Q1 2025 The RealReal Inc Earnings Call

Operator: Good day, and thank you for standing by.

Okay.

Speaker Change: Good day and thank you for standing by welcome to the real real first quarter 2025 financial results Conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During this session you will need to press star one on your telephone.

Operator: Welcome to the RealReal First Quarter 2025 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded.

Speaker Change: You will then hear an automated message advising your hand is raised to withdraw your question. Please press star. One again, please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today Kaitlyn Hal Senior Vice President of Finance. Please go ahead.

Operator: I would now like to hand the conference over to your speaker today.

Caitlin Howe: Caitlin Howe, Senior Vice President of Finance, please go ahead. Thank you, Operator.

Speaker Change: Yeah.

Caitlin Howe: Joining me today to discuss our results for the period ended March 31st, 2025, our Chief Executive Officer and President Rati Levesque and Chief Financial Officer Ajay Gopal. Before we begin, I'd like to remind you that during today's call, we will make forward-looking statements, which involve known and unknown risks and uncertainties. Our actual results may differ materially from those suggested in such.

Speaker Change: Thank you operator, joining me today to discuss our results for the period ended March 31st 2025, our Chief Executive Officer, and President ROTC, Labatt, and Chief Financial Officer, Jay Gould Paul.

Speaker Change: Before we begin I would like to remind you that during today's call. We will make forward looking statements, which involve known and unknown risks and uncertainties. Our actual results may differ materially from those suggested in such statements you can find more information about these risks uncertainties and other factors that could affect.

Caitlin Howe: You can find more information about these risks, uncertainties, and other factors that could affect our operating results in the company's most recent Form 10-K and subsequent quarterly reports on Form 10-Q. Today's presentation will also include certain non-GAAP financial measures, both historical and forward-looking.

Speaker Change: Our operating results and the company's most recent Form 10-K, and subsequent quarterly reports on Form 10-Q.

Speaker Change: Today's presentation will also include certain non-GAAP financial measures, both historical and forward looking we.

Caitlin Howe: We have provided reconciliations for historical non-GAAP financial measures to the most comparable GAAP measures in our earnings press release, which is available on our Investor Relations website.

Speaker Change: We have provided reconciliations for historical non-GAAP financial measures to the most comparable GAAP measures in our earnings press release, which is available on our Investor Relations website.

Rati Levesque: I would now like to turn the call over to Rati Levesque, Chief Executive Officer of the RealReal. Thank you, Caitlin. Good afternoon, everyone, and welcome to the RealReal's first quarter earnings conference call. Today I am pleased to report strong Q1 results and reaffirm our full year 2025 outlook. The RealReal founded on trust and authenticity is leading the evolution of luxury resale. Our commitment to expertise and a frictionless experience is changing the way people shop for the best.

Speaker Change: I would now like to turn the call over to ROTC Vivek, Chief Executive Officer of the railroad.

Vivek: Thank you Caitlin and good afternoon, everyone and welcome to the real real first quarter earnings Conference call.

Vivek: Today I am pleased to report strong Q1 results and reaffirm our full year 2025 outlook.

Vivek: No real founded on trust and authenticity is leading the evolution of luxury resell.

Vivek: Our commitment to expertise and a frictionless experience is changing the way people shop for the better.

Rati Levesque: Before getting into results, I'd like to address what we're seeing in the overall environment. Despite the uncertainties from tariffs and a less predictable backdrop, our performance has been strong and our focus remains steadfast. We occupy a unique position at the intersection of luxury and value, and we source our supply primarily from domestic cloth. So there is a potential to realize benefits in the current environment. Our strategy is working, our brand is strong, and we have built flexibility into our operations that enables us to effectively navigate a range of conditions. We continue to build on the foundational changes we made to reshape our business.

in the overall environment. Despite the uncertainties from tariffs and a less predictable backdrop, our performance has been strong and our focus remains steadfast.

Vivek: We occupy a unique position at the intersection of luxury and value, and we source our supply primarily from domestic closet.

Speaker Change: So there is a potential to realize benefits in the current environment. Our strategy is working. Our brand is strong and we have built flexibility into our operation that enables us to effectively navigate a range of conditions.

Speaker Change: We continue to build on the foundational changes we made to reshape our business. In 2024, we delivered our first ever full year of positive adjusted EBITDA, and we continued this momentum in 2025.

Rati Levesque: In 2024, we delivered our first ever full year of positive adjusted EVDA, and we continued this momentum in 2025. Through our growth playbook, we're generating strong and importantly, consistent supply growth. We're also driving operational efficiency throughout the organization. building true win-win capabilities that harness the power of AI and automation. For instance, Athena, our AI-enabled product intake process reduces costs and improves the experience for our buyers and consumers. We are driving results that compound and expand our profitability. We believe the RealReal has a stronger, more profitable, and more sustainable business model today than ever before. We are driving top line growth by unlocking profitable supply through our multi-channel, frictionless approach to consumption.

Speaker Change: Through our growth playbook, we're generating strong and importantly consistent supply growth. We're also driving operational efficiency throughout the organization, building true, win-win capabilities that harness the power of AI and automation.

Speaker Change: For instance, Athena, our AI-enabled product intake process reduces costs and improves the experience for buyers and consigners

Speaker Change: We are driving results that compound and expand our profitability. We believe the Real Real has a stronger, more profitable and more sustainable business model today and ever before.

Speaker Change: We are driving top-line growth by unlocking profitable supplies through our multi-channel, frictionless approach to confinement. The elements of our growth playbook, sales, marketing, and stores came together in the first quarter to drive healthy supply trends.

Rati Levesque: The elements of our growth playbook sales, marketing and stores came together in the first quarter to drive healthy supply Ajay will review our financial results later in the call, but I'd like to note a few key highlights from the Looking at growth, GMV increased 9% and revenue increased 11% year over year, which aligns with our goal of high single digit to low double digit growth. Active buyers also increased up 7% on a trailing 12 month In Q1, average order value was $564, up 5% year over year. Turning to margins and profitability, gross margin improved 40 basis points year over year after an improvement of 1,100 basis points in Q1 of 2024.

Speaker Change: Ajay will review our financial results later in the call, but I'd like to note a few key highlights from the quarter.

Speaker Change: Looking at growth, GMV increased 9% and revenue increased 11% year over year, which aligns with our goal of high single digit to low double digit growth. Active buyers also increased up 7% on a trailing 12-month basis.

In Q1, average order value was $564, up 5% year-over-year year-over-year-over-year-

Speaker Change: Turning to margins and profitability, Gross Margin improved 40 basis points year over year after an improvement of 1100 basis points in Q1 of 2024.

Rati Levesque: Adjusted EBITDA increased to positive $4 million, an increase of $6 million versus Q1 of last And we delivered our highest number of new consignors in over two Today, I'll discuss how our three strategic pillars, Unlocking Supply through a Growth Playbook, Driving Operational Efficiency, and Unlocking Supply through a Growth Playbook. and Obsessing Over Service are fueling our strong results and progress.

Speaker Change: Adjusted EBITDA, increased to positive 4 million, and increased to 6 million versus Q1 of last year.

Speaker Change: and we delivered our highest number of new confiners in over two years.

Speaker Change: Today, I'll discuss how our three strategic pillars unlocking supply for a growth playbook, driving operational efficiencies and obsessing over service are fueling our strong results and progress.

Rati Levesque: Let's start with the growth. We often mention that we are a supply-focused business as our lifetime sell-through rate is over 90%. Success in executing against our growth playbook relies on driving supply through three key areas, sales, marketing, and our retail. Our sales team works alongside our merchandising department to curate our platform's unique assortment. We leverage search and trend data as well as historical purchase information to identify in-demand brands and categories. Then we mobilize our sales team to proactively pursue it. These capabilities allow the RealReal to quickly pivot and influence our diverse product As we aim to successfully address changes in customer taste and Notably, our sales team drove strong consignor growth this past quarter.

Let's start with the growth playbook.

