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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM 10-Q
______________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
OR
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from  to

Commission file number 001-40249
______________________
ThredUp Inc.
______________________
(Exact name of registrant as specified in its charter)
Delaware
26-4009181
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
969 Broadway, Suite 200
Oakland, CA

94607
(Address of Principal Executive Offices)
(Zip Code)
(415) 402-5202
Registrant's telephone number, including area code
______________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A common stock, $0.0001 par value per shareTDUPThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes     No  ☐ 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes     No  ☐ 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer  
Smaller reporting company
Emerging growth company
                
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes   ☐     No  

The registrant had 58,666,102 shares of Class A common stock, $0.0001 par value per share, and 40,383,662 shares of Class B common stock, $0.0001 par value per share, outstanding as of April 29, 2022.




TABLE OF CONTENTS
Page
i


SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are statements that involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “shall,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:
our future financial performance, including our revenue, cost of revenue and operating expenses and our ability to achieve and maintain future profitability;
the sufficiency of our cash, cash equivalents and capital resources to meet our liquidity needs;
our ability to effectively manage or sustain our growth and to effectively expand our operations;
our strategies, plans, objectives and goals, including our expectations regarding future infrastructure investments;
our ability to attract and retain buyers and sellers and the continued impact of network effects as we scale our platform;
our ability to continue to generate revenue from new Resale-as-a-Service (“RaaS”) offerings that are our future sources of revenue;
trends in our key financial and operating metrics;
our estimated market opportunity;
economic and industry trends, projected growth or trend analysis;
our ability to comply with laws and regulations;
the effect of uncertainties related to the global COVID-19 pandemic, including as a result of the recent Omicron variant, the BA.2 subvariants and any new strains or variants of the virus and recovery therefrom on United States and global economies, our business, results of operations, financial condition, demand for secondhand and resale items, sales cycles and buyer and seller retention;
our ability to remediate our material weakness in our internal control over financial reporting;
our ability to successfully integrate and realize the benefits of our past or future strategic acquisitions or investments; and
the increased expenses associated with being a public company.
You should not rely upon forward-looking statements as predictions of future events. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in the section titled “Risk Factors” in our Annual Report on Form 10-K filed with the SEC on March 22, 2022 and and elsewhere in this Quarterly Report on Form 10-Q, as well as in our other filings with the Securities and Exchange Commission (“SEC”). Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. The results, events and circumstances
ii


reflected in the forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.
The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law.
***
Unless otherwise indicated or unless the context requires otherwise, all references in this document to “thredUP”, “the Company”, “we”, “us”, “our”, or similar references are to ThredUp Inc.
thredUP is one of the world’s largest online resale platforms for women’s and kids’ apparel, shoes and accessories, based primarily on items processed, items sold and the capacity of our distribution centers.
The “estimated retail price” of an item is based on the estimated original retail price of a comparable item of the same quality, construction and material offered elsewhere in new condition. Our estimated original retail prices are set by our team of merchants who periodically monitor market prices for the brands and styles that we offer on our marketplace.
iii


PART I. FINANCIAL INFORMATION.
Item 1.    Financial Statements (Unaudited)
ThredUp Inc.
Condensed Consolidated Balance Sheets
(in thousands, except per share data)
(unaudited)
March 31,December 31,
20222021
Assets
Current assets
Cash and cash equivalents$68,597 $84,550 
Marketable securities115,189 121,277 
Accounts receivable, net2,971 4,136 
Inventory, net12,025 9,825 
Other current assets9,634 8,625 
Total current assets208,416 228,413 
Operating lease right-of-use assets42,937 39,340 
Property and equipment, net73,132 55,466 
Goodwill12,043 12,238 
Intangible assets12,942 13,854 
Other assets11,558 11,515 
Total assets$361,028 $360,826 
Liabilities, Convertible Preferred Stock and Stockholders’ Equity
Current liabilities
Accounts payable$19,529 $13,336 
Accrued and other current liabilities50,970 45,253 
Seller payable20,640 19,125 
Operating lease liabilities, current4,433 3,931 
Current portion of long-term debt7,780 7,768 
Total current liabilities103,352 89,413 
Operating lease liabilities, non-current42,030 36,997 
Long-term debt25,634 27,559 
Other non-current liabilities2,324 1,123 
Total liabilities173,340 155,092 
Commitments and contingencies (Note 11)
Convertible preferred stock: $0.0001 par value; 100,000 shares authorized as of March 31, 2022 and December 31, 2021; no shares issued and outstanding as of March 31, 2022 and December 31, 2021
  
Stockholders’ equity:
Class A and B common stock, $0.0001 par value; 1,120,000 shares authorized as of March 31, 2022 and December 31, 2021; 98,942 and 98,435 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively
10 10 
Additional paid-in capital526,533 522,161 
Accumulated other comprehensive loss(2,804)(1,094)
Accumulated deficit(336,051)(315,343)
Total stockholders’ equity187,688 205,734 
Total liabilities, convertible preferred stock and stockholders’ equity$361,028 $360,826 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
1


