ThredUp Inc. (NASDAQ:TDUP), an online consignment and thrift store, has reported robust financial results for the third quarter of 2024, surpassing expectations and revising its forecasts upward for the fourth quarter and the full year. The company's Gross Merchandise Value (GMV) saw a 7% year-over-year increase, reaching $457 million, with significant gains in new buyer acquisition and retention.
ThredUp is shifting its focus to the U.S. market, where it is transitioning to a consignment model, now accounting for over 90% of its revenue. Despite a decline in consolidated revenue and active U.S. buyers, the company's gross margin has improved, and innovative AI features are expected to enhance customer engagement and drive sales growth.
Key Takeaways
- ThredUp's Gross Merchandise Value (GMV) grew by 7% year-over-year to $457 million.
- The company is transitioning to a consignment model, which is expected to constitute mid-90s percentage of revenue by 2025.
- ThredUp is divesting its European business, with a management buyout targeted by year-end.
- Adjusted EBITDA has been positive for five consecutive quarters, with U.S. cash flow positivity anticipated for the full year.
- New AI features, including enhanced search, Style Chat, and Image Search, are expected to improve customer engagement.
- Despite a decrease in third-quarter consolidated revenue to $73 million, the U.S. gross margin improved to 79.3%.
- The fourth-quarter U.S. revenue outlook has been raised to between $58 million and $60 million, with full-year projections of $250.8 million to $252.8 million.
Company Outlook
- ThredUp expects to continue its progress into 2025, projecting positive free cash flow and EBITDA margins similar to 2024.
- The company's focus is on enhancing the U.S. business post-EU divestiture.
- Investments in operational infrastructure and AI innovations are aimed at improving buyer acquisition and retention.
Bearish Highlights
- Third-quarter consolidated revenue decreased by 11% year-over-year.
- Active U.S. buyers declined to 1.2 million, with a 10.5% drop in orders.
Bullish Highlights
- The company's premium selling service experienced a doubling in demand immediately after launch.
- AI-based flaw detection is planned for 2025, following the introduction of 360-degree HD photos and automated digital measurements.
Misses
- European revenue declined due to strategic supply reductions and the transition to consignment.
Q&A Highlights
- Executives stressed operational efficiency and marketing investments.
- A new head of merchandising has been appointed to lead improvements.
- Q4 U.S. revenue guidance has been raised to $70 million to $72 million.
ThredUp's CEO, James Reinhart, expressed optimism about the company's growth trajectory, particularly in the U.S. market, following the strategic exit from European operations. The company is set to leverage AI technology and marketing strategies to further enhance its U.S. business. The next earnings call is anticipated in March, where the company will likely provide updates on its progress and outlook for the future.
InvestingPro Insights
ThredUp's recent financial results and strategic shifts have been met with mixed market reactions. According to InvestingPro data, the company's stock has experienced significant volatility, with a 20.37% decline in the past week and a staggering 85.72% drop over the last year. This performance aligns with an InvestingPro Tip indicating that the stock has taken a big hit over the last week and has fared poorly over the last month.
Despite the challenging stock performance, ThredUp maintains impressive gross profit margins, as highlighted by an InvestingPro Tip. This is consistent with the company's reported improvement in U.S. gross margin to 79.3% in the third quarter. The high gross margins could provide a foundation for future profitability as ThredUp continues to streamline its operations and focus on the U.S. market.
However, investors should note that ThredUp is quickly burning through cash, according to another InvestingPro Tip. This is particularly relevant given the company's transition to a consignment model and its investments in AI technology and operational infrastructure. The company's ability to manage its cash burn while pursuing growth initiatives will be crucial for its long-term success.
For readers interested in a deeper analysis, InvestingPro offers 17 additional tips for ThredUp, providing a comprehensive view of the company's financial health and market position. These insights can be valuable for investors looking to understand the full picture beyond the recent earnings report.
