Bed Bath & Beyond, Inc. (NASDAQ: BBBY) grows through acquisitions while posting Q2 2026 loss
Bed Bath & Beyond, Inc. reported Q2 2026 net revenue of $361,159 (in thousands), up from $282,251 (in thousands) a year earlier, but remained unprofitable with a Q2 net loss of $39,497 (in thousands) and six‑month loss of $55,895 (in thousands).
Cash, cash equivalents and restricted cash totaled $126,376 (in thousands) at June 30, 2026, after using $50,040 (in thousands) in operating cash flow year‑to‑date. Total assets were $634,151 (in thousands) and total liabilities $419,063 (in thousands), including growing lease obligations and $36,455 (in thousands) of debt.
The company pursued an acquisitive strategy, closing the $71,889 (in thousands) purchase of The Brand House Collective (Kirkland’s) and a $37,080 (in thousands) all‑stock deal for SFV Services, generating significant goodwill. Subsequent to quarter‑end it completed The Container Store acquisition, issuing 13,714,287 shares and $112.6 million of 5.00% Convertible Senior Notes, and agreed to acquire F9 Brands. It also recognized $9.5 million of tariff refunds and interest, largely reducing cost of goods sold.
Positive
- None.
Negative
- None.
Filing Explained
Completed acquisitions added common shares and senior unsecured notes; the proposed F9 deal could add about 18.1 million more shares.
The company’s Form 10-Q is an unaudited quarterly report, and it records the completed SFV Services acquisition on June 30 and The Container Store acquisition on July 8. The Container Store closing issued 13,714,287 common shares and
Those completed share issuances increase the common-share base and therefore reduce existing holders’ percentage ownership absent offsetting changes; the notes add senior, unsecured debt. The proposed F9 transaction remains unclosed and, if completed on the disclosed terms, would add approximately 18.1 million shares,
The company reports no 2026 sales under its at-the-market program, which remains available for up to
For the Container Store notes, the filing identifies stockholder approval under NYSE rules as an unresolved milestone: interest rises to
Key Figures
Net revenue Q2 2026: $361,159 (in thousands)
Net loss Q2 2026: $39,497 (in thousands)
Cash, cash equivalents and restricted cash: $126,376 (in thousands)
+5 more
8 metrics
Net revenue Q2 2026
$361,159 (in thousands)
Three months ended June 30, 2026 net revenue versus $282,251 (in thousands) in 2025
Net loss Q2 2026
$39,497 (in thousands)
Three months ended June 30, 2026 net loss versus $19,313 (in thousands) in 2025
Cash, cash equivalents and restricted cash
$126,376 (in thousands)
Cash, cash equivalents, and restricted cash at June 30, 2026 end of period
Net cash used in operating activities
$50,040 (in thousands)
Six months ended June 30, 2026 net cash used in operating activities
TBHC purchase consideration
$71,889 (in thousands)
Total fair value of consideration transferred for The Brand House Collective acquisition
SFV Services purchase consideration
$37,080 (in thousands)
Aggregate fair value of unregistered shares issued to SFV Services sellers
Tariff refunds and interest recognized
$9.5 million
Tariff refund claims of $9.2 million and $0.3 million interest recorded as of June 30, 2026
Convertible Senior Notes issued for TCS
$112.6 million
Aggregate principal amount of 5.00% Convertible Senior Notes due 2033 issued July 8, 2026
Key Terms
tokenized digital security, Convertible Senior Notes, equity method securities, Operating lease right-of-use assets, +1 more
5 terms
tokenized digital security financial
"a tokenized digital security linked to Overstock intellectual property and eligible for future dividends"
Convertible Senior Notes financial
"5.00% Convertible Senior Notes due 2033 with initial conversion rate of 109.8901 shares"
Convertible senior notes are a type of loan that a company issues to investors, which can be turned into company shares later on. They are called "senior" because they are paid back before other debts if the company runs into trouble. This allows investors to earn interest like a loan but also have the chance to own part of the company if its value rises.
equity method securities financial
"The carrying amount of the Company's equity method securities was $55.9 million at June 30, 2026"
An ownership stake in another company large enough to give significant influence but not full control, accounted for by recording the investor’s share of the other company’s profits or losses on its own financial statements. Think of it like a business partnership where you report your slice of the partner’s results as part of your own performance; this matters to investors because those shared results can materially change reported earnings, assets and the perceived health of the investor company.
Operating lease right-of-use assets financial
"Operating lease right-of-use assets totaled $115,796 (in thousands) at June 30, 2026"
An operating lease right-of-use (ROU) asset is an accounting entry that shows the value of a leased item you have the legal right to use—like a building, vehicle, or equipment—recorded on a company’s balance sheet along with the corresponding lease obligation. Investors care because it adds to reported assets and liabilities, changing measures like leverage and return on assets much like bringing a long-term rental onto the company’s financial snapshot, which can affect credit terms and valuation.
at the market public offerings financial
"has conducted and may in the future conduct "at the market" public offerings of its common stock"
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FAQ
How did Bed Bath & Beyond (BBBY) perform financially in Q2 2026?
Bed Bath & Beyond generated $361,159 (in thousands) in net revenue and recorded a net loss of $39,497 (in thousands) in Q2 2026. For the first six months of 2026, revenue reached $608,914 (in thousands) with a cumulative net loss of $55,895 (in thousands).
What was Bed Bath & Beyond’s (BBBY) cash position and cash flow for H1 2026?
At June 30, 2026, cash, cash equivalents and restricted cash totaled $126,376 (in thousands). During the first half of 2026 the company used $50,040 (in thousands) in operating activities and $39,433 (in thousands) in investing activities, partially offset by $13,630 (in thousands) provided by financing.
Which acquisitions did Bed Bath & Beyond (BBBY) complete in Q2 2026?
In Q2 2026 the company acquired The Brand House Collective (Kirkland’s) with total purchase consideration of $71,889 (in thousands) and SFV Services for share consideration of $37,080 (in thousands). These deals added substantial inventories, lease assets and combined goodwill of about $96.0 million.
What are the terms of Bed Bath & Beyond’s new Convertible Senior Notes related to The Container Store?
In the TCS acquisition completed July 8, 2026, Bed Bath & Beyond issued $112.6 million of 5.00% Convertible Senior Notes due 2033. The initial conversion rate is 109.8901 shares per $1,000 principal, with interest potentially increasing up to 12.00% if required stockholder approval is delayed.
What tariff refunds did Bed Bath & Beyond (BBBY) recognize in 2026?
By June 30, 2026 the company recorded $9.5 million related to tariff refunds and interest as a current asset. This included $9.2 million of tariff refunds, recorded as a reduction of cost of goods sold, and $0.3 million of interest income in interest income, net.
How many Bed Bath & Beyond (BBBY) shares and warrants were outstanding in mid‑2026?
On July 31, 2026, 95,330,379 common shares were outstanding. As of June 30, 2026, common stock outstanding totaled 81,760 (in thousands of shares units) on the equity table, and about 6.9 million warrants to purchase common stock at $15.50 per share remained outstanding.
What major credit facilities and borrowings does Bed Bath & Beyond (BBBY) have?
At June 30, 2026, BBBY had a $25.0 million revolving line with BMO, with $15.5 million outstanding, and access to a $90.0 million Bank of America credit facility, under which it had $14.6 million in letters of credit and recorded $1.0 million of related interest expense in Q2.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended June 30, 2026
Or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from to
Commission file number: 001-41850
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | ||||||||||
| (Address of principal executive offices) | (Zip Code) | ||||||||||
(801 ) 947-3100
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | ☒ | |||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | |||||||||
| Emerging growth company | |||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Table of Contents
BED BATH & BEYOND, INC.
TABLE OF CONTENTS TO QUARTERLY REPORT ON FORM 10-Q
For the Quarterly Period Ended June 30, 2026
| Page | ||||||||
PART I. FINANCIAL INFORMATION | ||||||||
| Item 1. | Financial Statements (Unaudited) | 5 | ||||||
Consolidated Balance Sheets | 5 | |||||||
Consolidated Statements of Operations | 7 | |||||||
Consolidated Statements of Changes in Stockholders' Equity | 8 | |||||||
Consolidated Statements of Cash Flows | 10 | |||||||
Notes to Unaudited Consolidated Financial Statements | 12 | |||||||
| Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 33 | ||||||
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 46 | ||||||
| Item 4. | Controls and Procedures | 47 | ||||||
PART II. OTHER INFORMATION | ||||||||
| Item 1. | Legal Proceedings | 48 | ||||||
| Item 1A. | Risk Factors | 48 | ||||||
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 56 | ||||||
| Item 3. | Defaults Upon Senior Securities | 56 | ||||||
| Item 4. | Mine Safety Disclosures | 56 | ||||||
| Item 5. | Other Information | 56 | ||||||
| Item 6. | Exhibits | 57 | ||||||
Signatures | 59 | |||||||
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SPECIAL CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q and the information incorporated herein by reference, and our other public documents and statements our officers and representatives may make from time to time, contain forward-looking statements within the meaning of the federal securities laws. These statements are intended to be covered by the safe harbor provisions of these laws. You can find many of these statements by looking for words such as "may," "would," "could," "should," "will," "expect," "anticipate," "predict," "project," "potential," "continue," "contemplate," "seek," "assume," "believe," "intend," "plan," "forecast," "goal," "estimate," or other similar terms or expressions or the negative of these terms or expressions, although not all forward-looking statements contain these identifying terms or expressions.
These forward-looking statements involve known and unknown risks and uncertainties and relate to future events or our future financial or operating performance. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry and business, and on management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, you are cautioned that any such forward-looking statements are not guarantees of future performance and are subject to assumptions, risks, uncertainties, and other important factors that are difficult to predict, and that actual results and outcomes may be materially different from the results, performance, achievements, or outcomes expressed or implied by any of our forward-looking statements for a variety of reasons, including among others:
•We depend on third-party companies to perform functions critical to our business, and any failure or increased cost on their part could have a material adverse effect on our business.
•We face intense competition and may not be able to compete successfully against existing or future competitors.
•We may not timely identify or effectively respond to consumer needs, expectations or trends, which could adversely affect our relationship with our customers, the demand for our products and services, and our market share.
•Our business depends on effective marketing, including marketing via email, search engine marketing, influencer marketing, and social media marketing. Our competitors have and may continue to cause us to increase our marketing costs and decrease certain other types of marketing, and have and may continue to outspend us on marketing or be more efficient in their spend.
•Economic factors, including recessions, other economic downturns, inflation, our exposure to the U.S. housing market, and decreases in consumer spending, have affected and could continue to adversely affect us.
•Tariffs, bans, or other measures or events that increase the effective price of products or limit our ability to access products we or our suppliers, fulfillment partners, or other third parties that import or export could have a material adverse effect on our business.
•Our changing business model and use of the Bed Bath & Beyond brand, Overstock brand, buybuy BABY brand, Kirkland's and Kirkland's Home brand, Beyond brand, and other brands of ours, could negatively impact our business.
•The changing job market, the changes in our leadership team, the change in our compensation approach, changing job structures, or any inability to attract, retain and engage key personnel could affect our ability to successfully grow our business.
•We rely upon paid and natural search engines to rank our product offerings, and our financial results may suffer if we are unable to maintain our prior rankings in natural searches.
•If we are not profitable and/or are unable to generate sufficient positive cash flow from operations, our ability to continue in business will depend on our ability to raise additional capital, obtain financing or monetize significant assets, and we may be unable to do so.
•Our business depends on the Internet, our infrastructure and transaction-processing systems, and catastrophic events could adversely affect our operating results.
•Compliance with ever-evolving federal, state, and foreign laws and other requirements relating to the handling of information about individuals necessitates significant expenditure and resources, and any failure by us, our vendors or our business partners to comply may result in significant liability, negative publicity, and/or an erosion of trust, which could materially adversely affect our business, results of operations, and financial condition.
•If we or our third-party providers experience cyberattacks or data security incidents, there may be damage to our brand and reputation, material financial penalties, and legal liability, which would materially adversely affect our business, results of operations, and financial condition.
•Failure to comply with, or changes in, laws, regulations and enforcement activities may adversely affect the products, services, and markets in which we operate.
•From time to time, we are subject to various legal proceedings which could adversely affect our business, financial condition or results of operations.
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•Damage to our reputation or brand image could adversely affect our sales and results of operations.
•If we do not successfully optimize and operate our fulfillment center or customer service operations, our business could be harmed.
•If we fail to effectively utilize technological advancements, including in artificial intelligence, our business and financial performance could be negatively impacted.
•Global conflict could negatively impact our business, results of operations, and financial condition.
•Product safety and quality concerns could have a material adverse impact on our revenue and profitability.
•We depend on our suppliers' and fulfillment partners' representations regarding product safety, content and quality, product compliance with various laws and regulations, including registration and/or reporting obligations, and for proper labeling of products.
•We have an evolving business model, which increases the complexity of our business.
•Exercising the Warrants is a risky investment and those who exercise their Warrants may not be able to recover the value of their investment in the common stock received upon such exercise. Warrant holders could sustain a total loss of the exercise price of any Warrants that they exercise.
•Investment in new business strategies, acquisitions, dispositions, partnerships, or other transactions could disrupt our ongoing business, present risks not originally contemplated and materially adversely affect our business, reputation, results of operations and financial condition.
•Regulatory changes or actions may alter the nature of an investment in us or restrict the use of digital assets, including tokens or blockchain technology in a manner that adversely affects our business, prospects, and operations.
•The mergers with Fathom Holdings, Inc. ("Fathom") and F9 Brands, Inc. ("F9") may not be completed and the Fathom Merger Agreement or the F9 Merger Agreement (each as defined herein) may be terminated in accordance with their terms.
•Combining our business with those of The Brand House Collective, Inc. ("TBHC") and The Container Store Holdings, LLC (“TCS”) may be more difficult, costly or time-consuming than expected and the combined company may fail to realize the anticipated benefits of the mergers with TBHC and TCS, which may adversely affect the combined company's business results and negatively affect the value of the combined company's common stock.
In evaluating all forward-looking statements, you should specifically consider the risks outlined above and in this report and our Annual Report on Form 10-K for the year ended December 31, 2025, and our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2026 under the headings, as applicable, "Special Cautionary Note Regarding Forward-Looking Statements," "Summary of Risk Factors," "Risk Factors," "Legal Proceedings," and "Management's Discussion and Analysis of Financial Condition and Results of Operations." These factors may cause our actual results and outcomes to differ materially from those contemplated by any forward-looking statement. Although we believe that our expectations reflected in the forward-looking statements are reasonable, we cannot guarantee or offer any assurance of future results, levels of activity, performance or achievements or other future events. Our forward-looking statements contained in this report speak only as of the date of this report and, except as required by law, we undertake no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this report or any changes in our expectations or any change in any events, conditions or circumstances on which any of our forward-looking statements are based.
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
Bed Bath & Beyond, Inc. Consolidated Balance Sheets (Unaudited) (in thousands, except per share data) | |||||||||||
| June 30, 2026 | December 31, 2025 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash | |||||||||||
Accounts receivable, net of allowance for credit losses of $ | |||||||||||
| Inventories | |||||||||||
| Prepaids and other current assets | |||||||||||
| Total current assets | |||||||||||
| Property and equipment, net | |||||||||||
| Intangible assets, net | |||||||||||
| Goodwill | |||||||||||
Equity securities, including securities measured at fair value of $ | |||||||||||
| Operating lease right-of-use assets | |||||||||||
Other long-term assets, net, including securities measured at fair value of $ | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities and Stockholders' Equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued liabilities | |||||||||||
| Unearned revenue | |||||||||||
| Operating lease liabilities, current | |||||||||||
| Short-term debt, net | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt, net | |||||||||||
| Operating lease liabilities, non-current | |||||||||||
Other long-term liabilities, including commitments measured at fair value of $ | |||||||||||
| Total liabilities | $ | $ | |||||||||
Commitments and contingencies (Note 10) | |||||||||||
Continued on the following page See accompanying notes to unaudited consolidated financial statements. | |||||||||||
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Bed Bath & Beyond, Inc. Consolidated Balance Sheets (Unaudited) (in thousands, except per share data) | |||||||||||
| (Continued) | June 30, 2026 | December 31, 2025 | |||||||||
| Stockholders' equity: | |||||||||||
Preferred stock, $ | $ | $ | |||||||||
Common stock, $ | |||||||||||
Issued shares - | |||||||||||
Outstanding shares - | |||||||||||
| Additional paid-in capital | |||||||||||
| Accumulated deficit | ( | ( | |||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
Treasury stock at cost - | ( | ( | |||||||||
| Equity attributable to stockholders of Bed Bath & Beyond, Inc. | |||||||||||
| Equity attributable to noncontrolling interests | |||||||||||
| Total stockholders' equity | |||||||||||
| Total liabilities and stockholders' equity | $ | $ | |||||||||
See accompanying notes to unaudited consolidated financial statements.
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Bed Bath & Beyond, Inc.
Consolidated Statements of Operations (Unaudited)
(in thousands, except per share data)
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Net revenue | $ | $ | $ | $ | |||||||||||||||||||
| Cost of goods sold | |||||||||||||||||||||||
| Gross profit | |||||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Sales and marketing | |||||||||||||||||||||||
| Technology | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Customer service and merchant fees | |||||||||||||||||||||||
| Other operating expense (income), net | ( | ( | |||||||||||||||||||||
| Total operating expenses | |||||||||||||||||||||||
| Operating loss | ( | ( | ( | ( | |||||||||||||||||||
| Interest income, net | |||||||||||||||||||||||
| Other income (expense), net | ( | ( | |||||||||||||||||||||
| Loss before income taxes | ( | ( | ( | ( | |||||||||||||||||||
| Provision (benefit) for income taxes | ( | ( | |||||||||||||||||||||
| Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Net loss per share of common stock: | |||||||||||||||||||||||
| Basic | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Diluted | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Weighted average shares of common stock outstanding: | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
See accompanying notes to unaudited consolidated financial statements.
