EXEC: ThredUp Shares Halved after Lowering Back Half Guidance

Second Quarter Summary
ThredUp revenues for the second quarter amounted to $90.8 million, up 16.9 percent y/y, as active buyers and orders grew at double-digit rates. All financial figures discussed by company CFO said Sean Sobers were said to be evaluated as non-GAAP figures, unless otherwise indicated.

Sobers said that the Q2 performance was primarily driven by strong buyer trends and higher repurchase rates supported by elevated promotional activity. These drivers resulted in another record quarter for new buyers acquired, with new buyer acquisitions up 13.1 percent year-over-year.

Active buyers on a trailing 12-month basis also grew 21 percent year-over-year to 1.8 million buyers, while orders were up 22 percent to 1.9 million. All of these metrics exceeded management’s expectations.

Co-Founder, CEO & Director James Reinhart told the call participants that the company was “pleased” with the Q2 results, but also said it was a tougher consumer environment than they 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,” Reinhart shared. He said this approach led to lower average selling prices (ASPs) and average revenue per buyer, which ultimately created an estimated $3 million headwind to the company’s top-line results in the second quarter.

Reinhart said the 13 percent growth in new buyers lapped the 72 percent growth from the prior-year second quarter, and delivering the strongest quarter on record for new buyers acquired.

“This is especially promising due to the higher expected LTVs (Lifetime Values) of these new buyers, and is consistent with our ongoing shift to a more premium buyer,” he noted. “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 percent and 145 percent year-over-year respectively. Brand is a big part of why that shift is working.”

He said the company believes that those who discover secondhand through creators and culture, rather than through search or promotions, tend to be stickier over time. He talked about a recent campaign, Dress the Party, that generated hundreds of millions of earned impressions in June, and said it was “proof that they can create an owned cultural moment, not just buy media around one.”

On the supply side, active sellers grew to record levels with quality reportedly keeping pace. The volume of premium bag items were up 32 percent year-over-year, representing 12 percent of the overall mix.

“We’re targeting an even stronger mix by year-end through seller incentives, new acquisition channels for premium sellers, and continued investment in the seller experience,” the CEO said.

“In June, we opened Direct Listings, our peer-to-peer offering, to everyone in our marketplace,” Rheinhart continued. “Since then, items listed are up 89 percent 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.”

Profitability Summary
Gross margin was reported at 79.9 percent of revenue for Q2, a 40-basis-point increase versus the second quarter last year. The improvement was said to be due to improved efficiency and logistics.

The second quarter of 2026 GAAP net loss was $5.9 million compared to GAAP net loss of $5.2 million in the year-ago second quarter.

Operating expenses amounted to $78.6 million in Q2, compared to $67.0 million in the prior-year quarter. The majority of the increase came from operations, product and technology

The operating loss for the quarter was $6.1 million, compared to an operating loss of $5.2 million in Q2 2025.

The net loss for the quarter was tallied at $5.9 million, or a loss of 5 cents per diluted share, compared to a net loss of $5.2 million, or 4 cents per diluted share, in the 2025 second quarter.

Adjusted EBITDA was $4.8 million, or 5.3 percent of revenue for the second quarter of 2026, outperforming our internal expectations. Our Q2 result represented a 140 basis point increase over last year, according to commentary from Sobers.

Balance Sheet Summary
Sobers continued, turning to the balance sheet, sharing that the company began the quarter with $54.4 million in cash and securities and ended the quarter with $57.4 million, up $3.0 million from the first quarter.

“We invested $2.7 million on CapEx and generated $3 million in cash in Q2,” he said. “We continue to expect similar levels of CapEx investment in 2026 as of last year or 2025.”

Outlook
Sobers said that in the current environment with consumers, the company has chosen to prioritize buyer engagement, which means investing more in promotions in the second half.

“We believe protecting buyer engagement is essential to long-term value creation,” he continued. “Because we expect these elevated promotions to create a revenue headwind of approximately $7 million in the second half, we are updating our revenue and EBITDA margin expectations for the balance of the year.”

In the third quarter, TDUP now expects revenue in the range of $87 million to $89 million, representing 7 percent y/y growth at the midpoint and a 20.3 percent two-year average growth rate.

Third quarter gross margin is expected in the range of 78 percent to 79 percent, with Adjusted EBITDA of approximately 4 percent of revenue, and basic weighted average shares outstanding of approximately 132 million shares.

For the fourth quarter, Sobers said the company now expects revenue in the range of $85 million to $87 million, representing 8 percent y/y growth at the midpoint and a 13.2 percent two-year average growth rate.

Fourth quarter gross margin is expected in the range of 77.5 percent to 78.5 percent of revenue, with Adjusted EBITDA of approximately 6 percent of revenue, and basic weighted average shares outstanding of approximately 133 million shares.

For full-year 2026, the CFO reported that they now expect revenue in the range of $344.4 million to $348.4 million, reflecting 11 percent year-over-year growth at the midpoint and a 15.5 percent two-year average growth rate.

Full year gross margin is forecast in the range of 78.7 percent to 79.1 percent of revenue, with Adjusted EBITDA of approximately 4.7 percent of revenue, representing approximately 30 basis points expansion versus last year. Basic weighted average shares outstanding are forecast at approximately 131 million shares.

Sobers said the company expects to continue to be cash flow positive for the full year.

“As we progress through the back half of 2026 and throughout 2027, we will balance growth investments while planning to drive EBITDA expansion,” Sobers suggested. “Despite the temporary macroeconomic friction outside of our control, we remain confident in the core fundamentals of our marketplace, our proven ability to engage buyers, and our path forward towards long-term growth and profitability.”

Image courtesy ThredUp