What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2024-03-05 compared with 2023-03-07 · 185 added, 285 removed, 622 unchanged (43% of the section changed)

Financial Statements and Supplementary Data

Report of Independent Registered Public Accounting Fir m – Deloitte & Touche LLP (PCAOB ID:

Report of Independent Registered Public Accounting Firm – KPMG LLP (PCAOB ID:

Report of Independent Registered Public Accounting Firm – Deloitte & Touche LLP (PCAOB ID:

Consolidated Balance Sheets

1 unchanged sentence

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Preferred Convertible Stock and Stockholders’ Equity (Deficit)

Consolidated Statements of Stockholders’ Equity

Consolidated Statements of Cash Flows

3 unchanged sentences

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of ThredUp Inc.

and subsidiaries (the “Company”) as of December 31, 2022, the related consolidated statements of operations, comprehensive loss, convertible preferred stock and stockholders’ equity (deficit), and cash flows, for the year ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for the year ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying consolidated balance sheets of ThredUp Inc.

and subsidiaries (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows, for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

3 unchanged sentences

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

/s/ Deloitte & Touche LLP

2 unchanged sentences

We have served as the Company’s auditor since 2022.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors

ThredUp Inc.:

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of ThredUp Inc.

and subsidiaries (the Company) as of December 31, 2021, the related consolidated statements of operations, comprehensive loss, convertible preferred stock and stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2021, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2021, in conformity with U.S.

generally accepted accounting principles.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

We served as the Company’s auditor from 2017 to 2022.

San Francisco, California

March 21, 2022

CONSOLIDATED BALANCE SHEETS

38 unchanged sentences

Year Ended December 31,

2022 2021 2020

(in thousands, except per share amounts)

14 unchanged sentences

Interest expense ( 2,239 ) ( 805 )

Other expense (income), net 1,957 ( 1,565 ) ( 73 )

Other income (expense), net 2,847 ( 1,957 )

Loss before provision for income taxes ( 71,229 ) ( 92,249 )

Provision for income taxes 19 35

Net loss attributable to common stockholders $ ( 92,284 ) $ ( 63,176 ) $ ( 47,877 )

Loss per share attributable to common stockholders, basic and diluted $ ( 0.92 ) $ ( 0.82 ) $ ( 4.14 )

Weighted-average shares used in computing loss per share attributable to common stockholders, basic and diluted 99,817 77,092 11,565

Net loss $ ( 71,248 ) $ ( 92,284 )

Loss per share, basic and diluted $ ( 0.68 ) $ ( 0.92 )

Weighted-average shares used in computing loss per share, basic and diluted 104,875 99,817

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

1 unchanged sentence

Year Ended December 31,

2022 2021 2020

(in thousands)

Net loss attributable to common stockholders $ ( 92,284 ) $ ( 63,176 ) $ ( 47,877 )

Other comprehensive loss, net of tax:

Net loss $ ( 71,248 ) $ ( 92,284 )

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustments 777 ( 2,418 )

Unrealized loss on available-for-sale securities ( 722 ) ( 365 ) —

Total other comprehensive loss ( 3,140 ) ( 1,094 ) —

Total comprehensive loss attributable to common stockholders $ ( 95,424 ) $ ( 64,270 ) $ ( 47,877 )

Unrealized gain (loss) on available-for-sale securities 1,082 ( 722 )

Total other comprehensive income (loss) 1,859 ( 3,140 )

Total comprehensive loss $ ( 69,389 ) $ ( 95,424 )

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

CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

Convertible Preferred Stock Common Stock

Shares Amount Shares Amount Additional Paid-in Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders’ Equity (Deficit)

(in thousands) (in thousands)

Balance as of December 31, 2019 65,928 $ 246,905 10,647 $ 1 $ 20,483 $ — $ ( 203,725 ) $ ( 183,241 )

Issuance of common stock from exercise of stock options 2,243 — 2,170 2,170

Stock-based compensation 7,336 7,336

Series C preferred stock warrant exercise 43 136 —

Net loss attributable to common stockholders ( 47,877 ) ( 47,877 )

Cumulative effect of accounting change ( 565 ) ( 565 )

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Shares Amount Additional Paid-in Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders’ Equity

(in thousands)

Balance as of December 31, 2021

2 unchanged sentences

Stock-based compensation 27,747 27,747

Shares withheld related to net share settlement ( 1 ) — ( 29 ) ( 29 )

Conversion of preferred stock warrants to Class B common stock warrants 1,827 1,827

Preferred stock conversion to Class B common stock ( 65,971 ) ( 247,041 ) 65,971 7 247,034 247,041

Sale of Class A common stock upon initial public offering, net of issuance costs 13,800 1 175,533 175,534

Cashless exercise of common stock warrant 129 — —

Issuance of Class A common stock upon closing of follow-on offering 2,000 1 45,524 45,525

Acquisition delayed share issuance 2,744 2,744

Net loss attributable to common stockholders ( 63,176 ) ( 63,176 )

Shares withheld for net share settlement

( 83 ) — ( 236 ) ( 236 )

Net loss ( 92,284 ) ( 92,284 )

Other comprehensive loss ( 3,140 ) ( 3,140 )

3 unchanged sentences

Stock-based compensation 32,908 32,908

Shares withheld related to net share settlement ( 83 ) — ( 236 ) ( 236 )

Net loss attributable to common stockholders ( 92,284 ) ( 92,284 )

Other comprehensive loss ( 3,140 ) ( 3,140 )

Shares withheld for net share settlement

( 723 ) — ( 1,782 ) ( 1,782 )

Net loss ( 71,248 ) ( 71,248 )

Other comprehensive income 1,859 1,859

Balance as of December 31, 2023

3 unchanged sentences

Year Ended December 31,

2022 2021 2020

(in thousands)

Cash flows from operating activities:

Net loss attributable to common stockholders $ ( 92,284 ) $ ( 63,176 ) $ ( 47,877 )

Adjustments to reconcile net loss attributable to common stockholders to net cash used in operating activities:

Net loss $ ( 71,248 ) $ ( 92,284 )

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization 18,732 14,033

15 unchanged sentences

Maturities of marketable securities 77,579 55,650

Purchase of non-marketable equity investment — ( 3,750 ) —

Acquisition of business, net of cash acquired — ( 23,581 ) —

Purchases of property and equipment ( 15,984 ) ( 43,251 )

Net cash provided by (used in) investing activities 8,924 ( 169,576 ) ( 19,424 )

Net cash provided by investing activities 43,680 8,924

Cash flows from financing activities:

1 unchanged sentence

Repayment of debt ( 4,000 ) ( 6,333 )

Proceeds from issuance of Class A common stock, net of underwriting discounts and commissions — 226,905 —

Payment of costs for the initial public offering and the follow-on offering — ( 4,729 ) ( 1,117 )

Proceeds from exercise of stock options and employee stock purchase plan 4,202 6,506 2,170

Tax withholding related to vesting of restricted stock units ( 2,196 ) ( 347 ) —

Net cash provided by (used in) financing activities ( 3,936 ) 228,960 18,215

Proceeds from issuance of stock-based awards

Payments of withholding taxes on stock-based awards

( 4,765 ) ( 2,196 )

Net cash used in financing activities ( 3,603 ) ( 3,936 )

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 68 ) ( 672 )

16 unchanged sentences

All intercompany balances and transactions have been eliminated upon consolidation.

