Q4 2023 RealReal Inc Earnings Call
Participants
Caitlin Howe; SVP, Finance; The RealReal, Inc.
John Koryl; CEO; The RealReal, Inc.
Rati Levesque; President, COO; The RealReal, Inc.
Todd Suko; Interim CFO & Chief Legal Officer; The RealReal, Inc.
Mark Altschwager; Analyst; Robert W. Baird & Co., Incorporated
Anna Andreeva; Analyst; Needham & Company Inc.
Rick Patel; Analyst; Raymond James
Marvin Fong; Analyst; BTIG
Ike Boruchow; Analyst; Wells Fargo Securities, LLC
Ashley Owens; Analyst; KeyBanc Capital Markets Inc.
Tom Nikic; Analyst; Wedbush Securities Inc.
Edward Yruma; Analyst; Piper Sandler Companies
Presentation
Operator
Good day, and thank you for standing by. Welcome to the RealReal fourth quarter and full year 2023 earnings conference call. (Operator Instructions) Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Caitlin Howe, Senior Vice President of Finance. Please go ahead.
Caitlin Howe
Thank you, operator. Joining me today to discuss our results for the period ended December 31, 2023, our Chief Executive Officer, John Koryl; President and Chief Operating Officer, Rati Levesque; and Interim Chief Financial Officer and Chief Legal Officer, Todd Suko.
Before we begin, I would like to remind you that during today's call, we will make forward-looking statements which involve known and unknown risks and uncertainties. Our actual results may differ materially from those suggested in such dates.
You can find more information about these risks, uncertainties and other factors that could affect our operating results in the Company's most recent Form 10-K and subsequent quarterly reports on Form 10-Q.
Today's presentation will also include certain non-GAAP financial measures, both historical and forward-looking, for which historical financial measures we have provided reconciliations to the most comparable GAAP measures in our earnings press release. In addition to the earnings press release, we issued a shareholder letter earlier today, both of which are available on our Investor Relations website.
I would now like to turn the call over to John Koryl, Chief Executive Officer of The RealReal.
John Koryl
Thanks, Caitlin, and welcome to our earnings call. Today. We reported financial results for the fourth quarter and full year 2023. For the first time since our IPO in 2019, we reported a full quarter of positive adjusted EBITDA as well as our first ever quarter of positive free cash flow.
Our Q4 adjusted EBITDA exceeded the high end of our Q4 guidance range and the Q4 GMV and revenue exceeded the midpoint of our guidance. Importantly, we announced today a reworking of our capital structure, for which I'll provide further details later in my prepared remarks.
Additionally, we recently announced two exciting leadership updates. First, our new CFO, Jago Paul, will join us in March. Jay brings with him a strong background as an e-commerce CFO, as well as an extensive experience with two-sided marketplace we look forward to introducing Jay in the near future.
We also announced that Karen Katen, who was a current member of our Board and the former CEO at Neiman Marcus Group. And our newly appointed Board Chairperson. Taken together, we believe that the RealReal is starting off 2024 with solid momentum from a business operation, an organization.
Our improved financial results in 2023 were driven by our strategic shift to refocus on our core consignment business. We refined our growth model with a focus on profitable supply as part of these efforts, we reduced direct revenue by half overhauled our consignor commission structure and revamped our approach to sales and marketing.
Looking ahead, our new initiative, a new initiative of drop-ship consignment previously referred to as virtual consignment has the potential to unlock incremental supply from trusted. Operationally, our results in 2023 were a significant step forward on our path to profitability we are beginning to deliver efficiencies from our investments in automation and artificial intelligence.
In 2024, we are focused on enhancing our technological capabilities and processes to improve the product flow in our authentication centers and further automating our authentication. While these initiatives rolled out a small investment in Q2 of this year, we are bullish on the long-term benefits that will enable us to continue to enhance our best-in-class authentication and deliver a superior experience to our guests.
