The RealReal, Inc. (REAL) 24 Feb 222021 Q4 Earnings call transcript

Company Profile

Participants

Caitlin Howe	IR
Julie Wainwright	Founder, CEO
Robert Julian	CFO
Rati Levesque	President
Lauren Schenk	Morgan Stanley
Erinn Murphy	Piper Sandler
Anna Andreeva	Needham & Company
Ike Boruchow	Wells Fargo
Marvin Fong	BTIG
Michael McGovern	Bank of America Merrill Lynch
Oliver Chen	Cowen
Tom Nikic	Wedbush Securities
Michael Binetti	Credit Suisse
Edward Yruma	KeyBanc Capital Markets
Susan Anderson	B. Riley Securities FBR

Call transcript

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Operator

Good day. And thank you for standing by. Welcome to the RealReal Fourth Quarter and Full Year 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation there will be a question-and-answer session. today's being that advised be conference recorded. is Please Instructions]. [Operator hand over Head to I Investor would speaker conference to like Howe, now your the today, Relations. of Caitlin Please go ahead.

Caitlin Howe

operator. you, Thank

December results Joining Wainwright; Julie Levesque; Officer, the me discuss Financial Rati our our Chief Julian. today period and to President, ended Robert XX, and CEO, XXXX, Founder for

Before we we to unknown make statements, forward-looking like and will known risks that and you begin, remind I uncertainties. which would call, during involve today's

such differ Our from materially statements. actual in suggested may results those

financial more the You risks, in and and recent find presentation release. Form to these can provided information our and both uncertainties reconciliations on historical which XX-K our most we other will non-GAAP forward-looking, GAAP about affect XX-Q. comparable earnings have could also operating Form Today's the subsequent reports factors company's include press measures that quarterly measures, results historical certain in for financial most measures,

the today, to into would RealReal will a to remarks, earnings Chief website. introductory issued I the press now we which In of Officer directly Executive we our Wainwright, Relations and for on a over call of go addition question-and-answer available Julie? turn session. both then to Investor release, earlier Julie like letter the stockholder are

Julie Wainwright

and as as today. quarter you and growth year expense Thank We're you, full financial top-line Caitlin, joining for operating call for well fourth the thank with leverage. pleased to solid our earnings everyone results to announce significant XXXX continued

use continue continue managing our of costs. a rate effectively high ability expand We operating our technology are in at encouraged we XXXX, while by to operations. proprietary grow business to the our Throughout also to

equipment innovative algorithms. efficiency drove we diamond our centers, and AI authentication our learning machine proprietary operational technologies, through and including in Specifically measurement

in business driving selling we through technology our to higher of expanded our improving enabling refining algorithm. prices average increase to our and use -- Through of operations, unit an economics, our we scaling the Additionally, pricing drive in are continue increase ASP.

providing of for Therefore, impact and becoming year business predictable full the forward-looking guidance recedes, COVID our is more to QX again. As return we today, XXXX.

position EBITDA time our profitability. and now number costs Importantly, productivity; adjusted cost profitable RealReal forward we full top-line and least a in controlling we investments conclusion assumptions: look March, path a to in relies growth in year details the with annual variable as fixed at and excellence our X This providing We financial we on prior XXXX. will main in XX%, to XXXX. improved our report At long-term to targets for leveraging are regarding basis line our be our project attaining Investor on to that three, technology operational profitability continued of and that our Day stores. more Vision refer expected

The interest it our the the We been We session. that, business. have about of our in prospects demand these more believe never indicate growth is resale we'll long-term up RealReal and heightened And with on positioned momentum trends. to increased in space. uniquely for capitalize the consumer now luxury open Q&A excited recent and

Caitlin Howe

questions. we're Operator, ready for

Operator

comes question Lauren Morgan first Schenk Our [Operator from of Please Instructions] proceed. Stanley.

Lauren Schenk

that? stores just within target taking What's assumed an you're assumed looking that there in XX% questions on that line my it towards? had profitability. Is profit I still Is time Thanks gross for Great. the get does question. GMV order the per Or a that CAGR then $XXX to few the projecting it any to -- to that store opening And be sort total need assumed XXXX number above there? that cadence number? of Thank sort you're or lastly, of the you. key in threshold? what's of

Robert Julian

let Julie weigh and I'll first also of part in. question, then the This is Robert. I'll Rati and take the

target that at in this GMV not we're XXXX, So specific for terms the time. disclosing of

the GMV, Julie or giving said, plus. providing we -- we're specific a growth the is we're with top a line assumed have XX% internally, the target We But is rate GMV what moment. established CAGR haven't which the established not not consistent but at

