Revolve Group, Inc.

Previous wording

To provide investors with additional information regarding our financial results, we have disclosed in the table above and elsewhere in this report Adjusted EBITDA, a non-GAAP financial measure that we calculate as net income before other expense (income), net; taxes; and depreciation and amortization; adjusted to exclude the effects of equity-based compensation expense, certain transaction costs and certain non-routine items. We have provided below a reconciliation of Adjusted EBITDA to net income, the most directly comparable GAAP financial measure. In future periods, we may exclude similar items, may incur income and expenses similar to these excluded items, and may include other expenses, costs and non-recurring items.

Current wording

To provide investors with additional information regarding our financial results, we have disclosed in the table above and elsewhere in this report Adjusted EBITDA, a non-GAAP financial measure that we calculate as net income before other income, net; taxes; and depreciation and amortization; adjusted to exclude the effects of equity-based compensation expense, certain transaction costs and certain non-routine items. We have provided below a reconciliation of Adjusted EBITDA to net income, the most directly comparable GAAP financial measure. In future periods, we may exclude similar items, may incur income and expenses similar to these excluded items, and may include other expenses, costs and non-recurring items.

Previous wording

other companies, including companies in our industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure.

Current wording

other companies, including companies in our industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure to benchmark performance across various companies.

Previous wording

In the near-term, Adjusted EBITDA will be adversely impacted by the lowering of gross margin as a result of the increased level of tariff rates, though any long-term impact remains unclear. See the section titled “—Factors Affecting Our Performance—Overall Economic Trends.”

Current wording

In the near-term, Adjusted EBITDA may be adversely impacted by the lowering of gross margin as a result of the increased level of tariff rates, though any long-term impact remains unclear. See the section titled “—Factors Affecting Our Performance—Overall Economic Trends.”

Previous wording

A reconciliation of Adjusted EBITDA to net income for the three and six months ended June 30, 2025 and 2024 is as follows:

Current wording

A reconciliation of Adjusted EBITDA to net income for the three and nine months ended September 30, 2025 and 2024 is as follows:

Previous wording

To provide investors with additional information regarding our financial results, we have also disclosed in the table above and elsewhere in this report free cash flow, a non-GAAP financial measure that we calculate as net cash provided by operating activities less cash used in purchases of property and equipment, and purchases of rental product. We have provided below a reconciliation of free cash flow to net cash provided by operating activities, the most directly comparable GAAP financial measure.

Current wording

To provide investors with additional information regarding our financial results, we have also disclosed in the table above and elsewhere in this report free cash flow, a non-GAAP financial measure that we calculate as net cash provided by operating activities less cash used in purchases of property and equipment, and purchases of rental product, net of proceeds from the sale of rental product. We have provided below a reconciliation of free cash flow to net cash provided by operating activities, the most directly comparable GAAP financial measure.

Previous wording

Total orders placed increased in the three and six months ended June 30, 2025 compared to the same periods in 2024, primarily due to our increased engagement with our existing customers and acquisition of new customers through our sales and marketing efforts. Although the impact, if any, is uncertain, customer behavior may be adversely affected by changes in trade policies and other macroeconomic factors. See the section titled “—Factors Affecting Our Performance—Overall Economic Trends.”

Current wording

Total orders placed increased in the three and nine months ended September 30, 2025 compared to the same periods in 2024, primarily due to our increased engagement with our existing customers and acquisition of new customers through our sales and marketing efforts. Although the impact, if any, is uncertain, customer behavior may be adversely affected by changes in trade policies and other macroeconomic factors. See the section titled “—Factors Affecting Our Performance—Overall Economic Trends.”

