TDUP - Earnings call transcript Q1 2024

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, everyone, and welcome to today's ThredUp Q1 2024 Earnings Call. At this time, all participants are in a listen-only mode. Later, you'll have the opportunity to ask questions during the question-and-answer session. [Operator Instructions] Please note this call is being recorded. I will be standing by if you should need any assistance. pleasure of the Investor my Lauren over now Head Frasch, Relations. is to conference turn to It Please go ahead.

Lauren Frasch

Quarter With Good afternoon, CEO call First conference us and on financial and thank Sobers, you to for Co-Founder; and discuss CFO. Reinhart, are James me joining Sean today's XXXX ThredUp's results. Thredup's

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

believe, evolving in new changing effects technologies artificial deploy performance, machine Before climate as change of to guarantees identify we to, and to and this remind the buyers. ability learning business market demand, uncertainties, full estimate habits, consumer These we and attract and earnings our that effectively call, forward-looking to anticipate, you inflation, the quarter increased and expressions, are growth regarding of economic statements known making statements plans, global reorganization activities our begin, in financial strategies AI uncertainty. our intelligence technologies, the I'd and not rates, for statements. are course offerings, ability limited like well such intended as will new cost-effectively such as including forward-looking of year statements fiscal performance, unknown interest and of guidance risks forward-looking involve to be and not and and similar future our Words including, future investments as but second during prospects, expect, general XXXX,

results from forward-looking by materially statements. could or results actual any implied projections differ such [indiscernible] or Our expressed performance

a and other could information information results are obligation risks, supplemental Any this uncertainties result our we factors update these release posted that statements filings, on undertake SEC can find operating as no about earnings as statements our on website. these press You IR make that information events. more or to in and future today, assumptions we based our affect and call of on new forward-looking of

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

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

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

James Reinhart

joining Good I'm afternoon, Reinhart, ThredUp's Quarter everyone. Thredup. CEO Earnings Co-Founder XXXX for Thank and James of Call. you First

to expect pleased year. in to half We ThredUp's news our for how about results important financials share are to business we and of share financial improve have the QX back the

time. year. Sobers, XXXX our a outlook in XXXX of financials We today's hand remainder free more session. first will cash margin first the will detail the an the around XXXX to of Chief AI and quarter that and EBITDA out announce our Officer, Financial to Sean company-specific excited question-and-answer it provide the quarter second talk today for for on expectations for update over We'll with to our expansion, key initiatives call in are and adjusted flow we close then through provide I

me line despite consumer Let in expectations an our were QX ongoing our which with with backdrop. start difficult results,

transition Recall representing to is best a margin representing XX.X%, was especially to year-over-year growth profit the our profit believe continued Our at Europe. in gross X%. growth underlying our X% business revenue we $XX.X million, due measure gross consignment, way in the year-over-year. of Consolidated came to gross in increase growth

while to million, gross increasing time reached reached growing orders $X.X U.S. high million, a compared of X% year. period year-over-year, margins record $X.X same Active buyers the XX.X%. last X% reached

as well that ongoing to or adjusted of negative business totaled leverage note, minus X.X% due as in revenue, March. we reorganizing EBITDA in some did $XXX,XXX, Of our

Our for a in flow quarter. row U.S. was and third EBITDA free positive adjusted cash quarter the the business for was positive

transforming savings turn our and how March, the centers processing marketing look me AI-powered to is about AI let resell of spend. product growth full last reduced approximately an changes is outlook, million The and year context we generate several as year our and the to enabling in more Now will adjusted into what and future, result flow a us XXXX. results triple and to year to areas. half of invest we ahead adjusted basis have we into increase free $XX EBITDA cut those company reorganized expenses in development, that expect parts distribution like. compared in potential We business roughly the our on reinvested nearly business, operating QX, in cash important In achieve boost full headcount EBITDA positive of these share high our in to to

