The RealReal Announces Fourth Quarter and Full Year 2023 Results
- Positive Q4 2023 Adjusted EBITDA of $1.4 million, an improvement of $22 million year-over-year.
- Q4 2023 Net Loss was $22 million, compared to $39 million in the same quarter of 2022.
- Full year 2023 Net Loss was $168 million, down from $196 million in 2022.
- Debt exchange transactions reduced total indebtedness by more than $17 million.
- Strategic shift to focus on consignment business resulted in positive Adjusted EBITDA and free cash flow.
- Moelis & Company LLC and Wachtell, Lipton, Rosen & Katz advised on the debt exchange transactions.
- Guidance for Q1 and full year 2024 projects GMV, total revenue, and Adjusted EBITDA.
- Cash, cash equivalents, and restricted cash totaled $191 million at the end of 2023.
- GMV decreased by 9% in Q4 2023 compared to the same period in 2022.
- Total Revenue decreased by 10% in Q4 2023 compared to the same period in 2022.
- Net Loss was $22 million in Q4 2023, representing 15.1% of total revenue.
- Adjusted EBITDA was $1.4 million in Q4 2023, representing 1.0% of total revenue.
- Trailing 12-months active buyers decreased by 8% compared to the same period in 2022.
- Orders decreased by 17% in Q4 2023 compared to the same period in 2022.
- Full year 2023 GMV decreased by 5% compared to 2022.
- Full year 2023 Total Revenue decreased by 9% compared to 2022.
Insights
The RealReal's recent financial results indicate a significant year-over-year improvement in their net loss and adjusted EBITDA, which are critical indicators of financial health. The reduction in net loss from $39 million to $22 million in Q4 and from $196 million to $168 million for the full year are noteworthy. Moreover, the shift from a negative adjusted EBITDA of $(20.2) million to a positive $1.4 million in Q4 suggests a substantial enhancement in operational efficiency. These improvements are likely a result of the strategic shift towards a consignment business model, which appears to be positively impacting margins.
The debt exchange transactions are also pivotal as they not only reduce total indebtedness by more than $17 million but also extend maturity dates, alleviating immediate liquidity concerns and potentially improving creditworthiness. The issuance of new PIK/Cash Senior Secured Notes and warrants could dilute existing shareholders but also provides capital structure flexibility. Investors should closely monitor the impact of these transactions on the company's leverage ratios and interest expenses.
Despite the positive financial restructuring, The RealReal's Gross Merchandise Volume (GMV) and total revenue both saw a decline, with GMV decreasing by 9% and revenue by 10% in Q4 compared to the same period in 2022. This decline could be indicative of market saturation, increased competition, or shifts in consumer behavior within the luxury resale market. The decrease in active buyers and orders by 8% and 17%, respectively, suggests a cooling in consumer engagement or retention issues.
However, the increase in Average Order Value (AOV) by 10% and a 13% rise in average selling prices could be seen as strategic wins, signaling that while fewer items are being sold, they are of higher value. This could align with their focus on profitable supply and improved margin structure. The guidance provided for 2024 indicates a cautious optimism, projecting a potential return to GMV growth and a narrow range for adjusted EBITDA, which will be a critical metric for investors to track as it reflects the company's ability to manage costs while scaling revenue.
The legal implications of the debt exchange transactions require careful consideration. The exchange of convertible senior notes for new senior secured notes and warrants alters the company's debt profile and may affect the rights of existing and future creditors. The involvement of reputable legal counsel, Wachtell, Lipton, Rosen & Katz, suggests a thorough legal process and compliance with securities regulations. It is important for investors to understand the terms of the new securities, including the impact of the potential exercise of the warrants on share price and ownership structure. The legal aspect of these transactions is a crucial part of evaluating the company's future financial stability and investor confidence.
