What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-03-03 compared with 2024-03-05 · 205 added, 173 removed, 634 unchanged (37% of the section changed)

15 unchanged sentences

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

Our responsibility is to express an opinion on the Company’s 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.

21 unchanged sentences

Other current assets 8,489 6,001

Current assets of discontinued operations

Total current assets 56,922 93,888

2 unchanged sentences

Goodwill 10,746 11,215

Intangible assets 8,156 10,499

Other assets 6,224 5,420

Non-current assets of discontinued operations

Total assets $ 171,225 $ 249,967

6 unchanged sentences

Current portion of long-term debt 3,855 3,838

Current liabilities of discontinued operations

Total current liabilities 61,524 76,673

2 unchanged sentences

Other non-current liabilities 2,760 2,122

Non-current liabilities of discontinued operations

Total liabilities 114,924 146,050

5 unchanged sentences

Additional paid-in capital 612,148 585,156

Accumulated other comprehensive loss ( 2,375 ) ( 4,234 )

Accumulated other comprehensive income (loss) 3 ( 2,375 )

Accumulated deficit ( 555,861 ) ( 478,875 )

20 unchanged sentences

Interest expense ( 2,525 ) ( 2,239 )

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

Other income, net 3,174 2,900

Loss before provision for income taxes ( 39,970 ) ( 52,337 )

Provision for income taxes 29 19

Loss from continuing operations ( 39,999 ) ( 52,356 )

Loss from discontinued operations, net of tax ( 36,987 ) ( 18,892 )

Net loss $ ( 76,986 ) $ ( 71,248 )

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

Weighted-average shares used to compute loss per share, basic and diluted 111,960 104,875

Loss from continuing operations per share, basic and diluted $ ( 0.36 ) $ ( 0.50 )

Loss from discontinued operations per share, basic and diluted ( 0.33 ) ( 0.18 )

Total loss per share, basic and diluted $ ( 0.69 ) $ ( 0.68 )

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

3 unchanged sentences

Net loss $ ( 76,986 ) $ ( 71,248 )

Other comprehensive income (loss), net of tax:

Other comprehensive income, net of tax:

Foreign currency translation adjustments 2,370 777

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

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

Unrealized gain on available-for-sale securities 8 1,082

Total other comprehensive income 2,378 1,859

Total comprehensive loss $ ( 74,608 ) $ ( 69,389 )

1 unchanged sentence

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

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

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

(in thousands)

6 unchanged sentences

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

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

Other comprehensive income 1,859 1,859

Balance as of December 31, 2023

12 unchanged sentences

(in thousands)

Cash flows from operating activities:

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

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

Cash flows from continuing operating activities:

Loss from continuing operations $ ( 39,999 ) $ ( 52,356 )

Adjustments to reconcile loss from continuing operations to net cash provided by (used in) continuing operating activities:

Depreciation and amortization 17,328 14,227

7 unchanged sentences

Accounts payable 3,907 ( 642 )

Accrued and other current liabilities ( 9,092 ) 1,752

Accrued and other liabilities

( 561 ) ( 8,202 )

Seller payable ( 5,688 ) 5,014

Operating lease liabilities ( 4,889 ) ( 5,936 )

Other non-current liabilities ( 54 ) ( 960 )

Net cash used in operating activities ( 22,591 ) ( 52,105 )

Cash flows from investing activities:

Net cash provided by (used in) continuing operating activities 4,903 ( 9,818 )

Cash flows from continuing investing activities:

Purchases of marketable securities ( 31,776 ) ( 17,915 )

1 unchanged sentence

Purchases of property and equipment ( 6,584 ) ( 13,108 )

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

Cash flows from financing activities:

Proceeds from debt, net of discount — 391

Net cash provided by (used in) continuing investing activities ( 10,260 ) 46,556

Cash flows from continuing financing activities:

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

2 unchanged sentences

( 4,059 ) ( 4,765 )

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

Net cash used in continuing financing activities ( 4,392 ) ( 3,603 )

Net change in cash, cash equivalents and restricted cash from continuing operations

( 9,749 ) 33,135

Net cash flow used in discontinued operating activities

( 4,005 ) ( 12,773 )

Net cash flow used in discontinued investing activities

( 6,641 ) ( 2,876 )

Net change in cash, cash equivalents and restricted cash from discontinued operations

( 10,646 ) ( 15,649 )

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 586 ) ( 68 )

16 unchanged sentences

All intercompany balances and transactions have been eliminated upon consolidation.

