ThredUp Inc

Previous wording

In August 2024, we announced that, following a review of our European operations, we intend to exit the European market and are evaluating strategic alternatives for our Remix business.

Current wording

In the third quarter of 2024, we announced that, following a review of our European operations, we intend to exit the European market and are evaluating strategic alternatives for our Remix business. The decision to exit the European market, coupled with the decline in our market capitalization, were identified as qualitative indicators of potential impairment of long-lived assets and goodwill. Consequently, in connection with the preparation of our financial statements for the quarterly period ended September 30, 2024, we performed long-lived assets and goodwill impairment assessments and recognized an impairment of long-lived assets of $9.8 million, of which $5.6 million related to certain property and equipment and $4.2 million related to intangible assets. There was no impairment recognized on goodwill as its fair value exceeded its carrying amount as of the valuation date. See Note 2. Significant Accounting Policies and Note 3. Financial Instruments and Fair Value Measurements, for further discussion of these impairment assessments.

Previous wording

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

Current wording

Revenue: Total revenue was $73.0 million, representing a decrease of 11.0% year over year.

Previous 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.

Current wording

Gross Profit and Margin: Gross profit totaled $52.0 million, representing a decrease of 8.2% year over year. Gross margin was 71.2%, an increase of 220 basis points from 69.0% in the comparable quarter last year.

Previous 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.

Current wording

Net Loss: Net loss was $24.8 million, or a negative 33.9% of revenue, for the third quarter of 2024, compared to a net loss of $18.1 million, or a negative 22.0% of revenue, for the third quarter of 2023. Net loss for the third quarter of 2024 included an impairment of long-lived assets related to our European operations of $9.8 million.

Previous 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.

Current wording

Non-GAAP Adjusted EBITDA Loss: Non-GAAP Adjusted EBITDA loss was $2.5 million, or a negative 3.4% of revenue, for the third quarter of 2024, compared to Non-GAAP Adjusted EBITDA loss of $3.6 million, or a negative 4.4% of revenue, for the third 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 second quarter of 2024, representing a decrease of 2.6% and a decrease of 5.8%, respectively, compared to the second quarter of 2023.

Current wording

Active Buyers and Orders: Active Buyers totaled 1.6 million and Orders totaled 1.6 million in the third quarter of 2024, representing decreases of 7.4% and 13.9%, respectively, compared to the third 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 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.

Current wording

Non-GAAP Adjusted EBITDA loss means net loss adjusted to exclude, where applicable in a given period, stock-based compensation expense, impairment of long-lived assets, 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 and Six Months Ended June 30, 2024 and 2023

Current wording

Comparison of the Three and Nine Months Ended September 30, 2024 and 2023

Previous wording

Total revenue decreased $2.9 million, or 3.5%, for the three months ended June 30, 2024 as compared to the same period in 2023. This decline was driven by a $13.3 million or 45.6% decrease in product revenue, partially offset by a $10.4 million or 19.5% increase in consignment 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 decrease in total revenue was mainly due to a 5.8% decrease in Orders, primarily driven by our European operations. This was partially offset by a 13.8% increase in the average order value.

Current wording

Total revenue decreased $9.0 million, or 11.0%, for the three months ended September 30, 2024 as compared to the same period in 2023. This decline was driven by a $11.0 million or 45.6% decrease in product revenue, partially offset by a $2.0 million or 3.5% increase in consignment revenue. The shift reflects our strategic decision to transition our RaaS clients from a product to a consignment model, as well as the introduction of the consignment model to our European operations in the third quarter of 2023. Additionally, the decline reflects a shift in focus, with fewer resources allocated to the European business as we evaluate strategic alternatives for that market. The overall decrease in total revenue was mainly due to a 7.4% decrease in Active Buyers and a 13.9% decrease in Orders. This was partially offset by a 14.0% increase in the average order value.

Previous 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.

