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spk10: Good day, and thank you for standing by. Welcome to the Real Reels Q4 earnings conference call. At this time, all participants 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 1 on your telephone, and you will then hear an automated message advising you your hand is raised. To withdraw your question, press star 1 1 again. Please be advised that today's conference is being recorded. I would like to now hand it over to Caitlin Howe, Head of Investor Relations. Caitlin, you have the floor.
spk09: Thank you, Operator. Joining me today to discuss our results for the period ended December 31st, 2022, are President and Chief Operating Officer, Rati Levesque, and Chief Financial Officer, Robert Julian. Also joining us on the call today is our new Chief Executive Officer of The RealReal, John Corral. John joined the company earlier this month, and we are very excited to have him on board. 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 John Corral, Chief Executive Officer of The RealReal, to introduce himself and provide a brief overview of his background. Then, John will pass it over to Rocky and Robert for an update on the business. And finally, we will go into our Q&A session. John?
spk14: Thanks, Caitlin, and welcome everyone to the call. As Caitlin mentioned, I wanted to take a few moments to introduce myself and provide some further insight into my background. First, let me start by saying I am thrilled to have joined The RealReal. The company's approach, customer breadth, and brand recognition within luxury resale are second to none. I am excited about our digital-first company with growth tailwinds in terms of consumer trends and demographics, along with an authentic ESG story. Perhaps most importantly, the talent that I have encountered so far at The RealReal is inspiring. I see a bright future for the business. As we all know, the company's valuation is under pressure at the moment, and achieving profitability is the company's focus. I have built a 30-year career finding efficiencies and driving profitable growth at e-commerce businesses. Let me give you a few examples. Most recently, I led Canadian Tire's online business through a period of substantial growth. We demonstrated operational excellence through the COVID-19 pandemic amid a massive surge in demand and disruptions to our store operations. We accomplished significant cost reductions while improving service levels for our millions of e-commerce customers. We improved the unit economics of the business with a particular emphasis on fulfillment and digital marketing efficiency. Similarly, during my tenure at Neiman Marcus, we drove considerable growth of our digital platform through new marketing vehicles, site experience improvements, and omni-channel efficiencies. We balanced growth with profitability during this period, focusing on marketing to the right customers, delivering them the right experience, and doing so in the most efficient way possible. This takes lots of testing and quickly scaling small wins to produce significant results. Now, I have no illusions that the RealReal's path to profitability will be achieved overnight or with only minimal effort. Rather, these types of accomplishments take both time and energy. I believe I have the knowledge and experience within a retail tech environment to effectively lead the company through this process. Based on what I've seen in my first month at The RealReal, I am confident we can achieve profitability in the near future. I am energized to work with the team to continue to up-level our consignor experience as we relentlessly pursue our mission of extending the life of luxury. I also look forward to getting to know the investors and equity research analysts who support us. Thank you, and I look forward to speaking again in May. I'll now pass it over to Rati to give you an update on our business trends and key initiatives.
spk08: Thanks, John. Today, we reported solid financial results for the fourth quarter and full year 2022. For the fourth quarter, both revenue and adjusted EBITDA came in better than the midpoint of our guidance. For full year 2022, we improved our adjusted EBITDA loss and adjusted EBITDA margin compared to the prior year. Despite a more challenging business environment, I believe we have made the changes necessary to deliver better results. Over the past six months, Robert and I identified and started to push on different levers in the business to reach profitability. To this end, we have been and continue to be focused on four key initiatives, which we laid out on the last earnings call. First, adjust our seller commission structure. Second, continue to drive efficiencies and reduce costs. Third, further optimize our product pricing to get the best price for our sellers and TRR, and finally, capitalize on potential new revenue streams. The first key initiative was to update our commission structure, which we implemented in November of 2022. The goals were to optimize take rate, limit the consignment of lower value items, and increase the supply of higher value items. We are closely monitoring the impacts of our recent changes, and we are encouraged by the early results. We have seen supply continue to come in, and value is growing faster than units, which is aligned with the intended goal of the changes. Over the next few months, we will analyze the data and identify ways we can continue to improve our take rate profile. The updates to our consigner commissions also included two elements to enhance the consigner experience. First, we