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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2023.
OR
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                     to                     
Commission file number 001-38134
Blue Apron Holdings, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware81-4777373
(State or Other Jurisdiction of Incorporation or Organization)(I.R.S. Employer Identification No.)
28 Liberty Street, New York, New York
10005
(Address of Principal Executive Offices)(Zip Code)
Registrant’s telephone number, including area code (347) 719-4312
Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of Each ClassTrading SymbolName of Exchange on Which Registered
Class A Common Stock, $0.0001 par value per shareAPRNNew York Stock Exchange LLC
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 x   No o
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 x   No o
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 fileroAccelerated filerxSmaller reporting company xEmerging growth companyo
Non-accelerated filero
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. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes o   No x
Indicate the number of shares outstanding of each class of the issuer’s common stock as of the latest practicable date.
ClassNumber of Shares Outstanding
Class A Common Stock, $0.0001 par value
6,389,337 shares outstanding as of July 31, 2023
Class B Common Stock, $0.0001 par value
0 shares outstanding as of July 31, 2023
Class C Capital Stock, $0.0001 par value
0 shares outstanding as of July 31, 2023


BLUE APRON HOLDINGS, INC.
TABLE OF CONTENTS
1
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements. All statements other than statements of historical fact contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and financial position, business strategy and plans, and objectives of management for future operations, are forward-looking statements. These statements involve known and unknown risks, uncertainties, and other important factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements.
In some cases, you can identify forward-looking statements by terms such as “may,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” or “continue,” or the negative of these terms or other similar expressions. The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition, and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of risks, uncertainties and assumptions described in the “Risk Factors” section and elsewhere in this Quarterly Report on Form 10-Q. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Some of the key factors that could cause actual results to differ from our expectations include:
•our ability to successfully execute our business without our fulfillment and production assets; our ability to successfully and efficiently transition our fulfillment and production assets to FreshRealm, Inc. ("FreshRealm"); the ability of FreshRealm to continue to fulfill our meal-kit products in a manner consistent with our brand standards, if at all; our ability to achieve the anticipated benefits of the FreshRealm Transaction (as defined below) for our stockholders;
•the sufficiency of our cash resources and our ability to continue to operate as a going concern if we are unable to execute our business strategy and implement our new asset-light operating plan, including (a) our ability to (i) earn up to $4.0 million in additional cash consideration under the asset purchase agreement we entered into with FreshRealm in connection with the FreshRealm Transaction, (ii) realize the benefit of the full $3.5 million promissory note issued in connection with the FreshRealm Transaction, and (iii) achieve the up to $17.5 million of volume-based rebates under the production and fulfillment agreement we entered into with FreshRealm, (b) the ability of FreshRealm to cost effectively price the production and fulfillment of our meal kits and other products, or (c) our ability, if we are unable to successfully implement our operating strategy, to recognize the benefits of our identified expense reductions, including our recent headcount reductions, or raise additional capital or funding, including through (i) our February 2023 ATM (as defined below) or otherwise, (ii) receiving all or a sufficient portion of the remaining $68.2 million due to us in connection with the $56.5 million private placement and the $12.7 million gift card transaction with certain affiliates of Joseph N. Sanberg, or (iii) the disposition of some or all of the pledged securities securing the private placement obligation;
•our ability, including the timing and extent, to successfully support the execution of our strategy; our ability to cost-effectively attract new customers and retain existing customers (including, on the one hand, our ability to execute our marketing strategy, or on the other hand, our ability to sustain any increase in demand we may experience); our ability to continue to expand our product offerings and distribution channels; our ability to sustain any increase in demand and/or ability to continue to execute operational efficiency practices, including managing our corporate workforce reduction implemented in December 2022 and July 2023, and the impact of our workforce reduction on executing our strategy;
•our expectations regarding, and the stability of, our and FreshRealm's supply chain, including potential shortages, interruptions or continued increased costs in the supply or delivery of ingredients to FreshRealm, and parcel and freight carrier interruptions or delays and/or higher freight or fuel costs, as a result of inflation or otherwise;
•our ability to respond to changes in consumer behaviors, tastes, and preferences that could lead to changes in demand, including as a result of, among other things, the impact of inflation or other macroeconomic factors, and to some extent, long-term impacts on consumer behavior and spending habits;
2
•our ability to attract and retain qualified employees and personnel in sufficient numbers;
•our ability to effectively compete;
•our ability to maintain and grow the value of our brand and reputation;
•our ability to execute one or more financing opportunities and/or other strategic transactions, if at all, and our ability to achieve the anticipated benefits of any such transactions for our shareholders:
•any material challenges in employee recruiting and retention; any prolonged closures, or series of temporary closures, of one or more of the fulfillment centers operated by FreshRealm for our products, supply chain or carrier interruptions or delays, and any resulting need to cancel or shift customer orders;
•our ability to achieve our environmental, social and corporate governance (“ESG”) goals on our anticipated timeframe, if at all;
•our reliance on FreshRealm to maintain food safety and prevent food-borne illness incidents and our susceptibility to supplier-initiated recalls;
•our ability to comply with modified or new laws and regulations applying to our business, or the impact that such compliance may have on our business;
•our vulnerability to adverse weather conditions, natural disasters, wars, and public health crises, including pandemics;
•our ability to protect the security and integrity of our data and protect against data security risks and breaches; and
•our ability to obtain and maintain intellectual property protection.
While we may elect to update these forward-looking statements at some point in the future, whether as a result of any new information, future events, or otherwise, we have no current intention of doing so except to the extent required by applicable law.
3
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
4
BLUE APRON HOLDINGS, INC.
Consolidated Balance Sheets
(In thousands, except share and per-share data)
(Unaudited)
June 30,
2023		December 31,
2022
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$30,027 $33,476 
Accounts receivable, net89 556 
Inventories, net2,289 25,023 
Seller note receivable, net3,118 — 
Prepaid expenses and other current assets15,655 17,657 
Total current assets51,178 76,712 
Property and equipment, net5,545 57,186 
Operating lease right-of-use assets28,470 32,340 
Other noncurrent assets1,723 4,904 
TOTAL ASSETS$86,916 $171,142 
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable$30,033 $18,709 
Current portion of related party payables— 3,000 
Accrued expenses and other current liabilities21,822 27,077 
Current portion of long-term debt— 27,512 
Operating lease liabilities, current9,436 8,650 
Deferred revenue16,022 19,083 
Total current liabilities77,313 104,031 
Operating lease liabilities, long-term18,854 23,699 
Related party payables— 2,500 
Other noncurrent liabilities6,949 7,191 
TOTAL LIABILITIES103,116 137,421 
Commitments and contingencies (Note 13)
STOCKHOLDERS’ EQUITY:
Class A common stock, par value of $0.0001 per share — 1,500,000,000 shares authorized as of June 30, 2023 and December 31, 2022; 6,377,956 and 4,408,495 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively
1 1 
Class B common stock, par value of $0.0001 per share — 175,000,000 shares authorized as of June 30, 2023 and December 31, 2022; 0 shares issued and outstanding as of June 30, 2023 and December 31, 2022
— — 
Class C capital stock, par value of $0.0001 per share — 500,000,000 shares authorized as of June 30, 2023 and December 31, 2022; 0 shares issued and outstanding as of June 30, 2023 and December 31, 2022
— — 
Additional paid-in capital839,557 810,512 
Accumulated deficit(855,758)(776,792)
TOTAL STOCKHOLDERS’ EQUITY(16,200)33,721 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$86,916 $171,142 
The accompanying notes are an integral part of these Consolidated Financial Statements.

5
BLUE APRON HOLDINGS, INC.
Consolidated Statements of Operations
(In thousands, except share and per-share data)
(Unaudited)
Three Months Ended
June 30,		Six Months Ended
June 30,
2023202220232022
Net revenue$106,229 $124,237 $219,309 $241,988 
Operating expenses:
Cost of goods sold, excluding depreciation and amortization66,001 81,158 138,614 160,648 
Marketing9,357 21,776 24,084 49,690 
Product, technology, general and administrative34,441 39,185 70,165 83,139 
Depreciation and amortization3,180 5,593 7,402 11,126 
Other operating expense5,846 — 5,846 — 
Total operating expenses118,825 147,712 246,111 304,603 
Income (loss) from operations(12,596)(23,475)(26,802)(62,615)
Gain (loss) on extinguishment of debt— 650 (1,850)650 
Gain (loss) on transaction(48,554)— (48,554)— 
Interest income (expense), net(774)(834)(1,747)(2,003)
Other income (expense), net— 387 — 2,033 
Income (loss) before income taxes(61,924)(23,272)(78,953)(61,935)
Benefit (provision) for income taxes(6)(54)(13)(65)
Net income (loss)$(61,930)$(23,326)$(78,966)$(62,000)
Net income (loss) per share attributable to Class A and Class B common stockholders:
Basic$(9.52)$(8.22)$(13.11)$(22.42)
Diluted$(9.52)$(8.22)$(13.11)$(22.42)
Weighted-average shares used to compute net income (loss) per share attributable to Class A and Class B common stockholders:
Basic6,506,6102,839,4756,024,1222,765,499 
Diluted6,506,6102,839,4756,024,1222,765,499 
The accompanying notes are an integral part of these Consolidated Financial Statements.
6
BLUE APRON HOLDINGS, INC.
Consolidated Statements of Stockholders’ Equity
(In thousands, except share data)
(Unaudited)
Class A
Common Stock		Additional
Paid-In
Capital		Accumulated
Deficit		Total
Stockholders'
Equity
Shares Amount   
2023
Balance — December 31, 20224,408,495$1 $810,512 $(776,792)$33,721 
Issuance of common stock upon exercise of stock options and vesting of restricted stock, net of tax withholdings12,0680 0 — — 
Issuance of common stock from public equity offerings, net of issuance costs1,390,7110 16,471 — 16,471 
Share-based compensation—— 1,355 — 1,355 
Net income (loss)—— — (17,036)(17,036)
Balance — March 31, 20235,811,274$1 $828,338 $(793,828)$34,511 
Issuance of common stock upon exercise of stock options and vesting of restricted stock, net of tax withholdings21,4380 0 — 0 
Issuance of common stock from public equity offerings, net of issuance costs545,2440 3,432 — 3,432 
Share-based compensation—— 1,009 — 1,009 
Issuance of warrant—— 6,778 — 6,778 
Net income (loss)—— — (61,930)(61,930)
Balance — June 30, 20236,377,956$1 $839,557 $(855,758)$(16,200)
2022
Balance — December 31, 20212,641,200$— $746,567 $(666,514)$80,053 
Issuance of common stock upon exercise of stock options and vesting of restricted stock, net of tax withholdings10,0820 0 — 0 
Issuance of common stock upon exercise of warrants40,6710 4,096 — 4,096 
Issuance of common stock from private placements, net of issuance costs29,7620 4,809 — 4,809 
Share-based compensation—— 2,233 — 2,233 
Cumulative effect adjustment related to the adoption of the leasing standard—— — (545)(545)
Net income (loss)—— — (38,674)(38,674)
Balance — March 31, 20222,721,715$— $757,705 $(705,733)$51,972 
Issuance of common stock upon exercise of stock options and vesting of restricted stock, net of tax withholdings15,9570 0 — — 
Issuance of common stock upon exercise of warrants19,6110 953 — 953 
Issuance of common stock from private placements, net of issuance costs142,3610 20,027 — 20,027 
Share-based compensation—— 1,799 — 1,799 
Net income (loss)—— — (23,326)(23,326)
Balance — June 30, 20222,899,644$— $780,484 $(729,059)$51,425 

