What changed in this filing

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Item 1A. Risk Factors

2025-03-03 compared with 2024-03-05 · 92 added, 63 removed, 802 unchanged (16% of the section changed)

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• Our business, including our costs and supply of secondhand items, is subject to risks associated with sourcing, itemizing, warehousing and shipping.

• Our ability to incorporate artificial intelligence, machine learning and other emergent technologies into our business operations successfully may affect our reputation and results of operations.

• We have experienced growth in many of our recent periods and those growth rates may not be indicative of our future growth.

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• Our advertising activity and strategic RaaS offerings may fail to efficiently drive growth in buyers and sellers, which could harm our business, results of operations and financial condition.

• Acquisitions, divestitures, strategic investments, partnerships and alliances involve numerous risks and uncertainties, could divert the attention of key management personnel, disrupt our business, dilute stockholder value and harm our results of operations and financial condition.

• We may not be able to expand our distribution center operations, attract and retain personnel to efficiently and effectively manage the operations required to process, itemize, list, sell, pack and ship secondhand and resale items or identify and lease distribution centers in geographic regions that enable us to effectively scale our operations.

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Additionally, if sellers substantially increase the initial price of their items that we list on our marketplaces and subsequently reclaim these items if they do not sell within the listing window, our business could be harmed because these activities may negatively affect sell-through rates and gross margin.

In addition to sourcing high-quality secondhand items by attracting new sellers and retaining existing sellers, our European operations acquire secondhand items from professional supplier companies as well as previously returned items from other retail apparel businesses.

We are subject to the risks of the broader retail environment, such as fluctuations in price and availability in procuring secondhand and returned items through these supply channels.

Further, the European suppliers we work with may increase their prices, which may negatively affect the cost efficiency for our European operations to source supply in this manner.

Such potential risks and constraints on the supply of items to sell on our Remix platform could lead to our business, results of operations and financial condition being harmed.

Our ability to incorporate artificial intelligence and machine learning and other emergent technologies into our business operations successfully may affect our reputation and results of operations.

We use artificial intelligence (“AI”), and machine learning (“ML”) technologies in our business to, among other things, optimize our product presentation and personalize our website experience through advanced search and product recommendations.

Our strategic plans and initiatives also include investments in information technology, data science, AI and ML and other emergent technologies.

We may expand our use of AI and ML and other emergent technologies into other areas of our business including general administrative functions.

However, there can be no assurance that we will realize the desired or anticipated benefits from AI and ML.

Our investments in AI and ML solutions and features may negatively impact our cost of revenue and gross margins until and unless we are able to increase revenue enough to offset these investments.

We may also fail to properly implement or market our AI solutions and features.

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

For example, data sets used by AI and ML may be over-broad or insufficient, can include unexpected biases and may also be subject to legal risks and licensing costs.

Our vendors may incorporate artificial intelligence tools into their offerings without disclosing this use to us, and the providers of artificial intelligence tools may not meet existing or rapidly evolving regulatory or industry standards with respect to the use and governance of artificial intelligence tools.

AI algorithms or training methodologies may have flaws and be prone to cybersecurity incidents or service interruptions.

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

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

Further, we may be unable to quickly and successfully adapt to rapid change resulting from advancements in AI and similar technology, or our competitors may have more success implementing and utilizing such technology than we do.

Any of these risks could have an adverse effect on our reputation and results of operations.

The use of AI and ML involves significant technical complexity and requires specialized expertise, and depends on our ability to continue to attract, retain and motivate highly skilled employees, software engineers and other employees with the technical skills in AI, ML and advanced algorithms.

Competition for highly skilled employees is intense, particularly in the fields of AI and data science.

We may be unable to attract or retain such highly skilled personnel who are critical to our success, which could hinder our ability to keep pace with innovation and technological changes in our industry or result in harm to our business, results of operations and financial condition.

Our business, including our costs and supply of secondhand items, is subject to risks associated with sourcing, itemizing, warehousing and shipping.

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We may incur additional expenses and our reputation could be harmed if the secondhand items we offer are damaged or contain contaminants.

