TheRealReal, Inc. Q2 FY2024 earnings call

• Delivered strong Q2 results with accelerated year-over-year GMV growth and double-digit revenue growth. • Consignment revenue saw a 17% year-over-year increase in Q2. • Active buyers on a trailing three-month basis grew 9% compared to 2023. • Adjusted EBITDA was negative $1.8 million in Q2, an improvement of $21 million, and 11th consecutive quarter of year-over-year improvement in adjusted EBITDA. • Returned to top-line growth in 2024, with incremental revenue dollars flowing to the bottom line at a high rate. • Focused on sales, marketing, and stores as the engine for profitable growth. • Leveraged AI advancements with 13 years of data on 40 million luxury items for continuous improvement and operational efficiencies.

In the second quarter, consignment revenue increased by 17% year-over-year. Active buyers on a trailing three-month basis grew 9% compared to the same period in 2023. Consignment revenue contributed significantly to the overall revenue, with a 17% year-over-year increase being a key driver.

• Increased the midpoint of the full-year adjusted EBITDA range and is guiding to positive adjusted EBITDA for full year 2024. • Expect GMV growth in the second half to accelerate versus the first half, with a balanced view on consumer spending slowdown. • Confidence in delivering positive adjusted EBITDA stems from strong first-half performance, resilient business model, consignment model, take-rate architecture, and being a full-category luxury marketplace.

• During the call, it was noted that forward-looking statements involve known and unknown risks and uncertainties, and actual results may differ materially from those suggested in such statements. Risks and uncertainties are also detailed in the company's most recent Form 10-K and subsequent quarterly reports on Form 10-Q.

Q: Josh Reese asked about guidance, specifically seeking more clarity on moving pieces behind the guidance.

A: Ajay Gopal responded, discussing that GMV growth in the second half is expected to accelerate, being prudent about consumer spending slowdown, with factors like consignment model, take-rate architecture, and being a full-category luxury marketplace contributing to confidence in delivering positive adjusted EBITDA.

Q: Chandana Madaka asked about luxury landscape trends and the aspirational customer.

A: Rati Levesque responded, mentioning price sensitivity but volume makeup, fine jewelry as a top growing category, 9% year-over-year active buyers, pushing the value play and focusing on supply for the consumer.

Q: Marvin Fong asked about Q4 guidance and direct revenue.

A: Ajay Gopal mentioned expecting usual seasonal pattern with Q4 growth, and Rati Levesque stated direct revenue is expected to stay within 9%-10% of total revenue on a go-forward basis, with margins showing notable improvement and expected to be in the mid-teens going forward