The RealReal Inc (NASDAQ:REAL) reported financial results for the third quarter of 2025, delivering a mixed performance against analyst expectations. The luxury resale marketplace posted record sales but fell short on profitability, leading to a notable market reaction.
Earnings Versus Estimates
The company's top-line performance demonstrated significant strength, while its bottom-line results presented a more complex picture.
- Revenue: The RealReal reported total revenue of $173.6 million for the quarter, a 17% increase compared to the same period last year. This figure came in just shy of the analyst consensus estimate of $173.9 million, representing a very narrow miss.
- Earnings Per Share: On a GAAP diluted basis, the company reported a net loss per share of $0.49. This was substantially wider than the analyst estimate for a non-GAAP EPS loss of $0.0583. The significant difference is largely attributed to a non-cash, $44 million adjustment related to the change in the fair value of the company's warrant liability.
Market Reaction and Price Action
Following the earnings release, the market's response was decisively negative. The stock experienced a sharp decline in after-hours trading, plummeting over 12%. This immediate sell-off suggests investor disappointment, likely focused on the wider-than-expected net loss and the impact of the warrant liability adjustment on profitability metrics, overshadowing the robust revenue growth.
Third Quarter 2025 Performance Highlights
Beyond the headline EPS and revenue figures, the earnings report highlighted several areas of operational strength and strategic progress.
- Gross Merchandise Value (GMV) reached a record $520 million, a 20% year-over-year increase.
- Adjusted EBITDA was $9.3 million, representing a margin of 5.4%. This is a significant improvement of 380 basis points compared to the prior year, indicating stronger underlying operational profitability.
- Active Buyers on a trailing twelve-month basis grew to 1.024 million, a 7% increase.
- Average Order Value (AOV) rose 12% to $584.
Forward-Looking Guidance
The company provided an optimistic outlook for the fourth quarter and raised its full-year 2025 guidance, which in some areas aligns with or exceeds current analyst expectations.
- Q4 2025 Revenue Guidance: The RealReal expects revenue between $188 million and $191 million. The midpoint of this range, $189.5 million, surpasses the current analyst sales estimate of $183.2 million for the quarter.
- Full-Year 2025 Revenue Guidance: The company raised its full-year revenue forecast to a range of $687 million to $690 million. This updated guidance appears to be in line with the analyst consensus estimate of $687.94 million.
- Adjusted EBITDA: For the full year, the company anticipates Adjusted EBITDA between $37.7 million and $38.7 million, signaling a continued focus on profitable growth.
Conclusion
The RealReal's third quarter presents a tale of two narratives. On one hand, the company is achieving impressive top-line growth, expanding its customer base, and demonstrating improved operational efficiency through a significantly higher Adjusted EBITDA margin. The raised guidance for the fourth quarter suggests management confidence in continued momentum. On the other hand, the large GAAP net loss, driven by accounting for its warrant liability, spooked investors, leading to a sharp decline in the stock price. The market's reaction indicates that despite strong operational progress, profitability remains a key focus for investors.
For a detailed look at historical earnings and future analyst estimates, you can review the data here.
Disclaimer: This article is for informational purposes only and is not intended as investment advice. All investment decisions involve risk, and readers should conduct their own research before making any investment decisions.
