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     104  0 Kommentare The RealReal Announces Fourth Quarter and Full Year 2019 Results

    Q4 Gross Merchandise Value Increased 39% Year over Year to $303.0 million
    Q4 Total Revenue Increased 57% Year over Year to $97.3 million
    Q4 Adjusted EBITDA Margin Improved 16.7 Percentage Points Y/Y
    2019 Contribution Profit Per Order Increased 126% Y/Y to $19.72

    SAN FRANCISCO, Feb. 25, 2020 (GLOBE NEWSWIRE) -- The RealReal (Nasdaq: REAL)—the world’s largest online marketplace for authenticated, consigned luxury goods—today reported financial results for its fourth quarter and full year ended Dec. 31, 2019.

    “Our Q4 results exemplify our long standing approach to balancing growth and operating leverage. In Q4, we achieved 39% Y/Y GMV growth with all top level categories experiencing strong growth. At the same time, Q4 adjusted EBITDA margin improved by approximately 17 percentage points Y/Y. Additionally, 82.9% of GMV was driven by repeat buyers in the quarter, a rare attribute of our marketplace that underscores our buyer loyalty and the strength of our flywheel,” said Julie Wainwright, CEO and founder. 

    Fourth Quarter Financial Highlights

    • Gross Merchandise Volume (GMV) was $303.0 million, up 39% year over year.
    • Total Revenue was $97.3 million, up 57% year over year.
    • Consignment and Service Revenue was $80.7 million, up 46% year over year.
    • Gross Profit was $62.5 million, up 48% year over year.
    • Adjusted EBITDA was ($12.7) million or (13.1%) of total revenue.
    • GAAP basic and diluted net loss per share was ($0.25).
    • Non-GAAP basic and diluted net loss per share was ($0.17). 
    • Net cash provided by operating activities was $3.6 million, compared to ($7.6) million used in the fourth quarter of 2018.
    • At the end of the fourth quarter, cash, cash equivalents and short-term investments totaled $363.3 million.

    Full Year 2019 Financial Highlights

    • Gross Merchandise Volume (GMV) was $1,008.3 million, up 42% year over year.
    • Total Revenue was $318.0 million, up 53% year over year.
    • Gross Profit was $203.2 million, up 48% year over year.
    • Adjusted EBITDA was ($73.0) million or (23.0%) of total revenue.
    • Contribution Profit Per Order was $19.72, up 126% year over year.
    • Buyer Acquisition Cost (BAC) was $114, down 18% year over year.

    “In 2019, we surpassed $1 billion in GMV. We also made significant progress on our path to profitability while still making investments to capitalize on the massive opportunity in front of us. In 2020, we will continue to invest in growth while driving meaningful operating leverage as we continue to revolutionize luxury resale and deliver value to our consignors and our buyers,” continued Wainwright.

    The RealReal continues to invest and innovate in authentication. We believe we have the most rigorous authentication process in the marketplace. Every item we sell is subject to that process. The impact of automation and technology has dramatically changed the authentication team’s day-to-day activities, allowing them to process more products per person while also expanding the depth of our authentication process, training and quality control procedures.

    “Our goal is to be the safest marketplace to buy pre-owned luxury goods, and our processes will continue to evolve throughout 2020 as we integrate more technology to stay ahead of counterfeiters,” added Wainwright. “Our buyer NPS score of 71 and the fact that approximately 83% of GMV came from repeat buyers and 81% of GMV came from repeat consignors in 2019, indicates that we are focused on the right issues.”

    The RealReal continues to deepen its sustainability commitments, pledging to become carbon neutral in 2021 as part of the CEO Carbon Neutral Challenge issued by Gucci president and CEO Marco Bizzarri. Since its founding through the end of 2019, The RealReal has offset 13,300 metric tons of carbon and saved 608 million liters of water.

    Other Fourth Quarter Highlights

    • Trailing 12 months active buyers reached 581,738, up 40% year over year.
    • Orders reached 637,112, up 35% year over year.
    • Average Order Value was $476 compared to $464 in the fourth quarter of 2018.
    • Consignment Take Rate increased 130bps year over year to 36.2%.
    • GMV from repeat buyers was 82.9% compared to 81.6% in the fourth quarter of 2018.

