GigaCloud Technology Inc. Q1 FY2026 earnings call

• Business resilience and diversification: Delivered over 30% y-o-y revenue growth and over 50% EPS growth. Europe is a strong proof point of scalable model. - Marketplace progress: GMV rose 17% y-o-y on a trailing 12-month basis to $1.7 billion at March 31, 2026. Active third-party sellers grew 19% to 1377, active buyers increased 25% to 12,473. - U.S. and Europe market performance: 12% U.S. marketplace GMV growth quarterly, Europe marketplace GMV grew 83% quarterly. - New Classic acquisition: Integration on track, deepening capabilities but full contribution ahead. Exit of lower-margin product categories in U.S. to protect bottom-line integrity.

Product revenue rose 7% to $243 million. In the U.S., product revenue totaled $126 million, up 15% from last year's first quarter, with 2% organic growth and approximately $14 million attributable to inorganic growth from acquisition. Standalone, New Classic was down ~20% year-over-year due to U.S. industry environment and integration disruption. In Europe, product revenue grew 80% year-over-year to $103 million. Service revenue increased 24% to $117 million. Service gross margins increased 250 basis points sequentially to 2.7% but declined 7.3% year-over-year mainly due to lowered ocean spot rates.

• Expect revenue in the range of $365 million to $390 million for the second quarter. - New Classic integration expected to go through a similar phase as Noble House with short-term disruption then recovery. - Capital allocation includes continued share buybacks and strategic acquisitions, currently focused on integrating New Classic.

• Service margins impacted by lowered ocean spot rates and other factors. - Difficult U.S. industry environment. - Short-term disruption during New Classic integration. - Rising oil prices affecting delivery costs.

Q: Larry, as you scale the business, how should we think about your strategic M&A efforts and your interest in acquiring larger assets as the business gets bigger?

A: We are continuously looking for opportunities that could build broader product line or improve technology capability to better service customers.

Q: How should we think about how rising oil prices affect your business?

A: Rising oil prices impact delivery cost on ocean and ground, but we are confident in navigating such increases.

Q: What do you think is really just driving your guys' ability to consistently outperform sort of the broader furniture and large parcel market right now?

A: It comes down to the marketplace driven by the SFR model which gives participants more flexibility, efficiency, and helps manage risk.

Q: What should we be aware of in terms of that inventory build and the purpose of that?

A: Majority was preparation for Q4 season, also increased spend due to acquisition.

Q: Talk about gross margin profitability and impacts of services.

A: Product margins improved year over year due to demand and spot rates, service margins decreased due to reduced ocean spot rate.

Q: Thoughts on timeline for integrating New Classic?

A: Roughly six quarters similar to Noble House case, with initial disruption then growth.

Q: Thoughts on capital allocation?

A: Share buybacks and strategic acquisitions are main focal points, currently focused on integrating New Classic.

Q: Provide more color on strength in Europe.

A: Model tested in US, Europe is more fragmented, operating in Germany and UK, planning for more fulfillment centers.