We our year. XXXX adjusted targets XXXX. in revenue targets adjusted specific EBITDA give Investor not moment, of than as our we're XXXX the for as specifics Vision EBITDA at will in providing at GMV, for part March plan, our will, long-term other and Day the in be positive But we that

gross year to per an per XXXX. target, our grow. important somewhere specific in And As do it's Again, far grow. profit continue look it's of order business it continued $XX or and to and at $XX to we I expect that metric profit gross continue we ended it monitor not a the within as and to order. has we think And

the I wouldn't totally about profitability, refer reasons people for base. holy our grail important of it the most one this is talk many it from ignores cost other to the However, our is to

looking the our other we're cost while plus. way, increases look I in is base, a forward. going our and low growth call you what Julie to very it's our or or cost at relatively single-digit gross it, variable again, I fixed It continued modest in say, is, cost us earlier, to XX% get continuing them some at would of to productivity so required in indicators And key to order, And base costs variable at would really on responsible modest rate our to for mentioned manage profit our profitability. metrics per productivity encourage fixed

I'll make over far turn and as comment, Rati. to it openings, X I'll store new and Julie As

good about where our open be to store in looking X works. going new We've new for opened XXXX already And model California. places store continue We in Brentwood, to in always locations stores. opportunistic we're

lot. was a So there. That pause I'll

Julie Wainwright

to And our to I locations. stores say that retail that than I have would opened continue for healthy, we agree metrics the year. still be X XX% on come less consignors from that store with Yeah. of the new openings. are continue And now our a

traffic new average well, They price. We driving continue that higher effect halo as are selling to see a regionally. happens

looking to where see locations to are and continue us. our And metrics new buyers for at those could make sellers locations and again, what So be are always we healthy. sense

Lauren Schenk

Very you. helpful. Thank

Operator

Thank you.

Please Piper from Sandler. Our Murphy next proceed. question comes of Erinn

Erinn Murphy

questions for you. Good me. thank afternoon. Great, Two

sources environment First, as you we're given see over can the think seeing the market? business about just pricing primary new increases category, a and gross the that we about going much. healthy. for normal looks in supply. you particularly as that your appointments versus from to have the question a you in-home still the per you pretty umbrella sounds is perspective time like utilize still about the appointments? talk that opportunity the And second Thank virtual it's the from I need then so price handbag of in is about forward? order profit inflationary Can talk how there And around It the we think stores

Julie Wainwright

Sure.

the two better us our rationale us the increases of value levels. fairly Let's Well, allows consignors specific hefty talk price resale their in announced bags for One, handbags. and in that on offer absolutely LVMH to about certainly the benefits and consumer. those benefits raise a still but

the wins, versus attractive. makes win and consumer consignor buying it retail, full retail the So even more

all that's So good.

have impact We on average order side. the what's the back here

economics. for have unit possible been We

X.XX been per now size a average two price at as years about to units average on due the over going for order from last Our unit our increasing basis X has steadily order. us has to selling

for consumer change embracing getting oversight getting human and that that bigger the a means average selling is so forthcoming retail. that able algorithms more prediction. change. demand and be wouldn't our people sophisticated that unit with what prices we will are been overall, you a going make are see price combination AOV say more that price And is share to retail of to of has But adjust general our up. the I can as pricing the we'll in What and says we're tell quickly us market, wallet in that we in All

over So that, to Rati I with supply. turn it talk about to

Rati Levesque

Sure.

you continues be said, as as healthy very in sources is supply, of and healthy So it to far home. like

they're And hit. concierge lucrative services, part to we during for our is Virtual launched per that day. also also us. followed our It Our retail also be appointments COVID most now mix, it, and call years X very locations. channel is team to the more that COVID sales by ago because able of continues us, valuable for the to what we when make productive more first helped take

well about the good it's again, then helping virtual units in-home both supply overall, really the and as with and retail as coming in the So feeling in, productivity. we're But dollars.

Erinn Murphy

Thank you so much.

Operator

you. Thank

from Andreeva Our of next Anna Needham. question comes proceed. Please

Anna Andreeva

full on mix And shift Great. And We I in to the we good just follow Thanks should Real of to will year I quarter. But gross secondly, be gross the margins then two part big implied guys. that forward. And on up how the direct follow mentioned decline margin the questions. XQ going was And a so a wanted owned that. processing in and you think inventory think about delays. guide? much. to fourth wanted had up I limiting afternoon, curious

You affecting that's you on out you XQ? December much. and Thank Just how that much and early late called meant quantify sales Did what to January. trying in gauge so EBITDA?

