Q2 2021 ThredUp Inc Earnings Call
[music].
Please standby.
Good day and welcome to the threat of Q2.2021 earnings Conference call today's call is being recorded.
At this time of like to turn the conference over to lot of at their Investor Relations. Please go ahead.
Good afternoon, and thank you for joining us on today's conference call to discuss the set up second quarter of 2021 financial results.
Thus, our James Reinhart, Waddell, Chief Executive Officer, and co founder and Sean Sobers, The company's Chief Financial Officer, We've posted our press release and supplemental financial information on our Investor Relations website at IR Dot Dot Com. This call is also being webcast on our IR website.
A replay of this call will be available on the website shortly.
Before we begin I'd like to remind you that we will make forward looking statements. During the course of this call, including but not limited to statements regarding our guidance and future financial performance market demand growth prospects business strategies and plans.
These forward looking statements involve known and unknown risks and uncertainties and our actual results could differ materially worse.
Words, such as anticipate believe estimate expect as well as similar expressions are intended to identify forward looking statements.
You can find more information about these risks uncertainties and other factors that could affect our operating results in our SEC filings earnings press release and supplemental information posted on our Investor Relations website. In addition, during the call we will present certain non-GAAP financial measures. These non-GAAP financial measures should be considered.
In addition to not as a substitute or in isolation from GAAP measures.
You can find additional disclosures regarding these non-GAAP measures, including reconciliations with comparable GAAP measures in our earnings release.
Now I'd like to turn the call over to James Reinhart.
Good afternoon, everyone I'm, James Reinhart, CEO and co founder of startup. Thank you for joining us for credit the second quarter 2021 earnings call with 2 quarters behind us as the public company. We're excited to share of financial results and business highlights from our second quarter, including threat of anticipated entry into the European retail market I'll also provide com.
Commentary on our ninth annual retail reported with our first ever threat of impact section.
This section details have theoretically is creating positive change in the world.
Then turn it over to Sean Sobers, Chief Financial Officer, who will walk through of financials in more detail and provide our outlook for the third quarter and fiscal year 2021.
For the second quarter in a row, we achieved record revenue record gross profit record gross margins record active buyers and record orders or growth metrics indicate that our business continues to rebound from the pandemic slowdown and we believe we are on a clear path to sustainable growth.
Given where our managed marketplace, let me comment and turn on both the demand and supply trends we're seeing.
On the demand side this quarter, we benefited from a return to some degree of normalcy given increase vaccination rates.
Late spring restrictions are lifted across the country.
The line has expanded and most state from back to business as usual, enabling consumers to reengage and everyday activities outside of their homes.
Of the Delta Varian has created some new wariness in parts of the country. Many of US are still preparing for in person school and the return to in person work. This fall.
We expect consumer spending to be resilient through the end of the year edging back to pre pandemic levels by some projections.
Purchasing behavior on the threat of supports this trajectory kit sales were up 50% in July compared to June while sales for women's items like Dressier working pants, so of 32% month over month increase during the same period.
In addition sales for both mini dresses and formal dresses grew by 16% and sales for heels experienced 21% month over month growth.
So while we entered the second half of the year with the enthusiasm the demand for consumer apparel is quote unquote back as many of you are saying, we also anticipate challenges from the Delta Varian to linger and competition for consumer wallet share to be fears.
On the supply side, we are continuing to build selection in our marketplace. The historic levels to capitalize on the growing number of sellers entering the resale market.
Our second quarter 2021 of financial results were better than expected 1 area, where we did not make as much progress as we had hoped and the reduction of bag processing times, even though we had accelerated overall processing capacity by more than 40%. This time last year regular bags processing times had increased to 12 weeks on average.
Across our distribution network.
We continue to provide VIP expedited service for those who are focused most on the earning money.
We have continued to see incredible interest for our cleanup kits service, resulting in a seemingly endless amount of supply we plan to continue to invest in processing capacity and automation to reduce the backlog and expand our items selection.
