GigaCloud Tech Q2 2026 Earnings Call: Complete Transcript

On Thursday, GigaCloud Tech (NASDAQ: GCT ) discussed second-quarter financial results during its earnings call. The full transcript is provided below. This content is powered APIs. 16.

The company is expanding its marketplace and growing its international presence, with significant growth in Europe, where GMV increased 66% year over year. Integration of the New Classic acquisition is progressing, with improvements seen in Q2; the company anticipates further stabilization and growth. The company's marketplace saw active third-party sellers increase by 26% and active buyers by 17%, reinforcing its network effect. GigaCloud Tech's strategic focus remains on disciplined execution, operational efficiency, and leveraging its platform for long-term growth.

The company executed $30 million in share buybacks during Q2, with an additional $18 million post-quarter, and initiated a new $120 million buyback plan. Q3 revenue guidance is set between $375 to $400 million, with anticipated continued contribution from New Classic. Full Transcript OPERATOR Good morning and welcome to the GigaCloud Tech second quarter 2026 earnings conference call. With us today are GigaCloud Tech's founder and Chief Executive Officer Larry Wu, its President Iman Schrock, and its Chief Financial Officer Erica Way.

Larry will give opening remarks, Iman will discuss the company's operational progress, and Erica will review the financial results. After that, we will open the call to questions from the audience. As a reminder, this conference contains statements about future events and expectations that are forward-looking in nature, and actual results may differ materially. Additionally, today's call will include a discussion of non-GAAP measures.

Within the meaning of SEC Regulation G, when required, a reconciliation of all non-GAAP financial measures to the most direct comparable financial measures calculated and presented in accordance with GAAP can be found in the press release issued today by GigaCloud Tech, which is posted on the company's website. Now I will turn the call over to Larry. Please go ahead, sir. Larry Wu, Founder and CEO Thank you, operator, and thank you all for joining us.

Our second quarter demonstrated GigaCloud Tech's resilience and adaptability despite ongoing pressure from across the board. Within the wider furniture landscape, we delivered 28% revenue growth and record earnings per share. Underscoring our commitment to profitable growth, we're actively shaping the company's future by expanding our marketplace, growing our international presence, and making strategic investments that create multiple growth opportunities. Europe is a strong example of this strategy in action.

The momentum we're building overseas is driving meaningful growth and demonstrating our model can scale and succeed across borders. Through disciplined execution, long-term investment, and local expertise, we are replicating our success globally. Beyond organic marketplace expansion, we are leveraging our strong balance sheet and cash flow generation to set the foundation for steady long-term growth. New Classic is a prime example.

Building on experience gained with Noble House, we're executing a proven integration strategy that is squarely on track. The acquisition expands our reach, broadens our offerings, and strengthens our ability to serve a larger portion of the industry. We're not simply industry participants. We're shaping its future by building the industry's digital infrastructure for large-parcel B2B transactions.

By seamlessly connecting buyers and sellers across channels and geographies, we have created an ecosystem that meets today's demands while positioning GigaCloud Tech for future growth. This quarter reinforces that our strategy is working even in the challenging environment. We continue to gain share, expand our capabilities, and deliver profitable growth. With a scalable platform, disciplined execution, and long-term focus, we believe GigaCloud Tech remains well positioned to create meaningful value in the years ahead.

Now I will turn the call to Iman for discussion of our ongoing and continued progress. Iman Schrock, President Thank you, Larry, and hello everyone. Our marketplace remains GigaCloud Tech's core engine, delivering another strong quarter. 7 billion as of June 30, 2026, demonstrating the continued value buyers and sellers find in our platform.

Even in today's challenging environment, marketplace fundamentals remain healthy. Active third-party sellers increased 26% to 1,465, while active buyers grew 17% to 12,823. These gains reinforce the network effect at the heart of our platform. More sellers attract more buyers, and more buyers create greater opportunities for sellers, strengthening the marketplace over time.

S. furniture industry, domestic GMV increased 9% during this quarter, significantly outperforming the broader market. We continue to gain market share, reflecting the strength of our marketplace and the value of our supplier-fulfilled retailing model. Our platform serves suppliers and retailers through an integrated ecosystem designed to make large-parcel B2B commerce more efficient.

By providing greater flexibility, efficiency, and risk management capabilities, we help customers navigate challenging market conditions while supporting long-term growth. We remain focused on disciplined execution and operational efficiency. GigaCloud Tech was built to perform across market cycles, and our adaptability is a key competitive advantage. Tools such as dynamic pricing allow us to respond quickly to changing conditions while remaining focused on our long-term strategy.