Julie Wainwright

then part Well, I'll and I'll switch take the over. last it

and the to with to it dynamics we repeat products that on and more just such site So satisfy have is on our site, explain the engagement demand. more dependent of getting marketplace us up a high such rate the because

pretty site rate, XX% had with in call in we went So op hiring centers January out to significant. actually we our into both behind and up then

was with get on and that to site. very Most and the with the product we impact normal fine February, prior receive dropped For because back wasn't to normal perspective, are because a ago second which out. for the only return XX% about on not will we growing coming have the at now jewelry in. except And them in people to didn't shortly. importantly, we week our the area, site the units back January up then didn't commitment year watches, to products new versus The We're it site. normal to call engage once

coming So in, had product backlog through. which we of we're now a working

and first due guidance, a us. at were the is you to said, quarter, have hard as So of knock-on prove we effect. now and the call Omicron our due to behind X that X.X mostly, the to that speak as always mostly XX% were can see if but now, I weeks you it's you is, depressed we to growing But least

gross the sorry, on to So now it to to I'm -- going margin. over turn Robert, Rati

Robert Julian

the of total And mentioned, reconciling in decline to I just gross the was it it's in you've mix the under prior direct that was already XX.X% of it's due would about revenue. decline. did point year, direct XXX versus a as came One different QX in two business revenue was last of our XX%. a the -- year, about from increase total it versus our percent the business basis areas. primarily margin which And say Anna, in impact

people's that of And mix Rati And revenue of that where and so negative appointments future, deemphasize we supply XXX as of COVID were for you had to points. to purchasing are business the inventory. intention deemphasize aspect reasons revenue is basis of our the mentioned. when decline was we get during a concierge-type in and percent our that impact direct into around that homes And intend on mentioned, to that we part for a in alone our very our did for future. specific challenged the it impact total these business part we to being as -- But

was mentioned, I points XXX. as Now total and basis mix decline was XXX the

It's as was were just this that very Last year a So offset, year-over-year. credits utilized improved site reasons. positive quite the for actually was positive a site necessary year. again, really revenue. credits and a there percent bit specific weren't of offset And that in

gross credits due about we our And margin smaller of basis improvement much total point site percent becoming saw XXX a our to overall so revenue. a in

two And point gross that is net you year-over-year so XXX decline see. between the those margin the in basis

Anna Andreeva

it. Okay, that’s helpful. Appreciate really

Operator

you. Thank

of Ike next Fargo. Our question Boruchow proceed. Wells Please comes from

Ike Boruchow

half thanks two and much. the we into take continue to questions. between the One, inverse Robert, so AOV year. Hey, of expect rate first relationship persist this should least at

shake guys NMV is is And just out. then that understanding if is downward where think Anna Maybe land us that whether of think take Maybe and this asking of become kind terms the guidance, to second much 'XX of XQ, you continue should of that year? I said question it flips least third target about just in was about, of mean, -- kind of the what where it in should to where than inflated your kind come the to your curious in you on planning has up? AOV a fiscal help being that it's be because rate it's expected down, exactly XX% I or revenue. based the are I don't past, understand fiscal Just really for at I more trajectory,

any great. be So health would therapy

Robert Julian

Sure.

in So between will there Ike, price those a we relationship the rate, of on selling or certainly, the value is mix. take rate percent determined market inverse is first by when rate it average changes your in items by in primarily terms a of competitively you the be question, to take items. that's changes really and category. what see results, continued higher in our due take And smaller And take

so it's question rates at value or higher items And value higher we of, take rates. take just are at a selling lower lower items

it's rate, on important a take necessarily the way, the on. path necessarily. the cases, value profit There a they and are very up or So a to are per the have But thing changes take our and that our take I rate news wouldn't a we rate some higher and we're gross we profit to we're mix where in items items, Because which fluctuate and increased products focus good thing so than profitability. that business on bad news the good mix, to taking by in with a less bad and these basis, or are necessarily past, basis associate $XXX of order reflection primarily, lower on It's or items not selling. gross some like just as actually our down.

on rate in it where have sense. our seemed And or rate an where there we take appropriate is so small made our basis, increased it item movements take

your take to the... So did that's before I question rate the answer question. move that And on

Ike Boruchow

asking, see stabilize if improve the where guess I maybe makes driving the sense? is. in what's way it continue near Yeah. I'm I could I likely for we it. the and Or say, was me dynamic inverse mix a understand to rate should that happen, the long-winded to it guess to even start understand term? I take is to mix. start that

