The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our consolidated financial
statements and related notes included elsewhere in this report. This discussion
contains forward-looking statements based upon current plans, expectations and
beliefs that involve risks and uncertainties. Our actual results and the timing
of certain events could differ materially from those anticipated in or implied
by these forward-looking statements as a result of several factors, including
those discussed in the sections titled "Risk Factors" and "Forward-Looking
Statements."
For discussion regarding our financial condition and results of operations for
the year ended December 31, 2021 compared to the year ended December 31, 2020,
refer to Part II, Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations in our Annual Report on Form 10-K for year
ended 2021, which was filed with the SEC on February 28, 2022.

Przegląd

REVOLVE is the next-generation fashion retailer for Millennial and Generation Z
consumers. As a trusted, premium lifestyle brand, and a go-to online source for
discovery and inspiration, we deliver an engaging customer experience from a
vast yet curated offering of apparel, footwear, accessories, beauty and home
products. Our dynamic platform connects a deeply engaged community of millions
of consumers, thousands of global fashion influencers, and more than 1,000
emerging, established and owned brands. Through 20 years of continued investment
in technology, data analytics, and innovative marketing and merchandising
strategies, we have built a powerful platform and brand that we believe is
connecting with the next generation of consumers and is redefining fashion
retail for the 21st century.
We sell merchandise through two complementary segments, REVOLVE and FWRD, that
leverage one platform. Through REVOLVE, we offer an assortment of premium
apparel, footwear, accessories, beauty and home products from emerging,
established and owned brands. Through FWRD, we offer an assortment of curated
and elevated iconic and emerging luxury brands. REVOLVE has historically been
focused on the discovery of trend-driven, ready-to-wear styles, while FWRD has
been more heavily weighted toward the statement pieces in her wardrobe such as
shoes and handbags. We believe that FWRD provides our customer with a unique
destination for luxury products as her spending power increases and her desire
for fashion and inspiration remains central to her self-expression.
We believe our product mix reflects the desires of the next-generation consumer
and we optimize this mix through the selection of established brands that
resonate with our consumer, the identification and incubation of emerging brands
and the continued development of owned brands. The focus on emerging and owned
brands minimizes our assortment overlap with other retailers, supporting
marketing efficiency, conversion and sales at full price.
We have invested in our robust and scalable internally-developed technology
platform to meet the specific needs of our business and to support our
customers' experience. We use proprietary algorithms and 20 years of data to
efficiently manage our merchandising, marketing, product development, sourcing
and pricing decisions. Our platform works seamlessly across devices and analyzes
browsing and purchasing patterns and preferences to help us make purchasing
decisions, which when combined with the small initial orders for new products,
allows us to manage inventory and fashion risk. We have also invested in our
creative capabilities to produce high-quality visual merchandising that caters
to our customers by focusing on style with a distinct point of view rather than
on individual products. The combination of our online sales platform and our
in-house creative photography allows us to showcase brands in a distinctive and
compelling manner.
We are pioneers of social media and influencer marketing, using social channels
and cultural events designed to deliver authentic and aspirational, yet
attainable, experiences to attract and retain Millennial and Generation Z
consumers, and these efforts have historically led to higher earned media value
than competitors. We complement our social media efforts through a variety of
brand marketing campaigns and events, which generate a constant flow of
authentic and inspiring content. Our social media and brand marketing strategy
is combined with robust and sophisticated digital performance marketing
activities and our proprietary brand ambassador program. Once we have attracted
potential new customers to our sites, our goal is to convert them into active
customers and then encourage repeat purchases. We acquire and retain customers
through paid search/product listing ads, affiliate marketing, paid
54

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społecznościowe, retargeting, nasz program ambasadorów marki, spersonalizowany e-mail marketing
oraz mobilna komunikacja „push” za pośrednictwem naszych aplikacji mobilnych.

We have developed an efficient logistics infrastructure, which allows us to
provide free shipping and returns to our customers in the United States. We
support our logistics network with proprietary algorithms to optimize inventory
allocation, reduce shipping and fulfillment expenses and deliver merchandise
quickly and efficiently to our customers, which allows us to ship over 95% of
orders on the same day if placed before noon Pacific Time. We continue to modify
and expand our fulfillment network to support our growth and the demand for our
products.
To date, we have primarily focused on expanding our U.S. business and have grown
internationally with limited investment and no physical presence. We began
offering a more localized shopping experience, including free returns and
all-inclusive pricing, beginning in 2018, for customers in the UK, the EU and
Australia, and further expanded to New Zealand, Singapore and Canada in 2020 and
Poland, Spain, Switzerland and the UAE in 2021, and Saudi Arabia and Monaco in
2022. We have also sold our REVOLVE products on two large international
marketplaces, Tmall Global in China and Nykaa Fashion in India, beginning in
2020 and 2022, respectively. For 2022 and 2021, we generated $187.1 million and
$165.1 million, respectively, in net sales shipped to customers internationally,
or 17.0% and 18.5% of total net sales, respectively. We intend to continue to
invest in and develop international markets while maintaining our focus on the
core U.S. market.
Impact of COVID-19
There continues to be uncertainty around the COVID-19 pandemic and its impact on
our business operations and operating results. While demand for our products has
improved as compared to the height of the outbreak and lockdowns, the extent to
which this increased demand will continue in the future remains uncertain. A
resurgence of COVID-19 may result in business restrictions and social distancing
mandates, the cancellation of large, in-person brand marketing events, supply
chain disruptions, changes in consumer behavior and an increase in the cost of
goods sold.

Różne poziomy ograniczeń mogą ewoluować i mogą stymulować długoterminowe zmiany
zachowania konsumentów.

Kluczowe wskaźniki operacyjne i finansowe

Używamy następujących wskaźników do oceny postępów w naszej działalności, m.in
decyzje o tym, gdzie alokować kapitał, czas i inwestycje technologiczne oraz
ocenić krótkoterminowe i długoterminowe wyniki naszej działalności.

Year Ended December 31,
2022                    2021                     2020
(in thousands, except average order value and percentages)
Gross margin                                                 53.8 %                55.0 %                     52.6 %
Adjusted EBITDA                                $           90,234         $     114,585         $           69,257
Free cash flow                                 $           18,269         $      60,118         $           71,449
Active customers                                            2,340                 1,840                      1,472
Total orders placed                                         8,304                 6,636                      4,499
Average order value                            $              304         $         271         $              236

Skorygowana EBITDA i wolne przepływy pieniężne nie są miarami zgodnymi ze standardami GAAP. Zobacz sekcje
poniżej w celach informacyjnych opatrzono napisami „-Skorygowana EBITDA” i „-Wolne przepływy pieniężne”.
dotyczące naszego wykorzystania Skorygowanej EBITDA i wolnych przepływów pieniężnych oraz ich uzgodnienia
odpowiednio do dochodu netto i środków pieniężnych netto z działalności operacyjnej.

Marża brutto

Gross profit is equal to our net sales less cost of sales. Gross profit as a
percentage of our net sales is referred to as gross margin. Cost of sales
consists of our purchase price of merchandise sold to customers and includes
import
55

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cła i inne podatki, koszty frachtu przychodzącego, koszty odbioru, wadliwe
zwroty towarów od klientów, korekty wyceny zapasów i inne
różne skurcze.

Gross margin is impacted by the mix of brands and categories of styles that we
sell on our sites. Gross margin on sales of owned brands is typically higher
than that for third-party brands. Gross margin is also affected by the
percentage of sales through the REVOLVE segment, which consists primarily of
emerging third-party, established third-party and owned brands, compared to our
FWRD segment, which consists primarily of established third-party brands.
Merchandise mix will vary from period to period and if we do not accurately
forecast demand, our growth, margins and inventory levels may be adversely
affected.
We review our inventory levels on an ongoing basis to identify slow-moving
merchandise and use product markdowns to efficiently sell these products. We
have maintained a high percentage of sales that occur at full price, which we
believe reflects our data-driven merchandising strategy, customer acceptance of
our merchandise and the sense of urgency we create through frequent product
introductions in limited quantities. Gross margin is impacted by the mix of
sales at full price and markdowns, as well as the level of markdowns.
Certain of our competitors and other retailers report cost of sales differently
than we do. As a result, the reporting of our gross profit and gross margin may
not be comparable to other companies.

