ThredUp at 45th Annual William Blair Growth Stock Conference: Strategic U.S. Focus

On Wednesday, 04 June 2025, ThredUp Inc. (NASDAQ:TDUP) presented at the 45th Annual William Blair Growth Stock Conference, emphasizing its strategic pivot towards the U.S. market after divesting its European operations. The company highlighted both its robust growth and the challenges it faces, demonstrating a commitment to reinvesting in technology and infrastructure to maintain its competitive edge.

Key Takeaways

• ThredUp reinvested $25 million into the U.S. business following the divestiture of its European operations.
• The company is leveraging AI to enhance product experience and improve customer acquisition.
• With current infrastructure, ThredUp aims for $500 million to $600 million in net revenue.
• The introduction of consignment fees has improved the quality and volume of supply.
• ThredUp experienced a 95% increase in new customer growth in the last quarter.

Financial Results

• European Divestiture Impact: $25 million was redirected to the U.S. business, enhancing its domestic operations.
• Contribution Margin: Currently in the low forties, with premium items achieving 40% better margins than standard items. Gross margins have improved by 10 points since the IPO.
• EBITDA: Targeting a 4% EBITDA margin, with any excess reinvested into growth. The U.S. business has seen seven consecutive quarters of EBITDA positivity.
• Revenue Potential: ThredUp projects $500 million to $600 million in revenue with current operations, and up to $1 billion with an additional $50 million in capital expenditure.
• Growth Trajectory: Q1 2024 saw a 10% revenue increase, a significant jump from last year’s 0.6%.

Operational Updates

• Supply Chain Enhancements: New consignment fees have led to higher quality supply and increased volume, with premium services offering additional seller benefits.
• Distribution Centers: Facilities in Dallas and Atlanta are operating at two-thirds capacity, with no major capital expenditure anticipated until 2027.
• Technology and AI: ThredUp has revamped its product backend with AI, improving search functions and user experience. New features like Style Chat and Shop Social are designed to enhance customer interaction and personalization.

Future Outlook

• Growth vs. Profitability: The focus remains on growth, maintaining EBITDA at 4% of revenue while reinvesting any surplus.
• Capacity Utilization: Current infrastructure supports up to $600 million in revenue, with potential expansion to $1 billion.
• Customer Acquisition Strategy: Continued strong customer growth is expected through Q1 2026, supported by efficient acquisition strategies.
• Consumer Sentiment: ThredUp remains cautious about economic conditions but is confident in its value proposition to consumers.

Q&A Highlights

• Industry Growth Rate: ThredUp anticipates industry growth in the low double digits.
• Competitive Landscape: The company differentiates itself from peer-to-peer and luxury resale platforms by focusing on the mass market.
• Marketing Spend: Increased marketing expenditure is encouraged due to improved unit economics and acquisition efficiency.
• De Minimis Rule: The company’s guidance is unaffected by tariffs or the de minimis rule.

For a comprehensive understanding, readers are encouraged to review the full transcript of the conference call.

Full transcript - 45th Annual William Blair Growth Stock Conference:

Dylan Carden, Analyst, William Blair: Nice. Military. I am Dylan Carden. I cover ThredUP for William Blair. There are disclosures on our website as it relates to compliance.

We have James Reinhart, Sean Sobers, CEO and CFO respectively of the company. We’re going to do this as a fireside chat, and let’s begin. So because this is a generalist audience, I know you’ve been here several years, but, you know, every CEO should be able to pitch their business in two minutes. Just overview what you do, why you founded it, you know, value proposition, and sort of Sure. Out

James Reinhart, CEO, ThredUP: there. Yeah. ThredUp, for those of you don’t know, it’s a it’s a marketplace for secondhand clothing, so we do just women’s and kids. We make it easy for you to clean out your closet, so we’ll send you this prepaid bag or you can print the label online, fill with all the stuff you’re no longer wearing. We take it in one of our distribution centers around the country, so we run four distribution centers around the country.

We process all those goods, we put them online for you, and then we deliver this incredible secondhand online shopping experience just like you’re shopping anywhere else on the Internet. When the items sell, we pay out the sellers, whole business is on consignment, and we repeat that millions and millions and millions of times every year.

Dylan Carden, Analyst, William Blair: And the what’s being missed in that conversation is how you solve for the complexity of that Yeah. Supply chain.

James Reinhart, CEO, ThredUP: Yeah. So I think the way to think about the three pieces of competitive advantage in the business is we’ve built a marketplace that connects buyers and sellers. I think that’s an important part. We’ve built an entirely new supply chain for second hand. So what we do in our distribution centers has really never been done before.

