The RealReal, Inc. (REAL) 8 Nov 222022 Q3 Earnings call transcript

Company Profile

Participants

Caitlin Howe	VP, IR
Rati Levesque	Co-Interim CEO, President & COO
Robert Julian	Co-Interim CEO & CFO
Marvin Fong	BTIG
Kunal Madhukar	UBS
Jonna Kim	Cowen
Tom Nikic	Wedbush Securities
Irwin Boruchow	Wells Fargo Securities
Simeon Siegel	BMO Capital Markets
Michael Binetti	Crédit Suisse
Noah Zatzkin	KeyBanc Capital Markets
Lauren Schenk	Morgan Stanley
Anna Andreeva	Needham & Company
Edward Yruma	Piper Sandler

Call transcript

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Operator

Good day, and thank you for standing by. Welcome to the RealReal's Third Quarter 2022 Earnings Results Conference Call. [Operator Instructions].

I would now like to hand the conference over to your host today, Caitlin Howe, Vice President of Investor Relations at The RealReal. Please go ahead.

Caitlin Howe

operator. you, Thank

Officer to September today Officer results the Chief for President, Julian. Officer; Joining XXXX, discuss are ended Executive Interim Co XX, Levesque; Executive Chief Co period Financial Rati Robert me and our and Interim and Chief

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

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

that risks can XX-K our could more on factors about and You company's and Form reports affect these results recent uncertainties the find quarterly in Form operating XX-Q. other information most subsequent

GAAP presentation forward in release. press certain looking, Today's we our non-GAAP and historical which both comparable financial measures, historical to include measures also for reconciliations have earnings financial will provided measures, most the

the earnings on are which release, press both a website. we available today, earlier stockholder addition In to letter of our Relations Investor issued

turn co-interim for over I call to like now Levesque, remarks. to introductory Rati would President the Rati? and CEO

Rati Levesque

Thanks in update on of everyone Caitlin quarter Both adjusted an our and the go then solid results will business guidance. Q&A. came midpoint for GMV for and into I XXXX. financial and EBITDA third joining. we the at provide reported Robert the of thank Today, our and you

For improved business challenging environment. the to both compared and third we despite quarter a more in prior out loss year, a row margin, adjusted EBITDA

timeline accelerate As growth profitability. to to objective our to continue we focus profitable on is our

that pricing a aggressive was our levers with structure, line Since seller new end, the able costs; this further thoroughly approach provide To third, this us compared to our take and lower co-CEOs best finally, enable our overhauling we deep Through optimize took stream. projected. the on potential still November initiatives: more capitalizing analyzed the profitability are there to strategic and growth reach which X; to price commission for in the in algorithm new get role sellers; and on effect are were focused on what first, following top that of determined the second, business previously we on Robert business to have insights. I assessment, revenue

first the initiative higher-value will rates limit structure. to the consignment adjustment commission unprofitable. of of and simplification are The our items believe update strategic low-value We an and consignment incentivize items, which the is of

certain We and home, deemphasizing kids. are in of categories also art process the like

calculate their The Additionally, we dynamic added personalized transparency their earnings RealReal. to at tool a we will and which luxury our to goods allow consign to to sellers and website increase believe sellers expected motivate

business In actions believe move combination, these will the we closer to profitability.

strategic second dynamic and to to model initiative sellers The The is our maximize optimize RealReal. our value for further pricing

continue We dynamic to refine will pricing our algorithm.

taking initiative we the Early a workforce hires backfill. a in The and quarter, is remain our and cost with reduction to fourth more regard our in base. aggressive selective third strategic approach highly implemented new in

these strategic final the other we as opportunities is including revenue initiative develop. is program, monetization The initiative data capitalizing early new opportunities. final still potential will update technology and a streams, in and This advertising stages, warranty you on

flow, are to aggressively In move X profitability. summary, of the we improve energized pursue these will we believe we more business our cash initiatives strategic as about strategic direction new and

our pass third to I'll to it Robert now discuss over quarter results.

