TheRealReal Inc

Previous wording

We have transformed the luxury consignment experience by removing the friction and pain points inherent in the traditional consignment model. For consignors, we offer concierge at-home consultation and pickup as well as virtual consultations via online face-to-face platforms. Consignors may also drop off items at our luxury consignment offices. Our retail stores provide an alternative location to drop off consigned items and an opportunity to interact with our authentication experts. Consignors may also utilize our complimentary shipping directly to our authentication centers. We leverage our proprietary transactional database and market insights from approximately 42.7 million item sales since our inception to deliver optimal pricing and rapid sell-through. For buyers, we offer highly coveted and exclusive authenticated pre-owned luxury goods at attractive values, as well as a high-quality experience befitting the products we offer. Our online marketplace is powered by our proprietary technology platform, including consumer facing applications and purpose-built software that supports our complex, single-SKU inventory management system.

Current wording

We have transformed the luxury consignment experience by removing the friction and pain points inherent in the traditional consignment model. For consignors, we offer concierge at-home consultation and pickup as well as virtual consultations. Consignors may also drop off items at our luxury consignment offices. Our retail stores provide an alternative location to drop off consigned items and an opportunity to interact with our authentication experts. Consignors may also utilize our complimentary shipping directly to our authentication centers. We leverage our proprietary transactional database and market insights from over 40 million item sales since our inception to deliver optimal pricing and rapid sell-through. For buyers, we offer highly coveted and exclusive authenticated pre-owned luxury goods at attractive values, as well as a high-quality experience befitting the products we offer. Our online marketplace is powered by our proprietary technology platform, including consumer facing applications and purpose-built software that supports our complex, single-SKU inventory management system.

Previous wording

•Consignment revenue. When we sell goods through our online marketplace or retail stores on behalf of our consignors, we retain a percentage of the proceeds, which we refer to as our take rate. Take rates vary depending on the total value of goods sold through our online marketplace on behalf of a particular consignor as well as the category and price point of the items. In the three months ended September 30, 2024 and 2023, our overall take rate on consigned goods was 38.6% and 38.1%, respectively. The increase in our take rate was due to the larger sales mix of higher take rate categories such as women's apparel. Additionally, we earn revenue from our subscription program, First Look, in which we offer buyers early access to the items we sell in exchange for a monthly fee.

Current wording

•Consignment revenue. When we sell goods through our online marketplace or retail stores on behalf of our consignors, we retain a percentage of the proceeds, which we refer to as our take rate. Take rates vary depending on the total value of goods sold through our online marketplace on behalf of a particular consignor as well as the category and price point of the items. In the three months ended March 31, 2025 and 2024, our overall take rate on consigned goods was 38.6% and 38.4%, respectively. Additionally, we earn revenue from our subscription program, First Look, in which we offer buyers early access to the items we sell in exchange for a monthly fee.

Previous wording

We generate revenue from orders processed through our website, mobile app and retail stores. Our omni-channel experience enables buyers to purchase anytime and anywhere. We have a global base of more than 37.8 million members as of September 30, 2024. We count as a member any user who has registered an email address on our website or downloaded our mobile app, thereby agreeing to our terms of service.

Current wording

We generate revenue from orders processed through our website, mobile app and retail stores. Our omni-channel experience enables buyers to purchase anytime and anywhere. We have a global base of more than 39.6 million members as of March 31, 2025. A member is any user who has registered an email address on our website or downloaded our mobile app, thereby agreeing to our terms of service.

Previous wording

Consignor growth and retention. We grow our sales by increasing the supply of luxury goods offered through our consignment online marketplace. We grow our supply both by attracting new consignors and by creating lasting engagement with existing consignors. We generate leads for new consignors principally through our advertising activity. We convert those leads into active consignors through the activities of our sales professionals, who are trained and incentivized to identify and source high-quality, coveted luxury goods from consignors. Our sales professionals form a consultative relationship with consignors and deliver a high-quality, rapid consigning experience. Our existing relationships with consignors allow us to unlock valuable supply across multiple categories, including women’s fashion, men’s fashion, jewelry and watches. Using artificial intelligence to assist our pricing team, we leverage our proprietary transactional database and market insights based on more than 42.7 million item sales since inception to deliver consignors optimal pricing and rapid sell-through.