Reclassifications

Certain reclassifications were made to the prior period consolidated statements of cash flows to conform to the current period presentation.

Use of Estimates

4 unchanged sentences

New Accounting Pronouncements

In October 2023, the FASB issued ASU 2023-06, “Disclosure Improvements:

Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative,” to amend certain disclosure and presentation requirements for a variety of topics within the ASC.

These amendments align the requirements in the ASC to the removal of certain disclosure requirements set out in Regulation S-X and Regulation S-K, announced by the SEC.

The effective date for each amended topic in the ASC is either the date on which the SEC’s removal of the related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, or on June 30, 2027, if the SEC has not removed the requirements by that date.

Early adoption is prohibited.

The Company does not expect that the application of this standard will have an impact on our consolidated financial statements and disclosures.

In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures.

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

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

Early adoption is permitted.

The Company is currently assessing the impact that adopting this new accounting standard will have on its consolidated financial statements.

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.

ASU 2023-09 requires additional quantitative and qualitative income tax disclosures to enable financial statements users to better assess how an entity’s operations and related tax risks and tax planning and operational opportunities affect its tax rate and prospects for future cash flows.

For public business entities, ASU 2023-09 is effective for annual periods beginning after December 15, 2024, which will be the fiscal year ending December 31, 2025 for us.

We expect the adoption will result in enhanced income tax disclosures.

We have assessed all other ASUs issued but not yet adopted and concluded that those not disclosed are not relevant to the Company.

Recently Adopted Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

1 unchanged sentence

Measurement of Credit Losses on Financial Instruments .

This ASU changes the impairment model for most financial assets, requiring the use of an expected loss model which requires entities to estimate the lifetime expected credit loss on financial assets measured at amortized cost.

Such credit losses will be recorded as an allowance to offset the amortized cost of the financial asset, resulting in a net presentation of the amount expected to be collected on the financial asset.

In addition, credit losses relating to available-for-sale debt securities will now be recorded through an allowance for credit losses rather than as a direct write-down to the security.

This ASU changes the impairment model for most financial assets, requiring the use of an expected loss model that requires entities to estimate the lifetime expected credit loss on financial assets measured at amortized cost.

Such credit losses are now recorded as an allowance to offset the amortized cost of the financial asset, resulting in a net presentation of the amount expected to be collected on the financial asset.

In addition, credit losses relating to available-for-sale debt securities are now recorded through an allowance for credit losses rather than as a direct write-down to the security.

This standard is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

The adoption of this guidance will not have a material impact on the Company’s consolidated financial statements.

The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

Foreign Currency

6 unchanged sentences

Under ASC 606, revenue is recognized upon transfer of control of promised goods and services to customers in an amount that reflects the consideration the Company expects to receive for those goods and services.

The Company generates the majority of its revenue from its marketplace, which allows its buyers to browse and purchase resale items for women’s and kids’ apparel, shoes and accessories on behalf of sellers.

The Company generates the majority of its revenue from its marketplace, which allows its buyers to browse and purchase resale items for apparel, shoes and accessories on behalf of sellers.

The Company recognizes revenue through the following steps:

5 unchanged sentences

Both buyers and sellers may be customers in the Company’s revenue arrangements.

Sellers are the primary customer in a consignment arrangement while the buyer is the primary customer in sale of Company-owned inventory, referred to as product sales.

Sellers are the primary customer in a consignment arrangement while the buyer is the primary customer in a sale of Company-owned inventory, referred to as product sales.

A contract with a customer exists in both cases when the end-customer purchases the goods obligating the Company to deliver the identified performance obligation(s).

2 unchanged sentences

Consignment Revenue

The Company generates consignment revenue from the sale of secondhand women’s and kids’ apparel, shoes and accessories on behalf of sellers.

The Company generates consignment revenue from the sale of secondhand apparel, shoes and accessories on behalf of sellers.

The Company retains a percentage of the proceeds received as payment for its consignment service.

14 unchanged sentences

All outbound shipping costs are accounted for in cost of revenue at the time revenue is recognized.

The Company generally has a 14 -day return period which may change from time to time and recognizes a returns reserve, based on historical experience, which is recorded in accrued and other current liabilities within the Company’s consolidated balance sheets.

Incentives include website discounts, customer credits and loyalty program rewards issued to sellers and buyers.

1 unchanged sentence

Revenue treatment for our loyalty program is discussed further below under Deferred Revenue.

Revenue from Loyalty Reward Redemption and Expiration

The Company has a customer loyalty program, which allows end-customers to earn and accumulate points with each qualifying purchase.

Earned points can be redeemed for reward coupons, such as discounts, free shipping, or waived restocking fee, which can be applied to future purchases or returns.

Unredeemed points expire after one year from the date the points were earned.

Reward coupons expire six months from the date the reward is claimed.

Points earned on purchases are a material right, representing a separate performance obligation.

The allocated consideration for the points earned through qualifying purchase transactions is deferred based on the standalone selling price of the points, adjusted for expected breakage in proportion to the pattern of redemption, and recorded within deferred revenue under accrued and other current liabilities within the Company’s consolidated balance sheets.

Revenue is recognized for these performance obligations at a point in time when rewards are redeemed by the end customer or expired.

As of December 31, 2023 and 2022, the Company had a deferred revenue liability of $ 3.1 million and $ 3.3 million, respectively, related to its customer loyalty program, which is included in accrued and other current liabilities within the Company’s consolidated balance sheets.

The Company recognized revenue from loyalty reward redemption of $ 7.7 million and $ 9.4 million for the years ended December 31, 2023 and 2022, respectively.

As our loyalty points expire in 12 months and coupon rewards expire in six months , the revenue for the remaining performance obligation is expected to be recognized within a 12-month period.