Previous wording

We define average order value as the sum of the total gross sales from our sites in a given period, prior to product returns, divided by the total orders placed in that period. We believe our high average order value demonstrates the premium nature of our product assortment. We believe that average order value is a measure that is useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends. Average order value varies depending on the site through which we sell merchandise, the percentage of sales at full price, and for sales at less than full price, the level of markdowns on these products, product mix, and the number of units per order. Average order value can be adversely impacted by negative consumer sentiment, including as a result of tariffs. In the near-term, we expect average order value to decrease year-over-year given the challenging macroeconomic environment, as customers seek to purchase products at more accessible price points. We expect this decrease to be partially offset by potential price increases as a result of the actual or anticipated effects of tariffs, though any long-term impact remains unclear. The impact of tariffs may also impair comparability of average order value with prior periods. See the section titled “—Factors Affecting Our Performance—Overall Economic Trends.”

Current wording

We define average order value as the sum of the total gross sales from our sites in a given period, prior to product returns, divided by the total orders placed in that period. We believe our high average order value demonstrates the premium nature of our product assortment. We believe that average order value is a measure that is useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends. Average order value varies depending on the site through which we sell merchandise, the percentage of sales at full price, and for sales at less than full price, the level of markdowns on these products, product mix, and the number of units per order. Average order value can be adversely impacted by negative consumer sentiment, including as a result of tariffs. A shift in product mix toward lower-priced products or categories may also reduce our average order value. In the near-term, average order value may decrease year-over-year given the challenging macroeconomic environment, as customers seek to purchase products at more accessible price points. We expect this potential decrease to be at least partially offset by price increases as a result of the actual or anticipated effects of tariffs, though any long-term impact remains unclear. The impact of tariffs may also impair comparability of average order value with prior periods. See the section titled “—Factors Affecting Our Performance—Overall Economic Trends.”

Previous wording

Average order value decreased in the three and six months ended June 30, 2025, relative to the same periods in 2024, primarily due to a shift in product mix.

Current wording

Average order value increased in the three months ended September 30, 2025, relative to the same periods in 2024, primarily due to an increase in units per order, an increase in full price sales and to a lesser extent, selective price increases, partially offset by shift in product mix. Average order value decreased in the nine months ended September 30, 2025, relative to the same periods in 2024, primarily due to a shift in product mix.

Previous wording

Since May 2025, the U.S. government has imposed incremental tariffs of 30% on most goods imported from China, from which we source a significant portion of our products, subject to certain exceptions. This tariff rate is comprised of a 20% tariff rate imposed under the International Emergency Economic Powers Act, or the IEEPA, since March 2025, and a temporarily reduced 10% reciprocal tariff imposed since May 2025. When factoring in the pre-existing Section 301 tariffs of 7.5%, our total tariff rate on goods imported from China is 37.5%. This rate may change, and at various points throughout the preceding quarter, this total tariff rate on goods imported from China reached 152.5%. These tariffs are in addition to the baseline Harmonized Tariff Schedule, or HTS, tariffs, which vary by product. In addition, U.S. tariffs on goods imported from other countries from which we source products included an incremental reciprocal tariff of 10% imposed since April 2025. On July 31, 2025, an executive order was issued imposing further modification to the reciprocal tariff rates for certain countries effective on August 7, 2025, including higher reciprocal tariff rates for countries such as Japan, Turkey, Indonesia and India. Heightened tariffs, particularly on Chinese goods, directly impact our owned brand products and, to a lesser extent, a limited number of third-party branded products for which we are the importer of record. In addition, we face various indirect exposures to the effects of heightened tariffs from other third-party brands. If U.S. tariffs on China or other countries from which we source products are sustained at heightened levels, it will increase our cost of sales and may also increase the price of our products. Raising prices of our products could adversely impact customer demand. In addition, heightened tariffs may adversely impact our ability to acquire products on acceptable terms and may also adversely impact global logistics, which may result in our inability to purchase sufficient inventory to meet customer demand and in turn materially and adversely impact our net sales. Furthermore, these and future changes in trade policy may adversely impact the macroeconomic environment, consumer sentiment and international demand if consumers outside of the United States boycott U.S. retailers. If we are not able to adjust our inventory levels and our inventory assortment in response to reduced customer demand, our gross margin may be adversely impacted.

