The RealReal, Inc. (REAL) 8 Aug 232023 Q2 Earnings call transcript

Company Profile

Participants

Caitlin Howe	Senior Vice President of Investor Relations
John Koryl	Chief Executive Officer
Rati Levesque	President & Chief Operating Officer
Robert Julian	Chief Financial Officer
Jason Napier	UBS
Rick Patel	Raymond James
Ike Boruchow	Wells Fargo
Anna Andreeva	Needham
Austin Ferner	Wedbush Securities
Marvin Fong	BTIG
Nathaniel Feather	Morgan Stanley
Edward Yruma	Piper Sandler
Mark Altschwager	Baird

Call transcript

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Operator

Hello and thank you for standing by. Welcome to The RealReal's Second Quarter 2023 Earnings Conference Call. [Operator Instructions]

I would now like to hand the conference over Caitlin Howe.

You may begin.

Caitlin Howe

operator. you, Thank

Robert to June today President results the Financial for Chief Joining XXXX, discuss Chief ended Officer, Chief Levesque; XX, Officer; Koryl, Executive period Operating me Rati our Julian. Officer; and John

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

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

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

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

call Officer would over I turn Koryl, The of Chief now John to RealReal. like to the Executive

John Koryl

Caitlin earnings guidance high in for by to purposely EBITDA exceeded was guidance the we adjusted while midpoint direct XXXX. our of of ability of our Today, our improvement maintain and the we GMV limit and call. welcome second consignment quarter to results our business, the exceeded financial range. QX driven reported The higher-margin end QX Thanks, and profitability revenue largely the revenue.

consigned resulted prior EBITDA to items. adjusted inventory Additionally, higher actions to a company-owned on margin order low-value compared the These higher and we continue loss gross value, reduced rate, make minimizing progress average in year. a smaller

luxury satisfaction. implemented consignor Promoter personalized seeing is experience our last are to over concierge us X a Score positive clients. to team metrics, and financial our our truly we deliver Beyond Net to trends enabling X and months the that we The consignor in

by first half be million augmented starting added during profitable the on our consignor of supply our members, efficiency, driven key working grow structure membership and total we have X over more second, streams, to XX quarter, is new including million addition, year, than as members. pursuing In been base new improve second our we X the revenue first, commission Through our through processes; taking new which operational revamped initiatives: in improvements third, next technology through partnerships; supply pricing on-site year potentially advertising. algorithms could the

about shoots we excited are in the I'm revenue to relation new of green especially business the our seeing some in streams.

operational to have on early and financial improved third-party and started are drive ads website our results. the initiatives These indications testing continue We positive.

full Today, XXXX we updating are our year guidance.

continue we In on profitable addition, XXXX. to basis expect to full year an be EBITDA adjusted for

we few as made we the believe changes model we strategy on are and to our be continue in and resale. the market capitalize consignment Over to significant have making leader business tactics well past we to business positioned luxury our quarters,

With for that, let's questions. open the call

Operator

first from Madhukar the comes Kunal UBS. [Operator Our Instructions] question with line of

Jason Napier

a This Jason on I UBS. questions. from for couple have is of Kunal

thinking in the near first how is the I guys wondering So about term. was gross you margins the are question

company margin the the which yield has then been should improvement changes business You the gross making guys talked about to soon. model

XXXX? range profitability question target what achieve my also, embedded EBITDA would margin And be roughly this exiting to So year? margin gross where full year gross actually the will is be the target the you like, for for in guys

Robert Julian

for I'll take Thanks Jason. one. Julian Robert This and is question, that Sure. the

business. focused results, of where from And seen had ongoing the we to which margins of and less have in the you've discount. have and the generally continuous more business inventory our business the has change we've very we've as consigned a due business our first the have seen been profitable consigned So deemphasized business more of the and our on flat move been in has XX% looks we business the direct is mix gross traditionally, favorable year like we half And improvement sort primarily the more to business. about an been in direct XX% as margin trying the

significant this So this is what points change in you've mix seen and XXX over improvement a quarter. basis again

So the first about of margin. half XX% up ended year, for gross the we at

you handle expect high because We that get continued would haven't we be to and could committed improvement of continue but into that focusing business. I've that high that that. and follow But should XXs, second strategy is of a the the trend that's expect to even consigned margin to year. on the in really rate we past to improve XXs once potentially to reach the gross continue half in the sustainable the scare get said the X this very we high-margin