over year. for full we be We time the this from focusing in across planting invest long-term me earnings product are that we've in our new the let as forward now growth. experience to progress turn to opportunity free turn investments to seeds to have for sustainable growing flow With and customer our that expect milestone long-term mind, important improving questions We expectations made we the the cash page business pulled how an on answering by resale. the to capture company profitability and view a about our

they shopping of to when do these or their see event inspire they in want All stores, online thrift, the whether place AI new and X work favorite last to AI-powered when that of now inspires consumers their at favorite live features when street, a new the that's if even the them. the an days, form. shopping allow no These for any us we us search any created have from tell style strikes, high make launched matter just inspiration have thrift about X that tools In experience outfits, that easiest tools to the and them. are to beta XX they're ThredUp

in other action. in visit new you smartphone You search search can your can our visual ThredUp tools and to try our store new concept bar, see on thredup.com/concept at the the

have competitive been shape. that amplified for long-term infrastructure, advantages the recently marketplace already in many to being proprietary to want AI have business. deepens now have that take and defensibility supply chain data years, started The our technology and my the only we about strengthens in by AI breakthroughs dynamics, advantages are I talking that emphasize belief we our place

earnings, to expected AI. with cash business vectors an Europe, key just generate investing this In beyond goes are this year, faster ever we grow strategic our committed and long-term transition With creating towards consignment the continues, progress new flow our our business opportunity areas. eye to in to remain free to making of we and stronger across

we processed XXXX we number week new in week. QX processed did of set Of in bags and for records We number number bag the consignment in consignment requests a of a week, combined. QX the note, in in bags returned all of of more the a than in bags

write-off strategy concluding After at of end we the assortment our XXXX, believe off. is paying our

acquired rates are been XXXX. since we Remix sell-through late they in strongest have among Our the

our relocating last week to our brings of as have that experience We is of expansion to top the and also executive and business Filote He in continue X on Florin line scaling Europe. will GM margin run while He we and marketplaces, announced Bulgaria. in our hired person building driving team. believe Europe. decades Sofia, EU he scaling is our Florin revenue European headquarters absolutely right U.S.-based sitting we

Product being business that as as I'm was while who Chief EU running of tech to previously scale will return and business our AI excited products. also Officer DeMeyere, based the Technology just and Dan the we U.S., all as in our U.S.

country. new we to you In our ThredUp or can client Next, a in roster, e-commerce natively page. get XXX RaaS, cleanout co-branded X integrating retail ability we've cleanout across we've begun our continued brands right stores added with to kit from checkout And scale to clients, now the Resale-as-a-Service, some order kit their a business. QX, the and

accelerate believe our our Europe to and We are footprint retailers looking further consignment. to RaaS transition agreements with in also there brands expand and can commercial

me impact. turn let Now to our

we're see recently we to purpose committed the it's take at shape noting core and As impacts business. remain to efforts how driving worth advocacy also our level. We started our federal balancing profits, beyond

helped textile circularity one of for that contemplated a continue forward fashion. the We resources member introduced an American bipartisan no As Textiles make the federal founding inclusion is as environmental most incentive by Cassidy potential Circular moment first to industry. sectors in historic time a to a damaging This and the Until was both longer advocate is circular and we government U.S. trade the economy Act, has believe of for will is industries recognizing sustainable the for March. of of international we global Americas perspective trade advocate Bill it's U.S. Coalition, provide and to fashion the and a economy, step planet-friendly. in fashion strengthen Bennet for more billion ] legislation [ that Michael the textile circularity the huge of Senators, bill $XX the from

our guiding I In along We turn about want are X where who of earnings I headed think these to this being emphasize conclusion, few milestones a dimensions. we quarter before reestablishment over a and principles. and it to we're Sean,

flow XXXX guidance, basis adjusted including now points of expanded past First, free our cash year years, and X,XXX XXXX. in on a basis full the over expect X the midpoint we EBITDA have

