Revolve Group, Inc.

Previous wording

A reconciliation of Adjusted EBITDA to net income for the three and six months ended June 30, 2026 and 2025 is as follows:

Current wording

A reconciliation of Adjusted EBITDA to net income for the three and nine months ended September 30, 2026 and 2025 is as follows:

Previous wording

We have included free cash flow in this report because it is a key measure used by our management and board of directors, which we believe is an important indicator of our liquidity because it measures the amount of cash we generate. Free cash flow also reflects changes in working capital. Our working capital fluctuates over time primarily as a result of the timing of our inventory purchases to support growth, our effective tax rate and the timing of tax payments, and changes in the level of merchandise that is returned by our customers, which in turn impacts our return reserve. Accordingly, we believe that free cash flow provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors.

Current wording

We have included free cash flow in this report because it is a key measure used by our management and board of directors, which we believe is an important indicator of our liquidity because it measures the amount of cash we generate. Free cash flow also reflects changes in working capital. Our working capital fluctuates over time primarily as a result of the timing of our inventory purchases to support growth, our effective tax rate and the timing of tax payments, and changes in the level of merchandise returned by our customers, which in turn impacts our return reserve. Accordingly, we believe that free cash flow provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors.

Previous wording

Active customers increased during the period ended June 30, 2026 compared to the same period in 2025 primarily due to our increased engagement with our existing customers and acquisition of new customers through our sales and marketing efforts.

Current wording

Active customers increased during the period ended September 30, 2026 compared to the same period in 2025 primarily due to acquisition of new customers through our sales and marketing efforts and our increased engagement with our existing customers.

Previous wording

Total orders placed increased in the three and six months ended June 30, 2026 compared to the same periods in 2025, primarily due to our increased engagement with our existing customers and acquisition of new customers through our sales and marketing efforts.

Current wording

Total orders placed increased in the three and nine months ended September 30, 2026 compared to the same periods in 2025, primarily due to our increased engagement with our existing customers and acquisition of new customers through our sales and marketing efforts.

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 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 due to net sales of Grow-Good hair care products created in partnership with Cardi B following its successful launch in the second quarter of 2026. We expect this potential decrease to be at least partially offset by price increases as a result of the actual or anticipated effects of incremental tariffs that were in effect at various times and rates over the course of 2025 and early 2026, 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

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 due to net sales of Grow-Good hair care products created in partnership with Cardi B following its successful launch in the second quarter of 2026.

Previous wording

Average order value in the three and six months ended June 30, 2026 was relatively flat compared to the same periods in 2025, as an increase in average selling price was offset by a decrease in units per order and a mix shift resulting from initial sales of Grow-Good hair care products, which have a much lower average order value.

Current wording

Average order value in the three and nine months ended September 30, 2026 decreased compared to the same periods in 2025, primarily due to a mix shift resulting from initial sales of Grow-Good hair care products, which have a much lower average order value.

Previous wording

On February 20, 2026, the Supreme Court of the United States of America ruled against President Trump’s use of the IEEPA to impose tariffs on global trade partners. U.S. Customs and Border Protection has since begun issuing refunds for these previous IEEPA-related tariffs, and during May and June 2026, we received $6.7 million in refunds of the majority of our prior IEEPA-related tariff payments, of which $5.6 million was recorded as a reduction to cost of sales. In June 2026, the U.S. Trade Representative released a report proposing further Section 301 tariffs of 10-12.5% on imports from the largest U.S. trading partners, premised on a finding that those countries’ forced labor enforcement efforts are insufficient.

Current wording

On February 20, 2026, the Supreme Court of the United States of America ruled against President Trump’s use of the IEEPA to impose tariffs on global trade partners. U.S. Customs and Border Protection has since begun issuing refunds for these previous IEEPA-related tariffs, and during May, June and July 2026, we received $6.9 million in refunds of the majority of our prior IEEPA-related tariff payments, of which $6.1 million was recorded as a reduction to cost of sales. In July 2026, the U.S. Trade Representative imposed further Section 301 tariffs of 10-12.5% on most imports from the largest U.S. trading partners related to a finding of insufficient prohibitions on products produced using forced labor.

