8-K
TheRealReal, Inc. (REAL)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 25, 2020
The RealReal, Inc.
(Exact name of Registrant as Specified in Its Charter)
| Delaware | 001-38953 | 45-1234222 | |
|---|---|---|---|
| (State or Other Jurisdiction<br><br><br>of Incorporation) | (Commission File Number) | (IRS Employer<br><br><br>Identification No.) | |
| 55 Francisco Street Suite 600<br><br><br>San Francisco, CA 94133 | |||
| (Address of Principal Executive Offices, including Zip Code) |
(855) 435-5893
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br><br><br>Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common stock, $0.00001 par value | REAL | The Nasdaq Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On February 25, 2020, The RealReal, Inc. (“The RealReal”) issued a press release announcing its financial results for the quarter ended December 31, 2019. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein.
Item 7.01 Regulation FD Disclosure
On February 25, 2020, The RealReal posted supplemental investor materials on its investor.therealreal.com website. The RealReal announces material information to the public about The RealReal, its services and other matters through a variety of means, including filings with the Securities and Exchange Commission, press releases, public conference calls, webcasts, the investor relations section of its website (investor.therealreal.com) in order to achieve broad, non-exclusionary distribution of information to the public and for complying with its disclosure obligations under Regulation FD.
The information in this current report on Form 8-K and the exhibit attached hereto is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit<br><br><br>Number | Description |
|---|---|
| 99.1 | Press Release dated February 25, 2020 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| The RealReal, Inc. | ||
|---|---|---|
| Date: February 25, 2020 | By: | /s/ Matt Gustke |
| Matt Gustke | ||
| Chief Financial Officer |
2
real-ex991_6.htm
Exhibit 99.1
THE REALREAL ANNOUNCES FOURTH QUARTER AND FULL YEAR 2019 RESULTS
Q4 Gross Merchandise Value Increased 39% Year over Year to $303.0 million
Q4 Total Revenue Increased 57% Year over Year to $97.3 million
Q4 Adjusted EBITDA Margin Improved 16.7 Percentage Points Y/Y
2019 Contribution Profit Per Order Increased 126% Y/Y to $19.72
SAN FRANCISCO, Feb. 25, 2020 -- The RealReal (Nasdaq: REAL)—the world’s largest online marketplace for authenticated, consigned luxury goods—today reported financial results for its fourth quarter and full year ended Dec. 31, 2019.
“Our Q4 results exemplify our long standing approach to balancing growth and operating leverage. In Q4, we achieved 39% Y/Y GMV growth with all top level categories experiencing strong growth. At the same time, Q4 adjusted EBITDA margin improved by approximately 17 percentage points Y/Y. Additionally, 82.9% of GMV was driven by repeat buyers in the quarter, a rare attribute of our marketplace that underscores our buyer loyalty and the strength of our flywheel,” said Julie Wainwright, CEO and founder.