Discontinued Operations

During the fourth quarter of 2024, the Company divested 91 % of its European business and Bulgarian subsidiary, Remix, meeting the requirements for reporting Remix as a discontinued operation.

Accordingly, Remix’s results, including the loss on divestiture, are presented as discontinued operations in the consolidated statements of income and excluded from continuing operations for all periods presented.

Further, the assets and liabilities of Remix have been reclassified as assets and liabilities of discontinued operations in the consolidated balance sheets as of December 31, 2023.

In the consolidated statements of cash flows, cash flows attributable to Remix have been segregated and presented separately as net cash flow used in discontinued operating activities and net cash flow used in discontinued investing activities for all periods presented.

Unless otherwise noted, amounts and disclosures in these Notes to Consolidated Financial Statements pertain to the Company’s continuing operations.

See Note 15, Discontinued Operations , for further details on the transaction.

Use of Estimates

1 unchanged sentence

Actual results could differ from those estimates.

Significant items subject to such estimates and assumptions include, but are not limited to, the useful lives of property and equipment and intangibles, allowance for sales returns, breakage on loyalty points and rewards and gift cards, valuation of inventory, stock-based compensation, right-of-use assets, goodwill and acquired intangibles, and income taxes.

Significant items subject to such estimates and assumptions include, but are not limited to, the useful lives of property and equipment, allowance for sales returns, breakage on loyalty points and rewards and gift cards, valuation of inventory, stock-based compensation, lease liabilities, and goodwill.

Estimates and assumptions about future events and their effects cannot be determined with certainty and therefore require the exercise of significant judgment.

New Accounting Pronouncements

In November 2024, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses , which expands disclosures about a public entity’s expenses, including inventory, employee compensation, depreciation, intangible asset amortization, selling expenses and other expense categories.

ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

The Company is currently evaluating the potential impact on its consolidated financial statement disclosures.

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 the Company.

The Company expects the adoption will result in enhanced income tax disclosures.

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

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

The Company has 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 November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures .

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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.

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.

2016-13, Financial Instruments — Credit Losses (Topic 326):

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 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 did not have a material impact on the Company’s consolidated financial statements.

Foreign Currency

Generally, the functional currency of the Company’s subsidiaries is the local currency.

In accordance with authoritative guidance, assets and liabilities of the Company’s foreign operations are translated from the respective functional currencies into U.S.

dollars at period-end rates, while income and expenses are translated using the average exchange rate during the period in which the transactions occurred.

The related translation adjustments are reflected as a foreign currency translation adjustment in accumulated other comprehensive loss within the Company’s consolidated balance sheets.

The adoption of this guidance enhanced segment reporting disclosures and did not have an impact on the Company’s consolidated financial statements.

See the “ Segment Reporting ” section below within this note for additional information.

Revenue Recognition

1 unchanged sentence

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 apparel, shoes and accessories on behalf of sellers.

The Company generates the majority of its revenue from its marketplaces, 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:

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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).

Generally, the Company requires authorization from a credit card or other payment method (such as PayPal), or verification of receipt of payment, before the products are shipped to buyers.

The Company requires authorization from a credit card or other payment method (such as PayPal), or verification of receipt of payment, before the products are shipped to buyers.

The Company generally receives payments from buyers before payments to the sellers are due.

Consignment Revenue

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

The Company generates consignment revenue primarily 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.

2 unchanged sentences

The Company does not take title of consigned goods at any time except in certain cases where the consignment window expires or returned goods become Company-owned inventory.

Additionally, consignment revenue includes bag fees charged to sellers for processing Clean Out Kits.

Consignment revenue is generally recognized upon purchase of the consigned good by the buyer as its performance obligation of providing consignment services to the consignor is satisfied at that point.

1 unchanged sentence

Consignment revenue is recognized net of seller payouts, discounts, incentives and returns.

Revenue from bag fees charged to sellers is recognized when the Clean Out Kit is processed.

Sales tax assessed by governmental authorities is excluded from revenue.

