REAL - Earnings call transcript Q1 2024

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Operator

Good day, and thank you for standing by. Welcome to the RealReal First Quarter 2024 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Caitlin Howe, Senior Vice President of Finance at the RealReal. Go ahead, Caitlin.

Caitlin Howe

operator. you, Thank

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

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

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

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

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

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

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

John Koryl

and the Today, Thanks, Caitlin, earnings financial quarter XXXX. first results call. reported we of welcome to our for

Our for X on were in return healthy story. efficiencies QX, by consignment delivering core the strong is time focus first revenue line consignment the business results most double-digit In only driving combined top growth resulted Growth overall our and in wasn't results. to with demand, quarters. a These segment. the in supply, growth strategic fueled continued profitable

in significantly million EBITDA line we our Adjusted year-over-year. margin bottom In which highest improved reported also resulted compared gross QX, $XX prior to ever results by improved year. the rate,

The is business. the at our range momentum strong and our above starting and came For XXXX the the core in RealReal adjusted range. with QX, high guidance in of came end guidance high of GMV revenue EBITDA in end

profitable sales consigners. lifetime to sales on We continue drive our and our targeted profitable attract marketing better marketing and supply. higher we value compensation to spend refine strategic more to align focus reoriented with supply, use We our incentives team's to to approach

focused year. are half here of the We the and back for QX

test As that core mode, believe back key growth are strategically initiatives new into to our beginning we we transition growing overall business. we are to

efficiencies authentication We stages encompasses marketing, are in our and realizing sales, our early unique which operations. areas functional of across of marketplace, the further

full opportunities in leverage we see our AI to and to business. and range. that profitably and to an client guidance and adjusted guidance positive we year year automation Today, profitably experience for are full updated the provided deliver EBITDA increase full QX work We track invest scale with the EBITDA XXXX. to year as our adjusted on We improve of our data in to we midpoint project the XXXX

working. We the core believe business is our focus on consignment continued

in providing our momentum We position excited as exceptional a am buyers. about revenue, leader experiences luxury in the are and goods to consignors on believe we our our business outstanding presale. consignment will continue margins to very growing delivering expanding I and capitalize to our luxury our

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

Operator

[Operator Instructions] from BTIG. will Marvin of first come Fong question Our

Marvin Fong

Congratulations all progress. the on

were some could other on be sort ASPs. us of both of was down kind what for about Can the that deck [indiscernible] health the trend consumer compared that -- of to UPT to just question So you as seem bucking consumer just on units, drill I up the the you some to out some there. retailers see of of you kind behavior. earnings

question far you're as thought of an open-ended seeing as I'd going? what you just about your customer is I give So kind

Rati Levesque

go as saw are up Yes. average correct. your as kind UPT. this No We selling of is about observations value I price Marvin, Yes, well go up order saw average Rati. X%. our think problem. We also

at top about consigned would overall say, both we looking I is and quite at the our saw revenue the look buyer you being is and a year-over-year. marketplace. healthy the buyer, that XX% growing So The seller funnel, of

I am a seller. leave becoming or about talking to seeing opportunities a to I'm funnel healthy eventually that buyer marketing-generated in being the

we pretty So feel optimistic.

One the look of things that price. average time selling we this at also during is

being they're selling price is little buying, more consumer the bit. see if average we'll what in cautious then a a go So down

So we're feel much -- feel continuing that. that right good watching, there. we're the we're in pretty I to QX, something but that see now. watch do We you But optimistic say will trends about really too cautiously we

Marvin Fong

was automation And you -- question, AI. AI and seeing from my or adjust pricing wondering, of prices see you're But Just a more as is think And centers. work follow-up and I some and on that been saying That's time improvement how kind John in effort, sales you've doing terrific. -- integrating expand to integrating of authentication like on for dynamic introducing your Okay. just will you quite sort what the setting into can measurable AI that? automation know that you and about into you is that specifically

Rati Levesque

Marvin. Yes,

where a and about about So we for us. we [ always some on operations one of constrained do mostly. supply around big and authentication think second, I business, AI, so a is for ] kind when our focus enable mode supply

will a big one. smarter pricing is We're getting items say definitely how price about impact we like-for-like I there. seeing So the

targeting about at smarter and On seller right the calling sales right we're the so side, the who time. getting when

authentication way Those our earlier bit are little stages, pricing. that. into and We're a testing

have our has area. that -- directly, impacting that business in and we're farther been We been along

inbound there's the You're going lot inbound quarters. over as opportunity to and think there few accelerated in us really a of leveraging We AI efficiencies hear there next about and talk well.

