Edward Yruma: Thank you.
Operator: Thank you. And your next question comes from the line of Trevor Young from Barclays. Please go ahead.
Trevor Young: Great. Thanks. James, could you provide an update on what you’re seeing among different buyer demos? Any color on demand from the more value or budget shoppers versus higher income shoppers would be helpful. And then second, the slides talk to an expected 20% industry CAGR through 2027. Is there any reason why you couldn’t match or even exceed that growth rate in the coming years, i.e. gain market share? I realize appreciating Sean’s comments about the product versus consignment mix headwinds, so maybe we look at like GP or order growth as a proxy versus that industry growth. Is that the right way to think about it?
James Reinhart: Yes. Thanks, Trevor. Yes, I mean, I do think gross margin and gross profit dollars is the right way to think about it. It’s very similar to – when we came public, the U.S. business was going through that transition and we’ve navigated that I think, very effectively. I think that’s why the U.S. gross margins are at the records that they’re at. So we expect that same thing to be true. And I do think that when you look at it on a gross margin growth basis, yes, that 20% seems fair. I mean, Q3 was 27% in that category. So we do think that is something that we will continue to strive for. And the buyer demo question, sorry. I think we’ve done a really, really good job as a team of focusing more of our buyer efforts on a slightly more premium shopper.
So this is a story we’ve been telling for some time now. And I think now all of that work that we’ve done to acquire that incrementally more premium buyer and deliver them incrementally more premium product, I think it’s now like proving to be fruitful. And I think that’s why you’re seeing active buyers now up year-over-year. I think that’s why you’re seeing active buyers up sequentially. We expect that trend to continue into Q4 and into 2024. So I think the segmentation strategy that we’ve done is working and I think we’ll continue to execute on that plan.
Trevor Young: Great. Thank you.
Operator: Thank you. And your next question comes from the line of Anna Andreeva from Needham. Please go ahead.
Anna Andreeva: Great. Thanks so much and good afternoon, guys. Two questions from us. Could you elaborate a bit more just on what you’re seeing in Europe? Have those headwinds gotten worse quarter to date? And does the fourth quarter guide contemplate bigger sales decline at remix or consignment revenues more moderate as well, just given your October comments? And secondly, not sure if I missed this, but what drove the upside to the third quarter gross margin just impressive beat despite environment getting worse? Thanks so much.
Sean Sobers: Hey, Anna. This is Sean. I’ll do the gross margin piece first. I think the outperformance in gross margin came from the RaaS goods transitioning faster consignment as well as kind of our normal ongoing improvements to our operations in marketplace such as pricing, fees, payouts and general automation and efficiencies that was all driving the overall gross margin in the U.S.
James Reinhart: Yes. And Anna to your question about the – on the European side, I mean, I think really what we’re seeing is just it’s a little bit softer than we had expected. And I mean, one of the things we’re really just starting to see now is, is that the weather is changing, right? It’s a much more seasonal business there, especially in that part of Eastern Europe. And so as it gets colder, we think we can see some momentum there. But right now, it’s a little softer than we had expected. And frankly, if you look at the U.S. business being EBITDA breakeven and free cash flow positive in Q3, we expect similar trends. We get into Q4, it’s just not enough to overcome some of the headwinds in Europe. And so I think that was something that was hard for us to see six quarters ago when we were forecasting breakeven in Q4 with that mix.
But again, we feel very good about the underlying fundamentals in both businesses. And we just didn’t want to make anything too short termy trade-offs right in Q4 and focus more on opportunities as we move into 2024.