Skorygowana EBITDA

To provide investors with additional information regarding our financial
results, we have disclosed in the table above and elsewhere in this report
Adjusted EBITDA, a non-GAAP financial measure that we calculate as net income
before other (income) expense, net, taxes, depreciation and amortization,
adjusted to exclude the effects of equity-based compensation expense, and
certain non-routine items. We have provided below a reconciliation of Adjusted
EBITDA to net income, the most directly comparable generally accepted accounting
principles, or GAAP, financial measure.
We have included Adjusted EBITDA in this report because it is a key measure used
by our management and board of directors to evaluate our operating performance,
generate future operating plans and make strategic decisions regarding the
allocation of capital. In particular, the exclusion of certain expenses in
calculating Adjusted EBITDA facilitates operating performance comparisons on a
period-to-period basis and, in the case of exclusion of the impact of
equity-based compensation, excludes an item that we do not consider to be
indicative of our core operating performance. Accordingly, we believe that
Adjusted EBITDA provides useful information to investors and others in
understanding and evaluating our operating results in the same manner as our
management and board of directors.

Skorygowana EBITDA ma ograniczenia jako narzędzie analityczne i nie powinieneś
rozważyć to w izolacji lub jako substytut analizy naszych wyników jako
raportowane zgodnie z GAAP. Niektóre z tych ograniczeń to:

•

although depreciation and amortization are non-cash charges, the assets being
depreciated and amortized may have to be replaced in the future, and Adjusted
EBITDA does not reflect cash capital expenditure requirements for such
replacements or for new capital expenditure requirements;

•

Skorygowana EBITDA nie odzwierciedla zmian ani zapotrzebowania na środki pieniężne dla naszej firmy
zapotrzebowanie na kapitał obrotowy;

•

Skorygowana EBITDA nie uwzględnia potencjalnie rozwadniającego wpływu
wynagrodzenie oparte na kapitale własnym;

•

Skorygowana EBITDA nie odzwierciedla płatności podatków, które mogą stanowić zmniejszenie
dostępna dla nas gotówka;

•

Skorygowana EBITDA nie odzwierciedla pewnych nierutynowych pozycji, które mogą stanowić
zmniejszenie dostępnej nam gotówki; I

•

inne firmy, w tym firmy z naszej branży, mogą obliczać Skorygowane
EBITDA inaczej, co zmniejsza jej przydatność jako miernika porównawczego.

Ze względu na te ograniczenia należy wziąć pod uwagę Skorygowaną EBITDA
inne miary wyników finansowych, w tym różne wskaźniki przepływów pieniężnych, netto
dochód i nasze inne wyniki GAAP.

Our financial results included certain items that we consider non-routine and
not reflective of the underlying trends in our core business operations.
Non-routine items in 2022 primarily related to an accrual for a then-pending
legal matter that has since been resolved. Although we believe these expenses to
be non-routine in nature, we cannot guarantee that these expenses will not be
incurred again in the future.
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Uzgodnienie Skorygowanej EBITDA do zysku netto przedstawia się następująco:

Year Ended December 31,
2022         2021          2020
(in thousands)
Net income                      $ 58,697     $  99,840     $ 56,790
Excluding:
Other (income) expense, net       (3,476 )         563          994
Provision for income taxes        17,919         4,888        3,282
Depreciation and amortization      4,791         4,508        4,827
Equity-based compensation          5,862         4,786        3,364
Non-routine items (1)              6,441             -            -
Adjusted EBITDA                 $ 90,234     $ 114,585     $ 69,257
(1)

Pozycje nierutynowe w 2022 roku dotyczą przede wszystkim rozliczenia międzyokresowego na toczące się wówczas rozliczenia międzyokresowe
kwestia prawna, która została już rozwiązana.

Wolne przepływy pieniężne

To provide investors with additional information regarding our financial
results, we have also disclosed in the table above and elsewhere in this report
free cash flow, a non-GAAP financial measure that we calculate as net cash
provided by operating activities less cash used in purchases of property and
equipment. We have provided below a reconciliation of free cash flow to net cash
provided by operating activities, the most directly comparable GAAP financial
measure.
We have included free cash flow in this report because it is a key measure used
by our management and board of directors, which we believe is an important
indicator of our liquidity because it measures the amount of cash we generate.
Free cash flow also reflects changes in working capital. Our working capital
fluctuates over time primarily as a result of the timing of our inventory
purchases to support growth, our effective tax rate and the timing of tax
payments, and changes in the level of merchandise that is returned by our
customers, which in turn impacts our return reserve. Accordingly, we believe
that free cash flow provides useful information to investors and others in
understanding and evaluating our operating results in the same manner as our
management and board of directors.
Free cash flow has limitations as an analytical tool, and you should not
consider it in isolation or as a substitute for analysis of our results as
reported under GAAP. There are limitations to using non-GAAP financial measures,
including that other companies, including companies in our industry, may
calculate free cash flow differently. Because of these limitations, you should
consider free cash flow alongside other financial performance measures,
including net cash provided by operating activities, purchases of property and
equipment and our other GAAP results.
The following table presents a reconciliation of free cash flow to net cash
provided by operating activities, as well as information regarding net cash used
in investing activities and net cash provided by financing activities, for each
of the periods indicated:
Year Ended December 31,
2022         2021         2020
(in thousands)

Środki pieniężne netto z działalności operacyjnej 23 436 USD 62 313 USD 73 773 USD
Zakupy środków trwałych i wyposażenia

           (5,167 )     (2,195 )     (2,324 )
Free cash flow                              $ 18,269     $ 60,118     $ 

71449

Środki pieniężne netto wykorzystane w działalności inwestycyjnej $ (5167 ) $ (2195 ) $ (2324 )
Środki pieniężne netto z działalności finansowej 887 USD 12 766 USD 8 660 USD

Active Customers
We define an active customer as a unique customer account from which a purchase
was made across our platform at least once in the preceding 12-month period. We
calculate the number of active customers on a trailing 12-month basis given the
volatility that can be observed when calculating it on the basis of shorter
periods that may not be reflective of longer-term trends; however, such a
methodology may not be indicative of other short-term trends, such as changes in
new customers. In any particular period, we determine our number of active
customers by counting
57
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the total number of customers who have made at least one purchase in the
preceding 12-month period, measured from the last date of such period. We view
the number of active customers as a key indicator of our growth, the reach of
our sites, the value proposition and consumer awareness of our brands, the
continued use of our sites by our customers and their desire to purchase our
products. We believe the number of active customers is a measure that is useful
to investors and management in understanding our growth, brand awareness and
market opportunity. Our number of active customers drives both net sales and our
appeal to brands and partners.
Active customers increased during 2022 as compared to 2021 primarily due to our
ability to engage with our existing customers and acquire new customers through
our sales and marketing efforts, and to a lesser extent, due to the easing of
stay-at-home orders and other restrictions in the United States and other key
regions around the world.
Total Orders Placed
We define total orders placed as the total number of orders placed by our
customers, prior to product returns, across our platform in any given period. We
view total orders placed as a key indicator of the velocity of our business and
an indication of the desirability of our products and sites to our customers.
Total orders placed, together with average order value, is an indicator of the
net sales we expect to recognize in a given period. We believe that total orders
placed is a measure that is useful to investors and management in understanding
our ongoing operations and in analysis of ongoing operating trends. Total orders
placed and total orders shipped in any given period may differ slightly due to
orders that are in process at the end of any particular period.
Total orders placed increased in 2022 as compared to 2021 primarily due to our
ability to engage with our existing customers and acquire new customers through
our sales and marketing efforts, and to a lesser extent due to the easing of
stay-at-home orders and other restrictions in the United States and other key
regions around the world
Average Order Value
We define average order value as the sum of the total gross sales from our sites
in a given period, prior to product returns, divided by the total orders placed
in that period. In 2022, average order value for merchandise sold through the
REVOLVE and FWRD segments was approximately $279 and $690, respectively,
reflecting the brands sold and typical profile of the shoppers on such sites. We
believe our high average order value demonstrates the premium nature of our
product assortment. We believe that average order value is a measure that is
useful to investors and management in understanding our ongoing operations and
in analysis of ongoing operating trends. Average order value varies depending on
the site through which we sell merchandise, the percentage of sales at full
price, and for sales at less than full price, the level of markdowns on these
products, product mix, and the number of units per order. Average order value
varies depending on the site through which we sell merchandise, the mix of
product categories sold, the number of units in each order, the percentage of
sales at full price, and for sales at less than full price, the level of
markdowns.
Average order value increased during 2022 as compared to 2021, primarily due to
a shift in mix back to higher price point merchandise combined with an increase
in the price of products as a result of the increase in the cost of goods and
other input costs, partially offset by a lower percentage of full price sales.

