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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, 2023
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
https://cdn.kscope.io/0fe1b62fff2ad360219d140107ca9b45-thredUP_Wordmark_RGB_Black.jpg
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, California
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 shareTDUP
The Nasdaq Stock Market LLC
Long-Term Stock Exchange

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 filerSmaller 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  
There were 72,605,495 shares of Class A common stock and 30,484,786 shares of Class B common stock outstanding as of May 2, 2023.



TABLE OF CONTENTS
Page Number
PART I. FINANCIAL INFORMATION
Item 1.
Item 2.
Item 3.
Item 4.
PART II. OTHER 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 as 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, inflationary pressures, increased interest rates, changing consumer habits and general global economic uncertainty;
our ability to comply with applicable laws and regulations;
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 Part I, Item 1A, Risk Factors, of our Annual Report on Form 10-K for the year ended December 31, 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.
***
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.
3

Table of Contents
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 marketplaces.
4

Table of Contents
PART I. FINANCIAL INFORMATION
Item 1.    Financial Statements
THREDUP INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31,
2023
December 31,
2022
(in thousands, except par value amounts)
ASSETS
Current assets:
Cash and cash equivalents$50,739 $38,029 
Marketable securities42,733 66,902 
Accounts receivable, net4,232 4,669 
Inventory20,933 17,519 
Other current assets6,338 7,076 
Total current assets124,975 134,195 
Operating lease right-of-use assets45,180 46,153 
Property and equipment, net95,806 92,482 
Goodwill11,805 11,592 
Intangible assets10,044 10,499 
Other assets6,960 7,027 
Total assets$294,770 $301,948 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$12,747 $7,800 
Accrued and other current liabilities47,976 50,155 
Seller payable17,868 16,166 
Operating lease liabilities, current5,792 6,413 
Current portion of long-term debt3,882 3,879 
Total current liabilities88,265 84,413 
Operating lease liabilities, non-current47,521 48,727 
Long-term debt, net of current portion24,831 25,788 
Other non-current liabilities3,066 3,019 
Total liabilities163,683 161,947 
Commitments and contingencies (Note 10)
Stockholders’ equity:
Class A and B common stock, $0.0001 par value; 1,120,000 shares authorized as of March 31, 2023 and December 31, 2022; 102,836 and 101,532 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively
10 10 
Additional paid-in capital561,577 551,852 
Accumulated other comprehensive loss(3,080)(4,234)
Accumulated deficit(427,420)(407,627)
Total stockholders’ equity131,087 140,001 
Total liabilities and stockholders’ equity$294,770 $301,948 
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
March 31,
2023
March 31,
2022
(in thousands, except per share amounts)
Revenue:
Consignment$46,479 $47,435 
Product29,443 25,260 
Total revenue75,922 72,695 
Cost of revenue:
Consignment9,220 10,049 
Product15,609 12,418 
Total cost of revenue24,829 22,467 
Gross profit51,093 50,228 
Operating expenses:
Operations, product, and technology38,347 39,161 
Marketing16,870 16,978 
Sales, general, and administrative16,059 14,664 
Total operating expenses71,276 70,803 
Operating loss(20,183)(20,575)
Interest expense77 423 
Other income, net(476)(303)
Loss before provision for income taxes(19,784)(20,695)
Provision for income taxes9 13 
Net loss$(19,793)$(20,708)
Loss per share, basic and diluted$(0.19)$(0.21)
Weighted-average shares used in computing loss per share, basic and diluted101,984 98,624 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6

Table of Contents
THREDUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
Three Months Ended
March 31,
2023
March 31,
2022
(in thousands)
Net loss$(19,793)$(20,708)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments544 (708)
Unrealized gain (loss) on available-for-sale securities610 (1,002)
Total other comprehensive income (loss)1,154 (1,710)
Total comprehensive loss$(18,639)$(22,418)
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7

Table of Contents
THREDUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
Common Stock
SharesAmountAdditional Paid-in CapitalAccumulated Other Comprehensive LossAccumulated DeficitTotal Stockholders’ Equity
(in thousands)
Balance as of December 31, 2022101,532 $10 $551,852 $(4,234)$(407,627)$140,001 
Issuance of common stock from exercise of stock options and restricted stock units1,484 — 275 275 
Stock-based compensation9,720 9,720 
Shares withheld related to net share settlement(180)— (270)(270)
Net income(19,793)(19,793)
Other comprehensive income1,154 1,154 
Balance as of March 31, 2023102,836 10 561,577 (3,080)(427,420)131,087 
Common Stock