Q4 and FY 2023 Net Loss Improved Year-Over-Year
by
Q4 2023 Adjusted EBITDA of positive
improving
Debt Exchange Transactions Entered into with Certain Holders of Convertible Senior Notes due 2025 and 2028
SAN FRANCISCO, Feb. 29, 2024 (GLOBE NEWSWIRE) -- The RealReal (Nasdaq: REAL)—the world’s largest online marketplace for authenticated, resale luxury goods—today reported financial results for its fourth quarter and full year ended December 31, 2023. Fourth quarter 2023 Net Loss was
“In the fourth quarter of 2023, The RealReal delivered positive Adjusted EBITDA and positive free cash flow. These are historic milestones and firsts for the company since our IPO in 2019. Our strategic shift to re-focus on the consignment business is delivering strong progress in our results. We refined our growth model with a focus on profitable supply and in the process we significantly improved our margin structure. We intend to carry forward this improved margin structure as we reaccelerate growth going forward,” said John Koryl, Chief Executive Officer of The RealReal.
The RealReal also announced it entered into private, separately negotiated debt exchange transactions with certain holders of
Moelis & Company LLC served as financial advisor and Wachtell, Lipton, Rosen & Katz served as legal counsel to The RealReal in connection with the exchange transactions.
“The exchange transactions completed today are another significant step forward for The RealReal, creating substantial runway and capital structure flexibility for us to execute on our strategic vision,” Koryl continued. “We believe our strong brand recognition coupled with our growing technology and data capabilities position us to deliver profitable growth in 2024.”
Fourth Quarter Financial Highlights
- GMV was
$451 million , a decrease of9% compared to the same period in 2022 - Total Revenue was
$143 million , a decrease of10% compared to the same period in 2022 - Net Loss was
$22 million or (15.1)% of total revenue, compared to$39 million or (24.2% ) of total revenue in the fourth quarter of 2022 - Adjusted EBITDA was
$1.4 million or1.0% of total revenue, compared to$(20.2) million or (12.6)% of total revenue in the fourth quarter of 2022 - GAAP basic and diluted net loss per share was
$(0.21) compared to$(0.39) in the prior year period - Non-GAAP basic and diluted net loss per share was
$(0.07) compared to$(0.29) in the prior year period - Top-line-related Metrics
- Trailing 12-months active buyers reached 922,000, a decrease of
8% compared to the same period in 2022 - Orders reached 826,000, a decrease of
17% compared to the same period in 2022 - Average order value (AOV) was
$545 , an increase of10% compared to the same period in 2022 - Higher AOV was driven by a
13% increase in average selling prices
- Trailing 12-months active buyers reached 922,000, a decrease of
Full Year 2023 Financial Highlights
- GMV was
$1.73 billion , a decrease of5% compared to full year 2022 - Total Revenue was
$549 million , a decrease of9% compared to full year 2022 - Net Loss was
$168 million or (30.7)% of total revenue, compared to$196 million or (32.5% ) of total revenue for full year 2022 - Adjusted EBITDA was
$(55.2) million or (10.0)% of total revenue compared to$(112.4) million or (18.6)% of total revenue for full year 2022 - GAAP basic and diluted net loss per share was
$(1.65) compared to$(2.05) in the prior year - Non-GAAP basic and diluted net loss per share was
$(0.87) compared to$(1.53) in the prior year - At the end of 2023, cash, cash equivalents and restricted cash totaled
$191 million
Q1 and Full Year 2024 Guidance
Based on market conditions as of February 29, 2024, we are providing guidance for GMV, total revenue and Adjusted EBITDA, which is a non-GAAP financial measure.
We have not reconciled forward-looking Adjusted EBITDA to net income (loss), the most directly comparable GAAP measure, because we cannot predict with reasonable certainty the ultimate outcome of certain components of such reconciliations, including payroll tax expense on employee stock transactions, that are not within our control, or other components that may arise, without unreasonable effort. For these reasons, we are unable to assess the probable significance of the unavailable information, which could materially impact the amount of future net income (loss).
| Q1 2024 | Full Year 2024 | |
| GMV | ||
| Total Revenue | ||
| Adjusted EBITDA |
Webcast and Conference Call
The RealReal will post a stockholder letter on its investor relations website at investor.therealreal.com/financial-information/quarterly-results and host a conference call at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) to answer questions regarding its fourth quarter and full year 2023 results. Investors and analysts can access the call via the following link: https://register.vevent.com/register/BI3644a7479aa04644b48e497e14e46fec. The call will also be available via live webcast at investor.therealreal.com along with the stockholder letter and supporting slides.
An archive of the webcast conference call will be available shortly after the call ends at investor.therealreal.com.
About The RealReal, Inc.
