What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-03-02 compared with 2025-03-03 · 179 added, 212 removed, 627 unchanged (38% of the section changed)

37 unchanged sentences

Accounts receivable, net 2,437 3,567

Inventory 690 2,824

Other current assets 6,112 9,179

Current assets of discontinued operations

Total current assets 56,676 56,922

3 unchanged sentences

Other assets 7,204 6,224

Non-current assets of discontinued operations

Total assets $ 167,245 $ 171,225

6 unchanged sentences

Current portion of long-term debt 3,875 3,855

Current liabilities of discontinued operations

Total current liabilities 62,380 61,524

2 unchanged sentences

Other non-current liabilities 2,816 2,760

Non-current liabilities of discontinued operations

Total liabilities 108,052 114,924

5 unchanged sentences

Additional paid-in capital 635,253 612,148

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

Accumulated other comprehensive income 3 3

Accumulated deficit ( 576,075 ) ( 555,861 )

5 unchanged sentences

(in thousands, except per share amounts)

Consignment $ 246,186 $ 213,093

Product 13,845 45,411

Total revenue 260,031 258,504

$ 310,813 $ 260,031

Cost of revenue

Consignment 45,599 39,732

Product 7,307 20,304

Total cost of revenue 52,906 60,036

64,060 52,906

Gross profit 246,753 207,125

29 unchanged sentences

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

(in thousands)

Balance as of December 31, 2023

13 unchanged sentences

Net loss ( 20,214 ) ( 20,214 )

Other comprehensive income 2,378 2,378

Balance as of December 31, 2025

6 unchanged sentences

Loss from continuing operations $ ( 20,214 ) $ ( 39,999 )

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

Adjustments to reconcile loss from continuing operations to net cash provided by continuing operating activities:

Depreciation and amortization 12,924 17,328

1 unchanged sentence

Reduction in carrying amount of right-of-use assets 4,641 4,536

Impairment of long-lived assets

Other ( 833 ) ( 16 )

1 unchanged sentence

Accounts receivable, net 1,130 1,482

Inventory 2,134 3,669

Other current and non-current assets ( 366 ) 2,956

4 unchanged sentences

Operating lease liabilities ( 4,767 ) ( 4,889 )

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

Other non-current liabilities ( 500 ) —

Net cash provided by continuing operating activities 10,652 4,903

Cash flows from continuing investing activities:

Purchases of marketable securities ( 20,723 ) ( 31,776 )

Maturities of marketable securities 28,100 77,579

Sale and maturities of marketable securities

24,029 28,100

Purchases of property and equipment ( 10,472 ) ( 6,584 )

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

Net cash used in continuing investing activities ( 7,166 ) ( 10,260 )

Cash flows from continuing financing activities:

7 unchanged sentences

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 )

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, allowance for sales returns, breakage on loyalty points and rewards and gift cards, valuation of inventory, stock-based compensation, lease liabilities, and goodwill.

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 gift cards, 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.

Reclassification

Certain prior period amounts have been reclassified to conform to the current period’s presentation.

Beginning in the first quarter of 2025, the Company combined consignment revenue and product revenue into a single line item, revenue, on the consolidated statements of operations, and similarly combined related cost of revenue line items, reflecting the immateriality of product revenue following the Company’s transition to a primarily consignment model.

The Company also reclassified inventory to other current assets on the consolidated balance sheets and statements of cash flows to align with the combined presentation.

These reclassifications had no impact on previously reported revenue, net loss, stockholders’ equity, or cash flows.

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 during 2024, reflecting the period from the beginning of the year through the transaction date, including the loss on divestiture, are presented as discontinued operations in the consolidated statements of operations and excluded from continuing operations for the year ended December 31, 2024.

Cash flows attributable to Remix are segregated and presented separately as net cash flow used in discontinued operating activities and net cash flow used in discontinued investing activities for the period through the transaction date during the year ended December 31, 2024 in the consolidated statements of cash flows.

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

See Note 14, Discontinued Operations , for further details on the transaction.

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):

In September 2025, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU”) 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software, which removes stage-based criteria and instead requires capitalization once a project is approved and it is probable that the project will be completed, unless significant development uncertainty exists.

ASU 2025-06 is effective for annual periods beginning after December 15, 2027, and interim periods within those annual periods.

For the Company, the ASU will be effective for the annual period ending December 31, 2028.

Early adoption is permitted.

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

In July 2025, the FASB issued ASU 2025-05, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses for Accounts Receivable and Contract Assets.

