UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
Exhibit 99.2
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
Introduction
On November 30, 2024 (the “Closing Date”), ThredUp Inc. (the “Company”) entered into a Stock Purchase Agreement (the “SPA”), by and among the Company and Xxxxxx Xxxxxx, the general manager of the Company’s European business and Bulgarian subsidiary, Remix Global EAD (“Remix”). To effectuate the Transaction, the Company established Remix US Holdings Inc. (“Remix US Holdings”), a new wholly owned subsidiary incorporated in Delaware, and transferred 100.0% of the shares of capital stock of Remix to Remix US Holdings. Pursuant to the SPA, the Company agreed to the divestiture (the “Transaction”) of 91.0% of the common stock of Remix US Holdings Inc. to Xxxxxx Xxxxxx for an aggregate cash purchase price of EUR 1.00 (one Euro).
The Transaction was completed on the Closing Date. Immediately upon the closing of the Transaction, the Company owned 9.0% of the common stock of Remix US Holdings. Following the closing of the Transaction, the financial statements of Remix US Holdings and Remix will no longer be consolidated with the financial statements of the Company.
In connection with the Transaction, Remix, as borrower, issued an unsecured convertible promissory note (the “Remix Convertible Note”) to the Company, as lender, reflecting the Company’s investment since acquiring Remix for various purposes, including infrastructure, technology, and personnel development. The note bears interest at 125 basis points plus the greater of the 12-month EURIBOR rate or zero, determined annually on November 30.
Unless earlier converted as described below, the principal and accrued interest shall be due and payable by Remix on demand by the Company at any time after the earlier of: (i) November 30, 2034; (ii) at the closing of a sale or initial public offering of Remix US Holdings or other deemed liquidation events; or (iii) at the closing of a bona fide investment from certain third-party strategic investors that invest not merely for passive investment or financial return but with the intention to gain long-term strategic benefits (each of the foregoing clauses (i), (ii) and (iii), a “Payment Event”). Notwithstanding the foregoing, so long as the Company is the largest non-management equityholder and/or debtholder of Remix US Holdings, (i) the Remix Convertible Note shall only be convertible into the common stock of Remix US Holdings and not into preferred stock; (ii) the Remix Convertible Note shall not be convertible if such conversion would result in the Company owning more than 9.0% of Remix US Holdings on a fully-diluted basis, and (iii) the principal and accrued interest of the Remix Convertible Note shall not be due and payable by Borrower at November 30, 2034. Accrued interest is not due and payable until a Payment Event, and prepayment by Remix of outstanding principal, together with accrued interest, may be made at any time without any prepayment penalty. The Remix Convertible Note contains customary events of default and related remedies.
1
A portion of the principal and unpaid accrued interest of the Remix Convertible Note will be automatically converted into the common stock of Remix US Holdings upon the closing of any qualified financing for equity securities of Remix US Holdings at a fixed valuation for cash from which Remix US Holdings receives gross cash proceeds of at least $1.0 million. In the event of any qualified financing, a portion of the outstanding principal amount and accrued interest of the Remix Convertible Note shall convert, at the Company’s option (but subject to the conditions described in the preceding paragraph), into either (i) shares of common stock of Remix US Holdings or (ii) shares of preferred stock issued in the qualified financing, on the same terms and conditions offered to the investors in such Qualified Financing. The number of shares of common or preferred stock of Remix US Holdings to be issued upon such conversion shall be equal to the amount of shares of necessary for the Company to own 9.0% of Remix US Holdings’ capital stock on a fully-diluted basis immediately following the closing of such qualified financing.
The following unaudited pro forma condensed consolidated financial information is based upon the historical financial statements of the Company, adjusted to reflect the Transaction. The following unaudited pro forma condensed consolidated financial information of the Company should be read in conjunction with the related notes herein and with the historical consolidated financial statements of the Company and the related notes thereto included in previous filings with the Securities and Exchange Commission (the “SEC”), including:
i.The audited historical consolidated financial statements of the Company and its subsidiaries, the accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on March 4, 2024; and
ii.The unaudited interim historical condensed consolidated financial statements of the Company and its subsidiaries, the accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s Quarterly Report on Form 10-Q for the nine months ended September 30, 2024 filed with the SEC on November 4, 2024.
