0001573221-22-000115 | 10-Q | XBRL Viewer

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Share-based Compensation Plans - Additional Information (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended		9 Months Ended		12 Months Ended
	Feb. 28, 2022	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	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]
Share-based payment arrangement, expense		$ 10,841	$ 12,592	$ 37,020	$ 36,324
Stock-based compensation capitalized to proprietary software development costs		400	400	1,289	1,121
Selling, general and administrative
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based payment arrangement, expense		$ 5,236	$ 6,421	$ 19,343	$ 18,611
Estimated shares issuable under the Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized (in shares)		1,750,000		1,750,000
Options granted as percentage on fair value of stock				85.00%
Annual increase in number of shares, percentage of shares of outstanding common stock		1.00%		1.00%
Increase in shares available for grant (in shares)							929,601	893,016	858,723
Unrecognized compensation costs		$ 100		$ 100
Weighted average period expect to recognized				1 month 13 days
Number of shares purchased (in shares)		0	0	282,226	98,355
Maximum \| Estimated shares issuable under the Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Annual increase in available number of authorized shares (in shares)		1,750,000		1,750,000
PSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	3 years
Unrecognized compensation costs		$ 97,700		$ 97,700
Weighted average period expect to recognized				2 years 10 months 24 days
PSUs \| Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance target, percentage	0.00%
PSUs \| Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance target, percentage	150.00%
Options to purchase common stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation costs		$ 800		$ 800
Weighted average period expect to recognized				7 months 6 days
Founder and CEO \| Selling, general and administrative
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based payment arrangement, expense				$ 1,000
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						10.00%
2011 Plan \| Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options exercisable period						10 years
2011 Plan \| Incentive and Non-statutory Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized (in shares)						12,987,255
2011 Plan \| Incentive and Non-statutory Stock Options \| Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted as percentage on fair value of stock						100.00%
2011 Plan \| Incentive Stock Options \| Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted as percentage on fair value of stock						110.00%
2019 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Annual increase in available number of authorized shares (in shares)										8,000,000
Annual increase in number of shares, percentage of shares of outstanding common stock										5.00%
Increase in shares available for grant (in shares)							4,648,003	4,465,083	4,293,616
2019 Plan \| Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized (in shares)										8,000,000

Leases - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Leases [Line Items]
Operating lease costs	$ 7.2	$ 7.5	$ 21.7	$ 22.4
Variable lease costs	$ 1.5	$ 1.3	$ 4.3	$ 4.0
Minimum
Leases [Line Items]
Operating lease term	1 year		1 year
Maximum
Leases [Line Items]
Operating lease term	15 years		15 years

Commitments and Contingencies - Additional Information (Details) $ in Thousands				1 Months Ended	3 Months Ended			4 Months Ended		9 Months Ended		12 Months Ended	28 Months Ended
	Mar. 24, 2022 USD ($)	Nov. 05, 2021	Oct. 21, 2021 USD ($)	Jan. 07, 2022 USD ($)	Sep. 30, 2022 USD ($)	Sep. 30, 2021 USD ($)	Dec. 07, 2020 lawsuit	Jul. 28, 2022 plaintiff	Jan. 10, 2020 lawsuit	Sep. 30, 2022 USD ($)	Sep. 30, 2021 USD ($)	Dec. 31, 2021 USD ($)	Mar. 09, 2022 plaintiff
Other Commitments [Line Items]
Purchase commitment agreement period					2 years
Purchase commitment					$ 10,400
Number of lawsuits filed \| lawsuit									3
Legal settlement					$ 152	$ 500				$ 456	$ 11,788
Class Actions Complaint Filed In San Mateo County, California
Other Commitments [Line Items]
Litigation settlement, amount awarded to other party	$ 11,000
Payment period for amount awarded to other party	30 days
Legal settlement												$ 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
Number of lawsuits consolidated \| lawsuit							2
Derivative Actions Filed In The US District Court, Delaware \| Operating Expense
Other Commitments [Line Items]
Legal settlement												$ 500
Payments for legal settlements				$ 500

Convertible Senior Notes, Net - Schedule of Future Minimum Payments Under Notes (Details) $ in Thousands	Sep. 30, 2022 USD ($)
2025 Convertible senior notes
Debt Disclosure [Line Items]
Remainder of 2022	$ 2,587
2023	5,175
2024	5,175
2025	175,088
Total future payments	188,025
Less amounts representing interest	(15,525)
Net carrying amount	172,500
2028 Convertible senior notes
Debt Disclosure [Line Items]
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)
Net carrying amount	$ 287,500

Leases - Schedule of Supplemental Cash Flow Information Related to Operating Leases (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Leases [Abstract]
Operating cash flows used for operating leases	$ 20,138	$ 22,399
Operating lease assets obtained in exchange for operating lease liabilities	$ 2,156	$ 43,481

Net Loss Per Share Attributable to Common Stockholders (Tables)

9 Months Ended

Sep. 30, 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):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Numerator
Net loss attributable to common stockholders	$	(47,258)	$	(57,196)	$	(157,835)	$	(183,912)
Denominator
Weighted-average common shares outstanding used to calculate net loss per share attributable to common stockholders, basic and diluted	96,696,417		91,859,603		95,036,618		90,995,285
Net loss per share attributable to common stockholders, basic and diluted	$	(0.49)	$	(0.62)	$	(1.66)	$	(2.02)

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):


	September 30,
	2022	2021
Options to purchase common stock	1,862,110	4,294,593
Restricted stock units	12,429,858	6,135,786
Estimated shares issuable under the Employee Stock Purchase Plan	478,406	130,945
Assumed conversion of the Convertible Senior Notes	18,746,323	18,746,323
Total	33,516,697	29,307,647

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 as as 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 as as 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

- Definition

Amount, excluding unamortized premium (discount) and debt issuance cost, of long-term debt. Excludes lease obligation.

+ References + Details

Condensed Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 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)	97,927,443	92,960,066
Common stock, shares, outstanding (in shares)	97,927,443	92,960,066

Summary of Significant Accounting Policies (Policies)	9 Months Ended
Summary of Significant Accounting Policies (Policies)	Sep. 30, 2022
Accounting Policies [Abstract]
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, 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.
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 condensed 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 condensed 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 the three and nine months ended September 30, 2022 and 2021. 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 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 condensed 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 unredeemed site credits, which were immaterial as of September 30, 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 September 30, 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.
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.
Inventory, Net	Inventory, NetInventory 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 not material for the three and nine months ended September 30, 2022 and 2021.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 condensed balance sheets and were $21.2 million and $23.6 million as of September 30, 2022 and December 31, 2021, respectively. Included in inventory on the Company’s condensed balance sheets are assets totaling $5.9 million and $9.1 million as of September 30, 2022 and December 31, 2021, respectively, for the rights to recover products from customers associated with its liabilities for return reserves.
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.
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 condensed balance sheets. 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 condensed 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 and Debt Issuance Costs	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. Debt Issuance Costs Debt issuance costs 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 condensed balance sheets as a direct deduction from the associated debt. 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 related 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.
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/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.
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. As of September 30, 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 nine months ended September 30, 2022 and 2021.
Change in Accounting Principle and Recently Adopted 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 to its customers. 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 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 August 2020, the Financial Accounting Standards Board ("FASB") issued ASU 2020-6, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): 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 condensed 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 condensed 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 condensed 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.

