Investor Presentation
August 2020
Safe Harbor
This presentation contains forward-looking statements relating to, among other things, the future performance of The RealReal that are based on the company's current expectations, forecasts and assumptions and involve risks and uncertainties. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "could," "expect," "plan," anticipate," "believe," "estimate," "predict," "intend," "potential," "continue," "ongoing" or the negative of these terms or other comparable terminology. These statements include, but are not limited to, statements about future operating results, including the amounts of our operating expense and capital expenditure investments or reductions and our strategies, plans, commitments, objectives and goals, in particular in the context of the impacts of the COVID-19 pandemic and the recent social unrest. Actual results could differ materially from those predicted or implied and reported results should not be considered as an indication of future performance. Other factors that could cause or contribute to such differences include, but are not limited to, the impact of the COVID-19 pandemic and the recent social unrest on our operations and business environment, any failure to generate a supply of consigned goods, pricing pressure on the consignment market resulting from discounting in the market for new goods, failure to efficiently and effectively operate our merchandising and fulfillment operations and other reasons.
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 SEC's website at www.sec.gov. Undue reliance should not be placed on the forward-looking statements in this press release, which are based on information available to the company on the date hereof. The company assumes no obligation to update such statements.
In addition to financial information presented in accordance with U.S. generally accepted accounting principles ("GAAP"), this presentation includes non-GAAP financial measures adjusted EBITDA, Contribution Margin and Contribution Profit. These non-GAAP measures are presented for supplemental informational purposes only and should not be considered a substitute for financial information presented in accordance with GAAP. These non-GAAP measures have limitations as analytical tools, and should not be considered in isolation or as a substitute for analysis of other GAAP financial measures. A reconciliation of these measures to the most directly comparable GAAP measures are included at the end of this presentation.
This presentation and the accompanying oral presentation also contain statistical data, estimates and forecasts that are based on independent industry publications or other publicly available information, as well as other information based on our internal sources. This information involves many assumptions and limitations, and you are cautioned not to give undue weight to such information. We have not independently verified the accuracy or completeness of the information contained in the industry publications and other publicly available information. Accordingly, we make no representations as to the accuracy or completeness of that information nor do we undertake to update such information after the date of this presentation.
1
Q2 Highlights
Q2 Negatively Impacted by COVID-19, Trends Improving Since May
- GMV of $182.8 million, down 20% Y/Y; exited Q2 with June GMV down 8% Y/Y
- Earlier than expected GMV recovery prompted us to begin reinvesting in growth
- Supply trends improved each month in Q2
- 82.3% of GMV from repeat buyers
- Revenue of $57.4 million, down 21% Y/Y; Direct revenue of $10.5 million, down 13% Y/Y
- Gross Profit of $35.8 million, down 22% Y/Y
- Raised $143.3 million in net proceeds through a convertible note offering
- Well capitalized with $410.3 million in cash, short term investments and cash equivalents
3
COVID-19 Safety Response
- Health and safety of our team, consignors and buyers is paramount
•
•
•
•
•
•
Replacing in-person White Glove consignment appointments with virtual appointments and temporarily closing our stores and Luxury Consignment Offices (LCOs) for the majority of Q2, though all stores and LCOs are open now;
Implementing Health and Temperature Screening upon entry at all locations and social distancing of six feet minimum between people onsite, with signage and markets throughout all locations to direct traffic and spacing;
Cleaning and sanitizing throughout the day and weekly deep cleanings;
Requiring masks at all locations for employees, customers and guests, and providing personal protective equipment, including masks to employees and visitors upon entry at all locations;
Designating and training Safety Committee Members to conduct social distancing, PPE and general COVID safety checks throughout business hours;
