ThredUp Inc. (TDUP) Earnings Call Transcript & Summary

Well, good morning, everyone. Thanks for joining us today. My name is Alexandra Steiger. I'm part of the U.S. Internet Research team here at Goldman Sachs. We are very pleased to have James Reinhart, Founder and CEO of ThredUp; and Sean Sobers, CFO of ThredUp with us today. Good to see you again, and welcome to our conference.

Thanks.

Thank you, our pleasure.

So let me kick it off with you, James. You founded ThredUp almost 15 years ago, and the company has grown significant systems then. You processed over 170 million items from thousands of brands over your history, and you've reached 1.7 million buyers. Last year, starting high level for those that are less familiar with the story, can you introduce the audience with ThredUp and the scale that the company has achieved over the past few years?

Sure. Yes. So I mean the founding story for ThredUp is I was in business school at the time, and I had a [indiscernible] that I wasn't going to wear. And I wanted to take them to a local consignment store. And this is 2009. And they said, "We don't take these, we just take luxury." And at the moment, like this was a J.Crew sweater I remember because the J.Crew sweater was a Brooks Brothers' coat. And I said, "but this stuff can't be worth 0." And so the founding insight was that there really was this market failure in secondhand because at the time, really all you had was eBay and Craigslist. And so at that time, there weren't great consumer options. And then this was a moment when the iPhone had just been invented, people were taking Ubers, they were staying in Airbnbs, you were streaming on Spot-- like there were all these consumer experiences that were being unlocked. All these new ways that consumers were engaging, and I thought the secondhand market that was sort of trapped in this old dusty goodwill experience, like there had to be a better way. And so the business got started with the idea to sort of reinvent secondhand for the modern consumer, and we've been on that journey ever since. And I think we've done really 3 things that have been critical to the story. One, is we really understand ourselves as the logistics and infrastructure company. And so we run distribution centers around the country. The core principle being that in order to unlock the modern resell economy, you need to make it really easy for consumers to get rid of the things that they no longer wear. And so we invented this Clean Out Kit, which holds like a laundry basket worth of stuff. And you fill it with all the things you're no longer wearing and send it to us and we take care of it. So we had to build infrastructure to do that. The second piece is we had to build an entire data science and algorithmic approach to how do you value secondhand clothing because what's unique about apparel relative to other used categories is there are no serial numbers on anything. So it's like you don't just scan something and then pull up like what you actually have to create a data set. So the second thing we did was we built this like a really important data set that is now processed 170 million items. And then the third piece is we had to build a marketplace that connects buyers and sellers. And Sean and I often talk about the fact that each one of those is hard, building an entirely new supply chain and infrastructure distribution centers that's hard. The data science and algorithms and pricing and market arbitrage is really hard and then a marketplace on top of that is really hard. And I think the value of the ThredUp is created because we do all 3. So that's kind of the beginning.

Leaving aside macro for a moment because I do want to focus on that later in our conversation, the resell category remains obviously an area of growth within the overall e-commerce landscape. Can you talk about the opportunity ahead for resale as a category? What is driving growth for the category? And how is ThredUp positioned to -- against that opportunity?

Yes. I mean resale is the fastest-growing sector in apparel. It is growing high teens, low 20s per year and traditional retail is maybe growing like a couple of points. And so I think what's driving that primarily is young people, consumers, millennials, Gen Z, that I think have a newfound appreciation for secondhand. I think our generation, I think secondhand was still a little bit stigmatized. And I think for people in their 20s, now it's just actually the thing you do. And when you double-click on the data around, okay, well, what's going to drive that growth into the future, what you see is 2 things. One is people who currently buy or sell secondhand when you ask them, are you going to do more or less of that in the future? Overwhelmingly, they say more, right? Literally, nobody says, this secondhand thing isn't working out for me, I'm going to do less. Like everybody says more. And then there's a whole cohort of people for whom you say, have you sold battered secondhand and they say, not yet. And you ask him, will you in the future? And overwhelmingly, they say, yes. And so when you have a survey data out like that, 2 things happen. One is you -- sort of eyes sort of get big because you're like, man, the number of people who are coming into this category is profound. And then the second piece is just then it's really hard to estimate that. And so -- but we feel very strong like the secondhand market is big and only going to get bigger and that it's not a fad, right? It is a true structural shift in how people shop, and I think that's pretty exciting.