Current wording

Since May 2025, the U.S. government has imposed incremental tariffs of 30% on most goods imported from China, from which we source a significant portion of our products, subject to certain exceptions. This tariff rate is comprised of a 20% fentanyl-related tariff rate imposed under the International Emergency Economic Powers Act, or the IEEPA, since March 2025, and a temporarily reduced 10% reciprocal tariff imposed under IEEPA since May 2025. When factoring in the pre-existing Section 301 tariffs of 7.5% on products we import, these policies combine for an additional 37.5% tariff rate on goods we import from China. These rates are subject to changes, particularly in light of ongoing bilateral trade negotiations between the United States and China, and at various points in 2025, this total tariff rate on goods imported from China reached 152.5%. These tariffs are in addition to the baseline Harmonized Tariff Schedule, or HTS, tariffs, which vary by product. In addition, U.S. tariffs on goods imported from other countries from which we source products included an incremental reciprocal tariff of 10% imposed since April 2025. Since August 7, 2025, higher reciprocal tariff rates for many U.S. trading partners, including countries such as Japan, Turkey, Indonesia and India, have been imposed pursuant to additional executive orders modifying the reciprocal tariff rates for certain countries. Products of India have also been targeted since August 2025 with an additional 25% tariff (on top of baseline HTS, reciprocal and other applicable duties) due to India’s import of crude oil from Russia. Heightened tariffs, particularly on Chinese goods, directly impact our owned brand products and, to a lesser extent, a limited number of third-party branded products for which we are the importer of record. In addition, we face various indirect exposures to the effects of heightened tariffs from other third-party brands. If U.S. tariffs on China or other countries from which we source products are sustained at heightened levels or are increased further, it will increase our cost of sales and may also increase the price of our products. Raising prices of our products could adversely impact customer demand. In addition, heightened tariffs may adversely impact our ability to acquire products on acceptable terms and may also adversely impact global logistics, which may result in our inability to purchase sufficient inventory to meet customer demand and in turn materially and adversely impact our net sales. Furthermore, these and future changes in trade policy may adversely impact the macroeconomic environment, consumer sentiment and international demand if consumers outside of the United States boycott U.S. retailers. If we are not able to adjust our inventory levels and our inventory assortment in response to reduced customer demand, our gross margin may be adversely impacted.

Previous wording

We offer merchandise across a variety of product types, brands and price points. The brands we sell on our platform consist of a mix of emerging third-party, established third-party (including iconic luxury brands) and owned brands. Our product mix consists primarily of apparel, footwear, beauty, accessories and home products.

Current wording

We offer merchandise across a variety of product types, brands and price points. The brands we sell on our platform consist of a mix of emerging third-party, established third-party (including iconic luxury brands) and owned brands. Our product mix consists primarily of apparel, footwear, beauty and accessories.

Previous wording

The REVOLVE segment contributes to a majority of our net sales, representing 86.9% of our net sales for the three months ended June 30, 2025 and 2024, and 86.3% and 85.9% of our net sales for the six months ended June 30, 2025 and 2024, respectively. During the three months ended June 30, 2025 and 2024, REVOLVE generated $268.4 million and $245.5 million in net sales, respectively, representing an increase of 9.3%. During the six months ended June 30, 2025 and 2024, REVOLVE generated $522.8 million and $475.1 million in net sales, respectively, representing an increase of 10.0%. The net sales increase in the three and six months ended June 30, 2025, as compared to the same periods in 2024, was primarily due to an increase in the number of orders shipped and a lower proportion of returned purchases, partially offset by a decrease in average order value.