SharesAmountAdditional Paid-in CapitalAccumulated Other Comprehensive LossAccumulated DeficitTotal Stockholders’ Equity
(in thousands)
Balance as of December 31, 202198,435 $10 $522,161 $(1,094)$(315,343)$205,734 
Issuance of common stock from exercise of stock options and restricted stock units507 — 754 754 
Stock-based compensation3,618 3,618 
Net income(20,708)(20,708)
Other comprehensive loss(1,710)(1,710)
Balance as of March 31, 202298,942 10 526,533 (2,804)(336,051)187,688 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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THREDUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31,
2023
March 31,
2022
(in thousands)
Cash flows from operating activities:
Net loss$(19,793)$(20,708)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization3,681 3,271 
Stock-based compensation expense9,391 3,523 
Reduction in carrying amount of right-of-use assets1,207 1,398 
Other41 481 
Changes in operating assets and liabilities:
Accounts receivable, net1,010 1,143 
Inventory(3,157)(2,313)
Other current and non-current assets22 (2,162)
Accounts payable4,102 1,601 
Accrued and other current liabilities(1,851)4,912 
Seller payable1,696 1,521 
Operating lease liabilities(2,062)539 
Other non-current liabilities1,255 115 
Net cash used in operating activities(4,458)(6,679)
Cash flows from investing activities:
Maturities of marketable securities24,579 4,726 
Purchases of property and equipment(5,679)(12,638)
Net cash provided by (used in) investing activities18,900 (7,912)
Cash flows from financing activities:
Repayment of debt(1,000)(2,000)
Proceeds from exercise of stock options and employee stock purchase plan446 965 
Payment of withholding taxes on stock-based awards(638)(156)
Net cash used in financing activities(1,192)(1,191)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash(540)(172)
Net change in cash, cash equivalents, and restricted cash12,710 (15,954)
Cash, cash equivalents, and restricted cash, beginning of period44,051 91,840 
Cash, cash equivalents, and restricted cash, end of period$56,761 $75,886 
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 operates a large resale platform that enables consumers to buy and sell primarily secondhand apparel, shoes, and accessories.
2. Significant Accounting Policies
Basis of Presentation and Use of Estimates
The accompanying unaudited 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 accordance 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, breakage on loyalty points and rewards and gift cards, 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, 2023, 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 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 10-K”).
Reclassifications
Certain reclassifications were made to the prior period condensed consolidated statement of cash flows to conform to the current period presentation.
Recently Adopted Accounting Pronouncements
In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU changes the impairment model for most financial assets, requiring the use of an expected loss model which requires entities to estimate the lifetime expected credit loss on financial assets measured at amortized cost. Such credit losses will be recorded as an allowance to offset the amortized cost of the financial asset, resulting in a net presentation of the amount expected to be collected on the financial asset. In addition, credit losses relating to available-for-sale debt securities will now be recorded through an allowance for credit losses rather than as a direct write-down to the security. This standard is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The adoption of this guidance during the first quarter of 2023 did not have a material impact on the Company’s condensed consolidated financial statements.
Revenue from Loyalty Reward Redemption and Expiration
As of March 31, 2023 and December 31, 2022, the Company had a liability of $3.3 million and $3.3 million, respectively, related to its customer loyalty program, which is included in accrued and other current liabilities within the Company’s condensed consolidated balance sheets. The Company recognized revenue from loyalty reward redemption of $2.1 million and $2.7 million for the three months ended March 31, 2023 and 2022, respectively.
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Gift Cards and Site Credits
The Company sells thredUP gift cards on its e-commerce website. thredUP gift cards do not expire or lose value over periods of inactivity. The Company accounts for gift cards by recognizing a gift card liability at the time a gift card is delivered to the customer. As of March 31, 2023 and December 31, 2022, $10.8 million and $10.9 million of gift card liability, respectively, was included in accrued and other current liabilities within the Company’s condensed consolidated balance sheets. Revenue from gift cards is generally recognized when the gift cards are redeemed by the customer and amounted to $0.5 million and $0.3 million for the three months ended March 31, 2023 and 2022, respectively.