Now, let me turn to our retail as a service program. We recently launched 4 new Ras clients, including Farfetch Madewell, LG electronics and phablet ex of.
Meanwhile, debuted the first white label resale shop enabled by threat ups 360, rasp platform, bringing to life, a robust 360 capabilities to deliver of fully customized resale experience. We will continue to roll out more features for our <unk> partners in the coming months.
In addition, our deal with LG electronics signals of any consumer business, not just fashion retailers can leverage <unk> platform to empower their customers to do good in the world.
These Ras deals are primarily structured to include upfront integration fees as well as ongoing service usage <unk> revenue sharing fees. We are in the nascent stages of implementing the structure from new client agreements as well as ongoing client renewals, but we believe this is an exciting part of our future.
In late June we published our ninth annual resale report, which measures the U S secondhand market and assesses current consumer trends. According to the report conducted by independent data provider global data the secondhand market in the U S is projected to double 77 billion in the next 5 years within.
That resale is expected to grow 11 times faster than the broader retail clothing sector. During the same time period. This predicted growth is driven by sellers, putting record amount of product into the market, 76% of people who have never resold clothing are opened the triangle, meaning that there are nearly 120.
Anticipated future sellers, who will continue to drive industry growth as it becomes easier to sell clothes online.
This new data only confirms for us that we must continue to invest in our platform infrastructure technology data science to capitalize on the resale opportunity in front of us.
Although we are still in the early stages of this transformation in retail there are emergent signals, suggesting that secondhand is displacing traditional retail in particular of resale is expected to be twice as big as fast fashion by 2030, <unk> replace fast fashion purchases with the secondhand clothing.
Consumers day, they care more about wearing sustainable apparel than they did before the pandemic and also have of growing disdain for both eco and financial waste the environmental impact of these behavioral change is significant and that impact will only amplify as more people participate interest.
Also included in this year's report for the first time as the section on threat ups impact and threat of we do well by doing good we are creating positive change by transforming the way, we shop and consume by enabling resell at scale, where ushering in a more circular future for fashion and helping new waves of consumers brands and retailers.
Take positive steps towards sustainability to the.
Date throughout this process more than 125 million unique secondhand items and displaced an estimated $1.1 billion pounds of carbon emissions.
When you buy of secondhand items instead of the new 1 you reduce its carbon footprint by 82%.
82%.
I am proud that by giving new life to millions of used clothes, we are offsetting the environmental and financial cost of fashion. The fashion industry can and will do better from threat up is committed to being part of that change. We believe this is just the beginning you can view of our full report at Www dot threat of Dot Com backslash retail.
Yeah.
Finally last month, we announced the initial phase of our international expansion strategy with the agreement to acquire remix 1 of Europe's leading fashion retail companies. The deal is expected to close in the fourth quarter.
The acquisition will accelerate threat ups international growth plans in Europe, where the secondhand market size with estimated by global data to be $21 billion in 2020 growing to $39 billion by 2025.
Much like threat zone proprietary operating platform <unk> built cost of single SKU logistics, the can process millions of unique garment sufficiently.
This acquisition brought up at the complimentary operational engine and an experienced management team to springboard is expansion into Europe.
We plan to invest in remix product offerings, the processing infrastructure and go to market strategy to accelerate the marketplace growth.
The <unk> acquisition also allow us the right up the potential to extend its ras platform beyond the us, enabling brands and retailers to deliver customized retail experiences to their customers in Europe.
A number of the world's leading brands and retailers already rely on <unk> platform to power their resale channel and international expansion opens the doors to potential future growth.
Bullish about the massive opportunity in the European retail market and we're thrilled about the chance to build upon the remix of technology and operational expertise.
In closing.