Czynniki wpływające na nasze wyniki

Wpływ COVID-19 na naszą działalność

The COVID-19 pandemic had a material adverse impact on our business operations
and operating results for 2020 due to business restrictions and social
distancing measures imposed in the United States and other countries, and the
severe negative impact on macroeconomic conditions and consumer discretionary
spending. As states began rolling back business restrictions and stay-at-home
orders, our operating results improved. However, there continues to be
uncertainty around the COVID-19 pandemic and its impact on our business
operations and operating results. Our business operations and results of
operations may continue to be adversely affected, including as a result of:

•

różne poziomy ograniczeń w Stanach Zjednoczonych, a także pewien klucz
regiony na całym świecie;

•

wzrost liczby przypadków COVID-19 w wyniku wariantów COVID-19;

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•

an increase in the cost of materials and disruption to the supply chain caused
by distribution and other logistical issues, including labor shortages as well
as potential bankruptcies impacting our suppliers or manufacturing partners;

•

zmniejszona produktywność z powodu polityki pracy z domu, zakazów podróżowania lub
nakazy schronienia na miejscu; I

•

spowolnienie gospodarki światowej, niepewne perspektywy gospodarcze na świecie lub a
kryzys kredytowy.

Ogólne trendy gospodarcze

The overall economic environment and related changes in consumer behavior have a
significant impact on our business. In general, positive conditions in the
broader economy promote customer spending on our sites, while economic weakness,
which generally results in a reduction of customer spending, may have a more
pronounced negative effect on spending on our sites. Macro factors that can
affect consumer confidence, shopping behavior and spending patterns, and thereby
our near-term and long-term results of operations, include inflation, employment
rates, business conditions, changes in the housing market, changes in the stock
market, the availability of credit, U.S. government stimulus payments, interest
rates, foreign currency exchange rates, fuel, energy and raw material costs,
supply chain challenges and Russia's war against Ukraine. In addition, during
periods of low unemployment, we generally experience higher labor costs. The
COVID-19 pandemic has also had and may continue to have a materially adverse
impact on the macroeconomic environment in the United States and substantially
all of our target markets.

Pozyskiwanie i utrzymanie klientów oraz wzrost świadomości marki

Our focus since inception has been on profitable growth, which has created our
disciplined approach to acquiring new customers and retaining existing customers
at a reasonable cost, relative to the contributions we expect from such
customers. Failure to attract new visitors to our sites and convert them to
customers would impact future net sales growth.
If our marketing efforts do not connect with our customer or fail to
cost-effectively promote our brand or convert impressions into purchases of our
product, our net sales growth and profitability will be adversely affected.
Competition for social media and influencer-based marketing channels continues
to increase, making it more difficult to differentiate our business and cost
effectively acquire customers. Furthermore, changes in the user experience on
social media platforms, including a shift towards video and the level of
recommended content as well as changes in privacy practices by third parties may
make it more difficult to gain customer awareness and cost effectively acquire
and retain customers. Apple has imposed requirements for consumer disclosures
regarding privacy practices, and has implemented an application tracking
transparency framework that requires opt-in consent for certain types of
tracking. This transparency framework was launched in April 2021 and has made it
more difficult and costly to acquire and retain customers, which may adversely
affect our operating results. Additionally, in November 2022, Google announced
that it plans to implement similar restrictions to restrict tracking activity
across Android devices in early 2023.
We seek to engage with our customers and build awareness of our brands through
sponsoring unique events and experiences such as #REVOLVEfestival,
#REVOLVEaroundtheworld and the REVOLVE Gallery, as well as short-term pop-up
retail experiences. With the travel restrictions and social distancing measures
imposed in response to the COVID-19 pandemic during 2020, we were unable to
engage with our customers through larger in-person activations such as
#REVOLVEfestival, which had a negative impact on our ability to drive traffic to
our sites, acquire new customers and retain our existing customers. As
restrictions eased and to maximize our opportunity to capture consumer demand as
economies reopened, during 2021 and 2022 we increased our marketing investment
and began hosting in-person events, including #REVOLVEfestival in April 2022
after a two-year hiatus. We plan to continue to conduct in-person events at
varying levels of scale in the future and make opportunistic investments in
marketing initiatives that could increase marketing as a percentage of net sales
to levels in excess of historical levels for certain quarters or periods of
time. This incremental investment may not deliver a meaningful return in the
short term and may adversely impact our operating income in the short term.

Utrzymanie klienta

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Our success is impacted not only by efficient and effective customer acquisition
and growth in brand awareness, but also by our ability to retain customers,
engage with our community and encourage repeat purchases. Existing customers,
whom we define as customers in a year who have purchased from us in any prior
year, account for a greater and greater share of active customers over time.
Existing customers as a percentage of total active customers were 50%, 49%, 49%
and 45% for 2022, 2021, 2020 and 2019, respectively.
Existing customers typically place more orders annually than new customers and
at higher average order values, resulting in existing customers representing
approximately 77% of orders and approximately 79% of net sales in 2022, up from
76% of orders and 77% of net sales in 2021 and 57% of orders and 58% of net
sales in 2014, again having increased in each year since 2014. We believe these
increasing metrics are reflective of our ability to engage and retain our
customers through our differentiated marketing and compelling merchandise
offering and shopping experience. The increasing share of our net sales from
existing customers reflects our customer loyalty and the net sales retention
behavior we see in our customer cohorts.
The chart below illustrates the spending behavior of our customer cohorts over
time, as reflected in customer purchases of our products annually. As shown in
the chart, the net sales contribution and retention from existing customer
cohorts was temporarily impacted in 2020 by the headwinds from the COVID-19
pandemic, before rebounding strongly in 2021 and 2022. Cohort net sales
retention is calculated as net sales attributable to a given customer cohort
divided by the total net sales attributable to the same customer cohort from one
year prior. Cohort net sales retention was 97% in 2022 as compared to 120% in
2021, 74% in 2020 and 89% in 2019. We believe that the reduced 2020 retention
performance was short term in nature as a result of the COVID-19 headwinds and
not indicative of the value of our customer base over the long term, as
evidenced by the strong recovery and retention rates in 2021 and 2022; however,
if the negative customer retention and purchasing pattern experienced in 2020
were to recur due to the COVID-19 pandemic or other factors, or if we are unable
to otherwise maintain our historically strong retention rates, our operating
results could be adversely impacted.

[[Image Removed: img166198876_1.jpg]]

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Mieszanka towarów

We offer merchandise across a variety of product types, brands and price points.
The brands we sell on our platform consist of a mix of emerging third-party,
established third-party (including iconic luxury brands) and owned brands. Our
product mix consists primarily of apparel, footwear, accessories and beauty
products.
Our merchandise mix across our two reporting segments carry a range of margin
profiles and may cause fluctuations in our gross margin. Shifts in our segment
mix and our broader category merchandise mix may result in fluctuations in our
gross margin from period to period.

