ThredUp Inc. Q1 FY2025 earnings call

• U.S. marketplace growth: Continued to reaccelerate with 10.5% top line growth, positive active buyer growth, and significant new buyer acquisition. April was the strongest new customer acquisition month in history.
• Macro environment: Q1 results exceeded expectations with little direct correlation to macro factors. Closure of de minimis loophole, tariffs on apparel, and reduced advertising spend by large ad buyers are seen as potential tailwinds. Business was accelerating before trade disruptions in early April.
• Product experience: AI-driven enhancements include improved search and discovery, personalized product pathways, visual search with 64% higher conversion in updated shop similar feature, and an AI-powered shop social feature in beta with strong early signals.
• Seller side: Substantial investments in seller experience, including refining premium seller dashboards, innovating for rhythmic buying and selling, and launching the ability to sell items alongside returns, with 8% of returns now including resale items and an average of 9 items per return.
• RaaS strategy: Open sourcing front-end technology and back-end logistics chain to encourage brands, pairing free branded resale shops with cleanout programs, lowering usage-based fees on cleanout programs, and providing broader marketing support.

ThredUp's U.S. marketplace saw top line growth accelerate to 10.5% in Q1 2025. Adjusted EBITDA was 5.3% of revenue, and cash generated was $2.6 million. Active buyer growth turned positive on a trailing 12-month basis, up 5.7% year-over-year. New buyers acquired in Q1 2025 were up 95% from Q1 2024. Premium sellers' items processed and contribution margins were 60% higher than regular items. Revenue contribution from the U.S. marketplace is the primary segment, with strong growth in new buyers driving the performance.

• Q2 2025: Expected revenue in the range of $72.5 million to $74.5 million (10% growth at midpoint), gross margin 77%-79%, adjusted EBITDA ~3.3% of revenue.
• Full year 2025: Revised revenue outlook to $281 million to $291 million (10% growth at midpoint), gross margin 77%-79%, adjusted EBITDA ~4% of revenue. Maintaining profitability expectations while focusing on growth.

• Tariffs and de minimis loophole closure: Uncertainty around how tariffs and de minimis changes will impact the business, though closure of de minimis is seen as potentially positive for ThredUp.
• Consumer environment: Volatile and uncertain consumer environment could impact buyer and seller behavior.
• Market competition: Continued competition in the resale space, including from brands using overstock and returns as resale items without proper circularity programs.

Q: What's driving buyer and revenue outperformance and confidence for the rest of the year?

A: Momentum in new buyer acquisition and progress on the supply side with processing in operations. Cohorts, operations, and unit economics are fundamentally sound.

Q: Any demographics on new customers and marketing spend?

A: New customers are similar to previous ones, slightly more middle to upper income. Marketing spend will continue if paybacks are attractive, with Shein and Temu pulling back spend being a tailwind.

Q: Category performance and pricing?

A: Dresses are the number one category. No structural change in pricing, mix of goods includes higher price consignment premium items.

Q: AI initiatives and pricing optimization?

A: Constant optimization of pricing and treatment groups through large-scale experiments. Marketplace optimization to balance margins, buyer value, and seller value.

Q: Seller trends and average revenue per order?

A: Good momentum on the seller side with growth in consignment premium and items sold alongside returns. Average revenue per order decline is due to mix of new buyers with promotions, not pricing pressure.