The RealReal — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total revenue for Q3 2026 was $206.1 million, a 19% increase compared to $173.6 million in Q3 2025.
• Gross merchandise value (GMV) reached $642 million in Q3 2026, up 23% year-over-year from $519.8 million.
• Consignment revenue grew 18% to $159.1 million, while Direct revenue grew 19% to $27.4 million.
• Gross profit was $154.4 million, an increase of $25.5 million compared to the prior year period.
• Gross margin improved 64 basis points to 74.9% in Q3 2026 from 74.3% in Q3 2025.
• Net income was $16.0 million (7.8% of revenue) in Q3 2026, compared to a net loss of $54.1 million (31.1% of revenue) in Q3 2025; Q3 2026 net income includes a $21.2 million non-cash adjustment for the change in fair value of warrant liability.
• Adjusted EBITDA was $17.0 million (8.3% margin) in Q3 2026, up from $9.3 million (5.4% margin) in Q3 2025.
• GAAP basic net income per share was $0.13 in Q3 2026 versus a loss of $0.47 per share in Q3 2025; diluted GAAP net loss per share was $(0.04) versus $(0.49).
• Non-GAAP diluted net income per share was $0.02 in Q3 2026 compared to a loss of $0.04 in Q3 2025.
• Net cash provided by operating activities for the nine months ended September 30, 2026, was $10.0 million, compared to $12.5 million used in the same period in 2025.
• Free cash flow for the nine months ended September 30, 2026, was negative $22.1 million, compared to negative $37.1 million in the prior year period.
• Cash and cash equivalents were $130.4 million as of September 30, 2026, down from $151.2 million as of December 31, 2025.
• Total liabilities were $758.1 million as of September 30, 2026, compared to $824.6 million as of December 31, 2025.
• Convertible Senior Notes, net, stood at $231.9 million as of September 30, 2026.
• Non-convertible notes, net, were $147.7 million as of September 30, 2026.
• Warrant liability decreased to $53.5 million as of September 30, 2026, from $114.4 million as of December 31, 2025.

Guidance and Future Outlook:

• The company raised its full-year 2026 guidance based on market conditions as of October 29, 2026.
• Full-year 2026 GMV guidance is raised to $2.585–$2.600 billion.
• Full-year 2026 Total Revenue guidance is raised to $806–$810 million.
• Full-year 2026 Adjusted EBITDA guidance is raised to $71.1–$72.6 million.
• Fourth Quarter 2026 GMV guidance is $720–$735 million.
• Fourth Quarter 2026 Total Revenue guidance is $218–$222 million.
• Fourth Quarter 2026 Adjusted EBITDA guidance is $27.5–$29.0 million.
• Management noted the inability to reconcile forward-looking Adjusted EBITDA to net income due to uncertainty regarding payroll tax expenses on employee stock transactions and other components.

Business Segments and Product Lines:

• Active buyers increased 13% over the trailing twelve months to 1,152,000.
• Average order value (AOV) increased 8% to $629 in Q3 2026.
• Orders grew 15% in Q3 2026, representing the strongest quarterly order growth since 2022.
• The company operates a full-service consignment model across fashion, fine jewelry, watches, art, and home.
• The platform utilizes AI and proprietary technology for authentication, operations optimization, and pricing.

Market and Competitive Landscape:

• The RealReal describes itself as the world's largest online marketplace for authenticated resale luxury goods.
• The company reports a community of 45 million members.
• Management cites a fundamental shift in how consumers shop for luxury fashion, with customers using the platform to discover, track ownership, and decide when to sell.
• The company has sold more than 55 million items over 15 years of proprietary data.

Risks and Challenges:

• Forward-looking statements involve risks including macroeconomic trends, inflation, and geopolitical instability.
• Risks include the ability to successfully complete plans to strengthen the balance sheet.
• Potential challenges include failure to generate a supply of consigned goods, pricing pressure from discounting in the new goods market, and operational inefficiencies in merchandising and fulfillment.
• Labor shortages and the impact of generative AI are cited as potential factors affecting results.

Management Commentary and Tone:

• CEO Rati Levesque described Q3 as another record quarter with all-time highs in GMV, revenue, and orders.
• Management expressed conviction in the business direction, citing the expansion of adjusted EBITDA margin by 290 basis points.
• The company completed a key refinancing earlier in the month to extend its debt maturity profile and position the business to continue deleveraging.
• Management views the platform as the "new operating system for luxury fashion ownership."

Other Key Points:

• The company completed a key refinancing extending its debt maturity profile.
• The press release includes a conference call and webcast scheduled for October 29, 2026, at 2:00 p.m. Pacific Time.
• The company reported a $21.2 million non-cash gain related to the change in fair value of warrant liability in Q3 2026.
• The company reported a $3.7 million gain on extinguishment of debt in Q3 2025, which is excluded from Adjusted EBITDA.
• One-time expenses of $1.7 million related to employee severance costs were recorded in Q3 2025.
• The company reported a loss related to a warehouse fire in Q3 2025, which was netted against insurance proceeds.