During a recent earnings call, The RealReal’s executives shared how AI tools are enhancing sales, efficiency, and customer service, contributing to record-high revenues.
During a quarterly earnings call on February 20, executives at The RealReal, an online marketplace focused on resale luxury goods, detailed how artificial intelligence (AI) tools have played an integral role in enhancing sales, operational efficiency, and customer service within the company. Rati Levesque, the President and CEO of The RealReal, stated in prepared remarks that the company is leveraging its substantial data and technological capabilities to utilize advancements in AI for various purposes, including identifying potential consignors, authenticating items, determining optimal pricing, and improving customer search experiences.
One notable implementation is the Smart Sales AI, which aids luxury managers in assessing which clients are likely to consign goods and the timing of those consignments. According to Levesque, The RealReal has experienced a 15% increase in value generated per sales representative in 2024. “Tools like Smart Sales allow our luxury managers to service more consignors and improve efficiency,” Levesque stated. He also mentioned plans for a more extensive rollout of this initiative in 2025, given the early encouraging results.
Additionally, The RealReal employs AI for processing various luxury items, such as fashion, jewelry, watches, art, and home goods. In a significant development, the company is set to launch its Athena AI initiative in 2025. This program will utilize image recognition to authenticate items and automatically pre-populate key attributes for listings on its website. Levesque noted that by the end of 2025, Athena AI will impact approximately half of the items passing through The RealReal’s authentication centers. He highlighted that, “Cost leverage from improvements in automation took hold in 2024, helping our teams to process units quickly and efficiently, cutting over one full day of processing time.”
The company’s AI-driven pricing engine has also proven effective, with 85% of The RealReal’s items launched at the end of 2024 being influenced by this technology. Levesque remarked that the data-driven approach has “been central to our efforts to improve pricing transparency, an important element in building further trust with our sellers.”
Financially, The RealReal achieved record-high quarterly revenue of $164 million for the fourth quarter, marking a 14% year-over-year growth. The gross merchandise value (GMV) increased by 12% to $504 million, while the number of active buyers rose by 7% to 408,000, and the average order value (AOV) climbed by 6% to $579. Furthermore, the company reported its first year of profitable Adjusted EBITDA.
Looking ahead, The RealReal anticipates continued growth, forecasting increases in both its GMV and total revenue for the full year of 2025. The company predicts its GMV will grow between 7% and 9%, rising from $1.83 billion in 2024 to a range of $1.96 billion to $1.99 billion in 2025. Revenue is expected to rise by 7% to 10%, increasing from $600 million in 2024 to a projected $645 million to $660 million in 2025. Ajay Gopal, the Chief Financial Officer, expressed confidence in the company’s growth strategy, asserting that the team is making strides in addressing the approximately $200 billion luxury resale total addressable market in the U.S. He emphasized, “Our results in 2024 reinforce our confidence that our growth playbook is working…”
Source: Noah Wire Services
