Item 5. Market for Registrant’s Common Equity
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market Information
Our common stock, par value $0.00001 per share, is listed on the Nasdaq Global Select Market, under the symbol “REAL” and began trading on June 28, 2019. Prior to that date, there was no public trading market for our common stock
Stockholders
As of the close of business on February 19, 2021, there were 176 stockholders of record of our common stock. The actual number of holders of our common stock is greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers or other nominees. This number of holders of record also does not include stockholders whose shares may be held in trust by other entities.
Dividend Policy
We have never declared or paid cash dividends on our capital stock. We currently intend to retain all available funds and future earnings, if any, to fund the development and expansion of our business, and we do not anticipate paying any cash dividends in the foreseeable future. Any future determination regarding the declaration and payment of dividends, if any, will be at the discretion of our board of directors and will depend on then-existing conditions, including our financial condition, operating results, contractual restrictions, capital requirements, business prospects and other factors our board of directors may deem relevant. Our ability to pay cash dividends on our capital stock is limited by the terms of our existing term loans and may be limited by any future debt instruments or preferred securities.
Securities Authorized for Issuance under Equity Compensation Plans
The information required by this item with respect to our equity compensation plans is incorporated by reference to our 2020 proxy statement set forth in the section titled “Securities Authorized for Issuance under Equity Compensation Plans” to be filed with the SEC within 120 days of the year ended December 31, 2020 (the “Proxy Statement”).
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Stock Performance Graph
We have presented below the cumulative total return to our stockholders in comparison to the Nasdaq Composite Index (Nasdaq Composite) and Russell 2000. All values assume a $100 initial investment on June 28, 2019, the date our common stock began trading on the Nasdaq Global Select Market, through December 31, 2020 and data for the Nasdaq Composite and Russell 2000 assume reinvestment of dividends. The comparisons are based on historical data and are not indicative of, nor intended to forecast, the future performance of our common stock.
Recent Sales of Unregistered Securities
None.
Use of Proceeds from our IPO
The offer and sale of the shares in the IPO was registered under the Securities Act pursuant to a registration statement on Form S-1 (File No.333-231891), which was declared effective by the SEC on June 27, 2019. The remainder of the information required by this item regarding the use of our initial public offering proceeds has been omitted pursuant to SEC rules because such information has not changed since our last periodic report was filed.
Issuer Purchases of Equity Securities
None.
Item 6. Selected Financial Data.
The selected statement of operations data for the years ended December 31, 2020, 2019, and 2018 and the selected balance sheet data as of December 31, 2020 and 2019 are derived from our audited financial statements included elsewhere in this Annual Report. The selected balance sheet data as of December 31, 2018 is derived from audited financial statements that are not included in this Annual Report. We have included, in our opinion, all adjustments that we consider necessary for a fair presentation of the financial information set forth in those statements. Our historical results are not necessarily indicative of the results to be expected in any future period. You should read the following selected financial and other data in conjunction with the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes appearing elsewhere in this Annual Report.
32
Statement of Operations Data
Year Ended December 31,
2020
2019
2018
(In thousands, except share and per share data)
Revenue:
Consignment and service revenue (1)
$
247,326
$
265,729
$
180,607
Direct revenue
52,623
50,625
33,125
Total revenue
299,949
316,354
213,732
Cost of revenue:
Cost of consignment and service revenue
66,976
73,579
50,855
Cost of direct revenue
45,406
41,252
25,959
Total cost of revenue
112,382
114,831
76,814
Gross profit
187,567
201,523
136,918
Operating expenses (2) :
Marketing
54,813
47,734
42,165
Operations and technology
163,808
143,231
104,929
Selling, general and administrative
141,762
110,663
63,728
Total operating expenses
360,383
301,628
210,822
Loss from operations
(172,816
)
(100,105
)
(73,904
)
Interest income
2,518
4,593
1,046
Interest expense
(5,264
)
(616
)
(1,152
)
Other expense, net
(169
)
(2,102
)
(1,656
)
Loss before provision for income taxes
(175,731
)
(98,230
)
(75,666
)
Provision for income taxes
101
199
99
Net loss
$
(175,832
)
$
(98,429
)
$
(75,765
)
Accretion of redeemable convertible preferred
stock to redemption value
—
(3,355
)
(8,922
)
Net loss attributable to common stockholders
$
(175,832
)
$
(101,784
)
$
(84,687
)
Net loss per share attributable to common
stockholders, basic and diluted (3)
$
(2.01
)
$
(2.14
)
$
(10.12
)
Shares used to compute net loss per share
attributable to common stockholders, basic
and diluted (3)
87,587,409
47,478,544
8,365,344
(1)
See Note 2 to our financial statements for an explanation of the immaterial correction of errors in 2019 related to inventory associated with commissions paid outside of our normal payment cycle to consignors for returned merchandise which have been corrected within consignment revenue.
(2)
Operating expenses include stock-based compensation expense as follows:
Year Ended December 31,
2020
2019
2018
(In thousands)
Marketing
$
1,755
$
392
$
164
Operations and technology
10,241
3,148
1,160
Selling, general and administrative
12,326
4,990
2,434
Total
$
24,322
$
8,530
$
3,758
(3)
See Notes 2 and 14 to our financial statements for an explanation of the calculations of our basic and diluted net loss per share attributable to common stockholders and the weighted-average number of shares used in the computation of the per share amounts.
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Balance Sheet Data
As of December 31,
2020
2019
2018
(In thousands)
Cash and cash equivalents
$
350,846
$
154,446
$
34,393
Short-term investments
4,017
208,811
27,131
Total assets (1)
605,109
465,247
135,417
Total liabilities
413,816
128,002
98,907
Redeemable convertible preferred stock
—
—
151,381
Convertible preferred stock
—
—
142,819
Accumulated deficit
(532,021
)
(356,189
)
(257,665
)
Total stockholders’ equity (deficit)
$
191,293
$
337,245
$
(257,690
)
(1)
See Notes 2 to our financial statements for an explanation of the immaterial correction of errors in 2019 related to inventory associated with commissions paid outside of our normal payment cycle to consignors for returned merchandise which have been corrected within inventory and consignment revenue.
Non-GAAP Financial Measures
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. Adjusted EBITDA may not be comparable to similarly titled metrics of other companies.
We calculate Adjusted EBITDA as net loss before interest income, interest expense, net other expense, income tax provision and depreciation and amortization, further adjusted to exclude stock-based compensation and certain one-time expenses. 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.
The following table presents a reconciliation of Adjusted EBITDA from net loss for 2020, 2019, and 2018:
Year Ended December 31,
2020
2019
2018
(In thousands)
Adjusted EBITDA Reconciliation:
Net loss
$
(175,832
)
$
(98,429
)
$
(75,765
)
Add (deduct):
Depreciation and amortization
18,845
13,408
9,290
Stock-based compensation
24,322
7,711
2,911
Compensation expense related to stock sales by
current and former employees
—
819
847
Legal settlement
1,110
—
—
Restructuring charges
514
—
—
Abandoned offering costs
—
293
—
Donation to TRR Foundation
—
3,155
—
Vendor services settlement
—
—
2,000
Interest income
(2,518
)
(4,593
)
(1,046
)
Interest expense
5,264
616
1,152
Other expense, net
169
2,102
1,656
Provision for income taxes
101
199
99
Adjusted EBITDA
$
(128,025
)
$
(74,719
)
$
(58,856
)
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.