Earnings call transcript Q4 2022

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Operator

Good afternoon, ladies and gentlemen. And welcome to the thredUp Q4 2022 Earnings Conference Call. At this time, all lines are in listen-only mode.

Following the presentation, we will conduct a question-and-answer session. [Operator Instructions]

recorded March being XXXX. is call on X, Monday, This call to Lauren I like the over Relations. would now Investor turn to of Frasch, Head ahead. go Please

Lauren Frasch

today’s and thredup’s Good call With year me And thank Reinhart, for Sean results. us afternoon. thredUp’s Sobers, James CEO you XXXX financial to and quarter fourth on discuss are and Co-Founder; full joining conference CFO.

website at webcast our information this be on Relations IR website financial on of release being our is supplemental ir.thredup.com. a and press call call We available posted site This replay on and our shortly. Investor will the

Before future rates, demand, we not the first and full begin, of and buyers consumer will new remind earnings to, business I’d the year call, growth, fiscal statements to quarter this our our interest performance, you and the general plans, limited that economic of market make increased prospects, course changing like ability for during inflation, we statements XXXX, and to strategies uncertainty. but attract including, global regarding habits forward-looking effects of financial guidance

of expressed statements such statements. could performance, intended any and estimate forward-looking Words as expressions of identify from well as differ similar guarantees or actual risks future and are by to not are unknown materially involve known statements. results performance future anticipate, believe, projections or and uncertainties, implied These results and our such forward-looking expect, as forward-looking

factors uncertainties our our other on and risks, You information SEC release these press that affect website. can earnings supplemental our IR find information more results filings, and could operating in about posted

to these of assumptions as on this undertake statements make as or are of no events. new statements future information on we result that based forward-looking we Any a today and update obligation call

in should we In or will non-GAAP measures a from measures. the addition addition, call, GAAP These considered substitute in to, non-GAAP for as isolation measures. financial present be not financial during certain

our in reconciliations measures, find IR measures comparable information posted on supplemental You our and these GAAP earnings regarding additional release non-GAAP disclosures website. including and can

Reinhart. to like I’d James over to Now turn the call

James Reinhart

everyone. earnings CEO fourth afternoon, call. Thank fiscal James Reinhart, you year Co-Founder XXXX joining thredUP’s and I’m thredUP. of Good quarter XXXX and for

As year, from quarter. share key fourth fiscal and new to into we we’re results financial highlights our thredUP’s business head a pleased

addition results, the our strategic will I more hand our consumer fourth company year year focus close we’ll XXXX. financial over and Officer, to our fiscal profitability. In a and quarter first on towards quarter question-and-answer in and call financials it the the share today’s of continued commentary to XXXX through Sobers, to also outlook Financial to We’ll areas out progress environment, our Chief Sean our the talk detail fiscal and for XXXX provide session. with then

our of excluding start strong $X expectations. exceeding related address internal Sean results. revenue, catch-up million, quarterly $XX in will further QX in benefit annualized to with with million Let generating $XX We later out our me XXXX call, we far a revenue million in card the own quarter, achieved closed gift a which detail breakage,

the to were XXX Year-over-year, business. our our Our the than gross business and at growth of strong a lower in our larger is a Remix the margins Remix due up margins overall that year were XX%, European lower ago margin becoming gross XX%. slightly U.S. proportion points of fact actually

declining promotional reached spend highly a QX expected would and Active slightly $X.X marketing reduced we as million quarter. in what $X.X both orders and buyers and we year-over-year, million, fourth respectively, be

bps XXX environment EBITDA we’re EBITDA quarter We compared improved annualized or in improved million successfully to to goals. quarter-over-quarter. apparel. gift improvement performance profitability without solid basis by and QX tough adjusted card continue adjusted quarter’s make EBITDA our Even a step progress and million also quarter-over-quarter. significant we the how the consumer XXX sequential this points $X up towards This $X the demonstrate is previous navigating believe a benefit,

and the on like to reflect briefly we’re how moment anticipating a resale to XXXX. opportunity take I’d XXXX evolving into

For headwinds consumers. macro resale, we inflation were interest This the with higher majority represents rate deteriorating the true thredUP’s squeezing customer to the midpoint of in shopper, and started conditions see was of for significant XXXX, particularly who base. budget

has sidelines well and second on discretionary back the and into we As last during sit QX been saw year pull documented, budget the to the of QX. spend continue on consumer quarter

levels were we also retail. In this addition to inventory across seeing demand pullback, elevated

