GigaCloud Technology Inc. Q2 FY2025 earnings call

• Marketplace GMV over trailing 12 months ending June 30, 2025, increased over 31% to surpass $1.4 billion, active 3P seller base at 1,162 (up ~25% year-over-year), active buyer base surpassed 11,000 (up ~51% year-over-year). • Europe GMV grew 59% year-over-year in Q2, with 3P sellers showing increased interest in expanding into Europe; opened additional fulfillment center in Germany in July. • SKU rationalization for Noble House portfolio: retired 3,800 outdated SKUs, introduced ~1,200 new ones, with portfolio margin now 3 points behind legacy GigaCloud, expecting portfolio to settle into stable rhythm by next summer.

Total revenues grew 4% to $323 million. Product revenue grew ~5% year-over-year to $226 million, with international momentum, led by Europe's 59% year-over-year revenue growth, now representing roughly 1/4 of global revenue. U.S. domestic product sales declined 11%, partly due to SKU rationalization and broader industry headwinds. Noble House portfolio contributed a little under 25% to global product sales. Product margin improved 174 basis points sequentially to 29.2%. Service revenue grew ~1% to $97 million, driven by 3P GMV growth but offset by lower ocean freight revenue and shipping disruptions. Service margin was 11.4%, down sequentially by 4.5%.

• Total revenue expected to be between $295 million and $310 million for third quarter. • Tariff developments in April caused cost increases for products procured then, resulting in ~2.5% gross margin headwind in Q3; expect to offset through targeted price increases, but supply chain will take time to adjust.

• Heightened tariffs on key sourcing countries like Vietnam, China, and Malaysia led to supply chain disruptions, with 3P partners halting shipping for weeks. • U.S. domestic product sales declined 11% partly due to broader industry headwinds.

Q: Can you give a little more details on Noble House's performance in the June quarter and then where you stand on your SKU rationalization efforts as we enter the second half of 2025 as it pertains to Noble House?

A: Erica Wei said they've made good progress with SKU rationalization, introduced 1,200 new SKUs, retired old ones, project ahead of schedule, and SKU rationalization efforts will continue with portfolio expected to reach stabilized stage by next Q2 peak season.

Q: Just on the second quarter, curious where like sort of the upside to your initial guidance came from... And then the tariff impact that you mentioned towards the end of the prepared remarks, 2.5%, I assume that's gross margin headwind. Is that unmitigated so that you have essentially levers at your disposal to pull to offset some of that 2.5%.

A: Erica Wei said the big surprise was Noble House, originally modeled larger decline but performance better than expected. On tariff impact, 2.5% is unmitigated, strategy is targeted price increases on certain products where market allows, but supply chain adjustment will take time and not sure if levers will absorb 2.5% headwind right away