Convertible Senior Notes, Net - Additional Information (Details)	1 Months Ended		3 Months Ended	9 Months Ended		19 Months Ended
	Mar. 31, 2021 USD ($) $ / shares	Jun. 30, 2020 USD ($) $ / shares	Mar. 31, 2021 USD ($) $ / shares	Sep. 30, 2022 USD ($) day shares	Sep. 30, 2021 USD ($)	Dec. 31, 2021 USD ($)	Jun. 30, 2022	Mar. 03, 2021 $ / shares	Jun. 10, 2020 $ / shares
Debt Instrument [Line Items]
Proceeds from issuance of convertible senior notes				$ 0	$ 278,234,000
Purchase of capped call transactions			$ 33,666,000
Equity component of convertible senior notes, net of issuance costs of $3,131			93,031,000
2025 Convertible senior notes
Debt Instrument [Line Items]
Aggregate principal amount		$ 172,500,000
Notes interest rate		3.00%
Proceeds from issuance of convertible senior notes		$ 165,800,000
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				130.00%
Notes, threshold trading days \| day				20
Notes, threshold consecutive trading days \| day				30
Percentage on aggregate principal amount of notes to be payable upon the event of default				25.00%
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 issuance costs		6,700,000
Equity component of convertible senior notes, net of issuance costs of $3,131		800,000
Liability component recorded as a reduction in carrying value of debt		5,900,000
Amortization period							5 years
Effective interest rate				3.74%		6.40%
Long-term debt				$ 172,500,000
Principal				$ 172,500,000
Debt instrument, term				5 years
2025 Convertible senior notes \| Capped Call Transactions
Debt Instrument [Line Items]
Payment to counterparties for purchased calls		22,500,000
Common stock subject to adjustment and exercisable upon conversion of initial notes (in shares) \| shares				9,705,454
Cap price of capped transactions (in dollars per share) \| $ / shares									$ 27.88
Cap price as percentage on common stock price per share									100.00%
Closing price of common stock (in dollars per share) \| $ / shares									$ 13.94
Reduction to additional paid premium payments for capped call transactions		22,500,000
2025 Convertible senior notes \| Conversion Option One
Debt Instrument [Line Items]
Notes, threshold percentage of stock price trigger				130.00%
Notes, threshold trading days \| day				20
Notes, threshold consecutive trading days \| day				30
2025 Convertible senior notes \| Conversion Option Two
Debt Instrument [Line Items]
Notes, threshold percentage of stock price trigger				98.00%
Notes, threshold trading days \| day				5
Notes, threshold consecutive trading days \| day				5
2025 Convertible senior notes \| Initial Purchasers
Debt Instrument [Line Items]
Aggregate principal amount		$ 22,500,000
2028 Convertible senior notes
Debt Instrument [Line Items]
Aggregate principal amount	$ 287,500,000		$ 287,500,000
Notes interest rate	1.00%		1.00%
Proceeds from issuance of convertible senior notes	$ 278,100,000
Purchase of capped call transactions	$ 33,700,000
Initial conversion rate	3.14465%
Initial conversion price (in dollars per share) \| $ / shares	$ 31.80		$ 31.80
Notes, threshold percentage of stock price trigger				130.00%
Notes, threshold trading days \| day				20
Notes, threshold consecutive trading days \| day				30
Percentage on aggregate principal amount of notes to be payable upon the event of default				25.00%
Interest rate used to compute initial fair value of liability	7.18%
Fair value of liability	$ 191,300,000		$ 191,300,000
Discount on initial issuance	96,200,000		96,200,000
Debt issuance costs				$ 9,400,000
Equity component of convertible senior notes, net of issuance costs of $3,131				3,100,000
Liability component recorded as a reduction in carrying value of debt				$ 6,300,000
Amortization period				7 years
Long-term debt				$ 287,500,000
Principal				$ 287,500,000
Debt instrument, term				7 years
2028 Convertible senior notes \| Capped Call Transactions
Debt Instrument [Line Items]
Payment to counterparties for purchased calls	33,700,000
Common stock subject to adjustment and exercisable upon conversion of initial notes (in shares) \| shares				9,040,869
Cap price of capped transactions (in dollars per share) \| $ / shares								$ 48.00
Cap price as percentage on common stock price per share								100.00%
Closing price of common stock (in dollars per share) \| $ / shares								$ 24.00
Reduction to additional paid premium payments for capped call transactions	33,700,000
2028 Convertible senior notes \| Conversion Option One
Debt Instrument [Line Items]
Notes, threshold percentage of stock price trigger				130.00%
Notes, threshold trading days \| day				20
Notes, threshold consecutive trading days \| day				30
2028 Convertible senior notes \| Conversion Option Two
Debt Instrument [Line Items]
Notes, threshold percentage of stock price trigger				98.00%
Notes, threshold trading days \| day				5
Notes, threshold consecutive trading days \| day				5
2028 Convertible senior notes \| Initial Purchasers
Debt Instrument [Line Items]
Aggregate principal amount	$ 37,500,000		$ 37,500,000
2028 Convertible Senior Notes as Liability Component
Debt Instrument [Line Items]
Discount on initial issuance				$ 0		$ 87,403,000
Liability component recorded as a reduction in carrying value of debt				$ 7,271,000		5,581,000
Effective interest rate				7.50%
Long-term debt				$ 280,229,000		194,516,000
Principal				$ 287,500,000		$ 287,500,000
2028 Convertible Senior Notes, Issuance Costs
Debt Instrument [Line Items]
Effective interest rate				1.45%

Fair Value Measurement - Additional Information (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents, fair value	$ 300,439	$ 418,171
2025 Convertible senior notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Aggregate principal amount	172,500
2028 Convertible senior notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Aggregate principal amount	287,500
Recurring \| Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents, fair value	$ 17,900	$ 139,400

Share-based Compensation Plans

9 Months Ended

Sep. 30, 2022

Share-Based Payment Arrangement [Abstract]

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 4 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.

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 three and nine months ended September 30, 2022, the Company recorded stock-based compensation expense for the number of PSUs considered probable of vesting based on the attainment of the performance targets.

As of September 30, 2022, total unrecognized compensation expense of approximately $0.8 million related to options and $97.7 million was related to RSUs and PSUs, which will be recognized over the remaining weighted-average vesting period of approximately 0.6 years and 2.9 years, respectively.

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 plan is considered compensatory and, as such, the purchase discount from market price purchased by employees will be recorded as compensation expense. 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.

There were 282,226 shares and 98,355 shares purchased by employees under the ESPP during the nine months ended September 30, 2022 and 2021, respectively. There were no shares purchased by employees under the ESPP during the three months ended September 30, 2022 and 2021, respectively.

As of September 30, 2022, total unrecognized compensation costs related to the 2019 ESPP was $0.1 million which will be amortized over the remaining weighted-average vesting period of approximately 0.12 years.

Total stock-based compensation expense by function was as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Marketing	$	567	$	628	$	1,774	$	1,924
Operations and technology	5,038		5,543		15,903		15,789
Selling, general and administrative	5,236		6,421		19,343		18,611
Total	$	10,841	$	12,592	$	37,020	$	36,324

During the nine months ended September 30, 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 each of the three months ended September 30, 2022 and 2021, the Company capitalized $0.4 million of stock-based compensation expense to proprietary software. During the nine months ended September 30, 2022 and 2021, the Company capitalized $1.3 million and $1.1 million of stock-based compensation expense to proprietary software, respectively.

Condensed Statements of Stockholders’ Equity (Deficit) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2021	Dec. 31, 2021
Statement of Stockholders' Equity [Abstract]
Accounting Standards Update [Extensible List]		ASU 2020-06
Equity component of convertible senior notes, issuance costs	$ 3,131

- Definition

Indicates amendment to accounting standards.

