Cover Page
Cover Page - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Feb. 21, 2023 | Jun. 30, 2022 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2022 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Transition Report | false | ||
Entity File Number | 001-38953 | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 45-1234222 | ||
Entity Address, Address Line One | 55 Francisco Street | ||
Entity Address, Address Line Two | Suite 400 | ||
Entity Address, City or Town | San Francisco | ||
Entity Address, State or Province | CA | ||
Entity Address, Postal Zip Code | 94133 | ||
City Area Code | 855 | ||
Local Phone Number | 435-5893 | ||
Title of 12(b) Security | Common stock, $0.00001 par value | ||
Trading Symbol | REAL | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Auditor Attestation Flag | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 217,875,844 | ||
Entity Common Stock, Shares Outstanding | 99,248,204 | ||
Documents Incorporated by Reference | Part III incorporates information by reference from the definitive proxy statement for the registrant’s 2023 Annual Meeting of Stockholders. | ||
Entity Registrant Name | TheRealReal, Inc. | ||
Entity Central Index Key | 0001573221 | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Filer Category | Accelerated Filer |
Audit Information
Audit Information | 12 Months Ended |
Dec. 31, 2022 | |
Audit Information [Abstract] | |
Auditor Name | KPMG LLP |
Auditor Location | San Francisco, CA |
Auditor Firm ID | 185 |
Balance Sheets
Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets | ||
Cash and cash equivalents | $ 293,793 | $ 418,171 |
Accounts receivable | 12,207 | 7,767 |
Inventory, net | 42,967 | 71,015 |
Prepaid expenses and other current assets | 23,291 | 20,859 |
Total current assets | 372,258 | 517,812 |
Property and equipment, net | 112,679 | 89,286 |
Operating lease right-of-use assets | 127,955 | 145,311 |
Other assets | 2,749 | 2,535 |
Total assets | 615,641 | 754,944 |
Current liabilities | ||
Accounts payable | 11,902 | 4,503 |
Accrued consignor payable | 81,543 | 71,042 |
Operating lease liabilities, current portion | 20,776 | 18,253 |
Other accrued and current liabilities | 93,292 | 94,188 |
Total current liabilities | 207,513 | 187,986 |
Operating lease liabilities, net of current portion | 125,118 | 143,159 |
Convertible senior notes, net | 449,848 | 348,380 |
Other noncurrent liabilities | 3,254 | 2,291 |
Total liabilities | 785,733 | 681,816 |
Commitments and contingencies (Note 11) | ||
Stockholders’ equity: | ||
Common stock, $0.00001 par value; 500,000,000 shares authorized as of December 31, 2022 and December 31, 2021; 99,088,172 and 92,960,066 shares issued and outstanding as of December 31, 2022 and December 31, 2021, respectively | 1 | 1 |
Additional paid-in capital | 781,060 | 841,255 |
Accumulated deficit | (951,153) | (768,128) |
Total stockholders’ equity (deficit) | (170,092) | 73,128 |
Total liabilities and stockholders’ equity (deficit) | $ 615,641 | $ 754,944 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock, shares issued (in shares) | 99,088,172 | 92,960,066 |
Common stock, shares, outstanding (in shares) | 99,088,172 | 92,960,066 |
Statements of Operations
Statements of Operations - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Revenue: | |||
Total revenue | $ 603,493 | $ 467,692 | $ 299,949 |
Cost of revenue: | |||
Total cost of revenue | 254,802 | 194,215 | 112,382 |
Gross profit | 348,691 | 273,477 | 187,567 |
Operating expenses: | |||
Marketing | 63,128 | 62,749 | 54,813 |
Operations and technology | 279,110 | 235,829 | 163,808 |
Selling, general and administrative | 195,160 | 176,418 | 140,652 |
Legal settlements | 456 | 13,389 | 1,110 |
Total operating expenses | 537,854 | 488,385 | 360,383 |
Loss from operations | (189,163) | (214,908) | (172,816) |
Interest income | 3,191 | 365 | 2,518 |
Interest expense | (10,472) | (21,531) | (5,264) |
Other income (expense), net | 171 | 23 | (169) |
Loss before provision for income taxes | (196,273) | (236,051) | (175,731) |
Provision for income taxes | 172 | 56 | 101 |
Net loss attributable to common stockholders | $ (196,445) | $ (236,107) | $ (175,832) |
Net loss per share attributable to common stockholders, basic (in dollars per share) | $ (2.05) | $ (2.58) | $ (2.01) |
Net loss per share attributable to common stockholders, diluted (in dollars per share) | $ (2.05) | $ (2.58) | $ (2.01) |
Weighted-average common shares outstanding used to calculate net loss per share attributable to common stockholders, basic (in shares) | 95,921,246 | 91,409,624 | 87,587,409 |
Weighted-average common shares outstanding used to calculate net loss per share attributable to common stockholders, diluted (in shares) | 95,921,246 | 91,409,624 | 87,587,409 |
Cost of consignment and service revenue | |||
Revenue: | |||
Total revenue | $ 384,979 | $ 302,221 | $ 213,312 |
Cost of revenue: | |||
Total cost of revenue | 56,963 | 44,985 | 30,389 |
Cost of direct revenue | |||
Revenue: | |||
Total revenue | 158,726 | 120,844 | 52,623 |
Cost of revenue: | |||
Total cost of revenue | 141,661 | 101,427 | 45,406 |
Shipping services revenue | |||
Revenue: | |||
Total revenue | 59,788 | 44,627 | 34,014 |
Cost of revenue: | |||
Total cost of revenue | $ 56,178 | $ 47,803 | $ 36,587 |
Statements of Comprehensive Los
Statements of Comprehensive Loss - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Statement of Comprehensive Income [Abstract] | |||
Net loss | $ (196,445) | $ (236,107) | $ (175,832) |
Other comprehensive income (loss), net of tax: | |||
Unrealized gain (loss) on investments | 0 | (11) | 4 |
Comprehensive loss | $ (196,445) | $ (236,118) | $ (175,828) |
Statements of Stockholders_ Equ
Statements of Stockholders’ Equity (Deficit) - USD ($) $ in Thousands | Total | Cumulative Effect, Period of Adoption, Adjustment | Common Stock | Additional Paid-in Capital | Additional Paid-in Capital Cumulative Effect, Period of Adoption, Adjustment | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Accumulated Deficit Cumulative Effect, Period of Adoption, Adjustment |
Beginning balance (in shares) at Dec. 31, 2019 | 85,872,320 | |||||||
Beginning balance at Dec. 31, 2019 | $ 337,245 | $ 1 | $ 693,426 | $ 7 | $ (356,189) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Purchase of capped calls | (22,546) | (22,546) | ||||||
Equity component of convertible senior notes, net of issuance costs | 19,020 | 19,020 | ||||||
Issuance of common stock upon exercise of options (in shares) | 2,604,494 | |||||||
Issuance of common stock upon exercise of options | 8,859 | 8,859 | ||||||
Issuance of common stock upon vesting of restricted stock units, net of shares withheld for employee taxes (in shares) | 733,385 | |||||||
Issuance of common stock upon vesting of restricted stock units, net of shares withheld for employee taxes | (751) | (751) | ||||||
Issuance of common stock for exercises under ESPP (in shares) | 91,465 | |||||||
Issuance of common stock for exercises under ESPP | 972 | 972 | ||||||
Stock-based compensation expense | 24,322 | 24,322 | ||||||
Other comprehensive income | 4 | 4 | ||||||
Net loss | (175,832) | (175,832) | ||||||
Ending balance (in shares) at Dec. 31, 2020 | 89,301,664 | |||||||
Ending balance at Dec. 31, 2020 | 191,293 | $ 1 | 723,302 | 11 | (532,021) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Purchase of capped calls | (33,666) | (33,666) | ||||||
Equity component of convertible senior notes, net of issuance costs | 93,031 | 93,031 | ||||||
Issuance of common stock upon exercise of options (in shares) | 1,221,365 | |||||||
Issuance of common stock upon exercise of options | 6,009 | 6,009 | ||||||
Issuance of common stock upon vesting of restricted stock units, net of shares withheld for employee taxes (in shares) | 2,237,748 | |||||||
Issuance of common stock upon vesting of restricted stock units, net of shares withheld for employee taxes | (8) | (8) | ||||||
Issuance of common stock for exercises under ESPP (in shares) | 199,289 | |||||||
Issuance of common stock for exercises under ESPP | 2,341 | 2,341 | ||||||
Stock-based compensation expense | 50,246 | 50,246 | ||||||
Other comprehensive income | (11) | (11) | ||||||
Net loss | (236,107) | (236,107) | ||||||
Ending balance (in shares) at Dec. 31, 2021 | 92,960,066 | |||||||
Ending balance at Dec. 31, 2021 | 73,128 | $ (98,632) | $ 1 | 841,255 | $ (112,052) | 0 | (768,128) | $ 13,420 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Issuance of common stock upon exercise of options (in shares) | 1,929,265 | |||||||
Issuance of common stock upon exercise of options | 2,906 | 2,906 | ||||||
Issuance of common stock upon vesting of restricted stock units, net of shares withheld for employee taxes (in shares) | 3,587,964 | |||||||
Issuance of common stock upon vesting of restricted stock units, net of shares withheld for employee taxes | (216) | (216) | ||||||
Issuance of common stock for exercises under ESPP (in shares) | 610,877 | |||||||
Issuance of common stock for exercises under ESPP | 1,400 | 1,400 | ||||||
Stock-based compensation expense | 47,767 | 47,767 | ||||||
Net loss | (196,445) | (196,445) | ||||||
Ending balance (in shares) at Dec. 31, 2022 | 99,088,172 | |||||||
Ending balance at Dec. 31, 2022 | $ (170,092) | $ 1 | $ 781,060 | $ 0 | $ (951,153) |
Statements of Stockholders_ E_2
Statements of Stockholders’ Equity (Deficit) (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Statement of Stockholders' Equity [Abstract] | ||
Equity component of convertible senior notes, issuance costs | $ 3,131 | $ 767 |
Accounting Standards Update [Extensible Enumeration] | Accounting Standards Update 2020-06 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Cash flows from operating activities: | |||
Net loss | $ (196,445) | $ (236,107) | $ (175,832) |
Adjustments to reconcile net loss to cash used in operating activities: | |||
Depreciation and amortization | 27,669 | 23,531 | 18,845 |
Stock-based compensation expense | 46,138 | 48,802 | 24,322 |
Reduction of operating lease right-of-use assets | 19,602 | 19,439 | 16,062 |
Bad debt expense | 1,680 | 1,034 | 903 |
Accrued interest on convertible notes | 0 | 950 | 216 |
Loss on disposal of property and equipment and impairment of capitalized proprietary software | 702 | 546 | 280 |
Accretion of debt discounts and issuance costs | 2,368 | 13,989 | 2,399 |
Other adjustments | 0 | 10 | (86) |
Changes in operating assets and liabilities: | |||
Accounts receivable | (6,120) | (1,588) | (337) |
Inventory, net | 28,048 | (28,694) | (20,405) |
Prepaid expenses and other current assets | (2,952) | (4,009) | (3,443) |
Other assets | (409) | (638) | 548 |
Operating lease liability | (17,764) | (15,285) | (12,752) |
Accounts payable | 4,947 | (9,989) | 2,800 |
Accrued consignor payable | 10,501 | 13,989 | 4,233 |
Other accrued and current liabilities | (9,823) | 30,922 | 7,994 |
Other noncurrent liabilities | 301 | 947 | (166) |
Net cash used in operating activities | (91,557) | (142,151) | (134,419) |
Cash flow from investing activities: | |||
Purchases of short-term investments | 0 | 0 | (73,280) |
Proceeds from maturities of short-term investments | 0 | 4,000 | 278,215 |
Capitalized proprietary software development costs | (14,061) | (9,967) | (8,678) |
Purchases of property and equipment | (22,861) | (37,470) | (18,253) |
Net cash provided by (used in) investing activities | (36,922) | (43,437) | 178,004 |
Cash flow from financing activities: | |||
Proceeds from exercise of stock options and common stock warrants | 2,906 | 6,009 | 8,859 |
Proceeds from issuance of stock in connection with the Employee Stock Purchase Program | 1,400 | 2,341 | 972 |
Taxes paid related to restricted stock vesting | (205) | (5) | (748) |
Net cash provided by financing activities | 4,101 | 252,913 | 152,815 |
Net increase (decrease) in cash and cash equivalents | (124,378) | 67,325 | 196,400 |
Cash and cash equivalents | |||
Beginning of period | 418,171 | 350,846 | 154,446 |
End of period | 293,793 | 418,171 | 350,846 |
Supplemental disclosures of cash flow information | |||
Cash paid for interest | 8,104 | 6,584 | 11 |
Cash paid for income taxes | 256 | 94 | 90 |
Supplemental disclosures of non-cash investing and financing activities | |||
Purchases of property and equipment included in accounts payable and other accrued and current liabilities | 13,860 | 1,922 | 2,638 |
Purchases of capitalized proprietary software development costs included in accounts payable and other accrued and current liabilities | 1,590 | 1,647 | 338 |
Issuance costs associated with issuance of convertible senior notes included in other accrued and current liabilities | 0 | 0 | 469 |
Stock-based compensation capitalized to proprietary software development costs | 1,629 | 1,444 | 0 |
Tax withholding liability for restricted stock | 11 | 3 | 0 |
2025 Convertible senior notes | |||
Cash flow from financing activities: | |||
Proceeds from issuance of convertible senior notes, net of issuance costs | 0 | 0 | 166,278 |
Purchase of capped calls | 0 | 0 | (22,546) |
2028 Convertible senior notes | |||
Cash flow from financing activities: | |||
Proceeds from issuance of convertible senior notes, net of issuance costs | 0 | 278,234 | 0 |
Purchase of capped calls | $ 0 | $ (33,666) | $ 0 |
Description of Business and Bas
Description of Business and Basis of Presentation | 12 Months Ended |
Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business and Basis of Presentation | Description of Business and Basis of Presentation Organization and Description of Business The RealReal, Inc. (the “Company”) is an online marketplace for authenticated, consigned luxury goods across multiple categories, including women’s fashion, men’s fashion, and jewelry and watches. The Company was incorporated in the state of Delaware on March 29, 2011 and is headquartered in San Francisco, California. Basis of Presentation The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and, in the opinion of management, reflect all adjustments necessary to state fairly the Company’s financial position, results of operations, comprehensive loss, stockholders’ equity (deficit), and cash flows for the periods presented. The Company’s functional and reporting currency is the U.S. dollar. The Company adopted ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity as of January 1, 2022 using the modified retrospective adoption method with a cumulative effect adjustment. Refer to Note 2 "Recently Adopted Accounting Pronouncements" for further details on the adoption of ASU 2020-6. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Use of Estimates The preparation of 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 as of the date of the financial statements and the reported amounts of expenses during the reporting period. Significant items subject to such estimates and assumptions include those related to revenue recognition, including the returns reserve, standalone selling price related to consignment transactions, valuation of inventory, software development costs, stock-based compensation, incremental borrowing rates related to lease liability, valuation of deferred taxes, and other contingencies. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could differ from those estimates. Net Loss per Share Attributable to Common Stockholders The Company follows the two-class method when computing net loss per common share when shares are issued that meet the definition of participating securities. The two-class method determines net loss per common share for each class of common stock and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income (loss) available or attributable to common stockholders for the period to be allocated between common stock and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. The Company’s convertible senior notes are participating securities as they give the holders the right to receive dividends if dividends or distributions declared to the common stockholders is equal to or greater than the last reported sale price of the Company’s common stock on the trading day immediately preceding the ex-dividend date for such dividend or distribution as if the instruments had been converted into shares of common stock. No undistributed earnings were allocated to the participating securities as the contingent event is not satisfied as of the reporting date. For periods in which the Company reports net losses, diluted net loss per common share attributable to common stockholders is the same as basic net loss per common share attributable to common stockholders, because potentially dilutive common shares and assumed conversion of the convertible senior notes are not assumed to have been issued within the calculation, if their effect is anti-dilutive. Segments The Company has one operating segment and one reportable segment as its chief operating decision maker, who is its Chief Executive Officer, reviews financial information on a consolidated basis for purposes of allocating resources and evaluating financial performance. All long-lived assets are located in the United States and substantially all revenue is attributed to consignors and buyers based in the United States. Revenue Recognition The Company generates revenue from the sale of pre-owned luxury goods through its online marketplace and retail stores. Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. The Company enters into contracts that include products and services that are capable of being distinct and accounted for as separate performance obligations as described below. The transaction price requires an allocation across consignment services, sales of Company-owned inventory, and shipping services. Estimation is required in the determination of the services' stand-alone selling price ("SSP"). Consignment Revenue The Company provides a service to sell pre-owned luxury goods on behalf of consignors to buyers through its online marketplace and retail stores. The Company retains a percentage of the proceeds received as payment for its consignment service, which the Company refers to as its take rate. SSP is estimated using observable stand-alone consignment sales which are conducted without shipping services. The Company reports consignment revenue on a net basis as an agent and not the gross amount collected from the buyer. Title to the consigned goods remains with the consignor until transferred to the buyer upon purchase of the consigned goods and expiration of the allotted return period. The Company does not take title of consigned goods at any time except in certain cases where returned goods become Company-owned inventory. The Company recognizes consignment revenue upon purchase of the consigned good by the buyer as its performance obligation of providing consignment services to the consignor is satisfied at that point. Consignment revenue is recognized net of estimated returns, cancellations, buyer incentives and adjustments. The Company recognizes a returns reserve based on historical experience, which is recorded in other accrued and current liabilities on the balance sheets (see Note 5). Sales tax assessed by governmental authorities is excluded from revenue. Certain transactions provide consignors with a material right resulting from the tiered consignor commission plan. Under this plan, the amount an individual consignor receives for future sales of consigned goods may be dependent on previous consignment sales for that consignor within his/her consignment period. Accordingly, in certain consignment transactions, a small portion of the Company’s consignment revenue is allocated to such material right using the portfolio method and recorded as deferred revenue, which is recorded in other accrued and current liabilities on the balance sheets. The impact of the deferral has not been material to the financial statements. The Company also generates subscription revenue from monthly memberships allowing buyers early access to shop for luxury goods. The buyers receive the early access and other benefits over the term of the subscription period, which represents a single stand-ready performance obligation. Therefore, the subscription fees paid by the buyer are recognized over the monthly subscription period. Subscription revenue was not material in 2022, 2021, and 2020. Direct Revenue The Company generates direct revenue from the sale of Company-owned inventory. The Company recognizes direct revenue on a gross basis upon shipment of the purchased good to the buyer as the Company acts as the principal in the transaction. SSP is estimated using observable stand-alone sales of Company-owned inventory which are conducted without shipping services, when available, or a market assessment approach. Direct revenue is recognized net of estimated returns, buyer incentives and adjustments. Sales tax assessed by governmental authorities is excluded from revenue. Cost of direct revenue is also recognized upon shipment to the buyer in an amount equal to that paid to the consignor from the original consignment sale, an amount equal to that paid as a direct purchase from a third party, or the lower of cost of the inventory purchased and its net realizable value. Shipping Services Revenue The Company provides a service to ship purchased items to buyers and a service to ship items from buyers back to the Company. The Company determines itself to be the principal in this arrangement. The Company charges a fee to buyers for this service and has elected to treat shipping and handling activities performed as a separate performance obligation. For shipping services revenue, the Company's SSP is estimated using a market approach considering external and internal data points on the stand-alone sales price of the shipping service. All outbound shipping and handling costs for buyers are accounted for as cost of shipping services and recognized as the shipping activity occurs. The Company also generates shipping services revenue from the shipping fees for consigned products returned by buyers to the Company within policy. The Company recognizes shipping revenue and associated costs over time as the shipping activity occurs, which is generally one to three days after shipment. Incentives Incentives, which include platform-wide discounts and buyer incentives, may periodically be offered to buyers. Platform-wide discounts are made available to all buyers on the online marketplace. Buyer incentives apply to specific buyers and consist of coupons or promotions that offer credits in connection with purchases on the Company’s platform, and do not impact the commissions