UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM 10-Q
______________________
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
OR
 ☐☒TRANSITIONQUARTERLY 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__________to __________
Commission file number: 001-40249

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
94607
(Address of Principal Executive Offices)principal executive offices)(Zip Code)

(415) 402-5202
(Registrant's telephone number, including area codecode)
______________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A common stock, $0.0001 par value per shareTDUPThe Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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

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

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

The registrant had 58,666,10265,594,295 shares of Class A common stock, $0.0001 par value per share, and 40,383,66234,487,761 shares of Class B common stock, $0.0001 par value per share, outstanding as of April 29,August 8, 2022.



TABLE OF CONTENTS

Page No.
PART I. FINANCIAL INFORMATION
Item 1.
Financial Statements
1
15
Unaudited Condensed Consolidated Balance Sheets
15
Unaudited Condensed Consolidated Statements of Operations
26
Unaudited Condensed Consolidated Statements of Comprehensive Loss
37
Unaudited Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity
48
Unaudited Condensed Consolidated Statements of Cash Flows
59
Notes to Unaudited Condensed Consolidated Financial Statements
610
Management'sManagement’s Discussion and Analysis of Financial Condition and Results of Operations
1619
Quantitative and Qualitative Disclosures About Market Risk
3031
Controls and Procedures
31
PART II. OTHERFINANCIAL INFORMATION
33
Legal Proceedings
3334
Risk Factors
34
Unregistered Sales of Equity Securities and Use of Proceeds
34
Item 3.
Defaults Upon Senior Securities
35
Item 4.
Mine Safety Disclosures
35
Item 5.
Other Information
35
Item 6.
Exhibits
36
SignaturesSignatures
3837

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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;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;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 the recent Omicron variant, the BA.2 subvariants and any new strains or variants of the virus and recovery therefrom on United States and global economies, our business, results of operations, financial condition, demand for secondhand and resale items, sales cycles and buyer and seller retention;
•our ability to remediate our material weakness in our internal control over financial reporting;
•our ability to successfully integrate and realize the benefits of our past or future strategic acquisitions or investments; and
•the increased expenses associated with being a public company.
You should not rely upon forward-looking statements as predictions of future events. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in the section titled “Risk Factors” in our Annual Report on Form 10-K filed with the SEC on March 22, 2022 and and elsewhere in this Quarterly Report on Form 10-Q, as well as in our other filings with the Securities and Exchange Commission (“SEC”). Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. The results, events and circumstances
ii

reflected in the forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.
The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law.
***
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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.
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Table of Contents
PART I. FINANCIAL INFORMATION.INFORMATION
Item 1.    Financial Statements (Unaudited)
ThredUp Inc.THREDUP INC.
Condensed Consolidated Balance SheetsCONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)
March 31,December 31,
20222021
Assets
Current assets
Cash and cash equivalents$68,597 $84,550 
Marketable securities115,189 121,277 
Accounts receivable, net2,971 4,136 
Inventory, net12,025 9,825 
Other current assets9,634 8,625 
Total current assets208,416 228,413 
Operating lease right-of-use assets42,937 39,340 
Property and equipment, net73,132 55,466 
Goodwill12,043 12,238 
Intangible assets12,942 13,854 
Other assets11,558 11,515 
Total assets$361,028 $360,826 
Liabilities, Convertible Preferred Stock and Stockholders’ Equity
Current liabilities
Accounts payable$19,529 $13,336 
Accrued and other current liabilities50,970 45,253 
Seller payable20,640 19,125 
Operating lease liabilities, current4,433 3,931 
Current portion of long-term debt7,780 7,768 
Total current liabilities103,352 89,413 
Operating lease liabilities, non-current42,030 36,997 
Long-term debt25,634 27,559 
Other non-current liabilities2,324 1,123 
Total liabilities173,340 155,092 
Commitments and contingencies (Note 11)00
Convertible preferred stock: $0.0001 par value; 100,000 shares authorized as of March 31, 2022 and December 31, 2021; no shares issued and outstanding as of March 31, 2022 and December 31, 2021— — 
Stockholders’ equity:
Class A and B common stock, $0.0001 par value; 1,120,000 shares authorized as of March 31, 2022 and December 31, 2021; 98,942 and 98,435 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively10 10 
Additional paid-in capital526,533 522,161 
Accumulated other comprehensive loss(2,804)(1,094)
Accumulated deficit(336,051)(315,343)
Total stockholders’ equity187,688 205,734 
Total liabilities, convertible preferred stock and stockholders’ equity$361,028 $360,826 
(Unaudited)

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

ThredUp Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Three Months Ended March 31,
20222021
Revenue:
Consignment$47,435 $44,688 
Product25,260 10,992 
Total revenue72,695 55,680 
Cost of revenue:
Consignment10,049 10,832 
Product12,418 5,130 
Total cost of revenue22,467 15,962 
Gross profit50,228 39,718 
Operating expenses:
Operations, product and technology39,161 28,312 
Marketing16,978 15,446 
Sales, general and administrative14,664 10,638 
Total operating expenses70,803 54,396 
Operating loss(20,575)(14,678)
Interest expense(423)(559)
Other income (expense), net303 (907)
Loss before provision for income taxes(20,695)(16,144)
Provision for income taxes13 27 
Net loss$(20,708)$(16,171)
Net loss per share attributable to common stockholders, basic and diluted$(0.21)$(0.86)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted98,624 18,701 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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 portion23,705 27,559 
Other non-current liabilities2,625 1,123 
Total liabilities177,969 155,092 
Commitments and contingencies (Note 11)00
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, respectively10 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 








2

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

ThredUp Inc.
Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity
(in thousands)
(unaudited)
Convertible
Preferred Stock		Common StockAdditional Paid-in CapitalAccumulated Other Comprehensive LossAccumulated DeficitTotal Stockholders’ Equity
SharesAmountSharesAmount
Balance as of December 31, 2021— $— 98,435 $10 $522,161 $(1,094)$(315,343)$205,734 
Exercise of stock options— — 334 — 754 — — 754 
Stock-based compensation— — — — 3,618 — — 3,618 
Issuance of common stock to settle restricted stock units— — 173 — — — — — 
Other comprehensive loss— — — — — (1,710)— (1,710)
Net loss— — — — — — (20,708)(20,708)
Balance as of March 31, 2022— $— 98,942 $10 $526,533 $(2,804)$(336,051)$187,688 
Convertible
Preferred Stock		Common StockAdditional Paid-in CapitalAccumulated Other Comprehensive LossAccumulated DeficitTotal Stockholders’ Equity (Deficit)
SharesAmountSharesAmount
Balance as of December 31, 202065,971 $247,041 12,890 $1 $29,989 $— $(252,167)$(222,177)
Exercise of stock options— — 1,458 — 1,875 — — 1,875 
Stock-based compensation— — — — 3,498 — — 3,498 
Conversion of preferred stock warrants to Class B common stock warrants— — — — 1,827 — — 1,827 
Preferred stock conversion to Class B common stock(65,971)(247,041)65,971 7 247,034 — — 247,041 
Sale of Class A common stock upon initial public offering, net of issuance costs— — 13,800 1 175,533 — — 175,534 
Cashless exercise of common stock warrant— — 25 — — — — — 
Net loss— — — — — — (16,171)(16,171)
Balance as of March 31, 2021— $— 94,144 $9 $459,756 $— $(268,338)$191,427 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4