Regarding our capital structure, today, we announced that we entered into a private separately negotiated debt exchange transactions with certain holders of our convertible senior notes due in 2025 and 2028.
As a result of the debt exchange transactions, we reduced our total indebtedness by more than $17 million, creating substantial runway and capital structure flexibilities for us to execute on our strategic vision.
Looking forward, we project that we are on track to deliver a break-even adjusted EBITDA year in 2024. Today, we provided Q1 2024 and full year 2024 financial guidance through growing profitable supply, driving operational efficiencies and delivering an exceptional service to our consignors and buyers.
We believe we can continue to make significant progress on the bottom line as we reaccelerate growth in 2024. I'm excited about the trajectory of our business and believe we will continue to capitalize on our position as the leader in luxury resale.
With that, let's open the call for questions.
Question and Answer Session
Operator
Thank you. (Operator Instructions)
Mark Altschwager, Baird.
Mark Altschwager
Yes, good afternoon. Thanks for taking my question. And congrats on the results this quarter. So a bigger picture here. Over the past few months, there's been a lot of discussion of the slowdown in the aspirational consumer, a little bit more promotional intensity for luxury apparel, especially online.
Is you view these trends as headwinds or tailwinds for your business and retail in general? And would love your perspective there? Both as it relates to supply and or I should say, quality supply of quality goods excuse me as well as buyer engagement. Thank you.
Rati Levesque
Yes. Thanks, Mark. And this is Rati. So as far as the health of the consumer goes. And in Q4, we saw a little blip. I think we spoke about in October, but after that, it definitely picked up. I will say, you know, we talked about the product consumer being slightly more promotional in October.
We didn't see that for the rest of the quarter and then going into Q1 also quite happy with the consumer there, both on the supply and demand sides of both sides of the marketplace. Our top of the funnel looks very healthy. And again, we look at opportunities all the way to appointments to GMV and revenue.
Mark Altschwager
Yes, excellent. Thank you. And maybe a follow-up with respect to the guidance on over the past few years. Q1, I think it marks the low point of the year from an EBITDA perspective with improvement in the back half, especially Q4 on the initial guide here doesn't seem to imply much improvement.
I think of $4 million loss at the midpoint in Q1, but breakeven at the midpoint for the full year. Maybe walk us through some of the dynamics this year that are different, especially with the revenue guide, I think implying some nice acceleration after Q1?
Caitlin Howe
Yes. Thanks for the question, Mark. This is Caitlin. So what I would say there is the midpoint of the Q1 guidance negative [$6 million] And so what we're expecting for this year is really a return to our typical cadence. Our typical seasonality, which we are more of a back half type of loaded business in terms of both top line and bottom line as well
So I think you're going to see that right. So you know, historically kind of excluding last year, which had some anomalies because of the changes we were making in the business. When you look back over the course of the time that we've been a public company Q1 and Q2 are typically pretty even between top line and bottom line and then it accelerates kind of throughout the year.
And so I think that's kind of how we're thinking about it on this year to come. So I think I think we're feeling good about where we are, but I do think we expect and we would see some acceleration through the year.
And then the other factor we have is just because of our comps. We had kind of a tough comp in Q1 of last year. We brought in a lot of low-value supply that we've moved through right as we were kind of minimizing low-value, minimizing direct. So I think you're going to see that Accelerade throughout the years.
Mark Altschwager
Very helpful. Thank you and best of luck.
John Koryl
Thanks.
Operator
Thank you. Anna Andreeva, Needham.
Anna Andreeva
Great. Thanks so much. And congrats on profitability guys. I wanted to check where the biggest upside came in the P&L versus the plan to reach profitability in the second quarter and in the fourth quarter rather and secondly, what's the timing of the new revenue streams that you guys have discussed as we go through the year? Maybe remind us where are you with sponsored ads and also the warranty opportunities. Thanks.
