NEW YORK, June 13, 2024 (GLOBE NEWSWIRE) -- Today, The RealReal, the world's largest online marketplace for authenticated, resale luxury goods, unveils an installation of fake handbags at 301 Canal Street. In a moment where authenticity has never been so important, we're drawing attention to the pervasive counterfeit crisis and provocatively prompting passer-bys to ask themselves what's real, with the goal of starting a conversation about why it matters on a street synonymous with counterfeit culture. Strat ...

VAL The RealReal Inc (REAL) Price 3 55 4.00 3.55 3.00 2.00 1.00 Jan '24 Feb '24 Apr '24 Mar '24 May '24 Jun '24 Seeking Alpha X Jun 13, 2024, 12:18 AM EDT Powered by YC H A R T S Data by Y Charts Statements of Operations Amid this backdrop, I'm renewing my buy call on The RealReal, Here is my full long-term bull case for The RealReal: The RealReal Q1 results (The RealReal Q1 shareholder letter) | --- | --- | --- | --- | --- | |--------------------------------------------------------------------------------- ...

Financial Data and Key Metrics Changes - The company reported a return to overall top line growth for the first time in three quarters, driven by double-digit growth in consignment revenue, which is the most profitable segment [7][8] - The gross margin rate reached the highest ever at 74.6%, significantly improving bottom line results compared to the prior year [8][29] - Adjusted EBITDA improved by $25 million year-over-year, with GMV and adjusted EBITDA exceeding the high end of guidance [8][11] Business Line Data and Key Metrics Changes - Consignment revenue grew by approximately 13% year-over-year, indicating strong demand and healthy supply [16][46] - The average order value increased by about 8%, reflecting positive consumer behavior [16] Market Data and Key Metrics Changes - Active buyers decreased by 9% year-over-year, but orders growth accelerated significantly, suggesting potential recovery in active buyer numbers [59][60] - The company is focusing on targeting high-value sellers to improve the mix and volume of consigned items [54][56] Company Strategy and Development Direction - The company is refining its sales and marketing approach to drive profitable supply and is testing new initiatives to grow its core business [9][10] - There is a strong focus on automation and AI to enhance client experience and operational efficiency [11][20] - The company aims to deliver positive adjusted EBITDA for the full year 2024 and has updated its full-year guidance with an increase in the midpoint of the adjusted EBITDA range [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the health of the consumer and the overall marketplace, noting that supply is currently strong [16][46] - The company is aware of the competitive landscape and is committed to enhancing its core business through pricing transparency and operational efficiencies [69][70] Other Important Information - The company is exploring new supply channels, including drop shipping, to expand its market reach [31][38] - Operational investments are planned to drive efficiencies and expand margins in the long term [35][42] Q&A Session Summary Question: Insights on consumer behavior and health - Management noted that average selling prices and units per transaction (UPT) are up, indicating a healthy consumer [16][18] Question: Impact of AI and automation on pricing - Management confirmed that AI is being integrated into pricing strategies, leading to smarter pricing decisions [20][22] Question: Gross margin outlook for the year - Management indicated that Q1's gross margin was strong but expected some seasonal reduction in Q2, with operational investments impacting EBITDA [29][30][35] Question: Update on drop shipping and supply channels - Management is optimistic about the early stages of drop shipping and is focusing on new supply channels [31][38] Question: Drivers of GMV growth - Management highlighted that GMV growth is driven by both higher-value items and increased volume from existing sellers [54][55] Question: Active buyers trend and engagement strategies - Management acknowledged the decline in active buyers but pointed to orders growth as a positive indicator for future recovery [59][60] Question: Competitive landscape evolution - Management is continuously monitoring competitors and believes in doubling down on their core business to maintain a competitive edge [69][70] Question: Consignment gross margin potential - Management sees potential for further improvement in consignment gross margins through operational efficiencies [73][74]

PART I. FINANCIAL INFORMATION This section presents the company's unaudited financial statements and management's discussion and analysis for Q1 2024 [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed financial statements and detailed notes for Q1 2024 and 2023 [Condensed Balance Sheets](index=5&type=section&id=Condensed%20Balance%20Sheets%20as%20of%20March%2031,%202024%20and%20December%2031,%202023) The condensed balance sheets detail the company's financial position, including assets, liabilities, and stockholders' deficit | Metric | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | | :-------------------------- | :----------------------------- | :----------------------------- | | Cash and cash equivalents | $165,996 | $175,709 | | Total assets | $431,579 | $446,923 | | Convertible senior notes, net | $302,324 | $452,421 | | Non-convertible notes, net | $131,199 | — | | Warrant liability | $26,000 | — | | Total liabilities | $758,632 | $750,222 | | Total stockholders' deficit | $(327,053) | $(303,299) | [Condensed Statements of Operations](index=6&type=section&id=Condensed%20Statements%20of%20Operations%20for%20the%20Three%20Months%20Ended%20March%2031,%202024%20and%202023) These statements present the company's financial performance, including revenue and net loss, for Q1 2024 and 2023 | Metric | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | Change (YoY) | | :------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :----------- | | Total revenue | $143,800 | $141,904 | +1.3% | | Gross profit | $107,279 | $89,983 | +19.2% | | Loss from operations | $(17,942) | $(81,800) | -78.1% | | Change in fair value of warrant liability | $(15,583) | — | N/A | | Gain on extinguishment of debt | $4,177 | — | N/A | | Net loss attributable to common stockholders | $(31,101) | $(82,500) | -62.4% | | Net loss per share, basic and diluted | $(0.30) | $(0.83) | -63.9% | [Condensed Statements of Stockholders' Equity (Deficit)](index=7&type=section&id=Condensed%20Statements%20of%20Stockholders'%20Equity%20(Deficit)%20as%20of%20March%2031,%202024%20and%202023) This section details changes in the company's equity or deficit, including