REAL 10-K & 10-Q changes, risk factors and insider trading

•We may not be able to return to historic levels of revenue growth rate or effectively manage growth or new opportunities.

•We may be unable to replicate our business model for newer categories of consigned goods.

•The public disclosure of our ESGEnvironmental, Social and Governance (as defined below"ESG") metrics and goals may subject us to risks.

Risks Related to Our Leadership and Employees

•ApplicationApplications of existing tax laws, rules or regulations are subject to interpretation byof taxing authorities.

•The indentures governing our Convertible Senior Notes (asand defined2029 below)Notes contain restrictions and other provisions regarding events of default that may make it more difficult to execute our strategy or to effectively compete, or that could materially affect our financial position.

Our past revenue growth should not be considered indicative of future performance. While we experienced revenue growth in 2019, 2021, 20222022, 2024 and 2024,2025, our revenue for fiscal 2023 decreased compared to 2022. Our online marketplace represents a substantial departure from the traditional resale market for luxury goods. While our business grew rapidly prior to the COVID-19 pandemic, theThe resale market for luxury goods may not continue to develop in a manner that we expect or that otherwise would be favorable to our business. Changes in our market make it difficult to assess our future performance. You should consider our business and prospects in light of the risks and difficulties we may encounter. As we grow our business, our revenue growth rates may continue to decline in future periods due to a number of factors, includingwhich may include our inability to attract and retain consignors, general economic conditions, including a recession, increased market adoption against which future growth will be measured, increasing competition, slowing demand for items on our online marketplace from existing and new customers, changes to our commission structure, take rate or business model, changes in our total product mix, including as a result of our strategic shift to focus on higher value items or our failure to capitalize on growth opportunities. Our rapid growth has placed significant demands on our management and our operational and financial infrastructure. Continued growth could strain our ability to maintain reliable service levels for our consignors and buyers, develop and improve our operational, financial and management controls, enhance our reporting systems and procedures and recruit, train and retain highly skilled personnel. Failure to effectively manage the growth of our business and operations would negatively affect our reputation and brand, business, financial condition and operating results.

We may require additional funds to support our growth and respond to business challenges. To support our future growth, we may need to further develop our online marketplace services, grow our retail presence, expand our categories of pre-owned luxury goods, enhance our operating infrastructure, expand the markets in which we operate and potentially acquire complementary businesses and technologies. Accordingly, we may need to engage in equity or debt financings to secure additional funds, which may result in significant dilution to existing stockholders or the granting of new equity securities which have rights, preferences and privileges superior to those of holders of our common stock. Our 2029 Notes (as defined below) contain, and any other debt financing secured by us could also contain, restrictive covenants relating to our capital-raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities in the future. In addition, we may not be able to obtain additional financing on terms favorable to us, if at all. If we are unable to obtain financing on terms satisfactory to us when we require it, our ability to support our business growth and to respond to business challenges could be significantly limited, and our business and prospects could fail or be adversely affected.

Public health emergencies or outbreaks of epidemics, pandemics, or contagious diseases such as the COVID-19 pandemic have adversely affected, and could in the future, adversely affect our business and the business of our consignors and buyers.

We currently operate a limited number of retail stores. We believe that retail stores are effective at raising brand awareness with consignors and buyers and generating new supply. We also believe that an expansion of our brick-and-mortar presence complements our online marketplace and strengthens the omni-channel consigning and buying experience. We have in the past and may in the future continue to reassess our retail footprint and adjust our retail strategy in particular geographies. The opening and closing of retail stores brings operational challenges. We may have to enter into long-term leases before we know whether our retail strategy or a particular geography will be successful. We face a number of challenges in opening new stores, including locating retail space having a cost and geographic profile that will allow us to operate in highly desirable shopping locations, hire in-store talent and expand our retail operations in a cost-effective manner. We also have faced and may in the future face a number of challenges in closing existing stores, which may include significant exit costs, managing lease obligations and employee-related costs, including in connection with our recently announced real estate reduction plan.costs. Closing existing stores may also limit our ability to attract new members, generate new supply and increase demand. We must provide our consignors and buyers with a consistent luxury experience across our retail locations. In the past, our stores have been the target of theft and have also experienced property damage. Any such future incidents may result in a disruption to our retail operations and significant costs if not covered by our insurance policies. In addition, the offering of unique, single-SKU products creates supply chain, merchandising and pricing challenges, as we must select the right product mix for each individual store while continuing to manage inventory at our authentication centers. If we are not able to manage or execute on our retail strategy, our business, operating results, prospects and reputation may be harmed.

While we have members from outside the United States who purchase items from our online marketplace, we have not expanded our physical operations internationally. If we choose to do so, we would need to adapt to and would be subject to new risks relating to various local cultures, languages, standards, laws and regulations and policies.policies as well as tariffs and trade-related restrictions, which could be significant. Our business model we employ may not appeal to consignors and buyers outside of the United States. Furthermore, to succeed with clients in international locations, it will be necessary to locate authentication centers in foreign markets and hire local employees in those markets, and we may have to invest in such facilities before demonstrating that we can successfully run operations outside of the United States. If we invest substantial time and resources to establish and expand our operations internationally and are unable to do so successfully and in a timely manner, our operating results would suffer.

Our success depends on our ability to generate a consistent supply of luxury goods to sell through our stores and online marketplace. To do this we must cost-effectively attract, retain and grow relationships with consignors. To expand our consignor base, we must appeal to and engage individuals new to consignment, or who have consigned through traditional brick-and-mortar shops but are unfamiliar with our business. We find new consignors by converting buyers utilizing our online marketplace, shopping in our retail stores, or utilizing our luxury consignment offices. We also reach new consignors through paid advertising, marketing materials, digital marketing, referral programs, organic word-of-mouth and other methods, such as mentions in the press, Internet search engine results and through our brand partnerships. We cannot be certain that these efforts will yield new consignors or be cost-effective. Moreover, new consignors may not choose to consign with us a second time or as frequently, or consign as many items or the same value of items, as has historically been the case with existing consignors. Therefore, the revenue generated from new consignors may not be as high as the revenue generated historically from our existing consignors or as high as we expect. Most of the luxury goods we offer through our online marketplace are initially sourced from consignors who are individuals. As a result, we may be subject to periodic fluctuations in the number, brands and quality of goods sold through our online marketplace on behalf of our consignors.consignors, including as a result of the fluctuating value of raw materials such as gold and silver. In addition, a significant number of our new and existing consignors greatly prefer our concierge consultation method for consigning luxury goods, which involves our sales professionals meeting with our consignors in their homes. InWe Novembercontinue 2022,to weoptimize updatedour take rate structure. If updates to our take rate structure with the goals of optimizing take rate, limiting consignment of lower value items, and increasing supply of higher value items. If our updated take rate structure isare not successful in increasing the consignment of suchoptimal items, our brand and reputation could be adversely affected, we may generate less revenue than expected, and we may choose to further refine the structure. We have a buy upfront program in an effort to generate additional supply. If we fail to attract new consignors or drive repeat consignments in a cost-effective manner, or fail to convert buyers to consignors, our ability to grow our business and our operating results would be adversely affected.

National retailers and brands set pricing for new luxury goods that they sell and from time to time offer sales and promotional pricing, particularly during the fourth quarter holiday season, when we have historically made a substantial portion of our annual sales. Promotional pricing by these parties may lower the value of products consigned with us and our inventory and, in turn, reduce the value proposition for both our consignors and buyers. We have in the past experienced a reduction in our GMV and AOV due to fluctuations in the price of new luxury goods sold by retailers and brands, and we could experience similar reductions and fluctuations in the future. However, the timing and magnitude of such discounting can be difficult to predict and can be brought on by unique factors such as a retailer or brand going out of business and liquidating its inventory, which may happen to a greater extent as a result of macroeconomic uncertainty, inflation, geopolitical instability due in part to the conflict between Russia and Ukraine, the Israel-Hamas warwar, increased U.S. trade tariffs and trade disputes with other countries, and weakened consumer demand. Any of the foregoing risks could adversely affect our business, financial condition and operating results.

