Good afternoon, and thank you for joining us on today's conference call to discuss thredUP's Fourth quarter and full year 2021 financial results. With us are James Reinhart, thredUp's CEO and Co-Founder; and Sean Sobers, CFO. We posted our press release and supplemental financial information on our Investor Relations website at ir.thredup.com. This call is also 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, including, but not limited to, statements regarding our guidance and future financial performance, market and demand, growth prospects, business strategies and plans. These forward-looking statements involve known and unknown risks and uncertainties, and our actual results could differ materially. Words such as anticipate, believe, estimate and expect as well as similar expressions are intended to identify forward-looking statements. You can find more about these risks, uncertainties and other factors that could affect our operating results in our SEC filings, earnings press release and supplemental information posted on our IR website. In addition, during the call, we will present certain non-GAAP financial measures. These non-GAAP financial measures should be considered in addition to, not as a substitute for or in isolation from GAAP measures. You can find additional disclosures regarding these non-GAAP measures, including reconciliations of comparable GAAP measures in our earnings release. Now, I'd like to turn the call over to James Reinhart.

Good afternoon, everyone. I'm James Reinhart, CEO and Co-Founder of thredUP. Thank you for joining us for thredUP's fourth quarter 2021 and fiscal year 2021 earnings call. We're excited to share another quarter of strong financial results and business highlights. In addition to our financial results, we will offer some perspective on the performance of Remix, the European resale company we acquired last year as well as progress in our Resale-as-a-Service, RaaS offering. Beyond our results, given we're 1 year in to being a public company, I thought it would also be useful to remind investors of our strategy, sustainable competitive advantages, and the investments we're making to widen our moat and strengthen our leadership position in the still nascent retail market. To conclude today's call, Sean Sobers, our Chief Financial Officer, will talk through our fourth quarter and fiscal year 2021 financials in more detail and provide our outlook for the first quarter and full year 2022. We'll close out today's call with a question-and-answer session. Let me start by acknowledging that since we last reported earnings in November, the world and investor sentiment have changed significantly. I want you to know that we get it. We are operating in a different macro context. And while volatility like this can stress a young public company, we welcome this increased [scrutiny]. I believe great companies with winning strategies in high-growth markets with strong management teams always outperform when times are difficult. We at thredUP are committed to being the kind of team you can count on for predictability and transparency. I also want to make it clear that we are on a mission to build a generation-defining company that changes the way the world shops and offers in a new era of sustainable shopping. We will always aim to balance…

Thanks, James, and again, thanks, everyone, for joining us on our fourth quarter and full year 2021 earnings call. I'll begin with an overview of our results and follow with guidance for the first quarter and full year. I will discuss non-GAAP results throughout my remarks. Our GAAP financials and a reconciliation between GAAP and non-GAAP are found in our earnings release, supplemental financials and our upcoming 10-K filing. We are extremely proud of our Q4 results, especially delivering our fourth consecutive quarter of accelerating revenue and gross profit dollar growth on both an organic and consolidated basis. One of the most exciting Q4 developments was our acquisition of Remix. While we plan to report and guide on a consolidated basis going forward, in some cases, we will speak more specifically about thredUP U.S. and Remix individually during the transitional period. For the fourth quarter of 2021, revenue exceeded our expectations, driven by the acquisition of Remix and growth in thredUP U.S. Revenue totaled $72.9 million, an increase of 68% year-over-year. Consignment revenue increased 31% year-over-year, while product revenue grew 205%. Product revenues outsized growth is largely due to our Q4 acquisition of Remix, a business that currently derives the majority of its revenue from direct sales model. For the full year, we are proud to deliver revenue of $251.8 million, an increase of 35% year-over-year. Active buyers and orders are amongst the most important KPIs that we used to track the business and we finished 2021 achieving record levels for both. For the trailing 12 months, active buyers rose 36% to 1.7 million. We ended the fourth quarter and full year reaching 1.7 million and 5.3 million orders, increasing 69% and 34% year-over-year, respectively. Since we believe that gross profit improvement is the best way to measure our progress,…

[Operator Instructions] We'll take our first question from Ike Boruchow with Wells Fargo.