Zarządzanie zapasami

We leverage our platform and technology to buy and manage our inventory,
including merchandise assortment and fulfillment center optimization. We utilize
a data-driven "read and react" buying process to merchandise and curate the
latest on-trend fashion. We generally make shallow initial inventory buys and
then use our proprietary technology tools to identify and re-order best sellers,
taking into account customer feedback across a variety of key metrics, which
allows us to manage inventory and fashion risk. To ensure sufficient
availability of merchandise, we generally purchase inventory in advance and
frequently before apparel trends are confirmed. As a result, we are vulnerable
to demand and pricing shifts and to suboptimal selection and timing of
merchandise purchases. In the normal course of business, we incur inventory
valuation adjustments, which impacts our gross margin. Moreover, our inventory
investments will fluctuate with the needs of our business. For example, entering
new categories will require additional investments in inventory. Shifts in
inventory levels may result in fluctuations in the percentage of full price
sales, levels of markdowns, merchandise mix, as well as gross margin. In
addition, our sales demand had initially been adversely impacted as a result of
the COVID-19 pandemic. In response, in 2020, we significantly reduced inventory
receipts by canceling or delaying orders. With consumer demand trends improving
beginning in the second quarter of 2020 and continuing to improve through 2021,
we invested heavily in inventory to meet the robust demand. However, during the
second quarter of 2022, consumer demand began to trend down significantly,
resulting in a significant increase in our inventory balance. We have taken
swift action in our efforts to balance our inventory levels with the shift in
demand, but we may not be able to respond quickly enough to adjust our inventory
position accordingly, which may have an adverse impact on our operating results.

Inwestycje w nasze operacje i infrastrukturę

We have made investments over time to grow our customer base, enhance our
offerings and deliver best-in-class service to our customers. Over the long
term, we expect to continue to make capital investments in our inventory,
fulfillment centers, and logistics infrastructure as we grow our customer base,
launch new brands, expand internationally and drive operating efficiencies. We
believe these investments will yield positive returns in the long term; however,
we cannot be certain that these efforts will grow our customer base or be
cost-effective in the short term.

Segment i wyniki geograficzne

Our financial results are affected by the performance across our two reporting
segments, REVOLVE and FWRD, as well as across the various geographies in which
we serve our customers.
The REVOLVE segment contributes to a majority of our net sales, representing
83.6% of our net sales for both 2022 and 2021. During 2022 and 2021, REVOLVE
generated $921.7 million and $745.1 million in net sales, respectively,
representing an increase of 23.7%. The net sales increase in 2022 compared to
2021 was primarily due to an increase in the number of total orders placed by
customers complemented by an increase in average order value.
The FWRD segment contributes to a smaller portion of our overall net sales,
representing 16.4% of our net sales for both 2022 and 2021. During 2022 and
2021, FWRD generated $179.7 million and $146.3 million in net sales,
respectively, representing an increase of 22.9%. The net sales increase in 2022
compared to 2021 was primarily due to an increase in the number of total orders
placed by customers combined with an increase in average order value.
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Net sales to customers outside of the United States contributed to 17.0% and
18.5% of our net sales for 2022 and 2021, respectively. During 2022 and 2021,
net sales to customers outside of the United States were $187.1 million and
$165.1 million, respectively, representing an increase of 13.2%.
Net sales to customers outside of the United States are impacted by various
factors including import and export taxes, currency fluctuations and other
macroeconomic conditions described in "-Overall Economic Trends" above. In
addition, any weakening of a local currency versus the U.S. dollar results in
our products becoming more expensive in that local currency, which has had, and
may continue to have, a negative impact on demand for our products in the
geographies that use such currency.

Sezonowość

Seasonality in our business has not historically followed that of traditional
retailers which typically experience concentration of net sales in the fourth
calendar quarter in connection with the holidays. We historically experienced
increased sales in the spring and summer months that have resulted in peak sales
during the second quarter of each fiscal year. We also historically experienced
lower activity in the first quarter of each year. The COVID-19 pandemic impacted
our historical seasonality, resulting in the second quarter not being the peak
quarter for the 2020 and 2021 fiscal years. With the exception of the COVID-19
pandemic and other unpredictable events such as the other macroeconomic
conditions described in "-Overall Economic Trends" above, we expect our
historical seasonality to revert closer to historical trends in future years.
Our operating income has also been affected by these historical trends because
many of our expenses are relatively fixed in the short term. If our growth rates
moderate over the long-term, the impact of these seasonality trends on our
results of operations may become more pronounced.
Our business is directly affected by the behavior of consumers. Economic
conditions and competitive pressures can significantly impact, both positively
and negatively, the level of demand by customers for our products. Consequently,
the results of any prior quarterly or annual periods should not be relied upon
as indications of our future operating performance.

Składniki naszych wyników operacyjnych

Sprzedaż netto

Net sales consist primarily of sales of women's apparel, footwear, accessories,
home and beauty products. We recognize product sales at the time control is
transferred to the customer, which is when the product is shipped. Net sales
represent the sales of these items and shipping revenue when applicable, net of
estimated returns and promotional discounts. Net sales are primarily driven by
growth in the number of our customers, the frequency with which customers
purchase and average order value.

Koszt sprzedaży

Cost of sales consists of our purchase price for merchandise sold to customers
and includes import duties, net of drawback claims, and other taxes, inbound
freight costs, receiving costs, defective merchandise returned from customers,
inventory valuation adjustments, and other miscellaneous shrinkage. Cost of
sales is primarily driven by the cost of the product, the number of total orders
placed by customers, the mix of the product available for sale on our sites and
transportation costs related to inventory receipts from our vendors. We expect
our cost of sales to fluctuate as a percentage of net sales primarily due to how
we manage our inventory and merchandise mix. We have recently experienced and
may continue to experience an increase in the cost of goods due to an increase
in the cost of materials.
Fulfillment Expenses
Fulfillment expenses represent those costs incurred in operating and staffing
our fulfillment centers, including costs attributed to inspecting and
warehousing inventories and picking, packaging and preparing customer orders for
shipment. Fulfillment expenses also include the cost of warehousing facilities.
We expect fulfillment expenses to fluctuate as a percentage of net sales due to
pressure from increased costs such as wages and other input cost pressure,
expansion of our fulfillment network footprint and capacity, and our customers'
propensity to return merchandise, to
62

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zostać częściowo zrekompensowane przez efektywność operacyjną wynikającą ze zwiększonej skali, jak również
automatyzacja przepływu pracy centrum logistycznego.

Koszty sprzedaży i dystrybucji

Selling and distribution expenses consist primarily of shipping and other
transportation costs incurred delivering merchandise to customers and from
customers returning merchandise, merchant processing fees, and customer service.
We expect selling and distribution expenses to fluctuate as a percentage of net
sales reflecting pressure from elevated return rates due to product mix and
consumer behavior, investments in international markets to offer hassle-free
returns as well as increases in shipping costs, including the impact of fuel
prices incurred through variable surcharges from our shipping partners,
partially offset by efficiencies realized from optimized shipping methods.

Wydatki marketingowe

Marketing expenses consist primarily of targeted online performance marketing
costs, such as paid search/product listing ads, affiliate marketing, paid
social, retargeting, search engine optimization, personalized email marketing
and mobile "push" communications through our mobile applications. Marketing
expenses also consist of investment in brand marketing channels, including
events, payments to influencers and other forms of online and offline marketing
such as our brand ambassador program. Marketing expenses are primarily related
to growing and retaining our customer base and building the REVOLVE and FWRD
brands. As a result of the impact on consumer discretionary spending and the
required social distancing due to the COVID-19 pandemic, we reduced our
marketing investment in absolute dollars and as a percentage of net sales in
2020. In 2021 and 2022, we increased our level of investment in marketing to
maximize our opportunities to capture consumer demand as economies reopened.
Over the long term, we expect marketing expenses to increase in absolute dollars
as we continue to scale our business, and may fluctuate as a percentage of sales
depending on net sales volume, the level of marketing investment in a particular
period and the competitive environment. We may make opportunistic investments in
marketing initiatives that may increase marketing as a percentage of net sales
to levels in excess of historical levels for certain quarters or periods of time
in the future.