Second, gross At driving past consignment annual of midpoint despite while consumer the of growth we is environment. represents growth driving our volatile over year growth profit our XX%. double-digit have the due ongoing growth. This rate XXXX business an adjusted years, not to is which the the EBITDA margin compromised shift, X underlying expansion, guidance,

more believe while where to cash are manage emerging to of technology the in Third, flow effectively of profits we the goals. consumer magnitude achieving and rapidly the we in and growth simultaneously customer have We the with invest AI position growth goes. a now especially regardless improve our environment ability experience, free

community, of we do exceed the that that meet anew of us Finally, investment want them. that That are to to want our expectations, stewards we not our are just we to trust today. we capital, we most ahead the begin days of great want journey reestablish and the is innovative

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

Sean Sobers

and remarks. results second an the James. follow our and XXXX. I of up I'll results throughout overview with for of discuss non-GAAP quarter begin guidance full will with year Thanks, my

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

We're our navigate results ability a of consumer environment. QX and to very our proud challenging

of For revenue million, first XXXX, X% year-over-year. increase $XX.X totaled quarter the an of

reaching million. year-over-year, X% year-over-year grew up grow, increased, Orders to continue $X.X while million, buyers XX%. active XX% shrank $X.X product to revenue also revenue X% year-over-year. Additionally, by up Consignment

with by in in driven pleased Europe. of declines XXXX. our our outsized expect and U.S. in growth are consignment transition the final We transition to and would to revenue product revenue continue accelerated growth stages in throughout the We consignment see

the transition mute consignment treatment. accounting While tailwind be to due simply gross we margins over expect the should time, revenue it growth to to slightly to a

consignment As gross and payouts payouts a are COGS in revenue reminder, margin. while reduce reduced net owned

a our most of rate As we to relevant as result, to growth pleased measure the profit evaluate look X%. to gross that profit are we business, our gross grew QX and report the underlying

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

The point to improvement record the in and both U.S. U.S. to our of margin consolidated results outperformance were consignment in over driven continued by We basis improvements our result year. a a DCs. report XX.X%, gross are operations was the the Europe last and of transition that XXX global proud

well our ongoing see pleased as We as per in order in logistics to items higher improvements the are network. U.S.

representing EBITDA GAAP the million first $XXX,XXX, loss $XX.X XXXX, XXXX. for the just quarter the or first X.X% million GAAP to the of loss compared same net year. of of versus towards last Adjusted an in Though be of nearly by revenue, in to progress net negative versus quarter quarter loss and profitability. challenging reduced point For last million expected, was than by $XX.X than more loss was EBITDA approximate adjusted reflecting significant half XXX last quarter QX improvement, basis proved $X quarter our more year, we significantly

$XX.X cash million just with QX. the to and Turning quarter and securities million, in with in $XX.X ended sheet, the first using cash balance we the in $X.X began quarter million

quarters. QX As illustrating a made the enormous in the progress in of cash we million over last X reminder, $XX we've year, last used

burn flow cash $X.X a reduced significantly from cash record Our to generating is of operations. due million

Now I'd to like outlook. turn to our

are As changes James significant to discussed priorities. AI-driven earlier, we support making structural our strategic

that resale in margins. experience a our these new not were online superior operations to and gross We expect structurally unlock higher priorities possible efficiencies including enable before,

eliminate in expect free so aligned with stronger a to objective We way are we operating shaping our drive fully accelerate are cash leverage decision-making, this that and resources organization our flow. that redundancies,

expect CapEx charges not additional reduction in our an require included of nonrecurring This any global Importantly, this. in incurring we XX% workforce, approximate corporate QX. million do to to do approximately reorganization $X

cost-saving SG&A We million expect to expenses. other XXXX, $XX in measures or this savings action in million plus $XX realized annualized, mostly in deliver

the path adjusted QX We cash flow profitability have on achieve an over significantly and positive Plus, to our we our accelerated in progress now profitability EBITDA recent year forward. past on our going to We this be progress. annual meaningful made expect and expect actions year. free to quarterly basis have

tailwind model. cash further reminder, negative prove our As capital our we a be should favorable working net as flow scale a dynamics to to

continue of per $X expect addition, CapEx levels approximately until quarter In XXXX. million to we maintenance