paid to consignors. These are treated as a reduction of consignment revenue and direct revenue. Additionally, the Company periodically offers commission exceptions to the standard consignment rates to consignors to optimize its supply. These are treated as a reduction of consignment revenue at the time of sale. The Company may offer a certain type of buyer incentive in the form of site credits to buyers on current transactions to be applied towards future transactions, which are included in other accrued and current liabilities on the balance sheets. Contract Liabilities The Company’s contractual liabilities primarily consist of deferred revenue for material rights primarily related to the tiered consignor commission plan, which are recognized as revenue using a portfolio approach based on the pattern of exercise, and certain buyer incentives, which were immaterial as of December 31, 2022 and December 31, 2021. Contract liabilities are recorded in other accrued and current liabilities on the balance sheets and are generally expected to be recognized within one year. Contract liabilities were immaterial as of December 31, 2022 and December 31, 2021. Cost of Revenue Cost of consignment revenue consist of credit card fees, packaging, customer service personnel-related costs, website hosting services, and consignor inventory adjustments relating to lost or damaged products. Cost of direct revenue consists of the cost of goods sold, credit card fees, packaging, customer service personnel-related costs, website hosting services, and inventory adjustments. Cost of shipping services revenue consists of the outbound shipping and handling costs to deliver purchased items to buyers, the shipping costs for consigned products returned by buyers to the Company within policy, and an allocation of the credit card fees associated with the shipping fee charged. Marketing Marketing expense is comprised of the cost of acquiring new consignors and buyers for our online platform and physical stores, including the cost of television, digital and direct mail advertising. Marketing expense also includes personnel-related costs, including stock-based compensation, of employees engaged in these activities. Advertising costs are expensed as incurred and were $49.0 million, $46.2 million, and $45.8 million in 2022, 2021, and 2020, respectively. Operations and Technology Operations and technology expense is comprised of costs associated with the authentication, merchandising and fulfillment of goods sold through our online marketplace and retail stores, as well as general information technology expense. The principal component of operations and technology expense is personnel-related costs, including stock-based compensation, of employees engaged in these activities. Operations and technology expense also includes allocated facility and overhead costs, costs related to our retail stores, facility supplies, inbound consignment shipping costs, and depreciation of hardware and equipment, as well as research and development expense for technology associated with managing and improving our operations. In 2022, 2021, and 2020, the Company capitalized proprietary software developments costs of $15.6 million, $12.7 million, and $9.0 million, respectively. As such, operations and technology expense also includes amortization of capitalized technology development costs, which is taken on straight-line basis over three years once the technology is ready for its intended use. Selling, General and Administrative Selling, general and administrative expense is principally comprised of the personnel-related costs for employees involved in sales, finance and administration, and includes stock-based compensation expense. Selling, general and administrative expense also includes allocated facility and overhead costs and professional services, including accounting and legal advisors. Stock-based Compensation The Company incurs stock-based compensation expense from stock options, restricted stock units (“RSUs”), performance based restricted stock units (“PSUs”), and employee stock purchase plan (“ESPP”) purchase rights. Stock-based compensation expense related to employees and nonemployees is measured based on the grant-date fair value of the awards. Compensation expense is recognized in the statements of operations over the period during which the employee is required to perform services in exchange for the award (the vesting period of the applicable award) using the straight-line method for awards with only a service condition and on a tranche by tranche basis for PSUs. The Company estimates the fair value of stock options granted and the purchase rights issued under the ESPP using the Black-Scholes option pricing model. The fair value of RSUs is estimated based on the fair market value of the Company’s common stock on the date of grant, which is determined based on the closing price of the Company’s common stock. The PSUs are measured using the fair market value of the Company’s common stock on the date of grant. The stock-based compensation expense for PSUs is recognized based on the estimated number of shares that the Company expects will vest and is adjusted on a quarterly basis using the estimated achievement of financial performance targets. The Company accounts for forfeitures as they occur. Cash and Cash Equivalents The Company considers all highly liquid investments purchased with original maturities of three months or less from the purchase date to be cash equivalents. Cash equivalents primarily consist of investments in short-term money market funds. Accounts Receivable Accounts receivables are recorded at the amounts billed to buyers and do not bear interest. Accounts receivables result from credit card transactions, the majority of which are settled within two business days. Inventory, Net Inventory consists of finished goods arising from goods returned after the title has transferred from the buyer to the Company as well as finished goods from direct purchases from vendors and consignors. The cost of inventory is an amount equal to that paid to the consignor or vendors. Inventory is valued at the lower of cost or net realizable value using the specific identification method and the Company records provisions, as appropriate, to write down obsolete and excess inventory to estimated net realizable value. After the inventory value is reduced, adjustments are not made to increase it from the estimated net realizable value. Our provisions to write down obsolete and excess inventory to net realizable value were $3.7 million and $0.2 million as of December 31, 2022 and 2021, respectively. Return reserves, which reduce revenue and cost of sales, are estimated using historical experience. Liabilities for return allowances are included in other accrued and current liabilities on the balance sheets and were $22.2 million and $23.6 million as of December 31, 2022 and 2021. Included in inventory on the Company’s balance sheets are assets totaling $6.1 million and $9.1 million as of December 31, 2022 and 2021, respectively, for the rights to recover products from customers associated with its liabilities for return reserves. Property and Equipment, Net Property and equipment, net is recorded at cost less accumulated depreciation and amortization. Depreciation and amortization are recorded on a straight-line basis over the estimated useful lives of the respective assets. Repair and maintenance costs are expensed as incurred. The estimated useful lives of our assets are as follows: Proprietary software 3 years Furniture and equipment 3-5 years Vehicles 5 years Leasehold improvements Shorter of lease term or estimated useful life Software Development Costs Proprietary software includes the costs of developing the Company’s internal proprietary business platform and automation projects. The Company capitalizes qualifying proprietary software development costs that are incurred during the application development stage. Capitalization of costs begins when two criteria are met: (1) the preliminary project stage is completed and (2) it is probable that the software will be completed and used for its intended function. Such costs are capitalized in the period incurred. Capitalization ceases and amortization begins when the software is substantially complete and ready for its intended use, including the completion of all significant testing. Costs related to preliminary project activities and post-implementation operating activities are expensed as incurred. Impairment of Long-lived Assets The carrying amounts of long-lived assets, including property and equipment, net and capitalized proprietary software, are periodically reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable or that the useful life is shorter than originally estimated. Recoverability of assets to be held and used is measured by comparing the carrying amount of assets to future undiscounted net cash flows the assets are expected to generate over their remaining life. If the assets are considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired assets. If the useful life is shorter than originally estimated, the Company amortizes the remaining carrying value over the revised shorter useful life. Leases Contracts that have been determined to convey the right to use an identified asset are evaluated for classification as an operating or finance lease. For the Company’s operating leases, the Company records a lease liability based on the present value of the lease payments at lease inception, using the applicable incremental borrowing rate. The Company estimates the incremental borrowing rate by developing its own synthetic credit rating, corresponding yield curve, and the terms of each lease at the lease commencement date. The corresponding right-of-use asset is recorded based on the corresponding lease liability at lease inception, adjusted for payments made to the lessor at or before the commencement date, initial direct costs incurred and any tenant incentives allowed for under the lease. The Company does not include optional renewal terms or early termination provisions unless the Company is reasonably certain such options would be exercised at the inception of the lease. Operating lease right-of-use assets, current portion of operating lease liabilities, and operating lease liabilities, net of current portion are included on the Company’s balance sheet. The Company has elected the practical expedients that allows for the combination of lease components and non-lease components and to record short-term leases as lease expense on a straight-line basis on the statements of operations. Variable lease payments are recorded as expense as they are incurred. The Company has finance leases for vehicles and equipment, and the amounts of finance lease right-of-use assets and finance lease liabilities have been immaterial to date. Convertible Senior Notes, Net Prior to the adoption of ASU 2020-06 on January 1, 2022, convertible debt instruments that may be settled in cash or other assets, or partially in cash, upon conversion, were separately accounted for as long-term debt and equity components (or conversion feature). The debt component represented the Company’s contractual obligation to pay principal and interest and the equity component represented the Company’s option to convert the debt security into equity of the Company or the equivalent amount of cash. Upon issuance, the Company allocated the debt component on the basis of the estimated fair value of a similar liability that does not have an associated convertible feature and the remaining proceeds are allocated to the equity component. The bifurcation of the debt and equity components resulted in a debt discount for the aforementioned notes. The Company uses the effective interest method to amortize the debt discount to interest expense over the amortization period which is the expected life of the debt. Following the adoption of ASU 2020-06, there is no bifurcation of the liability and equity components of the Notes, and the entire principal of the Notes are accounted for as long-term debt. Capped Call Transactions In June 2020 and March 2021, in connection with the issuance of its convertible senior notes, the Company entered into Capped Call Transactions (see Note 7). The Capped Call Transactions are expected generally to reduce the potential dilution to the holders of the Company’s common stock upon any conversion of the convertible senior notes and/ or offset any cash payments the Company is required to make in excess of the principal amount of converted convertible senior notes, with such reduction and/or offset subject to a cap based on the cap price. The capped calls are classified in stockholders’ equity as a reduction to additional paid-in capital and are not subsequently remeasured as long as the conditions for equity classification continue to be met. Debt Issuance Costs Debt issuance costs, which consist of direct incremental legal, consulting, banking and accounting fees relating to the anticipated debt offering, are amortized to interest expense over the estimated life of the related debt based on the effective interest method. The Company presents debt issuance costs on the balance sheets as a direct deduction from the associated debt. The Company adopted ASU 2020-06 as of January 1, 2022 using the modified retrospective method. Prior to the adoption of ASU 2020-06 on January 1, 2022, a portion of debt issuance costs incurred in connection with the convertible senior notes issued in June 2020 and March 2021 was allocated to the equity component and was recorded as a reduction to additional paid in capital and was not amortized to interest expense over the estimated life of the related debt. Following the adoption of ASU 2020-06, the debt issuance costs previously allocated to the equity component of both the 2025 and 2028 Notes were reclassified to debt. As such, all of the debt issuance costs are recorded as a direct deduction from the related principal debt amounts on the balance sheet, and are all amortized to interest expense over the estimated remaining life of the related debt. Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in loss in the period of enactment. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. Concentrations of Credit Risks Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents and accounts receivable. At times, such amount may exceed federally-insured limits. The Company reduces credit risk by placing its cash and cash equivalents and investments with major financial institutions within the United States. As of December 31, 2022 and December 31, 2021, there were no customers that represented 10% or more of the Company’s accounts receivable balance and there were no customers that individually exceeded 10% of the Company’s total revenue for each of the years ended December 31, 2022, 2021, and 2020. Change in Accounting Principle During the three months ended June 30, 2022, the Company changed its method of accounting for shipping and handling activities from applying the policy election to account for shipping services as fulfillment activities to recognizing shipping services as a promised service to customers which the Company determined to be a separate performance obligation. The Company believes that this change in accounting method is preferable, as it results in a disaggregation of revenue and related costs that provides more transparency to the users of its financial statements and is more consistent with the nature of the Company's promises made in arrangements with its customers. The effects of this change to the disaggregation and presentation of revenue and costs of revenue have been retroactively applied to all periods presented. This change had an immaterial impact to the Company's loss from operations and as such the Company did not retroactively adjust prior periods for these immaterial effects. Certain financial statement line items included in the Statement of Operations for the years ended December 31, 2022, December 31, 2021, and December 31, 2020, respectively were adjusted as follows (in thousands): Year Ended December 31, 2022 As Computed Under Previous Method Effect of Change As Reported Under Preferable Method Revenue: Consignment revenue $ 444,767 $ (59,788) $ 384,979 Shipping services revenue — 59,788 59,788 Cost of revenue: Cost of consignment revenue 113,141 (56,178) 56,963 Cost of shipping services revenue — 56,178 56,178 Year Ended December 31, 2021 As Previously Reported Effect of Change As Reported Under Preferable Method Revenue: Consignment revenue $ 346,848 $ (44,627) $ 302,221 Shipping services revenue — 44,627 44,627 Cost of revenue: Cost of consignment revenue 92,788 (47,803) 44,985 Cost of shipping services revenue — 47,803 47,803 Year Ended December 31, 2020 As Previously Reported Effect of Change As Reported Under Preferable Method Revenue: Consignment revenue $ 247,326 (34,014) 213,312 Shipping services revenue — 34,014 34,014 Cost of revenue: Cost of consignment revenue 66,976 (36,587) 30,389 Cost of shipping services revenue — 36,587 36,587 Recently Adopted Accounting Pronouncements In November 2021, the Financial Accounting Standards Board ("FASB") issued ASU 2021-10, Government Assistance (Topic 832): Disclosure by Business Entities about Government Assistance , which improves the transparency of government assistance received by requiring the disclosure of the nature of the transactions, the accounting for the transactions, and the effect of the transactions on the financial statements. The Company adopted this standard during the year ended December 31, 2022. The adoption of this standard did not have a material impact on the Company's financial statements. In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity , which simplifies accounting for convertible instruments. The Company adopted this guidance as of January 1, 2022 using the modified retrospective method. As a result of the adoption, the Convertible Senior Notes due 2025 (the "2025 Notes") and the Convertible Senior Notes due 2028 (the "2028 Notes" and together with the 2025 Notes, the "Notes") are no longer bifurcated into separate liability and equity components, but rather are classified as a single liability in the balance sheets. Upon adoption, the Company recorded a cumulative effect of $13.4 million as a reduction to accumulated deficit and a reduction to additional paid in capital of $112.1 million related to amounts attributable to the value of the conversion options that had previously been recorded in equity. Additionally, the Company recorded an increase to its convertible notes balance by an aggregate amount of $98.6 million as a result of the reversal of the separation of the convertible debt between debt and equity. As a result of the adoption, there was a net increase in deferred tax assets of $27.7 million and a corresponding increase of $27.7 million in the offsetting valuation allowance. The Company also reclassified the issuance costs previously allocated to the conversion feature to debt, so that all issuance costs are now presented as a direct deduction of the long-term debt line on the balance sheet. The adoption of this standard also significantly decreased the amount of non-cash interest expense to be recognized in future periods as a result of eliminating the discount on debt associated with the conversion feature. The adoption did not affect the Company's statements of cash flows. When calculating net loss per share attributable to common stockholders, the Company uses the if-converted method as required under ASU 2020-06 to determine the dilutive effect of the Notes; however there was no impact because including the assumed conversion of the convertible debt would have been anti-dilutive. |
Cash and Cash Equivalents
Cash and Cash Equivalents | 12 Months Ended |
Dec. 31, 2022 | |
Cash and Cash Equivalents [Abstract] | |
Cash and Cash Equivalents | Cash and Cash Equivalents The following tables summarize the estimated value of the Company’s cash and cash equivalents (in thousands): December 31, 2022 Amortized Cost Unrealized Gain Unrealized Loss Fair Value Cash and cash equivalents: Cash $ 275,742 $ — $ — $ 275,742 Money market funds 18,051 — — 18,051 Total cash and cash equivalents $ 293,793 $ — $ — $ 293,793 December 31, 2021 Amortized Cost Unrealized Gain Unrealized Loss Fair Value Cash and cash equivalents: Cash $ 278,769 $ — $ — $ 278,769 Money market funds 139,402 — — 139,402 Total cash and cash equivalents $ 418,171 $ — $ — $ 418,171 |
Fair Value Measurement
Fair Value Measurement | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement | Fair Value Measurement Assets and liabilities recorded at fair value on a recurring basis on the balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows: Level 1—Observable inputs such as unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. Level 2—Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the asset or liability. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. There were no transfers between Level 1, Level 2 or Level 3 of the fair value hierarchy during the periods presented. Assets and Liabilities Measured at Fair Value on a Recurring Basis As of December 31, 2022, the Company’s cash equivalents solely consisted of money market funds, which amounted to $18.1 million. Money market funds are measured at net asset value per share. Fair Value Measurements of Other Financial Instruments The following table presents the carrying amounts and estimated fair values of the financial instruments that are not recorded at fair value on the balance sheets (in millions): December 31, 2022 Net Carrying Amount Estimated Fair Value 2025 Convertible senior notes $ 169.3 $ 146.9 2028 Convertible senior notes $ 280.6 $ 210.2 The principal amounts of the 2025 Notes and the 2028 Notes are $172.5 million and $287.5 million, respectively. The difference between the principal amounts of the convertible senior notes and their respective net carrying amounts are the unamortized debt issuance costs and the unamortized debt discount. Upon adoption of ASU 2020-06 as of January 1, 2022, the unamortized debt discount balance was derecognized (See Note 7). |
Balance Sheet Components
Balance Sheet Components | 12 Months Ended |
Dec. 31, 2022 | |
Balance Sheet Related Disclosures [Abstract] | |