Fourth Quarter Financial Highlights
| ● | Gross Merchandise Volume (GMV) was $303.0 million, up 39% year over year. |
|---|---|
| ● | Total Revenue was $97.3 million, up 57% year over year. |
| --- | --- |
| ● | Consignment and Service Revenue was $80.7 million, up 46% year over year. |
| --- | --- |
| ● | Gross Profit was $62.5 million, up 48% year over year. |
| --- | --- |
| ● | Adjusted EBITDA was ($12.7) million or (13.1%) of total revenue. |
| --- | --- |
| ● | GAAP basic and diluted net loss per share was ($0.25). |
| --- | --- |
| ● | Non-GAAP basic and diluted net loss per share was ($0.17). |
| --- | --- |
| ● | Net cash provided by operating activities was $3.6 million, compared to ($7.6) million used in the fourth quarter of 2018. |
| --- | --- |
| ● | At the end of the fourth quarter, cash, cash equivalents and short-term investments totaled $363.3 million. |
| --- | --- |
Full Year 2019 Financial Highlights
| ● | Gross Merchandise Volume (GMV) was $1,008.3 million, up 42% year over year. |
|---|---|
| ● | Total Revenue was $318.0 million, up 53% year over year. |
| --- | --- |
| ● | Gross Profit was $203.2 million, up 48% year over year. |
| --- | --- |
| ● | Adjusted EBITDA was ($73.0) million or (23.0%) of total revenue. |
| --- | --- |
| ● | Contribution Profit Per Order was $19.72, up 126% year over year. |
| --- | --- |
| ● | Buyer Acquisition Cost (BAC) was $114, down 18% year over year. |
| --- | --- |
| ● | Since inception through Dec. 31, consignment with The RealReal has offset 13,300 metric tons of carbon and saved 608 million liters of water. |
| --- | --- |
“In 2019, we surpassed $1 billion in GMV. We also made significant progress on our path to profitability while still making investments to capitalize on the massive opportunity in front of us. In 2020, we will continue to invest in growth while driving meaningful operating leverage as we
continue to revolutionize luxury resale and deliver value to our consignors and our buyers,” continued Wainwright.
The RealReal continues to invest and innovate in authentication. We believe we have the most rigorous authentication process in the marketplace. Every item we sell is subject to that process. The impact of automation and technology has dramatically changed the authentication team’s day-to-day activities, allowing them to process more products per person while also expanding the depth of our authentication process, training and quality control procedures.
“Our goal is to be the safest marketplace to buy pre-owned luxury goods, and our processes will continue to evolve throughout 2020 as we integrate more technology to stay ahead of counterfeiters,” added Wainwright. “Our buyer NPS score of 71 and the fact that approximately 83% of GMV came from repeat buyers and 81% of GMV came from repeat consignors in 2019, indicates that we are focused on the right issues.”
The RealReal continues to deepen its sustainability commitments, pledging to become carbon neutral in 2021 as part of the CEO Carbon Neutral Challenge issued by Gucci president and CEO Marco Bizzarri. Since its founding through the end of 2019, The RealReal has offset 13,300 metric tons of carbon and saved 608 million liters of water.
Other Fourth Quarter Highlights
| ● | Trailing 12 months active buyers reached 581,738, up 40% year over year. |
|---|---|
| ● | Orders reached 637,112, up 35% year over year. |
| --- | --- |
| ● | Average Order Value was $476 compared to $464 in the fourth quarter of 2018. |
| --- | --- |
| ● | Consignment Take Rate increased 130bps year over year to 36.2%. |
| --- | --- |
| ● | GMV from repeat buyers was 82.9% compared to 81.6% in the fourth quarter of 2018. |
| --- | --- |
Q1 and FY 2020 Financial Outlook
Based on information available as of Feb. 25, 2020, we are providing the following financial guidance for the first quarter as well as for the full year 2020.
| (In Millions) | ||||||||
|---|---|---|---|---|---|---|---|---|
| First Quarter 2020 | Full Year 2020 | |||||||
| Low | High | Low | High | |||||
| Expected GMV Range | $ | 291 | $ | 295 | $ | 1,315 | $ | 1,345 |
| Implied Y/Y Growth | 30% | 32% | 30% | 33% | ||||
| Expected Adjusted EBITDA % of Revenue Range | (26.0%) | (24.0%) | (16.0%) | (15.0%) |
Webcast and Conference Call
The RealReal will host a conference call and webcast to discuss its fourth quarter and full year 2019 financial results today at 2 p.m. PDT. Investors and participants can access the call by dialing (866) 996-5385 in the U.S. and (270) 215-9574 internationally. The passcode for the conference line is 1182588. The call will also be available via live webcast at investor.therealreal.com along with supporting slides. An archive of the webcast conference call
will be available shortly after the call ends. The archived webcast will be available at investor.therealreal.com.
About The RealReal, Inc.