anything? missed know, So I don't [indiscernible] I

John Koryl

in perspective doing We've saying, as about, here's talked list pricing, it. I sales call you for day. been given laundry instead and known of people any your a to from No, of nailed authentication think it for you

folks we quarter real a order. historical them what in where especially trends. perspective, before. Now to support intelligently more can. the invested spend we're touch. But as don't a customers opportunity what costs. before. time we is We a of my human to have as consignors a there's those I That's to Miu for service of right instance, answers. way sounds can reducing our is high That concierge but bonds and customer Miu would is hot getting We lot obvious. try area for as be trying make to what why necessarily back would the on is Miu or call Miu the sure need we People do and based sign route customer with we're of giving From the other Consignors, more sales go that of web route area is a on is activity, lot who list to now. a really like to we cost kind have [indiscernible] us intelligent in thing. more reduce questions we're need

Operator

question next with Ike Fargo. will Our from Wells come

Irwin Boruchow

losses are just from and just gross me. feels at better then the Just it the usually year, would it the be year the just up business the guys on XQ at looking kind an like is new I just if this it's remainder perspective, better are you in that for Or think conservatism EBITDA line. in for two we than giving? the kind there's love any it when to seasonality QX? this sequentially. historically normal guys look guide I of I either think like putting of seasonally some of are you Is offer color maybe the can that margin you And should guys way about a

conservatism, this So there put just guys you I'm up? trying Those is my the guess is have in just understand, quarter Or I to are two great. which second funky anything versus questions. what is

Ajay Gopal

gross in business. is direct that there reported QX highest from We on I seen benefited was XX.X% -- that, rates. margin Gross our which, pointed as was we've say the is margin, the we really percentage margin what That impact an of in know, as has gross would you strong. GMV, out, ever the reported

QX. the was favorable in So mix

We from minus depending margins, up year. expansion close be somewhere very the you pointed I'd expect continued us out, or dynamics the versus to pretty which noticeably this things also on to plus course mix, saw should in through a the years. benefit I couple points, were of say also of like business range, prior and as of a consignment

was we're question how second Your and QX it. thinking about on

QX, from you of couple seasonally guidance. reflected reflected smaller than slightly a So and is look that -- in There QX there's a as at we things QX, QX see being that are you'll our to going see volumes. our always

small our sort QX. that seasonal So happen shows GMV to tends that in of reduction

this that like other we every us. things On companies. we year have unique to like are pressure on these time. increases We salary are us, -- Most a looking put of we at at EBITDA have some most that the not couple do side, notably,

bit So pressure that a little versus of QX on QX. puts

in on this that operational in think that have operations investments are in. investing I margin things us the longer These was are we and More importantly, help drive term. we and our past, planning the efficiencies in some discussed expand will

So in well. guidance that some as is our reflected QX of

Operator

question next our Owens, Ashley comes Capital And KeyBanc Markets. from

Unknown Analyst

This today. for is [indiscernible] on Ashley

update. early. just first any question I is it's my know So

well I maybe from this supply at think the and a from capability just drop opportunity well? like for maybe looking there as but as perspective ship launched just expanding business quarter, side the that as consignment

Rati Levesque

Yes, that always new question. looking for channels I can we're supply. take at

it's whether to other optimistic and So drop early launch, that's example part -- looking we're say super bring focus ship of We're and that. the well. watches, shipping but our partnerships whether continuing here, continuing an as happy international, to days we're on where I with trust that's important at with part we're going. I'd the there, drop-ship. be to or drop think consumers

new really a about We're thinking this as strategy. channel

watches, men's for into we expand do and for market example, So that how watches.

performing, early we keep how to back new But but supply new again, definitely much the focus is stages. get I to want that's growth channels been too as in on general, really here. what again, super share -- channels, posted. we'll don't you So

Unknown Analyst

refresh but like we just I oxide just mentioned margins, or should potentially other be missed us and with the have might in an you And this talk past, efficiencies came you've considering of kind also, for on EBITDA could that shipping there? the anything transport. where an quarter with inventory this to know in through I Awesome.

a that. just of kind of refresh So on all

Caitlin Howe

The question the efficiencies . investing. we're is that where operational question? on Was and

Unknown Analyst

what higher kind just this And expected. with it little happened bring a in of bit than to of EBITDA kind Yes. also quarter

Ajay Gopal

here. Ajay is This

compared attention look there's you at results to. reported things I was, our would in draw our a couple and QX of where when to So guidance your

you First really on in higher of our the And reflected sort the GMV our guidance. we anticipated range start see that to that in a strong came than volume, off, year. had can fact

of for a So that was source us. strength

coming the through very we sell saw supply and supply had through the year, had We nicely that strong into we and -- quarter.