ThredUp Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Three Months Ended March 31,
20222021
Revenue:
Consignment$47,435 $44,688 
Product25,260 10,992 
Total revenue72,695 55,680 
Cost of revenue:
Consignment10,049 10,832 
Product12,418 5,130 
Total cost of revenue22,467 15,962 
Gross profit50,228 39,718 
Operating expenses:
Operations, product and technology39,161 28,312 
Marketing16,978 15,446 
Sales, general and administrative14,664 10,638 
Total operating expenses70,803 54,396 
Operating loss(20,575)(14,678)
Interest expense(423)(559)
Other income (expense), net303 (907)
Loss before provision for income taxes(20,695)(16,144)
Provision for income taxes13 27 
Net loss$(20,708)$(16,171)
Net loss per share attributable to common stockholders, basic and diluted$(0.21)$(0.86)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted98,624 18,701 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.








2


ThredUp Inc.
Condensed Consolidated Statements of Comprehensive Loss
(in thousands)
(unaudited)
Three Months Ended March 31,
20222021
Net loss$(20,708)$(16,171)
Other comprehensive loss, net of tax:
Foreign currency translation adjustments(708) 
Unrealized loss on available-for-sale debt securities(1,002) 
Total comprehensive loss$(22,418)$(16,171)
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3


ThredUp Inc.
Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity
(in thousands)
(unaudited)
Convertible
Preferred Stock
Common StockAdditional Paid-in CapitalAccumulated Other Comprehensive LossAccumulated DeficitTotal Stockholders’ Equity
SharesAmountSharesAmount
Balance as of December 31, 2021
 $ 98,435 $10 $522,161 $(1,094)$(315,343)$205,734 
Exercise of stock options— — 334 — 754 — — 754 
Stock-based compensation— — — — 3,618 — — 3,618 
Issuance of common stock to settle restricted stock units— — 173 — — — — — 
Other comprehensive loss— — — — — (1,710)— (1,710)
Net loss— — — — — — (20,708)(20,708)
Balance as of March 31, 2022
 $ 98,942 $10 $526,533 $(2,804)$(336,051)$187,688 
Convertible
Preferred Stock
Common StockAdditional Paid-in CapitalAccumulated Other Comprehensive LossAccumulated DeficitTotal Stockholders’ Equity (Deficit)
SharesAmountSharesAmount
Balance as of December 31, 2020
65,971 $247,041 12,890 $1 $29,989 $ $(252,167)$(222,177)
Exercise of stock options— — 1,458 — 1,875 — — 1,875 
Stock-based compensation— — — — 3,498 — — 3,498 
Conversion of preferred stock warrants to Class B common stock warrants— — — — 1,827 — — 1,827 
Preferred stock conversion to Class B common stock(65,971)(247,041)65,971 7 247,034 — — 247,041 
Sale of Class A common stock upon initial public offering, net of issuance costs— — 13,800 1 175,533 — — 175,534 
Cashless exercise of common stock warrant— — 25 — — — — — 
Net loss— — — — — — (16,171)(16,171)
Balance as of March 31, 2021
 $ 94,144 $9 $459,756 $ $(268,338)$191,427 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4


ThredUp Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Ended
March 31,
20222021
Cash flows from operating activities
Net loss$(20,708)$(16,171)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization3,271 2,038 
Stock-based compensation expense3,523 3,498 
Reduction in the carrying amount of right-of-use assets1,398 1,318 
Changes in fair value of convertible preferred stock warrants and others481 1,048 
Changes in operating assets and liabilities:
Accounts receivable, net1,143 97 
Inventory, net(2,313)37 
Other current and non-current assets(2,162)(457)
Accounts payable1,601 4,722 
Accrued and other current liabilities4,912 4,784 
Seller payable1,521 1,470 
Operating lease liabilities539 (1,311)
Other non-current liabilities115 4 
Net cash (used in) provided by operating activities(6,679)1,077 
Cash flows from investing activities
Maturities of marketable securities4,726  
Purchase of property and equipment(12,638)(4,099)
Net cash used in investing activities(7,912)(4,099)
Cash flows from financing activities
Proceeds from debt issuance 4,625 
Repayment of debt(2,000) 
Proceeds from issuance of Class A common stock, net of underwriting discounts and commissions 180,284 
Proceeds from exercise of common stock options809 1,875 
Payment of costs for the initial public offering (1,733)
Net cash (used in) provided by financing activities(1,191)185,051 
Effect of exchange rate changes on cash and cash equivalents(172) 
Net (decrease) increase in cash, cash equivalents and restricted cash (15,954)182,029 
Cash, cash equivalents and restricted cash
Beginning of period91,840 67,539 
End of period$75,886 $249,568 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5


