The RealReal (Nasdaq: REAL)—the world’s largest online marketplace
for authenticated, consigned luxury goods—today reported financial
results for its first quarter ended March 31, 2020.
“Since we announced preliminary first quarter results on April
14, our operations continued to be constrained by shelter-in-place
directives, resulting in a significant GMV headwind,” said Julie
Wainwright, CEO of The RealReal. “Faced with the unknown duration
of the pandemic, we’ve focused on reducing operating expenses to
weather these new challenges and preserving liquidity to ensure we
are well positioned for the future. Given the strength of our
balance sheet, customer satisfaction, high buyer and consignor
repeat rates, and technology innovations driving efficiency, I’m
confident we’re well positioned to bounce back quickly once the
economy stabilizes and capitalize on the significant opportunity in
front of us.”
GMV trends performed as expected through early March, with GMV
growth in excess of 30% year over year. However, as local
directives limited operations in the company’s warehouses, GMW was
significantly impacted. Since March 17, when Bay Area
shelter-in-place directives went into effect, and continuing
through mid-April, GMV declined approximately 40%-45% year over
year. During the last two weeks of April, GMV trends have improved
modestly.
Interest in consignment remains strong. When social distancing
prevented in-person White Glove appointments, the company pivoted
and launched virtual appointments to continue delivering
personalized consignment consultations and enable people to
monetize the assets in their homes during these uncertain times.
The RealReal has conducted thousands of virtual appointments since
launching the service and will integrate virtual appointments into
its supply acquisition strategy going forward.
The RealReal B2B vendor program, where the company sources
supply from brands and retailers seeking distribution and demand,
was resilient in March and strength has continued into April.
Interest from business sellers has increased 10X vs. pre-COVID
levels.
Traffic trends have increased modestly in April year over year
despite an approximately two-thirds reduction in the company’s
advertising spend, and the company’s four day sell-through has
rebounded to pre-COVID levels. “Growing traffic and healthy
four-day velocity give us confidence that GMV trends could improve
once shelter-in-place restrictions are removed and we are able to
ramp supply,” continued Wainwright.
First Quarter Financial Highlights
- Gross Merchandise Volume (GMV) was $257.6 million, up 15% year
over year.
- Total Revenue was $78.2 million, up 11% year over year.
- Consignment and Service Revenue was $65.3 million, up 17% year
over year.
- Gross Profit was $49.2 million, up 16% year over year.
- Net Loss was ($38.3) million.
- Adjusted EBITDA was ($30.9) million or (39.5%) of total
revenue.
- GAAP basic and diluted net loss per share was ($0.44).
- Non-GAAP basic and diluted net loss per share was
($0.39).
- At the end of the first quarter, cash, cash equivalents and
short-term investments totaled $303.2 million.
- Since inception through March 31, consignment with The RealReal
saved 14,300 metric tons of carbon and saved 660 million liters of
water.
Other First Quarter Highlights
- Trailing 12 months active buyers reached 601,766, up 32% year
over year.
- Orders reached 574,215, up 15% year over year.
- Average Order Value was $449 compared to $450 in the first
quarter of 2019.
- Consignment Take Rate increased 90bps year over year to
36.2%.
- GMV from repeat buyers was 84.4% compared to 82.4% in the first
quarter of 2019.
Financial OutlookOn March 17, the company
withdrew its outlook for the first quarter and full year 2020 as a
result of the growing impact of the COVID-19 pandemic on its
business. Given limited near-term visibility, the company elects to
not provide an updated financial outlook.
Webcast and Conference CallThe RealReal will
post a shareholder letter on its investor relations website at
https://investor.therealreal.com/financial-information/quarterly-results
in lieu of a live presentation and host a conference call at 2 p.m.
PDT to answer questions regarding its first quarter 2020 financial
results, the shareholder letter and the supporting slides.
Investors and participants can access the call by dialing (866)
996-5385 in the U.S. and (270) 215-9574 internationally. The
passcode for the conference line is 8592508. The call will also be
available via live webcast at investor.therealreal.com along with
the shareholder letter and the supporting slides. An archive of the
webcast conference call will be available shortly after the call
ends. The archived webcast will be available at
investor.therealreal.com.
