The RealReal, Inc.

Good day and thank you for standing by. 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 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Caitlin Howe, Senior Vice President of Finance. Please go ahead.

Thank you, Operator. Joining me today to discuss our results for the period ended March 31st, 2025, our Chief Executive Officer and President, Ratsi 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 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 Ratsy 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'm 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 better. 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 closets. 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 2024, we delivered our first ever full year of positive adjusted EBITDA, 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 consigners. 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 confinement. The elements of our growth playbook, sales, marketing, and stores, came together in the first quarter to drive healthy supply trends. Ajay will review our financial results later in the call, but I'd like to note a few key highlights from the quarter. 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. 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. Adjusted EBITDA increased to positive 4 million, an increase of 6 million versus Q1 of last year. And we delivered our highest number of new consignors in over two years. Today, I'll discuss how our three strategic pillars, unlocking supply through our growth playbook, driving operational efficiencies, and obsessing over service are fueling our strong results and progress. Let's start with the growth playbook. 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 stores. 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 mix as we aim to successfully address changes in customer tastes and behaviors. Notably, our sales team drove strong consigner growth this past quarter as a result of our revamped incentive structure and a focused approach on consigner acquisition. 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 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 consignor and buyer engagement and generate leads for our sales and retail team. For us, stores offer a curated experience and provide consignors with access to our experts for valuations, for fine jewelry, and watches. Similar to our approach with the sales team, we measure success in our retail locations through the lens of supply generation and new consignor acquisition. In Q1, stores contributed a quarter of all new consignors. Our stores and sales team are highly integrated, working together on in-store and off-site events, consigner referrals, and expert appointments, which drive high-value supply. 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. 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. These partnerships are crucial for sourcing high-value items and expanding our access to desirable inventory. Our referral programs are now driving over $1 million of incremental supply per month. 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. 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 dropship 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. Moving to our next strategic pillar, operational efficiencies. 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 growth. 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 Athena. Units managed by Athena are processed faster. 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 consignors. 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 trends. As of the end of last year, the majority of our units are launched with algorithmic pricing. The next step in our development is applying our AI expertise and increased precision into our discounting cadence. The 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. Early test results indicate that we can drive better balance between price and sell-through using algorithmic discounting. We are leveraging AI and technology to improve speed, reduce human intervention, and drive operational efficiencies. Turning to our third strategic pillar, obsess over service. We provide best-in-class service to our buyers and consignors. 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 platform. Our members spend a lot of time with us, many clocking more than 40 hours per year on our app. Here are just a few examples of how we're enhancing engagement and fostering a sense of community. In Q1, we added obsession counts, similar to the count of likes or hearts on other platforms. to 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, creates more urgency and gamification. We are also building community through initiatives like our successful Substack Strategy, which provides valuable fashion content and fosters connection among our users and fans. 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 discounting. In 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 a 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. 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. With that, I'll turn the call over to Ajay to discuss our operational results and our financial outlook.