TheRealReal Inc

Previous wording

We have transformed the luxury consignment experience by removing the friction and pain points inherent in the traditional consignment model. For consignors, we offer concierge at-home consultation and pickup as well as virtual consultations via online face-to-face platforms. Consignors may also drop off items at our luxury consignment offices. Our Neighborhood and Flagship Stores provide an alternative location to drop off consigned items and an opportunity to interact with our authentication experts. Consignors may also utilize our complimentary shipping directly to our authentication centers. We leverage our proprietary transactional database and market insights from approximately 40.9 million item sales since our inception to deliver optimal pricing and rapid sell-through. For buyers, we offer highly coveted and exclusive authenticated pre-owned luxury goods at attractive values, as well as a high-quality experience befitting the products we offer. Our online marketplace is powered by our proprietary technology platform, including consumer facing applications and purpose-built software that supports our complex, single-SKU inventory management system.

Current wording

We have transformed the luxury consignment experience by removing the friction and pain points inherent in the traditional consignment model. For consignors, we offer concierge at-home consultation and pickup as well as virtual consultations via online face-to-face platforms. Consignors may also drop off items at our luxury consignment offices. Our retail stores provide an alternative location to drop off consigned items and an opportunity to interact with our authentication experts. Consignors may also utilize our complimentary shipping directly to our authentication centers. We leverage our proprietary transactional database and market insights from approximately 42.7 million item sales since our inception to deliver optimal pricing and rapid sell-through. For buyers, we offer highly coveted and exclusive authenticated pre-owned luxury goods at attractive values, as well as a high-quality experience befitting the products we offer. Our online marketplace is powered by our proprietary technology platform, including consumer facing applications and purpose-built software that supports our complex, single-SKU inventory management system.

Previous wording

•Consignment revenue. When we sell goods through our online marketplace or retail stores on behalf of our consignors, we retain a percentage of the proceeds, which we refer to as our take rate. Take rates vary depending on the total value of goods sold through our online marketplace on behalf of a particular consignor as well as the category and price point of the items. In the three months ended June 30, 2024 and 2023, our overall take rate on consigned goods was 38.5% and 36.7%, respectively. The increase in our take rate was due to the update of our consignor commission structure (effective November 1, 2022). Additionally, we earn revenue from our subscription program, First Look, in which we offer buyers early access to the items we sell in exchange for a monthly fee.

Current wording

•Consignment revenue. When we sell goods through our online marketplace or retail stores on behalf of our consignors, we retain a percentage of the proceeds, which we refer to as our take rate. Take rates vary depending on the total value of goods sold through our online marketplace on behalf of a particular consignor as well as the category and price point of the items. In the three months ended September 30, 2024 and 2023, our overall take rate on consigned goods was 38.6% and 38.1%, respectively. The increase in our take rate was due to the larger sales mix of higher take rate categories such as women's apparel. Additionally, we earn revenue from our subscription program, First Look, in which we offer buyers early access to the items we sell in exchange for a monthly fee.

Previous wording

We generate revenue from orders processed through our website, mobile app and retail stores. Our omni-channel experience enables buyers to purchase anytime and anywhere. We have a global base of more than 37.0 million members as of June 30, 2024. We count as a member any user who has registered an email address on our website or downloaded our mobile app, thereby agreeing to our terms of service.

Current wording

We generate revenue from orders processed through our website, mobile app and retail stores. Our omni-channel experience enables buyers to purchase anytime and anywhere. We have a global base of more than 37.8 million members as of September 30, 2024. We count as a member any user who has registered an email address on our website or downloaded our mobile app, thereby agreeing to our terms of service.

Previous wording

Through June 30, 2024, we have cumulatively paid more than $4.4 billion in commissions to our consignors. Our gross merchandise value (“GMV”) increased by 4% to $440.9 million from $423.3 million in the three months ended June 30, 2024 and 2023, respectively. Our GMV increased by 3% to $892.9 million from $867.7 million in the six months ended June 30, 2024 and 2023, respectively. Additionally, our net merchandise value (“NMV”) increased by 8% to $329.4 million from $303.9 million in the three months ended June 30, 2024 and 2023, respectively, and by 5% to $664.2 million from $631.7 million in the six months ended June 30, 2024 and 2023, respectively. Our total revenue increased by 11% to $144.9 million from $130.9 million in the three months ended June 30, 2024 and 2023, respectively, and increased by 6% to $288.7 million from $272.8 million in the six months ended June 30, 2024 and 2023, respectively. In the three months ended June 30, 2024 and 2023, our gross profit was $107.5 million and $86.2 million, respectively, representing an increase of 25%. In the six months ended June 30, 2024 and 2023, our gross profit was $214.7 million and $176.2 million, respectively, representing an increase of 22%.