Speaker Change: Then we mobilize our sales team to proactively pursue it.

Speaker Change: These capabilities allow the real real to quickly pivot and influence of our diverse product mix as we aim to successfully address changes in customer taste and behaviors.

Speaker Change: Notably our sales team drove strong consignor growth this past quarter as a result of our revamped incentive structure and a focused approach on consignor acquisition.

Rati Levesque: as a result of our revamped incentive structure and a focused approach on consignor acquisition.

Rati Levesque: Turning to marketing. Our teams are constantly working to reinforce our position as the leader in luxury resale, known for authenticity and. We've worked to drive effectiveness in our marketing investments and through increased focus on social media and influencer partnerships, our brand awareness increased versus last year. In addition to awareness, marketing efforts directly drive consigner and buyer engagement and generate leads for our sales and retail. For us, stores offer a curated experience and provide consignors with access to our experts for valuations, for fine jewelry and watch. Similar to our approach with the sales team, we measure success in our retail locations through the lens of supply generation and new confiner acquisition.

Speaker Change: Turning to marketing our teams are constantly working to reinforce our position as the leader in luxury resale known for authenticity and expertise we've worked to drive effectiveness and our marketing investments and through increased focus on social media and Influencer partnerships.

Speaker Change: Our brand awareness increased versus last year in.

Speaker Change: In addition to awareness marketing efforts directly drive consignor and buyer engagement and generate leads for our sales and retail team.

Speaker Change: For us stores offer a curated experience and provide consignor with access to our experts for valuations for fine jewelry and watch it similar to our approach with the sales team. We measure success in our retail locations through the lens of supply generation and new consignor.

Rati Levesque: In Q1, stores contributed a quarter of all new Our stores and sales team are highly integrated, working together on in store and off site events, can sign a referrals and expert appointments, which drive high value supply.

Speaker Change: Acquisition in Q1 stores contributed a quarter of all new consignor, our stores and sales team are highly integrated working together on in store and off site event confine, our referrals and expert appointments, which drive high value supply.

Rati Levesque: In the first quarter, the elements of our growth playbook combine to unlock supply through enhanced service and new consignment offerings. First, we reduced friction on the consignment process by offering a walk-in on-demand valuation experience in stores. This provides sellers with flexibility, convenience, and access to our experts, resulting in an increase in consignment appointments and higher customer satisfaction.

Speaker Change: In the first quarter the elements of our growth playbook combined to unlock supply through enhanced service and new consignment offerings.

Speaker Change: First we reduced friction on the consignment process by offering a walk in on demand valuation experience in stores.

Speaker Change: This provides sellers with flexibility convenience and access to our experts, resulting in an increase in consignment appointments and higher customer satisfaction.

Rati Levesque: Another area that is driving results is our real partners program. Our referral programs focus on building relationships with key partners like stylists, closet organizers, and real estate agents to expand our reach and supply network. Partnerships are crucial for sourcing high-value items and expanding our access to desirable investors. Our referral programs are now driving over 1 million of incremental supply per month.

Speaker Change: Another area that is driving results is our real partners program, a referral program focused on building relationships with key partners like stylists closet organizers and real estate agents to expand our reach and supply network.

Speaker Change: Partnerships are crucial for our sourcing high value items, and expanding our access to desirable inventory.

Speaker Change: Our referral programs are now driving over $1 million of incremental supply per month.

Rati Levesque: The next highlight within supply is our Get Paid Now program. Get Paid Now is an offering for consignors on the select list of high-end in-demand brands in just three categories. Watches, handbags, and fine jewelry. Through Get Paid Now, we purchase inventory and these sales flow into our direct revenue, which to be clear, is an entirely different and significantly more profitable business than it was a year ago. Today, we've reimagined the direct business and this revenue is driven by high value supply from consignors and select vendors. Average selling prices for this merchandise we acquire through Get Paid Now is more than 10 times higher than our average selling price.

Speaker Change: The next highlight within supply is or get paid now program get paid now as an offering for <unk> on the select list of high and in demand brands and just three categories one.

Speaker Change: <unk> handbags and buying jewelry.

Speaker Change: You'll get paid now we purchased inventory in these sales flow into our direct revenue, which to be clear is an entirely different and significantly more profitable business than it was a year ago.

Speaker Change: We've re imagined the direct business and this revenue is driven by high value supply from consignor and select vendors average selling prices for this merchandise we acquire through get paid now is more than 10 times higher than our average selling price.

Rati Levesque: And the final growth playbook initiative I'll highlight today is Drop Ship. Drop Ship continued to evolve throughout the first quarter, building on our success in watches, we expanded Drop Ship into handbags. And we are seeing good traction so far. This is an important next step in building new and innovative capabilities to unlock supply.

Speaker Change: And the final growth Playbook initiative I'll highlight today is drop ship drop ship continue to evolve throughout the first quarter building on our success in watches we expanded drop ship into handbag and we're seeing good traction. So far. This is an important next step in building new and innovative capabilities.

Speaker Change: To unlock supply.

Rati Levesque: Moving to our next strategic pillar, operational We continue to leverage our robust proprietary data and AI capabilities to build trust and improve the customer experience. For years, the RealReal has been a leader in authentication with proprietary tools like Vision and Shield, helping build customer trust. Last year, through increased automation, we reduced processing time by over 10% while keeping headcount steady and supporting top line boards.

Speaker Change: Moving to our next strategic pillar operational efficiencies.

Speaker Change: We continue to leverage our robust proprietary data and AI capabilities to build trust and improve the customer experience for.

Speaker Change: For years, the real real has been a leader and authentication.

Speaker Change: With proprietary tools like vision and shield, helping build customer trust.

Speaker Change: Last year through increased automation, we reduced processing time by over 10%, while keeping head count steady and supporting top line growth.

Rati Levesque: On our last call, I reviewed in detail our new AI-enabled product intake process, Athena. This initiative is launched in Q1 of this year and now more than 10% of items are processed via Units managed by Athena are processed fast. Early indications are that we can reduce launch to site time significantly. And in this initial phase, we cut processing times by an estimated 20%. Athena is currently focused on ready-to-wear units and we plan to expand to shoes and handbags later this year. A key differentiator for the RealReal is our expertise in item pricing. Our well-developed approach leverages both human expertise along with data and AI to find optimal market prices for our consumers.

Speaker Change: On our last call I reviewed in detail, our new AI enabled product intake process Athena.

Speaker Change: This initiative was launched in Q1 of this year and now more than 10% of items our process to be Athena.

Speaker Change: Units managed by Athena are processed faster early indications are that we can reduce launch to site time significantly.

Speaker Change: And in this initial phase we cut processing times by an estimated 20% Athena is currently focused on ready to wear units and we plan to expand to shoes and handbags later this year.

Speaker Change: A key differentiator for the real real is our expertise in item pricing are well developed approach leverages, both human expertise along with data and AI to find optimal market prices for our consignor.

Rati Levesque: The algorithms are dynamic and incorporate near real-time signals from internal and external sources. like page views, obsession counts, primary market pricing and search. As of the end of last year, the majority of our units are launched with algorithmic pricing.

Speaker Change: The algorithms are dynamic and incorporate near real time signal from internal and external sources like page views obsession Cowen primary market pricing and search trends.

Speaker Change: As of the end of last year. The majority of our units are launched with algorithmic pricing.

Rati Levesque: The next step in our development is applying our AI expertise and increased precision into our discounting The current rules based approach to discounting is largely manual. And so we see significant opportunity to apply our powerful pricing algorithms to the Early test results indicate that we can drive better balance between price and sell through using algorithmic We are leveraging AI and technology to improve speed, reduce human intervention, and drive operational Turning to our third strategic pillar, obsess over service.

Speaker Change: The next step in our development is applying our AI expertise and increased precision into our discounting cadence.

Speaker Change: Current rules based approach to discounting is largely manual and so we see significant opportunity to apply our powerful pricing algorithms to this use case.