The accompanying notes are an integral part of these Consolidated Financial Statements.
7
BLUE APRON HOLDINGS, INC.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
8
Six Months Ended
June 30,
20232022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)$(78,966)$(62,000)
Adjustments to reconcile net income (loss) to net cash from (used in) operating activities:
Depreciation and amortization of property and equipment7,402 11,126 
Loss (gain) on disposal of property and equipment— 135 
Loss on impairment1,662 — 
Loss (gain) on extinguishment of debt1,850 (650)
Loss (gain) on derecognition of warrant obligation— (214)
Loss (gain) on transaction48,554 — 
Changes in fair value of warrant obligation— (1,819)
Changes in reserves and allowances169 66 
Share-based compensation2,246 4,039 
Non-cash interest expense838 450 
Changes in operating assets and liabilities:
Accounts receivable467 (43)
Related party receivables— (10,000)
Inventories(2,365)(3,907)
Prepaid expenses and other current assets1,849 (3,712)
Operating lease right-of-use assets3,040 3,561 
Accounts payable11,162 12,632 
Current portion of related party payables(5,500)6,000 
Accrued expenses and other current liabilities(3,963)(3,708)
Operating lease liabilities(3,226)(4,020)
Deferred revenue(3,061)5,350 
Related party payables— 3,000 
Other noncurrent assets and liabilities3,166 (3,458)
Net cash from (used in) operating activities(14,676)(47,172)
CASH FLOWS FROM INVESTING ACTIVITIES:
Net proceeds from transaction23,558 — 
Purchases of property and equipment(2,232)(2,985)
Proceeds from sale of property and equipment114 111 
Net cash from (used in) investing activities21,440 (2,874)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from equity and warrant issuances20,354 25,500 
Net proceeds from debt issuance— 28,200 
Repayments of debt(30,000)(30,625)
Payments of debt and equity issuance costs(533)(1,143)
Principal payments on financing lease obligations(73)(17)
Net cash from (used in) financing activities(10,252)21,915 
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH(3,488)(28,131)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — Beginning of period34,656 83,597 
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — End of period$31,168 $55,466 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for income taxes, net of refunds$35 $65 
Cash paid for interest$922 $2,200 
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING INFORMATION:
Acquisition (disposal) of property and equipment financed under finance lease obligations$(214)$— 
Non-cash additions to property and equipment $(95)$163 
Purchases of property and equipment in Accounts payable and Accrued expenses
and other current liabilities		$230 $497 
The accompanying notes are an integral part of these Consolidated Financial Statements.
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BLUE APRON HOLDINGS, INC.
Notes to Consolidated Financial Statements
(Unaudited)
1. Organization and Description of Business
When used in these notes, Blue Apron Holdings, Inc. and its subsidiaries are collectively referred to as the “Company.”
The Company designs original recipes with fresh, seasonally-inspired produce and high-quality ingredients, which are sent directly to customers for them to prepare, cook, and enjoy. The Company creates meal experiences around original recipes every week based on what’s in-season with farming partners and other suppliers. Customers can choose which recipes they would like to receive in a given week, and the Company delivers those recipes to their doorsteps along with the pre-portioned ingredients required to cook or prepare those recipes.
In addition to meals, the Company sells wine through Blue Apron Wine, a direct-to-consumer wine delivery service. The Company also sells a curated selection of cooking tools, utensils, pantry items, and add-on products for different culinary occasions, as well as non-subscription meal kits and wine products, through Blue Apron Market, its e-commerce market.

Reverse Stock Split

On June 7, 2023 (the “effective date”), the Company effected a reverse stock split (the “Reverse Stock Split”) of its outstanding shares of Class A common stock, par value $0.0001 per share (the "Class A Common Stock") at a ratio of 1-for-12 pursuant to a Certificate of Amendment (the “Certificate of Amendment”) to the Company’s Restated Certificate of Incorporation, as amended, filed with the Secretary of State of the State of Delaware. The Reverse Stock Split was reflected on the New York Stock Exchange (the “NYSE”) beginning with the opening of trading on June 8, 2023. Pursuant to the Reverse Stock Split, every 12 shares of the Company’s issued and outstanding Class A Common Stock were automatically converted into one issued and outstanding share of Class A Common Stock, without any change in the par value per share. No fractional shares were issued as a result of the Reverse Stock Split. Stockholders who would otherwise be entitled to a fractional share of Class A Common Stock were instead entitled to receive a cash payment in lieu of such fractional shares. The number of authorized shares of the Company’s Class A common stock under the Company’s Restated Certificate of Incorporation, as amended, remained unchanged at 1,500,000,000. The Reverse Stock Split affected all issued and outstanding shares of the Company’s Class A Common Stock, and the respective numbers of shares of Class A Common Stock underlying the Company’s outstanding stock options, outstanding restricted stock units, outstanding performance stock units, outstanding warrants and the Company’s equity incentive plans were proportionately adjusted. All historical share and per share amounts of the Class A Common Stock included in the accompanying Consolidated Financial Statements have been retrospectively adjusted to give effect to the Reverse Stock Split for all periods presented.
2. Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
The unaudited interim Consolidated Financial Statements (the “Consolidated Financial Statements”) have been prepared on the same basis as the audited Consolidated Financial Statements, and in the opinion of management, reflect all adjustments, consisting of only normal recurring adjustments, necessary for the fair presentation of the Company’s financial position as of June 30, 2023 and December 31, 2022, results of operations for the three and six months ended June 30, 2023 and 2022, and cash flows for the six months ended June 30, 2023 and 2022. These unaudited Consolidated Financial Statements should be read in conjunction with the Company’s audited Consolidated Financial Statements and the notes thereto for the year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 16, 2023 (the “Annual Report”). There have been no material changes in the Company's significant accounting policies from those that were disclosed in Note 2, Summary of Significant Accounting Policies, included in the Annual Report, except those additional significant policies as described within the accompanying notes to the Consolidated Financial Statements.
The accompanying Consolidated Financial Statements include the accounts of Blue Apron Holdings, Inc. and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The Company prepares its Consolidated Financial Statements and related disclosures in conformity with accounting principles generally accepted in the United States (“GAAP”).
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Within the issuance of the Annual Report, the Company adopted Accounting Standards Update No. 2016-02, “Leases” ("ASC 842") using the modified retrospective approach, resulting in an adoption effective date of January 1, 2022. As such, the adoption of this standard within the annual period of the twelve months ended December 31, 2022, resulted in the following adjustments to amounts previously presented in the Consolidated Financial Statements within quarterly filings under the prior lease standard ("ASC 840"):
ASC 840 AmountASC 842 AdjustmentSix Months Ended
June 30, 2022
(In thousands)
Consolidated Statement of Operations:
Product, technology, general & administrative$81,767 $1,372 $83,139 
Depreciation & amortization$10,868 $258 $11,126 
Interest income (expense), net$(3,205)$1,202 $(2,003)
ASC 840 AmountASC 842 AdjustmentSix Months Ended
June 30, 2022
(In thousands)
Cash Flows From Operating Activities:
Net income (loss)$(61,572)$(428)$(62,000)
Depreciation and amortization of property and equipment$10,868 $258 $11,126 
Prepaid expenses and other current assets$(3,620)$(92)$(3,712)
Operating lease right-of-use assets$— $3,561 $3,561 
Accrued expenses and other current liabilities$(4,041)$333 $(3,708)
Operating lease liabilities$— $(4,020)$(4,020)
Other noncurrent assets and liabilities$(3,794)$336 $(3,458)
Cash Flows From Financing Activities:
Principal payments on financing lease obligations$(69)$52 $(17)
Liquidity and Going Concern Evaluation
Under Accounting Standards Codification (“ASC”) 205-40, Going Concern, the Company is required to evaluate whether there is substantial doubt regarding its ability to continue as a going concern each reporting period, including interim periods.
In this evaluation, management considered the conditions and events that could raise substantial doubt about the Company's ability to continue as a going concern within twelve months of the issuance date of this Quarterly Report on Form 10-Q, and considered the Company's current financial condition and liquidity sources, including current funds available, forecasted future cash flows, and the Company's conditional and unconditional obligations before such date.
The Company has a history of significant net losses, including $79.0 million and $62.0 million for the six months ended June 30, 2023, and 2022, respectively, and operating cash flows of $(14.7) million and $(47.2) million for the six months ended June 30, 2023, and 2022, respectively. As of June 30, 2023, the Company had a working capital deficit of $41.2 million and an accumulated deficit of $855.8 million. The Company has historically funded its operations through financing activities, including raising equity and debt. The Company's current operating plan indicates it will continue to incur net losses and generate negative cash flows from operating activities for the next twelve months, and as of June 30, 2023, the Company had cash and cash equivalents of $30.0 million. These conditions and events in the aggregate raise substantial doubt regarding the Company's ability to continue as a going concern.
In an effort to alleviate the conditions that raise substantial doubt regarding the Company's ability to continue as a going concern, the Company entered into a strategic partnership with FreshRealm, Inc. ("FreshRealm"). On June 9, 2023 (the "Closing Date"), the Company entered into definitive agreements with FreshRealm, pursuant to which, among other things, the Company sold its production and fulfillment operational infrastructure to FreshRealm, including, among other things, inventory, equipment, and related know-how and transferred related personnel relating to the Company's production
11
and fulfillment operations. Concurrently, the Company executed a 10-year production and fulfillment agreement (the "Production and Fulfillment Agreement") pursuant to which FreshRealm became the exclusive supplier of the Company's meal kits. The Company also subleased to FreshRealm the Company's fulfillment facilities located in Linden, New Jersey and Richmond, California (such transactions, together with the related transactions contemplated thereby, the "FreshRealm Transaction"). As consideration for the FreshRealm Transaction, on the Closing Date, the Company received approximately $23.6 million of net cash proceeds upfront and is eligible to receive up to $25.0 million of additional value primarily through a cash earnout if the Company achieves certain financial and cost-savings milestones within specified time periods and future volume-based rebates if the Company reaches specified thresholds and achieves financial targets based on volume of purchases of certain products from FreshRealm under the Production and Fulfillment Agreement. With a portion of the FreshRealm Transaction proceeds, the Company also repaid its remaining outstanding senior secured notes in full. See Note 3 for further discussion regarding the FreshRealm Transaction.

With the completion of the FreshRealm Transaction, the Company has further streamlined its cost structure and reduced its negative operating cash flows. The operating plans of the Company's management are focused on continuing to optimize the Company's cost structure and grow its revenues in order to earn the volume-based rebates on future meal-kit volumes and new product initiatives as well as the Earnout (as defined below), and to thereby achieve profitability. The Company’s ability to continue as a going concern is dependent upon the Company’s ability to implement its operating plan on its anticipated timeline. Although management believes that it is reasonably possible that it will be able to successfully execute its operating plan in a timely manner, it is less than probable to sufficiently alleviate substantial doubt as of the date of financial statement issuance.
Additionally, as of the date of this Quarterly Report on Form 10-Q, the remaining $55.5 million owed under the RJB Purchase Agreement (as defined in Note 14) due from an affiliate of Joseph N. Sanberg, an existing stockholder of the Company, remains unfunded, as well as the remaining $12.7 million owed from an affiliate of Sanberg under the Sponsorship Gift Cards Agreement (as defined in Note 16). An affiliate of Sanberg has granted the Company a security interest in equity shares of certain privately-held issuers (the "Pledged Shares") as collateral for the RJB Purchase Agreement, which it has the right to foreclose on and take ownership, options to monetize the Pledged Shares are currently being evaluated. The timing and proceeds from any such monetization are unknown and the proceeds, if and when realized, may not be sufficient to satisfy the entire outstanding amount under the RJB Purchase Agreement.
The Company's Consolidated Financial Statements do not include any adjustments that may result from the outcome of this uncertainty and have been prepared assuming the Company will continue as a going concern.
Use of Estimates
In preparing its Consolidated Financial Statements in accordance with GAAP, the Company is required to make estimates and assumptions that affect the amounts of assets, liabilities, revenue, costs, and expenses, and disclosure of contingent assets and liabilities which are reported in the Consolidated Financial Statements and accompanying disclosures. The accounting estimates that require the most difficult and subjective judgments include revenue recognition, inventory valuation, leases, the fair value of share-based awards, the fair value of the Blue Torch warrant obligation (as defined in Note 12), recoverability of long-lived assets, and the recognition and measurement of contingencies. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could materially differ from the Company’s estimates and assumptions.
Smaller Reporting Company Status
The Company is a “smaller reporting company,” as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, and therefore qualifies for reduced disclosure requirements for smaller reporting companies.
3. Strategic Transaction
FreshRealm Transaction

On May 15, 2023, the Company entered into a non-binding letter of intent with FreshRealm, which contemplated FreshRealm’s acquisition of the fulfillment equipment and other production assets of the Company and the Company’s entry into an expanded commercial relationship with FreshRealm.