The RealReal is the world’s largest online marketplace for authenticated, consigned luxury goods. 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 150+ 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 hundreds of brands, from Gucci to Cartier, supporting the circular economy. We make consigning effortless with free in-home pickup, drop-off service and direct shipping for individual consignors and estates. At our stores in LA and NYC, customers can shop, consign, and meet with our experts. At our nine Luxury Consignment Offices, three of which are in our retail stores, our expert staff provides free valuations.
Investor Relations Contact:
Paul Bieber
Head of Investor Relations
paul.bieber@therealreal.com
Press Contact:
Erin Santy
Head of Communications
pr@therealreal.com
Forward Looking Statements
This press release contains forward-looking statements within the meaning of federal and state securities laws. Forward-looking statements generally relate to future events or our future financial or operating performance. 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,” “would,” “continue,” “ongoing” or the negative of these terms or other comparable terminology. Forward-looking statements in this release include, but are not limited to statements about future operating results, including our financial outlook and guidance for the first quarter of 2020 and full year 2020, our ability to drive revenue growth, our ability to drive operating leverage, our ability to add capacity, capabilities and automation to our operations and our strategies, plans, commitments, objectives and goals. Forward-looking statements are based on current expectations of future events. Investors should realize that if underlying assumptions prove inaccurate or that known or unknown risks or uncertainties materialize, actual results could vary materially from our expectations and projections. Investors are therefore cautioned not to place undue reliance on any forward-looking statements. These forward-looking statements speak only as of the date of this press release and, except as required by applicable law, we undertake no obligation to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events or otherwise. Our future results may be different from those described in our forward-looking statements for a variety of reasons, including 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. A list and description of risks, uncertainties and other factors that could cause or contribute to differences in our results can be found in our filings with the Securities and Exchange Commission (“SEC”), including our prospectus filed pursuant to Rule 424(b) under the Securities Act of 1933, as amended, on June 28, 2019, our Quarterly Report on Form 10-Q for the quarters ended June 30, 2019 and September 30, 2019, and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 that will be filed with the SEC by March 2, 2020. We qualify all of our forward-looking statements by these cautionary 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 Contribution Profit, Adjusted EBITDA, Adjusted EBITDA as a percentage of total net 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, net other (income) expense, income tax provision, depreciation and amortization, further adjusted to exclude stock-based compensation, and certain one-time expenses. 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, excludes an item that we do not consider to be indicative of our core operating performance. Investors should, however, understand that stock-based compensation 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 for income taxes, and nonrecurring items divided by weighted average shares outstanding. We believe that adding back stock-based compensation expense and provision 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.
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. Fixed expenses include occupancy, general & administrative, technology, marketing headcount, and certain operations and merchandising headcount costs.
We view contribution profit as an important metric to assess our marginal profitability and measure our progress driving operating efficiencies. Accordingly, we believe that contribution profit provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management.
THE REALREAL, INC.
