Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2019 | Aug. 05, 2019 | |
Document And Entity Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | RVLV | |
Entity Registrant Name | Revolve Group, Inc. | |
Entity Central Index Key | 0001746618 | |
Entity Current Reporting Status | No | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Shell Company | false | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity File Number | 001-38927 | |
Entity Tax Identification Number | 461640160 | |
Entity Address, Address Line One | 16800 Edwards Road | |
Entity Address, City or Town | Cerritos | |
Entity Address, State or Province | California | |
Entity Address, Postal Zip Code | 90703 | |
City Area Code | 562 | |
Local Phone Number | 677-9480 | |
Class A Common Stock | ||
Document And Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 13,529,411 | |
Class B Common Stock | ||
Document And Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 55,340,994 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 44,845 | $ 16,369 |
Accounts receivable, net | 8,373 | 5,337 |
Inventory | 102,533 | 102,220 |
Income taxes receivable | 1,142 | |
Prepaid expenses and other current assets | 25,374 | 15,227 |
Total current assets | 182,267 | 139,153 |
Property and equipment, net | 14,239 | 5,907 |
Intangible assets, net | 403 | 564 |
Goodwill | 2,042 | 2,042 |
Other assets | 695 | 731 |
Deferred income taxes | 15,918 | 13,677 |
Total assets | 215,564 | 162,074 |
Current liabilities: | ||
Accounts payable | 29,687 | 20,219 |
Income taxes payable | 881 | 917 |
Accrued expenses | 22,138 | 18,398 |
Returns reserve | 36,355 | 29,184 |
Other current liabilities | 15,240 | 13,538 |
Total current liabilities | 104,301 | 82,256 |
Stockholders' equity: | ||
Accumulated members' equity/ Retained earnings | 38,458 | 61,270 |
Additional paid-in capital | 72,736 | |
Total members' equity | 79,818 | |
Total stockholders' equity | 111,263 | 79,818 |
Total liabilities and members’/stockholders’ equity | 215,564 | 162,074 |
Preferred Class T Unit | ||
Members' equity: | ||
Members' equity | 15,000 | |
Stockholders' equity: | ||
Total stockholders' equity | 15,000 | |
Common Class A Unit | ||
Members' equity: | ||
Members' equity | 3,548 | |
Stockholders' equity: | ||
Total stockholders' equity | $ 3,548 | |
Common Class A | ||
Stockholders' equity: | ||
Common stock value | 14 | |
Common Class B | ||
Stockholders' equity: | ||
Common stock value | $ 55 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) (Unaudited) - $ / shares | Jun. 30, 2019 | Dec. 31, 2018 |
Preferred Class T Unit | ||
Preferred, par value | $ 0 | $ 0 |
Preferred, shares authorized | 0 | 23,551,834 |
Preferred, shares issued | 0 | 23,551,834 |
Preferred, shares outstanding | 0 | 23,551,834 |
Common stock, shares outstanding | 23,551,834 | |
Common Class A Unit | ||
Common, par value | $ 0 | $ 0 |
Common stock, shares authorized | 0 | 41,936,219 |
Common stock, shares issued | 0 | 41,936,219 |
Common stock, shares outstanding | 0 | 41,936,219 |
Common stock, shares outstanding | 41,936,219 | |
Common Class A | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 1,000,000,000 | 0 |
Common stock, shares issued | 13,529,411 | 0 |
Common stock, shares outstanding | 13,529,411 | 0 |
Common Class B | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 125,000,000 | 0 |
Common stock, shares issued | 55,340,994 | 0 |
Common stock, shares outstanding | 55,340,994 | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements Of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income Statement [Abstract] | ||||
Net sales | $ 161,897 | $ 131,802 | $ 299,240 | $ 245,107 |
Cost of sales | 71,479 | 58,470 | 138,068 | 115,342 |
Gross profit | 90,418 | 73,332 | 161,172 | 129,765 |
Operating expenses: | ||||
Fulfillment | 5,301 | 3,263 | 9,796 | 6,045 |
Selling and distribution | 23,639 | 18,669 | 44,230 | 34,522 |
Marketing | 24,914 | 21,161 | 44,412 | 36,514 |
General and administrative | 18,836 | 16,145 | 38,105 | 31,085 |
Total operating expenses | 72,690 | 59,238 | 136,543 | 108,166 |
Income from operations | 17,728 | 14,094 | 24,629 | 21,599 |
Other expense, net | 444 | 123 | 660 | 320 |
Income before income taxes | 17,284 | 13,971 | 23,969 | 21,279 |
Provision for income tax | 4,543 | 3,504 | 6,266 | 5,480 |
Net income | 12,741 | 10,467 | 17,703 | 15,799 |
Less: Net loss attributable to non-controlling interest | 47 | |||
Net income attributable to Revolve Group, Inc. | 12,741 | 10,467 | 17,703 | 15,846 |
Less: Repurchase of Class B common stock upon corporate conversion | (40,816) | (40,816) | ||
Net income (loss) attributable to common stockholders | $ (28,075) | $ 10,467 | $ (23,113) | $ 15,846 |
Earnings (net loss) per share of Class A and Class B common stock: | ||||
Basic | $ (0.57) | $ 0.16 | $ (0.51) | $ 0.24 |
Diluted | $ (0.57) | $ 0.15 | $ (0.51) | $ 0.23 |
Weighted average Class A and Class B common shares outstanding: | ||||
Basic | 49,025 | 41,936 | 45,481 | 41,936 |
Diluted | 49,025 | 44,394 | 45,481 | 44,289 |
Condensed Consolidated Statem_2
Condensed Consolidated Statement of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Statement Of Income And Comprehensive Income [Abstract] | ||||
Net income | $ 12,741 | $ 10,467 | $ 17,703 | $ 15,799 |
Other comprehensive income: | ||||
Cumulative translation adjustment | (130) | (35) | 13 | (35) |
Total other comprehensive income | (130) | 13 | (35) | |
Total comprehensive income | 12,611 | 10,467 | 17,716 | 15,764 |
Less: Comprehensive loss attributable to non-controlling interest | 47 | |||
Total comprehensive income attributable to Revolve Group, Inc. | $ 12,611 | $ 10,467 | $ 17,716 | $ 15,811 |
Condensed Consolidated Statem_3
Condensed Consolidated Statement of Cash Flows (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Operating activities: | ||
Net income | $ 17,703 | $ 15,799 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 1,584 | 1,459 |
Equity-based compensation | 1,032 | 512 |
Deferred income taxes | (2,241) | 1,410 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (3,036) | (278) |
Inventories | (13,184) | (6,061) |
Income taxes receivable | (1,142) | 3,590 |
Prepaid expenses and other current assets | (271) | (704) |
Other assets | 36 | (107) |
Accounts payable | 9,468 | (3,971) |
Income taxes payable | (36) | |
Accrued expenses | 3,137 | 4,215 |
Returns reserve | 7,171 | 9,314 |
Other current liabilities | 2,462 | 449 |
Net cash provided by operating activities | 22,683 | 25,627 |
Investing activities: | ||
Purchases of property and equipment | (9,755) | (1,077) |
Net cash used in investing activities | (9,755) | (1,077) |
Financing activities: | ||
Proceeds from initial public offering, net of underwriting discounts paid | 57,077 | |
Repurchase of Class B common stock upon corporate conversion | (40,816) | |
Repayment of line of credit | (15,100) | |
Payment of deferred offering costs | (726) | |
Net cash (used in) provided by financing activities | 15,535 | (15,100) |
Effect of exchange rate changes on cash and cash equivalents | 13 | (35) |
Net increase in cash and cash equivalents | 28,476 | 9,415 |
Cash and cash equivalents, beginning of period | 16,369 | 10,588 |
Cash and cash equivalents, end of period | 44,845 | 20,003 |
Supplemental disclosure of cash flow information: | ||
Interest | 87 | |
Income taxes, net of refund | 9,674 | $ 355 |
Supplemental disclosure of non-cash activities: | ||
Deferred offering costs accrued, unpaid | $ 603 |
Description of Business
Description of Business | 6 Months Ended |
Jun. 30, 2019 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Description of Business | Note 1. Description of Business Revolve Group, Inc., or REVOLVE, is the next-generation fashion retailer for Millennial and Generation Z consumers. As a trusted, premium lifestyle brand and a go-to source for discovery and inspiration, our website and mobile apps deliver an aspirational customer experience from a vast, yet curated offering. Our dynamic platform connects a deeply engaged community of consumers, global fashion influencers, and emerging, established and owned brands. We are headquartered in Los Angeles County, California. |
Significant Accounting Policies
Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Note 2. Significant Accounting Policies Basis of Presentation Our unaudited condensed consolidated interim financial information has been prepared in accordance with Article 10 of the Securities and Exchange Commission’s, or the SEC, Regulation S-X. As permitted under those rules, certain footnotes or other financial information that are normally required by generally accepted accounting principles in the United States, or GAAP, can be condensed or omitted. These financial statements have been prepared on the same basis as our annual financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for the fair statement of our financial information. These interim results are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2019 or for any other interim period or for any other future year. All intercompany transactions and balances have been eliminated in consolidation. Our fiscal year ends on December 31 of each year. The accompanying unaudited condensed consolidated financial statements and related financial information should be read in conjunction with the audited consolidated financial statements and the related notes thereto for the year ended December 31, 2018 contained in our prospectus filed pursuant to Rule 424(b) under the Securities Act of 1933, as amended, with the SEC on June 7, 2019. Reorganization Historically, Revolve Group, Inc., formerly Advance Holdings, LLC, or Advance, included its wholly owned subsidiary Advance Development, Inc. who in turn had a majority controlling interest in Forward by Elyse Walker, or FORWARD. A non-controlling interest in FORWARD was held by an outside investor, Capretto, LLC, or Capretto. Twist Holdings, LLC, or Twist, included its wholly owned subsidiaries Alliance Apparel Group, Inc. and Eminent, Inc., doing business as REVOLVE. Twist and Advance were controlled by the same group of owners. Twist and Advance are Delaware limited liability companies formed in 2012. Eminent, Inc. and Advance Development, Inc. are Delaware corporations also formed in 2012. FORWARD was formed in 2011 as a California limited liability company. On March 15, 2018, we reorganized these entities, by contributing Twist and subsidiaries to Advance through an exchange of equity interests in Twist for additional equity interests in Advance, resulting in Advance becoming the parent and reporting entity of the consolidated group of companies. The exchange was done using an equity unit conversion ratio to ensure each Advance and Twist equity unit holder maintained the same intrinsic value before and after the exchange. The contribution of Twist and subsidiaries in exchange for Advance equity qualified as a combination of entities under common control. Accordingly, the contribution of net assets and the issuance of equity in Advance was recorded at the carrying amounts of assets and liabilities on the date of contribution. The accompanying condensed consolidated financial statements include the results of the new consolidated group as if the reorganization took place at the inception of the earliest period presented, January 1, 2018, under the principles