The RealReal Inc.

08/07/2025 | Press release | Distributed by Public on 08/07/2025 14:19

Quarterly Report for Quarter Ending June 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion of our financial condition and results of operations should be read together with our condensed financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and our audited financial statements and related notes and our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 21, 2025. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. See the discussion under "Note Regarding Forward-Looking Statements" elsewhere in this Quarterly Report on Form 10-Q for more information. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and particularly in the section titled "Risk Factors" and elsewhere in this Quarterly Report on Form 10-Q. Our historical results are not necessarily indicative of the results that may be expected for any period in the future, and our interim results are not necessarily indicative of the results we expect for the full calendar year or any other period.
Overview
We are the world's largest online marketplace for authenticated resale luxury goods. We are revolutionizing luxury resale by providing an end-to-end service that unlocks supply from consignors and creates a trusted, curated online marketplace for buyers globally. Since our inception in 2011, we have cultivated a loyal and engaged consignor and buyer base through our investments in our technology platform, logistics infrastructure and people. We offer a wide selection of authenticated, primarily pre-owned luxury goods on our online marketplace bearing the brands of thousands of luxury and premium designers. We offer products across multiple categories including women's and men's fashion, fine jewelry and watches. We have built a vibrant online marketplace that we believe expands the overall luxury market, promotes the recirculation of luxury goods and contributes to a more sustainable world.
We have transformed the luxury consignment experience by removing the friction and pain points inherent in the traditional consignment model. Our growth playbook centers on a scalable supply engine, and helps us forge enduring relationships with our consignors. We offer concierge at-home consultation and pickup as well as virtual consultations. 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 over 40 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.
The substantial majority of our revenue is generated by consignment sales. We also generate revenue from other services and direct sales.
•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, 2025 and 2024, our overall take rate on consigned goods was 37.9% and 38.5%, respectively. The decrease in our take rate was due to sales mix into higher value items. 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.
•Direct revenue.When we accept out of policy returns from buyers, or when we make direct purchases from businesses and consignors, we take ownership of goods and retain 100% of the proceeds when the goods subsequently sell through our online marketplace or retail stores.
•Shipping services revenue. When we deliver purchased items to our buyers, we charge shipping fees to buyers for the outbound shipping and handling services. We also generate shipping services revenue from the shipping fees for consigned products returned by our buyers to us within policy. Shipping services revenue excludes the effect of buyer incentives and sales tax.
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 40.4 million members as of June 30, 2025. A member is any user who has registered an email address on our website or downloaded our mobile app, thereby agreeing to our terms of service.
Factors Affecting Our Performance
To analyze our business performance, determine financial forecasts and help develop long-term strategic plans, we focus on the factors described below. While each of these factors presents significant opportunity for our business, collectively, they also pose important challenges that we must successfully address in order to sustain our growth, improve our operating results and achieve and maintain our profitability.
Consignors and Buyers
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 through our advertising activity and through the activity of our sales team. Our sales professionals, who are trained and incentivized to identify and source high-quality, coveted luxury goods, convert those leads into active consignors. Our sales professionals form a consultative relationship with consignors and deliver a high-quality, full-service 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.
Our growth has been driven in significant part by repeat sales by existing consignors concurrent with growth of our consignor base. In the three months ended June 30, 2025 and 2024, repeat consignors accounted for over 80% of GMV.
Buyer growth and retention. We grow our business by attracting and retaining buyers. We attract and retain buyers by offering highly coveted, authenticated, pre-owned luxury goods at attractive values and delivering a high-quality, luxury experience. We measure our success in attracting and retaining buyers by tracking buyer satisfaction and purchasing activity over time. If we fail to continue to attract and retain our buyer base to our online marketplace, our operating results could be adversely affected.
We believe there is substantial opportunity to grow our business by having buyers also become consignors and vice versa. As of June 30, 2025, 15% of our buyers during the last twelve months also consigned items, and 49% of our consignors during the past twelve months also made purchases. We believe this approach effectively captures the flywheel effect that strengthens the network dynamics of our online marketplace. Our GMV from buyers who are also consignors has increased over time due to the effectiveness of our flywheel. If we fail to continue to attract and retain our buyer base to our online marketplace, our operating results would be adversely affected.
Scaling operations and technology. To support the future growth of our business, we continue to invest in physical infrastructure, technology and talent. We principally conduct our intake, authentication, merchandising and fulfillment operations in our leased authentication centers located in Arizona and New Jersey comprising an aggregate of approximately 1.4 million square feet of space. We also operate retail stores in several geographies. In addition to scaling our physical infrastructure, growing our single-SKU business operations requires that we attract, train and retain highly-skilled personnel for purposes of authentication, copywriting, merchandising, pricing and fulfilling orders. We have invested substantially in technology to automate our operations and support growth. We have continued to elevate our authentication operations through the combination of technology, our rich proprietary data, and artificial intelligence capabilities to support efficiency and quality. We continue to strategically invest in technology, as innovation positions us to scale and support growth into the future.
Seasonality. Historically, we have observed trends in seasonality of supply and demand in our business. Specifically, our supply increases in the third and fourth quarters, and our demand increases in the fourth quarter. As a result of this seasonality, we typically see stronger AOV and more rapid sell-through in the fourth quarter.
Key Financial and Operating Metrics
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, 2025 and 2024.
