ThredUp Inc. (TDUP) Q3 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary and Q&A reveal positive aspects such as 25% YoY revenue growth, strong gross margins, AI investments, and a strategic RaaS transition. The Q&A highlights confidence in new partnerships and marketing efficiencies. Despite management's reluctance to provide long-term guidance, the optimistic short-term outlook and strategic initiatives suggest a positive stock price movement. The absence of a market cap suggests a moderate response, thus a 'Positive' prediction.
Key Financial Performance
Revenue $82.2 million, an increase of 33.6% year-over-year. The growth was driven by investments into marketing and inbound processing, which enhanced the marketplace flywheel, and improved buyer metrics from new customer-facing products.
Gross Margin 79.4%, a 10 basis point increase year-over-year. The improvement was attributed to higher average selling prices due to the rapid growth in the premium supply offering.
Adjusted EBITDA $3.8 million or 4.6% of revenue, a 410 basis point improvement year-over-year. This was due to leveraging multiyear investments, revenue outperformance, and continued investments in marketing and inbound processing.
Active Buyers 1.6 million for the trailing 12 months, up 25.6% year-over-year. Growth was driven by record new buyer acquisition and improved conversion rates for both new and existing buyers.
Orders 1.6 million in the third quarter, up 37.2% year-over-year. This was supported by repeat purchases from new buyers and improved conversion rates.
Free Cash Flow $2.4 million for the quarter and $3.4 million year-to-date. This reflects strong operational performance and efficient cash management.
You have reached the limit. Sign up to access full content
Get started
Operating Highlights
AI-driven product experiences: Launched 'Daily Edit' and 'Trend Report' features. 'Daily Edit' provides a personalized feed of 100 items refreshed daily, powered by in-house AI models. 'Trend Report' uses AI to combine macro and social trends with internal data to generate real-time style feeds.
Direct selling feature: Introduced a peer-to-peer selling platform in closed beta. Focuses on casual sellers with features like seller verification, no listing fees, and premium tools. Buyers benefit from seamless returns, trust, and curated listings.
Resale-as-a-Service (RaaS) expansion: Launched RaaS programs for New York & Co. and Cotopaxi, showcasing services like take-back programs, resale shops, and bulk consignment.
Premium Kit growth: Premium Kit now accounts for over 20% of marketplace supply, offering better monetization for sellers and accretive margins for ThredUp.
Revenue growth: Achieved 34% year-over-year revenue growth in Q3 2025, marking the strongest growth in nearly 4 years.
Customer acquisition: New buyer acquisition increased by 54% year-over-year, with October being the best month in history for new customer acquisition, up 81% year-over-year.
Gross margin: Gross margin reached 79.4%, a 10 basis point increase from the previous year.
Rebranding initiative: Launched a rebranded experience under the theme 'Fashion, Meet Forever,' aiming to build emotional connections with customers and elevate the brand.
Long-term growth strategy: Focused on reinvesting incremental dollars into marketplace growth through product improvements, marketing, and innovation. Emphasized leveraging operational infrastructure and proprietary data to sustain competitive advantages.
You have reached the limit. Sign up to access full content
Get started
Risk or Challenges
Tariffs and De Minimis Loophole Closure: While the closure of the de minimis loophole and tariffs have been a structural tailwind, they could also pose challenges if apparel prices rise significantly, potentially impacting consumer demand.
Broader Consumer Spending Uncertainty: Cautious outlook on the state of the broader American consumer, with concerns about reduced holiday spending or a shift in wallet share to new gifts, which could impact secondhand market performance.
Economic Uncertainty: Economic uncertainty for many American households could affect the adoption and success of new initiatives like direct selling.
Peer-to-Peer Selling Challenges: The peer-to-peer resale market faces issues such as friction in listing, pricing, fulfilling, and servicing items, as well as low trust and buyer recourse, which ThredUp aims to address but could still pose risks.
Competitive Pressures in Resale Market: The resale market is highly competitive, with new peer-to-peer marketplaces emerging frequently, leading to potential challenges in maintaining market share and differentiation.
Seasonal Slowdown in Resale: Expected seasonal slowdown in resale activity around the holidays, combined with increased marketing costs during this period, could impact financial performance.
Marketing and Processing Investments: Significant investments in marketing and inbound processing are necessary to drive growth, but these could strain financial resources if not managed effectively.
You have reached the limit. Sign up to access full content
Get started
Guidance & Outlook
Revenue Expectations: For Q4 2025, revenue is expected to range between $76 million and $78 million, representing 14% year-over-year growth at the midpoint. For the full year 2025, revenue is projected to be between $307 million and $309 million, reflecting 18% year-over-year growth at the midpoint. For 2026, revenue growth is anticipated to be in the low double digits, aligning with U.S. online resale industry growth expectations.