Full transcript - ThredUp Inc (TDUP) Q3 2024:
Operator: Good day, everyone. And welcome to the ThredUp Third Quarter 2024 Earnings Call. At this time, all participants are in a listen-only mode. Later, you’ll have the opportunity to ask questions during the question-and-answer session. [Operator Instructions] Please note today’s call will be recorded and we will be standing by if you should need any assistance. It is now my pleasure to turn today’s conference over to Lauren Frasch. Please go ahead.
Lauren Frasch: Good afternoon. And thank you for joining us on today’s conference call to discuss ThredUp third quarter 2024 financial results. With me are James Reinhart, ThredUp CEO and Co-Founder; and Sean Sobers, CFO. We posted our press release and supplemental financial information on our Investor Relations website at ir.thredup.com. This call is being webcast on our IR website and a replay of this call will be available on the site shortly. Before we begin, I’d like to remind you that we will make forward-looking statements during the course of this call, including, but not limited to, statements regarding our earnings guidance for the fourth fiscal quarter and full year of 2024, future financial performance, market demand, growth prospects, business strategies and plans, investments in AI technologies, the company’s intention to exit the European market and to seek strategic alternatives for its European business and our ability to cost-effectively attract new buyers. Words such as anticipate, believe, estimate and expect, as well as similar expressions are intended to identify forward-looking statements. These forward-looking statements are not guaranteed for future performance, involve known and unknown risks and uncertainties, including our ability to effectively deploy new and evolving technologies such as artificial intelligence and machine learning in our offerings, our ability to identify and execute a strategic alternative for the company’s European business, and the effects of inflation, increased interest rates, changing consumer habits and general global economic uncertainty. Our actual results could differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. You can find more information about these risks and uncertainties and other factors that could affect our operating results and our SEC filings, earning press release and supplemental information posted on our IR website. Any forward-looking statements that we make on this call are based on assumptions as of today and we undertake no obligation to update these statements as a result of new information or future events. In addition, during the call, we will present certain non-GAAP financial measures. These non-GAAP financial measures should be considered in addition to, not as a substitution for, or in isolation from, GAAP measures. You can find additional disclosures regarding those non-GAAP measures, including reconciliations, comparable GAAP measures in our earnings press release and supplemental information posted on our IR website. Now, I’d like to turn the call over to James Reinhart.
James Reinhart: Good afternoon, everyone. I’m James Reinhart, CEO and Co-Founder of ThredUp. Thank you for joining our third quarter 2024 earnings call. We are pleased to share ThredUp’s financial results for Q3 and our expectations for Q4 and into 2025. We will provide an update on growth, adjusted EBITDA margin expansion, expectations for free cash flow over the next year and further developments in our new AI products. My remarks on performance will focus on our U.S. marketplace and I will provide an update on the significant progress we’ve made with our EU divestiture. I will then hand it over to Sean Sobers, our Chief Financial Officer, to talk through our third quarter 2024 financials in more detail and provide our outlook for the fourth quarter and full year 2024. As always, we’ll close out today’s call with a question-and-answer session. Before I get into detail on U.S. performance and the balance of my remarks, let me provide some clarity on what’s happening with our EU business, Remix. We’ve made substantial progress in the divestiture of our EU business, having agreed on material terms for a management buyout by Florin Filote, Remix’s current GM and the Remix management team. While we continue to evaluate all strategic alternatives, under the proposed terms, ThredUp is expected to fund Remix with a final cash investment of approximately $2 million and to retain a minority interest in the Remix business. Discussions are proceeding well and we are targeting to close this transaction by year end. Now, turning back to the U.S. marketplace, let me start by saying that we’ve made real progress in course correcting in