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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 June 30, 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)

Delaware26-4009181
(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 filerAccelerated 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 65,594,295 shares of Class A common stock, $0.0001 par value per share, and 34,487,761 shares of Class B common stock, $0.0001 par value per share, outstanding as of August 8, 2022.



TABLE OF CONTENTS

Page No.
PART I. FINANCIAL INFORMATION
Item 1.
Item 2.
Item 3.
Item 4.
PART II. FINANCIAL INFORMATION
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.

2

Table of Contents
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 as well as restructuring activities;
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, including the effects of foreign currency exchange rate fluctuations, increased inflation and changing consumer habits and general global economic uncertainty;
our ability to comply with laws and regulations;
the effect of uncertainties related to the ongoing global COVID-19 pandemic, including as a result of 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 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 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.
***
3

Table of Contents
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. and its consolidated subsidiaries.
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.
4

Table of Contents
PART I. FINANCIAL INFORMATION
Item 1.    Financial Statements
THREDUP INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

June 30,December 31,
20222021
(in thousands, except par value amounts)
ASSETS
Current assets:
Cash and cash equivalents$52,197 $84,550 
Marketable securities96,326 121,277 
Accounts receivable, net3,368 4,136 
Inventory, net13,941 9,825 
Other current assets11,862 8,625 
Total current assets177,694 228,413 
Operating lease right-of-use assets49,420 39,340 
Property and equipment, net84,045 55,466 
Goodwill11,312 12,238 
Intangible assets11,522 13,854 
Other assets11,905 11,515 
Total assets$345,898 $360,826 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$16,183 $13,336 
Accrued and other current liabilities48,590 45,253 
Seller payable22,564 19,125 
Operating lease liabilities, current5,014 3,931 
Current portion of long-term debt7,791 7,768 
Total current liabilities100,142 89,413 
Operating lease liabilities, non-current51,497 36,997 
Long-term debt, net of current portion
23,705 27,559 
Other non-current liabilities2,625 1,123 
Total liabilities177,969 155,092 
Commitments and contingencies (Note 11)
Stockholders’ equity:
Class A and B common stock, $0.0001 par value; 1,120,000 shares authorized as of June 30, 2022 and December 31, 2021; 99,953 and 98,435 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively
10 10 
Additional paid-in capital537,760 522,161 
Accumulated other comprehensive loss(5,391)(1,094)
Accumulated deficit(364,450)(315,343)
Total stockholders’ equity167,929 205,734 
Total liabilities and stockholders’ equity$345,898 $360,826 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5

Table of Contents
THREDUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

Three Months Ended
Six Months Ended
June 30,
June 30,
2022202120222021
(in thousands, except per share amounts)
Revenue:
Consignment$48,536 $48,597 $95,971 $93,285 
Product27,885 11,362 53,145 22,354 
Total revenue76,421 59,959 149,116 115,639 
Cost of revenue:
Consignment10,218 10,687 20,267 21,519 
Product13,555 5,140 25,973 10,270 
Total cost of revenue23,773 15,827 46,240 31,789 
Gross profit52,648 44,132 102,876 83,850 
Operating expenses:
Operations, product and technology43,961 31,062 83,122 59,374 
Marketing19,640 15,957 36,618 31,403 
Sales, general and administrative17,380 10,999 32,044 21,637 
Total operating expenses80,981 58,018 151,784 112,414 
Operating loss(28,333)(13,886)(48,908)(28,564)
Interest expense(238)(573)(661)(1,132)
Other income (expense), net181 93 484 (814)
Loss before provision for income taxes(28,390)(14,366)(49,085)(30,510)
Provision for income taxes9 13 22 40 
Net loss$(28,399)$(14,379)$(49,107)$(30,550)
Net loss per share, basic and diluted$(0.29)$(0.15)$(0.50)$(0.54)
Weighted-average shares used in computing net loss per share, basic and diluted99,331 94,435 98,979 56,777 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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THREDUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)