It’s like a reverse logistics business, on steroids. And then if you think about all the clothing you’re all wearing, there’s no barcodes on it. So the the actual value of any garment in this room depends on what the supply and demand curve is of that garment at any one time. And so we’ve built an incredible data, proprietary data set to value that clothing. And so data’s hard, infrastructure’s hard, marketplaces are hard.

I think what people tend to sometimes underappreciate about the story is we do all three of those hard things simultaneously all the time, and I think that’s what’s built a real advantage for us over the years.

Dylan Carden, Analyst, William Blair: And the landscape itself as far as sort of the decision tree that the consumer is making as to why they even shop you or even send you their goods, you’re relatively sort of alone in that regard.

James Reinhart, CEO, ThredUP: Yeah. I have this thesis that consumers are only getting lazier over time. Like, one of my, like, beliefs about the future is that we only get lazier, and so we make it really easy for people who historically like, I’ll ask, how many people in the room have sold something on eBay? Or I got okay. In the last let me let me constrain it.

In the last year, have you sold raise your hand if you’ve sold something on eBay? K. We got one. K.

Sean Sobers, CFO, ThredUP: Two, three, maybe.

James Reinhart, CEO, ThredUP: Two, three, maybe. How many of you have given something away to goodwill or charity in the last year? So that’s how I often describe, like, the TAM between, like, what we do on the the supplier side versus the TAM of, say, the consumer selling their own stuff is we really compete with, you all giving really great stuff away all the time, and so we emphasize that convenient part of the cleanup service.

Dylan Carden, Analyst, William Blair: And within the quadrant of the resale landscape, you you have a lot of people kind of fighting for the luxury space or the peer to peer space.

Sean Sobers, CFO, ThredUP: Yeah. Right?

Dylan Carden, Analyst, William Blair: You are standalone in the online. Yep. I mean, that’s another yeah. Right.

James Reinhart, CEO, ThredUP: Yeah. So yeah. You have peer to peer, you know, you do all the work. Poshmark, eBay. We do all the work, you know, managed marketplace, right up.

And then mass or luxury. Right? RealReal does a wonderful job at the luxury end. There’s a number of other players. We focus more on, the mass market or kind of bridge brand approach, and our point of view is that that market is six times the size of the luxury market and that it’s much less competitive because of the moat that we’ve built, and so that’s really our sweet spot.

Dylan Carden, Analyst, William Blair: Alright. As far as the industry itself, resale is a very kind of complicated beast. I called you guys out a little bit in or Global Data. Yeah. I called Global Data out a little bit in their projections for the industry.

Yeah. Yeah. And to be fair, they were kinda modeling that in the beginning of the pandemic. But, you know, where do you kinda see the size of the piece that you’re addressing? How much of that is online at this point, and kinda what’s that trajectory, and what’s, a reasonable industry growth rate, you think, from here?

James Reinhart, CEO, ThredUP: Yeah. I think a reasonable industry growth rate from here is probably low double digits. Okay. I I think that’s reasonable. I think where the and Neil Sanders at Global Data would if he were here, he would admit this.

Right? Because we’ve been on panels together. He’s like, what I’m trying to do is extrapolate what consumers say they’re going to do in the future. Right. Because it’s hard to size markets that are so nascent.

Right?

Dylan Carden, Analyst, William Blair: Yeah. Right.

James Reinhart, CEO, ThredUP: And so what he’s saying is when I interview young people, right, and they go out and do panel data, 20 year olds, 30 year olds, then teens, and they ask them, hey. What percent of the stuff are you shopping today is secondhand? You look at that in successive generations. The younger you get, the higher that percentage is. And when you ask the same customers, and in the future, you gonna purchase more or less secondhand?

The younger you get, the higher that number is. Right. And so what Neil does is he says, if I just look at like a a decade set of cohorts and I extrapolate out what they say they’re going to do, the numbers get really big. Yeah. And then so he discounts them so that they seem reasonable to analysts like you.

And I can And then you’re not gonna I can’t But the answer is I don’t know how big it is, but I’m pretty sure that it’s, like, not a fad. Yeah. And, you know, there’s gonna be multiple winners. Got it. I mean survey work, can

Dylan Carden, Analyst, William Blair: you ask people, that’s why I don’t do survey work. You ask consumers what they’re about to do in the future, what are going do tomorrow? What are going have for breakfast? Okay, so let’s talk about the business then. So you’ve seen some real nice inflection in the business, Right?

Can you kind of dissect why that started to happen all of a sudden? Right? And then we can kind of sort of dig into the pieces of that.