Jason Napier

puts much to QX? macro question versus your it. Got drivers? your comment guidance, on you how achieve be to to like XXXX in My takes decelerating related I term around XXXX second outlook seem but beyond QX. things the mean, of is assumption guidance is could after growth in your you please near your Like obviously, and say, company-specific on improvement would the

Robert Julian

operate we're been merchandise aspect We we're unit X then portfolio actually basis. and exactly before, the -- portfolio being business growing new approach is profitable business we've consigned really and minimizing other I've lot of had we're here that the an What we're as streams. of here. forms been entire that walk a advertising on $XXX. looking sure for to almost looking or taking you've that said revenue we is, business this more is at beneath think new a reset now of actually And year profitable and the months the consigned another a from I seen making under where direct per away we've discussing, revenue

of inventory. other site warranty, forms that is here, you possession of out call we started the of thing in forms took and talking one reach put they but in inventory. we year that Those back building got inventory on this then in sure was to and we've us take If insurance. merchandise give now it of shop. ship to our the can't sit for don't all When site down watch that and example customer. that like on our authentication is that possession about to could talked of in to somebody What other sell. The but a of like represent I warehouses ability watches goods locally all ultimately their past still necessarily We've now surprised have they to half the make -- our things return earnings of maintain used our merchandise have before really a shut the I I is shop sells authentic those inventory we're the have that to business, the little a on we they about use is who and they

focused to creating of business, really being that with profitability consignment, of supply leads again, additional our complement forms trusted a that it's a in core portfolio additional that revenue, So via to on partnerships and augmenting adding partners XXXX.

John Koryl

add our that please first And modeling just XX%. Jason, by a for bit well half is you've so this color direct in that What talked and we've to year. year of as the -- just I'll is purposes the about of has this seen on. business a -- declined little reset

of that we the very intentionally year. half shrinking trend will business baseline that the and We are in continue second are and the resetting direct

reset In addition year; kids categories, we have $XXX whether throughout have is that that, under exited it's year. to this or we on. so deemphasized this and And items a home some continue and will

to trends those intentionally. doing? aggregate doing, going I past try are So to the quite to It happen. get in is continue folks what revenue what headlines GMV of encourage done to that's is is why And aggregate in

negative the points are recognize doing that the has XXX purpose it's it quite seems and it margin loss we're and significantly why it's that's narrowing because adjusted shrinking. But is important improved so surface, year-over-year. basis gross And that our EBITDA why on we on to

in this point, at we these the new to the will company in and the And year this a double-digit baseline revenue growth you a But reset. future. reset numbers. declining -- Now growth GMV after really past return get company to will we headline being as and new have a this some normal reach of

Jason Napier

Got it. one. on follow-up that A quick

you're run how can inventory company-owned we the new of away for from like XXXX, think rate about moving the example? inventory year So model, days as for like

Robert Julian

some the and inventory. reduced further be it small. do about inventory inventory quite with was own I'll very our our We to question is the we vendor although have it's used inventory, of to in what reduction begin inventory and balance -- significantly inventory. purchased Jason, we've little go year-over-year

portion is our inventory in million, retail our $X are it balance of million. of model. that $XX We that part But inventory to traditional buying of roughly of sort total inventory a balance about resell

inventory. inventory we'll and I terms less to some $XX to get to that which returns balance we pretty even a year, eventually. paid normal so what that inventory is was last million to year, is intend out-of-policy X and less expect we've think getting a then to in And of nominal gotten But we've some at on that's end much end on. amount think reduce continued inventory to normal more new gotten balance rate close significantly new you and the it I would QX $XX recovered at represented But than at some by $XX now, so million. point, of get or our I grows. owned our And consider inventory or now the grow million. But that the That in to to road of a balance down that business should the pretty

Operator

question Rick of Our from next Raymond comes James. the line Patel,

Rick Patel

you XXXX. you where And Can you it marketplace comments. update room to have I of with place? Are think also, touched Hoping terms on in can you on the expand in are Or you those on higher? commission comfortable take augmenting do commission in structure you structure the you us see monetization?

