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The RealReal’s Repeat Buyers Push Revenue Over the $1 Billion Mark

Online consignment merchant The RealReal slightly narrowed its net loss in the fourth quarter, even as its selling power grew stronger.

In a Nutshell: The RealReal, an online marketplace for authenticated, consigned luxury goods and a top player in the resale world, surpassed $1 billion in gross merchandise volume (GMV) in 2019, while also making progress toward profitability.

Over the trailing 12 months, active buyers reached 581,738, up 40 percent year over year and orders reached 637,112, up 35 percent year.

The company said its goal is to be the safest marketplace to buy pre-owned luxury goods and its processes will continue to evolve throughout 2020 as it integrates more technology to stay ahead of counterfeiters.

The RealReal also continues to deepen its sustainability commitments, pledging to become carbon neutral in 2021 as part of the CEO Carbon Neutral Challenge issued by Gucci president and CEO Marco Bizzarri. Since its founding through the end of 2019, The RealReal has offset 13,300 metric tons of carbon and saved 608 million liters of water.

Sales: Gross merchandise volume (GMV) for the fourth quarter ended Dec. 31 was up 39 percent to $303 million year over year, with all top-level categories experiencing strong growth. Total revenue was $97.3 million, up 57 percent year over year. Consignment and service revenue grew 46 percent to $80.7 million.

For the full year, GMV rose 42 percent to $1.01 billion compared to the previous year. Total revenue increased 53 percent to $318.0 million.

Earnings: The company posted a net loss for the quarter of $21.37 million compared to a net loss of $22.18 million in the year-ago period.

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Gross profit in the quarter increased 48 percent to $62.5 million from a year earlier. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was $12.7 million or 13.1 percent of total revenue.

For the year, the net loss expanded to $96.55 million from a net loss of $75.77 million in 2018. Gross profit for the year was $203.2 million, up 48 percent year over year. Adjusted EBITDA was $73 million or 23 percent of total revenue.

CEO’s Take: Julie Wainwright, CEO and founder of The RealReal, said: “Our Q4 results exemplify our long standing approach to balancing growth and operating leverage. At the same time, Q4 adjusted EBITDA margin improved by approximately 17 percentage points year over year. Additionally, 82.9 percent of GMV was driven by repeat buyers in the quarter, a rare attribute of our marketplace that underscores our buyer loyalty and the strength of our flywheel.”

“In 2020, we will continue to invest in growth while driving meaningful operating leverage as we continue to revolutionize luxury resale and deliver value to our consignors and our buyers,” Wainwright continued. “The RealReal continues to invest and innovate in authentication. We believe we have the most rigorous authentication process in the marketplace. Every item we sell is subject to that process. The impact of automation and technology has dramatically changed the authentication team’s day-to-day activities, allowing them to process more products per person while also expanding the depth of our authentication process, training and quality control procedures.”