James Reinhart, CEO, ThredUP: Yeah. Sure. I think you have to separate, a couple of things that are happening in the core US business. We can talk about those. But, also, we’ve been in this consolidated business with Europe, for a long time.

So we bought a business in 2021, after we went public, business called Remix. We were trying to do what we did in ThredUP in Europe, and to make a very long story that requires more time, that business, like, didn’t work. As the market turned in 2022, it became very challenging to both, operate The US business and invest in it the way we like as well as the European business. The net effect of that is that as The US was making progress in generating some free cash flow, generating positive EBITDA, we could not reinvest those dollars back into The US business because we were using them to kind of, you know, manage what was happening, the loss making that was happening in Europe. So that was the way we had to run the business for for a couple of years.

And so Sean and I sat around like feeling like really constrained. Right? It’s like we can’t invest in The US we would like the way we would like, and we were trying to get the European business to be where we wanted it to be. So we divested of that business just shortly after the conference here last year. We announced that we were going to sell it, and we got rid of the business in November, of twenty twenty four.

And really since then, we’ve been able to take the progress that we’ve been observing in The US for multiple quarters, and then we had some of the incremental cash flow to put into that. And so the combination of the core US business and product getting better, now having cash to put behind it has, I think, created this, you know, this positive, flywheel. And in fact, was looking back to last year because a lot of times people don’t like when founders when founders talk about the product getting better, people are like, yeah. Yeah. Yeah.

Yeah. Founders always think the product is getting better.

Dylan Carden, Analyst, William Blair: We’re gonna talk about that, don’t we?

James Reinhart, CEO, ThredUP: But the product you know, I talked about it year ago, like, the product was really getting better built on an entirely new AI infrastructure, and the impact of that was conversion rates started to go up. And as you know, when conversion rates start to go up, like, all kinds of magical things, like, happen in a business. Like, CACs go down, LTVs go up, LTV to CAC ratios get really juicy. Right? And so product’s getting better, consumers are happier, no longer at the European business, I think that’s what’s driven the inflection.

Sean Sobers, CFO, ThredUP: So I would add to that too is like on on The US side of the business, since we were consolidated, people didn’t really see what was happening. And I think as of q one’s results, it was our seventh straight quarter in The US or now the only business of EBITDA positivity, but was all clouded mixed in with the European business.

Dylan Carden, Analyst, William Blair: That’s fair. And but in on that to that end, you quantified the I think you quantified the impact of how much you had available. It was like $12,000,000 put back in the investment that you made in removing I think

Sean Sobers, CFO, ThredUP: it’s more like 25.

James Reinhart, CEO, ThredUP: 20 5 million

Sean Sobers, CFO, ThredUP: dollars Yeah.

James Reinhart, CEO, ThredUP: Almost of like what we would have been able to put in over the last six quarters.

Dylan Carden, Analyst, William Blair: Just covering losses and just not having those operating Yeah.

James Reinhart, CEO, ThredUP: And just, you know, not really being able to feel confident that if we put doll a dollar here, we’re gonna generate this the ROI that we want. Whereas, you know, before we went public, you know, ThreadUp business in the last quarter before we went public, think this would be 4047%. You know, like, we know how to grow we knew how to grow The US business, and so we’re trying to get back to that, core engine.

Dylan Carden, Analyst, William Blair: And and it’s I mean, just because you said it, it it I’m not gonna hold you to 47%, but Please don’t. Yeah. Like, what can you grow above the industry either because of online migration or because of, you know, awareness or capacity utilization, which I know has been sort of an issue for you historically?

James Reinhart, CEO, ThredUP: Yeah. I mean, I think for a while we were we were growing well above the industry rate and then, then we weren’t. Right?

Dylan Carden, Analyst, William Blair: And so I think Well, industry wasn’t growing presumably at that point. Or what

James Reinhart, CEO, ThredUP: Well, industry from, like you know, if you go back to, you know, when we started the business 02/2010, like, was very nascent. The first time we did the resell report was 2012, I wanna say. Sounds right. And, you know, the industry was, like, starting to accelerate. Right?

And I think ThredUP was really both benefiting from this sort of macro and actually driving Catalyst. You know, catalyst for that. And but look, I think we we believe that we should be able to grow at or above industry rate, for sure, and we’re gonna do everything we can to do that.

Dylan Carden, Analyst, William Blair: And so the 25,000,000, how did that sort of now that it wasn’t covering Europe, how did that get invested in the business?

James Reinhart, CEO, ThredUP: I mean, it’s not like we it wasn’t like one big, like, blank check, but I think it’s clear now our ability to invest in operations, put high quality supply online, and invest in in marketing growth. Right? And so, now the CACs and LTVs, as I said, are better than ever and so you’re just more efficient. And we just had, you know, incredible new customer growth quarter, which maybe we’ll we’ll talk about, but, you know, strong new customer growth and and continuing that momentum.