Two from me. Within Europe, I think you guys gave the Remix gross margin for the quarter. Could you give the revenue contribution for fourth quarter as well? And then within the European business, any insight over the past week or 2 on consumer sentiment or behavior that you guys would call out? And then a second question for Sean. Just the EBITDA progression through the year, it seems like you're expecting things to kind of smooth out. Just anything we should keep in mind quarter-to-quarter would be great.

Yes. Okay. This is Sean. Yes, from a Remix revenue perspective, I think the last kind of information we gave you guys was 2020 was about $34 million. They've been growing since then. We're not going to get real specific about what their revenue is, but you can assume that they're growing, we're growing to kind of do some math there. I'll let James give you a little view on kind of the sentiment in Europe.

Yes. I mean I think Europe has been under a lot of pressure, Eastern Europe, obviously. But nothing that would, I think, is changing our point of view on the broader kind of long-term European strategy, but obviously, we have a team in Ukraine. Our hearts go out to them. We've been monitoring them. But I don't think that we have any more information to provide at this point, but certainly something we're keeping a close eye on. And then I'll Sean talk about EBITDA progression over the rest of the year.

Yes. And then from an EBITDA perspective, like the rate overall, we expect a slight improvement quarter-over-quarter as we go throughout the year. DC07 won't really come online for revenue until about Q3. So you have some headwinds as you go through the first half that we talked about in the prepared remarks. And you'll start to see that benefit more in Q4 as we get more up to speed in generating revenue out of DC07 or the Dallas DC.

We'll take our next question from Ross Sandler with Barclays.

Sean, just a little housekeeping on all those numbers you rattled out. But I think you said core thredUP gross profit was $44.1 million, which would make the Remix gross profit of $4.1 million and that a 37% margin revenue would be $11 million in the quarter. And if I annualize that, your gross profit for core thredUP in '22 based on the high end of your guidance is below 20% growth. So I guess the question is, are those numbers right? Or am I just way off? And why is the core growing less than 20%? What's going on with kind of core U.S. consignment? And then the second question is, how do we bridge from the mid-60s up to your long-term gross profit margin target of 75 to 78. Can you just help us get there given the Remix impact?

Yes. From a gross margin perspective, I think you'll see the evolution from where we are today, consolidated to kind of migrate more towards what thredUP was stand-alone, pre Remix. So we'll get back into the 70s as we move towards more of a consignment base model throughout Europe. That will start to give us a little tailwind from where we are today, in addition to all the improvements that we'll be having from an automation perspective and the scale we'll get as we move into DC07 in the processing centers. I guess kind of the overall March as we go from where we are today, get back to where thredUP was stand-alone and then move towards the longer-term model that we laid out in front of you. And then from a thredUP versus Remix, I think you can kind of back your way into revenue. I think we gave enough of that. And I don't know on your percentage and growth for the full year. It looks -- it is a different number than that.

We'll take our next question from Dylan Carden with William Blair.

Just curious, the utilization rate for Atlanta specifically, I would imagine it's below that 77% number you gave. And then the not needing distribution capacity until 2025, I think -- I thought that you've said to around the IPO to your sort of 18 to 24 months build-out cycle. Just curious if I had that right, if there's a change there, maybe balancing profitability in tandem with growth investment? And then -- sorry, just to add to it, just on distribution. The new Clean Out Kit processing centers, can you just speak to the strategy there, what that allows for from maybe a speed lead time standpoint in sort of any sort of economic or margin implications of expanding that?