of change in reporting entity guidance. Additionally, on March 15, 2018, Capretto exchanged its equity interest in FORWARD, for an equity interest in Advance in the form of 1,309,761 Class T Preferred units. This exchange took place at book value and at a conversion ratio to ensure that there was neither a gain nor loss upon issuance of equity by Advance to Capretto. As a result, the non-controlling interest in FORWARD was eliminated on this date. As further described in Note 4, Equity-based Compensation Reverse Split On May 24, 2019, we effected a one-for-22.31 reverse split of all of our issued and outstanding Class T units and Class A units. All figures have been presented on the basis of the reverse split wherever applicable for all the periods presented in these condensed consolidated financial statements. Corporate Conversion Prior to our initial public offering or IPO, we operated as a Delaware limited liability company under the name Revolve Group, LLC. In connection with the IPO, Revolve Group, LLC converted into a Delaware corporation and changed its name to Revolve Group, Inc. so that the top-tier entity in our corporate structure was a corporation rather than a limited liability company, which we refer to as the Corporate Conversion. In conjunction with the Corporate Conversion, all of the outstanding Class T and Class A units of Revolve Group, LLC were converted into an aggregate of 67,889,013 shares of our Class B common stock. The holders of Class T units received an aggregate of 2,400,960 shares, representing the total preference amount for the Class T units. The remaining 65,488,053 shares of our Class B common stock were allocated on a pro rata basis to the Class T and Class A unitholders based on the number of units held by each holder. In connection with the Corporate Conversion, Revolve Group, Inc. holds all property and assets of Revolve Group, LLC and assumed all of the debts and obligations of Revolve Group, LLC. The members of the board of managers and the officers of Revolve Group, LLC became the members of the board of directors and the officers of Revolve Group, Inc. Initial Public Offering On June 7, 2019, we completed an IPO, in which we issued and sold 2,941,176 shares of our Class A common stock at a public offering price of $18.00 per share. We received approximately $45.8 million in net proceeds after deducting $3.3 million of underwriting discounts and approximately $3.8 million in offering costs. Upon the closing of the IPO, we used $40.8 million of the net proceeds from the offering to repurchase an aggregate of 2,400,960 shares of Class B common stock held by TSG6 L.P. and certain of its affiliates, or TSG, and Capretto. In June 2019, we issued and sold an additional 441,176 shares of Class A common stock at a price of $18.00 per share following the underwriters’ exercise of their option to purchase additional shares and received proceeds of $7.5 million, net of underwriting discounts and commissions of $0.5 million. In connection with the IPO, 10,147,059 Class B shares were converted into Class A shares by the selling stockholders. Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the allowance for sales returns, the valuation of deferred tax assets, inventory, equity‑based compensation, valuation of goodwill, and the reserves for income tax uncertainties and other contingencies. Deferred Offering Costs Deferred offering costs of $3.8 million, which consisted of direct incremental legal, consulting, accounting fees and other direct costs relating to the IPO were capitalized and offset against proceeds upon the consummation of the IPO, which became effective on June 6, 2019. Recently Adopted Accounting Pronouncements Under the Jumpstart Our Business Startups Act, or the JOBS Act, we meet the definition of an emerging growth company. We have elected to use the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act. On January 1, 2019 we adopted Accounting Standards Update, or ASU, Intra-Entity Transfer of Assets Other than Inventory On January 1, 2019 we adopted ASU No. 2014-09, Revenue from Contacts with Customers (Topic 606) Accounting Pronouncements Not Yet Effective In January 2017, the FASB issued ASU No. 2017-04 , Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). A lessee is generally required to recognize the lessee’s rights and obligations resulting from leases on the balance sheet by recording a right-of-use asset and a lease liability. The new standard requires lessees to classify leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. This new lease guidance is effective for us for annual periods beginning after December 15, 2019 and interim periods within fiscal years beginning after December 15, 2020, with early adoption permitted. As currently issued, the standard requires recognizing and measuring leases using a modified retrospective approach or allowing for application of the guidance at the beginning of the period in which it is adopted by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption rather than at the beginning of the earliest comparative period presented. We are evaluating the potential impact of this ASU on our consolidated financial statements and related disclosures. Net Sales As a result of applying Topic 606, the impact to our condensed consolidated balance sheet as of June 30, 2019 was as follows (in thousands): June 30, 2019 As reported Impact due to ASC 606 Without adoption Assets: Inventory $ 102,533 $ 13,589 $ 116,122 Prepaid expenses and other current assets 25,374 (12,871 ) 12,503 Total assets 215,564 718 216,282 Liabilities: Other current liabilities 15,240 1,094 16,334 Total current liabilities 104,301 1,094 105,395 Stockholders' equity: Retained earnings 38,458 (376 ) 38,082 Total liabilities and members’/stockholders’ equity 215,564 718 216,282 As a result of applying Topic 606, the impact to our condensed consolidated statements of income for the three and six months ended June 30, 2019 was as follows (in thousands): Three Months Ended June 30, 2019 As reported Impact due to ASC 606 Without adoption Net sales $ 161,897 $ (167 ) $ 161,730 Selling and distribution 23,639 18 23,657 Net income 12,741 (185 ) 12,556 Six Months Ended June 30, 2019 As reported Impact due to ASC 606 Without adoption Net sales $ 299,240 $ (334 ) $ 298,906 Selling and distribution 44,230 (244 ) 43,986 Net income 17,703 (90 ) 17,613 As a result of applying Topic 606, the impact to our condensed consolidated statements of cash flows for the six months ended June 30, 2019 was not material. Revenue is primarily derived from the sale of apparel merchandise through our sites and, when applicable, shipping revenue. Prior to the adoption of ASC 606 on January 1, 2019, revenue was recognized when all of the following criteria were satisfied in accordance with the then applicable accounting literature: (1) persuasive evidence of an arrangement existed; (2) the sales price was fixed or determinable; (3) collectability was reasonably assured; and (4) the product had been shipped and title passed to the customer. These criteria were met when the customer ordered an item, the customer’s credit card had been charged, and the item was fulfilled and shipped to the customer. In accordance with ASC 606, we now recognize revenue through the following steps: (1) identification of the contract, or contracts, with the customer; (2) identification of the performance obligations in the contract; (3) determination of the transaction price; (4) allocation of the transaction price to the performance obligations in the contract; and (5) recognition of revenue when, or as, we satisfy a performance obligation. A contract is created with our customer at the time the order is placed by the customer, which creates a single performance obligation to deliver the product to the customer. We recognize revenue for our single performance obligation at the time control of the merchandise passes to the customer, which is at the time of shipment. In addition, we have elected to treat shipping and handling as fulfillment activities and not a separate performance obligation. In accordance with our return policy, merchandise returns are accepted for full refund if returned within 30 days of the original purchase date and may be exchanged up to 60 days from the original purchase date. At the time of sale, we establish a reserve for merchandise returns, based on historical experience and expected future returns, which is recorded as a reduction of sales and cost of sales. The following table presents a rollforward of our sales return reserve for the year ended December 31, 2018 and the six months ended June 30, 2019 (in thousands): December 31, June 30, 2018 2019 Beginning balance $ 19,005 $ 29,184 Returns (530,824 ) (343,798 ) Provisions 541,003 350,969 Ending balance $ 29,184 $ 36,355 We may also issue store credit in lieu of cash refunds and sell gift cards without expiration dates to our customers. Store credits issued and proceeds from the issuance of gift cards are recorded as deferred revenue, net of breakage, and recognized as revenue when the store credit or gift cards are redeemed or, as a result of the adoption of ASC 606, upon inclusion in our store credit and gift card breakage estimates. Revenue recognized in net sales on breakage on store credit and gift cards for the three and six months ended June 30, 2019 was $0.2 million and $0.4 million, respectively. We did not recognize any revenue related to unredeemed gift cards or store credits for the three and six months ended June 30, 2018. Sales taxes and duties collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from net sales. We currently collect sales taxes in all states that have adopted laws imposing sales tax collection obligations on out-of-state retailers and are subject to audits by state governments of sales tax collection obligations on out-of-state retailers in jurisdictions where we do not currently collect sales taxes, whether for prior years or prospectively. No significant interest or penalties related to sales taxes are recognized in the accompanying condensed consolidated financial statements. We have exposure to losses from fraudulent credit card charges. We record losses when incurred related to these fraudulent charges as amounts have historically been insignificant. See Note 9, Segment Information |
Line of Credit
Line of Credit | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
Line of Credit | Note 3. Line of Credit On March 23, 2016, we entered into a line of credit agreement with Bank of America, N.A, with an expiration date of March 23, 2021. The line of credit provides us with up to $75.0 million aggregate principal in revolver borrowings, based on eligible inventory and accounts receivable less reserves, and expires on March 23, 2021. Borrowings under the credit agreement accrue interest, at our option, at (1) a base rate equal to the highest of (a) the federal funds rate plus 0.50%, (b) the prime rate and (c) the LIBOR rate plus 1.00%, in each case plus a margin ranging from 0.25% to 0.75%, or (2) an adjusted LIBOR rate plus a margin ranging from 1.25% to 1.75%. No debt was outstanding as of December 31, 2018 or June 30, 2019. We are also obligated to pay other customary fees for a credit facility of this size and type, including an unused commitment fee. The credit agreement also permits us, in certain circumstances, to request an increase in the facility by an additional amount of up to $25.0 million (in an initial minimum amount of $10 million and in increments of $5 million thereafter) at the same maturity, pricing and other terms. Our obligations under the credit agreement are secured by substantially all of our assets. The credit agreement also contains customary covenants restricting our activities, including limitations on our ability to sell assets, engage in mergers and acquisitions, enter in transactions involving related parties, obtain letters of credit, incur indebtedness or grant liens or negative pledges on our assets, make loans or make other investments. Under the covenants, we are prohibited from paying cash dividends with respect to our capital stock. |
