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As filed with the Securities and Exchange Commission on June 28, 2017.
    Registration No. 333-218425

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



AMENDMENT NO. 4 TO
FORM S-1

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

Blue Apron Holdings, Inc.
(Exact name of registrant as specified in its charter)

Delaware   5961   81-4777373
(State or other jurisdiction of
incorporation or organization)
  (Primary Standard Industrial
Classification Code Number)
  (I.R.S. Employer
Identification No.)

5 Crosby Street
New York, New York 10013
(347) 719-4312
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)



Matthew B. Salzberg
President and Chief Executive Officer
Blue Apron Holdings, Inc.
5 Crosby Street
New York, New York 10013
(347) 719-4312
(Name, address, including zip code, and telephone number, including area code, of agent for service)



Copies to:

Mark G. Borden, Esq.
David A. Westenberg, Esq.
Wilmer Cutler Pickering Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
Telephone: (617) 526-6000
Telecopy: (617) 526-5000
  Benjamin C. Singer, Esq.
General Counsel and Secretary
Blue Apron Holdings, Inc.
5 Crosby Street
New York, New York 10013
Telephone: (347) 765-1896
Telecopy: (646) 627-8815
  Mark T. Bettencourt, Esq.
Gregg L. Katz, Esq.
Goodwin Procter LLP
100 Northern Avenue
Boston, Massachusetts 02210
Telephone: (617) 570-1000
Telecopy: (617) 523-1231

            Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement is declared effective.

            If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. o

            If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

            If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

            If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

            Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer o   Accelerated filer o   Non-accelerated filer ý
(Do not check if a
smaller reporting company)
  Smaller reporting company o

Emerging growth company ý

            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 7(a)(2)(B) of the Securities Act. o



CALCULATION OF REGISTRATION FEE

               
 

Title of Each Class of Securities To Be Registered

  Amount to be
Registered(1)
  Proposed Maximum
Offering Price per
Share(2)
  Proposed Maximum
Aggregate Offering
Price(2)
  Amount of
Registration Fee(3)
 

Class A Common Stock, $0.0001 par value per share

  34,500,000   $11.00   $379,500,000   $43,984.05

 

(1)
Estimated pursuant to Rule 457(a) under the Securities Act of 1933, as amended. Includes additional shares that the underwriters have the option to purchase to cover over-allotments, if any.
(2)
Estimated solely for the purpose of calculating the registration fee.
(3)
Previously paid.



            The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

   


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EXPLANATORY NOTE

          This Amendment No. 4 to the Registration Statement on Form S-1 is being filed solely for the purpose of re-inserting information that was inadvertently omitted from Amendment No. 3 to the Registration Statement on Form S-1. The re-inserted information clarifies that entities affiliated with certain of the underwriters in this offering are lenders under the Registrant's Revolving Credit and Guaranty Agreement, dated as of August 26, 2016, as amended.


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The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject to Completion, dated June 28, 2017.

PRELIMINARY PROSPECTUS

30,000,000 Shares

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Class A Common Stock

                                      

          This is the initial public offering of shares of Class A common stock of Blue Apron Holdings, Inc. All of the 30,000,000 shares of Class A common stock are being sold by us.

          Prior to this offering, there has been no public market for the Class A common stock. It is currently estimated that the initial public offering price per share will be between $10.00 and $11.00. Our Class A common stock has been approved for listing on the New York Stock Exchange under the symbol "APRN."

          We have two classes of voting common stock, Class A common stock and Class B common stock, and one class of non-voting stock, Class C capital stock. The rights of the holders of Class A common stock, Class B common stock, and Class C capital stock are identical, except for voting and conversion rights. Each share of Class A common stock is entitled to one vote, and each share of Class B common stock is entitled to ten votes. Shares of Class C capital stock have no voting rights, except as otherwise required by law. Each outstanding share of Class B common stock will convert automatically into one share of Class A common stock upon any transfer, whether or not for value and whether voluntary or involuntary or by operation of law, except for certain exceptions and permitted transfers described in our restated certificate of incorporation, and each outstanding share of Class B common stock held by a stockholder who is a natural person, or held by the permitted transferees of such stockholder, will convert automatically into one share of Class A common stock upon the death or permanent and total disability of such stockholder, subject to a conversion delay of nine months in the event of the death or permanent and total disability of one of our founders. In addition, all outstanding Class B common stock will convert automatically into Class A common stock, on a share-for-share basis, upon the date which is nine months after the death or disability of Matthew B. Salzberg, our president and chief executive officer, or when the outstanding shares of Class B common stock represent less than 5% of the combined voting power of the outstanding Class A common stock and Class B common stock. All outstanding Class C capital stock will convert automatically into Class A common stock, on a share-for-share basis, on the date fixed therefor by our board of directors that is between 31 and 90 days following the conversion of all outstanding Class B common stock into Class A common stock. Upon the completion of this offering, the holders of the outstanding shares of Class B common stock will collectively hold approximately 98.1% of the voting power of our outstanding capital stock, and Matthew B. Salzberg will hold approximately 29.2% of the voting power of our outstanding capital stock.

          As an "emerging growth company," we are eligible for reduced public company reporting requirements. See "Prospectus Summary—Implications of Being an Emerging Growth Company."

                                      

          See "Risk Factors" beginning on page 16 to read about factors you should consider before buying shares of Class A common stock.

                                      

          Neither the Securities and Exchange Commission nor any state securities commission or other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

                                      

  Per Share   Total
 

Initial public offering price

  $   $  

Underwriting discount(1)

  $   $  

Proceeds, before expenses

  $   $  

                   

(1)         See "Underwriting" beginning on page 163 of this prospectus for a description of the compensation paid to underwriters.

          To the extent that the underwriters sell more than 30,000,000 shares of Class A common stock, the underwriters have the option to purchase up to an additional 4,500,000 shares from us at the initial public offering price less the underwriting discount.

                                      

          The underwriters expect to deliver the shares against payment in New York, New York on                          , 2017.

Goldman Sachs & Co. LLC   Morgan Stanley   Citigroup   Barclays

 

RBC Capital Markets   SunTrust Robinson Humphrey   Stifel

 

Canaccord Genuity   Needham & Company   Oppenheimer & Co.   Raymond James   William Blair

                                      

Prospectus dated                          , 2017.


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  Page

Prospectus Summary

  1

The Offering

  10

Summary Consolidated Financial Data

  13

Risk Factors

  16

Cautionary Note Regarding Forward-Looking Statements

  49

Use of Proceeds

  50

Dividend Policy

  50

Capitalization

  51

Dilution

  54

Selected Consolidated Financial Data

  57

Management's Discussion and Analysis of Financial Condition and Results of Operations

  61

Business

  94

Management

  120

Executive Compensation

  128

Related Person Transactions

  140

Principal Stockholders

  147

Description of Capital Stock

  148

Shares Eligible for Future Sale

  155

Material U.S. Federal Income and Estate Tax Considerations for Non-U.S. Holders of Class A Common Stock

  158

Underwriting

  163

Industry and Other Data

  169

Legal Matters

  169

Experts

  169

Where You Can Find More Information

  169

Index to Consolidated Financial Statements

  F-1



          No dealer, salesperson, or other person is authorized to give any information or to represent anything not contained in this prospectus or in any free writing prospectus that we file with the Securities and Exchange Commission. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. You must not rely on any unauthorized information or representations. This prospectus is an offer to sell only the shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date regardless of the time of delivery of this prospectus or of any sale of our Class A common stock.

          For investors outside the United States: Neither we nor the underwriters have done anything that would permit our initial public offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the shares of our Class A common stock and the distribution of this prospectus outside of the United States.


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PROSPECTUS SUMMARY

          This summary highlights information contained elsewhere in this prospectus. You should read the following summary together with the more detailed information appearing in this prospectus, including our consolidated financial statements and related notes, and the risk factors beginning on page 16, before deciding whether to purchase shares of our Class A common stock. Unless the context otherwise requires, we use the terms "Blue Apron Holdings," "Blue Apron," "our company," "we," "us," and "our" in this prospectus to refer to Blue Apron Holdings, Inc. and its subsidiaries.


BLUE APRON

          Blue Apron's mission is to make incredible home cooking accessible to everyone.

          We believe that sharing home-cooked meals with our families and loved ones is an important way to demonstrate our values and affection. It is at our kitchen tables, over a meal, where we often celebrate our milestones, acknowledge our setbacks, and appreciate the comfort of each other's company. Modern life has made this more difficult—many of us are too busy to grocery shop, lack the skills or confidence to cook, or cannot easily find the quality ingredients that make home cooking enjoyable.

          By creating unique cooking experiences built on original recipes, high-quality, pre-portioned ingredients, and engaging content, we make incredible home cooking accessible. Along the way, as we introduce new flavors, new ingredients, new techniques, and tried-and-true cooking fundamentals, our customers keep learning. That's why we named our company Blue Apron: chefs around the world wear blue aprons when learning to cook. To us, that apron symbolizes lifelong learning, a value that permeates everything we do.

          Our vision for the future is ambitious: to build a better food system. We are transforming the way that food is produced, distributed, and consumed. We believe a better food system will benefit not only consumers and stockholders, but also the planet, and we manage our business for the benefit of all three.

Overview

          Blue Apron was founded in 2012 premised on a simple desire—our founders wanted to cook at home with their families, but they found grocery shopping and menu planning burdensome, time consuming, and expensive. This problem inspired Blue Apron's first delivery: a box with three recipes—seared hanger steak, barbecue Cornish game hen, and lemongrass shrimp with soba noodles—and the pre-portioned ingredients needed to cook them. Since that initial delivery, we have scaled rapidly, developing our expertise and an ever-more ambitious vision. From inception through March 31, 2017, we have delivered over 159 million meals to households across the United States, which represents approximately 25 million paid orders.

          Our core product is the cooking experience we help our customers create. Central to these experiences are the original recipes we design and send along with fresh, seasonal ingredients directly to our customers. We offer our customers two flexible plans—our 2-Person Plan and our Family Plan. Our recipes are accompanied by printed and digital content, including how-to instructions and the stories of our suppliers and specialty ingredients. We also sell wine, which can be paired with our meals, and we sell kitchen tools and staples we use in our test kitchens where we create new recipes.

          Our customers often cook with us multiple times each week, and they trust us to craft delicious recipes and to select interesting, high-quality ingredients to feed their families and loved ones. Hailing from 48 states, our customers span ages, geographies, income brackets, and culinary expertise. They include recent college graduates, young couples, families, singles, and

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empty nesters. Our passionate, committed, and engaged community of home cooks tell us, through emails, phone calls, and social media, how much Blue Apron has changed their lives.

Our Business Model

          We have reimagined the traditional grocery business model and developed an integrated ecosystem that employs technology and expertise across many disciplines. Our supply-demand coordination activities—demand planning, recipe creation, recipe merchandising, and marketing—drive our end-to-end value chain. We gather and infer information about our customers' tastes, food preferences, and order behavior to forecast near-term and long-term demand. We also manage and influence demand, including through our content, proprietary software tools, and e-commerce experience. For example, our flexible recipe design process allows us to adjust recipes close to the time of delivery, enabling us to coordinate customer preferences with expected ingredient supply to help mitigate supply chain risks. Because our customers select recipes instead of specific ingredients, we can make adjustments while maintaining a consistent, high-quality customer experience. Our innovative direct-to-consumer business model enables us to:

    eliminate middlemen and work in a direct, coordinated manner with our suppliers to reduce costs so we can make our products available affordably and at scale;

    provide consumers with differentiated, specialty ingredients, many of which are not widely available and are exclusive to us;

    develop and implement proprietary technology across our fulfillment operations to effectively manage our frequently changing, high-throughput, perishable inventory; and

    design and optimize a cost-effective delivery network capable of reaching over 99% of the U.S. population.

          Our greatest strength is our highly collaborative and multidisciplinary team, which includes agricultural scientists, software and industrial engineers, data scientists, brand and direct marketers, quality and fulfillment associates, operations specialists, photographers, customer experience representatives, recipe writers, and world-class chefs. Our shared commitment to making home cooking accessible to everyone defines our work and focuses our efforts.

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Our Value Proposition

          The benefits of our innovative business model extend to multiple stakeholders—our customers, our stockholders, and the planet.

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          For descriptions of how we define and calculate Customers, Orders and Average Order Value, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Key Financial and Operating Metrics."

Selected Financial Results

          In 2014, 2015, and 2016, we generated $77.8 million, $340.8 million, and $795.4 million in net revenue, respectively, representing growth of 338% from 2014 to 2015 and growth of 133% from 2015 to 2016. In the three months ended March 31, 2016 and March 31, 2017, we generated $172.1 million and $244.8 million in net revenue, respectively, representing growth of 42%. In the years ended December 31, 2014, 2015, and 2016, we incurred net losses of $(30.8) million,

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$(47.0) million, and $(54.9) million, respectively, and in the three months ended March 31, 2016 and March 31, 2017, we generated net income of $3.0 million and incurred a net loss of $(52.2) million, respectively. In the years ended December 31, 2014, 2015, and 2016, our adjusted EBITDA was $(26.5) million, $(42.9) million, and $(43.6) million, respectively, and in the three months ended March 31, 2016 and March 31, 2017, our adjusted EBITDA was $5.0 million and $(46.3) million, respectively. In the years ended December 31, 2014, 2015, and 2016, our net cash from (used in) operating activities was $(16.9) million, $(26.4) million, and $(23.5) million, respectively, and in the three months ended March 31, 2016 and March 31, 2017, our net cash from (used in) operating activities was $6.0 million and $(19.0) million, respectively. Adjusted EBITDA is a non-GAAP financial measure. See "Selected Consolidated Financial Data—Non-GAAP Financial Measures" for information regarding our use of adjusted EBITDA and a reconciliation of adjusted EBITDA to net loss, the most directly comparable measure calculated in accordance with U.S. generally accepted accounting principles, or GAAP.

Our Products

          Meals.    We create original recipes that we develop every week. Our customers can choose the recipes they would like to receive from each week's menu, and we deliver those recipes to their doorsteps along with the pre-portioned ingredients required to cook them.

          Our customers can plan their orders to complement their individual tastes and lifestyles, making their order selections on our website or through our mobile application. We design our recipes to evoke a sense of discovery for our customers and to be both accessible to new home cooks and interesting for experienced ones. Our culinary team begins the recipe creation process with various seasonal ingredients grown by our farm suppliers. Our chefs apply to these raw ingredients their expertise and insights from our customer feedback and recipe ratings to create new offerings every week. Some recipes offer comfort foods with a twist while others involve less familiar culinary traditions. Every week our chefs go back to the kitchen, inventing original recipes to deliver variety to our customers.

          Wine.    For many people, a good glass of wine makes dinner better, so in September 2015 we launched Blue Apron Wine, our direct-to-consumer wine delivery service. We work directly with vineyards and acclaimed winemakers, including our in-house winemaker, to create custom Blue Apron wines that pair with our meals. Blue Apron Wine uses an integrated supply chain and proprietary sourcing relationships to deliver high-quality wines at compelling values.

          Market.    To better equip our customers to excel as home cooks, in November 2014 we launched Blue Apron Market, our e-commerce marketplace featuring a curated selection of cooking tools, utensils, and pantry items recommended by our culinary team. All of our recipe cards feature cooking tools and utensils from Blue Apron Market, creating an integrated brand experience for our community of home cooks and repeated merchandising opportunities for our company.

Our Market Opportunity

          Our market opportunity is broad, as we believe our customers choose to buy Blue Apron meals instead of shopping at grocery stores, ordering takeout, or eating at restaurants.

          In 2016, according to a Euromonitor study commissioned by us, aggregate sales in the U.S. grocery market were $781.5 billion, and aggregate sales in the global grocery market were more than eight times larger. For purposes of this study, the grocery market includes retail sales of fresh foods, packaged foods, hot drinks, soft drinks, and alcoholic drinks across grocery retailers, variety stores, warehouses clubs, mass merchandisers, and Internet retailers. According to this study, online sales in 2016 represented only $9.7 billion, or approximately 1.2%, of the overall grocery market in the United States, but are expected to grow at a compound annual growth rate

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(excluding the impact of price inflation), or CAGR, of 8.5% between 2017 and 2020, compared to the broader grocery market, which is expected to grow at a CAGR of 1.3% in the same period.

          We believe an opportunity exists to increase online grocery penetration to the level of penetration that exists in many other retail markets. Conventional grocery stores currently face many of the same challenges online as they do offline. They have high inventory counts, compete in the sale of commodity products, and confront considerable waste. In addition, conventional grocery stores generally have relatively low gross margin structures and are highly capital-intensive given their large retail footprints, making it difficult for them to invest in technology and innovation.

          In 2016, according to the Euromonitor study we commissioned, aggregate sales in the U.S. restaurant market were $543.1 billion and aggregate sales in the global restaurant market were almost five times larger. According to the Euromonitor study we commissioned, online sales in 2016 represented only $12.0 billion, or approximately 2.2%, of the overall U.S. restaurant market, but are expected to grow at a CAGR of 22.6% between 2017 and 2020, compared to the broader restaurant market, which is expected to grow at a CAGR of 1.6% in the same period.

          We believe that our business is poised to capture share from the grocery and restaurant markets and to benefit from shifts in consumer preferences, including a growing interest in cooking, prioritization of experiences over goods, and increasing interest by consumers in where their food comes from.

Our Strengths

          Our strengths as a company include the following:

    Powerful and emotional brand connection.  Many of our customers cook Blue Apron meals, drink Blue Apron wine, use tools from Blue Apron Market, and share these cooking experiences with their families and loved ones multiple times each week. We believe that we have developed a powerful and emotional connection with our customers through the frequency of these touchpoints and the experiential nature of our products. Our customers share their culinary triumphs through email, social media, blogs, and phone calls, telling us how Blue Apron has changed their lives.

    Superior products at compelling values.  We provide our customers with distinct cooking experiences centered on original recipes that our professional culinary team crafts each week, frequently around specialty ingredients cultivated or produced exclusively for us.

    Constant product innovation.  We invent new, differentiated products every week by designing new recipes, incorporating varied ingredients, and creating original content that tells compelling stories. Our constant product innovation process enables us to deliver the type of variety that our customers expect with the quality that they deserve.

    Attractive unit economics.  We benefit from favorable customer acquisition costs due to our strong customer relationships and engagement. Once we have acquired a new customer, we have historically had efficient payback periods on our marketing expenses as reflected by our Orders per Customer, Average Order Value, and a high rate of Repeat Orders, which we define as an Order from a Customer who has previously placed an Order in any period. As we have continued to scale our business, grow our direct supplier relationships, and introduce increased automation into our fulfillment centers, we have reduced our cost of goods sold as a percentage of net revenue. Our operating cash flow benefits from our favorable working capital dynamics.

    Hard-to-replicate value chain.  We have made substantial investments in direct supplier relationships, talent, infrastructure, technology, and data to build an interconnected value chain. We work with over 300 different suppliers and the majority of our food purchases are

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      from suppliers who have entered into exclusivity arrangements with us. These efforts enable us to deliver high-quality food at compelling values, utilizing ingredients that are often unique to us. We have built a diverse team and developed the processes to coordinate closely between such functions as professional chefs, technologists, and supply chain experts. Our value chain is supported by custom-built fulfillment and logistics operations to manage frequently changing, high-throughput, perishable inventory.

    Proprietary technology and data.  Technology and analytics underpin every part of our business. We have ongoing interactions with our customers through our website, recipe and delivery calendar tools, and mobile application, through which customers tell us, and from which we can infer, their tastes and preferences. We then combine this data and information with our proprietary software systems, using forecasting tools and data science to predict orders for specific recipes and to optimize our culinary, supply chain, and logistics operations.

    Expertise across diverse competencies.  Our business model requires competencies across a wide range of industries and expertise, including developing a lifestyle brand, building a direct-to-consumer Internet business, curating engaging content, managing and forecasting demand, sourcing ingredients of all types, inventing new recipes weekly, pioneering developments in agricultural science, and building an end-to-end value chain. We have scaled our organization by attracting top talent in all of our functional areas, and our business model relies on, and our culture encourages, collaboration across these teams.

Our Growth Strategy

          We have grown rapidly since our founding, but we believe we have only scratched the surface in terms of the role we can play in consumers' homes and around their dinner tables. Our growth strategy includes the following:

    Increase market penetration with our core product.  As a relatively young brand, we believe we have an opportunity to grow awareness and to attract new customers to our core product, and relatively modest increases in penetration represent large revenue growth opportunities for us.

    Expand our core product to fit more lifestyles.  We are developing product expansion initiatives to fit the lifestyles of a broader customer set in order to continue to expand our addressable market and drive greater satisfaction among current customers, thereby increasing their Average Order Value and rate of Repeat Orders.

    Broaden our product portfolio.  We are focused on opportunities to launch new products that further create an integrated brand experience.

    Develop new brands and new channels.  We believe we have a powerful brand that we can leverage to develop new brands and channels.

    International expansion.  We have built a trusted brand, proprietary technology, processes, and a diverse set of competencies that we believe would enable us over time to pursue attractive opportunities outside of the United States.

Risks Associated with Our Business

          You should consider carefully the risks described under the "Risk Factors" section beginning on page 16 and elsewhere in this prospectus. These risks, which include the following, could materially and adversely affect our business, financial condition, operating results, cash flow, and

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prospects, which could cause the trading price of our Class A common stock to decline and could result in a partial or total loss of your investment:

    We have a limited operating history and a novel business model, which make it difficult to evaluate our future prospects and the risks and challenges we may encounter.

    We have a history of losses, and we may be unable to achieve or sustain profitability.

    If we fail to cost-effectively acquire new customers or retain our existing customers, our business could be materially adversely affected.

    If we fail to manage future growth effectively, our business could be materially adversely affected.

    Food safety and food-borne illness incidents may materially adversely affect our business by exposing us to lawsuits or enforcement actions, increasing our operating costs, and reducing demand for our product offerings.

    Our business depends on a strong and trusted brand, and any failure to maintain, protect, or enhance our brand could materially adversely affect our business.

    Changes in consumer tastes and preferences or in consumer spending and other economic or financial market conditions could materially adversely affect our business.

    Changes in food and supply costs and availability could materially adversely affect our business.

    If we fail to successfully develop new product offerings and enhance our existing product offerings, our ability to attract new customers and retain existing customers, and our business, financial condition, and operating results, may be materially adversely affected.

    Our historical revenue growth has masked seasonal fluctuations in our operating results. In the future, our seasonal patterns may become more pronounced and seasonality could have a material impact on our results.

    Increased competition presents an ongoing threat to the success of our business.

    If we do not successfully build out and operate our fulfillment centers and logistics channels, including by expanding our use of automation, our business could be materially adversely affected.

    If we lose key management or fail to meet our growing need for qualified employees with specialized skills, our business, financial condition, and operating results could be materially adversely affected.

