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Item 8. Financial Statements and Supplementary Data

2025-02-25 compared with 2024-02-27 · 114 added, 43 removed, 743 unchanged (17% of the section changed)

113 unchanged sentences

Retained earnings

Non-controlling interest

Total stockholders’ equity

12 unchanged sentences

Income from operations

Other (income) expense, net

Other income, net

Income before income taxes

Provision for income taxes

Net loss attributable to non-controlling interest

Net income attributable to Revolve Group, Inc.

Earnings per share of Class A and Class B

8 unchanged sentences

Year Ended December 31,

Other comprehensive income (loss):

Other comprehensive (loss) income:

Cumulative translation adjustment

Total other comprehensive income (loss)

Total other comprehensive (loss) income

Total comprehensive income

Comprehensive loss attributable to non-controlling interest

Comprehensive income attributable to Revolve Group, Inc.

The accompanying notes are an integral part of these consolidated financial statements.

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(In thousands, except share data)

Non-controlling

Total Stockholders’

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Issuance of Class A common stock from exercise of stock options and vesting of restricted stock units

Repurchases of Class A common stock

Equity-based compensation

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Cumulative translation adjustment

Issuance of non-controlling interest at fair value

Net income (loss)

Balance as of December 31, 2024

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Depreciation and amortization

Rental product depreciation

Equity-based compensation

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Purchases of property and equipment

Purchases of rental product

Cash paid for acquisition

Net cash used in investing activities

Financing activities:

Proceeds from the exercise of stock options, net

Proceeds from the exercise of stock options, net of

tax withholdings on share-based payment awards

Repurchases of Class A common stock

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Revolve Group, Inc., or REVOLVE, is an online fashion retailer for Millennial and Generation Z consumers.

Through our websites and mobile apps we deliver an aspirational customer experience from a vast yet curated offering.

Through our websites and mobile applications we deliver an aspirational customer experience from a vast yet curated offering.

Our dynamic platform connects a deeply engaged community of consumers, global fashion influencers, and a broad yet curated collection of brands.

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Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

Actual results could differ from those estimates.

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of sales is also reduced and an offsetting asset is recorded within prepaid expenses and other current assets for expected merchandise to be returned.

The following table presents a rollforward of our sales return reserve for the years ended December 31, 2023, 2022 and 2021 (in thousands):

The following table presents a roll-forward of our sales return reserve for the years ended December 31, 2024, 2023 and 2022 (in thousands):

Beginning balance

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We record losses when incurred related to these fraudulent charges as amounts have historically been insignificant.

See Note 12, Segment Information , for disaggregation of revenue by reportable segment, geographic area and product category.

See Note 12, Segment Information , for disaggregation of net sales by reportable segment, geographic area and major product category.

Rental Product, Net

During the second quarter of 2024, we entered into a consignment agreement with a third party to rent a limited quantity of our product assortment, primarily handbags, to customers.

We consider rental product to be a long-term productive asset and classify it as other assets within the Company ’ s condensed consolidated balance sheets.

Rental product is stated at cost, less accumulated depreciation.

We depreciate rental product, less an estimated salvage value, over its estimated useful life, using the straight-line method.

The estimated useful life of our rental product is typically two years .

Rental product depreciation is included in cost of sales in the condensed consolidated statements of income.

As of December 31, 2024, rental product, net amounted to $ 2.3 million and was included within other assets.

Rental product depreciation was $ 0.7 million for the year ended December 31, 2024.

Our consignment partner offers customers an opportunity to purchase items in rentable condition prior to the end of their useful life.

In such instances, we consider the disposal of rental product to be a sale and record the proceeds as net sales and record the net book value of the items at the time of sale as cost of sales in the condensed consolidated statements of income.

Write-offs for losses on lost, damaged, and unreturned products are recorded as rental product depreciation within cost of sales.