Rati Levesque

the question. Yes. Thank you for

last we the the everyone, in mid-value add take we low-value there that So inventory start there objective just Robert, I value, the one. that and items to in remind I high I'll reduce referring you're John as change get think, November change and and The needed. was commission what -- back to continue made and structure, of under and made that more $XXX is can year area.

into what kind iterate news good So there, it. way we would continue under say, test the want of The and value and and our really high we $XXX. to, optimize commission items doing to I structure tweak,

again, that. declining The did inventory. that commission getting We structure or are, rid

I need and we do the can And doing mid-value. we're that tools use, in smarter call to And as cadence. that. we're well, that and how promotion just continue tweak our do to so on sophisticated that I in personalized We getting becoming levers mentioned more that the think last and we the more

retain to area. sellers continue see to in the those mid-value You campaigns win-back some going on

Robert Julian

And I to It dynamic. that, be balance guess There And that structure I to we will be There's continue we're the would and nimble. final commission test Robert, This finish Rati. Rick. is no to right and react no achieve. line. add find and is iterate and trying will

the the it we in don't or think the and did market XX% we XX% X, change got there. be well -- pretty ever we'll will got It will November we first pretty we be se. per change dynamic on think XXX% I it that we I changes... and done in that made, iterate maybe test there mass But

Rati Levesque

personalized right? And a approach, more

Robert Julian

precise. More

Rati Levesque

reasons different with sign People can have us. that they

promotion hitting getting and structure. or kind tune are those of different in more so to cadence them what with a And

John Koryl

your data Could monetization. you market -- question; first had question? your you part could don't of I clarify you was You question? repeat Would or the it the know original a

Rick Patel

you whether original and comfortable have versus how was now? around monetization with to even higher have The right marketplace you you commission in you are updated and take just structure the structure place commission saw what the room Yes.

John Koryl

Yes.

we I one. covered that think

Rick Patel

where going acquisition markets what's Great. half? can able closed you into locations. Have your you've been retail on back comfort also through means? to with pick And other product the product you then touch supply in availability And up level the

Rati Levesque

sure. for Yes,

EBITDA luxury salespeople. store new firstly. -- and stores what coming -- I'll flagship the again, look bullish we we on is store, when everyone are couple say X of halo the quite continue the average we a maybe We're with So the stores, are they're we well much consignment still strategy what locations, effect, working that dynamic to through stores, item high based X are seeing our and sellers the We're that find have see consignors retail offices. with at coming specific. remind closed store and not P&L Again, another opportunity a doing value quite when neighborhood to and that stores few sticky as they're and quite when through working on

stores expect X look look to to and locations that. So a at new we're continuing to we'll X to year like continue at we

we a closed, result. kind say As a far and that as decision it's it's I'd market the stores market by of --

So the into at other based a of flagship the luxury in those look look some decision able business in-home locations. we're is the of if paying there on kind P&L those of at taking neighborhoods that our rent in of most some and And We stores that the right the And same. channel. consignment of we when some offices move seeing opportunity other markets. were then to we were

back into example, want get We to for Francisco. San Miami, Chicago,

the to we definitely but is how we the operating in lease more the recipe as as negotiation. So a and be operate well in these we'll winning and expenses involved prudent quite expect neighborhood and here the we future of have playbook this on see the store

Operator

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

Ike Boruchow

Two questions.

kind the the Could tier bit at luxury data anything softening talk pressure you any of the I'm that with? a been just Are high little business. kind trends on U.S. of There's additional on inside over the consumer. higher nature of couple seeing more level. seen you dealing some points your the definitely you've guys buckets prior of curious U.S. you First, if that are consumer about in months.

Rati Levesque

start. can I Sure.

looking of at traffic, So I'm to earnings, high conversion the as as funnel. looking I'm at this is also macro flat top on the mentioned always think I look concerned on leaves, page. sellers at the and the looking every at far I When is I'm value, I conversion flat.

