RealReal Earnings Call: Strong Growth and Optimism

Realreal ((REAL)) has held its Q1 earnings call. Read on for the main highlights of the call.

The latest earnings call from RealReal paints a positive picture for the company, showcasing strong revenue growth and improvements in profitability. The sentiment expressed during the call was overwhelmingly optimistic, driven by strategic initiatives and operational efficiencies. Despite facing some challenges with operating cash flow and macroeconomic uncertainties, the positive highlights significantly overshadowed the lowlights, indicating a successful start to the year.

Record-Breaking Revenue and Growth

In the first quarter of 2025, RealReal reported a 9% increase in Gross Merchandise Value (GMV) and an 11% rise in revenue year-over-year. This growth aligns with the company’s goal of achieving high-single-digit to low-double-digit growth. Additionally, the number of active buyers increased by 7% on a trailing 12-month basis, reflecting the company’s expanding customer base.

Improved Profitability and Margins

RealReal’s profitability saw significant improvements, with adjusted EBITDA reaching a positive $4 million, marking a $6 million increase compared to the same period last year. The company’s gross margin also improved by 40 basis points year-over-year, highlighting enhanced operational efficiencies.

New Consignor Growth

The company achieved its highest number of new consignors in over two years, thanks to innovative strategies aimed at boosting consignor acquisition. This growth is a testament to RealReal’s successful efforts in expanding its supply base.

Successful Strategic Initiatives

RealReal’s growth playbook initiatives, including sales, marketing, and store strategies, have driven healthy supply trends. Programs like Real Partners and Get Paid Now are generating substantial supply growth, further strengthening the company’s market position.

Operational Efficiency with AI

The introduction of the Athena AI-enabled product intake process has significantly reduced costs and improved efficiency. This technology processes more than 10% of items, with an estimated 20% reduction in processing times, showcasing RealReal’s commitment to leveraging technology for operational excellence.

Operating Cash Flow Challenges

Despite the positive financial performance, RealReal faced challenges with operating cash flow, which was negative $28 million in the first quarter. This was attributed to the timing of incentive payments and working capital seasonality, indicating areas for potential improvement.

Potential Macroeconomic Challenges

The company acknowledged potential challenges arising from a more uncertain macroeconomic environment. However, RealReal maintains a balanced perspective, focusing on its strategic initiatives to navigate these uncertainties effectively.

Forward-Looking Guidance

During the call, RealReal reaffirmed its full-year 2025 guidance, projecting GMV between $1.96 billion and $1.99 billion and revenue between $645 million and $660 million. The company expects adjusted EBITDA to be between $20 million and $30 million. These forecasts underscore RealReal’s confidence in its strategic pillars of unlocking supply, driving operational efficiencies, and enhancing service.

In summary, RealReal’s earnings call highlighted a positive outlook for the company, with strong revenue growth and profitability improvements. Key takeaways include record-breaking revenue and growth, improved profitability and margins, and successful strategic initiatives. Despite some challenges, RealReal remains optimistic about its future prospects, reaffirming its full-year guidance and strategic focus.