The RealReal, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the RealReal's first quarter 2022 earnings results conference call. At this time, all participants' lines are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to hand the conference over to your first speaker today, Caitlin Howe, Vice President of Investor Relations. Thank you. Please go ahead, ma'am.

Thank you, operator. Joining me today to discuss our results for the period ended March 31st, 2022, our founder and CEO, Julie Wainwright, President, Rocky Levesque, and Chief Financial Officer, Robert Julian. Before we begin, I would like to remind you that during today's call, we will make forward-looking statements which involve known and unknown risks and uncertainties. Our actual results may differ materially from those suggested in such statements. You can find more information about these risks, uncertainties, and other factors that could affect our operating results in the company's most recent Form 10-K and subsequent quarterly reports on Form 10-Q. Today's presentation will also include certain non-GAAP financial measures both historical and forward-looking, to which historical financial measures we have provided reconciliations to the most comparable gap measures in our earnings press release. In addition to the earnings press release, we issued a stockholder letter earlier today, both of which are available on our investor relations website. I would now like to turn the call over to Julie Wainwright, Chief Executive Officer of The RealReal, for introductory remarks. And then we will go directly into a question and answer session. Julie?

Thank you, Caitlin. And thank you to everyone joining our earnings call today. Before we get into the quarter's results, I want to take a moment to acknowledge the ongoing humanitarian crisis in Ukraine. Our thoughts are with those impacted by this devastating war. And we wish for a resolution to this conflict and a return to peace in the region. Today, we are pleased to announce better than anticipated financial results for the first quarter of 2022. During the quarter, we delivered solid top-line growth despite COVID-related staff call-outs in our authentication centers early in the first quarter. Since supply drives demand, our return to normal staffing levels resulted in strong demand on our platform due to increased inventory. GMV was driven by fine jewelry and watches, high-value handbags, and strong growth rates in women's apparel and shoes. Of note, the real-world sales in apparel are contrary to e-commerce reported retail trends. Importantly, during the first quarter, we also continued to generate significant operating expense leverage on both fixed and variable costs. After better than anticipated financial results in the first quarter, We are pleased to confirm our full year guidance and provide guidance for the second quarter of 2022. Notably, we continue to project the RealReal will be profitable on an adjusted EBITDA basis in 2024, and we are on track to achieve our Vision 2025 targets. These targets and projections rely on a number of assumptions. Number one, continued top-line growth of at least 30%. Number two, operational excellence with improved variable cost productivity. And number three, laser-focused discipline on fixed costs. We note that the RealReal delivered on all three of these points in our first quarter 2022 results. The near-term risks to the business continue to be inflationary pressures on our transportation costs and attracting and retaining sales and operational talent. For transportation costs, we are taking immediate steps to offset these increases. For sales and ops hiring, we exited the quarter in good shape. However, we are actively recruiting to fill positions as we grow. Looking forward, we continue to see strong demand in our business. As inflation has ramped up and prices have increased in the primary luxury market, we believe the RealReal is a demonstrated value option, offering unique and highly coveted items within the luxury goods space. Therefore, we believe we are positioned for a strong 2022. And with that, we will now go into our Q&A session.