Gift Cards and Site Credits

The Company sells ThredUp gift cards on its e-commerce website and may also convert site credits to ThredUp gift cards after one year at the discretion of the Company.

ThredUp gift cards do not expire or lose value over periods of inactivity.

The Company accounts for gift cards by recognizing a gift card liability at the time a gift card is delivered to the customer.

As of December 31, 2023 and 2022, $ 6.6 million and $ 10.9 million, respectively, of gift card liability was included in accrued and other current liabilities within the Company’s consolidated balance sheets.

Revenue from gift cards is generally recognized when the gift cards are redeemed by the customer and amounted to $ 2.0 million and $ 1.0 million for the years ended December 31, 2023 and 2022, respectively.

The Company recognizes breakage revenue when it determines that the redemption of gift cards is remote.

Breakage revenue was $ 4.4 million and $ 2.1 million for the years ended December 31, 2023 and 2022, respectively.

The Company issues site credits for returns, which can be applied toward future purchases but may not be converted into cash.

Site credits may also be converted to ThredUp gift cards after one year at the discretion of the Company.

These credits are recognized as revenue when used.

As of December 31, 2023 and 2022, $ 4.8 million and $ 7.2 million, respectively, of such customer site credits were included in accrued and other current liabilities within the Company’s consolidated balance sheets.

Revenue recognized from the redemption of site credits was $ 41.5 million, and $ 48.4 million for the years ended December 31, 2023 and 2022, respectively.

Deferred Revenue

2 unchanged sentences

As of December 31, 2023 and 2022, the Company had $ 3.3 million and $ 4.3 million, respectively, in deferred revenue for such items, which were recognized shortly after the period end, and are included in accrued and other current liabilities within the Company’s consolidated balance sheets.

The Company has a customer loyalty program that provides customers with rewards that can be applied to future purchases or other incentives.

Loyalty points and rewards are accounted for as separate performance obligations and accrued as deferred revenue in the amount of the transaction price allocated to the points and rewards.

The allocated transaction price is based on the estimated fair value per point, net of breakage.

Breakage is estimated based on the Company’s historical redemption rates.

Revenue is recognized when the loyalty rewards are redeemed or expire.

As of December 31, 2022 and 2021, the Company had a liability of $ 3.3 million and $ 4.0 million, respectively, related to the loyalty program which is included in accrued and other current liabilities within the Company’s consolidated balance sheets.

The Company recognized $ 9.4 million, $ 13.8 million, and $ 6.6 million of revenue related to loyalty points during the years ended December 31, 2022, 2021, and 2020, respectively.

Revenue allocated to loyalty points is expected to be recognized within one year as loyalty points expire 12 months after issuance.

Revenue by Geographic Area

2 unchanged sentences

Year Ended December 31,

2022 2021 2020

(in thousands)

United States $ 258,504 $ 240,942

Others 47,437 11,115 —

International

63,518 47,437

Total revenue $ 322,022 $ 288,379

1 unchanged sentence

The Company operates under one operating segment and one reportable segment as its chief operating decision maker, who is its Chief Executive Officer, reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources and evaluating financial performance.

Business Combinations

The Company accounts for business combinations using the acquisition method of accounting, which requires, among other things, allocation of the fair value of purchase consideration to the tangible and intangible assets acquired and liabilities assumed at estimated fair values on the acquisition date.

The excess of the fair value of purchase consideration over the values of these identifiable assets and liabilities is recorded as goodwill.

When determining the fair value of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible assets.

Significant estimates in valuing intangible assets include, but are not limited to, expected future cash flows, which includes consideration of future growth and margins, future changes in technology, brand awareness and discount rates.

Fair value estimates are based on the assumptions that management believes to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.

After the purchase accounting is finalized, any subsequent adjustments are reflected in the consolidated statements of operations.

Acquisition costs, such as legal and consulting fees, are expensed as incurred.

Loss Per Share Attributable to Common Stockholders

Loss Per Share

The Company follows the two-class method when computing loss per common share when shares issued meet the definition of participating securities.

3 unchanged sentences

The undistributed earnings are allocated on a proportionate basis and the resulting loss per share attributed to common stockholders will, therefore, be the same for both Class A and Class B common stock on an individual or combined basis.

For periods in which the Company reports net losses, diluted loss per share attributable to common stockholders is the same as basic loss per share attributable to common stockholders, because potentially dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.

For periods in which the Company reports net losses, diluted loss per share is the same as basic loss per share, because potentially dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.

Comprehensive Loss

Comprehensive loss is comprised of net loss attributable to common stockholders, foreign currency translation adjustments, and unrealized gains and losses on available-for-sale securities.

See Note 10, Common Stock and Stockholders’ Equity (Deficit) , for the description and detail of the components of accumulated other comprehensive loss.

Comprehensive loss is comprised of net loss, foreign currency translation adjustments, and unrealized gains and losses on available-for-sale securities.

See Note 9, Common Stock and Stockholders’ Equity , for the description and detail of the components of accumulated other comprehensive loss.

Cash, Cash Equivalents and Restricted Cash

1 unchanged sentence

Cash and cash equivalents are comprised primarily of domestic and foreign bank accounts, commercial paper, and money market funds.

Restricted cash primarily represents letters of credit with financial institutions held as collateral for its facility leases.

Restricted cash primarily represents letters of credit with financial institutions held as collateral for facility leases.

Restricted cash is classified non-current if the Company expects that the cash will remain restricted for a period greater than one year.

9 unchanged sentences

Marketable securities are reported at fair value with unrealized gains and losses reported, net of tax, as a separate component of accumulated other comprehensive gain (loss) until realized.

The marketable securities are reviewed periodically to identify possible other-than-temporary impairments.

Realized gains or losses and other-than-temporary impairments, if any, on available-for sale securities are reported in other income, net as incurred.

The marketable securities are assessed periodically for impairments.

Realized gains or losses and allowance for credit loss, if any, on available-for sale securities are reported in other income (expense), net as incurred.

Concentrations of Credit Risk

8 unchanged sentences

Accounts receivable consists of amounts due from payment processors and trade customers that do not bear interest.

The Company records an allowance for doubtful accounts for estimated losses inherent in its trade accounts receivable portfolio.

The Company records an allowance for current expected credit losses for estimated losses inherent in its trade accounts receivable portfolio.

In establishing the required allowance, management considers historical losses adjusted for current market conditions, the financial condition of the customer, the amount of receivables in dispute, and the current receivables aging and payment patterns.