Previous wording

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 reinstated 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

Current wording

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 reinstated under alternative authorities 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 have and continue to undertake a series of actions and initiatives to mitigate the impact of heightened tariffs, including cost-sharing discussions with our owned brand manufacturing partners, diversifying our owned brand manufacturing sources outside of China, partnering with our third-party brands to mitigate the impact of tariffs, optimizing our product import logistics, selectively increasing prices for our products and further optimizing our supply chain. However, our mitigation efforts may be costly and may not yield near-term results or be as effective as we intend, or at all, and may have other negative impacts on our business, operations and financial condition. See the sections titled “Risk Factors—Risks Related to Our Business and Industry—Tariffs imposed by the U.S. or foreign governments or a global trade war has increased and may in the future continue to increase the cost of our products, which could have a material adverse effect on our business, financial condition and results of operations” and “—We purchase inventory in anticipation of sales, and if we are unable to manage our inventory effectively, our operating results could be adversely affected.”

Current wording

We have and continue to undertake a series of actions and initiatives to mitigate the impact of heightened tariffs, including cost-sharing discussions with our owned brand manufacturing partners, diversifying our owned brand manufacturing sources outside of China, partnering with our third-party brands to mitigate the impact of tariffs, optimizing our product import logistics, selectively increasing prices for our products and further optimizing our supply chain. However, our mitigation efforts may be costly and may not yield near-term results or be as effective as we intend, or at all, and may have other negative impacts on our business, operations and financial condition. See the sections titled “Risk Factors—Risks Related to Our Business and Industry—Tariffs imposed by, threatened by or increased by the U.S. or foreign governments or a global trade war has increased and may in the future continue to increase the cost of our products, which could have a material adverse effect on our business, financial condition and results of operations” and “—We purchase inventory in anticipation of sales, and if we are unable to manage our inventory effectively, our operating results could be adversely affected.”

Previous wording

The REVOLVE segment contributes to a majority of our net sales, representing 87.1% and 86.9% of our net sales for the three months ended June 30, 2026 and 2025, respectively, and 86.3% of our net sales for both the six months ended June 30, 2026 and 2025. During the three months ended June 30, 2026 and 2025, REVOLVE generated $302.5 million and $268.4 million in net sales, respectively, representing an increase of 12.7%. During the six months ended June 30, 2026 and 2025, REVOLVE generated $595.8 million and $522.8 million in net sales, respectively, representing an increase of 14.0%. The net sales increase in the three and six months ended June 30, 2026, as compared to the same periods in 2025, was primarily due to an increase in the number of orders shipped and a lower proportion of returned purchases.

Current wording

The REVOLVE segment contributes to a majority of our net sales, representing 86.2% and 86.1% of our net sales for the three months ended September 30, 2026 and 2025, respectively, and 86.3% of our net sales for both the nine months ended September 30, 2026 and 2025. During the three months ended September 30, 2026 and 2025, REVOLVE generated $306.8 million and $254.6 million in net sales, respectively, representing an increase of 20.5%. During the nine months ended September 30, 2026 and 2025, REVOLVE generated $902.5 million and $777.5 million in net sales, respectively, representing an increase of 16.1%. The net sales increase in the three and nine months ended September 30, 2026, as compared to the same periods in 2025, was primarily due to an increase in the number of orders shipped and a lower proportion of returned purchases, partially offset by a lower average order value.

Previous wording

The FWRD segment contributes to a smaller portion of our overall net sales, representing 12.9% and 13.1% of our net sales for the three months ended June 30, 2026 and 2025, respectively, and 13.7% of our net sales for both the six months ended June 30, 2026 and 2025. During the three months ended June 30, 2026 and 2025, FWRD generated $44.9 million and $40.6 million in net sales, respectively, representing an increase of 10.7%. During the six months ended June 30, 2026 and 2025, FWRD generated $94.5 million and $82.9 million in net sales, respectively, representing an increase of 14.1%. The net sales increase in the three months ended June 30, 2026, as compared to the same period in 2025, 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. The net sales increase in the six months ended June 30, 2026, as compared to the same period in 2025, was primarily due to an increase in the number of orders shipped and a lower proportion of returned purchases.