Current wording

Total revenue decreased $8.3 million, or 3.4%, for the nine months ended September 30, 2024 as compared to the same period in 2023. This decline was driven by a $35.5 million or 42.8% decrease in product revenue, partially offset by a $27.2 million or 17.2% increase in consignment revenue. The shift reflects our strategic decision to transition our RaaS clients from a product to a consignment model, as well as the introduction of the consignment model to our European operations in the third quarter of 2023. Additionally, the decline reflects a shift in focus, with fewer resources allocated to the European business as we evaluate strategic alternatives for that market. The overall decrease in total revenue was mainly due to a 7.4% decrease in Active Buyers and a 4.2% decrease in Orders. This was partially offset by a 11.2% increase in the average order value.

Previous wording

Gross margin was 70.4% and 67.4% for the three months ended June 30, 2024 and 2023, respectively, or an increase of 300 basis points. The increase in gross margin for the three months ended June 30, 2024 as compared to the same period in 2023 was primarily due to an increase in consignment revenue as a percentage of total revenue. The transition of our RaaS clients and the introduction of our European operations to the consignment model in the third quarter of 2023 drove growth in our consignment revenue, positively impacting our gross margin.

Current wording

The increase in gross margin for the three and nine months ended September 30, 2024 as compared to the same periods in 2023 was primarily driven by a significantly higher proportion of revenue from the consignment model, which has a higher gross margin than the product model. The transition of our RaaS clients to consignment model and the introduction of the consignment model to our European operations in the third quarter of 2023 contributed to the growth in our consignment revenue, positively impacting our gross margin.

Previous 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.

Current wording

Consignment gross margin was 81.0% and 82.5% for the three months ended September 30, 2024 and 2023, respectively, or a decrease of 150 basis points. Consignment gross margin was 81.5% and 81.7% for the nine months ended September 30, 2024 and 2023, respectively, or a decrease of 20 basis points. The decrease in consignment gross margin for the three and nine months ended September 30, 2024 as compared to the same periods in 2023 was primarily due to an increase in outbound shipping and packaging costs.

Previous wording

Product gross margin was 28.5% and 40.7% for the three months ended June 30, 2024 and 2023, respectively, or a decrease of 1,220 basis points. The decrease in product gross margin for the three months ended June 30, 2024 as compared to the same period in 2023 was primarily due to a 1,380 basis point increase in product inventory costs, mainly driven by our European operations. This decrease was partially offset by a 160 basis point decrease in shipping, labor, and packaging costs.

Current wording

Product gross margin was 26.5% and 36.8% for the three months ended September 30, 2024 and 2023, respectively, or a decrease of 1,030 basis points. The decrease in product gross margin for the three months ended September 30, 2024 as compared to the same period in 2023 was primarily due to a 1,200 basis point increase in product inventory costs, mainly driven by our European operations. This decrease was partially offset by a 170 basis point decrease in shipping, labor, and packaging costs.

Previous wording

Product gross margin was 26.7% and 43.8% for the six months ended June 30, 2024 and 2023, respectively, or a decrease of 1,710 basis points. The decrease in product gross margin for the six months ended June 30, 2024 as compared to the same period in 2023 was due to a 1,960 increase in product inventory costs, mainly driven by our European operations. This decrease was partially offset by a 250 basis point decrease in shipping, labor, and packaging costs.

Current wording

Product gross margin was 26.6% and 41.8% for the nine months ended September 30, 2024 and 2023, respectively, or a decrease of 1,520 basis points. The decrease in product gross margin for the nine months ended September 30, 2024 as compared to the same period in 2023 was due to a 1,740 increase in product inventory costs, mainly driven by our European operations, partially offset by a 220 basis point decrease in shipping, labor, and packaging costs.

Previous wording

Operations, product, and technology expenses increased $1.9 million, or 2.4% for the six months ended June 30, 2024 as compared to the same period in 2023. The increase was due to a $2.1 million increase in inbound shipping related to consignment revenue, a $2.0 million increase in facilities, technology, and other costs, and a $1.0 million increase in severance costs as a result of our workforce reorganization in March 2024. This increase was partially offset by a $3.2 million decrease in personnel-related costs, of which $1.0 million was related to stock-based compensation.

