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TI

ThredUp Inc. (TDUP)·Q1 2025 Earnings Summary

Executive Summary

  • Record revenue of $71.3M (+10.5% YoY) and Adjusted EBITDA of $3.8M (5.3% margin), driven by strong new buyer acquisition; loss from continuing operations improved to $5.2M and EPS was ($0.04) .
  • Management raised FY25 guidance: revenue to $281–$291M (+10% YoY midpoint) and Adjusted EBITDA margin to ~4.0%; Q2 revenue guide is $72.5–$74.5M with GM 77–79% and ~3.3% Adjusted EBITDA margin .
  • KPIs inflected positively: Active Buyers 1.37M (+5.7% YoY) and Orders 1.37M (+16.1% YoY); cash, restricted cash, and investments increased to $55.4M (+$2.6M QoQ) .
  • Stock narrative catalysts: raised outlook, accelerating marketplace momentum, and AI-led product improvements (Shop Social, Shop Similar) that are lifting conversion (e.g., 64% higher conversion in “shop similar” sessions; ~4x conversion vs non‑AI searches for Shop Social beta) .

What Went Well and What Went Wrong

  • What Went Well

    • “Record quarter for new buyer acquisition” with new buyers +95% YoY; April was the strongest new customer acquisition month in company history (CEO) .
    • Adjusted EBITDA doubled YoY to $3.8M (5.3% margin), with “powerful margin flow-through on incremental revenue” as momentum outpaced spend (CFO) .
    • AI-led product enhancements: sessions using “Shop Similar” have 64% higher conversion; Shop Social in beta shows ~4x conversion vs non‑AI searches (CEO) .

  • What Went Wrong

    • Gross margin fell 100 bps YoY to 79.1% due to higher incentives to convert first-time buyers and elevated shipping/labor/packaging costs .
    • Continued GAAP losses: loss from continuing operations was $5.2M and EPS was ($0.04) for Q1 .
    • Management guided Q2 Adjusted EBITDA margin (~3.3%) below Q1’s 5.3% as they reinvest in growth; average revenue per order declined ~5% on mix shift to new buyers/promotions (CEO) .

Financial Results

MetricQ1 2024Q4 2024Q1 2025
Revenue ($USD Millions)$64.533 $67.267 $71.291
Gross Margin (%)80.1% 80.4% 79.1%
Adjusted EBITDA ($USD Millions)$1.888 $4.989 $3.808
Adjusted EBITDA Margin (%)2.9% 7.4% 5.3%
Loss from Continuing Ops ($USD Millions)$(12.190) $(8.059) $(5.215)
EPS – Continuing Ops ($USD)$(0.11) $(0.07) $(0.04)
KPIQ1 2024Q4 2024Q1 2025
Active Buyers (000s)1,296 1,274 1,370
Orders (000s)1,181 1,226 1,371
Free Cash Flow ($USD Millions)$2.162 $(1.800) $3.928
Cash, Restricted Cash & ST Securities ($USD Millions)N/A$52.8 $55.4

Notes:

  • ThredUp operates a single reportable segment; no segment breakdown applies .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)FY 2025$270–$280 $281–$291 Raised
Adjusted EBITDA Margin (%)FY 2025~3.3% (flat to FY24) ~4.0% Raised
Gross Margin (%)FY 202577–79 77–79 Maintained
Revenue ($USD Millions)Q2 2025N/A$72.5–$74.5 New
Gross Margin (%)Q2 2025N/A77–79 New
Adjusted EBITDA Margin (%)Q2 2025N/A~3.3 New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
AI/technology initiativesSuite of AI tools launched; image search recognized by TIME; improving search diversity Shop Social beta (~4x conversion vs non‑AI); Shop Similar (+64% conversion); personalized discovery scaling Strengthening; broader deployment
Tariffs/macro and de minimisEarly commentary on macro; momentum improving in U.S. De minimis closure and tariff proposals could be tailwinds; ad spend reductions by SHEIN/Temu lowering CAC (CEO/CFO) Potential positive tailwind
Marketplace flywheel (buyers/supply)Fresh listings up; premium selling expanding; capacity sufficient New buyers +95% YoY; active buyers +5.7%; inbound processing investments; premium items have ~60% higher contribution margins Accelerating growth
Marketing/CAC/paybacksPlan ~19% of revenue on marketing; sub‑12‑month payback target CACs attractive; LTV/CAC trending toward highs; reinvest outperformance to growth More spend, efficient returns
Product performanceImage search benefits; fresh listings driving retention Dresses top category; pricing steady; ARPO down ~5% on new buyer mix Stable pricing; mix effects
RaaS/brand partnershipsOngoing; exit Europe Open-sourcing branded resale tech; lowering fees; “universal recommerce layer” vision Strategic shift to scale RaaS