InWe November 2022, wepreviously updated our take rate structure with the goals of optimizing take rate, limiting consignment of lower value items, and increasing supply of higher value items. If such higher value items are not attractive to our existing consignors or buyers, or if such items do not attract new consignors or buyers, our revenues may fall short of expectations, our brand and reputation could be adversely affected and we may incur expenses that are not offset by revenues. In addition, our business may be adversely affected if we are unable to attract new and repeat consignors that supply the necessary high-quality, appropriately priced and in-demand luxury merchandise in this high value category. Additionally, as we enter into new categories, potential consignors may demand higher commissions than our current categories, which would adversely affect our take rate and operating results. Expansion of our offerings may also strain our management and operational resources, specifically the need to hire and manage additional authentication and market experts. We may also face novel challenges in our authentication process and methods as we expand our product offerings. In addition, we may experience greater competition in specific categories from companies that are more experienced in these categories. If any of these were to occur, it could damage our reputation, limit our growth and have an adverse effect on our operating results.

We compete with vendors of new and pre-owned luxury goods, including branded luxury goods stores, department stores, traditional brick-and-mortar consignment stores, pawn shops, auction houses, specialty retailers, discount chains, independent retail stores, the online offerings of traditional retail competitors, resale players focused on niche or single categories, as well as technology-enabled marketplaces that may offer the same or similar luxury goods and services that we offer. Many of our competitors have longer operating histories, larger fulfillment infrastructures, greater brand recognition and technical capabilities, faster or lower-cost shipping, larger selections of goods for sale, greater financial, marketing, institutional and other resources and larger buyer bases than we do. As the market evolves, new competitors may emerge, including traditional retail competitors who expand their offerings to include resale. Some of our competitors may have greater resources than we do, which may allow them to derive greater revenue and profits from their existing buyer bases, acquire consignors at lower costs, achieve more favorable total product mixes or respond more quickly than we can to new or emerging technologies, such as artificial intelligence,intelligence and machine learning, and changes in consumer shopping behavior or preferences. These competitors may also adopt more aggressive pricing policies, commission structures or take rates, which may allow them to build larger consignor or buyer bases or generate revenue from their existing buyer bases more effectively than we do. New competitors may force us to decrease our take rates to remain competitive and negatively impact on our financial performance. If we fail to respond to competition effectively, our business and operating results may be adversely affected.

We store the majority of the luxury goods we offer through our online marketplace in our authentication centers in Arizona and New Jersey, with a smaller portion of luxury goods offered for sale in our retail stores. Any large scale damage to or catastrophic loss of goods stored in such authentication centers or retail stores or any other location where goods offered through our online marketplace are stored, due to natural disasters, especially as catastrophic weather events become more frequent due to climate change, or man-made causes such as arson or theft would result in liability to our consignors for the expected commission liability for the lost items, reduction in the value of our inventory and a significant disruption to our business. In addition, while we take measures to avoid damage, conduct inspections of consigned goods and inspect returned products, we cannot control items while they are out of our possession or prevent all damage while items are stored in our authentication centers. For example, we have in the past and may in the future experience contamination, such as mold, bacteria, viruses, insects and other pests, in the goods shipped to us by our consignors, which may cause contamination of other goods stored in our authentication centers or while shipping to buyers. We may incur additional expenses and our reputation could be harmed if buyers or potential buyers believe that the luxury goods we offer on behalf of our consignors are not of high-quality or may be damaged or contain contaminants. Additionally, given the nature of the unique consigned luxury goods we offer on our online marketplace, our ability to restore the supply of consigned luxury goods on our online marketplace would take time and would result in a limitation and delay of available supply for buyers which would negatively impact our revenue and operating results. While we carry insurance for the consigned luxury goods stored in these authentication centers as well as for business interruption and loss of income, our liabilities and expenses resulting from a catastrophic event could exceed our maximum insurance coverage amounts which could have a material adverse impact on our business and operating results. For example, in May 2024, we experienced a fire on the roof of one of our leased Secaucus warehouses. As of December 31, 2024, our discussions with the insurance company remain ongoing and our liabilities and expenses are expected to exceed our maximum insurance coverage amounts.

We rely on third-party payment processors to process payments made by buyers or to consignors on our online marketplace. The software and services provided by our third-party payment processors may not meet our expectations, contain errors or vulnerabilities, or be compromisedcompromise. orWe experiencehave outages.experienced, and expect that in the future we will experience, interruptions, delays and outages in service from third party payment service providers, including payment processors, application providers and hosting services. Any of these risks could cause us to lose our ability to accept online payments, make payments to consignors or conduct other payment transactions, any of which could make our platform less convenient and attractive and adversely affect our ability to attract and retain buyers and consignors.

We rely on the fair use doctrine when we routinely refer to third-party intellectual property, such as trademarks, on our platform. Third parties may dispute the scope of that doctrine and challenge our ability to reference their intellectual property in the course of our business. For instance, from time to time, we are contacted by companies controlling brands of goods consignors sell, demanding that we cease referencing those brands in connection with such sales, whether in advertising or on our website. We have consistently responded by reference to the holding in Tiffany (NY), Inc. v. eBay that factual use of a brand to describe and sell a used good is not false advertising. These matters have generally been resolved with no further communications, but some have resulted in litigation against us. For example, in November 2018, Chanel filed a lawsuit against us in the U.S. District Court for the Southern District of New York bringing various trademark and advertising-related claims under the Lanham Act and New York state law analogues. The final outcome of this litigation, including our liability, if any, with respect to Chanel’s claims, is uncertain. An unfavorable outcome in this or similar litigation could adversely affect our business and could lead to other similar lawsuits. See “Part II,I, Item 13 – Legal Proceedings” for a description of the Chanel litigation.

In addition, the Company, its officers and directors and the underwriters of the Company’s initial public offering (“IPO”) were named as defendants in numerous purported securities class actions in connection with the Company’s IPO (the “Securities Litigation”). See “Part II,I, Item 13 – Legal Proceedings” for a description of the Securities Litigation.