The Company does not have any off-balance sheet credit exposure related to its customers.

The allowance for doubtful accounts was immaterial as of December 31, 2022 and 2021.

Inventories, consisting of merchandise that the Company has purchased and holds title, are accounted for using the specific identification method, and are valued at the lower of cost and net realizable value.

The allowance for current expected credit losses was not material as of December 31, 2023 and 2022.

Inventories, consisting of merchandise that the Company has purchased and to which the Company holds title, are accounted for using the specific identification method, and are valued at the lower of cost or net realizable value.

The cost of inventory is equal to the cost of the merchandise paid to the seller and related inbound shipping costs.

2 unchanged sentences

Property and Equipment, Net

Property and equipment are stated at cost less accumulated depreciation.

Depreciation of furniture, fixtures, and equipment (including computer hardware and software) is computed on a straight-line basis over the estimated useful lives of the related assets, which range from one to ten years .

Leasehold improvements are amortized on a straight-line basis over the life of the related asset or the term of the lease, whichever is shorter.

Property and equipment are stated at cost less accumulated depreciation and amortization.

Depreciation of property and equipment and amortization of leasehold improvement are computed on a straight-line basis over the estimated useful lives of the related assets, as follows:

Asset Category

Estimated Useful Life

Computers and software

Up to 3 years

Furniture and fixtures

Up to 5 years

Machinery and equipment

Up to 10 years

Leasehold improvements

Shorter of economic life or remaining lease term

Maintenance and repairs are charged to expense as incurred, and improvements are capitalized.

6 unchanged sentences

Costs related to preliminary project activities and post implementation operating activities are expensed as incurred.

Impairment of Long-Lived Assets

Amounts capitalized are amortized over two years on a straight-line basis.

Long-Lived Assets

The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset group may not be recoverable.

Recoverability of assets held and used is measured by comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated from the use of the asset and its eventual disposition.

If such assets are considered to be impaired, the impairment to be recognized is equal to the excess of the fair value over the carrying amount of the impaired assets.

There were no impairments of long-lived assets for the years ended December 31, 2022, 2021, and 2020.

If such review indicates that the carrying amount of the asset group is not recoverable, the carrying amount of such assets is reduced to the fair value.

There were no material impairments of long-lived assets for the years ended December 31, 2023 and 2022.

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination.

Goodwill is not subject to amortization, but is reviewed for impairment on an annual basis or more frequently if events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable.

The Company performed a qualitative assessment during the fourth quarter of 2022 and determined that the fair value of its single reporting unit is greater than its carrying value.

If it is determined that it is more likely than not that the fair value of the reporting unit is less than its carrying amount or if a qualitative assessment is not performed, then the Company would perform the quantitative goodwill impairment test as required, in which it would use a discounted cash flow approach to estimate the fair value of the reporting unit.

The Company performed a qualitative assessment during the fourth quarter of 2023 and determined that it is more likely than not that the fair value of its single reporting unit is greater than its carrying value.

If it is determined that it is more likely than not that the fair value of the reporting unit is less than its carrying amount or if a qualitative assessment is not performed, then the Company would perform a quantitative goodwill impairment test as required, in which it would use a discounted cash flow approach to estimate the fair value of the reporting unit.

If the fair value of the reporting unit is less than the carrying value, then a goodwill impairment amount is recorded for the difference.

1 unchanged sentence

Acquired Intangible Assets

When a business is acquired, a portion of the purchase price is typically allocated to identifiable intangible assets, such as trademark, acquired technology and customer relationships.

Fair value of these assets is determined primarily using the income approach, which requires management to project future cash flows and apply an appropriate discount rate.

Intangible assets with finite lives are amortized on a straight-line basis over their economic lives ranging from 3 years to 9 years.

Estimates are based upon assumptions believed to be reasonable but which are inherently uncertain and unpredictable.

Assumptions may be incomplete or inaccurate, and unanticipated events and circumstances may occur.

Incorrect estimates could result in future impairment charges, and those charges could be material to the Company’s results of operations.

The Company reviews intangible assets for impairment whenever events or changes in business circumstances indicate that the carrying amounts of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate.

There were no impairments of intangible assets for the years ended December 31, 2023 and 2022.

Other Investment

8 unchanged sentences

If the investment is impaired, an impairment charge is recognized in the amount by which the carrying amount of the investment exceeds the estimated fair value of the investment, with the impairment charge recognized within the Company’s consolidated statements of operations.

During the year ended December 31, 2022, the Company recorded an impairment loss of $ 3.8 million related to its non-marketable equity investment in other expense, net within its consolidated statement of operations.

During the year ended December 31, 2022, the Company recorded an impairment loss of $ 3.8 million related to its non-marketable equity investment in other income (expense), net within its consolidated statement of operations.

Asset Retirement Obligations

The Company records asset retirement obligations (“AROs”) for the estimated cost of restoring its automated warehouse facilities to the specific condition required per the terms of its lease agreement, upon termination of the lease.

The Company records asset retirement obligations (“AROs”) for the estimated cost of restoring its automated warehouse facilities to the specific condition required in accordance with the terms of its lease agreement, upon termination of the lease.

AROs represent the present value of the expected costs and timing of the related obligations incurred.

21 unchanged sentences

As of December 31, 2023 and 2022, there was $ 21.5 million and $ 16.2 million, respectively, of seller payable within the Company’s consolidated balance sheets.

Gift Cards and Site Credits

The Company sells thredUP gift cards on its e-commerce website.

thredUP gift cards do not expire or lose value over periods of inactivity.

The Company accounts for gift cards by recognizing a gift card liability at the time a gift card is delivered to the customer.

As of December 31, 2022 and 2021, $ 10.9 million and $ 7.3 million of gift card liability, respectively, was included in accrued and other current liabilities within the Company’s consolidated balance sheets.

Revenue from gift cards is generally recognized when the gift cards are redeemed by the customer and amounted to $ 1.0 million, $ 0.9 million and $ 0.6 million during the years ended December 31, 2022, 2021, and 2020, respectively.

The Company issues site credits for order refunds.

Site credits can be applied towards future charges but may not be converted into cash.

Site credits may also be converted to thredUP gift cards after one year at the discretion of the Company.

These credits are recognized as revenue when used.

As of December 31, 2022 and 2021, $ 7.2 million and $ 5.9 million, respectively, of such customer site credits were included in accrued and other current liabilities within the Company’s consolidated balance sheets.

Revenue recognized from the redemption of site credits was $ 48.4 million, $ 33.2 million, and $ 21.1 million for the years ended December 31, 2022, 2021, and 2020, respectively.