The RealReal is the world’s largest online marketplace for authenticated, resale luxury goods, with more than 35 million members. With a rigorous authentication process overseen by experts, The RealReal provides a safe and reliable platform for consumers to buy and sell their luxury items. We have hundreds of in-house gemologists, horologists and brand authenticators who inspect thousands of items each day. As a sustainable company, we give new life to pieces by thousands of brands across numerous categories—including women's and men's fashion, fine jewelry and watches, art and home—in support of the circular economy. We make selling effortless with free virtual appointments, in-home pickup, drop-off and direct shipping. We handle all of the work for consignors, including authenticating, using AI and machine learning to determine optimal pricing, photographing and listing their items, as well as shipping and customer service.
Investors:
Caitlin Howe
Senior Vice President, Finance
IR@therealreal.com
Media:
Laura Hogya
Head of Communications
pr@therealreal.com
Forward Looking Statements
This press release 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 and financial results, including our strategies, plans, commitments, objectives and goals, in particular in the context of the recent geopolitical events, including the conflict between Russia and Ukraine and the Israel-Hamas war, and uncertainty surrounding macroeconomic trends; the debt exchange; financial guidance, anticipated growth in 2024 and long-range financial projections. 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, inflation, macroeconomic uncertainty, geopolitical instability, 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, labor shortages 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 for the year ended December 31, 2022 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.
Non-GAAP Financial Measures
To supplement our unaudited and condensed financial statements presented in accordance with generally accepted accounting principles ("GAAP"), this earnings release and the accompanying tables and the related earnings conference call contain certain non-GAAP financial measures, including Adjusted EBITDA, Adjusted EBITDA as a percentage of total revenue ("Adjusted EBITDA Margin"), free cash flow, non-GAAP net loss attributable to common stockholders, and non-GAAP net loss per share attributable to common stockholders, basic and diluted. We have provided a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures in this earnings release.
We do not, nor do we suggest that investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors should also note that non-GAAP financial measures we use may not be the same non-GAAP financial measures, and may not be calculated in the same manner, as that of other companies, including other companies in our industry.
Adjusted EBITDA is a key performance measure that our management uses to assess our operating performance. Because Adjusted EBITDA facilitates internal comparisons of our historical operating performance on a more consistent basis, we use this measure as an overall assessment of our performance, to evaluate the effectiveness of our business strategies and for business planning purposes. Adjusted EBITDA may not be comparable to similarly titled metrics of other companies.
We calculate Adjusted EBITDA as net loss before interest income, interest expense, other (income) expense net, provision (benefit) for income taxes, depreciation and amortization, further adjusted to exclude stock-based compensation, employer payroll tax on employee stock transactions, and certain one-time expenses. The employer payroll tax expense related to employee stock transactions are tied to the vesting or exercise of underlying equity awards and the price of our common stock at the time of vesting, which may vary from period to period independent of the operating performance of our business. Adjusted EBITDA has certain limitations as the measure excludes the impact of certain expenses that are included in our statements of operations that are necessary to run our business and should not be considered as an alternative to net loss or any other measure of financial performance calculated and presented in accordance with GAAP.
In particular, the exclusion of certain expenses in calculating Adjusted EBITDA and Adjusted EBITDA Margin facilitates operating performance comparisons on a period-to-period basis and, in the case of exclusion of the impact of stock-based compensation and the related employer payroll tax on employee stock transactions, excludes an item that we do not consider to be indicative of our core operating performance. Investors should, however, understand that stock-based compensation and the related employer payroll tax will be a significant recurring expense in our business and an important part of the compensation provided to our employees. Accordingly, we believe that Adjusted EBITDA and Adjusted EBITDA Margin provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors.
Free cash flow is a non-GAAP financial measure that is calculated as net cash (used in) provided by operating activities less net cash used to purchase property and equipment and capitalized proprietary software development costs. We believe free cash flow is an important indicator of our business performance, as it measures the amount of cash we generate. Accordingly, we believe that free cash flow provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management.
Non-GAAP net loss per share attributable to common stockholders, basic and diluted is a non-GAAP financial measure that is calculated as GAAP net loss plus stock-based compensation expense, provision (benefit) for income taxes, employer payroll tax on employee stock transactions and non-recurring items divided by weighted average shares outstanding. We believe that adding back stock-based compensation expense, employer payroll tax on employee stock transactions, provision (benefit) for income taxes, and non-recurring items as adjustments to our GAAP net loss, before calculating per share amounts for all periods presented provides a more meaningful comparison between our operating results from period to period.
