Great. Good afternoon, everyone. Thank you so much for joining us for the last day of the Needham Growth Conference here. My name is Bernie McTernan, and I'm one of the Internet analysts here. My pleasure to introduce GigaCloud Technology. We have Larry Wu, Chairperson and CEO. He's going to run through a presentation, and then I'm going to come back for Q&A at the end. If you have any questions, please enter them into the portal, or you can always email me as well, too. But with that, happy to turn it over to Larry.
Thank you, Bernie. Thank you, everybody, for joining us. I'm the Founder, Chairman, and CEO for GigaCloud Technology. We are a company running a B2B marketplace with a focus on helping our customers to transact the big and bulky items, like furniture. The name may give you an impression that we're trying to confuse people by pretending to be a cloud computing company, but we're not. Actually, the name makes a lot of sense if I tell you our business model that I'm going to discuss later. E-commerce has changed the horizon of B2C a lot, everybody knows. But we have the vision that the e-commerce will continue to change how the global supply chain functions, that we're trying to use the technology and our business model to make the global supply chain more efficient. I'm going to spend some time talking about the history.
We're not really a very new company. We already have 16 years of history of operating in the e-commerce world. We actually started in Japan and the U.K. later. And after that, we entered the U.S. market in 2013, which later on became our largest market. And we changed our business model a little bit to focus on providing the B2B marketplace service, which we launched in 2019. And we went public in the year 2022. And we're very proud that we got recognized by a lot of the media, as we're going to show here, that according to Forbes, I know a lot of industry AI, robotic, biotech companies have been very successful.
But it's very honorable to share that, according to Forbes, for any company, that a U.S.-based company with a market cap under $2 billion, actually, GigaCloud was named number one among those companies for the year 2025. And we still stay on the list of top 20 for the year 2026. And it's a really honor that myself got named as Entrepreneur of the Year by EY for the Los Angeles area because the company is headquartered in El Monte in the greater Los Angeles area. And also, we got a recognition from Time Magazine, Newsweek, and also industry media like Furniture Today for the innovation that we're bringing to the industry and our financial performance as well. We're going to spend some time talking about our financial performance. This is a number of last quarter. We generated $333 million, which reflects the 10% year-over-year growth.
We generated $33 million of net profit. It's a net profit. It's not really those kind of sophisticated definitions, like just the EBITDA, excluding item, those kind of definitions. We talk about really straightforward kind of a net income, which is $37 million. We saw a single-digit contraction to our absolute number of net profit last quarter, just because I think everybody is aware that because of the Election Day, those kind of back and forth in tariffs that got ourselves in a little bit challenging situation. The softness from the demand side of the consumer is bringing some negative impact. We're very proud that we successfully navigated those, but still generated $0.99 per share EPS, which is 1% higher from what we had for the same period of time last quarter, thanks to the very aggressive share repurchase program.
We actually bought roughly 10% of the whole company in the last 12 months, and we are debt-free. We generated cash more than our net profit. For the last quarter alone, we generated more than $70 million from the operation, although the net profit is just $37 million, and we are really disciplined in utilizing our cash, and also we try our best to reward our investor as long as putting capital in helping the company to continue the growth, so we raised roughly $41 million in our IPO in 2022. I think everybody can recall that year is very difficult for a company to do the IPO, but in the next three years, we already spent roughly $200 million in either repurchase to reward our investor or did acquisition help us to create even more opportunity for further growth, so we did three transactions.
The last one just completed January 2, which is a newly closed transaction. We spent $18 million to acquire a furniture distributor focused on brick-and-mortar store universe. Next, I'm going to talk about the breakdown by region. We're seeing pretty robust growth from Europe. It represents only 20% of our revenue. But for the last quarter, which is Q3 2025, it's already a third of our total revenue. And we're seeing pretty strong growth, which is 70% year-over-year from that region. So that really compensated the slowing down that we're seeing from the U.S. side. So by taking advantage of the growth that we're generating, we're still delivering pretty reasonable kind of growth despite all the challenges I talked about. Maybe we just move on to the next slide because we already talked about our growth in Europe. So again, how we did that.
So it's a fundamental kind of description of our business model. Before doing that, we need to make everybody aware that it's a very niche market with the characteristic of non-standard, big and bulky, and very fragmented market. Without those characteristics, it's really preventing us from even understanding the validity of our business model. We're talking about tens of thousands of SKUs when it goes to the furniture. So we're talking about very fragmented, small transactions between the supplier and the retailers. Obviously, a technology helping people to manage those small transactions will make sense. And also, when it goes to big and bulky, any savings that you can provide to those categories will be very significant because if you really look at the total dollar amount consumers are spending on those big and bulky items, a big percentage actually is logistics-related.