For of their This brands promotions on aggressively in across overstock industry. last for pressure channels, was when holiday via shopping. downward and the especially were pronounced into half the further liquidating year, prices QX causing even second direct retailers wholesale leaned

retailers While hyper-promotional same for the chain, value due traditional flexible landscape. cheaply The this were our out inventory to affected supply clothing. this the influx stands face and thredUP model we that believe of as washed we by risks was brand priced being in we message consignment don’t and

facing the were summarize, combination pulling same back to at discretionary were a retailers shoppers with we in QX, overflowing budget context apparel. operating when on So the purchases, of time

of were value shoppers diluted was relative proposition on market, for the to the in clothing. many sitting offered and our new bargains resale saw we So for exceptional sidelines core those being that

still few inventories seeing we’re a historical make levels, us and a that Now cautiously real-time in for about months consumer elevated things of the couple to challenging remain into XXXX. optimistic the resale midst in environment a relative setup we’re but XXXX, of

in leaner delight, the predictable shopper, to and our and For are pretty around ripped more And believe promotional we likely normal. the year. particularly year, much playbook, today, getting second, dynamics now it’s Unlike are across new retain the to decline. stable activities are inventories how marketplace we to retail budget customer last last when compared up the this track one, and much in clear

an Consumers expect levels year When been for when and significant could As there’s clothes. resale income recover their favorable. eventually as it think to opportunity as downturn, primed slowly normalized think their we to quite that if ahead, to levels, health shopping to and we are we us that enable wallet prepare shine. reset discounts the believe right-size for conditions inventory starts the have done for the for will be does business retailers value wane sentiment resale for balances prices every to across to don’t buyers We income the follow in share years. we spectrum, in we confident capture our and expect buyer XXXX, we’ve across from proposition when many

for in current offense defense we’re playing we’re the while buyer competitive also when dynamics the and positioning So business normalize. environment,

in that fourth believe for we quarter with now and to in a backdrop, the focused to will XXXX turn on beyond. I’d strategic that us up So success we like areas few set

economics we how marketplace. our unit optimizing are continued with we in experimentation First, manage

we demand As a both can business. marketplace, our to the make supply of real-time and adjustments sides

to fee as data marketplace. cleanout in with shoppers service, experiments started new and manage how take in the we for calibrating Examples of include this these unit on improving to indicators returns experimenting our positioning promotions and observe we of based testing and shape successfully keep real-time early our with in merchandising a our that more we’re Many business economics. XXXX QX attract the mix

creating storage processing apparel. upon some items. SKU years our The center Dallas we increases our capacity best-in-class U.S. flagship million our capacity has from million infrastructure officially single network-wide of from of This Dallas. learning X technology, opening increased opening by to for Second, facility X.X items our facility newest of building in our distribution most have our advanced

optimize includes studios higher storage and while than identification a versions less Such photo that and for density, processing. brand and storage system, consuming and technology garment energy inspection redesign tag automation inbound multilevel providing size studio previous XX% automated XX% automates future

mid-summer. processing we has to new This enable by start to this when four-week and distribution processing scale consumer backlog center will recovery hit target see to quickly us our pacing already

the of and real-time, seasonal we engagement, goods As scope better satisfaction. increased purchase on we frequency process think we online mix can bags and buyer in we put

bargain more growth we consumer that resale and set promising. reinvesting Third, to back the are spend we us to customers share year We for overall dynamics our largely up year. more an appears or those of wallet in pulled prices in were think able at apparel new more ahead. are Many earn opportunity is behind stable last the now on and see shop environment

or to RaaS. our Resale-as-a-Service business Turning

way We’re Francesca’s. Bradley, apparel. as serves platform brand Vera with Spade, Pacsun, who others have Those Stars J. Michael and XX new as Athleta, Crew, retailers brands Madewell, programs RaaS gaining for now new like adopt Kate engage Fabletics, launched momentum increasingly a we recently as customers. brands Tommy now and Hilfiger, resale RaaS and resale and clients many choosing provider younger our retailers to among joined the are go-to

profitability sell-through and As recurring marketplace the infrastructure, to and enables on supply leveraging high a advantage, world’s expand to our and metrics customers. revenue. long-term increases by amplifies our RaaS scalable retailers sources reminder, assets leading our margin thredUP’s By experiences adding RaaS brands their return of resale offer

in of Many A year the business’ we are efficiency made the with you and European profile. supply Remix’s with we fashion Turning progress thrilled consignment a improving familiar increasing resell have acquired the Remix, XXXX. Remix. are half we and marketing to growth, driving in, performance and company margin

has turbulence end believe economic output inflation, proven a maintained XXX,XXX growth strong Eastern to costs to Remix center the Remix rising foot Sofia, Europe, the in is at a and distribution Bulgaria. square center As shared expected This new overall has war last trajectory. we quarter, and the capacity Despite resilient amidst we distribution year. near triple company’s of energy be opened in a hi-tech full by headquarters

EBITDA remain in to start to I’d back of free the in half provide we like of positive. towards confident cash goals. an our our update being XXXX flow our goal saying path these reaching that I’ll forward breakeven Now by achieve progress on adjusted and

prices, allows earnings mix. policies our inventory merchandising payouts, In you to model processing cadence, sourcing, return how flex with calls, I seller us past and our shared marketplace

