Ladies and gentlemen, thank you for standing by, and welcome to The RealReal first quarter 2021 financial results conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. If anyone should require assistance during the conference, please press star zero on your touchtone telephone. I would now like to hand the conference over to your host today, Mr. Paul Bieber. Sir, please go ahead. Thank you, Mel. Good afternoon, and welcome to The RealReal's earnings call for the quarter ended March 31st, 2021. I'm Paul Bieber, head of investor relations and capital markets at The RealReal. Joining me today to discuss our results are founder and CEO, Julie Wainwright, and Chief Financial Officer, Matt Gustke. 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 in our most recent periodic report on Form 10-K and subsequent quarterly reports on Form 10-Q, and in our earnings release from earlier today. In addition, our presentation will include certain non-GAAP financial measures, for which we have provided reconciliations to the most comparable GAAP measures in 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? Thanks, Paul. Well, after more than a year of navigating the challenges created by COVID, it is great to say that we returned to growth in Q1, and also achieved our highest quarterly GMV in the company's history. Q1 GMV increased 27% year-on-year, a significant improvement from the 1% year-on-year decline in Q4. Our members increased by 1.5 million in Q1. We also added the greatest quarterly number of new consignors to date in Q1. As of April, we have surpassed $2 billion in cumulative consignor commission payouts. For perspective, it took us eight years to pay out the first $1 billion in commissions, but the second $1 billion happened in less than two years. Tackling the challenges of the past year led to numerous innovations and strategic initiatives, which have us well-positioned to build on our momentum and support long-term growth. Specifically, we have significantly diversified our supply acquisition, expanded our retail footprint, and brought millions of new members into the circular economy. We thank our entire team for their dedication to delivering a superior experience to our community throughout these unprecedented times. As we build on our recent momentum and march toward profitability, we remain focused on driving scale and operation efficiency gains. The pandemic still limits our forward visibility. Our return to growth, combined with the widespread vaccination distribution, leaves us optimistic about the balance of 2021. Importantly, I want to thank Matt. He has been my partner managing the company for the last eight years, raising over $1 billion in capital and taking us public. Matt will be with The RealReal until we find his replacement, and he will ensure we have a successful transition with the next CFO. Back to the quarterly results. Now, we're ready for the questions. Thank you. First question comes from the line of Justin Post. Your line is now open, you may ask your question. Great. Thanks for taking my question. I guess when I talk about a GMV kind of flat quarter-over-quarter in the guidance, how do you think about Q2 seasonality? Of course, we can look back at prior years, but how are you thinking about that? Specifically, we know how important in-home visits are. Are those going to be kind of ramping in Q2, or is the real benefit to that going to be in the back half? Thank you. Yeah. I'll take the first and start the second, you can head on, Julie. The GMV guide for the second quarter of $320 million-$330 million, as you point out, is roughly flat. That's basically consistent with the non-COVID period. We typically see sequential flatness in the Q2 over Q1, as well as Q3 over Q2, with a kind of more hockey stick-like inflection in the fourth quarter each year. With respect to in-home, yeah, I mean, your question was asked and answered, basically. We began reintroducing in-home in March, nationwide in April. Still very early days. We're seeing good indications that there's a lot of pent-up supply. We'd expect to see that continue ramping throughout the balance of this year and beyond, frankly. Got it. Maybe one follow-up. The impact of that, I mean, is it going to be additive once you get that back up and running? Could we look for better than normal sequential trends in the second half? Well, hi, this is Julie, obviously. Yeah. We don't know what normal is as we come out of COVID. I would say early indicators show that we're picking up more units than we did prior to COVID when we do our in-home visits, but that could be temporary. It could go on the balance of the year. It's just hard to project right now. We tend to make more conservative projections. All we can say is that we're encouraged by the early signs. Got it. Thanks, and good to see you back at growth rates again. Thanks. Thank you. Next question comes from the line of Oliver Chen from Cowen. Hi. Thank you. The vendor program has been impressive. What do you see ahead in terms of the vendor