Caitlin Howe
And thanks Anna, this is Caitlin again. Why don't I take the first one and then on Koryl and the team, can you comment on the new revenue streams. So what we saw what we saw in Q4 versus our expectations, as Rati mentioned, you'd like to read the I think there was some general kind of concern or just watching out or kind of demand trends more broadly.
And so we weren't an exception to that. What we did see is we saw a nice acceleration on the top line through Q4. And so I think from a top line perspective, we were pleased with where we ended up in Q4, and that's from as we think about flow through, I would say the beat versus our expectations was split roughly evenly between gross profit and OpEx. And so let's talk through that.
So what helped us from a gross margin perspective in Q4? We had more favorability than expected. And this mix between direct and consigned, we grew the consignment revenue while shrinking direct a little bit more than 50% in the quarter versus prior year, which again, is a purposeful change that we made earlier last year.
And then the other thing that helped take rate was favorable in the quarter versus where we thought we'd land, and that's a function of and the commission structure change that we made in late 2022, combined with the mix of product that we sold within the quarter.
I would say, you know, and then and then kind of order of importance, I would say shipping margin have a little bit more favorable than anticipated, and we continue to make progress on efficiencies in terms of inventory control, transportation costs, those types of things.
On the OpEx what I would say is that we were really favorable in terms of just being disciplined on the support OpEx. So when we talk about support versus sales and ops, we had a nice healthy supply quarter.
And so sales and ops and more or less where we expected maybe a little bit spending, but that's an area where we'd like to spend right when supply is healthy and we were just really disciplined on R&D. Are there support out there.
John Koryl
And in terms of the new revenue, dropship is a key one launching capability. So that did impact Q4 at all what we've reported. So you will see a little bit of that, not a huge impact whatsoever in 2024. But from an advertising perspective, it was not material at all at our Q4 results. We've been learning for probably half a year.
And what I've learned is we need to spend all of our time focusing on our core, Brian, it's an it's a nice sign business, but at the end of the day, anything that distracts from the core business from a site experience perspective is something that we have to be very careful with.
So as much tailwind as we're seeing with our core business right now, we're really just focusing on that and again, making sure that we're investing in our sales team and investing in marketing in the right way and providing all the operational efficiency needs that we need on the warehouse and authentication side. So this is truly not only Q4, but our 2024 outlook is a story about our core business.
Anna Andreeva
Thank you so much. Super helpful.
Operator
Thank you. Rick Patel, Raymond James.
Rick Patel
Thank you, and good afternoon, everyone. Can you unpack the opportunity for drop-ship consignment? Just curious if you can provide any context on how much volume can touch in the first quarter versus where it can ramp to by the end of the year?
And then secondly, just curious if you can help us understand the economics of drop-ship as you think about the positive contribution towards profitability.
Rati Levesque
Well, share hiring and its Rati again. So you like Koryl mentioned with other revenue stream. That's how we're thinking about drop-ship as well. It's early, we're learning on it is a very small, a very small impact for this year.
We really are, you know, we're excited about it and we are confident that this can generate a new channel for us when we think about growth in the next few years. But this year, it really is a test-and-learn and you're not going to see a huge forecast in '24.
Rick Patel
Got it. And then can you also help us with the cash flow mechanics following the debt refi as we think about the impact of the changes in aggregate, what will be the impact on cash interest expense in 2024 and beyond? And is there anything to contemplate from a modeling prospective for the share count going forward?
Caitlin Howe
Yes. So from a rebate perspective and talk, Todd, you led a lot of that. So feel free to jump in here. But from a modeling perspective, clearly, we have had really inexpensive debt. We still have a large portion of that, especially in the 2028, those are a 1% coupon.
And so still a significant portion of our capital structure in the debt side of our capital structure is very inexpensive debt, but interest rate environment has changed. And so there will be incremental cash expense that we'll have to pay. And Todd I don't know give some commentary around that.
Todd Suko
The incremental interest expenses, 8.75 cash, 4.25 times. And we look, yes, we think our average weighted average cost of debt stays reasonably low at about 4.8% in the first year. Not sure if that answers your question.