I reduced which the find the in ourselves. spending environment expenses headcount, to discretionary also R&D, CapEx significantly uncertain across shared we business position and we economic how for

to our like and until last finer not open, One more least on XXXX expect is now reduce Dallas versus XX% CapEx, investments distribution with we point put planning further center CapEx area than in I’d XXXX. by are year spend significant do at to our a CapEx

results past adjusted We to indicative areas. sequential this these all improvements ability are of quarter’s across EBITDA in of our execute believe and

As the free just achieve we look breakeven, not to position business CapEx ahead, expenses time. committed also rigorously to remain over to and managing cash flow but we expand

will we and discretionary operations we persist, of also and strategy, to be While environment a challenging growth product, our recovery. a preparing broader take expect advantage consumer

purpose mission with to ESG like thredUp’s take a connect moment and I’d strategy. to core our

new continue journey a inspire of are impact forefront. keeping the social environmental we at As secondhand consumers our to think to generation we and first,

we our the outlining how helping growing published our QX, In while people, Impact are communities planet business. and a we inaugural Report, sustainable

their for Company with sustainable announced AZEK recognized in all AZEK an partnership innovative our defy design. environmentally of to the and which exciting [ph] We products, bags cleanout recycle return also are

We’re and fashion coalition. also in as The ACT joined will of for much-needed Textiles business Circular have policies serve solutions a the the models U.S. to thrilled accelerate American circular to advocate adoption

a endorsed It’s recently to models we power secondhand Maryland the Bill drive of example, exciting amplify and benefit sales that $XX. business For policymakers to American see sustainability under to consumer. tax eliminates circular the items on

over in XXXX of strategic our growth I our I results the balancing Sean through guidance, drive to long-term environment. financial reemphasize macro it want Before with turn are to shown to efforts business. strength improvements quarter-over-quarter challenging and investments results adjusted to EBITDA and amidst walk We’ve the our those the

will structure prices unit When in that be profit that of moment to an thredUP’s of providing and stronger apparel confident we’re brighter a ever-improving elasticity. capture and the clothing recovers environment and marketplace an way, great brands liquidation great discretionary mission in a than with economics, sustainable cost increased ever with selection incredible we’ll ready moderates, leaner at shine consumer

With go that, it more to now guidance I will Sean and over detail. financial to our results turn in through

Sean Sobers

call. quarter And year everyone Thanks, and of quarter us thanks overview an guidance the for fourth first joining follow-up full earnings on I’ll and begin and full James. with our our with results again, for XXXX year.

discuss will non-GAAP remarks. my results I throughout

in GAAP release, our reconciliation found XX-K supplemental financials upcoming a between earnings and and financials non-GAAP and are GAAP filing. our Our

our include year Europe XXXX a for after one reminder, full acquisition. As business now results our the

of results. We QX our proud very are

gift of forward. quarter fourth and the to totaled from immaterial related decrease a breakage this $XX.X benefit an year-over-year. card $X.X This includes benefit For going a expect of XXXX, revenue million, we catch-up X% of million

of of a fourth end high Excluding this, X% still $XX.X delivered revenue exceeding decline, million, the our guidance. quarter we

growth and strongest of down decline was our by our seasonally outsized to revenue relative grew product the in revenue mix attributable XX%. is an revenue from year-over-year, business their The product outstanding and quarter consignment XX% a revenue Consignment European This while primarily in RaaS during is shift. driven performance growth supply.

time. RaaS falls transition Currently, we of continuing product of consignment revenue over are our though businesses business revenue, majority and towards from these each to the both European under

On decrease in led in marketing remain on decline QX full environment top the the of an factors resulted We X% a orders, we decline for pulled in of to customers year also efficiency. environment budget back million trailing on XX% in million the competitive buyers XX of increase a the active which marketing difficult X.X macro a fourth X% to quarter our highly ended respectively. in These $X.X the sidelines, in million X.X and orders as with a spend reaching year-over-year, months.

over quarter year. the XXX-basis-point fourth a For XXXX, gross of the same decline margin quarter was XX.X%, last

result to consolidated margin XX.X%, came over while which fourth Excluding same in is outperformance XXX-basis-point at business, large U.S. portion a due gross quarter for to margins XX.X%, in year slightly were last the decline gross the our the the $X.X European our our in our quarter. lower up the was of consolidated million our breakage results margins benefit,

profile a time. than margins we supply business gross As improve reminder, European seek U.S. as margin product In its over lower to Europe’s consignment margin transition the the significantly plan we a near-term, towards are to higher the

through many the data closer investments order to we to XX% that However, U.S. commands. in margins see range business opportunities automation be these improve to in the science and

EBITDA quarter X.X% million, in GAAP was a for a compared negative revenue year. XXXX. the loss net million of of or fourth of $XX.X the For million same $X.X was of loss quarter quarter XXXX, last GAAP Adjusted to the $XX.X fourth net loss

as was the loss Excluding an million tightly managed expenses revenue, or year $X adjusted we compared XX.X% of XXX-basis-point improvement leveraged our breakage a the to EBITDA benefit, quarter investments. negative and approximate same our last

