ThredUp’s third quarter results were met with a significant negative market reaction despite surpassing Wall Street’s revenue and profit expectations. Management attributed the quarter’s growth to strong new customer acquisition and the successful roll-out of AI-powered features that improved user engagement and conversion rates. CEO James Reinhart highlighted the impact of recent product launches, including the Daily Edit and Trend Report, which leverage in-house AI models to personalize shopping experiences, as key drivers behind a surge in active and new buyers. The team also pointed to a robust performance from the Premium Kit supply channel, helping to boost average selling prices and margins.
Is now the time to buy TDUP? Find out in our full research report (it’s free for active Edge members).
ThredUp (TDUP) Q3 CY2025 Highlights:
- Revenue: $82.16 million vs analyst estimates of $77.61 million (33.6% year-on-year growth, 5.9% beat)
- Adjusted EPS: -$0.03 vs analyst estimates of -$0.04 (in line)
- Adjusted EBITDA: $3.77 million vs analyst estimates of $3.5 million (4.6% margin, relatively in line)
- Revenue Guidance for Q4 CY2025 is $77 million at the midpoint, above analyst estimates of $74.59 million
- Operating Margin: -5.3%, up from -17% in the same quarter last year
- Orders: 1.61 million, up 436,000 year on year
- Market Capitalization: $989.9 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From ThredUp’s Q3 Earnings Call
- Irwin Boruchow (Wells Fargo) asked about the sustainability of recent revenue growth and ThredUp’s multiyear growth outlook. CEO James Reinhart explained that the company’s long-term model targets growth in the high teens to 20% and emphasized reinvesting incremental profits to sustain the marketplace flywheel.
- Bernard McTernan (Needham & Company) inquired about the integration of the new peer-to-peer product and its unit economics. Reinhart responded that peer-to-peer supply would be displayed alongside Clean Out kits and said the model is designed for superior long-term EBITDA margins, though it is still early in development.
- Robert Brooks (Northland Capital Markets) sought details on new buyer growth composition and differences in marketing strategies for reacquiring lapsed buyers. Reinhart shared that about one-third of new buyers are returning customers and expects the rebrand to further attract past users.
- Dylan Carden (William Blair) focused on operational synergies between peer-to-peer and managed supply, as well as marketing efficiency. Reinhart described benefits for both buyers and sellers and highlighted historically low customer acquisition costs due to improved product experience and favorable ad markets.
- Dana Telsey (Telsey Group) queried the growth of premium kits and AI’s effect on conversion rates. Reinhart reported that premium kits now make up more than 20% of supply and that AI-powered features are driving sustained improvements in customer conversion and engagement.
Catalysts in Upcoming Quarters
In upcoming quarters, our team will be monitoring (1) adoption and monetization trends for the peer-to-peer direct selling platform, (2) the pace of new brand partnerships and growth within the Resale-as-a-Service channel, and (3) continued improvements in customer acquisition efficiency and repeat purchase rates. Additionally, we will track how AI-driven personalization and economic headwinds affect consumer engagement and overall marketplace health.
ThredUp currently trades at $8.01, down from $8.51 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members).
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