Three Months Ended June 30, Six Months Ended June 30,
2025 2024 2025 2024
(In thousands, except AOV and percentages)
GMV $ 504,105 $ 440,914 $ 994,510 $ 892,855
NMV $ 379,377 $ 329,422 $ 750,134 $ 664,237
Consignment revenue $ 128,620 $ 112,714 $ 252,434 $ 228,362
Direct revenue $ 20,495 $ 16,724 $ 40,949 $ 29,433
Shipping services revenue $ 16,073 $ 15,496 $ 31,838 $ 30,939
Number of orders 868 820 1,737 1,660
Take rate 37.9 % 38.5 % 38.2 % 38.4 %
Active buyers
1,001 942 1,001 942
AOV $ 581 $ 538 $ 573 $ 538
GMV
GMV represents the total amount paid for goods across our online marketplace in a given period. We do not reduce GMV to reflect product returns or order cancellations. GMV includes amounts paid for both consigned goods and our inventory net of platform-wide discounts and excludes the effect of buyer incentives, shipping fees and sales tax. Platform-wide discounts are made available to all buyers on the online marketplace, and impact commissions paid to consignors. Buyer incentives apply to specific buyers and consist of coupons or promotions that offer credits in connection with purchases on our platform. In addition to revenue, we believe this is an important measure of the scale and growth of our online marketplace and a key indicator of the health of our consignor ecosystem. We monitor trends in GMV to inform budgeting and operational decisions to support and promote growth in our business and to monitor our success in adapting our business to meet the needs of our consignors and buyers. While GMV is the primary driver of our revenue, it is not a proxy for revenue or revenue growth (see Note 2-Summary of Significant Accounting Policies-Revenue Recognition-Consignment Revenue).
NMV
NMV represents the value of sales from both consigned goods and our inventory net of platform-wide discounts less product returns and order cancellations and excludes the effect of buyer incentives, shipping fees and sales tax. We believe NMV is a supplemental measure of the scale and growth of our online marketplace. Like GMV, NMV is not a proxy for revenue or revenue growth.
Consignment Revenue
Consignment revenue is generated from the sale of pre-owned luxury goods through our online marketplace and retail stores on behalf of consignors. We retain a portion of the proceeds received, which we refer to as our take rate. We recognize consignment revenue, net of allowances for product returns, order cancellations, buyer incentives and adjustments. We also generate revenue from subscription fees paid by buyers for early access to products.
Direct Revenue
Direct revenue is generated from the sales of company-owned inventory. We recognize direct revenue upon shipment of the goods sold, based on the gross purchase price net of allowances for product returns, buyer incentives and adjustments.
Shipping Services Revenue
Shipping services revenue is generated from shipping fees we charge to buyers for outbound shipping and handling activities related to delivering purchased items to our buyers. We also generate shipping services revenue from the shipping fees for consigned products returned by our buyers to us within policy. We recognize shipping services revenue over time as the shipping activity occurs. Shipping services revenue excludes the effect of buyer incentives and sales tax.
Number of Orders
Number of orders means the total number of orders placed across our online marketplace and retail stores in a given period. We do not reduce number of orders to reflect product returns or order cancellations.
Take Rate
Take rate is a key driver of our revenue and provides comparability to other marketplaces. The numerator used to calculate our take rate is equal to net consignment sales and the denominator is equal to the numerator plus consignor commissions. Net consignment sales represent the value of sales from consigned goods net of platform-wide discounts less consignor commission, product returns and order cancellations. We exclude direct revenue from our calculation of take rate because direct revenue represents the sale of inventory owned by us, which costs are included in cost of direct revenue. Our take rate reflects the high level of service that we provide to our consignors across multiple touch points and the consistently high velocity of sales for their goods. We continue to assess our take rate structure and may implement further changes in the future to, among other things, optimize take rate, limit consignment of lower value items, and increase supply of higher value items.
Our take rate structure is primarily based on the category and the price point of the sold items. For example, under the current take rate structure, consignors can earn 20% commission on all sold items under $100, and up to 90% commission on watches sold for over $7,500. We launched a pricing tool for our consignors that provides detail on commission rates for specific categories and other aspects of the take rate structure. Consignors are eligible to receive additional commissions based on total net sales under an added tiered commission structure.Management assesses changes in take rates by monitoring the volume of GMV and take rate across each discrete commission grouping, encompassing commission tiers and exceptions.
Active Buyers
Active buyers include buyers who purchased goods through our online marketplace during the 12 months ended on the last day of the period presented, irrespective of returns or cancellations. We believe this metric reflects scale, brand awareness, buyer acquisition and engagement.
Average Order Value
Average order value ("AOV") means the average value of all orders placed across our online marketplace and retail stores, excluding the effect of buyer incentives, shipping fees and sales taxes. Our focus on luxury goods across multiple categories drives a consistently strong AOV. Our AOV reflects both the average price of items sold as well as the number of items per order. Our AOV is a key driver of our operating leverage.
Non-GAAP Financial Measures
Adjusted EBITDA
Adjusted EBITDA is a key performance measure that our management uses to assess our operating performance. Because Adjusted EBITDA facilitates internal comparisons of our historical operating performance on a more consistent basis, we use this measure as an overall assessment of our performance, to evaluate the effectiveness of our business strategies and for business planning purposes and for incentive and compensation purposes. Adjusted EBITDA may not be comparable to similarly titled metrics of other companies.
Adjusted EBITDA means GAAP net income (loss) before interest income, interest expense, 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 income (loss) or any other measure of financial performance calculated and presented in accordance with GAAP.
