Hello, and thank you for standing by. My name is Tiffany, and I'll be your conference operator today. At this time, I would like to welcome everyone to the ThreadUp First Quarter 2026 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star, then the number one on your telephone keypad. I would now like to turn the call over to Lauren Prash, Investor Relations. Lauren, please go ahead.

Good afternoon, and thank you for joining us on today's conference call to discuss ThredUP's financial results. With me are James Reinhart, ThredUP's CEO and co-founder, and Sean Soberth, 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. Such statements are based on current expectations and assumptions that are subject to a number of risks and uncertainties. Actual results could differ materially. Please refer to our earnings release, the supplemental financial information, and our forms 10-K and 10-Q for more information on these expectations, assumptions, and related risk factors. We undertake no obligation to update any forward-looking statements. During this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP to GAAP measures is included in today's earnings press release and the supplemental financial information, which are distributed and available to the public through our investor relations website located at ir.thredUP.com. Now, I'd like to turn the call over to James.

Good afternoon, everyone. I'm James Reinhart, CEO and co-founder of ThredUP. Thank you for joining our first quarter 2026 earnings call. Today, I'll review our Q1 results, discuss what drove performance in the quarter, and share how we're focused for the balance of the year. I'll then hand it over to Sean Sobers, our Chief Financial Officer, to walk through the financials in more detail and provide our outlook for Q2 and the full year. As always, we'll close with a question and answer session. First to the results. In the first quarter, revenue grew 14.6% year-over-year to $81.7 million, while gross margin was 79.2% and adjusted EBITDA was 3.4% of revenue. We grew our cash balance by $1.3 million. Active buyers on the trailing 12-month basis grew 25% year-over-year, and new buyer acquisition remained strong. March was the best month in our history. All of these metrics exceeded our expectations. However, as we move through Q2, we think it's worth acknowledging that the macro environment remains uncertain. Relative to prior quarters, we do see an incrementally discerning consumer as gas prices remain high and inflation proves to be sticky. We've observed this mainly through average selling prices and conversion rates being slightly lower since early March. Prices are off roughly 3% and conversion rates for existing customers lower by about 5%. Nevertheless, overall demand has remained resilient year-to-date with continued growth in new buyers and strong sell-through driven by existing buyers. That demand, combined with improved marketing efficiency, has supported strong unit economics and has given us confidence in our growth plan for 2026 and how our business leverages and expands margins over time. As we move through 2026, our priorities are focused in three areas, continuing to grow and retain high-value buyers, developing AI technology that helps customers discover and shop across our vast marketplace, and scaling high-quality supply from a diverse group of sellers. In Q1, we continue to improve how customers discover, shop, and sell across startup. With millions of unique items, helping customers find the right item quickly is critical to conversion and retention. On that note, I'm excited to share that we now have our first agentic product experience live for a segment of customers. We start by assigning an agent or a team of agents to each customer. The agents consume event feeds across all platforms, web, mobile web, native, and channels, email, push, SMS, and use reinforcement learning to enable personalized browsing at the individual customer level. No two customer journeys are the same. Ultimately, we're working towards a customer experience that will dynamically change everything you see on thredup based on your clickstream data in real time this is the true promise of agentic commerce second we are now aggregating exact match items into an improved customer experience starting with our highest volume category dresses let me explain this means a customer who is shopping for a dress might now see options on that product page to buy this dress in a different color or a different size or a different quality standard all without having to navigate to another product page. While this is standard in e-commerce, no scaled resale company has been able to replicate this experience across thousands of brands and category SKUs. We think this is a foundational improvement in the resale shopping journey, and ThredUP is uniquely able to do this given our data and vast catalog of photography. This experience is particularly relevant for newer