# GigaCloud Technology Inc (GCT) FY 2024 MD&A

Verbatim Item 7 Management's Discussion and Analysis from GigaCloud Technology Inc's 10-K for fiscal year 2024.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1857816/000185781625000015/gct-20241231.htm
Accession: 0001857816-25-000015
Filing date: 2025-03-03
Report date: 2024-12-31
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Published MD&A gate trimmed front/tail over-capture.
Confidence: high

Company profile: /company/GCT/
All MD&A years: /company/GCT/mda/
Previous year: /company/GCT/mda/fy2023/ (FY 2023)
Next year: /company/GCT/mda/fy2025/ (FY 2025)

Item 7.         Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following information should be read in conjunction with the consolidated financial statements and related notes thereto included in this annual report on Form 10-K.

In addition to historical information, this report contains forward-looking statements that involve risks and uncertainties which may cause our actual results to differ materially from plans and results discussed in forward-looking statements. We encourage you to review the risks and uncertainties discussed in the sections entitled Item 1A. “Risk Factors” and “Forward-Looking Statements” included at the beginning of this annual report . The risks and uncertainties can cause actual results to differ significantly from those forecast in forward-looking statements or implied in historical results and trends.

We caution readers not to place undue reliance on any forward-looking statements made by us, which speak only as of the date they are made. We disclaim any obligation, except as specifically required by law and the rules of the SEC, to publicly update or revise any such statements to reflect any change in our expectations or in events, conditions or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements.

Overview

We are a pioneer of global end-to-end B2B ecommerce solutions for large parcel merchandise. We generate revenues primarily through three revenue streams:

•GigaCloud 3P: generates service revenues, including revenues from platform commission, ocean transportation service, warehousing service, last-mile delivery service, packaging service, drayage service and others, by facilitating transactions between sellers and buyers in our GigaCloud Marketplace.

•GigaCloud 1P: generates product revenues through the sale of our inventory in our GigaCloud Marketplace.

•Off-platform ecommerce: generates product revenues through the sale of our inventory to and through third-party ecommerce websites.

GMV from GigaCloud 3P and GigaCloud 1P together make up our GigaCloud Marketplace GMV, and GMV from off-platform ecommerce and GigaCloud Marketplace GMV together make up our total GMV across the platforms. These three revenue streams complement each other to improve our value proposition to sellers and buyers in our GigaCloud Marketplace.

Key Financial and Operating Metrics

We monitor the following key financial and operating metrics to evaluate the growth of our GigaCloud Marketplace, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions. The financial impact from the acquisitions of Noble House and Wondersign has been reflected in our condensed consolidated financial results since the completion of the acquisitions in the fourth quarter of 2023. In the second quarter of 2024, we introduced Noble House-related SKUs to our GigaCloud Marketplace, which contributed to a one-time uplift in our operating metrics. The operating impact from these acquisitions has been reflected in the operating metrics in our GigaCloud Marketplace since April 1, 2024.

The following tables set forth our key financial and operating metrics for the periods indicated:

[[GREPCENT_TABLE]]
[["","Year ended December 31,"],["","2024","","2023","","2022"],["Key Financial Statement Metrics:","(In thousands, except for per share data)"],["Total revenues","$","1,161,042","","","$","703,831","","","$","490,071"],["Gross profit","285,236","","","188,633","","","83,114"],["Operating income","130,622","","","110,078","","","35,023"],["Net income","125,808","","","94,108","","","23,972"],["Net income per ordinary share"],["\u2014Basic","3.06","","2.31","","0.60"],["\u2014Diluted","3.05","","2.30","","0.60"]]
[[/GREPCENT_TABLE]]

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[[GREPCENT_TABLE]]
[["","Year ended December 31,"],["","2024","","2023","","2022"],["Non-GAAP Financial Metrics(1):","(In thousands, except for per share data)"],["Adjusted EBITDA","$","156,942","","","$","118,307","","","$","41,842"],["Adjusted EPS \u2013 diluted","3.81","","2.89","","1.33"]]
[[/GREPCENT_TABLE]]

_____________________

(1)     See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation——Non-GAAP Financial Measures” for information regarding our use of Adjusted EBITDA and Adjusted EPS – diluted and a reconciliation of net income to Adjusted EBITDA and net income per ordinary share – diluted to Adjusted EPS – diluted.

Below is a summary of our key financial and operating metrics for the periods indicated:

[[GREPCENT_TABLE]]
[["","Year ended December 31,"],["Key Operating Metrics:","2024","","2023","","2022"],["GigaCloud Marketplace GMV (in $ thousands)","$","1,341,385","","","$","794,433","","","$","518,218"],["Active 3P sellers","1,111","","815","","560"],["3P seller GigaCloud Marketplace GMV(in $ thousands)","$","693,888","","","$","426,347","","","$","257,721"],["Active buyers","9,306","","5,010","","4,156"],["Spend per active buyer (in $)","$","144,142","","","$","158,569","","","$","124,692"]]
[[/GREPCENT_TABLE]]

GigaCloud Marketplace GMV

The growth in GigaCloud Marketplace GMV, including GMV from both GigaCloud 3P and GigaCloud 1P, reflects our ability to attract and retain sellers and buyers in the GigaCloud Marketplace. The revenues we generate in our marketplace are highly correlated to the amount of GMV transacted in the GigaCloud Marketplace.

GigaCloud Marketplace GMV increased to $1,341.4 million in 2024 from $794.4 million in 2023 and $518.2 million in 2022, representing a year-over-year growth of 68.9% and 53.3%, respectively, primarily due to the continued increase in the numbers of sellers and buyers transacting in our marketplace as our marketplace continues to gain scale and market position. In the second quarter of 2024, we introduced Noble House-related SKUs to our GigaCloud Marketplace, which have been reflected in our GigaCloud Marketplace GMV starting April 1, 2024. In 2024, furniture products accounted for more than 79% of GigaCloud Marketplace GMV, garden and outdoor furniture products accounted for approximately 13% of GigaCloud Marketplace GMV, and various other products including bath and faucets, luggage, pet products and others accounted for approximately 8% of GigaCloud Marketplace GMV. Our GigaCloud Marketplace GMV continued to grow since inception, as shown below:

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[[GREPCENT_TABLE]]
[["GigaCloud Marketplace GMV by Year"],["($ in thousands)"]]
[[/GREPCENT_TABLE]]

Active 3P Sellers

The number of active 3P sellers in the GigaCloud Marketplace increased to 1,111 in 2024 from 815 in 2023, which increased from 560 in 2022. We view active 3P sellers as a key driver of the product catalog in our marketplace, which helps attract and retain buyers. The GigaCloud Marketplace offers SKUs across furniture, home appliances, fitness equipment and other large parcel categories from our active 3P sellers. The number of SKUs was 35,649 as of December 31, 2024, an increase from 22,101 as of December 31, 2023 and 12,312 as of December 31, 2022. We expect to grow the number of active 3P sellers through geographic expansion, suppliers outreach, marketing initiatives, referrals and word-of-mouth. We also leverage our 1P inventory sales to establish new markets, reducing the risk in geographic expansion for new sellers, and increasing the appeal for new sellers to join our marketplace.