Establishing a separate Emergency Sick Leave program to help ensure employees who are sick, are required to quarantine or have been exposed to COVID and are staying home; and
- Providing a transportation allowance for private transportation to work in Q2
4
Early Signs of GMV Recovery
Positive Business Trends Enabled Earlier Reinvestment in Growth than Previously Expected
Q2 AND JULY TRENDS
Supply Units
Supply Processing Capacity
Demand
- Declined 29% y/y in Q2 with gradual improvement each month; June down 15%; July +3%
- NYC recovering; declined 49% y/y in Q2, 35% in June and 1% in July
- Excluding NYC and LA, declined 20% y/y in Q2, declined 5% in June and +8% in July
- Operating capacity limits in early Q2 loosened; no longer a constraint to growth
- Recalled a substantial portion of furloughed employees
- Supply processing also benefitting from automation investments
- Strong sell-through throughout COVID
- Resumed marketing investments in May and June, approaching pre-COVID levels
- Traffic trends remain healthy despite lower advertising spend; sessions +20% Y/Y in Q2
GMV (Y/Y Change %)
~30% | 17% | |||||||||
(21%) | (22%) | (16%) | (8%) | (8%) | (2%) | (3%) | ||||
(44%) | (44%) | |||||||||
Jan - Feb | Mar 2020 | Mar 2020 | Apr 2020 | Apr 2020 | May 2020 | May 2020 | Jun 2020 | Jun 2020 | July 2020 | July 2020 |
2020 | 1H | 2H | 1H | 2H | 1H | 2H | 1H | 2H | 1H | 2H |
5
Green Shoots in the Business
- Reinvented our supply acquisition strategy with a focus on the digital experience
- Launched virtual appointments (completed ~25K in Q2), appointment self-scheduling and curbside pick-up
- Potential for virtual appointments, self-scheduling and van pick-up to efficiently unlock supply
- NYC and LA recovering, should benefit from advertising investments and store openings; COVID headwinds remain in both markets
- Supply units shipped excluding NYC and LA +8% Y/Y in July
- The RealReal B2B vendor performance remains resilient; vendor channel GMV +19% Y/Y
- Traffic trends remained healthy in Q2; sessions up 20% Y/Y despite advertising pullback early in Q2
- 4-daysales sell-through rate at pre-COVID levels; new supply continues to sell quickly
- Expect value orientation to position us well to emerge from the pandemic with strong momentum
- Believe the online/offline retail landscape will be transformed over the next 12 months to our benefit
6
Positioned to Rebound Strongly and Fuel Growth
LARGEST ONLINE MARKETPLACE FOR AUTHENTICATED, CONSIGNED LUXURY GOODS
Founder-led business with nearly a decade focused on authenticated luxury goods
100% authenticated marketplace
ESG dedicated
Virtual appointments recently added
Efficient operations supported by automation
Omnichannel supply activation
Brand partnerships
ENTERED 2020 WITH STRONG MOMENTUM
- Significant scale - over $1bn in GMV in 2019
- Strong repeat customer base - over 80% of GMV from repeat buyers/consignors in 2019
- 1Q 2020, GMV growth ~30% Y/Y pre-COVID
- Growing luxury, and resale, TAM
- Strong unit economics and operating leverage
COVID-19 RESULTING IN
SHORT-TERM DISRUPTION, BUT MAY
INCREASE OUR LONG-TERM OPPORTUNITY
Implemented expense and capex
reductions across the business during peak disruption, and recently started to invest again
Introduced virtual appointments, appointment scheduling and curbside pick-ups
Decline of traditional retail and growth of e-commerce reshaping competitive landscape
Greater consumer awareness
of sustainability
7
Q2 TTM Active Buyer Growth 24% Y/Y
(in thousands)
582 602 612
543 | ||||||
492 | ||||||
455 | ||||||
416 | ||||||
379 | ||||||
326 | 352 | |||||
48% | 50% | |||||
45% | 43% | 43% | ||||
40% | 40% | 40% | ||||
32%
24%
1Q18 | 2Q18 | 3Q18 | 4Q18 | 1Q19 | 2Q19 | 3Q19 | 4Q19 | 1Q20 | 2Q20 | ||
Active Buyers | Y/Y Growth | ||||||||||
TTM Active buyer growth increased 24% Y/Y; Added 10K active buyers in Q2 as we significantly reduced our ad spend in early Q2
8
Q2 GMV Declined 20% Y/Y
($MM)
$303 | |||||||
$253 | $258 | ||||||
$218 | $224 | $229 | |||||
$171 | 48% | $183 | |||||
$158 | $163 | 43% | 42% | 40% | |||
39% | |||||||
48% | 46% | 42% | |||||
15% |
-20% | |||||||||||
1Q18 | 2Q18 | 3Q18 | 4Q18 | 1Q19 | 2Q19 | 3Q19 | 4Q19 | 1Q20 | 2Q20 | ||
GMV | Y/Y Growth | ||||||||||
GMV negatively impacted by COVID-19 headwinds that started in mid-March when shelter-in-place directives were implemented
9
Q2 Take Rate Decreased 60bps Y/Y Due to Mix of Higher ASP Sales
($ in millions)
Declined
$229
36.6% | $183 |
36.0%
$72 | $57 | |||||
2Q19 | 2Q20 | |||||
Total Revenue | GMV | Take Rate | ||||
(20%)
(21%)
10
GMV Decline Driven By Order and AOV Decline
Average order value (AOV) | Number of orders | |
Declined | (in thousands) | |
Declined | ||
8% | 13% | |
505 | ||
$453 |
$417
438
2Q19 | 2Q20 | 2Q19 | 2Q20 |
The primary driver of the lower AOV was a 7% Y/Y decline in Units per Transaction (UPT). ASP and UPT were negatively impacted
by lack of fresh supply in April. ASPs started to recover in May and turned positive in June.