Current wording

Through September 30, 2024, we have cumulatively paid more than $4.6 billion in commissions to our consignors. Our gross merchandise value (“GMV”) increased by 6% to $433.1 million from $407.6 million in the three months ended September 30, 2024 and 2023, respectively. Our GMV increased by 4% to $1,325.9 million from $1,275.3 million in the nine months ended September 30, 2024 and 2023, respectively. Additionally, our net merchandise value (“NMV”) increased by 11% to $335.2 million from $302.9 million in the three months ended September 30, 2024 and 2023, respectively, and by 7% to $999.4 million from $934.6 million in the nine months ended September 30, 2024 and 2023, respectively. Our total revenue increased by 11% to $147.8 million from $133.2 million in the three months ended September 30, 2024 and 2023, respectively, and increased by 8% to $436.5 million from $405.9 million in the nine months ended September 30, 2024 and 2023, respectively. In the three months ended September 30, 2024 and 2023, our gross profit was $110.7 million and $94.1 million, respectively, representing an increase of 18%. In the nine months ended September 30, 2024 and 2023, our gross profit was $325.5 million and $270.2 million, respectively, representing an increase of 20%.

Previous wording

Consignor growth and retention. We grow our sales by increasing the supply of luxury goods offered through our consignment online marketplace. We grow our supply both by attracting new consignors and by creating lasting engagement with existing consignors. We generate leads for new consignors principally through our advertising activity. We convert those leads into active consignors through the activities of our sales professionals, who are trained and incentivized to identify and source high-quality, coveted luxury goods from consignors. Our sales professionals form a consultative relationship with consignors and deliver a high-quality, rapid consigning experience. Our existing relationships with consignors allow us to unlock valuable supply across multiple categories, including women’s fashion, men’s fashion, jewelry and watches. Using artificial intelligence to assist our pricing team, we leverage our proprietary transactional database and market insights based on more than 40.9 million item sales since inception to deliver consignors optimal pricing and rapid sell-through.

Current wording

Consignor growth and retention. We grow our sales by increasing the supply of luxury goods offered through our consignment online marketplace. We grow our supply both by attracting new consignors and by creating lasting engagement with existing consignors. We generate leads for new consignors principally through our advertising activity. We convert those leads into active consignors through the activities of our sales professionals, who are trained and incentivized to identify and source high-quality, coveted luxury goods from consignors. Our sales professionals form a consultative relationship with consignors and deliver a high-quality, rapid consigning experience. Our existing relationships with consignors allow us to unlock valuable supply across multiple categories, including women’s fashion, men’s fashion, jewelry and watches. Using artificial intelligence to assist our pricing team, we leverage our proprietary transactional database and market insights based on more than 42.7 million item sales since inception to deliver consignors optimal pricing and rapid sell-through.

Previous wording

Our growth has been driven in significant part by repeat sales by existing consignors concurrent with growth of our consignor base. The percentage of GMV from repeat consignors in the three months ended June 30, 2024 was 85% as compared to 84% for the three months ended June 30, 2023.

Current wording

Our growth has been driven in significant part by repeat sales by existing consignors concurrent with growth of our consignor base. The percentage of GMV from repeat consignors in the three months ended September 30, 2024 was 85% as compared to 83% for the three months ended September 30, 2023.

Previous wording

We believe there is substantial opportunity to grow our business by having buyers also become consignors and vice versa. As of June 30, 2024, 15% of our buyers during the last twelve months had become consignors at any point in that time, and 48% of our consignors had become buyers during the last twelve months had become buyers at any point in that time. We believe our updated method of measuring buyers who have become consignors and vice versa more accurately reflects the flywheel that enhances the network effect of our online marketplace. If we fail to continue to attract and retain our buyer base to our online marketplace, our operating results would be adversely affected.

Current wording

We believe there is substantial opportunity to grow our business by having buyers also become consignors and vice versa. As of September 30, 2024, 15% of our buyers during the last twelve months had become consignors at any point in that time, and 48% of our consignors during the last twelve months had become buyers at any point in that time. We believe our updated method of measuring buyers who have become consignors and vice versa more accurately reflects the flywheel that enhances the network effect of our online marketplace. If we fail to continue to attract and retain our buyer base to our online marketplace, our operating results would be adversely affected.

