The RealReal(REAL) - 2024 Q2 - Quarterly Report

Financial Performance - The company's gross merchandise value (GMV) increased by 4% to $440.9 million for the three months ended June 30, 2024, compared to$423.3 million for the same period in 2023[118]. - The net merchandise value (NMV) rose by 8% to $329.4 million for the three months ended June 30, 2024, up from$303.9 million in the prior year[118]. - Total revenue increased by 11% to $144.9 million for the three months ended June 30, 2024, compared to$130.9 million in the same period of 2023[118]. - Consignment revenue increased by $16.1 million, or 17$112.7 million in Q2 2024 compared to Q2 2023, driven by a 4% increase in overall GMV and an improved take rate of 38.5%[153]. - Direct revenue decreased by $4.2 million, or 20$16.7 million in Q2 2024 compared to Q2 2023, primarily due to planned actions to minimize vendor-purchased inventory[155]. - Shipping services revenue increased by $2.1 million, or 16$15.5 million in Q2 2024 compared to Q2 2023, attributed to an increase in the number of orders and higher shipping fees[155]. - Total revenue for Q2 2024 was $144.9 million, up from$130.9 million in Q2 2023, reflecting a growth of 10.5%[150]. - The net loss for Q2 2024 was $16.7 million, an improvement from a net loss of$41.3 million in Q2 2023[150]. Operational Metrics - The company's take rate on consigned goods improved to 38.5% in the three months ended June 30, 2024, from 36.7% in the same period of 2023[116]. - The number of active buyers reached 381,000 for the three months ended June 30, 2024, compared to 351,000 in the same period of 2023[127]. - The percentage of GMV from repeat consignors was 85% for the three months ended June 30, 2024, compared to 84% for the same period in 2023[121]. - The average order value (AOV) remained stable at $538 for the three months ended June 30, 2024, compared to$537 in the same period of 2023[127]. - Active buyers metric reflects scale, brand awareness, and buyer engagement, indicating a strong market presence[136]. - Average Order Value (AOV) remains robust due to the focus on luxury goods, driving operating leverage[137]. Cost and Expense Management - Total cost of revenue decreased to $37.5 million in Q2 2024 from$44.7 million in Q2 2023, a reduction of 16%[150]. - Gross profit increased to $107.5 million in Q2 2024, compared to$86.2 million in Q2 2023, resulting in a gross margin improvement of 829 basis points[161]. - Operating expenses totaled $126.3 million in Q2 2024, slightly down from$127.1 million in Q2 2023, indicating a stable expense management[150]. - Marketing expenses decreased to $13.8 million in Q2 2024 from$15.4 million in Q2 2023, reducing the marketing expense as a percentage of revenue from 12% to 9%[162][163]. - Operations and technology expenses are projected to increase to support growth and investment in automation[145]. - Selling, general and administrative expenses are anticipated to decrease as a percentage of revenue over the long term[146]. - Selling, general and administrative expenses remained relatively flat at $93.9 million for the six months ended June 30, 2024, compared to$94.2 million in the same period of 2023[185]. - Selling, general and administrative expenses as a percentage of revenue decreased to 33% from 35% year-over-year[186]. Cash Flow and Financial Position - As of June 30, 2024, the company had cash and cash equivalents of $150.7 million and an accumulated deficit of$1,167.4 million[193]. - Net cash used in operating activities was $10.2 million for the six months ended June 30, 2024, compared to$60.9 million in the same period of 2023[199]. - Net cash used in investing activities was $10.3 million for the six months ended June 30, 2024, down from$27.3 million in the same period of 2023[200]. - The Company exchanged $145.8 million of 2025 Notes and$6.5 million of 2028 Notes for $135.0 million of 2029 Notes with a 13.00$231.7 million, with $12.0 million expected to be paid within the next 12 months[208]. Debt and Interest - Interest expense increased by$3.1 million, or over 100%, to $(5.8) million for the three months ended June 30, 2024, due to contractual interest from the 2029 Notes issued in February 2024[170]. - Interest income decreased by$0.1 million, or 3%, to $4.3 million for the six months ended June 30, 2024[191]. - Interest expense increased by$4.2 million, or 78%, to $9.5 million for the six months ended June 30, 2024, due to the 2029 Notes issued in February 2024[192]. Restructuring and Adjustments - Restructuring charges include impairments and severance benefits, reflecting ongoing adjustments to operational efficiency[147]. - Restructuring charges were$0 for the three months ended June 30, 2024, compared to $1.9 million in the same period of 2023, indicating completion of prior restructuring efforts[167]. - Restructuring charges decreased by$38.1 million, or 99%, to $196,000 for the six months ended June 30, 2024, compared to$38.3 million in the same period of 2023[187]. Investment and Growth Strategy - The company continues to invest in technology and infrastructure to support future growth and enhance operational efficiency[124]. - The updated take rate structure allows consignors to earn a 20% commission on items sold under $100 and up to 90$7,500[135]. - The Company recorded a gain of $4.2 million from the Note Exchange, reflecting the difference between the carrying amount of the Exchanged Notes and the fair value of the 2029 Notes[210].