additional paid-in capital and accumulated deficit | Metric | As of March 31, 2024 (in thousands) | As of December 31, 2023 (in thousands) | | :-------------------------------- | :---------------------------------- | :----------------------------------- | | Additional Paid-in Capital | $823,672 | $816,325 | | Accumulated Deficit | $(1,150,726) | $(1,119,625) | | Total Stockholders' Deficit | $(327,053) | $(303,299) | - Net loss for the three months ended March 31, 2024, was **$(31.1) million**, contributing to the accumulated deficit[21](index=21&type=chunk) - Stock-based compensation expense for the three months ended March 31, 2024, was **$7.3 million**[21](index=21&type=chunk) [Condensed Statements of Cash Flows](index=9&type=section&id=Condensed%20Statements%20of%20Cash%20Flows%20for%20the%20Three%20Months%20Ended%20March%2031,%202024%20and%202023) These statements summarize cash flows from operating, investing, and financing activities for Q1 2024 and 2023 | Cash Flow Activity | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | Change (YoY) | | :----------------------------- | :--------------------------------------------- | :--------------------------------------------- | :----------- | | Net cash used in operating activities | $(3,467) | $(30,433) | -88.6% | | Net cash used in investing activities | $(5,321) | $(15,920) | -66.6% | | Net cash used in financing activities | $(929) | $(295) | +215% | | Net decrease in cash, cash equivalents and restricted cash | $(9,717) | $(46,648) | -79.1% | [Notes to Unaudited Condensed Financial Statements](index=11&type=section&id=Notes%20to%20Unaudited%20Condensed%20Financial%20Statements) These notes provide essential details and explanations regarding accounting policies and financial statement items [Note 1. Description of Business and Basis of Presentation](index=11&type=section&id=Note%201.%20Description%20of%20Business%20and%20Basis%20of%20Presentation) This note describes The RealReal, Inc.'s business and the basis for its financial statement presentation - The RealReal, Inc. operates as an online marketplace for authenticated, consigned luxury goods, including women's fashion, men's fashion, and jewelry and watches[32](index=32&type=chunk) - The unaudited condensed financial statements are prepared in accordance with U.S. GAAP and SEC interim reporting requirements, and should be read in conjunction with the 2023 Annual Report on Form 10-K[33](index=33&type=chunk)[35](index=35&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=11&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines key accounting principles applied, covering revenue, stock-based compensation, and inventory - Revenue is generated from consignment sales (net basis, agent), direct sales of company-owned inventory (gross basis, principal), and shipping services (recognized over time)[41](index=41&type=chunk)[42](index=42&type=chunk)[46](index=46&type=chunk)[48](index=48&type=chunk) - Stock-based compensation expense is measured based on the grant-date fair value of awards (stock options, RSUs, PSUs, ESPP purchase rights) and recognized over the vesting period[52](index=52&type=chunk) - Inventory is valued at the lower of cost and net realizable value using the specific identification method, with provisions for write-downs and shrinkage[58](index=58&type=chunk) - Capped call transactions are classified in stockholders' equity as a reduction to additional paid-in capital and are not subsequently remeasured[67](index=67&type=chunk) [Note 3. Cash and Cash Equivalents](index=16&type=section&id=Note%203.%20Cash%20and%20Cash%20Equivalents) This note provides a breakdown of the company's cash and cash equivalents as of March 31, 2024 | Category | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | | :---------------------- | :----------------------------- | :----------------------------- | | Cash | $23,029 | $50,947 | | Money market funds | $142,967 | $124,762 | | Total cash and cash equivalents | $165,996 | $175,709 | [Note 4. Fair Value Measurement](index=16&type=section&id=Note%204.%20Fair%20Value%20Measurement) This note details fair value measurements of financial instruments, including warrants and convertible notes - Money market funds are classified as Level 1 financial assets, totaling **$143.0 million** as of March 31, 2024[77](index=77&type=chunk) - Warrants are accounted for as Level 3 liabilities, with an aggregate fair value of **$26.0 million** as of March 31, 2024, and a **$15.6 million** change in fair value recognized in Q1 2024[77](index=77&type=chunk)[80](index=80&type=chunk)[82](index=82&type=chunk) - The fair value of the 2025 Convertible Senior Notes was **$20.1 million** (carrying amount **$26.5 million**) and 2028 Convertible Senior Notes was **$123.3 million** (carrying amount **$275.8 million**) as of March 31, 2024[78](index=78&type=chunk) [Note 5. Condensed Balance Sheet Components](index=18&type=section&id=Note%205.%20Condensed%20Balance%20Sheet%20Components) This note provides further detail on specific balance sheet items like property and equipment | Category | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | | :-------------------------- | :----------------------------- | :----------------------------- | | Property and equipment, net | $101,327 | $104,087 | | Other accrued and current liabilities | $82,528 | $82,685 | - Depreciation and amortization expense on property and equipment was **$8.2 million** for Q1 2024, up from **$7.5 million** in Q1 2023[83](index=83&type=chunk) [Note 6. Non-convertible Notes, Net](index=18&type=section&id=Note%206.%20Non-convertible%20Notes,%20Net) This note describes the company's non-convertible senior secured notes and the Note Exchange transaction - On February 29, 2024, the company completed a Note Exchange, exchanging **$145.8 million** of 2025 Notes and **$6.5 million** of 2028 Notes for **$135.0 million** of 4.25%/8.75% PIK/Cash Senior Secured Notes due 2029 (2029 Notes)[86](index=86&type=chunk)[87](index=87&type=chunk) - The Note Exchange resulted in a **$4.2 million** gain on extinguishment of debt[88](index=88&type=chunk) - The 2029 Notes bear interest at **13.00%** per annum (**8.75%** cash, **4.25%** PIK) and mature on March 1, 2029, or earlier under certain conditions[87](index=87&type=chunk) | Fiscal Year | 2029 Notes (in thousands) | | :---------------- | :------------------------ | | 2024 through 2028 | — | | 2029 | $166,592 | | Total expected payments at maturity | $166,592 | | Less unamortized debt issuance costs and debt premium, net | $(3,801) | | Less amounts related to PIK interest | $(31,592) | | Net carrying amount | $131,199 | [Note 7. Convertible Senior Notes, Net](index=20&type=section&id=Note%207.