+ References

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Reference 55: http://www.xbrl.org/2003/role/disclosureRef
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Reference 56: http://www.xbrl.org/2003/role/disclosureRef
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Reference 57: http://www.xbrl.org/2003/role/disclosureRef
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Reference 63: http://www.xbrl.org/2003/role/disclosureRef
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Reference 64: http://www.xbrl.org/2003/role/disclosureRef
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Reference 66: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
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-URI https://asc.fasb.org/extlink&oid=124501264&loc=SL117420844-207641

Reference 67: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
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-Subparagraph (e)(4)
-URI https://asc.fasb.org/extlink&oid=126732423&loc=SL123482106-238011

Reference 68: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 40
-Section 65
-Paragraph 1
-Subparagraph (f)
-URI https://asc.fasb.org/extlink&oid=126732423&loc=SL123482106-238011

+ Details

Convertible Senior Notes, Net

9 Months Ended

Sep. 30, 2022

Debt Disclosure [Abstract]

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 September 30, 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 condensed 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 $168.7 million as of September 30, 2022, with principal of $172.5 million, net of unamortized issuance costs of $3.8 million. The 2025 Notes were classified as long term liabilities as of September 30, 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):


	September 30, 2022		December 31, 2021
Principal	$	172,500	$	172,500
Unamortized debt discount (1)	—		(14,350)
Unamortized debt issuance costs	(3,775)		(4,286)
Net carrying amount	$	168,725	$	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, 2021
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:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Contractual interest expense	$	1,293	$	1,294	$	3,881	$	3,881
Amortization of debt discount	—		900		—		2,669
Amortization of debt issuance costs	326		271		978		803
Total interest and amortization expense	$	1,619	$	2,465	$	4,859	$	7,353

Future minimum payments under the 2025 Notes as of September 30, 2022, are as follows:


Fiscal Year	Amount
Remainder of 2022	$	2,587
2023	5,175
2024	5,175
2025	175,088
Total future payments	188,025
Less amounts representing interest	(15,525)
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 issued in the Note Offering 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;

•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 September 30, 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 condensed 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 $280.2 million as of September 30, 2022, with principal of $287.5 million, net of unamortized issuance costs of $7.3 million. The 2028 Notes were classified as long term liabilities as of September 30, 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):


	September 30, 2022		December 31, 2021
Principal	$	287,500	$	287,500
Unamortized debt discount (1)	—		(87,403)
Unamortized debt issuance costs	(7,271)		(5,581)
Net carrying amount	$	280,229	$	194,516

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:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Contractual interest expense	$	718	$	719	$	2,156	$	1,613
Amortization of debt discount	—		2,709		—		6,003
Amortization of debt issuance costs	323		171		964		380
Total interest and amortization expense	$	1,041	$	3,599	$	3,120	$	7,996

Future minimum payments under the 2028 Notes as of September 30, 2022, are as follows:


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 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 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 and 2028 Capped Call transactions.

Share-based Compensation Plans (Tables)

9 Months Ended

Sep. 30, 2022

Share-Based Payment Arrangement [Abstract]

Schedule of Total Stock-based Compensation Expense, by Function

Total stock-based compensation expense by function was as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Marketing	$	567	$	628	$	1,774	$	1,924
Operations and technology	5,038		5,543		15,903		15,789
Selling, general and administrative	5,236		6,421		19,343		18,611
Total	$	10,841	$	12,592	$	37,020	$	36,324

Summary of Significant Accounting Policies - Statement of Operations (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Summary Of Significant Accounting Policies [Line Items]
Total revenue	$ 142,703	$ 118,838	$ 443,838	$ 322,567
Cost of Revenue	56,926	47,739	191,757	129,717
Consignment revenue
Summary Of Significant Accounting Policies [Line Items]
Total revenue	93,874	78,373	274,780	215,712
Cost of Revenue	15,206	10,162	43,193	29,872
Consignment revenue \| As Computed Under Previous Method
Summary Of Significant Accounting Policies [Line Items]
Total revenue		89,451	318,364	246,985
Cost of Revenue		22,714	86,342	64,352
Consignment revenue \| Effect of Change
Summary Of Significant Accounting Policies [Line Items]
Total revenue		(11,078)	(43,584)	(31,273)
Cost of Revenue		(12,552)	(43,149)	(34,480)
Consignment revenue \| As Computed Under Previous Method
Summary Of Significant Accounting Policies [Line Items]
Total revenue	108,698
Cost of Revenue	28,205
Consignment revenue \| Effect of Change
Summary Of Significant Accounting Policies [Line Items]
Total revenue	(14,824)
Cost of Revenue	(12,999)
Shipping services revenue
Summary Of Significant Accounting Policies [Line Items]
Total revenue	14,824	11,078	43,584	31,273
Cost of Revenue	12,999	12,552	43,149	34,480
Shipping services revenue \| As Computed Under Previous Method
Summary Of Significant Accounting Policies [Line Items]
Total revenue		0	0	0
Cost of Revenue		0	0	0
Shipping services revenue \| Effect of Change
Summary Of Significant Accounting Policies [Line Items]
Total revenue		11,078	43,584	31,273
Cost of Revenue		$ 12,552	$ 43,149	$ 34,480
Shipping services revenue \| As Computed Under Previous Method
Summary Of Significant Accounting Policies [Line Items]
Total revenue	0
Cost of Revenue	0
Shipping services revenue \| Effect of Change
Summary Of Significant Accounting Policies [Line Items]
Total revenue	14,824
Cost of Revenue	$ 12,999

- Definition

The aggregate cost of goods produced and sold and services rendered during the reporting period.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
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Amount, excluding tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value added and excise.

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Leases - Schedule of Weighted Average Remaining Lease Term and Discount Rate For Operating Leases (Details)	Sep. 30, 2022
Leases [Abstract]
Weighted average remaining lease term	6 years 4 months 24 days
Weighted average discount rate	6.20%

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	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Numerator
Net loss attributable to common stockholders, basic	$ (47,258)	$ (57,196)	$ (157,835)	$ (183,912)
Net loss attributable to common stockholders, diluted	$ (47,258)	$ (57,196)	$ (157,835)	$ (183,912)
Denominator
Weighted-average common shares outstanding used to calculate net loss per share attributable to common stockholders, basic (in shares)	96,696,417	91,859,603	95,036,618	90,995,285
Weighted-average common shares outstanding used to calculate net loss per share attributable to common stockholders, diluted (in shares)	96,696,417	91,859,603	95,036,618	90,995,285
Net loss per share attributable to common stockholders, basic (in dollars per share)	$ (0.49)	$ (0.62)	$ (1.66)	$ (2.02)
Net loss per share attributable to common stockholders, diluted (in dollars per share)	$ (0.49)	$ (0.62)	$ (1.66)	$ (2.02)

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The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

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+ References + Details

Net Loss Per Share Attributable to Common Stockholders - Schedule of Anti-dilutive Securities Excluded from Computation of Diluted Net Loss Per Share (Details) - shares	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total (in shares)	33,516,697	29,307,647
Options to purchase common stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total (in shares)	1,862,110	4,294,593
Restricted stock units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total (in shares)	12,429,858	6,135,786
Estimated shares issuable under the Employee Stock Purchase Plan
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total (in shares)	478,406	130,945
Assumed conversion of the Convertible Senior Notes
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total (in shares)	18,746,323	18,746,323

Condensed Balance Sheet Components - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Statement of Financial Position [Abstract]
Depreciation and amortization expense on property and equipment	$ 6.6	$ 6.0	$ 19.7	$ 17.8

Share-based Compensation Plans - Schedule of Total Stock-based Compensation Expense by Function (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total	$ 10,841	$ 12,592	$ 37,020	$ 36,324
Marketing
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total	567	628	1,774	1,924
Operations and technology
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total	5,038	5,543	15,903	15,789
Selling, general and administrative
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total	$ 5,236	$ 6,421	$ 19,343	$ 18,611

