Nina Westervelt/Bloomberg
Shareholders in the
are having a real, real bad day.
The online marketplace for used luxury goods late Monday posted financial results for the first quarter that are not being well received by the Street. The RealReal (ticker: REAL) reported revenue for the quarter of $98.8 million, up 27% from a year earlier and ahead of the Street consensus forecast of $95.9 million. Gross merchandise volume was $327 million, also up 27%. On a non-GAAP basis, the company lost 49 cents a share, in line with the Street consensus.
For the second quarter, the company sees GMV about flat sequentially in the $320 million to $330 million range, but up 75% to 80% from a year earlier—an easy comparison given the deep decline in the business during the pandemic last spring. The company did not provide more detailed guidance on the quarter or any outlook for the full year.
In recent trading, RealReal shares were tumbling 20.4%, at $16.17. The
was down 1.6%.
“After more than a year of navigating the tough challenges created by Covid, we are incredibly pleased to report our return to growth,” CEO Julie Wainwright said in a statement. “As we build on our recent momentum and march toward profitability, we remain focused on driving scale and operating efficiency gains. While the pandemic limits our visibility, with our return to growth and widespread vaccine distribution, we are optimistic our performance will continue to improve significantly throughout 2021.”
The company also announced that Chief Financial Officer Matt Gustke has decided to leave the company to pursue other interests. He will remain CFO until year end, or until a replacement is found. The company has hired an executive recruitment firm to find a successor.
BTIG analyst Marvin Fong responded to the results by cutting his rating on RealReal stock to Neutral from Buy. He notes that this was Real’s first growth quarter since the start of the pandemic, with revenue and GMV both above his estimates. But he writes that he is concerned that the market “could become less forgiving of Real’s lack of profitability.”
Fong notes that the first quarter adjusted Ebitda [earnings before interest, taxes, depreciation, and amortization] loss of $36 million was a little wider than he had expected. While the company has made some improvements to its business model, he adds, the reopening thesis has already played out for Real, and a higher cost structure is pushing out break-even multiple years. Writes Fong: “we see fewer catalysts to drive the stock forward.”
Raymond James analyst Aaron Kessler maintains his Market Perform rating on the shares. He writes in a research note that the flattish second-quarter GMV guidance many have disappointed investors looking for continued sequential improvement. Kessler writes that he remains positive on long-term fundamentals, with the luxury goods market shifting online and the potential for 25% long-term growth, but he adds that the shares are “fairly valued.”
Write to Eric J. Savitz at eric.savitz@barrons.com
