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The RealReal, the most prominent online luxury resale platform in the US, has accomplished EBITDA (earnings before interest, tax, depreciation and amortisation) profitability in the fourth quarter of 2023, the first time since its IPO in 2019, the company announced Thursday.
In that same period, the secondhand site posted revenue of $143 million, a 10 percent year-over-year dip. Net losses totalled $22 million, or negative 15 percent of revenue, compared to $39 million or 24.2 percent of total revenue in the fourth quarter of 2022.
Adjusted EBITDA, meanwhile, reached $1.4 million, or 1 percent of total revenue, compared to negative $20.2 million last year, or about 13 percent of revenue.
Full year 2023 revenue dropped 9 percent to $549 million, reflecting an anticipated downturn due to the company’s prioritisation of profitability. Investors are pleased; shares of The RealReal spiked in value Thursday evening, climbing by more than 30 percent in after-hours trading.
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The RealReal embarked on its quest for EBITDA profitability in 2022, scaling back low-margin inventory by adjusting its commission structure to favour higher-value pieces like handbags and jewellery. The company also invested in automation, AI-powered pricing and other sales efficiencies, which contributed to its cash flow positive status in the fourth quarter.
“During a time where the retail industry struggled, we outperformed,” The RealReal chief executive John Koryl said in a statement. “The changes we made have laid out a powerful path forward. What we have planned for the next three to five years will ensure the growth of our business and the viability of the resale sector.”
Learn more:
Can Fashion Resale Ever Be a Profitable Business?
Companies like The RealReal and ThredUp promised Wall Street that with scale comes profit. But operational costs and competition have kept them in the red.
