ThredUp Inc. (TDUP) Earnings

Management highlights

### Key Areas of Focus - Growth and Retention of High-Value Buyers - Development of AI Technology for Customer Discovery and Shopping - Scaling High-Quality Supply from Diverse Sellers ### Q1 Developments - First agentic product experience live for a segment of customers, using agents and reinforcement learning for personalized browsing. - Aggregating exact match items into an improved customer experience, starting with dresses. - Spending on meta up 100% year-over-year in Q1, Pinterest up 94%, with reduced spend on Google. - New seller kit requests in Q1 were 48% from new sellers, growing 90% year-over-year, driven by TikTok shop activation, onsite promotion, and targeted campaigns. - Direct listings beta remains promising with improved seller pricing tools, relisting tool, and improved seller verification and training. - Resell as a Service (RAS) has landed new apparel brand partners and deepened engagement with existing clients, with Earth Month campaigns driving meaningful engagement.

Guidance

### Q2 Guidance - Revenue in the range of $89 million to $91 million, representing 16% year-over-year growth at the midpoint. - Gross margin in the range of 78.5% to 79.5%. - Adjusted EBITDA of approximately 5.2% of revenue. - Basic weighted average shares outstanding of approximately 130 million shares. ### Full-Year 2026 Guidance - Revenue in the range of $351.2 to $356.2 million, reflecting 14% year-over-year growth at the midpoint. - Gross margin in the range of 78.5 to 79.5%. - Adjusted EBITDA of approximately 6.1% of revenue, representing approximately 170 basis point expansion versus last year. - Basic weighted average shares outstanding of approximately 131 million shares. - Plan to flow any incremental dollars above the guide back into growth driving opportunities in processing and marketing.

Segment performance

In the first quarter, revenue grew 14.6% year-over-year to 81.7 million. Gross margin was 79.2%, and adjusted EBITDA was 3.4% of revenue. Active buyers on the trailing 12-month basis grew 25% year-over-year. Q1 saw 1.7 million active buyers for the trailing 12 months, up 25% over last year, and 1.6 million orders in the first quarter, up 19.3%. Gross margin was 79.2%, a 10 basis point increase versus the same quarter last year as a result of higher ASPs. Adjusted EBITDA was $2.7 million or 4% of revenue for the first quarter of 2026, with a 190 basis point decline over last year.

Risks & headwinds

The macro environment remains uncertain with a more discerning consumer due to high gas prices and sticky inflation. This has led to average selling prices being off roughly 3% and conversion rates for existing customers lower by about 5%. There are risks associated with the onboarding, education, and segmentation of new sellers, as new suppliers initially may not perform as well as existing ones. Also, there are uncertainties around how the consumer environment will evolve and its impact on demand and financial performance.

Analyst Q&A

• Q: Hey, good afternoon, guys. Two from me. The first one is, I mean, so the Q1, very strong, understand maintaining expectations, Q2 to Q4. But James, can maybe you or Sean elaborate? You mentioned the consumer being more selective, but demand resilient. I mean, there's been a lot of things that have occurred, gas, you know, the macro. Can you kind of square those two dynamics? How are you thinking about the rest of the year? Maybe when did you start to see demand? consumer behaviors start to change did it coincide with the cnn effect or gas prices going up just just to elaborate more on that would probably be helpful.

  A: Yeah i guess james um yeah i mean look the businesses remain strong and i think q1 was a good quarter exceeded expectations top bottom line gross margins uh expanded so i think we're feeling very good about the business april you know has been good you know quarter to date so I think everything generally is going in the right direction. I think we wanted to give folks the building blocks of what we saw on ASPs and what we saw on conversion rates, because it does track, I think, the war in Iran and elevated oil prices and gas prices, which we just think on the margin is making the consumer a little bit more picky, a little bit more discerning. And we're seeing it in ASPs and conversion rate. Now, having said that, we've flowed those dynamics through the P&L through the rest of the year. And I think, you know, the business, you know, remains strong even with those dynamics at play in April. But I think there's just enough out there, Ike, that we want to, you know, be thoughtful about what the rest of the year guide looks like. But yeah, I mean, we're feeling great about where we sit. Sean, anything that I'm kind of- No, I think it is key to understand that we did flow through that ASP and conversion, you know, items that we saw in April through the full guidance outlook. And then I guess just to follow up on the ASP, I think you said coordinated was like down those singles. Is that kind of the expectation the rest of the year that your ASP or AOV, however you would define it, should remain under pressure? Are you expecting a bounce back in the back half? Yeah, right now I think it's off about 3%, consistent with beginning of March, sort of when we started to see this. Yeah, that's been the guide for the rest of the year. But I think depending on how things materialize with oil prices increasing, you know, with inflation, you know, I could see a scenario where it bounces back, timing of that a little unclear. But I still think that the unit margins, the contribution margins, top line EBITDA are all strong, even with ASB as being off a little bit. Yeah, and our assumption isn't there isn't a recovery in the guidance numbers. Thanks, guys. Thanks.

