Earnings call transcript: GigaCloud Technology Q3 2025 beats expectations

GigaCloud Technology (NASDAQ:GCT) reported its Q3 2025 earnings, showcasing a robust performance with an earnings per share (EPS) of $0.99, significantly surpassing the forecasted $0.72. The company also exceeded revenue expectations with $333 million, against a forecast of $299.83 million. Despite the positive earnings report, GigaCloud’s stock experienced a decline of 7.01% during regular trading hours, closing at $27.38, though it showed a slight recovery of 0.8% in after-hours trading.

Key Takeaways

• GigaCloud reported a 37.5% EPS surprise, setting a new quarterly record.
• Revenue grew by 10% year-over-year, reaching $333 million.
• The stock dropped 7.01% during regular trading but showed a slight recovery in after-hours.
• The company maintained a debt-free status and strong liquidity of $367 million.
• Q4 revenue guidance is projected between $328 million and $344 million.

Company Performance

GigaCloud Technology demonstrated resilience in Q3 2025, achieving a 10% year-over-year increase in revenue. This growth was driven by a diversified business model and strong international presence, particularly in Europe, where revenue surged by 70%. The company also maintained a robust gross margin of 23.2% and reported net income of $37 million, accounting for 11.2% of its revenue.

Financial Highlights

• Revenue: $333 million (+10% YoY)
• Earnings per share: $0.99 (new record)
• Gross Margin: 23.2%
• Net Income: $37 million (11.2% of revenue)
• Operating Cash Flow: $78 million
• Total Liquidity: $367 million
• Debt-free status maintained

Earnings vs. Forecast

GigaCloud’s Q3 2025 earnings per share of $0.99 significantly surpassed the forecasted $0.72, marking a 37.5% surprise. The company’s revenue of $333 million also exceeded the forecast of $299.83 million by 10.94%. This strong performance reflects the company’s effective strategies and operational efficiencies.

Market Reaction

Despite the positive earnings report, GigaCloud’s stock fell by 7.01% during regular trading hours, closing at $27.38. This decline may reflect broader market trends or investor concerns about future economic conditions. However, the stock showed a slight recovery in after-hours trading, rising by 0.8% to $27.6.

Outlook & Guidance

For Q4, GigaCloud projects revenue between $328 million and $344 million. The company is also set to close its acquisition of New Classic Home Furnishings on January 1, 2026, which is expected to integrate over 4-6 quarters. GigaCloud continues to focus on bridging digital and physical sales channels and exploring further M&A opportunities.

Executive Commentary

CEO Larry Wu emphasized the company’s resilience, stating, "Despite the challenges... we delivered a robust 10% year-over-year growth." Executive Iman highlighted the importance of diversification, noting, "Diversification and having a balanced portfolio is a core tenet of our strategy."

Risks and Challenges

• Macroeconomic pressures, including housing market uncertainties and global trade challenges.
• Fluctuations in shipping demand and declining U.S. ocean shipping rates.
• Potential integration challenges with the New Classic acquisition.
• Competitive pressures in the technology and e-commerce sectors.

Q&A

During the earnings call, analysts inquired about the company’s M&A strategy, potential recovery in the housing market, and the performance of the Noble House portfolio. Executives confirmed their Q4 performance expectations and discussed strategic initiatives.

Full transcript - GigaCloud Technology Inc (GCT) Q3 2025:

Conference Operator: Good day, and welcome to the GigaCloud Technology third quarter 2025 earnings call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today’s presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I’d now like to turn the conference over to Mr. Larry Wu, CEO. Please go ahead.