Numerous state, federal and international laws, rules and regulations govern privacy, data protection and the collection, use and protection of personal information and other types of data we collect, use, disclose and otherwise process. These laws, rules and regulations are constantly evolving, and we expect that there will continue to be new proposed laws, regulations and industry standards concerning privacy, data protection and information security in the United States, the European Union (the "EU"), the United Kingdom (the "UK") and other jurisdictions. For example, the California Consumer Privacy Act (the “CCPA”), that requires covered companies to provide disclosures to California consumers and afford such consumers qualified privacy rights, such as rights of access, deletion and to opt-out of the sales and "sharing" of their personal information, which relates to "cross context behavioral advertising" or more commonly known as targeted advertising. The CCPA was amended by the California Privacy Rights Act (the “CPRA”), which went into effect on January 1, 2023. The CCPA, as amended, removes the exclusion of employment data from its auspices, adds new consumer privacy rights (such as the right to correct inaccurate personal information, or the right to opt out of the “sharing” of personal information for the purposes of cross-context behavioral advertising), expands business’s obligations to secure contractual obligations from service providers and third parties, and expands business’s obligations with respect to automated opt-out preference signals. The new California Privacy Protection Agency completed its first round of rulemaking but has left many new requirements, such as data privacy and security risk assessments and the right to opt out of certain data profiling activities, for its second round of rulemaking, which began in March 2023 and has yet to be finalized.activities. It remains unclear how these new amendments will be interpreted or when the second round of rulemaking activity will conclude.enforced. The CCPA may limit the effectiveness of our marketing activities and require us to modify our data processing practices and policies and to incur substantial costs and expenses in an effort to comply. Similarly, several other U.S. states, including Virginia, Connecticut, Colorado, Utah, Delaware, Iowa, Indiana, Kentucky, Maryland, Montana, Minnesota, Nebraska, New Hampshire, New Jersey, Oregon, Rhode Island, Tennessee and Texas have passed similar consumer data privacy laws that impose general data minimization obligations on covered businesses and also extend privacy rights to individuals, including the rights to opt out of targeted advertising and respect automated opt-out preference signals. Many of these state laws also require covered businesses to provide consumers with the ability to opt-out of certain profiling or automated decision-making processes Additionally, the European Commission imposes stringent EU data protection requirements across all EU Member States through the General Data Protection Regulation (“GDPR”). The GDPR has been transposed into national law by the UK (“UK GDPR”) and has been incorporated into the European Economic Area (“EEA”) Agreement. The GDPR and UK GDPR, as well as other statutes and regulations related to privacy and data protection, increase our compliance obligations and may affect our collection, processing, retention and transfer of certain personal data, reporting of certain security breaches, and expose us to increased penalties for non-compliance. Increased regulatory scrutiny could lead to substantial costs, require significant changes to our existing systems, limit the effectiveness of our marketing activities, and subject us to additional liabilities. Further, recent litigation in the EEA and the UK has driven significant changes in enforcement and interpretation, and we cannot yet fully determine the impact these or future laws, rules and regulations may have on our business or operations.

Given the increased legislative and regulatory enforcement focus on the use of data for advertising and artificial intelligence,intelligence in the EU, UK, US and other jurisdictions, we may be subject to new and unexpected regulatory interpretations and rulemaking efforts, including proposals for regulation of artificial intelligence or other automated decision-making processes. Future laws, regulations, standards and other obligations could, for example, impair our ability to collect or use information that we utilize to create targeted marketing and advertising and offer certain bespoke product features and other capabilities to drive efficiencies in our merchandising operations, thereby impairing our ability to maintain and attract new consignors and buyers, which could have a material adverse effect on our business and operating results.

These laws, rules and regulations may be inconsistent from one jurisdiction to another, subject to differing interpretations and may be interpreted to conflict with our practices. Any failure or perceived failure by us or any third parties with which we do business to comply with these laws, rules and regulations, or with other obligations to which we or such third parties are or may become subject, may result in actions against us by governmental entities,entities or third-party or class action litigation, and the expenditure of legal and other costs and of substantial time and resources,resource expenditures, and fines, penalties or other liabilities.

In addition, many of the underlying laws, rules and regulations imposing taxes and other obligations were established before the growth of the Internet and e-commerce. U.S. federal, state and local taxing authorities are currently reviewing the appropriate treatment of companies engaged in Internet commerce and considering changes to existing tax or other laws or may change interpretation of existing tax or other laws that could levy sales, income, consumption, use or other taxes relating to our activities, and/or impose obligations on us to collect such taxes. If such tax or other laws, rules or regulations are amended or interpretations are changed,change, or if new unfavorable laws, rules or regulations are enacted, the results could increase our tax payments or other obligations, prospectively or retrospectively, subject us to interest and penalties, decrease the demand for our services if we pass on such costs to our buyers or consignors, result in increased costs to update or expand our technical or administrative infrastructure or effectively limit the scope of our business activities if we decided not to conduct business in particular jurisdictions. As a result, these changes may have a material adverse effect on our business, results of operations, financial condition and prospects.

•adverse economic and market conditions, including declines in consumer discretionary spending, currency fluctuations, inflation, disruptions in the financial industryindustry, increased U.S. trade tariffs and trade disputes with other countries, and geopolitical instability;

As of the dateDecember hereof,31, 2025, the principal amount of our 3.00% convertible senior notes due 2025 (the “20252028 Notes”) iswas $26.7$48.2 million, the principal amount of our 1.00% convertible senior notes due 2028 (the “2028 Notes”) is $97.7 million, the principal amount of our 4.25%/8.75% PIK/cash senior secured notes due 2029 (the “2029 Notes”) iswas $134.5$143.8 million and the principal amount of our 4.00% convertible senior notes due 2031 (the “2031 Notes” and,was together$190.1 with the 2025 Notes and the 2028 Notes, the “Convertible Senior Notes”) is $146.7 million (together with the 2029 Notes and the Convertible Senior Notes, the “Notes”).million. Additionally, the Company issued warrantsWarrants to acquire an aggregate of up to 7,894,737 shares of our common stock (subject to adjustment in accordance with the terms of the Warrants). We may be required to use a substantial portion of our cash flows from operations to pay interest and principal on our indebtedness. Such payments will reduce the funds available to use for working capital, capital expenditures and other corporate purposes and limit our ability to obtain additional financing, which may in turn limit our ability to implement our business strategy, heighten our vulnerability to downturns in our business, the industry, or in the general economy, limit our flexibility in planning for, or reacting to, changes in our business and the industry and prevent us from taking advantages of business opportunities as they arise. If we are unable to generate such cash flow to service our debt, we may be required to adopt one or more alternatives, such as selling assets, incurring additional debt, restructuring debt or issuing additional equity on terms that may be onerous or highly dilutive. These alternatives may be insufficient to overcome macroeconomic conditions that may affect us. The duration and severity of macroeconomic uncertainty, any ensuing economic downturns, including economic recession or depression, could directly impact our ability to implement alternatives to service our debt. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations.

Subject to certain exceptions and qualifications, the indenture governing our 2029 Notes (the “2029 Notes Indenture”) restricts our ability to, among other things, (i) grant or incur liens securing indebtedness; (ii) incur, assume or guarantee additional indebtedness; (iii) enter into transactions with affiliates; (iv) sell or otherwise dispose of assets, including capital stock of subsidiaries; (v) in the case of the Company and any future guarantor (if any), consolidate, amalgamate or merge with or into, or sell all or substantially all of its assets to, another person; (vi) make certain restricted payments or other investments; and (vii) pay dividends or make other distributions (including loans and other advances). In addition, the 2029 Notes Indenture contains a covenant that provides that the Company may not permit liquidity (calculated as the sum of (a) unused commitments then available to be drawn under any revolving credit facility, delayed draw term loan facility or qualified securitization financing permitted thereunder (after giving effect to any borrowing base or similar limitations), plus (b) the amount of unrestricted cash and cash equivalents held by the Company and its subsidiaries (if any)) to be less than $25 million as of the last day of any month. These restrictions, and others set forth in the 2029 Notes Indenture, may make it difficult to successfully execute our business strategy or effectively compete with companies that are not similarly restricted.

The indentures governing our Convertible Senior Notes and our 2029 Notes Indenture also set forth certain events of default after which our Notes may be declared immediately due and payable and set forth certain types of bankruptcy or insolvency events of default involving the Company or its subsidiaries. Such acceleration of our debt could have a material adverse effect on our liquidity if we are unable to negotiate mutually acceptable terms with the holders of the 2028 Notes or the 2029 Notes or if alternate funding is not available to us. Furthermore, if we are unable to repay the Notes upon an acceleration or otherwise, we could be forced into bankruptcy or liquidation.

The capped call transactions may affect the value of the 2025Convertible Notes, the 2028Senior Notes and our common stock.