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The chart below displays the yearly GigaCloud Marketplace GMV of our 3P Sellers in our GigaCloud Marketplace from inception in 2019 to 2024. Each yearly 3P Sellers represents the groups of sellers who first sold products in our GigaCloud Marketplace in that particular year. The Active 3P Sellers shows the total number of sellers who had sold at least one item in our GigaCloud Marketplace in the last 12 months. The increasing trend of our yearly 3P Sellers have demonstrated attractive consistent growth in both number of sellers and GigaCloud Marketplace GMV, as shown below:

[[GREPCENT_TABLE]]
[["3P Seller GMV in GigaCloud Marketplace"],["($ in thousands, except for number of Active 3P Sellers)"]]
[[/GREPCENT_TABLE]]

3P Seller GigaCloud Marketplace GMV

3P Seller GigaCloud Marketplace GMV represents the GMV our 3P Sellers transact in the GigaCloud Marketplace. 3P Seller GigaCloud Marketplace GMV was $693.9 million in 2024, $426.3 million in 2023 and $257.7 million in 2022, representing a year-over-year growth of 62.8% from 2023 and 65.4% from 2022, respectively. 3P Seller GigaCloud Marketplace GMV represented 51.7%, 53.7% and 49.7% of total GigaCloud Marketplace GMV in 2024, 2023 and 2022, respectively.

Active Buyers

The number of active buyers in the GigaCloud Marketplace was 9,306 active buyers in 2024, 5,010 in 2023 and 4,156 in 2022, representing a year-over-year growth of 85.7% and 20.5%, respectively. We view the number of active buyers as a key driver of GMV and revenue for our GigaCloud Marketplace. We plan to expand our active buyers by enhancing our marketplace product categories, and leveraging referrals from existing users.

The chart below displays the yearly GigaCloud Marketplace GMV of our buyers in our GigaCloud Marketplace from inception in 2019 to 2024. Each yearly Buyers represent the groups of buyers who first purchased products in our GigaCloud Marketplace in that particular year. The Active Buyers shows the total number of buyers who had made at least one purchase in our GigaCloud Marketplace in the last 12 months. Our number of buyers and buyer GMV have grown consistently since inception, as shown below:

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[[GREPCENT_TABLE]]
[["All Buyer GMV in GigaCloud Marketplace"],["($ in thousands, except for number of Active Buyers)"]]
[[/GREPCENT_TABLE]]

Spend Per Active Buyer

The spend per active buyer in our GigaCloud Marketplace were $144,142 in 2024, $158,569 in 2023 and $124,692 in 2022, representing a year-over-year decrease of 9.1% in 2024 and an increase 27.2% in 2023, respectively. Spend per active buyer is a key driver of GMV and revenue for our GigaCloud Marketplace. We grow spend per active buyer by expanding our product categories, increasing buyers’ purchase frequency and raising the average price per purchase. The slight decrease in spend per active buyer in 2024 was primarily due to a higher number of new buyers onboarded during the period, who generally require time to increase their spending in our GigaCloud Marketplace.

Key Factors Affecting Our Results of Operations

Key factors affecting our results of operations include the following:

Our Ability to Attract and Retain Sellers

Sellers in our marketplace are typically manufacturers based in Asia who are able to use our supply chain capabilities to establish overseas sales channels without having to invest in their own logistics or fulfillment centers overseas. We are focused on growing and retaining the number of sellers who choose to list their large parcel merchandise in our marketplace and utilize our logistics network for the shipping and handling of their products.

Our number of active 3P sellers was 1,111 in 2024, compared to 815 in 2023, representing an increase of 36.3% from 2023. We believe this increasing trend will continue because of the growing recognition of our marketplace, our seller-friendly comprehensive logistics network enabling hassle-free delivery of large parcel merchandise and our expansion into new markets.

Using our marketplace, sellers are able to quickly gain access to key global markets in which we operate, including the U.S., the U.K., Germany, Japan and Canada. We provide a flat rate program for shipping and handling, and sellers are able to utilize our warehouse space. We also create sales analytics which provide valuable information as sellers determine which products to bring to market.

We attract new sellers predominantly through organic channels such as geographic expansion, suppliers outreach, marketing initiatives, referrals and word-of-mouth. In 2023, we completed the acquisitions of Noble House and Wondersign, which supplemented our supply chain, fulfillment and logistics capabilities and we expect to attract more sellers and buyers onto our GigaCloud Marketplace after these strategic acquisitions. We also plan to augment organic customer acquisition by adding additional sales and marketing employees to enhance seller and buyer growth.

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Our Ability to Attract and Retain Buyers

Buyers in our marketplace are typically resellers based in the U.S., Asia and Europe who procure large parcel merchandise to resell to end customers. Our marketplace is attractive to buyers because we minimize inventory risk from our buyers’ business operations. Our buyers can browse a product in our marketplace and list the product on their preferred ecommerce websites such as Rakuten, Amazon, Walmart, Wayfair, Home Depot and OTTO, or their own store prior to procuring and storing the product in a warehouse or shop. Once a sale to the end customer takes place, buyers can order the product in our marketplace and we will handle the fulfillment directly to the end customer.

In 2024, we had 9,306 active buyers in our marketplace with an average $144,142 spend per active buyer, representing a 85.7% increase in active buyers and 9.1% decrease in spend per active buyer compared to the previous period, primarily attributable to higher number of new buyers onboarded during the period, who generally require time to increase their spending in our GigaCloud Marketplace.

Recent and Future Acquisitions

In addition to organic growth, we have grown through acquisitions that have deepened and expanded our presence in current markets and facilitated entry into attractive new markets.

In 2023, we completed the acquisition of Noble House, a leading B2B distributor of indoor and outdoor home furnishing, for an aggregate consideration of approximately $77.6 million, and the acquisition of Wondersign, a cloud-based interactive digital signage and e-catalog management SaaS company, for an aggregate purchase price of approximately $10.0 million.

Following the acquisitions, our results of operations are affected by the newly acquired businesses or operations, the purchase accounting for the acquisition, any debt incurred in connection with the acquisitions and expenditures made to integrate the newly acquired businesses or operations. As a result of our acquisitions and the consolidation of our operating subsidiaries’ financial results into our consolidated financial results, the periods presented in our historical financial statements may not be comparable to one another and our future results of operations and financial results may also differ.

Overall Economic Trends

The overall economic environment and related changes in customer behavior have a significant impact on our business. Customer spending on our products and services is primarily discretionary, and therefore positive economic conditions generally drive stronger business performance.

Recent global economic uncertainties, inflation, higher interest rates, lower consumer confidence and demand for discretionary goods, and geopolitical events such as recent international trade disputes and the ongoing wars in Ukraine and in Israel and Gaza, including the related disruptions to international shipping in the Red Sea could impact the demand of products and shipping and freight rates. We incurred increased transportation costs in the fourth quarter of 2024 due to seasonal demand surge which had negatively affect our profitability. Other macroeconomic factors that can affect customer spending patterns include employment rates, availability of customer credit, interest rates, tax rates and energy costs.