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

ThredUp Inc.
Three Months EndedSix 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 
Notes to Condensed Consolidated Financial Statements (Unaudited)
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 EndedSix 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 plan166 — — — 
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, 202065,971 $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 forfeitures1,668 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,California; Scottsdale, ArizonaArizona; and Bulgaria,Sofia, Bulgaria; distribution centers in Pennsylvania, Georgia, Arizona and BulgariaBulgaria; and a processing centerscenter in Texas and Tennessee.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 generally accepted accounting principles (“GAAP”) in 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 March 31,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, shortshort- to intermediate-term, high gradehigh-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 March 31,June 30, 2022 and December 31, 2021, the Company had a liability of $3.4$3.3 million and $4.0 million, respectively, related to the loyalty program which is included in accrued and other current liabilities inwithin the Company’s condensed consolidated balance sheets. The Company recognized $2.7$2.5 million and $3.3$3.4 million of
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ThredUp Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
revenue from loyalty reward redemption or expiration for the three months ended March 31,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 Attributable to Common Stockholders
The Company follows the two-class method when computing net loss per common share when shares issued meet the definition of participating securities. The rights, including the liquidation and dividend rights and sharing of losses, of the Class A common stock and Class B common stock are identical, other than voting rights. As the liquidation and dividend rights and sharing of losses are identical, the undistributed earnings are allocated on a proportionate basis and the resulting net loss per share attributed to common stockholders will, therefore, be the same for both Class A and Class B common stock on an individual or combined basis.
For periods in which the Company reports net losses, diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders,, because potentially dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.
Cash, Cash Equivalents and Restricted Cash
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets to the amounts shown in the condensed consolidated statements of cash flows (in thousands):
March 31,December 31,
20222021
Cash and cash equivalents$68,597$84,550
Restricted cash, current560560
Restricted cash, non-current6,7296,730
Total cash, cash equivalents and restricted cash$75,886 $91,840 
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 $6.7$6.5 million and $6.7 million is included in the other assets in the condensed consolidated balance sheets as of March 31,June 30, 2022 and December 31, 2021, respectively.respectively.
Fair Value Measurements
Fair value accounting is applied for all financial assets and liabilities that are recognized or disclosed at fair value inwithin the Company’s condensed consolidated financial statements on a recurring basis (at least annually). As of March 31,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 onwithin 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—1 — Observable inputs such as unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.
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ThredUp Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
Level 2—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—3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
New Accounting Pronouncements Recently Issued But Not Yet Adopted
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and subsequent amendments to the initial guidance: ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-10, ASU 2019-11, ASU 2020-02, ASU 2020-03 and ASU 2022-02 which replaces the existing incurred loss impairment model with an expected credit loss model and requires a financial asset measured at amortized cost to be presented at the net amount expected to be collected. This standard is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted. The Company hasdoes not early adopted this standard and is currently evaluatingexpect that the impactadoption of this standard will have a material impact on its condensed consolidated financial statements.
3.Financial Instruments and Fair Value Measurements
The following table providestables provide information about the Company’s financial instruments that are measured at fair value (in thousands):on a recurring basis and indicate the fair value hierarchy of the valuation techniques utilized to determine such values:
Fair Value as of March 31, 2022
Level 1Level 2Level 3Total
Assets
Cash equivalents:
Money market fund$8,858 $— $— $8,858 
U.S. treasury securities4,798 — — 4,798 
Commercial paper— 18,532 — 18,532 
U.S. government agency bonds2,450 — — 2,450 
Total cash equivalents$16,106 $18,532 $— $34,638 
Marketable securities
Corporate debt securities$50,573 $— $— $50,573 
U.S. treasury securities36,873 — — 36,873 
U.S. government agency bonds27,743 — — 27,743 
Total marketable securities$115,189 $— $— $115,189 
Total$131,295 $18,532 $— $149,827 

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 securities35,725 — — 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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ThredUp Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
Fair Value as of December 31, 2021
Level 1Level 2Level 3Total
Assets
Cash equivalents:
Money market fund$41,376 $— $— $41,376 
Commercial paper— 12,098 — 12,098 
Total cash equivalents$41,376 $12,098 $— $53,474 
Marketable securities
Corporate debt securities$55,921 $— $— $55,921 
U.S. treasury securities37,190 — — 37,190 
U.S. government agency bonds28,166 — — 28,166 
Total marketable securities$121,277 $— $— $121,277 
Total$162,653 $12,098 $— $174,751 
The following tables summarize the cost or amortized cost, gross unrealized gains, gross unrealized losses and fair value of the marketable securities as of March 31,June 30, 2022 and December 31, 2021 (in thousands):2021:
March 31, 2022
Cost or Amortized CostUnrealizedFair Value
GainsLosses
Corporate debt securities$51,106 $— $(533)$50,573 
U.S. treasury securities37,267 — (394)36,873 
U.S. government agency bonds28,183 — (440)27,743 
Total$116,556 $— $(1,367)$115,189 

June 30, 2022
December 31, 2021Cost or Amortized CostUnrealizedFair Value
Cost or Amortized CostUnrealizedFair ValueGainsLosses
GainsLosses(in thousands)
Corporate debt securitiesCorporate debt securities$56,098 $— $(177)$55,921 Corporate debt securities$36,319 $— $(594)$35,725 
U.S. treasury securitiesU.S. treasury securities37,286 — (96)37,190 U.S. treasury securities30,625 — (494)30,131 
Commercial paperCommercial paper2,399 — — 2,399 
U.S. government agency bondsU.S. government agency bonds28,258 — (92)28,166 U.S. government agency bonds28,604 1 (534)28,071 
TotalTotal$121,642 $— $(365)$121,277 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 March 31,June 30, 2022 and December 31, 2021, the amortized cost of the Company’s cash equivalents approximateapproximated 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
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ThredUp Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
data, proprietary pricing models, real-time quotes from contributing dealers, trade prices and other market data.
The Company’s money market funds, U.S. treasury securities, corporate debt securities and U.S. government agency bonds were valued using Level 1 inputs because they are valued using quoted market prices.
The Company’s commercial papers were valued using Level 2 inputs because they are valued using quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
There were no transfers between levels during the threesix months ended March 31,June 30, 2022. As of March 31,June 30, 2022, of the $115.2$96.3 million carrying amount of marketable securities, $71.6$78.7 million had a contractual maturity date of less than one year and $43.6$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 (in thousands):following:
March 31,December 31,
20222021
Property and equipment$96,316 $76,028 
Less: accumulated depreciation and amortization(23,184)(20,562)
Property and equipment, net$73,132 $55,466 

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 $2.6$2.8 million and $2.0$1.9 million for the three months ended March 31,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
The goodwillGoodwill is primarily attributable to the planned growth in the combined business after the acquisition of Remix Global EAD (“Remix”). Goodwill is not amortized to earnings, but instead is reviewed for impairment at least annually, absent any interim indicators of impairment. The carrying amount of goodwill was $12.0$11.3 million as of March 31,June 30, 2022 and $12.2 million as of December 31, 2021. The change is due to the foreign currency translation adjustments.
The gross carrying amounts and accumulated amortization of the intangible assets with determinable lives are as follows (in thousands):follows:
As of March 31, 2022
Intangible assets with determinable livesAmortization Period (years)Gross carrying amountAccumulated
amortization		Carrying amount, net
Customer relationships8$5,001 $(301)$4,700 
Developed technology34,712 (753)3,959 
Trademarks94,520 (237)4,283 
Total$14,233 $(1,291)$12,942 
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As of June 30, 2022
Amortization PeriodGross 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 
Notes to Condensed Consolidated Financial Statements (Unaudited)

As of December 31, 2021As of December 31, 2021
Intangible assets with determinable livesAmortization Period (years)Gross carrying amountAccumulated
amortization		Carrying amount, net
Amortization PeriodGross carrying amountAccumulated
amortization		Carrying amount, net
(in years)(in thousands)
Customer relationshipsCustomer relationships8$5,092 $(150)$4,942 Customer relationships8$5,092 $(150)$4,942 
Developed technologyDeveloped technology34,798 (373)4,425 Developed technology34,798 (373)4,425 
TrademarksTrademarks94,602 (115)4,487 Trademarks94,602 (115)4,487 
TotalTotal$14,492 $(638)$13,854 Total$14,492 $(638)$13,854 

The changes in the gross carrying amounts are due to foreign currency translation.
Developed technology, customer relationships, and trademarks intangibles amortization is recorded within operations, product and technology, sales general and administrative, and marketing expense lines, respectively, within the consolidated statements of operations. The amortization expense of intangible assets with determinable lives was $0.7$0.6 million and zero for the three months ended as of March 31,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 (in thousands):following:
March 31,December 31,
20222021
Finished goods$9,907 $8,247 
Raw materials1,450 908 
Work in progress668 670 
$12,025 $9,825 

June 30,December 31,
20222021
(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 (in thousands):following:
March 31,December 31,
20222021
Gift card and site credit liabilities$13,770 $13,223 
Accrued vendor liabilities9,398 6,031 
Allowance for returns7,366 6,209 
Accrued compensation6,795 6,438 
Deferred revenue6,213 5,878 
Accrued taxes5,419 5,728 
Accrued other2,009 1,746 
$50,970 $45,253 
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ThredUp Inc.
June 30,December 31,
20222021
(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 
Notes to Condensed Consolidated Financial Statements (Unaudited)
7. Lease Agreements
The Company’s operating lease expense was $2.4$2.5 million and $2.1$1.8 million for the three months ended March 31,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.
MaturitiesFuture maturities of operating lease liabilities were as follows as of March 31, 2022 (in thousands):
Amount
Remainder of 2022$6,804 
20238,487 
20247,543 
20256,740 
20266,386 
Thereafter29,947 
Total lease payments65,907 
Less: imputed interest(14,934)
Less: tenant improvement allowance yet to be received(4,510)
Total lease liabilities46,463 
Less: current lease liabilities(4,433)
Total non-current lease liabilities$42,030 
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 ana ten-year agreement to lease a distribution center in Sofia, Bulgaria. The leased property, which contains both logistics and office areas, is divided into 3 spaces with separate commencement dates stages of March 1, 2022 and targeted dates in May 2022 and June 2023. delivery. The base rent and maintenance for the first stage, space iscommenced in March 2022, was approximately €6.1 million, or $6.8$6.4 million estimatedtranslated at March 31,the June 30, 2022 Euro to USD spot rate, in aggregate over the original termlife of 10 years from 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.

date for the third stage is June 2023.
In January 2022, the Company entered into ana ten-year agreement to lease office space in Sofia, Bulgaria. The Company anticipates delivery ofBulgaria and the leased property accounting commencement and recording of the related right of use asset and liability to occur duringwas delivered in the second quarter of 2022. The base rent, isparking and maintenance was approximately €4.3€5.0 million, or $4.7$5.2 million, estimatedtranslated at March 31,the June 30, 2022 Euro to USD spot rate, in aggregate over the original termrate.
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Table of 10 years from the commencement date.