EBITDA Given day-to-day consignment we roll a flow, to timing match are in the and expect cash transition our the accelerated to we're AI how free business the on the new the meaningful Europe improvements our better of guidance adjusted products, running U.S. and we updating and out in basis. how

online our spend to assortment in and secondhand with experiences, widest deepest flow, our we attention significantly of parts amplifying the to to the and to cash in are we investing long-term and operating we our marketing that have profitability are we those of of line reduced free While clear turned business new sight success. ensuring have expenses, product With committed investing products anywhere. clothing key

As earlier, save million reorganization expected to our I in $XX noted is XXXX.

and have million product customers. features of experience are ramping the AI dollars new as into operations we better each increasing prudent we're are be $X.X in processing though to to a since guidance it the across to but outlook Historically, high growth, with our our early and apparel of trends also range we experience, ramp areas revenue in of a macro investments. challenged balance reinvesting deploying remains this execute strategic However, customer relates we in drive year. we our as Furthermore, achieve marketing these most new our choosing the driven consumer us discretionary for unique of XXXX, updated this environment regardless environment can level consumer, the that our confidence provides

of shares range XX%, growth in margin quarter, of million With revenue we expect all and of X% in of positive million, XX% the this of basic to of to in XXX approximately representing profit adjusted revenue year-over-year, in $XX second million. mind, $XX gross the weighted X% gross the outstanding of average range EBITDA to X%

of operations; our of shares the outstanding to accelerated EBITDA than average range year For outlook; approximately representing outlook $XXX approximately XX%, gross and approximately of positive range the and full shift in million $XXX the X% XX% basic XXX now of year-over-year, higher previous revenue $XXX of in Xx of points X% million; due to profit the revenue, improved expect XXXX, our of previous to consignment gross nearly margin to weighted basis growth adjusted million. XX% we

closing, we're profitability, accelerated self-funded to free for flow and a company. excited path being In cash our

we years While profit-first growth attention we while a EBITDA to continuing and in X spent to free have expand cash turned now the flow. adjusted past mindset, our

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

Operator

Fargo. Instructions] [Operator Our sir. Boruchow first Matthew of from Wells question comes Yes,

Irwin Boruchow

guys. you Good from to hear

questions. X Just

QX, take to just year? blocks me, but for there. the you're bit revenue, kind the it positive guide little one just to be see cash profitability First like scale this to free increase it flow getting a help on looks the the EBITDA, is profit, understand some the of building for us the good more Maybe in in

James Reinhart

Yes, sure.

business. on We -- year structurally the X with this the guide. calendar, start earnings made have number profits QX. me the to transformation with a real the line business in and but up the over in last always focused changes doesn't full months I we of it the Let mean, on

the on fruition clear going QX, towards to as cash the we magnitude the of end it year going how reinvest for for that QX, were really to EBITDA was so flow. and those flip free and the full of And script for came to savings that dollars the became

the even lowering that's so revenue. And despite

some to And where going so excited switch we and but blocks, about about the of Sean feel can that get very take you building through good it's us.

Sean Sobers

Yes.

there on it's guidance, million math pretty -- The And the simple of from expect going around as in is there we're I the think cash the at midpoint. subtract quarters is of on guided, free is simple million and flow free to we about the EBITDA we're QX flow out And -- point. spend side, the think about we guiding you're $X cash to kind $XX pretty EBITDA CapEx. close to if that at our then CapEx obviously, you in it, and positive positive operations, forward. EBITDA for be, going

Irwin Boruchow

Got range to it. trying lower Super I'm follow-up. helpful. you're making. And combined the increased then just investments with understand a the revenue

when just and talk seeing puts profits always takes, down. going revenues up coming the maybe are about Just

a understand So trying I'm just that to bit better. little

James Reinhart

Yes, sure.