In connection with the pricing of the 2025 Notes and the 2028 Notes, we entered into privately negotiated capped call transactions with certain counterparties. The capped call transactions cover the number of shares of our common stock initially underlying the 2025 Notes and the 2028 Notes. The capped call transactions are expected to offset the potential dilution to our common stock upon any conversion of the 2025 Notes and the 2028 Notes. In connection with establishing their initial hedges of the capped call transactions, the counterparties or their respective affiliates entered into various derivative transactions with respect to our common stock. The counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions prior to the maturity of the 2025 Notes and the 2028 Notes (and are likely to do so on each exercise date of the capped call transactions), or following any termination of any portion of the capped call transactions in connection with any repurchase, redemption or early conversions of the 2025 Notes and the 2028 Notes or otherwise. This activity could also cause or avoid an increase or a decrease in the market price of our common stock.

We have transformed the luxury consignment experience by removing the friction and pain points inherent in the traditional consignment model. ForOur consignors,growth weplaybook centers on scalable supply engine, and helps us forge enduring relationships with our consignors. We offer concierge at-home consultation and pickup as well as virtual consultations. Consignors may also drop off items at our luxury consignment offices. Our retail stores provide an alternative location to drop off consigned items and an opportunity to interact with our authentication experts. Consignors may also utilize our complimentary shipping directly to our authentication centers. We leverage our proprietary transactional database and market insights from approximatelyover 44.550 million item sales since our inception to deliver optimal pricing and rapid sell-through. For buyers, we offer highly coveted and exclusive authenticated pre-owned luxury goods at attractive values, as well as a high-quality experience befitting the products we offer. Our online marketplace is powered by our proprietary technology platform, including consumer facing applications and purpose-built software that supports our complex, single-SKU inventory management system.

•Consignment revenue. When we sell goods through our online marketplace or retail stores on behalf of our consignors, we retain a percentage of the proceeds, which we refer to as our take rate. Take rates vary depending on the total value of goods sold through our online marketplace on behalf of a particular consignor as well as the category and price point of the items. In 20242025 and 2023,2024, our overall take rate on consigned goods was 38.4%37.7% and 37.5%38.4% respectively. The increasedecrease in our take rate was due to thesales updatemix ofinto ourhigher consignorvalue commission structure (effective November 1, 2022).items. Additionally, we earn revenue from our subscription program, First Look, in which we offer buyers early access to the items we sell in exchange for a monthly fee.

•Shipping services revenue. When we deliver purchased items to our buyers, we charge shipping fees to buyers for the outbound shipping and handling services. We also generate shipping services revenue from the shipping fees for consigned products returned by our buyers to us within policy. Shipping services revenue is recognized net of immaterial buyer incentives and excludes the effect of buyer incentives and sales tax.

We generate revenue from orders processed through our website, mobile app and retail stores. Our omni-channel experience enables buyers to purchase anytime and anywhere. We have a global base of more than 38.640 million members as of December 31, 2024.2025. We count as aA member is any user who has registered an email address on our website or downloaded our mobile app, thereby agreeing to our terms of service.

We measure the ratio of demand versus supply in a given period, which we refer to as our online marketplace sell-through ratio. Sell-through ratio is defined as GMV in the period divided by the aggregate initial value of items added to our online marketplace in the period. In 2024,2025, our online marketplace sell-through ratio was approximatelyover 85%.80%.

We believe there is substantial opportunity to grow our business by having buyers also become consignors and vice versa. As of December 31, 2024,2025, 15%16% of our buyers during the last twelve months also consigned items, and 48%50% of our consignors also made purchases. We believe this approach effectively captures the flywheel effect that strengthens the network dynamics of our online marketplace. If we fail to continue to attract and retain our buyer base to our online marketplace, our operating results would be adversely affected. The graph below shows the percentage of GMV in each year from buyers who have participated as both buyers and consignors on our online marketplace. GMV attributable to consigning activity of such buyers is not included. Our GMV from buyers who are also consignors has increased over time due to the effectiveness of our flywheel.flywheel and more recently through tools to encourage flywheel behavior like the "Reconsign" module on our platform.

Buyer acquisition cost. Our financial performance depends on effectively managing the expenses we incur to attract and retain buyers. We closely monitor our efficiency in acquiring new buyers. Our buyer acquisition cost (“BAC”) for a given period is comprised of our total advertising spend for acquiring both buyers and consignors, which is principally the cost of television, digital and direct mail advertising, divided by the number of buyers acquired in that period. We adjust or re-allocate our advertising in real-time to optimize our spend across channels, buyer demographics and geographies to improve our return on advertising spend. Our BAC hasmay declinedvary overfrom time,year whichto hasyear, beendepending drivenupon bywhen improvingwe acquisitionchoose efficiencies.to make more significant investments.

Scaling operations and technology. To support the future growth of our business, we continue to invest in physical infrastructure, technology and talent. We principally conduct our intake, authentication, merchandising and fulfillment operations in our leased authentication centers located in Arizona and New Jersey comprising an aggregate of approximately 1.4 million square feet of space. We also operate retail stores in several geographies. In addition to scaling our physical infrastructure, growing our single-SKU business operations requires that we attract, train and retain highly-skilled personnel for purposes of authentication, copywriting, merchandising, pricing and fulfilling orders. We have invested substantially in technology to automate our operations and support growth,growth. includingWe have continued to elevate our authentication operations through the combination of technology, our proprietary machinedata, learningand technologyartificial intelligence capabilities to support efficiency and quality. We continue to strategically invest in technology, as innovation positions us to scale and support growth into the future.

Shipping services revenue is generated from shipping fees we charge to buyers for outbound shipping and handling activities related to delivering purchased items to our buyers. We also generate shipping services revenue from the shipping fees for consigned products returned by our buyers to us within policy. We recognize shipping services revenue over time as the shipping activity occurs.occurs, net of immaterial buyer incentives. Shipping services revenue excludes the effect of buyer incentives and sales tax.

Take rate is a key driver of our revenue and provides comparability to other marketplaces. The numerator used to calculate our take rate is equal to net consignment sales and the denominator is equal to the numerator plus consignor commissions. Net consignment sales represent the value of sales from consigned goods net of platform-wide discounts less consignor commission, product returns and order cancellations. We exclude direct revenue from our calculation of take rate because direct revenue represents the sale of inventory owned by us, which costs are included in cost of direct revenue. Our take rate reflects the high level of service that we provide to our consignors across multiple touch points and the consistently high velocity of sales for their goods. In November 2022, we updated our take rate structure with the goals of optimizing take rate, limiting consignment of lower value items, and increasing supply of higher value items. We continue to assess our take rate structure and may implement further changes in the future.

Average order value (“AOV”) means the average value of all orders placed across our online marketplace and retail stores, excluding the effect of buyer incentives, shipping fees and sales taxes. Our focus on luxury goods across multiple categories drives a consistently strong AOV. Our AOV reflects both the average price of items sold as well as the number of items per order. Our AOV is a key driver of our operating leverage.

•Direct revenue. We generate direct revenue from the sale of items that we own, which we refer to as our inventory. We generally acquire inventory when we accept out of policy returns from buyers,buyers and when we make direct purchases from businesses and consignors. We recognize direct revenue upon shipment based on the gross purchase price paid by buyers for goods, net of allowances for product returns, buyer incentives and adjustments.

•Shipping services revenue. We generate shipping services revenue from the outbound shipping and handling fees we charge when delivering purchased items to our buyers. We also generate shipping services revenue from the shipping fees for consigned products returned by our buyers to us within policy. We recognize shipping services revenue over time as the shipping activity occurs.occurs, net of immaterial buyer incentives. Shipping services revenue excludes the effect of buyer incentives and sales tax.

