The RealReal, Inc. (REAL) 23 Feb 212020 Q4 Earnings call transcript

Company Profile

Participants

Paul Bieber	Head, Investor Relations
Julie Wainwright	Founder and CEO
Matt Gustke	Chief Financial Officer
Oliver Chen	Cowen
Eric Sheridan	UBS
Michael Binetti	Credit Suisse
Erinn Murphy	Piper Sandler
Edward Yruma	KeyBanc Capital Markets
Justin Post	Bank of America
Mark Altschwager	Baird
Ike Boruchow	Wells Fargo
Simeon Siegel	BMO Capital Markets
Aaron Kessler	Raymond James
Susan Anderson	B. Riley
Marvin Fong	BTIG

Call transcript

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Operator

Ladies and gentlemen, thank you for standing by. And welcome to The RealReal Fourth Quarter 2020 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. [Operator Instructions] I would now like to turn the conference over to your host, Head of Investor Relations, Mr. Bieber. Paul ahead. go Please

Paul Bieber

RealReal. Good the welcome XXXX. quarter Head at Paul Chris. earnings I The call Bieber, The Relations Investor for ended of afternoon. you, to And RealReal’s am Thank December XX,

available CEO, which Joining me today a our Hopefully, and we discuss on stockholder our chance Gustke. earlier are to Financial Matt both have press distributed Julie release letter website. Founder Officer, and Relations results Chief you Wainwright; are to also and of had read today Investor our that

Before we unknown we These during of begin, and materially. I’d remind and you results call. and risks like the will that to actual forward-looking this known differ our statements make involve uncertainties statements forward-looking could course

uncertainties our report on could today. factors You can earnings and quarterly XX-K, in find other our operating recent from periodic in release more affect our on most Form XX-Q and reports subsequent earlier risks, that Form information results these about

for non-GAAP Q&A. that, I go In addition, measures and for With remarks earnings release. our the measures, comparable press most to to in will presentation have certain then introductory our GAAP will straight will financial reconciliations the we Julie? provided over which Julie, to call include hand we

Julie Wainwright

were thank and Thanks, results. discuss we our joining found challenging Obviously, very you Paul, QX ways innovate. XXXX afternoon. resilient and us good And but year, XXXX for to all today to was a

to December a recovery back Overall, quarter-to-date of are growth with are even GMV we stronger seeing emerge signs encouraging positioned We stronger. trends to company. well and

would teams In We have the slow. for tireless retail believe COVID, especially Authentication these e-commerce we tailwinds increasing markets tailwind profitability. several employees like come realize cost of will the plan major as could to that ahead. of as companies dedication an capitalize outperformance approximately locations. in operate in many significant acceleration our and would operations, drive Arizona unprecedented given will We the growth contrast, XX to thankful embarked see our initiatives Last Thank opportunity stores. help most The us that work on the which toward we tremendously business. of This that We out frontline to neighborhood we commitment. our we and during our their year, on you the are large normal to strategic your to efficiencies on include march recognize position the Centers times. for across return could structure QX. as in our to the of by of us initiatives We open end these leverage

we significantly engage are our supply will allow Given valuable early results us optimistic unlock customers most our and marketing than efforts further efficiently this more strategy alone. with to

is we we number high continue people QX growth. ability invest -- quarter vendor The channel two. acceleration. in and processes has to to This supply continue program increased vendor source improved our third Our and of XX% to year-on-year, value consecutive our technology will its GMV support

phase with positively over the December, provided accelerating X% of new of to next It When continued help and shipping to per costs of to Arizona timeline growth. recovery December GMV year-on-year. Center, in our buyer scale. times, we we order growth This while opening the last and Lastly, recovering. November were growth facility support expenses accelerated update GMV improve the and gradually supply reducing for will we new as was trending us balance summer XXXX shipping our our fixed our Authentication QX, our

anticipate non-COVID will as strengthen have continued lap period. so COVID began far Quarter-to-date quarter we year-on-year February in XXXX. trends to Consequently, GMV to between impacts. to against was XX% QX through fourth we XX% year-on-year XX% of GMV XXth, increase growth the Our GMV

XXXX. in recovery our about optimistic are We

excited makes which However, you with us difficult were term in to are we underscored leave XXXX thought the more reality to on which for us, that increasing we the early our our growth have XXXX GMV a want outlook and exited corner. is and as about continuing it yet this behind QX we The this to growth back is letter, to vaccine chance and I around about at the pandemic time. a that is longer widespread details which supply are XXXX, performance. provide by excited Hopefully not apparently a our -- we had momentum is stockholder is contains you distribution, and lot read

So, with that, for let’s Operator, open the questions. line

Operator

comes Oliver from from [Operator Chen question Instructions] Your Cowen. first

open. is line Your

Oliver Chen

Matt. Thank and Julie you. Hi,

for markets? beyond are great really you with managing markets Regarding supply, innovation gathering different the mix? on QX of ahead see you the do lot supply York, LA regional mind all a for supply pieces with program? other what growing in also a and job in and the New vendor But BXB be our should what You may did and the