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Bed Bath & Beyond, Inc. Consolidated Statements of Changes in Stockholders' Equity (Unaudited) (in thousands) | |||||||||||||||||||||||
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Equity attributable to stockholders of Bed Bath & Beyond, Inc. | |||||||||||||||||||||||
| Shares of common stock issued | |||||||||||||||||||||||
| Balance at beginning of period | |||||||||||||||||||||||
| Common stock issued upon vesting of restricted stock | |||||||||||||||||||||||
| Common stock issued for ESPP purchases | |||||||||||||||||||||||
| Common shares issued in the acquisition of TBHC | |||||||||||||||||||||||
| Common shares issued in the acquisition of SFV Services | |||||||||||||||||||||||
| Common stock sold through offerings | |||||||||||||||||||||||
| Balance at end of period | |||||||||||||||||||||||
| Shares of treasury stock | |||||||||||||||||||||||
| Balance at beginning of period | |||||||||||||||||||||||
| Repurchases of common stock | |||||||||||||||||||||||
| Tax withholding upon vesting of employee stock awards | |||||||||||||||||||||||
| Balance at end of period | |||||||||||||||||||||||
| Total shares of common stock outstanding | |||||||||||||||||||||||
| Common stock | |||||||||||||||||||||||
| Balance at beginning of period | $ | $ | $ | $ | |||||||||||||||||||
| Common shares issued in the acquisition of TBHC | |||||||||||||||||||||||
| Common shares issued in the acquisition of SFV Services | |||||||||||||||||||||||
| Balance at end of period | $ | $ | $ | $ | |||||||||||||||||||
| Additional paid-in capital | |||||||||||||||||||||||
| Balance at beginning of period | $ | $ | $ | $ | |||||||||||||||||||
| Stock-based compensation to employees and directors | |||||||||||||||||||||||
| Common stock issued for ESPP purchases | |||||||||||||||||||||||
| Common stock sold through offerings, net | |||||||||||||||||||||||
| Common shares issued in the acquisition of TBHC | |||||||||||||||||||||||
| Common shares issued in the acquisition of SFV Services | |||||||||||||||||||||||
| Balance at end of period | $ | $ | $ | $ | |||||||||||||||||||
| Accumulated deficit | |||||||||||||||||||||||
| Balance at beginning of period | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Net loss | ( | ( | ( | ( | |||||||||||||||||||
| Balance at end of period | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Continued on the following page See accompanying notes to unaudited consolidated financial statements. | |||||||||||||||||||||||
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Bed Bath & Beyond, Inc. Consolidated Statements of Changes in Stockholders' Equity (Unaudited) (in thousands) | |||||||||||||||||||||||
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| (Continued) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Accumulated other comprehensive loss | |||||||||||||||||||||||
| Balance at beginning and end of period | $ | ( | $ | $ | ( | $ | |||||||||||||||||
| Treasury stock | |||||||||||||||||||||||
| Balance at beginning of period | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Repurchases of common stock | ( | ( | |||||||||||||||||||||
| Tax withholding upon vesting of employee stock awards | ( | ( | ( | ( | |||||||||||||||||||
| Balance at end of period | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Total equity attributable to stockholders of Bed Bath & Beyond, Inc. | $ | $ | $ | $ | |||||||||||||||||||
| Equity attributable to noncontrolling interests | |||||||||||||||||||||||
| Balance at beginning of period | $ | $ | $ | $ | |||||||||||||||||||
| Proceeds from security token offering, net | |||||||||||||||||||||||
| Dividends from token offering | ( | ( | |||||||||||||||||||||
| Net loss attributable to noncontrolling interests | |||||||||||||||||||||||
| Total equity attributable to noncontrolling interests | $ | $ | $ | $ | |||||||||||||||||||
| Total stockholders' equity | $ | $ | $ | $ | |||||||||||||||||||
See accompanying notes to unaudited consolidated financial statements.
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Bed Bath & Beyond, Inc. Consolidated Statements of Cash Flows (Unaudited) (in thousands) | ||||||||||||||
| Six months ended June 30, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| Cash flows from operating activities: | ||||||||||||||
| Net loss | $ | ( | $ | ( | ||||||||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||||
| Depreciation and amortization | ||||||||||||||
| Stock-based compensation to employees and directors | ||||||||||||||
| Gain on sale of intangible assets | ( | |||||||||||||
| Impairment of long-lived assets (including leases) | ||||||||||||||
| Gain on disposal of property and equipment | ( | |||||||||||||
| Loss from equity method securities | ||||||||||||||
| Other non-cash adjustments | ( | |||||||||||||
| Changes in operating assets and liabilities, net of acquisitions: | ||||||||||||||
| Accounts receivable, net | ( | ( | ||||||||||||
| Inventories | ||||||||||||||
| Prepaids and other current assets | ( | ( | ||||||||||||
| Other long-term assets, net | ( | |||||||||||||
| Accounts payable | ||||||||||||||
| Accrued liabilities | ( | |||||||||||||
| Unearned revenue | ( | |||||||||||||
| Operating lease assets and liabilities | ( | |||||||||||||
| Other long-term liabilities | ( | ( | ||||||||||||
| Net cash used in operating activities | ( | ( | ||||||||||||
| Cash flows from investing activities: | ||||||||||||||
| Expenditures for property and equipment | ( | ( | ||||||||||||
| Purchase of intangible assets | ( | ( | ||||||||||||
| Acquisitions of businesses, net of cash acquired | ( | |||||||||||||
| Purchase of equity securities | ( | |||||||||||||
| Proceeds from the sale of intangible assets | ||||||||||||||
| Proceeds from sale of property and equipment | ||||||||||||||
| Disbursement of notes receivable | ( | ( | ||||||||||||
| Dividends from token offering | ( | |||||||||||||
| Other investing activities, net | ||||||||||||||
| Net cash used in investing activities | ( | ( | ||||||||||||
Continued on the following page See accompanying notes to unaudited consolidated financial statements. | ||||||||||||||
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Bed Bath & Beyond, Inc. Consolidated Statements of Cash Flows (Unaudited) (in thousands) | ||||||||||||||
| Six months ended June 30, | ||||||||||||||
| (Continued) | 2026 | 2025 | ||||||||||||
| Cash flows from financing activities: | ||||||||||||||
| Proceeds from sale of common stock, net of offering costs | $ | $ | ||||||||||||
| Payments on short-term debt | ( | |||||||||||||
| Proceeds from short-term debt | ||||||||||||||
| Repayments on revolving line of credit | ( | |||||||||||||
| Proceeds from revolving line of credit | ||||||||||||||
| Repurchase of shares | ( | |||||||||||||
| Payments of taxes withheld upon vesting of employee stock awards | ( | ( | ||||||||||||
| Proceeds from employee stock purchase plan | ||||||||||||||
| Other financing activities, net | ( | |||||||||||||
| Net cash provided by financing activities | ||||||||||||||
| Net decrease in cash, cash equivalents, and restricted cash | ( | ( | ||||||||||||
| Cash, cash equivalents, and restricted cash, beginning of period | ||||||||||||||
| Cash, cash equivalents, and restricted cash, end of period | $ | $ | ||||||||||||
| Supplemental disclosures of cash flow information: | ||||||||||||||
| Non-cash investing and financing activities: | ||||||||||||||
| Non-cash acquisition of TBHC and SFV Services | $ | $ | ||||||||||||
See accompanying notes to unaudited consolidated financial statements.
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Bed Bath & Beyond, Inc.
Notes to Unaudited Consolidated Financial Statements
1. DESCRIPTION OF BUSINESS
Bed Bath & Beyond, Inc. is an omni-channel-focused retailer with an affinity model that owns or has ownership interests in various brands, offering a comprehensive array of products and services that enable its customers to enhance everyday life through quality, style, and value. The Company currently owns Bed Bath & Beyond, Overstock, buybuy BABY, the Kirkland's and Kirkland's Home brands, SFV Services, and now The Container Store (refer to Note 17—Subsequent Events), as well as other related brands and websites and a blockchain asset portfolio inclusive of tZERO, GrainChain, and other assets.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The Company has prepared the accompanying unaudited consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") regarding interim financial reporting. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States ("GAAP") have been omitted in accordance with the rules and regulations of the SEC. These financial statements should be read in conjunction with the audited annual consolidated financial statements and related notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2025. There have been no significant changes to the Company's significant accounting policies disclosed in Note 2—Accounting Policies and Supplemental Disclosures, included in Part II, Item 8, Financial Statements and Supplementary Data, of the Company's Annual Report on Form 10-K for the year ended December 31, 2025, except as disclosed below.
The accompanying unaudited consolidated financial statements include the Company's accounts and the accounts of the Company's wholly-owned subsidiaries and other subsidiaries for which the Company exercises control, and reflect all adjustments, consisting only of normal recurring adjustments, which are, in the Company's opinion, necessary for a fair presentation of results for the interim periods presented. All intercompany account balances and transactions have been eliminated in consolidation. The results of operations for the three and six months ended June 30, 2026, are not necessarily indicative of the results to be expected for any future period or the full fiscal year, due to seasonality and other factors.
Prior to April 2, 2026, The Brand House Collective, Inc. (formerly known as Kirkland’s Inc.) (“The Brand House Collective”) was not a consolidated subsidiary of the Company. Accordingly, transactions between the Company and The Brand House Collective prior to the acquisition date, including amounts advanced under the Amended Credit Agreement (as discussed further in this Note 2—Summary of Significant Accounting Policies) and related amendments, were accounted for as transactions with a non-consolidated entity and are reflected in the Company’s consolidated financial statements through the acquisition date in accordance with their nature.
As discussed further in Note 3—Business Combinations, on April 2, 2026 (the "Acquisition Date"), the Company completed its acquisition of The Brand House Collective. Beginning on the acquisition date, the results of operations, assets and liabilities of The Brand House Collective are included in the Company’s consolidated financial statements. Accordingly, balances and transactions between the Company and The Brand House Collective occurring after the acquisition date are eliminated in consolidation.
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Use of estimates
The preparation of financial statements in conformity with GAAP requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent liabilities in the Company's consolidated financial statements and accompanying notes. Estimates are used for, but not limited to, receivables valuation, revenue recognition, loyalty program reward point and gift card breakage, sales returns, inventory valuation, asset useful lives, equity and debt securities valuation, income taxes, stock-based compensation, performance-based compensation, self-funded health insurance liabilities, contingencies, goodwill, and the fair value of assets acquired and liabilities assumed in acquisitions. Although these estimates are based on the Company's best knowledge of current events and actions that the Company may undertake in the future, the accounting of these estimates may change from period to period. To the extent there are differences between these estimates and actual results, the Company's consolidated financial statements may be materially affected.
Debt securities carried at fair value
Business Combinations
Assets acquired and liabilities assumed as part of a business combination are recorded at their fair value at the date of acquisition. The excess of purchase price over the fair value of assets acquired and liabilities assumed is recorded as goodwill. Determining fair value of identifiable assets, particularly intangible assets and liabilities acquired requires management to make estimates, which are based on all available information and in some cases, assumptions, with respect to the timing and amount of future revenues and expenses associated with an asset or liability.
Noncontrolling interests
In April 2025, the Company's controlled subsidiary, Commercial Strategies, Inc. ("Commercial Strategies"), launched a crowdfunding offering (the "token offering") of the right to acquire a tokenized digital security linked to Overstock intellectual property and eligible for future dividends, if any, from the licensing revenue that Commercial Strategies earns from the Overstock intellectual property. The token offering closed on May 16, 2025, and Commercial Strategies issued the tokenized digital security in the form of Series A Preferred Stock. The holders of the preferred shares will be entitled to receive, out of funds and assets legally available for such purpose, an annual dividend that is derived from the royalty fee paid by Bed Bath & Beyond, Inc. to Commercial Strategies for licensing of the Overstock intellectual property. The holders of the preferred stock have no voting rights.
In May 2025, the Company's controlled subsidiary, Zion Peaks, Inc. ("Zion Peaks"), launched a crowdfunding offering (the "token offering") of the right to acquire a tokenized digital security linked to buybuy BABY intellectual property and eligible for future dividends, if any, from the licensing revenue that Zion Peaks earns from the buybuy BABY intellectual property. The token offering closed on August 11, 2025, and Zion Peaks issued the tokenized digital security in the form of Series A Preferred Stock. The holders of the preferred shares will be entitled to receive, out of funds and assets legally available for such purpose, an annual dividend that is derived from the royalty fee paid by Bed Bath & Beyond, Inc. to Zion Peaks for licensing of the buybuy BABY intellectual property.
As a result of these transactions in the second and third quarters of 2025, the Company recognized the amounts of contributions attributable to the noncontrolling interests on the Company's consolidated balance sheets. At June 30, 2026 and
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Recently issued accounting standards
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), which requires public entities to disclose disaggregated information about certain income statement line items in the notes to the financial statements. For public entities, ASU 2024-03 is required to be adopted for annual periods beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. This ASU will result in the Company including the additional required disclosures when adopted and does not otherwise have a material impact on the Company's consolidated financial statements.
In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40), Targeted Improvements to the Accounting for Internal-Use Software, which clarified and modernizes the accounting for costs related to internal-use software. The amendments in ASU 2025-06 remove all references to project stages throughout Subtopic 350-40 and clarify the threshold entities apply to begin capitalizing costs. ASU 2025-06 is effective for all entities for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption permitted. This ASU will result in the Company adopting the new threshold to apply to begin capitalizing costs and does not otherwise have a material impact on the Company's consolidated financial statements.
Acquisition of The Brand House Collective, Inc.
On April 2, 2026 (the "Acquisition Date"), the Company completed the previously announced acquisition of The Brand House Collective, Inc. (“TBHC”) pursuant to the Agreement and Plan of Merger, dated as of November 24, 2025 (the “TBHC Merger Agreement”), by and among the Company, Knight Merger Sub II, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Knight Merger Sub”), and TBHC. Pursuant to the TBHC Merger Agreement, upon the terms and subject to the conditions set forth therein, Knight Merger Sub merged with and into TBHC, with TBHC surviving as a wholly owned subsidiary of the Company. The acquisition of TBHC strengthens the Company's presence in key categories of home décor and seasonal merchandise, while providing a flexible store base that can be integrated into the Company's broader platform.
Under the TBHC Merger Agreement, consideration includes conversion of each share of common stock, no par value, of TBHC (the "TBHC Common Stock") that was issued and outstanding immediately prior to the effective time of the TBHC Merger (the "TBHC Merger Effective Time") converted into the right to receive 0.1993 shares of a fully paid and non-assessable share of common stock, par value $0.0001 per share, of the Company ("BBBY Common Stock").
Each TBHC shareholder who would otherwise have been entitled to receive in the TBHC Merger a fractional share of TBHC Common Stock pursuant to the TBHC Merger Agreement was, in lieu of such fractional share and upon surrender of such holder's certificates representing shares of TBHC Common Stock outstanding prior to the TBHC Merger Effective Time, paid in cash the dollar amount (rounded to the nearest whole cent) without interest and subject to any required tax withholding, determined by multiplying such fraction by $4.62 , the closing price of the BBBY Common Stock on the New York Stock Exchange on April 1, 2026, the trading day immediately prior to the TBHC Merger Effective Time.
At the TBHC Merger Effective Time, subject to and in accordance with the terms of TBHC's Amended and Restated 2002 Equity Incentive Plan (the “TBHC Incentive Plan”), each option to purchase shares of TBHC Common Stock (“Option”) that was outstanding as of immediately prior to the TBHC Merger Effective Time was automatically cancelled and converted into the right to receive, without interest and subject to applicable withholding taxes, a number of validly issued, fully paid and nonassessable shares of BBBY Common Stock equal to (i) the Net Option Share Amount (as defined in the TBHC Merger Agreement) multiplied by (ii) the Exchange Ratio, plus any Fractional Share Cash Consideration. Any Option with an exercise price equal to or in excess of $0.94 , the closing price of TBHC Common Stock on April 1, 2026, the trading day immediately prior to the closing of the TBHC Merger, was cancelled and will have no further force or effect by virtue of the TBHC Merger, without any action on the part of the holder thereof and without any payment to the holder thereof.
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Subject to and in accordance with the terms of the TBHC Incentive Plan, each TBHC restricted stock unit (“RSU”) that was outstanding as of immediately prior to the TBHC Merger Effective Time, whether vested or unvested, automatically, without any action on the part of BBBY, Knight Merger Sub, TBHC or the holder thereof, fully vested and was converted into the right to receive, without interest and subject to applicable withholding taxes, a number of validly issued, fully paid and nonassessable shares of BBBY Common Stock equal to (i) the number of shares of TBHC Common Stock subject to such RSU immediately prior to the TBHC Merger Effective Time multiplied by (ii) the Exchange Ratio, plus any Fractional Share Cash Consideration.
The results of operations of TBHC have been included in the consolidated financial statements of the Company from April 2, 2026, the closing date of the acquisition (as discussed further in Note 2—Summary of Significant Accounting Policies). For the three and six months ended June 30, 2026, results of operations included $70.5 18.9
The following table summarizes the components of the purchase consideration (in thousands):
Share consideration issued to TBHC shareholders (1) | $ | |||||||
Share consideration to TBHC's Incentive Plan (2) | ||||||||
Settlement of existing TBHC indebtedness (3) | ||||||||
Settlement of preexisting relationships (4) | ||||||||
| Total fair value of consideration paid | ||||||||
Fair value of previously held equity interest in TBHC (5) | ||||||||
| Investment in TBHC | $ | |||||||
___________________________________________
(1) Represents the aggregate fair value of 2,705 common shares of the Company issued directly to the sellers based on the closing trading price of the Company's common shares of $4.62 per share on April 1, 2026
(2) Represents the aggregate fair value of 248 common shares of the Company issued in exchange for TBHC RSU equity awards that accelerated upon the change in control.
(3) Represents the settlement of TBHC existing indebtedness
(4) Represents the settlement of preexisting relationships comprised of 1) the settlement of Notes payable and accrued interest due to the Company of $43,732 and $473 , respectively, 2) Accounts receivable from inventory sales of $3,836 , and 3) Collaboration fee receivable of $205 .
(5) Represents the reported amount of the Company’s previously held interests in TBHC.
Prior to the Acquisition Date, the Company owned 39.8 % of the outstanding ownership interests in TBHC which it accounted for as an equity method security under the fair value option. The Acquisition Date fair value of the Company’s previously held ownership interest in TBHC was approximately $8.3 million and is included in the measurement of the investment in TBHC. The Company remeasured the previously held equity investment to its fair value, as of the date of acquisition, based on TBHC’s quoted market price as of April 1, 2026. The remeasurement resulted in an immaterial gain. Refer to Note 2—Summary of Significant Accounting Policies, basis of presentation, and Note 7—Equity Securities for further information.
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The Company has provisionally allocated the purchase price based on the fair values of the assets acquired and liabilities assumed at the TBHC acquisition date as follows (in thousands):
| April 2, 2026 | ||||||||
| Cash and cash equivalents | $ | |||||||
| Inventories, net | ||||||||
| Prepaid expenses and other current | ||||||||
| Fixed assets, net | ||||||||
| Goodwill | ||||||||
| Operating lease right-of-use assets | ||||||||
| Other long-term assets, net including securities measured at fair value | ||||||||
| Total assets acquired | ||||||||
| Accounts payable | ||||||||
| Accrued liabilities | ||||||||
| Unearned revenue | ||||||||
| Operating lease liabilities, current | ||||||||
| Long-term debt, net | ||||||||
| Operating lease liabilities, non-current | ||||||||
| Other long-term liabilities, including commitments measured at fair value | ||||||||
| Total liabilities assumed | ||||||||
| Net assets acquired | ||||||||
| Less: Fair value of previously held equity interest | ( | |||||||
| Total purchase consideration transferred | ||||||||
| Less: Cash acquired | ||||||||
| Purchase price, net of cash acquired | $ | |||||||
The fair values presented were estimated by management. The excess of the cost of acquisition over the fair value of the net tangible assets acquired of $63.7 million has been allocated as goodwill. The goodwill recognized is attributable to TBHC’s assembled workforce and expected synergies from combining the operations of the Company and TBHC. Goodwill will not be amortized but will be reviewed annually for impairment. None of the goodwill is expected to be deductible for income tax purposes.
The initial accounting for the TBHC acquisition is incomplete as the valuation of the acquired assets has not yet been finalized. As such there may be adjustments to the purchase accounting and those adjustments could be material. Management is completing its evaluation during the measurement period, which will not exceed one year from the acquisition date. Any adjustments to the provisional amount arising from new information about facts and circumstances that existed as of the acquisition date will be recognized in the period the adjustment is determined, with a corresponding adjustment to goodwill.
Acquisition related costs of $1.5 million and $4.5 million were incurred for the three and six months ended June 30, 2026. These costs are reported in the Consolidated Statements of Operations as General and administrative and relate to professional expenses and other third-party costs.
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The following reflects the pro forma impact of the purchase of TBHC on the Company’s results of operations giving effect of the transaction if it had taken place on January 1, 2025 (in thousands):
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Revenue | $ | ||||||||||||||||||||||
| Net income (loss) | ( | ( | ( | ( | |||||||||||||||||||
Acquisition of SFV Services
On June 30, 2026 (the “Effective Date”), Bed Bath & Beyond, Inc., a Delaware corporation (the “Company”), acquired TwoPonds, Inc., a Delaware corporation (“SFV Services”) and the parent company of SFV-LLGC, LLC, a Florida limited liability company, pursuant to the terms of that certain Agreement and Plan of Merger, dated as of the Effective Date (the “Merger Agreement”), by and among the Company, Beyond Home Services, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company (“Parent”), SFV Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of the Parent (“Merger Sub”), SFV Services, Mitchell Rosen Revocable Trust (“MR Trust”) and Sharon Rosen Revocable Trust (“SR Trust”, and together with MR Trust, collectively, “Sellers”). Pursuant to the Merger Agreement, Merger Sub merged with and into SFV Services (the “Merger”), with SFV Services surviving the Merger as a wholly owned subsidiary of Parent. SFV Services is a provider of installation and construction services.
