ThredUp Inc. (TDUP) Earnings Call Transcript & Summary

Okay. Thanks, everybody, for joining us. I'm Michael Binetti, the digital retail -- I'm Softlines Retail analyst at Credit Suisse. Thanks for your time. We are here, thrilled to have thredUP with us. We have founder, James Reinhart and CFO, Sean Sobers with us today for, I think, our second appearance at our tech conference.

Happy to be here.

Happy to have you guys here. Yes, for sure. The thredUP so has been a very, very interesting one. IPO-ed here not too long ago, so we've been learning a lot more about it recently, but I just want to jump in with a couple of industry topics because this is an interesting company that has a very different spin on retail and feels the pressures that a lot of the companies we cover are feeling in a very different way.

So the industry is under pressure from supply shortages, labor costs and higher logistics costs. But a lot of those are from a vendor base and needs to move goods here from Asia and things like that. So thredUP's a little bit more uniquely positioned with exposure to those things. Can you just walk us through some of the dynamics at play for your business. Talk to us about where you're seeing some of those pressures, how you're dealing with them and where you think the biggest advantages versus some of the traditional apparel sellers are for your business?

Yes. I mean, look, we don't produce anything overseas, right? We own many factories in Vietnam, right? Everything is domestically sourced direct from consumer. And so it's been interesting to watch kind of the industry supply chain challenges manifest themselves and then us feeling really confident that because everything is domestically sourced in the U.S., we've received everything back from the consumer directly. We just don't have that type of exposure. So I think it's actually provided us an opportunity to leverage our advantage in supply and use that as we talked about in earnings around prices and converting customers and taking share that I think we're pretty excited about. But look, I mean, we definitely still have some exposure to labor and logistics domestically in the U.S., just not any of those sort of overseas supply chain challenges.

So one of the things that's been interesting. There's been a lot of different businesses and a lot of different ideas on how to sell these categories to consumers. Resale has been a big one. You guys, obviously, you have a different spin on it. But one of the things that has been pretty consistent feedback on your company since the IPOs, look, if these guys -- if this works, it's not really a matter of whether thredUP will work. If it does work, thredUP's winning -- it's like thredUP would win if resale the way you guys do it wins and the TAM is really, really big. So when I see you guys making moves per TAM, I find it very interesting. And I was -- the last question I would ask you it was kind of a leader to -- one thing on your last conference call, I thought it was you guys zigging while the rest of the world was zagging. You made some moves to lower prices strategically. A lot of the retailers that we cover, have no choice. They're all raising prices and pretty dramatically. So I want to dive into that. That could be a very interesting flash point for a narrative that's very different for your company. What do you see there? What's the opportunity?

Yes. I mean, look, when I look at the resale industry over the last -- I've been sort of telling the story for a number of years, we thought that there were 3 really well-developed lanes. There was the sort of peer-to-peer lane, which has been -- which eBay pioneered in the '90s. There's sort of the luxury space in resale, which has been well covered by offline consignment stores. And so you have companies in that space that are public now. But we always believe that like the mass resale space was the biggest. And there are 25,000 thrift and consignment stores in the U.S. So it's a big offline market. And we just saw opportunity to really innovate online. And so we think that ultimately, like we're playing in the largest TAM, and I'll get to pricing related to that, which is because we think that's the biggest TAM, we think the opportunity to access that TAM is all about supply. And so it's ultimately all about how do you get as many cleanout kits in the door, how do we process as many goods. And what we've been seeing over the past year is a lot of success there in getting supply. And so what we were starting to observe over the last couple of quarters is that while prices were going up, well, it felt like everything you turned on the news, prices were going up on everything, right? It's like all anybody could talk about. And we were observing that actually we were seeing in our data that like we could price things more competitively. And so because we had this enormous supply advantage, because we had all this domestically sourced, we actually had this advantage we could press. And so I think the team, we went through the exercise of running some experiments and felt like we actually could lower prices pretty effectively. And so in Q3, we announced that if you look on a year-over-year basis, our prices in Q3 were 15% lower than they were a year ago. And so we were really able to sell more units, acquire more customers and sort of that's part of the strategy. And so I think you'll see more of that from us over time, but it gets back to, a, we have a supply advantage and b, we use our data to make those decisions. There's no -- it's not a team of merchants that sit around and say, "Hey, let's lower prices." It's a massively rigorous quantitative assessment.