Robert Julian

say model. It I at I a fairly a and stable in the less is. level stable. might down or it I that's this little see my but bit, fairly up see fluctuate stable more

Julie Wainwright

it consistently gone Just stayed up to average order value and now. up has

-- of do is we're we high-value, getting so share order we're take then And and believe value items. bigger wallet by driven more average lower a rate

Ike Boruchow

piece? Then Great. the direct

Robert Julian

am and a QX, was XXXX direct out decline of in over a I piece, about of XX expecting figure On we talked direct numbers. revenue projecting -- basis, decline total and a bit get XX.X% little as the the about on and XX% So Vision to QX, full a to year further total revenue. XXXX inflated. And in was we and that direct I gave which that was revenue to

that's of a auto direct now. grow. business that continue with in returns policy associated Now part will part The paid there to is

are the projecting to gross numbers. forecast to in run, could due part total to where own XXXX it the see part direct And and end to of over I of resell. alone, business XX% XXXX of less. ends at long-term, our are in And we we in So XXXX. revenue deemphasize Where going an in XX% of was is we're our then we share will improvement our there maybe where is inventory. declining long mix improvement. items see be stabilize. margins that will as always the up percentage course, our our up But But XX% certainly mentioned, will XX% some we or it I it business the we AOV and to Vision of just direct, should is the that what purchasing our

Ike Boruchow

Great. Thank Very you. helpful.

Operator

you. Thank

of question Fong comes next BTIG. from Please proceed. Our Marvin

Marvin Fong

street expand questions. for also the looked what first just for Most the maybe my improvement leverage on pretty quarters one pressures taking more operating it Maybe looks and of Thanks EBITDA quarter me. so year. you bit the guidance the EBITDA was Thanks. of asked, the for like on expecting? The since been have might like efficiencies just a But the on line Good than be cost first more it little expect you quarter. implies adjusted evening. good to after a in Thanks. two the the the last some just comment realize, could

Robert Julian

up is start our of suggest does year guidance a variant in and QX, through exactly side Rati or and on supply sort corrected. more full But with it a that -- throughput. not that sort we're look impacted And less which slow the good we the balanced And product bumpiness actually and are we website. on the it back And is little little to got we system saw as think the to news getting a that's of actually I we and commit the Omicron at I'll could sort that, -- perfectly on QX terms think QX. So in ultimately about, of it projecting labor. has not in SLAs of did that of bit you I little bit bit throughput what start supply, the The behind the results. SLAs us, where the for our for reflected talk

Julie Wainwright

So rate. to saw level, of And we said continue growth EBITDA loss reflection at the also a another we that that way, we a the expected didn't is this continuing. expect to be in top-line

fixed quarter where -- we then we're because pick to had to still that But up the leverage. way normal. back variable get get many the and so going So slowing expect basically temps, And the to didn't is once cost we of hired down -- but this we we leveraging call-outs forward hiring in Omicron, area. in that first

Robert Julian

rate year And as that to the continue. we've to just and year. go at past the frankly, continue the that then guidance quarter, maintain corresponds of And cost leverage this And forecast. the adjusted we that's growth fixed the little GMV grow to year out every our quarter, our we'll sort and continue year always you a quarter. fixed on cost of bit And frankly, you'll each highest so the EBITDA we see more better And the through this pronounced in improvement go why project the year gets as as usually leverage revenue and the generated we every full see the is the end throughout as to adjusted our you of to which productivity. to full pattern gets quarter is we through quarter fixed on go the year the cost continue acceleration in will through base, fourth productivity of an EBITDA

Marvin Fong

great That’s everyone. color. Thanks

Operator

Thank you.

Our McGovern of Michael proceed. next Please question comes of Bank from America.

Michael McGovern

taking have question. for thanks Hey, my two. I

ask just some you off, you bigger of XXXX to Could investment underlying First And to want about be shipping on? I what XXXX? areas the secondly, expense wanted then speak ask to about QX. And will spending I for guidance. in to expect EBITDA the

I a headwind. think it was pretty last you quarter, big noted

So ask in I wanted And on to improve initiatives of just that stood overtime? the what shipping to are you. Thank QX. where expense some that