The opening balances of SFV Services have been included in the consolidated balance sheet of the Company as of June 30, 2026, the closing date of the acquisition. For the three and six months ended June 30, 2026, the consolidated statement of operations did not include SFV Services results, as the transaction closed on the final day of the quarter.
The following table summarizes the components of the purchase consideration (in thousands):
Share consideration issued to SFV Services shareholders (1) | $ | |||||||
| Investment in SFV Services | $ | |||||||
___________________________________________
(1) Represents the aggregate fair value of 7,200 unregistered shares of common stock of the Company issued directly to the sellers at price of $5.15 per share, based on the closing trading price of the Company's common stock of $5.79 per share on June 30, 2026, adjusted for discount for lack of marketability.
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The Company has provisionally allocated the purchase price based on the fair values of the assets acquired and liabilities assumed at the SFV Services acquisition date as follows (in thousands):
| June 30, 2026 | ||||||||
| Cash and cash equivalents | $ | |||||||
| Accounts receivable, net | ||||||||
| Prepaid expenses and other current | ||||||||
| Fixed assets, net | ||||||||
| Goodwill | ||||||||
| Operating lease right-of-use assets | ||||||||
| Other long-term assets, net including securities measured at fair value | ||||||||
| Total assets acquired | ||||||||
| Accounts payable | ||||||||
| Accrued liabilities | ||||||||
| Unearned revenue | ||||||||
| Operating lease liabilities, current | ||||||||
| Operating lease liabilities, non-current | ||||||||
| Other long-term liabilities, including commitments measured at fair value | ||||||||
| Total liabilities assumed | ||||||||
| Net assets acquired | ||||||||
| Less: Cash acquired | ( | |||||||
| Purchase price, net of cash acquired | $ | |||||||
The fair values presented were estimated by management. The fair value of the assets acquired includes accounts receivable of $2.7 million, of which all is expected to be collectible. The excess of the cost of acquisition over the fair value of the net tangible assets acquired of $32.3 million has been allocated as goodwill. The goodwill recognized is attributable to SFV Services’ assembled workforce and expected synergies from combining the operations of the Company and SFV Services. The initial accounting for the SFV Services acquisition is incomplete as the valuation of the acquired assets has not yet been finalized. As such there may be adjustments to the purchase accounting and those adjustments could be material. Goodwill will not be amortized but will be reviewed annually for impairment. None of the goodwill is expected to be deductible for income tax purposes.
Acquisition related costs of $0.3 million and $0.8 million were incurred for the three and six months ended June 30, 2026, respectively. These costs are reported in the Consolidated Statements of Operations as General and administrative and relate to professional expenses and other third-party costs.
The following reflects the pro forma impact of the purchase of SFV Services on the Company’s results of operations giving effect of the transaction if it had taken place on January 1, 2025 (in thousands):
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Revenue | $ | $ | $ | $ | |||||||||||||||||||
| Net income (loss) | ( | ( | ( | ( | |||||||||||||||||||
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4. FAIR VALUE MEASUREMENT
The following tables summarize the Company's assets and liabilities measured at fair value on a recurring basis using the following levels of inputs (in thousands):
Fair Value Measurements at June 30, 2026 | |||||||||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Cash equivalents—Money market funds | $ | $ | $ | $ | |||||||||||||||||||
| Equity securities, at fair value | |||||||||||||||||||||||
| Available-for-sale debt securities (1) | |||||||||||||||||||||||
| Total assets | $ | $ | $ | $ | |||||||||||||||||||
Fair Value Measurements at December 31, 2025 | |||||||||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Cash equivalents—Money market funds | $ | $ | $ | $ | |||||||||||||||||||
| Equity securities, at fair value | |||||||||||||||||||||||
| Available-for-sale debt securities (1) | |||||||||||||||||||||||
| Debt securities, at fair value (1) | |||||||||||||||||||||||
| Total assets | $ | $ | $ | $ | |||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Loan commitments, at fair value (2) | $ | $ | $ | $ | |||||||||||||||||||
| Total liabilities | $ | $ | $ | $ | |||||||||||||||||||
(1) Included in Other long-term assets, net in the consolidated balance sheets.
(2) Included in Other long-term liabilities in the consolidated balance sheets.
The following table provides activity for the Company's Level 3 investments (in thousands):
| Amount | |||||
Level 3 investments at December 31, 2024 | $ | ||||
| Increase due to purchases of Level 3 investments | |||||
| Transfers out of Level 3 investments | ( | ||||
| Decrease in fair value of Level 3 investments | ( | ||||
| Accrued interest on Level 3 investments | |||||
Level 3 investments at December 31, 2025 | |||||
| Increase due to purchases of Level 3 investments | |||||
Accrued interest, net on Level 3 investments | |||||
Level 3 investments at June 30, 2026 | $ | ||||
The following table provides activity for the Company's Level 3 liabilities (in thousands):
| Amount | |||||
Level 3 liabilities at December 31, 2024 | $ | ||||
| Fair value of Level 3 liabilities assumed | |||||
Level 3 liabilities at December 31, 2025 | |||||
| Derecognition of Level 3 liabilities assumed | ( | ||||
Level 3 liabilities at June 30, 2026 | $ | ||||
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5. PROPERTY AND EQUIPMENT, NET
Property and equipment, net consist of the following (in thousands):
| June 30, 2026 | December 31, 2025 | ||||||||||
| Computer hardware and software, including internal-use software and website development | $ | $ | |||||||||
| Furniture and equipment | |||||||||||
| Leasehold improvements | |||||||||||
| Less: accumulated depreciation | ( | ( | |||||||||
| Total property and equipment, net | $ | $ | |||||||||
Capitalized costs associated with internal-use software and website development, both developed internally and acquired externally, and depreciation of costs for the same periods associated with internal-use software and website development consist of the following (in thousands):
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||
| Capitalized internal-use software and website development | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
| Depreciation of internal-use software and website development | |||||||||||||||||||||||||||||||||||
Depreciation expense is classified within the corresponding operating expense categories on the consolidated statements of operations as follows (in thousands):
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||
| Cost of goods sold | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
| Technology | |||||||||||||||||||||||||||||||||||
| Sales and marketing | |||||||||||||||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||||||||||||||
| Total depreciation | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
6. INTANGIBLE ASSETS, NET
Intangible assets, net consist of the following (in thousands):
| June 30, 2026 | December 31, 2025 | ||||||||||
| Intangible assets subject to amortization, gross (1) | $ | $ | |||||||||
| Less: accumulated amortization of intangible assets | ( | ( | |||||||||
| Intangible assets subject to amortization, net | |||||||||||
| Intangible assets not subject to amortization | |||||||||||
| Total intangible assets, net | $ | $ | |||||||||
(1) At June 30, 2026, the weighted average remaining useful life for intangible assets subject to amortization, gross was 1.93 years.
7. EQUITY SECURITIES
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Equity securities consist of the following (in thousands):
| June 30, 2026 | December 31, 2025 | ||||||||||
| Equity securities accounted for under the equity method under ASC 323 | $ | $ | |||||||||
| Equity securities accounted for under the fair value option | |||||||||||
| Total equity securities | $ | $ | |||||||||
The Company's equity securities accounted for under the equity method under ASC 323 and fair value option include equity securities in which the Company can exercise significant influence, but not control, over these entities through holding more than a 20% voting interest in the entity.
The following table includes the Company's equity securities and related ownership interest as of June 30, 2026:
| Ownership interest | |||||
| Medici Ventures, L.P. | |||||
| tZERO Group, Inc. | |||||
| Zulily Newco | |||||
On April 2, 2026, the Company completed the previously announced acquisition of TBHC and now effectively own 100 % of TBHC's outstanding shares of common stock. See Note 3—Business Combinations for further information.
The carrying amount of the Company's equity method securities was $55.9 million at June 30, 2026, which is included in Equity securities on the consolidated balance sheets, of which $17.1 million was valued under the fair value option (tZERO and Zulily Newco). For the equity method investments, there was no difference in the carrying amount of the assets and liabilities and the maximum exposure to loss, and there was no difference between the carrying amount of the investment in Medici Ventures, L.P., and the amount of underlying equity the Company has in the entity's net assets.
The following table summarizes the net loss recognized on equity method securities recorded in Other income (expense), net in the consolidated statements of operations (in thousands):
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||
| Net loss recognized on our proportionate share of the net assets of our equity method securities | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||||||
| Decrease in fair value of equity method securities held under fair value option | ( | ( | ( | ||||||||||||||||||||||||||||||||
Upon obtaining control of TBHC, the Company discontinued its application of equity method accounting resulting in a decrease in the fair value of equity method securities held under the fair value option of $8.3 million. Refer to Note 3—Business Combinations for further information on consolidation of TBHC.
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TZROP Conversion
On April 29, 2026, tZERO Group, Inc. ("tZERO"), an investee of the Company in which the Company is the largest shareholder, announced that the required majority of holders of its TZROP security tokens had approved the proposal to convert each outstanding TZROP token into three shares of tZERO's Series B preferred stock and eight shares of tZERO's common stock. As a result of the conversion, the Company's combined direct and indirect ownership in tZERO, decreased from approximately 49.4 % to 38.7 %. The decrease in the Company's combined indirect and direct ownership did not have a material impact on the carrying value of the Company's investment in tZERO.
In connection with the proposed conversion, the Company entered into a non-binding Letter of Intent with tZERO pursuant to which the Company has indicated its intent to lead up to $10.0 million in additional financing through a convertible note financing. The proposed financing is expected to be funded in tranches subject to the achievement of specified operational and financial milestones. As of June 30, 2026, the proposed financing has not been funded or approved.
Regulation S-X Rule 10-01(b)(1)
8. BORROWINGS
BMO Line of Credit
In October 2024, the Company entered into a Loan and Security Agreement (the "Loan Agreement") with BMO Bank N.A. (in such capacity, "BMO"), pursuant to which BMO agrees to lend the Company up to $25.0 million on a one-year revolving line of credit to aid the Company in securing strategic ventures. In connection with the Loan Agreement, BMO issued a revolving line of credit promissory note (the "Revolving Note") and granted a lien on the cash collateral account specified in the Loan Agreement (the "Cash Collateral Account"). The revolving line of credit bears interest on the unpaid principal balance at an annual rate equal to the Secured Overnight Financing Rate, or SOFR rate, for a one-month interest period plus 1.00 %, established by the Federal Reserve Bank of New York. The Company is obligated to pay certain commitment fees on undrawn amounts under the Loan Agreement in amounts specified in the Loan Agreement. The Loan Agreement and Revolving Note was originally scheduled to terminate on October 18, 2025, and loans thereunder may be borrowed, repaid, and reborrowed up to such date. In September 2025, the Company and BMO extended the term of the Loan Agreement and Revolving Note for an additional year, which will now terminate in October 2026.
As of June 30, 2026, the Company had $9.5 million of outstanding standby letter of credits under the Revolving Note. As of June 30, 2026, the outstanding balance on the line of credit was $15.5 million. The total outstanding debt on the line of credit is included in Short-term debt, net on the consolidated balance sheets.
The Loan Agreement is subject to limited affirmative covenants and negative covenants, including the requirement that the Company maintain cash in the Cash Collateral Account in an amount that is three percent greater than BMO's aggregate commitments under the Loan Agreement. As of June 30, 2026, the Company was in compliance with its debt covenants and continues to monitor ongoing compliance with the debt covenants.
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Bank of America Revolver
On April 2, 2026, following the acquisition of TBHC, TBHC entered into a Sixth Amendment to Third Amended and Restated Credit Agreement (as the same has been amended from time to time, the “2023 Credit Agreement”) with Bank of America, N.A., as administrative agent and collateral agent, and lender, agrees to lend the Company up to $90.0 million. During the three and six months ended June 30, 2026, the Company borrowed $25.9 18.1 14.6 million in letters of credit outstanding under the 2023 Credit Agreements. For the three and six months ended June 30, 2026, the Company recorded interest expense of $1.0 1.00 %. The fee paid to the lenders on the unused portion of the 2023 Credit Agreement is 25 basis points when usage is greater than 50% of the total commitment amount; otherwise, the fee on the unused portion is 37.5 basis points per annum.
Pursuant to the 2023 Credit Agreement, the Company entered into a pledge and security agreement with the administrative agent to the 2023 Credit Agreement, pledging its equity interests in TBHC. The Company has not guaranteed the obligations under the 2023 Credit Agreement or pledged any assets, other than the pledged equity interests in TBHC as collateral.
Short-term Loan
On June 29, 2026, the Company entered into a Promissory Note Agreement (the "Promissory Note") with The Container Store, Inc. ("TCS Inc."), pursuant to which the Company issued the Promissory Note for a total principal amount of $7.5 million. The Promissory Note matures on July 31, 2026 and bears interest at a rate of 8.00 % per annum. Refer to Note 17—Subsequent Events for additional information on the Company relationship with TCS Inc. and information on the subsequent repayment of the Promissory Note.
9. LEASES
The Company has operating leases for office space and a data center and, upon the completion of the merger with TBHC, certain retail store locations. The Company's leases have remaining lease terms of one year to seven years , some of which may include options to extend the leases perpetually, and some of which may include options to terminate the leases within one year . Variable lease costs include executory costs, such as taxes, insurance, and maintenance.
The components of lease expenses were as follows (in thousands):
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||
| Operating lease cost | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
| Short-term lease cost | |||||||||||||||||||||||||||||||||||
| Variable lease cost | |||||||||||||||||||||||||||||||||||
The following table provides a summary of other information related to leases (in thousands):
| Six months ended June 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cash payments included in operating cash flows from lease arrangements | $ | $ | |||||||||
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The following table provides supplemental balance sheet information related to leases:
| June 30, 2026 | December 31, 2025 | ||||||||||
| Weighted-average remaining lease term—operating leases | |||||||||||
| Weighted-average discount rate—operating leases | % | % | |||||||||
Maturity of lease liabilities under non-cancellable operating leases as of June 30, 2026, are as follows (in thousands):
| Payments due by period | Amount | |||||||
| 2026 (Remainder) | $ | |||||||
| 2027 | ||||||||
| 2028 | ||||||||
| 2029 | ||||||||
| 2030 | ||||||||
| Thereafter | ||||||||
| Total lease payments | ||||||||
| Less interest | ||||||||
| Present value of lease liabilities | $ | |||||||
During the three and six months ended June 30, 2026, the Company recognized $5.2
10. COMMITMENTS AND CONTINGENCIES
Legal proceedings and contingencies
From time to time, the Company is involved in litigation concerning consumer protection, employment, intellectual property, claims under the securities laws, and other commercial matters related to the conduct and operation of the business and the sale of products on the Company's websites. In connection with such litigation, the Company has been in the past and may be in the future subject to judgments requiring the Company to pay significant damages or associated costs. In some instances, other parties may have contractual indemnification obligations to the Company. However, such contractual obligations may prove unenforceable or non-collectible, and if the Company cannot enforce or collect on indemnification obligations, the Company may bear the full responsibility for damages, fees, and costs resulting from such litigation. As a result of such litigation, the Company may also be subject to penalties and equitable remedies that could force the Company to alter important business practices. Such litigation could be costly and time consuming and could divert or distract the Company's management and key personnel from the business operations. Due to the uncertainty of litigation and depending on the amount and the timing, an unfavorable resolution of some or all of such matters could materially affect the Company's business, results of operations, financial position, or cash flows.
The Company establishes liabilities when a particular contingency is probable and estimable which are included in Accrued liabilities on the consolidated balance sheets. At June 30, 2026 and December 31, 2025, the Company's established liabilities were not material.
Tariffs
The International Emergency Economic Powers Act (IEEPA) was used by the Trump administration to impose tariffs on imports. The U.S. Supreme Court ruled on February 20, 2026, that IEEPA does not authorize the President to impose tariffs, and as a result, on March 4, 2026, the Court of International Trade (CIT) ordered the Trump administration to begin refunding all tariffs imposed under IEEPA. On May 29, 2026, the administration appealed the CIT's ruling requiring universal refunds and reliquidation of finally liquidated entries. However, other entries, that are not finally liquidated are already being processed by U.S. Customs and Border Protection (CBP). The Company participated in the phase one IEEPA claim submissions, which began on April 20, 2026, and submitted a refund request for tariffs previously paid. During May and June 2026, the Company was informed that entries that paid tariffs of $9.2 million were approved for refunds and that the Company would also be paid $0.3 million of accrued interest. The Company received a nominal initial payment in July 2026.
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The Company believes it is appropriate to apply a loss recovery model to account for the tariff refunds and a gain contingency model to account for the accrued interest, as under the loss recovery model, the amount recognized is limited to the amount of the loss incurred.
Under the loss recovery model, a recovery is recognized when it is probable and reasonably estimable. A gain contingency is not recognized until realization, with realization achieved upon resolution of all uncertainties. The administration's appeal relates to finally liquidated entries and does not affect phase one submissions. Therefore, with CBP having confirmed to the Company the specific entries to be refunded and the exact amount of accrued interest to be paid, the total amounts to be received from CBP are probable, estimable, and realized. There are no further uncertainties.
As of June 30, 2026, the Company has recorded $9.5 million of tariff refund claims and accrued interest as a component of prepaid and other current assets on the Company's consolidated balance sheet, with no amounts recorded in prior periods. The $9.2 million of tariff refund claims is offset against cost of goods sold, the financial statement caption in which the original tariff cost was recognized, and the $0.3 million of interest income is recorded in interest income, net, on the Company's consolidated statement of operations.
11. INDEMNIFICATIONS AND GUARANTEES
During the normal course of business, the Company has made certain indemnities, commitments, and guarantees under which the Company may be required to make payments in relation to certain transactions. These indemnities include, but are not limited to, indemnities to various lessors in connection with facility leases for certain claims arising from such facility or lease, the environmental indemnity the Company entered into in favor of the lenders under its prior loan agreements, customary indemnification arrangements in underwriting agreements and similar agreements, and indemnities to its directors and officers to the maximum extent permitted under the laws of the State of Delaware. The duration of these indemnities, commitments, and guarantees varies, and in certain cases, is indefinite. In addition, the majority of these indemnities, commitments, and guarantees do not provide for any limitation of the maximum potential future payments the Company could be obligated to make. As such, the Company is unable to estimate with any reasonableness its potential exposure under these items. The Company has not recorded any liability for these indemnities, commitments, and guarantees in the accompanying consolidated balance sheets. The Company does, however, accrue losses for any known contingent liability, including those that may arise from indemnification provisions, when future payment is both probable and reasonably estimable.
12. STOCKHOLDERS' EQUITY
Common Stock
Each share of common stock has the right to one vote. The holders of common stock are also entitled to receive dividends declared by the Board of Directors out of funds legally available, subject to prior rights of holders of all classes of stock outstanding having priority rights as to dividends.
JonesTrading Sales Agreement
The Company entered into a Capital on DemandTM Sales Agreement (the "Sales Agreement") dated June 10, 2024 with JonesTrading Institutional Services LLC ("JonesTrading"), under which the Company has conducted and may in the future conduct "at the market" public offerings of its common stock. Under the Sales Agreement, JonesTrading, acting as the Company's sales agent or principal, may offer the Company's common stock in the market on a daily basis or otherwise as the Company requests from time to time. The Company has no obligation to sell shares under the Sales Agreement, but it may do so from time to time. For the six months ended June 30, 2026, the Company did no t sell any shares of its common stock pursuant to the Sales Agreement. For the six months ended June 30, 2025, the Company sold 4,331,713 shares of its common stock pursuant to the Sales Agreement and has recognized $24.2 million in proceeds, net of $0.5 million of offering costs, including commissions paid to JonesTrading. As of June 30, 2026, the Company had $16.0 million remaining available under its "at the market" sales program.
