The RealReal(US:REAL)2022-05-11 00:14Financial Data and Key Metrics Changes - The company reported better-than-anticipated financial results for Q1 2022, with GMV driven by fine jewelry, watches, high-value handbags, and strong growth in women's apparel and shoes [6][10] - The projected GMV growth for Q2 is approximately 33.5% compared to the previous year, indicating confidence in continued growth despite a challenging retail environment [17][25] - Revenue growth rate for Q1 was 48.5%, with a projected growth rate of 52.3% for Q2, reflecting strong demand and operational efficiency [92] Business Line Data and Key Metrics Changes - Direct revenue as a percentage of total revenue increased to 34% in Q1 from 25% in the previous year, driven by higher sell-through rates [18] - The company anticipates that the proportion of direct revenue will decline over time as it emphasizes its consignment business model [20] Market Data and Key Metrics Changes - The company noted a shift in consumer behavior towards apparel, which is growing at a fast rate, contrasting with trends in the broader e-commerce market [7][15] - The luxury market is described as resilient, with the company positioned to benefit from consumers trading down from primary markets due to inflation [10][28] Company Strategy and Development Direction - The company aims to achieve profitability on an adjusted EBITDA basis by 2024 and is on track to meet its Vision 2025 targets, focusing on topline growth of at least 30% and operational excellence [8] - The strategy includes a focus on reducing fixed costs and improving variable cost productivity, with significant operating expense leverage achieved in Q1 [9][62] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate inflationary pressures and labor challenges, noting strong demand and a healthy supply of inventory [9][10] - The company believes that a potential recession could drive higher supply as consumers look to monetize their items, leveraging its unique position in the luxury resale market [39][100] Other Important Information - The company has 16 shoppable stores and three luxury consignment offices, with plans to open two new stores per year, depending on real estate opportunities [63][65] - The company is making progress in automation and pricing strategies, aiming to improve processing times and enhance operational efficiency [109][110] Q&A Session Summary Question: Can you talk about the behavior of new buyers compared to previous cohorts? - New buyers are behaving similarly to previous cohorts, with a notable increase in apparel purchases [15] Question: What are you seeing in the business quarter-to-date? - The company is confident in its Q2 guidance, projecting a 33.5% growth in GMV [17][25] Question: How should we think about the mix of direct sales for the balance of the year? - Direct revenue is expected to decrease as the company emphasizes its consignment model, although it will remain a portion of the business [20] Question: Are you seeing any signs of trade down within your business? - The company is observing a category shift rather than a trade down, with increased sales in apparel [28] Question: Can you provide insights on supply trends in Q1? - Supply trends were healthy, with a mix of ready-to-wear items and a return to pre-COVID levels in in-home supply [32] Question: What is the breakdown of inventory by category? - Approximately 60% of inventory is from vendor purchases, 25% from "get paid now" initiatives, and 15% from out-of-policy returns [33] Question: What are the expectations for gross margin in the upcoming quarters? - Gross margin is expected to improve in the second half of the year as the proportion of direct revenue declines [77] Question: How is the marketing spend expected to evolve? - The company anticipates continued efficiency in marketing spend, aided by a strong flywheel effect from its stores [85]