The RealReal Reports Preliminary First Quarter Results
GMV trends performed as expected through early March, with GMV growth in excess of 30% year over year. GMV growth in the second week of March was 12% year over year. However, limited operations in the company’s warehouses in accordance with shelter-in-place directives have significantly impacted GMV. Since
“This unprecedented crisis has significantly impacted our ability to operate at previously planned levels, stemming primarily from limited warehouse operations. In response, we undertook a comprehensive review of our operations, including stress test scenarios,” said
- Reduced marketing investments;
- Reduced overall headcount by approximately 10% and annual company payroll related expenses by approximately 15%, excluding the impact of furloughs;
- Furloughed approximately 15% of total headcount including employees in its e-commerce centers, retail stores, Luxury Consignment Offices, sales organization and headquarters;
- Renegotiated certain vendor contracts and deferred other expense payments;
- Instituted a hiring freeze;
- Postponed the opening of its
- Deferred certain capital investments;
- Reduced discretionary investments across the business; and
- Reduced executive salaries.
These actions are intended to result in operating expense reductions of more than
Interest in consignment remains strong. While social distancing prevents in-person White Glove appointments, the company has turned to virtual appointments to continue delivering personalized consignment consultations and support people monetizing the assets in their homes during these uncertain times. The
The RealReal’s vendor channel, where it sources supply from business sellers, was also resilient in March, as interest from business sellers and brands seeking distribution capacity and demand increased.
“We were off to a strong start in Q1, on track to meet or exceed our Q1 guidance. As the world changed with the spread of COVID-19, we were impacted by the new reality emerging from shelter-in-place and social distancing mandates,” said
- Temporarily closing stores and Luxury Consignment Offices;
- Suspending all in-person White Glove consignment appointments;
- Enforcing social distancing in its e-commerce centers, including staggered shifts, reduced staff onsite resulting in operations significantly below full capacity, taped off six-foot boundaries, training, signage throughout every facility, etc.;
- Cleaning and sanitizing during every hour of every shift and dedicating equipment to individual use;
- Providing personal protective equipment (PPE), including daily kits for every onsite employee with gloves and a mask;
- Providing a transportation allowance for private transportation to work;
- Cleaning items received for consignment, including steam cleaning fine jewelry and watches, heat steaming ready-to-wear, and wiping down accessories and handbags;
- Consulting directly with a third-party medical expert to validate approach and ensure every precaution is being taken to keep onsite teams safe.
“Given the unknown duration of the pandemic, we’ve focused on reducing operating expenses and preserving liquidity to weather the near-term challenges and ensure we are well positioned to capitalize on the significant opportunity in front of us,” continued Wainwright. “I am confident the strength of our balance sheet, customer satisfaction, healthy traffic trends, and buyer and consignor repeat rates, along with continuing progress in technology initiatives that support efficiently scaling our operations, will position us to bounce back quickly once the economy stabilizes.”
The company’s primary internal planning scenario relies on the
The foregoing results are preliminary and subject to change following the completion of the company’s quarter-end close and review process. The
Preliminary First Quarter Financial Metrics
- GMV was approximately
$258 million, up 15% year over year.
- GAAP net loss is expected to be in the range of (
- Adjusted EBITDA loss is expected to be in the range of (
- Trailing 12 months active buyers reached 601,766, up 32% year over year.
- Orders reached 574,215, up 15% year over year.
- Average Order Value was
$449compared to $450in the first quarter of 2019; Average selling price per item increased year over year but units per transaction decreased year over year.
- GMV from repeat buyers was 84.4% compared to 82.4% in the first quarter of 2019.
- At the end of the first quarter, cash, cash equivalents and short-term investments totaled approximately
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Forward Looking Statements
This press release contains forward-looking statements relating to, among other things, the future performance of The
More information about factors that could affect the company's operating results is included under the captions “Risk Factors” and “Management's Discussion and Analysis of Financial Condition and Results of Operations” in the company's most recent Annual Report on Form 10-K and subsequent quarterly reports on Form 10-Q, copies of which may be obtained by visiting the company's Investor Relations website at https://investor.therealreal.com or the
Non-GAAP Financial Measures
This press release contains Adjusted EBITDA, a non-GAAP financial measure. We have provided a reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure.
We do not, nor do we suggest that investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors should also note that non-GAAP financial measures we use may not be the same non-GAAP financial measures, and may not be calculated in the same manner, as that of other companies, including other companies in our industry.
Adjusted EBITDA is a key performance measure that our management uses to assess our operating performance. Because Adjusted EBITDA facilitates internal comparisons of our historical operating performance on a more consistent basis, we use this measure as an overall assessment of our performance, to evaluate the effectiveness of our business strategies and for business planning purposes. Adjusted EBITDA may not be comparable to similarly titled metrics of other companies.
We calculate Adjusted EBITDA as net loss before interest income, interest expense, net other (income) expense, income tax provision, depreciation and amortization, further adjusted to exclude stock-based compensation, and certain one-time expenses. Adjusted EBITDA has certain limitations as the measure excludes the impact of certain expenses that are included in our statements of operations that are necessary to run our business and should not be considered as an alternative to net loss or any other measure of financial performance calculated and presented in accordance with GAAP.
In particular, the exclusion of certain expenses in calculating Adjusted EBITDA facilitates operating performance comparisons on a period-to-period basis and, in the case of exclusion of the impact of stock-based compensation, excludes an item that we do not consider to be indicative of our core operating performance. Investors should, however, understand that stock-based compensation will be a significant recurring expense in our business and an important part of the compensation provided to our employees. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors.
The following table reflects the reconciliation of the estimated range of net loss to the estimated range of Adjusted EBITDA for the quarter ended
|Three Months Ended
|Adjusted EBITDA Reconciliation:|
|Net loss||$||(39,891) - (38,891||)||$||(23,222||)|
|Depreciation and amortization||4,145||2,808|
|Compensation expense related to stock sales by current and former employees||—||819|
|Other (income) expense, net||(8||)||282|
|Provision for income taxes||—||—|
|Adjusted EBITDA||$||(32,500) - (31,500||)||$||(18,478||)|
Source: The RealReal