customers and amplifies our broader acquisition strategy as we bring more and more first-time secondhand shoppers to our site we plan to slowly roll this out to more customers and more categories in the coming quarters third with the ongoing success of our ai product development cycles and elevated conversion rates we are unlocking scale and new channels our spend on meta is up 100 percent year over year in q1 delivering some of the highest ltv to cap ratios we've seen pinterest is similarly up 94 this is reduced spend on google where we tend to see the acquisition costs be lower and churn higher. This evolution is consistent with our goal of increasing early customer retention and expanding LTVs over time and exemplifies how ThredUP benefits from advanced and generative AI technology. Turning to supply, each year, our annual resale report has become the industry's go-to resource for understanding where the secondhand market is headed. And this year's edition, which we published last month, identified supply as the defining constraint for the next phase of growth. With U.S. online resale already growing more than three times faster than the broader retail environment, we believe the key to unlocking the next phase of market value isn't demand, it's aggregating more high-quality supply online. Let me anchor that in what we're actually seeing on the supply side of our own marketplace. Our seven-day sell-through rate, which we view as the best proxy for overall demand, is up more than 15% year-over-year, alongside continued strong growth in listings. Listings are up 17% year-over-year in Q1. The net of these performance indicators is that we need more sellers and more supply to satisfy the growing awareness and demand from buyers on our marketplace. We are moving swiftly to do so. In Q1, we made a deliberate investment in new seller acquisitions. Of our total kit requests in the quarter, 48% came from sellers who were new to ThredUp. New seller kit requests grew 90% year-over-year. Overall, this was one of the largest surges in new sellers in Reddit's history, driven by TikTok shop activation, on-site promotion, and targeted seller campaigns. With so many new supplier initiatives in motion, we've renewed our focus on onboarding, seller education, and segmentation, with particular attention to TikTok shops, where we just recently launched premium bags. In addition, we're increasing inbound processing faster than planned to capitalize on this influx of new sellers and build on the momentum we saw in Q1. The long-term picture is clear. A larger seller base, improved supply quality, and more aggressive processing should create a faster-growing, more liquid, more profitable marketplace. Now let me turn to other areas of opportunity in our business. Our direct listings beta remains promising, as we've maintained our goal of growing 10% week over week while continuing to launch new features that deliver the highest quality buyer and seller experience. First, using our vast data set, we're launching a suite of improved seller pricing tools to help items sell more quickly. Second, leveraging the customer data we have accumulated over the years, we're finalizing the rollout of a relisting tool that allows our core marketplace buyer to resell their previously purchased items with one click or make their entire purchase closet shoppable. This relisting feature is a powerful and unique asset given we've sold over 100 million items that ostensibly could be made available to others with one click. We think about this as quote lean back selling and it's more consistent with our approach to serving casual sellers versus professionals looking to run a small business. Finally, we are improving seller verification and training so that we reduce potential for fraud, eliminate subpar listings, and build more trust in our marketplace over time. On the resale-as-a-service, or RAS, front, we've landed several new apparel brand partners that will be launching resale experiences with us in the coming quarters. We've also deepened engagement with existing clients. A standout example was Reformation's in-store trading event in New York City, which went viral on TikTok, a playback we're now replicating across the entire partner base. Earth Month was a particularly strong activation period, with Land's End, Madewell, and Abercrombie all running RAS campaigns that drove meaningful engagement. As we look ahead, we remain focused on executing our growth plan amidst an ever-changing consumer environment. Our priority is building a marketplace that delivers clear value to buyers and compelling monetization and convenience for sellers. We are confident our focus on conversion, retention, and supply quality on top of our strong unit economics will position us to deliver durable compounding performance over time. With that, I'll turn it over to Sean to walk through the financials in more detail and provide our outlook for Q2 in the full year.