We rationalize we’ve by breakage loss adjusted QX work QX are done basis incredibly cost benefit, improved to points, the the even over million proud without structure. or XXX that EBITDA exhibiting our $X our

fourth and Turning to ended million. $XXX.X with the balance sheet. cash quarter million in $XXX quarter and the securities with We began marketable

Our million, began as in CapEx of we cash million phase our while Dallas to usage DC. first on $XX.X from the was operations $X.X spent wrap up investment we

remain we in track revenue QX to $XX to half and $XX breakeven on believe million. continue adjusted on confident Based our million assuming progress, achieved second quarterly of to are reach of the that least we we XXXX, EBITDA at

free breakeven being our and reaching is way As a point positive profitability. we’ve mentioned, on to just expanding path cash flow

of minimal, that in EBITDA materially adjusted our the improve working we and our of spend believe free Given half needs are are the drivers CapEx capital year. of key which cash flow, second this will both

then million QX more back the of decrease level expect $XX year in slightly and spent and We first to this half spend in cash decreased in half. the the significantly in

initiatives needs driven Our this structure. as reduce be by cost plan to usage the CapEx EBITDA year diminishing implemented cash and we strategic will streamline improving our and

XXXX, in CapEx in in than XXXX. are less million reduce to $XX million spending CapEx $XX we the to planning After significantly

million million $X the quarter approximately maintenance half to QX, of per year. levels $X ramp down the QX of spend the and in in back to about planning We’re in $X million

efficiency Importantly, as our DCs, current so beyond within XXXX global the expect until are unit earliest to we planning do for levels and capacity we’ve improved maintenance not of our CapEx then. and at expand

through business expense Due be CapEx to reduced our to able to balance. structure, fund ability cash significantly our needs to our manage we the expect our and existing

turn do expect anticipate balance reaching a we debt $XX reiterate capital down to them. our or flow cash nor As on to the before positive we to and before marketable result, not markets we want below that do existing million falling securities free cash draw our

elevated economy. instability deteriorating remains degree will the retail throughout Though inventories seen that the high macro XXXX’s a we the believe pressure there of ease in year, trends of stabilized, we’ve

our Even new that as spending this and we shoppers environment normal, more to the business. to may are shift stronger, as emerge refining managing to adjust and we ensure profitable expenses adapt model a

guidance. to Turning

range of shares the average approximately of weighted gross $XX revenue and in loss and we expect revenue of range of XX% quarter, the XX% XX% outstanding first to the adjusted XX% million. to $XX basic $XXX For million to in margin of million, EBITDA

For range margins revenue the in adjusted XXXX, of EBITDA the of and to $XXX million. of expect XX% range $XXX approximately of and $XXX of the we of gross weighted full revenue approximately X% approximately XX% basic loss in million to year to million, average outstanding shares X% approximately

normalize closing, growth and ongoing are take In shape. fourth goals pleased we deliver markets on can as we are to apparel our with our and improve our quarter performance efforts confident and breakeven business

Operator, are questions. now your and line. for I James please the open ready

Operator

with question comes Barclays. Your Please Trevor Thank from first ahead. Instructions] Young you. [Operator go

Trevor Young

gift you around in the like through a on well than picking that further halfway quarter, a not been you coming it obviously, December question. card When guide, That’s ahead a even of and at expected results. impact. that outlook my excluding the in the Was that now mid-November, cautious guide the Good result seeing you’ve more of first or guys point gave deterioration seemed trend? bit up maybe more

James Reinhart

Yeah. I reasonably they softer was and expect little then I October a Yeah. and November Hey, James. December were. to think it mean Trevor. think than be I It’s strong we

better say than amazing any would was business I by think was I that So we stretch. December don’t it expected. the that performed

across reflective can work kind number a end, see that approach. you think of think of working better guidance QX, I like, it’s sort are just we products started and of and our for started the work in better that’s the of little of also I things the the to a to on things front so we on portfolio think

Trevor Young

I of it Q-on-Q. to XQ, do of about it inventory quality that kind where on of the and think, makes kind Got of good you it. feel be Is XXXX? inventory the out up as expect That you into head mid-high-teens sense. then And you the coming was

Sean Sobers

No. Yeah.

think about we I expect that’s where be. to it

that keep balance the is business up think inventory I the mind that owned only. shows sheet in inventory the on the --

So that’s to going related to relates European of the over of what’s business. to the be U.S. and a XX% small it probably portion

Trevor Young

Got it. Thank you, both.

