The company reported quarterly earnings Wednesday (Aug. 5) showing revenues of $90.8 million, up 17% from the same quarter last year.
New buyers were up 13%, making it the strongest quarter on record for new buyers acquired. Still, management said ThredUp is learning to adjust as spending habits vary according to income level.
“It’s definitely the customer who’s doing better, in this K-shaped economy, is definitely buying for fun and delight and travel,” CEO James Reinhart said during an earnings call.
“We’ve seen a lot of that over the summer for holiday vacations and things like that. Whereas your budget shopper … I think part of the discounting approach is to move some of the staples and sort of basics to that budget shopper, but you have to do that at a lower price than you did 12 months ago.”
The month of June was “grindy,” the CEO added. “You could tell that people needed incentives and promotions to convert.”
To manage this divide, ThredUp is using a two-pronged approach, aggressively discounting aging inventory to move staples for price-sensitive shoppers while maintaining firm pricing on its “fresh” premium listings.
The company is also pivoting its marketing spending away from search-based Google ads toward social media platforms like Meta and Pinterest, where it says it has found stickier, higher-value customers. New customer volume on the two platforms saw significant jumps: 130% for Meta and 145% for Pinterest.
“Brand is a big part of why that shift is working,” said Reinhart. “We believe that those who discover secondhand through creators and culture, rather than through search or promotions, tend to be stickier over time.”
Beyond shifting consumer demographics, the company is betting on artificial intelligence (AI) to manage its catalog of 5 million unique items. Reinhart characterized AI not as a peripheral tool but as the “foundation of everything we build across the enterprise.”
Among the company’s latest AI tools is a “real-time personalization engine” designed to analyze visitor intent within seconds to reconfigure inventory feeds. ThredUp says early testing of this offering found a 7% increase in profit per buyer among new customers.
Meanwhile, the company is lowering its full-year revenue guidance to between $344.4 million and $348.4 million, anticipating a $7 million headwind in the second half of the year due to increased promotional activity.
Chief Financial Officer Sean Sobers noted that while these promotions impact short-term margins, protecting buyer engagement is “essential to creating long-term value.”