added a dynamic tool to our website to allow consigners to calculate their potential earnings, enhancing transparency in the consignment process. Additionally, we began rolling out our new consigner concierge team, which pairs each consigner with a small, dedicated team of consignment customer service experts. Early results indicate that the consigner concierge team is helping us to resolve issues faster, increase our net promoter score, and improve the overall consigner experience. Going forward, we will continue to assess our approach to further optimize commission structure and enhance the customer experience. Regarding the second initiative around improving efficiencies and cutting costs, We recently announced a reduction in our workforce of approximately 7% of the total employee base and a rationalization of our real estate footprint. As part of this action, we announced the closure of two flagship stores, two neighborhood stores, and two luxury consignment offices. We closed underperforming stores, and we will continue to thoughtfully assess our store fleet to optimize our retail footprint. We continue to be optimistic about brick and mortar retail as a channel to efficiently scale supply as well as offer an outstanding brand presentation. However, we will be disciplined in opening and closing stores to efficiently manage our cost base. Another area of efficiency has been in our marketing spend. Our buyer acquisition cost was down 36% in Q4 2022 compared to Q4 of the prior year. While effectively managing our marketing costs, active buyers was up 25% in the fourth quarter. We will continue to identify and drive efficiencies in the business. The third initiative to further optimize our dynamic product pricing is showing good progress. We're using our pricing algorithm to drive higher initial prices. During Q4, approximately one quarter of all of our inventory was covered by our new algorithm. and we anticipate that by year end, 2023, we'll have closer to 80% coverage. As you know, product pricing directly impacts our sellers as well as our profitability. We are moving fast and with urgency, but we believe these key initiatives will take time and their impact will not be meaningful, not be meaningfully reflected in our financial results until the second half of this year. In combination, we are confident these key initiatives will help move the business to profitability. Furthermore, we are excited to get John up to speed and move into the next chapter of the RealReal's evolution. I'll now pass it over to Robert to discuss our fourth quarter and full year 2022 results.
spk02: Thanks, Rachi. We are pleased with the financial progress we made throughout 2022. We're especially encouraged that the changes we made during the year, in particular shrinking the direct business and growing the profitable consignment business, were evident in our fourth quarter results. During the fourth quarter, GMV grew 13% and our total revenue grew 10% compared to the prior year. It's important to note that the revenue growth was a combination of profitable consignment revenue growing 27% and unprofitable direct revenue shrinking 27%. This resulted in a significant improvement in our gross margin in Q4 2022. During the fourth quarter, our gross margin was 60.5%, an increase of 490 basis points compared to the prior year. We expect that our gross margins will continue to improve in 2023. and Q4 gross profit increased $16 million, or 20%, compared to the same quarter in the prior year. For the fourth quarter of 2022, adjusted EBITDA was a loss of $20 million, or minus 13% of revenue, compared to a loss of $27 million, or minus 19% of revenue, in the prior year. We ended the fourth quarter of 2022 with $294 million of cash and cash equivalents on hand. The use of cash in the fourth quarter of 2022 was $7 million. This is a significant change in trend compared to the $102 million use of cash through the first half of 2022. At the end of Q4, we had $43 million of net inventory on hand. a decrease of $20 million compared to the end of the prior quarter and a decrease of $28 million compared to the end of the prior year. We expect that our inventory balance will continue to decline in 2023. Today we are providing first quarter 2023 guidance. Given that John is new in his role, we will not at this time be providing full year 2023 guidance. We anticipate providing full-year financial targets during our next earnings call in May. For the first quarter of 2023, we project GMV to be in the range of $340 million to $360 million. We project Q1 revenue to be in the range of $135 million to $145 million. And we project Q4 adjusted EBITDA be in the range of minus 35 million to minus 31 million dollars as a reminder q1 is seasonally a lower volume quarter for us additionally our q1 guidance includes a sequential increase in bonus accrual and a one-time accrual for the change in our loyalty program taken together these create a flat year-over-year comparison in our adjusted ebitda and sequential decline compared to q4 Turning to longer-term targets, we continue to project that the RealReal will be profitable on an adjusted EBITDA basis in full year 2024. We will give John more time to assess our business before committing to specific financial targets beyond 2024. We look forward to updating you on our progress operationally and financially as we move through 2023. Thanks very much for your attention, and we will now go into our Q&A session.
spk10: Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Andrea, of Anna and Driva. Congrats and welcome, John. Anna, you have the floor.