In particular, the exclusion of certain expenses in calculating Adjusted EBITDA facilitates operating performance comparisons on a period-to-period basis and, in the case of exclusion of the impact of stock-based compensation and the related employer payroll tax expense on employee stock transactions, excludes an item that we do not consider to be indicative of our core operating performance. Investors should, however, understand that stock-based compensation and the related employer payroll tax expense will be a significant recurring expense in our business and an important part of the compensation provided
to our employees. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors.
The following table provides a reconciliation of net income (loss) to Adjusted EBITDA (in thousands):
Three Months Ended June 30, Six Months Ended June 30,
2025 2024 2025 2024
Adjusted EBITDA Reconciliation:
Net income (loss)
$ (11,366) $ (16,708) $ 51,034 $ (47,809)
Depreciation and amortization 8,256 8,227 16,631 16,536
Interest income (1,109) (2,263) (2,483) (4,332)
Interest expense 7,038 5,769 13,358 9,520
Provision for income taxes 89 35 184 106
EBITDA 2,908 (4,940) 78,724 (25,979)
Stock-based compensation
8,208 7,702 15,567 14,822
Payroll taxes expense on employee stock transactions 260 118 799 174
Legal settlement
- 600 - 600
Restructuring charges (1)
- - - 196
Gain on extinguishment of debt (2)
- - (37,101) (4,177)
Change in fair value of warrant liability(3)
(4,537) (5,630) (47,040) 9,953
One time expenses(4)
- 389 - 389
Adjusted EBITDA $ 6,839 $ (1,761) $ 10,949 $ (4,022)
(1) The restructuring charges for the six months ended June 30, 2024 consist of employee severance related charges.
(2) The gain on extinguishment of debt for the six months ended June 30, 2025 reflects the difference between the carrying value of the February 2025 Exchanged Notes and the fair value of the 2031 Notes. The gain on extinguishment of debt for the six months ended June 30, 2024 reflects the difference between the carrying value of the 2024 Exchanged Notes and the fair value of the 2029 Notes.
(3) The change in fair value of warrant liability for the three and six months ended June 30, 2025 and June 30, 2024 reflects the remeasurement of the Warrants issued by the Company in connection with the 2024 Note Exchange in February 2024.
(4) One-time expenses for the three and six months ended June 30, 2024 reflect 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.
Components of our Operating Results
Revenue
Our revenue is comprised of consignment revenue, direct revenue and shipping services revenue.
•Consignment revenue.We generate the substantial majority of our revenue from the sale of pre-owned luxury goods through our online marketplace and retail stores on behalf of consignors. For consignment sales, we retain a percentage of the proceeds received, which we refer to as our take rate. We recognize consignment revenue, net of allowances for product returns, order cancellations, buyer incentives and adjustments. Additionally, we generate revenue from subscription fees paid by buyers for early access to products, but to date our subscription revenue has not been material.
•Direct revenue.We generate direct revenue from the sale of items that we own, which we refer to as our inventory. We generally acquire inventory when we accept out of policy returns from buyers, and when we make direct purchases from businesses and consignors. We recognize direct revenue upon shipment based on the gross purchase price paid by buyers for goods, net of allowances for product returns, buyer incentives and adjustments.
•Shipping services revenue. We generate shipping services revenue from the outbound shipping and handling fees we charge when delivering purchased items to our buyers. We also generate shipping services revenue from the shipping fees for consigned products returned by our buyers to us within policy. We recognize shipping services revenue over time as the shipping activity occurs. Shipping services revenue excludes the effect of buyer incentives and sales tax.
Cost of Revenue
Cost of consignment revenue consists of credit card fees, packaging, customer service personnel-related costs, website hosting services, and consignor inventory adjustments related to lost or damaged products. Cost of direct revenue consists of the cost of goods sold, credit card fees, packaging, customer service personnel-related costs, website hosting services, and inventory adjustments for lower of cost or net realizable value provisions and for lost or damaged products. Cost of shipping services revenue consists of the outbound shipping and handling costs to deliver purchased items to our buyers, the shipping costs for consigned products returned by our buyers to us within policy, and an allocation of the credit card fees associated with the shipping fee charged.
Marketing
Marketing expense comprises the cost of acquiring and retaining consignors and buyers, including the cost of television, digital and direct mail advertising. Marketing expense also includes personnel-related costs for employees engaged in these activities. We expect these expenses to continue to decrease as a percentage of revenue over the longer term.
Operations and Technology
Operations and technology expense principally includes personnel-related costs for employees involved with the authentication, merchandising and fulfillment of goods sold through our online marketplace and retail stores, as well as our general information technology expense. Operations and technology expense also includes allocated facility and overhead costs, costs related to our retail stores, facility supplies, inbound consignment shipping costs and depreciation of hardware and equipment, as well as research and development expense for technology associated with managing and improving our operations. We capitalize a portion of our proprietary software and technology development costs. As such, operations and technology expense also includes amortization of capitalized technology development costs. We expect operations and technology expense to increase in future periods to support our growth, including continuing to invest in automation and other technology improvements to support and drive efficiency in our operations. These expenses may vary from year to year as a percentage of revenue, depending primarily upon when we choose to make more significant investments. We expect these expenses to continue to decrease as a percentage of revenue over the longer term.