Current wording

The REVOLVE segment contributes to a majority of our net sales, representing 86.1% and 86.0% of our net sales for the three months ended September 30, 2025 and 2024, respectively, and 86.3% and 85.9% of our net sales for the nine months ended September 30, 2025 and 2024, respectively. During the three months ended September 30, 2025 and 2024, REVOLVE generated $254.6 million and $243.4 million in net sales, respectively, representing an increase of 4.6%. During the nine months ended September 30, 2025 and 2024, REVOLVE generated $777.5 million and $718.5 million in net sales, respectively, representing an increase of 8.2%. The net sales increase in the three months ended September 30, 2025, as compared to the same period in 2024, was primarily due to an increase in the number of orders shipped and an increase in average order value, partially offset by a higher proportion of returned purchases. The net sales increase in the nine months ended September 30, 2025, as compared to the same period in 2024, was primarily due to an increase in the number of orders shipped and a lower proportion of returned purchases.

Previous wording

The FWRD segment contributes to a smaller portion of our overall net sales, representing 13.1% of our net sales for the three months ended June 30, 2025 and 2024, and 13.7% and 14.1% of our net sales for the six months ended June 30, 2025 and 2024, respectively. During the three months ended June 30, 2025 and 2024, FWRD generated $40.6 million and $36.9 million in net sales, respectively, representing an increase of 9.8%. During the six months ended June 30, 2025 and 2024, FWRD generated $82.9 million and $77.9 million in net sales, respectively, representing an increase of 6.4%. The net sales increase in the three and six months ended June 30, 2025, as compared to the same periods in 2024, was primarily due to an increase in the number of orders shipped, partially offset by a decrease in average order value.

Current wording

The FWRD segment contributes to a smaller portion of our overall net sales, representing 13.9% and 14.0% of our net sales for the three months ended September 30, 2025 and 2024, respectively, and 13.7% and 14.1% of our net sales for the nine months ended September 30, 2025 and 2024, respectively. During the three months ended September 30, 2025 and 2024, FWRD generated $41.0 million and $39.7 million in net sales, respectively, representing an increase of 3.2%. During the nine months ended September 30, 2025 and 2024, FWRD generated $123.8 million and $117.6 million in net sales, respectively, representing an increase of 5.3%. The net sales increase in the three and nine months ended September 30, 2025, as compared to the same periods in 2024, was primarily due to an increase in the number of orders shipped, partially offset by a decrease in average order value.

Previous wording

Net sales to customers in the United States contributed to 78.2% and 79.7% of our net sales for the three months ended June 30, 2025 and 2024, respectively, and 79.4% and 80.3% of our net sales for the six months ended June 30, 2025 and 2024, respectively. During the three months ended June 30, 2025 and 2024, net sales to customers in the United States were $241.6 million and $225.1 million, respectively, representing an increase of 7.4%. During the six months ended June 30, 2025 and 2024, net sales to customers in the United States were $480.9 million and $444.2 million, respectively, representing an increase of 8.3%.

Current wording

Net sales to customers in the United States contributed to 78.3% and 78.6% of our net sales for the three months ended September 30, 2025 and 2024, respectively, and 79.0% and 79.7% of our net sales for the nine months ended September 30, 2025 and 2024, respectively. During the three months ended September 30, 2025 and 2024, net sales to customers in the United States were $231.4 million and $222.7 million, respectively, representing an increase of 3.9%. During the nine months ended September 30, 2025 and 2024, net sales to customers in the United States were $712.3 million and $666.8 million, respectively, representing an increase of 6.8%.

Previous wording

Net sales to customers outside of the United States contributed to 21.8% and 20.3% of our net sales for the three months ended June 30, 2025 and 2024, respectively, and 20.6% and 19.7% of our net sales for the three months ended June 30, 2025 and 2024, respectively. During the three months ended June 30, 2025 and 2024, net sales to customers outside of the United States were $67.3 million and $57.4 million, respectively, representing an increase of 17.3%. During the six months ended June 30, 2025 and 2024, net sales to customers outside of the United States were $124.8 million and $108.8 million, respectively, representing an increase of 14.7%.

