Realreal ((REAL)) has held its Q3 earnings call. Read on for the main highlights of the call.
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The RealReal’s recent earnings call painted a picture of robust financial health and strategic advancements. The company reported record growth in GMV and revenue, alongside significant improvements in adjusted EBITDA and free cash flow. Despite facing a decline in take rate and competitive pressures, the overall sentiment was positive, with the company expressing confidence in its ability to sustain growth and profitability, as reflected in its raised guidance.
Record Quarterly GMV and Revenue Growth
The RealReal achieved a remarkable milestone with a record quarterly GMV of $520 million, marking a 20% increase year-over-year. Revenue also saw a significant rise, growing by 17% year-over-year to reach $174 million. This growth underscores the company’s ability to capture market demand effectively.
Strong Adjusted EBITDA and Free Cash Flow
The company reported an adjusted EBITDA of $9.3 million, which constitutes 5.4% of total revenue. This represents a year-over-year margin expansion of 380 basis points. Additionally, The RealReal generated $14 million in free cash flow for the quarter, highlighting its operational efficiency and financial discipline.
Increase in Active Buyers and Consignors
The RealReal’s active buyer base expanded by 7% year-over-year, surpassing 1 million active buyers. Both new and repeat consignors experienced double-digit growth, indicating strong engagement and satisfaction with the platform.
Successful Implementation of AI and Efficiency Initiatives
The company has made strides in operational efficiency through the implementation of AI-driven processes. The Athena AI-enabled product intake process now touches 27% of all items, with a target of reaching 30%-40% by year-end. This initiative is expected to further enhance operational efficiencies.
Positive Outlook and Guidance Raise
The RealReal has raised its full-year GMV outlook to between $2.10 billion and $2.11 billion, with adjusted EBITDA projected to be between $37.7 million and $38.7 million. This reflects a 400 basis point improvement compared to 2024, showcasing the company’s confidence in its strategic direction and growth potential.
Decline in Take Rate
The company’s take rate experienced a decline of 70 basis points year-over-year, settling at 37.9%. This was primarily due to a shift towards higher-value items and categories, which, while impacting the take rate, aligns with the company’s strategic focus on premium segments.
Uncertainty in Competitive Landscape
The luxury resale market is witnessing evolving competitive dynamics, with new entrants influencing pricing and supply acquisition. The RealReal is navigating these challenges by leveraging its established market presence and strategic initiatives.
Forward-Looking Guidance
Looking ahead, The RealReal projects an annual GMV of over $2 billion, reflecting strong growth. The company anticipates continued GMV growth of 17% and revenue growth of 16% year-over-year for Q4. With an adjusted EBITDA margin expected to reach 9.5%, The RealReal plans to further leverage AI and automation to enhance operational efficiencies, aiming for a full-year GMV between $2.10 billion and $2.11 billion, and revenue between $687 million and $690 million.
In conclusion, The RealReal’s earnings call highlighted a period of impressive growth and strategic advancements. The company’s positive sentiment, bolstered by record GMV and revenue growth, strong financial metrics, and successful implementation of AI initiatives, positions it well for sustained success in the competitive luxury resale market.