ThredUp(TDUP)2022-08-16 07:40Financial Data and Key Metrics Changes - Revenue for Q2 2022 was $76.4 million, a 27% increase year-over-year, despite a slowdown in demand towards the end of the quarter [11][31] - Gross profit reached $52.6 million, representing a 19% year-over-year growth, with gross margins at 68.9% overall and 74.2% in the U.S. [11][34] - Adjusted EBITDA loss was $13.5 million, which is a decline compared to the adjusted EBITDA loss of $9 million in Q2 2021 [35][39] Business Line Data and Key Metrics Changes - Consignment revenue remained flat year-over-year, while product revenue grew by 145%, driven by the European acquisition and growth in the Resale-as-a-Service (RaaS) channel [31][32] - Active buyers increased by 29% to 1.7 million, and orders rose by 40% year-over-year, totaling 1.7 million [31][33] Market Data and Key Metrics Changes - The consumer environment has deteriorated, particularly affecting budget consumers, who make up a significant portion of the customer base [9][12] - The average order value for discount shoppers declined by 7%, while upscale shoppers saw a 15% increase in average order value [13] Company Strategy and Development Direction - The company aims to reach adjusted EBITDA breakeven by managing costs and adjusting its business model to adapt to changing consumer behavior [10][20] - Investments are being made in customer experience and operational improvements, including the launch of new features and tools to enhance the shopping experience [20][21] - The company is focusing on its marketplace model's flexibility to adjust pricing and inventory based on consumer demand [15][17] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenges posed by inflation and changing consumer habits, particularly among budget consumers [9][12] - The company expects to maintain strong gross margins and is prepared to adjust pricing and promotions to remain competitive [19][65] - There is a cautious outlook for the second half of 2022, with expectations that current trends will persist without significant recovery [59][60] Other Important Information - The company has made significant cost-cutting measures, including layoffs and reducing discretionary spending, to position itself for profitability [18][40] - The European business is expected to contribute more significantly in Q4, with higher average selling prices and gross margins [83] Q&A Session Summary Question: What needs to go right for breakeven in 2H 2023? - Management expects current trends to persist, with no significant recovery anticipated in the near term [59] Question: Are trends stabilizing or deteriorating? - Trends are stabilizing at lower levels, with management projecting to operate at these levels for some time [63] Question: Are customer acquisition costs coming down? - There is a noted decrease in advertising costs, which may allow for more customer acquisition opportunities [71] Question: What level of promotional activity is assumed in the outlook? - A highly competitive environment is anticipated, with adjustments in pricing and promotions expected [76] Question: How did Remix perform during the quarter? - Remix performed well and is expected to have its strongest quarter in Q4 due to seasonal trends [83] Question: What are the trends in merchandise and pricing adjustments? - Discount shoppers are trading down to cheaper items, while upscale shoppers are buying more expensive items [91]