Previous wording

The key operating and financial metrics that we use to assess the performance of our business are set forth below for the three and six months ended June 30, 2024 and 2023.

Current wording

The key operating and financial metrics that we use to assess the performance of our business are set forth below for the three and nine months ended September 30, 2024 and 2023.

Previous wording

(1) During the three months ended June 30, 2024, we updated active buyers to represent buyers who purchased goods through our online marketplace during the period presented. Active buyers for the six months ended June 30, 2024 were buyers who purchased goods during the 6 months ended. Previously we had measured buyers who purchased goods during the 12 months ended on the last day of the period presented.

Current wording

(1) During the three months ended June 30, 2024, we updated active buyers to represent buyers who purchased goods through our online marketplace during the period presented. Active buyers for the nine months ended September 30, 2024 were buyers who purchased goods during the 9 months ended. Previously we had measured buyers who purchased goods during the 12 months ended on the last day of the period presented.

Previous wording

Active buyers include buyers who purchased goods through our online marketplace during the period presented, irrespective of returns or cancellations. We believe this metric reflects scale, brand awareness, buyer acquisition and engagement.

Current wording

Active buyers include buyers who purchased goods through our online marketplace during the periods presented, irrespective of returns or cancellations. We believe this metric reflects scale, brand awareness, buyer acquisition and engagement.

Previous wording

Adjusted EBITDA means GAAP net loss before interest income, interest expense, other (income) expense net, provision for income taxes, and depreciation and amortization, further adjusted to exclude stock-based compensation, CEO transition costs, payroll taxes on employee stock transactions, legal settlement charges, restructuring charges, gain on extinguishment of debt, change in fair value of warrant liability and certain one-time expenses. Adjusted EBITDA provides a basis for comparison of our business operations between current, past and future periods by excluding items that we believe are not indicative of our core operating performance. Adjusted EBITDA is a non-GAAP measure. 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.

Current wording

Adjusted EBITDA means GAAP net loss before interest income, interest expense, other (income) expense net, provision for income taxes, and depreciation and amortization, further adjusted to exclude stock-based compensation, payroll taxes on employee stock transactions, legal settlement charges, restructuring charges, gain on extinguishment of debt, change in fair value of warrant liability and certain one-time expenses. Adjusted EBITDA provides a basis for comparison of our business operations between current, past and future periods by excluding items that we believe are not indicative of our core operating performance. Adjusted EBITDA is a non-GAAP measure. 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.

Previous wording

(1) The restructuring charges for the three and six months ended June 30, 2023 consist of impairment of right-of-use assets and property and equipment, employee severance charges, and other charges, including legal and transportation expenses. See "Note 10 - Restructuring" in the notes to the unaudited financial statements for disclosure regarding the restructuring expenses incurred.

Current wording

(1) Restructuring charges for the three and nine months ended September 30, 2023 consists of impairment of right-of-use assets and property and equipment, employee severance charges, gain on lease terminations, and other charges, including legal and transportation expenses. See "Note 10 - Restructuring" in the notes to the unaudited financial statements for disclosure regarding the restructuring expenses incurred.

Previous wording

(2) The gain on extinguishment of debt for the six months ended June 30, 2024 reflects the difference between the carrying value of the Exchanged Notes and the fair value of the 2029 Notes.

Current wording

(2) The gain on extinguishment of debt for the nine months ended September 30, 2024 reflects the difference between the carrying value of the Exchanged Notes and the fair value of the 2029 Notes.

Previous wording

(3) The change in fair value of warrant liability for the three and six months ended June 30, 2024 reflects the remeasurement of the warrants issued by the Company in connection with the Note Exchange in February 2024.

Current wording

(3) The change in fair value of warrant liability for the three and nine months ended September 30, 2024 reflects the remeasurement of the warrants issued by the Company in connection with the Note Exchange in February 2024.

Previous wording

(4) One time expenses for the three and six months ended June 30, 2024 reflects estimated losses related to the fire at one of our New Jersey authentication centers, net of estimated insurance recoveries. See "Note 11 - Commitments and Contingencies" in the notes to the unaudited financial statements for disclosure regarding the event. One time expenses for the six months ended June 30, 2023 consists of retention bonuses for certain executives incurred in connection with our founder's resignation on June 6, 2022.

