10-Q: ThredUp Inc. Reports Q1 2025 Results: Revenue Up 10.5%, Losses Narrow

ThredUp Inc. saw a 10.5% increase in revenue and a significant reduction in net losses in the first quarter of 2025, driven by growth in active buyers and orders.

Summary

• ThredUp Inc. reported a revenue increase of 10.5% to $71.3 million for the first quarter of 2025.
• The company's gross profit increased by 9.0% to $56.4 million, with a gross margin of 79.1%.
• Loss from continuing operations significantly decreased to $5.2 million, compared to $12.2 million in the same period last year.
• Non-GAAP Adjusted EBITDA from continuing operations was $3.8 million, representing 5.3% of revenue.
• Active Buyers increased by 5.7% to 1.4 million, and Orders increased by 16.1% to 1.4 million.
• The company divested 91% of its European business, Remix, in the fourth quarter of 2024, which is now reported as a discontinued operation.

Sentiment

Score: 7

Explanation: The document presents a generally positive outlook with improved financial performance and growth in key metrics. While the company is still operating at a loss, the significant reduction in losses and positive EBITDA suggest a positive trajectory. However, the risks related to inflation and future capital requirements temper the overall sentiment.

Positives

• Revenue growth of 10.5% indicates increasing market traction.
• Significant reduction in net losses demonstrates improved operational efficiency.
• Growth in Active Buyers and Orders suggests increasing user engagement and platform adoption.
• Positive Non-GAAP Adjusted EBITDA indicates improving profitability.
• The company believes that its existing cash, cash equivalents and short-term marketable securities will be sufficient for at least the next 12 months and beyond to meet its shortand long-term capital requirements.

Negatives

• Gross margin decreased by 100 basis points to 79.1%, driven by higher outbound shipping, labor, and packaging costs.
• The company is still reporting a loss from continuing operations, although significantly reduced.
• Marketing expenses increased as a percentage of revenue, reflecting a higher rate of marketing spend relative to the growth in revenue.

Risks

• The company acknowledges that inflation remains at elevated levels in the U.S., resulting in rising costs that have affected gross margin and operating expenses.
• The company states that if it is unable to increase its prices to sufficiently offset the rising costs of doing business, its profitability and financial position could be adversely impacted.
• The company expects operating losses to continue in 2025 as it continues to invest in growing its business and its infrastructure.
• The company's future capital requirements will depend on many factors, including but not limited to, the timing of any future distribution center automation and expansion plans to support planned revenue growth, the expansion of sales and marketing activities, the potential introduction of new offerings and new RaaS clients, the continuing growth of our marketplaces and overall economic conditions.

Future Outlook

The company expects operating losses to continue in 2025 as it continues to invest in growing its business and its infrastructure. Based upon current operating plans, the company believes that its existing cash, cash equivalents and short-term marketable securities will be sufficient for at least the next 12 months and beyond to meet its shortand long-term capital requirements, and it does not anticipate expanding its distribution network to include additional locations in the near term.

Management Comments

• ThredUp operates one of the worlds largest online resale platforms for apparel, shoes and accessories.
• Our mission is to inspire the world to think secondhand first.
• We believe in a sustainable fashion future and we are proud that our business model creates a positive impact to the benefit of our buyers, sellers, clients, employees, investors and the environment.

Industry Context

ThredUp operates in the rapidly emerging resale economy, which is one of the fastest-growing sectors in retail. The company's RaaS offering allows brands and retailers to offer a scalable closet clean out service and/or resale shop to their customers, which is expected to accelerate the growth of this category.

Comparison to Industry Standards

• It's difficult to provide a direct comparison to industry standards without specific competitor data, but ThredUp's focus on consignment and RaaS aligns with trends towards sustainable fashion and circular economy models.
• Companies like Poshmark and The RealReal are also key players in the online resale market, but their business models and financial reporting may differ.
• A comparison of growth rates, gross margins, and customer acquisition costs would be necessary for a more detailed assessment against industry benchmarks.

Legal Proceedings

• The Company is subject to litigation claims and assessments from time to time in the ordinary course of business.
• The Company's management does not believe that any such matters, individually or in the aggregate, will have a material adverse effect on the Company's business, financial condition, results of operations or cash flows.

Stakeholder Impact

• Shareholders: Improved financial performance and growth prospects are generally positive for shareholders.
• Employees: Continued investment in the business and infrastructure could create opportunities for employees.
• Customers: The company's focus on value and sustainability could benefit customers.
• Suppliers: Increased sales volume could lead to increased demand for suppliers.
• Creditors: The company's ability to meet its debt obligations is supported by its improved financial performance.

Next Steps

• The company will continue to invest in growing its business and infrastructure.
• The company will focus on expanding sales and marketing activities.
• The company will explore potential new offerings and RaaS clients.
• The company will monitor overall economic conditions and their impact on the business.

Key Dates

Keywords

ThredUp, resale, e-commerce, financial results, Q1 2025, revenue, EBITDA, active buyers, orders, RaaS