    Q1 and FY 2020 Financial Outlook
    Based on information available as of Feb. 25, 2020, we are providing the following financial guidance for the first quarter as well as for the full year 2020. 

      (in Millions)
      First Quarter 2020   Full Year 2020
      Low High   Low High
    Expected GMV Range $291 $295   $1,315 $1,345
    Implied Y/Y Growth 30% 32%   30% 33%
    Expected Adjusted EBITDA % of Revenue Range (26.0%) (24.0%)   (16.0%) (15.0%)
               

     

    Webcast and Conference Call
    The RealReal will host a conference call and webcast to discuss its fourth quarter and full year 2019 financial results today at 2 p.m. PDT. 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 1182588. The call will also be available via live webcast at investor.therealreal.com along with 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 and NYC, customers can shop, consign, and meet with our experts. At our nine Luxury Consignment Offices, three of which are in our retail stores, our expert staff provides free valuations.

    Investor Relations Contact:
    Paul Bieber
    Head of Investor Relations
    paul.bieber@therealreal.com

    Press Contact:
    Erin Santy
    Head of Communications
    pr@therealreal.com

    Forward Looking Statements
    This press release contains forward-looking statements within the meaning of federal and state securities laws. Forward-looking statements generally relate to future events or our future financial or operating performance.  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,” “would,” “continue,” “ongoing” or the negative of these terms or other comparable terminology.  Forward-looking statements in this release include, but are not limited to statements about future operating results, including our financial outlook and guidance for the first quarter of 2020 and full year 2020, our ability to drive revenue growth, our ability to drive operating leverage, our ability to add capacity, capabilities and automation to our operations and our strategies, plans, commitments, objectives and goals. Forward-looking statements are based on current expectations of future events. Investors should realize that if underlying assumptions prove inaccurate or that known or unknown risks or uncertainties materialize, actual results could vary materially from our expectations and projections. Investors are therefore cautioned not to place undue reliance on any forward-looking statements. These forward-looking statements speak only as of the date of this press release and, except as required by applicable law, we undertake no obligation to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events or otherwise. Our future results may be different from those described in our forward-looking statements for a variety of reasons, including 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. A list and description of risks, uncertainties and other factors that could cause or contribute to differences in our results can be found in our filings with the Securities and Exchange Commission (“SEC”), including our prospectus filed pursuant to Rule 424(b) under the Securities Act of 1933, as amended, on June 28, 2019, our Quarterly Report on Form 10-Q for the quarters ended June 30, 2019 and September 30, 2019, and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 that will be filed with the SEC by March 2, 2020. We qualify all of our forward-looking statements by these cautionary 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 Contribution Profit, 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, net other (income) expense, income tax provision, 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.

    Contribution Profit is a non-GAAP financial measure that is calculated as gross profit per order minus variable expenses including variable marketing, operations, sales and merchandising expenses.  Fixed expenses include occupancy, general & administrative, technology, marketing headcount, and certain operations and merchandising headcount costs.

    We view contribution profit as an important metric to assess our marginal profitability and measure our progress driving operating efficiencies. Accordingly, we believe that contribution profit provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management.

    THE REALREAL, INC.
    Statements of Operations
    (in thousands, except share and per share data)
    (unaudited)
                     