Our Ability to Broaden Service Offerings

Our results of operations are also affected by our ability to introduce new service offerings. We have a history of expanding our service offering to enhance our customer experience and to increase revenues. We started our business by primarily selling our own self-procured large parcel merchandise directly to end customers. We expanded our service offerings and launched our GigaCloud Marketplace in 2019. The platform has since become a significant contributor to our overall revenues, accounting for 64.7%, 70.9% and 76.0% of our total revenues in 2024, 2023 and 2022, respectively. We continue to evaluate opportunities to launch additional services.

Our Ability to Effectively Invest in our Infrastructure and Technology Platform

Our results of operations depend in part on our ability to invest in our infrastructure and technology platform to cost-effectively meet the demands of our anticipated growth. Our global fulfillment and logistics network is a key part of our infrastructure, which consists of fulfillment centers and other facilities that are strategically located, designed and equipped to efficiently manage inventory and to fulfill customers orders and other needs. As of December 31, 2024, our global logistics network included 35 fulfillment centers with an aggregate gross floor area of approximately 10.3 million square feet in five countries, and two other facilities with storage and showroom functions with an aggregate gross floor

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area of approximately 18,348 square feet in the U.S.. Additionally, we maintain partnerships with several major shipping, trucking and freight service providers to supplement our transportation network and shipping requirements.

Our ability to improve our operational efficiency depends on our ability to invest in our technology infrastructure and platform, including our virtual warehousing solution and AI technology. We also invest in our research and development personnel for the design, development, and testing of our platform, and incur software development costs for the internal-use software and our Group's websites. We successfully improved our warehouse management solutions over the past years.

Seasonality

Our business is subject to seasonality. We expect the last quarter of the year to be the most active because of the November and December holiday sales period. Our GigaCloud Marketplace GMV is usually the largest in the fourth quarter of a year. It is uncertain whether this is an indicator of industry trends going forward.

Key Components of Results of Operations

Revenues

We generate service revenues from our GigaCloud 3P business, and product revenues from our GigaCloud 1P, off-platform ecommerce businesses and others. Service revenues from GigaCloud 3P, including revenues from platform commission, ocean transportation service, warehousing service, last-mile delivery service, packaging service, drayage service and others are generated by facilitating transactions between sellers and buyers in our GigaCloud Marketplace. Product revenues from GigaCloud 1P are generated through the product sales of our inventory through our GigaCloud Marketplace, and product revenues from off-platform ecommerce are generated from product sales of our inventory to and through third-party ecommerce websites.

The following table sets forth the breakdown of our revenues, both in absolute amount and as a percentage of our total revenues, for the periods presented:

[[GREPCENT_TABLE]]
[["","For the Year Ended December 31,"],["","2024","","2023","","2022"],["","$","","%","","$","","%","","$","","%"],["","(In thousands, except for percentages)"],["Revenues"],["Service revenues"],["Platform commission","$","16,879","","","1.5","","","$","11,187","","","1.6","","","$","6,872","","","1.4"],["Ocean transportation service","65,759","","","5.7","","","19,703","","","2.8","","","37,957","","","7.7"],["Drayage service","15,214","","","1.3","","","10,762","","","1.5","","","5,007","","","1.0"],["Warehousing service","46,189","","","4.0","","","24,423","","","3.5","","","16,242","","","3.3"],["Last-mile delivery service","156,585","","","13.5","","","105,978","","","15.1","","","62,745","","","12.8"],["Packaging service","29,951","","","2.6","","","17,296","","","2.5","","","7,735","","","1.6"],["Others","19,696","","","1.7","","","9,835","","","1.4","","","4,070","","","0.8"],["Subtotal","350,273","","","30.2","","","199,184","","","28.3","","","140,628","","","28.7"],["Product revenues"],["Off-platform ecommerce","409,639","","","35.3","","","204,622","","","29.1","","","117,761","","","24.0"],["GigaCloud 1P","400,511","","","34.5","","","299,930","","","42.6","","","231,682","","","47.3"],["Others","619","","","0.1","","","95","","","\u2014","","","\u2014","","","\u2014"],["Subtotal","810,769","","","69.8","","","504,647","","","71.7","","","349,443","","\u2014","","71.3"],["Total","$","1,161,042","","","100.0","","","$","703,831","","","100.0","","","$","490,071","","","100.0"]]
[[/GREPCENT_TABLE]]

Revenues reported are attributed to geographic areas based on locations of our fulfillment centers, except for platform commission revenues which are attributed to Hong Kong, where the server of GigaCloud Marketplace is located. Revenues by geography for the years ended December 31, 2024, 2023 and 2022 is as follows:

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[[GREPCENT_TABLE]]
[["","Year ended December 31,"],["","2024","","2023","","2022"],["Revenues by geographic region:","(In thousands)"],["Hong Kong","$","16,879","","","$","11,187","","","$","6,872"],["Platform commission","16,879","","","11,187","","","6,872"],["United States","64,924","","","19,610","","","37,684"],["Others(1)","835","","","93","","","273"],["Ocean transportation service","65,759","","","19,703","","","37,957"],["United States","15,006","","","10,667","","","4,971"],["Others(1)","208","","","95","","","36"],["Drayage service","15,214","","","10,762","","","5,007"],["United States","45,103","","","23,601","","","14,569"],["Others(1)","1,086","","","822","","","1,673"],["Warehousing service","46,189","","","24,423","","","16,242"],["United States","138,842","","","101,285","","","60,632"],["Germany","16,197","","","3,663","","","1,061"],["Others(1)","1,546","","","1,030","","","1,052"],["Last-mile delivery service","156,585","","","105,978","","","62,745"],["United States","26,570","","","16,070","","","7,101"],["Germany","2,984","","","879","","","255"],["Others(1)","397","","","347","","","379"],["Packaging service","29,951","","","17,296","","","7,735"],["United States","18,265","","","9,196","","","3,962"],["Others(1)","1,431","","","639","","","108"],["Others","19,696","","","9,835","","","4,070"],["Service revenues","$","350,273","","","$","199,184","","","$","140,628"],["United States","573,348","","","373,837","","","269,599"],["Germany","170,497","","","71,163","","","21,133"],["Japan","45,922","","","44,348","","","40,082"],["Others(1)","21,002","","","15,299","","","18,629"],["Product revenues","$","810,769","","","$","504,647","","","$","349,443"],["Total revenues","$","1,161,042","","","$","703,831","","","$","490,071"]]
[[/GREPCENT_TABLE]]

(1) No other individual region's revenues exceeded 10% of the Company’s total revenues for the years ended December 31, 2024, 2023 and 2022.

Service Revenues—GigaCloud 3P

We derive service revenues primarily through the various 3P activities of sellers and buyers in the GigaCloud Marketplace, including revenues from platform commission, ocean transportation service, warehousing service, last-mile delivery service, packaging service, drayage service and others. When a seller and buyer enter into a transaction in GigaCloud Marketplace, we generate revenues from platform services by earning a percentage commission depending on the transaction value. The standard commission ranges between 1% and 5%. Additionally, we charge a fulfillment fee for other freight services such as delivery of products via ocean transportation. We charge the sellers storage fees based on the number of days and the size of the products that are stored in our fulfillment centers, and we charge buyers a flat fee for last-mile delivery services for delivery of products to end customers directly from our fulfillment centers, which varies by the weight of the products.We charge drayage service fees in connection with transportation of products from ports to warehouses at a flat fee. We also charge packaging fees in connection with merchandise that we pack and ship.

