Q2 2021 RealReal Inc Earnings Call
Good day, and thank you for standing by and welcome to the real real second quarter 2021 for financial results conference call at the time smoke dispense line and a listen only mode. After the speaker's presentation. There will be a question and answer session to ask the question. During the session you will need the press star 1.
On your telephone.
If you require any further assistance. Please press star zero and I would like to hand, the call over to your speaker of today, Mr. Paul Bieber head of Investor Relations. Please go ahead.
Thank you good afternoon, and welcome to the real real earnings call for the quarter ended June 30 of 2021 on.
Paul Bieber head of Investor Relations at the real real joining me today to discuss our results of our founder and CEO, Julie Wainwright, and Chief Financial Officer, and Matt Gusky.
Hopefully you've had a chance to read our press release and stockholder letter that we distributed earlier today, both of which are available on our Investor Relations website.
Before we begin I'd like to remind you that we will make forward looking statements. During the course of this call.
These forward looking statements involve known and unknown risks and uncertainties and our actual results could differ materially.
You can find more information about these risks uncertainties and other factors that could affect our operating results and our most recent periodic report on form 10-K, subsequent quarterly reports on form 10-Q, and and our earnings release from earlier today.
In addition, our presentation will include certain non-GAAP financial measures for which we have provided reconciliations for the most comparable GAAP measures and our earnings press release.
With that I'll hand, the call over to Julie for introductory remarks, and then we'll go straight to Q&A Julie Thank you.
And thank you all for joining us for this asset.
Second quarter results.
We're pleased to report another quarter without Kevin by outcomes consignment and our continued retail momentum.
We achieved our highest number of for both new and repeat the same as the supplier.
And some slides of the marketplace is this resulted in Q2 G&A increase of 91% year on year.
And 53% compared to the same period in 2019.
Q2 year on year of GMP crowd also accelerated quarter on quarter, when compared to about 2020 and 2019.
We achieved the strong growth rates, while also savvy and significant improvement in gross profit for our partner.
Key driver on our path to profitability.
And gross profit per order was approximately $94.89 quarter on quarter improvement.
Q2 of them very busy quarter for us and we made significant progress with our top priorities specifically getting back debt home are at levels of assignments are increasing as a percent of total consignment and contributed 38% of total units and Q.
The Arizona facility, we accelerated the move to our large authentication center and pain ex accommodate future growth and I'm happy to say, that's going very well.
Our neighborhood store expansion, we added Austin, Dallas and Atlanta during Q2, our retail stores generated 30% of new consignment and the quarter.
And to open about 2 large starts this year and.
And lastly, our technology innovation, our investments and technology continued to differentiate our business type of efficiencies on our operations and then April of significant future scale.
And Q2, we released the next generation of our syndication and pricing and Tim.
The current trends and our business ex Tom we believe they will continue this year and net beyond the GMB growth and make progress the gross profit per order.
And efficiencies and operations and marketing all of these elements of change of our path to profitability.
Investments, we have made and neighborhood stores and our Arizona facility and only support our growth, but also create the potential for meaningful leverage going forward.
We are focused on achieving profitability and expect to make significant progress over the coming quarters.
As always I'd like to thank the entire tier of our team for their hard work and delivering a strong Q2 results.
And is their dedication and commitment and drives our business every day.
And with that operator, we are ready for questions.
And to remind you to ask the question you will lead the press star 1 on your telephone to withdraw your question press the patchy.
Your first question is from Oliver Chen of Cowen. Your line is now open.
Thank you very much on.
On the on profitability and the opportunity ahead of what do you see as the key drivers and managing that gross profit per order.
And also just love your thoughts on on the evolution of L. A and New York and these markets in terms of supply growth and capabilities. Thank you.
And I'm going to start with the last part and then im going to turn it over to Matt.
Discuss the key drivers of the path to profitability.
Interestingly enough, both la and New York.