The following unaudited pro forma condensed consolidated balance sheet as of September 30, 2024, presents the Company’s condensed consolidated financial position giving pro forma effect to the Transaction as if the Transaction had closed on September 30, 2024. The unaudited pro forma condensed consolidated statement of operations for the nine months ended September 30, 2024, and for the years ended December 31, 2023 and 2022 present the Company’s consolidated results of operations giving pro forma effect to reflect the presentation of Remix as discontinued operations in accordance with Accounting Standards Codification 205-20, Discontinued Operations (“ASC 205”), on January 1, 2022, which represents the first day of 2022.
The unaudited pro forma condensed consolidated financial statements presented below have been derived from the Company’s historical consolidated financial statements. While the historical consolidated financial statements reflect the past financial results of the Company, the pro forma condensed consolidated financial statements are included for informational purposes only and are intended to illustrate how the Transaction might have affected the historical consolidated financial statements had each been completed at an earlier time as indicated herein. The pro forma adjustments include transaction accounting adjustments that reflect the accounting for the transaction in accordance with U.S. GAAP.
2
These pro forma adjustments are based on currently available information, estimates and assumptions that the Company believes are reasonable in order to reflect, on a pro forma basis, the impact of the Transaction on the Company’s historical consolidated financial statements, and are not necessarily indicative of the Company’s future financial position and future results of operations and do not reflect all actions that may be taken by the Company following the closing of the Transaction. The actual financial position and results of operations of the Company may differ significantly from the pro forma amounts reflected herein due to a variety of factors.
3
Pro Forma Condensed Consolidated Balance Sheets
(unaudited)
| Transaction Accounting Adjustments | |||||||||||||||||||||||||||||
| As Reported September 30, 2024 | Reclassification to Held for Sale (1) | Disposition of Remix (1) | Pro Forma September 30, 2024 | ||||||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||||||||
| ASSETS | |||||||||||||||||||||||||||||
| Current assets: | |||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 43,715 | $ | (3,518) | $ | — | $ | 40,197 | |||||||||||||||||||||
| Marketable securities | 11,581 | — | — | 11,581 | |||||||||||||||||||||||||
| Accounts receivable, net | 5,717 | (1,650) | — | 4,067 | |||||||||||||||||||||||||
| Inventory | 7,375 | (6,633) | — | 742 | |||||||||||||||||||||||||
| Other current assets | 4,977 | (100) | — | 4,877 | |||||||||||||||||||||||||
| Current assets held for sale | — | 11,901 | (2) | (11,901) | (2) | — | |||||||||||||||||||||||
| Total current assets | 73,365 | — | (11,901) | 61,464 | |||||||||||||||||||||||||
| Operating lease right-of-use assets | 44,804 | (14,858) | — | 29,946 | |||||||||||||||||||||||||
| Property and equipment, net | 76,432 | (4,276) | — | 72,156 | |||||||||||||||||||||||||
| Goodwill | 12,121 | (752) | — | 11,369 | |||||||||||||||||||||||||
| Intangible assets | 1,995 | (1,995) | — | — | |||||||||||||||||||||||||
| Other assets | 6,227 | (820) | 880 | (3) | 6,287 | ||||||||||||||||||||||||
| Noncurrent assets held for sale | — | 22,701 | (2) | (22,701) | (2) | — | |||||||||||||||||||||||
| Total assets | $ | 214,944 | $ | — | $ | (33,722) | $ | 181,222 | |||||||||||||||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||||||||||||||||||||
| Current liabilities: | |||||||||||||||||||||||||||||
| Accounts payable | $ | 13,125 | $ | (4,388) | $ | — | $ | 8,737 | |||||||||||||||||||||
| Accrued and other current liabilities | 34,170 | (4,704) | — | 29,466 | |||||||||||||||||||||||||
| Seller payable | 19,802 | (998) | — | 18,804 | |||||||||||||||||||||||||
| Operating lease liabilities, current | 5,455 | (1,623) | — | 3,832 | |||||||||||||||||||||||||