ASU 2025-05 provides a practical expedient that permits entities to assume that conditions existing as of the balance sheet date remain unchanged over the life of the asset when estimating expected credit losses for current accounts receivable and current contract assets.

ASU 2025-05 is effective for annual periods beginning after December 15, 2025, including interim periods within those annual periods.

For the Company, the ASU will be effective for the annual period ending December 31, 2026.

Early adoption is permitted.

The Company is currently evaluating the potential impact of the ASU but does not expect its adoption to have a material impact on its consolidated financial statement disclosures.

In November 2024, the FASB issued 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.

For the Company, the ASU will be effective for the annual period ending December 31, 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 .

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

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

Early adoption is permitted.

The 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.

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

ASU 2023-09 enhances disclosures within the income tax rate reconciliation and information disclosed related to income taxes paid, and requires disaggregation of certain financial statement captions between federal and state.

For public business entities, ASU 2023-09 is effective for annual periods beginning after December 15, 2024, which is the annual period ended December 31, 2025 for the Company.

The Company adopted ASU 2023-09 prospectively as of January 1, 2025, with no material impact on its consolidated financial statements.

See Note 12, Income Taxes , 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 marketplaces, 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 core marketplace, which allows its buyers to browse and purchase resale items for apparel, shoes and accessories on behalf of sellers.

The Company recognizes revenue through the following steps:

5 unchanged sentences

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

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

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

Sellers are the primary customer in a consignment arrangement.

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

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 primarily from the sale of secondhand apparel, shoes and accessories on behalf of sellers.

Consignment Arrangement

The Company generates 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.

The Company reports consignment revenue on a net basis as an agent and not the gross amount collected from the buyer.

The Company reports revenue on a net basis as an agent and not the gross amount collected from the buyer.

Title to the consigned goods remain with the seller until transferred to the buyer, which occurs subsequent to purchase of the consigned goods and upon expiration of the allotted return period.

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.

Consignment revenue is also recognized upon purchase of the consigned good for which the consignment window has already expired and the Company has taken title to the consigned good.

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.

Product Revenue

The Company recognizes product revenue on a gross basis as the Company acts as the principal in the transaction.

Online sales and sales to third-party retail partners are generally recognized upon shipment of the purchased good to the buyer.

Product revenue is recognized net of discounts, incentives and returns.

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

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.

Revenue is also recognized on consigned good for which the consignment window has already expired and the Company has taken title to the consigned good.

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

Revenue from bag fees charged to sellers is recognized as the related items are sold to a buyer.

Sales tax assessed by governmental authorities is excluded from revenue.

1 unchanged sentence

The Company charges shipping fees to buyers, which are included in revenue.

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

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

Returns and Incentives

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

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

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 .

Incentives include website discounts and customer credits.

Incentives are treated as a reduction of revenue.

Deferred Revenue

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

Deferred revenue consists primarily of product revenue from items purchased but not shipped.

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.

As of December 31, 2025 and 2024, the Company had $ 1.6 million and $ 1.9 million, respectively, 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

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

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

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

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

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

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

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

As of December 31, 2024 and 2023, the Company had a deferred revenue liability of $ 1.5 million and $ 3.1 million, respectively, related to its customer loyalty program, which is included in accrued and other current liabilities within the Company’s consolidated balance sheets.

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

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 seller payables and site credits to ThredUp gift cards after one year at the discretion of the Company.

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

Earned points could be redeemed for loyalty rewards, such as non-cashoutable shopping credit, free shipping, or waived restocking fee, which could be applied to future purchases or returns.

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

Reward coupons expired six months from the date the reward was claimed.

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

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

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

Effective October 1, 2024, customers were no longer able to earn loyalty points and after March 31, 2025, they could no longer redeem any previously accumulated points.

As of December 31, 2025 and 2024, the Company had a deferred revenue liability of $ 0 and $ 1.5 million, respectively, related to its customer loyalty program, which is included in accrued and other current liabilities within the Company’s consolidated balance sheets.

The Company recognized $ 1.5 million and $ 11.5 million of revenue from loyalty reward redemptions and expirations for the years ended December 31, 2025 and 2024, respectively.

Gift Cards, Site Credits and Seller Payable

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

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

1 unchanged sentence

As of December 31, 2025 and 2024, $ 3.9 million and $ 8.5 million, respectively, of gift card liability was included in accrued and other current liabilities within the Company’s consolidated balance sheets.

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

Revenue from redemption of gift cards was not material for the years ended December 31, 2025 and 2024.