Yes. Dylan, it's James. Yes, I mean, I think when we went public, I think we were planning on every 18 to 24 months for these distribution centers because that had been the historical trend. But we did not anticipate at that point the opportunity to build a bigger facility in Dallas. So the facility in Dallas is 3x -- more than 3x the size of Atlanta, right, which was more than 2.5x the size of our previous facility. And so I think as we probably signaled previously, we were sort of evaluating whether we would need to continue building facilities of that scale at that rate. And I think what we've been able to see with our pricing strategies and our turnover, right, that we can maintain strong growth rates within the constraints of that facility, which makes us think we don't really need to start biting off a new one until 2025. So I think that gives us a lot of confidence in how the business leverages over the next year or 2. And then I think that's a natural segue into your question about processing centers, because those are much more of a lightweight facility build-out and they operate near our bigger hubs. We can turn those on, access more processing power, shorter lease durations, but ways that I think really diversify our ability to process bags over time. And I think as you might have caught in my remarks, because of that, we're seeing the bag backlog processing times come down. So we think the whole recipe for how ops is scaling and leveraging, I think, is in a really good place.

We'll take our next question from Anna Andreeva with Needham & Company.

Two questions. First, really strong growth in buyers. Can you talk about what drove that? And how are you thinking about buyer growth implied in guidance either for 1Q or for the full year? And then secondly, just looking at the gross margins, the low end of the guide, I think you're implying a bigger decline for the year versus what you expect for 1Q despite the new DCs coming online, I think you said in 3Q. I just wanted to make sure what's driving that.

Yes, Anna, it's James. I think just on both of those points, it's really the Remix contribution. So the growth in active buyers in Q4 because we consolidated Remix in Q4, closed the deal in October. So that showed kind of outsized growth relative to where we would have been thredUP standalone. And so -- but I think you can probably think about the next year at sort of more steady growth rates across both of our businesses. And that -- and Remix consolidation in 2022 is actually what drives the gross margin number because remember, their business is totally direct product revenue, and that business operates at much lower gross margins than thredUP does as a consignment business. And so as Remix continues to grow, right, it's a much smaller business than thredUP is today, it will make up a slightly larger portion of our revenue as we grow throughout the year. And so that will just from the math structurally bring down margins. And then the plan, obviously, is the transition Remix to consignment as the thredUP business is on consignment. That's just going to take a couple of years. We obviously don't want to do anything that would shake that business up in a negative way. But that transition will happen. And so I think we feel very confident in the long-term gross margins of the business and a combined entity, but we're going to have to digest Remix in the near term.

Yes. And Anna, just to be clear that we expect active buyers as a thredUP standalone U.S. business to grow throughout '22 as well.

We'll take our next question from Lauren Schenk with Morgan Stanley.

This is Nathan Feather on for Lauren. Just looking at your guidance implies a bit of an acceleration from 1Q to the rest of the year. Was that just due to the processing limitations due to Omicron? Or any other puts or takes you can talk to there? And then obviously, an investment year in fiscal '22 kind of laying the groundwork for future leverage. Can you talk through how that changes the path to profitability versus what you had laid out about yet?

Nathan, yes, I mean, I think on the first quarter, I think as Sean and I mentioned, we definitely had real processing headwinds in December or into January with Omicron. And so that, obviously, as we've been consistent, hurt our ability to put those items online and drive that revenue. And our new -- both of our processing centers that we mentioned in Lebanon and then in Grapevine, Texas, both of those have come on just in the last month or so. And so that adds a lot of processing capacity to our business as we move throughout the year. And so again, as our business, as we process more goods that allows us to grow even faster. And so I think that's part of why the numbers that you see suggests an acceleration throughout the year. And as it relates to path to profitability, I think we remain consistent, which is we want to make these investments to drive sustainable growth and profits over time. And I think we're making the right ones right now to take advantage of what we believe is a massive market. And so -- but I think, importantly, those infrastructure investments leverage over the next couple of years, that I think will make it very clear to investors how profits come over time.

Yes. Keep in mind that, that statement we said we won't need another distribution center like Dallas until the earliest like 2025. So all that investment now is going to continue to pay off through '23, '24 until it gets to '25.

