The RealReal (Nasdaq: REAL)—the world’s largest online marketplace
for authenticated, resale luxury goods—today reported financial
results for its third quarter ended Sept. 30, 2021. The company
reported strong top-line growth as well as solid bottom-line
improvements. Gross merchandise value (GMV) increased 50% and 46%
compared to the same periods in 2020 and 2019, respectively. Third
quarter gross profit per order was approximately $94, an increase
of $4 per order, or a 4% improvement year-over-year. In addition,
the company achieved leverage in all major expense categories in
the third quarter of 2021 compared to prior year.
“We are pleased to announce strong results for the third
quarter. Our product supply has ramped nicely driven by at-home
concierge appointments and our expanded retail footprint. Based on
what we know today, we believe the operational and supply impacts
to our business from COVID-19 are effectively behind us, and we are
well-positioned for a strong holiday season. Additionally, we
believe The RealReal’s unique business model is largely insulated
from the supply chain shortages and certain of the inflationary
impacts many retailers are experiencing,” said Julie Wainwright,
founder and CEO of The RealReal.
Wainwright continued, “Like many retailers, we experienced
certain pressures to our operations during the third quarter,
namely elevated shipping costs and staffing challenges in our
authentication centers. To address, we implemented multiple
initiatives, including shipping diversification and last-mile
optimization as well as training and development programs and a
continued focus on automation. The investments we made in 2019 and
2020 to move toward expanded automation in our authentication
centers have already begun to show a strong return on
investment.”
During the third quarter, The RealReal announced a new Chief
Financial Officer, Robert Julian. As an operations- and
strategy-focused CFO, Julian has a track record of driving
shareholder value and building world-class finance
organizations.
“Overall, our business is experiencing very positive trends and
we believe these trends will continue through the end of the year
and into 2022. While we are in the early innings of delivering
operating expense leverage, we believe the company is starting to
see the benefits of our previous investments, which will create
leverage as we drive toward profitability in the coming quarters,”
said Wainwright.
In mid-2021, the company began reporting GMV and average order
value (AOV) results, among other top-line metrics, and the company
committed to providing these results on a monthly basis through the
end of 2021. The company intends to resume a more typical annual
and quarterly guidance cadence in 2022 along with committing to a
timeline to reach Adjusted EBITDA profitability.
Third Quarter Financial Highlights
- GMV was $368 million, an increase of 50% and 46% compared to
the same periods in 2020 and 2019, respectively.
- Total Revenue was $119 million, an increase of 53% and 46%
compared to the same periods in 2020 and 2019, respectively.
- Net Loss was ($57 million) for the third quarter of 2021,
compared to ($44 million) and ($25 million) in the same periods in
2020 and 2019, respectively.
- Adjusted EBITDA was ($31.5 million) or (26.5%) of total revenue
compared to (37.6%) of total revenue in the third quarter of 2020
and (26.0%) of total revenue in the third quarter of 2019. Adjusted
EBITDA includes $0.4 million of COVID-related expenses and $1.4
million of redundant occupancy expenses and productivity ramp
associated with our relocation of our authentication center from
Brisbane, Calif., to Phoenix.
- GAAP basic and diluted net loss per share was ($0.62).
- Non-GAAP basic and diluted net loss per share was ($0.47).
- At the end of the third quarter, cash and cash equivalents
totaled $445 million.
- GMV growth driven by strong supply growth and buyer engagement
in the third quarter of 2021
- Trailing 12-months (TTM) active buyers reached 772,000, an
increase of 25% compared to the same period in 2020.
- Orders reached 757,000, an increase of 38% compared to the same
period in 2020.
- AOV was $486, an increase of 9% compared to the same period in
2020. Higher AOV was driven by a 10% year-over-year increase in
units per transaction (UPT), partially offset by slightly lower
average selling price (ASP). UPT benefited from a seasonal shift
toward women’s ready-to-wear categories.