the U.S. since last quarter. While I won’t belabor the challenges we mentioned in August, I will confirm our view that they were anomalies in our operating history. What gives me confidence in this view is threefold. First, we exceeded our own expectations for Q3 and are raising estimates for Q4 and the year. Second, typically secondhand shopping tends to be slower in Q4 as consumers shift their wallet share to new gifts and new goods for the holiday. Over the past three years on average, our marketplace has trended down seasonally 6% from Q3 to Q4. This year, we are expecting just a 4% seasonal decline. Third, despite our customers facing a more challenging environment, they are still shopping regularly with us. While we don’t typically report gross merchandise value, we thought it useful to add that our GMV is growing 7% year-over-year from $426 million in 2023 to $457 million in 2024 at our midpoint. But as we’ve noted on previous calls, we’ve had to be incrementally more promotional to drive that sale. We see opportunities both in what we’re doing at ThredUp, but also in the macro environment to generate higher willingness to pay and more flow through as we turn the page to 2025. We know there’s work to do in order to return to our more ambitious growth and profit targets, but I’m confident we are squarely back on that trajectory. As such, here are five areas I’d like to highlight that form the building blocks of that confidence. First, on customer acquisition and retention. Q3 was the strongest new buyer acquisition quarter we’ve had in more than two years, a combination of better ad targeting, as well as full funnel conversions. In addition, our new customer retention metrics are strengthening as we improve our product experience and dial in our revised email onboarding and push notification reengagement strategies. Repeat rates for new customers are up 12% over the last few months, with LTV-to-CAC ratios and payback strong. Year-to-date, our predicted paybacks are trending 15% better than they were last year over the same period. We now believe we are back in a position to invest more aggressively in growing new buyers while still achieving our free cash flow targets. As a reminder, active buyers is a lagging metric, so the full impacts of these improvements won’t be seen for several quarters, but we expect active buyer growth to turn positive early next year. Second, on sourcing strategy and our pricing algorithms. Continued refinements in our sourcing strategy and pricing algorithms have allowed us to delight customers with incredible deals, driving strong sell through, and expanding our contribution margins despite the lower exit rate out of Q2. Despite our topline contraction in Q3, we generated more cash flow from operations year-over-year and expanded adjusted EBITDA by nearly 100 basis points. Our unit economics remain as strong as ever, with gross margins up 70 basis points year-over-year to 79.3%. We expect our cash flow from operations will be positive on a full year basis in the U.S. in 2024, and the U.S. will be roughly free cash flow break even for the full year. Adjusted EBITDA in Q3 was positive for the fifth consecutive quarter, and as such, I’ll stop speaking to this as a milestone as we turn our attention to driving net income and positive earnings per share in the future. Third, our consignment transition. Our marketplace is in the final stages of our transition to consignment in the U.S. Consignment revenue now makes up more than 90% of U.S. revenue and it’s expected to trend toward the mid-90s in 2025. While the accounting treatment of consignment goods has muted revenue growth in previous quarters, and will again in Q4, it should have minimal impact into 2025. With consignment rates in the mid-90s, our cash flow from operations, and by extension our negative working capital cycle, will continue to improve as our business grows. Our marketplace model can now really shine with our consignment mix at this level. Fourth, our operating infrastructure. We’ve built an operating infrastructure that continues to prove not just a source of durable competitive advantage, but a source of leverage and future profits. With continued improvements in automation and processing, our variable contribution margins are at record highs, meaning the flow through from the incremental dollar of revenue generates strong bottomline returns. This leverage extends to our Resale-as-a-Service business or RaaS. With RaaS, we see more opportunities to double down on these competitive advantages and use our platform to serve not only our brand clients, but also to potentially partner with and to ultimately power the broader resale and sustainable apparel ecosystem. We are more ambitious