Content analysis
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H.S. sophomore Good
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Financial report summary
?Risks
- Risks Related to Our Business and Industry
- We have a history of operating losses, and we may not achieve or maintain profitability in the future, which in turn could negatively impact our financial condition and our stock price.
- Our annual and quarterly results of operations have fluctuated from period to period and may do so in the future, which could cause our stock price to fluctuate and the value of your investment to decline.
- Our historical growth may not be indicative of our future growth and our net revenue growth rate may decelerate compared to prior years.
- If we fail to generate a sufficient volume of listings of luxury design products on our online marketplace, our ability to grow our business and market share would suffer.
- We may expand our business through acquisitions of other businesses, products, or technologies, which have required, could continue to require, and may require significant management attention, could disrupt our business, dilute stockholder value, adversely affect our operating results, and/or prove to be unsuccessful.
- If we are unable to establish the authenticity of the items listed and sold through our online marketplace, our business, brand, and reputation could suffer.
- We may be subject to claims that items listed on our online marketplace are counterfeit, infringing, hazardous, or illegal, or otherwise subject to regulation or cultural patrimony considerations.
- If we are deemed to be liable for fraudulent or unlawful activities of sellers who list stolen items on our online marketplace, our business and reputation could suffer.
- Our growth depends on our ability to attract and maintain an active community of sellers and buyers.
- We rely, in part, on sellers to provide a positive experience to buyers, which includes limited disruptions in service by sellers.
- Sellers rely on shipping services to deliver orders received through our online marketplace and if the items sold through our online marketplace are not delivered on time, in proper condition, or at all, our business and reputation could suffer.
- We operate in an evolving industry and our past results may not be indicative of future operating performance.
- If we do not compete effectively our results of operations and market position could suffer.
- Our net revenue could be negatively impacted as a result of greater than expected product returns.
- Insufficient allowance for transaction losses could negatively impact our financial results.
- Our metrics and market estimates used to evaluate our performance are subject to inherent challenges in measurement, and real or perceived inaccuracies in those estimates may harm our reputation and negatively affect our business.
- Our business and results of operations may be more susceptible to other macroeconomic conditions or trends due to our reliance on consumer discretionary spending.
- National retailers and brands set their own retail prices and promotional discounts on new luxury design products, which could adversely affect our value proposition to our buyers.
- If we fail to successfully anticipate and respond to changing preferences among our sellers and buyers, our ability to grow our business and our results of operations may suffer.
- If we fail to successfully expand our business model to encompass additional product verticals in a timely and cost-effective manner, our ability to increase our market share would suffer, which in turn could negatively impact our business, financial condition, and results of operations.
- If we fail to maintain and promote our brand and reputation, our business, market position, and future growth could suffer.
- If our marketing efforts are not effective, our ability to grow our business and maintain or expand our market share could suffer.
- We rely on third parties to drive traffic to our website, and these providers may change their algorithms or pricing in ways that could damage our business, operations, financial condition, and prospects.
- If the mobile solutions available to sellers and buyers are not effective, the use of our platform could decline.
- We must continue to drive efficiencies in our operations or our business could suffer.
- If we fail to manage our growth effectively, or if we are unable to execute our business plan and grow our business, our results of operations, and financial condition could be materially and adversely harmed.
- We may require additional capital to support business growth, and we may be unable to obtain additional capital on acceptable terms, if at all, and any additional financing may dilute existing stockholders.
- If we fail to attract and retain key personnel on our executive team or to effectively manage leadership succession, our business, financial condition, and results of operations could be adversely impacted.
- Further expansion into markets outside of the United States is important to the growth of our business but will subject us to risks associated with operations abroad.
- We may incur significant losses from fraud, which would harm our results of operations.
- Our payments system depends on third-party providers and is subject to evolving laws and regulations.
- If we fail to recruit and retain specialized employees and contractors, our business and operations could suffer.
- If we experience labor disputes or other disruption, it could harm our operations.
- Economic, political, and market conditions, including geopolitical risks, could result in increased market volatility and uncertainty, which could negatively impact our business, financial condition, and results of operations.
- We have transitioned to being a flexible work model company, which could have a negative impact on the execution of our business plans and operations and create productivity, connectivity, and oversight challenges.
- Public health crises, such as the COVID-19 pandemic, have impacted, and may continue to impact, our business, key metrics, and results of operations in volatile and unpredictable ways.
- Our NFT platform (utilizing Ether, a cryptocurrency generated using the Ethereum protocol) may expose us to legal, regulatory, and other risks. Given the nascent and evolving nature of cryptocurrencies and NFTs, we may be unable to accurately anticipate or adequately address such risks or the potential impact of such risks. Although we ceased further investment in our NFT platform in January 2023, the occurrence of any such risks could adversely affect our business and reputation.
- If our insurance coverage is insufficient or our insurers are unable to meet their obligations, our insurance may not mitigate the risks facing our business.
- Our cash, cash equivalents and short-term investments may be exposed to failure of our banking institutions.
- Risks Related to Privacy, Cybersecurity, and Infrastructure
- If sensitive information about our sellers and buyers or other third parties with whom we transact business is disclosed, or if we or our third-party providers are subject to cyber-attacks, use of our online marketplace could be curtailed, we may be exposed to liability, and our reputation would suffer.
- Our use and other processing of personal information and other data is subject to laws and obligations relating to privacy and data protection, and our failure to comply with such laws and obligations could harm our business.
- Use of social media, emails, and push notifications may harm our reputation or subject us to fines or other penalties.