Contents
8. Long-termLong-Term Debt
TheIn 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 Loanprior loan and Security Agreementsecurity agreement with Silicon Valley BankBank. As of December 31, 2021, the amended interest rate on the Term Loan was the prime rate published in February 2019.The Wall Street Journal plus a margin of 1.5%, with a floor of 5.50%. The Term Loan was amended 5 times before December 31, 2021. The amended interest rate on the Term Loan is the prime rate published in The Wall Street Journal plus 1.5% with a floor of 5.50% per annum.
As of March 31,June 30, 2022, the nominal interest rate was 5.50%6.25% and the effective interest rate was 6.65%. TheAs of June 30, 2022 and December 31, 2021, the Company iswas in compliance with its debt covenants under the covenants asTerm Loan.
During the six months ended June 30, 2022, the Company repaid a total of March$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, 2022.2021, 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.
The Company has repaid $6.0 millionAs of June 30, 2022, future annual scheduled principal payments of the Term Loan were as of March 31, 2022. The remaining maturities of the loan agreement as of March 31, 2022 are as follows (in thousands):follows:
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ThredUp Inc.
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 
Notes
On July 14, 2022, the Term Loan was amended. Refer to Condensed Consolidated Financial Statements (Unaudited)
Amount
Remainder of 2022$6,000 
20238,000 
202420,000 
Thereafter— 
Total future principal34,000 
Less: unamortized debt discount(586)
Less: current portion of long-term debt(7,780)
Non-current portion of long-term debt$25,634 
Note 14, Subsequent Events, for additional information.
9. Common Stock
Each share of Class A common stock is entitled to 1 vote per share. Each share of Class B common stock is entitled to 10 votes per share and is convertible at any time into 1 share of Class A common stock.
The table below summarizes the Class A common stock and Class B common stock issued and outstanding as of March 31,June 30, 2022.
As of March 31, 2022
AuthorizedIssued and Outstanding
(in thousands)
Common stock Class A1,000,000 58,558 
Common stock Class B120,000 40,384 
Total common stock1,120,000 98,942 

As of June 30, 2022
AuthorizedIssued and Outstanding
(in thousands)
Class A common stock1,000,000 65,465 
Class B common stock120,000 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 IncentiveIncentive Plan
In February 2021, in connection with the Initial Public Offering (“IPO”), the Company’s board of directors adopted the 2021 Stock Option and Incentive Plan (“2021 Plan”) to replace the Second Amended and Restated 2010 Stock Plan, which was subsequently approved by the Company’s stockholders in March 2021. The 2021 Plan became effective on March 24, 2021.
2021 Employee Stock Purchase Plan
In February 2021, the Company’s board of directors adopted the Employee Stock Purchase Plan (“ESPP”), which was subsequently approved by the stockholders in March 2021. The ESPP became effective on March 24, 2021. There wasThe Company recognized $0.2 million and zero$0.2 million in stock-based compensation expense related to the ESPP for the three months ended March 31,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 1-for-one basis as the awards vest. RSUs granted to newly hired employees typically vest 25% annually over 4four 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
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ThredUp Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
period. During the threesix months ended March 31,June 30, 2022, the Company granted 749,8429,444,468 shares of RSUs with a weighted average grant date fair value at $8.81$7.43 under the 2021 Plan.
Stock-basedStock-Based Compensation
Total stock-based compensation expense by department is as follows (in thousands):follows:
Three Months Ended
March 31,
20222021
Operations, product and technology$1,392 $1,350 
Marketing333 437 
Sales, general and administrative1,798 1,711 
Total stock-based compensation expense$3,523 $3,498 

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

As of June 30,
20222021
(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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ITEMItem 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSManagement’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.
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Overview
thredUP is one of the world’s largest online resale platforms for women’s and kids’ apparel, shoes and accessories. Our mission is to inspire a new generation of consumers to think secondhand first. We believe in a sustainable fashion future and we are proud that our business model creates a positive impact to the benefit of our buyers, sellers, clients, employees, investors and the environment. Our custom-built operating platform consists of distributed processing infrastructure, proprietary software and systems and data science expertise. This platform is powering the rapidly emerging resale economy, one of the fastest growing sectors in retail, according to a GlobalData market survey conducted in April 2021.
thredUP’s proprietary operating platform is the foundation for our managed marketplace, where we have bridged online and offline technology to make the buying and selling of tens of millions of unique items easy and fun. The marketplace we have built enables buyers to browse and purchase resale items for primarily women’s and kids’ apparel, shoes and accessories across a wide range of price points. Buyers love shopping value, premium and luxury brands all in one place, at up to 90% off estimated retail price. Sellers love thredUP because we make it easy to clean out their closets and unlock value for themselves or for the charity of their choice while doing good for the planet. thredUP’s sellers order a Clean Out Kit, fill it and return it to us using our prepaid label. We take it from there and do the work to make those items available for resale.
In 2018, based on our success with consumers directly, we extended our platform to enable brands and retailers to participate in the resale economy. Some of the world’s leading brands and retailers are already taking advantage of our RaaS offering, which allows them to conveniently offer a scalable closet clean out service and/or resale shop to their customers. We believe RaaS will accelerate the growth of this emerging category and form the backbone of the modern resale experience domestically and internationally.
In October 2021, we closed thecompleted our acquisition of Remix Global EAD (“Remix”), a fashion resale company headquarteredbased in Sofia, Bulgaria, whichBulgaria. With this acquisition, we further expandsexpanded our reach to European customers. With this acquisition, wecustomers, added a complementary operational infrastructure and added an experienced management team to enable our expansion into Europe. In addition, Remix’s product assortment extendsextended our resale offering to include men’s items and items sourced from a variety of supply channels, such as wholesale supply.
Recent Business Developments
Acquisition of Remix Global EAD
On July 24, 2021, we entered into Share Purchase Agreements with the shareholders of Remix to purchase 100% of the outstanding equity interests of Remix and its subsidiary. On October 7, 2021, we completed our acquisition of Remix.
COVID-19 Update
The ongoing development of the COVID-19 pandemic has beencontinued to impact our business, primarily driven by the emergence of new variants and continuesrelated 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 be a complex and evolving situation. We continue to monitor the development of theCOVID-19 pandemic, including the impactabsence of any economic stimulus in 2022. We are actively engaging with our customers and are continuing to take measures to protect the Omicron variant, the BA.2 subvariantshealth and other SARS-CoV-2 viruses, federal, state and local government response, vaccination rates, the impact on our supply chain and the impact on our employees. We have prioritized the safety of our employees during the pandemic. In 2020, we shifted all of our corporate employees and contract engineers to a remote work model and implemented additional measures to better enable remote work. employees. As of March 31,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 threesix months ended March 31,June 30, 2022, we experienced an increase in consumer demand partially due to the reduced severity of the COVID-19 recoverypandemic and re-opening efforts.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
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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.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
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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 FirstSecond Quarter Results
Revenue:Total revenue was a record at $72.7$76.4 million, an increase of 31%27% year-over-year.
Gross Profit and Margin: Gross profit totaled $50.2$52.6 million representing growth of 26%19% year-over-year. Gross margin decreased by 224471 basis points to 69% from 71%74% in the comparable quarter last year.
Net Loss: GAAP net loss was $20.7$28.4 million, or a negative 37% of revenue, for the firstsecond quarter of 2022, compared to a GAAP net loss of $16.2$14.4 million for the firstsecond quarter 2021.
Adjusted EBITDA:Adjusted EBITDA loss was $13.0$13.5 million, aor negative 18% of revenue for the second quarter of 2022, compared to an Adjusted EBITDA loss of $9.1$9.0 million for the firstsecond quarter of 2021, aor negative 16%15% of the firstrevenue for the second quarter 2021 revenue.of 2021.
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Active Buyers and Orders:Total first quarter of 2022 Active Buyers oftotaled 1.72 million and Orders totaled 1.70 million in the second quarter of 1.64 million grew 33%2022, representing growth of 29% and 45%40%, respectively, compared to the firstsecond quarter of 2021.
Key Financial and Operating Metrics
Our unaudited condensed consolidated financial statements were prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States (“U.S.”). We review a number of operating and financial metrics, including the following key business and Non-GAAPnon-GAAP metrics, to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions. These key financial and operating metrics are set forth below for the periods presented.
Three Months Ended
March 31,		% Change
202220212022 vs 2021
(in thousands)
Active Buyers (as of period end)1,715 1,290 33 %
Orders1,640 1,128 45 %
Net loss$(20,708)$(16,171)28 %
Net loss margin(28)%(29)%1 %
Adjusted EBITDA loss(1)
$(12,963)$(9,119)42 %
Adjusted EBITDA margin(18)%(16)%(2)%

