Q3 2025 Earnings Call: Contradictions Emerge on Noble House Performance, Tariff Strategies, and M&A Plans

Date of Call: November 6, 2025

Financials Results

• Revenue: $333.0M, up 10% year-over-year
• EPS: $0.99 per share (quarterly record), driven in part by share repurchases
• Gross Margin: 23.2%, a 70 basis point sequential decline from Q2 2025

Guidance:

• Revenue for Q4 2025 is expected to be between $328 million and $344 million.
• New Classic Home Furnishing acquisition expected to close January 1, 2026.
• Expect strategic initiatives from New Classic to be reflected over 4 to 6 quarters after close.

Business Commentary:

• Strong Revenue Growth and Diversification:
• GigaCloud Technology reported record revenue of $333 million for Q3 2025, up 10% year-over-year.

• The growth was driven by strategic acquisitions like Noble House and the expansion into new markets, particularly Europe, which saw revenues increase by 70%.

• Marketplace Expansion and GMV Growth:

• GigaCloud's marketplace GMV rose approximately 21%, reaching nearly $1.5 billion for the trailing 12 months ending September 30, 2025.

• This growth was supported by an increased active 3P seller base and expansion into new geographical markets for diversification.

• Profitability and Margin Integrity:

• GigaCloud achieved a gross margin of 23.2% for Q3, with a 70 basis point sequential decline.

• The company maintained profitability despite challenging macroeconomic conditions by implementing strategic price increases and optimizing product portfolios, particularly through the integration of Noble House acquisitions.

• M&A Strategy and Future Growth:

• GigaCloud announced the planned acquisition of New Classic Home Furnishing, scheduled to close on January 1, 2026.

• This acquisition aligns with the company's long-term growth strategy, aiming to diversify business and expand beyond e-commerce, targeting brick-and-mortar wholesalers as a new revenue stream.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted 'robust 10% year-over-year growth' and 'new records of $333 million in quarterly revenue and $0.99 in quarterly EPS.' CFO noted record operating cash flow of $78M, $367M liquidity and continued buybacks, and provided a solid Q4 revenue range, all signaling confidence.

Q&A:

• Question from Thomas Forte (Maxim Group LLC): Can you talk about your thoughts on additional M&A acquisitions, including targets in Europe or technology/software, and your M&A focus going forward?
  Response: Will continue to pursue deals that add product or fulfillment capability but near-term priority is closing New Classic; unlikely to complete additional acquisitions in the next few months.

• Question from Thomas Forte (Maxim Group LLC): With recent Fed rate cuts, do you see these translating into greater interest in home merchandise and a possible sales catalyst over the next 12 months?
  Response: Management is hopeful about a housing rebound but is not relying on macro; they emphasize micro-level execution and diversified revenue streams to drive growth regardless of housing trends.

• Question from Joseph Gonzalez (ROTH Capital Partners, LLC): Can you unpack Noble House's cadence this quarter and the drivers for its growth in Q3?
  Response: Noble House outperformed in both the U.S. and Europe and was a primary driver of Q3 growth.

• Question from Joseph Gonzalez (ROTH Capital Partners, LLC): Excluding Noble House, what drivers are supporting your core business and your confidence behind the Q4 guidance?
  Response: Q4 is tracking in line with guidance driven by strong organic performance in Europe, Noble House contributions, and stable performance from the legacy business.

Contradiction Point 1

Noble House Performance and SKU Rationalization

It highlights discrepancies in the reported performance of Noble House and the timeline of SKU rationalization efforts, which could impact strategic decisions and investor expectations.

