TDUP

Core Financial & Customer Performance

• Q2 2026 all core operating and financial metrics exceeded internal expectations, despite a more challenging macroeconomic and consumer environment than anticipated at the start of the year.
• The company had to run incrementally higher promotional activity to drive conversion among price-sensitive shoppers, which created a $3 million top-line headwind and reduced average selling prices (ASP) and average revenue per buyer.

Strategic Priorities & Customer Acquisition

• Management continues to focus on three long-term strategic priorities: growing and retaining high-value buyers, scaling high-quality premium supply from diverse sellers, and building AI as a foundational technology for the marketplace.
• The company is shifting customer acquisition spend away from Google PMAX to Meta and Pinterest, where acquired buyers have higher lifetime values (LTV) and customer acquisition costs are falling. New customer volume on these platforms grew 130% (Meta) and 145% (Pinterest) year-over-year.
• Brand marketing is a key focus: the recent "Dress the Party" campaign generated hundreds of millions of earned impressions, creating organic cultural reach that drives higher customer stickiness than paid search or promotion alone.

Supply Side Updates

• Active sellers reached a new record level, with overall product quality keeping pace with volume growth. Premium bag item volume grew 32% year-over-year, and now represents 12% of total inventory mix; management targets further premium mix growth by year-end via seller incentives and new acquisition channels.
• Peer-to-peer direct listings opened to all marketplace users in June 2026: since launch, total listed items grew 89% month-over-month, with over 100,000 total items listed at an average listing price of $80. Direct listings have a intentionally more premium product mix, with guardrails preventing low-quality or low-priced items.

Resell as a Service (RaaS) Updates

• The company launched three new RaaS brand storefronts this quarter: Steve Madden, Dolce Vita, and Betsy Johnson. Each new brand provides access to a new set of pre-qualified buyers and sellers with existing brand affinity, creating a unique compounding distribution advantage that cannot be obtained through other channels. The RaaS pipeline remains focused on elevated brands that serve higher-income customers, with new launches planned for fall 2026.

AI Technology and Product Development

• AI is now the foundational technology for all company development, rather than a separate workstream. Short-term AI value comes from operational efficiency and cost leverage, reducing required headcount growth and improving team productivity.
• Newly deployed AI features include: a real-time personalization engine that adjusts shopper feeds within seconds based on detected intent (delivered a 5% lift in item engagement and 7% lift in profit per new buyer in initial testing); clustering, which groups visually similar items to reduce browsing friction; Exact Match, which aggregates identical item listings into a single product page; and Notify Me, which lets shoppers opt in for alerts when sold-out items are restocked (opt-ins grew over 50% week-over-week post-launch). All AI features reduce shopping friction and bring the secondhand experience closer to traditional e-commerce, supporting long-term marketplace scaling.

• Management downward revised full-year 2026 guidance to account for persistent weakness among price-sensitive lower-income shoppers and the decision to increase promotional activity on aging inventory to protect long-term brand value.
• Q3 2026 guidance: Revenue of $87-$89 million (7% year-over-year growth at the midpoint, 20.3% two-year average compound growth); gross margin of 78-79%; adjusted EBITDA of approximately 4% of revenue.
• Q4 2026 guidance: Revenue of $85-$87 million (8% year-over-year growth at the midpoint, 13.2% two-year average compound growth); gross margin of 77.5-78.5%; adjusted EBITDA of approximately 6% of revenue.
• Full-year 2026 guidance: Total revenue of $344.4-$348.4 million (11% year-over-year growth at the midpoint, 15.5% two-year average compound growth); gross margin of 78.7-79.1%; adjusted EBITDA of approximately 4.7% of revenue (30 basis points of expansion year-over-year); the company expects to remain full-year cash flow positive in 2026.
• Management will balance growth investment and planned EBITDA expansion through the back half of 2026 and into 2027, and remains confident in long-term growth and profitability despite temporary macroeconomic headwinds.

ThredUP reports consolidated financial results for the second quarter of 2026, with no separate product segment breakdown provided in the transcript. Consolidated results are as follows: total revenue of $90.8 million, representing a 16.9% year-over-year increase. Gross margin was 79.9%, up 40 basis points year-over-year. GAAP net loss was $5.9 million, compared to a GAAP net loss of $5.2 million in the year-ago quarter. Adjusted EBITDA was $4.8 million, equal to 5.3% of total revenue, representing a 140 basis point increase year-over-year. Trailing 12-month active buyers grew 21% year-over-year to 1.8 million, total orders grew 22% year-over-year to 1.9 million, and new buyer acquisitions grew 13.1% year-over-year (a new quarterly record for the company).

• Persistently challenging macroeconomic conditions, particularly elevated gas prices driven by Middle East geopolitical conflict, are weighing on disposable income for lower-income consumers (household income under $60,000 per year), the most price-sensitive segment of ThredUP's customer base.
• Weak conversion among lower-income consumers requires incremental promotional activity, which creates an estimated $7 million total revenue headwind for the back half of 2026.
• Discounting fresh, premium inventory to hit short-term targets would damage long-term brand equity and reduce customer willingness to pay, creating a strategic risk that management avoided via the downward guidance revision.
• The shift to higher-LTV premium customers and higher-mix premium supply is a gradual process, and does not happen overnight, leaving the company temporarily exposed to headwinds from the lower-income consumer segment in the near term.

Q: Why is management embedding caution in the revised back-half guidance after a better-than-expected Q2, and what is driving the downward change to EBITDA margin expectations? / A: Conversion weakened in June and early July 2026, even with solid traffic, as lower-income consumers required larger promotions to purchase. Management made a conscious choice to be cautious and prioritize maintaining strong buyer cohorts, rather than risking missing targets by assuming all variables would break favorably. The EBITDA impact comes from both the reduced revenue base and the decision to maintain planned marketing and processing investments, as management views the current headwind as temporary.

Q: Is the current weakness among price-sensitive consumers expected to be temporary, and what is the outlook for average selling prices (ASP)? / A: The headwind is expected to be temporary because the company is actively shifting its buyer mix away from lower-income consumers, who now represent less than 20% of the total customer base (the lowest share in years). Higher-income buyer growth is significantly outpacing lower-income buyer growth. ASP will see temporary pressure in the back half of 2026 from aging inventory discounting, but the overall product mix is improving and long-term ASP trends are upward.

Q: What portion of the guidance cut comes from consumer weakness versus intentional assortment reset to prioritize higher AOV products, and how long will the reset take? / A: Most of the guidance cut comes from clear weakness in purchasing behavior among consumers earning under $60,000 per year. At the same time, the company is intentionally shifting assortment mix to prioritize higher-value fresh product, and has chosen not to discount this new premium inventory to hit short-term targets, which would hurt long-term brand value. This is not a full assortment reset—management is just strategically discounting older inventory to drive engagement with price-sensitive consumers in the current weak environment.

Q: Is the new peer-to-peer direct listings supply skewed more premium than core marketplace supply, and how does its sell-through compare? / A: Direct listings are intentionally more premium than core supply: the platform enforces minimum price ($20) and quality standards, leading to an average listing price of $80. Sell-through is slower for direct listings than the managed core marketplace, consistent with other peer-to-peer platforms, largely because sellers tend to overprice items relative to market clearing rates. The company plans to add seller education to improve this over time.