Three Months EndedSix Months Ended
June 30,June 30,
20222021Change20222021Change
(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)%(24)%(1,318) bps(33)%(26)%(651) bps
Adjusted EBITDA loss(1)
$(13,541)$(9,036)(50)%$(26,504)$(18,155)(46)%
Adjusted EBITDA margin(18)%(15)%(262) bps(18)%(16)%(210) bps
(1)See below for a reconciliation of Adjusted EBITDA to net loss.
Active Buyers
An Active Buyer is a thredUP buyer who has made at least one purchase in the last twelve months. A thredUP buyer is a customer who has created an account in our marketplace. A thredUP buyermarketplace and is identified by a unique email address and aaddress. A single person could have multiple thredUP accounts and count as multiple Active Buyers. The number of Active Buyers is a key driver of revenue for our marketplace and we expect the number of Active Buyers to increase over time.
Orders
Orders means the total number of orders placed by buyers across our marketplace, including through our RaaS clients, in a given period, net of cancellations. We expect Orders to increase over time.
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Adjusted EBITDA
Adjusted EBITDA means net loss adjusted to exclude, where applicable in a given period, depreciation and amortization, stock-based compensation expense, interest expense, acquisition and offering related expenses, interest expense,restructuring charges, change in fair value of convertible preferred stock warrant liability and provision for income taxes and organizational alignment expenses.taxes. We use Adjusted EBITDA, a Non-GAAPnon-GAAP metric, to evaluate and assess our operating performance and the operating leverage in our business, and for internal planning and forecasting purposes. We believe that Adjusted EBITDA, when taken collectively with our GAAP results, may be helpful to investors because it provides consistency and comparability with past financial performance and assists in comparisons with other companies, some of which use similar non-GAAP financial information to supplement their GAAP results.
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The following table provides a reconciliation of net loss to Adjusted EBITDA (in thousands):
Three Months Ended
March 31,
20222021
Adjusted EBITDA Reconciliation:
GAAP Net loss$(20,708)$(16,171)
Depreciation and amortization3,271 2,038 
Stock-based compensation expense3,523 3,498 
Interest expense423 559 
Acquisition related expenses204 — 
Organizational alignment expenses311 — 
Change in fair value of convertible preferred stock warrant liability— 930 
Provision for income taxes13 27 
Non-GAAP Adjusted EBITDA$(12,963)$(9,119)
EBITDA:

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Three Months EndedSix Months Ended
June 30,June 30,
2022202120222021
(in thousands)
Adjusted EBITDA Reconciliation:
GAAP net loss$(28,399)$(14,379)$(49,107)$(30,550)
Depreciation and amortization3,407 1,861 6,678 3,899 
Stock-based compensation expense10,058 2,896 13,581 6,394 
Interest expense238 573 661 1,132 
Acquisition-related expenses70 — 274 — 
Restructuring charges1,076 — 1,387 — 
Change in fair value of convertible preferred stock warrant liability— — — 930 
Provision for income taxes9 13 22 40 
Non-GAAP Adjusted EBITDA$(13,541)$(9,036)$(26,504)$(18,155)

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

Three Months EndedSix Months Ended
June 30,June 30,
2022202120222021
(in thousands)
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)

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Comparison of the Three and Six Months Ended March 31,June 30, 2022 and 2021
Revenue
Three Months Ended
March 31,		Change
20222021Amount%
(in thousands, except percentages)
Consignment revenue$47,435 $44,688 $2,747 6 %
Product revenue25,260 10,992 14,268 130 %
Total revenue$72,695 $55,680 $17,015 31 %
Consignment revenue as a % of total revenue65 %80 %
Product revenue as a % of total revenue35 %20 %

The $17.0
Three Months EndedSix Months Ended
June 30,ChangeJune 30,Change
20222021Amount%20222021Amount%
(in thousands, except percentages)
Consignment revenue$48,536 $48,597 $(61)— %$95,971 $93,285 $2,686 3 %
Product revenue27,885 11,362 16,523 145 %53,145 22,354 30,791 138 %
Total revenue$76,421 $59,959 $16,462 27 %$149,116 $115,639 $33,477 29 %
Consignment revenue as a % of total revenue64 %81 %(17)%64 %81 %(17)%
Product revenue as a % of total revenue36 %19 %17 %36 %19 %17 %

Total revenue increased by $16.5 million, increase in total revenue represents a 31% increase in total revenueor 27%, for the three months ended March 31,June 30, 2022, as compared to the three months ended March 31,June 30, 2021. This increase in total revenue was primarily attributable to a 45%40% increase in Orders and a 29% growth in Active Buyers of 33% largely driven
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by the additionresulting from our acquisition of our European operations offset by a 10% decrease in October 2021 and the increases in our domestic Orders and Active Buyers. We experienced slowing revenue and Order growth in the back half of June 2022 that is attributable to various factors including, but not limited to, general global economic uncertainty, increased inflation and weakening consumer discretionary spending. Overall, revenue per Order over the same period. The 10% decrease in revenue per Order wasdecreased by 9% primarily due to lower revenue per Order for our European operationsoperations; domestic revenue per Order increased by 6% in the comparative period due to intensified marketing, advertising and promotional efforts and sales acceleration connected with revamp of our loyalty program.
Total revenue increased by $33.5 million, or 29%, for the six months ended June 30, 2022, as compared with ourto the six months ended June 30, 2021. Orders increased by 43% and Active Buyers grew by 29% partially offset by a 10% decrease in revenue per Order due to lower pricing in Europe; domestic operations.revenue per Order increased by 4% in the comparative period. Our intensified marketing, advertising and promotional efforts largely contributed to the increases in Orders and Active Buyers.
Product revenue increased by 130%145% and 138%, respectively, for the three and six months ended March 31,June 30, 2022, as compared to the three and six months ended March 31, 2021 and represented 35% of total revenue. This revenue increased primarilyJune 30, 2021. The increase was mainly due to the introductionaddition of our European operations, which is primarily product revenue, and a smalleran increase in our domestic product revenue.revenue which is due to increased upfront finished goods purchases, for which revenue is recognized as product revenue when shipped to the end customer.
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Cost of Revenue
Three Months Ended
March 31,		Change
20222021Amount%
(in thousands, except percentages)
Cost of consignment revenue$10,049 $10,832 $(783)(7)%
Cost of product revenue12,418 5,130 7,288 142 %
Total cost of revenue$22,467 $15,962 $6,505 41 %
Gross profit$50,228 $39,718 $10,510 26 %
Gross profit margin69 %71 %
Cost of revenue as a % of total revenue31 %29 %
Cost of consignment revenue as a % of total cost of revenue45 %68 %
Cost of product revenue as a % of total cost of revenue55 %32 %

Three Months EndedSix Months Ended
June 30,ChangeJune 30,Change
20222021Amount%20222021Amount%
(in thousands, except percentages)
Cost of consignment revenue$10,218 $10,687 $(469)(4)%$20,267 $21,519 $(1,252)(6)%
Cost of product revenue13,555 5,140 8,415 164 %25,973 10,270 15,703 153 %
Total cost of revenue$23,773 $15,827 $7,946 50 %$46,240 $31,789 $14,451 45 %
Gross profit$52,648 $44,132 $8,516 19 %$102,876 $83,850 $19,026 23 %
Gross profit margin69 %74 %69 %73 %
Cost of revenue as a % of total revenue31 %26 %31 %27 %
Cost of consignment revenue as a % of total cost of revenue43 %68 %44 %68 %
Cost of product revenue as a % of total cost of revenue57 %32 %56 %32 %

Total cost of revenue as a percentage of total revenue was 31% for the three months ended March 31,June 30, 2022, an increase of 200471 basis points from 29%26% for the three months ended March 31,June 30, 2021. Total cost of revenue as a percentage of total revenue was 31% for the six months ended June 30, 2022, an increase of 352 basis points from 27% for the six months ended June 30, 2021. This decrease in gross profit margin was primarily attributabledue to the additioninclusion of operating results of our European operations beginning infrom October 2021 whichonward. Revenue from our European operations is primarily derived from product sales with a lower gross profit gross margin compared to our consignment sales.
margin. Consignment sales result inhave a higher gross profit margin than product sales becausebut made up a smaller percentage of total revenue for both the three and six months ended June 30, 2022 due to combination with revenue coming from our European operations. Revenue for consignment sales is recognized net of seller payouts and cost of items sold, whereas, for product sales, seller payouts and cost of items sold are recognizedincluded as a component of cost of revenue.
We expect cost of revenue leading to different gross margin profiles between consignment sales and product sales.decrease in absolute dollars but increase as a percentage of revenue as our European operations become a greater share of our overall business in the short-term.
Cost of Consignment Revenue

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Three Months EndedSix Months Ended
June 30,ChangeJune 30,Change
20222021Amount%20222021Amount%
(in thousands, except percentages)
Cost of consignment revenue$10,218 $10,687 $(469)(4)%$20,267 $21,519 $(1,252)(6)%
As a percent of consignment revenue21 %22 %21 %23 %
Consignment gross margin79 %78 %79 %77 %