About The RealReal, Inc. The RealReal is the
world’s largest online marketplace for authenticated, consigned
luxury goods. With a rigorous authentication process overseen by
experts, The RealReal provides a safe and reliable platform for
consumers to buy and sell their luxury items. We have 150+ in-house
gemologists, horologists and brand authenticators who inspect
thousands of items each day. As a sustainable company, we give new
life to pieces by hundreds of brands, from Gucci to Cartier,
supporting the circular economy. We make consigning effortless with
free in-home pickup, drop-off service and direct shipping for
individual consignors and estates. At our stores in LA, NYC and San
Francisco, customers can shop, consign, and meet with our experts.
At our 10 Luxury Consignment Offices, four of which are in our
retail stores, our expert staff provides free valuations.
Investor Relations Contact:Paul BieberHead of
Investor Relationspaul.bieber@therealreal.com
Press Contact:Erin SantyHead of
Communicationspr@therealreal.com
Forward Looking StatementsThis press release
contains forward-looking statements relating to, among other
things, the future performance of The RealReal that are based on
the company's current expectations, forecasts and assumptions and
involve risks and uncertainties. In some cases, you can identify
forward-looking statements by terminology such as “may,” “will,”
“should,” “could,” “expect,” “plan,” anticipate,” “believe,”
“estimate,” “predict,” “intend,” “potential,” “continue,” “ongoing”
or the negative of these terms or other comparable terminology.
These statements include, but are not limited to, statements about
future operating results, including the amounts of our operating
expense and capital expenditure reductions and our strategies,
plans, commitments, objectives and goals, in particular in the
context of the impacts of the COVID-19 pandemic. Actual results
could differ materially from those predicted or implied and
reported results should not be considered as an indication of
future performance. Other factors that could cause or contribute to
such differences include, but are not limited to, the impact of the
COVID-19 pandemic on our operations, any failure to generate a
supply of consigned goods, pricing pressure on the consignment
market resulting from discounting in the market for new goods,
failure to efficiently and effectively operate our merchandising
and fulfillment operations and other reasons.
More information about factors that could affect the company's
operating results is included under the captions “Risk Factors” and
“Management's Discussion and Analysis of Financial Condition and
Results of Operations” in the company's most recent Annual Report
on Form 10-K and subsequent quarterly reports on Form 10-Q, copies
of which may be obtained by visiting the company's Investor
Relations website at https://investor.therealreal.com or the
SEC's website at www.sec.gov. Undue reliance should not be placed
on the forward-looking statements in this press release, which are
based on information available to the company on the date hereof.
The company assumes no obligation to update such statements.
Non-GAAP Financial MeasuresTo supplement our
unaudited and condensed financial statements presented in
accordance with generally accepted accounting principles ("GAAP"),
this earnings release and the accompanying tables and the related
earnings conference call contain certain non-GAAP financial
measures, including Adjusted EBITDA, Adjusted EBITDA as a
percentage of total net revenue ("Adjusted EBITDA Margin"), free
cash flow, non-GAAP net loss attributable to common stockholders,
and non-GAAP net loss per share attributable to common
stockholders, basic and diluted. We have provided a reconciliation
of these non-GAAP financial measures to the most directly
comparable GAAP financial measures in this earnings release.
We do not, nor do we suggest that investors should, consider
such non-GAAP financial measures in isolation from, or as a
substitute for, financial information prepared in accordance with
GAAP. Investors should also note that non-GAAP financial measures
we use may not be the same non-GAAP financial measures, and may not
be calculated in the same manner, as that of other companies,
including other companies in our industry.
Adjusted EBITDA is a key performance measure
that our management uses to assess our operating performance.
Because Adjusted EBITDA facilitates internal comparisons of our
historical operating performance on a more consistent basis, we use
this measure as an overall assessment of our performance, to
evaluate the effectiveness of our business strategies and for
business planning purposes. Adjusted EBITDA may not be comparable
to similarly titled metrics of other companies.
We calculate Adjusted EBITDA as net loss before
interest income, interest expense, other (income) expense
net, provision for income taxes, depreciation and
amortization, further adjusted to exclude stock-based compensation,
and certain one-time expenses. Adjusted EBITDA has certain
limitations as the measure excludes the impact of certain expenses
that are included in our statements of operations that are
necessary to run our business and should not be considered as an
alternative to net loss or any other measure of financial
performance calculated and presented in accordance with GAAP.