Dylan Carden, Analyst, William Blair: Ops

Sean Sobers, CFO, ThredUP: would also add in too is don’t underestimate the value of the human capital that we were sending Yeah. And spending in Europe. And not talking about our salaries, but some of the smartest people in the company on the US Team were trying to make the European results better. Not not to keep piling on them, but it was a distraction from US performance and the opportunity there.

Dylan Carden, Analyst, William Blair: And so the inventory itself getting better, you’ve mentioned that now I think three quarters in a row. Yeah. Is that an awareness? Is that because there’s sort of now that you’re charging fees

James Reinhart, CEO, ThredUP: Yep.

Dylan Carden, Analyst, William Blair: That there’s a different customer on the platform? Or how does that work?

James Reinhart, CEO, ThredUP: Yeah. I think it’s I think you you sort of alluded to it. I think when we introduced fees, it’s about eighteen months ago at this point.

Dylan Carden, Analyst, William Blair: Which are now uniform across the business.

James Reinhart, CEO, ThredUP: Now uniform across the business.

Dylan Carden, Analyst, William Blair: And are 14 on a

James Reinhart, CEO, ThredUP: slight $14.99 on a slight scale. Yep.

Dylan Carden, Analyst, William Blair: Yeah. Yeah. Based on what you’ve said.

James Reinhart, CEO, ThredUP: Yes. And no. No. No. You you pay that no matter what.

You pay the $14.89 no matter what.

Dylan Carden, Analyst, William Blair: You can get a discount if you have good product.

James Reinhart, CEO, ThredUP: You can get a discount if you have good product, but you don’t know that in advance.

Dylan Carden, Analyst, William Blair: Right. Yeah. Yeah. Yeah. Yeah.

James Reinhart, CEO, ThredUP: But the idea when we launched these was just to sort of improve kind of the, lever offset some of the logistics costs and labor costs are increasing. We did not actually anticipate how much better the supply would be and how much and on a volume basis, many more items we get. But if you sort of think about it, if you’re a consumer now who has to pay, $14.99 is not a lot because we take it out of it, your pay even on the back end. You’re like, well, if I’m paying 49, I should put some good stuff in here. Right?

And I should stuff this thing because it’s $14.99 whether there are 25 things in there or 30 things in there. And so you had this, like, early, effect of better supply, more of it. And then what we introduced at the beginning at the end of q three of last year, we started in trial, and then we’ve accelerated as our consignment premium service, which instead of $14.99, we charged you $34.99. And in that model $34.99? 30 4 90 9.

Just figuring out what the elasticity was. Yeah. Well, and you get some you get a slew of benefits with that.

Dylan Carden, Analyst, William Blair: Oh, that’s advanced one. That’s a rush job.

James Reinhart, CEO, ThredUP: Yep. And well, you get advanced one and then you also get, you get longer consignment window, you get some price protection, you get a bunch of stuff, and that has just gone up into the right, the mix of goods. I think the last time we talked about it was like 15%?

Dylan Carden, Analyst, William Blair: Yeah.

James Reinhart, CEO, ThredUP: 15% and growing?

Dylan Carden, Analyst, William Blair: That that customer that’s using that

James Reinhart, CEO, ThredUP: That mix of goods coming from the consignment premium service has grown month over month since we launched it. Wow. And I think what it speaks to is that there is this segment of customers who have, you know, some nice stuff, but they this customer segment sits between The RealReal and the high end and mass market ThredUp, and they’re like, but this is like a real I want a little bit more control over this DVF dress. Right? And so she’s like, I don’t The RealReal might not take it.

I’m not sure I want to sell it on ThredUp. With consignment premium, have more control, and so now you’re getting that customer who we think is a great segment of sellers.

Sean Sobers, CFO, ThredUP: I mean your ASP difference between the two, like basic service versus premium service is almost double in the premium service. Say that again? Sorry. The the ASP difference between the standard service and premium is double.

James Reinhart, CEO, ThredUP: The mix of goods in there. Yeah.

Dylan Carden, Analyst, William Blair: Yeah. And and what has that also done to I know what it does to conversion. We’ve talked you talked about that. Yeah. What does it do from like a keep rate standpoint?

Right? Because at one point, think when you were going public, it was like you kept 50% of everything you were Yeah. Taken in. Yeah. You know, now that you’re getting better product presumably

James Reinhart, CEO, ThredUP: The yield on the bags are better.

