Financial Data and Key Metrics Changes - The company reported a 20% growth in GMV (Gross Merchandise Value) in Q3, following a 14% growth in Q2, indicating strong performance in the luxury resale market [7][14] - EBITDA margin expanded by 380 basis points in Q3, reaching approximately 5%, with expectations to close the year at 5.5% [46][49] - The company aims for medium-term EBITDA margins of 15%-20% over the next four to six years [46][48] Business Line Data and Key Metrics Changes - The RealReal is closing in on $2 billion in GMV, with significant room for growth compared to the $85 billion U.S. luxury resale market [3][19] - The company has processed and sold 50 million items, providing a robust data set for pricing and authentication [12][19] Market Data and Key Metrics Changes - The luxury resale market is experiencing a cultural shift, with 58% of consumers preferring to shop on resale platforms [7] - The primary luxury retail market is expected to grow in low single digits, while the resale market is anticipated to grow at a faster rate, potentially in the high single digits [14][16] Company Strategy and Development Direction - The company is focused on unlocking supply from consumers' closets, which is estimated to be around $200 billion, by enhancing its sales team, marketing efforts, and retail presence [21][22] - The introduction of the Dropship initiative aims to tap into international supply without taking possession of items, facilitating growth in new markets [25][24] Management's Comments on Operating Environment and Future Outlook - Management noted that inflation in the primary market increases the attractiveness of the resale platform, as consumers seek value [11] - The company is seeing broad-based strength across demographics, particularly among Gen Z and millennials, with a higher propensity to spend on initial purchases [29][30] Other Important Information - The company has implemented AI tools, such as Athena, to streamline the intake and authentication process, with 27% of items processed through this system in Q3 [31][34] - The company has made significant progress in deleveraging, reducing debt by $86 million since the beginning of the previous year [51][53] Q&A Session Summary Question: How does the company view the current competitive landscape? - The company sees competition from various sources, including peer-to-peer resale platforms, managed marketplaces, and traditional retail, but believes it has strong strategic advantages [17][18] Question: What are the company's priorities for international expansion? - While international expansion is a growth area, the company is currently focused on maximizing potential in the U.S. market [27] Question: How is the company addressing the men's luxury segment? - The company acknowledges under-indexing in men's luxury but is actively working to expand its presence in this category, particularly through watches [43][44] Question: What are the expectations for margin expansion moving forward? - The company anticipates continued margin expansion driven by operational efficiencies and improved sales strategies, aiming for mid-teens margins in the future [46][48]

Core Insights - The Real Real is experiencing significant momentum in the luxury resale market, with a projected Gross Merchandise Value (GMV) of $2 billion for the first time in its history, indicating a market shift towards resale [2][3] - A notable statistic reveals that 58% of consumers now prefer the secondary market over the primary market, highlighting a change in consumer shopping behavior [3] Company Strategy - The company operates 19 physical locations, which facilitate consignment by reducing friction for consigners and enhancing customer engagement [4][5] - Plans for expansion include opening 1 to 3 new stores annually, while maintaining a digital-first approach [7] Market Dynamics - The total addressable market (TAM) in the U.S. is estimated at $200 billion, representing significant potential for growth in the luxury resale sector [9] - The intersection of luxury and value is driving consumer willingness to spend, particularly on high-value items such as fine jewelry, watches, and handbags [10] Technological Advancements - The Real Real has leveraged technology and AI to streamline the processing of items, improving efficiency and reducing costs per unit [12][13] - The introduction of the AI tool "Athena" has enabled faster item processing, enhancing operational capabilities [13]

Core Insights - The RealReal reported strong third-quarter results, with gross merchandise value (GMV) increasing by 20% to $520 million and revenue rising by 17% to $174 million, leading to an upward revision of full-year GMV guidance to over $2.1 billion [2][3] Sales Performance - The company’s internal report highlighted fine jewelry as the fastest-growing category, with first-time watch buyers increasing by 46% and searches for wedding dresses rising by 247% year-over-year [4] - Handbag searches for fair-condition items grew by 32%, indicating a shift towards practicality and value retention among consumers [4] Consumer Behavior - Economic conditions are influencing consumer behavior, with nearly 70% of Americans living paycheck to paycheck and 25% struggling to pay bills recently [5] - Almost half of U.S. shoppers now purchase secondhand items as frequently as new ones, suggesting that resale has become a regular purchasing behavior rather than a niche choice [5] Operational Efficiency - The company’s growth strategy emphasizes supply quality and operational discipline, with a revised compensation plan that increased average supply value per luxury manager by 12% [7] - The AI-enabled intake system, Athena, managed 27% of all items during the quarter and is projected to handle 40% by year-end, automating authentication and listing processes [8] Financial Metrics - Gross profit rose by 16% to $129 million, supported by higher-value sales and automation gains, while consignment margins improved to 89% and direct-sales margins rose to 21% [11] - Operating expenses decreased by 6% as a share of revenue, reflecting continued cost discipline, with the company ending the quarter with $123 million in cash and reducing debt by $86 million since early 2024 [11] Future Outlook - For the fourth quarter, The RealReal expects GMV between $585 million and $595 million, representing an approximate 17% increase, and revenue between $188 million and $191 million, up roughly 16% [12] - Management anticipates that efficiency improvements and sustained consumer demand for secondhand luxury will support steady growth into 2026 [12] Customer Engagement - Users who both buy and consign, referred to as "Flywheelers," are two to three times more valuable than single-side participants, driving higher transaction frequency and long-term loyalty [9] - The RealReal's high-value pop-up events generated over $2.6 million in supply within a few days, indicating strong engagement with luxury consignors [10]