Current wording

The FWRD segment contributes to a smaller portion of our overall net sales, representing 13.8% and 13.9% of our net sales for the three months ended September 30, 2026 and 2025, respectively, and 13.7% of our net sales for both the nine months ended September 30, 2026 and 2025. During the three months ended September 30, 2026 and 2025, FWRD generated $49.2 million and $41.0 million in net sales, respectively, representing an increase of 20.0%. During the nine months ended September 30, 2026 and 2025, FWRD generated $143.7 million and $123.8 million in net sales, respectively, representing an increase of 16.0%. The net sales increase in the three and nine months ended

Previous wording

Net sales to customers in the United States contributed to 77.4% and 78.2% of our net sales for the three months ended June 30, 2026 and 2025, respectively, and 78.7% and 79.4% of our net sales for the six months ended June 30, 2026 and 2025, respectively. During the three months ended June 30, 2026 and 2025, net sales to customers in the United States were $269.1 million and $241.6 million, respectively, representing an increase of 11.4%. During the six months ended June 30, 2026 and 2025, net sales to customers in the United States were $543.0 million and $480.9 million, respectively, representing an increase of 12.9%.

Current wording

Net sales to customers in the United States contributed to 77.9% and 78.3% of our net sales for the three months ended September 30, 2026 and 2025, respectively, and 78.4% and 79.0% of our net sales for the nine months ended September 30, 2026 and 2025, respectively. During the three months ended September 30, 2026 and 2025, net sales to customers in the United States were $277.4 million and $231.4 million, respectively, representing an increase of 19.9%. During the nine months ended September 30, 2026 and 2025, net sales to customers in the United States were $820.4 million and $712.3 million, respectively, representing an increase of 15.2%.

Previous wording

Net sales to customers outside of the United States contributed to 22.6% and 21.8% of our net sales for the three months ended June 30, 2026 and 2025, respectively, and 21.3% and 20.6% of our net sales for the six months ended June 30, 2026 and 2025, respectively. During the three months ended June 30, 2026 and 2025, net sales to customers outside of the United States were $78.4 million and $67.3 million, respectively, representing an increase of 16.3%. During the six months ended June 30, 2026 and 2025, net sales to customers outside of the United States were $147.2 million and $124.8 million, respectively, representing an increase of 18.0%.

Current wording

Net sales to customers outside of the United States contributed to 22.1% and 21.7% of our net sales for the three months ended September 30, 2026 and 2025, respectively, and 21.6% and 21.0% of our net sales for the nine months ended September 30, 2026 and 2025, respectively. During the three months ended September 30, 2026 and 2025, net sales to customers outside of the United States were $78.6 million and $64.2 million, respectively, representing an increase of 22.4%. During the nine months ended September 30, 2026 and 2025, net sales to customers outside of the United States were $225.8 million and $189.0 million, respectively, representing an increase of 19.5%.

Previous wording

General and administrative expenses consist primarily of payroll and related benefit costs and equity-based compensation expense for our employees involved in general corporate functions, as well as costs associated with the use by these functions of facilities and equipment, such as depreciation, rent and other occupancy expenses. Over the long-term, we expect general and administrative expenses to continue to increase in absolute dollars to support business growth with general and administrative expenses as a percentage of net sales declining over the long-term as we leverage our investments and as our business scales. General and administrative expenses as a percentage of net sales may also increase if we are unable to adjust our cost structure for changes in customer demand and net sales.

Current wording

General and administrative expenses consist primarily of payroll and related benefit costs and equity-based compensation expense for our employees involved in general corporate functions, as well as costs associated with the use by these functions of facilities and equipment, such as depreciation, rent and other occupancy expenses. Over the long-term, we expect general and administrative expenses to continue to increase in absolute dollars to support business growth with general and administrative expenses as a percentage of net sales declining over the long-term as we leverage our investments and as our business scales. General and administrative expenses as a percentage of net sales may also increase during periods of increased investment in growth initiatives or if we are unable to adjust our cost structure for changes in customer demand and net sales.