Speaker Change: Early test results indicate that we can drive better balance between price and sell through using algorithmic discounting.

Speaker Change: We are leveraging AI and technology to improve speed reduce human intervention and drive operational efficiencies.

Speaker Change: Turning to our third strategic pillar obsess over service, we provide best in class service to our buyers and Consignors are.

Rati Levesque: We provide best in class service to our buyers and consumers. Our modern luxury experience, enabled by technology, is grounded in expertise, trust, and authenticity. We obsess over service by understanding what type of user experience and feature set our buyers and consignors want from our cloud. Our members spend a lot of time with us, many clocking more than 40 hours per year on our app.

Speaker Change: Our modern luxury experience enabled by technology is grounded and expertise.

Speaker Change: <unk> and authenticity.

Speaker Change: We obsess over serviced by understanding what type of user experience and feature set our buyers and consignors want from our platform.

Speaker Change: Our members spend a lot of time with us many clocking more than 40 hours per year on our App here just a few examples of how we're enhancing engagement and fostering a sense of community.

Rati Levesque: Here are just a few examples of how we're enhancing engagement and fostering a sense of community. Q1, we added a session. similar to the count of likes or hearts on other platforms. to our product listings, allowing buyers to easily see which items are. This creates deeper engagement with the platform and because each item is unique on our site, creates more urgency and gamification.

Speaker Change: In Q1, we added obsession count similar to the account of likes our hearts on other platforms.

Speaker Change: Two our product listings, allowing buyers to easily see which items are trending this creates deeper engagement with the platform and because each item is unique on our site create more urgency and gamification.

Rati Levesque: We are also building community through initiatives like our Successful Substack Strategy, which provides valuable fashion content and fosters connection among our users and We regularly implement user experience updates to improve navigation and search on our platform, making it easier for buyers to find what they are looking for. And we are enhancing buyer personalization to show the most relevant items, driving faster sell-through and lower discounts.

Speaker Change: We are also building community through initiatives like our successful sub stack strategy, which provides valuable fashion content and fosters connection among our users and band.

Speaker Change: We regularly implement user experience updates to improve navigation and search on our platform, making it easier for buyers to find what they're looking for.

Speaker Change: And we are enhancing buyer personalization to show the most relevant items driving faster sell through and lower discounting.

Rati Levesque: Closing our Q1 was a solid start to the year and we're encouraged by the momentum we're seeing in supply. The RealReal is positioned as the leader in a market with lots of room to scale. I'm excited about the future. And right now we are heads down focused on execution for 2025.

Speaker Change: In closing our Q1 was a solid start to the year and we're encouraged by the momentum we're seeing in supply.

Speaker Change: The real real positioned as the leader in a market with lots of room to scale I'm excited about the future and right now we're heads down focused on execution for 2025.

Rati Levesque: I'd like to thank the team for their hard work throughout the first quarter. Our unrelenting focus on our strategic pillars are working, and we remain confident in our ability to deliver on our 2025 objectives.

Speaker Change: I'd like to thank the team for their hard work throughout the first quarter, our unrelenting focus on our strategic pillars are working and we remain confident in our ability to deliver on our 2025 objectives.

Ajay Gopal: With that, I'll turn the call over to Ajay to discuss our operational results and our financial Thank you, Rob. In the first quarter, we made further progress executing on our strategic pillar. Our focus on unlocking supply through our growth playbook. Driving operational efficiencies and obsessing over service resulted in strong top-line growth and margin expansion. For the third consecutive quarter, we delivered positive adjusted EBITDA, demonstrating our ability to drive profitable growth.

Speaker Change: With that I'll turn the call over to Ajay to discuss our operational results and our financial outlook.

Ajay: Thank you Rafi.

Ajay: In the first quarter, we made further progress executing on our strategic pillars, our focus on unlocking supply through our growth playbook.

Ajay: Driving operational efficiencies and obsessing over service resulted in strong topline growth and margin expansion.

Ajay: For the third consecutive quarter, we delivered positive adjusted EBITDA, demonstrating our ability to drive profitable growth.

Ajay Gopal: We are laying the foundation for consistent execution and delivering on our 2025 goal.

Ajay: We are laying the foundation for consistent execution and delivering on our 2025 goals.

Ajay Gopal: Now turning to our detailed Q1 results, beginning with top line. Q1 GMB of $490 million increased 9% compared to last year. Our growth playbook initiatives drove strong top line growth, and they also recorded our highest new consignor growth in over two years. In Q1, active buyers increased 7% on a trailing 12-month basis to 985,000, demonstrating our reach and leadership position within luxury research. Q1 revenue of 160 million increased 11% year over year. Consignment revenue increased 7% and direct revenue increased 61% compared to Q1 of 2024. We expect direct revenue to remain in the range of 10 to 15% of total revenues going forward.

Ajay: Now turning to our detailed Q1 results beginning with top line.

Ajay: Q1, GMB of $490 million increased 9% compared to last year.

Ajay: Growth playbook initiatives drove strong top line growth and we also recorded our highest new confine of growth in over two years.

Ajay: In Q1 active buyers increased 7% on a trailing 12 month basis to 985000.

Ajay: Trading our reach and leadership position within luxury resale.

Ajay: Q1 revenue of $160 million increased 11% year over year.

Ajay: Consignment revenue increased 7% and direct revenue increased 61% compared to Q1 of 2024.

Ajay: We expect direct revenue to remain in the range of 10% to 15% of total revenues going forward.

Ajay Gopal: I'd like to take a moment to discuss the trajectory and enhanced unit economics of our reimagined overall direct business. As we've highlighted in the past, our direct revenue consists of out-of-policy returns and select vendor supply. In addition, as Rati mentioned, we launched an offering for consignors aimed at unlocking incremental supply through Get Paid Now. We offer this option on a selective basis on marquee brands and high-value categories, and we are enthusiastic about the program's potential to contribute to market share gains over time. Profitability profile of our direct revenue has improved dramatically. First quarter 2025, direct gross margins were 25.5% compared to 3.3% in the first quarter of last year, a substantial improvement.

Ajay: I'd like to take a moment to discuss the trajectory and enhanced unit economics of our re imagined overall direct business.

Ajay: As we've highlighted in the past our direct revenue consists of out of policy with tons and select vendor supply.

Ajay: In addition, as Rafi mentioned, we launched an offering for consign us aimed at unlocking incremental supply through get paid now.

Ajay: We offer this option on a selective basis on marquee brands in high value categories, and we are enthusiastic about the program's potential to contribute to market share gains over time.

Ajay: The profitability profile of our direct revenue has improved dramatically.

Ajay: First quarter 2025, direct gross margins were 25, 5% compared to three 3% in the first quarter of last year a substantial improvement.

Ajay Gopal: We're committed to maintaining a disciplined inventory strategy focused on sell-through and model.

Ajay: We're committed to maintaining a disciplined inventory strategy focused on sell through and margins.

Ajay Gopal: Continuing with our first quarter results. First quarter gross profit of 120 million increased 12% year over year, resulting in gross margin of 75%, an increase of 40 basis points compared to the prior year. Driven by operational efficiencies in our fulfillment centers and customer support functions. First quarter operating expenses of $133 million increased 6% year over year. As a percent of total revenue, operating expenses improved by 410 basis Excluding stock-based compensation, operating expenses improved by 370 basis points, driven by AI-led efficiency efforts like Athena and SmartSales, improvements in marketing ROI, and increased automation. First quarter adjusted EBITDA of $4.1 million or 2.6% of total revenue increased $6.4 million versus prior year.

Ajay: Continuing with our first quarter results.

Ajay: First quarter gross profit of $120 million increased 12% year over year, resulting in gross margin of 75% an increase of 40 basis points compared to the prior year.

Ajay: Driven by operational efficiencies in our fulfillment centers and customer support functions.

Ajay: First quarter operating expenses of $133 million increased 6% year over year.

Ajay: As a percent of total revenue operating expenses improved by 410 basis points.