Rick Patel
Yes, that's helpful context. And anything to think about for the share count going forward.
Todd Suko
Of course, you're got. So I would just say that the yes, in the agreement, but the total amount of warrants that were issued were [$7.9 million] approximately. So a little bit over 7% dilution. I would use the year end share count.
Caitlin Howe
And Rick, The only other thing I would add is just we were able to delever a little bit of the transaction which we saw as favorable.
Rick Patel
Very helpful. Thanks very much, guys, all the best. Thank you.
Operator
Thank you. Kunal Madhukar, UBS.
Hi, thanks a lot. This is Jason on for Kunal from UBS. A couple of questions. So the first one is on the modeling side of things, actually the footnote in the press release, but could you please provide some details around the underlying components of the $6 million restructuring charge in 4Q.
That pretty much drove better than expected EBITDA compared to your guidance. And speaking of switching, okay. How can we think about this line item for 2024 in terms of dollars and year-on-year change? And I have a follow-up.
Caitlin Howe
Yes. So the crux of the restructuring charge that we took in Q4 really had to do with exiting some real estate. And so we did incur additional expenses. So I would characterize it a little bit differently. I don't think that's what drove our favorability. If you exclude those types of things when you're spending to exit real estate because it's not part of your ongoing operations. So that's how I would characterize it.
Got it. Thank you. Second question, is on how can we think about sort of the inventory levels and gross margin level levels compared to 2022 for this year? If you could share any color on that would be helpful.
Caitlin Howe
You have to I assume you're talking there about owned inventory. So our inventory balance at the end of 2023 was about $22 million. And if you remember we peaked at $75 million of owned inventory of 12 to 18 months ago. And so what I would say, as you know, that's really reflective of us minimizing the direct business, minimizing that owned inventory, transact those transactions.
So I wouldn't I would consider this to be more or less a new normal for us. So there are ways that we still acquire inventory on and it's really through out of policy returns. And so if somebody return something we've already paid out the consignor, then we will take that back onto our balance sheet in certain circumstances for really good repeat buyers.
So that's we assume that will more or less grow with the business is small, obviously, in all a small dollar amount and then there also and also some get paid now, which is really, really a customer offering. So in certain circumstances, I'm very limited brands, high end categories that high end watches a few categories of high handbags.
There is there is some situations where we will pay a consignor upfront and we typically pay that last. So we think if you can sign with us, you'll end up earning more, but those are really low risk of having to discount those goods. So those two will continue.
But what we did kind of during COVID to go out and buy inventory, and that's really minimized and done at this point. So how we're how we're thinking about total inventory on inventory going forward is more or less as a percent of revenue, it's 4% to 5% right now. We assume it will stay in that range and going forward.
Thank you very much. Appreciate it.
Operator
Thank you. Marvin Fong, BTIG, LLC.
Marvin Fong
Good evening. Thanks for taking the questions and congratulations on the quarter. I guess I'd like to circle back to what rightly was saying about the improvement after a bumpy October. And I believe you said you're pretty happy with mid-January, even though and there were signs that elsewhere that the consumer kind of pulled back.
So I was just curious, you know, if you could do you have any thoughts on why it is that you guys saw that improvement, it, was it something you guys yourselves? Where are you doing with your marketing or anything like that? Or did you just kind of feel like it's the value proposition resonating with the consumer.
John Koryl
I think, Amit, thanks for the question. I think it's and all of the above, I think what people forget is we didn't have a lot of capabilities on how to personalize our relationship with the customer and what something that we've gotten really good at now.
As a year ago, we couldn't say, hey, we haven't heard from Marvin in a while here, let's offer them something to make it so that he can inside we now have that capability. We have the exact same capability on the customer side. So that's just one example on the marketing side.
On the other side of the coin, we're seeing a lot of efficiency from our sales team, Rossi and team have done an incredible job of increasing the tenure of our sales representatives. We always knew we are in the relationship business, but that's really coming through in the past year and as that in tenure increases, that relationship increases and distinctiveness of the real real relationship with the consignor and ultimately the customer is really good.