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Warrants
On September 22, 2025, the Company announced that its Board of Directors had declared a warrant dividend distribution (the "Warrant Distribution") to the record holders of the Company's common stock (the "Common Stock"), in the form of warrants to purchase Common Stock (the "Warrants"). Holders of Common Stock at the close of business on October 2, 2025 (the "Record Date") received one warrant for each ten shares of Common Stock then owned, rounded down to the nearest whole number. The Warrants were distributed to holders of Common Stock on the terms and conditions described in the Warrant Agreement, dated as of October 7, 2025, between the Company, Computershare, Inc., a Delaware corporation, and its affiliate, Computershare Trust Company, N.A., as Warrant Agent. The Warrants have a cash exercise price of $15.50 , and will expire on October 7, 2026, unless the Early Expiration Price Condition (as defined in the Warrant Agreement) is met.
13. STOCK-BASED AWARDS
The Company has equity incentive and compensatory plans that provide for the grant of stock-based awards, including restricted stock and performance shares to employees and board members, and provide employees with the ability to purchase shares of its common stock through an employee stock purchase plan. Employee accounting applies to equity incentives and compensation granted by the Company to its own employees. When an award is forfeited prior to the vesting date, the Company recognizes an adjustment for the previously recognized expense in the period of the forfeiture.
Stock-based compensation expense is classified within the corresponding operating expense categories on the consolidated statements of operations as follows (in thousands):
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||
| Cost of goods sold | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
| Sales and marketing | ( | ( | |||||||||||||||||||||||||||||||||
| Technology | |||||||||||||||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||||||||||||||
| Customer service and merchant fees | |||||||||||||||||||||||||||||||||||
| Total stock-based compensation | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
Restricted stock unit awards
The Company's Amended and Restated 2005 Equity Incentive Plan (the "Plan") provides for the grant of restricted stock units and other types of equity awards to employees and directors of the Company. The Compensation Committee of the Board of Directors approves grants of restricted stock unit awards to the Company's officers, board members, and employees. These restricted stock unit awards generally vest over a period of three years to four years , subject to the recipient's continuing service to us.
The cost of restricted stock units is determined using the fair value of the Company's common stock on the date of the grant and compensation expense is either recognized on a straight-line basis over the vesting schedule or on an accelerated schedule when vesting of restricted stock awards exceeds a straight-line basis. The cumulative amount of compensation expense recognized at any point in time is at least equal to the portion of the grant date fair value of the award that is vested at that date.
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Performance Shares
Performance-based shares ("PSUs") granted to the Company's executive management team under the Plan are eligible to vest based on achieving specific performance metrics. To the extent any of the PSUs become earned based on the Company's achievement of the aforementioned performance metrics, such earned PSUs will vest as to one-third of the earned PSUs on each of the first, second, and third anniversaries of the grant date, subject to the recipient’s continued service through the vesting date. To be eligible to vest in any tranche of the PSUs, the Company must meet the threshold performance metrics established for the performance period. Expense is recognized as compensation cost based on the fair value on the date of grant over the performance period, taking into account the probability that the Company will satisfy the performance goals.
Stock-based compensation related to the PSUs is included in the stock-based compensation expense table above combined with the expense associated with the Company's restricted stock units, performance share options, and employee stock purchase plan. Stock-based compensation related to the PSUs was a credit of $1.8 million due to staff-related reductions and $0.8 million for the three months ended June 30, 2026 and 2025, respectively, and credits of $2.4 million and $1.3 million due to staff related reductions for the six months ended June 30, 2026 and 2025, respectively.
The following table summarizes restricted stock unit and PSU award activity (in thousands, except per share data):
| Six months ended June 30, 2026 | |||||||||||
| Units | Weighted Average Grant Date Fair Value | ||||||||||
| Outstanding—beginning of year | $ | ||||||||||
| Granted at fair value | |||||||||||
| Vested | ( | ||||||||||
| Forfeited | ( | ||||||||||
| Outstanding—end of period | $ | ||||||||||
Share Options
Stock-based compensation related to the Performance Share Option is included in stock-based compensation expense table above combined with the expense associated with the Company's restricted stock units, PSUs, and employee stock purchase plan. Stock-based compensation related to the performance share options was $0.4 million and $0.8 million for the three months ended June 30, 2026 and 2025, respectively, and $0.9 million and $1.8 million for the six months ended June 30, 2026 and 2025, respectively.
The following table summarizes Share Options award activity for the six months ended June 30, 2026 (in thousands, except fair value data and remaining contractual term):
| Units | Weighted Average Exercise Price Per Share | Weighted Average Contractual Term Remaining (Years) | Aggregate Intrinsic Value | ||||||||||||||||||||
| Outstanding—beginning of year | $ | ||||||||||||||||||||||
| Granted at fair value | |||||||||||||||||||||||
| Vested | |||||||||||||||||||||||
| Forfeited | ( | ||||||||||||||||||||||
| Outstanding—end of period | $ | $ | |||||||||||||||||||||
| Vested and expected to vest as of June 30, 2026 | $ | $ | |||||||||||||||||||||
| Vested and exercisable as of June 30, 2026 | $ | — | $ | ||||||||||||||||||||
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Employee Stock Purchase Plan
Purchases under the 2021 Employee Stock Purchase Plan (the "ESPP") during the six months ended June 30, 2026 and 2025 were 67,219 shares and 90,921 shares, respectively, at an average purchase price per share of $4.53 and $5.43 , respectively. At June 30, 2026, approximately 2.5 million shares of common stock remained available under the ESPP.
Stock-based compensation related to the ESPP is included in the stock-based compensation expense table above combined with the expense associated with the Company's restricted stock units, PSUs, and performance share options. Stock-based compensation related to the ESPP was $0.1 million and $0.2 million for the three months ended June 30, 2026 and 2025, respectively and $0.3 million and $0.4 million for the six months ended June 30, 2026 and 2025, respectively.
14. REVENUE AND CONTRACT LIABILITY
Unearned Revenue
The following table provides information about unearned revenue from contracts with customers, including significant changes in unearned revenue balances during the periods presented (in thousands):
| Amount | |||||
| Unearned revenue at December 31, 2024 | $ | ||||
| Increase due to deferral of revenue at period end, net | |||||
| Decrease due to beginning contract liabilities recognized as revenue | ( | ||||
| Unearned revenue at December 31, 2025 | |||||
| Increase due to deferral of revenue at period end, net | |||||
| Increase due to business combinations | |||||
| Decrease due to beginning contract liabilities recognized as revenue | ( | ||||
| Unearned revenue at June 30, 2026 | $ | ||||
The Company's total unearned revenue related to outstanding loyalty program rewards was $4.7 million and $4.1 million at June 30, 2026 and December 31, 2025, respectively. Breakage income related to loyalty program rewards and gift cards is recognized in Net revenue in the consolidated statements of operations. Breakage recognized in revenue was $0.8 million and $1.1 million for the three months ended June 30, 2026 and 2025, respectively and $1.6 million and $7.7 million for the six months ended June 30, 2026 and 2025, respectively. The timing of revenue recognition of these reward dollars is driven by actual customer activities, such as redemptions and expirations. At June 30, 2026 and December 31, 2025, the Company had an additional $2.3 million and $2.4 million, respectively, of unearned contract revenue classified within Other long-term liabilities on the consolidated balance sheets.
Sales returns allowance
The following table provides additions to and deductions from the sales returns allowance, which is included in the Accrued liabilities balance in the consolidated balance sheets (in thousands):
| Amount | |||||
| Allowance for returns at December 31, 2024 | $ | ||||
| Additions to the allowance | |||||
| Deductions from the allowance | ( | ||||
| Allowance for returns at December 31, 2025 | |||||
| Additions due to business combinations | |||||
| Additions to the allowance | |||||
| Deductions from the allowance | ( | ||||
| Allowance for returns at June 30, 2026 | $ | ||||
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15. NET LOSS PER SHARE
The following table sets forth the computation of basic and diluted net loss per common share for the periods indicated (in thousands, except per share data):
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||
| Numerator: | |||||||||||||||||||||||||||||||||||
| Net loss attributable to common stockholders | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||
| Denominator: | |||||||||||||||||||||||||||||||||||
| Weighted average shares of common stock outstanding—basic | |||||||||||||||||||||||||||||||||||
| Weighted average shares of common stock outstanding—diluted | |||||||||||||||||||||||||||||||||||
| Net loss per share of common stock: | |||||||||||||||||||||||||||||||||||
| Basic | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||
| Diluted | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||
The following shares were excluded from the calculation of diluted shares outstanding as their effect would have been anti-dilutive (in thousands):
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||
| Restricted stock units, PSUs, and Share Options | |||||||||||||||||||||||||||||||||||
| Employee Stock Purchase Plan | |||||||||||||||||||||||||||||||||||
| Warrants | |||||||||||||||||||||||||||||||||||
16. BUSINESS SEGMENTS
Segment Operations: The Company currently has one reportable segment, which is its Retail business. The reportable segment is comprised of the Company's Bed Bath & Beyond operating segment, Overstock.com operating segment, and TBHC operating segment which primarily sells home goods products to customers. Across each operating segment, the Company offers customers similar products, source from overlapping suppliers, the same customer type, have similar distribution methods, and operate under the same regulatory environment. The Company has determined that each of its operating segments share similar economic characteristics and business activities and are aggregated into a single reportable Retail segment. The Bed Bath & Beyond operating segment includes results from its buybuy BABY brand, which are not material to the business and are not separately reviewed by the Chief Operating Decision Maker. The Retail segment primarily derives revenues from omni-channel sales of home furnishing merchandise through its suite of websites and mobile applications.
The accounting policies of the Retail segment are the same as those described in the summary of significant accounting policies. The Chief Operating Decision Maker (CODM), who is the Company's Principal Executive Officer, assesses performance for the Retail segment and decides how to allocate resources based on Operating Income (loss) that also is reported on the Consolidated Statements of Operations. The measure of segment assets is Cash and Cash Equivalents, as reported on the Consolidated Balance Sheet.
The CODM uses Operating Income (Loss) to evaluate income generated from segment resources in deciding whether to reinvest profits into the Retail segment or for other uses, such as to make acquisitions or investments. The CODM also uses Operating Income (Loss) to monitor budget versus actual results. The monitoring of budgeted versus actual results is used in assessing performance of the segment and in establishing bonus metrics.
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The following table summarizes the Company's segment revenue, significant segment expenses, other segment items, and segment loss (in thousands):
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
Net revenue | $ | $ | $ | $ | |||||||||||||||||||
Less: | |||||||||||||||||||||||
Cost of goods sold (as adjusted) (1) | |||||||||||||||||||||||
Sales and marketing expense (as adjusted) (1) | |||||||||||||||||||||||
Technology expense (as adjusted) (1) | |||||||||||||||||||||||
General and administrative (as adjusted) (1) | |||||||||||||||||||||||
Customer service and merchant fees (as adjusted) (1) | |||||||||||||||||||||||
Other segment items (2) | |||||||||||||||||||||||
Operating loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
___________________________________________
(1) Significant segment expense categories are adjusted to exclude costs related to depreciation and amortization, stock-based compensation, acquisition-related costs, and brand integration and restructuring costs which are included in the Other segment items line.
(2) Other segment items includes other operating expense (income), net, depreciation and amortization, stock-based compensation, acquisition-related costs, and brand integration and restructuring costs.
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17. SUBSEQUENT EVENTS
Completion of the Acquisition of The Container Store Holdings, LLC
On July 8, 2026 the Company completed the previously announced acquisition of The Container Store Holdings, LLC, a Delaware limited liability company (“TCS”), pursuant to the Agreement and Plan of Merger (the “TCS Merger Agreement”), date April 2, 2026, by and among the Company, Falcon Merger Sub, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company (“TCS Merger Sub”) and TCS. Pursuant to the Merger Agreement, upon the terms and subject to the conditions set forth therein, Merger Sub merged with and into TCS, with TCS surviving as a wholly owned subsidiary of the Company (the “Merger”).
Pursuant to the terms and conditions of the Merger Agreement, the Company issued an aggregate number of 13,714,287 shares of Common Stock and $112.6 million aggregate principal amount of Convertible Notes to holders of outstanding TCS indebtedness as merger consideration.
On the Closing Date, the Company entered into an indenture (the “Indenture”), among the Company, the guarantors from time to time party thereto and Computershare Trust Company, National Association, as trustee, with respect to $112.6 million aggregate principal amount of the Company’s 5.00 % Convertible Senior Notes due 2033 (the “Convertible Notes”) to be issued pursuant to the Merger Agreement. The Convertible Notes are senior, unsecured obligations of the Company and accrue interest payable semiannually in arrears at a rate of 5.00 % per year on April 1 and October 1 of each year, beginning April 1, 2027. The Convertible Notes mature on July 8, 2033, unless earlier converted or repurchased. The Convertible Notes are guaranteed by certain subsidiaries of the Company.
Under the Indenture, the Company agrees to use its reasonable best efforts to obtain the approval of its stockholders that is required under the applicable NYSE rules and regulations in connection with the issuance of its Common Stock. The Indenture provides that if the Company has not obtained such stockholder approval on or before the three-month anniversary of the Closing Date, the interest payable on the Convertible Notes will increase to 10.00 % per year until such stockholder approval is obtained and if the Company has not obtained such stockholder approval on or before the six-month anniversary of the Closing Date, the interest payable on the Convertible Notes will increase to 12.00 % per year until such stockholder approval is obtained.
The conversion rate is initially 109.8901 shares of Common Stock per $1,000 principal amount of Convertible Notes (equivalent to an initial conversion price of approximately $9.10 per share of Common Stock). The conversion rate is subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. In addition, following certain corporate events that occur prior to the maturity date, the Company will, in certain circumstances, increase the conversion rate for a holder who elects to convert its Convertible Notes in connection with such a corporate event.
The total preliminary purchase price consideration amounted to $168.6 million, representing (i) 13,714,287 shares of the Company’s common stock with a preliminary fair value of $67.7 million or $4.94 per share, based on the Company's closing share price of $5.37 on July 8, 2026, adjusted for a discount for lack of marketability of $0.43 per share due to the unregistered status of the shares issued, (ii) debt incurred for the issuance of Convertible Notes with a preliminary fair value of $108.4 million, (iii) less $7.5 million for the effective settlement of a pre-existing relationship short-term loan due to TCS Inc.
The acquisition is being accounted for as a business combination in accordance with ASC 805, Business Combinations. The preliminary allocation of the purchase price to the assets acquired and liabilities assumed is currently being finalized. Management’s initial estimates of the fair value of identified intangible assets and other purchase accounting adjustments are reflected in the unaudited pro forma condensed combined financial information included in the Company’s Current Report on Form 8-K, filed concurrently with this Quarterly Report. The Company will disclose its formalized preliminary purchase price allocation and the required supplemental pro forma financial disclosures within its Note for Business Combinations in the Quarterly Report on Form 10-Q for the period ending September 30, 2026.
Short-term Loan
On July 10, 2026, the Company repaid the $7.5 million short-term loan to TCS Inc. Refer to Note 8—Borrowings for additional information on this transaction.
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Participation Agreement
In January 2026 and November 2025, the Company purchased from certain lenders, via participation agreements for par/near par trades, a portion of the loans issued by TCS Inc. pursuant to the Term Loan Credit Agreement, dated as of January 28, 2025, as subsequently amended (“TCS Credit Agreement”). The aggregate purchase price for the Company’s participation in certain loans issued pursuant to the TCS Credit Agreement was $8.6 million. As a result of these transactions, the Company participated in the rights to the payment of interest and repayment of the loans and any exercise of rights or remedies related thereto.
Immediately after the closing of the Merger on July 8, 2026, the participation agreements between the Company and certain lenders were settled. The carrying value of the participation on that date was $9.1 million, representing an aggregate purchase price of $8.6 million and accrued interest of $0.5 million. In connection with the settlement, the Company (i) received cash of $6.4 million, (ii) repurchased 286,663 shares of Common Stock with a fair value of $1.4 million and will hold those shares in treasury, and (iii) cancelled $1.3 million aggregate principal amount of Convertible Notes with a fair value of $1.3 million.
Merger Agreement with F9 Brands, Inc.
On July 23, 2026 (the “Effective Date”), the Company entered into an Agreement and Plan of Merger (the “F9 Merger Agreement”) by and among the Company, Beyond Home Services, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company (“Purchaser”), F9 Merger Sub 1, Inc., a Delaware corporation and wholly owned subsidiary of Purchaser (“Merger Sub 1”), F9 Merger Sub 2, LLC, a Delaware limited liability company and wholly owned subsidiary of Purchaser (“Merger Sub 2”), F9 Investments, LLC, a Florida limited liability company (“Seller”), F9 Brands, Inc., a Delaware corporation (“F9”), and, solely for certain provisions thereof, Tom Sullivan, the indirect owner of Seller. Pursuant to the F9 Merger Agreement, and subject to the terms and conditions set forth therein, Merger Sub 1 will merge with and into F9 (the “First Merger”), immediately followed by the merger of F9 with and into Merger Sub 2 (the “Second Merger” and, together with the First Merger, the “Mergers”), with Merger Sub 2 surviving the Mergers as a wholly owned subsidiary of the Company. As this transaction has not closed prior to the issuance of these financial statements, the initial accounting for the business combination under ASC 805 has not yet been determined.
Pursuant to the terms of the F9 Merger Agreement, the aggregate merger consideration expected to be delivered at closing includes (i) $7.0 million in cash, (ii) approximately 18.1 million shares of the Company’s common stock, subject to certain adjustments, including reductions related to cash payments under employee incentive arrangements, (iii) the transfer of certain real estate assets consisting of two manufacturing facilities in Sweden and one manufacturing facility in Poland, (iv) a promissory note in the principal amount of $4.6 million, repayable by the Company within 90 days following closing and guaranteed by the Company, and (v) earnout consideration of up to $12.5 million, payable upon the achievement of specified trailing twelve-month EBITDA targets at the end of any fiscal quarter beginning with the quarter ending September 30, 2026 through December 31, 2031.
The completion of the Mergers is subject to customary closing conditions, including, among other things, (i) the absence of legal restraints or orders prohibiting the transaction, (ii) the absence of pending or threatened proceedings that would reasonably be expected to materially impair consummation of the transaction, (iii) the absence of a Material Adverse Effect as defined in the F9 Merger Agreement, (iv) the delivery of customary closing documents by the parties, (v) receipt of specified audited and unaudited financial statements of F9, and (vi) the accuracy of representations and warranties and compliance with covenants by the respective parties.
In connection with the F9 Merger Agreement, the Company and Seller are expected to enter into a registration rights and lock-up agreement at closing. Under the contemplated arrangement, the Company will be required to file a resale shelf registration statement covering the shares issued as merger consideration following closing and will grant Seller customary registration rights. In addition, 50 % of the shares issued as merger consideration will be subject to transfer restrictions for a period of twelve months following the closing date, subject to certain customary exceptions. Seller and its affiliates will also be subject to certain standstill restrictions for a period of twenty-four months following closing.
