The RealReal’s Record Q2: Growth and Optimism

Realreal ((REAL)) has held its Q2 earnings call. Read on for the main highlights of the call.

The RealReal’s latest earnings call exuded a strong positive sentiment, driven by record-setting GMV and revenue figures, significant improvements in adjusted EBITDA, and robust growth in new consignors. The integration of AI and operational efficiencies further bolstered the positive outlook, despite some concerns about operating cash flow and direct revenue gross margin fluctuations.

Record GMV and Revenue Growth

In Q2 2025, The RealReal achieved a record GMV of $504 million and record revenue of $165 million, marking a 14% year-over-year increase. This milestone underscores the company’s strong market position and its ability to drive substantial sales growth.

Adjusted EBITDA Surpasses Expectations

The RealReal’s adjusted EBITDA reached $6.8 million, or a 4.1% margin, exceeding expectations and reflecting a significant year-over-year increase of $8.6 million. This achievement highlights the company’s operational efficiency and effective cost management strategies.

Strong New Consignor Growth

The company experienced its highest number of new consignors ever, with double-digit growth for the second consecutive quarter. This trend indicates a growing trust and interest in The RealReal’s platform among sellers, contributing to its expanding inventory and sales.

Operational Efficiency and AI Integration

The integration of AI, particularly through the Athena system, is now impacting 20% of all units and is expected to reach 30-40% by year-end. This technological advancement is contributing to significant operating expense leverage, enhancing overall efficiency.

Improved Financial Outlook

The RealReal has raised its full-year guidance, projecting GMV between $2.030 billion and $2.045 billion and revenue between $667 million and $674 million. Adjusted EBITDA is expected to range from $29 million to $32 million, reflecting the company’s confidence in sustaining growth and profitability.

Negative Operating Cash Flow

Operating cash flow was negative $4 million in the second quarter, though this was an improvement both year-over-year and quarter-over-quarter. This indicates progress in managing cash flow, despite it remaining a challenge.

Direct Revenue Gross Margin Fluctuations

The direct gross margin stood at 16.2%, influenced by the category mix of products sold. Fluctuations are expected based on the types of products, which may impact future profitability.

Forward-Looking Guidance

The RealReal’s forward-looking guidance is optimistic, with expectations of continued growth in GMV and revenue. The company aims to leverage AI and automation, enhance its sales force, and expand its drop ship initiative to sustain momentum. The focus remains on improving profitability and achieving consistent cash flow.

In conclusion, The RealReal’s earnings call conveyed a strong positive sentiment, with record-breaking financial results and promising growth prospects. Key takeaways include the company’s strategic use of AI, significant consignor growth, and an improved financial outlook, all contributing to a bright future for The RealReal.