Balance Sheet Components | Balance Sheet Components Property and Equipment, Net Property and equipment, net is recorded at cost less accumulated depreciation and amortization. Depreciation and amortization are recorded on a straight-line basis over the estimated useful lives of the respective assets. Property and equipment, net consists of the following (in thousands): December 31, December 31, Proprietary software $ 39,017 $ 31,799 Furniture and equipment 47,692 40,176 Automobiles 2,119 1,505 Leasehold improvements 86,986 66,154 Property and equipment, gross 175,814 139,634 Less: accumulated depreciation and amortization (63,135) (50,348) Property and equipment, net $ 112,679 $ 89,286 Depreciation and amortization expense on property and equipment was $26.9 million, $23.5 million, and $18.8 million for the years ended December 31, 2022, 2021 and 2020, respectively. Other Accrued and Current Liabilities Other accrued and current liabilities consist of the following (in thousands): December 31, December 31, Returns reserve $ 22,233 $ 23,577 Accrued compensation 15,111 14,258 Accrued legal 484 14,417 Accrued sales tax and other taxes 8,531 8,935 Site credit liability 11,813 8,738 Accrued marketing and outside services 8,729 7,897 Accrued shipping 5,715 2,006 Accrued interest 1,166 1,166 Deferred revenue 3,549 3,387 Accrued inventory — 3,513 Accrued property and equipment 11,417 1,427 Other 4,544 4,867 Other accrued and current liabilities $ 93,292 $ 94,188 |
Debt
Debt | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
Debt | Debt Revolving Credit Agreement In April 2021, the Company entered into a loan and security agreement ("Revolving Credit Agreement") with a lender, to provide a revolving line of credit of up to $50 million. Advances on the line of credit bear interest payable monthly at a variable annual rate equal to the greater of the prime rate plus 0.50% or 4.25%. The credit facility expires in April 2023. The Revolving Credit Agreement contains affirmative, negative and financial covenants, including covenants that require maintaining minimum cash and investment balances over specified periods of time and covenants that restrict, among other things, the Company’s ability to change its name, business, management, ownership or business locations, enter into mergers or acquisitions or incur additional indebtedness. As of December 31, 2022, the Company was in compliance with all covenants. As of December 31, 2022, $0 had been drawn on the Revolving Credit Agreement. |
Convertible Senior Notes, Net
Convertible Senior Notes, Net | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
Convertible Senior Notes, Net | Convertible Senior Notes, Net 2025 Convertible Senior Notes In June 2020, the Company issued an aggregate principal of $172.5 million of its 3.00% Convertible Senior Notes due 2025, pursuant to an indenture between the Company and U.S. Bank National Association, as trustee, in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). The 2025 Notes include $22.5 million in aggregate principal amount of the 2025 Notes sold to the initial purchasers resulting from the exercise in full of their option to purchase additional Notes. The 2025 Notes will mature on June 15, 2025, unless earlier redeemed or repurchased by the Company or converted. The Company received net proceeds from the 2025 Notes offering of approximately $165.8 million, after deducting the initial purchasers’ discount and commission and offering expenses. The Company used approximately $22.5 million of the net proceeds from the 2025 Notes offering to fund the net cost of entering into the capped call transactions described below. The Company intends to use the remainder of the net proceeds for general corporate purposes. The 2025 Notes accrue interest at a rate of 3.00% per annum, payable semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2020. The initial conversion rate applicable to the 2025 Notes is 56.2635 shares of common stock per $1,000 principal amount of 2025 Notes (which is equivalent to an initial conversion price of approximately $17.77 per share of the Company’s common stock). The conversion rate is subject to adjustment upon the occurrence of certain specified events but will not be adjusted for accrued and unpaid interest. In addition, upon the occurrence of a corporate event, the Company will, in certain circumstances, increase the conversion rate by a number of additional shares for a holder that elects to convert its 2025 Notes in connection with such corporate event. The 2025 Notes will be redeemable, in whole or in part, at the Company’s option at any time, and from time to time, on or after June 20, 2023 if the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which the Company provides notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately before the date the Company sends the related redemption notice. In addition, calling any Note for redemption will constitute a make-whole fundamental change with respect to that Note, in which case the conversion rate applicable to the conversion of that Note will be increased in certain circumstances if it is converted after it is called for redemption. Prior to March 15, 2025, the 2025 Notes will be convertible only under the following circumstances: • During any calendar quarter (and only during such calendar quarter) beginning after September 30, 2020, if, the last reported sale price per share of the Company’s common stock exceeds 130% of the applicable conversion price on each applicable trading day for at least 20 trading days (whether or not consecutive) in the period of the 30 consecutive trading day period ending on, and including, the last trading day of the immediately preceding calendar quarter. • During the five business day period after any five consecutive trading day period in which, for each day of that period, the trading price per $1,000 principal amount of Notes for such trading day was less than 98% of the product of the last reported sale price of the Company’s common stock and the applicable conversion rate on such trading day; • Upon the occurrence of specified corporate transactions; or • If the Company calls any notes for redemption. On and after March 15, 2025, until the close of business on the scheduled trading day immediately preceding the maturity date, holders may convert all or a portion of their 2025 Notes, in multiples of $1,000 principal amount, at any time, regardless of the foregoing circumstances. Upon conversion, the 2025 Notes will be settled, at the Company’s election, in cash, shares of the Company’s common stock, or a combination of cash and shares of the Company’s common stock. It is the Company’s current intent to settle conversions of the 2025 Notes through combination settlement, which involves repayment of the principal portion in cash and any excess of the conversion value over the principal amount in shares of its common stock. The conditions allowing holders of the 2025 Notes to convert were not met as of December 31, 2022 . The 2025 Notes are unsecured and unsubordinated obligations of the Company and will rank senior in right of payment to any of future indebtedness of the Company that is expressly subordinated in right of payment to the 2025 Notes; rank equal in right of payment to any existing and future unsecured indebtedness of the Company that is not so subordinated; be effectively subordinated in right of payment to any secured indebtedness of the Company to the extent of the value of the assets securing such indebtedness; and be structurally subordinated to all existing and future indebtedness and other liabilities and obligations incurred by future subsidiaries of the Company. If bankruptcy, insolvency, or reorganization occurs with respect to the Company (and not solely with respect to a significant subsidiary of the Company), then the principal amount of, and all accrued and unpaid interest on, all of the 2025 Notes then outstanding will immediately become due and payable without any further action or notice by any person. If an event of default (other than bankruptcy, insolvency, or reorganization with respect to the Company and not solely with respect to a significant subsidiary of the Company) occurs and is continuing, then, with the exception of certain reporting events of default, the trustee, by notice to the Company, or noteholders of at least 25% of the aggregate principal amount of notes then outstanding, by notice to us and the trustee, may declare the principal amount of, and all accrued and unpaid interest on, all of the 2025 Notes then outstanding to become due and payable immediately. Prior to the adoption of ASU 2020-06 on January 1, 2022 and in accounting for the issuance of the 2025 Notes, the Company separately accounted for the liability and equity components of the 2025 Notes by allocating the proceeds between the liability component and the embedded conversion options, or equity component, due to Company’s ability to settle the 2025 Notes in cash, its common stock, or a combination of cash and common stock at Company’s option. The allocation was done by first estimating the fair value of the liability component and the residual value was assigned to the equity component. The value of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The allocation was performed in a manner that reflected the Company’s non-convertible debt borrowing rate for similar debt. The interest rate of 5.67% was used to compute the initial fair value of the liability component of $152.7 million, with a corresponding amount recorded as a discount on the initial issuance of the 2025 Notes of approximately $19.8 million. The debt discount was recorded to equity and was amortized to the debt liability over the life of the Notes using the effective interest method. The equity component was not remeasured as long as it continued to meet the conditions for equity classification. In connection with the issuance of the 2025 Notes, the Company incurred approximately $6.7 million of debt issuance costs, which primarily consisted of initial purchasers’ discounts and legal and other professional fees. Prior to the adoption of ASU 2020-06 on January 1, 2022, the Company allocated these costs to the liability and equity components based on the allocation of the proceeds. The portion of these costs allocated to the equity component totaling approximately $0.8 million was recorded as a reduction to additional paid-in capital. The portion of these costs initially allocated to the liability component totaling approximately $5.9 million was recorded as a reduction in the carrying value of the debt on the balance sheets and was amortized to interest expense using the effective interest method over the expected life of the 2025 Notes or approximately its five-year term. The effective interest rate on the liability component of the 2025 Notes for the period from the date of issuance through December 31, 2021 was 6.4%. On January 1, 2022, the Company adopted ASU 2020-06 based on a modified retrospective transition method. Under such transition, prior period information for both the 2025 and 2028 Notes has not been retrospectively adjusted. In accounting for the 2025 Notes after the adoption of ASU 2020-06, the 2025 Notes are accounted for as a single liability, and the carrying amount of the Notes is $169.3 million as of December 31, 2022, with principal of $172.5 million, net of unamortized issuance costs of $3.2 million. The 2025 Notes were classified as long term liabilities as of December 31, 2022. The issuance costs related to the 2025 Notes are being amortized to interest expense over the expected life of the 2025 Notes or approximately its five-year term at an effective interest rate of 3.74%. The net carrying amount of the liability component of the 2025 Notes was as follows (in thousands): December 31, December 31, Principal $ 172,500 $ 172,500 Unamortized debt discount (1) — (14,350) Unamortized debt issuance costs (3,204) (4,286) Net carrying amount $ 169,296 $ 153,864 (1) Upon adoption of ASU 2020-06 as of January 1, 2022, the unamortized debt discount balance was derecognized, as described in "Note 2— Summary of Significant Accounting Policies—Recently Adopted Accounting Pronouncements." As discussed above, upon the adoption of ASU 2020-06, the Company reversed the separation of the debt and equity components of the Notes, and accounted for the Notes wholly as debt. Additionally, the issuance costs of the Notes were accounted for as debt issuance costs in its entirety. The net carrying amount of the equity component of the 2025 Notes as of December 31, 2021 was as follows (in thousands): December 31, Proceeds allocated to the conversion options (debt discount) $ 19,787 Issuance costs (767) Net carrying amount $ 19,020 The following table sets forth the amounts recorded in interest expense related to the 2025 Notes (in thousands): Year Ended December 31, 2022 2021 2020 Contractual interest expense $ 5,175 $ 5,175 $ 2,803 Amortization of debt discount — 3,594 1,843 Amortization of debt issuance costs 1,080 1,082 556 Total interest and amortization expense $ 6,255 $ 9,851 $ 5,202 Future minimum payments under the 2025 Notes as of December 31, 2022, are as follows (in thousands): Fiscal Year Amount 2023 $ 5,175 2024 5,175 2025 175,088 Total future payments 185,438 Less amounts representing interest (12,938) Total principal amount $ 172,500 2028 Convertible Senior Notes In March 2021, the Company issued an aggregate principal of $287.5 million of its 1.00% Convertible Senior Notes due 2028, pursuant to an indenture between the Company and U.S. Bank National Association, as trustee, in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act. The 2028 Notes include $37.5 million in aggregate principal amount of the 2028 Notes sold to the initial purchasers resulting from the exercise in full of their option to purchase additional Notes. The 2028 Notes will mature on March 1, 2028, unless earlier redeemed or repurchased by the Company or converted. The Company received net proceeds from the 2028 Notes offering of approximately $278.1 million, after deducting the initial purchasers’ discount and commission and offering expenses. The Company used approximately $33.7 million of the net proceeds from the 2028 Notes offering to fund the net cost of entering into the capped call transactions described below. The Company intends to use the remainder of the net proceeds for general corporate purposes. The 2028 Notes accrue interest at a rate of 1.00% per annum, payable semi-annually in arrears on March 1 and September 1 of each year, beginning on September 1, 2021. The initial conversion rate applicable to the 2028 Notes is 31.4465 shares of common stock per $1,000 principal amount of 2028 Notes (which is equivalent to an initial conversion price of approximately $31.80 per share of the Company’s common stock). The conversion rate is subject to adjustment upon the occurrence of certain specified events but will not be adjusted for accrued and unpaid interest. In addition, upon the occurrence of a corporate event, the Company will, in certain circumstances, increase the conversion rate by a number of additional shares for a holder that elects to convert its 2028 Notes in connection with such corporate event. The 2028 Notes will be redeemable, in whole or in part, at the Company’s option at any time, and from time to time, on or after March 5, 2025 if the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which the Company provides notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately before the date the Company sends the related redemption notice. In addition, calling any Note for redemption will constitute a make-whole fundamental change with respect to that Note, in which case the conversion rate applicable to the conversion of that Note will be increased in certain circumstances if it is converted after it is called for redemption. Prior to December 1, 2027, the 2028 Notes will be convertible only under the following circumstances: • During any calendar quarter (and only during such calendar quarter) beginning after June 30, 2021, if, the last reported sale price per share of the Company’s common stock exceeds 130% of the applicable conversion price on each applicable trading day for at least 20 trading days (whether or not consecutive) in the period of the 30 consecutive trading day period ending on, and including, the last trading day of the immediately preceding calendar quarter; • During the five business day period after any five consecutive trading day period in which, for each day of that period, the trading price per $1,000 principal amount of Notes for such trading day was less than 98% of the product of the last reported sale price of the Company’s common stock and the applicable conversion rate on such trading day; • Upon the occurrence of specified corporate transactions; or • If the Company calls any notes for redemption. On and after December 1, 2027, until the close of business on the scheduled trading day immediately preceding the maturity date, holders may convert all or a portion of their 2028 Notes, in multiples of $1,000 principal amount, at any time, regardless of the foregoing circumstances. Upon conversion, the 2028 Notes will be settled, at the Company’s election, in cash, shares of the Company’s common stock, or a combination of cash and shares of the Company’s common stock. It is the Company’s current intent to settle conversions of the 2028 Notes through combination settlement, which involves repayment of the principal portion in cash and any excess of the conversion value over the principal amount in shares of its common stock. The conditions allowing holders of the 2028 Notes to convert were not met as of December 31, 2022. The 2028 Notes are unsecured and unsubordinated obligations of the Company and will rank senior in right of payment to any of future indebtedness of the Company that is expressly subordinated in right of payment to the 2028 Notes; rank equal in right of payment to any existing and future unsecured indebtedness of the Company that is not so subordinated; be effectively subordinated in right of payment to any secured indebtedness of the Company to the extent of the value of the assets securing such indebtedness; and be structurally subordinated to all existing and future indebtedness and other liabilities and obligations incurred by future subsidiaries of the Company. If bankruptcy, insolvency, or reorganization occurs with respect to the Company (and not solely with respect to a significant subsidiary of the Company), then the principal amount of, and all accrued and unpaid interest on, all of the 2028 Notes then outstanding will immediately become due and payable without any further action or notice by any person. If an event of default (other than bankruptcy, insolvency, or reorganization with respect to the Company and not solely with respect to a significant subsidiary of the Company) occurs and is continuing, then, with the exception of certain reporting events of default, the trustee, by notice to the Company, or noteholders of at least 25% of the aggregate principal amount of notes then outstanding, by notice to us and the trustee, may declare the principal amount of, and all accrued and unpaid interest on, all of the 2028 Notes then outstanding to become due and payable immediately. Prior to the adoption of ASU 2020-06 on January 1, 2022 and in accounting for the issuance of the 2028 Notes, the Company separately accounted for the liability and equity components of the 2028 Notes by allocating the proceeds between the liability component and the embedded conversion options, or equity component, due to Company’s ability to settle the 2028 Notes in cash, its common stock, or a combination of cash and common stock at Company’s option. The allocation was done by first estimating the fair value of the liability component and the residual value was assigned to the equity component. The value of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The allocation was performed in a manner that reflected the Company’s non-convertible debt borrowing rate for similar debt. The interest rate of 7.18% was used to compute the initial fair value of the liability component of $191.3 million, with a corresponding amount recorded as a discount on the initial issuance of the 2028 Notes of approximately $96.2 million. The debt discount was recorded to equity and was amortized to the debt liability over the life of the Notes using the effective interest method. The equity component was not remeasured as long as it continued to meet the conditions for equity classification. In connection with the issuance of the 2028 Notes, the Company incurred approximately $9.4 million of debt issuance costs, which primarily consisted of initial purchasers’ discounts and legal and other professional fees. The Company allocated these costs to the liability and equity components based on the allocation of the proceeds. The portion of these costs allocated to the equity component totaling approximately $3.1 million was recorded as a reduction to additional paid-in capital. The portion of these costs allocated to the liability component totaling approximately $6.3 million was recorded as a reduction in the carrying value of the debt on the balance sheets and was amortized to interest expense using the effective interest method over the expected life of the 2028 Notes or approximately its seven-year term. The effective interest rate on the liability component of the 2028 Notes for the period from the date of issuance through December 31, 2021 was 7.5%. In accounting for the 2028 Notes after the adoption of ASU 2020-06, the 2028 Notes are accounted for as a single liability, and the carrying amount of the Notes is $280.6 million as of December 31, 2022, with principal of $287.5 million, net of unamortized issuance costs of $6.9 million. The 2028 Notes were classified as long term liabilities as of December 31, 2022. The issuance costs related to the 2028 Notes are being amortized to interest expense over the expected life of the 2028 Notes or approximately its seven-year term at an effective interest rate of 1.45%. The net carrying amount of the liability component of the 2028 Notes was as follows (in thousands): December 31, December 31, 2021 Principal $ 287,500 $ 287,500 Unamortized debt discount (1) — (87,403) Unamortized debt issuance costs (6,948) (5,581) Net carrying amount $ 280,552 $ 194,516 (1) Upon adoption of ASU 2020-06 as of January 1, 2022, the unamortized debt discount balance was derecognized, as described in "Note 2— Summary of Significant Accounting Policies—Recently Adopted Accounting Pronouncements." As discussed above, upon the adoption of ASU 2020-06, the Company reversed the separation of the debt and equity