Operations and technology expense principally includes personnel-related costs for employees involved with the authentication, merchandising and fulfillment of goods sold through our online marketplace and retail stores, as well as our general information technology expense. Operations and technology expense also includes allocated facility and overhead costs, costs related to our retail stores, facility supplies, inbound consignment shipping costs,costs and depreciation of hardware and equipment, as well as research and development expense for technology associated with managing and improving our operations. We capitalize a portion of our proprietary software and technology development costs. As such, operations and technology expense also includes amortization of capitalized technology development costs. We expect operations and technology expense to increase in future periods to support our growth, including continuing to invest in automation and other technology improvements to support and drive efficiency in our operations. These expenses may vary from year to year as a percentage of revenue, depending primarily upon when we choose to make more significant investments. We expect these expenses to continue to decrease as a percentage of revenue over the longer term.

Direct revenue decreasedincreased by $14.6$26.5 million, or 18%,41%, in 20242025 compared to 2023.2024. The decreaseincrease was primarily driven by ourhigher planned actions to rebalance vendor-purchased company-owned inventory as the margin profilesales of ouritems directacquired revenuefrom isbusinesses, lowerindividual thansellers, consignmentand revenue.from We recognize direct revenue upon shipmentout of thepolicy purchased good to the buyer.returns. Direct revenue as a percentage of total revenue may vary from period to period primarily based on the amount of consignment revenue.

Shipping services revenue increased by $7.9$3.4 million, or 15%,5%, in 20242025 compared to 20232024 primarily due to ana 7% increase in the standardnumber shippingof feeorders perin order.the year ended December 31, 2025.

Cost of consignment revenue decreasedincreased by $4.3$2.8 million, or 7%,5%, in 20242025 compared to 2023,2024, driven by ahigher decreaseconsignment in overhead costs, including packaging, employee compensation related expenses and website hosting fees,volume, partially offset by costsincreased directlyoperational associated with the increase in consignment revenue.efficiencies.

Consignment revenue gross margin increased by 26281 basis points in the year ended December 31, 20242025 compared to the year ended December 31, 2023,2024, driven by the improvementincrease in takeconsignment raterevenue and theincreased reductionoperational in overhead costs.efficiencies.

Cost of direct revenue decreasedincreased by $18.5$14.9 million, or 25%,27%, in 20242025 compared to 2023.2024. The decreaseincrease was primarily attributable to the 18% decreaseincrease in direct revenue compared to the prior yearyear, aspartially aoffset resultby ofimproved oursell-through plannedand actionsless to rebalance vendor-purchased company-owned inventory.discounting.

Direct revenue gross margin increased by 750882 basis points in the year ended December 31, 20242025 compared to the year ended December 31, 2023,2024. This improvement was primarily driventhe by strategic liquidationresult of companythe owned inventory sold at discounted prices, which resultedincrease in the sell through of inventory that was previously reserved. The margin profile of our direct revenue isand lowerimproved thanproduct themargins, marginwhich profilewere attributed to planned inventory purchases of ourhigher consignmentvalue revenue.items that have higher product margins.

Cost of shipping services revenue increased by $2.8$5.4 million, or 7%,12%, in the year ended December 31, 20242025 compared to the year ended December 31, 2023,2024, primarily due to increaseda cost7% perincrease shipment.in the number of orders and higher carrier costs.

Shipping services revenue gross margin increaseddecreased by 497466 basis points in the year ended December 31, 20242025 compared to the year ended December 31, 2023,2024, primarily due to thehigher increasecarrier in the standard shipping fee per order.costs.

Our total gross margin increasedremained by 603 basis pointsflat in the year ended December 31, 20242025 compared to the year ended December 31, 2023 primarily driven by the increase in higher margin consignment revenue and decrease in lower margin direct revenue.2024. Gross margin may vary from period to period.

Marketing expense decreasedincreased by $3.0$8.0 million, or 5%,14%, in 20242025 compared to 2023.2024. The decreaseincrease was primarily due to a decrease inincreased advertising costs.

As a percentage of revenue, marketing expense decreasedremained toflat at 9% in 2024 from 11%2025 and 2023.2024. These expenses may vary from period to period as a percentage of revenue, depending primarily upon our marketing investments. We expect these expenses to decrease as a percentage of revenue over the longer term.

Operations and technology expense increased by $3.8$15.1 million, or 1%,6%, in 20242025 compared to 2023.2024. The increase was primarilydriven due toby higher employee costs anddue softwareto andincreased servicevolume expenses,compared partiallyto offsetthe byprior a decrease in stock based compensation expense.period.

As a percentage of revenue, operations and technology expense decreased to 40% in 2025 from 43% in 2024 from 47% in 2023 due to an increase in consignment revenue.revenue and improved operating efficiencies in our authentication centers. These expenses may vary from period to period as a percentage of revenue, depending primarily upon when we choose to make more significant investments. We expect these expenses to decrease as a percentage of revenue over the longer term.

Selling, general and administrative expense increased by $3.9$13.9 million, or 2%,7%, in 20242025 compared to 2023.2024. The increase was primarily due to increased employee compensationcosts, relatedprimarily expensesoffset dueby toa an increasedecrease in headcountlegal compared to the prior period.fees.

The fair value of warrant liability increased by $68.2 million, or 100% in 2024 compared to 2023. The Company issued warrants to acquire an aggregate of up to 7,894,737 shares (subject to adjustment in accordance with the terms of the warrants) of the Company's common stock as part of the 2024 Note Exchange (as defined below) in February 2024. The changewarrant wasliability is subsequently re-measured to fair value at each reporting date with changes in the fair value included in earnings. During the year ended December 31, 2025, we incurred a loss of $35.8 million due to the unrealizedincrease loss onin the changefair value of the warrants outstanding at December 31, 2025. The increase in the fair value of the warrant liability fromwas primarily driven by an increase in the issuanceCompany’s datestock toprice Decemberduring 31,the 2024period, (Seewhich Noteresulted 6in —a Non-convertiblehigher Notes,valuation Net).of the warrants.

Gain on extinguishment of debt increased by $4.2$36.6 million, or over 100% in 20242025 compared to 2023.2024. The increase was due to the gain recorded from the extinguishment of the 2025 Exchanged Notes (as defined below) and the issuance of the 20292031 Notes during the year ended December 31, 2025 (See Note 67 — Non-convertibleConvertible Senior Notes, Net).

Interest expense increased by $10.7$6.3 million, or 100%,30%, for the year ended December 31, 20242025 compared to the year ended December 31, 20232024. The increase was due to the contractualfull-period interestimpact expense related toof the 2029 Notes issuedduring the year ended December 31, 2025 compared to a partial period of interest expense during the year ended December 31, 2024, as well as the issuance of the 2031 Notes in February 2024.2025 and August 2025.

As of December 31, 2024,2025, we had cash and cash equivalents of $172.2$151.2 million and an accumulated deficit of $1,253.8$1,295.6 million. We had restricted cash of $14.9$14.8 million as of December 31, 2024,2025, consisting of cash deposited with a financial institution as collateral for our letters of credit, facility leases and credit cards. Since our inception, we have historically generated negative cash flows from operations and have primarily financed our operations through equity and convertible debt financings. InHowever, July 2019, we received net proceeds of $315.5 million upon completion of our IPO on July 2, 2019. In June 2020, we received net proceeds of $143.3 million fromduring the issuanceyears ofended ourDecember 31, 2025 Notes and the related capped call transactions. In March 2021, we received net proceeds of $244.5 million from our 2028 Notes and the related capped call transactions. In February 2024, we exchangedachieved $145.8positive millioncash offlow thefrom 2025 Notes and $6.5 million of the 2028 Notes for $135.0 million in aggregate principal amount of the 2029 Notes (the “2024 Note Exchange”). As a result of the 2024 Note Exchange, we significantly extended the average maturity date of our outstanding indebtedness (see Note 6 - Non-convertible Notes, Net).operations.

