GigaCloud's Q2 2025: Navigating Contradictions in Tariff Mitigation, M&A Strategies, and SKU Rationalization

Tariff impact mitigation, strategic M&A and asset acquisition, the impact of Amazon's sales promotions, SKU rationalization and Noble House integration timeline, and tariff impact and mitigation are the key contradictions discussed in GigaCloud Technology's latest 2025Q2 earnings call.



Revenue Growth and Marketplace Performance:
- GigaCloud Technology reported a 4% year-over-year increase in revenue for Q2 2025, surpassing expectations.
- The growth was driven by strong performance in the marketplace, with Marketplace GMV growing by 31% on a trailing 12-month basis.

International Expansion and Europe Growth:
- Europe emerged as a critical growth area for GigaCloud, with GMV in the region growing 59% year-over-year in Q2 2025.
- The expansion was supported by the opening of an additional fulfillment center in Germany and increased interest from 3P sellers to enter the European market.

SKU Rationalization and Product Margin Improvement:
- GigaCloud's SKU rationalization efforts resulted in the retirement of 3,800 outdated SKUs and the introduction of 1,200 new ones.
- This led to a significant improvement in product margin, which increased by 174 basis points sequentially to 29.2%.

Operational Efficiency and Cash Management:
- GigaCloud maintained strong cash generation, with operating cash flows of $48 million in 2025 and liquidity of nearly $300 million.
- The company executed $46 million in share buybacks and made net purchases of liquid investments of approximately $20 million, while maintaining a stable liquidity position.

Tariff Challenges and Strategic Adaptation:
- The company faced increased tariffs and supply chain disruptions, which led to temporary shipping halts by some suppliers.
- GigaCloud adapted by leveraging its Supplier Fulfilled Retailing (SFR) model to ensure competitive sourcing and maintain marketplace growth, despite the challenges.