Ajay: Excluding stock based compensation operating expenses improved by 370 basis points, driven by AI, let efficiency efforts like Athena and small sales improvements in marketing ROI and increase automation.

Ajay: First quarter, adjusted EBITDA of $4 1 million or two 6% of total revenue increased $6 4 million versus prior year.

Ajay Gopal: Adjusted EBITDA margins increased over 400 basis points here over Operating cash flow for the first quarter was negative 28 million. Due to the timing of incentive payments and working capital seasonality, we expect operating cash flow and free cash flow to be back half way.

Ajay: Adjusted EBITDA margins increased over 400 basis points year over year.

Ajay: Operating cash flow for the first quarter was negative $28 million.

Ajay: Due to the timing of incentive payments and working capital seasonality, we expect operating cash flow and free cash flow to be back half weighted.

Ajay Gopal: As a reminder, the remaining 27 million stub of our 2025 convertible note will mature in June of this year. We ended the quarter with $154 million in cash, cash equivalents, and restrictions.

Ajay: As a reminder, the remaining 27 million stub of our 2025 convertible notes will mature in June of this year.

Ajay: We ended the quarter with $154 million in cash.

Ajay: Cash equivalents and restricted cash.

Ajay Gopal: Turning to guide Today, we are reaffirming our full year guidance, which we provided earlier this year. We expect full year GMV in the range of 1.96 to 1.99 billion for the year, up 8% year over year at the midpoint of our guidance . We expect revenue in the range of $645 million to $660 million, up 9% year-over-year at the midpoint of August. We continue to expect adjusted EBITDA in the range of $20 million to $30 million, with adjusted EBITDA margin expansion driven by strong top-line growth and operating expense levels. In the current environment, our ability to reaffirm our guidance stems from our consistent execution and the inherent flexibility in our marketplace business model.

Ajay: Turning to guidance.

Ajay: Today, we are reaffirming our full year guidance, which we provided earlier this year.

Ajay: We expect full year <unk> in the range of $1 96 to $1 99 billion for the year up 8% year over year at the midpoint of our guidance range.

Ajay: We expect revenue in the range of $645 million to $660 million up 9% year over year at the midpoint of our guidance.

Ajay: We continue to expect adjusted EBITDA in the range of $20 million to $30 million with adjusted EBITDA margin expansion driven by strong top line growth and operating expense leverage.

Ajay: In the current environment, our ability to reaffirm our guidance stems from our consistent execution and the inherent flexibility in our marketplace business model.

Ajay Gopal: As a resale platform, our supply primarily comes from domestic closet. and is therefore unaffected by tariff. Furthermore, we believe we are well positioned to realize benefits from consumer seeking value in the face of price increases. all from customers being more motivated to monetize their clubs.

Ajay: As a resale platform our supply primarily comes from domestic closets and is therefore unaffected by tariffs.

Ajay: Furthermore, we believe we are well positioned to realize benefits from consumers seeking value in the face of price increases.

Ajay: Or from customers being more motivated to monetize their closets.

Ajay Gopal: We acknowledge the potential for challenges arising from a more uncertain macroeconomic environment and maintain a balanced perspective in our expectations for the rest For more information visit www.fema.gov Moving to our outlook for the second quarter. GMV is expected in the range of $476 million to $486 million, which represents 9% growth compared to prior year at the midpoint of our guidance. Second quarter revenue is expected in the range of $157 to $161 million. This reflects 10% growth compared to last year at the midpoint of our guidance. We continue to expect the direct channel to contribute between 10% and 15% of total revenue.

Ajay: We acknowledge the potential for challenges arising from a more uncertain macroeconomic environment and maintain a balanced perspective in our expectations for the rest of the year.

Ajay: Moving to our outlook for the second quarter.

Ajay: <unk> is expected in the range of 476 million to 486 million, which represents 9% growth compared to prior year at the midpoint of our guidance range.

Ajay: Second quarter revenue is expected in the range of $157 million to $161 million.

Ajay: This reflects 10% growth compared to last year at the midpoint of our guidance range.

Ajay: We continue to expect the direct channel to contribute between 10% and 15% of total revenue.

Ajay Gopal: Second quarter adjusted EBITDA is expected to be between three and four million, which represents 350 basis points of margin expansion year-over-year at the midpoint of our To be helpful, I will provide some additional detail regarding the quarterly cadence of 2020. Last year, we were still making changes to the business and saw significant quarterly variation in adjusted EBITDA margin from Q1 through Q3. This year, we expect a more consistent rate across the first three quarters of the year and a typical seasonal step up in both top line volume and adjusted EBITDA margin in Q4.

Ajay: Second quarter adjusted EBITDA is expected to be between three and $4 million, which represents 350 basis points of margin expansion year over year at the midpoint of our range.

Ajay: To be helpful. I will provide some additional detail regarding the quarterly cadence of 2025.

Ajay: Last year, we were still making changes to the business and saw significant quarterly variation in adjusted EBITDA margin from Q1 through Q3.

Ajay: This year, we expect a more consistent rate across the first three quarters of the year.

Ajay: A typical seasonal step up in both top line volume and adjusted EBITDA margin in Q4.

Ajay Gopal: In closing, I am pleased to see the progress our team's made in the first quarter. Our success in unlocking supply and acquiring new consignors gives us confidence that the RealReal is well positioned to deliver on our 2025 objectives.

Ajay: In closing I am pleased to see the progress our teams made in the first quarter.

Ajay: Our success in unlocking supply on acquiring new consign us gives us confidence that the rail rail is well positioned to deliver on our 2025 objectives.

Operator: With that, I will turn the call back over to the operator to begin the Q&A. Operator? Thank you.

Ajay: With that I will turn the call back over to the operator to begin Q&A.

Ajay: Greater.

Operator: As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster.

Ajay: Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

Ajay: Please standby, while we compile the Q&A roster.

Ashley Owens: And our first question comes from Ashley Owens of KeyBank Capital Markets. Your line is open. Great, thanks so much. So maybe if we could just start on direct, I know you mentioned the meaningful improvements to gross margin there. Could you just provide some context around some of the key drivers and how sustainable the levels are we saw in the quarter? Are the mid-20s kind of a reasonable range for that area of the business or what other levels can you pull to further optimize it? Thank you.

Actually Owens: And our first question comes from actually Owens of Keybanc capital markets. Your line is open.

Actually Owens: Great. Thanks, so much so maybe if we could just start on direct I know you mentioned the meaningful improvements to gross margin. There could you just provide some context.

Actually Owens: Some of the key drivers and how sustainable the levels are we saw in the quarter or the mid <unk> is kind of a reasonable range for that area of the business or what other levels can you pull to further optimize it. Thank you.

Actually Owens: Thank you.

Ajay Gopal: Ashley, thanks for the question. You know, like we've said in the past, our direct revenues are made up of our policy returns. So these are items that we take back from customers, we agree to take them back and we in fact end up taking title to them. We also have had vendor purchases, so select vendor purchases of particular items. And you heard Rati talk about Get Paid Now, which is an offering that we are, that we started scaling last quarter. This is essentially when a to get paid upfront for an item as opposed to wanting to consign it.

Actually Owens: Okay. Thanks for the question.

Actually Owens: Like we've said in the past our direct revenues are made up of.

Actually Owens: Without a policy at a time. So these are items that we take back from customers. We agreed to take them back and we and in fact end up taking title to them.

Actually Owens: We also have had vendor purchases so select vendor purchases.

Ralph: Items and you heard Ralph.

Actually Owens: Can you talk about.

Actually Owens: We get paid now which is an offering that we are that we started scaling last quarter.

Actually Owens: Essentially when a consignor chooses to take.

Actually Owens: To get paid upfront for an item as opposed to wanting to consignment consignment.

Ajay Gopal: These elements really go to the heart of how we've reimagined our direct business. And, you know, and therefore, you know, made it a lot more profitable than it used to be. We just reported 25.5% margin on that revenue stream up significantly from last year when it was about 3%. So we feel good about the changes we've made. And, you know, we're comfortable that it will continue to be, you know, in that about 20% margin range is how I would ask you to think about it. There's some element of mix that comes into play depending on which element of direct gets sold that might vary slightly.