And our oldest stores are continue both and driving new consignors and new buyers and.
And our performing phenomenally well.
Our <unk> and <unk>.
And Dean the.
New York Storm below we're going to be Reconfiguring, the bottom part of the bottom of the New York store to allow us to take and even more consignment there.
The stores are a little bit more mature.
Especially sales house.
And theyre doing well.
And.
And television plan or better than plan for us the were.
We are committed there our flagship stores.
Obviously, we are expanding not the flagship stores for extending the neighborhood stores and those are also doing as well as we thought for investment.
Yeah.
Okay.
I'll go to the first questions and thank you focus was really on gross profit per order of drivers and within the context of overall profitability and so on <unk>.
Besides that the bulk of America.
And then kind of cover the overall framework for how we're thinking about profitability.
First of all of our very focused on it and as you saw gross profit per order increased to $9 quarter over quarter getting into the mid nineties from here forward further improvements can be expected from the full quarter benefit from lower buyer incentives, which exited Q2 at pre COVID-19 levels, and then beyond that big deal.
Over time to see the incremental shipping improvements and continuing benefits from from a high and it'll be so those are really the key pieces of the kind of gets you from where we are now to $100 neighborhood and going forward just small incremental benefits from there.
And in the broader context of profitability Thats, just 1 element. So first and foremost is topline growth GMB is growing well and <unk>.
July and thank you saw we put the release outfit the.
Still going on 53% versus 2019, which the comps ex youre getting more difficult and into Q3, as we're lapping our post IPO and quarter, we're comfortable saying and we can sustain 30% topline growth for the foreseeable future that combined with gross profit per order, increasing to the $100 neighborhood and and getting very bullish.
And for efficiencies, which we have been doing consistently over time and expect to continue to do so get us to the point, where we're seeing contribution margin for water and the 35 to $40 range and and what remains the of the controlling of fixed costs and our <unk>.
The cost from this point forward are really not getting interest very much at all the affiliates of profitability, Arizona and elastic step up of about 2 small stores to come and after that year and you see very minimal fixed cost increases going forward. So the leverage on the top line compounded by the gross profit piece and variable marketing efficiencies and other <unk>.
Well expense efficiencies will carry us to the finish line.
Thank you so much and that's very helpful.
Question on the 30% annual GMB growth that you called out on the letter what are some underlying drivers that give you confidence there and any further details would be helpful. Thank you and best regards.
Yeah. Thanks, Thanks, Oliver so of course.
Part of every minute of.
On the China and on this but.
Overall, we're feeling very optimistic about where we are not only coming out of the COVID-19, but just overall.
Keep in mind that where we are now is just a rounding error in terms of penetration for the overall Tam with significant tailwind and the resale market overall and where.
Very well positioned to continue growing well and <unk>.
And our unfair share of market growth going forward on <unk>.
Half of that I think we've derisked some of those assumptions over the course of Covid and.
Now with more diversified supply coming from more places that's it gives us incremental confidence the permitting for something like that is reasonable at this point.
And of course, we are always looking at our cohort and seeing if there's any change of the cohorts and then you're back.
And we are and very good shape with our assumptions of repeat versus new and and also on the consignor and buyer side. So we do feel confident about next year and we do.
And do recognize we're at.
Of this year and Nextera and we do recognize the Delta variant is the wildcard, but assuming there are now complete shutdowns again, which we don't foresee we feel good about our share here.
Thank you very much and best regards.
Thanks Oliver.
Your next question and is from Erinn Murphy of Piper Sandler Your line is open.
Great. Thanks, and good afternoon, and I've got 2 for Julian just a quick clarification for Matt.
Julie on the next generation of authentication and price and capabilities that you're adding can you share a little bit more about what that should permit you could do over time and how are you measuring returns there and then if you could share on the second quarter, what you saw and apparel and footwear trends and then I've got just 1 clarification for Matt.
Sure so.