The Company issues site credits for order refunds. Site credits can be applied toward future charges but may not be converted into cash. Site credits may also be converted to thredUP gift cards after one year at the discretion of the Company. These credits are recognized as revenue when used. As of March 31, 2023 and December 31, 2022, $6.3 million and $7.2 million, respectively, of such customer site credits were included in accrued and other current liabilities within the Company’s condensed consolidated balance sheets. Revenue recognized from the redemption of site credits was $9.4 million and $11.0 million for the three months ended March 31, 2023 and 2022, respectively.
The Company recognizes breakage revenue when it determines that the redemption of gift cards and site credits is remote. Breakage was not material for the three months ended March 31, 2023 and 2022.
Cash, Cash Equivalents and Restricted Cash
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Company’s condensed consolidated balance sheets that sum to the total of the same such amounts shown in the Company’s condensed consolidated statements of cash flows:
March 31,
2023
December 31,
2022
(in thousands)
Cash and cash equivalents$50,739 $38,029 
Restricted cash included in Other current assets475 383 
Restricted cash included in Other assets5,547 5,639 
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows$56,761 $44,051 
Fair Value Measurements
The Company applies the provisions of FASB ASC Topic 820, Fair Value Measurements and Disclosures, for its financial and non-financial assets and liabilities. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair value into three broad levels as follows:
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.
Level 2 inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Level 3 inputs are unobservable inputs for the asset or liability.
The Company measures certain assets and liabilities at fair value as discussed throughout the notes to its condensed consolidated financial statements. As of March 31, 2023 and December 31, 2022, the carrying amounts of the Company’s accounts receivable, other current assets, other assets, accounts payable, seller payable and accrued and other current liabilities approximated their estimated fair values due to their relatively short maturities. Management believes the terms of its long-term variable-rate debt reflect current market conditions for an instrument with similar terms and maturity, and as such, the carrying value of the Company’s long-term debt approximated its fair value as of March 31, 2023 and December 31, 2022.
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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 as of March 31, 2023 and December 31, 2022:
March 31, 2023
Level 1Level 2Level 3Total
(in thousands)
Assets:
Cash equivalents:
Money market funds$10,052 $ $ $10,052 
Commercial paper 21,062  21,062 
U.S. government agency discount notes2,992   2,992 
Total cash equivalents13,044 21,062  34,106 
Marketable securities:
Corporate debt securities13,505   13,505 
U.S. treasury securities12,322   12,322 
U.S. government agency bonds16,906   16,906 
Total marketable securities42,733   42,733 
Total assets at fair value$55,777 $21,062 $ $76,839 
December 31, 2022
Level 1Level 2Level 3Total
(in thousands)
Assets:
Cash equivalents:
Money market funds$1,110 $ $ $1,110 
Commercial paper 14,460  14,460 
Total cash equivalents1,110 14,460  15,570 
Marketable securities:
Corporate debt securities25,488   25,488 
U.S. treasury securities19,176   19,176 
U.S. government agency bonds22,238   22,238 
Total marketable securities66,902   66,902 
Total assets at fair value$68,012 $14,460 $ $82,472 
The following tables summarize the cost, gross unrealized gains, gross unrealized losses and fair value of the marketable securities as of March 31, 2023 and December 31, 2022:
March 31, 2023
Cost or Amortized CostUnrealizedFair Value
GainsLosses
(in thousands)
Corporate debt securities$13,568 $ $(63)$13,505 
U.S. treasury securities12,501  (179)12,322 
U.S. government agency bonds17,138  (232)16,906 
Total$43,207 $ $(474)$42,733 
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December 31, 2022
Cost or Amortized CostUnrealizedFair Value
GainsLosses
(in thousands)
Corporate debt securities$25,774 $ $(286)$25,488 
U.S. treasury securities19,531  (355)19,176 
U.S. government agency bonds22,679  (441)22,238 
Total$67,984 $ $(1,082)$66,902 
As of March 31, 2023 and December 31, 2022, 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 the Company’s marketable securities, which were all classified as available-for-sale, 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 determined that the declines in the fair value of its marketable securities were not driven by credit-related factors. During the three months ended March 31, 2023 and 2022, the Company did not recognize any losses on its marketable securities due to credit-related factors.
