Executive Summary

Revenue grew 9.5% year over year to $67.3M on continuing operations, with record gross margin of 80.4% and Adjusted EBITDA margin expanding to 7.4% as marketplace flow-through improved .
The quarter materially exceeded prior Q4 guidance: revenue, gross margin, and Adjusted EBITDA all beat the ranges set in November; new buyer conversion rates hit all-time highs, aided by AI Image Search (+85% conversion vs standard search) and improved marketplace product features; Orders rose 2% YoY while Active Buyers declined 6% YoY .
Strategic focus sharpened: ThredUp closed the Remix divestiture, restating all historicals to reflect Europe as discontinued operations; management emphasized U.S.-only execution, premium kits (now >10% of new listings), and scaling inbound processing capacity .
2025 outlook: Q1 revenue $67.5–$69.5M, GM 77–79%, Adj. EBITDA margin 2.5–3.5%; FY revenue $270–$280M (+6% YoY midpoint), GM 77–79%, Adj. EBITDA margin ~flat vs 2024 (3.3%); management targets positive full-year free cash flow and >40% reduction in stock-based comp .
Potential stock reaction catalysts: sustained AI-driven conversion improvements, accelerating growth through higher marketing investment with sub-12-month paybacks, premium kit mix shift (higher ASPs), and explicit path to annual positive FCF; note near-term gross margin pressure from new buyer incentives .

What Went Well and What Went Wrong

What Went Well
- Record Q4 gross margin of 80.4% and Adjusted EBITDA margin of 7.4% as revenue reaccelerated, demonstrating strong incremental flow-through in the marketplace model .
- AI Image Search adoption and product innovations drove all-time-high new buyer conversion; “sessions with an image search have an 85% higher conversion rate,” noted the CEO, and 360° photos lifted 30-day sell-through up to 12% by category .
- Premium selling service scaled: premium kits are live to 100% of sellers, now >10% of new listings; average listing prices are ~50% higher vs traditional kits, supporting mix and margin quality .
What Went Wrong
- Active Buyers declined 6% YoY to 1.274M despite strong Q4 acquisition; management expects an inflection to positive in Q1 but acknowledged the decline in trailing-12-month measure .
- 2025 gross margin guide implies slight decline vs 2024 as the mix tilts to first-time buyers needing higher incentives; once repeat, discount rates are >1000 bps lower, but near-term pressure is expected .
- Cash and investments fell by ~$4.2M QoQ in continuing ops in Q4 (working capital, capex, debt repayment, and $2M final funding for Remix), highlighting continued discipline but a tighter cash posture .

Financial Results

Metric	Q4 2023	Q3 2024 (U.S. only)	Q4 2024
Revenue ($USD Millions)	$61.447	$61.514	$67.267
Gross Margin (%)	77.5%	79.3%	80.4%
Adjusted EBITDA Margin (%)	4.1%	1.1%	7.4%
Loss from Continuing Ops Margin (%)	(13.8%)	(16.8%)	(12.0%)
Total EPS ($USD)	$(0.14)	$(0.22)	$(0.19)

Segment revenue breakdown (continuing operations; restated to exclude Remix for all periods presented):

Segment Revenue ($USD Millions)	Q4 2023	Q4 2024
Consignment	$55.399	$64.595
Product	$6.048	$2.672
Total	$61.447	$67.267

Key KPIs

KPI	Q4 2023	Q3 2024	Q4 2024
Active Buyers (millions)	1.357	1.248	1.274
Orders (millions)	1.200	1.172	1.226
Cash, CE + ST Marketable Securities ($USD Millions, quarter-end)	n/a	$60.6	$52.8

Vs. prior guidance (U.S. Q4 2024): Previous guidance set at revenue $58.0–$60.0M, GM 78.5–79.5%, Adj. EBITDA margin 0.0–2.0% ; Actuals were revenue $67.3M, GM 80.4%, Adj. EBITDA margin 7.4% — a broad-based beat across metrics .

Significant surprise: Bold outperformance vs guidance driven by stronger conversion, marketing effectiveness, and focus on core U.S. ops; preliminary release flagged beats on all elements ahead of official reporting .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($USD Millions)	Q1 2025	n/a	$67.5–$69.5	New
Gross Margin (%)	Q1 2025	n/a	77.0–79.0	New
Adjusted EBITDA Margin (%)	Q1 2025	n/a	2.5–3.5	New
Depreciation & Amortization ($USD Millions)	Q1 2025	n/a	~$3.2	New
Stock-based Compensation ($USD Millions)	Q1 2025	n/a	~$5.4	New
Weighted Avg Shares (Millions)	Q1 2025	n/a	~117	New
Revenue ($USD Millions)	FY 2025	n/a	$270–$280 (+6% YoY midpoint)	New
Gross Margin (%)	FY 2025	n/a	77.0–79.0	New
Adjusted EBITDA Margin (%)	FY 2025	n/a	~flat vs 2024 at 3.3%	New
Depreciation & Amortization ($USD Millions)	FY 2025	n/a	~$12.6	New
Stock-based Compensation ($USD Millions)	FY 2025	n/a	~$14.5	New
Weighted Avg Shares (Millions)	FY 2025	n/a	~122	New

