ThredUp Inc

Previous wording

Revenue: Total revenue was $79.6 million, representing an increase of 4.8% year-over-year.

Current wording

Revenue: Total revenue was $79.8 million, representing a decrease of 3.5% year over year.

Previous wording

Gross Profit and Margin: Gross profit totaled $55.3 million, representing an increase of 8.3% year-over-year. Gross margin was 69.5%, an increase of 220 basis points from 67.3% in the comparable quarter last year.

Current wording

Gross Profit and Margin: Gross profit totaled $56.1 million, representing an increase of 0.7% year over year. Gross margin was 70.4%, an increase of 300 basis points from 67.4% in the comparable quarter last year.

Previous wording

Net Loss: Net loss was $16.6 million, or a negative 20.8% of revenue, for the first quarter of 2024, compared to a net loss of $19.8 million, or a negative 26.1% of revenue, for the first quarter of 2023.

Current wording

Net Loss: Net loss was $14.0 million, or a negative 17.5% of revenue, for the second quarter of 2024, compared to a net loss of $18.8 million, or a negative 22.7% of revenue, for the second quarter of 2023.

Previous wording

Non-GAAP Adjusted EBITDA Loss: Non-GAAP Adjusted EBITDA loss was $0.7 million, or a negative 0.9% of revenue, for the first quarter of 2024, compared to Non-GAAP Adjusted EBITDA loss of $6.6 million, or a negative 8.7% of revenue, for the first quarter of 2023. Non-GAAP Adjusted EBITDA loss and Non-GAAP Adjusted EBITDA loss margin are non-GAAP measures which may not be comparable to similarly-titled measures used by other companies. See below for a reconciliation of Non-GAAP Adjusted EBITDA loss to net loss.

Current wording

Non-GAAP Adjusted EBITDA Loss: Non-GAAP Adjusted EBITDA loss was $1.5 million, or a negative 1.9% of revenue, for the second quarter of 2024, compared to Non-GAAP Adjusted EBITDA loss of $5.0 million, or a negative 6.1% of revenue, for the second quarter of 2023. Non-GAAP Adjusted EBITDA loss and Non-GAAP Adjusted EBITDA loss margin are non-GAAP measures which may not be comparable to similarly-titled measures used by other companies. See below for a reconciliation of Non-GAAP Adjusted EBITDA loss to net loss.

Previous wording

Active Buyers and Orders: Active Buyers totaled 1.7 million and Orders totaled 1.7 million in the first quarter of 2024, representing an increase of 3.7% and an increase of 9.3%, respectively, compared to the first quarter of 2023.

Current wording

Active Buyers and Orders: Active Buyers totaled 1.7 million and Orders totaled 1.7 million in the second quarter of 2024, representing a decrease of 2.6% and a decrease of 5.8%, respectively, compared to the second quarter of 2023.

Previous wording

Non-GAAP Adjusted EBITDA loss means net loss adjusted to exclude, where applicable in a given period, stock-based compensation expense, depreciation and amortization, severance and other reorganization costs, interest expense, and provision for income taxes. Non-GAAP Adjusted EBITDA loss margin represents Non-GAAP Adjusted EBITDA loss divided by Total revenue. We use Non-GAAP Adjusted EBITDA loss and Non-GAAP Adjusted EBITDA loss margin, which are non-GAAP measures, to evaluate and assess our operating performance and the operating leverage in our business, and for internal planning and forecasting purposes. We believe that Non-GAAP Adjusted EBITDA loss and Non-GAAP Adjusted EBITDA loss margin, when taken collectively with our GAAP results, may be helpful to investors because they provide consistency and comparability with past financial performance and assist in comparisons with other companies, some of which use similar non-GAAP financial information to supplement their GAAP results.