Rati Levesque

and Yeah. start Robert This Julie can in. chime let Rati. and I is

variable authentication continue We'll said, of on of see will It's and far on is what our facilities like all both really are beginning. pull really those Julie that because of about especially big centers. that automation technology as lever lot in As at fixed XXXX is the scaling mean and pricing, side big And the authentication just optimizing coffee, or Robert it to our a our investments spoke automation our pricing and in labor, automating I EBITDA, the investments. continue. of the leverage to

that So out. we've mapped all

and our about Over to well. few really road feel is product years, as we confident technology and back the next it tied map that

last really and in we As the were year. go, some year surcharges things mitigate far was that shipping risk COVID late did and of that as headwinds driven We did shipping, out that to year last we getting. this do and see expenses

didn't customers. some Good was conversion to inflation that of news that drop is Some see we passing cost in cart. our our of

there. we So left that

in-house charges SurePost, UPS through vans for our that's also small mitigate Carrier And utilizing We some that's in-house, us. some also of this network our shipping then to year. that helping packages diversified

Robert Julian

Michael, add said. to what Yes. to just And Rati

shipping impact see it of our offset If shipping was wash compared you more total QX in gross or but did less more that prior at increase look a less we revenue the shipping increased year, on margin. expense We terms it. in and saw and to costs, gross or profit an actually

Michael McGovern

Very Thank it. helpful. you. Got

Operator

you. Thank

Chen Our of next Please question comes Oliver proceed. Cowen. from

Oliver Chen

ASPs be leverage? XXXX. or Hi. profitable The also your GMV quite In quarter, categories, then momentum just supply. variable thoughts and/or in solid. you UPTs EBITDA add to finally, just you're you. you're fixed were regionally past, cost expect it And by UPT York you're thoughts like if or thinking sensitive sooner on relative and versus forward? would on if on encouraged how the you And question, comments proceeding? and And about New mentioned happy really in by love on in momentum adjusted a growth an the seeing? quite On outsized are been that's you'll sounds digit has Thank Would your LA What your ASPs, thoughts to basis question. be going profitability you could double any letter markets. Second modeling

Robert Julian

multipart Robert. one the Oliver, the take this first is question. I'll in

a year, feel sooner be really we will going I path I'm In in than to confident And as not quarter. that. into box the a to not to specific XXXX, able that frankly, terms commit highly profitability of to going I'm that. our achieve ourselves number to

and I'm feel sooner in XXXX. comfortable feel thinking time very a very not that. as confident confident we give a very going So to but think about not we in I'm and it quarter, I frame,

cost path expenses profitability, detailed in for and XXXX, success shooting our our will about variable time. like said Investor the We greater that fixed we're much in looks and that terms as to and a what are metrics what terms in more at our give going of to give details, I and Day explanation at of structure major our

Rati Levesque

can And numbers. Yeah. I take

see on And wouldn't LA regionally? the have do we I and for of larger been us. right, your regional But part New stores a Your offerings, you're supply say than past. then jewelry to are that's and as that and But ready-to-wear categories far as and New value watches, what's high way are coming another question the we mix And back bit our in versus looks us was well health more monitor normal our of have our markets seen the for healthy, and through LA you've supply as with what York and to consistent virtual side fine second pretty quite regionally. showing growth. diversified York

So a that's significant. while. the the important to a more that been actually But for couple stool we there are have part is fairly

I transaction, trend mentioned. units like So this see that we based mentioned then we on Julie that's transaction third and our per wallet selling see units going increase average gaining we'll And of as and our your share important. a that coming in more ASP. was new and Julie what well price and the believe our selling average really do as question like forward supply on in is per price versus based mean, customer

As far consignors as the at product. marketing experience connecting personalizing goes, that and buyers you've to right got the and and and better optimizing better

is So the is year you per on a go seeing trends. have reasonable it's up AOV, but based per think reasonable units very we're quarter-to-date, assumption We're for built back still I assumption. AOV forward a this the higher we think we our two AOV I past significantly AOV to And that going over in trend XXXX, here. now a do transaction. and we new if gone And believe this

Robert Julian

not the increases in Yes, least you extraordinary And improvement. I if extraordinary question, it's -- have I order in where we're or I'm improvement we've beyond don't in for think to build a two transaction average modeling units per think in some seen value. at Oliver, don't me, modeling --

think to doesn't transaction in continue value. of or per units But point average sort selling trend of up. increases or price view, those extraordinary I average order require a it both modeling from of

Julie Wainwright

to right. get To

Robert Julian

of terms modeling. In

Julie Wainwright

Right.

Oliver Chen

Okay, great. Very regards. Best helpful. Thanks.

Julie Wainwright

Thanks, Oliver.

