ThredUp Inc.TDUP
ThredUp Inc. Stock Compensation Disclosure
Stock-Based Compensation
Stock-based compensation expense capitalized in internal use software was $0.5 million and $0.6 million for the years ended December 31, 2024 and 2023, respectively.
2010 Stock Incentive Plan
In 2010, the Company adopted the Second Amended and Restated 2010 Stock Plan (“2010 Plan”), and amended the 2010 Plan in 2011. The 2010 Plan provides for the grant of stock awards to employees, consultants and directors of the Company. Options granted under the 2010 Plan may either be Incentive Stock Options (“ISOs”) or Nonstatutory Stock Options (“NSOs”). ISOs may be granted to Company employees only, while stock awards other than ISOs may be granted to employees, directors and consultants. In 2020, the board of directors authorized an additional 6.5 million shares for the 2010 Plan. In 2021, the board of directors authorized an additional 1.0 million shares for the 2010 Plan.
Stock awards under the 2010 Plan may be granted with terms of up to 10 years and at prices determined by the board of directors, provided, however, that (i) the exercise price of an ISO or NSO shall not be less than 100% of the estimated fair value of the shares on the date of the grant, and (ii) the exercise price of an ISO granted to a 10% or more stockholder shall not be less than 110% of the estimated fair value of the shares on the grant date. The options generally vest over a four-year period. For certain options, vesting accelerates upon the occurrence of specified events, such as a change of control.
2021 Stock Option and Incentive Plan
In February 2021, in connection with the IPO, the Company’s board of directors adopted the 2021 Stock Option and Incentive Plan (“2021 Plan”) to replace the 2010 Plan, which was subsequently approved by the Company’s stockholders in March 2021. The 2021 Plan became effective on March 24, 2021.
Stock option activity under the 2010 Plan, as amended is as follows:
| Number of Options Outstanding | Weighted-Average Exercise Price Per Share | Weighted-Average Remaining Contractual Life | Aggregate Intrinsic Value | |||||||||||||||||||||||
| (in thousands) | (in thousands) | |||||||||||||||||||||||||
Outstanding as of December 31, 2023 | 16,247 | $ | 1.99 | 4.14 years | $ | 5,861 | ||||||||||||||||||||
| Granted | — | $ | — | |||||||||||||||||||||||
| Exercised | (1,013) | $ | 0.90 | |||||||||||||||||||||||
| Forfeited or expired | (1,492) | $ | 1.06 | |||||||||||||||||||||||
Outstanding as of December 31, 2024 | 13,742 | $ | 2.16 | 3.61 years | $ | 5,300 | ||||||||||||||||||||
Exercisable as of December 31, 2024 | 13,277 | $ | 2.17 | 3.54 years | $ | 5,300 | ||||||||||||||||||||
The aggregated intrinsic value represents the difference between the exercise price and the fair value of common stock. The aggregate intrinsic value of all options exercised was $0.4 million and $1.6 million during the years ended December 31, 2024 and 2023, respectively.
As of December 31, 2024, the total unrecognized compensation cost related to all nonvested stock options was not material.
Each of these inputs is subjective and generally requires significant judgment:
•Fair Value of Common Stock — Historically, for all periods prior to the IPO in March 2021, the fair value of the shares of common stock has historically been determined by the Company’s board of directors as there was no public market for the common stock. The board of directors determined the fair value of our common stock by considering a number of objective and subjective factors, including: the valuation of comparable companies, sales of preferred stock to unrelated third parties, our operating and financial performance, the lack of liquidity of common stock and general and industry specific economic outlook, amongst other factors. After the completion of the IPO in March 2021, the fair value of each share of underlying common stock is based on the closing price of the Company’s common stock as reported on the date of grant on the Nasdaq Global Select Market.
•Expected Term — The expected term represents the period that the Company’s stock options are expected to be outstanding and is determined using the simplified method (based on the mid-point between the vesting date and the end of the contractual term) as the Company has concluded that its stock option exercise history does not provide a reasonable basis upon which to estimate expected term.
•Volatility — Because the Company does not have sufficient trading history for its common stock, the expected volatility was estimated based on the average volatility for comparable publicly-traded companies, over a period equal to the expected term of the stock option grants.
•Risk-Free Rate — The risk-free rate assumption is based on the U.S. Treasury zero coupon issues in effect at the time of grant for periods corresponding with the expected term of the option.
•Dividends — The Company has never paid dividends on its common stock and does not anticipate paying dividends on common stock. Therefore, the Company uses an expected dividend yield of zero.
Employee Stock Purchase Plan
In February 2021, the Company’s board of directors adopted the Employee Stock Purchase Plan (“ESPP”), which was subsequently approved by stockholders in March 2021. The ESPP became effective on March 24, 2021, and the first offering period began on March 25, 2021. Under the terms of the ESPP, rights to purchase common shares may be granted to eligible qualified employees subject to certain restrictions. The ESPP enables the Company’s eligible employees, through payroll withholding, to purchase a limited number of common shares at 85% of the fair market value of a common share either at the beginning of that offering period or on the applicable exercise date, whichever is less. Purchases are made on a semi-annual basis.
During the years ended December 31, 2024 and 2023, compensation expense related to ESPP was not material.
Restricted Stock Units
The Company issues service-based RSUs to employees. The RSUs automatically convert to shares of the Company’s Class A common stock on a one-for-one basis as the awards vest. RSUs were granted to newly hired employees typically vest in equal quarterly installments over 3 or 4 years, provided that the initial vest occurs after a 1-year cliff. During 2023, the Company modified the vesting schedule of substantially all RSUs outstanding as of December 31, 2022 from 4 years to 3 years and recognized compensation expense of $2.4 million related to the acceleration of the vesting schedule. Such grants commence vesting as of the nearest scheduled quarterly vesting date from the date of grant. The RSUs are measured at grant date fair value, at the market price of the Company’s common stock on the grant date. The Company records stock-based compensation expense related to the RSUs ratably over the employee respective requisite service period.
The following table summarizes RSU activity under the 2021 Plan:
| Number of Shares | Weighted-Average Grant Date Fair Value Per Share | |||||||||||||
| (in thousands) | ||||||||||||||
Outstanding and nonvested as of December 31, 2023 | 8,538 | $ | 4.39 | |||||||||||
| Granted | 10,438 | $ | 1.88 | |||||||||||
| Vested | (7,117) | $ | 3.70 | |||||||||||
| Forfeited | (2,571) | $ | 3.76 | |||||||||||
Outstanding and nonvested as of December 31, 2024 | 9,288 | $ | 2.26 | |||||||||||
The fair value of RSUs as of the vesting date was $12.3 million and $31.5 million during the years ended December 31, 2024 and 2023 , respectively.
As of December 31, 2024, the Company had $18.4 million of unrecognized stock-based compensation related to RSUs, which will be recognized over the weighted average remaining requisite service period of 1.65 years.
Stock-based Compensation
The following table provides information about stock-based compensation expense by financial statement line item:
| Year Ended December 31, | ||||||||||||||
| 2024 | 2023 | |||||||||||||
| (in thousands) | ||||||||||||||
| Operations, product and technology | $ | 11,382 | $ | 11,115 | ||||||||||
| Marketing | 487 | 3,462 | ||||||||||||
| Sales, general and administrative | 13,978 | 15,075 | ||||||||||||
| Total stock-based compensation expense | $ | 25,847 | $ | 29,652 | ||||||||||
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.