ThredUp's revenue grew 8% in Q2! The Real Real's profit margins increased significantly!

Despite losing some users last year, ThredUp’s revenue grew 8% year-over-year last quarter, according to its second-quarter earnings report on Aug. 8, thanks in large part to its booming resale services business.

CEO James Reinhart revealed on the conference call that ThredUp added 11 new brands to its RAAS program this quarter, bringing the total to more than 50. Of the 10 brands with the largest resale programs based on listing volume, six are powered by ThredUp. Reinhart said the influx of big brands like American Eagle and Toms has helped ThredUp get closer to its goal of becoming profitable by the end of the year.

James Reinhart said: "We are on track to break even in the fourth quarter, which historically has not been our best revenue quarter, so this gives us confidence in the momentum of the business as we enter a better quarter next year."

Reinhart also noted that ThredUp has now exceeded earnings expectations every quarter since its IPO in 2021 , driven primarily by growth in the RAAS business, and company executives are confident of profitability in the next two quarters.

Rival The Real Real sees big profit gains

Rival The Real Real’s quarterly earnings report on Aug. 8 showed a 15% year-over-year revenue decline. But margins increased by 908 basis points, and net losses narrowed to $41 million from $53 million. ThredUp had a net loss of $5 million in the second quarter.

The Real Real, which doesn't work with any brands or do any back-end resale-as-a-service work like ThredUp, expects to be profitable sometime in 2024 and hopes to do so by changing the type of inventory it sells.

"In the second quarter, we continued to move away from company-owned inventory and consignment merchandise priced under $100 that were unprofitable for The Real Real," The Real Real CEO John Koryl said on the call. "Moving away from selling items under $100 resulted in higher average order values, higher gross margins, lower company-owned inventory and smaller adjusted EBITDA losses compared to the prior year. We view the shift toward higher gross margins as a structural change in our business model. As a result, we believe the changes implemented in 2023 will result in a slightly smaller but more profitable business."

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