ThredUp's Q3 2025: Contradictions in New Buyer Strategy, Peer-to-Peer Economics, EBITDA Margins, and Growth Plans

Date of Call: November 3, 2025

Financials Results

• Revenue: $82.2M, up 33.6% YOY
• Gross Margin: 79.4%, up 10 bps YOY

Guidance:

• Q4 revenue: $76M–$78M (≈14% YoY at midpoint); gross margin 78%–79%; adjusted EBITDA ≈3%; basic weighted shares ≈126M.
• FY2025 revenue: $307M–$309M (≈18% YoY at midpoint); gross margin 79%–79.2%; adjusted EBITDA ≈4.2%; basic weighted shares ≈122M.
• 2026 planning: expect low-double-digit revenue growth and modest EBITDA expansion vs. 2025; direct-selling excluded from 2026 forecast; detailed outlook in March.

Business Commentary:

* Revenue Growth and Market Performance: - ThredUp reported revenue growth of 34% year-over-year in Q3 2025, marking the strongest year-over-year growth in nearly 4 years. - This growth was driven by exceptional customer acquisition, particularly with new buyer acquisition up 54% year-over-year, and active buyers increasing by 26% year-over-year.

• Product Innovation and Consumer Engagement:
• The launch of a rebranded experience and new product features such as the Daily Edit and Trend Report led to a 54% increase in new buyer acquisition in October.

• This initiative focused on elevating the emotional connection with customers through storytelling and cultural relevance, enhancing the brand's value proposition.

• Supply Chain Expansion and Diversification:

• ThredUp expanded its supply chain with the launch of direct selling on the platform, building on its existing premium kit offerings.

• This growth vector aims to address the friction experienced in the casual seller market, with a focus on providing a superior customer experience by mitigating issues like poor product listings and returns.

• Financial Performance and Guidance:

• ThredUp reported gross margin of 79.4% and adjusted EBITDA of 4.6% for Q3 2025.
• The company maintained its strategy of investing in growth opportunities, with a focus on expanding its marketplace through product improvements and increased marketing spend.
  

  Sentiment Analysis:

  Overall Tone: Positive

  • Management called Q3 "our strongest year-over-year growth in nearly 4 years": revenue $82.2M (+33.6% YOY), gross margin 79.4%, adjusted EBITDA 4.6%. They raised Q4 and FY top-line guidance and said they'll reinvest incremental dollars into growth, signaling constructive momentum and a positive outlook.

Q&A:

• Question from Irwin Boruchow (Wells Fargo Securities): Clarification on next fiscal year—are you assuming low-double-digit revenue growth with similar EBITDA margin expansion (roughly +90 bps) and what's a sustainable multiyear growth rate?
  Response: Company targets being a Rule-of-40 business; long-term EBITDA of 20%–25% implies high‑teens to ~20% revenue growth, while 2026 planning starts with low-double-digit growth and modest margin expansion (slightly better than the ~90 bps expansion in 2025).

• Question from Bernard McTernan (Needham & Company): How will peer-to-peer listings display relative to Clean Out kit goods, and how do you expect unit economics of peer-to-peer sales to compare to traditional Clean Out kits?
  Response: Peer-to-peer will use AI-generated, high-quality imagery and merchandising; though top-line per item may be lower, peer-to-peer is expected to deliver superior variable margins and be a strong long-term EBITDA contributor (still early stage).

• Question from Robert Brooks (Northland Capital Markets): On buyer growth mix—of the ~320k added buyers, how many were new vs. resurrected? And why was there a lag to land a new large RaaS partner after the go-to-market shift?
  Response: Roughly one-third of added buyers are resurrected lapsed customers and two-thirds are new; the RaaS timing lag reflects enterprise contract renewal cycles, and management says the RaaS pipeline is strong going into renewals.

• Question from Dylan Carden (William Blair): Will direct (peer-to-peer) listings be shown alongside consignment or on a separate site, and what synergies do you see between the two?
  Response: Direct listings will be browsable together or separately (like 1P/3P on other marketplaces); synergies include consolidating sellers, expanding buyer selection, improving acquisition efficiency, and leveraging DC/logistics for supply and returns.

• Question from Dana Telsey (Telsey Advisory Group): Status and potential mix for premium selling kits, impact of AI investments on conversion, and how marketing spend will evolve into 2026?
  Response: Premium kits grew to north of 20% of supply with room to increase; AI-driven personalization and curation have improved conversion; company plans higher absolute marketing spend in 2026 (same or higher percent of revenue but more dollars).

