Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- The RealReal Inc (REAL, Financial) reported a 17% year-over-year increase in consignment revenue for Q2 2024.
- Active buyers grew by 9% compared to the same period in 2023.
- Adjusted EBITDA improved by $21 million year-over-year, marking the 11th consecutive quarter of improvement.
- Revenue grew by $16 million in the first half of 2024, with a $46 million improvement in adjusted EBITDA compared to the prior year.
- The company increased the midpoint of its full-year adjusted EBITDA guidance and is now guiding to positive adjusted EBITDA for full-year 2024.
Negative Points
- Average selling price (ASP) was down 3% in Q2 2024.
- There is a potential slowdown in consumer spending, with some compression in prices driven by a preference for more discounted products.
- The company remains cautious about the second half of 2024 due to modest pressure on consumer spending.
- Despite improvements, adjusted EBITDA was still negative $1.8 million in Q2 2024.
- The company is supply-constrained, which could impact future growth if not managed effectively.
Q & A Highlights
Highlights from The RealReal Inc (REAL) Q2 2024 Earnings Call
Q: Can you provide more color on the guidance, particularly regarding the expected decline in GMV but improvement in the bottom line?
A: Ajay Gopal, CFO: We expect GMV growth to accelerate in the second half, especially in Q4. We are being prudent about a potential slowdown in consumer spending, seeing modest pressure and some price compression. Our guidance reflects confidence in achieving positive adjusted EBITDA for the full year, supported by our consignment model, take rate architecture, and full-category luxury marketplace.
Q: What trends are you noticing in the luxury landscape, particularly regarding consumer spending and aspirational customers?
A: Rati Levesque, President & COO: We see some price sensitivity but are compensating with increased volume. Active buyers grew 9% year-over-year, with jewelry being a top-growing category. We focus on educating consumers about the value of our products and ensuring a steady supply.
Q: Can you elaborate on the fourth-quarter GMV guidance and whether it reflects a normal seasonal pattern or any incremental consumer weakness?
A: Ajay Gopal, CFO: We expect the usual seasonal pattern with significant Q3 to Q4 growth. The midpoint of our guidance implies a 9% year-on-year growth in Q4. Rati Levesque added that the supply funnel looks healthy, giving us confidence for the back half of the year.
Q: Is the current level of direct revenue sustainable, or should we expect it to revert to earlier levels?
A: Ajay Gopal, CFO: We expect direct revenue to stay within 9% to 10% of total revenue. The margins have notably improved, and we expect them to be in the mid-teens going forward.
Q: What are the key factors contributing to the resilience of your business model?
A: Ajay Gopal, CFO: Our consignment model shares price changes with sellers, our take rate architecture provides a buffer against price drops, and our full-category luxury marketplace offers a wide range of products, helping us adapt to shifts in consumer demand.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