Thanks, James. I'll begin with an overview of our results and follow up with guidance for the second quarter and full year of 2026. I will discuss non-GAAP results throughout my remarks. We are extremely proud of our Q1 results in which we exceeded our internal expectations for revenue, gross margins, and adjusted to die for the first quarter of 2026 revenue told 81.7 million dollars an increase of 14.6 percent year over year our performance was driven by investments into new buyer acquisition continued ltv to cac efficiencies and inbound processing that drove our marketplace flywheel these drivers resulted in another strong quarter for new buyer acquisition including a record month in march we finished the quarter with a record 1.7 million active buyers for the trailing 12 months, up 25% over last year, while we had 1.6 million orders in the first quarter, up 19.3%. For the first quarter of 2026, gross margin was 79.2%, a 10 basis point increase versus the same quarter last year as a result of higher AFPs. For the first quarter of 2026, gap net loss was $6.5 million compared to gap net loss of $5.2 million in the same quarter last year. Adjusted EBITDA was $2.7 million, or 0.4% of revenue for the first quarter of 2026, outwarming our internal expectations. Our Q1 result represented a 190 basis point decline over last year. This year, with more confidence in our growth trajectory, we invested in our drivers earlier in the quarter, resulting in better top line results and more moderate EBITDA this year. From here, we expect a methodically expand EBITDA year over year in 2026. Turning to the balance sheet, we began the quarter with $53.1 million in cash and securities and ended the quarter with $54.4 million. We invested $4.1 million in CapEx and generated $1.3 million in cash in Q1. We continue to expect similar levels of CapEx in 2026 as last year. Now I'd like to turn to guidance. As James mentioned earlier, we are seeing indications of a more selective consumer. As a result, we are maintaining our revenue and EBITDA margin expectations for the balance of the year, while flowing through our Q1 outperformance. Nevertheless, we remain confident in driving strong performance in the things within our In the second quarter, we expect revenue in the range of $89 million to $91 million, representing 16% year-over-year growth at the midpoint. Gross margin in the range of 78.5% to 79.5%. adjusted EBITDA of approximately 5.2% of revenue, and basic weighted average shares outstanding of approximately 130 million shares. For the full year of 26, we expect revenue in the range of $351.2 to $356.2 million, reflecting 14% year-over-year growth at the midpoint, raising our gross margin expectation in the range of 78.5% to 79.5%, adjusted EBITDA of approximately 6.1% of revenue, representing approximately 170 basis point expansion versus last year, and basic weighted average shares outstanding of approximately 131 million shares. As we emphasized on our last call, we continue to plan to flow any incremental dollars above our guide back into growth driving opportunities in processing and marketing. This year, we remain confident in the fundamentals of our marketplace, flywheel, and operational consistency and our strategy as we pursue predictable growth, expanding profits, and accelerating cash flow. James and I are now ready for your questions. Operator, please open the line.

At this time, if you would like to ask a question, press star, send the number one on your telephone keypad. To withdraw your questions, simply press star one again. We kindly ask that you limit your questions to one-and-one follow-up for today's call. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Ike Burakoff with Wells Fargo. Please go ahead.

Hey, good afternoon, guys. Two from me. The first one is, I mean, for the Q1, very strong, understand maintaining expectations Q2 to Q4. But James, can maybe you or Sean elaborate, you mentioned the consumer being more selective, but demand resilient. I mean, there's been a lot of things that have occurred, gas, you know, the macro. Can you kind of square those two dynamics? How are you thinking about the rest of the year? Maybe when did you start to see the consumer behavior start to change? Did it coincide with the CNN effect or gas prices going up?