Maybe one for you, Sean. So the company has gone through significant financial progress in the recent quarters with narrowing losses reaccelerating growth rates. Can you talk about the evolution of the company's financial profile since the IPO in '21 and help frame investors how we should think about growth and profitability from here?

Okay. Yes. No, I think it's interesting because when we went public, we were only in the U.S. We were transitioning to a consignment-based business, but probably, I don't know, 60% of our way there then. And so from then until now, we acquired a company in Europe. We transitioned most of our business in the U.S. to consignment, although we're still kind of closing out a few of those things that we'll wrap up this year. And that in itself has driven better financial statements across the board, including the automation and the efficiency that we've done. But we've improved gross margin in the U.S., something like 76.4% last quarter, record all-time high. And we still have ways -- a little bit of ways to go on the consignment side, which will be a little bit of a tailwind. And then you bring in Europe, and Europe is a 100% owned business, which is a structurally different gross margin profile, but they've started their journey to consignment transition as well. So that really essentially started last quarter, and it will take some time, but that business will migrate over to consignment, which will improve gross margins, contribution margin, but that will take something around 3 years over that time. I think the benefits of margin expansion more than just consignment is going to be automation, efficiency, continuing what we've done in the U.S. for a long period of time. We're just getting better at it and then taking that same level of effort that we do in the U.S. and bringing it to Europe. There's not all the same opportunities in Europe just because the labor structure is so much lower cost. But there's a lot of room for data and automation and things like that we can do there. So...

Macro obviously remains pretty challenging, especially for the lower income budget shopper, and you've highlighted that in the cost -- in the last few earnings calls. Can you maybe expand on the trends you're seeing on your platform and how this influenced your decision to target more affluent shoppers?

Yes. I mean, I think what we've seen over the past 6 quarters is, yes, that budget shopper who maybe makes less than $60,000 a year. I mean apparel is a discretionary category like definitionally. And so I think those customers are then particularly strained across their personal balance sheet. And so you just see less of them in market purchasing. And that was a big part of our business. And I think sometimes it's lost on people that when you have 1/3 of your customers that identify like that and then they sort of step back, that's a tough thing for a business. And I think we've done like a pretty remarkable job of evolving away from being so concentrated on that customer really quickly to being able to target a slightly more affluent customer. And I say slightly more affluent because we're talking about customers for whom their household -- average household income is, say, $90,000, right? So it's -- this is by no means a wealthy consumer. I often characterize it as a distinction between somebody who might shop at Old Navy, right, versus somebody who might shop at J.Crew, right? That's what we're talking about. And so the implications for us on the platform is a different targeting strategy for supply because that shopper wants a different suite of products relative to the budget shopper, different pricing strategy, different discounting strategy, different customer acquisition approach around the types of ads and the types of messaging. And the team, I give them just an enormous amount of credit for being able to shift that so effectively. And I think what we're watching for now as we move over the next year is, we do still have incredible product for the budget shopper. And so I think as that environment for the budget shopper improves over the next -- pick your time horizon, maybe it's a year, maybe it's 2 years, I think you'll see that shopper come back to our platform again, but we will have built this new base of customers that I think are driving kind of the margin expansion and the revenue that we've seen.

Maybe let me follow up here and ask you a question that we're asking all of our companies here at this conference. How do you expect the health of the consumer into the second half of this year into '24? Do you expect the consumer to improve, just to kind of like stay the same or even deteriorate from here?

Yes. I don't know if I see like a fundamental deterioration from here. But I think like people are -- they're just getting tighter with their dollar. And I think they're looking in -- especially in discretionary categories, it's just that people are just buying on a deal. And I think you see it whether it's travel, whether you see it in their leisure activities. And so I think in the apparel category, if it's not on sale, like it's probably not moving and I think that's a lot of what you're going to see over the next 6 to 12 months. And I think the implication is can you get customers to pay, pay more later, right? And I think the difference for us is we're not a brand. So like there is no erosion of brand value by the fact that we are selling other people's products on sale, we're just responding to the macro environment. And so I think we can then pass along like deals and discounting, I think, at a lower risk than say, pick your brand, right, where everything is 40% off. And so I think it will be the issue to watch over the next 12 to 18 months as brands try and recapture some of that margin and try and be less promotional. And I think you're going to see a wedge opportunity for us where we can still be in an incredible deal, but in a different way.