        Three Months Ended  December 31,   Year Ended December 31,
          2019       2018       2019       2018  
    Revenue:                
    Consignment and service revenue   $   80,673     $   55,070     $   267,412     $   183,991  
    Direct revenue       16,649         7,023         50,625         23,385  
    Total revenue       97,322         62,093         318,037         207,376  
    Cost of revenue:                
    Cost of consignment and service revenue       20,987         13,772         73,579         50,855  
    Cost of direct revenue       13,788         6,117         41,252         19,603  
    Total cost of revenue       34,775         19,889         114,831         70,458  
    Gross profit       62,547         42,204         203,206         136,918  
    Operating expenses (1):                
    Marketing       10,896         12,631         47,734         42,165  
    Operations and technology       39,960         32,343         143,231         104,929  
    Selling, general and administrative       34,553         19,502         110,663         63,728  
    Total operating expenses       85,409         64,476         301,628         210,822  
    Loss from operations       (22,862 )       (22,272 )       (98,422 )       (73,904 )
    Interest income       1,675         444         4,593         1,046  
    Interest expense       (45 )       (225 )       (616 )       (1,152 )
    Other income (expense), net       5         (64 )       (2,102 )       (1,656 )
    Loss before provision for income taxes       (21,227 )       (22,117 )       (96,547 )       (75,666 )
    Provision for income taxes       147         62         199         99  
    Net loss   $   (21,374 )   $   (22,179 )   $   (96,746 )   $   (75,765 )
    Accretion of redeemable convertible preferred stock to redemption value       —     $   (3,271 )   $   (3,355 )   $   (8,922 )
    Net loss attributable to common stockholders   $   (21,374 )   $   (25,450 )   $   (100,101 )   $   (84,687 )
    Net loss per share attributable to common stockholders, basic and diluted   $   (0.25 )   $   (3.00 )   $   (2.11 )   $   (10.12 )
    Weighted average shares used to compute net loss per share attributable to common stockholders, basic and diluted       85,823,352         8,496,051         47,478,544         8,365,344  
                     
                     
    (1) Includes stock-based compensation as follows:                
    Marketing       104         49         392         164  
    Operating and technology       1,083         385         3,148         1,160  
    Selling, general and administrative (2)       1,608         511         4,990         2,434  
    Total       2,795         945         8,530         3,758  
                     
    (2) Includes compensation expense related to stock sales by current and former employees in September 2018 and March 2019.
     


    THE REALREAL, INC.
    Balance Sheets
    (in thousands, except share and per share data)
    (unaudited)
        December 31,
    2019
      December 31,
    2018
    Assets        
    Current assets        
    Cash and cash equivalents   $ 154,446     $ 34,393  
    Short-term investments     208,811       27,131  
    Accounts receivable     7,779       7,571  
    Inventory, net     23,599       10,355  
    Prepaid expenses and other current assets     13,804       9,696  
    Total current assets     408,439       89,146  
    Property and equipment, net     55,831       33,286  
    Restricted cash           11,234  
    Other assets     2,660       1,751  
    Total assets   $ 466,930     $ 135,417  
    Liabilities, Redeemable Convertible Preferred Stock, Convertible Preferred Stock and Stockholders’ Equity (Deficit)        
    Current liabilities        
    Accounts payable   $ 11,159     $ 5,149  
    Accrued consignor payable     52,820       35,259  
    Other accrued and current liabilities     54,567       41,956  
    Long-term debt, current portion           5,990  
    Total current liabilities     118,546       88,354  
    Long-term debt, net of current portion           3,249  
    Other noncurrent liabilities     9,456       7,304  
    Total liabilities     128,002       98,907  
    Redeemable convertible preferred stock, $0.00001 par value; no and 31,053,601 shares authorized as of December 31, 2019, and December 31, 2018, respectively; no and 31,053,601 shares issued and outstanding as of December 31, 2019, and December 31, 2018, respectively           151,381  
    Convertible preferred stock $0.00001 par value; no and 73,950,153 shares authorized as of December 31, 2019, and December 31, 2018, respectively; no and 73,724,645 shares issued and outstanding as of December 31, 2019, and December 31, 2018, respectively           142,819  
    Stockholders’ equity (deficit):        
    Common stock, $0.00001 par value; 500,000,000 and 145,467,774 shares authorized as of December 31, 2019, and December 31, 2018, respectively; 85,872,320 and 8,593,077 shares issued and outstanding as of December 31, 2019, and December 31, 2018, respectively     1        
    Additional paid-in capital     693,425        
    Accumulated comprehensive income (loss)     7       (25 )
    Accumulated deficit     (354,505 )     (257,665 )
    Total stockholders’ equity (deficit)     338,928       (257,690 )
    Total liabilities, redeemable convertible preferred stock, convertible preferred stock and stockholders’ equity (deficit)   $ 466,930     $ 135,417  
                     


