8-K: The RealReal Appoints Rati Sahi Levesque as CEO, Exceeds Q3 Guidance

The RealReal has appointed Rati Sahi Levesque as its new CEO, effective immediately, and announced preliminary Q3 results that exceeded previous guidance, leading to an updated full-year outlook.

Summary

• The RealReal has appointed Rati Sahi Levesque as the new CEO, replacing John Koryl, effective October 28, 2024.
• Ms. Levesque, previously President and COO, has also been appointed to the Board of Directors.
• The company released preliminary financial results for the third quarter of 2024, showing that Gross Merchandise Value (GMV), Total Revenue, and Adjusted EBITDA exceeded prior guidance.
• Q3 2024 preliminary GMV is $433.1 million, compared to the previous guidance of $410-$430 million.
• Q3 2024 preliminary Total Revenue is $147.8 million, compared to the previous guidance of $135-$142 million.
• Q3 2024 preliminary Adjusted EBITDA is $2.3 million, compared to the previous guidance of $(2) $1 million.
• The company has updated its full-year 2024 guidance, with GMV now expected to be between $1.810 and $1.826 billion, Total Revenue between $595 and $602 million, and Adjusted EBITDA between $4.5 and $7.5 million.
• The company will release its actual third quarter financial results on November 4, 2024.

Sentiment

Score: 8

Explanation: The document conveys a positive sentiment due to the appointment of a well-regarded internal candidate as CEO, the strong preliminary Q3 results, and the raised full-year guidance. The company's focus on profitability and growth is also viewed favorably.

Positives

• The appointment of Rati Sahi Levesque as CEO is seen as a positive move due to her long history with the company and deep understanding of the business.
• The company's Q3 preliminary results exceeded expectations, indicating strong performance and business momentum.
• The updated full-year guidance reflects increased confidence in the company's growth trajectory.
• The company's growth playbook, focused on unlocking supply, is showing positive results in both top-line and margin metrics.
• The RealReal is positioned as a leader in the luxury resale market with significant growth potential.

Negatives

• The departure of John Koryl as CEO and board member could be seen as a negative, although the company has framed it as a transition.
• The company reported a preliminary net loss of $(17.938) million for the three months ended September 30, 2024, although this is before adjustments for EBITDA.

Risks

• The company's forward-looking statements are subject to risks and uncertainties, including macroeconomic conditions, geopolitical instability, and the ability to generate a supply of consigned goods.
• The company's financial results are preliminary and subject to change based on the completion of closing and review procedures.
• The company's adjusted EBITDA is a non-GAAP measure and may not be comparable to similar metrics used by other companies.

Future Outlook

The company has raised its full-year 2024 guidance for GMV, Total Revenue, and Adjusted EBITDA, indicating a positive outlook for the remainder of the year. The company plans to discuss its fourth quarter and full-year outlook in more detail during its earnings conference call next week.

Management Comments

• Karen Katz, Chairperson of the Board, stated that Rati has been pivotal in formulating and executing the recent strategic shifts that have propelled the Company on its path to profitability.
• Rati Sahi Levesque said she is honored to lead The RealReal as its next CEO and believes there is a significant opportunity to leverage the company's brand and community to enhance the client experience and accelerate profitable growth.
• Ms. Levesque also commented that the company's growth playbook, centered on unlocking supply, is working with proof points in both top line and margin metrics.

Industry Context

This announcement comes as the luxury resale market continues to grow, with The RealReal positioning itself as a leader in this space. The appointment of a long-term company leader as CEO suggests a focus on stability and continued growth within the existing business model.

Comparison to Industry Standards

• The RealReal's performance is being compared to other online luxury resale platforms such as ThredUp and Poshmark, although direct comparisons are difficult due to differences in business models and reporting metrics.
• The company's focus on authentication and its large member base of 37 million members are key differentiators in the market.
• The company's improved guidance suggests it is outperforming some of its competitors in terms of growth and profitability.
• The company's adjusted EBITDA is a key metric that is being compared to industry benchmarks, although it is important to note that this is a non-GAAP measure.

Management Changes

Stakeholder Impact

• Shareholders are likely to react positively to the news of the new CEO and the improved financial outlook.
• Employees may experience a period of transition with the change in leadership, but the appointment of an internal candidate may provide stability.
• Customers and consignors are unlikely to be directly impacted by the leadership change, but may benefit from the company's focus on growth and profitability.
• Creditors may view the improved financial outlook as a positive sign of the company's ability to meet its obligations.

Next Steps

• The company will release its actual third quarter financial results after the market closes on November 4, 2024.
• The company will host a conference call at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) on November 4, 2024, to review its financial results.

Key Dates

Keywords

luxury resale, CEO appointment, financial results, GMV, EBITDA, revenue, guidance, Rati Sahi Levesque, The RealReal, John Koryl