RealReal Earnings Exceeds Q2 Estimates But Downward Revised FY22 Outlook Falls Short

RealReal Inc REAL reported second-quarter FY22 revenue growth of 47.2% year-on-year, to $154.43 million, beating the consensus of $154.05 million.

Adjusted loss per share was $(0.40), beating the consensus of $(0.44).

The gross merchandise volume (GMV) increased 30% Y/Y to $454 million, with 84.7% of GMV from repeat buyers. Trailing 12 months active buyers reached 889,000, an increase of 22%Y/Y.

Orders reached 934,000, an increase of 39% Y/Y. The average order value (AOV) was $486 (-7% Y/Y), driven by a year-over-year decrease in average selling prices (ASPs).

Gross profit rose 38.3% Y/Y to $87.69 million, and the margin was 56.8%, down 366 bps.

The loss from operations reduced to $(50.98) million, from $(64.8) million in 2Q21. Adjusted EBITDA loss was $28.81 million, down from a loss of $32.89 million.

The company states that top-line growth experienced some pressure during the quarter due to a sales labor-related supply shortfall and a mix of products sold more reflective of our pre-COVID mix.

Net cash used in operating activities year-to-date totaled $(87.9) million, and free cash outflow was $(104.12) million. It held $315.89 million in cash and equivalents as of June 30, 2022.

3Q22 Outlook: RealReal expects GMV of $430 million - $450 million, Revenue of $145 million- $155 million vs. consensus of $164.43 million; and Adjusted EBITDA of $(30) million - $(26) million.

FY22 Outlook, lowered: The company expects GMV of $1.85 billion - $1.9 billion (prior expectations $2 billion to $2.1 billion), Revenue of $615 million- $635 million (prior of $635 million to $665 million) vs. consensus of $653.7 million; and Adjusted EBITDA of $(110) million - $(100) million.

Price action: REAL shares are trading lower by 11.48% at $2.70 during the post-market session on Tuesday.