REAL — The RealReal, Inc.

Summary of The RealReal (REAL) Q4 2025 Earnings Call

1. Key Financial Results and Metrics

• Q4 GMV: $616 million, up 22% year-over-year.
• Full Year GMV: $2.13 billion, a 16% increase from 2024.
• Q4 Total Revenue: $194 million, an 18% increase year-over-year.
• Full Year Revenue: $693 million, up 15% from the previous year.
• Adjusted EBITDA: $22 million in Q4 (11.3% margin), up from $11 million year-over-year; full-year adjusted EBITDA of $42 million (6.1% margin), reflecting a 450 basis point improvement.
• Free Cash Flow: $43 million in Q4, a $23 million increase year-over-year; full-year free cash flow of $5 million.
• Gross Margin: 74.8% in Q4, a 40 basis point increase year-over-year; full-year gross margin of 74.6%.
• Active Buyer Growth: Accelerated to 9% on a trailing 12-month basis.

2. Strategic Updates and Business Highlights

• The company emphasized a transformative year, achieving positive adjusted EBITDA in every quarter of 2025.
• Strategic Pillars: Focused on growth playbook, operational excellence, and enhancing customer service.
• Launched Smart Sales, an AI-enabled tool for lead scoring and real-time valuation estimates, enhancing sales team productivity.
• Athena: 35% of units processed through this AI-enabled intake process, contributing to operational efficiencies and faster listing times.
• Continued to leverage AI for enhancing customer experience, including natural language search capabilities.
• The marketing strategy successfully turned buyers into consignors, with 40% of new consignors coming from existing buyers.

3. Forward Guidance and Outlook

• 2026 GMV Growth: Projected between 12% to 15%.
• Revenue Growth: Expected between 10% and 13%.
• Adjusted EBITDA: Forecasted to be between $57 million and $65 million, with a margin expansion target of approximately 200 basis points.
• Q1 2026 Guidance: GMV growth expected in the range of 19% to 22%, with revenue growth of 16% to 18%.

4. Challenges and Points of Concern

• Take Rate Decline: Q4 take rate decreased by 120 basis points due to a shift towards higher-value items that carry lower percentage take rates.
• Competitive Pressures: The luxury resale market is becoming increasingly competitive, necessitating continuous innovation and efficiency improvements.
• Supply Pipeline Visibility: While the company is currently seeing strong supply, concerns were raised about the sustainability of obtaining high-value items as competition increases.

5. Notable Q&A Insights

• Athena's Impact: The process has improved intake to listing cycle times, with expectations to expand its use across various item values in 2026.
• Sales Team Efficiency: The company is balancing hiring with efficiency improvements, leveraging tools like Smart Sales to enhance productivity.
• Market Resilience: Management noted no slowdown in buyer and seller activity since Q4, attributing growth to effective sales and marketing strategies.
• AI Utilization: AI is being used not only for operational efficiencies but also to enhance the seller experience, helping to convert buyers into consignors.
• Direct Channel Margins: Strong margins in the direct channel were attributed to a favorable product mix and the "Get Paid Now" initiative.

Overall, The RealReal demonstrated strong financial performance in Q4 2025, with significant growth in GMV and revenue, while also outlining a positive outlook for 2026 despite challenges in take rates and competitive pressures.