Current wording

Consignor growth and retention. We grow our sales by increasing the supply of luxury goods offered through our consignment online marketplace. We grow our supply both by attracting new consignors and by creating lasting engagement with existing consignors. We generate leads for new consignors through our advertising activity and through the activity of our sales team. Our sales professionals, who are trained and incentivized to identify and source high-quality, coveted luxury goods, convert those leads into active consignors. Our sales professionals form a consultative relationship with consignors and deliver a high-quality, full-service consigning experience. Our existing relationships with consignors allow us to unlock valuable supply across multiple categories, including women’s fashion, men’s fashion, jewelry and watches.

Previous wording

Our growth has been driven in significant part by repeat sales by existing consignors concurrent with growth of our consignor base. The percentage of GMV from repeat consignors in the three months ended September 30, 2024 was 85% as compared to 83% for the three months ended September 30, 2023.

Current wording

Our growth has been driven in significant part by repeat sales by existing consignors concurrent with growth of our consignor base. In the three months ended March 31, 2025 and 2024, repeat consignors accounted for over 80% of GMV.

Previous wording

Buyer growth and retention. We grow our business by attracting and retaining buyers. We attract and retain buyers by offering highly coveted, authenticated, pre-owned luxury goods at attractive values and delivering a high-quality, luxury experience. We measure our success in attracting and retaining buyers by tracking buyer satisfaction and purchasing activity over time. We have experienced higher than average buyer satisfaction, as evidenced by our buyer net promoter score of 51 in 2023, and compared to our online shopping industry average of 45 according to NICE Satmetrix U.S. Consumer 2023 data. If we fail to continue to attract and retain our buyer base to our online marketplace, our operating results would be adversely affected.

Current wording

Buyer growth and retention. We grow our business by attracting and retaining buyers. We attract and retain buyers by offering highly coveted, authenticated, pre-owned luxury goods at attractive values and delivering a high-quality, luxury experience. We measure our success in attracting and retaining buyers by tracking buyer satisfaction and purchasing activity over time. If we fail to continue to attract and retain our buyer base to our online marketplace, our operating results could be adversely affected.

Previous wording

We believe there is substantial opportunity to grow our business by having buyers also become consignors and vice versa. As of September 30, 2024, 15% of our buyers during the last twelve months had become consignors at any point in that time, and 48% of our consignors during the last twelve months had become buyers at any point in that time. We believe our updated method of measuring buyers who have become consignors and vice versa more accurately reflects the flywheel that enhances the network effect of our online marketplace. If we fail to continue to attract and retain our buyer base to our online marketplace, our operating results would be adversely affected.

Current wording

We believe there is substantial opportunity to grow our business by having buyers also become consignors and vice versa. As of March 31, 2025, 15% of our buyers during the last twelve months also consigned items, and 49% of our consignors during the past twelve months also made purchases. We believe this approach effectively captures the flywheel effect that strengthens the network dynamics of our online marketplace. Our GMV from buyers who are also consignors has increased

Previous wording

Scaling operations and technology. To support the future growth of our business, we continue to invest in physical infrastructure, talent and technology. We principally conduct our intake, authentication, merchandising and fulfillment operations in our leased authentication centers located in Arizona and New Jersey comprising an aggregate of approximately 1.4 million square feet of space. We also operate retail stores in several geographies. In addition to scaling our physical infrastructure, growing our single-SKU business operations requires that we attract, train and retain highly-skilled personnel for purposes of authentication, copywriting, merchandising, pricing and fulfilling orders. We have invested substantially in technology to automate our operations and support growth, including proprietary machine learning technology to support efficiency and quality. We continue to strategically invest in technology, as innovation positions us to scale and support growth into the future.

