The RealReal and ThredUp Aim for EBITDA Breakeven by 2024
Two major players in the online resale market, The RealReal and ThredUp, have showcased promising signs of financial improvement in their recent earnings reports. ThredUp recorded a net loss of $18.8 million in the second quarter of 2023, a significant reduction from the $28.4 million loss in the same period the previous year. Similarly, The RealReal reported a net loss of $41.3 million for the quarter, compared to $53.2 million in 2022.
Investor reactions have been positive, resulting in a double-digit increase in the stock prices of both companies on Wednesday morning.
ThredUp’s CEO, James Reinhart, expressed confidence in the company’s trajectory toward breakeven by Q4, during the earnings call. ThredUp’s revenue also showed an 8 percent rise, reaching $82.7 million. The company highlighted the growth of its “resale-as-a-service” offering, securing 11 new clients in Q2 2023, a notable increase from the approximately 40 brands it had at the end of 2022.
Meanwhile, The RealReal is aiming to achieve EBITDA positivity by 2024, leveraging strategies like a higher-margin consignment structure, new supply partnerships, and on-site advertising.
The RealReal reported net losses of $41.3 million for the second quarter, an improvement from the $53.2 million loss during the same period in the previous year. The company’s total revenue experienced a 15 percent decrease, down to $131 million from $154 million.
In Q2, The RealReal’s adjusted losses before interest, taxes, depreciation, and amortization narrowed to $22.3 million, down from $28.8 million in the same period last year (18.7 percent of total revenue).
The company’s gross merchandise value, a measure of sales, contracted by 7 percent to $423 million in the second quarter, reflecting a strategic focus on higher-margin sales and the reduction of directly purchased products.
The RealReal’s plans for the remainder of the year include the expansion of its ability to sell products without managing physical inventory, utilizing “trusted partners” for the process.
While The RealReal’s gross merchandise volume experienced a 7 percent decrease to $423 million, active buyers increased by 11 percent to 985,000, and the average order value rose to $537, a 10 percent increase.
Closing at $2.17 per share, The RealReal’s stock performance has shown promising signs according to data from Yahoo Finance.