tdup-20230930

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 September 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________________ to ____________________

Commission File Number: 001-40249

ThredUp Inc.

(Exact name of registrant as specified in its charter)


Delaware			26-4009181
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

969 Broadway, Suite 200 Oakland, 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 class

Trading Symbol(s)

Name of each exchange on which registered

Class A Common Stock, $0.0001 par value per share

TDUP

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 filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

There were 77,290,731 shares of Class A common stock and 29,959,781 shares of Class B common stock outstanding as of October 31, 2023.

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		Page Number
	PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	5
	Unaudited Condensed Consolidated Balance Sheets	5
	Unaudited Condensed Consolidated Statements of Operations	6
	Unaudited Condensed Consolidated Statements of Comprehensive Loss	7
	Unaudited Condensed Consolidated Statements of Stockholders’ Equity	8
	Unaudited Condensed Consolidated Statements of Cash Flows	10
	Notes to Unaudited Condensed Consolidated Financial Statements	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	29

	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 3.	Defaults Upon Senior Securities	32
Item 4.	Mine Safety Disclosures	32
Item 5.	Other Information	32
Item 6.	Exhibits	32
	Signatures	34

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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, climate change 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; and

•our ability to successfully integrate and realize the benefits of our past or future strategic acquisitions or investments.

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, in Part II, Item 1A, Risk Factors, in our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2023 and June 30, 2023 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 apparel, shoes and accessories, based primarily on items processed, items sold and the capacity of our distribution centers.

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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.

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

THREDUP INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


	September 30, 2023		December 31, 2022
	(in thousands, except par value amounts)
ASSETS
Current assets:
Cash and cash equivalents	$	68,552	$	38,029
Marketable securities	5,575		66,902
Accounts receivable, net	5,993		4,669
Inventory	18,173		17,519
Other current assets	7,199		7,076
Total current assets	105,492		134,195
Operating lease right-of-use assets	43,090		46,153
Property and equipment, net	90,270		92,482
Goodwill	11,455		11,592
Intangible assets	8,460		10,499
Other assets	6,621		7,027
Total assets	$	265,388	$	301,948
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	12,426	$	7,800
Accrued and other current liabilities	40,225		50,155
Seller payable	21,516		16,166
Operating lease liabilities, current	6,383		6,413
Current portion of long-term debt	3,834		3,879
Total current liabilities	84,384		84,413
Operating lease liabilities, non-current	45,257		48,727
Long-term debt, net of current portion	22,968		25,788
Other non-current liabilities	3,231		3,019
Total liabilities	155,840		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 September 30, 2023 and December 31, 2022; 106,837 and 101,532 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively	11		10
Additional paid-in capital	577,740		551,852
Accumulated other comprehensive loss	(3,941)		(4,234)
Accumulated deficit	(464,262)		(407,627)
Total stockholders’ equity	109,548		140,001
Total liabilities and stockholders’ equity	$	265,388	$	301,948

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

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THREDUP INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three Months Ended				Nine Months Ended
	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
	(in thousands, except per share amounts)
Revenue:
Consignment	$	57,838	$	41,553	$	157,732	$	137,524
Product	24,211		26,392		82,897		79,537
Total revenue	82,049		67,945		240,629		217,061
Cost of revenue:
Consignment	10,131		9,087		28,931		29,354
Product	15,291		14,362		48,246		40,335
Total cost of revenue	25,422		23,449		77,177		69,689
Gross profit	56,627		44,496		163,452		147,372
Operating expenses:
Operations, product, and technology	40,355		38,702		118,473		121,824
Marketing	19,406		14,752		54,919		51,370
Sales, general, and administrative	15,058		15,232		47,147		47,276
Total operating expenses	74,819		68,686		220,539		220,470
Operating loss	(18,192)		(24,190)		(57,087)		(73,098)
Interest expense	732		103		1,530		764
Other income, net	(845)		(624)		(2,006)		(1,108)
Loss before provision for income taxes	(18,079)		(23,669)		(56,611)		(72,754)
Provision for income taxes	3		9		24		31
Net loss	$	(18,082)	$	(23,678)	$	(56,635)	$	(72,785)
Loss per share, basic and diluted	$	(0.17)	$	(0.24)	$	(0.54)	$	(0.73)
Weighted-average shares used in computing loss per share, basic and diluted	105,898		100,253		103,918		99,409