Robert Julian

and I'll prior the total for are Rati. to quarter. year. grew financial we third Thanks, by results compared open our with XX% pleased saying, revenue GMV Both

XX.X% million of revenue. a XX.X% revenue to to compares quarter, QX. total XX% prior is and million revenue, to improved of loss loss XX% over in $XX.X a $XX.X to of minus year third XX% in declining percentage This gross primarily revenue QX. margin the Adjusted of During EBITDA the QX due minus a in in as direct was This to of XX%. or compared or

compared quarter $XXX in third in XXXX end equivalents QX, million $XXX the $XX million $XX the third quarter the had XXXX. on on of million use with the quarter use of decrease a of ended of was cash compared and company-owned of a hand. We to cash Total cash million of inventory XXXX first $XX the At we to hand, XXXX. of million cash end half of of of the second of

through continue that balance expect the will inventory year. of We our decline to the end

mentioned broad are Today, backdrop the uncertainty, of initiatives XXXX that we fourth many economic guidance against Rati providing strategic earlier. and quarter

will going We impact have are positive our to initiatives forward. a meaningful confident that business these

We project in in a may $XXX we reflected QX project X range take in And minus it be financial million. $XX to GMV $XXX to results. range project to fully be million to revenue to million. million. be of of range to the be our QX $XXX the minus $XXX However, quarter or initiatives for these million the QX We EBITDA $XX in adjusted of million

Turning targets. to longer-term

basis in to initiatives XXXX track adjusted on We RealReal are Vision we an that direction. on by continue that strategic profitable to Overall, achieve new project and EBITDA our will The and XXXX EBITDA adjusted target. are we be our encouraged

now into session. With will Q&A we our go that,

Operator

[Operator Instructions].

Our Marvin first Fong question comes from with the BTIG. line of

Marvin Fong

also, or just structure change. that might Could to rate? of more out importantly, your take for the First consignment commission you some the of the expectation just specific rate you the take a changes sense on net just marketplace made, give question, us overall but how

to just a goods Europe purchase and luxury the a strong question, saw of to first-run like consumer looking buyers And dollar stuff lot environment, we that. are from some second purchase obviously American leverage on --

channel. just discounts taking dynamics sales like So just perhaps in opportunities and the your GMV of curious if for impacted first-run any consumer advantage of is outlook the by that,

Rati Levesque

and on you chime start, a Robert take in -- a the for structure the back I'll we I'll commission the have on results. step level question. the Sure. take High structure, rate and Thank commission second. for believed

what looked some at that loyalty, our We we things. our our so forth. of is more look because we much more clear the cards, it's earnings really offer. our and service news and at new and is take feedback it's contribution room the commission believed, much looked we structure buyer seller We good like. on to The getting many and the we're that more transparent, And margin have VIP, level

As we what rate unprofitable. deemphasized goes, low-value we're did as where we was take the goods far

these mid-tier took more luxury and is in we areas. goods high-end no The So to little change.

for tier means did value, that the items so We and gross may means the us day. seller incentivize the more, profit high at top bit of get end little that of but a the more dollars that

talk low-value and play how to to let mid out. high really take that in little goods So that change more low about on rate unprofitable could no the And us I'll you and level, to are value.

Robert Julian

Yes, Marvin.

results. terms in we I to being net-net it of do impact to the of So overall the all positive RealReal changes, financial be The other things equal say would constant But at mix. commission expect

the And especially price so by ranges. taking category, you're at low more seeing us

mid-price the and we're less or And most even the a the of some the protecting more. desirable bit mentioned, types are, little Rati more in categories, earn seller the we're As allowing products points at consignor, ranges. cases, there price in highest to

net-net, take in not you see a other overall rate. should But things equal, our insignificant increase all being

may caution of point, higher higher rate you not lower take take being would because things on, in are though, point, rate favor the nominal we equal items. thing would is take items expect you that Now price rate price as as actually all much intentionally lower I go up our deemphasizing

the So improve our see otherwise nominally, as to see expect. terms much profitability bottom you as you adjusted But improvement the overall will not on results might of take the rate and you EBITDA. would in the line