spk11: Can you hear me? We can hear you, Anna. Oh, great. Great. Thank you so much. I was saying congrats and welcome to John. joining RealReal. We had two questions. I wanted to follow up on the guidance. So first off, sales guide for flat to down, is that primarily weighted by greater exits from direct? I'm assuming the take rate also is lower on all the mixed changes in the business, but just wanted to reconcile that. And then secondly, you mentioned the decline is bigger sequentially. despite less profitable direct business being a smaller percentage of the mix. Can you just talk a bit more of what's driving that? Robert, I think you mentioned the changes to the loyalty program, just was hoping to get more color. Thank you so much.
spk02: Sure thing, Anna. I'll start on that and let the others chime in as well. So in terms of the guidance in the flat revenue year over year, I'm actually very happy that you've asked the question, Anna, because I would like for... folks that think about our business, you know, bifurcated now between the growth of our consignment business and the growth of our direct business. We talked about that in our Q4 results and how it impacted gross margin. But what we're seeing in that result, that overall minus 1% revenue, is actually the consigned business continuing to grow into 20% range, you know, that good profitable business. we're seeing our direct business decline significantly year over year, Q1 of 23 versus Q1 of 22. You may recall that our direct business peaked both in terms of absolute dollars and in terms of its percentage of total revenue in Q1 of 2022. It was 34% of our total revenue in Q1 of 2022. And so, The overall growth rate is really two different stories. The good consigned business, the profitable consigned business growing very healthily, and the unprofitable direct business shrinking. It does have a significant impact on our gross margin, which we project to continue to improve. But it brings me to your second question, which is, If you're growing your very profitable business more and you're shrinking the unprofitable business, why is there such a decline sequentially in adjusted EBITDA? And really the biggest impact is volume. You can see that there's a significant decline at the midpoint of our guidance in overall GMV, roughly $50 million in a decline in revenue. And that by itself would create a $10 million headwind sequentially in our adjusted EBITDA. It is somewhat offset by the actions we've taken on commission. Maybe half of that would be offsetting the pure volume decline, but it does leave a further gap that needs to be explained. And I would say, we mentioned in our opening comments that there is a bonus accrual, an annual bonus accrual, which frankly did not pay or was not accrued in the prior year, which creates a couple million dollar sequential decline. There's also this loyalty program. We changed our loyalty program, and it requires an accrual to be built up on the balance sheet that is front-loaded in the beginning of 2023, which is another couple million-dollar decline. And there actually is somewhat of an increase in marketing expense in Q1 of 2023 as we continue to you know, work on adding additional confiners and customers and so on. And a little bit is hardly worth mentioning, you know, some of this customer service pod activity has a little bit of a sequential increase as well. So that's why you see the sequential decline Q4 to Q1.
spk08: And just to add a little bit of color to that, Q1 is always the soft quarter for us. In retail, you just do see less volume. in comparison to Q4. So, in addition to everything Robert said, the one-time accrual and then a smaller investment, like he mentioned, in the concierge pause, which good news is we are seeing a healthy result in net promoter score because of that. All right.
spk10: Well, thank you so much. That's very helpful. Appreciate it.
spk06: Thank you, Hannah.
spk10: Stand by for our next question. Our next question comes from Mark Aswager with RW Baird.
spk12: Thanks for taking my question. Thank you. I guess just a higher level to start with, you know, we've been hearing more about the aspirational consumer pulling back and curious what you're seeing on your platform and really your updated views on the impact of that trend should it happen. Um, as consumer stress continues to build, you know, do they seek value and then seek out the real, real, or are they going to pull back on these categories altogether? And then, um, for the restructuring was hoping could touch more broadly on the real estate strategy. I guess how important, what is your assessment of how important these physical locations are for driving customer acquisition and supply acquisition? Or are you finding. maybe more efficient ways to drive that moving forward. Thank you.
spk08: Yeah, thanks, Mark. I'll take those, and I'll let the team add as needed. On the consumer side, you know, it all starts at the top of the funnel, similar to the seller. Traffic is quite healthy and strong. Active buyers, we've mentioned, is up 25% year over year. Our repeat rate looks good. I think I mentioned on the last quarter we were seeing a bit of a trade-down effect where people, instead of buying the top-tier luxury brands, was maybe kind of trading down to that next tier, you know, five points less here and there. What I will say is that it's stable, so we're not seeing that go up or down since. It has stabilized since Q3. So overall... pretty healthy on the consumer side, both buyer and seller, and we feel good about that, really playing into the value play that we are, especially on the pricing side as we go into more uncertain times. And then your next question on restructuring and real estate strategy, you know, specifically on, I think you're speaking about the retail stores. A couple things I want to mention there is First of all, we're always optimizing our fleet. It's a dynamic strategy. We looked at some of the locations that weren't maybe performing as well as the others. So where we really focused was around our flagship stores and luxury consignment offices, which were early concepts and less efficient to drive supply. They're quite expensive to run, especially the flagship stores. So I don't want to say never say never, but we don't expect to open more flagships. What we're finding is the most efficient way to gain supply is really our neighborhood stores. So it's in between that luxury consignment office and that flagship, and that's where we're seeing the most value come in and the most volume. But we continue to be opportunistic with these retail locations, and we're getting smarter about our leasing and contracts and our markets that we're targeting.