Operator

Boruchow Fargo. next with Please Wells Your comes from question Ike ahead. go

Kate Fitzsimons

at are And behavioral you a is like you finding more in your perspective from that called seeing getting just bit you’re anything you it. just out encouraging? you’re Just that sharper you with on This a mentioned for could the guys that shopper? your elaborate if that Kate to James, or on customer. it stabilization I’m category budget wondering remarks, then, a appealing

of any were particularly that Just of key looking more even encouraged towards with learnings the kind you by you’re coming out that holiday XXXX? pleased

James Reinhart

for. Yeah. Sure. shoppers budget sidelines, Yeah. market right just both have data it you better who characterize qualitative Kate, in the the not mean, I are who that as of that to is more on starts looking were would transition often is shopper what quantitative around stabilize, maybe I or and as

So once that can work the start of everything in. then promotions, little bit sort messages, bend to we you mix, you’re living can understand the really the context a the marketing better

I storytelling into And QX that how we as that we’re we through were we of just type And shoppers. I moving XXXX. work of XXXX, the got those in messaging around is think and informing really a so think lot sharper budget move doing to

and that shopper you’re world of discounting, in very the discounting, think how a can you I really product to And just offering. the market get feeling to messages pinched, relate competitive the that sharper you’re putting types in what consumers environment you’re around are so allow think is where I

And where team, now work I into moves right XXXX. some make that so feeling that’s I we can business understand I we make we’re better we to we think the -- the confidence with, as move what dealing management we’re and are where think like and think, any

Kate Fitzsimons

very Thanks helpful. That’s much.

Operator

Anna question Please ahead. Needham next Andreeva from go comes & Your from Company.

Anna Andreeva

of so cleanout are $XXX wanted you Great. much, guys And and now stuff. addition We that Thanks you afternoon, fee. I see to mentioned that in $X,XXX guys. testing follow-up. processing good noticed that some to James,

I early, you tested Just sellers it? in and are is guess, has been response that thus so about think the for curious the recognizing actually coming but did seller And getting paying it’s you as specifically? now better supply And far. curious those you how amounts the what thank much. from just also

James Reinhart

Yeah. Hey, continue to it. test Anna. we Yeah. I mean

the been waned cleanout of for you so and was, I just following as time, think you’ve service demand some know, part our really has we’re incredible insight our the best built prioritize for and never us we could monetize to being most we out sellers equity brand that the at ways where ways closet. also your to for clean convenient thredUP place looking

points And for so, we’ve testing similarly price bag. also fees different been paying the yeah, with cleanout at and

results. to very the have good we feel I about say, test And

that really why we’re We’re number from understand already making suggest changes the these stuff. seeing And processing that limited some as I consumers cohorts like these we’re bags and of better of think is a imagine, amount cleanout items better. are service, are might and putting items getting items you quality they’re more when kits, the are those we’re in people for the of the so paying higher of

So for think we the I a positive this good business. sign think -- is

Anna Andreeva

much. Awesome. you so Thank

Operator

Your next question comes Please go Carden William from Dylan ahead Blair. with

Dylan Carden

it that for is segment Thanks. you maybe I to disclose is how of or in won’t think piling -- percent you many, stay on way reach this, or of pretty what Can guess, of that Any just small the of that a of charging? are broad-based sales sort we a the second. program, but Yeah. How market?

James Reinhart

experiment. a it’s meaty Dylan, pretty

the enough seller to we’re buyers. experience, So good our to now sure right, the the seeing. But we’re that data we for best results about make continue the product to pretty we evolve get have that I think going get we and feel to mix

and I lot we’re get spend balancing to And And how out on fast about sides marketplace the to done think I I the a marketplace. possible. over think think as side to ability the our of the really couple last now more we’ve years, demand flex of we’ve as both talked

we I where good we feel all about are. think So pretty

Dylan Carden

the some we of other you’re what the kits? not embedded -- could that’s sort spend cleanout or then on of in for doing. kind breakeven is optimization that their efforts of that doing EBITDA is of including embedded Is I And initiatives of unit that this sort ran if be economic else, you you’re it sort would time incremental? some guess optimization charging and

James Reinhart

Yeah.

think things returns about around is, doing products areas, many around work. can returned the the be sort charges, is customer’s work best out bag economics as to make those to I what we returns, talked number we’re how a sort as of cleanout in that well of the continuing we’re kind of of the three experience unit way there figure the of

doing merchandising in. then work of product and And coming the we’re around the sculpting of that’s the mix

I are the think still think we in market. those reflected three the things the are in I it year, to early. best for can, that And experiments that that’s but guidance is

things to And other but also we experience have on front-end of a for buyers we work think on upside. the that some continue number

guidance best we be better. business come will to think hard in it think work make case of the but reflects to So really XXXX, where day I we and our the every work

as stuff well. working new some we’re on So

Dylan Carden

break in the revenue the I consignment Okay. in the you’re do first outlook, the think by of business. And items. sort you those out kind they’re declines product fair? where But of of the of out rounding the bottom consignment versus not quarter, that consumer Is then is kind guidance know to going that two

James Reinhart

No. Yeah.

supply QX from had think the towards because non-RaaS I turned we products, mix was off the business. in pushed

is Europe then of -- also coming an majority outsized you have which owned. Europe RaaS, had lot So and from that is the we owned. quarter in more portion a from is of And a supply good that

So that’s I you in think what happen QX. saw

get you that when into XXXX, to said, a RaaS through of kind do being we have of supply. lot That burn

So slight as say, -- I just improve I wouldn’t shift go consignment but a through we XXXX. would XXXX, expect improvement dramatic it in to

Dylan Carden

Excellent.

mentioned any update you lastly, stand then And of second, had there? off turned sort kind that guess any you for throughput supply where you of processing Okay. I -- on

James Reinhart

Yeah.