Just to elaborate more on that would probably be helpful. yeah sure hey i guess james um yeah i mean look the businesses remain strong i mean i think q1 was was a good quarter exceeded expectations top bottom line gross margins uh expanded so i think we're feeling very good about the business april you know has been good you know quarter to date so i think everything generally is going in the right direction i think you know we wanted to give folks the building blocks of what we saw on asps and what we saw on conversion rates because it does track, I think, the war in Iran and elevated oil prices and gas prices, which we just think on the margin is making the consumer a little bit more picky, a little bit more discerning. And we're seeing it in ASPs and conversion rate. Now, having said that, we flowed those dynamics through the P&L through the rest of the year. And I think the business remains strong, even with those dynamics at play in April. But I think there's just enough out there, Ike, that we want to um you know be thoughtful about what the rest of the year guide uh looks like but but yeah i mean we're we're feeling great about where we sit sean anything that i'm kind of no i think it is key to understand that we did flow through that asp and conversion you know items that we saw in april through the whole guidance outlook and then i guess just to follow up on the asp i think you said coordinated it was like down low singles is that kind of the expectation the rest of the year that your ASP or AOV, however you would define it, should remain under pressure, or are you expecting a bounce back in the back half? Yeah, right now, I think it's off about 3%, consistent with beginning of March, sort of when we started to see this. Yeah, that's been the guide for the rest of the year. But I think depending on how things materialize with oil prices, with inflation, I could see a scenario where it bounces back, timing of that a little unclear. But I still think that the unit margins, the contribution margins, top line EBITDA are all strong, even with ASB as being off a little bit.

Yeah, and our assumption isn't there isn't a recovery in the guidance numbers.

Thanks, guys.

Thanks. Your next question comes from the line of Matt Coranda with Roth Capital. Please go ahead.

Hey, guys. I guess maybe just following up on that line of questioning, I just wanted to hear you unpack sort of the trend that you're seeing in the business in April and how you kind of built the guide for the second quarter. I guess you said reduced conversion, ASP pressure in April, but the guide for second quarter sales is an acceleration relative to the first quarter. So just maybe square those for us if you could help out there.

Yeah, Matt. Hey, it's James. Yeah, I mean, April has been strong. And I think the guide reflects 16% growth in Q2. And, you know, we flowed through the Q1 beat into the full year at 14%. So again, I think business remains strong and resilient, but we have to acknowledge that ASPs are a little less than we anticipated. I think had ASPs not come down a little bit and conversion rate not come down a little bit, and again, we attribute this to the macro, you know, my guess is numbers would be coming up for both the quarter and the year. But I think at this point, it's better to be a little bit more cautious and see how the quarter unfolds. But again, I think both those dynamics are at play. A slightly more discerning consumer, at the same time, us really operating and executing the business at a high level. Both those things can be true, Matt, I guess is the answer.

Okay. That's helpful. Thanks, James. And then I guess maybe on the supply front, just wanted to hear a bit more. It sounds like the signal is the macro disruption we're seeing might even be driving more supply to your marketplace. Just wanted to hear a little bit about the incremental supply that you're seeing turn on and maybe in the context also, if you have any of the third party initiative that you have going on.

Yeah, I mean, we saw a huge surge in new sellers coming out of the platform in Q1. It was almost 1,000 basis points improvement year over year, Matt, around new sellers. So it was a conscious effort to really invest in getting the supply engine going, and I think we're seeing the success of that. I think anytime you're onboarding that many new people, it definitely adds more work to the team around how do we improve the messaging, how do we improve the education, onboarding of all these new sellers. So we're spending a little bit more time on that than we were 90 days ago. But to me, I think it speaks to the strength of the marketplace model, you know, in any economic climate. And I think we feel very good about how these suppliers from a cohort basis become repeat suppliers over time and really fuel the business back half of 26 and into 27.

Okay. Very encouraging. Thank you.

Your next question comes from the line of Dylan Cardin with William Blair. Please go ahead.

Appreciate it. Is this the first time that you spent to acquire sellers? Can we start there?

