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Introduction & Market Context
Luxury resale platform TheRealReal (NASDAQ:REAL) presented its Q2 2025 financial results on August 7, 2025, showcasing record performance that has sparked significant investor enthusiasm. The stock surged 31.03% in premarket trading to $7.22, reflecting a dramatic shift in sentiment compared to the 9.33% drop following Q1 results. The company’s strong performance comes amid growing consumer interest in sustainable luxury consumption and circular fashion economy.
Quarterly Performance Highlights
TheRealReal delivered exceptional results across key metrics in the second quarter, exceeding analyst expectations and its own guidance. The company achieved record gross merchandise value (GMV) of $504 million, a 14% year-over-year increase, while revenue reached an all-time high of $165 million, also up 14% compared to Q2 2024.
As shown in the following chart of quarterly GMV growth:
A significant milestone was reached as active buyers exceeded 1 million for the first time, representing 6% growth on a trailing 12-month basis. This achievement demonstrates TheRealReal’s expanding market reach and growing consumer adoption of luxury resale.
The buyer growth trend is illustrated in this chart:
The company’s financial performance showed substantial improvement in profitability metrics. Adjusted EBITDA reached $6.8 million or 4.1% of total revenue, increasing by $8.6 million versus the prior year and representing a margin expansion of over 530 basis points.
The revenue and profitability trends are highlighted in the following chart:
Detailed Financial Analysis
TheRealReal’s gross profit increased 14% year-over-year to $123 million, resulting in a gross margin of 74.3%, slightly up from 74.1% in Q2 2024. Notably, consignment gross margin improved to 89.3%, up 93 basis points from the previous year.
Operating expenses as a percentage of revenue improved significantly across all categories, with total operating expenses decreasing by 690 basis points year-over-year. Operations and technology expenses decreased from 45.1% to 41.8% of revenue, while selling, general and administrative expenses fell from 32.5% to 29.1%.
The operating expense improvements are illustrated in this chart:
Despite these improvements, the company still reported a net loss of $11.4 million for the quarter, though this represents a substantial improvement from the $16.7 million loss in Q2 2024. The path to profitability is becoming clearer as operational efficiencies continue to take hold.
The reconciliation from net loss to Adjusted EBITDA shows the components driving improved profitability:
Strategic Initiatives & Technology
TheRealReal’s performance is being driven by three strategic pillars: unlocking supply through its growth playbook, driving operational efficiency, and obsessing over service. The company highlighted how these elements work together to create a powerful business flywheel.
The company’s strategy is supported by its proprietary technology and data assets accumulated over 14+ years, which enable sophisticated pricing algorithms, authentication processes, and personalized customer experiences.
As shown in this overview of the company’s key strategic advantages:
A major focus has been the implementation of AI-driven operational improvements, with the company’s Athena intake system now processing approximately 20% of units. This initiative is on track to reach 30-40% by year-end and is already contributing to reduced processing costs per unit.
The company’s Q2 highlights across its three strategic pillars are summarized in this comprehensive overview:
Forward-Looking Statements
Following the strong Q2 performance, TheRealReal raised its full-year 2025 outlook. The company now projects GMV between $2.030 billion and $2.045 billion, revenue between $667 million and $674 million, and Adjusted EBITDA between $29 million and $32 million.
For Q3 2025, the company expects GMV of $495-502 million, revenue of $167-170 million, and Adjusted EBITDA of $6.1-7.1 million, indicating continued momentum.
The updated guidance is presented in the following outlook summary:
The raised outlook reflects management’s confidence in the company’s ability to continue executing its strategic initiatives while driving toward sustainable profitability. The significant stock price increase in premarket trading suggests investors share this optimism, particularly after the company’s ability to exceed expectations in Q2.
TheRealReal appears to be at an inflection point, with its focus on operational efficiencies and AI-driven improvements beginning to yield tangible financial results while maintaining strong top-line growth. As the company continues to scale its platform and leverage its technological advantages, it is positioning itself to capitalize on the growing luxury resale market.
Full presentation:
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