Statements of Operations
(in thousands, except share and per share data)
(unaudited)
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2019 | 2018 | 2019 | 2018 | |||||||||
| Revenue: | ||||||||||||
| Consignment and service revenue | $ | 80,673 | $ | 55,070 | $ | 267,412 | $ | 183,991 | ||||
| Direct revenue | 16,649 | 7,023 | 50,625 | 23,385 | ||||||||
| Total revenue | 97,322 | 62,093 | 318,037 | 207,376 | ||||||||
| Cost of revenue: | ||||||||||||
| Cost of consignment and service revenue | 20,987 | 13,772 | 73,579 | 50,855 | ||||||||
| Cost of direct revenue | 13,788 | 6,117 | 41,252 | 19,603 | ||||||||
| Total cost of revenue | 34,775 | 19,889 | 114,831 | 70,458 | ||||||||
| Gross profit | 62,547 | 42,204 | 203,206 | 136,918 | ||||||||
| Operating expenses (1): | ||||||||||||
| Marketing | 10,896 | 12,631 | 47,734 | 42,165 | ||||||||
| Operations and technology | 39,960 | 32,343 | 143,231 | 104,929 | ||||||||
| Selling, general and administrative | 34,553 | 19,502 | 110,663 | 63,728 | ||||||||
| Total operating expenses | 85,409 | 64,476 | 301,628 | 210,822 | ||||||||
| Loss from operations | (22,862 | ) | (22,272 | ) | (98,422 | ) | (73,904 | ) | ||||
| Interest income | 1,675 | 444 | 4,593 | 1,046 | ||||||||
| Interest expense | (45 | ) | (225 | ) | (616 | ) | (1,152 | ) | ||||
| Other income (expense), net | 5 | (64 | ) | (2,102 | ) | (1,656 | ) | |||||
| Loss before provision for income taxes | (21,227 | ) | (22,117 | ) | (96,547 | ) | (75,666 | ) | ||||
| Provision for income taxes | 147 | 62 | 199 | 99 | ||||||||
| Net loss | $ | (21,374 | ) | $ | (22,179 | ) | $ | (96,746 | ) | $ | (75,765 | ) |
| Accretion of redeemable convertible preferred stock to redemption value | — | $ | (3,271 | ) | $ | (3,355 | ) | $ | (8,922 | ) | ||
| Net loss attributable to common stockholders | $ | (21,374 | ) | $ | (25,450 | ) | $ | (100,101 | ) | $ | (84,687 | ) |
| Net loss per share attributable to common stockholders, basic and diluted | $ | (0.25 | ) | $ | (3.00 | ) | $ | (2.11 | ) | $ | (10.12 | ) |
| Weighted average shares used to compute net loss per share attributable to common stockholders, basic and diluted | 85,823,352 | 8,496,051 | 47,478,544 | 8,365,344 | ||||||||
| (1) Includes stock-based compensation as follows: | ||||||||||||
| Marketing | 104 | 49 | 392 | 164 | ||||||||
| Operating and technology | 1,083 | 385 | 3,148 | 1,160 | ||||||||
| Selling, general and administrative (2) | 1,608 | 511 | 4,990 | 2,434 | ||||||||
| Total | 2,795 | 945 | 8,530 | 3,758 | ||||||||
| (2) Includes compensation expense related to stock sales by current and former employees in September 2018 and March 2019. |
THE REALREAL, INC.
Balance Sheets
(in thousands, except share and per share data)
(unaudited)
| December 31,<br><br><br>2018 | |||||
|---|---|---|---|---|---|
| Assets | |||||
| Current assets | |||||
| Cash and cash equivalents | 154,446 | $ | 34,393 | ||
| Short-term investments | 208,811 | 27,131 | |||
| Accounts receivable | 7,779 | 7,571 | |||
| Inventory, net | 23,599 | 10,355 | |||
| Prepaid expenses and other current assets | 13,804 | 9,696 | |||
| Total current assets | 408,439 | 89,146 | |||
| Property and equipment, net | 55,831 | 33,286 | |||
| Restricted cash | — | 11,234 | |||
| Other assets | 2,660 | 1,751 | |||
| Total assets | 466,930 | $ | 135,417 | ||
| Liabilities, Redeemable Convertible Preferred Stock, Convertible Preferred Stock and Stockholders’ Equity (Deficit) | |||||