    Our tri-class capital structure has the effect of concentrating voting control with our president and chief executive officer, Matthew B. Salzberg, and the other holders of Class B common stock.

Our Corporate Structure

          Blue Apron, Inc. was incorporated in Delaware on December 5, 2011 under the name Petridish Media, Inc. and changed its name to Blue Apron, Inc. on August 29, 2012. Blue Apron Holdings, Inc., the issuer in this offering, was incorporated in Delaware on December 22, 2016 to enable Blue Apron, Inc. to implement a holding company organizational structure, effected by a merger conducted pursuant to Section 251(g) of the General Corporation Law of the State of Delaware, as described below. We refer to this transaction as our corporate reorganization.

          Immediately prior to our corporate reorganization, Blue Apron Holdings, Inc. was a direct, wholly-owned subsidiary of Blue Apron, Inc., and Blue Apron Merger Sub, Inc., a Delaware

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corporation which we refer to as Merger Sub, was a direct, wholly-owned subsidiary of Blue Apron Holdings, Inc. Both Blue Apron Holdings, Inc. and Merger Sub were organized for the sole purpose of implementing our corporate reorganization. On December 28, 2016, Merger Sub merged with and into Blue Apron, Inc., with Blue Apron, Inc. continuing as the surviving corporation. Each issued and outstanding share of common stock of Blue Apron, Inc. was converted into one share of common stock of Blue Apron Holdings, Inc. and each issued and outstanding share of preferred stock of Blue Apron, Inc. was converted into one share of preferred stock of Blue Apron Holdings, Inc. The separate corporate existence of Merger Sub ceased and all of the issued and outstanding shares of Blue Apron Holdings, Inc. owned by Blue Apron, Inc. were automatically canceled and retired. As a result of our corporate reorganization, each stockholder of Blue Apron, Inc. became a stockholder of Blue Apron Holdings, Inc., holding the same proportional equity interests and voting power as of immediately prior to our corporate reorganization, and Blue Apron, Inc. became a direct, wholly-owned subsidiary of Blue Apron Holdings, Inc. The certificate of incorporation and bylaws of Blue Apron Holdings, Inc. were amended and restated to be identical to those of Blue Apron, Inc. as of immediately prior to our corporate reorganization, and the initial directors and executive officers of Blue Apron Holdings, Inc. were the same individuals who were directors and executive officers of Blue Apron, Inc. as of immediately prior to our corporate reorganization. On December 28, 2016, immediately after the merger, Blue Apron, Inc. converted into Blue Apron, LLC, a Delaware limited liability company, which we refer to as Opco.

          In connection with our corporate reorganization, Blue Apron Holdings, Inc. assumed the Restated Blue Apron, Inc. 2012 Equity Incentive Plan, as previously amended, and then amended and restated the plan in its entirety. We refer to the Restated Blue Apron, Inc. 2012 Equity Incentive Plan, as so amended and restated, as the Blue Apron Holdings, Inc. 2012 Equity Incentive Plan, or the 2012 Equity Incentive Plan. Blue Apron Holdings, Inc. also assumed Blue Apron, Inc.'s obligations under the various investor agreements that had been entered into in connection with the Series D preferred stock financing of Blue Apron, Inc. in May 2015. The other liabilities of Blue Apron, Inc., including under its revolving credit facility, were not assumed by Blue Apron Holdings, Inc. in our corporate reorganization and therefore continue to be obligations of Opco, and the assets of Blue Apron, Inc. were not transferred to Blue Apron Holdings, Inc. and continue to be assets of Opco.

          In connection with our corporate reorganization, we also implemented a tri-class capital structure consisting of two classes of voting common stock, Class A common stock and Class B common stock, and one class of non-voting stock, Class C capital stock. To implement the tri-class capital structure, all then-outstanding shares of common stock, each then having one vote per share, were reclassified into shares of Class B common stock, having ten votes per share, and all then-outstanding securities convertible into or exercisable for common stock became convertible into or exercisable for Class B common stock. For a description of our tri-class capital structure, see "Description of Capital Stock—Class A, Class B and Class C Stock."

Our Corporate Information

          Our principal executive offices are located at 5 Crosby Street, New York, New York 10013, and our telephone number at that address is (347) 719-4312. Our website address is www.blueapron.com. Information contained on our website is not incorporated by reference into this prospectus, and you should not consider information contained on our website to be part of this prospectus or in deciding whether to purchase shares of our Class A common stock.

          "Blue Apron," our logo, and other trademarks or trade names of Blue Apron, LLC appearing in this prospectus are our property. This prospectus also contains trademarks and trade names of other companies, which are the property of their respective owners. Solely for convenience, trademarks and trade names referred to in this prospectus may appear without the ® or ™ symbols,

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but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensor to these trademarks and trade names.

Implications of Being an Emerging Growth Company

          We qualify as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As an emerging growth company, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies, including:

    reduced disclosure about our executive compensation arrangements;

    exemption from the requirements to hold non-binding advisory votes on executive compensation and golden parachute payments; and

    exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting.

          We may take advantage of these exemptions up until the last day of the fiscal year following the fifth anniversary of this offering or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company if we have more than $1.07 billion in annual revenue, we have more than $700 million in market value of our stock held by non-affiliates (and we have been a public company for at least 12 months and have filed one annual report on Form 10-K) or we issue more than $1 billion of non-convertible debt securities over a three-year period. We may choose to take advantage of some, but not all, of the available exemptions. We have taken advantage of certain reduced reporting obligations in this prospectus. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you hold stock.

          In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of this exemption and, therefore, while we are an emerging growth company we will not be subject to new or revised accounting standards at the same time that they become applicable to other public companies that are not emerging growth companies.

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THE OFFERING

Class A common stock offered

  30,000,000 shares

Class A common stock to be outstanding after this offering

 

30,042,687 shares

Class B common stock to be outstanding after this offering

 

159,206,766 shares

Class C capital stock to be outstanding after this offering

 

None

Total Class A common stock, Class B common stock, and Class C capital stock to be outstanding after this offering

 

189,249,453 shares

Underwriters' option to purchase additional shares of Class A common stock

 

4,500,000 shares

Use of proceeds

 

We estimate that our net proceeds from the sale of our Class A common stock in this offering will be approximately $292.7 million, assuming an initial public offering price of $10.50 per share, which is the midpoint of the estimated price range set forth on the cover page of this prospectus, and after deducting the estimated underwriting discount and estimated offering expenses payable by us.

 

The principal purposes of this offering are to create a public market for the Class A common stock, facilitate access to the public equity markets, increase our visibility in the marketplace and obtain additional capital.

 

We intend to use the net proceeds of this offering for working capital, capital expenditures, and general corporate purposes.

Voting rights

 

We have two classes of voting common stock, Class A common stock and Class B common stock, and one class of non-voting stock, Class C capital stock. Each share of Class A common stock is entitled to one vote and each share of Class B common stock is entitled to ten votes. Shares of Class C capital stock have no voting rights, except as otherwise required by law.

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Holders of Class A common stock and Class B common stock vote together as a single class on all matters (including the election of directors) submitted to a vote of stockholders, unless otherwise required by law. Upon the completion of this offering, the holders of the outstanding shares of Class B common stock will collectively hold approximately 98.1% of the voting power of our outstanding capital stock, and Matthew B. Salzberg, our president and chief executive officer, will hold approximately 29.2% of the voting power of our outstanding capital stock. As a result, the holders of the outstanding shares of Class B common stock will have the ability to control the outcome of matters submitted to our stockholders for approval, including the election of our directors and the approval of any change in control transaction.

Directed share program

 

At our request, the underwriters have reserved 5% of the shares of Class A common stock in this offering for sale to certain of our employees and their friends and family and certain of our suppliers and vendors at the initial public offering price. The number of shares of Class A common stock available for sale to the general public in the offering will be reduced to the extent these persons purchase the directed shares in the program. Any directed shares not so purchased will be offered by the underwriters to the general public on the same terms as the other shares offered hereby. See "Underwriting."

Dividend policy

 

We anticipate that we will retain all of our future earnings to finance the operation and expansion of our business and do not anticipate declaring or paying any cash dividends on our capital stock in the foreseeable future. See "Dividend Policy."

Risk factors

 

You should read the "Risk Factors" section beginning on page 16 and the other information included in this prospectus for a discussion of factors to consider before deciding to invest in shares of our Class A common stock.

New York Stock Exchange symbol

 

"APRN"



          The number of shares of Class A common stock, Class B common stock, and Class C capital stock to be outstanding after this offering is based on (1) 159,206,766 shares of Class B common stock outstanding as of May 31, 2017 (assuming the automatic conversion of all outstanding shares of preferred stock into an aggregate of 85,190,551 shares of Class B common stock and the automatic conversion of an aggregate principal amount of $64.6 million and all accrued and unpaid interest outstanding on our convertible promissory notes, or the convertible notes, into an aggregate of 6,688,761 shares of Class B common stock, assuming an initial public offering price of $10.50 per share (the midpoint of the estimated price range set forth on the cover page of this prospectus), upon the completion of this offering), (2) 42,687 shares of Class A common stock

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outstanding as of May 31, 2017 and (3) no shares of Class C capital stock outstanding as of May 31, 2017, and excludes:

    11,638,660 shares of Class B common stock issuable upon the exercise of options outstanding under the 2012 Equity Incentive Plan as of May 31, 2017, with a weighted-average exercise price of $6.99 per share;

    417,711 shares of Class B common stock reserved for issuance under the 2012 Equity Incentive Plan as of May 31, 2017; and

    25,000,000 shares of Class A common stock that will be reserved for issuance under the 2017 Equity Incentive Plan upon the closing of this offering.

          In addition, the number of shares of Class A common stock reserved for issuance under the 2017 Equity Incentive Plan upon the closing of this offering will be subject to automatic annual increases in accordance with the terms of such plan.

          Except as otherwise noted, all information in this prospectus assumes:

    the automatic conversion of all outstanding shares of preferred stock into an aggregate of 85,190,551 shares of Class B common stock upon the closing of this offering;

    the issuance of 6,688,761 shares of Class B common stock upon the automatic conversion of the convertible notes upon the closing of this offering, assuming an initial public offering price of $10.50 per share (the midpoint of the estimated price range set forth on the cover page of this prospectus);

    no exercise of the outstanding options described above; and

    no exercise by the underwriters of their option to purchase up to an additional 4,500,000 shares from us.



          All share information contained in this prospectus has been adjusted to reflect the following stock splits as if they had been in effect during all periods presented:

    On July 22, 2013, we effected a forward stock split pursuant to which (1) each then-outstanding share of common stock became ten shares of common stock and (2) the number of shares issuable upon conversion or exercise of all then-outstanding securities convertible into or exercisable for common stock was increased by a factor of ten and the exercise or conversion price therefor was reduced by a factor of ten.

    On February 11, 2015, we effected another forward stock split pursuant to which (1) each then-outstanding share of common stock became five shares of common stock and (2) the number of shares issuable upon conversion or exercise of all then-outstanding securities convertible into or exercisable for common stock was increased by a factor of five and the exercise or conversion price therefor was reduced by a factor of five.

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SUMMARY CONSOLIDATED FINANCIAL DATA

          The following table presents summary consolidated financial data for our business for the periods indicated. The summary consolidated statements of operations data presented below for the years ended December 31, 2014, 2015, and 2016 have been derived from our audited consolidated financial statements appearing elsewhere in this prospectus. The summary consolidated statements of operations data for the three months ended March 31, 2016 and 2017 and the consolidated balance sheet data as of March 31, 2017 have been derived from our unaudited consolidated financial statements for those periods included elsewhere in this prospectus, and except as described in the notes thereto, have been prepared on a basis consistent with our audited consolidated financial statements and, in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of such information for such periods. Our historical results are not necessarily indicative of the results to be expected in the future. You should read this summary consolidated financial data in conjunction with the sections entitled "Selected Consolidated Financial Data" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and related notes appearing elsewhere in this prospectus.

  Year Ended December 31,     Three Months Ended
March 31,
 
 

  2014     2015     2016     2016     2017    

    (in thousands, except share and per-share amounts)  

                      (unaudited)     (unaudited)  

Consolidated Statements of Operations Data:

                               

Net revenue

  $ 77,806   $ 340,803   $ 795,416   $ 172,098   $ 244,843  

Operating expenses:

                               

Cost of goods sold, excluding depreciation and amortization

    72,223     263,271     532,682     112,523     168,531  

Marketing

    13,960     51,362     144,141     25,413     60,605  

Product, technology, general, and administrative

    21,811     70,151     165,179     29,690     63,210  

Depreciation and amortization

    611     2,917     8,217     1,485     4,180  

Total operating expenses

    108,605     387,701     850,219     169,111     296,526  

Income (loss) from operations

    (30,799 )   (46,898 )   (54,803 )   2,987     (51,683 )

Interest income (expense) and other income (expense), net

    (4 )   (6 )   25     57     (470 )

Income (loss) before income taxes

    (30,803 )   (46,904 )   (54,778 )   3,044     (52,153 )

Provision for income taxes

        (61 )   (108 )   (27 )   (41 )

Net income (loss)

  $ (30,803 ) $ (46,965 ) $ (54,886 ) $ 3,017   $ (52,194 )

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  Year Ended December 31,     Three Months Ended
March 31,
 
 

  2014     2015     2016     2016     2017    

    (in thousands, except share and per-share amounts)  

                      (unaudited)     (unaudited)  

Net income (loss) per share attributable to Class B common and Class C capital stockholders:

                               

Basic

  $ (0.88 ) $ (0.92 ) $ (0.84 ) $   $ (0.78 )

Diluted

  $ (0.88 ) $ (0.92 ) $ (0.84 ) $   $ (0.78 )

Weighted-average shares used to compute net income (loss) per share attributable to Class B common and Class C capital stockholders:

                               

Basic

    34,841,852     51,137,406     65,425,609     61,973,247     67,090,001  

Diluted

    34,841,852     51,137,406     65,425,609     69,307,608     67,090,001  

Pro forma net income (loss) per share attributable to Class B common and Class C capital stockholders (unaudited)(1):

                               

Basic

              $ (0.36 )       $ (0.34 )

Diluted

              $ (0.36 )       $ (0.34 )

Pro forma weighted-average shares used to compute net income (loss) per share attributable to Class B common and Class C capital stockholders (unaudited)(1):

                               

Basic

                150,616,160           152,280,552  

Diluted

                150,616,160           152,280,552  

 

  Year Ended December 31,     Three Months
Ended
March 31,
 
 

  2014     2015     2016     2016     2017    

    (in thousands)  

Other Financial Data:

                               

Adjusted EBITDA(2)

  $ (26,523 ) $ (42,876 ) $ (43,621 ) $ 5,048   $ (46,265 )

Net cash from (used in) operating activities

  $ (16,859 ) $ (26,396 ) $ (23,545 ) $ 5,955   $ (19,039 )

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  As of March 31, 2017    

    (in thousands)
(unaudited)
 

 

Actual  

  Pro Forma(3)     Pro Forma
As Adjusted(4)
 
 

Consolidated Balance Sheet Data:

                   

Cash and cash equivalents

  $ 61,167   $ 61,167   $ 356,097  

Working capital(5)

    (84,826 )   (84,826 )   (87,078 )

Total assets

    322,465     322,465     615,143  

Total liabilities

    311,477     311,477     311,477  

Convertible preferred stock

    194,869          

Total stockholders' equity (deficit)

    (183,881 )   10,988     303,666  

(1)
Pro forma basic and diluted net income (loss) per share have been calculated assuming the automatic conversion of all outstanding shares of convertible preferred stock into 85,190,551 shares of Class B common stock.

(2)
See "Selected Consolidated Financial Data—Non-GAAP Financial Measures" for information regarding our use of non-GAAP financial measures and a reconciliation of such measures to their most directly comparable GAAP equivalents.

(3)
The pro forma column in the consolidated balance sheet data table above reflects the automatic conversion of all of our outstanding shares of convertible preferred stock into 85,190,551 shares of Class B common stock in connection with our initial public offering.

(4)
The pro forma as adjusted column in the consolidated balance sheet data table above also reflects our sale of 30,000,000 shares of Class A common stock in this offering at an assumed initial public offering price of $10.50 per share, which is the midpoint of the initial public offering price range reflected on the cover page of this prospectus, and after deducting the estimated underwriting discount and offering expenses payable by us. The pro forma as adjusted column does not give effect to the automatic conversion of the convertible notes upon the closing of this offering. A $1.00 increase or decrease in the assumed initial public offering price of $10.50 per share, which is the midpoint of the initial public offering price range reflected on the cover page of this prospectus, would increase or decrease each of cash and cash equivalents, total assets and total stockholders' equity (deficit) on a pro forma as adjusted basis by approximately $28.4 million, assuming that the number of shares offered, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discount and offering expenses payable by us.

(5)
We define working capital as current assets (excluding cash and cash equivalents) less current liabilities.

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RISK FACTORS

          Investing in our Class A common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below, together with all of the other information included in this prospectus, including our consolidated financial statements and the related notes appearing at the end of this prospectus, before deciding to invest in our Class A common stock. Our business, financial condition, operating results, cash flow and prospects could be materially and adversely affected by any of these risks or uncertainties. In that case, the trading price of our Class A common stock could decline, and you may lose all or part of your investment.

Risks Related to Our Business and Industry

We have a limited operating history and a novel business model, which make it difficult to evaluate our future prospects and the risks and challenges we may encounter.

          We have a limited operating history and a novel business model, which make it difficult to evaluate our future prospects and the risks and challenges we may encounter in seeking to execute on our strategies. These risks and difficulties include our ability to:

    forecast our revenues and plan our operating expenses;

    attract new customers and retain existing customers;

    manage growth in our personnel and operations;

    expand our product offerings;

    maintain and grow the value of our brand and reputation;

    scale our supply chain while avoiding material disruptions or adverse incidents in our operations;

    maintain relationships with our existing suppliers and secure relationships with new suppliers to supply quality ingredients for use in our product offerings;

    scale and adapt our supply chain, production, operations and expenses, including marketing expenses, in response to customer demand and seasonal trends;

    adapt to evolving trends in the ways consumers purchase, prepare and consume food, as well as in how consumers interact with technology;

    comply with laws and regulations applicable to our business, including food safety, employment and health and safety regulations; and

    hire, integrate, and retain talented employees with a broad and varied range of skills and expertise.

          If the demand for our products does not develop as we expect, or if we fail to address the needs of our customers or fail to maintain relationships with our suppliers, our business would be materially harmed. The cumulative effects of these factors or our inability to manage any of the risks and challenges identified above and elsewhere in this section could result in, among other things, large fluctuations and unpredictability in our quarterly and annual operating results, meaning that comparing our operating results on a period-to-period basis may not be meaningful and that we might fail to meet industry, financial analyst or investor expectations for any period. If we are unable to successfully address these risks and challenges, our business, financial condition and operating results would be materially adversely affected.

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We have a history of losses, and we may be unable to achieve or sustain profitability.

          We have experienced net losses in each year since our inception. In the years ended December 31, 2014, 2015 and 2016, we incurred net losses of $(30.8) million, $(47.0) million and $(54.9) million, respectively. In the three months ended March 31, 2016 and 2017, we generated net income of $3.0 million and incurred a net loss of $(52.2) million, respectively. We anticipate that our operating expenses and capital expenditures will increase substantially in the foreseeable future as we continue to invest to increase our customer base and supplier network, expand our marketing channels, invest in our distribution and fulfillment infrastructure, hire additional employees and enhance our technology and infrastructure capabilities. Our expansion efforts may prove more expensive than we anticipate, and we may not succeed in increasing our revenue and margins sufficiently to offset these higher expenses. We incur significant expenses in developing our technology, building out our fulfillment centers, obtaining and storing ingredients and other products, and marketing the products we offer. In addition, many of our expenses, including the costs associated with our existing and future fulfillment centers, are fixed. Accordingly, we may not be able to achieve or maintain profitability, and we may incur significant losses for the foreseeable future.

If we fail to cost-effectively acquire new customers or retain our existing customers, or if we fail to derive revenue from our existing customers consistent with our historical performance, our business could be materially adversely affected.

          Our success, and our ability to increase revenue and operate profitably, depends in part on our ability to cost-effectively acquire new customers, to retain existing customers, and to keep existing customers engaged so that they continue to purchase products from us. If we are unable to cost-effectively acquire new customers, retain our existing customers or keep existing customers engaged, our business, financial condition and operating results would be materially adversely affected. Further, if customers do not perceive our product offerings to be of sufficient value and quality, or if we fail to offer new and relevant product offerings, we may not be able to attract or retain customers or engage existing customers so that they continue to purchase products from us. Many of our new customers originate from referrals from existing customers, and therefore we must ensure that our existing customers remain loyal to us in order to continue receiving those referrals.

          Our new customers typically evaluate whether our product offerings fit their lifestyles, tastes and preferences before deciding whether to continue purchasing our product offerings and, if so, the frequency at which they make purchases. Our net revenue in any period is essentially a function of our ability to attract and retain customers and the frequency and size of the orders placed by those customers. While an increase in order frequency or size could potentially offset losses of customers and, similarly, an increase in the number of customers could potentially offset a reduction in the frequency or size of the orders placed by our customers, any inability by us to continue to derive net revenue from our existing customers consistent with our historical performance could materially adversely affect our business, financial condition and operating results.

          We spend significant amounts on advertising and other marketing activities, such as television, digital and social media, direct mail, radio and podcasts, and email, to acquire new customers, retain and engage existing customers, and promote our brand, and we expect our marketing expenses to continue to comprise a significant portion of our operating expenses. For 2014, 2015 and 2016, our marketing expenses were $14.0 million, $51.4 million and $144.1 million, respectively, representing approximately 17.9%, 15.1% and 18.1% of net revenue, respectively. For the three months ended March 31, 2016 and 2017, our marketing expenses were $25.4 million and $60.6 million, respectively, representing approximately 14.8% and 24.8% of net revenue, respectively. Despite our focus on marketing activities, we may fail to identify cost-efficient

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marketing opportunities as we scale our investments in marketing or fail to fully understand or estimate the conditions and behaviors that drive customer behavior. If any of our marketing activities prove less successful than anticipated in attracting new customers or retaining existing customers, we may not be able to recover our marketing spend, our cost to acquire new customers may increase, and our existing customers may reduce the frequency or size of their purchases from us. In addition, our third-party marketing partners may not provide adequate value for their services. Any of the foregoing events could materially adversely affect our business, financial condition and operating results.

If we fail to manage future growth effectively, our business could be materially adversely affected.