than ever with our goal of ThredUp being the underlying infrastructure for the vast majority of resale, branded or otherwise, on the internet. With only maintenance and modest CapEx expenditures in front of us, our distribution centers are primed to continue providing additional leverage over time. As a reminder, we don’t expect to need any additional capacity in our network until at least 2027, when we should be able to fund any additional capacity through cash generated from the business. Finally, our generative AI product and technology investments. We have continued to improve the customer’s experience in significant ways. And we continue to believe that AI disproportionately benefits our marketplace relative to other marketplaces and retailers. And the generative AI can significantly enhance the secondhand shopping experience. For years, our dream was to build a secondhand shopping experience that was indistinguishable from shopping new. Advancements in generative AI are quickly making that a reality. Let me double click into a few areas that we introduced last quarter and provide a product update. First, our AI search functionality is now deployed across our platform, bringing a much more robust shopping experience to every journey. This technology is quickly becoming the foundation for all of our onsite merchandising, email, ad tech and marketing campaigns. In fact, TIME Magazine just last week recognized our new AI search technology in its prestigious 2024 Best Inventions List. Second, Style Chat helps customers shop intuitively by inspiration and occasion, bringing engagement and fun back to the secondhand shopping experience. This foundation will power new social commerce features launching in 2025, empowering creators, influencers and affiliates to curate and showcase our 4 million plus items and build compelling secondhand destinations to celebrate the endless expression of thrift. Third, Image Search lets you import any photo into ThredUp’s mobile experience to find premium looks that match your style. The adoption of Image Search has been rapid as customers have made it one of their go-to tools to find what they want on ThredUp for a fraction of what they would pay for it new. This experience is the powerful trifecta of combining Image Search tech, data infrastructure and our vast assortment of available secondhand items. We know shifting consumer behavior takes time, but we’re seeing these new tools unlocking that shift for us. We just concluded a launch of Image Search for Halloween costumes and saw a 16% bump in adoption and usage remained sticky afterwards. We are now able to thematically capture cultural moments, emerging trends or long-tail niche demand with scalable solutions that would not have been possible just 12 months ago. Up next, Ugly Holiday Sweaters. Fourth, beginning this month, we will launch 360-degree high-definition photos for newly processed items in our DCs, giving customers richer information about every item. This will be coupled with new automated digital measurements rolling out by year-end and AI-based flaw detection coming in 2025. While these seem routine, photo quality, flaw detection and measurement accuracy, they are critical friction points in shopping secondhand online. All three are getting a big upgrade on ThredUp over the next few quarters. We should see this translate into improved conversion, lower returns and increased customer retention. Finally, we introduced our premium selling service to 100% of sellers. While you can still get a standard clean-out kit or send items in for donation, our premium service is targeted for customers with high confidence in the quality and desirability of their items. Upon launch, demand for this service doubled overnight, demonstrating the need for premium options on ThredUp. The service is priced higher at $34.99 per bag, with more power tools for sellers such as longer consignment windows, a floor on discount deductions from payouts and more dedicated customer support. We are continuing to innovate on behalf of sellers. Whether you want us to do all the work, you want to do more of it yourself or somewhere in between, we remain relentless in our pursuit of making ThredUp the leading choice to sell secondhand apparel online. We believe this will expand our TAM and at the same time, our sustainability impact. Before I turn it over to Sean, I want to close with a celebration of my ThredUp teammates and all their hard work over the past quarter. It’s been a tough few months, no doubt about it, but we’re back on track with strong momentum in our marketplace and exciting opportunities in front of us. I can’t wait to see what we invent next on behalf of our customers. Now over to you, Sean.