Current wording

(4) One time expenses for the three and nine months ended September 30, 2024 consists of vendor services settlement and estimated losses, net of estimated insurance recoveries related to the fire at one of our New Jersey authentication centers. See "Note 11 - Commitments and Contingencies" in the notes to the unaudited financial statements for disclosure regarding the event. One time expenses for the nine months ended September 30, 2023 consists of retention bonuses for certain executives incurred in connection with our founder's resignation on June 6, 2022.

Previous wording

Consignment revenue increased by $16.1 million, or 17% in the three months ended June 30, 2024 compared to the three months ended June 30, 2023. The increase in revenue was driven primarily by an increase in consignment GMV and improvement in our take rate during the three months ended June 30, 2024 compared to the three months ended June 30, 2023.

Current wording

Consignment revenue increased by $14.1 million, or 14% in the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The increase in revenue was driven primarily by an increase in consignment GMV and improvement in our take rate during the three months ended September 30, 2024 compared to the three months ended September 30, 2023.

Previous wording

Overall GMV increased by 4% during the three months ended June 30, 2024. Our take rate increased to 38.5% from 36.7% during the three months ended June 30, 2024 compared to the three months ended June 30, 2023 due to the update of our commission structure which went into effect on November 1, 2022. Additionally, returns and cancellations as a percentage of GMV improved for the three months ended June 30, 2024 to 25.3% from 28.2% for the three months ended June 30, 2023.

Current wording

Overall GMV increased by 6% during the three months ended September 30, 2024. Our take rate increased to 38.6% from 38.1% during the three months ended September 30, 2024 compared to the three months ended September 30, 2023 due to the larger sales mix of higher take rate categories such as women's apparel. Additionally, returns and cancellations as a percentage of GMV improved for the three months ended September 30, 2024 to 22.6% from 25.7% for the three months ended September 30, 2023.

Previous wording

Direct revenue decreased by $4.2 million, or 20%, in the three months ended June 30, 2024 compared to the three months ended June 30, 2023. The decrease was primarily driven by our planned actions to minimize vendor-purchased company-owned inventory as the margin profile of our direct revenue is lower than consignment revenue. We recognize direct revenue on a gross basis upon shipment of the purchased good to the buyer. Direct revenue as a percentage of total revenue may vary from period to period primarily based on the growth of consignment revenue.

Current wording

Direct revenue decreased by $1.7 million, or 10%, in the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The decrease was primarily driven by our planned actions to minimize vendor-purchased company-owned inventory as the margin profile of our direct revenue is lower than consignment revenue. We recognize direct revenue on a gross basis upon shipment of the purchased good to the buyer. Direct revenue as a percentage of total revenue may vary from period to period primarily based on the growth of consignment revenue.

Previous wording

Shipping services revenue increased by $2.1 million, or 16%, in the three months ended June 30, 2024 compared to the three months ended June 30, 2023 primarily due to the increase in the number of orders in the three months ended June 30, 2024 and due to an increase in the standard shipping fee per order.

Current wording

Shipping services revenue increased by $2.3 million, or 17%, in the three months ended September 30, 2024 compared to the three months ended September 30, 2023 primarily due to the increase in the number of orders in the three months ended September 30, 2024, and due to an increase in the standard shipping fee per order.

Previous wording

Cost of consignment revenue decreased by $1.5 million, or 10%, in the three months ended June 30, 2024 compared to the three months ended June 30, 2023, driven by efficiencies in our cost leverage.

Current wording

Cost of consignment revenue decreased by $0.3 million, or 2%, in the three months ended September 30, 2024 compared to the three months ended September 30, 2023, driven by efficiencies in our cost leverage.

Previous wording

Consignment revenue gross margin increased by 346 basis points in the three months ended June 30, 2024 compared to the three months ended June 30, 2023 primarily driven by the improvement in take rate and the resulting increase in consignment revenue.

Current wording

Consignment revenue gross margin increased by 180 basis points in the three months ended September 30, 2024 compared to the three months ended September 30, 2023 primarily driven by the improvement in take rate and the resulting increase in consignment revenue.

Previous wording

Cost of direct revenue decreased by $6.7 million, or 33%, in the three months ended June 30, 2024 compared to the three months ended June 30, 2023. The decrease was primarily attributable to the decrease in direct revenue compared to the prior year.

Current wording

Cost of direct revenue decreased by $2.8 million, or 18%, in the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The decrease was primarily attributable to the decrease in direct revenue compared to the prior year.

Previous wording

Direct revenue gross margin increased by 1,561 basis points for the three months ended June 30, 2024, primarily driven by strategic liquidation of company owned inventory sold at discounted prices, which resulted in sell through of inventory that was previously reserved. The margin profile of our direct revenue is lower than consignment revenue.