We are also dependent on third parties to handle the shipment of our items to purchasers and to handle the shipment of the items we receive from sellers, including the FedEx Corporation (“FedEx”), which has a partnership with the United States Postal Service, and United Parcel Service, Inc.

We provide prepaid labels to consumers to use to ship us secondhand sellers and use third party services to ship items to buyers.

If one or more of these third-party package-delivery providers increases its prices or were to experience a major work stoppage or other disruption, preventing our products from being delivered in a timely fashion or causing us to incur additional shipping costs we could not pass on to our customers, our costs could increase and our business and results of operations could be adversely affected.

We rely on consumer discretionary spending and have been and may continue to be adversely affected by economic downturns and other macroeconomic conditions or trends.

Our business and results of operations are subject to global economic conditions and their impact on consumer discretionary spending, particularly in the retail market.

Our business and results of operations are subject to global economic and political conditions and their impact on consumer discretionary spending, particularly in the retail market.

Some of the factors that may negatively influence consumer spending on retail items include economic downturns, high levels of unemployment, high consumer debt levels, reductions in net worth, declines in asset values, home foreclosures and reductions in home values, higher interest rates, limited credit availability, inflation, resumption of federal student loan payments, higher fuel and other energy costs, increased costs of logistics, higher commodity prices and general uncertainty regarding the overall future political and economic environment.

Economic conditions in particular regions may also be affected by natural disasters, such as earthquakes, extreme weather events and wildfires;

unforeseen public health crises, such as pandemics and epidemics, including the COVID-19 pandemic;

political crises, such as a government shutdown, terrorist attacks, war and other incidents of political instability, such as Russia’s invasion of Ukraine, and the Israel-Hamas war and other conflicts in the Middle East or other catastrophic events, whether occurring in the United States or internationally.

unforeseen public health crises, such as pandemics and epidemics;

political crises, such as a government shutdown, terrorist attacks, war and other incidents of political instability, such as Russia’s invasion of Ukraine, the Israel-Hamas war and other conflicts in the Middle East, and the risk of increased tensions between China and Taiwan, or other catastrophic events, whether occurring in the United States or internationally.

Additionally, other macroeconomic developments, such as efforts of governments to stimulate or stabilize the economy, international conflicts, trade disputes, sanctions, increased tariffs internationally, including between the United States and China and on imports into the United States from various countries, have at times impacted, and may in the future impact our business in an adverse manner, whether directly or indirectly, such as through their impacts on the financial positions and operations of our customers, suppliers, and other third parties with whom we do business.

Traditionally, consumer purchases of new retail items have declined during periods of economic uncertainty, when disposable income is reduced or when there is a reduction in consumer confidence.

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In addition, future growth, such as the potential expansion of our operations internationally or expansion into new categories of offerings, either organically or through acquisitions, would require significant capital expenditures, which could adversely affect our results of operations, and the allocation of valuable management resources to grow and change in these areas.

Our revenue was $322.0 million and $288.4 million for the years ended December 31, 2023 and 2022, respectively, representing annual growth of 12% and 15%, respectively.

Our revenue from continuing operations was $260.0 million and $258.5 million for the years ended December 31, 2024 and 2023, respectively, representing annual growth of 1% and 7%, respectively.

In future periods, we may not be able to sustain or increase revenue growth rates consistent with recent history, or at all.

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We may not be able to achieve and maintain profitability.

We experienced net losses of $71.2 million and $92.3 million in the years ended December 31, 2023 and 2022, respectively.

We expect to continue to incur net losses and we may not achieve or maintain profitability in the future.

We experienced losses from continuing operations of $40.0 million and $52.4 million in the years ended December 31, 2024 and 2023, respectively.

We expect to continue to incur losses from continuing operations and we may not achieve or maintain profitability in the future.

We believe there is a significant market opportunity for our business, and we intend to invest aggressively to capitalize on this opportunity.