Gross Margin Projections: Gross margin for Q4 2025 is expected to be in the range of 78% to 79%. For the full year 2025, gross margin is projected to be between 79% and 79.2%.
Adjusted EBITDA: Adjusted EBITDA for Q4 2025 is expected to be approximately 3% of revenue. For the full year 2025, adjusted EBITDA is projected to be approximately 4.2% of revenue. Slightly better EBITDA margin expansion is planned for 2026 compared to 2025.
Capital Expenditures: CapEx for 2025 is expected to be approximately $10 million, similar to the anticipated level for 2026.
Market Trends and Consumer Behavior: The company remains cautious about the broader American consumer environment, particularly during the holiday season, and anticipates a potential reduction in overall holiday spending or a shift in wallet share to new gifts. However, the secondhand market may benefit from enhanced value offerings.
Strategic Plans for 2026: The company plans to methodically roll out its direct selling initiative throughout 2026, which is expected to unlock new growth opportunities. However, this growth vector is not yet included in the 2026 revenue forecast.
You have reached the limit. Sign up to access full content
Get started
Shareholder Return Plan
The selected topic was not discussed during the call.
You have reached the limit. Sign up to access full content
Get started
Key Q&A
Q:Sean, on the comment you just made on next year, just to make sure I heard you right. So initially for next fiscal year, you're assuming revenue can grow low double digits with similar EBITDA margin expansion that you're putting up this year, which I assume is 4.2% relative to the U.S.' 3.3% last year. So basically 100 bps margin.
A:Yes. We said a 90 bps expansion we expect for '25, and we'll do slightly better than that in '26.
Q:James, how are you thinking about the compounding effects of customer acquisition, the experience improvements, all intertwined with what is a much lower growth rate next year that you're starting to plan? And then really just longer term, what is a sustainable growth rate for this model as you see it over a multiyear period?
A:We aim to be a Rule of 40 company with a long-term EBITDA model of 20%-25%, implying growth in the high teens to 20%. For '26, starting with a low double-digit industry growth rate is a good place to start. The plan for '26 and beyond is similar to '25: methodically expand EBITDA and reinvest in growth. We feel very good about '25 and the multiyear path to being a Rule of 40 company.
Q:How will peer-to-peer products look on your website relative to goods coming in from the Clean Out kits? And what are the unit economics of peer-to-peer sales versus traditional Clean Out kits?
A:The product displays will look sharp, using AI to produce high-quality imagery. Peer-to-peer has a variable unit economic model that supports it as a strong long-term EBITDA driver. It generates superior margins due to lower top-line revenue but better variable cost flow-through. Sellers make more money, and buyers are happy. However, this is still early in the journey.
Q:Could you provide more details on buyer growth, including the mix of new buyers and how your marketing approach differs between getting prior buyers back on the platform versus new ones?
A:Active buyers is a trailing metric, while new buyers is a quarterly metric. About 1/3 of total new buyers are resurrected customers who had churned. The marketing approach focuses on driving new buyer growth and recovering lapsed buyers, especially with the rebrand and moving up the marketing funnel.
Q:Why was there a lag between the change in the go-to-market strategy for RaaS and the new partner that joined this quarter? What is driving your confidence in landing more new partners?
A:The lag is due to multiyear contracts with brands, and the renewal season for retail brands is now starting. The pipeline feels strong for new partners to sign or switch over. Six months is a quick turnaround for enterprise transactions, and the confidence comes from the timing of contract renewals.
Q:Will the direct peer-to-peer product be listed alongside consignment? What are the synergies between the two businesses?
A:Yes, consumers can browse them together or separately, similar to Amazon's 1P and 3P model. Synergies include centralizing sellers' needs, consolidating secondhand selling, providing buyers with greater selection, and leveraging the supply chain and logistics network. The focus is on sellers and supply over time.
Q:What efficiencies are you seeing in marketing, and how does customer acquisition lag effect active customer growth versus revenue growth?
A:Historically low CAC is driven by better product experience, improved conversion rates, and opportunities in the ad market. New buyer growth is strong, and active buyers trail that. The company plans to spend more on marketing next year, continuing the trajectory of customer acquisition.
Q:Can you expand on premium selling kits and their potential mix? How are AI investments leading to conversion improvements?
A:Premium selling kits have grown from 0% to over 20%, with room to grow further. AI investments have improved product conversion rates through better personalization, curation, and trend forecasting. The rebrand and new personalization strategy launched in September have contributed to these improvements.