9 unchanged sentences

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

Incentives are treated as a reduction of product revenue and consignment revenue.

Incentives are treated as a reduction of consignment revenue and product revenue.

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

Deferred Revenue

Deferred revenue consists primarily of product revenue from items purchased but not shipped, and revenue allocated to unredeemed loyalty points.

Cash collections for items purchased but not shipped are generally recognized as revenue upon shipment.

As of December 31, 2024 and 2023, the Company had $ 1.9 million in deferred revenue for such items in each period, included in accrued and other current liabilities within the Company’s consolidated balance sheets, and for which revenue was recognized shortly after the period end.

Revenue from Loyalty Reward Redemption and Expiration

8 unchanged sentences

The Company recognized revenue from loyalty reward redemption of $ 11.5 million and $ 7.7 million for the years ended December 31, 2024 and 2023, 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.

Beginning October 1, 2024, customers will no longer earn loyalty points and may redeem any accumulated points until expiration but no later than March 31, 2025.

As a result, revenue attributable to any remaining performance obligation is expected to be recognized by March 31, 2025.

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.

The Company sells ThredUp gift cards on its e-commerce website and may also convert seller payables and 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.

2 unchanged sentences

Revenue from gift cards is generally recognized when the gift cards are redeemed by the customer and amounted to $ 0.3 million and $ 2.0 million for the years ended December 31, 2024 and 2023, respectively.

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

The Company recognizes breakage revenue for the portion of gift card values that are not expected to be redeemed.

Previously, breakage revenue was estimated when gift card redemption was deemed remote.

Beginning in the fourth quarter of 2024, with more historical data available, breakage revenue is estimated based upon historical customer redemption patterns.

Judgment is required in determining the appropriate grouping of gift cards for analyzing breakage rates, redemption patterns, and estimating the ultimate value of gift cards not expected to be redeemed.

Breakage revenue was $ 7.2 million and $ 4.4 million for the years ended December 31, 2024 and 2023, respectively.

4 unchanged sentences

Revenue recognized from the redemption of site credits was $ 43.2 million, and $ 41.5 million for the years ended December 31, 2024 and 2023, respectively.

Deferred Revenue

Deferred revenue consists primarily of cash collections for product items purchased, but not shipped, and revenue allocated to unredeemed loyalty points.

Cash collections for items purchased, but not shipped, are generally recognized as revenue upon shipment.

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.

Revenue by Geographic Area

Revenue is attributed to a geographic area based on the shipped-from location.

The following summarizes the Company’s revenue by geographic area:

Year Ended December 31,

(in thousands)

United States $ 258,504 $ 240,942

International

63,518 47,437

Total revenue $ 322,022 $ 288,379

Segment Reporting

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.

The Company does not have material intra-entity sales or transfers.

The key measure of segment profit or loss that the CODM uses to allocate resources and assess performance is the Company’s consolidated loss from continuing operations, as reported in the consolidated statements of operations.

Significant expense within operating loss, as well as within loss from continuing operations, include cost of revenue, operations, product and technology, marketing, and sales, general and administrative expenses, which are each separately presented in the consolidated statements of operations.

Other segment items within loss from continuing operations include interest expense, other income, net, and provision for income taxes.

The CODM manages the business using consolidated expense information, as well as regularly provided budgeted or forecasted expense information.

Assets provided to the CODM are consistent with those reported on the consolidated balance sheets.

Loss Per Share

7 unchanged sentences

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 facility leases.

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

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

2 unchanged sentences

Cash and cash equivalents $ 31,851 $ 54,337

Cash and cash equivalents from discontinued operations

Restricted cash included in Other current assets 3,690 462

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

When assets are retired or otherwise disposed of, the cost and accumulated depreciation and amortization are removed from the Company’s consolidated balance sheet and any resulting gain or loss is reflected in the consolidated statement of operations in the period realized.

When assets are retired or otherwise disposed of, the cost and accumulated depreciation and amortization are removed from the Company’s consolidated balance sheets and any resulting gain or loss is reflected in the consolidated statements of operations in the period realized.

Internal-Use Software

5 unchanged sentences

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

Long-Lived Assets

Impairment of 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 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.

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

There were no material impairments of long-lived assets for the years ended December 31, 2024 and 2023 related to continuing operations.

