Pre-owned luxury marketplace The RealReal (NASDAQ: NASDAQ 🙂 reported better-than-expected results in the first quarter of 2024, with revenue up 1.3% year over year to $143.8 million. The company expects revenue to be around $140 million next quarter, in line with analyst estimates. It posted a non-GAAP loss of $0.12 per share, an improvement from the loss of $0.83 per share in the same quarter last year.
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The RealReal (REAL) Highlights of Q1 CY2024:
- Gain: $143.8 million vs. analyst estimates of $139.2 million (3.3% better)
- EPS (non-GAAP): -$0.12 vs. analyst estimates of -$0.15
- Revenue guidance for the second quarter of 2024 is mid-$140 million, about in line with what analysts expected (adjusted Q2 EBITDA guidance is better than expected)
- Company reaffirmed its full-year revenue expectations from $592.5 million at the center
- Gross margin (GAAP): 74.6%, compared to 63.4% in the same quarter last year
- Free cash flow was -$8.79 million, compared to $1.45 million in the previous quarter
- Active buyers: 922,000, down 92,000 year over year
- Market capitalization: $440.8 million
The RealReal (NASDAQ: REAL), founded by Julie Wainwright, a consignment shopping enthusiast, is an online marketplace for buying and selling pre-owned luxury goods.
Online MarketplaceMarketplaces have been around for centuries. Where it was once a main street in a small town or a shopping center in the suburbs, vendors took advantage of their proximity to each other because they could attract customers by offering convenience and choice. Today, a large number of online marketplaces fulfill that same role, bringing together large customer bases, which attract commission-paying sellers, creating flywheel effects that in turn contribute to further customer acquisition.
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Sales growth RealReal’s sales growth over the past three years has been strong, averaging 24.6% per year. This quarter, The RealReal exceeded analyst expectations but reported lackluster revenue growth of 1.3% year over year.
Guidance for next quarter indicates that The RealReal expects revenue to grow 7% year-over-year to $140 million, an improvement over the 15.3% year-over-year decline seen in the comparable quarter of last year was recorded. Ahead of the earnings results, analysts expected revenue to grow 9.6% over the next twelve months.
Usage Growth As an online marketplace, The RealReal generates revenue growth by increasing both the number of users on the platform and average dollar order size.
Over the past two years, The RealReal users, a key performance measure for the company, have grown 10.9% annually to 922,000. This is significant growth for a consumer internet company.
Unfortunately, The RealReal’s user base fell by 92,000 in the first quarter, a 9.1% decline from last year.
Revenue per user Average revenue per user (ARPU) is a crucial metric to track for consumer internet companies like The RealReal because it measures how much the company makes in transaction fees from each user. Additionally, ARPU gives us unique insights because it is a function of a user’s average order size and The RealReal’s take rate, or “cut,” on each order.
RealReal’s ARPU has fallen to an average of 4.6% over the past two years. While the company’s user base has continued to grow, it has lost its pricing power and will need to make improvements soon. This quarter, ARPU grew 11.4% year over year to $155.97 per user.
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Key Takeaways from The RealReal’s First Quarter Results It was great to see The RealReal exceed analyst revenue expectations this quarter. We were also pleased that next quarter revenue and adjusted EBITDA guidance both exceeded Wall Street estimates. On the other hand, the number of users decreased and revenue growth was quite weak. Overall, this was a mediocre quarter for The RealReal. The stock is up 3.3% after reporting and is currently trading at $3.9 per share.