• Q: Hey, guys. I guess maybe just following up on that line of questioning, just wanted to hear you unpack sort of the trend that you're seeing in the business in April and how you kind of built the guide for the second quarter. I guess you said reduced conversion, ASP pressure in April, but the guide for second quarter sales is an acceleration relative to the first quarter. So just maybe square those for us if you could help out there.

  A: Yeah, Matt, James. Yeah, I mean, April has been been strong. And I think the guide reflects 16 percent growth in Q2. And, you know, we flowed through the Q1 beat into the full year at 14 percent. So, again, I think business remains strong and resilient. But we have to acknowledge that ASPs are a little are a little less than we anticipated. I think had ASPs not come down a little bit and conversion rate not come down a little bit, and again, we attribute this to the macro, my guess is numbers would be coming up for both the quarter and the year. But I think at this point, it's better to be a little bit more cautious and see how the quarter unfolds. But again, I think both those dynamics are at play. Slightly more discerning consumer, at the same time, us really operating and executing the business at a high level. Both those things can be true, Matt, I guess is the answer. Okay, that's helpful. Thanks, James. And then I guess, Maybe on the supply front, just wanted to hear a bit more. It sounds like the signal is the macro disruption we're seeing might even be driving more supply to your marketplace. Just wanted to hear a little bit about the incremental supply that you're seeing turn on, and maybe in the context also if you have any of the third-party initiative that you have going on. A: Yeah, I mean, we saw a huge surge in new sellers coming out of the platform in Q1. It was, you know, almost a thousand basis points improvement year over year, Matt, around new sellers. So it was a conscious effort to really invest in getting the supply engine going. And I think we're seeing the success of that. I think anytime you're onboarding that many new people, there's definitely adds more work to the team around how do we improve the messaging? How do I improve the education onboarding of all these new sellers? So we're spending a little bit more time on that, you know, than we were 90 days ago. But to me, I think it speaks to the strength of the marketplace model, you know, in any economic climate. And I think we feel very good about how these suppliers from a cohort basis become repeat suppliers over time and really fuel the business. back half of 26 and into 27. Okay. Very encouraging. Thank you. Yeah.

• Q: Appreciate it. Is this the first time that you spent to acquire sellers? Just let me start there.

  A: Yeah, Dylan, we are spending some dollars testing kind of the methods and the way that we acquire sellers. You know, the work we did on TikTok, as an example, we are working with some creators and some influencers on an affiliate basis. And so, yes, we're sort of kicking off a real methodical approach there. And I think what we've learned, actually, is that there is room to really grow sellers through some basic paid marketing methods. And we were sort of embarking on that journey now. The effects of that, Dylan, are that not only are you able to really expand the seller base, but those sellers that you acquire actually convert at pretty good rates into buyers. And also the quality of the sellers that you bring on the platform, their goods actually help drive improvements in buyer conversion rates and buyer LTVs. And so there's actually a nice recipe in there to spend some money acquiring sellers that makes both sides of the marketplace better. spin faster. So, sorry, long answer to your question, but I think there's real opportunity here for us to do this in a methodical way. No, that's perfect. And that was kind of the root of the question. I mean, because you levered marketing, albeit, you know, modestly still. I mean, is part of the idea you sort of walk through some of the efficiencies that you're seeing, which you've spoken to before, is part of this sort of reallocation of because you're seeing some of these greater efficiencies in acquiring either buyers or sellers? Is that one way to think about it? A: Yeah, yeah. And, you know, for the last couple of years, I've said, you know, when we do want to start turning on or turning some of our attention to acquiring sellers, we have very effective ways to do that, right? Evolving some of the messaging across these platforms, changing the incentive mix. And so everything that I've said over the last few years around how we would do this is exactly what we're doing today. And I think it's playing out very similar to how we thought, which is, There are very compelling ways to acquire sellers, you know, beyond just the organic reach that we have today. And those methods can be very creative to the business, both by expanding the overall seller base and also converting those sellers into buyers, right? We do really see it as an acceleration of the flywheel. Excellent. Thank you.

