ThredUp Inc. TDUP, one of the largest online resale platforms for apparel, shoes and accessories, delivered preliminary fourth-quarter 2024 results that exceeded all previously issued guidance. The company returned to solid growth in its core business.
Last year in November, ThredUp divested its European business, Remix Global EAD (“Remix”), to streamline the company’s operations and concentrate exclusively on the U.S. market. As a result, the company’s fourth-quarter performance now emphasizes U.S. business operations, which have shown remarkable growth and efficiency.
Management acknowledged that the company’s strategic focus on the U.S. business, combined with the growing influence of AI-driven improvements to the product experience, played a pivotal role in accelerating momentum during the quarter. Moreover, leveraging its infrastructure and marketplace investments significantly boosted margins, positioning ThredUp for growth. The company is optimistic about maintaining this positive trajectory as it moves into 2025, aiming to capitalize on these advancements and infrastructure efficiencies.
Shares of ThredUp have increased 49.7% in the past month against the industry’s 5.6% decline.
TDUP Stock Past Month Performance
Image Source: Zacks Investment Research
TDUP’s Strong U.S.-Only Q4 Preliminary Results Surpass Guidance
ThredUp’s preliminary results for the quarter ending Dec. 31, 2024 highlight total revenues between $66.7 million and $67.2 million, marking a 9% year-over-year increase and surpassing the earlier prediction of $58 million to $60 million. The result shows gross margin in the band of 80.2-80.4%, an improvement from the previously forecasted range of 78.5-79.5%.
Preliminary results indicate an adjusted EBITDA margin of 6.4-6.9%, a significant outperformance compared with flat to 2% adjusted EBITDA margin previously projected. Meanwhile, net loss as a percentage of revenues is in the range of 12-12.6%.
TDUP’s Combined Preliminary Results
For the fourth quarter, ThredUp's combined revenues, which includes Remix’s performance until its divestiture on Nov. 30, 2024, are expected to be between $74.5 million and $75 million, representing an 8% year-over-year decline. However, this is an improvement from the previously forecasted range of $67.2 million to $69.2 million, which indicated a steeper 15-17% decline.
Looking ahead, the company will no longer report combined results or provide a combined outlook, as the business in Europe has been classified as a discontinued operation.
ThredUp’s Strategic Focus for Sustainable Growth
ThredUp is focusing on key strategic areas to drive its growth. It plans to further invest in customer acquisition and retention. The company is also refining its sourcing strategies and pricing algorithms to boost profitability.
The company’s advanced operating infrastructure, supported by automation and efficient processing, is driving record-high contribution margins and strong profitability. ThredUp is expanding its AI-driven innovations, such as AI search, Style Chat and image recognition, to enhance the second-hand shopping experience and increase customer engagement. These strategic areas will be the key component in scaling the business and ensuring sustainable growth in the years ahead.
TDUP’s Investment Analysis
ThredUp’s strong preliminary results for the fourth quarter, coupled with its positive progress in customer acquisition, retention and AI-driven innovations, have drawn attention. The company's strategic shift toward U.S. business, alongside investments in consignment and operational infrastructure, positions it well for continued growth. However, despite these promising developments, ThredUp is not fully immune to challenges in the broader market and macroeconomic environment. Currently, ThredUp carries a Zacks Rank #3 (Hold).
Stocks to Consider
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The Zacks Consensus Estimate for Ollie's Bargain’s current fiscal-year sales and earnings indicates growth of 8.3% and 13.1%, respectively, from the previous year’s reported figures.
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