Summary of The RealReal FY Conference Call - March 23, 2026 Company Overview - **Company**: The RealReal (NasdaqGS: REAL) - **Industry**: Luxury Resale Market - **Total Addressable Market (TAM)**: Estimated at over $200 billion, growing 2-3 times faster than primary resale markets [6][30] Core Business Model - **Marketplace Model**: Operates as a managed marketplace, focusing on unlocking supply from sellers and providing a curated experience for buyers [6][7] - **Sell-Through Rate**: 50% of launched items sell within 30 days, indicating strong demand and effective supply management [7] - **Average Order Value**: Exceeds $600, with high-value transactions frequently occurring [7][8] Recent Performance and Growth Drivers - **Gross Merchandise Value (GMV) Growth**: Reported a 22% increase in Q4, with guidance for Q1 at a midpoint of 21% [12][30] - **Growth Strategy**: Focused on unlocking supply through improved sales team efficiency, marketing investments, and store openings [12][13][14] - **Sales Team**: Approximately 400 luxury managers enhancing supply by building relationships with consignors [16][17] Marketing and Customer Acquisition - **Increased Marketing Spend**: Focused on social marketing and referral programs to drive new seller acquisition [21][22] - **Network Effects**: 50% of sellers are also buyers, with 16% of buyers becoming sellers, enhancing customer lifetime value [23] Store Strategy - **Store Impact**: New stores have led to a 75% increase in new consignors, amplifying the effectiveness of sales and marketing efforts [26][27] - **Store Expansion Plans**: Plans to open 1-3 stores annually, targeting key markets to complement existing channels [27] Economic Resilience - **Consumer Base**: Targets affluent consumers, providing a value proposition during economic downturns [29][30] - **Historical Performance**: Consistent growth during turbulent economic periods, with increased supply and buyer engagement [30] Pricing Strategy - **Dynamic Pricing**: Utilizes a sophisticated algorithm to set optimal prices based on market demand and item scarcity [31][32] - **Market Positioning**: Items may sell for more or less than primary market prices, depending on demand and availability [32] Buyer Engagement - **Engagement Metrics**: Increasing GMV per active buyer driven by changing consumer behavior, particularly among Gen Z and Millennials [34][36] - **Consumer Trends**: 47% of surveyed consumers consider resale value when purchasing luxury items [36] AI Implementation - **Athena AI**: Implemented to streamline item intake processes, with 35% of items processed through AI, aiming to expand to higher-value items [38][41] - **Cost Efficiency**: AI expected to reduce variable costs, particularly for higher-value items, contributing to margin expansion [47][48] Financial Outlook - **EBITDA Margin Goals**: Targeting 15%-20% adjusted EBITDA over the medium term, with operational efficiencies driving margin improvements [48] - **Capital Efficiency**: Low capital expenditure (2%-3% of sales) due to a consignment model, with plans for automation in fulfillment centers [53][54] - **Deleveraging Strategy**: Focus on reducing debt, having already eliminated over $80 million since early 2024 [55] Conclusion - The RealReal is well-positioned in the luxury resale market, leveraging a strong business model, effective marketing strategies, and technological advancements to drive growth and enhance profitability. The company remains focused on expanding its market presence while maintaining financial discipline.

Leadership Changes - Edd Denes has been appointed as the CEO of Accelerating Circularity, reflecting the organization's commitment to advancing circular systems in the textile industry [3] - Kathryn Smith has been named vice president of human rights risk solutions at Worldly, where she will lead the company's social compliance strategy [4] - Dave Fluty has joined Oritain as executive director of forensic science, bringing 30 years of experience from U.S. Customs and Border Protection [6] - Erin Nealy Cox has been appointed as global governance, chief legal officer, and corporate secretary at Walmart, effective April 13 [8] - The RealReal has appointed Jennifer McKeehan to its board of directors and added Tiffany Stevenson as chief people officer and Tom Hanrahan as chief revenue officer [9] Company Initiatives - Accelerating Circularity aims to enhance the textile industry's transition to circular systems under the leadership of Edd Denes [3] - Worldly is focusing on improving operational efficiencies in social compliance and human rights with Kathryn Smith at the helm [4] - Oritain is set to strengthen its forensic capabilities across North America with the expertise of Dave Fluty [6] - Walmart is enhancing its governance and legal strategy with the appointment of Erin Nealy Cox [8] - The RealReal is expanding its leadership team to drive growth and operational effectiveness [9]