However, an impairment charge of $ 9.8 million was recorded for the year ended December 31, 2024 related to discontinued operations.

See Note 15, Discontinued Operations, for further details.

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.

4 unchanged sentences

During the years ended December 31, 2024 and 2023, there were no additions to or impairment of goodwill.

Acquired Intangible Assets

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

In October 2021, the Company made a strategic investment in preferred shares of a privately held online retail company.

The Company accounts for its investment in accordance with ASC 321, Investments – Equity Securities (“ASC 321”).

Upon acquisition, the investment was measured at cost, which represented the then fair value of $ 3.8 million and was included in other assets within the Company’s consolidated balance sheet as of December 31, 2021.

Under ASC 321, the Company can elect to subsequently measure the investments at initial cost, minus impairment and any changes, plus or minus, resulting from observable price in orderly transactions for the identical or a similar investment of the same issuer.

This election must be made for each investment separately.

Changes in the carrying value of other investment are recognized within the Company’s consolidated statements of operations.

Each reporting period, the Company performs a qualitative assessment to evaluate whether the investment is impaired.

The Company’s assessment includes a review of recent operating results and trends, recent sales and acquisitions of the investee securities and other factors that raise concerns about the investee’s ability to continue as a going concern.

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 income (expense), net within its consolidated statement of operations.

As part of the divestiture of Remix, $ 0.7 million of goodwill was allocated to the disposal group based on the relative fair values of the divested business and the portion retained.

Asset Retirement Obligations

23 unchanged sentences

As of December 31, 2024 and 2023, there was $ 15.1 million and $ 20.8 million, respectively, of seller payable within the Company’s consolidated balance sheets.

Revenue recognized from the redemption of seller credits was $ 22.9 million and $ 16.5 million for the years ended December 31, 2024 and 2023, respectively.

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

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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 $ 38.0 million and $ 37.6 million, during the years ended December 31, 2023 and 2022, respectively.

Research and development costs from continuing operations related to our technology were approximately $ 31.3 million and $ 32.6 million, during the years ended December 31, 2024 and 2023, 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 $ 51.1 million and $ 49.2 million for the years ended December 31, 2023 and 2022, respectively.

Advertising and other promotional costs from continuing operations included in marketing within the Company’s consolidated statements of operations are expensed as incurred and were approximately $ 41.5 million and $ 38.8 million for the years ended December 31, 2024 and 2023, respectively.

Sales, General and Administrative

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Financial Instruments and Fair Value Measurements

Fair Value Measurements - Recurring Basis

The following tables provide information about the Company’s financial instruments that are measured at fair value on a recurring basis and indicate the fair value hierarchy of the valuation techniques utilized to determine such values as of December 31, 2024 and 2023:

6 unchanged sentences

treasury securities — 500 — 500

government agency bonds 1,108 1,108

Total cash equivalents 1,061 8,423 — 9,484

Marketable securities:

Corporate debt securities — — — —

treasury securities — 8,122 — 8,122

Commercial paper — 499 — 499

government agency bonds — 3,704 — 3,704

7 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

Marketable securities:

Corporate debt securities 25,488 — — 25,488

treasury securities — 7,405 — 7,405

2 unchanged sentences

Total assets at fair value $ 8,028 $ 32,138 $ — $ 40,166

The following tables summarize the cost, gross unrealized gains, gross unrealized losses and fair value of the marketable securities as of December 31, 2023 and 2022:

December 31, 2023

Cost or Amortized Cost Unrealized Fair Value

(in thousands)

Corporate debt securities $ — $ — $ — $ —

treasury securities 7,403 2 — 7,405

government agency bonds 695 — — 695

Total $ 8,098 $ 2 $ — $ 8,100

December 31, 2022

Cost or Amortized Cost Unrealized Fair Value

(in thousands)

Corporate debt securities $ 25,774 $ — $ ( 286 ) $ 25,488

treasury securities 19,531 — ( 355 ) 19,176

government agency bonds 22,679 — ( 441 ) 22,238

Total $ 67,984 $ — $ ( 1,082 ) $ 66,902

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

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

As of December 31, 2024 and 2023, the Company’s cash equivalents and marketable securities approximated their estimated fair value.

