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June 3, 2019
Julie Wainwright
Chairperson and Chief Executive Officer
TheRealReal, Inc.
55 Francisco Street
Suite 600
San Francisco, CA 94133
Re: TheRealReal, Inc.
Amendment Nos. 1 and 2 to Draft Registration Statement on Form S-1
Submitted May 16 and 22, 2019
Registration Statement on Form S-1
Filed May 31, 2019
File No. 333-231891
Dear Ms. Wainwright:
We have reviewed your amended registration statement and have the
following
comments. In some of our comments, we may ask you to provide us with
information so we
may better understand your disclosure.
Please respond to this letter by amending your registration statement
and providing the
requested information. If you do not believe our comments apply to your facts
and
circumstances or do not believe an amendment is appropriate, please tell us why
in your
response.
After reviewing any amendment to your registration statement and the
information you
provide in response to these comments, we may have additional comments. Unless
we note
otherwise, our references to prior comments are to comments in our May 7, 2019
letter.
Draft Registration Statement Amendment No. 1 on Form S-1 filed on May 16, 2019
Managment's Discussion and Analysis of Financial Condition and Results of
Operations
Key Financial and Operating Metrics, page 55
1. We have read your responses to comments 6 and 7 and revised disclosures
and have the
following comments:
You disclose that your GMV and take rate metrics exclude "certain
buyer incentives."
Please clearly disclose the specific buyer incentives that you
exclude from your GMV
Julie Wainwright
FirstName LastNameJulie Wainwright
TheRealReal, Inc.
Comapany NameTheRealReal, Inc.
June 3, 2019
June 3, 2019 Page 2
Page 2
FirstName LastName
and take rate metrics and explain to us why you exclude these
incentives.
Please tell us your consideration of supplementing your current
"gross" GMV figure
by presenting a "net" GMV figure that incorporates actual sales
cancellations, returns,
and customer discounts. It appears that such amounts are readily
determinable and
available and that netting such items in GMV would more directly
correlate with your
GAAP revenues. To the extent you believe your current presentation
is sufficient,
please separately discuss the added benefits to investors of
grossing up GMV for each
of these items.
With a view towards transparency, revise your disclosure to
discuss the limitations
associated with GMV.
Results of Operations, page 57
2. We have reviewed your response to comment 9 and your disclosure on
page 1 indicating
that you offer products across multiple categories, including women's,
men's, kids',
jewelry and watches, and home and art. Please revise your disclosures
to
quantify revenues by these, or similar, product categories, or tell us
why providing such
information under ASC 280-10-50-40 is impracticable. We note that you
already disclose
GMV by similar product categories on page 84, so it is unclear why
disclosing revenues
on a GAAP basis would be impracticable or not useful to investors.
3. We have read your response to comment 10 and have the following
comments. Please
apply these comments to both your annual and interim results of
operations discussions.
As previously requested, please explain in reasonable detail the
factors that led to the
increases in your GMV. In doing so, clearly explain the reasons
why there
were increases in active consignors and buyers.
Your disclosure on page 49 indicates that take rates "vary
depending on the total value
of goods sold through our online marketplace on behalf of a
particular consignor as
well as the category and price point of the items." With a view
towards understanding
your business, explain to us how management assesses changes in
take rates and
clearly disclose the factors contributing to the changes in your
take rate between
periods. In doing so, ensure that you explain the specific changes
to your commission
structure referenced on pages 58 and 60.
Within your quarterly and annual results of operations discussion,
you explain that the
increase in your direct revenues was driven in part by "an overall
growth in our
consignment business." Considering the overly broad nature of this
statement, please
revise your discussion to identify the specific factors
contributing to the significant
increases in your direct revenues.
Julie Wainwright
FirstName LastNameJulie Wainwright
TheRealReal, Inc.
Comapany NameTheRealReal, Inc.
June 3, 2019
June 3, 2019 Page 3
Page 3
FirstName LastName
Certificate of Incorporation and Bylaw Provisions
Exclusive Forum, page 118
4. We note your response and revised disclosure to prior comment 15.
Please revise your
related exclusive forum risk factor on page 35 to reflect your revised
disclosure. In
addition, we also note that your proposed Certificate of Incorporation
does not mirror your
revised disclosure. Please revise or tell us why such revisions are
not necessary.
Note 5. Balance Sheet Components
Other Accrued and Current Liabilities, page F-22
5. We have read your responses to comments 16 and 17 related to your
sales return reserve
and have the following comments:
To the extent material, please revise your MD&A disclosures to
discuss the impact of
changes in the sales return reserve on your results of operations.
You indicate in your response that you obtain title to returned
goods in "certain cases"
where you have already remitted sales proceeds to consignors.
Confirm whether or
not you always obtain title to returned goods when consignors have
already been paid
and clarify if you ever obtain title to returned goods prior to
payment to consignors.
You indicate in your response that title of consigned goods
transfer "from the
consignor to the end customer after the expiration of the end of
the customers return
window." Tell us how, if at all, the timing of title transfer from
consignor to end
customer impacts the point at which you recognize your consignment
fee within
revenue. In doing so, explain to us how you meet the criteria to
recognize revenue
under ASC 606 at the time a transaction is processed on your
marketplace, a point in
time occurring prior to the end customer obtaining title.
Note 10 .Share-based Compensation Plans
Stock-based Compensation, page F-30
6. Please provide us with the grant dates of any equity issuances,
including stock options and
convertible preferred stock, made during the last 12 months, as well
as the underlying fair
value per share of your common stock at each grant date. Explain to us
the events or
factors that support any material differences between recent
valuations of your common
stock leading up to the IPO and the estimated offering price, once
determined.
Julie Wainwright
TheRealReal, Inc.
June 3, 2019
Page 4
You may contact Robert Babula, Staff Accountant, at 202-551-3339 or
Andrew Blume,
Staff Accountant, at 202-551-3254 if you have questions regarding comments on
the financial
statements and related matters. Please contact Scott Anderegg, Staff Attorney,
at 202-551-3342
or Mara Ransom, Assistant Director at 202-551-3264 with any other questions.
FirstName LastNameJulie Wainwright Sincerely,
Comapany NameTheRealReal, Inc.
Division of
Corporation Finance
June 3, 2019 Page 4 Office of Consumer
Products
FirstName LastName