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GigaCloud Technology Inc (GCT)·Q2 2025 Earnings Summary

Executive Summary

  • Record quarterly revenue of $322.6M (+3.8% YoY) with gross margin at 23.9% and net income of $34.6M (+28.1% YoY); GAAP diluted EPS $0.91 and Adjusted EPS $1.14. Strong marketplace KPIs underpin performance.
  • Results materially beat S&P Global consensus: revenue $322.6M vs $290.1M estimate; Primary EPS $1.14 vs $0.42 estimate. Management cited Europe strength and Noble House SKU rationalization as drivers. Values retrieved from S&P Global.*
  • Q3 2025 revenue guidance set at $295–$310M, with an expected ~250 bps gross margin headwind due to tariff-related cost timing; targeted pricing planned to mitigate over time.
  • Capital allocation remains active: cumulative repurchases ~4.3M shares for $71M under a $78M authorization; liquidity ~$304M (cash, restricted cash, investments).

What Went Well and What Went Wrong

What Went Well

  • Europe momentum: Q2 Europe revenue grew ~59% YoY, now ~25% of global product sales; opened an additional German fulfillment center in July as Europe becomes a strategic pillar.
  • Noble House SKU rationalization: retired ~3,800 stale SKUs, added ~1,200; product margin improved 174 bps sequentially to 29.2% and Noble House margin now ~3 pts behind legacy GigaCloud. “These efforts are now paying dividends.”
  • Marketplace scale and engagement: TTM GMV rose to $1,438.5M (+31% YoY); active buyers up 50.9% YoY to 10,951; active 3P sellers up 24.9% YoY to 1,162.

What Went Wrong

  • Service margin pressure: service margin 11.4%, down ~450 bps sequentially due to lower ocean spot rates and temporary April–May shipping disruptions from tariff uncertainty.
  • U.S. domestic product sales decline: down ~11% YoY, split between ~5% impact from proactive SKU rationalization and ~6% broader industry headwinds.
  • Gross margin outlook headwind: Q3 gross margin expected to face an unmitigated ~250 bps impact from tariff-driven cost timing, with mitigation through targeted price increases requiring time.

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$295.8 $271.9 $322.6
Gross Margin %22.0% 23.4% 23.9%
Net Income ($USD Millions)$31.0 $27.1 $34.6
Net Income Margin %10.5% 10.0% 10.7%
Operating Income ($USD Millions)$27.6 $28.3 $35.8
Adjusted EBITDA ($USD Millions)$30.9 $33.2 $43.3
Diluted EPS (GAAP) ($)$0.76 $0.68 $0.91
Adjusted EPS – diluted ($)$0.75 $0.83 $1.14

Segment breakdown (Q2 2025):

SegmentRevenue ($USD Millions)Margin %
Product$225.7 29.2%
Services$96.9 11.4%

KPIs (TTM unless noted):

KPIQ4 2024Q1 2025Q2 2025
GigaCloud Marketplace GMV ($USD Millions)$1,341.4 $1,416.7 $1,438.5
3P Seller GMV ($USD Millions)$693.9 $734.3 $757.5
Active 3P Sellers1,111 1,154 1,162
Active Buyers9,306 9,966 10,951
Spend per Active Buyer ($)$144,142 $142,156 $131,359

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total RevenuesQ2 2025$275–$305M (May 12, 2025) n/aExceeded: Actual $322.6M
Total RevenuesQ3 2025n/a$295–$310M New
Gross MarginQ3 2025n/a~250 bps headwind vs Q2 (unmitigated) Headwind

