The RealReal Expands AI Push as Luxury Buyers Spend More

Core Insights - The RealReal's latest earnings report emphasizes the role of artificial intelligence in enhancing operational efficiency and improving the listing process for luxury items [1][3] - CEO Rati Levesque highlighted a multi-year AI roadmap aimed at leveraging technology to identify potential consignors and streamline the listing process [3][11] AI and Operational Strategy - The company is focusing on two key AI initiatives: SmartSales for identifying high-potential clients and Athena for reducing the time from item intake to live listing while enhancing accuracy [3] - The AI strategy is designed to shape supply dynamics, targeting higher-value consignors and premium product categories that foster loyalty among both sellers and buyers [4][11] Supply Growth and Retail Strategy - A coordinated "growth playbook" integrates marketing, sales, and retail efforts, improving targeting of mid to high-value sellers [8] - Approximately 25% of new consignors are sourced through retail locations, with items sourced through these channels having an average selling price 5 to 7 times higher than those from other sources [8] Demand Resilience - Demand remains strong, particularly in premium categories, with buyers spending $5,000 or more increasing by 20% year over year [9] - The RealReal's positioning at the intersection of luxury and value, along with educational efforts regarding resale pricing, contributes to this demand resilience [9] Financial Performance - In Q4 2025, gross merchandise value (GMV) rose 22% year over year, while revenue increased by 18%, with adjusted EBITDA reaching $22 million [10] - For the full year 2025, GMV increased by 16% to $2.13 billion, and revenue rose by 15% to $693 million, marking positive adjusted EBITDA in every quarter for the first time [10] Future Outlook - The results are seen as indicators of a broader transformation, with plans to deepen AI integration and enhance supply chain efficiency as priorities for 2026 [11]