Three Months Ended
March 31,		Change
20222021Amount%
(in thousands, except percentages)
Cost of consignment revenue$10,049 $10,832 $(783)(7)%
As a percent of consignment revenue21 %24 %
Consignment gross margin79 %76 %
The $0.8 million decrease in costCost of consignment revenue represents a 7% decrease in the cost of consignment revenuedecreased by $0.5 million, or 4% for the three months ended March 31,June 30, 2022 compared to the three months ended March 31,June 30, 2021.
The decrease in cost Cost of consignment revenue decreased by $1.3 million or 6% for the threesix months ended March 31,June 30, 2022 was driven bycompared to the six months ended June 30, 2021. The decreases in the comparative periods were due to consignment revenue being a smaller percentage of total revenue and changes in related costs outlined in the below table. table as follows.
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Three Months EndedSix Months Ended
June 30,ChangeJune 30,Change
20222021Amount%20222021Amount%
(in thousands, except percentages)
Outbound shipping$6,471 $7,942 $(1,471)(19)%$13,088 $16,059 $(2,971)(19)%
Direct labor2,554 1,918 636 33 %5,013 3,783 1,230 33 %
Packaging883 620 263 42 %1,619 1,533 86 6 %
Other310 207 103 50 %547 144 403 280 %
Total cost of consignment revenue$10,218 $10,687 $(469)(4)%$20,267 $21,519 $(1,252)(6)%

Consignment gross margin increased 30094 basis points to 79% for the three months ended March 31,June 30, 2022. Consignment gross margin increased 195 basis points to 79% for the six months ended June 30, 2022. Outbound shipping and packaging costs decreased mainly due to consolidation of our outbound shipping process across distribution centers.
Three Months Ended
March 31,
Change
20222021Amount%
(in thousands, except percentages)
Outbound shipping$6,617 $8,117 $(1,500)(18)%
Direct labor2,459 1,865 594 32 %
Packaging736 913 (177)(19)%
Other237 (63)300 *
Total cost of consignment revenue$10,049 $10,832 $(783)(7)%
* Not meaningful
centers which was partially offset by higher shipping rates and increased direct labor.
Cost of Product Revenue
Three Months Ended
March 31,		Change
20222021Amount%
(in thousands, except percentages)
Cost of product revenue$12,418 $5,130 $7,288 142 %
As a percent of product revenue49 %47 %
Product gross margin51 %53 %

The $7.3 million increase in cost
Three Months EndedSix Months Ended
June 30,ChangeJune 30,Change
20222021Amount%20222021Amount%
(in thousands, except percentages)
Cost of product revenue$13,555 $5,140 $8,415 164 %$25,973 $10,270 $15,703 153 %
As a percent of product revenue49 %45 %49 %46 %
Product gross margin51 %55 %51 %54 %

Cost of product revenue represents a 142% increase in the cost of product revenueincreased $8.4 million, or 164%, for the three months ended March 31,June 30, 2022 compared to the three months ended March 31,June 30, 2021.
Cost of product revenue increased $15.7 million or 153% for the six months ended June 30, 2022 compared to the six months ended June 30, 2021. The increaseincreases in cost of product revenue forin the three months ended March 31, 2022 wascomparative periods were primarily driven by higher domestic product revenue and related costs outlinedinclusion of our European operations in 2022 onward. The cost components are detailed in the below table. table as follows.

Three Months EndedSix Months Ended
June 30,ChangeJune 30,Change
20222021Amount%20222021Amount%
(in thousands, except percentages)
Inventory costs$9,610 $3,035 $6,575 217 %$18,442 5,861 $12,581 215 %
Outbound shipping2,633 1,625 1,008 62 %5,053 3,333 1,720 52 %
Direct labor988 365 623 171 %1,875 757 1,118 148 %
Packaging324 115 209 182 %603 319 284 89 %
Total cost of product revenue$13,555 $5,140 $8,415 164 %$25,973 $10,270 $15,703 153 %

Product gross margin decreased 200337 basis points to 51% for the three months ended March 31,June 30, 2022.
The Product gross margin decreased 293 basis points to 51% for the six months ended June 30, 2022. Our European operations have lower product profit margin mainly due to capitalization of production costs into inventory and release from inventory to cost of product revenue increased by 142%, which was higher than the increase in product revenue, as our European operations currently have higher inventory costs, resulting in a relatively lower gross margin profile.items are shipped. The increase in outbound shipping from the additioninclusion of our European operations
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in 2022 was offset by a decrease in domestic outbound shipping for our domestic operations relative to the revenue growth due to consolidation of our outbound shipping process across distribution centers. The 171% and 148% increases in direct labor for the three and six months ended June 30, 2022, respectively, as compared to the same periods in 2021 were due primarily to the 145% and 138% growth in revenues. We expect the gross margin profiles for product revenue during the three and six months ended June 30, 2022, respectively, as compared to convergethe same periods in the long-term as we integrate our European operations.2021.
Three Months Ended
March 31,		Change
20222021Amount%
(in thousands, except percentages)
Inventory costs$8,832 $2,826 $6,006 213 %
Outbound shipping2,420 1,708 712 42 %
Direct labor887 392 495 126 %
Packaging279 204 75 37 %
Total cost of product revenue$12,418 $5,130 $7,288 142 %
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Operating Expenses

Three Months EndedSix Months Ended
June 30,ChangeJune 30,Change
20222021Amount%20222021Amount%
(in thousands, except percentages)
Operations, product and technology$43,961 $31,062 $12,899 42 %$83,122 $59,374 $23,748 40 %
Marketing19,640 15,957 3,683 23 %36,618 31,403 5,215 17 %
Sales, general and administrative17,380 10,999 6,381 58 %32,044 21,637 10,407 48 %
Total operating expenses$80,981 $58,018 $22,963 40 %$151,784 $112,414 $39,370 35 %
Operations, product and technology as a % of total revenue58 %52 %56 %51 %
Marketing as a % of total revenue26 %27 %25 %27 %
Sales, general and administrative as a % of total revenue23 %18 %21 %19 %

Operating Expenses
Three Months Ended
March 31,		Change
20222021Amount%
(in thousands, except percentages)
Operations, product and technology$39,161 $28,312 $10,849 38 %
Marketing16,978 15,446 1,532 10 %
Sales, general and administrative14,664 10,638 4,026 38 %
Total operating expenses$70,803 $54,396 $16,407 30 %
Operations, product and technology as a % of total revenue54 %51 %
Marketing as a % of total revenue23 %28 %
Sales, general and administrative as a % of total revenue20 %19 %
Operating expenses increased $16.4$23.0 million, or 30%40%, for the three months ended March 31,June 30, 2022 compared to the three months ended March 31,June 30, 2021. Gross profitOperating expenses increased $10.5$39.4 million, or 26%35%, for the six months ended June 30, 2022 compared to the six months ended June 30, 2021 in the same period.
Operating expenses increased as we We continue to invest in the expansion of distribution center processing capacity, marketing efforts, infrastructure to support being a public company and expansion into Europe.
Results by operating expenses line item are discussed below.
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Operations, Product and Technology
Three Months Ended
March 31,		Change
20222021Amount%
(in thousands, except percentages)
Personnel-related costs$25,494 $18,679 $6,815 36 %
Facilities and other allocated costs8,330 6,020 2,310 38 %
Inbound shipping4,876 3,555 1,321 37 %
Other461 58 403 695 %
Total operations, product and technology expenses$39,161 $28,312 $10,849 38 %
Operations, product and technology as % of total revenue54 %51 %

Three Months EndedSix Months Ended
June 30,ChangeJune 30,Change
20222021Amount%20222021Amount%
(in thousands, except percentages)
Personnel-related costs$27,674 $19,272 $8,402 44 %$53,168 $37,951 $15,217 40 %
Facilities and other allocated costs9,203 6,481 2,722 42 %17,533 12,501 5,032 40 %
Inbound and other shipping6,537 5,077 1,460 29 %11,413 8,632 2,781 32 %
Other547 232 315 136 %1,008 290 718 248 %
Total operations, product and technology expenses$43,961 $31,062 $12,899 42 %$83,122 $59,374 $23,748 40 %
Operations, product and technology as % of total revenue58 %52 %56 %51 %

Personnel-related costs were $25.5$27.7 million for the three months ended March 31,June 30, 2022, which increased by 36%a 44% increase from $18.7$19.3 million for the three months ended March 31, 2021, drivenJune 30, 2021. Personnel-related costs were $53.2 million for the six months ended June 30, 2022, which increased by a 45% increase40% from $38.0 million for the six months ended June 30, 2021. Our average headcount in the average U.S. headcount mostly from distribution and processing centers, corporate and general operational support functions increased 37% and 55% for the inclusionthree and six months ended June 30, 2022, respectively, as compared to the three and six months ended June 30, 2021.
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Table of employees from the Remix acquisition.Contents
Facilities and other allocated costs were $8.3$9.2 million for the three months ended March 31,June 30, 2022, which increased by 38%42% from $6.0$6.5 million for the three months ended March 31,June 30, 2021, driven by increases of $0.5$1.9 million in Software-as-a-service subscriptions and hosting, $0.7 million inrent, depreciation, supplies and third partythird-party logistics related to new distribution and processing centers and clean out bag storage, $0.6$0.8 million in warehousesoftware subscriptions and hosting fees. Facilities and other allocated costs were $17.5 million for the six months ended June 30, 2022, which increased by 40% from $12.5 million for the six months ended June 30, 2021, driven by increases of $3.8 million in rent, related primarily to newdepreciation and other operating expenses in distribution and processing and distribution centers and $0.4$1.3 million in depreciation.software subscriptions and hosting fees.
Inbound and other shipping costs were $4.9$6.5 million for the three months ended March 31,June 30, 2022, which increased by 37%29% from $3.6$5.1 million for the three months ended March 31, 2021,June 30, 2021. Inbound and other shipping costs were $11.4 million for the six months ended June 30, 2022, which increased by 32% from $8.6 million for the six months ended June 30, 2021. The increases in the comparative periods were driven by higher shipping rates and increases in transfers between our processing centers and distribution centers.
We expect operating, product and technology costs to decrease in absolute dollars but to be a higher percentage of $0.8 million in returnsrevenue next quarter due to fixed facilities and intra-company shipments and $0.5 million in the Clean Out Kits from sellers.technology costs.
Marketing
Three Months Ended
March 31,		Change
20222021Amount%
(in thousands, except percentages)
Marketing and advertising costs$13,927 $13,220 $707 5 %
Personnel-related costs2,075 1,684 391 23 %
Facilities and technology allocated costs368 312 56 18 %
Professional Services267 94 173 184 %
Other341 136 205 151 %
Total marketing expense$16,978 $15,446 $1,532 10 %
Marketing as % of total revenue23 %28 %