11
Top Line Leverage
$453
$417
2Q192Q20
AOV
AOV declined 8% Y/Y; AOV primarily impacted by a 7% decline in UPT. ASPs were positive in June.
Leverage drivers
36.6%
36.0%
2Q192Q20
Take Rate
Down 60bps Y/Y; Decrease driven by higher mix of lower take rate categories such as handbags, jewelry and sneakers.
$91(1)
(1)
$82
2Q192Q20
Gross Profit
Per Order
Down 10% Y/Y; Shipping leverage was offset by the AOV decline and the fixed nature of certain expenses within cost of sales.
- Calculated by dividing Gross Profit by the number of orders for the applicable quarter..
12
Operating Leverage
Operating Expenses (% of Revenue) Negatively Impacted by COVID-19 GMV Headwinds
56.7% | 63.7% |
47.5%
35.1%
16.2%16.8%
2Q19 | 2Q20 | 2Q19 | 2Q20 | 2Q19 | 2Q20 |
Marketing | SG&A | Ops & Tech | ||
BAC declines and healthy | Deleverage driven by the GMV | Automation benefits and payroll | ||
retention were offset by the | decline in Q2, especially early | reductions were offset by the | ||
GMV decline in Q2, especially | in Q2, as well as rent, COVID | GMV decline in Q2, especially | ||
early in Q2. | related expenses and public | in early Q2, and increased | ||
company costs. | fixed expenses. | |||
13
3Q and Full Year 2020 Outlook
- Withdrew our 2020 outlook on March 17th
- Not providing a 3Q or updated 2020 outlook at this time given limited near-term visibility
14
Investment Highlights
Largest Online | Superior | ||
Marketplace for | Large and | Marketplace Due | Powerful |
Authenticated, | to Service, Trust, | Financial | |
Attractive TAM | |||
Consigned | Technology | Model | |
Luxury Goods | and Data | ||
15
Largest Online Marketplace for Authenticated, Consigned Luxury Goods with Powerful Flywheel Driving Growth
2019 GMV | 2019 Total Revenue |
of consignors | of buyers are |
are buyers(1) | consignors(1) |
TTM Active Buyers(1) | 2019 AOV |
WOMEN | MEN | JEWELRY | ||
WATCHES | HOME & ART | KIDS | of GMV from | of GMV from | ||
repeat consignors (1) | repeat buyers (1) |
Note: Average Order Value (AOV).
(1) As of June 30, 2020.
16
TAM is Large and Propelled by Strong Luxury Tailwinds
LUXURY RETAIL IS
SHIFTING ONLINE(2)
~29%
US luxury goods available for resale(1)
Average time | 12% | |||||
consumers | 10% | |||||
keep luxury products(1) | ||||||
5% | ||||||
Annual new supply | ||||||
of US luxury goods | ||||||
for resale(1) | ||||||
2018 | 2019E | 2025F | ||||
2014 |
YOUNGER GENERATIONS | SHIFTS IN |
ARE DRIVING GROWTH (2) | CONSUMER MINDSET |
Gen Y & Gen Z All other
~45% | Edward Enninful, | |
Editor-in-chief of British Vogue | ||
61% | ||
Focus on maximizing value | ||
for money with high quality | ||
products with utility | ||
~55% | ||
39% | Move away from trend-right | |
fast fashions that have | ||
a short shelf-life | ||
2019E | 2025E |
(1) Frost & Sullivan Total Addressable Market assessment for the Luxury Resale Market.
(2) Bain-Altagamma Luxury Goods Worldwide Market Study, May 2020.