          We have grown rapidly since inception and anticipate further growth. For example, our net revenue increased from $77.8 million in 2014 to $340.8 million in 2015 and to $795.4 million in 2016, and from $172.1 million for the three months ended March 31, 2016 to $244.8 million for the three months ended March 31, 2017. The number of our full-time employees increased from 1,051 at December 31, 2014 to 2,997 at December 31, 2015, to 5,028 at December 31, 2016 and to 5,202 at March 31, 2017. This growth has placed significant demands on our management, financial, operational, technological and other resources. The anticipated growth and expansion of our business and our product offerings will place significant demands on our management and operations teams and require significant additional resources to meet our needs, which may not be available in a cost-effective manner or at all. We are also required to manage relationships with various suppliers and other third parties, and expend time and effort to integrate new suppliers into our fulfillment operations. If we do not effectively manage our growth, we may not be able to execute on our business plan, respond to competitive pressures, take advantage of market opportunities, satisfy customer requirements or maintain high-quality product offerings.

Food safety and food-borne illness incidents or advertising or product mislabeling may materially adversely affect our business by exposing us to lawsuits, product recalls or regulatory enforcement actions, increasing our operating costs and reducing demand for our product offerings.

          Selling food for human consumption involves inherent legal and other risks, and there is increasing governmental scrutiny of and public awareness regarding food safety. Unexpected side effects, illness, injury or death related to allergens, food-borne illnesses or other food safety incidents (including food tampering or contamination) caused by products we sell, or involving suppliers that supply us with ingredients and other products, could result in the discontinuance of sales of these products or our relationships with such suppliers, or otherwise result in increased operating costs or harm to our reputation. Shipment of adulterated products, even if inadvertent, can result in criminal or civil liability. Such incidents could also expose us to product liability, negligence or other lawsuits, including consumer class action lawsuits. Any claims brought against us may exceed or be outside the scope of our existing or future insurance policy coverage or limits. Any judgment against us that is in excess of our policy limits or not covered by our policies or not subject to insurance would have to be paid from our cash reserves, which would reduce our capital resources.

          The occurrence of food-borne illnesses or other food safety incidents could also adversely affect the price and availability of affected ingredients, resulting in higher costs, disruptions in supply and a reduction in our sales. Furthermore, any instances of food contamination, whether or not caused by our products, could subject us or our suppliers to a food recall pursuant to the Food Safety Modernization Act of the United States Food and Drug Administration, or FDA, and comparable state laws. Food recalls could result in significant losses due to their costs, the destruction of product inventory, lost sales due to the unavailability of the product for a period of

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time and potential loss of existing customers and a potential negative impact on our ability to attract new customers due to negative consumer experiences or as a result of an adverse impact on our brand and reputation.

          In addition, food companies have been subject to targeted, large-scale tampering as well as to opportunistic, individual product tampering, and we could be a target for product tampering. Forms of tampering could include the introduction of foreign material, chemical contaminants and pathological organisms into consumer products as well as product substitution. In the near future, FDA requirements will require companies like us to analyze, prepare and implement mitigation strategies specifically to address tampering designed to inflict widespread public health harm. If we do not adequately address the possibility, or any actual instance, of product tampering, we could face possible seizure or recall of our products and the imposition of civil or criminal sanctions, which could materially adversely affect our business, financial condition and operating results.

Our business depends on a strong and trusted brand, and any failure to maintain, protect or enhance our brand, including as a result of events outside our control, could materially adversely affect our business.

          We have developed a strong and trusted brand that has contributed significantly to the success of our business, and we believe our continued success depends on our ability to maintain and grow the value of the Blue Apron brand. Maintaining, promoting and positioning our brand and reputation will depend on, among other factors, the success of our food safety, quality assurance, marketing and merchandising efforts and our ability to provide a consistent, high-quality customer experience. Any negative publicity, regardless of its accuracy, could materially adversely affect our business. Brand value is based in large part on perceptions of subjective qualities, and any incident that erodes the loyalty of our customers or suppliers, including adverse publicity or a governmental investigation or litigation, could significantly reduce the value of our brand and significantly damage our business.

          We believe that our customers hold us and our products to a high food safety standard. Therefore, real or perceived quality or food safety concerns or failures to comply with applicable food regulations and requirements, whether or not ultimately based on fact and whether or not involving us (such as incidents involving our competitors), could cause negative publicity and lost confidence in our company, brand or products, which could in turn harm our reputation and sales, and could materially adversely affect our business, financial condition and operating results.

          In addition, in recent years, there has been a marked increase in the use of social media platforms and other forms of Internet-based communications that provide individuals with access to broad audiences, and the availability of information on social media platforms is virtually immediate, as can be its impact. Many social media platforms immediately publish the content their participants post, often without filters or checks on accuracy of the content posted. Furthermore, other Internet-based or traditional media outlets may in turn reference or republish such social media content to an even broader audience. Information concerning us, regardless of its accuracy, may be posted on such platforms at any time. Information posted may be adverse to our interests or may be inaccurate, each of which may materially harm our brand, reputation, performance, prospects and business, and such harm may be immediate and we may have little or no opportunity to respond or to seek redress or a correction.

          The value of our brand also depends on effective customer support to provide a high-quality customer experience, which requires significant personnel expense. If not managed properly, this expense could impact our profitability. Failure to manage or train our own or outsourced customer support representatives properly could compromise our ability to handle customer complaints effectively.

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Changes in consumer tastes and preferences or in consumer spending and other economic or financial market conditions could materially adversely affect our business.

          Our operating results may be materially adversely affected by changes in consumer tastes. Our success depends in part on our ability to anticipate the tastes, eating habits and lifestyle preferences of consumers and to offer products that appeal to consumer tastes and preferences. Consumer tastes and preferences may change from time to time and can be affected by a number of different trends and other factors that are beyond our control. For example, our sales could be materially adversely affected by changes in consumer demand in response to nutritional and dietary trends, dietary concerns regarding items such as calories, sodium, carbohydrates or fat, or concerns regarding food safety. Our competitors may react more efficiently and effectively to these changes than we can. We cannot provide any assurances regarding our ability to respond effectively to changes in consumer health perceptions or our ability to adapt our product offerings to trends in eating habits. If we fail to anticipate, identify or react to these changes and trends, or to introduce new and improved products on a timely basis, we may experience reduced demand for our products, which could materially adversely affect our business, financial condition and operating results.

          In addition, the business of selling food products over the Internet is dynamic and continues to evolve. The market segment for food delivery has grown significantly, and this growth may not continue. If customers cease to find value in this model or otherwise lose interest in our product offerings or our business model generally, we may not acquire new customers in numbers sufficient to grow our business or retain existing customers at rates consistent with our business model, and our business, financial condition and operating results could be materially adversely affected.

          Furthermore, preferences and overall economic conditions that impact consumer confidence and spending, including discretionary spending, could have a material impact on our business. Economic conditions affecting disposable consumer income such as employment levels, business conditions, changes in housing market conditions, the availability of credit, interest rates, tax rates, fuel and energy costs, the effect of natural disasters or acts of terrorism, and other matters could reduce consumer spending or cause consumers to shift their spending to lower-priced alternatives, each of which could materially adversely affect our business, financial condition and operating results.

Changes in food costs and availability could materially adversely affect our business.

          The success of our business depends in part on our ability to anticipate and react to changes in food and supply costs and availability. We are susceptible to increases in food costs as a result of factors beyond our control, such as general economic conditions, market changes, increased competition, general risk of inflation, exchange rate fluctuations, seasonal fluctuations, shortages or interruptions, weather conditions, changes in global climates, global demand, food safety concerns, generalized infectious diseases, changes in law or policy, declines in fertile or arable lands, product recalls and government regulations. In particular, food deflation could reduce the attractiveness of our product offerings relative to competing products and thus reduce our sales growth and overall sales, while food inflation, particularly periods of rapid inflation, could reduce our profitability as there may be a lag between the time of the price increase and the time at which we are able to increase the price of our product offerings. We generally do not have long-term supply contracts or guaranteed purchase commitments with our food suppliers, and we do not hedge our commodity risks. In limited circumstances, we may enter into strategic purchasing commitment contracts with certain suppliers, but many of these contracts are relatively short in duration and may provide only limited protection from price fluctuations, and the use of these arrangements may limit our ability to benefit from favorable price movements. As a result, we may not be able to anticipate, react to or mitigate against cost fluctuations which could materially adversely affect our business, financial condition and operating results.

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          Any increase in the prices of the ingredients most critical to our recipes, or scarcity of such ingredients, such as vegetables, poultry, beef, pork and seafood, would adversely affect our operating results. Alternatively, in the event of cost increases or decrease of availability with respect to one or more of our key ingredients, we may choose to temporarily suspend including such ingredients in our recipes, rather than paying the increased cost for the ingredients. Any such changes to our available recipes could materially adversely affect our business, financial condition and operating results.

If we fail to successfully develop new product offerings and enhance our existing product offerings, our ability to attract new customers and retain existing customers, and our business, financial condition and operating results, may be materially adversely affected.

          Our customers have a wide variety of options for purchasing food, including traditional and online grocery stores and restaurants, and consumer tastes and preferences may change from time to time. Our ability to attract new customers, retain existing customers, and increase customer engagement with us will depend in part on our ability to successfully create and introduce new product offerings and to improve upon and enhance our existing product offerings. As a result, we may introduce significant changes to our existing product offerings or develop and introduce new and unproven product offerings. If our new or enhanced product offerings are unsuccessful, including because they fail to generate sufficient revenue or operating profit to justify our investments in them, our business and operating results could be materially adversely affected. Furthermore, new customer demands, tastes or interests, superior competitive offerings or a deterioration in our product quality or our ability to bring new or enhanced product offerings to market quickly and efficiently could negatively affect the attractiveness of our products and the economics of our business and require us to make substantial changes to and additional investments in our product offerings or business model. In addition, we frequently experiment with and test different product offerings and marketing and pricing strategies. If these experiments and tests are unsuccessful, or if the product offerings and strategies we introduce based on the results of such experiments and tests do not perform as expected, our ability to attract new customers, retain existing customers and increase customer engagement may be adversely affected.

          Developing and launching new product offerings or enhancements to our existing product offerings involves significant risks and uncertainties, including risks related to the reception of such product offerings by our existing and potential future customers, increases in operational complexity, unanticipated delays or challenges in implementing such offerings or enhancements, increased strain on our operational and internal resources (including an impairment of our ability to accurately forecast demand and related supply) and negative publicity in the event such new or enhanced product offerings are perceived to be unsuccessful. We have scaled our business rapidly, and significant new initiatives have in the past resulted in, and in the future may result in, operational challenges affecting our business. In addition, developing and launching new product offerings and enhancements to our existing product offerings may involve significant upfront capital investments and such investments may not prove to be justified. Any of the foregoing risks and challenges could materially adversely affect our ability to attract and retain customers as well as our visibility into expected operating results, and could materially adversely affect our business, financial condition and operating results.

Our historical revenue growth has masked seasonal fluctuations in our operating results. As our growth rate moderates or seasonal patterns become more pronounced, seasonality could have a material impact on our results.

          Our business is seasonal in nature, which impacts the levels at which customers engage with our products and brand, and, as a result, the growth trends of our revenue and our expenses fluctuate from quarter to quarter. For example, we anticipate that the first quarter of each year will

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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. In addition, our marketing strategies, which may be informed by these seasonal trends, will impact our quarterly results of operations. See "Management's Discussion and Analysis of Financial Condition and Results of Operations." These trends may cause our cash requirements to vary from quarter to quarter depending on the variability in the volume and timing of sales. We believe that these seasonal trends have affected and will continue to affect our quarterly results. Our historical revenue growth has masked the impact of seasonality, but as our growth rate moderates or seasonal spending by our customers becomes more pronounced, seasonality could have a more significant impact on our operating results from period to period.

Increased competition presents an ongoing threat to the success of our business.

          We expect competition in food sales generally, and with companies providing food delivery in particular, to continue to increase. We compete with other food and meal-delivery companies, the supermarket industry, a wide array of food retailers (including natural and organic, specialty, conventional, mass, discount and other food retail formats), conventional supermarkets, other food retailers, and online supermarket retailers. We also compete with a wide array of casual dining and quick-service restaurants and other food service businesses in the restaurants industry, as well as a broad range of online wine retailers, wine specialty stores and retail liquor stores. In addition, we compete with food manufacturers, consumer packaged goods companies, providers of logistics services, and other food and ingredient producers. Any international expansion of our business will present additional challenges from competition unique to each new market, compounded by the fact that we currently do not have experience offering our products outside of the United States.

          We believe that our ability to compete depends upon many factors both within and beyond our control, including:

    the size and composition of our customer base;

    our reputation and brand strength relative to our competitors;

    consumer tastes and preferences;

    the flexibility and variety of our product offerings relative to our competitors;

    our selling and marketing efforts;

    the quality and price of products offered by us and our competitors;

    our ability to comply with, and manage the costs of complying with, laws and regulations applicable to our business;

    the convenience of the experience that we provide; and

    our ability to cost-effectively source, market and distribute the products we offer and to manage our operations.

          Some of our current competitors have, and potential competitors may have, longer operating histories, larger fulfillment infrastructures, greater technical capabilities, significantly greater financial, marketing and other resources and larger customer bases than we do. In addition, business combinations and consolidation in and across the industries in which we compete could further increase the competition we face and result in competitors with significantly greater resources and customer bases than us. Further, some of our other current or potential competitors may be smaller, less regulated, and have a greater ability to reposition their product offerings than companies that, like us, operate at a larger scale. These factors may allow our competitors to derive greater sales and profits from their existing customer base, acquire customers at lower costs,

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respond more quickly than we can to changes in consumer demand and tastes, or otherwise compete with us effectively, which may adversely affect our business, financial condition and operating results. These competitors may engage in more extensive research and development efforts, undertake more far-reaching marketing campaigns and adopt more aggressive pricing policies, which may allow them to build larger customer bases or generate additional sales more effectively than we do.

If we do not successfully build out and operate our fulfillment centers and logistics channels, including by expanding our use of automation, and manage our ongoing real property and operational needs, our business, financial condition and operating results could be materially adversely affected.

          If we do not successfully build out and operate our fulfillment centers, we may experience insufficient or excess fulfillment capacity, increased costs, impairment charges or other harm to our business. We have encountered in the past, and may encounter in the future, difficulty in hiring a sufficient number of employees to adequately staff our fulfillment centers, requiring us to use temporary workers through third parties at greater cost and with lower levels of performance. If we do not have sufficient fulfillment capacity or experience problems or delays in fulfilling orders, our customers may experience delays in receiving their meal deliveries, which could harm our reputation and our customer relationships and could materially adversely affect our business, financial condition and operating results. In addition, any disruption in, or the loss of operations at, one or more of our fulfillment centers, even on a short term basis, could delay or postpone production of our products, which could materially adversely affect our business, financial condition and operating results.

          We have designed and built our own fulfillment center infrastructure, including customizing third-party inventory and package handling software systems, which is tailored to meet the specific needs of our business. Furthermore, we are expanding the use of automated production equipment and processes in our existing fulfillment centers and are incorporating automated production equipment and processes into our new Linden, New Jersey fulfillment center that we are in the process of building out. As we continue to add capacity, capabilities and automated production equipment and processes to our fulfillment centers, our fulfillment operations will become increasingly complex and challenging. Any failure to hire, train or retain employees capable of operating our fulfillment centers could materially adversely affect our business, financial condition and operating results. We also may be unable to procure and implement automated production equipment and processes on a timely basis, and they may not operate as intended or achieve anticipated cost efficiencies. For example, suppliers could miss their equipment delivery schedules, new production lines and operations could improve less rapidly than expected, or not at all, the equipment or processes could require longer design time than anticipated or redesigning after installation, and new production technology may involve equipment and processes with which we are not fully experienced. Difficulties we experience in automating our fulfillment processes could impair our ability to reduce costs and could materially adversely affect our business, financial condition and operating results. In addition, any disruption in the operation of our fulfillment centers, including due to factors such as earthquakes, weather, fires, floods, power losses, telecommunications failures, acts of war or terrorism, human errors and similar events or disruptions, could materially adversely affect our business, financial condition and operating results.

          Assuming we continue to grow, we will need to continue to add additional fulfillment and storage capacity in order to meet customer demand. For example, we are in the process of building out a new fulfillment center in Linden, New Jersey, which we have recently begun utilizing, and have entered into a lease for another new fulfillment center in Fairfield, California, which is currently under construction. See "Business—Facilities." Upon completion of our new fulfillment centers in Linden, New Jersey and Fairfield, California, we anticipate that such fulfillment centers,

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together with our Arlington, Texas fulfillment center, will comprise our primary fulfillment operations for the foreseeable future. We are evaluating, and intend to continue to evaluate, our ongoing real property and operational needs, including as they relate to our Jersey City, New Jersey and Richmond, California facilities. If we do not successfully manage our ongoing real property and operational needs or if we redeploy these facilities for other uses or vacate these facilities, we may experience insufficient or excess fulfillment capacity, increased costs, impairment charges or other harm to our business, financial condition and operating results. In addition, we expect to incur higher capital expenditures in the future, primarily related to our new fulfillment centers. For a discussion of our projected future capital expenditures, see "Management's Discussion and Analysis of Financial Conditions and Results of Operations—Liquidity." The timing and amount of our projected capital expenditures is dependent upon a number of factors, including the actual and forecasted growth in our business, and may vary significantly from our estimates, and we cannot assure you that these and any other new fulfillment centers will be timely constructed, that we will effectively integrate new facilities into our existing fulfillment operations, that our fulfillment software systems will continue to meet our business needs, or that we will be able to execute our expansion plans or recruit qualified managerial and operational personnel necessary to support our expansion plans. The expansion of our fulfillment capacity will put pressure on our managerial, financial, operational, technological and other resources.

          If we are unable to expand our fulfillment operations and increase our fulfillment capacity or to effectively control expansion-related expenses, or if we grow faster than we anticipate, we may exceed our fulfillment center capacity sooner than we anticipate, we may experience problems fulfilling orders in a timely manner or our customers may experience delays in receiving their purchases, any of which could harm our reputation and our relationships with our customers. Many of the expenses and investments with respect to our fulfillment centers are fixed, and any expansion of such fulfillment centers will require additional investment of capital. We expect to incur higher capital expenditures in the future for our fulfillment center operations. We may incur such expenses or make such investments in advance of expected sales, and such expected sales may not occur.

Our ability to source quality ingredients and other products is critical to our business, and any disruption to our supply or supply chain could materially adversely affect our business.

          We depend on frequent deliveries of ingredients and other products from a variety of local, regional, national and international suppliers, and some of our suppliers may depend on a variety of other local, regional, national and international suppliers to fulfill the purchase orders we place with them. The availability of such ingredients and other products at competitive prices depends on many factors beyond our control, including the number and size of farms, ranches and vineyards that provide crops, livestock and raw materials for making wine that meet our quality and production standards.

          We rely on our suppliers, and their supply chains, to meet our quality and production standards and specifications and supply ingredients and other products in a timely and safe manner. We have developed and implemented a series of measures to ensure the safety and quality of our third party-supplied products, including using contract specifications, certificates of identity for some products or ingredients, sample testing by suppliers and sensory based testing. However, no safety and quality measures can eliminate the possibility that suppliers may provide us with defective or out-of-specification products against which regulators may take action or which may subject us to litigation or require a recall. Suppliers may provide us with food that is or may be unsafe, food that is below our quality standards or food that is improperly labeled. In addition to a negative customer experience, we could face possible seizure or recall of our products and the imposition of civil or criminal sanctions if we incorporate a defective or out-of-specification item into one of our deliveries.

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          Furthermore, there are many factors beyond our control which could cause shortages or interruptions in the supply of our ingredients and other products, including adverse weather, environmental factors, natural disasters, unanticipated demand, labor or distribution problems, changes in law or policy, food safety issues by our suppliers and their supply chains, and the financial health of our suppliers and their supply chains. Production of the agricultural products used in our business may also be materially adversely affected by drought, water scarcity, temperature extremes, scarcity of agricultural labor, changes in government agricultural programs or subsidies, import restrictions, scarcity of suitable agricultural land, crop conditions, crop or animal diseases or crop pests. Failure to take adequate steps to mitigate the likelihood or potential effect of such events, or to effectively manage such events if they occur, may materially adversely affect our business, financial condition and operating results, particularly in circumstances where an ingredient or product is sourced from a single supplier or location.

          In addition, unexpected delays in deliveries from suppliers that ship directly to our fulfillment centers or increases in transportation costs (including through increased fuel costs) could materially adversely affect our business, financial condition and operating results. Labor shortages or work stoppages in the transportation industry, long-term disruptions to the national transportation infrastructure, reduction in capacity and industry-specific regulations such as hours-of-service rules that lead to delays or interruptions of deliveries could also materially adversely affect our business, financial condition and operating results.

          We currently source certain of our ingredients from suppliers located outside of the United States. Any event causing a disruption or delay of imports from suppliers located outside of the United States, including weather, drought, crop-related diseases, the imposition of import or export restrictions, restrictions on the transfer of funds or increased tariffs, destination-based taxes, value-added taxes, quotas or increased regulatory requirements, could increase the cost or reduce the supply of our ingredients and the other materials required by our product offerings, which could materially adversely affect our business, financial condition and operating results. Furthermore, our suppliers' operations may be adversely affected by political and financial instability, resulting in the disruption of trade from exporting countries, restrictions on the transfer of funds or other trade disruptions, each of which could adversely affect our access or ability to source ingredients and other materials used in our product offerings on a timely or cost-effective basis.

The reliable and cost-effective storage, transport and delivery of ingredients and other products and our product offerings is critical to our business, and any interruptions, delays or failures could materially adversely affect our reputation, business, financial condition and operating results.

          We maintain arrangements with third parties to store ingredients and other products, to deliver ingredients and other products from our suppliers to our fulfillment centers and to transport ingredients and other products between our fulfillment centers. Interruptions or failures in these services could delay or prevent the delivery of these ingredients and other products to us and therefore adversely affect our ability to fulfill our customers' orders. These interruptions may be due to events that are beyond our control or the control of the third parties with whom we contract. In addition, we are in the process of expanding our internal capabilities with respect to storing ingredients and other products and transporting ingredients and other products both from our suppliers to our storage locations and fulfillment centers and between our storage locations and fulfillment centers. These expansion efforts may fail to meet our expectations and may not prove to be cost-effective or as operationally efficient as our current arrangements with third parties, each of which could materially adversely affect our business, financial condition and operating results.

          We also maintain arrangements with third-party transport carriers to deliver the food products we sell to our customers. Interruptions, delays or failures in these carrier services could prevent the timely or proper delivery of these products, which may result in significant product inventory losses

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given the highly perishable nature of our food products. These interruptions may be due to events that are beyond our control or the control of these carriers, including adverse weather and natural disasters. If we are not able to maintain acceptable pricing and other terms with these carriers or they experience performance problems or other difficulties, we may not be able to deliver orders in a timely manner and meet customer expectations, and our business and reputation could suffer.