Rati Levesque

And sorry. then --

going seeing the and Second on as side health sellers, what question we're repeat XX% for buyer new of both second, side, are was about more consumer. growing we're opportunities seeing out seller quite the healthy the And year-over-year. a and as opportunities seller the far on

the cohorts buyers up are side, buyers On repeat are strong. and strong. new quite looking year-over-year, buyer looking The quite active XX% healthy,

good say other they're What of us people I'm will with so deciding and are order the mid-tier but a or this are -- the we a portfolios, and And be is trading our we down top-tier maybe And to X% we're seeing pricing XX%. squeezing have for not I a effect, in down and instead trade a news. sell, item, may reduce luxury you've to item heard of the one down seeing have to item, by like sure news that when bit. we the you'll we do that see is an when or for that take margins good by item that's kind

So watch that. continue we'll to

and of happen trends I'd we QX late into in saw So QX. then that that kind say

Robert Julian

U.S. And plenty strong in of the we've Marvin, dollar consumers And anecdotes that. about participating the had you potentially heard certainly, market mentioned primary Europe. impacting in

our numbers our primary U.S. outlook influences. and wouldn't that's is the news dollar But reflected not was, to market, I in question in other in it's it's term. in participating specifically specifically it Your or say have so business the more our bad for or Europe, whether GMV whether being certainly, it's here on. short impacting consumers

Operator

Our with of next from question comes line Kunal UBS. the Madhukar

Kunal Madhukar

of we it second, for be search? you strategic the One kind be And the the these A could mentioned, would mentioned on in I initiatives on could. X on to reflected also fully you financials. where search, if the a or stand couple CEO quarter take that do X on CEO initiatives the

the guide in the to quarters are see kind to of would So effect do in B what of us -- be financials? thinking And are would QX Part so A QX, Part for not 'XX, those be, a it you ballpark, going next for just EBITDA of I where couple what about or like So rationally. to should maybe going effect outlook, an but mean, we just realistically, see? looking be

Rati Levesque

Right. Yes.

here. I'll start, I'll let again, and add Robert So

search. So first on the question CEO

search. looks I is time, -- Stuart news in this piece there lead And is line good have think to strong there of pipeline. is like. the hired a on Spencer good all what mentioned profile we're we news that we the last other The are

So there, next year. probably more come early to

and of in As when next year. out, as initiative we full that the it half you're seeing back really far play about strategic going to talk the see

why these totally of that and us deemphasize in say commission like initiatives strategic -- QX they're mid-QX, have early lot So the QX honest. QX, low-value QX, taken to like I categories. changes a quarters is of the to the transitional place layoff for be like And

quarters back and really to in we'll see have any see So of really it couple will the a of meaningful next half to -- year. we wait impact, see

Robert Julian

say, X on line. in biggest and order has change in commission with later. terms I business, commission of That change will magnitude, our Yes. the impact impactful most our is impact bottom received we the certainly it And on November terms effective that of items what became the how would Kunal, of

so on. us And takes on those frame sell in the it so to goods eventually and to there which time up to is them receive get them site a

is And natural there that up our in eventually time for so show financials. a lag to

there's move for order se our than the to it time be benefit items other per that through nothing system. to So done in to takes get that

one would things, impact The have through again, get second natural have be changes, the early more the lag most because impact immediate of stages. will are Obviously, cost And pricing immediate to impactful and less it we've has system. less more the the made, longer-term that optimization. monetization time a a in or may strategic

So of that be that. need you all there's of number a to for things done to see

answer not going at guidance and in XXXX We're time. EBITDA this To about provide your QX. question QX to

We February. give and on QX earnings our call in will on XXXX, we'll update

Operator

the of with question comes next from Our Oliver line Chen Cowen.