components of the Notes, and accounted for the Notes wholly as debt. Additionally, the issuance costs of the Notes were accounted for as debt issuance costs in its entirety. The net carrying amount of the equity component of the 2028 Notes as of December 31, 2021 was as follows (in thousands): December 31, 2021 Proceeds allocated to the conversion options (debt discount) $ 96,162 Issuance costs (3,131) Net carrying amount $ 93,031 The following table sets forth the amounts recorded in interest expense related to the 2028 Notes (in thousands): December 31, December 31, 2021 Contractual interest expense $ 2,875 $ 2,332 Amortization of debt discount — 8,759 Amortization of debt issuance costs 1,288 554 Total interest and amortization expense $ 4,163 $ 11,645 Future minimum payments under the 2028 Notes as of December 31, 2022, are as follows (in thousands): Fiscal Year Amount 2023 2,875 2024 2,875 2025 2,875 2026 2,875 2027 2,875 2028 288,937 Total future payments 303,312 Less amounts representing interest (15,812) Total principal amount $ 287,500 Capped Call Transactions with Respect to the 2025 Notes and 2028 Notes In connection with the issuance of the 2025 Notes and 2028 Notes, including the initial purchasers’ exercise of the option to purchase additional Notes, the Company entered into capped call transactions with respect to its common stock with certain financial institutions (collectively, the “Counterparties”). The Company paid an aggregate amount of approximately $22.5 million to the Counterparties in connection with the 2025 capped call transactions (the "2025 Capped Calls") and $33.7 million to the Counterparties in connection with the 2028 capped call transactions and (the "2028 Capped Calls" and, together with the 2025 Capped Calls, the "Capped Calls"). The 2025 Capped Calls and 2028 Capped Calls cover approximately 9,705,454 shares and 9,040,869 shares of the Company’s common stock at a strike price that corresponds to the initial conversion price of the 2025 Notes and the 2028 Notes, respectively. The 2025 Capped Calls and the 2028 Capped Calls are subject to anti-dilution adjustments that are intended to be substantially identical to those in the 2025 Notes and the 2028 Notes, as applicable, and are exercisable upon conversion of the 2025 Notes or the 2028 Notes, as applicable. The Capped Calls are subject to adjustment upon the occurrence of specified extraordinary events affecting the Company, including merger events, tender offer and announcement events. In addition, the Capped Calls are subject to certain specified additional disruption events that may give rise to a termination of the Capped Calls, including nationalization, insolvency or delisting, changes in law, failures to deliver, insolvency filings and hedging disruptions. The 2025 Capped Calls settle in components commencing on April 16, 2025 with the last component scheduled to expire on June 12, 2025. The 2028 Capped Calls settle in components commencing on December 31, 2027 with the last component scheduled to expire on February 28, 2028. The cap price of the 2025 Capped Call is initially $27.88 per share, which represents a premium of 100.0% over the closing price of the Company’s common stock of $13.94 per share on June 10, 2020, and is subject to certain adjustments under the terms of the capped call transactions. The cap price of the 2028 Capped Call is initially $48.00 per share, which represents a premium of 100.0% over the closing price of the Company’s common stock of $24.00 per share on March 3, 2021, and is subject to certain adjustments under the terms of the Capped Call transactions. The Company expects to receive from the Counterparties a number of shares of the Company’s common stock or, at the Company’s election (subject to certain conditions), cash, with an aggregate market value (or, in the case of cash settlement, in an amount) approximately equal to the product of such excess times the number of shares of the Company’s common stock relating to the 2025 Capped Calls and 2028 Capped Calls being exercised. These Capped Call instruments meet the conditions outlined in ASC 815-40 to be classified in stockholders’ equity, are not accounted for as derivatives, and are not subsequently remeasured as long as the conditions for equity classification continue to be met. The Company recorded a reduction to additional paid-in capital of approximately $22.5 million and $33.7 million related to the premium payments for the 2025 Capped Calls and 2028 Capped Calls transactions. |
Common Stock
Common Stock | 12 Months Ended |
Dec. 31, 2022 | |
Common Stock [Abstract] | |
Common Stock | Common Stock The Company had reserved shares of common stock for issuance, on an as-converted basis, as follows: December 31, December 31, Options issued and outstanding 1,754,776 4,131,501 Outstanding restricted stock units 11,369,021 8,182,649 Shares available for grant under the 2019 equity incentive plan 5,035,545 6,709,676 Shares available for issuance under 2019 ESPP 3,529,709 3,210,985 Total 21,689,051 22,234,811 |
Share-based Compensation Plans
Share-based Compensation Plans | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Share-based Compensation Plans | Share-based Compensation Plans 2011 Equity Incentive Plan In 2011, the Company adopted the Equity Incentive Plan (2011 Plan) authorizing the granting of incentive stock options (ISOs) and non-statutory stock options (NSOs) to eligible participants for up to 12,987,255 shares of common stock. Under the 2011 Plan, incentive stock options and non-statutory stock options are to be granted at an exercise price that is no less than 100% of the fair value of the stock at the date of grant. Options generally vest over four years and are exercisable for up to 10 years after the date of grant. Incentive stock options granted to stockholders who own more than 10% of the outstanding stock of the Company at the time of grant must be issued at an exercise price no less than 110% of the fair value of the stock on the date of grant. The 2011 Plan has been replaced by the Company’s 2019 Plan as defined below with respect to future equity awards. 2019 Equity Incentive Plan In connection with the Company’s initial public offering, the Company adopted the 2019 Equity Incentive Plan (the “2019 Plan”). The 2019 Plan allows the Company to grant stock options, stock appreciation rights, restricted stock, restricted stock units and performance awards to participants. Subject to the terms and conditions of the 2019 Plan, the initial number of shares authorized for grants under the 2019 Plan is 8,000,000. These available shares increase annually by an amount equal to the lesser of 8,000,000 shares, 5% of the number of shares of the Company’s common stock outstanding on the immediately preceding December 31, or the number of shares determined by the Company’s board of directors. On August 4, 2020, the Company’s board of directors approved an increase of shares available for grant under the 2019 Plan by 4,293,616 shares. On May 5, 2021, the Company’s board of directors approved an increase of shares available for grant under the 2019 Plan by 4,465,083 shares. On February 23, 2022, the Company’s board of directors approved an increase of shares available for grant under the 2019 Plan by 4,648,003 shares. Activity under the Company’s stock option plan is set forth below: Number of Weighted- Weighted- Aggregate Balances at December 31, 2021 4,131,501 5.19 4.3 $ 30,382 Options granted — — Options exercised (1,929,265) 1.50 Options cancelled (447,460) 9.29 Balances at December 31, 2022 1,754,776 8.21 4.0 1 Options vested and exercisable— December 31, 2022 1,709,130 8.01 3.9 1 There were no stock options granted in 2022 and in 2021. The aggregate intrinsic value of options exercised for the years ended December 31, 2022, 2021, and 2020 was $5.3 million, $20.5 million, and $32.2 million, respectively. The aggregate intrinsic value of options exercised is the difference between the fair value of the underlying common stock on the date of exercise and the exercise price for in-the-money stock options. In February 2022, the Company granted PSUs with financial performance targets to certain employees of the Company. The number of units issued will depend on the achievement of financial metrics relative to the approved performance targets, and can range from 0% to 150% of the target amount. The PSUs are subject to continuous service with the Company and will vest after approximately three years. The PSUs are measured using the fair value at the date of grant. The compensation expense associated with PSUs is recognized based on the estimated number of shares that the Company expects will vest and may be adjusted based on interim estimates of performance against the performance condition. During the year ended December 31, 2022, the Company recorded $0.1 million of stock-based compensation expense for the number of PSUs considered probable of vesting based on the attainment of the performance targets. RSUs A summary of RSU activity for the year ended December 31, 2022 is as follows: Number of Restricted Stock Units Aggregate Intrinsic Value Unvested December 31, 2021 8,182,649 $ 16.42 $ 94,972 Granted 11,032,022 5.42 Vested (3,719,829) 14.07 Forfeited (4,125,821) 11.21 Unvested December 31, 2022 11,369,021 $ 8.39 $ 14,178 Included in the table above for the year ended December 31, 2022 are approximately 544,000 PSUs granted and 268,000 PSUs forfeited. The weighted average grant date fair value per share of the PSUs granted in the year ended December 31, 2022 was $7.70. The weighted average grant date fair value per share of the PSUs forfeited in the year ended December 31, 2022 was $7.28. The total fair value as of the respective vesting dates of RSUs that vested during the year ended December 31, 2022 was $14.5 million . 2019 Employee Stock Purchase Plan In connection with the Company’s initial public offering, the Company adopted the Employee Stock Purchase Plan (ESPP). The Employee Stock Purchase Plan permits employees to purchase shares of common stock during six-month offering periods at a purchase price equal to the lesser of (1) 85% of the fair market value of a share of common stock on the first business day of such offering period and (2) 85% of the fair market value of a share of common stock on the last business day of such offering period. The initial number of shares of common stock that could be issued under the employee stock purchase plan was 1,750,000 shares. These available shares increase by an amount equal to the lesser of 1,750,000 shares, 1% of the number of shares of common stock outstanding on the immediately preceding December 31, or the number of shares determined by the Company’s board of directors. On August 4, 2020, the Company’s board of directors approved an increase in the shares available for grant under the ESPP by 858,723 shares. On May 5, 2021, the Company's board of directors approved an increase in the shares available for grant under the ESPP by 893,016 shares. On February 23, 2022, the Company’s board of directors approved an increase of shares available for grant under the ESPP by 929,601 shares. During the years ended December 31, 2022 and 2021, employees purchased 610,877 and 199,289 shares, respectively, at an average price of $2.29 and $11.74, respectively. As of December 31, 2022, the Company had approximately $0.4 million of unrecognized stock-based compensation cost related to purchase rights under the employee stock purchase plan, which the Company expects to recognize over a weighted average period of 0.4 years. Stock-based Compensation In determining the fair value of the stock-based awards, the Company uses the Black-Scholes option-pricing model and assumptions discussed below. Each of these inputs is subjective and generally requires significant judgment. Fair Value of Common Stock— The fair value of the shares of common stock has historically been determined by the Company’s board of directors as there was no public market for the common stock. Subsequent to our IPO, the fair value per share of common stock is the closing price of the Company’s common stock as reported on the applicable grant date. Expected Term —The expected term represents the period that the Company’s stock options are expected to be outstanding and is determined using the simplified method (based on the mid-point between the vesting date and the end of the contractual term) as the Company has concluded that its stock option exercise history does not provide a reasonable basis upon which to estimate expected term . Volatility —Because the Company was privately held and did not have an active trading market for its common stock for a sufficient period of time, the expected volatility was estimated based on the average volatility for comparable publicly-traded companies, over a period equal to the expected term of the stock option grants. Risk-free Rate —The risk-free rate assumption is based on the U.S. Treasury zero coupon issues in effect at the time of grant for periods corresponding with the expected term of the option. Dividends —The Company has never paid dividends on its common stock and does not anticipate paying dividends on common stock. Therefore, the Company uses an expected dividend yield of zero. The following assumptions were used to estimate the fair value of stock options granted in 2019, as there were no stock options granted in 2022, 2021 and 2020: Year Ended December 31, 2019 Expected term (in years) 5.0 – 6.1 Expected volatility 44.2% – 47.8% Average risk-free rate 1.9% – 2.6% Dividend yield — As of December 31, 2022, total unrecognized stock-based compensation expense related to options was $0.4 million. These costs are expected to be recognized over a weighted average period of 0.4 years as of December 31, 2022. As of December 31, 2022, the Company had approximately $82.9 million of unrecognized stock-based compensation expense related to RSUs and PSUs, which the Company expects to recognize over the remaining weighted-average vesting period of approximately 2.7 years. Total stock-based compensation expense by function was as follows (in thousands): Year Ended December 31, 2022 2021 2020 Marketing $ 2,209 $ 2,557 $ 1,755 Operations and technology 19,822 21,395 10,241 Selling, general and administrative 24,107 24,850 12,326 Total $ 46,138 $ 48,802 $ 24,322 During the year ended December 31, 2022, the Company recognized compensation expense of $1.0 million within selling, general and administrative associated with the modification of certain outstanding equity awards pursuant to the terms of the transition and separation agreement the Company entered into with its founder, Julie Wainwright, in connection with her resignation as Chief Executive Officer on June 6, 2022. During the year ended December 31, 2022 and 2021, the Company capitalized $1.6 million and $1.4 million of stock-based compensation expense to proprietary software, respectively. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
Leases | Leases The Company leases its corporate offices, retail spaces and authentication centers under various noncancelable operating leases with terms ranging from one year to fifteen years. The Company recorded operating lease costs of $29.0 million and $29.7 million for the years ended December 31, 2022 and 2021, respectively. The Company incurred $5.6 million and $5.3 million of variable lease costs for the years ended December 31, 2022 and 2021, respectively, which is comprised primarily of the Company’s proportionate share of operating expenses, property taxes and insurance. Maturities of operating lease liabilities by fiscal year for the Company’s operating leases are as follows (in thousands): Fiscal Year Amount 2023 29,020 2024 28,800 2025 29,345 2026 28,463 2027 21,410 Thereafter 38,034 Total future minimum payments $ 175,072 Less: Imputed interest (29,178) Present value of operating lease liabilities $ 145,894 Supplemental cash flow information related to the Company’s operating leases are as follows (in thousands): Year Ended Year ended December 31, 2022 2021 2020 Operating cash flows used for operating leases $ 27,097 $ 25,386 $ 21,381 Operating lease assets obtained in exchange for operating lease liabilities $ 2,245 $ 46,614 $ 23,853 The weighted average remaining lease term and discount rate for the Company’s operating leases are as follows: As of December 31, 2022 As of December 31, 2021 Weighted average remaining lease term 6.2 years 7.1 years Weighted average discount rate 6.2 % 6.2 % |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Noncancelable Purchase Commitments Our contractual commitments primarily consist of software and other services in the ordinary course of business that are noncancellable with varying expiration dates through 2027. As of December 31, 2022, the future minimum payments under the Company’s noncancelable purchase commitments were as follows (in thousands): Year Ending December 31, Purchase 2023 $ 11,240 2024 8,663 2025 1,862 2026 1,649 2027 972 Total future minimum payments $ 24,386 Contingencies From time to time, the Company is subject to, and it is presently involved in, litigation and other legal proceedings and from time to time, the Company receives inquiries from government agencies. Accounting for contingencies requires the Company to use judgment related to both the likelihood of a loss and the estimate of the amount or range of loss. The Company records a loss contingency when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Company discloses material contingencies when a loss is not probable but reasonably possible. On November 14, 2018, Chanel, Inc. sued the Company in the U.S. District Court for the Southern District of New York. The Complaint alleged federal and state law claims of trademark infringement, unfair competition, and false advertising. On February 1, 2019, Chanel, Inc. filed its First Amended Complaint that included substantially similar claims against the Company. On March 4, 2019, the Company filed a Motion to Dismiss the First Amended Complaint, which was granted in part and dismissed in part on March 30, 2020. The surviving claims against the Company include trademark infringement under 15 U.S.C. § 1114, false advertising under 15 U.S.C. § 1125, and unfair competition under New York common law. On May 29, 2020, the Company filed its Answer to the Amended Complaint. On October 30, 2020, the Company sought leave to amend its Answer to assert counterclaims against Chanel, Inc. for violations of the Sherman Act, 15 U.S.C. §§ 1 & 2, the Donnelly Act, N.Y. Gen. Bus. Law. § 340, and New York common law. The motion for leave to amend was granted on February 24, 2021. Chanel, Inc. moved to dismiss the Company’s counterclaims; the motion to dismiss remains pending. The parties agreed to a stay in April 2021 to engage in settlement discussions. After several mediation sessions, the parties were unable to reach a resolution, and the stay was lifted in November 2021. Chanel then sought a partial stay of discovery on the Company's counterclaims and unclean hands defense while Chanel's motion to dismiss and strike those claims are pending, and on March 10, 2022, the Court granted Chanel's request. The parties continue to engage in fact discovery regarding Chanel's counterfeiting and false advertising claims against the Company. Fact discovery is currently scheduled to be completed by August 15, 2023, and all depositions of fact witnesses will be completed by no later than July 15, 2023. 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 the Company’s business and could lead to other similar lawsuits. The Company is not able to predict or reasonably estimate the ultimate outcome or possible losses relating to this claim. On September 10, 2019, a purported shareholder class action complaint was filed against the Company, its officers and directors and the underwriters of its IPO in the Superior Court of the State of California in the County of San Mateo. Three additional purported class actions, also alleging claims arising from the IPO were subsequently filed in Marin County and San Francisco County Superior Courts. The San Mateo case was voluntarily dismissed, refiled in Marin County Superior Court and consolidated with the cases there. On January 10, 2020, the Marin County plaintiffs filed a consolidated amended complaint. The plaintiffs in the San Francisco Superior Court case have filed a request for dismissal. Separately an additional purported class action was filed in the United States District Court for the Northern District of California on November 25, 2019. On February 12, 2020, a lead plaintiff was appointed in the federal action and an Amended Consolidated Complaint was filed on March 31, 2020. Defendants filed a demurrer and motion to strike in the state court action on March 13, 2020 and filed a motion to stay the proceedings in favor of the federal action on May 1, 2020. On August 4, 2020, the court granted defendants’ motion to stay the state court action and deferred ruling on the demurrer and motion to strike pending the outcome of the federal court action. A motion to dismiss the federal court action was filed on May 15, 2020. On March 31, 2021, the court entered an order on the motion to dismiss, dismissing the Securities Exchange Act of 1934 (the “Exchange Act”) claims and some of the claims alleged under the Securities Act of 1933 (the “Securities Act”). The court provided plaintiffs with an opportunity to amend the complaint and, on April 30, 2021, plaintiffs filed a Second Amended Complaint in federal court. The state court complaint, and the Second Amended Complaint in federal court each allege claims under the Securities Act of 1933 on behalf of a purported class of shareholders who acquired the Company’s stock pursuant to or traceable to the registration statement for the Company’s IPO. The federal complaint also alleges claims under the Exchange Act on behalf of a purported class of shareholders who purchased the Company’s stock from June 27, 2019 through November 20, 2019. The complaints seek, among other things, damages and interest, rescission, and attorneys’ fees and costs. On July 27, 2021, the Company reached an agreement in principle to settle this shareholder class action. On November 5, 2021, plaintiff filed the executed stipulation of settlement and motion for preliminary approval of the settlement with the federal court. On March 24, 2022, the court entered an order preliminarily approving the settlement. On July 28, 2022, the court entered an order finally approving the settlement and dismissing the case. The financial terms of the stipulation of settlement provide that the Company will pay $11.0 million within thirty (30) days of the later of preliminary approval of the settlement or plaintiff’s counsel providing payment instructions. The Company paid the settlement amount on March 29, 2022 with available resources and recorded approximately $11.0 million for the year ended December 31, 2021 under our Operating expenses as a Legal settlement. One of the plaintiffs in the state court action opted out of the settlement. The stay of the state court case has been lifted, and the opt out plaintiff filed an amended complaint on October 31, 2022 alleging putative class claims under the Securities Act on behalf of the two shareholders who opted out of the settlement and those who purchased stock from November 21, 2019 through March 9, 2020. On December 22, 2022, the Company filed a motion to dismiss and a motion to strike class allegations. On September 10, 2020 and December 7, 2020, purported shareholders filed putative derivative actions in the United States District Court for the District of Delaware. The derivative complaints allege factual allegations largely tracking the above referenced purported shareholder class actions. The two derivative cases have been consolidated. On September 13, 2021, the parties reached a settlement in principle of the derivative case. The settlement in principle provides for certain corporate governance reforms in exchange for a release and dismissal of the lawsuit. On October 21, 2021, the parties reached agreement to pay up to $0.5 million in attorneys’ fees and costs to plaintiffs’ counsel in the derivative case. On November 5, 2021, the parties entered into a stipulation of settlement, and on February 11, 2022, the court entered an order and final judgment approving the settlement. In connection with the derivative settlement, the Company recorded approximately $0.5 million for the year ended December 31, 2021 under our Operating expenses as a Legal settlement. The stipulation of settlement was preliminarily approved on December 8, 2021, and the $0.5 million was paid within thirty (30) days of the preliminary approval, or on January 7, 2022, with available resources. Indemnifications In the ordinary course of business, the Company may provide indemnifications of varying scope and terms to vendors, directors, officers and other parties with respect to certain matters including, but not limited to, losses arising out of the breach of such agreements, intellectual property infringement claims made by third parties and other liabilities relating to or arising from the Company's various services, or its acts or omissions. The Company has not incurred any material costs as a result of such indemnifications and have not accrued any liabilities related to such obligations in its financial statements. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The components of the Company’s income tax provision consisted of (in thousands): Year Ended December 31, 2022 2021 2020 Current: Federal $ — $ — $ — State 172 56 101 Total current tax expense 172 56 101 Deferred: Federal — — — State — — — Total deferred tax expense — — — Total provision for income taxes $ 172 $ 56 $ 101 The reconciliation of the Federal statutory income tax provision for the Company’s effective income tax provision (in thousands): Year Ended December 31, 2022 2021 2020 Tax at federal statutory rate $ (41,209) $ (49,480) $ (36,559) State taxes, net of federal effect (11,257) (13,704) (10,315) Stock-based compensation 419 (2,698) (6,261) Non-deductible items 524 3,661 402 Tax credits (563) — — Convertible Notes — 16,782 — Adoption of ASU 2020-06 (28,045) — — Valuation allowance 80,254 42,327 52,834 Other 49 3,168 — Provision for income taxes $ 172 $ 56 $ 101 The Company’s deferred tax assets and liabilities (in thousands): December 31, 2022 2021 Deferred tax assets: Net operating loss carryforwards $ 219,872 $ 178,558 Fixed assets and intangibles 3,904 2,915 Capitalized research and development (1) 7,899 — Accruals and reserves 10,867 8,202 Stock options 2,474 5,007 Operating lease liabilities 39,143 43,345 Capped calls 15,082 15,095 Convertible debt 1,675 — Tax credits 1,416 — Gross deferred tax assets 302,332 253,122 Less: valuation allowance (265,796) (185,541) Total deferred tax assets 36,536 67,581 Deferred tax liabilities: Operating lease right-of-use assets (34,330) (39,021) Convertible debt — (26,477) Other (2,206) (2,083) Gross deferred tax liabilities (36,536) (67,581) Net deferred tax assets $ — $ — (1) Under the Tax Cuts and Jobs Act of 2017, research and development costs are no longer fully deductible and are required to be capitalized and amortized for U.S. tax purposes effective January 1, 2022. The mandatory capitalization requirement increases our gross deferred tax assets, which are fully offset by the valuation allowance. In assessing the realizability of deferred tax assets, the Company evaluates all available positive and negative evidence by considering whether it is more likely than not that some portion or all of the deferred tax assets will not be recognized. The ultimate realization of deferred tax assets is dependent upon future taxable income, future reversals of existing taxable temporary difference, taxable income in carryback years and tax-planning strategies. The Company believes it is more likely than not that the deferred tax assets in the U.S. will not be realized; accordingly, a valuation allowance has been established against our U.S. deferred tax assets. The net change in the valuation allowance for the years ended December 31, 2022 and December 31, 2021 was an increase of $80.3 million and an increase of $42.3 million, respectively. As of December 31, 2022 and 2021, the Company has a net operating loss carryforward of $827.6 million and $674.9 million for federal tax purposes, respectively, and $770.0 million and $609.7 million for state tax purposes, respectively. If not utilized, these losses will expire beginning in 2024 for state tax purposes. However, beginning in tax year 2018 and forward, the Federal law has changed such that net operating losses generated after December 31, 2017 may be carried forward indefinitely. Accordingly, $168.2 million of the federal net operating losses will begin to expire in 2032. However, $659.4 million of the federal net operating losses will not expire. As of December 31, 2022 and 2021, the Company has a credit carryforward of $2.0 million and $0.9 million for federal tax purposes, respectively, and $1.0 million and $1.0 million for state tax purposes, respectively. If not utilized, these credits will expire beginning in 2041 for federal tax purposes and do not expire for state tax purposes. The Tax Reform Act of 1986 limits the use of net operating losses and tax credit carryforwards in certain situations where changes occur in the stock ownership of a company. During 2019, we analyzed whether any of the reported net operating losses would be limited because of these rules. Based on our analysis we believe $3.3 million of the Federal and $2.1 million of California net operating losses will not be available to offset future taxable income because of the limitation. The reported net operating losses have been adjusted based on this analysis. The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal, state and local, jurisdictions, where applicable. As of December 31, 2022 and 2021, all years generally remain open to examination. Additionally, net operating loss carryforwards are subject to examination by the Internal Revenue Service and the California Franchise Tax Board for up to three years after utilization. As of December 31, 2022, the Company has unrecognized tax benefits of $1.5 million. The unrecognized tax benefits relate to federal and state research and development credits. The Company's policy is to include interest and penalties as a component to the statement of operations, however there were no associated interest and penalties. There were no unrecognized tax benefits that, if recognized, would affect the Company's effective tax rate as of December 31, 2022. The Company estimates that there will be no material changes in its uncertain tax positions in the next 12 months. |
Net Loss Per Share Attributable
Net Loss Per Share Attributable to Common Stockholders | 12 Months Ended |
Dec. 31, 2022 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share Attributable to Common Stockholders | Net Loss Per Share Attributable to Common Stockholders A reconciliation of the numerator and denominator used in the calculation of the basic and diluted net loss per share attributable to common stockholders is as follows (in thousands, except share and per share data): Year Ended December 31, 2022 2021 2020 Numerator Net loss attributable to common stockholders $ (196,445) $ (236,107) $ (175,832) Denominator Weighted-average common shares outstanding used to calculate net loss per share attributable to common stockholders, basic and diluted 95,921,246 91,409,624 87,587,409 Net loss per share attributable to common stockholders, basic and diluted $ (2.05) $ (2.58) $ (2.01) The following securities were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented, because including them would have been anti-dilutive (on an as-converted basis): December 31, 2022 2021 2020 Options to purchase common stock 1,754,776 4,131,501 5,809,376 Restricted stock units 11,369,021 8,187,586 5,103,727 Estimated shares issuable under the Employee Stock Purchase Plan 695,782 147,871 109,729 Assumed conversion of the Convertible Senior Notes 18,746,323 18,746,323 9,705,454 Total 32,565,902 31,213,281 20,728,286 The Convertible Senior Notes issued in June 2020 and in March 2021 are convertible, based on the applicable conversion rate, into cash, shares of the Company’s common stock or a combination thereof, at the Company’s election. The impact of the assumed conversion to diluted net loss per share is computed on an as-converted basis. |
Retirement Plan
Retirement Plan | 12 Months Ended |
Dec. 31, 2022 | |
Retirement Benefits [Abstract] | |
Retirement Plan | Retirement PlanThe Company has a defined-contribution 401(k) retirement plan covering substantially all of its employees. Eligible employees are permitted to contribute up to an amount not to exceed an annual statutory maximum. The Company matches employee contributions at a rate of 25% of vested contributions, up to a maximum of $1,000 per participant per year. The Company’s contributions to the 401(k) plan were $1.6 million, $1.1 million, and $0.8 million for the years ended December 31, 2022, 2021, and 2020, respectively. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Chief Executive Officer On January 24, 2023, the Company entered into an offer letter with John E. Koryl, and he was appointed as Chief Executive Officer and as a member of its Board of Directors, effective February 6, 2023. Pursuant to the offer letter, Mr. Koryl’s annual base salary was set at $700,000, with a sign on bonus of $300,000 and target annual bonus opportunity of 100% of base salary. The Company will recommend that the Board grant Mr. Koryl 1,250,000 time-based RSUs, which will vest 25% on the first anniversary of the vesting commencement date and in quarterly installments thereafter and 1,500,000 PSUs, which will be eligible to vest over a five-year performance period based on continuous employment with the Company during the applicable service period and the Company’s stock price achievement. Restructuring In February 2023, the Company announced a reduction of its workforce. The Company expects to incur employee severance and related charges of $1.7 million to $2.2 million, the majority of which will be recognized in the first quarter of 2023. In addition, the Company is taking actions to optimize its retail and office space, and is currently in the process of evaluating an estimate for impairment of certain right-of-use assets and related leasehold improvements that have a total carrying value of $41.6 million as of December 31, 2022. As a result, the Company expects to incur exit costs relating to the workspace reductions. The Company may incur additional charges in the future as it further evaluates its real estate needs. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and, in the opinion of management, reflect all adjustments necessary to state fairly the Company’s financial position, results of operations, comprehensive loss, stockholders’ equity (deficit), and cash flows for the periods presented. The Company’s functional and reporting currency is the U.S. dollar. The Company adopted ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity as of January 1, 2022 using the modified retrospective adoption method with a cumulative effect adjustment. Refer to Note 2 "Recently Adopted Accounting Pronouncements" for further details on the adoption of ASU 2020-6. |
Use of Estimates | Use of Estimates The preparation of 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 as of the date of the financial statements and the reported amounts of expenses during the reporting period. Significant items subject to such estimates and assumptions include those related to revenue recognition, including the returns reserve, standalone selling price related to consignment transactions, valuation of inventory, software development costs, stock-based compensation, incremental borrowing rates related to lease liability, valuation of deferred taxes, and other contingencies. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could differ from those estimates. |
Net Loss per Share Attributable to Common Stockholders | Net Loss per Share Attributable to Common Stockholders The Company follows the two-class method when computing net loss per common share when shares are issued that meet the definition of participating securities. The two-class method determines net loss per common share for each class of common stock and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income (loss) available or attributable to common stockholders for the period to be allocated between common stock and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. The Company’s convertible senior notes are participating securities as they give the holders the right to receive dividends if dividends or distributions declared to the common stockholders is equal to or greater than the last reported sale price of the Company’s common stock on the trading day immediately preceding the ex-dividend date for such dividend or distribution as if the instruments had been converted into shares of common stock. No undistributed earnings were allocated to the participating securities as the contingent event is not satisfied as of the reporting date. For periods in which the Company reports net losses, diluted net loss per common share attributable to common stockholders is the same as basic net loss per common share attributable to common stockholders, because potentially dilutive common shares and assumed conversion of the convertible senior notes are not assumed to have been issued within the calculation, if their effect is anti-dilutive. |
Segments | Segments The Company has one operating segment and one reportable segment as its chief operating decision maker, who is its Chief Executive Officer, reviews financial information on a consolidated basis for purposes of allocating resources and evaluating financial performance. All long-lived assets are located in the United States and substantially all revenue is attributed to consignors and buyers based in the United States. |
Revenue Recognition | Revenue Recognition The Company generates revenue from the sale of pre-owned luxury goods through its online marketplace and retail stores. Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. The Company enters into contracts that include products and services that are capable of being distinct and accounted for as separate performance obligations as described below. The transaction price requires an allocation across consignment services, sales of Company-owned inventory, and shipping services. Estimation is required in the determination of the services' stand-alone selling price ("SSP"). Consignment Revenue The Company provides a service to sell pre-owned luxury goods on behalf of consignors to buyers through its online marketplace and retail stores. The Company retains a percentage of the proceeds received as payment for its consignment service, which the Company refers to as its take rate. SSP is estimated using observable stand-alone consignment sales which are conducted without shipping services. The Company reports consignment revenue on a net basis as an agent and not the gross amount collected from the buyer. Title to the consigned goods remains with the consignor until transferred to the buyer upon purchase of the consigned goods and expiration of the allotted return period. The Company does not take title of consigned goods at any time except in certain cases where returned goods become Company-owned inventory. The Company recognizes consignment revenue upon purchase of the consigned good by the buyer as its performance obligation of providing consignment services to the consignor is satisfied at that point. Consignment revenue is recognized net of estimated returns, cancellations, buyer incentives and adjustments. The Company recognizes a returns reserve based on historical experience, which is recorded in other accrued and current liabilities on the balance sheets (see Note 5). Sales tax assessed by governmental authorities is excluded from revenue. Certain transactions provide consignors with a material right resulting from the tiered consignor commission plan. Under this plan, the amount an individual consignor receives for future sales of consigned goods may be dependent on previous consignment sales for that consignor within his/her consignment period. Accordingly, in certain consignment transactions, a small portion of the Company’s consignment revenue is allocated to such material right using the portfolio method and recorded as deferred revenue, which is recorded in other accrued and current liabilities on the balance sheets. The impact of the deferral has not been material to the financial statements. The Company also generates subscription revenue from monthly memberships allowing buyers early access to shop for luxury goods. The buyers receive the early access and other benefits over the term of the subscription period, which represents a single stand-ready performance obligation. Therefore, the subscription fees paid by the buyer are recognized over the monthly subscription period. Subscription revenue was not material in 2022, 2021, and 2020. Direct Revenue The Company generates direct revenue from the sale of Company-owned inventory. The Company recognizes direct revenue on a gross basis upon shipment of the purchased good to the buyer as the Company acts as the principal in the transaction. SSP is estimated using observable stand-alone sales of Company-owned inventory which are conducted without shipping services, when available, or a market assessment approach. Direct revenue is recognized net of estimated returns, buyer incentives and adjustments. Sales tax assessed by governmental authorities is excluded from revenue. Cost of direct revenue is also recognized upon shipment to the buyer in an amount equal to that paid to the consignor from the original consignment sale, an amount equal to that paid as a direct purchase from a third party, or the lower of cost of the inventory purchased and its net realizable value. Shipping Services Revenue The Company provides a service to ship purchased items to buyers and a service to ship items from buyers back to the Company. The Company determines itself to be the principal in this arrangement. The Company charges a fee to buyers for this service and has elected to treat shipping and handling activities performed as a separate performance obligation. For shipping services revenue, the Company's SSP is estimated using a market approach considering external and internal data points on the stand-alone sales price of the shipping service. All outbound shipping and handling costs for buyers are accounted for as cost of shipping services and recognized as the shipping activity occurs. The Company also generates shipping services revenue from the shipping fees for consigned products returned by buyers to the Company within policy. The Company recognizes shipping revenue and associated costs over time as the shipping activity occurs, which is generally one to three days after shipment. Incentives Incentives, which include platform-wide discounts and buyer incentives, may periodically be offered to buyers. Platform-wide discounts are made available to all buyers on the online marketplace. Buyer incentives apply to specific buyers and consist of coupons or promotions that offer credits in connection with purchases on the Company’s platform, and do not impact the commissions paid to consignors. These are treated as a reduction of consignment revenue and direct revenue. Additionally, the Company periodically offers commission exceptions to the standard consignment rates to consignors to optimize its supply. These are treated as a reduction of consignment revenue at the time of sale. The Company may offer a certain type of buyer incentive in the form of site credits to buyers on current transactions to be applied towards future transactions, which are included in other accrued and current liabilities on the balance sheets. Contract Liabilities The Company’s contractual liabilities primarily consist of deferred revenue for material rights primarily related to the tiered consignor commission plan, which are recognized as revenue using a portfolio approach based on the pattern of exercise, and certain buyer incentives, which were immaterial as of December 31, 2022 and December 31, 2021. Contract liabilities are recorded in other accrued and current liabilities on the balance sheets and are generally expected to be recognized within one year. Contract liabilities were immaterial as of December 31, 2022 and December 31, 2021. |
Cost of Revenue | Cost of Revenue Cost of consignment revenue consist of credit card fees, packaging, customer service personnel-related costs, website hosting services, and consignor inventory adjustments relating to lost or damaged products. Cost of direct revenue consists of the cost of goods sold, credit card fees, packaging, customer service personnel-related costs, website hosting services, and inventory adjustments. Cost of shipping services revenue consists of the outbound shipping and handling costs to deliver purchased items to buyers, the shipping costs for consigned products returned by buyers to the Company within policy, and an allocation of the credit card fees associated with the shipping fee charged. |