On the Closing Date, the Company entered into definitive agreements with FreshRealm, pursuant to which, among other things, the Company sold its production and fulfillment operational infrastructure to FreshRealm, and concurrently
12
executed the ten year Production and Fulfillment Agreement under which FreshRealm became the exclusive supplier of the Company’s meal kits.

Asset Purchase Agreement
On the Closing Date, the Company, Blue Apron, LLC, the Company’s wholly owned subsidiary (“Blue Apron”), and FreshRealm entered into an asset purchase agreement (the “Asset Purchase Agreement”), pursuant to which FreshRealm purchased certain assets of the Company relating to the Company’s production and fulfillment operations (the “P&F Business”) conducted by the Company at its fulfillment facilities located in Linden, New Jersey and Richmond, California (together, the “Facilities”).
Pursuant to the Asset Purchase Agreement, on the Closing Date, (i) Blue Apron transferred to FreshRealm various assets used in the P&F Business including, among others, certain of Blue Apron’s inventory and consumable supplies and the rights under warranties and indemnities related thereto, identified transferred contracts (the “Transferred Contracts”), furnishings and equipment at the Facilities, including certain operating and finance leases, permits, books and records relating to the P&F Business, and intellectual property, including certain know-how, business IT systems and any implied goodwill arising out of such assets or the P&F Business (such assets, the “Purchased Assets”), other than the assets set forth in clause (ii); (ii) Blue Apron retained various assets including certain of Blue Apron’s prepaid expenses, intellectual property, excluded contracts, the assets relating to the Company’s wine business and e-commerce marketplace business, and other assets unrelated to the P&F Business, including assets relating to the Company’s culinary, marketing and digital product, and customer service operations (such assets, the “Excluded Assets”); (iii) FreshRealm assumed certain liabilities, including liabilities relating to the ownership or use of the Purchased Assets after the Closing, the employment of the Relevant Team Employees (as defined in the Asset Purchase Agreement) after the Closing Date, and obligations under the Transferred Contracts; and (iv) Blue Apron retained certain liabilities, including trade payables in connection with the P&F Business prior to the Closing Date, liabilities relating to operation of the P&F Business prior to the Closing Date, and liabilities relating to the Excluded Assets.
The Company determined that the assets sold and transferred and the assigned liabilities (collectively the "Disposal Group") did not constitute a component and did not meet the criteria for discontinued operation under ASC 205-20 as no discrete financial information is available for the Disposal Group with no cash flows that can be clearly distinguished for financial reporting purposes from the rest of Company. The Company concluded that the Disposal Group constitutes a business as it contains inputs and processes for producing outputs and, as such, the Company accounted for the sale as a disposal of a business under ASC 810-10. As of May 15, 2023, the Disposal Group met the criteria for classification as held for sale under ASC 360 with the Disposal Group subsequently being disposed of by sale on the Closing Date. The Disposal Group consisted of the following assets and liabilities:
(In thousands)
Sold Assets
     Inventories, net$24,990 
     Furnishings and equipment44,874 
     Operating lease right-of-use assets481 
     Finance lease right-of-use assets463 
          Total Sold Assets$70,808 
Assigned Liabilities
     Operating lease liabilities, current158 
     Finance lease liabilities, current93 
     Operating lease liabilities, long-term314 
     Finance lease liabilities, long-term381 
     PTO accrual - relevant Team Employees1,442 
          Total Assigned Liabilities$2,388 
Total Disposal Group$68,420 
As consideration for the FreshRealm Transaction, on the Closing Date, FreshRealm paid to Blue Apron an amount in cash equal to $28.5 million (the "Base Sale Price"), less $3.5 million, which was paid to Blue Apron in the form of the Seller Note (as defined and described in Note 5), less an amount equal to all vacation time, sick time and other paid time off accrued by Relevant Team Employees (the "PTO Credit") in connection with the FreshRealm Transaction. Under the
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Asset Purchase Agreement, FreshRealm is obligated to pay to Blue Apron an aggregate of up to $4.0 million of additional cash consideration, including $3.0 million if, as of September 30, 2023, Blue Apron has achieved certain financial and cost-savings milestones and is in compliance in all material respects with its obligations under the Transition Services Agreement (as defined below), and $1.0 million if Blue Apron has achieved the aforementioned financial and cost-savings milestones and also remains in compliance with its obligations under the Transition Services Agreement as of December 31, 2023 (the "Earnout").
The Company determined the total net consideration to be equal to the Base Sale Price, minus the face amount of the Seller Note, plus the seller note receivable, net, minus the PTO Credit, minus the value of the Warrant (as described below).

Purchase Consideration
(In thousands)
Base purchase price$28,500 
Seller note principal(3,500)
Seller note receivable, net3,086 
PTO credit - Relevant Team Employees(1,442)
Warrant(6,778)
Total Purchase consideration$19,866 

For the three and six months ended June 30, 2023, the Company recognized a loss on the FreshRealm Transaction of $48.6 million, which is recorded in Loss on transaction in the accompanying consolidated statement of operations.
(In thousands)
Total purchase consideration$19,866 
Total disposal group(68,420)
Net loss recognized on Transaction$(48,554)
Production and Fulfillment Agreement
In connection with the execution of the Asset Purchase Agreement, Blue Apron and FreshRealm entered into the Production and Fulfillment Agreement, pursuant to which Blue Apron granted FreshRealm an exclusive right to produce and fulfill all Exclusive Products (as defined in the Production and Fulfillment Agreement) at any FreshRealm facility for sale to Blue Apron (the “Exclusive Right”), including certain individual meal recipe/SKUs that comprise prepped and unprepped ingredients, fresh and/or frozen meals and/or current or future food products that are similar to the Products (as defined in the Production and Fulfillment Agreement). The Exclusive Right does not apply to Blue Apron’s non-food products, individual food or beverage ingredients, pantry items sold on the Market or Wine portion of its website or mobile applications as of the Closing Date. The Exclusive Right does not extend to non-Blue Apron products produced by any future acquirer of Blue Apron. In the event that Blue Apron acquires a third party, the exclusivity does not apply to any meal-kit or food products of such third party for a twenty-four (24) month period, during which time FreshRealm and Blue Apron will negotiate mutually agreeable terms for the production and fulfillment of such acquired products. Blue Apron and FreshRealm intend to expand the portfolio of recipe and meal kit products, which would be subject to the Exclusive Right. In the event that Blue Apron desires to develop a new category of food products that is not excluded from the Exclusive Right, FreshRealm has the first right to develop such new category of products, and if FreshRealm does not accept such right to develop, the exclusivity would not apply and the Company would be able to develop such category.
The Production and Fulfillment Agreement also provides for up to $17.5 million of volume-based rebates during the term of the Production and Fulfillment Agreement. Blue Apron can earn these rebates based on the volume of purchases of certain products under the Production and Fulfillment Agreement above specified thresholds, as well as the achievement of certain financial targets by Blue Apron. To earn these rebates, Blue Apron must pay for the relevant products. The volume-based rebates represent a potential future gain that is contingent upon the Company (i) increasing its purchase volume from FreshRealm and (ii) achieving positive adjusted EBITDA. As the volume-based rebates act to ensure that the Company continues to purchase a substantive volume of products from FreshRealm (i.e., ensure that the interests of the Company and FreshRealm are aligned through 2025), the Company determined that the volume-based rebates relate to the ongoing future relationship with FreshRealm, and not the FreshRealm Transaction, and thus should be
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excluded from the measurement of the consideration. For the three and six month ended June 30, 2023 no volume-based rebates were earned.

The initial term of the Production and Fulfillment Agreement is 10 years and will automatically renew for additional 2-year periods unless terminated by either party in accordance with such party’s termination rights. Following any early termination or expiration of the Production and Fulfillment Agreement, the Production and Fulfillment Agreement will continue to be in full force and effect for a period of 18 months after such termination or expiration, with the exception of the Exclusive Right, during which, among other things, Blue Apron and FreshRealm will work in good faith on a transition plan and Blue Apron will plan reductions of use of FreshRealm for manufacturing products.
Subleases
In connection with the execution of the Asset Purchase Agreement, Blue Apron and FreshRealm entered into sublease agreements for the Facilities (the "Sublease Agreements"). The term of the subleases commenced on the Closing Date.
The Richmond, California sublease (the "CA Sublease") will expire on the earlier to occur of (i) the Triggering Date (as defined in the CA Sublease), or (ii) December 31, 2024. The CA Sublease contemplates an assignment of Blue Apron’s interest in the underlying prime lease to FreshRealm.
The Linden, New Jersey sublease (the "NJ Sublease" and together with the CA Sublease, the "Subleases") will expire on December 31, 2024, unless the Triggering Date (as defined in the NJ Sublease) occurs, in which event the term shall be extended until August 31, 2026. The NJ Sublease contemplates potential extensions of the NJ Sublease term and/or an assignment of Blue Apron’s interest in the underlying Prime Lease (as defined in the NJ Sublease) to FreshRealm.
The Subleases are classified as operating leases, and as the Company is not relieved of its primary obligations under the prime leases, the Company will continue to account for the prime leases as it did before the commencement of the Subleases and will continue to assess the ROU Assets for impairment. Additionally, the Company will recognize sublease income in its consolidated statement of operations over the respective sublease terms on a straight-line basis. See Note 8 for further discussion on leases.
Warrant

In connection with the execution of the Asset Purchase Agreement, and in consideration for the Transaction, the Company simultaneously issued to FreshRealm a warrant (the “Warrant”) to purchase 1,268,574 shares of the Company’s Class A Common Stock, at an exercise price of $0.01 per share, which represent 19.99% of the Company’s outstanding Class A Common Stock as of the Closing Date.

Prior to the 7th anniversary of the Closing Date of the FreshRealm Transaction, the Warrant is exercisable at any time on or after the earlier to occur of (i) the expiration of the Standstill/Lock-up Period (as defined below) and (ii) the delisting of the Class A Common Stock from the New York Stock Exchange; provided that if the Class A Common Stock is concurrently listed on another Trading Market (as defined in the Warrant) within ninety (90) days after such delisting, the Warrant will not become exercisable pursuant to clause (ii) Subject to the terms of the Warrant, the number of shares issuable upon exercise of the Warrant and the exercise price will be subject to adjustment in certain events, including (i) dividends or distributions of shares of Class A Common Stock, (ii) splits, subdivisions, combinations and certain reclassifications of shares of Class A Common Stock, or (iii) distributions of assets other than Class A Common Stock.

Pursuant to the terms of the Warrant, the Company will not effect the exercise of the Warrant, and the holder will not be entitled to exercise any portion of the Warrant, that, upon giving effect to such exercise, the aggregate number of shares of Class A Common Stock beneficially owned by the holder (together with its affiliates) would exceed 19.99% of the number of shares of Class A Common Stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the Warrant, which percentage may be changed at the holders election to a lower percentage upon 61 days’ notice to the Company, subject to the terms of the Warrant.