          We rely on third-party transport carriers for the delivery of our wines to our customers. State and federal laws regulate the ability of transport carriers to transport wine, and carriers may be required to obtain licenses in order to deliver wine to our customers. Changes in our access to those carriers, including changes in prices or changes in our relationships with those carriers, changes in the laws allowing third-party transport of wine, or regulatory discipline against licenses held by those carriers, could materially adversely affect our wine business.

          Delivery of the products we sell to our customers could also be affected or interrupted by the merger, acquisition, insolvency, or government shut-down of the carriers we engage to make deliveries. If the products we sell are not delivered in proper condition or on a timely basis, our business and reputation could suffer.

Any failure to adequately store, maintain and deliver quality perishable foods could materially adversely affect our business, financial condition and operating results.

          Our ability to adequately store, maintain and deliver quality perishable foods is critical to our business. We store food products, which are highly perishable, in refrigerated fulfillment centers and ship them to our customers inside boxes that are insulated with thermal liners and frozen refrigerants to maintain appropriate temperatures in transit and use refrigerated third-party delivery trucks to support temperature control for shipments to certain locations. Keeping our food products at specific temperatures maintains freshness and enhances food safety. In the event of extended power outages, natural disasters or other catastrophic occurrences, failures of the refrigeration systems in our fulfillment centers or third-party delivery trucks, failure to use adequate packaging to maintain appropriate temperatures, or other circumstances both within and beyond our control, our inability to store highly perishable inventory at specific temperatures could result in significant product inventory losses as well as increased risk of food-borne illnesses and other food safety risks. Improper handling or storage of food by a customer—without any fault by us—could result in food-borne illnesses, which could nonetheless result in negative publicity and harm to our brand and reputation. The occurrence of any of these risks could materially adversely affect our business, financial condition and operating results.

If we lose key management or fail to meet our growing need for qualified employees with specialized skills, our business, financial condition and operating results could be materially adversely affected.

          Our continued success is dependent upon our ability to retain key management, particularly Matthew B. Salzberg, our president and chief executive officer, Matthew J. Wadiak, our chief operating officer, and Ilia M. Papas, our chief technology officer. Messrs. Salzberg, Wadiak and Papas and our other executive officers are employees "at will" and could elect to terminate their employment with us at any time. We do not maintain "key person" insurance on the lives of Messrs. Salzberg, Wadiak or Papas or other executive officers.

          Our continued success is also dependent upon our ability to attract and retain other qualified employees possessing a broad range of skills and expertise. We may need to offer higher compensation and other benefits in order to attract and retain key personnel in the future, and, to attract top talent, we must offer competitive compensation packages before we have the opportunity to validate the productivity and effectiveness of new employees. Additionally, we may not be able to hire new employees quickly enough to meet our needs. If we fail to meet our hiring needs or successfully integrate our new hires, our efficiency and ability to meet our forecasts and

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our employee morale, productivity and retention could all suffer. Any of these factors could materially adversely affect our business, financial condition and operating results.

We rely on our proprietary technology and data to forecast customer demand and to manage our supply chain, and any failure of this technology could materially adversely affect our business, financial condition and operating results.

          We rely on our proprietary technology and data to forecast demand and predict our customers' orders, determine the amounts of ingredients and other supply to purchase, and to optimize our in-bound and out-bound logistics for delivery and transport of our supply to our fulfillment centers and of our product offerings to customers. If this technology fails or produces inaccurate results at any step in this process—such as if the data we collect from customers is insufficient or incorrect, if we over or underestimate future demand, or if we fail to optimize delivery routes to our customers—we could experience increased food waste or shortages in key ingredients, the operational efficiency of our supply chain may suffer (including as a result of excess or shortage of fulfillment center capacity) or our customers may experience delays or failures in the delivery of our product offerings, for example by missing ingredients. Moreover, forecasts and predictions based on historical data, regardless of any historical patterns or the quality of the underlying data, are inherently uncertain, and unforeseen changes in consumer tastes or external events could result in material inaccuracy of our forecasts and predictions, which could result in disruptions in our business and our incurrence of significant costs and waste. Furthermore, any interruptions or delays in our ability to use or access our proprietary technology could lead to interruptions or delays in our supply chain. The occurrence of any of the foregoing risks could materially adversely affect our business, financial condition and operating results.

The termination of, or material changes to, our relationships with key suppliers or vendors could materially adversely affect our business, financial condition and operating results.

          We currently depend on a limited number of suppliers for some of our key ingredients. We strive to work with suppliers that engage in certain growing, raising or farming standards that we believe are superior to conventional practices and that can deliver products that are specific to our quality, food safety and production standards. Currently, there are a limited number of meat and seafood suppliers that are able to simultaneously meet our standards and volume requirements. As such, these suppliers could be difficult to replace if we were no longer able to rely on them. We also work with suppliers that grow specialty or unique ingredients for us. It can take a significant amount of time and resources to identify, develop and maintain relationships with certain suppliers, including suppliers that grow specialty or unique products for us. In the event of any disruptions to our relationships with our specialty crop growers, the ingredients they grow for us would be difficult to replace. The termination of, or material changes to, arrangements with key suppliers or vendors, disagreements with key suppliers or vendors as to payment or other terms, or the failure of a key supplier or vendor to meet its contractual obligations to us may require us to contract with alternative suppliers or vendors. For example, the failure of a key supplier to meet its obligations to us or otherwise deliver ingredients at the volumes that meet our quality and production standards could require us to make purchases from alternative suppliers or make changes to our product offerings. If we have to replace key suppliers or vendors, we may be subject to pricing or other terms less favorable than those we currently enjoy, and it may be difficult to identify and secure relationships with alternative suppliers or vendors that are able to meet our volume requirements, food safety and quality or other standards. If we cannot replace or engage suppliers or vendors who meet our specifications and standards in a short period of time, we could encounter increased expenses, shortages of ingredients and other items, disruptions or delays in customer shipments or other harm. In this event, we could experience a significant reduction in sales and incur higher costs for replacement goods and customer refunds during the shortage or thereafter, any of which could materially adversely affect our business, financial condition and operating results.

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          In our wine business, we rely on the use of third-party alternating proprietorship winemaking facilities. We rely on the host or owner of such facilities to ensure that the facilities are operational and maintained in good condition. Changes in our access to those facilities, including changes in prices or changes in our relationships with the third parties who own and operate those facilities, or regulatory discipline against licenses held by those third parties, or any failure by such third parties to maintain their facilities in good condition, may impair our ability to produce wines at such facilities and could materially adversely affect our wine business.

Higher labor costs due to statutory and regulatory changes could materially adversely affect our business, financial condition and operating results.

          Various federal and state labor laws govern our relationships with our employees and affect operating costs. These laws include employee classifications as exempt or non-exempt, minimum wage requirements, unemployment tax rates, workers' compensation rates, overtime, family leave, workplace health and safety standards, payroll taxes, citizenship requirements and other wage and benefit requirements for employees classified as non-exempt. As our employees are paid at rates set above, but related to, the applicable minimum wage, further increases in the minimum wage could increase our labor costs. Significant additional government regulations could materially adversely affect our business, financial condition and operating results.

Unionization activities may disrupt our operations and adversely affect our profitability.

          Although none of our employees is currently covered under a collective bargaining agreement, our employees may elect to be represented by labor unions in the future. If a significant number of our employees were to become unionized and collective bargaining agreement terms were to deviate significantly from our current compensation and benefits structure, our business, financial condition and operating results could be materially adversely affected. In addition, a labor dispute involving some or all of our employees may harm our reputation, disrupt our operations and reduce our revenues, and the resolution of labor disputes may increase our costs.

Disruptions in our data and information systems could harm our reputation and our ability to run our business.

          We rely extensively on data and information systems for our supply chain, order processing, fulfillment operations, financial reporting, human resources and various other operations, processes and transactions. Furthermore, a significant portion of the communications between, and storage of personal data of, our personnel, customers and suppliers depends on information technology. Our data and information systems are subject to damage or interruption from power outages, computer and telecommunications failures, computer viruses, security breaches (including breaches of our transaction processing or other systems that could result in the compromise of confidential customer data), catastrophic events, data breaches and usage errors by our employees or third-party service providers. Our data and information technology systems may also fail to perform as we anticipate, and we may encounter difficulties in adapting these systems to changing technologies or expanding them to meet the future needs of our business. If our systems are breached, damaged or cease to function properly, we may have to make significant investments to fix or replace them, suffer interruptions in our operations, incur liability to our customers and others or face costly litigation, and our reputation with our customers may be harmed. We also rely on third-parties for a majority of our data and information systems, including for third-party hosting and payment processing. If these facilities fail, or if they suffer a security breach or interruption or degradation of service, a significant amount of our data could be lost or compromised and our ability to operate our business and deliver our product offerings could be materially impaired. In addition, various third parties, such as our suppliers and payment processors, also rely heavily on

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information technology systems, and any failure of these systems could also cause loss of sales, transactional or other data and significant interruptions to our business. Any material interruption in the data and information technology systems we rely on, including the data or information technology systems of third-parties, could materially adversely affect our business, financial condition and operating results.

Our business is subject to data security risks, including security breaches.

          We, or our third-party vendors on our behalf, collect, process, store and transmit substantial amounts of information, including information about our customers. We take steps to protect the security and integrity of the information we collect, process, store or transmit, but there is no guarantee that inadvertent or unauthorized use or disclosure will not occur or that third parties will not gain unauthorized access to this information despite such efforts. Security breaches, computer malware, computer hacking attacks and other compromises of information security measures have become more prevalent in the business world and may occur on our systems or those of our vendors in the future. Large Internet companies and websites have from time to time disclosed sophisticated and targeted attacks on portions of their websites, and an increasing number have reported such attacks resulting in breaches of their information security. We and our third-party vendors are at risk of suffering from similar attacks and breaches. Although we take steps to maintain confidential and proprietary information on our information systems, these measures and technology may not adequately prevent security breaches and we rely on our third-party vendors to take appropriate measures to protect the security and integrity of the information on those information systems. Because techniques used to obtain unauthorized access to or to sabotage information systems change frequently and may not be known until launched against us, we may be unable to anticipate or prevent these attacks. In addition, a party who is able to illicitly obtain a customer's identification and password credentials may be able to access the customer's account and certain account data.

          Any actual or suspected security breach or other compromise of our security measures or those of our third-party vendors, whether as a result of hacking efforts, denial-of-service attacks, viruses, malicious software, break-ins, phishing attacks, social engineering or otherwise, could harm our reputation and business, damage our brand and make it harder to retain existing customers or acquire new ones, require us to expend significant capital and other resources to address the breach, and result in a violation of applicable laws, regulations or other legal obligations. Our insurance policies may not be adequate to reimburse us for direct losses caused by any such security breach or indirect losses due to resulting customer attrition.

          We rely on email and other messaging services to connect with our existing and potential customers. Our customers may be targeted by parties using fraudulent spoofing and phishing emails to misappropriate passwords, payment information or other personal information or to introduce viruses through Trojan horse programs or otherwise through our customers' computers, smartphones, tablets or other devices. Despite our efforts to mitigate the effectiveness of such malicious email campaigns through product improvements, spoofing and phishing may damage our brand and increase our costs. Any of these events or circumstances could materially adversely affect our business, financial condition and operating results.

We are subject to risks associated with payments to us from our customers and other third parties, including risks associated with fraud.

          Nearly all of our customers' payments are made by credit card or debit card. We currently rely exclusively on one third-party vendor to provide payment processing services, including the processing of payments from credit cards and debit cards, and our business would be disrupted if this vendor becomes unwilling or unable to provide these services to us and we are unable to find

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a suitable replacement on a timely basis. We are also subject to payment brand operating rules, payment card industry data security standards and certification requirements, which could change or be reinterpreted to make it more difficult or impossible for us to comply. If we fail to comply with these rules or requirements, we may be subject to fines and higher transaction fees and lose our ability to accept credit and debit card payments from customers, which would make our services less convenient and attractive to our customers and likely result in a substantial reduction in revenue. We may also incur losses as a result of claims that the customer did not authorize given purchases, fraud, erroneous transmissions and customers who have closed bank accounts or have insufficient funds in their accounts to satisfy payments owed to us.

          We are subject to, or voluntarily comply with, a number of other laws and regulations relating to the payments we accept from our customers and third parties, including with respect to money laundering, money transfers, privacy, and information security, and electronic fund transfers. These laws and regulations could change or be reinterpreted to make it difficult or impossible for us to comply. If we were found to be in violation of any of these applicable laws or regulations, we could be subject to civil or criminal penalties and higher transaction fees or lose our ability to accept credit and debit card payments from our customers, process electronic funds transfers or facilitate other types of online payments, which may make our services less convenient and less attractive to our customers and diminish the customer experience.

We may require additional capital to fund the expansion of our business, and our inability to obtain such capital could materially adversely affect our business, financial condition and operating results.

          To support our expanding business, we must have sufficient capital to continue to make significant investments. We cannot assure you that cash generated by our operations will be sufficient to allow us to fund such expansion. If cash flows from operations are not sufficient, we may need additional equity or debt financing to provide the funds required to expand our business. If such financing is not available on satisfactory terms or at all, we may be unable to expand our business or to develop new business at the rate desired, and our operating results may suffer. Debt financing increases expenses, may contain covenants that restrict the operation of our business, and must be repaid regardless of operating results. For example, covenants contained in our revolving credit agreement include limitations on our ability to pay dividends; create, incur or assume indebtedness or liens; consummate a merger, sale, disposition or similar transaction; engage in transaction with affiliates; and make investments. Equity financing, or debt financing that is convertible into equity, could result in dilution to our existing stockholders.

          Our inability to obtain adequate capital resources, whether in the form of equity or debt, to fund our business and growth strategies may require us to delay, scale back or eliminate some or all of our operations or the expansion of our business, which could materially adversely affect our business, financial condition and operating results.

Our results could be adversely affected by natural disasters, public health crises, political crises or other catastrophic events.

          Natural disasters, such as hurricanes, tornadoes, floods, earthquakes, droughts and other adverse weather and climate conditions; unforeseen public health crises, such as pandemics and epidemics; crop or animal diseases; crop pests; political crises, such as terrorist attacks, war and other political instability or uncertainty; or other catastrophic events, whether occurring in the United States or internationally, could disrupt our operations or the operations of one or more of our suppliers. In particular, these types of events could impact our supply chain from or to the impacted region given our dependency on frequent deliveries of ingredients and other products from a variety of local, regional and national suppliers. In addition, these types of events could

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adversely affect consumer spending in the impacted regions or our ability to deliver our products to our customers. To the extent any of these events occur, our business, financial condition and operating results could be materially and adversely affected.

We may be unsuccessful in making, integrating and maintaining acquisitions, joint ventures and strategic investments.

          We expect to evaluate and consider a wide array of potential strategic transactions, including acquisitions and dispositions of businesses, joint ventures, new technologies, services, products and other assets and strategic investments. Any of these transactions could be material to our business, financial condition and operating results. The process of integrating any acquired business or operating any joint venture may create unforeseen operating difficulties and expenditures. We may face difficulties in incorporating supply or distribution channels, technology and rights into our existing product offerings, and we may experience unanticipated expenses relating to these and other integration processes. We may also face known and unknown liabilities associated with a company we acquire or in which we invest.

          We may not realize the anticipated benefits of any or all of our acquisitions, joint ventures or investments in the time frame expected or at all. Valuations supporting our acquisitions and strategic investments could change rapidly. Following any such transaction, we could determine that such valuations have experienced impairments or other-than-temporary declines in fair value which could materially adversely affect our business, financial condition and operating results through the write-off of goodwill and other impairment charges.

Failure to establish and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and stock price.

          We are not currently required to comply with the rules of the SEC implementing Section 404 of the Sarbanes-Oxley Act and are therefore not required to make a formal assessment of the effectiveness of our internal control over financial reporting for that purpose. Upon becoming a public company, we will be required to comply with the SEC's rules implementing Sections 302 and 404 of the Sarbanes-Oxley Act, which will require management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of controls over financial reporting. Though we will be required to disclose changes made in our internal controls and procedures on a quarterly basis, we will not be required to make our first annual assessment of our internal control over financial reporting pursuant to Section 404 until the year following our first annual report required to be filed with the SEC. As an emerging growth company, our independent registered public accounting firm will not be required to formally attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 until the later of the year following our first annual report required to be filed with the SEC or the date we are no longer an emerging growth company. At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our controls are documented, designed or operating.

          To comply with the requirements of being a public company, we have undertaken various actions, and may need to take additional actions, such as implementing new internal controls and procedures and hiring additional accounting or internal audit staff. Testing and maintaining internal control can divert our management's attention from other matters that are important to the operation of our business. Additionally, when evaluating our internal control over financial reporting, we may identify material weaknesses that we may not be able to remediate in time to meet the applicable deadline imposed upon us for compliance with the requirements of Section 404. If we identify any material weaknesses in our internal control over financial reporting or are unable to comply with the requirements of Section 404 in a timely manner or assert that our

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internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting once we are no longer an emerging growth company, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our Class A common stock could be materially adversely affected, and we could become subject to investigations by the stock exchange on which our securities are listed, the SEC or other regulatory authorities, which could require additional financial and management resources.

Risks Related to Our Intellectual Property

We may be accused of infringing or violating the intellectual property rights of others.

          Other parties have claimed or may claim in the future that we infringe or violate their trademarks, patents, copyrights, domain names, publicity rights or other proprietary rights. Such claims, regardless of their merit, could result in litigation or other proceedings and could require us to expend significant financial resources and attention by our management and other personnel that otherwise would be focused on our business operations, result in injunctions against us that prevent us from using material intellectual property rights, or require us to pay damages to third parties. We may need to obtain licenses from third parties who allege that we have infringed or violated their rights, but such licenses may not be available on terms acceptable to us or at all. In addition, we may not be able to obtain or use on terms that are favorable to us, or at all, licenses or other rights with respect to intellectual property that we do not own, which would require us to develop alternative intellectual property. To the extent we rely on open source software, we may face claims from third parties that claim ownership of the open source software or derivative works that were developed using such software, or otherwise seek to enforce the terms of the applicable open source license. Similar claims might also be asserted regarding our in-house software. These risks have been amplified by the increase in intellectual property claims by third parties whose sole or primary business is to assert such claims. As our business expands, we are likely to be subject to intellectual property claims against us with increasing frequency, scope and magnitude. We may also be obligated to indemnify affiliates or other partners who are accused of violating third parties' intellectual property rights by virtue of those affiliates or partners' agreements with us, and this could increase our costs in defending such claims and our damages. Furthermore, such affiliates and partners may discontinue their relationship with us either as a result of injunctions or otherwise. The occurrence of these results could harm our brand or materially adversely affect our business, financial position and operating results.

We may not be able to adequately protect our intellectual property rights.

          We regard our customer lists and other consumer data, trademarks, service marks, domain names, copyrights, trade dress, trade secrets, know-how, proprietary technology and similar intellectual property as critical to our success. We cannot be sure that our intellectual property portfolio will not be infringed, violated or otherwise challenged by third parties, or that we will be successful in enforcing, defending or combatting any such infringements, violations, or challenges. We also cannot be sure that the law might not change in a way that would affect the nature or extent of our intellectual property ownership.

          We rely on registered and unregistered trademark, copyright and trade secret protection and other intellectual property protections under applicable law to protect these proprietary rights. While we have taken steps toward procuring trademark registration for several of our trademarks in key countries around the world and have entered or may enter into contracts to assist with the procurement and protection of our trademarks, we cannot assure you that our common law, applied-for, or registered trademarks are valid and enforceable, that our trademark registrations and applications or use of our trademarks will not be challenged by known or unknown third parties, or

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that any pending trademark applications will issue or provide us with any competitive advantage. Effective intellectual property protection may not be available to us or may be challenged by third parties. Furthermore, regulations governing domain names may not protect our trademarks and other proprietary rights that may be displayed on or in conjunction with our website and other marketing media. We may be unable to prevent third parties from acquiring or retaining domain names that are similar to, infringe upon, or diminish the value of our trademarks and other proprietary rights.

          We also rely on confidentiality, supplier, license and other agreements with our employees, suppliers and others. There is no guarantee that these third parties will comply with these agreements and refrain from misappropriating our proprietary rights. Misappropriation of our proprietary rights could materially adversely affect our business, financial position and operating results.

          We may not be able to discover or determine the extent of any unauthorized use or infringement or violation of our intellectual property or proprietary rights. Third parties also may take actions that diminish the value of our proprietary rights or our reputation. The protection of our intellectual property may require the expenditure of significant financial and managerial resources. Moreover, the steps we take to protect our intellectual property may not adequately protect our proprietary rights or prevent third parties from continuing to infringe or misappropriate these rights. We also cannot be certain that others will not independently develop or otherwise acquire equivalent or superior technology or other intellectual property rights, which could materially adversely affect our business, financial condition and operating results.

          Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to obtain and use information that we regard as proprietary. Litigation may be necessary in the future to enforce our intellectual property rights, to protect our trade secrets, to determine the validity and scope of the proprietary rights of others or to defend against claims of infringement or invalidity. Such litigation could be costly, time-consuming and distracting to management, result in a diversion of resources, the impairment or loss of portions of our intellectual property and could materially adversely affect our business, financial condition and operating results. Furthermore, our efforts to enforce our intellectual property rights may be met with defenses, counterclaims and countersuits attacking the validity and enforceability of our intellectual property rights. These steps may be inadequate to protect our intellectual property. We will not be able to protect our intellectual property if we are unable to enforce our rights or if we do not detect unauthorized use of our intellectual property. Despite our precautions, it may be possible for unauthorized third parties to use information that we regard as proprietary to create product offerings that compete with ours.

          We currently operate only in the United States. To the extent that we determine to expand our business internationally, we will encounter additional risks, including different, uncertain or more stringent laws relating to intellectual property rights and protection.

Risks Related to Government Regulation of Our Food Operations

We are subject to extensive governmental regulations, which require significant expenditures and ongoing compliance efforts.

          We are subject to extensive federal, state and local regulations. Our food processing facilities and products are subject to inspection by the U.S. Department of Agriculture, or USDA, the FDA and various state and local health and agricultural agencies. Applicable statutes and regulations governing food products include rules for labeling the content of specific types of foods, the nutritional value of that food and its serving size, as well as rules that protect against contamination of products by food-borne pathogens. Many jurisdictions also provide that food producers adhere to good manufacturing or production practices (the definitions of which may vary by jurisdiction)

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with respect to processing food. Recently, the food safety practices and procedures in the meat processing industry have been subject to more intense scrutiny and oversight by the USDA, and future outbreaks of diseases among cattle, poultry or pigs could lead to further governmental regulation of our business or of our suppliers. In addition, our fulfillment centers are subject to various federal, state and local laws and regulations relating to workplace safety and workplace health. Failure to comply with all applicable laws and regulations could subject us or our suppliers to civil remedies, including fines, injunctions, product recalls or seizures and criminal sanctions, any of which could have a material adverse effect on our business, financial condition and operating results. Furthermore, compliance with current or future laws or regulations could require us to make significant expenditures or otherwise materially adversely affect our business, financial condition and operating results.