Selling, General and Administrative
Selling, general and administrative expense is principally comprised of personnel-related costs for our sales professionals and employees involved in finance and administration. Selling, general and administrative expense also includes allocated facilities and overhead costs and professional services, including accounting and legal advisors. We expect these expenses to continue to decrease as a percentage of revenue over the longer term.
Provision for Income Taxes
Our provision for income taxes consists primarily of state minimum taxes in the United States. We have a full valuation allowance for our net deferred tax assets primarily consisting of net operating loss carryforwards, accruals and reserves, stock-based compensation, fixed assets, and other book-to-tax timing differences. We expect to maintain this full valuation allowance for the foreseeable future.
Results of Operations
The following tables set forth our results of operations (in thousands) and such data as a percentage of revenue for the periods presented:
Three Months Ended June 30, Six Months Ended June 30,
2025 2024 2025 2024
Revenue:
Consignment revenue $ 128,620 $ 112,714 $ 252,434 $ 228,362
Direct revenue 20,495 16,724 40,949 29,433
Shipping services revenue 16,073 15,496 31,838 30,939
Total revenue 165,188 144,934 325,221 288,734
Cost of revenue:
Cost of consignment revenue 13,761 13,108 26,715 26,388
Cost of direct revenue 17,185 13,760 32,420 26,045
Cost of shipping services revenue 11,566 10,600 23,387 21,556
Total cost of revenue 42,512 37,468 82,522 73,989
Gross profit 122,676 107,466 242,699 214,745
Operating expenses:
Marketing 15,548 13,759 31,403 29,042
Operations and technology 68,986 65,422 135,964 128,394
Selling, general and administrative 48,027 47,082 97,988 93,852
Restructuring charges
- - - 196
Total operating expenses 132,561 126,263 265,355 251,484
Loss from operations (9,885) (18,797) (22,656) (36,739)
Change in fair value of warrant liability
4,537 5,630 47,040 (9,953)
Gain on extinguishment of debt
- - 37,101 4,177
Interest income 1,109 2,263 2,483 4,332
Interest expense (7,038) (5,769) (13,358) (9,520)
Other income, net
- - 608 -
Income (loss) before provision for income taxes
(11,277) (16,673) 51,218 (47,703)
Provision for income taxes 89 35 184 106
Net income (loss)
$ (11,366) $ (16,708) $ 51,034 $ (47,809)
Three Months Ended June 30, Six Months Ended June 30,
2025 2024 2025 2024
Revenue:
Consignment revenue 78 % 78 % 78 % 79 %
Direct revenue 12 11 12 10
Shipping services revenue 10 11 10 11
Total revenue 100 100 100 100
Cost of revenue:
Cost of consignment revenue 8 9 8 9
Cost of direct revenue 10 9 10 9
Cost of shipping services revenue 7 7 7 7
Total cost of revenue 25 25 25 25
Gross profit 75 75 75 75
Operating expenses:
Marketing 9 9 10 10
Operations and technology 42 45 42 44
Selling, general and administrative 29 32 30 33
Restructuring charges
- - - -
Total operating expenses 80 86 82 87
Loss from operations (5) (11) (7) (12)
Change in fair value of warrant liability
3 4 14 (3)
Gain on extinguishment of debt
- - 11 1
Interest income 1 2 1 2
Interest expense (4) (4) (4) (3)
Other income, net
- - - -
Income (loss) before provision for income taxes
(5) (9) 15 (15)
Provision for income taxes - - - -
Net income (loss)
(5) % (9) % 15 % (15) %
Comparison of the Three Months Ended June 30, 2025 and 2024
Consignment Revenue
Three Months Ended June 30, Change
2025 2024 Amount %
(In thousands, except percentage)
Consignment revenue $ 128,620 $ 112,714 $ 15,906 14 %
Consignment revenue increased by $15.9 million, or 14% in the three months ended June 30, 2025 compared to the three months ended June 30, 2024. The increase in revenue was driven primarily by an increase in consignment GMV during the three months ended June 30, 2025. GMV growth during the three months ended June 30, 2025 was driven by an 8% increase in our AOV and 6% increase in the number of orders. Our take rate decreased to 37.9% from 38.5% during the three months ended June 30, 2025 compared to the three months ended June 30, 2024 due to sales mix into higher value items.
Direct Revenue
Three Months Ended June 30, Change
2025 2024 Amount %
(In thousands, except percentage)
Direct revenue $ 20,495 $ 16,724 $ 3,771 23 %
Direct revenue increased by $3.8 million, or 23%, in the three months ended June 30, 2025 compared to the three months ended June 30, 2024. The increase was primarily driven by higher sell through of inventory acquired from out of policy returns and high value inventory acquired through the Get Paid Nowprogram. Through this program, select items are evaluated, authenticated and priced and the business or consignor receives payment based on this process in advance of the sale of the item. 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.
Shipping Services Revenue
Three Months Ended June 30, Change
2025 2024 Amount %
(In thousands, except percentage)
Shipping services revenue $ 16,073 $ 15,496 $ 577 4 %
Shipping services revenue increased by $0.6 million, or 4%, in the three months ended June 30, 2025 compared to the three months ended June 30, 2024 primarily due to a 6% increase in the number of orders in the three months ended June 30, 2025.
Cost of Consignment Revenue
Three Months Ended June 30, Change
2025 2024 Amount %
(In thousands, except percentage)
Cost of consignment revenue $ 13,761 $ 13,108 $ 653 5 %
Cost of consignment revenue increased by $0.7 million, or 5%, in the three months ended June 30, 2025 compared to the three months ended June 30, 2024, driven by higher consignment volume, partially offset by increased operational efficiencies.