As such, the unrealized gains or losses related to the Company’s cash equivalents and marketable securities were not material.

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.

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As of December 31, 2024, of the $ 12.3 million carrying amount of marketable securities, all had a contractual maturity date of less than one year.

Fair Value Measurements - Nonrecurring Basis

The Company measures the fair value of certain assets on a nonrecurring basis when events or changes in circumstances indicate that the carrying value of the asset or asset group may not be recoverable.

In the third quarter of 2024, the Company performed impairment assessments of its long-lived assets and goodwill following the decision to exit the European market and a decline in market capitalization, recognizing a $ 9.8 million impairment of long-lived assets.

In the fourth quarter of 2024, as part of the Remix divestiture, the Company recognized a convertible notes receivable of $ 350,000 and a retained equity interest of $ 530,000 .

These assets are classified as Level 3 within the fair value hierarchy.

See Note 15, Discontinued Operations , for a further discussion on the transaction, impairment assessments, and related fair value measurements.

Property and Equipment, Net

12 unchanged sentences

Depreciation and amortization expense of property and equipment was $ 17.3 million and $ 14.2 million for the years ended December 31, 2024 and 2023, respectively.

Goodwill and Other Intangible Assets

Goodwill is primarily attributable to the planned growth in the combined business after the acquisition of Remix Global EAD (“Remix”).

Goodwill was $ 10.7 million and $ 11.2 million as of December 31, 2024 and 2023, respectively.

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:

December 31, 2023

Amortization Period Gross Carrying Amount Accumulated Amortization Net Carrying Amount

(in years) (in thousands)

Customer relationships 8 $ 4,965 $ ( 1,386 ) $ 3,579

Developed technology 3 4,679 ( 3,482 ) 1,197

Trademarks 9 4,494 ( 1,114 ) 3,380

Total $ 14,138 $ ( 5,982 ) $ 8,156

December 31, 2022

Amortization Period Gross Carrying Amount Accumulated Amortization Net Carrying Amount

(in years) (in thousands)

Customer relationships 8 $ 4,814 $ ( 742 ) $ 4,072

Developed technology 3 4,536 ( 1,864 ) 2,672

Trademarks 9 4,351 ( 596 ) 3,755

Total $ 13,701 $ ( 3,202 ) $ 10,499

The changes in the gross carrying amounts were due to foreign currency translation adjustments.

Amortization expense related to developed technology, customer relationships, and trademarks is recorded within operations, product and technology;

sales, general and administrative;

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

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:

(in thousands)

Thereafter 1,359

Total $ 8,156

The change in goodwill during the year ended December 31, 2024 was due to an allocation of $ 0.7 million of goodwill to the disposal group as part of the divestiture of Remix, with the remaining immaterial change resulting from foreign currency translation adjustment.

Goodwill was allocated to the disposal group based on the relative fair values of the divested business and the portion retained.

In the third quarter of 2024, the Company performed a quantitative goodwill impairment assessment as a result of its decision to exit the European market and the decline in its market capitalization.

There was no impairment recognized on goodwill as its fair value exceeded its carrying amount as of the valuation date.

In the fourth quarter, the Company conducted its annual goodwill impairment test, including a qualitative assessment.

Based on this evaluation, no indicators of impairment were identified.

Accordingly, the Company determined that it is more likely than not that the fair value of the Company’s single reporting unit exceeds its carrying value.

Balance Sheet Components

Inventory consisted of the following:

(in thousands)

Work in process $ 3,333 $ 2,639

Finished goods 12,354 14,880

Total $ 15,687 $ 17,519

Work in process inventory relates to items that are currently undergoing preparation for sale, including itemization, cleaning, and repair.

Accrued and other current liabilities consisted of the following:

1 unchanged sentence

Gift card and site credit liabilities $ 12,234 $ 11,407

Deferred revenue 6,377 7,582

Accrued taxes 4,967 4,326

Accrued compensation 4,092 4,993

Accrued vendor liabilities 3,916 3,898

Accrued compensation 3,438 2,370

Deferred revenue 3,328 4,936

Allowance for returns 3,052 3,050

Accrued taxes 2,608 2,566

Accrued other 1,280 1,189

5 unchanged sentences

The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

As of December 31, 2023, maturities of operating lease liabilities were as follows:

As of December 31, 2024, future minimum undiscounted lease payments were as follows:

(in thousands)

6 unchanged sentences

Security deposits and letters of credits used to secure the leases were $ 0.2 million and $ 5.0 million, respectively, as of December 31, 2024 and $ 0.3 million and $ 5.4 million, respectively, as of December 31, 2023.

