RealReal Q3 Earnings Call Highlights

Key Points

• Record Q3 performance: GMV rose 23% year over year to $642 million, revenue increased 19% to $206 million, and adjusted EBITDA reached $17 million, with the margin expanding to 8.3%.
• Marketplace growth and efficiency improved: Active buyers surpassed 1.15 million, supply expanded through new sourcing channels, and automation helped triple picking productivity while supporting operating-expense leverage.
• Outlook raised: The RealReal increased its full-year GMV, revenue and adjusted EBITDA guidance, while refinancing its debt is expected to reduce annual interest expense by about $4 million.

RealReal NASDAQ: REAL reported record third-quarter results for 2026, citing accelerating buyer activity, expanded supply channels and operating efficiencies that supported both revenue growth and margin improvement.

Gross merchandise value, or GMV, increased 23% year over year to $642 million, while revenue rose 19% to $206 million. Orders grew 15%, the company’s strongest order growth since 2022, and average order value increased 8% to $629. Adjusted EBITDA totaled $17 million, or 8.3% of revenue, representing margin expansion of 290 basis points from a year earlier.

Chief Executive Officer and President Rati Levesque said the quarter marked all-time quarterly highs in GMV, revenue and orders. She attributed the performance to higher customer engagement, broader supply sourcing and technology investments.

“Q3 was another record quarter for The RealReal, with all-time quarterly highs across GMV, revenue, and orders,” Levesque said. “These results point to a resilient customer base buying more across a range of price points.”

Buyer Activity and Supply Expansion

Trailing 12-month active buyers exceeded 1.15 million, up 13% from a year earlier. Levesque said 47% of third-quarter GMV came from buyers who had been with the company for five years or longer, while new buyers grew more than 20%.

The company also highlighted growth among younger customers. Gen Z was its fastest-growing buyer cohort, with buyers up more than 60% since 2023, according to Levesque. She said the company is seeing these customers increasingly participate as both buyers and consignors.

Supply grew at a double-digit rate during the quarter as the company diversified its sourcing channels. Those efforts included its core sales team, Trusts & Estates business, partnerships, contractors, retail stores and international dropship vendors.

The Trusts & Estates team delivered 35% more units than a year earlier, while the company expanded its Japanese dropship-vendor network to seven vendors from two in the prior quarter. Levesque said the company expects to have launched more than $100 million of supply through the dropship channel by year-end.

In addition, 44% of new consignors originated from the company’s buyer base. Chief Financial Officer Ajay Gopal said 52% of consignors during the trailing 12 months also made purchases on the platform, which the company views as evidence of marketplace network effects.

Margins, Automation and Cash Flow

Gross margin expanded about 60 basis points year over year to 74.9%, producing gross profit of $154 million. Gopal said consignment margins were 89.3% and remained relatively stable. He also noted that shipping results included one-time adjustments, adding that the company expects gross margin to remain in a 73% to 75% range going forward.

The company’s take rate was 36.8%, down about 110 basis points year over year because of an ongoing mix shift toward higher-value items. Sequentially, however, the take rate increased 90 basis points from the second quarter.

Operating expenses leveraged by roughly 440 basis points year over year. Operations and technology expenses leveraged approximately 260 basis points, while SG&A expenses leveraged about 240 basis points. Marketing investment represented approximately 70 basis points of year-over-year deleverage.

Gopal said the company’s Athena technology platform is expected to process nearly 50% of all items by year-end. Athena uses the company’s authentication and product data to reduce manual work in its operations. The company also launched an automated storage and retrieval system at its Perth Amboy authentication center during September.

For items processed through that system, Levesque said the company has tripled units picked per hour. Gopal said automation, including Athena and the storage system, is helping the company manage growing volumes with limited incremental costs.

The company ended the quarter with $145 million in cash equivalents and restricted cash. Free cash flow was $11.3 million, and Gopal said the company exited the third quarter with positive year-to-date operating cash flow, a milestone it historically reached in the fourth quarter.

Debt Refinancing and Raised Outlook

Subsequent to quarter-end, The RealReal refinanced its senior secured notes with a $150 million term loan and a $25 million revolving credit facility, both maturing in October 2033. The new term loan is priced at Secured Overnight Financing Rate, or SOFR, plus 5.75%, with a potential reduction to SOFR plus 5.5% if certain net leverage ratios are achieved.

Gopal said the refinancing is expected to reduce annual interest expense by approximately $4 million. He added that the company has reduced total debt by more than $80 million over the past two years and believes it can lower total leverage to $150 million or less over the medium term.

The company raised its full-year outlook following the third-quarter performance. Its updated guidance calls for:

• Full-year GMV of $2.585 billion to $2.6 billion, representing 21% to 22% growth.
• Revenue of $806 million to $810 million, representing 16% to 17% growth.
• Adjusted EBITDA of $71.1 million to $72.6 million, with an adjusted EBITDA margin of about 8.9% at the midpoint.

For the fourth quarter, The RealReal forecast GMV of $720 million to $735 million, revenue of $218 million to $222 million, and adjusted EBITDA of $27.5 million to $29 million. The midpoint of the fourth-quarter EBITDA outlook implies a margin of approximately 12.8%.

Gopal said the company remains focused on reaching a medium-term adjusted EBITDA margin range of 15% to 20%, with an expected annual expansion pace of roughly 200 to 300 basis points as it balances investments in growth with profitability.

About RealReal (NASDAQ:REAL)

The RealReal, Inc operates an online and physical marketplace for authenticated, pre-owned luxury goods. Through its platform, the company enables individuals and businesses to consign and purchase items across categories such as apparel, handbags, shoes, jewelry, watches, fine art, and home furnishings.

The company combines consignment services with in-house authentication, merchandising, photography, fulfillment, and customer support. Its authentication process is designed to assess the legitimacy and condition of products before they are offered for sale, helping connect sellers with buyers seeking luxury items through the resale market.

Founded in 2011 by Julie Wainwright, The RealReal serves customers primarily in the United States through its website, mobile applications, and retail locations.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.