THE REALREAL, INC.
Statements of Operations
(In thousands, except share and per share data)
| (Unaudited) | |||||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Revenue: | |||||||||||||||
| Consignment revenue | $ | 113,500 | $ | 110,199 | $ | 415,572 | $ | 384,979 | |||||||
| Direct revenue | 15,964 | 33,252 | 79,160 | 158,726 | |||||||||||
| Shipping services revenue | 13,909 | 16,204 | 54,572 | 59,788 | |||||||||||
| Total revenue | 143,373 | 159,655 | 549,304 | 603,493 | |||||||||||
| Cost of revenue: | |||||||||||||||
| Cost of consignment revenue | 14,439 | 13,770 | 58,120 | 56,963 | |||||||||||
| Cost of direct revenue | 13,181 | 36,246 | 74,343 | 141,661 | |||||||||||
| Cost of shipping services revenue | 9,704 | 13,029 | 40,563 | 56,178 | |||||||||||
| Total cost of revenue | 37,324 | 63,045 | 173,026 | 254,802 | |||||||||||
| Gross profit | 106,049 | 96,610 | 376,278 | 348,691 | |||||||||||
| Operating expenses: | |||||||||||||||
| Marketing | 13,815 | 14,533 | 58,275 | 62,988 | |||||||||||
| Operations and technology | 62,396 | 71,469 | 257,041 | 278,628 | |||||||||||
| Selling, general and administrative | 44,594 | 47,932 | 182,453 | 194,886 | |||||||||||
| Restructuring charges | 6,066 | 621 | 43,462 | 896 | |||||||||||
| Legal settlement | 240 | — | 1,340 | 456 | |||||||||||
| Total operating expenses(1) | 127,111 | 134,555 | 542,571 | 537,854 | |||||||||||
| Loss from operations | (21,062 | ) | (37,945 | ) | (166,293 | ) | (189,163 | ) | |||||||
| Interest income | 2,088 | 1,831 | 8,805 | 3,191 | |||||||||||
| Interest expense | (2,683 | ) | (2,458 | ) | (10,701 | ) | (10,472 | ) | |||||||
| Other income (expense), net | — | 38 | — | 171 | |||||||||||
| Loss before provision for income taxes | (21,657 | ) | (38,534 | ) | (168,189 | ) | (196,273 | ) | |||||||
| Provision for income taxes | 36 | 76 | 283 | 172 | |||||||||||
| Net loss attributable to common stockholders | $ | (21,693 | ) | $ | (38,610 | ) | $ | (168,472 | ) | $ | (196,445 | ) | |||
| Net loss per share attributable to common stockholders, basic and diluted | $ | (0.21 | ) | $ | (0.39 | ) | $ | (1.65 | ) | $ | (2.05 | ) | |||
| Weighted average shares used to compute net loss per share attributable to common stockholders, basic and diluted | 103,937,199 | 98,546,282 | 101,806,000 | 95,921,246 | |||||||||||
| (1) Includes stock-based compensation as follows: | |||||||||||||||
| Marketing | $ | 370 | $ | 435 | $ | 1,550 | $ | 2,209 | |||||||
| Operations and technology | 2,426 | 3,919 | 12,534 | 19,822 | |||||||||||
| Selling, general and administrative | 5,184 | 4,764 | 20,189 | 24,107 | |||||||||||
| Total | $ | 7,980 | $ | 9,118 | $ | 34,273 | $ | 46,138 | |||||||
THE REALREAL, INC.