Core Insights - The RealReal, Inc. announced changes to its Board of Directors and executive leadership team to enhance governance and operational leadership as it enters a new growth phase [1] Board of Directors Update - Jennifer McKeehan has been appointed to the Board of Directors, effective March 6, 2026, while Niki Leondakis has departed from her role [2] - McKeehan is currently the Chief Operating Officer of Fanatics Commerce and has extensive experience in global operations and supply chain management from her previous roles at Walmart, Peloton, and The Home Depot [2] - Leondakis has been on the Board since 2019, providing valuable guidance during a transformative period for the company [2][3] Executive Leadership Update - Tiffany Stevenson has joined as Chief People Officer, bringing experience from Weight Watchers, Box, and Sephora, where she led global people strategy and organizational development [4] - Tom Hanrahan has been appointed as Chief Revenue Officer, responsible for revenue growth strategy across merchandising, supply acquisition, and commercial operations, with prior experience at Square [5] - These leadership additions reflect the company's commitment to investing in experienced operators to drive sustainable growth and innovation in the luxury resale market [6] Company Overview - The RealReal is the largest online marketplace for authenticated luxury resale, with over 40 million members [6] - The company offers a full-service consignment model that includes virtual appointments, in-home pickup, drop-off, and direct shipping, facilitating the buying and selling of luxury goods [6] - The RealReal employs a rigorous authentication process combined with proprietary technology, including AI and machine learning, to optimize pricing and processing for its members [6]

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]

Financial Data and Key Metrics Changes - In Q4 2025, the company achieved $616 million in GMV, representing a 22% growth year-over-year, with an adjusted EBITDA margin of 11% [5][16] - For the full year 2025, GMV reached $2.13 billion, a 16% increase compared to the previous year, while revenue grew by 15% to $693 million [20][21] - The adjusted EBITDA for the full year was $42 million, reflecting a 450 basis points increase in margin year-over-year [21][24] Business Line Data and Key Metrics Changes - Q4 total revenue was $194 million, an 18% increase year-over-year, with consignment revenue up 16% and direct revenue up 39% [17][18] - Active buyer growth accelerated to 9% on a trailing 12-month basis, with orders up 10% and average order value increasing by 11% [17][19] - The take rate in Q4 was 36.5%, a decline of 120 basis points year-over-year, attributed to a favorable mix shift towards higher value items [18] Market Data and Key Metrics Changes - The company noted that 47% of consumers consider resale value when making purchases in the primary market, indicating a shift in consumer behavior towards luxury resale [6] - The luxury resale market is experiencing a fundamental shift, with younger consumers increasingly preferring resale options [6][81] Company Strategy and Development Direction - The company is focused on three strategic pillars: growth playbook, operational excellence, and obsessing over service [7][10] - The growth playbook includes leveraging AI tools like Smart Sales to enhance sales team productivity and improve customer engagement [8][10] - The company aims to expand its capabilities in AI-driven recommendations and enhance customer experience through features like My Closet [12][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of buyers and sellers, with expectations of continued double-digit growth in both segments [39][41] - The company projects full-year GMV growth of 12%-15% and revenue growth of 10%-13% for 2026, with adjusted EBITDA expected to reach $57 million-$65 million [23][24] Other Important Information - The company ended Q4 with $166 million in cash equivalents and restricted cash, demonstrating strong cash flow dynamics [20] - The company has reduced total indebtedness by over $80 million in the past two years, reinforcing its commitment to a strong balance sheet [22] Q&A Session Summary Question: Can you provide an update on Athena's impact on operational efficiency? - Management confirmed that 35% of units are processed through Athena, contributing to operating leverage and efficiency improvements [30][31] Question: What factors contribute to the Q1 guidance of 19%-22% GMV growth? - Management highlighted the effectiveness of their sales and marketing strategies, with strong buyer engagement and supply growth [38][39] Question: How is the testing of dropshipping progressing? - Management reported healthy growth in dropshipping, particularly in watches and handbags, while continuing to expand into international markets [47] Question: What initiatives are in place to drive incremental supply? - Management mentioned several initiatives, including Smart Sales and referral programs, aimed at unlocking more supply [49] Question: What is the outlook for Athena's contribution in 2026? - Management expects Athena's processing percentage to continue increasing, enhancing operational efficiency [56] Question: How does the company plan to control expenses while growing revenue? - Management emphasized leveraging AI and automation to drive operational efficiencies and control costs [89][90]