Three Months Ended
Six Months Ended
June 30,
June 30,
2022202120222021
(in thousands)
Net loss$(28,399)$(14,379)$(49,107)$(30,550)
Other comprehensive loss, net of tax:
Foreign currency translation adjustments(2,333) (3,041) 
Unrealized loss on available-for-sale debt securities(254)(36)(1,256)(36)
Total comprehensive loss$(30,986)$(14,415)$(53,404)$(30,586)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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THREDUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY
(Unaudited)
Convertible
Preferred Stock
Common StockAdditional Paid-in CapitalAccumulated Other Comprehensive LossAccumulated DeficitTotal Stockholders’ Equity
SharesAmountSharesAmount
(in thousands)
Balance as of December 31, 2021
 $ 98,435 $10 $522,161 $(1,094)$(315,343)$205,734 
Exercise of stock options334 — 754 754 
Stock-based compensation3,618 3,618 
Issuance of common stock to settle restricted stock units173 — — — 
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 
Exercise of stock options160 — 874 874 
Stock-based compensation10,353 10,353 
Issuance of common stock to settle restricted stock units685 — — — 
Issuance of common stock from employee stock purchase plan
166 — — — 
Other comprehensive loss(2,587)(2,587)
Net loss(28,399)(28,399)
Balance as of June 30, 2022
 $ 99,953 $10 $537,760 $(5,391)$(364,450)$167,929 

Convertible
Preferred Stock
Common StockAdditional Paid-in CapitalAccumulated Other Comprehensive LossAccumulated DeficitTotal Stockholders’ Equity (Deficit)
SharesAmountSharesAmount
(in thousands)
Balance as of December 31, 2020
65,971 $247,041 12,890 $1 $29,989 $ $(252,167)$(222,177)
Exercise of stock options1,458 — 1,875 1,875 
Stock-based compensation3,498 3,498 
Conversion of preferred stock warrants to Class B common stock warrants1,827 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 costs13,800 1 175,533 175,534 
Cashless exercise of common stock warrant25 — — — — 
Net loss(16,171)(16,171)
Balance as of March 31, 2021  94,144 9 459,756  (268,338)191,427 
Exercise of stock options525 — 959 959 
Stock-based compensation2,896 2,896 
Cashless exercise of common stock warrant104 — — 
Issuance of common stock to settle restricted stock units8 — — — 
Withholding taxes for the net share settlement of restricted stock units(1)— (29)(29)
Other comprehensive loss(36)(36)
Net loss(14,379)(14,379)
Balance as of June 30, 2021 $ 94,780 $9 $463,582 $(36)$(282,717)$180,838 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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THREDUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

Six Months Ended
June 30,
20222021
(in thousands)
Cash flows from operating activities:
Net loss$(49,107)$(30,550)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization6,678 3,899 
Stock-based compensation expense13,581 6,394 
Reduction in the carrying amount of right-of-use assets2,905 2,384 
Changes in fair value of convertible preferred stock warrants and others1,138 1,179 
Changes in operating assets and liabilities:
Accounts receivable, net682 278 
Inventory, net(4,703)(843)
Other current and non-current assets(4,799)(3,364)
Accounts payable1,954 2,716 
Accrued and other current liabilities749 8,171 
Seller payable3,465 2,985 
Operating lease liabilities2,602 (2,343)
Other non-current liabilities20 4 
Net cash used in operating activities(24,835)(9,090)
Cash flows from investing activities:
Purchase of marketable securities(3,475)(57,418)
Maturities of marketable securities26,294  
Purchase of property and equipment(27,583)(8,999)
Net cash used in investing activities(4,764)(66,417)
Cash flows from financing activities:
Proceeds from debt issuance 4,625 
Repayment of debt(4,000) 
Proceeds from issuance of Class A common stock, net of underwriting discounts and commissions 180,284 
Proceeds from stock issued under incentive and purchase plans, net of forfeitures
1,668 2,805 
Payment of costs for the initial public offering (3,633)
Net cash provided by (used in) financing activities(2,332)184,081 
Effect of exchange rate changes on cash and cash equivalents(521) 
Net (decrease) increase in cash, cash equivalents and restricted cash (32,452)108,574 
Cash, cash equivalents and restricted cash:
Beginning of period91,840 67,539 
End of period$59,388 $176,113 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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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 Sofia, Bulgaria; distribution centers in Pennsylvania, Georgia, Arizona and Bulgaria; and a processing center in Texas. 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 the United States ("U.S.") Generally Accepted Accounting Principles ("GAAP") 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 June 30, 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.
Reclassifications
Certain reclassifications were made to the prior period condensed consolidated statement of operations to conform to the current period presentation. The Company reclassified interest expense from Interest and other (expense) income, net to a separate line item within the condensed consolidated statements of operations.
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.
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Revenue from Loyalty Reward Redemption or Expiration
As of June 30, 2022 and December 31, 2021, the Company had a liability of $3.3 million and $4.0 million, respectively, related to the loyalty program which is included in accrued and other current liabilities within the Company’s condensed consolidated balance sheets. The Company recognized $2.5 million and $3.4 million of revenue from loyalty reward redemption or expiration for the three months ended June 30, 2022 and June 30, 2021, respectively, and $5.2 million and $6.7 million for the six months ended June 30, 2022 and June 30, 2021, respectively.
Net Loss Per Share
The Company follows the two-class method when computing net loss per 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 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 is the same as basic net loss per share , 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:

