ThredUp Inc

Item 1A. Risk Factors

The Company is supplementing the risk factors previously disclosed in the section titled Risk Factors in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC on March 5, 2024 (our Fiscal 2023 10-K) and in the section titled Risk Factors in Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarters ended March 31, 2024 and June 30, 2024, filed with the SEC on May 6, 2024 and August 5, 2024 (our First Quarter 2024 10-Q) and Second Quarter 2024 10-Q), to include the following risk factors, which should be read in conjunction with the other risk factors presented in our Fiscal 2023 10-K a, First Quarter 2024 10-Q and First Quarter 2Second Quarter 2024 10-Q.

New Risk Factors

The price of our Class A common stock currently does not meet the requirements for continued listing on Nasdaq. If we fail to regain and maintain compliance with the minimum listing requirements, our Class A common stock may be delisted, which could materially adversely affect the liquidity of our Class A common stock.

Our Class A common stock currently trades on the Nasdaq Stock Market LLC (Nasdaq). Nasdaq has requirements that a company must meet in order to remain listed on Nasdaq. For example, Nasdaq Listing Rule 5450(a)(1) requires listed securities to maintain a minimum bid price of $1.00 per share (the Minimum Bid Price Requirement) and Nasdaq Listing Rule 5810(c)(3)(A) provides that a failure to meet the Minimum Bid Price Requirement exists if the deficiency continues for a period of 30 consecutive trading days. Our Class A common stock is also listed on The Long Term

Stock Exchange (LTSE), which has a similar Minimum Bid Price Requirement.

On September 24, 2024 10-Q.

, we received written notice (the Notice) from the Listing Qualifications Department of Nasdaq (the Nasdaq Listing Department) notifying us that, based on the closing bid price of our Class A common stock for the last 34 consecutive trading days, we no longer comply with the Minimum Bid Price Requirement. The Notice had no immediate effect on the listing of our Class A common stock on The Nasdaq Global Select Market. Pursuant to the Nasdaq Listing Rules, we have been provided an initial compliance period of 180 calendar days from the Notice to regain compliance with the Minimum Bid Price Requirement. To regain compliance, the closing bid price of our Class A common stock must be at least $1.00 per share for a minimum of 10 consecutive trading days prior to March 24, 2025, and we must otherwise satisfy The Nasdaq Global Select Markets requirements for listing. If we do not regain compliance within the compliance period(s), including any extensions that may be granted by Nasdaq, our Class A common stock will be subject to delisting. Pursuant to the LTSE Listing Rules, we have been given 180 calendar days, or until March 26, 2025, to regain compliance with the LTSE Minimum Bid Price Requirement. We intend to monitor the closing bid price of our Class A common stock and consider our available options to resolve the noncompliance with the applicable Minimum Bid Price Requirements. There can be no assurance that we will be able to regain compliance with Nasdaqs or LTSEs continued listing requirements or that Nasdaq or LTSE will grant us a further extension of time to regain compliance, if applicable. If our Class A common stock were to be delisted, the liquidity of our Class A common stock would be adversely affected, and the market price of our Class A common stock could decrease.

We have recorded, and may be required to record in the future, significant charges if our long-lived assets and goodwill become impaired.

We test long-lived assets and goodwill for impairment if changes in circumstances or the occurrence of events suggest impairment exists. In the third quarter of 2024, we announced our decision to exit the European market and initiated a strategic review of our Remix business. The decision to exit the European market, coupled with the decline in the Companys market capitalization, were identified as qualitative indicators of potential impairment of long-lived assets and goodwill. As a result, we performed a long-lived assets impairment assessment as well as a quantitative goodwill impairment assessment on our one reporting unit, in connection with the preparation of the Companys financial statements for the quarterly period ended September 30, 2024.

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Based on this assessment, we recognized an impairment of long-lived assets of $9.8 million, of which $5.6 million related to certain property and equipment and $4.2 million related to intangible assets. The quantitative impairment assessment indicated that there was no impairment of goodwill related to our one reporting unit. In conducting the long-lived assets and goodwill impairment assessments, we estimated fair value using a combination of a market approach, which incorporated valuation multiples of comparable public companies and transactions, and an income approach based on projected discounted cash flows that included significant assumptions related to estimates of future revenues and operating expenses, long-term growth rates, working capital requirements, and discount rates.

It is possible that changes in circumstances, many of which are outside of our control, or in the numerous variables associated with the assumptions and estimates used in assessing the appropriate valuation of our long-lived assets and goodwill, could in the future result in other impairment charges, which could adversely affect our business, financial condition and results of operations.

Modified Risk Factors

Our efforts to identify and consummate a strategic alternative for our European operations conducted through our Remix subsidiary may not be successful. 

Following a strategic review, we have determined to seek strategic alternatives for the Remix business with the intention to exit our existing European markets. Efforts to identify and consummate a strategic alternative could may require significant management time and resources and have the potential to divert theour attention offrom our manageongoing business. We may need to make substantial investment and cause uss of resources, including ongoing cash infusions to incur various expensessupport the Remix business while we seek a strategic alternative, whether or not any strategic alternative is ultimately consummated. We may also face risks associated with obtaining necessary regulatory approval for a strategic alternative, which could cause us to incur unanticipated liabilities and harm our business generally. We may be unsuccessful in identifying and consummating a strategic alternative for our European operations and any such alternative may not have the anticipated benefits, any of which could harm our business, results of operations and financial condition.