So first of all of them the start with the last of apparel and actually.
And so we're very excited about that in fact, it's actually.
And exceeding our overall growth for accounts coming back and footwear is still not as high and it's still doing well and actually there is no longer drag on the business and we're very excited about that we're seeing similar trends in July.
This is all good news.
Now when it comes to.
Yeah, and perhaps I can even give the exact numbers.
And they are up and.
The apparel was ready to wear was up 70% versus year on year and footwear was also up roughly 70% gross sit here now same period a year ago. So that's really good news and bodes well for July for the balance of the year in terms of our <unk> technology.
A lot of technology, and we've been using it for pricing and when we talk about pricing optimization and our goal is to get the absolute highest price without a fall off in the velocity of sales and leasing in general on the over our $10.80 net price increased by using our across the board.
By using both of machine learning and computer vision to help us and then with human oversight.
And that continues to show improvement and obviously, the consignor wins that the prices are higher and certainly we get our fair share of that.
And we're excited about the progress there and that's how we measure of that for us the indication, it's really 2 levels and first of all of it actually allows.
As to change the work flow for our team. So we measure of both on effectiveness of keeping based off the market and efficiency of that team and the processing unit and it's.
It Tech or technology solutions continued to improve we sell our of human driven.
Business, and especially on that side, but it actually is making us more efficient and even more effective and then the other thing is we are going to our range and up tour volume.
<unk> on the Delta very and sometimes this year and our new Phoenix facility. Please you can and the ones who comes we'll be able to see the.
Firsthand, what we're doing and and and we can even talk about the changes visually debt because I think youll see a huge impact.
Got it Thanks, and then Matt My clarification for you and just on the gross profit per quarter.
And the shareholder letter about obviously getting to that 100 plus level should we take the language around that to be over the next 18 months of the exit rate for next year or is that still potentially and the cards for this year just trying to understand the way it was laid out and the shareholder letter it's kind of at the 18 month guide and share yes, we're trying to put some very specific timeframes and and <unk>.
But by no means are walking back from anything we've said previously and I am sorry.
I do see the has the potential to approach. The 100 dollar of kind of milestones at the end of this year and certainly with comfort of kind of getting down on a full year basis.
Thanks, so much.
Your next question is for Michael Binetti of Credit Suisse. Your line is now open.
Hey, guys. Thanks for taking the questions here.
Can you can you connect a few comments on the variable expenses here I think you noted the variable expenses at the end of the shareholder letter were $79 per order and 2020, and we could see it move around in 2018 to 2019, but maybe you could walk us through where you see the.
The apples to apples equivalent of that number this year and what what are the inputs that get you. There and then maybe rank order the inputs for next year as you push towards the I think the apples to apples number would be 60% to 65.
<unk> per order to.
To get the EBITDA profitability from the from the 79 and 2020 I'm just trying to understand the GAAP there since we've been over the for gross profit for quite a bit.
Sure sure I think on track all of its the Perth.
Parts of your question.
And so.
What's the definition first of all of our variable expenses are sort.
And they include the 3 big ones on the cost of our marketing cost of our variable operations.
And and.
And I can ship and the cost of the sales team and then sort of second tiers of our retail of our variable of retail operating expenses.
To get from here to there I think 2019 is kind of the the most recent good kind of benchmark to work from so many of you see all of those costs and aggregates improved by about 10% to 15% on the our unit or 1 of our business to get to the of the profitability milestone.
On the biggest drivers are going to be the first of all as I mentioned, the marketing and our operations variable unit expenses.
The marketing efficiency.
Long standing track record of driving marketing efficiency and that starts with really strong cohorts and really strong by our engagement and retention and see no reason to think that that won't continue and then.
And on top of the of the compound that with improving by our acquisition costs over time.
On the variable operation side, and Thats really of the product of strength of really leveraging the investments that we've made and automation and we continue the mix. So we are seeing the benefits now we expect to continue seeing and going forward.