| Current portion of long-term debt | 3,851 | — | — | 3,851 | |||||||||||||||||||||||||
| Current liabilities held for sale | — | 11,713 | (2) | (11,713) | (2) | — | |||||||||||||||||||||||
| Total current liabilities | 76,403 | — | (11,713) | 64,690 | |||||||||||||||||||||||||
| Operating lease liabilities, non-current | 47,147 | (13,345) | — | 33,802 | |||||||||||||||||||||||||
| Long-term debt, net of current portion | 19,116 | — | — | 19,116 | |||||||||||||||||||||||||
| Other non-current liabilities | 3,006 | (772) | — | 2,234 | |||||||||||||||||||||||||
| Noncurrent liabilities held for sale | — | 14,117 | (2) | (14,117) | (2) | — | |||||||||||||||||||||||
| Total liabilities | 145,672 | — | (25,830) | 119,842 | |||||||||||||||||||||||||
| Commitments and contingencies | |||||||||||||||||||||||||||||
| Stockholders’ equity: | |||||||||||||||||||||||||||||
| Common stock | 11 | — | — | 11 | |||||||||||||||||||||||||
| Additional paid-in capital | 605,687 | — | — | 605,687 | |||||||||||||||||||||||||
| Accumulated other comprehensive loss | (2,272) | — | 2,278 | (4) | 6 | ||||||||||||||||||||||||
| Accumulated deficit | (534,154) | — | (10,170) | (5) | (544,324) | ||||||||||||||||||||||||
| Total stockholders’ equity | 69,272 | — | (7,892) | 61,380 | |||||||||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 214,944 | $ | — | $ | (33,722) | $ | 181,222 | |||||||||||||||||||||
4
Pro Forma Condensed Consolidated Statements of Operations
(unaudited)
| As Reported | Pro Forma | |||||||||||||||||||
| Nine Months Ended September 30, 2024 | Disposition of Remix (6) | Nine Months Ended September 30, 2024 | ||||||||||||||||||
| (in thousands, except per share amounts) | ||||||||||||||||||||
| Revenue: | ||||||||||||||||||||
| Consignment | $ | 184,930 | $ | (3,339) | $ | 181,591 | ||||||||||||||
| Product | 47,434 | (36,261) | 11,173 | |||||||||||||||||
| Total revenue | 232,364 | (39,600) | 192,764 | |||||||||||||||||
| Cost of revenue: | ||||||||||||||||||||
| Consignment | 34,122 | (484) | 33,638 | |||||||||||||||||
| Product | 34,816 | (28,715) | 6,101 | |||||||||||||||||
| Total cost of revenue | 68,938 | (29,199) | 39,739 | |||||||||||||||||
| Gross profit | 163,426 | (10,401) | 153,025 | |||||||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Operations, product, and technology | 117,162 | (11,766) | 105,396 | |||||||||||||||||
| Marketing | 44,765 | (7,744) | 37,021 | |||||||||||||||||
| Sales, general, and administrative | 47,558 | (4,486) | 43,072 | |||||||||||||||||
| Impairment of long-lived assets | 9,814 | (9,814) | — | |||||||||||||||||
| Total operating expenses | 219,299 | (33,810) | 185,489 | |||||||||||||||||
| Operating loss | (55,873) | 23,409 | (32,464) | |||||||||||||||||
| Interest expense | (1,958) | — | (1,958) | |||||||||||||||||
| Other income, net | 2,573 | (70) | 2,503 | |||||||||||||||||
| Loss before provision for income taxes | (55,258) | 23,339 | (31,919) | |||||||||||||||||
| Provision for income taxes | 21 | — | 21 | |||||||||||||||||
| Loss from continuing operations | $ | (55,279) | $ | 23,339 | $ | (31,940) | ||||||||||||||
| Loss from continuing operations per share, basic and diluted | $ | (0.50) | $ | (0.29) | ||||||||||||||||
| Weighted-average shares outstanding, basic and diluted | 111,054 | 111,054 | ||||||||||||||||||
5
Pro Forma Condensed Consolidated Statements of Operations
(unaudited)
| As Reported | Pro Forma | |||||||||||||||||||
| Year Ended December 31, 2023 | Disposition of Remix (6) | Year Ended December 31, 2023 | ||||||||||||||||||
| (in thousands, except per share amounts) | ||||||||||||||||||||
| Revenue: | ||||||||||||||||||||
| Consignment | $ | 213,609 | $ | (516) | $ | 213,093 | ||||||||||||||
| Product | 108,413 | (63,002) | 45,411 | |||||||||||||||||
| Total revenue | 322,022 | (63,518) | 258,504 | |||||||||||||||||
| Cost of revenue: | ||||||||||||||||||||
| Consignment | 39,732 | — | 39,732 | |||||||||||||||||
| Product | 68,485 | (48,181) | 20,304 | |||||||||||||||||
| Total cost of revenue | 108,217 | (48,181) | 60,036 | |||||||||||||||||
