Q2 2025 ThredUp Inc Earnings Call

And uncertainties.

Actual results could differ materially; please refer to our Orange Relief, supplemental financial information, and our Form 10-K and 10-Q. For more information on these expectations, assumptions, and related risk factors, we undertake no obligation to update any forward-looking statements.

During this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP to GAAP measures is included in today's earnings press release and the supplemental financial information, which are distributed and available to the public through our investor relations website located at ir.thredup.com. Now, I'd like to turn the call over to James.

Good afternoon, everyone. I'm James Reinhart, CEO, and co-founder of thread up. Thank you for joining our second quarter of 2025 earnings call. Today we'll discuss Financial results for Q2 and update our expectations for Q3 Q4 and fiscal year 2025, I will provide an update on our thinking about the background discuss ongoing Innovation and our AI driven product experience is and end with a refresher on our compounding competitive advantages, in the growing resale Market.

I'll then hand it over to Sean sober, our Chief Financial Officer, to talk, to our financials in more detail as always, we'll close out today's call with a question and answer session.

First of the results, the second quarter was strong. Revenue growth accelerated to 16.4% year-over-year, gross margin landed at 79.5%, and adjusted EBITDA was 3.9%, all of which exceeded our own internal expectations. These results were driven by the underlying fundamentals of strong customer growth and orders in our business. We acquired more new customers in the second quarter than at any other time in our history, with new buyer acquisition of 74% year-over-year.

We're up 17% year-over-year, and orders were up 21% year-over-year.

In 2025, it's simple. We will maintain our gross margin and bottom line, efficiency, and reinvest incremental dollars we generate back into growing new buyers and sellers in our Marketplace. We are continuing to do this with success in Q3 and believe this approach creates the greatest long-term shareholder value.

Referring to the macro, we talked about the impact of tariffs at some length on our last call. Let me reiterate a few points that remain relevant.

First, and by far the most impactful to thread up is the closure of the Dominus loophole.

Though the full impact is still uncertain, we believe the closure of the dominance exemption is likely to cause higher prices for ultra-fast fashion goods and reduce production volumes. Both of these factors could continue to be positive for ThreatUp.

Second, the increase in the price of new apparel that may result from broad-based tariffs could enhance the comparative value proposition for consumers who are shopping for value on product.

Third add markets remain dynamic. As we predicted, the short-term gains we experienced from companies like Shein and Tiemoue aggressively pulling back lasted from mid-April to mid-May before they began spending again.

Regardless of how advertising rates Trend. We're continuing to see efficiency throughout our funnel driven by improvements in the threat of experience. Let's turn to that.

We are now more than 18 months into our AI-led product journey, and the positive results continue to compound. It's not as though any one feature is driving the outcome, but rather the whole set of ways that shoppers can now engage on ThredUp is improving.

While we've shared some of the individual feature results previously, including visual search style chat image and search shop similar, I thought it might be useful to review how the aggregate nature of these improvements is rolling up to create better business fundamentals.

Visitors to sign-up rates on ThredUp are up 30% year-over-year, and the sign-up to purchase rate is up 60%.

This is an 18% improvement in how visitors turn into ThredUp customers.

Typically when you accelerate marketing, spend as we have and drive more traffic, you get degradation in the funnel, but the work we've done has created the opposite outcome. This is the flywheel. We will continue to lean into

And we continue to invest in new ways to leverage AI technology in the prompt experience.

This quarter, we debuted our first AI generated images on roughly, a 100 individual product pages. That showed how an item might look on a model.

What fashion brands make products that we can easily offer, but we can’t give on our massive assortment? The secondhand skews, the results were fascinating.

For existing heavy thread Up buyers, the AI model and images had a modest conversion impact.

But for those new to shopping secondhand, it was a big deal.

Customer satisfaction of AI model photos been on par with their very best features. We think this is because this is the way the new customers are used to shopping elsewhere.

Market in the coming quarters.

Again, this is in service of our goal to make the experience of shopping secondhand virtually indistinguishable from shopping new products.

