GigaCloud (GCT) Q2 Revenue Jumps 3.8%

GigaCloud Technology (GCT -0.53%), a global B2B e-commerce company specializing in large parcel merchandise, reported its second quarter 2025 results on August 7, 2025. The main headlines: GigaCloud delivered record GAAP revenue of $322.6 million, well above analyst GAAP estimates of $290.08 million, and surpassed consensus on adjusted earnings per share (EPS) with a Non-GAAP diluted EPS of $1.14 versus the expected $0.41. These results reflect expanding marketplace adoption, especially in the third-party (3P) seller segment and international markets. Although top-line growth was notable, ongoing margin pressure was also reported. Overall, the company posted its highest-ever quarterly revenue (GAAP), outperformed expectations, with both GAAP revenue and non-GAAP EPS exceeding analyst estimates, and maintained momentum in profitability.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

Overview of GigaCloud Technology's Business and Success Drivers

GigaCloud Technology operates a business-to-business (B2B) e-commerce marketplace designed for large, bulky merchandise such as furniture, fitness equipment, and auto parts. It brings together manufacturers, third-party sellers, and buyers on a global scale, with the added advantage of end-to-end logistics support.

Recent company focus areas include expanding the seller and buyer base, international market growth, and integrating strategic acquisitions. Offering efficient logistics through its own fulfillment network, and applying AI-driven analytics, have been crucial for platform adoption. The ability to add new product lines through acquisitions and technology enhancements supports continued revenue growth and improves margins over time. User base growth, measured by active sellers and buyers, is a critical indicator of platform health and future prospects.

Highlights and Performance in the Quarter

GigaCloud posted record revenue (GAAP), setting a new company high and far exceeding analyst expectations. The revenue figure (GAAP) rose 3.8% year-over-year. Product revenue (GAAP) increased to $225.7 million from $215.1 million, while service revenues edged up to $96.9 million from $95.8 million. Notably, Gross profit (GAAP) was $76.9 million, a 0.7% increase year over year. driven by volume gains but offset by tighter gross margins.

Margin measures showed some pressure. Gross margin, representing gross profit as a share of revenue (GAAP), declined to 23.9% from 24.6% in Q2 2024, with hopes for improvement as integration work finishes and new higher-margin products scale up in sales.

Operating income (GAAP) increased to $35.8 million from $27.4 million a year earlier. This improvement followed a significant reduction in general and administrative costs, which fell to $13.0 million from $26.3 million in Q2 2024. However, Selling and marketing expenses (GAAP) rose to $24.8 million. Net income (GAAP) expanded to $34.6 million, with net income margin rising to 10.7% (from 8.7%). Adjusted EBITDA, which is a measure of core profitability before interest, taxes, depreciation, and amortization, was also up slightly year over year.

Key marketplace metrics support the topline story. Gross Merchandise Value (GMV), a measure of the total value of goods transacted on the marketplace, surged 31.0% to $1,438.5 million for the 12 months ended June 30, 2025. Third-party seller (3P) GMV grew 32.5% year-over-year to $757.5 million for the 12 months ended June 30, 2025 and now represents more than half of total GMV (52.7%) for the 12 months ended June 30, 2025. Growth in active 3P sellers (up 24.9% to 1,162 for the 12 months ended June 30, 2025) and active buyers (up 50.9% to 10,951 for the 12 months ended June 30, 2025) shows continued momentum in platform adoption. Spend per active buyer ticked down slightly for the 12 months ended June 30, 2025, reflecting many new buyers starting with lower volumes.

The company continued to grow its logistics and fulfillment network, especially in Europe. Opening a fulfillment center in Bremen, Germany, allowed GigaCloud to support more rapid order fulfillment across continental markets.

Strategic acquisitions such as the Noble House portfolio added to the product selection and are beginning to contribute to profitability, with the Noble House portfolio becoming a meaningful margin contributor. However, The company is still working through SKU rationalization—retiring underperforming inventory and launching improved product lines—which means the impact on overall margins is not immediate, as discussed in relation to recent gross margin trends. Management previously noted that a three to six month ramp is typical before new items start contributing meaningfully to profit. About $87 million has been used for acquisitions since its IPO, demonstrating ongoing commitment to building scale and capability both organically and through deals.

Shareholder returns were a priority, as The company repurchased 4.3 million shares for $71 million out of an authorized $78 million as of August 7, 2025. and cash and investments totaled $303.7 million as of June 30, 2025. Operating cash flow (GAAP) in the first half of 2025 totaled $48.0 million, compared to $34.4 million in the first half of 2024, improving 39.6% year over year, reflecting robust financial flexibility to pursue share repurchases and growth investments. There were no dividend payments during the quarter.

Looking Ahead: Guidance and What to Watch

Management issued revenue guidance of $295 million to $310 million for Q3 2025. The midpoint of this range would imply a sequential decline in GAAP total revenues from Q2 to Q3 2025. Leadership cited two main reasons: a high comparison period for Noble House’s outdoor product line and slow ramp-up on newly launched SKUs, as well as ongoing inventory transitions. Macro factors, such as tariffs and changes in ocean freight rates, add additional uncertainty to the coming months.

Given this guidance and recent margin trends, the most important items for investors to monitor include the speed of integration and sales scaling in newly acquired product lines, changes in the mix of service versus product revenues, and margin recovery. Trends in inventory and working capital should also be watched closely, since increases in inventory and accounts receivable could signal slower demand or longer sales cycles in select parts of the business. No additional earnings or margin guidance was provided beyond the revenue range.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.