The other to us is led for upside gross margin. that our thing

a I at last of was record gross in the As in margin the direct came combined, for and out was high I operating of pointed by strength would discipline -- driven was source last we The thing another quarter. operating mix to percentage, the our there's earlier, is great point manage how we that us expenses. which around also

see of a team and where the we and is thoughtful very for here, I investments. new returns doing about getting and being job we're I'm what sort phenomenal those invest

operating sort really So results through in well. that of the cumulative effect as our QX of those came rigor

Operator

And question Anna be with our Needham. next will

Anna Andreeva

Nice us. from Congrats. Two ones quick results.

the First, you're guiding second acceleration for end at high quarter. GMV for the

past, And is probably that year? as what think the well? in quarter? that a of in the So are secondly, mentioned How driving part first in seeing go perform And that. talk easier, do that we did what's was you about quarter-to-date about compare business how the a bit. the that's you a as through mid-value pressured can so you But you

Rati Levesque

acceleration question demand we're QX, GMV first about in general. just your in So on thinking how

you that retention is sellers about via targeting right supply then little into just really have have matter As quite bit a keeping right know, and about value bringing now, the it's that and and our them healthy mix, talked that I strategies. that, supply them all right the and the ecosystem

of takes and that of good in process, it the kind a that about us came it input the into kind in site. the couple feel we to like on get QX lead get helps really QX, supply came that weeks of that So items or

make of strategy what of that based the And like. so And our heard talk to say in we sure then about go changes, mid dropping. commission optimize we past, have in And on kind that you seen changes value supply. us personalize to promotional and better mid-value. made position we the mid-value tweak the yes, supply, we really on that, back in the some I indicators we there commission to a because of after look that's much will day, continue when value that we had those will QX all mid kind have

mean, at and in So bring we again, kind on and a seeing the X-legged things have the of the at get yes, of retail the right and tactics of the mix in these same marketing kind quality seller which sales. focus time, And of of product, to I stool overall, day, to QX. end the it's all line firing of in right we're between to kind

Operator

And next with our comes question Baird. from Mark

Mark Altschwager

First, I on wanted topic. follow to supply the up

Just little to understand bit it a better.

of a Are the With existing growth, seeing you an seeing items? function to we that the this drivers more sort returning of of higher-value mix it's sellers? a mean, so there Are would new GMV those acceleration with on of sellers you can great. from I is function volume of key the bit to Maybe understand be things. platform? just help little a more But really each unpack any

Rati Levesque

Yes, sure, Mark.

up we just sellers, about but more from saying only of mix. of . following working sales right of value and earlier are also was we're better onboarding acquisition or a together, retail each coming the about retention so volume we're is about marketing seeing with So I more as on kind growth, thinking both. our sellers and and It's of not value all what function kind better it retail

retail think heard sales about -- units, in we talk talked us value past, the not as So the only about on well. I but team focusing you've

and to product sell. the that sure have right volume we the right making So

one of the doing. we're that's So things

and They're right a watches of who the when that. marketing the is They more or side, the much know also at know we more sellers being fine effective good we they're the If looking target thing. On at what time. same target here. jury high at need to to example value when time,

path. So just that continuing down

well are stores. And meeting drop are. their other and as also we're seller going are in high those making jobs and coming in. where as that stores the stores doing other value about the as sure they The through and the more seeing there's factors far things

than retention in talk retention. looks past, think about us heard you've better they sales on side have, the the numbers I ever The honestly.

that. getting we're that and well, some good We've there. programs So launched that -- upside and really also are referral working affiliate we're feeling about

on you're work. that efficient sales our into to things, the these it's starting and getting some the about seeing see side, tech way now team and enabling test -- there We smarter of and And then more as well.

