GigaCloud Technology Inc Class A Ordinary Shares 2026 Q2 Earnings Call

Please go ahead, sir. Thank you, operator, thank you all for joining us.

Our second quarter demonstrated GigaCloud's resilience and adaptability. Despite ongoing pressure from across the broader furniture landscape, we delivered 28% revenue growth and record earning per share, underscoring our commitment to profitable growth. We're actively shaping the company's future by expanding our marketplace, growing our international presence, and making strategic investment that create multiple growth opportunities. Europe is a strong example of this strategy in action. The momentum we're building overseas is driving meaningful growth and demonstrating our model can scale and succeed across borders. Through disciplined execution, long-term investment, and local expertise, we are replicating our success globally. Beyond organic marketplace expansion, we are leveraging our strong balance sheet and cash flow generation to set the foundation for steady long-term growth. New Classic is a prime example.

Building on experience gained with Noble House, we're executing a proven integration strategy that is squarely on track. The acquisition expands our reach, broadens our offerings, and strengthens our ability to serve a larger portion of the industry. We're not simply industry participants. We're shaping its future by building the industry's digital infrastructure for large parts of B2B transactions. By seamlessly connecting buyers and sellers across channels and geographies, we have created an ecosystem that meets today's demands while positioning GigaCloud for future growth. This quarter reinforces that our strategy is working. Even in the challenging environment, we continue to gain share, expand our capabilities, and deliver profitable growth. With a scalable platform, disciplined execution, and long-term focus, we believe GigaCloud remains well-positioned to create meaningful value in the years ahead. I will turn the call to Iman for discussion of our ongoing and continued progress.

Thank you, Larry. Hello, everyone. Our marketplace remains GigaCloud's core engine, delivering another strong quarter. Trailing 12-month GMV grew 21% year-over-year to $1.7 billion as of June 30, 2026, demonstrating the continued value buyers and sellers find in our platform, even in today's challenging environment. Marketplace fundamentals remain healthy. Active third-party sellers increased to 26% to 1,465, while active buyers grew 17% to 12,823. These gains reinforce the network effect at the heart of our platform. More sellers attract more buyers, and more buyers create greater opportunities for sellers, strengthening the marketplace over time. Despite declines in the U.S. furniture industry, domestic GMV increased 9% during this quarter, significantly outperforming the broader market. We continue to gain market share, reflecting the strength of our marketplace and the value of our supplier-fulfilled retailing model.

Our platform serves suppliers and retailers through an integrated ecosystem designed to make large parcel B2B commerce more efficient. By providing greater flexibility, efficiency, and risk management capabilities, we help customers navigate challenging market conditions while supporting long-term growth. We remain focused on disciplined execution and operational efficiency. GigaCloud was built to perform across market cycles. Our adaptability is a key competitive advantage. Tools such as dynamic pricing allow us to respond quickly to changing conditions while remaining focused on our long-term strategy. The strength of our platform and operating model gives us confidence in our ability to continue creating value, gaining share, and advancing our growth objective. Europe remains one of our most exciting growth opportunities. Quarterly GMV increased 66% year-over-year, making the region both a meaningful growth vector and an important source of diversification.

We are seeing the same strategy that fueled our U.S. success gain traction internationally, building a strong supply foundation with 1P, attracting buyers, and creating a flywheel that drives 3P seller participation, product selection, transaction volume, and efficiency. That flywheel is gaining momentum. We are now seeing meaningful 3P participation in response to marketplace buying demand. 3P sellers in Europe increased more than 400% year-over-year, and now represent over 15% of Europe marketplace GMV, compared to 6% just a year ago, reinforcing our belief that we are still in the early stages of a significant opportunity. Turning to New Classic, the integration remains on track for completion by mid-next year and continues to be an important strategic priority. Our teams are aligning systems, processes, and operations while identifying opportunities to introduce new product offerings, improve efficiency, capture synergies, and leverage the scale of our platform.

As we had shared during the last call, the New Classic portfolio saw an approximately 20% year-over-year decline in Q1, immediately following the close of the acquisition. The decline was due to both challenges faced by traditional wholesalers in the industry and by initial disruptions following the change in ownership. Encouragingly, that decline improved to 8% in the second quarter, reflecting stabilization and early progress from our integration efforts. We believe the larger opportunity still lies ahead. New Classic brings a strong brand, established customer relationships, and a meaningful brick-and-mortar distribution that complement our existing strengths. These channels create new opportunities for growth, and we are already introducing additional product and offerings to this customer base. While we are pleased with the progress made so far, we are even more excited about the opportunity ahead.

We believe New Classic is well positioned to benefit from the scale, resources, and capabilities of the GigaCloud platform, creating long-term value for customers, partners, and shareholders. I'll turn the call over to Erica for a discussion of our second quarter financial results.

Thank you, Iman, and thank you all for joining us today. As a quick reminder, all figures covered today are rounded, and unless otherwise noted, comparisons are against the same period last year. Let's get into it. Despite continued market uncertainty, we delivered record revenue and record quarterly EPS through disciplined execution and a focus on profitable growth. Revenue increased 28% year-over-year to $412 million, including 23% organic growth and a 5% inorganic contribution from New Classic. EPS rose 28% to $1.16 per share, a testament to our team's strong execution and the enduring strength of our business model. Let's break it down further. Starting with service revenue. Strong marketplace activity drove service revenue growth of 25% to $121 million. Service revenue growth was supported by higher demand for ocean freight, warehousing, and last-mile services, as well as increased commission revenue from higher transaction volumes.

Service gross margin improved 3.2% sequentially to 11.7%, driven by ongoing carrier optimization, responsive pricing for our service offerings, and favorable ocean freight dynamics. Because much of our ocean freight capacity is secured through long-term contracts, our service margins benefited as spot rates moved higher during the quarter. Moving on to product revenue. Product revenue increased 29% year-over-year to $291 million, with growth across all regions. In the U.S., product revenue grew 17%, despite continued softness in the broader furniture market. We benefited from a strong outdoor furniture season in Q2, and our ability to deliver was driven by capabilities gained from acquiring Noble House, an asset that has become an ongoing and growing contributor to our revenue and earnings. That success gives us a proven playbook as we turn to our newest addition, New Classic. New Classic generated $16.3 million of revenue during the quarter.

While sales declined 8% year-over-year, performance improved significantly from the first quarter as we stabilized operations and advanced integration efforts. We believe New Classic is following a similar path to Noble House, where operational improvements and disciplined execution unlock meaningful value over time. Europe remained a standout performer, with product revenue increasing 54% year-over-year to $109 million. Growth was driven by continued marketplace expansion, increasing buyer and seller participation, and stronger relationships with international partners. Europe continues to validate the scalability of our model outside the U.S. It has become a meaningful contributor, an important source of diversification, and a powerful growth vector that we believe can remain a significant opportunity for years to come. Product gross margin was 31.4%, in line with the previous quarter. On a combined basis, total company gross margin was 25.6%, a sequential increase of 1.7% from prior quarter.

Sales and marketing expense was $36 million, or 9% of total revenue, compared with 8% a year ago, primarily due to higher channel commission and spend supporting our European expansion. General and administrative expense was $19 million, or 5% of revenue, compared to 4% in prior year quarter. As we previously discussed, our annual stock-based compensation is granted in the second quarter each year, with a substantial portion vesting immediately upon grant. Consequently, the resulting expense is directly tied to our share price on the grant date, meaning the higher share price this year resulted in an increased total SBC expense. As a result, share-based comp was $11 million in the second quarter of 2026 compared to $3 million in the second quarter of 2025.