Marketing | Marketing Marketing expense is comprised of the cost of acquiring new consignors and buyers for our online platform and physical stores, including the cost of television, digital and direct mail advertising. Marketing expense also includes personnel-related costs, including stock-based compensation, of employees engaged in these activities. Advertising costs are expensed as incurred and were $49.0 million, $46.2 million, and $45.8 million in 2022, 2021, and 2020, respectively. |
Operations and Technology | Operations and Technology Operations and technology expense is comprised of costs associated with the authentication, merchandising and fulfillment of goods sold through our online marketplace and retail stores, as well as general information technology expense. The principal component of operations and technology expense is personnel-related costs, including stock-based compensation, of employees engaged in these activities. Operations and technology expense also includes allocated facility and overhead costs, costs related to our retail stores, facility supplies, inbound consignment shipping costs, and depreciation of hardware and equipment, as well as research and development expense for technology associated with managing and improving our operations. In 2022, 2021, and 2020, the Company capitalized proprietary software developments costs of $15.6 million, $12.7 million, and $9.0 million, respectively. As such, operations and technology expense also includes amortization of capitalized technology development costs, which is taken on straight-line basis over three years once the technology is ready for its intended use. |
Selling, General and Administrative | Selling, General and Administrative Selling, general and administrative expense is principally comprised of the personnel-related costs for employees involved in sales, finance and administration, and includes stock-based compensation expense. Selling, general and |
Stock-based Compensation | Stock-based Compensation The Company incurs stock-based compensation expense from stock options, restricted stock units (“RSUs”), performance based restricted stock units (“PSUs”), and employee stock purchase plan (“ESPP”) purchase rights. Stock-based compensation expense related to employees and nonemployees is measured based on the grant-date fair value of the awards. Compensation expense is recognized in the statements of operations over the period during which the employee is required to perform services in exchange for the award (the vesting period of the applicable award) using the straight-line method for awards with only a service condition and on a tranche by tranche basis for PSUs. The Company estimates the fair value of stock options granted and the purchase rights issued under the ESPP using the Black-Scholes option pricing model. The fair value of RSUs is estimated based on the fair market value of the Company’s common stock on the date of grant, which is determined based on the closing price of the Company’s common stock. The PSUs are measured using the fair market value of the Company’s common stock on the date of grant. The stock-based compensation expense for PSUs is recognized based on the estimated number of shares that the Company expects will vest and is adjusted on a quarterly basis using the estimated achievement of financial performance targets. The Company accounts for forfeitures as they occur. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments purchased with original maturities of three months or less from the purchase date to be cash equivalents. Cash equivalents primarily consist of investments in short-term money market funds. |
Accounts Receivable | Accounts Receivable Accounts receivables are recorded at the amounts billed to buyers and do not bear interest. Accounts receivables result from credit card transactions, the majority of which are settled within two business days. |
Inventory, Net | Inventory, Net Inventory consists of finished goods arising from goods returned after the title has transferred from the buyer to the Company as well as finished goods from direct purchases from vendors and consignors. The cost of inventory is an amount equal to that paid to the consignor or vendors. Inventory is valued at the lower of cost or net realizable value using the specific identification method and the Company records provisions, as appropriate, to write down obsolete and excess inventory to estimated net realizable value. After the inventory value is reduced, adjustments are not made to increase it from the estimated net realizable value. Our provisions to write down obsolete and excess inventory to net realizable value were $3.7 million and $0.2 million as of December 31, 2022 and 2021, respectively. Return reserves, which reduce revenue and cost of sales, are estimated using historical experience. Liabilities for return allowances are included in other accrued and current liabilities on the balance sheets and were $22.2 million and $23.6 million as of December 31, 2022 and 2021. Included in inventory on the Company’s balance sheets are assets totaling $6.1 million and $9.1 million as of December 31, 2022 and 2021, respectively, for the rights to recover products from customers associated with its liabilities for return reserves. |
Property and Equipment, Net | Property and Equipment, Net Property and equipment, net is recorded at cost less accumulated depreciation and amortization. Depreciation and amortization are recorded on a straight-line basis over the estimated useful lives of the respective assets. Repair and maintenance costs are expensed as incurred. The estimated useful lives of our assets are as follows: Proprietary software 3 years Furniture and equipment 3-5 years Vehicles 5 years Leasehold improvements Shorter of lease term or estimated useful life |
Software Development Costs | Software Development Costs Proprietary software includes the costs of developing the Company’s internal proprietary business platform and automation projects. The Company capitalizes qualifying proprietary software development costs that are incurred during the application development stage. Capitalization of costs begins when two criteria are met: (1) the preliminary project stage is completed and (2) it is probable that the software will be completed and used for its intended function. Such costs are capitalized in the period incurred. Capitalization ceases and amortization begins when the software is substantially complete and ready for its intended use, including the completion of all significant testing. Costs related to preliminary project activities and post-implementation operating activities are expensed as incurred. |
Impairment of Long-lived Assets | Impairment of Long-lived Assets The carrying amounts of long-lived assets, including property and equipment, net and capitalized proprietary software, are periodically reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable or that the useful life is shorter than originally estimated. Recoverability of assets to be held and used is measured by comparing the carrying amount of assets to future undiscounted net cash flows the assets are expected to generate over their remaining life. |
Leases | Leases Contracts that have been determined to convey the right to use an identified asset are evaluated for classification as an operating or finance lease. For the Company’s operating leases, the Company records a lease liability based on the present value of the lease payments at lease inception, using the applicable incremental borrowing rate. The Company estimates the incremental borrowing rate by developing its own synthetic credit rating, corresponding yield curve, and the terms of each lease at the lease commencement date. The corresponding right-of-use asset is recorded based on the corresponding lease liability at lease inception, adjusted for payments made to the lessor at or before the commencement date, initial direct costs incurred and any tenant incentives allowed for under the lease. The Company does not include optional renewal terms or early termination provisions unless the Company is reasonably certain such options would be exercised at the inception of the lease. Operating lease right-of-use assets, current portion of operating lease liabilities, and operating lease liabilities, net of current portion are included on the Company’s balance sheet. The Company has elected the practical expedients that allows for the combination of lease components and non-lease components and to record short-term leases as lease expense on a straight-line basis on the statements of operations. Variable lease payments are recorded as expense as they are incurred. The Company has finance leases for vehicles and equipment, and the amounts of finance lease right-of-use assets and finance lease liabilities have been immaterial to date. |
Convertible Senior Notes, net | Convertible Senior Notes, Net Prior to the adoption of ASU 2020-06 on January 1, 2022, convertible debt instruments that may be settled in cash or other assets, or partially in cash, upon conversion, were separately accounted for as long-term debt and equity components (or conversion feature). The debt component represented the Company’s contractual obligation to pay principal and interest and the equity component represented the Company’s option to convert the debt security into equity of the Company or the equivalent amount of cash. Upon issuance, the Company allocated the debt component on the basis of the estimated fair value of a similar liability that does not have an associated convertible feature and the remaining proceeds are allocated to the equity component. The bifurcation of the debt and equity components resulted in a debt discount for the aforementioned notes. The Company uses the effective interest method to amortize the debt discount to interest expense over the amortization period which is the expected life of the debt. Following the adoption of ASU 2020-06, there is no bifurcation of the liability and equity components of the Notes, and the entire principal of the Notes are accounted for as long-term debt. |
Capped Call Transactions | Capped Call Transactions In June 2020 and March 2021, in connection with the issuance of its convertible senior notes, the Company entered into Capped Call Transactions (see Note 7). The Capped Call Transactions are expected generally to reduce the potential dilution to the holders of the Company’s common stock upon any conversion of the convertible senior notes and/ |
Debt Issuance Costs | Debt Issuance CostsDebt issuance costs, which consist of direct incremental legal, consulting, banking and accounting fees relating to the anticipated debt offering, are amortized to interest expense over the estimated life of the related debt based on the effective interest method. The Company presents debt issuance costs on the balance sheets as a direct deduction from the associated debt. The Company adopted ASU 2020-06 as of January 1, 2022 using the modified retrospective method. Prior to the adoption of ASU 2020-06 on January 1, 2022, a portion of debt issuance costs incurred in connection with the convertible senior notes issued in June 2020 and March 2021 was allocated to the equity component and was recorded as a reduction to additional paid in capital and was not amortized to interest expense over the estimated life of the related debt. Following the adoption of ASU 2020-06, the debt issuance costs previously allocated to the equity component of both the 2025 and 2028 Notes were reclassified to debt. As such, all of the debt issuance costs are recorded as a direct deduction from the related principal debt amounts on the balance sheet, and are all amortized to interest expense over the estimated remaining life of the related debt. |
Income Taxes | Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in loss in the period of enactment. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. |
Concentrations of Credit Risks | Concentrations of Credit Risks Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents and accounts receivable. At times, such amount may exceed federally-insured limits. The Company reduces credit risk by placing its cash and cash equivalents and investments with major financial institutions within the United States. |
Change in Accounting Principle and Recently Adopted and Issued Accounting Pronouncements | During the three months ended June 30, 2022, the Company changed its method of accounting for shipping and handling activities from applying the policy election to account for shipping services as fulfillment activities to recognizing shipping services as a promised service to customers which the Company determined to be a separate performance obligation. The Company believes that this change in accounting method is preferable, as it results in a disaggregation of revenue and related costs that provides more transparency to the users of its financial statements and is more consistent with the nature of the Company's promises made in arrangements with its customers. The effects of this change to the disaggregation and presentation of revenue and costs of revenue have been retroactively applied to all periods presented. This change had an immaterial impact to the Company's loss from operations and as such the Company did not retroactively adjust prior periods for these immaterial effects. Recently Adopted Accounting Pronouncements In November 2021, the Financial Accounting Standards Board ("FASB") issued ASU 2021-10, Government Assistance (Topic 832): Disclosure by Business Entities about Government Assistance , which improves the transparency of government assistance received by requiring the disclosure of the nature of the transactions, the accounting for the transactions, and the effect of the transactions on the financial statements. The Company adopted this standard during the year ended December 31, 2022. The adoption of this standard did not have a material impact on the Company's financial statements. In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity , which simplifies accounting for convertible instruments. The Company adopted this guidance as of January 1, 2022 using the modified retrospective method. As a result of the adoption, the Convertible Senior Notes due 2025 (the "2025 Notes") and the Convertible Senior Notes due 2028 (the "2028 Notes" and together with the 2025 Notes, the "Notes") are no longer bifurcated into separate liability and equity components, but rather are classified as a single liability in the balance sheets. Upon adoption, the Company recorded a cumulative effect of $13.4 million as a reduction to accumulated deficit and a reduction to additional paid in capital of $112.1 million related to amounts attributable to the value of the conversion options that had previously been recorded in equity. Additionally, the Company recorded an increase to its convertible notes balance by an aggregate amount of $98.6 million as a result of the reversal of the separation of the convertible debt between debt and equity. As a result of the adoption, there was a net increase in deferred tax assets of $27.7 million and a corresponding increase of $27.7 million in the offsetting valuation allowance. The Company also reclassified the issuance costs previously allocated to the conversion feature to debt, so that all issuance costs are now presented as a direct deduction of the long-term debt line on the balance sheet. The adoption of this standard also significantly decreased the amount of non-cash interest expense to be recognized in future periods as a result of eliminating the discount on debt associated with the conversion feature. The adoption did not affect the Company's statements of cash flows. When calculating net loss per share attributable to common stockholders, the Company uses the if-converted method as required under ASU 2020-06 to determine the dilutive effect of the Notes; however there was no impact because including the assumed conversion of the convertible debt would have been anti-dilutive. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Schedule of Property and Equipment, Net | The estimated useful lives of our assets are as follows: Proprietary software 3 years Furniture and equipment 3-5 years Vehicles 5 years Leasehold improvements Shorter of lease term or estimated useful life December 31, December 31, Proprietary software $ 39,017 $ 31,799 Furniture and equipment 47,692 40,176 Automobiles 2,119 1,505 Leasehold improvements 86,986 66,154 Property and equipment, gross 175,814 139,634 Less: accumulated depreciation and amortization (63,135) (50,348) Property and equipment, net $ 112,679 $ 89,286 |
Schedule of Change in Accounting Estimate | Certain financial statement line items included in the Statement of Operations for the years ended December 31, 2022, December 31, 2021, and December 31, 2020, respectively were adjusted as follows (in thousands): Year Ended December 31, 2022 As Computed Under Previous Method Effect of Change As Reported Under Preferable Method Revenue: Consignment revenue $ 444,767 $ (59,788) $ 384,979 Shipping services revenue — 59,788 59,788 Cost of revenue: Cost of consignment revenue 113,141 (56,178) 56,963 Cost of shipping services revenue — 56,178 56,178 Year Ended December 31, 2021 As Previously Reported Effect of Change As Reported Under Preferable Method Revenue: Consignment revenue $ 346,848 $ (44,627) $ 302,221 Shipping services revenue — 44,627 44,627 Cost of revenue: Cost of consignment revenue 92,788 (47,803) 44,985 Cost of shipping services revenue — 47,803 47,803 Year Ended December 31, 2020 As Previously Reported Effect of Change As Reported Under Preferable Method Revenue: Consignment revenue $ 247,326 (34,014) 213,312 Shipping services revenue — 34,014 34,014 Cost of revenue: Cost of consignment revenue 66,976 (36,587) 30,389 Cost of shipping services revenue — 36,587 36,587 |
Cash and Cash Equivalents (Tabl
Cash and Cash Equivalents (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Cash and Cash Equivalents [Abstract] | |
Summary of Estimated Value of Cash and Cash Equivalents | The following tables summarize the estimated value of the Company’s cash and cash equivalents (in thousands): December 31, 2022 Amortized Cost Unrealized Gain Unrealized Loss Fair Value Cash and cash equivalents: Cash $ 275,742 $ — $ — $ 275,742 Money market funds 18,051 — — 18,051 Total cash and cash equivalents $ 293,793 $ — $ — $ 293,793 December 31, 2021 Amortized Cost Unrealized Gain Unrealized Loss Fair Value Cash and cash equivalents: Cash $ 278,769 $ — $ — $ 278,769 Money market funds 139,402 — — 139,402 Total cash and cash equivalents $ 418,171 $ — $ — $ 418,171 |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Schedule of Carrying Values and Estimated Fair Values of Debt Instruments | The following table presents the carrying amounts and estimated fair values of the financial instruments that are not recorded at fair value on the balance sheets (in millions): December 31, 2022 Net Carrying Amount Estimated Fair Value 2025 Convertible senior notes $ 169.3 $ 146.9 2028 Convertible senior notes $ 280.6 $ 210.2 |
Balance Sheet Components (Table
Balance Sheet Components (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Balance Sheet Related Disclosures [Abstract] | |
Schedule of Property and Equipment, Net | The estimated useful lives of our assets are as follows: Proprietary software 3 years Furniture and equipment 3-5 years Vehicles 5 years Leasehold improvements Shorter of lease term or estimated useful life December 31, December 31, Proprietary software $ 39,017 $ 31,799 Furniture and equipment 47,692 40,176 Automobiles 2,119 1,505 Leasehold improvements 86,986 66,154 Property and equipment, gross 175,814 139,634 Less: accumulated depreciation and amortization (63,135) (50,348) Property and equipment, net $ 112,679 $ 89,286 |
Schedule of Other Accrued and Current Liabilities | Other accrued and current liabilities consist of the following (in thousands): December 31, December 31, Returns reserve $ 22,233 $ 23,577 Accrued compensation 15,111 14,258 Accrued legal 484 14,417 Accrued sales tax and other taxes 8,531 8,935 Site credit liability 11,813 8,738 Accrued marketing and outside services 8,729 7,897 Accrued shipping 5,715 2,006 Accrued interest 1,166 1,166 Deferred revenue 3,549 3,387 Accrued inventory — 3,513 Accrued property and equipment 11,417 1,427 Other 4,544 4,867 Other accrued and current liabilities $ 93,292 $ 94,188 |
Convertible Senior Notes, Net (
Convertible Senior Notes, Net (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Net Carrying Amount of Notes | The net carrying amount of the liability component of the 2025 Notes was as follows (in thousands): December 31, December 31, Principal $ 172,500 $ 172,500 Unamortized debt discount (1) — (14,350) Unamortized debt issuance costs (3,204) (4,286) Net carrying amount $ 169,296 $ 153,864 (1) Upon adoption of ASU 2020-06 as of January 1, 2022, the unamortized debt discount balance was derecognized, as described in "Note 2— Summary of Significant Accounting Policies—Recently Adopted Accounting Pronouncements." December 31, Proceeds allocated to the conversion options (debt discount) $ 19,787 Issuance costs (767) Net carrying amount $ 19,020 The net carrying amount of the liability component of the 2028 Notes was as follows (in thousands): December 31, December 31, 2021 Principal $ 287,500 $ 287,500 Unamortized debt discount (1) — (87,403) Unamortized debt issuance costs (6,948) (5,581) Net carrying amount $ 280,552 $ 194,516 (1) Upon adoption of ASU 2020-06 as of January 1, 2022, the unamortized debt discount balance was derecognized, as described in "Note 2— Summary of Significant Accounting Policies—Recently Adopted Accounting Pronouncements." As discussed above, upon the adoption of ASU 2020-06, the Company reversed the separation of the debt and equity components of the Notes, and accounted for the Notes wholly as debt. Additionally, the issuance costs of the Notes were accounted for as debt issuance costs in its entirety. The net carrying amount of the equity component of the 2028 Notes as of December 31, 2021 was as follows (in thousands): December 31, 2021 Proceeds allocated to the conversion options (debt discount) $ 96,162 Issuance costs (3,131) Net carrying amount $ 93,031 |