Julie Wainwright

a digits growth will Right expect make by one. into this that region. overall aided by was neighborhood and supply and going double we not and before new in our grow are this prediction to going be retail take stores quarter is our it continue vendor. already will I now we to that really But supply

excited turning third very we in we we that in, have supply but on So are the fact if our growth. point as a of feel about we now the month are reached coming

Oliver Chen

data and commentary what’s and your women’s had platform? may new or be love new And not on And behavior retention and apparel is volatile the saying means how that on may thoughts Okay. buyer returning behaving? growth the for growth, new encouraging to encouraging if would and the that really customer buyer buyers, what you the I on

Julie Wainwright

one lot returned and apparel is growth. of there to normal. questions So is Number

continue grow to actually lockdowns are expect it to We easing. given

continue it’s So we that to expect to and exciting. grow

us time we first grown apparel The since the had women’s for is lockdowns.

jewelry previously, we our really and at watches. our stated unit sales average price and has by been we well handbag selling As are driven high fine

that are behaving new more up, ASPs a our old are And our are are money. ALBs our up, it ASPs buyers our the buyers they at now right spending are new overall little like pre-COVID, but So appears bit up.

similar the to they back at rate look pretty repeat their site, point. of terms this In

Oliver Chen

That’s neighborhood one innovative was to environment that Why sounds store the dynamic are quickly? ones. you where from physical change time reads in Yeah. now newest this facing the really is having we for good Last right and have really retail helpful.

Julie Wainwright

neighborhoods the participate done There landlords one capacity the way we are critical as even for to COVID which so is the Number why well in And in in also the the Number during to ability our are shorter you go. also leases the phenomenally that dropped Madison, do remove to precipitously and rents we many decision of test have term know time. to we study willingness the a this making. two, did consigners way was one, friction reasons we wanted limited right six they has drop-offs. store from have with know, to the looking the to have case a months more about This number process always neighborhood ago. three, in

possible for are COVID. will made So both profitability more, supply than combination leases go to to the primarily And open an driving to and short-term sometimes align, for fast they smaller open it were to measuring going as before start then we XX ahead meant if faster with eye year as now stores with right we this those sense [ph] supply. they demand and to us decide they favorable but there are for neighborhood terms are that

Oliver Chen

much. very you Thank Best regards.

Julie Wainwright

Thank you.

Operator

Your of comes UBS. next from Eric question Sheridan

Your line is open.

Eric Sheridan

you play. years you and some you. going the some to question. continues announcements Obviously the touch broader Thank trying is out Thank the role initiatives company? making the that of brands and ‘XX of the as you big upon accomplish you after to a some of relationships back Can have then the harkening how could about path ‘XX the bit is into talked about so turning forward sustainability you industry as company year. much the little more have talk some last in around about importantly made Maybe we it for the sure you narrative the one brands the a the update this talk taking of feeds also of with sustainability goals into of with and along you luxury goals

Julie Wainwright

discussions than any have Burberry is also participate them Gucci’s via circular people Sure. a one that’s the world. been the sustainable circular and economy and relationship, in know, still with role we And to because actually did to RealReal they more other as with fashion are supply importance Stella I Gucci, first different join encourage relationships was has encouraged prior long-term McCartney, its partner a then in you they consigning in buy. not still we always of The mean, only echoing and chain the to economy us. in the with.

Gucci we be So be later Burberry reinforcing lines conversations continuing, partnerships more along -- sustainability. will and of are will it Stella are in the there in we announced the and year, and with

So on right do is I going in the own we we -- think with but XX-year in that The for I to emphasis RealReal about slowly their administration them hit year, working industry resale to that’s the are other is sense hit our time the people I don’t U.S., celebrate be lost but impact slowly numbers. makes and of each this. that ready brands is a think birthday in the and surely surely environmental the this through also to coming that there and are do greater sustainability message with shift order think have

Eric Sheridan

much. so Thanks

Operator

Binetti question of next Credit comes from Your Michael Suisse.

is open. Your line

Michael Binetti

in can to just in to GMV the March the but for today it’s don’t mean on growth in you Hey, be detail for guess XX I XX% then to guys. all first about provided. thanks I Thanks and GMV reporting points speak the XX% quarter-to-date letter you the the quarter easier obviously taking questions. XX% and guidance, monthly short-term based with our shareholder

abundance wondering something stop follow-up. cause multiyear of is it it Is supply of that until if we am -- will around a bend I in part the an flow and there on here? would the were I just borrowers? your I So the caution there’s have

Matt Gustke

Yeah.

balance an the some is has This GMV check at with the progressively, supply December supply, over So been are paper. you here. the implies trending. plus we it first abundance course track Listen the in to of on like right, of time everything of growth put are if And was to so which comfortable progress, there quarter with -- first if with of XX%, well, back resembling been still happy starts of acceleration. building but month COVID there that’s doing that our we was you guidance middle getting you anything been positive how have the quarter-to-date are so caution enough we X%, always is

more but importantly gate think in confidence trajectory forward I of recovery. this terms coming in step out the that increasing positive our visibility So a have we of the is some

that to are to we we going happy So first with are look overshoot.

