The RealReal Races to Accelerate Profit Timeline
● The resale company is fighting to “demonstrate the efficacy of our business model.”
The RealReal Inc. has something to prove.
The resale pioneer — led by co-interim chief executive officers Rati Sahi Levesque and Robert Julian since founder Julie Wainwright left the company in June — continued to post steep losses in the third quarter and is trying to prove it can make money sooner than later.
“As we continue to focus on profitable growth, our objective is to accelerate our timeline to profitability and demonstrate the efficacy of our business model,” said the co-interim CEO's in a letter to shareholders. “We believe there are levers in our business that may enable us to reach profitability with lower top-line growth than previously projected.”
That includes overhauling the consignor commission structure to “incentivize the consignment of higher-value items,” optimizing pricing by refining the company's dynamic algorithms, more aggressively cutting costs and capitalizing on new revenue streams.
They said The RealReal is exploring “a warranty program, advertising technology and data monetization” as revenue drivers.
“These opportunities are in early stages, but we believe show promise,” the pair said.
The company is doing what it can to win back investors, who are proving hard to impress — especially with the economy flagging.
Shares of The RealReal fell 11.9 percent to $1.23 in regular trading Tuesday, leaving the company with a market capitalization of just $117 million.
And quarterly results drove only a modest rebound in after-market trading, which saw shares inch up just 0.4 percent.
Third-quarter net losses tallied $47.3 million, an improvement from losses of $57.2 million a year earlier.
Adjusted losses per diluted share came in at 38 cents, slightly better than the 41 percent deficit analysts had penciled in.
Adjusted losses before interest, taxes, depreciation and amortization totaled $28.2 million, or 19.7 percent of revenues, compared with $31.5 million, or 26.5 percent of revenues a year earlier.
Revenues for the quarter ended Sept. 30 rose 20 percent to $143 million as gross merchandise volume also rose 20 percent to $441 million.
The company saw its average order volume fall as consumers shifted from high-value items to more ready-to-wear pieces.
The RealReal ended the quarter with cash and cash equivalents of $300 million.
In the fourth quarter, The RealReal is expecting adjusted losses before interest, taxes, depreciation and amortization ranging from $27 million to $23 million on revenues of $145 million to $165 million.