The RealReal(REAL) - 2024 Q1 - Quarterly Results

Financial Highlights and Business Outlook 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 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] 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] Q2 and Full Year 2024 Guidance 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][6] Financial Statements 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 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 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 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 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][14] Reconciliation of Net Loss to Adjusted EBITDA 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 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 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 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] - Despite a year-over-year decline in active buyers, Average Order Value (AOV) increased, signaling a strategic shift towards higher-value transactions[5][31]