Financial Data and Key Metrics Changes - In Q4 2025, the company achieved $616 million in GMV, representing a 22% growth year-over-year, with an Adjusted EBITDA margin of 11% [5][15] - Full year GMV reached $2.13 billion, a 16% increase compared to the previous year, with revenue of $693 million, up 15% [18][19] - Adjusted EBITDA for the full year was $42 million, or 6.1% of total revenue, reflecting a 450 basis points increase year-over-year [19][20] Business Line Data and Key Metrics Changes - Q4 total revenue was $194 million, an 18% increase, with consignment revenue up 16% and direct revenue up 39% year-over-year [15][16] - Active buyer growth accelerated to 9% on a trailing 12-month basis, with orders up 10% and average order value increasing by 11% [16] Market Data and Key Metrics Changes - The company noted that 47% of consumers consider resale value when making purchases in the primary market, indicating a shift in consumer behavior towards luxury resale [6] - The company is capitalizing on trends in high-value categories like fine jewelry and watches, which have shown strong growth [16][61] Company Strategy and Development Direction - The company is focused on three strategic pillars: growth playbook, operational excellence, and obsessing over service [8] - The growth playbook aims to unlock supply by meeting customers where they are, while operational excellence focuses on profitability through technology and automation [10][11] - The company is evolving its My Closet feature to provide customers with tools to track and capitalize on the value of their closet [12][73] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth trajectory, projecting full year GMV growth of 12%-15% and revenue growth of 10%-13% for 2026 [20][21] - The company anticipates continued margin expansion, with Adjusted EBITDA expected to be in the range of $57 million-$65 million for 2026 [20][21] Other Important Information - The company ended Q4 with $166 million in cash equivalents and restricted cash, with free cash flow of $43 million, up $23 million year-over-year [18][19] - The company has reduced total indebtedness by over $80 million over the past two years, strengthening its balance sheet [19] Q&A Session Summary Question: Can you provide an update on Athena and its impact on operational efficiency? - Management confirmed that 35% of units are processed through Athena, which has driven operating leverage and will be extended to mid-value items in 2026 [27][28] Question: What gives confidence in the Q1 guidance of 19%-22% GMV growth? - Management noted resilience in buyer and seller engagement, with improvements in sales team efficiency and marketing strategies contributing to growth [35][36] Question: How is the testing of dropshipping progressing? - Management indicated that dropshipping is expanding into new categories and international markets, though it is not the main driver of growth [44] Question: What initiatives are in place to drive incremental supply? - Management highlighted several initiatives, including Smart Sales, referrals, and affiliate programs, which are expected to scale up [46] Question: What is the outlook for Athena's contribution in 2026? - Management expects Athena's processing percentage to continue increasing, leveraging AI and data to enhance efficiency [53][54] Question: How is the company managing operating expenses to achieve margin expansion? - Management emphasized the importance of operational efficiencies and fixed cost leverage as key drivers for margin expansion [82][83]

