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TI

ThredUp Inc. (TDUP)·Q2 2025 Earnings Summary

Executive Summary

  • Record revenue of $77.7M (+16.4% YoY), gross margin 79.5%, and adjusted EBITDA margin 3.9%; Active Buyers +17% YoY and Orders +21% YoY, driven by premium supply and AI-led conversion improvements .
  • Strong beat vs consensus: Revenue $77.66M vs $73.76M* and EPS -$0.04 vs -$0.053*, alongside raised FY25 guidance to $298–$302M revenue and ~4.2% adjusted EBITDA margin; FY gross margin narrowed to 78–79% .
  • Guidance introduced for Q3/Q4 reflects seasonality: Q3 revenue $76–$78M (adj. EBITDA ~4.5%) and Q4 revenue $73–$75M (adj. EBITDA ~3.0%) .
  • Management highlighted AI product momentum (visual/style/image search, AI model images) and macro tailwinds from the closure of the de minimis loophole; increased marketing/inbound spend supports growth with disciplined LTV/CAC paybacks .

What Went Well and What Went Wrong

What Went Well

  • Record new buyer acquisition: +74% YoY, with visitor signups +30% YoY and signup-to-purchase +60%, reflecting compounding AI feature improvements; active buyers +17% YoY to ~1.47M .
  • Premium supply mix and AI elevating site experience materially improved ASPs and conversion, sustaining 79.5% gross margin despite aggressive top-of-funnel growth .
  • Cash increased to $56.2M (cash, restricted cash, and marketable securities), up $0.8M QoQ; adjusted EBITDA dollars doubled YoY; free cash flow positive YTD .

What Went Wrong

  • GAAP loss from continuing operations remained at -$5.2M (-6.7% margin), reflecting reinvestment in marketing and inbound processing to accelerate growth .
  • Gross margin guide implies back-half moderation (77–79%) as the company prioritizes customer experience and logistics (pick/pack/ship) to convert first-time buyers into repeat purchasers .
  • Seasonality and uncertain macro (higher Q4 ad rates; mixed indicators for consumer health) temper Q4 outlook (+10% YoY at midpoint) despite strong YTD execution .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$67.27 $71.29 $77.66
Gross Margin %80.4% 79.1% 79.5%
Operating Loss Margin %(12.1%) (7.6%) (6.8%)
Adjusted EBITDA Margin % (Non-GAAP)7.4% 5.3% 3.9%
EPS – Loss from Continuing Ops ($USD)$(0.07) $(0.04) $(0.04)
KPIsQ4 2024Q1 2025Q2 2025
Active Buyers (thousands)1,274 1,370 1,465
Orders (thousands)1,226 1,371 1,535
Estimates Comparison (Q2 2025)Consensus*ActualBeat/Miss
Revenue ($USD Millions)$73.76*$77.66 Beat by $3.91M (+5.3%)*
EPS ($USD)-$0.053*-$0.04 Beat by $0.013*

Values marked with an asterisk were retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025$281–$291M $298–$302M Raised (+$14M midpoint)
Gross Margin %FY 202577–79% 78–79% Narrowed upward lower bound
Adjusted EBITDA Margin % (Non-GAAP)FY 2025~4.0% ~4.2% Raised
RevenueQ3 2025N/A$76–$78M New
Gross Margin %Q3 2025N/A77–79% New
Adjusted EBITDA Margin % (Non-GAAP)Q3 2025N/A~4.5% New
RevenueQ4 2025N/A$73–$75M New
Gross Margin %Q4 2025N/A77–79% New
Adjusted EBITDA Margin % (Non-GAAP)Q4 2025N/A~3.0% New
D&A ($USD Millions)FY 2025$12.6 $12.6 Maintained
Stock-Based Compensation ($USD Millions)FY 2025$16.0 $17.8 Raised
Weighted Avg Shares (basic)Q3 2025N/A~125M New
Weighted Avg Shares (basic)Q4 2025N/A~129M New
Weighted Avg Shares (basic)FY 2025N/A~123M New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024)Previous Mentions (Q1 2025)Current Period (Q2 2025)Trend
AI/technology initiativesImage Search drove +85% higher conversion; strongest Q4 for new buyer acquisition Launched Shop Social (AI-powered social commerce); open-source branded resale 18+ months into AI journey; signups +30%, signup-to-purchase +60%; debut AI model images at scale Accelerating adoption and conversion uplift
Tariffs/macro—De minimis closure and advertising shifts highlighted De minimis closure likely raises ultrafast fashion prices; ad markets dynamic (Shein/Tmall pullback then resume) Supportive tailwinds with near-term volatility
Supply chain/operations——Record requests/receipts/clean-out kits; hiring lag in processing contributed to EBITDA beat Scaling to meet demand; operational leverage emerging
RaaS strategy—Open-source approach; removing brand fees Re-engaged >60 brands; expect momentum by year-end; not material in 2025 Pipeline rebuilding; 2026 impact more likely
Marketing/CAC—Record new buyers +95% YoY High-teens to ~20% of revenue; LTV/CAC payback <1 year; conversion improvements lower CAC Efficient spend at higher scale
Category performance——Dresses strong through spring/summer Positive mix tailwind