Dylan, expect to think, on DCXX. in remarks, really a turned the we We in mid-summer. I good place be backlog our by

Dylan Carden

Excellent.

James Reinhart

the We processing So CMP-related in is place. good in versus been. think in of good all coming in of coming it’s a bags mix is good think We as place. the unit bags those economics is as RaaS-related a ever

think I coming across together economics. unit for processing nicely the really us and So everything is

Dylan Carden

Excellent.

lot guys. Okay. Thanks a Nice quarter.

James Reinhart

Thanks.

Operator

from ahead. Your comes Goldman Please next Sachs. Alexandra go from question Steiger

Alexandra Steiger

you Thank year through you do you you full on goal for taking and of factors Could second, please profitability about guide. different discuss follow terms your blocks the help EBITDA want Thank the given building guide your how EBITDA year to half? control? understand my in that up your the back think us you. inside the of are margins achieve versus questions. And to I could in of your then progressing outside

Sean Sobers

we EBITDA QX quarters XXXX, that as kind improving and the let’s roll take Yeah. EBITDA kind you of take breakage, from, From an had you of from the perspective, of we of it consecutive if of rates out kind impact XXXX. to of four expect evolution continue through

economics. guidance, going in we’re growth. I In our as and on growth will see kind more growth, overall of are more on there? to fuel to able operations, be simple to think do both going spend you get as more, we improving spend unit marketing, How it’s spend of those

your initiatives that I James rate about EBITDA think those how breakeven has where was we’re on then in economics, the perspective. there the and we are towards we are strategic an happened I on But mentioned. headed drivers XXXX, in DCs an unit going overall XXXX new and from perspective And to talked get what

James Reinhart

these I good and thing be ourselves we for the I recovers if conditions making is, And investments in that, would in our add only I think business implies we’re for and which implicit can some place. none take I the are everyone market and think in in good the the XXXX the gets this that that. so we’re of navigating better, Alexandra, would guidance is advantage environment to recovery, really big find think consumer a that right? And we of

Alexandra Steiger

you. Thank very That’s helpful.

Operator

comes Nikic Securities. question with from Tom next Your Wedbush

Tom Nikic

question. taking count. want James, Hey, the customer I my Thanks to about for ask everybody.

So I to think we starting again? get bottoming of the to do that quarter-over-quarter, quarters. back it’s When about growth of think been kind down and each last two

James Reinhart

to see start initiatives Yeah. we’re as that key we Yeah. sort in you reinvest on. working growth I should Hey, mean, some that the of of inflect Tom. this year, I and think,

you in had, spend couple they very I a think clip. really at last successful had high were what is, quarters nice we quarters while saw growing of the XXXX. you The where business was throughout

of And got of half you lot some back into of the of marketing. so a sort that XXXX were you as in which top you’re on less spending lapping

comfortable And and see feel economics like year. we’re now spending we this that the page you to think macro feel move turn should that the start so seeing through stable, more that as into is I we so as the very XXXX, environment improve we into with

Tom Nikic

follow-up Got there, a quasi end to shopper shopped down potentially it. more think resale consumer And before never the budget about lately. and obviously, higher trade thredUp? your how before, maybe been shopped and But do who’s pressured never business you discount potential has gravitating becoming the hungry

James Reinhart

been you I’ll promising. right, to answer follow-up. the I clear, quasi give are your I like, XXXX quasi in we’ve a think, for mean, resale think I conditions

like to down still feel is the looking for you see and you If value. shopper promotions start come retailer

quite those two things well that I environment. in could this think that resell suggests intersection of really do

traditional prices value more as in you should it’s be means And be is that the retail to so trade that just getting from that down suggest retail normalized and and stronger. just context some of of going some for is then expensive proposition more

way. XXXX plays But whether see the so think cautiously I setup how that we’ll optimistic. we’re and out looks And think in that’s feeling it we

Tom Nikic

Sounds this year. luck everybody and best good. Thanks

James Reinhart

Thanks.