So you already talked about promotion. Then my next question, so how do you actually expect kind of like the competitive intensity in apparel in general to evolve from here? And maybe, Sean, for you like, can you maybe frame the impact of the higher promotional environment on the business from like a financial perspective?

I mean I don't see a path for -- I think there are very few brands that can maintain their pricing strategy today, right, of selling stuff more at full price. I just think it's really hard. And so I just think you're going to continue to see the world be more promotional. And then the question is, how does a business like ours or any business sort of rebuild the P&L with sort of the promotion in mind? And I think the difference for us relative to a company that, say, makes things is that we can really rapidly change the price we pay for the goods that are coming on to the platform because we have a large portion of sellers and so we can flex some of those payouts, right, which is sort of how we think about our cost of goods to better reflect the pricing dynamic. So I think that's a marketplace, we're just a little bit more immune to that. I don't think we're totally immune, right? There's a threshold, but I think we're better positioned relative to others, which is if you look at our guidance, we're chunking it about the back half of the year, like strong double-digit growth, strong double-digit margin expansion, which we feel good about.

Yes. No, I think the natural hedge on how we do payouts because it happens after the item sells. So if it's more promotionally discounted, there's a little bit of hedge there because we pay out less. The part that probably offsets that to some degree is processing is processing, right, whether it's a $20 item or $10 item. So that's -- there's definitely a headwind to overall gross margin or contribution margin, depending on what it is.

Great. That's covered to some business initiatives you introduced over the past couple of months. James, you talked about the decision to introduce fees for cleanout kits for sellers. So can you maybe talk about the seller response? And maybe, Sean, again, can you maybe walk us through like the financial implications here?

Yes. I mean as a founder, it's so funny you have these things that you've convinced yourself, you could never do, which is we can never charge people to pick up the bags at their house or to order a bag because they won't send it to us. And that was like a bit of a sacred cow. And then over the past year, what we've learned is that if you charge people a little bit, and so the way this works is if you request a bag from ThredUp or you send us a box of stuff, we'll charge you anywhere from $10 to $20, there's something like testing that's going on there. Once we process your goods, we'll charge you essentially the logistics cost to receive the box in. And I never thought we could do that, but we can. Like what we've learned is that the customer would much rather pay us $10 for this and be always able to send stuff to ThredUp, then be caught in a queue of people waiting for their bags to be processed, which is like what has happened over the last couple of years, where there's so much demand for our cleanout service that we couldn't keep up. So by introducing just a small fee, you enable actually everybody to participate. But then you also weed out people who send you not great stuff because the psychology of just paying $10 is enough for people to be like, maybe I won't send them like my stuff is not any good. And so you have the benefit of like you're getting better sellers and you're getting the right like mix by discouraging bad sellers. And then the third thing, which I really in hindsight like why didn't we see this, is you're getting a lot more stuff coming in the bag or in the box because once we're going to charge you $10, you might, well, stuff all the stuff in there. And so the net effect is like immensely, profitable and great, right? And I just joke as a founder because we should have done it like 5 years ago, right? And, so anyway, that's how it's working, and then Sean can talk about how...

It probably also helps you to kind of like target the more affluent.

Yes, I mean, it's just like -- just incremental, and it's like it's not even necessarily the targeting that it's just -- there's a self-selection, right, for the type of seller who kind of comes on to the platform. And I think -- and then like the last piece in China is -- and then if we say to you, hey, we're going to charge you $10 and then you send us an incredible bag of stuff. We can then go and waive you -- waive the $10 fee and make you feel really good like thank you, for sending us such amazing stuff. We've waived your $10 fee. And then you feel even better about it, right? And so those like 4 pieces have worked really well.

I think from the financial side, it's kind of a win-win scenario because for the people who are paying, that's just straight revenue. And then the people are sending in better goods. So we're getting just better, higher quality, we're selling items faster, better margin, more items per bag, so more cost spread out. So like it all works, but it is really important. And usually, I want to talk to your team when I say this part. It's like, but not everybody ends up paying for the bag. So don't just take like total number of suppliers times $13, $20, whatever it is, because we do go in and waive for the best suppliers because the most important thing for us is not the fee we charge is what we get from the supplier. If it's amazing and it sells in 5 days, it's great because that's what it sells 5 days. We sold it with low discount, good margin, great turns and usage of the capital assets that we have. And so it all becomes kind of a better thing across the board because of this.