Current wording

Scaling operations and technology. To support the future growth of our business, we continue to invest in physical infrastructure, technology and talent. We principally conduct our intake, authentication, merchandising and fulfillment operations in our leased authentication centers located in Arizona and New Jersey comprising an aggregate of approximately 1.4 million square feet of space. We also operate retail stores in several geographies. In addition to scaling our physical infrastructure, growing our single-SKU business operations requires that we attract, train and retain highly-skilled personnel for purposes of authentication, copywriting, merchandising, pricing and fulfilling orders. We have invested substantially in technology to automate our operations and support growth, including proprietary machine learning technology to support efficiency and quality. We continue to strategically invest in technology, as innovation positions us to scale and support growth into the future.

Previous wording

The key operating and financial metrics that we use to assess the performance of our business are set forth below for the three and nine months ended September 30, 2024 and 2023.

Current wording

The key operating and financial metrics that we use to assess the performance of our business are set forth below for the three months ended March 31, 2025 and 2024.

Previous wording

Shipping services revenue is generated from shipping fees we charge to buyers for outbound shipping and handling activities related to delivering purchased items to our buyers. We also generate shipping services revenue from the shipping fees for consigned products returned by our buyers to us within policy. We recognize shipping services revenue over time as the shipping activity occurs. Shipping services revenue excludes the effect of buyer incentives and sales tax.

Current wording

Shipping services revenue is generated from shipping fees we charge to buyers for outbound shipping and handling activities related to delivering purchased items to our buyers. We also generate shipping services revenue fromthe shipping fees for consigned products returned by our buyers to us within policy. We recognize shipping services revenue over time as the shipping activity occurs. Shipping services revenue excludes the effect of buyer incentives and sales tax.

Previous wording

Take rate is a key driver of our revenue and provides comparability to other marketplaces. The numerator used to calculate our take rate is equal to net consignment sales and the denominator is equal to the numerator plus consignor commissions. Net consignment sales represent the value of sales from consigned goods net of platform-wide discounts less consignor commission, product returns and order cancellations. We exclude direct revenue from our calculation of take rate because direct revenue represents the sale of inventory owned by us, which costs are included in cost of direct revenue. Our take rate reflects the high level of service that we provide to our consignors across multiple touch points and the consistently high velocity of sales for their goods. In November 2022, we updated our take rate structure with the goals of optimizing take rate, limiting consignment of lower value items, and increasing supply of higher value items.

Current wording

Take rate is a key driver of our revenue and provides comparability to other marketplaces. The numerator used to calculate our take rate is equal to net consignment sales and the denominator is equal to the numerator plus consignor commissions. Net consignment sales represent the value of sales from consigned goods net of platform-wide discounts less consignor commission, product returns and order cancellations. We exclude direct revenue from our calculation of take rate because direct revenue represents the sale of inventory owned by us, which costs are included in cost of direct revenue. Our take rate reflects the high level of service that we provide to our consignors across multiple touch points and the consistently high velocity of sales for their goods. We continue to assess our take rate structure and may implement further changes in the future to, among other things, optimize take rate, limit consignment of lower value items, and increase supply of higher

Previous wording

Our take rate structure is primarily based on the category and the price point of the sold items. For example, under the updated take rate structure, consignors can earn 20% commission on all sold items under $100, and up to 90% commission on watches sold for over $7,500. We launched a pricing tool for our consignors that provides detail on commission rates for specific categories and other aspects of the take rate structure. Consig nors are eligible to receive additional commissions based on total net sales under an added tiered commission structure. Management assesses changes in take rates by monitoring the volume of GMV and take rate across each discrete commission grouping, encompassing commission tiers and exceptions.