And then as you know for kind of the largest.
And just about them up opening retail stores for the same day and so that's up 2 will start to generate leverage going forward.
So that all adds up to 10% to 15%.
And I guess to follow that where do you.
Where do you see the the customer acquisition costs going by 'twenty..2 if we if we should think about it and those terms and then.
1 other follow up on the I think for the direct gross margin was down about 570 basis points driven by the sale of aged on.
Of aged inventory and lower margin can you just help us think about what's embedded as we think about <unk> or second half. Please.
Yes.
Sure let me spell of Domino remember your first question.
For the direct margin Youre right.
Down the.
And for a 5 percentage points year over year basis, and that's really a function of us de emphasizing the purposeful purchase of inventory.
And as our supply channels across the board have rebounded strongly and we just don't utilize that as much. So the higher mix of the direct business is coming from the traditional kind of late returns, which is the lowest margin piece.
And that's important to Dimensionalize the thing so the direct piece of the business is low.
Less than 10% of overall GMB, so small changes on the small base half of pre.
Pretty significant.
The impact on the surface.
Overall gross profit per order as the metric to look at net increased 9 months quarter over quarter, we continue to see the opportunity for that to go up.
The other question.
Okay Hallmark of the back yes, im not going to provide any long term guidance on where we see that heading other than to say that we have historically been very nimble and have been very effective at driving back improvements just about every year, except for 2020 and.
And I'm confident we can continue the inefficient.
Alright, Thanks, a lot guys.
Yes.
Your next question is from Mark on <unk> of Baird. Your line is now open.
Thanks. Good afternoon I. Appreciate you taking my question. So another follow up just on the path of profitability, but maybe from a little bit of a different angle here.
And I appreciate that the backdrop makes the forecasting difficult.
We kind of put the pieces together that you are kind of guiding to GMP spring this year expectations for at least 30% next year. It would seem that youre going to be knocking on the door of about $2 billion <unk> run rate by kind of later part of next year gross profit per order as bounce back nicely.
You outlined and there is some room for that to improve it sounds like Youre pleased with some of the efficiency initiatives, especially the Arizona.
So I guess as I put that together, I guess, which which components.
And the path to kind of bear the most risk here because it seems like you've given us all of the components that are kind of moving and and the direction, but you kind of call out.
And not wanting to put a timeline on some of these things at this point. So just any any further clarity there would be great.
Okay.
And I can start so.
And we would obviously I think youre hearing allowed us there are commitments to simultaneously continuing to drive topline growth and driving the profitability we.
We'd love to be definitive about the day, the timeframe and we're going to get there, but the current environment or any of it doesn't seem like the prudent thing to do.
But we are putting out monthly disclosures, which are a pretty good of approximately for providing short term guidance and the incremental beds and the short term has sort of negligible. So thats of Hollywood approaches and <unk>.
Provided less transparent and more transparency of that less.
On our path.
Fair enough and just a quick follow up Matt on just the inventory line it looks like the the direct gross margin was.
Weighed down a bit by some working through of aged inventory and any more context, there and I think youre guiding to some kind of further inventory build through the remainder of the year. So just.
Any thoughts on how you are kind of managing the opportunities with the direct side with some potential margin of the risks. Thank you.
So let me start with that last part is notwithstanding so inventory at the end of Q2 was about $60 million that should be the apex of our inventory balance at least for the balance of this year, we're not doing out of the.
Nearly the emphasis with the more a couple of quarters ago.
So that's.
Point number 1 point number 2.
The aged inventory part of the comment means older supply that we have from late returns and the.
That stayed with us over a period of time that we do end up bringing the price down to sell through ultimately it is not new that has forever been the pattern forever and the the.
The late return part of inventory has always been the lowest margin piece of the direct line and the overall business. So there's nothing really new to comment on other than inventory is not going up and this quarter, we don't expect the share count.
Thanks for the clarification there best of luck.
