RealReal Q1 Earnings Call Highlights

Key Points

• RealReal’s Q1 2026 results beat expectations, with GMV up 24% to $606 million and revenue up 19% to $190 million. Adjusted EBITDA rose to $13.1 million, reflecting strong margin expansion and improving operating efficiency.
• Management raised full-year guidance after the strong start to 2026, now targeting GMV of $2.42 billion to $2.47 billion and revenue of $770 million to $784 million. The updated outlook also calls for adjusted EBITDA of $59 million to $67 million, with continued progress toward medium-term margin goals.
• AI, automation, and supply expansion are central to the growth plan, including the Athena intake system, automated storage at its Perth Amboy center, and new supply channels such as stores, referrals, and international drop-ship partnerships. Executives said customer demand remains resilient despite macro concerns.

RealReal NASDAQ: REAL reported first-quarter 2026 results that exceeded its expectations, with management pointing to stronger buyer engagement, higher-value transactions and improving operating efficiency across the luxury resale platform.

Chief Executive Officer and President Rati Levesque said the quarter marked the company’s fourth consecutive quarter of double-digit top-line growth and its third consecutive quarter of growth above 20%. She said trailing 12-month active buyers grew by double digits year over year, reflecting “higher levels of trust and an acceleration in engagement” with the platform.

Levesque framed 2026 as a year of “compounding” for the company after what she described as stabilization in 2024 and optimization in 2025. She said RealReal has built a foundation in which customer relationships, data, brand and scale reinforce one another.

First-quarter sales and profitability improve

Chief Financial Officer Ajay Gopal said first-quarter gross merchandise value rose 24% year over year to $606 million, while total revenue increased 19% to $190 million. On a two-year stacked basis, GMV was up 32%.

Consignment revenue grew 18% from the prior-year period, and direct revenue increased 26%. Gopal said trailing 12-month active buyers rose 10% year over year, while average order value increased 15% to $646.

The company’s take rate was 36.4%, down 220 basis points year over year. Gopal attributed the decline to a favorable shift toward higher-value items, which carry a lower percentage take rate but generate more profit dollars and better unit economics.

Gross profit increased 18% year over year to $141 million. Gross margin was 74.5%, down 50 basis points, which Gopal said was primarily driven by product mix. Operating expenses leveraged 730 basis points as a percentage of revenue, supported by operating efficiencies and volume leverage on fixed costs.

Adjusted EBITDA was $13.1 million, up $9 million from the prior year, and represented 6.9% of total revenue. That marked a 430-basis-point margin expansion year over year. The company ended the quarter with $139 million in cash equivalents and restricted cash. Operating cash flow was negative $16.6 million, an $11.7 million improvement from a year earlier.

Guidance raised after strong start to 2026

RealReal raised its full-year outlook following the first-quarter performance. The company now expects:

• Full-year GMV: $2.42 billion to $2.47 billion, representing 14% to 16% growth year over year.
• Full-year revenue: $770 million to $784 million, representing 11% to 13% growth.
• Full-year adjusted EBITDA: $59 million to $67 million, implying an 8.1% margin at the midpoint.

Gopal said the updated adjusted EBITDA outlook represents roughly 200 basis points of margin improvement versus 2025. He also reiterated that the company remains on track toward its medium-term target of 15% to 20% adjusted EBITDA margins.

For the second quarter, RealReal expects GMV of $590 million to $600 million, revenue of $186 million to $189 million and adjusted EBITDA of $11 million to $12 million. At the midpoint, the adjusted EBITDA outlook implies a 6.1% margin and about 200 basis points of year-over-year margin expansion.

Management highlights supply, stores and customer flywheel

Levesque said RealReal is focused on three strategic pillars: its growth playbook, service improvements and operational excellence. She described the company’s sales team as a competitive asset, supported by algorithmic pricing tools that provide consignors with data-driven earnings estimates.

The company is also expanding referral programs through its Real Partners initiative, which works with stylists, closet organizers and real estate agents who refer clients to the platform and earn commissions. Levesque said stores remain an important supply channel, noting that sellers who engage with a store deliver 40% more value. RealReal plans to add stores in San Francisco and Boston in 2026.

Levesque also cited newer supply channels, including drop ship and vendor partnerships. She said the company is building an asset-light international supply network with partners in markets such as Italy, France and Japan. In response to an analyst question, she said the international drop-ship strategy remains in “early days” and is being approached through a “crawl, walk, run” framework.

Management also emphasized the growing overlap between buyers and sellers. Gopal said 43% of new consignors in the first quarter came from the active buyer base. Levesque said these customers, referred to internally as “RealRealers,” spend 50% more time with the company than the average customer.

AI and automation remain central to margin plan

RealReal executives said artificial intelligence and automation are playing an increasing role in both the customer experience and the company’s cost structure.

Levesque said the company’s AI-enabled intake system, Athena, is automating repetitive and data-driven intake work, allowing experts to focus on tasks requiring specialized judgment. She said RealReal is targeting nearly 50% of items to flow fully through Athena by the end of 2026, which is expected to improve processing times, speed to site and unit economics.

The company is also using AI-powered image embedding in pricing models to account for visual product characteristics when determining market value. Levesque said this should help create better comparables and maximize earnings for consignors.

Later this year, RealReal plans to roll out an automated storage and retrieval system at its Perth Amboy authentication center. Management said the system is expected to increase capacity by 35% without opening additional warehouses.

In the Q&A portion of the call, Gopal said operations and technology were a significant source of operating leverage in the quarter and are expected to remain important to margin expansion. He also said that efficiency gains could be reinvested into growth areas such as marketing, product and technology, while still balancing margin improvement.

Executives say customer demand remains resilient

Analysts asked management about macroeconomic pressures, including fuel prices and pressure on lower-income consumers. Levesque said the company is not seeing a meaningful change in buyer or consignor trends and described both groups as resilient.

She said RealReal’s positioning at the intersection of value and luxury is resonating with customers. She also said resale is becoming less of a one-time transaction and more of an ongoing relationship, supported by tools such as MyCloset, Reconsign and pricing estimators.

Levesque said about 50% of RealReal’s customer base is Gen Z and millennial, and she cited resale’s growing role in how consumers approach luxury purchases. She said the company’s trust, authentication expertise, pricing data and sales organization remain central to its competitive position.

Asked about higher average order value, Gopal said customers have shown a willingness to buy higher-priced items on the platform, and he described the marketplace as flexible enough to respond as preferences shift across fashion categories. He said management expects a healthier balance between price and unit growth in the second half of the year.

About RealReal NASDAQ: REAL

The RealReal, Inc NASDAQ: REAL operates an online marketplace specializing in the authenticated resale of luxury goods. Since its founding in 2011 by entrepreneur Julie Wainwright, the company has positioned itself as a leading platform for consignors and shoppers seeking designer fashion, fine jewelry, watches, art, and home décor. Headquartered in San Francisco, The RealReal combines e-commerce technology with an in-house team of experts to offer a seamless buying and selling experience for secondhand luxury items.

At the core of The RealReal's business model is its consignment service, which enables individuals to sell pre-owned luxury products through a fully managed process.

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