<unk>, we're continuing to invest in the future our acquisition of remix our ongoing technology investments in wrath of the scaling of our distribution and processing network. All of this is part of our strategy to build the leading retail company in the World. We believe these investments will pay dividends over time, and we're confident that given our strong unit economics.
Now is the time to be more aggressive.
The consumer behavior, especially among young people is shifting in such material ways. We must go big and we must go fast to inspire and capture of this new generation of consumers who are shopping secondhand.
With that I'd now like to turn it over to Shaun to walk through the financials.
Thanks, James and again, thanks, everyone for joining us for our second quarter earnings call I'll begin with an overview of our second quarter results and follow on with guidance for the third quarter and the full year 2021.
I will discuss non-GAAP results throughout my remarks, our GAAP financials, and a reconciliation between GAAP and non-GAAP are found in our earnings release supplemental financials and our 10-Q.
As James share in second quarter, 2021 revenue exceeded our expectations, our second quarter revenue of $60 million represented a 27% increase year over year as we continue our transition from direct product revenue to consignment revenue. We are pleased to report that consignment revenue comprised 81% of our total revenue up.
From 74% for the same period last year.
As a reminder, given the ongoing transition to the consignment revenue. We think gross profit growth is the best indicator of our underlying growth.
The second quarter gross profit totaled $44.1 million.
The representing growth of 33, 7% year over year.
All time highest for both active buyers and orders were key to our second quarter financial results.
<unk> of buyers as the key performance indicator for us and highlights our success in attracting new buyers, who return and make repeat purchases for the <unk>.
Trailing 12 months active buyers rose, 8% to 1.3 of $4 million keep in mind that active buyers grew 71% in Q2 of 2020.
Orders are another important kpis and provide insight into our marketplace.
Paired to the same period last year orders increased 22% to $1 million to $2 million.
As I mentioned, the second quarter 2021, gross profit grew 33, 7% year over year and this exceeded total revenue growth for the quarter.
Gross margin expanded to a record 73, 6%. This is the 390 basis point improvement over 69, 7% gross margin in the same quarter last year and a sequential increase of 230 basis points over Q1.2021.
Scaling and increased automation across our Dcs plus the closure of our last manual DC helped drive the improvement in gross margin.
In addition, higher items per shipment coupled with higher Asps helped improved Q2 gross margin.
Total GAAP operating expenses were $58 million and $18.5 million increase year over year and included $2.9 million of stock based compensation.
While we are relentless in our approach to driving long term operating leverage at this time, we are actively investing in our business, we're investing to extend our automation capabilities increase our processing capacity and grow our new customers as we believe the combination of these 3 activities will enable us to compound growth over time.
Approximately half of the total Opex increase was in operations product and technology is related to the expansion of our overall DC network and the related increase in bag processing as we noted on our last call. Our Atlanta DC is coming online as expected and we will certainly have the capacity to hold $3.5 million items, we continue to believe.
That further automation opportunities exist across our DC network, and we will invest in that direction.
I did want to take a moment to point out and remind you how inbound expenses and sales are accounted for in our P&L.
Items process in the quarter result in operating expenses in the period of processing and then as expected. These expenses will generate revenue over future periods.
As we process more items through our DC network operating expenses will increase in advance of the anticipated revenue growth.
Depending on the time of year, we made process more items than we sell in a quarter and vice versa.
For example of seasonal demand for second hand clothing ebbs in December we can flex our DC associates to inbound processing, which creates an operating expense headwind in Q4, and an expected favorable sales tailwind as we move into Q1.
Turning our attention to marketing spend for a moment, we continue to feel confident in our ability to repeatedly scale marketing spend while meeting our 12 month payback targets.
We believe this payback target ensures that our cohorts remain predictable and stable overtime, even while expanding our growth spend to capture the opportunity in front of us.
This quarter's increase in SG&A compares against last year's Covid related employee furlough, and our 20% reduction in payroll.
In addition, we of new public company costs of approximately $2 million in Q2.