We recognize breakage revenue when we determine that the redemption of gift cards and site credits is remote.

Breakage on gift cards and site credits was $ 2.2 million for the year ended December 31, 2022 and was not material for the years ended December 31, 2021 and 2020.

Income taxes are accounted for under the asset and liability method.

16 unchanged sentences

Operations, product and technology expenses also include an allocation of corporate facilities and information technology costs including equipment, depreciation and rent.

Research and development costs related to our technology were approximately $ 37.6 million, $ 28.7 million and $ 20.7 million, during the years ended December 31, 2022, 2021, and 2020, respectively.

Research and development costs related to our technology were approximately $ 38.0 million and $ 37.6 million, during the years ended December 31, 2023 and 2022, respectively.

Marketing costs consist primarily of advertising, public relations expenditures and personnel costs for employees engaged in marketing.

Marketing costs also include an allocation of corporate facilities and information technology costs including equipment, depreciation and rent.

Advertising and other promotional costs included in marketing within the Company’s consolidated statements of operations are expensed as incurred and were approximately $ 49.2 million, $ 54.1 million and $ 38.4 million for the years ended December 31, 2022, 2021, and 2020, respectively.

Advertising and other promotional costs included in marketing within the Company’s consolidated statements of operations are expensed as incurred and were approximately $ 51.1 million and $ 49.2 million for the years ended December 31, 2023 and 2022, respectively.

Sales, General and Administrative

Sales, general and administrative expenses consist of personnel costs for employees involved in general corporate functions, including accounting, finance, tax, legal and people services;

and customer service.

Sales, general and administrative expenses consist of personnel costs for employees involved in general corporate functions, including accounting, finance, tax, legal and people services, and customer service.

Sales, general and administrative also includes payment processing fees, professional fees and allocation of corporate facilities and information technology costs such as equipment, depreciation and rent.

Stock-Based Compensation

Stock-based compensation costs are based on the fair values on the date of grant for stock unit awards and stock options and on the date of enrollment for the employee stock purchase plan (“ESPP”).

The fair values of stock unit awards are based on thredUP’s stock price on the date of grant.

Stock-based compensation costs are based on the fair values on the date of grant for restricted stock unit awards and stock options and on the date of enrollment for the employee stock purchase plan (“ESPP”).

The fair values of restricted stock unit awards are based on ThredUp’s stock price on the date of grant.

The fair values of stock options and ESPP are estimated using the Black-Scholes option-pricing model.

The fair values of equity awards are recognized as compensation expense over the requisite service period or over the period in which the related services are received (generally the vesting period), using the straight-line method.

The estimated fair value of equity awards that contain performance conditions is recognized on a graded-vesting basis once the Company has determined that it is probable that performance conditions will be satisfied.

The fair values of share-based awards are recognized as compensation expense over the requisite service period or over the period in which the related services are received (generally the vesting period), using the straight-line method.

The determination of fair value for share-based awards on the date of grant using an option pricing model requires management to make certain assumptions regarding subjective variables.

1 unchanged sentence

Fair Value Measurements

Fair value accounting is applied for all financial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis (at least annually).

As of December 31, 2022 and 2021, the carrying amount of accounts receivable, other current assets, other assets, accounts payable, seller payable and accrued and other current liabilities approximated their estimated fair value due to their relatively short maturities.

Fair value accounting is applied to all financial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis (at least annually).

As of December 31, 2023 and 2022, the carrying amount of accounts receivable, other current assets, other assets, accounts payable, seller payable and accrued and other current liabilities approximated their fair value due to their relatively short maturities.

Management believes the terms of its long-term variable-rate debt reflect current market conditions for an instrument with similar terms and maturity, therefore the carrying value of the Company’s debt approximated its fair value.

15 unchanged sentences

Commercial paper — 14,954 — 14,954

treasury securities — 7,976 — 7,976

government agency bonds 1,108 1,108

Total cash equivalents 8,028 24,038 — 32,066

34 unchanged sentences

As of December 31, 2023 and 2022, the Company’s cash equivalents approximated their estimated fair value.

As such, there are no unrealized gains or losses related to the Company’s cash equivalents.

As such, there were no unrealized gains or losses related to the Company’s cash equivalents.

For the Company’s marketable securities, which were all classified as available-for-sale, the Company utilizes third-party pricing services to obtain fair value.

Third-party pricing methodologies incorporate bond terms and conditions, current performance data, proprietary pricing models, real-time quotes from contributing dealers, trade prices and other market data.

The Company’s money market funds, U.S.

treasury securities, corporate debt securities and U.S.

government agency bonds were valued using Level 1 inputs because they are valued using quoted prices in active markets.

The Company’s commercial paper is valued using Level 2 inputs because it is valued using quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

There were no transfers between levels during the year ended December 31, 2022.

The Company determined that the declines in the fair value of its marketable securities were not driven by credit-related factors.

During the years ended December 31, 2023 and 2022, the Company did not recognize any losses on its marketable securities due to credit-related factors.

As of December 31, 2023, the Company’s money market funds, were valued using Level 1 inputs because they are valued using quoted prices in active markets.

The Company’s commercial paper, U.S.

treasury securities, and U.S.

government agency bonds were valued using Level 2 inputs because they are valued using quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

There were no transfers into or out of Level 3 during the year ended December 31, 2023.

As of December 31, 2023, of the $ 8.1 million carrying amount of marketable securities, all had a contractual maturity date of less than one year.

4 unchanged sentences

Machinery and equipment $ 79,273 $ 55,292

Leasehold improvements 27,620 15,724

Internal-use software 11,284 6,917

Computers and software 8,260 7,817

Leasehold improvements 15,724 4,705

Furniture and fixtures 2,180 856

Construction in progress 6,542 36,482

Furniture and fixtures 2,574 2,180

Total property and equipment, at cost 135,553 124,412

1 unchanged sentence

Property and equipment, net $ 87,672 $ 92,482

Depreciation and amortization expense of property and equipment was $ 11.5 million, $ 8.5 million, and $ 5.6 million for the years ended December 31, 2022, 2021, and 2020, respectively.

During the years ended December 31, 2022, 2021, and 2020, the Company capitalized costs associated with internal-use software of $ 1.7 million, $ 2.1 million, and $ 1.4 million, respectively.

On July 24, 2021, the Company entered into Share Purchase Agreements with the shareholders of Remix, a fashion resale company headquartered in Sofia, Bulgaria, to purchase 100 % of the outstanding equity interests of Remix and its subsidiary.