Current wording

Net sales to customers outside of the United States contributed to 21.7% and 21.4% of our net sales for the three months ended September 30, 2025 and 2024, respectively, and 21.0% and 20.3% of our net sales for the nine months ended September 30, 2025 and 2024, respectively. During the three months ended September 30, 2025 and 2024, net sales to customers outside of the United States were $64.2 million and $60.5 million, respectively, representing an increase of 6.1%. During the nine months ended September 30, 2025 and 2024, net sales to customers outside of the United States were $189.0 million and $169.3 million, respectively, representing an increase of 11.6%.

Previous wording

Net sales consist primarily of sales of apparel, footwear, beauty, accessories and home products. We recognize product sales at the time control is transferred to the customer, which is when the product is shipped. Net sales represent the sales of these items and shipping revenue when applicable, net of estimated returns and promotional discounts. Net sales are primarily driven by growth in the number of our customers, the frequency with which customers purchase, the proportion of returned merchandise and average order value. Net sales may be impacted by tariffs and other changes to trade policy, particularly in the near term. See the section titled “—Factors Affecting Our Performance—Overall Economic Trends.”

Current wording

Net sales consist primarily of sales of apparel, footwear, beauty and accessories. We recognize product sales at the time control is transferred to the customer, which is when the product is shipped. Net sales represent the sales of these items and shipping revenue when applicable, net of estimated returns and promotional discounts. Net sales are primarily driven by growth in the number of our customers, the frequency with which customers purchase, the proportion of returned merchandise and average order value. Net sales may be impacted by tariffs and other changes to trade policy, particularly in the near term. See the section titled “—Factors Affecting Our Performance—Overall Economic Trends.”

Previous wording

Other expense (income), net consists primarily of interest income on our money market funds, partially offset by foreign currency exchange gains and losses and fees associated with our line of credit. For the three and six months ended June 30, 2025, other expense (income), net also includes a $2.4 million loss on deconsolidation of subsidiary. For the six months ended June 30, 2024, other expense (income), net includes $2.8 million of insurance proceeds related to a settled legal matter.

Current wording

Other income, net consists primarily of interest income on our money market funds, partially offset by foreign currency exchange gains and losses and fees associated with our line of credit. For the three and nine months ended September 30, 2025, other income, net includes $4.5 million of insurance proceeds related to a previously disclosed shipment theft incident. For the nine months ended September 30, 2025, other income, net also includes a $2.4 million loss on deconsolidation of a subsidiary. For the nine months ended September 30, 2024, other income, net includes $2.8 million of insurance proceeds related to a settled legal matter.

Previous wording

The increase in net sales for the six months ended June 30, 2025, as compared to the same period in 2024, was primarily due to a 5.3% increase in the number of orders shipped combined with a lower proportion of returned purchases, partially offset by a 1.3% decrease in the average order value.

Current wording

The increase in net sales for the three months ended September 30, 2025, as compared to the same period in 2024, was primarily due to a 4.5% increase in the number of orders shipped combined with a 1.0% increase in the average order value, partially offset by a higher proportion of returned purchases.

Previous wording

Net sales in the REVOLVE segment increased 9.3% to $268.4 million in the three months ended June 30, 2025 compared to net sales of $245.5 million in the same period in 2024. Net sales in the FWRD segment increased 9.8% to $40.6 million in the three months ended June 30, 2025 as compared to net sales of $36.9 million in the same period in 2024.

Current wording

Net sales in the REVOLVE segment increased 4.6% to $254.6 million in the three months ended September 30, 2025 as compared to net sales of $243.4 million in the same period in 2024. Net sales in the FWRD segment increased 3.2% to $41.0 million in the three months ended September 30, 2025 as compared to net sales of $39.7 million in the same period in 2024.

Previous wording

The increase in cost of sales for the three months ended June 30, 2025, as compared to the same period in 2024, was primarily due to an increase in net sales and to a lesser extent, an increase in the cost of products related to tariffs. The decrease in cost of sales as a percentage of net sales was primarily due to a lower mix of third-party brand sales, partially offset by a lower percentage of full price sales and the impact of increased import tariff rates. Third-party brand sales generally carry lower gross margins than that of owned brand sales.