Equity-based Compensation
Equity-based Compensation | 6 Months Ended |
Jun. 30, 2019 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Equity-based Compensation | Note 4. Equity-based Compensation In 2013, Twist and Advance adopted equity incentive plans, which we refer to collectively as the 2013 Plan, pursuant to which the board of managers could grant options to purchase Class A units to officers and employees. Options could be granted with an exercise price equal to or greater than the unit’s fair value at the date of grant. All issued awards have 10 year terms and generally vest and become fully exercisable annually over five years of service from the date of grant. Awards will become fully vested upon the sale of the company. On March 15, 2018, in connection with the reorganization described in Note 2, Significant Accounting Policies Significant Accounting Policies Upon the effectiveness of the Corporate Conversion on June 6, 2019, as discussed in Note 2, Significant Accounting Policies In September 2018, the board of directors adopted the 2019 Equity Incentive Plan, or the 2019 Plan, which became effective in June 2019. Under the 2019 Plan, a total of 4,500,000 shares of our Class A common stock are reserved for issuance. Upon the completion of our IPO, the 2019 Plan replaced the 2013 Plan, however, the 2013 Plan will continue to govern the terms and conditions of the outstanding awards previously granted under that plan. The number of shares that will be available for issuance under our 2019 Plan also will increase annually on the first day of each year beginning in 2020, in an amount equal to the least of: (a) 6,900,000 shares, (b) 5% of the outstanding shares of all classes of our common stock as of the last day of the immediately preceding year and (c) such other amount as our board of directors may determine. All future grants going forward will be issued under the 2019 Plan. As of June 30, 2019 we have not issued any options to purchase Class A common stock under the 2019 plan. All historical data presented in the tables within this footnote have been recast to retroactively reflect all share and per share data of options as if they had been issued by Revolve Group, Inc. and that both the reverse split and Corporate Conversion had occurred. See Note 2, Significant Accounting Policies, Equity option activity for the six months ended June 30, 2019 for the 2013 Plan is as follows: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value (000's) Balance at January 1, 2019 5,139,304 $ 6.22 7.1 $ 48,416 Granted 67,232 15.62 10.0 Exercised — — — Forfeited (39,180 ) 15.62 — Expired — — — Balance at June 30, 2019 5,167,356 6.27 6.6 145,863 Exercisable at June 30, 2019 3,519,324 3.75 5.5 108,222 Vested and expected to vest 5,056,805 6.28 6.5 142,712 The weighted average grant-date fair value of options granted during the three and six months ended June 30, 2019 was $6.48 per share. As of June 30, 2019 Equity‑based compensation cost that has been included in general and administrative expense in the accompanying condensed consolidated statements of income amounted to $0.4 million, $0.5 million, $0.5 million and $1.0 million for the three and six months ended June 30, 2018 and 2019, respectively. There was no income tax benefit recognized in the condensed consolidated statements of income for equity‑based compensation arrangements for any period presented. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2019 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 5. Commitments and Contingencies Contingencies We record a loss contingency when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. We also disclose material contingencies when we believe a loss is not probable but reasonably possible. Accounting for contingencies requires us to use judgment related to both the likelihood of a loss and the estimate of the amount or range of loss. Although we cannot predict with assurance the outcome of any litigation or tax matters, we do not believe there are currently any such actions that, if resolved unfavorably, would have a material impact on our operating results, financial position and cash flows. Indemnifications In the ordinary course of business, we may provide indemnifications of varying scope and terms to vendors, directors, officers and other parties with respect to certain matters. We have not incurred any material costs as a result of such indemnifications and have not accrued any liabilities related to such obligations in our condensed consolidated financial statements. Tax Contingencies We are subject to income taxes in the United States and U.K. Significant judgment is required in evaluating our tax positions and determining our provision for income taxes. During the ordinary course of business, there are transactions and calculations for which the ultimate tax determination is uncertain. We establish reserves for tax-related uncertainties based on estimates or whether, and the extent to which, additional taxes will be due. These reserves are established when we believe that certain positions might be challenged despite our belief that our tax return positions are fully supportable. We adjust these reserves in light of changing facts and circumstances, such as the outcome of tax audits. Our provision for income taxes does not include any reserve provision because we believe that all of our tax positions are highly certain. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 6. Income Taxes The following table summarizes our effective tax rate for the periods presented (in thousands): Three months ended June 30, Six Months Ended June 30, 2018 2019 2018 2019 Income before income taxes $ 13,971 $ 17,284 $ 21,279 $ 23,969 Provision for income taxes 3,504 4,543 5,480 6,266 Effective tax rate 25.1 % 26.3 % 25.8 % 26.1 % The increases in the effective tax rate for the three and six months ended June 30, 2019, as compared to the same periods in 2018, were primarily due to income generated from our U.K. subsidiary and the impact of certain nondeductible expenses. On December 22, 2017, the Tax Cuts and Jobs Act, or U.S. Tax Reform, was enacted. Effective January 1, 2018, the legislation significantly changed U.S. tax law by modifying the foreign earnings deferral provisions. These changes include a tax on global intangible low-taxed income provisions, or GILTI, and a deduction for foreign-derived intangible income, or FDII. The U.S. Tax Act creates a new requirement that certain income earned by foreign subsidiaries, known as GILTI, must be included in the gross income of the subsidiary's U.S. shareholder. The FASB allows an accounting policy election of either recognizing deferred taxes for temporary differences expected to reverse as GILTI in future years or recognizing such taxes as a current period expense when incurred. We have elected to treat GILTI as a current period expense when incurred. |
Members__Stockholders_ Equity
Members’/Stockholders’ Equity | 6 Months Ended |
Jun. 30, 2019 | |
Equity [Abstract] | |
Members’/Stockholders’ Equity | Note 7. Members’/Stockholders’ Equity Changes in members’/stockholders’ equity for the three and six months ended June 30, 2018 and 2019 were as follows: Three Months Ended June 30, 2018 Class T Preferred Units Class A Common Units Accumulated Members' Total Members'/ Stockholders' Number Amount Number Amount Equity Equity (in thousands, except unit data) Beginning Balance 23,551,834 $ 15,000 41,936,219 $ 2,257 $ 36,172 $ 53,429 Equity-based compensation — — — 403 — 403 Cumulative translation adjustment — — — — (35 ) (35 ) Net income — — — — 10,467 10,467 Ending Balance 23,551,834 $ 15,000 41,936,219 $ 2,660 $ 46,604 $ 64,264 Six Months Ended June 30, 2018 Class T Preferred Units Class A Common Units Non- Controlling Accumulated Members' Total Members'/ Stockholders' Number Amount Number Amount Interest Equity Equity (in thousands, except unit data) Beginning Balance 22,242,073 $ 15,000 41,936,219 $ 2,148 $ (623 ) $ 31,463 $ 47,988 Issuance of Units and Repurchases of Non-controlling Interest 1,309,761 — — — 670 (670 ) — Equity-based compensation — — — 512 — — 512 Cumulative translation adjustment — — — — — (35 ) (35 ) Net income — — — — (47 ) 15,846 15,799 Ending Balance 23,551,834 $ 15,000 41,936,219 $ 2,660 $ — $ 46,604 $ 64,264 Three Months Ended June 30, 2019 Class T Preferred Units Class A Common Units Common Stock Additional Paid-in Accumulated Members' Equity/ Retained Total Members'/ Stockholders' Number Amount Number Amount Number Amount Capital Earnings Equity (in thousands, except unit and share data) Beginning Balance 23,551,834 $ 15,000 41,936,219 $ 4,059 — $ — $ — $ 66,661 $ 85,720 Corporate conversion (23,551,834 ) (15,000 ) (41,936,219 ) (4,059 ) 67,889,013 68 18,991 — — Repurchase of Class B common stock — — — — (2,400,960 ) (2 ) — (40,814 ) (40,816 ) Issuance of Class A common stock upon initial public offering, net of offering costs — — — — 3,382,352 3 53,224 — 53,227 Equity-based compensation — — — — — — 521 — 521 Cumulative translation adjustment — — — — — — — (130 ) (130 ) Net income — — — — — — — 12,741 12,741 Ending Balance — $ — — $ — 68,870,405 $ 69 $ 72,736 $ 38,458 $ 111,263 Six Months Ended June 30, 2019 Class T Preferred Units Class A Common Units Common Stock Additional Paid-in Accumulated Members' Equity/Retained Total Members'/ Stockholders' Number Amount Number Amount Number Amount Capital Earnings Equity (in thousands, except unit and share data) Beginning Balance 23,551,834 $ 15,000 41,936,219 $ 3,548 — $ — $ — $ 61,270 $ 79,818 Corporate conversion (23,551,834 ) (15,000 ) (41,936,219 ) (3,548 ) 67,889,013 68 18,480 — — Repurchase of Class B common stock — — — — (2,400,960 ) (2 ) — (40,814 ) (40,816 ) Issuance of Class A common stock upon initial public offering, net of offering costs — — — — 3,382,352 3 53,224 — 53,227 Equity-based compensation — — — — — — 1,032 — 1,032 Cumulative effect of adoption of ASC 606 — — — — — — — 286 286 Cumulative translation adjustment — — — — — — — 13 13 Net income — — — — — — — 17,703 17,703 Ending Balance — $ — — $ — 68,870,405 $ 69 $ 72,736 $ 38,458 $ 111,263 |
Earnings (Net Loss) per Share
Earnings (Net Loss) per Share | 6 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