Yeah, Dylan, we are spending some dollars testing kind of the methods and the way that we acquire sellers. You know, the work we did on TikTok, as an example, we were working with some creators and some influencers on an affiliate basis. And so, yes, we're sort of kicking off a real methodical approach there. And I think what we've learned actually is that there is room to really grow sellers through some basic paid marketing. And we were sort of embarking on that journey now. The effects of that, Dylan, are that not only are you able to really expand the seller base, but those sellers that you acquire actually convert a pretty good rate into buyers. And also the quality of the sellers that you bring on the platform, their goods actually help drive improvements in buyer conversion rates and buyer LTVs. And so there's actually a nice recipe in there to spend some money acquiring sellers that makes both sides of the marketplace spin faster. So sorry, long answer to your question, but I think there's real opportunity here for us to do this in a methodical way.

No, that's perfect. And that was kind of the root of the question. Because you levered marketing, albeit modestly still. I mean, it's part of the idea you sort to walk through some of the efficiencies that you're seeing, which you've spoken to before, is part of this sort of reallocation because you're seeing some of these greater efficiencies in acquiring either buyers or sellers? Is that one way to think about it?

Yeah. For the last couple of years, I've said, when we do want to start turning on or turning some of our attention to acquiring sellers, we have very effective ways to do that, evolving some of the messaging across these platforms, changing the incentive mix. Everything that I've said over the last few years around how we would do this. It's exactly what we're doing today. And I think it's playing out very similar to how we thought, which is there are very compelling ways to acquire sellers beyond just the organic reach that we have today. And those methods can be very creative to the business, both by expanding the overall seller base and also converting those sellers into buyers. We do really see it as an acceleration of the flywheel.

Excellent. Thank you.

Your next question comes from the line of Dana Telsey with Telsey Advisory Group. Please go ahead.

Hi, good afternoon, everyone. As you think about the prices being lost in conversion a little bit lower, was it consistent throughout the quarter, or is that just the end of the quarter in the month of March? And then with the uptick in new customers, what are their demographics? Is there any regional age, income level? What are you seeing there? Thank you.

Yeah. Hey, Dana. Yeah. You know, interestingly, the pricing piece, we really did start to see some of the conversion headwind and some of the price decrease, you know, start to happen beginning of March, which is very consistent with, you know, the war in Iran. And so, you know, it's hard to say it's perfectly correlated, but we did start to see it then. But what I would say is it really didn't normalize. So we're now operating in that environment for the past 60 days. And so we've been able to, you know, correct where necessary around the types of goods that we're putting on promotion, right? How we're thinking about sell-through and marketing and curation. And so I would just sort of emphasize we've sort of digested these things, both the pricing and the conversion rate and have changed the way that we're operating the business to, you know, meet the customer where they are. But yes, it does point to some correlation with elevated oil prices and consumer sentiment. And then your second question around customers. Yeah, the buyer mix, I think, you know, I mentioned it in the prepared remarks, Dana, but the buyer, we're trying to spend more dollars on Meta, more dollars on Pinterest, fewer dollars on Google, primarily because of the mix of customers that we're able to acquire. You know, the Meta and Pinterest customer, they have better LTVs. Their caps are slightly elevated, but the LTVs more than offset them. And so as we start to have more and more of our new customer flow come from those channels, we actually see the predictive LTVs be higher. And I think that speaks to the ability for us to compound these cohorts over time. So I actually think we're feeling pretty good about the customer acquisition mix and strategy and feeling good about the ability to digest the pricing and conversion piece we've seen since the beginning of March.

Got it. And just one last thing. You talked about the inbound processing being faster than planned. How much faster was it? And where do you go from here? Thank you.

Yeah, I mean, I think with all of the growth in buyers, active buyers being up, new buyer acquisition, what we're seeing in the dynamics is that all of our data suggests that the buyers that we have could buy more and eat up more supply. And so I think our approach now is to turn on all the afterburner jets, you know, to process as much as possible, getting the cohort sizes, the purchase behavior. So I actually think it's a wonderful moment in time, Dana, where we can point to if we process more goods, the business flywheel should go faster, given the pent up demand from this large buyer cohort. So I think it's a nice place to be in where we're able to fly our customers efficiently, the LTVs are good, and really we just need more supply online, and that's what we're doing.