up. XX% year-on-year. So up that buyers Active are are said, new members

I of are can and That So consumer we not we side. indicators the constrained. said, sign if that get being all the strong. quite supply, have always leading supply sell we're of confidence the showing a of buyer we're on seeing the our health it slowdown

is So the fly-in. our focus our get -- right sure we making really

Ike Boruchow

Got maybe Rob. it. for And follow-up, then a maybe

due. of can having started year. I'm you Just on I'm about your that? maybe XXXX sheet, the how this if how talk us you internal you rest can guys I through as give are I that. walk that's you when curious can't to start look have deal about with waves you flow address high-level -- you little start coming year, look but how or at us if views conversations still with balance -- know curious that. cash to about mean notes have cash of I'm to cash to at next sure the are are to bit And the burn, just specifics -- you deal burn conversations kind inevitably a but away you that

Robert Julian

Ike. to, happy Yes, Sure.

the us. be past the first cash question on halves the burn, X the in projected talked half the and of reflected in and of So second part for year the in in actual you will your first cash certainly it the adjusted the difference and adjusted of the year. And that tale projected a see about EBITDA we've it half can of EBITDA in

EBITDA midpoint guidance, If our you $XX first the million. -- the closer $XX take midpoint in about is of and of million our loss the to guidance, a at half adjusted

the a that on naturally the some So the that little restructuring of not did on. There unusual. the cash the year. some some you'll expenses. business. year so space also with half We burn was improvement that, second see restructuring proceed did as change in first from We associated a and in exited cash profitability things will we and the were of was in retail half basis just There some also some the other some a was stores layoffs burn closing of office have

versus idle And but significant our efficiency we where more first to produce look module in some in we the center. Phoenix, the were our some In CapEx CapEx year timing from we we've I half of things a view cash half, going forward warehouse PIC to to point put half going the then in and the other conveyance a pretty heavy little in timing that's authentication year. would half packaging had of the first finally, on heavy added of second a the first and was machines, the an in

cash to the positive EBITDA significantly being year to and year. expect the beyond. expect lower even be we it we burn XXXX half in in So this to of committed then be we have next as second adjusted And better

think I regard moment. you're overly se the about the per burn not to cash trends in So and very going at concerned see our positive position, I'm cash that

is the our have of we have And sort question have second the intention about date said structure about it XXXX your talked Now mid-XXXX early and that. as 'XX the we part the or in address convertible notes to the come know, capital And 'XX. you notes. our capital of structure and was a due,

so Board, that actively. conjunction to in capital The ways us and additional management ideal our looking and continue prevent And an quite different with anything current. to coming our at from in give find team runway work we on options structure to to

short we be continue so that to addressing in the to And committed term.

for by about address could the end of still year. that that by not that. year, of If the we it after end would I'm hopeful very soon end the the past, some In year. the we of reason, the it's talked -- be it's And the

structure and from we'll actually you more a that hear X time. that our and we optimistic solution to have we very X notes I'm So that us the I will for capital soon. months, we're have on But would good and you'll very with share addressing next very, at say within certainly the our convertible options, that

Operator

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

Anna Andreeva

sales percent keep down the reduction? spend. it's coming sequentially. Is us. And couple of slightly some this about about marketing are And how declined Great. performing should And efficiencies? the the implied that secondly, how it as last low sales guide a goals spend, result the next business? the of TV of gross And within year? can percent On I you're adds marketing talked where number for of down finding buyers the in then you from But you Two a reducing talk And about value as of know as been the the profitability coming are quarters. year? of thinking you on questions reaching

John Koryl

the start for on Thank marketing side, I'll you Yes. question. Anna. the

think to really down the customer I what doing is target we're our narrowing is. exactly knowing who

As talked a we've business. always supply-constrained we're about,

So the it and demand website we where consignors work -- hardest, dollars of supply the terms on for happens, stores. actually right? we really our the to the into and granted. actually take in It finding need getting doesn't don't the But to it's

advertising So what and move probably you've the from at seen is away mass much top. towards personalized us more moving

targeting and a from there's We're So there of lot advertising of marketing. capabilities of over-the-top land getting of from things a a perspective Internet the that television with out better nature. lot

a can that and supply think become consignors targeting part the we're buyers I of mid- So much job upper funnel. more effective doing at and the the

minute the the velocity that harder promotions is behavior. always dollars or can work see that structure see thing from marketing effectively really other were can you we're adjusting or doing new to units how customer. spend more like we would a to behavior commission dollars to marketing or dollars a What and units, about a we'd ago change trying how behavior do add those what more marketing the looking our at we value very drive manner. say most Rati closely that to elicit are our personalized in I more talked The is higher

to of of of you're of a lot broader results what fund lot had We testing. the seeing lot experimentation, out And money take honestly. the spend to of a is a

more lot right good to but of seeing we QX. now, proportionate probably And was to as I be profile then that company happening marketing those. starting a think revenue, that's growing the investment of low seeing what going with a think And past, can look XX%, we're if from growing profiles. spend adjust in XX spend at we tests results our to Those and XX%. lower totally I marketing want are a And double percentage the in results, a concurrent we keep of to a sheet digits there's XX company the versus much more one forward. smaller you're growing see different profitable what I is