- GMV from repeat buyers was 84% compared to 83% in the third
quarter of 2020.
- Revenue growth driven by GMV growth and higher direct sales,
partially offset by lower take rate
- Consignment and Service Revenue was $89.5 million, an increase
of 39% and 30% compared to the same periods in 2020 and 2019,
respectively.
- Direct Revenue was $29.4 million, an increase of 115% and 139%
compared to the same periods in 2020 and 2019, respectively.
- Consignment Take Rate decreased 50 basis points year-over-year
to 34.9%, but increased 40 basis points sequentially compared to
the second quarter of 2021, reflecting normalized category mix
partially offset by certain adjustments in the period.
- Gross Profit per Order increases 4% year-over-year due to
higher AOV and higher direct gross margins
- Gross Profit was $71.1 million, an increase of 44% compared to
the same period in 2020.
- Gross Profit per Order improved $4 year-over-year to $94 per
order.
- Reducing fashion’s impact
- Since The RealReal’s inception in 2011 through Sept. 30, 2021,
consignment with The RealReal saved nearly 22,000 metric tons of
carbon and more than 1 billion liters of water.
Webcast and Conference Call
The RealReal will post a stockholder letter on its investor
relations website
at investor.therealreal.com/financial-information/quarterly-results and
host a conference call at 2:00 p.m. Pacific Time (5:00 p.m. Eastern
Time) to answer questions regarding its third quarter and
year-to-date results. Investors and analysts can access the call by
dialing (866) 996-5385 in the U.S. or (270) 215-9574
internationally. The passcode for the call is 1875975. The call
will also be available via live webcast
at investor.therealreal.com along with the stockholder
letter and supporting slides.
An archive of the webcast conference call will be available
shortly after the call ends at investor.therealreal.com.
About The RealReal, Inc.
The RealReal is the world’s largest online marketplace for
authenticated, resale luxury goods, with more than 24 million
members. 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 hundreds of
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 thousands of brands across numerous
categories—including women's and men's fashion, fine jewelry and
watches, art and home—in support of the circular economy. We make
selling effortless with free virtual appointments, in-home pickup,
drop-off and direct shipping. We do all of the work for consignors,
including authenticating, using AI and machine learning to
determine optimal pricing, photographing and listing their items,
as well as handling shipping and customer service. At our 18 retail
locations, including our 15 shoppable stores, customers can sell,
meet with our experts and receive free valuations.
Investor Relations Contact:Caitlin HoweVice
President, Investor RelationsIR@therealreal.com
Press Contact:Erin SantyHead of
Communicationspr@therealreal.com
Forward Looking Statements
This 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
investments or reductions and our strategies, plans, commitments,
objectives and goals, in particular in the context of the impacts
of the COVID-19 pandemic and the recent social unrest. 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 and the recent social unrest on our operations
and our business environment, 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 for the year ended December 31, 2020, a copy 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 Measures