Earnings (Net Loss) per Share | Note 8. Earnings (Net Loss) per Share Basic and diluted earnings (net loss) per share is presented in conformity with the two-class method required for participating securities and multiple classes of common stock. We consider the Class T preferred units, which were outstanding prior to the Corporate Conversion, to be a participating security. In connection with our IPO, we established two classes of authorized common stock: Class A common stock and Class B common stock. The rights of the holders of Class A and Class B common stock are identical, except for voting and conversion rights. Each share of Class A common stock is entitled to one vote per share. Each share of Class B common stock is entitled to ten votes per share and is convertible at any time into one share of Class A common stock. Undistributed earnings allocated to the Class T preferred units are subtracted from net income in determining net income attributable to common stockholders. Basic earnings (net loss) per share is computed by dividing the net income (loss) attributable to common stockholders by the weighted-average number of common shares outstanding during the period. As a participating security, the Class T preferred units are excluded from basic weighted-average common shares outstanding. Diluted earnings (net loss) per share represents net income (loss) divided by the weighted-average number of common shares outstanding, inclusive of the effect of dilutive stock options. For the three and six months ended June 30, 2019, our potential dilutive shares relating to stock options were not included in the computation of diluted earnings (net loss) per share as the effect of including these shares in the calculation would have been anti-dilutive. The undistributed earnings (net losses) are allocated based on the participation rights of Class A and Class B common shares as if the earnings for the year have been distributed and losses allocated. As the liquidation and dividend rights are identical for both classes, the undistributed earnings are allocated on a proportionate basis. For the purpose of calculating basic and diluted earnings (net loss) per share for the three and six months ended June 30, 2019, the $40.8 million of Class B shares issued and subsequently repurchased in connection with our IPO to satisfy the total preference amount for the Class T Units is treated as a dividend and subtracted from net income available to common stockholders on a proportionate basis. In addition, the net losses for the three and six months ended June 30, 2019 were not allocated to our participating security as the Class T preferred units were not contractually obligated to share in the Company’s losses. Basic and diluted earnings (net loss) per share and the weighted-average shares outstanding have been computed for all periods shown below to give effect to the reverse split, the Corporate Conversion, and the repurchase of Class B shares that occurred in connection with our IPO. See Note 2, Significant Accounting Policies The following table presents the calculation of basic and diluted earnings (net loss) per share: Three Months Ended June 30, Six Months Ended June 30, 2018 2019 2018 2019 Class B Class A Class B Class B Class A Class B (in thousands, except per share data) Numerator Net income $ 10,467 $ 912 $ 11,829 $ 15,799 $ 683 $ 17,020 Net loss attributable to non-controlling interest — — — 47 — — Repurchase of Class B common stock — (2,922 ) (37,894 ) — (1,575 ) (39,241 ) Undistributed earnings to participating security (3,764 ) — — (5,599 ) — — Net income (loss) attributable to common stockholders $ 6,703 $ (2,010 ) $ (26,065 ) $ 10,247 $ (892 ) $ (22,221 ) Denominator Weighted average shares used to compute basic earnings (net loss) per share — basic 41,936 3,510 45,515 41,936 1,755 43,726 Effect of dilutive stock options 2,458 — — 2,353 — — Weighted average number of shares used to compute diluted earnings (net loss) per share — diluted 44,394 3,510 45,515 44,289 1,755 43,726 Earnings (net loss) per share: Basic $ 0.16 $ (0.57 ) $ (0.57 ) $ 0.24 $ (0.51 ) $ (0.51 ) Diluted $ 0.15 $ (0.57 ) $ (0.57 ) $ 0.23 $ (0.51 ) $ (0.51 ) The following have been excluded from the computation of basic and diluted earnings (net loss) per share as their effect would have been anti-dilutive (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2018 2019 2018 2019 Outstanding options to purchase Class B shares 588 4,001 547 3,665 |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
Segment Information | Note 9. Segment Information We have two reportable segments, REVOLVE and FORWARD, each offering clothing, shoes, accessories, and beauty products available for sale to customers through their respective websites. Our reportable segments have been identified based on how our chief operating decision makers manage our business, make operating decisions, and evaluate operating performance. Our chief operating decision makers are our co-chief executive officers. We evaluate the performance of our reportable segments based on net sales and gross profit. Management does not evaluate the performance of our reportable segments using asset measures. Revenue from external customers for each group of similar products and services is not reported to our chief operating decision makers. The separate identification for purposes of segment disclosure is impracticable, as it is not readily available and the cost to develop would be excessive. During the three and six months ended June 30, 2018 and 2019, no customer represented over 10% of net sales. The following table summarizes our net sales and gross profit for each of our reportable segments (in thousands): Three Months Ended June 30, Six Months Ended June 30, Net sales 2018 2019 2018 2019 REVOLVE $ 116,102 $ 143,944 $ 213,115 $ 266,595 FORWARD 15,700 17,953 31,992 32,645 Total $ 131,802 $ 161,897 $ 245,107 $ 299,240 Gross profit REVOLVE $ 66,468 $ 82,837 $ 117,100 $ 148,100 FORWARD 6,864 7,581 12,665 13,072 Total $ 73,332 $ 90,418 $ 129,765 $ 161,172 The following table lists net sales by geographic area (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2018 2019 2018 2019 United States $ 107,022 $ 136,055 $ 198,225 $ 251,460 Rest of the world (1) 24,780 25,842 46,882 47,780 Total net sales $ 131,802 $ 161,897 $ 245,107 $ 299,240 (1) No individual country exceeded 10% of total net sales for any period presented. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Note 10. Fair Value Measurements We utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible pursuant to the provisions of FASB ASC Topic 820, Fair Value Measurements and Disclosures, or ASC 820. We determine fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. The carrying amounts for our cash and cash equivalents, accounts receivable, accounts payable, line of credit to the extent borrowings are outstanding and accrued expenses approximate fair value due to their short-term maturities. When considering market participant assumptions in fair value measurements, the following fair value hierarchy as established under ASC 820 distinguishes between observable and unobservable inputs, which are categorized in one of the following levels: Level 1: Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2: Inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 3: Inputs are unobservable inputs for the asset or liability. We consider all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. Our cash equivalents are comprised of money market funds, which are valued based on Level 1 inputs consisting of quoted prices in active markets. We did not have any cash equivalents as of December 31, 2018. Our cash equivalents as of June 30, 2019 were $26.3 million. |
Detail of Certain Balance Sheet
Detail of Certain Balance Sheet Accounts | 6 Months Ended |
Jun. 30, 2019 | |
Balance Sheet Related Disclosures [Abstract] | |
Detail of Certain Balance Sheet Accounts | Note 11. Detail of Certain Balance Sheet Accounts Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consist of the following (in thousands): December 31, June 30, 2018 2019 Expected merchandise returns, net ( 1) $ — $ 12,871 Advanced payments on inventory to be delivered from vendors 6,664 5,373 Deferred offering costs ( 2) 2,521 — Prepaid rent 460 502 Prepaid insurance 1,013 1,574 Prepaid packaging 443 432 Other 4,126 4,622 Total prepaid expenses and other current assets $ 15,227 $ 25,374 (1) Reflects the adoption of ASC 606. The prior period has not been restated and continues to be reported under accounting standards in effect for that period. For more information on the transitional impact of adopting ASC 606, please see the section entitled “Recent Accounting Pronouncements” in Note 2, Significant Accounting Policies (2) Deferred offering costs, which consist of direct incremental legal, consulting, banking, accounting fees and other direct costs relating to the IPO were capitalized and subsequently offset against proceeds upon the consummation of the IPO, which became effective on June 6, 2019. Accrued Expenses Accrued expenses consist of the following (in thousands): December 31, June 30, 2018 2019 Salaries and related benefits $ 6,259 $ 6,241 Selling and distribution 2,090 2,712 Marketing 6,223 6,478 Sales taxes 1,970 2,260 Other 1,856 4,447 Total accrued expenses $ 18,398 $ 22,138 Other Current Liabilities Other current liabilities consist of the following (in thousands): December 31, June 30, 2018 2019 Store credit ( 1) $ 9,900 $ 10,559 Gift cards ( 1) 1,568 1,620 Other 2,070 3,061 Total other current liabilities $ 13,538 $ 15,240 (1) Reflects the adoption of ASC 606. The prior period has not been restated and continues to be reported under accounting standards in effect for that period. For more information on the transitional impact of adopting ASC 606, please see the section entitled “Recent Accounting Pronouncements” in Note 2, Significant Accounting Policies |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation Our unaudited condensed consolidated interim financial information has been prepared in accordance with Article 10 of the Securities and Exchange Commission’s, or the SEC, Regulation S-X. As permitted under those rules, certain footnotes or other financial information that are normally required by generally accepted accounting principles in the United States, or GAAP, can be condensed or omitted. These financial statements have been prepared on the same basis as our annual financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for the fair statement of our financial information. These interim results are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2019 or for any other interim period or for any other future year. All intercompany transactions and balances have been eliminated in consolidation. Our fiscal year ends on December 31 of each year. The accompanying unaudited condensed consolidated financial statements and related financial information should be read in conjunction with the audited consolidated financial statements and the related notes thereto for the year ended December 31, 2018 contained in our prospectus filed pursuant to Rule 424(b) under the Securities Act of 1933, as amended, with the SEC on June 7, 2019. |