Convertible Senior Notes, Net - Amounts Recorded in Interest Expense Related to Notes (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
2025 Convertible senior notes
Debt Disclosure [Line Items]
Contractual interest expense	$ 1,293	$ 1,294	$ 3,881	$ 3,881
Amortization of debt discount	0	900	0	2,669
Amortization of debt issuance costs	326	271	978	803
Total interest and amortization expense	1,619	2,465	4,859	7,353
2028 Convertible senior notes
Debt Disclosure [Line Items]
Contractual interest expense	718	719	2,156	1,613
Amortization of debt discount	0	2,709	0	6,003
Amortization of debt issuance costs	323	171	964	380
Total interest and amortization expense	$ 1,041	$ 3,599	$ 3,120	$ 7,996

Condensed Balance Sheet Components (Tables)

9 Months Ended

Sep. 30, 2022

Balance Sheet Related Disclosures [Abstract]

Schedule of Property and Equipment, Net

Property and equipment, net consists of the following (in thousands):


	September 30, 2022		December 31, 2021
Proprietary software	$	37,384	$	31,799
Furniture and equipment	47,409		40,176
Automobiles	2,020		1,505
Leasehold improvements	71,679		66,154
Property and equipment, gross	158,492		139,634
Less: accumulated depreciation and amortization	(58,986)		(50,348)
Property and equipment, net	$	99,506	$	89,286

Schedule of Other Accrued and Current Liabilities

Other accrued and current liabilities consist of the following (in thousands):


	September 30, 2022		December 31, 2021
Returns reserve	$	21,187	$	23,577
Accrued compensation	22,941		14,258
Accrued legal	1,460		14,417
Accrued sales tax and other taxes	7,926		8,935
Site credit liability	11,313		8,738
Accrued marketing and outside services	7,960		7,897
Accrued inventory	1,887		3,513
Accrued shipping	3,623		2,006
Deferred revenue	3,698		3,387
Accrued interest	1,741		1,166
Other	8,238		6,294
Other accrued and current liabilities	$	91,974	$	94,188

Summary of Significant Accounting Policies (Details) - USD ($)	Sep. 30, 2022	Jan. 01, 2022	Dec. 31, 2021
Summary Of Significant Accounting Policies [Line Items]
Rights to recover products from customers	$ 5,900,000		$ 9,100,000
Accumulated deficit	(912,543,000)		(768,128,000)
Additional paid-in capital	771,287,000		841,255,000
Net deferred tax assets	253,200,000
Effect of Change \| ASU 2020-06
Summary Of Significant Accounting Policies [Line Items]
Accumulated deficit		$ 13,400,000
Additional paid-in capital		(112,100,000)
Long-term debt		98,600,000
Net deferred tax assets		27,700,000
Valuation allowance		$ 27,700,000
Other Accrued and Current Liabilities
Summary Of Significant Accounting Policies [Line Items]
Inventory return reserves allowances	21,200,000		$ 23,600,000
Common Stock
Summary Of Significant Accounting Policies [Line Items]
Dividend or distribution declared	$ 0

Net Loss Per Share Attributable to Common Stockholders

9 Months Ended

Sep. 30, 2022

Earnings Per Share [Abstract]

Net Loss Per Share Attributable to Common Stockholders


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Numerator
Net loss attributable to common stockholders	$	(47,258)	$	(57,196)	$	(157,835)	$	(183,912)
Denominator
Weighted-average common shares outstanding used to calculate net loss per share attributable to common stockholders, basic and diluted	96,696,417		91,859,603		95,036,618		90,995,285
Net loss per share attributable to common stockholders, basic and diluted	$	(0.49)	$	(0.62)	$	(1.66)	$	(2.02)


	September 30,
	2022	2021
Options to purchase common stock	1,862,110	4,294,593
Restricted stock units	12,429,858	6,135,786
Estimated shares issuable under the Employee Stock Purchase Plan	478,406	130,945
Assumed conversion of the Convertible Senior Notes	18,746,323	18,746,323
Total	33,516,697	29,307,647

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.

Fair Value Measurement

9 Months Ended

Sep. 30, 2022

Fair Value Disclosures [Abstract]

Fair Value Measurement

Assets and liabilities recorded at fair value on a recurring basis on the condensed 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 September 30, 2022 and December 31, 2021, the Company’s cash equivalents solely consisted of money market funds, which amounted to $17.9 million and $139.4 million, respectively. Money market funds are measured at net asset value per share and are excluded from the fair value hierarchy.

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 condensed balance sheets (in millions):


	September 30, 2022
	Net Carrying Amount		Estimated Fair Value
2025 Convertible senior notes	$	168.7	$	139.4
2028 Convertible senior notes	$	280.2	$	194.1

The principal amounts of the 2025 convertible senior notes and the 2028 convertible senior 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 (See Note 7).

As of September 30, 2022, the fair value of the 2025 convertible senior notes and the 2028 convertible senior notes, which differs from their carrying value is determined by prices for the convertible senior notes observed in market trading. The market for trading of the convertible senior notes is not considered to be an active market and therefore the estimate of fair value is based on Level 2 inputs, such as interest rates based on the market price on the last trading day for the period.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Fair Value Measurement - Schedule of Carrying Amounts and Estimated Fair Values (Details) $ in Millions	Sep. 30, 2022 USD ($)
Net Carrying Amount \| 2025 Convertible senior notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Net Carrying Amount	$ 168.7
Net Carrying Amount \| 2028 Convertible senior notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Net Carrying Amount	280.2
Estimated Fair Value \| 2025 Convertible senior notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Estimated Fair Value	139.4
Estimated Fair Value \| 2028 Convertible senior notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Estimated Fair Value	$ 194.1

Fair Value Measurement (Tables)

9 Months Ended

Sep. 30, 2022

Fair Value Disclosures [Abstract]

Schedule of Carrying Amounts and Estimated Fair Values

The following table presents the carrying amounts and estimated fair values of the financial instruments that are not recorded at fair value on the condensed balance sheets (in millions):


	September 30, 2022
	Net Carrying Amount		Estimated Fair Value
2025 Convertible senior notes	$	168.7	$	139.4
2028 Convertible senior notes	$	280.2	$	194.1

Convertible Senior Notes, Net (Tables)

9 Months Ended

Sep. 30, 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):


	September 30, 2022		December 31, 2021
Principal	$	172,500	$	172,500
Unamortized debt discount (1)	—		(14,350)
Unamortized debt issuance costs	(3,775)		(4,286)
Net carrying amount	$	168,725	$	153,864

The net carrying amount of the equity component of the 2025 Notes as of December 31, 2021 was as follows (in thousands):


	December 31, 2021
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):


	September 30, 2022		December 31, 2021
Principal	$	287,500	$	287,500
Unamortized debt discount (1)	—		(87,403)
Unamortized debt issuance costs	(7,271)		(5,581)
Net carrying amount	$	280,229	$	194,516

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:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Contractual interest expense	$	1,293	$	1,294	$	3,881	$	3,881
Amortization of debt discount	—		900		—		2,669
Amortization of debt issuance costs	326		271		978		803
Total interest and amortization expense	$	1,619	$	2,465	$	4,859	$	7,353

The following table sets forth the amounts recorded in interest expense related to the 2028 Notes:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Contractual interest expense	$	718	$	719	$	2,156	$	1,613
Amortization of debt discount	—		2,709		—		6,003
Amortization of debt issuance costs	323		171		964		380
Total interest and amortization expense	$	1,041	$	3,599	$	3,120	$	7,996

Schedule of Future Minimum Payments Under Notes

Future minimum payments under the 2025 Notes as of September 30, 2022, are as follows:


