TDUP Q2 2025 New Buyer Acquisition Jumps 74%
- Accelerating New Buyer Acquisition: The management emphasized robust customer growth with new buyer acquisition soaring 74% year-over-year and sustained momentum from Q4 into Q2, which is expected to compound as buyers and sellers increasingly overlap.
- AI-Driven Product Enhancements Boosting Conversion: Significant investments in AI and improvements in the product experience have yielded a notable uptick in visitor-to-customer conversion rates, supporting more effective marketing spend and fueling overall growth.
- Premium Supply Growth and Strategic Supply Chain Innovation: The focus on expanding premium supply—with strong underlying unit economics—and the early promise of the Resale as a Service (RAS) strategy, evidenced by renewed engagement with over 60 apparel brands, lays a foundation for improved gross margins and long-term scalability.
- Macro and Seasonal Headwinds: The Q&A highlighted concerns about a conservative Q4 forecast due to a typical seasonal downshift compounded by weak macroeconomic indicators (e.g., weak jobs and housing markets), suggesting potential revenue disruptions going into the fourth quarter.
- Increased Marketing Costs and Competitive Pressure: Discussions about rising ad rates and increased competition from major players indicate potential margin pressures. Higher CPMs and strategic pullbacks in marketing spend to manage CAC could impact growth and profitability.
- Uncertain Execution and Impact of the RAS Model: Several questions addressed the challenges with the new resell-as-a-service (RAS) strategy, noting that existing contractual obligations and tariff-related uncertainties could delay its material impact, with benefits potentially not being realized until 2026.
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Revenue | Q3 2025 | no prior guidance | $76,000,000 to $78,000,000 | no prior guidance |
Gross Margin | Q3 2025 | no prior guidance | 77% to 79% | no prior guidance |
Adjusted EBITDA (% of Revenue) | Q3 2025 | no prior guidance | Approximately 4.5% of revenue | no prior guidance |
Basic Weighted Average Shares Outstanding | Q3 2025 | no prior guidance | Approximately 125,000,000 shares | no prior guidance |
Revenue | Q4 2025 | no prior guidance | $73,000,000 to $75,000,000 | no prior guidance |
Gross Margin | Q4 2025 | no prior guidance | 77% to 79% | no prior guidance |
Adjusted EBITDA (% of Revenue) | Q4 2025 | no prior guidance | Approximately 3% of revenue | no prior guidance |
Basic Weighted Average Shares Outstanding | Q4 2025 | no prior guidance | Approximately 129,000,000 shares | no prior guidance |
Revenue | FY 2025 | $281,000,000 to $291,000,000 | $298,000,000 to $302,000,000 | raised |
Gross Margin | FY 2025 | 77% to 79% | 78% to 79% | raised |
Adjusted EBITDA (% of Revenue) | FY 2025 | Approximately 4% of revenue | Approximately 4.2% of revenue | raised |
Basic Weighted Average Shares Outstanding | FY 2025 | Approximately 122M | Approximately 123,000,000 shares | raised |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
New Buyer Acquisition & Conversion Efficiency | Previous calls in Q3 2024, Q4 2024 and Q1 2025 highlighted record new buyer acquisition, stronger conversion rates, efficient CAC and gradual adoption of AI improvements ( , , ) | Q2 2025 continued this pattern with record new buyer acquisition (up 74% YoY), 18% improvement in conversion rates and reduced CAC driven by AI-led enhancements ( ) | Consistent strong growth with increased emphasis on AI-driven efficiency while balancing premium buyer incentives ( , ) |
AI-Driven Product Enhancements & Technology Investments | In Q3 2024 and Q4 2024, as well as Q1 2025, ThredUp stressed AI search, style chat, image search, shop similar features and marketplace optimization that improved product discovery and customer experience ( , , ) | Q2 2025 emphasized an 18‑month AI-led product journey with new AI-generated images and social commerce integration along with ongoing investments in technology to improve conversion and operational efficiency ( ) | Steady evolution and scaling of AI capabilities with incremental feature rollouts, reinforcing a central role in enhancing the customer journey ( , ) |
Macro-Economic, Tariff, & Seasonal Uncertainty | Q3 2024 noted macro headwinds and anticipated seasonal declines; Q4 2024 discussed tariffs, inflation and consumer concerns; Q1 2025 reflected a relatively resilient consumer base with guidance not relying on macro tailwinds ( , , ) | Q2 2025 showed increased caution with weak jobs, a soft housing market and the impact of tariff changes influencing advertising and pricing dynamics ( ) | Shift from earlier relative optimism in Q1 to increased caution in Q2 as macro uncertainties and tariff impacts become more pronounced ( , ) |
