TDUP Q2 Deep Dive: Marketplace Flywheel and AI Investments Drive Buyer Growth

August 12, 2025 at 22:56 PM EDT

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Online fashion resale marketplace ThredUp (NASDAQ: TDUP) reported Q2 CY2025 results topping the market’s revenue expectations, with sales up 16.4% year on year to $77.66 million. On top of that, next quarter’s revenue guidance ($74 million at the midpoint) was surprisingly good and 3.7% above what analysts were expecting. Its non-GAAP loss of $0.04 per share was $0.01 above analysts’ consensus estimates.

Is now the time to buy TDUP? Find out in our full research report (it’s free).

ThredUp (TDUP) Q2 CY2025 Highlights:

Revenue: $77.66 million vs analyst estimates of $73.85 million (16.4% year-on-year growth, 5.2% beat)
Adjusted EPS: -$0.04 vs analyst estimates of -$0.05 ($0.01 beat)
Adjusted EBITDA: $3.02 million vs analyst estimates of $2.4 million (3.9% margin, relatively in line)
The company lifted its revenue guidance for the full year to $300 million at the midpoint from $286 million, a 4.9% increase
Operating Margin: -6.8%, up from -14.4% in the same quarter last year
Orders: 1.54 million, up 264,000 year on year
Market Capitalization: $1.27 billion

StockStory’s Take

ThredUp’s second quarter results were well received by the market, as the company outpaced Wall Street’s revenue estimates and saw robust year-over-year sales growth. Management credited these results to a surge in new buyers—up 74%—and a positive flywheel effect between product experience enhancements, premium supply, and efficient marketing. CEO James Reinhart highlighted that improvements in site features and operational execution combined to “really get the marketplace humming on all cylinders,” with the company setting records for both buyer acquisition and order volume. The continued growth in active buyers and efficient customer acquisition were central to ThredUp’s strong quarterly performance.

Looking to the remainder of the year, management pointed to ongoing investments in AI-driven product experiences and marketing as key drivers of their improved guidance. Reinhart explained that the company’s approach would be to “maintain our gross margin and bottom line efficiency and reinvest incremental dollars we generate back into growing new buyers and sellers in our marketplace.” The team emphasized that the closure of the de minimis import tax loophole and broader apparel tariffs could further enhance ThredUp’s value proposition for price-sensitive consumers, while AI-driven improvements are expected to keep customer acquisition costs low and engagement high.

Key Insights from Management’s Remarks

Management attributed the quarter’s outperformance to a combination of accelerated buyer growth, advances in AI-powered product features, and the scaling of premium supply and seller tools.

Buyer acquisition momentum: New buyer growth reached a company record, with fresh marketing tactics and improved product experiences attracting a larger and more engaged customer base. Reinhart noted that “new buyer acquisition continues to be strong, really driven by product.”
AI-driven conversion improvements: The company’s ongoing investment in artificial intelligence delivered a measurable lift in sign-up and conversion rates, with sign-up rates up 30% and sign-up-to-purchase rates up 60%. These improvements—such as AI-generated model images—were especially impactful for customers new to secondhand shopping.
Premium supply scaling: Growth in premium service kits resulted in higher average selling prices and contributed to gross margin gains. Roughly a quarter of premium sellers were first-timers, and premium kit volume grew 44% quarter-over-quarter.
Operational infrastructure leverage: ThredUp’s proprietary supply chain and processing capabilities allowed it to keep up with the surge in supply and orders. Investments in automation and data-driven operations were highlighted as key to maintaining efficiency at scale.
Resale as a Service (RaaS) strategy shift: The pivot to an open-source RaaS model is resonating with apparel brands, with over 60 renewed brand conversations underway. Management believes this strategy could create a “universal recommerce layer” for the industry, though material impact is expected further out.

Drivers of Future Performance

Management expects continued growth to be powered by AI-enabled marketing, the expanding resale market, and ongoing supply chain innovation, while remaining mindful of macroeconomic uncertainties.

AI-enabled customer acquisition: Management believes that ongoing enhancements to AI-powered personalization and recommendation tools will keep conversion rates elevated and customer acquisition costs low, enabling more effective marketing spend.
Impact of tariffs and regulatory changes: The closure of the de minimis import loophole and new apparel tariffs are expected to raise the cost of new fast fashion, making secondhand options on ThredUp more attractive. Reinhart stated that these changes could “enhance the comparative value proposition for consumers.”
Seasonality and macro risks: While the company anticipates strong growth through the next quarter, management is cautious about a typical seasonal slowdown in the final quarter and ongoing macroeconomic uncertainties, including weak job and housing markets. They plan to adjust marketing investment accordingly to maintain efficiency.

Catalysts in Upcoming Quarters

In upcoming quarters, the StockStory team will focus on (1) the pace of new buyer and seller acquisition and their repeat purchase rates, (2) the rollout and adoption of new AI-driven shopping features and social commerce integrations, and (3) the scale and impact of brand partnerships under the evolving Resale as a Service strategy. How ThredUp navigates macroeconomic headwinds and competitive ad environments will also be closely watched.

ThredUp currently trades at $10.28, up from $9.71 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).

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