Rati, anything that? to add to

Rati Levesque

think that's great. I

more you to I to Anna, expected on think Yes, attribution personalized that that your which what of when you'll for we your look to was was buyers. the To it, happen it based numbers declining question, and much talked a really the at point. our model, we that sophisticated de-emphasized number items back $XXX getting about point, play look and of second your minimal under at is the but half year. quite see out

-- how had that is you what right, piece, think was ads that question a your I Anna? the third it I Is question. think looking?

Anna Andreeva

Yes.

Just sales on color advertising and any for initial next year. year this

John Koryl

many Yes, do our record a testing. want to like sound lots broken of the we of right, and to experience, a we've as core of I'm going it's said impact don't part not consignors. is XXXX, buyers with material negatively What times.

total about in negative X We and So we to advertising only honestly is see launched type done launched didn't page, X we X% page July, what results. the on population. it we've early any of

XX%. we So went to

e-mail gone XX%. more definitely us into placements we've to Now types, evolve What itself. into you're to the see and ad page is to potentially site continue app going to the on

or of have to traffic us app that desktop in a the it we tablet. lot various So web be actually lot ways, of comes mobile or a

the new to to we that find to are say lot continue impacted negatively indications negatively continue there. would core as of that as going and do days to we from to we're ways monetize early that ad so. We're I going the So test traffic. the experience the long just comfortable experience and haven't isn't impacting a experience can we're

Operator

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

Austin Ferner

you about And the Tom. just the question had like, on -- it time you plans sorry. any or future? guys if debts, currently so, -- doing trading are just of deal the for plan taking you're sorry, those I shares guys near the of is wait by a that, convertible thinking for plan refinance something where convertible on discounts end and quick about Do going like to at guys do thinking advantage -- how Or the What's your you the are from sorry? that on Ferner Austin within that year? to XXXX. you about

Robert Julian

this we of commit is there Robert. are company not any So moment. advantage best strategy of certainly, the taking multiple I the that are to would our at to discount forward our and say everything one Austin, and out I'm specific in this going options pursue notes. we I'm liquidity. convertible options. us going and solution to shareholders the and terms and time to in at and one the some are is for and best we ways the find addressing to But any will And of our commit position the specific those of going at to going not capital looking put the structure strategies of taking

year, earlier, would and we've as it after think of I the by very I hope that if soon preferred what been be our of the be And committed the year, not timing. that. as has with said, a decent But indicated likelihood the by would there's that. among end to before, our that ideally, And to I said what end before, have and we of solution we -- --

given X the range most I've sort to is in likely. X next months So of of the

Operator

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

Marvin Fong

between like I fourth guidance for third first on better so guidance. So GMV, which the basis or like and year-over-year around of is compared million something quarter to it fourth on quarter. the a the kind the be looks use midpoint, it I question If if third $XXX quarter down quarter, break much would

kind you you active So so, have driving that? little against X if your million less it had question, second optimism in seems quarter, of And fourth than speak right? math kind quarter a just just million more the And I of XX Is -- members just fourth about. you Could what's think like my you view? mentioned buyers. to

kind of what key sort to all the higher-level a question, Just aren't transacting. these members of of currently who unlocking

view that would great. Just any on be

Robert Julian

I'll that GMV math, Robert. would implied the just your that I is The always to normal highest revenue it sequence and is is is you What I confirming QX is by our QX GMV guess, this correct. easier. Marvin, quarter. of start referenced say the that make

in what's $XXX You direct so business will still severe will say year-over-year on. I see decline -- decline to of I decline. or a midpoint represents and are the and still items QX year we or at years, GMV that but QX. to if under deemphasizing results on a saw you other a last quite guidance in it in most in is QX Maybe improvement our we QX there not QX of significant that QX implied that a fairly from year-over-year as looked mentioned a basis, that still before a

