UK DPF Extension, are available for companies to use to legitimize personal data transfers to the U.S.

from the EEA and UK.

The DPF and the UK DPF Extension may be modified and subject to legal challenge, and it remains unclear whether the DPF or the UK DPF Extension will be appropriate for us to rely on.

Developments relating to cross-border data transfer may result in data protection regulators applying differing standards for, and requiring ad hoc verification of, transfers of personal data from Europe or other regions to the U.S.

Commission has released revised SCCs addressing the CJEU concerns.

The UK has also adopted new standard contractual clauses, or the UK SCCs, which became effective on March 21, 2022.

On June 28, 2021, the European Commission announced a decision of “adequacy” concluding that the UK ensures an equivalent level of data protection to the GDPR, which generally permits continued personal data flows from the EEA to the UK.

Some uncertainty remains, however, as this adequacy determination must be renewed after four years and may be modified or revoked in the interim.

The European Commission also has a draft regulation in the approval process that focuses on a person’s right to conduct a private life.

The proposed legislation, known as the Regulation of Privacy and Electronic Communications, or ePrivacy Regulation, would replace the current ePrivacy Directive.

Originally planned to be adopted and implemented at the same time as the GDPR, the ePrivacy Regulation is still being negotiated.

If adopted, the ePrivacy Regulation is expected to have a broad potential impact on the use of internet-based services and tracking technologies, such as cookies.

Aspects of the ePrivacy Regulation remain for negotiation between the European Commission and the Council.

We expect to incur additional costs to comply with the requirements of the ePrivacy Regulation as it is finalized for implementation.

On February 10, 2022, the French data protection authority issued a press release announcing that the French data protection authority had issued a similar decision.

Other data protection authorities in the EU are increasingly focused on the use of online tracking tools and have indicated that they plan to issue similar rulings.

We may find it necessary or appropriate to develop or use alternative methods to replace the functionality of cookies.

In China, for example, the Personal Information Protection Law, or PIPL, was adopted on August 20, 2021 and went into effect on November 1, 2021.

The PIPL allows for fines of up to 50 million renminbi, or 5% of a covered company’s revenue in the prior year.

There is no harmonized approach to these laws and regulations globally.

This private right of action may increase the likelihood of, and risks associated with, data breach litigation.

Moreover, California voters approved the California Privacy Rights Act, or CPRA, in November 2020.

The CPRA significantly modified the CCPA, creating obligations relating to consumer data effective as of January 1, 2022.

Numerous other states have proposed, and in certain cases enacted, legislation that share similarities with the CCPA and the CPRA.

If sensitive information, including such information about our customers, is disclosed or accessed without authorization, or if we or our third-party providers are subject to real or perceived cyberattacks or other security breaches or incidents, our customers may curtail use of our platform, we may be exposed to liability and our reputation would suffer.

We collect, transmit and store personal and financial information provided by our customers, such as names, email addresses, the details of transactions and credit card and other financial information.

We collect, transmit, store and otherwise process personal and financial information provided by our customers, such as names, email addresses, the details of transactions and credit card and other financial information.

Some of our third-party service providers, such as identity verification and payment processing providers, also regularly have access to customer data.

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Like other online services, they are also vulnerable to computer viruses, malware, computer hacking, fraudulent use, credential stuffing attacks, unauthorized access, phishing or social engineering attacks, ransomware attacks, denial-of-service attacks, exploitation of bugs and vulnerabilities, system malfunctions, failures, terrorism, inadvertent or intentional acts by our employees and contractors and other real or perceived cyberattacks.

Any of these incidents could lead to interruptions or shutdowns of our platform, loss, unavailability or corruption of data, or unauthorized access to or alteration, use, acquisition or

disclosure of personal data or other sensitive information.

Any of these incidents could lead to interruptions or shutdowns of our platform, loss, unavailability or corruption of data, or unauthorized access to or alteration, use, acquisition or disclosure of personal data or other sensitive information.

Cyberattacks could also result in the theft of our intellectual property.

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We and our third-party service providers may not have the resources or technical sophistication to anticipate or prevent all such cyberattacks, and we or they may face difficulties or delays in identifying and responding to cyberattacks and data security breaches and incidents.