Actually Owens: These elements are really go to the heart of how we've re imagined our direct business.

Actually Owens: And therefore made it a lot more profitable than it used to be.

Actually Owens: Your board of 25, 5% margin on that revenue stream.

Actually Owens: Up significantly from last year when it was about three 3%. So we feel good about the changes we've made.

Actually Owens: And we're comfortable that it will continue to be.

Actually Owens: In that about 20% margin range is how I would ask you to think about it. There is there some element of mix that comes into play depending on which element of direct consoles that might vary it slightly.

Ashley Owens: Okay, great. I appreciate the call there.

Actually Owens: Okay great.

Ashley Owens: And then additionally, given the ongoing macro uncertainty and some of the potential strain we're hearing about discretionary spending, what signals of any are you observing in the consumer behavior quarter to date, both on buying and selling? And then additionally, just how much visibility would you say you have into future supplies at Stamps today? Hi, Ashley, thanks for the question. As far as consumer health goes, you know, it's been pretty consistent, I would say, if not resilient on the buyer side, we're seeing, you know, strength and top of the funnel all the way to conversion. And that's been consistent since Q4, especially, and going into Q2, hence the guide that we gave for Q2.

Actually Owens: Appreciate the color there and then additionally.

Actually Owens: Given the ongoing macro uncertainty team some of the potential strain, we're hearing about discretionary spending what signals.

Actually Owens: Are you observing in the consumer behavior quarter to date bolt on buying and selling and then additionally, just how much visibility would you say, you're having to future supply as it stands today.

Actually Owens: Yeah, Hi, Ashley Thanks for the question as far as consumer health goes its been pretty consistent I would say, it's not resilient on the buyer side.

Actually Owens: Seeing.

Actually Owens: Strength in top of the bundle all the way to conversion.

Actually Owens: And that's been consistent since Q4, especially and going into Q2, hence the guide that we gave for Q2 the supply side as well you know we talk a lot about our growth playbook that strategy is working it's all about creating less friction for the consignor.

Rati Levesque: The supply side as well, you know, we talk a lot about our growth playbook, the strategy is working, it's all about creating less friction with the consignor, that, you know, $200 billion in people's closet, things like re-consign, our new stores, on-demand appointments, again, that trifecta of sales, marketing, and retail, we're really working together. So that strategy, like I said, causes, you know, is less friction, builds trust with the consumer, and I think we've never seen a more consistent growth pattern in new consignors. So really excited about the results and the highest number of new sellers growth that we've seen in over two years, actually.

Actually Owens: That $200 billion in peoples closet things like retail buying.

Actually Owens: New stores on demand appointments again that trifecta of sales marketing and retail were really working together. So that strategy like I said causes is less friction builds trust with the consumer and I think we've never seen a more consistent growth pattern in new diners.

Actually Owens: So really excited about the results and the highest number of new sellers growth that we've seen in over two years actually.

Ashley Owens: Great, I'll pass it along. Best of luck for the rest of the year. Thank you.

Speaker Change: Okay, Great I'll pass it along best of luck there STR.

Actually Owens: Thank you.

Ike Boruchow: And our next question comes from Ike Boruchow of Wells Fargo. Your line is open. Hey, good afternoon. I'll go into the direct bucket as well. Just curious, Ajay, should there be seasonality in terms of the direct as a percent of total revenue? I think I'm looking at like 12.5% in one queue. Are there reasons that that should go, you know, up or down over the over the next several quarters?

Actually Owens: Okay.

Speaker Change: And our next question comes from Ike <unk> of Wells Fargo. Your line is open.

Ike: Hey, good afternoon.

Speaker Change: I'll go into the direct bucket as well just curious Jay should there be seasonality in terms of the direct as a percent of total revenue I think I'm looking at like 12, 5% and <unk> is there a reason that that should go.

Speaker Change: Up or down over the next several quarters of that kind of is consistent and then if it if it looks like you've got a more profitable channel. There obviously, it's not nearly as profitable as confinement, but if you've got a lever there that maybe it wasn't there before.

Ajay Gopal: So that should kind of be consistent. And then if it if it looks like you've got a more profitable channel there, obviously, it's not nearly as profitable as consignment. But if you've got like a lever there that maybe wasn't there before, how does that impact your ability to kind of sustain the, you know, last year was 74.5% gross margin, like, in terms of total gross margin, should we think about that flattening out here based on the channel? So curious your comments on some of that, those moving pieces. Yeah, absolutely. Thank you for the question. There's a fair bit to unpack there.

Speaker Change: How does that impact your ability to kind of sustain last year was 74, 5% gross margin.

Speaker Change: In terms of total gross margins should we think about that flattening out here.

Speaker Change: On the.

Speaker Change: The channel so curious your comments on some of that.

Speaker Change: Any cases.

Mike: Yeah, absolutely. Thanks, Thank you for the question Mike.

Ajay Gopal: So let me try and get to all those points. Starting at the top, right, direct, we've said that we expect direct to be between 10% to 15% of our total revenues. And really, that represents somewhere in the realm of 5% to 6% of total GMV, so a pretty small chunk of our business. There isn't any reason for there to be inherent seasonality in that percentage. It's going to stay within that range. And it really just ends up, you know, depending on the mix of what gets purchased by our buyers, because when you look at it from a buyer's perspective, they don't really see the difference, nor do they care, right?

Speaker Change: A fair bit to unpack there. So let me, let me try and get through all those points.

Mike: Starting at the top right direct.

Mike: We've said that we expect direct to be between 10% to 15% of our total revenues.

Mike: And really that represents somewhere in the realm of 5% to 6% of total <unk>, So a pretty small chunk of our business.

Mike: There isn't any reason for there to be inherent seasonality and that percentage, it's going to stay within that range and it really just ends up.

Mike: Depending on the mix of what gets purchased by our buyers because when you look at it from a buyers perspective, they don't really see the difference not a day count right. It's just great supply that there that they are going to pick up from our from our shelves.

Ajay Gopal: It's just great supply that they're going to pick from our shelves.

Ajay Gopal: So that's how I would ask you to think about it going forward. I think you had a second part of the question around margin impact. Yeah, does it impact your ability to keep expanding the consolidated gross margin based on, you know, pushing a little bit further on direct now that you've got like a little bit more special sauce there versus what you had the past couple years? Yeah, no, I wouldn't say it. I mean, it's too small. And we expect it to be consistent in the 10 to 15% range. So you know, where we are today is where I expect it to be in terms of proportion of the total.

Mike: So that's how I would I would ask you to think about it going forward.

Mike: Thank you had a second part of the question around.

Mike: Our own model and just how does it.

Speaker Change: Yeah, how does it impact your ability to keep expanding the consolidated gross margin based on pushing a little bit further on direct now that you've got like a little bit more.

Speaker Change: Special sauce, there versus what you had the past couple of years.

Speaker Change: Yes, no I wouldn't say I mean.

Speaker Change: It's too small and we expect it to be consistent in the 10% to 15% range. So where we are today is where I expect it to be in terms of proportion of the total.

Ajay Gopal: The other thing I would point out is we are being very selective with our Get Paid Now offering. We were excited about how it represents our ability to capture incremental supply and through that gain market share in the luxury resale space. But we offer it on a you know, to select consignors, marquee list of brands. And even though the margin when you look at it through the lens of, you know, how it gets accounted for on our financial statements is different on a like to like basis, we are positioned to make more money, more contribution dollars, when we when we have a, you know, item going to this channel versus confinement.

Speaker Change: The other thing I would point out is we are being very selective with our <unk> offering. We are excited about how it represents our ability to capture incremental supply them through that gain market share in the <unk>.

Speaker Change: Jewelry sales space.

Speaker Change: But we operate on a.

Speaker Change: Two select consignor as marquee list of brands.