Sean Sobers: Thanks, James. I’ll begin with an overview of our results and follow up with guidance for the fourth quarter and full year of 2024. I will discuss non-GAAP results throughout my remarks. Our GAAP financials and a reconciliation between our GAAP and non-GAAP measures are found in our earnings release, supplemental financials and our 10-Q filing. As James mentioned earlier, we’ve made significant progress in the divestiture of our EU business and are planning to close the transaction by year end. For this reason, I will be primarily focused on our U.S. results this quarter. We are providing the U.S. P&L plus the last six quarters in our supplemental financials. I will briefly discuss our consolidated results, but I would encourage investors to focus on our U.S. results as they are representative of our go-forward business. For the third quarter of 2024, consolidated revenue totaled $73 million, a decrease of 11% year-over-year. In Q3, the U.S. achieved net revenue of $61.5 million, down 9.6% over last year. U.S. active buyers were 1.2 million, while orders were 1.2 million, a 7.3% and a 10.5% decline, respectively. While our active buyers were impacted by our missteps earlier in the year, our revenue performance exceeded the midpoint of our guidance by $1.5 million. For the third quarter of 2024, consolidated gross margin was 71.2%, a 220-basis-point increase over the same quarter last year. The U.S. achieved gross margin of 79.3%, a 70-basis-point improvement over last year, and 80 basis points above the midpoint of our outlook. Despite a highly competitive consumer environment, we are pleased to deliver both sequential and year-over-year improvement, driven by the final phase of the consignment shifts and improving union economics. For the third quarter of 2024, consolidated GAAP net loss was $25 million, while adjusted EBITDA loss was $2.5 million. In the U.S., we generated $700,000 of adjusted EBITDA in Q3 or 1.1% of revenue. This result is $500,000 higher versus last year and our fifth consecutive quarter of positive adjusted EBITDA in the U.S. Turning to the balance sheet, we began the third quarter with $60.7 million in cash and securities and ended the quarter with $60.6 million, using $100,000 in cash in Q3. The U.S. generated $3.9 million in cash flow from operations. We are very proud of the strides we are making on our path to free cash flow. Year-to-date, on a consolidated basis, we’ve consumed $5.6 million, which is entirely attributable to the EU, compared to $28 million last year. Importantly, in the same period, the U.S. is breaking even. Now I’d like to turn to guidance. We are raising our U.S. revenue outlook to account for the favorable trends we are seeing in the U.S. business. We remain cautious on the outlook of our consumer in an uncertain post-election economy and anticipate a highly promotional Q4. However, we are seeing a return to our underlying fundamentals and are beginning to see the positive impact of customer experience improvements we’ve made throughout the year. Current trends provide us with the confidence to raise our Q4 revenue outlook and narrow our gross margin expectations. We are reiterating our Q4 EBITDA margin outlook as we invest in processing and marketing to fuel momentum into 2025. As we look into next year, our early planning process contemplates 2025 U.S. net revenue growth a flat to slightly up on similar EBITDA margins as in 2024. In addition, we expect to be free cash flow positive on an annual basis as we are planning our CapEx needs to remain at approximately $8 million in the U.S. With all of this in mind, in the U.S., the fourth quarter, we now expect revenue in the range of $58 million to $60 million, representing a 4% decline at the midpoint and $1 million higher than our previous outlook. Narrowing gross margin range of 78.5% to 79.5%, 150 basis points higher over the last year at the midpoint. Reiterating adjusted EBITDA of zero percent to a positive 2% of revenue and basic weighted average shares outstanding of approximately 114 million shares. For the full year of 2024 in the U.S., we now expect revenue in the range of approximately $250.8 million to $252.8 million, $2.8 million higher at the midpoint, incorporating our Q3 beat and our higher Q4 outlook. Gross margin in the range of approximately 79.2% to 79.4%, 250 basis points higher over last year at the midpoint. Positive adjusted EBITDA of 1.6% to 2.1% of revenue, a $10 million improvement year-over-year at the midpoint, and basic weighted average shares outstanding of approximately 114 million shares. In closing, we are pleased to have a challenging two quarters behind us, but we know there is still work to do. We are excited to raise our revenue outlook for Q4 while still investing in revenue-driving processing power that should fuel momentum into 2025. We are making progress on our EU divestment and are looking forward to exiting the year as a U.S.-only business with gross margins approaching 80%. Positive adjusted EBITDA and improving free cash flow dynamics. James and I are now ready for your questions. Operator, please open the line.
Operator: [Operator Instructions] We’ll take our first question from Ike Boruchow with Wells Fargo (NYSE:WFC). Please go ahead. Your line is open.