In particular, the exclusion of certain expenses in calculating
Adjusted EBITDA and Adjusted EBITDA Margin facilitates operating
performance comparisons on a period-to-period basis and, in the
case of exclusion of the impact of stock-based compensation,
excludes an item that we do not consider to be indicative of our
core operating performance. Investors should, however, understand
that stock-based compensation will be a significant recurring
expense in our business and an important part of the compensation
provided to our employees. Accordingly, we believe that Adjusted
EBITDA and Adjusted EBITDA Margin provide useful information to
investors and others in understanding and evaluating our operating
results in the same manner as our management and board of
directors.
Free cash flow is a non-GAAP financial measure
that is calculated as net cash (used in) provided by operating
activities less net cash used to purchase property and equipment
and capitalized proprietary software development costs. We believe
free cash flow is an important indicator of our business
performance, as it measures the amount of cash we generate.
Accordingly, we believe that free cash flow provides useful
information to investors and others in understanding and evaluating
our operating results in the same manner as our management.
Non-GAAP net loss per share attributable to common
stockholders, basic and diluted is a non-GAAP financial
measure that is calculated as GAAP net loss plus stock-based
compensation expense, provision for income taxes, and nonrecurring
items divided by weighted average shares outstanding. We believe
that adding back stock-based compensation expense and provision for
income taxes, and non-recurring items as adjustments to our GAAP
net loss, before calculating per share amounts for all periods
presented provides a more meaningful comparison between our
operating results from period to period.
THE
REALREAL, INC. |
Statements
of Operations |
(In
thousands, except share and per share data) |
(Unaudited) |
|
For the Three Months Ended March 31, |
|
|
2020 |
|
|
|
2019 |
|
Revenue: |
|
|
|
Consignment and service revenue |
$ |
65,297 |
|
|
$ |
55,575 |
|
Direct revenue |
|
12,942 |
|
|
|
15,007 |
|
Total revenue |
|
78,239 |
|
|
|
70,582 |
|
Cost of
revenue: |
|
|
|
Cost of consignment and service revenue |
|
18,088 |
|
|
|
15,946 |
|
Cost of direct revenue |
|
10,954 |
|
|
|
12,254 |
|
Total cost of revenue |
|
29,042 |
|
|
|
28,200 |
|
Gross
profit |
|
49,197 |
|
|
|
42,382 |
|
Operating
expenses: |
|
|
|
Marketing |
|
12,922 |
|
|
|
11,733 |
|
Operations and technology |
|
40,737 |
|
|
|
31,544 |
|
Selling, general and administrative |
|
35,104 |
|
|
|
22,319 |
|
Total operating expenses (1) |
|
88,763 |
|
|
|
65,596 |
|
Loss from
operations |
|
(39,566 |
) |
|
|
(23,214 |
) |
Interest
income |
|
1,286 |
|
|
|
405 |
|
Interest
expense |
|
(20 |
) |
|
|
(131 |
) |
Other income
(expense), net |
|
8 |
|
|
|
(282 |
) |
Loss before
provision for income taxes |
|
(38,292 |
) |
|
|
(23,222 |
) |
Provision
for income taxes |
|
— |
|
|
|
— |
|
Net
loss |
$ |
(38,292 |
) |
|
$ |
(23,222 |
) |
Accretion of
redeemable convertible preferred stock to redemption value |
$ |
— |
|
|
$ |
(3,355 |