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• fluctuations in inventories held by primary sellers and related fluctuations in promotional activities and merchandise discounting;

• our ability to effectively manage our international operations;

• the impact of market volatility and economic downturns, including those caused by outbreaks of disease, such as the COVID-19 pandemic, on our business;

• adverse litigation judgments, other dispute-related settlement payments or other litigation-related costs;

• regulatory fines;

• the impact of market volatility and economic downturns, including those caused by outbreaks of disease on our business;

• costs arising from investigations, litigation, regulatory audits and similar such proceedings, including the cost of responding to claims or inquiries, participating in such proceedings and paying any adverse judgments, fines, settlement costs and other related costs;

• changes in, and continuing uncertainty in relation to, the legislative or regulatory environment;

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• costs and timing of expenses related to the acquisition of talent, technologies, intellectual property or businesses, including potentially significant amortization costs and possible write-downs;

• public health crises, including the COVID-19 pandemic;

• public health crises;

• general economic conditions throughout the world, including the inflation and interest rate environment, military conflicts, including Russia’s invasion of Ukraine, the Israel-Hamas war, other conflicts in the Middle East, and geopolitical uncertainty and instability.

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We have reduced our cost structure to better align the operational needs of the business to current economic conditions.

We may have additional restructuring initiatives in the future to improve our operations, respond to changes in business conditions and markets and to streamline certain key functions to reduce costs.

In March 2024, we reorganized certain functions within our business to improve efficiencies and reduce overhead costs.

We may have additional workforce reorganization initiatives in the future to improve our operations, respond to changes in business conditions and markets and to streamline certain key functions to reduce costs.

We may not realize expected savings or benefits from restructuring activities, incur additional restructuring charges and experience loss of key personnel, disruptions in our operations, and difficulties in the timely delivery of products.

In addition, during the fourth quarter of 2024, we divested 91% of our European business and Bulgarian subsidiary, Remix Global EAD.

These factors could negatively impact our business, results of operations and financial condition.

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Seasonality in our core marketplace does not necessarily follow that of traditional retailers, such as typical concentration of revenue in the holiday quarter, and we have seen a relatively linear revenue pattern throughout the year compared to traditional retailers.

However, our business has in the past, and may in the future be adversely affected by unseasonable weather conditions, including those resulting from climate change in both our U.S.

and EU markets.

However, our business has in the past, and may in the future be adversely affected by unseasonable weather conditions, including those resulting from climate change.

For example, we have observed that periods of unseasonably warm weather in the fall and winter may lead to reduced consumer spending on winter apparel that tends to have a higher average selling price, which negatively impacts our business.

The effects of unseasonably warm weather are particularly pronounced on our Remix platform, which unlike our core marketplace, tends to see an increased concentration of revenue in winter months due to increased sales of winter apparel.

As the effects of climate change increase, we expect the frequency and impact of weather and climate related events and conditions to increase as well.

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If we are not able to negotiate acceptable pricing and other terms with these vendors or they experience performance problems or other difficulties, it could negatively impact our business and results of operations and negatively affect the experiences of our buyers and sellers, which could affect the degree to which they continue to buy and supply secondhand items on our marketplaces.

For instance, our current shipping arrangement with FedEx Corporation (“FedEx”) includes volume based pricing incentives and discounts.

If we fall below the volume threshold under our arrangement with FedEx, either due to a decrease in outbound shipments from our distribution centers, or because we meet our shipping needs with other carriers aside from FedEx, then we would no longer benefit from the FedEx discount, thereby leading to an increase in our shipping costs.

For instance, our shipping arrangements with our vendors typically include volume based pricing incentives and discounts.

If we fall below the volume threshold under our arrangements, then our shipping costs will increase.

In addition, our ability to receive inbound secondhand items efficiently and ship secondhand items to buyers may be negatively affected by inclement weather, fire, flood, power loss, earthquakes, labor disputes, or acts of war or terrorism.

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

In May 2022, partly as a result of rising costs, we announced a price increase in standard shipping fees for our customers.

Partly as a result of rising costs, we have in the past, and may in the future announce price increases in standard shipping fees for our customers.

In the future, however, we may not be able to pass such increases on to our customers.

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Current or future economic uncertainties or downturns could adversely affect our business and results of operations.

