ThredUp Inc. reported fourth‑quarter 2025 revenue of $79.7 million, up 18.5% from $67.3 million in Q4 2024, and a full‑year total of $310.8 million, a 20% increase over the $260.0 million reported in 2024. The company’s earnings per share of –$0.04 matched the consensus estimate of –$0.04, while revenue surpassed the $77.5 million estimate by $2.2 million, giving the company a modest revenue beat.
Adjusted EBITDA margin fell to 3.7% in Q4 2025 from 7.4% in the prior year, reflecting higher investment in AI‑powered operations and a shift toward premium supply that increased operating costs. The full‑year adjusted EBITDA margin improved to 4.4% from 3.3% in 2024, indicating a gradual recovery. Free cash flow turned positive for the year at $3.1 million, but the quarter itself posted a negative $3.19 million, a reversal from the $2.4 million positive free cash flow reported in Q3 2025.
For the first quarter of 2026, ThredUp guided revenue of $79.5 million to $80.5 million and an adjusted EBITDA margin of about 3%. Full‑year 2026 guidance projects revenue of $349 million to $355 million and an adjusted EBITDA margin of roughly 6%, signaling confidence in continued growth but a more modest margin expansion than the 2025 year‑end level.
CEO James Reinhart said the company is “building toward sustained, profitable growth by enhancing the structural drivers of our flywheel: full‑funnel buyer growth, high‑quality supply, and AI‑driven innovation.” CFO Sean Sobers noted that Q4 results “exceeded our internal expectations for revenue, gross margins and adjusted EBITDA.” Both executives cautioned that an affordability crisis could temper discretionary spending, underscoring the need for disciplined cost management.
In pre‑market trading, ThredUp’s shares fell 3.44%, reflecting investor concern over the Q4 margin compression and negative quarterly free cash flow despite the revenue beat. Analysts highlighted the company’s first annual positive free cash flow as a milestone, but noted that the Q4 margin decline and the need for continued AI investment could weigh on near‑term profitability.
The earnings release underscores ThredUp’s progress toward profitability, with a first annual positive free cash flow and a 20% revenue growth rate. However, the compression of Q4 adjusted EBITDA margin and the negative quarterly free cash flow signal that the company is still investing heavily to scale its AI platform and premium supply chain. The guidance suggests a cautious outlook, with modest revenue growth and a 3% margin for Q1 2026, while the full‑year 2026 outlook indicates a return to a 6% margin as the company expects the AI investments to pay off. Overall, the results provide a clearer view of ThredUp’s trajectory toward sustainable, profitable growth while highlighting the ongoing balance between investment and margin pressure.
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