We'll take our next question from Mike Ng with Goldman Sachs.

I just have 2. First, could you just talk a little bit about the parallel that you see for Remix in Europe relative to thredUP in the U.S.? And what gives you confidence about the opportunities for Remix to follow on that thredUP maturity curve? And then second, I just wondered if you could talk about what you view as the constraints on growth. I think it historically has been a supply side constraint and on that supply side, it seems like labor is the biggest constraint now. Is that right? And how do you see that evolving throughout 2022?

Yes. Michael, I think on Remix, I think as we said last quarter, it looks a lot like thredUP did 6, 7 years ago from a revenue and growth profile. And so I think our ability to run a similar playbook as we have in front of over the last few years, but deployed that with all of the things that we've learned. To me, it feels like we have a lot of confidence that Remix can end up on a very similar track to thredUP, not just in its sustainable growth, but also just its ability to kind of capture this ongoing expanding TAM and be able to do that in a consignment margin profile that looks very similar to thredUP, but I think we said that that's going to take 2 to 3 years as we transition that business from when we closed the deal in October. So I think we continue to feel confident in Remix looking a lot like thredUP over the next few years. As for like constraint to growth, yes, I mean, it's often in 2-sided markets like this one. It's supply that drives that. And for us, it's really about supply processing power. And so part of our investments in bringing on a new DC in Dallas and adding the processing centers is to really accelerate that processing. And I think that gets back to Nathan's questions earlier, right? That's what really drives acceleration as we move through the year is our ability to process more and more goods. So I think that story is very consistent to how it's been at thredUP over the last few years.

We'll take our next question from Tom Nikic with Wedbush Securities.

I wanted to ask about, I guess, the building blocks for EBITDA for 2022. I think based on the margin rates and revenues you gave, the actual loss in dollars should be about $10 million to $15 million more 2022 versus '21. I think you said $6 million comes from the DCs and the processing centers. I think you said [$30 million] of incremental public company costs. Is the remainder just losses from Remix? Or is there anything else that the source of investment that we should be thinking about?

You have a piece related to the increased costs and logistics as well. That's kind of the missing piece, I think you have.

Okay. Got it.

That alone in Q1 was $1 million.

Okay. Got it. And is there any way we should think about like what the core sort of improvement would kind of be without these investments?

Well, I think you can take those out. I mean in Q1 alone, the $1.5 million related to DC07 is about 2% of EBITDA. If you look at the $6 million for that, it's approximately 2% for the full year as well. That's going to be front-end loaded. So you're going to have similar numbers, maybe 2.5% that would impact Q2, so if you're thinking it through that way, just related to the DCs. But I think this is great because it's investment for the long-term future and then the impacts of some of the things we're doing in SG&A as well as just kind of increased logistics.

We'll now take our next question from Dana Telsey with Telsey Advisory Group.

I think in the last quarter, you had mentioned strategically lowering prices and it was, I think, around 15% in the third quarter. What does it look like in the fourth quarter? And how do you think about your go-forward game plan?

Yes. Dana, it's James. Yes, I mean, I think as I said last quarter, we really let the data help dictate for us where the pricing opportunities are. And as I said, I don't think -- not all prices that thredUP went down 15%. It was -- it's on average across 35,000 brands that we sell. And I would say right now, we're doing the same calculation. So I don't think we have any new news to break on pricing. I think we're going to let the data point to the best way to drive performance in our business and serve the customer. And I think that's the thing we've always been doing, we'll continue to do.

Got it. And it's nice processing times. What is your expectation as we go through 2022 in terms of what it looks like?

Yes. I mean I think, look, we've made a huge progress since last quarter and the new processing centers coming online, DC07 coming online. So I think we're feeling confident that it's moving in the right direction. As I said last time, though, there's always this elasticity experience where, as our processing times come down, consumers, sellers pile into our business. So I think it's too soon to say, Dana, when it's going to be back down to our steady rate of 2 to 3 weeks. But I have a lot of confidence that the investments that we're making right now to drive processing are the right ones, meaning the customer is going to respond positively to that.

