Executive Summary

Q4 2024 delivered strong top-line growth but margin compression: revenue $295.8M (+20.9% y/y; -2.5% q/q), gross margin 22.0% (down 650 bps y/y), diluted EPS $0.76 (down 12.6% y/y; down from $0.98 in Q3) .
Services remained the growth engine (+~40% y/y to $97.1M) with service margin ~19.5%, but product margins were pressured by elevated holiday ground delivery costs and prior high-cost freight inventory flowing through COGS .
FY24 crossed $1.16B revenue (+65% y/y) with $125.8M net income (+33.7% y/y), demonstrating scale despite headwinds; liquidity ended at ~$303M with no debt, enabling ~$29M of buybacks executed out of a $46M plan as of Mar 3, 2025 .
Initial 1Q25 revenue guide of $250–$265M implies sequential decline; management also flagged potential y/y revenue decline in Q2 as it retires lower-margin Noble House SKUs—near-term margin pressure persists before easing as freight normalizes and SKU mix improves .
Catalysts: continued 3P and EU expansion, Noble House inflection later in 2025, freight normalization, and capital returns; near-term risks include macro/furniture demand softness, holiday delivery costs, and tariff/supply-chain shifts (management sees limited direct tariff impact) .

What Went Well and What Went Wrong

What Went Well
- Surpassed $1B annual revenue; FY24 revenue $1.161B (+65% y/y), FY24 net income $125.8M (+33.7% y/y) despite sector headwinds .
- Marketplace scale: TTM GMV $1.34B (+68.9% y/y), active buyers 9,306 (+85.7% y/y), active 3P sellers 1,111 (+36.3% y/y); “global diversification” with Europe GMV +155% y/y (CEO) .
- Service engine resilient: Q4 services $97.1M (+~40% y/y) with service margin ~19.5% (up ~2 pts y/y), reflecting platform engagement and stabilized ocean contract rates (sequentially down vs Q3 spike as expected) .
- Capital allocation: executed ~$29M of $46M buyback authorization; cash, restricted cash and investments ~$303M; debt-free—supports investment and returns .
- Governance/controls: CFO appointment (Erica Wei) and “fully remediated” prior material weaknesses in internal controls (tone of improved reporting quality) .
What Went Wrong
- Margin compression: Q4 gross margin 22.0% (28.5% y/y), net margin 10.5% (14.5% y/y); product margin down y/y and q/q on holiday delivery surcharges and earlier high-cost freight inventory .
- Sequential step-down: Q4 revenue $295.8M vs Q3 $303.3M; diluted EPS $0.76 vs Q3 $0.98; adjusted EBITDA $30.9M vs Q3 $48.8M as costs rose with scale and seasonal logistics spend .
- 1H25 softness ahead: Q1 guide $250–$265M; Q2 could see y/y revenue decline as GCT retires lower-profit Noble House SKUs; ground delivery costs and residual high-cap freight inventory pressure near-term margins .

Financial Results

Metric	Q4 2023	Q3 2024	Q4 2024
Revenue ($M)	244.737	303.316	295.782
Gross Profit ($M)	69.837	77.251	64.990
Gross Margin (%)	28.5%	25.5%	22.0%
Net Income ($M)	35.575	40.685	30.959
Net Margin (%)	14.5%	13.4%	10.5%
Diluted EPS ($)	0.87	0.98	0.76
Adjusted EBITDA ($M)	43.815	48.799	30.902
Adjusted EPS – diluted ($)	1.07	1.15	0.75

Highlights:

Revenue +20.9% y/y but -2.5% q/q; gross margin fell 650 bps y/y on product delivery surcharges and earlier freight costs; adjusted EBITDA -36.6% q/q from Q3’s unusually high service margins tied to ocean freight dynamics .

Segment breakdown (Q4 y/y comparison):

Segment ($M)	Q4 2023	Q4 2024
Service Revenues	69.336	97.107
Product Revenues	175.401	198.675
Service Cost of Revenues	57.291	78.188
Product Cost of Revenues	117.609	152.604

KPIs (TTM):

KPI	TTM Sep 30, 2024	TTM Dec 31, 2024
Marketplace GMV ($M)	1,233.6	1,341.4
3P GMV ($M)	635.5	693.9
Active 3P Sellers	1,051	1,111
Active Buyers	8,535	9,306
Spend per Active Buyer ($)	144,534	144,142

Q4 2024 actual vs Wall Street consensus*:

Metric	Q4 2024 Actual	Q4 2024 Consensus*	Surprise
Revenue ($M)	295.782	N/A*	N/A
Diluted EPS ($)	0.76	N/A*	N/A

*Values retrieved from S&P Global: consensus data unavailable at time of analysis due to access limits.