I is these And the of portion on marketing focused we're only behind really think some a it restraining of new of that out then products. product some those developments, rolled dollars AI of but customers. to are we part they're

the early DCs adding processing of be is XXXX. the for since going is a haven't cautious out to marketing we how to timing play ways that We're something year in the about. bit And in we so more our want also done

sort processing that marketing growth. that so the but products, little good of on growth, declare say we there's that more prefer see the very to are And a the feel we things around would we bit a about, is those of number very, what AI transition I before data victory in

caution think there. So there's I some

as, softer -- little think a I is I we think described second to than I've that like, was QX that anticipated.

has how it fine, April think of sort did around our I shake to out. of the uncertainty year alleviate been not but going is sort

a stickier. higher you're like to We for seeing seems going think I little inflation think be longer. rates are

And to the the conservative numbers. play out, to of be bit we the how so I around given flow how being feel to we more and just that's on a kind And cash very little going cautious think year came free profitability more line. was about top we wanted good

Operator

with comes Our question William Dylan from Carden Blair. next

Dylan Carden

up margin gross on Just curious, down kind the way drivers the I there? what guess, that our are of, working the the taking line, year, P&L, for

comment had gross potentially just structurally about latching business, a Sean, little on a on to elaborate you And that or being maybe a just bit. higher margin expand that

Sean Sobers

Dylan, Sean. this is

think, things I then, so the margin overall build fruition, And logistics from costs, order, the all have a the across the come overall, to gross like biggest per of investments to on starting past improvements automation that. perspective, was more in items you team, operations general. driver up continuing improved more to

big the are those drivers think towards margin gross I So expansion.

And the can to then I there. in general, I don't still lots there's lean to where better. margins but future and just, that, because of it opportunities want these think even of change lead from I that next-gen is think on too comes to the us far at days investments really us AI margin the early we're there to gross for improve

And have then you the... also

Dylan Carden

[indiscernible]

Sean Sobers

all the which think accelerated like tailwind improvement some and doing, kind think of time. still of shift structurally the And makes I to consignment higher combination us feel I consignment the of of operations of this. is ...sort a sort for

Dylan Carden

it. point, incremental. at really of frontward-looking a mostly been customer-based The not sort it's right? end? piece AI doing Basically, know You're back that's on always investments the of I much this are

Sean Sobers

that create that today are can first the for pretty on side, of that announced I on we foundational will the the -- is there end. still the be it's but prototyping ones -- number a we're think really improvements today Yes, some that back we customer-facing early. But think things we time really

side. XX% out And are the I rolled think customers. just the consumer same thing to of on Those products

really to iterate, beta they continue are we products. As

those lot we're on we products and why we part to we'll a the consumer think take bit cautious lean in see of feedback I growth a get And want more of I little more over before so response And shape being time. think side. is

Dylan Carden

it. Got

marketing bit sneak sort all costs of year? sort came Was [ as And part in dollars I in. could to the a -- sorry, had sounds a related environment of sort guess, lighter of marketing little if latter I than that of quarter. and these that in waiting cutting softer of line see like of at or, what more And I it mentioned thought. the one of The ] is the you some reflect to investment maybe a much of kind

So well. there as be relationship to seems it there some

Sean Sobers

Yes, versus it's the around little of a QX. bit half back timing, year the of of Dylan, sort

I for dollars think, to overall, expectation marketing grow since the is our time this year first XXXX.

we But in make invest. So business QX started the the is are as in we these we QX bit what relative March. first little timing, a transitions planning to saw to especially of of to in part

the those So are reasons X why.

Operator

Patel question Raymond James. comes Rick next with The from

Rakesh Patel

first the about the down we rest to Can for business talk about about in you think attributed year? quarter-over-quarter growth curious for something so buyer quarter, guidance going on it should we buyers? for the like else think if the changes model or And the what's the embedded that's looks how there's of outlook there. if as active It just was

James Reinhart

Yes, Rick. Sure, revenue tracks lines generally I mean, up buyer Yes. and with growth. I think growth

have in basis. I seasonality of we mentioned earlier, you the But we we numbers in move think a And see pull sort effects you timing think, of through sort QX did I QX as reaccelerate, on to some year. spend those should just QX. back as

are really growth our key active But long-term I strategy. to think buyers

so And should closely business. with growth underlying of they rate pretty track the the

last business, the for true to years. has we the that which few active range, on again, buyers in And so gross profit be double-digit And expect based growth. expect in we growth been