And for people that are on the webcast that aren't in the room, James is able to say that without making a CFO, next gen will start sweating. [indiscernible] very often you here somebody talk about lowering prices with [indiscernible] the CFO doesn't start sweating a little bit. So it sounds like the economics starts to work.

He just starts sweating now.

So the volume is more than enough to offset that.

Yes.

Right. Interesting. You mentioned on your, I think, in your fourth quarter guidance, gross margins were guided down a little bit, maybe a little bit less than what the Street was thinking, but I think there was some -- maybe some investors that were thinking that when you're talking about lower prices, that was why the gross margins were down, but I think it was separate than that. Do you want to touch on that a bit?

Yes. So I think that as we brought in the Remix business, they have a very different profile on gross margin than we do. So the entire change in kind of gross margins is really about consolidating it into the business. I think we guided 65% to 67% after doing 73% in Q3. So that's the driver behind it. And the main issue with -- or the main driver for them having lower gross margins as they own their goods versus us were mostly on a consignment basis. And I think we're on record over time. We're going to transition that business to a mostly consignment-based business, just like thredUP would probably take 2 to 3 years' time to get there.

Yes. Got it. Okay. So again, the key take there is that the economics from the pricing decision?

No impact on thredUP margins, it's the Remix business.

Yes. I think just to add in to that, sorry [indiscernible] . We did 73% gross margin and we reduced prices by 15% year-over-year. So that would -- I think that it's all baked into that number, so you can feel pretty confident that it's not a headwind...

Yes. The gross margin is not [indiscernible]. Yes. Okay. So let's talk about the topic of the last 1.5 years here to reopen. I don't feel like we're headed into reopen Part 2. I don't know. I think there's going to be a lot of different dynamics from reopen part 1.

It might be a 5-part story, but, yeah.

[indiscernible] may never end. Talk about some of the dynamics around the categories that were the first wave of reopening categories. We've heard a lot of the dresses and heels and handbags that get back to socializing. Revenge retail were working. Do you think that those categories have legs? Or are you starting to see any data showing you that the customer is moving into a different phase of reopening in?

I mean we definitely saw change October over September in customers that looked like they were expecting to go out more. So we saw trends around dresses up as you mentioned, but also heels and sort of cocktail dresses and things like that, that suggested that people were ready for sort of a fun Q4. But look, I mean, I think we just had the new variant get announced. And then so I think people were continued to be on edge. But I think over the past 1.5 years, I think what we've learned in our business is how to be more resilient on the mix of goods that we're getting, how we're pricing them, how we're showing them to customers. And so there is a blessing in this, I think, for us around the pandemic, which is how do we get sharper around that assortment. How do we flex our labor and our distribution centers to process the goods. And -- but I don't think we have -- I don't think we have a point of view that's very different than others around like what's going to trend in Q4. I do think people are going to get back out in the world. But I don't think we're -- I think as we talked about a few months ago, we thought we would go over this, and we're not yet so...

Never-ending story. I want to talk about the operations. You guys have been an operations-led company. I'm sure people know the company, for those that don't, the core of the business is women going on the thredUP site, requesting big bag in the mail that they can go through the closet cleanout, tidy up a bit, mail it back to these guys and they get it up on the website. But that's really inventory engine here, but that -- there's a lot of logistics. I just made that sound very simple. There's a lot of logistics. If you see their distribution centers, their works of science for sure, to get every unit on the website. Can you talk a little bit about the processing times and where we've gone through COVID, I think the -- getting the cleanout kits through the system. I think you were at 12 weeks at the end of third quarter, but you think that can come down next year. Talk to us about how you see that going?

Yes. I mean, prior to March '20 when the pandemic hit, we were running 2- to 3-week processing time. And so that's historically what we've tried to target. We obviously got a surge during the pandemic for 2 reasons. One, people were at home, they were cleaning up their closets. Everybody had nothing to do. So we had a little bit of that effect. And at the same time, we had a constraint in labor. It was hard to get folks into our facilities. So it peaked as high as 20 weeks to process a cleanout kit. And then it came all the way back down to 8 weeks. And now, as you said, we're at 12 weeks. I think the long-term goal is 2 to 3 weeks. But what's important to note is that we're processing more than ever. I mean we're processing more items, we're processing more bags than ever. We just have more demand for our cleanout service than ever. And so I often tell people, it's like, say, we have a really hot restaurant. And we got to line out the door. And when the line is 15 people long, people don't get in line, but then the line gets down to 2 or 3 elong and people hop in the line. And so we're in this constant interest in our cleanout service that's proving challenging to get all the way down to where we are, which is making us invest more. And so our new distribution center that we announced in Dallas is going to have 10 million items in it.