So your math is right.

our and of top I about the of we're other I'll on, number the to of the would sort reference in that us in terms seeing of implied to and talk the we're what business is at the it over turn business QX, In confidence and funnel seasonality in Koryl then things and Rati presented. QX so seeing that previous gives

Rati Levesque

Yes. it's again, all supply. And about

about approach, way the really right and items, Koryl testing our targeting talked as our more as now right that's sellers, that. finding personalized focus marketing, we're supply into initiatives, right our So the efficiencies, far

right piece to high creating again, in bring personalized the puzzle also value side, targeting come an supply the well. organization, as and outbound same is needs in sales retail that we that of and of sellers, value On right making promotions idea, working, mix we're sure the our more a and and that the then

of So a low-cost, high-reward of as kind that's well. kind low-risk, channel

into we and forecast of takes gave So continue right business. not that consideration and lower-value guidance focused now working what's to and what's the there, gave be we kind deemphasizing the

So feel that. about we good

on your second question members. then And was

from be that And not I was unlocking think question more. your to how I unlock And was of it up. a consignors, think supplier that's on buyers kind we honest, perspective and right? -- can

was few XX% it closer ago. a So years to

think coming to another that we with really, consignment get funnel. as targeting concerned are them to of can as it's more back that. now consignors in is far I lever closer Reconsigned a optimize again, ratio XX% and We'll buyers into that to pull our continue them promotion. it's and specific

Operator

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

Nathaniel Feather

This for is Feather Lauren. Nathan on

any items, strip Some the with a those how really bottom some year line. we pullback encouraging should of helpful. onetime quantify to out take then there? I the is get be aiming roll year that And And that $XXX achieve you're this Any growing? what kind be on vendor way the rate that on about think think why results If in side, would understand GMV the we you cetera. purchases, reset industry to any of out? you as impacts, about reason would to couldn't et advertising you way rate

Robert Julian

I'm digits, our what still this the would give ongoing us at the this want had we you maybe of categories. growth we of on reset growth is, start that. for reframe confident we believe business think is a rate proportion bit. of have strategy to and feel I'll we and in XX% be to range Nathan, we growth good XXXX, growth won't been again, going I consigned proper business speculate I or I'll not direct could and on and little question complete, take, -- different changed business that to maybe the our the business direct have a so or normal the rate do what be out baseline and new think gotten once whatever, $XXX that or But might a still we give better frame are items double under way that reset to this double-digit new once the have business grow XX%. business, can But we question a

John Koryl

And of now combination our that Yes. think traditional calling also and we're about the we've I it's partnerships. what supply consignment a business talked

profile of forms if constantly -- supply authenticate supply incredibly news until marketplace is partnerships other can So of say, has about that to it has for sold, demand business different basically good And the bring actually that cost supply-constrained that's we that bear a abundance important wait that an we these are it's good to in I the supply. think looking the a after to as to well. what is don't and our

have. and find think So, way we really bring that good with in I high expectations situation. can meet high We if that the traffic we're to for we accordingly, a can really marketplace high timely just their had the manner partners to touch, right and in a authentic right service goods that customer monetize a like the we right monetize those

question, site. of terms in expect in way to fully throughout we deploy brand the a complementary advertising your And advertising

seeing what the travel, on to used that those So it own find all doing brands are we of finance, our site? those of are customers partners, be advertising we our types what our on complement that, right type again, site. things want Can that they're

that How So in if page and have and of we et that, billions the can do monetize the on billions site, on we we cetera. way? billions right find app, views the

last the what to do where advertise to don't want in is that hurt in And damage doing judicious doing destroy advertising in our in can term, core helping we there, I the we're thing quarter can don't our way. is damage see way again, and do do business want to digits to we out is sprinting this who us -- just business. if core put But are strategy our What we be nice a the X make and complementary trying there very figure again, the core it people our a any in really own or it. monetization can do you but business long and there. number short to is in the And customers term

Operator

Edward [Operator the question next Yruma Piper line comes Instructions] with of Our from Sandler.