Previous wording

Other (income) expense, net consists primarily of interest income on our money market funds, 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 (income) expense, net also includes a $2.4 million loss on deconsolidation of subsidiary.

Current wording

Other income, net consists primarily of interest income on our money market funds, 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.

Previous wording

Net sales in the REVOLVE segment increased 12.7% to $302.5 million in the three months ended June 30, 2026 as compared to net sales of $268.4 million in the same period in 2025. Net sales in the FWRD segment increased 10.7% to $44.9 million in the three months ended June 30, 2026 as compared to net sales of $40.6 million in the same period in 2025.

Current wording

Net sales in the REVOLVE segment increased 20.5% to $306.8 million in the three months ended September 30, 2026 as compared to net sales of $254.6 million in the same period in 2025. Net sales in the FWRD segment increased 20.0% to $49.2 million in the three months ended September 30, 2026 as compared to net sales of $41.0 million in the same period in 2025.

Previous wording

The increase in cost of sales for the six months ended June 30, 2026, as compared to the same period in 2025, was primarily due to an increase in net sales. The decrease in cost of sales as a percentage of net sales was primarily driven by a $5.6 million reduction of cost of sales due to IEEPA tariff refunds, shallower markdowns within markdown sales and a lower mix of third-party brand sales, partially offset by a lower percentage of full price sales and increased inventory valuation adjustments.

Current wording

The increase in cost of sales for the three months ended September 30, 2026, as compared to the same period in 2025, was primarily due to an increase in net sales. The increase in cost of sales as a percentage of net sales was primarily driven by a lower percentage of full price sales and increased inventory valuation adjustments, partially offset by a lower mix of third-party brand sales.

Previous wording

The increase in fulfillment expenses for the three months ended June 30, 2026, as compared to the same period in 2025, was primarily due to an increase in the number of units processed. The increase in fulfillment expenses as a percentage of net sales was primarily due to higher compensation expense for fulfillment staff, partially offset by a lower proportion of returned purchases.

Current wording

The increase in fulfillment expenses for the three months ended September 30, 2026, as compared to the same period in 2025, was primarily due to an increase in the number of units processed. The slight increase in fulfillment expenses as a percentage of net sales was primarily due to higher labor costs for fulfillment staff, partially offset by a lower proportion of returned purchases.

Previous wording

The increase in selling and distribution expenses for the three months ended June 30, 2026, as compared to the same period in 2025, was due to increases in orders placed and net sales that resulted in a $6.4 million increase in shipping and handling costs, a $1.3 million increase in merchant processing fees and a $0.6 million increase in other selling expenses. The increase in selling and distribution expenses as a percentage of net sales as compared to the three months ended June 30, 2025, was primarily due to higher shipping rates, partially offset by a lower proportion of returned purchases.

Current wording

The increase in selling and distribution expenses for the three months ended September 30, 2026, as compared to the same period in 2025, was due to increases in orders placed and net sales that resulted in a $7.4 million increase in shipping and handling costs, a $3.3 million increase in merchant processing fees and a $1.1 million increase in other selling expenses. The increase in selling and distribution expenses as a percentage of net sales as compared to the three months ended September 30, 2025, was primarily due to higher shipping rates, partially offset by a lower proportion of returned purchases.

Previous wording

The increase in marketing expenses for the three months ended June 30, 2026, as compared to the same period in 2025, was due to a $8.2 million increase in performance marketing expense and a $2.2 million increase in brand marketing expense. The increase in marketing expenses as a percentage of net sales was primarily due to an increase in performance marketing investments and incremental marketing investments to support various longer-term growth initiatives, including our first-ever namesake label, REVOLVE Los Angeles, within our owned brands assortment and the recent launch of our Grow-Good beauty assortment of hair care products in partnership with Cardi B.