Rental Product Revenues

Rental product revenues are recognized ratably over the subscription period, commencing on the date the subscriber enrolls in the rental program, net of discounts, customer credits and refunds and are recorded within net sales in the condensed consolidated statements of income.

The subscription fees are collected from the customer upon

The subscription has a minimum period of three months after which it renews automatically on a monthly basis until cancelled by the customer.

Cost of Sales

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We do not maintain an allowance for doubtful accounts related to these receivables as payment is typically received in full within a few business days after the sale.

We carry the remaining portion of accounts receivable at invoiced amounts less allowances for doubtful accounts and other deductions.

We carry the remaining portion of accounts receivable at

invoiced amounts less allowances for doubtful accounts and other deductions.

Allowance for doubtful accounts was insignificant at both December 31, 2024 and 2023.

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Prepaid expenses and other current assets consist primarily of expected merchandise returns net of related costs, advanced payments on inventory to be delivered from vendors, prepaid packaging, and prepaid insurance.

Business Combinations

We account for business combinations using the acquisition method.

All of the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree are recorded at their acquisition date fair values.

The difference between the aggregate consideration paid for an acquisition and the fair value of the net assets acquired is recorded as either goodwill or a bargain purchase gain.

Identifiable intangible assets with finite lives are amortized over their useful lives.

Amortization of intangible assets is recorded within general and administrative expenses.

We use estimates and assumptions available to us as a part of the determination of fair value to accurately value assets acquired, liabilities assumed and any noncontrolling interest on the business combination date.

These estimates are subject to measurement period adjustments.

As a result, during the preliminary determination of fair value, which may be up to one year from the business combination date, we may record adjustments to the assets acquired or liabilities assumed subsequent to the completion of the determination of fair value in the period in which the adjustments were determined.

Noncontrolling interest, if any, is measured using the fair value of the subsidiaries’ identifiable assets and liabilities at the date of acquisition, subject to possible adjustments for up to one year from the business combination date.

We also may incur acquisition-related and other expenses including legal, banking, accounting and other advisory fees of third parties which are recorded within general and administrative expenses in the period in which they were incurred.

The results of operations of acquired businesses are included in the consolidated financial statements from the acquisition date.

Alexandre Vauthier Acquisition

In February 2024, Alexandre Vauthier, a French luxury fashion brand, filed for bankruptcy due to difficulties resulting from an increase in its working capital requirements.

On June 19, 2024, pursuant to a decision rendered by the Commercial Court of Paris, Revolve Group, Inc.

acquired the business of Alexandre Vauthier, for $ 0.4 million.

The acquisition was made through L.A.

Rive Droite, a newly incorporated French joint stock company.

As of the acquisition date, the approximate fair value of net assets acquired was $ 0.4 million.

The results of operations of the acquired business are included in the Company ’ s consolidated results beginning June 19, 2024.

On July 1, 2024, the Company entered into a shareholders’ agreement with Mr.

Alexandre Vauthier, according to which Mr.

Alexandre Vauthier transferred all intellectual property and other rights relating to the business held by

him in exchange for 20 % share capital and voting interest in L.A.

Following that transfer, the Company recorded a noncontrolling interest of $ 0.4 million within its condensed consolidated balance sheets, which was measured based on the fair value of L.A.

Rive Droite’s net identifiable assets as of July 1, 2024.

Total acquisition costs incurred by the Company in connection with the purchase were $ 0.5 million and primarily related to legal fees.

These costs are recorded within general and administrative expenses in the condensed consolidated statements of income.

Equity Investments

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The estimated useful life of our capitalized software is three years .

We lease office and warehouse space and equipment used in connection with our operations under various operating leases, some of which provide for rental payments on a graduated basis, rent holidays and other incentives.

We lease office, warehouse and retail space and equipment used in connection with our operations under various operating leases, some of which provide for rental payments on a graduated basis, rent holidays and other incentives.

Operating leases with a term greater than one year are recorded on the consolidated balance sheets as right-of-use lease assets and lease liabilities at the commencement date.