• Question from Matt Koranda (ROTH Capital Partners): What drove the Q3 sales acceleration versus the Q4 slowdown guide, and how will sellers be vetted and fees applied for direct listings?
  Response: Q3 acceleration driven by improved tools/AI, strong new-buyer acquisition and macro demand for value; Q4 guidance reflects seasonality, tougher comps and planned marketing pullback; vetting leverages ~0.5M existing vetted sellers plus additional ID checks, monetization will include buyer transaction/return insurance fees and seller-paid premium tooling/subscriptions over time.

• Question from Oliver Chen (Cowen Inc.): For the Q3 revenue beat how much was repeat vs. new buyers, how do you view peer-to-peer vs. competitors, what role will GenAI/agents play, and any CapEx implications?
  Response: About ~80% of revenue still comes from repeat buyers while new customers are ramping; GenAI underpins listing/photography/pricing/merchandising and differentiates peer-to-peer via trust and returns; CapEx ~ $10M in 2025–26 and expected to increase in 2027 to support a new Dallas DC.

Contradiction Point 1

New Buyer Strategy and Acquisitions

It involves the strategy for acquiring and retaining new buyers, which directly impacts customer growth and revenue.

What is the proportion of new buyers in total YoY additions, and how do marketing strategies differ for existing vs. new buyers? - Robert Brooks (Northland Capital Markets)

2025Q3: About one-third of new buyers are churned customers, and two-thirds are new customers. - James Reinhart(CEO)

What are the demographics of new buyers compared to the core customer base? - Dana Telsey (Telsey Advisory Group LLC)

2025Q2: The majority of new buyers were new to the brand and new to secondhand. - James G. Reinhart(CEO)

Contradiction Point 2

Peer-to-Peer Model and Economics

It involves the expected unit economics and consumer experience of the new peer-to-peer model, which could impact the company's growth strategy and profitability.

How will P2P products be presented on the website, and how will their unit economics compare to traditional Clean Out kits? - Bernard McTernan (Needham & Company)

2025Q3: Economically, peer-to-peer sales are expected to generate superior margins due to variable unit economics. - James Reinhart(CEO)

How does ThredUp plan to sustain supply demands as the business accelerates? - Dylan Douglas Carden (William Blair & Co. LLC)

2025Q2: We're also going to have a diverse range of offerings, including consignment, which is more of a variable margin model. - James G. Reinhart(CEO)

Contradiction Point 3

New Buyer Acquisition and Business Momentum

It involves differing statements about the source of new buyer acquisition and the sustainability of the growth momentum, which are crucial for investor understanding of the company's growth trajectory.

What is the new buyers' proportion in total year-over-year buyer growth, and how do marketing strategies differ for existing versus new buyers? - Robert Brooks(Northland Capital Markets)

2025Q3: About one-third of new buyers are churned customers, and two-thirds are new customers. - James Reinhart(CEO)

What’s driving the outperformance in buyer and revenue, and what gives confidence in sustainability for the remainder of the year? - Ike Boruchow(Wells Fargo)

2025Q1: Momentum in the business continues, driven by new buyer acquisition and supply-side progress. - James Reinhart(CEO)

Contradiction Point 4

EBITDA Margin Expectations

It involves differing statements about EBITDA margin expectations, which are critical indicators for investor understanding of the company's profitability and financial health.

What is the sustainable long-term growth rate for this model? - Irwin Boruchow(Wells Fargo)

2025Q3: The strategy for '26 is similar to '25, focusing on expanding EBITDA and reinvesting for growth. - James Reinhart(CEO)

Are you still expecting Q3 revenue growth to accelerate from Q2, with Q3 as the year's peak EBITDA margin quarter and Q4 to see a slight decline? - Ike Boruchow(Wells Fargo)

2025Q1: EBITDA more in the 4.5% range for Q3, followed by a dip to match the full-year guide of 4%. - Sean Sobers(CFO)

Contradiction Point 5

Revenue Growth and Expansion Strategy

It involves differing perspectives on the sustainable growth rate and expansion strategy, which are crucial for investor expectations and corporate planning.

What is a sustainable long-term growth rate for this model? - Irwin Boruchow(Wells Fargo Securities, LLC, Research Division)

2025Q3: We want to be a Rule of 40 company with growth in the high teens to 20%. The plan for '26 involves expanding EBITDA and reinvesting dollars into growth. The strategy for '26 is similar to '25, focusing on expanding EBITDA and reinvesting for growth. - James Reinhart(CEO)

Can you provide guidance for revenue, gross margin, and EBITDA pacing this year, and what factors concern you regarding a potential business slowdown? - Irwin Boruchow(Wells Fargo)

2024Q4: Revenue growth will accelerate from Q1 to Q2, Q2 to Q3, and Q4 will still see growth. - John(Executive)