From time to time in 2024, 2023 and 2022, when we had excess fulfillment capacity, we utilized such excess fulfillment capacity and our extensive logistics network to offer third-party logistics services to customers to help fulfill their large parcel transportation needs. As we continue to grow our GigaCloud Marketplace, we expect to dedicate our

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logistics capacity to customers using our marketplace and to products sold on our own marketplace, and will opportunistically provide third-party logistics services when there is excess capacity within our network.

Product Revenues—GigaCloud 1P

We derive product revenues from the sales of products through selling our own inventory in our marketplace. Our 1P business creates more products for buyers, gives us insights into seller needs, provides us with proprietary data and increases the velocity of sales in our marketplace.

Product Revenues—Off-platform Ecommerce

We derive product revenues primarily from the sales of our own inventory through two sales models, which are (i) product sales made to third-party ecommerce websites, or Product Sales to B, such as Wayfair, Walmart, Home Depot, Amazon, Target and Overstock; and (ii) product sales to individual customers through third-party ecommerce websites, or Product Sales to C, such as Rakuten, Amazon and OTTO, where end customers can visit our online stores and purchase directly from us. Regarding Product Sales to B, as expenses charged by these websites are not in exchange for a distinct good or service, the payments to these websites are not recognized as expenses but as recorded net of revenues. With respect to Product Sales to C, expenses incurred for product sales made through these websites are recorded as selling and marketing expenses.

Cost of Revenues

Our cost of revenues primarily consists of cost of services and cost of products. The following table sets forth the breakdown of our cost of revenues, both in absolute amount and as a percentage of our total revenues, for the periods presented:

[[GREPCENT_TABLE]]
[["","For the Year Ended December 31,"],["","2024","","2023","","2022"],["","$","","%","","$","","%","","$","","%"],["","(In thousands, except for percentages)"],["Cost of revenues"],["Services","$","284,951","","","24.5","","","$","161,215","","","22.9","","","$","120,102","","","24.5"],["Products","590,855","","","50.9","","","353,983","","","50.3","","","286,855","","","58.5"],["Total","$","875,806","","","75.4","","","$","515,198","","","73.2","","","$","406,957","","","83.0"]]
[[/GREPCENT_TABLE]]

Cost of Services

Cost of services primarily consists of domestic delivery costs, an allocated portion of fulfillment center rental expenses, and costs associated with the operation of the GigaCloud Marketplace.

Cost of Products

Cost of products primarily consists of the purchase price of merchandise, shipping and handling costs for self-owned merchandise, rental expenses for fulfillment centers excluding the portion allocated to cost of service revenue and abnormal capacity, packaging fees and personnel related costs. Shipping and handling costs primarily consist of those costs incurred during the process of delivery in North America and markets in other regions such as Japan and Europe, including the expenses attributable to shipment and handling activities, when we deliver a good to a customer.

Gross Profit and Margin

The table below sets forth a breakdown of our gross profit and gross profit margin for each of the periods presented:

[[GREPCENT_TABLE]]
[["","For the Year Ended December 31,"],["","2024","","2023","","2022"],["","(In thousands, except for percentages)"],["Gross Profit","$","285,236","","","$","188,633","","","$","83,114"],["Gross Margin (%)","24.6","%","","26.8","%","","17.0","%"]]
[[/GREPCENT_TABLE]]

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Operating Expenses

Our operating expenses consist of selling and marketing expenses, general and administrative expenses, research and development expenses and losses on disposal of property and equipment. The following table sets forth the breakdown of our operating expenses, both in absolute amount and as a percentage of our total revenues, for the periods presented:

[[GREPCENT_TABLE]]
[["","For the Year Ended December 31,"],["","2024","","2023","","2022"],["","$","","%","","$","","%","","$","","%"],["","(In thousands, except for percentages)"],["Operating expenses"],["Selling and marketing expenses","$","70,686","","","6.1","","","$","41,386","","","5.9","","","$","24,038","","","4.9"],["General and administrative expenses","73,944","","","6.4","","","30,008","","","4.3","","","22,627","","","4.6"],["Research and development expenses","9,791","","","0.8","","","3,925","","","0.6","","","1,426","","","0.3"],["Losses on disposal of property and equipment","193","","","\u2014","","","3,236","","","0.5","","","\u2014","","","\u2014"],["Total operating expenses","$","154,614","","","13.3","","","$","78,555","","","11.2","","","$","48,091","","","9.8"]]
[[/GREPCENT_TABLE]]

Selling and Marketing Expenses

Our selling and marketing expenses primarily consist of staff cost which included share-based compensation, payroll and related expenses for personnel engaged in selling and marketing activities, platform service fees charged by third-party ecommerce websites arising from Product sales to C on Off-platform ecommerce channels, advertising expenses and traveling expenses. Advertising expenses include advertisements through various forms of media and marketing and promotional activities.

The following table sets forth the breakdown of our selling and marketing expenses, both in absolute amount and as a percentage of our total revenues, for the periods presented:

[[GREPCENT_TABLE]]
[["","For the Year Ended December 31,"],["","2024","","2023","","2022"],["","$","","%","","$","","%","","$","","%"],["","(In thousands, except for percentages)"],["Selling and marketing expenses"],["Staff cost","$","29,986","","","2.6","","","$","18,604","","","2.6","","","$","12,144","","","2.5"],["Platform service fees","30,683","","","2.6","","","17,503","","","2.5","","","9,595","","","2.0"],["Advertising expenses","6,668","","","0.6","","","3,908","","","0.6","","","1,530","","","0.3"],["Traveling","885","","","0.1","","","541","","","0.1","","","201","","","\u2014"],["Others","2,464","","","0.2","","","830","","","0.1","","","568","","","0.1"],["Total selling and marketing expenses","$","70,686","","","6.1","","","$","41,386","","","5.9","","","$","24,038","","","4.9"]]
[[/GREPCENT_TABLE]]

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General and Administrative Expenses

Our general and administrative expenses primarily consist of staff cost which included share-based compensation, payroll and related costs for employees involved in general corporate functions, professional fees, rental and depreciation expenses associated with the use of facilities and equipment by these employees, rental expenses during the initial start-up period in our fulfillment centers and other abnormal capacity costs, property insurance and other general corporate expenses.

The following table sets forth the breakdown of our general and administrative expenses, both in absolute amount and as a percentage of our total revenues, for the periods presented:

[[GREPCENT_TABLE]]
[["","For the Year Ended December 31,"],["","2024","","2023","","2022"],["","$","","%","","$","","%","","$","","%"],["","(In thousands, except for percentages)"],["General and administrative expenses"],["Staff cost","$","31,173","","","2.7","","","$","14,126","","","2.0","","","$","15,040","","","3.1"],["Professional fees","10,455","","","0.9","","","7,495","","","1.1","","","3,034","","","0.6"],["Rental and depreciation","19,204","","","1.7","","","2,886","","","0.4","","","715","","","0.1"],["Office supplies and utility","3,664","","","0.3","","","2,102","","","0.3","","","1,131","","","0.2"],["Property Insurance","3,979","","","0.3","","","1,218","","","0.2","","","1,577","","","0.3"],["Others","5,469","","","0.5","","","2,181","","","0.3","","","1,130","","","0.2"],["Total general and administrative expenses","$","73,944","","","6.4","","","$","30,008","","","4.3","","","$","22,627","","","4.6"]]
[[/GREPCENT_TABLE]]

Research and Development Expenses

Our research and development expenses primarily consist of IT- and platform-related personnel costs, including share-based compensation expense associated with our engineering, programming, data analytics, and product development personnel responsible for the design, development, and testing of our platform, rental and depreciation expenses associated with the use of facilities and equipment of research and development personnel, and information technology costs.