Current wording

Our take rate structure is primarily based on the category and the price point of the sold items. For example, under the current take rate structure, consignors can earn 20% commission on all sold items under $100, and up to 90% commission on watches sold for over $7,500. We launched a pricing tool for our consignors that provides detail on commission rates for specific categories and other aspects of the take rate structure. Consig nors are eligible to receive additional commissions based on total net sales under an added tiered commission structure. Management assesses changes in take rates by monitoring the volume of GMV and take rate across each discrete commission grouping, encompassing commission tiers and exceptions.

Previous wording

Active buyers include buyers who purchased goods through our online marketplace during the periods presented, irrespective of returns or cancellations. We believe this metric reflects scale, brand awareness, buyer acquisition and engagement.

Current wording

Active buyers include buyers who purchased goods through our online marketplace during the 12 months ended on the last day of the period presented, irrespective of returns or cancellations. We believe this metric reflects scale, brand awareness, buyer acquisition and engagement.

Previous wording

Adjusted EBITDA means GAAP net loss before interest income, interest expense, other (income) expense net, provision for income taxes, and depreciation and amortization, further adjusted to exclude stock-based compensation, payroll taxes on employee stock transactions, legal settlement charges, restructuring charges, gain on extinguishment of debt, change in fair value of warrant liability and certain one-time expenses. Adjusted EBITDA provides a basis for comparison of our business operations between current, past and future periods by excluding items that we believe are not indicative of our core operating performance. Adjusted EBITDA is a non-GAAP measure. Adjusted EBITDA has certain limitations as the measure excludes the impact of certain expenses that are included in our statements of operations that are necessary to run our business and should not be considered as an alternative to net loss or any other measure of financial performance calculated and presented in accordance with GAAP.

Current wording

Adjusted EBITDA means GAAP net income (loss) before interest income, interest expense, provision for income taxes, and depreciation and amortization, further adjusted to exclude stock-based compensation, payroll taxes on employee stock transactions, restructuring charges, gain on extinguishment of debt, change in fair value of warrant liability and certain one-time expenses. Adjusted EBITDA provides a basis for comparison of our business operations between current, past and future periods by excluding items that we believe are not indicative of our core operating performance. Adjusted EBITDA is a non-GAAP measure. Adjusted EBITDA has certain limitations as the measure excludes the impact of certain expenses that are included in our statements of operations that are necessary to run our business and should not be considered as an alternative to net income (loss) or any other measure of financial performance calculated and presented in accordance with GAAP.

Previous wording

The following table provides a reconciliation of net loss to Adjusted EBITDA (in thousands):

Current wording

The following table provides a reconciliation of net income (loss) to Adjusted EBITDA (in thousands):

Previous wording

(2) The gain on extinguishment of debt for the nine months ended September 30, 2024 reflects the difference between the carrying value of the Exchanged Notes and the fair value of the 2029 Notes.

Current wording

(2) The gain on extinguishment of debt for the three months ended March 31, 2025 reflects the difference between the carrying value of the February 2025 Exchanged Notes and the fair value of the 2031 Notes. The gain on extinguishment of debt for the three months ended March 31, 2024 reflects the difference between the carrying value of the 2024 Exchanged Notes and the fair value of the 2029 Notes.

Previous wording

(3) The change in fair value of warrant liability for the three and nine months ended September 30, 2024 reflects the remeasurement of the warrants issued by the Company in connection with the Note Exchange in February 2024.

Current wording

(4) The change in fair value of warrant liability for the three months ended March 31, 2025 and March 31, 2024 reflects the remeasurement of the Warrants issued by the Company in connection with the 2024 Note Exchange in February 2024.

Previous wording

•Direct revenue. We generate direct revenue from the sale of items that we own, which we refer to as our inventory. We generally acquire inventory when we accept out of policy returns from buyers, and when we make direct purchases from businesses and consignors. We recognize direct revenue upon shipment based onthe gross purchase price paid by buyers for goods, net of allowances for product returns, buyer incentives and adjustments.

