TheRealReal, Inc. Q2 FY2025 earnings call

• Q2 was a breakout quarter with record GMV, revenue, and new consignors. - Growth playbook focuses on sales, marketing, and stores: new sales team compensation plan emphasizes retail value; experiential pop-up events generate supply; Reconsign Program makes it easy for repeat consignors to reengage. - Drop ship initiative expanding, with fine jewelry added in Q3 and plans to partner with larger aggregators and international vendors. - AI and automation drive efficiency: Athena process touching ~20% of units, on track to reach 30%-40% by year-end; next phase focuses on listing automation, enhanced search, and reduced manual processes. - Obsessing over service: enhancements to consignor page, launch of Price History Feed, development of My Closet digital catalog, and work on buyer journey improvements like AI-powered visual/conversational search.

In Q2 2025, The RealReal achieved record GMV of $504 million and record revenue of $165 million, both up 14% year-over-year. Adjusted EBITDA was $6.8 million or 4.1% margin. Consignment revenue grew 14%, while direct revenue increased 23% (representing 12% of total revenue in the quarter). Consignment gross margin was 89.3% in Q2, an improvement of 93 basis points year-over-year. Direct gross margin was 16.2% in Q2, within the previously communicated range of 15% to 25%, fluctuating based on product category mix.

• Raised full year outlook: full year GMV expected in the range of $2.030 billion to $2.045 billion (11% year-over-year at midpoint), revenue $667 million to $674 million (12% year-over-year at midpoint), and adjusted EBITDA $29 million to $32 million. - Q3 guidance: GMV expected in the range of $495 million to $502 million (15% growth at midpoint), revenue $167 million to $170 million, and adjusted EBITDA between $6.1 million and $7.1 million (approximately 3.9% of total revenue).

Q: Congrats on the quarter. Top line and guidance. Cadence and what's underpinning.

A: Rati says Q3 has momentum, supply growth, and growth playbook working Q: Margins, take rate, gross margin A: Ajay says take rate down due to higher AOV, consignment gross margin strong Q: Expansion to luxury vendors, scalability of sales force A: Rati talks about drop ship testing, sales team efficiency with compensation, referral, reconsign Q: New consignors, tweaks, buyers becoming sellers A: Rati says marketing reinvestment, growth playbook, reconsign feature, retail pop-ups Q: Athena rollout, pricing, tariffs A: Rati says Athena at 20% coverage, tariff beneficiary, AOV up, plan to invest in marketing Q: Breakout performance, medium-term top line, margin A: Rati says 8%-12% growth for planning, Ajay talks about margin expansion, EBITDA margin progress Q: New consignor growth, permanent shift A: Rati says not one-time, consistent cohorts, Gen Z/Millennial, high frequency Q: Athena savings per unit, inbound process A: Ajay says Athena touches item from arrival to listing, AI in multiple areas driving OpEx leverage Q: Luxury space, direct revenue margin A: Rati says not huge impact, Ajay talks about direct margin range based on product mix Q: Athena inbound process, cost savings A: Ajay says Athena in AI, core strategic moats, driving OpEx leverage