Koszty ogólnoadministracyjne

General and administrative expenses consist primarily of payroll and related
benefit costs and equity-based compensation expense for our employees involved
in general corporate functions, as well as costs associated with the use by
these functions of facilities and equipment, such as depreciation, rent and
other occupancy expenses. In 2021, we reinvested significantly to expand our
team to support our strong growth. General and administrative expenses are
expected to increase in the near term as we plan to continue to invest in our
team to support future growth, albeit at a more moderate year-over-year growth
rate than in 2021. Over the long-term, we expect general and administrative
expenses to continue to increase moderately in absolute dollars to support
business growth and meet our obligations as a public company with general and
administrative expenses as a percentage of revenue declining over the long-term
as we leverage our investments and as our business scales.

Inne wydatki (przychody) netto

Other (income) expense, net consists primarily of interest income on our money
market funds, interest expense and other fees associated with our line of credit
and foreign exchange (gains) losses.
63

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Wyniki operacji

Poniższe tabele przedstawiają nasze wyniki operacyjne za okresy
przedstawione i wyrażają relacje niektórych pozycji w procentach
sprzedaży netto za te okresy. Okresowe porównanie wyników finansowych
wyniki niekoniecznie wskazują na przyszłe wyniki.

Year Ended December 31,
2022           2021          2020
(in thousands)
Net sales                             $ 1,101,416     $ 891,390     $ 580,649
Cost of sales                             509,093       401,567       275,369
Gross profit                              592,323       489,823       305,280
Operating expenses:
Fulfillment expenses                       31,804        21,322        16,471

Koszty sprzedaży i dystrybucji 190 419 133 506 80 496
Wydatki marketingowe

                        181,648       140,398        

76371

General and administrative expenses       115,312        89,306        70,876
Total operating expenses                  519,183       384,532       244,214
Income from operations                     73,140       105,291        61,066
Other (income) expense, net                (3,476 )         563           994
Income before income taxes                 76,616       104,728        60,072
Provision for income taxes                 17,919         4,888         3,282
Net income                            $    58,697     $  99,840     $  56,790
Year Ended December 31,
2022        2021        2020
Net sales                                100.0 %     100.0 %     100.0 %
Cost of sales                             46.2        45.0        47.4
Gross profit                              53.8        55.0        52.6
Operating expenses:
Fulfillment expenses                       2.9         2.4         2.8

Koszty sprzedaży i dystrybucji 17,3 15,0 13,9
Wydatki marketingowe

                        16.5        15.8        13.2
General and administrative expenses       10.5        10.0        12.2
Total operating expenses                  47.2        43.2        42.1
Income from operations                     6.6        11.8        10.5
Other (income) expense, net               (0.3 )       0.1         0.2
Income before income taxes                 6.9        11.7        10.3
Provision for income taxes                 1.6         0.5         0.5
Net income                                 5.3 %      11.2 %       9.8 %

Porównanie lat zakończonych w 2022 i 2021 r

Sprzedaż netto

Year Ended December 31,               Change
2022            2021            $           %
(dollars in thousands)
Net sales   $    1,101,416     $ 891,390     $ 210,026       23.6 %

Wzrost sprzedaży netto za 2022 r. w porównaniu do 2021 r. wynikał przede wszystkim z
wzrost łącznej liczby zamówień składanych przez klientów o 25,1% i wzrost
w średniej wartości zamówienia na poziomie 12,2% w stosunku do 2021 r., częściowo skompensowane o ok
wyższy odsetek zwrotów zakupów.

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Net sales in the REVOLVE segment increased 23.7% to $921.7 million in 2022
compared to net sales of $745.1 million in 2021. Net sales generated from our
FWRD segment increased 22.9% to $179.7 million in 2022 as compared to net sales
of $146.3 million in 2021.
Cost of Sales
Year Ended December 31,               Change
2022             2021            $           %
(dollars in thousands)
Cost of sales             $    509,093       $ 401,567     $ 107,526       26.8 %
Percentage of net sales           46.2 %          45.0 %
The increase in cost of sales in 2022, as compared to 2021, was primarily due to
an increase in the volume of merchandise sold. The increase in cost of sales as
a percentage of net sales was due to a lower percentage of full price sales and
higher routine inventory adjustments, partially offset by a higher mix of owned
brand sales.
Fulfillment Expenses
Year Ended December 31,              Change
2022             2021           $           %
(dollars in thousands)

Koszty realizacji 31 ​​804 USD 21 322 USD 10 482 USD 49,2 %
Procent sprzedaży netto

            2.9 %           2.4 %
Fulfillment expenses in 2022 were higher as compared to 2021, primarily due to
an increase in the number of units processed. The increase in fulfillment
expenses as a percentage of net sales was primarily due to customers returning a
higher proportion of their purchases, higher wages for fulfillment staff, the
mix of units processed and the expansion of our fulfillment network footprint
and capacity.

Koszty sprzedaży i dystrybucji

Year Ended December 31,              Change
2022             2021           $           %
(dollars in thousands)

Koszty sprzedaży i dystrybucji 190 419 USD 133 506 USD 56 913 USD 42,6 %
Procent sprzedaży netto

                     17.3 %          15.0 %
The increase in selling and distribution expenses in 2022, as compared to 2021,
was primarily due to an increase in the number of orders shipped. Shipping and
handling costs increased $36.0 million, merchant processing fees increased $8.4
million, other selling expenses increased $4.7 million, packaging costs
increased $4.0 million and customer service costs increased $3.8 million during
2022 as compared to 2021. The increase in selling and distribution expenses as a
percentage of net sales was due to customers returning a higher proportion of
their purchases as compared to the comparative period in the prior year combined
with increased average shipping and handling fees per package through increases
in carrier rates and fuel surcharges.
Marketing Expenses
Year Ended December 31,              Change
2022             2021           $           %
(dollars in thousands)
Marketing expenses        $    181,648       $ 140,398     $ 41,250       29.4 %
Percentage of net sales           16.5 %          15.8 %
The increase in marketing expenses in 2022, as compared to 2021, was due to an
increase in marketing investments to acquire customers and retain existing
customers to drive higher net sales. The increase was due to an increase in
performance marketing expense of $30.5 million as well as an increase of $10.8
million in brand marketing expense. The higher investment in 2022 is reflective
of the increased cost to acquire new customers and retain existing
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customers as well as investments made in brand marketing initiatives including
the Homecoming Weekend events that took place in the first quarter during Super
Bowl weekend, the opening of the Revolve Social Club in March 2022,
#REVOLVEfestival which we hosted in April 2022 after a two-year hiatus, the
return of REVOLVE Gallery in September, #REVOLVEwinterland and various other
smaller scale events throughout the year. Due to COVID-19 related restrictions
in the comparable prior year period, our in-person, event-based marketing events
were limited, particularly in the first half of the prior year.

Koszty ogólnoadministracyjne

Year Ended December 31,              Change
2022              2021          $           %
(dollars in thousands)

Koszty ogólnego zarządu 115 312 USD 89 306 USD 26 006 USD 29,1 %
Procent sprzedaży netto

                        10.5 %         10.0 %
The increase in general and administrative expenses in 2022, as compared to
2021, was due to a $11.3 million increase in salaries and related benefits and
equity-based compensation expense related to an increase in our headcount, a
$6.3 million accrual for a then-pending legal matter that has since been
resolved, a $3.5 million increase related to professional services and other
occupancy costs, and a $4.9 million increase in other operating expenses to
support business growth. The increase in general and administrative expenses as
a percentage of net sales was primarily driven by the $6.3 million accrual for
the then-pending legal matter.
Income Taxes
Year Ended December 31,
2022             2021
(dollars in thousands)
Income before income taxes   $     76,616       $ 104,728
Provision for income taxes         17,919           4,888
Effective tax rate                   23.4 %           4.7 %

Wzrost efektywnej stopy podatkowej za 2022 rok w porównaniu do 2021 roku był przede wszystkim
w związku ze spadkiem nadwyżki korzyści podatkowych związanych z wykonywaniem
niekwalifikowane opcje na akcje.