%20Convertible%20Senior%20Notes,%20Net) This note provides information on the company's outstanding convertible senior notes due 2025 and 2028 - The company has **$26.7 million** principal of 3.00% Convertible Senior Notes due 2025 and **$281.0 million** principal of 1.00% Convertible Senior Notes due 2028 outstanding as of March 31, 2024[106](index=106&type=chunk) - The 2025 Notes have an initial conversion rate of **56.2635 shares per $1,000 principal**, and the 2028 Notes have an initial conversion rate of **31.4465 shares per $1,000 principal**[100](index=100&type=chunk) - Capped call transactions, classified in stockholders' equity, are in place to reduce potential dilution from the Convertible Senior Notes[112](index=112&type=chunk) | Metric | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | 2025 Notes Total interest and amortization expense | $1,158 | $1,602 | | 2028 Notes Total interest and amortization expense | $1,040 | $1,044 | [Note 8. Share-based Compensation Plans](index=23&type=section&id=Note%208.%20Share-based%20Compensation%20Plans) This note details the company's equity incentive plan and related compensation expense - The 2019 Equity Incentive Plan allows for grants of stock options, RSUs, PSUs, and performance awards, with **5,233,525 new shares** authorized on February 20, 2024[114](index=114&type=chunk)[115](index=115&type=chunk) - Total unrecognized compensation expense for RSUs and PSUs was approximately **$49.0 million** as of March 31, 2024, with a weighted-average vesting period of **2.4 years**[119](index=119&type=chunk) | Function | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | | :-------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Marketing | $410 | $450 | | Operations and technology | $2,304 | $3,691 | | Selling, general and administrative | $4,406 | $4,850 | | Total stock-based compensation expense | $7,120 | $8,991 | [Note 9. Leases](index=24&type=section&id=Note%209.%20Leases) This note outlines the company's lease costs and operating lease liabilities | Lease Cost Type | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | | :---------------------- | :--------------------------------------------- | :--------------------------------------------- | | Operating lease costs | $5,100 | $7,100 | | Variable lease costs | $1,500 | $1,300 | - In Q1 2023, the company recorded **$25.7 million** in impairment charges related to right-of-use assets due to office and store closures[127](index=127&type=chunk) - The present value of operating lease liabilities was **$122.0 million** as of March 31, 2024, with a weighted average remaining lease term of **5.3 years** and a weighted average discount rate of **6.1%**[129](index=129&type=chunk) [Note 10. Restructuring](index=25&type=section&id=Note%2010.%20Restructuring) This note describes the company's 2023 savings plan and associated restructuring charges - In February 2023, the company initiated a savings plan involving workforce reduction and real estate presence reduction[130](index=130&type=chunk) - Restructuring charges for Q1 2023 totaled **$36.4 million**, including **$25.7 million** for right-of-use asset impairment and **$7.2 million** for leasehold improvements impairment; charges for Q1 2024 were immaterial[131](index=131&type=chunk) [Note 11. Commitments and Contingencies](index=25&type=section&id=Note%2011.%20Commitments%20and%20Contingencies) This note discloses the company's involvement in ongoing legal proceedings - The company is involved in ongoing litigation with Chanel, Inc. regarding trademark infringement, unfair competition, and false advertising, with mediation efforts continuing[134](index=134&type=chunk) - A shareholder class action lawsuit was settled for **$11.0 million** in March 2022, but an opt-out plaintiff is pursuing claims in state court, with a motion for class certification set for July 30, 2024[135](index=135&type=chunk) [Note 12. Income Taxes](index=26&type=section&id=Note%2012.%20Income%20Taxes) This note discusses the company's income tax provision and deferred tax asset valuation allowance - The provision for income taxes was immaterial for both the three months ended March 31, 2024, and 2023[137](index=137&type=chunk) - The company maintains a full valuation allowance of **$292.3 million** against its gross deferred tax assets of **$319.4 million** as of March 31, 2024, primarily due to net operating loss carryforwards[137](index=137&type=chunk) [Note 13. Net Loss Per Share Attributable to Common Stockholders](index=27&type=section&id=Note%2013.%20Net%20Loss%20Per%20Share%20Attributable%20to%20Common%20Stockholders) This note presents the calculation of basic and diluted net loss per share | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :------------------------------------------------------------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net loss attributable to common stockholders (in thousands) | $(31,101) | $(82,500) | | Weighted-average common shares outstanding (basic and diluted) | 105,212,053 | 99,608,071 | | Net loss per share (basic and diluted) | $(0.30) | $(0.83) | - Potentially dilutive securities, including options, RSUs, ESPP shares, Convertible Senior Notes, and Warrants, were excluded from diluted EPS calculation as their effect would be anti-dilutive due to net losses[140](index=140&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations for Q1 2024 [Overview](index=28&type=section&id=Overview) This overview introduces The RealReal's business model and highlights key financial performance - The RealReal is the world's largest online marketplace for authenticated resale luxury goods, offering an end-to-end service for consignors and a trusted, curated marketplace for buyers[142](index=142&type=chunk) - The company's revenue is primarily generated from consignment sales, supplemented by direct sales and shipping services[144](index=144&type=chunk)[145](index=145&type=chunk) - As of March 31, 2024, the company had over **36.2 million members**[145](index=145&type=chunk) - Gross Merchandise Value (GMV) increased by **2%** to **$451.9 million**, and gross profit increased by **19%** to **$107.3 million** for the three months ended March 31, 2024, compared to the prior year[146](index=146&type=chunk) [Factors Affecting Our Performance](index=29&type=section&id=Factors%20Affecting%20Our%20Performance) This section discusses critical elements influencing the company's performance - Consignor growth and retention are key, with **85% of GMV** from repeat consignors in Q1 2024, up from **82%** in Q1 2023[148](index=148&type=chunk)[149](index=149&type=chunk) - The company invests in physical infrastructure (authentication centers), talent, and proprietary technology, including machine learning, to automate operations and