ThredUp (NASDAQ:TDUP) reported fourth-quarter 2025 results highlighted by double-digit revenue growth, record gross margins, and continued adjusted EBITDA profitability, as management emphasized the benefits of operating as a streamlined, U.S.-focused business and outlined priorities for 2026 centered on buyer growth, supply expansion, and AI-driven product improvements.
Fourth-quarter results driven by buyer growth and premium supply
CEO and co-founder James Reinhart said the company delivered 18.5% year-over-year revenue growth in the fourth quarter, with gross margin of 79.6% and adjusted EBITDA margin of 3.7% of revenue. CFO Sean Sobers said quarterly revenue totaled $79.7 million, and the performance was driven by investments in new buyer acquisition, continued LTV-to-CAC efficiencies, and inbound processing.
Gross margin declined 80 basis points year-over-year, though Sobers said results exceeded internal expectations due to higher average selling prices tied to growth in premium supply offerings. Adjusted EBITDA was $2.9 million, and Sobers noted the year-over-year decline in margin reflected the company’s ability this year to invest more efficiently to support future growth.
Full-year 2025: record revenue and positive free cash flow
For full-year 2025, Reinhart said ThredUp delivered record revenue of $310.8 million, representing 20% year-over-year growth, and maintained a premium gross margin profile at 79.4%. He said the year included record 1.7 million active buyers, up 30% year-over-year, and record volume of 21.1 million items processed, representing more than 17% growth.
Adjusted EBITDA for the year totaled $14 million, or 4.4% of revenue, according to Reinhart. He also said ThredUp generated adjusted EBITDA in every quarter over the past two years and produced positive free cash flow for the full year in 2025.
On the balance sheet, Sobers said the company began 2025 with $52.8 million in cash and securities and ended with $53.1 million. He said the company invested $10.5 million in capital expenditures during 2025 and expects similar CapEx levels in 2026 while expanding free cash flow.
Strategy shifts: U.S.-focused model, supply innovation, and AI tools
Reinhart framed 2025 as the first full year operating as a dedicated U.S. enterprise following the exit of European operations, and he said the company completed a multi-year accounting transition to a fully consignment-based model, with more than 90% of the business now on consignment. He said removing those “historical headwinds” has established a baseline of more predictable growth and operating leverage.
Reinhart also said the company experienced little impact during “large tariff disruptions of 2025,” citing a supply base that is “wholly on consignment and U.S.-sourced.”
On supply, management highlighted multiple initiatives:
- Premium Kits: Reinhart said kit requests grew 36% year-over-year in 2025 and that Premium Kits, launched early in the year, represented 17% of supply for the full year. In Q&A, he said premium reached the “high teen” mix by Q4 and contributed to higher ASPs, particularly around holiday categories such as handbags, dresses, and shoes.
- TikTok Shop: Reinhart said ThredUp sold more than 100,000 cleanout bags through TikTok Shop in January, and 97% of those orders came from brand new suppliers. He said the company is experimenting with TikTok LIVE and creator affiliates and is processing those bags to evaluate the mix and quality of goods.
- Resale-as-a-Service (RaaS): Reinhart said the company’s RaaS footprint expanded since the prior call to include LANVIN, Steve Madden, and Betsey Johnson.
- Direct Listings beta: Reinhart said ThredUp has been rolling out Direct Listings deliberately, targeting approximately 10% weekly growth, and now has thousands of buyers and sellers in the beta. He said sellers are listing “10x more items” than expected, sell-through has been as expected, and average selling price is “much, much higher,” at more than $70. He added that customers have responded positively to ThredUp handling returns, and the company continues weekly updates, including bulk import, direct messaging, and an offer function. Reinhart said 50% of new listings are now coming from bulk import.
On AI, Reinhart said ThredUp has used emerging models to improve search and discovery, ad buying, recommendations, photography, measurement, and flaw detection. He highlighted “The Daily Edit” and “The Trend Report” as AI-driven features and described plans to use “agentic AI” to create a more personalized shopping journey. He also pointed to “Dottie,” an AI customer service agent that he said has reduced human escalation rates and increased customer satisfaction scores.
Macro view: cautious consumer backdrop, value proposition emphasized
Reinhart said he continues to believe the U.S. consumer may be weaker than headline data suggests, citing anemic job growth in 2025, BLS revisions, and the New York Fed’s view that nearly 90% of the 2025 tariff burden fell on firms and consumers. He also pointed to higher non-discretionary costs such as rent and insurance. While he called discretionary spending conditions “uncertain,” he argued ThredUp’s marketplace model is positioned to benefit as consumers seek value and liquidity from items in their closets.
2026 outlook: measured guidance with seasonal cadence and margin expansion plan
Sobers provided initial guidance for the first quarter and full year 2026, while stressing typical seasonality and a cautious posture on the consumer environment. He said Q1 is expected to be the smallest quarter for both revenue and EBITDA dollars due to post-holiday “hangover” effects, followed by acceleration as supply processing and marketing ramp.
- Q1 2026 guidance: revenue of $79.5 million to $80.5 million (12% year-over-year growth at the midpoint), gross margin of 78% to 79%, and adjusted EBITDA of approximately 3% of revenue. Basic weighted average shares outstanding are expected to be about 128 million.
- Full-year 2026 guidance: revenue of $349 million to $355 million (13% year-over-year growth at the midpoint), gross margin of 78% to 79%, and adjusted EBITDA of approximately 6% of revenue, representing more than 150 basis points of expansion versus 2025. Basic weighted average shares outstanding are expected to be about 130 million.
In Q&A, Reinhart said the company is not seeing anything “materially different” in the business, but is being thoughtful given uncertainty and prefers to “print the quarters, not guide the quarters.” Sobers said he expects Q2 to show the highest revenue growth rate of the year, with moderation in Q3 and Q4, and said both EBITDA dollars and EBITDA rate are expected to be higher in the second half than the first half.
Addressing margin expansion despite slightly lower gross margin guidance, Sobers said marketing is expected to be at a similar percentage of revenue year-over-year, with EBITDA improvement driven by leverage in SG&A and operations, product, and technology (OP&T). He also said ThredUp’s long-term gross margin target range, referenced from the IPO period, was 75% to 78%, and that the 78% to 79% outlook provides flexibility for initiatives that could be modest headwinds to gross margin but supportive of the overall business.
Reinhart said customer acquisition costs are expected to increase “a little bit” as ThredUp scales marketing, but he expects at least as many new buyers in 2026 as in 2025. He also said product work in 2026 is focused more on retention and expanding three- and five-year LTV, including efforts to make ThredUp a “go-to” destination for more of a customer’s total closet needs.
About ThredUp (NASDAQ:TDUP)
ThredUp, Inc operates an online consignment and thrift platform that enables consumers to buy and sell secondhand clothing and accessories. Through its digital marketplace, the company offers curated selections of apparel for women and children, spanning a broad range of brands and styles. Sellers can order a “Clean Out Kit” to send in items they no longer wear, while buyers benefit from discounted prices and a simplified shopping experience powered by ThredUp’s in-house authentication, quality control and logistics capabilities.
In addition to its core consumer-to-consumer marketplace, ThredUp has expanded into business-to-business services with its Resale-as-a-Service (RaaS) offering.
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