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The RealReal Files for Initial Public Offering

The RealReal has filed plans to go public, although the timing of its initial public offering date hasn’t yet been determined.

The luxury consignment marketplace, which has direct-to-consumer roots, said it plans to list shares of its common stock on The Nasdaq Global Select Market under the trading symbol “REAL.” It has also set $100 million as a placeholder for the size of the IPO. That dollar amount is used to determine registration fees. Proceeds from the IPO will be used for general corporate purposes, such as working capital needs. The filing wasn’t unexpected, as The RealReal had been interviewing firms earlier this year to help take the company public.

Founded in 2011 by serial entrepreneur Julie Wainwright, who is the chief executive officer, the company had an aggregate raise of $287.8 million. The last raise was a $115 million Series G round in July 2018. According to data provider PitchBook, that last round valued the company at $745 million.

According to its registration statement filed with the Securities and Exchange Commission Friday, the San Francisco-based company doesn’t yet have any profits. The RealReal widened its net loss to $75.8 million in 2018, up from a net loss of $52.3 million in 2017. The company also said the net loss for the three months ended March 31, 2019 was $23.2 million.

Revenues rose 55 percent to $207.4 million last year, up from $133.9 million in 2017. The company has also been investing in stores as it adds brick-and-mortar to its DTC platform. Revenues are generated from orders through the company website, mobile app and three retail stores–two in New York, one on Madison Ave. in the Upper East Side and the other in SoHo, and one in Los Angeles.

The filing also noted that The RealReal had $710.8 million in gross merchandise value (GMV) in 2018, with at least 80 percent of its GMV from repeat buyers. In 2017, GMV was $492.2 million.

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The company said that through March 31, 2019, “we have cumulatively paid $987.7 million in commissions to our consignors.” Last year, The RealReal said it added about 2.6 million new items to its online marketplace. Other key 2018 data points: 1.6 million orders processed, up 42 percent over 2017; average order value was $446, up 2 percent; and gross profit was $136.9 million, up 56 percent. In addition, 80 percent of products on the online marketplace sold within 90 days last year, versus 60 percent within 30 days in 2017.

The RealReal said its mission is to “empower consignors and buyers to extend the lifecycle of luxury goods in a way that honors luxury brands.” The pre-owned market for luxury items has grown since the company was founded, with the resale market resonating in particular with the millennial and Gen Z consumer base, who have paid more attention to sustainability and the circular economy.

At the end of 2018, the company had more than 180 luxury managers across more than 40 major U.S. metropolitan markets. Consignors can earn up to 85 percent in commissions and achieved an average commission rate of 65 percent last year. The company also disclosed in the filing that it had 416,000 active buyers in 60 countries in 2018. And last year it sold merchandise bearing the brand names of more than 7,000 luxury and premium designers, in apparel, footwear, handbags and rare jewelry. The RealReal said it has processed up to 14,000 stock keeping units a day in 2018, with each SKU representing an individual item. Its online marketplace platform generates hundreds of millions of data points, including data from 400 million views of items by potential buyers in 2018.

Last month, Stefan Larsson joined the company’s board. A former CEO at Ralph Lauren Corp., Larsson was named President at PVH Corp on May 21, and assumed the role on Monday. Joining Larsson on The RealReal board were three other experts from the technology, customer experience and financial industries. The new independent directors bring the company’s board to eight members. Wainwright is the board chair.