To 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, non-GAAP net loss per share attributable to common
stockholders, basic and diluted, and Contribution Profit. 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 (benefit) for income taxes, depreciation and
amortization, further adjusted to exclude stock-based compensation,
employer payroll tax on employee stock transactions, and certain
one-time expenses. The employer payroll tax expense related to
employee stock transactions are tied to the vesting or exercise of
underlying equity awards and the price of our common stock at the
time of vesting, which may vary from period to period independent
of the operating performance of our business. 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 and the
related employer payroll tax on employee stock transactions,
excludes an item that we do not consider to be indicative of our
core operating performance. Investors should, however, understand
that stock-based compensation and the related employer payroll tax
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 (benefit) for income
taxes, and non-recurring items divided by weighted average shares
outstanding. We believe that adding back stock-based compensation
expense and related payroll tax, provision (benefit) 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)
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Revenue: |
|
|
|
|
|
|
|
Consignment and service revenue |
$ |
89,451 |
|
|
|
$ |
64,152 |
|
|
|
$ |
246,985 |
|
|
|
$ |
176,006 |
|
|
Direct revenue |
29,387 |
|
|
|
13,645 |
|
|
|
75,582 |
|
|
|
37,111 |
|
|
Total revenue |
118,838 |
|
|
|
77,797 |
|
|
|
322,567 |
|
|
|
213,117 |
|
|
Cost of revenue: |
|
|
|
|
|
|
|
Cost of consignment and service revenue |
22,714 |
|
|
|
16,304 |
|
|
|
64,352 |
|
|
|
47,253 |
|
|
Cost of direct revenue |
25,025 |
|
|
|
11,964 |
|
|
|
65,365 |
|
|
|
31,678 |
|
|
Total cost of revenue |
47,739 |
|
|
|
28,268 |
|
|
|
129,717 |
|
|
|
78,931 |
|
|
Gross profit |
71,099 |
|
|
|
49,529 |
|
|
|
192,850 |
|
|
|
134,186 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
Marketing |
15,708 |
|
|
|
15,186 |
|
|
|
44,378 |
|
|
|
37,747 |
|
|
Operations and technology |
61,135 |
|
|
|
40,578 |
|
|
|
172,906 |
|
|
|
117,858 |
|
|
Selling, general and administrative |
44,912 |
|
|
|
35,384 |
|
|
|
132,504 |
|
|
|
101,937 |
|
|
Legal settlement |
500 |
|
|
|
— |
|
|
|
11,788 |
|
|
|
1,110 |
|
|
Total operating expenses (1) |
122,255 |
|
|
|
91,148 |
|
|
|
361,576 |
|
|
|
258,652 |
|
|
Loss from operations |
(51,156 |
) |
|
|
(41,619 |
) |
|
|
(168,726 |
) |
|
|
(124,466 |
) |
|
Interest income |
55 |
|
|
|
448 |
|
|
|
249 |
|
|
|
2,350 |
|
|
Interest expense |
(6,072 |
) |
|
|
(2,406 |
) |
|
|
(15,374 |
) |
|
|
(2,810 |
) |
|
Other income (expense), net |
5 |
|
|
|
— |
|
|
|
22 |
|
|
|
(89 |
) |
|
Loss before provision for income
taxes |
(57,168 |
) |
|
|
(43,577 |
) |
|
|
(183,829 |
) |
|
|
(125,015 |
) |
|
Provision (benefit) for income
taxes |
28 |
|
|
|
(17 |
) |
|
|
83 |
|
|
|
38 |
|
|
Net loss attributable to common
stockholders |
$ |
(57,196 |
) |
|
|
$ |
(43,560 |
) |
|
|
$ |
(183,912 |
) |
|
|
$ |
(125,053 |
) |
|
Net loss per share attributable
to common stockholders, basic and diluted |
$ |
(0.62 |
) |
|
|
$ |
(0.50 |
) |
|
|
$ |
(2.02 |
) |
|
|
$ |
(1.43 |
) |
|
Weighted average shares used to
compute net loss per share attributable to common stockholders,
basic and diluted |
91,859,603 |
|
|
|
87,869,321 |
|
|
|
90,995,285 |
|
|
|
87,176,677 |
|
|
|
|
|
|
|
|
|
|
