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01/10 16:01
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals positive growth in active buyers and revenue guidance. AI enhancements and RaaS strategy are promising, though not immediately impactful. Strong performance in key categories and efficient marketing spending further support a positive outlook. However, some uncertainty remains due to lack of specifics in management's responses. Considering the overall positive sentiment and strategic initiatives, the stock is likely to see a positive movement of 2% to 8%.
Revenue Revenue totaled $77.7 million, an increase of 16.4% year-over-year. This growth was driven by significant investments into marketing and inbound processing to drive the marketplace flywheel.
Gross Margin Gross margin was 79.5%, a 70 basis point increase versus the same quarter last year. This improvement was due to higher average selling prices from the rapid growth in premium supply, slightly offset by higher incentives required for new buyers.
Adjusted EBITDA Adjusted EBITDA was $3 million or 3.9% of revenue, doubling from last year and representing a 170 basis point margin improvement. This was due to leveraging multiyear investments and revenue outperformance.
Active Buyers Active buyers were 1.5 million for the trailing 12 months, up 16.5% year-over-year. This growth was attributed to record new buyer acquisition, which was up 74% year-over-year.
Orders Orders were up 20.8% year-over-year to 1.5 million, driven by strong customer growth and engagement.
Cash and Securities Cash and securities increased to $56.2 million from $55.4 million at the beginning of the quarter, generating $800,000 in cash. This was achieved despite $3.3 million spent on CapEx.
AI-driven product experiences: ThredUp has been investing in AI-led product innovations for over 18 months. Features like Visual Search, Style Chat, Image Search, and Shop Similar have improved customer engagement. Sign-up rates increased by 30% year-over-year, and sign-up to purchase rates rose by 60%. AI-generated images on 100,000 product pages showed promising results, especially for new customers.
Social commerce: ThredUp introduced a feature allowing customers to shop their style inspiration from Instagram and other social media platforms. This feature is live on the iOS app and will expand to other platforms later this year.
Resale as a Service (RaaS) strategy: ThredUp transitioned to an open-source model for its RaaS strategy, engaging with over 60 apparel brands. The company aims to create a universal recommerce layer for the resale ecosystem, similar to AWS for cloud services.
Operational infrastructure and supply chain: ThredUp has invested over $400 million in infrastructure, software, and data to scale its managed marketplace. This includes automation for item identification, measurements, and shipping.
Seller experience improvements: Premium service kits with fees up to $34.99 grew by 44% quarter-over-quarter. A new feature allows customers to resell items when returning products, with volume increasing 4x quarter-over-quarter.
AI and data-driven competitive advantage: ThredUp leverages its proprietary resale database and AI technology to improve margins and customer experience. The company believes its decade-long head start and investments make it difficult for competitors to replicate its model.
Tariff Impact: The closure of the de minimis loophole and potential broad-based tariffs could lead to higher prices for ultrafast fashion goods, which may indirectly benefit ThredUp but also create uncertainties in pricing and production volumes.
Advertising Market Dynamics: Ad markets remain dynamic, with fluctuations in advertising rates due to competitors like Shein and Temu. This could impact ThredUp's marketing efficiency and customer acquisition costs.
Operational Hiring Challenges: Increased demand and operational momentum led to hiring challenges in processing operations, which could strain the company's ability to meet growth demands efficiently.
Consumer Environment Uncertainty: Cautious outlook on the current consumer environment, which could impact revenue growth and customer spending behavior.
Seasonal Resale Slowdown: Expected seasonal slowdown in resale activity around the holidays, which could affect Q4 revenue performance.
New Buyer Incentives: Higher incentives required to convert new buyers, which could pressure margins despite higher average selling prices.
Revenue Expectations: For Q3 2025, revenue is expected to range between $76 million and $78 million, representing 25% year-over-year growth at the midpoint. For Q4 2025, revenue is expected to range between $73 million and $75 million, reflecting 10% year-over-year growth at the midpoint. For the full year 2025, revenue is projected to range between $298 million and $302 million, reflecting 15% year-over-year growth at the midpoint.
Gross Margin Projections: Gross margin is expected to range between 77% and 79% for both Q3 and Q4 2025. For the full year 2025, gross margin is projected to be between 78% and 79%.
Adjusted EBITDA: For Q3 2025, adjusted EBITDA is expected to be approximately 4.5% of revenue. For Q4 2025, adjusted EBITDA is projected to be approximately 3% of revenue. For the full year 2025, adjusted EBITDA is expected to be approximately 4.2% of revenue.
Capital Expenditures: Maintenance CapEx levels are expected to be approximately $8 million for the full year 2025.
Market Trends and Consumer Behavior: The closure of the de minimis loophole and potential broad-based tariffs are expected to increase the price of new apparel, enhancing the value proposition for ThredUp's secondhand offerings. Dynamic ad markets are also influencing marketing efficiency.
AI and Technology Investments: ThredUp plans to continue investing in AI-driven product experiences, including AI-generated images and social commerce features, to improve customer engagement and conversion rates. These investments are expected to drive long-term growth and operational efficiency.
Resale as a Service (RaaS) Strategy: ThredUp is transitioning to an open-source model for its RaaS strategy, engaging with over 60 apparel brands. This strategy aims to create a universal recommerce layer for the resale ecosystem, with more updates expected in the coming quarters.
The selected topic was not discussed during the call.
The earnings call summary and Q&A reveal positive aspects such as 25% YoY revenue growth, strong gross margins, AI investments, and a strategic RaaS transition. The Q&A highlights confidence in new partnerships and marketing efficiencies. Despite management's reluctance to provide long-term guidance, the optimistic short-term outlook and strategic initiatives suggest a positive stock price movement. The absence of a market cap suggests a moderate response, thus a 'Positive' prediction.
The earnings call reveals positive growth in active buyers and revenue guidance. AI enhancements and RaaS strategy are promising, though not immediately impactful. Strong performance in key categories and efficient marketing spending further support a positive outlook. However, some uncertainty remains due to lack of specifics in management's responses. Considering the overall positive sentiment and strategic initiatives, the stock is likely to see a positive movement of 2% to 8%.
The earnings call highlights strong financial performance with a 10.5% revenue growth and improved EBITDA margins. Despite a slight gross margin decline, the company achieved record free cash flow and increased active buyers. Positive Q&A insights suggest sustained growth and successful strategic execution. The optimistic revenue guidance and potential benefits from trade policy changes further support a positive outlook. However, the lack of a share repurchase program and cautious economic environment temper expectations slightly, leading to an overall positive sentiment.
The earnings call presents a mixed but overall positive outlook. Key positive factors include a 9.5% revenue growth, a 290 basis point increase in gross margin, and a significant improvement in adjusted EBITDA. Despite a decline in active buyers, strong new buyer acquisition and improved consignment sales are promising. The Q&A section highlights management's confidence in growth throughout the year and technological advancements like image search. However, economic and regulatory concerns, along with competitive pressures, temper the outlook slightly. Overall, the sentiment is positive, with expected stock price movement between 2% to 8%.
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