Weak or volatile economic conditions in the global economy or individual markets, changes in gross domestic product growth, financial and credit market fluctuations, inflation, labor shortages, political turmoil, natural catastrophes, warfare and terrorist attacks on the United States and in the European region or elsewhere, including the Israel-Hamas war and other conflicts in the Middle East, and other events outside of our control could cause customers and prospective customers to reduce spending, and demand for our offerings may decline.

Weak or volatile economic conditions in the global economy or individual markets, changes in gross domestic product growth, financial and credit market fluctuations, inflation, labor shortages, political turmoil, natural catastrophes, warfare and terrorist attacks on the United States or elsewhere, including the Israel-Hamas war and other conflicts in the Middle East, and other events outside of our control could cause customers and prospective customers to reduce spending, and demand for our offerings may decline.

Additionally, economic downturns could result in our RaaS relationships terminating or limiting their arrangements with us as retailers focus on general cost reductions in the face of macroeconomic uncertainty.

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Our reputation or brand image could be adversely impacted by any failure to maintain satisfactory practices for all our operations and activities, including greenwashing concerns regarding our advertising campaigns and marketing programs related to our sustainability initiatives.

Future acquisitions, strategic investments, partnerships or alliances could be difficult to identify and integrate, divert the attention of key management personnel, disrupt our business, dilute stockholder value and harm our results of operations and financial condition.

Acquisitions, divestitures, strategic investments, partnerships and alliances involve numerous risks and uncertainties, could divert the attention of key management personnel, disrupt our business, dilute stockholder value and harm our results of operations and financial condition.

We have in the past and may in the future seek to acquire businesses, products or technologies that we believe could complement our business, enhance our technical capabilities or otherwise offer growth opportunities.

The pursuit of potential acquisitions may divert the attention of management and cause us to incur various expenses in identifying, investigating and pursuing suitable acquisitions, whether or not they are consummated.

Any acquisition, investment or business relationship may result in unforeseen operating difficulties and expenditures.

In addition, we have limited experience in acquiring other businesses.

In addition, we have in the past and may in the future divest businesses, including businesses that are no longer part of our strategic plans.

The pursuit of potential acquisitions and divestitures may divert the attention of management and cause us to incur various expenses in identifying, investigating and pursuing such transactions, whether or not they are consummated.

Any acquisition, divestiture, investment or other business relationship may result in unforeseen operating difficulties and expenditures.

We also have limited experience in acquiring other businesses.

In addition, our due diligence could fail to identify all of the problems, liabilities or other shortcomings or challenges of an acquired business, product or technology, including issues related to intellectual property, regulatory compliance practices, revenue recognition or other accounting practices or issues with employees, partners or customers.

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Moreover, the anticipated benefits of any acquisition, investment or business relationship may not be realized or we may be exposed to unknown risks or liabilities.

Divestitures similarly require a significant investment of time and resources, may disrupt our business, may not close on the expected timing or at all, distract management from other responsibilities and may result in losses on disposal or continued financial involvement in the divested business, including through indemnification, guarantee or other financial arrangements, for a period of time following the transaction.

We may not be able to find and identify desirable acquisition targets or we may not be successful in entering into an agreement with any one target.

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Further, the companies in which we invest may not succeed, and our investments could lose all of their value.

Our failure to address these risks or other issues encountered in connection with acquisitions and investments could cause us to fail to realize the anticipated benefits of these acquisitions or investments, cause us to incur unanticipated liabilities and harm our business generally.

For example, in the fourth quarter of 2024, we divested 91% of our ownership of Remix.

This resulted in significant impairment charges of long-lived assets and a loss on divestiture.

For more information, see the section titled “Risk Factors—Risks Relating to Legal, Regulatory, Accounting and Tax Matters— We have recorded, and may be required to record in the future, significant charges if our long-lived assets and goodwill become impaired .”

Our failure to address these risks or other issues encountered in connection with acquisitions, divestitures and investments could cause us to fail to realize the anticipated benefits, cause us to incur unanticipated liabilities and harm our business generally.

As an online secondhand marketplace, our success depends on the accuracy of our item acceptance process.

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Aspects of these state privacy laws, and their interpretation, remain unclear, and we cannot yet fully predict the impact of these laws or regulations on our business or operations.