Fiscal Year	Amount
Remainder of 2022	$	2,587
2023	5,175
2024	5,175
2025	175,088
Total future payments	188,025
Less amounts representing interest	(15,525)
Total principal amount	$	172,500

Future minimum payments under the 2028 Notes as of September 30, 2022, are as follows:


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

- Definition

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

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+ Details

Cash and Cash Equivalents (Tables)

9 Months Ended

Sep. 30, 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):


	September 30, 2022
	Amortized Cost		Unrealized Gain		Unrealized Loss		Fair Value
Cash and cash equivalents:
Cash	$	282,515	$	—	$	—	$	282,515
Money market funds	17,924		—		—		17,924
Total cash and cash equivalents	$	300,439	$	—	$	—	$	300,439


	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

Income Taxes	9 Months Ended
Income Taxes	Sep. 30, 2022
Income Tax Disclosure [Abstract]
Income Taxes	Income Taxes The Company's provisions for income taxes were immaterial during the three and nine months ended September 30, 2022 and 2021. Although the Company does not update its deferred tax assets during interim periods, the Company adjusted deferred tax assets and corresponding valuation allowance for the adoption of ASU 2020-06 in the first quarter and the true up of the US return filing in the third quarter. Prior to the adoption of ASU 2020-06, the difference between the book and tax treatment of the conversion option and debt issuance costs of the 2025 and 2028 Notes resulted in a difference between the carrying amount and tax basis of the 2025 and 2028 Notes. This taxable temporary difference resulted in the recognition of a net $26.5 million deferred tax liability, net of $4.6 million of amortized interest expense. As of January 1, 2022, the unamortized balance of this deferred tax liability was $27.5 million, which was derecognized upon the adoption of ASU 2020-06, and $0.2 million of deferred tax assets were recognized, resulting in a $27.7 million increase to the net deferred tax assets. Both the reduction to the deferred tax liability and increase to the deferred tax asset were offset with an increase to our valuation allowance of $27.7 million. The Company maintained a full valuation allowance against its gross deferred tax assets which were $253.2 million at September 30, 2022. The deferred tax assets were primarily comprised of federal and state tax net operating loss carryforwards. Utilization of the net operating loss carryforwards may be subject to annual limitation due to historical or future ownership percentage change rules provided by the Internal Revenue Code of 1986, and similar state provisions. The annual limitation may result in the expiration of certain net operating loss carryforwards before their utilization. As of September 30, 2022, the Company had unrecognized tax benefits under ASC 740 Income Taxes of approximately $0 and applicable interest of $0. The total amount of unrecognized tax benefits that would affect our effective tax rate, if recognized, is $0. Our policy is to account for interest and penalties related to uncertain tax positions as a component of income tax provision. The Company does not anticipate that the amount of unrecognized tax benefits will significantly increase or decrease within the next twelve months. Due to historical losses, all years are open to examination and adjustment by the taxing authorities.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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+ Details

Income Taxes (Details) - USD ($)	Sep. 30, 2022	Jan. 01, 2022
Valuation Allowance [Line Items]
Deferred tax assets	$ 253,200,000
Unrecognized tax benefits	0
Unrecognized tax benefits, interest	0
Unrecognized tax benefits that would impact effective tax rate	$ 0
Effect of Change \| ASU 2020-06
Valuation Allowance [Line Items]
Recognition of deferred tax liability		$ 26,500,000
Amortized interest expense		4,600,000
Deferred tax liabilities		27,500,000
Deferred tax assets		200,000
Deferred tax assets		27,700,000
Valuation allowance		$ 27,700,000

Condensed Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Current assets
Cash and cash equivalents	$ 300,439	$ 418,171
Accounts receivable, net	8,753	7,767
Inventory, net	62,974	71,015
Prepaid expenses and other current assets	27,095	20,859
Total current assets	399,261	517,812
Property and equipment, net	99,506	89,286
Operating lease right-of-use assets	132,869	145,311
Other assets	2,780	2,535
Total assets	634,416	754,944
Current liabilities
Accounts payable	9,900	4,503
Accrued consignor payable	71,771	71,042
Operating lease liabilities, current portion	20,444	18,253
Other accrued and current liabilities	91,974	94,188
Total current liabilities	194,089	187,986
Operating lease liabilities, net of current portion	130,050	143,159
Convertible senior notes, net	448,954	348,380
Other noncurrent liabilities	2,578	2,291
Total liabilities	775,671	681,816
Commitments and contingencies (Note 10)
Stockholders’ equity (deficit):
Common stock, $0.00001 par value; 500,000,000 shares authorized as of September 30, 2022 and December 31, 2021; 97,927,443 and 92,960,066 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively	1	1
Additional paid-in capital	771,287	841,255
Accumulated deficit	(912,543)	(768,128)
Total stockholders’ equity (deficit)	(141,255)	73,128
Total liabilities and stockholders’ equity (deficit)	$ 634,416	$ 754,944

Debt	9 Months Ended
Debt	Sep. 30, 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 September 30, 2022 (unaudited), the Company was in compliance with all covenants. As of September 30, 2022, $0 had been drawn on the Revolving Credit Agreement.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
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-Subparagraph (h)
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(c))
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
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Reference 12: http://www.xbrl.org/2003/role/disclosureRef
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-Publisher FASB
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-Topic 470
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-Subparagraph (i)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

+ Details

Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2022

Accounting Policies [Abstract]

Schedule of Change in Accounting Estimate

Certain financial statement line items included in the Statement of Operations for the three and nine month periods ended September 30, 2022 and September 30, 2021, respectively were adjusted as follows (in thousands):


	Three Months Ended September 30, 2022
	As Computed Under Previous Method		Effect of Change		As Reported Under Preferable Method
Revenue:
Consignment revenue	$	108,698	$	(14,824)	$	93,874
Shipping services revenue	—		14,824		14,824
Cost of revenue:
Cost of consignment revenue	28,205		(12,999)		15,206
Cost of shipping services revenue	—		12,999		12,999


	Nine Months Ended September 30, 2022
	As Computed Under Previous Method		Effect of Change		As Reported Under Preferable Method
Revenue:
Consignment revenue	$	318,364	$	(43,584)	$	274,780
Shipping services revenue	—		43,584		43,584
Cost of revenue:
Cost of consignment revenue	86,342		(43,149)		43,193
Cost of shipping services revenue	—		43,149		43,149


	Three Months Ended September 30, 2021
	As Previously Reported		Effect of Change		As Reported Under Preferable Method
Revenue:
Consignment revenue	$	89,451	$	(11,078)	$	78,373
Shipping services revenue	—		11,078		11,078
Cost of revenue:
Cost of consignment revenue	22,714		(12,552)		10,162
Cost of shipping services revenue	—		12,552		12,552


	Nine Months Ended September 30, 2021
	As Previously Reported		Effect of Change		As Reported Under Preferable Method
Revenue:
Consignment revenue	$	246,985	$	(31,273)	$	215,712
Shipping services revenue	—		31,273		31,273
Cost of revenue:
Cost of consignment revenue	64,352		(34,480)		29,872
Cost of shipping services revenue	—		34,480		34,480

Leases (Tables)

9 Months Ended

Sep. 30, 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
Remainder of 2022	$	7,237
2023	28,797
2024	28,587
2025	29,261
2026	28,456
Thereafter	59,483
Total future minimum payments	$	181,821
Less: Imputed interest	(31,327)
Present value of operating lease liabilities	$	150,494

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):


	Nine Months Ended September 30,
	2022		2021
Operating cash flows used for operating leases	$	20,138	$	22,399
Operating lease assets obtained in exchange for operating lease liabilities	$	2,156	$	43,481

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:


	September 30, 2022
Weighted average remaining lease term	6.4 years
Weighted average discount rate	6.2	%

