TheRealReal Inc

Progress with Core Consignment Re-focus

Our strategic shift to re-focus on our core consignment business is delivering significant progress as evidenced in our fourth quarter and full year 2023 results. We refined our growth model with a focus on profitable supply. As part of these efforts, we reduced company-owned inventory (i.e. direct), overhauled our consignor commission structure, and revamped our approach to sales and marketing. For the full year 2023 compared to the full year 2022, we grew consignment revenue by 8% and over that same period, we purposefully decreased direct revenue by half. As a result of these initiatives, during 2023, our gross margin expanded over 1,000 basis points compared to full year 2022. Our gross margin rate was 74.0% in the fourth quarter of 2023.

Looking ahead, our new initiative of drop-ship consignment (previously referred to as virtual consignment) has the potential to unlock incremental supply from trusted partners. With momentum in the core consignment business, our improved margin structure gives us confidence in delivering profitable growth in 2024. We look forward to providing more updates in the coming quarters.