In particular, our vendors and service providers may also be the targets of cyberattacks, malicious software, phishing schemes, and fraud, and our third-party vendors’

and service providers’

systems and networks may be, or may have been, breached or contain exploitable defects or bugs that could result in a breach of or disruption to our or their systems and networks.

Our ability to monitor our vendors and service providers’

data security is limited, and, in any event, third parties may be able to circumvent those security measures, resulting in the unauthorized access to, misuse, acquisition, disclosure, loss, alteration, or destruction of our and our customers’

data, including confidential, sensitive, and other information about individuals.

In particular, our vendors and service providers may also be the targets of cyberattacks, malicious software, phishing schemes, and fraud, and our third-party vendors’ and service providers’ systems and networks may be, or may have been, breached or contain exploitable defects or bugs that could result in a breach of or disruption to our or their systems and networks.

Our ability to monitor our vendors and service providers’ data security is limited, and, in any event, third parties may be able to circumvent those security measures, resulting in the unauthorized access to, misuse, acquisition, disclosure, loss, alteration, or destruction of our and our customers’ data, including confidential, sensitive, and other information about individuals.

Moreover, techniques used to obtain unauthorized access to systems change frequently and may not be known until launched against us or our third-party service providers.

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Additionally, with many of our employees and employees of our service providers now working remotely, we and our service providers have less capability to monitor and enforce our data protection and data security policies and face increased privacy, data protection and data security risks.

Also, due to political uncertainty and military actions associated with Russia’s war against Ukraine, we and our vendors and service providers are vulnerable to heightened risks of cybersecurity incidents and security and privacy breaches from or affiliated with nation-state actors.

Also, due to political uncertainty and military actions associated with geopolitical tensions, including Russia’s war against Ukraine, we and our vendors and service providers are vulnerable to heightened risks of cybersecurity incidents and security and privacy breaches from or affiliated with nation-state actors.

We are taking steps to monitor and enhance the security of our systems, information technology infrastructure, networks, and data, including with respect to remote access to systems and data.

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If the facilities where the computer and communications hardware are located fail, or if we suffer an interruption or degradation of services at our main facility, we could lose customer data and miss order fulfillment deadlines, which could harm our business.

Our systems and operations are vulnerable to damage or interruption from fire, flood, power loss, telecommunications failure, terrorist attacks, cyberattacks, data loss, acts of war, break-ins, earthquake and similar events.

For example, in September 2018, a distributed denial of service, or DDoS, attack caused our sites to be down for several hours, and we could be the subject of similar attacks in the future.

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Our back-up facility is designed to support transaction volume at a level slightly above our average daily sales, but is not adequate to support spikes in demand.

The back-up facility may not process effectively during times of higher traffic to our sites and may process transactions more slowly and may not support all of our sites’

functionality.

The back-up facility may not process effectively during times of higher traffic to our sites and may process transactions more slowly and may not support all of our sites’ functionality.

We use complex custom-built proprietary software in our technology infrastructure, which we seek to continually update and improve.

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Additionally, if we expand our use of third-party services, including cloud-based services, our technology infrastructure may be subject to increased risk of slowdown or interruption as a result of integration with such services and/or failures by such third parties, which are out of our control.

Our net sales depend on the number of visitors who shop on our sites and the volume of orders we can handle.

Our net sales depend on the number of visitors who shop on our sites and the

volume of orders we can handle.

Unavailability of our sites or reduced order fulfillment performance would reduce the volume of goods sold and could also materially adversely affect consumer perception of our brand.

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These information technology systems, some of which are managed by third parties, may be susceptible to damage, disruptions or shutdowns due to failures during the process of upgrading or replacing software, databases or components, power outages, hardware failures, computer viruses, attacks by computer hackers, other security breaches and incidents, telecommunication failures, user errors or catastrophic events.

Any material disruption of our systems or the systems of our third-party service providers could disrupt our ability to track, record and analyze the products that we sell and could negatively impact our operations, shipment of goods, ability to process financial information and transactions, and our ability to receive and process retail customers’

orders and eCommerce orders or engage in normal business activities.

If our information technology systems suffer damage, disruption or shutdown and we do

not effectively resolve the issues in a timely manner, our business, financial condition and results of operations may be materially and adversely affected and we could experience delays in reporting our financial results.

If our information technology systems suffer damage, disruption or shutdown and we do not effectively resolve the issues in a timely manner, our business, financial condition and results of operations may be materially and adversely affected and we could experience delays in reporting our financial results.