The F9 Merger Agreement may be terminated under certain circumstances, including at the election of either party on or after October 31, 2026, subject to specified exceptions, by mutual written consent of the parties, or upon certain breaches of
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representations, warranties, or covenants that are not timely cured. The transaction is expected to close during the third quarter of 2026.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion provides information that we believe to be relevant to an understanding of our unaudited consolidated financial condition and results of operations. The statements in this section regarding industry outlook, our expectations regarding the performance of our business and any other non-historical statements are forward-looking statements. Our actual results and outcomes may differ materially from those contained in or implied by any forward-looking statements contained herein. These forward-looking statements are subject to numerous risks, uncertainties, and other important factors, including, but not limited to, those described in "Special Cautionary Note Regarding Forward Looking Statements" and in Part II, Item 1A, "Risk Factors" included in this Quarterly Report on Form 10-Q. You should read the following discussion together with our unaudited consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q and with the sections entitled "Special Cautionary Note Regarding Forward-Looking Statements," Part I, Item 1A, "Risk Factors," and our consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2025 and with the sections entitled "Special Cautionary Note Regarding Forward-Looking Statements," Part II, Item 1A, "Risk Factors" included in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2026.
Overview
We are an omni-channel-focused retailer with an affinity model that owns or has ownership interests in various brands, offering a comprehensive array of products and services that enable its customers to enhance everyday life through quality, style, and value. In addition, we also offer an increasing number of add-on services across our platforms, including warranties, shipping insurance, and installation services. Our customer engagement and retention are bolstered by our welcome rewards+ membership program, enhancing the overall value proposition for our customers. We currently own Bed Bath & Beyond, Overstock, buybuy BABY, the Kirkland's and Kirkland's Home brands, SFV Services, and now The Container Store, among other brands. As used herein, "Bed Bath & Beyond," "the Company," "we," "our" and similar terms include Bed Bath & Beyond, Inc. and its controlled subsidiaries, unless the context indicates otherwise.
Through our Bed Bath & Beyond brand, we provide an extensive array of home-related products tailored specifically for our target customers - consumers who seek comprehensive support throughout their shopping journey, aspiring to discover quality, stylish products at competitive prices that align with their budget requirements. We regularly refresh our product assortment to reflect the evolving preferences of our customers and aim to stay aligned with current trends. Furniture across all rooms continues to play a critical role in our strategy. Leveraging an asset-light supply chain, direct shipping is offered to customers from both our suppliers and third-party logistics providers.
Bed Bath & Beyond's strategic priorities include curating stylish, high-quality assortments to make product selection intuitive and affordable, in addition to enhancing offerings with trusted aspirational brands. We transform the customer experience by building trust, creating life-stage experiences, and consistently delivering inspiration, quality, and value.
Through our Overstock brand, we aim to provide a wide array of quality goods at discounted prices, and a treasure hunt-like experience for our target customers - consumers who are highly engaged, very accustomed to purchasing online, and actively seeking great deals. The mission of this brand is to delight our customers by offering them deals on products they will love. Our product assortment includes home categories such as indoor and outdoor furniture, rugs, décor, and lighting, as well as lifestyle categories such as jewelry and watches, apparel and accessories, and designer shoes and handbags.
The buybuy BABY brand acquisition allows us to reunite two traditionally related brands, Bed Bath & Beyond and buybuy BABY, and support our customers through key life stage shopping moments.
Through our Kirkland's and Kirkland's Home brands acquisition, we believe this addition strengthens our presence in key categories that drive both traffic and margin, while providing a flexible store base that can be integrated into our broader platform.
The acquisition of SFV Services adds installation, renovation, construction and project-execution capabilities that further differentiate Bed Bath & Beyond from traditional retailers.
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The Container Store acquisition (refer to Note 17—Subsequent Events) combines the best of organizing solutions, design services and expertise with the best of Bed Bath & Beyond's home essentials. The result is a more complete home destination that combines organization, essentials, decor and services in one convenient shopping experience.
Recent Developments
Acquisition of The Brand House Collective, Inc.
On April 2, 2026, we completed the previously announced acquisition of The Brand House Collective, Inc. (“TBHC” or “The Brand House Collective”) pursuant to the Agreement and Plan of Merger, dated as of November 24, 2025 (the “TBHC Merger Agreement”), by and among the Company, Knight Merger Sub II, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Knight Merger Sub”), and TBHC. Pursuant to the TBHC Merger Agreement, upon the terms and subject to the conditions set forth therein, Knight Merger Sub merged with and into TBHC, with TBHC surviving as a wholly owned subsidiary of the Company. We believe the acquisition of TBHC will allow us to strengthen our presence in key categories of home décor and seasonal merchandise, while providing a flexible store base that can be integrated into our broader platform.
Acquisition of SFV Services
On June 30, 2026, we completed the previously announced acquisition of SFV Services. SFV Services provides renovation, construction, demolition, facilities and project management services across residential and commercial markets. Core offerings include residential renovations and remodeling, commercial renovations and tenant improvements, demolition and white-box services, construction management, general contracting, facilities maintenance programs, franchise and multi-unit rollouts, program management, project management, and owner's representation.
Acquisition of The Container Store Holdings, LLC
On July 8, 2026 we completed the previously announced acquisition of The Container Store Holdings, LLC, a Delaware limited liability company (“TCS”), pursuant to the Agreement and Plan of Merger (the “TCS Merger Agreement”), date April 2, 2026, by and among the Company, Falcon Merger Sub, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company (“TCS Merger Sub”) and TCS. Pursuant to the Merger Agreement, upon the terms and subject to the conditions set forth therein, Merger Sub merged with and into TCS, with TCS surviving as a wholly owned subsidiary of the Company (the “Merger”).
Merger Agreement with Fathom Holdings
On June 16, 2026, we entered into a Merger Agreement and Plan of Reorganization (the “Fathom Merger Agreement”), by and among the Company, Fathom Merger Sub, Inc., a North Carolina corporation and wholly owned subsidiary of the Company (“FTHM Merger Sub”), and Fathom Holdings, Inc., a North Carolina Corporation (“FTHM”), pursuant to which, subject to the terms and conditions set forth therein, FTHM Merger Sub will merge with and into FTHM, with FTHM surviving such Merger as a wholly owned subsidiary of the Company.
Merger Agreement with F9
On July 23, 2026, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Beyond Home Services, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company (“Purchaser”), F9 Merger Sub 1, Inc., a Delaware corporation and wholly owned subsidiary of Purchaser (“Merger Sub 1”), F9 Merger Sub 2, LLC, a Delaware limited liability company and wholly owned subsidiary of Purchaser (“Merger Sub 2”), F9 Investments, LLC, a Florida limited liability company (“Seller”), F9 Brands, Inc., a Delaware corporation (the “Target”), and, solely for the purposes of Sections 3.6, 3.7, 3.8 and 5.1 of the Merger Agreement, Tom Sullivan, the indirect owner of Seller (“Sullivan”), pursuant to which, subject to the terms and conditions set forth therein, Merger Sub 1 will merge with and into the Target (the “First Merger”), immediately followed by the merger of the Target with and into Merger Sub 2 (the “Second Merger” and, together with the First Merger, the “Mergers”), with Merger Sub 2 surviving as a wholly owned subsidiary of Purchaser.
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Executive Commentary
This executive commentary is intended to provide investors with a view of our business through the eyes of our management. As an executive commentary, it necessarily focuses on selected aspects of our business. This executive commentary is intended as a supplement to, but not a substitute for, the more detailed discussion of our business included elsewhere herein. Investors are cautioned to read our entire "Management's Discussion and Analysis of Financial Condition and Results of Operations," our interim and audited financial statements, and the discussion of our business and risk factors and other information included elsewhere or incorporated in this report. This executive commentary includes forward-looking statements, and investors are cautioned to read "Special Cautionary Note Regarding Forward-Looking Statements."
Revenue for the three months ended June 30, 2026, was $361.2 million, compared to $282.3 million for the three months ended June 30, 2025, representing an increase of $78.9 million, or 28.0%. The increase was primarily due to the inclusion of The Brand House Collective. In other respects, revenue increased, largely driven by an increase in average order value, partially offset by a decrease in number of orders delivered.
Gross profit for three months ended June 30, 2026, was $96.7 million, or 26.8% of revenue, compared to $67.0 million, or 23.7% of revenue, for the three months ended June 30, 2025. This represents an increase of $29.7 million, or 44.4%. The increase in gross profit was primarily attributable to the acquisition of The Brand House Collective, including the effect of tariff refunds. Gross margin increased by 310 basis points year-over-year, primarily due to positive mix associated with the acquisition of The Brand House Collective, including the effect of tariff refunds.
Sales and marketing expenses were $43.1 million, or 11.9% of revenue, for the three months ended June 30, 2026, compared to $38.2 million, or 13.5% of revenue, for the three months ended June 30, 2025. This represents an increase of $4.9 million, or 12.8%. The increase was primarily driven by higher revenue and related performance marketing expenses, partially offset by improved marketing efficiency.
Technology expenses increased by $1.1 million for the three months ended June 30, 2026, compared to the prior period. The increase was primarily due to severance, driven by the workforce optimization as part of our technology transformation efforts, including the adoption of evolving technological advancements such as artificial intelligence.
General and administrative expenses increased by $43.4 million for the three months ended June 30, 2026, compared to the prior period. The increase primarily reflected the expansion of our physical retail footprint, including store labor, occupancy, distribution, and other operating costs associated with The Brand House Collective, as well as $7.3 million of acquisition‑related professional fees.
Customer service and merchant fees increased by $2.2 million for the three months ended June 30, 2026, compared to the prior period. The increase was primarily driven by an increase in credit card costs, primarily due to increased volume.
Other operating expense (income), net increased by $8.5 million for the three months ended June 30, 2026, compared to the prior period. The increase reflects the $5.2 million loss from The Brand House Collective's impairment of leased assets due to store closures and the non-recurrence of the $5.0 million gain from the 2025 sale of Bed Bath & Beyond trademarks in Canada and the United Kingdom, partially offset by $2.2 million gains from lease termination.
Consolidated cash and cash equivalents decreased from $175.3 million as of December 31, 2025, to $99.5 million as of June 30, 2026, a decrease of $75.8 million, primarily as a result of disbursement for notes receivable of $20.0 million to TBHC, and net cash outflows from operating activities of $50.0 million.
Key Operating Metrics
We review a number of metrics, including the following key operating and financial metrics, to evaluate our business, measure our performance, identify trends in our business, prepare financial forecasts and make strategic decisions. We believe these operational measures are useful in evaluating our performance, in addition to our financial results prepared in accordance with U.S. GAAP. You should read the key operating and financial metrics in conjunction with the following discussion of our results of operations and together with our consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q.
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We use the following key operating metrics to assess the performance of our business (in thousands, except for LTM net revenue per active customer, average order value and orders per active customer):
| Three months ended June 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Active customers (1) | 6,389 | 4,356 | |||||||||
| LTM net revenue per active customer (2) | $ | 178 | $ | 259 | |||||||
| Orders delivered (3) | 2,797 | 1,289 | |||||||||
| Average order value (4) | $ | 129 | $ | 219 | |||||||
| Orders per active customer (5) | 1.79 | 1.32 | |||||||||
___________________________________________
(1) Active customers represent the total number of unique customers who have made at least one purchase during the prior twelve-month period. This metric captures both the inflow of new customers and the outflow of existing customers who have not made a purchase during the prior twelve-month period. We view active customers as a key indicator of our growth.
(2) Last twelve months (LTM) net revenue per active customer represents total net revenue in a twelve-month period divided by the total number of active customers for the same twelve-month period. We view LTM net revenue per active customer as a key indicator of our customers' purchasing patterns, including their initial and repeat purchase behavior.
(3) Orders delivered represents the total number of orders fulfilled in any given period, including orders that may eventually be returned. As we ship a large volume of packages related to e-commerce orders through multiple carriers, actual delivery dates for e-commerce orders may not always be available, and in those circumstances, we estimate delivery dates based on historical data. Typically, brick and mortar store orders will be fulfilled on-site at the time of the order. We view the orders delivered metric as a key indicator of our growth.
(4) Average order value is defined as total net revenue in any given period divided by the total number of orders delivered in that period. We view average order value as a key indicator of the mix of products on our sites, the mix of offers and promotions and the purchasing behavior of our customers.
(5) Orders per active customer is defined as orders delivered in a twelve-month period divided by active customers for the same twelve-month period. We view orders per active customer as a key indicator of our customers' purchasing patterns, including their initial and repeat purchase behavior.
Macroeconomic Trends
We continue to monitor recent macroeconomic trends and geopolitical events, including, without limitation, ongoing global conflicts, trade barriers including tariffs, financial and stock market volatility, higher interest rates, inflation, and their impacts. These events have and may continue to negatively impact consumer confidence and consumer spending, which have and may continue to adversely affect our business and our results of operations. Many of our suppliers source from other countries and may be negatively affected by increased tariffs or other import/export controls by the United States and foreign governments, as well as uncertainty in the market as it responds to global macroeconomic factors. Due to the uncertain and constantly evolving nature and volatility of these trends and events, we cannot currently predict their long-term impact on our operations and financial results. As of June 30, 2026, the challenges arising from these events have not adversely affected our liquidity or capacity to service our debt, nor have these conditions required us to reduce our capital expenditures.
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Results of Operations
Comparisons of Three Months Ended June 30, 2026 to Three Months Ended June 30, 2025, and Six Months Ended June 30, 2026 to Six Months Ended June 30, 2025
Net revenue, cost of goods sold, gross profit and gross margin
The following table summarizes our net revenue, cost of goods sold, and gross profit (in thousands):
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||
| Net revenue | $ | 361,159 | $ | 282,251 | $ | 608,914 | $ | 513,999 | |||||||||||||||||||||||||||
Cost of goods sold | |||||||||||||||||||||||||||||||||||
| Product costs and other costs of goods sold | 264,478 | 215,282 | 453,035 | 388,898 | |||||||||||||||||||||||||||||||
Gross profit | $ | 96,681 | $ | 66,969 | $ | 155,879 | $ | 125,101 | |||||||||||||||||||||||||||
| Year-over-year percentage change | |||||||||||||||||||||||||||||||||||
| Net revenue | 28.0 | % | 18.5 | % | |||||||||||||||||||||||||||||||
Gross profit | 44.4 | % | 24.6 | % | |||||||||||||||||||||||||||||||
| Percent of net revenue | |||||||||||||||||||||||||||||||||||
Cost of goods sold | |||||||||||||||||||||||||||||||||||
| Product costs and other costs of goods sold | 73.2 | % | 76.3 | % | 74.4 | % | 75.7 | % | |||||||||||||||||||||||||||
Gross margin | 26.8 | % | 23.7 | % | 25.6 | % | 24.3 | % | |||||||||||||||||||||||||||
Revenue for the three months ended June 30, 2026, was $361.2 million, compared to $282.3 million for the three months ended June 30, 2025, representing an increase of $78.9 million, or 28.0%. The increase was primarily due to the inclusion of The Brand House Collective. In other respects, revenue increased, largely driven by an increase in average order value, partially offset by a decrease in number of orders delivered.
Revenue for the six months ended June 30, 2026, was $608.9 million, compared to $514.0 million for the six months ended June 30, 2025, representing an increase of $95 million or 18.5%. The increase was primarily due to the inclusion of The Brand House Collective. Bed Bath & Beyond revenue also increased, largely driven by an increase in average order value, partially offset by a decrease in number of orders delivered.
Change in estimate of average transit times (days)
Our revenue related to merchandise sales is recognized upon delivery to our customers. Typically, brick and mortar store orders will be fulfilled on-site at the time of the order. As we ship a large volume of packages related to e-commerce orders through multiple carriers, it is not practical for us to track the actual delivery date for each of those shipments. We use estimates to determine which shipments are delivered and, therefore, recognized as revenue at the end of the period. Our delivery date estimates are based on average shipping transit times. We review and update our estimates on a quarterly basis based on our actual transit time experience. However, actual shipping times may differ from our estimates, which can be further impacted by uncertainty, volatility, and any disruption to our carriers caused by certain macroeconomic conditions, such as supply chain challenges, trade barriers including tariffs, inflation, rising interest rates, climate and weather events, or geopolitical events.
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The following table shows the effect that hypothetical changes in the estimate of average shipping transit times would have had on the reported amount of revenue and income before income taxes (in thousands):
| Three months ended June 30, 2026 | ||||||||||||||
| Change in the Estimate of Average Transit Times (Days) | Increase (Decrease) Revenue | Increase (Decrease) Income Before Income Taxes | ||||||||||||
| 2 | $ | (6,700) | $ | (1,053) | ||||||||||
| 1 | $ | (3,172) | $ | (498) | ||||||||||
| As reported | As reported | As reported | ||||||||||||
| -1 | $ | 4,866 | $ | 765 | ||||||||||
| -2 | $ | 10,848 | $ | 1,705 | ||||||||||
Gross profit and gross margin
Our overall gross margins fluctuate based on factors such as competitive pricing; product costs including the effect of tariffs; discounting; product mix of sales; advertising revenue and our marketing allowance program; and operational and fulfillment costs which include costs incurred to operate and staff warehouses, including rent and depreciation expense associated with these facilities, and costs to receive, inspect, pick, and prepare customer order for delivery, all of which we include as costs in calculating gross margin.
Gross margins for the past six quarterly periods and fiscal year ending 2025 were:
| Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025 | FY 2025 | Q1 2026 | Q2 2026 | |||||||||||||||||||||||||||||||||||||||||||||||
Gross margin | 25.1 | % | 23.7 | % | 25.3 | % | 24.6 | % | 24.7 | % | 23.9 | % | 26.8 | % | |||||||||||||||||||||||||||||||||||||||
Gross profit for the three months ended June 30, 2026, was $96.7 million, or 26.8% of revenue, compared to $67.0 million, or 23.7% of revenue, for the three months ended June 30, 2025. This represents an increase of $29.7 million, or 44.4%. The increase in gross profit was primarily attributable to the acquisition of The Brand House Collective, including the effect of tariff refunds. Gross margin increased by 310 basis points year-over-year, primarily due to positive mix associated with the acquisition of The Brand House Collective, including the effect of tariff refunds.
Gross profit for the six months ended June 30, 2026, was $155.9 million or 25.6%, compared to $125.1 million, or 24.3% of revenue, for the six months ended June 30, 2025. This represents an increase of $30.8 million, or 24.6%. The increase in gross profit was primarily attributable to the acquisition of The Brand House Collective, including the effect of tariff refunds Gross margin increased by 130 basis points year-over-year, primarily due to positive mix associated with the acquisition of The Brand House Collective, including the effect of tariff refunds.
Operating expenses
Sales and marketing expenses
We use a variety of online advertising channels to attract new and repeat customers, including search engine marketing, personalized emails, mobile app, loyalty program, affiliate marketing, display banners, and social media. We also build our brand awareness through linear and streaming TV advertising.
Costs associated with our discounted shipping and other promotions, such as coupons, are not included in sales and marketing expenses. Rather, they are accounted for as a reduction in revenue as they reduce the amount of consideration we expect to receive in exchange for goods or services and therefore affect net revenues and gross margin. We consider these promotions to be an effective marketing tool.
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The following table summarizes our sales and marketing expenses (in thousands):
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||
| Sales and marketing expenses | |||||||||||||||||||||||||||||||||||
| Sales and marketing expenses | $ | 43,108 | $ | 38,209 | $ | 75,418 | $ | 69,499 | |||||||||||||||||||||||||||
| Advertising expense included in sales and marketing expenses | 40,591 | 36,653 | 71,605 | 66,030 | |||||||||||||||||||||||||||||||
| Year-over-year percentage change | |||||||||||||||||||||||||||||||||||
| Sales and marketing expenses | 12.8 | % | 8.5 | % | |||||||||||||||||||||||||||||||
| Advertising expense included in sales and marketing expenses | 10.7 | % | 8.4 | % | |||||||||||||||||||||||||||||||
| Percent of net revenue | |||||||||||||||||||||||||||||||||||
| Sales and marketing expenses | 11.9 | % | 13.5 | % | 12.4 | % | 13.5 | % | |||||||||||||||||||||||||||
| Advertising expense included in sales and marketing expenses | 11.2 | % | 13.0 | % | 11.8 | % | 12.8 | % | |||||||||||||||||||||||||||
Sales and marketing expenses were $43.1 million, or 11.9% of revenue, for the three months ended June 30, 2026, compared to $38.2 million, or 13.5% of revenue, for the three months ended June 30, 2025. This represents an increase of $4.9 million, or 12.8%. The increase was primarily driven by higher revenue and related performance marketing expenses, partially offset by improved marketing efficiency.