Management Commentary

  • “Driven by strong customer and order growth, we are extremely pleased with our second quarter performance… more than 18-months into our AI-led product journey” — James Reinhart, CEO .
  • “Revenue growth accelerated to 16.4% year over year, gross margin landed at 79.5% and adjusted EBITDA was 3.9%… new buyer acquisition up 74% year over year” — James Reinhart .
  • “We accelerated revenue growth, exceeded our adjusted EBITDA expectations and generated cash” — Sean Sobers, CFO .
  • “We delivered a significant revenue beat… updated view is $14,000,000 above our previous guidance” — Sean Sobers .
  • “Closure of the de minimis exemption is likely to cause higher prices for ultrafast fashion goods… positives for ThredUp” — James Reinhart .

Q&A Highlights

  • Outperformance drivers: “Flywheel” of premium supply, improved product experience, and efficient acquisition; momentum compounding across quarters .
  • Gross margin dynamics: Premium supply lifted ASPs; company will invest in pick/pack/ship to deepen repeat behavior, modestly impacting COGS in back half .
  • Seasonality/macro: Q4 resale slowdown and higher ad rates; cautious stance amid mixed consumer indicators .
  • Marketing cadence and LTV/CAC: Targeting high-teens to ~20% of revenue; paybacks under one year; willing to lean in as conversion improves .
  • RaaS pipeline: >60 brands in active conversations; expect some launches by year-end; material impact more likely in 2026 .
  • AI execution: Hardest problem is recommendations/filtering across ~4.5M SKUs; steady monthly model improvement driving conversion .

Estimates Context

  • Q2 2025 vs consensus: Revenue $77.66M vs $73.76M*, EPS -$0.04 vs -$0.053* — clear beat on both top and bottom lines .
  • FY 2025: Company guidance $298–$302M revenue, ~4.2% adj. EBITDA margin vs S&P Global revenue consensus $308.28M* — consensus currently above company guidance; absent continued outperformance, Street may need to adjust FY revenue down toward guidance ranges .
  • Q3/Q4 cadence: Introduced quarterly guidance (Q3 $76–$78M, Q4 $73–$75M) reflecting seasonality; adjusted EBITDA profile maintained inline with strategy to reinvest growth and generate cash .

Values marked with an asterisk were retrieved from S&P Global.

Key Takeaways for Investors

  • Sustained growth acceleration: Q2 revenue +16.4% YoY with record Active Buyers and Orders; premium mix and AI features underpin conversion and ASPs .
  • Clear beat and raised FY guide: Q2 beat vs consensus on revenue and EPS, and FY guidance raised by $14M at midpoint with improved margin outlook — a positive near-term catalyst .
  • Investment posture disciplined: High-teens to ~20% marketing spend with <1-year LTV/CAC paybacks; reinvestment into inbound processing and customer experience supports durable growth .
  • Macro tailwinds from de minimis closure: Potentially higher ultrafast fashion prices and shifting ad markets favor TDUP’s value proposition and acquisition efficiency .
  • Operating leverage emerging: Hiring bottlenecks in Q2 processing contributed to EBITDA beat; scaling operations to meet record supply inflows .
  • Watch back-half margin cadence: GM guided to 77–79% as the company prioritizes repeat conversion through logistics/service improvements .
  • RaaS optionality: Open-source branded resale re-engaging >60 brands; expect broader impact in 2026, providing medium-term ecosystem upside .