June 30,December 31,
20222021
(in thousands)
Cash and cash equivalents$52,197 $84,550 
Restricted cash, current660 560 
Restricted cash, non-current6,531 6,730 
Total cash, cash equivalents and restricted cash$59,388 $91,840 

Restricted cash, non-current of $6.5 million and $6.7 million is included in the other assets in the condensed consolidated balance sheets as of June 30, 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 within the Company’s condensed consolidated financial statements on a recurring basis (at least annually). As of June 30, 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 within the Company’s condensed 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.
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.
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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
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. The Company does not expect that the adoption of this standard will have a material impact on its condensed consolidated financial statements.
3. Financial Instruments and Fair Value Measurements
The following tables provide information about the Company’s financial instruments that are measured at fair value on a recurring basis and indicate the fair value hierarchy of the valuation techniques utilized to determine such values:

Fair Value as of June 30, 2022
Level 1Level 2Level 3Total
(in thousands)
Assets:
Cash equivalents:
Money market funds
$11,157 $ $ $11,157 
Commercial paper 9,590  9,590 
Total cash equivalents11,157 9,590  20,747 
Marketable securities:
Corporate debt securities
35,725   35,725 
U.S. treasury securities30,131   30,131 
Commercial paper
 2,399  2,399 
U.S. government agency bonds28,071   28,071 
Total marketable securities93,927 2,399  96,326 
Total$105,084 $11,989 $ $117,073 

Fair Value as of December 31, 2021
Level 1Level 2Level 3Total
(in thousands)
Assets:
Cash equivalents:
Money market fund$41,376 $ $ $41,376 
Commercial paper 12,098  12,098 
Total cash equivalents41,376 12,098  53,474 
Marketable securities:
Corporate debt securities55,921   55,921 
U.S. treasury securities37,190   37,190 
U.S. government agency bonds28,166   28,166 
Total marketable securities121,277   121,277 
Total$162,653 $12,098 $ $174,751 

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The following tables summarize the cost or amortized cost, gross unrealized gains, gross unrealized losses and fair value of the marketable securities as of June 30, 2022 and December 31, 2021:

June 30, 2022
Cost or Amortized CostUnrealizedFair Value
GainsLosses
(in thousands)
Corporate debt securities$36,319 $ $(594)$35,725 
U.S. treasury securities30,625  (494)30,131 
Commercial paper
2,399   2,399 
U.S. government agency bonds28,604 1 (534)28,071 
Total$97,947 $1 $(1,622)$96,326 

December 31, 2021
Cost or Amortized CostUnrealizedFair Value
GainsLosses
(in thousands)
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 June 30, 2022 and December 31, 2021, the amortized cost of the Company’s cash equivalents approximated 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 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 six months ended June 30, 2022. As of June 30, 2022, of the $96.3 million carrying amount of marketable securities, $78.7 million had a contractual maturity date of less than one year and $17.6 million had a contractual maturity date between one to two years.
4. Property and Equipment, Net
Property and equipment, net consists of the following:

June 30,December 31,
20222021
(in thousands)
Property and equipment$110,018 $76,028 
Less: accumulated depreciation and amortization(25,973)(20,562)
Property and equipment, net$84,045 $55,466 