The Company’s money market funds, corporate debt securities, U.S. treasury securities, U.S. government agency bonds, and U.S. government agency discount notes were valued using Level 1 inputs because they are valued using quoted prices in active markets.
The Company’s commercial paper is valued using Level 2 inputs because it is 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, 2023. As of March 31, 2023, all of the $42.7 million carrying amount of marketable securities, all had a contractual maturity date of less than one year.
4. Property and Equipment, Net
Property and equipment, net consisted of the following:
March 31,
2023
December 31,
2022
(in thousands)
Property and equipment$130,819 $124,412 
Less: accumulated depreciation and amortization(35,013)(31,930)
Property and equipment, net$95,806 $92,482 
Depreciation and amortization expense of property and equipment was $3.0 million and $2.6 million for the three months ended March 31, 2023 and 2022, respectively.
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 reviewed for impairment at least annually, absent any interim indicators of impairment. Goodwill was $11.8 million and $11.6 million as of March 31, 2023 and December 31, 2022, respectively. The increase in goodwill during the three months ended March 31, 2023 was due to foreign currency translation adjustments.
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The gross carrying amounts and accumulated amortization of the Company’s intangible assets with determinable lives as of March 31, 2023 and December 31, 2022 were as follows:
March 31, 2023
Amortization PeriodGross Carrying AmountAccumulated AmortizationNet Carrying Amount
(in years)(in thousands)
Customer relationships8$4,902 $(907)$3,995 
Developed technology34,619 (2,278)2,341 
Trademarks94,436 (728)3,708 
Total$13,957 $(3,913)$10,044 
December 31, 2022
Amortization PeriodGross Carrying AmountAccumulated AmortizationNet Carrying Amount
(in years)(in thousands)
Customer relationships8$4,814 $(742)$4,072 
Developed technology34,536 (1,864)2,672 
Trademarks94,351 (596)3,755 
Total$13,701 $(3,202)$10,499 
The changes in the gross carrying amounts were due to foreign currency translation adjustments.
Amortization expense related to developed technology, customer relationships, and trademarks is recorded within operations, product, and technology; sales, general, and administrative; and marketing expense, respectively, within the Company’s condensed consolidated statements of operations. Amortization expense of intangible assets with determinable lives was $0.6 million and $0.7 million for the three months ended March 31, 2023 and 2022, respectively.
6. Balance Sheet Components
Inventories consisted of the following:
March 31,
2023
December 31,
2022
(in thousands)
Work in process$2,432 $2,639 
Finished goods18,501 14,880 
Total$20,933 $17,519 
Work in process inventory relates to items that are currently undergoing preparation for sale, including itemization, cleaning, and repair.
Accrued and other current liabilities consisted of the following:
March 31,
2023
December 31,
2022
(in thousands)
Gift card and site credit liabilities$17,093 $18,101 
Accrued vendor liabilities8,936 9,116 
Deferred revenue6,398 7,582 
Accrued compensation4,459 4,993 
Allowance for returns4,779 4,907 
Accrued taxes4,195 4,326 
Accrued other2,116 1,130 
Total$47,976 $50,155 
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7. 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. The Company incurred an immaterial amount of debt issuance costs in connection with the Term Loan. The debt issuance costs are recorded on the Company’s condensed consolidated balance sheets and are being amortized over the life of the Term Loan using the effective-interest method.
The Term Loan was subsequently amended several times, with the most recent amendment taking place in July 2022. As amended, the Term Loan matures on July 14, 2027 and provides for an aggregate borrowing amount of up to $70.0 million, which bears interest at the prime rate published in the Wall Street Journal plus a margin of 1.25%, with a floor of 6.00%. The Company incurred an immaterial amount of debt issuance costs in connection with the amendment. For accounting purposes, pursuant to FASB ASC Topic 470, Debt, this transaction was accounted for as a modification of the Term Loan. The debt issuance costs were recognized in interest expense within the Company’s condensed consolidated statement of operations during the third quarter of 2022.