Management Commentary

  • CEO: “We are proud to deliver Q1 out‑performance, including a record quarter for new buyer acquisition… raising our full year outlook” .
  • CEO: April “being the strongest new customer acquisition month in our history,” with de minimis closure and tariffs potentially adding tailwinds .
  • CFO: “As momentum accelerated through March, we were unable to spend marketing and processing fast enough, driving our EBITDA beat… powerful margin flow‑through on incremental revenue” .
  • CEO: AI product updates: Shop Similar sessions +64% conversion; Shop Social beta ~4x conversion; personalized sort and brand discovery improving relevance .
  • CEO: Premium consignment: “contribution margins from premium items sold are 60% higher than regular items” .
  • CEO: Seller innovations: “8% of returns now include items for resale… on average customers are including nine items” .

Q&A Highlights

  • Outlook cadence: Revenue expected to accelerate Q2→Q3; EBITDA margin to peak ~4.5% in Q3 then normalize to ~4% for FY25 (CFO) .
  • Marketing intensity and returns: Plan ~19% of revenue on marketing; LTV/CAC trending toward highs; reinvest growth while maintaining positive free cash flow (CEO/CFO) .
  • Category/pricing: Dresses strongest; pricing steady; ARPO down ~5% due to new buyer promotions (CEO) .
  • Tariffs and ad market: Potentially lower CPCs as some fast-fashion ad buyers pull back; secondhand advantage if new apparel prices rise (CEO) .

Estimates Context

  • Q1 2025 Wall Street (S&P Global) consensus vs actual:
    • Revenue: $67.54M* vs $71.29M; bold beat (+$3.8M) .
    • EPS (Primary): ($0.07)* vs ($0.04); bold beat (+$0.03) .

Values retrieved from S&P Global.*

Implications:

  • The revenue and EPS beats, combined with raised FY25 guidance, support estimate revisions upward on revenue and modestly on margins given reinvestment into marketing .

Key Takeaways for Investors

  • Growth inflection: double‑digit revenue growth (+10.5% YoY) with improving loss metrics and positive free cash flow; momentum supported by AI‑enhanced conversion and efficient CACs .
  • Guidance raised: FY25 revenue and Adjusted EBITDA margin increased, signaling confidence in marketplace flywheel and AI strategy execution .
  • Near‑term margin mix: Expect gross margin pressure from elevated new buyer incentives and Q2 EBITDA margin stepping down as reinvestment accelerates; margins should peak in Q3 as scale benefits flow through .
  • Structural tailwinds: De minimis closure and tariff dynamics may strengthen secondhand value proposition and lower advertising costs, potentially improving acquisition efficiency (watch CAC trends) .
  • Execution priorities: Maintain gross margin discipline while scaling premium consignment (60% higher contribution margin) and inbound processing to support buyer growth .
  • Liquidity runway: Ending Q1 with $55.4M in cash/restricted cash/short‑term securities and positive operating cash flow; FY25 goal of positive annual free cash flow reiterated .
  • Trade: Near‑term, trade the beat/raise and Q2 setup with reinvestment narrative; medium‑term, thesis hinges on sustained AI‑driven conversion, buyer growth, and operating leverage to reach consistent profitability .