The acquisition of Remix closed on October 7, 2021.

With this acquisition, the Company added a complementary operational infrastructure and an experienced management team to enable its expansion into Europe.

The Company acquired the business for total cash consideration of $ 25.6 million and future issuance of 130,597 Class A common shares in 2023 with a fair value of $ 2.7 million as of the closing date.

Revenue of $ 11.1 million and net loss attributable to common stockholders of $ 1.2 million from this acquisition have been included in the consolidated statements of operations from the acquisition date through December 31, 2021.

The Company incurred $ 1.1 million in transaction-related costs during the year ended December 31, 2021, which are included within sales, general and administrative expenses.

The assets acquired and liabilities assumed were recognized at fair value as of the date of the acquisition.

During 2022, the Company finalized the analysis of the purchase price and no adjustments were made to the assessed fair values.

The following table summarizes the final fair values assigned to the assets acquired and liabilities assumed:

(in thousands)

Purchase price:

Cash consideration $ 25,550

Delayed share issuance 2,744

Total purchase price $ 28,294

Cash and cash equivalents $ 1,860

Accounts receivable 1,150

Inventory 3,657

Intangible assets 14,800

Other assets 786

Total assets 22,253

Accounts payable ( 3,102 )

Accrued and other liabilities ( 3,356 )

Total liabilities ( 6,458 )

Net assets acquired 15,795

Goodwill 12,499

Total purchase price $ 28,294

Goodwill was calculated as the excess of the consideration transferred over the net assets acquired and represents the estimated future economic benefits arising from other assets acquired, the assembled workforce and planned growth in strategic markets that could not be individually identified and separately recognized.

Goodwill recognized as a result of this acquisition is no t deductible for tax purposes.

Customer relationships represent the fair value of future projected revenue that will be derived from sales of products to existing customers of Remix business.

Customer relationships were valued using the multi-period excess earning method of the income approach.

Developed technology primarily consists of a client facing platform (i.e., website and mobile app) and supporting functions, all of which were internally developed.

Trademarks relates to the “Remix” trade name.

Developed technology and trademarks were valued using the relief-from-royalty method under the income approach.

This method involves forecasting avoided royalties, reducing them by taxes and discounting the resulting net cash flows to a present value using an appropriate discount rate that requires judgement by management.

(in thousands)

Identifiable intangible assets acquired:

Customer relationships $ 5,200

Developed technology 4,900

Trademarks 4,700

Total identifiable intangible assets acquired $ 14,800

The Company did not present pro forma and other financial information for the acquisition of Remix, as this was not considered to be a material business combination.

Depreciation and amortization expense of property and equipment was $ 16.1 million and $ 11.5 million for the years ended December 31, 2023 and 2022, respectively.

Goodwill and Other Intangible Assets

1 unchanged sentence

Goodwill was $ 12.0 million and $ 11.6 million as of December 31, 2023 and 2022, respectively.

The decrease in goodwill during the year ended December 31, 2022 was due to foreign currency translation adjustments.

The change in goodwill during the year ended December 31, 2023 was due to foreign currency translation adjustments.

The gross carrying amounts and accumulated amortization of the Company’s intangible assets with determinable lives as of December 31, 2023 and 2022 were as follows:

17 unchanged sentences

and marketing expense, respectively, within the Company’s consolidated statements of operations.

Amortization expense of intangible assets with determinable lives was $ 2.6 million, $ 0.6 million, and zero for the years ended December 31, 2022, 2021, and 2020, respectively.

Amortization expense of intangible assets with determinable lives was $ 2.6 million for each of the years ended December 31, 2023 and 2022, respectively.

As of December 31, 2023, the estimated future amortization expense of intangible assets with determinable lives was as follows:

3 unchanged sentences

Balance Sheet Components

Inventories consisted of the following:

Inventory consisted of the following:

(in thousands)

6 unchanged sentences

Gift card and site credit liabilities $ 11,407 $ 18,101

Accrued vendor liabilities 9,116 6,031

Deferred revenue 6,377 7,582

Accrued taxes 4,967 4,326

Accrued compensation 4,092 4,993

Accrued vendor liabilities 4,080 9,116

Allowance for returns 3,817 4,907

Accrued taxes 4,326 5,728

Accrued other 1,194 1,130

Total $ 35,934 $ 50,155

The Company leases certain office space and distribution centers with lease terms ranging from one to ten years .

The Company leases certain office space and distribution centers with lease terms ranging from one to twelve years .

These leases require monthly lease payments that may be subject to annual increases throughout the lease term.

7 unchanged sentences

imputed interest ( 13,963 )

tenant improvement allowance yet to be received ( 38 )

Present value of lease liabilities 50,570

1 unchanged sentence

Non-current lease liabilities $ 44,621

(1) Excludes $ 4.3 million of legally binding minimum lease payments for leases signed but not yet commenced.

Security deposits and letters of credits used to secure the leases were $ 1.1 million and $ 5.4 million, respectively, as of December 31, 2023 and $ 1.0 million and $ 6.0 million, respectively, as of December 31, 2022.

1 unchanged sentence

Year Ended December 31,

2022 2021 2020

(in thousands)

1 unchanged sentence

Short-term lease cost 596 1,355

Variable cost (1)

1,467 1,381 1,197

Variable lease cost (1)

Total lease cost $ 12,659 $ 11,727

5 unchanged sentences

Year Ended December 31,

2022 2021 2020

(in thousands)

2 unchanged sentences

Long-Term Debt

In February 2019, the Company entered into a loan and security agreement (“Term Loan”) with Western Alliance Bank for an aggregate amount of up to $ 40.0 million to refinance its prior loan and security agreement with Silicon Valley Bank.

The Company incurred an immaterial amount of debt issuance costs in connection with the Term Loan.

The debt issuance costs are recorded on the Company’s consolidated balance sheets and are being amortized over the life of the Term Loan using the effective-interest method.

The Term Loan was subsequently amended several times, with the most recent amendment taking place in July 2022.

As amended, the Term Loan matures on July 14, 2027 and provides for an aggregate borrowing amount of up to $ 70.0 million, which bears interest at the prime rate published in the Wall Street Journal plus a margin of 1.25 %, with a floor of 6.00 %.

The Company incurred an immaterial amount of debt issuance costs in connection with the amendment.

For accounting purposes, pursuant to FASB ASC Topic 470, Debt , this transaction was accounted for as a modification of the Term Loan.

The debt issuance costs were recognized in interest expense within the Company’s consolidated statement of operations during the third quarter of 2022.