And give us a perspective on that. I've seen a couple of [indiscernible] figure.

Yes. I mean, our first one ever had 400,000 and then we opened a really big one, which was 1.5 million items. And then we opened a really, really big one, which was 3.5 million items. So we're running out a release, right? And this 1 is now 3x the size of our Atlanta facility, which is just about to be complete this quarter. So massive investments in capacity. We'll grow a capacity of 150% with the addition of this Dallas facility. So big investments in processing, big in process -- big investments in infrastructure, but that doesn't mean we're going to get people to stop sending us cleanout kits.

A good problem to have if we have the demand to do that. And the technology and the automation in those DCs has changed quite noticeably from the early stages. And where are you now? Are you -- is the technology kind of at a plateau level where you just dropped this in at higher volume? Or are there some more...

No. We're constantly making improvements on the automation side, software side. So figuring out ways where we can have less people in the facilities so that we can leverage those folks in other areas. But I don't know, what's your estimate of how automated we are?

Put me on the spot. I don't know. Second inning? Something like that? Yes, I think it's a long way to go, and you've been to the DC as you know, it's like the first reaction when you walk in, it's like, "Man, this place is so automated," But you're 30 minutes in, you're like, so a lot of people moving stuff around. So there's a lot and we've done some stuff things since you came to Phoenix [ for us ], our Phoenix DC. So it's progressing pretty nicely.

Okay. Now since you mentioned Dallas, I think you opened the first dedicated cleanout kit processing facility at Grapevine. And that feeds into, I think, the Dallas facility. Tell us the difference in the 2. What's the key behind the new Grapevine facility?

Yes, I mean, it's just -- again, we have so much demand for our cleanout service, and we're scaling our RaaS, Resale-As-A-Service business rapidly, which we'll get a chance to talk about. And so we just needed more and more processing capacity. But we didn't think we ultimately needed more in the near term, more storage capacity. So we thought, ultimately, we need is the ability to process more bags because the sell-through is so strong in thredUP and so the Grapevine facility will feed into Dallas, and it will launch either end of this year or first part of next year. And we're investigating like a processing center where all it does is process, process bags and then inject that supply into our distribution centers. And so identifying whether we can separate sort of distribution and processing and be able to scale processing centers all over the country.

I always touch on that with you guys because again, there's not a lot of fashion conversations with these guys. It's a very operational-focused company at the core. So when we hear you guys talking about those things on the conference calls, we know that's what's going to be moving the [ needle ]. Any -- I just want to -- before we talk about RaaS, any concern with the processing up at 12 weeks right now, if there are quick changes in categories that you guys -- it will take you a while to get there?

No. I mean, look, I think we would always prefer to process stuff in 2 to 3 weeks. But I think we're doing a good job of messaging to the consumer based on what our expectations are around processing time, around what we want. And so I think we're doing the best we can on the mix. But I think as processing time is coming down, I think it actually allows us to just get even better.

All right. This is -- I know this is your passion here, Retail-as-a-Service. This is something that's one of the newer ideas here, but a big one, I think. What -- maybe you can just tell us what it is. What's the big picture or the possibility beyond just -- this is incremental sales. Tell the audience what Retail-as-a-Service is? Just get us up to speed?

So it's Retail. I mean it's Resale.

Resale. Sorry.

So yes, Resale-as-a-Service. And so the idea behind it, RaaS, is how we affectionately refer to it is we have a big, robust core marketplace on thredUp. But increasingly, we are seeing opportunities to work with retailers and brands to help them power resale experiences. And so I often tell you, it's the equivalent of like Mercedes or Audi having certified preowned cars. Like every dealer in America now has a certified preowned business. And I really believe that every retailer or every brand will ultimately have a side-by-side resale business, but it's tricky. And so we decided to take our technology, software, data, infrastructure, logistics and leverage all of that to help any brand bring a resale experience to their customers. And so it works sort of in 2 ways. One is we distribute cleanout kits through our partners. So we now work with more than 2 dozen retailers and brands, everybody from reformation to the GAP companies. We just launched with Adidas. We just launched with Crocs. So great brands. And those brands can send and distribute cleanout kits to their customers and then they get returned to thredUP. We process those goods and we pay out in gift cards to the retailer. So brands love it because it's like a physical loyalty program. And then all that product that we're ingesting back from all of our partners, we can put in branded resale shops. And so imagine a world where every brand has a resale shop that's white labeled, but it's powered by thredUP in the back end. So imagine brand.thredup.com could be any brand, curated experience. Brands can have input on merchandising and pricing and selection and storytelling, but it all sits on thredUP's infrastructure so that it's really plug and play for the brand. And so I'm super excited about it because I think it's an opportunity for any brand to turn on resale in like 30 days. And I think, ultimately, it will be a big part of our story.