Our eCommerce operations are important to our business.

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Due to the importance of our website and eCommerce operations, we are vulnerable to website downtime and other technical failures.

Our failure to successfully respond to these risks could reduce eCommerce sales and damage our brand’s reputation.

Additionally, the information technology networks and systems used in our business and operations, some of which are managed by third parties, may suffer cyberattacks and otherwise be subject to security breaches and incidents.

Any such security breaches and incidents may result in, in addition to network and system disruptions, damage, and shutdowns, consequences such as loss or corruption of, or unauthorized access to or acquisition of, data stored or processed on those networks and systems.

The risks described here are heightened due to the increase in remote working in connection with the COVID-19 pandemic.

See also “—If sensitive information, including such information about our customers, is disclosed or accessed without authorization, or if we or our third-party providers are subject to real or perceived cyberattacks or other security breaches or incidents, our customers may curtail use of our platform, we may be exposed to liability and our reputation would suffer.”

We must successfully maintain, scale and upgrade our information technology systems and our failure to do so could have a material adverse effect on our business, financial condition and results of operations.

We have identified the need to significantly expand, scale and improve our information technology systems and personnel to support recent and expected future growth.

As such, we are in process of implementing, and will continue to invest in and implement, significant modifications and upgrades to our information technology systems and procedures, including replacing legacy systems with successor systems, making changes to legacy systems or acquiring new systems with new functionality, hiring employees with information technology expertise and building new policies, procedures, training programs and monitoring tools.

The risks described here are heightened due to the increase in remote working since 2020.

We must successfully maintain, scale and improve our information technology systems and personnel, and failure to do so could have a material adverse effect on our business, financial condition and results of operations.

We must successfully maintain, scale and improve our information technology systems and personnel to support our current operations and future growth.

As such, we will continue to invest in and implement significant modifications and upgrades to our information technology systems and procedures, including replacing legacy systems with successor systems, making changes to legacy systems or acquiring new systems with new functionality, hiring employees with information technology expertise and building new policies, procedures, training programs and monitoring tools.

These types of activities subject us to inherent costs and risks associated with replacing and changing these systems, including impairment of our ability to leverage our eCommerce channels, fulfill customer orders, potential disruption of our internal control structure, substantial capital expenditures, additional administration and operating expenses, acquisition and retention of sufficiently skilled personnel to implement and operate the new systems, demands on management time, the introduction of errors or vulnerabilities and other risks and costs of delays or difficulties in transitioning to or integrating new systems into our current systems.

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The software underlying our sites is highly complex and may contain undetected errors or vulnerabilities, some of which may only be discovered after the code has been released.

We rely heavily on a software engineering practice known as “continuous deployment,”

meaning that we typically release software code multiple times per day.

We rely heavily on a software engineering practice known as “continuous deployment,” meaning that we typically release software code multiple times per day.

This practice may result in the more frequent introduction of errors or vulnerabilities into the software underlying our platform.

Any errors or vulnerabilities discovered in our code after release could result in damage to our reputation, loss of customers, disruption to our eCommerce channels, loss of revenue or liability for damages, any of which could adversely affect our growth prospects and our business.

Any errors or vulnerabilities discovered in our code after release could result in damage to our reputation, loss of customers, disruption to our eCommerce channels, loss of net sales or liability for damages, any of which could adversely affect our growth prospects and our business.

Our business may be adversely affected if we are unable to provide our customers a cost-effective shopping platform that is able to respond and adapt to rapid changes in technology.

The number of people who access the Internet through devices other than personal computers, including mobile phones, smartphones, handheld computers such as notebooks and tablets, video game consoles, and television set-top devices, has increased dramatically in the past few years.

The smaller screen size, functionality, and memory associated with some alternative devices may make the use of our sites and purchasing our products more difficult.

The versions of our sites developed for these devices may not be compelling to consumers.

In addition, it is time consuming and costly to keep pace with rapidly changing and continuously evolving technology.

We launched our mobile applications for REVOLVE and FWRD in 2013, and all of our North American sites and a majority of our international sites are mobile-optimized.

In 2022 and 2021, a majority of orders were placed from a mobile device.

However, we cannot be certain that our mobile applications or our mobile-optimized sites will be successful in the future.