Larry Wu, CEO, GigaCloud Technology: Thank you, operator, and welcome everybody to today’s call. This quarter’s performance is a strong testament to GigaCloud’s resilience and adaptability. Despite the challenges brought by global trade uncertainties, a cooling housing market, and the wavering consumer confidence, we delivered a robust 10% year-over-year growth, returning to two-digit increase and setting new records of $333 million in quarterly revenue and $0.99 in quarterly EPS. These results reflect our ability to move fast, stay lean, and execute with precision, even in the face of macroeconomic headwinds. We’re navigating today’s environment with confidence, guided by the disciplined execution to our long-term strategy, staying agile, continuing to diversify for resiliency. Our know-how’s optimization is delivering fantastic results. Strategically adding new products and phasing out underperformers has fueled our first year-over-year revenue growth since we completed the acquisition. We are excited for the future value that we expect.

This portfolio to unlock as we continue our optimization effort. As we have discussed many times before, we view M&A as a part of our long-term growth strategy. Noble House is a powerful validation of the strategy by combining product, channel, and vendor resources from Noble House with operational efficiency and the transformative marketplace of GigaCloud. We have not only been able to turn a bankrupt company losing nearly $40 million in 2023 to a profitable growing asset in less than two years, but also expanded our product line and channel outreach. This result is exactly why we view M&A as a cornerstone of our long-term growth. As we look forward, this successful playbook gives us tremendous confidence in our strategy to continue unlocking new value for the future. With that said, I’m very excited to share our plan to acquire New Classic Home Furnishings, scheduled to close on January 1st, 2026.

As a traditional brick-and-mortar-focused wholesaler, New Classic is a perfect strategic fit for GigaCloud to further diversify our business and reach beyond e-commerce. As many of you know, the GigaCloud ecosystem has historically been more concentrated towards e-commerce and pick-and-book. This acquisition represents our strategic move to recalibrate our focus, making brick-and-mortar wholesale a more significant and complementary part of our ecosystem, an area we see tremendous opportunities in. We have already proven the viability of our marketplace. The next step of evolution, naturally, is to bridge the digital and the physical world. For a truly channel-agnostic ecosystem that empowers buyers and sellers to trade seamlessly with unparalleled reach and flexibility. Executing this next-phase evolution in the current economic climate is a deliberate choice.

While no company is immune to macro pressures, our focus execution, strong balance sheet, and use of diversification as a hedging strategy allow us to navigate this turbulence more effectively than most, securing competitive advantages today that will fuel our next chapter of growth. To that end, I will now turn the call over to Iman, who will provide more detailed updates on the progress we’re continuing to make against our key operational goals.

Iman, Executive (likely COO or similar), GigaCloud Technology: Thank you, Larry. Hello, everybody. Our marketplace continues to gain momentum, delivering another strong quarter of growth. For the trailing 12 months ending September 30, 2025, marketplace GMV rose approximately 21%, reaching nearly $1.5 billion, underscoring the scalability and resilience of our platform. Our active 3P seller base continues to expand, up 17% year-over-year to 1,232, with GMV for this cohort climbing more than 24% on a trailing 12-month basis to over $790 million. Buyer growth also accelerated, increasing 34% to 11,419 as more businesses looked for new efficiencies and risk optimization in a challenging environment. Our global revenues increased by 10% in the third quarter on a year-over-year basis. While the domestic U.S. markets faced headwinds, our international markets acted as a powerful hedge, driving growth and offsetting domestic softness.

Diversification and having a balanced portfolio is a core tenet of our strategy, ensuring we’re not overly reliant on any single market. Europe continues to be a powerful growth engine, with year-over-year revenues of 70% to a record $100 million, making a major milestone in our global expansion. Our diversification efforts, however, are not limited to geographical expansion. We’re also looking to create a more dynamic marketplace supported by a broader range of product offerings and distribution channels. To accelerate this strategy, we leverage M&A to acquire key capabilities. Our playbook has a two-pronged approach, depending on our core capabilities through acquisitions and leveraging our ecosystem to make the acquired asset more efficient, competitive, and profitable. Our 2023 acquisition of Noble House is a prime example. It’s not just an addition, but a strategic integration that deepens our product catalog and capabilities.