In addition, pursuant to the terms of the Warrant, the holder will not, and will not cause any direct or indirect affiliate to, for a period beginning on the issuance date of the Warrant and ending 18 months after the issuance date of the Warrant (the “Standstill/Lock-up Period”), (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, the Warrant or the shares of Class A Common Stock issuable upon exercise of the Warrant ( the “Warrant Shares”), (ii) enter into any hedging, swap or other agreement or transaction that would transfer, in whole or in part, any of the economic consequences of the Warrant or Warrant Shares, whether any such transaction described in clauses (i) or (ii) is to be settled by delivery of the Warrant or Warrant Shares, in cash or otherwise, (iii) make any demand
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for or exercise any right under the registration rights agreement between the Company and FreshRealm with respect to the Warrant Shares or otherwise with respect to the registration of the Warrant or Warrant Shares, or (iv) publicly disclose the intention to do any of the foregoing, except as permitted by certain exceptions set forth in the Warrant.

The Company assessed the classification of the Warrant as either equity-classified or liability-classified instruments based on the specific terms and applicable authoritative guidance in ASC 480 and ASC 815. The Warrant did not meet the criteria for ASC 480 or ASC 815-40 liability accounting. As the Warrant is considered indexed to the Company’s own stock and meets the requirements for equity classification, the Company is accounting for the Warrant as an equity instrument.

The Company initially measured the Warrant within equity at fair value and will not subsequently remeasure the equity instrument. As of the Closing Date, the Warrant was valued at $6.8 million and was recorded to additional-paid-in capital. The Company utilized a Black-Scholes option pricing model to measure the fair value of the Warrant, using the following key assumptions:

Expected volatility134.84 %
Risk-free interest rate3.84 %
Expected term (in years)7
Dividend yield0.00%

Expected Volatility — The expected volatility was derived from the average historical stock volatility of the Company over the expected term prior to June 9, 2023.

Risk‑Free Interest Rate — The risk‑free interest rate is based on the daily par yield curve rate per U.S. Treasury for constant maturity notes with terms approximately equal to the expected term.

Expected Term — The expected term represents the period that the Warrant is expected to be outstanding based on the contractual terms.

Dividend Yield — The expected dividend is zero as the Company has not paid and does not anticipate paying any dividends in the foreseeable future.

Transition Services Agreement

The Company also entered into a transition services agreement (the “Transition Services Agreement”) with FreshRealm, pursuant to which the Company will be paid to provide certain services to FreshRealm to facilitate the transition of the operations of the P&F Business to FreshRealm (such services, the “P&F Services”). The obligations of Blue Apron to provide the P&F Services shall terminate with respect to each P&F Service on the earlier of (i) the applicable Transition Date, which means initially September 30, 2023, subject to extension as mutually agreed to by the parties and provided that specific P&F Services may have specific Transition Dates, and (ii) the transition of the applicable operations or P&F Services to FreshRealm, in each case subject to further extension. In accordance with the Transition Services Agreement, the P&F Services being performed by the Company for FreshRealm are being charged to FreshRealm at cost (equal to pass-through charges and the estimated cost of personnel time and effort to perform the transition services), which the Company determined to, in all material respects, approximate fair value. The Company will recognize revenue under the Transition Services Agreement as services are provided to FreshRealm and any pass-through charges will be recorded as reduction to the relevant expenses.

Technology License Agreement

In connection with the execution of the Asset Purchase Agreement, the Company and FreshRealm entered into a technology license agreement (the “Technology License Agreement”), pursuant to which the Company licensed certain software and technology to FreshRealm to enable FreshRealm to perform its obligations under the Production and Fulfillment Agreement. The Technology License Agreement provides an exclusive license to the software for Blue Apron’s warehouse management system and a non-exclusive license to source code for certain other Blue Apron software used in connection with Blue Apron’s direct-to-consumer business, solely for the purpose of enabling the warehouse management system. In addition, Blue Apron received a non-exclusive license to intellectual property rights that were sold to FreshRealm in accordance with the Asset Purchase Agreement. The Technology License Agreement has certain limitations
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on the use of the intellectual property rights licensed to Blue Apron to prevent use of those intellectual property rights to compete with FreshRealm.

There was no consideration for the technology licenses as these licenses are required in order for FreshRealm to be able to perform its obligations under the Production and Fulfillment Agreement.

As software was not part of the Disposal Group, the Company assessed the remaining software for impairment under ASC 350-40 and determined there were indicators of impairment present related to certain internal-use capitalized software used in P&F Business. As there is no future utility for such internal-use capitalized software, the Company recorded a $1.7 million impairment loss in Other operating expense as of June 30, 2023, representing the remaining carrying value of these assets.

Retail License Agreement

    In connection with the execution of the Asset Purchase Agreement, the Company and FreshRealm entered into a retail license agreement (the “Retail License Agreement”), pursuant to which the Company granted an exclusive license under certain of the Company’s trademarks and certain other specified intellectual property rights, in connection with the manufacturing, packaging, marketing, promotion, sale, and distribution of ready-to-heat, ready-to-cook and ready-to-eat meals, meal kits, and related food items and food products (the “Retail Products”) in the United States through specified sales channels other than specified direct-to-consumer channels. In addition, the Company granted FreshRealm a non-exclusive license to use the licensed intellectual property in sales presentations, business development collateral, and marketing and advertising materials related to the Retail Products. The Retail License Agreement also granted FreshRealm specified rights to sublicense the licenses for purposes of production and fulfillment of the Retail Products in the United States. Under the Retail License Agreement, FreshRealm pays certain royalties to the Company. The royalties must be spent to promote the Retail Products, although, during the term of the Retail License Agreement, a smaller proportion of the royalties must be so spent and the remainder of the royalties will be credited or paid to the Company.

In addition, the Retail License Agreement grants FreshRealm a right of first refusal to obtain rights with respect to (i) new names, trademarks, or other branding assets for use in connection with Retail Products or (ii) sale of Retail Products in territories outside of the United States.             

The initial term of the Retail License Agreement is 10 years and will automatically renew for additional 2 year periods unless terminated by either party in accordance with such party’s termination rights.

The Company determined that the royalties relate to the ongoing future relationship with FreshRealm and is not consideration for the sale of the Disposal Group. As such, the Company did not record any amounts related to the royalties for the three and six months ended June 30, 2023 as no Retail Products were sold in the period.

4. Inventories, Net
Inventories, net consist of the following:
June 30,
2023		December 31,
2022
(In thousands)
Fulfillment$13 $2,315 
Product2,276 22,708 
Inventories, net$2,289 $25,023 
Product inventory primarily consists of bulk and prepped food, containers, pre-made meals, products available for resale, and wine products. Fulfillment inventory consists of packaging used for shipping and handling. Product and fulfillment inventories are recognized as components of Cost of goods sold, excluding depreciation and amortization in the accompanying Consolidated Statements of Operations when sold.
Following the completion of the FreshRealm Transaction, on the Closing Date, the Company sold and transferred all of its product and fulfillment inventory related to its meal kits to FreshRealm.
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5. Seller Note Receivable, Net
As part of the consideration for the FreshRealm Transaction, on the Closing Date, and as a security for certain of Blue Apron’s indemnification obligations under the Asset Purchase Agreement, the Company and FreshRealm entered into a promissory note in the amount of $3.5 million (the "Seller Note"). Under the Seller Note, FreshRealm is entitled to set-off any indemnifiable losses pursuant to indemnification claims under the Asset Purchase Agreement against its payment obligations under the Seller Note, which will mature and become payable to the Company on June 9, 2024. The Seller Note has an interest rate of 1.5% per annum, accruing as of the Closing Date.
As the Seller Note has a stated interest rate that is not a market interest rate, the Company discounted the Seller Note to reflect the fair value market rate as of the Closing Date. Based on a market rate of 13.42% consisting of an 8.25% prime rate and a 5.17% risk-free rate per the U.S. Treasury, the Company determined the present value of the Seller Note face amount to be $3.1 million on the Closing Date. The Company is accreting the $0.4 million discount over the one-year life of the Seller Note using the effective interest rate method. As of June 30, 2023, the unaccreted discount was $0.4 million.
6. Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consist of the following:
June 30,
2023		December 31,
2022
(In thousands)
Prepaid insurance$6,678 $8,241 
Other current assets8,977 9,416 
Prepaid expenses and other current assets$15,655 $17,657 
7. Restricted Cash
Restricted cash reflects pledged cash deposited into savings accounts that is used as security primarily for fulfillment centers and office space leases.
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same amounts reported in the Consolidated Statements of Cash Flows:
June 30,
2023		December 31,
2022
(in thousands)
Cash and cash equivalents$30,027 $33,476 
Restricted cash included in Prepaid expenses and other current assets72 111 
Restricted cash included in Other noncurrent assets1,069 1,069 
Total cash, cash equivalents, and restricted cash$31,168 $34,656 
June 30,
2022		December 31,
2021
(in thousands)
Cash and cash equivalents$54,028 $82,160 
Restricted cash included in Prepaid expenses and other current assets369 608 
Restricted cash included in Other noncurrent assets1,069 829 
Total cash, cash equivalents, and restricted cash$55,466 $83,597 
8. Leases
The Company leases fulfillment centers and office space under non‑cancelable operating lease arrangements that expire on various dates through 2027. These arrangements require the Company to pay certain operating expenses, such as
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taxes, repairs, and insurance, and contain renewal and escalation clauses. While certain leases contain renewal options, the Company has determined that its options to renew would not be reasonably certain in determining the expected lease terms, and therefore are not included as part of its right-of-use assets and lease liabilities. On the Closing Date, the Company entered into the Sublease Agreements with FreshRealm to sublease its Linden, New Jersey and Richmond, California fulfillment centers to FreshRealm. The Company has also entered into agreements to sublease all or portions of its corporate office and other fulfillment centers. Refer to Note 3 for additional information.
The following table summarizes the weighted-average remaining lease terms and weighted average discount rates:
June 30,
2023		December 31,
2022
Weighted average remaining lease term:
Operating leases3.13 years3.55 years
Finance leases0.00 years4.61 years
Weighted average discount rate:
Operating leases16.21 %16.20 %
Finance leases— %16.23 %
Lease cost consists of the following:
Three Months Ended
June 30,		Six Months Ended
June 30,
2023202220232022
(In thousands)
Operating lease cost$3,236$3,290$6,443$6,581
Finance lease cost:
Amortization of right-of-use assets19—$56$—
Interest on lease liabilities120$33$1
Total lease cost
Sublease income(1,108)(1,109)$(1,741)$(2,175)
Net lease cost$2,159$2,181$4,791$4,407
The following table presents the lease-related assets and liabilities recorded on the Consolidated Balance Sheets:
June 30,
2023		December 31,
2022
(In thousands)
Operating leases:
Operating lease right-of use assets$28,470$32,340
Operating lease right-of use liabilities, current$9,436$8,650
Operating lease right-of use liabilities, non-current$18,854$23,699
Finance leases:
Property and equipment, net$—$260
Accrued expenses and other current liabilities$—$45
Other noncurrent liabilities$—$225