Even inadvertent, non-negligent or unknowing violations of federal, state or local regulatory requirements could expose us to adverse governmental action and materially adversely affect our business, financial condition and operating results.

          The Federal Food, Drug, and Cosmetic Act, or FDCA, which governs the shipment of foods in interstate commerce, generally does not distinguish between intentional and unknowing, non-negligent violations of the law's requirements. Most state and local laws operate similarly. Consequently, almost any deviation from subjective or objective requirements of the FDCA or state or local law leaves us vulnerable to a variety of civil and criminal penalties. As a rapidly growing company, we often deploy new equipment, update our facilities or occupy new facilities. These activities require us to adjust our operations and regulatory compliance systems to meet rapidly changing conditions. Although we have adopted and implemented systems to prevent the production of unsafe or mislabeled products, any failure of those systems to prevent or anticipate an instance or category of deficiency could result in significant business interruption and financial losses to us. The occurrence of events that are difficult to prevent completely, such as the introduction of pathogenic organisms from the outside environment into our facilities, also may result in the failure of our products to meet legal standards. Under these conditions we could be exposed to civil and criminal regulatory action.

          In some instances we may be responsible or held liable for the activities and compliance of our third-party vendors and suppliers, despite limited visibility into their operations. Although we monitor and carefully select our third-party vendors and suppliers, they may fail to adhere to regulatory standards, or our quality standards or labor and employment practices, and we may fail to identify deficiencies or violations on a timely basis or at all. In addition, recent legislation in California called the Transparency in Supply Chains Act of 2010 requires us to audit our suppliers with respect to certain risks related to slavery and human trafficking and to mitigate any such risks in our operations, and any failure to disclose issues or other non-compliance could subject us to action by the California Attorney General.

          We cannot assure you that we will always be in full compliance with all applicable laws and regulations or that we will be able to comply with any future laws and regulations. Failure to comply with these laws and regulations could materially adversely affect our business, financial condition and operating results.

Changes to law, regulation or policy applicable to foods could leave us vulnerable to adverse governmental action and materially adversely affect our business, financial condition and operating results.

          The food industry is highly regulated. We invest significant resources in our efforts to comply with the local, state and federal food regulatory regimes under which we operate. However, we cannot assure you that existing laws and regulations will not be revised or that new, more restrictive

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laws and regulations will not be adopted or become applicable to us or the products we distribute. We also operate under a business model that is relatively new to the food industry, in which we rapidly source, process, store and package meal ingredients—including fresh fruits and vegetables, and poultry, beef and seafood, each of which may be subject to a unique regulatory regime—and ship them directly to consumers in the course of e-commerce transactions. Our business model leaves our business particularly susceptible to changes in and reinterpretations of compliance policies of the FDA and other government agencies, and some of our competitors may interpret the applicability of the same or similar laws and regulations to their businesses differently than we interpret them. Furthermore, certain recently promulgated FDA regulations, such as the requirements regarding food defense, are not yet in effect, and it is unclear how the FDA may interpret and enforce many other recent regulations, presenting considerable future uncertainty. The recent U.S. presidential election, bringing with it a change in senior federal government officials and policy priorities, creates additional uncertainty.

          Our existing compliance structures may be insufficient to address the changing regulatory environment and changing expectations from government regulators regarding our business model. This may result in gaps in compliance coverage or the omission of necessary new compliance activity. Furthermore, the expansion of our business internationally would require us to comply with foreign laws and regulations, including those related to food safety, employment and health and safety, each of which may be materially different than the laws and regulations applicable to us in the United States. In addition, and regardless of our prospective compliance status, our business, financial condition and operating results could be materially adversely affected by future changes in applicable law and regulations.

          Furthermore, we recently began conducting livestock and poultry operations, which are subject to a variety of federal, state and local legal and regulatory requirements, including regarding the discharge of materials and pollutants and animal welfare.

Our facilities and operations are governed by numerous and sometimes conflicting registration, licensing and reporting requirements.

          Our fulfillment centers are required to be registered with the federal government and, depending on their location, are also subject to the authority of state and local governments. In some cases, disparate registration and licensing requirements lead to legal uncertainty, inconsistent government classifications of our operations and unpredictable governmental actions. Regulators may also change prior interpretations of governing licensing and registration requirements. Our relatively new business model leaves us particularly susceptible to these factors. If we misapply or misidentify licensing or registration requirements, fail to maintain our registrations or licenses or otherwise violate applicable requirements, our products may be subject to seizure or recall and our operations subject to injunction. This could materially adversely affect our business, financial condition and operating results.

          Similarly, we are required to submit reports to the FDA's Reportable Food Registry in the event that we determine a product may present a serious danger to consumers. The reporting requirement may be triggered based on a subjective assessment of incomplete and changing facts. Our inventory moves very rapidly throughout our supply and distribution chain. Should we fail, in a timely fashion, to identify and report a potentially reportable event which, subsequently, is determined to have been reportable, government authorities may institute civil or criminal enforcement actions against us, and may result in civil litigation against us or criminal charges against certain of our employees. This could materially adversely affect our business, financial condition and operating results.

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Good manufacturing process standards and food safety compliance metrics are complex, highly subjective and selectively enforced.

          The federal regulatory scheme governing food products establishes guideposts and objectives for complying with legal requirements rather than providing clear direction on when particular standards apply or how they must be met. For example, new FDA regulations referred to as Hazard Analysis and Risk-Based Preventive Controls for Human Food require that we evaluate food safety hazards inherent to our specific products and operations. We must then implement "preventive controls" in cases where we determine that qualified food safety personnel would recommend that we do so. Determining what constitutes a food safety hazard, or what a qualified food safety expert might recommend to prevent such a hazard, requires evaluating a variety of situational factors. This analysis is necessarily subjective, and a government regulator may find our analysis or conclusions inadequate. Similarly, the standard of "good manufacturing practice" to which we are held in our food production operations relies on a hypothesis regarding what individuals and organizations qualified in food manufacturing and food safety would find to be appropriate practices in the context of our operations. Our business model, and the scale and nature of our operations, have relatively few meaningful comparisons among traditional food companies. Government regulators may disagree with our analyses and decisions regarding the good manufacturing practices appropriate for our operations.

          Decisions made or processes adopted by us in producing our meals are subject to after-the-fact review by government authorities, sometimes years after the fact. Similarly, governmental agencies and personnel within those agencies may alter, clarify or even reverse previous interpretations of compliance requirements and the circumstances under which they will institute formal enforcement activity. It is not always possible accurately to predict regulators' responses to actual or alleged food-production deficiencies due to the large degree of discretion afforded regulators. We may be vulnerable to civil or criminal enforcement action by government regulators if they disagree with our analyses, conclusions, actions or practices. This could materially adversely affect our business, financial condition and operating results.

Packaging, labeling and advertising requirements are subject to varied interpretation and selective enforcement.

          We operate under a novel business model in which we source, process, store and package meal ingredients and ship them directly to consumers. Most FDA requirements for mandatory food labeling are decades old and were adopted prior to the advent of large-scale, direct-to-consumer food sales and e-commerce platforms. Consequently, we, like our competitors, must make judgments regarding how best to comply with labeling and packaging regulations and industry practices not designed with our specific business model in mind. Government regulators may disagree with these judgments, leaving us open to civil or criminal enforcement action. This could materially adversely affect our business, financial condition and operating results.

          We are subject to detailed and complex requirements for how our products may be labeled and advertised, which may also be supplemented by guidance from governmental agencies. Generally speaking, these requirements divide information into mandatory information that we must present to consumers and voluntary information that we may present to consumers. Packaging, labeling, disclosure and advertising regulations may describe what mandatory information must be provided to consumers, where and how that information is to be displayed physically on our materials or elsewhere, the terms, words or phrases in which it must be disclosed, and the penalties for non-compliance.

          Voluntary statements made by us to our customers, whether on our packages, websites, in print, in radio, on television or in package inserts, can be subject to FDA regulation, Federal Trade

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Commission, or FTC, regulation, USDA regulation, state and local regulation, or any combination of the foregoing. These statements may be subject to specific requirements, subjective regulatory evaluation, or both. FDA, FTC, USDA and state- and local-level regulations and guidance can be confusing and subject to conflicting interpretations. Guidelines, standards and market practice for, and consumers' understandings of, certain types of voluntary statements, such as those characterizing the nutritional and other attributes of food products, continue to evolve rapidly, and regulators may attempt to impose civil or criminal penalties against us if they disagree with our approach to using voluntary statements. Furthermore, in recent years the FDA has increased enforcement of its regulations with respect to nutritional, health and other claims related to food products, and plaintiffs have commenced legal actions against a number of companies that market food products positioned as "natural" or "healthy," asserting false, misleading and deceptive advertising and labeling claims, including claims related to such food being "all natural" or that they lack any genetically modified ingredients. Should we become subject to similar claims or actions, consumers may avoid purchasing products from us or seek alternatives, even if the basis for the claim is unfounded, and the cost of defending against any such claims could be significant. The occurrence of any of the foregoing risks could materially adversely affect our business, financial condition and operating results.

Risks Related to Government Regulation of our Wine Business

If we do not comply with the specialized regulations and laws that regulate the alcoholic beverage industry, our business could be materially adversely affected.

          Alcoholic beverages are highly regulated at both the federal and state levels. Regulated areas include production, importation, product labeling, taxes, marketing, pricing, delivery, ownership restrictions, prohibitions on sales to minors, and relationships among alcoholic beverage producers, wholesalers and retailers. We cannot assure you that we will always be in full compliance with all applicable regulations or laws, that we will be able to comply with any future regulations and laws, that we will not incur material costs or liabilities in connection with compliance with applicable regulatory and legal requirements, or that such regulations and laws will not materially adversely affect our wine business.

          Licenses issued by state and federal alcoholic beverage regulatory agencies are required in order to produce, sell and ship wine. We have state and federal licenses, and must remain in compliance with state and federal laws in order to keep our licenses in good standing. Compliance failures can result in fines, license suspension or license revocation. In some cases, compliance failures can also result in cease and desist orders, injunctive proceedings or other criminal or civil penalties. If our licenses do not remain in good standing, our wine business could be materially adversely affected.

          Our wine business relies substantially on state laws that authorize the shipping of wine by out-of-state producers directly to in-state consumers. Those laws are relatively new in many states, and it is common for the laws to be modified. Adverse changes to laws allowing a producer to ship wine to consumers across state lines could materially adversely affect our wine business.

Other Risks Related to Government Regulation

Government regulation of the Internet, e-commerce and other aspects of our business is evolving, and we may experience unfavorable changes in or failure to comply with existing or future regulations and laws.

          We are subject to a number of regulations and laws that apply generally to businesses, as well as regulations and laws specifically governing the Internet and e-commerce and the marketing, sale and delivery of goods and services over the Internet. Existing and future regulations and laws

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may impede the growth and availability of the Internet and online services and may limit our ability to grow our business. These laws and regulations, which continue to evolve, cover taxation, tariffs, privacy and data protection, data security, pricing, content, copyrights, distribution, mobile and other communications, advertising practices, electronic contracts, sales procedures, automatic subscription renewals, credit card processing procedures, consumer protections, the provision of online payment services, unencumbered Internet access to our services, the design and operation of websites, and the characteristics and quality of product offerings that are offered online. We cannot guarantee that we have been or will be fully compliant in every jurisdiction, as it is not entirely clear how existing laws and regulations governing issues such as property ownership, sales and other taxes, consumer protection, libel and personal privacy apply or will be enforced with respect to the Internet and e-commerce, as many of these laws were adopted prior to the advent of the Internet and e-commerce and do not contemplate or address the unique issues they raise. Moreover, as e-commerce continues to evolve, increasing regulation and enforcement efforts by federal and state agencies and the prospects for private litigation claims related to our data collection, privacy policies or other e-commerce practices become more likely. In addition, the adoption of any laws or regulations, or the imposition of other legal requirements, that adversely affect our ability to market, sell, and deliver our products could decrease our ability to offer, or customer demand for, our offerings, resulting in lower revenue, and existing or future laws or regulations could impair our ability to expand our product offerings, which could also result in lower revenue and make us more vulnerable to increased competition. Future regulations, or changes in laws and regulations or their existing interpretations or applications, could also require us to change our business practices, raise compliance costs or other costs of doing business and materially adversely affect our business, financial condition and operating results.

Failure to comply with privacy-related obligations, including federal and state privacy laws and regulations and other legal obligations, or the expansion of current or the enactment of new privacy-related obligations could materially adversely affect our business.

          A variety of federal and state laws and regulations govern the collection, use, retention, sharing, transfer and security of customer data. We also may choose to comply with, or may be required to comply with, self-regulatory obligations or other industry standards with respect to our collection, use, retention, sharing or security of customer data.

          We strive to comply with all applicable laws, regulations, self-regulatory requirements, policies and legal obligations relating to privacy, data usage, and data protection. It is possible, however, that these laws, regulations and other obligations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and which may conflict with other rules or requirements or our practices. We cannot guarantee that our practices have complied, comply, or will comply fully with all such laws, regulations, requirements and obligations.

          We have posted our privacy policy which describes our practice related to the collection, use and disclosure of customer data on our website and in our mobile application. Any failure, or perceived failure, by us to comply with our posted privacy policy or with any federal or state laws, regulations, self-regulatory requirements, industry standards, or other legal obligations could result in claims, proceedings or actions against us by governmental entities, customers or others, or other liabilities, or could result in a loss of customers, any of which could materially adversely affect our business, financial condition and operating results. In addition, a failure or perceived failure to comply with industry standards or with our own privacy policy and practices could result in a loss of customers and could materially adversely affect our business, financial condition and operating results.

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          Additionally, existing privacy-related laws, regulations, self-regulatory obligations and other legal obligations are evolving and are subject to potentially differing interpretations. Various federal and state legislative and regulatory bodies may expand current laws or enact new laws regarding privacy matters, and courts may interpret existing privacy-related laws and regulations in new or different manners. In addition, as we expand our business internationally we may be subject to non-U.S. privacy, data protection, consumer protection and other laws and regulations, which in some cases are more restrictive than those in the United States. For example, the European Union traditionally has imposed stricter obligations under such laws than the United States. Consequently, the expansion of our operations internationally may require changes to the ways we collect and use consumer information.

          Changes in privacy-related laws, regulations, self-regulatory obligations and other legal obligations, or changes in industry standards or consumer sentiment, could require us to incur substantial costs or to change our business practices, including changing, limiting or ceasing altogether the collection, use, sharing, or transfer of data relating to consumers. Any of these effects could materially adversely affect our business, financial condition and operating results.

If government regulations relating to the Internet or other areas of our business change, we may need to alter the manner in which we conduct our business, or incur greater operating expenses, which could materially adversely affect our business.

          The adoption or modification of laws or regulations relating to the Internet or other areas of our business could limit or otherwise adversely affect the manner in which we currently conduct our business. In addition, the continued growth and development of the market for e-commerce may lead to more stringent consumer protection laws, which may impose additional burdens on us. If we are required to comply with new regulations or legislation or new interpretations of existing regulations or legislation, this compliance could cause us to incur additional expenses or alter our business model, which could materially adversely affect our business, financial condition and operating results.

Our failure to collect state or local sales, use or other similar taxes could result in substantial tax liabilities, including for past sales, as well as penalties and interest, and our business could be materially adversely affected.

          We do not collect state or local sales, use or other similar taxes in any jurisdictions in which we do not have a physical presence, in reliance on court decisions or applicable exemptions that restrict or preclude the imposition of obligations to collect state and local sales, use and other similar taxes with respect to online sales of our products. In addition, we do not collect state or local sales, use or other similar taxes in certain jurisdictions in which we do have a physical presence in reliance on applicable exemptions. However, an increasing number of states have considered or adopted laws or administrative practices that attempt to impose obligations on remote sellers and online marketplaces to collect taxes on their behalf, and our reliance on such case law and exemptions in certain jurisdictions could be challenged. A successful assertion by one or more states requiring us to collect taxes where we do not do so could result in substantial tax liabilities, including for past sales as well as penalties and interest, and could materially adversely affect our business, financial condition and operating results.

Changes in tax treatment of companies engaged in e-commerce could materially adversely affect the commercial use of our sites and our business, financial condition and operating results.

          Due to the global nature of the Internet, it is possible that various states or, if we expand internationally, foreign countries, might attempt to impose additional or new regulation on our

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business or levy additional or new sales, income or other taxes relating to our activities. Tax authorities at the international, federal, state and local levels are currently reviewing the appropriate treatment of companies engaged in e-commerce. New or revised international, federal, state or local tax regulations may subject us or our customers to additional sales, income and other taxes. For example, Congress is considering various approaches to legislation that would require companies engaged in e-commerce to collect sales tax taxes on Internet revenue. We cannot predict the effect of current attempts to impose sales, income or other taxes on e-commerce. New or revised taxes and, in particular, sales taxes, value-added taxes and similar taxes would likely increase the cost of doing business online and decrease the attractiveness of selling products over the Internet. New taxes could also create significant increases in internal costs necessary to capture data and collect and remit taxes. Any of these events could materially adversely affect our business, financial condition and operating results.

Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations which could subject our business to higher tax liability.

          We may be limited in the portion of net operating loss carryforwards that we can use in the future to offset taxable income for U.S. federal and state income tax purposes. As of December 31, 2015 and 2016, we had U.S. federal net operating loss carryforwards of $57.0 million and $62.9 million, respectively, and state net operating loss carryforwards of $35.8 million and $42.0 million, respectively. In general, Section 382 of the Internal Revenue Code of 1986, as amended, or the Code, limits the ability of a company that undergoes an "ownership change" (generally defined as a greater than 50-percentage-point cumulative change (by value) in the equity ownership of certain stockholders over a rolling three-year period) to utilize our net operating loss carryforwards and tax credit carry forwards and certain built-in losses recognized in years after the ownership change. Future changes in our stock ownership, some of which may be outside of our control, could result in an ownership change under Section 382 of the Code. Furthermore, Section 383 of the Code generally limits the amount of tax liability in any post-ownership change year that can be reduced by pre-ownership change tax credit carryforwards. If we were to undergo an "ownership change," it could materially limit our ability to utilize our net operating loss carryforwards and other deferred tax assets. In addition, our federal and state net operating loss carryforwards will each expire at various dates beginning in 2033, if not utilized. Our net operating loss carryforwards may expire unutilized or underutilized, which could prevent us from offsetting future taxable income.

Risks Related to Our Class A Common Stock and this Offering

An active trading market for our Class A common stock may not develop, and you may not be able to resell your shares of our Class A common stock at or above the initial offering price.

          Before this offering, there was no public trading market for our Class A common stock. If a market for our Class A common stock does not develop or is not sustained, it may be difficult for you to sell your shares of Class A common stock at an attractive price, at the time that you would like to sell them, or at all. The initial public offering price of our Class A common stock will be determined through negotiations between us and the underwriters. This initial public offering price may not be indicative of the market price of our Class A common stock after the offering. We cannot predict the prices at which our Class A common stock will trade. It is possible that in one or more future periods our results of operations may be below the expectations of public market analysts and investors and, as a result of these and other factors, the price of our Class A common stock may fall.

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The market price of our Class A common stock may be volatile, which could result in substantial losses for investors purchasing shares in this offering.

          The market price of our Class A common stock could be subject to significant fluctuations after this offering, and it may decline below the initial public offering price. Some of the factors that may cause the market price of our Class A common stock to fluctuate include:

    price and volume fluctuations in the overall stock market from time to time;

    volatility in the market price and trading volume of comparable companies;

    actual or anticipated changes in our earnings or fluctuations in our operating results or in the expectations of securities analysts;

    announcements of new service offerings, strategic alliances or significant agreements by us or by our competitors;

    departure of key personnel;

    litigation involving us or that may be perceived as having an adverse effect on our business;

    changes in general economic, industry and market conditions and trends;

    investors' general perception of us;

    sales of large blocks of our stock; and

    announcements regarding industry consolidation.

          In the past, following periods of volatility in the market price of a company's securities, securities class action litigation has often been brought against that company. Because of the potential volatility of our stock price, we may become the target of securities litigation in the future. Securities litigation could result in substantial costs and divert management's attention and resources from our business.

Our quarterly operating results or other operating metrics may fluctuate significantly, which could cause the trading price of our Class A common stock to decline.

          Our quarterly operating results and other operating metrics have fluctuated in the past and may in the future fluctuate as a result of a number of factors, many of which are outside of our control and may be difficult to predict, including:

    the level of demand for our service offerings and our ability to maintain and increase our customer base;

    the timing and success of new service introductions by us or our competitors or any other change in the competitive landscape of our market;

    the mix of products sold;

    order rates by our customers;

    pricing pressure as a result of competition or otherwise;

    delays or disruptions in our supply chain;

    our ability to reduce costs;

    errors in our forecasting of the demand for our products, which could lead to lower revenue or increased costs;

    seasonal or other variations in buying patterns by our customers;

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    increases in and timing of sales and marketing and other operating expenses that we may incur to grow and expand our operations and to remain competitive;

    levels of customer credits and refunds;

    adverse litigation judgments, settlements or other litigation-related costs;

    food safety concerns, regulatory proceedings or other adverse publicity about us or our products;

    costs related to the acquisition of businesses, talent, technologies or intellectual property, including potentially significant amortization costs and possible write-downs;

    changes in consumer tastes and preferences; and

    general economic conditions.

          Any one of the factors above or the cumulative effect of some of the factors above may result in significant fluctuations in our operating results.

          The variability and unpredictability of our quarterly operating results or other operating metrics could result in our failure to meet our expectations or those of any analysts that cover us or investors with respect to revenue or other operating results for a particular period. If we fail to meet or exceed such expectations for these or any other reasons, the market price of our Class A common stock could fall substantially, and we could face costly lawsuits, including securities class action suits.

We will have broad discretion in the use of the net proceeds of this offering and may not use them effectively.

          Our management will have broad discretion to use the net proceeds of this offering, and you will be relying on the judgment of our management regarding the application of these proceeds. We expect to use the net proceeds of this offering for working capital, capital expenditures and general corporate purposes. See "Use of Proceeds." Because we will have broad discretion in the application of the net proceeds from this offering, our management may fail to apply these funds effectively, which could materially adversely affect our ability to operate and grow our business. You will not have the opportunity to influence our decisions on how to use the net proceeds from this offering.

If securities or industry analysts do not publish, or cease publishing, research or reports about us, our business or our market, or if they publish negative evaluations of our stock or the stock of other companies in our industry, the price of our stock and trading volume could decline.