Consignment revenue gross margin increased by 93 basis points in the three months ended June 30, 2025 compared to the three months ended June 30, 2024 due to an increase in consignment revenue and increased operational efficiencies during the three months ended June 30, 2025.
Cost of Direct Revenue
Three Months Ended June 30, Change
2025 2024 Amount %
(In thousands, except percentage)
Cost of direct revenue $ 17,185 $ 13,760 $ 3,425 25 %
Cost of direct revenue increased by $3.4 million, or 25%, in the three months ended June 30, 2025 compared to the three months ended June 30, 2024. The increase was primarily attributable to the increase in direct revenue compared to the prior year.
Direct revenue gross margin decreased by 157 basis points for the three months ended June 30, 2025, primarily due to category mix of products sold during the three months ended June 30, 2025.
Cost of Shipping Services Revenue
Three Months Ended June 30, Change
2025 2024 Amount %
(In thousands, except percentage)
Cost of shipping services revenue $ 11,566 $ 10,600 $ 966 9 %
Cost of shipping services revenue increased by $1.0 million, or 9%, in the three months ended June 30, 2025 compared to the three months ended June 30, 2024, primarily due to a 6% increase in the number of orders and higher carrier costs.
Shipping services revenue gross margin decreased by 355 basis points for the three months ended June 30, 2025, primarily due to higher carrier costs.
Total Gross Margin
Our total gross margin increased by 20 basis points in the three months ended June 30, 2025 compared to the three months ended June 30, 2024.
Marketing
Three Months Ended June 30, Change
2025 2024 Amount %
(In thousands, except percentage)
Marketing $ 15,548 $ 13,759 $ 1,789 13 %
Marketing expense increased by $1.8 million, or 13%, in the three months ended June 30, 2025 compared to the three months ended June 30, 2024. The increase was primarily due to an increase in advertising costs.
As a percent of revenue, marketing expense remained flat at 9% in the three months ended June 30, 2025 and 2024. 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.
Operations and Technology
Three Months Ended June 30, Change
2025 2024 Amount %
(In thousands, except percentage)
Operations and technology $ 68,986 $ 65,422 $ 3,564 5 %
Operations and technology expense increased by $3.6 million, or 5%, in the three months ended June 30, 2025 compared to the three months ended June 30, 2024. The increase was driven by higher variable hourly compensation from increased volume compared to the prior period.
As a percent of revenue, operations and technology expense decreased to 42% from 45% in the three months ended June 30, 2025 and 2024, 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.
Selling, General and Administrative
Three Months Ended June 30, Change
2025 2024 Amount %
(In thousands, except percentage)
Selling, general and administrative $ 48,027 $ 47,082 $ 945 2 %
Selling, general and administrative expense increased by $0.9 million, or 2%, in the three months ended June 30, 2025 compared to the three months ended June 30, 2024. The increase was primarily due to higher employee costs, partially offset by lower legal fees.
As a percent of revenue, selling, general and administrative expense decreased to 29% from 32% in the three months ended June 30, 2025 compared to the three months ended June 30, 2024. These expenses may vary from period to period as a percentage of revenue. We expect these expenses to decrease as a percentage of revenue over the longer term.
Change in Fair Value of Warrant Liability
Three Months Ended June 30, Change
2025 2024 Amount %
(In thousands, except percentage)
Change in fair value of warrant liability $ 4,537 $ 5,630 $ (1,093) (19) %
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 warrant liability is subsequently re-measured to fair value at each reporting date with changes in the fair value included in earnings. During the three months ended June 30, 2025, we incurred a gain of $4.5 million due to the decrease in the fair value of the warrants outstanding at June 30, 2025.
Interest Income
Three Months Ended June 30, Change
2025 2024 Amount %
(In thousands, except percentage)
Interest income $ 1,109 $ 2,263 $ (1,154) (51) %
Interest income decreased by $1.2 million, or 51%, for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024 due to lower average cash balances.
Interest Expense
Three Months Ended June 30, Change
2025 2024 Amount %
(In thousands, except percentage)
Interest expense $ (7,038) $ (5,769) $ (1,269) 22 %
Interest expense increased by $1.3 million, or 22% for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 due to the interest expense related to the 2031 Notes issued in February 2025.
Comparison of the Six Months Ended June 30, 2025 and 2024
Consignment Revenue
Six Months Ended June 30, Change
2025 2024 Amount %
(In thousands, except percentage)
Consignment revenue, net $ 252,434 $ 228,362 $ 24,072 11 %
Consignment revenue increased by $24.1 million, or 11%, in the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The increase in revenue was driven primarily by an increase in consignment GMV, a 6% increase in our AOV and 5% increase in the number of orders during the six months ended June 30, 2025 compared to the six months ended June 30, 2024.
Our take rate decreased to 38.2% from 38.4% during the six months ended June 30, 2025 compared to the same period last year.
Direct Revenue
Six Months Ended June 30, Change
2025 2024 Amount %
(In thousands, except percentage)
Direct revenue $ 40,949 $ 29,433 $ 11,516 39 %
Direct revenue increased by $11.5 million, or 39%, in the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The increase was primarily driven by higher sell through of inventory acquired from out of policy returns and high value inventory acquired through the Get Paid Nowprogram. We recognize direct revenue 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 amount of consignment revenue.