Condensed Balance Sheet Components - Schedule of Other Accrued and Current Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Statement of Financial Position [Abstract]
Returns reserve	$ 21,187	$ 23,577
Accrued compensation	22,941	14,258
Accrued legal	1,460	14,417
Accrued sales tax and other taxes	7,926	8,935
Site credit liability	11,313	8,738
Accrued marketing and outside services	7,960	7,897
Accrued inventory	1,887	3,513
Accrued Shipping	3,623	2,006
Deferred revenue	3,698	3,387
Accrued interest	1,741	1,166
Other	8,238	6,294
Other accrued and current liabilities	$ 91,974	$ 94,188

Cover - shares	9 Months Ended
Cover - shares	Sep. 30, 2022	Oct. 31, 2022
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2022
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 600
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 Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		98,065,780
Entity Registrant Name	TheRealReal, Inc.
Entity Central Index Key	0001573221
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q3
Amendment Flag	false

Condensed Statements of Operations - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Condensed Statements of Operations - USD ($) $ in Thousands	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Revenue:
Total revenue	$ 142,703	$ 118,838	$ 443,838	$ 322,567
Cost of revenue:
Cost of Revenue	56,926	47,739	191,757	129,717
Gross profit	85,777	71,099	252,081	192,850
Operating expenses:
Marketing	13,511	15,708	48,469	44,378
Operations and technology	70,782	61,135	207,311	172,906
Selling, general and administrative	46,860	44,912	147,063	132,504
Legal settlement	152	500	456	11,788
Total operating expenses	131,305	122,255	403,299	361,576
Loss from operations	(45,528)	(51,156)	(151,218)	(168,726)
Interest income	1,002	55	1,360	249
Interest expense	(2,675)	(6,072)	(8,014)	(15,374)
Other income, net	6	5	133	22
Loss before provision for income taxes	(47,195)	(57,168)	(157,739)	(183,829)
Provision for income taxes	63	28	96	83
Net loss attributable to common stockholders	$ (47,258)	$ (57,196)	$ (157,835)	$ (183,912)
Net loss per share attributable to common stockholders, basic (in dollars per share)	$ (0.49)	$ (0.62)	$ (1.66)	$ (2.02)
Net loss per share attributable to common stockholders, diluted (in dollars per share)	$ (0.49)	$ (0.62)	$ (1.66)	$ (2.02)
Shares used to compute net loss per share attributable to common stockholders, basic (in shares)	96,696,417	91,859,603	95,036,618	90,995,285
Shares used to compute net loss per share attributable to common stockholders, diluted (in shares)	96,696,417	91,859,603	95,036,618	90,995,285
Consignment revenue
Revenue:
Total revenue	$ 93,874	$ 78,373	$ 274,780	$ 215,712
Cost of revenue:
Cost of Revenue	15,206	10,162	43,193	29,872
Direct revenue
Revenue:
Total revenue	34,005	29,387	125,474	75,582
Cost of revenue:
Cost of Revenue	28,721	25,025	105,415	65,365
Shipping services revenue
Revenue:
Total revenue	14,824	11,078	43,584	31,273
Cost of revenue:
Cost of Revenue	$ 12,999	$ 12,552	$ 43,149	$ 34,480

Debt (Details) - Revolving Credit - USD ($)	1 Months Ended
Debt (Details) - Revolving Credit - USD ($)	Apr. 30, 2021	Sep. 30, 2022
Line of Credit Facility [Line Items]
Line of credit facility, maximum borrowing capacity	$ 50,000,000
Line of credit facility, variable annual rate	0.50%
Notes interest rate	4.25%
Balance drawn on line of credit		$ 0

- Definition

The carrying value as of the balance sheet date of the current and noncurrent portions of long-term obligations drawn from a line of credit, which is a bank's commitment to make loans up to a specific amount. Examples of items that might be included in the application of this element may consist of letters of credit, standby letters of credit, and revolving credit arrangements, under which borrowings can be made up to a maximum amount as of any point in time conditional on satisfaction of specified terms before, as of and after the date of drawdowns on the line. Includes short-term obligations that would normally be classified as current liabilities but for which (a) postbalance sheet date issuance of a long term obligation to refinance the short term obligation on a long term basis, or (b) the enterprise has entered into a financing agreement that clearly permits the enterprise to refinance the short-term obligation on a long term basis and the following conditions are met (1) the agreement does not expire within 1 year and is not cancelable by the lender except for violation of an objectively determinable provision, (2) no violation exists at the BS date, and (3) the lender has entered into the financing agreement is expected to be financially capable of honoring the agreement.

+ References + Details

Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2022

Accounting Policies [Abstract]

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, 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.

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 condensed 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 condensed 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 the three and nine months ended September 30, 2022 and 2021.

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 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 condensed 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 unredeemed site credits, which were immaterial as of September 30, 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 September 30, 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.

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.

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 not material for the three and nine months ended September 30, 2022 and 2021.

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 condensed balance sheets and were $21.2 million and $23.6 million as of September 30, 2022 and December 31, 2021, respectively. Included in inventory on the Company’s condensed balance sheets are assets totaling $5.9 million and $9.1 million as of September 30, 2022 and December 31, 2021, respectively, for the rights to recover products from customers associated with its liabilities for return reserves.

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.

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 condensed balance sheets.

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 condensed 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 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 condensed balance sheets as a direct deduction from the associated debt. 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 related 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.

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 September 30, 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 nine months ended September 30, 2022 and 2021.

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 to its customers. 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 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.


	Three Months Ended September 30, 2022
	As Computed Under Previous Method		Effect of Change		As Reported Under Preferable Method
Revenue:
Consignment revenue	$	108,698	$	(14,824)	$	93,874
Shipping services revenue	—		14,824		14,824
Cost of revenue:
Cost of consignment revenue	28,205		(12,999)		15,206
Cost of shipping services revenue	—		12,999		12,999


	Nine Months Ended September 30, 2022
	As Computed Under Previous Method		Effect of Change		As Reported Under Preferable Method
Revenue:
Consignment revenue	$	318,364	$	(43,584)	$	274,780
Shipping services revenue	—		43,584		43,584
Cost of revenue:
Cost of consignment revenue	86,342		(43,149)		43,193
Cost of shipping services revenue	—		43,149		43,149


	Three Months Ended September 30, 2021
	As Previously Reported		Effect of Change		As Reported Under Preferable Method
Revenue:
Consignment revenue	$	89,451	$	(11,078)	$	78,373
Shipping services revenue	—		11,078		11,078
Cost of revenue:
Cost of consignment revenue	22,714		(12,552)		10,162
Cost of shipping services revenue	—		12,552		12,552


	Nine Months Ended September 30, 2021
	As Previously Reported		Effect of Change		As Reported Under Preferable Method
Revenue:
Consignment revenue	$	246,985	$	(31,273)	$	215,712
Shipping services revenue	—		31,273		31,273
Cost of revenue:
Cost of consignment revenue	64,352		(34,480)		29,872
Cost of shipping services revenue	—		34,480		34,480

Recently Adopted Accounting Pronouncements

In August 2020, the Financial Accounting Standards Board ("FASB") issued ASU 2020-6, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): 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 condensed 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 condensed 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 condensed 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.