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

3 unchanged sentences

Breakage revenue was $ 8.6 million and $ 7.2 million for the years ended December 31, 2025 and 2024, respectively.

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

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

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

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

These credits are recognized as revenue when used.

1 unchanged sentence

Revenue recognized from the redemption of site credits was $ 50.1 million, and $ 43.2 million for the years ended December 31, 2025 and 2024, respectively.

Seller payable includes amounts owed to sellers upon the purchase of sellers’ goods by the Company or by buyers.

Amounts are initially provided as a credit to sellers (“seller credits”).

These credits may be applied towards purchases from the Company, converted to third-party retailer or ThredUp gift cards, or redeemed for cash.

As of December 31, 2025 and 2024, there was $ 18.3 million and $ 15.1 million, respectively, of seller payable within the Company’s consolidated balance sheets.

Revenue recognized from the redemption of seller credits was $ 30.3 million and $ 22.9 million for the years ended December 31, 2025 and 2024, respectively.

Segment Reporting

18 unchanged sentences

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 and payment processors.

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

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

2 unchanged sentences

Cash and cash equivalents $ 38,629 $ 31,851

Cash and cash equivalents from discontinued operations

Restricted cash included in Other current assets 225 3,690

6 unchanged sentences

The marketable securities are assessed periodically for impairments.

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

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

Concentrations of Credit Risk

12 unchanged sentences

The allowance for current expected credit losses was not material as of December 31, 2025 and 2024.

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

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

Inventory valuation requires the Company to make judgments based on currently available information about the likely method of disposition, such as through sales to individual customers or liquidations, and expected recoverable values of each disposition category.

The Company records an inventory write-down based on the age of the inventory and historical experience of expected sell-through.

Property and Equipment, Net

24 unchanged sentences

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.

For the year ended December 31, 2025, the Company recorded a $ 1.1 million impairment of long-lived assets related to a warehouse lease asset group, including a right-of-use asset and related leasehold improvements, which was recorded within operations, product and technology on the consolidated statements of operations.

No such impairments were recorded for the year ended December 31, 2024, related to continuing operations.

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.

The Company’s goodwill originated from its acquisition of Remix Global EAD (“Remix”) in 2021.

Upon the divestiture of Remix in 2024, $ 0.7 million of goodwill was allocated to the disposed business based on the relative fair values of the divested business and the portion retained, with the remaining goodwill retained by the Company’s reporting unit following the divestiture.

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

The Company performed a qualitative assessment during the fourth quarter of 2024 and determined that it is more likely than not that the fair value of its single reporting unit is greater than its carrying value.

The Company performed its annual goodwill impairment assessment during the fourth quarter.

For the year ended December 31, 2025, the Company completed a qualitative assessment and determined that it is more likely than not that the fair value of its single reporting unit is greater than its carrying value.

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

1 unchanged sentence

During the years ended December 31, 2025 and 2024, there were no additions to or impairment of goodwill.

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

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For these leases, lease payments are recognized on a straight-line basis over the lease term and variable payments in the period in which the obligation is incurred.

Seller Payable

Seller payable includes amounts owed to sellers upon the purchase of sellers’ goods by the Company or by buyers.

Amounts are initially provided as a credit to sellers.

These credits may be applied towards purchases from the Company, converted to third-party retailer or ThredUp gift cards or redeemed for cash.

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.

7 unchanged sentences

Cost of Revenue

Cost of consignment revenue consists of outbound shipping, outbound labor and packaging costs.

Cost of product revenue mainly consists of the inventory cost, inbound shipping related to the sold merchandise, outbound shipping, outbound labor, packaging costs and inventory write-downs.

Cost of revenue primarily consists of outbound shipping, outbound labor and packaging costs.

The classification of expenses varies across the retail industry.

2 unchanged sentences

Operations, product and technology expenses consist primarily of distribution center operating costs and product and technology expenses.

Distribution center operating costs include personnel costs, distribution center rent, maintenance and equipment depreciation as well as inbound shipping costs, other than those capitalized in inventory.

Distribution center operating costs include personnel costs, inbound shipping costs (excluding amounts capitalized to inventory), distribution center rent, equipment, maintenance, and depreciation.

Product and technology costs include personnel costs for the design and development of product and the related technology that is used to operate the distribution centers, merchandise science, website development and related expenses for these departments.