| Gross profit | 213,805 | (15,337) | 198,468 | |||||||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Operations, product, and technology | 156,712 | (13,373) | 143,339 | |||||||||||||||||
| Marketing | 66,273 | (14,885) | 51,388 | |||||||||||||||||
| Sales, general, and administrative | 62,657 | (5,918) | 56,739 | |||||||||||||||||
| Total operating expenses | 285,642 | (34,176) | 251,466 | |||||||||||||||||
| Operating loss | (71,837) | 18,839 | (52,998) | |||||||||||||||||
| Interest expense | (2,239) | — | (2,239) | |||||||||||||||||
| Other income, net | 2,847 | 53 | 2,900 | |||||||||||||||||
| Loss before provision for income taxes | (71,229) | 18,892 | (52,337) | |||||||||||||||||
| Provision for income taxes | 19 | — | 19 | |||||||||||||||||
| Loss from continuing operations | $ | (71,248) | $ | 18,892 | $ | (52,356) | ||||||||||||||
| Loss from continuing operations per share, basic and diluted | $ | (0.68) | $ | (0.50) | ||||||||||||||||
| Weighted-average shares outstanding, basic and diluted | 104,875 | 104,875 | ||||||||||||||||||
6
Pro Forma Condensed Consolidated Statements of Operations
(unaudited)
| As Reported | Pro Forma | |||||||||||||||||||
| Year Ended December 31, 2022 | Disposition of Remix (6) | Year Ended December 31, 2022 | ||||||||||||||||||
| (in thousands, except per share amounts) | ||||||||||||||||||||
| Revenue: | ||||||||||||||||||||
| Consignment | $ | 174,994 | $ | — | $ | 174,994 | ||||||||||||||
| Product | 113,385 | (47,437) | 65,948 | |||||||||||||||||
| Total revenue | 288,379 | (47,437) | 240,942 | |||||||||||||||||
| Cost of revenue: | ||||||||||||||||||||
| Consignment | 37,015 | — | 37,015 | |||||||||||||||||
| Product | 59,026 | (31,873) | 27,153 | |||||||||||||||||
| Total cost of revenue | 96,041 | (31,873) | 64,168 | |||||||||||||||||
| Gross profit | 192,338 | (15,564) | 176,774 | |||||||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Operations, product, and technology | 155,642 | (9,701) | 145,941 | |||||||||||||||||
| Marketing | 64,369 | (11,792) | 52,577 | |||||||||||||||||
| Sales, general, and administrative | 61,814 | (5,083) | 56,731 | |||||||||||||||||
| Total operating expenses | 281,825 | (26,576) | 255,249 | |||||||||||||||||
| Operating loss | (89,487) | 11,012 | (78,475) | |||||||||||||||||
| Interest expense | (805) | — | (805) | |||||||||||||||||
| Other expense, net | (1,957) | (13) | (1,970) | |||||||||||||||||
| Loss before provision for income taxes | (92,249) | 10,999 | (81,250) | |||||||||||||||||
| Provision for income taxes | 35 | — | 35 | |||||||||||||||||
| Loss from continuing operations | $ | (92,284) | $ | 10,999 | $ | (81,285) | ||||||||||||||
| Loss from continuing operations per share, basic and diluted | $ | (0.92) | $ | (0.81) | ||||||||||||||||
| Weighted-average shares outstanding, basic and diluted | 99,817 | 99,817 | ||||||||||||||||||
Notes to the Unaudited Pro Forma Condensed Consolidated Financial Information:
1.Adjustments to previously reported unaudited condensed consolidated balance sheet to reflect the recognition of Remix as an asset held for sale and discontinued operations as of September 30, 2024.
2.Represents the disposition of Remix’s assets and liabilities, which would be reported as “held for sale” and discontinued operations, as if the sale had occurred on September 30, 2024.
3.Represents the fair value of the consideration, consisting of the 9% equity interest in Remix US Holdings and the Remix Convertible Note, to be realized from the sale of the Remix business.
4.Represents the release of the September 30, 2024 unrealized foreign currency translation adjustment balances into earnings for disposed foreign entities.
5.Represents the cumulative impact to accumulated deficit of the pro forma adjustments to the unaudited pro forma condensed consolidated statements of operations for the nine months ended September 30, 2024. There is no income tax impact, as ThredUp, Inc. has not recorded an income tax provision due to operating losses incurred since its inception.
6.Represents the historical financial results of the Remix business as discontinued operations in accordance with ASC 205.