Okay.
Finally, our year over year stock based compensation rose, 47% to $2.9 million.
Primarily due to the recognition of performance based stock options that triggered in conjunction with our March 2021 IPO.
Our second quarter adjusted EBITDA loss of $9 million was 15, 1% of revenue in the same quarter last year, our EBITDA loss was $3.3 million and 6.9% of revenue.
As a reminder, in Q2.2020 with the uncertainty of the pandemic, we severely cut back growth expenses implemented employee furlough program that reduced corporate salaries by 20% and were unable to process bags due to the impacts of COVID-19 in our Dcs.
Second quarter basic and weighted average shares were $94.4 million and included the shares of our initial public offering in late March share.
<unk> issued by US in our recent July of follow on offering are not included.
Turning to the balance sheet, we began in the second quarter with $249.6 million in cash cash equivalents of restricted cash and short term investments and ended the quarter with $233.5 million.
The Q2 cash ending balance does not include the $45.3 million of net proceeds from our July 21 follow on offering of 2 million shares.
Our recent agreement to acquire remix is an exciting development for threat of this acquisition provides a unique opportunity that we believe gives us a head start in our European expansion.
We expect that remix will provide an advantage for us in the near term by establishing of European footprint without starting from scratch.
Similar to US remix operate as a single SKU logistics platform with the ability to process millions of unique items.
We will share more information and guidance about the financial contribution of the remix of acquisition after the transaction closes.
The acquisition is expected to close during the fourth quarter of 2021 and are subject to the customary and deal specific closing conditions.
Yeah.
As James mentioned as we look ahead to Q3 and Q4 of 2021, we are actively investing in the business, we see opportunities to acquire more new customers and plan to increase our marketing spend while staying within the 12 month payback target that we've outlined.
With the final phase of Atlanta are most automated facility coming online and of seemingly endless supply. We will continue to invest in processing capacity with the goal to have more fresh items online and available for sale of than ever before.
We believe this will improve selection meaningfully as we head into 2022.
As of the end of Q2.2021, our capacity in our DC network was up more than 18% as compared to the beginning of 2021.
As the pandemic drags on like many businesses, we are seeing near term wage inflation for our D. C staff that is likely to impact both gross margins and EBITDA in the back half of the year.
Now I'd like to share our financial outlook for the third quarter and full year of 2021.
Note that our guidance does not include the planned <unk> acquisition.
For the third quarter of 2021, we expect revenue in the range of $60 million to $62 million.
Gross margin of 71, 5% to 72, 5%.
And adjusted EBITDA loss of 19% to 17%.
And basic weighted average shares outstanding of approximately 97 million shares.
For the full year of 2021, we expect revenue in the range of $236 million to $241 million.
Gross margin of 71, 5% to 72.5 per cent.
And adjusted EBITDA loss of 16% to 14, 5% of revenue.
And basic weighted average shares outstanding of approximately $77 million.
In closing we are very pleased with our second quarter performance, we had record sales meaningful gross margin expansion and an all time high active buyers in orders, we continue to deliberate investment in our infrastructure to position us for accelerating growth both in our core marketplace as well as our emerging <unk> business.
Finally, we are excited about our international growth trajectory with the <unk> acquisition, and we will share more about our plans once the acquisition closes.
James and I are now ready for your questions. Operator, Please open the line.
Thank you if you'd like to ask a question. Please signal by pressing star 1 on your telephone keypad, if you're using a speaker phone. Please make sure. Your mute function is turned off to learn of snow treat chart equipment. That's.
We ask that you limit yourself to 1 question and 1 follow up then you may re prompt for additional questions. If time permits again press star 1 to ask a question.
And we'll take our first question day from Ike <unk> with Wells Fargo.
Hey, guys.
Congrats on the quarter of 2 questions.
For Sean can you talk a little bit more about the near term investments just kind of curious about when you mentioned the wages and some other things so kind of interested in what youre doing to reinvest.