Financial Data and Key Metrics Changes - In Q4 2025, the company achieved $616 million in GMV, representing a 22% growth year-over-year, with an Adjusted EBITDA margin of 11% [4][13] - Full year GMV reached $2.13 billion, a 16% increase compared to the previous year, with revenue of $693 million, up 15% [17][18] - Adjusted EBITDA for the full year was $42 million, or 6.1% of total revenue, reflecting a 450 basis points increase year-over-year [18][21] Business Line Data and Key Metrics Changes - Q4 total revenue was $194 million, an 18% increase, with consignment revenue up 16% and direct revenue up 39% year-over-year [14][16] - Active buyer growth accelerated to 9% on a trailing 12-month basis, with orders up 10% and average order value increasing by 11% [15][16] - The take rate in Q4 was 36.5%, a decline of 120 basis points year-over-year, attributed to a favorable mix shift towards higher value items [15][16] Market Data and Key Metrics Changes - The company noted that 47% of consumers consider resale value when making primary market purchases, indicating a shift in consumer behavior towards luxury resale [5] - The luxury resale market is experiencing a fundamental shift, with younger consumers increasingly preferring resale options [5][11] Company Strategy and Development Direction - The company is focused on three strategic pillars: growth playbook, operational excellence, and obsessing over service [6][10] - The growth playbook aims to unlock supply by meeting customers where they are, while operational excellence focuses on profitability through technology and automation [6][10] - The company is enhancing customer experience through initiatives like My Closet, which aims to provide tools for tracking and capitalizing on closet value [11][68] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth trajectory, projecting full year GMV growth of 12%-15% and revenue growth of 10%-13% for 2026 [19][20] - The company anticipates Adjusted EBITDA to be in the range of $57 million-$65 million for 2026, representing an expansion of nearly 200 basis points [19][20] - Management highlighted the resilience of buyers and sellers, with no slowdown observed since Q4 [35][36] Other Important Information - The company ended Q4 with $166 million in cash equivalents and restricted cash, with free cash flow of $43 million, up $23 million year-over-year [17][21] - The company has reduced total indebtedness by over $80 million over the past two years, strengthening its balance sheet [18] Q&A Session Summary Question: Update on Athena's impact on operational model - Management confirmed that 35% of units are processed through Athena, contributing to operating leverage and plans to extend its use to mid-value items [25][26] Question: Q1 guidance and confidence in growth - Management noted strong buyer and seller resilience, with double-digit growth expected in Q1, driven by effective sales and marketing strategies [32][34] Question: Dropshipping testing and future plans - Management indicated that dropshipping is being tested in categories like watches and handbags, with plans to expand further [40] Question: Supply pipeline visibility and ASP trends - Management reported a healthy balance between volume and price growth, with a strong supply pipeline for higher value items like fine jewelry [56] Question: AI's role in supply procurement - Management emphasized AI's potential to enhance supply procurement and improve seller experiences through targeted approaches [83][85]

Q4 2025 Financial Results February 26, 2026 Q4 2025 FINANCIAL RESULTS Safe Harbor/Disclosure Statement These materials contain forward-looking statements relating to, among other things, the future performance of The RealReal that are based on the company's current expectations, forecasts and assumptions and involve risks and uncertainties. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "could," "expect," "plan," "anticipate," "target," "contemplat ...

Core Insights - The RealReal is reopening its flagship store in San Francisco, emphasizing its commitment to the city's revival and its roots where the company was founded [1][4] - The new store is the 17th retail location nationwide and features a reimagined two-story space of over 8,100 square feet, designed for both shopping and consignment [2][3] Store Offerings - The flagship store will offer a range of luxury items including women's and men's fashion, fine jewelry, and watches, along with expanded areas for consignor appointments and private showings [3][8] - The store will also feature locally sourced vintage furniture and art, enhancing the shopping experience with a connection to San Francisco's creative spirit [3] Store Details - The store is located at 253 Post Street, San Francisco, CA, and will operate Monday to Saturday from 10 a.m. to 6 p.m. and Sunday from 11 a.m. to 6 p.m. [6] - The store includes three luxury consignment offices and aims to provide personalized consignment services through in-store luxury experts [8] Company Overview - The RealReal is the largest online marketplace for authenticated luxury resale, serving over 40 million members with a full-service consignment model [6] - The company utilizes a rigorous authentication process combined with AI and machine learning to optimize pricing and processing, promoting a circular economy in luxury goods [6]

Core Insights - The article discusses the latest trends and developments in the investment banking sector, highlighting key financial metrics and market movements. Group 1: Financial Performance - Investment banks have reported a significant increase in revenue, with an average growth of 15% year-over-year, driven by strong trading volumes and advisory fees [1]. - The total assets under management (AUM) in the sector have reached $5 trillion, reflecting a 10% increase compared to the previous year [1]. Group 2: Market Trends - There is a growing trend towards digital transformation within investment banks, with 70% of firms investing in technology to enhance operational efficiency [1]. - The demand for sustainable investment products is rising, with a reported 25% increase in ESG (Environmental, Social, and Governance) fund inflows [1]. Group 3: Regulatory Environment - Recent regulatory changes are impacting the investment banking landscape, with new compliance requirements expected to increase operational costs by approximately 5% [1]. - The article notes that firms are adapting to these changes by enhancing their risk management frameworks [1].