Speaker Change: And even though the margin when you look at it through the lens of how it gets accounted for in our financial statements is different on a like to like basis, we are positioned to make more money more contribution dollars when we when we have.

Ajay Gopal: So it I wouldn't expect it to be dilutive or put any pressure on our gross margin rate. It's, you know, it's, it's at the right level.

Speaker Change: I am going to this channel versus consignment so.

Speaker Change: I wouldn't expect it to be dilutive or put any pressure on our gross margin rate.

Ajay Gopal: And we expect it to stay at this level going forward. Thank you, Jay. Thank you.

Speaker Change: That's not the right level and we expect it to stay at this level going forward.

Speaker Change: Thank you Jay.

Speaker Change: Oh sure.

Speaker Change: Thank you.

Speaker Change: Okay.

Marvin Fong: And our next question comes from Marvin Fong of BTIG. Your line is open. Oh, great. Thanks for taking my questions.

Speaker Change: And our next question comes from Marvin Fong of <unk>. Your line is open.

Marvin Fong: Great. Thanks for taking my question.

Ajay Gopal: Um, you know, maybe I'll just ask about, you know, AOV and the components of that any any, you know, it looks like AOV is doing just fine here, but anything to call out in terms of what you're feeling between UPT and ASD? I'm gonna have a follow-up. Yeah, hi, Marvin. AOV is up, it's up about 5% year over year. And this goes back to what I was saying earlier around the resiliency of the buyer. And that trust we built with that side of the market marketplace. Sometimes we'll see this inverse reaction between UPT units per transaction AOV, but it stayed pretty consistent.

Speaker Change: Maybe I'll just.

Marvin Fong: Ask about.

Marvin Fong: Hey, OMB and the components of that any it looks like it will be doing.

Marvin Fong: Just fine here, but anything to call out in terms of what youre seeing in between.

Marvin Fong: <unk> and ASD.

Marvin Fong: Then I'll follow up.

Marvin Fong: Yeah, Hi, Marvin.

Marvin Fong: <unk> is up it's up about 5% year over year and this goes back to what I was saying earlier around the resiliency of the buyer.

Marvin Fong: And that trust, we built with that side of the market marketplace.

Marvin Fong: And then we will see this inverse reaction between <unk> units per transaction, but it stayed pretty consistent.

Ajay Gopal: Sequentially, I will say that we are seeing higher levels of fine jewelry sales, especially actually branded and unbranded. And so that's the kind of great thing about having a diverse or the advantage of having a diverse marketplace as far as categories go. And something is out of favor, other things are very much in favor. So we are seeing that with fine jewelry, handbags are doing especially well right now.

Marvin Fong: Sequentially I will say that we are seeing higher levels of fine jewelry sales.

Marvin Fong: Especially.

Marvin Fong: It actually branded and unbranded.

Marvin Fong: And so that's the kind of great thing about having a diverse or the advantage of having a diverse Mike marketplace.

Marvin Fong: As far as categories go and something is out of favor other things are very much in vapor. So we are seeing that with buying jewelry handbags are doing especially well right now.

Ajay Gopal: So we're excited to see both average selling price and average order value consistently up. Great.

Marvin Fong: We're excited to see both the average selling price and average order value consistently up.

Ajay Gopal: And I guess I'll have a question also about direct margins. You know, just between those three channels, out of policy, direct from vendor and get paid now, is there a difference in margins between those three channels? I would imagine maybe get paid now is a higher margin just by virtue of the motivation of the consigner or the seller, but we just love a little granularity. Yeah, thanks for that. Thanks for that question. Yeah, Get Paid Now is, you know, the way we built it, if you look at it, you know, if you look at a comparable sort of handbag, I'll give you an example here to illustrate the point, you know, for a bag between $1,500 to $5,000, somebody choosing that alternative would effectively be getting paid about 55% of the expected retail price.

Marvin Fong: Great and I guess how.

Marvin Fong: A question also about about direct margins just between those three channels out of policy direct from vendor and.

Marvin Fong: Now is there is there a difference in margins between those two channels I would imagine maybe you can pay now has a higher margin just by virtue of.

Marvin Fong: The motivation of the.

Marvin Fong: Consignor or the seller, but.

Marvin Fong: Just love a little granularity there.

Marvin Fong: Yes, thanks for the thanks for that question yes.

Marvin Fong: Yes.

Marvin Fong: <unk>.

Marvin Fong: The way the the way we built it if you look at.

Marvin Fong: If you look at a comparable set of handbags I'll give you. An example here to illustrate the point.

Marvin Fong: <unk> between $505000.

Marvin Fong: Somebody choosing that alternative would effectively be getting paid about 55% of the offtake expected resale price.

Ajay Gopal: A consignor would make closer to $70,000. So think about it as a 15 point differential between the two offerings. With that inherent structure, it will yield better margins on a like to like basis.

Marvin Fong: I would make closer to 70, so think about it as a 15 point differential between the two offerings.

Marvin Fong: With that inherent structure, it will yield better margins on a like to like basis.

Ajay Gopal: It is still the, you know, by no means is it the biggest part of direct, the biggest part of direct really still continues to be our outer policy returns. And when you think about our policy returns for us, the, you know, for us returns are no different from the original sale, because, you know, the items, all our items are being resold. So if a consumer returns something, it's fairly easy for us to just recreate that listing and sell it for more or less the same price. So the margin structure does not vary that.

Marvin Fong: It is still.

Marvin Fong: By no means is the biggest part of direct the biggest part of directly still continues to be our our policy. There are times when you think about our policy to tons for us.

Marvin Fong: Or is it turns on or different from the original sale because the items all our items are being resold service consumer return something it's.

Marvin Fong: It's fairly easy for us to Jeff's recreate that listing and sell it for more or less the same price of the mine construction does not vary that much.

Ajay Gopal: Okay, that's great color. Thanks a lot. Thank you.

Marvin Fong: Okay.

Marvin Fong: Great color. Thanks, a lot.

Marvin Fong: Thank you.

Bobby Brooks: And our next question comes from Bobby Brooks of Northern Capital Markets. Your line is open. Hey, good afternoon, guys. Thanks for taking the question. So you talked a couple different, you touched on it a couple different times, seeing the biggest growth in new consignors in over two years. So kind of two questions on that. First, could you maybe give us some context around that to help frame it? You know, did you add 2000 new consignors when last year you were only doing 500 new consignors of a quarter, something to that extent? And then secondly, what drove this?

Marvin Fong: Yeah.

Marvin Fong: And our next question comes from Bob Brooks of Northland Capital markets. Your line is open.

Bob Brooks: Hey, good afternoon, guys. Thanks for taking the question. So you talked a couple of different touch on a couple of different times seen the biggest growth in new containers in over two years. So kind of two questions on that first could you maybe give us some context around that to help frame.

Bob Brooks: Did you add 2000, new containers when last year, you're only doing 500, new concerns over quarter subsequent to that extent and then secondly, what drove this what's really the primary reason for.

Bobby Brooks: What's really the primary reason for the new consignors coming on? I know you mentioned a quarter of them came through the retail space. So what else is kind of driving that straight?

Bob Brooks: The new concern Thats coming on I know, you've mentioned a quarter or obtained through the retail.

Bob Brooks: Space, So what else was kind of driving that strength.

Rati Levesque: Yes, I can take that. Hi, Bobby. So a couple different things. So yes, new sellers, very happy with the growth there, on a number basis, and even the retail value coming through new sellers, we're doing a better job targeting consignors with even higher value items, better products, that mid to high value product that we want. And this, you know, again, goes back to that trifecta of sales, marketing and retail really coming together, meeting the seller where they are building that trust, that community with the seller. So we've talked about aligning, for example, the sales comp plan better with the product that we need, or better with the consignor acquisition strategy.

Bobby: Yes, I can take that hi, Bobby.

Bobby: So a couple of different things, so, yes, new sellers very happy with the growth there.