Current wording

Operations, product, and technology expenses decreased $1.3 million, or 1.1% for the nine months ended September 30, 2024 as compared to the same period in 2023. The decrease was primarily due to a $5.1 million decrease in personnel-related costs, primarily due to our workforce reorganization in March 2024. This decrease was partially offset by a $2.1 million increase in inbound shipping related to consignment revenue, an $0.8 million increase in facilities, technology, and other costs, as well as an $0.8 million increase in severance costs as a result of our workforce reorganization. The increase in operations, product, and technology expenses as a percentage of total revenue was primarily due to the decline in total revenue.

Previous 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.

Current wording

Marketing expenses decreased $4.1 million, or 21.2%, for the three months ended September 30, 2024 as compared to the same period in 2023. The decrease was due to a $2.4 million decrease in personnel-related costs, of which $1.1 million was related to stock-based compensation expense, primarily due to our workforce reorganization in March 2024 as well as a $2.0 million decrease in advertising costs. This decrease was partially offset by a $0.3 million increase in facilities, technology and other costs. The decrease in marketing expenses as a percentage of total revenue was due to a decrease in marketing spend coupled with a decline in total revenue.

Previous 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.

Current wording

Sales, general, and administrative expenses increased $0.4 million, or 0.9%, for the nine months ended September 30, 2024 as compared to the same period in 2023. The increase was primarily due to a $1.3 million increase in severance costs as a result of our workforce reorganization in March 2024 and a $0.3 million increase in facilities, technology and other costs. This increase was partially offset by a $1.2 million decrease in personnel-related costs following our workforce reorganization in March 2024, of which $0.5 million was related to stock-based compensation expense. The increase in sales, general, and administrative expenses as a percentage of total revenue was primarily due to the decline in total revenue.

Previous wording

Interest expense for the three months ended June 30, 2024 remained relatively consistent as compared to the same period in 2023.

Current wording

Interest expense for the three months ended September 30, 2024 as compared to the same period in 2023, slightly decreased due to a lower outstanding debt balance.

Previous 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.

Current wording

Interest expense increased $0.4 million for the nine months ended September 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 $0.3 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.

Current wording

Other income, net increased $0.6 million for the nine months ended September 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

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.

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 not be material 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 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.

Current wording

Net cash used in operating activities was $0.2 million during the nine months ended September 30, 2024, compared to net cash used of $14.6 million during the nine months ended September 30, 2023. The $14.4 million decrease in operating cash outflows was primarily due to an $1.4 million decrease in our net loss, adjusted by a $5.3 million increase in non-cash charges, and $7.7 million of favorable changes in operating assets and liabilities. The change in operating assets and liabilities was primarily due to a $9.2 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 $3.5 million reduction in accounts receivable due to timing in payment processing, and a $2.2 million increase in accrued and other liabilities due to timing of vendor payments. This was partially offset by a $7.1 million decrease in seller payable, primarily due to timing of seller credit cash-outs or redemptions and conversions to gift cards.

Previous 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.

Current wording

Net cash used in investing activities for the nine months ended September 30, 2024 was $8.4 million as compared to net cash provided by investing activities of $48.4 million for the same period in 2023. The $56.8 million increase in cash outflows was primarily due to a $50.4 million decrease in maturities of marketable securities and a $14.8 million increase in purchases of marketable securities, partially offset by a $8.4 million decrease in purchases of property and equipment.

Previous 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.

Current wording

Net cash used in financing activities for the nine months ended September 30, 2024 increased $0.9 million as compared to the same period in 2023 primarily due to a $1.7 million decrease in proceeds from issuance of stock-based awards, partially offset by a $0.7 million decrease in payroll taxes paid on stock-based award activity.