17
We Offer a Superior Marketplace for Consignors and Buyers
Consignor | Buyer |
END-TO-END SERVICE | TRUST |
Rapid sales velocity | Curated, exclusive selection |
Optimal pricing | Value |
High commissions | Luxury service |
18
Our NPS Compares Favorably with Best-in-Class Consumer Companies
Industry Averages | Best-in-Class | |
71 | 74 | |||||||
68 | 68 | |||||||
64 | ||||||||
55 | 58 | |||||||
52 | ||||||||
43 | ||||||||
TRR Buyers | TRR Consignors | Department / | Online shopping | costco | ritz carlton | amazon | Nordstrom | zapps |
Buyers | Consignors | Department/ | Online | |||||
specialty stores | Shopping | |||||||
Specialty | ||||||||
Stores |
- Reflects TRR 2019 NPS scores and NICE Satmetrix U.S. Consumer 2018 and 2019 data
19
Supply Drives the Business and Essentially Everything Sells
93% | 96% | 94% |
TOTAL SELL | TOTAL SELL | TOTAL SELL |
THROUGH %(1) | THROUGH %(1) | THROUGH %(1) |
78%(2) | 78%(2) | 77%(2) |
60%(2) | 59%(2) | 58% (2) |
2017 | 2018 | 2019 | ||
< 30 days | 30-90 days | |||
- Represents ratio of GMV to initial supply value for the specified year.
(2) | Represents unit sell through rate for the specified period. | 20 |
End-to-end Service Model Activates Supply
WHITE GLOVE
VIRTUAL | IN-HOME | LUXURY CONSIGMENT | IN-STORE | DIRECT SHIPPING | VENDOR | |||||||||
CONSULTATION | CONSULTATION* | OFFICE | CHANNELS | |||||||||||
Complimentary | ||||||||||||||
virtual appointments | Luxury managers(2) | Luxury | Retail stores in | shipping directly to | interest from | |||||||||
our merchandising | ||||||||||||||
via email, phone and | consignment | NYC (SoHo and | B2B vendors as | |||||||||||
and fulfillment | ||||||||||||||
video, achieving | offices(1) | Madison Ave), LA | compared to | |||||||||||
equivalent unit | and San Francisco(1) | facilities | pre-COVID(1) | |||||||||||
volume to in-home(1) | Markets(2) | |||||||||||||
CURBSIDE PICK-UP | CURBSIDE DROP-OFF | CURBSIDE DROP-OFF | FREE SHIPPING LABEL | |||||||||||
*In-home consultation offering temporarily suspended.
- For the quarter ending June 30, 2020.
- As of December 31, 2019.
21
Trust: We Authenticate Every Item on Our Marketplace
150+
Highly trained brand
authenticators,
gemologists, horologists
and art curators (1)
Note: As of December 31, 2019.
22
Our Single-SKU Inventory Management is Both Unique and Very Complex
Buyers Become Consignors
SUPPLY SIDE
CONSIGNORS
WHITE GLOVE SERVICES
Direct Ship
B2B Vendors | FACILITIES | DEMAND SIDE | |||
Pick, Pack & Ship | |||||
Virtual Consultations | Online Purchases | ||||
Pick, Pack & Ship | |||||
highly trained brand | |||||
In-home | authenticators, gemologists, | In-store Purchases | |||
Transfer for | horologists and art curators(1) | ||||
LCO | LCOs | Authentication | |||
Transfer for | BUYERS | ||||
In-store | Stores | Authentication | |||
Store Merchandising | |||||
In-store & Online Order Fulfillment
Consignors Become Buyers
Note: Luxury Consignment Office (LCO).
- As of December 31, 2019.
23
Why The RealReal's Model, Data & Technology Wins
TRR SITS AT THE CENTER OF THE
CIRCULAR ECONOMY
of global luxury goods market | of luxury customers prefer |
represented by Generations Y | brands that are socially |
and Z by 2025(1) | responsible(2) |
metric tons of | Carbon neutral |
by | |
carbon saved | |
since inception(3) |
of TRR consignors cite
environmental impact or extending
the lifecycle of luxury as key motivators for consigning(3)
of buyers said that they | |
of personal luxury goods | purchase more expensive |
market represented by the | luxury items than they would |
online channel by 2025(1) | have bought without a resale |
market(4) |
COVETED DEMOGRAPHIC
HENRYs are the new luxury buyers(5)
US HENRY households
US ultra-affluent households
of TRR consignors | of TRR buyers |
have annual income of | have annual income of |
>$100,000(6) | >$100,000(6) |
of TRR consignors are | of TRR buyers are |
under 45 years old(6) | under 45 years old(6) |
SCALED MARKETPLACE
END-TO-END SERVICE
Rapid sales velocity
Optimal pricing
High commissions
item sales | TRUST | |