Losses on Disposal of Property and Equipment

Our losses on disposal of property and equipment primarily consist of the losses on the disposal of old and obsolete property and equipment.

Interest Expense

Our interest expense primarily consists of our financial lease interest expense for leased equipment used in our fulfillment centers and other facilities in the U.S.

Interest Income

Our interest income primarily consists of interest income from bank deposits, wealth management products and investments.

Foreign Currency Exchange Gains (Losses), Net

Our foreign exchange gains and losses represent the gains or losses due to appreciation or depreciation of the U.S. dollar against Japanese Yen, the Euro, Canadian dollar and the British Pound.

Government Grants

Our income from government grants primarily consists of industry related government subsidies.

Others, Net

Our others, net primarily consists of gains from the dissolution of a non-principal subsidiary and net gains from other non-operating income and expenses.

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Income Tax Expense

Our income tax expense primarily consists of current tax expense, deferred tax expense and uncertain tax positions.

Results of Operations

The following table sets forth a summary of our consolidated results of operations, both in absolute amount and as a percentage of our total revenues, for the periods presented. This information should be read together with our consolidated financial statements and related notes included elsewhere in this annual report. The results of operations in any period are not necessarily indicative of our future trends.

[[GREPCENT_TABLE]]
[["","For the Year Ended December 31,"],["","2024","","2023","","2022"],["","$","","%","","$","","%","","$","","%"],["","(In thousands, except for percentages)"],["Revenues"],["Service revenues","$","350,273","","","30.2","","","$","199,184","","","28.3","","","$","140,628","","","28.7"],["Product revenues","810,769","","","69.8","","","504,647","","","71.7","","","349,443","","","71.3"],["Total revenues","1,161,042","","","100.0","","","703,831","","","100.0","","","490,071","","","100.0"],["Cost of revenues"],["Services","284,951","","","24.5","","","161,215","","","22.9","","","120,102","","","24.5"],["Products","590,855","","","50.9","","","353,983","","","50.3","","","286,855","","","58.5"],["Total cost of revenues","875,806","","","75.4","","","515,198","","","73.2","","","406,957","","","83.0"],["Gross profit","285,236","","","24.6","","","188,633","","","26.8","","","83,114","","","17.0"],["Operating expenses"],["Selling and marketing expenses","70,686","","","6.1","","","41,386","","","5.9","","","24,038","","","4.9"],["General and administrative expenses","73,944","","","6.4","","","30,008","","","4.3","","","22,627","","","4.6"],["Research and development expenses","9,791","","","0.8","","","3,925","","","0.6","","","1,426","","","0.3"],["Losses on disposal of property and equipment","193","","","\u2014","","","3,236","","","0.5","","","\u2014","","","\u2014"],["Total operating expenses","154,614","","","13.3","","","78,555","","","11.2","","","48,091","","","9.8"],["Operating income","130,622","","","11.3","","","110,078","","","15.6","","","35,023","","","7.1"],["Interest expense","(256)","","","\u2014","","","(1,240)","","","(0.2)","","","(568)","","","(0.1)"],["Interest income","9,405","","","0.8","","","3,304","","","0.5","","","472","","","0.1"],["Foreign currency exchange gains (losses), net","(1,233)","","","(0.1)","","","2,086","","","0.3","","","(4,854)","","","(1.0)"],["Government grants","37","","","\u2014","","","911","","","0.1","","","1,085","","","0.2"],["Others, net","2,039","","","0.2","","","(144)","","","\u2014","","","6","","","\u2014"],["Income before income taxes","140,614","","","12.1","","","114,995","","","16.3","","","31,164","","","6.4"],["Income tax expense","(14,806)","","","(1.3)","","","(20,887)","","","(3.0)","","","(7,192)","","","(1.5)"],["Net income","$","125,808","","","10.8","","","$","94,108","","","13.4","","","$","23,972","","","4.9"]]
[[/GREPCENT_TABLE]]

Year Ended December 31, 2024 Compared to Year Ended December 31, 2023

Revenues

Our revenues, which primarily consist of service revenues generated from GigaCloud 3P and product revenues generated from GigaCloud 1P and off-platform ecommerce sales, increased by 65.0% to $1,161.0 million in 2024 from $703.8 million in 2023. This increase was primarily due to the increased market recognition and scale of our

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GigaCloud Marketplace, leading to increases in our GigaCloud Marketplace GMV, sales volume and number of sellers and buyers.

•Service Revenues from GigaCloud 3P. Our service revenues increased by 75.9% to $350.3 million in 2024 from $199.2 million in 2023. The increase was attributable to:

◦an increase in revenues from last mile delivery services by 47.7% to $156.6 million in 2024 from $106.0 million in 2023 as our GigaCloud Marketplace GMV and delivery volume continued to increase;

◦an increase in revenues from ocean transportation services by 234.0% to $65.8 million in 2024 from $19.7 million in 2023 as our GigaCloud Marketplace GMV and delivery volume continued to increase, as well as an increase in the pricing of ocean transportation services during the period;

◦an increase in revenues from warehousing services by 89.3% to $46.2 million in 2024 from $24.4 million in 2023 as we handled more products as our GigaCloud Marketplace GMV continued to increase;

◦an increase in revenues from packaging service by 73.4% to $30.0 million in 2024 from $17.3 million in 2023 as we handled more products as our GigaCloud Marketplace GMV continued to increase;

◦an increase in revenues from platform commission by 50.9% to $16.9 million in 2024 from $11.2 million in 2023 as our GigaCloud Marketplace GMV continued to increase;

◦an increase in revenues from drayage services by 41.7% to $15.2 million in 2024 from $10.8 million in 2023 as our GigaCloud Marketplace GMV and delivery volume continued to increase; and

◦an increase in revenues from other services by 101.0% to $19.7 million in 2024 from $9.8 million in 2023 as revenues generated by Wondersign and other miscellaneous services increased.

•Product Revenues from GigaCloud 1P. Our product revenues from GigaCloud 1P increased by 33.5% to $400.5 million in 2024 from $299.9 million in 2023. The increase was primarily due to increases in GigaCloud Marketplace GMV and the number of buyers as our marketplace continued to grow in scale.

•Product Revenues from Off-platform Ecommerce. Our product revenues from off-platform ecommerce increased by 100.2% to $409.6 million in 2024 from $204.6 million in 2023. The increase was primarily due to increases in sales channels and sales volume in certain third-party off-platform ecommerce.

Cost of Revenues

Our cost of revenues increased by 70.0% to $875.8 million in 2024 from $515.2 million in 2023.