ThredUp Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
1.Organization and Description of Business
ThredUp Inc. (“ThredUp” or the “Company”) was formed as a corporation in the State of Delaware in January 2009. ThredUp is a large resale platform that enables consumers to buy and sell primarily secondhand women’s and kid’s apparel, shoes and accessories. The Company has corporate offices in Oakland, California, Scottsdale, Arizona and Bulgaria, distribution centers in Pennsylvania, Georgia, Arizona and Bulgaria and processing centers in Texas and Tennessee. We have additional distribution centers in Texas and Bulgaria under construction.
2. Significant Accounting Policies
Basis of Presentation and Use of Estimates
The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany account balances and transactions have been eliminated upon consolidation. The unaudited condensed consolidated financial statements were prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States (“U.S.”) for interim financial information and with the instructions to Quarterly Report on Form 10‑Q and Article 10 of Regulation S-X. As permitted under those rules, certain footnotes or other financial information can be condensed or omitted.

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts that are reported in the consolidated financial statements and the related disclosures. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include, but are not limited to, the useful lives of property and equipment and intangibles, allowance for sales returns, allowance for bad debts, breakage on loyalty points and rewards and valuation of inventory, stock-based compensation, right-of-use assets, goodwill and acquired intangibles and income taxes.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all normal and recurring adjustments necessary to present fairly the financial position of the Company as of March 31, 2022, and the results of operations and cash flows for the interim periods presented.

The accompanying unaudited condensed consolidated financial statements and related financial information should be read in conjunction with the Company’s audited consolidated financial statements and related notes for the year ended December 31, 2021, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 22, 2022.

Concentrations of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents, marketable securities and accounts receivable. The Company deposits cash at major financial institutions, and at times, such cash may exceed federally insured limits. The credit risk is believed to be minimal due to the financial position of the depository institutions in which those deposits are held. The Company has never experienced any losses on deposits since inception. The Company’s investment policy restricts cash investments to highly liquid, short to intermediate-term, high grade fixed income securities, and as a result, the Company believes its cash equivalents and marketable securities represent minimal credit risk.

Revenue from Loyalty Reward Redemption or Expiration
As of March 31, 2022 and December 31, 2021, the Company had a liability of $3.4 million and $4.0 million, respectively, related to the loyalty program which is included in accrued and other current liabilities in the consolidated balance sheets. The Company recognized $2.7 million and $3.3 million of
6


ThredUp Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
revenue from loyalty reward redemption or expiration for the three months ended March 31, 2022 and 2021, respectively.
Net Loss Per Share Attributable to Common Stockholders
The Company follows the two-class method when computing net loss per common share when shares issued meet the definition of participating securities. The rights, including the liquidation and dividend rights and sharing of losses, of the Class A common stock and Class B common stock are identical, other than voting rights. As the liquidation and dividend rights and sharing of losses are identical, the undistributed earnings are allocated on a proportionate basis and the resulting net loss per share attributed to common stockholders will, therefore, be the same for both Class A and Class B common stock on an individual or combined basis.
For periods in which the Company reports net losses, diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders, because potentially dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.
Cash, Cash Equivalents and Restricted Cash
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets to the amounts shown in the condensed consolidated statements of cash flows (in thousands):
March 31,December 31,
20222021
Cash and cash equivalents$68,597$84,550
Restricted cash, current560560
Restricted cash, non-current6,7296,730
Total cash, cash equivalents and restricted cash$75,886 $91,840 
Restricted cash, non-current of $6.7 million and $6.7 million is included in the other assets in the condensed consolidated balance sheets as of March 31, 2022 and December 31, 2021, respectively.
Fair Value Measurements
Fair value accounting is applied for all financial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis (at least annually). As of March 31, 2022 and December 31, 2021, the carrying amount of accounts receivable, other current assets, other assets, accounts payable, seller payable and accrued and other current liabilities approximated their estimated fair value due to their relatively short maturities. Management believes the terms of its long-term debt reflect current market conditions for an instrument with similar terms and maturity, therefore the carrying value of the Company’s debt approximated its fair value.
Assets and liabilities recorded at fair value on a recurring basis on the consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows:
Level 1—Observable inputs such as unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.
7


ThredUp Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
Level 2—Inputs (other than quoted prices in active markets included in Level 1) are either directly or indirectly observable for the asset or liability. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
New Accounting Pronouncements Recently Issued But Not Yet Adopted
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and subsequent amendments to the initial guidance: ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-10, ASU 2019-11, ASU 2020-02, ASU 2020-03 and ASU 2022-02 which replaces the existing incurred loss impairment model with an expected credit loss model and requires a financial asset measured at amortized cost to be presented at the net amount expected to be collected. This standard is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted. The Company has not early adopted this standard and is currently evaluating the impact of this standard on its consolidated financial statements.
3.Financial Instruments and Fair Value Measurements
The following table provides the financial instruments measured at fair value (in thousands):
Fair Value as of March 31, 2022
Level 1Level 2Level 3Total
Assets
Cash equivalents:
Money market fund$8,858 $ $ $8,858 
U.S. treasury securities4,798   4,798 
Commercial paper 18,532  18,532 
U.S. government agency bonds2,450   2,450 
Total cash equivalents$16,106 $18,532 $ $34,638 
Marketable securities
Corporate debt securities$50,573 $ $ $50,573 
U.S. treasury securities36,873   36,873 
U.S. government agency bonds27,743   27,743 
Total marketable securities$115,189 $ $ $115,189 
Total$131,295 $18,532 $ $149,827 
8