Jonna Kim

color Oliver. Could And what and on on the more saw throughout for XQ? you quarter-to-date just love you Jonna What on which the and some more would categories working during exit quarter monthly performed provide color additional trends. is what's was? well rate This

Rati Levesque

see really going fine we continuation to same the watches in trends to still a and perspective, back which demand to numbers a From jewelry handbags, similar QX, wear -- pre-COVID of ready very Sure. was high-value strong.

some call, except for information And strong unprofitable which talked of we Again, effect the was the engagement about cohorts we well. lot is seller that there, down to the strategic there are cutting looking on beginning initiatives new opportunities out same that there side, trade of a nothing the us. really as So about. volume volume that of is these a this at that and decline reasons talked and

for guidance numbers. you'll we the you give year real So start that as to see in next

Operator

Our next BMO. from with the question Simeon of Siegel comes line

Simeon Siegel

point, can low to unprofitable And overgeneralization, is and high I they're know the this delta you a around price is just putting between I profit any speak if minimum thoughts that value just guess, structurally items. but threshold goods? on there at this

Robert Julian

Yes.

always, about our whether know it get our it fine questions well, so jewelry footwear. economics. unit you answer unit. items, depends, watches, And offering or talk the So it's really And my our Simeon, broad, about fashion, is different is and the when depends sometimes we I on

unique in price points each is so at different rates. unique commission category economics and And different is the the the

that really margin. disincent and But So lower we in put hard generalize. frankly, that which a to some and do it's us taken place it eliminate or better have much the is contribution the items, true profit lower negative priced of we actions were,

as of really on to the disincent those the see very our you do expect site. won't structure of the point both brands it's not the where commission are I that we've off categories, list in deemphasizing some taken, well. was with And much so We to think our there And talked really way maybe some the with brands, designed. items business taken some and we about but that we've actions it our

high-value luxury that benefit to Our business and both was buyers. items from designed sellers authentication, be for

actions are are started to business And that, taking really is trying which how we the so the really. encourage

Rati Levesque

the into and removed combination, been Robert brands the you structure, $XXX. now But pair some is at the a at those the you'll day, of deemphasize maybe day, the will that have get the Manolos And items end Right. from end of discount of in at see that's we commission list price what the value $XXX, But through that see come business. at the sell they're didn't still low the that in of really, point the discounted. of and believe when said, that like may come

Robert Julian

you you targets because impact we a impact forward. EBITDA a growth lower have meaningful able profitability. profitability that, overall P&L, much and path and meaningful meaningful in you impact And on we specific can't on it's our think going our in growth will rate But will a the strategic projections, our impact Simeon. has that our at it has about and on that on true talked It cash It give say which change but I QX has achieve reflected see being to reflected I complex. our flow a does adjusted change our It line bottom rate. it's a profitability. intentional. quite is see to a do meaningful this

Simeon Siegel

go Got fixed versus That's the through really at characterize you. this what however, then percent of Got way helpful. this, would point, just expenses And it. easiest you as the to variable?

Robert Julian

into did again, we we've sales because talked grow. more we The fixed changing bifurcating and and last we while that support would our time expenses sort the apps or of about to really less, this, XX-XX growth our say and continue of I it's limited it's cost roughly

portion of So a has natural is a there's fixed sort equation becoming that fixed. variable larger mechanical stays

fixed, trending might because a growing. variable little bit towards only costs fixed the but And be more XX% and aren't so XX% it

Operator

of Our Morgan Lauren next from question comes line the Schenk Stanley. with

Lauren Schenk

follow-up What last look of up of going GMV retention of should these one for impact profitability. more like growth growth just you this rate the changes on business on How growth do platform. do conversation, some revenue sort rate sake successful giving quality and broadly lower the are on the lower the the inventory forward? if customer could think normalized more just of the amount following Maybe up value the think lowering you then in changes. And potentially of commission you

Robert Julian

you totally question, structure this your in normalized the I approach there's taking the revenue first new actual there's rate XX%. grew it grew in and an both -- in grew year, of of do So our some in part to terms terms of XX%. this And which Lauren, the honest, that results half different might things first that lots the new of brands. with revenue and almost of QX, on list see off GMV commission unknown be being in growth compare what can think in GMV XX% And of our and somewhat

growth of of the of the having And forecast the in the but with mostly little growth for things mix revenue. QX implied midpoint you're to commissions, our even change So in not because less QX, some in already because less impact bit revenue a low rates terms because direct we did is rate, that in in to and what's seeing at mid-teens of brands.

see the So impact made. to the that. going that we're of We're we've what assessing changes