) |
Net loss
attributable to common stockholders |
$ |
(38,292 |
) |
|
$ |
(26,577 |
) |
Net loss per
share attributable to common stockholders, basic and diluted |
$ |
(0.44 |
) |
|
$ |
(3.05 |
) |
Weighted
average shares used to compute net loss per share attributable to
common stockholders, basic and diluted |
|
86,588,796 |
|
|
|
8,705,664 |
|
|
|
|
|
(1) Includes
stock-based compensation as follows: |
|
|
|
Marketing |
|
188 |
|
|
|
68 |
|
Operating and technology |
|
1,478 |
|
|
|
490 |
|
Selling, general and administrative (2) |
|
1,744 |
|
|
|
551 |
|
Total |
|
3,410 |
|
|
|
1,109 |
|
|
|
|
|
(2) Includes compensation expense related to stock sales by current
and former employees in March 2019. |
THE
REALREAL, INC. |
Condensed
Balance Sheets |
(In
thousands, except share and per share data) |
(Unaudited) |
|
March 31, 2020 |
|
December 31, 2019 |
Assets |
|
|
|
Current
assets |
|
|
|
Cash and cash equivalents |
$ |
134,662 |
|
|
$ |
154,446 |
|
Short-term investments |
|
168,592 |
|
|
|
208,811 |
|
Accounts receivable |
|
3,089 |
|
|
|
7,779 |
|
Inventory, net |
|
24,916 |
|
|
|
23,599 |
|
Prepaid expenses and other current assets |
|
11,273 |
|
|
|
13,804 |
|
Total current assets |
|
342,532 |
|
|
|
408,439 |
|
Property and
equipment, net |
|
59,637 |
|
|
|
55,831 |
|
Operating
lease right-of-use assets |
|
124,346 |
|
|
|
— |
|
Other
assets |
|
3,025 |
|
|
|
2,660 |
|
Total assets |
$ |
529,540 |
|
|
$ |
466,930 |
|
Liabilities and Stockholders’ Equity |
|
|
|
Current
liabilities |
|
|
|
Accounts payable |
$ |
9,916 |
|
|
$ |
11,159 |
|
Accrued consignor payable |
|
33,489 |
|
|
|
52,820 |
|
Operating lease liabilities, current portion |
|
14,209 |
|
|
|
— |
|
Other accrued and current liabilities |
|
43,941 |
|
|
|
54,567 |
|
Total current liabilities |
|
101,555 |
|
|
|
118,546 |
|
Operating
lease liabilities, net of current portion |
|
120,174 |
|
|
|
— |
|
Other
noncurrent liabilities |
|
1,038 |
|
|
|
9,456 |
|
Total liabilities |
|
222,767 |
|
|
|
128,002 |
|
Stockholders’ equity: |
|
|
|
Common stock, $0.00001 par value; 500,000,000 shares authorized as
of March 31, 2020 and December 31, 2019; 86,850,694 and 85,872,320
shares issued and outstanding as of March 31, 2020 and December 31,
2019, respectively |
|
1 |
|
|
|
1 |
|
Additional paid-in capital |
|
699,249 |
|
|
|
693,426 |
|
Accumulated other comprehensive income |
|
321 |
|
|
|
7 |
|
Accumulated deficit |
|
(392,798 |
) |
|
|
(354,506 |
) |
Total stockholders’ equity |
|
306,773 |
|
|
|
338,928 |
|
Total liabilities and stockholders’ equity |
$ |
529,540 |
|
|
$ |
466,930 |
|
|
|
|
|
THE
REALREAL, INC. |
Condensed
Statements of Cash Flows |
(In thousands) |
(Unaudited) |
|
Three Months Ended March 31, |
|
|
2020 |
|
|
|
2019 |
|
Cash
flows from operating activities: |
|
|
|
Net loss |
$ |
(38,292 |
) |
|
$ |
(23,222 |
) |
Adjustments to reconcile net loss to cash used in operating
activities: |
|
|
|
Depreciation and amortization |
|
4,145 |
|
|
|
2,808 |
|
Stock-based compensation expense |
|
3,410 |
|
|
|
1,109 |
|
Amortization of operating lease right-of-use assets |
|
4,121 |
|
|
|
— |
|
Bad debt expense |
|
455 |
|
|
|
321 |
|
Compensation expense related to stock sales by current and former