Michael Binetti

Great.

Okay. quarter is competitors Thanks, mentioned image And some the guess, the on the commented maybe some on I you we gross software I some in I me fourth to thinking comment So year in just help in mind to and then, through, flat can shareholder year at Matt. fourth from saw first in think first seen that quarter that something Matt, in a per stuff that if And and the you mix you hear just walking bit quarter? that the have quarter supply. then, think what’s inbound the what love you be on I’d driving back letter I the different interesting space? of was recognition profit in order wouldn’t the down was the over shareholder please? of just in that

Julie Wainwright

part take Matt take will then can first and the back I And part. the

-- image on computer was our by in centers with progress but a some We along recognition, a it tremendous saw machine have played vision, learning just automating part it [ph] made image ops wasn’t recognition and recognition.

price automation, those more means up work. about particular photo XX% QA that employ are doing work in we copywriting, in QC automation, almost in of of the all editing, now we and which are So to people

So accelerate that. to we continue

a components. have unlike fine the huge also people -- in we We have jewelry business most this also watch of

do have a further the it still of diamonds we of the depth stones within other measuring remove of we been setting for would automation because So having humans in we the types from able all old twice the jewelry. never without way, our stones, recalculate to which

decrease feel have schedule our of automation I which a comfortable things on. that regularly but actually our in our really applied say, later growth unit that fairly are to op across progress just honest, are So the we pleased to would ahead is, and our we economics with and be multiple centers. where centers, needed op support continues channels the can be to we these key in little focusing, and is been technology

Matt Gustke

on on will gross second Yeah. profit the one the take And I drivers. overview

are quarter. So you profit per that’s growth always helpful. we is guide right, Dynamics drives so in gross -- to throughout there, are all underneath to leverage order flat comfortable one, the the first P&L

been average our We good categories. Julie’s seeing order have to comments, value contributions from value by in driven earlier improvements high

improvements We expenses. shipping in are nice our also seeing year-over-year

So bit the work correlated value left things continues little of all and kind offsetting have to rate adding up to recovery good products. take AOV we to the high be which do on with those of

back due climb units bit so well, of to little norms. to a down transaction year-over-year, QX, to back AOV almost yet exclusively as Going X% was that historical first to per

categories, to Take particular, as more existing performance take ASP down rates due the rate means repeat higher a that consignors In and from few our earning jewelry well basis addition, year-over-year we had strong on. things going high points was contribution handbags from in higher consigners. as XX a other

did levels it’s elevated we to it an in Second, and kind has impact a of just We marketing of both immediate consigners. really see a of used tactic garner and shift incentives out had to buyer buyers impact. And QX. new as incentives immediate more be traditional buyer

COVID way activity and So supply growth as we stimulate particular and recovers during growth a to consignor as recovers. use it buyer in our

letter. that’s decrease detail to was stockholder And million in expect there in adjustment onetime a finally, over $X.X We the see time. that in QX described

Michael Binetti

Okay. Thanks Matt. lot a

Operator

Erinn from Sandler. comes Piper next of question Murphy Your

is line open. Your

Erinn Murphy

how learning Thanks. consigner afternoon bit growth. stores new what from XX% nice Matt December. there And and are for new Brisbane little shipping the -- past? a for my once me, how you up? talk about follow this Good will the Julie, you excuse you is just is times, in then, up think guess, up was new month cohorts Thank question can running the more on, see you that that just are you. are new D.C. D.C. about plans of Arizona Great. other Arizona new once to versus for share recovering the of I and the and you on the your consignors maybe a and Can when that coming about for I look or

Julie Wainwright

Hi.

that’s we some six first our have to new well, neighborhood excited Obviously So, in based are first opening on of early stores. all, XX we about committed the since results. months and

tend value data’s this Now NPS leather the have more all consign consigners outside consigned to tend store. score. consigners to X.X at But in venues the us. a Madison also actually preliminary of that who a to than They other consigned retail times higher location for

a results in stores So constraints early the on results. early COVID. to we interesting days are The are based excited but right for that stores about retail the due on these now thing have we limited pretty that capacity our

in only at Palo have four in look for example, time sales business that in it store our you is including, the pent-up consignment It there a when we one put So demand for a frictionless f Alto, beyond the shows neighborhood. team. that the people all are on at and given constraints could

So promising. we excited early very but are our results about

Matt Gustke

Yeah.