It We vision our certainly seen normalized new it's also in what be be that, give when going more will give is we full most projections not it's less than going XX% the February that be original and to you some for was the growth be. guidance or CAGR rate plan, but to profitable. into XXXX. will QX be that year built But year growth it's answer XXXX guidance the will the full to much truthful rate

Rati Levesque

successful, Right. we'll But side growth and seller I we slowdown that. agree is with value what here say are see mid-tier I we commission items didn't low well. would as to in the slight if the customer that as value, on far we And stays then concerned, just cutting as because as we're continue and there And that high consistent. that structure believe do in but a area. out is doing those change come

level. these size a our many changes, for we buyer, seller our again, both we and our looked basket both at including our when So things VIP, brand made cohorts, and item on

So there value the the you're from believe some I buyer. in do and the be seller that slowdown, coming may getting but still

value might but it So items. higher of be less unit

Operator

Boruchow Wells comes of question from Fargo. next Ike Our with line the

Irwin Boruchow

that you you kids, GMV say the categories, fully what you those of will year, of on of And expecting by have I think kind these unproductive categories? worked percent today. contribute So end categories down art, home, these just that's are can next

Rati Levesque

in of will of units. but the unmeaningful these amount categories, It's I GMV a say it's small not percentage really

in we'll a selling for through that it's I of from mean So revenue. first us areas of say the will this, for I these back changes is half but see you'll next Again, of operational half by in the through items lot the some year. year. our impact these meaningful what keep that hearing And a of not you expense say of lot work

Irwin Boruchow

if it. I And categories, simplistic, overly maybe this just guys these is if ask, you unprofitable can sale but were why I were then mean,

Rati Levesque

Good -- yes, a question. it's good

we're how with general. costs. a everything in I categories unprofitable really talk it growth at taking at eyes little at bit about always we And and the looking was think really of look a all fresh

not it's the direct of a So profitable well. was certain categories, but Items under as just business weren't piece another price it. point

So it of was in the not pick already we on was our and core to -- got bring items house, home. we're with you, everything really not already the on initiatives is because business we've to But And manager home are be product the up to the these honest early ship in it's can these grow like like art. why large expensive up. our luxury set quite that value low so and And kids there. items one to

model business high-touch is mentioned take up these earlier. to items Robert not Our like set

Robert Julian

different is things cost. revenue I'll as as fast feel for to of that there not, manufacturing will categories or point to in and that to take bit just that about think and bit background and accounting volume a that many Yes. well. I you it's I as as not as we mentioned, for that really technical path add to the and I There's incremental a to like view. one of couple cost possible tech we thing there top answer forward whether from have my And of finance the And environment. to other operations, as and unit companies now Rati approach that of desire profitability. or industrial think uncommon -- many know a as and I enough path is the making a that grow unit scale. are to the GMV get that well. and possible a And And it's your do are little companies, times scale this the next as with is decisions cover a companies add think start-up try line cost was do accounting about think little guys

approach so next what process of unit cost contribution aggregate our fully so incremental be a opposed looked really was the relates there system to unit analysis my cost what are as And like, than are receiving would it? next And and us that incremental variable our of loaded at I to as say that is we a the point cost what different at holistic in little it and a through is our little at bit folks less to does what a in margin different to I the become a a P&L revenue think looking that more move how and and incremental of a it our looking before. did are it terms it little bit does it unit was gives and answer little of In may profitable. for item truly the an some

And that that's items we so found on would disincent commission are to this and informed analysis really different that like based that we approach, what that change. and there

Operator

next from Michael question Binetti Credit Suisse. with Our of line the comes

Michael Binetti

like inventory It some you're work revenues, starting down. finally of direct seems that to the

places in on how the mind going quarter? we here us give you just You fourth you see fourth quarter in few a as in see revenue it to financials. your Would the rough in build thought that can a .