Current wording

Non-GAAP Adjusted EBITDA loss means net loss adjusted to exclude, where applicable in a given period, stock-based compensation expense, depreciation and amortization, severance and other reorganization costs, interest expense, and provision for income taxes. Non-GAAP Adjusted EBITDA loss margin represents Non-GAAP Adjusted EBITDA loss divided by Total revenue. We use Non-GAAP Adjusted EBITDA loss and Non-GAAP Adjusted EBITDA loss margin as non-GAAP measures to evaluate and assess our operating performance and the operating leverage in our business, and for internal planning and forecasting purposes. We believe that Non-GAAP Adjusted EBITDA loss and Non-GAAP Adjusted EBITDA loss margin, when taken collectively with our GAAP results, may be helpful to investors because they provide consistency and comparability with past financial performance and assist in comparisons with other companies, some of which use similar non-GAAP financial information to supplement their GAAP results.

Previous wording

Comparison of the Three Months Ended March 31, 2024 and 2023

Current wording

Comparison of the Three and Six Months Ended June 30, 2024 and 2023

Previous wording

Total revenue increased $3.7 million, or 4.8%, for the three months ended March 31, 2024 as compared to the same period in 2023. The increase in revenue for the three months ended March 31, 2024 as compared to the same period in 2023 was driven by $14.7 million or a 31.7% increase in consignment revenue, partially offset by $11.1 million or a 37.6% decrease in product revenue. The increase in total revenue was primarily due to a 3.7% increase in Active Buyers, a 9.3% increase in Orders and a 7.6% increase in the average order value. Consignment revenue increased while product revenue decreased as a percentage of revenue by 15.7% as we transitioned our RaaS partners and introduced our European operations to the consignment model in 2023.

Current wording

Total revenue increased $0.8 million, or 0.5%, for the six months ended June 30, 2024 as compared to the same period in 2023. This growth was driven by a $25.2 million or 25.2% increase in consignment revenue, partially offset by a $24.4 million or 41.6% decrease in product revenue. The shift occurred as we transitioned our RaaS clients from a product to a consignment model and introduced our European operations to the consignment model in the third quarter of 2023. The overall increase in total revenue was mainly due to a 1.1% increase in Orders, primarily driven by our U.S. operations, and a 10.8% increase in the average order value.

Previous wording

Consignment gross margin was 82.8% and 80.2% for the three months ended March 31, 2024 and 2023, respectively, or an increase of 260 basis points. The increase in consignment gross margin for the three months ended March 31, 2024 as compared to the same period in 2023 was primarily due to a 260 basis point decrease in outbound shipping, labor and packaging costs.

Current wording

Consignment gross margin was 80.8% and 82.1% for the three months ended June 30, 2024 and 2023, respectively, or a decrease of 130 basis points. The decrease in consignment gross margin for the three months ended June 30, 2024 as compared to the same period in 2023 was primarily due to a 130 basis point increase in outbound shipping, labor and packaging costs.

Previous wording

Marketing expenses decreased $3.5 million, or 20.5%, for the three months ended March 31, 2024 as compared to the same period in 2023. The decrease was due to a $2.5 million decrease in advertising costs, a $1.3 million decrease in personnel-related costs, of which $1.0 million was related to stock-based compensation expense, and a $0.2 million decrease in facilities, technology and other costs. This decrease was partially offset by $0.5 million in severance costs related to our workforce reorganization in March 2024.

Current wording

Marketing expenses decreased $6.0 million, or 17.0%, for the six months ended June 30, 2024 as compared to the same period in 2023. The decrease was due to a $3.0 million decrease in personnel-related costs, of which $1.8 million was related to stock-based compensation expense, a $2.9 million decrease in advertising costs, and a $0.4 million decrease in facilities, technology and other costs. This decrease was partially offset by a $0.3 million increase in severance costs as a result of our workforce reorganization in March 2024.

Previous wording

Sales, general, and administrative expenses increased $1.5 million, or 9.4%, for the three months ended March 31, 2024 as compared to the same period in 2023. The increase was due to $1.3 million in severance costs related to our workforce reorganization in March 2024, a $0.5 million increase in personnel-related costs, and a $0.1 million increase in facilities, technology and other costs. This increase was partially offset by a $0.4 million decrease in professional services.

Current wording

Sales, general, and administrative expenses increased $0.9 million, or 2.9%, for the six months ended June 30, 2024 as compared to the same period in 2023. The increase was due to a $1.0 million increase in severance costs as a result of our workforce reorganization in March 2024 and a $0.5 million increase in personnel-related costs. This increase was partially offset by a $0.6 million decrease in professional services.