(1) Includes stock-based
compensation as follows: |
|
|
|
|
|
|
|
Marketing |
$ |
628 |
|
|
|
$ |
705 |
|
|
|
$ |
1,924 |
|
|
|
$ |
1,228 |
|
|
Operating and technology |
5,543 |
|
|
|
2,892 |
|
|
|
15,789 |
|
|
|
7,222 |
|
|
Selling, general and administrative |
6,421 |
|
|
|
3,775 |
|
|
|
18,611 |
|
|
|
8,461 |
|
|
Total |
$ |
12,592 |
|
|
|
$ |
7,372 |
|
|
|
$ |
36,324 |
|
|
|
$ |
16,911 |
|
|
THE REALREAL,
INC.Condensed Balance Sheets(In
thousands, except share and per share data)(Unaudited)
|
September 30,2021 |
|
December 31,2020 |
Assets |
|
|
|
Current assets |
|
|
|
Cash and cash equivalents |
$ |
444,809 |
|
|
|
$ |
350,846 |
|
|
Short-term investments |
— |
|
|
|
4,017 |
|
|
Accounts receivable, net |
6,770 |
|
|
|
7,213 |
|
|
Inventory |
63,876 |
|
|
|
42,321 |
|
|
Prepaid expenses and other current assets |
22,319 |
|
|
|
17,072 |
|
|
Total current assets |
537,774 |
|
|
|
421,469 |
|
|
Property and equipment, net |
83,928 |
|
|
|
63,454 |
|
|
Operating lease right-of-use
assets |
146,852 |
|
|
|
118,136 |
|
|
Other assets |
2,857 |
|
|
|
2,050 |
|
|
Total assets |
$ |
771,411 |
|
|
|
$ |
605,109 |
|
|
Liabilities and
Stockholders’ Equity |
|
|
|
Current liabilities |
|
|
|
Accounts payable |
$ |
8,246 |
|
|
|
$ |
14,346 |
|
|
Accrued consignor payable |
60,366 |
|
|
|
57,053 |
|
|
Operating lease liabilities, current portion |
15,229 |
|
|
|
14,999 |
|
|
Other accrued and current liabilities |
84,921 |
|
|
|
61,862 |
|
|
Total current liabilities |
168,762 |
|
|
|
148,260 |
|
|
Operating lease liabilities, net
of current portion |
145,787 |
|
|
|
115,084 |
|
|
Convertible senior notes,
net |
344,245 |
|
|
|
149,188 |
|
|
Other noncurrent liabilities |
1,900 |
|
|
|
1,284 |
|
|
Total liabilities |
660,694 |
|
|
|
413,816 |
|
|
Stockholders’ equity: |
|
|
|
Common stock, $0.00001 par value; 500,000,000 shares
authorized as of September 30, 2021 and December 31,
2020; 92,289,799 and 89,301,664 shares issued and
outstanding as of September 30, 2021 and December 31,
2020, respectively |
1 |
|
|
|
1 |
|
|
Additional paid-in capital |
826,649 |
|
|
|
723,302 |
|
|
Accumulated other comprehensive income |
— |
|
|
|
11 |
|
|
Accumulated deficit |
(715,933 |
) |
|
|
(532,021 |
) |
|
Total stockholders’ equity |
110,717 |
|
|
|
191,293 |
|
|
Total liabilities and stockholders’ equity |
$ |
771,411 |
|
|
|
$ |
605,109 |
|
|
THE REALREAL,
INC.Condensed Statements of Cash Flows(In
thousands)(Unaudited)
|
Nine Months Ended September 30, |
|
2021 |
|
2020 |
Cash flows from operating
activities: |
|
|
|
Net loss |
$ |
(183,912 |
) |
|
|
$ |
(125,053 |
) |
|
Adjustments to reconcile net loss to cash used in operating
activities: |
|
|
|
Depreciation and amortization |
17,840 |
|
|
|
13,673 |
|
|
Stock-based compensation expense |
36,324 |
|
|
|
16,911 |
|
|
Reduction of operating lease right-of-use assets |
14,765 |
|
|
|
12,003 |
|
|
Bad debt expense |
637 |
|
|
|
661 |
|
|
Accrued interest on convertible notes |
1,525 |
|
|
|
1,496 |
|
|
Accretion of debt discounts and issuance costs |
9,854 |
|
|
|
1,268 |
|
|
Loss on retirement of property and equipment |
404 |
|
|
|
— |
|
|
Other adjustments |
10 |
|
|
|
(75 |
) |
|
Changes in operating assets and liabilities: |
|
|
|
Accounts receivable, net |
(194 |
) |
|
|
2,559 |
|
|
Inventory |
(21,555 |
) |
|
|
4,927 |
|
|
Prepaid expenses and other current assets |
(5,330 |
) |
|
|
(4,626 |
) |
|
Other assets |
(807 |
) |
|
|
578 |
|
|
Operating lease liability |
(12,548 |
) |
|
|
(8,710 |
) |
|
Accounts payable |
(6,220 |