1 In the third quarter of 2024, the Company entered into a non-cancellable operating lease agreement for its Scottsdale, AZ, office space.

The lease is expected to commence in the second quarter of 2025 and has a lease term of 5.6 years.

Future minimum lease payments are expected to be approximately $ 0.3 million annually, totaling $ 2.0 million over the lease term, excluding renewal options.

The components of lease cost are as follows:

17 unchanged sentences

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.

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 remains available and 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 %.

2 unchanged sentences

In addition, the Term Loan contains customary events of default.

As of December 31, 2023 and 2022, the Company was in compliance with its debt covenants under the Term Loan.

As of December 31, 2024, the Company was in compliance with its debt covenants under the Term Loan.

The Term Loan is payable in consecutive monthly installments.

2 unchanged sentences

As of December 31, 2024 and 2023, the effective interest rate for borrowings under the Term Loan was 9.71 % and 10.73 %, respectively.

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.

During the years ended December 31, 2024 and 2023, the Company did not make any borrowings under the Term Loan and repaid $ 4.0 million each year on amounts outstanding under the Term Loan.

As of December 31, 2024 and 2023, the amount outstanding under the Term Loan was $ 22.3 million and $ 26.3 million, respectively.

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.

During the years ended December 31, 2024 and 2023, the Company incurred interest costs of $ 2.5 million and $ 2.9 million, respectively, related to the Term Loan.

There was no capitalized interest for the year ended December 31, 2024, and $ 0.6 million was capitalized as part of an asset for the year ended December 31, 2023.

As of December 31, 2024, annual scheduled principal payments of the Term Loan were as follows:

31 unchanged sentences

For certain options, vesting accelerates upon the occurrence of specified events, such as a change of control.

IPO Options Under the 2010 Plan

In August 2020, the Company’s board of directors approved stock options for 3,588,535 common shares to be granted to certain officers and employees with an exercise price of $ 2.05 per share.

50 % of the options granted vest over a four-year period commencing on the effective date of the IPO.

The remaining 50 % of the options granted vest over a four-year period commencing on the one-year anniversary of the IPO.

As these stock options vest upon the satisfaction of both a time-based condition and a performance condition, the fair value of these stock options of $ 6.7 million, in aggregate, is being recognized as compensation expense over the requisite service period using the accelerated attribution method.

During the years ended December 31, 2023 and 2022, compensation expense related to stock options subject to these performance conditions was $ 0.5 million and $ 1.2 million, respectively.

2021 Stock Option and Incentive Plan

15 unchanged sentences

The aggregate intrinsic value of all options exercised was $ 0.4 million and $ 1.6 million during the years ended December 31, 2024 and 2023, 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.

As of December 31, 2024, the total unrecognized compensation cost related to all nonvested stock options was not material.

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

32 unchanged sentences

Outstanding and nonvested as of December 31, 2024

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.

The fair value of RSUs as of the vesting date was $ 12.3 million and $ 31.5 million during the years ended December 31, 2024 and 2023 , respectively.

As of December 31, 2024, the Company had $ 18.4 million of unrecognized stock-based compensation related to RSUs, which will be recognized over the weighted average remaining requisite service period of 1.65 years.

24 unchanged sentences

The Company did not make any contributions to this plan during the years ended December 31, 2024 and 2023.

The components of loss before provision for income taxes were as follows:

Year Ended December 31,

(in thousands)

Domestic $ ( 51,084 ) $ ( 80,648 )

Foreign ( 20,145 ) ( 11,601 )

Total $ ( 71,229 ) $ ( 92,249 )

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

The components of loss from continuing operations before provision for income taxes were $ 40.0 million and $ 52.3 million during the years ended December 31, 2024 and 2023, respectively.

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

The Company’s state tax provision, which was current, was not material for the years ended December 31, 2024 and 2023.

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.