Current wording

The decrease in cost of sales for the three months ended September 30, 2025, as compared to the same period in 2024, was primarily due to a lower mix of third-party brand sales, partially offset by an increase in the cost of products related to tariffs. The decrease in cost of sales as a percentage of net sales was primarily due to shallower markdowns within markdown sales, a higher percentage of full price sales and higher margins on these sales, and a lower mix of third-party brand sales, partially offset by the impact of increased import tariff rates. Third-party brand sales generally carry lower gross margins than that of owned brand sales.

Previous wording

The increase in fulfillment expenses for the six months ended June 30, 2025, as compared to the same period in 2024, was primarily due to an increase in the number of units processed. The decrease in fulfillment expenses as a percentage of net sales was primarily due to a lower proportion of returned purchases, partially offset by a decrease in average order value.

Current wording

The increase in fulfillment expenses for the three months ended September 30, 2025, as compared to the same period in 2024, was primarily due to an increase in the number of units processed. Fulfillment expenses as a percentage of net sales were flat for the three months ended September 30, 2025, as compared to the same period in 2024.

Previous wording

The increase in selling and distribution expenses for the six months ended June 30, 2025, as compared to the same period in 2024, was due to increases in orders placed and net sales that resulted in a $1.8 million increase in shipping and handling costs, a $1.3 million increase in merchant processing fees, a $0.9 million increase in customer service expenses and a $0.9 million increase in other selling expenses. The decrease in selling and distribution expenses as a percentage of net sales was primarily due to a lower proportion of returned purchases and lower shipping rates as compared to the same period in the prior year, partially offset by a decrease in average order value.

Current wording

The increase in selling and distribution expenses for the three months ended September 30, 2025, as compared to the same period in 2024, was due to increases in orders placed and net sales that resulted in a $2.1 million increase in shipping and handling costs, a $0.4 million increase in merchant processing fees, a $0.4 million increase in customer service expenses and a $0.9 million increase in other selling expenses. The increase in selling and distribution expenses as a percentage of net sales was primarily due to higher shipping rates and a higher proportion of returned purchases as compared to the same period in the prior year, partially offset by an increase in average order value.

Previous wording

The increase in marketing expenses for the three months ended June 30, 2025, as compared to the same period in 2024, was due to a $6.0 million increase in performance marketing expense, partially offset by a $1.9 million decrease in brand marketing expense. Marketing expenses expressed as a percentage of net sales for the three months ended June 30, 2025 were flat as compared to the same period in 2024.

Current wording

The increase in marketing expenses for the three months ended September 30, 2025, as compared to the same period in 2024, was due to a $0.8 million increase in performance marketing expense and a $0.1 million increase in brand marketing expense. The decrease in marketing expenses as a percentage of net sales was due to efficiencies in our performance marketing and brand marketing investments.

Previous wording

The increase in general and administrative expenses for the three months ended June 30, 2025, as compared to the same period in 2024, was primarily due to a $1.9 million increase in salaries and related benefits and equity-based compensation expense, a $1.5 million increase related to professional services and other occupancy costs, a $0.4 million increase in non-routine and transaction costs and a $1.0 million increase in other operating expenses. The increase in general and administrative expenses as a percentage of net sales was driven by growth in general and administrative expenses outpacing growth in net sales.

Current wording

The increase in general and administrative expenses for the three months ended September 30, 2025, as compared to the same period in 2024, was primarily due to a $2.4 million increase related to professional services and other occupancy costs, a $1.3 million increase in salaries and related benefits and equity-based compensation expense, a $1.0 million increase in non-routine costs and a $0.1 million increase in other operating expenses, partially offset by a $0.2 million decrease in transaction costs. The increase in general and administrative expenses as a percentage of net sales was driven by increased investment in strategic growth initiatives and an increase in non-routine costs.