So Arizona. bit more a little on detail

years’ set worth this is portfolio growth. just of if largest focusing us about our facility and our a not phase the So is for purely few up several on of us next This growth. in

the grow our load to as days costs much of now capacity things sort shipping, would max terms and early -- distances. we some in a right difference because going to start have it’s have to Brisbane continue capacity do balance, it out larger like in not here in not of but be shipping then we of to In it’s both

as start really way of to customers and distances, the it to grow and us to optimizing keep levels it’s service our shipping allows we So in cost, coming in. products managing by terms consigners

years wide about we and really by capacity excited next several So a our over give are to to this lowest cost the is the us margin location. grow

drive of per going lot on scale to expense order as it’s a the fixed leverage basis. So cost we

Erinn Murphy

for the And call I and about margin year COVID negotiated on hit. contract planning then a on add at talked of gross know could that it. XXXX. last shipping this Matt originally if end the follow-up XXX points improvement basis I you just Got of you obviously you

have clearly that specifically from into topline curious year, So contract is now renegotiations? GMV accelerating. once forward this seeing think you shipping looked the to how do are gross you that Like margin kind we -- of opportunity inflect about we

Matt Gustke

Yeah. Yeah.

the is contract what So shipping itself it’s supposed do. doing to

of of of itself with for revenues are out and get all consignment margin bit because So mix get Gross this profiles. we to that as tricky margin us, we back is anticipated shipping. leverage of gross growth number have the we we going inherently a different direct a

risk. of unknown the We So we selectively profiles vendor revenue mix higher think seen increase inventory prices direct for we the will that’s lean is which and margin us. that sort the purchasing to as yielding somewhat have upfront, better opportunity including in

to that to that’s So to we so keep mixing keep the extent see to we are that, direct up. that continue going doing going happening

most we level we So profit recently profitability. to just that the get months. opportunity XX metric that hence our order we to track months are on from back in how and to path roughly to as productivity about next XX see in to gross we nearly overall $XXX keep the were to And to people encourage $XX $XXX, progressing focus per at the trying

Erinn Murphy

so you much. Thank Great.

Operator

of comes KeyBanc question Capital from Yruma next Edward Your Markets.

Your line open. is

Edward Yruma

their It running. down start in seems driving of I the for competitors on evening, guess, have I of to promotions effort businesses. supply kind am jump take bit little questions. an guys. like trying a understand are the to been taking your first, rate Hey. Good you Thanks side some

like has any relationships think final stepping is successful sense about impact second, vendor think kind of the just stores Thank promotion or from one any to of near- pronounced the whether so brands? do then, plus is there been think it on some that question, And you expense you a building kind on with neighborhood at back, been negative kind of period of there side? guess, this with Arizona medium-term is perspective? that you. should do And you that we have of relationships, I the that build to Just

Julie Wainwright

to take over some am this Ed, to Matt. is going right. All turn Julie. and I

So let’s have with the relationships, with been brands we working brands vendor first. the capacity. relationships that The the last are studying just the some one vendor of talk about are also same another

to we deal art have overstock do actually work And hand that they vendors of me art on been work also and that just press fashion more during we brands the variety vendors have business also little glove. fine our jewelry of in that categories a world. vendor in yeah, we other home But, than do And are our very of and have the in that But of that we So the or diverse fashion work times. just because are strategically we for good some from. side been sourced those with other vendors products. COVID vendors home vendors have with are with the and a luxury the types

are they tests. Sometimes running

what’s with other the So going -- … to that is the Matt, And vendor. do you want on take that’s

Matt Gustke

I Yeah. … Yeah. Edward,

Julie Wainwright

part… That’s three a

Matt Gustke

a that’s from going today. was I question

Julie Wainwright

three part question… Yeah. a That is

Matt Gustke

memory. our test to Just

the things that short-term lease around question footprint So imagine. near-term. favorable for is getting mean balance good that might for stores and around with are sheet what and news because as expensive. think environment leases P&L the terms retailing these second is I over and financials just the you does basically particularly small The their These with the for store

have weeks capital lease, right. we plus $XXX,XXX from in to we don’t to weeks be opening minus precise So things them overly sign because a sources in after But a to capital, we $XXX,XXX we them and or want I profit don’t open spend much hopeful here year to they are get really take much four think, We these six can become don’t open. that data. really of

the and is sort the these to of of this of of XX handful a point out short-term to seeing… the much. dollars we once close year becomes bit other where the to get drag environment of it’s rate million In we take tipping a P&L. are those And this really question of the of it that year think rolling kind start to pressure end but back then us neutral and So not we is I capital get a around

Julie Wainwright

We are not.