Our social commerce work, continues to Delight customers, with easy ways to shop their inspiration from Instagram and other social media. Our new feature is live on the setup IOS app, and we expect to roll out to more platforms later this year.

We believe that enabling customers to seamlessly shop, their style inspiration from influencers, and creators is a meaningful opportunity for us to drive, social proof and capture wild. Share

We plan to continue to invest in engineering design and data science resources over multiple cycles to nail this experience all the way through the product funnel.

Returning to the seller side of our Marketplace. We continue to make substantial improvements across the seller experience. With our ambition to make spread out. The default place to sell secondhand clothing online.

Given the topline growth in Q2 and the expectations for Q3, it will come as no surprise that we set all-time records in requests, receipts, and clean out kits processed.

Our strategy involves expanding the number of ways customers can sell and the frequency with which they sell on thredup.

Premium service kits with service fees up to 34.99% quarter over quarter.

We are particularly excited by the mix of new sellers. Joining thread up as premium service. Customers roughly a quarter of Premium kits are coming from sellers who have never previously sold on thread up.

Earlier this year, we launched the ability to resell items. When you are returning a product you bought on ThredUp, that volume has increased more than 4X over the quarter despite no measurable increase in our overall buyer return rates.

We are leveraging our return supply chain to lower selling costs but more importantly making it easier for buyers to become sellers on thread up.

Let me provide a brief update on resale as a service for Ras.

Our change to an open-source model and our RAS strategy is in the earliest stages, and we are seeing promising engagement from brands.

We have renewed conversations with more than 60 apparel Brands, after the announcement of our new strategy. Again, we believe value for this ecosystem is created in the operations and Technology layer to ingest secondhand items at scale and make them available for resale at sufficiently as possible.

Over the long term is brand resale. Becomes more prevalent in the industry. We believe this ecosystem will benefit from a powerful affordable. Quote Universal re-commerce layer akin to what Amazon web services has done for cloud or Shopify has done for small business.

This can then enable any brand to do everything. They need across the resale ecosystem.

We will have more to share in the coming quarters as we launch new brands under this model.

Before I turn it over to Sean, I want to reiterate three important competitive advantages in our model that are working together to drive the positive momentum you're seeing today.

First, the operational infrastructure and supply chain that we have been invested in over many years is working as well as ever.

We've invested over 400 million dollars in infrastructure software and data to invent how a managed Marketplace can work at scale.

From the humble clean-out kit to advanced photography technology, from the inbound automation of item identification and measurements.

To the outbound Carousel. Automation for shipping at unique apparel skews, tens of thousands of times a day.

Our tailored purpose-built supply chain is unique and we believe that replicating our success would take many years, significant capital investment, and the creation of a great deal of new intellectual property.

Second, the technology investments we've made over many years to build a proprietary resale database and data expertise have enabled us to take advantage of the leaps in AI technology you're seeing today.

It is precisely the hundreds of millions of pieces of clothing that we've processed and the vast doors of data about those items that has helped us leverage AI so quickly and expertly to sell more items to better margins.

Third as we all know marketplaces are hard to build and sustain but when you get the fly goes going, they are very hard to stop.

Our Innovations on the buyer and seller sides are helping us delay. Both sets of customers expanding the addressable opportunity, while deepening engagement and capturing wallet share.

I have said multiple times that ThredUp, some marketplace should uniquely benefit from advances in AI. And I believe we are seeing that come to fruition so far this year.

As a parting thought, if you zoom out and ask how to compete with ThredUp over time, we think you will run into a lot more questions than answers.

How will you acquire, process, and fulfill the broadest selection of quality second-hand apparel anywhere?

Can you price the apparel attractively while maintaining healthy and sustainable unit economics?

A feat only possible through advanced automation infrastructure.

Will you be able to compete with a well-known and trusted brand backed by superior technology infrastructure and the decade-plus head start?

These are hard questions to answer, especially while threats are escalating.

In some, we believe the conditions for our future, success are very bright and we are going to be relentless in executing our Playbook.