Depreciation and amortization expense of property and equipment was $2.8 million and $1.9 million for the three months ended June 30, 2022 and June 30, 2021, respectively, and $5.4 million and $3.9 million for the six months ended June 30, 2022 and June 30, 2021, respectively.
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5. Goodwill and Other Intangible Assets
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 $11.3 million as of June 30, 2022 and $12.2 million as of December 31, 2021. The change is due to foreign currency translation adjustments.
The gross carrying amounts and accumulated amortization of the intangible assets with determinable lives are as follows:

As of June 30, 2022
Amortization Period
Gross carrying amountAccumulated
amortization
Carrying amount, net
(in years)
(in thousands)
Customer relationships8$4,697 $(428)$4,269 
Developed technology34,426 (1,075)3,351 
Trademarks94,246 (344)3,902 
Total$13,369 $(1,847)$11,522 

As of December 31, 2021
Amortization Period
Gross carrying amountAccumulated
amortization
Carrying amount, net
(in years)
(in thousands)
Customer relationships8$5,092 $(150)$4,942 
Developed technology34,798 (373)4,425 
Trademarks94,602 (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 $0.6 million and zero for the three months ended June 30, 2022 and June 30, 2021, respectively, and $1.3 million and zero for the six months ended June 30, 2022 and June 30, 2021, respectively.
6. Balance Sheet Components
Inventories consist of the following:

June 30,
December 31,
2022
2021
(in thousands)
Finished goods$11,939 $8,247 
Raw materials1,416 908 
Work in progress586 670 
Total
$13,941 $9,825 

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Accrued and other current liabilities consist of the following:

June 30,December 31,
2022
2021
(in thousands)
Gift card and site credit liabilities$15,191 $13,223 
Accrued vendor liabilities10,580 6,031 
Allowance for returns5,860 6,209 
Accrued compensation5,572 6,438 
Deferred revenue5,277 5,878 
Accrued taxes4,822 5,728 
Accrued other1,288 1,746 
Total
$48,590 $45,253 

7. Lease Agreements
The Company’s operating lease expense was $2.5 million and $1.8 million for the three months ended June 30, 2022 and June 30, 2021, respectively, and $4.9 million and $3.9 million for the six months ended June 30, 2022 and June 30, 2021, respectively.
Future maturities of operating lease liabilities were as follows as of June 30, 2022:

Amount
(in thousands)
2022$5,659 
20239,611 
20248,667 
20257,864 
20267,509 
Thereafter35,927 
Total lease payments75,237 
Less: imputed interest(17,275)
Less: tenant improvement allowance yet to be received(1,451)
Total lease liabilities56,511 
Less: current lease liabilities(5,014)
Total non-current lease liabilities$51,497 

In December 2021, the Company entered into a ten-year agreement to lease a distribution center in Sofia, Bulgaria. The leased property, which contains both logistics and office areas, is divided into three stages of delivery. The base rent and maintenance for the first stage, commenced in March 2022, was approximately €6.1 million, or $6.4 million translated at the June 30, 2022 spot rate, over the life of the lease. The base rent and maintenance for the second stage, commenced in May 2022, was approximately €6.0 million, or $6.3 million translated at the June 30, 2022 spot rate, over the life of the lease. The targeted commencement date for the third stage is June 2023.
In January 2022, the Company entered into a ten-year agreement to lease office space in Sofia, Bulgaria and the leased property was delivered in the second quarter of 2022. The base rent, parking and maintenance was approximately €5.0 million, or $5.2 million, translated at the June 30, 2022 spot rate.
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8. Long-Term Debt
In February 2019, the Company entered into a loan and security agreement (“Term Loan”) with Western Alliance Bank for an aggregate amount of up to $40.0 million to refinance its prior loan and security agreement with Silicon Valley Bank. As of December 31, 2021, the amended interest rate on the Term Loan was the prime rate published in The Wall Street Journal plus a margin of 1.5%, with a floor of 5.50%. The Term Loan was amended five times before December 31, 2021.
As of June 30, 2022, the nominal interest rate was 6.25% and the effective interest rate was 6.65%. As of June 30, 2022 and December 31, 2021, the Company was in compliance with its debt covenants under the Term Loan.
During the six months ended June 30, 2022, the Company repaid a total of $4.0 million on amounts outstanding under the Term Loan. During the six months ended June 30, 2021, the Company did not make any repayments on amounts outstanding under the Term Loan. As of June 30, 2022 and December 31, 2021, the amount outstanding under the Term Loan was $32.0 million and $36.0 million, respectively.
During the three months ended June 30, 2022 and June 30, 2021, the Company recognized $0.2 million and $0.6 million, respectively, of interest expense relating to the Term Loan. During the six months ended June 30, 2022 and June 30, 2021, the Company recognized $0.7 million and $1.1 million, respectively, of interest expense relating to the Term Loan.
As of June 30, 2022, future annual scheduled principal payments of the Term Loan were as follows:

