ThredUp(TDUP) - 2025 Q1 - Quarterly Report

Part I. Financial Information Financial Statements The company's Q1 2025 unaudited financial statements show revenue growth to $71.3 million, a reduced net loss of $5.2 million, and stable assets, following the late 2024 divestiture of its European business Condensed Consolidated Balance Sheets Balance Sheet Highlights (in thousands) | Balance Sheet Highlights (in thousands) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $41,057 | $31,851 | | Total current assets | $60,460 | $56,922 | | Total assets | $172,500 | $171,225 | | Total current liabilities | $65,605 | $61,524 | | Total liabilities | $116,417 | $114,924 | | Total stockholders' equity | $56,083 | $56,301 | Condensed Consolidated Statements of Operations Statement of Operations (in thousands) | Statement of Operations (in thousands) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenue | $71,291 | $64,533 | | Gross profit | $56,371 | $51,713 | | Operating loss | $(5,434) | $(12,395) | | Loss from continuing operations | $(5,215) | $(12,190) | | Loss from discontinued operations, net of tax | — | $(4,364) | | Net loss | $(5,215) | $(16,554) | | Total loss per share, basic and diluted | $(0.04) | $(0.15) | Condensed Consolidated Statements of Cash Flows Cash Flow Summary (in thousands) | Cash Flow Summary (in thousands) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by continuing operating activities | $5,743 | $3,288 | | Net cash provided by (used in) continuing investing activities | $5,075 | $(5,291) | | Net cash used in continuing financing activities | $(1,589) | $(1,480) | | Net change in cash, cash equivalents, and restricted cash | $9,229 | $(5,987) | Notes to Financial Statements Notes detail the Remix divestiture as a discontinued operation, reclassification of revenue reporting, termination of the customer loyalty program, and compliance with debt covenants - In Q4 2024, the company divested its European business, Remix, now reported as a discontinued operation, with all continuing operations discussions excluding Remix results[36][82][88] - Beginning in Q1 2025, the company combined consignment and product revenue into a single 'revenue' line item due to the shift to a primarily consignment model[35][97] - The customer loyalty program was discontinued as of March 31, 2025, with revenue from this program at $1.5 million in Q1 2025, down from $3.7 million in Q1 2024[46] - As of March 31, 2025, the company had $21.3 million outstanding under its Term Loan and was in compliance with all debt covenants[65][67] Management's Discussion and Analysis (MD&A) MD&A highlights Q1 revenue growth to $71.3 million, positive Non-GAAP Adjusted EBITDA of $3.8 million, improved operating leverage, and sufficient liquidity for the next 12 months Key Financial and Operating Metrics Key Metrics (Q1 2025 vs Q1 2024) | Key Metrics (Q1 2025 vs Q1 2024) | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Active Buyers (in thousands) | 1,370 | 1,296 | +5.7% | | Orders (in thousands) | 1,371 | 1,181 | +16.1% | | Revenue (in thousands) | $71,291 | $64,533 | +10.5% | | Gross Margin | 79.1% | 80.1% | -100 bps | | Loss from continuing operations (in thousands) | $(5,215) | $(12,190) | -57.2% | | Non-GAAP Adjusted EBITDA (in thousands) | $3,808 | $1,888 | +101.7% | Results of Operations Revenue increased 10.5% to $71.3 million driven by buyer and order growth, while gross margin declined and operating expenses decreased due to cost efficiencies - Revenue growth was primarily driven by a 5.7% increase in Active Buyers and a 16.1% increase in Orders, reflecting strength in the core marketplace business[98] - Gross margin decreased to 79.1% from 80.1% year-over-year, mainly due to higher outbound shipping, labor, and packaging costs[99] - Operations, product, and technology expenses decreased by $2.0 million, primarily due to a $1.1 million decrease in severance costs from the March 2024 workforce reorganization[100] - Sales, general, and administrative expenses decreased by $2.6 million, mainly from a $3.6 million reduction in personnel-related costs, including a $1.2 million decrease in severance costs from the 2024 reorganization[102] Liquidity and Capital Resources The company generated $5.7 million in positive operating cash flow, holding $55.4 million in liquidity, deemed sufficient for at least the next 12 months - The company generated positive cash flows from continuing operations of $5.7 million for Q1 2025, an increase from $3.3 million in the prior year period[105][109] - As of March 31, 2025, the company had cash, cash equivalents, and short-term marketable securities totaling $55.4 million[105] - Management believes existing cash and available credit will be sufficient for at least the next 12 months and does not anticipate expanding its distribution network in the near term[106] Market Risk Disclosures Primary market risks include immaterial interest rate exposure and significant inflation risk impacting operating costs and potentially customer spending - The company's Term Loan bears a variable interest rate, but a 1% change in rates would not materially impact annual interest expense[117] - Inflation remains a key risk, contributing to rising costs for labor, freight, and other operational expenses, potentially affecting customer purchasing power and revenue growth[118] Controls and Procedures Disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[120] - There were no material changes in internal control over financial reporting during the quarter[121] Part II. Other Information Legal Proceedings, Risk Factors, and Other Disclosures The company is not involved in material legal proceedings, and no material changes occurred to risk factors, unregistered equity sales, or senior security defaults - The company is not currently a party to any material pending legal proceedings[124] - There have been no material changes to the company's risk factors as disclosed in its Fiscal 2024 10-K[125]