Q:What are the demographics of new buyers, and how do you see marketing spend in '26 compared to '25?
A:The demographics of new buyers remain consistent. Marketing spend in '26 will be higher in dollar terms but similar as a percentage of revenue. Marketing is the last area the company plans to leverage as part of its growth strategy.
Q:What is driving the large acceleration in sales in Q3, and why is there a deceleration in Q4 growth?
A:Q3 sales acceleration is driven by consumers seeking value, improved tooling, and better conversion rates. Q4 deceleration is due to seasonal shifts in wallet share to holiday gifts and tougher year-over-year comps. On a two-year stack, Q4 growth is strong.
Q:How will the process work for vetting sellers in the peer-to-peer model, and how do you plan to monetize it?
A:Existing ThredUp sellers are pre-vetted. Additional vetting may include third-party vendors or extra steps like ID verification. Monetization will involve charging buyers fees and offering an insurance-like return product. Sellers may subscribe to tools for listing and merchandising.
Q:What are the competitive advantages of the peer-to-peer model compared to platforms like Poshmark or Mercari?
A:ThredUp focuses on the long-tail casual seller, offering a curated experience that drives liquidity and sell-through. Buyers benefit from trust, safety, and returns. The platform aims to deliver a superior experience for both sellers and buyers.
Q:What is enabling the large acceleration in sales in Q3, and what are the trends driving it?
A:The acceleration is driven by consumers seeking value, improved tooling, and better conversion rates. The macro environment favors value-focused shopping, and the company's strategy of offering great brands at great value is resonating with customers.
Q:What role will Generative AI play in the peer-to-peer model, and how is ThredUp leveraging AI for competitive advantage?
A:Generative AI is used for listing photography, curation, merchandising, pricing, and display. ThredUp's proprietary tools and technology infrastructure enable faster innovation and a superior product experience, giving it a competitive edge in the resale market.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the sustainable growth rate for the model over a multiyear period, stating only that they aim to be a Rule of 40 company. They also did not provide clear guidance for '26, citing economic uncertainty and the need to 'turn over more cards.' Additionally, while discussing the peer-to-peer model, management acknowledged that it is still early in the journey and avoided committing to specific financial outcomes or timelines.
You have reached the limit. Sign up to access full content
Get started
Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Co
Cotopaxi
Daily Edit
Investor Relations
Kit
Premium
RaaS
Today
Trend
advantage
asset
beta
buyer confidence
buying
core infrastructure
curation
decade
feed
friction
heart
household
investment layer
launch selling
level scale
listing
marketplace year
merchandise
merchandising
moat
peer marketplace
peer platform
potential
program
quality term
resale market
seller peer
success
suite
supply vector
top core
trust
wallet
TDUP Transcript
ThredUp Inc. (TDUP) Q1 2026 Earnings Call Transcript
Positive5-4
The earnings call highlights a 15% revenue growth and a 2% improvement in gross margin, both of which are positive indicators. Additionally, the company reduced its net loss and improved adjusted EBITDA, suggesting better financial health. Despite the risks associated with forward-looking statements, the overall financial performance and operational improvements are likely to positively influence the stock price in the short term.
ThredUp Inc. (TDUP) Q4 2025 Earnings Call Transcript
Positive3-3
The earnings call reflects positive sentiment with revenue growth, improved margins, and increased active buyers. The RaaS platform expansion and technology investments signal strategic growth. Despite a net loss, improved financial metrics and optimistic guidance for the secondhand market suggest potential stock price gains. The absence of concerning issues in the Q&A further supports a positive outlook.
ThredUp Inc. (TDUP) Q3 2025 Earnings Call Transcript
Positive11-4
The earnings call summary and Q&A reveal positive aspects such as 25% YoY revenue growth, strong gross margins, AI investments, and a strategic RaaS transition. The Q&A highlights confidence in new partnerships and marketing efficiencies. Despite management's reluctance to provide long-term guidance, the optimistic short-term outlook and strategic initiatives suggest a positive stock price movement. The absence of a market cap suggests a moderate response, thus a 'Positive' prediction.
ThredUp Inc. (TDUP) Q2 2025 Earnings Call Transcript
Positive8-4
The earnings call reveals positive growth in active buyers and revenue guidance. AI enhancements and RaaS strategy are promising, though not immediately impactful. Strong performance in key categories and efficient marketing spending further support a positive outlook. However, some uncertainty remains due to lack of specifics in management's responses. Considering the overall positive sentiment and strategic initiatives, the stock is likely to see a positive movement of 2% to 8%.
TDUP Slides
TDUP Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
How soon is the transcript available after the earnings call ends?
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
Is the transcript edited or altered in any way?
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
