TheRealReal, Inc. Q3 FY2025 earnings call

RealReal's strong Q3 results and full-year GMV outlook over $2 billion reflect its long-term strategy in luxury resale. Key operational highlights include: 1) Growth playbook: Sales team using data and new compensation plan to unlock supply, marketing scaling consignor base and focusing on flywheelers (2-3x more valuable), and retail stores/events generating supply. 2) Operational efficiencies: Athena AI-enabled product intake process touching 27% of items, aiming for 30%-40% by year-end, with plans to expand to mid- and high-value items. 3) Obsessing over service: Customer trust metric up 8 points year-over-year, with focus on personalized communication and partnership to build deep customer loyalty.

In Q3 2025, RealReal delivered strong results. Quarterly GMV was $520 million, up 20% year-over-year. Revenue was $174 million, up 17% year-over-year. Consignment revenue increased 15% year-over-year, while direct revenue jumped 47% compared to Q3 2024, making up 13% of total revenue. Average order value was $584, up 12% year-over-year. Gross profit was $129 million, up 16% year-over-year. Consignment gross margin was 89.3%, an improvement of 70 basis points year-over-year, and direct gross margin was 20.9%, an increase of 370 basis points versus prior year. Adjusted EBITDA was $9.3 million, or 5.4% of total revenue, up 380 basis points year-over-year.

For Q4 2025, GMV is expected in the range of $585 million to $595 million (17% growth midpoint), revenue in the range of $188 million to $191 million (16% growth midpoint), and adjusted EBITDA between $17.5 million and $18.5 million (approximately 9.5% of total revenue, over 275 basis points of margin expansion midpoint). For full-year 2025, GMV is expected in the range of $2.10 billion to $2.11 billion (15% growth midpoint), revenue in the range of $687 million to $690 million (15% growth midpoint), and adjusted EBITDA in the range of $37.7 million to $38.7 million with an adjusted EBITDA margin of 5.5%, reflecting 400 basis points of improvement versus 2024.

Not explicitly detailed in the transcript, but forward-looking statements note known and unknown risks that could affect actual results differing from forward-looking statements.

Q: Ike Boruchow asks about confidence in 4Q GMV guide and quarter-to-date insights.

A: Rati Levesque talks about growth playbook, compensation structure, smart sales, referral/affiliate programs, and AI prospecting driving new sellers.

Q: Robert Brooks asks about lessons learned and exceeded expectations.

A: Rati Levesque mentions strategic pillars working, progress in growth, EBITDA margin, trust, and Athena's progress.

Q: Ashley Owens asks about competitive dynamics and 4Q EBITDA bridge.

A: Rati Levesque and Ajay Gopal discuss market shift, operating efficiencies, and leverage in ops/tech and SG&A.

Q: Marvin Fong asks about AOV, ASP, units, and direct revenue.

A: Ajay Gopal talks about balanced growth in ASP and units, mix benefit in ASP, and direct revenue trends.

Q: Matt Koranda asks about sales team supply unlocks and levers.

A: Rati Levesque mentions sales, marketing, retail, flywheelers, and referral programs.

Q: Anna Glaessgen asks about GMV growth drivers and high-value events.

A: Rati Levesque talks about growth playbook and retail events.

Q: Jay Sole asks about ops/tech line growth and cash uses.

A: Ajay Gopal discusses leverage in ops/tech and cash uses in investments.

Q: Mark Altschwager asks about marketing investment and customer behavior.

A: Rati Levesque and Ajay Gopal talk about marketing ROI and customer demographics.