Company: NEGG
Filing Date: 2025-04-28
Form Type: 20-F
Source: 0001213900-25-036055
Chunk: 179

Company: Newegg Commerce, Inc.
Filing Date: 2025-04-28
Form: 20-F
Item: Item 18
Chunk 179
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and are recognized when the applicable revenue recognition criteria have been satisfied. For all of the product sales, the Company ships
a large volume of packages through multiple carriers. Actual delivery dates may not always be available and as such, the Company estimates
delivery dates as needed based on historical data. (2) unredeemed gift cards, which are initially recorded as deferred revenue and
are recognized in the period they are redeemed. Subject to governmental agencies’ escheat requirements, certain gift cards not expected
to be redeemed, also known as “breakage,” are recognized as revenue based on the historical redemption pattern. These gift
cards breakage revenue for the years ended December 31, 2024, 2023, and 2022 were immaterial.

F-12

Deferred revenue totaled $27.0million
and $25.6million at December 31, 2024 and 2023, respectively. During the year ended December 31, 2024, the Company recognized
$22.2million of net revenue included in deferred revenue at December 31, 2023. During the year ended December 31, 2023, the
Company recognized $27.6million of net revenue included in deferred revenue at December 31, 2022. During the year ended December
31, 2022, the Company recognized $36.6million of net revenue included in deferred revenue at December 31, 2021.

o. Cost of Sales

The Company’s cost of sales represents
the purchase price of the products it sells to its customers, offset by incentives earned from vendors, including marketing development
funds and other vendor incentive programs. See further discussion of vendor payments under Incentives Earned from Vendors below. Cost
of sales also includes freight-in and freight-out costs and charges related to refurbished, slow-moving, or obsolete inventory along with
payroll and benefit costs related to the Newegg Partner Services.

p. Shipping and Handling

The Company records revenue for certain
shipping and handling billed to its customers. Shipping and handling revenue totaled approximately $9.9million, $12.1million and $15.3million for the years ended December 31, 2024, 2023 and 2022, respectively.

The related shipping and handling costs
are included in cost of sales. Shipping and handling costs totaled approximately $38.1million, $45.9million and $49.2million for the years
ended December 31,