What are the key drivers behind the double-digit growth in your core business (excluding Noble House) for Q4, and what are you seeing in the early innings of Q4 that supports this confidence? - [Joseph Gonzalez](ROTH Capital)

2025Q3: Q3, I think, overall went really well. The main drivers here are Noble Health outperforming in the U.S. and also Europe, it's nothing new, continuing to perform very strongly. - [Erica Wei](CFO)

Regarding Q2, where did the upside to your initial guidance come from, and can you discuss how the quarter progressed and what positive surprises drove the strong execution? - [Matthew Butler Koranda](ROTH Capital)

2025Q2: The big surprise was the performance of Noble House. We were modeling a larger year-over-year decline due to SKU rationalization, but the performance of new SKUs was better than expected, contributing to our strong results. - [Erica Wei](CFO)

Contradiction Point 2

Tariff Impact and Mitigation Strategies

It involves changes in the reported impact of tariffs on the company's financials and the strategies employed to mitigate these impacts, which are critical for financial forecasting and investor confidence.

Are these rate cuts driving increased interest in home merchandise and potentially boosting sales over the next 12 months? - [Thomas Forte](Maxim Group)

2025Q3: Yes. That's -- obviously this is Larry. We were hopeful about the bouncing back of the housing market, but we're trying to keep ourselves more focused on the execution on a micro level, because we do have the toolbox of more diversified revenue avenue that we can really enjoy the [indiscernible] ability to avoid any kind of reliance on any of the macro positive other factor to happen to really provide the opportunity to grow that we are trying to deliver the growth regardless of what the macroeconomic is doing. - [Lei Wu](CEO)

The 2.5% tariff impact on gross margin—is this the net headwind, or are there mitigation efforts to reduce this impact? Is this the maximum negative impact? - [Matthew Butler Koranda](ROTH Capital)

2025Q2: The 2.5% is an unmitigated gross margin headwind. Strategy involves targeted price increases on certain products where markets allow, but adjustments will take time to fully absorb and normalize. - [Erica Wei](CFO)

Contradiction Point 3

M&A and Expansion Plans

It involves strategic directions for M&A and expansion, which could impact future business developments and investor expectations.

Could you discuss additional M&A? - [Thomas Forte](Maxim Group)

2025Q3: We'll keep looking on different opportunity by focusing on any opportunity that can bring us more product or the fulfillment capability. But right now, I think we're more focusing on concluding -- the closing of New Classic. But our team is definitely concurrently looking for new opportunity, but it's unlikely that this can happen in the coming few months because we'll be focusing on new classes at this moment. - [Lei Wu](CEO)

What types of assets are you targeting for strategic M&A? - [Tom Forte](Maxim Group)

2025Q1: We are -- we definitely have an interest in expanding into Europe and better serving the bricks-and-mortar space. Opportunities may include technology for better customer understanding and service or additional channels or connections. - [Erica Wei](CFO)

Contradiction Point 4

Impact of Tariffs on Pricing

It pertains to the company's stance on how tariffs may affect pricing, which could influence pricing strategies and consumer behavior.

Can you provide a cadence of how the quarter went and the drivers for the growth in Q3? - [Joseph Gonzalez](ROTH Capital Partners)

2025Q3: I think we are pretty neutral on that. Even if 25% is applied, we are neutral on that. And the reason is that in term of the export from China, we already have the -- we are already in the process of building a different sourcing strategy. - [Lei Wu](CEO)

Are you considering entering new categories? - [Tom Forte](Maxim Group)

2025Q1: A 100% tariff would not directly result in a 100% price increase for end consumers, as tariffs are applied only to the value of the goods, not all seller costs such as warehousing, ground shipping, and picking/packing. - [Erica Wei](CFO)

Contradiction Point 5

Strategic M&A Focus

It reflects changes in the company's strategic priorities, which could impact future growth and investment decisions.

Can you comment on potential M&A? - [Thomas Forte](Maxim Group)

2025Q3: We're definitely focusing on new classes at this moment. - [Lei Wu](CEO)

Can you give your current thoughts on strategic M&A? - [Thomas Forte](Maxim Group)

2024Q4: We are actively considering M&A opportunities. We're focused on expanding in Europe, strengthening fulfillment networks, and boosting market reach to brick-and-mortar buyers. We're open to various targets that enhance our marketplace. - [Erica Wei](CFO)