Balance Sheets
(In thousands, except share and per share data)
| December 31, 2023 | December 31, 2022 | ||||||
| Assets | |||||||
| Current assets | |||||||
| Cash and cash equivalents | $ | 175,709 | $ | 293,793 | |||
| Accounts receivable | 17,226 | 12,207 | |||||
| Inventory, net | 22,246 | 42,967 | |||||
| Prepaid expenses and other current assets | 20,766 | 23,291 | |||||
| Total current assets | 235,947 | 372,258 | |||||
| Property and equipment, net | 104,087 | 112,679 | |||||
| Operating lease right-of-use assets | 86,348 | 127,955 | |||||
| Restricted cash | 14,914 | — | |||||
| Other assets | 5,627 | 2,749 | |||||
| Total assets | $ | 446,923 | $ | 615,641 | |||
| Liabilities and Stockholders’ Equity (Deficit) | |||||||
| Current liabilities | |||||||
| Accounts payable | $ | 8,961 | $ | 11,902 | |||
| Accrued consignor payable | 77,122 | 81,543 | |||||
| Operating lease liabilities, current portion | 20,094 | 20,776 | |||||
| Other accrued and current liabilities | 82,685 | 93,292 | |||||
| Total current liabilities | 188,862 | 207,513 | |||||
| Operating lease liabilities, net of current portion | 104,856 | 125,118 | |||||
| Convertible senior notes, net | 452,421 | 449,848 | |||||
| Other noncurrent liabilities | 4,083 | 3,254 | |||||
| Total liabilities | 750,222 | 785,733 | |||||
| Stockholders’ deficit: | |||||||
| Common stock, | 1 | 1 | |||||
| Additional paid-in capital | 816,325 | 781,060 | |||||
| Accumulated deficit | (1,119,625 | ) | (951,153 | ) | |||
| Total stockholders’ deficit | (303,299 | ) | (170,092 | ) | |||
| Total liabilities and stockholders’ deficit | $ | 446,923 | $ | 615,641 | |||
THE REALREAL, INC.
Statements of Cash Flows
(In thousands)
| Year Ended December 31, | |||||||
| 2023 | 2022 | ||||||
| Cash flows from operating activities: | |||||||
| Net loss | $ | (168,472 | ) | $ | (196,445 | ) | |
| Adjustments to reconcile net loss to cash used in operating activities: | |||||||
| Depreciation and amortization | 31,695 | 27,669 | |||||
| Stock-based compensation expense | 34,273 | 46,138 | |||||
| Reduction of operating lease right-of-use assets | 16,746 | 19,602 | |||||
| Bad debt expense | 1,962 | 1,680 | |||||
| Loss on disposal of property and equipment and impairment of capitalized proprietary software | 223 | 702 | |||||
| Accretion of debt discounts and issuance costs | 2,573 | 2,368 | |||||
| Property, plant, equipment and right-of-use asset impairments | 39,739 | — | |||||
| Provision for inventory write-downs and shrinkage | 9,783 | 4,077 | |||||
| Gain on lease termination | (738 | ) | — | ||||
| Changes in operating assets and liabilities: | |||||||
| Accounts receivable | (6,981 | ) | (6,120 | ) | |||
| Inventory, net | 10,938 | 23,971 | |||||
| Prepaid expenses and other current assets | 2,001 | (2,952 | ) | ||||
| Other assets | (3,050 | ) | (409 | ) | |||
| Operating lease liability | (26,478 | ) | (17,764 | ) | |||
| Accounts payable | (425 | ) | 4,947 | ||||
| Accrued consignor payable | (4,421 | ) | 10,501 | ||||
| Other accrued and current liabilities | (464 | ) | (9,823 | ) | |||
| Other noncurrent liabilities | (172 | ) | 301 | ||||
| Net cash used in operating activities | (61,268 | ) | (91,557 | ) | |||
| Cash flow from investing activities: | |||||||
| Capitalized proprietary software development costs | (12,951 | ) | (14,061 | ) | |||
| Purchases of property and equipment | (29,177 | ) | (22,861 | ) | |||
| Net cash used in investing activities | (42,128 | ) | (36,922 | ) | |||
| Cash flow from financing activities: | |||||||
| Proceeds from exercise of stock options | 19 | 2,906 | |||||