| Current liabilities | |||||
| Accounts payable | 11,159 | $ | 5,149 | ||
| Accrued consignor payable | 52,820 | 35,259 | |||
| Other accrued and current liabilities | 54,567 | 41,956 | |||
| Long-term debt, current portion | — | 5,990 | |||
| Total current liabilities | 118,546 | 88,354 | |||
| Long-term debt, net of current portion | — | 3,249 | |||
| Other noncurrent liabilities | 9,456 | 7,304 | |||
| Total liabilities | 128,002 | 98,907 | |||
| Commitments and contingencies | |||||
| Redeemable convertible preferred stock, 0.00001 par value; no and<br> 31,053,601 shares authorized as of December 31, 2019 and December 31,<br> 2018, respectively; no and 31,053,601 shares issued and outstanding<br> as of December 31, 2019 and December 31, 2018, respectively | — | 151,381 | |||
| Convertible preferred stock 0.00001 par value; no and 73,950,153<br> shares authorized as of December 31, 2019 and December 31, 2018,<br> respectively; no and 73,724,645 shares issued and outstanding<br> as of December 31, 2019 and December 31, 2018, respectively | — | 142,819 | |||
| Stockholders’ equity (deficit): | |||||
| Common stock, 0.00001 par value; 500,000,000 and 145,467,774 shares<br> authorized as of December 31, 2019 and December 31, 2018,<br> respectively; 85,872,320 and 8,593,077 shares issued and outstanding<br> as of December 31, 2019 and December 31, 2018, respectively | 1 | — | |||
| Additional paid-in capital | 693,425 | — | |||
| Accumulated comprehensive income (loss) | 7 | (25 | ) | ||
| Accumulated deficit | (354,505 | ) | (257,665 | ) | |
| Total stockholders’ equity (deficit) | 338,928 | (257,690 | ) | ||
| Total liabilities, redeemable convertible preferred stock, convertible preferred stock and stockholders’ equity (deficit) | 466,930 | $ | 135,417 |
All values are in US Dollars.
THE REALREAL, INC.
Statements of Cash Flows
(in thousands)
(unaudited)
| Year Ended December 31, | ||||||
|---|---|---|---|---|---|---|
| 2019 | 2018 | |||||
| Cash flows from operating activities: | ||||||
| Net loss | $ | (96,746 | ) | $ | (75,765 | ) |
| Adjustments to reconcile net loss to cash used in operating activities: | ||||||
| Depreciation and amortization | 13,408 | 9,290 | ||||
| Stock-based compensation expense | 7,711 | 2,911 | ||||
| Change in fair value of convertible note derivative liability | — | 1,248 | ||||
| Bad debt expense | 1,371 | 999 | ||||
| Compensation expense related to stock sales by current and former employees | 819 | 847 | ||||
| Change in fair value of convertible preferred stock warrant liability | 2,100 | 450 | ||||
| Accrued interest on convertible notes | — | 223 | ||||
| Loss on retirement of property and equipment | — | 203 | ||||
| Accretion of unconditional endowment grant liability | 94 | 118 | ||||
| Accretion of debt discounts | 11 | 104 | ||||
| Amortization of premiums (discounts) on short-term investments | (320 | ) | 78 | |||
| Changes in operating assets and liabilities: | ||||||
| Accounts receivable | (1,579 | ) | (1,572 | ) | ||
| Inventory, net | (13,244 | ) | (3,741 | ) | ||
| Prepaid expenses and other current assets | (4,108 | ) | (5,338 | ) | ||
| Other assets | (1,026 | ) | (318 | ) | ||
| Accounts payable | 6,010 | (2,576 | ) | |||
| Accrued consignor payable | 17,561 | 6,587 | ||||
| Other accrued and current liabilities | 10,686 | 15,681 | ||||