Current wording

The increase in marketing expenses for the three months ended September 30, 2026, as compared to the same period in 2025, was due to a $8.2 million increase in performance marketing expense and a $2.2 million increase in brand marketing expense. The increase in marketing expenses as a percentage of net sales was primarily due to an increase in performance marketing and brand marketing investments to support various longer-term growth initiatives, including our first-ever namesake label, REVOLVE Los Angeles, within our owned brands assortment.

Previous wording

The increase in general and administrative expenses for the six months ended June 30, 2026, as compared to the same period in 2025, was primarily due to a $4.0 million increase in salaries and related benefits and equity-based compensation expense, a $2.4 million increase in studio and design costs, a $2.0 million increase in other operating expenses to support business growth and a $1.0 million increase related to professional services and other occupancy costs. The decrease in general and administrative expenses as a percentage of net sales was driven by scale efficiencies with growth in net sales outpacing growth in general and administrative expenses.

Current wording

The increase in general and administrative expenses for the three months ended September 30, 2026, as compared to the same period in 2025, was primarily due to a $2.6 million increase in salaries and related benefits and equity-based compensation expense, a $2.4 million increase in other operating expenses to support business growth, a $1.9 million increase related to professional services and other occupancy costs and a $0.8 million increase in studio and design costs. General and administrative expenses as a percentage of net sales were flat as compared to the three months ended September 30, 2025.

Previous wording

Net sales in the REVOLVE segment increased 14.0% to $595.8 million in the six months ended June 30, 2026 as compared to net sales of $522.8 million in the same period in 2025. Net sales in the FWRD segment increased 14.1% to $94.5 million in the six months ended June 30, 2026 as compared to net sales of $82.9 million in the same period in 2025.

Current wording

Net sales in the REVOLVE segment increased 16.1% to $902.5 million in the nine months ended September 30, 2026 as compared to net sales of $777.5 million in the same period in 2025. Net sales in the FWRD segment increased 16.0% to $143.7 million in the nine months ended September 30, 2026 as compared to net sales of $123.8 million in the same period in 2025.

Previous wording

The increase in cost of sales for the three months ended June 30, 2026, as compared to the same period in 2025, was primarily due to an increase in net sales. The decrease in cost of sales as a percentage of net sales was primarily driven by a $5.6 million reduction of cost of sales due to IEEPA tariff refunds, shallower markdowns within markdown sales and a lower mix of third-party brand sales, partially offset by a lower percentage of full price sales and increased inventory valuation adjustments.

Current wording

The increase in cost of sales for the nine months ended September 30, 2026, as compared to the same period in 2025, was primarily due to an increase in net sales. The decrease in cost of sales as a percentage of net sales was primarily driven by a $6.1 million reduction of cost of sales due to IEEPA tariff refunds, shallower markdowns within markdown sales and a lower mix of third-party brand sales, partially offset by a lower percentage of full price sales and increased inventory valuation adjustments.

Previous wording

The increase in fulfillment expenses for the six months ended June 30, 2026, as compared to the same period in 2025, was primarily due to an increase in the number of units processed. Fulfillment expenses as a percentage of net sales were flat as compared to the six months ended June 30, 2025.

Current wording

The increase in fulfillment expenses for the nine months ended September 30, 2026, as compared to the same period in 2025, was primarily due to an increase in the number of units processed. The slight increase in fulfillment expenses as a percentage of net sales was primarily due to higher labor costs for fulfillment staff, partially offset by a lower proportion of returned purchases.

Previous wording

The increase in selling and distribution expenses for the six months ended June 30, 2026, as compared to the same period in 2025, was due to increases in orders placed and net sales that resulted in a $11.7 million increase in shipping and handling costs, a $3.1 million increase in merchant processing fees and a $1.3 million increase in other selling expenses. The increase in selling and distribution expenses as a percentage of net sales as compared to the six months ended June 30, 2025, was primarily due to higher shipping rates, partially offset by a lower proportion of returned purchases.

Current wording

The increase in selling and distribution expenses for the nine months ended September 30, 2026, as compared to the same period in 2025, was due to increases in orders placed and net sales that resulted in a $19.1 million increase in shipping and handling costs, a $6.4 million increase in merchant processing fees and a $2.4 million increase in other selling expenses. The increase in selling and distribution expenses as a percentage of net sales as compared to the nine months ended September 30, 2025, was primarily due to higher shipping rates, partially offset by a lower proportion of returned purchases.