Shipping Services Revenue
Six Months Ended June 30, Change
2025 2024 Amount %
(In thousands, except percentage)
Shipping services revenue $ 31,838 $ 30,939 $ 899 3 %
Shipping services revenue increased by $0.9 million, or 3%, in the six months ended June 30, 2025 compared to the six months ended June 30, 2024 primarily due to a 5% increase in the number of orders in the six months ended June 30, 2025.
Cost of Consignment Revenue
Six Months Ended June 30, Change
2025 2024 Amount %
(In thousands, except percentage)
Cost of consignment revenue, net $ 26,715 $ 26,388 $ 327 1 %
Cost of consignment revenue increased by $0.3 million, or 1%, in the six months ended June 30, 2025 compared to the six months ended June 30, 2024, driven by higher consignment volume, partially offset by increased operational efficiencies.
Consignment revenue gross margin increased by 97 basis points in the six months ended June 30, 2025 compared to the six months ended June 30, 2024, driven by the increase in consignment revenue and increased operational efficiencies.
Cost of Direct Revenue
Six Months Ended June 30, Change
2025 2024 Amount %
(In thousands, except percentage)
Cost of direct revenue $ 32,420 $ 26,045 $ 6,375 24 %
Cost of direct revenue increased by $6.4 million, or 24%, in the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The increase was primarily attributable to the increase in direct revenue compared to the prior year.
Direct revenue gross margin increased by 932 basis points for the six months ended June 30, 2025, due to an increase in direct revenue and improved product margins during the six months ended June 30, 2025.
Cost of Shipping Services Revenue
Six Months Ended June 30, Change
2025 2024 Amount %
(In thousands, except percentage)
Cost of shipping services revenue $ 23,387 $ 21,556 $ 1,831 8 %
Cost of shipping services revenue increased by $1.8 million, or 8%, in the six months ended June 30, 2025 compared to the six months ended June 30, 2024, primarily due to a 5% increase in the number of orders and higher carrier costs.
The shipping services revenue gross margin decreased by 378 basis points for the six months ended June 30, 2025, primarily due to higher carrier costs.
Total Gross Margin
Our total gross margin increased by 25 basis point for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. Gross margin may vary from period to period.
Marketing
Six Months Ended June 30, Change
2025 2024 Amount %
(In thousands, except percentage)
Marketing $ 31,403 $ 29,042 $ 2,361 8 %
Marketing expense increased by $2.4 million, or 8%, in the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The increase was primarily due to increased advertising costs.
As a percent of revenue, marketing expense remained flat at 10% in the six months ended June 30, 2025 and 2024, respectively. 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.
Operations and Technology
Six Months Ended June 30, Change
2025 2024 Amount %
(In thousands, except percentage)
Operations and technology $ 135,964 $ 128,394 $ 7,570 6 %
Operations and technology expense increased by $7.6 million, or 6%, in the six months ended June 30, 2025 compared to the six months ended June 30, 2024.The increase was driven by higher variable hourly compensation from increased volume compared to the prior period.
As a percent of revenue, operations and technology expense decreased to 42% from 44% in the six months ended June 30, 2025 and 2024, 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.
Selling, General and Administrative
Six Months Ended June 30, Change
2025 2024 Amount %
(In thousands, except percentage)
Selling, general and administrative $ 97,988 $ 93,852 $ 4,136 4 %
Selling, general and administrative expense increased by $4.1 million, or 4%, in the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The increase was primarily due to higher employee costs, partially offset by a decrease in legal fees.
As a percent of revenue, selling, general and administrative expense decreased to 30% from 33% in the six months ended June 30, 2025 and 2024, respectively. These expenses may vary from period to period as a percentage of revenue. We expect these expenses to decrease as a percentage of revenue over the longer term.
Restructuring charges
Six Months Ended June 30, Change
2025 2024 Amount %
(In thousands, except percentage)
Restructuring charges
$ - $ 196 $ (196) (100) %
We did not incur any restructuring charges during the six months ended June 30, 2025, compared to the $0.2 million during the six months ended June 30, 2024.
Change in Fair Value of Warrant Liability
Six Months Ended June 30, Change
2025 2024 Amount %
(In thousands, except percentage)
Change in fair value of warrant liability
$ 47,040 $ (9,953) $ 56,993 100 %
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 warrant liability is subsequently re-measured to fair value at each reporting date with changes in the fair value included in earnings. During the six months ended June 30, 2025, we incurred a gain of $47.0 million due to the decrease in the fair value of the warrants outstanding at June 30, 2025.
Gain on Extinguishment of Debt
Six Months Ended June 30, Change
2025 2024 Amount %
(In thousands, except percentage)
Gain on extinguishment of debt
$ 37,101 $ 4,177 $ 32,924 100 %
Gain on extinguishment of debt increased by $32.9 million, or over 100% for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The increase was due to the gain recorded from the extinguishment of the Exchanged Notes (as defined below) and the issuance of the 2031 Notes during the three months ended March 31, 2025 (See Note 7 - Convertible Senior Notes, Net).
Interest Income
Six Months Ended June 30, Change
2025 2024 Amount %
(In thousands, except percentage)
Interest income $ 2,483 $ 4,332 $ (1,849) (43) %
Interest income decreased by $1.8 million, or 43% in the six months ended June 30, 2025 compared to the six months ended June 30, 2024 due to lower average cash balances.