| Other noncurrent liabilities | 2,762 | 3,376 | ||||
| Net cash used in operating activities | (54,490 | ) | (47,195 | ) | ||
| Cash flow from investing activities: | ||||||
| Purchases of short-term investments | (220,609 | ) | (31,454 | ) | ||
| Proceeds from maturities of short-term investments | 39,281 | 9,624 | ||||
| Proceeds from sale of short-term investments | — | 7,023 | ||||
| Capitalized proprietary software development costs | (9,267 | ) | (5,724 | ) | ||
| Purchases of property and equipment | (24,761 | ) | (13,392 | ) | ||
| Net cash used in investing activities | (215,356 | ) | (33,923 | ) | ||
| Cash flow from financing activities: | ||||||
| Proceeds from issuance of common stock in initial public offering, net of issuance costs | 315,541 | — | ||||
| Proceeds from issuance of redeemable convertible preferred stock, net of issuance costs | 43,492 | 86,640 | ||||
| Proceeds from issuance of convertible preferred stock, net of issuance costs | 26,283 | 9,627 | ||||
| Proceeds from issuance of convertible notes, net of issuance costs | — | 14,273 | ||||
| Proceeds from exercise of stock options and common stock warrants | 2,729 | 614 | ||||
| Payment of deferred offering costs | — | (24 | ) | |||
| Taxes paid related to net share settlement of equity awards | (130 | ) | — | |||
| Issuance cost paid related to conversion of convertible notes | — | (545 | ) | |||
| Repayment of debt | (9,250 | ) | (4,500 | ) | ||
| Net cash provided by financing activities | 378,665 | 106,085 | ||||
| Net increase in cash, cash equivalents and restricted cash | 108,819 | 24,967 | ||||
| Cash, cash equivalents, and restricted cash | ||||||
| Beginning of period | 45,627 | 20,660 | ||||
| End of period | $ | 154,446 | $ | 45,627 | ||
| Supplemental disclosures of cash flow information | ||||||
| Cash paid for interest | $ | 553 | $ | 666 | ||
| Cash paid for income taxes | 102 | 49 |
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, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2019 | 2018 | 2019 | 2018 | |||||||||
| Adjusted EBITDA Reconciliation: | ||||||||||||
| Net loss | $ | (21,374 | ) | $ | (22,179 | ) | $ | (96,746 | ) | $ | (75,765 | ) |
| Depreciation and amortization | 3,870 | 2,801 | 13,408 | 9,290 | ||||||||
| Stock-based compensation | 2,795 | 945 | 7,711 | 2,911 | ||||||||
| Compensation expense related to stock sales by current and former employees | — | — | 819 | 847 | ||||||||
| Abandoned offering costs | 293 | — | 293 | — | ||||||||
| Donation to TRR Foundation | 3,155 | — | 3,155 | — | ||||||||
| Vendor services settlement | — | — | — | 2,000 | ||||||||
| Interest income | (1,675 | ) | (444 | ) | (4,593 | ) | (1,046 | ) | ||||
| Interest expense | 45 | 225 | 616 | 1,152 | ||||||||
| Other (income) expense, net | (5 | ) | 64 | 2,102 | 1,656 | |||||||
| Provision for income taxes | 147 | 62 | 199 | 99 | ||||||||
| Adjusted EBITDA | $ | (12,749 | ) | $ | (18,526 | ) | $ | (73,036 | ) | $ | (58,856 | ) |
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, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2019 | 2018 | 2019 | 2018 | |||||||||
| Net loss | $ | (21,374 | ) | $ | (22,179 | ) | $ | (96,746 | ) | $ | (75,765 | ) |
| Stock-based compensation | 2,795 | 945 | 7,711 | 2,911 | ||||||||
| Compensation expense related to stock sales by current and former employees | — | — | 819 | 847 | ||||||||
| Provision for income taxes | 147 | 62 | 199 | 99 | ||||||||