Non-GAAP adjustments context:

Adjusted EBITDA: excludes interest, taxes, D&A, share-based comp, and non-recurring items; Q4 2024 included ~$0.2M non-recurring item related to a Japan FC fire; FY24 fire-related net losses were largely offset by insurance proceeds .
Adjusted EPS – diluted reconciliation provided; Q4 2024 adjusted EPS $0.75 vs GAAP $0.76 (timing of tax/interest/investment income, D&A, SBC) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance / Actual	Change
Total Revenue ($M)	Q4 2024	$275–$290 (issued Nov 7, 2024)	$295.8 actual	Beat guidance
Total Revenue ($M)	Q1 2025	—	$250–$265	New guide; sequential decline vs Q4 actual
Revenue (qualitative)	Q2 2025	—	Potential y/y decline as older Noble House SKUs retired	New qualitative view
Gross Margin (qualitative)	Q1–Q2 2025	—	Near-term pressure: ground delivery surcharges (holiday timing) and residual high-cap freight inventory; easing as fixed-rate ocean contracts flow through	Qualitative
Capital Returns	12 months from Sep 3, 2024	$46M authorization	~$29M executed as of Mar 3, 2025; additional ~$6M post-Q4 to date	Ongoing execution

Earnings Call Themes & Trends

Topic	Q-2 (Q2 2024)	Q-1 (Q3 2024)	Current (Q4 2024)	Trend
Supply chain & freight	Ocean spot spike; shifted to fixed-rate contracts; margin impact manageable; new FCs ramping (4–6 months)	Service margin uplift on fixed-rate ocean; flagged holiday ground delivery cost of up to ~$4.5M in Q4	Ocean rates normalized in Q4; product margins hit by holiday ground surcharges and high-cost inventory; Q1 to still reflect last of high-cap freight inventory	Stabilizing ocean; near-term ground delivery pressure easing post-Q1
Tariffs/macro	Category weak; hedged via fixed-rate ocean; expanding EU; macro headwinds	Diversification; more than half of 1P US supply from SE Asia; platform helps 3P adjust; limited tariff impact	“No terribly material impact” expected; furniture price elasticity low; platform channel-agnostic for supply shifts	Managed exposure; limited direct tariff risk per mgmt
Noble House integration	Outdoor drove Q2; breakeven targeted by YE24; 5% SKUs on marketplace; gradual opening	Breakeven by YE24 on track; ~300 new SKUs in development	Breakeven achieved; Phase 3 SKU rationalization; Q2 revenue softening; scaling winners by late 2025	Execution progressing; profit lift expected later 2025
Technology/BaaS/Wondersign	BaaS pilot launched; Wondersign integration; >10M sq ft fulfillment	Tech upgrades; Wondersign strengthening brick-and-mortar; more updates ahead	Wondersign rebranding to “Wonder” with mobile-first app (GIGA IQ); early adoption among suppliers/retailers	Expanding SaaS enablement for B&M
Europe	Product revenue +139% y/y in Q2; EU expansion	EU revenue +140% y/y; strong momentum	EU GMV +~155% y/y; new Germany FC opened in early 2025	Fastest-growing geography
Controls/Governance	—	—	Material weaknesses “fully remediated”; CFO appointment (Wei)	Strengthening governance
Capital returns	—	$46M buyback authorized; shares to be retired	~$29M executed; ~$6M post-Q4 to date	Ongoing repurchases

Management Commentary

“2024 was a landmark year… surpassed $1 billion in total revenues… resilience of our B2B Marketplace… standout progress in Europe… 155% GMV growth year over year.” — Larry Wu, CEO .
“Service revenues exceeded $97 million… service margin was 19.5% in the fourth quarter… ocean freight prices began returning to normal levels in the fourth quarter.” — Erica Wei, CFO .
“Product margin declined… due to elevated ground delivery fees during the holiday season [and] increased procurement costs… moving through inventory procured during elevated ocean freight spot rates.” — Erica Wei, CFO .
“We expect further temporary softening in Q2… retire a number of older, less profitable SKUs… focus on profitable growth, not just growth.” — Erica Wei, CFO .
“We don’t really expect any terribly material impact from tariffs directly… non-value dense category… very low single-digit retail price impact.” — Erica Wei, CFO .