Edward Yruma

change of then I And inventory guess, kind of guys those of curious, some the is gray I of in pricing know some follow-up, softness down. you entry-level as your or certainly first, pricing know I no had you said have in job dearth good just given just changed some a But a as have pricing, of well buyers. done managing weakness maybe you really market. the you as historically, the outlook

of first quarter. a in lot quarter kind fall the You fourth have of in the seem that to returns

seasonally. we least assume inventory that we tick back -- So at up do levels will kind should of

Rati Levesque

super first of like-for-like on No, up number take pricing, based I'll if to and information. items not the market, on gone the we're the item, have sessions question based pricing. the on anything, the dynamic the based taking down on all and news

up. So price. items we'll like-for-like has don't always say the continue to gone market. optimize pricing and set But the price; again, tweak the We sets it according we to market the

Robert Julian

the it second But does owned and returns. a saying speaking, Generally Ed, more QX we I'm I'll owned inventory. be time most balance on sort correlation impacts if has and impact take that our that not been returns But impacts and Maybe then returns our the would if and policy it on The after out therefore, returns there's the returns, to maybe question seasonality "consigned back items" our owned more balance. inventory. of there's inventory concerned sheet, our of our moving inventory owned only to consignor you it is paid not inventory I'm take our get agreed [indiscernible]. And is owned inventory. QX. our speaking, that there's out-of-policy not of about generally and

Operator

Altschwager the with of Our Baird. question from comes line Mark next

Mark Altschwager

targeting. of of A couple streams regarding you're follow-ups these new some revenue that

your first over both think previously, of that outlined cost touched bit not you take that on the we taking but Just you're how get where this percentage GMV supply fact think the you terms the the And overall can BXB relationships business, different. profile considering of then share that some structure margin if of you can rate kind and the those you high-level consignment. opportunity I about any of aspirations is of a apologize on where should time, with in

So one. that's number

of understanding early are XXXX, newer assuming supply very for advertising And contribution you like two, just about EBITDA then the things from material plan these days we and as but breakeven relationships? some think

John Koryl

profile is that the EBITDA to make are we as of the of ends calling to The can to plan avoid as actual the much get can the the we to XXXX. of our part possible is It of is amount, consignment that up If days. times. of is with copy, which business in as as share what it the then in It's can close structure those that in photography, goal disclose testing why shipping advertising. the we're margin do, I'm cost start writing part the in going we're a with early partner positive so obviously, but net supplying actually that we the terms the of the terms themselves. And in partnerships, plan. That's to of margin can't we our of goods really spot. Anything multiple we cost could things that good XXXX.

want do be margin But into of we is shown it business. and we thing it. to the we same at large get last sell supply, time, the our have grow if deleveraging business So to can we've percentage a have a

merchandise find XXXX a So what that profile. is If we can where noncannibalistic material do find it where is other of earnings to the product. balance and we of then too, accretive all our supply our had that and right becomes is part that, of

Robert Julian

I different as have you about to interesting it it's Mark, a our rate should said partnerships also really but an good a could beneficial P&L It's how through very adjusted affects our it very, would business. It it profile. net-net, EBITDA question good a and Yes, It say, profile, be actually basis, And take runs be us. how and different cost an it the has P&L. a question. on would

think expect take you it our So dilute dilute It I that actually should our gross could to don't rate. margin.

take different structure. a different type And so partnership mix that of rate and that just reflects a would of be a cost

a profile. you that's a different business a and on On a what rate rate would works and profile if have talk similar thing. bad how a But you and different take little different basis, partnerships, take I we bottom-line our structure very, can in that, go it why would basis, different that P&L And would margin, these caution but necessarily it technically true. terms about adjusted of be people maybe profitable degradation I would not margin very gross and EBITDA down not take cost that think profile, expect very in an from this see a And be rate, that adjusted but the nuances a would accretive gross that's of EBITDA. we road

Operator

to Koryl now to showing further would the call questions turn I'm in no back the like over remarks. I queue. closing John for

John Koryl

business In today. thank fulfill our our for team efforts I to want to The values us their and live joining closing, for our move our at out RealReal mission, you forward. Thank

deliver our also exceptional service Your and to contributions remarkable not clients making but our are daily smoothly run inspiring. to business only

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

Operator

call. conference and Ladies today's gentlemen, you this concludes for participation. your Thank

now disconnect. may You

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