Further, as our operations expand internationally, including as a result of acquisitions, we may become subject to additional laws and regulations relating to privacy and data protection.

Regulatory authorities in the European Economic Area, United Kingdom and Switzerland, for example, traditionally have imposed stricter obligations under laws and regulations relating to privacy and data protection.

For example, in Europe, the collection and use of personal information is governed by the European Union’s General Data Protection Regulation and the United Kingdom’s implementation of the same (collectively, the “GDPR”).

The GDPR requires companies to meet stringent requirements regarding the handling, protection, and cross-border transfers of personal data of individuals in the relevant jurisdictions.

The GDPR provides for substantial penalties for non-compliance, which may result in monetary penalties of up to 20 million Euros or 4% of a company’s worldwide turnover, whichever is greater.

Aspects of data protection laws and regulations in Europe, including those relating to cross-border data transfer and the use of cookies, are evolving rapidly and remain subject to substantial uncertainty.

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

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

Consequently, international expansion, including as a result of acquisitions, increases our risk of non-compliance with applicable foreign data protection laws and regulations.

Future requirements, or changes in the interpretation of existing requirements, relating to privacy, data protection and information security may require us to implement, enhance or modify privacy and security policies, provide certain types of notices, grant certain rights to individuals, inform individuals of security breaches, and, in some cases, obtain individuals’ consent to use personal data for certain purposes.

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In addition, we currently host our RaaS websites using the Shopify Inc.

e-commerce platform (“Shopify”) and our Remix platform through a separately managed infrastructure vendor, with a data center located in the European Union (together with AWS and Shopify, our “third-party infrastructure services”).

e-commerce platform (“Shopify”) (together with AWS, our “third-party infrastructure services”).

Our operations depend on protecting the virtual cloud infrastructures hosted in AWS and Shopify by maintaining their configuration, architecture and interconnection specifications, as well as the information stored in these virtual data centers and which third-party Internet service providers transmit.

Furthermore, we have no physical access or control over the third-party infrastructure services we engage.

Although we have disaster recovery plans that utilize multiple third-party infrastructure service locations, the data centers that we use, including the Remix data center in the European Union are vulnerable to damage or interruption from human error, intentional bad acts, earthquakes, floods, fires, severe storms, war, terrorist attacks, power losses, hardware failures, systems failures, telecommunications failures, and similar events, many of which are beyond our control, any of which could disrupt our service, destroy user content, or prevent us from being able to continuously back up or record changes in our users’ content.

Although we have disaster recovery plans that utilize multiple third-party infrastructure service locations, the data centers that we use are vulnerable to damage or interruption from human error, intentional bad acts, earthquakes, floods, fires, severe storms, war, terrorist attacks, power losses, hardware failures, systems failures, telecommunications failures, and similar events, many of which are beyond our control, any of which could disrupt our service, destroy user content, or prevent us from being able to continuously back up or record changes in our users’ content.

In the event of significant physical damage to one of these data centers, it may take a significant period of time to achieve full resumption of our marketplaces, and our disaster recovery planning may not account for all eventualities.

Further, a prolonged third-party infrastructure service disruption affecting our core marketplace, RaaS websites or our Remix platform could damage our reputation with current buyers, sellers and RaaS clients, expose us to liability, make it difficult to attract and retain new and existing buyers, sellers and RaaS clients, or otherwise harm our business.

Further, a prolonged third-party infrastructure service disruption affecting our core marketplace or RaaS websites could damage our reputation with current buyers, sellers and RaaS clients, expose us to liability, make it difficult to attract and retain new and existing buyers, sellers and RaaS clients, or otherwise harm our business.

In particular, volume of traffic and activity on our marketplace spikes on certain days and during certain periods of the year, such as during a holiday promotion.

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Our principal trademark assets include the registered trademarks “THREDUP” and “Think Secondhand First” and our logos and taglines.

We also hold European Union trademarks for our Remix logo.

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

We have registered trademarks in Australia, Canada, the European Union, Japan, South Korea, Mexico, the United Kingdom and the United States.

We have registered trademarks in Australia, Canada, the European Union, South Korea, Mexico, the United Kingdom and the United States.

