ThredUp(US:TDUP)2022-11-15 02:24Financial Data and Key Metrics Changes - Revenue for Q3 2022 was $67.9 million, representing a 7% year-over-year increase [38] - Active buyers rose 18% year-over-year to 1.7 million, while orders increased 24% year-over-year to 1.6 million [41] - GAAP net loss for Q3 2022 was $23.7 million, compared to a net loss of $14.7 million in the same quarter last year [43] - Adjusted EBITDA loss was $11 million, primarily due to planned investments in operating infrastructure and technology [11][43] Business Line Data and Key Metrics Changes - Consignment revenue decreased year-over-year, while product revenue grew by 74%, driven by the growth of the RaaS supply and the European acquisition [39] - Gross margin for U.S. operations declined slightly to 72.4%, a 40 basis point decrease year-over-year [41] - Consolidated gross margin was 65.5%, a 740 basis point decline due to the consolidation of the lower-margin European business [42] Market Data and Key Metrics Changes - The company observed a deterioration in consumer health towards the end of Q2, which continued into Q3, impacting revenue [12] - The promotional environment in Q4 is expected to be highly competitive, affecting revenue projections [48] Company Strategy and Development Direction - The company aims to reach adjusted EBITDA breakeven in the second half of 2023, assuming quarterly revenue of $80 million to $85 million [45] - Investments are being made to improve the buying experience and enhance the RaaS business model, which is expected to drive long-term profitability [30][27] - The company is focusing on expense management and reducing operating costs while maintaining strong unit economics [25][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the challenging consumer environment and believes that the resale market will gain share as retail inventory positions improve [15][36] - The company anticipates that the hyper-promotional landscape will subside, allowing it to compete effectively once again [51] - Management noted that consumer behavior is changing, with a growing expectation for lower prices, which could benefit resale in the long term [15] Other Important Information - The company is making significant improvements to its infrastructure, including a new high-tech processing and distribution center in Bulgaria [28] - The company released its inaugural impact report, highlighting its commitment to environmental, social, and governance (ESG) initiatives [32] Q&A Session Summary Question: What macro expectations underpin the view of flat growth in the first half of 2023? - Management indicated that the plan assumes the extreme promotional environment and inventory excess will have subsided [54] Question: How have budget value consumers trended in Q4? - Management noted that both budget and premium shoppers are currently sitting out, impacted by early promotions and a competitive environment [57] Question: What is the outlook for return rates in Q4? - Management expects return rates to remain elevated, similar to Q3, which negatively impacted revenue by approximately $3 million [71] Question: What are the expectations for the RaaS business in 2023? - Management is optimistic about RaaS growth, expecting more retailers to consider circular economy strategies as inventory positions improve [74] Question: How is the marketing budget planned for next year? - Management sees attractive acquisition costs and plans to ramp up marketing efforts in Q1 after the holiday season [82]