since inception | ||
Value | ||
Luxury service | ||
Curated, exclusive selection |
DATA & PERSONALIZATION
DRIVE SATISFACTION
Hermès | |
Togo Birkin 35 | |
$7,700.00 | |
Color: Gold | |
Size: 45cm | |
Material: Togo | |
Hardware: Gold | |
Lock/Key: Included | |
Box: Included | |
Handle Drop: 5.5" | |
Height: 10.5" | |
Width: 14" | |
Depth: 7.5" | Hermes |
Togo Birkin 35 | |
$7,700.00 |
(1) | Bain Altagamma Luxury Goods Worldwide Market Study, May 2020. | (5) | Millennial HENRYs (High Earner Not Rich Yet) occupy the space between the middle-income |
(2) | Bain Altagamma Worldwide Luxury Market Monitor, November 2019. | consumers ($50,000-$99,000) and the ultra-affluent elites (+$250,000), Forbes, May 2020. | |
(3) | According to The RealReal customer survey results as of March 31, 2020. | (6) | As of December 31, 2019. |
(4) | BCG Why Luxury Brands Should Celebrate the Preowned Boom. | 24 |
Long Term Financial Profile
- Strong & sustainable growth
- Significant operating leverage
- Substantial liquidity
25
Strong Revenue Growth Driven By GMV Growth and Take Rate
($ in millions) | $1,008 |
$711
$492
36.3%
35.5%
33.7%
$318 | |||||||
$138 | $214 | ||||||
2017 | 2018 | 2019 | |||||
Total revenue | GMV | Take Rate | |||||
2019 GROWTH
42%
49%
26
GMV Growth Driven By Order Growth and Higher AOV
Average order value (AOV)Number of orders
2019 Growth | (Thousands) | 2019 Growth | |
2% | $455 | 39% | 2,218 |
$446
$438
1,595
1,123
2017 | 2018 | 2019 | 2017 | 2018 | 2019 |
27
Top Line Leverage
Leverage drivers
$438$446
$455
36.3%
35.5%
33.7%
$92(1)
(1)
$86
$78 (1)
201720182019
AOV
Driven by higher average
price of items sold and
greater number of items per
order
201720182019
Take Rate
Up 80bps Y/Y in 2019 Driven
by Take Rate changes
2017 | 2018 | 2019 |
Gross Profit
Per Order
Up 7% Y/Y in 2019;
Increases due to
improvements in Take Rate, AOV, and shipping leverage
- Calculated by dividing Gross Profit by the number of orders for the applicable quarter.
28
Operating Leverage
Operating Expenses (% of Revenue)
49.1% | |
42.7% | 45.0% |
32.0% | 34.8% | 33.7% (1) | |
26.7% | 29.8% | ||
19.7%
15.0%
2017 | 2018 | 2019 | 2017 | 2018 | 2019 | 2019 Adj. | 2017 | 2018 | 2019 |
Marketing | SG&A | Ops & Tech | |||
'19 leverage driven by | '19 deleverage driven by | '19 leverage driven by | |||
healthy retention trends and | investments in public company | automation, improved | |||
a ~20% Y/Y decline in BAC; | costs, headcount and a $3.2 | outbound efficiencies and fixed | |||
~500bps Y/Y leverage in | million donation to establish the | expense leverage; ~400bps | |||
2019 | TRR Foundation | Y/Y leverage in 2019 | |||
Note: | Buyer Acquisition Cost or BAC for a given period is comprised of our total advertising spend divided by the number of buyers acquired in that period. | ||||
(1) | Excluding the $3.2 million donation to establish The RealReal Foundation and $0.3 million in abandoned offering costs, SG&A as a percent of revenue was 33.7% in 2019 |
29
Capital Efficient Marketplace Model
GMV, Total Revenue and Inventory
($ in millions)
$1,008
$711
$492
$318 | |||||||||||||
$214 | |||||||||||||
$138 | |||||||||||||
$7 | $10 | $24 | |||||||||||
2017 | 2018 | 2019 | |||||||||||
GMV | Total Revenue | Inventory | |||||||||||
30
Driving Toward Profitability
Gross Profit per Order
$86$92
Drivers of operating leverage
20182019
Contribution margin(1)
13.8%
6.7%
20182019
Adjusted EBITDA (% of Revenue)(2)
(27.6%) | (23.0%) | |
(32.2%) | ||
2017 | 2018 | 2019 |
Revenue
Drivers
Gross Margin
Drivers
Variable
Expense
Leverage
Fixed Expense
Leverage
Strong Retention | Consignment | AOV |
Take Rate |
Shipping | Consignment | Direct Sales Mix | ||
Expense | Take Rate | |||
Marketing | Ops & Tech | SG&A | ||
Improving BAC | Process automation | Sales team productivity | ||
Ops & Tech | SG&A | Marketing | ||
Rent and headcount | Headcount and public | Headcount | ||
company expenses | ||||
Note: The figures above are non-GAAP financial measures. Please see the reconciliation from GAAP to Non-GAAP measures contained in the appendix to this presentation.