We expect that operating losses and negative cash flows from operations couldmay continue in the foreseeable future. We believe our existing cash and cash equivalents as of December 31, 20242025 will be sufficient to meet our working capital and capital expenditures needs for at least the next 12 months.

Net Cash UsedProvided inby Operating Activities

During 2024,2025, net cash provided by operating activities was $26.8$37.0 million, which consisted of a net loss of $134.2$41.8 million, adjusted by non-cash$88.1 chargesmillion of $158.2non-cash millioninflows and cash inflowsoutflows due to a net change of $2.8$9.3 million in our operating assets and liabilities. The net change in our operating assets and liabilities was primarily the result of cash outflows due to a decrease of $22.2 million in operating lease liabilities, an increase of $12.5 million in accounts receivable, and an increase of $9.5 million in inventory, partially offset by cash inflows due to an increase of $11.5$21.8 million in consignor payables and an increase of $13.1$12.7 million in other accrued and current liabilities, partially offset by cash outflows due to a decrease of $20.9 million in operating lease liabilities. Our primary uses of cash in operating activities include operating costs such as operating lease obligations, compensation and benefits, marketing, and other expenditures necessary to support our business growth.

During 2024,2025, net cash used in investing activities was $25.6$29.2 million, which primarily consisted of $14.2$18.6 million for purchases of property and equipment, net, including leasehold improvements, and $11.8$12.9 million for capitalized proprietary software costs.

Net Cash ProvidedUsed byin Financing Activities

During 2024,2025, net cash used in financing activities was $4.8$28.9 million, which primarily consisted of cash outflows of $5.3a $26.7 million repayment of our 2025 Notes and a $6.6 million payment for debt issuance costs related to the 20242025 Note Exchange and $1.6 million of taxes related to restricted stock units vesting,Exchanges, partially offset by $1.4$1.9 million cash received due to settlement of proceedsCapped fromCalls in conjunction with the issuance2025 ofNote common stock related to the Company's employee stock purchase plan.Exchanges.

As of December 31, 2024,2025, we had 2025 Notes outstanding in an aggregate principal amount of $26.7 million and 2028 Notes outstanding in an aggregate principal amount of $281.0$48.2 million. As a result of the 2025 Note Exchanges, as of December 31, 2025, we had 2031 Notes outstanding in an aggregate principal amount of $190.1 million (together, the "Convertible Senior Notes"). A portion of the net proceeds from the sale of the 2025 Notes and the 2028 Notes was used to fund the net cost of entering into the capped call transactions described below. We did not receive any cash proceeds from the issuance of the 2031 Notes in the 2025 Note Exchanges.

OnThe February2028 10,Notes 2025,are pursuantconvertible tointo cash, shares of our common stock or a combination of cash and shares of our common stock, at the 2025Company’s Noteselection, Exchange,at wean issuedinitial $146.7conversion millionrate inof aggregate31.4465 shares of our common stock per $1,000 principal amount of the 20312028 NotesNotes, inwhich exchangeis forequivalent $183.3to millionan ininitial aggregateconversion principalprice amountof approximately $31.80 per share of our 2028common Notes.stock. The 2031 Notes are convertible into cash, shares of our common stock or a combination of cash and shares of our common stock, at the Company’s election, at an initial conversion rate of 95.5795 shares of common stock per $1,000 principal amount, which is equivalent to an initial conversion price of approximately $10.46 per share of our common stock. The initial conversion price represents a premium of approximately 26.9% over the $8.24 closing price of our common stock on February 10, 2025. As a result of the 2025 Notes Exchange, we have $97.7 million outstanding in aggregate principal amount of the 2028 Notes as of the date hereof. We did not receive any cash proceeds from the issuance of the 2031 Notes in the 2025 Notes Exchange.

For additional details related to our Convertible Senior Notes,Notes and the 2025 Note Exchanges, please see “Note 7 – Convertible Senior Notes, Net” and "Note 17 — Subsequent Events" to the financial statements included in this report.

On February 29, 2024, the Company entered into exchange agreements with certain holders (the “Exchange Holders”) of its Convertiblethen Senioroutstanding 2025 Notes and 2028 Notes to exchange (i) $145.8 million in aggregate principal amount of the 2025 Notes and (ii) $6.5 million in aggregate principal amount of the 2028 Notes (together, the “Exchanged Notes”) for $135.0 million in aggregate principal amount of the Company’s 4.25%/8.75% PIK/Cash Senior Secured Notes due 2029 (the “2029 Notes”), pursuant to anthe indenture.2029 Notes Indenture. The 2029 Notes bear interest at a rate of 13.00% per annum, consisting of cash interest at a rate of 8.75% per annum payable semi-annually in arrears and payment in-kind interest at a rate of 4.25% per annum payable semi-annually. The 2029 Notes will mature on the earlier of (a) March 1, 2029 and (b) any date, if any, on or after December 1, 2027 on which (a) the aggregate principal amount of the 2028 Notes then outstanding is greater than $20 million and (b) the difference between (i) the amount of unrestricted cash and cash equivalents held by the Company and its subsidiaries (if any) as of such date of determination and (ii) the aggregate principal amount of 2028 Notes outstanding as of such date of determination is less than $75 million. In connection with the 2024 Note Exchange, the Company issued warrantsWarrants to acquire an aggregate of up to 7,894,737 shares (subject to adjustment in accordance with the terms of the warrants) of the Company’s common stock to the holders of the Exchanged Notes at an exercise price of $1.71, subject to certain cashless exercise provisions and adjustment in accordance with the terms of the warrants (the “Warrants”) (see “Note 4 – Fair Value Measurement” to the financial statements included in this report for further details on the terms of the Warrants).

•Our growth strategies may not be successful.successful

•We rely on consumer discretionary spending, which is adversely affected by economic downturns, including economic recession or depression and other macroeconomicmacro economic conditions or trends.

•Our industry is highly competitive,competitive and we may not be able to compete effectively.

We experienced net income (lossesloss) of $(134.2) million, $(41.8) million, and $38.9$11.7 million in 2024, 2025 and the threesix months ended MarchJune 31,30, 20262026, respectively, and as of MarchJune 31,30, 2026 we had an accumulated deficit of $1,256.7$1,283.9 million. Our key initiatives currently include growing profitable supply, improving efficiencies, and pursuing new revenue streams. If those initiatives or our investments do not prove successful or our market does not develop as we expect, we may not achieve profitability on the timeline we expect or at all, and may continue to experience losses over the long term. Any failure to increase our revenue sufficiently to keep pace with our investments and other expenses could prevent us from achieving or maintaining profitability or positive cash flow on a consistent basis. If we are unable to successfully address these risks and challenges as we encounter them, our business, financial condition and operating results could be adversely affected. We cannot assure you that we will ever achieve or sustain profitability and may continue to incur significant losses going forward.

Our growth strategies, including our initiatives to pursue new revenue streams, are evolving. For example, we have recently introduced third party advertising on our online marketplace. However, these efforts mightmay not be successfulsuccessful, orand we may not be able to pursue them at all. In addition, our third-party advertising has been perceived negatively by potential consignors and buyers using our online marketplace, suchand other efforts may be perceived negatively as our use of third-party advertising. Additionally, we may not be able to pursue these efforts at all.well. We may limit the user data shared with third-party advertising partners, which could have a negative effect on our ability to maximize our advertising revenue. In addition, we seek to balance new initiatives with our desire to provide an optimal user experience on our online marketplace, and we may not be successful in achieving a balance that continues to retain and attract consignors and buyers. If our growth strategies, including our initiatives to pursue new revenue streams, are not successful, do not generate sustainable revenue or help us achieve profitability, it could have a material adverse impact on our business and operating results.