•Our cost of services increased by 76.8% to $285.0 million in 2024 from $161.2 million in 2023, primarily due to:

◦an increase in delivery cost by 65.3% to $200.9 million in 2024 from $121.5 million in 2023 as ocean freight costs, last mile delivery costs and products handled increased during the period;

◦an increase in rental cost by 138.6% to $51.3 million in 2024 from $21.5 million in 2023 as the total square footage of our fulfillment centers increased; and

◦an increase in staff cost by 88.2% to $23.9 million in 2024 from $12.7 million in 2023 primarily due to a higher share-based compensation expenses linked to higher share prices for awards granted and vested in 2024 for our staff.

•Our cost of products increased by 66.9% to $590.9 million in 2024 from $354.0 million in 2023, primarily due to:

◦an increase in procurement cost by 63.2% to $438.7 million in 2024 from $268.8 million in 2023 as sales volume, as well as shipping costs to procure our inventories, including ocean freight costs, increased during the period;

◦an increase in delivery cost by 53.9% to $66.5 million in 2024 from $43.2 million in 2023 as our sales volume and last mile delivery costs increased;

◦an increase in rental cost by 119.4% to $54.4 million in 2024 from $24.8 million in 2023, as the total square footage of our fulfillment centers increased to meet increased demand during the period; and

◦an increase in staff cost by 59.7% to $22.2 million in 2024 from $13.9 million in 2023 as we increased the number of employees and the share-based compensation expenses incurred for them.

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Gross Profit and Gross Margin

As a result of the foregoing, our gross profit increased by 51.2% to $285.2 million in 2024 from $188.6 million in 2023. Our gross margin was 24.6% in 2024 and 26.8% in 2023.

Selling and Marketing Expenses

Our selling and marketing expenses increased by 70.8% to $70.7 million in 2024 from $41.4 million in 2023, which was primarily due to (i) an increase in platform service fee we incurred on certain third-party ecommerce websites by 75.4% to $30.7 million in 2024 from $17.5 million in 2023 as sales volume and sales channels both increased, (ii) an increase in staff cost related to selling and marketing personnel by 61.3% to $30.0 million in 2024 from $18.6 million in 2023 primarily due to increase in the number of staff and higher share-based compensation expenses linked to higher share prices for awards granted and vested in 2024, and (iii) an increase in advertising expense by 71.8% to $6.7 million in 2024 from $3.9 million in 2023 as we increased our marketing efforts.

General and Administrative Expenses

Our general and administrative expenses increased by 146.3% to $73.9 million in 2024 from $30.0 million in 2023, which was primarily due to (i) an increase in staff cost related to general and administrative personnel by 121.3% to $31.2 million in 2024 from $14.1 million in 2023, primarily due to higher share-based compensation expenses linked to higher share prices for awards granted and vested in 2024 and an increased number of staff, (ii) an increase in rental expense by 562.1% to $19.2 million in 2024 from $2.9 million in 2023, primarily due to the expenses incurred for certain new fulfillment centers that were under preparation for use in 2024 and an increase in space for our corporate offices in 2024 compared to the previous period, (iii) an increase in professional service expense by 40.0% to $10.5 million in 2024 from $7.5 million in 2023 as we engaged additional professional services for our financial and legal advisors in 2024 compared to the previous period, and (iv) an increase in property insurance expense by 233.3% to $4.0 million in 2024 from $1.2 million in 2023 as our insurance premiums increased to accommodate our growing business.

Research and Development Expenses

Research and development expenses increased by 151.3% to $9.8 million in 2024 from $3.9 million in 2023. The increase was primarily due to our dedication in expanding our research and development efforts, including an increase in the number of research and development projects and the number of employees that performed research and development function in 2024.

Losses on Disposal of Property and Equipment

We had losses on disposal of property and equipment of $0.2 million in 2024 and $3.2 million in 2023. The higher figure in 2023 was primarily attributable to the disposal of old and obsolete property and equipment relating to the Noble House acquisition in 2023.

Interest Expense

We had interest expenses of $0.3 million in 2024 and $1.2 million in 2023. The decrease was primarily attributable to a decrease in the balance of finance lease liabilities.

Interest Income

We had interest income of $9.4 million in 2024 and $3.3 million in 2023. The increase was primarily attributable to higher average bank deposits, wealth management products and investment and interest rates in 2024 compared to the previous period.

Foreign Currency Exchange Gains / (Losses), Net

We had foreign currency exchange losses, net of $1.2 million in 2024 and foreign currency exchange gains, net of $2.1 million in 2023, primarily attributable to the overall depreciation of Japanese Yen and Euro over U.S. dollar in 2024, as compared to an overall appreciation in 2023.

Government Grants

We had government grants of $37 thousand in 2024 and $911 thousand in 2023.

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Others, net

Other gains, net was $2.0 million in 2024 primarily attributable to gains from the dissolution of a non-principal subsidiary, as well as net gains from other non-operating income and expenses. Other losses, net was $0.1 million in 2023.

Income Tax Expense

We had income tax expense of $14.8 million in 2024 and $20.9 million in 2023, primarily due to tax planning which optimized our tax structure in 2024.

Net Income

As a result of the foregoing, our net income was $125.8 million in 2024 and $94.1 million in 2023.

Year Ended December 31, 2023 Compared to Year Ended December 31, 2022

We discussed the results of operations for the year ended December 31, 2023 compared to year ended December 31, 2022 in our annual report on Form 10-K for the fiscal year ended December 31, 2023, which was filed with the SEC on March 27, 2024 (File No.: 001-41454) (the “2023 Form 10-K”). See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Year Ended December 31, 2023 Compared to Year Ended December 31, 2022” therein, which was incorporated by reference herein.

Year Ended December 31, 2022 Compared to Year Ended December 31, 2021

We discussed the results of operations for the year ended December 31, 2022 compared to year ended December 31, 2021 in our annual report on Form 20-F for the fiscal year ended December 31, 2022, which was filed with the SEC on April 24, 2023 (File No.: 001-41454) (the “2022 Form 20-F). See “Item 5. Operating and Financial Review and Prospects—Results of Operations—Year Ended December 31, 2022 Compared to Year Ended December 31, 2021” therein, which was incorporated by reference herein.

Segment Information for Fiscal Years 2024, 2023 and 2022

For the purpose of internal reporting and management's operation review, we do not segregate our business by revenue stream or geography. Our management has determined that our company has one operating segment. See Note 2, Segment Reporting, in the notes to the consolidated financial statements included elsewhere in this annual report.