Supplemental cash flow information and non-cash activity related to our operating leases are as follows:
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Six Months Ended
June 30,
20232022
(In thousands)
Operating cash flow information:
Cash paid for amounts included in the measurement of lease liabilities$6,606$6,637
Non-cash activity:
Right-of-use assets obtained in exchange for lease obligations$233$39,060
9. Property and Equipment, Net
Property and equipment, net consists of the following:
June 30,
2023		December 31,
2022
(in thousands)
Computer equipment$6,330 $12,308 
Capitalized software28,163 28,831 
Fulfillment equipment56 51,639 
Furniture and fixtures450 2,757 
Leasehold improvements6,699 113,703 
Construction in process(1)
2,428 2,466 
Property and equipment, gross44,126 211,704 
Less: accumulated depreciation and amortization(38,581)(154,518)
Property and equipment, net$5,545 $57,186 
________________________
(1)Construction in process includes all costs capitalized related to projects that have not yet been placed in service.
Following the completion of the FreshRealm Transaction, on the Closing Date, the Company sold and transferred property and equipment related to the P&F Business to FreshRealm. See Note 3 for additional information.
In June 2023, the Company recorded an impairment loss of $1.7 million primarily related to abandoned internal-use capitalized software related to the P&F Business. See Note 3 for additional information.
10. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consist of the following:
June 30,
2023		December 31,
2022
(in thousands)
Accrued compensation$5,105 $9,653 
Accrued credits and refunds reserve1,113 1,053 
Accrued marketing expenses4,537 3,968 
Accrued shipping expenses115 2,132 
Accrued workers' compensation reserve3,209 4,260 
Other current liabilities7,743 6,011 
Accrued expenses and other current liabilities$21,822 $27,077 
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11. Deferred Revenue
Deferred revenue consists of the following:
June 30,
2023		December 31,
2022
(in thousands)
Cash received prior to fulfillment$3,133 $4,940 
Gift cards, prepaid orders, and other12,889 14,143 
Deferred revenue$16,022 $19,083 
Under ASC 606, Revenue from Contracts with Customers, the Company has two types of contractual liabilities: (i) cash collections from its customers prior to delivery of products purchased, which are included in Deferred revenue on the Consolidated Balance Sheets, and are recognized as revenue upon transfer of control of its products, and (ii) unredeemed gift cards and other prepaid orders, which are included in Deferred revenue on the Consolidated Balance Sheets, and are recognized as revenue when gift cards are redeemed and the products are delivered. Certain gift cards are not expected to be redeemed, also known as breakage, and are recognized as revenue over the expected redemption period, subject to requirements to remit balances to governmental agencies.
Contractual liabilities included in Deferred revenue on the Consolidated Balance Sheets were $16.0 million and $19.1 million as of June 30, 2023 and December 31, 2022, respectively. During the six months ended June 30, 2023, the Company recognized $6.7 million to Net revenue from the Deferred revenue as of December 31, 2022.
See Note 16 for further information regarding the March and May Sponsorship Gift Cards (as defined below).
12. Debt
2020 Term Loan and Amendment
On October 16, 2020, the Company entered into a financing agreement which provided for a senior secured term loan in the aggregate principal amount of $35.0 million (the “2020 Term Loan”). The 2020 Term Loan bore interest at a rate equal to LIBOR (subject to a 1.50% floor) plus 8.00% per annum, with the principal amount repayable in equal quarterly installments of $875,000 through December 31, 2022, and the remaining unpaid principal amount of the 2020 Term Loan due on March 31, 2023.
On May 5, 2021 (the “closing date”), the Company amended the financing agreement (the “May 2021 Amendment”), which modified certain provisions of the financing agreement, such as increasing the interest rate margin on the 2020 Term Loan by 1.00% per annum, resulting in the 2020 Term Loan bearing interest, from and after the closing date, at a rate equal to LIBOR (subject to a 1.50% floor) plus 9.00% per annum.
The 2020 Term Loan was repaid in full on May 5, 2022 with the proceeds of the senior secured notes issued under the note purchase agreement described below.
Blue Torch Warrant Obligation
In connection with the May 2021 Amendment, the Company agreed to prospectively grant warrants (the “Blue Torch warrant obligation”) to the lenders, so long as the 2020 Term Loan remained outstanding. See Note 18 for further discussion.
The Blue Torch warrant obligation was terminated within the termination of the Company’s financing agreement with Blue Torch Finance LLC ("Blue Torch"), as discussed below.
Senior Secured Notes and March 2023 Extinguishment
On May 5, 2022 (the “issue date”), the Company entered into a note purchase and guarantee agreement (the “note purchase agreement”), which provided for, among other things, the issuance of $30.0 million in aggregate principal amount of senior secured notes due May 5, 2027 (the “senior secured notes”) at a purchase price equal to 94.00% thereof. The proceeds of the senior secured notes were used, together with cash on hand, to repay in full the outstanding amount under the 2020 Term Loan and pay fees and expenses in connection with the transactions contemplated by the note purchase
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agreement. The Company subsequently terminated its financing agreement, effective as of the issue date, which also resulted in the termination of the Blue Torch warrant obligation.
Note Purchase Agreement Amendment
On March 15, 2023, the Company entered into the note purchase agreement amendment which, among other things, accelerated the repayment of the senior secured notes due originally in May 2027 to an effective maturity of June 2023. The Company agreed to pay the full outstanding principal balance on the senior secured notes in four equal amortization installments of $7.5 million, with the first installment paid in connection with the signing of the note purchase agreement amendment, and with the final installment due on June 15, 2023, including any accrued and unpaid interest. Under the note purchase agreement amendment, the noteholder also agreed to reduce the minimum liquidity covenant amount, which was previously set at $25.0 million, to $17.5 million following the first amortization payment, and to $10.0 million following the first and second amortization payments, until the senior secured notes were repaid in full. Furthermore, conditioned upon the timely payment of all the amortization payments, the noteholder agreed to waive all prepayment premiums and a fee equal to 1.00% of the principal amount of the senior secured notes if the Company had failed to use commercially reasonable efforts to cause 90% of packaging for its meal kit boxes to be recyclable, reusable or compostable that would otherwise have been owed by the Company at maturity in May 2027. On June 9, 2023, the Company repaid its senior secured notes in full.
Note Purchase Agreement Amendment Debt Extinguishment
The Company evaluated the note purchase agreement amendment under ASC 470-50 regarding the modification of an existing debt instrument, which states that if the modification of the terms of an existing debt agreement is considered substantial, the transaction shall be accounted for as an extinguishment, with the net carrying value of the existing debt derecognized and the amended debt instrument then initially recorded at fair value. The Company concluded that the modification was considered substantial and thus recorded a $1.9 million extinguishment loss for the six months ended June 30, 2023 in the Consolidated Statement of Operations.
Senior Secured Notes Terms and Covenants
After receiving a minimum specified bond rating after the issue date, as specified within the terms of the note purchase agreement, the senior secured notes bore interest at a rate equal to 8.875% per annum, which, prior to the note purchase agreement amendment, were payable in arrears on June 30 and December 31 of each calendar year. Prior to the note purchase agreement amendment, the senior secured notes amortized semi-annually in equal installments of $1.5 million beginning on December 31, 2025, with the remaining unpaid principal amount of the senior secured notes due on May 5, 2027.
The Company amortized deferred financing costs using the effective interest method over the life of the debt, in accordance with ASC 835-30, Imputation of Interest. The following table summarizes the presentation of the Company’s debt balances in the Consolidated Balance Sheets as of the dates indicated below:
Senior secured notesDebt issuance costs, netNet
(In thousands)
June 30, 2023
Current portion of long-term debt$— $— $— 
Long-term debt— — — 
Total$— $— $— 
December 31, 2022
Current portion of long-term debt$30,000 $(2,488)$27,512 
Long-term debt— — — 
Total$30,000 $(2,488)$27,512 
13. Commitments and Contingencies
The Company records accruals for loss contingencies associated with legal matters when it is probable that a liability will be incurred and the amount of the loss can be reasonably estimated. If the Company determines that a loss is
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reasonably possible, the Company discloses the matter, and, if estimable, the amount or range of the possible loss in the notes to the Consolidated Financial Statements.
The Company is a party to a lawsuit filed in California Superior Court in Contra Costa County under the California wage and hour laws and the Private Attorneys General Act on behalf of certain non-exempt employees in the Company's former Richmond, California fulfillment center. The complaint was filed on June 21, 2023, and alleges that during the time the Company operated the Richmond, California fulfillment center, the Company failed to pay minimum wages and overtime, provide required meal and rest breaks, provide wages due upon separation from employment, provide accurate wage statements, to non-exempt employees in violation of California law. The Company is in the preliminary stages of reviewing the allegations made in the complaint and believes that it has strong defenses and intend to vigorously defend against this lawsuit. As a result, the Company is currently unable to provide any assurances as to the ultimate outcome of this lawsuit or that an adverse resolution of this lawsuit would not have a material adverse effect on the Company's consolidated financial position or results of operations.
In addition, from time to time the Company may become involved in legal proceedings or be subject to claims arising in the ordinary course of its business. Although the results of such litigation and claims cannot be predicted with certainty, the Company currently believes that there are no ordinary course matters that will have a material adverse effect on its business, operating results, financial conditions, or cash flows.
14. Stockholders’ Equity (Deficit)
Public Equity Offerings
During the three months ended June 30, 2023, the Company issued and sold 545,244 shares of its Class A Common Stock via “at-the-market” equity offerings, resulting in $3.5 million of proceeds, net of commissions and offering costs. During the six months ended June 30, 2023, the Company issued and sold 1,935,955 shares of its Class A Common Stock via “at-the-market” equity offerings, resulting in $20.1 million of proceeds, net of commissions and offering costs.
RJB Private Placements
February 2022 Private Placement
On February 14, 2022, the Company entered into a purchase agreement with RJB Partners LLC (“RJB”), an affiliate of Joseph N. Sanberg, an existing stockholder of the Company, under which the Company agreed to issue and sell to RJB units consisting of Class A Common Stock and warrants to purchase shares of Class A Common Stock in a private placement (the “February 2022 Private Placement”) which closed concurrently with the execution of the purchase agreement for an aggregate purchase price of $5.0 million (or $168.00 per unit). In the aggregate, RJB received (i) 29,762 shares of Class A Common Stock, and (ii) warrants to purchase 41,667 shares of Class A Common Stock at exercise prices of $180.00 per share, $216.00 per share, and $240.00 per share, resulting in $4.8 million of proceeds, net of issuance costs.
The shares of Class A Common Stock and warrants were issued separately and constitute separate securities. The Company conducted an assessment of the classification of the warrants issued in the February 2022 Private Placement and, based on their terms, concluded the warrants were equity-classified. Accordingly, the net proceeds were recorded within Additional paid-in capital.
RJB Purchase Agreement
On April 29, 2022, the Company entered into a purchase agreement with RJB (the “RJB Purchase Agreement”). Under the agreement, the Company agreed to issue and sell 277,778 shares of Class A Common Stock for an aggregate purchase price of $40.0 million (or $144.00 per share), of which 138,889 shares of Class A Common Stock were issued and sold to an affiliate of Joseph N. Sanberg for an aggregate purchase price of $20.0 million concurrently with the execution of the agreement, and with the remainder to be issued and sold under a second closing (the "RJB Second Closing"), initially expected to close by May 30, 2022 or such other date as agreed to by the parties.