spk12: Great. Thank you for the detail, and welcome to John.
spk06: Thank you very much.
spk10: Please stand by for our next question. Our next question comes from Blake Anderson with Jeffrey. Hi.
spk07: I appreciate the question. I wanted to ask on the profitability side, you mentioned your four key initiatives. I think you said some of those will take time to become meaningful. I was wondering how much we should expect them to contribute to profitability goals this year, and then how much should they kick in by next year?
spk02: I'll start on that one, Blake. I think that we had mentioned that many of these initiatives, you're really going to see the full impact in the second half of 2023. And I think that you should expect a pretty significant improvement in our adjusted EBITDA performance in the second half of the year. And as we mentioned before, we're not providing full year guidance. I'm not going to give too much of the details of that, so we'll provide full year guidance on our next call. But I do think it's fair for you to expect sequential improvements in adjusted EBITDA every quarter of 2023 and a pretty significant change in trend in the second half of 2023, leading to our confidence that we will be positive adjusted EBITDA in the full year of 2024. And it's really a combination of all the strategic initiatives that we've been talking about. They all have varying degrees of impact on the overall results. But the cumulative effect is what I just mentioned in terms of our expectation for adjusted EBITDA improvements.
spk07: That's super helpful. I wanted to follow up on the authentication process. I know that's a key focus for you. Can you talk about your investment in that part of your business and just how it's resonating with consumers in the market and your progress on scaling those costs? Thanks so much.
spk08: Yeah, so authentication really is core to what we're doing, and we're always looking to find efficiencies there. I think we talked about Investor Day, all the technology that we've invested in. So more than now, 40% of our handbags are authenticated via machine learning. We've invested pretty significantly in how we measure and authenticate jewelry, diamonds specifically, where now we can hire a technician versus a gemologist to authenticate those items. So we'll continue to optimize. You know, we have a roadmap, a short, medium, and long-term roadmap to really find even more efficiencies there to kind of offset the rigor of authenticating.
spk06: Very helpful. Thank you. Please stand by for our next question.
spk10: Our next question comes from Kunal Madhukar with UBS. Kunal, you have the floor.
spk01: Great. Thank you. Thanks for taking the questions. A couple, if I could. So one is on AOV. AOV was down 2% year over year. And you said that that was because of lower selling prices. Can you talk about, you know, how this kind of, the kind of compensation that is happening between Lower AOV versus your lower emphasis on low value items and how we should kind of look at like AOV trends going into the rest of 2023. That is one. And the second is regarding the marketing expenses. So the marketing expenses are definitely lower. CAC you reported was 36% lower. What exactly are you doing on the marketing side that is leading to greater efficiency? And then as you look at 1Q23, Why do you think marketing expenses will be higher in 1Q23 when it's a seasonally weaker quarter? Thank you.
spk08: Yes, thanks Kunal. I'll take the first one there. As far as the AOV being down 2% year over year, and the lower emphasis on low value and how we should consider that. UPT, units per transaction, is flat. Average selling price is slightly down, but that's really driven out of mix more than anything. So the commission changes are not yet impacting those numbers, but it really is just kind of, you know, all a weighing game between AOV, UPT, and ASP and net-net. We expect those numbers to to go in the right direction as far as value of the item. So as we get out of items that are low value, under $100, you're going to see kind of all of those numbers lift in the right direction. UPT is the one that would stay flat, but again, net-net with ASP increasing and AOV increasing. That's how you can expect the numbers to trend in the back half of the year. As far as marketing expenses and the back piece, yes, we did find great efficiencies down 36% year over year. I would say a couple different things. We're getting smarter on our marketing spend. We're really going after our most valuable sellers and targeting them at the right time. We know when they buy a handbag. We're getting smarter about when to know when they are ready to sell that handbag and target them then. There's retail and marketing optimization that's happening between the two channels as well. Retail is pretty significant there. We also just have, you know, when you have a lot of volume and you have really great product, that also helps the marketing spend, especially with the repeat buyers. And then I'd say the one other thing that we are doing and really is helping our flywheel effect is a reconcine. And we have invested, again, in getting people to knowing when they are buying with us and then getting them to reconsign at the right moment.