TAM few big. different the together we there. working So it's there's things retailers a here, and know know know faster. We We is growing

going continue kind of kind to so And we're that. optimize of to

Mark Altschwager

Deal.

marketplace. a accelerating, piece? Just about buyers about think just and us platform. you're a understand overall But follow-up think through trailing year-over-year. the be to metric. high mid-single-digit, supply-constrained a new we metric growth? I X% Active into how GMV should that, it's platform that single-digit acceleration maybe that's engaging positive we the territory be as I just and down buyers territory, you that how back then. buyer active as GMV the But in that trending thinking drive know the Should if help

Ajay Gopal

orders, accelerated as look XX-month think into you over would slowly at months. nature think metric. business see It we've said where of significantly such, Mark, And we it the sort active buyer its XX-month a I metric. was it would of sort it's made lap XX trailing from to forward-looking it that that probably bearing -- We weight bearing good expect that which the you best. last metric. from to a I trend that is some orders is over make lot our the point in changes numbers is of trailing we as -- really QX, way a and And of growth quite we

Operator

Sole, UBS. And our next question comes Jay from

Jay Sole

I'm any you in, competitors competitive improve? exit? landscape quarter. just Have Have the curious you [indiscernible] have come how it? your evolve last new the about saw you seen over seen you thoughts position

Rati Levesque

our in trying always general, can regularly consumers. do one we had the done need to that and I'll we to and that solar always marketing last most the of double with Yes. be doing brand what day. we and watching, that say to our recent competitive at are one teams. Thanks, looking how down improve awareness We're others core so in need of the and to studies business our not on end the built always in We takeaway and and analysis really really kind was Jay. see we're focus on our we've we trust by

consumer we and marketplace we things that transparency listening in service talk you've experience like the they relationships, and concierge example, the ] being the around really [ offering that that about making Koryl leader the So the to pricing. for pricing heard need, sure are full offer, pods

by So that's transparency. what mean pricing I

our really about So our over as down of as starting team to X our LRP what just next the of years. really continuing we're path solidify kind is like kind we're talking

Operator

Tom with our Wedbush. And comes question from next

Tom Nikic

like of is changes that a we a as are I'm think as ask kind been eventually margin like like bound sorry gross that margin has like margin? I extremely we strong. -- want see chance gross if we what upper and could XXs. this I for good XX-plus Is gross margin to it like is the the in it Like extremely, could of possibly high get? consignment sort all of as was was your consignment the you already. with that, percent? that of there gross asked made, of I kind mean about Or the think should

Ajay Gopal

this We Ajay here. this. is about Tom, talk didn't

think consignment margin through of in structure operational we're I is -- looking at question that our is still to those and timely. efficiencies We're margin. lot our So looking drive gross We there your a very continuing into for going forward. incremental, There'll do business expand way the we right? to be. going your it believe be forward, will But gross our to their make the more margins that point, room will consignment game

more can X.X and go there's today the But over that we are seen the gains last about really we years. we good So after. where feel we've

Tom Nikic

conscious All right. for at seems a up Are that Great. And and the to shoppers primary you you're luxury becoming more like down some result? the about I When as benefit sense price starting RealReal it's I you goods, from follow getting volatile maybe higher-end any competitive the a if could more like far look pivoting become maybe question mean the little trade recently. market Jay's towards and landscape. on

Rati Levesque

I on answer same puts that is consideration a that as and Tom, would higher-end now that brands our that, losing interesting when takes, the category we doing happening mix. always Yes. in of depending Miu say Miu Hermès, kind thing for us has is what's I pricing like we're kind we always and some that before. And and But then less kind of right we market some and momentum. strong see diversified see something brands of pretty [indiscernible] into you share. are items, our really like well, we or kind of brand. think see, take advantage little

And So right, flexibility, we that have that pricing. us helps there. then in

the more we we out So more last are and it price pressure target. continuing being came the saw around a little consumer cautious a to was yes, pricing how in their little look time

I in But that. haven't continue we'll QX, and that yet. this watch at moment so to seen And

Operator

This question-and-answer session. will conclude our

remarks. Koryl, Now I'd closing for over it CEO, John like to to turn

John Koryl

for joining today. us you Thank

simply, Before call, RealReal team start team XXXX entire strong the to like a for we'd the thank to to delivering you. thank closing our

to delivering is our in inspiring. effort consignors relentless service world-class and truly Your buyers

on to capitalize and space. playing are growing the uniquely strengths, luxury resale are We we positioned to our

thank life day. fashion you our on than We join more as to they the all. make our and us also great members to Have Thank more sustainable. of extend luxury XX million mission want a

Operator

does thank Thank you participation your conference for And you, everyone. program. call. This the in today's conclude

now disconnect. may You

The RealReal, Inc. (REAL) 7 May 242024 Q1 Earnings call transcript