Description of Business and Basis of Presentation	9 Months Ended
Description of Business and Basis of Presentation	Sep. 30, 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, men’s, kids’, jewelry and watches, and home and art. 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 unaudited condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and the requirements of the U.S. Securities and Exchange Commission (the “SEC”) for interim reporting. The Company’s functional and reporting currency is the U.S. dollar. The condensed balance sheet as of December 31, 2021 included herein was derived from the audited financial statements as of that date. The accompanying unaudited condensed financial statements have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to state fairly the Company’s financial position, results of operations, comprehensive loss, and stockholders’ equity, and cash flows for the periods presented. The Company had a change in accounting policy from those disclosed in the audited financial statements and related notes for the year ended December 31, 2021 related to shipping services revenue. Changes to reclassify amounts in the prior periods have been made to conform to the current period presentation, as described in Note 2 “Change in Accounting Principle” below. These unaudited condensed financial statements should be read in conjunction with the Company’s financial statements and notes included in our Annual Report on Form 10-K filed with the SEC on February 28, 2022.

Leases - Schedule of Maturities of Operating Lease Liabilities (Details) $ in Thousands	Sep. 30, 2022 USD ($)
Leases [Abstract]
Remainder of 2022	$ 7,237
2023	28,797
2024	28,587
2025	29,261
2026	28,456
Thereafter	59,483
Total future minimum payments	181,821
Less: Imputed interest	(31,327)
Present value of operating lease liabilities	$ 150,494

Commitments and Contingencies	9 Months Ended
Commitments and Contingencies	Sep. 30, 2022
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies Noncancelable Purchase Commitments The Company has commitments for cloud services and other services in the ordinary course of business with varying expiration terms through 2025. As of September 30, 2022, there were no material changes to the Company's noncancelable purchase commitments disclosed in the financial statements in the Annual Report on Form 10-K other than in the three months ended September 30, 2022, the Company entered into an agreement with a term of two years for a total purchase commitment of $10.4 million. 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 February 15, 2023, and all depositions will be completed by no later than May 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 our business and could lead to other similar lawsuits. 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 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.

Convertible Senior Notes, Net - Schedule of Net Carrying Amount of Liability Component of Notes (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
2025 Convertible Senior Notes as Liability Component
Debt Disclosure [Line Items]
Principal	$ 172,500	$ 172,500
Unamortized debt discount	0	(14,350)
Unamortized debt issuance costs	(3,775)	(4,286)
Net carrying amount	168,725	153,864
2028 Convertible Senior Notes as Liability Component
Debt Disclosure [Line Items]
Principal	287,500	287,500
Unamortized debt discount	0	(87,403)
Unamortized debt issuance costs	(7,271)	(5,581)
Net carrying amount	$ 280,229	$ 194,516

- Definition

Amount, excluding unamortized premium (discount) and debt issuance cost, of long-term debt. Excludes lease obligation.

+ References + Details

Condensed Balance Sheet Components

9 Months Ended

Sep. 30, 2022

Balance Sheet Related Disclosures [Abstract]

Condensed 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):


	September 30, 2022		December 31, 2021
Proprietary software	$	37,384	$	31,799
Furniture and equipment	47,409		40,176
Automobiles	2,020		1,505
Leasehold improvements	71,679		66,154
Property and equipment, gross	158,492		139,634
Less: accumulated depreciation and amortization	(58,986)		(50,348)
Property and equipment, net	$	99,506	$	89,286

Depreciation and amortization expense on property and equipment was $6.6 million and $6.0 million for the three months ended September 30, 2022 and 2021, respectively, and $19.7 million and $17.8 million for the nine months ended September 30, 2022 and 2021, respectively.

Other Accrued and Current Liabilities

Other accrued and current liabilities consist of the following (in thousands):


	September 30, 2022		December 31, 2021
Returns reserve	$	21,187	$	23,577
Accrued compensation	22,941		14,258
Accrued legal	1,460		14,417
Accrued sales tax and other taxes	7,926		8,935
Site credit liability	11,313		8,738
Accrued marketing and outside services	7,960		7,897
Accrued inventory	1,887		3,513
Accrued shipping	3,623		2,006
Deferred revenue	3,698		3,387
Accrued interest	1,741		1,166
Other	8,238		6,294
Other accrued and current liabilities	$	91,974	$	94,188

Condensed Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
Condensed Statements of Cash Flows - USD ($) $ in Thousands	Sep. 30, 2022	Sep. 30, 2021
Cash flows from operating activities:
Net loss	$ (157,835)	$ (183,912)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization	20,255	17,840
Stock-based compensation expense	37,020	36,324
Reduction of operating lease right-of-use assets	14,598	14,765
Bad debt expense	1,133	637
Accrued interest on convertible notes	575	1,525
Accretion of debt discounts and issuance costs	1,942	9,854
Loss on disposal/sale of property and equipment and impairment of capitalized proprietary software	432	404
Other adjustments	0	10
Changes in operating assets and liabilities:
Accounts receivable, net	(2,119)	(194)
Inventory, net	8,041	(21,555)
Prepaid expenses and other current assets	(6,543)	(5,330)
Other assets	(391)	(807)
Operating lease liability	(13,074)	(12,548)
Accounts payable	4,067	(6,220)
Accrued consignor payable	729	3,313
Other accrued and current liabilities	(4,494)	21,951
Other noncurrent liabilities	409	556
Net cash used in operating activities	(95,255)	(123,387)
Cash flow from investing activities:
Proceeds from maturities of short-term investments	0	4,000
Capitalized proprietary software development costs	(9,847)	(7,455)
Purchases of property and equipment	(16,408)	(30,303)
Net cash used in investing activities	(26,255)	(33,758)
Cash flow from financing activities:
Proceeds from issuance of 2028 convertible senior notes, net of issuance costs	0	278,234
Purchase of capped calls in conjunction with the issuance of the 2028 convertible senior notes	0	(33,666)
Proceeds from exercise of stock options	2,906	5,452
Proceeds from issuance of stock in connection with the Employee Stock Purchase Program	900	1,092
Taxes paid related to restricted stock vesting	(28)	(4)
Net cash provided by financing activities	3,778	251,108
Net increase (decrease) in cash and cash equivalents	(117,732)	93,963
Cash and cash equivalents
Beginning of period	418,171	350,846
End of period	300,439	444,809
Supplemental disclosures of cash flow information
Cash paid for interest	5,496	3,988
Cash paid for income taxes	256	94
Supplemental disclosures of non-cash investing and financing activities
Property and equipment additions not yet paid in cash	4,487	1,425
Capitalized proprietary software development costs additions not yet paid in cash	2,159	1,247
Stock-based compensation capitalized to proprietary software development costs	$ 1,289	$ 1,121

