Commitments and Contingencies |
9 Months Ended |
|---|---|
Sep. 30, 2026 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| Commitments and Contingencies | Commitments and Contingencies Merchandise Purchase Commitments
As of September 30, 2026 and December 31, 2025, the Company had obligations to purchase $9.9 million and $11.2 million, respectively, of merchandise.
Letters of Credit
The Company had irrevocable standby letters of credit in the amount of $1.3 million as of September 30, 2026 and December 31, 2025, primarily related to the Company’s operating leases. No amounts have been drawn related to these letters of credit. The letters of credit have expiration dates through August 2029.
Finance Agreement Payable
In June 2026, the Company entered into a new agreement with a third party to finance certain insurance premiums over a new 12 month period. The amount financed is payable in 10 equal monthly installments, including interest, and matures in April 2027. As of September 30, 2026, the outstanding balance owed by the Company was $0.4 million and is included in other current liabilities on the Company’s condensed consolidated balance sheet. As of December 31, 2025, the outstanding balance of $0.2 million related to a similar financing arrangement was included in other current liabilities on the Company’s condensed consolidated balance sheet. The balance as of December 31, 2025 matured and was paid in full in April 2026. Interest expense related to these agreements is not material.
Contingencies
From time to time, the Company is subject to various claims, charges and litigation matters that arise in the ordinary course of business. The Company records a provision for a liability when it is both probable that the loss has been incurred and the amount of the loss can be reasonably estimated. If the Company determines that a loss is reasonably possible and the loss or range of loss can be reasonably estimated, it discloses the possible loss or range of loss. Any potential gains associated with legal matters are not recorded until the period in which all contingencies are resolved and the gain is realized or realizable. Depending on the nature and timing of any such proceedings that may arise, an unfavorable resolution of a matter could materially affect the Company’s future consolidated results of operations, cash flows or financial position in a particular period. Except if otherwise indicated, it is not reasonably possible to determine the probability of loss or estimate damages for any of the matters discussed below, and therefore, the Company has not established reserves for any of these matters.
The Santa Clara County District Attorney’s Office, in conjunction with other representatives from other California district and city attorneys’ offices, is investigating the Company’s compliance with California’s Automatic Renewal Law, California’s Unfair Competition Law, and False Advertising Law. The Company has met with this task force of multiple California district attorneys (called the California Autorenewal Task Force, or “CART”) and has provided documents and information upon request and discussed proposed remediation. Based on discussions with CART, it is probable that the Company will incur a loss with regard to this matter. However, based on the current information, the Company does not have enough information to make a reasonable estimate of the loss or range of loss at this time. An unfavorable outcome in this matter could result in a material loss in future periods.
Tariffs
In February 2026, the U.S. Supreme Court ruled that tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”) were unauthorized. Following this ruling, the U.S. Court of International Trade ordered U.S. Customs and Border Protection (“CBP”) to refund IEEPA tariffs previously collected. In April 2026, CBP launched a portal for importers to submit refund claims.
The Company paid approximately $1.2 million in IEEPA tariffs during 2025 and 2026. During the third quarter of 2026, the Company determined that recovery of these tariffs was probable based on the CBP’s established refund process. The Company accounted for these refunds under ASC 450, recognizing the gain only once the refund is realized or realizable.
During the three and nine months ended September 30, 2026, the Company received $1.2 million in cash refund payments which were recognized as a reduction of cost of goods sold. There were no cash refunds received related to IEEPA tariffs during the three and nine months ended September 30, 2025.
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