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We perform this evaluation at the reporting unit level, comprised of the principle business units within our REVOLVE segment.

In order to test for goodwill impairment, we compare the fair value of the reporting unit to its carrying value, including goodwill.

In order to test for goodwill impairment, we compare the fair value of the reporting unit to its

carrying value, including goodwill.

If the fair value of the reporting unit is less than its carrying amount, goodwill is written down for the amount by which the carrying amount exceeds the reporting unit's fair value.

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We do not have significant vendor concentrations.

Accounting Pronouncements Not Yet Effective

Recently Adopted Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , which updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses and information used to assess segment performance.

ASU 2023-07 is effective for us for annual periods beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The amendments should be applied retrospectively to all prior periods presented in the financial statements.

We are currently in the process of evaluating the effects of this pronouncement on our consolidated financial statements and related disclosures.

We adopted ASU 2023-07 in the fourth quarter of 2024 by including cost of sales by segment disclosure within Note 12, Segment Information , as our chief operating decision makers periodically review segment gross profit to assess segment performance and cost of sales is considered both easily computable and significant.

Accounting Pronouncements Not Yet Effective

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

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(1) Includes $ 0.9 million and $ 1.2 million of intangible assets not subject to amortization as of December 31, 2024 and 2023, respectively.

Our amortization expense for acquired identifiable intangible assets with finite useful lives was $ 0.1 million for each of the years ended December 31, 2023, 2022 and 2021.

Our amortization expense for acquired identifiable intangible assets with finite useful lives was $ 0.2 million for the year ended December 31, 2024 and $ 0.1 million for the years ended December 31, 2023 and 2022.

Future estimated amortization expense for acquired identifiable intangible assets is as follows (in thousands):

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For the years ended December 31, 2024, 2023 and 2022, $ 2.9 million, $ 2.7 million, and $ 2.6 million, respectively, was recorded in general and administrative expense and $ 1.4 million, $ 2.3 million, and $ 2.1 million, respectively, was recorded in fulfillment expense in the accompanying consolidated statements of income.

Operating leases with a term greater than one year are recorded on the consolidated balance sheets as right-of-use lease assets and lease liabilities at the commencement date.

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We are also obligated to pay other customary fees for a credit facility of this size and type, including an unused commitment fee.

The credit agreement also permits us, in certain circumstances, to request an increase in the facility by an additional amount of up to $ 25.0 million (in an initial minimum amount of $ 10.0 million and in increments of

$ 5.0 million thereafter) at the same maturity, pricing and other terms.

The credit agreement also permits us, in certain circumstances, to request an increase in the facility

by an additional amount of up to $ 25.0 million (in an initial minimum amount of $ 10.0 million and in increments of $ 5.0 million thereafter) at the same maturity, pricing and other terms.

Our obligations under the credit agreement are secured by substantially all of our assets.

12 unchanged sentences

Tax Contingencies

We are subject to income taxes in the United States and the United Kingdom, or UK.

We are subject to income taxes in the United States, the United Kingdom, or UK, France and Netherlands.

Significant judgment is required in evaluating our tax positions and determining our provision for income taxes.

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In March 2022, we received a cease and desist letter alleging copyright infringement and related claims.

During 2022, we ac crued $ 6.3 million to general and administrative expenses for estimated losses and legal fees that we expected to incur in connection with these claims and during the three months ended March 31, 2023, we accrued an additional $ 0.3 million for estimated legal fees.

During 2022, we accrued $ 6.3 million to general and administrative expenses for estimated losses and legal fees that we expected to incur in connection with these claims and during the three months ended March 31, 2023, we accrued an additional $ 0.3 million for estimated legal fees.

In February, 2023, we entered into a final settlement agreement with the claimant and paid approximately $ 1.5 million in settlement costs and legal fees related to this matter, net of insurance proceeds.

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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.