Current wording

•Direct revenue. We generate direct revenue from the sale of items that we own, which we refer to as our inventory. We generally acquire inventory when we accept out of policy returns from buyers, and when we make direct purchases from businesses and consignors. We recognize direct revenue upon shipment based on the gross purchase price paid by buyers for goods, net of allowances for product returns, buyer incentives and adjustments.

Previous wording

Consignment revenue increased by $43.2 million, or 14%, in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The increase in revenue was driven primarily by an increase in consignment GMV, a 3% increase in our AOV and 110 basis point improvement in our take rate during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. Overall GMV increased by 4% during the nine months ended September 30, 2024. The increase in GMV is driven by an increase in consignment GMV, slightly offset by a decrease in direct GMV.

Current wording

Consignment revenue increased by $8.2 million, or 7%, in the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase in revenue was driven primarily by an increase in consignment GMV during the three months ended March 31, 2025. GMV growth during the three months ended March 31, 2025 was driven by an 5% increase in AOV driven by a year-over-year increase in average selling prices and a 3% increase in the number of orders. Additionally, our take rate increased to 38.6% from 38.4% during the three months ended March 31, 2025 compared to the same period last year.

Previous wording

Direct revenue decreased by $1.7 million, or 10%, in the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The decrease was primarily driven by our planned actions to minimize vendor-purchased company-owned inventory as the margin profile of our direct revenue is lower than consignment revenue. We recognize direct revenue on a gross basis upon shipment of the purchased good to the buyer. Direct revenue as a percentage of total revenue may vary from period to period primarily based on the growth of consignment revenue.

Current wording

Direct revenue increased by $7.7 million, or 61%, in the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase was primarily driven by higher sell through of inventory acquired from out of policy returns and high value inventory acquired through the Get Paid Now program. Through this program, select items are evaluated, authenticated and priced and the business or consignor receives payment based on this process in advance of the sale of the item.We recognize direct revenue upon shipment of the purchased good to the buyer. Direct revenue as a percentage of total revenue may vary from period to period primarily based on the amount of consignment revenue.

Previous wording

Shipping services revenue increased by $2.3 million, or 17%, in the three months ended September 30, 2024 compared to the three months ended September 30, 2023 primarily due to the increase in the number of orders in the three months ended September 30, 2024, and due to an increase in the standard shipping fee per order.

Current wording

Shipping services revenue increased by $0.3 million, or 2%, in the three months ended March 31, 2025 compared to the three months ended March 31, 2024 primarily due to a 3% increase in the number of orders in the three months ended March 31, 2025.

Previous wording

Cost of consignment revenue decreased by $0.3 million, or 2%, in the three months ended September 30, 2024 compared to the three months ended September 30, 2023, driven by efficiencies in our cost leverage.

Current wording

Cost of consignment revenue decreased by $0.3 million, or 2%, in the three months ended March 31, 2025 compared to the three months ended March 31, 2024, driven by increased operational efficiencies, partially offset by higher consignment volume.

Previous wording

Cost of direct revenue decreased by $2.8 million, or 18%, in the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The decrease was primarily attributable to the decrease in direct revenue compared to the prior year.

Current wording

Cost of direct revenue increased by $3.0 million, or 24%, in the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase was primarily attributable to the increase in direct revenue compared to the prior year.

Previous wording

The shipping services revenue gross margin increased by 582 basis points for the nine months ended September 30, 2024, primarily due to the increase in the standard shipping fee per order.

Current wording

The shipping services revenue gross margin decreased by 404 basis points for the three months ended March 31, 2025, primarily due to the increase in the standard shipping fee per order.

Previous wording

Our total gross margin increased by 430 basis points in the three months ended September 30, 2024 compared to the three months ended September 30, 2023, due to the increase in consignment revenue and decrease in direct revenue as a percentage of total revenue and the improvement in take rate. Gross margin may vary from period to period.