Previous wording

The increase in marketing expenses for the six months ended June 30, 2026, as compared to the same period in 2025, was due to a $14.5 million increase in performance marketing expense and a $7.7 million increase in brand marketing expense. The increase in marketing expenses as a percentage of net sales was primarily due to an increase in performance marketing investments and incremental marketing investments to support various growth initiatives, including the launch of our first-ever namesake label, REVOLVE Los Angeles, within our owned brand assortment and the launch of Grow-Good beauty assortment of hair care products with Cardi B.

Current wording

The increase in marketing expenses for the nine months ended September 30, 2026, as compared to the same period in 2025, was due to a $22.7 million increase in performance marketing expense and a $9.9 million increase in brand marketing expense. The increase in marketing expenses as a percentage of net sales was primarily due to an increase in performance marketing and brand marketing investments to support various growth initiatives, including the launch of our first-ever namesake label, REVOLVE Los Angeles, within our owned brand assortment and the launch of Grow-Good beauty assortment of hair care products with Cardi B.

Previous wording

The increase in general and administrative expenses for the three months ended June 30, 2026, as compared to the same period in 2025, was primarily due to a $2.0 million increase in salaries and related benefits and equity-based compensation expense, a $1.3 million increase in studio and design costs, a $1.1 million increase in other operating expenses to support business growth and a $0.6 million increase related to professional services and other occupancy costs. The slight increase in general and administrative expenses as a percentage of net sales was driven by increased investment in strategic growth initiatives.

Current wording

The increase in general and administrative expenses for the nine months ended September 30, 2026, as compared to the same period in 2025, was primarily due to a $6.6 million increase in salaries and related benefits and equity-based compensation expense, a $3.2 million increase in studio and design costs, a $4.4 million increase in other operating expenses to support business growth and a $2.9 million increase related to professional services and other occupancy costs. The decrease in general and administrative expenses as a percentage of net sales was driven by lower non-routine costs.

Previous wording

The decrease in the effective tax rate for the three months ended June 30, 2026, as compared to the same period in 2025, was primarily due to the prior year increase in the valuation allowance against deferred tax assets and the disallowance of intercompany write-offs, which did not recur in the current period.

Current wording

The decrease in the effective tax rate for the nine months ended September 30, 2026, as compared to the same period in 2025, was primarily due to the prior year increase in the valuation allowance against deferred tax assets and the disallowance of intercompany write-offs, which did not recur in the current period.

Previous wording

For the six months ended June 30, 2026, we generated $41.2 million of operating cash flow as compared to $57.8 million for the same period in 2025. The decrease in our operating cash flow was primarily due to unfavorable impact from changes in working capital, partially offset by higher net income adjusted for certain non-cash items.

Current wording

For the nine months ended September 30, 2026, we generated $16.9 million of operating cash flow as compared to $69.6 million for the same period in 2025. The decrease in our operating cash flow was primarily due to unfavorable impact from changes in working capital, driven primarily by increased inventory purchases, partially offset by higher net income adjusted for certain non-cash items.

Previous wording

Net cash used in investing activities was $21.8 million and $7.0 million for the six months ended June 30, 2026 and 2025, respectively. The increase was primarily due to a $14.5 million investment in unconsolidated entities made during the six months ended June 30, 2026.

Current wording

Net cash used in investing activities was $24.4 million and $12.2 million for the nine months ended September 30, 2026 and 2025, respectively. The increase was primarily due to a $14.5 million investment in unconsolidated entities made during the nine months ended September 30, 2026.

Previous wording

Net cash used in financing activities was $10.2 million and $2.1 million for the six months ended June 30, 2026 and 2025, respectively, and was primarily attributable to repurchases of Class A common stock.

Current wording

Net cash used in financing activities was $10.1 million and $1.9 million for the nine months ended September 30, 2026 and 2025, respectively, and was primarily attributable to repurchases of Class A common stock.