Obviously, the top line throughput of 1 to understand the part of the the equation and then James of of processing. I think you were at 8 weeks last quarter of 12, I think last quarter, you were targeting to get back to 2 to 3 by the end of the year is that still on the table. When they can you kind of walk us through what exactly is leading to that kind of step back there.
Great. Thanks.
Yes, I can actually handle both of those I mean, because they are related I think the the big investments are in highly scaled processing to meet just what appears to be incredible demand for our clean out service.
It's like I think we of a restaurant with the line out the door, we have of concert where its scalpers are scalping tickets.
We have such demand.
For our clean out service that we just feel like it's incumbent on us to continue to scale our processing capacity.
So I think of lot of the investments, we're going to make us continuing to build bigger better faster distribution centers continue to staff up on our associate accounts continuing to invest in the technology that helps us processed items faster you saw some of that in our gross margin expansion. This quarter I think we'll do some more of that.
But I think it speaks really to the fact that we have hit hit a nerve here with the American consumer They love our service they love how convenient it is.
So we wanted to aggressively go after trying to capture that mind share in that and that opportunity. So I think that's sort of where our heads are at at the resale market is bigger than ever and our opportunity to really capture it has never been more more exciting. So that's how we think about those investments and.
And as far as like the processing times.
Hope to get to 2 to 3 weeks by the end of the year.
Realistically I don't I don't see us getting their way of the end of the year I think that's our goal as we move into 2022.
Part of it of the organic interest in our cloud service and then part of it is a Ras partners and all of the momentum we're having in our rack business is manifesting itself in.
Just a lot of demand for our clean out there. So I think the combination of those 2 things means.
We're unlikely to hit that 2 to 3 weeks by the end of the year.
Got it thanks, so much of it.
Thanks, Mark Thanks.
Next we'll hear from Ross Sandler with Barclays.
Hey, guys just a question on the Europe business.
Did you to them, specifically and I guess, we'll hold off from getting into the overall master plan here, but.
Could you help us just frame the size of the business in terms of maybe their 2021.
And then Sean revenue and gross profit.
Growing a lot faster than orders of your rent per order quarter is up a bunch of.
This quarter whats driving that as of <unk> more items per order any help line on that metric. Thanks a lot.
Yeah, Ross I'll start on the remix side.
This is the team that I've known for for about 5 years now and have been incredibly impressed with the quality of the team the operations and the processing and the fact that they operate and I think an area of the European market that I think has been overlooked but I think is really exciting which is essentially <unk>.
Eastern Europe, and so I think the combination of the team and the ops.
And really made us feel like this was a great great opportunity to get gets started in Europe I mean, the business did.
About $34 million in revenue on a trailing basis.
We were able to acquire of the business for less than 1 times revenue.
We feel like not only do we get a great a great team.
And of great opportunity, but we got it at a very attractive price.
We can invest in that as really a springboard to Europe, both central and eastern and then as we think about moving into western Europe, so be able to talk a little bit more about those investments once the deal closes and as we think about 2022, but that's a little bit of a high level.
And then on Euro zone on revenue and gross profit range is around 27% gross profit growth of 34% orders grew 22%. So the thinking about it there is some improvement on the overall economics of it is helping the growth there maybe some of the ACI gross profit you saw the growth profit margin growth pretty significantly this quarter as we move away from our manual DC into our automated DC.
So I think youre seeing the remainder of this above and beyond the order growth coming from overall order economics.
Thank you, we'll hear from Erinn Murphy with Piper Sandler.
Great. Thanks. Good afternoon, a couple from me first James can you talk a little bit more about if youre seeing any impact in demand from the delta right now or if it's changing any of the category composition and then I guess, Sean for you on active customer growth in the back half any help on kind of how youre thinking about the pace of that given.
<unk> seen year to date.
Sure. Thanks Erin.