Operator

you. Thank

Our Wedbush Please comes Tom from next Nikic Securities. proceed. question of

Tom Nikic

Is to supply. the the the source know some think by that driven And new for everybody. of question. of I wanted your effective are perspective some initiatives, follow from taking supply highly channel. questions ROI on from Or number a it mentioned to traditional from that I up store a about I the the think vehicle should the about? higher perspective it's I earlier other of we efficiencies Hi, a a like store supply ROI that your you've high are you store Thanks of consignors safe stores. guess, mentioned an acquisition than there say -- any that gains? maybe

Julie Wainwright

is more units I'll it take get And yeah, in-home Well, at highest because No, then get beginning. at that's purely visit, the we pickup. the ROI we the and more pickup. still per per therefore, value

So that's important. really

Now we in second are terms now drop-offs. units store -- the store of

shipping box got label. other prior they a and directly stores, we get to The the a us us were our would free just perspective per having in-home sources in-home. People send so to it

Our store sort of then that have a order. retail-facing in and which didn't luxury offices, consignment vendor

pickup to a the to We we've strong part is sites very but for is consignor. don't what impact get of still them, in-home the per second up units important seen pickup few the units, that. increase. Virtual continue still And is many retail. So the as pick

stores days, to also still store of early normal neighborhood our Rati them it the significantly have stores, that well. opened significantly we performing to have the very, profitability footprint only very, COVID, especially have will But well. again, store, that overall, it The So as back performing I And more in on levels. those which said, are been clear, look like stores And West year. because but and like our retail to smaller really neighborhood very to prior looks would haven't but they still -- But want time good. it's very are we be the a were a ROI stores opened -- give accretive say got and some quickly. the all X on

Tom Nikic

very And squeeze I That's more helpful. one in. could if

high So and you've kind the range. in has investment the top-line expense profitability you'll million been how drive going of about up step we talked growth? we growth marketing have do million increase require gas think XXXX. you the as think a do -- in about in bit you Do that? about expecting level as between that's I for $X a year-over-year target historically, marketing of top-line goes? little to think pedal to far dollars XX% How the $XX to think Or plus to get to

Julie Wainwright

our So business. this one of of is the beauties

whacking see meaning the Our been had repeat our put XXXX. said the customers couple sorting us good with customers growth, ended lower year a XX we customers before efficient. another been variable get new more back put consistently, ended continuing, much the will of We We show continue new To year the fact it piece. out variable But -- down to we've consistently part X of COVID just XX%, number. same is really we the think we and don't growth. I acquire in rate marketing for with months that a to year let's actually without But able drive we've consigners. way, than to in even had of we've customer cost the our aside. marketing the the there

part of don't efficient it over becomes It will fixed and need grow like game, time. a So And really really marketing to We continue. increasingly hasn't grown marketing that. it expect at cost will variable get we looks all. the

Tom Nikic

Julie Thanks, you it. year. the Analyst this And luck see at Got and best Day.

Julie Wainwright

Good.

Operator

you. Thank

Michael Credit from proceed. Binetti comes of question Suisse. Please next Our

Michael Binetti

help Thanks for guys the Hey, there. all

questions, at our higher I want but a a lot level. ask answered to of You one

IPO, We were the breakeven us the bit targeting point to EBITDA in to that down million you see time XXXX. back path at little a walk this the bit to XXXX. a previewed of from go $XX year breakeven That's we in back, million. little $XXX starting You for

it XXXX, you with X-year you in pandemic the So about EBITDA. about a In I had we out two think middle. negative pushed years about had million -- $XX of

But So to to a climb this to where year, you down the climb steeper the this to is year. to about past a right billion $X you'd in of do the from be thought little breakeven EBITDA you need bit breakeven. GMV headed have be it's XXX XX

goods. about XX%. And you stability at time they're it, number at saw I see for mix most think I saw probably of rates of a think of the you you said, reasons, I you Robert, lower But -- think here. now, the take

of help work at just you that lead did previously? dug and some few factors swing towards the least done us in map than that profitability big you see a the as to bit of of what you've a EBITDA that can can a understand you climb here So steeper