Current wording

Our total gross margin increased by 40 basis points in the three months ended March 31, 2025 compared to the three months ended March 31, 2024. Gross margin may vary from period to period.

Previous wording

As a percent of revenue, marketing expense decreased to 8% from 9% in the three months ended September 30, 2024 and 2023. These expenses may vary from period to period as a percentage of revenue, depending primarily upon our marketing investments. We expect these expenses to decrease as a percentage of revenue over the longer term.

Current wording

As a percent of revenue, marketing expense decreased to 9.9% from 10.6% in the three months ended March 31, 2025 and 2024, respectively. These expenses may vary from period to period as a percentage of revenue, depending primarily upon our marketing investments. We expect these expenses to decrease as a percentage of revenue over the longer term.

Previous wording

Selling, general and administrative expense increased by $2.7 million, or 6%, in the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The increase was primarily due to increased employee compensation related expenses due to an increase in headcount compared to the prior period.

Current wording

Operations and technology expense increased by $4.0 million, or 6%, in the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase was primarily due to higher variable employee costs and software and service expenses.

Previous wording

As a percent of revenue, operations and technology expense decreased to 45% from 46% in the three months ended September 30, 2024 and 2023, respectively. These expenses may vary from period to period as a percentage of revenue, depending primarily upon when we choose to make more significant investments. We expect these expenses to decrease as a percentage of revenue over the longer term.

Current wording

As a percent of revenue, operations and technology expense decreased to 41.9% from 43.8% in the three months ended March 31, 2025 and 2024, respectively. These expenses may vary from period to period as a percentage of revenue, depending primarily upon when we choose to make more significant investments. We expect these expenses to decrease as a percentage of revenue over the longer term.

Previous wording

As a percent of revenue, selling, general and administrative expense decreased to 32% from 34% in the nine months ended September 30, 2024 and 2023, respectively. These expenses may vary from period to period as a percentage of revenue. We expect these expenses to decrease as a percentage of revenue over the longer term.

Current wording

As a percent of revenue, selling, general and administrative expense decreased to 31.2% from 32.5% in the three months ended March 31, 2025 and 2024, respectively. These expenses may vary from period to period as a percentage of revenue. We expect these expenses to decrease as a percentage of revenue over the longer term.

Previous wording

We did not incur any restructuring charges during the three months ended September 30, 2024, compared to $(0.9) million in the three months ended September 30, 2023. The decrease was primarily due to a gain recognized on various lease terminations during the three months ended September 30, 2023.

Current wording

We did not incur any restructuring charges during the three months ended March 31, 2025, compared to the $0.2 million during the three months ended March 31, 2024.

Previous wording

The fair value of warrant liability decreased by $0.7 million, or 100% for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The change was due to the unrealized gain on the change in fair value of the warrant liability from June 30, 2024 to September 30, 2024 (See Note 6 — Non-convertible Notes, Net). The Company issued warrants to acquire an aggregate of up to 7,894,737 shares (subject to adjustment in accordance with the terms of the warrants) of the Company's common stock as part of the Note Exchange in February 2024. The cumulative fair value adjustment since the issuance date is $9.2 million.

Current wording

The fair value of warrant liability decreased by $58.1 million, or over 100% for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The Company issued Warrants to acquire an aggregate of up to 7,894,737 shares (subject to adjustment in accordance with the terms of the Warrants) of the Company's common stock as part of the 2024 Note Exchange in February 2024. The change was due to the unrealized gain on the change in fair value of the warrant liability from December 31, 2024 to March 31, 2025 (See Note 6 — Non-convertible Notes, Net).

Previous wording

Gain on extinguishment of debt increased by $4.2 million, or 100% for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The increase was due to the gain recorded from the extinguishment of the Exchanged Notes (as defined below) and the issuance of the 2029 Notes (See Note 6 — Non-convertible Notes, Net).