Matt Gustke

seeing not I know are any... we

Julie Wainwright

And watches always resale seen take at have and I the it’s and is and can in take on being market look, space rate competitive what press has watches, we within rate been say, sneakers watch our is competitive. always least the that the that

damp that hasn’t put any really So on it.

it’s Our mix. big our a sneakers, not of component

and We are without high our rate. still changing take getting amazingly sneakers quality

sneakers of So rate a multi-brand doesn’t impact the this someone where to being business, is to really decides if down the bring take it for beauty multi-category zero us.

and Our more panel take then high our order due us is jewelry and it watches because men’s. then great things, value in that fine to and was selling and in shift enduring mostly handbags particular COVID

first And and good a to gross adding apparel positive will of now what in have the that we really take quarter, consider again so percentage three so the change. terms They change side. rate selling competitive back this are apparels would that life on we margin coming more didn’t those -- already

Edward Yruma

guys. answering Great. the all questions, Thanks for

Operator

Justin Your next question of America. Bank Post comes of from

Your open. line is

Matt Gustke

Justin, I hear you. can’t

Justin Post

about how us get marketing, the for, Thank is quarter? know program taking Help of? you. outlook the just, to us maybe about then, the EBITDA vendor frame question. could help you I one economics for compare to sourced an And of Sorry can be Thanks incentives first I that. inventory. Julie, makes Two, should differences Any incentives, you, we the you buyer maybe in for QX, aware first, my sense. core which big second think extra guess, the Matt,

Julie Wainwright

supply the economics that overall So, good, in business. but accretive is to vendor a a fact it net are -- it’s

on have not the However, still supply. it’s be to -- very careful we

where prices riskfact.com, up to impact you a a end goal quite would few. become its on dropping Our not is you,

diversity supply have is our all for taking. on we the wanted the our to to in free but mean margin a sort that take really vendor our gross for of approach high So we that good that price it’s increase with way is one a there vendors products. it of We in doesn’t a can

also to call height, they in to meaning skewed look much us in invest team. pretty unit depth the getting overall our amazing. it AOV with and to core accretive a But They invest both stories, have are that an do have the which do supply is we too good things things economics platform, is at there vendor. getting sell makes the on added tend we sense. really which again sell higher benefit arm we platform for to the optimize The to and of average So, a and -- along AOV, early

value If person, perhaps, they things faster you sell it, think do high about and in online.

So, have and they a also marketing benefit.

is with on transcend those we to analysis do COVID lot but those look how COVID acquisition they for a up of out just to we times and as us. supply get them high of got in have So good see even

Matt Gustke

about keep vendor of regular how not more It’s our to Yeah. on The vendor the for business it’s just consignment else. synonymous. comes in taking important add quick our everybody direction thing to supply One buying it and flexes inventory are vendor mind that it. economics, like we upfront majority want terms on in in

value consignment is but high well. course the purchases adding some So direct is There as side of on we there strategic supply. about be inventory more there, can

profit vendor really supply value channels bring an are separate two overall. order high gross the those of So vectors, focus per our the and enrich incremental to metric

the start we have declarative for so of On GMV, But in transparency period that provided which are Arizona. and terms think done roughly for quarter-over-quarter. QX, up substantially down of we other directional a quarter-over-quarter, comfortable much core these expenses, obviously, tech buyer too in marketing, the to operating that. and be the our and expenses me bottomline profit appropriate of question, seeing uncertainty being expectations We We stores. incentives guidance could we is about we our on that of open gross for excludes modestly a there acceleration, GMV being ops realizing namely bunch flat

technology to investing of are We in above. support the all

be was up going amount then to decent So, modestly. a very kind up SG&A very, just as we that of said and

it the to extent There’s all the range be to we is add amount in ultimate of that a growth the out. determinant that there. shakes whether fair real still that bottomline good which sort So together, could grow going of be of

Justin Post

you. Thank Great.

Matt Gustke

Oh! in I that’s going didn’t down guess. didn’t the that that available now we year-over-year supply mention that in of We back year-over-year. see already I to buy order start per -- -- was inventory flat with essentially to positive The a being incentives, profit basis. I gross January. embedded answer Meaning, guidance trending hand-in-hand to hit our recovering on

supply, So continue as we incentives. types of to our grow it’s just lessens dependence on using those

that. seeing are we So

Justin Post

Matt. it. Julie. Thank Got Thanks, Thanks, you.

Julie Wainwright

Yeah.

Matt Gustke

you. Thank

Operator

Baird. of Your comes Mark question Altschwager from next

Your open. line is

Mark Altschwager

sales getting how afternoon. I to with the could team this virtual? give an your on hoping Hi. a of to also club question. productivity the update was trends to now bit adapting you clients that are the are move all larger appointments. really the us my trending virtual virtual How are with taking curious Thanks some for Good you the interactions? is And more we used seeing

Julie Wainwright

in-home, request. to multiple at stores than home I box say, where white virtual still starting and it in look now have previous have people that. into we channels we at we So closer And of when have upon the and would we the is and us that glove directly virtual, people’s stores. and to ship to have we are a go bit little involvement got with direct back shipped it you have a the sales put some look ones We

into a So, up if home, maybe for items, actually pick your do to XX% virtual example, if we we we appointment. more go than tend

think we because people a is and virtual that it’s we productivity early on almost glove mix white just productive and once get the are. between virtual in that, Having So get to out get more COVID depending -- be of will said where going breakeven will days. we our

a wash, have it’s but it’s during So a tool COVID a it’s to great have -- been for good almost times. the efficiencies us tool still

Matt Gustke

know our we look meet It’s amount is the going for them to Yeah. -- it. friction let going do don’t consignors are longer just term to don’t they to are like us is whatever feel But mix least we going we like. we of what the and