Kwartalne wyniki operacji oraz inne dane finansowe i operacyjne

The following tables set forth selected unaudited quarterly results of
operations and other financial and operations data for each of the quarters
indicated. The information for each of these quarters has been prepared on the
same basis as the audited annual consolidated financial statements included
elsewhere in this report and in the opinion of management, includes all
adjustments, which include only normal recurring adjustments, necessary for the
fair statement of our consolidated results of operations for these periods. This
data should be read in conjunction with our consolidated financial statements
and related notes included elsewhere in this report. Our quarterly results of
operations will vary in the future. These quarterly operating results are not
necessarily indicative of our operating results for any future period.
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Trzy miesiące zakończone

                  December 31,       September 30,      June 30,      March 31,       December 31,       September 30,      June 30,       March 31,
2022               2022             2022           2022             2021               2021             2021           2021
(in thousands, except per share data)
Net sales        $      259,153     $       268,711     $ 290,054     $  283,498     $      239,805     $       244,064     $ 228,614     $   178,907
Cost of sales           125,865             126,329       127,812        129,087            108,341             109,588       101,396          82,242
Gross profit            133,288             142,382       162,242        154,411            131,464             134,476       127,218          96,665
Operating
expenses:
Fulfillment
expenses                  8,532               8,072         7,910          7,290              5,870               5,776         5,309           4,367
Selling and
distribution
expenses                 45,389              46,477        51,967         46,586             38,036              38,354        32,139          24,977
Marketing
expenses                 39,893              44,584        51,921         45,250             32,344              46,955        34,871          26,228
General and
administrative
expenses                 28,815              28,498        31,164         26,835             23,278              24,180        21,970          19,878
Total
operating
expenses                122,629             127,631       142,962        125,961             99,528             115,265        94,289          75,450
Income from
operations               10,659              14,751        19,280         28,450             31,936              19,211        32,929          21,215
Other expense
(income), net               293              (1,440 )      (1,813 )         (516 )              224                (158 )         264             233
Income before
income taxes             10,366              16,191        21,093         28,966             31,712              19,369        32,665          20,982
Provision for
(benefit from)
income taxes              2,498               4,203         4,820          6,398              2,330               2,701         1,127          (1,270 )
Net income       $        7,868     $        11,988     $  16,273     $   22,568     $       29,382     $        16,668     $  31,538     $    22,252
Earnings per
share
of Class A and
Class B common
stock:
Basic            $         0.11     $          0.16     $    0.22     $     0.31     $         0.40     $          0.23     $    0.44     $      0.31
Diluted          $         0.11     $          0.16     $    0.22     $     0.30     $         0.39     $          0.22     $    0.42     $      0.30
Weighted
average
number of
shares
of Class A and
Class B common
stock
outstanding:
Basic                    73,349              73,328        73,312         73,264             73,057              72,810        72,387          71,782
Diluted                  74,286              74,354        74,635         74,803             74,834              74,881        74,422          74,033
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Trzy miesiące zakończone

December 31,       September 30,       June 30,       March 31,      December 31,       September 30,       June 30,       March 31,
2022               2022              2022           2022             2021               2021              2021           2021
Net sales                  100.0 %             100.0 %        100.0 %         100.0 %           100.0 %             100.0 %        100.0 %         100.0 %
Cost of sales               48.6                47.0           44.1            45.5              45.2                44.9           44.4            46.0
Gross profit                51.4                53.0           55.9            54.5              54.8                55.1           55.6            54.0
Operating
expenses:
Fulfillment
expenses                     3.3                 3.0            2.7             2.6               2.4                 2.4            2.3             2.4
Selling and
distribution
expenses                    17.5                17.3           17.9            16.4              15.9                15.7           14.1            14.0
Marketing
expenses                    15.4                16.6           17.9            16.0              13.5                19.2           15.3            14.7
General and
administrative
expenses                    11.1                10.6           10.7             9.5               9.7                 9.9            9.6            11.1
Total operating
expenses                    47.3                47.5           49.2            44.5              41.5                47.2           41.3            42.2
Income from
operations                   4.1                 5.5            6.7            10.0              13.3                 7.9           14.3            11.8
Other expense
(income), net                0.1                (0.5 )         (0.6 )          (0.2 )             0.1                (0.1 )          0.1             0.1
Income before
income taxes                 4.0                 6.0            7.3            10.2              13.2                 8.0           14.2            11.7
Provision for
(benefit from)
income taxes                1.0                 1.6            1.7             2.3               1.0                 1.2            0.5            (0.7 )
Net income                   3.0 %               4.4 %          5.6 %           7.9 %            12.2 %               6.8 %         13.7 %          12.4 %
Three Months Ended
December 31,       September 30,      June 30,       March 31,       December 31,       September 30,       June 30,       March 31,
2022               2022             2022           2022              2021               2021              2021           2021
(in thousands, except average order value and percentages)
Other
Financial
and
Operations
Data
Gross margin             51.4 %              53.0 %        55.9 %          54.5 %             54.8 %              55.1 %         55.6 %          54.0 %
Adjusted
EBITDA(1)      $       14,137     $        17,676     $  26,878     $    31,543     $       34,176     $        21,666     $   35,403     $    23,340
Free cash
flow           $      (12,278 )   $         8,618     $ (30,798 )   $    52,727     $       (6,525 )   $         1,340     $   32,830     $    32,473
Active
customers               2,340               2,249         2,165           2,041              1,840               1,678          1,554           1,477
Total orders
placed                  1,954               1,951         2,243           2,156              1,755               1,830          1,769           1,282
Average
order value    $          306     $           320     $     303     $       288     $          292     $           276     $      255     $       256

(1) Skorygowana EBITDA to miara finansowa niezgodna ze standardami GAAP, którą obliczamy jako netto

dochód przed innymi kosztami (przychodami), netto, podatkami, amortyzacją i

amortyzacja, skorygowana w celu wyłączenia skutków wynagrodzenia opartego na kapitale własnym

wydatki i niektóre nierutynowe pozycje. Proszę zapoznać się z sekcją zatytułowaną „-Klucz

EBITDA skorygowana o wskaźniki operacyjne i finansowe” powyżej, aby uzyskać więcej informacji.

Pozycje nierutynowe obejmują pewne pozycje, które uważamy za nierutynowe i nierutynowe

odzwierciedla podstawowe trendy w naszej podstawowej działalności biznesowej.

Poniższa tabela przedstawia uzgodnienie Skorygowanej EBITDA do netto

     income:
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Trzy miesiące zakończone

December 31,       September 30,       June 30,       March 31,       December 31,       September 30,      June 30,       March 31,
2022               2022              2022           2022              2021               2021             2021           2021
(in thousands)
Net income     $        7,868     $        11,988     $   16,273     $    22,568     $       29,382     $        16,668     $  31,538     $    22,252
Excluding:
Other
expense
(income),
net                       293              (1,440 )       (1,813 )          (516 )              224                (158 )         264             233
Provision
for (benefit
from) income
tax                     2,498               4,203          4,820           6,398              2,330               2,701         1,127          (1,270 )
Depreciation
and
amortization            1,272               1,214          1,203           1,102              1,118               1,119         1,122           1,149
Equity-based
compensation            1,452               1,524          1,395           1,491              1,122               1,336         1,352             976
Non-routine
items(1)                  754                 187          5,000             500                  -                   -             -               -
Adjusted
EBITDA         $       14,137     $        17,676     $   26,878     $    31,543     $       34,176     $        21,666     $  35,403     $    23,340
The following table presents a reconciliation of free cash flow, a non-GAAP
financial measure, to net cash (used in) provided by operating activities, as
well as information regarding net cash used in investing activities and net cash
provided by financing activities:

Trzy miesiące zakończone

December 31,       September 30,      June 30,       March 31,       December 31,       September 30,      June 30,       March 31,
2022               2022             2022           2022              2021               2021             2021           2021
(in thousands)
Net cash (used in)
provided
by operating
activities           $      (11,015 )   $        10,006     $ (29,352 )   $    53,797     $       (6,098 )   $         1,855     $  33,347     $    33,209
Purchases of
property and
equipment                  (1,263 )            (1,388 )      (1,446 )        (1,070 )             (427 )              (515 )        (517 )          (736 )
Free cash flow(1)    $      (12,278 )   $         8,618     $ (30,798 )   $    52,727     $       (6,525 )   $         1,340     $  32,830     $    32,473
Net cash used in
investing
activities(2)        $       (1,263 )   $        (1,388 )   $  (1,446 )   $    (1,070 )   $         (427 )   $          (515 )   $    (517 )   $      (736 )
Net cash provided
by financing
activities                      391                 128           242             126              3,318               1,231         3,900           4,317

(1) Wolne przepływy pieniężne to miara finansowa niezgodna ze standardami GAAP, którą obliczamy jako gotówkę netto

(wykorzystane) dostarczone z działalności operacyjnej pomniejszone o środki pieniężne netto wykorzystane na zakupy

majątku i wyposażenia. Proszę zapoznać się z sekcją zatytułowaną „-Obsługa klawiszy i

Przepływy pieniężne wolne od wskaźników finansowych” powyżej, aby uzyskać więcej informacji.