Current wording

Direct revenue gross margin increased by 765 basis points for the three months ended September 30, 2024, primarily driven by strategic liquidation of company owned inventory sold at discounted prices, which resulted in sell through of inventory that was previously reserved. The margin profile of our direct revenue is lower than consignment revenue.

Previous wording

Cost of shipping services revenue increased by $0.9 million, or 10%, in the three months ended June 30, 2024 compared to the three months ended June 30, 2023, primarily due to a 4% increase in the number of orders and increased cost per shipment.

Current wording

Cost of shipping services revenue increased by $1.0 million, or 10%, in the three months ended September 30, 2024 compared to the three months ended September 30, 2023, primarily due to a 4% increase in the number of orders and increased cost per shipment.

Previous wording

Our total gross margin increased by 829 basis points in the three months ended June 30, 2024 compared to the three months ended June 30, 2023 due to the increase in consignment revenue and decrease in direct revenue as a percentage of total revenue and the improvement in take rate. Gross margin may vary from period to period.

Current wording

Our total gross margin increased by 430 basis points in the three months ended September 30, 2024 compared to the three months ended September 30, 2023, due to the increase in consignment revenue and decrease in direct revenue as a percentage of total revenue and the improvement in take rate. Gross margin may vary from period to period.

Previous wording

Selling, general and administrative expense remained relatively flat in the six months ended June 30, 2024 compared to the six months ended June 30, 2023.

Current wording

Marketing expense remained relatively flat in the three months ended September 30, 2024 compared to the three months ended September 30, 2023.

Previous wording

As a percent of revenue, marketing expense decreased to 9% from 12% in the three months ended June 30, 2024 and 2023. These expenses may vary from period to period as a percentage of revenue, depending primarily upon our marketing investments. We expect these expenses to decrease as a percentage of revenue over the longer term.

Current wording

As a percent of revenue, marketing expense decreased to 8% from 9% in the three months ended September 30, 2024 and 2023. These expenses may vary from period to period as a percentage of revenue, depending primarily upon our marketing investments. We expect these expenses to decrease as a percentage of revenue over the longer term.

Previous wording

Operations and technology expense decreased by $5.2 million or 4% in the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The decrease was primarily due to lower employee compensation related expenses due to a decrease in headcount related to the savings plan implemented during 2023.

Current wording

Operations and technology expense increased by $5.2 million, or 8%, in the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The increase was primarily due to increased employee compensation related expenses due to an increase in headcount compared to the prior period.

Previous wording

As a percent of revenue, operations and technology expense decreased to 45% from 50% in the three months ended June 30, 2024 and 2023, respectively. These expenses may vary from period to period as a percentage of revenue, depending primarily upon when we choose to make more significant investments. We expect these expenses to decrease as a percentage of revenue over the longer term.

Current wording

As a percent of revenue, operations and technology expense decreased to 45% from 46% in the three months ended September 30, 2024 and 2023, respectively. These expenses may vary from period to period as a percentage of revenue, depending primarily upon when we choose to make more significant investments. We expect these expenses to decrease as a percentage of revenue over the longer term.

Previous wording

Selling, general and administrative expense increased by $2.8 million, or 6%, in the three months ended June 30, 2024 compared to the three months ended June 30, 2023. The increase was primarily due to increased employee compensation related expenses due to an increase in headcount compared to the prior period.

Current wording

Selling, general and administrative expense increased by $2.7 million, or 6%, in the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The increase was primarily due to increased employee compensation related expenses due to an increase in headcount compared to the prior period.

Previous wording

We did not incur any restructuring charges during the three months ended June 30, 2024, compared to $1.9 million in the three months ended June 30, 2023. We incurred charges to reduce our real estate presence and operating expenses through the closure of certain retail and office locations and workforce reduction during the three months ended June 30, 2023, which were substantially completed during 2023.

Current wording

We did not incur any restructuring charges during the three months ended September 30, 2024, compared to $(0.9) million in the three months ended September 30, 2023. The decrease was primarily due to a gain recognized on various lease terminations during the three months ended September 30, 2023.

Previous wording

The fair value of warrant liability decreased by $5.6 million, or 100% for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. The change was due to the unrealized gain on the change in fair value of the warrant liability from March 31, 2024 to June 30, 2024 (See Note 6 — Non-convertible Notes, Net). The Company issued warrants to acquire an aggregate of up to 7,894,737 shares (subject to adjustment in accordance with the terms of the warrants) of the Company's common stock as part of the Note Exchange in February 2024. The cumulative fair value adjustment since inception is $10.0 million.

