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RealReal (REAL)
NASDAQ:REAL
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RealReal
(NASDAQ:REAL)
49Neutral
Positive Factors
Debt Management
REAL has strengthened its balance sheet by reducing total debt and pushing out maturity risk to 2028 and beyond.
Financial Performance
REAL released a positive preliminary 4Q/FY update well ahead of Street expectations on both revenues and adjusted EBITDA.
Market Position
The RealReal's Q3 results showed improving growth and profitability, supported by healthy supply trends and salesforce productivity.
Negative Factors
Debt Concerns
REAL's cash position becomes more steady, the company has hinted at looking to possibly deleverage its current debt level.
Shareholder Impact
Existing shareholders will be diluted by ~9% should the 2031 Notes rise above the conversion price.
RealReal (REAL) vs. S&P 500 (SPY)
Market Cap
$605.18M
Dividend YieldN/A
Average Volume (3M)3.24M
Price to Earnings (P/E)―
Beta (1Y)2.88
Revenue Growth9.32%
EPS Growth25.94%
CountryUS
Employees3,011
SectorConsumer Cyclical
Sector Strength55
IndustryLuxury Goods
Share Statistics
EPS (TTM)-1.28
Shares Outstanding111,246,605
10 Day Avg. Volume3,210,041
30 Day Avg. Volume3,243,145
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)1.15
Price to Cash Flow (P/CF)6.20
P/FCF Ratio6.20
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$10.83Price Target Upside99.08% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering4
RealReal Business Overview & Revenue Model
Company DescriptionThe RealReal, Inc. operates an online marketplace for consigned luxury goods in the United State. It offers various product categories, including women's, men's, kids', jewelry and watches, and home and art products. The company was incorporated in 2011 and is headquartered in San Francisco, California.
How the Company Makes MoneyThe RealReal makes money through a consignment model where it takes a commission on each item sold. Sellers send their luxury goods to The RealReal, where the items are authenticated, photographed, and listed for sale on their online platform and in physical retail locations. When an item is sold, the company retains a percentage of the sale price as a commission, which varies based on the item's price and category. Additional revenue streams include fees for premium services, such as white-glove pickup services for consignors, and potential partnerships with luxury brands that can offer exclusive collaborations or events. The company's earnings are significantly influenced by the quality and quantity of items consigned, the efficiency of their authentication process, and their ability to attract both buyers and sellers to the platform.
RealReal Financial Statement Overview
Summary
RealReal shows revenue growth and cash flow improvements but faces challenges with high debt levels, negative equity, and ongoing losses. The negative equity position and leverage pose significant risks.Income Statement
RealReal has shown some revenue growth with a 2024 revenue of $600.5 million up from $549.3 million in 2023. However, the company struggles with profitability, posting a negative EBIT and net income. Gross profit margin is healthy at 74.5% for 2024, but the net profit margin remains deeply negative at -22.3%. Overall, while there is revenue growth, the persistent losses suggest challenges in achieving profitability.45
Neutral
Balance Sheet
The balance sheet indicates significant leverage with a debt-to-equity ratio that is not calculable due to negative equity, compounded by negative stockholders' equity of -$407.4 million in 2024. The equity ratio is also negative, reflecting financial instability. The company's high debt levels compared to assets and negative equity highlight potential solvency risks.30
Negative
Cash Flow
Cash flow analysis shows improvement with positive operating cash flow of $26.8 million in 2024 compared to negative $61.3 million in 2023. Free cash flow also turned positive in 2024 at $12.6 million, which is a promising sign. However, the company's cash flow to net income ratios are not favorable due to negative net income, indicating potential sustainability issues.55
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 600.48M | 549.30M | 603.49M | 467.69M | 298.27M | Gross Profit |
| 447.52M | 376.28M | 348.69M | 273.48M | 185.88M | EBIT |
| -56.49M | -166.29M | -188.71M | -201.52M | -174.50M | EBITDA |
| -79.44M | -109.05M | -138.53M | -171.55M | -135.56M | Net Income Common Stockholders |
| -134.20M | -168.47M | -196.44M | -236.11M | -177.51M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 172.21M | 175.71M | 293.79M | 418.17M | 354.86M | Total Assets |
| 423.10M | 446.92M | 615.64M | 754.94M | 605.11M | Total Debt |
| 546.55M | 577.37M | 595.74M | 509.79M | 279.27M | Net Debt |
| 374.34M | 401.66M | 301.95M | 91.62M | -71.58M | Total Liabilities |
| 830.47M | 750.22M | 785.73M | 681.82M | 413.82M | Stockholders Equity |
| -407.38M | -303.30M | -170.09M | 73.13M | 191.29M |
| Cash Flow | Free Cash Flow | |||
| 798.00K | -103.40M | -128.48M | -189.59M | -161.35M | Operating Cash Flow |
| 26.85M | -61.27M | -91.56M | -142.15M | -132.76M | Investing Cash Flow |
| -25.59M | -42.13M | -36.92M | -43.44M | 176.35M | Financing Cash Flow |
| -4.76M | 226.00K | 4.10M | 252.91M | 152.81M |
RealReal Technical Analysis
Negative
5.44
Price Trends
6.71
Negative
7.33
Negative
5.21
Positive
Market Momentum
-0.34
Negative
40.96
Neutral
11.29
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For REAL, the sentiment is Negative. The current price of 5.44 is below the 20-day moving average (MA) of 5.75, below the 50-day MA of 6.71, and above the 200-day MA of 5.21, indicating a neutral trend. The MACD of -0.34 indicates Negative momentum. The RSI at 40.96 is Neutral, neither overbought nor oversold. The STOCH value of 11.29 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for REAL.