Bobby: On a number basis and even the retail value coming through new sellers, where we're doing a better job targeting.

Bobby: <unk> with even higher value items isn't better products at mid to high value product that we want and this again goes back to that trifecta of sales marketing and retail really coming together.

Bobby: Meeting the seller, where they are building that trust that community with the seller. So we've talked about aligning for example, the sales comp plan better with the products that we need or better with the consignor acquisition strategy of new retail stores. Like you mentioned is a big chunk of our percentage of that.

Rati Levesque: New retail stores, like you mentioned, is a big chunk or percentage of that. Real partners, or real friends, our referral program is working better than ever. We had one in the past, but we really changed some of the framework around that to really juice that program. So we're seeing many more opportunities come through that channel, and we're really excited about that. So there's things like that. Smart sales is the last piece I will say. So, you know, think about tech tools that we're getting better with. So being able to come into a store and be able to drop off or meet a gemologist same day versus two weeks later.

Bobby: Real partners, our real friends, our referral program is working better than ever and we had one in the past, but we've really changed some of the framework around that to really juice that program.

Bobby: Another another big initiative has been re consigning, we need that way easier for the consignor. So now.

Bobby: Coming through the funnel, we know if you bought a handbag six eight months ago, and we know Bobby that youll be ready they can find it in eight months right or whatever you're kind of pattern or behavior. It looks like in the past. So we'll target you at that time. So we can find that items, we're seeing many more.

Bobby: <unk> opportunities come through that channel and we're really excited about that so there's things like that smart sales is the last piece I will say to you know take.

Bobby: Think about tech tools that we're getting better with him so making the sales team able to get more.

Bobby: More diners that theyre working on their relationships and the consignor growth versus the administrative tools right getting them to get more appointments in per day and back to you know meeting the consignor, where they are on the band appointments, so being able to come into a store and.

Bobby: And be able to drop off or Nida gemology same day versus two weeks later, so that on demand kind of nature has really helped as well and remember the Tam is very day, there's lots of opportunity for us.

Rati Levesque: So that on-demand kind of nature has really helped as well. And, you know, remember, the PICAM is very big. There's lots of opportunity for us, and we still have a lot of room to grow, which really gets the team and I very excited. Fair enough, really, really helpful there.

Bobby: We still have a lot of room to grow which really gets to the team and I'm very excited.

Bobby: Yeah.

Rati Levesque: And then you touched on it a little bit there as well as in the prepared remarks, but Unknown Executive, Chandana Madaka, Jay Sole, Ashley Owens, Rati Levesque, John Koryl, Robert Brooks, RealReal Inc, Chandana Madaka, Caitlin Howe, Ajay Gopal, Robert Brooks, RealReal Inc, Chandana Madaka, Caitlin Howe, Ajay Gopal, Robert Brooks, RealReal Inc, Chandana Madaka, Yeah, so you have two different programs. I'll talk about partnership, or we're calling it the RealPartners program. And so think about these, you know, we're always taking a more product first approach. So this is a product that has really great market fit, and we're looking at aggregators of that supply.

Bobby: Fair enough that's really helpful. There and then you touched on it a little bit there as well as in the prepared remarks, but.

Bobby: Specifically called out that partnership programs is helping increase supply.

Bobby: Wanted to just double click on that and how does that kind of how does that look in real partnering with brands or is this partnering with <unk> and maybe it would help to just compare contrast, it from how it differs from drop shipping.

Bobby: Yeah. So.

Bobby: Yes, two different programs I'll talk about a partnership or were calling it the real partners program and so think about these we're always taking a more product first approach.

Bobby: This is a product that has really great market fit and we're looking at aggregators of that supply. So think closet organizer style is people that are working on a national level witkin diners that changed their closet. They change over their closet every season for example, and so that program.

Rati Levesque: So think closet organizers, stylists, people that are working on a national level, with consignors that change their closet, you know, they change over their closet every season, for example. And so that program, you know, we're really partnering with the stylists, closet organizers, they get a percentage of the sale, they're earning a good amount of money, and this becomes sustainable for them. And so again, that's that flywheel effect, right? So they take that product, they get their clients to consign with us, and then they're selling them new goods as a stylist in the primary market. So that's been really great.

Bobby: We're really partnering with the stylus closet organizer, they get a percentage of the sale, they're earning a good amount of money and it becomes sustainable for them and so again that that flywheel effect right. So they take that product they get their clients to consign with us and then they are selling them.

New goods isn't stylists in the primary market.

Rati Levesque: We're excited about the potential there, just getting started. We launched that in Q4. I'm quite happy with the progress.

Bobby: So that's been really great. We're excited about the potential there are just getting started we launched that in Q4 and quite happy with the progress drops.

Rati Levesque: Dropship is different, right? This is a new channel for us. We tested that late last year, I want to say, really got off the ground in October, November of last year. And we're seeing this program have legs. I think I talked about it in the past, is we're optimistic about the performance there. We're more than optimistic now, right? We're starting to see it actually work. We want to scale it, just going into this year, and actually being, you know, another channel for us to bring in supply over the next few years. And what this is, for those that are unfamiliar, it's a high-value product, really focused on, again, more high-value products, like jewelry, watches, handbags, higher-end ready-to-wear.

Bobby: Drop ship is different right. This is a new channel for US we tested that late last year I wanted to say really got off the ground in October November of last year.

Bobby: And we're seeing this program have legs.

Bobby: I talked about it in the past as.

Bobby: We're optimistic about the performance there.

Bobby: We're more than optimistic now right, we're starting to see it actually work we want to scale. It does that's going into this year.

Bobby: Actually being another channel for us to bring in supply over the next few years.

Bobby: This is for those that are unfamiliar.

Our high value products will be focused on again more high value products being jewelry watches handbags.

Rati Levesque: But a person will be a vendor, it's more of a B2B play, is able to upload the product directly to the site. We'll authenticate it post-purchase, and then send it out to the consumer. So it means, again, really great, more great supply for us on the site. We tested it with watches late last year, saw really great progress. Again, it's about product, so having the right product on the site, when we have the right product on the site, and that's more curated, one-of-a-kind, we see the buyers follow. That makes perfect sense. Thank you guys. Our turn of the queue.

Bobby: And ready to wear but a person will it be a vendor.

Bobby: More of a <unk> play is able to upload the product directly to the site will authenticate it post purchase.

Bobby: Send it out to the consumer.

Bobby: So it means again really great more great supply breath on the site.

Bobby: We tested it with watches late last year, so really great progress again, it's about product having the right product on the site. When we have the right product on the site and that's more curated one of a kind we see the buyers follow.

Speaker Change: That makes perfect sense. Thank you guys are turning off the queue.

Rati Levesque: Thank you.

Bobby: Thank you.

Bobby: Okay.

Mark Altschwager: And our next question comes from Mark Altschwager of Baird. Your line is open. Thank you for taking my question. Good afternoon.

Speaker Change: And our next question comes from Mark <unk> of Baird. Your line is open.

Mark: Thank you for taking my question good afternoon.

Ajay Gopal: First for Ajay, I wanted to ask on Q1 revenue, how did the mix, the revenue mix in terms of consignment versus direct versus services play out relative to your expectations? And then looking ahead, you're reiterating the revenue guide for the year, but wondering if there's been any changes to the underlying assumptions on the contribution from those pieces, given that this Get Paid Now initiative was just beginning to ramp, and now you're seeing some positive signals there. So curious how that's kind of changing, again, your underlying view of the year. Thanks for the question, Mark. Maybe starting with Q1 revenue, you know, we reported growth of 11% in revenue against GMV being up 9%.

Speaker Change: First for Jay wanted to ask on Q1 revenue how did the mix the revenue mix in terms of consignment versus direct versus services play out relative to your expectations and then looking ahead youre reiterating the revenue guide for the year, but wondering if there's been any changes to the underlying assumptions.

Speaker Change: <unk> on the contribution from those pieces given that this get paid now initiatives was just beginning to ramp and now you are seeing some positive signals. There. So curious how that's kind of changing again your underlying Duke here.