Long-lived assets consist of property and equipment and operating lease right-of-use assets. The geographic information for long-lived assets as of December 31, 2024, 2023 and 2022 is as follows:

[[GREPCENT_TABLE]]
[["","December 31,"],["","2024","","2023","","2022"],["","(In thousands)"],["The United States","$","456,563","","","$","400,554","","","$","144,504"],["Others","24,865","","","22,982","","","12,717"],["Total long-lived assets","$","481,428","","","$","423,536","","","$","157,221"]]
[[/GREPCENT_TABLE]]

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Revenues reported are attributed to geographic areas based on locations of our fulfillment centers, except for platform commission revenues which are attributed to Hong Kong, where the server of GigaCloud Marketplace is located. Revenues by geography for the years ended December 31, 2024, 2023 and 2022 is as follows:

[[GREPCENT_TABLE]]
[["","Year ended December 31,"],["","2024","","2023","","2022"],["Revenues by geographic region:","(In thousands)"],["Hong Kong","$","16,879","","","$","11,187","","","$","6,872"],["Platform commission","16,879","","","11,187","","","6,872"],["United States","64,924","","","19,610","","","37,684"],["Others(1)","835","","","93","","","273"],["Ocean transportation service","65,759","","","19,703","","","37,957"],["United States","15,006","","","10,667","","","4,971"],["Others(1)","208","","","95","","","36"],["Drayage service","15,214","","","10,762","","","5,007"],["United States","45,103","","","23,601","","","14,569"],["Others(1)","1,086","","","822","","","1,673"],["Warehousing service","46,189","","","24,423","","","16,242"],["United States","138,842","","","101,285","","","60,632"],["Germany","16,197","","","3,663","","","1,061"],["Others(1)","1,546","","","1,030","","","1,052"],["Last-mile delivery service","156,585","","","105,978","","","62,745"],["United States","26,570","","","16,070","","","7,101"],["Germany","2,984","","","879","","","255"],["Others(1)","397","","","347","","","379"],["Packaging service","29,951","","","17,296","","","7,735"],["United States","18,265","","","9,196","","","3,962"],["Others(1)","1,431","","","639","","","108"],["Others","19,696","","","9,835","","","4,070"],["Service revenues","$","350,273","","","$","199,184","","","$","140,628"],["United States","573,348","","","373,837","","","269,599"],["Germany","170,497","","","71,163","","","21,133"],["Japan","45,922","","","44,348","","","40,082"],["Others(1)","21,002","","","15,299","","","18,629"],["Product revenues","$","810,769","","","$","504,647","","","$","349,443"],["Total revenues","$","1,161,042","","","$","703,831","","","$","490,071"]]
[[/GREPCENT_TABLE]]

(1) No other individual region's revenues exceeded 10% of the Company’s total revenues for the years ended December 31, 2024, 2023 and 2022.

Non-GAAP Financial Measure

To supplement our consolidated financial statements, which are prepared and presented in accordance with U.S. GAAP, we use Adjusted EBITDA and Adjusted EPS – diluted, to understand and evaluate our core operating performance. Adjusted EBITDA is net income excluding interest, income taxes and depreciation and amortization, further adjusted to exclude share-based compensation expenses and non-recurring items. Adjusted EPS – diluted is a financial measure defined as our Adjusted EBITDA divided by our diluted weighted-average shares outstanding. Management uses Adjusted EBITDA and Adjusted EPS – diluted as measures of operating performance, for planning purposes, to allocate resources to enhance the financial performance of our business, to evaluate the effectiveness of our business strategies and in communications with our Board of Directors and investors concerning our financial performance. Non-GAAP financial measures, which may differ from similarly titled measures used by other companies, are presented to enhance investors’

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overall understanding of our financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with U.S. GAAP.

The table below sets forth a reconciliation of Adjusted EBITDA from net income for the years indicated:

[[GREPCENT_TABLE]]
[["","For the Year Ended December 31,"],["","2024","","2023","","2022"],["","(In thousands)"],["Net income","$","125,808","","","$","94,108","","","$","23,972"],["Add: Income tax expense","14,806","","","20,887","","","7,192"],["Add: Interest expense","256","","","1,240","","","568"],["Less: Interest income","(9,405)","","","(3,304)","","","(472)"],["Add: Depreciation and amortization","8,524","","","2,873","","","1,386"],["Add: Share-based compensation expense","16,825","","","2,503","","","9,196"],["Add: Non-recurring items(1)","128","","","\u2014","","","\u2014"],["Adjusted EBITDA","$","156,942","","","$","118,307","","","$","41,842"]]
[[/GREPCENT_TABLE]]

____________________

(1)    One of our fulfillment centers in Japan experienced a fire in March 2024. The fire destroyed our inventories located within the fulfillment center. We recognized losses of $2.0 million as a result of the fire. Based on the provisions of our insurance policies, the gross losses were reduced by the insurance proceeds received $1.9 million from our insurance carrier for the claim.We do not believe such losses to be recurring or frequent in nature.

The table below sets forth a reconciliation of Adjusted EPS – diluted for the years indicated:

[[GREPCENT_TABLE]]
[["","","For the Year Ended December 31,"],["","","2024","","2023","","2022"],["Net income per ordinary share \u2013 diluted","","$","3.05","","","$","2.30","","","$","0.60"],["Adjustments, per ordinary share:"],["Add: Income tax expense","","0.36","","","0.51","","","0.29"],["Add: Interest expense","","0.01","","","0.03","","","0.02"],["Less: Interest income","","(0.23)","","","(0.08)","","","(0.02)"],["Add: Depreciation and amortization","","0.21","","","0.07","","","0.06"],["Add: Share-based compensation expenses","","0.41","","","0.06","","","0.38"],["Add: Non-recurring items(1)","","\u2014","","","\u2014","","","\u2014"],["Adjusted EPS \u2013 diluted","","$","3.81","","","$","2.89","","","$","1.33"],["Weighted average number of ordinary shares outstanding - diluted","","41,201,026","","40,922,590","","24,412,314"]]
[[/GREPCENT_TABLE]]

____________________

(1)    One of our fulfillment centers in Japan experienced a fire in March 2024. The fire destroyed our inventories located within the fulfillment center. We recognized losses of $2.0 million as a result of the fire. Based on the provisions of our insurance policies, the gross losses were reduced by the insurance proceeds received $1.9 million from our insurance carrier for the claim.We do not believe such losses to be recurring or frequent in nature.

Liquidity and Capital Resources

Liquidity

To date, we have financed our operating and investing activities mainly through cash generated from our business. As of December 31, 2024, we had $259.8 million in cash and $0.7 million in restricted cash.

In July 2022, we entered into a two-year credit facility agreement with Wells Fargo Bank, National Association, under which we are able to borrow up to $30 million during the term of the facility. The credit facility also requires us to comply with various customary covenants and other restrictions. In July 2024, we renewed the credit facility with a maturity date of June 30, 2026. As of the date of this annual report, we have not made any draw down from this credit facility.

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We believe our cash on hand will be sufficient to meet our current and anticipated needs for general corporate purposes for at least the next 12 months. We may, however, need additional cash resources in the future if we experience changes in business conditions or other developments. We may also need additional cash resources in the future if we find and wish to pursue opportunities for investment, acquisition, capital expenditure or similar actions. If we determine that our cash requirements exceed the amount of cash we have on hand, we may seek to issue equity or equity-linked securities or obtain debt financing. The issuance and sale of additional equity would result in further dilution to our shareholders. The incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that would restrict our operations. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all.

As a Cayman Islands exempted company and offshore holding company, we are permitted under PRC laws and regulations to provide funding to our PRC Subsidiaries only through loans or capital contributions, subject to relevant approval, filing and/or reporting with respect to government authorities and limits on the amount of capital contributions and loans. This may delay us from making loans or capital contributions to our PRC Subsidiaries, if any. See “Item 1A. Risk Factors—Risks Related to Doing Business in China—PRC regulation of loans to, and direct investments in, PRC entities by offshore holding companies and governmental control of currency conversion may restrict or prevent us to make loans or additional capital contributions to our PRC Subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.”