Yes, I mean, I think on the Delta of Varian, we haven't seen anything immediate.
That's the sort of changing or clouding kind of how we're thinking about the back half of the year, but I think it's something that our intent is certainly is up relative to where it was a month ago, but at least our sense from the where the consumer is kids going back to school.
People going back to the office might get off of school yesterday. So.
In California, which tends to be more most restrictive so we do feel like there's still momentum in the consumer but I think we're going to be.
We're going to watch closely Aaron to see like what what might change or how that might impact in certain regions I'll, let John talk a little bit about the other non active buyers EBITDA for the quarter. We added were up 8% year over year I think the.
Keep in mind is the Q2 'twenty growth was 71% so as Covid hit.
A lot of people stopped in the marketing marketing got cheaper cost of acquisition was really low we continue to see basically ended up there and so we were able to capture more customers than we normally would of different prices taking interest for Q3 of 'twenty. So we do think it will pick up in the back half of the year, but we do the 2020 with the unique we're obviously in so many ways, but 1 of the things.
The cost of acquiring the customers pretty low so we have added quite a few customers early in the first half and as well as well.
Got it and then if I could just add 1 more on the LG electronics Roth partnership can you maybe talk a little bit more about this is I think your first extension outside of the top line as industry. So how does that specific relationship work and how open are you into extending into other categories outside of the traditional apparel silverstein. Thanks, so much.
Yes, Erin I wouldn't say that it was.
Where we're expanding outside of traditional apparel categories, but I think 1 of the things we found in our conversations with LG was the way that they want to inspire of their customers to do good to think more sustainably and so I think what's powerful about that partnership as it shows that anybody who wants to do the right thing.
Their customers do the right thing with the closed theyre no longer wearing can plug into the threat.
Machine and into our platform to do that and I think again, what it does is it just compounds our supply advantage in this industry and again, it's really all of that supply. If you think about all marketplaces, they're all driven by supply it doesn't matter, whether it's airbnb or its door dash or its Uber right all of these <unk>.
<unk> places there are ultimately about capturing supply and so I think the LG example, just show the another indicator of threat ups incredible supply advantage and how that compounds over time.
Thank you.
Next we'll hear from Ed <unk> with Keybanc.
Hey, Thanks for taking the question I guess in the short term as you think about the processing time is it a function of needing to add more staff is there something you can do from a process perspective to get bags through more quickly and then I guess just in terms of some of the products Youre seeing felt strongly have you seen the anticipated shift the kind of return to school of return to work.
But I think you were maybe looking for in the back half of thus far thanks.
Yes, Thanks Ed.
Start.
I think on the processing side of what we're seeing is even though we're scaling processing.
As planned.
We're just seeing incredible demand Ed for our clean out service, so even though we've scaled processing 40%.
Since the beginning of the year, our capacity is going to be up more than 60% by the end of the year, we're doing all of the things to scale processing, but at the same time the consumer.
Is coming the threat of clean out service at higher and higher rates and so I think you can comment on us as I said to keep keep scaling here into the sort of double down on our advantage.
But I don't think as I said.
Responding to Ike's question I don't think we're going to get back to those processing times, we'd hope for by the end of the year, but that's not because we haven't scaled.
I think capacity is that we can't get people to stop sending us stuff.
And so I think thats, a good position of being in the near term as of the shifts in the mix I think as we noted we're we're definitely seeing some increased month over month.
And what I would say return to office categories things like heels things like dresses and so I think all of those things are nice tailwind for us in the back half of the year.
But I think it remains to be seen what happens with the delta of Iran, and whether those trends persist and part of the.
The last thing I would say our kids.
Kids going back to school, we saw strong month over month growth June to July and our kids business. It was up 50% month over month, which is which is.
Quite promising and so so feeling good about how Q3 will shake out in the rest of the year.
Thanks, guys.
Okay.
