ThredUp (NASDAQ:TDUP) executives said the online resale company delivered a record second quarter across buyers, sellers, orders and revenue, while also navigating a recent shift toward more price-sensitive behavior among budget-conscious consumers.
Speaking at Wells Fargo’s consumer conference, Chief Executive Officer and Co-Founder James Reinhart said second-quarter revenue rose 17%, while buyers and orders each increased by more than 20%. He attributed the performance to more than six quarters of record new-buyer growth, stronger customer conversion, pricing improvements and investments in the product experience.
U.S.-Only Focus Helped Improve Financial Profile
Reinhart said ThredUp’s operational and financial improvement accelerated after the company exited its European Remix business. ThredUp acquired Remix at the end of 2021, but the business struggled as inflation and interest rates rose in Europe during 2022, according to Reinhart. ThredUp announced plans to exit the unit in summer 2024 and closed the transaction in November 2024.
Following the exit, ThredUp was able to focus its investment and personnel on its U.S. operations, he said. The company now has positive EBITDA, is generating free cash flow and held approximately $60 million in cash, according to the discussion.
Reinhart said the company does not currently view share repurchases as the best use of cash. Instead, ThredUp plans to continue investing in growth, citing the size of the secondhand market and what it sees as efficient customer-acquisition economics.
“The business is still $350 million. It is still modest size,” Reinhart said. “I think we have got a long way to run before that.”
Consumer Became More Selective After Memorial Day
While second-quarter results were strong, executives said demand conditions became more difficult in June and into July. Reinhart said the company observed that budget shoppers became increasingly selective, with consumers seeking lower clearing prices on individual items.
ThredUp’s technology and broad assortment allow it to assess demand across brands, categories and price points, Reinhart said. The company lists roughly 100,000 new items online each day and expects to sell about 25 million units this year across 35,000 brands and 100 categories.
The company lowered its outlook for the second half by about $7 million, but executives said the revised outlook still calls for growth, positive EBITDA and cash-flow generation. Reinhart framed the reduction as roughly $0.50 per item across an estimated 14 million second-half units.
Rather than protect per-unit margins by maintaining higher prices, ThredUp has chosen to prioritize customer engagement and buyer retention, he said. The company believes it can eventually recover pricing as consumer conditions improve, while avoiding the higher cost of reacquiring customers who leave the platform.
Chief Financial Officer Sean Sobers said the company initially sought to rule out internal causes for the slowing behavior before concluding that consumer softness was the primary factor. He said conditions had not improved materially since the company’s earnings report and that the timing of a recovery remains uncertain.
Executives pointed to consumer uncertainty and gas prices as factors affecting the outlook. Sobers said a resolution of uncertainty surrounding the Strait could potentially support consumer activity, though he cautioned that any recovery could take months.
Product Mix, New Selling Channels and AI Opportunities
Reinhart said ThredUp sees two key levers for improving economics regardless of the demand backdrop: expanding the places where it sells merchandise and shifting its assortment toward more premium goods. He cited the company’s Direct Listing offering, potential live-selling initiatives and improved premium merchandise mix as potential drivers.
Direct Listing enables certain sellers, particularly existing ThredUp clean-out-kit users, to list their own items on the platform. Items sold through the service typically carry prices about twice those in ThredUp’s core marketplace, Reinhart said. The company is also exploring live selling, which he said could require AI-enabled technology to efficiently scale sales of one-of-one merchandise.
On artificial intelligence, Reinhart said he views “agentic commerce” as a potentially significant shift comparable to the transition from offline to online retail. He expects fashion to be a more difficult category for shopping agents because apparel purchases are more considered, but said ThredUp’s structured product data, standardized imagery and return policy could create an advantage in secondhand search and discovery.
The company is working to ensure its products and services can be found through chat-based AI platforms and that its data infrastructure can support shopping agents, according to Reinhart. He also said ThredUp is considering AI-supported tools for sellers and social creators, including ways to help creators build secondhand affiliate stores.
Despite the near-term consumer pressure, Reinhart said resale demand remains broadly healthy, with more consumers shopping resale and industry participants continuing to expand. He said the key issue for the sector will be how companies convert category growth into sustainable monetization and cash flow.
About ThredUp (NASDAQ:TDUP)
ThredUp Inc operates an online resale platform for secondhand clothing, shoes and accessories. Through its marketplace, consumers can buy pre-owned merchandise and list unwanted items for resale. The company handles much of the resale process, including receiving, inspecting, photographing, pricing and fulfilling orders for eligible products.
ThredUp also provides branded resale programs for retailers and apparel companies. These services enable brands to offer customers options such as clothing resale, trade-in and take-back programs through customized digital experiences powered by ThredUp’s infrastructure.