Sales and marketing expenses were $75.4 million, or 12.4% of revenue, for the six months ended June 30, 2026, compared to $69.5 million, or 13.5% of revenue, for the six months ended June 30, 2025. The increase was driven by higher revenue and related performance marketing expenses, partially offset by improved marketing efficiency.
Technology expenses
We seek to deploy our capital resources efficiently in technology to support operations, including private and public cloud, web services, customer support solutions, and product search. We aim to enhance the customer experience by investing in technology, including investing in machine learning algorithms and generative AI, improving our process automation and efficiency, modernizing and enhancing our systems, and supporting and expanding our logistics infrastructure. We expect to continue to incur technology expenses to support these efforts and these expenditures may continue to be material.
The frequency and variety of cyberattacks on our websites, enterprise systems, services, and on third parties we use to support our technology continues to increase. The impact of such attacks, their costs, and the costs we incur to protect ourselves against future attacks, have not been material to date. However, we consider the risk introduced by cyberattacks to be serious and will continue to incur costs related to efforts to protect ourselves against them.
The following table summarizes our technology expenses (in thousands):
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||
| Technology expenses | $ | 24,334 | $ | 23,221 | $ | 45,548 | $ | 49,939 | |||||||||||||||||||||||||||
| Year-over-year percentage change | |||||||||||||||||||||||||||||||||||
| Technology expenses | 4.8 | % | (8.8) | % | |||||||||||||||||||||||||||||||
| Technology expenses as a percent of net revenue | 6.7 | % | 8.2 | % | 7.5 | % | 9.7 | % | |||||||||||||||||||||||||||
Technology expenses increased by $1.1 million for the three months ended June 30, 2026, compared to the prior period. The increase was primarily due to severance, driven by the workforce optimization as part of our technology transformation efforts, including the adoption of evolving technological advancements such as artificial intelligence.
Technology expenses decreased by $4.4 million for the six months ended June 30, 2026, compared to the prior period. The decrease was primarily due to a reduction in staff related expenses, and a reduction in depreciation and amortization, driven
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by our technology transformation efforts, including the adoption of evolving technological advancements such as artificial intelligence.
General and administrative expenses
The following table summarizes our general and administrative expenses (in thousands):
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||
| General and administrative expenses | $ | 57,527 | $ | 14,088 | $ | 72,390 | $ | 28,402 | |||||||||||||||||||||||||||
| Year-over-year percentage change | |||||||||||||||||||||||||||||||||||
| General and administrative expenses | 308.3 | % | 154.9 | % | |||||||||||||||||||||||||||||||
| General and administrative expenses as a percent of net revenue | 15.9 | % | 5.0 | % | 11.9 | % | 5.5 | % | |||||||||||||||||||||||||||
General and administrative expenses increased by $43.4 million for the three months ended June 30, 2026, compared to the prior period. The increase primarily reflected the expansion of our physical retail footprint, including store labor, occupancy, distribution, and other operating costs associated with The Brand House Collective, as well as $7.3 million of acquisition‑related professional fees.
General and administrative expenses increased by $44.0 million for the six months ended June 30, 2026, compared to the prior period. The increase primarily reflects the expansion of our physical retail footprint, including store labor, occupancy, distribution, and other operating costs associated with The Brand House Collective, as well as $11.0 million of acquisition‑related professional fees.
Customer service and merchant fees
Customer service and merchant fees include customer service costs and merchant processing fees associated with customer payments made by credit cards and other payment methods and other variable fees. Customer service and merchant fees as a percent of net revenue may vary due to several factors, such as our ability to effectively manage customer service costs and merchant fees.
The following table summarizes our customer service and merchant fees (in thousands):
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||
| Customer service and merchant fees | $ | 11,579 | $ | 9,331 | $ | 20,597 | $ | 18,688 | |||||||||||||||||||||||||||
| Year-over-year percentage change | |||||||||||||||||||||||||||||||||||
| Customer service and merchant fees | 24.1 | % | 10.2 | % | |||||||||||||||||||||||||||||||
| Customer service and merchant fees as a percent of net revenue | 3.2 | % | 3.3 | % | 3.4 | % | 3.6 | % | |||||||||||||||||||||||||||
Customer service and merchant fees increased by $2.2 million for the three months ended June 30, 2026, compared to the prior period. The increase was primarily driven by an increase in credit card costs, primarily due to increased volume.
Customer service and merchant fees increased by $1.9 million for the six months ended June 30, 2026, compared to the prior period. The increase was primarily driven by a $3.0 million increase in credit card costs, primarily due to increased order volume, partially offset by a $1.1 million decrease in customer service outsourced labor.
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Other operating (expense) income, net
The following table summarizes our other operating income, net (in thousands):
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||
| Other operating expense (income), net | $ | 3,016 | $ | (5,454) | $ | 3,016 | $ | (5,790) | |||||||||||||||||||||||||||
| Year-over-year percentage change | |||||||||||||||||||||||||||||||||||
| Other operating expense (income), net | (155.3) | % | (152.1) | % | |||||||||||||||||||||||||||||||
| Other operating expense (income), net as a percent of net revenue | 0.8 | % | (1.9) | % | 0.5 | % | (1.1) | % | |||||||||||||||||||||||||||
Other operating expense (income), net increased by $8.5 million for the three months ended June 30, 2026, compared to the prior period. The increase reflects the $5.2 million loss from The Brand House Collective's impairment of leased assets due to store closures and the non-recurrence of the $5.0 million gain from the 2025 sale of Bed Bath & Beyond trademarks in Canada and the United Kingdom, partially offset by $2.2 million gains from lease termination.
Other operating expense (income), net increased by $8.8 million for the six months ended June 30, 2026, compared to the prior period. The increase reflects the $5.2 million loss from The Brand House Collective's impairment of leased assets due to store closures and the non-recurrence of the $5.0 million gain from the 2025 sale of Bed Bath & Beyond trademarks in Canada and the United Kingdom, partially offset by $2.2 million of gains from lease terminations.
Other income (expense), net
The $7.6 million favorable change in other income (expense), net for the three months ended June 30, 2026, as compared to the same period in 2025, was primarily attributable to a $6.6 million decrease in loss recognized from our equity method securities and a $0.7 million loss from TBHC promissory convertible notes.
The $25.2 million favorable change in other income (expense), net for the six months ended June 30, 2026, as compared to the same period in 2025, was primarily attributable to a $21.2 million decrease in loss recognized from our equity method securities, a gain of $2.8 million gain recognized on the loan commitment in 2026, and a $0.7 million non-recurring loss recognized from TBHC convertible promissory notes in 2025. The decrease in loss recognized from our equity method securities reflects the change from a recognized loss on equity method securities of $23.6 million for the six months ended June 30, 2025 to a recognized loss on equity method securities of $2.4 million for the six months ended June 30, 2026. The gain recognized on the loan commitment was driven by the fact that The Brand House Collective had drawn the entire available balance from the Delayed Draw Loan Commitment.
Income taxes
Our income tax provision for interim periods is determined using an estimate of our annual effective tax rate adjusted for discrete items, if any, for relevant interim periods. We update our estimate of the annual effective tax rate each quarter and make cumulative adjustments if our estimated annual effective tax rate changes.
Our quarterly tax provision and our quarterly estimate of our annual effective tax rate are subject to significant variations due to several factors including: variability in predicting our pre-tax and taxable income, the mix of jurisdictions to which those items relate, relative changes in expenses or losses for which tax benefits are limited or not recognized, how we do business, fluctuations in our stock price, economic outlook, political climate, and other conditions such as supply chain challenges, inflation, rising interest rates, and geopolitical events. In addition, changes in laws, regulations, and administrative practices will impact our rate. Our effective tax rate can be volatile based on the amount of pre-tax income. For example, the impact of discrete items on our effective tax rate is greater when pre-tax income is lower.
During the three months ended June 30, 2026, we completed the acquisition of The Brand House Collective, Inc. (“TBHC”). In connection with the preliminary purchase price allocation, we recognized deferred tax liabilities primarily related to differences between the financial reporting carrying amounts and the tax bases of acquired assets.
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The deferred tax liabilities recognized in the acquisition provided a source of future taxable income that management considered in assessing the realizability of deferred tax assets. Based on this additional positive evidence, we released a portion of our valuation allowance during the second quarter of 2026. The release was recorded as a discrete income tax benefit in the period of the acquisition and reduced income tax expense for the three and six months ended June 30, 2026, by approximately $3.1 million.
Our provision for income tax for the three months ended June 30, 2026 and 2025 was $2.5 million benefit and $0.3 million expense, respectively. The effective tax rate for the three months ended June 30, 2026 and 2025 was 6.0% and (1.5)%, respectively. Our provision for income tax for the six months ended June 30, 2026 and 2025 was $2.3 million benefit and $0.5 million expense, respectively. The effective tax rate for the six months ended June 30, 2026 and 2025 was 3.9% and (0.8)% benefit, respectively. Our tax provision and rate differs from the statutory federal income tax rate of 21% primarily due to year-to-date losses on our retail operations for which tax benefits are limited and the release of a portion of our valuation allowance.
Each quarter we assess on a jurisdictional basis whether it is more likely than not that our deferred tax assets will be realized under ASC Topic 740. We have no carryback ability, and therefore we must rely on future taxable income, including tax planning strategies and future reversals of taxable temporary differences, to recover our deferred tax assets. We assess available positive and negative evidence to estimate whether we will generate sufficient future taxable income to use our existing deferred tax assets. A significant piece of objective negative evidence evaluated as of June 30, 2026, is the cumulative loss position over a three-year period generated by our U.S. retail operations. On the basis of this evaluation, we continue to maintain a valuation allowance against our deferred tax assets for the U.S. jurisdiction, not supported by reversals of taxable temporary differences. We intend to continue maintaining a valuation allowance on our net U.S. deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances. We will continue to monitor the need for a valuation allowance against our deferred tax assets on a quarterly basis.
As we repatriate foreign earnings for use in the United States, the distributions are generally exempt from federal and foreign income taxes but may be subject to certain state taxes. As of June 30, 2026, the cumulative amount of foreign earnings considered permanently reinvested upon which taxes have not been provided, and the corresponding unrecognized deferred tax liability was not material.
We are subject to taxation in the United States and multiple state and foreign jurisdictions. Tax years beginning in 2020 are subject to examination by taxing authorities, although net operating loss and credit carryforwards from all years are subject to examinations and adjustments for at least three years following the year in which the attributes are used.
Liquidity and Capital Resources
Overview
We believe that our cash and cash equivalents currently on hand and expected cash flows from future operations will be sufficient to continue operations for at least the next twelve months. We continue to monitor, evaluate, and manage our operating plans, forecasts, and liquidity considering the most recent developments driven by macroeconomic conditions, such as supply chain challenges, inflation, rising interest rates, tariffs, bans, or other measures or events that increase the effective price of products, and other geopolitical events. We proactively seek opportunities to improve the efficiency of our operations and have in the past and may in the future take steps to realize internal cost savings, including aligning our staffing needs, creating a more variable cost structure to better support our current and expected future levels of operations and process streamlining.
We periodically evaluate opportunities to repurchase our equity securities, obtain credit facilities, or issue additional debt or equity securities, which may impact our future operations and liquidity. In addition, we may, from time to time, consider the investment in, or acquisition of, complementary businesses, products, services, or technologies to expand our business, any of which might affect our liquidity requirements or cause us to issue additional debt or equity securities that would be dilutive to stockholders.
Our future capital requirements will depend on many factors, including, but not limited to, our growth, our ability to execute on our business strategy, our ability to integrate and realize synergies from investments in new business strategies, acquisitions, or other transactions, and consumer sentiment towards our offerings. In the event that additional liquidity is required from outside sources, we may not be able to raise the capital on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, financial condition, and results of operations could be adversely affected.
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Current sources of liquidity
Our principal sources of liquidity are existing cash and cash equivalents and accounts receivable, net. At June 30, 2026, we had $99.5 million of cash and cash equivalents and $29.8 million of accounts receivable, net of allowance for credit losses.
During the six months ended June 30, 2026, the Company entered into standby letter of credits with BMO Bank N.A. valued at $9.5 million. The letter of credits were issued in favor of the Company's payment processors as a financial guarantee in connection with ongoing payment processing operations.
On June 29, 2026 and in connection with the acquisition of TCS, the Company entered into a promissory note agreement with TCS in the amount of $7.5 million. The promissory note bears interest at 8.0% per annum and matures on July 31, 2026. The Company entered into the financing arrangement to provide additional short-term liquidity and support working capital needs. The note was repaid in full prior to its contractual maturity date.
We entered into a Sales Agreement dated June 10, 2024 with JonesTrading, under which we have conducted and may in the future conduct "at the market" public offerings of our common stock. Under the Sales Agreement, JonesTrading, acting as our sales agent or principal, may offer our common stock in the market on a daily basis or otherwise as we request from time to time. At June 30, 2026, we had $16.0 million available under our "at the market" sales program. We have no obligation to sell additional shares under the Sales Agreement, but we may do so from time to time. Under the agreement, we will pay JonesTrading up to a 2% sales commission on all sales. For the six months ended June 30, 2026, we did not sell any shares of our common stock pursuant to the Sales Agreement.
Cash flow information is as follows (in thousands):
| Six months ended June 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cash (used in) provided by: | |||||||||||
| Operating activities | $ | (50,040) | $ | (35,092) | |||||||
| Investing activities | (39,433) | (20,188) | |||||||||
| Financing activities | 13,630 | 16,718 | |||||||||
Operating activities
Cash received from customers generally corresponds to our net revenues as our customers primarily use credit cards to buy from us, causing our receivables from these sales transactions to settle quickly. We have payment terms with our partners that generally extend beyond the amount of time necessary to collect proceeds from our customers.
The $50.0 million of net cash used in operating activities during the six months ended June 30, 2026, was primarily due to loss from operating activities adjusted for non-cash items of $38.1 million and cash used by changes in operating assets and liabilities of $11.9 million.
The $35.1 million of net cash used in operating activities during the six months ended June 30, 2025, was primarily due to loss from operating activities adjusted for non-cash items of $25.3 million and cash used by changes in operating assets and liabilities of $9.8 million.
Investing activities
For the six months ended June 30, 2026, investing activities resulted in a net cash outflow of $39.4 million, primarily due to $27.2 million for the disbursement of notes receivable, $6.0 million related to the acquisitions of business, $4.6 million expenditures for property and equipment, and $1.6 million purchases of intangible assets.
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For the six months ended June 30, 2025, investing activities resulted in a net cash outflow of $20.2 million, primarily due to $8.0 million for purchases of equity securities, $5.2 million for disbursement of notes receivable to Kirkland's, $5.2 million for purchases of intangible assets, and $3.0 million of expenditures for property and equipment, offset by $1.3 million of proceeds received from the sale of intangible assets.
Financing activities
For the six months ended June 30, 2026, financing activities resulted in a net cash inflow of $13.6 million, primarily due to $25.9 million from borrowings of revolving line of credits, $7.5 million proceeds from short-term debt, and $0.4 million purchases from ESPP, which was offset by $18.1 million repayments on revolving line of credits, purchase of treasury stock.
For the six months ended June 30, 2025, financing activities resulted in a net cash inflow of $16.7 million, primarily due to $24.2 million in net proceeds from the sales of our common stock pursuant to our "at the market" public offering, net of offering costs, offset by $6.5 million payments on short-term debt.
Future liquidity commitments
We expect to fund the ongoing operations, capital requirements, and working capital needs of TBHC, TCS, and SFV Services through existing cash balances, cash flows from operations, and available credit facilities.
Contractual Obligations and Commitments
The following table summarizes our contractual obligations as of June 30, 2026, and the effect such obligations and commitments are expected to have on our liquidity and cash flow in future periods (in thousands):
| Contractual Obligations | Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | ||||||||||||||||||||||||||||||
| Operating leases (1) | $ | 125,934 | $ | 37,124 | $ | 56,338 | $ | 28,295 | $ | 4,177 | |||||||||||||||||||||||||
| Total contractual cash obligations | $ | 125,934 | $ | 37,124 | $ | 56,338 | $ | 28,295 | $ | 4,177 | |||||||||||||||||||||||||
__________________________________________
(1) Represents the future minimum lease payments under non-cancellable operating leases. For information regarding our operating lease obligations, see Note 9—Leases, in the Notes to Unaudited Consolidated Financial Statements included in Item 1, Part I, Financial Statements (Unaudited) of this Quarterly Report on Form 10-Q.
Tax contingencies
We are involved in various tax matters, the outcomes of which are uncertain. As of June 30, 2026, accrued tax contingencies were $3.6 million. Changes in federal, foreign, state, and local tax laws may increase our tax contingencies. The timing of the resolution of income tax contingencies is highly uncertain, and the amounts ultimately paid, if any, upon resolution of issues raised by the taxing authorities may differ from the amounts accrued. It is reasonably possible that within the next 12 months we will receive additional assessments by various tax authorities. These assessments may or may not result in changes to our contingencies related to positions on prior years' tax filings.
Critical Accounting Policies and Estimates
During the period we completed the acquisitions of TBHC and SFV Services, we allocated the fair value of purchase consideration to the tangible assets acquired and liabilities assumed. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Our valuation procedures include consultation with an independent adviser, as appropriate. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to inventories, fixed assets and operating right-of-use assets and lease liabilities. Critical estimates in valuing certain assets include but are not limited to projected future cash flows, comparable assets, and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates and changes could be significant. We expect to finalize these amounts during the one-year measurement period starting from the date of each acquisition.
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Other estimates associated with the accounting for acquisitions may change as additional information becomes available regarding the assets acquired and liabilities assumed, as more fully discussed in Note 3—Business Combinations of our unaudited consolidated financial statements included elsewhere in this Quarterly Report.
As of June 30, 2026, there were no significant changes in the application of our critical accounting policies or estimation procedures from those presented in Annual Report on Form 10-K for the year ended December 31, 2025.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risk from interest rate changes, foreign currency fluctuations, and changes in the market values of our securities. Information relating to quantitative and qualitative disclosures about these market risks is set forth below.
Interest Rate Sensitivity
The fair value of our cash and cash equivalents (highly liquid instruments with a remaining maturity of 90 days or less at the date of purchase) would not be significantly affected by either an increase or decrease in interest rates due mainly to the short-term nature of these instruments.
Interest on the revolving line of credit pursuant to the Loan Agreement described herein would accrue based on market rates plus 1.00%, for a one-month interest period; however, we do not expect that any changes in prevailing interest rates will have a material impact on our results of operations.
The Delayed Draw Term Loan Commitments require the Company to originate a loan at a floating interest rate plus an agreed margin upon request from the borrower, so long as the conditions specified in the Amended Credit Agreement with respect to the origination of such loan are satisfied. The outstanding Delayed Draw Term Loan Commitments expose the Company to the risk that the price of the loans arising from the exercise of the instrument might change from the inception to funding of the loan due to changes in loan interest rate margins; however, we do not expect that any changes in prevailing interest rates will have a material impact on our results of operations.
Foreign Currency Risk
Most of our sales and operating expenses are denominated in U.S. dollars, and therefore, our net revenue and operating expenses are not currently subject to significant foreign currency risk. As we grow our operations, our exposure to foreign currency risk could become more significant.