support growth[152](index=152&type=chunk) - The business experiences seasonality, with supply and demand typically increasing in the third and fourth quarters, leading to stronger Average Order Value (AOV) and faster sell-through in Q4[153](index=153&type=chunk) [Key Financial and Operating Metrics](index=30&type=section&id=Key%20Financial%20and%20Operating%20Metrics) This section presents essential financial and operational data, including GMV, revenue, and take rate | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Change (YoY) | | :-------------------------- | :-------------------------------- | :-------------------------------- | :----------- | | GMV (in thousands) | $451,941 | $444,366 | +1.7% | | NMV (in thousands) | $334,815 | $327,805 | +2.1% | | Consignment revenue (in thousands) | $115,648 | $102,643 | +12.7% | | Direct revenue (in thousands) | $12,709 | $24,953 | -49.1% | | Shipping services revenue (in thousands) | $15,443 | $14,308 | +7.9% | | Number of orders (in thousands) | 840 | 891 | -5.7% | | Take rate | 38.4% | 37.4% | +1.0 pp | | Active buyers (in thousands) | 922 | 1,014 | -9.1% | | AOV | $538 | $499 | +7.8% | - The take rate increased to **38.4%** from **37.4%** due to an updated consignor commission structure implemented in November 2022, aimed at optimizing take rate and increasing supply of higher value items[163](index=163&type=chunk)[164](index=164&type=chunk) [Non-GAAP Financial Measures](index=31&type=section&id=Non-GAAP%20Financial%20Measures) This section defines and reconciles non-GAAP financial measures, specifically Adjusted EBITDA - Adjusted EBITDA is a key non-GAAP measure used by management to assess operating performance and for business planning, excluding items not indicative of core operating performance[167](index=167&type=chunk)[168](index=168&type=chunk) | Metric | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | | :-------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net loss | $(31,101) | $(82,500) | | EBITDA | $(21,039) | $(73,979) | | Adjusted EBITDA | $(2,261) | $(27,297) | - Adjusted EBITDA for Q1 2024 significantly improved to **$(2.3) million** from **$(27.3) million** in Q1 2023, reflecting reduced net loss and lower restructuring charges[171](index=171&type=chunk) [Components of our Operating Results](index=33&type=section&id=Components%20of%20our%20Operating%20Results) This section details the various revenue streams, cost of revenue, and operating expenses - Revenue is categorized into consignment (majority), direct (company-owned inventory), and shipping services[175](index=175&type=chunk)[179](index=179&type=chunk) - Cost of revenue includes credit card fees, packaging, customer service, website hosting, and inventory adjustments for both consignment and direct sales, plus shipping costs[176](index=176&type=chunk) - Operating expenses comprise marketing, operations and technology (including authentication, merchandising, fulfillment, and R&D), selling, general and administrative, and restructuring charges[177](index=177&type=chunk)[178](index=178&type=chunk)[179](index=179&type=chunk)[180](index=180&type=chunk) - The provision for income taxes is immaterial, and the company maintains a full valuation allowance against its net deferred tax assets[181](index=181&type=chunk) [Results of Operations](index=35&type=section&id=Results%20of%20Operations) This section provides a detailed comparison of the company's financial performance for Q1 2024 [Comparison of the Three Months Ended March 31, 2024 and 2023](index=36&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20March%2031,%202024%20and%202023) This subsection offers a comprehensive line-by-line analysis of revenue, costs, and expenses | Metric | Q1 2024 (in thousands) | Q1 2023 (in thousands) | Change (k) | Change (%) | | :-------------------------------- | :--------------------- | :--------------------- | :--------- | :--------- | | Consignment revenue | $115,648 | $102,643 | $13,005 | 13% | | Direct revenue | $12,709 | $24,953 | $(12,244) | -49% | | Shipping services revenue | $15,443 | $14,308 | $1,135 | 8% | | Cost of consignment revenue | $13,280 | $15,529 | $(2,249) | -14% | | Cost of direct revenue | $12,285 | $25,030 | $(12,745) | -51% | | Cost of shipping services revenue | $10,956 | $11,362 | $(406) | -4% | | Marketing | $15,283 | $17,518 | $(2,235) | -13% | | Operations and technology | $62,972 | $68,032 | $(5,060) | -7% | | Selling, general and administrative | $46,770 | $49,845 | $(3,075) | -6% | | Restructuring charges | $196 | $36,388 | $(36,192) | -99% | | Change in fair value of warrant liability | $(15,583) | — | $(15,583) | 100% | | Gain on extinguishment of debt | $4,177 | — | $4,177 | 100% | | Interest income | $2,069 | $2,053 | $16 | 1% | | Interest expense | $(3,751) | $(2,667) | $(1,084) | 41% | - Total gross margin increased by **1,119 basis points** due to increased consignment revenue, decreased direct revenue as a percentage of total revenue, and an improved take rate[197](index=197&type=chunk) [Liquidity and Capital Resources](index=40&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's ability to meet its financial obligations [Cash Flows](index=40&type=section&id=Cash%20Flows) This subsection analyzes the changes in cash from operating, investing, and financing activities - Net cash used in operating activities significantly decreased to **$3.5 million** in Q1 2024 from **$30.4 million** in Q1 2023, primarily due to a lower net loss and non-cash charges related to warrant liability[216](index=216&type=chunk)[217](index=217&type=chunk) - Net cash used in investing activities decreased to **$5.3 million** in Q1 2024 from **$15.9 million** in Q1 2023, reflecting reduced capital expenditures[218](index=218&type=chunk)[219](index=219&type=chunk) - Net cash used in financing activities increased to **$0.9 million** in Q1 2024 from **$0.3 million** in Q1 2023, mainly due to debt issuance costs for the Note Exchange[220](index=220&type=chunk) [Convertible Senior Notes](index=41&type=section&id=Convertible%20Senior%20Notes) This subsection provides details on the company's outstanding convertible senior notes - As of March 31, 2024, the company had **$26.7 million** principal of 2025 Convertible Senior Notes and **$281.0 million** principal of 2028 Convertible Senior Notes outstanding[221](index=221&type=chunk) - Capped call transactions are in place to reduce potential dilution from the conversion of these notes[223](index=223&type=chunk) [2029 Notes and Warrants](index=42&type=section&id=2029%20Notes%20and%20Warrants) This subsection describes the issuance of 2029 Notes and associated warrants - On February 29, 2024, the company issued **$135.0 million** in 2029 Notes and warrants to acquire up