Robert Julian

a but the modeling of path Sure. inputs some our you And improvement then, the projected. year of improve the points in becomes and XXXX elements we as a to talk I'm is lot And I modest we XXXX. we in now few, improvement But that able to percentage revenue, basis that, the gross get where main profitability primarily how now I say gross in between profitable in about revenue so assumptions to to be direct in should to can not that total previous smaller changed including a to on. of would margin what's much path, too that is and has certainly margin. percent XXX-XXX a pandemic time. are I during and tell and of think going due a the the mix

modest sort at And or relatively It's of low the or base, of growth continued It of, inflation is would productivity may part in variable little SEC a And in I've and XXXX of we of in XX% of taken call productivity is operating we I which the And a control three operations OpEx, at on. would OpEx the call low sort three I that grow of again, On about the of assumptions our I to expense. rate real mid-single-digit or it, plus. we're primarily would so there. XX our support cost model, and expense I sales inflation variable. fixed is we're two And break XXXX is operations to part on look and we through into supports your know very fixed it now how technology in minus it our different them the get where of you into think what finance in XXXX. more from project different which that I and and operating And like now, fixed I in to the SG&A, say terms IT categories: in through mid-single and that and things. bridge call in that almost I categories. profitability digits confident sort marketing side, what where get I buckets, profitability And cost a that actually and feel that base. them and XXX-XXX model, of filings, project less view bit of our we HR main put positive if at to only gap OpEx, something my at to and to

Julie Wainwright

opportunistic Madison consignors for And had Street one interact of we a much, result very store positive win. opportunities. of it got actually a little investment that with the between COVID in down sort going And that out. and then slowly things the though to which And big dangerous more were understand really do 'XX the are easier retail think even maybe at high. was 'XX as little activity the and paying stronger wasn't saw slow to and a is opened investments, And market then important that New us a stores was said, in once I during -- moving we single York store. the then of big really it’s Michael, already consumers. answer to come couple bit pay rent really we a and slow, that asked. stores I are key COVID, 'XX, ways already and are But question I neighborhood store And a and various didn't out did biggest we they of to to providing due to we we that, The

So will not a as future about about and investment much and that we slower the think, months. be we XX made investments big I opened, XX in because great

So pace again. the happen one at number was that, won't That that investment. that

at we accelerated which doubled these actually did, of at deliver operations operational have technology investment, results. our XXXX, allowing we we it -- now to are if scientists you our and and actually data look science end to the one our from 'XX, other and 'XX and scale -- us data The authentication and really streamlined the invested who in heavily

like, are on going more off base seeing forward, investments big those that our we pay So But two made, okay, we're is if the them. what it's those know now. we both and of

Now we fine-tune on productivity, keep top-line. fixed costs fixed the and keep growing

is So public. reinvest went when stronger to feeling We we profitability than we to we we dipped technology. again into as out might Because would went have stated COVID it. have gotten -- in we probably we exited my

have go out. now really we're strength. you us So But might from seen feel go up in and to to like continue we set strength

Robert Julian

use words we too, just and one in be thing, of EBITDA. want that the a may And be semantics, be other to we attribute say would I careful didn't me. breakeven to it but adjusted I this I positive question that be add I about that XXXX. would said or we

positive Now because breakeven. your not projection to But that's going profitable, our adjusted number. that is you EBITDA, a and actually unfair not how question is for little next be, I'm well, giving XXXX

Michael Binetti

at hit quarter the There's you XXX of the you guess, still us very the kinds after was in history lines before I a I the easily to forgotten maybe guys you Interesting. XXXX of time? to you there due And are a would elements got that? Can through that time on like But confident see model. because going Do where some point path margins basis here. to reported right in better I Julie COVID in pandemic kind that points, the in taking margin up of be you potential be gross leverage that in XX%. fourth it's all said gross follow XXXX. coming XXXX, a guys think for hit. But year big into to

Julie Wainwright

when I to XXXX. and versus ago get we were March, remember, very year I'll But XX revisit, were I then XX% ago in mean, quickly, with days just February, PTSD. And January down shutdown. are a first first XX% we up over and year of we the Yeah. even versus hate in the

an So XX had point we swing.

base gyrations historically, look our number that order a we've drives we So the keep the you and order have our a business In order keep to shelves somewhat the of in -- and opening predictability up, of again, purchased went to at to holistically, number. was the people We inventories. -- through repeat had just but cohort business -- and huge if given site, okay once at were that why empty. the we solid keep engaged things in start the saw lot

And returning a don't invest diversified continue things is been normal. our extraordinarily transaction, in channels normal fixed we're supply but situation, And acquisition need both in or -- technology retail. AOV significantly. a our our to higher per away, So units now have we not taking that that heavily now. all in technology of are higher or to And to costs,

open to going things normal at more we're the a -- going store. we're Now pace we open when

we through a So turmoil up there. of All oddly middle, direction. really place. everything though in moving sort of the indicators a are enough, even good better lot in ended in the a went key And

Operator

Yruma comes Edward next Our KeyBanc. of question from

Edward Yruma

guess, change guess are estate. world duration help with just us I kind on short-term understand strategy of there a to opportunistic seeing know probably us firstly, these I post-COVID were how I question. the And the mentioned taking a as those leases? follow-up, easy for costs? with on are economics some thanks improving, wins then real your of like see Robert, just Hi, at of store the give any environment -- with you background, more you that a Analyst given But Do Thank the you lid in you. pop-ups? times of variable you'll couple getting the you this a of related the kind Day.