Condensed Statements of Stockholders' Equity (Deficit) - USD ($) $ in Thousands	Total	Effect of Change	Common Stock	Additional Paid-in Capital	Additional Paid-in Capital Effect of Change	Accumulated Other Comprehensive Income (Loss)	Accumulated Deficit	Accumulated Deficit Effect of Change
Beginning balance (in shares) at Dec. 31, 2020			89,301,664
Beginning balance at Dec. 31, 2020	$ 191,293		$ 1	$ 723,302		$ 11	$ (532,021)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock upon exercise of options (in shares)			543,963
Issuance of common stock upon exercise of options	3,973			3,973
Issuance of common stock upon vesting of restricted stock units, net of shares withheld for employee taxes (in shares)			829,641
Stock-based compensation expense	11,278			11,278
Purchase of capped calls	(33,666)			(33,666)
Equity component of convertible senior notes, net of issuance costs of $3,131	93,031			93,031
Other comprehensive loss	(11)					(11)
Net loss	(55,993)						(55,993)
Ending balance (in shares) at Mar. 31, 2021			90,675,268
Ending balance at Mar. 31, 2021	209,905		$ 1	797,918		0	(588,014)
Beginning balance (in shares) at Dec. 31, 2020			89,301,664
Beginning balance at Dec. 31, 2020	191,293		$ 1	723,302		11	(532,021)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(183,912)
Ending balance (in shares) at Sep. 30, 2021			92,289,799
Ending balance at Sep. 30, 2021	110,717		$ 1	826,649		0	(715,933)
Beginning balance (in shares) at Mar. 31, 2021			90,675,268
Beginning balance at Mar. 31, 2021	209,905		$ 1	797,918		0	(588,014)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock upon exercise of options (in shares)			153,414
Issuance of common stock upon exercise of options	786			786
Issuance of common stock upon vesting of restricted stock units, net of shares withheld for employee taxes (in shares)			532,468
Issuance of common stock for exercises under ESPP (in shares)			98,355
Issuance of common stock for exercises under ESPP	1,092			1,092
Stock-based compensation expense	13,219			13,219
Net loss	(70,723)						(70,723)
Ending balance (in shares) at Jun. 30, 2021			91,459,505
Ending balance at Jun. 30, 2021	154,279		$ 1	813,015		0	(658,737)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock upon exercise of options (in shares)			145,217
Issuance of common stock upon exercise of options	693			693
Issuance of common stock upon vesting of restricted stock units, net of shares withheld for employee taxes (in shares)			685,077
Issuance of common stock upon vesting of restricted stock units, net of shares withheld for employee taxes	(7)			(7)
Stock-based compensation expense	12,948			12,948
Net loss	(57,196)						(57,196)
Ending balance (in shares) at Sep. 30, 2021			92,289,799
Ending balance at Sep. 30, 2021	110,717		$ 1	826,649		$ 0	(715,933)
Beginning balance (in shares) at Dec. 31, 2021			92,960,066
Beginning balance at Dec. 31, 2021	73,128	$ (98,632)	$ 1	841,255	$ (112,052)		(768,128)	$ 13,420
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock upon exercise of options (in shares)			417,428
Issuance of common stock upon exercise of options	637			637
Issuance of common stock upon vesting of restricted stock units, net of shares withheld for employee taxes (in shares)			922,610
Issuance of common stock upon vesting of restricted stock units, net of shares withheld for employee taxes	(2)			(2)
Stock-based compensation expense	12,964			12,964
Net loss	(57,412)						(57,412)
Ending balance (in shares) at Mar. 31, 2022			94,300,104
Ending balance at Mar. 31, 2022	(69,317)		$ 1	742,802			(812,120)
Beginning balance (in shares) at Dec. 31, 2021			92,960,066
Beginning balance at Dec. 31, 2021	73,128	$ (98,632)	$ 1	841,255	$ (112,052)		(768,128)	$ 13,420
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(157,835)
Ending balance (in shares) at Sep. 30, 2022			97,927,443
Ending balance at Sep. 30, 2022	(141,255)		$ 1	771,287			(912,543)
Beginning balance (in shares) at Mar. 31, 2022			94,300,104
Beginning balance at Mar. 31, 2022	(69,317)		$ 1	742,802			(812,120)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock upon exercise of options (in shares)			94,601
Issuance of common stock upon exercise of options	328			328
Issuance of common stock upon vesting of restricted stock units, net of shares withheld for employee taxes (in shares)			848,646
Issuance of common stock upon vesting of restricted stock units, net of shares withheld for employee taxes	(23)			(23)
Issuance of common stock for exercises under ESPP (in shares)			282,226
Issuance of common stock for exercises under ESPP	900			900
Stock-based compensation expense	14,164			14,164
Net loss	(53,165)						(53,165)
Ending balance (in shares) at Jun. 30, 2022			95,525,577
Ending balance at Jun. 30, 2022	(107,113)		$ 1	758,171			(865,285)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock upon exercise of options (in shares)			1,416,611
Issuance of common stock upon exercise of options	1,941			1,941
Issuance of common stock upon vesting of restricted stock units, net of shares withheld for employee taxes (in shares)			985,255
Issuance of common stock upon vesting of restricted stock units, net of shares withheld for employee taxes	(6)			(6)
Stock-based compensation expense	11,181			11,181
Net loss	(47,258)						(47,258)
Ending balance (in shares) at Sep. 30, 2022			97,927,443
Ending balance at Sep. 30, 2022	$ (141,255)		$ 1	$ 771,287			$ (912,543)

Cash and Cash Equivalents

9 Months Ended

Sep. 30, 2022

Cash and Cash Equivalents [Abstract]

Cash and Cash Equivalents

The following tables summarize the estimated value of the Company’s cash and cash equivalents (in thousands):


	September 30, 2022
	Amortized Cost		Unrealized Gain		Unrealized Loss		Fair Value
Cash and cash equivalents:
Cash	$	282,515	$	—	$	—	$	282,515
Money market funds	17,924		—		—		17,924
Total cash and cash equivalents	$	300,439	$	—	$	—	$	300,439


	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

Leases

9 Months Ended

Sep. 30, 2022

Leases [Abstract]

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 $7.2 million and $7.5 million for the three months ended September 30, 2022 and 2021, respectively, and $21.7 million and $22.4 million for the nine months ended September 30, 2022 and 2021, respectively. The Company also incurred $1.5 million and $1.3 million of variable lease costs for the three months ended September 30, 2022 and 2021, respectively, and $4.3 million and $4.0 million of variable lease costs for the nine months ended September 30, 2022 and 2021, respectively. The variable lease costs are 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
Remainder of 2022	$	7,237
2023	28,797
2024	28,587
2025	29,261
2026	28,456
Thereafter	59,483
Total future minimum payments	$	181,821
Less: Imputed interest	(31,327)
Present value of operating lease liabilities	$	150,494

Supplemental cash flow information related to the Company’s operating leases are as follows (in thousands):


	Nine Months Ended September 30,
	2022		2021
Operating cash flows used for operating leases	$	20,138	$	22,399
Operating lease assets obtained in exchange for operating lease liabilities	$	2,156	$	43,481

The weighted average remaining lease term and discount rate for the Company’s operating leases are as follows:


	September 30, 2022
Weighted average remaining lease term	6.4 years
Weighted average discount rate	6.2	%

The Company has leases for certain vehicles and equipment that are classified as finance leases. The finance lease right-of-use asset and finance lease liabilities for these vehicle and equipment leases are immaterial as of September 30, 2022 and December 31, 2021.

Cash and Cash Equivalents - Summary of Estimated Value of Cash and Cash Equivalents (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Cash and Cash Equivalents [Line Items]
Cash and cash equivalents, amortized cost	$ 300,439	$ 418,171
Cash and cash equivalents, fair value	300,439	418,171
Cash
Cash and Cash Equivalents [Line Items]
Cash and cash equivalents, amortized cost	282,515	278,769
Cash and cash equivalents, fair value	282,515	278,769
Money market funds
Cash and Cash Equivalents [Line Items]
Cash and cash equivalents, amortized cost	17,924	139,402
Cash and cash equivalents, fair value	$ 17,924	$ 139,402

Condensed Statements of Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Statement of Comprehensive Income [Abstract]
Net loss	$ (47,258)	$ (57,196)	$ (157,835)	$ (183,912)
Other comprehensive loss, net of tax:
Unrealized loss on investments	0	0	0	(11)
Comprehensive loss	$ (47,258)	$ (57,196)	$ (157,835)	$ (183,923)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

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+ Details

Condensed Balance Sheet Components - Schedule of Property, Plant and Equipment (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 158,492	$ 139,634
Less: accumulated depreciation and amortization	(58,986)	(50,348)
Property and equipment, net	99,506	89,286
Proprietary software
Property, Plant and Equipment [Line Items]
Property and equipment, gross	37,384	31,799
Furniture and equipment
Property, Plant and Equipment [Line Items]
Property and equipment, gross	47,409	40,176
Automobiles
Property, Plant and Equipment [Line Items]
Property and equipment, gross	2,020	1,505
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 71,679	$ 66,154