ThredUp Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
Fair Value as of December 31, 2021
Level 1Level 2Level 3Total
Assets
Cash equivalents:
Money market fund$41,376 $ $ $41,376 
Commercial paper 12,098  12,098 
Total cash equivalents$41,376 $12,098 $ $53,474 
Marketable securities
Corporate debt securities$55,921 $ $ $55,921 
U.S. treasury securities37,190   37,190 
U.S. government agency bonds28,166   28,166 
Total marketable securities$121,277 $ $ $121,277 
Total$162,653 $12,098 $ $174,751 
The following tables summarize the cost or amortized cost, gross unrealized gains, gross unrealized losses and fair value of the marketable securities as of March 31, 2022 and December 31, 2021 (in thousands):
March 31, 2022
Cost or Amortized CostUnrealizedFair Value
GainsLosses
Corporate debt securities$51,106 $ $(533)$50,573 
U.S. treasury securities37,267  (394)36,873 
U.S. government agency bonds28,183  (440)27,743 
Total$116,556 $ $(1,367)$115,189 
December 31, 2021
Cost or Amortized CostUnrealizedFair Value
GainsLosses
Corporate debt securities$56,098 $ $(177)$55,921 
U.S. treasury securities37,286  (96)37,190 
U.S. government agency bonds28,258  (92)28,166 
Total$121,642 $ $(365)$121,277 
As of March 31, 2022 and December 31, 2021, the amortized cost of the Company’s cash equivalents approximate their estimated fair value. As such, there are no unrealized gains or losses related to the Company’s cash equivalents.
For all of the marketable securities, the Company utilizes third-party pricing services to obtain fair value. Third-party pricing methodologies incorporate bond terms and conditions, current performance
9


ThredUp Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
data, proprietary pricing models, real-time quotes from contributing dealers, trade prices and other market data.
The Company’s money market funds, U.S. treasury securities, corporate debt securities and U.S. government agency bonds were valued using Level 1 inputs because they are valued using quoted market prices.
The Company’s commercial papers were valued using Level 2 inputs because they are valued using quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
There were no transfers between levels during the three months ended March 31, 2022. As of March 31, 2022, of the $115.2 million carrying amount of marketable securities, $71.6 million had a contractual maturity date of less than one year and $43.6 million had a contractual maturity date between one to two years.
4.Property and Equipment, Net
Property and equipment, net consists of the following (in thousands):
March 31,December 31,
20222021
Property and equipment$96,316 $76,028 
Less: accumulated depreciation and amortization(23,184)(20,562)
Property and equipment, net$73,132 $55,466 
Depreciation and amortization expense of property and equipment was $2.6 million and $2.0 million for the three months ended March 31, 2022 and 2021, respectively.
5.    Goodwill and Other Intangible Assets
The goodwill is primarily attributable to the planned growth in the combined business after the acquisition of Remix Global EAD (“Remix”). Goodwill is not amortized to earnings, but instead is reviewed for impairment at least annually, absent any interim indicators of impairment. The carrying amount of goodwill was $12.0 million as of March 31, 2022 and $12.2 million as of December 31, 2021. The change is due to the foreign currency translation adjustments.
The gross carrying amounts and accumulated amortization of the intangible assets with determinable lives are as follows (in thousands):
As of March 31, 2022
Intangible assets with determinable livesAmortization Period (years)Gross carrying amountAccumulated
amortization
Carrying amount, net
Customer relationships
8$5,001 $(301)$4,700 
Developed technology
34,712 (753)3,959 
Trademarks
94,520 (237)4,283 
Total$14,233 $(1,291)$12,942 
10


ThredUp Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
As of December 31, 2021
Intangible assets with determinable livesAmortization Period (years)Gross carrying amountAccumulated
amortization
Carrying amount, net
Customer relationships
8$5,092 $(150)$4,942 
Developed technology
34,798 (373)4,425 
Trademarks
94,602 (115)4,487 
Total$14,492 $(638)$13,854 