RealReal Risk Analysis
RealReal disclosed 57 risk factors in its most recent earnings report. RealReal reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
RealReal Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
65 Neutral | $227.27M | 13.79 | 4.74% | 10.38% | -4.18% | -58.51% | |
60 Neutral | $559.34M | ― | -8.28% | ― | 12.01% | -23.53% | |
59 Neutral | $11.74B | 10.16 | -1.06% | 4.15% | 1.27% | -16.61% | |
57 Neutral | $2.34B | 5.56 | 2.62% | 2.12% | -6.52% | -104.24% | |
54 Neutral | $143.12M | ― | 3.88% | ― | -5.43% | -15.13% | |
49 Neutral | $605.18M | ― | 32.94% | ― | 9.32% | 25.94% | |
43 Neutral | $333.55M | ― | -70.81% | ― | ― | ― |
* Consumer Cyclical Sector Average
Performance Comparison
REAL
RealReal
5.44
1.98
57.23%
MOV
Movado Group
14.49
-10.03
-40.91%
SIG
Signet Jewelers
59.06
-39.12
-39.85%
MYTE
MYT Netherlands
7.99
4.25
113.64%
LANV
Lanvin Group Holdings
2.26
0.69
43.95%
BRLT
Brilliant Earth Group
1.45
-1.40
-49.12%
RealReal Earnings Call Summary
Earnings Call Date: Feb 20, 2025 | % Change Since: -31.66% | Next Earnings Date: May 13, 2025
Earnings Call Sentiment Positive
The earnings call presented a positive outlook with significant achievements in revenue growth, profitability, and strategic initiatives. Despite some challenges like a decline in direct revenue and high SG&A costs, the company's strategic refocus and operational improvements indicate a strong position moving forward.Highlights
Strong Revenue Growth
The RealReal reported a 14% revenue growth in Q4 and 9% for the full year.
Positive Adjusted EBITDA and Free Cash Flow
For the first time, The RealReal delivered a full year of profitable adjusted EBITDA and positive free cash flow, with a $104 million improvement versus last year.
Increase in Gross Margin
Gross margin increased by 600 basis points year-over-year, highlighting operational efficiencies.
Growth in GMV and Active Buyers
GMV reached $1.83 billion, a 6% increase year-over-year, and active buyers on a trailing 12-month basis increased by 5%.
Sales Team Efficiency
The value generated per sales rep in 2024 increased by approximately 15% compared to the prior year.
Successful Store Openings
The RealReal opened two new stores in Miami and Houston, with nearly 25% of new consignors acquired through retail locations.
Lowlights
Direct Revenue Decline
Direct revenue was down 18% as the company established a better baseline for that business.
High SG&A Costs
SG&A expenses remain high, with two-thirds being relatively fixed costs, highlighting a need for further efficiency improvements.
Company Guidance
During the RealReal's fourth quarter 2024 financial results conference call, the company provided detailed guidance and metrics highlighting their strong performance and forward-looking strategies. Key metrics included a 14% revenue growth in Q4, with GMV reaching $18 billion, marking a 6% year-over-year increase. The company achieved significant financial milestones, including its first full year of positive adjusted EBITDA and free cash flow, with free cash flow improving by $104 million from the previous year. Consignment revenue was up 14%, driven by a focus on mid and high-value supply, while active buyers on a trailing 12-month basis increased by 5%. The company's growth playbook, which includes initiatives like SmartSales AI and Athena AI, aims to enhance sales efficiency and operational productivity. For 2025, RealReal projects GMV between $1.96 billion and $1.99 billion, revenue growth of 9% at the midpoint, and adjusted EBITDA of $20 million to $30 million, signifying a 200 to 300 basis points margin expansion.RealReal Corporate Events
Private Placements and FinancingFinancial Disclosures
RealReal Finalizes Debt Exchange Agreement for 2025
Positive
Feb 10, 2025
On February 10, 2025, The RealReal, Inc. finalized a debt exchange agreement reducing its total indebtedness by $37 million by exchanging $183 million of 1.00% Convertible Senior Notes due 2028 for $147 million of new 4.00% Convertible Senior Notes due 2031. This strategic move strengthens the company’s financial position and capital structure. The company also reported strong preliminary financial results for the fourth quarter and full year 2024, exceeding previous guidance ranges for Gross Merchandise Value (GMV) and Adjusted EBITDA, signaling an important inflection point towards profitable growth.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.