And.
Your next question is from Edward.
Keybanc Your line is now open.
Hey, guys. Thanks for taking the questions I guess first and.
Of our metrics you can give I know, it's the early days on customer acquisition costs and neighborhood stores.
And I know you guys indicate youre going to kind of pause expansion and once you've completed the flat, but any particular hurdles you are hoping to meet and then as a follow up we noticed that you guys seem to be testing other categories like electronics and the sporting goods on it.
Any sense of that how we should think about those test thus far and kind of how are you and obtaining the initial set of inventory.
Alright, so if Julie so and.
And how are yields some of that.
I think.
Okay. So the.
Interest you take a minute just start with the category and we're pretty excited about it and it's early early days, but we're not going to make any.
And we're not going to make any predictions, but we are going into the collectibles and particularly the very large category and the outdoor and we are we think of ourselves and <unk>.
Luxury lifestyle business are.
And of signers were asking us to get into these categories and research dip for awhile and felt like.
It was.
Actually the net on net add to us.
The target.
And the third week of the lack of very very new for us, but I would expect it to be and expands our Tam actually expense our service level. So we feel really great about that and then do you want to talk about the first part of that yes.
Sure so to add on to the.
And as well so I think you also asked and like how does that change all of its not really all of it.
Leverages, our existing sales infrastructure, and our existing authentication and infrastructure and our retail book and a retailer.
And just put making better utilization of those things and then the retail and retail stores, yet so there's kind of a lot in there so you're we're.
We're not disclosing specific numbers in terms of the store acquisition cost of wheat.
And have said and the remains the cash that's the.
<unk> of new Consign, our sphere of retail is more efficient and through our marketing efforts alone and that remains the case, it's a very surgical effective way to acquire and gives refiners.
And that's frankly the tool that we didn't really have previously.
And Youre right were about the pause we're doing exactly what we said we're going to get to around 10 stores and then give them. Some time to mature we're going alerts and things were going to optimize them and I will come back the reassess what we do going forward keep in mind that the majority of the source and health and EBIT at all of the US is a couple of more to go on.
And 3 months so it can take all of the time to gather data and come back.
On top of the task.
Early signs from the storage of quite good. So of course, we're looking at overall value supply quantity and value of supply coming in number of and you can sign of the of course, the demand is generated and the stores and then most importantly, the impact of the stores on the market and which they operate and F&B of small or large scale on the depending on the <unk>.
Size of the star and the location.
But we've seen consistently a halo effect, where the growth rate and that market accelerates with the opening of the store and then stays at the higher level of and continues to grow for a longer period of time, so with access and accelerate on a market by market basis. So I wanted to see that play out of cost.
Polio before committing to how many we're going forward.
Got it thanks guys.
Your next question is from Michael Mcgovern of.
Bank of America. Your line is now open.
Hey, Thanks for taking my question.
Just wanted to ask about the metrics around the retail stores driving 30% of nuc and signers than at home concierge appointments generating 38% of total units and June are you seeing that trend continue to improve and July as we've seen COVID-19 cases, and kind of tick up a little bit nationwide.
And then also secondly, I just wanted to ask about any other specific cost trends to call out for Q3, I think you gave some high level of framework is there anything specific to call out for Q3 of that might cause some quarter on quarter.
Anything to point out.
And so in terms of what are we seeing names of lie actually we've seen an increase and the number of units coming from our income and share inside of a decrease of the impact.
And have not felt at this point any impact at all and the Delta Darian and I think it's also because we do tend to.
Most of our businesses urban centric.
And most of the urban areas also have a higher destination right I think nationally.
And urban driven business.
And.
And it and getting back on home people are excited and they have come back on and we're seeing increasing the net and that continues in August.
And the second the second.
The second part of it around the Opex. So we expect to see some opex increases on a quarter over quarter basis, and thats going to come from the.
General theme is investing ahead of anticipated Q4 volumes and the growth so on.