With that, I'll turn it over to Sean to talk to the financials in more detail.

Thanks James. I'll begin with an overview of our results and follow up with guidance for the third quarter, fourth quarter and full year 2025.

I will discuss non-gaap results throughout my remarks, our gaap financials, and our reconciliation between our gaap and non-gaap measures are found in our earnings release supplemental financials and our 10 Q filing.

We are extremely proud of our Q2 results and which we accelerated Revenue growth exceeds our adjusted, eva. Expectations and generated cash.

for second quarter of 2025 Revenue, totaled, 77.7 million increases 16.4% year-over-year,

Our outperformance was driven by significant investments in marketing and inbound processing in order to drive our Marketplace flywheel.

These Investments resulted in our second consecutive record quarter of new, buyer acquisition, with new buyers up 74% year-over-year.

We finished the quarter with 1.5 million active buyers for the trailing. 12 months up, 16.5% over the last year. While orders were up 20.8% to 1.5 million,

For the second quarter of 2025, growth in the market was 79.5%, a 70 basis point increase versus the same quarter last year, as a result of higher average selling prices due to the rapid growth in our premium supply.

This dynamic was slightly offset by new buyer growth, as new buyers require higher incentives to convert on their first purchase.

adjusted, even though it was $3 million or 3.9% of revenue for the second quarter of 2025

We doubled our adjusted. Eva dollars versus last year, representing a 170 basis, point margin Improvement, as we leverage our multi-year investments and benefited from our Revenue outperformance

As our momentum accelerated through May, we were unable to hire fast enough in our processing operations, driving our EVB.

As we've entered Q3 with encouraging momentum, we are spending on marketing and inbound processing earlier in the quarter, which I will further discuss later.

Turning to the balance sheet. We began the second quarter with 55.4 million in cash and securities and ended the quarter with 56.2 million generating $800,000 in cash.

We spent 3.3 million on capex in Q2 and continue to expect maintenance capex levels of approximately 8 million dollars in 2025.

Now, I'd like to provide a bit of context for our updated guidance, which it sounds similar to last quarter.

We delivered a significant Revenue beat in the second quarter and we are flowing that through to the full year Revenue Outlook.

Though, we remain cautious on the current consumer environment. We are pleased to be raising our Topline expectations for the balance of the year to align with the Positive Trends. We are currently seeing in the business.

We also delivered a strong beat on Q2 adjusted evida which we are flying through to our raised year guide.

With contribution margins in the low, 40% range and healthy tax driven by AI improvements. Our customer experience and marketing tactics. We see continued opportunity to invest in marketing and inbound processing.

As we have increasing confidence in our quarters-to-date momentum, we are making these investments earlier in the quarter. We expect this timing to drive demand throughout the quarter and beyond, and more effectively enable us to flow our incremental Evida dollars back into our growth drivers.

Therefore, we are maintaining our profitability expectations for the remainder of the year. As we continue to focus on driving growth and generating cash.

With all this in mind, in the third quarter, we now expect revenue in the range of $76 million to $78 million, representing 25% year-over-year growth at the midpoint.

Gross margin in the range of 77% to 79%.

Adjusted Eva approximately 4.5% of Revenue in line with our previous expectations and basically the average shares outstanding of approximately 125 million shares.

In the fourth quarter, we expect Revenue in the range of 73 to 75 million representing 10% year-over-year. Growth at the midpoint the sequential step down reflects the seasonal slowdown and resale around the holidays.

Gross margin in the range of 77 to 79% adjusted Eva of approximately, 3% of Revenue in line with our previous expectations.

And basic weighted average shares outstanding of approximately 129 million shares.

For the full year of 2025, we now expect revenue in the range of $298 million to $302 million, reflecting 15% year-over-year growth at the midpoint. This updated view is $14 million above our previous guidance, incorporating our Q2 results and our raised outlook for the remainder of the year.

We are narrowing. Our growth margin range to 78 to 79%.