In February 2019, the Company entered into a loan and security agreement (“Term Loan”) with Western Alliance Bank for an aggregate amount of up to $ 40.0 million and incurred an immaterial amount of debt issuance costs, which were recorded on the Company’s consolidated balance sheets and are being amortized over the life of the Term Loan using the effective-interest method.

The Term Loan was subsequently amended several times, with the most recent amendment taking place in December 2023.

As amended, the Term Loan matures on July 14, 2027 and provides for an aggregate borrowing amount of up to $ 48.8 million, of which $ 22.5 million is designated for the purchase of certain equipment.

The Term Loan bears interest at the prime rate published in the Wall Street Journal plus a margin of 1.25 %, with a floor of 4.75 %.

The Term Loan requires the Company to comply with certain financial covenants, including, among other things, liquidity requirements, performance metrics, and a debt service coverage ratio.

6 unchanged sentences

As of December 31, 2023 and 2022, the effective interest rate for borrowings under the Term Loan was 10.73 % and 9.70 %, respectively.

During the year ended December 31, 2022, the Company borrowed an aggregate amount of $ 0.7 million under the Term Loan and repaid a total of $ 6.3 million on amounts outstanding under the Term Loan.

During the year ended December 31, 2021, the Company borrowed an aggregate amount of $ 5.0 million under the Term Loan and repaid a total of $ 4.0 million on amounts outstanding under the Term Loan.

During the year ended December 31, 2023, the Company did not make any borrowings under the Term Loan and repaid a total of $ 4.0 million on amounts outstanding under the Term Loan.

During the year ended December 31, 2022, the Company borrowed an aggregate amount of $ 0.7 million under the Term Loan and repaid a total of $ 6.3 million on amounts outstanding under the Term Loan.

As of December 31, 2023 and 2022, the amount outstanding under the Term Loan was $ 26.3 million and $ 30.3 million, respectively.

During the years ended December 31, 2022, 2021, and 2020, the Company incurred $ 2.4 million, $ 2.5 million, and $ 1.7 million, respectively, of interest cost relating to the Term Loan, of which $ 1.6 million, $ 0.3 million, and $ 0.4 million, respectively, was capitalized as part of an asset.

During the years ended December 31, 2023 and 2022, the Company incurred $ 2.9 million and $ 2.4 million, respectively, of interest cost relating to the Term Loan, of which $ 0.6 million and $ 1.6 million, respectively, was capitalized as part of an asset.

As of December 31, 2023, annual scheduled principal payments of the Term Loan were as follows:

4 unchanged sentences

Non-current portion of long-term debt $ 22,006

Common Stock and Stockholders’ Equity (Deficit)

Common Stock and Stockholders’ Equity

Each share of Class A common stock is entitled to one vote per share.

Each share of Class B common stock is entitled to ten votes per share and is convertible at any time into one share of Class A common stock.

Immediately prior to the completion of the IPO, 65,970,938 shares of the convertible preferred stock converted to an equivalent number of shares of Class B common stock and 164,973 shares of the convertible preferred stock warrants were converted to an equivalent number of Class B common stock warrants.

On August 2, 2021, the Company completed a follow‑on public offering of Class A common stock at a price of $ 24.25 per share.

The Company issued and sold 2,000,000 shares of Class A common stock.

The aggregate net proceeds were $ 45.5 million after deducting $ 3.3 million of underwriting discounts and commissions and offering costs.

The selling stockholders sold 5,388,024 shares of Class A common stock (including 963,655 shares that were offered and sold pursuant to the full exercise of the underwriters’ option to purchase additional shares), which were converted from Class B common stock.

The Company did not receive any of the proceeds from the sale of the Class A common stock by the selling stockholders.

The table below summarizes the Class A common stock and Class B common stock authorized, issued and outstanding as of December 31, 2023 and 2022:

11 unchanged sentences

Total 1,120,000 101,532

Accumulated Other Comprehensive Loss

The following table summarizes changes in accumulated other comprehensive loss by component during the years ended December 31, 2022 and 2021:

Change in Accumulated Other Comprehensive Loss by Component

Foreign Currency Translation Adjustments Unrealized Loss on Available-For-Sale Securities Total

(in thousands)

Balance as of December 31, 2020

Other comprehensive loss before reclassifications ( 729 ) ( 365 ) ( 1,094 )

Amounts reclassified from accumulated other comprehensive loss to income — — —

Total other comprehensive loss, net of reclassifications ( 729 ) ( 365 ) ( 1,094 )

Balance as of December 31, 2021

( 729 ) ( 365 ) ( 1,094 )

Other comprehensive loss before reclassifications ( 2,418 ) ( 722 ) ( 3,140 )

Amounts reclassified from accumulated other comprehensive loss to income — — —

Total other comprehensive loss, net of reclassifications ( 2,418 ) ( 722 ) $ ( 3,140 )

Balance as of December 31, 2022

$ ( 3,147 ) $ ( 1,087 ) $ ( 4,234 )

Stock-Based Compensation

31 unchanged sentences

The aggregated intrinsic value represents the difference between the exercise price and the fair value of common stock.

The aggregate intrinsic value of all options exercised was $ 2.5 million, $ 53.8 million and $ 2.9 million during the years ended December 31, 2022, 2021, and 2020, respectively.

The weighted average grant date fair value of options granted was zero , $ 6.66 and $ 1.72 during the years ended December 31, 2022, 2021, and 2020, respectively.

The Company records stock-based awards at fair value as of the grant date, using the Black Scholes option pricing model.

The fair value of stock options granted were estimated using the following range of assumptions:

Year Ended December 31,

Expected term (in years) 5.00 - 10.00

Expected volatility 59.4 % - 61.8 %

46.9 % - 54.9 %

Average risk-free rate 0.44 % - 1.10 %

0.28 % - 1.55 %

Dividend yield — —

The aggregate intrinsic value of all options exercised was $ 1.6 million and $ 2.5 million during the years ended December 31, 2023 and 2022, respectively.

As of December 31, 2023, there was $ 1.2 million of total unrecognized stock-based compensation related to outstanding stock options, which will be recognized over a weighted average period of 0.93 years.

Each of these inputs is subjective and generally requires significant judgment:

13 unchanged sentences

Under the terms of the ESPP, rights to purchase common shares may be granted to eligible qualified employees subject to certain restrictions.

The ESPP enables the Company’s eligible employees, through payroll withholdings, to purchase a limited number of common shares at 85 % of the fair market value of a common share either at the beginning of that offering period or on the applicable exercise date, whichever is less.