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Tariffs/Macro & Supply Chain“Challenging macroeconomic environment” noted with strong resilience in 2024 results Tariff hikes created temporary April–May disruptions; supply chain agility via SFR mitigated impact Elevated macro volatility; operational agility emphasized
Europe ExpansionEuropean GMV +155% YoY; global diversification highlighted Europe revenue +59% YoY; added new German FC; increasing 3P interest to diversify to Europe Strengthening; becoming strategic pillar
3P Ecosystem & Marketplace Scale3P GMV +62.8% YoY; active buyers +85.7% Active buyers +50.9% YoY; 3P GMV +32.5% YoY; expanding 3P into Europe Continued growth; broader geographic diversification
Noble House PortfolioNot highlighted in prior press releases reviewedSKU rationalization driving margin improvement; margin now ~3 pts behind legacy Improving margin profile; nearing steady-state cadence
Services & Ocean FreightService revenues +$97.1M in Q4 Lower ocean spot rates and temporary volume declines compress service margin to 11.4% Near-term margin pressure; normalization expected

Management Commentary

  • Larry Wu (CEO): “Despite a challenging environment, we continue to grow and have achieved our highest quarterly revenue to date… powered by accelerating performance from our Noble House portfolio… These results validate the strength of our Marketplace and the differentiated advantages of our Supplier Fulfilled Retailing (SFR) model.”
  • Larry Wu (CEO): “We started this quarter facing heightened tariff… A number of our 3P partners halted shipping… Rather than a setback, I see this event as a proving ground for the marketplace and the SFR model.”
  • Iman Schrock (President): “Europe continues to be one of our strongest growth areas… we opened an additional fulfillment center in Germany… Over time, we see Europe as having the potential of becoming… comparable scale and significance to our domestic U.S. operations.”
  • Erica Wei (CFO): “Product margin improved by 174 basis points sequentially to 29.2%… Service margin came in at 11.4%, down sequentially by 4.5%… We expect an around 2.5% gross margin headwind in the coming quarter.”
  • Erica Wei (CFO): “Under these programs, we have repurchased approximately 4.3 million shares for $71 million… With a solid, debt-free balance sheet, and strong operating cash flow generation, we remain focused on disciplined capital deployment to drive shareholder returns.”

Q&A Highlights

  • Noble House performance and SKU rationalization: Management ahead of schedule; Q2 performance “better than expected” during outdoor peak season; portfolio expected to stabilize by next summer.
  • Tariffs and sourcing flexibility: Emphasis on dynamic supplier network enabling rapid pivoting across geographies to manage tariff and build-cost trade-offs.
  • Upside drivers vs initial guidance: Noble House outperformed conservative expectations, driving Q2 upside.
  • Gross margin headwind magnitude and mitigation: ~250 bps headwind is unmitigated; targeted price increases will help but require time for full supply-chain digestion.

Estimates Context

Q2 2025 vs S&P Global consensus:

MetricConsensusActualSurprise
Revenue ($USD)$290,079,670*$322,606,000 +$32,526,330; +11.2%*
Primary EPS ($)$0.415*$1.14*+$0.725; +174.7%*

Q3 2025 guidance vs S&P Global consensus:

MetricCompany GuidanceS&P ConsensusNotes
Revenue ($USD)$295–$310M $300,962,250*Guidance brackets consensus; aligns broadly*
Primary EPS ($)n/a$0.72333*No company EPS guide; margin headwind ~250 bps noted *

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Q2 delivered a substantive beat vs consensus on both revenue and EPS, underpinned by Europe strength and Noble House SKU-driven margin gains; sequential gross margin expanded 50 bps to 23.9%. *
  • Services margin compression is transitory, tied to ocean spot rate declines and temporary April–May shipment pauses; management expects normalization as volumes return.
  • Q3 guide ($295–$310M) with an expected ~250 bps gross margin headwind reflects tariff-related cost timing; targeted price increases are the key lever, but mitigation will be gradual.
  • Marketplace KPIs continue to scale (TTM GMV $1.44B; active buyers 10,951), supporting durable growth and improved mix as 3P expands into Europe.
  • Noble House is becoming a meaningful margin contributor ahead of plan, reducing portfolio drag and improving consolidated product margins.
  • Capital returns remain robust with ~$71M repurchases to date under the current authorization, supported by strong liquidity and operating cash flow ($48M YTD).
  • Near-term trading: expect sensitivity to margin headlines and tariff narratives; medium-term thesis centers on marketplace scale, European expansion, and SKU optimization driving sustainable margin uplift and cash generation.