On August 7, 2022, the Company amended the RJB Purchase Agreement, pursuant to which RJB agreed to purchase from the Company at the RJB Second Closing (i) the 138,889 shares of Class A Common Stock remaining to be issued and sold under the initial RJB Purchase Agreement at a $60.00 price per share, instead of a price of $144.00 per share, and (ii) an additional 694,444 shares of Class A Common Stock at a price of $60.00 per share. Upon execution of the amendment, the RJB Second Closing comprised in the aggregate a purchase price of $50.0 million and 833,333 shares of Class A Common Stock to be issued and sold, as well as agreeing to extend the date of the second closing to on or before August 31, 2022. In addition, pursuant to the amendment, Joseph N. Sanberg agreed to personally guarantee the payment of the aggregate purchase price.
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On September 7, 2022, the Company further amended the RJB Purchase Agreement to extend the RJB Second Closing date to September 30, 2022 or such earlier date as may be agreed to by the Company and RJB, and to change the price per share to $67.80 for the purchase of the 833,333 shares of Class A Common Stock remaining to be sold and issued, for an aggregate purchase price of $56.5 million.
On November 6, 2022, the Company entered into an agreement with an affiliate of Joseph N. Sanberg, pursuant to which the affiliate (i) guaranteed the remaining amount to be funded under the RJB Second Closing and (ii) to secure its obligation to pay the remaining amount to be funded under the RJB Second Closing, granted the Company security interests of certain privately-held issuers, the certificates (if any) representing the Pledged Shares, and all dividends, distributions, cash, instruments and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Pledged Shares.
On December 14, 2022, an affiliate of Sanberg funded $1.0 million under the RJB Purchase Agreement, in exchange for which the Company issued and sold 14,749 shares of its Class A Common Stock, resulting in $0.6 million of proceeds, net of issuance costs. As of the date of this Quarterly Report on Form 10-Q, the remaining $55.5 million of the RJB Purchase Agreement remains unfunded. As such, the Company is permitted to exercise remedies in respect to the Pledged Shares, including foreclosing on the Pledged Shares.
Warrant Terms
Each equity-classified warrant issued by the Company has a term of seven years from the date of issuance. Each such warrant may only be exercised for cash, except in connection with certain fundamental transactions, and no fractional shares will be issued upon exercise of the warrants. The warrants are non-transferable, except in limited circumstances, and have not been and will not be listed or otherwise trade on any stock exchange. The number of shares issuable upon exercise of the warrants and the applicable exercise prices is subject to adjustment upon the occurrence of certain events. See Note 3 for additional information on the Warrant.
As of June 30, 2023, the equity-classified warrants issued by the Company were as follows:
Exercise PriceIssuedExercisedOutstanding as of June 30, 2023
$0.01 1,268,5741,268,574
$180.00 543,810—543,810
$216.00 271,905—271,905
$240.00 135,952—135,952
15. Share-based Compensation
The Company recognized share-based compensation for share-based awards in Cost of goods sold, excluding depreciation and amortization, and Product, technology, general and administrative expenses as follows:
Three Months Ended
June 30,		Six Months Ended
June 30,
2023202220232022
(In thousands)(In thousands)
Cost of goods sold, excluding depreciation and amortization$— $— $— $2 
Product, technology, general and administrative953 1,704 2,246 3,875 
Total share-based compensation$953 $1,704 $2,246 $3,877 
16. Related Party Transactions
Due to their status as beneficial owners of more than 10 percent (10%) of the voting power of the outstanding capital stock of the Company, Joseph N. Sanberg and his affiliates meet the definition of “related parties” per ASC 850, Related Party Disclosures.
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Gift Card Sponsorship Agreements
March and May Sponsorship Gift Cards
On March 11, 2022, the Company entered into a gift card sponsorship agreement with an affiliate of Joseph N. Sanberg, pursuant to which such affiliate agreed to pay the Company a $9.0 million net sponsorship fee to support a marketing program through which the Company would distribute gift cards (the “March Sponsorship Gift Cards”), at the Company’s sole discretion, in order to support its previous growth strategy.
On May 5, 2022, the Company entered into an additional gift card sponsorship agreement with an affiliate of Joseph N. Sanberg (the “Sponsorship Gift Cards Agreement”), pursuant to which such affiliate agreed to pay the Company a $20.0 million net sponsorship fee to support a marketing program through which the Company will distribute gift cards (the “May Sponsorship Gift Cards”), at its sole discretion, in order to support its previous growth strategy. On August 7, 2022, the Company amended the Sponsorship Gift Cards Agreement to extend the funding date to on or before August 31, 2022, and pursuant to which, Joseph N. Sanberg personally guaranteed his affiliate’s obligation.
On September 7, 2022, the Sponsorship Gift Cards Agreement was further amended to reduce the net sponsorship fee to $18.5 million and extend its due date to September 19, 2022. As of the date of this Quarterly Report on Form 10-Q, the Sanberg affiliate has paid $5.8 million of its commitment under said agreement, with $12.7 million remaining to be paid.
Sustainability and Carbon Credit Agreement
On March 31, 2022, the Company entered into an agreement (the “Sustainability Agreement”) with an affiliate of Joseph N. Sanberg. Under the terms of the agreement, the Company purchased and subsequently retired $3.0 million of carbon offsets, which were recognized in Product, technology, general and administrative expenses during the three months ended March 31, 2022.
Such affiliate also performed the assessment of the Company’s 2021 annual carbon footprint that provided it with the basis for determining the amount of carbon offsets the Company needed to purchase. The fee for these services was waived as a condition of entering into the Sustainability Agreement.
On June 30, 2022, the Company entered into a statement of work under the Sustainability Agreement, through which the affiliate transferred to the Company a sufficient amount of carbon offsets for its estimated 2023 and 2024 Scope 1, Scope 2, and Scope 3 emissions based upon its 2021 annual carbon footprint, for a purchase price of $6.0 million, which was to be paid in twenty-four equal monthly installments beginning on July 31, 2022.
On February 2, 2023, the Company and the affiliate terminated the Sustainability Agreement, which released the Company of its remaining payment obligation of $5.5 million. Under the terms of the termination agreement, the Company retained a number of carbon credits purchased for $0.5 million and paid to the Sanberg affiliate as of December 31, 2022. Such retained carbon credits are expected to offset the Company's estimated 2023 and 2024 Scope 1 and Scope 2 emissions. During the six months ended June 30, 2023, the Company retired $0.2 million of carbon offsets, which were recognized in Product, technology, general and administrative expenses.
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RJB Private Placements
See Note 14 for information regarding the February 2022 Private Placement and the RJB Purchase Agreement.
The following table summarizes the composition and amounts of the transactions in the Company’s Consolidated Statements of Operations involving its related parties:
Three Months Ended
June 30,		Six Months Ended
June 30,
2023202220232022
(In thousands)(In thousands)
Net revenue:
Feeding America bulk sale
$— $10,000 $— $10,000 
March Sponsorship Gift Cards
$46 $442 $212 $442 
Cost of goods sold, excluding depreciation and amortization$28 $5,468 $136 $5,468 
Product, technology, general and administrative$— $3,000 $208 $3,000 
17. Earnings per Share
Basic net income (loss) per share attributable to common stockholders is computed by dividing the net income (loss) attributable to common stockholders by the weighted-average number of common shares outstanding for the period.
Diluted net income (loss) per share attributable to common stockholders is computed by dividing the diluted net income (loss) attributable to common stockholders by the weighted-average number of common shares, including potential dilutive common shares assuming the dilutive effect of outstanding common stock options, restricted stock units, and warrants. For periods in which the Company has reported net loss, diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders, because dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Class AClass AClass AClass A
(In thousands, except share and per-share data)
Numerator: 
Net income (loss) attributable to common stockholders$(61,930)$(23,326)$(78,966)$(62,000)
Denominator:  
Weighted-average shares used to compute net income (loss) per share attributable to common stockholders—basic6,506,6102,839,4756,024,1222,765,499
Weighted-average shares used to compute net income (loss) per share attributable to common stockholders—diluted6,506,6102,839,4756,024,1222,765,499
Net income (loss) per share attributable to common stockholders—basic (1)
$(9.52)$(8.22)$(13.11)$(22.42)
Net income (loss) per share attributable to common stockholders—diluted (1)
$(9.52)$(8.22)$(13.11)$(22.42)
________________________
(1)Net income (loss) per share attributable to common stockholders — basic and net income (loss) per share attributable to common stockholders — diluted may not recalculate due to rounding.
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The following have been excluded from the computation of diluted net income (loss) per share attributable to common stockholders as their effect would have been antidilutive:
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Class AClass AClass AClass A
Stock options1,9362,7152,0302,856
Restricted stock units286,725210,329250,028198,041
Warrants951,667951,667951,667951,667
Total anti-dilutive securities1,240,3281,164,7111,203,7251,152,564
18. Fair Value Measurements
The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs are developed using market data, such as publicly available information about actual events or transactions, and reflect the assumptions that market participants would use when pricing the asset or liability. Unobservable inputs are inputs for which market data is not available and that are developed using the best information available about the assumptions that market participants would use when pricing the asset or liability.
The fair value hierarchy consists of the following three levels:
Level 1 — Quoted market prices in active markets for identical assets or liabilities.
Level 2 — Observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3 — Unobservable inputs reflecting the reporting entity’s own assumptions or external inputs from inactive markets.
The Company uses observable market data when available, and minimizes the use of unobservable inputs when determining fair value. The Company did not measure any assets or liabilities at fair value on a recurring basis as of June 30, 2023 and December 31, 2022.
Non-Financial Assets
Certain non-financial assets, such as long-lived assets, are only recorded at fair value if an impairment loss is recognized. Impairment losses recognized as of June 30, 2023 and December 31, 2022 were $1.7 million, $0.0 million, respectively. The following table presents non-financial assets that were measured and recorded at fair value on a non-recurring basis and the total impairment losses recorded on those assets. Non-recurring fair value measurements for the period ended June 30, 2023, included the following:
Six Months Ended June 30, 2023
Carrying value before impairmentFair value
(Level 3)		Impairment Loss
Non-financial assets (in thousands)
Long-lived assets$1,662$—$1,662
See Note 3 and Note 9 for further discussion on the long-lived assets impairment losses.
Warrant Obligation
The Blue Torch warrant obligation issued in conjunction with the May 2021 Amendment, as discussed in Note 12, was accounted for in accordance with ASC 815-40, Contracts in an Entity’s Own Equity, as a liability recognized at fair value (Level 3 within the fair value hierarchy), and was remeasured as of each balance sheet date with changes in fair value recorded in Other income (expense), net in the Consolidated Statements of Operations. The amount of each warrant to be issued under the obligation set forth in the financing agreement was based upon 0.50% of the then-outstanding shares of
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the Company’s common stock on a fully-diluted basis on the first day of each quarter, beginning on July 1, 2021, so long as the 2020 Term Loan remained outstanding. As such, the fair value of the Blue Torch warrant obligation was calculated using the estimated amount of warrants to be issued over the life of the financing agreement multiplied by the price of the Company’s stock as of the closing date, less $0.01 per share to represent each warrant’s exercise price. The estimated amount of shares to be issued was derived from the Company’s estimate of shares of the Company’s common stock on a fully-diluted basis over the life of the financing agreement.
On May 5, 2022, the Company fully repaid the 2020 Term Loan with the proceeds of its senior secured notes and cash on hand and terminated its financing agreement effective as of the same date, which also resulted in the termination of the warrant obligation. As of May 5, 2022, all warrants that had been issued under the Blue Torch warrant obligation had been exercised in full, resulting in no liability-classified warrants outstanding. See Note 12 for further discussion.
The following table summarizes the changes of the Blue Torch warrant obligation as of June 30, 2022 and December 31, 2021:
Balance as of December 31, 2021
Loss (gain) on
changes in stock
price
Loss (gain) on changes in estimated
common stock on a fully-diluted basis
Exercise of warrantsDerecognitionBalance as of June 30, 2022
(In thousands)
Warrant obligation$9,589 $(1,971)$153 $(5,050)$(2,721)$— 