- Contribution margin is a non-GAAP financial measure that is calculated as gross profit per order minus variable expenses including variable marketing, operations, sales and merchandising expenses as a percentage of sales.
- Adjusted EBITDA means net loss before net interest expense, income tax provision and depreciation and amortization, further adjusted to exclude stock-based compensation and certain one-time expenses.
31
Strong Contribution Profit per Order Supports Path to Profitability
2018 | 2019 | Y/Y Change | |||||
$446 | $455 | 2% | |||||
AOV | |||||||
$130 | $143 | 10% | |||||
Revenue per Order | |||||||
Take Rate | 35.5% | 36.3% | 80bps | ||||
$86 | $92 | 7% | |||||
Gross Profit per Order | |||||||
$77 | $72 | (7%) | |||||
Variable Cost per Order | |||||||
Contribution Profit per Order (1) | $9 | $20 | 126% | ||||
$46 | $53 | 15% | |||||
Fixed Cost per Order | |||||||
Adjusted EBITDA per Order (2) | ($37) | ($33) | 11% |
Note: The figures above are non-GAAP financial measures. Please see the reconciliation from GAAP to Non-GAAP measures.
- Contribution Profit is a non-GAAP financial measure that is calculated as gross profit per order minus variable expenses including variable marketing, operations, sales and merchandising expenses.
- Adjusted EBITDA means net loss before net interest expense, income tax provision and depreciation and amortization, further adjusted to exclude stock-based compensation and certain one-time expenses.
32
Consistent Retention Across Buyer Cohorts
Annual GMV by Buyer Cohort Year
($ in millions)
2014 | 2015 | 2016 | 2017 | 2018 | 2019 |
2014 | 2015 | 2016 | 2017 | 2018 | 2019 |
Note: Each cohort represents all buyers that first purchased across our online marketplace in the designated year and the aggregate GMV purchased by such cohort for the initial year and each year thereafter.
33
2019 Buyer LTV : BAC Payback Less Than 3 Months With Flywheel Enhancing The Network Effect of Our Marketplace
Buyer LTV : BAC - All Buyers1 | BLTV : BAC - Buyers who are also consignors1 | |||||||||||||||||||||||||||||
2015 | 2016 | 2017 | 2018 | 2019 | 2015 | 2016 | 2017 | 2018 | 2019 | |||||||||||||||||||||
12.00x | 12.00x | |||||||||||||||||||||||||||||
10.00x | 10.00x | |||||||||||||||||||||||||||||
8.00x | 8.00x | |||||||||||||||||||||||||||||
6.00x | 6.00x | |||||||||||||||||||||||||||||
4.00x | 4.00x | |||||||||||||||||||||||||||||
2.00x | 2.00x | |||||||||||||||||||||||||||||
0.00x | 0.00x | |||||||||||||||||||||||||||||
3 Mo | 6 Mo | 12 Mo | 24 Mo 36 Mo | 3 Mo | 6 Mo | 12 Mo | 24 Mo | 36 Mo | ||||||||||||||||||||||
2019 BAC payback in less than 3 months | Further acceleration of BAC payback | |||||||||||||||||||||||||||||
Months | Months | |||||||||||||||||||||||||||||
3 Mo | 6 Mo | 12 Mo | 24 Mo | 36 Mo | 3 Mo | 6 Mo | 12 Mo | 24 Mo | 36 Mo | |||||||||||||||||||||
2015 | 0.73x | 0.99x | 1.48x | 2.44x | 3.48x | 2015 | 1.34x | 2.13x | 3.68x | 7.02x | 10.77x | |||||||||||||||||||
2016 | 0.67x | 0.89x | 1.29x | 2.14x | 3.14x | 2016 | 1.21x | 1.95x | 3.38x | 6.60x | 10.61x | |||||||||||||||||||
2017 | 0.71x | 0.93x | 1.34x | 2.22x | 2017 | 1.29x | 2.00x | 3.51x | 6.86x | |||||||||||||||||||||
2018 | 0.88x | 1.12x | 1.59x | 2018 | 1.67x | 2.54x | 4.29x | |||||||||||||||||||||||
2019 | 1.12x | 1.42x | 2019 | 1.70x | 2.58x |
Note: | BLTV refers to cumulative gross profit attributable to purchases by buyers in a given period. BAC for a given period is comprised of our total advertising spend divided by the number of buyers acquired in that period. | |
BLTV in the graph on the right includes only gross profit attributable to transactions in which the members participated as buyers and does not include gross profit attributable to transactions in which the member | ||
participated as a consignor | 34 | |
(1) | As of December 31, 2019. | |
ESG - What We Are Doing in 2020