While we have members from outside the United States who purchase items from our online marketplace, we have not expanded our physical operations internationally. If we choose to do so, we would need to adapt to and would be subject to new risks relating to various local cultures, languages, standards, laws and regulations and policies as well as tariffs and trade-related restrictions, which could be significant. Our business model we employ may not appeal to consignors and buyers outside of the United States. Furthermore, to succeed with clients in international locations, it will be necessary to locate authentication centers in foreign markets and hire local employees in those markets, and we may have to invest in such facilities before demonstrating that we can successfully run operations outside of the United States. If we invest substantial time and resources to establish and expand our operations internationally and are unable to do so successfully and in a timely manner, our operating results would suffer.

Our success depends on our ability to generate a consistent supply of luxury goods to sell through our stores and online marketplace. To do this we must cost-effectively attract, retain and grow relationships with consignors. To expand our consignor base, we must appeal to and engage individuals new to consignment, or who have consigned through traditional brick-and-mortar shops but are unfamiliar with our business. We find new consignors by converting buyers utilizing our online marketplace, shopping in our retail stores, or utilizing our luxury consignment offices. We also reach new consignors through paid advertising, marketing materials, digital marketing, referral programs, organic word-of-mouth and other methods, such as mentions in the press, Internet search engine results and through our brand partnerships. We cannot be certain that these efforts will yield new consignors or be cost-effective. Moreover, new consignors may not choose to consign with us a second time or as frequently, or consign as many items or the same value of items, as has historically been the case with existing consignors. Therefore, the revenue generated from new consignors may not be as high as the revenue generated historically from our existing consignors or as high as we expect. Most of the luxury goods we offer through our online marketplace are initially sourced from consignors who are individuals. As a result, we may be subject to periodic fluctuations in the number, brands and quality of goods sold through our online marketplace on behalf of our consignors, including as a result of the fluctuating value of raw materials such as gold and silver, which have recently reached record highs. In addition, a significant number of our new and existing consignors greatly prefer our concierge consultation method for consigning luxury goods, which involves our sales professionals meeting with our consignors in their homes. We continue to optimizeupdate our take rate structure. If updates to our take rate structure are not successful in increasing the consignment of optimal items, our brand and reputation could be adversely affected, we may generate less revenue than expected, and we may choose to further refine the structure. We have a buy upfront program in an effort to generate additional supply. If we fail to attract new consignors or drive repeat consignments in a cost-effective manner, or fail to convert buyers to consignors, our ability to grow our business and our operating results would be adversely affected.

Our brand and ability to attract and retain consignors and buyers depends in part on the reliable performance of our network infrastructure and content delivery process. The continuing and uninterrupted performance of our online marketplace is critical to our success. We have experienced, and expect that in the future we will experience, interruptions, delays and outages in service and availability from time to time due to a variety of factors, including infrastructure changes, human or software errors, website hosting disruptions and capacity constraints which could affect the availability of services on our platform and prevent or inhibit the ability of members to access our online marketplace or complete purchases on our website and app. Volume of traffic and activity on our online marketplace spikes on certain days and during certain periods of the year, such as during a Black Friday promotion and generally during the fourth quarter due to the seasonality of our business, and any interruption would be particularly problematic if it were to occur at such a high volume time.

Numerous state, federal and international laws, rules and regulations govern privacy, data protection and the collection, use and protection of personal information and other types of data we collect, use, disclose and otherwise process. These laws, rules and regulations are constantly evolving, and we expect that there will continue to be new proposed laws, regulations and industry standards concerning privacy, data protection and information security in the United States, the European Union (the "EU"), the United Kingdom (the "UK") and other jurisdictions. For example, the California Consumer Privacy Act (the “CCPA”) requires covered companies to provide disclosures to California consumers and afford such consumers qualified privacy rights, such as rights of access, deletion and to opt-out of the sales and "sharing" of their personal information, which relates to "cross context behavioral advertising" or more commonly known as targeted advertising. The CCPA was amended by the California Privacy Rights Act (the “CPRA”), which went into effect on January 1, 2023. The CCPA, as amended, removes the exclusion of employment data from its auspices, adds new consumer privacy rights (such as the right to correct inaccurate personal information, or the right to opt out of the “sharing” of personal information for the purposes of cross-context behavioral advertising), expands business’s obligations to secure contractual obligations from service providers and third parties, and expands business’s obligations with respect to automated opt-out preference signals. The new California Privacy Protection Agency completed its first round of rulemaking but has left many new requirements, such as data privacy and security risk assessments and the right to opt out of certain data profiling activities. It remains unclear how these new amendments will be interpreted or enforced. The CCPA may limit the effectiveness of our marketing activities and require us to modify our data processing practices and policies and to incur substantial costs and expenses in an effort to comply. Similarly, several other U.S. states, including Virginia, Connecticut, Colorado, Utah, Delaware, Iowa, Indiana, Kentucky, Maryland, Montana, Minnesota, Nebraska, New Hampshire, New Jersey, Oregon, Rhode Island, Tennessee and Texas have passed similar consumer data privacy laws that impose general data minimization obligations on covered businesses and also extend privacy rights to individuals, including the rights to opt out of targeted advertising and respect automated opt-out preference signals. Many of these state laws also require covered businesses to provide consumers with the ability to opt-out of certain profiling or automated decision-making processes Additionally, the European Commission imposes stringent EU data protection requirements across all EU Member States through the General Data Protection Regulation (“GDPR”). The GDPR has been transposed into national law by the UK (“UK GDPR”) and has been incorporated into the European Economic Area (“EEA”) Agreement. The GDPR and UK GDPR, as well as other statutes and regulations related to privacy and data protection, increase our compliance obligations and may affect our collection, processing, retention and transfer of certain personal data, reporting of certain security breaches, and expose us to increased penalties for non-compliance. Increased regulatory scrutiny could lead to substantial costs, require significant changes to our existing systems, limit the effectiveness of our marketing activities, and subject us to additional liabilities. Further, recent litigation in the EEA and the UK has driven significant changes in enforcement and interpretation, and we cannot yet fully determine the impact these or future laws, rules and regulations may have on our business or operations.processes.

Given the increased legislative and regulatory enforcement focus on the use of data for advertising and artificial intelligence in the EU, UK, US and other jurisdictions, we may be subject to new and unexpected regulatory interpretations and rulemaking efforts, including proposals for regulation of artificial intelligence or other automated decision making processes. Future laws, regulations, standards and other obligations could, for example, impair our ability to collect or use information that we utilize to create targeted marketing and advertising and offer certain bespoke product features and other capabilities to drive efficiencies in our merchandising operations, thereby impairing our ability to maintain and attract new consignors and buyers, which could have a material adverse effect on our business and operating results.

