The RealReal, Inc.

Good afternoon and welcome to the RealReal Second Quarter 2022 Earnings Results Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw from the queue, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Caitlin Howe, VP of Investor Relations of RealReal. Please go ahead.

Thank you, Operator. Joining me today to discuss our results for the period ended June 30th, 2022, are Co-Interim CEO and President, Rathi Lavak, and Co-Interim CEO 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, for which historical financial measures we have provided reconciliations to the most comparable GAAP 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 Rati Levesque, co-interim CEO and President of The RealReal for introductory remarks.

Thanks, Caitlin, and thank you everyone for joining our earnings call today. Robert and I will provide some opening remarks and commentary on the business, and then we will go into our Q&A session. During the second quarter, we announced that our founder and CEO, Julie Wainwright, will be moving on at the end of this year. We thank Julie for her incredible vision, tireless efforts, and strong leadership over the past 11 years. Robert and I are energized in our new roles as co-interim CEOs, and we are enthusiastic about the direction of the business. During the second quarter of 2022, we delivered solid financial results. While top line GMV growth was slightly lower than expected, we did meet our revenue projections and we exceeded our guidance on adjusted EBITDA. While our Q2 GMV growth rate was 30%, we did experience some downward pressure due to a sales labor shortfall and a change in product mix. First, from the supply side, we entered the quarter needing more salespeople, and this hiring challenge was exasperated by a higher-than-normal attrition in our sales force. We proactively implemented multiple strategies to address the labor shortfall, including hiring and backfilling sales roles, selectively increasing compensation in key markets, and utilizing technology for consignors to self-serve. We believe these actions, combined with attrition returning to normal levels at the end of Q2, are meaningful steps in addressing the underlying labor issue. Additionally, our consignment leads and opportunities continue to remain robust. Taken together, we believe we are well positioned for a significant step up in supply for the fourth quarter. The second pressure on GMV and Q2 came from the demand side. Starting in the first quarter and accelerating into the second quarter, there was a shift in consumer demand. The shift was from higher priced items like fine jewelry and watches to lower priced items like ready to wear and shoes. While high value continues to perform, the second quarter mix more closely mirrored our pre-COVID product mix as consumers go back to the office, travel more, and attend events. Therefore, the higher proportion of GMB coming from apparel and shoes resulted in improved take rates year over year but also a reduction in average order value. While we expected demand to normalize across categories at some point, it occurred more quickly than anticipated. Overall, we are optimistic about the direction of the business. We believe our demand remains strong as both new and repeat customers continue to grow. Furthermore, we believe our flywheel has strong momentum and is helping us to reduce our buyer acquisition costs. Finally, we are taking a close look at expenses to more effectively manage our costs, which Robert will explain further. I'll now pass it over to him for a brief financial update.