The Term Loan requires the Company to comply with certain financial covenants, including, among other things, liquidity requirements, minimum cash deposits with Western Alliance bank, performance metrics, and a debt service coverage ratio. The Term Loan also contains affirmative and negative covenants customary for financings of this type, including, among other things, limitations or prohibitions on repurchasing common shares, declaring and paying dividends and other distributions, redeeming and repurchasing certain other indebtedness, loans and investments, additional indebtedness, liens, mergers, asset sales and transactions with affiliates. In addition, the Term Loan contains customary events of default. As of March 31, 2023 and December 31, 2022, the Company was in compliance with its debt covenants under the Term Loan.
The Term Loan is payable in consecutive monthly installments. Interest is due monthly on amounts outstanding under the Term Loan. The Company is also permitted to make voluntary prepayments without penalty or premium at any time.
As of March 31, 2023 and December 31, 2022, the effective interest rate for borrowings under the Term Loan was 10.22% and 9.70%, respectively.
During the three months ended March 31, 2023, the Company did not make any borrowings under the Term Loan and repaid a total of $1.0 million on amounts outstanding under the Term Loan. During the three months ended March 31, 2022, the Company did not make any borrowings under the Term Loan and repaid a total of $2.0 million on amounts outstanding under the Term Loan. As of March 31, 2023 and December 31, 2022, the amount outstanding under the Term Loan was $29.3 million and $30.3 million, respectively.
During the three months ended March 31, 2023 and 2022, the Company incurred $0.7 million and $0.6 million, respectively, of interest costs relating to the Term Loan, of which $0.6 million and $0.1 million, respectively, was capitalized as part of an asset.
As of March 31, 2023, annual scheduled principal payments of the Term Loan were as follows:
Amount
(in thousands)
2023$3,000 
20244,000 
20254,000 
20264,000 
202714,333 
Total principal payments29,333 
Less: unamortized debt discount(620)
Less: current portion of long-term debt(3,882)
Non-current portion of long-term debt$24,831 
8. Common Stock and Stockholders’ Equity
Each share of Class A common stock is entitled to one vote per share. Each share of Class B common stock is entitled to ten votes per share and is convertible at any time into one share of Class A common stock.
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The table below summarizes the Class A common stock and Class B common stock authorized, issued and outstanding as of March 31, 2023 and December 31, 2022:
March 31, 2023
AuthorizedIssued and Outstanding
(in thousands)
Class A common stock1,000,000 72,351 
Class B common stock120,000 30,485 
Total1,120,000 102,836 
December 31, 2022
AuthorizedIssued and Outstanding
(in thousands)
Class A common stock1,000,000 70,723 
Class B common stock120,000 30,809 
Total1,120,000 101,532 
Accumulated Other Comprehensive Loss
The following table summarizes changes in accumulated other comprehensive loss by component during the three months ended March 31, 2023 and 2022:
Change in Accumulated Other Comprehensive Loss by Component
Three Months Ended
March 31,
2023
March 31,
2022
Foreign Currency Translation AdjustmentsUnrealized Gain (Loss) on Available-For-Sale SecuritiesTotalForeign Currency Translation AdjustmentsUnrealized Loss on Available-For-Sale SecuritiesTotal
(in thousands)
Beginning balance$(3,147)$(1,087)$(4,234)$(729)$(365)$(1,094)
Other comprehensive income (loss) before reclassifications544 610 1,154 (708)(1,002)(1,710)
Amounts reclassified from accumulated other comprehensive loss to income      
Total other comprehensive income (loss), net of reclassifications544 610 1,154 (708)(1,002)(1,710)
Ending balance$(2,603)$(477)$(3,080)$(1,437)$(1,367)$(2,804)
9. Stock-Based Compensation
The Company has stock-based compensation plans, which are more fully described in Note 11, Stock-Based Compensation Plans, to the Consolidated Financial Statements included in the 2022 10-K. During the three months ended March 31, 2023, the Company granted restricted stock units subject to service conditions.
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The following table provides information about stock-based compensation expense by financial statement line item:
Three Months Ended
March 31,
2023
March 31,
2022
Operations, product, and technology$3,671 $1,392 
Marketing1,205 333 
Sales, general, and administrative4,515 1,798 
Total stock-based compensation expense$9,391 $3,523 
During the three months ended March 31, 2023, the Company modified the vesting schedule of substantially all restricted stock unit awards outstanding as of December 31, 2022 from 4 years to 3 years and recognized compensation expense of $2.4 million related to the acceleration of the vesting schedule. As of March 31, 2023, the total unrecognized compensation cost related to all nonvested stock options was $3.1 million and the related weighted-average period over which it is expected to be recognized was approximately 1.27 years. As of March 31, 2023, the total unrecognized compensation cost related to all nonvested restricted stock units was $64.0 million and the related weighted-average period over which it is expected to be recognized was approximately 2.36 years.