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Commercial paper — 6,681 — 6,681

treasury securities — 500 — 500

Corporate debt securities — 849 — 849

government agency bonds — 697 — 697

Total cash equivalents 5,030 8,227 — 13,257

Marketable securities:

Corporate debt securities — 2,374 — 2,374

treasury securities — 6,126 — 6,126

Commercial paper — 499 — 499

government agency bonds — 998 — 998

8 unchanged sentences

treasury securities — 500 — 500

government agency bonds — 1,108 — 1,108

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

2 unchanged sentences

government agency bonds — 3,704 — 3,704

Commercial paper — 499 — 499

Total marketable securities — 12,325 — 12,325

7 unchanged sentences

As of December 31, 2025, the Company’s money market funds, were valued using Level 1 inputs because they are valued using quoted prices in active markets.

The Company’s commercial paper, U.S.

The Company’s commercial paper, corporate debt securities, U.S.

treasury securities, and U.S.

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

As of December 31, 2025 and 2024, the Company had no assets or liabilities classified within Level 3 of the fair value hierarchy.

There were no transfers into or out of Level 3 during the year ended December 31, 2025.

1 unchanged sentence

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.

The Company holds a privately held, non-marketable equity investment in Remix, of which 91 % was divested in 2024.

As part of the divestiture, the Company retained a minority equity interest and does not have a significant influence.

The investment is accounted for under the measurement alternative as it does not have a readily determinable fair value.

Under this approach, the investment is initially recorded at cost, adjusted for impairment if any, and remeasured upon observable transactions for the same or similar investments issued by the investee.

See Note 14, Discontinued Operations, for additional information regarding the divestiture.

During the year ended December 31, 2025, the Company acquired an additional equity investment in Remix of $ 0.5 million and recorded a $ 0.8 million gain within other income, net on the consolidated statement of operations, upon the remeasurement of its initial equity investment based on an observable transaction involving new equity issued by the investee.

In determining the fair value, the Company used the transaction price as an observable input and considered the preferences and rights of the equity securities issued, as well as the lack of marketability of the investment.

Due to the use of significant unobservable inputs, the investment is classified as a Level 3 asset within the fair value hierarchy.

As of December 31, 2025 and 2024, the carrying amount of the non-marketable equity investment was $ 1.8 million and $ 0.5 million, respectively, and was included in other assets on the Company’s consolidated balance sheets.

impairments or downward observable price adjustments were recognized during the year ended December 31, 2025 or cumulatively.

Property and Equipment, Net

12 unchanged sentences

Depreciation and amortization expense of property and equipment was $ 12.9 million and $ 17.3 million for the years ended December 31, 2025 and 2024, respectively.

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, 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

3 unchanged sentences

Accrued vendor liabilities 4,844 3,916

Accrued compensation 3,438 2,370

Deferred revenue 3,328 4,936

Allowance for returns 3,814 3,052

Accrued taxes 2,571 2,608

Accrued compensation 2,527 3,438

Deferred revenue 1,573 3,328

Accrued other 1,156 1,280

Total $ 24,511 $ 29,856

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

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

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

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Security deposits and letters of credits used to secure the leases were $ 0.2 million and $ 4.9 million, respectively, as of December 31, 2025 and $ 0.2 million and $ 5.0 million, respectively, as of December 31, 2024.

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:

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(1) Variable lease costs, which include items such as real estate taxes, common area maintenance, and changes based on an index or rate, are not included in the calculation of the right-of-use assets and are recognized as incurred.

In the fourth quarter of 2025, the Company recorded an impairment charge of $ 1.1 million related to a warehouse lease asset group, including an ROU asset and related leasehold improvements.

The impairment charge was recorded within operations, product and technology in the Company’s consolidated statements of operations for the year ended December 31, 2025.

Fair value was estimated using a market-based approach, considering third-party broker information, market conditions, and its remaining lease term.

The weighted-average remaining lease term and weighted-average discount rate used to calculate the present value of lease liabilities are as follows:

8 unchanged sentences

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

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

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

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

The Term Loan also contains affirmative and negative covenants customary for financings of this type, including, among other things, limitations or prohibitions on repurchasing common shares, declaring and paying dividends and other distributions, redeeming and repurchasing certain other indebtedness, loans and investments, additional indebtedness, liens, mergers, asset sales and transactions with affiliates.

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

Following subsequent amendments, as of December 31, 2025, the Term Loan had a maturity date of July 14, 2027 and provided for an aggregate borrowing amount of up to $ 48.8 million, of which $ 22.5 million remained available and was designated for the purchase of certain equipment.