(2) Środki pieniężne netto wykorzystane w działalności inwestycyjnej obejmują płatności za zakupy

majątek i sprzęt, który jest również uwzględniony w naszej kalkulacji gratis

cash flow.

Sezonowość i trendy kwartalne

Seasonality in our business has not historically followed that of traditional
retailers which typically experience concentration of net sales in the fourth
calendar quarter in connection with the holidays. We historically experienced
increased sales in the spring and summer months that have resulted in peak sales
during the second quarter of each fiscal year. We also historically experienced
lower activity in the first quarter of each year. The COVID-19 pandemic impacted
our historical seasonality, resulting in the second quarter not being the peak
quarter in 2020 and 2021. With the exception of the COVID-19 pandemic and other
unpredictable events such as the other macroeconomic conditions described in
"-Overall Economic Trends" above, we expect our seasonality to revert closer to
historical trends in future years. Our operating income has also been affected
by these historical trends because many of our expenses are relatively fixed in
the short term. If our growth rates moderate over the long-term, the impact of
these seasonality trends on our results of operations may become more
pronounced.
We focus our internal measurements of performance on quarterly year-over-year
comparisons but discuss quarterly sequential information below to help investors
understand fluctuations in our business.
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Our quarterly net sales are reflective of the seasonality as discussed above
with the second quarter of 2022 reflecting the impact of seasonal increases
leading up to the early summer months. Net sales increased in the first quarter
of 2022 due to continued growth in the business and further increased in the
second quarter of 2022 due to growth in the business and seasonality. Net sales
decreased in the third and fourth quarters of 2022 due to seasonality and weak
macroeconomic conditions.
Our quarterly gross profit has fluctuated quarter to quarter primarily due to
the quarterly fluctuations in net sales, among other factors. The decrease in
gross profit margin in the third and fourth quarter of 2022 was primarily due to
a lower percentage of full price sales and deeper markdowns within the markdown
sales.
Fulfillment expenses and selling and distribution expenses have also fluctuated
quarter-to-quarter, primarily due to the quarterly fluctuation in net sales. The
fluctuation in fulfillment costs is driven by the costs incurred to fulfill
total orders placed by our customers, while the fluctuation in selling and
distribution costs is primarily due to the costs incurred to package and ship
products ordered by our customers, ship returns from our customers, provide
customer service and costs incurred related to merchant processing. Fulfilment
expenses as a percentage of net sales increased in the first two quarters of
2022 due to customers returning a higher proportion of their purchases as well
as higher wages for fulfillment staff and further increased in the third and
fourth quarters of 2022 due to the expansion of our fulfillment network
footprint and capacity as well as the mix of units processed.
Selling and distribution expense as a percentage of net sales increased in the
first, second, third and fourth quarters of 2022 due to customers returning a
higher proportion of their purchases, increased shipping rates and higher
surcharges.
Marketing expenses vary quarter-to-quarter, primarily due to fluctuations in our
marketing investments to acquire and retain customers to drive higher net sales
and the timing of our brand marketing events. The first quarter of 2022 includes
marketing expenses related to the Homecoming Weekend and the opening of the
Revolve Social Club. The second quarter of 2022 includes marketing expenses
related to #REVOLVEfestival. During the first half of 2021, due to COVID-19
restrictions, our in-person event-based marketing events were limited, and we
were unable to host the aforementioned events. The third quarters of 2022 and
2021 include expenses attributed to REVOVLE Gallery. The fourth quarter of 2022
included #REVOLVEwinterland.

Koszty ogólne i administracyjne generalnie sukcesywnie rosły
kwartał do kwartału, ponieważ nadal zwiększaliśmy zatrudnienie, aby wspierać biznes
wzrost.

Mieliśmy zysk netto za wszystkie prezentowane okresy.

Our business is directly affected by the behavior of consumers. Economic
conditions and competitive pressures can significantly impact, both positively
and negatively, the level of demand by customers for our products. Consequently,
the results of any prior quarterly or annual periods should not be relied upon
as indications of our future operating performance.

Płynność i zasoby kapitałowe

Poniższa tabela przedstawia nasze środki pieniężne i ich ekwiwalenty, należności oraz
kapitał obrotowy na wskazane daty:

As of
December 31, 2022       December 31, 2021
(in thousands)
Cash and cash equivalents   $           234,724     $           218,455
Accounts receivable, net                  5,421                   4,639
Working capital                         337,131                 279,620
(1)

Kapitał obrotowy dla wszystkich przedstawionych powyżej okresów określany jest jako aktywa obrotowe
mniej zobowiązań bieżących.

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As of December 31, 2022, the majority of our cash and cash equivalents was held
for working capital purposes, we had no borrowings under our line of credit and
were in compliance with all financial covenants.
We believe that our existing cash and cash equivalents, cash flows from
operations as well as the available borrowing capacity under our line of credit
will be sufficient to meet our anticipated cash needs for at least the next 12
months. However, our liquidity assumptions may prove to be incorrect, and we
could exhaust our available financial resources sooner than we currently expect.
We may seek to borrow funds under our line of credit or raise additional funds
at any time through equity, equity-linked or debt financing arrangements. Our
future capital requirements and the adequacy of available funds will depend on
many factors, including those described in the section titled "Risk Factors." We
may not be able to secure additional financing to meet our operating
requirements on acceptable terms, or at all.

Źródła płynności

Since our inception, we have financed our operations and capital expenditures
primarily through cash flows generated by operations, private sales of equity
securities, the incurrence of debt, the net proceeds we received through our
IPO, as well as proceeds received from the exercise of stock options.

Linia kredytowa

On March 23, 2021, we amended and restated our existing credit agreement to,
among other things, extend the expiration date from March 23, 2021 to March 23,
2026. The line of credit provides us with up to $75.0 million aggregate
principal in revolver borrowings, based on eligible inventory and accounts
receivable less reserves. Borrowings under the credit agreement accrue interest,
at our option, at (1) a base rate equal to the highest of (a) the federal funds
rate, plus 0.50%, (b) the prime rate and (c) an adjusted LIBO rate determined on
the basis of a one-month interest period, plus 1.00%, or (2) an adjusted LIBO
rate, subject to a floor of 0.00%, in each case, plus a margin ranging from
0.25% to 0.75% per year in the case of base rate loans, and 1.25% to 1.75% per
year in the case of LIBO rate loans. No borrowings were outstanding as of
December 31, 2022 and 2021.
Our obligations under the credit agreement are secured by substantially all of
our assets. The credit agreement also contains customary covenants restricting
our activities, including limitations on our ability to sell assets, engage in
mergers and acquisitions, enter into transactions involving related parties,
obtain letters of credit, incur indebtedness or grant liens or negative pledges
on our assets, make loans or make other investments. Under these covenants, we
are prohibited from paying cash dividends with respect to our capital stock. We
were in compliance with all financial covenants as of December 31, 2022 and
2021.