The following table summarizes the activities for all stock options under the Company’s share-based compensation plans for the three months ended March 31, 2023:
Number of Options OutstandingWeighted-Average Exercise Price Per ShareWeighted-Average Remaining Contractual LifeAggregate Intrinsic Value(1)
(in thousands)(in thousands)
Outstanding as of December 31, 202217,872 $1.97 5.20 years$1,442 
Granted $ 
Exercised(178)$1.48 
Forfeited or expired(126)$3.61 
Outstanding as of March 31, 202317,568 $1.96 4.98 years$11,622 
Exercisable as of March 31, 202314,787 $1.91 4.55 years$10,351 
(1)The intrinsic value is the amount by which the current market value of the underlying stock exceeds the exercise price of the stock awards.
There were no options granted during the three months ended March 31, 2023 and 2022. The total intrinsic value of stock options exercised during the three months ended March 31, 2023 and 2022 was $0.1 million and $2.1 million, respectively.
The following table summarizes the activities for all restricted stock units under the Company’s share-based compensation plans for the three months ended March 31, 2023:
Number of SharesWeighted-Average Grant Date Fair Value Per Share
(in thousands)
Outstanding and nonvested as of December 31, 20227,855 $8.01 
Granted8,310 $1.78 
Vested(1,383)$5.79 
Forfeited(167)$5.70 
Outstanding and nonvested as of March 31, 202314,615 $4.71 
The total vesting date fair value of restricted stock units which vested during the three months ended March 31, 2023 and 2022 was $8.0 million and $2.7 million, respectively.
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10. 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 limited and customary indemnification obligations. 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.
11. 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, 2023 and 2022 was determined based upon estimates of the Company’s annual effective tax rate for the years ending December 31, 2023 and 2022, 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.
12. Loss Per Share
The following participating securities have been excluded from the computation of diluted loss per share for the periods presented because including them would have been anti-dilutive:
March 31,
2023
March 31,
2022
(in thousands)
Outstanding stock options17,569 18,825 
Restricted stock units14,615 1,830 
Delayed share issuance related to acquisition130 130 
Employee stock purchase plan152 105 
Total32,466 20,890 
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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 in conjunction with other information, including our condensed consolidated financial statements and related notes included in Part I, Item 1, Financial Statements, of this Quarterly Report on Form 10-Q; Part I, Item 1A, Risk Factors, of this Quarterly Report on Form 10-Q; and our consolidated financial statements and related notes appearing in our Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 10-K”). 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 operates one of the world’s largest online resale platforms for 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 January 2023.
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 core marketplace we have built in the U.S. 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 addition to our core marketplace, 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 acquired 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.
Key Factors Affecting Our Performance
Macroeconomic Factors
Macroeconomic factors, including inflation, increased interest rates, significant capital market volatility, and global economic and geopolitical developments have direct and indirect impacts on our results of operations that are difficult to isolate and quantify. These factors contributed to increases in our operating costs during 2022 and the first quarter of 2023 primarily due to increased transportation costs and wage rates. In addition, rising fuel, utility, and food costs, rising interest rates, and recessionary fears may impact customer demand and our ability to forecast consumer spending patterns. We expect some or all of these factors to continue to impact our operations throughout the rest of 2023.
Overview of First Quarter Results
Revenue: Total revenue was $75.9 million, representing an increase of 4.4% year-over-year.
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Gross Profit and Margin: Gross profit totaled $51.1 million, representing an increase of 1.7% year-over-year. Gross margin was 67.3%, a decrease of 180 basis points from 69.1% in the comparable quarter last year.
Net Loss: Net loss was $19.8 million, or a negative 26.1% of revenue, for the first quarter of 2023, compared to a net loss of $20.7 million for the first quarter of 2022.