Current wording

Gain on extinguishment of debt increased by $32.9 million, or over 100% for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase was due to the gain recorded from the extinguishment of the Exchanged Notes (as defined below) and the issuance of the 2031 Notes during the three months ended March 31, 2025 (See Note 7 — Convertible Senior Notes, Net).

Previous wording

Interest income decreased by $0.3 million, or 14%, for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023 due to lower average cash balances.

Current wording

Interest income decreased by $0.7 million, or 34% for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 due to lower average cash balances.

Previous wording

As of September 30, 2024, we had cash and cash equivalents of $153.2 million and an accumulated deficit of $1,185.4 million. With the expiration of the Revolving Credit Agreement in the three months ended June 30, 2023, we had restricted cash of $14.9 million as of September 30, 2024, consisting of cash deposited with a financial institution as collateral for our letters of credit, facility leases and credit cards. Since inception, we have generated negative cash flows from operations and have primarily financed our operations through equity and convertible debt financings. In July 2019, we received net proceeds of $315.5 million upon completion of our initial public offering ("IPO"). In June 2020, we received net proceeds of $143.3 million from the issuance of the 2025 Notes and the related capped call transactions. In March 2021, we received net proceeds of $244.5 million from the 2028 Notes and the related capped call transactions. In February 2024, we exchanged $145.8 million of the 2025 Notes and $6.5 million of the 2028 Notes for $135.0 million in aggregate principal amount of the 2029 Notes (the “Note Exchange”). As a result of the Note Exchange, we significantly extended the average maturity date of our outstanding indebtedness (see Note 6 - Non-convertible Notes, Net).

Current wording

As of March 31, 2025, we had cash and cash equivalents of $139.6 million and an accumulated deficit of $1,191.4 million. We had restricted cash of $14.9 million as of March 31, 2025, consisting of cash deposited with a financial institution as collateral for our letters of credit, facility leases and credit cards. Since inception, we have generated negative cash flows from operations and have primarily financed our operations through equity and convertible debt financings. In July 2019, we received net proceeds of $315.5 million upon completion of our IPO on July 2, 2019. In June 2020, we received net proceeds of $143.3 million from the issuance of our 2025 Notes and the related capped call transactions. In March 2021, we received net proceeds of $244.5 million from our 2028 Notes and the related capped call transactions. In February 2024, we exchanged $145.8 million of our 2025 Notes and $6.5 million of the 2028 Notes for $135.0 million in aggregate principal amount of the 2029 Notes in the 2024 Note Exchange. As a result of the 2024 Note Exchange, we significantly extended the average maturity date of our outstanding indebtedness (see Note 6 — Non-convertible Notes, Net).

Previous wording

Our primary capital requirements include contractual obligations related to our operating leases, certain non-cancellable contracts and compensation and benefits payments to support our strategic plans. Our future capital requirements will depend on many factors, including, but not limited to, those set forth under the heading "Risk Factors" in this Quarterly Report, and our ability to grow our revenues and the timing of investments to support growth in our business, such as the build-out of our authentication centers and, to a lesser extent, the opening of new retail stores. We may seek additional equity or debt financing. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, financial condition and results of operations could be adversely affected.

Current wording

Our primary capital requirements include contractual obligations related to our operating leases, our indebtedness, certain non-cancellable contracts and compensation and benefits payments to support our strategic plans. Our future capital requirements will depend on many factors, including, but not limited to, those set forth under the heading “Risk Factors” in this Quarterly Report, and our ability to grow our revenues and the timing of investments to support growth in our business, such as the build-out of our authentication centers and, to a lesser extent, the opening of new retail stores. We may seek additional equity or debt financing. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, financial condition and results of operations could be adversely affected.