employees |
|
— |
|
|
|
819 |
|
Change in fair value of convertible preferred stock warrant
liability |
|
— |
|
|
|
280 |
|
Accretion of unconditional endowment grant liability |
|
23 |
|
|
|
26 |
|
Accretion of debt discounts |
|
— |
|
|
|
7 |
|
Amortization of premiums (discounts) on short-term investments |
|
(207 |
) |
|
|
40 |
|
Changes in operating assets and liabilities: |
|
|
|
Accounts receivable |
|
4,235 |
|
|
|
(4,050 |
) |
Inventory, net |
|
(1,317 |
) |
|
|
(173 |
) |
Prepaid expenses and other current assets |
|
2,356 |
|
|
|
(2,388 |
) |
Other assets |
|
(365 |
) |
|
|
(111 |
) |
Operating lease liability |
|
(2,721 |
) |
|
|
— |
|
Accounts payable |
|
(2,206 |
) |
|
|
797 |
|
Accrued consignor payable |
|
(19,331 |
) |
|
|
1,292 |
|
Other accrued and current liabilities |
|
(8,865 |
) |
|
|
(475 |
) |
Other noncurrent liabilities |
|
(412 |
) |
|
|
349 |
|
Net cash used in operating activities |
|
(54,971 |
) |
|
|
(22,571 |
) |
Cash
flow from investing activities: |
|
|
|
Purchases of short-term investments |
|
(73,280 |
) |
|
|
— |
|
Proceeds from maturities of short-term investments |
|
114,020 |
|
|
|
12,873 |
|
Capitalized proprietary software development costs |
|
(1,480 |
) |
|
|
(1,686 |
) |
Purchases of property and equipment |
|
(6,486 |
) |
|
|
(3,743 |
) |
Net cash provided by investing activities |
|
32,774 |
|
|
|
7,444 |
|
Cash
flow from financing activities: |
|
|
|
Proceeds from issuance of redeemable convertible preferred stock,
net of issuance costs |
|
— |
|
|
|
43,572 |
|
Proceeds from issuance of convertible preferred stock, net of
issuance costs |
|
— |
|
|
|
26,279 |
|
Proceeds from exercise of stock options and common stock
warrants |
|
2,564 |
|
|
|
1,332 |
|
Payment of deferred offering costs |
|
— |
|
|
|
(222 |
) |
Taxes paid related to restricted stock vesting |
|
(151 |
) |
|
|
— |
|
Repayment of debt |
|
— |
|
|
|
(1,250 |
) |
Net cash provided by financing activities |
|
2,413 |
|
|
|
69,711 |
|
Net (decrease) increase in cash, cash equivalents and restricted
cash |
|
(19,784 |
) |
|
|
54,584 |
|
Cash, cash equivalents, and restricted cash |
|
|
|
Beginning of period |
|
154,446 |
|
|
|
45,627 |
|
End of period |
$ |
134,662 |
|
|
$ |
100,211 |
|
|
|
|
|
Supplemental disclosures of cash flow
information |
|
|
|
Cash paid
for interest |
$ |
4 |
|
|
$ |
98 |
|
The following table reflects the reconciliation of net loss to
Adjusted EBITDA for each of the periods indicated (in
thousands):
|
Three Months Ended March 31, |
|
|
2020 |
|
|
|
2019 |
|
Adjusted EBITDA Reconciliation: |
|
|
|
Net loss |
$ |
(38,292 |
) |
|
$ |
(23,222 |
) |
Depreciation and amortization |
|
4,145 |
|
|
|
2,808 |
|
Stock-based compensation |
|
3,410 |
|
|
|
1,109 |
|
Legal settlement |
|
1,110 |
|
|
|
— |
|
Compensation expense related to stock sales by current and former
employees |
|
— |
|
|
|
819 |
|
Interest income |
|
(1,286 |
) |
|
|
(405 |
) |
Interest expense |
|
20 |
|
|
|
131 |
|
Other (income) expense, net |
|
(8 |
) |
|
|
282 |
|
Provision for income taxes |
|
— |
|
|
|
— |
|
Adjusted EBITDA |
$ |
(30,901 |
) |
|
$ |
(18,478 |
) |
|
|
|
|
A reconciliation of GAAP net loss to non-GAAP net loss
attributable to common stockholders, the most directly comparable