19. Restructuring Costs

In December 2022, the Company implemented a reduction in corporate personnel to better align internal resources with strategic priorities, which resulted in a reduction of approximately 10% of the Company’s total corporate workforce, inclusive of both current and vacant roles. As a result, during the three months ended December 31, 2022, the Company recorded $1.5 million in employee-related expenses in Other operating expense, primarily consisting of severance payments, substantially all of which resulted in cash expenditures in the first half of 2023.

In June 2023, the Company announced the planned departure of an officer of the Company. The Company's Board of Directors approved a severance package for said officer on June 9, 2023. As a result, during the three months ended June 30, 2023, the Company recorded $0.4 million in employee related expenses in Other operating expense, primarily consisting of severance payments, substantially all of which will result in cash expenditures in the second half of 2023 and first quarter of 2024.
Employee-Related Costs
(in thousands)
Balance - December 31, 2022$1,295 
Cash payments(911)
Balance - March 31, 2023$384 
Charges408 
Cash payments(307)
Other(69)
Balance - June 30, 2023$416 



20. Subsequent Events

On July 19, 2023, the Company further executed its planned reduction in corporate personnel, which was previously planned in conjunction with the closing of the FreshRealm Transaction on June 9, 2023. As the Company executes its asset-light model, it is further streamlining its business to better match its resources to this structure. This reduction in corporate personnel resulted in a reduction of approximately 20% of the Company’s total corporate workforce.
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As a result of this action, the Company expects to incur approximately $1.3 million in one-time employee-related expenses, primarily consisting of severance, substantially all of which will result in cash expenditures.
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Item 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis is meant to provide material information relevant to an assessment of the financial condition and results of operations of our company, including an evaluation of the amounts and certainty of cash flows from operations and from outside resources, so as to allow investors to better view our company from management’s perspective. You should read the following discussion of our financial condition and results of operations together with our consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission on March 16, 2023. The following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Quarterly Report on Form 10-Q, particularly in the section titled “Risk Factors” under Part II, Item 1A, below. In this discussion, we use certain financial measures that are considered non-GAAP financial measures under Securities and Exchange Commission rules. These rules require supplemental explanation and reconciliation, which is included elsewhere in this Quarterly Report on Form 10-Q. Investors should not consider non-GAAP financial measures in isolation from or in substitution for financial information presented in compliance with U.S. generally accepted accounting principles (“GAAP”). In the below discussion, we use the term basis points to refer to units of one-hundredth of one percent.
Unless otherwise indicated, all information in this Quarterly Report on Form 10-Q gives effect to a 1-for-12 reverse stock split of our Class A common stock that became effective on June 7, 2023, and all references to historical share and per share amounts give effect to the reverse stock split.
Overview
Blue Apron’s vision is Better Living Through Better Food™. Founded in 2012, we are on a mission to spark discovery, connection, and joy through cooking. We offer fresh, chef-designed recipes that empower our customers to embrace their culinary curiosity and challenge their abilities to see what a difference cooking quality food can make in their lives.
Our core product is the meal experience we help our customers create. These experiences extend from discovering new recipes, ingredients, and cooking techniques to preparing meals with families and loved ones to sharing photos and stories of culinary triumphs. Central to these experiences are the original recipes we design with fresh, seasonally-inspired produce and high-quality ingredients sent to our customers.
Central to our operations, we have developed an integrated network that employs technology and expertise across many disciplines. Our supply-demand coordination activities – demand planning, recipe creation, procurement, recipe merchandising, customer service, and marketing – drive our end-to-end value chain.
We currently offer our customers four weekly meal plans—a Two-Serving Signature Plan, a Two-Serving Vegetarian Plan, a Two-Serving Wellness Plan, and a Four-Serving Signature Plan. In addition, each week, customers can add unlimited Add-ons recipes to each order, which includes breakfast, appetizers, side dishes, desserts, à la carte proteins, and/or Heat & Eat meals, which are microwaveable meals that are ready in minutes.
We also sell wine, which can be paired with our meals or can be purchased à la carte, through Blue Apron Wine, our direct-to-consumer wine delivery service. Through Blue Apron Market, our e-commerce market, we sell a curated selection of cooking tools, utensils, pantry items, and add-on products for different culinary occasions, which are tested in our test kitchen and recommended by our culinary team. Our products are available to purchase through our website, mobile app, and beginning in the second quarter of 2022, third-party sales platforms for our meal kit products.
Reverse Stock Split

Following our 2023 Annual Meeting of Stockholders on June 7, 2023, our Board of Directors determined to effect a reverse stock split at a ratio of 1-for-12 and, on June 7, 2023 (the “effective date”), we effected a reverse stock split (the “Reverse Stock Split”) of our outstanding shares of Class A common stock, par value $0.0001 per share (the "Class A common stock") at a ratio of 1-for-12 pursuant to a Certificate of Amendment (the “Certificate of Amendment”) to our Restated Certificate of Incorporation, as amended, filed with the Secretary of State of the State of Delaware. The Reverse Stock Split was reflected on the New York Stock Exchange (the “NYSE”) beginning with the opening of trading on June 8,
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2023. Pursuant to the Reverse Stock Split, every 12 shares of our issued and outstanding Class A common stock were automatically converted into one issued and outstanding share of Class A common stock, without any change in the par value per share. No fractional shares were issued as a result of the Reverse Stock Split. Stockholders who would otherwise be entitled to a fractional share of Class A common stock were instead entitled to receive a cash payment in lieu of such fractional shares. The number of authorized shares of our Class A common stock under our Restated Certificate of Incorporation, as amended, remained unchanged at 1,500,000,000. The Reverse Stock Split affected all issued and outstanding shares of our Class A common stock, and the respective numbers of shares of Class A common stock underlying our outstanding stock options, outstanding restricted stock units, outstanding performance stock units, outstanding warrants and the Company’s equity incentive plans were proportionately adjusted.
Strategic Transaction
On June 9, 2023 (the "Closing Date"), we entered into definitive agreements with FreshRealm, Inc. ("FreshRealm"), pursuant to which, among other things, we sold our production and fulfillment operational infrastructure to FreshRealm, including, among other things, inventory equipment and related know-how, and transferred related personnel relating to our production and fulfillment operations. Concurrently, we executed a 10-year production and fulfillment agreement (the “Production and Fulfillment Agreement”), pursuant to which FreshRealm became the exclusive supplier of our meal kits. The Company also subleased to FreshRealm the Company's fulfillment facilities located in Linden, New Jersey and Richmond, California (the “Facilities” and such transactions, together with the related transactions contemplated thereby, the “FreshRealm Transaction”). On the Closing Date, the Company and FreshRealm entered into an asset purchase agreement (the “Asset Purchase Agreement”), pursuant to which FreshRealm purchased certain assets of the Company relating to the P&F Business conducted by the Company at the Facilities, including, among others, our meal kit inventory and consumable supplies, identified transferred contracts, furnishings and equipment at the Facilities, intellectual property, including certain know-how and the transfer of related personnel. We received an amount in cash equal to $28.5 million, less $3.5 million, which was paid to us in the form of a seller note (the "Seller Note"), less $1.4 million related to all vacation time, sick time and other paid time off accrued by certain personnel related to the P&F Business. We are eligible to receive up to an additional $4.0 million in cash consideration if we achieve certain financial and cost-savings milestones and are in compliance with the Transition Services Agreement (as defined below).

Under the Production and Fulfillment Agreement, we are also eligible to earn up to $17.5 million of volume-based rebates based on the volume of purchases of certain products, including new product launches, above specified target thresholds, as well as the achievement of certain financial targets by us during the term of the Production and Fulfillment Agreement.