to **7,894,737 shares** of common stock as part of the Note Exchange[225](index=225&type=chunk) [Contractual Obligations and Commitments](index=42&type=section&id=Contractual%20Obligations%20and%20Commitments) This subsection outlines the company's significant contractual obligations - No material changes to contractual obligations from the 2023 10-K, except for the Note Exchange, which decreased 2025 and 2028 Notes commitments and introduced 2029 Notes and Warrants[227](index=227&type=chunk)[230](index=230&type=chunk) [Critical Accounting Estimates](index=42&type=section&id=Critical%20Accounting%20Estimates) This subsection identifies key accounting estimates requiring significant management judgment - The fair value of the 2029 Notes and the warrant liability are considered critical accounting estimates, requiring significant judgment in valuation methods and interest rate assessment[229](index=229&type=chunk)[230](index=230&type=chunk)[231](index=231&type=chunk) [Recent Accounting Pronouncements](index=43&type=section&id=Recent%20Accounting%20Pronouncements) This subsection confirms no new material accounting pronouncements have been adopted since the last annual report - There have been no new developments to recently issued accounting standards from those disclosed in the 2023 Annual Report on Form 10-K[232](index=232&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, the registrant is not required to provide detailed market risk disclosures - The company is a smaller reporting company and is exempt from providing detailed market risk disclosures[233](index=233&type=chunk) [Item 4. Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2024 - Disclosure controls and procedures were evaluated and deemed effective at a reasonable assurance level as of March 31, 2024[234](index=234&type=chunk) - No changes in internal control over financial reporting materially affected, or are reasonably likely to materially affect, internal control during the period[235](index=235&type=chunk) - Management acknowledges the inherent limitations of control systems, which can only provide reasonable, not absolute, assurance against errors and fraud[236](index=236&type=chunk) PART II. OTHER INFORMATION This section provides additional information, including legal proceedings and risk factors [Item 1. Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) This section details the company's involvement in ongoing legal proceedings - The company is a defendant in an ongoing lawsuit filed by Chanel, Inc. in November 2018, alleging trademark infringement, unfair competition, and false advertising; mediation efforts are continuing[240](index=240&type=chunk) - A shareholder class action lawsuit was settled for **$11.0 million** in March 2022, but an opt-out plaintiff is pursuing claims in state court, with a motion for class certification set for July 30, 2024[241](index=241&type=chunk) [Item 1A. Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) This section outlines various risks that could materially affect the company's business and financial condition - The company has a history of net losses and an accumulated deficit, and there is no assurance of achieving or maintaining future profitability[251](index=251&type=chunk) - The savings plan implemented in February 2023, including workforce and real estate reductions, may not yield anticipated benefits, could incur higher costs, or disrupt business operations[252](index=252&type=chunk)[253](index=253&type=chunk)[254](index=254&type=chunk) - Success depends on the ability to obtain sufficient new and recurring supply of pre-owned luxury goods and to accurately authenticate items, as counterfeit goods could damage reputation[267](index=267&type=chunk)[280](index=280&type=chunk) - The company has incurred significant debt, and transactions related to Convertible Senior Notes and Warrants may dilute ownership interests or adversely affect financial condition due to cash settlement requirements or accounting volatility[329](index=329&type=chunk)[332](index=332&type=chunk)[333](index=333&type=chunk)[334](index=334&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=63&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports the issuance of warrants to purchase common stock in connection with the Note Exchange - Warrants to purchase **7,894,737 shares** of common stock were issued on February 29, 2024, as part of the Note Exchange, with an exercise price of **$1.71 per share** and an expiration date of March 1, 2029[339](index=339&type=chunk) - These warrants were issued pursuant to Section 4(a)(2) of the Securities Act of 1933[340](index=340&type=chunk) [Item 3. Defaults Upon Senior Securities](index=63&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to the company for the reporting period [Item 4. Mine Safety Disclosures](index=63&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company for the reporting period [Item 5. Other Information](index=63&type=section&id=Item%205.%20Other%20Information) This section discloses a Rule 10b5-1 trading plan adopted by a Board member - Rob Krolik, a Board member, adopted a Rule 10b5-1 trading plan on March 7, 2024, for the sale of up to **74,949 shares** of common stock[344](index=344&type=chunk) [Item 6. Exhibits](index=64&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q - Exhibits include the Offer Letter for Ajay Gopal, Form of Exchange Agreement, Indenture for 2029 Notes, Warrant Agency Agreement, Security Agreement, and various certifications (e.g., CEO/CFO certifications under Sarbanes-Oxley Act)[346](index=346&type=chunk) [Signatures](index=65&type=section&id=Signatures) The report is officially signed by the Chief Executive Officer and Chief Financial Officer - The report was signed by John Koryl (Chief Executive Officer) and Ajay Madan Gopal (Chief Financial Officer) on May 7, 2024[351](index=351&type=chunk)