You should bring them to your distribution centers. Terrifying.

I'm thinking about having to do that themselves.

Well, I mean, it's like, we power resale for Walmart, for example, right? It's like one of the biggest retailers in the world, it's like, yes, we don't really want to deal with [indiscernible] here. Right? And so again, I think it's all the work we've done over the past 10 years has put us in a position to do this.

Yes. It's very specialized for sure. It's -- I mean is there any concerns about ubiquity there? Like I remember a day a couple of years ago where you were 2 retailers on back-to-back days announced that they're partnering with you and their competitors. And then it was like, sometimes you run into competitive bad blood, if not, just straight up conflict on that kind of thing. Any concerns about ubiquity or your ability to approach large numbers of these brands together?

I don't think that we create more conflict. The brands compete on their own. I think this is just another channel for them. But I think it's one of those areas where if a brand doesn't have a resale strategy relative to its competitors, it's had a huge disadvantage. Because I think if you look at where the consumer is going, consumer sentiment and mind share, especially among young people, like they care about resale. They care about sustainability. They care about circularity. And so when they're making a buying decision between a brand that doesn't have a point of view on this and a brand that does, they're going to often go with the brand that does. And so I think it's going to be table stakes for brands to have resale strategies over the next 3, 4, 5 years.

And what's the attractiveness of the economics versus the core business of the cleanout bags you process yourself through the thredUp label versus doing RaaS for a business. Is there an economic trade-off there? Or...

No. It's not a trade-off. I mean we haven't disclosed too much around like the particular unit economics, but we love to sell product on other people. We work with Madewell, for example, very successful partnership. We're indifferent as to whether product sells on thredUP or it sells on Madewell's resale site. But RaaS runs with SaaS for a reason, right? And so the fees that we think we can generate over time, we think can be meaningful.

Interesting. Let's talk about some of the consumer-facing initiatives. Thrift the Look is interesting. There's -- talk about the launch of Thrift the Look. I know it was informed by what you learned from, I think, an early strategy was the Goody Boxes. But how should we think about the growth potential there? And how you're marketing this and how many consumers are looking at it using it as an option?

Yes. I mean, Thrift the Look came out of a styling service, we had called Goody Boxes. And the idea for Thrift the Look is as more products come online on thredUp, we need more sophisticated ways to curate selections, inspire people and we know women love to look through magazines and look online and look at Instagram. And like, what's trending, what's cool? And so the ability to provide a service -- a styling service like that, but where everything is secondhand, we think is really powerful. And so we think about Thrift the Look is a platform where we can create lots of curated looks to allow people to -- you can follow a stylist, you can follow particular types of looks. Sean and I were just looking earlier. There's like a whole set of new categorizations. There's a Y2K theme. There's a holiday. There's all these themes that are trends that our team puts together, and then we use our technology -- automated technology to back end to fill those shops. So think about it as a mass personalization strategy that allows anybody to kind of shop our curations.

It has been noticeable to see younger consumers, like Thrift is not a second -- second tier consideration set for where they -- we were talking earlier that like our generation, there's no kids in high school going to...

It's the coolest place to go to the thrift shop.

Yes. And they find really unique things that are -- where I think that social currency from finding something very unique is very important. Are there other ways that you can leverage your platform data to kind of gamify the experience for people? I mean I know you guys are more ops so because we talked about a little bit in fashion focus, but adding some things like Thrift the Look, there are natural extensions of your ability to use the data to connect people to the product. Are there other ideas?

Yes. I mean I think Thrift the Look is a big investment for us because we think it scales really nicely. But everything that we're doing around, save, searches and following sellers and things like that, that are -- that add like a social layer on top of it. What we want to do is balance -- the goal is not necessarily to entertain you, right? Because there's lots of places where you could be entertained on the Internet. And trying to compete with entertainment, I think, it's a high bar. And so we take more of the Amazon approach, which is we want to be functionally amazing and make it easy for you to find exactly what you want as fast -- get it as fast as you want. And so that's really where we optimize everything is on delivering functionality.