We still have a lot of opportunities of Concert turning customers into consignors and even consignors into customers. But a lot of those relationships from a marketing and a sales perspective have made it. So we're a lot stickier and we're seeing a lot more continuity as the business goes forward.
Anything to add Rati?
Rati Levesque
Koryl, I wouldn't say, you know, also our investments are working, right? We have the affiliate program we have a referral program. We're offering more events on our consumer event. So like Koryl, like Todd mentioned, marketing and sales are working better together, more efficiencies and then kind of our investments and our tactics are working.
And we look forward to this year because now we have a full year of these investments and I can't overemphasize the personalized promotions now we know what we need and how to get it and to get it from. And that's been an MGA have done.
Marvin Fong
Terrific. And maybe you also saw a follow up on. Yes. So you guys obviously provided for your guidance and I observed that the active buyers were down in the fourth quarter. So the first part, as you know, was that is that just a final flush of kind of the low the low value buyers finally cycling out of the on the active buyer count?
And just secondly, could you just kind of talk about what you're thinking about, you know, active buyer growth versus AOV growth as you went through providing your full year GMV guidance?
Rati Levesque
Sure. I can take that one Marvin. So our active buyers did decelerate in Q4. We expected that all the changes that we made moving out, unprofitable inventory, low value, unprofitable categories, moving out of the direct business so it's something that we have forecasted.
You're going to see this kind of turn going into this year and definitely going into that. And it's and the same attempt the same way, we think about average order value and the quality of the consumer, the quality of the product is really what we're focused on.
Marvin Fong
Got it. That's great. Thanks, everyone.
Operator
Thank you. Ike Boruchow, Wells Fargo.
Ike Boruchow
Everyone. Two questions for me. Of course, on the demand side, just curious where you are listening to other soft lines and consumer companies thus far this earnings season. Have you seen destocking volatility?
You've seen intra-quarter to start Q1 a lot of companies have talked of softness in late January, early February, some stabilization coming out of February. Just not to get too granular, but just kind of curious, is that mirror kind of what you're seeing? Or I'm just kind of curious how your business has slowed.
Caitlin Howe
No, I think we're going to resist the urge of giving kind of the month by month or week by week lows. And I think this is Bobby on. But I think the general principle is what we saw. We saw an acceleration throughout Q4. We've seen good momentum so far in Q1. And I think overall, we're feeling pretty optimistic, maybe cautiously optimistic about where the businesses.
Ike Boruchow
Got it. And then if I can shift gears to the margins and the guidance on revenue. So just first on the margin, but I think the last call you had said like a low 70s gross margin. I think it seems like the new normal. You obviously had a great gross margin in 4Q.
Should we be kind of expecting low 70s throughout the year? Is there seasonality we should we should think of as we kind of model the gross margin? And then Caitlin, just on the revenue versus GMV guide, can you just help us with the moving pieces between those two, maybe some take rate guidance for Q1 or the full year or direct revenue? How is that supposed to trend through the year? Any help on those lines would be great.
Caitlin Howe
Yes, absolutely. Great question. So if you think about growing GMV flowing through to total revenue, kind of a couple of factors there that you hit on some take rate and then also mix of product. And so when I say mix, I'm talking about consignment versus direct flows through dollar for dollar from GMV to revenue. And so you saw a little bit of headwind this year sorry, last year 2023 as we exited direct.
No, I still think there's a little bit of that you're going to see in Q1 on that, that direct is still going to, we believe will shrink. But then once we start comping yet lower percent of total direct, I think you're going to see a more consistent flow through Bobby from GMV to total revenue.
So again, I think Q1 a little bit a little bit of noise there just as we continue to exit the direct business. But then I think it should normalize, you'll take rate going forward, right? You saw were up 150 basis points and integrate and really that was mostly driven by the consignor commission rate card change that we made at the end of 2022.