The strength of our platform and operating model gives us confidence in our ability to continue creating value, gaining share, and advancing our growth objectives. Europe remains one of our most exciting growth opportunities. Quarterly GMV increased 66% year over year, making the region both a meaningful growth vector and an important source of diversification. S.

success gain traction internationally, building a strong supply foundation with 1P, attracting buyers, and creating a flywheel that drives 3P seller participation, product selection, transaction volume, and efficiency. That flywheel is gaining momentum. We are now seeing meaningful 3P participation in response to marketplace buying demand. 3P sellers in Europe increased more than 400% year over year and now represent over 15% of Europe marketplace GMV compared to 6% just a year ago, reinforcing our belief that we are still in the early stages of a significant opportunity.

Turning to New Classic, the integration remains on track for completion by mid next year and continues to be an important strategic priority. Our teams are aligning systems, processes, and operations while identifying opportunities to introduce new product offerings, improve efficiency, capture synergies, and leverage the scale of our platform. As we shared during the last call, the New Classic portfolio saw an approximately 20% year-over-year decline in Q1 immediately following the close of the acquisition. The decline was due to both challenges faced by traditional wholesalers in the industry and by initial disruptions following the change in ownership.

Encouragingly, that decline improved to 8% in the second quarter, reflecting stabilization and early progress from our integration efforts. We believe the larger opportunity still lies ahead. New Classic brings a strong brand, established customer relationships, and a meaningful brick-and-mortar distribution that complement our existing strengths. These channels create new opportunities for growth, and we are already introducing additional products and offerings to this customer base.

While we are pleased with the progress made so far, we are even more excited about the opportunity ahead. We believe New Classic is well positioned to benefit from the scale, resources, and capabilities of the GigaCloud Tech platform, creating long-term value for customers, partners, and shareholders. Now I'll turn the call over to Erica for a discussion of our second quarter financial results. Erica Way (Chief Financial Officer) Thank you, Iman, and thank you all for joining us today.

As a quick reminder, all figures covered today are rounded and unless otherwise noted, comparisons are against the same period last year. Now let's get into it. Despite continued market uncertainty, we delivered record revenue and record quarterly EPS through disciplined execution and a focus on profitable growth. Revenue increased 28% year over year to $412 million, including 23% organic growth and a 5% inorganic contribution from New Classic.

16 per share, a testament to our team's strong execution and the enduring strength of our business model. Now let's break it down further, starting with service revenue. Strong marketplace activity drove service revenue growth of 25% to $121 million. Service revenue growth was supported by higher demand for ocean freight, warehousing and last-mile services, as well as increased commission revenue from higher transaction volumes.

7%, driven by ongoing carrier optimization, responsive pricing for our service offerings and favorable ocean freight dynamics. Because much of our ocean freight capacity is secured through long-term contracts, our service margins benefited as spot rates moved higher during the quarter. Moving on to product revenue, product revenue increased 29% year over year to $291 million with growth across all regions. , product revenue grew 17% despite continued softness in the broader furniture market.

We benefited from a strong outdoor furniture season in Q2 and our ability to deliver was driven by capabilities gained from acquiring Noble House, an asset that has become an ongoing and growing contributor to our revenue and earnings, and that success gives us a proven playbook as we turn to our newest addition, New Classic. 3 million of revenue during the quarter. While sales declined 8% year over year, performance improved significantly from the first quarter as we stabilized operations and advanced integration efforts.

We believe New Classic is following a similar path to Noble House, where operational improvements and disciplined execution unlock meaningful value over time. Europe remained a standout performer, with product revenue increasing 54% year over year to $109 million. Growth was driven by continued marketplace expansion, increasing buyer and seller participation and stronger relationships with international partners. Europe continues to validate the scalability of our model.

S. it has become a meaningful contributor, an important source of diversification and a powerful growth vector that we believe can remain a significant opportunity for years to come. 4%, in line with the previous quarter. 7% from prior quarter.

Sales and marketing expense was $36 million, or 9% of total revenue, compared with 8% a year ago, primarily due to higher channel commission and spend supporting our European expansion. General and administrative expense was $19 million, or 5% of revenue, compared to 4% in prior year quarter. As we previously discussed, our annual stock-based compensation is granted in the second quarter each year with a substantial portion vesting immediately upon grant. Consequently, the resulting expense is directly tied to our share price on the grant date, meaning the higher share price this year resulted in an increased total SBC expense.