point do contemplate categories what the be time. items question if competitive And with categories, the and guess right response some been I under big you are competitive now you I might you men's for of. in is you to think here a aware price the And go there website, kids basic -- should -- seen apparel told $XX yourself, then are apparel, think second apparel are question finally, dynamics But high-value as to look system. and of categories How be through yet for into that the there's you I it's of the guess. uneconomical, those hundreds that goods. -- economic then like and in just at as the just compete units as through hundreds response sense I participant make many I to show Have some a like changes. to commission don't trying to the that the close put any those us one have women's

doing you're that they that on about are with work -- the you Once ecosystem, how highlighted do done GMV forward? have rethink today, of to think build categories spoke what the they you the in bring other it on going to want the the you people back? other don't you the Or you do model sense see categories GMV? do there's is that that there parts you make Like way whether to the

Robert Julian

Okay.

Michael, was questions. that the So X-part

Regarding me might you profile give currently. inventory, you the let sense owned expect, inventory a what that give a we of have you of to

the and open come a buy of inventory. And so that before of purchased inventory inventory the And So on of purchased come X. are vendor have is hand, it continue to category we reduction has from far to about lot that will for from half that from seen described vendor category. essentially we've is

this paid get what accept and category. and we XX% enforce of now we tighter about so inventory is About how have hand rules that And out-of-policy from of on in returns. what our we've a about policy And getting talked the bucket. about or will little a of from not half total the of in will is we is inventory XX% about terms

and hope see the continue to order expect kids the of owned decline, we out same limit so we of do saw in identifying the to surgically decent things maybe to And you and to purchase of policy. equilibrium We continue magnitude at inventory QX. terms probably in And roughly in to the we a very in was what that category. want to strategically that focus want on of level in

So that's in and of we're expecting what going terms the context forward. that's inventory, of

Rati Levesque

changes kind we of the competitive competitive mid- commission and still response to in the high-value structure. the there, are On

our there. more. because from earn a our for bit So little If they XX of luxury million Birkin It's bag, so of a no us made pricing watches, items you top-tier with forth. anything, more and members. competitor because change the like optimization standpoint earn We still

about to we're And okay competitive the we go your yes, not right. goes worried So business that third we're with question not that they're not -- and that ahead. items because item, because -- goes anymore, low-value that. We're back profitable. do we're The deemphasizing you're -- --

Robert Julian

competitive be the last interesting, on price point going the One the get thing you The and mentioned, the highest and because very incremental to end, to an RealReal VIP as at you're It's with Rati ticker response. Michael, you handbags and highest a if at watches commission earned.

from a We be be a price going clear But now are -- percentage It's our now. might it have very from might of item in to point in of those small we quite sort town very the part on what of or that clearly business. advantage game best of a be or is consignors response categories report was very, because sort small in see GMV. to it highest competitors, interesting those

Rati Levesque

items site looking seeing $XX. question categories many then And of the at and your around kind last and at

First site. we items say, millions I of to have want on the of all,

this that So put going over point categories all very as quarters. look and price those just still a now, of it's things. the continue in is in good take And couple for It's context. brand small to to far to optimize But and as list next beverage. of we'll our and we're

Operator

KeyBanc. Zatzkin question the Noah Our of with line from next comes

Noah Zatzkin

A couple from me.

for about home year profitable gross term given maybe we of margin the less the lower-priced, remainder be thinking deemphasizing and longer structurally and should how the First, items? some of

that well. spend a pull and should Any down we back it to forward how came improved efficiency. on be would on during bit quarter. the about going quarter rate marketing second, then as Was a quite during the reflection And Or think rate a decision of helpful there color there? is

Robert Julian

was question related it first and the In XX%. now a seen We've QX, And our XX.X%. was QX nice was QX, then year. to nearly take margins improvement roughly margin XX% gross gross I'll margin. in gross in throughout in this sequentially

in normal QX, continue flattish I'm QX about clear what glad to what to expect QX trying versus owned but maybe balance. were inventory that to gross that I you're QX, a margin to inventory. overall we In you discount slight asked a improvement very sequentially of we're is some remove trend and would expect. lower out the our in I see in question think in trying this the continue only to because circumstances, going They of to

preventing been in sequential so some do margin. is a in gross And continuation that has projected see improvement QX, it we that discounting further of

to expect go down that reason. of it improve the I sort but short haven't of I because expected don't run in