We have made substantial progress with our Noble House portfolio optimization. Since last quarter, we have introduced another 2,300 new SKUs and retired 1,100 underperforming SKUs, shaping a more streamlined, high-performing portfolio built to scale. As shared earlier this year, our SKU rationalization efforts have successfully returned the portfolio to profitability, while temporarily impacting our top line. I am pleased to report that in Q3, this disciplined approach has paid off, with the portfolio not only maintaining its profitability but also returning to growth. We have effectively reset our foundation and are now reigniting growth from a much healthier foundation. Looking ahead, we plan to build on this momentum.

Our strong balance sheet positions us to be highly active and disciplined in pursuing inorganic opportunities that align with our long-term strategic goals, and our pending acquisition of New Classic is a great example of the type of value-creating asset we are looking for. New Classic is a well-respected, long-standing U.S. wholesaler with deep roots in the brick-and-mortar furniture space. The company has over 1,000 primarily brick-and-mortar retailer relationships, over 2,000 active SKUs, a high-performing team, and a wide network of vendors that specialize in products tailored for this specific channel. The acquisition is strategically targeted to dramatically widen our distribution and channel reach. By pairing New Classic’s network with GigaCloud’s marketplace ecosystem and logistics capabilities, we can accelerate growth. We unlock new efficiencies.

We expect to close the transaction early in the first quarter of 2026 and expect four to six quarters of strategic initiatives to be reflected in our financial performance. Now, I’ll turn things over to Erica for a discussion of third-quarter financials.

Erica, CFO, GigaCloud Technology: Thank you, Iman. Hello, everybody. A quick note before we get into our results. All figures I cover today are rounded, and unless otherwise noted, comparisons are against the same period last year. Now, let’s take a look at this quarter’s results. We delivered a great quarter, including double-digit growth revenue of 10% to $333 million, a new quarterly high. Now, let’s break this down by revenue streams. Our service revenues declined 2% year-over-year, primarily driven by reduced U.S. ocean shipping and drayage revenues. The uncertainties seen in recent months have resulted in significant declines in the demand for ocean shipping services to the U.S. for many industries. Lower demand has suppressed ocean spot rates, which translates to lowered ocean service revenues for us. U.S. revenue pressures were partially offset by strong year-over-year growth in similar services delivered to our European market sellers. Service margin came in at 9.1%.

Down 2.3% sequentially, primarily driven by higher last-mile delivery costs in the U.S., following pricing adjustments implemented by some of our ground transportation fulfillment partners. In response, we are actively recalibrating client pricing to reflect these updated cost structures. Total product revenue grew 16% year-over-year, driven by our strong performance of 69% growth in Europe. Growth was partially offset by a 5% decline in the U.S., which is reflective of the challenging macroeconomic pressures in the region, but more importantly, it is a direct outcome of our disciplined strategy. As communicated last quarter, we have implemented targeted price increases to address rising tariff costs. Our strategy is to prioritize margin integrity over pure volume, ensuring the growth we deliver is sustainable and valuable. Our commitment to margin integrity was put to the test this quarter and proved effective.

We faced a significant margin headwind from the sale of products sourced in Q2 under tariffs exceeding 100%, which we successfully navigated with strategic price increases, protecting our baseline profitability. Beyond this mitigation, we delivered a sequential product margin expansion of 70 basis points to 29.9% as we grew our higher product margin channels and benefited from lowered ocean shipping costs. For GigaCloud as a whole, gross margin was 23.2% for the third quarter, a 70 basis point sequential decline from the second quarter of 2025. Operating expenses declined 1.7% sequentially to 11%. Primarily driven by lowered G&A expenses. This is a reflection of lower stock-based compensation this quarter, as most stock-based comp is granted and vested in the second quarter of each year. Selling and marketing expenses remain flat sequentially at 8% of sales.