The ESPP enables the Company’s eligible employees, through payroll withholding, to purchase a limited number of common shares at 85 % of the fair market value of a common share either at the beginning of that offering period or on the applicable exercise date, whichever is less.

Purchases are made on a semi-annual basis.

1 unchanged sentence

Restricted Stock Units

The Company issues service-based and performance-based RSUs to employees.

The Company issues service-based RSUs to employees.

The RSUs automatically convert to shares of the Company’s Class A common stock on a one -for-one basis as the awards vest.

RSUs granted to newly hired employees typically vest in equal quarterly installments over 3 or 4 years, provided that the initial vest occurs after a 1 -year cliff.

RSUs were granted to newly hired employees typically vest in equal quarterly installments over 3 or 4 years, provided that the initial vest occurs after a 1 -year cliff.

During 2023, the Company modified the vesting schedule of substantially all RSUs outstanding as of December 31, 2022 from 4 years to 3 years and recognized compensation expense of $ 2.4 million related to the acceleration of the vesting schedule.

Such grants commence vesting as of the nearest scheduled quarterly vesting date from the date of grant.

Generally, performance conditions include targets for revenue, gross profit, and EBITDA.

The RSUs are measured at grant date fair value, at the market price of the Company’s common stock on the grant date.

4 unchanged sentences

Outstanding and nonvested as of December 31, 2022

1,271 $ 18.81

Granted 9,093 $ 1.88

2 unchanged sentences

Outstanding and nonvested as of December 31, 2023

The total vesting fair value of RSUs that vested during the years ended December 31, 2023 and 2022 was $ 31.5 million and $ 20.2 million, respectively.

As of December 31, 2023, the Company had $ 34.5 million of unrecognized stock-based compensation related to RSUs, which will be recognized over the weighted average remaining requisite service period of 1.64 years.

Stock-based Compensation

1 unchanged sentence

Year Ended December 31,

2022 2021 2020

(in thousands)

3 unchanged sentences

Total stock-based compensation expense $ 31,682 $ 26,817

As of December 31, 2022, there was $ 4.9 million of total unrecognized stock-based compensation related to outstanding stock options, which will be recognized over a weighted average period of 1.27 years.

As of December 31, 2022, the Company had $ 58.7 million unrecognized stock-based compensation related to RSUs, which will be recognized over the weighted average remaining requisite service period of 3.07 years.

The total fair value of RSUs that vested during the years ended December 31, 2022 and 2021 was $ 20.2 million and $ 1.7 million, respectively.

Stock-based compensation expense capitalized in internal use software was $ 1.1 million and $ 0.6 million for the years ended December 31, 2023 and 2022, respectively.

Commitments and Contingencies

16 unchanged sentences

Year Ended December 31,

2022 2021 2020

(in thousands)

3 unchanged sentences

The Company had no federal or foreign provision for income taxes as the Company has incurred operating losses since inception.

The Company’s state tax provision, which was current, was $ 35,000 , $ 80,000 and $ 56,000 for the years ended December 31, 2022, 2021, and 2020, respectively.

The Company’s state tax provision, which was current, was not material for the years ended December 31, 2023 and 2022.

The Company’s effective tax rate, as a percentage of pretax income, differs from the statutory federal rate primarily due to the valuation allowance that the Company records on its deferred tax assets as management believes it is more likely than not that the deferred tax assets will not be fully realized.

1 unchanged sentence

Year Ended December 31,

2022 2021 2020

(in thousands)

Tax expense at United States statutory rate $ ( 19,372 ) $ ( 13,250 ) $ ( 10,042 )

Tax expense at U.S.

statutory rate

$ ( 14,958 ) $ ( 19,372 )

Increase (decrease) in tax resulting from:

11 unchanged sentences

Capitalized research and development costs 11,112 6,247

Stock compensation 2,939 2,128

Stock-based compensation

Other 2,098 2,348

13 unchanged sentences

As of December 31, 2023 and 2022, the Company held valuation allowances against its deferred tax assets due to the uncertainty of realizing future benefits from its net operating loss carryforwards and other deferred tax assets.

The valuation allowance increased by approximately $ 17.5 million, $ 18.8 million, and $ 10.5 million during the years ended December 31, 2022, 2021, and 2020, respectively.

The valuation allowance increased by approximately $ 7.9 million and $ 17.5 million during the years ended December 31, 2023 and 2022, respectively.

federal, state, and foreign net operating loss carryforwards of approximately $ 371.6 million, $ 254.0 million and $ 20.9 million, respectively, for income tax purposes are available to offset future taxable income as of December 31, 2023.

2 unchanged sentences

If not used, these federal carryforwards will begin to expire in varying amounts beginning in 2030.

Foreign net operating losses can be carried forward for a period of 5 years.

Foreign net operating losses can be carried forward for a period of five years.

The Tax Reform Act of 1986 and similar California legislation impose substantial restrictions on the utilization of net operating losses and tax credit carryforwards in the event that there is a change in ownership as provided by Section 382 and Section 383 of the Internal Revenue Code and similar state provisions.

1 unchanged sentence

While the Company has experienced an ownership change since its inception, an immaterial amount of net operating losses or tax credits has been limited as of December 31, 2023.

The Company had no uncertain tax positions as of December 31, 2022 and 2021.

The Company’s tax years 2010 through current will remain open for examination by the federal and state authorities for three and four years, respectively, from the date of utilization of any net operating loss credits.

The Company recognizes the benefits of income tax positions only if the positions are more likely than not of being sustained.

As of December 31, 2023 and 2022, the amount of gross unrecognized tax benefits related to continuing operations was $ 1.0 million and zero , respectively.

All of the unrecognized tax benefits, if recognized, would not impact the Company’s effective income tax rate.

A reconciliation of gross unrecognized tax benefits from continuing operations is as follows:

Year Ended December 31,

(in thousands)

Balance at the beginning of the period

Increases related to prior year tax positions

Increases related to current year tax positions

Balance at the end of the period

The Company is not currently under examination by income tax authorities in federal, state or other jurisdictions.

Loss Per Share Attributable to Common Stockholders

The following participating securities have been excluded from the computation of diluted loss per share attributable to common stockholders for the periods presented because including them would have been anti-dilutive:

2022 2021 2020

Loss Per Share

The following participating securities have been excluded from the computation of diluted loss per share for the periods presented because including them would have been anti-dilutive:

(in thousands)

Outstanding stock options 16,247 17,872

Convertible preferred stock — — 65,971

Outstanding convertible preferred stock warrants — — 149

Restricted stock units 8,538 7,855

4 unchanged sentences

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