Got it. And just lastly, last time you were seeing an uptick in terms of dress-up wear for the holiday season. Any new trends out there that you're seeing in terms of product sell-through categories?

Well, we're definitely seeing like consumers really seeing the shift to warm weather come earlier just like some vacation staples, like maxi dresses, for example, Dana, they were up 55% year-over-year in February. We saw shorts were up 68% year-over-year in February. Miniskirts were up 58% year-over-year in February. So I think a number of these categories that suggest consumers are ready to kind of get out in the world, like continue to be true. And so those are sort of a few of the trends that we saw.

We'll take our next question from Matthew Egger with Piper Sandler.

Just 2 quick ones from me. One, can you kind of explain to us the rationale in scaling international this early in the story and maybe speak to how you view kind of expansion -- category expansion versus geographic expansion? And then secondly, kind of in the -- when you all were going public and in your IPO models, I think you said RaaS was not a part of your forecast. Is that still not contemplated in your model or your guidance going forward?

Yes. Matt, look, I think we believe that the international opportunity in resale is massive. The European resale market is very large. And so we felt like it was a great opportunity with a business like Remix that was very similar to thredUP in lots of ways. We thought it was the right time to do that, we won’t comment on other categories at this point. But continue to feel very confident in the decision to buy Remix and expand into Europe, essentially doubles the TAM for thredUP. As for kind of the IPO modeling forecast...

We're past that. So yes, anything that we know about RaaS is in our forecast.

Yes.

[Operator Instructions]. We'll take our next question from Brian McNamara with Berenberg Capital Market.

Can you give me a little more color on your expectations for Europe in Q1 and this year and how that's perhaps changed over the last few weeks? If this call was a month ago, is your top line guidance for the year materially higher?

Brian, yes. I mean, look, we continue to think that Europe is a great opportunity for us. I think what's happening in the Russia and war in Ukraine, like -- we don't expect that to be a huge drag on the business over the course of the year. But look, we acknowledge that it's -- there is some uncertainty there. But look, I don't think that it's going to materially change our point of view that international growth is a big opportunity for us and that Remix is a great business that we have in Europe. So yes, I mean, I think we're watching it closely, but I don't think our point of view on the opportunity in Europe has really changed.

Yes, specifically, Brian, just like -- we generate no revenue from Ukraine. We get no supply from the Ukraine. But obviously, the burden on what's happening in Europe is hanging on the consumer. So we're paying close attention to that.

Got it. And just a quick follow-up. So the stock in your peers has had a tough few months here. What do you think you're not getting enough credit for? And what's your long-term investors be most excited about?

I think people fundamentally misunderstand like some of the competitive advantages that we're building in all the dollars that go into building infrastructure growth create real compounding returns over time. So I think as we've been consistent, we think when you're building infrastructure, you're widening your moat, you're deepening your advantage. And that really materializes over a number of years. And I always point to people that this is very much the same playbook that Amazon ran very early in its life, which was to build real infrastructure that really delivers for the consumer and then to be able to ride that out over time. And I'm a big believer that, that strategy pays off, but it takes some time to pay off. But we're not going to waver from making the right decisions on how to build those competitive advantages to serve the customer. And I think that's the thing, Brian, people often don't quite appreciate.

And that does conclude today's question and answer session. I would like to turn the conference back over to management for any additional or closing remarks.

Thanks, everyone, for joining us for our conference call. Thank you for the great questions. Thank you to the thredUP team for all their hard work. And just to call out to acknowledge all the folks we have in the Ukraine that are suffering through a really difficult time, we want to give them a shout out and appreciate all their incredible hard work in service of our customers. So, with that, we'll wrap it up. Thank you.

Thank you. That does conclude today's conference. We thank you all for your participation, and you may now disconnect.