- We launched a comprehensive initiative to enhance transparency of ESG policies, reporting, and board oversight along SASB recommended metrics
- We reviewed and updated key ESG policies and disclosures, including:
- Environmental Management System (EMS)
- Human Rights Policy
- Climate Change Policy
- Diversity and Inclusion Policy
- Environmental Policy
- Energy, Water and Waste Policy
- GHG Emissions
- Occupational Health and Safety
- Top Suppliers and Service Providers
- Supplier Code of Conduct and Supplier Management Program
- Key ESG performance metrics
35
Building a Strong ESG Foundation
- Sustainability is a core value
- Saving water and carbon emissions
- Pioneering the circular economy
- Extending the lifecyle of luxury products
- Social
- Diversity and inclusion
- Employee safety
- Human capital management
- Data privacy
- Governance
- Board and Committee oversight of Diversity and Inclusion
- Board and Committee oversight of ESG
- Ethics
- According to The RealReal customer survey results as of March 31, 2020
- As of June 30, 2020
(3) | Bain Altagamma Luxury Goods Worldwide Market Study, May 2020. | 36 |
(4) | Bain Altagamma Worldwide Luxury Market Monitor, November 2019. |
TRR SITS AT THE CENTER OF THE
CIRCULAR ECONOMY
of TRR buyers say they shop | of TRR consignors cite environmental |
The RealReal as a | impact or extending the lifecycle of |
replacement for fast fashion(1) | luxury as key motivators for |
consigning(1) |
Carbon neutral
metric tons ofby carbon saved
since inception(2)
million liters of water
saved since inception(2)
of luxury customers prefer | of global luxury goods market |
brands that are socially | represented by Generations Y |
responsible(4) | and Z by 2025(3) |
ESG Highlights
Environment | Society |
Governance
- Our busines model drives significant water and carbon emission savings
- Carbon reduction goal targets carbon neutrality in 2021
- Reduce greenhouse gas (GHG) emissions by 30% by 2030; achieve net-zero emissions by 2050
- Circular economy advocacy and thought leadership
- Increase the usage of virtual appointments
- Sustainability calculator
- UN Global Compact Signatory
- UN Climate Change's Fashion Industry Charter
- The Ellen MacArthur Foundation Member
- Sustainable Apparel Coalition
- Environmental Management System (EMS) and Sustainability Task Force
- 68% of employees are female (1)
- 60% of employees identify as racially or ethnically diverse (1)
- Implementing a company wide diversity & inclusion plan
- 98.3% of employees received an annual performance review; our people managers have quarterly meetings with their employees to address performance and development(1)
- Employee safety is our top priority and we have implemented numerous new safety measures to protect our employees during the pandemic
- Committed to high standards for our working environments that protect the well-being of all employees
- Data protection policy governs business
- All employees are eligible to participate in ESPP Plan; all full-time employees receive awards through our Equity Incentive Plan.
- UN Global Compact Signatory
- 50% of our Board of Directors were female (2)
- Majority independent Board of Directors
- Fully independent Audit and Compensation and Nominating and Governance Committees
- Classified Board Structure - promotes continuity of leadership, Board stability and long-term planning
- Quarterly reporting to the Governance committee
- Board of oversight of risk management and ESG integration
- Annual Director and Committee evaluations
- Anti-hedgingand anti-pledging requirements
- Single-classcapital structure: one share, one vote
(1) | As of December 31, 2019 | 37 |
(2) | As of August 4, 2020 |
Our Model is Inherently Sustainable
Millions of liters of water saved since inception (1)
698
660
Metric tons of carbon saved since inception (1)
15,040
14,300
608
13,300
4Q19 | 1Q20 | 2Q20 | 4Q19 | 1Q20 | 2Q20 |
(1) Seehttps://www.therealreal.com/sustainabilityfor methodology.