Dylan Carden, Analyst, William Blair: Yield on the bags, yield on all the human capital and the right? All of that. Right?

James Reinhart, CEO, ThredUP: Yes. I mean, as Sean said, you know, the price point, it’s it’s not quite double, but it’s, like, roughly double. But, our cost to process that item is exactly the same. Right? So you’re immediately getting, contribution margin leverage because your processing costs are the same whether the item is 25 or $50, and you’re delighting the buyer.

And a lot of those items need to be discounted less Yeah. Because they’re in demand items. The seller knows that. The buyer knows that. And so the unit economics, I think we said we’re about 40%.

Contribution was up 40% better for premium items.

Dylan Carden, Analyst, William Blair: In the first quarter. Yeah. And I you’re not I’m not gonna hold you to actual numbers here, but, you know, you gave it the IPO. You gave no.

James Reinhart, CEO, ThredUP: Mean says that a lot.

Dylan Carden, Analyst, William Blair: I say that a lot. Right? But is this I mean, this is it. Right? This is the whole model because I don’t think what people really appreciate is just how much of a logistics play this is.

You know, you have the fact that resale is growing in acceptance, losing its stigma, you know, increasingly moving online. Then you had the fact that no one’s going to try to solve for this very complicated problem. Yeah. And so when you went public, was the idea was that I think at the time it was like 47% unit contribution margin or something like that. Is that 27.

James Reinhart, CEO, ThredUP: It was 27.

Dylan Carden, Analyst, William Blair: Yeah. 27. Yeah. But that was without Houston and Atlanta, your two now most automated distribution centers. Right?

And it was before fees Yep. And it’s before all that. And so how should people think and and what you’ve done is you’ve, I think, since that grown your gross margin 10 points Yep. Which is all the back end logistics Yeah. Which is the easiest stuff to automate.

Right? Arguably It’s

James Reinhart, CEO, ThredUP: like you study the business. Yeah. Yeah. Yeah. But yes.

No. You’re right. Like, you’re getting leverage

Dylan Carden, Analyst, William Blair: on the top. Know where employment.

James Reinhart, CEO, ThredUP: I I do. And so, Sean, we’ve talked

Dylan Carden, Analyst, William Blair: Give me the updated 20%. Yeah.

Sean Sobers, CFO, ThredUP: So we actually announced on probably the last two earnings call that contribution margin now are in the low forties. And so I think we thought at the time of the IPO, thought once we moved to the more automated DCs, which aren’t Dallas and Atlanta, they’re the ones prior to that, we would gain a thousand bits. And so we’re well past that now and still working on improving it.

Dylan Carden, Analyst, William Blair: And all the growth here is, so people know, is for the capacity utilization of these two facilities. Correct. At which point you’re utilizing them to the tune of what, like a third?

James Reinhart, CEO, ThredUP: We’re we’re two thirds at this point, but lots of room lots of room to run. But I think you have to combine the contribution margins with, like, the efficiency on the acquisition side to get kind of the full picture because part of the reason why we’re able to, like, continue to invest on the growth side is CACs are CACs are coming down, right, because conversion rate is up. Okay. LTVs are going up because conversion rate is up. But the unit economics of those orders are going And so you’re now generating actually more cash from every incremental order and your acquisition engine is working better.

So, you know, it’s the first time I think Sean in a while has been like, hey. Can the marketing team spend more money? Right? And so, normally normally the CFO says, once the marketing team spend less money. Right?

So I think it’s like a nice opportunity right now and we’re just gonna keep going.

Dylan Carden, Analyst, William Blair: But CACs are only coming down in that with conversion. CACs are actually dollar, absolute CACs are increasing? No.

James Reinhart, CEO, ThredUP: No. No. CACs are

Dylan Carden, Analyst, William Blair: Is that the case in TIMU or is

James Reinhart, CEO, ThredUP: We haven’t talked about, like, the raw dollars, but I think, they’re they’re not they’re not rising on a on a hard dollar basis. And that is not even with Sheen or TIMU. It’s just the the it’s so you might be thinking about CPMs. Yeah. Right?

So, I mean, ad rates might have have been going up, but the CACs because of the conversion rate have actually been coming down.

Dylan Carden, Analyst, William Blair: Interesting. I think I lost my own train of thought there.

James Reinhart, CEO, ThredUP: But then on the you said on the Sheen and on the Timu Yeah. That then has has since mid April, you have seen about a 10 to 15% reduction in ad costs on Google and Facebook, which, you know, our q one numbers were sort of, I think, should be decoupled. Like, it was a strong q one. It was a strong April, CPMs are lower than they were kind of pre pre liberation day.