Rakesh Patel

any tilted you months color just if And versus seeing ago? can I'm changes lower-income general in you're behavior higher-income towards behavior? consumers. customer in And saw transactions what provide more around you X curious more versus

James Reinhart

the -- think, consumer, I it's out that challenging be there. to continuing think is I

strategically last moved premium have to more we years. of our the assortment be think couple over incrementally I

doing And so I that think customer is okay.

I the on remains we And are more more shopper, per think, seeing I order. items I still mean, think budget the sidelines.

do You some revenue customer. of growth see per that in

so trade-down how I perspective. a seeing of some from think, potentially, positioned well environment, And Rick, of the value resale, you're given is effects a

our actually consumer But if that down, down I confidence perspective think is it's a is you now the the I look, numbers, right? months think, row. at X in look

into consumer I and the about little think the we're that's rolling think bit is how cautious, I a thinking more rest of the year.

Operator

Our Andreeva next from question Instructions] [Operator comes Anna with Needham.

Anna Andreeva

quick premium consumers late? specifically us. the also just follow the softer year? up wanted being for value on to Two the it for as And there. and sounds softer guide the as you're you But guide. trends conservative softer from I more more ones like well sales for are more to Or of explain is XQ of kind customer sales seeing discerning

of still And there at consignment XX% in the Europe? what year? the we then you mix are for Should secondly, expect seeing

James Reinhart

Sure.

feel start better better Europe, there. the I me we're progress Let with about we which and making is think that

think, we record consignment in processing receipts QX. noted, bags, I as

Inflation think onward. environment the higher there with I And think think I is I And is is remains XX%. that the journey demand so consistent there. But that expectation challenged.

and there, to demand. great, the But So Florin think with of that's scaling lots continue we're supply he's the be GM going new that to be experience to think in marketplaces we as going thrilled and I case.

incrementally think Europe I where is about feel we headed. so better And

dollars again, think, little U.S., bit significant I to our sales, thinking launch given position marketing a the XX piece, come we premium number data X changing new reorganization, on these in pretty want more a X us think of leaves I processing around over products value things softer in versus business see and of the the timing about in we're the last the how just then how and things just days, the of together. where

And we smarter think be of we so think given little a the just year. the we think, about should the I as rest demand environment,

walls or want got business, We see things macro more of about kind together. of hopper, premium the necessarily customers. in are the to is don't we is a think, And there customers think come we So think the the number we've X that that I value challenged. inside things those and environment of

Anna Andreeva

very for year. I said That's Okay. be marketing you should think the dollars And helpful. James, growing

James Reinhart

Yes.

Anna Andreeva

we Should an increase expect for in marketing XQ?

James Reinhart

Marketing Yes. the since timing I and for on new first QX, is definitely a going of -- to in growing dollars QX And think They're the are growing for Yes. those I think QX. to related QX, product of we're from year-over-year. it time the XXXX the all AI how cautious. across launching that's quite again, investments a think, to timing little and are going so those not And of I a that to we're perspective where sure I us land driving be sort products? think be

Anna Andreeva

sense. Makes

Operator

remarks. like no at I'd presenters now to further or closing call over time. turn questions have back We the this today's to additional for any

James Reinhart

XXXX That quarter concludes thanks. earnings call. first Well, our

done not to employees they've I of am over thank I've future the leader is former be prouder the it I we've our current for that more defensible the on than highly all want building ThredUp today. actually in into been never to contributions years could pioneer marketplace conclusion, date. in and made that our I of And and resell today. Just bullish the work

through want that I our thank so believe you to years with our for shareholders And truly us. of are couple this sticking best days we us and ahead last of reassure

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

Operator

This participation. today's you program. Thank does conclude for your

may at any time. You disconnect

ThredUp (TDUP) 6 May 242024 Q1 Earnings call transcript