Thredup, Inc. ((TDUP)) has held its Q1 earnings call. Read on for the main highlights of the call.
ThredUp’s recent earnings call painted a picture of optimism and strategic growth, despite facing some challenges. The company celebrated significant achievements in new buyer acquisition and revenue growth, alongside strategic advancements in AI and Resale-as-a-Service (RaaS). While there was a noted decrease in gross margin and concerns over macroeconomic uncertainties due to tariffs, the overall sentiment was positive, suggesting a strong outlook for the future.
Record-Breaking New Buyer Acquisition
In a remarkable achievement, ThredUp reported a 95% increase in new buyers for Q1 2025 compared to the same period last year. This surge marked the strongest month for new customer acquisition in the company’s history, underscoring the effectiveness of their marketing and outreach strategies.
Revenue Growth and Profitability
ThredUp’s revenue for the first quarter of 2025 reached $71.3 million, reflecting a 10.5% increase year-over-year. The company also reported an adjusted EBITDA of $3.8 million, which is 5.3% of revenue, effectively doubling from the previous year. This growth highlights ThredUp’s successful efforts in scaling its operations and improving profitability.
AI-Driven Product Enhancements
The company has made significant strides in AI-driven product enhancements, launching new features such as the ‘shop similar’ feature, which boosted conversion rates by 64%. Additionally, a beta ‘shop social’ feature was introduced, linking social media inspiration to curated shopping experiences, further enhancing customer engagement.
Expansion of Resale-as-a-Service (RaaS)
ThredUp is expanding its RaaS offering by open sourcing its front-end technology and back-end logistics chain. This move aims to encourage brands to participate more actively in branded resale, with the goal of creating a ‘universal recommerce layer’ that could revolutionize the resale market.
Gross Margin Decrease
Despite the positive developments, ThredUp experienced a decrease in gross margin for Q1 2025, which stood at 79.1%, down 100 basis points from the previous year. This decline was attributed to the higher incentives required for new buyer conversion, reflecting the competitive nature of the market.
Impact of Tariffs and Economic Uncertainty
The company acknowledged potential negative impacts from successive rounds of tariffs and the closure of the de minimis loophole, which contribute to uncertainty in the macroeconomic environment. These factors pose challenges that ThredUp will need to navigate carefully in the coming months.
Forward-Looking Guidance
Looking ahead, ThredUp provided guidance for the second quarter and full year of 2025. For Q2, the company expects revenue between $72.5 million and $74.5 million, with a gross margin range of 77% to 79% and an adjusted EBITDA of approximately 3.3% of revenue. For the full year, revenue is anticipated to be between $281 million and $291 million, with gross margins also between 77% and 79% and an adjusted EBITDA of around 4% of revenue. This guidance reflects a robust start to the year, driven by a significant increase in new buyers, with a focus on maintaining gross margins and reinvesting in growth.
In conclusion, ThredUp’s earnings call highlighted a strong performance and strategic direction, despite some challenges. The company’s achievements in new buyer acquisition, revenue growth, and AI advancements were particularly noteworthy. While there are concerns about economic uncertainties and gross margin pressures, ThredUp’s forward-looking guidance suggests confidence in continued growth and resilience in the face of external challenges.