Previous wording

The increase in the effective tax rate for the six months ended June 30, 2025, as compared to the same period in 2024, was primarily due to an increase in valuation allowance against deferred income tax assets.

Current wording

The decrease in the effective tax rate for the three months ended September 30, 2025, as compared to the same period in 2024, was primarily due to a decrease in state income taxes and an increase inthe benefit from foreign-derived intangible income.

Previous wording

The increase in net sales for the three months ended June 30, 2025, as compared to the same period in 2024, was primarily due to a 6.7% increase in the number of orders shipped combined with a lower proportion of returned purchases, partially offset by a 2.0% decrease in the average order value.

Current wording

The increase in net sales for the nine months ended September 30, 2025, as compared to the same period in 2024, was primarily due to a 5.0% increase in the number of orders shipped combined with a lower proportion of returned purchases, partially offset by a 1.0% decrease in the average order value.

Previous wording

Net sales in the REVOLVE segment increased 10.0% to $522.8 million in the six months ended June 30, 2025 compared to net sales of $475.1 million in the same period in 2024. Net sales in the FWRD segment increased 6.4% to $82.9 million in the six months ended June 30, 2025 as compared to net sales of $77.9 million in the same period in 2024.

Current wording

Net sales in the REVOLVE segment increased 8.2% to $777.5 million in the nine months ended September 30, 2025 as compared to net sales of $718.5 million in the same period in 2024. Net sales in the FWRD segment increased 5.3% to $123.8 million in the nine months ended September 30, 2025 as compared to net sales of $117.6 million in the same period in 2024.

Previous wording

The increase in cost of sales for the six months ended June 30, 2025, as compared to the same period in 2024, was primarily due to an increase in net sales. The increase in cost of sales as a percentage of net sales was primarily due to a lower percentage of full price sales and deeper markdowns on markdown sales, partially offset by a lower mix of third-party brand sales.

Current wording

The increase in cost of sales for the nine months ended September 30, 2025, as compared to the same period in 2024, was primarily due to an increase in net sales. The decrease in cost of sales as a percentage of net sales was primarily due to a lower mix of third-party brand sales and shallower markdowns within markdown sales, partially offset by a lower percentage of full price sales and the impact of increased import tariff rates.

Previous wording

The increase in fulfillment expenses for the three months ended June 30, 2025, as compared to the same period in 2024, was primarily due to an increase in the number of units processed. The decrease in fulfillment expenses as a percentage of net sales was primarily due to a lower proportion of returned purchases, partially offset by a decrease in average order value.

Current wording

The increase in fulfillment expenses for the nine months ended September 30, 2025, as compared to the same period in 2024, was primarily due to an increase in the number of units processed. The decrease in fulfillment expenses as a percentage of net sales was primarily due to a lower proportion of returned purchases, partially offset by a decrease in average order value.

Previous wording

The increase in selling and distribution expenses for the three months ended June 30, 2025, as compared to the same period in 2024, was due to increases in orders placed and net sales that resulted in a $1.6 million increase in shipping and handling costs, a $0.7 million increase in merchant processing fees, a $0.5 million increase in customer service expenses and a $0.6 million increase in other selling expenses. The decrease in selling and distribution expenses as a percentage of net sales was primarily due to a lower proportion of returned purchases and lower shipping rates as compared to the same period in the prior year, partially offset by a decrease in average order value.

Current wording

The increase in selling and distribution expenses for the nine months ended September 30, 2025, as compared to the same period in 2024, was due to increases in orders placed and net sales that resulted in a $3.9 million increase in shipping and handling costs, a $1.6 million increase in merchant processing fees, a $1.4 million increase in customer service expenses and a $1.7 million increase in other selling expenses. The decrease in selling and distribution expenses as a percentage of net sales was primarily due to a lower proportion of returned purchases and lower shipping rates as compared to the same period in the prior year, partially offset by a decrease in average order value.