| Proceeds from issuance of stock in connection with the Employee Stock Purchase Program | 886 | 1,400 | |||||
| Taxes paid related to restricted stock vesting | (679 | ) | (205 | ) | |||
| Net cash provided by financing activities | 226 | 4,101 | |||||
| Net decrease in cash, cash equivalents, and restricted cash | (103,170 | ) | (124,378 | ) | |||
| Cash, cash equivalents, and restricted cash | |||||||
| Beginning of period | 293,793 | 418,171 | |||||
| End of period | $ | 190,623 | $ | 293,793 | |||
The following table reflects the reconciliation of net loss to Adjusted EBITDA for each of the periods indicated (in thousands):
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Adjusted EBITDA Reconciliation: | |||||||||||||||
| Net loss | $ | (21,693 | ) | $ | (38,610 | ) | $ | (168,472 | ) | $ | (196,445 | ) | |||
| Net loss (% of revenue) | 15.1 | % | 24.2 | % | 30.7 | % | 32.6 | % | |||||||
| Depreciation and amortization | 8,165 | 7,414 | 31,695 | 27,669 | |||||||||||
| Interest income | (2,088 | ) | (1,831 | ) | (8,805 | ) | (3,191 | ) | |||||||
| Interest expense | 2,683 | 2,458 | 10,701 | 10,472 | |||||||||||
| Provision (benefit) for income taxes | 36 | 76 | 283 | 172 | |||||||||||
| EBITDA | (12,897 | ) | (30,493 | ) | (134,598 | ) | (161,323 | ) | |||||||
| Stock-based compensation (1) | 7,980 | 9,118 | 34,273 | 46,138 | |||||||||||
| CEO separation benefits (2) | — | 46 | — | 948 | |||||||||||
| CEO transition costs (3) | — | 533 | 159 | 1,551 | |||||||||||
| Payroll tax expense on employee stock transactions | 53 | 39 | 195 | 451 | |||||||||||
| Legal fees reimbursement benefit (4) | — | — | — | (1,400 | ) | ||||||||||
| Legal settlements (5) | 240 | — | 1,340 | 456 | |||||||||||
| Restructuring charges (6) | 6,066 | 621 | 43,462 | 896 | |||||||||||
| Other (income) expense, net | — | (38 | ) | — | (171 | ) | |||||||||
| Adjusted EBITDA | $ | 1,442 | $ | (20,174 | ) | $ | (55,169 | ) | $ | (112,454 | ) | ||||
| Adjusted EBITDA (% of revenue) | 1.0 | % | 12.6 | % | 10.0 | % | 18.6 | % | |||||||
(1) The stock-based compensation expense for the year ended December 31, 2022 includes a one-time charge of
(2) The CEO separation benefit charges for the year ended December 31, 2022 consist of base salary, bonus and benefits for the 2022 fiscal year, as well as an additional twelve months of base salary and benefits payable to Julie Wainwright pursuant to the Separation Agreement.
(3) The CEO transition charges for the year ended December 31, 2022 consist of general and administrative fees, including legal and recruiting expenses, as well as retention bonuses for certain executives incurred in connection with our founder's resignation on June 6, 2022. The CEO transition charges for the year ended December 31, 2023 consists of retention bonuses for certain executives incurred in connection with our founder's resignation in 2022.
(4) During the year ended December 31, 2022, we received insurance reimbursement of
(5) The legal settlement charges for the year ended December 31, 2023 reflect legal settlement expenses arising from the settlement of two former employees’ individual claims and California Private Attorney General Actions initiated against the Company on behalf of such former employees and those similarly situated.
(6) Restructuring for the year ended December 31, 2023 consists of impairment of right-of-use assets and property and equipment, employee severance charges, gain on lease terminations, and other charges, including legal and transportation expenses. Restructuring for the year ended December 31, 2022 consists of employee severance payments and benefits.