[Financial Highlights and Business Outlook](index=1&type=section&id=Financial%20Highlights%20and%20Business%20Outlook) The RealReal returned to top-line growth in Q1 2024, significantly improving profitability and raising its full-year Adjusted EBITDA outlook [First Quarter 2024 Financial Highlights](index=1&type=section&id=First%20Quarter%202024%20Financial%20Highlights) Q1 2024 delivered 2% GMV growth, 13% consignment revenue increase, 74.6% gross margin, and a substantial reduction in net loss - Revenue growth: **2% GMV increase** and **13% consignment revenue increase** year-over-year[1](index=1&type=chunk) Q1 2024 Key Financial Results (vs. Q1 2023) | Metric | Q1 2024 | Q1 2023 | YoY Change | | :--- | :--- | :--- | :--- | | GMV | $452 million | - | +2% | | Total Revenue | $144 million | - | +1% | | Gross Profit | $107 million | $90 million | +$17 million | | Gross Margin | 74.6% | 63.6% | +1,100 bps | | Net Loss | $(31.1) million | $(82.5) million | +$51.4 million | | Adjusted EBITDA | $(2.3) million | $(27.3) million | +$25 million | | GAAP EPS | $(0.30) | $(0.83) | +$0.53 | Q1 2024 Key Operating Metrics (vs. Q1 2023) | Metric | Q1 2024 | YoY Change | | :--- | :--- | :--- | | TTM Active Buyers | 922,000 | -9% | | Orders | 840,000 | -6% | | Average Order Value (AOV) | $538 | +8% | - Focus on core consignment business and efficiencies resulted in **profitable supply growth** and an **all-time high gross margin rate**[2](index=2&type=chunk) [Q2 and Full Year 2024 Guidance](index=1&type=section&id=Q2%20and%20Full%20Year%202024%20Guidance) The company issued Q2 2024 guidance and raised its full-year Adjusted EBITDA outlook, reflecting increased confidence in its profitability trajectory Q2 and Full Year 2024 Financial Guidance | Metric | Q2 2024 Guidance | Full Year 2024 Guidance | | :--- | :--- | :--- | | GMV | $420 - $450 million | $1.81 - $1.87 billion | | Total Revenue | $135 - $145 million | $580 - $605 million | | Adjusted EBITDA | $(6) - $(3) million | $(5) - $8 million | - Full-year 2024 Adjusted EBITDA outlook midpoint was **raised**, indicating strong momentum in the core business[3](index=3&type=chunk)[6](index=6&type=chunk) [Financial Statements](index=5&type=section&id=Financial%20Statements) Q1 2024 financial statements show a significant reduction in net loss and improved operating cash flow, alongside a shift in debt structure [Statements of Operations](index=5&type=section&id=Statements%20of%20Operations) Q1 2024 operations show stable total revenue, 13% consignment revenue growth, increased gross profit, and a significantly reduced net loss Q1 2024 Statement of Operations Highlights (in thousands) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Consignment revenue | $115,648 | $102,643 | | Direct revenue | $12,709 | $24,953 | | **Total revenue** | **$143,800** | **$141,904** | | Gross profit | $107,279 | $89,983 | | Total operating expenses | $125,221 | $171,783 | | Loss from operations | $(17,942) | $(81,800) | | **Net loss** | **$(31,101)** | **$(82,500)** | [Condensed Balance Sheets](index=6&type=section&id=Condensed%20Balance%20Sheets) As of March 31, 2024, total assets were $431.6 million, with a shift in debt structure from convertible to non-convertible notes Balance Sheet Summary (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $165,996 | $175,709 | | Total current assets | $225,322 | $235,947 | | **Total assets** | **$431,579** | **$446,923** | | Convertible senior notes, net | $302,324 | $452,421 | | Non-convertible notes, net | $131,199 | $— | | **Total liabilities** | **$758,632** | **$750,222** | | Total stockholders' deficit | $(327,053) | $(303,299) | [Condensed Statements of Cash Flows](index=7&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) Q1 2024 saw a significant reduction in net cash used in operating activities to $(3.5) million, driven by a lower net loss Q1 2024 Statement of Cash Flows Highlights (in thousands) | Cash Flow Activity | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(3,467) | $(30,433) | | Net cash used in investing activities | $(5,321) | $(15,920) | | Net cash used in financing activities | $(929) | $(295) | | **Net decrease in cash** | **$(9,717)** | **$(46,648)** | | Cash at end of period | $180,906 | $247,145 | [Non-GAAP Financial Measures and Reconciliations](index=3&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) Q1 2024 non-GAAP metrics show Adjusted EBITDA loss significantly reduced, non-GAAP net loss per share improved, and free cash flow outflow cut - Non-GAAP measures like Adjusted EBITDA, Free Cash Flow, and non-GAAP net loss per share supplement GAAP statements for internal performance comparison[12](index=12&type=chunk)[14](index=14&type=chunk) [Reconciliation of Net Loss to Adjusted EBITDA](index=8&type=section&id=Reconciliation%20of%20Net%20Loss%20to%20Adjusted%20EBITDA) Q1 2024 GAAP net loss of $(31.1) million reconciled to an Adjusted EBITDA loss of $(2.3) million, a significant improvement year-over-year Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net loss | $(31,101) | $(82,500) | | Adjustments (D&A, Interest, Taxes, etc.) | $10,062 | $(66,682) | | Stock-based compensation | $7,120 | $8,991 | | Restructuring charges | $196 | $36,388 | | Gain on extinguishment of debt | $(4,177) | $— | | Change in fair value of warrant liability | $15,583 | $— | | **Adjusted EBITDA** | **$(2,261)** | **$(27,297)** | [Reconciliation to Non-GAAP Net Loss](index=8&type=section&id=Reconciliation%20to%20Non-GAAP%20Net%20Loss) Q1 2024 non-GAAP net loss improved to $(12.3) million, or $(0.12) per share, from $(35.7) million year-over-year Reconciliation to Non-GAAP Net Loss (in thousands, except per share data) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net loss | $(31,101) | $(82,500) | | Total Adjustments | $18,849 | $46,768 | | **Non-GAAP net loss** | **$(12,252)** | **$(35,732)** | | Non-GAAP net loss per share | $(0.12) per share | $(0.36) per share | [Reconciliation to Free Cash Flow](index=9&type=section&id=Reconciliation%20to%20Free%20Cash%20Flow) Q1 2024 free cash flow outflow significantly improved to $(8.8) million from $(46.4) million, driven by reduced operating cash use Free Cash Flow Reconciliation (in thousands) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(3,467) | $(30,433) | | Purchase of property, equipment & software | $(5,321) | $(15,920) | | **Free Cash Flow** | **$(8,788)** | **$(46,353)** | [Key Financial and Operating Metrics](index=9&type=section&id=Key%20Financial%20and%20Operating%20Metrics) Key metrics show stabilizing GMV with year-over-year growth, improved take rate to 38.4%, and increased AOV despite fewer active buyers Quarterly Operating Metrics Trend | Metric | Q1 2023 | Q4 2023 | Q1 2024 | | :--- | :--- | :--- | :--- | | GMV (in thousands) | $444,366 | $450,668 | $451,941 | | Take Rate | 37.4% | 37.7% | 38.4% | | Active Buyers (in thousands) | 1,014 | 922 | 922 | | AOV | $499 | $545 | $538 | - Take rate consistently improved over the past year, rising from **37.4% in Q1 2023** to **38.4% in Q1 2024**[31](index=31&type=chunk) - Despite a year-over-year decline in active buyers, **Average Order Value (AOV) increased**, signaling a strategic shift towards higher-value transactions[5](index=5&type=chunk)[31](index=31&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________________ FORM 10-K ___________________________________ (Mark One) x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(ad) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For The Transition Period From To Commission File Number 001-38953 The RealReal, Inc. (Exact name of Re ...