The reconciliation between the provision for income taxes at the statutory rate and the provision for income taxes at the effective tax rate is as follows:

The Company’s effective tax rate, as a percentage of pretax income from continuing operations, 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.

The reconciliation between the provision for income taxes at the statutory rate and the provision for income taxes at the effective tax rate from continuing operations is as follows:

Year Ended December 31,

6 unchanged sentences

Non-deductible and other expenses 860 921

Foreign tax rate differential 4,229 2,436

Stock-based compensation 2,540 4,471

8 unchanged sentences

Stock-based compensation

Capital losses

Intangibles 393 76

Other 1,303 1,598

5 unchanged sentences

Fixed assets 9,723 11,222

Intangibles 733 1,369

Total deferred tax liabilities 9,725 11,497

2 unchanged sentences

Net deferred tax assets consist primarily of net operating loss carryforwards of approximately $ 87.7 million and $ 92.8 million as of December 31, 2024 and 2023, respectively, related to U.S.

federal, state, and foreign taxes.

federal and state taxes.

Net deferred tax assets also include capital loss carryforwards of $ 21.7 million related to U.S.

federal and state taxes that were generated in the year ended December 31, 2024 as a result of the Remix divestiture transaction on November 30, 2024.

See Note 15, Discontinued Operations , for further details.

A valuation allowance is provided when it is more likely than not that the deferred tax assets will not be realized.

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 $ 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.

As of December 31, 2024 and 2023, the Company held valuation allowances against its deferred tax assets due to the uncertainty of realizing future benefits from its net operating loss carryforwards, capital loss carryforwards, and other deferred tax assets.

The valuation allowance increased by $ 22.2 million and $ 6.5 million during the years ended December 31, 2024 and 2023, respectively.

federal and state net operating loss carryforwards of $ 342.3 million and $ 271.4 million, respectively, for income tax purposes are available to offset future taxable income as of December 31, 2024.

$ 263.3 million of the U.S.

1 unchanged sentence

If not used, these federal carryforwards will begin to expire in varying amounts beginning in 2034.

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.

2 unchanged sentences

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.

As of December 31, 2024 and 2023, the amount of gross unrecognized tax benefits related to continuing operations was $ 1.3 million and $ 1.0 million, respectively.

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

6 unchanged sentences

Balance at the end of the period

$ 1,272 $ 987

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 or tax credit carryforward.

8 unchanged sentences

Total 23,056 24,893

Discontinued Operations

On November 30, 2024, the Company exited the European market by completing the sale of its European subsidiary, Remix, to Remix’s management (the “Transaction”).

The divestiture qualified for held-for-sale classification on November 30, 2024 and represented a strategic shift with a major effect on the Company’s operations and financial results.

Following the divestiture, the Company will not have any significant continuing involvement in the operations of Remix.

As a result, Remix met the criteria for reporting as a discontinued operation on the same date.

Upon the closing of the Transaction, the Company retained a 9 % equity interest in Remix US Holdings, Inc., the parent company of Remix, with a fair value of $ 530,000 , and received cash proceeds of EUR 1.00 .

The minority investment does not provide the Company with significant influence over Remix and will be accounted for under the cost method.

The Company has not elected the fair value option for this investment.

The investment will be assessed for impairment at each reporting period or if indicators of impairment arise.

In connection with the Transaction, Remix issued an unsecured convertible promissory note (the “Convertible Note”) to the Company as consideration for the Transaction.

The Convertible Note, reflecting the Company’s investment since acquiring Remix for various purposes, including infrastructure, technology, and personnel development, had a fair value of $ 350,000 .

The Convertible Note has an aggregate principal amount of EUR 61.6 million and bears interest at 125 basis points plus the greater of the 12-month EURIBOR rate or zero, determined annually on November 30.

The Convertible Note does not have a fixed maturity date, and the Company does not anticipate full repayment, with both the timing and amount of any potential repayment remaining uncertain.

Through its conversion feature, the Convertible Note ensures the Company’s ownership interest in Remix remains at 9 % and cannot exceed this level, regardless of potential future dilutive actions.

Consequently, the discount, representing the difference between the aggregated principal amount and fair value, is not subject to amortization, and accrued interest will be offset by a credit reserve adjustment and immediately written off in future periods, resulting no net impact to the Company’s financial statements.