Three Months EndedSix Months Ended
June 30,ChangeJune 30,Change
20222021Amount%20222021Amount%
(in thousands, except percentages)
Marketing and advertising costs$15,245 $13,743 $1,502 11 %$29,172 $26,963 $2,209 8 %
Personnel-related costs3,122 1,555 $1,567 101 %5,197 3,239 $1,958 60 %
Facilities and technology allocated costs239 337 (98)(29)%607 650 (43)(7)%
Professional services346 176 170 97 %613 271 342 126 %
Other688 146 542 371 %1,029 280 749 268 %
Total marketing expense$19,640 $15,957 $3,683 23 %$36,618 $31,403 $5,215 17 %
Marketing as % of total revenue26 %27 %25 %27 %

Marketing costs increased 10%23% for the three months ended March 31, 2022 compared to 26% gross profit growth.June 30, 2022. Marketing and advertising costs were $13.9$15.2 million for the three months ended March 31,June 30, 2022, which increased by 5%11% from $13.2$13.7 million for the three months ended March 31,June 30, 2021. IncreaseThe increase in marketing and advertising costs was driven by increasesan increase of $1.4$2.4 million from our acquisition of our European operations in organic and acquisition marketing and advertising,2021, offset by a decrease of $0.7$0.9 million from the discontinuance of our Goody Box program.
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Marketing costs increased 17% for the six months ended June 30, 2022. Marketing and advertising costs were $29.2 million for the six months ended June 30, 2022, which increased by 8% from $27.0 million for the six months ended June 30, 2021. The increase in marketing and advertising costs was driven by an increase of $4.2 million from our acquisition of our European operations in 2021, offset by $2.0 million from the discontinuance of our Goody Box program and reduction in other domestic marketing costs.
Personnel-related costs were $2.1$3.1 million for the three months ended March 31,June 30, 2022, which increased by 23%101% from $1.7$1.6 million for the three months ended March 31,June 30, 2021. This increase was primarilyPersonnel-related costs were $5.2 million for the six months ended June 30, 2022, which increased by 60% from $3.2 million for the six months ended June 30, 2021. The average headcount increased 86% and 88%, respectively, for the three and six months ended June 30, 2022 as compared to the three and six months ended June 30, 2021. Stock-based compensation expenses for the U.S. increased $0.9 million and $0.8 million, respectively, for the three and six months ended June 30, 2022 as compared to the three and six months ended June 30, 2021.
We expect marketing costs to decrease in absolute dollars but be a higher percentage of revenue next quarter due to 23% growth in the average U.S. based headcount and additional marketing employees from the acquisitionfixed personnel-related costs.
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Table of Remix.Contents
Sales, General and Administrative
Three Months Ended
March 31,		Change
20222021Amount%
(in thousands, except percentages)
Personnel-related costs$7,372 $5,536 $1,836 33 %
Professional services2,506 1,835 671 37 %
Payment processing fees2,217 1,797 $420 23 %
Other2,569 1,470 1,099 75 %
Total sales, general and administrative costs$14,664 $10,638 $4,026 38 %
Sales, general and administrative as % of total revenue20 %19 %

Three Months EndedSix Months Ended
June 30,ChangeJune 30,Change
20222021Amount%20222021Amount%
(in thousands, except percentages)
Personnel-related costs$11,123 $5,267 $5,856 111 %$18,495 $10,803 $7,692 71 %
Professional services2,008 1,456 552 38 %4,514 3,291 1,223 37 %
Payment processing fees2,264 2,029 235 12 %4,481 3,826 655 17 %
Other1,985 2,247 (262)(12)%4,554 3,717 837 23 %
Total sales, general and administrative expenses$17,380 $10,999 $6,381 58 %$32,044 $21,637 $10,407 48 %
Sales, general and administrative as % of total revenue23 %18 %21 %19 %

Sales, general and administrative expenses increased 58% for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021. Sales, general and administrative expense increased 38%48% for the threesix months ended March 31,June 30, 2022 as compared to 26% gross profit growth. This increasethe six months ended June 30, 2021. The increases for both comparative periods was mainly the result of investments, primarily in personnel and, to a lesser extent, professional services costs, made towards scaling our business and improving our processes as we became a public company.
Personnel-related costs were $7.4$11.1 million for the three months ended March 31,June 30, 2022, which increased by 111% from $5.5$5.3 million for the three months ended March 31, 2021, drivenJune 30, 2021. Personnel-related costs were $18.5 million for the six months ended June 30, 2022, which increased by a71% from $10.8 million for the six months ended June 30, 2021. The average headcount increase of 25% in U.S. operationsincreased 97% and 91%, respectively, for the inclusion of employees fromthree and six months ended June 30, 2022 as compared to the Remix acquisition.three and six months ended June 30, 2021.
Professional services costs were $2.5$2.0 million for the three months ended March 31,June 30, 2022, which increased 37%38% from $1.8$1.5 million compared to the three months ended March 31,June 30, 2021 primarily due to the inclusion of our European operations increase in legal fees and customer support services. Professional services costs were $4.5 million for the six months ended June 30, 2022, which increased 37% from $3.3 million compared to the six months ended June 30, 2021 due to an increase of $0.7$0.5 million in legal services, the inclusion of our European operations and accountinga general increase in services including customer support and other services.
Payment processing fees were $2.2$2.3 million for the three months ended March 31,June 30, 2022, which increased 23%12% from $1.8$2.0 million for the three months ended March 31,June 30, 2021. The increase was mainly due to the 31%27% increase in overall sales partially offset by lower payment processing rate in our European operations. Payment processing fees were $4.5 million for the six months ended June 30, 2022, which increased 17% from $3.8 million for the six months ended June 30, 2021. The increase was mainly due to the 29% increase in overall revenue, partially offset by lower payment processing rate in our European operations.
Other expenses were $2.6$2.0 million for the three months ended March 31,June 30, 2022, an increasea decrease of 75%12% from $1.5$2.2 million for the three months ended March 31,June 30, 2021, primarily driven by a decrease in sales & use tax reserves and payroll service fees. Other expenses were $4.6 million for the six months ended June 30, 2022, an increase of 23% from $3.7 million for the six months ended June 30, 2021, primarily driven by higher insurance premiums associated with our public company status.
We expect sales, general and administrative costs to decrease in absolute dollars but be a higher percentage of revenue next quarter due to fixed corporate overhead costs.
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Liquidity and Capital Resources
As of March 31,June 30, 2022, we had cash, cash equivalents and short-term marketable securities of $183.8 million and an accumulated deficit of $336.1 million. As of December 31, 2021, we had cash, cash equivalents and short-term marketable securities of $205.8 million and an accumulated deficit of $315.3$148.5 million. We have generated negative cash flows from operations and have primarily financed our operations through private and public sales of equity securities and debt. Additionally, we currently have a term loan facility with Western Alliance Bank (the “Term Loan”) for which we have drawn $40.0 million and repaid $6.0 million.$8.0 million, with $32.0 million outstanding as of June 30, 2022. In March 2021,July 2022, we completed our IPOentered into a Second Amended and Restated Loan and Security Agreement, 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 aggregate net proceedsborrowings under the Term Loan to the prime rate published in the Wall Street Journal plus a margin of $175.5 million, after deducting offering costs, underwriter discounts1.25% with a floor of 6.00% and commissionsextend the maturity date of $17.7 million. In August 2021, we completed our follow-on public offering and sold an aggregate of two million shares. The aggregate net proceeds were $45.5 million after deducting $3.3 million of underwriter discounts and commissions and offering costs.
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the outstanding Term Loan to July 14, 2027.
We expect operating losses and negative cash flows from operations to continue into the foreseeable future as we continue to invest in growing our business and expanding our infrastructure. Our primary use of cash includes operating costs such as processing center and distribution center spend, product and technology expenses, marketing expenses, personnel expenses and other expenditures necessary to support our operations and our growth. Additionally, our primary capital expenditures are related to the set-up, expansion and/or automation of our processing centers and distribution centers.centers and may be accelerated or delayed based on our operating position and needs of the Company. Based upon our current operating plans, we believe that our existing cash, cash equivalents and short-term marketable securities will be sufficient to meet our short-term and long-term capital requirements. Our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially.
Our future capital requirements will depend on many factors, including, but not limited to the timing of our increased distribution center automation and expansion plans to support planned revenue growth, the expansion of sales and marketing activities, the potential introduction of new offerings and new RaaS clients, the continuing growth of our marketplace and overall economic conditions. We may seek additional equity or debt financing. If we raise equity financing, our stockholders may experience significant dilution of their ownership interests. If we conduct an additional debt financing, the terms of such debt financing may be similar or more restrictive than our current term loan facility, and we would have additional debt service obligations. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, financial condition and results of operations could be harmed.
Cash Flows
The following table summarizes our cash flows for the periods indicated.indicated:
Three Months Ended
March 31,
20222021
(in thousands)
Net cash (used in) provided by:
Operating activities$(6,679)$1,077 
Investing activities(7,912)(4,099)
Financing activities(1,191)185,051 
Effect of exchange rate changes on cash and cash equivalents(172)— 
Net (decrease) increase in cash, cash equivalents and restricted cash$(15,954)$182,029 

Six Months Ended
June 30,
20222021
(in thousands)
Net cash provided by (used in):
Operating activities$(24,835)$(9,090)
Investing activities(4,764)(66,417)
Financing activities(2,332)184,081 
Effect of exchange rate changes on cash and cash equivalents(521)— 
Net increase (decrease) in cash, cash equivalents and restricted cash$(32,452)$108,574 

Changes in Cash Flow from Operating Activities
For the threesix months ended March 31,June 30, 2022, net cash used in operating activities was $6.7$24.8 million, which consisted of a net loss of $20.7$49.1 million, partially offset by non-cash charges of $8.7 million and $5.4 million of net$24.3 million. The cash generated from changes in our operating assets and liabilities. The increaseflow decrease in operating assets and liabilities was primarily due to a $4.9$4.7 million increase in inventory to support seasonal sales for our European operations and to support business growth. We also experienced a $1.5 million increase in prepaid expenses for insurance, software and other expenses. Offsetting these cash flow decreases was a $6.2 million increase in accounts payable, accrued and other current liabilities and seller payable flows due to payment timing, increased sales and higher operating expenses as we grow our business.
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For the six months ended June 30, 2021, net cash used in operating activities was $9.1 million, which consisted of a net loss of $30.6 million, partially offset by non-cash charges of $13.9 million and a net change of $7.6 million in our operating assets and liabilities. The change in operating assets and liabilities is due to an $8.2 million increase in accrued and other current liabilities, primarily resulting from an increase in allowance for returnsaccrued marketing and accrued vendor liabilitiescompensation, a $3.0 million increase in seller payable due to the timing of payments, a $2.7 million increase in accounts payable due to the timing of payments and higher operating expenses as we grow our business, and a $4.3 million cash inflow from changes in accounts receivable, accounts payable and seller payable due to the timing of payments.business. These changes were partially offset by increased inventory of $2.3 million to support business growth and a $2.2$3.4 million increase in other current and non-current assets resulting from an increase in contract assets and security deposits.
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For the three months ended March 31, 2021, net cash provided by operating activities was $1.1 million, which consisted of non-cash charges of $7.9 million and net cash of $9.3 million generated from changes in operating assets and liabilities, partially offset by a net loss of $16.2 million. The increase in operating assets and liabilities was primarily due to a $4.8 million increase in accrued and other current liabilities, a $4.7 million increase in accounts payable due to the timing of payments and increased operating expenses as we grow our business, and a $1.5 million increase in seller payable due to the timing of payments, partially offset byprepaid insurance, a reduction in operating lease liabilities of $1.3 million.$2.3 million resulting from the payment of leases, and a $0.8 million increase in net inventory.
Changes in Cash Flow from Investing Activities
For the threesix months ended March 31,June 30, 2022, net cash used in investing activities was $7.9$4.8 million, which was driven by $12.6$27.6 million of capital expenditures primarily for our new distribution centers and $3.5 million purchases of marketable securities, partially offset by $4.7$26.3 million in maturities of marketable securities.
For the threesix months ended March 31,June 30, 2021, net cash used in investing activities was $4.1$66.4 million, which is attributable towas driven by $57.4 million in new purchases of propertymarketable securities and equipment,$9.0 million of capital expenditures primarily for automation assets for theour distribution center in Georgia.centers.
Changes in Cash Flow from Financing Activities
For the threesix months ended March 31,June 30, 2022, net cash used in financing activities was $1.2$2.3 million, which consisted mainly of $2.0$4.0 million in debt repayment, partially offset by $0.8$1.7 million in proceeds from the exercise of common stock options.options and employee stock purchases.
For the threesix months ended March 31,June 30, 2021, net cash provided by financing activities was $185.1$184.1 million, which consisted mainly of $180.3 million in net proceeds from the sale of Class A common stock in theour IPO, net of underwriting discounts and commissions, $4.6 million in net debt financing proceeds, and $1.9$2.8 million in proceeds from the exercise of common stock options,options. This was partially offset by $1.7$3.6 million in public offering costs for the IPO.

Critical Accounting Policies and Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these condensed consolidated financial statements requires us to make judgments and estimates that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, as well as the reported revenue generated, and expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these judgments and estimates under different assumptions or conditions and any such differences may be material.
There have been no significant changes to our critical accounting policies since December 31, 2021. For a description of critical accounting policies that affect our significant judgments and estimates used in the preparation of our unaudited condensed consolidated financial statements, refer to the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K filed with the SEC on March 22, 2022.
Recent Accounting Pronouncements
For information on recently issued accounting pronouncements, refer toSee discussion under Note 2, titled “SignificantSignificant Accounting Policies”Policies, to our unaudited condensed consolidated financial statementsthe Condensed Consolidated Financial Statements included in Part 1,I, Item 1,Financial Statements, of this Quarterly Report on Form 10-Q, for a discussion of recentinformation on new accounting pronouncements.
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JOBS Act Accounting Election
We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act (“JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have elected to use this extended transition period until we are no longer an emerging growth company or until we affirmatively and irrevocably opt out of the extended transition period. Accordingly, our condensed consolidated financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.


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Item 3.    Quantitative and Qualitative Disclosures About Market Risk.Risk
We are exposed to market risks in the ordinary course of our business. These risks primarily include:
Interest Rate Risk
As of March 31,June 30, 2022, we had unrestricted cash and cash equivalents of $68.6$52.2 million and marketable securities of $115.2$96.3 million, consisting primarily of money market funds, corporate debt securities, commercial paper, U.S. treasury securities and U.S. government agency bonds, which carry a degree of interest rate risk. Fluctuations in interest rates have not been significant to date. The primary objective of our investment activities is to preserve principal while maximizing income without significantly increasing risk. We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure. Due to the short-term to intermediate term nature of our investments, we have not been exposed to, nor do we anticipate being exposed to, material risks due to changes in interest rates. Fluctuations in interest rates have not been significant to date.
Interest rates under our loan and security agreement with Western Alliance Bank are tied to the prime rate with a floor of 5.50% and therefore carry interest rate risk. As of March 31,June 30, 2022, we had borrowed $40.0 million under our loan and security agreement, with $34.0$32.0 million principal outstanding as of such date, at an interest rate of 5.50%6.25%. Fluctuations in interest rates have not been significant to date. See Note 14, Subsequent Events for discussion of our loan amendment and impact on interest rates effective July 14, 2022.
A hypothetical 100 basis point change in interest rates would not have a material impact on our financial condition or results of operations for the periods presented.
Inflation Risk
In recent months, inflation has increased significantly in the United States and overseas where we conduct our business, resulting in rising interest rates, fuel, wages, freight and other costs. We do not believe that inflation has had a material effect on our business, financial condition, or results of operations to date. However, these increases could negatively impact our business by driving up our operating and borrowing costs. In addition, the effect of inflation on consumers’ budgets could result in a decrease in our customers’ spending. If we are unable to increase our prices to sufficiently offset the rising costs of doing business, our profitability and financial position could be adversely impacted.
Foreign Currency Exchange Rate Risk
We transact business in Europe through Remix in multiple currencies. As a result, our operating results, cash flows and net investment in Remix are subject to fluctuations due to changes in foreign currency exchange rates. As of March 31,June 30, 2022, our most significant currency exposure was the Bulgarian lev (BGN). We manage our foreign currency exchange rate risks through natural hedgehedges including foreign currency revenue and costs matching, as well as foreign currency assets offsetting liabilities. We have not entered into any hedging arrangements with respect to foreign currency risk, but we may do so in the future if our exposure to foreign currency becomebecomes more significant.

Assets and liabilities of our foreign operations are translated into dollars at period-end rates, while income and expenses are translated using the average exchange rate during the period in which the transactions occurred. The related translation adjustments are reflected as a negative foreign currency translation adjustment of $0.7$3.0 million impacting equity for the threesix months ended March 31,June 30, 2022 in accumulated other comprehensive loss.

A hypothetical 10% change in foreign currency exchange rates would not have had a material impact on our financial condition or results of operations during any of the periods presented.
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Item 4.    Controls and Procedures.Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to RuleRules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”) as of the end of the period covered by this report. The term “disclosure controls and procedures,” as defined under the Exchange Act, means controls and procedures that are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objective and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Further, no evaluation of control can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.
Because of the material weakness in our internal control over financial reporting discussed below, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31,June 30, 2022, our disclosure controls and procedures were not effective. In light of this fact, our management, including our Chief Executive Officer and Chief Financial Officer, has performed additional reconciliations and other post-closing procedures and has concluded that, notwithstanding the material weakness in our internal control over financial reporting, the unaudited interim condensed consolidated financial statements for the periods covered by and included in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with GAAP.
Previously Reported Material Weaknesses in Internal Control Over Financial Reporting
As previously disclosed in our Annual Report on Form 10-K filed with the SEC on March 22, 2022, in connection with the audit of our financial statements for the fiscal years ended December 31, 2021, 2020, 2019 and 2018 we and our independent registered public accounting firm identified certain control deficiencies in the design and implementation of our internal control over financial reporting that in the aggregate constituted a material weakness. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis.
Our material weakness related to the following control deficiencies:
•We did not design and maintain effective control over our accounting and proprietary data systems used in our financial reporting process. These systems lacked controls over user access, program change management, computer operation and data validation to ensure that IT program and data changes affecting financial accounting applications and underlying accounting records are identified, tested, authorized and implemented appropriately.
•We did not design and maintain adequate controls over the preparation and review of certain account reconciliations and journal entries. Specifically, we did not design and maintain controls and we did not maintain a sufficient complement of accounting personnel to ensure (i) the appropriate segregation of duties in the preparation and review of account reconciliations and journal entries and (ii) account reconciliations were prepared and reviewed at the appropriate level of precision on a consistent and timely basis.
The deficiencies described above, if not remediated, could result in a misstatement of one or more account balances or disclosures in our annual or interim consolidated financial statements that would not
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be prevented or detected, and, accordingly, we determined that these control deficiencies constitute a material weakness.
Remediation Plans
To address our material weakness, we have added accounting, finance and information technology personnel and implemented new financial accounting processes. We are continuing to take steps to remediate the material weakness described above through implementing enhancements and controls within our accounting and proprietary systems, hiring additional qualified accounting, finance and information technology resources and further evolving our accounting and quarterly close processes. We will not be able to fully remediate these control deficiencies until these steps have been completed and the controls have been operating effectively for a sufficient period of time.
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Changes in Internal Control over Financial Reporting
We are taking actions to remediate the material weaknesses relating to our internal control over financial reporting, as described above. Except as described above, there was not any change in our internal control over financial reporting (as such term is defined in RuleRules 13a-15(f) and 15d-15(f) under the Exchange Act) during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. We have not experienced any material impact to our internal controls over financial reporting despite our employees working remotely due to the COVID-19 pandemic. We are continually monitoring and assessing the COVID-19 situation on our internal controls to minimize the impact on their design and operating effectiveness.
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PART II. OTHER INFORMATION.INFORMATION
Item 1.    Legal Proceedings.Proceedings
We are not a party to any material pending legal proceedings. From time to time, we may be subject to legal proceedings and claims arising in the ordinary course of business.
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Item 1A.    Risk Factors.Factors
Risks affecting our business are discussedThe Company is supplementing the risk factors previously disclosed in the section titled “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed with the SEC on March 22, 2022 (our “Fiscal 2021 10-K”). There have been no material changes to ourinclude the following risk factors, as previously disclosedwhich should be read in conjunction with the other risk factors presented in our Fiscal 2021 10-K.

Our international operations may subject us to exchange rate fluctuations and other currency risks.
Assets, liabilities, revenues and related expenses of our international operations are denominated in foreign currencies. Exchange rate fluctuations between a local currency and the U.S. dollar may negatively impact the financial conditions and operating results of our international operations when converted into U.S. dollars. In addition, the relative change in currency values creates fluctuations in product pricing for foreign end-customers, which may result in lost orders and reduce the competitiveness of our products in certain foreign markets. The reduction of our revenue as a result of exchange rate fluctuations could negatively impact our future growth prospects, results of operations and financial condition.
We may not realize expected savings or benefits from restructuring activities.
34We have entered into restructuring activities and may enter into such initiatives in the future to improve our operations, respond to changes in business conditions and markets and to streamline certain key functions to reduce costs. We may not realize expected savings or benefits from restructuring activities, incur additional restructuring charges and experience loss of key personnel, disruptions in our operations, and difficulties in the timely delivery of products. These factors could negatively impact our business, results of operations and financial condition.
Recent increases in interest rates and volatility in the capital markets may increase our borrowing costs and affect our ability to raise additional funds.
We have relied in part on borrowed funds to meet our liquidity needs and fund our operations and may continue to do so in the future. In July 2022, we entered into a Second Amended and Restated Loan and Security Agreement to, among other things, increase our 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. Continued increases in interest rates will increase the cost of servicing our outstanding indebtedness as well as the cost of any new indebtedness we may incur, including as a result of any future refinancings, and could negatively impact our business, results of operations and financial condition. In addition, uncertainty and volatility in the capital markets and other factors may negatively impact our access to debt and equity financing and such financing may not be available on terms favorable to us or at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us, we could face significant limitations on our ability to invest in our operations and otherwise suffer harm to our business.

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds.
Unregistered Sales of Equity Securities.

None.

Proceeds
Use of Proceeds(a)from our Public Offerings.None.

(b)
On March 30, 2021, we closed our IPO, in which we sold 13,800,000 shares of our Class A common stock at an offering price of $14.00 per share, including 1,800,000 shares pursuant to the exercise of the underwriters’ option to purchase additional shares of our Class A common stock, resulting in net proceeds to us of $175.5 million after deducting offering costs, underwriting discounts and commissions of $17.7 million. All of the shares offered, issued and sold in our IPO were registered under the Securities Act pursuant to a registration statement on Form S-1 (File No. 333-253834), which was declared effective by the SEC on March 25, 2021. There has been no material change in the planned use of proceeds from the IPO as disclosed in our final prospectus filed pursuant to Rule 424(b) on March 26, 2021.
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On August 2, 2021, the Company issued and sold 2,000,000 shares of Class A common stock at a price of $24.25 per share in a registered public offering. The aggregate net proceeds were $45.5 million, after deducting $3.3 million of underwriting discounts and commissions and offering costs. There has been no material change in the planned use of proceeds from the registered public offering completed in August 2021.

(c)None.
Item 3.    Defaults Upon Senior Securities
None.
Item 4.    Mine Safety Disclosures
Not applicable.
Item 5.    Other Information

(a)None.

(b)None.
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Item 6.    EXHIBITS.Exhibits
Exhibit
Number		Exhibit TitleIncorporation by Reference
FormFile No.ExhibitFiling Date
3.1S-1333-2538343.23/3/2021
3.2S-1333-2538343.43/3/2021
4.1S-1333-2538344.13/3/2021
4.2S-1333-2538344.23/3/2021
31.1Filed herewith
31.2Filed herewith
32.1*Furnished herewith
32.2*Furnished herewith
101.INSXBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.Filed herewith
101.SCHInline XBRL Taxonomy Extension Schema Document.Filed herewith
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document.Filed herewith
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document.Filed herewith
101.LABInline XBRL Taxonomy Extension Label Linkbase Document.Filed herewith
36

Incorporation by Reference
Exhibit
Number		Exhibit TitleFormFile No.ExhibitFiling Date
3.1
Amended and Restated Certificate of Incorporation of the Registrant.
S-1333-2538343.23/3/2021
3.2
Amended and Restated Bylaws of the Registrant.
S-1333-2538343.43/3/2021
4.1
Form of Class A common stock certificate of the Registrant.
S-1333-2538344.13/3/2021
4.2
Tenth Amended and Restated Investors’ Rights Agreement, dated February 16, 2021, by and among the Registrant and certain of its stockholders.
S-1333-2538344.23/3/2021
31.1
Certification of Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Filed herewith
31.2
Certification of Principal Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Filed herewith
32.1*
Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Furnished herewith
32.2*
Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Furnished herewith
101.INSXBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.Filed herewith
101.SCHInline XBRL Taxonomy Extension Schema Document.Filed herewith
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document.Filed herewith
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document.Filed herewith
101.LABInline XBRL Taxonomy Extension Label Linkbase Document.Filed herewith
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document.Filed herewith
104Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101).Filed herewith
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document.Filed herewith
104Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101).Filed herewith
________________
*The certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Quarterly Report on Form 10-Q and are not deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall they be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act, irrespective of any general incorporation language contained in such filing.

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

THREDUP INC.
Date:May 9, 2022By:/s/ James Reinhart
James Reinhart
Chief Executive Officer
(Principal Executive Officer)
Date:May 9, 2022By:/s/ Sean SobersSEAN SOBERS
Sean Sobers
Chief Financial Officer
(Principal Financial and Accounting Officer)

Dated: August 15, 2022
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