Amount
(in thousands)
2022
$4,000 
20238,000 
202420,000 
Thereafter 
Total future principal32,000 
Less: unamortized debt discount(504)
Less: current portion of long-term debt(7,791)
Non-current portion of long-term debt$23,705 

On July 14, 2022, the Term Loan was amended. Refer to Note 14, Subsequent Events, for additional information.
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 June 30, 2022.

As of June 30, 2022
AuthorizedIssued and Outstanding
(in thousands)
Class A common stock
1,000,000 65,465 
Class B common stock
120,000 34,488 
Total common stock1,120,000 99,953 

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.
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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. The Company recognized $0.2 million and $0.2 million in stock-based compensation expense related to the ESPP for the three months ended June 30, 2022 and June 30, 2021, respectively, and $0.4 million and $0.2 million for the six months ended June 30, 2022 and June 30, 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 four 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 period. During the six months ended June 30, 2022, the Company granted 9,444,468 shares of RSUs with a weighted average grant date fair value at $7.43 under the 2021 Plan.
Stock-Based Compensation
Total stock-based compensation expense by department is as follows:

Three Months Ended
Six Months Ended
June 30,
June 30,
2022202120222021
(in thousands)
Operations, product and technology $3,970 $984 $5,362 $2,334 
Marketing1,226 289 1,559 726 
Sales, general and administrative4,862 1,623 6,660 3,334 
Total stock-based compensation expense$10,058 $2,896 $13,581 $6,394 

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.
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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 and six months ended June 30, 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 consists solely of certain state income taxes.
13. Net Loss Per Share
The following participating securities have been excluded from the computation of diluted net loss per share for the periods presented, because including them would have been anti-dilutive:

As of June 30,
2022
2021
(in thousands)
Outstanding stock options18,514 21,600 
Restricted stock units9,285 218 
Delayed share issuance related to acquisition131  
Employee stock purchase plan59 101 
Total27,989 21,919 

