ThredUp Inc. Class A Common Stock 2026 Q2 Earnings Call

Thank you for joining us on today's conference call to discuss ThredUp's fourth quarter of 2025 financial results. With me are James Reinhart, ThredUp CEO and Co-Founder, and Sean Sobers, CFO. We posted our press release and supplemental financial information on our investor relations website at ir.thredup.com. This call is being webcast on our IR website. A replay of this call will be available on the site shortly. Before we begin, I'd like to remind you that we will make forward-looking statements during the course of this call. Such statements are based on current expectations and assumptions that are subject to a number of risks and uncertainties. Actual results could differ materially. Please refer to our earnings release, the supplemental financial information, and our forms 10-K and 10-Q for more information on these expectations, assumptions, and related risk factors.

We undertake no obligation to update any forward-looking statements. During this call, we'll present both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP to GAAP measures is included in today's earnings press release and supplemental financial information, which are distributed and available to the public through our investor relations website located at ir.thredup.com. Now, I'd like to turn the call over to James.

James? Good afternoon, everyone. I'm James Reinhart, CEO and Co-Founder of ThredUp.

Thank you for joining our second quarter 2026 earnings call. Today, I'll walk through our Q2 results, the key drivers behind them, and how we're thinking about the back half of the year. I'll then hand it over to Sean Sobers, our Chief Financial Officer, to walk through the financials in more detail and provide our outlook for Q3, Q4, and the full year. We'll close with a question-and-answer session. First, let me start with the results. In the second quarter, revenue was $90.8 million, up 16.9% year-over-year. Gross margin was 79.9%, up 40 basis points. Net loss was $5.9 million, and adjusted EBITDA was $4.8 million, or 5.3% of revenue. Active buyers on a trailing 12-month basis also grew 21% year-over-year, while orders were up 22%.

All of these metrics exceeded our expectations. We're pleased with our Q2 results. This was a tougher consumer environment than we would have expected at the beginning of the year. Despite a record quarter for new buyers acquired and record active buyers, we had to be incrementally promotional to drive conversion among our most price-sensitive shoppers. This approach in Q2 led to lower ASPs and average revenue per buyer. Ultimately, we estimate a $3 million headwind to our top-line results in Q2. Turning to the back half of the year, as we continue to move throughout 2026, our focus remains on the three strategic priorities that I outlined last quarter. Continuing to grow and retain high-value buyers, scaling high-quality, premium supply from a diverse group of sellers, and developing AI technology that helps customers discover and shop across our vast marketplace.

New buyer growth was again strong, up 13% in the quarter, lapping the 72% growth from the prior year quarter. Q2 was our strongest quarter on record for new buyers acquired. This is especially promising due to the higher expected LTVs of these new buyers and is consistent with our ongoing shift to a more premium buyer. We are continuing to reduce spend on Google PMax in favor of Meta and Pinterest, where LTVs are higher, customer acquisition costs are coming down, and volume is scaling quickly. As such, new customer volume on Meta and Pinterest grew 130% and 145% year-over-year, respectively. Brand is a big part of why that shift is working. We believe that those who discover secondhand through creators and culture, rather than through search or promotions, tend to be stickier over time.

Our most recent campaign, Dress the Party, generated hundreds of millions of earned impressions this June. Proof that we can create an owned cultural moment, not just buy media around one. On the supply side, active sellers grew to record levels, with quality keeping pace. The volume of premium bag items was up 32% year-over-year, representing 12% of the overall mix. We're targeting an even stronger mix by year-end through seller incentives, new acquisition channels for premium sellers, and continuing investment in the seller experience. In June, we opened direct listings, our peer-to-peer offering, to everyone in our marketplace. Since then, items listed are up 89% month-over-month, and there are now more than 100,000 items listed, with an average listing price of $80. While just a small fraction of total available items, we're pleased with the steady organic growth and premium mix of these items.

Let me turn to Resale-as-a-Service. This quarter, we launched three new brand storefronts, Steve Madden, Dolce Vita, and Betsey Johnson. As a reminder, each new brand gives us access to an entirely new set of sellers. Customers with real affinity for that brand who send us their cleanout kits because they trust the storefront carrying a name they already shop. That's a distribution advantage we don't get from any other channel, and it compounds every time we add a new brand to the roster. Let me talk about the product experience. We're now more than two years into our AI transformation work. No longer do we merely, quote, "work on AI products." Rather, they are, quote, "The foundation of everything we build across the enterprise." I'm often asked: What's the biggest impact, short and long term? In the short term, it's efficiency and cost leverage.

I'm confident that advancements in AI technology will provide significant cost savings for the business by reducing the need to grow headcount as fast and by helping our teams to be more productive. The phase we're entering now is closer to what I think the long-term impact will be, speed. The speed at which we can test, learn, adapt is accelerating. The rate at which we can develop next-generation product experiences, test pricing algorithms, design new back-end operations processes is unlike anything I've seen in my years running the business. Of course, many companies will speed up, the rate of change we will see across consumer experiences will likely accelerate. We think that will only make our unique, defensible, competitive advantages more pronounced.

Generative AI will commoditize a lot of the technology stack, it will not replace the fact that we still put real clothes on every day. Our continued investments in our supply chain and processing infrastructure, our compounding data advantage, and our trusted marketplace enable us to build world-class buyer and seller experiences. With that context, let me turn to recent product advancements. Over the past several calls, I've walked you through individual features that use AI to make a 5 million single SKU catalog feel more easily shoppable. I believe the most powerful example for where our technology is going now is with our real-time personalization engine. We see more than 250,000 anonymous sessions a day. Historically, the experience stayed largely static until our systems adapted for the shopper's next visit.

Our new real-time engine reads intent within seconds, retailers the feed on the very next fetch of inventory. In our first A/B test, that drove a 5% lift in item engagement and a 7% lift in profit per buyer for new customers. It's early, it's a real signal on what this system can unlock. We've also now widely deployed several AI-driven product experience to cut down the overwhelm of shopping second-hand. Clustering, Exact Match, and Notify Me all get at reducing cognitive shopping friction and are especially effective for newer customers. Clustering brings visually similar items together into a single browsing experience, keying off buyer intent and preference.

Exact Match goes further, aggregates listings of the exact same item into a single product page, where one item means one page, where a user chooses their size, color, or condition, rather than seeing the same item show up as 10 near-identical listings. Both features remove visual redundancy and bring second-hand shopping closer to a traditional e-commerce experience, critical technology for scaling our marketplace. This advancement also unlocks a Notify Me feature. Notify Me turns a sold-out single SKU item from a dead end into a reason to come back once it's restocked. Opt-ins for Notify Me have grown more than 50% week-over-week since its launch. For someone new to resale, this makes our marketplace feel as easy to shop as buying new. Taken together, this is why we believe that advancements in AI create a structural advantage for us.

It makes our marketplace more fun to shop and more efficient for us to run. Let's look ahead. While Sean will discuss our second half guidance in more detail, I want to be clear that we likely could have maintained our original second half outlook. Doing so would have required just about every variable to fall in our favor. Gas prices to come back down and uncertainty to abate. Seasonal acceleration that has proved to be unpredictable the last few years, flawless execution of price, promotion, and customer targeting. This seemed a high bar, one that could risk investor confidence if even one of these things moved against us. Our view is that the business is executing at a high level, with growing active buyers, strong new buyer and seller growth fundamentals, and an exceptional product pipeline.