Sean Sobers, CFO, ThredUP: Marketing team has not stopped asking for more money.

Dylan Carden, Analyst, William Blair: Yeah. Well, and so give me the updated philosophy on growth versus profitability at this point. And and where I was really heading with that conversation is there’s a lot more margin drivers in the business than when you commit to like a 20% structural margin in it. Right? I mean

Sean Sobers, CFO, ThredUP: I mean, I’ll start. I think that this year is all about growth. So we want to get back to like a level EBITDA compared to what we did last year. I think we guided the full year at four percent. For every dollar we’re going beat on that 4% of revenue, we want to put it back into the growth engine to get growth basically regenerated.

We went from, you know, growing at six tenth of a percent last year to we grew 10% in Q one. Right. Let’s reinvest, reinvest in marketing, reinvest in the product, reinvest in operations, bring stuff online and grow basically as fast as

James Reinhart, CEO, ThredUP: we can.

Sean Sobers, CFO, ThredUP: But keeping EBITDA at the same rate as last year. That’s this year is about that growth.

Dylan Carden, Analyst, William Blair: And is the idea that if you accelerate growth to a certain level, then you’ll just naturally start to see the flow through at that point? Yeah. Yeah. Yeah. Okay.

And I I guess also on that kind of logistics side, if you’re growing faster, you know, you speak to, like, not needing to invest in more CapEx until, 2027, thereabouts. Yeah. Does that change that in any capacity? I mean, I’m sure, man, if you’re growing 25%, I’m sure.

James Reinhart, CEO, ThredUP: But Yeah. I think yeah.

Dylan Carden, Analyst, William Blair: There’s a level of growth that you can obtain and still have that be true, I guess.

James Reinhart, CEO, ThredUP: Yeah. We think, you know, between 500 and 600,000,000, the the business can within with its existing footprint can do 5 to 600,000,000 in net revenue. And then the way to think about it is the capacity expansion in Dallas, which is, you know, we already have the full box. We just don’t have it built all the way out. We estimate it’s, I don’t know, 50,000,000 just to keep the math easier.

Right? If you put 50,000,000 in CapEx into that building, that building can generate another 500,000,000 in revenue. Okay. And so So you can basically get, again, numbers, tariffs and steel. There’s a bunch, right?

But like in general, you can we think you can get we can get the business to $1,000,000,000 in revenue with another incremental $50,000,000 in CapEx.

Dylan Carden, Analyst, William Blair: Yeah. That’s good.

James Reinhart, CEO, ThredUP: Good payback.

Dylan Carden, Analyst, William Blair: That’s a good payback. Better than the initial payback.

James Reinhart, CEO, ThredUP: Yeah. Yeah. Mean, we’ve learned a lot and, you know, we’re in a we’re really in our, I mean, realistically, or seventh generation of the of the automated facilities and, yeah, we’ve we’ve learned a lot about how to

Dylan Carden, Analyst, William Blair: make those work. You’ve closed as many facilities as you’ve opened.

James Reinhart, CEO, ThredUP: Right? Exactly. Yeah. Yeah. The

Dylan Carden, Analyst, William Blair: other piece that I want kinda wanted to touch on is just the user experience Mhmm. Which I think is also driving kind of some of the Yes. Conversion rates. Can sort of walk people through how that’s changed in recent quarters and what you’re doing with your data effectively, right, and what you’re doing with your AI is a huge piece of this, so Yeah. Free form.

James Reinhart, CEO, ThredUP: So I think if you go back eighteen months, we we I sort of stood in front of the company about January all hands and January 24, and I was like, we’re kinda burning the boats on the way we used to, like, build product technology. We’re gonna, like, reinvent the product with an AI back end infrastructure. That began this journey of rebuilding the search function. Primarily, we started with search, and so it used to be that, so we had about we had a search team, that worked for about seven years building this, like, search product. Right?

Search is critical, right, to to commerce because that’s how a lot of people shop. Seven years, team of engineers working on this. In ninety days, our new AI team built a far superior search product.

Dylan Carden, Analyst, William Blair: Wow.

James Reinhart, CEO, ThredUP: So then we took that, and they’re still working on on refining it, but then we took that basic infrastructure and then just started to build on top of it. So the whole back end now is fundamentally like an AI driven, back end. Then since then, we’ve layered on, like, image search, which we’ve talked about, which is you can take pictures of anything, you can upload pictures of anything, you can anything you any image of any outfit you find anywhere in the universe, like, you can upload to ThredUp and we will find that item, secondhand. We then launched sort of a sneakily great product, just called similar item search, which is it’s so obvious when you describe it because that’s how people shop, but, like, in practice, like, the technology of k. You’re looking for that white blazer.