So remains virtual be in-home role, a ultimately how it a definitely has does but out have shakes seen. role, to

Mark Altschwager

Could Thank on you. drivers, a some on more you Matt, bit follow-up as up commentary. any the going look pretty just year-over-year. on just us what’s there ahead? looks color vendor then, related quick of Inventory significantly it’s like implications And a the we maybe give

Matt Gustke

Yeah.

is numbers a of small here. inventory Our lot of sort

it’s like I vendor year, increase relates few large think think, up a tens XX-something-percent The over millions. we transactions executed quarter. basis majority still in to pretty increase percent a But something that in So of XX of that’s I increase. that’s that couple the in fourth substantially percentage the on but of

we how selling. like terms the selling and quickly that we what are far really product are things in So are margin price, seeing we of average realizing

go order to through of for gross P&L So, slight to additive forward. be the think going ultimately use as flushing small we we term cash is profit per

Mark Altschwager

Yeah. Thanks for the all detail.

Operator

Wells question Fargo. comes of Ike Your from next Boruchow

Your line is open.

Ike Boruchow

Hey, everyone.

around quick last it on acceleration the months. over next of in that about for add way first terms Is was business. think and to to you, congrats it XX% you be think questions direct, year Let fiscal the just on XX XX% the we going the vendor said upcoming to in two penetration? Matt, I kind my me one business of get of should could the the quarter XX%

Matt Gustke

Okay.

aggregate just this again. So let me

inventory vendor, would So of to In vendor, we right is -- XX% we as GMV say basis business interest. total are the lot which that tracking the think, a for substantial. purchase a basis. sort opportunity is inbound the still XX% that quite There’s on to yes, direct The of call aggregate, on combined still sellers is I consignment still of there year. through zone we channel progressively the go we

see continue We there. growth will to very strong

Ike Boruchow

it. And picture. question, Matt, bigger second just then Got

of a have expecting high to for to wanted XX level kind you level evolved guess has mark would street the I higher I’d hit EBITDA I model positive adjusted is profitability the the over you around totally I was I clear GMV. But months. you ask $X on of believe I it’s little right guess over just So not the that that outlook, now. pre-COVID the be past question billion understand question,

So margin that in GMV the maybe much does come cost down, of maybe mean GMV efficiencies of would because lower model. of need or the that it’s revenue change mix or greater of revenue better business more so number or because would the you

get into I holistically level, would high you about Just but details, to the kind of how want don’t just think you that? know

Matt Gustke

want don’t into I get that’s far. to and right. are You there the details something out

more sitting I the the the become. But the be past. made have that’s not lot am areas. obviously the that I diverse that going good coming But that I predictable we fundamentally, and us things am in in allows about COVID a talked out how have COVID, we we the well of forward there’s and So business of think in encouraged as further here, most update supply channels thing other fuzzier grow by having to out come of as going go is progress to we anything during set more a

future, level that of are here going far we hit in ultimately highest anything really a very point the to at the fundamental that’s So and that terms breakeven. I when in out that don’t of looking setback see sitting

continue neighborhood lot have that we right amount the as can of of done short-term stores, balance getting and the of we we we Now between we more They But there, a are sure now always making a a we will and say investment. be from drag. really lot are to to those. are will happen. course, we If hey do level things of going seeing

focused are growth profitable We on going forward.

Ike Boruchow

Very Matt. helpful. Thanks,

Operator

Your question next Siegel Capital of comes Simeon Markets. from BMO

Your line is open.

Simeon Siegel

sorry you contra Good Thank thinking Thanks. everyone. how on you missed the -- and this and given this million then could buyer whatever returns any I are QX and $X.X on drove help any And if rev what items comfort about just quarter pieces elaborate adjustment? you. that incentive you in cancellations help afternoon, it, Matt, into have just moving year? then reconciliation for

Matt Gustke

Okay.

parter. three Another

adjustment got buyer I returns and on think I it incentives.

Julie Wainwright

Okay.

Matt Gustke

tends that I use or specific to because like consignors. sort tactic couponing with X as of are new GMV individual that them run to us of a closer think of as to -- have is consignor historically X.X incentive buyers and GMV points and in to about used that that quarter growth buyer maybe percentage percentage X%. supply, new we got And fourth Buyer growth, a drive points the about

It’s were call an based more are than broad we marketing. drive to -- We are wanted we As seeing. we the immediate of to it. with really trends action encouraged

supply be of from a pivoted buyer are we or not. because that that seeing how what it short-term is sustained much to lean some on marketing So basis, basis. governor we incentives. case the to a our expect of into Don’t results is need really the good investments into We the on

on So basis thing. I’d were. they versus continuing roughly it’s really favorable Returns modeling tactical be a a to short-term how and But quarter-over-quarter is it. cancels flat where be

starts the the sort see over recorded outside that our error a in so had manually of little error to adjustment, to and some of and audit reverting that that immaterial subset And of to a product manual of I to It’s mix part of U related were just these was. come -- going incorrectly by then kind recovery our consigner it of are payment of to through as almost a really where come mean the XXXX, time. guess of in been or We we payments mean. reversion to shaped time we sort and over our back the accumulating kind little COVID as processes were made statements. The discovered payments normal financial corrected itself