During the three months ended March 31, 2024, we received $ 2.8 million in insurance proceeds related to this matter.

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

In February 2024, the U.S.

Fish and Wildlife Service served us with a notice of violation and proposed civil penalty, alleging that we have violated certain administrative requirements under the Endangered Species Act and the Lacey Act in connection with our export and import of certain items of merchandise.

During the fourth quarter of 2023, we accrued $ 2.8 million to general and administrative expenses for estimated losses and legal fees related to this matter, which remains pending as of the date of this report.

While we believe the amount accrued is adequate based on the information available to us as of the date of this report, the ultimate loss and associated legal expenses may differ from the amount accrued.

We have obligations under operating leases for office and fulfillment facilities.

During the fourth quarter of 2023, we accrued $ 2.8 million to general and administrative expenses for estimated losses and legal fees related to this matter and during the second quarter of 2024, we accrued an additional $ 0.4 million to general and administrative expenses for estimated losses and legal fees related to this matter.

In June 2024, we entered into a final settlement with the U.S.

Fish and Wildlife Service and paid $ 3.2 million in settlement cost and legal fees related to this matter.

We have obligations under operating leases for office, fulfillment facilities and retail stores.

For a description of our leases, please see Note 5, Leases .

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Net deferred tax assets

As of December 31, 2023, and 2022, gross federal and state operating loss carryforwards were insignificant.

As of December 31, 2024, there were no gross federal and state operating loss carryforwards.

As of December 31, 2023, gross federal and state operating loss carryforwards were insignificant.

In accordance with ASC 740-30-25-17, we intend that the undistributed net earnings from continuing operations as well as the future net earnings of the foreign subsidiaries to be permanently reinvested in our operations outside of the U.S.

6 unchanged sentences

Equity-based compensation

Section 162(m) limitation

For the years ended December 31, 2024, 2023 and 2022, we filed a consolidated federal and state income tax return for Revolve Group, Inc.

3 unchanged sentences

No interest or penalties related to income taxes are recognized in the accompanying consolidated financial statements.

In October 2021, the Organization for Economic Co-operation and Development issued a statement updating and finalizing the key components of the two-pillar plan on global tax reform, intended to be effective on January 1, 2024.

Pillar One focuses on nexus and profit allocation.

Pillar Two provides for a global minimum effective corporate tax rate of 15 %, applied on a jurisdiction-by-jurisdiction basis.

While the U.S.

has not yet adopted the Pillar Two rules, various other governments around the world are enacting legislation.

As currently designed, Pillar Two will apply to our worldwide operations.

However, given that we do not have material operations in jurisdictions with tax rates lower than the Pillar Two minimum, these rules are not expected to materially increase our global tax costs.

We are continuing to evaluate the impacts of enacted legislation and pending legislation to enact Pillar Two model rules in the jurisdictions in which we operate.

Equity-based Compensation

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As of December 31, 2024, we had unrecognized stock-based compensation expense of $ 10.7 million for the operational milestones that were considered not probable of achievement.

During 2023, we recorded stock-based compensation expense of $ 0.3 million related to the 2023 Performance Option Awards.

Equity‑based compensation cost that has been included in general and administrative expense in the accompanying consolidated statements of income amounted to $ 5.8 million, $ 5.9 million, and $ 4.8 million for the

years ended December 31, 2023, 2022 and 2021, respectively.

During 2024 and 2023, we recorded stock-based compensation expense of $ 0.1 million and $ 0.3 million, respectively, related to the 2023 Performance Option Awards.

Equity‑based compensation cost that has been included in general and administrative expense in the accompanying consolidated statements of income amounted to $ 10.0 million, $ 5.8 million, and $ 5.9 million for the years ended December 31, 2024, 2023 and 2022, respectively.

An excess income tax benefit of $ 1.8 million, $ 0.1 million and $ 0.5 million was recognized in the consolidated statements of income for equity‑based compensation arrangements for the years ended December 31, 2024, 2023 and 2022, respectively.