The RealReal, Inc. (NASDAQ:REAL) Q4 2023 Earnings Conference Call February 29, 2024 5:00 PM ET Company Participants Caitlin Howe - Senior Vice President of Investor Relations John Koryl - Chief Executive Officer Rati Levesque - President & Chief Operating Officer Todd Suko - Chief Legal Officer Conference Call Participants Mark Altschwager - Baird Anna Andreeva - Needham Rick Patel - Raymond James Jason Napier - UBS Marvin Fong - BTIG Ike Boruchow - Wells Fargo Ashley Owens - KeyBanc Capital Markets Tom Nik ...

[Financial Highlights and Business Update](index=1&type=section&id=Financial%20Highlights%20and%20Business%20Update) The company achieved significant profitability milestones in Q4 2023, including positive Adjusted EBITDA and free cash flow, and improved full-year financial performance despite revenue declines, further strengthening its capital structure through strategic debt exchanges [Fourth Quarter 2023 Financial Highlights](index=1&type=section&id=Fourth%20Quarter%202023%20Financial%20Highlights) The company achieved positive Adjusted EBITDA and free cash flow in Q4 2023, significantly improving profitability despite a 9% GMV and 10% revenue decrease - The company achieved **positive Adjusted EBITDA** and **positive free cash flow** for the first time since its IPO in 2019, driven by a strategic shift to focus on the consignment business[2](index=2&type=chunk) Q4 2023 Financial Performance vs. Q4 2022 | Metric | Q4 2023 | Q4 2022 | Change | | :--- | :--- | :--- | :--- | | GMV | $451 million | $493 million | -9% | | Total Revenue | $143 million | $160 million | -10% | | Net Loss | $22 million | $39 million | +$17M | | Adjusted EBITDA | $1.4 million | $(20.2) million | +$21.6M | | GAAP Net Loss per Share | $(0.21) | $(0.39) | Improved | | Non-GAAP Net Loss per Share | $(0.07) | $(0.29) | Improved | - Key operating metrics showed mixed results in Q4 2023 compared to the prior year period: Trailing 12-months active buyers **decreased by 8% to 922,000**, and orders **decreased by 17% to 826,000**. However, Average Order Value (AOV) **increased by 10% to $545**[6](index=6&type=chunk)[13](index=13&type=chunk) [Full Year 2023 Financial Highlights](index=1&type=section&id=Full%20Year%202023%20Financial%20Highlights) Full-year 2023 saw a 9% revenue and 5% GMV decrease, yet the company significantly improved profitability, reducing net loss and halving its Adjusted EBITDA loss Full Year 2023 Financial Performance vs. Full Year 2022 | Metric | Full Year 2023 | Full Year 2022 | Change | | :--- | :--- | :--- | :--- | | GMV | $1.73 billion | $1.81 billion (approx) | -5% | | Total Revenue | $549 million | $603 million | -9% | | Net Loss | $168 million | $196 million | +$28M | | Adjusted EBITDA | $(55.2) million | $(112.4) million | +$57.2M | | GAAP Net Loss per Share | $(1.65) | $(2.05) | Improved | | Non-GAAP Net Loss per Share | $(0.87) | $(1.53) | Improved | - The company ended 2023 with cash, cash equivalents, and restricted cash **totaling $191 million**[13](index=13&type=chunk) [Debt Exchange Transactions](index=1&type=section&id=Debt%20Exchange%20Transactions) Strategic debt exchange transactions reduced total indebtedness by over $17 million and extended 2025 maturities to 2029, enhancing capital structure flexibility - The company exchanged a portion of its **3.00% Convertible Senior Notes due 2025** and **1.00% Convertible Senior Notes due 2028**[3](index=3&type=chunk) - The exchange was for **$135 million of new 4.25%/8.75% PIK/Cash Senior Secured Notes due 2029** and warrants to purchase up to **7,894,737 shares of common stock**[3](index=3&type=chunk) - The transactions resulted in a **reduction of total debt by more than $17 million** and **extended a significant portion of 2025 maturities**, creating substantial runway and capital structure flexibility[3](index=3&type=chunk)[5](index=5&type=chunk) [Financial Guidance](index=2&type=section&id=Financial%20Guidance) The company issued Q1 and full-year 2024 guidance, projecting GMV and revenue ranges, with Adjusted EBITDA expected to approach breakeven or profitability [Q1 and Full Year 2024 Guidance](index=2&type=section&id=Q1%20and%20Full%20Year%202024%20Guidance) The company provided Q1 and full-year 2024 guidance, projecting GMV between $415M-$445M for Q1 and $1.80B-$1.88B for full year, with Adjusted EBITDA nearing breakeven Q1 and Full Year 2024 Guidance | Metric | Q1 2024 Guidance | Full Year 2024 Guidance | | :--- | :--- | :--- | | GMV | $415M - $445M | $1.80B - $1.88B | | Total Revenue | $135M - $145M | $580M - $605M | | Adjusted EBITDA | $(8)M - $(4)M | $(8)M - $8M | - The company has not reconciled its **forward-looking Adjusted EBITDA guidance** to the most comparable GAAP measure, net income (loss), due to the inability to predict certain components with reasonable certainty[9](index=9&type=chunk) [Consolidated Financial Statements](index=5&type=section&id=Consolidated%20Financial%20Statements) This section presents the company's consolidated financial statements, detailing revenue and profitability trends, balance sheet changes, and cash flow activities for the period [Statements of Operations](index=5&type=section&id=Statements%20of%20Operations) Full-year 2023 total revenue decreased to $549.3 million, yet gross profit increased to $376.3 million, and net loss improved to $(168.5) million Full Year Income Statement Highlights (in thousands) | Line Item | 2023 | 2022 | | :--- | :--- | :--- | | Total Revenue | $549,304 | $603,493 | | Gross Profit | $376,278 | $348,691 | | Loss from Operations | $(166,293) | $(189,163) | | Net Loss | $(168,472) | $(196,445) | | Net Loss per Share | $(1.65) | $(2.05) | - **Consignment revenue**, the core business, **grew from $385.0M in 2022 to $415.6M in 2023**, while **direct revenue was more than halved, falling from $158.7M to $79.2M**[25](index=25&type=chunk) [Balance Sheets](index=6&type=section&id=Balance%20Sheets) As of December 31, 2023, total assets decreased to $446.9 million, total liabilities decreased to $750.2 million, and stockholders' deficit increased to $(303.3) million Balance Sheet Highlights (in thousands) | Line Item | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $175,709 | $293,793 | | Total Assets | $446,923 | $615,641 | | Total Liabilities | $750,222 | $785,733 | | Total Stockholders' Deficit | $(303,299) | $(170,092) | [Statements of Cash Flows](index=7&type=section&id=Statements%20of%20Cash%20Flows) Full-year 2023 net cash used in operating activities improved to $(61.3) million, resulting in a $103.2 million net decrease in cash, ending at $190.6 million Full Year Cash Flow Highlights (in thousands) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(61,268) | $(91,557) | | Net cash used in investing activities | $(42,128) | $(36,922) | | Net cash provided by financing activities | $226 | $4,101 | | Net decrease in cash | $(103,170) | $(124,378) | | Cash at end of period | $190,623 | $293,793 | [Non-GAAP Financial Measures and Reconciliations](index=3&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) This section provides reconciliations of GAAP net loss to non-GAAP measures, including Adjusted EBITDA, non-GAAP net loss, and free cash flow, highlighting key adjustments and performance improvements [Reconciliation of Net Loss to Adjusted EBITDA](index=8&type=section&id=Reconciliation%20of%20Net%20Loss%20to%20Adjusted%20EBITDA) This section reconciles GAAP Net Loss to Adjusted EBITDA, showing a positive $1.4 million Adjusted EBITDA in Q4 2023 and a significant full-year improvement to $(55.2) million Adjusted EBITDA Reconciliation Highlights (in thousands) | Metric | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :--- | :--- | :--- | :--- | :--- | | Net Loss | $(21,693) | $(38,610) | $(168,472) | $(196,445) | | Adjusted EBITDA | $1,442 | $(20,174) | $(55,169) | $(112,454) | [Reconciliation of GAAP Net Loss to Non-GAAP Net Loss](index=9&type=section&id=Reconciliation%20of%20GAAP%20Net%20Loss%20to%20Non-GAAP%20Net%20Loss) This table reconciles GAAP Net Loss to Non-GAAP Net Loss, showing a Q4 2023 Non-GAAP net loss of $(7.3) million and a full-year improvement to $(88.8) million Non-GAAP Net Loss Reconciliation (in thousands, except per share data) | Metric | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :--- | :--- | :--- | :--- | :--- | | GAAP Net Loss | $(21,693) | $(38,610) | $(168,472) | $(196,445) | | Non-GAAP Net Loss | $(7,318) | $(28,177) | $(88,760) | $(147,233) | | Non-GAAP Net Loss per Share | $(0.07) | $(0.29) | $(0.87) | $(1.53) | [Reconciliation of Net Cash Used in Operating Activities to Free Cash Flow](index=9&type=section&id=Reconciliation%20of%20Net%20Cash%20Used%20in%20Operating%20Activities%20to%20Free%20Cash%20Flow) The company achieved positive free cash flow of $3.8 million in Q4 2023, a significant turnaround, and improved full-year free cash flow to $(103.4) million Free Cash Flow Reconciliation (in thousands) | Metric | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :--- | :--- | :--- | :--- | :--- | | Net cash from (used in) operating activities | $10,523 | $3,698 | $(61,268) | $(91,557) | | Free Cash Flow | $3,793 | $(6,969) | $(103,396) | $(128,479) | [Key Financial and Operating Metrics](index=9&type=section&id=Key%20Financial%20and%20Operating%20Metrics) This section presents a quarterly breakdown of key financial and operating metrics, including GMV, orders, active buyers, AOV, and Take Rate [Quarterly Key Metrics](index=9&type=section&id=Quarterly%20Key%20Metrics) This section details quarterly operating metrics, showing Q4 2023 GMV at $450.7 million, AOV increasing to $545, and Take Rate improving to 37.7%, despite a decline in active buyers Key Metrics Comparison: Q4 2023 vs Q4 2022 | Metric | Q4 2023 | Q4 2022 | | :--- | :--- | :--- | | GMV (in thousands) | $450,668 | $492,955 | | Number of Orders (in thousands) | 826 | 993 | | Active Buyers (in thousands) | 922 | 998 | | AOV | $545 | $496 | | Take Rate | 37.7% | 35.7% |

The RealReal, Inc. (NASDAQ:REAL) Q3 2023 Earnings Conference Call November 7, 2023 5:00 PM ET Company Participants Caitlin Howe - Senior Vice President of Investor Relations John Koryl - Chief Executive Officer Robert Julian - Chief Financial Officer Rati Levesque - President & Chief Operating Officer Conference Call Participants Mark Altschwager - Baird Marvin Fong - BTIG Ike Boruchow - Wells Fargo Tom Nikic - Wedbush Securities Edward Yruma - Piper Sandler Ashley Owens - KeyBanc Capital Markets Rick Patel ...

The following table reflects the reconciliation of net loss to Adjusted EBITDA for each of the periods indicated (in thousands): | --- | --- | --- | --- | --- | --- | --- | --- | --- | |------------------------------------------------------|-------|-------------------------------------|-------|----------|-------|------------------------------------|-------|-----------| | Adjusted EBITDA Reconciliation: | | Three Months Ended September \n2023 | 30, | 2022 | | Nine Months Ended September \n2023 | 30, | 2022 | ...