Thank you. Your next question comes from the line of Bobby Brooks with Northland Capital Markets. Please go ahead.

Hey, good afternoon, team. Thank you for taking my question. So I just wanted to start on, you started to see those headwinds in the pricing conversion in March, but at the same time, you had the best month in your history of buyer acquisition, which seems really impressive. So, but also like if I was hearing something was having pricing conversion headwinds of the month, I wouldn't think they would have the best, you know, best month acquiring customers in the history. So I just wanted to hear a little bit more on that dynamic and what you, you know, what do you think you guys did to drive that great performance?

Yeah. Hey, Bobby, it's James. Yeah. I mean, again, I think both these things can be true. I think it shows actually like the underlying strength of the business, which is even in a world where conversion rates might be a little bit softer, the fundamental conversion rate in the business remains strong if you're going to go back to last year remember we spent multiple quarters driving conversion rates way up and so right now we're seeing a little bit of a pullback we think because of the macro environment in there but they're still very strong and that conversion rate Bobby is translating into the new buyer growth like just to give you an example, I think new buyers in Q1 were up 27% year over year, and CACs were down more than double-digit percentage. And so again, we're executing at a high level, and I think if we not had this ASP headwind, if we not had this conversion rate headwind, I'm guessing numbers would be going up. And so we just wanted to acknowledge that those headwinds are real, but we're we're navigating through them absolutely appreciate that call and then just wanted to hear a little bit more of an update on uh how that supply channel through the tiktok shop ended up looking because i know it was like 100 000 bags in one month and then you kind of had to go through that so i was just curious of like any insights of like was that high quality supply and it seems like that's a channel you're looking to tap a little bit more going forward just just more there Yeah, on TikTok, I would say that the TikTok shop bags that have come in, you know, that we've been able to process, you know, so far, they're very similar to other new, you know, new suppliers, basic suppliers that are coming in, which is to say that new suppliers, Bobby, they're always a little worse than existing suppliers, right, because you need to sort of get up the learning curve on ThredUp. And so I think it's a huge opportunity for us to lean into TikTok to scale. Again, I think we need to improve onboarding and some of the education to get all of these sellers to perform the way our large cohort of existing buyers have performed. But I actually feel great about the channel. In fact, we just launched on TikTok in the last couple of weeks our premium kits for sale, which is, again, a new opportunity for us to scale premium bags further. So, again, I feel great about the channel. And, um, we just need to keep educating new sellers just to come on the platform. And, um, but this cohort, it looks to be promising.

That's really helpful. And then just last one for me, it was great to see, again, like on the buyer acquisition, just maybe a little bit more on what incentives you guys, you feel you're doing that's driving that really good acquisition. Is it just the better, you know, better marketing channels going, leaning more into meta and Pinterest and kind of leaning away from Google? Or is it a lot of tailwinds from the rebrand or last year? Just wanted to dive a little bit more of what levers you think are really working and pushing those new buyers.

Yeah, I think the channel mix is a big piece of it. we really kicked off work to improve how we advertised on Meta and how we advertised on Pinterest in a real material way about a year ago. And we've just been methodically growing those channels. And now we're seeing historically low cash for us on Meta. So we're able to put more dollars to work there. And so the combination of just a better product experience on the site, as well as better targeting and efficiency, I think has put together a pretty good recipe. Um, and so we, we, we're trying to lean more into those, those channels, Pinterest and Meta in particular, uh, going forward. But I think, and if we can continue to do that, continue to scale, spend, move dollars away from Google PMAX, I think you'll start to really see those cohorts hum even better than they are today.

Really appreciate the color. Thanks for the time and congrats on the strong quarter. Thanks.

Your next question comes from the line of Oliver Chin with TD Cohen. Please go ahead.