So if there's any way that you can improve how the supply chain functions, that really can make a lot of a difference just because of the characteristics of that very unique category. That's how we come up with the business model we call SFR, or Supplier Fulfilled Retailing. We have that kind of idea because we see the chance to improve how the supplier can do business with the retailers. Because if you really look at the traditional way that how they do business together, it's going to be the retailers are going to make a purchase from the supplier, either wholesaler or factory, and keep the inventory with them. And when the consumer places an order with the retailer, then the retailer will ship the product from their warehouse to the consumer.
But you probably can really see if the supplier end could have the capability to fulfill the order directly to the consumer, which will remove the touchpoint at the warehouse of the retailer that we can save some money by removing that redundant touchpoint and make the shipping costs lower and the damage related to shipping because we're reducing another handling point of the journey and also get lower. So it's very obvious by doing so, which is enabling the supplier end capability of fulfilling orders, retail orders directly to consumers, will improve the efficiency of the supply chain. It's very easy to understand from a logistics perspective.
There are some other benefits, which are not so obvious, that are related to the nature of the category, which is a non-standard, big and bulky, that when the retailer has to manage the inventory in the way that how the industry traditionally functions, they're dealing with tens of thousands of SKUs, each of them with very shallow inventory depth or very few number of items in their inventory. So when people deal with that, obviously, all the projections could be something that has error. But when you're dealing with so many items, each of them with very shallow inventory depth or the base number, let's just say a retailer is trying to make a forecast for an item, it's a specific sofa, which they can sell only three to five pieces each month.
A single item of error could translate to, if the base number is a five, that the single piece error can translate to 20% of error. If they are doing two pieces of error, it will be translated to 40% either redundant inventory or 40% of the chance they lost at the sale. It's a huge risk or variance if the retailers are supposed to be the ones making forecasts of the sales. A better solution from our perspective is always keep the inventory with the supplier because the supplier will be dealing with a lot of retailers nationwide. From the supplier's perspective, although those fluctuations will happen anyway from the retailer's end, those variance can be reduced substantially when they pull all the variance from the retailer end together to a single party.
So we're seeing a very kind of a typical effect called the pooling effect of risk or pooling effect of variance from macroeconomics, which is broadly used by industry like insurance. That, when obviously, for every individual, the risk of the car got hit is either zero or one. So it's pretty difficult to make a projection with such a huge variance. But if you really pool that risk to insurance companies and with the greater population, let's just say 100,000, the chance of that accident happening will be a very stable number that can be very easy to manage. So by doing something similar with the supply chain, which is putting all the inventory with the seller or supplier, that can be something that it's really beneficial for both sides because the forecast of the sales will be a lot easier.
But there still needs to be someone sitting in the middle helping them to hold those inventory physically and also do a good job in allocating all the inventory to different parts of the region. That's how Giga can help them to do on top of helping them to connect together to do the transaction. But also, we're building an infrastructure consisting of the U.S. that consists of 25 warehouses that allow us to do load balancing nationwide to do a better job in projecting where the demand will be coming from and help those suppliers or factories or distributors to fulfill the order to consumer, then we're giving the retailers a chance that they can forget about physically handling the warehouse inventory fulfillment.
They can sell to their customer just against the inventory that the supplier is holding for them by just having either if they're e-commerce, by having a link on the website, or have a sample on their floor without having to worry about anything else about supply chain. So in that situation, as long as they're done with the sales, they can easily, that's where the Giga name comes from, is we want to make them feel that they can easily download a product from cloud without even thinking where those products are actually coming from to their customer's doorstep. So we're kind of providing a way to help both our supplier and the retailer do business in a completely virtual or digital way without having to worry about the infrastructure operation. So that's why we have that name. Giga means that we deal with the big and bulky.
GigaCloud means that we want to help both sides to do the transaction in the way we just talked about. That's our business model, and actually, it's trademarked SFR model that we believe it's an evolution to the supply chain that will benefit every participant in our ecosystem. Yeah, so why we're talking about here? We're talking about some of the benefits we're bringing to our customers. Obviously, it's more flexible that they won't be in the position they have to deal with the warehouse lease operation and also those algorithms that can be very complicated when you have to make projections about how each item will be geographically distributed to allow to reduce the shipping cost to the lowest level and allow our participants to focus on the thing, which is their core for the retailer.
It is really converting their traffic into sales, then we're taking care of everything behind the scene to really help them to fulfill the order, and just because we're consolidating all those kinds of supply chain-related operations to ourselves, that we're creating the scale and also the efficiency to make all the participants in our ecosystem can enjoy the benefit of the whole scale that we're creating in our own kind of marketplace. We are having some kind of very unique revenue stream consisting of 1P, which is revenue related to the operation that we could source from the factory to make those inventory available to the retailers, or the 3P is the situation that our supplier can be a factory, can be a distributor to entrust their inventory with us to put them in our warehouse and allow those retailers to make sales against.