You also launched features to improve the flow of product returns, including the keep for credit feature that contributed to return rates declining by 500 basis points in the U.S. Can you maybe expand on those initiatives and on the benefits you're seeing on the keep for credit feature?

Yes. I mean what we found with keep for credit is we know returns are like a problem in the apparel industry. Some of it's because things generally are -- like don't fit in the consumers like and then sometimes they're bad actors, right? In secondhand, you have the unique challenge of -- you have fit over like 5, 7 years and how brands are sort of changing their size profiles. And so it's a little trickier, and we've always had pretty low return rates, but we had this initiative where we realized if a customer is returning one item to us and that item is $20, $10 is going to get eaten up in the logistics fee. And we're in the business of trying to have less product moving around, less carbon emissions, more circularity. And so we -- this initiative says to the customer, and we use a bunch of data scientists in the background. You go to click return and we say, "Hey, Amanda, how about you? How do we let you keep the item, and we'll give you x percent back in credit for you to shop on ThredUp". And the psychology of that for you as the consumer like -- that's actually a pretty good deal. Like maybe this item didn't fit. But if I'm going to get $20 back for it, I could take it and get it altered, right? And -- or I could get it dry cleaned to get this like persnickety little stain right out of it. And so we actually think it's been a great thing for the customer. And then we're getting less items back that we have to shift, process, reingest, reput online. And so it's been really effective and the P&L represents that.

Yes. It's great across the board on the P&L.

More broadly, you've also introduced other interesting product changes and improvements to like the customer experience in the recent months. Anything you want to highlight that stood out to you in terms of really changing the customer experience?

I mean, I think the work that we've done on sculpting is probably the third piece. So we talked about the shipping fees and we talked about KFC, keep for credit. The sculpting piece is just on the margin, I think, we're paying closer attention to the seasonality and demand signals of like what we want. And so we used to be willing to accept anything that would sell at some point in a sort of a time horizon and we saw it made sense based on the price of the item. And so for an example, like right now, if you -- 3 years ago, if you would sense ThredUp a high-end tank shop, right? We take it right now, even though we're moving into fall and winter. I think now we're being a little bit more picky around -- we don't really want that right now because we have to -- one, it's not good for you because if we accept it, we're going to have to sell it at a lower price because there's not a big enough demand curve in the fall for that. And two, like maybe it won't sell at the rate that we want. And so we're really trying to educate the customer around send us stuff that's seasonally appropriate, and we're using sculpting where we're just sort of rejecting the incremental items that maybe we would have accepted a few years ago.

A topic that is obviously front and center for many investors these day is AI and Gen AI. So I do want to ask you, like how you're leveraging AI and where do you see an opportunity to deploy AI within your business?

In our distribution centers, there's enormous opportunity for AI. We've been using AI technology to process imagery and look at items for years. I think the -- where we're evolving even more now is we've got technology that allows us to take any item. So take that sweater, right? And when that item is on a carousel and it's moving like through the distribution center, we have cameras that will take a picture of that in a 6-camera array and then in real time, shooted to a database that says, have we ever seen this item before? And if we have, it will report back all of the data, photograph, everything about the item and then we can essentially skip all the downstream processing of the item. And that is an AI model that kind of sits in the background. And so we've been doing stuff like that, it's getting better and better. I think the other -- so that's on the distribution side. And then the other piece, I think, is on the front-end product side because we don't have product descriptions and things like that the way a more traditional retailer might. Well, we're using AI to provide more lifestyle photography, provide incremental product copy that like helps the customer sort of visualize the item and that's been effective.

Just to add on the photo capture the first part that James was talking about is what can be so amazing about that is if you're able to take an item out of the bag or the box, take the photo, then have the AI work and match it. It would mean you know all the attributes, you know -- you actually have professional pictures that we already took on the item and you skipped the inbound process, dollars in a significant form. So this is being tested in the Atlanta facility now. But even as we do it, we're thinking like, oh, you got to keep pulling it forward like right out of the box or the bag is like would be the most important because then there's nobody doing any data entry or anything to pull that information. So it would be a huge opportunity for cost savings.

Great. Let's pivot to Remix for a moment. So you acquired Remix in '21, which has led the way for your European expansion. You've also seen a lot of positive momentum in recent quarters. Can you maybe talk about the business, how it evolved since the acquisition and some of the factors that might drive the momentum going forward?