Inflation
Increases in commodity and shipping prices and energy and labor costs have resulted in inflationary pressures across various parts of our business and operations, including our partners and supply chain. We continue to monitor the impact of inflation to minimize its effects on our customers. We work with our partners to limit the amount of cost increases that are passed on through higher pricing. If costs borne by the Company or our partners were to be subject to incremental inflationary pressures, we may not be able to fully offset such higher costs through pricing actions or other cost efficiency measures. Our inability or failure to do so could harm our business, financial condition, and results of operations. While it is difficult to accurately measure the impact of inflation due to the imprecise nature of the estimates required, we believe the effects of inflation, if any, on our historical results of operations and financial condition have been immaterial. We cannot assure you, however, that our results of operations and financial condition will not be materially impacted by inflation in the future.
Investment Risk
The fair values of the equity and debt securities may be subject to fluctuations due to volatility of the stock market in general, investment-specific circumstances, and changes in general economic conditions. At June 30, 2026, the recorded value in equity securities of private companies was $55.9 million. At June 30, 2026, $17.1 million of the equity securities and $26.0 million of the debt securities were measured at fair value using Level 3 inputs. The fair value assessment of private companies includes a review of recent operating results and trends, recent sales/acquisitions of the securities, and other publicly available data. Valuations of private companies are inherently more complex due to the lack of readily available market data. As such, we believe that providing a sensitivity analysis is not practicable. These investments valued using Level 3 inputs represent 65.1% of assets measured at fair value. See Note 4—Fair Value Measurement included in Item 1, Part I, Financial Statements (Unaudited) of this Quarterly Report on Form 10-Q for further information. For the equity interest in Medici Ventures, L.P., we record our proportionate share of the entity's reported net income or loss, which reflects the fair value changes of the underlying investments of the entity and any other income or losses of the entity.
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ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We carried out an evaluation of the effectiveness of our disclosure controls and procedures as required by Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") under the supervision and with the participation of our principal executive officer and principal financial officer, as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level.
On April 2, 2026, the Company completed the acquisition of The Brand House Collective (“TBHC”). On June 30, 2026, the Company completed the acquisition of TwoPonds, Inc. (“SFV Services”). As permitted by the Securities and Exchange Commission’s guidance regarding recently acquired businesses, management has excluded the internal controls over financial reporting of TBHC and SFV Services from its evaluation of disclosure controls. TBHC accounted for 21% of our total assets and 20% of our net revenue as of and for the three months ended June 30, 2026.
Limitations on Disclosure Controls and Procedures
In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Management does not expect, however, that our disclosure controls and procedures will prevent or detect all errors and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.
Changes in Internal Control Over Financial Reporting
Except for the acquisition of TBHC and SFV Services discussed above, there were no changes in our internal control over financial reporting that occurred during the quarter June 30, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We are currently in the process of incorporating TBHC’s and SFV’s business processes and systems into our internal control over financial reporting structures.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, we are involved in, or become subject to litigation or other legal proceedings concerning consumer protection, employment, privacy, intellectual property, claims under the securities laws, and other commercial matters related to the conduct and operation of our business and the sale of products on our websites. We also prosecute lawsuits to enforce our legal rights. In connection with such litigation or other legal proceedings, we have been in the past and we may be in the future subject to equitable remedies relating to the operation of our business or judgments requiring us to pay significant damages or associated costs. Such litigation could be costly and time consuming and could divert or distract our management and key personnel from our business operations. Due to the uncertainty of litigation and depending on the amount and the timing, an unfavorable resolution of some or all of such matters could materially affect our business, results of operations, financial position, or cash flows. For additional details, see the information set forth under Item I of Part I, Financial Statements (Unaudited)—Note 10—Commitments and Contingencies, subheading Legal Proceedings and Contingencies, contained in the Notes to Unaudited Consolidated Financial Statements of this Quarterly Report on Form 10-Q, which is incorporated by reference in answer to this Item.
ITEM 1A. RISK FACTORS
Any investment in our securities involves a high degree of risk. Please consider the following risk factors and the risk factors previously disclosed in Part 1, Item 1A, "Risk Factors," of our Annual Report on Form 10-K for the year ended December 31, 2025 carefully. If any one or more of such risks were to occur, it could have a material adverse effect on our business, prospects, financial condition and results of operations, and the market price of our securities could decrease significantly. Statements to the effect that an event could or would harm our business (or have an adverse effect on our business or similar statements) mean that the event could or would have a material adverse effect on our business, prospects, financial condition and results of operations, which in turn could or would have a material adverse effect on the market price of our securities. Many of the risks we face involve more than one type of risk. Consequently, you should carefully read all of the risk factors below, the risk factors described in our Form 10-K for the year ended December 31, 2025, and in any reports we file with the SEC after we file this Form 10-Q, before making any decision to acquire or hold our securities.
Other than the risk factors set forth below, there are no material changes from the risk factors previously disclosed in Part I, Item 1A, "Risk Factors," of our Annual Report on Form 10-K for the year ended December 31, 2025.
Future sales or other distributions of our stock may depress our stock price or subject us to limitations on our ability to use our net operating loss and tax credit carryforwards.
Sales or other distributions of a substantial number of shares of our common stock, in the public market or otherwise, by us or by a significant stockholder, have in the past and could in the future, depress the trading price of our common stock and impair our ability to raise capital through the sale of additional equity securities.
In addition, we have in the past and may in the future issue additional shares of our common or preferred stock from time to time in amounts that may be significant. We have sold common stock including under our "at the market" sales agreement and in follow-on underwritten offerings in the past and may do so in the future. We also previously issued a class of preferred stock that was publicly traded and may in the future issue preferred stock that is publicly traded. The sale of substantial amounts of our common or any preferred stock, by us or a significant stockholder, or the perception that these sales may occur, could adversely affect the trading prices of our securities.
Under Section 382 and Section 383 of the Internal Revenue Code of 1986, as amended, if a corporation undergoes an “ownership change,” the corporation may be limited in its ability to use its pre-ownership change net operating loss carryforwards and certain other tax attributes to offset its post-ownership change taxable income or otherwise reduce its income tax liabilities. In general, an “ownership change” will occur if the ownership of our stock by certain stockholders or groups of stockholders changes by more than 50% over a rolling three-year period. Similar rules may apply under state tax laws. Changes in the ownership of our stock, including as a result of issuances of stock in connection with the proposed TCS Merger, our merger with TBHC and other transactions (some of which may be beyond our control), may result in an ownership change, which could result in increased future income tax liability to us.
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Risks Related to the Combined Company with TCS
The TCS Merger will involve substantial costs.
We and TCS have incurred and expect to incur non-recurring costs associated with combining the operations of the two companies, as well as transaction fees and other costs related to the TCS Merger. These costs and expenses include fees paid to financial, legal, accounting and other advisors, and other related charges.
The combined company will also incur restructuring and integration costs in connection with the TCS Merger. The costs related to restructuring will be expensed as a cost of the ongoing results of operations of the combined company. There are processes, policies, procedures, operations, technologies and systems that must be integrated in connection with the TCS Merger and the integration of TCS’s business with our business. We expect that the elimination of duplicative costs, strategic benefits, and additional income, as well as the realization of other efficiencies related to the integration of the businesses, may offset incremental transaction, TCS Merger-related and restructuring costs over time. However, any net benefit may not be achieved in the near term or at all. While we have assumed that certain expenses would be incurred in connection with the TCS Merger and the other transactions pursuant to the TCS Merger Agreement, there are many factors beyond our control that could affect the total amount or the timing of the integration and implementation expenses.
Lawsuits may in the future be filed against us or TCS, or against our directors or TCS’s principals, challenging the TCS Merger.
Transactions such as the TCS Merger are frequently subject to litigation or other legal proceedings, including actions alleging that our board of directors or the TCS principals breached their respective fiduciary duties to their stockholders or equity holders by entering into the TCS Merger Agreement, by failing to obtain a greater value in the transaction or otherwise. Neither we nor TCS can provide assurance that such litigation or other legal proceedings will not be brought. If litigation or other legal proceedings are in fact brought against us or TCS, or against our board of directors or the TCS principals, we and they will defend against them, but might not be successful in doing so. An adverse outcome in such matters, as well as the costs and efforts of a defense even if successful, could have a material adverse effect on our business, results of operations or financial position or that of the combined company, including through the possible diversion of either company’s resources or distraction of key personnel.
We and TCS have each incurred significant losses in recent years, and we cannot be certain when or if our operations will generate sufficient cash to fully fund our ongoing operations or the growth of the combined company.
We and TCS have each historically used significant amounts of cash in operating activities, and we expect the combined company to continue to use significant amounts of cash to fund ongoing operations, capital requirements, working capital needs, and debt service obligations for the foreseeable future. If the combined company do not achieve profitability as anticipated, we may be required to allocate additional financial resources, which could adversely affect liquidity, results of operations, or the ability to pursue other strategic initiatives. The incurrence of indebtedness for such purposes would result in increased payment obligations and could also result in certain restrictive covenants, such as limitations on our ability to incur additional debt or secure such debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our liquidity, financial condition, or ability to conduct our business. We cannot be certain when or if the combined company’s operations will generate sufficient cash to fully fund ongoing operations or the growth of the combined company.
Combining our business with that of TCS may be more difficult, costly or time-consuming than expected and the combined company may fail to realize the anticipated benefits of the TCS Merger, which may adversely affect the combined company’s business results and negatively affect the value of the combined company’s common stock.
The success of the TCS Merger will depend on, among other things, the ability of us and TCS to combine our businesses in a manner that facilitates growth opportunities. We and TCS have entered into the TCS Merger Agreement because we believe that the TCS Merger and the other transactions contemplated by the TCS Merger Agreement are in the best interests of our respective stockholders and that combining our businesses will produce benefits.
However, we and TCS must successfully combine and integrate our businesses in a manner that permits these benefits to be realized. In addition, the combined company must achieve the anticipated growth without adversely affecting current revenues, liquidity, customer and vendor relationships, and investments in future growth. If the combined company is not able
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to successfully achieve these objectives, the anticipated benefits of the TCS Merger may not be realized fully, or at all, or may take longer to realize than expected.
An inability to realize the full extent of the anticipated benefits of the TCS Merger and the other transactions under the TCS Merger Agreement, as well as any delays encountered in the integration process, could have an adverse effect upon the revenues, level of expenses and operating results of the combined company, which may adversely affect the value of the common stock of the combined company.
In addition, the actual integration may result in additional and unforeseen expenses, and the anticipated benefits of the integration plan may not be realized. Actual growth and any potential cost savings, if achieved, may be lower than what we and TCS expect and may take longer to achieve than anticipated. If we and TCS are not able to adequately address integration challenges, we may be unable to successfully integrate operations or realize the anticipated benefits of the integration of the two companies.
The failure to successfully integrate TCS with our businesses and operations in the expected time frame may adversely affect the combined company’s future results.
We and TCS have operated will continue to operate independently. There can be no assurance that our businesses can be integrated successfully. It is possible that the integration process could result in the loss of key employees of either company, the loss of customers, the disruption of either company’s or both companies’ ongoing businesses, inconsistencies in standards, controls, procedures and policies, unexpected integration issues, higher than expected integration costs and an overall post-completion integration process that takes longer than originally anticipated. Specifically, the following issues, among others, must be addressed in integrating our operations in order to realize the anticipated benefits of the TCS Merger so the combined company performs as expected:
•combining the companies’ operations and corporate functions;
•combining the businesses and meeting the capital requirements of the combined company, in a manner that permits the combined company to achieve any cost savings or other synergies anticipated to result from the TCS Merger, the failure of which would result in the anticipated benefits of the TCS Merger not being realized in the time frame currently anticipated or at all;
•integrating the companies’ technologies and technologies licensed from third parties;
•integrating and unifying the offerings and services available to customers;
•identifying and eliminating redundant and underperforming functions and assets;
•harmonizing the companies’ operating practices, employee development and compensation programs, internal controls and other policies, procedures and processes;
•maintaining existing agreements with customers, suppliers, distributors, vendors, landlords, and other counterparties, avoiding delays in entering into new agreements with prospective counterparties, and leveraging relationships with such third parties for the benefit of the combined company;
•addressing possible differences in business backgrounds, corporate cultures and management philosophies;
•consolidating the companies’ administrative and information technology infrastructure;
•coordinating distribution and marketing efforts;
•managing the movement of certain positions to different locations;
•coordinating geographically dispersed organizations; and
•effecting actions that may be required in connection with obtaining regulatory or other governmental approvals and consents.
In addition, at times the attention of certain members of our management and resources may be focused on the integration of the businesses of the two companies and diverted from day-to-day business operations or other opportunities that may have been beneficial to such company, which may disrupt the business of the combined company.
The combined company may not be able to retain customers or other business relationships, which could have an adverse effect on the combined company’s business and operations. Third parties may terminate or alter existing contracts or relationships with us or TCS.
The combined company may experience impacts on relationships with customers, suppliers, vendors, landlords, and other counterparties that may harm the combined company’s business and results of operations. Certain counterparties may no longer desire to do business with the combined company following the TCS Merger, may seek to renegotiate commercial terms,
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or may terminate, reduce, or fail to renew existing relationships. There can be no guarantee that customers and other third parties will remain with or continue to have a relationship with the combined company following the TCS Merger. If any customers or other counterparties stop doing business with the combined company, then the combined company’s business and results of operations may be harmed.
We and TCS also have contracts with landlords, licensors and other business partners which may contain limitations applicable to such contracts following the TCS Merger. If these consents cannot be obtained, the combined company may suffer a loss of potential future revenue, incur costs and lose rights that may be material to the combined company’s business. In addition, third parties with whom we or TCS currently have relationships may terminate or otherwise reduce the scope of their relationship with either party following the TCS Merger. Any such disruptions could limit the combined company’s ability to achieve the anticipated benefits of the TCS Merger.
The combined company may be exposed to increased litigation, which could have an adverse effect on the combined company’s business and operations.
The combined company may be exposed to increased litigation from stockholders, customers, suppliers, distributors, consumers and other third parties due to the combination of our and TCS’s businesses following the TCS Merger. Such litigation may have an adverse impact on the combined company’s business and results of operations or may cause disruptions to the combined company’s operations.
Due to the TCS Merger, we may be required to recognize impairment charges for goodwill and other intangible assets.
We anticipate that we will have a significant amount of goodwill and other intangible assets on our consolidated balance sheet following the TCS Merger. Goodwill represents the excess of the purchase price paid over the fair value of the net assets acquired in business combinations, such as the TCS Merger. If the carrying amount exceeds fair value, an impairment loss is recognized. Goodwill is tested for impairment at least annually, or when we determine that a triggering event has occurred. Significant negative industry or economic trends, disruptions to our business, the impact of acquired businesses (including an inability to effectively integrate acquired businesses), unexpected significant changes, planned changes in use of the assets, divestitures and market capitalization declines may impair goodwill and other intangible assets. We may recognize impairment charges for goodwill and other intangible assets. Any charges relating to such impairments could materially and adversely affect our results of operations in the periods recognized, which could result in an adverse effect on the market price of our common stock.
The market price for shares of our common stock following the TCS Merger may be affected by factors different from, or in addition to, those that historically have affected or currently affect the market prices of shares of our common stock.
Our stockholders and the former equity holders and creditors of TCS were entitled to receive merger consideration under the TCS Merger Agreement now hold shares of common stock in the combined company. The business of TCS differs from our business, and, accordingly, the results of operations and prospects of the combined company will be affected by some factors that are different from those currently or historically affecting our results of operations and the market price of our common stock.
Former TCS equity holders and creditors who received shares of our common stock or the Convertible Notes in the TCS Merger may decide not to hold such securities following the TCS Merger, and our existing stockholders before the TCS Merger may decide to reduce their investment in us as a result of changes to our investment profile following the TCS Merger. Sales of our common stock after the closing, or the perception that such sales may occur, as well as future conversion of the Convertible Notes into shares of our common stock, could have the effect of depressing the market price of the common stock of the combined company.
Risks Related to the Fathom and F9 Mergers
The Pending Mergers may not be completed and the Merger Agreements may be terminated in accordance with their terms.
The Fathom Merger Agreement and the F9 Merger Agreement (together with the Fathom Merger Agreement, the “Merger Agreements”) are subject to a number of conditions that must be satisfied or waived (to the extent permitted) prior to the completion of our proposed merger with, as applicable, FTHM and F9 (together, the “Pending Mergers”). The conditions to the completion of the Pending Mergers, some of which are beyond the control of the Company, Fathom and F9, may not be
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satisfied or waived in a timely manner or at all, and, accordingly, the Pending Mergers may be delayed or not completed. Additionally, either the Company or Fathom and F9 may terminate the Pending Merger Agreements, as applicable, under certain circumstances.
The termination of the Merger Agreements could negatively impact our business and the trading prices of our common stock.
If the Merger Agreements are not completed, the ongoing business of the Company may be adversely affected and, without realizing any of the expected benefits of having completed the Pending Mergers, we would be subject to a number of risks, including the following:
•failure to complete the proposed Pending Mergers may result in negative publicity and a negative impression of us in the investment community;
•we may experience negative reactions from our customers, employees, and other counterparties;
•we will be required to pay our costs relating to the Pending Mergers, such as financial advisory, legal, financing and accounting costs and associated fees and expenses, whether or not the Pending Mergers are completed; and
•matters relating to the Pending Mergers (including integration planning) will require substantial commitments of time and resources by management, which could otherwise have been devoted to day-to-day operations or to other opportunities that may have been beneficial to us.
Our current stockholders will have a reduced ownership and voting interest in us after the Pending Mergers compared to their current ownership and will exercise less influence over management.
Based on the number of issued and outstanding shares of common stock as of June 30, 2026, it is expected that Fathom and F9 equity holders and creditors entitled to receive merger consideration will collectively own up to approximately 21%, of our outstanding shares of common stock after giving effect to the Pending Mergers. As a result of the Pending Mergers, assuming consummated, our current stockholders will own a smaller percentage of the combined company than they currently own, and as a result will have less influence on our management and policies of the combined company than they now have on our management and policies, as the case may be.
Obtaining required approvals and satisfying closing conditions may prevent or delay completion of the Pending Mergers.
The Pending Mergers are subject to a number of conditions to closing as specified in the respective Merger Agreements. No assurance can be given that these approvals, financings, consents and other required conditions to closing will be obtained or satisfied, and, if they are obtained or satisfied, no assurance can be given as to their timing or the terms on which they are obtained. Any delay in completing the Pending Mergers could cause the combined company not to realize, or to be delayed in realizing, some or all of the benefits that we expect to achieve if the Pending Mergers are successfully completed within the expected time frame.
Failure to attract, motivate and retain executives and other key employees could diminish the anticipated benefits of the Pending Mergers.
The success of the Pending Mergers will depend in part on the combined company’s ability to retain the talents and dedication of the professionals currently employed by us and Fathom and F9. It is possible that these employees may decide not to remain with us or Fathom or F9, as applicable, while the Pending Mergers are pending, or with the combined company if the mergers are consummated. If key employees terminate their employment, or if an insufficient number of employees are retained to maintain effective operations, the combined company’s business activities may be adversely affected and management’s attention may be diverted from successfully integrating us and Fathom or F9 to hiring suitable replacements, all of which may cause the combined company’s business to suffer. In addition, we and Fathom or F9 may not be able to locate suitable replacements for any key employees who leave either company or offer employment to potential replacements on reasonable terms. In addition, there could be disruptions to or distractions for the workforce and management, including disruptions associated with integrating employees into the combined company. No assurance can be given that the combined company will be able to attract or retain key employees of ours and Fathom or F9 to the same extent that those companies have been able to attract or retain their own employees in the past.