- If we fail to successfully expand the features, services, and offerings on our online marketplace, our ability to grow our business may suffer.
- Any significant disruption in service provided by, or termination of our relationship with, third parties that host our website and mobile app and process payments made by buyers or to sellers on our online marketplace could damage our reputation and result in loss of sellers and buyers, which in turn would harm our business and results of operations.
- Our business depends on continued and unimpeded access to the Internet and mobile networks.
- Climate change may have an adverse impact on our business.
- Risks Related to Regulatory Matters and Litigation
- Our business is subject to a large number of U.S. and non-U.S. laws, many of which are evolving.
- If we fail to comply with applicable laws or regulations, including those relating to the sale of antique and vintage items, we may be subject to fines, penalties, loss of licensure, registration, and approval, or other governmental enforcement action.
- We are subject to governmental export and import controls and anti-corruption laws and regulations that could impair our ability to compete in international markets and subject us to liability if we are not in full compliance with applicable laws.
- The increasing impact of and focus on ESG matters could increase our costs, harm our reputation, harm our relationships with employees, and adversely affect our financial results.
- We may become involved in claims, lawsuits, government investigations, and other proceedings that could adversely affect our business, financial condition, and results of operations.
- Expanding and evolving regulations in the areas of privacy and user data protection could create technological, economic and complex cross-border business impediments to our business and those of our sellers.
- Risks Related to Intellectual Property
- If we cannot successfully protect our intellectual property, our business could suffer.
- We may be subject to intellectual property claims, which are extremely costly to defend, could require us to pay significant damages and could limit our ability to use certain technologies in the future.
- We are subject to the terms of open source licenses because our platform incorporates open source software.
- Risks Related to our Operations as a Public Company
- If our internal control over financial reporting or our disclosure controls and procedures are not effective, we may not be able to accurately report our financial results, prevent fraud or file our periodic reports in a timely manner, which may cause investors to lose confidence in our reported financial information and may lead to a decline in our stock price.
- We are an emerging growth company, and any decision on our part to comply only with certain reduced reporting and disclosure requirements applicable to emerging growth companies could make our common stock less attractive to investors.
- We may not be able to manage our transition effectively or efficiently to a public company.
- As a result of becoming a public company, we are, and will become, subject to additional regulatory compliance requirements, including Section 404, and if we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud.
- Risks Related to Tax and Accounting Matters
- We could be required to pay or collect sales taxes in jurisdictions in which we do not currently do so, with respect to past or future sales. This could adversely affect our business and results of operations.
- Our business and our sellers may be subject to sales tax, value-added tax (“VAT”), provincial taxes, goods and services tax, and other taxes.
- Our facilitation of transactions in cryptocurrencies such as Ether on our NFT platform exposes us to risks under U.S. and foreign tax laws.
- Application of existing tax laws, rules or regulations are subject to interpretation by taxing authorities.
- We may experience fluctuations in our tax obligations and effective tax rate.
- Amendments to existing tax laws, rules, or regulations or enactment of new unfavorable tax laws, rules, or regulations could have an adverse effect on our business and results of operations.
- Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.
- Our reported results of operations may be adversely affected by changes in generally accepted accounting principles.
- Risks Related to Our Common Stock
- An active trading market for our common stock may not develop or be sustained and the price of our common stock could be volatile. Declines in the price of our common stock could subject us to litigation.
- Sales of a substantial number of shares of our common stock in the public market, such as the perception that sales might occur, could cause the price of our common stock to decline.
- We cannot guarantee that our share repurchase program will be fully consummated or that it will enhance long-term stockholder value. Share repurchases could also increase the volatility of the trading price of our stock and will diminish our cash reserves.
- Future sales and issuances of our common stock or rights to purchase common stock could result in additional dilution to our stockholders and could cause the price of our common stock to decline.
- Our actual results of operations may not meet our guidance and investor expectations, which would likely cause our stock price to decline.
- If securities analysts or industry analysts do not publish reports about our business, downgrade our common stock, or publish negative research or reports, our stock price and trading volume could decline.
- We do not intend to pay dividends on our common stock, so any returns on your investment will be limited to changes in the value of our common stock.
- Our directors, executive officers and principal stockholders beneficially own a substantial percentage of our stock and will be able to exert significant control over matters subject to stockholder approval.
- Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of our company more difficult, limit attempts by our stockholders to replace or remove our current management, and limit the market price of our common stock.
- Claims for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against us and may reduce cash resources.
- Our amended and restated certificate of incorporation and amended and restated bylaws designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, and provides that federal district courts will be the sole and exclusive forum for Securities Act claims, which could limit our stockholders’ ability to obtain what they believe to be a favorable judicial forum for disputes with us or our directors, officers, or other employees.
Management Discussion
- Net revenue was $84.7 million for the year ended December 31, 2023, as compared to $96.8 million for the year ended December 31, 2022. The decrease of $12.2 million, or 13%, was primarily due to a $10.4 million decrease in seller marketplace services revenue, which was primarily due to a decrease in marketplace transaction fees as a result of the decrease in our GMV. We believe our GMV and net revenue have been adversely impacted, both directly and indirectly, by macroeconomic factors, including significant capital market volatility, significant housing market volatility, rising interest rates, inflation, global economic and geopolitical developments, and changing consumer behavior in a post-COVID-19 environment; however, these impacts are difficult to isolate and quantify. Additionally, there was a $1.4 million decrease in software services revenue as a result of the sale of Design Manager in June 2022.