Previous wording

The increase in marketing expenses for the six months ended June 30, 2025, as compared to the same period in 2024, was due to a $10.4 million increase in performance marketing expense, partially offset by a $5.2 million decrease in brand marketing expense. The decrease in marketing expenses as a percentage of net sales was primarily due to efficiencies in our brand marketing investments.

Current wording

The increase in marketing expenses for the nine months ended September 30, 2025, as compared to the same period in 2024, was due to a $11.2 million increase in performance marketing expense, partially offset by a $5.1 million decrease in brand marketing expense. The decrease in marketing expenses as a percentage of net sales was primarily due to efficiencies in our brand marketing investments.

Previous wording

The increase in general and administrative expenses for the six months ended June 30, 2025, as compared to the same period in 2024, was primarily due to a $3.7 million increase in salaries and related benefits and equity-based compensation expense, a $3.3 million increase related to professional services and other occupancy costs, a $1.2 million increase in transaction costs and other non-routine costs and a $1.6 million increase in other operating expenses. The increase in general and administrative expenses as a percentage of net sales was driven by growth in general and administrative expenses outpacing growth in net sales.

Current wording

The increase in general and administrative expenses for the nine months ended September 30, 2025, as compared to the same period in 2024, was primarily due to a $5.7 million increase related to professional services and other occupancy costs, a $5.0 million increase in salaries and related benefits and equity-based compensation expense, a $2.0 million increase in non-routine and transaction costs and a $1.7 million increase in other operating expenses. The increase in general and administrative expenses as a percentage of net sales was driven by increased investment in strategic growth initiatives and an increase in non-routine and transaction costs.

Previous wording

The increase in the effective tax rate for the three months ended June 30, 2025, as compared to the same period in 2024, was primarily due to an increase in valuation allowance against deferred income tax assets.

Current wording

The increase in the effective tax rate for the nine months ended September 30, 2025, as compared to the same period in 2024, was primarily due to an increase in valuation allowance against deferred income tax assets, partially offset by a decrease in state income taxes.

Previous wording

For the six months ended June 30, 2025, we generated $57.8 million of operating cash flow as compared to $13.7 million for the same period in 2024. The increase in our operating cash flow was primarily due to favorable impact from changes in working capital and higher net income adjusted for certain non-cash items.

Current wording

For the nine months ended September 30, 2025, we generated $69.6 million of operating cash flow as compared to $22.8 million for the same period in 2024. The increase in our operating cash flow was primarily due to favorable impact from changes in working capital and higher net income adjusted for certain non-cash items.

Previous wording

Our primary investing activities have consisted of purchases of property and equipment to support our fulfillment centers and our overall business growth and internally developed software for the continued development of our proprietary technology infrastructure, leasehold improvements in our retail locations and purchases of rental product. Purchases of property and equipment may vary from period-to-period depending on the timing and extent of the expansion of our operations.

Current wording

Our primary investing activities have consisted of purchases of property and equipment to support our fulfillment centers and our overall business growth and internally developed software for the continued development of our proprietary technology infrastructure, leasehold improvements in our retail locations, purchases of rental product and proceeds from sale of rental product. Purchases of property and equipment may vary from period-to-period depending on the timing and extent of the expansion of our operations.

Previous wording

Net cash used in financing activities was $2.1 million for the six months ended June 30, 2025, and was primarily attributable to repurchases of shares of our Class A common stock under our stock repurchase program. Net cash used in financing activities was $10.0 million for the six months ended June 30, 2024, and was primarily attributable to repurchases of shares of our Class A common stock under our stock repurchase program.

Current wording

Net cash used in financing activities was $1.9 million for the nine months ended September 30, 2025, and was primarily attributable to repurchases of shares of our Class A common stock under our stock repurchase program. Net cash used in financing activities was $11.0 million for the nine months ended September 30, 2024, and was primarily attributable to repurchases of shares of our Class A common stock under our stock repurchase program.