Non-GAAP Adjusted EBITDA Loss: Non-GAAP Adjusted EBITDA loss was $6.6 million, or a negative 8.7% of revenue, for the first quarter of 2023, compared to Non-GAAP Adjusted EBITDA loss of $13.0 million, or a negative 17.8% of revenue, for the first quarter of 2022. Non-GAAP Adjusted EBITDA loss and Non-GAAP Adjusted EBITDA loss margin are non-GAAP measures which may not be comparable to similarly-titled measures used by other companies. See below for a reconciliation of Non-GAAP Adjusted EBITDA loss to net loss.
Active Buyers and Orders: Active Buyers totaled 1.7 million and Orders totaled 1.5 million in the first quarter of 2023, representing a decrease of 2.7% and 7.9%, respectively, compared to the first quarter of 2022.
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
March 31,
2023
March 31,
2022
Change
(in thousands, except percentages)
Active Buyers (as of period end)1,668 1,715 (2.7)%
Orders1,511 1,640 (7.9)%
Total revenue$75,922 $72,695 4.4 %
Gross profit$51,093 $50,228 1.7 %
Gross margin67.3 %69.1 %(180) bps
Net loss$(19,793)$(20,708)(4.4)%
Net loss margin(26.1)%(28.5)%240  bps
Non-GAAP Adjusted EBITDA loss(1)$(6,635)$(12,963)(48.8)%
Non-GAAP Adjusted EBITDA loss margin(1)(8.7)%(17.8)%910  bps
(1)Non-GAAP Adjusted EBITDA loss and Non-GAAP Adjusted EBITDA loss margin are non-GAAP measures which may not be comparable to similarly-titled measures used by other companies. See below for a reconciliation of Non-GAAP Adjusted EBITDA loss to net loss.
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 and purchased in our marketplaces, including through our RaaS clients, and is identified by a unique email address. 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 marketplaces.
Orders
Orders means the total number of orders placed by buyers across our marketplaces, including through our RaaS clients, in a given period, net of cancellations.
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Non-GAAP Financial Metrics
Non-GAAP Adjusted EBITDA Loss and Non-GAAP Adjusted EBITDA Loss Margin
Non-GAAP Adjusted EBITDA loss means net loss adjusted to exclude, where applicable in a given period, interest expense, provision for income taxes, depreciation and amortization, stock-based compensation expense, acquisition-related expenses, and restructuring charges. Non-GAAP Adjusted EBITDA loss margin represents Non-GAAP Adjusted EBITDA loss divided by Total revenue. We use Non-GAAP Adjusted EBITDA loss and Non-GAAP Adjusted EBITDA loss margin, non-GAAP metrics, to evaluate and assess our operating performance and the operating leverage in our business, and for internal planning and forecasting purposes. We believe that Non-GAAP Adjusted EBITDA loss and Non-GAAP Adjusted EBITDA loss margin, when taken collectively with our GAAP results, may be helpful to investors because they provide consistency and comparability with past financial performance and assist in comparisons with other companies, some of which use similar non-GAAP financial information to supplement their GAAP results.
The following table provides a reconciliation of net loss to Non-GAAP Adjusted EBITDA loss:
Three Months Ended
March 31,
2023
March 31,
2022
(in thousands)
Net loss$(19,793)$(20,708)
Interest expense77 423 
Provision for income taxes13 
Depreciation and amortization3,681 3,271 
Stock-based compensation expense9,391 3,523 
Acquisition-related expenses— 204 
Restructuring charges— 311 
Non-GAAP Adjusted EBITDA loss$(6,635)$(12,963)
Total revenue75,922 72,695 
Non-GAAP Adjusted EBITDA loss margin(8.7)%(17.8)%
Comparison of the Three Months Ended March 31, 2023 and 2022
Revenue
Three Months EndedChange
March 31,
2023
March 31,
2022
Amount%
(in thousands, except percentages)
Consignment revenue$46,479 $47,435 $(956)(2.0)%
Product revenue29,443 25,260 4,183 16.6 %
Total revenue$75,922 $72,695 $3,227 4.4 %
Consignment revenue as a percentage of total revenue61.2 %65.3 %
Product revenue as a percentage of total revenue38.8 %34.7 %
Total revenue increased $3.2 million, or 4.4%, for the three months ended March 31, 2023 as compared to the same period in 2022. The increase in revenue for the three months ended March 31, 2023 as compared to the same period in 2022 was primarily due to a $4.2 million increase in product revenue as our European operations continue to scale and grow as well as a mix shift due to growth in supply from our RaaS partners, which are recognized as part of product revenue, partially offset by a $1.0 million decrease in consignment revenue due to the mix shift described previously.