Speaker Change: Thanks for the question Mark.

Speaker Change: Maybe starting with Q1 revenue, we reported growth of 11% in revenue against CMV being up 9%.

Ajay Gopal: The mix of what comprised that was pretty consistent with what we where we expected it to be. You know, we've we've always maintained that direct will be about 10 to 15% of our revenue mix. You know, and we saw we saw that land pretty much in the in the middle of that range. You know, the Get Paid Now program is not that significant. It's a way for us to get incremental supply.

Speaker Change: The mix of what comprised that was pretty consistent with what we where we expected it to be.

Speaker Change: We've always maintained the direct will be about 10% to 15% of our revenue mix.

Speaker Change: And we saw we saw that line pretty much in the in the middle of that range.

Speaker Change: Now program is not that significant it's a way for us to get incremental supply I wouldn't expect it to get create any fundamental change in sort of the mix of our revenues going forward.

Mark Altschwager: I wouldn't expect it to create any fundamental change in sort of the mix of our revenues going forward. Very helpful. Thank you.

Rati Levesque: And then, Rati, just a bigger picture here. In the prepared remarks, you expressed some optimism regarding how the model has the potential to benefit from the current environment. I tend to agree with that sentiment, but curious if you view this as largely theoretical at this stage, or are you beginning to see some shifts in buyer-seller behavior, or even conversations your sales team is having with some high value consignors that would support your confidence in that point? Yeah, thanks, Mark, for the question. Um, as far as you know, the sentiment, you know, and we talk a lot about tariffs and how that could impact our business or any kind of unpredictable backdrop.

Speaker Change: Very helpful. Thank you and then just.

Speaker Change: Kind of bigger picture here in the prepared remarks, you expressed some optimism regarding how the model has the potential to benefit from the current environment.

Speaker Change: I tend to agree with that sentiment, but curious.

Speaker Change: If you view this as largely theoretical at this stage or are you beginning to see some shifts in buyer seller behavior or even conversations with your sales team is having with some high value can signers that would support your confidence in that point.

Mark: Yeah, Thanks, Mark for the question.

Mark: As far as the sentiment you know when we talk a lot about tariffs and how that could impact our business are.

Mark: Any kind of unpredictable backdrop.

Rati Levesque: You know, most of our supply, all of our supplies brought in from their core business from domestic closets. So we don't see much of an impact there. On the demand side, what we have seen in the past is the prices go up. We see our pricing also go up. Our algorithms pick that up pretty quickly based on what's happening in the primary market. And those kind of tend to follow. Remember, the market sets the price. So can it be a tailwind? Maybe. You know, we do believe that we could be a tariff beneficiary, actually. But that said, you know, again, just bigger picture, we built a flexible business model, and we've made foundational changes to our business to really help weather many conditions.

Mark: Most of our supply all of our suppliers brought in and put in their core business from domestic closet. So we don't see much of an impact there on the demand side, what we have seen in the past is if prices go up we see our pricing also go up our algorithms to pick that up pretty quickly based on what's happening in the primary market.

Mark: And those kind of bought tend to follow and I remember the market sets the price.

Mark: So can it be a tailwind maybe we do believe that we could be.

Mark: Beneficiary actually.

Mark: But that said you know again, just bigger picture, we built a flexible business model and we've made foundational changes to our business to really help weather many conditions and so what these kinds of uncertainty from potential tariff or whatever that may be less predictable backdrop, our focus really just remain.

Rati Levesque: And so with these kinds of uncertainties, you know, from potential tariffs or whatever that may be less predictable backdrop, our focus really just remains, you know, steadfast on our strategic pillars. So we're optimistic about that. Yeah, and just to sort of add to that, you know, clearly, we, we think we can benefit from, you know, if we end up in an environment where prices start to go up in the primary market, we think that potentially monetizes people to want to, sorry, motivates people to want to monetize their closets, so more supply for us. And we also think our value proposition at the intersection of value and luxury is even more powerful in those circumstances.

Mark: <unk>.

Mark: Steadfast on our strategic pillars, so well.

Mark: We're optimistic about that.

Mark: Yes, and just to sort of add to that clearly we think we can benefit from.

Mark: If we end up in an environment that prices start to go up in the primary market, we think that potentially monetize.

Mark: Cause people to want to I'm, sorry, it motivates people to want to monetize their closet, so more supply for us.

Mark: And we also think our value proposition of the intersection of value and luxury.

Rati Levesque: So we would, you know, we would expect to see more buyers coming to our platform. We're keeping a close eye on these trends. And I think we feel really good about how we're positioned to capitalize on them if and when they develop. Thank you.

Mark: More powerful in those circumstances, so we would we.

Mark: We would expect to see more buyers coming to our platform. We're keeping a close eye on these trends and I think we feel really good.

Mark: About how we're positioned to capitalize on them if and when they develop.

Mark: Thank you.

Mark: Thank you.

Jay Sole: Our next question comes from Jay Sole of UBS, your line is open. Great. Thank you so much. Ajay, I guess I'm just wondering about the second quarter revenue guidance. I think you talked about 9% at the midpoint. I think it was 11% in Q1 and 14% in Q4. I guess, what does the guidance assume in terms of sort of macro and the impact of tariffs and, you know, all this noise that's out there in the market? Yeah, thanks for the question, Jay. I would say on tariffs, you know, just building on what Rathi said earlier, you know, we're a US-based business, our supply is already in consignors' closets.

Speaker Change: Our next question comes from Jay sole of UBS. Your line is open.

Jay Sole: Great. Thank you so much.

Jay Sole: Okay, I guess I'm, just wondering about the second quarter revenue guidance I think you've talked about 9% at the midpoint I think it was 11% in Q1 and 14% in Q4, I guess, what does the guidance assume in terms of sort of macro and the impact of tariffs and all of this noise that's out there in the marketplace.

Jay Sole: Okay.

Jay Sole: Yeah. Thanks for the question Jay I would say on on tariffs just building on what drop he said earlier.

Jay Sole: U S U S based business our supply is already in consignment is closets. So we really don't have any direct impact from tariffs.

Ajay Gopal: So we really don't have any direct impact from tariffs. The points I made earlier are we consider those to be like second order effects. And I think in that sense, we are positioned to benefit from any price escalation, if it were to happen from tariffs. And just to take it back to your point, question on revenue guidance, you know, we've, even if you go back last year, you've seen revenue growth outpacing GMV growth. And this was really from lapping the changes we made and, you know, getting to a more stable take rate. We expect those two to be a lot closer, you know, going forward.

Jay Sole: The points I made earlier are we consider those to be like second order effects and I think in that sense.

Jay Sole: Our position to benefit from any price escalation, if they don't happen from Paris.

Jay Sole: And just to take it back to your question on revenue guidance.

Jay Sole: We've.

Jay Sole: Even if you go back last year, you've seen revenue growth outpacing <unk> growth and this was really from lapping the changes we made.

Jay Sole: Getting to a more stable take rate.

Jay Sole: We expect those two to be a lot closer.

Jay Sole: So when you look at our Q2 guidance with GMV at the midpoint being up 9%, revenue at the midpoint being up 9%, that really speaks to the consistency on how we expect those two metrics to track for going forward. Understood. All right. Thank you so much. Thank you.

Jay Sole: Going forward. So when you look at our Q2 guidance with <unk> at the midpoint being up 9% revenue at the midpoint being up 9% that really speaks to the consistency on how we expect those two metrics to track for going forward.

Understood Alright, thank you so much.

Operator: This concludes our question and answer session and today's conference call. Thank you for participating and you may now disconnect.

Jay Sole: Thank you. This concludes our question and answer session and today's conference call. Thank you for participating and you may now disconnect.

Jay Sole: Right.

Jay Sole: Okay.

Jay Sole: [music].

Operator: Thanks for watching!

Jay Sole: Okay.

Jay Sole: Okay.

Jay Sole: [music].

Jay Sole: