Clarify if "more promotional" means adjusting price or traditional discounts, and what's driving the EBITDA margin hit.

Promotions are focused on discounting aging inventory, not fresh, new listings, to protect brand equity and willingness to pay for new products. The EBITDA hit is primarily due to reduced revenue from promotions, combined with continued investment in marketing and processing, as the company believes the macro headwind is temporary. “we're really emphasizing discounts on, on aging inventory... we're not discounting that, that way. product, we're discounting older inventory.”

What drives the belief that price-sensitive consumer weakness is temporary, and how should ASP be modeled?

The weakness is linked to higher gas prices affecting budget customers (under $60k/year), a segment the company is actively shifting away from. Growth among higher-income customers ($100k-$150k/year) is significantly stronger. ASPs are not expected to move down for 2027, as the current discounting targets older inventory, while the mix of goods is generally improving and prices are going up. “we think that the higher gas prices that have come from, you know, conflict in the Middle East, I think, you know, are weighing on, again, over this sort of budget customer.”

What limits the mix strategy from being better (supply/demand), and what's new in AI, can it offset weaknesses?

The company is successfully shifting buyer mix towards premium through Meta/Pinterest, and premium supply is also increasing. AI's most impactful work is real-time personalization, which is driving conversion rates for new buyers and visitors, amplifying the acquisition engine. AI is helping to offset some weaknesses by improving conversion. “the most impactful work we're doing is what I commented on, which is just the ability to real-time personalize. We're seeing lift in that for window shoppers, for our new buyers.”

TDUP

ThredUp (TDUP) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Consumer Discretionary· Aug 5, 2026

Source: earnings call transcript

Executive summary

ThredUp Q2 FY26 — Strong Buyer Growth Despite Promotional Environment

ThredUp delivered strong Q2 FY26 results, exceeding internal expectations across revenue, gross margin, and adjusted EBITDA, driven by record new buyer acquisitions and active buyer growth. However, a challenging consumer environment necessitated increased promotional activity, impacting average selling prices and leading to a revised, more cautious outlook for the second half of the year. The company is prioritizing buyer engagement and shifting its customer mix towards more premium segments, leveraging AI for personalization and efficiency, while navigating temporary macroeconomic headwinds.

Highlights

Revenue was $90.8 million, up 16.9% year over year, exceeding internal expectations.
Gross margin was 79.9%, up 40 basis points year over year, driven by improved efficiency.
Adjusted EBITDA was $4.8 million, or 5.3% of revenue, outperforming internal expectations.
Active buyers grew 21% year over year to 1.8 million on a TTM basis, reaching record levels.
New buyer acquisitions were up 13.1% year over year, marking the strongest quarter on record.

Concerns

A tougher consumer environment led to incremental promotional activity, resulting in an estimated $3 million headwind to Q2 top-line revenue.
Updated full-year 2026 revenue guidance to $344.4M-$348.4M, reflecting 11% YoY growth at the midpoint, due to an anticipated $7 million revenue headwind from promotions in H2.
Adjusted EBITDA margin guidance for full-year 2026 updated to approximately 4.7% of revenue, impacted by increased promotions and continued investments.
Q3 FY26 revenue guidance of $87M-$89M implies 7% YoY growth at midpoint, a deceleration from Q2.
Q4 FY26 revenue guidance of $85M-$87M implies 8% YoY growth at midpoint, further deceleration.

Guidance & targets

Category	Target	Timeline	Confidence
Q3 FY26 Revenue	$87 million to $89 million high materiality	Q3 · FY26	High
Q3 FY26 Revenue Growth (YoY midpoint)	7% medium materiality	Q3 · FY26	High
Q3 FY26 Gross Margin	78% to 79% medium materiality	Q3 · FY26	High
Q3 FY26 Adjusted EBITDA Margin	approximately 4% of revenue medium materiality	Q3 · FY26	High
Q4 FY26 Revenue	$85 million to $87 million high materiality	Q4 · FY26	High
Q4 FY26 Revenue Growth (YoY midpoint)	8% medium materiality	Q4 · FY26	High
Q4 FY26 Gross Margin	77.5% to 78.5% medium materiality	Q4 · FY26	High
Q4 FY26 Adjusted EBITDA Margin	approximately 6% of revenue medium materiality	Q4 · FY26	High
Full Year 2026 Revenue	$344.4 million to $348.4 million high materiality	FY26	High
Full Year 2026 Revenue Growth (YoY midpoint)	11% medium materiality	FY26	High
Full Year 2026 Gross Margin	78.7% to 79.1% medium materiality	FY26	High
Full Year 2026 Adjusted EBITDA Margin	approximately 4.7% of revenue high materiality	FY26	High
Full Year 2026 Cash Flow	cash flow positive medium materiality	FY26	High

Product announcements

Product	Type	Timeline
Real-time Personalization Engine	launch	Deployed, first A-B test results available
Clustering	launch	Widely deployed
Exact Match	launch	Widely deployed
Notify Me	launch	Launched, opt-ins growing more than 50% week over week.

Deals & partnerships

Steve Madden Launch of new brand storefront for Resell as a Service (RAS)

Part of the Resell as a Service (RAS) program, leveraging brand trust for clean out kits.