Are you going to see growth is and our sales team and our operations for 2 to support higher volumes of products coming in and higher volumes of approximately out.
To some extent with our marketing and we kind of invest into the strong seasonal period and then on Q3, specifically, we still have redundant or duplicative expenses for our California facility, which basically shut down at this point.
Possibly rolling off as we exit the quarter, so that will be clean and kind of coming into Q4. So you didn't ask but I'll give you of sub Q4, opex given all of the different dynamics should be pretty close to flat sequentially versus Q3.
Alright, that's great. Thank you so much.
Your next question is from Warren Cheng of Morgan Stanley. Your line is now open.
Great I just wanted to ask about third quarter and the fact that you you didn't give the <unk> guide that you do you typically debt, but just curious at that 30% plus common and the shareholder letter should sort of be extrapolated as the general guide for <unk> for the third quarter or if there's something else that youre seeing there.
Thanks, so much.
Okay.
No I wouldn't that's not the interpretation of that and make it hears it but we will be replaced given the short term guidance with providing even more frequent disclosures on the actual results on a monthly basis for the July results are out and you're going to continue seeing those disclosures every month for the balance of the year. So the incremental benefit and the short term of providing guidance and thank you Sir.
And a de Minimis.
In terms of of what we're seeing is he software on July the year on year comps did not accelerate but is the beginning of more difficult comps in 2019 Q3 of 2019 was 1 of our strongest quarters ever coming off of our IPL and <unk>.
August was the most difficult comp in that quarter and September was pretty much up there as well, but we're expecting to see continuing strong growth.
For the balance of this year.
No doubt and excess of that 30% over the balance of this quarter.
Yeah, and Patrick and case, you missed the press release for July we did grow 53% versus same period and 2019 for that 53% net.
Alright.
Right, but I guess the reason for not giving the guidance is is just you know.
And sort of you're just going to give short your and your monthly updates rather than quarterly guidance going forward is that the that the conclusion and at least.
And the balance of the year and that's what we committed just because of our business with sales impact of last year, and Mike Hogan and we just thought it would be easier for us easier for you to follow the business and its recovery, including asphalt everything on that on the top line.
Okay. Thank you.
Mhm.
Shannon is.
From Ike for trial of Wells Fargo. Your line is now open.
Hey, good afternoon, everyone.
And I guess, Matt I, just wanted to dig into the direct.
Business, a little bit more.
And the consignment gross margin looks great, but I guess I'm trying to understand what.
And maybe what exactly happened this quarter on the direct margin and.
And I bring it up because the amount of.
Months ago.
3 months ago, you had stated that you assumed that the margin would sequentially improve and there would be more of a purposeful direct revenue by inventory approach, which gives you a better margin, but now it sounds like you're saying you have less of the and the gross margin decelerated from Q1, So I guess I'm just trying to understand the topic strategically have been.
In the second quarter of amendments or is there a way we should think about the margin and net revenue base just because of they used to be on the 20th of level closer to China and I think we're just talking a little bit of trouble understanding how we should think about it.
Sure. So, yes, something's changed since last quarter and that is debt our income we're back and home and our traditional business of sourcing and supply on a consignment business is growing very well and that takes pressure off to to buy inventory to sustain our operating and our growth. So we made the dish.
And that that's not cash.
And isolation and Thats not how we prefer to use our capital of the purchase inventory. So we're just taking our foot off the gas on that.
For for the for the time, Inc.
And Thats really what youre seeing there, but I think we can kind of getting lost and some of these the.
The distinction between the different parts of the.
On the business.
If you.
You just look at overall, the consignment business and gross profit per order and Thats trending well the the margin and the direct business is just like the overall size of the business is too small to really drive things over time.
It should keep going up because of it.
There are in both parts of the business elements that are not purely variable the sort of semi fixed and they get some leverage as we grow some of the guide to a specific percentage of it will be very transparent. If that's part of business is having an impact on our gross profit per order trajectory and it's not.