Current wording

The fair value of warrant liability decreased by $0.7 million, or 100% for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The change was due to the unrealized gain on the change in fair value of the warrant liability from June 30, 2024 to September 30, 2024 (See Note 6 — Non-convertible Notes, Net). The Company issued warrants to acquire an aggregate of up to 7,894,737 shares (subject to adjustment in accordance with the terms of the warrants) of the Company's common stock as part of the Note Exchange in February 2024. The cumulative fair value adjustment since the issuance date is $9.2 million.

Previous wording

Interest income decreased by $0.1 million, or 6%, for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023.

Current wording

Interest income decreased by $0.3 million, or 14%, for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023 due to lower average cash balances.

Previous wording

Interest expense increased by $3.1 million, or over 100% for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 due to the contractual interest expense related to the 2029 Notes issued in February 2024.

Current wording

Interest expense increased by $3.3 million, or over 100% for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 due to the contractual interest expense related to the 2029 Notes issued in February 2024.

Previous wording

Consignment revenue increased by $29.1 million, or 15%, in the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The increase in revenue was driven primarily by an increase in consignment GMV, a 4% increase in our AOV and 140 basis point improvement in our take rate during the six months ended June 30, 2024 compared to the six months ended June 30, 2023. Overall GMV increased by 3% during the six months ended June 30, 2024. The increase in GMV is driven by an increase in consignment GMV, slightly offset by a decrease in direct GMV.

Current wording

Consignment revenue increased by $43.2 million, or 14%, in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The increase in revenue was driven primarily by an increase in consignment GMV, a 3% increase in our AOV and 110 basis point improvement in our take rate during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. Overall GMV increased by 4% during the nine months ended September 30, 2024. The increase in GMV is driven by an increase in consignment GMV, slightly offset by a decrease in direct GMV.

Previous wording

Additionally, returns and cancellations as a percentage of GMV improved for the six months ended June 30, 2024 to 25.6% from 27.2% for the six months ended June 30, 2023. Our take rate increased to 38.4% from 37.0% during the six months ended June 30, 2024 compared to the same period last year due to the update of our commission structure which went into effect on November 1, 2022.

Current wording

Additionally, returns and cancellations as a percentage of GMV improved for the nine months ended September 30, 2024 to 24.6% from 26.7% for the nine months ended September 30, 2023. Our take rate increased to 38.5% from 37.4% during the nine months ended September 30, 2024 compared to the same period last year due to the update of our commission structure which went into effect on November 1, 2022.

Previous wording

Direct revenue decreased by $16.4 million, or 36%, in the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The decrease was primarily driven by our planned actions to minimize vendor-purchased company-owned inventory as the margin profile of our direct revenue is lower than consignment revenue. We recognize direct revenue on a gross basis upon shipment of the purchased good to the buyer. Direct revenue as a percentage of total revenue may vary from period to period primarily based on the growth of consignment revenue.

Current wording

Direct revenue decreased by $18.1 million, or 29%, in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The decrease was primarily driven by our planned actions to minimize vendor-purchased company-owned inventory as the margin profile of our direct revenue is lower than consignment revenue. We recognize direct revenue on a gross basis upon shipment of the purchased good to the buyer. Direct revenue as a percentage of total revenue may vary from period to period primarily based on the growth of consignment revenue.

Previous wording

Cost of consignment revenue decreased by $3.7 million, or 12%, in the six months ended June 30, 2024 compared to the six months ended June 30, 2023, driven by a decrease in overhead costs, including packaging and employee compensation related expenses.

Current wording

Cost of consignment revenue decreased by $4.0 million, or 9%, in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, driven by a decrease in overhead costs, including packaging, employee compensation related expenses, and website hosting service fees.

Previous wording

Consignment revenue gross margin increased by 356 basis points in the six months ended June 30, 2024 compared to the six months ended June 30, 2023, primarily driven by the improvement in take rate and the resulting increase in consignment revenue.

Current wording

Consignment revenue gross margin increased by 296 basis points in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, driven by the improvement in take rate and the reduction in overhead costs.

Previous wording

Cost of direct revenue decreased by $19.4 million, or 43%, in the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The decrease was primarily attributable to the decrease in direct revenue compared to the prior year.

Current wording

Cost of direct revenue decreased by $22.2 million, or 36%, in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The decrease was primarily attributable to the decrease in direct revenue compared to the prior year.