And so we had to sell through the product that came in under the old rate card in the first half of the year, but then we saw you. So you got to see kind of a clean P&L in the back half of 2023. So what I would say as you know, take rate, is this new normal at a higher level? And now from here, what will change is the mix of products sold within a given quarter?
And so as a SPRAOB. goes a little bit higher. It tends to be higher in Q2, tends to be highest out of the year in Q4, you're going to see a little pressure on take rates. But what you end up getting is good flow through on those units. And so that's kind of top line. And then the other piece that you asked about was margin gross margin and here's what I would say.
As you know, we were pretty pleased with our gross margin in Q4, and I think you know, I think we would say that that has seven a 70% plus is kind of you know, that low 70s is the new normal. Again, it will vary quarter to quarter based on based on the mix of products that we sell. But I think we're feeling pretty good about that.
Consignment business has a high. It has a pretty high gross margin inherently. And so as we mix more into that return to growth on our on the consignment and overall top line, I think we feel pretty good about where the gross margin will be.
Ike Boruchow
So thanks. And it's actually like I made the comment.
Caitlin Howe
Thanks Ike.
Ike Boruchow
Thanks.
Operator
Thank you. Ashley Owens, KeyBanc Capital Markets.
Ashley Owens
Good day thing. Sal talked about the changes that have been made to the business really encouraging to see the positive EBITDA this quarter, just given this in the guidance today, do you think the growth trajectory here a little bit more firm?
And what are you seeing on the website in terms of shopper behaviors today that kind of gives you the confidence that we'll see that mid-single digit to low double digit revenue growth things this year. And that momentum will kind of persist?
Rati Levesque
Yes, sure. Hi, Ashley. I'll start and I'll let John add anything that he missed. And we feel pretty confident, I would say, going into the year on based on where we are based on the funnel, like I mentioned earlier, based on the consumer and the health of the consumer, fine jewelry is quite strong, high value is strong. And then you know it all starts with supply for us.
So when we look at the supply and we're seeing really healthy growth going into Q1, you know, I won't give any more guidance than that in Q1, but we are quite optimistic. And then we talked about all of the programs that we are launching that we've tested in Q4 that that works for us.
And those investments, like I mentioned, around marketing and sales, that tenure of the sales rep is quite healthy going into Q1, did start all started in Q4. That realignment of value and quality between the sales and marketing team is really working for us. And so we're seeing these investments pay off, and we're seeing that that kind of growth continue into Q1.
John Koryl
I think it's really well said we're in a supply-constrained business and the team is doing a really good job of developing supply. We definitely see this as a I said, low double-digit grower. And we're up against some pretty tough comps, obviously in Q1 from last year with a lot of low-value goods and clearing out the direct goods that we even did it at negative margin last year.
So the comps in terms of growth aren't going to be easy. But from there, especially in the back half of the year, as we've said we see this as being the longer term sustainable, much more profitable model of our business than we've been running to date.
Ashley Owens
Thank you.
Operator
Thank you. Tom Nikic, Wedbush.
Tom Nikic
Hi, everybody, and thanks for taking my question. I wanted to ask about the debt transaction. So and now that you've done this essentially, did you feel like this kind of it sounds like you're good now, like at least like, you know, for a couple of years until the next big tranches come or is this kind of, you know, step one and then you kind of need to do another transaction to get the capital structure exactly where you want it to be?
John Koryl
Yes, Tom, I'll talk about business. This is John Koryl, a runway perspective, and then I'll let Todd get into the particulars. But from my perspective, what I challenge the team and our partners with this give us the runway to prove that our model is the right model.
And what you've seen in this quarter and the previous honestly, five quarters is we're on the right path given the time to prove it gives us the time so that we could it be adjusted EBITDA breakeven or better? And then what can we do in '25 and how can we build on that? And then what they were able to do is give us three plus years to prove this out. And that is what was incredibly important to me in my role.