Marketing Spend, Promotional Costs & Margin Pressure | Across Q3 2024, Q4 2024 and Q1 2025, discussions centered on high teens to 20% revenue allocation for marketing, promotional incentives for new buyers and margin trade-offs, with efforts to improve efficiency ( , , ) | In Q2 2025, the focus remains on efficient marketing spend with proactive adjustments for seasonal slowdown while margin improvements from premium supply growth are partly offset by higher buyer incentives ( ) | Continued strategic focus on balancing growth investments with margin pressures, maintaining efficiency despite the cost of customer acquisition ( , ) |
Execution Risks & Operational Investment Challenges | Indirectly raised in Q3 2024 (divestiture, operational scaling, AI implementation) and in Q4 2024 (early-stage aggressive investments), while Q1 2025 did not explicitly address them ( , ) | Q2 2025 included indirect references such as hiring challenges in processing operations and complexities in refining AI product recommendations ( ) | Underlying execution risks persist with slightly increased emphasis on operational hurdles and scaling challenges in Q2 2025 ( , ) |
Supply Chain Innovation & Premium Supply Growth (including Resale as a Service) | Q3 2024 and Q4 2024 emphasized robust reverse logistics, premium selling services and early RaaS initiatives; Q1 2025 highlighted enhancements in seller experience and consignment premium offerings ( , , ) | Q2 2025 reported record supply metrics, 44% QoQ growth in premium service kits and continued RaaS progress supporting high-quality supply growth ( ) | Consistently positive with ongoing innovation and growth, reinforcing the company’s long‑term competitive advantage in supply chain and premium inventory ( , ) |
Dynamic Pricing & Operational Flexibility Strategies | In Q4 2024 dynamic pricing adjustments and operational flexibility (capacity utilization, AI-driven measurement) were discussed and Q1 2025 added insights on pricing experiments and improved processing capabilities; Q3 2024 offered only indirect hints ( , ) | Q2 2025 did not provide any new commentary on dynamic pricing or operational flexibility strategies ([N/A]) | Reduced emphasis in Q2 2025 suggests either strategic evolution or lower prioritization of these topics relative to previous periods ( , ) |
Strategic Shifts: U.S. Focus & EU Divestiture Transition | Q3 2024 and Q4 2024 detailed divestiture of the EU business and a renewed focus on the U.S. market, with Q1 2025 reiterating accelerated growth in the U.S. post-exit from Europe ( , , ) | Q2 2025 maintained the strategic focus with confirmation that newly acquired U.S. customers mirror prior best-case profiles, affirming the U.S.-centric growth strategy ( ) | Consistent strategic messaging post-divestiture with a stable, reinforced commitment to U.S. market dominance ( , ) |
Consumer Demand Uncertainty | Q3 2024 cited macro and post-election uncertainty, while Q4 2024 mentioned mixed signals due to strong holiday performance coupled with future consumer caution; Q1 2025 reflected more confidence with resilient demand ( , , ) | Q2 2025 expressed higher caution with concerns over weak labor and housing market impacting consumer spending patterns ( ) | A noticeable shift from earlier confidence in consumer demand to increased caution in Q2, likely driven by evolving macroeconomic indicators ( , ) |
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Revenue Outperformance
Q: What drove Q2 revenue and buyer growth?
A: Management attributed the performance to an improved product experience, record new buyer acquisition up 74% YOY, and high-quality supply that together fueled 16.4% revenue growth and strong conversions. -
Margin Outlook
Q: What drove the strong margins this quarter?
A: The quarter’s premium supply mix pushed average selling prices higher, resulting in a 79.5% gross margin, though management noted that balancing increased customer acquisition costs may slightly temper margins going forward. -
AI Impact
Q: How is AI affecting acquisition and experience?
A: Management explained that leveraging AI has improved product recommendations and elevated the overall shopping experience, which in turn boosted conversion rates and lowered acquisition costs despite challenges in scaling across millions of SKUs. -
RAS Strategy
Q: How is the new RAS model progressing?
A: Conversations with over 60 brands have resumed under the open source RAS strategy, with management expecting its impact to be material in 2026, even though it won’t significantly affect results in 2025. -
Marketing & Demographics
Q: What are buyer demographics and marketing spend plans?
A: New buyers closely mirror the company’s core customer base, while marketing spending is maintained in the high teens to 20% of revenue, adjusting modestly for seasonal factors such as Q4 ad competitiveness. -
Supply Dynamics
Q: How is supply mix distributed across pricing bands?
A: While management did not disclose exact figures by payout bands, they emphasized strong growth in premium consignment, which is driving both seller participation and enhanced buyer acquisition, thereby reinforcing marketplace liquidity.