The changes in the gross carrying amounts are due to foreign currency translation.
Developed technology, customer relationships, and trademarks intangibles amortization is recorded within operations, product and technology, sales general and administrative, and marketing expense lines, respectively, within the consolidated statements of operations. The amortization expense of intangible assets with determinable lives was $0.7 million and zero for the three months ended as of March 31, 2022 and 2021, respectively.
6.     Balance Sheet Components
Inventories consist of the following (in thousands):
March 31,
December 31,
20222021
Finished goods$9,907 $8,247 
Raw materials1,450 908 
Work in progress668 670 
$12,025 $9,825 
Accrued and other current liabilities consist of the following (in thousands):
March 31,December 31,
20222021
Gift card and site credit liabilities$13,770 $13,223 
Accrued vendor liabilities9,398 6,031 
Allowance for returns7,366 6,209 
Accrued compensation6,795 6,438 
Deferred revenue6,213 5,878 
Accrued taxes5,419 5,728 
Accrued other2,009 1,746 
$50,970 $45,253 
11


ThredUp Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
7.    Lease Agreements
The Company’s operating lease expense was $2.4 million and $2.1 million for the three months ended March 31, 2022 and 2021, respectively.
Maturities of operating lease liabilities were as follows as of March 31, 2022 (in thousands):
Amount
Remainder of 2022$6,804 
20238,487 
20247,543 
20256,740 
20266,386 
Thereafter29,947 
Total lease payments65,907 
Less: imputed interest(14,934)
Less: tenant improvement allowance yet to be received(4,510)
Total lease liabilities46,463 
Less: current lease liabilities(4,433)
Total non-current lease liabilities$42,030 

In December 2021, the Company entered into an agreement to lease a distribution center in Sofia, Bulgaria. The leased property, which contains both logistics and office areas, is divided into three spaces with separate commencement dates of March 1, 2022 and targeted dates in May 2022 and June 2023. The base rent for the first stage space is approximately €6.1 million or $6.8 million, estimated at March 31, 2022 Euro to USD spot rate, in aggregate over the original term of 10 years from the commencement date.

In January 2022, the Company entered into an agreement to lease office space in Sofia, Bulgaria. The Company anticipates delivery of the leased property, accounting commencement and recording of the related right of use asset and liability to occur during the second quarter of 2022. The base rent is approximately €4.3 million or $4.7 million, estimated at March 31, 2022 Euro to USD spot rate, in aggregate over the original term of 10 years from the commencement date.

8.    Long-term Debt
The Company entered into a loan and security agreement (“Term Loan”) with Western Alliance Bank for an aggregate amount up to $40.0 million to refinance its Loan and Security Agreement with Silicon Valley Bank in February 2019. The Term Loan was amended five times before December 31, 2021. The amended interest rate on the Term Loan is the prime rate published in The Wall Street Journal plus 1.5% with a floor of 5.50% per annum.
As of March 31, 2022, the nominal interest rate was 5.50% and the effective interest rate was 6.65%. The Company is in compliance with the covenants as of March 31, 2022.

The Company has repaid $6.0 million of the Term Loan as of March 31, 2022. The remaining maturities of the loan agreement as of March 31, 2022 are as follows (in thousands):
12


ThredUp Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
Amount
Remainder of 2022$6,000 
20238,000 
202420,000 
Thereafter 
Total future principal34,000 
Less: unamortized debt discount(586)
Less: current portion of long-term debt(7,780)
Non-current portion of long-term debt$25,634 
9.    Common Stock
Each share of Class A common stock is entitled to one vote per share. Each share of Class B common stock is entitled to ten votes per share and is convertible at any time into one share of Class A common stock.
The table below summarizes the Class A common stock and Class B common stock issued and outstanding as of March 31, 2022.
As of March 31, 2022
AuthorizedIssued and Outstanding
(in thousands)
Common stock Class A1,000,000 58,558 
Common stock Class B120,000 40,384 
Total common stock1,120,000 98,942 
10.    Stock-Based Compensation Plans
The Company's stock-based compensation plans are described in more detail in Note 11, Stock-Based Compensation Plans, to the consolidated financial statements in the 2021 Form 10-K.
2021 Stock Option and Incentive Plan
In February 2021, in connection with the Initial Public Offering (“IPO”), the Company’s board of directors adopted the 2021 Stock Option and Incentive Plan (“2021 Plan”) to replace the Second Amended and Restated 2010 Stock Plan, which was subsequently approved by the Company’s stockholders in March 2021. The 2021 Plan became effective on March 24, 2021.
2021 Employee Stock Purchase Plan
In February 2021, the Company’s board of directors adopted the Employee Stock Purchase Plan (“ESPP”), which was subsequently approved by the stockholders in March 2021. The ESPP became effective on March 24, 2021. There was $0.2 million and zero in stock-based compensation related to the ESPP for the three months ended March 31, 2022 and 2021, respectively.
Restricted Stock Units
The Company issues service-based and performance-based restricted stock units (“RSU”) to employees. The RSUs automatically convert to shares of the Company’s common stock on a one-for-one basis as the awards vest. RSUs granted to newly hired employees typically vest 25% annually over 4 years commencing on the date of grant. The RSUs are measured at grant date fair value, at the market price of the Company’s Class A common stock on the grant date. The Company records stock-based compensation expense related to the RSUs ratably over the employee’s respective requisite service
13