Previous wording

Interest expense increased $0.6 million for the three months ended March 31, 2024 as compared to the same period in 2023. This increase was due to a $0.6 million of capitalized interest expense recorded in the first quarter of 2023 in conjunction with the build-out of our distribution centers. We did not capitalize any interest in the same period in 2024.

Current wording

Interest expense increased $0.5 million for the six months ended June 30, 2024 as compared to the same period in 2023. This increase was primarily due to the capitalization of interest costs in the first quarter of 2023 in conjunction with the build-out of our distribution centers. We did not capitalize any interest in the same period in 2024.

Previous wording

Other income, net increased $0.4 million for the three months ended March 31, 2024 as compared to the same period in 2023. The increase was primarily due to an increase in interest income on our marketable securities due to a higher interest rate environment.

Current wording

Other income, net increased $0.3 million for the three months ended June 30, 2024 as compared to the same period in 2023. The increase was primarily due to an increase in interest income from our marketable securities due to a higher interest rate environment.

Previous wording

Although we generated $1.4 million in cash flows from operating activities in the first quarter of 2024, we had historically generated negative cash flows from operations and have primarily financed our operations through private and public sales of equity securities and debt. As of March 31, 2024, we had cash, cash equivalents and short-term marketable securities of $62.5 million. Additionally, we have a term loan facility (“Term Loan”) under which $22.5 million remained available to be drawn as of March 31, 2024 for the purchase of certain equipment, and we were in full compliance with our debt covenants under the Term Loan as of that date. See Note 7, Long-Term Debt, to the Condensed Consolidated Financial Statements included in Part I, Item 1, Financial Statements, of this Quarterly Report on Form 10-Q for a further discussion on our Term Loan.

Current wording

We have historically generated negative cash flows from operations and have primarily financed our operations through private and public sales of equity securities and debt. As of June 30, 2024, we had cash, cash equivalents and short-term marketable securities of $55.3 million. Additionally, we have a term loan facility (“Term Loan”) under which $22.5 million remained available to be drawn as of June 30, 2024 for the purchase of certain equipment, and we were in full compliance with our debt covenants under the Term Loan as of that date. See Note 7, Long-Term Debt, to the Condensed Consolidated Financial Statements included in Part I, Item 1, Financial Statements, of this Quarterly Report on Form 10-Q for a further discussion on our Term Loan.

Previous wording

We expect operating losses to continue in 2024 as we continue to invest in growing our business and our infrastructure. Our primary sources of liquidity are cash flows generated from operations, cash on hand and borrowings available under the Term Loan. Our primary use of cash includes operating costs such as distribution network spend, product and technology expenses, marketing expenses, personnel expenses and other expenditures necessary to support our operations and our growth. Additionally, our primary capital expenditures are related to the set-up, expansion and/or automation of our distribution network. Based upon our current operating plans, we believe that our existing cash, cash equivalents and short-term marketable securities will be sufficient for at least the next 12 months and beyond to meet our short- and long-term capital requirements, and we do not anticipate expanding our distribution network to include additional locations in the near term. Our cash flow forecast is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially.

Current wording

We expect operating losses to continue in 2024 as we continue to invest in growing our business and our infrastructure. Our primary sources of liquidity are cash flows generated from operations, cash on hand and borrowings available under the Term Loan. Our primary use of cash includes product inventory costs and seller payouts, operating costs such as distribution network spend, product and technology expenses, marketing expenses, personnel expenses and other expenditures necessary to support our operations and our growth. Additionally, our primary capital expenditures are related to the set-up, expansion and/or automation of our distribution network. Based upon our current operating plans, we believe that our existing cash, cash equivalents and short-term marketable securities will be sufficient for at least the next 12 months and beyond to meet our short- and long-term capital requirements, and we do not anticipate expanding our distribution network to include additional locations in the near term. Our cash flow forecast is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially.