So the specifics of the transaction, I'll turn that over to Todd, but we got exactly what we wanted out of the deal in terms of the timing of being able to produce this going forward with Omnipod five, I mean, I think to your question about how do we see the capital structure going forward.
Tom Nikic
I think that right now we have plenty of flexibility to deal with that in the future. And this improves the exact plus margin have good options for them, taking decisions Great. If I could just ask a quick follow-up. I just want make sure I can understand the returns. So the total interest rate on the debt is 8.75% of which 4.25% is pick and 4.5% is cash that went out.
John Koryl
Tom it is 8.75% cash and 4.25% debt.
Tom Nikic
Got it. Okay. Thank you very much.
Operator
Thank you. Edward Yruma, KWM LLC.
Edward Yruma
Hey, guys, it's Ed Yruma from Piper Sandler. A couple of quick ones for me. Just first a housekeeping question. If I recall that '25 converts were, I think, 150 notional sides to this largely takes them out 146. And then I guess what triggers a pickup versus cash interest?
And then maybe a bigger picture question. We've seen easing pricing of kind of hard luxury, even some promotions on things like watches, I guess, have you seen deterioration in pricing and I know your consignment, but hasn't impacted revenue growth? Thanks.
Todd Suko
Yes. So I'll take first parts of the face value of the 2025 notes was 72.5 as we took out 145.8 of those plus another 6.5 of the '28 to replace that with the $135 million of senior secured notes. And that's how we get there $17 million, as you elaborate.
Rati Levesque
And then I can take the second part of that, Edward, I can't the pricing piece of it where we're seeing the consumer as far as squeezing their our average selling price for like for like items have gone up. We're getting smarter as far as M&A is concerned, we've got 13 years of data of attribution and pricing. And so we feel really good about continuing to kind of test.
It's higher and higher prices better for the consignor. It's better for the real real and our pricing algorithm and models are now expanding over more and more categories throughout this year. So we're happy about the progress there as far as you know, but our luxury items and where we're seeing the consumer, like I mentioned before, fine jewelry is quite healthy. Ready-to-wear is back and we're doing well with high value overall.
John Koryl
Yes. Just I hate to pile on I think it's still amazing. I've only been here a year, but in all honesty, the amount of pricing, power and knowledge that we have and putting all this data together seeing a million unique skews every month. It's really providing a lot of benefits, not only the history of the 13 years, but the 1 million unique users per month makes it.
So we've seen just about everything before and category-by-category, we can actually push up the pricing trial. Then we get a lot of signal from our website Mark three, three, 3.5 billion website visitors per year. So you have this wonderful combination of you have an algorithm to build on top of.
But then you actually have the experience of seeing the actual product performance, while how many people obsess at how many people added to their cart, all of those type of things, I think we've been able to offset a lot of softness with, though, in all honesty, a lot of competitive intelligence.
Edward Yruma
Yes. And just on the cash versus pick interest, what makes you toggle it? Is that your discretion is that?
Todd Suko
No, it's site discretion. So it's 8.75% cash and then the existing crews.
Edward Yruma
With 8.7% plus the PIC. I'm sorry.
Todd Suko
Plus the PIC Yes, correct.
(multiple speakers)
Edward Yruma
Thank you.
Operator
Thank you at this time, I would now like to turn the conference back over to John Koryl, CEO for closing remarks.
John Koryl
Yes, thank you for joining us today. And before closing the call, we'd like to thank our entire team at The RealReal for their hard work and dedication in delivering significant progress and our operations and results in 2023.
As a team, we honestly couldn't have accomplished any of these milestones without your relentless efforts to deliver the preeminent luxury reship resale experience to our consignors and buyers. I look forward to the next phase of our growth in 2024 and beyond.
I'd also like to thank our more than 35 million members as they join us on our mission to extend the life of luxury and make fashion more sustainable. Thank you.
Operator
This concludes today's conference call. Thank you for participating. You may now disconnect.