Right? Lily. Right? White blazer Lily. She finds it on ThredUp, she’s like, yeah, but I actually want, like, a nicer brand.

Right? You can click one, like, little button and we’ll we’ll find that exact same white white blazer using Image Search, but hundreds of them, and you can filter by brand. Right? You can filter by price point. You can be like, actually, I want it in black.

One tile, same exact. Right? And so it allows you this, like, pivot point in shopping, which is actually, like, how people shop in the real world, which is, you know, shocking. So that worked really well, and then we launched a thing called Style Chat, which was a chat interface for you could basically create any outfit you wanted. So, right, if you were like, hey, I’m going to a conference in Chicago in June, can you come up with a set of outfits?

Like, you can do that right now and work with our, like, style assistant. And then the most exciting one that we launched about a month ago is called Shop Social. So one of the things we think is broken about the way consumers get insight is that you really get insight in your social, like, social feeds of, like, what you see in the universe, TikTok, Instagram, Pinterest. So you got all this social, and then their shopping features just aren’t amazing. Yeah.

Like, they’re kinda clunky. You’re clicking back and forth. So now we’ve built an experience on ThreadUp that you just put the links to your Pinterest shop, the link to your TikTok, the link to your Instagram. We will then ingest that content and use our AI technology to put together a style, an assortment that will just update in real time every time you load it. If you’ve not checked that out, like, it it’s it’s kind of amazing.

And I don’t have a Pinterest. My my 14 year old daughter does. And, like, when I put it in there, like, it it’s just remarkable.

Dylan Carden, Analyst, William Blair: It’s a product recommendation tool, essentially, based on your essentially, your the entire history of your fashion.

James Reinhart, CEO, ThredUP: Yeah. And so if you think about how the user then is interacting, like, they’re doing their customers are doing the social thing. They’re doing their social thing. You’re doing your Instagram thing. You’re doing your TikTok thing.

You’re pinning on Pinterest, and then whenever you load the ThreadUp app and go to your shop shop social feed, we’re just ingesting that. So there’s no, like, cross posting and pasting and tagging. It’s all native into the app, and I I think it’s one of the most exciting things that, like, we’ve that I’ve certainly felt like we’ve worked on, and it still has a long way to go from a UI perspective. Still a little clunky at a point, but I’m pretty excited about What’s that? When did that launch?

It launched last month. Yeah. But we we we rarely at ThredUp talk about new hires, but if you go back and look, we hired a woman named Danielle Vermeer, who worked in Amazon in their resell business and then was CEO of a a company that was sort of the TikTok of thrifting. We hired her in the fall and sort of put her with the team to focus on this, and, it’s pretty fun.

Dylan Carden, Analyst, William Blair: What’s amazing about it is if you go back to, like, the initial appeal of, like, the influencer marketing, it was a trust thing.

James Reinhart, CEO, ThredUP: Yep.

Dylan Carden, Analyst, William Blair: Right? I mean, you were arbitraging consumer trust. Mhmm. And then that obviously ran in the wrong direction.

James Reinhart, CEO, ThredUP: Yep.

Dylan Carden, Analyst, William Blair: Right? Yep. Yep. You’re as good as Johnson and Johnson at this point. So if you’re you’re influencing yourself in any way, right?

James Reinhart, CEO, ThredUP: Yes, exactly. Now you can just do your wherever you’re getting your influence, if you just link that to your Threader profile, we basically and the other thing is people we can literally bring it in, but we can also interpret. Like, a lot people who don’t actually understand even what their style is, and so, it’s kind of amazing when you do some user research and people put their links in there and then it spits out, like, style might be this, and you’re like, I do have a style. Don’t think

Sean Sobers, CFO, ThredUP: I

James Reinhart, CEO, ThredUP: knew that. Right? And so, it’s kind of a fun way to also help help customers.

Dylan Carden, Analyst, William Blair: And so tying it together, so you talked about 95% new customer growth in the last quarter. Yep. I think what total active customers are only up 6%?

James Reinhart, CEO, ThredUP: Yes. Yes. So trail active buyers is a trailing twelve month.

Dylan Carden, Analyst, William Blair: That’s that’s different. Right? Yep. One year so it’s not apples to apples.

James Reinhart, CEO, ThredUP: Right. No. Right. No.

Dylan Carden, Analyst, William Blair: But, I mean, the active customer sort of the retention, right, as opposed to churn

James Reinhart, CEO, ThredUP: Yeah.