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Cost of Revenue
Three Months EndedChange
March 31,
2023
March 31,
2022
Amount%
(in thousands, except percentages)
Cost of consignment revenue$9,220 $10,049 $(829)(8.2)%
Cost of product revenue15,609 12,418 3,191 25.7 %
Total cost of revenue$24,829 $22,467 $2,362 10.5 %
Gross profit$51,093 $50,228 $865 1.7 %
Gross margin67.3 %69.1 %
Gross margin was 67.3% and 69.1% for the three months ended March 31, 2023 and 2022, respectively, or an unfavorable change of 180 basis points.
The decrease in gross margin for the three months ended March 31, 2023 as compared to the same period in 2022 was primarily due to a 410 basis point increase in product revenue as a percentage of total revenue, partially offset by favorable labor variances for cost of consignment revenue. Consignment revenue is recognized net of seller payouts and cost of items sold, whereas for product revenue, seller payouts and cost of items sold are included as a component of cost of revenue. As such, product revenue has a lower gross margin than consignment revenue.
Cost of Consignment Revenue
Three Months EndedChange
March 31,
2023
March 31,
2022
Amount%
(in thousands, except percentages)
Cost of consignment revenue$9,220 $10,049 $(829)(8.2)%
Consignment gross margin80.2 %78.8 %
Consignment gross margin was 80.2% and 78.8% for the three months ended March 31, 2023 and 2022, respectively, or a favorable change of 140 basis points. Consignment gross profit dollars were flat year-over-year.
The increase in consignment gross margin for the three months ended March 31, 2023 as compared to the same period in 2022 was primarily due to 120 basis points of lower direct labor costs.
Cost of Product Revenue
Three Months EndedChange
March 31,
2023
March 31,
2022
Amount%
(in thousands, except percentages)
Cost of product revenue$15,609 $12,418 $3,191 25.7 %
Product gross margin47.0 %50.8 %
Product gross margin was 47.0% and 50.8% for the three months ended March 31, 2023 and 2022, respectively, or an unfavorable change of 380 basis points. Product gross profit dollars were up 8% year-over-year.
The decrease in product gross margin for the three months ended March 31, 2023 as compared to the same period in 2022 was primarily due to 290 basis points of higher inventory costs and an 60 basis points of higher packaging and other costs.
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Operations, Product, and Technology
Three Months EndedChange
March 31,
2023
March 31,
2022
Amount%
(in thousands, except percentages)
Operations, product, and technology$38,347 $39,161 $(814)(2.1)%
Operations, product, and technology as a percentage of total revenue50.5 %53.9 %
The $0.8 million decrease in operations, product, and technology expenses for the three months ended March 31, 2023 as compared to the same period in 2022 was primarily due to a $1.4 million decrease in personnel-related costs, partially offset by a $0.8 million increase in inbound shipping and other costs.
Marketing
Three Months EndedChange
March 31,
2023
March 31,
2022
Amount%
(in thousands, except percentages)
Marketing$16,870 $16,978 $(108)(0.6)%
Marketing as a percentage of total revenue22.2 %23.4 %
The $0.1 million decrease in marketing expenses for the three months ended March 31, 2023 as compared to the same period in 2022 was primarily due to a $1.1 million decrease in social and other advertising costs and a $0.2 million decrease in professional services, partially offset by a $1.0 million increase in personnel-related costs, of which $0.9 million was related to stock-based compensation expense and a $0.2 million increase in facilities, technology, and other allocated costs.
Sales, General and Administrative
Three Months EndedChange
March 31,
2023
March 31,
2022
Amount%
(in thousands, except percentages)
Sales, general, and administrative$16,059 $14,664 $1,395 9.5 %
Sales, general, and administrative as a percentage of total revenue21.2 %20.2 %
The $1.4 million increase in sales, general, and administrative expenses for the three months ended March 31, 2023 as compared to the same period in 2022 was primarily due to a $3.0 million increase in personnel-related costs, of which $2.7 million was related to stock-based compensation expense, and a $0.1 million increase in facilities, technology, and other allocated costs, partially offset by a $1.2 million decrease in professional services and a $0.5 million decrease in other corporate expenses.
Interest Expense
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