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]

Financial Data and Key Metrics Changes - The company reported a record GMV of $5.04 billion and record revenue of $165 million, both up 14% year over year [8][20] - Adjusted EBITDA was $6.8 million, representing a 4.1% margin, which was a substantial beat versus expectations [9][23] - Gross profit for Q2 was $123 million, with a gross margin of 74.3%, an increase of 20 basis points year over year [21][22] - Operating expenses were $133 million, improved by 690 basis points year over year as a percentage of revenue [22][23] - The company ended the quarter with $109 million in cash and cash equivalents, and reduced total debt by $27 million [24][25] Business Line Data and Key Metrics Changes - Consignment revenue grew 14%, while direct revenue increased 23% compared to the previous year, representing 12% of total revenue [20][21] - The consignment gross margin was 89.3%, an improvement of 93 basis points year over year [21][22] - Direct gross margin was 16.2%, fluctuating based on the category mix of products sold [21] Market Data and Key Metrics Changes - The active buyer base increased by 6% on a trailing twelve-month basis, exceeding 1 million active buyers [20] - The company noted that 53% of its customers are millennials and Gen Z, indicating a strong generational appeal [7] Company Strategy and Development Direction - The company is focused on a growth playbook centered on sales, marketing, and stores, with a new sales team compensation plan emphasizing retail value [10] - The strategy includes leveraging AI for operational efficiency and enhancing customer engagement through innovative features [13][16] - The company is expanding its dropship initiative to include jewelry, aiming to partner with larger luxury good aggregators [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the momentum of the business, with expectations for continued growth in Q3 and Q4 [32][30] - The company raised its full-year guidance, expecting GMV in the range of $2.03 billion to $2.045 billion, and revenue between $667 million and $674 million [26][27] - Management highlighted the favorable cash dynamics of the business model, anticipating strong positive free cash flows in the second half of the year [25][29] Other Important Information - The company is actively addressing counterfeiting issues in luxury goods through collaboration with law enforcement and proprietary technology [14] - The introduction of the reconsigned program has strengthened supply and created a circular loop for luxury assets [11] Q&A Session Summary Question: Can you comment on the cadence seen over the past couple of months? - Management noted that momentum has kept pace in Q3, with double-digit new seller growth continuing [32] Question: How should we think about the take rate and gross margin going forward? - Management explained that the take rate is influenced by the average order value, which was up 8%, and that consignment gross margins remain strong [36][37] Question: Can you elaborate on the expansion to luxury vendors and international consignors? - Management indicated that the dropship channel is still in early stages but has potential for growth, especially with international partners [42] Question: What drove the increase in new consignors? - Management attributed the growth to marketing reinvestment and the effectiveness of the growth playbook, including the reconsign feature [51][52] Question: How is Athena impacting operational efficiency? - Management stated that Athena is currently processing 20% of items, with plans to increase to 30-40% by year-end, aiming to reduce costs per unit [55][88]