spk02: Kunal, one thing I'll add, we made some comments, I made some comments about the sequential change in adjusted EBITDA from Q4 2022 to Q1 2023. And I said there was more marketing expense sequentially between those two quarters. I would not make an assumption about what that means of our overall marketing expense in 2023 on a full year basis versus overall marketing expense in 2022, we haven't, as we mentioned before, we haven't given full year guidance yet. So that sequential change may not be indicative of a full year change in trend on the change in marketing spend and aggregate.
spk01: Thank you, Matthew. Thank you, Robert.
spk10: Thank you, Kunal. Please stand by for our next question. Our next question comes from Noah Zatskin of KeyBank Capital Markets. Noah, you have the floor.
spk03: Hi, thanks for taking my question. Just real quick to circle back on the real estate rationalization. How should we think about kind of the short-term potential impact to GMV in the metros that are affected? Anything material that you call out there? And then second, just kind of a housekeeping item from a modeling perspective, how should we be thinking about the 7% kind of reduction in workforce looking into next year?
spk08: Thank you. Yes, I'll take the first one. As far as real estate and stores are concerned, again, we were very careful about which stores and real estate that we decided to shut down. Again, these were stores that were underperforming in comparison to the rest of the past. So we're not assuming any changes in volume or consumer because of these store closures. That is not something that we're worried about at this time. And then your question about the 7% workforce, I'll let Robert take that one.
spk02: Sure, I'll take that. And although we've disclosed financially about the reduction in forces, the cost of the severance and so on, somewhere between 1.7 and 2.5 million. We've given a number in terms of how many folks were impacted by that. The 7% are roughly 230 people. We did not give a figure on a full year savings amount. Again, because we did not provide full year guidance, we didn't want to give a partial full year impact of one of the elements that creates our full year projections. But for modeling purposes, I guess I would say you could make an assumption relative to how much you think a fully loaded person impacts the P&L, and you could apply it to roughly 230 folks, and you would get at least the incremental impact of that one piece of our expected full year results in 2023.
spk06: Very helpful. Thank you.
spk10: Thanks, Tom. And again, as a reminder, if you would like to ask a question, you will need to press star 1-1 on your telephone. Our next question comes from Marvin Fong with BTIG. Marvin, you have the floor.
spk13: Thank you for taking my questions. Good evening. Welcome aboard, John. Just one for me, I guess. Just on take rate, I apologize that this was asked earlier, but You know, marketplace take rate, I think, declined sequentially. And I understand, I think, historically, the fourth quarter is a lower take rate. But you guys also, I think, instituted those changes that could have, you know, should have increased take rate. So I just was wondering if you could just kind of walk us through those dynamics. Did everything kind of just behave as you expected and it fell out to the 35.7% or did something worth calling out occur this past quarter? Thanks.
spk02: You know, one of the things, Marvin, I would mention, we always talk about take rate is effectively the result of our mix of what people are putting in their basket and whether it's high-priced items that have a relatively lower take rate or lower-priced items that have a relatively higher take rate. And I would say while we made a change to our commission structure and take rates in Q4, Not much of that was very much reflected in the Q4 results or the Q4 take rate. It was just too far into the quarter, and there's just too much of a lag to see that. So I would attribute any change sequentially in take rates as just a change in mix between low take rate items and high take rate items that folks put in their baskets. I do think that it's... it's fair to anticipate that there could be an improvement in take rate year over year based on the commission structure changes that we made, which was partially the intent of that exercise.
spk13: And I guess if I could follow up maybe on the topic of mix, you know, because of the pandemic and the savings thereafter, there was a, a lot more consumption of jewelry and handbags, and then it seemed like that was reverting back to apparel. Any update you could give us on sort of how mix is trending among your different categories?
spk08: Yeah, sure, Marvin, I can take that one. As far as categories are concerned, they're all doing actually quite healthy, really driven out of ready-to-wear, but a lot of that, like you mentioned, is just right-sizing to pre-pandemic numbers and has been pretty stable since. So as people are getting back out there, we're seeing a lot more sales in ready-to-wear, and then as well as fine jewelry, specifically driven out of unbranded. The other category that has been quite strong for us is men, so both on the supply and demand side.