Got it. Well, let's go outside the U.S. a little bit. So can you talk about the acquisition of Remix a little bit in Europe and since -- I know it's early days, it closed in October, but what have you learned so far? What should we expect to see in '22 in terms of ramping up on the international side?

Yes. No, I mean, I think it's very interesting opportunity because it was a business that wasn't growing that quickly. 70% of their revenue came from Bulgaria and Romania. Yet they service 7 other countries in Europe. So I think there's just a great opportunity to expand our footprint in Europe. And one of the things, as they were kind of not growing significantly, they also weren't able to invest significantly either. So one of the things we'll do is we'll turn back on their marketing power, some more infrastructure, some more people, really reactivate that growth, and you should start to see that really impact the second half of '22 from a gross perspective related to Remix.

I mean and what does Europe look like for this audience? Are there a lot of thredUP type businesses in Europe? Or is Europe the -- is all of Europe an opportunity for Remix as you kind of put your processes behind?

Yes. Michael, it's funny, it looks a lot like the U.S. Like there are luxury players, there are peer-to-peer players, right? There's remix, which I think is the best copy of thredUP over there. So we think there's huge white space in Europe. I think it effectively doubles the TAM. Europeans in some ways are probably a little further ahead of Americans on the sustainability and circularity piece. So they're sort of more positively inclined from a consumer sentiment perspective. So we think a huge TAM. I love the Remix team, the founders. It's a business I've known since 2016. And so I feel really confident that, that can be like the beachhead for how we move into Europe. And Bulgaria, although it's a place that I don't think people think of it as a hotspot for e-commerce, right? It's actually an incredibly great place to operate from. It's in the European Union. It benefits from all the EU provides around logistics and labor and protections. And so I feel like really great about them operating outside of Bulgaria. The labor rates are very strong, and the market is good. So I'm excited.

What do you see as similarities or differences between the consumers view there of Thrift versus the U.S.?

I think the European consumer has always been more positively inclined towards secondhand, but it's not definitely universally true because it's not as though like Europe is a monolith, right? And -- so I think there's going to be some puts and takes as we understand the market, but I'm incredibly bullish on Europe as a market for us.

And you mentioned that they were probably a bit under invested, Sean, but I think you mentioned that they might meet your growth a little bit in the near term as a combined company, remind us how long you expect that [indiscernible] data points to watch there?

Yes, I would look at -- if you think about EBITDA and kind of where it's headed in '22, I would think of it like -- I think we're guiding '21 around about 15% -- negative 15%. And I'd expect '22 to be just slightly better than that from an EBITDA margin perspective. And I think it's all about the investments that we're going to make throughout '22. So we've been talking about DC07, which is Dallas DC. We're talking about the processing center. We're talking about kind of reinvesting in Remix from a marketing perspective and infrastructure. And all those things are going to lead into accelerating revenue growth once we get to the back half of '22 and into '23. So that's the way I would kind of think about it. I don't necessarily think that from a revenue perspective, anyway, Remix is going to mute our growth. If anything, it's going to make it look depending on how you do the math. It might look extra awesome when you compare it over $0 from last [indiscernible].

That's the technical terms. Extra awesome.

I think you guys have some seasonality in the fourth quarter. Those -- we'll see those investments show up here in the fourth quarter because that's a normal time of the year for you guys to see for [ bringing up ] investments.

Yes. No, I think it -- like so far, secondhand is not a traditional gift-giving item. It's getting more and more so, but this allows us as outbound processing slows down a little bit, inbound processing would pickup. And we have -- we talked about, we have so much supply. So we can really focus in processing and processing. And that the way the accounting works, that's all OpEx in the period we're in. So you'll see a little bit more of that as we go through the Q4.

So the OpEx is front-loaded, but then we'll have the site stage with a lot of product for the new year?

Correct.

Okay. And then can we also talk about the investment in Vopero, that's the managed marketplace in Latin America. How does this compare to Remix. How should we think about the international growth story aside from Europe peers. What's your view to that one?