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

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We also use Google services for our business emails, file storage and communications.

Our business would be disrupted if any of the third-party software, services or other technology we utilize, or functional equivalents thereof, were unavailable due to extended outages or interruptions or because they are no longer available on commercially reasonable terms or prices.

commercially reasonable terms or prices.

In each case, we would be required to either seek licenses or other rights to different software, services or technology from third parties and redesign our business and marketplace to function with such other software, services or technology or develop these components ourselves, which would result in increased costs and could result in delays in the launch of new offerings on our marketplaces until equivalent software, services and/or technology can be identified, licensed or developed, and integrated into our business and marketplace.

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Risks Relating to Legal, Regulatory, Accounting and Tax Matters

Failure to comply with applicable laws or regulations, including those relating to the resale of secondhand items, or changes to such laws, rules or regulations may subject us to fines, penalties, registration and approval or other governmental enforcement action.

Our business and financial condition could be adversely affected by unfavorable changes in or interpretations of existing laws, rules and regulations or the promulgation of new laws, rules and regulations applicable to us and our business, including those relating to the internet and e-commerce, such as geo-blocking and other geographically based restrictions, internet advertising and price display, consumer protection, anti-corruption, antitrust and competition, economic and trade sanctions, tax, banking, data security, network and information systems security, data protection, privacy and escheatment and unclaimed property.

Failure to comply with applicable laws or regulations, including those relating to the resale of secondhand items, or changes to such laws, rules or regulations may subject us to investigations, audits, fines, penalties, registration and approval or other governmental enforcement action.

We are subject to and may become a party to various other litigation, claims, investigations, audits, enforcement actions, arbitrations, or other legal proceedings that arise from time to time in the ordinary course of our business.

Adverse judgments or settlements in some or all of these legal disputes may result in significant monetary damages, penalties or injunctive relief against us.

Any claims or litigation could be costly to defend, and even if we are successful or fully indemnified or insured, they could damage our reputation and make it more difficult to compete effectively or obtain adequate insurance in the future, and responding to any action may result in a significant diversion of management's attention and resources.

Litigation and other claims are subject to inherent uncertainties and management’s view of these matters may change in the future.

For a description of our current legal proceedings, see "Item 3.

Legal Proceedings" along with "Note 11—Commitments and Contingencies" of the notes to the consolidated financial statements contained within this Annual Report on Form 10-K.

In addition, our business and financial condition could be adversely affected by unfavorable changes in or interpretations of existing laws, rules and regulations or the promulgation of new laws, rules and regulations applicable to us and our business particularly following the change in Presidential administration, including those relating to the internet and e-commerce, such as geo-blocking and other geographically based restrictions, internet advertising and price display, consumer protection, anti-corruption, antitrust and competition, economic and trade sanctions, tax, banking, data security, network and information systems security, data protection, privacy and escheatment and unclaimed property.

As a result, regulatory authorities could prevent or temporarily suspend us from conducting some or all of our activities or otherwise penalize us if our practices were found not to comply with applicable regulatory or licensing requirements or any binding interpretation of such requirements.

Unfavorable changes or interpretations could decrease demand for our marketplaces, limit marketing methods and capabilities, affect our growth, increase costs or subject us to additional liabilities.

In addition, if we were to continue to expand internationally, we would be subject to additional regulation.

In addition, we would be subject to additional regulation in connection with any future international expansion.

For example, there are, and will likely continue to be, an increasing number of laws and regulations pertaining to the internet and e-commerce.

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Moreover, failure by us to effectively monitor the application of these laws and regulations to our business, and to comply with such laws and regulations, may negatively affect our brand and subject us to penalties and fines.

We are also dependent on third parties to handle the shipment of our items to purchasers and to handle the shipment of the items we receive from sellers, including FedEx, which has a partnership with the United States Postal Service, and UPS, and provide sellers with prepaid labels to ship their items to us for resale.

If we, the third parties that handle the shipments or our sellers and buyers do not comply with applicable laws, regulations and contractual requirements with respect to such shipments, it could lead to litigation or other claims against us, resulting in increased legal expenses and costs.

