RealReal : Second Quarter 2020 Investor Presentation

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.

1. 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

1. 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

1. 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.

1. For the quarter ending June 30, 2020.
2. 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).

1. 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

1. Strong & sustainable growth
2. Significant operating leverage
3. 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

1. 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.

1. 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.
2. 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.

1. 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.
2. 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

1. • 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
2. According to The RealReal customer survey results as of March 31, 2020
3. 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.

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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)

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