Yes. I mean we bought the business in the fall of '21. It was a business that was similar to ThredUp up in many ways. It was secondhand. It was value messaging. It was -- it had operations that were similar in sort of theory to ours. And we've been like really impressed. It's a great team. I mean their distribution, you can sort of walk into the facility there and all you do is light up with things that you can do better. And so when I saw a business that was -- that had raised just a limited amount of capital and it built a real business and that was operating the way ThredUp was operating like a decade ago, we saw just huge, huge potential. And so we bought the business in fall of '21, and we've spent the past 2 years just giving them the ThredUp playbook, right? So we moved them out of their sort of janky facilities into like a new modern facility. We brought in all the technology around photo processing and pricing and discounting and all that stuff. So yes, the business has been doing really, really well. And I think, as Sean mentioned, the consignment mixed shift is the next big one. But they have like some huge advantages. I mean they operate in Sofia, Bulgaria, which is an incredible labor market. They can serve most of Central and Eastern Europe effectively from that market. And we think it's a great beachhead for the rest of Europe.

Sean, I don't know if you want to follow up just on like the financial implications as you're kind of going through that transition from -- or to consignment.

Yes, yes. No, I think that business, since it's kind of an own purchased upfront business, the accounting is different. And you're guessing at what you're going to sell items for us, so you do your best at that. So the margins on that business are like in the 30s. I think we've talked about that. But with the transition to consignment, there is going to be a tailwind, not only that you get the accounting treatment, which is helpful, of course, but you actually are going to get to know what you sell it for. So your -- what you're selling is going to be improved. I think the other side of it is, is what James touched on is just the level of expertise that ThredUp U.S. can bring to Europe is huge, right? So whether it's pricing or some of the automation, I mean, he talked about moving out of their janky facilities where he said, it was they had a distribution center, but it wasn't one center. It was like 4 different buildings. There was a car involved. We literally talked about like steps to the item, second process. There is like a vehicle involved in this process. So getting that done made things significantly different. And they were a business that was capital constrained too. So they really couldn't even tried to lean in when things were good. They were just like -- they had to generate $1 every time they spent $1. So it was a very unique profile. And so I think that's how we've been able to really accelerate that growth curve, given them a little bit of opportunity to spend and invest, yes.

Great. So you also operate a business called Retail as a Service, or RAS, where you partner with brands to power their resale efforts. Can you just quickly walk the audience through what RAS is and how it benefits the overall ThredUp ecosystem?

Yes. So I mean, we've built these 3 assets around infrastructure, operations, pricing and data and marketplace. And over the last few years, we started to realize that the brands would really be able to benefit from all of the technology that we've built. And then I have this thesis that over time, brands will want to be part of the resell ecosystem because ultimately, they'll have pressure to be more sustainable and more circular and that pressure will come from investors, right? It will come from regulators, and it will come from customers who want to see the brands that they love being more sustainable. And so over the past couple of years, we've served to build this platform where we power both the take-back programs. So you can go into dozens of brands now, Athleta, Reformation, Kate Spade, J.Crew, Madewell, Tommy Hilfiger, the list goes on...

25 more...

25 more, I know. And you can pick up a co-branded Clean Out Kit like in their store. Sometimes you'll get it in an online order. And then you can send that back to ThredUp seeing where you would send a Clean Out Kit back to us. And the key difference is that instead of getting credit at ThredUp, you get credit as the brand. And the brand would actually give you more credit to shop for the brand. And so brands love this because it's essentially like found money, right, from their consumer. So that's the first part, which is an integrated take-back model, which is doing very well. And we were public about just how big that has gone. It's close to 0.5 million Clean Out Kits coming through brand last year. So a significant like penetration there. And then the other piece is that we are now taking our technology empowering branded resell sites. And so if you go to jcrew.com, you can click on a little pre-loved tab and move to a site that looks very much on brand for J.Crew and it's all their secondhand product. And what's important about that is that, that product that sits on J.Crew or sits on Kate Spade or Madewell or Athleta or the other 25 is cross-listed on ThredUp. And so there's no difference for us in the back end. We process the products, we put them online on thredup.com and then we cross list them in real time on these brand sites. And so it just provides incremental demand, incremental awareness. And so when you zoom out, the value of RAS is -- oh, and then we charge brands like a fee for the privilege of us doing all this. And so when you zoom out, like the RAS business improves our supply advantage, it's another way to get great bags and great Clean Out Kits, drives incremental demand on the same fixed asset base and drives service like SaaS like fees. And so we think it's a good like long-term fit for the business. And we kind of really want to -- we really think about ourselves as the backbone of resale on the Internet, and I think that's how brands are approaching it.