We process. have corrected reconciliation the

the have is it in the So present that’s filing results XX-K. and flushed quarterly we the good period with we adjustment when forward our that to back belongs going of our

letter So, of and doesn’t again picture QX that in muddy it without and immaterial, financial And and for with no on and on our sort both go really forward presented hopefully the clarity results. we this adjustment one-time stockholder basis. helpfulness, impact meaningful a year-over-year

Simeon Siegel

Best luck of lot. a Thanks year ahead. for the Great.

Matt Gustke

Thank you.

Operator

of comes Your Raymond next Kessler Aaron from question James.

Your line open. is

Aaron Kessler

guys. Thanks, Great.

assuming it half into follow-up we that Should half that’s second impact we a terms Just the go a questions, profit kind sounds managing some of take of that, GMV on realize ramps amount. the and throughout to per gross leverage I like mix the more rates, be us into tech ‘XX make a sense the year assuming of you in vendor would going healthy start to just can that’s couple to maybe the first and are as Thank take on increasing helpful? just ‘XX impact give on just mostly rates well well? operations order in obviously And be then for you a as the on then that as of line expect you.

Matt Gustke

in vendor impact Then remind take Okay. the like, rates let me question. take -- on that me somebody

Paul Bieber

tech leverage. and Ops

Matt Gustke

impact. All channel. that should on tech is mix rate. to Overall main the it and because and Ops than AOVs value structure it’s are take direct are up going more have rate give equation tends is profit. the it in like-for-like commission consignments difference purpose -- and lower leverage. it more it’s identical for you. gross equal, have those take coming I be that things between we right. to an just terms take positive Thank be products purchasing. can’t again of products structurally mix and overall, Net-net a skewed -- toward gross to the pretty into offset The higher profit with a of is all predict in now. virtually inherently not really on whatever On our rates. significant consignor. individual in be by and ultimately the per But, impact Vendor It higher modest order Those is basis,

because too get and know. don’t I tech, of ops terms In I don’t want precise, to

kind progressive out come and are business we as OpEx say, investments that’s what stores, alongside like a start But of extent to through we The we look we is strong it’s to the that state to see the profile the what really strategic of core leverage looks in the of that we COVID. an in tougher our that to program, more And short-term, of invest cetera. that’s have growth in we -- basis, of short-term out these COVID, fundamentally of expect get would year. each see obviously will it lot overall, is et part lapping we and technology continue rates operating to a in the power the kind Arizona, controllable. delivers growth the initiatives, I sort business is leverage steadier When recovery, as laid a on growth very the like quarter So a increase. is vendor yes, making retail,

Aaron Kessler

That’s Thanks it. folks. all Got Great. guys.

Operator

Anderson Your next Susan B. of Riley. question comes from

open. is line Your

Susan Anderson

Thanks evening. guess I question. for on Good stores. the a quick Hi. follow-up taking my neighborhood

any planning profitability looking or to there’s if also And much could then them? Thanks. insight curious cost opening where at you Just give to you into on cities you are how are them? if the open and it then specific regions timeframe

Julie Wainwright

Go ahead.

Matt Gustke

Yeah.

Julie Wainwright

ahead. Go

Matt Gustke

start. little a talk will about I earlier this I bit had on.

months X,XXX. higher second the hopeful we XX-month on just are old. us wall lease that basis. looking ones About oldest days a basis three-year little then four neighborhood. a to But because $XXX,XXX CapEx a square feet, have know it than end X,XXX we larger end the approximating in in these open. little quarter. weeks about six by two-year, and than them to get bit the a a are it range certain that from we call Brooklyn of hopeful, spectrum to look are little X,XXX are speaking -- the open breakeven a square And we more takes But like is of it at over few open on X,XXX of though, the we will don’t feet a terms. generally the We XX They can like about footprint in

So short-term… in the

Susan Anderson

Right.

Matt Gustke

they start perform. then But like -- time be we there to go then next This or some let excess it and a drag, continue as lower. should then right? …it’s we year

Susan Anderson

Think of store didn’t surprise. Right. thing with was coming be. model key some it we a to They outside And of neighborhoods COVID about restrictions. restrictions urban on are in is have number location continuing and people And based areas. again this based as the on other you talking should a the

only neighborhood. City. So two we open in in York’s now a York opened in don’t in have and Alto, their two leave Palo only New and we Right New to have City for people like opened one We Brooklyn. York another example, now, place we may we New right big New York

in So sort as you thinking places start of have California, place. of Hollywood. Other Beach we a a natural open West and store Newport yet Connecticut in we

in would travel -- the of of pockets you off drop to big it either assuming can and but a a that going buy almost or consignment U.S. store. there’s are sort by out prefer So to likely consignment, far neighborhood where here’s that most people the cities it’s here’s is huge figure yourself unbraided