As existing mobile devices and platforms evolve and new mobile devices and platforms are released, it is difficult to predict the problems we may encounter in adjusting and developing applications for changed and alternative devices and platforms, and we may need to devote significant resources to the creation, support and maintenance of such applications.

The majority of our customer orders are placed from a mobile device.

As existing mobile devices and other platforms evolve and new mobile devices and platforms are released, it is difficult to predict the problems we may encounter in adjusting and developing applications for changed and alternative devices and platforms, and we may need to devote significant resources to the creation, support and maintenance of such applications.

If we are unable to attract consumers to our websites through these devices or are slow to develop a version of our websites that is more compatible with alternative devices or a mobile application, we may fail to capture a significant share of consumers in the fashion retail market, which could materially and adversely affect our business.

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The implementation of upgrades and changes requires significant investments.

Our results of operations may be affected by the timing, effectiveness and costs associated with the successful implementation of any upgrades or changes to our systems and infrastructure.

Our results of operations may be affected by the timing, effectiveness and costs

associated with the successful implementation of any upgrades or changes to our systems and infrastructure.

In the event that it is more difficult for our customers to buy products from us on their mobile devices, or if our customers choose not to buy products from us on their mobile devices or to use mobile products that do not offer access to our websites, our customer growth could be harmed and our business, financial condition and operating results may be materially adversely affected.

Our use of artificial intelligence and machine learning could adversely affect our business and operating results.

We use artificial intelligence, or AI, and machine learning, or ML, in our business to, among other things, optimize our product assortment and personalize our website experience through advanced search and product recommendations.

We may expand our use of AI and ML into other areas of our business including the design and development of owned brand merchandise and general administrative functions.

Issues relating to our use of new and evolving technologies such as AI may cause us to experience brand or reputational harm, competitive harm, legal liability and new or enhanced governmental or regulatory scrutiny, and to incur additional costs to resolve such issues.

For example, AI algorithms are based on ML and predictive analytics, which can include unexpected biases and lead to discriminatory outcomes.

In addition, perceived or actual technical, legal, compliance, privacy, security, ethical or other issues relating to the use of AI could undermine the decisions, predictions or analysis that AI applications produce and create additional risks, such as risks of cybersecurity incidents, all of which could adversely affect our business and operating results.

The use of AI involves significant technical complexity and requires specialized expertise.

Any disruption or failure in our AI-based systems or technology infrastructure could result in delays or errors in our operations, which could harm our business and operating results.

Moreover, developing, testing and deploying AI systems may also increase our operating expenses due to the nature of the computing costs involved in such systems.

Risks Related to Our Intellectual Property

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We rely on trademark, copyright, trade secrets, confidentiality agreements and other practices to protect our brands, designs, proprietary information, technologies and processes.

Our principal trademark assets include the registered trademarks “REVOLVE,”

“FWRD”

and multiple other brand names and our logos.

Our trademarks are valuable assets that support our brand and consumers’

perception of our services and merchandise.

We also hold the rights to the “revolve.com”

and “fwrd.com”

Internet domain names and various other related domain names, which are subject to Internet regulatory bodies and trademark and other related laws of each applicable jurisdiction.

We have copyrights and other proprietary rights associated with our owned brands’

apparel and other products.

Our principal trademark assets include the registered trademarks “REVOLVE,” “FWRD” and multiple other brand names and our logos.

Our trademarks are valuable assets that support our brand and consumers’ perception of our services and merchandise.

We also hold the rights to the “revolve.com” and “fwrd.com” Internet domain names and various other related domain names, which are subject to Internet regulatory bodies and trademark and other related laws of each applicable jurisdiction.

We have copyrights and other proprietary rights associated with our owned brands’ apparel and other products.

If we are unable to protect our trademarks or domain names in the United States or in other jurisdictions in which we may ultimately operate, our brand recognition and reputation would suffer, we would incur significant expense establishing new brands and our operating results would be adversely impacted.

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Our limited registered copyright and patent protection may restrict our ability to protect our technologies and processes from competition.

We primarily rely on unregistered copyrights to protect our designs and products and on trade secret laws to protect our technologies and processes, including the algorithms we use throughout our business.

We primarily rely on unregistered copyrights to protect our designs and products and on trade secret laws to protect our technologies and processes, including the algorithms

we use throughout our business.