program momentum and also capabilities, whether that be human capabilities or infrastructure that you're building, and how might that manifest? Would just love your view on New York, L.A. as well. As we reopen, what is your hypothesis for acquiring goods in those regions as well? Thank you. Look, vendor is an alternate channel for us, and we have both upgraded our management there and are improving our technology where we can add SKU depth, which will launch on time in the summer. Vendor is important, but it's still relatively small as a% of our total business, and we don't expect it to grow that much more as our in-home visits start taking up. They're getting very aggressive. L.A. and N.Y., we're not reporting on them separately, but I could say we're very pleased with the progress and growth we're seeing in both of those two critical regions. Vendor is a great channel for us just to close the loop. It's still not as strategic as getting back in home and working with our individual consignors. Yeah. The capabilities with respect to vendor are tracking, and we're continuing to work on them. Over the course of the next quarter or so, we expect to enhance our capabilities that would really be more customer-facing. Okay. As we look forward to the reopening, what do you see happening with product mix? Do you anticipate that apparel and UPTs will accelerate? It looks like buyer's incentives will normalize based on your comments. Are there any thoughts around seller incentives as well in the marketplace? Well, all incentives actually are decelerating or normalized as we speak for the buyers and the consignors. The buyers are back to pre-COVID times. Same with consignors. We're using consignor incentives only when we open neighborhood stores to introduce the idea of drop-offs now going forward. That doesn't mean occasionally we wouldn't run small promotions that are normal for the business if we see where we need more of some type of product, but those have been normalized. We're excited about that. The question about when will apparel return. Apparel did show growth in Q1. It's just not growing. It's still not part of the mix as it was prior to COVID. Also, shoes are down, but showing growth. We don't know when it's going to return to normal. We have a hypothesis, which could be totally wrong, that it will return in the fall. In the meantime, our AOV's are at an all-time high. It's just the mix in the baskets changed. Thank you very much. Best regards. Thank you. Thank you. We have the next question. Comes from the line of Michael Binetti from Credit Suisse. Your line is now open. You may ask a question. Hey, guys. Congrats on the return to growth, thanks for taking our questions here. I guess the gross profit per order was around flat, even though you did see a nice acceleration in GMV. I'm just trying to think through the model here. Maybe a little bit more clarity on the roadmap to $100 per order in gross profit that you pointed to in the shareholder letter by the end of 2022. Anything beyond what you mentioned in the shareholder letter as far as the biggest points of leverage from here? I know you've got a lot of the automation that you've been talking about over the last two years is in place now. I guess, just backing up bigger picture, Matt, we've talked about this a lot. Can you help us revisit the path to profitability? I think the early framework that you were thinking about to get the company to break even on EBITDA with rough math, $2 billion of GMV and $100 of gross profits per order. Is that still the right framework, or have some of the investments below the gross margin line changed those dynamics? Sure. On the gross profit per order, there was a decent amount of disclosure in the shareholder letter. Yes, roughly flat. We do expect that to increase this quarter modestly, mostly due to buyer incentives coming down. We don't know, as Julie mentioned, exactly what the AOV trend is going to look like longer term. Roughly speaking, AOVs and take rates are nearly perfectly inversely correlated. As AOV goes up, it is a little bit additive to gross profit per order. We think that's not going to be a major driver getting toward 100. Continuing shipping leverage, getting the buyer incentives down, and leverage over some fixed costs is mostly what gets us there by the end of 2022, as you point out. With respect to the path to profitability, we're not in a position to update any longer-term projections because we're still in so much fluid of an environment with COVID, but no fundamental changes. I think to the extent that you saw forever elevated mix in terms of high-priced goods and a higher AOV, it would take a slightly higher amount of GMV, all other things equal, but that's not necessarily our long-term view. No real updates to speak of. Okay. You mentioned in the shareholder letter. Yeah. Some of the cash from the recent draw, it looks like you have some international investments in mind. Maybe you could speak to what you think about in the near term and maybe a little