Thanks, Matt.
And part of that sorry part of the follow up is what we're seeing sell through there on the the inventory side of the vendor perspective, very high value of things there are lots of high value watches and handbags those carry inherently with structurally lower take rates. So that you are seeing lots of.
And <unk> are a very strongly growing category recently, so part of that is just the systemic in terms of our take rate structure and so that's kind of bounce around on a small base of GMB going forward.
Thanks, Ken.
Yes.
Okay.
And of course your next question comes from the line of.
Fernando on your line is open.
Alright that look like on for Susan Thanks for taking your question.
Just the.
Bigger.
The picture question on the path of profitability and assuming that 30% annual GMB growth.
And when would you likely need to make additional investments such as opening of new facility or moving into a bigger 1 and then what other type of investments do you think you would need to make to maintain the growth.
It's a great question.
And with the pretty simple answer we will be well past the profitability milestone by the time, we need a new education center with Arizona, We have about 5 years of total growth capacity into the front of us.
And that obviously, our warehouses of network is a big part of our fixed cost base of that.
More abstractly fixed cost overall going forward should not go very fast for the levels that they are at currently and we will exit this year and I should say.
So those fixed costs include our overhead functions all of our real estate.
And so putting our store portfolio and so that should be of a very modest growth rate going forward.
Okay.
Hello, operator.
Yes. Your next question comes from the line and Riva Your line is open.
And.
Great. Thanks, Thanks for taking my question and congrats guys.
1 question for Julia I guess and a follow up for Matt.
The Julie the number of new buyers increased nicely again this quarter can you maybe talk about the behavior of some of these buyers compares to the previous cohorts just anything to call out that's the difference.
Mcgrath likely or of regionally and Matt and not sure. If I missed this I think you talked about $10 million and the transient cost from the Arizona DC for this year, what should we expect for the third quarter and just remind us when should we expect these costs of roll off.
Okay.
Yes, Okay, yes, youre right now of about $10 million for the full year and non recurring costs. That's made up of Covid expenses, and Arizona inefficiency of so about overlapping range as well as duplicative labor costs the overlapping.
Rent will be done by the exiting this quarter the.
And the duplicative labor also will be done as we exit this quarter.
And so whats left is COVID-19 and I wish I could say when the costs are going to kind of roll off of the public costs are in a $1 million and change per quarter.
Going forward until they are not.
Yep, Okay and term debt.
And buyers and we're actually seeing.
And it's getting our base is getting the youngster and looked at her male but not significantly.
The GAAP accident.
The more engaged with us and he's on the millennials, but yes it.
And is the majority of our buyer base now and.
And our and and we are getting more males, but having said that and their lifetime value is approaching the as far as we can tell at the earliest lumped into the price increase out of it.
And so on some level of it hasn't changed and on another level of getting younger which we like.
And it's getting younger and hormel is outside of it correct.
Yes.
Operator, we'll go to the next question.
For the next question comes from the line of Marvin Fong and your line is open.
Great. Thanks, Good evening, Thanks for taking all of these questions on 2 for me.
Most of have been asked but just on just wanted to follow up on what Andreas bringing up that the the new buyer growth was very strong.
Look back and history I think you guys were doing even better numbers like the 140000 or better.
New customers a quarter and I noted and Matt that you said you know buyer incentives are about the debt pre COVID-19 levels. So just just wanted to get your thoughts on on.
For our models should we think about your active buyer growth.
Staying about about this level, where you did and the second quarter of Roku, we actually kind of them reached.
The reach those kind of $140.50 level and then the second question and apologies. If you addressed this elsewhere, but the the <unk> for July was down a little bit of.
And just thought just interest and your comments on what drove that is that the.
So the mix of apparel going up and.
Just the total will pay on the trend there that'd be great. Thank you.