Reorganization | Reorganization Historically, Revolve Group, Inc., formerly Advance Holdings, LLC, or Advance, included its wholly owned subsidiary Advance Development, Inc. who in turn had a majority controlling interest in Forward by Elyse Walker, or FORWARD. A non-controlling interest in FORWARD was held by an outside investor, Capretto, LLC, or Capretto. Twist Holdings, LLC, or Twist, included its wholly owned subsidiaries Alliance Apparel Group, Inc. and Eminent, Inc., doing business as REVOLVE. Twist and Advance were controlled by the same group of owners. Twist and Advance are Delaware limited liability companies formed in 2012. Eminent, Inc. and Advance Development, Inc. are Delaware corporations also formed in 2012. FORWARD was formed in 2011 as a California limited liability company. On March 15, 2018, we reorganized these entities, by contributing Twist and subsidiaries to Advance through an exchange of equity interests in Twist for additional equity interests in Advance, resulting in Advance becoming the parent and reporting entity of the consolidated group of companies. The exchange was done using an equity unit conversion ratio to ensure each Advance and Twist equity unit holder maintained the same intrinsic value before and after the exchange. The contribution of Twist and subsidiaries in exchange for Advance equity qualified as a combination of entities under common control. Accordingly, the contribution of net assets and the issuance of equity in Advance was recorded at the carrying amounts of assets and liabilities on the date of contribution. The accompanying condensed consolidated financial statements include the results of the new consolidated group as if the reorganization took place at the inception of the earliest period presented, January 1, 2018, under the principles of change in reporting entity guidance. Additionally, on March 15, 2018, Capretto exchanged its equity interest in FORWARD, for an equity interest in Advance in the form of 1,309,761 Class T Preferred units. This exchange took place at book value and at a conversion ratio to ensure that there was neither a gain nor loss upon issuance of equity by Advance to Capretto. As a result, the non-controlling interest in FORWARD was eliminated on this date. As further described in Note 4, Equity-based Compensation |
Reverse Stock Split | Reverse Split On May 24, 2019, we effected a one-for-22.31 reverse split of all of our issued and outstanding Class T units and Class A units. All figures have been presented on the basis of the reverse split wherever applicable for all the periods presented in these condensed consolidated financial statements. |
Corporate Conversion | Corporate Conversion Prior to our initial public offering or IPO, we operated as a Delaware limited liability company under the name Revolve Group, LLC. In connection with the IPO, Revolve Group, LLC converted into a Delaware corporation and changed its name to Revolve Group, Inc. so that the top-tier entity in our corporate structure was a corporation rather than a limited liability company, which we refer to as the Corporate Conversion. In conjunction with the Corporate Conversion, all of the outstanding Class T and Class A units of Revolve Group, LLC were converted into an aggregate of 67,889,013 shares of our Class B common stock. The holders of Class T units received an aggregate of 2,400,960 shares, representing the total preference amount for the Class T units. The remaining 65,488,053 shares of our Class B common stock were allocated on a pro rata basis to the Class T and Class A unitholders based on the number of units held by each holder. In connection with the Corporate Conversion, Revolve Group, Inc. holds all property and assets of Revolve Group, LLC and assumed all of the debts and obligations of Revolve Group, LLC. The members of the board of managers and the officers of Revolve Group, LLC became the members of the board of directors and the officers of Revolve Group, Inc. |
Initial Public Offering | Initial Public Offering On June 7, 2019, we completed an IPO, in which we issued and sold 2,941,176 shares of our Class A common stock at a public offering price of $18.00 per share. We received approximately $45.8 million in net proceeds after deducting $3.3 million of underwriting discounts and approximately $3.8 million in offering costs. Upon the closing of the IPO, we used $40.8 million of the net proceeds from the offering to repurchase an aggregate of 2,400,960 shares of Class B common stock held by TSG6 L.P. and certain of its affiliates, or TSG, and Capretto. In June 2019, we issued and sold an additional 441,176 shares of Class A common stock at a price of $18.00 per share following the underwriters’ exercise of their option to purchase additional shares and received proceeds of $7.5 million, net of underwriting discounts and commissions of $0.5 million. In connection with the IPO, 10,147,059 Class B shares were converted into Class A shares by the selling stockholders. |
Use of Estimates | Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the allowance for sales returns, the valuation of deferred tax assets, inventory, equity‑based compensation, valuation of goodwill, and the reserves for income tax uncertainties and other contingencies. |
Deferred Offering Costs | Deferred Offering Costs Deferred offering costs of $3.8 million, which consisted of direct incremental legal, consulting, accounting fees and other direct costs relating to the IPO were capitalized and offset against proceeds upon the consummation of the IPO, which became effective on June 6, 2019. |
Recently Adopted Accounting Pronouncements and Accounting Pronouncements Not Yet Effective | Recently Adopted Accounting Pronouncements Under the Jumpstart Our Business Startups Act, or the JOBS Act, we meet the definition of an emerging growth company. We have elected to use the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act. On January 1, 2019 we adopted Accounting Standards Update, or ASU, Intra-Entity Transfer of Assets Other than Inventory On January 1, 2019 we adopted ASU No. 2014-09, Revenue from Contacts with Customers (Topic 606) Accounting Pronouncements Not Yet Effective In January 2017, the FASB issued ASU No. 2017-04 , Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). A lessee is generally required to recognize the lessee’s rights and obligations resulting from leases on the balance sheet by recording a right-of-use asset and a lease liability. The new standard requires lessees to classify leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. This new lease guidance is effective for us for annual periods beginning after December 15, 2019 and interim periods within fiscal years beginning after December 15, 2020, with early adoption permitted. As currently issued, the standard requires recognizing and measuring leases using a modified retrospective approach or allowing for application of the guidance at the beginning of the period in which it is adopted by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption rather than at the beginning of the earliest comparative period presented. We are evaluating the potential impact of this ASU on our consolidated financial statements and related disclosures. |
Net Sales | Net Sales As a result of applying Topic 606, the impact to our condensed consolidated balance sheet as of June 30, 2019 was as follows (in thousands): June 30, 2019 As reported Impact due to ASC 606 Without adoption Assets: Inventory $ 102,533 $ 13,589 $ 116,122 Prepaid expenses and other current assets 25,374 (12,871 ) 12,503 Total assets 215,564 718 216,282 Liabilities: Other current liabilities 15,240 1,094 16,334 Total current liabilities 104,301 1,094 105,395 Stockholders' equity: Retained earnings 38,458 (376 ) 38,082 Total liabilities and members’/stockholders’ equity 215,564 718 216,282 As a result of applying Topic 606, the impact to our condensed consolidated statements of income for the three and six months ended June 30, 2019 was as follows (in thousands): Three Months Ended June 30, 2019 As reported Impact due to ASC 606 Without adoption Net sales $ 161,897 $ (167 ) $ 161,730 Selling and distribution 23,639 18 23,657 Net income 12,741 (185 ) 12,556 Six Months Ended June 30, 2019 As reported Impact due to ASC 606 Without adoption Net sales $ 299,240 $ (334 ) $ 298,906 Selling and distribution 44,230 (244 ) 43,986 Net income 17,703 (90 ) 17,613 As a result of applying Topic 606, the impact to our condensed consolidated statements of cash flows for the six months ended June 30, 2019 was not material. Revenue is primarily derived from the sale of apparel merchandise through our sites and, when applicable, shipping revenue. Prior to the adoption of ASC 606 on January 1, 2019, revenue was recognized when all of the following criteria were satisfied in accordance with the then applicable accounting literature: (1) persuasive evidence of an arrangement existed; (2) the sales price was fixed or determinable; (3) collectability was reasonably assured; and (4) the product had been shipped and title passed to the customer. These criteria were met when the customer ordered an item, the customer’s credit card had been charged, and the item was fulfilled and shipped to the customer. In accordance with ASC 606, we now recognize revenue through the following steps: (1) identification of the contract, or contracts, with the customer; (2) identification of the performance obligations in the contract; (3) determination of the transaction price; (4) allocation of the transaction price to the performance obligations in the contract; and (5) recognition of revenue when, or as, we satisfy a performance obligation. A contract is created with our customer at the time the order is placed by the customer, which creates a single performance obligation to deliver the product to the customer. We recognize revenue for our single performance obligation at the time control of the merchandise passes to the customer, which is at the time of shipment. In addition, we have elected to treat shipping and handling as fulfillment activities and not a separate performance obligation. In accordance with our return policy, merchandise returns are accepted for full refund if returned within 30 days of the original purchase date and may be exchanged up to 60 days from the original purchase date. At the time of sale, we establish a reserve for merchandise returns, based on historical experience and expected future returns, which is recorded as a reduction of sales and cost of sales. The following table presents a rollforward of our sales return reserve for the year ended December 31, 2018 and the six months ended June 30, 2019 (in thousands): December 31, June 30, 2018 2019 Beginning balance $ 19,005 $ 29,184 Returns (530,824 ) (343,798 ) Provisions 541,003 350,969 Ending balance $ 29,184 $ 36,355 We may also issue store credit in lieu of cash refunds and sell gift cards without expiration dates to our customers. Store credits issued and proceeds from the issuance of gift cards are recorded as deferred revenue, net of breakage, and recognized as revenue when the store credit or gift cards are redeemed or, as a result of the adoption of ASC 606, upon inclusion in our store credit and gift card breakage estimates. Revenue recognized in net sales on breakage on store credit and gift cards for the three and six months ended June 30, 2019 was $0.2 million and $0.4 million, respectively. We did not recognize any revenue related to unredeemed gift cards or store credits for the three and six months ended June 30, 2018. Sales taxes and duties collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from net sales. We currently collect sales taxes in all states that have adopted laws imposing sales tax collection obligations on out-of-state retailers and are subject to audits by state governments of sales tax collection obligations on out-of-state retailers in jurisdictions where we do not currently collect sales taxes, whether for prior years or prospectively. No significant interest or penalties related to sales taxes are recognized in the accompanying condensed consolidated financial statements. We have exposure to losses from fraudulent credit card charges. We record losses when incurred related to these fraudulent charges as amounts have historically been insignificant. See Note 9, Segment Information |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Summary of Sales Return Reserve | The following table presents a rollforward of our sales return reserve for the year ended December 31, 2018 and the six months ended June 30, 2019 (in thousands): December 31, June 30, 2018 2019 Beginning balance $ 19,005 $ 29,184 Returns (530,824 ) (343,798 ) Provisions 541,003 350,969 Ending balance $ 29,184 $ 36,355 |