As of MarchJune 31,30, 2026, the principal amount of our 2028 Notes was $48.2 million, the principal amount of our 2029 Notes was $146.9 million, and the principal amount of our 2031 Notes was $190.1 million. Additionally, the Company issued Warrants to acquire an aggregate of up to 7,894,737 shares of our common stock (subject to adjustment in accordance with the terms of the Warrants). We may be required to use a substantial portion of our cash flows from operations to pay interest and principal on our indebtedness. Such payments will reduce the funds available to use for working capital, capital expenditures and other corporate purposes and limit our ability to obtain additional financing, which may in turn limit our ability to implement our business strategy, heighten our vulnerability to downturns in our business, the industry, or in the general economy, limit our flexibility in planning for, or reacting to, changes in our business and the industry and prevent us from taking advantagesadvantage of business opportunities as they arise. If we are unable to generate such cash flow to service our debt, we may be required to adopt one or more alternatives, such as selling assets, incurring additional debt, restructuring debt or issuing additional equity on terms that may be onerous or highly dilutive. These alternatives may be insufficient to overcome macroeconomic conditions that may affect us. The duration and severity of macroeconomic uncertainty, any ensuing economic downturns, including economic recession or depression, could directly impact our ability to implement alternatives to service our debt. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations.

•Consignment revenue. When we sell goods through our online marketplace or retail stores on behalf of our consignors, we retain a percentage of the proceeds, which we refer to as our take rate. Take rates vary depending on the total value of goods sold through our online marketplace on behalf of a particular consignor as well as the category and price point of the items. In the three months ended MarchJune 31,30, 2026 and 2025, our overall take rate on consigned goods was 36.4%35.9% and 38.6%,37.9%, respectively. The decrease in our take rate was due to sales mix into higher value items. Additionally, we earn revenue from our subscription program, First Look, in which we offer buyers early access to the items we sell in exchange for a monthly fee.

We generate revenue from orders processed through our website, mobile app and retail stores. Our omni-channel experience enables buyers to purchase anytime and anywhere. We have a global base of more than 40 million members as of MarchJune 31,30, 2026. A member is any user who has registered an email address on our website or downloaded our mobile app, thereby agreeing to our terms of service.

Our growth has been driven in significant part by repeat sales by existing consignors concurrent with growth of our consignor base. In the three months ended MarchJune 31,30, 2026 and 2025, repeat consignors accounted for over 80% of GMV.

We believe there is substantial opportunity to grow our business by having buyers also become consignors and vice versa. As of MarchJune 31,30, 2026, 16% of our buyers during the last twelve months also consigned items, and 50%51% of our consignors during the past twelve months also made purchases. We believe this approach effectively captures the flywheel effect that strengthens the network dynamics of our online marketplace. Our GMV from buyers who are also consignors has increased over time due to the effectiveness of our flywheel and more recently through tools to encourage flywheel behavior like the "Reconsign" module on our platform. If we fail to continue to attract and retain our buyer base to our online marketplace, our operating results would be adversely affected.

The key operating and financial metrics that we use to assess the performance of our business are set forth below for the three and six months ended MarchJune 31,30, 2026 and 2025.

Average Order Value ("AOV")

(1) The gain on extinguishment of debt for the threesix months ended MarchJune 31,30, 2025 reflects the difference between the carrying value of the February 2025 Exchanged Notes and the fair value of the 2031 Notes.

(2) The change in fair value of warrant liability for the three and six months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025 reflects the remeasurement of the Warrants issued by the Company in connection with the 2024 Note Exchange in February 2024.

Our revenue is comprised of consignment revenue, direct revenue,revenue and shipping services revenue.

Comparison of the Three Months Ended MarchJune 31,30, 2026 and 2025

Consignment revenue increased by $22.1$19.6 million, or 18%,15% in the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025. The increase in revenue was driven primarily by a 24%an increase in consignment GMV offset by a decrease in our take rate during the three months ended MarchJune 31,30, 2026. GMV growth during the three months ended June 30, 2026 was driven by a 13% increase in our AOV and 8% increase in the number of orders.

Our take rate decreased to 36.4%35.9% from 38.6%37.9% during the three months ended MarchJune 31,30, 2026 compared to the samethree periodmonths lastended yearJune 30, 2025 due to sales mix into higher value items.

Direct revenue increased by $5.4$5.3 million, or 26%, in the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025. The increase was primarily driven by higher sales of items acquired from businesses, individual sellers, and from out of policy returns. Increases in out of policy returns isare consistent with the growth in our consignment business. We recognize direct revenue on a gross basis upon shipment of the purchased good to the buyer. Direct revenue as a percentage of total revenue may vary from period to period primarily based on the amountgrowth of consignment revenue.

Shipping services revenue increased by $2.2$2.5 million, or 14%,16%, in the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025 primarily due to aan 8% increase in the number of orders and an increase in shipping fees in the three months ended MarchJune 31,30, 2026.

Cost of consignment revenue increased by $2.5$2.3 million, or 19%,17%, in the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025, driven by higher consignment volume.

Consignment revenue gross margin decreased by 1315 basis points in the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025.

Cost of direct revenue increased by $5.0$3.2 million, or 33%,19%, in the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025. The increase was primarily attributable to the increase in direct revenue compared to the prior year.

Direct revenue gross margin decreasedincreased by 411471 basis points for the three months ended MarchJune 31,30, 20262026, comparedprimarily due to decreased inventory adjustments during the three months ended MarchJune 31,30, 2025 due to category mix of products sold and favorable inventory adjustments in prior year.2026.

Cost of shipping services revenue increased by $0.8$1.3 million, or 7%11%, in the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025, primarily due to aan 8% increase in the number of orders.

The shippingShipping services revenue gross margin increased by 476255 basis points for the three months ended MarchJune 31,30, 2026, primarily due to an increase in shipping fees.

Our total gross margin decreasedincreased by 5010 basis points in the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025 driven by a lower take rate from category mix and growth in direct revenue, which has a lower margin profile than consignment revenue. Gross margin may vary from period to period.2025.

Marketing expense increased by $2.7$2.8 million, or 17%,18%, in the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025. The increase was primarily due to an increase in advertising costs due to increased advertising volumes and changes in the composition of marketing spend.

As a percent of revenue, marketing expense decreasedincreased to 9.8%10% from 9.9%9% in the three months ended MarchJune 31,30, 2026 and 2025, respectively. These expenses may vary from period to period as a percentage of revenue, depending primarily upon our marketing investments.

Operations and technology expense increased by $5.7 million, or 9%,8%, in the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025. The increase was driven by higher employee costs due to increased volume, and an increase in software and service expenses. The increased employee costs were partially offset by realized efficiencies in our fulfillment processes that moderated the overall increase.

As a percent of revenue, operations and technology expense decreased to 38.3%39% from 41.9%42% in the three months ended MarchJune 31,30, 2026 and 2025, respectively, due to improved operating efficiencies in our authentication centers. These expenses may vary from period to period as a percentage of revenue. We expect these expenses to decrease as a percentage of revenue over the longer term.

Selling, general and administrative expense increased by $2.4$4.4 million, or 5%,9%, in the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025. The increase was primarily due to higher employee costs.costs and higher professional services fees.

As a percent of revenue, selling, general and administrative expense decreased to 27.6%27% from 31.2%29% in the three months ended MarchJune 31,30, 2026 andcompared 2025,to respectively.the three months ended June 30, 2025. These expenses may vary from period to period as a percentage of revenue. We expect these expenses to decrease as a percentage of revenue over the longer term.

The Company issued warrants to acquire an aggregate of up to 7,894,737 shares (subject to adjustment in accordance with the terms of the warrants) of the Company's common stock as part of the 2024 Note Exchange in February 2024. The warrant liability is subsequently re-measured to fair value at each reporting date with changes in the fair value included in earnings. During the three months ended MarchJune 31,30, 2026, we incurred a gainloss of $47.3$18.6 million due to the decreaseincrease in the fair value of the warrants outstanding at MarchJune 31,30, 2026. The decreaseincrease in the fair value of the warrant liability was primarily driven by aan decreaseincrease in the Company’s stock price during the period, which resulted in a lowerhigher valuation of the warrants.