Interest Expense
Six Months Ended June 30, Change
2025 2024 Amount %
(In thousands, except percentage)
Interest expense $ (13,358) $ (9,520) $ (3,838) 40 %
Interest expense increased by $3.8 million, or 40% in the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The increase was due to the full-period impact of the 2029 Notes during the six months ended June 30, 2025 compared to a partial period of interest expense during the six months ended June 30, 2024, as well as the issuance of the 2031 Notes in February 2025.
Liquidity and Capital Resources
As of June 30, 2025, we had cash and cash equivalents of $94.3 million and an accumulated deficit of $1,202.8 million. We had restricted cash of $14.9 million as of June 30, 2025, consisting of cash deposited with a financial institution as collateral for our letters of credit, facility leases and credit cards. Since inception, we have generated negative cash flows from operations and have primarily financed our operations through equity and convertible debt financings. In July 2019, we received net proceeds of $315.5 million upon completion of our IPO on July 2, 2019. In June 2020, we received net proceeds of $143.3 million from the issuance of our 2025 Notes and the related capped call transactions. In March 2021, we received net proceeds of $244.5 million from our 2028 Notes and the related capped call transactions. In February 2024, we exchanged $145.8 million of our 2025 Notes and $6.5 million of our 2028 Notes for $135.0 million in aggregate principal amount of the 2029 Notes in the 2024 Note Exchange. As a result of the 2024 Note Exchange, we significantly extended the average maturity date of our outstanding indebtedness (see Note 6 - Non-convertible Notes, Net).
In February 2025, we exchanged $183.3 million aggregate principal amount of the 2028 Notes for $146.7 million aggregate principal amount of our new 2031 Notes in the 2025 Note Exchange (see Note 7 - Convertible Senior Notes, Net).
In June 2025, the 2025 Notes matured, and the Company repaid the outstanding principal amount and accrued interest in full. The total cash payment upon maturity was $27.2 million, which included the outstanding principal amount and accrued interest through the maturity date.
We expect that operating losses and negative cash flows from operations could continue in the foreseeable future. We believe our existing cash and cash equivalents as of June 30, 2025 will be sufficient to meet our working capital and capital expenditures needs for at least the next 12 months.
Our primary capital requirements include contractual obligations related to our operating leases, our indebtedness, certain non-cancellable contracts and compensation and benefits payments to support our strategic plans. Our future capital requirements will depend on many factors, including, but not limited to, those set forth under the heading "Risk Factors" in this Quarterly Report, and our ability to grow our revenues and the timing of investments to support growth in our business, such as the build-out of our authentication centers and, to a lesser extent, the opening of new retail stores. We may seek additional equity or debt financing. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, financial condition and results of operations could be adversely affected.
Cash Flows
The following table summarizes our cash flows for the periods indicated.
Six Months Ended June 30,
2025 2024
Net cash used in:
Operating activities
$ (31,840) $ (10,221)
Investing activities
(16,692) (10,280)
Financing activities
(29,387) (4,465)
Net decrease in cash, cash equivalents and restricted cash $ (77,919) $ (24,966)
Net Cash Used in Operating Activities
During the six months ended June 30, 2025, net cash used in operating activities was $31.8 million, which primarily consisted of a net loss of $51.0 million, adjusted by non-cash charges of $35.1 million and cash outflows due to a net change of $47.7 million in our operating assets and liabilities. The net change in our non-cash charges operating assets and liabilities was primarily the result of cash outflows due to a $14.7 million decrease in other accrued and current liabilities, a $13.7 million decrease in accrued consignor payable, a $10.9 million decrease in operating lease liabilities and a $10.0 million increase in accounts receivable.
During the six months ended June 30, 2024, net cash used in operating activities was $10.2 million, which consisted of a net loss of $47.8 million, adjusted by non-cash charges of $54.5 million and cash outflows due to a net change of $16.9 million in our operating assets and liabilities. The net change in our non-cash charges operating assets and liabilities was primarily the result of cash outflows due to a $12.7 million decrease in accrued consignor payable and a decrease of $9.9 million in operating lease liabilities, partially offset by a decrease of $4.8 million in prepaid expenses and other current assets.
Net Cash Used in Investing Activities
During the six months ended June 30, 2025, net cash used in investing activities was $16.7 million, which consisted of $12.5 million for purchases of property and equipment, net, including leasehold improvements and $6.5 million for capitalized proprietary software development costs, partially offset by $2.3 million of insurance proceeds received related to the warehouse fire.
During the six months ended June 30, 2024, net cash used in investing activities was $10.3 million, which consisted of $5.1 million for purchases of property and equipment, net, including leasehold improvements and $5.1 million for capitalized proprietary software development costs.
Net Cash Used in Financing Activities
During the six months ended June 30, 2025, net cash used in financing activities was $29.4 million, which consisted of a $26.7 million repayment of our 2025 Notes and $5.0 million payment of expenses related to the 2025 Note Exchange.
During the six months ended June 30, 2024, net cash used in financing activities was $4.5 million, which primarily consisted of payment of expenses related to the 2024 Note Exchange.
Convertible Senior Notes
In connection with the 2025 Note Exchange, on February 10, 2025, we entered into private, separately negotiated transactions and issued $146.7 million in aggregate principal amount of our 2031 Notes in exchange for $183.3 million in aggregate principal amount of our 2028 Notes.