GAAP financial measure, in order to calculate non-GAAP net loss
attributable to common stockholders per share, basic and diluted,
is as follows (in thousands, except share and per share data):
|
Three Months Ended March 31, |
|
|
2020 |
|
|
|
2019 |
|
Net loss |
$ |
(38,292 |
) |
|
$ |
(23,222 |
) |
Stock-based compensation |
|
3,410 |
|
|
|
1,109 |
|
Compensation expense related to stock sales by current and former
employees |
|
— |
|
|
|
819 |
|
Accretion of redeemable convertible preferred stock |
|
— |
|
|
|
(3,355 |
) |
Remeasurement of preferred stock warrant liability |
|
— |
|
|
|
280 |
|
Legal settlement |
|
1,110 |
|
|
|
— |
|
Provision for income taxes |
|
— |
|
|
|
— |
|
Non-GAAP net loss attributable to common stockholders |
$ |
(33,772 |
) |
|
$ |
(24,369 |
) |
Weighted-average common shares outstanding used to calculate
Non-GAAP net loss attributable to common stockholders per share,
basic and diluted |
|
86,588,796 |
|
|
|
8,705,664 |
|
Non-GAAP net loss attributable to common stockholders per share,
basic and diluted |
$ |
(0.39 |
) |
|
$ |
(2.80 |
) |
|
|
|
|
The following table presents a reconciliation of net cash used
in operating activities to free cash flow for each of the periods
indicated (in thousands):
|
Three Months
Ended March 31, |
|
|
2020 |
|
|
|
2019 |
|
Net cash
used in operating activities |
$ |
(54,971 |
) |
|
$ |
(22,571 |
) |
Purchase of property and equipment and capitalized proprietary
software development costs |
|
(7,966 |
) |
|
|
(5,429 |
) |
Free Cash
Flow |
$ |
(62,937 |
) |
|
$ |
(28,000 |
) |
|
|
|
|
Key Financial and Operating Metrics:
|
March 31, 2018 |
June 30, 2018 |
September 30, 2018 |
December 31, 2018 |
March 31, 2019 |
June 30, 2019 |
September 30, 2019 |
December 31, 2019 |
March 31, 2020 |
|
(In
thousands, except AOV and percentages) |
|
GMV |
$ |
158,378 |
|
$ |
162,954 |
|
$ |
170,923 |
|
$ |
218,495 |
|
$ |
224,116 |
|
$ |
228,487 |
|
$ |
252,766 |
|
$ |
302,975 |
|
$ |
257,606 |
|
NMV |
$ |
113,347 |
|
$ |
115,916 |
|
$ |
123,550 |
|
$ |
153,776 |
|
$ |
160,538 |
|
$ |
164,782 |
|
$ |
186,617 |
|
$ |
219,508 |
|
$ |
184,625 |
|
Consignment
and Services Revenue |
$ |
40,319 |
|
$ |
41,426 |
|
$ |
44,968 |
|
$ |
53,894 |
|
$ |
55,575 |
|
$ |
60,070 |
|
$ |
69,245 |
|
$ |
82,522 |
|
$ |
65,297 |
|
Direct
Revenue |
$ |
7,400 |
|
$ |
7,021 |
|
$ |
8,255 |
|
$ |
10,449 |
|
$ |
15,007 |
|
$ |
12,139 |
|
$ |
12,271 |
|
$ |
11,209 |
|
$ |
12,942 |
|
Number of
Orders |
|
356 |
|
|
359 |
|
|
409 |
|
|
471 |
|
|
498 |
|
|
505 |
|
|
577 |
|
|
637 |
|
|
574 |
|
Take
Rate |
|
35.1 |
% |
|
35.5 |
% |
|
36.4 |
% |
|
34.9 |
% |
|
35.3 |
% |
|
36.6 |
% |
|
36.8 |
% |
|
36.2 |
% |
|
36.2 |
% |
Active
Buyers |
|
326 |
|
|
352 |
|
|
379 |
|
|
416 |
|
|
456 |
|
|
492 |
|
|
543 |
|
|
582 |
|
|
602 |
|
AOV |
$ |
445 |
|
$ |
453 |
|
$ |
418 |
|
$ |
464 |
|
$ |
450 |
|
$ |
453 |
|
$ |
438 |
|
$ |
476 |
|
$ |
449 |
|
% of GMV
from Repeat Buyers |
|
81.5 |
% |
|
82.9 |
% |
|
82.9 |
% |
|
81.6 |
% |
|
82.4 |
% |
|
83.1 |
% |
|
81.8 |
% |
|
82.9 |
% |
|
84.4 |
% |
|
|
|
|
|
|
|
|
|
|
RealReal (NASDAQ:REAL)
Historical Stock Chart
From Jun 2024 to Jul 2024
RealReal (NASDAQ:REAL)
Historical Stock Chart
From Jul 2023 to Jul 2024