Previous wording

Our future capital requirements will depend on many factors, including but not limited to, the timing of our increased distribution center automation and expansion plans to support planned revenue growth, the expansion of sales and marketing activities, the potential introduction of new offerings and new RaaS clients, the continuing growth of our marketplaces and overall economic conditions. However, we expect that our capital expenditures will be limited in the remainder of 2024 as we have completed the first phase of our new distribution center in Texas. See the section titled “Risk Factors—Risks Relating to Our Indebtedness and Liquidity—We may require additional capital to support business growth, and this capital might not be available or may be available only by diluting existing stockholders” within the 2023 10-K.

Current wording

Our future capital requirements will depend on many factors, including but not limited to, the timing of any future distribution center automation and expansion plans to support planned revenue growth, the expansion of sales and marketing activities, the potential introduction of new offerings and new RaaS clients, the continuing growth of our marketplaces and overall economic conditions. However, we expect that our capital expenditures will be limited in the remainder of 2024 as we have completed the first phase of our new distribution center in Texas. See the section titled “Risk Factors—Risks Relating to Our Indebtedness and Liquidity—We may require additional capital to support business growth, and this capital might not be available or may be available only by diluting existing stockholders” within the 2023 10-K.

Previous wording

Net cash provided by operating activities was $1.4 million during the three months ended March 31, 2024, compared to net cash used of $4.5 million during the three months ended March 31, 2023. The increase in cash inflows was primarily due to a $3.2 million decrease in our net loss, partially offset by a $0.5 million decrease in non-cash adjustments to net loss, and favorable changes totaling $3.1 million in operating assets and liabilities. The change in operating assets and liabilities was primarily due to a $7.0 million reduction in inventory mainly driven by decreased upfront inventory purchases as we transitioned our RaaS partners and introduced our European operations to the consignment model in 2023 and a $2.4 million increase in accrued and other current and non-current liabilities driven primarily by accrued severance costs related to our workforce reorganization in March 2024. This was partially offset by a $6.5 million decrease in accounts and seller payable primarily due to timing of vendor payments and seller credit cash-outs or redemptions.

Current wording

Net cash used in operating activities was $3.6 million during the six months ended June 30, 2024, compared to net cash used of $14.8 million during the six months ended June 30, 2023. The $11.3 million decrease in operating cash outflows was primarily due to an $8.0 million decrease in our net loss, adjusted by a $2.6 million decrease in non-cash charges, and $5.8 million of favorable changes in operating assets and liabilities. The change in operating assets and liabilities was primarily due to a $7.7 million reduction in inventory, mainly driven by decreased upfront inventory purchases as we transitioned our RaaS clients and introduced our European operations to the consignment model in the third quarter of 2023, a $1.4 million increase in accounts payable, accrued and other liabilities due to timing of vendor payments, a $0.9 million reduction in accounts receivable due to timing in payment processing, a $0.7 million reduction in other assets primarily due to lower vendor prepayments, and a $0.7 million reduction in lease payments due to lower rent prepayment and the expiration of certain leases. This was partially offset by a $5.6 million decrease in seller payable primarily due to timing of seller credit cash-outs or redemptions.

Previous wording

Net cash used in investing activities for the three months ended March 31, 2024 increased $24.7 million as compared to the same period in 2023. The increase in cash outflows was primarily due to a $20.1 million decrease in maturities of marketable securities and an $8.7 million increase in purchases of marketable securities, offset by a $4.1 million decrease in purchases of property and equipment.

Current wording

Net cash used in investing activities for the six months ended June 30, 2024 was $4.9 million as compared to net cash provided by investing activities of $29.3 million for the same period in 2023. The $34.3 million increase in cash outflows was primarily due to a $36.5 million decrease in maturities of marketable securities and a $7.3 million increase in purchases of marketable securities, partially offset by a $9.5 million decrease in purchases of property and equipment.

Previous wording

Net cash used in financing activities for the three months ended March 31, 2024 increased $0.3 million as compared to the same period in 2023 which was primarily due to $0.6 million of increased taxes paid related to stock-based award activity, offset by $0.3 million of increased proceeds from issuance of stock-based awards.

Current wording

Net cash used in financing activities for the six months ended June 30, 2024 increased $0.9 million as compared to the same period in 2023 primarily due to a $0.6 million increase in payroll taxes paid on stock-based award activity and a $0.3 million decrease in proceeds from issuance of stock-based awards.