As of June 30, 2025, we had 2028 Notes outstanding in an aggregate principal amount of $97.7 million, as a result of the 2025 Note Exchange, and 2031 Notes outstanding in an aggregate principal amount of $146.7 million (together, the "Convertible Senior Notes"). A portion of the net proceeds from the sale of the 2028 Notes was used to fund the net cost of entering into the capped call transactions described below. We did not receive any cash proceeds from the issuance of the 2031 Notes in the 2025 Note Exchange.
The 2028 Notes are convertible into cash, shares of our common stock or a combination of cash and shares of our common stock, at the Company's election, at an initial conversion rate of 31.4465 shares of our common stock per $1,000 principal amount of the 2028 Notes, which is equivalent to an initial conversion price of approximately $31.80 per share of our common stock. The initial conversion price of the notes represents a premium of approximately 32.5% over the $24.00 closing price of our common stock on March 3, 2021. The 2031 Notes are convertible into cash, shares of our common stock or a combination of cash and shares of our common stock, at the Company's election, at an initial conversion rate of 95.5795 shares of common stock per $1,000 principal amount, which is equivalent to an initial conversion price of approximately $10.46 per share of our common stock. The initial conversion price represents a premium of approximately 26.9% over the $8.24 closing price of our common stock on February 10, 2025.
In connection with the issuance of the 2028 Notes, we entered into privately negotiated capped call transactions, with certain of the initial purchasers or their affiliates. The capped call transactions cover, subject to anti-dilution adjustments, the number of shares of common stock underlying the 2028 Notes sold in the offering. The capped call transactions are generally expected to reduce potential dilution to our common stock upon any conversion of the notes and/or offset any cash payments we are required to make in excess of the principal amount of converted 2028 Notes, as the case may be, with such reduction and/or offset subject to a cap. The cap price of the capped call transactions related to the 2028 Notes was initially $48.00 per share, which represents a premium of 100.0% over the closing price of our common stock of $24.00 per share on March 3, 2021, and is subject to certain adjustments under the terms of the capped call transactions.
For additional details related to our Convertible Senior Notes and the 2025 Note Exchange, please see "Note 7 - Convertible Senior Notes, Net" to the condensed financial statements included in this quarterly report.
2029 Notes and Warrants
On February 29, 2024, the Company entered into exchange agreements with certain holders (the "Exchange Holders") of its then-outstanding 2025 Notes and 2028 Notes to exchange (i) $145.8 million in aggregate principal amount of the 2025 Notes and (ii) $6.5 million in aggregate principal amount of the 2028 Notes (together, the "Exchanged Notes") for $135.0 million in aggregate principal amount of the Company's 2029 Notes, pursuant to the 2029 Notes indenture. The 2029 Notes bear interest at a rate of 13.00% per annum, consisting of cash interest at a rate of 8.75% per annum payable semi-annually in arrears and payment in-kind interest at a rate of 4.25% per annum payable semi-annually. The 2029 Notes will mature on the
earlier of (a) March 1, 2029 and (b) any date, if any, on or after December 1, 2027 on which (a) the aggregate principal amount of the 2028 Notes then outstanding is greater than $20 million and (b) the difference between (i) the amount of unrestricted cash and cash equivalents held by the Company and its subsidiaries (if any) as of such date of determination and (ii) the aggregate principal amount of 2028 Notes outstanding as of such date of determination is less than $75 million. In connection with the 2024 Note Exchange, 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 to the holders of the Exchanged Notes at an exercise price of $1.71, subject to certain cashless exercise provisions and adjustment in accordance with the terms of the Warrants (see "Note 4 - Fair Value Measurement" to the condensed financial statements included in this quarterly report for further details on the terms of the Warrants).
For additional details related to our 2029 Notes, please see "Note 6 - Non-convertible Notes, Net" to the condensed financial statements included in this quarterly report.
Contractual Obligations and Commitments
There have been no material changes from the contractual obligations and commitments previously disclosed in our most recent Annual Report on 10-K except that as of June 30, 2025 and as further described in "Note 7 - Convertible Senior Notes, Net" to the condensed financial statements included in this quarterly report:
•Our total commitments and obligations in the aggregate principal amount plus the associated future interest payments for the 2028 Notes decreased by $189.8 million in connection with the 2025 Note Exchange; and
•Our cash requirements related to our 2031 Notes were $181.9 million, of which $5.9 million is expected to be paid within the next 12 months.
Critical Accounting Estimates
Our management's discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with United States generally accepted accounting principles. The preparation of these financial statements requires our management to make judgments and estimates that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenue generated, and expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these judgments and estimates under different assumptions or conditions and any such differences may be material.
While our significant accounting policies are more fully described in Note 2-Summary of Significant Accounting Policies, we believe that the accounting estimates discussed below relate to the more significant areas involving management's judgments and estimates.
2025 Note Exchange
During the sixmonths ended June 30, 2025, the Company accounted for the 2025 Note Exchange as a debt extinguishment and recorded a gain of $37.1 million as the difference between the carrying amount of the February 2025 Exchanged Notes and the fair value of the 2031 Notes. The fair value of the 2031 Notes is considered a critical estimate because the judgment in the valuation methods utilized and assessing an interest rate that would be available to the Company of a similar debt instrument.
Recent Accounting Pronouncements
For more information on recently issued accounting pronouncements, see Note 2 to our unaudited condensed financial statements "Summary of Significant Accounting Policies" in this Quarterly Report on Form 10-Q.
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