Operator

with question Raymond next go ahead. from Patel Please James. Rick comes Your

Rick Patel

progress. I a the Hey, guys. question to Well the Tom’s have last on consumer. done follow-up on

in to versus your your first quarter, quarter key behavior the any maybe terms -- how you So as of what expectations highlight up is the what rest and consumer for changes the differences at you look the are -- the behavioral elaborate how year? in on performed shaping fourth for of

James Reinhart

across based little think Yeah. mean, in few inventories ago, I been still retailer Rick, months I elevated apparel a right, had sector, lots the would we are thought places. into a I on this still cleaner think, conversation I commentary but of the QX, have inventories

on promotional So seeing of you’re price. sort pressure still creates that environment downward

of themes continuation year. the really of in think that’s last So a of I QX

sight would But that, like, I there say end clear right around is an it’s in this. that

at the think the inventory we to value I sequentially But meaningfully have more be shopper thredUp And attractive move so through don’t the environment. the changed year. the is think going and I on proposition as conditions

consumer I can though I do people still think rates think like sentiment still negative. interest that quite is think higher. go

think to we continue quarter-over-quarter. we big so of more consumer ourselves the think cautious, expect we bit at any do the operating that’s under to success grow and and kind of in can our that’s we have the But which conditions why guidance I little invest behavior. consumer sort And the of a have find least being and business, you’re business of going time how sort for a inflection don’t in in we’re and lot a

Rick Patel

talk the also And practices implement Remix can there. on the you outlook touched about for business? to opportunities thredUP best You U.S.

the improvement you contribution in improvements are of should and more terms inning the of see in of which expect those terms to So meaningful in, a margins? when we

James Reinhart

Yeah.

relatively operated still to try of didn’t to felt and and way I I that I in a so XXXX some sort we like make year changes early mean large it processed big sense introduce Remix was think its Europe difficult think P&L. scale transition. the it’s into on

to changes think of the we’re business I see some make transition margins think see more we that those some you’ll starting as to go consignment, gross of and slowly you’ll I up. of those

very very and But executing the business to is customer topline. retention well well its across acquisition doing It’s metrics.

to progress be we feel where its But we and that pleased consignment about there with -- patient but see and optimistic headed. so get is business transitions. mix these very And will of we’ll we’re some

Rick Patel

Thank the year. this you. All best

James Reinhart

Thanks.

Operator

from Helgans from question next Jefferies. Ashley comes Your

Blake Anderson

for It for our I past the wanted about question. Blake to talk like Thanks client taking to I think, year. doubled deals. pipeline RaaS this your for It’s looks count Ashley. on you, close

should Just the business wondering on on in RaaS those could And a challenged comment are update How XXXX incremental an you competitive contribute could sales especially how XXXX? EBITDA to get conversations macro? versus the how if much and we going, in environment? is if

James Reinhart

yeah, mean, total we RaaS exited Yeah. I year very about Blake. feeling think, Sure, good clients. I the the

retail. And certainly may for I J. right will Kate our brands in It of better. thredUP. with get who think is a of a on now, year think best-selling was Spade, challenging although, the as are very you XXXX also I business, Crew year. the there’s saw I two challenging XXXX it good well launches and expect momentum be

But the pipeline feels solid.

and the evolves view the small out that XXXX basis. all of brands, I brand branded drives brands, bottomline. I are every an the big think XXXX incrementality think break things launch more are our resale over to of bring think sort for brands think incremental and drives you on how continue we demand accretive positive on long think we’re But incremental I we partner for taking I don’t in But I the business. ecosystem. right some partner But those really launch supply see on to that us both

Blake Anderson

budget. just change, our am for of is it. to you’re Got your marketing ways an marketing could Thank customers? if the try on then if you reassess Apple we acquire that And then your And I give could kind on update now and comment on follow-up just you on IDFA you. could XXXX. to wondering marketing strategy and us post

James Reinhart

mean, for that I’ll it. start since to over some then numbers. time and nothing strategy IDFA or the of Sean talked about the turn changed it news But, through just with since the has walk us I’ll no piece the I last really to we

build wide and I sort range continue We then direct we both the continue as building response channels, on focus brand. of upper a to to think funnel of

on would no Sean but I’ll the talk the So real math. say, strategy, I about change, let

Sean Sobers

Yeah.

business. down the this go in and On from about is up to that, think percentage but the a as as dollars XXXX, total the growth us marketing investing of expected

to about think when model that out you So XXX. start

Blake Anderson

guys. you, Thank Great.

James Reinhart

Thanks.

Operator

from go from Your next question comes Sandler. Yruma ahead. Piper Please Ed

Ed Yruma

expect promotional with question. now I price I to guess turmoil different as marketing of types have Difficulty] you be kind of [Technical guys. promotions, experimented think you you downs kind of anticipate the versus of think, lowest in Thanks moved striking of to Thank follow-up, handle? build kind like ahead And the price a follow-up guys taking for pricing Hey, all between transparency having later coincidence? back terms you. that basically do offering comes of Do first consumer on a marketing. what the on that is more you you back, where you

James Reinhart

It’s you. very hear really our on couldn’t We garbled end. Ed. Hey,

-- I can’t -- I Maybe out again? don’t question. So try I the make couldn’t know

Ed Yruma

Yeah.