Hi, James and Sean. As we look ahead, order frequency relative to all the momentum and active buyer, what should we know there in terms of what you're seeing? And second, as you articulated regarding ASP and conversion rates, do you expect that to be pretty noisy and or get worse or what's incorporated in your guidance, which is usually conservative? And thirdly, on reinforcement learning, which you featured early, a lot of those models are based on the action reward models in terms of how you're defining that. What's happening in the reinforcement learning in terms of the agent versus the reward, and how does that optimize in terms of being adaptive, and what should we pay attention to in the models as you continue to invest in that experience, which sounds like you're scaling personalization in a new way. Thank you.

Yeah. Hey, Oliver. Why don't I handle the reinforcement learning piece? And then I'll kick it back to Sean on kind of the guidance piece. Yeah. I mean, I think this is pretty exciting times for us to have this first product experience, you know, in market with an agentic engine. and yet every time the agent is going out and an agent or team of agents, right? Because I think you think about this as multiple clients going out there, we're getting better data around how the customer is browsing, what they're adding to cart, what they're removing to cart, what they're clicking on, time on these individual items. And the model is then taking that data and flowing through what is most likely to predict an actual conversion rate at the end of all of this flow. And so it is actually working in real time to pull this information. And, you know, if you look at sort of the underlying fundamentals of this, it's pretty exciting stuff because typically those models have a real lag in them. You know, you're going back and you're doing this more in email marketing or push marketing. In this experience, it's actually changing what the customer is seeing, you know, as they're navigating the site. And for a traditional retailer, this is actually not as hard to do because you have a limited catalog, right? You have SKU depth. For secondhand, when you've got hundreds of thousands of new items coming online every week, you actually need a much more robust, dynamic engine to be able to do this. And I think that's where the team has built something I think that's really pretty special. And so we're seeing conversion rates from that be strong. and we're looking forward to rolling it out to more customers and more categories over time. We started with dresses. That's our biggest category, but lots of wood to chop.

Yeah, Oliver, and on the ASPs and conversion from a plan perspective or a guidance perspective, we looked at what we were seeing at the end of March and all the way through April that James talked about on the prepared remarks and really baked that into the guidance as we go forward.

So you see that in the 2026 full Q2 and full year outlook. And then that last Last piece on frequency, we are seeing actually incremental frequency, Oliver. So one of the things we talked about on the last call was, you know, making some product decisions around the free shipping threshold and how customers engage and really focusing on frequency over, you know, just having average order value be the anchor. And I will tell you that we are seeing frequency go up. If you look at the data on a trailing 12-month basis, you can see revenue per order being slightly lower, but you can actually see orders per buyer actually going up. And I think you're going to continue to see that trend through the rest of 2026. And I think if you roll that trend forward into 27, that order frequency number is a much bigger driver of revenue growth than revenue per order, given how much customers are shopping on ThreatUp. So we think those dynamics are really positive. I think the team's done a great job calibrating revenue per order and frequency.

Okay. And as you've done this for decades, supply has always been very important, but it feels like your machinery has heightened that importance given your success with buyers. But what's different now? Because supply has always been critical, but has there been a step change? And lastly, on the mix, you know, your customer experience has gotten better through AI, too, and premiumization has been a factor. Like, how is that interplaying with perhaps reinforcement learning or what we should understand about the CX?

Yeah, I mean, I think on supply, I think we've always adopted the, you know, point of view that the supply that we're getting could satisfy sort of buyers and demand on the marketplace. I think what we've seen over the last probably 15 months through the launch of our premium service and then just recently the launch of direct selling, we're seeing that incremental innovation in the supply channels really can drive outsized growth among both sellers and buyers, that there are fundamentally pockets of sellers and pockets of the market that we were not addressing. And I would say premium and even just above premium were areas that I don't think ThredUp was really known for, but I think were slowly becoming much more relevant to customers that have that premium mix of goods. And I think similarly with direct selling, you know, customers, ThredUp really didn't have an option for that customer who wanted to sell their own item and recover as much as possible. You know, that is changing. And so I think our point of view is seller innovation can drive expansion of the addressable market and make the business grow faster. And I think that's why we're why we're innovating. As for reinforcement learning with respect to supply, like it's sort of a TBD. We're not using agents yet to do much on the supply side. So there's no sort of RL to comment on.