          The trading market for our Class A common stock will be influenced by the research and reports that industry or securities analysts may publish about us, our business, our market or our competitors. We do not currently have and may never obtain research coverage by industry or financial analysts. If no analysts or few analysts commence coverage of us, the trading price of our stock would likely decrease. Even if we do obtain analyst coverage, if one or more of the analysts covering our business downgrade their evaluations of our stock or the stock of other companies in our industry, the price of our stock could decline. If one or more of these analysts cease to cover our stock, we could lose visibility in the market for our stock, which in turn could cause our stock price to decline.

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Purchasers in this offering will incur immediate and substantial dilution in the book value of their investment as a result of this offering.

          If you purchase Class A common stock in this offering, you will incur immediate and substantial dilution of $8.89 per share, representing the difference between the assumed initial public offering price of $10.50 per share, which is the midpoint of the range listed on the cover page of this prospectus, and our pro forma as adjusted net tangible book value per share after giving effect to this offering and the automatic conversion of all outstanding shares of preferred stock and the automatic conversion of the outstanding principal amount of, and all accrued and unpaid interest on, our outstanding convertible notes into Class B common stock upon the closing of this offering. Moreover, to the extent outstanding options are exercised, you will incur further dilution. See the "Dilution" section of this prospectus.

Because we do not expect to pay any dividends on our Class A common stock for the foreseeable future, investors in this offering may never receive a return on their investment.

          You should not rely on an investment in our Class A common stock to provide dividend income. We do not anticipate that we will pay any cash dividends to holders of our Class A common stock in the foreseeable future. Instead, we plan to retain any earnings to maintain and expand our existing operations. Accordingly, investors must rely on sales of their Class A common stock after price appreciation, which may never occur, as the only way to realize any return on their investment. As a result, investors seeking cash dividends should not purchase our Class A common stock.

Our tri-class capital structure has the effect of concentrating voting control with our president and chief executive officer, Matthew B. Salzberg, and the other holders of Class B common stock. This structure will limit or preclude your ability to influence corporate matters, including a change of control, and might affect the market price of our Class A common stock.

          We are offering shares of Class A common stock in this offering. Upon completion of this offering, our capital structure will consist of three classes of stock: Class B common stock, with ten votes per share; Class A common stock, with one vote per share; and non-voting Class C capital stock. Upon completion of this offering and assuming no exercise of the underwriters' option to purchase additional shares of Class A common stock in this offering: stockholders who hold shares of Class B common stock, including our executive officers, employees and directors and their affiliates, will together hold approximately 98.1% of the voting power of our outstanding capital stock; our executive officers, directors, stockholders that own greater than 5% of our outstanding capital stock and their respective affiliated entities will together hold approximately 87.5% of the voting power of our outstanding capital stock; and our president and chief executive officer, Matthew B. Salzberg, will hold approximately 29.2% of the voting power of our outstanding capital stock. Because of the ten-to-one voting ratio between the Class B common stock and Class A common stock, the holders of Class B common stock collectively will continue to control a majority of the combined voting power of our common stock and therefore be able to control all matters submitted to our stockholders for approval, including the election of directors and any merger, consolidation or sale of all or substantially all of our assets, so long as the outstanding shares of Class B common stock represent at least 9.1% of the total number of outstanding shares of Class A common stock and Class B common stock. This concentrated control will limit or preclude your ability to influence corporate matters, including a change of control of our company, for the foreseeable future, and might affect the market price of our Class A common stock.

          Future transfers by holders of Class B common stock will generally result in those shares converting into Class A common stock, with limited exceptions and permitted transfers described in

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our restated certificate of incorporation. In addition, each outstanding share of Class B common stock held by a stockholder who is a natural person, or held by the permitted transferees of such stockholder, will convert automatically into one share of Class A common stock upon the death or permanent and total disability of such stockholder, subject to a conversion delay of nine months in the event of the death or permanent and total disability of one of our founders, Matthew B. Salzberg, Ilia M. Papas or Matthew J. Wadiak. The conversion of Class B common stock into Class A common stock will have the effect, over time, of increasing the relative voting power of those holders of Class B common stock who retain their shares of Class B common stock in the long term. If, for example, Mr. Salzberg retains a significant portion of his holdings of Class B common stock for an extended period of time, he could, in the future, control a majority of the combined voting power of the Class A common stock and Class B common stock. For a description of our tri-class capital structure, see "Description of Capital Stock—Class A, Class B and Class C Stock."

A significant portion of our total outstanding shares may be sold into the public market in the near future, which could cause the market price of our Class A common stock to drop significantly, even if our business is doing well.

          If our existing stockholders sell, or indicate an intention to sell, substantial amounts of our Class A common stock in the public market after the lock-up and legal restrictions on resale discussed in this prospectus lapse, the trading price of our Class A common stock could substantially decline. Based on shares outstanding as of May 31, 2017, on the closing of this offering, we will have outstanding a total of 30,042,687 shares of Class A common stock, 159,206,766 shares of Class B common stock, and no shares of Class C capital stock, assuming no exercise of outstanding options, and after giving effect to the automatic conversion of all of our outstanding shares of preferred stock and the automatic conversion of the outstanding aggregate principal amount of, and accrued and unpaid interest on, our outstanding convertible notes into shares of Class B common stock (excluding the underwriters' option to purchase additional shares of Class A common stock). This includes the 30,000,000 shares of Class A common stock that we are selling in this offering, which may be resold in the public market immediately. The remaining 42,687 shares of our Class A common stock and 159,206,766 shares of our Class B common stock, which together represent 84.1% of our outstanding shares after this offering, are currently, and will be following the closing of this offering, restricted as a result of securities laws or lock-up agreements but will be able to be sold, subject to any applicable volume limitations, under federal securities laws with respect to affiliate sales. Each of our directors, executive officers, and other holders of substantially all our outstanding shares have entered into lock-up agreements with the underwriters under which the holders of such securities have agreed that, subject to certain exceptions, without the prior written consent of Goldman Sachs & Co. LLC and Morgan Stanley & Co. LLC, they will not dispose of or hedge any of their capital stock or securities convertible into or exchangeable for shares of capital stock during the period from the date of this prospectus continuing to and including (i) with respect to 20% of the securities subject to these agreements, 120 days after the date of this prospectus and (ii) with respect to the remaining balance of the securities subject to these agreements, 180 days after the date of this prospectus. However, if such 120-day or 180-day period would end during the period beginning 14 calendar days prior to the end of one of our fiscal quarters or our fiscal year and ending on the day after the second full trading day following the date on which we publicly release earnings for such fiscal quarter or fiscal year, the applicable restricted period will end on the day after the second full trading day following the date on which we publicly release such earnings. Upon each release of the foregoing restrictions, our securityholders subject to a lock-up agreement will be able to sell our shares in the public market. In addition, the underwriters may, in their sole discretion, release all or some portion of the shares subject to lock-up agreements prior to a release of the foregoing

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restrictions. For a description of the lock-up agreements, see the "Shares Eligible for Future Sale" and "Underwriting" sections of this prospectus.

          In addition, as of May 31, 2017, there were 11,638,660 shares of Class B common stock subject to outstanding options and an additional 417,711 shares of Class B common stock reserved for issuance under our equity incentive plans that will become eligible for sale in the public market to the extent permitted by any applicable vesting requirements, lock-up agreements and Rules 144 and 701 under the Securities Act of 1933, as amended, or the Securities Act. Moreover, after this offering, holders of an aggregate of 158,013,137 shares of our Class B common stock as of May 31, 2017, will have rights, subject to some conditions, to require us to file registration statements covering their shares or to include their shares in registration statements that we may file for ourselves or other stockholders. We also intend to register all shares of Class A common stock that we may issue under our employee benefit plans. Once we register these shares, they can be freely sold in the public market upon issuance, subject to the lock-up agreements and the restrictions imposed on our affiliates under Rule 144.

Anti-takeover provisions in our restated certificate of incorporation and our amended and restated bylaws, as well as provisions of Delaware law, might discourage, delay or prevent a change in control of our company or changes in our management and, therefore, depress the trading price of our Class A common stock.

          Our restated certificate of incorporation and amended and restated bylaws and Delaware law contain provisions that may discourage, delay or prevent a merger, acquisition or other change in control that stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares of our Class A common stock. These provisions may also prevent or delay attempts by our stockholders to replace or remove our management. Our corporate governance documents include provisions:

    establishing a classified board of directors with staggered three-year terms so that not all members of our board are elected at one time;

    providing that directors may be removed by stockholders only for cause and only with a vote of the holders of at least 66-2/3% of the votes that all our stockholders would be entitled to cast for the election of directors;

    limiting the ability of our stockholders to call and bring business before special meetings and to take action by written consent in lieu of a meeting;

    requiring advance notice of stockholder proposals for business to be conducted at meetings of our stockholders and for nominations of candidates for election to our board of directors;

    authorizing blank check preferred stock, which could be issued with voting, liquidation, dividend and other rights superior to our Class A common stock; and

    limiting the liability of, and providing indemnification to, our directors and officers.

          As a Delaware corporation, we are also subject to provisions of Delaware law, including Section 203 of the Delaware General Corporation Law, which limits the ability of stockholders holding shares representing more than 15% of the voting power of our outstanding voting stock from engaging in certain business combinations with us. Any provision of our restated certificate of incorporation or amended and restated bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our Class A common stock, and could also affect the price that some investors are willing to pay for our Class A common stock.

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          The existence of the foregoing provisions and anti-takeover measures could limit the price that investors might be willing to pay in the future for shares of our Class A common stock. They could also deter potential acquirers of our company, thereby reducing the likelihood that you could receive a premium for your Class A common stock in an acquisition.

Our restated certificate provides that the Court of Chancery of the State of Delaware is the sole and exclusive forum for substantially all disputes between us and our stockholders. Our restated certificate of incorporation further provides that the federal district courts of the United States of the America are the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. These choice of forum provisions could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

          Our restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the sole and exclusive forum for (1) any derivative action or proceeding brought on behalf of our company, (2) any action asserting a claim of breach of fiduciary duty owed by any director, officer or other employee or stockholder of our company to us or our stockholders, (3) any action asserting a claim arising pursuant to any provision of the General Corporation Law or as to which the General Corporation Law of the State of Delaware confers jurisdiction on the Court of Chancery or (4) any action asserting a claim governed by the internal affairs doctrine. Our restated certificate of incorporation further provides that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America shall, to the fullest extent permitted by law, be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. These choice of forum provisions may limit a stockholder's ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and other employees. Alternatively, if a court were to find the choice of forum provisions contained in our certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could materially adversely affect our business, financial condition and operating results.

Our management team has limited experience managing a public company.

          Most members of our management team have limited experience managing a publicly traded company, interacting with public company investors and complying with the increasingly complex laws pertaining to public companies. Our management team may not successfully or efficiently manage our transition to being a public company subject to significant regulatory oversight and reporting obligations under the federal securities laws and the scrutiny of securities analysts and investors. These new obligations and constituents will require significant attention from our management team and could divert their attention away from the day-to-day management of our business, which could materially adversely affect our business, financial condition and operating results.

The requirements of being a public company may strain our resources, divert management's attention and affect our ability to attract and retain qualified board members.

          As a public company, we will be subject to the reporting requirements of the Exchange Act, the listing requirements of the New York Stock Exchange and other applicable securities rules and regulations. Compliance with these rules and regulations will increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly, and increase demand on our systems and resources, particularly after we are no longer an emerging growth

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company. Among other things, the Exchange Act requires that we file annual, quarterly and current reports with respect to our business and operating results and maintain effective disclosure controls and procedures and internal control over financial reporting. In order to maintain and, if required, improve our disclosure controls and procedures and internal control over financial reporting to meet this standard, significant resources and management oversight may be required. As a result, management's attention may be diverted from other business concerns, which could harm our business and operating results. Although we have already hired additional employees to comply with these requirements, we may need to hire even more employees in the future, which will increase our costs and expenses.

          We are currently evaluating our internal controls, identifying and remediating any deficiencies in those internal controls and documenting the results of our evaluation, testing and remediation. We may not be able to complete our evaluation, testing and any required remediation in a timely fashion. During the evaluation and testing process, if we identify one or more material weaknesses in our internal control over financial reporting that we are unable to remediate before the end of the same fiscal year in which the material weakness is identified, we will be unable to assert that our internal controls are effective. If we are unable to assert that our internal control over financial reporting is effective, or if our auditors are unable to attest to management's report on the effectiveness of our internal controls, which will be required after we are no longer an emerging growth company, we could lose investor confidence in the accuracy and completeness of our financial reports, which would cause the price of our Class A common stock to decline.

          In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time consuming. These laws, regulations, and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expense and a diversion of management's time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies, regulatory authorities may initiate legal proceedings against us and our business may be harmed.

          We also expect that being a public company and these new rules and regulations will make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve on our audit committee and compensation committee, and qualified executive officers.

We are an "emerging growth company," and the reduced disclosure requirements applicable to emerging growth companies may make our Class A common stock less attractive to investors.

          We are an "emerging growth company," as defined in the JOBS Act, and may remain an emerging growth company until the last day of our fiscal year following the fifth anniversary of this offering, subject to specified conditions. For so long as we remain an emerging growth company, we are permitted, and intend, to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not emerging growth companies. We would cease to be an emerging growth company if we have more than $1.07 billion in annual revenue, we have

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more than $700 million in market value of our stock held by non-affiliates (and we have been a public company for at least 12 months and have filed one annual report on Form 10-K) or we issue more than $1 billion of non-convertible debt securities over a three-year period. These exemptions include reduced disclosure obligations regarding executive compensation and exemptions from the requirements to hold non-binding advisory votes on executive compensation and golden parachute payments, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, and not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements. In this prospectus, we have not included all of the executive compensation related information that would be required if we were not an emerging growth company. We cannot predict whether investors will find our Class A common stock less attractive if we rely on these exemptions. If some investors find our Class A common stock less attractive as a result, there may be a less active trading market for our Class A common stock and our stock price may be more volatile.

          In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of this exemption from new or revised accounting standards and, therefore, while we are an emerging growth company we will not be subject to new or revised accounting standards at the same time that they become applicable to other public companies that are not emerging growth companies. Accordingly, we will incur additional costs in connection with complying with the accounting standards applicable to public companies at such time or times as they become applicable to us.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

          This prospectus contains forward-looking statements. All statements other than statements of historical fact contained in this prospectus, 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 prospectus 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 prospectus and are subject to a number of risks, uncertainties and assumptions described in the "Risk Factors" section and elsewhere in this prospectus. 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 expectations regarding our expenses and revenue, our ability to maintain and grow adjusted EBITDA, the sufficiency of our cash resources, and needs for additional financing;

    our ability to cost-effectively attract new customers and retain existing customers;

    our ability to expand our product offerings;

    our ability to maintain and grow the value of our brand and reputation;

    our ability to manage our growth;

    our expectations regarding, and the stability of, our supply chain, including potential shortages or interruptions in the supply or delivery of ingredients;

    our ability to maintain food safety and prevent food-borne illness incidents;

    changes in consumer tastes and preferences or in consumer spending;

    our ability to effectively compete;

    our ability to attract and retain qualified employees and key personnel;

    our ability to comply with modified or new laws and regulations applying to our business;

    our vulnerability to adverse weather conditions or natural disasters; 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.

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USE OF PROCEEDS

          We estimate that our net proceeds from the sale of our Class A common stock in this offering will be approximately $292.7 million, assuming an initial public offering price of $10.50 per share, which is the midpoint of the range listed on the cover page of this prospectus, and after deducting the estimated underwriting discount and estimated offering expenses payable by us. If the underwriters fully exercise their option to purchase additional shares from us in this offering, we estimate that the net proceeds will be approximately $337.3 million.

          A $1.00 increase (decrease) in the assumed initial public offering price of $10.50 per share would increase (decrease) the net proceeds from this offering by approximately $28.4 million, assuming that the number of shares offered, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discount and offering expenses payable by us.

          The principal purposes of this offering are to create a public market for our Class A common stock, facilitate access to the public equity markets, increase our visibility in the marketplace and obtain additional capital.

          We intend to use the net proceeds of this offering for working capital, capital expenditures and general corporate purposes. In addition, we believe that opportunities may exist from time to time to expand our current business through acquisitions of or investments in complementary products, technologies or businesses. While we have no current agreements, commitments or understandings for any specific acquisitions at this time, we may use a portion of the net proceeds for these purposes.

          Our management will have broad discretion in the application of the net proceeds of this offering, and investors will be relying on the judgment of our management regarding the application of the net proceeds. The timing and amount of our actual expenditures will be based on many factors, including cash flows from operations, the anticipated growth of our business, and the availability and terms of alternative financing sources to fund our growth. Pending their use as described above, we intend to invest our net proceeds from this offering in short-term, interest-bearing investment-grade securities, certificates of deposit, bank deposits, or direct or guaranteed obligations of the U.S. government.


DIVIDEND POLICY

          We have never declared or paid any dividends on our capital stock. We anticipate that we will retain all of our future earnings to finance the operation and expansion of our business and do not anticipate declaring or paying any cash dividends on our capital stock in the foreseeable future. Any future determination to declare and pay cash dividends, if any, will be made at the discretion of our board of directors and will depend on a variety of factors, including applicable laws, our financial condition, results of operations, contractual restrictions, capital requirements, business prospects, general business or financial market conditions, and other factors our board of directors may deem relevant. In addition, our revolving credit facility contains covenants that could restrict our ability to pay cash dividends.

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CAPITALIZATION

          The following table sets forth our cash and cash equivalents and capitalization as of March 31, 2017, as follows:

    on an actual basis;

    on a pro forma basis to give effect to (1) the automatic conversion of all outstanding shares of preferred stock into Class B common stock upon the closing of this offering, (2) the restatement of our certificate of incorporation in connection with this offering and (3) the issuance in May 2017 of 42,687 shares of Class A common stock in exchange for an equal number of shares of Class C capital stock; and

    on a pro forma as adjusted basis to give effect to (1) the pro forma adjustments set forth above, (2) the automatic conversion of our outstanding convertible notes, and all accrued and unpaid interest thereon, into 6,688,761 shares of Class B common stock upon the closing of this offering, assuming an initial public offering price of $10.50 per share (the midpoint of the estimated price range set forth on the cover page of this prospectus) and (3) our sale of 30,000,000 shares of Class A common stock in this offering at an assumed initial public offering price of $10.50 per share, which is the midpoint of the initial public offering price range listed on the cover page of this prospectus, after deducting the estimated underwriting discount and offering expenses payable by us.

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          You should read this information in conjunction with our consolidated financial statements and the related notes appearing at the end of this prospectus and the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section and other financial information contained in this prospectus.

    As of March 31, 2017
 

    Actual     Pro Forma     Pro Forma
As Adjusted
 

    (in thousands, except share and
per-share amounts)
 

Cash and cash equivalents

  $ 61,167   $ 61,167   $ 356,097  

Convertible preferred stock, $0.0001 par value, 17,371,402 shares authorized, 14,500,938 shares issued and outstanding, actual; 0 shares issued and outstanding, pro forma and pro forma as adjusted

    194,869          

Stockholders' equity (deficit):

                   

Preferred stock, $0.0001 par value: 0 shares authorized, 0 shares issued and outstanding, actual; 10,000,000 shares authorized, 0 shares issued and outstanding pro forma and pro forma as adjusted

             

Class A common stock, $0.0001 par value: 177,000,000 shares authorized; 0 shares issued and outstanding, actual; 1,500,000,000 shares authorized, 42,687 shares issued and outstanding pro forma; 1,500,000,000 shares authorized, 30,042,687 shares issued and outstanding pro forma as adjusted

            3  

Class B common stock, $0.0001 par value: 175,000,000 shares authorized; 67,156,678 shares issued and outstanding, actual; 175,000,000 shares authorized, 152,347,229 shares issued and outstanding pro forma; 175,000,000 shares authorized, 159,035,990 shares issued and outstanding pro forma as adjusted

    7     15     16  

Class C capital stock, $0.0001 par value: 2,000,000 shares authorized; 42,687 shares issued and outstanding, actual; 500,000,000 shares authorized, 0 shares issued and outstanding pro forma; 500,000,000 shares authorized, 0 shares issued and outstanding pro forma as adjusted

             

Additional paid-in capital

    6,860     201,721     494,395  

Accumulated deficit

    (190,748 )   (190,748 )   (190,748 )

Total stockholders' equity (deficit)

    (183,881 )   10,988     303,666  

Total capitalization

  $ 10,988   $ 10,988   $ 303,666  

          A $1.00 increase (decrease) in the assumed initial public offering price of $10.50 per share of Class A common stock, which is the midpoint of the range listed on the cover page of this prospectus, would increase (decrease) the pro forma as adjusted amount of each of cash and cash equivalents, total stockholders' equity (deficit) and total capitalization by approximately $28.4 million, assuming that the number of shares offered, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discount and offering expenses payable by us.

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          The table above is illustrative only and excludes:

    10,846,745 shares of Class B common stock issuable upon the exercise of options to purchase shares of our Class B common stock outstanding under the 2012 Equity Incentive Plan as of March 31, 2017, with a weighted-average exercise price of $6.23 per share;

    1,380,402 shares of Class B common stock reserved for issuance under the 2012 Equity Incentive Plan as of March 31, 2017; and

    25,000,000 shares of Class A common stock that will be reserved for issuance under the 2017 Equity Incentive Plan upon the closing of this offering.

          In addition, the number of shares of Class A common stock reserved for issuance under the 2017 Equity Incentive Plan upon the closing of this offering will be subject to automatic annual increases in accordance with the terms of such plan.

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DILUTION

          If you purchase shares of our Class A common stock in this offering, your ownership interest will be immediately diluted to the extent of the difference between the initial public offering price per share and the pro forma as adjusted net tangible book value per share immediately after this offering.

          Our pro forma net tangible book value as of March 31, 2017 was $11.0 million, or $0.07 per share. Our pro forma net tangible book value per share represents the amount of our total tangible assets reduced by the amount of our total liabilities and divided by the total number of shares outstanding as of March 31, 2017, after giving effect to (1) the automatic conversion of all outstanding shares of preferred stock into Class B common stock upon the closing of this offering and (2) the issuance in May 2017 of 42,687 shares of Class A common stock in exchange for an equal number of shares of Class C capital stock.

