The RealReal, Inc. Common Stock 2026 Q2 Earnings Call

Thank you, operator. Joining me today to discuss our results for the period ended June 30, 2026, are Chief Executive Officer and President, Rati Levesque, and Chief Financial Officer, Ajay Gopal. 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 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. 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.

I would now like to turn the call over to Rati Levesque, Chief Executive Officer of The RealReal.

Good afternoon. Thank you for joining us. Q2 was another standout quarter for our business. We delivered GMV of $617 million, an all-time high for TRR, up 22% year-over-year and marking our fourth consecutive quarter of GMV growth above 20%. Revenue grew 17% to $193 million, trailing 12-month active buyers accelerated for the fourth consecutive quarter, up 11% year-over-year. Along with strong top-line growth, we also delivered meaningful margin expansion. Adjusted EBITDA margin of 7% was up nearly 300 basis points versus last year. These results reflect the disciplined execution of our strategy. Quarter after quarter, we're up-leveling the customer experience, deepening trust, and compounding our advantage. Our buyers are higher quality, our sellers are more engaged, and the platform connecting them gets smarter every quarter. Given the strength of what we're seeing, we are confidently raising our full-year outlook.

The RealReal is a marketplace deliberately designed for the luxury consumer and the way they want to be served. We've developed deep expertise across the full range of luxury, establishing the trust that comes from handling our members' most valued possessions. Every part of our platform, from sourcing and authentication to pricing and merchandising, is built to deliver an unparalleled service, and it will continue to evolve as our customers do. As the resale market grows, trust is what separates leaders from the rest. We take possession of every item, we authenticate it, and we stand behind our work, a standard most marketplaces structurally cannot match. That's what brought a consignor to us in Q2 with a $2.5 million F.P. Journe watch, and it's the same standard that serves a member discovering luxury for the first time.

AI is unlocking the power of that data across pricing, search, authentication, and the tools our members use to manage the value of what they own. We see where luxury demand is moving in real time. When demand moves, we're positioned to secure the supply and have the data and pricing intelligence to meet it. Let's discuss the progress we're making against our strategic pillars, starting with our growth playbook. Our sales team sets us apart. We don't wait for supply to come to us. Our people go out and source it, which means our assortment is curated, not accumulated. Year-to-date supply per sales rep is up 15% versus last year, and the relationships they build deepen over time, with consignors coming back and bringing more of their closet with them.

The same relationships and trust that bring consignors back also bring us new ones through referrals. Our Real Partners program connects us with high-value supply through professionals like stylists and real estate agents who already have the trust of luxury consumers. Sellers referred through our Real Partners program consign four times the value of our average new consignor. The program demonstrates the network effects in our business, and we see meaningful runway ahead. As we discussed last quarter, we're building an asset-light international supply network. In the second quarter, we onboarded two large Japanese vendors onto our dropship program. The success of our sales team, partnerships, and our newer supply initiatives is bringing more high-quality supply every quarter. On the marketing side, we are acquiring higher-quality buyers.

New buyers, up double digits in the second quarter, are showing stronger lifetime value and are more likely to turn into consignors, becoming RealRealers and reinforcing our flywheel. In Q2, we launched our Be a RealRealer campaign, putting flywheel messaging at the center of our brand marketing. We're investing in marketing with a healthy balance across brand building and performance channels. We see real opportunity as resale adoption accelerates and younger generations discover luxury through our platform. We are also enriching the product data we share with paid channels, helping search platforms match the right buyer to the right item. These new buyers are spending more on their first purchase. That same depth of data is why we lead when consumers turn to AI to look for pre-owned luxury. Our stores deepen consignor relationships, deliver high-quality supply, and build trust in the communities we serve.

We are expanding our store footprint strategically in 2026. We look forward to opening our first Boston area store this fall and an additional neighborhood store in the L.A. market, one of our largest and fastest-growing regions. These new stores, along with our San Francisco location, which opened earlier this year, brings our total store count to 20. Going forward, we'll continue to target one to three new stores per year. Turning to our second pillar, obsess over service. On the buyer side, we recently started testing an AI-powered conversational shopping agent in partnership with Google. We have over 1 million one-of-a-kind listings and more than 40 million members. We are always finding ways to make product discovery more intuitive. For example, if you're looking for a dress for a fall wedding in upstate New York, our agent will deliver a specific and personalized set of results.

We're also using AI and our proprietary data to automatically add richer detail to every listing. Information like occasion, collection, and trend data used to require manual input. This means items are more discoverable both on and off platform. On the seller side, more than two-thirds of our consignors tell us they prefer a full-service experience. They are looking for a trusted partner who handles everything. This is what our full-service model delivers. You hand us the item, and we do the rest. Every day, we work to make our experience even better, faster, and more transparent, as well as being easier to engage with. First, our price estimator tool is now built on a centralized AI-powered pricing architecture that gives our sales team and our consignors consistent, real-time visibility into the current market value of their items.

Our sales team is actively using the tool, and we've launched it in a test for 20% of our consignors. We're also redesigning our digital onboarding for new consignors, removing friction from the seller funnel, and making it more conversational from the first interaction. We continue to build the feature set for My Closet, the product manifestation of our vision to become the personal advisor of the closet. We're building the system of record for our customers' luxury assets and expect to begin rolling out the broader consumer-facing experience in the coming quarters. Turning to operational excellence. Athena, our AI-enabled intake system, continues to scale, and we remain on track for our year-end target of nearly 50% of items flowing fully through it. We're also starting to process higher-value items that previously required manual handling and attribution. A year in, Athena has shown us there's even more opportunity.

We've begun experimenting with the next iteration, extending AI and automation into parts of intake that weren't in the initial phase and removing more manual steps. Ultimately, Athena and our broader technology investments are helping to remove multiple dollars per unit from our processing costs, increasing speed to sell, and allowing us to scale with minimal incremental headcount investment. We're delivering growth while continuing to drive operating leverage across the business. Entering the year, we said 2026 would be the year our advantages begin to compound. That statement is starting to become reality. Each part of our platform, from authentication and pricing to supply and member experience, makes the other stronger. Looking at the broader landscape, we're leading a meaningful shift in how luxury consumers shop.

In a recent survey of our customers, over 70% of respondents said that The RealReal elevates their personal style, allowing them to better express who they are. They're prioritizing quality, individuality, and lasting value over trend cycles. The RealReal is more than a marketplace. With access to decades of fashion across thousands of designers, we help our customers discover, shop with confidence, and maximize the value of their closets. Before I turn the call over to Ajay, I want to thank our team for delivering an exceptional quarter in Q2. Results like this require execution across every part of the business, and I'm incredibly proud of our team. Your dedication continues to raise the bar for how we show up for our consignors and buyers and reinforces my conviction in where we're headed. With that, I'll turn the call over to Ajay.

Thank you, Rati. Good afternoon, everyone. I am pleased to review our second quarter results, which demonstrate in the financials what Rati just described. Our strategy is delivering results, and we are beginning to see the compounding effects we've been investing towards. You can see it in the durability of our growth and the operating leverage in our model. Q2 GMV of $617 million increased 22% year-over-year and accelerated to 37% on a two-year stacked basis. We delivered adjusted EBITDA of $13.5 million, or 7% of revenue, expanding 290 basis points year-over-year. Orders increased 8%, and average order value grew 13% to $659. Q2 revenue of $193 million increased 17%, with consignment revenue up 15% and direct revenue up 26%, supported by strong supply through the quarter, with strength across our sales team, stores, and direct channels.