Adjusted EVA of approximately 4.2% of revenue. This reflects our Q2B while we are holding our assumptions for the remainder of the year to be broadly similar to our previous outlook.

And basic weighted average shares outstanding of approximately 123 million shares.

In closing, we are currently proud of our, Q2 performance, we accelerated, Revenue, growth, generated, cash, and we remain focused on doing the same in Q3.

The momentum we're seeing in the business provides us with increased confidence in our ability to deliver on our goals.

James and I are now ready for your questions, operator. Please open the line.

Thank you, ladies and gentlemen, we will now begin the question and answer session. Should you have a question please? Press star 4 by the 1, on your telephone keypad. You will hear a prompt that you had been raised. And should you wish to cancel your request? Please press star 4 to 2. If you're using a speaker phone, please, leave the handset. Before pressing any Keys 1 moment, please for your first question.

And your first question comes from the line of IO from Biggio. Please go ahead.

Hey everyone, uh, let me add, uh, let me get my congrats. Excuse me. Um, I guess a couple quick ones. Um, I guess first for James and then I thought I have a follow-up for Sean, but uh, just James maybe just at a high level, just more detail on what drove this kind of Q2 revenue outperformance and the new buyer. It's just, you know, the business has inflected so strongly, and it seems like it's happened pretty fast. So just kind of curious about the underlying factors. What do you think was the biggest driver there? Because there's so many different things you guys are doing right now to improve the business. I'm curious if you could kind of like level set that or rank order those for us.

Yeah, sure. Heck um yeah, I mean I think, you know, rank ordering is is difficult. What I would say though, is that we've really got this flywheel working of improved products and experience, you know, sort of put some numbers in the prepared, remarks around this around conversion rate, you know, cross cross cross the product experience. And then our new buyer acquisition continues to be strong, really driven, by by products. And so you need to combine that with strong operations processing and high quality Supply. What you get is this, Trifecta of great Supply, uh, great products experience and efficient acquisition. And what we're seeing is that as those things continue to get better and better, we're able to then deploy uh more dollars.

Into the growth flywheel and I think that's what's driving sort of, you know, momentum in the business. And um, yeah, it it feels great to be able to see the model really working and to feel like the marketplace is, is really humming on all cylinders.

I I assume you don't want to get into like the monthly Cadence or anything, but I mean just to see you do 16% growth and 2 q and your guiding to 25% in the third quarter like is the business. Just

Sequentially building every month because that's been going on for a while. I just kind of curious, if you could kind of help us understand what's going on under the covers,

Yeah, I mean we're definitely seeing you know, the new buyers that we are acquiring, you know, starting back in Q4 of last year, right? That momentum continued into q1 and I think into Q2 and and we're seeing it, you know, the first month of Q3. Uh, so so certainly, you're getting that acceleration. But then if you get a normal seasonal slowdown, uh, in Q4. Um, and, uh, yeah, I think as you as you all know, right? That when you're driving that many new buyers uh, into the into the business, as long as you're maintaining strong engagement rates and retention rates that really does start to compound. Um, and uh, you know, we're seeing that in the numbers for Q3 and Q4

Great. And this is the last 1, maybe for Sean. I'm not sure if it's for Sean or for you James. But uh, to drop to 10 in the fourth quarter, seems very conservative. Um, could maybe just talk about the guard rails. You're putting on that just because I I mean like like how many active buyers are you assuming drop off? Because I assume there's a good amount to get the Rev to go from 25 to 10. So I'm just kind of curious the guard rails are kind of putting around the fourth quarter. Um,

Tend to see marketing rates go up in Q4, and so we tend to pull back a little bit on our own investments just to maintain our paybacks and CAC LTV to CAC strategy. So we do a little bit of that ourselves. And then the third is, to be honest, you know, I think Sean and I are a little uncertain on the macro. Uh, jobs numbers are weak, housing markets are weak. And so I think it's probably smart to be a little conservative around exactly how Q4 is going to play out at this point. Um, but obviously, when we get to, you know, properly reporting Q3 and guiding Q4 in November, you know, we'll have more to share, but we think that's a more prudent course.

Thanks.

Thank you, and your next question comes from the line. If you land card in from William Blair please go ahead

Thank you. Um on the gross margin side of things, you know, typically I think there's sort of an inverse relationship between new customers and gross margin and yet you were able to sort of set records in both this quarter, just curious the Dynamics there.

And you're kind of keeping the wide range go forward um kind of the puts and takes on that and and maybe to related question but, you know, sort of mentioned some timing.

On costs as they relate to some of the upside and earnings in the second quarter, can you provide maybe some more details as to what those were and how that rolls through third and fourth quarter?

yeah, Sean I think on the on the growth margin outperformance in Q2 and we saw the premium Supply piece continue to grow and really Drive asps

And then as you look towards kind of the back half of the year, you see growth margin kind of kick down a little bit. I mean we still expect premium Supply to be there but we really want to focus on the customer experience as we've added all these new customers and the first half of the year and by that I mean we're going to focus on things like pick pack and ship which is stuff that kind of rolls into cogs and impacts gross margins to give a better overall customer experience, just to drive it home and uh really allow those new customers to become second time, purchasers or third time purchasers and forth temperatures,

And then, uh, you know, we don't spend a lot of time typically talking about supply, um, and we were kind of talking about it here on this call. I'm just curious, sort of, as you see the business accelerate.

It sounds like you're kind of keeping pace from a supply standpoint and then sort of the processing times, keeping those in check.

Yeah. Dylan, it's James. Uh, yeah. We continue to see record, you know, requests and receipts processed on the supply side, and we're really focused on innovating in the supply chain. You know, we really want to make ThredUp the default place to sell online and make it as easy as possible for anyone, you know, to get engaged. And so I think premium has done a very...

A good job of capturing you know that that more premium uh seller. Um you know we also we have our sort of donation program for customers who are really just you know, doing a, a non-financial motivated cleanout and and really trying to capture that whole Market Dillon. And it's and it's worked so well, so far uh year to date. And I think we're going to continue to innovate there as we get in the back half of the year.

Excellent. Thank you very much. Nice job.

Thanks, thank you. And your next question comes from the line of Dana Healthy from TY Group. Please go ahead.

Hi. Congratulations, everyone. As you think about this inflow of new buyers, what are the demographics of those new buyers? How do you think they differ from your core customers, and is this due in part to the closure of the dimm? Additionally, how do the categories differ at all from the first quarter to the second quarter? And then I have a follow-up.

Uh, hey Dan, it's James, um, no on the new demographic side, you know, there's nothing materially different about this customer, you know, compared to Prior customers. I, I think our point of view is that the addressable market for, you know, female, you know, secondhand Shoppers in the US. It's pretty large and I think we're now, you know, just getting back into once we divested Europe, a really aggressively growing, uh, you know, our share in that market. So the customers really do look like previous, you know, best best case, uh, thread up customer. So we

Feel good about that. I think from from a trend perspective, uh, q1 into Q2, we really did see. You know, continued explosion in the number of dresses that we were selling, you know, into Springtime, uh, and Into Summer that continues to be a a winning category for us. And uh, we think opportunity to, to take even further share, uh, you know, as we move through the year.

Got it. And then on the marketing spend, can you talk a little about the cadence of marketing spend, how much difference there is quarter by quarter now, and then just on the Wrath with the change to the open-source model, any further expansion of Wrath and its implications? Thank you.

Yeah, I think on the marketing side we, you know, other than the seasonal shift in, um, downshifting Q4 uh when when ad rates get really competitive around the holidays, otherwise we're really targeting, you know, somewhere in the High Teens to 20%, you know of Revenue on marketing. We're really in growth, you know, in acceleration of of growth mode. Uh, and that has been pretty consistent is a reminder, Dana. We're really focused on this LTV to CAC ratio being under 1 such that we're paying back uh under a year. And we've been really relentless on that. And so if, if we can acquire more customers under that construct, we'll, we'll try and lean in. Um, and that's what we've been trying to do, you know, year to date. And I think that's what you're starting to see some of that momentum, uh, build on the marketing spend.

And then start your second part was around.

Rest. Okay. Um, yeah, I I think look, I I think we're just a few months into the new strategy, but I think it is really starting to resonate with the apparel brands that we're talking to. So, you know, more than 60 Brands. We're now, you know, back engaged in conversations and the idea really is that thread up is the is the real scalable partner, uh, in town that can help them meet their goals, either on, uh, takeback programs and building sustainability and circularity into their brand, uh, as well as helping them position, you know, an assortment of secondhand Goods. That's uh, expansive and quality and meets the

Bids for, for their customers. So we feel great about this strategy, I think it's summer as you know, and and so it will take a little while uh, for us to Ink some of these deals. But I think we're, we're feeling good about the strategy shift.

Thank you.

Thank you and your next question comes from the line of Bobby Brooks from Northland, Capital markets. Please go ahead.

Hey, good afternoon guys, congrats on the great quarter. Um, so on the 1q call you guys had discussed that each incremental dollar but your 4% would be reinvested in the marketing and it kind of does tail. That also does tales with what was said earlier in this call. So I'm just trying to understand what's underpinning. The 32 guide to 4.5%, I know the 42 guide is for 3%, so maybe it's just as simple as on a full year basis. You'll be at that 4% threshold, but it was just hoping for a little bit more color there.

Yes, it's just due to the kind of seasonality of 2 Force Revenue versus Q3. I think the full year guidance takes into account the beats for Q1 and Q2.

Getting you to the 4.2 percent.

okay, and so it's just so

that's,

Really just kind of a baking in the first half beats, but anything more on, like the 3Q because it seemed like you guys are investing more heavily up front. So I just kind of surprised that you'd be above that 4% threshold.

yeah, but, I mean, I mean, I think we are in in in continue to invest in marketing, but we also insert committed to, you know, modest, uh,

You know, evida expansion, you know, over the course of the year we certainly want to be able to deliver to investors Clarity around the business, generating free cash flow uh the business, having a strong, you know, margin profile that we can control. And so I think what you're seeing in Q3 and the rest of the year is, you know, the growth is strong. Uh, and we want to, you know, make sure that it was clear. We were dropping some of those dollars uh, to the bottom line consistent with what we said earlier in the year. Um, but you know, to emphasize we're really we're really sort of growth oriented at the moment and I think we've been trying to focus on what's not consume any Capital, it's generate cash. Uh, let's maintain, you know, our gross margin efficiency or ibido efficiency and then really grow as fast as as we can. And, you know, that's how the numbers shake out.

That's very helpful caller. And then the next 1 was, I was just curious to hear a bit more about the supply Dynamics and kind of the makeup of what you guys are seeing. So obviously you guys have 3 or 5, different bandwidths on payouts, between 5 and 20, 20 and 50, 50 and 100 and so on with your take rate moving lower as the pricing the sale price moves up each band. So could you just give us some sense of like how much of the how much of your business falls under each category?

But I think what we feel like is that the consignment premium, uh, piece. Not only is it great for sellers, we think it's a very, you know, out of the gate strong product Market fit, but it really does help Drive buyer acquisition. Uh, buyers are there to find great products, Great Value. And that premium Supply is a part of that. Uh and so we really focus the rates based on, you know, maximizing the opportunity for the buyer uh and the seller and thread up all at the same time.

Got it. Um, and then just 1 last 1 for me is just obviously, your business is has clear benefits from the network effect. And it's those are really starting to take hold, but could you just discuss and

Taking into account that you just just just posted your best quarter and customer Acquisitions. Could you just maybe discuss the balance between what you're seeing in new people coming to the platform as new suppliers versus people coming to the platform as uh, first-time customers. Uh, and just kind of the mix of that or maybe long term time customers becoming suppliers or long-term customers, becoming or long-term suppliers becoming a customer and vice versa, just kind of curious to hear about those trends.