Core Insights - The RealReal's 2025 Resale Report highlights a cultural shift in luxury resale, emphasizing its desirability and accessibility, with over 40 million members engaging in the marketplace [1][10] - The report indicates that nearly one-third of clothing purchased in the U.S. last year was secondhand, with 58% of consumers preferring the secondary market [3] Market Trends - Fine jewelry and timeless handbags maintained strong demand, while nostalgia for 2010s fashion and 1980s maximalism influenced consumer preferences [2] - Vintage searches increased by nearly 30% year-over-year, as consumers sought long-term value through resale [2] Consumer Behavior - 47% of consumers now consider resale value before purchasing new items, reflecting a shift in buying habits due to inflation and rising retail prices [7] - The report notes a rejection of uniformity in fashion, with consumers favoring unique pieces that express personal style [3] Brand Performance - Resale values for luxury items showed significant increases: Rolex Datejusts (+17%), Goyard Saint Louis totes (+18%), and Hermès Birkin 30 (+15%) [7] - Isabel Marant emerged as the 1 most-searched contemporary label, with a 54% increase year-over-year [7] Notable Events - Celebrity influence was evident, with Kendrick Lamar's Celine Super Bowl jeans driving a 963% increase in related searches within 24 hours [7] - The report highlights a surge in wedding-related searches across generations, with vintage engagement rings seeing a 198% increase [11]

Financial Data and Key Metrics Changes - Q1 GMV reached $490 million, a 9% increase year over year [27] - Q1 revenue was $160 million, reflecting an 11% year-over-year growth [28] - Adjusted EBITDA for Q1 was $4.1 million, up $6.4 million from the previous year, with adjusted EBITDA margins increasing over 400 basis points [31] - Gross profit for Q1 was $120 million, a 12% increase year over year, resulting in a gross margin of 75%, up 40 basis points [30] Business Line Data and Key Metrics Changes - Consignment revenue increased by 7%, while direct revenue surged by 61% compared to Q1 of 2024 [28] - Average order value (AOV) rose to $564, a 5% increase year over year [9] - The company reported its highest number of new consignors in over two years, contributing significantly to supply growth [10][27] Market Data and Key Metrics Changes - Active buyers increased by 7% on a trailing twelve-month basis, reaching 985,000 [27] - The company expects direct revenue to remain between 10% to 15% of total revenues going forward [29] Company Strategy and Development Direction - The company is focused on three strategic pillars: unlocking supply through a growth playbook, driving operational efficiencies, and obsessing over service [10][21] - The growth playbook includes initiatives like the "Get Paid Now" program and dropshipping, aimed at enhancing supply and profitability [15][76] - The company is leveraging AI and automation to improve operational efficiency and customer experience [18][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate uncertainties in the macroeconomic environment, particularly due to its unique position in the luxury resale market [6][34] - The company anticipates that rising prices in the primary market could motivate consumers to monetize their closets, potentially increasing supply [88][89] - Full-year guidance for GMV is set between $1.96 billion and $1.99 billion, reflecting an 8% year-over-year increase at the midpoint [33] Other Important Information - The company ended the quarter with $154 million in cash, cash equivalents, and restricted cash [32] - Operating cash flow for Q1 was negative $28 million due to timing of incentive payments and working capital seasonality [32] Q&A Session Summary Question: Can you provide context around the improvements in direct revenue margins? - Management explained that direct revenues consist of out-of-policy returns and vendor purchases, with the "Get Paid Now" initiative significantly improving profitability, achieving a margin of 25.5% compared to 3% last year [38][39] Question: What signals are being observed in consumer behavior amid macro uncertainty? - Management noted consistent buyer resilience and strength in conversion rates, with a positive outlook on supply growth due to reduced friction in the consignment process [40][42] Question: Is there seasonality in direct revenue as a percentage of total revenue? - Management indicated that direct revenue is expected to remain between 10% to 15% of total revenues without inherent seasonality, depending on buyer mix [48][50] Question: How did the revenue mix play out in Q1? - Management confirmed that the revenue mix was consistent with expectations, with direct revenue comprising about 10% to 15% of total revenue [82][83] Question: What is the outlook for the second quarter revenue guidance? - Management reiterated that the second quarter revenue is expected to grow by 9%, aligning with GMV growth, and emphasized the stability of their business model amid external pressures [95][94]