Let me give one more shot. Can you hear better now?

James Reinhart

No. It’s still bad.

Ed Yruma

it. Got

James Reinhart

Sounds are like you under...

Ed Yruma

up. I will step

James Reinhart

Okay.

about Sorry that.

Sean Sobers

Ed. Thanks,

Ed Yruma

Okay.

Operator

Please comes question with Dana Telsey Group. next Your from go Advisory ahead. Telsey

Dana Telsey

Good afternoon, everyone.

As puts trends you’re And that what may what hood the gross consumer, XXXX, Remix far? biggest how and you differences are consumer think the the you. so as the then the Thank for or plan -- under consignment be? breakouts and the seeing you’re you U.S. are with the the margin from of product European what the about both and takes thinking on about and

James Reinhart

I businesses, I operates incrementally Dana. on revenue is a Europe. U.S. in mean I think, than mean, competitive in and U.S. -- Central some in it’s They I European versus Remix Sure, markets, the I both think key Eastern consumer, think, consumer it like the few where have less concentration it’s

greater dollars as in value business resale more in can the kind share that we think, across of think I sort Europe, I invest business retail. so have And gains of

mean, where is that, consumer choice the slightly quarter attractively well I do But probably will new benefiting think the So as priced I you two. for U.S., least dissipate. at be from right and they is U.S. certainly frankly, I consumer consumer how as than apparel start think to in that the now will stuff or I that think true less think others has another for certainly, know I European that is

So the talk I the and margin versus piece. little consumer, how think European about that’s we bit U.S. think I’ll Sean a about let the consumer

Sean Sobers

Yeah.

versus the margin, looking you’re On gross at XXXX XXXX.

our the of I is to environment settle or Obviously, whether going you’re start to going be about slightly improve. consignment down, can kind that think promotional I I think think, to inventory down is start you break overall, it’s over just also to better assumption product. will But than talking that XXXX.

So you’re same split there go across it well it’s improvements if as and thing slightly Europe, going would slight the to and Board. the improve between the U.S. to going

Dana Telsey

look And it. value the where day. environment the lastly, is for as you certainly now Got just at then mainstream of the apparel

you in your active it’s seen it’s from of whether orders, Is history environment? the whether terms customers, navigating you’ve how of are value at offering? this all in terms what In different before it

James Reinhart

of it’s pandemic. than I prior different, Dana, don’t think we where too to the live sort

consumer. I the in that of volatility clear the value I of think then think the think and was in nicely business And created pandemic, I was to the a bunch really value prior very growing U.S. resale the proposition. pandemic sort very, very to

talked standard a year, I in as you’ll the assessment have think past. of value So in move to back I would taint I we’ve which value off-price more a context, more you the think I get we the through know the which the of is think, about secondhand,

year, this into So year, be I think price to the as opportunity value we further attractive point. the get given certainly resales it’s going

Operator

go with Ed Sandler. from comes Piper question next ahead. Yruma Please Your

Ed Yruma

this Hopefully, is guys. bit clear. little a Hey,

experimented quite Let guess, a I me being experiencing I promotional. first more promotional try guys the strategy. being promotional again. have know you bit or this on in less XXXX

close a retail on you of do formula. what the follow-up Thank expense, demand just to think that and you kind how are consumer just think having front question in as of of consumer previous coincident? marketing today in improves then nailing you. And is Difficulty] of I kind when kind or [Technical marketing a more

James Reinhart

It was Ed. little a better,

we’ll think it. I So get

So think the and first how strategy promotional I question that’s evolved. around was

half today to in. we were that and the I so delight are going just was both we we’re back really the buyer that context they And think mix where where of of and understanding the XXXX the finished goods

was assortment data-driven then are coming around we of those types And budget of organization. And thinking shopper in value. and do how of about shopper goods, in categories right? it’s that and how shape broadly, so the very demand, again, a acquire I how what’s we’re do sharper resell got that more we what think are so -- the we the And

sort we quantitative of really pricing relying on discounting. the thinking we’ll data continue But our So on were promotion that. around evolve to

seeing. the about based On good think recovery. potential in the customer recovery. leaning think, I now I any I that we that think the you’re But is ahead that, the And very we on we’re spend, feel think, spend don’t dollars asking costs do the consumer I we’re the ahead is LTDs customer answer spending what acquisition marketing and of we’re of

field the on good but game as it, the very playing of we’re those investments. we sort see think I feeling about

Ed Yruma

Thanks so much.

Operator

Please at no There this are further Instructions] [Operator time. proceed. questions

James Reinhart

good Thank generation new on you us everyone the joining the team questions. appreciate to think inspire all call. a secondhand thredUP does hard I all work to every the the for day Appreciate first.

everyone. see We’ll thanks, time. you next So,

Operator

today. conference disconnect thank your please the Ladies you ask and We call lines. this and concludes you gentlemen, for participating that

ThredUp (TDUP) 6 Mar 232022 Q4 Earnings call transcript