Schedule of Amounts Recorded in Interest Expense Related to Notes | The following table sets forth the amounts recorded in interest expense related to the 2025 Notes (in thousands): Year Ended December 31, 2022 2021 2020 Contractual interest expense $ 5,175 $ 5,175 $ 2,803 Amortization of debt discount — 3,594 1,843 Amortization of debt issuance costs 1,080 1,082 556 Total interest and amortization expense $ 6,255 $ 9,851 $ 5,202 The following table sets forth the amounts recorded in interest expense related to the 2028 Notes (in thousands): December 31, December 31, 2021 Contractual interest expense $ 2,875 $ 2,332 Amortization of debt discount — 8,759 Amortization of debt issuance costs 1,288 554 Total interest and amortization expense $ 4,163 $ 11,645 |
Schedule of Future Minimum Payments Under Notes | Future minimum payments under the 2025 Notes as of December 31, 2022, are as follows (in thousands): Fiscal Year Amount 2023 $ 5,175 2024 5,175 2025 175,088 Total future payments 185,438 Less amounts representing interest (12,938) Total principal amount $ 172,500 Future minimum payments under the 2028 Notes as of December 31, 2022, are as follows (in thousands): Fiscal Year Amount 2023 2,875 2024 2,875 2025 2,875 2026 2,875 2027 2,875 2028 288,937 Total future payments 303,312 Less amounts representing interest (15,812) Total principal amount $ 287,500 |
Common Stock (Tables)
Common Stock (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Common Stock [Abstract] | |
Schedule of Reserved Shares of Common Stock for Issuance on Converted Basis | The Company had reserved shares of common stock for issuance, on an as-converted basis, as follows: December 31, December 31, Options issued and outstanding 1,754,776 4,131,501 Outstanding restricted stock units 11,369,021 8,182,649 Shares available for grant under the 2019 equity incentive plan 5,035,545 6,709,676 Shares available for issuance under 2019 ESPP 3,529,709 3,210,985 Total 21,689,051 22,234,811 |
Share-based Compensation Plans
Share-based Compensation Plans (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Stock Option Plan Activity | Activity under the Company’s stock option plan is set forth below: Number of Weighted- Weighted- Aggregate Balances at December 31, 2021 4,131,501 5.19 4.3 $ 30,382 Options granted — — Options exercised (1,929,265) 1.50 Options cancelled (447,460) 9.29 Balances at December 31, 2022 1,754,776 8.21 4.0 1 Options vested and exercisable— December 31, 2022 1,709,130 8.01 3.9 1 |
Schedule of RSUs Activity | A summary of RSU activity for the year ended December 31, 2022 is as follows: Number of Restricted Stock Units Aggregate Intrinsic Value Unvested December 31, 2021 8,182,649 $ 16.42 $ 94,972 Granted 11,032,022 5.42 Vested (3,719,829) 14.07 Forfeited (4,125,821) 11.21 Unvested December 31, 2022 11,369,021 $ 8.39 $ 14,178 |
Schedule of Assumptions to Estimate Fair Value of Stock Options | The following assumptions were used to estimate the fair value of stock options granted in 2019, as there were no stock options granted in 2022, 2021 and 2020: Year Ended December 31, 2019 Expected term (in years) 5.0 – 6.1 Expected volatility 44.2% – 47.8% Average risk-free rate 1.9% – 2.6% Dividend yield — |
Schedule of Total Stock-based Compensation Expense, Excluding Compensation Expense Related to Stock Sales, by Function | Total stock-based compensation expense by function was as follows (in thousands): Year Ended December 31, 2022 2021 2020 Marketing $ 2,209 $ 2,557 $ 1,755 Operations and technology 19,822 21,395 10,241 Selling, general and administrative 24,107 24,850 12,326 Total $ 46,138 $ 48,802 $ 24,322 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
Schedule of Maturities of Operating Lease Liabilities | Maturities of operating lease liabilities by fiscal year for the Company’s operating leases are as follows (in thousands): Fiscal Year Amount 2023 29,020 2024 28,800 2025 29,345 2026 28,463 2027 21,410 Thereafter 38,034 Total future minimum payments $ 175,072 Less: Imputed interest (29,178) Present value of operating lease liabilities $ 145,894 |
Schedule of Supplemental Cash Flow Information Related to Operating Leases | Supplemental cash flow information related to the Company’s operating leases are as follows (in thousands): Year Ended Year ended December 31, 2022 2021 2020 Operating cash flows used for operating leases $ 27,097 $ 25,386 $ 21,381 Operating lease assets obtained in exchange for operating lease liabilities $ 2,245 $ 46,614 $ 23,853 |
Schedule of Weighted Average Remaining Lease Term and Discount Rate for Operating Leases | The weighted average remaining lease term and discount rate for the Company’s operating leases are as follows: As of December 31, 2022 As of December 31, 2021 Weighted average remaining lease term 6.2 years 7.1 years Weighted average discount rate 6.2 % 6.2 % |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Payments Under Noncancelable Purchase Commitments | As of December 31, 2022, the future minimum payments under the Company’s noncancelable purchase commitments were as follows (in thousands): Year Ending December 31, Purchase 2023 $ 11,240 2024 8,663 2025 1,862 2026 1,649 2027 972 Total future minimum payments $ 24,386 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Company's Tax Provision | The components of the Company’s income tax provision consisted of (in thousands): Year Ended December 31, 2022 2021 2020 Current: Federal $ — $ — $ — State 172 56 101 Total current tax expense 172 56 101 Deferred: Federal — — — State — — — Total deferred tax expense — — — Total provision for income taxes $ 172 $ 56 $ 101 |
Schedule of Reconciliation of Company's Effective Tax Rate To Statutory Federal Rate | The reconciliation of the Federal statutory income tax provision for the Company’s effective income tax provision (in thousands): Year Ended December 31, 2022 2021 2020 Tax at federal statutory rate $ (41,209) $ (49,480) $ (36,559) State taxes, net of federal effect (11,257) (13,704) (10,315) Stock-based compensation 419 (2,698) (6,261) Non-deductible items 524 3,661 402 Tax credits (563) — — Convertible Notes — 16,782 — Adoption of ASU 2020-06 (28,045) — — Valuation allowance 80,254 42,327 52,834 Other 49 3,168 — Provision for income taxes $ 172 $ 56 $ 101 |
Schedule of Components of Deferred Tax Assets and Liabilities | The Company’s deferred tax assets and liabilities (in thousands): December 31, 2022 2021 Deferred tax assets: Net operating loss carryforwards $ 219,872 $ 178,558 Fixed assets and intangibles 3,904 2,915 Capitalized research and development (1) 7,899 — Accruals and reserves 10,867 8,202 Stock options 2,474 5,007 Operating lease liabilities 39,143 43,345 Capped calls 15,082 15,095 Convertible debt 1,675 — Tax credits 1,416 — Gross deferred tax assets 302,332 253,122 Less: valuation allowance (265,796) (185,541) Total deferred tax assets 36,536 67,581 Deferred tax liabilities: Operating lease right-of-use assets (34,330) (39,021) Convertible debt — (26,477) Other (2,206) (2,083) Gross deferred tax liabilities (36,536) (67,581) Net deferred tax assets $ — $ — (1) Under the Tax Cuts and Jobs Act of 2017, research and development costs are no longer fully deductible and are required to be capitalized and amortized for U.S. tax purposes effective January 1, 2022. The mandatory capitalization requirement increases our gross deferred tax assets, which are fully offset by the valuation allowance. |
Net Loss Per Share Attributab_2
Net Loss Per Share Attributable to Common Stockholders (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of Reconciliation of Numerator and Denominator Used in Calculation of Basic and Diluted Net Loss Per Share | A reconciliation of the numerator and denominator used in the calculation of the basic and diluted net loss per share attributable to common stockholders is as follows (in thousands, except share and per share data): Year Ended December 31, 2022 2021 2020 Numerator Net loss attributable to common stockholders $ (196,445) $ (236,107) $ (175,832) Denominator Weighted-average common shares outstanding used to calculate net loss per share attributable to common stockholders, basic and diluted 95,921,246 91,409,624 87,587,409 Net loss per share attributable to common stockholders, basic and diluted $ (2.05) $ (2.58) $ (2.01) |
Schedule of Anti-dilutive Securities Excluded from Computation of Diluted Net Loss Per Share | The following securities were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented, because including them would have been anti-dilutive (on an as-converted basis): December 31, 2022 2021 2020 Options to purchase common stock 1,754,776 4,131,501 5,809,376 Restricted stock units 11,369,021 8,187,586 5,103,727 Estimated shares issuable under the Employee Stock Purchase Plan 695,782 147,871 109,729 Assumed conversion of the Convertible Senior Notes 18,746,323 18,746,323 9,705,454 Total 32,565,902 31,213,281 20,728,286 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Additional Information (Details) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 USD ($) segment | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | Jan. 01, 2022 USD ($) | |
Summary Of Significant Accounting Policies [Line Items] | ||||
Number of operating segment | segment | 1 | |||
Number of reportable segment | segment | 1 | |||
Advertising expense | $ 49,000 | $ 46,200 | $ 45,800 | |
Inventory write-down | 3,700 | 200 | ||
Rights to recover products from customers | 6,100 | 9,100 | ||
Accumulated deficit | (951,153) | (768,128) | ||
Additional paid-in capital | 781,060 | 841,255 | ||
Net deferred tax assets | 302,332 | 253,122 | ||
Valuation allowance | 265,796 | 185,541 | ||
Cumulative Effect, Period of Adoption, Adjustment | Accounting Standards Update 2020-06 | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Accumulated deficit | $ 13,400 | |||
Additional paid-in capital | (112,100) | |||
Long-term debt | 98,600 | |||
Net deferred tax assets | 27,700 | |||
Valuation allowance | $ 27,700 | |||
Other Accrued and Current Liabilities | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Inventory return reserves allowances | 22,200 | 23,600 | ||
Proprietary software | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Research and development expense | $ 15,600 | $ 12,700 | $ 9,000 | |
Property and equipment, useful life | 3 years |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Estimated Useful Lives of Assets (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Proprietary software | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 3 years |
Furniture and equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 3 years |
Furniture and equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 5 years |
Vehicles | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 5 years |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Statement of Operations (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Summary Of Significant Accounting Policies [Line Items] | |||
Total revenue | $ 603,493 | $ 467,692 | $ 299,949 |
Total cost of revenue | 254,802 | 194,215 | 112,382 |
Consignment revenue | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Total revenue | 384,979 | 302,221 | 213,312 |
Total cost of revenue | 56,963 | 44,985 | 30,389 |
Consignment revenue | As Computed Under Previous Method | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Total revenue | 346,848 | 247,326 | |
Total cost of revenue | 92,788 | 66,976 | |
Consignment revenue | Effect of Change | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Total revenue | (44,627) | (34,014) | |
Total cost of revenue | (47,803) | (36,587) | |
Consignment revenue | As Computed Under Previous Method | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Total revenue | 444,767 | ||
Total cost of revenue | 113,141 | ||
Consignment revenue | Effect of Change | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Total revenue | (59,788) | ||
Total cost of revenue | (56,178) | ||
Shipping services revenue | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Total revenue | 59,788 | 44,627 | 34,014 |
Total cost of revenue | 56,178 | 47,803 | 36,587 |
Shipping services revenue | As Computed Under Previous Method | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Total revenue | 0 | 0 | |
Total cost of revenue | 0 | 0 | |
Shipping services revenue | Effect of Change | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Total revenue | 44,627 | 34,014 | |
Total cost of revenue | $ 47,803 | $ 36,587 | |
Shipping services revenue | As Computed Under Previous Method | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Total revenue | 0 | ||
Total cost of revenue | 0 | ||
Shipping services revenue | Effect of Change | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Total revenue | 59,788 | ||
Total cost of revenue | $ 56,178 |
Cash and Cash Equivalents - Sum
Cash and Cash Equivalents - Summary of Estimated Value of Cash, Cash Equivalents and Short-term Investments (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Cash and Cash Equivalents [Line Items] | ||
Cash and cash equivalents, amortized cost | $ 293,793 | $ 418,171 |
Cash and cash equivalents, fair value | 293,793 | 418,171 |
Cash | ||
Cash and Cash Equivalents [Line Items] | ||
Cash and cash equivalents, amortized cost | 275,742 | 278,769 |
Cash and cash equivalents, fair value | 275,742 | 278,769 |
Money market funds | ||
Cash and Cash Equivalents [Line Items] | ||
Cash and cash equivalents, amortized cost | 18,051 | 139,402 |
Cash and cash equivalents, fair value | $ 18,051 | $ 139,402 |
Fair Value Measurement - Additi
Fair Value Measurement - Additional Information (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 | Mar. 31, 2021 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Cash and cash equivalents, fair value | $ 293,793,000 | $ 418,171,000 | |
Principal | $ 287,500,000 | ||
Money market funds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Cash and cash equivalents, fair value | 18,051,000 | $ 139,402,000 | |
2025 Convertible senior notes | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Principal | 172,500,000 | ||
2028 Convertible senior notes | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Principal | $ 287,500,000 |
Fair Value Measurement- Carryin
Fair Value Measurement- Carrying Values and Estimated Fair Values of Debt Instruments (Details) $ in Millions | Dec. 31, 2022 USD ($) |
2025 Convertible senior notes | Net Carrying Amount | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Convertible notes payable | $ 169.3 |
2025 Convertible senior notes | Estimated Fair Value | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Notes payable, fair value disclosure | 146.9 |
2028 Convertible senior notes | Net Carrying Amount | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Convertible notes payable | 280.6 |
2028 Convertible senior notes | Estimated Fair Value | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Notes payable, fair value disclosure | $ 210.2 |
Balance Sheet Components - Sche
Balance Sheet Components - Schedule of Property and Equipment, Net (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 175,814 | $ 139,634 |
Less: accumulated depreciation and amortization | (63,135) | (50,348) |
Property and equipment, net | 112,679 | 89,286 |
Proprietary software | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 39,017 | 31,799 |
Furniture and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 47,692 | 40,176 |
Automobiles | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 2,119 | 1,505 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 86,986 | $ 66,154 |
Balance Sheet Components - Addi
Balance Sheet Components - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |||
Depreciation and amortization expense on property and equipment | $ 26.9 | $ 23.5 | $ 18.8 |
Balance Sheet Components - Sc_2
Balance Sheet Components - Schedule of Other Accrued and Current Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Payables and Accruals [Abstract] | ||
Returns reserve | $ 22,233 | $ 23,577 |
Accrued compensation | 15,111 | 14,258 |
Accrued legal | 484 | 14,417 |
Accrued sales tax and other taxes | 8,531 | 8,935 |
Site credit liability | 11,813 | 8,738 |
Accrued marketing and outside services | 8,729 | 7,897 |
Accrued shipping | 5,715 | 2,006 |
Accrued interest | 1,166 | 1,166 |
Deferred revenue | 3,549 | 3,387 |
Accrued inventory | 0 | 3,513 |
Accrued property and equipment | 11,417 | 1,427 |
Other | 4,544 | 4,867 |
Other accrued and current liabilities | $ 93,292 | $ 94,188 |
Debt - Additional Information (
Debt - Additional Information (Details) - Revolving Credit Facility - USD ($) | 1 Months Ended | |
Apr. 30, 2021 | Dec. 31, 2022 | |
Debt Disclosure [Line Items] | ||
Maximum borrowing capacity | $ 50,000,000 | |
Debt instrument, variable annual rate | 0.50% | |
Interest rate, stated percentage | 4.25% | |
Line of credit | $ 0 |
Convertible Senior Notes, Net -
Convertible Senior Notes, Net - 2025 Convertible Senior Notes (Details) | 1 Months Ended | 12 Months Ended | |||
Jun. 30, 2020 USD ($) $ / shares | Dec. 31, 2022 USD ($) d | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | Mar. 31, 2021 USD ($) | |
Debt Disclosure [Line Items] | |||||
Principal | $ 287,500,000 | ||||
Purchase of capped call transactions | $ 33,666,000 | $ 22,546,000 | |||
Equity component of convertible senior notes, net of issuance costs | 93,031,000 | 19,020,000 | |||
2025 Convertible senior notes | |||||
Debt Disclosure [Line Items] | |||||
Principal | $ 172,500,000 | $ 172,500,000 | |||
Notes interest rate | 3% | ||||
Proceeds from issuance of convertible senior notes, net of issuance costs | $ 165,800,000 | $ 0 | $ 0 | $ 166,278,000 | |
Purchase of capped call transactions | $ 22,500,000 | ||||
Initial conversion rate | 5.62635% | ||||
Initial conversion price (in dollars per share) | $ / shares | $ 17.77 | ||||
Notes, threshold percentage of stock price trigger | 130% | ||||
Notes, threshold trading days | d | 20 | ||||
Notes, threshold consecutive trading days | d | 30 | ||||
Percentage on aggregate principal amount of notes to be payable upon the event of default | 25% | ||||
Interest rate used to compute initial fair value of liability | 5.67% | ||||
Fair value of liability | $ 152,700,000 | ||||
Discount on initial issuance | 19,800,000 | ||||
Debt offering costs | 6,700,000 | ||||
Equity component of convertible senior notes, net of issuance costs | 800,000 | ||||
Unamortized issuance costs | $ 5,900,000 | ||||
Amortization period | 5 years | 5 years | |||
Variable annual interest rate | 6.40% | ||||
Effective interest rate (percent) | 3.74% | ||||
2025 Convertible senior notes | Conversion Option One | |||||
Debt Disclosure [Line Items] | |||||
Notes, threshold percentage of stock price trigger | 130% | ||||
Notes, threshold trading days | d | 20 | ||||
Notes, threshold consecutive trading days | d | 30 | ||||
2025 Convertible senior notes | Conversion Option Two | |||||
Debt Disclosure [Line Items] | |||||
Notes, threshold percentage of stock price trigger | 98% | ||||
Notes, threshold trading days | d | 5 | ||||
Notes, threshold consecutive trading days | d | 5 | ||||
2025 Convertible senior notes | Initial Purchasers | |||||
Debt Disclosure [Line Items] | |||||
Principal | $ 22,500,000 | ||||
2025 Convertible Senior Notes, Liability Component | |||||
Debt Disclosure [Line Items] | |||||
Principal | $ 172,500,000 | $ 172,500,000 | |||
Discount on initial issuance | 0 | 14,350,000 | |||
Unamortized issuance costs | 3,204,000 | 4,286,000 | |||
Long-term debt | $ 169,296,000 | $ 153,864,000 |
Convertible Senior Notes, Net_2
Convertible Senior Notes, Net - Schedule of Net Carrying Amount of Liability Component of Notes (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 | Mar. 31, 2021 |
Debt Disclosure [Line Items] | |||
Principal | $ 287,500,000 | ||
2025 Convertible Senior Notes, Liability Component | |||
Debt Disclosure [Line Items] | |||
Principal | $ 172,500,000 | $ 172,500,000 | |
Unamortized debt discount | 0 | (14,350,000) | |
Unamortized debt issuance costs | (3,204,000) | (4,286,000) | |
Net carrying amount | 169,296,000 | 153,864,000 | |
2028 Convertible Senior Notes, Liability Component | |||
Debt Disclosure [Line Items] | |||
Principal | 287,500,000 | 287,500,000 | |
Unamortized debt discount | 0 | (87,403,000) | |
Unamortized debt issuance costs | (6,948,000) | (5,581,000) | |
Net carrying amount | $ 280,552,000 | $ 194,516,000 |
Convertible Senior Notes, Net_3
Convertible Senior Notes, Net - Schedule of Net Carrying Amount of Equity Component of Notes (Details) $ in Thousands | Dec. 31, 2021 USD ($) |
2025 Convertible Senior Notes, Equity Component | |
Debt Disclosure [Line Items] | |
Proceeds allocated to the conversion options (debt discount) | $ 19,787 |
Issuance costs | (767) |
Net carrying amount | 19,020 |
2028 Convertible Senior Notes, Equity Component | |
Debt Disclosure [Line Items] | |
Proceeds allocated to the conversion options (debt discount) | 96,162 |
Issuance costs | (3,131) |
Net carrying amount | $ 93,031 |
Convertible Senior Notes, Net_4
Convertible Senior Notes, Net - Amounts Recorded in Interest Expense Related to Notes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
2025 Convertible senior notes | |||
Debt Instrument [Line Items] | |||
Contractual interest expense | $ 5,175 | $ 5,175 | $ 2,803 |
Amortization of debt discount | 0 | 3,594 | 1,843 |
Amortization of debt issuance costs | 1,080 | 1,082 | 556 |
Total interest and amortization expense | 6,255 | 9,851 | $ 5,202 |
2028 Convertible senior notes | |||
Debt Instrument [Line Items] | |||
Contractual interest expense | 2,875 | 2,332 | |
Amortization of debt discount | 0 | 8,759 | |
Amortization of debt issuance costs | 1,288 | 554 | |
Total interest and amortization expense | $ 4,163 | $ 11,645 |
Convertible Senior Notes, Net_5
Convertible Senior Notes, Net - Schedule of Future Minimum Payments Under Notes (Details) - USD ($) | Dec. 31, 2022 | Mar. 31, 2021 | Jun. 30, 2020 |
Debt Instrument [Line Items] | |||
Total principal amount | $ 287,500,000 | ||
2025 Convertible senior notes | |||
Debt Instrument [Line Items] | |||
2023 | $ 5,175,000 | ||
2024 | 5,175,000 | ||
2025 | 175,088,000 | ||
Total future payments | 185,438,000 | ||
Less amounts representing interest | (12,938,000) | ||
Total principal amount | 172,500,000 | $ 172,500,000 | |
2028 Convertible senior notes | |||
Debt Instrument [Line Items] | |||
2023 | 2,875,000 | ||
2024 | 2,875,000 | ||
2025 | 2,875,000 | ||