Dylan Carden, Analyst, William Blair: And that kind of acceleration in new customers. I mean, 95% presumably is not the number, but sort of how do you think about I mean, tell me if it is, but, how do you kind of think about what this all how this all translates from an active customer growth standpoint?

James Reinhart, CEO, ThredUP: Yeah. I mean, like, historically, we run the business, you know, we acquire new customers, like, they retain over time. Like, we just we just add a new cohort and stack those cohorts over time, and, and that’s how we ran the business for for many, many years. I think then when we pulled back on marketing spend, again, back to, kind of the European piece, when we pulled back on marketing spend, what you saw last year was active buyers declined. We weren’t Yeah.

Adding new customers at the rate that that we had previously. So now we’re sort of back in the new buyer, game and more efficient, better product. And so we expect to kind of stack those cohorts. So you should have some nice outsized new customer growth, right, until sort of a comp Yeah. Into q one of twenty six.

Okay. But When you lap that. Yeah. When you lap that. But but setting that aside, like, q one was the was the greatest number of new customers we’ve ever acquired in the history of the company.

April was the single best month of new customers we’ve ever acquired in the history of the company, and, you know, I think that we feel confident we can we can keep doing that.

Dylan Carden, Analyst, William Blair: Even with more friction points effectively to

James Reinhart, CEO, ThredUP: Potentially. Yep. Yeah.

Dylan Carden, Analyst, William Blair: And the risk of, like, you sort of alluded to the first quarter, the risk of kind of jiggering the algorithm and customer acquisition, do you feel like you kind of have this at a place where there won’t be those kind of major surprises at this point?

James Reinhart, CEO, ThredUP: I I do. I do. I mean, we we definitely made some mistakes in q one of last year around trying to sort of shift the acquisition strategy on on the fly. And in hindsight, think we probably would have done those things differently, but, I think we feel much better now about where retention is and

Dylan Carden, Analyst, William Blair: Because you were trying to essentially stimulate customer stickiness to a discount.

James Reinhart, CEO, ThredUP: Yeah. We were basically

Dylan Carden, Analyst, William Blair: doing it through a better product and experience.

James Reinhart, CEO, ThredUP: Exactly right. And, like, I think what we thought at the time was we needed to acquire better customers, right, that would then retain better. And what we realized, and I joke with Mike, what we realized is that they weren’t the problem. We were the problem. Right?

We needed a better product. It wasn’t the customer that wasn’t good. It was that we weren’t delivering, the mix of goods and the that we needed. And so once we got back on track of just strong customer acquisition and then conversion rate and the product better, we’ve been much better off.

Dylan Carden, Analyst, William Blair: And then just walk through the year, the guide. I mean, kind of how are you thinking about how much you’ve hedged a lot of companies or not a lot of companies, but there’s a handful of companies out there kind of trying to really take down numbers based on consumer sentiment, right? They’re doing it on both sides. They’re taking the margin, which tariffs are not an issue

Sean Sobers, CFO, ThredUP: for you guys. We’re not

Dylan Carden, Analyst, William Blair: talking about tariffs in this meeting, but at least on the You’re be the only meeting all day, Yes, 100% for me at least. So you’re not talking about the margin impact of it, but on the demand side, how much have you kind of hedged this general demand in your category?

Sean Sobers, CFO, ThredUP: So I think we’re such a unique different world than a lot of other So one, we based guidance in q two and full year based on what we saw through April. Yeah. So real live data had nothing to do with tariffs, nothing to do with the de minimis actual being closed.

James Reinhart, CEO, ThredUP: Yep.

Sean Sobers, CFO, ThredUP: And it was real activity what we’re seeing. It it is not about hoping for something or worrying about something. So I think in the unique set case that we’re not worried about that near term future or even the rest of the year as it relates to the guide. I think we’re logical about how we do guidance. Right?

We want to be able to meet our guidance or slightly exceed and that’s kind of our approach, how it’s always been.

James Reinhart, CEO, ThredUP: And I I mean, the consumer sentiment numbers out today that were like not great. Right. Right? And so I think we want to be like thoughtful around, you know, how does Thread up show up in a world where sentiment’s a little sour. You kinda double click into those numbers.

Everybody’s been at a conference today, I managed to double click into them. And, like, what you see actually is it’s really young people are the outlier on negative sentiment. And so Which is our customer. Which is our customer. And so, like, I just think we we have an opportunity to really delight them by delivering, like, great value, but I think we should also be cautious around, like, how they behave over multiple, quarters.

And But I think in any scenario, I think we’re well positioned at this point with the product experience and the selection.

Dylan Carden, Analyst, William Blair: Let’s end there because we’re getting the flashy screen of death here. Thank you everyone for being here. Really appreciate it. Breakout is

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