XXXX, project XXXX, Now company's a next continuation was was low to of the margin mid the you trend and where return this if to [indiscernible] COVID, this XXs. expect before into which year gross

And time, a run. that think level long over in in trend continue going to being I just to return see you're that of so margin gross

Rati Levesque

your question on second a marketing the Noah, of percentage revenue. as

come a the acquisition XX% You say for us year-over-year. general down. cost marketing few do has numbers, grown I I'll that that good don't back, it reasons a And share in back see there's is specific story for that.

a market our is product strong. First of bit all, quite mix

working. Our [indiscernible] is

do. end richer and ROI team we use sent, attribution what buyers and quite the and means or smarter day, so at the sellers model. better Our high-touch repeats, strong. We what the forth. both has And now has are And the gotten optimized best that of data at

on and good we'll optimization. really a continue work again, So to story there,

Operator

next with comes Tom from Nikic the question Our Wedbush. of line

Tom Nikic

I'm up the If questions the and and the I about puts a on earlier structure little commission some of about confused follow the of kind there. takes take rate. could

incentivizing mix be payout incentivize low goods, you headwind the goods, presumably which to you're people products, improve if to going that and a about, high-end you're disincentivizing take your mean on ASP there's higher-end talked to those rate. sell I to So shift products detrimental would

you I think also middle not said tier. the you're changing

you I'm So bit like that mentioned comes don't the -- think where offsets are Robert, in confused where that kind I that not rate. improvement of a to kind expect I sure as I'm the of would little -- a little like from. take of you

Robert Julian

dollars. would when about it rate couple period XXX that's past, the changes rate our Yes. a way the picking points dollars, a a X -- or our take it's rate, what point next. change was we have not sometimes or we just take we're priced price gross a I Thanks is, per profit from profit a The higher by structurally there commission no before, in in less rate, in the are basis items, would higher rate category, maybe to over you more describe but move And lower category, c to less for mix. said Tom. earning rate as talked by we take we gross see question, say have take And of change but rate items, the we've I

overall in rate because So dollar and a which is take look, this with rate. in this we means it things earning being mix, say, the GMV question. cautioned the our is just of the done And constant increasing equal, take What we've and would we're per overall sort equal actual our rate profitable. with up changed we're or assumption. not board, strategic more, keeping question and rate a changes, you we're mix to take on being mix all significant across the at going take be is would more change more going past, other revenue I've we're all overall what things changing actually see of

net-net [indiscernible] is change. mix saying I'm now mix. All is that this constant may higher. our So at is back new [indiscernible] we're And which

just take selling for we're You business before, items rate time we gross because our for is strictly which in more more equivalent like earn at good high-priced news take take different for in news decline rate And make lower our that is the business a get profit not rate. nominal a rates of the dollars is a because bad item.

for by take And but I that's improvement know change a be will to the in little unpack. in the so an our predictable, we company. is profitability it overall But profit to more the due phenomenal a expect , next lot is what rate rate less

Rati Levesque

happy are one. that of on we're to because different you walk that puts And there takes couple and a through separately

Operator

next Sandler. with . line Yruma the question Edward of Our from comes Piper

Edward Yruma

anyone I and over the won't beat since call. on you the went commission before horse

Robert Julian

we far. everybody why at [indiscernible] told that confused That's so only

folks additionally a little and then take more with probably So significant time, of follow-up bit to little more a a [indiscernible] and time spend help. that's

Rati Levesque

we're to it. offline, happy [indiscernible] walk you for

Edward Yruma

done about the think and you And the pat. be side the late Like of on did what pretty business that we've macro want think Yes. with softens. as are ask that countercyclicality right, in consignor the some I I the piece that then their and argue gotten a driven? certainly, specialist, you there's any is. concierge expect actually to would some the splitting are, think macro No, supply most on increase could kind is model of the I change operating consignment objectives I consignment that there's maybe maybe seeing up follow-up,