2026 | 2,875,000 | ||
2027 | 2,875,000 | ||
2028 | 288,937,000 | ||
Total future payments | 303,312,000 | ||
Less amounts representing interest | (15,812,000) | ||
Total principal amount | $ 287,500,000 |
Convertible Senior Notes, Net_6
Convertible Senior Notes, Net - 2028 Convertible Senior Notes (Details) | 1 Months Ended | 12 Months Ended | ||
Mar. 31, 2021 USD ($) $ / shares | Dec. 31, 2022 USD ($) d | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Debt Disclosure [Line Items] | ||||
Principal | $ 287,500,000 | |||
Purchase of capped call transactions | $ 33,666,000 | $ 22,546,000 | ||
Equity component of convertible senior notes, net of issuance costs | 93,031,000 | 19,020,000 | ||
2028 Convertible senior notes | ||||
Debt Disclosure [Line Items] | ||||
Principal | $ 287,500,000 | |||
Notes interest rate | 1% | |||
Proceeds from issuance of convertible senior notes, net of issuance costs | $ 278,100,000 | $ 0 | $ 278,234,000 | $ 0 |
Purchase of capped call transactions | $ 33,700,000 | |||
Initial conversion rate | 3.14465% | |||
Initial conversion price (in dollars per share) | $ / shares | $ 31.80 | |||
Notes, threshold percentage of stock price trigger | 130% | |||
Notes, threshold trading days | d | 20 | |||
Notes, threshold consecutive trading days | d | 30 | |||
Percentage on aggregate principal amount of notes to be payable upon the event of default | 25% | |||
Interest rate used to compute initial fair value of liability | 7.18% | |||
Fair value of liability | $ 191,300,000 | |||
Discount on initial issuance | 96,200,000 | |||
Debt offering costs | 9,400,000 | |||
Equity component of convertible senior notes, net of issuance costs | 3,100,000 | |||
Unamortized issuance costs | $ 6,300,000 | |||
Effective interest rate (percent) | 7.50% | |||
Amortization period | 7 years | |||
2028 Convertible senior notes | Conversion Option One | ||||
Debt Disclosure [Line Items] | ||||
Notes, threshold percentage of stock price trigger | 130% | |||
Notes, threshold trading days | d | 20 | |||
Notes, threshold consecutive trading days | d | 30 | |||
2028 Convertible senior notes | Conversion Option Two | ||||
Debt Disclosure [Line Items] | ||||
Notes, threshold percentage of stock price trigger | 98% | |||
Notes, threshold trading days | d | 5 | |||
Notes, threshold consecutive trading days | d | 5 | |||
2028 Convertible senior notes | Initial Purchasers | ||||
Debt Disclosure [Line Items] | ||||
Principal | $ 37,500,000 | |||
2028 Convertible Senior Notes, Liability Component | ||||
Debt Disclosure [Line Items] | ||||
Principal | $ 287,500,000 | $ 287,500,000 | ||
Discount on initial issuance | 0 | 87,403,000 | ||
Unamortized issuance costs | 6,948,000 | 5,581,000 | ||
Long-term debt | $ 280,552,000 | $ 194,516,000 | ||
2028 Convertible Senior Notes Issuance Costs | ||||
Debt Disclosure [Line Items] | ||||
Effective interest rate (percent) | 1.45% | |||
Amortization period | 7 years |
Convertible Senior Notes, Net_7
Convertible Senior Notes, Net - Capped Call Transactions with Respect to the 2025 and 2028 Notes (Details) - Purchased Calls - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | ||||
Mar. 31, 2021 | Jun. 30, 2020 | Dec. 31, 2022 | Mar. 03, 2021 | Jun. 10, 2020 | |
2025 Convertible senior notes | |||||
Debt Disclosure [Line Items] | |||||
Payment to counterparties for purchased calls | $ 22.5 | ||||
Common stock subject to adjustment and exercisable upon conversion of initial notes (in shares) | 9,705,454 | ||||
Capped call, initial strike price (in dollars per share) | $ 27.88 | ||||
Capped call, premium over closing stock price | 100% | ||||
Closing price of common stock per share (in dollars per share) | $ 13.94 | ||||
Reduction to additional paid premium payments for capped call transactions | $ 22.5 | ||||
2028 Convertible senior notes | |||||
Debt Disclosure [Line Items] | |||||
Payment to counterparties for purchased calls | $ 33.7 | ||||
Common stock subject to adjustment and exercisable upon conversion of initial notes (in shares) | 9,040,869 | ||||
Capped call, initial strike price (in dollars per share) | $ 48 | ||||
Capped call, premium over closing stock price | 100% | ||||
Closing price of common stock per share (in dollars per share) | $ 24 | ||||
Reduction to additional paid premium payments for capped call transactions | $ 33.7 |
Common Stock - Schedule of Rese
Common Stock - Schedule of Reserved Shares of Common Stock for Issuance on Converted Basis (Details) - shares | Dec. 31, 2022 | Dec. 31, 2021 |
Class of Stock [Line Items] | ||
Common stock reserved for future issuance (in shares) | 21,689,051 | 22,234,811 |
2019 Equity Incentive Plan | ||
Class of Stock [Line Items] | ||
Common stock reserved for future issuance (in shares) | 5,035,545 | 6,709,676 |
2019 Employee Stock Purchase Plan | ||
Class of Stock [Line Items] | ||
Common stock reserved for future issuance (in shares) | 3,529,709 | 3,210,985 |
Outstanding Restricted Stock Units | ||
Class of Stock [Line Items] | ||
Common stock reserved for future issuance (in shares) | 11,369,021 | 8,182,649 |
Options Issued and Outstanding | ||
Class of Stock [Line Items] | ||
Common stock reserved for future issuance (in shares) | 1,754,776 | 4,131,501 |
Share-based Compensation Plan_2
Share-based Compensation Plans - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 12 Months Ended | |||||||
Feb. 28, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2011 | Feb. 23, 2022 | May 05, 2021 | Aug. 04, 2020 | Dec. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Granted (in shares) | 0 | 0 | |||||||
Aggregate intrinsic value of options exercised | $ 5,300 | $ 20,500 | $ 32,200 | ||||||
Share-based payment arrangement, expense | 46,138 | 48,802 | 24,322 | ||||||
Unrecognized compensation costs | $ 400 | ||||||||
Weighted average period expect to recognized | 4 months 24 days | ||||||||
Stock-based compensation capitalized to proprietary software development costs | $ 1,629 | $ 1,444 | $ 0 | ||||||
Chief Executive Officer | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Share-based payment arrangement, expense | $ 1,000 | ||||||||
Estimated shares issuable under the Employee Stock Purchase Plan | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Number of authorized (in shares) | 1,750,000 | ||||||||
Options granted as percentage on fair value of stock | 85% | ||||||||
Annual increase in available number of authorized (in shares) | 1,750,000 | ||||||||
Annual increase in number of shares, percentage of shares of outstanding common stock | 1% | ||||||||
Increase in available for grant (in shares) | 929,601 | 893,016 | 858,723 | ||||||
Number of purchased (in shares) | 610,877 | 199,289 | |||||||
Average price of purchased (in dollars per share) | $ 2.29 | $ 11.74 | |||||||
Unrecognized compensation costs | $ 400 | ||||||||
Weighted average period expect to recognized | 4 months 24 days | ||||||||
2011 Plan | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Vesting period | 4 years | ||||||||
Percentage of maximum incentive stock options granted to stockholders | 10% | ||||||||
2011 Plan | Maximum | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Options exercisable period | 10 years | ||||||||
2019 Equity Incentive Plan | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Number of authorized (in shares) | 8,000,000 | ||||||||
Annual increase in available number of authorized (in shares) | 8,000,000 | ||||||||
Annual increase in number of shares, percentage of shares of outstanding common stock | 5% | ||||||||
Increase in available for grant (in shares) | 4,648,003 | 4,465,083 | 4,293,616 | ||||||
Granted (in shares) | 0 | ||||||||
Incentive and Non-statutory Stock Options | 2011 Plan | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Number of authorized (in shares) | 12,987,255 | ||||||||
Incentive and Non-statutory Stock Options | 2011 Plan | Minimum | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Options granted as percentage on fair value of stock | 100% | ||||||||
Incentive Stock Options | 2011 Plan | Minimum | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Options granted as percentage on fair value of stock | 110% | ||||||||
Performance Shares | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Vesting period | 3 years | ||||||||
Share-based payment arrangement, expense | $ 100 | ||||||||
Performance Shares | Minimum | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Performance target, percentage | 0% | ||||||||
Performance Shares | Maximum | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Performance target, percentage | 150% | ||||||||
Outstanding Restricted Stock Units | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Vested in period, fair value | 14,500 | ||||||||
RSUs and PSUs | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Unrecognized compensation costs | $ 82,900 | ||||||||
Weighted average period expect to recognized | 2 years 8 months 12 days |
Share-based Compensation Plan_3
Share-based Compensation Plans - Schedule of Stock Option Plan Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Number of Options | ||
Granted (in shares) | 0 | 0 |
2019 Equity Incentive Plan | ||
Number of Options | ||
Number of options , beginning balance (in shares) | 4,131,501 | |
Granted (in shares) | 0 | |
Exercised (in shares) | (1,929,265) | |
Cancelled (in shares) | (447,460) | |
Number of options, ending balance (in shares) | 1,754,776 | 4,131,501 |
Options vested and exercisable (in shares) | 1,709,130 | |
Weighted- Average Exercise Price Per Share | ||
Beginning balance (in dollars per share) | $ 5.19 | |
Granted (in dollars per share) | 0 | |
Exercised (in dollars per share) | 1.50 | |
Cancelled (in dollars per share) | 9.29 | |
Ending balance (in dollars per share) | 8.21 | $ 5.19 |
Options vested and exercisable (in dollars per share) | $ 8.01 | |
Weighted- Average Remaining Contractual Life (years) | ||
Weighted average remaining contractual term (in years) | 4 years | 4 years 3 months 18 days |
Options vested and exercisable (in years) | 3 years 10 months 24 days | |
Aggregate intrinsic value, beginning balance | $ 30,382 | |
Aggregate intrinsic value, ending balance | 1 | $ 30,382 |
Options vested and exercisable | $ 1 |
Share-based Compensation Plan_4
Share-based Compensation Plans - Schedule of RSUs Activity (Details) $ / shares in Units, $ in Thousands | 12 Months Ended |
Dec. 31, 2022 USD ($) $ / shares shares | |
Restricted stock units | |
Number of Shares | |
Unvested, beginning balance (in shares) | shares | 8,182,649 |
Granted (in shares) | shares | 11,032,022 |
Vested (in shares) | shares | (3,719,829) |
Forfeited (in shares) | shares | (4,125,821) |
Unvested, ending balance (in shares) | shares | 11,369,021 |
Restricted Stock Units Weighted- Average Grant Date Fair Value | |
Weighted-average grant date fair value (in dollars per share) | $ / shares | $ 16.42 |
Granted (in dollars per share) | $ / shares | 5.42 |
Vested (in dollars per share) | $ / shares | 14.07 |
Forfeited (in dollars per share) | $ / shares | 11.21 |
Weighted-average grant date fair value (in dollars per share) | $ / shares | $ 8.39 |
Aggregate intrinsic value, unvested, beginning balance | $ | $ 94,972 |
Aggregate intrinsic value, unvested, Ending balance | $ | 14,178 |
Vested in period, fair value | $ | $ 14,500 |
Phantom Share Units (PSUs) | |
Number of Shares | |
Granted (in shares) | shares | 544,000 |
Forfeited (in shares) | shares | (268,000) |
Restricted Stock Units Weighted- Average Grant Date Fair Value | |
Granted (in dollars per share) | $ / shares | $ 7.70 |
Forfeited (in dollars per share) | $ / shares | $ 7.28 |
Share-based Compensation Plan_5
Share-based Compensation Plans - Schedule of Assumptions to Estimate Fair Value of Stock Options (Details) | 12 Months Ended |
Dec. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected volatility, minimum | 44.20% |
Expected volatility, maximum | 47.80% |
Average risk-free rate, minimum | 1.90% |
Average risk-free rate, maximum | 2.60% |
Dividend yield | 0% |
Minimum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected term (in years) | 5 years |
Maximum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected term (in years) | 6 years 1 month 6 days |
Share-based Compensation Plan_6
Share-based Compensation Plans - Schedule of Total Stock-based Compensation Expense, Excluding Compensation Expense Related to Stock Sales, by Function (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based payment arrangement, expense | $ 46,138 | $ 48,802 | $ 24,322 |
Marketing | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based payment arrangement, expense | 2,209 | 2,557 | 1,755 |
Operations and technology | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based payment arrangement, expense | 19,822 | 21,395 | 10,241 |
Selling, general and administrative | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based payment arrangement, expense | $ 24,107 | $ 24,850 | $ 12,326 |
Leases - Additional Information
Leases - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Leases [Line Items] | ||
Operating lease costs | $ 29 | $ 29.7 |
Variable lease costs | $ 5.6 | $ 5.3 |
Minimum | ||
Leases [Line Items] | ||
Operating lease term | 1 year | |
Maximum | ||
Leases [Line Items] | ||
Operating lease term | 15 years |
Leases - Schedule of Maturities
Leases - Schedule of Maturities of Operating Lease Liabilities (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Leases [Abstract] | |
2023 | $ 29,020 |
2024 | 28,800 |
2025 | 29,345 |
2026 | 28,463 |
2027 | 21,410 |
Thereafter | 38,034 |
Total future minimum payments | 175,072 |
Less: Imputed interest | (29,178) |
Present value of operating lease liabilities | $ 145,894 |
Leases - Schedule of Supplement
Leases - Schedule of Supplemental Cash Flow Information Related to Operating Leases (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Leases [Abstract] | |||
Operating cash flows used for operating leases | $ 27,097 | $ 25,386 | $ 21,381 |
Operating lease assets obtained in exchange for operating lease liabilities | $ 2,245 | $ 46,614 | $ 23,853 |
Leases - Schedule of Weighted A
Leases - Schedule of Weighted Average Remaining Lease Term and Discount Rate For Operating Leases (Details) | Dec. 31, 2022 | Dec. 31, 2021 |
Leases [Abstract] | ||
Weighted average remaining lease term | 6 years 2 months 12 days | 7 years 1 month 6 days |
Weighted average discount rate | 6.20% | 6.20% |
Commitments and Contingencies -
Commitments and Contingencies - Schedule of Future Minimum Payments Under Noncancelable Purchase Commitments (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2023 | $ 11,240 |
2024 | 8,663 |
2025 | 1,862 |
2026 | 1,649 |
2027 | 972 |
Total future minimum payments | $ 24,386 |
Commitments and Contingencies_2
Commitments and Contingencies - Additional Information (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 4 Months Ended | 12 Months Ended | ||||||
Oct. 31, 2022 plaintiff | Jul. 28, 2022 USD ($) plaintiff | Nov. 05, 2021 | Oct. 21, 2021 USD ($) | Jan. 07, 2022 USD ($) | Dec. 07, 2020 lawsuit | Jan. 10, 2020 lawsuit | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Other Commitments [Line Items] | ||||||||||
Legal settlements | $ 456 | $ 13,389 | $ 1,110 | |||||||
Class action complaints filed in San Mateo County, California | ||||||||||
Other Commitments [Line Items] | ||||||||||
Number of lawsuits filed | lawsuit | 3 | |||||||||
Litigation settlement, amount awarded to other party | $ 11,000 | |||||||||
Payment period for amount awarded to other party | 30 days | |||||||||
Legal settlements | 11,000 | |||||||||
Number of plaintiffs that opted out | plaintiff | 1 | |||||||||
Number of plaintiffs that opted out or purchased stock | plaintiff | 2 | |||||||||
Derivative actions filed in the US District Court, Delaware | ||||||||||
Other Commitments [Line Items] | ||||||||||
Litigation settlement, amount awarded to other party | $ 500 | |||||||||
Payment period for amount awarded to other party | 30 days | |||||||||
Legal settlements | $ 500 | |||||||||
Number of lawsuits consolidated | lawsuit | 2 | |||||||||
Payments for legal settlements | $ 500 |
Income Taxes - Components of Co
Income Taxes - Components of Company's Tax Provision (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Current: | |||
Federal | $ 0 | $ 0 | $ 0 |
State | 172 | 56 | 101 |
Total current tax expense | 172 | 56 | 101 |
Deferred: | |||
Federal | 0 | 0 | 0 |
State | 0 | 0 | 0 |
Total deferred tax expense | 0 | 0 | 0 |
Total provision for income taxes | $ 172 | $ 56 | $ 101 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Company's Effective Tax Rate To Statutory Federal Rate (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |||
Tax at federal statutory rate | $ (41,209) | $ (49,480) | $ (36,559) |
State taxes, net of federal effect | (11,257) | (13,704) | (10,315) |
Stock-based compensation | 419 | (2,698) | (6,261) |
Non-deductible items | 524 | 3,661 | 402 |
Tax credits | (563) | 0 | 0 |
Convertible Notes | 0 | 16,782 | 0 |
Adoption of ASU 2020-06 | (28,045) | 0 | 0 |
Valuation allowance | 80,254 | 42,327 | 52,834 |
Other | 49 | 3,168 | 0 |
Total provision for income taxes | $ 172 | $ 56 | $ 101 |
Income Taxes - Components of De
Income Taxes - Components of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred tax assets: | ||
Net operating loss carryforwards | $ 219,872 | $ 178,558 |
Fixed assets and intangibles | 3,904 | 2,915 |
Capitalized research and development | 7,899 | 0 |
Accruals and reserves | 10,867 | 8,202 |
Stock options | 2,474 | 5,007 |
Operating lease liabilities | 39,143 | 43,345 |
Capped calls | 15,082 | 15,095 |
Convertible debt | 1,675 | 0 |
Tax credits | 1,416 | 0 |
Gross deferred tax assets | 302,332 | 253,122 |
Less: valuation allowance | (265,796) | (185,541) |
Total deferred tax assets | 36,536 | 67,581 |
Deferred tax liabilities: | ||
Operating lease right-of-use assets | (34,330) | (39,021) |
Convertible debt | 0 | (26,477) |
Other | (2,206) | (2,083) |
Gross deferred tax liabilities | (36,536) | (67,581) |
Net deferred tax assets | $ 0 | $ 0 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2019 | |
Operating Loss Carryforwards [Line Items] | |||
Change in valuation allowance | $ 80.3 | $ 42.3 | |
Unrecognized tax benefits | 1.5 | ||
Federal Tax | |||
Operating Loss Carryforwards [Line Items] | |||
Operating loss carryforward | 827.6 | 609.7 | |
Net operating losses, subject to expiration | 168.2 | ||
Net operating losses, not subject to expiration | 659.4 | ||
Tax credit carryforward | 2 | ||
Net operating loss not available to offset future taxable income | $ 3.3 | ||
State Tax | |||
Operating Loss Carryforwards [Line Items] | |||
Operating loss carryforward | 770 | $ 674.9 | |
Tax credit carryforward | $ 1 | ||
Net operating loss not available to offset future taxable income | $ 2.1 |
Net Loss Per Share Attributab_3
Net Loss Per Share Attributable to Common Stockholders - Schedule of Reconciliation of Numerator and Denominator Used in Calculation of Basic and Diluted Net Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Numerator | |||
Net loss attributable to common stockholders | $ (196,445) | $ (236,107) | $ (175,832) |
Denominator | |||
Weighted-average common shares outstanding used to calculate net loss per share attributable to common stockholders, basic (in shares) | 95,921,246 | 91,409,624 | 87,587,409 |
Weighted-average common shares outstanding used to calculate net loss per share attributable to common stockholders, diluted (in shares) | 95,921,246 | 91,409,624 | 87,587,409 |
Net loss per share attributable to common stockholders, basic (in dollars per share) | $ (2.05) | $ (2.58) | $ (2.01) |
Net loss per share attributable to common stockholders, diluted (in dollars per share) | $ (2.05) | $ (2.58) | $ (2.01) |
Net Loss Per Share Attributab_4
Net Loss Per Share Attributable to Common Stockholders - Schedule of Anti-dilutive Securities Excluded from Computation of Diluted Net Loss Per Share (Details) - shares | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive securities (in shares) | 32,565,902 | 31,213,281 | 20,728,286 |
Options to purchase common stock | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive securities (in shares) | 1,754,776 | 4,131,501 | 5,809,376 |
Restricted stock units | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive securities (in shares) | 11,369,021 | 8,187,586 | 5,103,727 |
Estimated shares issuable under the Employee Stock Purchase Plan | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive securities (in shares) | 695,782 | 147,871 | 109,729 |
Assumed conversion of the Convertible Senior Notes | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive securities (in shares) | 18,746,323 | 18,746,323 | 9,705,454 |
Retirement Plan - Additional In
Retirement Plan - Additional Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Defined Contribution Plan Disclosure [Line Items] | |||
Percentage of employee vested contributions | 25% | ||
Defined contribution plan | $ 1,600 | $ 1,100 | $ 800 |
Maximum | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Employer discretionary contribution amount | $ 1 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ in Thousands | 1 Months Ended | ||||
Jan. 24, 2023 | Feb. 28, 2022 | Feb. 28, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Subsequent Event [Line Items] | |||||
Property and equipment, net | $ 112,679 | $ 89,286 | |||
Performance Shares | |||||
Subsequent Event [Line Items] | |||||
Vesting period | 3 years | ||||
Subsequent Event | Employee Severance | Minimum | |||||
Subsequent Event [Line Items] | |||||
Restructuring and related cost | $ 1,700 | ||||
Subsequent Event | Employee Severance | Maximum | |||||
Subsequent Event [Line Items] | |||||
Restructuring and related cost | 2,200 | ||||
Subsequent Event | Facility Closing | |||||
Subsequent Event [Line Items] | |||||
Property and equipment, net | $ 41,600 | ||||
Subsequent Event | Chief Executive Officer | Bonus | |||||
Subsequent Event [Line Items] | |||||
Annual base salary | $ 700 | ||||
CEO's sign on bonus | $ 300 | ||||
Portion of options vesting on anniversary date, vesting percentage (as a percent) | 100% | ||||
Subsequent Event | Chief Executive Officer | Time-Based Restricted Stock Units | Time-based RSUs | |||||
Subsequent Event [Line Items] | |||||
Portion of options vesting on anniversary date, vesting percentage (as a percent) | 25% | ||||
Granted (in shares) | 1,250,000 | ||||
Subsequent Event | Chief Executive Officer | Performance Shares | PSUs | |||||
Subsequent Event [Line Items] | |||||
Granted (in shares) | 1,500,000 | ||||
Vesting period | 5 years |