Numerous states within the United States and municipalities, including the States of California and New York, have regulations regarding the handling of secondhand items and licensing requirements of secondhand dealers.

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We cannot be certain that our insurance coverage will be adequate for liabilities actually incurred or that insurance will continue to be available to us on economically reasonable terms or at all.

We have recorded, and may be required to record in the future, significant charges if our long-lived assets and goodwill become impaired.

We have recorded impairment charges, and may in the future be required to record additional impairment charges, to operations in our financial statements should we determine that our goodwill and other long-lived assets are impaired.

Such charges might have a significant impact on our reported financial condition and results of operations.

In the third quarter of 2024, we recorded an impairment charge of $9.8 million in connection with the decision to exit the European market, coupled with the decline in our market capitalization.

This charge was recognized within Loss from discontinued operations, net of tax in the consolidated statements of operations for the year ended December 31, 2024.

As required by accounting rules, we review our goodwill for impairment at least annually as of October 1 or more frequently if facts and circumstances indicate that it is more likely than not that the fair value of a reporting unit that has goodwill is less than its carrying value.

Factors that may be considered a change in circumstances indicating that the carrying value of our goodwill might not be recoverable include a significant decline in projections of future cash flows and lower future growth rates in our industry.

We review long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable.

It is possible that changes in circumstances, many of which are outside of our control, or in the numerous variables associated with the assumptions and estimates used in assessing the appropriate valuation of our long-lived assets and goodwill, could in the future result in other impairment charges, which could adversely affect our business, financial condition and results of operations.

Our failure to address risks associated with payment methods, credit card fraud and other consumer fraud, or our failure to control any such fraud, could damage our reputation and brand and could harm our business, results of operations and financial condition.

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If we or our third-party credit card payment processors fail to comply with these rules or requirements, we may be subject to fines and higher transaction fees and lose our ability to accept credit and debit card payments from our buyers and sellers in addition to the consequences that could arise from such action or inaction violating or being alleged to violate applicable laws, regulations, contractual obligations or other obligations, including those regulating to privacy, data protection and data security as outlined above, including harm to our reputation and market position.

Any of these could have an adverse impact on our business, results of operations, financial condition and prospects.

Any of these could have an adverse impact on our business, results of operations, financial condition

and prospects.

Our failure to adequately prevent fraudulent transactions could damage our reputation and market position, result in claims, litigation or regulatory investigations and proceedings or lead to expenses that could harm our business, results of operations and financial condition.

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§ 201, the United States.

Travel Act, the USA PATRIOT Act, and are subject to similar anti-corruption and anti-bribery laws to the extent of the international expansion of our operations, such as our European operations in Bulgaria.

Travel Act, the USA PATRIOT Act.

Anti-corruption and anti-bribery laws have been enforced aggressively in recent years and are interpreted broadly and prohibit companies, their employees and third-party business partners, representatives and agents from promising, authorizing, making or offering improper payments or other benefits, directly or indirectly, to government officials and others in the private sector in order to influence official action, direct business to any person, gain any improper advantage, or obtain or retain business.

Further expansion of our business internationally, including as a result of acquisitions, increases our risks under these laws.

Further future expansion of our business internationally, including as a result of acquisitions, increases our risks under these laws.

In addition, in the future we may use third parties to operate our marketplaces or otherwise conduct business on our behalf, abroad.

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We cannot assure you that all our employees, business partners, representatives, and agents, as well as those companies to which we outsource certain of our business operations, will not take actions in violation of our policies and applicable law, for which we may be ultimately held responsible.

Any violation of the FCPA or other applicable anti-corruption laws and anti-bribery laws could result in whistleblower complaints, adverse media coverage, investigations, loss of export privileges, severe criminal or civil sanctions, suspension or disbarment from United States government contracts, substantial diversion of management’s attention, significant legal fees and fines, severe criminal or civil sanctions against us, our officers or our employees, disgorgement of profits, and other sanctions and remedial measures, and prohibitions on the conduct of our business, any of which could harm our reputation, business, results of operations, financial condition and prospects and the price of our Class A common stock.

could harm our reputation, business, results of operations, financial condition and prospects and the price of our Class A common stock.