Susan Anderson

handbags? guess, That apparel in Great. seeing category sense. product you That’s helpful. expecting I a makes that And then, just terms you guess the of continue February. the I to to the first by on are follow-up trends being quarter Are levels pre-COVID guess, fourth increase to back about maybe, penetration similar jewelry ship and quarter in and or I we should think to of

Julie Wainwright

So already shifting. it’s

a I So at is kids to clip. don’t going beauty growing besides happen, but know don’t -- everything and nice obviously we what’s

diminishing men without and we the watches. have and across nice a of our the handbags and everything, jewelry That nice women’s actually business growth in every are So is bulk category growing is apparel.

comping gives is good lot it a now month looks we and us months, was that once it a growth and of non-COVID hope. are -- it two So returns to right non-COVID it

Susan Anderson

definitely very positive. Yeah. That’s

next Great. quarter. so luck Good Thanks Okay. much.

Julie Wainwright

Thank you.

Paul Bieber

Operator, more, think, if there I one anymore. we can take is

Operator

comes Fong question BTIG. from Marvin next of Your

Your line is open.

Marvin Fong

fitting Great. end. at for Thanks here Thank you. me the in

looks already neighborhood that one Just a follow-up the question been successful. has stores, on tremendously on

that just the stores ultimately? in of number the past be plan could to would opening so, going of activity, you you of lot for or are you not points maybe off will is to a one making what And international pretty points last something of be really back and or drop on stores then, the statements you I think, you you there the store seeing rethink we just been about retail that? some said talked primarily see maybe haven’t is the you enjoying of Matt, where round question made the then curious if go have lot I your had the if or -- that international some do something increase were XX you to is Thanks. which stabilize in FY And you also COVID you get because past, think quarter business, that to strategically second if out and on just XX you can do curious of with like have that you the progress kind have we success in maybe ‘XX? a in to think make

Julie Wainwright

Okay. Matt?

Matt Gustke

Okay.

Julie Wainwright

Three parter…

Matt Gustke

No. Four parter.

think, goes. see I how it So let’s

Marvin Fong

Okay.

Matt Gustke

that, we if that perform like Palo neighborhood So ones loosened. I we better like restrictions that they capacity thing or as have Brooklyn where those the have opened get three recently around right? the stop, So in Beach. to if frankly stores we stores. think And Alto roughly with question -- continue not stores, and that’s Newport the XX and I look opened hope

open to investments of want them than marketing acquiring more local, We number far because they more like are and of personalized do. look more unlocking consignors want a fair they efficient our what can probably at alone. more to be substantially supply it’s targeted, up going Far to

our would two these I business. -- if aggressive quite not of fundamentally shocked. would talking rollout now about would a are healthy you I from more for pleased be be are stores. So That actually a quarters be thing we

the incremental they at and acquire efficiently perspective, a lot how are supply In terms us. more side. on an to the as, new we versus of them our are -- consignors mix I demand, very think bring they incrementality still supply They look most of view powerful from supply of on

on interact the our in store interact than online. people supply active side, the it. to is only NPS with -- are who it On mean, our it make exceptionally with People value they us can argue makes you love far demand rates easier stores do low, who products. are high. and us The sell return Yes, demand helpful. they more buyers both are high quite I

So very healthy.

good think question. a I it’s

good in sales, of those store supply. and not I across lot that see are interest Board think there a very is finding we in like the just the people shopping

Julie Wainwright

are smaller they footprint. wait, Well,

sheer they of look at footprint or So the there, the about are of smaller they just footprint a what store have SKUs which flagship. SKUs have supports get the store we less smaller of number design, efficiency if flagship by third would just But and cost means have. versus the you they the in like, a

mix per local tuning So the square really job They of nature, good even on team. to in based foot maximize the neighborhood. dollars it’s the done merchandising that sales by have a its up fine to

have that’s their level a success, -- anything. just can’t It’s means size never which because less they alone they SKUs. are you dictates -- restraints buy the of we just size have certain buy will said So

Matt Gustke

to about you talk Do want international?

Julie Wainwright

any see I International, that year I will year, we have sometime but top begin for would peers. do assume it launch planning next this year. impacts expect international a from this to not

Matt Gustke

Planning this year for year. launch next

Julie Wainwright

Right.

way international another do not incremental expenses set see So year. to expect associated or GMV incremental with this

Marvin Fong

so Thank you Great. much.

Matt Gustke

Okay.

Julie Wainwright

of to to on back time So, you for we the you your our thank are I vaccinations excited Thank call we want next your you much. note, be to leave all looking and get QX growth back are I to when results. want to me. you comes to encourage very just And our forward attention. to up.

Operator

conference. participation a your Everyone this else have has and wonderful gentlemen, Thank left day. you today’s the call. concludes Ladies and for

disconnect. all may You

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