Julie Wainwright

leases. On the store pop-up we time do strategy, every didn't

depressed there. case still So retail stores in -- and

is a for So looking opportunity about instance, that we up this a couple neighborhood our store And that. just for first store us, as for opened ago in That an makes always California. of we're comes sense in weeks year.

leases, short-term than XX up. they're not meaning they're pop So they're less years, but

Do I look those to feel pretty really mean it. good. about good you answer? So want

Robert Julian

Sure.

say I no come our there's call our will in continue of on So by work I part and what that. we into cost background and what's on gains. focus And to is Sigma that. productivity. model would good seen I from lean wins easy a actually the modest cost Ed, continual we've improvement. you're in And just a That's base, really productivity was basis, and manufacturing the And built heavily would influenced Six on variable right, that continuous

controlling As I factories you're to distribution the I don't in the environment -- any is wins Probably easy warehouses low typical which or mentioned or before, cost. fixed the it's centers. is or or low-hanging running where really if digits, fruit mid-single know

and inflation fixed made operating by our about two is. what an XX-plus we the the that's we'll I of all investments that's that, a to and at to give leverage think area only continue to our than I our the our grow the a leverage of the Again, little more area which, win. support good and big cost to information rate And expenses, we business that grow they would But of That's support operating on that the have part more refer functions. that's thirds the top-line, that, investments, more is as in percent of where that. sense. is profitability on report. or made But large were real they path way, is and related comes where we is the that expense our

Edward Yruma

Got much. it. so Thanks

Operator

you. Thank

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

Susan Anderson

about that good there competitive the Thanks the as curious you over all? at couple of Hi, years. take next Are my for question. you're seeing thinking evening. we pressures taking I'm just how on look any rate,

Julie Wainwright

The and multiple cool is I'll Rati answer that categories. chime then then. we across thing business in Yeah, about our span

because do rate in our rate seen all have premium. of on ability is take have we XX%, take jewelry don't the see watches, But under to rates perspective, has We our pressure always and certain products a bit and -- on we've down. last take fine bring take been. get year and $XXX. rate for -- But non-branded we do So our work, we we the favor when the a to little take it

on in inventory more we're a blended take to not changing input, our what people then does on And change, it's and cart, having overall So it the what on actually a want actually it compete because of part through. in but not we sell rate. allows put blended us degrade categories be when it's to the mix doing

Rati Levesque

highest? we're luxury mean, is focus to almost we pricing as a have thing make with case. on But of there end I far competitive where as we so XX Yeah, what we always that. I'll Are our paying the more that's a premium always million And the to at doing sellers. shoppers. rate take are at we look just commission And the one will consistently add is us. analysis structure. less And the day, the and seller that earn sure to we

Susan Anderson

seems just handbags follow-up. like tailwinds Great. then such I'm a as seeing like watches and there's certain just pretty for big and curious, pretty luxury items been it And some big industry brands styles. resell value you're and

those Do higher we're little come that right could So kind in I'm for now of the back a growth just bit? curious that. your sustainability a maybe think of you mode thoughts around items

Julie Wainwright

actually have strong. the We strong brand handbags same, unbranded jewelry. is been also fine name to be jewelry fine and they And to continue COVID all

as luxury growth the shifting raise So the prices. expect area. some continued in the see as think brands market differential price retail continues of out do resell to And see people their we to I that primary we'll

Susan Anderson

Thanks luck Good Great. year. this so much.

Julie Wainwright

And is I our Thank you. think that last question.

for thank So that. you

I'll So go closing just the remarks. with on

throughout dedication going to joining their thank XXXX. want through So We're path entire progress be to of XXXX. as our at our thank profitability hard growth it's excited We towards for you for continue and a we RealReal move team and us. all the XXXX. fun to work And

members make have mission life our are of who Importantly, and the luxury on to XX extend sustainable. more now fashion us joining million we have

of in small So all big group. And be to you the thank you. a talking we'll

This concludes thanks. our So call.

Operator

conference concludes This you you you. participating. Thank today's And disconnect. now thank may And call. for

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