ThredUp Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
period. During the three months ended March 31, 2022, the Company granted 749,842 shares of RSUs with a weighted average grant date fair value at $8.81 under the 2021 Plan.
Stock-based Compensation
Total stock-based compensation expense by department is as follows (in thousands):
Three Months Ended
March 31,
20222021
Operations, product and technology $1,392 $1,350 
Marketing333 437 
Sales, general and administrative1,798 1,711 
Total stock-based compensation expense$3,523 $3,498 
11.    Commitments and Contingencies
Legal Contingencies
The Company is subject to litigation claims and assessments from time to time in the ordinary course of business. The Company’s management does not believe that any such matters, individually or in the aggregate, will have a material adverse effect on the Company’s business, financial condition, results of operations or cash flows.
Indemnifications
In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and provide for general indemnification. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future, but that have not yet been made.
12.    Income Taxes
The quarterly income tax provision reflects an estimate of the corresponding quarter’s state taxes in the United States. The provision for income tax expense for the three months ended March 31, 2022 and 2021 was determined based upon estimates of the Company’s annual effective tax rate for the years ending December 31, 2022 and 2021, respectively. Since the Company is in a full valuation allowance position, due to losses incurred since inception, the provision for taxes consist solely of certain state income taxes.
14


ThredUp Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
13.    Net Loss Per Share Attributable to Common Stockholders
The following participating securities were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented, because including them would have been anti-dilutive:
As of March 31,
20222021
(in thousands)
Outstanding stock options18,825 22,068 
Restricted stock units1,830 96 
Delayed share issuance related to acquisition130  
Employee stock purchase plan105  
Outstanding Class B common stock warrants 138 
Total20,890 22,302 

15


ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read together with our condensed financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and our audited financial statements and related notes and our Annual Report on Form 10-K filed with the SEC on March 22, 2022. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. You should review the section titled “Special Note Regarding Forward-Looking Statements” for a discussion of forward-looking statements and the section titled “Risk Factors” for a discussion of factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Our historical results are not necessarily indicative of the results that may be expected for any period in the future, and our interim results are not necessarily indicative of the results we expect for the full calendar year or any other period.
16


Overview
thredUP is one of the world’s largest online resale platforms for women’s and kids’ apparel, shoes and accessories. Our mission is to inspire a new generation of consumers to think secondhand first. We believe in a sustainable fashion future and we are proud that our business model creates a positive impact to the benefit of our buyers, sellers, clients, employees, investors and the environment. Our custom-built operating platform consists of distributed processing infrastructure, proprietary software and systems and data science expertise. This platform is powering the rapidly emerging resale economy, one of the fastest growing sectors in retail, according to a GlobalData market survey conducted in April 2021.
thredUP’s proprietary operating platform is the foundation for our managed marketplace, where we have bridged online and offline technology to make the buying and selling of tens of millions of unique items easy and fun. The marketplace we have built enables buyers to browse and purchase resale items for primarily women’s and kids’ apparel, shoes and accessories across a wide range of price points. Buyers love shopping value, premium and luxury brands all in one place, at up to 90% off estimated retail price. Sellers love thredUP because we make it easy to clean out their closets and unlock value for themselves or for the charity of their choice while doing good for the planet. thredUP’s sellers order a Clean Out Kit, fill it and return it to us using our prepaid label. We take it from there and do the work to make those items available for resale.
In 2018, based on our success with consumers directly, we extended our platform to enable brands and retailers to participate in the resale economy. Some of the world’s leading brands and retailers are already taking advantage of our RaaS offering, which allows them to conveniently offer a scalable closet clean out service and/or resale shop to their customers. We believe RaaS will accelerate the growth of this emerging category and form the backbone of the modern resale experience domestically and internationally.
In October 2021, we closed the acquisition of Remix Global EAD (“Remix”), a fashion resale company headquartered in Sofia, Bulgaria, which further expands our reach to European customers. With this acquisition, we added a complementary operational infrastructure and an experienced management team to enable our expansion into Europe. In addition, Remix’s product assortment extends our resale offering to include men’s items and items sourced from a variety of supply channels, such as wholesale supply.
Recent Business Developments
Acquisition of Remix Global EAD
On July 24, 2021, we entered into Share Purchase Agreements with the shareholders of Remix to purchase 100% of the outstanding equity interests of Remix and its subsidiary. On October 7, 2021, we completed our acquisition of Remix.
COVID-19 Update
The COVID-19 pandemic has been and continues to be a complex and evolving situation. We continue to monitor the development of the pandemic, including the impact of the Omicron variant, the BA.2 subvariants and other SARS-CoV-2 viruses, federal, state and local government response, vaccination rates, the impact on our supply chain and the impact on our employees. We have prioritized the safety of our employees during the pandemic. In 2020, we shifted all of our corporate employees and contract engineers to a remote work model and implemented additional measures to better enable remote work. As of March 31, 2022, our remote work model remains largely in place.
Financial Impact
In the three months ended March 31, 2022, we experienced an increase in demand partially due to COVID-19 recovery and re-opening efforts. Gross margin and operating expenses were impacted due to rising labor, processing and other costs to support the demand
Impact on Processing at our Distribution and Processing Centers
17