The fair value of retained equity interest was estimated using a combination of a market approach, which incorporated valuation multiples of comparable public companies and transactions, and an income approach based on projected discounted cash flows (the “DCF” model).

The significant assumptions used included estimates of future revenues and operating expenses, long-term growth rates, working capital requirements, discount rates, and discounts for lack of marketability and control, which are considered unobservable inputs and are classified as Level 3 within the fair value hierarchy.

Estimating the fair value of a business was a subjective process that involved assumptions market participants would use in determining fair value, along with other estimates and judgments, particularly related to future cash flows, which are inherently uncertain.

The Company utilized a probability-weighted approach to determine the transaction-date fair value of the Convertible Note by analyzing all possible repayment scenarios, the estimated cash flows that the Company would receive under each scenario, and the likelihood of each scenario occurring.

As of December 31, 2024, the 9 % retained equity interest in Remix US Holdings, Inc., valued at $ 530,000 , and the Convertible Note, valued at $ 350,000 , were recorded in other assets within the consolidated balance sheets.

As a result of the Transaction, the Company derecognized net assets of $ 7.6 million, a previously recognized foreign currency translation adjustment of $ 3.6 million, and incurred transaction costs of $ 1.0 million, resulting in a loss of $ 11.3 million, recorded in loss from discontinued operations, net of tax within the consolidated statements of operations.

As a result of the Transaction and the Convertible Note, there were deferred tax assets of $ 21.7 million generated from the capital loss carryforwards incurred, related to U.S.

federal and state taxes.

As of December 31, 2024, the Company held a valuation allowance against these deferred tax assets due to the uncertainty of realizing future benefits from the capital loss carryforwards.

Accordingly, there was no income tax impact and the Company has not recorded an income tax provision related to the losses.

Remix’s financial results are presented as loss from discontinued operations, net of tax in the consolidated statements of operations.

For fiscal 2024, these results include the period from the beginning of the year through the date of the Transaction.

The following table presents the major components of Remix’s financial results for the periods presented:

Year Ended December 31,

(in thousands)

Total revenue $ 47,317 $ 63,518

Total cost of revenue

33,937 48,181

Operating expenses

39,077 34,176

Other income (expense), net

Loss on Remix divestiture

Loss from discontinued operations

$ ( 36,987 ) $ ( 18,892 )

The following table represents the aggregated carrying amounts of assets and liabilities classes classified as discontinued operations in the consolidated balance sheets for the period presented:

(in thousands)

Other current assets 4,766

Current assets of discontinued operations 17,629

Operating lease right-of-use assets 14,021

Property and equipment, net 9,850

Intangible assets 8,156

Other assets 1,498

Non-current assets of discontinued operations 33,525

Total assets of discontinued operations

Accounts payable

Accrued and other current liabilities

Current liabilities of discontinued operations

Operating lease liabilities, non-current

Other non-current liabilities

Non-current liabilities of discontinued operations

Total liabilities of discontinued operations

In the third quarter of 2024, the Company announced its decision to exit the European market and that it had initiated a strategic review of its Remix business.

However, the Company did not classify Remix as held for sale during this period, as the necessary criteria were not met due to the required approval not being obtained.

The decision to exit the European market, coupled with the decline in the Company’s market capitalization, were identified as qualitative indicators of potential impairment of long-lived assets and goodwill.

Consequently, the Company performed long-lived assets and goodwill impairment assessments during the third quarter of 2024 and recognized an impairment of long-lived assets of $ 9.8 million, of which $ 5.6 million related to certain property and equipment and $ 4.2 million related to intangible assets, recorded within loss from discontinued operations, net of tax in the consolidated statements of operations.

There was no impairment recognized on goodwill as its fair value exceeded its carrying amount as of the valuation date.

In conducting the long-lived assets and goodwill impairment assessments in the third quarter of 2024, the Company determined fair values using a combination of a market approach, which incorporated valuation multiples of comparable public companies and transactions, and an income approach based on projected DCF model.

The significant assumptions used in the DCF model included estimates of future revenues and operating expenses, long-term growth rates, working capital requirements, and discount rates, which are considered unobservable inputs and are classified as Level 3 within the fair value hierarchy.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

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