A reconciliation of GAAP net loss to non-GAAP net loss attributable to common stockholders, the most directly comparable GAAP financial measure, in order to calculate non-GAAP net loss attributable to common stockholders per share, basic and diluted, is as follows (in thousands, except share and per share data):
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Net loss | $ | (21,693 | ) | $ | (38,610 | ) | $ | (168,472 | ) | $ | (196,445 | ) | |||
| Stock-based compensation | 7,980 | 9,118 | 34,273 | 46,138 | |||||||||||
| CEO separation benefits | — | 46 | — | 948 | |||||||||||
| CEO transition costs | — | 533 | 159 | 1,551 | |||||||||||
| Payroll tax expense on employee stock transactions | 53 | 39 | 195 | 451 | |||||||||||
| Legal fees reimbursement benefit | — | — | — | (1,400 | ) | ||||||||||
| Legal settlement | 240 | — | 1,340 | 456 | |||||||||||
| Restructuring charges | 6,066 | 621 | 43,462 | 896 | |||||||||||
| Provision for income taxes | 36 | 76 | 283 | 172 | |||||||||||
| Non-GAAP net loss attributable to common stockholders | $ | (7,318 | ) | $ | (28,177 | ) | $ | (88,760 | ) | $ | (147,233 | ) | |||
| Weighted-average common shares outstanding used to calculate Non-GAAP net loss attributable to common stockholders per share, basic and diluted | 103,937,199 | 98,546,282 | 101,806,000 | 95,921,246 | |||||||||||
| Non-GAAP net loss attributable to common stockholders per share, basic and diluted | $ | (0.07 | ) | $ | (0.29 | ) | $ | (0.87 | ) | $ | (1.53 | ) | |||
The following table presents a reconciliation of net cash used in operating activities to free cash flow for each of the periods indicated (in thousands):
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Net cash provided by (used in) operating activities | $ | 10,523 | $ | 3,698 | $ | (61,268 | ) | $ | (91,557 | ) | |||||
| Purchase of property and equipment and capitalized proprietary software development costs | (6,730 | ) | (10,667 | ) | (42,128 | ) | (36,922 | ) | |||||||
| Free cash flow | $ | 3,793 | $ | (6,969 | ) | $ | (103,396 | ) | $ | (128,479 | ) | ||||
Key Financial and Operating Metrics:
| Three Months Ended | |||||||||||||||||||||||||||||||||||
| December 31, 2021 | March 31, 2022 | June 30, 2022 | September 30, 2022 | December 31, 2022 | March 31, 2023 | June 30, 2023 | September 30, 2023 | December 31, 2023 | |||||||||||||||||||||||||||
| (In thousands, except AOV and percentages) | |||||||||||||||||||||||||||||||||||
| GMV | $ | 437,179 | $ | 428,206 | $ | 454,163 | $ | 440,659 | $ | 492,955 | $ | 444,366 | $ | 423,341 | $ | 407,608 | $ | 450,668 | |||||||||||||||||
| NMV | $ | 318,265 | $ | 310,511 | $ | 332,508 | $ | 325,105 | $ | 367,382 | $ | 327,805 | $ | 303,918 | $ | 302,912 | $ | 335,245 | |||||||||||||||||
| Consignment Revenue | $ | 86,508 | $ | 83,989 | $ | 96,917 | $ | 93,874 | $ | 110,199 | $ | 102,643 | $ | 96,577 | $ | 102,852 | $ | 113,500 | |||||||||||||||||
| Direct Revenue | $ | 45,262 | $ | 48,823 | $ | 42,646 | $ | 34,005 | $ | 33,252 | $ | 24,953 | $ | 20,887 | $ | 17,356 | $ | 15,964 | |||||||||||||||||
| Shipping Services Revenue | $ | 13,355 | $ | 13,888 | $ | 14,872 | $ | 14,824 | $ | 16,204 | $ | 14,308 | $ | 13,391 | $ | 12,964 | $ | 13,909 | |||||||||||||||||
| Number of Orders | 861 | 878 | 934 | 952 | 993 | 891 | 789 | 794 | 826 | ||||||||||||||||||||||||||
| Take Rate | 35.0 | % | 35.7 | % | 36.1 | % | 36.0 | % | 35.7 | % | 37.4 | % | 36.7 | % | 38.1 | % | 37.7 | % | |||||||||||||||||
| Active Buyers | 797 | 828 | 889 | 950 | 998 | 1,014 | 985 | 954 | 922 | ||||||||||||||||||||||||||
| AOV | $ | 508 | $ | 487 | $ | 486 | $ | 463 | $ | 496 | $ | 499 | $ | 537 | $ | 513 | $ | 545 | |||||||||||||||||
FAQ
What was The RealReal's (REAL) Q4 2023 net loss?
How did The RealReal's (REAL) Q4 2023 Adjusted EBITDA compare year-over-year?
What were the highlights of The RealReal's (REAL) full year 2023 financial results?
How did The RealReal (REAL) reduce its total indebtedness?
What were the key financial metrics for The RealReal (REAL) in Q4 2023?
What was the year-over-year change in The RealReal's (REAL) GMV for full year 2023?
What is The RealReal's (REAL) guidance for GMV in Q1 2024?
Where can investors access The RealReal's (REAL) conference call regarding its financial results?