The Pending Mergers, and uncertainty regarding the Pending Mergers, may cause customers, strategic partners and others to delay or defer decisions concerning us or Fathom or F9 and adversely affect each company’s ability to effectively manage its respective business.
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The Pending Mergers will occur only if the stated conditions are met, including the receipt of required approvals, and consents among other conditions. Many of these conditions are beyond our control and Fathom and F9’s control, and all parties also have certain rights to terminate the Pending Merger Agreements under certain circumstances.
Accordingly, there may be uncertainty regarding the completion of the Pending Mergers. This uncertainty may cause customers, strategic partners or others that deal with us or Fathom or F9 to delay or defer entering into contracts with us or making other decisions concerning us or seek to change or cancel existing business relationships with us, which could negatively affect the business of either company. Any delay or deferral of those decisions or changes in existing agreements could have an adverse impact on our business, regardless of whether the Pending Mergers are ultimately completed.
Whether or not the Pending Mergers are completed, the announcement and pendency of the Pending Mergers could cause disruptions in our business, which could have an adverse effect on our business and financial results.
Whether or not the Pending Mergers are completed, the announcement and pendency of the Pending Mergers could cause disruptions in our business, including by diverting the attention of our management away from day-to-day business operations and toward the completion of the Pending Mergers. In addition, we have diverted significant management resources in an effort to complete the Pending Mergers. If the Pending Mergers are not completed, we will have incurred significant costs, including the diversion of management resources, for which we will have received little or no benefit. These disruptions could adversely affect our business and financial results.
The Pending Mergers will involve substantial costs.
We, Fathom and F9 have incurred and expect to incur non-recurring costs associated with combining the operations of the companies, as well as transaction fees and other costs related to the Pending Mergers. These costs and expenses include fees paid to financial, legal, accounting and other advisors, and other related charges. Some of these costs are payable by us regardless of whether the Pending Mergers are completed.
The combined company will also incur restructuring and integration costs in connection with the Pending Mergers. The costs related to restructuring will be expensed as a cost of the ongoing results of operations of the combined company. There are processes, policies, procedures, operations, technologies and systems that must be integrated in connection with the Pending Mergers and the integration of Fathom and F9’s businesses with our business. We expect that the elimination of duplicative costs, strategic benefits, and additional income, as well as the realization of other efficiencies related to the integration of the businesses, may offset incremental transaction, merger related and restructuring costs over time. However, any net benefit may not be achieved in the near term or at all. Many of these costs will be borne by us even if the Pending Mergers are not completed. While we have assumed that certain expenses would be incurred in connection with the Pending Mergers and the other transactions contemplated by the Merger Agreements, there are many factors beyond our control that could affect the total amount or the timing of the integration and implementation expenses.
Lawsuits may in the future be filed against us or Fathom or F9, or against our directors or Fathom or F9’s principals, challenging the Pending Mergers, and an adverse ruling in any such lawsuit may prevent the Pending Mergers from becoming effective or from becoming effective within the expected time frame.
Transactions such as the proposed Pending Mergers are frequently subject to litigation or other legal proceedings, including actions alleging that the respective board of directors breached their respective fiduciary duties to their stockholders or equity holders by entering into the Merger Agreements, by failing to obtain a greater value in the transaction or otherwise. Neither we nor Fathom or F9 can provide assurance that such litigation or other legal proceedings will not be brought. If litigation or other legal proceedings are in fact brought against us, Fathom or F9, or against the respective board of directors, we and they will defend against them, but might not be successful in doing so. An adverse outcome in such matters, as well as the costs and efforts of a defense even if successful, could have a material adverse effect on our business, results of operations or financial position or that of the combined company, including through the possible diversion of either company’s resources or distraction of key personnel.
Furthermore, one of the conditions to the completion of each of the Pending Mergers is that no law or order restraining, enjoining, making illegal, or otherwise prohibiting the consummation of the Pending Mergers be in effect. As such, if any plaintiff or governmental authority is successful in obtaining such relief, that relief may prevent the Pending Mergers from becoming effective or from becoming effective within the expected time frame.
Future sales or other distributions of our stock may depress our stock price or subject us to limitations on our ability to use our net operating loss and tax credit carryforwards.
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Sales or other distributions of a substantial number of shares of our common stock, in the public market or otherwise, by us or by a significant stockholder, have in the past and could in the future, depress the trading price of our common stock and impair our ability to raise capital through the sale of additional equity securities.
In addition, we have in the past and may in the future issue additional shares of our common or preferred stock from time to time in amounts that may be significant. We have sold common stock including under our "at the market" sales agreement and in follow-on underwritten offerings in the past and may do so in the future. We also previously issued a class of preferred stock that was publicly traded and may in the future issue preferred stock that is publicly traded. The sale of substantial amounts of our common or any preferred stock, by us or a significant stockholder, or the perception that these sales may occur, could adversely affect the trading prices of our securities.
Under Section 382 and Section 383 of the Internal Revenue Code of 1986, as amended, if a corporation undergoes an “ownership change,” the corporation may be limited in its ability to use its pre-ownership change net operating loss carryforwards and certain other tax attributes to offset its post-ownership change taxable income or otherwise reduce its income tax liabilities. In general, an “ownership change” will occur if the ownership of our stock by certain stockholders or groups of stockholders changes by more than 50% over a rolling three-year period. Similar rules may apply under state tax laws. Changes in the ownership of our stock, including as a result of issuances of stock in connection with the Pending Mergers, our merger with TCS, our merger with TBHC and other transactions (some of which may be beyond our control), may result in an ownership change, which could result in increased future income tax liability to us.
Risks Related to the Combined Company with Fathom and F9
We have incurred significant losses in recent years, and we cannot be certain when or if our operations will generate sufficient cash to fully fund our ongoing operations or the growth of the combined company.
We have historically used significant amounts of cash in operating activities, and we expect the combined company to continue to use significant amounts of cash to fund ongoing operations, capital requirements, working capital needs, and debt service obligations for the foreseeable future. If we, Fathom, F9, or the combined company do not achieve profitability as anticipated, we may be required to allocate additional financial resources, which could adversely affect liquidity, results of operations, or the ability to pursue other strategic initiatives. The incurrence of indebtedness for such purposes would result in increased payment obligations and could also result in certain restrictive covenants, such as limitations on our ability to incur additional debt or secure such debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our liquidity, financial condition, or ability to conduct our business. We cannot be certain when or if our, Fathom’s, F9’s, or the combined company’s operations will generate sufficient cash to fully fund ongoing operations or the growth of the combined company.
Combining our business with that of Fathom or F9 may be more difficult, costly or time-consuming than expected and the combined company may fail to realize the anticipated benefits of the Pending Mergers, which may adversely affect the combined company’s business results and negatively affect the value of the combined company’s common stock.
The success of the Pending Mergers, if consummated, will depend on, among other things, the ability of us, Fathom and F9 to combine our businesses in a manner that facilitates growth opportunities. We, Fathom and F9 have entered into the respective Merger Agreements because we believe that the Pending Mergers and the other transactions contemplated by the Merger Agreements are in the best interests of our respective stockholders and that combining our businesses will produce benefits.
However, we, Fathom and F9 must successfully combine and integrate our businesses in a manner that permits these benefits to be realized. In addition, the combined company must achieve the anticipated growth without adversely affecting current revenues, liquidity, customer and vendor relationships, and investments in future growth. If the combined company is not able to successfully achieve these objectives, the anticipated benefits of the Pending Mergers may not be realized fully, or at all, or may take longer to realize than expected.
An inability to realize the full extent of the anticipated benefits of the Pending Mergers and the other transactions contemplated by the Merger Agreements, as well as any delays encountered in the integration process, could have an adverse effect upon the revenues, level of expenses and operating results of the combined company, which may adversely affect the value of the common stock of the combined company.
In addition, the actual integration may result in additional and unforeseen expenses, and the anticipated benefits of the integration plan may not be realized. Actual growth and any potential cost savings, if achieved, may be lower than what we, Fathom and F9 expect and may take longer to achieve than anticipated. If we, Fathom and F9 are not able to adequately address
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integration challenges, we may be unable to successfully integrate operations or realize the anticipated benefits of the integration of the companies.
The failure to successfully integrate Fathom or F9 with our businesses and operations in the expected time frame may adversely affect the combined company’s future results.
We, Fathom and F9 have operated and, until the completion of the Pending Mergers, will continue to operate independently. There can be no assurance that our businesses can be integrated successfully. It is possible that the integration process could result in the loss of key employees of either company, the loss of customers, the disruption of either company’s or both companies’ ongoing businesses, inconsistencies in standards, controls, procedures and policies, unexpected integration issues, higher than expected integration costs and an overall post-completion integration process that takes longer than originally anticipated. Specifically, the following issues, among others, must be addressed in integrating our operations in order to realize the anticipated benefits of the Pending Mergers so the combined company performs as expected:
•combining the companies’ operations and corporate functions;
•combining the businesses and meeting the capital requirements of the combined company, in a manner that permits the combined company to achieve any cost savings or other synergies anticipated to result from the Pending Mergers, the failure of which would result in the anticipated benefits of the Pending Mergers not being realized in the time frame currently anticipated or at all;
•integrating the companies’ technologies and technologies licensed from third parties;
•integrating and unifying the offerings and services available to customers;
•identifying and eliminating redundant and underperforming functions and assets;
•harmonizing the companies’ operating practices, employee development and compensation programs, internal controls and other policies, procedures and processes;
•maintaining existing agreements with customers, suppliers, distributors, vendors, landlords, and other counterparties, avoiding delays in entering into new agreements with prospective counterparties, and leveraging relationships with such third parties for the benefit of the combined company;
•addressing possible differences in business backgrounds, corporate cultures and management philosophies;
•consolidating the companies’ administrative and information technology infrastructure;
•coordinating distribution and marketing efforts;
•managing the movement of certain positions to different locations;
•coordinating geographically dispersed organizations; and
•effecting actions that may be required in connection with obtaining regulatory or other governmental approvals and consents.
In addition, at times the attention of certain members of our Fathom’s and F9’s management and each company’s respective resources may be focused on completion of the Pending Mergers and the integration of the businesses of the companies and diverted from day-to-day business operations or other opportunities that may have been beneficial to such company, which may disrupt each company’s ongoing business and the business of the combined company.
The combined company may not be able to retain customers or other business relationships, which could have an adverse effect on the combined company’s business and operations. Third parties may terminate or alter existing contracts or relationships with us, Fathom or F9.
If the Pending Mergers are consummated, the combined company may experience impacts on relationships with customers, suppliers, vendors, landlords, and other counterparties that may harm the combined company’s business and results of operations. Certain counterparties may no longer desire to do business with the combined company following the Pending Mergers, may seek to renegotiate commercial terms, or may terminate, reduce, or fail to renew existing relationships. There can be no guarantee that customers and other third parties will remain with or continue to have a relationship with the combined company following the Pending Mergers. If any customers or other counterparties stop doing business with the combined company, then the combined company’s business and results of operations may be harmed.
Contracts with landlords, licensors and other business partners may require us, Fathom or F9, as applicable, to obtain consent from these other parties in connection with the Pending Mergers, or which may otherwise contain limitations applicable to such contracts following the Pending Mergers. If these consents cannot be obtained, the combined company may suffer a loss of potential future revenue, incur costs and lose rights that may be material to the combined company’s business. In addition, third parties with whom we, Fathom or F9 currently have relationships may terminate or otherwise reduce the scope of their relationship with either party in anticipation of the Pending Mergers. Any such disruptions could limit the combined company’s ability to achieve the anticipated benefits of the Pending Mergers. The adverse effect of any such disruptions could also be exacerbated by a delay in the completion of the Pending Mergers or by a termination of the Merger Agreements.
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The combined company may be exposed to increased litigation, which could have an adverse effect on the combined company’s business and operations.
The combined company may be exposed to increased litigation from stockholders, customers, suppliers, distributors, consumers and other third parties due to the combination of our, Fathom’s and F9’s businesses following the Pending Mergers. Such litigation may have an adverse impact on the combined company’s business and results of operations or may cause disruptions to the combined company’s operations.
Due to the Pending Mergers, we may be required to recognize impairment charges for goodwill and other intangible assets.
Upon and subject to closing the Pending Mergers, we anticipate that we will have a significant amount of goodwill and other intangible assets on our consolidated balance sheet. Goodwill represents the excess of the purchase price paid over the fair value of the net assets acquired in business combinations, such as the Pending Mergers. If the carrying amount exceeds fair value, an impairment loss is recognized. Goodwill is tested for impairment at least annually, or when we determine that a triggering event has occurred. Significant negative industry or economic trends, disruptions to our business, the impact of acquired businesses (including an inability to effectively integrate acquired businesses), unexpected significant changes, planned changes in use of the assets, divestitures and market capitalization declines may impair goodwill and other intangible assets. If the Pending Mergers are consummated, we may recognize impairment charges for goodwill and other intangible assets. Any charges relating to such impairments could materially and adversely affect our results of operations in the periods recognized, which could result in an adverse effect on the market price of our common stock.
The market price for shares of our common stock following the Pending Mergers may be affected by factors different from, or in addition to, those that historically have affected or currently affect the market prices of shares of our common stock.
If the Pending Mergers are consummated, our stockholders and the current equity holders and creditors of Fathom and F9 entitled to receive merger consideration under the respective Merger Agreements will hold shares of common stock in the combined company. The business of Fathom and F9 differs from our business, and, accordingly, the results of operations and prospects of the combined company will be affected by some factors that are different from those currently or historically affecting our results of operations and the market price of our common stock.
Former Fathom and F9 equity holders and creditors who receive shares of our common stock in the Pending Mergers may decide not to hold such securities following the Pending Mergers, and our existing stockholders may decide to reduce their investment in us as a result of changes to our investment profile following the Pending Mergers. Sales of our common stock after the closing, or the perception that such sales may occur could have the effect of depressing the market price of the common stock of the combined company.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None not otherwise reported on a Current Report on Form 8-K.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
(a) Disclosure in lieu of reporting on a Current Report on Form 8-K.
None.
(b) Material changes to the procedures by which security holders may recommend nominees to the board of directors
None.
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(c) Insider trading arrangements and policies.
During the three months ended June 30, 2026, no director or officer of the Company adopted terminated
ITEM 6. EXHIBITS
| (a) | Exhibit Number | Exhibit Description | ||||||||||||
| 2.1*** | Asset Purchase Agreement, dated June 12, 2023, by and among Overstock.com, Inc., Bed Bath & Beyond Inc. and certain subsidiaries of Bed Bath & Beyond Inc., incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed on June 13, 2023 | |||||||||||||
| 2.2*** | Agreement and Plan of Merger, dated as of November 24, 2025, by and among Bed Bath & Beyond, Inc., Knight Merger Sub II, Inc., and The Brand House Collective, Inc. (incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed by the Company with the SEC on November 25, 2025). | |||||||||||||
| 2.3*** | Agreement and Plan of Merger, dated as of April 2, 2026, by and among Bed Bath and Beyond, Inc., Falcon Merger Sub, LLC and The Container Store Holdings, LLC (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed by the Company with the SEC on April 2, 2026) | |||||||||||||
| 2.4*** | Merger Agreement and Plan of Reorganization, dated as of June 16, 2026, by and among Bed Bath & Beyond, Inc., Fathom Merger Sub, Inc., and Fathom Holdings Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed by the Company with the SEC on June 17, 2026) | |||||||||||||
| 2.5*** | Agreement and Plan of Merger, dated as of June 30, 2026, by and among Bed Bath & Beyond, Inc., Beyond Home Services, LLC, SFV Merger Sub, Inc., TwoPonds, Inc., Mitchell Rosen Revocable Trust and Sharon Rosen Revocable Trust (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed by the Company with the SEC on July 1, 2026) | |||||||||||||
| 3.1 | Amended and Restated Certificate of Incorporation, incorporated by reference to Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q filed on July 29, 2014 | |||||||||||||
| 3.2 | Certificate of Amendment to Amended and Restated Certificate of Incorporation, incorporated by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K filed on November 6, 2023 | |||||||||||||
| 3.3 | Certificate of Amendment to Amended and Restated Certificate of Incorporation, incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on May 24, 2024 | |||||||||||||
| 3.4 | Certificate of Amendment to Amended and Restated Certificate of Incorporation, incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on August 22, 2025 | |||||||||||||
| 3.5 | Certificate of Amendment to Amended and Restated Certificate of Incorporation, incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on May 19, 2026 | |||||||||||||
| 3.6 | Sixth Amended and Restated Bylaws, incorporated by reference to Exhibit 3.5 to the Company's Annual Report on Form 10-K filed on February 24, 2026 | |||||||||||||
| 10.1*** | Transaction Support Agreement, dated as of April 2, 2026, by and among, Bed Bath and Beyond, Inc., The Container Store Holdings, LLC and the other persons party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed by the Company with the SEC on April 2, 2026) | |||||||||||||
| 10.2 | Put Agreement, dated as of April 2, 2026, by and among Bed Bath and Beyond, Inc., and the Specified Lenders (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed by the Company with the SEC on April 2, 2026) | |||||||||||||
| 10.3 | Form of Voting and Support Agreement, dated as of June 16, 2026, by and among Bed Bath & Beyond, Inc., Fathom Holdings Inc., and certain stockholders of Fathom Holdings Inc. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed by the Company with the SEC on June 17, 2026) | |||||||||||||
| 10.4 | Registration Rights, Lock-Up and Voting Agreement, dated as of June 30, 2026, by and among Bed Bath & Beyond, Inc., Mitchell Rosen Revocable Trust and Sharon Rosen Revocable Trust (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed by the Company with the SEC on July 1, 2026) | |||||||||||||
| 10.5 | Amended and Restated 2005 Equity Incentive Plan, Amended and Restated Effective March 10, 2026 (incorporated by reference to Exhibit 99.1 to the Company's Registration Statement on Form S-8 filed by the Company with the SEC on March 11, 2026) | |||||||||||||
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| 10.6* | Employment Letter Agreement, dated as of April 2, 2026, by and between Amy Sullivan and Bed Bath & Beyond, Inc. | |||||||||||||
| 10.7* | Employment Letter Agreement, dated as of April 2, 2026, by and between Brian LaRose and Bed Bath & Beyond, Inc. | |||||||||||||
| 10.8* | Employment Letter Agreement, dated as of April 2, 2026, by and between Lisa Foley and Bed Bath & Beyond, Inc. | |||||||||||||
| 10.9* | Release Agreement, dated as of April 27, 2026, by and between Adrianne Lee and Bed Bath & Beyond, Inc. | |||||||||||||
| 10.10* | Severance Agreement and Release, dated as of May 15, 2026, by and between Leah Putnam and Bed Bath & Beyond, Inc. | |||||||||||||
| 31.1* | Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer | |||||||||||||
| 31.2* | Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer | |||||||||||||
| 32.1** | Section 1350 Certification of Principal Executive Officer | |||||||||||||
| 32.2** | Section 1350 Certification of Principal Financial Officer | |||||||||||||
| 101 | Attached as Exhibit 101 to this report are the following documents formatted in Inline XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Cash Flows, (iv) Consolidated Statements of Stockholders' Equity, and (v) Notes to Consolidated Financial Statements. | |||||||||||||
| 104 | The cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2026, formatted in Inline XBRL (included as Exhibit 101). | |||||||||||||
______________________________________
* Filed herewith.
** Furnished herewith.
*** Certain schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Reporting Company agrees to furnish supplementally a copy of any omitted schedule or exhibit to the SEC upon request.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Date: | August 4, 2026 | BED BATH & BEYOND, INC. | ||||||
| /s/ BRIAN LAROSE | ||||||||
| Brian LaRose | ||||||||
| Chief Financial Officer (Principal Financial Officer) (Principal Accounting Officer) | ||||||||
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