ThredUp Q3 Earnings Call Highlights

Key Points

• Q3 revenue rose 7.4% to $88.2 million, while GMV increased 20% as items sold grew 17%; deeper discounts constrained revenue per item and gross margin fell 120 basis points to 78.2%.
• ThredUp cut its Q4 outlook to revenue of $77 million–$79 million and an adjusted EBITDA margin of negative 4% to negative 2%, citing heavier competition, softer October spending and a challenging holiday season. For full-year 2026, it expects 9% revenue growth at the midpoint and positive cash flow.
• The company is expanding live selling and other initiatives: ThredUp said live-selling prices were higher than on its core marketplace and 75% of buyers on Whatnot were new customers, though these efforts remain early-stage.

ThredUp NASDAQ: TDUP lowered its fourth-quarter outlook as promotions, weaker spending among budget-conscious shoppers and competition from peer-to-peer resale platforms put pressure on revenue per item, executives said on the company’s third-quarter 2026 earnings call.

The online secondhand retailer reported third-quarter revenue of $88.2 million, up 7.4% from a year earlier. Gross merchandise value, or GMV, rose 20% as the company sold 17% more items, but CEO and Co-Founder James Reinhart said heavier discounts held back revenue growth.

ThredUp now expects fourth-quarter revenue of $77 million to $79 million, a 2% year-over-year decline at the midpoint. The company also expects an adjusted EBITDA margin of negative 4% to negative 2% for the period.

“The big change from last quarter” was the visibility into the scale of competitive spending, Reinhart told analysts. He added that October was softer than anticipated and that the company expects a challenging holiday season, traditionally its weakest quarter.

Discounts Weigh on Revenue per Item

Reinhart said the price customers paid per item rose from $19 to $21 between the fourth quarter of 2024 and the second quarter of 2026. Beginning in June, that figure fell to $18 and has remained there, even as the company’s premium product mix expanded.

The CEO said ThredUp has tried to protect pricing on newer inventory while applying deeper discounts to older items. Products that previously sold for $20 after 45 to 90 days may now sell for $17 or $18, he said.

Despite the pricing pressure, customer activity reached new highs. ThredUp ended the quarter with 1.8 million active buyers over the trailing 12 months, up 16% year over year, and recorded 1.9 million orders, up 17%. Conversion improved 13%, while retention from a first to a second order increased 12%, Reinhart said.

Third-quarter gross margin was 78.2%, down 120 basis points from a year earlier. The company reported a GAAP net loss of $5.5 million, compared with a $4.2 million loss a year earlier. Adjusted EBITDA was $3.5 million, or 4% of revenue.

Competition and a Cautious Outlook

Reinhart estimated that peer-to-peer competitors could spend as much as $500 million on marketing and order subsidies in the second half of 2026, plus shipping subsidies. He estimated the competitive pressure would account for about $5 million of the fourth-quarter impact, with broader consumer and holiday retail conditions making up the rest.

The CEO said some budget shoppers were moving to Vinted and that ThredUp was also seeing some share shift to Depop. He said the company had not observed an impact on its sellers. CFO Sean Sobers characterized ThredUp as being caught in the “crossfire” of competitors’ spending rather than directly targeted.

For full-year 2026, ThredUp now expects revenue of $337.7 million to $339.7 million, representing 9% growth at the midpoint. It forecasts an adjusted EBITDA margin of 2.4% to 2.8% and continues to expect positive cash flow for the year.

Sobers said preliminary planning for 2027 assumes no improvement or deterioration in the current macroeconomic and competitive environment. On that basis, the company anticipates low-single-digit revenue growth, a flat adjusted EBITDA margin versus 2026 and continued cash generation. A more detailed outlook is expected on the company’s fourth-quarter earnings call in March.

Live Selling and Other Initiatives

ThredUp is investing in live selling, artificial intelligence-enabled shopping and creator storefronts as it responds to the competitive environment. The company launched its first live shows on Whatnot in late September and expects to have up to 10 studios and dozens of hosts streaming up to 18 hours a day across multiple platforms by year-end.

Reinhart said 75% of customers who bought from ThredUp Live on Whatnot had never purchased from ThredUp before. For similarly aged items, the median live-selling price on Whatnot was 52% higher than on ThredUp’s core marketplace, he said. Buyers also pay for shipping, returns are fewer and fulfillment can use existing distribution infrastructure, resulting in superior unit economics, according to the CEO.

The company’s direct-selling offering, which launched widely in June, is operating at an approximately $10 million GMV run rate, Reinhart said. ThredUp slowed its growth in late August to refine shipping, cart and checkout features but plans to accelerate the offering for the holiday season.

Sobers cautioned that the newer initiatives are still in their early stages and contribute only a small amount to the preliminary 2027 outlook.

About ThredUp (NASDAQ:TDUP)

ThredUp Inc operates an online resale platform for secondhand apparel, shoes and accessories. Through its marketplace, consumers can shop for pre-owned women's and children's clothing and related products, while individuals can send in unwanted items for resale through the company's “Clean Out” service.

ThredUp manages much of the resale process, including receiving, inspecting, photographing, pricing, listing and fulfilling merchandise. The company also provides resale-as-a-service solutions that enable brands and retailers to offer or support secondhand programs, helping them participate in the growing circular fashion market.

Founded in 2009, ThredUp initially focused on children's clothing before expanding into women's apparel and broader fashion categories.

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