COVID-19 and ongoing recovery also contributed to a tightened labor supply. We continue to face challenges in hiring and retaining employees. We have implemented compensation and benefits programs to attract potential employees and to improve employee retention. These programs caused, along with an inflationary labor market, higher Cost of Revenue and higher Operations, Product and Technology expenses and negatively impacted our results of operations.
We expect that the COVID-19 pandemic will continue to have an adverse impact on our business, results of operations and financial condition, including our revenue and cash flows in the short term. Due to the unpredictable nature of the pandemic, it is difficult to predict the long-term impact on our business. See the section titled “Risk Factors” in our Annual Report on Form 10-K filed with the SEC on March 22, 2022 for further discussion of the possible impact of the COVID-19 pandemic on our business, operations and financial condition.

18


Overview of First Quarter Results
Revenue: Total revenue was a record at $72.7 million, an increase of 31% year-over-year.
Gross Profit and Margin: Gross profit totaled $50.2 million representing growth of 26% year-over-year. Gross margin decreased by 224 basis points to 69% from 71% in the comparable quarter last year.
Net Loss: GAAP net loss was $20.7 million for the first quarter 2022, compared to a GAAP net loss of $16.2 million for the first quarter 2021.
Adjusted EBITDA: Adjusted EBITDA loss was $13.0 million, a negative 18% of revenue, compared to Adjusted EBITDA loss of $9.1 million for the first quarter 2021, a negative 16% of the first quarter 2021 revenue.
Active Buyers and Orders: Total first quarter of 2022 Active Buyers of 1.72 million and Orders of 1.64 million grew 33% and 45%, respectively, compared to the first quarter of 2021.
Key Financial and Operating Metrics
Our unaudited condensed consolidated financial statements were prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States (“U.S.”). We review a number of operating and financial metrics, including the following key business and Non-GAAP metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions. These key financial and operating metrics are set forth below for the periods presented.
Three Months Ended
March 31,
% Change
202220212022 vs 2021
(in thousands)
Active Buyers (as of period end)1,715 1,290 33 %
Orders1,640 1,128 45 %
Net loss$(20,708)$(16,171)28 %
Net loss margin(28)%(29)%%
Adjusted EBITDA loss(1)
$(12,963)$(9,119)42 %
Adjusted EBITDA margin(18)%(16)%(2)%
(1)See below for a reconciliation of Adjusted EBITDA to net loss.
Active Buyers
An Active Buyer is a thredUP buyer who has made at least one purchase in the last twelve months. A thredUP buyer is a customer who has created an account in our marketplace. A thredUP buyer is identified by a unique email address and a single person could have multiple thredUP accounts and count as multiple Active Buyers. The number of Active Buyers is a key driver of revenue for our marketplace and we expect the number of Active Buyers to increase over time.
Orders
Orders means the total number of orders placed by buyers across our marketplace, including through our RaaS clients, in a given period, net of cancellations. We expect Orders to increase over time.
19


Adjusted EBITDA
Adjusted EBITDA means net loss adjusted to exclude, where applicable in a given period, depreciation and amortization, stock-based compensation expense, acquisition and offering related expenses, interest expense, change in fair value of convertible preferred stock warrant liability, provision for income taxes and organizational alignment expenses. We use Adjusted EBITDA, a Non-GAAP metric, to evaluate and assess our operating performance and the operating leverage in our business, and for internal planning and forecasting purposes. We believe that Adjusted EBITDA, when taken collectively with our GAAP results, may be helpful to investors because it provides consistency and comparability with past financial performance and assists in comparisons with other companies, some of which use similar non-GAAP financial information to supplement their GAAP results.
The following table provides a reconciliation of net loss to Adjusted EBITDA (in thousands):
Three Months Ended
March 31,
20222021
Adjusted EBITDA Reconciliation:
GAAP Net loss$(20,708)$(16,171)
Depreciation and amortization3,271 2,038 
Stock-based compensation expense3,523 3,498 
Interest expense423 559 
Acquisition related expenses204 — 
Organizational alignment expenses311 — 
Change in fair value of convertible preferred stock warrant liability— 930 
Provision for income taxes13 27 
Non-GAAP Adjusted EBITDA$(12,963)$(9,119)

20


Results of Operations
The following table sets forth our results of operations for the periods presented:
Three Months Ended
March 31,
20222021
Revenue:(in thousands)
Consignment$47,435 $44,688 
Product25,260 10,992 
Total revenue72,695 55,680 
Cost of revenue:
Consignment10,049 10,832 
Product12,418 5,130 
Total cost of revenue22,467 15,962 
Gross profit50,228 39,718 
Operating expenses:
Operations, product and technology39,161 28,312 
Marketing16,978 15,446 
Sales, general and administrative14,664 10,638 
Total operating expenses70,803 54,396 
Operating loss(20,575)(14,678)
Interest expense(423)(559)
Other income (expense), net303 (907)
Loss before provision for income taxes(20,695)(16,144)
Provision for income taxes13 27 
Net loss$(20,708)$(16,171)
Net loss per share attributable to common stockholders, basic and diluted$(0.21)$(0.86)