          After giving effect to the automatic conversion of our outstanding convertible notes, and all accrued and unpaid interest thereon, or the convertible notes, into 6,688,761 shares of Class B common stock upon the closing of this offering assuming an initial public offering price of $10.50 per share (the midpoint of the estimated price range set forth on the cover page of this prospectus), our pro forma as adjusted net tangible book value as of March 31, 2017 would have been approximately $11.0 million, or approximately $0.07 per share. After giving further effect to (1) the sale of 30,000,000 shares of Class A common stock that we are offering at an assumed initial public offering price of $10.50 per share, which is the midpoint of the range listed on the cover page of this prospectus, and after deducting the estimated underwriting discount and offering expenses payable by us and (2) the pro forma adjustments described in the preceding paragraph, our pro forma as adjusted net tangible book value as of March 31, 2017 would have been approximately $303.7 million, or approximately $1.61 per share. This amount represents an immediate increase in net tangible book value of $1.54 per share to our existing stockholders and an immediate dilution in net tangible book value of approximately $8.89 per share to new investors purchasing shares of Class A common stock in this offering. We determine dilution by subtracting the pro forma as adjusted net tangible book value per share after this offering from the amount of cash that a new investor paid for a share of Class A common stock.

          The following table illustrates this dilution:

Assumed initial public offering price per share of Class A common stock

        $ 10.50  

Pro forma net tangible book value per share as of March 31, 2017

  $ 0.07        

Increase in pro forma as adjusted net tangible book value attributable to investors purchasing shares of our Class A common stock in this offering

    1.54        

Pro forma as adjusted net tangible book value per share immediately after this offering

          1.61  

Dilution in pro forma as adjusted net tangible book value per share to investors purchasing shares in this offering

        $ 8.89  

          A $1.00 increase (decrease) in the assumed initial public offering price of $10.50 per share of Class A common stock, which is the midpoint of the range listed on the cover page of this prospectus, would increase (decrease) the pro forma as adjusted net tangible book value per share immediately after this offering by approximately $0.15 per share, and dilution in pro forma as adjusted net tangible book value per share to investors purchasing shares in this offering by approximately $0.85 per share, assuming that the number of shares of Class A common stock offered, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discount and offering expenses payable by us.

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          If the underwriters fully exercise their option to purchase additional shares of Class A common stock in this offering, the pro forma as adjusted net tangible book value after the offering would be $1.80 per share, and the dilution in net tangible book value per share to investors purchasing shares in this offering would be $8.70 per share, in each case assuming an initial public offering price of $10.50 per share, which is the midpoint of the range listed on the cover page of this prospectus.

          The following table presents, as of March 31, 2017, after giving effect to the conversion of all outstanding preferred stock into Class B common stock, the differences between our existing stockholders and new investors purchasing shares of our Class A common stock in this offering with respect to (i) the number of outstanding shares purchased from us, (ii) the total consideration paid to us or to be paid to us and (iii) the average price per share that existing stockholders and new investors paid or will pay to us. The calculations below are based on an assumed initial public offering price of Class A common stock of $10.50 per share, which is the midpoint of the range listed on the cover page of this prospectus, before deducting the estimated underwriting discount and offering expenses payable by us.

    Shares Purchased     Total Consideration     Average
Price
 

    Number     Percent     Number     Percent     Per Share
 

Existing stockholders

    159,078,677     84.1 % $ 260,862     45.3 % $ 1.64  

New investors

    30,000,000     15.9     315,000     54.7     10.50  

Total

    189,078,677     100 % $ 575,862     100 %      

          The table above assumes no exercise of the underwriters' option to purchase additional shares of Class A common stock from us in this offering. If the underwriters fully exercise their option to purchase additional shares in this offering, our existing stockholders would own 82.2% and our new investors would own 17.8% of the total number of shares of our capital stock outstanding after our initial public offering.

          The foregoing table is based on 159,035,990 shares of Class B common stock and 42,687 shares of Class C capital stock outstanding as of March 31, 2017 (which includes 67,156,678 shares of Class B common stock outstanding as of March 31, 2017 and which assumes the automatic conversion of (i) all outstanding shares of preferred stock into an aggregate of 85,190,551 shares of Class B common stock upon the completion of this offering and (ii) our outstanding convertible notes, and all accrued and unpaid interest thereon, into 6,688,761 shares of Class B common stock, assuming an initial offering price of $10.50 per share (the midpoint of the estimated price range set forth on the cover page of this prospectus)) and no shares of Class A common stock outstanding as of March 31, 2017, and excludes:

    10,846,745 shares of Class B common stock issuable upon the exercise of options to purchase shares of our Class B common stock outstanding under the 2012 Equity Incentive Plan as of March 31, 2017, with a weighted-average exercise price of $6.23 per share;

    1,380,402 shares of Class B common stock reserved for issuance under the 2012 Equity Incentive Plan as of March 31, 2017; and

    25,000,000 shares of Class A common stock reserved for issuance under the 2017 Equity Incentive Plan.

          To the extent that outstanding options are exercised, new options or other equity rights are issued under the 2012 Equity Incentive Plan or we issue additional shares of capital stock in the future, there will be further dilution to new investors. In addition, the number of shares of Class A

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common stock reserved for issuance under the 2017 Equity Incentive Plan is subject to automatic annual increases in accordance with the terms of such plan, which may result in further dilution to investors participating in this offering.

          We may choose to raise additional capital due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. To the extent that additional capital is raised through the sale of equity or securities convertible into equity, the issuance of these securities may result in further dilution to our stockholders.

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SELECTED CONSOLIDATED FINANCIAL DATA

          The following table sets forth our selected consolidated financial data. The consolidated statement of operations data for the years ended December 31, 2014, 2015, and 2016, and the selected consolidated balance sheet data as of December 31, 2015, and 2016, are derived from our audited consolidated financial statements and related notes included elsewhere in this prospectus. The summary consolidated statements of operations data for the three months ended March 31, 2016 and 2017 and the consolidated balance sheet data as of March 31, 2017 have been derived from our unaudited consolidated financial statements for those periods included elsewhere in this prospectus, and except as described in the notes thereto, have been prepared on a basis consistent with our audited consolidated financial statements and, in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of such information for such periods. Our historical results are not necessarily indicative of the results to be expected in any future period. You should read the following selected consolidated financial data in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and the related notes appearing elsewhere in this prospectus.

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    Year Ended December 31,     Three Months Ended
March 31,
 

    2014     2015     2016     2016     2017
 

    (in thousands, except share and per-share numbers)  

                      (unaudited)     (unaudited)  

Consolidated Statements of Operations Data:

                               

Net revenue

  $ 77,806   $ 340,803   $ 795,416   $ 172,098   $ 244,843  

Operating expenses:

                               

Cost of goods sold, excluding depreciation and amortization

    72,223     263,271     532,682     112,523     168,531  

Marketing

    13,960     51,362     144,141     25,413     60,605  

Product, technology, general and administrative

    21,811     70,151     165,179     29,690     63,210  

Depreciation and amortization

    611     2,917     8,217     1,485     4,180  

Total operating expenses

    108,605     387,701     850,219     169,111     296,526  

Income (loss) from operations

    (30,799 )   (46,898 )   (54,803 )   2,987     (51,683 )

Interest income (expense) and other income (expense), net

    (4 )   (6 )   25     57     (470 )

Income (loss) before income taxes

    (30,803 )   (46,904 )   (54,778 )   3,044     (52,153 )

Provision for income taxes

        (61 )   (108 )   (27 )   (41 )

Net income (loss)

  $ (30,803 ) $ (46,965 ) $ (54,886 ) $ 3,017   $ (52,194 )

Net income (loss) per share attributable to Class B common and Class C capital stockholders:

                               

Basic

  $ (0.88 ) $ (0.92 ) $ (0.84 ) $   $ (0.78 )

Diluted

  $ (0.88 ) $ (0.92 ) $ (0.84 ) $   $ (0.78 )

Weighted-average shares used to compute net income (loss) per share attributable to Class B common and Class C capital stockholders:

                               

Basic

    34,841,852     51,137,406     65,425,609     61,973,247     67,090,001  

Diluted

    34,841,852     51,137,406     65,425,609     69,307,608     67,090,001  

Pro forma net income (loss) per share attributable to Class B common and Class C capital stockholders (unaudited)(1):

                               

Basic

              $ (0.36 )       $ (0.34 )

Diluted

              $ (0.36 )       $ (0.34 )

Pro forma weighted-average shares used to compute net income (loss) per share attributable Class B common and Class C capital stockholders (unaudited)(1):

                               

Basic

                150,616,160           152,280,552  

Diluted

                150,616,160           152,280,552  

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    Year Ended December 31,     Three Months
Ended
March 31,
 

    2014     2015     2016     2016     2017
 

    (in thousands)  

Other Financial Data:

                               

Adjusted EBITDA(2)

  $ (26,523 ) $ (42,876 ) $ (43,621 ) $ 5,048   $ (46,265 )

Net cash from (used in) operating activities

  $ (16,859 ) $ (26,396 ) $ (23,545 ) $ 5,955   $ (19,039 )

 

    December 31,     March 31,
 

    2015     2016     2017
 

    (in thousands)  

                (unaudited)  

Consolidated Balance Sheet Data:

                   

Cash and cash equivalents

  $ 126,860   $ 81,468   $ 61,167  

Working capital(3)

    (27,581 )   (58,108 )   (84,826 )

Total assets

    164,973     273,407     322,465  

Total liabilities

    52,038     211,938     311,477  

Convertible preferred stock

    194,869     194,869     194,869  

Total stockholders' equity (deficit)

    (81,934 )   (133,400 )   (183,881 )

(1)
Pro forma basic and diluted net income (loss) per share have been calculated assuming (i) the automatic conversion of all outstanding shares of convertible preferred stock into 85,190,551 shares of Class B common stock and (ii) the issuance in May 2017 of 42,687 shares of Class A common stock in exchange for an equal number of shares of Class C capital stock.

(2)
See "—Non-GAAP Financial Measures" for information regarding our use of adjusted EBITDA and a reconciliation of adjusted EBITDA to its most directly comparable GAAP equivalent.

(3)
We define working capital as current assets (excluding cash and cash equivalents) less current liabilities.

Non-GAAP Financial Measures

          To provide investors with additional information regarding our financial results, we monitor and have presented within this prospectus adjusted EBITDA, which is a non-GAAP financial measure. This non-GAAP financial measure is not based on any standardized methodology prescribed by U.S. generally accepted accounting principles, or GAAP, and is not necessarily comparable to similarly-titled measures presented by other companies.

          We define adjusted EBITDA as earnings (loss) before interest and other income and expense, taxes, depreciation, amortization and share-based compensation expense. We have presented adjusted EBITDA in this prospectus 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.

          We use adjusted EBITDA to evaluate our operating performance and trends and make planning decisions. We believe adjusted EBITDA helps identify underlying trends in our business that could otherwise be masked by the effect of the expenses that we exclude. Accordingly, we believe that adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects, and allowing for greater transparency with respect to key financial metrics used by our management in its financial and operational decision-making.

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          Our adjusted EBITDA is not prepared in accordance with GAAP, and should not be considered in isolation of, or as an alternative to, measures prepared in accordance with GAAP. There are a number of limitations related to the use of adjusted EBITDA rather than net income (loss), which is the most directly comparable GAAP equivalent. Some of these limitations are:

    adjusted EBITDA excludes share-based compensation expense, as share-based compensation expense has recently been, and will continue to be for the foreseeable future, a significant recurring expense for our business and an important part of our compensation strategy;

    adjusted EBITDA excludes depreciation and amortization expense and, although these are non-cash expenses, the assets being depreciated may have to be replaced in the future;

    adjusted EBITDA does not reflect interest expense, or the cash requirements necessary to service interest, which reduces cash available to us;

    adjusted EBITDA does not reflect income tax payments that reduce cash available to us; and

    other companies, including companies in our industry, may calculate adjusted EBITDA differently, which reduces its usefulness as a comparative measure.

          Because of these limitations, we consider, and you should consider, adjusted EBITDA together with other operating and financial performance measures presented in accordance with GAAP. The following table presents a reconciliation of adjusted EBITDA to net income (loss), the most directly comparable measure calculated in accordance with GAAP, for each of the periods presented.

    Year Ended December 31,     Three Months
Ended
March 31,
 

    2014     2015     2016     2016     2017
 

    (in thousands)  

Adjusted EBITDA

                               

Net income (loss)

  $ (30,803 ) $ (46,965 ) $ (54,886 ) $ 3,017   $ (52,194 )

Share-based compensation

    3,665     1,105     2,965     576     1,238  

Depreciation and amortization

    611     2,917     8,217     1,485     4,180  

Interest (income) expense, net

    4     6     (25 )   (57 )   470  

Provision for income taxes

        61     108     27     41  

Adjusted EBITDA

  $ (26,523 ) $ (42,876 ) $ (43,621 ) $ 5,048   $ (46,265 )

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

          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 prospectus. 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 prospectus, particularly in the section titled "Risk Factors." In this discussion, we use 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 prospectus. 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. In the below discussion, we use the term basis points to refer to units of one-hundredth of one percent.

Overview

          Blue Apron's mission is to make incredible home cooking accessible to everyone.

          Our core product is the cooking experience we help our customers create. Central to these experiences are the original recipes we design and send along with fresh, seasonal ingredients directly to our customers. We offer our customers two flexible plans—our 2-Person Plan and our Family Plan. Our recipes are accompanied by printed and digital content, including how-to instructions and the stories of our suppliers and specialty ingredients. We also sell wine, which can be paired with our meals, through Blue Apron Wine, our direct-to-consumer wine delivery service. Through Blue Apron Market, our e-commerce marketplace, we sell kitchen tools and staples we use in our test kitchens. In addition, we sell the products of BN Ranch, a premium supplier of sustainable beef, poultry and lamb, which we acquired in February 2017.

          We have grown our net revenue from $77.8 million for 2014 to $340.8 million for 2015 and to $795.4 million for 2016, representing growth of 338% from 2014 to 2015 and growth of 133% from 2015 to 2016. Our net revenue increased from $172.1 million for the three months ended March 31, 2016 to $244.8 million for the three months ended March 31, 2017, representing a 42% increase. From our inception through March 31, 2017 we have derived over 99% of our net revenue from sales of our meals. For a discussion of the key opportunities and challenges we face in growing our business, see "—Key Factors Affecting Our Performance."

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

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condition and together with our consolidated financial statements and the related notes and other financial information included elsewhere in this prospectus.

    Year Ended December 31,     Three Months
Ended March 31,
 

    2014     2015     2016     2016     2017
 

    (in thousands)  

Net revenue

  $ 77,806   $ 340,803   $ 795,416   $ 172,098   $ 244,843  

Adjusted EBITDA

  $ (26,523 ) $ (42,876 ) $ (43,621 ) $ 5,048   $ (46,265 )

Net cash from (used in) operating activities

  $ (16,859 ) $ (26,396 ) $ (23,545 ) $ 5,955   $ (19,039 )

 

    Three Months Ended
 

    March 31,
2015
    June 30,
2015
    September 30,
2015
    December 31,
2015
    March 31,
2016
    June 30,
2016
    September 30,
2016
    December 31,
2016
    March 31,
2017
 

Orders (in thousands)

    841     1,247     1,763     1,970     2,903     3,399     3,597     3,674     4,273  

Customers (in thousands)

    213     303     414     429     649     766     907     879     1,036  

Average Order Value

  $ 57.77   $ 58.74   $ 58.01   $ 59.21   $ 59.28   $ 59.40   $ 57.12   $ 58.78   $ 57.23  

Orders per Customer

    3.9     4.1     4.3     4.6     4.5     4.4     4.0     4.2     4.1  

Average Revenue per Customer

  $ 228   $ 242   $ 247   $ 272   $ 265   $ 264   $ 227   $ 246   $ 236  

Net revenue (in thousands)

  $ 48,586   $ 73,271   $ 102,283   $ 116,663   $ 172,098   $ 201,924   $ 205,452   $ 215,942   $ 244,843  

Adjusted EBITDA (in thousands)

  $ (6,689 ) $ (8,525 ) $ (18,310 ) $ (9,352 ) $ 5,048   $ 7,976   $ (34,627 ) $ (22,018 ) $ (46,265 )

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 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 growth. 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. For example, we view Repeat Orders as a useful metric when evaluating revenue retention. We define a Repeat Order as an Order from a Customer who has previously placed an Order in any period, including the current period. Repeat Orders has limitations as a financial and operating metric as it does not measure the frequency or the value of Orders. Because of these and other limitations, we consider, and you should consider, Orders (and Repeat Orders) in conjunction with our other metrics, including net revenue, net income (loss), adjusted EBITDA, 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 in a given reporting period. For example, the number of Customers in the first quarter of 2017 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 three months ended March 31, 2017. We view the number of Customers as a key indicator of our scale and growth. 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, Orders per Customer and Average Revenue per Customer.

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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 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 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.

Adjusted EBITDA

          Adjusted EBITDA is a non-GAAP financial measure defined by us as earnings (loss) before interest income and expense, taxes, depreciation, amortization and share-based compensation expense. We have presented adjusted EBITDA in this prospectus 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 "Selected Consolidated Financial and Other Data—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.

Key Factors Affecting Our Performance

          We believe that our performance and future success depends on a number of factors that present significant opportunities but also pose risks and challenges, including those discussed below and under "Risk Factors."

Customer Lifecycle Management and Marketing Efficiency

Customer Acquisition, Customer Retention, Customer Engagement and Brand Awareness

          Our growth will depend in part on our ability to cost-effectively launch marketing campaigns that attract and retain customers and successfully promote awareness of our brand. We use various offline paid advertising channels (such as television, direct mail, radio, and podcasts) and online paid advertising channels (such as digital and social media and email). We typically complement our paid advertising channels by offering promotional discounts to new customers for use on their first Order, a practice we began emphasizing in 2016. We also attract new customers by word of mouth, including through our customer referral program, through which certain existing customers may invite others to receive a complimentary meal delivery. We intend to continue

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investing in marketing and offering promotional discounts to drive customer acquisition. We are also increasingly focused on using marketing to drive customer retention, customer engagement and brand awareness, and to support that effort we have expanded our investment in offline paid marketing.

          In addition to marketing, we continue to invest in our products, brand and overall customer experience, each of which further drives customer acquisition, customer retention and customer engagement and encourages repeat purchases. We also engage with our customers through social media, our website, blog, in-box content and mobile application, including through how-to videos, visual imagery and original stories about our ingredients and suppliers, to deepen our customers' connection with our brand. Our flexible platform allows customers to interact with us by either actively managing or passively receiving orders, and we believe this flexibility drives higher customer engagement, loyalty and retention over the long term.

Marketing Efficiency

          In managing our marketing expenses, we evaluate the efficiency of our marketing efforts in connection with our goal of maximizing customer lifetime value. We evaluate our marketing efficiency primarily from three perspectives: (1) our marketing spend per customer, or Cost per Customer, (2) our cumulative net revenue generated per Customer and (3) the associated cost of goods sold, excluding depreciation and amortization, as a percentage of net revenue, which we view as a key measure of our operational efficiency.

          To illustrate the efficiency of our marketing initiatives, we compared in the chart below the cumulative net revenue per Customer over specific time increments from their first purchase with our cumulative Cost per Customer for the corresponding time period.

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GRAPHIC


(1)
Cost per Customer, or CPC, is calculated as cumulative marketing expenses for the years 2014, 2015, 2016 and the first quarter of 2017, divided by the total number of Customers acquired during such period. The Cumulative Net Revenue columns reflect cumulative net revenue per Customer from Customers acquired between 2014 and 2016. Each column reflects cumulative net revenue for the Customers in the applicable cohort divided by the total number of Customers in that cohort. The chart presents the average cumulative net revenue generated by all Customers included in the applicable cohorts, including from Customers that ordered only once and then ceased ordering as well as those Customers that continued to order from us and thus ordered multiple times. For a Customer to be included in the calculation for a particular column, the length of time that has elapsed since the Customer first purchased from us must be at least as long as the time period indicated for such column. Accordingly, the number of Customers included in the cumulative net revenue per Customer columns decreases as the time intervals increase. For example, the six-month column is calculated using the cumulative net revenue during the first six months following a Customer's first purchase from all Customers who first purchased from us between January 1, 2014 and September 30, 2016 (i.e., Customers who first purchased at least six months prior to the end of the first quarter of 2017). Customers acquired after September 30, 2016 are not included in any Cumulative Net Revenue column calculations because their first purchase occurred less than six months before the end of the first quarter of 2017.

          Using the same methodology as above, cumulative net revenue per Customer for the six months after such Customer's first Order was $402 for 2014 cohorts, $451 for 2015 cohorts and $387 for 2016 cohorts. We believe Cost per Customer accurately represents our average marketing spend per Customer for the periods presented. Cumulative net revenue per Customer is driven by our ability to retain and engage Customers once we have acquired them, and therefore we believe cumulative net revenue per Customer accurately portrays Customer behavior relative to the costs incurred to acquire, engage and retain Customers.

          We believe the above cohorted cumulative net revenue per Customer analysis illustrates our historical costs to acquire, retain and engage customers and the efficiency of our marketing expenses. The chart above also illustrates that, while we derive significant revenue from those Customers that continue to make purchases from us, over time our Customers on average order less frequently or sometimes cease ordering, as evidenced by the declining increases in cumulative net revenue per Customer over the time intervals presented. We further note that the above analysis does not reflect the variable costs of producing net revenue, including our cost of goods sold, excluding depreciation and amortization.

          We further measure the efficiency of our marketing spend and the lifetime value of Customers by comparing the net contribution per Customer for an applicable cohort to our Cost per Customer.

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We calculate the net contribution per Customer for a particular cohort by subtracting the cost of goods sold, excluding depreciation and amortization, associated with Orders by such Customers occurring in a particular cohort from the net revenue associated with such Orders. To do so, we use the average cost of goods sold, excluding depreciation and amortization, for the period in which such Orders occurred. For Orders occurring in 2015 and 2016 and the first quarter of 2017, we use the average per Order cost of goods sold, excluding depreciation and amortization, for the applicable quarter in which such Order occurred, and for Orders occurring in 2014, we use the annual average per Order cost of goods sold, excluding depreciation and amortization. Using this methodology, our net contribution per Customer for the six month period after such Customer's first order was $115 for the period from the first quarter of 2014 to the first quarter of 2017, which is equal to 1.2 times our Cost per Customer of $94 for the corresponding period.

          We chose to use a six-month interval following a Customer's first purchase to illustrate marketing efficiency because we believe that such presentation enables us to reflect the effects of the ordering behaviors both of those Customers who, during that relatively short period, determine that our product offerings do not fit their lifestyles, tastes or preferences, as well as those Customers who continue to order from us. We believe that any shorter period of time would not accurately account for Customers who cease purchasing after their first few purchases, while any longer period of time would, by definition, exclude our most recently acquired Customers and thus provide less visibility into recent trends.

          For the 2015 cohorts, our cumulative net revenue was positively impacted by the introduction of our Family Plan in the first quarter of 2015, which increased our ability to meet the needs of a wider range of customers and enabled us to introduce higher per Order price points. In addition, we opened our third fulfillment center in Arlington, Texas in the third quarter of 2015, which enabled us to expand our delivery capability to over 99% of the U.S. population and to more cost-effectively deliver products to customers located in the central United States.