38
Innovative and Experienced Team
Julie Wainwright | Matt Gustke | Rati Sahi Levesque | Marc Viale | Fredrik Björk |
Founder, President | Chief Financial Officer | Chief Operating Officer | SVP, Strategy and Growth | Chief Technology Officer |
and Chief Executive | ||||
Officer |
Zaina Orbai | Josh Mahoney | Todd Suko | Paul Bieber |
Chief People Officer | Chief Product Officer | ||
Chief Legal Officer | Head of Investor | ||
SVP, Product | |||
Relations | |||
Management | |||
39
55%
of consignors are buyers(1)
13%
of buyers are consignors(1)
- As of June 30, 2020.
40
Appendix
Reconciliation to Adjusted EBITDA
($ in millions) | |||
FYE December 31 | 2017 | 2018 | 2019 |
Total Revenue | $137.5 | $213.7 | $318.0 |
Net loss | ($52.3) | ($75.8) | ($96.6) |
Depreciation and amortization | 5.6 | 9.3 | 13.4 |
Stock-based compensation expense | 1.9 | 2.9 | 7.7 |
Compensation expense related to stock sales by current and former employees | - | 0.8 | 0.8 |
Abandoned Offering Costs | - | - | 0.3 |
Donation to TRR Foundation | - | - | 3.2 |
Vendor service settlement | - | 2.0 | - |
Interest income | (0.4) | (1.0) | (4.6) |
Interest expense | 0.8 | 1.2 | 0.6 |
Other expense, net | 0.1 | 1.7 | 2.1 |
Provision for income taxes | 0.1 | 0.1 | 0.1 |
Adjusted EBITDA | ($44.3) | ($58.9) | ($73.0) |
Adjusted EBITDA (% of Revenue) | -32.2% | -27.6% | -23.0% |
42
Reconciliation to Adjusted EBITDA
FYE December 31 | 1Q18 | 2Q18 | 3Q18 | 4Q18 | 1Q19 | 2Q19 | 3Q19 | 4Q19 | 1Q20 | 2Q20 |
Total Revenue | $47.7 | $48.4 | $53.2 | $64.3 | $70.6 | $72.2 | $81.5 | $93.7 | $78.2 | $57.4 |
Net loss | ($14.1) | ($17.6) | ($21.9) | ($22.2) | ($23.2) | ($26.6) | ($25.3) | ($21.3) | ($38.3) | ($42.9) |
Depreciation and amortization | 2.0 | 2.1 | 2.4 | 2.8 | 2.8 | 3.2 | 3.5 | 3.9 | 4.1 | 4.6 |
Stock-based compensation expense | 0.5 | 0.7 | 0.7 | 0.9 | 1.1 | 1.3 | 2.5 | 2.8 | 3.4 | 6.1 |
Compensation expense related to stock sales by current and former employees | - | - | 0.8 | - | 0.8 | - | - | - | - | |
Legal Settlement | - | - | - | - | - | - | - | - | 1.1 | |
Abandoned Offering Costs | - | - | - | - | - | - | - | 0.3 | - | |
Restructuring | 0.4 | |||||||||
Donation to TRR Foundation | - | - | - | - | - | - | - | 3.2 | - | |
Vendor service settlement | - | - | 2.0 | - | - | - | - | - | - | |
Interest income | (0.1) | (0.1) | (0.4) | (0.4) | (0.4) | (0.6) | (1.9) | (1.7) | (1.3) | (0.6) |
Interest expense | 0.2 | 0.5 | 0.2 | 0.2 | 0.1 | 0.1 | 0.1 | 0.0 | 0.0 | 0.4 |
Other expense, net | 0.1 | 1.3 | 0.2 | 0.1 | 0.3 | 1.7 | 0.1 | (0.0) | (0.0) | 0.1 |
Provision for income taxes | - | - | 0.0 | 0.1 | - | 0.1 | 0.0 | 0.0 | 0.0 | 0.1 |
Adjusted EBITDA | ($11.3) | ($13.1) | ($15.9) | ($18.5) | ($18.5) | ($20.9) | ($20.9) | ($12.7) | ($30.9) | ($31.8) |
Adjusted EBITDA (% of Revenue) | -23.8% | -26.9% | -29.9% | -28.8% | -26.2% | -28.9% | -25.7% | -13.6% | -39.5% | -55.4% |
43
Reconciliation to Contribution Margin
($ per order) | ||
FYE December 31 | 2018 | 209 |
AOV | $445.6 | $454.7 |
Revenue | 130.0 | 143.4 |
Gross profit | 85.8 | 91.6 |
Variable expenses | 77.1 | 71.9 |
Contribution profit | $8.7 | $19.7 |
Contribution margin | 6.7% | 13.7% |
44
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The RealReal Inc. published this content on 06 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 07 August 2020 12:53:07 UTC