Comparison of the Three Months Ended March 31, 2022 and 2021
Revenue
Three Months Ended
March 31,
Change
20222021Amount%
(in thousands, except percentages)
Consignment revenue$47,435 $44,688 $2,747 %
Product revenue25,260 10,992 14,268 130 %
Total revenue$72,695 $55,680 $17,015 31 %
Consignment revenue as a % of total revenue65 %80 %
Product revenue as a % of total revenue35 %20 %
The $17.0 million increase in total revenue represents a 31% increase in total revenue for the three months ended March 31, 2022, as compared to the three months ended March 31, 2021. This increase was primarily attributable to a 45% increase in Orders and growth in Active Buyers of 33% largely driven
21


by the addition of our European operations, offset by a 10% decrease in revenue per Order over the same period. The 10% decrease in revenue per Order was primarily due to lower revenue per Order for our European operations compared with our domestic operations.
Product revenue increased by 130% for the three months ended March 31, 2022, as compared to the three months ended March 31, 2021 and represented 35% of total revenue. This revenue increased primarily due to the introduction of our European operations, which is primarily product revenue, and a smaller increase in our domestic product revenue.
Cost of Revenue
Three Months Ended
March 31,
Change
20222021Amount%
(in thousands, except percentages)
Cost of consignment revenue$10,049 $10,832 $(783)(7)%
Cost of product revenue12,418 5,130 7,288 142 %
Total cost of revenue$22,467 $15,962 $6,505 41 %
Gross profit$50,228 $39,718 $10,510 26 %
Gross profit margin69 %71 %
Cost of revenue as a % of total revenue31 %29 %
Cost of consignment revenue as a % of total cost of revenue45 %68 %
Cost of product revenue as a % of total cost of revenue55 %32 %
Total cost of revenue as a percentage of total revenue was 31% for the three months ended March 31, 2022, an increase of 200 basis points from 29% for the three months ended March 31, 2021. This decrease in gross profit margin was primarily attributable to the addition of our European operations beginning in October 2021, which is primarily product sales with lower profit gross margin compared to our consignment sales.
Consignment sales result in higher gross profit margin than product sales because revenue for consignment sales is recognized net of seller payouts, whereas, for product sales, seller payouts are recognized as a component of cost of revenue, leading to different gross margin profiles between consignment sales and product sales.
Cost of Consignment Revenue
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Three Months Ended
March 31,
Change
20222021Amount%
(in thousands, except percentages)
Cost of consignment revenue
$10,049 $10,832 $(783)(7)%
As a percent of consignment revenue21 %24 %
Consignment gross margin79 %76 %
The $0.8 million decrease in cost of consignment revenue represents a 7% decrease in the cost of consignment revenue for the three months ended March 31, 2022 compared to the three months ended March 31, 2021.
The decrease in cost of consignment revenue for the three months ended March 31, 2022 was driven by the related costs outlined in the below table. Consignment gross margin increased 300 basis points to 79% for the three months ended March 31, 2022. Outbound shipping and packaging costs decreased mainly due to consolidation of our outbound shipping process across distribution centers.
Three Months Ended
March 31,
Change
20222021Amount%
(in thousands, except percentages)
Outbound shipping$6,617 $8,117 $(1,500)(18)%
Direct labor2,459 1,865 594 32 %
Packaging736 913 (177)(19)%
Other237 (63)300 *
Total cost of consignment revenue$10,049 $10,832 $(783)(7)%
* Not meaningful
Cost of Product Revenue
Three Months Ended
March 31,
Change
20222021Amount%
(in thousands, except percentages)
Cost of product revenue$12,418 $5,130 $7,288 142 %
As a percent of product revenue49 %47 %
Product gross margin51 %53 %
The $7.3 million increase in cost of product revenue represents a 142% increase in the cost of product revenue for the three months ended March 31, 2022 compared to the three months ended March 31, 2021.
The increase in cost of product revenue for the three months ended March 31, 2022 was primarily driven by higher product revenue and related costs outlined in the below table. Product gross margin decreased 200 basis points to 51% for the three months ended March 31, 2022.
The cost of product revenue increased by 142%, which was higher than the increase in product revenue, as our European operations currently have higher inventory costs, resulting in a relatively lower gross margin profile. The increase in outbound shipping from the addition of our European operations
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was offset by a decrease in outbound shipping for our domestic operations relative to the growth in revenues. We expect the gross margin profiles for product revenue to converge in the long-term as we integrate our European operations.
Three Months Ended
March 31,
Change