The RealReal Announces Third Quarter 2024 Results
Q3 2024 Revenue of $148 million, up $15 million or 11% Year-Over-YearQ3 2024 Net Loss of $(18) million, or (12.1)% of Total Revenue, improved $5 million Year-Over-YearQ3 2024 Adjusted EBITDA of $2.3 million or 1.6% of Total Revenue, increased $9 million Year-Over-Year
SAN FRANCISCO, Nov. 04, 2024 (GLOBE NEWSWIRE) -- The RealReal (NASDAQ:REAL)—the world's largest online marketplace for authenticated, resale luxury goods—today reported financial results for its third quarter ended September 30, 2024. Third quarter 2024 gross merchandise value (GMV) and total revenue increased 6% and 11% respectively, compared to the third quarter of 2023. During the quarter, consignment revenue grew 14% compared to the same period in 2023. Third quarter Adjusted EBITDA improved $9 million compared to the third quarter of 2023.
"I am pleased to report strong results for the third quarter, and I am encouraged by the continued strength in supply trends as we enter the fourth quarter," said Rati Levesque, Chief Executive Officer of The RealReal. "Third quarter GMV, Total Revenue, and Adjusted EBITDA all exceeded our prior expectations, enabling us to raise our full year outlook."
Levesque continued, "Our team is focused on delivering against our 2024 commitments. I'm encouraged by our results and by how our teams are executing against our vision to change the way people shop for the better, creating a unique circular shopping experience built on technical expertise and high-touch human service."
Third Quarter Highlights
GMV was $433 million, an increase of 6% compared to the same period in 2023
Total Revenue was $148 million, an increase of 11% compared to the same period in 2023
Gross Profit was $111 million, an increase of $17 million compared to the same period in 2023
Gross Margin was 74.9%, an increase of 430 basis points compared to the same period in 2023
Net Loss was $(18) million or (12.1)% of total revenue, compared to $(23) million or (17.2)% of total revenue in the same period in 2023
Adjusted EBITDA was $2.3 million or 1.6% of total revenue compared to $(7.0) million or (5.2)% of total revenue in the same period in 2023
GAAP basic net loss per share was $(0.16) compared to $(0.22) in the prior year period and GAAP diluted net loss per share was $(0.17) compared to $(0.22) in the prior year period
Non-GAAP basic and diluted net loss attributable to common shareholders per share was $(0.09) compared to $(0.15) in the prior year period
Top-line-related Metrics
Trailing three months active buyers was 389,000, an increase of 7% compared to the same period in 2023
Orders were 829,000, an increase of 4% compared to the same period in 2023
Average order value (AOV) was $522, an increase of 2% versus the same period in 2023
Q4 and Full Year 2024 GuidanceBased on market conditions as of November 4, 2024, we are raising our full year guidance. Additionally, we are providing guidance for fourth quarter 2024 GMV, Total Revenue and Adjusted EBITDA, which is a Non-GAAP financial measure.
We have not reconciled forward-looking Adjusted EBITDA to net income (loss), the most directly comparable GAAP measure, because we cannot predict with reasonable certainty the ultimate outcome of certain components of such reconciliations including payroll tax expense on employee stock transactions that are not within our control, or other components that may arise, without unreasonable effort. For these reasons, we are unable to assess the probable significance of the unavailable information, which could materially impact the amount of future net income (loss).
Q4 2024
Full Year 2024
GMV
$484 - $500 million
$1.810 - $1.826 billion
Total Revenue
$158 - $165 million
$595 - $602 million
Adjusted EBITDA
$6.5 - $9.5 million
$4.7 - $7.7 million
Webcast and Conference CallThe RealReal will host a conference call to review the company's third quarter 2024 results beginning at approximately 2:00 p.m. Pacific Time today (5:00 p.m. Eastern Time). A live webcast of the conference call and accompanying materials will be available online at investor.therealreal.com. A replay of the webcast will be available at the same location.
About The RealReal, Inc.The RealReal is the world's largest online marketplace for authenticated, resale luxury goods, with 37 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 handle 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 shipping and customer service.
Investor Relations Contact:Caitlin
Press Contact:Mallory
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," "target," "contemplate," "project," "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 and financial results, including our strategies, plans, commitments, objectives and goals, in particular in the context of the impacts of recent geopolitical events, including the conflict between Russia and Ukraine and the Israel-Hamas war, and uncertainty surrounding macro-economic trends, the debt exchange, financial guidance, anticipated growth in 2024, the anticipated impact of generative AI, and long-range financial targets and projections. 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, inflation, macroeconomic uncertainty, geopolitical instability, 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, labor shortages 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, 2023 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 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 (benefit) for income taxes, depreciation and amortization, further adjusted to exclude stock-based compensation, employer payroll tax expense on employee stock transactions, legal settlement charges, restructuring, warehouse fire costs (net), gain on extinguishment of debt, change in fair value of warrant liabilities 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 expense 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 expense 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, payroll tax expenses on employee stock transactions, legal settlement charges, restructuring charges, gain on extinguishment of debt, change in fair value of warrant liabilities and certain one-time expenses divided by weighted average shares outstanding. We exclude the effect of our liability classified warrants to arrive at the weighted average common shares outstanding when their effect is anti-dilutive. We believe that making these adjustments 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,
2024
2023
2024
2023
Revenue:
Consignment revenue
$
116,908
$
102,852
$
345,270
$
302,072
Direct revenue
15,623
17,356
45,056
63,196
Shipping services revenue
15,224
12,964
46,163
40,663
Total revenue
147,755
133,172
436,489
405,931
Cost of revenue:
Cost of consignment revenue
13,326
13,577
39,714
43,681
Cost of direct revenue
12,925
15,686
38,970
61,162
Cost of shipping services revenue
10,791
9,837
32,347
30,859
Total cost of revenue
37,042
39,100
111,031
135,702
Gross profit
110,713
94,072
325,458
270,229
Operating expenses:
Marketing
11,604
11,591
40,646
44,460
Operations and technology
66,199
61,038
194,593
194,645
Selling, general and administrative
47,512
44,788
141,364
138,959
Restructuring
—
(856
)
196
37,396
Total operating expenses (1)
125,315
116,561
376,799
415,460
Loss from operations
(14,602
)
(22,489
)
(51,341
)
(145,231
)
Change in fair value of warrant liability
744
—
(9,209
)
—
Gain on extinguishment of debt
—
—
4,177
—
Interest income
1,940
2,260
6,272
6,717
Interest expense
(5,948
)
(2,673
)
(15,468
)
(8,018
)
Loss before provision for income taxes
(17,866
)
(22,902
)
(65,569
)
(146,532
)
Provision for income taxes
72
47
178
247
Net loss attributable to common stockholders
$
(17,938
)
$
(22,949
)
$
(65,747
)
$
(146,779
)
Net loss per share attributable to common stockholders
Basic
$
(0.16
)
$
(0.22
)
$
(0.61
)
$
(1.45
)
Diluted
$
(0.17
)
$
(0.22
)
$
(0.61
)
$
(1.45
)
Weighted average shares used to compute net loss per share attributable to common stockholders
Basic
109,016,060
102,648,790
107,043,946
101,087,793
Diluted
112,418,751
102,648,790
107,043,946
101,087,793
(1) Includes stock-based compensation as follows:
Marketing
$
225
$
382
$
707
$
1,181
Operations and technology
2,533
3,115
7,527
10,107
Selling, general and administrative
5,000
5,039
14,346
15,005
Total
$
7,758
$