Dolce Vita Launch of new brand storefront for Resell as a Service (RAS)

Part of the Resell as a Service (RAS) program, leveraging brand trust for clean out kits.

Betsy Johnson Launch of new brand storefront for Resell as a Service (RAS)

Part of the Resell as a Service (RAS) program, leveraging brand trust for clean out kits.

Risks & headwinds

Tougher consumer environment Q2 FY26 and H2 FY26

Estimated $3 million headwind to Q2 top line results; anticipated $7 million revenue headwind in H2 FY26.

Mitigation:Increased promotional activity to drive conversion and maintain buyer engagement; shifting customer mix towards more premium buyers; focusing promotions on aging inventory rather than fresh products.

Increased price sensitivity among budget shoppers Q2 FY26 and H2 FY26

Impacts customers making under $60,000 a year (less than 20% of customer base); requires incremental promotions to convert.

Mitigation:Targeted promotions on older inventory; strategic shift in marketing spend to acquire higher LTV, more premium buyers (Meta, Pinterest); belief that this is a temporary issue linked to factors like gas prices.

Higher gas prices Ongoing, particularly Q2 FY26 and H2 FY26

Weighing on budget customers.

Mitigation:Considered a temporary factor; company is shifting customer mix away from segments most affected.

What to watch in Q3 FY26

Revenue Growth (Q3 FY26)

Q3 FY26

Current Q2 FY26 revenue growth was 16.9% YoY.

Target 7% YoY growth at midpoint ($87M-$89M)

Why it matters

This will indicate the immediate impact of increased promotional activity and the challenging consumer environment on top-line growth.

In the third quarter, we now expect revenue in the range of $87 to $89 million, representing 7% year-over-year growth at the midpoint and a 20.3% two-year average growth rate.

Find out whether TDUP delivers this. Inve re-checks your case every morning.

Q&A highlights

Why is the guidance cautious given strong Q2 and focus on stickier buyers, and what are current business trends?

Q2 was a beat, but June and early July showed increased promotional needs for conversion, especially among price-sensitive shoppers. The cautious guide reflects this need for incremental promotions to maintain buyer engagement, particularly for the less than 20% of customers making under $60k/year, which is seen as a temporary headwind.

“it was grindy out there in June. It was just more challenging to get customers to convert. We saw lots of visitors, lots of traffic, but you could tell that people needed incentives and promotions to convert.”

asked by Dylan Cardin · answered by James Reinhart

2 min read 6 chapters

Detailed narrative

Strategic Priorities and Buyer Acquisition

ThredUp continues to focus on three strategic priorities: growing and retaining high-value buyers, scaling high-quality premium supply, and developing AI technology. Q2 FY26 saw record new buyer acquisitions, up 13% year over year, building on 72% growth in the prior year.

The company is shifting marketing spend from Google PMAX to Meta and Pinterest, where LTVs are higher and customer acquisition costs are decreasing, with volume on these platforms growing 130% and 145% year over year, respectively.

Supply Side Enhancements and Direct Listings

Active sellers reached record levels, with the volume of premium bag items increasing 32% year over year, now representing 12% of the overall mix. ThredUp aims for an even stronger premium mix by year-end through seller incentives and new acquisition channels.

The direct listings (peer-to-peer) offering, opened to all in June, has seen items listed increase 89% month over month, with over 100,000 items listed at an average price of $80, contributing to a premium mix.

Resell as a Service (RAS) Expansion

The company launched three new brand storefronts this quarter: Steve Madden, Dolce Vita, and Betsy Johnson. Each new brand provides access to a new set of sellers and customers with brand affinity, offering a unique distribution advantage. The RAS strategy is focused on elevated brands that serve customers with higher purchasing power, with a big push with Reformation in the spring and more planned for the fall.

AI Transformation and Real-time Personalization

ThredUp's AI transformation is now foundational to its operations, driving efficiency and cost leverage by reducing headcount growth and increasing team productivity. The long-term impact is seen in accelerating the speed of product development, testing pricing algorithms, and designing back-end operations.

A new real-time personalization engine, reading intent within seconds, drove a 5% lift in item engagement and a 7% lift in profit per buyer for new customers in its first A-B test.

AI-Driven Product Experience Enhancements

Several AI-driven product features have been deployed to reduce cognitive shopping friction, especially for new customers. "Clustering" groups visually similar items, and "Exact Match" aggregates listings of the same item into a single product page, allowing users to choose size, color, or condition.

These features remove visual redundancy, making secondhand shopping more akin to traditional e-commerce. The "Notify Me" feature, which alerts users when a sold-out item is restocked, has seen opt-ins grow over 50% week over week since launch.

Navigating Macroeconomic Headwinds

Despite strong underlying fundamentals, ThredUp adjusted its second-half guidance due to a tougher consumer environment, particularly impacting price-sensitive shoppers. The company chose to prioritize buyer engagement through increased promotions, anticipating a $7 million revenue headwind in H2. This strategic decision aims to build durable, compounding performance without compromising long-term vision for short-term gains, even as the two-year average revenue growth rate for H2 is projected at 16.6%.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.