Ike Boruchow: Hey, everyone. Two questions from me. I think, James, three months ago, obviously, we were taking down the U.S. expectations. There were some issues. Now, you’re raising expectations for 4Q. So, I’m just curious underlying that. What exactly are you looking at? What KPIs would give you that kind of confidence? Then just margins into next year, obviously, we’ve got the noise with the reported EBITDA margin and the U.S. margin around 2024. [Audio Gap]
James Reinhart: I think we expect to grow faster. I think we expect EBITDA to be better, really driven by better gross margins, better contribution margins. So a difficult couple of months in last quarter, but I think we’ve really turned the corner. The ability to focus really on the U.S. business, I think, is the other piece. So, I think the EU has been a distraction, as we’ve acknowledged. I think once we’ve turned all of our attention to the U.S., you can really see those results start to materialize. I’ll let Sean talk about some of the financials.
Sean Sobers: Yeah. I would add, just like a piece of color, but on a financial side, is if you go back to the IPO on contribution margin, we talked about it when we went public as about 27%. Since then, we’ve improved over 1,000 bps. And we’re taking that improvement, I think, as you go from 2024 to 2025, as we increase revenue, to basically reinvest into the growth of the business. That’s why I think you’re seeing similar to slightly better EBITDA rates as you get in to 2025 versus 2024.
Ike Boruchow: Awesome. Thank you.
Operator: And we’ll take our next question from Bernie McTernan from Needham & Company. Please go ahead. Your line is open.
Bernie McTernan: Great. Thanks for taking the question. Maybe just to start talking about moving to a U.S.-only business. Just -- any incremental color you guys can provide in terms of how a manager will be spending their time and allocating resources, basically trying to get a sense in terms of where the incremental investments would be going? And then just as a follow-up, I would love just any additional color on some of the new AI or product initiatives like Style Chat, Image Search. Is that driving new buyers to the platform? Is it increasing retention? Just trying to get a sense in terms of how we should be seeing these flow through the financials.
James Reinhart: Sure. Hey, Bernie. Yeah. And I think if you go back before we had the European business, we spent a lot of time talking about the fundamentals in the U.S. business, really the competitive advantage being the marketplace model, our data advantage and our infrastructure. And I think now as we are back to being U.S.-only, we’re really doubling down on those three things. Improvements across our operating infrastructure, whether it’s innovation in our DCs or AI in the product features, I think all of our attention has really been focused back on the U.S., and I think you really started to see the fruits of that in Q3 across the product team, the ops team, the finance team. And so -- I think there’s a lot of optimism that now without some of the distraction and the challenges of the EU business, we can make progress faster. But I think from a resource allocation perspective, one of the things that was challenging over the past few quarters was we didn’t feel the freedom to invest in the U.S. business as deeply because we still had to manage the cash consumption of the EU business. I think now without that drag and overhead, I think there’s a freeing feeling of, okay, how do we get the U.S. business to grow faster to generate more contribution margin over time. So I think that’s what you should see from us over the next few quarters is really resources in the U.S. driving growth. And I think that reflects why the EBITDA, as we get into 2025, it’s -- we’re not declaring victory through driving incremental EBITDA dollars. I think we’re really focused on the underlying fundamentals of growth in the business, which is marketing and operations. As for your question about AI and its impact, look, I think it’s up and down the funnel. So I think from an ad tech and targeting, I think we’re using AI to provide better photography, to provide better image tagging, whether we’re using that on Google (NASDAQ:GOOGL) or Meta (NASDAQ:META). I think once customers get onto the platform, the power of our new search product is helping customers find items they want more quickly. I think it’s giving them confidence that the results are something that’s attractive to them. Then just the retargeting and remarketing piece, really being able to use our image search technology. If you find an item that’s sold out, the ability to say, hey, here’s an item that’s just like that one using a visual search. So, all those little things, I think, have added up a few bps at a time to drive customer adoption and customer conversion. So, I think you’ll see more and more of that as we get into 2025. I think, fundamentally, the product is going to be better.
Bernie McTernan: Great. Thanks. Thanks, James.