The Term Loan bore interest, as of December 31, 2025, at the prime rate published in the Wall Street Journal, with a floor of 4.75 %, plus a margin of 1.25 %.

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

The Term Loan also contained affirmative and negative covenants customary for financings of this type, including, among other things, limitations or prohibitions on repurchasing common shares, declaring and paying dividends and other distributions, redeeming and repurchasing certain other indebtedness, loans and investments, additional indebtedness, liens, mergers, asset sales and transactions with affiliates.

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

As of December 31, 2025, the Company was in compliance with its debt covenants under the Term Loan.

The Term Loan is payable in consecutive monthly installments.

Interest is due monthly on amounts outstanding under the Term Loan.

The Company is also permitted to make voluntary prepayments without penalty or premium at any time.

As of December 31, 2025, the Term Loan was payable in consecutive monthly installments.

Interest was due monthly on amounts outstanding under the Term Loan.

The Company was also permitted to make voluntary prepayments without penalty or premium at any time.

As of December 31, 2025 and 2024, the effective interest rate for borrowings under the Term Loan was 8.94 % and 9.71 %, respectively.

2 unchanged sentences

During the years ended December 31, 2025 and 2024, the Company incurred interest costs of $ 1.9 million and $ 2.5 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, 2025, annual scheduled principal payments of the Term Loan were as follows:

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Non-current portion of long-term debt $ 14,276

On January 30, 2026, the Company entered into certain Amendment No.

2 to Second Amended and Restated Loan and Security Agreement (the “Amendment”) with the lenders party thereto (the “Lenders”) and Western Alliance Bank, as agent (the “Agent”).

The Amendment, among other things, reduces the aggregate commitment under the undrawn committed term loan facility from $ 22.5 million to $ 10.0 million, extends the maturity date from July 14, 2027 to July 10, 2030, and changes the reference interest rate on any outstanding principal amount from the prime rate published in the Wall Street Journal to the secured overnight financing rate (“SOFR”), subject to a 2.50 % per annum floor, plus an applicable margin of 3.25 % per annum.

In addition, the Amendment modifies the amortization of the outstanding term loan such that only interest, and no principal, is payable until January 10, 2028.

The Amendment also modifies certain financial covenants under the Loan Agreement, including revisions to the existing minimum cash and liquidity requirements, and eliminates the fixed charge coverage ratio maintenance covenant.

Common Stock and Stockholders’ Equity

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ISOs may be granted to Company employees only, while stock awards other than ISOs may be granted to employees, directors and consultants.

In 2020, the board of directors authorized an additional 6.5 million shares for the 2010 Plan.

In 2021, the board of directors authorized an additional 1.0 million shares for the 2010 Plan.

Stock awards under the 2010 Plan may be granted with terms of up to 10 years and at prices determined by the board of directors, provided, however, that (i) the exercise price of an ISO or NSO shall not be less than 100 % of the estimated fair value of the shares on the date of the grant, and (ii) the exercise price of an ISO granted to a 10% or more stockholder shall not be less than 110 % of the estimated fair value of the shares on the grant date.

19 unchanged sentences

As of December 31, 2025, 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:

• Fair Value of Common Stock — Historically, for all periods prior to the IPO in March 2021, the fair value of the shares of common stock has historically been determined by the Company’s board of directors as there was no public market for the common stock.

The board of directors determined the fair value of our common stock by considering a number of objective and subjective factors, including:

the valuation of comparable companies, sales of preferred stock to unrelated third parties, our operating and financial performance, the lack of liquidity of common stock and general and industry specific economic outlook, amongst other factors.

After the completion of the IPO in March 2021, the fair value of each share of underlying common stock is based on the closing price of the Company’s common stock as reported on the date of grant on the Nasdaq Global Select Market.

• Expected Term — The expected term represents the period that the Company’s stock options are expected to be outstanding and is determined using the simplified method (based on the mid-point between the vesting date and the end of the contractual term) as the Company has concluded that its stock option exercise history does not provide a reasonable basis upon which to estimate expected term.

• Volatility — Because the Company does not have sufficient trading history for its common stock, the expected volatility was estimated based on the average volatility for comparable publicly-traded companies, over a period equal to the expected term of the stock option grants.

• Risk-Free Rate — The risk-free rate assumption is based on the U.S.

Treasury zero coupon issues in effect at the time of grant for periods corresponding with the expected term of the option.

• Dividends — The Company has never paid dividends on its common stock and does not anticipate paying dividends on common stock.

Therefore, the Company uses an expected dividend yield of zero .