This brings net income to $37 million, or 11.2% of revenue, an expansion of 50 basis points sequentially. I am also pleased to report a new record for quarterly EPS of $0.99 per share, driven by our team’s focused execution and amplified by our ongoing share repurchase efforts. For the third quarter, we generated operating cash flows of $78 million, ending the quarter with total liquidity, which includes cash, cash equivalents, restricted cash, and short-term investments, of $367 million. We remain debt-free and continue to execute on our capital allocation strategy of pursuing strategic acquisitions such as New Classic while simultaneously returning capital to shareholders through buybacks. Since the announcement of our $111 million share buyback plan in August, we have executed approximately $16 million in buybacks to date, or 15% of our latest plan limit.

This brings our cumulative buyback total to $87 million as of date since our IPO in 2022, and we plan on continuing to execute opportunistically using buybacks as a flexible tool to return value to our shareholders. Finishing with our fourth-quarter outlook, revenue is expected to be between $328 million and $344 million. Operator, we are now ready to begin the Q&A session.

Conference Operator: We will now begin the question and answer session. To ask a question, you must press Star then One on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press Star then Two. At this time, we will pause momentarily to assemble our roster. Your first question today comes from Tom Forte from Maxim Group. Please go ahead.

Great. Thanks. Congratulations on the quarter. One question and one follow-up. You talked about a new M&A acquisition. Can you talk about your thoughts on additional M&A acquisitions? Recently, you’ve talked about looking for opportunities to expand in Europe and then also looking for opportunities, I think, to add technology, perhaps on the software side, things of that nature. That’s my first question.

Larry Wu, CEO, GigaCloud Technology: Yeah. We keep looking on different opportunities by focusing on any opportunity that can bring us more product or the fulfillment of capability. Right now, I think we’re more focusing on concluding the closing of New Classic. Our team is definitely concurrently looking for a new opportunity, but it’s unlikely that this can happen in the coming few months because we’ll be focusing on New Classic for the distant moment.

Okay. For my second question, and thank you, Larry, for the answer on that one. The good news for the housing market is that the site has now had multiple rate cuts. I recognize that the housing market is still very challenged. Do you think any of these rate cuts are starting to translate into greater interest in home merchandise and the possibility for some sort of sales catalyst over the next 12 months?

Yeah. That’s obviously the scenario we were hopeful about. The bouncing back of the housing market. We’re trying to keep ourselves more focused on the execution, on micro level, because we do have the toolbox of more diversified revenue avenue that we can really enjoy the flexibility to avoid any kind of reliance on any of the macro positive factors to happen to really provide the opportunity to grow. We’re trying to deliver the growth regardless of what the macroeconomics is doing.

Thank you, Larry. Thanks for taking my questions.

Thank you.

Conference Operator: Thank you. Once again, if you have a question, please press Star then One. Your next question comes from Joseph Gonzalez from Roth Capital Partners. Please go ahead.

Hi, guys. Thank you for taking my question. It’s great to see you guys kind of transform Noble House. I want to see if you guys can unpack that here a little bit. Is there any chance you can just give us a cadence of how the quarter went and kind of the drivers for that growth there in Q3?

Erica, CFO, GigaCloud Technology: Hey, thanks, Joseph. Yeah, Q3, I think overall went really well. The main drivers here are Noble House outperforming in the U.S. and also Europe. It’s nothing new, continuing to perform very strongly.

Got it. As it pertains to your core business, excluding Noble House, any drivers there you’d like to unpack for us as you come out with about double-digit growth in the fourth quarter through your guidance? Just kind of what you guys are seeing in your early innings of Q4 and the confidence there.

I think as of today, we’re seeing kind of Q4 going well kind of as expected, and this is reflected in the guidance that we gave just now. This is, of course, inclusive of the expectation of Europe, which is mostly, it is entirely organic, continuing to perform strongly, Noble House, and then, of course, our original non-acquired parts of the business, all three combined.

Got it. It’s good to hear you guys are able to navigate during a dynamic environment. We’ll go ahead and leave it there. Thank you, guys.

Thank you.

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