And adjusted the latter of and then kick it over to Matt and the Abbvie was installments of record type of the month of July for us, but it did trend down vs.
And and May just because of the fr apparel, and Hugh and thanks again and it.
Still was a record high AMD and for July which tends to be.
And the first kind of ahead of it tends to be the 1 of our balance every month and just because people are buying and.
More apparel and the apparel and less expensive, it's mark Martin and temporary in that month, and we did see.
The mix down a little but it's still at record high levels and and that yeah.
Yeah, and I think and then the rest of the broadly was around the buyer growth generally I think.
It's the basic function of the metric of active buyers. The trailing 12 months. So youre going to you saw that sort of lagging indicator of both on the deceleration during the Covid and the Reacceleration out of the world kind of pulling out of the Covid I think the most useful and the use of that metric is the look at gms per active buyer on a trailing 12 month basis as you can see.
On this period were up to about $7500 of slide 17, and the dollars, which is approaching where we were pre COVID-19. So overall of the buyer ecosystem of the folks that we have and are very engaged and is very very healthy over time.
I don't think of our new buyer growth and the embargo should basically attract business Dubai address doesn't necessarily need to because we do tend to see a slightly increasing contribution from our base of buyers every year.
Gotcha. Thanks, Julie Thanks, Matt appreciate it.
The operator, we'll take the last question.
For the last question and will be coming from Simeon Siegel and your line is open.
Thanks, Good afternoon, everyone.
Did you and anyway to quantify how much of the ASP increase was due to mix versus I think and the shareholder letter you mentioned youre already seeing benefits on the ASP from the Nextgen pricing engine. So would love to hear about that and then how youre thinking about that at all.
Lever moving forward thanks, guys.
So the.
Yeah, I believe actually get $10 and Lora and so we're excited about that over on the business with our pricing and optimization and here's how we literally and this is the key area of investment for us because obviously and raise prices we said it on.
Oh, great now, having said that the last thing and you learn and see if velocity of sales of dropping.
So it is and internet process, the ongoing and and we.
We do expect and continue to see benefits, sometimes it's the only $5, but like I said of relic and valid for this year.
And hopefully it will continue.
It will continue.
But every dollar is important for us because it desktop and <unk>.
Our share of the cash back to the Bottomline and.
And it also enhances the consumer satisfaction and those things of benefits that really part of alright.
And that was great.
And I think you've basically covered and so I think we've covered in the second the stockholder letter of some ASP was up 17% year on year and in Q2, and Julie mentioned earlier on the call that in July women's ready to wear and home and shoes were up 70% year over year share.
And it's starting to mix up in the business. So that implies that the like for like prices are up and as Jos mentioned.
Also the.
Units per transaction.
And are very high.
Seeing the continuance of high value purchases the strength there is sustaining but the items per order has come up to the corporate level as well. So that's the outcome of that are of the record high of Io gateways and stand for 1.
Great. Thank you and then Matt can you comment at all on in terms of the return of cancellations, maybe what youre expecting there of the assertion of impact from mix and that's apparel growth.
Now if we didn't comment on it.
But typically.
And what it should be pretty stable I think the the.
Abnormally low return on expiring COVID-19 have largely normalized at this point, the there's still a bit lower and thats, just a function of category mix.
So we don't frankly know exactly what category mix is going to trend over a multi quarter basis.
They are going to travel together return rates and.
And frankly bus and then Q4 typically is a slightly higher return rate within the context of the year, but this quarter should be operating system and we saw on Q2.
Okay. Thanks, a lot guys best of luck for the year.
And thanks.
There are no of course chimps at this time.
And I'll transfer it back to Ms. Julie Wainwright.
So thank you for joining our call today. We appreciate the time, we appreciate your questions and with that we've got some work to do and that's true.
<unk> has a great week and we'll talk to you at Q3 results. Thanks Bye.
Everyone else has left the call.
That concludes today's conference call and you may now disconnect have a great day.
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