Previous wording

During the nine months ended September 30, 2023, net cash used in operating activities was $71.8 million, which consisted of a net loss of $146.8 million, adjusted by non-cash charges of $109.0 million and cash outflows due to a net change of $34.0 million in our operating assets and liabilities. The net change in our operating assets and liabilities was primarily the result of cash outflows due to a decrease of $21.4 million in operating lease liabilities, a $15.0 million decrease in accrued consignor payable, a $2.9 million increase in accounts receivable, and a $2.9 million increase in other assets, partially offset by a decrease of $9.5 million in inventory.

Current wording

During the three months ended March 31, 2025, net cash used in operating activities was $28.3 million, which consisted of net income of $62.4 million, adjusted by non-cash charges of $59.2 million and cash outflows due to a net change of $31.5 million in our operating assets and liabilities. The net change in our non-cash charges was primarily due to the $42.5 million unrealized gain on change in fair value of warrant liability and the $37.1 million gain on debt extinguishment in connection with the 2025 Note Exchange. The net change in our operating assets and liabilities was primarily the result of cash outflows due to a $14.5 million increase in accounts receivables, a $9.3 million decrease in other accrued and current liabilities, a $7.4 million decrease in accrued consignor payables and a $5.5 million decrease in operating lease liabilities, partially offset by a $7.3 million decrease in prepaid expenses and other current assets.

Previous wording

During the nine months ended September 30, 2024, net cash used in operating activities was $1.1 million, which consisted of a net loss of $65.7 million, adjusted by non-cash charges of $73.4 million and cash outflows due to a net change of $8.8 million in our operating assets and liabilities. The net change in our non-cash charges operating assets and liabilities was primarily the result of cash outflows due to a decrease of $15.3 million in operating lease liabilities and a $5.0 million decrease in accrued consignor payable, partially offset by an increase of $10.0 million in other accrued and current liabilities.

Current wording

During the three months ended March 31, 2024, net cash used in operating activities was $3.5 million, which consisted of a net loss of $31.1 million, adjusted by non-cash charges of $33.1 million and cash outflows due to a net change of $5.5 million in our operating assets and liabilities. The net change in our non-cash charges was primarily due to the unrealized loss on change in fair value of warrant liability. Such Warrants were issued in connection with the 2024 Note Exchange during the three months ended March 31, 2024. The net change in our operating assets and liabilities was primarily the result of cash outflows due to a $4.9 million decrease in operating lease liabilities and a $3.0 million increase in accounts receivables partially offset by a $3.0 million decrease in prepaid expenses and other current assets.

Previous wording

During the nine months ended September 30, 2024, net cash used in investing activities was $16.8 million, which consisted of $9.2 million for purchases of property and equipment, net, including leasehold improvements and $8.1 million for capitalized proprietary software development costs, partially offset by $0.5 million of insurance proceeds received related to the warehouse fire.

Current wording

During the three months ended March 31, 2025, net cash used in investing activities was $5.9 million, which consisted of $4.7 million for purchases of property and equipment, net, including leasehold improvements and $2.9 million for capitalized proprietary software development costs, partially offset by $1.7 million of insurance proceeds received related to the warehouse fire that occurred in May 2024.

Previous wording

During the nine months ended September 30, 2023, net cash used in investing activities was $35.4 million, which consisted of $25.5 million for purchases of property and equipment, net, including leasehold improvements and $9.9 million for capitalized proprietary software development costs.

Current wording

During the three months ended March 31, 2024, net cash used in investing activities was $5.3 million, which consisted of $2.1 million for purchases of property and equipment, net, including leasehold improvements and $3.2 million for capitalized proprietary software development costs.

Previous wording

During the nine months ended September 30, 2024, net cash used in financing activities was $4.6 million, which primarily consisted of payment of debt issuance costs related to the Note Exchange.

Current wording

During the three months ended March 31, 2024, net cash used in financing activities was $0.9 million, which primarily consisted of payment of debt issuance costs related to the 2024 Note Exchange.