Yeah, I, I think what you're seeing is look, I mean, we've been saying for some time that that I think you have to really think about thread up as a marketplace, where you're really trying to add the right number of buyers and the right number of sellers, in to get, uh, the market clearing Dynamics to work. You know, you obviously want it to be highly liquid. And I think what you're seeing now is such strong, buyer growth in the business uh and our operational infrastructure you know, has never been stronger. We're able to feed that virus with high quality uh Supply and so the guard rails as far as buyers buy buyer growth and seller growth are off. You know where I think we're acquiring, lots of new sellers, the sellers are becoming buyers. Uh, as I mentioned, lots of buyers, uh, that are coming in. They're now getting complimentary cleanout kits in their orders and so, they're becoming sellers. So I think you're really starting to see that crossover, uh, happen between buyers and sellers. And again, I think that's what built a really healthy Network effect. You're the marketplace,

Very well said. Uh, appreciate the time. I'll return to the queue.

Thank you. And your next question comes from the line of Bernie Mina from meet him in Company. Please go ahead.

Great. Uh thanks for taking the questions. Um, just wanted to start on new buyers, obviously really strong results during the quarter um but just wanted to get a sense in terms of like it seems like there was less competition for new buyers in the first half of the quarter and then so there was more competition in the second half. So how did that play into the new buyer growth and and what's contemplated for the guide and 3 q and 4 q?

Yeah, hey Bernie, it's James. Yeah, and then, as you mentioned, the last call April was was strong. Um, and

You did see Team, uh, T-mobile and shien and, you know, a few others sort of pull back a little bit, but they kind of came back into the market in midday. Um, and so, uh, a lot of the performance throughout the quarter, you know, the last couple months of the quarter was really driven by, you know, the team doing a wonderful job on the growth side, you know, the product experience, continuing to get better, and we've continued to see strong momentum into July. So I, I think a lot of the back half of the year and we expect to see more of the same, um, and so it'll remain to be seen that, you know, how some of these guys, you know, play, I know Amazon has made some changes and how they're sending, uh, on Google shopping. Uh, the Trump Administration just rolled out diminished exemption is now not just for Chinese Goods, but for all Goods coming into the us so that will have some Dynamics around who's buying ads in the ad rate. So, uh, I think it's a pretty Dynamic environment, uh, but I'm pretty confident that regardless of the macro Trends there, like, we're going to be

Able to spend and apply our customers at, uh, you know, at real predictable and strong rates. So,

Okay, no, that's great. Thank you. And then just want, also want to touch on Ras. Um, obviously mentioned, um, conversations with over 60 Brands. Um, what are some and acknowledging that summer. But other than that, um, what are some of the bottlenecks for getting those Brands over the finish line and like how many new brand Partnerships we get to see for it to be a material impact on your supply.

But but I do think, uh, I think you think you're going to see some momentum by year end, whether that's material, I think, you know, remains to be seen. I I don't expect to be material in 25 but I I'm I'm optimistic that it will have a real impact in 2026.

Understood. Thanks James.

Thank you, and your next question, Council, on the line of Oliver Chen from tawen. Please go ahead.

Hi James and Sean, um, the AI acceleration has been really, really nice. Um, what do you think the hardest parts of that AI? A journey have been and second as you rank order. Um, the financial impact it sounds like

Customer acquisition is the highest impact. But how would you rank order? Um, the the model impact as you see it. Um, second question is on, on the new buyer, a growth rates. What are your thoughts on? Um, how that number like what kind of long-term growth rates? Might we expect there, it's been extraordinary. But um, the the related question is like 1 and done or the nature of of the new customers uh relative to existing. Thank you.

Hey, Oliver, uh, good good. Good to hear you. Um, the, uh, I think on the first 1 on the the hardest part of the of AI for us, is given the breadth of the catalog. Write 4 and a half million. Plus skus changing every day is really nailing.