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				Nine Months Ended
	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
	(in thousands)
Net loss	$	(18,082)	$	(23,678)	$	(56,635)	$	(72,785)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	(1,080)		(2,217)		(772)		(5,258)
Unrealized gain (loss) on available-for-sale securities	152		(28)		1,065		(1,284)
Total other comprehensive income (loss)	(928)		(2,245)		293		(6,542)
Total comprehensive loss	$	(19,010)	$	(25,923)	$	(56,342)	$	(79,327)

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

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THREDUP INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)


	Common Stock
	Shares	Amount		Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders’ Equity
	(in thousands)
Balance as of December 31, 2022	101,532	$	10	$	551,852	$	(4,234)	$	(407,627)	$	140,001
Issuance of common stock from exercise of stock options and restricted stock units	1,484	—		275						275
Stock-based compensation				9,720						9,720
Shares withheld for net share settlement	(180)	—		(270)						(270)
Net loss								(19,793)		(19,793)
Other comprehensive income						1,154				1,154
Balance as of March 31, 2023	102,836	10		561,577		(3,080)		(427,420)		131,087
Issuance of common stock from exercise of stock options, restricted stock units, and employee stock purchase plan	2,663	1		593						594
Stock-based compensation				7,958						7,958
Shares withheld for net share settlement	(164)	—		(348)						(348)
Net loss								(18,760)		(18,760)
Other comprehensive income						67				67
Balance as of June 30, 2023	105,335	$	11	$	569,780	$	(3,013)	$	(446,180)	$	120,598
Issuance of common stock from exercise of stock options, restricted stock units, and employee stock purchase plan	1,673	$	—	$	490					490
Stock-based compensation				$	8,190					8,190
Shares withheld for net share settlement	(171)	—		$	(720)					(720)
Net loss								(18,082)		(18,082)
Other comprehensive loss						(928)				(928)
Balance as of September 30, 2023	106,837	$	11	$	577,740	$	(3,941)	$	(464,262)	$	109,548

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	Common Stock
	Shares	Amount		Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders’ Equity
	(in thousands)
Balance as of December 31, 2021	98,435	$	10	$	522,161	$	(1,094)	$	(315,343)	$	205,734
Issuance of common stock from exercise of stock options and restricted stock units	507	—		754						754
Stock-based compensation				3,618						3,618
Net loss								(20,708)		(20,708)
Other comprehensive loss						(1,710)				(1,710)
Balance as of March 31, 2022	98,942	10		526,533		(2,804)		(336,051)		187,688
Issuance of common stock from exercise of stock options, restricted stock units, and employee stock purchase plan	1,030	—		1,031						1,031
Stock-based compensation				10,353						10,353
Shares withheld for net share settlement	(19)	—		(157)						(157)
Net loss								(28,399)		(28,399)
Other comprehensive loss						(2,587)				(2,587)
Balance as of June 30, 2022	99,953	$	10	$	537,760	$	(5,391)	$	(364,450)	$	167,929
Issuance of common stock from exercise of stock options, restricted stock units, and employee stock purchase plan	779	$	—	$	229					$	229
Stock-based compensation				$	7,460					$	7,460

Net loss								$	(23,678)	$	(23,678)
Other comprehensive loss						$	(2,245)			$	(2,245)
Balance as of September 30, 2022	100,732	$	10	$	545,449	$	(7,636)	$	(388,128)	$	149,695

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)


	Nine Months Ended
	September 30, 2023		September 30, 2022
	(in thousands)
Cash flows from operating activities:
Net loss	$	(56,635)	$	(72,785)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	13,881		10,217
Stock-based compensation expense	24,907		20,758
Reduction in carrying amount of right-of-use assets	4,788		4,820
Other	59		1,409
Changes in operating assets and liabilities:
Accounts receivable, net	(1,373)		795
Inventory	(873)		(6,222)
Other current and non-current assets	1,055		(1,732)
Accounts payable	4,049		(3,000)

SEC Form 10-Q filed by ThredUp Inc.