Others may independently develop the same or similar designs, products, technologies and processes, or may improperly acquire and use information about our technologies and processes, which may allow them to provide products or services similar to ours, which could harm our competitive position.

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We have in the past received, and may in the future receive, claims by various third-parties that we have infringed their copyrights, trademarks or patents, or improperly used or disclosed their trade secrets, or otherwise infringed or violated their proprietary rights, such as licensing or publicity rights.

For example, in March 2023, we received a cease and desist letter alleging copyright infringement and related claims.

During 2023, we accrued $7.3 million to general and administrative expenses for losses and legal fees incurred in connection with these claims.

In November 2023, we entered into a final settlement agreement with the claimant and paid $7.3 million in settlement costs and legal fees related to this matter.

As of the date of this report, we expect to receive approximately $2.6 million in insurance proceeds related to this matter.

We record insurance proceeds related to legal matters within other income (expense), net in the period in which they are received.

Our active engagement in social media activities and large network of social media influencer partners increases these risks for us.

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We could also be subject to actual damages, the amounts of which may be difficult to quantify.

In addition, in some cases we may

be obligated to pay the attorneys’

fees for a plaintiff in a lawsuit filed against us.

Such damages and attorneys’

fees, if any, could adversely affect our business, operating results and financial condition.

In addition, in some cases we may be obligated to pay the attorneys’ fees for a plaintiff in a lawsuit filed against us.

Such damages and attorneys’ fees, if any, could adversely affect our business, operating results and financial condition.

Even if such claims were not valid, defending them could be expensive and distracting, adversely affecting our operating results.

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The market price of our Class A common stock may be volatile or may decline steeply or suddenly regardless of our operating performance, and we may not be able to meet investor or analyst expectations.

The market price of our Class A common stock has, and may continue to, fluctuate or decline significantly in response to numerous factors, including those described in this “Risk Factors”

section, many of which are beyond our control and may not be related to our operating performance.

The market price of our Class A common stock has, and may continue to, fluctuate or decline significantly in response to numerous factors, including those described in this “Risk Factors” section, many of which are beyond our control and may not be related to our operating performance.

These fluctuations could cause you to lose all or part of your investment in our Class A common stock.

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• additional shares of our Class A common stock being sold into the market by us or our existing stockholders, or the anticipation of such sales;

• repurchases of our Class A common stock pursuant to our stock repurchase program and any announcement of a termination of the program;

• announcements by us or our competitors of significant products or features, technical innovations, acquisitions, strategic partnerships, joint ventures or capital commitments;

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• imposition of fines or other remedial measures as a result of the underpayment of customs duties;

other events or factors, including those resulting from war, including Russia’s war against Ukraine, or incidents of terrorism, or responses to these events.

In addition, extreme price and volume fluctuations in the stock markets have affected and continue to affect many eCommerce and other technology companies’

stock prices.

Often, their stock prices have fluctuated in ways

unrelated or disproportionate to the companies’

operating performance.

• other events or factors, including those resulting from war and geopolitical tensions, or incidents of terrorism, or responses to these events.

In addition, extreme price and volume fluctuations in the stock markets have affected and continue to affect many eCommerce and other technology companies’ stock prices.

Often, their stock prices have fluctuated in ways unrelated or disproportionate to the companies’ operating performance.

In the past, stockholders have filed securities class action litigation following periods of market volatility.

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This variability and unpredictability could also result in our failing to meet the expectations of industry or financial analysts or investors for any period.

If our revenue or operating results fall below the expectations of analysts or investors or below any forecasts we may provide to the market, or if the forecasts we provide to the market are below the expectations of analysts or investors, the price of our Class A common stock could decline substantially.

Such a stock price decline could occur even when we have met any previously publicly stated revenue or earnings forecasts that we may provide.

If our operating results fall below the expectations of analysts or investors or below any forecasts we

may provide to the market, or if the forecasts we provide to the market are below the expectations of analysts or investors, the price of our Class A common stock could decline substantially.

Such a stock price decline could occur even when we have met any previously publicly stated operating results forecasts that we may provide.

In addition, the price of our Class A common stock could decline if our results fail to meet investor expectations driven by certain investors and analysts having access to third-party credit card data used to estimate our net sales.

We cannot guarantee that our stock repurchase program will be fully consummated or that it will enhance long-term stockholder value.

