Secondhand luxury marketplace The RealReal (NASDAQ: REAL) met Wall Street’s revenue expectations in Q1 CY2025, with sales up 11.3% year on year to $160 million. On the other hand, next quarter’s revenue guidance of $159 million was less impressive, coming in 0.8% below analysts’ estimates. Its non-GAAP loss of $0.08 per share was in line with analysts’ consensus estimates.
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The RealReal (REAL) Q1 CY2025 Highlights:
- Revenue: $160 million vs analyst estimates of $159.8 million (11.3% year-on-year growth, in line)
- Adjusted EPS: -$0.08 vs analyst estimates of -$0.08 (in line)
- Adjusted EBITDA: $4.11 million vs analyst estimates of $3.98 million (2.6% margin, relatively in line)
- The company reconfirmed its revenue guidance for the full year of $652.5 million at the midpoint
- EBITDA guidance for the full year is $25 million at the midpoint, below analyst estimates of $29.7 million
- Operating Margin: -8%, up from -12.5% in the same quarter last year
- Free Cash Flow was -$35.85 million, down from $22.91 million in the previous quarter
- Active Buyers : 985,000, up 601,000 year on year
- Market Capitalization: $797.3 million
"We are pleased to report strong first quarter results and our focus remains steadfast,” said Rati Levesque, Chief Executive Officer of The RealReal.
Company Overview
Founded by consignment store aficionado Julie Wainwright, The RealReal (NASDAQ: REAL) is an online marketplace for buying and selling secondhand luxury goods.
Sales Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Unfortunately, The RealReal’s 6.2% annualized revenue growth over the last three years was tepid. This was below our standard for the consumer internet sector and is a rough starting point for our analysis.
This quarter, The RealReal’s year-on-year revenue growth was 11.3%, and its $160 million of revenue was in line with Wall Street’s estimates. Company management is currently guiding for a 9.7% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 8.5% over the next 12 months. Although this projection indicates its newer products and services will catalyze better top-line performance, it is still below average for the sector.
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Active Buyers
User Growth
As an online marketplace, The RealReal generates revenue growth by increasing both the number of users on its platform and the average order size in dollars.
Over the last two years, The RealReal’s active buyers , a key performance metric for the company, increased by 18.5% annually to 985,000 in the latest quarter. This growth rate is among the fastest of any consumer internet business and indicates its offerings have significant traction. 
In Q1, The RealReal added 601,000 active buyers , leading to 157% year-on-year growth. The quarterly print was higher than its two-year result, suggesting its new initiatives are accelerating user growth.
Revenue Per User
Average revenue per user (ARPU) is a critical metric to track because it measures how much the company earns in transaction fees from each user. ARPU also gives us unique insights into a user’s average order size and The RealReal’s take rate, or "cut", on each order.
The RealReal’s ARPU fell over the last two years, averaging 5.5% annual declines. This isn’t great, but the increase in active buyers is more relevant for assessing long-term business potential. We’ll monitor the situation closely; if The RealReal tries boosting ARPU by taking a more aggressive approach to monetization, it’s unclear whether users can continue growing at the current pace. 
This quarter, The RealReal’s ARPU clocked in at $162.47. It declined 56.6% year on year, worse than the change in its active buyers .
Key Takeaways from The RealReal’s Q1 Results
We were very impressed by The RealReal’s number of users this quarter. We were also happy its EBITDA outperformed Wall Street’s estimates. On the other hand, its full-year EBITDA guidance missed significantly and its EBITDA guidance for next quarter fell short of Wall Street’s estimates. Overall, this quarter could have been better. The stock traded down 10.5% to $6.53 immediately after reporting.
The RealReal may have had a tough quarter, but does that actually create an opportunity to invest right now? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.