Topic 606 | |
Schedule of Impact to Financial Statements | As a result of applying Topic 606, the impact to our condensed consolidated balance sheet as of June 30, 2019 was as follows (in thousands): June 30, 2019 As reported Impact due to ASC 606 Without adoption Assets: Inventory $ 102,533 $ 13,589 $ 116,122 Prepaid expenses and other current assets 25,374 (12,871 ) 12,503 Total assets 215,564 718 216,282 Liabilities: Other current liabilities 15,240 1,094 16,334 Total current liabilities 104,301 1,094 105,395 Stockholders' equity: Retained earnings 38,458 (376 ) 38,082 Total liabilities and members’/stockholders’ equity 215,564 718 216,282 As a result of applying Topic 606, the impact to our condensed consolidated statements of income for the three and six months ended June 30, 2019 was as follows (in thousands): Three Months Ended June 30, 2019 As reported Impact due to ASC 606 Without adoption Net sales $ 161,897 $ (167 ) $ 161,730 Selling and distribution 23,639 18 23,657 Net income 12,741 (185 ) 12,556 Six Months Ended June 30, 2019 As reported Impact due to ASC 606 Without adoption Net sales $ 299,240 $ (334 ) $ 298,906 Selling and distribution 44,230 (244 ) 43,986 Net income 17,703 (90 ) 17,613 |
Equity-based Compensation (Tabl
Equity-based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Summary of Equity Option Activity | Equity option activity for the six months ended June 30, 2019 for the 2013 Plan is as follows: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value (000's) Balance at January 1, 2019 5,139,304 $ 6.22 7.1 $ 48,416 Granted 67,232 15.62 10.0 Exercised — — — Forfeited (39,180 ) 15.62 — Expired — — — Balance at June 30, 2019 5,167,356 6.27 6.6 145,863 Exercisable at June 30, 2019 3,519,324 3.75 5.5 108,222 Vested and expected to vest 5,056,805 6.28 6.5 142,712 |
Income Taxes (Tables)
Income Taxes (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Summary of Effective Tax Rate | The following table summarizes our effective tax rate for the periods presented (in thousands): Three months ended June 30, Six Months Ended June 30, 2018 2019 2018 2019 Income before income taxes $ 13,971 $ 17,284 $ 21,279 $ 23,969 Provision for income taxes 3,504 4,543 5,480 6,266 Effective tax rate 25.1 % 26.3 % 25.8 % 26.1 % |
Members__Stockholders_ Equity (
Members’/Stockholders’ Equity (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Equity [Abstract] | |
Schedule of Changes in Members'/Stockholders' Equity | Changes in members’/stockholders’ equity for the three and six months ended June 30, 2018 and 2019 were as follows: Three Months Ended June 30, 2018 Class T Preferred Units Class A Common Units Accumulated Members' Total Members'/ Stockholders' Number Amount Number Amount Equity Equity (in thousands, except unit data) Beginning Balance 23,551,834 $ 15,000 41,936,219 $ 2,257 $ 36,172 $ 53,429 Equity-based compensation — — — 403 — 403 Cumulative translation adjustment — — — — (35 ) (35 ) Net income — — — — 10,467 10,467 Ending Balance 23,551,834 $ 15,000 41,936,219 $ 2,660 $ 46,604 $ 64,264 Six Months Ended June 30, 2018 Class T Preferred Units Class A Common Units Non- Controlling Accumulated Members' Total Members'/ Stockholders' Number Amount Number Amount Interest Equity Equity (in thousands, except unit data) Beginning Balance 22,242,073 $ 15,000 41,936,219 $ 2,148 $ (623 ) $ 31,463 $ 47,988 Issuance of Units and Repurchases of Non-controlling Interest 1,309,761 — — — 670 (670 ) — Equity-based compensation — — — 512 — — 512 Cumulative translation adjustment — — — — — (35 ) (35 ) Net income — — — — (47 ) 15,846 15,799 Ending Balance 23,551,834 $ 15,000 41,936,219 $ 2,660 $ — $ 46,604 $ 64,264 Three Months Ended June 30, 2019 Class T Preferred Units Class A Common Units Common Stock Additional Paid-in Accumulated Members' Equity/ Retained Total Members'/ Stockholders' Number Amount Number Amount Number Amount Capital Earnings Equity (in thousands, except unit and share data) Beginning Balance 23,551,834 $ 15,000 41,936,219 $ 4,059 — $ — $ — $ 66,661 $ 85,720 Corporate conversion (23,551,834 ) (15,000 ) (41,936,219 ) (4,059 ) 67,889,013 68 18,991 — — Repurchase of Class B common stock — — — — (2,400,960 ) (2 ) — (40,814 ) (40,816 ) Issuance of Class A common stock upon initial public offering, net of offering costs — — — — 3,382,352 3 53,224 — 53,227 Equity-based compensation — — — — — — 521 — 521 Cumulative translation adjustment — — — — — — — (130 ) (130 ) Net income — — — — — — — 12,741 12,741 Ending Balance — $ — — $ — 68,870,405 $ 69 $ 72,736 $ 38,458 $ 111,263 Six Months Ended June 30, 2019 Class T Preferred Units Class A Common Units Common Stock Additional Paid-in Accumulated Members' Equity/Retained Total Members'/ Stockholders' Number Amount Number Amount Number Amount Capital Earnings Equity (in thousands, except unit and share data) Beginning Balance 23,551,834 $ 15,000 41,936,219 $ 3,548 — $ — $ — $ 61,270 $ 79,818 Corporate conversion (23,551,834 ) (15,000 ) (41,936,219 ) (3,548 ) 67,889,013 68 18,480 — — Repurchase of Class B common stock — — — — (2,400,960 ) (2 ) — (40,814 ) (40,816 ) Issuance of Class A common stock upon initial public offering, net of offering costs — — — — 3,382,352 3 53,224 — 53,227 Equity-based compensation — — — — — — 1,032 — 1,032 Cumulative effect of adoption of ASC 606 — — — — — — — 286 286 Cumulative translation adjustment — — — — — — — 13 13 Net income — — — — — — — 17,703 17,703 Ending Balance — $ — — $ — 68,870,405 $ 69 $ 72,736 $ 38,458 $ 111,263 |
Earnings (Net Loss) per Share (
Earnings (Net Loss) per Share (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of Calculation of Basic and Diluted Earnings ( Net Loss) per Share | The following table presents the calculation of basic and diluted earnings (net loss) per share: Three Months Ended June 30, Six Months Ended June 30, 2018 2019 2018 2019 Class B Class A Class B Class B Class A Class B (in thousands, except per share data) Numerator Net income $ 10,467 $ 912 $ 11,829 $ 15,799 $ 683 $ 17,020 Net loss attributable to non-controlling interest — — — 47 — — Repurchase of Class B common stock — (2,922 ) (37,894 ) — (1,575 ) (39,241 ) Undistributed earnings to participating security (3,764 ) — — (5,599 ) — — Net income (loss) attributable to common stockholders $ 6,703 $ (2,010 ) $ (26,065 ) $ 10,247 $ (892 ) $ (22,221 ) Denominator Weighted average shares used to compute basic earnings (net loss) per share — basic 41,936 3,510 45,515 41,936 1,755 43,726 Effect of dilutive stock options 2,458 — — 2,353 — — Weighted average number of shares used to compute diluted earnings (net loss) per share — diluted 44,394 3,510 45,515 44,289 1,755 43,726 Earnings (net loss) per share: Basic $ 0.16 $ (0.57 ) $ (0.57 ) $ 0.24 $ (0.51 ) $ (0.51 ) Diluted $ 0.15 $ (0.57 ) $ (0.57 ) $ 0.23 $ (0.51 ) $ (0.51 ) |
Schedule of Antidilutive Securities Excluded from Computation of Basic and Diluted Earnings (Net Loss) per Share | The following have been excluded from the computation of basic and diluted earnings (net loss) per share as their effect would have been anti-dilutive (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2018 2019 2018 2019 Outstanding options to purchase Class B shares 588 4,001 547 3,665 |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
Summary of Net Sales and Gross Profit of Reportable Segments | The following table summarizes our net sales and gross profit for each of our reportable segments (in thousands): Three Months Ended June 30, Six Months Ended June 30, Net sales 2018 2019 2018 2019 REVOLVE $ 116,102 $ 143,944 $ 213,115 $ 266,595 FORWARD 15,700 17,953 31,992 32,645 Total $ 131,802 $ 161,897 $ 245,107 $ 299,240 Gross profit REVOLVE $ 66,468 $ 82,837 $ 117,100 $ 148,100 FORWARD 6,864 7,581 12,665 13,072 Total $ 73,332 $ 90,418 $ 129,765 $ 161,172 |
Schedule of Net Sales by Geographic Area | The following table lists net sales by geographic area (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2018 2019 2018 2019 United States $ 107,022 $ 136,055 $ 198,225 $ 251,460 Rest of the world (1) 24,780 25,842 46,882 47,780 Total net sales $ 131,802 $ 161,897 $ 245,107 $ 299,240 (1) No individual country exceeded 10% of total net sales for any period presented. |
Detail of Certain Balance She_2
Detail of Certain Balance Sheet Accounts (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Balance Sheet Related Disclosures [Abstract] | |
Schedule of Prepaid Expenses and Other Current Assets | Prepaid expenses and other current assets consist of the following (in thousands): December 31, June 30, 2018 2019 Expected merchandise returns, net ( 1) $ — $ 12,871 Advanced payments on inventory to be delivered from vendors 6,664 5,373 Deferred offering costs ( 2) 2,521 — Prepaid rent 460 502 Prepaid insurance 1,013 1,574 Prepaid packaging 443 432 Other 4,126 4,622 Total prepaid expenses and other current assets $ 15,227 $ 25,374 (1) Reflects the adoption of ASC 606. The prior period has not been restated and continues to be reported under accounting standards in effect for that period. For more information on the transitional impact of adopting ASC 606, please see the section entitled “Recent Accounting Pronouncements” in Note 2, Significant Accounting Policies (2) Deferred offering costs, which consist of direct incremental legal, consulting, banking, accounting fees and other direct costs relating to the IPO were capitalized and subsequently offset against proceeds upon the consummation of the IPO, which became effective on June 6, 2019. |
Schedule of Accrued Expenses | Accrued expenses consist of the following (in thousands): December 31, June 30, 2018 2019 Salaries and related benefits $ 6,259 $ 6,241 Selling and distribution 2,090 2,712 Marketing 6,223 6,478 Sales taxes 1,970 2,260 Other 1,856 4,447 Total accrued expenses $ 18,398 $ 22,138 |
Schedule of Other Current Liabilities | Other current liabilities consist of the following (in thousands): December 31, June 30, 2018 2019 Store credit ( 1) $ 9,900 $ 10,559 Gift cards ( 1) 1,568 1,620 Other 2,070 3,061 Total other current liabilities $ 13,538 $ 15,240 (1) Reflects the adoption of ASC 606. The prior period has not been restated and continues to be reported under accounting standards in effect for that period. For more information on the transitional impact of adopting ASC 606, please see the section entitled “Recent Accounting Pronouncements” in Note 2, Significant Accounting Policies |
Significant Accounting Polici_4
Significant Accounting Policies - Additional Information (Details) | Jun. 07, 2019USD ($)$ / sharesshares | May 24, 2019 | Mar. 15, 2018shares | Jun. 30, 2019USD ($)$ / sharesshares | Jun. 30, 2019USD ($)$ / shares | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($)$ / sharesshares | Jun. 30, 2018USD ($) | Jun. 06, 2019USD ($) | Jan. 01, 2019USD ($) | Dec. 31, 2018USD ($) |
Summary Of Significant Accounting Policies [Line Items] | |||||||||||
Net proceeds from issuance of initial public offering | $ 57,077,000 | ||||||||||
Offering costs | 726,000 | ||||||||||
Stock repurchased during period, value | $ 40,816,000 | 40,816,000 | |||||||||
Deferred offering costs | $ 3,800,000 | $ 2,521,000 | |||||||||
Net increase in retained earnings | $ 38,458,000 | 38,458,000 | 38,458,000 | $ 61,270,000 | |||||||
Revenue recognized | 161,897,000 | $ 131,802,000 | 299,240,000 | $ 245,107,000 | |||||||
Topic 606 | Breakage on Store Credit and Gift Cards | |||||||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||||||
Revenue recognized | 200,000 | 400,000 | |||||||||
Topic 606 | Unredeemed Gift Cards Or Store Credits | |||||||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||||||
Revenue recognized | $ 0 | $ 0 | |||||||||
Topic 606 | Impact Due to ASC 606 | |||||||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||||||
Net increase in retained earnings | $ (376,000) | (376,000) | (376,000) | $ 300,000 | |||||||
Revenue recognized | (167,000) | $ (334,000) | |||||||||
IPO | |||||||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||||||
Shares issued | shares | 2,941,176 | ||||||||||
Shares issued, price per share | $ / shares | $ 18 | ||||||||||
Net proceeds from issuance of initial public offering | $ 45,800,000 | ||||||||||
Underwriting discounts | 3,300,000 | ||||||||||
Offering costs | 3,800,000 | ||||||||||
Class T Preferred Units | |||||||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||||||
Conversion of stock, shares issued | shares | 1,309,761 | 2,400,960 | |||||||||
Class T and Class A Unit | |||||||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||||||
Conversion of stock, shares issued | shares | 65,488,053 | ||||||||||
Reverse split, ratio | 0.045 | ||||||||||
Class B Common Stock | |||||||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||||||
Conversion of stock, shares issued | shares | 10,147,059 | 67,889,013 | |||||||||
Stock repurchased during period, value | $ 40,800,000 | $ 40,800,000 | $ 40,800,000 | ||||||||
Stock repurchased during period, shares | shares | 2,400,960 | ||||||||||
Class A Common Stock | |||||||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||||||
Conversion of stock, shares issued | shares | 1 | ||||||||||
Shares issued | shares | 441,176 | ||||||||||
Shares issued, price per share | $ / shares | $ 18 | $ 18 | $ 18 | ||||||||
Underwriting discounts | $ 500,000 | ||||||||||
Proceeds from issuance of stock | $ 7,500,000 |
Significant Accounting Polici_5
Significant Accounting Policies - Schedule of Impact of Topic 606 to Condensed Consolidated Balance Sheet (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
Assets | |||
Inventory | $ 102,533 | $ 102,220 | |
Prepaid expenses and other current assets | 25,374 | 15,227 | |
Total assets | 215,564 | 162,074 | |
Liabilities: | |||
Other current liabilities | 15,240 | 13,538 | |
Total current liabilities | 104,301 | 82,256 | |
Stockholders' equity: | |||
Accumulated members' equity/ Retained earnings | 38,458 | 61,270 | |
Total liabilities and members’/stockholders’ equity | 215,564 | $ 162,074 | |
Impact Due to ASC 606 | Topic 606 | |||
Assets | |||
Inventory | 13,589 | ||
Prepaid expenses and other current assets | (12,871) | ||
Total assets | 718 | ||
Liabilities: | |||
Other current liabilities | 1,094 | ||
Total current liabilities | 1,094 | ||
Stockholders' equity: | |||
Accumulated members' equity/ Retained earnings | (376) | $ 300 | |
Total liabilities and members’/stockholders’ equity | 718 | ||
Without Adoption | Topic 606 | |||
Assets | |||
Inventory | 116,122 | ||
Prepaid expenses and other current assets | 12,503 | ||
Total assets | 216,282 | ||
Liabilities: | |||
Other current liabilities | 16,334 | ||
Total current liabilities | 105,395 | ||
Stockholders' equity: | |||
Accumulated members' equity/ Retained earnings | 38,082 | ||
Total liabilities and members’/stockholders’ equity | $ 216,282 |
Significant Accounting Polici_6
Significant Accounting Policies - Schedule of Impact of Topic 606 to Condensed Consolidated Statements of Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||
Net sales | $ 161,897 | $ 131,802 | $ 299,240 | $ 245,107 |
Selling and distribution | 23,639 | 18,669 | 44,230 | 34,522 |
Net income | 12,741 | $ 10,467 | 17,703 | $ 15,799 |
Impact Due to ASC 606 | Topic 606 | ||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||
Net sales | (167) | (334) | ||
Selling and distribution | 18 | (244) | ||
Net income | (185) | (90) | ||
Without Adoption | Topic 606 | ||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||
Net sales | 161,730 | 298,906 | ||
Selling and distribution | 23,657 | 43,986 | ||
Net income | $ 12,556 | $ 17,613 |
Significant Accounting Polici_7
Significant Accounting Policies - Summary of Sales Return Reserve (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2019 | Dec. 31, 2018 | |
Accounting Policies [Abstract] | ||
Beginning balance | $ 29,184 | $ 19,005 |
Returns | (343,798) | (530,824) |
Provisions | 350,969 | 541,003 |
Ending balance | $ 36,355 | $ 29,184 |
Line of Credit - Additional Inf
Line of Credit - Additional Information (Details) - Revolving Credit Facility - Bank of America, N.A, - USD ($) | Mar. 23, 2016 | Jun. 30, 2019 | Dec. 31, 2018 |
Line Of Credit Facility [Line Items] | |||
Line of credit facility agreement date | Mar. 23, 2016 | ||
Line of credit facility expiration date | Mar. 23, 2021 | ||
Maximum amount of line of credit | $ 75,000,000 | ||
Line of credit facility interest rate description | Borrowings under the credit agreement accrue interest, at our option, at (1) a base rate equal to the highest of (a) the federal funds rate plus 0.50%, (b) the prime rate and (c) the LIBOR rate plus 1.00%, in each case plus a margin ranging from 0.25% to 0.75%, or (2) an adjusted LIBOR rate plus a margin ranging from 1.25% to 1.75%. | ||
Outstanding debt | $ 0 | $ 0 | |
Line of credit facility, additional maximum borrowing capacity | 25,000,000 | ||
Line of credit facility, additional borrowing capacity initial minimum amount | 10,000,000 | ||
Line of credit facility, additional borrowing capacity increments thereafter | $ 5,000,000 | ||
Line of credit facility, asset restrictions | The credit agreement also contains customary covenants restricting our activities, including limitations on our ability to sell assets, engage in mergers and acquisitions, enter in transactions involving related parties, obtain letters of credit, incur indebtedness or grant liens or negative pledges on our assets, make loans or make other investments. | ||
Line of credit facility, dividend restrictions | prohibited from paying cash dividends with respect to our capital stock | ||
Federal Funds Rate | |||
Line Of Credit Facility [Line Items] | |||
Basis spread on variable rate (as a percent) | 0.50% | ||
London Interbank Offered Rate (LIBOR) | |||
Line Of Credit Facility [Line Items] | |||
Basis spread on variable rate (as a percent) | 1.00% | ||
Margin Rate | Minimum | |||
Line Of Credit Facility [Line Items] | |||
Basis spread on variable rate (as a percent) | 0.25% | ||
Margin Rate | Maximum | |||
Line Of Credit Facility [Line Items] | |||
Basis spread on variable rate (as a percent) | 0.75% | ||
LIBOR Rate Margin | Minimum | |||
Line Of Credit Facility [Line Items] | |||
Basis spread on variable rate (as a percent) | 1.25% | ||
LIBOR Rate Margin | Maximum | |||
Line Of Credit Facility [Line Items] | |||
Basis spread on variable rate (as a percent) | 1.75% |
Equity-based Compensation - Add
Equity-based Compensation - Additional Information (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Mar. 15, 2018 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Conversion of options to purchase common stock, description | 1:1 basis | |||||
Weighted average grant date fair value of options granted | $ 6.48 | $ 6.48 | ||||
Tax benefits in relation to equity-based compensation | $ 0 | |||||
General and Administrative Expense | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Equity-based compensation cost | $ 500,000 | $ 400,000 | $ 1,000,000 | $ 500,000 | ||
2013 Equity Incentive Plan | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Equity incentive plans award term | 10 year | |||||
Equity incentive plans vesting period | 5 years | |||||
Incremental equity-based compensation expense | $ 0 | $ 0 | ||||
2013 Equity Incentive Plan | Stock Option | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Total unrecognized compensation cost | $ 8,200,000 | $ 8,200,000 | $ 8,200,000 | |||
Total unrecognized compensation cost to be recognized, weighted average service period | 4 years 4 months 24 days | |||||
Amendment to 2013 Equity Incentive Plan | Common Class A Unit | Maximum | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Number of shares available for issuance | 6,207,978 | |||||
2019 Equity Incentive Plan | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Increase in number of shares reserved for future issuance, description | The number of shares that will be available for issuance under our 2019 Plan also will increase annually on the first day of each year beginning in 2020, in an amount equal to the least of: (a) 6,900,000 shares, (b) 5% of the outstanding shares of all classes of our common stock as of the last day of the immediately preceding year and (c) such other amount as our board of directors may determine | |||||
Increase in number of shares reserved for future issuance, shares | 6,900,000 | |||||
Percentage of number of shares of common stock outstanding | 5.00% | |||||
2019 Equity Incentive Plan | Common Class A | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Common stock reserved for issuance | 4,500,000 | 4,500,000 | 4,500,000 |
Equity-based Compensation - Sum
Equity-based Compensation - Summary of Equity Option Activity (Details) - 2013 Equity Incentive Plan - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2019 | Dec. 31, 2018 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Number of Shares, Beginning balance | 5,139,304 | |
Number of Shares, Granted | 67,232 | |
Number of Shares, Forfeited | (39,180) | |
Number of Shares, Ending balance | 5,167,356 | 5,139,304 |
Number of Shares, Exercisable | 3,519,324 | |
Number of Shares, Vested and expected to vest | 5,056,805 | |
Weighted Average Exercise Price, Beginning balance | $ 6.22 | |
Weighted Average Exercise Price, Granted | 15.62 | |
Weighted Average Exercise Price, Forfeited | 15.62 | |
Weighted Average Exercise Price, Ending balance | 6.27 | $ 6.22 |
Weighted Average Exercise Price, Exercisable | 3.75 | |
Weighted Average Exercise Price, Vested and expected to vest | $ 6.28 | |
Weighted Average Remaining Contractual Term | 6 years 7 months 6 days | 7 years 1 month 6 days |