Our consolidated financial statements and the results of operations have not materially changed as a result of the FreshRealm Transaction as we continue to sell our products, with the only change being that FreshRealm is now the exclusive supplier of our products.
See Note 3 to the accompanying consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information about the FreshRealm Transaction.
Key Financial and Operating Metrics
We use the following key financial and operating metrics to evaluate our business and operations, measure our performance, identify trends affecting our business, project our future performance, and make strategic decisions. You should read the key financial and operating metrics in conjunction with the following discussion of our results of operations and financial condition together with our consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q.
Three Months Ended
June 30,		Six Months Ended
June 30,
2023202220232022
(In thousands)
Net revenue$106,229$124,237$219,309$241,988
Net income (loss)$(61,930)$(23,326)$(78,966)$(62,000)
Adjusted EBITDA$(2,617)$(16,178)$(11,308)$(47,612)
Net cash from (used in) operating activities$(5,157)$(18,347)$(14,676)$(47,172)
Free cash flow$(6,111)$(20,011)$(16,908)$(50,157)
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Three Months Ended
June 30,
2023		March 31,
2023		December 31,
2022		September 30,
2022		June 30,
2022
Orders (in thousands)
1,403 1,608 1,460 1,548 1,701 
Customers (in thousands)
267 326 298 323 349 
Average Order Value$75.66 $70.27 $73.15 $70.83 $67.14 
Orders per Customer5.3 4.9 4.9 4.8 4.9 
Average Revenue per Customer$397 $346 $358 $340 $328 
Orders
We define Orders as the number of paid orders by our Customers across our meal, wine, and market products sold on our e-commerce platforms and, beginning in the second quarter of 2022, through third-party sales platforms in any reporting period, inclusive of orders that may have eventually been refunded or credited to customers. Orders, together with Average Order Value, is an indicator of the net revenue we expect to recognize in a given period. We view Orders delivered as a key indicator of our scale and financial performance, however Orders has limitations as a financial and operating metric as it does not reflect the product mix chosen by our Customers or the purchasing behavior of our customers. Because of these and other limitations, we consider, and you should consider, Orders in conjunction with our other metrics, including net revenue, net income (loss), adjusted EBITDA, net cash from (used in) operating activities, free cash flow, Average Order Value, and Orders per Customer.
Customers
We determine our number of Customers by counting the total number of individual customers who have paid for at least one Order from Blue Apron across our meal, wine, or market products sold on our e-commerce platforms and, beginning in the second quarter of 2022, through third-party sales platforms in a given reporting period. For example, the number of Customers in the three and six months ended June 30, 2023 was determined based on the total number of individual customers who paid for at least one Order across our meal, wine, or market products in the quarter ended June 30, 2023, including sales made on third-party sales platforms. We view the number of Customers as a key indicator of our scale and financial performance, however Customers has limitations as a financial and operating metric as it does not reflect the product mix chosen by our customers, Order frequency, or the purchasing behavior of our Customers. Because of these and other limitations, we consider, and you should consider, Customers in conjunction with our other metrics, including net revenue, net income (loss), adjusted EBITDA, net cash from (used in) operating activities, free cash flow, Orders per Customer, and Average Revenue per Customer.
Average Order Value
We define Average Order Value as our net revenue from our meal, wine, and market products sold on our e-commerce platforms and, beginning in the second quarter of 2022, through third-party sales platforms, in a given reporting period divided by the number of Orders in that period. We view Average Order Value as a key indicator of the mix of our product offerings chosen by our customers, the mix of promotional discounts, and the purchasing behavior of our customers.
Orders per Customer
We define Orders per Customer as the number of Orders in a given reporting period divided by the number of Customers in that period. We view Orders per Customer as a key indicator of our customers’ purchasing patterns, including their repeat purchase behavior.
Average Revenue per Customer
We define Average Revenue per Customer as our net revenue from our meal, wine, and market products sold on our e-commerce platforms and, beginning in the second quarter of 2022, through third-party sales platforms in a given reporting period divided by the number of Customers in that period. We view Average Revenue per Customer as a key indicator of our customers’ purchasing patterns, including their repeat purchase behavior.
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Adjusted EBITDA
Adjusted EBITDA is a non-GAAP financial measure defined by us as net income (loss) before interest income (expense), net, other operating expense, gain (loss) on extinguishment of debt, gain (loss) on transaction, other income (expense), net, benefit (provision) for income taxes, depreciation and amortization, and share-based compensation expense. We have presented adjusted EBITDA in this Quarterly Report on Form 10-Q because it is a key measure used by our management and board of directors to understand and evaluate our operating performance, generate future operating plans, and make strategic decisions regarding the allocation of capital. In particular, we believe that the exclusion of certain items in calculating adjusted EBITDA can produce a useful measure for period-to-period comparisons of our business. Accordingly, we believe that adjusted EBITDA provides useful information in understanding and evaluating our operating results. Please see “Non-GAAP Financial Measures” for a discussion of the use of non-GAAP financial measures and for a reconciliation of adjusted EBITDA to net income (loss), the most directly comparable measure calculated in accordance with GAAP.
Free Cash Flow
Free cash flow is a non-GAAP financial measure defined by us as net cash from (used in) operating activities less purchases of property and equipment. We have presented free cash flow in this Quarterly Report on Form 10-Q because it is used by our management and board of directors as an indicator of the amount of cash we generate or use and to evaluate our ability to satisfy current and future obligations and to fund future business opportunities. Accordingly, we believe that free cash flow provides useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our ability to satisfy our financial obligations and pursue business opportunities, and allowing for greater transparency with respect to a key financial metric used by our management in their financial and operational decision-making. Free cash flow is not a measure of cash available for discretionary expenditures since we have certain non-discretionary obligations such as debt repayments or finance lease obligations that are not deducted from the measure. Additionally, other companies, including companies in our industry, may calculate free cash flow differently, which reduces its usefulness as a comparative measure. Please see “Non-GAAP Financial Measures” for a discussion of the use of non-GAAP financial measures and for a reconciliation of free cash flow to net cash from (used in) operating activities, the most directly comparable measure calculated in accordance with GAAP.
Components of Our Results of Operations
Net Revenue
We generate net revenue primarily from the sale of meals to customers through our Two‑Serving and Four-Serving Plans, as well as our Add-On, premium, customization, and other up-sell offerings. We also generate net revenue through sales of Blue Apron Wine, sales on Blue Apron Market, sales of meal kits on third-party sales platforms, and to a more limited extent, through enterprise bulk sales on an ad hoc basis. We generally derive substantially all of our net revenue from sales of our meal kit boxes through our direct-to-consumer platform. We deduct promotional discounts, actual customer credits and refunds as well as customer credits and refunds expected to be issued to determine net revenue. Customers who receive a damaged meal or wine order or are dissatisfied with a meal or wine order and contact us within seven days of receipt of the order may receive a full or partial refund, full or partial credit against future purchase, or replacement, at our sole discretion. Credits only remain available for customers who maintain a valid account with us. Customers who return an unused, undamaged Blue Apron Market product within 30 days of receipt receive a full refund.
Our business is seasonal in nature and, as a result, our revenue and expenses and associated revenue trends fluctuate from quarter to quarter. We anticipate that the first quarter of each year will generally represent our strongest quarter in terms of customer engagement. Conversely, during the summer months and the end of year holidays, when people are vacationing more often or have less predictable weekly routines, we generally anticipate lower customer engagement. However, seasonal trends may be masked and impacted by marketing investments. We also anticipate that our net revenue will be impacted by the execution of strategic priorities, including our ability to develop and execute product expansion initiatives, pricing updates, as well as the timing and extent of the sale and issuance of gift cards and the associated revenue upon the redemption of those gift cards, which generally occurs within one year of gift card issuance. Net revenue will also be impacted by gift card breakage revenue, which is our estimate of the portion of our gift card balance not expected to be redeemed. During 2022, we entered into various agreements and amendments to such agreements with related parties under which we ultimately agreed to issue $27.5 million (net of promotional discounts) of gift cards, which may result in higher levels of gift card breakage revenue and which may inflate net revenue or mask seasonal trends in future periods. As of the date of this Quarterly Report on Form 10-Q, $12.7 million of gift card proceeds
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from the related party have not been funded, and no gift cards have yet been issued against those amounts. See Note 16 to the accompanying consolidated financial statements in this Quarterly Report on Form 10-Q for further discussion.
In addition, our net revenue is impacted by our marketing strategies, including the timing and amount of paid advertising and promotional activity. As part of the execution of our strategic priorities, we significantly increased marketing expenses toward the end of the fourth quarter of 2021 and throughout most of 2022. However, in December 2022, we announced that we were focused on driving towards profitability in the future and plan to significantly reduce marketing expenses in 2023, which is expected to negatively impact customers and net revenue in 2023. Our ability to grow net revenue and increase marketing expenses in the future are dependent upon our ability to implement our operating plan on our planned timeline and the sufficiency of our cash resources.
Credit card charges are recorded in deferred revenue until the criteria for revenue recognition have been met. Because we generally charge credit cards in advance of shipment and, historically, customers have most frequently requested delivery of their meals earlier in the week, our deferred revenue balance at the end of a financial reporting period may fluctuate significantly based on the day of the week on which that period ends. Consequently, large changes in deferred revenue at any particular time are not meaningful indicators of our financial results or future net revenue trends.
Cost of Goods Sold, excluding Depreciation and Amortization
Cost of goods sold, excluding depreciation and amortization, consists of product and fulfillment costs. Product costs include the cost of food, packaging for food that is portioned prior to delivery to customers, labor and related personnel costs incurred to portion food for our meals, inbound shipping costs, and cost of products sold through Blue Apron Wine and Blue Apron Market. Fulfillment costs consist of costs incurred in the shipping and handling of inventory including the shipping costs to our customers, labor and related personnel costs related to receiving, inspecting, warehousing, picking inventory, and preparing customer orders for shipment, and the cost of packaging materials and shipping supplies. As noted above, our business is seasonal in nature and, as a result we anticipate that the third quarter of each year will generally reflect higher levels of cost of goods sold, excluding depreciation and amortization, due to higher packaging and shipping costs due to warmer temperatures.
As of June 9, 2023, the production and fulfillment of our meal-kits is exclusively supplied by FreshRealm. Pursuant to the Production and Fulfillment Agreement, until September 1, 2023, we will pay FreshRealm a price for our meal kits equal to the actual cost to FreshRealm for the products and fulfillment services. Commencing on September 1, 2023, we will pay FreshRealm a price equal to the sum of (A) the Recipe Ingredient Cost; (B) the NPI Product Price; (C) the Fulfillment Cost; (D) the EOL Quarterly Surcharge; and (E) the FR Margin (each as defined in the Production and Fulfillment Agreement).
Over time, we expect such expenses to decrease as a percentage of net revenue as we realize the benefits we expect to receive from the FreshRealm Transaction, including from FreshRealm's economies of scale and, if earned, as we recognize the up to $17.5 million of volume-based rebates under the Product and Fulfillment Agreement, which are discussed in more detail above.
Marketing
Our marketing expenses consist primarily of costs incurred to acquire new customers, retain existing customers, and build our brand awareness through various online and offline paid channels, including digital and social media, television, direct mail, radio and podcasts, email, brand activations, and certain variable and fixed payments to strategic brand partnerships. Also included in marketing expenses are the costs of orders through our customer referral program, in which certain existing customers may invite others to receive a complimentary meal kit, as well as costs paid to third parties to market our products. The cost of the customer referral program is based on our costs incurred for fulfilling a complimentary meal delivery, including product and fulfillment costs.
As part of the execution of our strategic priorities in prior periods, we increased marketing expenses toward the end of the fourth quarter of 2021 and throughout most of 2022. However, in December 2022, we determined to significantly reduce marketing expenditures, and we expect marketing expenses to decrease meaningfully, both in absolute dollars and as a percentage of net revenue in 2023 compared to 2022, as we prioritize profitability and marketing efficiency. Our ability to increase marketing expenses in the future is dependent upon the sufficiency of our cash resources, including our ability to (i) earn up to $4.0 million in additional cash consideration under the asset purchase agreement we entered into with FreshRealm in connection with the FreshRealm Transaction, (ii) realize the benefit of the full $3.5 million promissory note issued in connection with the FreshRealm Transaction, and (iii) achieve the up to $17.5 million of volume-based rebates under the production and fulfillment agreement we entered into with FreshRealm, (b) the ability of
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FreshRealm to cost effectively price the production and fulfillment of our meal kits and other products, or (c) our ability, if we are unable to successfully implement our operating strategy, to recognize the benefits of our identified expense reductions, including our recent headcount reductions, or raise additional capital or funding, including through (i) our February 2023 ATM (as defined below) or otherwise, (ii) receiving all or a sufficient portion of the remaining $68.2 million due to us in connection with the $56.5 million private placement and the $12.7 million gift card transaction with certain affiliates of Joseph N. Sanberg, or (iii) the disposition of some or all of the pledged securities securing the private placement obligation.

We anticipate that our marketing strategies, including the timing and extent of our marketing expenses, will be informed by the sufficiency of our cash resources, our strategic priorities, our ability to execute on our strategic priorities, the seasonal trends in our business, our marketing technology capabilities, and the competitive landscape of our market, and will fluctuate from quarter-to-quarter and have a significant impact on our quarterly results of operations. We also anticipate that our future marketing strategies and investments may continue to be impacted by macroeconomic and other factors.
Product, Technology, General and Administrative
Product, technology, general and administrative expenses ("PTGA") consist of costs related to the development of our products and technology, general and administrative expenses, and overhead expenses, which include: payroll and related expenses for employees involved in the application, production, and maintenance of our platform and other technology infrastructure costs; payroll and related expenses for employees performing corporate and other managerial functions; facilities’ costs such as occupancy and rent costs for our corporate offices and fulfillment centers; professional fees; payment processing fees; the retirement of carbon offsets; and other general corporate and administrative costs.

On June 9, 2023, FreshRealm purchased certain assets of ours relating to our production and fulfillment operations conducted at the Facilities, including PTGA expenses related to the P&F Business. Under the Production and Fulfillment Agreement, we will incur an annual baseline PTGA fee, which represents operating overhead costs allocated to us by FreshRealm. Commencing on January 1, 2024 and continuing thereafter until the end of the term of the Production and Fulfillment Agreement, the annual baseline PTGA fee will be reduced by approximately $10.0 million, subject to annual adjustments in accordance with an inflationary index.

We expect these expenses to decrease in absolute dollars in 2023 compared to 2022, as we realize savings from the corporate workforce reductions announced in December 2022 and July 2023 and continue to streamline our cost structure
Depreciation and Amortization
Depreciation and amortization consists of depreciation expense for our property and equipment and amortization expense for capitalized software development costs and finance leases.
Other operating expense
Other operating expense includes transaction costs and severance-related expenses associated with the FreshRealm Transaction, as well as impairment losses on long-lived assets.
Gain (Loss) on Extinguishment of Debt
Gain (loss) on extinguishment of debt relates to the extinguishment gains or losses recorded upon the amendment of our financing arrangements.
Gain (Loss) on Transaction
Gain (loss) on transaction represents the loss on sale to FreshRealm of certain assets related to the company's production and fulfillment operations.
Interest Income (Expense), Net
Interest income (expense), net consists primarily of interest expense on our previous outstanding borrowings and finance leases.
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Other Income (Expense), Net
Other income (expense), net consisted of the change in fair value of the Blue Torch warrant obligation upon remeasurement as of each reporting period, as well as the gain recorded upon its derecognition during the three months ended June 30, 2022.
Benefit (Provision) for Income Taxes
Our benefit (provision) for income taxes and our effective tax rates are affected by permanent differences between GAAP and statutory tax laws, certain one-time items, and the impact of valuation allowances. Our tax provision results from state taxes in a jurisdiction in which net operating losses are not available to offset our tax obligation. We continue to maintain a valuation allowance for all of our deferred tax assets in federal and state tax jurisdictions, as we have concluded it is more likely than not the deferred tax assets will not be utilized.
Results of Operations
The following sets forth our consolidated statements of operations data for each of the periods indicated:
Three Months Ended
June 30,		Six Months Ended
June 30,
2023202220232022
Net revenue$106,229 $124,237 $219,309 $241,988 
Operating expenses:
Cost of goods sold, excluding depreciation and amortization66,001 81,158 138,614 160,648 
Marketing9,357 21,776 24,084 49,690 
Product, technology, general and administrative34,441 39,185 70,165 83,139 
Depreciation and amortization3,180 5,593 7,402 11,126 
Other operating expense5,846 — 5,846 — 
Total operating expenses118,825 147,712 246,111 304,603 
Income (loss) from operations(12,596)(23,475)(26,802)(62,615)
Gain (loss) on extinguishment of debt— 650 (1,850)650 
Gain (loss) on transaction(48,554)— (48,554)— 
Interest income (expense), net(774)(834)(1,747)(2,003)
Other income (expense), net— 387 — 2,033 
Income (loss) before income taxes(61,924)(23,272)(78,953)(61,935)
Benefit (provision) for income taxes(6)(54)(13)(65)
Net income (loss)$(61,930)$(23,326)$(78,966)$(62,000)
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The following table sets forth our consolidated statements of operations data as a percentage of net revenue for each of the periods indicated:
Three Months Ended
June 30,		Six Months Ended
June 30,
2023202220232022
Net revenue100.0 %100.0 %100.0 %100.0 %
Operating expenses:
Cost of goods sold, excluding depreciation and amortization62.1 %65.3 %63.2 %66.4 %
Marketing8.8 %17.5 %11.0 %20.5 %
Product, technology, general and administrative32.4 %31.5 %32.0 %34.4 %
Depreciation and amortization3.0 %4.5 %3.4 %4.6 %
Other operating expense5.5 %— %2.7 %— %
Total operating expenses111.9 %118.9 %112.2 %125.9 %