[PART I—FINANCIAL INFORMATION](index=9&type=section&id=PART%20I%E2%80%94FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=9&type=section&id=Item%201.%20Financial%20Statements.) Unaudited condensed consolidated financial statements for Lulu's Fashion Lounge Holdings, Inc., covering balance sheets, operations, and cash flows for periods ended October 3, 2021 [Condensed Consolidated Balance Sheets](index=9&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | October 3, 2021 | January 3, 2021 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $40,927 | $15,554 | | Inventory, net | $23,400 | $16,895 | | Total current assets | $81,590 | $42,799 | | Total assets | $145,252 | $105,076 | | **Liabilities & Stockholder's Deficit** | | | | Total current liabilities | $162,831 | $41,267 | | Long-term debt, net | $0 | $96,856 | | Total liabilities | $165,188 | $140,627 | | Total stockholder's deficit | ($156,294) | ($169,001) | [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)) Statement of Operations Highlights (in thousands) | Metric | Three Months Ended Oct 3, 2021 | Three Months Ended Sep 27, 2020 | Nine Months Ended Oct 3, 2021 | Nine Months Ended Sep 27, 2020 | | :--- | :--- | :--- | :--- | :--- | | Net revenue | $106,320 | $54,533 | $278,861 | $194,129 | | Gross profit | $50,767 | $24,405 | $133,300 | $86,921 | | Income (loss) from operations | $9,062 | $4,070 | $26,856 | ($3,152) | | Net income (loss) | $3,850 | $377 | $10,819 | ($15,152) | | Net income (loss) per share | $0.13 | $0.01 | $0.37 | ($0.90) | [Condensed Consolidated Statement of Cash Flows](index=12&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) Statement of Cash Flows Highlights (in thousands) | Cash Flow Activity | Nine months ended Oct 3, 2021 | Nine months ended Sep 27, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $41,788 | $21,184 | | Net cash used in investing activities | ($1,587) | ($1,605) | | Net cash provided by (used in) financing activities | ($14,828) | $10,472 | | **Net increase in cash** | **$25,373** | **$30,051** | [Notes to Condensed Consolidated Financial Statements](index=14&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) - On November 15, 2021, the company completed its IPO, raising net proceeds of approximately **$85.6 million**, which were used to repay its existing term loan[39](index=39&type=chunk)[41](index=41&type=chunk) - The company's liquidity position improved significantly post-IPO, alleviating previous substantial doubt about its ability to continue as a going concern[42](index=42&type=chunk)[43](index=43&type=chunk) - As of October 3, 2021, the company had **$103.4 million** in borrowings outstanding under its Term Loan, which was subsequently repaid in full on November 15, 2021, following the IPO[96](index=96&type=chunk)[166](index=166&type=chunk)[241](index=241&type=chunk) - In connection with the IPO, the company entered into a new **$50.0 million** three-year revolving credit facility and borrowed **$25.0 million** on November 15, 2021[165](index=165&type=chunk)[242](index=242&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=53&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, highlighting strong revenue growth from increased active customers and improved liquidity post-IPO Key Operating and Financial Metrics (in thousands, except percentages and customer counts) | Metric | Three Months Ended Oct 3, 2021 | Three Months Ended Sep 27, 2020 | Nine Months Ended Oct 3, 2021 | Nine Months Ended Sep 27, 2020 | | :--- | :--- | :--- | :--- | :--- | | Gross Margin | 47.7% | 44.8% | 47.8% | 44.8% | | Net Income (Loss) | $3,850 | $377 | $10,819 | ($15,152) | | Adjusted EBITDA | $11,885 | $5,249 | $35,050 | $19,009 | | Active Customers | 2.5M | 2.3M | 2.5M | 2.3M | | Average Order Value | $125.07 | $102.69 | $119.99 | $107.99 | - Net revenue for the three months ended October 3, 2021, increased by **$51.8 million**, or **95%**, compared to the same period in 2020, driven by more active customers, higher customer spending, and fewer markdowns[218](index=218&type=chunk) - Net revenue for the nine months ended October 3, 2021, increased by **$84.7 million**, or **43.6%**, compared to the prior year period, also due to growth in active customers and spending[224](index=224&type=chunk) - The company completed its IPO on November 15, 2021, raising net proceeds of approximately **$81.3 million** after discounts and expenses, which were used to repay the existing Term Loan[239](index=239&type=chunk)[242](index=242&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=79&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company states there has been no material change in its exposure to market risk from previously disclosed information - There has been no material change in the company's exposure to market risk from that discussed in its Prospectus[264](index=264&type=chunk) [Item 4. Controls and Procedures](index=79&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective as of October 3, 2021, with no material changes to internal control over financial reporting - Based on an evaluation as of the end of the period, the CEO and CFO concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of October 3, 2021[266](index=266&type=chunk) - There were no changes in internal control over financial reporting during the quarter ended October 3, 2021, that have materially affected, or are reasonably likely to materially affect, internal controls[267](index=267&type=chunk) [PART II—OTHER INFORMATION](index=80&type=section&id=PART%20II%E2%80%94OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=80&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to ordinary course legal proceedings but does not anticipate a material adverse effect on its financials - The company is not currently a party to any legal proceedings that it believes would have a material adverse effect on its business, financial condition, or results of operations[270](index=270&type=chunk) [Item 1A. Risk Factors](index=80&type=section&id=Item%201A.%20Risk%20Factors) Details significant risks, including brand dependence, COVID-19 impacts, competition, supply chain disruptions, data security, and challenges as a newly public company - The business is highly dependent on its ability to maintain a strong brand community with engaged customers and influencers, and negative publicity could severely harm the brand[272](index=272&type=chunk) - The COVID-19 pandemic has adversely affected and may continue to affect labor, supply chain, and consumer demand, particularly as the company's products are often tied to in-person social and formal events[277](index=277&type=chunk)[278](index=278&type=chunk) - The company operates in the highly competitive retail apparel industry and faces pressure from larger competitors with greater resources, as well as an increasingly crowded e-commerce market[324](index=324&type=chunk)[327](index=327&type=chunk) - The business is subject to system security risks, including data breaches; a past incident in 2016 involved the potential interception of payment card numbers, highlighting the ongoing threat[343](index=343&type=chunk)[345](index=345&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=143&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Confirms no unregistered equity sales and details the use of approximately **$81.3 million** net proceeds from the November 2021 IPO - The company completed its IPO on November 15, 2021, selling **5,750,000 shares** of common stock at **$16.00 per share**[462](index=462&type=chunk) - Net proceeds from the IPO were approximately **$81.3 million** after deducting underwriting discounts of **$6.4 million** and estimated offering expenses of **$4.3 million**[462](index=462&type=chunk) - There has been no material change in the expected use of net proceeds from the IPO as described in the company's Prospectus[462](index=462&type=chunk) [Item 3. Defaults Upon Senior Securities](index=145&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities.) The company reports no defaults upon senior securities during the period - None[463](index=463&type=chunk) [Item 4. Mine Safety Disclosures](index=145&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) This item is not applicable to the company - Not applicable[464](index=464&type=chunk) [Item 5. Other Information](index=145&type=section&id=Item%205.%20Other%20Information.) The company reports no other information to disclose for this period - None[465](index=465&type=chunk) [Item 6. Exhibits](index=146&type=section&id=Item%206.%20Exhibits.) This section lists exhibits filed with the Form 10-Q, including corporate documents, equity agreements, and CEO/CFO certifications [Signatures](index=149&type=section&id=Signatures)