    THE REALREAL, INC.
     Statements of Cash Flows
    (in thousands)
    (unaudited)
        Year Ended December 31,
          2019       2018  
    Cash flows from operating activities:        
    Net loss   $   (96,746 )   $   (75,765 )
    Adjustments to reconcile net loss to cash used in operating activities:        
    Depreciation and amortization       13,408         9,290  
    Stock-based compensation expense       7,711         2,911  
    Change in fair value of convertible note derivative liability       —         1,248  
    Bad debt expense       1,371         999  
    Compensation expense related to stock sales by current and former employees       819         847  
    Change in fair value of convertible preferred stock warrant liability       2,100         450  
    Accrued interest on convertible notes       —         223  
    Loss on retirement of property and equipment       —         203  
    Accretion of unconditional endowment grant liability       94         118  
    Accretion of debt discounts       11         104  
    Amortization of premiums (discounts) on short-term investments       (320 )       78  
    Changes in operating assets and liabilities:        
    Accounts receivable       (1,579 )       (1,572 )
    Inventory, net       (13,244 )       (3,741 )
    Prepaid expenses and other current assets       (4,108 )       (5,338 )
    Other assets       (1,026 )       (318 )
    Accounts payable       6,010         (2,576 )
    Accrued consignor payable       17,561         6,587  
    Other accrued and current liabilities       10,686         15,681  
    Other noncurrent liabilities       2,762         3,376  
    Net cash used in operating activities       (54,490 )       (47,195 )
    Cash flow from investing activities:        
    Purchases of short-term investments       (220,609 )       (31,454 )
    Proceeds from maturities of short-term investments       39,281         9,624  
    Proceeds from sale of short-term investments       —         7,023  
    Capitalized proprietary software development costs       (9,267 )       (5,724 )
    Purchases of property and equipment       (24,761 )       (13,392 )
    Net cash used in investing activities       (215,356 )       (33,923 )
    Cash flow from financing activities:        
    Proceeds from issuance of common stock in initial public offering, net of issuance costs       315,541         —  
    Proceeds from issuance of redeemable convertible preferred stock, net of issuance costs       43,492         86,640  
    Proceeds from issuance of convertible preferred stock, net of issuance costs       26,283         9,627  
    Proceeds from issuance of convertible notes, net of issuance costs       —         14,273  
    Proceeds from exercise of stock options and common stock warrants       2,729         614  
    Payment of deferred offering costs       —         (24 )
    Taxes paid related to net share settlement of equity awards       (130 )       —  
    Issuance cost paid related to conversion of convertible notes       —         (545 )
    Repayment of debt       (9,250 )       (4,500 )
    Net cash provided by financing activities       378,665         106,085  
    Net increase in cash, cash equivalents and restricted cash       108,819         24,967  
    Cash, cash equivalents, and restricted cash        
    Beginning of period       45,627         20,660  
    End of period   $   154,446     $   45,627  
             
    Supplemental disclosures of cash flow information        
    Cash paid for interest   $   553     $   666  
    Cash paid for income taxes       102         49  
                     

    The following table reflects the reconciliation of net loss to Adjusted EBITDA for each of the periods indicated (in thousands):

        Three Months Ended December 31,   Year Ended December 31,
          2019       2018       2019       2018  
    Adjusted EBITDA Reconciliation:                
    Net loss   $ (21,374 )   $ (22,179 )   $ (96,746 )   $ (75,765 )
    Depreciation and amortization     3,870       2,801       13,408       9,290  
    Stock-based compensation     2,795       945       7,711       2,911  
    Compensation expense related to stock sales by current and former employees                 819       847  
    Abandoned offering costs     293             293        
    Donation to TRR Foundation     3,155             3,155        
    Vendor services settlement                       2,000  
    Interest income     (1,675 )     (444 )     (4,593 )     (1,046 )
    Interest expense     45       225       616       1,152  
    Other (income) expense, net     (5 )     64       2,102       1,656  
    Provision for income taxes     147       62       199       99  
    Adjusted EBITDA   $ (12,749 )   $ (18,526 )   $ (73,036 )   $ (58,856 )
                                     