Additional: Management reiterated a plan to reach positive free cash flow on an annual basis in 2025 and to reduce stock-based compensation by over 40% year over year .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 & Q3 2024)	Current Period (Q4 2024)	Trend
AI / Technology Initiatives	Launched AI suite (search, image search, style chat); TIME Best Inventions recognition; >60% of searches lead to item exploration	1.3M image searches to date; sessions with image search show +85% conversion; 360° photos increase 30-day sell-through up to 12%; automated digital measurements deployed	Strengthening; driving conversion and sell-through
Supply / Processing Capacity	Reprioritized U.S.; evaluating EU exit; focus on unit economics and process improvements	Scaling inbound processing; fresh listings under 14 days +9% YoY; premium kits >10% of new listings; higher ASPs (+50%)	Improving supply quality and velocity
Tariffs / Macro	—	Consumer concern around tariffs/inflation: 51% say inflation affects apparel spend; 62% worry tariffs raise new apparel prices; 59% would seek secondhand; potential CPC tailwind; dynamic pricing adapts	Potential tailwind to secondhand demand and marketing efficiency
Regional Strategy	Non-binding term sheet to divest Remix; Q3 impairment taken	Remix divestiture completed; company now U.S.-only; historicals restated to discontinued ops	Strategic focus clarified
Policy / Regulatory	ACT petition; helped shape CA SB707 to minimize landfill disposal (signed Sept 2024)	Continued positioning as sustainability leader; resale adoption narrative	Ongoing engagement supports brand narrative
Marketing & LTV/CAC	—	Marketing to ~19% of revenue in 2025; LTV/CAC near all-time highs; sub-12-month paybacks maintained	Aggressive growth investment within disciplined payback

Management Commentary

“We are proud to have closed out 2024 with a definitive return to growth, while also delivering strong bottom-line results.” — James Reinhart, CEO .
“Since inception, 1.3 million image searches have been performed, and sessions with an image search have an 85% higher conversion rate.” — James Reinhart (prepared remarks) .
“Adjusted EBITDA was $5 million or 7.4% of revenue for the fourth quarter of 2024… our marketplace model generates powerful margin flow-through on incremental revenue.” — Sean Sobers, CFO .
“We are planning to reach positive free cash flow on an annual basis [in 2025]… we expect to reduce stock-based compensation by over 40%.” — Sean Sobers .
“Premium kits now make up more than 10% of newly listed items… average listing prices for items from premium bags are 50% higher than traditional bags.” — James Reinhart .

Q&A Highlights

Pacing across 2025: revenue growth expected to accelerate Q1→Q2→Q3, then remain positive in Q4; EBITDA rate similar in Q2 to Q1, peaks in Q3, dips in Q4 as they prepare for 2026 growth; gross margin broadly consistent by quarter .
Marketing intensity and paybacks: ~19% of revenue on marketing; LTV/CAC trending to all-time highs; sub-1-year payback maintained; increased spend justified by improved product experience and AI-driven conversion .
Capacity & CapEx: sufficient DC capacity; increasing turns and item selection quality; limited capex needs, with maintenance capex ~$8M in 2025 (CFO context) .
Stock-based comp: strategic shift to more cash and fewer shares to reduce dilution; expected >40% reduction in 2025 SBC (~$14.5M guided) .
Tariffs effect & pricing: potential CPC tailwind if ad rates decline; secondhand demand could benefit as new apparel prices rise; dynamic pricing engine adjusts to demand/supply and market pricing .

Estimates Context

Wall Street consensus estimates from S&P Global (Capital IQ) were unavailable at time of query due to request limits; as a result, explicit comparisons to sell-side consensus for revenue/EPS/EBITDA cannot be provided at this time. If desired, we can refresh and add consensus comparisons once access is available [GetEstimates error].

Key Takeaways for Investors

Q4 delivered a comprehensive beat vs prior guidance, with record gross margin and materially higher Adjusted EBITDA margin, validating marketplace leverage on incremental growth .
AI product velocity is a differentiator: image search, 360° photos, and automated measurements are measurably improving conversion and sell-through, supporting higher marketing ROI and strong paybacks .
Mix shift to premium kits (>10% of listings; ~50% higher ASPs) should sustain gross profit quality even as near-term gross margin is pressured by new buyer incentives; watch repeat buyer transition to normalize discounts (>1000 bps lower) .
Strategic clarity: Europe divestiture complete; U.S.-only focus with restated comparables reduces complexity and highlights the core earnings power of the marketplace .
2025 setup: guided to +6% revenue growth with stable Adjusted EBITDA margins vs 2024 and positive annual free cash flow; monitor quarterly pacing (peak EBITDA in Q3) and marketing spend execution (~19% of revenue) .
Liquidity discipline remains essential; Q4 continuing ops cash/investments declined ~$4.2M on working capital, capex, and debt repayment plus $2M Remix funding; FY maintenance capex ~$8M guided .
Potential macro tailwinds: tariff-driven new apparel price increases could push consumers toward secondhand; CPC rate declines could further improve acquisition efficiency; pricing algorithms are dynamic and responsive .

ThredUp Inc. (TDUP)·Q4 2024 Earnings Summary