Next we'll hear from Dana Telsey with Telsey Advisory group.
Good afternoon, everyone and congratulations on the quarter.
As you think about sales net the.
Strength in the gross margin what are you seeing in terms of AUR gain side of the.
The pricing algo, changing and any updated thoughts on the strength of the take rate.
Yes. So Dan this is John I'll start with digital and I think the interesting part of out of it as you guys know how much we use data in our algorithmic algorithm. So when we start seeing sell through rates pick up take on something like dresses is the.
Pandemic was waning in Q2, we saw the settlement of salaries tick up sell through rates and basically definitely so we know the pricing opportunity. There. So the algorithm takeover in search of price a little bit higher so we're starting to see the ASC clients, which obviously helps overall gross margin as well as that revenue. So I think of 1 of the things that we saw as we were moving through kind of the slower.
Periods of the pandemic and we've seen that basically through the entities.
Yes, I think the and then also get back the Ross. Your question earlier was around whats driving some of the unit economic expansion.
Pricing power because every item is unique on the threat up we can really treat everything like a snowflake.
That gives us the ability to leverage our data to extract as much as we can from each item.
And so I think on the take rate side the <unk>.
And part of your question Dana is.
We continue to iterate on how do we compensate sellers.
For the for the great clothing that they send us at the same time balancing our ability to arbitrage payouts to sellers and prices to buyers, but it really comes down to the data and so if we see opportunity to raise prices or lower payouts.
And still delight the customer we're going to take advantage of those opportunities and I think as we continue to have incredible supply an incredible demand for our cleanup of service I think that puts us in a real position of strength in the near term, but also over the long term.
Got it and just 1 quick follow up on the SaaS platform with the additions that you've had this quarter. What are you seeing in terms of what Youre looking for is there any limit to how many you could add.
And how your payment is off the Ras program.
Yes, we added as he said.
Number of good partners this quarter Phablet ex Farfetch LG made well we continue to have a number of conversations with world class brands and so I don't think there really is the cap Dana on how many brands can be part of our platform and I think the LG extension.
It showed that it isn't it isn't just the apparel, where we could create value for brands and retailers over time.
So I think it is really exciting and I think it gets back to why we need to continue to invest in our infrastructure to capture this market opportunity because what's really driving the industry is sellers sellers wanting to participate.
In this ecosystem and.
We want to make sure that we continue to maintain our leadership.
In that area. So so no I think theres lots of opportunity for us to continue to delight brands and retailers and we don't see any end in sight.
Thank you.
We'll now hear from Ana <unk> with Needham.
Great. Thanks, so much and congrats guys.
2 quick ones from me I guess, the James a question on some of the Kpis.
You guys talked about the ASP of buyers shopping I think 6 times. The months previously just curious if any of those metrics have changed and anything to call out regarding the frequency and what kind of trends are you seeing but the number of sellers on the platform, especially as the supply opens up and secondly.
Sean just follow up on remix of can you maybe talk about how the business is trending so far in 'twenty..1 should we think of this brand is an opening beneficiary of this year has supply from the brand opened up thanks, so much.
Yeah, and I mean, I think on the the.
The active buyers in the shopping sessions I think.
We continue to see strong active buyer engagement I think thats whats really fed.
Orders being up the way they are year over year. So you do see engagement you see high conversion rates what drives that is it.
Selection and so again I think the magic of the threat of marketplaces as we process from our goods import more selection online that really drives the buyer appetite.
And so that leads to increased sessions that it leads to increased conversion rate. It leads the higher average order values. So I think everything in that flywheel of our marketplace.
Is working and we expect it to continue the work overtime as we scale.
We don't disclose the numbers on the sellers because it isn't a Mac the metric that we actively track other than to show to show folks that how strong our bag the demand for clean out services.
Sticking to the fact that roughly 75% to 80% of our supply comes from repeat sellers.
Similar kpis on the buy side, so that's a little bit about how the marketplace is breaking out I'll, let Sean.