14. Subsequent Events
On July 14, 2022, (the “Closing Date”), the Company entered into a Second Amended and Restated Loan and Security Agreement (the “Second Amended Term Loan”), which amends and restates the Term Loan to, among other things, increase the aggregate borrowing ability to $70.0 million, reduce the applicable margin for borrowings under the Term Loan to the prime rate published in The Wall Street Journal plus a margin of 1.25%, with a floor of 6.00%, and extend the maturity date of the outstanding Term Loan to July 14, 2027. The Second Amended Term Loan contains several financial covenants, including cash availability and cash holding requirements, minimum revenue amounts and, beginning in the first quarter of fiscal year 2025, a minimum Fixed Charge Coverage Ratio.
The Second Amended Term Loan provides for an aggregate principal amount of $70.0 million of term loans, to be made available as either the “Term A Loan” or “Term B Loan.” The Term A Loan is for an aggregate principal amount of $32.0 million and was fully advanced on the Closing Date to refinance the outstanding obligations under the Term Loan. The Term B Loan is for an aggregate principal amount of $38.0 million. The Term B Loan is available to be drawn by the Company through the four-year anniversary of the Closing Date to finance the purchase price of eligible equipment purchased by the Company.
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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.
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 2021, we completed our acquisition of Remix Global EAD (“Remix”), a fashion resale company based in Sofia, Bulgaria. With this acquisition, we further expanded our reach to European customers, added a complementary operational infrastructure and added an experienced management team to enable our expansion into Europe. In addition, Remix’s product assortment extended our resale offering to include men’s items and items sourced from a variety of supply channels, such as wholesale supply.
Recent Business Developments
COVID-19 Update
The ongoing development of the COVID-19 pandemic has continued to impact our business, primarily driven by the emergence of new variants and related subvariants. Our performance was adversely affected by market instability, supply chain disruptions, labor challenges caused by the pandemic and the U.S. government response to the COVID-19 pandemic, including the absence of any economic stimulus in 2022. We are actively engaging with our customers and are continuing to take measures to protect the health and safety of our employees. As of June 30, 2022, our remote work model remains largely in place.
The long-term impact of COVID-19 on our operations and financial performance remains uncertain and will depend on various unpredictable factors, including the duration of the pandemic, potential subsequent waves of COVID-19 infection or potential new variants, the effectiveness of COVID-19 vaccines and treatments and government actions to prevent and manage disease spread. The long-term impact of the pandemic on demand and supply for our products and services is also difficult to predict, but could negatively affect our future results and performance.
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Financial Impact
In the six months ended June 30, 2022, we experienced an increase in consumer demand partially due to the reduced severity of the COVID-19 pandemic and shift in consumer and lifestyle patterns. Gross margin and operating expenses were impacted due to rising labor, processing and other costs to support the consumer demand experienced to date.
Impact on Processing at our Distribution and Processing Centers
The COVID-19 pandemic and the ongoing recovery also contributed to a tightened labor supply. We continue to face challenges in hiring and retaining employees in our distribution and processing centers. 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.
Inflation
The Russia-Ukraine conflict and other geopolitical conflicts, as well as the related international response, have exacerbated inflationary pressures during the pandemic. We continue to actively monitor, evaluate and respond to developments relating to operational challenges in an inflationary environment. Global supply chain disruptions and the higher inflationary environment remain unpredictable and our past results may not be indicative of future performance.
Foreign Currency
In recent months, the U.S. dollar has been appreciating against major European currencies, including the Bulgarian Lev, for both economic and geopolitical reasons. A strengthening U.S. dollar will have a negative impact on our consolidated sales. We are managing the currency risk related to earnings through natural hedges and have offsetting costs relating to operating our business and a regional source of supply. Therefore, changes to exchange rates have not had a significant impact to our earnings. We continue to monitor our foreign exchange exposure as we grow our business globally. For further details, please refer to "Foreign Currency Exchange Rate Risk" in Part I, Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Restructuring
In June 2022, we restructured certain back-office functions to improve efficiencies and to reduce overhead costs. In addition, we closed our processing center in Tennessee and consolidated its operations into our distribution center in Texas, which is under construction. These and future restructuring activities are expected to provide future growth and efficiency benefits; however, the actual results may differ.
Overview of Second Quarter Results
Revenue: Total revenue was a record at $76.4 million, an increase of 27% year-over-year.
Gross Profit and Margin: Gross profit totaled $52.6 million representing growth of 19% year-over-year. Gross margin decreased by 471 basis points to 69% from 74% in the comparable quarter last year.
Net Loss: GAAP net loss was $28.4 million, or a negative 37% of revenue, for the second quarter of 2022, compared to a GAAP net loss of $14.4 million for the second quarter 2021.
Adjusted EBITDA: Adjusted EBITDA loss was $13.5 million, or negative 18% of revenue for the second quarter of 2022, compared to an Adjusted EBITDA loss of $9.0 million for the second quarter of 2021, or negative 15% of the revenue for the second quarter of 2021.
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Active Buyers and Orders: Active Buyers totaled 1.72 million and Orders totaled 1.70 million in the second quarter of 2022, representing growth of 29% and 40%, respectively, compared to the second quarter of 2021.
Key Financial and Operating Metrics
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
Six Months Ended
June 30,
June 30,
20222021
Change
20222021
Change
(in thousands, except percentages and basis points)
Active Buyers (as of period end)1,724 1,341 29 %1,724 1,341 29 %
Orders1,704 1,218 40 %3,344 2,346 43 %
Net loss$(28,399)$(14,379)(98)%$(49,107)$(30,550)(61)%
Net loss margin(37)%