) |
|
|
(4,164 |
) |
|
Accrued consignor payable |
3,313 |
|
|
|
(8,330 |
) |
|
Other accrued and current liabilities |
21,951 |
|
|
|
1,015 |
|
|
Other noncurrent liabilities |
556 |
|
|
|
(150 |
) |
|
Net cash used in operating activities |
(123,387 |
) |
|
|
(96,017 |
) |
|
Cash flow from investing
activities: |
|
|
|
Purchases of short-term investments |
— |
|
|
|
(73,280 |
) |
|
Proceeds from maturities of short-term investments |
4,000 |
|
|
|
222,217 |
|
|
Proceeds from sale of short-term investments |
— |
|
|
|
7,932 |
|
|
Capitalized proprietary software development costs |
(7,455 |
) |
|
|
(6,640 |
) |
|
Purchases of property and equipment |
(30,303 |
) |
|
|
(15,685 |
) |
|
Net cash (used in) provided by investing activities |
(33,758 |
) |
|
|
134,544 |
|
|
Cash flow from financing
activities: |
|
|
|
Proceeds from issuance of 2025 convertible senior notes, net of
issuance costs |
— |
|
|
|
166,278 |
|
|
Purchase of capped calls in conjunction with the issuance of the
2025 convertible senior notes |
— |
|
|
|
(22,546 |
) |
|
Proceeds from issuance of 2028 convertible senior notes, net of
issuance costs |
278,234 |
|
|
|
— |
|
|
Purchase of capped calls in conjunction with the issuance of the
2028 convertible senior notes |
(33,666 |
) |
|
|
— |
|
|
Proceeds from exercise of stock options |
5,452 |
|
|
|
7,135 |
|
|
Proceeds from issuance of stock in connection with the Employee
Stock Purchase Program |
1,092 |
|
|
|
— |
|
|
Taxes paid related to restricted stock vesting |
(4 |
) |
|
|
(748 |
) |
|
Net cash provided by financing activities |
251,108 |
|
|
|
150,119 |
|
|
Net increase in cash and cash equivalents |
93,963 |
|
|
|
188,646 |
|
|
Cash and cash
equivalents |
|
|
|
Beginning of period |
350,846 |
|
|
|
154,446 |
|
|
End of period |
$ |
444,809 |
|
|
|
$ |
343,092 |
|
|
The following table reflects the reconciliation of net loss to
Adjusted EBITDA for each of the periods indicated (in
thousands):
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Adjusted EBITDA
Reconciliation: |
|
|
|
|
|
|
|
Net loss |
$ |
(57,196 |
) |
|
|
$ |
(43,560 |
) |
|
|
$ |
(183,912 |
) |
|
|
$ |
(125,053 |
) |
|
Depreciation and amortization |
6,034 |
|
|
|
4,917 |
|
|
|
17,840 |
|
|
|
13,673 |
|
|
Stock-based compensation |
12,592 |
|
|
|
7,372 |
|
|
|
36,324 |
|
|
|
16,911 |
|
|
Payroll tax expense on employee stock transactions (1) |
245 |
|
|
|
— |
|
|
|
967 |
|
|
|
— |
|
|
Legal fees reimbursement benefit (2) |
(500 |
) |
|
|
— |
|
|
|
(500 |
) |
|
|
— |
|
|
Legal settlement (3) |
500 |
|
|
|
— |
|
|
|
11,788 |
|
|
|
1,110 |
|
|
Restructuring charges (4) |
811 |
|
|
|
72 |
|
|
|
2,314 |
|
|
|
514 |
|
|
Interest income |
(55 |
) |
|
|
(448 |
) |
|
|
(249 |
) |
|
|
(2,350 |
) |
|
Interest expense |
6,072 |
|
|
|
2,406 |
|
|
|
15,374 |
|
|
|
2,810 |
|
|
Other (income) expense, net |
(5 |
) |
|
|
— |
|
|
|
(22 |
) |
|
|
89 |
|
|
Provision for income taxes |
28 |
|
|
|
(17 |
) |
|
|
83 |
|
|
|
38 |
|
|
Adjusted
EBITDA |
$ |
(31,474 |
) |
|
|
$ |
(29,258 |
) |
|
|
$ |
(99,993 |
) |
|
|
$ |
(92,258 |
) |
|
(1) We exclude employer payroll tax expense related to employee
stock-based transactions because we believe that excluding this
item provides meaningful supplemental information regarding our
operating results. In particular, this expense is dependent on the
price of our common stock at the time of vesting or exercise, which
may vary from period to period, and other factors that are beyond
our control and do not correlate to the operation of the business.