• Q: Hi, good afternoon, everyone. As you think about the prices being lost and conversion a little bit lower, was it consistent throughout the quarter, or is that just the end of the quarter in the month of March? And then with the uptick in new customers, what are their demographics? Is there any regional age, income level? What are you seeing there? Thank you.

  A: Yeah, hey, Dana. Yeah, you know, interestingly, the pricing piece, we really did start to see some of the conversion headwind and some of the price decrease, you know, start to happen beginning of March, which is very consistent with, you know, the war in Iran. And so, you know, it's hard to say it's perfectly correlated, but we did start to see it then. But what I would say is it really did normalize. So we're now operating in that environment for the past 60 days. And so we've been able to, you know, you know, correct where necessary around the types of goods that we're putting on promotion, right? How we're thinking about sell-through and marketing and curation. And so I would just sort of emphasize, we've sort of digested these things, both the pricing and the conversion rate, and have changed the way that we're operating the business to, you know, meet the customer where they are. But yes, it does point to some correlation with elevated oil prices and consumer sentiment. And then your second question around the customers. Yeah, the buyer mix, I think, you know, I mentioned it in the prepare remarks, Dana, but the buyer, we're trying to spend more dollars on Meta, more dollars on Pinterest, fewer dollars on Google, primarily because of the mix of customers that we're able to acquire. You know, the Meta and Pinterest customer, they have better LTVs. Their caps are slightly elevated, but the LTVs more than offset them. And so as we start to have more and more of our new customer flow come from those channels, we actually see the predictive LTVs be higher. And I think that speaks to the ability for us to compound these cohorts over time. So I actually think we're feeling pretty good about the customer acquisition mix and strategy and feeling good about the ability to digest the pricing and conversion piece we've seen since the beginning of March. Got it. And just one last thing. You talked about the inbound processing being faster than planned. How much faster was it? And where do you go from here? Thank you. A: Yeah, I mean, I think with all of the growth in buyers, active buyers being up, new buyer acquisition, what we're seeing in the dynamics is that all of our data suggests that the buyers that we have could buy more and eat up more supply. And so I think our approach now is to turn on all the afterburner jets to process as much as possible, getting the cohort sizes, the purchase behaviors. I actually think it's a wonderful moment in time, Dana, where we can point to if we process more goods, the business flywheel should go faster, given the pent-up demand from this large buyer cohort. So I think it's a nice place to be in where we're able to fly our customers efficiently, the LTDs are good, and really we just need more supply online, and that's what we're doing. Thank you.

• Q: Hey, good afternoon, team. Thank you for taking my question. So I just wanted to start on, you started to see those headwinds in the pricing conversion in March, but at the same time, you had the best month in your history of buyer acquisition, which seems really impressive. But also like if, I was hearing something was having pricing conversion headwinds of the month. I wouldn't think they would have the best, you know, best month acquiring customers in the history. So I just wanted to hear a little bit more on that dynamic and what you, uh, you know, what, what do you think you guys did to drive that great performance?

  A: Yeah. Hey, Bobby. It's James. Yeah. I mean, again, I think both these things can be true. I think it shows actually like the underlying strength of the business, which is even in a world where conversion rates might be a little bit softer. The fundamental conversion rate in the business remains strong. If you're going to go back to last year, remember, we spent multiple quarters driving conversion rates way up. And so right now we're seeing a little bit of a pullback. We think because of the macro environment in there, but they're still very strong. And that conversion rate Bobby is translating into the new buyer growth. Like just to give you like an example, I think new buyers in Q1 were up 27%, 27% year over year and tax were down more than double digit percentage. And so again, like, We're executing at a high level, and I think had we not had this ASP headwind, had we not had this conversion rate headwind, I'm guessing numbers would be going up. And so we just want to acknowledge that those headwinds are real, but we're navigating through them. Absolutely. Appreciate that call. And then just wanted to hear a little bit more of an update on Uh, how that supply channel through the tech talk shop ended up looking. Cause I know it was like a hundred thousand bags in one month. And then you kind of had to go through that. So I was just curious of like any insights of like, was that high quality supply? And it seems like that's a channel你想让我继续为你完成这个JSON吗？请明确一下具体需求，比如是否要继续补充关于这个问答部分的内容等。不过按照目前的情况，我先把已有的问答部分内容按照格式整理进去了。如果还有其他需要完善的地方，请告知我。</think>