          Over the course of the three-year period from 2014 to 2016, promotional discounts became an important part of our marketing strategy to attract new customers and accordingly have impacted our marketing efficiency. For example, the primary driver for the decline in cumulative net revenue per Customer for the six-months after such Customer's first paid Order from $402 to $387 from 2014 to 2016 was the increased use of promotional discounts to attract new Customers.

          We are currently in the process of introducing additional product expansions to increase both customer flexibility (the ability to select greater or fewer recipes per Order) and the number of recipe options (the ability to choose from a greater number of recipes each week). We expect that this product expansion will favorably impact our cumulative net revenue per Customer.

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GRAPHIC

          During the period from 2014 to 2016, our marketing expenses increased from $14 million to $144 million, an increase of approximately 930%. As part of scaling our marketing strategy, we have increased marketing expenses related to all three of our major advertising channels (offline media, online media and our customer referral program). Beginning in 2016, however, a larger portion of our spending has been on offline channels. We believe increased emphasis on offline channels will drive stronger brand awareness, customer engagement and, ultimately, customer retention. During 2016, 92% of our net revenue was generated from Repeat Orders, ranging from 89% to 93% across each of the four quarters of 2016. For the three months ended March 31, 2017, 92% of our net revenue was generated from Repeat Orders.

          In addition, in 2016 we began adjusting our marketing strategies around seasonal trends in our business, and we anticipate that the first quarter of each year will generally represent our strongest quarter in terms of customer engagement. See "—Quarterly Results of Operations and Other Financial and Operations Data—Marketing." As a result, we expect that the first quarter of 2017 will represent our highest levels of quarterly marketing expenses as a percentage of net revenue in 2017 and that our quarterly marketing expenses as a percentage of net revenue will decline during the balance of 2017.

Product Offerings

          Our ability to enhance our existing products and introduce new products will impact our revenue and results of operations. We make ongoing changes to our products intended to enhance the customer experience. Today, to accommodate various customer lifestyles, we offer both a 2-Person Plan and a Family Plan for our meals, each with flexibility in recipe selection. In addition, for certain customers, we offer increased flexibility (greater or fewer recipes per order) and additional options (the ability to choose from a greater number of recipes) in our product offerings, and we plan to make this increased flexibility and additional options available to all customers in the future. We are also focused on brand extensions that are complementary to our meal

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experience, such as Blue Apron Wine and Blue Apron Market. We believe that by introducing new products and increasing the choices available, we will better attract and retain customers. Our customers' choices from among our product offerings will impact our revenue and results of operations, and as we introduce additional products and increase flexibility in our existing products, our customers' behavior and engagement with us may change.

Operational Execution

          Our ability to effectively coordinate supply and demand and execute across our end-to-end value chain impacts our customer experience and our operating results. We begin by working with our suppliers, often months in advance of creating our menus. We then continue to forecast demand as well as monitor and evaluate our expected supply of ingredients, retaining flexibility to finalize recipes in the weeks leading up to shipment. We operate three technology-enabled, refrigerated fulfillment centers that collectively employ approximately 4,600 employees as of April 30, 2017. Each fulfillment center includes an operation that portions ingredients into exact quantities for each week's recipes using a combination of automated methods, manual labor, and warehousing, packaging and shipping operations. We utilize a company-managed, third-party delivery network that optimizes outbound logistics, including packing materials and the choice of carrier, on a zip code by zip code basis to ensure cost-effective, timely and safe delivery of our orders.

Capital Investment to Support our Growth

          Our strategic investments in our fulfillment center operations will significantly impact our ability to continue to grow our business, introduce new products, increase variety to customers, and create efficiencies in our cost structure. We have made significant investments to scale our operations and support the growth of our business, and we plan to continue this investment. In the near term, we plan to further invest in equipping our fulfillment centers with automated portioning and packaging equipment, which we believe will increase our operational efficiency. In 2016, we also signed leases and began building out two new fulfillment centers in New Jersey and California.

Seasonality

          We experience seasonality in our business that impacts the level at which customers engage with our products and brand. While we believe these seasonal trends have affected and will continue to affect our results, our historical trajectory of rapid growth has masked these effects to date. 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. Our marketing strategies, which are informed by these seasonal trends, will impact our quarterly results of operations. We expect the impact of these trends on our financial results to be more pronounced in the future.

Components of Our Results of Operations

Net Revenue

          We generate net revenue primarily from the sale of meals to customers through our 2-Person and Family Plans. We also generate net revenue through sales of Blue Apron Wine, which we began offering in September 2015, and through sales on Blue Apron Market, which we launched in November 2014. In addition, we generate net revenue through the sale of products of BN Ranch, which we acquired in February 2017. We deduct promotional discounts and customer credits and refunds expected to be issued to determine net revenue. Customers who receive a damaged meal

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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.

          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 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, Blue Apron Market, and BN Ranch. 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. While we expect these expenses to increase in dollar amount to support our growth, we expect such expenses to decrease as a percentage of net revenue over time as we continue to scale our business.

Marketing

          Our marketing expenses consist primarily of costs incurred to acquire new customers, retain existing customers and build our brand awareness through various offline and online paid advertising channels, including television, digital and social media, direct mail, radio and podcasts, and email.

          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 delivery, 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. We expect to continue to incur marketing expenses to attract and retain customers as well as to promote brand awareness. We anticipate that our marketing strategies, which may be informed by the seasonal trends in our business and the competitive landscape of our market, will fluctuate from quarter-to-quarter and impact our quarterly results of operations.

Product, Technology, General and Administrative

          Product, technology, general and administrative expenses 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; and payment processing fees, professional fees, and other general corporate and administrative costs. While we expect these expenses to increase in dollar amount to support our growth, we expect

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such expenses to decrease as a percentage of net revenue over time as we continue to scale our business.

Depreciation and Amortization

          Depreciation and amortization consists of depreciation expense for our property and equipment and amortization expense for capitalized software development costs.

Interest and Other Income and Expense

          Interest and other income and expense consists primarily of interest expense associated with our revolving credit facility and capital lease financings, offset by interest income on cash and short-term investments balances.

Provision for Income Taxes

          Our 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. For the year ended December 31, 2016 and the three months ended March 31, 2017, we recorded a tax expense of $0.1 million and $0.0 million, respectively, resulting in an effective tax rate of (0.2)% and (0.1)%, respectively. This effective tax rate is lower than the statutory rate as we established a valuation allowance which reduced the tax benefit of our operating loss. In addition, we recorded a state tax provision in certain jurisdictions in which net operating losses were not available.

          As of December 31, 2016, we had U.S. federal net operating loss carryforwards of $62.9 million and state net operating loss carryforwards of $42.0 million. The federal and state net operating loss carryforwards are subject to limitations under applicable tax laws and will expire at various dates beginning in 2033, if not utilized. See Note 14, "Income Taxes" in our consolidated financial statements contained elsewhere in this prospectus.

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Results of Operations

          The following sets forth our consolidated statements of operations data for each of the periods indicated.

    Year Ended
December 31,
    Three Months
Ended
March 31,
 

    2014     2015     2016     2016     2017
 

    (in thousands)  

Net revenue

  $ 77,806   $ 340,803   $ 795,416   $ 172,098   $ 244,843  

Operating expenses:

                               

Cost of goods sold, excluding depreciation and amortization

    72,223     263,271     532,682     112,523     168,531  

Marketing

    13,960     51,362     144,141     25,413     60,605  

Product, technology, general and administrative

    21,811     70,151     165,179     29,690     63,210  

Depreciation and amortization

    611     2,917     8,217     1,485     4,180  

Total operating expenses:

    108,605     387,701     850,219     169,111     296,526  

Income (loss) from operations

    (30,799 )   (46,898 )   (54,803 )   2,987     (51,683 )

Interest income (expense) and other income (expense), net

    (4 )   (6 )   25     57     (470 )

Income (loss) before income taxes

    (30,803 )   (46,904 )   (54,778 )   3,044     (52,153 )

Provision for income taxes

        (61 )   (108 )   (27 )   (41 )

Net income (loss)

  $ (30,803 ) $ (46,965 ) $ (54,886 ) $ 3,017     (52,194 )

          The following table sets forth our consolidated statements of operations data as a percentage of net revenue for each of the periods indicated.

    Year Ended
December 31,
    Three Months
Ended
March 31
 

    2014     2015     2016     2016     2017
 

    (as a percentage of net revenue)  

Net revenue

    100.0 %   100.0 %   100.0 %   100.0 %   100.0 %

Operating expenses:

                               

Cost of goods sold, excluding depreciation and amortization

    92.8 %   77.3 %   67.0 %   65.4 %   68.8 %

Marketing

    17.9 %   15.1 %   18.1 %   14.8 %   24.8 %

Product, technology, general and administrative

    28.0 %   20.6 %   20.8 %   17.3 %   25.8 %

Depreciation and amortization          

    0.8 %   0.9 %   1.0 %   0.9 %   1.7 %

Total operating expenses:

    139.6 %   113.8 %   106.9 %   98.3 %   121.1 %

Income (loss) from operations

    (39.6 )%   (13.8 )%   (6.9 )%   1.7 %   (21.1 )%

Interest income (expense) and other income (expense), net

    (0.0 )%   (0.0 )%   0.0 %   0.0 %   (0.2 )%

Income (loss) before income taxes

    (39.6 )%   (13.8 )%   (6.9 )%   1.8 %   (21.3 )%

Provision for income taxes

        (0.0 )%   (0.0 )%   (0.0 )%   (0.0 )%

Net income (loss)

    (39.6 )%   (13.8 )%   (6.9 )%   1.8 %   (21.3 )%

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Three Months Ended March 31, 2016 Compared to Three Months Ended March 31, 2017

Net Revenue

    Three Months
Ended March 31,
       

    2016     2017     % Change
 

    (in thousands)        

Net revenue

  $ 172,098   $ 244,843     42 %

          Net revenue increased by $72.7 million, or 42%, from $172.1 million for the three months ended March 31, 2016 to $244.8 million for the three months ended March 31, 2017. The increase in net revenue was primarily due to the increase in Orders during the three months ended March 31, 2017 driven by a significant increase in marketing expenses focused on customer acquisition and retention due to our strategy to increase marketing investment during periods of high customer engagement such as the first quarter.

Operating Expenses

Cost of Goods Sold, excluding Depreciation and Amortization

    Three Months
Ended March 31,
       

    2016     2017     % Change
 

    (in thousands)        

Cost of goods sold, excluding depreciation and amortization

  $ 112,523   $ 168,531     50 %

% of net revenue

    65.4 %   68.8 %      

          Cost of goods sold, excluding depreciation and amortization, increased by $56.0 million, or 50%, from $112.5 million for the three months ended March 31, 2016 to $168.5 million for the three months ended March 31, 2017. This increase was driven by an increase in Orders. As a percentage of net revenue, cost of goods sold, excluding depreciation and amortization, increased from 65.4% for the three months ended March 31, 2016 to 68.8% for the three months ended March 31, 2017. The increase in cost of goods sold, excluding depreciation and amortization, as a percentage of net revenue was primarily due to:

    an increase of 290 basis points in labor costs primarily driven by wage increases in our California fulfillment center and increased headcount, such as in supervisor roles, in our fulfillment center operations in anticipation of an increase in product demand and to support our planned product expansion by offering greater flexibility in recipes;

    an increase of 150 basis points primarily due to an annual rate increase from shipping carriers and the expansion of our refrigerated shipping network, which enabled both a reduction in fulfillment packaging costs and improved delivery service to customers; and

    a decrease of 80 basis points in food and product packaging costs driven by operational improvements and improved pricing with suppliers.

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Marketing

    Three Months
Ended March 31,
       

    2016     2017     % Change
 

    (in thousands)        

Marketing

  $ 25,413   $ 60,605     138 %

% of net revenue

    14.8 %   24.8 %      

          Marketing expenses increased by $35.2 million, or 138%, from $25.4 million for the three months ended March 31, 2016 to $60.6 million for the three months ended March 31, 2017. This increase was primarily driven by our continued investment in various offline and online paid advertising channels and our customer referral program to drive customer acquisition as well as an increasing focus on customer retention and brand awareness. As a percentage of net revenue, marketing expenses increased from 14.8% for the three months ended March 31, 2016 to 24.8% for the three months ended March 31, 2017. This increase as a percentage of net revenue primarily included an increase of 1080 basis points for advertising and promotional activity driven by our seasonal marketing strategies in the three months ended March 31, 2017 to increase marketing investment during a period of expected high customer engagement, partially offset by a decrease of 90 basis points in our customer referral program primarily driven by a decrease in the mix of customer referral orders versus total Orders. In addition, this increase in advertising and promotional activity as a percentage of net revenue was driven by increased investment in offline media reflecting our increased focus on customer retention and brand awareness in the three months ended March 31, 2017. We anticipate that our marketing expenses will decline significantly from the first quarter of 2017 to the second quarter of 2017 and that, as a percentage of net revenue, our quarterly marketing expense for each of the remaining three quarters of 2017 will be lower than the seasonally high level in the first quarter of 2017.

Product, Technology, General and Administrative

    Three Months
Ended March 31,
       

    2016     2017     % Change
 

    (in thousands)        

Product, technology, general and administrative

  $ 29,690   $ 63,210     113 %

% of net revenue

    17.3 %   25.8 %      

          Product, technology, general and administrative expenses increased by $33.5 million, or 113%, from $29.7 million for the three months ended March 31, 2016 to $63.2 million for the three months ended March 31, 2017. This increase was primarily due to increased investment to support the growth in our business, including:

    an increase of $17.7 million in personnel costs primarily driven by increased headcount in corporate and other managerial positions;

    an increase of $7.9 million in facilities costs for our corporate offices and fulfillment centers, including occupancy and rent; and

    an increase of $7.7 million in corporate overhead and administrative costs, which includes an increase of $1.4 million in payment processing fees driven by the increase in net revenue.

          As a percentage of net revenue, product, technology, general and administrative expenses increased from 17.3% for the three months ended March 31, 2016 to 25.8% for the three months

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ended March 31, 2017 primarily due to increased investment to support the growth in our business and execute on key business initiatives, such as fulfillment center and other operational improvements and planned product expansion.

Depreciation and Amortization

    Three Months
Ended March 31,
       

    2016     2017     % Change
 

    (in thousands)        

Depreciation and amortization

  $ 1,485   $ 4,180     181 %

% of net revenue

    0.9 %   1.7 %      

          Depreciation and amortization increased by $2.7 million, or 181%, from $1.5 million for the three months ended March 31, 2016 to $4.2 million for the three months ended March 31, 2017. This increase was primarily driven by continued investment in our property and equipment in our fulfillment centers to support the growth in our business. As a percentage of net revenue, depreciation and amortization increased from 0.9% for the three months ended March 31, 2016 to 1.7% for the three months ended March 31, 2017.

Income (Loss) from Operations

    Three Months
Ended March 31,
       

    2016     2017     % Change
 

    (in thousands)        

Income (loss) from operations

  $ 2,987   $ (51,683 )   (1,830 )%

% of net revenue

    1.7 %   (21.1 )%      

          Income (loss) from operations for the three months ended March 31, 2016 and 2017 was $3.0 million and $(51.7) million, respectively. This decrease was due to an increase in operating expenses of $127.4 million, which more than offset the increase in net revenue of $72.7 million. As a percentage of net revenue, income (loss) from operations was 1.7% and (21.1)% for the three months ended March 31, 2016 and 2017, respectively. This decrease as a percentage of net revenue was primarily driven by an increase in operating expenses as a percentage of net revenue primarily due to our seasonal marketing strategies and increased investment to support the growth in our business.

Income Taxes

          The provision for income taxes recorded in the three months ended March 31, 2016 and 2017 reflects state income taxes in certain jurisdictions in which net operating losses were not available to offset our tax obligations.

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Year Ended December 31, 2015 Compared to Year Ended December 31, 2016

Net Revenue

    Year Ended
December 31,
       

    2015     2016     % Change
 

    (in thousands)        

Net revenue

  $ 340,803   $ 795,416     133 %

          Net revenue increased by $454.6 million, or 133%, from $340.8 million for 2015 to $795.4 million for 2016. The increase in net revenue was primarily due to a 133% increase in Orders during 2016 driven by our continued focus on customer acquisition and retention and the continued scaling of our business. Substantially all of the growth in our net revenue from 2015 to 2016 was driven by new customers, as evidenced by the relatively narrow ranges in the quarterly amounts of Average Order Values ($57.12 to $59.40) and Orders per Customer (3.9 to 4.6) in 2015 and 2016. While our marketing expenses have historically been primarily focused on customer acquisition, we anticipate adding additional products and increasing the portion of our marketing expenses focused on brand awareness and customer retention in order to drive increased customer engagement and growth in our net revenue from existing customers.

Operating Expenses

Cost of Goods Sold, excluding Depreciation and Amortization

    Year Ended
December 31,
       

    2015     2016     % Change
 

    (in thousands)        

Cost of goods sold, excluding depreciation and amortization

  $ 263,271   $ 532,682     102 %

% of net revenue

    77.3 %   67.0 %      

          Cost of goods sold, excluding depreciation and amortization, increased by $269.4 million, or 102%, from $263.3 million for 2015 to $532.7 million for 2016. This increase was driven by an increase in Orders. As a percentage of net revenue, cost of goods sold, excluding depreciation and amortization, decreased from 77.3% for 2015 to 67.0% for 2016. The decrease in cost of goods sold, excluding depreciation and amortization, as a percentage of net revenue was primarily due to:

    a decrease of 500 basis points in labor costs driven by operational efficiencies including production optimization, increased automation and more efficient labor planning, including less reliance on higher-priced temporary labor;

    a decrease of 290 basis points in shipping, fulfillment packaging and other direct fulfillment costs driven by operational and pricing improvements and increased use of more cost-effective shipping methods; and

    a decrease of 220 basis points in food and product packaging costs driven by operational improvements and improved pricing primarily due to increased direct relationships with farms and other suppliers.

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Marketing

    Year Ended
December 31,
       

    2015     2016     % Change
 

    (in thousands)        

Marketing

  $ 51,362   $ 144,141     181 %

% of net revenue

    15.1 %   18.1 %      

          Marketing expenses increased by $92.8 million, or 181%, from $51.4 million for 2015 to $144.1 million for 2016. This increase was primarily driven by our continued investment in customer acquisition, including through direct mail, online and television campaigns and our customer referral program. As a percentage of net revenue, marketing expenses increased from 15.1% for 2015 to 18.1% for 2016. This increase as a percentage of net revenue primarily included an increase of 400 basis points for advertising and promotional activity, partially offset by a decrease of 90 basis points in our customer referral program primarily driven by a decrease in cost per Order.

Product, Technology, General and Administrative

    Year Ended
December 31,
       

    2015     2016     % Change
 

    (in thousands)        

Product, technology, general and administrative

  $ 70,151   $ 165,179     135 %

% of net revenue

    20.6 %   20.8 %      

          Product, technology, general and administrative expenses increased by $95.0 million, or 135%, from $70.2 million for 2015 to $165.2 million for 2016. This increase was primarily due to increased investment to support the growth in our business, including:

    an increase of $48.2 million in personnel costs primarily driven by increased headcount in corporate and other managerial positions;

    an increase of $23.5 million in facilities costs for our corporate offices and fulfillment centers, including occupancy and rent; and

    an increase of $22.8 million in corporate overhead and administrative costs, which includes an increase of $9.3 million in payment processing fees driven by the increase in net revenue.

          As a percentage of net revenue, product, technology, general and administrative expenses increased from 20.6% for 2015 to 20.8% for 2016.

Depreciation and Amortization

    Year Ended
December 31,
       

    2015     2016     % Change
 

    (in thousands)        

Depreciation and amortization

  $ 2,917   $ 8,217     182 %

% of net revenue

    0.9 %   1.0 %      

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          Depreciation and amortization increased by $5.3 million, or 182%, from $2.9 million for 2015 to $8.2 million for 2016. This increase was primarily driven by continued investment in our property, equipment, and technology to support the growth in our business. As a percentage of net revenue, depreciation and amortization increased from 0.9% for 2015 to 1.0% for 2016.

Income (loss) from Operations

    Year Ended
December 31,
       

    2015     2016     % Change
 

    (in thousands)        

Loss from operations

  $ (46,898 ) $ (54,803 )   17 %

% of net revenue

    (13.8 )%   (6.9 )%      

          Loss from operations increased by $7.9 million, or 17%, from $46.9 million for 2015 to $54.8 million for 2016. This increase was due to an increase in net revenue of $454.6 million, which was more than offset by an increase in operating expenses of $462.5 million. As a percentage of net revenue, loss from operations decreased from 13.8% for 2015 to 6.9% for 2016. This decrease as a percentage of net revenue was primarily driven by a decrease as a percentage of net revenue in cost of goods sold, excluding depreciation and amortization as a result of the continued scaling of our business.

Income Taxes

          The provision for income taxes recorded in 2015 and 2016 reflects state income taxes in certain jurisdictions in which net operating losses were not available to offset our tax obligations.

Year Ended December 31, 2014 Compared to Year Ended December 31, 2015

Net Revenue

    Year Ended
December 31,
       

    2014     2015     % Change
 

    (in thousands)        

Net revenue

  $ 77,806   $ 340,803     338 %

          Net revenue increased by $263.0 million, or 338%, from $77.8 million for 2014 to $340.8 million for 2015. This increase was primarily due to an increase in Orders driven by continued focus on customer acquisition and the continued scaling of our business. Substantially all of the growth in our net revenue from 2014 to 2015 was driven by new customers.

Operating Expenses

Cost of Goods Sold, excluding Depreciation and Amortization

    Year Ended
December 31,
       

    2014     2015     % Change
 

    (in thousands)        

Cost of goods sold, excluding depreciation and amortization

  $ 72,223   $ 263,271     265 %

% of net revenue

    92.8 %   77.3 %      

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          Cost of goods sold, excluding depreciation and amortization, increased by $191.0 million, or 265%, from $72.2 million for 2014 to $263.3 million for 2015. This increase was driven by an increase in Orders. As a percentage of net revenue, cost of goods sold, excluding depreciation and amortization, decreased from 92.8% for 2014 to 77.3% for 2015. This decrease as a percentage of net revenue was primarily due to:

    a decrease of 1090 basis points in shipping, fulfillment packaging and other direct fulfillment costs driven by improved pricing and operational improvements including packaging efficiencies as well as increased use of more cost-effective shipping methods;

    a decrease of 250 basis points in labor costs driven by more efficient labor planning, including less reliance on higher-priced temporary labor; and

    a decrease of 240 basis points in food and product packaging costs driven by pricing and operational improvements.

Marketing

    Year Ended
December 31,
       

    2014     2015     % Change
 

    (in thousands)        

Marketing

  $ 13,960   $ 51,362     268 %

% of net revenue