Share repurchases could also increase the volatility of the trading price of our stock and could diminish our cash reserves.

In August 2023, our board of directors authorized a stock repurchase program of up to $100 million of our outstanding Class A common stock.

Although our board of directors has authorized this repurchase program, the program does not obligate us to repurchase any specific dollar amount or number of shares.

The actual timing and amount of repurchases remain subject to a variety of factors, including stock price, trading volume, market conditions and other general business considerations.

In addition, the terms of our credit agreement impose certain limitations on our ability to repurchase shares.

The repurchase program has no expiration date but it may be modified, suspended or terminated at any time, and we cannot guarantee that the program will be fully consummated or that it will enhance long-term stockholder value.

The program could affect the trading price of our stock and increase volatility, and any announcement of a termination of the program may result in a decrease in the trading price of our stock.

In addition, the repurchase program could diminish our cash reserves.

Future sales of shares could cause our stock price to decline.

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These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.

All shares of common stock sold are freely tradable without restriction or further registration under the Securities Act, unless held by our “affiliates,”

as that term is defined in Rule 144 under the Securities Act.

Our outstanding shares of Class A common stock, including shares issuable upon conversion of our outstanding Class B common stock, may be resold in the public market in the United States subject to registration under the Securities Act or under an exemption from registration, including Rule 144.

The holders of all of our Class B common stock have rights, subject to certain conditions, to require us to file registration statements for the public resale of the shares of Class A common stock issuable upon conversion of their shares of Class B common stock, or to include such shares in registration statements that we may file.

If we register the offer and sale of shares for the holders of registration rights, those shares can be freely sold in the public market upon issuance.

In addition, the shares subject to outstanding options and restricted stock units, or RSUs, and the shares reserved for future issuance under our equity incentive plans will become available for sale immediately upon the exercise of such options.

We register the offer and sale of all shares of common stock that we may issue under our equity incentive plans and, as a result, the sale of shares to be issued under our equity incentive plans can be freely sold in the public market upon issuance, subject to the restrictions of Rule 144 under the Securities Act in the case of our affiliates.

In addition, we register the offer and sale of all shares of common stock that we may issue under our equity incentive plans, including the shares subject to outstanding options and restricted stock units, or RSUs.

As a result, the sale of shares to be issued under our equity incentive plans can be freely resold in the public market upon issuance, subject to the restrictions of Rule 144 under the Securities Act in the case of our affiliates.

The dual class structure of our common stock concentrates voting control with our executive officers, directors and their affiliates, which may depress the trading price of our Class A common stock.

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This concentration of ownership will limit the ability of other stockholders to influence corporate matters and may cause us to make strategic decisions that could involve risks to you or that may not be aligned with your interests.

In addition, our dual class structure may adversely affect the market price of our Class A common stock as certain index providers have implemented restrictions with respect to the inclusion of companies with multiple-class share structures in certain of their indices.

For example, S&P Dow Jones does not admit companies with multiple-class share structures to certain of its indices.

Affected indices include the S&P 500, S&P MidCap 400 and S&P SmallCap 600, which together make up the S&P Composite 1500.

The dual class structure of our common stock makes us ineligible for inclusion in these indices and we cannot assure you that other stock indices will not take similar actions.

It is unclear what effect, if any, these policies have on the valuations of publicly traded companies excluded from such indices, but it is possible that they may depress valuations, as compared to similar companies that are

Further, given the sustained flow of investment funds into passive strategies that seek to track certain indices, exclusion from certain stock indices will likely preclude investment by many of these funds and could make our Class A common stock less attractive to other investors.

As a result, the market price of our Class A common stock could be adversely affected.

If securities or industry analysts either do not publish research about us or publish inaccurate or unfavorable research about us, our business or our market, or if they adversely change their recommendations regarding our Class A common stock, the trading price or trading volume of our Class A common stock could decline.

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If any analyst who may cover us were to cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the trading price or trading volume of our Class A common stock to decline.

We have elected to take advantage of the “controlled company”

exemption to the corporate governance rules for NYSE-listed companies, which could make our Class A common stock less attractive to some investors or otherwise harm our stock price.

Because we qualify as a “controlled company”

under the corporate governance rules for NYSE-listed companies, we are not required to have a majority of our board of directors be independent, nor are we required to have a compensation committee or an independent nominating function.