    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  December 31,   Year Ended December 31,
          2019       2018       2019       2018  
    Net loss   $ (21,374 )   $ (22,179 )   $ (96,746 )   $ (75,765 )
    Stock-based compensation     2,795       945       7,711       2,911  
    Compensation expense related to stock sales by current and former employees                 819       847  
    Provision for income taxes     147       62       199       99  
    Accretion of redeemable convertible preferred stock           (3,271 )     (3,355 )     (8,922 )
    Remeasurement of preferred stock warrant liability           62       2,100       450  
    Abandoned offering costs     293             293        
    Donation to TRR Foundation     3,155             3,155        
    Non-GAAP net loss attributable to common stockholders   $ (14,984 )   $ (24,381 )   $ (85,824 )   $ (80,380 )
    Weighted-average common shares outstanding used to calculate Non-GAAP net loss attributable to common stockholders per share, basic and diluted     85,823,352       8,496,051       47,478,544       8,365,344  
    Non-GAAP net loss attributable to common stockholders per share, basic and diluted   $ (0.17 )   $ (2.87 )   $ (1.81 )   $ (9.61 )
                                     

    The following table presents a reconciliation of net cash provided by (used in) operating activities to free cash flow for each of the periods indicated (in thousands):

        Three Months Ended  December 31,   Year Ended December 31,
          2019       2018       2019       2018  
    Net cash provided by (used in) operating activities   $   3,629     $   (7,570 )   $   (54,490 )   $   (47,195 )
    Purchase of property and equipment and capitalized proprietary software development costs       (11,247 )       (6,131 )       (34,028 )       (19,116 )
    Free Cash Flow   $   (7,618 )   $   (13,701 )   $   (88,518 )   $   (66,311 )
                                     

    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
        (In thousands, except AOV and percentages)
    GMV   $   158,378     $   162,954     $   170,923     $   218,495     $   224,116     $   228,487     $   252,766     $   302,975  
    NMV   $   113,347     $   115,916     $   123,550     $   153,776     $   160,538     $   164,782     $   186,617     $   219,508  
    Consignment and Services Revenue    $   40,999     $   42,178     $   45,744     $   55,070     $   56,236     $   60,713     $   69,790     $   80,673  
    Direct Revenue    $   5,460     $   4,807     $   6,095     $   7,023     $   13,019     $   10,263     $   10,695     $   16,649  
    Number of Orders       356         359         409         471         498         505         577         637  
    Take Rate     35.1 %     35.5 %     36.4 %     34.9 %     35.3 %     36.6 %     36.8 %     36.2 %
    Active Buyers       326         352         379         416         456         492         543         582  
    AOV   $   445     $   453     $   418     $   464     $   450     $   453     $   438     $   476  
    % of GMV from Repeat Buyers     81.5 %     82.9 %     82.9 %     81.6 %     82.4 %     83.1 %     81.8 %     82.9 %
                                                                     

    2019 and 2018 Contribution Profit Per Order:

        2019       2018     Y/Y Change
    AOV $ 454.7     $ 445.6     2 %
    Revenue $ 143.4     $ 130.0     10 %
    Gross Profit $ 91.6     $ 85.8     7 %
    Variable Expenses $ 71.9     $ 77.1     (7 %)
    Contribution Profit $   19.7     $   8.7     126 %
    Contribution Margin   13.8 %     6.7 %   704 bps
    Fixed Cost $ 52.6     $ 45.6     15 %
    EBITDA $ (32.9 )   $ (36.9 )   11 %
                         


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    The RealReal Announces Fourth Quarter and Full Year 2019 Results Q4 Gross Merchandise Value Increased 39% Year over Year to $303.0 millionQ4 Total Revenue Increased 57% Year over Year to $97.3 millionQ4 Adjusted EBITDA Margin Improved 16.7 Percentage Points Y/Y2019 Contribution Profit Per Order Increased 126% Y/Y …