Employee Stock Purchase Plan

8 unchanged sentences

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

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

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

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

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

10 unchanged sentences

The fair value of RSUs as of the vesting date was $ 49.7 million and $ 12.3 million during the years ended December 31, 2025 and 2024 , 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.

As of December 31, 2025, the Company had $ 30.5 million of unrecognized stock-based compensation related to RSUs, which will be recognized over the weighted average remaining requisite service period of approximately two years .

Stock-based Compensation

6 unchanged sentences

Total stock-based compensation expense $ 19,003 $ 25,847

Stock-based compensation expense capitalized in internal use software was $ 0.5 million and $ 0.6 million for the years ended December 31, 2024 and 2023, respectively.

Stock-based compensation expense capitalized in internal use software was not material for the years ended December 31, 2025 and 2024, respectively.

Commitments and Contingencies

16 unchanged sentences

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 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:

The Company’s state provision for income taxes was current and was not material for the years ended December 31, 2025 and 2024.

The Company’s effective tax rate, as a percentage of loss from continuing operations before provision for income taxes, 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 effective tax rate of the Company's provision for income taxes for the year ended December 31, 2025 differs from the federal statutory rate as follows:

Year Ended December 31,

(in thousands)

(in thousands, except percentages)

Tax expense at U.S.

statutory rate $ ( 4,232 ) 21.0 %

State and local income taxes, net of federal income tax effect

Change in valuation allowance

6,770 ( 33.6 ) %

Increase (decrease) in tax resulting from:

Nontaxable or nondeductible items

Stock-based compensation

( 2,756 ) 13.6 %

Other 64 ( 0.3 ) %

Other adjustments

166 ( 0.8 ) %

Total $ 59 ( 0.3 ) %

The reconciliation between the provision for income taxes at the statutory rate and the provision for income taxes at the effective tax rate for the year ended December 31, 2024 is as follows:

Year Ended December 31,

(in thousands)

Tax expense at U.S.

statutory rate

Increase in tax resulting from:

State taxes, net of federal effect 23

2 unchanged sentences

Change in valuation allowance 5,000

Total $ 29 $ 19

The significant categories of temporary differences that gave rise to deferred tax assets and liabilities were as follows:

6 unchanged sentences

Capital losses

21,355 21,746

Intangibles 350 393

11 unchanged sentences

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.

4 unchanged sentences

federal net operating losses can be carried forward indefinitely and are available to offset 80% of future taxable income.

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

If not used, these federal and state carryforwards will begin to expire in varying amounts beginning in 2027.

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.

8 unchanged sentences

Balance at the beginning of the period

$ 1,272 $ 987

Increases related to prior year tax positions

4 unchanged sentences

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

The cash paid for income taxes, net of refunds, during the years ended December 31, 2025 and 2024 was not material.

Loss Per Share

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

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

(in thousands)

2 unchanged sentences

Employee stock purchase plan 10 25

Delayed share issuance related to acquisition — —

Total 18,351 23,056

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.

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, recorded within loss from discontinued operations, net of tax in the consolidated statements of operations for the year ended December 31, 2024.

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

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

The Transaction 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 did 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.

The minority investment did not provide the Company with significant influence over Remix.

The Company did not elect the fair value option for this investment.

The investment was accounted for under the cost method and is being 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 Convertible Note had an aggregate principal amount of EUR 61.6 million and bore interest at 125 basis points plus the greater of the 12-month EURIBOR rate or zero, determined annually on November 30.

The Convertible Note did not have a fixed maturity date,

and the Company did not anticipate full repayment, with both the timing and amount of any potential repayment remaining uncertain.

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

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

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 were considered unobservable inputs and were 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.

6 unchanged sentences

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:

Remix’s financial results are presented as loss from discontinued operations, net of tax in the consolidated statements of operations for the year ended December 31, 2024.

These results reflect 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 period presented:

Year Ended December 31,

(in thousands)

Total revenue $ 47,317 $ 63,518

Total cost of revenue

33,937 48,181

Cost of revenue

Operating expenses

39,077 34,176

Other income (expense), net

Other income, 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.

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.

Loss from discontinued operations, net of tax

During the year ended December 31, 2025, the Company received additional equity interests in Remix and remeasured its retained equity investment commensurate with an observable transaction involving new equity issued by Remix.

As a result, the Company’s equity investment in Remix was $ 1.8 million as of December 31, 2025, and is included in other assets in the consolidated balance sheets.

See Note 3, Financial Instruments and Fair Value Measurements , for further discussion of this investment.

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