Great. I don't know if you want to add something because we're going through a shift to consignment here as well.

Yes, yes, yes. No, this is actually the last piece of the U.S. business that purchases upfront, and we're literally down to one partner, that is, purchase upfront that is going to change to consignment. So that will be the last piece in the U.S., and they will be just a very small piece that will be related to returns of stuff that we own. I think you'll get that tailwind. But I do think that people often ask is like, what's the revenue stream from this? The most important thing is eventually not the fee that they pay us, which we do like that, of course. But it's the fact that you have one item that's listed in 4 different locations being able to be sold, supported by an infrastructure behind the scenes is exactly the same. So we do nothing different for when we sell through Madewell or we sell through ThredUp. It's the same item. Actually, the processor doesn't even know and we have dual lists there or trialists or whatever it is. And so I think that's like the real advantage of getting RAS up and running. It's just a huge demand channel for us in addition.

And I think you just have to like think -- you have to take the long view on this because every brand like it's going to like go at some methodical pace, right, like how they're going to like approach resale. Like it's not like one brand is going to decide overnight. We want 20% of our business to be -- like that's not how it works. But each one of those businesses grows 3% or 4% a year. You wake up 10 years all of a sudden, you have 100 or 150 or 200 brands on the platform that are all growing at that rate, like the numbers get pretty big. And so I think people tend to like underestimate that just compounding growth over, say, a decade and then ThredUp is the only place where that can exist, right, because the switching costs, right, become really, really hard, we're your provider at that scale.

Looking more near term, and that's probably for you, Sean, you laid out a target to reach adjusted EBITDA breakeven in Q4 of this year. Can you maybe talk about the building blocks of margin progression into the second half and then also into next year?

Yes. So I think it's -- I mean, it's essentially improving unit economics. So just we're going into bigger facilities, we're more automated. There's less costs associated with it. ASPs have come up. So all of that and then it's volume. And it sounds kind of funny because it's the simple economics on that piece, but it's just the more we're able to process at those better unit economics and continue to improve that business, from [ unit commerce ], it drives us toward that breakeven. And then you have the transition of consignment, you have the transition of consignment in Europe. And all that just kind of get this point where, for us, breakeven EBITDA is just a waypoint, right? It's on the way to free cash flow generation, cash flow generation and expanding EBITDA margins and profitability to you. So it doesn't just stop there, just the one thing we've talked about a lot recently.

And as the founder, I'm always balancing the like pursuit of profits with the pursuit of growth, right? And like you ultimately want to have both. And I think where we're trying to find that right balance is what's the right sustainable growth rate, that's high double digits, right? And then how does that flow through to free cash flow generation. And that's a nice -- we have that debate all the time.

As you're moving towards adjusted EBITDA breakeven, how should we think about capital allocation? You've really touched on that. And kind of like your question, kind of like how you balance growth versus those reinvestment into the business, either on like the product side or international expansion and kind of like all the product initiatives you've laid out?

Yes. I mean, I think we definitely want to like show investors, hey, the business can generate free cash flow. And then I think we want to find the balance of -- we obviously want to expand margins over time. But we also think the category is emergent, and we don't want to miss opportunities to continue to be a dominant force in that. And so I think we're going to have the right balance, which is you should continue to see margin expansion, but -- we think a lot about the Rule of 40, which has become kind of shorthand for some of this stuff and that's sort of a guiding light for us of being a company that on that metric really stands out. And I think that's how we're thinking about it.

Great. Last minute, I do want to ask you about your outside-the-box prediction for the resell category and then also ThredUp for, let's say, next year and then let's take also more longer-term approach.

Yes. I mean, I think there's a lot of like -- I think there's a lot of competition on the RAS side right now. I think there's a number of start-ups that have come in to try and build resale platforms for brands. And I think most of those companies are going to die. And so I think one thing you'll probably see is real consolidation around resale enablement over the next couple of years, and I think ThredUp will be a big beneficiary of that. And then I think you're going to continue to see with a challenged consumer resale being like a category winner relative to the rest of retail. And so we feel very good about our ability to sort of outperform like the broader category. But we'll make that happen.

Great. Well, thank you so much for joining us today.

Thanks.

Thank you.

Thank you.