The RealReal(US:REAL)2025-11-10 23:00Financial Data and Key Metrics Changes - The company reported a record quarterly GMV of $520 million, representing a 20% increase year-over-year [5][14] - Revenue for Q3 was $174 million, up 17% year-over-year, with consignment revenue increasing by 15% [14][15] - Adjusted EBITDA was $9.3 million, or 5.4% of total revenue, reflecting a 380 basis point increase year-over-year [5][14] - Free cash flow for the quarter was $14 million, a $12 million improvement year-over-year [16][17] Business Line Data and Key Metrics Changes - Fine jewelry emerged as the fastest-growing category, with first-time watch buyers increasing by 46% [5] - Average order value rose to $584, a 12% increase compared to the previous year [15] - Direct revenue surged by 47% year-over-year, accounting for 13% of total revenue [14][15] Market Data and Key Metrics Changes - The total addressable market for luxury resale is estimated at over $200 billion, indicating significant growth potential [6] - The company noted that 58% of shoppers now prefer the secondary market, with 47% considering resale value before purchasing new items [4][5] Company Strategy and Development Direction - The company is focused on three strategic pillars: growth playbook, operational efficiency, and customer service [6][10] - The growth playbook emphasizes unlocking high-quality supply through data and strong consignor relationships [6][10] - The company plans to expand its retail presence by adding one to three stores per year, enhancing its market reach [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a full-year GMV of over $2 billion, driven by strong market trends and operational efficiencies [4][19] - The company raised its full-year guidance, expecting GMV in the range of $2.10 billion to $2.11 billion, reflecting a 15% increase [18][19] - Management highlighted the importance of building trust and transparency with customers to enhance loyalty and drive growth [11][12] Other Important Information - The proprietary AI-enabled product intake process, Athena, is expected to touch 30%-40% of all items by year-end, improving efficiency and reducing costs [10][56] - The company has reduced its total indebtedness by over $86 million since the beginning of 2024, strengthening its balance sheet [17] Q&A Session Summary Question: Can you speak to the confidence in the Q4 GMV growth guidance? - Management noted strong momentum from sales, marketing, and retail efforts, with early signs of success from referral and affiliate programs [22][23] Question: What guardrails can you provide for next year's growth rates? - Management indicated a medium-term growth rate expectation of high single digits to low double digits, with potential for higher growth in the short term [25] Question: How is the DropShip initiative performing? - Management stated that the DropShip initiative is in the testing phase, with plans for future expansion based on learnings [28][29] Question: What is driving the revenue growth, supply processing speed, or overall supply increase? - Management emphasized that the growth is primarily driven by increased supply coming through the door, supported by effective sales and marketing strategies [30][31] Question: Can you share insights on competitive dynamics in the resale market? - Management highlighted the growing attention to resale and the company's strong market position, leveraging expertise and data to maintain a competitive edge [36][39] Question: What are the plans for cash uses in the balance sheet going forward? - Management indicated that cash will primarily be used for investments in automation and technology to enhance operational efficiency [74]