spk13: Okay, that's great. Very helpful. Thank you.
spk10: Thank you. Our next question comes from Lauren Schneck with Morgan Stanley. Lauren, you have the floor.
spk04: Hey, this is Nathan Feather for Lauren Schneck. So I'd just like to dig a bit more into the supply trends you're seeing after raising take rates on the lower value items. Did you see a divergence in the supplier behavior between those only consigning lower value items and those consigning across various price points? And then on a different note, just write some comment on what you're seeing in demand trends quarter to date. Thank you.
spk08: Yeah, so on the commission structure and the changes that we made on the supply side, good news is we're seeing value, like I mentioned, come in. It is doing what we wanted it to. One of our objectives was minimizing the lower value items, so specifically items under 100. So we are seeing that happen as a result for sure. And it's still pretty early in the read there, but the rest of the price points mid-tier and especially high value is quite strong. You may see us tweak our commission structure accordingly. We're watching it. We're analyzing it every week. We're making sure all the price tranches are coming in the way we want it to and that we're really optimizing the mix the way we need it to. So, again, it's doing what we want to on low, low value. Items under 100 is how we identify that internally. And then mid and especially high doing quite well. So, we'll continue to monitor that. And I'm sorry, you asked something about the buyer behavior. Oh, is there a divergence? No changes in the buyer behavior except for what I said around the categories, ready to wear being quite strong versus pre-COVID numbers. But no changes. on the buyer side in relation to the supply coming in or the commission changes. And we wouldn't expect to see anything based on the commission change on the supplier side.
spk04: Great. Thank you.
spk10: Our next question comes from Edward Uruma with Piper Sandler. Edward, you have the floor.
spk05: Hey, John, just a bigger picture question. As you looked at this opportunity to join RealReal and you kind of peeled apart the P&L, and I appreciate you're not giving financial guidance here yet, but do you think Real fundamentally has a top-line problem or does it have a cost problem as you think about that path of profitability? Thank you.
spk14: Edward, thank you for the question. The reason I joined, quite frankly, is The real, real define the space. And our job, as you've heard from these guys, Rati and Robert specifically, is it's time to refine it. And what we have to do is make sure that the supply we get can be processed by us in a profitable way. So some of that is we have to get better operationally. We have to spend the time addressing all of those things, getting in that right supply, getting it authenticated in the right way, shipping it more efficiently. But at the same time, you know, we had to adjust the commission rates so that we could find that right mix and balance. The demand side has not been the problem with the RealReal. The challenge is always finding that right supply to grow the business. So, you know, again, I joined here, quite frankly, because of, A, the mission, right? B, the model. It's wonderful having, you know, the right and the permission to work with consignors to display their inventory for sale and get away from the direct buy ourselves. And, you know, I find myself very bullish. I think of it in sort of three ways. You know, number one, how do I make it the best benefit possible for the buyer? How do I make it the best benefit possible for the consigner in finding that win-win? And then how do we do our part? And what I'm most excited about is the team is addressing each of those in a consistent manner. So we're literally tearing apart every aspect of the P&L to say, where do we do our part? How do we look at the commission? What do we do to make sure that we have the right buyer value proposition as well? So there are no easy answers. There are no silver bullets. There are things that we just need to test, learn, increment, and quite frankly, implement a lot of small wins that lead to big results. And I commend Roddy and Robert and all the work they've done the past few months with really getting out there and testing so many different things. Now we're digesting some and ready to make the next steps in terms of profitability. So again, not one lane. It's a multi-lane answer.
spk06: Thank you.
spk10: That concludes our Q&A. I would now like to turn it back over to Roddy Levesque for closing remarks.
spk08: All right. Thank you for joining us today. Before we close the call, I want to take a moment to express our deepest gratitude to the RealReal team. We want to acknowledge the many changes the organization has undergone over the past several months. Each of you have demonstrated impressive flexibility and commitment throughout this process. We are excited about the direction of the business and we appreciate your tireless efforts, energy, and passion. We look forward to partnering with you to keep making a difference in luxury resale and for the planet. To our people at The RealReal, thank you. Finally, I'd like to thank our more than 31 million members who are joining us on our mission to extend the life cycle of luxury goods and make fashion more sustainable.
spk06: Thank you.
spk10: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.
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