Weighted Average Remaining Contractual Term, Granted | 10 years | |
Weighted Average Remaining Contractual Term, Exercisable | 5 years 6 months | |
Weighted Average Remaining Contractual Term, Vested and expected to vest | 6 years 6 months | |
Aggregate Intrinsic Value, Balance | $ 145,863 | $ 48,416 |
Aggregate Intrinsic Value, Exercisable | 108,222 | |
Aggregate Intrinsic Value, Vested and expected to vest | $ 142,712 |
Income Taxes - Summary of Effec
Income Taxes - Summary of Effective Tax Rate (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | ||||
Income before income taxes | $ 17,284 | $ 13,971 | $ 23,969 | $ 21,279 |
Provision for income taxes | $ 4,543 | $ 3,504 | $ 6,266 | $ 5,480 |
Effective tax rate | 26.30% | 25.10% | 26.10% | 25.80% |
Members'_Stockholders' Equity -
Members'/Stockholders' Equity - Schedule of Changes in Members'/Stockholders' Equity (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Class Of Stock [Line Items] | ||||
Beginning Balance | $ 53,429 | $ 47,988 | ||
Beginning Balance | $ 85,720 | $ 79,818 | ||
Repurchase of Class B common stock | (40,816) | (40,816) | ||
Issuance of Class A common stock upon initial public offering, net of offering costs | 53,227 | 53,227 | ||
Equity-based compensation | 521 | 403 | 1,032 | 512 |
Cumulative translation adjustment | (130) | (35) | 13 | (35) |
Net income | 12,741 | 10,467 | 17,703 | 15,799 |
Ending Balance | 64,264 | 64,264 | ||
Ending Balance | $ 111,263 | 111,263 | ||
ASC 606 | ||||
Class Of Stock [Line Items] | ||||
Cumulative effect of adoption of ASC 606 | $ 286 | |||
Class T Preferred Units | ||||
Class Of Stock [Line Items] | ||||
Beginning Balance | $ 15,000 | $ 15,000 | ||
Beginning Balance, units | 23,551,834 | 22,242,073 | ||
Beginning Balance, shares | 23,551,834 | 23,551,834 | ||
Beginning Balance | $ 15,000 | $ 15,000 | ||
Issuance of Units and Repurchases of Non-controlling Interest, units | 1,309,761 | |||
Corporate conversion | $ (15,000) | $ (15,000) | ||
Corporate conversion, units | (23,551,834) | (23,551,834) | ||
Ending Balance | $ 15,000 | $ 15,000 | ||
Ending Balance, units | 23,551,834 | 23,551,834 | ||
Class A Common Units | ||||
Class Of Stock [Line Items] | ||||
Beginning Balance | $ 2,257 | $ 2,148 | ||
Beginning Balance, units | 41,936,219 | 41,936,219 | 41,936,219 | |
Beginning Balance, shares | 41,936,219 | 41,936,219 | ||
Beginning Balance | $ 4,059 | $ 3,548 | ||
Corporate conversion | $ (4,059) | $ (3,548) | ||
Corporate conversion, units | (41,936,219) | (41,936,219) | ||
Equity-based compensation | $ 403 | $ 512 | ||
Ending Balance | $ 2,660 | $ 2,660 | ||
Ending Balance, units | 0 | 41,936,219 | 0 | 41,936,219 |
Common Stock | ||||
Class Of Stock [Line Items] | ||||
Corporate conversion | $ 68 | $ 68 | ||
Corporate conversion, units | 67,889,013 | 67,889,013 | ||
Repurchase of Class B common stock | $ (2) | $ (2) | ||
Repurchase of Class B common stock, shares | (2,400,960) | (2,400,960) | ||
Issuance of Class A common stock upon initial public offering, net of offering costs | $ 3 | $ 3 | ||
Issuance of Class A common stock upon initial public offering, net of offering costs, shares | 3,382,352 | 3,382,352 | ||
Ending Balance | $ 69 | $ 69 | ||
Ending Balance, shares | 68,870,405 | 68,870,405 | ||
Accumulated Members' Equity | ||||
Class Of Stock [Line Items] | ||||
Beginning Balance | $ 36,172 | $ 31,463 | ||
Issuance of Units and Repurchases of Non-controlling Interest | (670) | |||
Cumulative translation adjustment | (35) | (35) | ||
Net income | 10,467 | 15,846 | ||
Ending Balance | $ 46,604 | 46,604 | ||
Non-Controlling Interest | ||||
Class Of Stock [Line Items] | ||||
Beginning Balance | (623) | |||
Issuance of Units and Repurchases of Non-controlling Interest | 670 | |||
Net income | $ (47) | |||
Additional Paid-in Capital | ||||
Class Of Stock [Line Items] | ||||
Corporate conversion | $ 18,991 | $ 18,480 | ||
Issuance of Class A common stock upon initial public offering, net of offering costs | 53,224 | 53,224 | ||
Equity-based compensation | 521 | 1,032 | ||
Ending Balance | 72,736 | 72,736 | ||
Accumulated Members' Equity/Retained Earnings | ||||
Class Of Stock [Line Items] | ||||
Beginning Balance | 66,661 | 61,270 | ||
Repurchase of Class B common stock | (40,814) | (40,814) | ||
Cumulative translation adjustment | (130) | 13 | ||
Net income | 12,741 | 17,703 | ||
Ending Balance | $ 38,458 | 38,458 | ||
Accumulated Members' Equity/Retained Earnings | ASC 606 | ||||
Class Of Stock [Line Items] | ||||
Cumulative effect of adoption of ASC 606 | $ 286 |
Earnings (Net Loss) per Share -
Earnings (Net Loss) per Share - Additional Information (Details) $ in Thousands | Jun. 07, 2019USD ($) | Jun. 30, 2019shares | Jun. 30, 2019USD ($) | Jun. 30, 2019USD ($)Voteshares |
Earnings Per Share [Line Items] | ||||
Stock repurchased during period, value | $ | $ 40,816 | $ 40,816 | ||
Common Class A | ||||
Earnings Per Share [Line Items] | ||||
Number of votes per share | Vote | 1 | |||
Conversion of stock | shares | 1 | |||
Common Class B | ||||
Earnings Per Share [Line Items] | ||||
Number of votes per share | Vote | 10 | |||
Conversion of stock | shares | 10,147,059 | 67,889,013 | ||
Stock repurchased during period, value | $ | $ 40,800 | $ 40,800 | $ 40,800 |
Earnings (Net Loss) per Share_2
Earnings (Net Loss) per Share - Schedule of Calculation of Basic and Diluted Earnings ( Net Loss) per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Numerator | ||||
Net income | $ 12,741 | $ 10,467 | $ 17,703 | $ 15,846 |
Less: Net loss attributable to non-controlling interest | 47 | |||
Repurchase of Class B common stock | (40,816) | (40,816) | ||
Net income (loss) attributable to common stockholders | $ (28,075) | $ 10,467 | $ (23,113) | $ 15,846 |
Denominator | ||||
Weighted average shares used to compute basic earnings (net loss) per share — basic | 49,025 | 41,936 | 45,481 | 41,936 |
Weighted average number of shares used to compute diluted earnings (net loss) per share — diluted | 49,025 | 44,394 | 45,481 | 44,289 |
Earnings (net loss) per share: | ||||
Basic | $ (0.57) | $ 0.16 | $ (0.51) | $ 0.24 |
Diluted | $ (0.57) | $ 0.15 | $ (0.51) | $ 0.23 |
Class B Common Stock | ||||
Numerator | ||||
Net income | $ 11,829 | $ 10,467 | $ 17,020 | $ 15,799 |
Less: Net loss attributable to non-controlling interest | 47 | |||
Repurchase of Class B common stock | (37,894) | (39,241) | ||
Undistributed earnings to participating security | (3,764) | (5,599) | ||
Net income (loss) attributable to common stockholders | $ (26,065) | $ 6,703 | $ (22,221) | $ 10,247 |
Denominator | ||||
Weighted average shares used to compute basic earnings (net loss) per share — basic | 45,515 | 41,936 | 43,726 | 41,936 |
Effect of dilutive stock options | 2,458 | 2,353 | ||
Weighted average number of shares used to compute diluted earnings (net loss) per share — diluted | 45,515 | 44,394 | 43,726 | 44,289 |
Earnings (net loss) per share: | ||||
Basic | $ (0.57) | $ 0.16 | $ (0.51) | $ 0.24 |
Diluted | $ (0.57) | $ 0.15 | $ (0.51) | $ 0.23 |
Class A Common Stock | ||||
Numerator | ||||
Net income | $ 912 | $ 683 | ||
Repurchase of Class B common stock | (2,922) | (1,575) | ||
Net income (loss) attributable to common stockholders | $ (2,010) | $ (892) | ||
Denominator | ||||
Weighted average shares used to compute basic earnings (net loss) per share — basic | 3,510 | 1,755 | ||
Weighted average number of shares used to compute diluted earnings (net loss) per share — diluted | 3,510 | 1,755 | ||
Earnings (net loss) per share: | ||||
Basic | $ (0.57) | $ (0.51) | ||
Diluted | $ (0.57) | $ (0.51) |
Earnings (Net Loss) per Share_3
Earnings (Net Loss) per Share - Schedule of Antidilutive Securities Excluded from Computation of Basic and Diluted Earnings (Net Loss) per Share (Details) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Class B Common Stock | ||||
Earnings Per Share [Line Items] | ||||
Outstanding options to purchase shares | 4,001 | 588 | 3,665 | 547 |
Segment Information - Additiona
Segment Information - Additional Information (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019Customer | Jun. 30, 2018Customer | Jun. 30, 2019SegmentCustomer | Jun. 30, 2018Customer | |
Segment Reporting Information [Line Items] | ||||
Number of reportable segments | Segment | 2 | |||
Segment reporting, disclosure of customers | During the three and six months ended June 30, 2018 and 2019, no customer represented over 10% of net sales. | |||
Sales Revenue, Net | Customer Concentration Risk | ||||
Segment Reporting Information [Line Items] | ||||
Number of customer | Customer | 0 | 0 | 0 | 0 |
Percentage of net sales | 10.00% | 10.00% | 10.00% | 10.00% |
Segment Information - Summary o
Segment Information - Summary of Net Sales and Gross Profit of Reportable Segments (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Segment Reporting Information [Line Items] | ||||
Net sales | $ 161,897 | $ 131,802 | $ 299,240 | $ 245,107 |
Gross profit | 90,418 | 73,332 | 161,172 | 129,765 |
REVOLVE | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 143,944 | 116,102 | 266,595 | 213,115 |
Gross profit | 82,837 | 66,468 | 148,100 | 117,100 |
FORWARD | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 17,953 | 15,700 | 32,645 | 31,992 |
Gross profit | $ 7,581 | $ 6,864 | $ 13,072 | $ 12,665 |
Segment Information - Schedule
Segment Information - Schedule of Net Sales by Geographic Area (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Revenues From External Customers And Long Lived Assets [Line Items] | ||||
Total net sales | $ 161,897 | $ 131,802 | $ 299,240 | $ 245,107 |
United States | ||||
Revenues From External Customers And Long Lived Assets [Line Items] | ||||
Total net sales | 136,055 | 107,022 | 251,460 | 198,225 |
Rest of the world | ||||
Revenues From External Customers And Long Lived Assets [Line Items] | ||||
Total net sales | $ 25,842 | $ 24,780 | $ 47,780 | $ 46,882 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Fair Value Disclosures [Abstract] | ||
Cash equivalents | $ 26,300,000 | $ 0 |
Detail of Certain Balance She_3
Detail of Certain Balance Sheet Accounts - Schedule of Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Jun. 06, 2019 | Dec. 31, 2018 |
Prepaid Expense And Other Assets Current [Abstract] | |||
Expected merchandise returns, net | $ 12,871 | ||
Advanced payments on inventory to be delivered from vendors | 5,373 | $ 6,664 | |
Deferred offering costs | $ 3,800 | 2,521 | |
Prepaid rent | 502 | 460 | |
Prepaid insurance | 1,574 | 1,013 | |
Prepaid packaging | 432 | 443 | |
Other | 4,622 | 4,126 | |
Total prepaid expenses and other current assets | $ 25,374 | $ 15,227 |
Detail of Certain Balance She_4
Detail of Certain Balance Sheet Accounts - Schedule of Accrued Expenses (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Accrued Liabilities Current [Abstract] | ||
Salaries and related benefits | $ 6,241 | $ 6,259 |
Selling and distribution | 2,712 | 2,090 |
Marketing | 6,478 | 6,223 |
Sales taxes | 2,260 | 1,970 |
Other | 4,447 | 1,856 |
Total accrued expenses | $ 22,138 | $ 18,398 |
Detail of Certain Balance She_5
Detail of Certain Balance Sheet Accounts - Schedule of Other Current Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Other Liabilities Current [Abstract] | ||
Store credit | $ 10,559 | $ 9,900 |
Gift cards | 1,620 | 1,568 |
Other | 3,061 | 2,070 |
Total other current liabilities | $ 15,240 | $ 13,538 |