When evaluating the performance of our business and making
operating plans, we do not consider these items. Similar charges
were not adjusted in prior periods as they were not material.(2)
During the nine months ended 9/30/21, we received insurance
reimbursement of $3.2 million related to legal fees for a
certain matter, of which $2.7 million have been applied to the
current year's legal expenses. (3) On November 5, 2021, a
stipulation of settlement was filed with the federal court to
settle the putative shareholder class action filed against us, our
officers and directors, and the underwriters for the Company’s
initial public offering. The stipulation of settlement is subject
to preliminary and final approval by the court. The financial terms
of the settlement stipulation provide that the Company will pay
$11.0 million within thirty (30) days of the later of preliminary
approval of the settlement or plaintiff’s counsel providing payment
instructions. Also on November 5, 2021, a stipulation of settlement
was filed in the derivative case filed against us as a nominal
defendant and our officers and directors as defendants. The
stipulation of settlement is subject to preliminary and final
approval by the court. The financial terms of the settlement
stipulation provide that the Company will pay $0.5 million within
thirty (30) days of the later of preliminary approval of the
settlement or plaintiff’s counsel providing payment instructions.
(4) The restructuring charges for the three and nine months ended
September 30, 2021 comprise of the costs to transition operations
from the Brisbane warehouse to our new Phoenix warehouse. The
restructuring charges for the three and nine months ended September
30, 2020 consist of COVID-19 related costs including employee
severance.
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 September 30, |
|
Nine Months Ended September 30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Net loss |
$ |
(57,196 |
) |
|
|
$ |
(43,560 |
) |
|
|
$ |
(183,912 |
) |
|
|
$ |
(125,053 |
) |
|
Stock-based compensation |
12,592 |
|
|
|
7,372 |
|
|
|
36,324 |
|
|
|
16,911 |
|
|
Payroll tax expense on employee stock transactions |
245 |
|
|
|
— |
|
|
|
967 |
|
|
|
— |
|
|
Legal fees reimbursement benefit |
(500 |
) |
|
|
— |
|
|
|
(500 |
) |
|
|
— |
|
|
Legal settlement |
500 |
|
|
|
— |
|
|
|
11,788 |
|
|
|
1,110 |
|
|
Restructuring charges |
811 |
|
|
|
72 |
|
|
|
2,314 |
|
|
|
514 |
|
|
Provision for income taxes |
28 |
|
|
|
(17 |
) |
|
|
83 |
|
|
|
38 |
|
|
Non-GAAP net loss attributable to common stockholders |
$ |