We're helping them to do the transaction together. Also, because we're helping them to do the fulfillment, we're generating logistics-related revenue as well. So we're keeping our transaction fee and the logistics cost very low, very competitive. We're taking advantage of the combination of 1P, 3P logistics that we're creating a kind of cycle to allow us to provide the service that's very comprehensive. Also, those three-part working together are helping us to create the scale that could never be available if we're only doing 1P. We're leveraging those scales to run the whole supply chain more efficiently, which is also helping our 1P to sell more product. These are the activities of our market participants. Right now, we're having roughly 1,100 active buyers buying from the ecosystem or the marketplace. Each of them, on average, is spending $130K every year.
This slide is giving you a kind of sense of how it looks like. There's some similarity to kind of a normal B2C website. The distinction actually coming from we have a very sophisticated kind of pricing model that allows our participants to create the term that they're comfortable with when we're selling to their customers. For example, for the pricing, we provide features that allow the seller to provide rebate, spot price, and margin transaction price, and even margin transaction for future goods as well. Just like you'll see that we're trying to make the marketplace to be in a position like the exchange for big and bulky items that allow people to do the trade upon digitally. Also for the fulfillment part, that we're allowing all kinds of different fulfillment methods.
Although we will provide most of the value if we fulfill directly to the consumer, but we also allow our customers to either do the pickup from our warehouse or we ship to their warehouse. We allow those kinds of traditional B2B fulfillment as well. So we are providing all the modules that are necessary for our customers to build the business in the way that they want it. So right now, we're having 50,000 different SKUs. The strongest category we have is the furniture. But we also do those consumer-facing big and bulky items like auto parts, toys, home appliances as well. Although the furniture still is a dominating position that's representing roughly 70% of the total GMV. But we do have diversified product offerings from other categories' vendors as well. Maybe I'll pause here to see if there are any questions.
Yeah. No, that's great. Larry, thank you very much. That was a great presentation. And again, please, if anyone has any questions, please type them into the portal or email me. Maybe just to start, a couple that I had. As we think about just the growth for the company over the next couple of years, is it more so supplier-driven? Is it adding more buyers to the platform? Is it more SKUs from your existing sellers? Just trying to think about what the growth algorithm for the company is.
Yeah. It's a really great question. I think, obviously, that we are trying to drive growth for different markets. For example, for the last year, the most impressive performance is coming from Europe because we're seeing a challenging environment here in the States. But we're really focusing on bringing more participants and make them more reliable on the ecosystem to do the business.
So just to give a ballpark that, again, we're B2B. We're not really B2C. So the addressable market is the wholesale market. So for the wholesale of furniture in the United States, it's roughly $40-$50 billion, which we only represent a very small kind of a portion of. We still have a long way to go because it's a very traditional industry that the usage of technology is still very limited. So we're trying to kind of show the benefits of running the business model in our way by taking advantage of the technology and the infrastructure we're providing to benefit the participants. And hopefully, that will end up with more companies can make transition from the traditional way of running business into the Giga way, which we believe is the future.
Okay. No, that's great. Can you walk through the options that suppliers have or maybe define another way in terms of what your competition is? I always think it's helpful to say, "Hey, here's the old way of doing things, and here's how it used to work, and here's the innovation that we're bringing to the marketplace."
Yeah. The traditional way of doing that, either obviously, the factory or the supplier can set up their own kind of infrastructure, including sales team and warehousing system, all of those. Again, that's really kind of manual, which just relies on sales reps or trade shows, those kinds of things. That's the technology play will provide value that we're trying to make this marketplace, helping people to do business with lower cost, make the transaction more smooth.
For some of the situations that we're providing a kind of a value that brings more trust. For example, when people are doing margin trade, they need a third party to make sure that, before the product leaving the warehouse, the balance needs to be paid. So we were pretty much in that situation. We were pretty much like an escrow service provider. So we're providing the value by giving them the technology, make the transaction costs cheaper, and also allow a more creative way of doing business. But eventually, also, obviously, that we're consolidating all the volume. Again, this goes back to the nature of the industry that is really fragmented. You don't see a furniture manufacturer that is Fortune 500 or something. So when you consolidate that volume together, it's creating a scale that can reduce everybody's operation cost as well.
That's all the value that we're providing that really doesn't exist in the past.
Yeah. Understood. Can you talk about the strength in Europe this year? It makes a lot of sense. Or basically, how was it able to happen? I mean, so tariffs happen. It makes a lot of sense to pivot to Europe. But was that an active choice that you guys were facilitating on behalf of your suppliers, your buyers? Or how did the business, how was Europe able to pick up just at that time?