On the virtual circle, lastly, James, as you really see these TAMs kind of innovate or get bigger, do you anticipate needing different capabilities or supply chain or kind of you'll test as it goes because you're broadening in relevance? I'm not sure if that means something different for how you handle or authenticate over a longer term.

Yeah, I don't see any like material, no pun intended, kind of change in how we do supply handling. But I think what we've done, Oliver, so far is we've built real defensibility, unique assets to price and scale, you know, items that are $25, $26, $27. And we're leveraging that entire supply chain and innovation to do more. And again, our thesis all along was that we could build competitive advantage in supply chain, in data, with our marketplace. And then from there, continue to incrementally expand how we serve buyers and sellers. And I think we're just showing that we can do that. We can still really drive growth among our core basic everyday sellers, but also attract different segments, whether that's through premium or direct selling. And I think it just speaks to the power of the business model to really compound year after year. Thank you very much.

Your next question comes from the line of Bernie McTernan with Needham and Company. Please go ahead.

Great. Thanks for taking the question. Want to touch on supplier, keep that thread going. James, what metrics do you track internally to make sure you have enough supply on the platform, and just where are those metrics now versus where you want them to be? And I have a follow-up.

Yeah, Bernie, we track actually two things. One is items per buyer. So, you know, from a broad selection perspective, how many items are listed, you know, and what's the availability as we look at the distribution of buyers and distribution of items. I think that metric, you know, flipped in Q1 where it said, oh, you've got so much incremental buyer demand. You actually don't have quite as many items per buyer as you would need. And so I think that speaks to, you know, the improvements in the platform and the amount of buyer growth. All of a sudden, the warning light went on of like, hey, you actually could benefit from more and more supply to meet the demands of these buyers. That's one is items per buyer. The second, Bernie, is we actually look at like the quality of the item. We think about it internally as a hanger score, but it's actually like the quality and score of items per buyer. And what we saw was you could still drive more and more high-quality hanger score items, primarily through the mix of premium, to delight that segment of buyers. That led to us launching premium bags on TikTok as an example. And so both of those indicators would suggest that the relationship between supply and buyers is healthy, but that the marketplace today is currently slightly underserved relative to where it was six months ago. And I think, you know, to Dana's question, that's why we're more aggressively investing in ramping supply.

Yep, that makes a lot of sense. And then I wanted to ask on the ASP headwind, is this just consumers trading down or is it any specific action that you guys are taking on pricing to cause this headwind?

Yeah, Bernie, I think that is the question, right? I mean, I think, you know, from the face of it, it looks like the consumer is being a little bit more discerning. And so I think what we're trying to, you know, figure out over the next, you know, 60 days, 90 days is, is there something we can be doing to, you know, have that flip back more quickly, right? Is there something we can do about how we promote or curate or merchandise? But we think today it's mostly the consumer being a little bit more discerning, and that's why we float it through the rest of the year. I think if ASPs were back up, as I said earlier, back up 3%, 3.5%, you know, my guess is that, you know, the numbers would be higher, you know, for Q2 and for the year. And so I think we just have to digest this and, you know, keep operating at a high level, and I think we'll be in great shape.

Great. Thanks, James.

That concludes our question and answer session.

I will now turn the call back over to James Reinhart for closing remarks. well thank you all for joining us today especially grateful to the thread up team for your continued hard work and just the relentless pursuit of solutions to make the lives of all of our buyers and all of our sellers happy so thank you all look forward to seeing you on our next call cheers ladies and gentlemen this concludes today's call thank you all for joining you may now disconnect