(43,520 |
) |
|
|
$ |
(36,133 |
) |
|
|
$ |
(132,936 |
) |
|
|
$ |
(106,480 |
) |
|
Weighted-average common shares outstanding used to calculate
Non-GAAP net loss attributable to common stockholders per share,
basic and diluted |
91,859,603 |
|
|
|
87,869,321 |
|
|
|
90,995,285 |
|
|
|
87,176,677 |
|
|
Non-GAAP net loss attributable to common stockholders per share,
basic and diluted |
$ |
(0.47 |
) |
|
|
$ |
(0.41 |
) |
|
|
$ |
(1.46 |
) |
|
|
$ |
(1.22 |
) |
|
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 September 30, |
|
Nine Months Ended September 30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Net cash used in operating activities |
$ |
(35,071 |
) |
|
|
$ |
(9,436 |
) |
|
|
$ |
(123,387 |
) |
|
|
$ |
(96,017 |
) |
|
Purchase of property and equipment and capitalized proprietary
software development costs |
(12,295 |
) |
|
|
(7,685 |
) |
|
|
(37,758 |
) |
|
|
(22,325 |
) |
|
Free Cash Flow |
$ |
(47,366 |
) |
|
|
$ |
(17,121 |
) |
|
|
$ |
(161,145 |
) |
|
|
$ |
(118,342 |
) |
|
Key Financial and Operating Metrics:
|
September 30,2019 |
|
December 31,2019 |
|
March 31,2020 |
|
June 30,2020 |
|
September 30,2020 |
|
December 31, 2020 |
|
March 31,2021 |
|
June 30,2021 |
|
September 30,2021 |
|
|
|
|
GMV |
$ |
252,766 |
|
|
$ |
302,975 |
|
|
$ |
257,606 |
|
|
$ |
182,771 |
|
|
$ |
245,355 |
|
|
$ |
301,219 |
|
|
$ |
327,327 |
|
|
$ |
350,001 |
|
|
$ |
367,925 |
|
NMV |
$ |
186,617 |
|
|
$ |
219,508 |
|
|
$ |
184,625 |
|
|
$ |
139,797 |
|
|
$ |
189,059 |
|
|
$ |
223,390 |
|
|
$ |
244,162 |
|
|
$ |
256,509 |
|
|
$ |
273,417 |
|
Consignment and Services
Revenue |
$ |
69,067 |
|
|
$ |
81,386 |
|
|
$ |
65,086 |
|
|
$ |
46,768 |
|
|
$ |
64,152 |
|
|
$ |
71,320 |
|
|
$ |
75,082 |
|
|
$ |
82,452 |
|
|
$ |
89,451 |
|
Direct Revenue |
$ |
12,271 |
|
|
$ |
11,209 |
|
|
$ |
12,942 |
|
|
$ |
10,523 |
|
|
$ |
13,645 |
|
|
$ |
15,512 |
|
|
$ |
23,735 |
|
|
$ |
22,460 |
|
|
$ |
29,387 |
|
Number of Orders |
577 |
|
|
637 |
|
|
574 |
|
|
438 |
|
|
550 |
|
|
671 |
|
|
690 |
|
|
673 |
|
|
757 |
|
Take Rate |
36.8 |
% |
|
36.2 |
% |
|
36.2 |
% |
|
36.0 |
% |
|
35.4 |
% |
|
35.7 |
% |
|
34.3 |
% |
|
34.5 |
% |
|
34.9 |
% |
Active Buyers |
543 |
|
|
582 |
|
|
602 |
|
|
612 |
|
|
617 |
|
|
649 |
|
|
687 |
|
|
730 |
|
|
772 |
|
AOV |
$ |
438 |
|
|
$ |
476 |
|
|
$ |
449 |
|
|
$ |
417 |
|
|
$ |
446 |
|
|
$ |
449 |
|
|
$ |
474 |
|
|
$ |
520 |
|
|
$ |
486 |
|
% of GMV from Repeat Buyers |
81.8 |
% |
|
82.9 |
% |
|
84.4 |
% |
|
82.3 |
% |
|
82.9 |
% |
|
82.4 |
% |
|
83.6 |
% |
|
84.5 |
% |
|
84.1 |
% |
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