The following table sets forth a summary of our cash flows for the periods presented:

[[GREPCENT_TABLE]]
[["","For the Year Ended December 31,"],["","2024","","2023","","2022"],["","(In thousands)"],["Summary of Consolidated Statement of Cash Flow Data:"],["Net cash provided by operating activities","$","158,078","","","$","133,452","","","$","49,656"],["Net cash used in investing activities","(55,419)","","","(90,547)","","","(709)"],["Net cash provided by (used in) financing activities","(24,969)","","","(4,003)","","","31,887"],["Effect of foreign currency exchange rate changes on cash and restricted cash","(1,414)","","","190","","","380"],["Net increase in cash and restricted cash","76,276","","","39,092","","","81,214"],["Cash and restricted cash at the beginning of the year","184,168","","","145,076","","","63,862"],["Cash and restricted cash at the end of the year","$","260,444","","","$","184,168","","","$","145,076"]]
[[/GREPCENT_TABLE]]

Operating Activities

Net cash provided by operating activities in 2024 was $158.1 million, as compared to $133.5 million in 2023. This was attributable to net income of $125.8 million in 2024, as adjusted by non-cash items and the effects of changes in working capital and other activities. Adjustments to reconcile net income to net cash provided by operating activities primarily consisted of (i) changes in inventories of $46.9 million, (ii) changes in accounts payable, accrued expenses and other current liabilities of $38.2 million, (iii) operating lease of $29.3 million, (iv) share-based compensation of $16.8 million, (v) changes in deferred income taxes of $11.5 million and (vi) depreciation and amortization of $8.5 million.

Investing Activities

Net cash used in investing activities in 2024 was $55.4 million, primarily consisting of purchase of investments of $73.8 million for U.S treasury bonds and other wealth management products, and cash paid for purchase of property and equipment of $15.5 million, partially offset by sale and maturities of investments of $31.8 million and cash received from disposal of property and equipment of $2.1 million.

Financing Activities

Net cash used in financing activities in 2024 was $25.0 million, consisting solely of (i) repayment of finance lease obligations of $1.7 million and (ii) payment of share repurchase of $23.2 million.

We discussed our net cash provided by/used in operating activities, investing activities and financing activities in 2023 in the 2023 Form 10-K. See the titles named operating activities, investing activities and financing

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activities in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” therein, which was incorporated by reference herein.

We discussed our net cash provided by/used in operating activities, investing activities and financing activities in 2022 in the 2022 Form 20-F. See the titles named operating activities, investing activities and financing activities in “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources” therein, which was incorporated by reference herein.

Share Repurchase Program

In June 2023, we announced that our board of directors approved a share repurchase program to repurchase up to $25.0 million of our Class A ordinary shares over the next 12 months, which expired in June 2024. On September 3, 2024, we announced that our board of directors approved a new share repurchase program under which we may purchase up to $46.0 million of our Class A ordinary shares, par value $0.05, over a 12-month period. Under the share repurchase program, we may purchase our ordinary shares through various means, including open market transactions, privately negotiated transactions, block trades, any combination thereof or other legally permissible means. We may effect repurchase transactions in compliance with Rule 10b5-1 and Rule 10b-18 of the Securities Exchange Act of 1934, as amended, or the Exchange Act. The number of shares repurchased and the timing of repurchases will depend on a number of factors, including, but not limited to, price, trading volume and general market conditions, along with our working capital requirements, general business conditions and other factors. Our board of directors will review the share repurchase program periodically, and may modify, suspend or terminate the share repurchase program at any time. We plan to fund repurchases from our existing cash balance.

See “Item 5—Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” of this annual report on Form 10-K for more information.

Capital Resources

Our capital expenditures consist primarily of purchase of property and equipment. Our capital expenditures were $15.5 million in 2024. We intend to fund our future capital expenditures with our existing cash balance, short-term investments and anticipated cash flows from operations. We will continue to make well-planned capital expenditures to meet the expected growth of our business.

Contractual Obligations

The following table sets forth our contractual obligations as of December 31, 2024:

[[GREPCENT_TABLE]]
[["","Total","","Less than 1 Year","","1 \u2013 3 Years","","More than 3 Years"],["","(In thousands)"],["Lease commitment(1)"],["Operating leases","$","540,748","","","$","105,052","","","$","299,069","","","$","136,627"],["Finance leases","631","","","189","","","405","","","37"],["Total","$","541,379","","","$","105,241","","","$","299,474","","","$","136,664"]]
[[/GREPCENT_TABLE]]

_____________________

(1)Lease commitment consists of the commitments under the lease agreements for our fulfillment centers and storage shelves.

Except for those disclosed above, we did not have any significant capital or other commitments, long-term obligations, or guarantees as of December 31, 2024.

Off-Balance Sheet Commitments and Arrangements

We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any unconsolidated third parties. In addition, we have not entered into any derivative contracts that are indexed to our shares and classified as shareholders’ equity or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. Moreover, we do not have any variable interest in any unconsolidated entity

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that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or product development services with us.

Holding Company Structure

The Cayman Islands currently has no exchange control regulations or currency restrictions which may affect the import or export of capital, including the availability of cash and cash equivalents for use by our company, or the remittance of dividends, interest or other payments to non-resident holders of our securities.

Our company, GigaCloud Technology Inc, is a holding company incorporated in the Cayman Islands with no material operations of its own and is not a direct Chinese or Hong Kong operating company. We conduct our operations primarily through our principal subsidiaries. As a result, our ability to pay dividends depends upon dividends paid by our subsidiaries . If our subsidiaries incur debt on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends to us.

In addition, as determined in accordance with local regulations, our subsidiaries in certain of our markets may be restricted from paying us dividends offshore or from transferring a portion of their assets to us, whether in the form of dividends, loans or advances, unless certain requirements are met or regulatory approvals are obtained. In addition, our subsidiaries may be restricted in their ability to pay dividends or distributions or make other transfers to us as a result of the laws of their respective jurisdictions of organization and agreements of our subsidiaries . See “Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities—Dividends.” Even though we currently do not require any such dividends, loans or advances from our entities for working capital and other funding purposes, we may in the future require additional cash resources from them due to changes in business conditions, to fund future acquisitions and development, or merely to declare and pay dividends or distributions to our shareholders.

Trend Information

Other than as disclosed elsewhere in this annual report, we are not aware of any known trends, uncertainties, demands, commitments or events for the year ended December 31, 2024 that are reasonably likely to have a material adverse effect on our net revenues, income, profitability, liquidity or capital resources, or that are reasonably likely to cause a material change in the relationship between costs and revenues, or that would cause reported financial information to be not necessarily indicative of future operating results or financial conditions.

Critical Accounting Estimates

We prepare our financial statements in conformity with U.S. GAAP. The preparation of these financial statements requires our management to make estimates and assumptions based on the most recently available information, our own historical experience and various other assumptions that we believe to be reasonable under the circumstances. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from our expectations as a result of changes in our estimates. For the year ended December 31, 2024, we have not identified critical accounting estimates that involve a significant level of estimation uncertainty and would have a material impact on our results.

Recent Accounting Pronouncements

A list of recently issued accounting pronouncements that are relevant to us is included in Note 2 “Recent accounting pronouncements” to our consolidated financial statements included elsewhere in this annual report.