The RealReal(US:REAL)2025-05-08 22:02Financial 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]