We have elected to take advantage of the “controlled company” exemption to the corporate governance rules for NYSE-listed companies, which could make our Class A common stock less attractive to some investors or otherwise harm our stock price.

Because we qualify as a “controlled company” under the corporate governance rules for NYSE-listed companies, we are not required to have a majority of our board of directors be independent, nor are we required to have a compensation committee or an independent nominating function.

In light of our status as a controlled company, in the future we could elect not to have a majority of our board of directors be independent or not to have a compensation committee or nominating and corporate governance committee.

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Future securities issuances could result in significant dilution to our stockholders and impair the market price of our Class A common stock.

Future issuances of shares of our Class A common stock or the conversion of a substantial number of shares of our Class B common stock, or the perception that these sales or conversions may occur, could depress the market price of our Class A common stock and result in dilution to existing holders of our Class A common stock.

Also, to the extent outstanding options to purchase our shares of our Class A or Class B common stock are exercised or RSUs or other equity-based awards become vested, there will be further dilution.

The amount of dilution could be substantial depending upon the size of the issuances or exercises.

Also, to the extent outstanding options are exercised or RSUs or other equity-based awards become vested, there will be further dilution which could be substantial.

Furthermore, we may issue additional equity securities that could have rights senior to those of our Class A common stock.

All of the shares of Class A common stock issuable upon the conversion of shares of Class B common stock subject to outstanding options have been registered for public resale under the Securities Act.

Accordingly, these shares are able to be freely sold in the public market upon issuance as permitted by any applicable vesting requirements and subject to compliance with applicable securities laws.

All of the shares of Class A common stock issuable upon the conversion of the shares of Class B common stock that are subject to outstanding options have been registered for public resale under the Securities Act.

Accordingly, these shares will be able to be freely resold in the public market upon issuance as permitted by any applicable vesting requirements and subject to compliance with applicable securities laws.

In addition, the holders of all of our Class B common stock have rights, subject to certain conditions, to require us to file registration statements for the public resale of the shares of Class A common stock issuable upon conversion of their shares of Class B common stock or to include such shares in registration statements that we may file.

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• require super-majority voting to amend some provisions in our certificate of incorporation and bylaws;

authorize the issuance of “blank check”

preferred stock that our board of directors could use to implement a stockholder rights plan;

• authorize the issuance of “blank check” preferred stock that our board of directors could use to implement a stockholder rights plan;

• eliminate the ability of our stockholders to call special meetings of stockholders;

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Any provision of our certificate of incorporation or bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock and could also affect the price that some investors are willing to pay for our Class A common stock.

Our bylaws designate a state or federal court located within the State of Delaware as the exclusive forum for substantially all disputes between us and our stockholders, and also provide that the federal district courts are the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act, each of which could limit our stockholders’

ability to choose the judicial forum for disputes with us or our directors, officers, stockholders or employees.

Our bylaws provide that, unless we consent in writing to the selection of an alternative forum, the sole and exclusive forum for (1) any derivative action or proceeding brought on our behalf, (2) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, stockholders, officers or other employees to us or our stockholders, (3) any action arising pursuant to any provision of the Delaware General Corporation Law, our certificate of incorporation or our bylaws or (4) any other action asserting a claim that is governed by the internal affairs doctrine shall be the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, another State court in Delaware or the federal district court for the District of Delaware), except for any claim as to which such court determines that there is an indispensable party not subject to the jurisdiction of such court (and the indispensable party does not consent to the personal jurisdiction of such court within ten days following such determination), which is vested in the exclusive jurisdiction of a court or forum other than such court or for which such court does not have subject matter jurisdiction.

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Any person or entity purchasing or otherwise acquiring or holding or owning (or continuing to hold or own) any interest in any of our securities shall be deemed to have notice of and consented to the foregoing bylaw provisions.

provisions may limit a stockholder’s ability to bring a claim in a judicial forum of its choosing for disputes with us or our current or former directors, officers, stockholders or other employees, which may discourage such lawsuits against us and our current and former directors, officers, stockholders and other employees.

Although we believe these exclusive forum provisions benefit us by providing increased consistency in the application of Delaware law and federal securities laws in the types of lawsuits to which each applies, the exclusive forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum of its choosing for disputes with us or our current or former directors, officers, stockholders or other employees, which may discourage such lawsuits against us and our current and former directors, officers, stockholders and other employees.