Uh, product recommendations and, and filtering using the technology. So, even just in the last few weeks we've been rolling out improvements into, uh, how customers are getting the right sorts of product, uh, the items that, you know, they should shop with these other items. So, I think the hardest thing is, is really getting the models to work, as well, as we, as we know, they, theoretically can, um, which I think is really exciting because I think, you know, similar to whether it's citvt or or any of the other um, Services out there, they're getting better every month. Uh, and you can see that where, where we feel like the opportunity to make our experience of shopping on thread, a better every month, you know, through AI. So I think that part's exciting and the teams working super hard and, um, but these are hard big, big problems to solve. I think on the, um,

You know, the question around, like new buyer growth rates. The uh, look, I I I I don't expect it to be 95%, um, every quarter or 75% every quarter, you know, there's a real acceleration there that has happened, um, but I think we feel good about the addressable Market. I mean, this is a big Market in the US, uh, expected.

The double by by 2030. And so there's a lot of women out there that either are casual shop versus secondhand or have never shopped secondhand and we think we can go out and acquire. Those customers that is very predictable and large large numbers. And so I don't have a steady state rate for you, but I, but I would say that we have a million and a half customers, uh, and you know, there's an order of magnitude more customers out there that are not thread up customers than than, than are. And so um,

So that's sort of how we feel about the opportunity.

And then you had a second to give your other question. It was in there, was on the model, was on, which one on the, um,

Yeah, linking AI to a financial modeling. Like how might you make order some of the

Yeah, I I think you you sort of suggested that role on the customer, acquisition piece was the top of the list. I would agree with that. I I think it has helped us really, uh, drive conversion, you know, throughout the funnel make our ad spend more effective. I would say though that the the other piece is um, you know, if you shop thread up today, you just the The Experience feels more elevated and I think we're working, you know, further to even Elevate uh the shopping experience. And so I think the work that we've done improving the crispness of the images. Um some of the work we've done with on model for photography, the merchandising has improved, a lot of that stuff has really elevated. Uh the shopping journey and we hear that from customers that thread up. Just feels like a more elevated experience than it was uh a couple years ago and I think that's dropped.

More customers into the fold and increasing people's feelings about how the site is and what it means to shop there.

Okay. And James, um, you've been a Visionary within the sector. What are your thoughts about? Uh consolidation going forward or how you see the next leg of innovation over the the longer term and and how might that juxtapose with how you think about capex and what investment needs are options. You may have in the future

That people are going to wake up someday a couple years from now and say I'm never going to shop secondhand again. And so I think there's this is a structural shift. You know, I think similar to how off price, you know, spent 20, 30 years, really, shifting, how consumers, you know, shopped and behaved. I think secondhand is, is, is, is on a similar Journey. So I do think there'll be big, big companies created thread up. I hope will be 1 of them, um, and, uh, we'll sort of see, you know, see what happens. But, um, but I think that generally speaking, the, the fact that the market is big and the structural shift would suggest that there'll be some big companies.

Okay, last 1 on customer acquisition costs there a lot of puts and takes in different forces here as what's changed the most in your prospective, their framework, or maybe not much has changed, but just the tax that's around. You have or above any thoughts on on shifts or and how what that may imply for the future on the customer acquisition cost.

Yeah, I mean, we've seen some change on cpms, I think on on meta and on Google um which I think are consistent with some of the changes with, you know how big ad buyers like a team or Sheen are moving in and out of the market. Um but but by far the biggest driver has been the conversion rate. Um and so you know, conversion rates, right when they go up, you know, significantly like it changes all the math in a pretty dramatic way. And so our tax have come down, commensurate with our improvements in the product experience that has allowed.

To spend more money and by spending more money, we're actually able to optimize the funnel even more. And so you really do have this virtuous cycle, uh, driven by the product experience.

Thank you. Best regards.

Thank you. And there are no further. Question is that this time I want to know how to call back to Mr. James Reinhart for any closing remarks

Thank you all for joining us on this call. We're really excited about the momentum in the business and want to send a big thank you to the ThredUp team that I think has done an incredible job. They continue to do the really hard work to serve customers, so thank you all, and thank you to the team. We'll see you next time.

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