Q&A Highlights

Guide deceleration drivers: Q1 midpoint implies low-single-digit growth; softness from macro and specific channels; Q2 impacted by Noble House SKU rationalization during its seasonal peak (outdoor) .
Margin outlook: Q1/Q2 pressure persists with residual high-cap freight inventory and holiday ground costs; improvement later as fixed-rate ocean contracts and SKU mix benefits flow through .
Noble House contribution: Q1 likely flat to slightly lower depending on SKU retirements and channel performance; breakeven achieved in 2024, with more meaningful profitability toward late 2025 .
Tariffs: Limited impact expected; platform enables flexible supply-chain shifts; more than half of 1P US supply from SE Asia reduces exposure .
Strategic M&A: Priority on EU logistics/network and brick-and-mortar enablement; tech assets like Wondersign/Wonder; product/category adjacencies akin to Noble House .

Estimates Context

S&P Global consensus for Q4 2024 revenue and EPS was unavailable at the time of analysis due to access limits; as such, we compare to company guidance and actuals only. Q4 actual revenue $295.8M vs prior guide $275–$290M (beat) . Q1 2025 revenue guided to $250–$265M; consensus unavailable* .
Implication: Sell-side models likely need to reflect lower 1H25 revenue trajectory (Q1 guide down seq.; potential Q2 y/y decline) and margin pressure assumptions (holiday delivery costs, residual high-cap freight) before recovering in 2H25 as mix normalizes and SKU optimization progresses .
Note: Consensus values were not retrievable via S&P Global at the time of this report; any estimate comparisons are therefore omitted.*

*Values retrieved from S&P Global.

Key Takeaways for Investors

Quality topline, pressured margins: Strong Q4 revenue but margin compression on seasonal logistics and earlier freight costs—expect near-term headwinds to persist into Q1/Q2 before easing as fixed-rate ocean and SKU optimization kick in .
Service engine + platform scale: Services grew ~40% y/y with ~19.5% margin; marketplace KPIs (buyers, sellers, GMV) signal durable network effects even in a soft category .
Noble House path to profit: Breakeven achieved; Phase 3 SKU pruning drives Q2 softness but sets up better mix and profitability ramp into late 2025—monitor SKU “winners” scaling cadence .
EU growth runway: Europe remains the fastest-growing region; new Germany FC supports continued share gains and geographic diversification .
Capital returns and balance sheet strength: ~~$303M liquidity, no debt, buyback execution (~~$29M done) provide downside support and optionality for inorganic growth (EU/B&M tech) .
Tariff risk manageable: Direct tariff impact expected to be limited; platform/channel-agnostic model helps participants pivot across supply routes .
Trading setup: Near-term—mind Q1/Q2 guide trajectory and margin compression; potential upside skew if freight/delivery costs ease faster and Noble House SKU winners scale earlier than planned. Medium-term—marketplace flywheel, EU expansion, and SKU mix improvement should support margin rebuilding and EPS growth .

Appendix: Prior Two Quarters Snapshot

Metric	Q2 2024	Q3 2024
Revenue ($M)	310.867	303.316
Gross Margin (%)	24.6%	25.5%
Net Income ($M)	26.969	40.685
Diluted EPS ($)	0.65	0.98
Adjusted EBITDA ($M)	42.744	48.799

Additional notes:

Q3 benefitted from elevated service margins due to ocean freight dynamics and expanded fixed-rate coverage; Q4 normalized as expected with seasonal cost headwinds .
FY24 cash from operations $158.1M; investments in capacity and racking to support scale; capex and leases reflect fulfillment footprint expansion .

All figures as disclosed in the company’s Q4 2024 8-K press release and earnings call, cross-referenced with prior quarters.

GigaCloud Technology Inc (GCT)·Q4 2024 Earnings Summary