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Year Ended December 31,

Net loss attributable to

non-controlling interest

Net income attributable to common stockholders - basic

Reallocation of undistributed earnings as a result of conversion of Class B to Class A shares

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During 2024, we repurchased and retired 767,198 shares of Class A common stock for a total cost of $ 11.8 million, exclusive of broker fees and excise tax, at an average price of $ 15.35 per share.

During 2023, we repurchased and retired 2,198,854 shares of Class A common stock for a total cost of $ 30.6 million, exclusive of broker fees and excise tax, at an average price of $ 13.91 per share.

Broker fees and excise taxes incurred on share repurchases represent direct costs of the repurchase and are recorded as part of the cost basis.

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During the years ended December 31, 2024, 2023 and 2022, no customer represented over 10 % of net sales.

The following tables summarize our net sales and gross profit for each of our reportable segments (in thousands):

The following tables summarize our net sales, cost of sales and gross profit for each of our reportable segments (in thousands):

Year Ended December 31,

Cost of sales

All of our long-lived assets and goodwill are located in the United States as of the years ended December 31, 2024, 2023 and 2022.

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Total net sales

(1) Includes deferred revenue, shipping revenue and other revenue.

(1) Includes deferred revenue, shipping revenue, rental product revenue and other revenue.

Detail of Certain Balance Sheet Accounts

3 unchanged sentences

Advanced payments on inventory to be delivered from vendors

Prepaid marketing

Total prepaid expenses and other current assets

1 unchanged sentence

Accrued expenses consist of the following (in thousands):

Salaries and related benefits

Legal matters

Selling and distribution

Salaries and related benefits

Total accrued expenses

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Securities Trading Plans of Directors and Executive Officers

During our last fiscal quarter, the following directors and officers, as defined in Rule 16a-1(f), adopted a “Rule 10b5-1 trading arrangement” as defined in Regulation S-K Item 408, as follows:

On December 11, 2023 , MMMK Development, Inc., or MMMK Development, an entity controlled by our co-chief executive officers , Mike Karanikolas and Michael Mente , adopted a Rule 10b5-1 trading arrangement providing for the sale from time to time of an aggregate of up to 4,813,100 shares of our Class A common stock.

The trading arrangement is intended to satisfy the affirmative defense in Rule 10b5-1(c).

The duration of the trading arrangement is until November 29, 2024 , or earlier if all transactions under the trading arrangement are completed.

During our last fiscal quarter, no other director or officer, as defined in Rule 16a-1(f), adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” each as defined in Regulation S-K Item 408.

During our last fiscal quarter, no director or officer, as defined in Rule 16a-1(f), adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” each as defined in Regulation S-K Item 408.

DISCL OSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

21 unchanged sentences

August 12, 2019

Certificate of Amendment to Certificate of Incorporation of Revolve Group, Inc., as filed with the Secretary of State of the State of Delaware on June 7, 2024

June 10, 2024

Amended and Restated Bylaws of Revolve Group, Inc.

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October 9, 2018

LIBOR Transition Amendment, dated as of May 11, 2023, to Amended and Restated Credit Agreement, dated as of March 23, 2021, by and among Alliance Apparel Group, Inc., Eminent, Inc., Advance Development, Inc, Revolve Group, Inc., Twist Holdings, LLC, the other guarantors from time to time party thereto, the lenders from time to time party thereto and Bank of America, N.A., as administrative agent and collateral agent for the lenders.

August 2, 2023

to time party thereto and Bank of America, N.A., as administrative agent and collateral agent for the lenders.

Insider Trading Policy

Subsidiaries of the Registrant

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Compensation Recovery Policy

February 27, 2024

Inline XBRL Instance Document

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Oana Ruxandra

/s/ Marc Stolzman

February 27, 2024

Marc Stolzman

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 8. Financial Statements and Supplementary Data