Labor-related matters, including labor disputes, may adversely affect our operations.

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Often these cases raise complex factual and legal issues and create risks and uncertainties.

We have previously identified a material weakness in our internal control over financial reporting in the Annual Report on Form 10-K and if we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate consolidated financial statements or comply with applicable regulations could be impaired.

If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate consolidated financial statements or comply with applicable regulations could be impaired.

The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting and provide an annual management report on the effectiveness of internal controls over financial reporting.

We are continuing to develop and refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we will file with the SEC, is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers.

We have previously identified control deficiencies in the design and operation of our internal control over financial reporting that constituted a material weakness, as further described in “Item 9A.

Controls and Procedures” in this Annual Report on Form 10-K.

We have previously identified, and may in the future identify, control deficiencies in the design and operation of our internal control over financial reporting that constituted a material weakness..

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our consolidated financial statements will not be prevented or detected on a timely basis.

As described in Item 9A in this Annual Report on Form 10-K, we have completed the remediation measures related to our previously reported material weakness and concluded that our internal control over financial reporting was effective as of December 31, 2023.

However, completion of remediation does not provide assurance that our remediated controls will continue to operate properly or that our financial statements will be free from error.

Completion of the remediation measures related to a material weakness does not provide assurance that our remediated controls will continue to operate properly or that our financial statements will be free from error.

Our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business.

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Our loan and security agreement restricts our ability to incur additional indebtedness, requires us to maintain certain financial covenants and restricts our ability to pay dividends.

If we conduct additional debt financing, the terms of such debt financing may be similar or more restrictive.

If we obtain additional debt financing, the terms of such debt financing may be similar or more restrictive.

Additionally, there has recently been volatility in and disruptions to the global economy, including the equity and debt financial markets.

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

Our failure to meet Nasdaq’s or the Long-Term Stock Exchange’s continued listing requirements could result in a delisting of our Class A common stock, which could materially adversely affect the liquidity of our Class A common stock.

We received notices from Nasdaq and the Long-Term Stock Exchange (“LTSE”) in 2024 that we were not in compliance with the minimum closing bid price requirement that a company must meet in order to remain listed on Nasdaq and the LTSE.

While we have since regained compliance with Nasdaq’s and the LTSE’s listing standards, any future failure to satisfy an exchange’s continued listing requirements could result in a delisting of our Class A common stock from the applicable exchange.

If our Class A common stock were to be delisted from an exchange, the liquidity of our Class A common stock would be adversely affected, and the market price of our Class A common stock could decrease.

The dual-class structure of our common stock has the effect of concentrating voting control with those stockholders who held our capital stock prior to our IPO, including our directors, executive officers and their respective affiliates.

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We do not have employment agreements with our executive officers or other key personnel that require them to continue to work for us for any specified period and, therefore, they could terminate their employment with us at any time.

The loss of one or more of our executive officers, especially our founder and Chief Executive Officer, or other executive officers or key personnel could harm our business.

The loss of one or more of our executive officers, including our founder and Chief Executive Officer, or other executive officers or key personnel could harm our business.

In addition, our future success will depend upon our ability to hire for key functions, such as engineering, data science and marketing, as well as distribution center employees.

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Further, as some of our contractors are information technology specialists in Ukraine, political turmoil, warfare, or terrorist attacks in Ukraine could negatively affect our contractors and our business.

Our international operations may subject us to exchange rate fluctuations and other currency risks.

Assets, liabilities, revenues and related expenses of our international operations are denominated in foreign currencies.

Exchange rate fluctuations between a local currency and the U.S.

dollar may negatively impact the financial conditions and operating results of our international operations when converted into U.S.

In addition, the relative change in currency values creates fluctuations in product pricing for foreign end-customers, which may result in lost orders and reduce the competitiveness of our products in certain foreign markets.

The reduction of our revenue as a result of exchange rate fluctuations could negatively impact our future growth prospects, results of operations and financial condition.

Use of social media, emails and text messages may adversely impact our reputation or subject us to fines or other penalties.

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

What changed 10-K

Item 1A. Risk Factors