ThredUp outlines 25% revenue growth target for Q3 2025 amid accelerating buyer acquisition and AI-driven gains
Aug. 04, 2025 10:16 PM ET
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Earnings Call Insights: ThredUp Inc. (TDUP) Q2 2025
Management View- CEO James G. Reinhart opened by stating, "The second quarter was strong. Revenue growth accelerated to 16.4% year-over-year. Gross margin landed at 79.5% and adjusted EBITDA was 3.9%, all of which exceeded our own internal expectations." Reinhart highlighted record new buyer acquisition, up 74% year-over-year, with active buyers up 17% and orders up 21% year-over-year.
- Reinhart emphasized the company’s strategy: "Our approach in 2025 is simple: maintain our gross margin and bottom line efficiency and reinvest incremental dollars we generate back into growing new buyers and sellers in our marketplace."
- The CEO described ongoing innovation: "We are now more than 18 months into our AI-led product journey and positive results continue to compound." He detailed improvements in sign-up rates, with a 30% year-over-year increase, and a 60% increase in sign-up to purchase rate, resulting in an 18% improvement in visitor-to-customer conversion.
- Reinhart announced a pilot of AI-generated images on 100,000 product pages, noting, "Customer satisfaction of AI model photos have been on par with our very best features… We are retooling how the images are created and displayed at further scale and expect to be back in market in the coming quarters."
- On the seller side, Reinhart reported, "We set all-time records in requests, receipts and cleanout kits processed," and called out a 44% quarter-over-quarter increase in premium service kits received.
- Reinhart also provided an update on Resale as a Service (RaaS): "We have renewed conversations with more than 60 apparel brands after the announcement of our new strategy."
- CFO Graden Sean Sobers stated, "For the second quarter of 2025, revenue totaled $77.7 million, an increase of 16.4% year-over-year. Our outperformance was driven by significant investments into marketing and inbound processing in order to drive our marketplace flywheel."
Outlook- CFO Sobers stated, "In the third quarter, we now expect revenue in the range of $76 million to $78 million, representing 25% year-over-year growth at the midpoint; gross margin in the range of 77% to 79%, adjusted EBITDA of approximately 4.5% of revenue."
- For Q4, guidance provided was revenue of $73 million to $75 million, with gross margin of 77% to 79% and adjusted EBITDA of approximately 3% of revenue.
- Full-year 2025 revenue is now expected in the range of $298 million to $302 million, reflecting 15% year-over-year growth at the midpoint. Sobers noted, "This updated view is $14 million above our previous guidance, incorporating our Q2 beat and our raised outlook for the remainder of the year."
- Reinhart noted on Q4, "We do tend to see marketing rates go up in Q4. And so we tend to pull back a little bit on our own investments just to maintain our paybacks in CAC -- LTV to CAC strategy."
Financial Results- Revenue for Q2 2025 was reported at $77.7 million, up 16.4% year-over-year. Gross margin reached 79.5%. Adjusted EBITDA was $3 million or 3.9% of revenue.
- The company finished Q2 with 1.5 million active buyers for the trailing 12 months, up 16.5% year-over-year. Orders were up 20.8% to 1.5 million.
- ThredUp ended the quarter with $56.2 million in cash and securities and generated $800,000 in cash for the period. CapEx for Q2 was $3.3 million.
Q&A- Irwin Bernard Boruchow, Wells Fargo, asked about drivers of Q2 revenue outperformance and new buyers. Reinhart responded that the "flywheel working of improved product experience," strong operations, and high-quality supply are combining for momentum.
- Boruchow asked about the Q3 to Q4 step down. Reinhart explained, "Really for Q4, remember that it is a seasonal downshift in resale, right? That has been true for more than a decade."
- Dylan Douglas Carden, William Blair, asked about gross margin dynamics with rising new customers. Sobers cited premium supply growth driving ASPs and focus on customer experience investments impacting gross margin in the back half.
- Dana Lauren Telsey, Telsey Group, inquired about new buyer demographics and the impact of de minimis closure. Reinhart stated, "There's nothing materially different about this customer compared to prior customers." The CEO also noted dresses as a winning category.
- Robert Brooks, Northland Capital, sought clarity on EBITDA margin guidance and supply dynamics. Sobers said, "It's just due to the kind of the seasonality of Q4's revenue versus Q3."
- Bernard Jerome McTernan, Needham, asked about competition for new buyers and guidance assumptions. Reinhart noted, "A lot of the performance throughout the quarter, in the last couple of months of the quarter was really driven by the team doing a wonderful job on the growth side, the product experience continuing to get better."
- Oliver Chen, TD Cowen, questioned aspects of the AI journey. Reinhart observed the challenge of "nailing product recommendations and filtering using the technology," and emphasized ongoing improvements and opportunity to acquire more customers.
Sentiment Analysis- Analysts focused on drivers of buyer growth, sustainability of momentum, margin dynamics, and the nature of new customers, with a generally positive but probing tone.
- Management maintained a confident and optimistic tone throughout, with Reinhart stating, "We are going to be relentless in executing our playbook," and Sobers noting increased confidence in guidance. In Q&A, management remained detailed and transparent, occasionally noting prudence or caution regarding macro uncertainty.
- Compared to last quarter, analyst sentiment shifted from cautious optimism to a more positive and inquisitive stance, reflecting the acceleration in customer and revenue growth. Management’s tone remained confident, though with more emphasis on momentum and competitive advantages.
Quarter-over-Quarter Comparison- Revenue growth accelerated from 10.5% year-over-year in Q1 to 16.4% in Q2, with active buyer growth and order volume both increasing at a faster pace.
- The company raised its full-year revenue guidance to $298 million to $302 million, up from $281 million to $291 million previously.
- Management’s confidence in AI-driven enhancements and marketplace flywheel effects deepened, while strategic focus on premium supply and seller innovation intensified.
- Analyst questions this quarter focused more on sustainability of buyer growth and margin dynamics, reflecting greater interest in the compounding effects of recent initiatives.
Risks and Concerns- Reinhart noted macro uncertainty, including the unknowns around tariff impacts and ad market fluctuations, but highlighted ThredUp’s insulation due to its business model.
- Sobers mentioned the challenge of hiring fast enough to meet processing needs as momentum accelerated through May.
- Management remains cautious about Q4 performance due to traditional seasonal slowdowns and potential macro headwinds, with Reinhart stating, "I think it's probably smart to be a little conservative around exactly how Q4 is going to play out at this point."
Final Takeaway
ThredUp delivered robust Q2 results with accelerated revenue and record new buyer acquisition, driven by continued investment in AI-led product enhancements and a growing premium supply mix. Management raised full-year guidance and expects 25% revenue growth at the midpoint for Q3, while emphasizing ongoing innovation and marketplace momentum. The company remains focused on maintaining gross margins and reinvesting in growth, with a cautious approach to seasonal and macroeconomic uncertainties as it advances its competitive position in the resale market.
Read the full Earnings Call Transcript |