Rati Levesque

away. service, they information it's of better -- concierge they cosigner at made get end about and to right the the the internally, service the our [indiscernible] sellers that just day, sure getting we've On making

part this that that And continue I piece training. last they at hired up that who SLA. making look we excellent. challenges is one end really we're year, And the operational saw for our day. time we're we the think had some And the the any resignation against earlier getting really of X our and we our all go to sure know of we're good to on during seller news And who day of -- hitting the us that optimize time. back they to call if all was

providers and are services there constantly. changing So not

NPS believe the we're increase So service, do receives and customer about seller and excited satisfaction we side. it's on the going really that to the really

Robert Julian

amount that dealing somebody these best a weren't sort best focused it sales out. managing is could job. our a who's better maybe Rati is I [indiscernible] the said, else think sales with I handle spending what it's do our does we're lot is agree would thing to in benefit to I they they on dedicated time organization other issues, equipped these of with Yes, versus do add of that organization, to do everything a issues And

also is organization the it to as so them And partially well. a [indiscernible] to time focused focus productivity initiative should sales on our be over for allow

Rati Levesque

And seeing any more on opportunities there, optimize during not on the that. the supply, trends piece, decline strong, any but come see strong, closet macro earlier we I to that seeing, are our is supply even yet the and we're not and monetize people will I in mentioned want cellular side, [indiscernible] think on repeat we're more to

demand a down. side, On we the seeing are trade

think that So earlier. I

seeing demand far macro some of the not but on it's anything comment that [indiscernible] is trade all, side, there. down As yet, on not is as on to the seeing side supply more the [indiscernible] we're it concerned,

Operator

next with Our the comes Needham. line from question Andreeva of Anna

Anna Andreeva

sense guys value to the quarters curious seeing curious, But should quarter end curious result? are of sales then the kind couple GMS for on just low-value what there. the numbers points, us. buyers the we what are the those being than what are just high base appreciating secondly, the next use versus buyer price range of A the end as And guys? assumptions in I questions the money you a And of if lower you you guys and lower typically makes percentage out on you some at business up emphasized few of date? follow wanted The sales of but that the to be on expect buyer just making low to in guys lose just or wider guidance. what volatility is only

Rati Levesque

made the that. changes will more to believe deemphasize again, about [indiscernible] we you right Sure. right which the to value commission than is the structure way [indiscernible] increase that

you'll overall, [indiscernible] come concern the I of so rate. And see that this growth think And then [indiscernible] out

Robert Julian

revenue. in I would in overrepresented say that terms of later they were and GMV much

a and units business is revenue cost, to which of the And less managing further [indiscernible]. and drives the going so our that's cost benefit units system to have think driving [indiscernible] I do we're to our GMV structure through our

mix impacted side, the that somebody carton conversion -- a low is GMV, we end you're the to [indiscernible] high [indiscernible] that On suggested there's is attention [indiscernible] you range impact the impact, explained how only partially because so on in is the normal on a by of nominal the earlier at rate. is provided paying what those range about if but versus larger end people are guidance revenue already in the

the is there more to market GMV terms rate so And conversion of what in in from would uncertainty expect we [indiscernible] range. wider revenue in

whether that's [indiscernible] thing revenue rate. GMV later a see to we've bit take the portion us. the business a revenue as of some revenue other little is reflected a from well to on and as The wider revenue revenue that impact kind has is the to [indiscernible] GMV of sign it only because direct direct conversion at converged from our as total ones range expect normally seen managing in of

Operator

I'd question-and-answer call That Levesque Rati session. back to the turn concludes for today's remarks. closing like to

Rati Levesque

right. for All you Thank us today. joining

express the to day. dedication, close our moment I for we The to team. call, just light and Before to RealReal Thank a single gratitude values vision want take bringing to our every you

the people in willing right and The Our quality our I align debate team you. vision RealReal, is to at to passionate, do people strategy, the values commit is comprised take and care business. honorable, [indiscernible] have risk, curious for counter. what's and Their to plan, of accountable to They're most our dedication thank

fashion million make our you. to Finally, than luxury and our of who on more the more thank life us mission XX members to Thank extend cycle I'd joining like good are sustainable.

Operator

concludes you call. today's for Thank participating. conference This

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