As a result, share-based comp was $11 million in the second quarter of 2026, compared to $3 million in the second quarter of 2025. Dilutive effects from our 2026 SBC grant have already been offset by buybacks executed in the second quarter, which we will go into more details on shortly. 3% of revenue, up 22% year over year, supported by share repurchases. 16 per share.

Operating cash flow was $48 million during the quarter. We remained debt-free as of quarter end and ended the quarter with $379 million of total liquidity, which includes cash, cash equivalents, restricted cash and short-term investments. We continue to execute on our share buyback plan. As we had previously communicated, we retained the flexibility to execute our share repurchase plan opportunistically during periods of market volatility.

55 per share. All repurchased shares as of June 30th, 2026 have been retired. 00 per share. This brings our total execution under our $111 million authorized plan to $81 million as of today.

This leaves us with $30 million remaining under our previous authorization and two years still left on that plan. In our view, that level of capacity is insufficient to act decisively when opportunities arise. As a result, our board has approved the cancellation of our existing plan and authorized a new buyback plan of $120 million, effective immediately with a duration of three years. Regarding M&A, our near-term priority remains the successful integration of New Classic.

Once that progress is further along, we expect to become more active in pursuing additional acquisition opportunities that support our long-term growth strategy. Looking ahead, we expect third quarter revenue to be in the range of $375 to $400 million. Operator, we are now ready to begin the Q&A session. OPERATOR Thank you.

We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two.

The first question comes from Thomas Forte from Maxim Group. Please go ahead. Thomas Forte, Analyst at Maxim Group Thanks, Larry, Iman, Erica, Greta, congratulations on the very strong results. I have three questions.

I'll go one at a time. So Erica, I didn't hear two words in your performance remarks, so I'd appreciate if you could comment on tariffs refunds and if it's something that you have an opportunity to do given that a lot of other companies are talking about it this quarter. Erica Way (Chief Financial Officer) Yes, good morning, Tom, and thank you for your question. So we have been applying for tariff refunds just like everyone else has and we have already received a portion of them so far.

The amounts received are not terribly material to date in the grand scheme of things. Given the acquisition situation with New Classic and customers that had previously received price increases because of purchasing containers, I think in the net of things, I don't think it will be a meaningful effect for GigaCloud Tech as a whole in the long run since we may not be able to retain all of the economic benefits. Thomas Forte, Analyst at Maxim Group Thank you. And then the second question I had is, during the quarter, Amazon launched supply chain as a service.

So I'd appreciate you explaining to the market why you think it is or is not a competitor and if it is a competitor, why you believe you're better situated to succeed in your efforts. Iman Schrock, President Hey, Tom. We continuously monitor developments across the logistics landscape. Amazon's logistics network is broad.

Our value proposition extends beyond transportation. Our strength lies in the combination of our B2B marketplace and integrated logistics solutions that we provide for large-parcel products. We are purpose-built for large parcel and are completely channel agnostic, enabling customers to fulfill orders across multiple sales channels through a neutral platform. We believe this flexibility combined with our marketplace continues to differentiate our offering.

Thomas Forte, Analyst at Maxim Group Excellent. Thank you. Third and final question. So as you get bigger, M&A activity also needs to get bigger to move the needle.

So what's your appetite for larger-scale acquisitions? Iman Schrock, President Hi, Tom. So it really is target specific. Sorry, I'm hearing a little bit of feedback.

It really is target specific. So I think there is appetite for perhaps something a little bigger as we grow, once we are past the initial stages of integrating New Classic. Now, when it comes to a topic of specific size, it really depends on who the target is and how well they fit in with GigaCloud Tech's long-term objectives strategic-wise rather than a fixed specific range we are trying to hit. Does that answer your question?

Thomas Forte, Analyst at Maxim Group Yes. Thank you. So congrats again on a very strong quarter. Iman Schrock, President Thank you, Tom.

OPERATOR The next question comes from Matt Karanda from Ross Capital. Please go ahead. Matt Karanda, Analyst at Ross Capital Hey guys. Good morning.

Just wanted to hear a little bit more about the third quarter growth outlook. The 17% growth you've incorporated into the outlook. How is New Classic factored into that? Just given some of the headwinds you mentioned on New Classic products.