7
SUPPLEMENTAL INFORMATION TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
This supplemental information includes a presentation of Adjusted EBITDA loss, a non-GAAP measure, after giving pro forma effect to the Transaction as reflected in the unaudited pro forma condensed consolidated statements of operations of the Company for the nine months ended September 30, 2024, for the year ended December 31, 2023 and for the year ended December 31, 2022 set forth above, which are incorporated by reference herein. A reconciliation is provided below for Adjusted EBITDA loss to net loss, the most directly comparable financial measure stated in accordance with GAAP. We calculate Adjusted EBITDA loss as net loss adjusted to exclude, where applicable in a given period, stock-based compensation expense, depreciation and amortization, impairment of long-lived assets, interest expense, severance and other reorganization costs, provision for income taxes, impairment of non-marketable securities, and acquisition and offering-related expenses. This supplemental information should be read in conjunction therewith and with the historical consolidated financial statements of the Company and the related notes thereto included in previous filings with the SEC.
In addition to the pro forma condensed consolidated financial information determined in accordance with GAAP, we believe Adjusted EBITDA loss is useful in evaluating the Company’s operating performance. The Company use this measure to evaluate and assess its operating performance and the operating leverage in its business, and for internal planning and forecasting purposes. The Company believes that this non-GAAP measure, when taken collectively with the Company’s GAAP results, may be helpful to investors because they provide consistency and comparability with past financial performance and assist in comparisons with other companies, some of which use similar non-GAAP financial information to supplement their GAAP results. The Company’s non-GAAP measures are presented for supplemental informational purposes only, should not be considered a substitute for financial information presented in accordance with GAAP and may be different from similarly-titled non-GAAP measures used by other companies. The Company encourages investors to review the Company’s results determined in accordance with GAAP and the accompanying reconciliations for more information.
8
Pro Forma Reconciliation of GAAP to Non-GAAP Financial Measures
(unaudited)
| As Reported | Pro Forma | |||||||||||||||||||
| Nine Months Ended September 30, 2024 | Disposition of Remix | Nine Months Ended September 30, 2024 | ||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| Net loss | $ | (55,279) | $ | 23,339 | $ | (31,940) | ||||||||||||||
| Stock-based compensation expense | 20,687 | (895) | 19,792 | |||||||||||||||||
| Depreciation and amortization | 14,497 | (3,601) | 10,896 | |||||||||||||||||
| Impairment of long-lived assets | 9,814 | (9,814) | — | |||||||||||||||||
| Severance and other | 3,562 | (252) | 3,310 | |||||||||||||||||
| Interest expense | 1,958 | — | 1,958 | |||||||||||||||||
| Provision for income taxes | 21 | — | 21 | |||||||||||||||||
| Non-GAAP Adjusted EBITDA (loss) | $ | (4,740) | $ | 8,777 | $ | 4,037 | ||||||||||||||
| As Reported | Pro Forma | |||||||||||||||||||
| Year Ended December 31, 2023 | Disposition of Remix | Year Ended December 31, 2023 | ||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| Net loss | $ | (71,248) | $ | 18,892 | $ | (52,356) | ||||||||||||||
| Stock-based compensation expense | 31,682 | (2,030) | 29,652 | |||||||||||||||||
| Depreciation and amortization | 18,732 | (4,505) | 14,227 | |||||||||||||||||
| Severance and other | 1,196 | (296) | 900 | |||||||||||||||||
| Interest expense | 2,239 | — | 2,239 | |||||||||||||||||
| Provision for income taxes | 19 | — | 19 | |||||||||||||||||
| Non-GAAP Adjusted EBITDA loss | $ | (17,380) | $ | 12,061 | $ | (5,319) | ||||||||||||||
| As Reported | Pro Forma | |||||||||||||||||||
| Year Ended December 31, 2022 | Disposition of Remix | Year Ended December 31, 2022 | ||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| Net loss | $ | (92,284) | $ | 10,999 | $ | (81,285) | ||||||||||||||
| Stock-based compensation expense | 26,817 | (2,589) | 24,228 | |||||||||||||||||
| Depreciation and amortization | 14,033 | (3,388) | 10,645 | |||||||||||||||||
| Impairment of non-marketable securities | 3,750 | — | 3,750 | |||||||||||||||||
| Severance and other | 3,182 | — | 3,182 | |||||||||||||||||
| Interest expense | 805 | — | 805 | |||||||||||||||||
| Acquisition and offering related expenses | 274 | (145) | 129 | |||||||||||||||||
| Provision for income taxes | 35 | — | 35 | |||||||||||||||||
| Non-GAAP Adjusted EBITDA loss | $ | (43,388) | $ | 4,877 | $ | (38,511) | ||||||||||||||
9