Yeah. Yeah. We obviously talk about the best of the time to deal with the risk before that happens. So actually, we have been diversifying our supply chain seven, eight years ago. Although originally, the supply chain is really heavily focused on China.
But right now, we're happy to report that actually for the product we're selling to the States, 70% was already coming from the supply chain, also out of China. So we are very early in doing diversifying the supply chain. That's how, obviously, that helped us to deal with the tariff thing. But again, as we always say, I just think people spend too much time on trying to speculate what's going to happen with the tariff. Because at the end of the day, I try to say that, but very few people want to listen. I'm telling everybody at the end of the day, there's no evidence whatsoever saying if the tax is so high, then the distributor will get the lower margin. There is no historical data or evidence showing that. People still buy what they need to buy.
If you really look at cigarettes or alcohol, that normally carry a lot of tax. But there's no evidence showing that the distributor, which we sort of are, will end up with a lower margin. But the short term, obviously, is going to be some disruption, as we have seen in Q3 last year. But for the long run, we don't really worry about that. But of course, the increase of the price will hurt the demand to a certain level. But it's also something that can make people think more about efficiency when they are seeing the demand is shrinking by 10% or something. With that strong belief that when we kind of were very aggressive in buying back our shares when the market is allowing us to do that, it's a very attractive price to reward the investor who chose to trust us.
Right. Obviously, your stock price is a lot higher than where it was shortly after Labor Day. Those are good purchases. One to ask on inventory. You showed just the revenue generation models of 3P and 1P. What is that split in terms of 1P versus 3P? Then probably importantly, how do you think about inventory risk? How do you think about is it the brand's choice whether they're selling it to you or not? Or what's that vetting process on your end?
For 1P, obviously, that we're taking the inventory risk. Before the inception of the B2B marketplace, that's how we made our living. We're definitely one of the best companies out there when it goes to how to make sure that you manage your inventory level properly. When it goes to non-standard items, definitely the inventory risk is very significant.
I'm hoping that the 16 years of success in managing that can provide some level of confidence. For our 3P seller, we're not really seeing they can manage the inventory at the level we can do. So although that we don't really disclose that number, but I can tell that 3P seller, their performance in terms of managing the inventory is a little bit worse compared with where we are. Got it. Okay. And then I also want and we have about five minutes left. So just as a reminder, if anyone has questions, please get them in. But another one for me, just wanted to hear more about the unit economics of the business, and particularly what your take rate is, and maybe how that might be different under 1P versus 3P. Yeah. For 1P, obviously, that all the sales revenue goes to us.
But for 3P, the take rate, it's a little bit surprising to some people that how close our revenue number to our GMV number, part of that is coming from the take rate is extremely high, just because we are helping them to handle those fulfillment kind of functions, which is a big chunk of the total value consumer is spending. So the take rate for us, including the transaction fee, fulfillment-related revenue, it can be anywhere from 35%. Sometimes if the ocean shipping price is very high, it can easily go above even 50%.
Yeah. No, I mean, I think it shows the value that you're providing if you're able to command take rates that high. And maybe one of the last ones for me, just thinking about, I think you said you had 25 different warehouses in the US.
Is there a good way for investors to think about just what your capacity is in those warehouses? Just trying to get a sense in terms of how much growth you could have in your own company before all of a sudden more capital needs to be outlaid towards things like building more warehouses.
Oh, yeah, yeah, yeah. Definitely. It's a reasonable kind of question, but of course, it involves some certain level of CapEx investors definitely care about. But historically, it's fully kind of covered by our operating cash flow that we never saw just because of warehouse expansion that we kind of get our investor concerned that we could have a cash flow problem. Although that definitely involves some kind of a CapEx, and also, if you really look at our balance sheet, we're debt-free with $360 million cash on balance sheet.
But there's a liability that's related with the leasing liability of our warehouses. That's a big chunk of liability we're seeing from our balance sheet. Got it. Okay. So you're leasing the warehouses you don't own them? We don't own any warehouse. We don't want to.
Right. Okay. Understood. And then just maybe lastly for me, in terms of your buyers, are these? I think you said 11,000 buyers. So are these typically smaller mom-and-pop, or are there some really big ones? Just trying to think about how investors should think about that composition.
Yeah. Again, it's fragmented. You can think about typical situation. For e-commerce universe, it can be resellers that do business on Amazon, Wayfair, eBay, TikTok, Temu. They source from us. For brick and mortar, it's also the same that we do have sizable retailers doing business.
But again, you don't see Fortune 500 retailers of furniture. And the biggest company only represents 10% of the whole industry. That's how fragmented it really is.
Right. Right. Okay. Well, Larry, let's leave it there. Thank you so much for your time. Thanks for everyone who joined on the webcast. And have a great rest of your day. Okay.
Thank you for having me.
Okay.
Take care.