RealReal Is Maintained at Neutral by UBS

The RealReal Inc. REAL posted third-quarter 2024 results, wherein the bottom line surpassed the Zacks Consensus Estimate. Also, both top and bottom lines increased year over year.

The company delivered strong results for the third quarter, with positive supply trends continuing into the fourth quarter. Third-quarter Gross Merchandise Volume (“GMV”), total revenues and adjusted EBITDA all exceeded prior expectations, allowing the company to raise its full-year outlook.

The RealReal, Inc. Price, Consensus and EPS Surprise

The RealReal, Inc. price-consensus-eps-surprise-chart | The RealReal, Inc. Quote

REAL’s Quarterly Performance: Key Insights

REAL posted a GAAP loss of 17 cents per share compared with a loss of 22 cents in the prior year period. The company’s non-GAAP loss per share was 9 cents compared with the loss of 15 cents in third quarter of 2023. The Zacks Consensus Estimate for loss was 21 cents per share.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Total revenues of $147.8 million increased 11% year over year and beat the Zacks Consensus Estimate of $142 million. The GMV reached $433.1 million, indicating a 6.2% increase compared with the same period in 2023.

The trailing three-month active buyers totaled 389,000, marking a 7% increase compared with the same period in 2023. Orders reached 829,000, up 4% from the year-ago period. The average order value was $522, representing a 2% increase year over year.

Gross profit was $110.7 million, up 17.7% year over year. The gross margin increased 430 basis points (bps) year over year to 74.9% in the quarter under review.

Total operating expenses rose 7.5% to $125.3 million from the third quarter of 2023. However, this metric, as a percentage of total revenues, decreased 270 bps year over year to 84.8%.

Adjusted EBITDA was $2.3 million, which increased $9 million year over year. The company’s adjusted EBITDA margin was 1.6% in the third quarter.

REAL’s Q3 Segment Details

This Zacks Rank #3 (Hold) company’s Consignment revenues were $116.9 million, up 13.7% year over year. Direct revenues were $15.6 million, down 10% year over year and Shipping services revenues were $15.2 million, up 17.4% year over year.

The Zacks consensus estimate for Consignment revenues, Direct revenues and Shipping services revenues was pegged at $113.4 million, $14.4 million and $14 million, respectively, for the quarter under review.

The RealReal’s Financial Health Snapshot

The company ended the reported quarter with cash and cash equivalents of $153.2 million, operating lease liabilities (net of current portion) of $91.2 million and total stockholders’ deficit of $345.4 million.

REAL’s Fourth Quarter & 2024 Outlook

For the fourth quarter of 2024, GMV is anticipated between $484 million and $500 million, with total revenues expected in the range of $158 million to $165 million. Adjusted EBITDA is anticipated to be between $6.5 million and $9.5 million.

For 2024, GMV is expected in the band of $1.81 billion to $1.83 billion compared with the prior expectations of $1.79-$1.82 billion. Total revenues are expected to be between $595 million and $602 million. The company’s prior anticipation was $580-$595 million. Adjusted EBITDA is expected to be in the range of $4.7 million to $7.7 million compared with the previous estimation of breakeven to $6 million.

The stock has lost 1.6% in the past three months against the industry’s 3.2% growth.

Key Picks

Some better-ranked stocks are Under Armour, Inc. UAA, Abercrombie & Fitch Co. ANF and Gildan Activewear Inc. GIL.

Under Armour is one of the leading designers, marketers and distributors of authentic athletic footwear, apparel and accessories. The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Under Armour’s fiscal 2025 earnings and sales indicates a decline of 59.3% and 10.6%, respectively, from fiscal 2024’s actuals. UAA has a trailing four-quarter average earnings surprise of 64.2%.

Abercrombie is a specialty retailer of premium, high-quality casual apparel. It has a Zacks Rank of 2 (Buy) at present. ANF delivered a 16.8% earnings surprise in the last reported quarter.

The consensus estimate for Abercrombie’s fiscal 2025 earnings and sales indicates growth of 63.4% and 13%, respectively, from the fiscal 2024 reported levels. ANF has a trailing four-quarter average earnings surprise of 28%.

Gildan Activewear is a manufacturer and marketer of premium quality branded basic activewear. It carries a Zacks Rank #2 at present.

The consensus estimate for Gildan Activewear’s 2024 earnings and sales indicates growth of 15.6% and 1.5%, respectively, from the 2023 reported levels. GIL has a trailing four-quarter average earnings surprise of 5.4%.

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