Our stockholders will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder as a result of our exclusive forum provisions.

Further, the enforceability of similar exclusive forum provisions in other companies’

organizational documents has been challenged in legal proceedings, and it is possible that a court of law could rule that these types of provisions are inapplicable or unenforceable if they are challenged in a proceeding or otherwise.

Further, the enforceability of similar exclusive forum provisions in other companies’ organizational documents has been challenged in legal proceedings, and it is possible that a court of law could rule that these types of provisions

are inapplicable or unenforceable if they are challenged in a proceeding or otherwise.

If a court were to find either exclusive forum provision contained in our bylaws to be inapplicable or unenforceable in an action, we may incur significant additional costs associated with resolving such action in other jurisdictions, all of which could harm our results of operations.

UNRESOLV ED STAFF COMMENTS

CYBERSECURITY

Risk Management and Strategy

We have implemented policies and processes to evaluate and manage cybersecurity risks, incorporating them into our broader risk management framework.

We regularly examine cybersecurity threats that could compromise our information systems’ security or data.

Every quarter, we evaluate our cybersecurity posture and reassess whether significant changes in our business could impact our digital infrastructure.

These assessments aim to identify potential internal and external threats, estimate their probability and possible impact, and gauge the effectiveness of our current policies and processes in mitigating these threats.

Following these risk assessments, we evaluate whether and, if so, how to re-design, implement and maintain reasonable safeguards to minimize identified risks and reasonably address any identified gaps in existing safeguards.

We also regularly monitor the effectiveness of our safeguards.

We devote significant resources and designate high-level personnel, including our chief architect, who reports to our co-chief executive officer, to manage the risk assessment and mitigation process.

We regularly check and improve our security measures and educate our employees about them with the help of our information technology team.

Key personnel are made aware of our cybersecurity policies through trainings.

We engage third parties in connection with our risk assessment processes.

We require all external service providers who may impact our cybersecurity risks to certify that they can set up and maintain proper security consistent with all applicable laws, manage security effectively for their work with us, and quickly inform us if they think their security has been breached.

We have never experienced a cybersecurity incident that was determined to be material, although, like many technology-dependent companies operating in the current environment, we have experienced cybersecurity incidents in the past.

For additional information regarding whether any risks from cybersecurity threats are reasonably likely to materially affect our company, including our business strategy, results of operations or financial condition, please see the section titled “Risk Factors.”

One of the key functions of our board of directors is informed oversight of our risk management process, including risks from cybersecurity threats.

Our board of directors monitors and assesses strategic risk exposure, and our executive officers manage the material risks we face.

Our board of directors administers its cybersecurity risk oversight function directly as a whole and through the audit committee.

Our chief architect, who has over 15 years of experience in software engineering, has served as our chief architect for seven years, works with our cybersecurity management committee to manage our cybersecurity policies and processes, including those described in the “Risk Management and Strategy” section above.

They stay informed and manage how we identify, address, prevent and resolve cybersecurity issues and related matters.

This is done through regular checks of our systems, tests to identify security weaknesses and maintaining our incident response plan.

Our chief architect and the cybersecurity management committee are responsible for our cybersecurity rules and methods, like those described in the “Risk Management and Strategy” section.

They stay updated and track how we

prevent, identify, lessen and address cybersecurity issues.

This is done through regular checks of our systems, tests to find security weaknesses and having a plan ready to respond to any incidents.

In addition to regular meetings, the chief architect and co-chief executive officer regularly discuss active, emerging and potential cybersecurity risks.

They keep each other informed about significant changes affecting cybersecurity, and they periodically update our board of directors or the audit committee about these changes as well as our cybersecurity risks, so that our board of directors can administer its oversight function as part of its broader oversight and risk management.

The following table sets forth information with respect to our facilities, all of which are used by both our REVOLVE and FWRD segments:

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Cerritos, California

Office and studio space

Cerritos, California

Los Angeles, California

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Approximately 30,000 square feet is sublet to a third-party on a month-to-month basis.

Approximately 26,000 square feet is sublet to a third-party through the remainder of the lease term.

We believe that our facilities are adequate for our needs and believe that we should be able to renew any of the above leases or secure similar property without an adverse impact on our operations.

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-K

Item 1A. Risk Factors