The RealReal is gaining traction and seeing growth as shoppers increasingly prioritise sustainability when making fashion choices, blunting the stigma of buying secondhand goods. But even as the company inks new brand partnerships and attracts new customers, profitability remains out of reach.

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The RealReal’s Q3 revenue rose 55 per cent to $80.5 million, beating analysts’ forecasts of $75.9 million. The high-end resale platform’s gross merchandise value was up 48 per cent to $252.8 million, also ahead of expectations. Orders rose 41 per cent compared to a year ago.

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“Environmental impact and extending the life of luxury items are key motivators for consigning with us,” chief executive Julie Wainwright said during a conference call with analysts on Monday.

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The RealReal has received a boost as more designer brands consider resale as a component of their sustainability strategies. In October, the San Francisco-based company announced a partnership with Burberry that encourages customers to consign their goods on the platform in exchange for high-touch customer service. Meanwhile, more customers are getting comfortable buying higher-priced goods like watches and jewellery, CFO Matt Gustke said during the call, a shift that drove average order value up to $438, from $418 during the year-ago period.

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Net losses rose to $25.3 million, however, compared to $21.9 million during the year-ago period. The costs of marketing, acquiring new customers and building out technological capabilities are still outpacing the amount of revenue generated. The RealReal’s shares, which gained in after-hours trading following the Q3 earnings report, are down since its June IPO. “We don’t expect the profitability debate to be solved anytime soon,” Credit Suisse analysts said in a recent report.

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A recent report that cast doubt on The RealReal’s authentication process likely prompted an analyst’s question about the process. Wainwright maintained that the RealReal’s standards are best in class, but investments are still being made. “We continue to invest in automation, training and technology to stay ahead of counterfeiters,” she said.

At the same time, the company is investing in its offline footprint. Its fourth store will open in San Francisco in the first half of 2020, Wainwright said, adding that while revenues from stores is a relatively small piece of the business, additional retail locations can drive up the size of orders, as in-store purchases tend to be larger.

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“The nice thing about The RealReal is this facelift for vintage,” says Jane Hali & Associates analyst Jessica Ramirez. “If you go into The RealReal, you feel like you’re shopping in a luxury store. It’s not like digging through to find that unique piece in a vintage shop.”

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As The RealReal invests in expansion, and profitability remains out of reach, analysts are watching for proof of concept, and how resale impacts the earnings of other companies, like Tapestry and Capri, whose affordable luxury products are seen as vulnerable.

“These are still early days for online resale platforms,” says Alex Fitzgerald, a manager in the consumer and retail practice of A.T. Kearney. “We’re watching their ability to grow active users and percentage of repeat purchasers alongside revenue growth, and keeping a close eye on references to marketing spend and costs associated with authentication.”

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