Wykorzystanie gotówki

Our short-term and long-term liquidity requirements primarily arise from
operating costs such as merchandise purchases, compensation and benefits, lease
obligations, marketing and other expenditures necessary to support our business
growth. We used a substantial portion of the proceeds from the IPO to repurchase
shares of our Class B common stock. We believe that our existing cash and cash
equivalents, cash flows from operations as well as the available borrowing
capacity under our line of credit will be sufficient to meet our anticipated
cash needs for at least the next 12 months. However, our liquidity assumptions
may prove to be incorrect, and we could exhaust our available financial
resources sooner than we currently expect. We may seek to borrow funds under our
line of credit or raise additional funds at any time through equity,
equity-linked or debt financing arrangements. Our future capital requirements
and the adequacy of available funds will depend on many factors, including those
described in the "Risk Factors" section of this report. We may not be able to
secure additional financing to meet our operating requirements on acceptable
terms or at all.
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Historical Cash Flows
Year Ended December 31,
2022         2021         2020
(in thousands)
Net cash provided by operating activities   $ 23,436     $ 62,313     $ 73,773
Net cash used in investing activities         (5,167 )     (2,195 )     (2,324 )
Net cash provided by financing activities        887       12,766        8,660

Środki pieniężne netto dostarczone przez działalność operacyjną

Cash from operating activities consists primarily of net income adjusted for
certain non-cash items, including depreciation, equity-based compensation, and
the effect of changes in working capital and other activities.
We generated $23.4 million of operating cash flow in 2022 compared to $62.3
million in 2021. The decrease in our operating cash flow was primarily due to a
$40.2 million decrease in net income adjusted for non-cash items and a $29.4
million decrease from changes in other working capital, partially offset by a
$30.7 million increase due to reduced investments in inventory.

Środki pieniężne netto wykorzystane w działalności inwestycyjnej

Our primary investing activities have consisted of purchases of property and
equipment to support our fulfillment centers and our overall business growth and
internally developed software for the continued development of our proprietary
technology infrastructure. Purchases of property and equipment may vary from
period-to-period due to the timing and extent of the expansion of our
operations.
Net cash used in investing activities was $5.2 million and $2.2 million in 2022
and 2021, respectively. The increase was primarily due to capital expenditures
related to our new fulfillment centers.

Środki pieniężne netto dostarczone przez działalność finansową

Na naszą działalność finansową składają się przede wszystkim wpływy z realizacji
opcje na akcje oraz pożyczki i spłaty związane z istniejącą linią
kredyt, jeśli dotyczy.

Środki pieniężne netto z działalności finansowej wyniosły 0,9 mln USD i 12,7 mln USD
odpowiednio w 2022 i 2021 r., i był przypisany wpływom z ww
realizacja opcji na akcje.

Zobowiązania kontraktowe

Na dzień 31 grudnia 2022 r. nasze główne zobowiązania umowne obejmują
zobowiązań wynikających z umów leasingu operacyjnego dla obiektów biurowych i logistycznych. Dla
opis naszych umów leasingowych znajduje się w nocie 5 Leasing do naszego skonsolidowanego sprawozdania finansowego
sprawozdania finansowe zawarte w innych częściach niniejszego sprawozdania.

Inflacja

We have been impacted by rising levels of inflation in recent periods resulting
in part from various supply chain disruptions, increased shipping and
transportation costs, increased merchandise and labor costs and other
disruptions caused by the COVID­19 pandemic and general economic and market
conditions. We continue to monitor the impact of inflation in order to minimize
its effects through pricing strategies, productivity improvements and cost
reductions. These mitigating actions may adversely impact demand for our
products. Furthermore, if costs were to become subject to significant
incremental inflationary pressures, we may not be able to fully offset such
higher costs through price increases. Our inability or failure to do so could
harm our business, financial condition and results of operations.
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Krytyczne zasady rachunkowości i szacunki

Our management's discussion and analysis of our financial condition and results
of operations is based on our consolidated financial statements, which have been
prepared in accordance with GAAP. The preparation of these consolidated
financial statements requires us to make estimates and assumptions that affect
the reported amounts of assets, liabilities, net sales, expenses and related
disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our
estimates are based on historical experience and various other assumptions that
we believe to be reasonable under the circumstances. Our actual results could
differ from these estimates.
We believe that the assumptions and estimates associated with revenue
recognition and inventory have the greatest potential impact on our consolidated
financial statements. Therefore, we consider these to be our critical accounting
policies and estimates. For further information on all of our significant
accounting policies, please see Note 2, Significant Accounting Policies, of the
accompanying notes to our consolidated financial statements included elsewhere
in this report.
Net Sales
Revenue is primarily derived from the sale of apparel merchandise through our
sites and, when applicable, shipping revenue. We recognize revenue through the
following steps: (1) identification of the contract, or contracts, with the
customer; (2) identification of the performance obligations in the contract; (3)
determination of the transaction price; (4) allocation of the transaction price
to the performance obligations in the contract; and (5) recognition of revenue
when, or as, we satisfy a performance obligation. A contract is created with our
customer at the time the order is placed by the customer, which creates a
performance obligation to deliver the product to the customer. We recognize
revenue for the performance obligation at the time control of the merchandise
passes to the customer, which is at the time of shipment. In addition, we have
elected to treat shipping and handling as fulfillment activities and not a
separate performance obligation.
In accordance with our policy on returns and exchanges, merchandise returns are
generally accepted for full refund if returned within 60 days of the original
purchase date and merchandise may be exchanged up to 90 days from the original
purchase date. At the time of sale, we establish a reserve for merchandise
returns, based on historical experience, merchandise mix and expected future
returns, which is recorded as a reduction of sales. Accordingly, cost of sales
is also reduced and an offsetting asset is recorded within prepaid expenses and
other current assets for expected merchandise to be returned. Our returns
reserve as of December 31, 2022 and 2021 was $63.4 million and $49.3 million,
respectively, and the provisions recorded for returns were $1,410.5 million and
$894.1 million, during 2022 and 2021, respectively. Actual levels of returns may
vary from our estimates as of period ends and would be recorded in future
periods.
In March 2020 we launched the REVOLVE Loyalty Club within the REVOLVE segment
and in April 2021 we expanded the program to include the FWRD segment. Eligible
customers who enroll in the program will generally earn points for every dollar
spent and will automatically receive a $20 reward once they earn 2,000 points.
We defer revenue based on an allocation of the price of the customer purchase
and the estimated standalone selling price of the points earned. Revenue is
recognized once the reward is redeemed or expires or once unconverted points
expire. Rewards generally expire 90 days after they are issued and unconverted
points generally expire if a customer fails to engage in any activity that
generates points for a period of one year or if their participation in the
program is otherwise terminated.
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We may also issue store credit in lieu of cash refunds or exchanges and sell
gift cards without expiration dates to our customers. Store credits issued and
proceeds from the issuance of gift cards are recorded as deferred revenue and
recognized as revenue when the store credit or gift cards are redeemed or upon
inclusion in our store credit and gift card breakage estimates. Revenue
recognized in net sales on breakage on store credit and gift cards was $1.7
million and $1.2 million for 2022 and 2021, respectively.
Sales taxes and duties collected from customers and remitted to governmental
authorities are accounted for on a net basis and therefore are excluded from net
sales. We currently collect sales taxes in all states that have adopted laws
imposing sales tax collection obligations on out-of-state retailers and are
subject to audits by state governments of sales tax collection obligations on
out-of-state retailers in jurisdictions where we do not currently collect sales
taxes, whether for prior years or prospectively. No significant interest or
penalties related to sales taxes are recognized in the accompanying consolidated
financial statements.
We have exposure to losses from fraudulent credit card charges. We record losses
when incurred related to fraudulent charges as such amounts have historically
been insignificant.
Inventory
Inventories are stated at the lower of cost and net realizable value. Cost is
determined using the specific identification method. Cost of inventory includes
import duties and other taxes and transport and handling costs. We write down
inventory where it appears that the carrying cost of the inventory may not be
recovered through subsequent sale of the inventory. We analyze the quantity of
inventory on hand, the quantity sold in the past year, the anticipated sales
volume, the expected sales price and the cost of making the sale when evaluating
the value of our inventory. If the sales volume or sales price of specific
products declines, additional write-downs may be required.

Najnowsze komunikaty księgowe

Patrz Nota 2, Istotne zasady rachunkowości, do naszego skonsolidowanego sprawozdania finansowego
oświadczenia zawarte w innym miejscu tego raportu w celu uzyskania informacji dotyczących ostatnio
wystawionych świadectw księgowych.

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