Operator: [Operator Instructions] We’ll take our next question from Dylan Carden with William Blair. Please go ahead. Your line is open.
Dylan Carden: Yeah. Thanks. Just on the marketing line, you kind of touched on it a little bit there, but you’ve had some nice dollar declines on that item this year, including the third quarter, and then you’re sort of speaking to improvement in buyer acquisition and retention. Can you kind of speak to addition, please? It’s a big piece of that that’s away from Europe. and in the next year, would you expect to invest more in marketing? And I have more other follow-up. Thanks.
James Reinhart: Hey, Dylan. Yeah. I mean, I think, thanks for pointing that out. I mean, look, I think, we had a great acquisition quarter in Q3 and you’re right, that was with roughly the same or a little bit less marketing year-over-year. And I think that speaks to why the CACs have been strong and why our LTVs -- LTV-to-CAC ratios have improved. So, again, I think, the lessons in Q2 were painful, but I think it did unlock some fresh thinking around the way we were going to approach acquisition, the way we were going to approach retention, and I think the team really delivered that in Q3. And so, I think, it gives us confidence as we get into Q4 and into 2025 to not just take that playbook, but to improve upon it. We want to continue to spend dollars on the marketing side to acquire customers, and I think that we can continue to have the same types of efficiency we’ve had in Q3 and into Q4. Despite, Dylan, a sort of rocky macro in a presidential election year, I think, the team has done a great job despite those challenges. And so, as you get into 2025 without that, you should see some opportunity. And we need to combine the marketing investments with strong merchandising. We have a new head of merchandising at ThredUp who I think will really improve the work we’re doing. And the operations team is continuing to improve the product experience on the operations side. So things like 360 degree photos and automated measurements, these are, Dylan, all the little things that help the marketing dollars work harder, and I think when you line all those up together, really good things can happen and I think that’s what’s giving us some confidence as we close out the year.
Dylan Carden: And just to be clear, the $70 million, $72 revenue guidance report, has that still got Europe in it, right?
Sean Sobers: Yeah. Yeah. We’ve given you both the U.S. guidance standalone, as well as the total consolidated guidance, too, so you can see that in the press release, as well as the supplemental financials.
Dylan Carden: Sorry about that. And the deceleration in Europe, looking at those numbers, can you explain that a little bit? I guess there’s a reason for staying somewhat invested. What do you think of that?
Sean Sobers: Yeah. No. I mean, I think this is to some degree by design. They’re reducing some of their supply at much lower margins which is going to reduce revenue in the near-term as they transition to consignment. I think this is what we expected. So you’ve seen revenue shrink, you’ve seen EBITDA dollars shrink, but I think they’re well on their way to getting to the point and designing that business the way it should be designed and run. 18-plus months out, I assume they’ll be very successful, but in the near-term, they’re still going through the transition and it’s just taking a little while.
James Reinhart: Yeah. And Dylan, I just add, just to be really clear, we’re raising the estimates for Q4 in the U.S. and the consolidators are just down because of Europe coming down per Sean’s comments by design. I think Florin team has done a really, really great job kind of rightsizing that business, where to deploy the dollars. I think the turnaround is underway and I think those guys will be successful, but I didn’t want anything to get lost in translation, right? We’re really focused on the U.S. business and I think we want investors and the community to really focus on the U.S. guidance and what we’ve been doing here.
Dylan Carden: Thank you very much.
Operator: [Operator Instructions] There are no further questions on the line. I’ll return the program to our speakers for any closing remarks.
James Reinhart: Thank you, everyone, for joining our Q3 earnings call. Really great to be able to share the positive news coming out of this quarter and the confidence we feel as we turn the page. I want to thank all the ThredUp teammates for all their hard work over the past quarter. We know it’s been difficult at moments, but it’s really exciting to see the progress and the momentum. And we look forward to keeping posted on what’s next, our next call in March. Thanks.
Operator: This does conclude today’s program. Thank you for your participation and you may now disconnect.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.