Say talk about <unk>, which is the day nothing yet.
Yes.
The more about remix I think we've got to wait till it closes we needed all of our insights some.
Some of these episodes of the $34 million.
2020 revenue and that there'll be a little bit of headwind on gross margin in the tail end on EBITDA. So I think thats kind of where we can give you information there Jason probably give you the generic color on the company.
We want to be able to kind of peak.
Closed and then be able to open up and talk about what's growth, what's the where are we investing.
Okay. That's fair thanks, so much day.
Thank you.
Our final question will come from Dylan Carden with William Blair.
Awesome. Thank you.
Im curious Sean you went through some of the puts and takes on when you book revenue the expense versus when you actually book the revenue on the cleanup kits just that sort of delay.
But curious also of its higher levels of pent up demand in certain periods also portend upside to sales in later periods or if theres a certain amount of scale in this of inventory over a certain period of time, if you can't get of process.
And then I was just curious on the resale report you've now done at pre during and post the pandemic any large data points of incremental kind of things youre seeing in that net.
That work you do the kind of better understand resale demand coming out of the pandemic I mean, clearly youre seeing it in your business, but.
Im curious if theres a couple of things that you can point to in that report that might be of interest as you see it.
Okay. Thanks, John I'll start again project of retail.
I think that is the great thing about outright of works is the data drives everything we do so we understand when an item comes in.
What time of year it is what's the <unk>.
Sell through is in April versus what it is in November that really drives how we do acceptance of how we do pricing theres sort of thing.
Things that are always going to be accepted north face jacket, regardless of you are in the middle of the some of it is always going to the market for it but there may be less of a market for winter coats as youre heading into the summer season, that's pretty obvious we're moving pricing gesture. So that's how we drive the decision process, how do we access and how the price. So we still want the overall flywheel of the Mark.
And in particular, the inventory spending like it always does regardless of the season, regardless of what we're getting.
Yes, the only thing I would add is just we because we've continued to scale our processing capacity, we added our Atlanta facility, which will be fully built out by the end of the year as we continue to scale of that capacity. It just provides us more opportunities.
The 2 invest in faster processing and so I think to give you a lot of confidence that as we're opening the bigger facilities, we have the supply and we have the supply curve that's right that's coming in right behind it right and so I think what we're really excited about is we can continue to expand capacity and feel very confident.
The debt that the bags will come along with it and so.
But again, we incur those processing expenses.
As we ramp up in the near term and those delivered revenue over overtime.
As sort of like what we're seeing in the retail report I think there were 2.2 data points that really stood out to us.
But I think again speak to why the industry. So exciting I think the 1 was you had 173 million consumers.
Some sort of secondhand product in 2020, not just apparel, but some sort of secondhand product and so I think the main debt right in the mind share thats evolving around second hand is really powerful.
And then the second data point of interesting.
86% of consumers have for our open to shopping secondhand in apparel right and so what that means to me is that what you have today is tens of millions of people that are sitting on the sidelines, who are open to the idea of shopping secondhand and so when you combine that along with the.
<unk> of new sellers that are coming into the market. I think you have the you have the ingredients for an industry that will continue to grow pretty rapidly not over the next few years, but over the next 10.15 20 years.
I think those of the structural tailwind at our back.
Awesome really appreciate nice work guys. Thank you.
Thanks, Tom.
That will conclude today's question and answer session I will now turn the conference over to James Reinhart, CEO and co founder for any additional closing remarks.
Well, thanks, everyone for joining the call I appreciate the good questions hopefully it's clear to you know, how we think about our investments and how we think about the opportunity over time and so I want to thank thank you think the threat of team for all the hard work and we're going to keep keep working hard to continue to deliver on our mission. So.
Thanks, all very much I appreciate it.
That will conclude today's conference. Thank you for your participation you may now disconnect.
Okay.
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