Yes. I mean it's -- they're very different. Vopero, early-stage company, companies like just over a year old, incredibly talented founders, great backgrounds, combination of like fashion, logistics, operations. And our analysis of the Latin American resale market was that it's about 7 to 10 years behind the U.S. And so a lot of the things that the Vopero team is working on, the way they think about the world remind me of like what thredUP looked like 10 years ago. And so we own a minority stake in that business, but I'm very excited about the founders and the founding team. And I think -- if they were up here right now, you'd be amazed by them, right? It's a great, great team. And so that's an area where we did a minority investment. Remix is an area where we obviously own the business. And I think we'll just be thoughtful about are there other parts of the world that we should have a point of view on and -- but we certainly don't have -- there's no [indiscernible] team at thredUP. So you're talking to them. So I think we're -- I think we'll probably spend the next year or 2 kind of marinating with the investments that we have.

So the natural question is Asia. What's the opportunity there?

Yes. I don't -- we literally don't have a point of view on it yet.

Is there a market developing yet for this, though?

I think there is. I think there is. But I think it's premature at this point for us to kind of talk about it.

Are there other markets that you could go in with the thredUP brand instead of acquire your way into? Is it -- or is that just too difficult? Is it better to have a beachhead?

Yes. I mean I think the thredUP brand has real legs here in the U.S., and I think we're trying to figure out exactly like how much that translates into Europe, more into other markets. So I think it's too early to say.

Let's maybe we can talk about the -- some of the financials for a minute. How should we think about the gross margin from here? I know we talked a little bit about the near-term stuff, but you had a 300 basis point increase in the third quarter, a lot of automation, I think, behind that number, the DCs and more items per order. How long did those drivers sustain? And how do you see the puts and takes rolling in and rolling off?

Yes. So I think it's a little more complicated now with Remix because it basically takes us as a step back. But as we migrate Remix to a consignment-based business, that will start to be a tailwind. So they'll start to migrate back over time back to that 70-plus percent gross margin range. And our long-term target is 75% to 78%. We're still very confident that we'll get there. I think in the near term, you think about the thredUP U.S. business only, is automation and expansion into larger facilities just continue to drive improvement in gross margin and help offset the wage inflation and the shipping increases that we think are kind of here to stay. Our plan all along is we knew these things were going to happen. We just thought it's going to be more gradual. And instead of in Q3, they all just shot straight up and they went up. I don't think they're going to keep going up at that pace, but we'll be able to offset those over time with automation and scale in the facilities.

Got it. And so just back to some of the questions earlier, some of the industry dynamics like higher wages in the DCs, shipping costs and everything. How do that -- how is that going to affect the P&L? You mentioned EBITDA slightly better next year. Are those just, yes, just pure cost inflation? You have enough to offset those on the...

We're not baking in any improvement like wages are going to go down or shipping is going to get lower. And think about how our P&L works is wages and shipping affect both COGS and OpEx because it's in both places, whether it's inbound or outbound processing. So -- but we do think we'll be able to offset it with automation and scale the DCs over time. And then I think you'll see improvement over that 2- to 3-year period of time as we migrate Remix away from an owned business to a consignment-based business. I mean the good news is we have brilliant people in ops that probably explain this way better than I can as far as what we're able to do and what we've been able to do, but I'm very confident we'll be able to basically automate our way into continued improvement there.

Got it. And then the new 10 million, how long does it take the new 10 million unit warehouse to get -- or distribution center to get up to scale?

Well, I mean, Atlanta, which is just being completed this quarter, it was about 6 quarters. So I think Dallas is probably at least that before it's fully utilized. But the nice thing is we can kind of stage our way into it. And so we don't want to absorb all the CapEx out of the gate. We can kind of build as we go. But I think it's probably a 6- to 8-quarter ramp.

And how far out do you have visibility on shipping? You have contracts out 6 months a year or...

Contracts seem to be like optional. [indiscernible] contracts. Generally, you find these subsidies and additions going around the holiday time that never go away. So yes, we have contracts, but it's a little tricky. It's like a one-way contract, I think.

Got it. Okay. What's the -- one thing that we'd like to ask the companies that we see is what's one thing if we get you back here next year that we're going to be surprised that thredUP pulled off over the next year?

I think you'll be surprised by the number of RaaS -- RaaS clients and Resale shops that are in market.

Really? Okay. I can tell you're excited about it now. I'm excited to see it too.

All right. Sounds good.

Stay tuned on the RaaS. Thanks for the thredUP team. I know we're out of time. But if anybody needs to follow up, I'll happily follow up. And thank you guys for your time.

Thanks Mike. I appreciate it.

Thank you.

Take care.

Okay.