| Accretion of redeemable convertible preferred stock | — | (3,271 | ) | (3,355 | ) | (8,922 | ) | |||||
| Remeasurement of preferred stock warrant liability | — | 62 | 2,100 | 450 | ||||||||
| Abandoned offering costs | 293 | — | 293 | — | ||||||||
| Donation to TRR Foundation | 3,155 | — | 3,155 | — | ||||||||
| Non-GAAP net loss attributable to common stockholders | $ | (14,984 | ) | $ | (24,381 | ) | $ | (85,824 | ) | $ | (80,380 | ) |
| Weighted-average common shares outstanding used to calculate Non-GAAP net loss attributable to common stockholders per share, basic and diluted | 85,823,352 | 8,496,051 | 47,478,544 | 8,365,344 | ||||||||
| Non-GAAP net loss attributable to common stockholders per share, basic and diluted | $ | (0.17 | ) | $ | (2.87 | ) | $ | (1.81 | ) | $ | (9.61 | ) |
The following table presents a reconciliation of net cash provided by (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, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2019 | 2018 | 2019 | 2018 | |||||||||
| Net cash provided by (used in) operating activities | $ | 3,629 | $ | (7,570 | ) | $ | (54,490 | ) | $ | (47,195 | ) | |
| Purchase of property and equipment and<br><br><br>capitalized proprietary software development<br><br><br>costs | (11,247 | ) | (6,131 | ) | (34,028 | ) | (19,116 | ) | ||||
| Free Cash Flow | $ | (7,618 | ) | $ | (13,701 | ) | $ | (88,518 | ) | $ | (66,311 | ) |
Key Financial and Operating Metrics:
| March 31,<br><br><br>2018 | June 30,<br><br><br>2018 | September 30,<br><br><br>2018 | December 31,<br><br><br>2018 | March 31,<br><br><br>2019 | June 30,<br><br><br>2019 | September 30,<br><br><br>2019 | December 31,<br><br><br>2019 | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands, except AOV and percentages) | ||||||||||||||||||||||||
| GMV | $ | 158,378 | $ | 162,954 | $ | 170,923 | $ | 218,495 | $ | 224,116 | $ | 228,487 | $ | 252,765 | $ | 302,975 | ||||||||
| NMV | $ | 113,347 | $ | 115,916 | $ | 123,550 | $ | 153,775 | $ | 160,538 | $ | 164,782 | $ | 186,617 | $ | 219,508 | ||||||||
| Consignment and Services Revenue | $ | 40,999 | $ | 42,178 | $ | 45,744 | $ | 55,070 | $ | 56,236 | $ | 60,713 | $ | 69,790 | $ | 80,673 | ||||||||
| Direct Revenue | $ | 5,460 | $ | 4,807 | $ | 6,095 | $ | 7,023 | $ | 13,019 | $ | 10,263 | $ | 10,695 | $ | 16,649 | ||||||||
| Number of Orders | 356 | 359 | 409 | 471 | 498 | 505 | 577 | 637 | ||||||||||||||||
| Take Rate | 35.1 | % | 35.5 | % | 36.4 | % | 34.9 | % | 35.3 | % | 36.6 | % | 36.8 | % | 36.2 | % | ||||||||
| Active Buyers | 326 | 352 | 379 | 416 | 455 | 492 | 543 | 582 | ||||||||||||||||
| AOV | $ | 445 | $ | 453 | $ | 418 | $ | 464 | $ | 450 | $ | 453 | $ | 438 | $ | 476 | ||||||||
| % of GMV from Repeat Buyers | 81.5 | % | 82.9 | % | 82.9 | % | 81.6 | % | 82.4 | % | 83.1 | % | 81.8 | % | 82.9 | % |
2019 and 2018 Contribution Profit Per Order:
| 2019 | 2018 | Y/Y Change | |||||
|---|---|---|---|---|---|---|---|
| AOV | $ | 454.7 | $ | 445.6 | 2% | ||
| Revenue | $ | 143.4 | $ | 130.0 | 10% | ||
| Gross Profit | $ | 91.6 | $ | 85.8 | 7% | ||
| Variable Expenses | $ | 71.9 | $ | 77.1 | (7%) | ||
| Contribution Profit | $ | 19.7 | $ | 8.7 | 126% | ||
| Contribution Margin | 13.8 | % | 6.7 | % | 704bps | ||
| Fixed Cost | $ | 52.6 | $ | 45.6 | 15% | ||
| EBITDA | $ | (32.9 | ) | $ | (36.9 | ) | 11% |
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