bit more over the medium term there. Well, in the near term, which we would define near term, the next six months. sort of put on hold given the lack of return to normal across Europe and other countries. We still have 2022 in our crosshairs for some international small expansion. It may most likely move to the latter half of that year. Right now, what we're working on is more planning, some development work, but COVID moved that back a little bit. Okay, thanks. Thank you. Next question comes from the line of Erinn Murphy from Piper Sandler. Your line is now open. You may ask a question. Great. Thanks. Good afternoon. I was hoping you could talk a little bit more about the neighborhood stores. I know you gave some encouraging metrics on how the buyer is engaging with that format. Can you just share a little bit more about what you're seeing in terms of brand awareness and what you're seeing in terms of the drop-off? What kind of units is the consumer dropping off when they are consigning there? Then just secondly, on the roadmap, I guess, Matt, does your pending departure, does that impact maybe the ability to secure a good pipeline of second half leases for that initiative? On the neighborhood stores, they are exceeding our expectations, both with demand and also supply. Those stores that we've had open the longest are ahead of our expectations. I think we all know this, but I'll just put it out there. We're still operating with COVID restrictions in every single market. We still have limited capacity in the store for either a buyer or a consigner. Even then, we're seeing incredible reception to us having these small neighborhood stores. We're encouraged by that. We're so encouraged that we're actually going to open three more than we originally planned this year. Then we're going to take a breath and take a pause and measure the effect as we hopefully do pull out of any limitations in running those stores from both consigners and buyers being in the store. Right now, they're exceeding our expectations, and they're exceeding our expectations even if we were in a non-COVID period. That's really the best way to state it right now, because we're still working under what we consider restrictive and artificial circumstances. It looks good even then. Do you want to? Yeah, on the second question, the simple answer is no. Almost all of the leases of those 13 are already signed, and I wouldn't expect to have any difficulties securing future locations. Plus, Matt's not going anywhere for a while. We're just giving you guys a heads up here. Thank you. Good to hear. Just secondly, just with the announcement this afternoon on shuttering the Brisbane center as we move through the summer, how do you think about the opportunity in the back half to narrow some of the losses just from the expense base maybe coming in a bit? Yeah, I can start with that. Yes. Unfortunately, with the move into Arizona, which provides us with a lot of benefits in terms of cost leverage over time, we made the difficult decision that we will close the Brisbane, California, location sometime at the end of the third quarter. Yes, we'll be rolling off of some operating expenses, which are roughly equal to what the Arizona facility, although it's double the size, would cost. We'll be helpful, and as we start to leverage the Arizona facility, that's where we start to throw off some meaningful fixed cost leverage. Great. I just want to make a couple of statements about that. We did extend every employee in the Brisbane facility an offer to join us if they were in good standing, and we're happy to say that we've had a higher than expected response. All the experts are staying with the company in some capacity. We actually are moving some core talent with us when we do move into Arizona. Also, the state of Arizona did give us incentives to move there, which the state of California, it's not really their focus. We're very excited about expanding and making it a major hiring focus for us in the future in Arizona. We're excited about the state. Great. Thank you. Thank you. Next question comes from the line of Edward Yruma from KeyBanc Capital Markets. Your line is now open. You may ask a question. Hey, good afternoon. Thanks for taking the questions. I guess first on marketing expense, I know you guys leveraged it the first quarter. Now that your supply is more normalized, can you give us a thought process on whether that leverage should occur for the balance of the year? Then second, Julie, on the neighborhood stores, can you talk a little bit more about your experience on the sell side there? I know historically they were kind of designed for people to buy items there. I know you had a couple comments in shareholder letter. Any interesting findings on the receptivity of consumers to shop at those neighborhood stores? Thank you. Sure. On the marketing side, yeah, we do expect leverage going forward. It's not always going to be a straight line because the cadence of our marketing spend is not in direct short-term relationship to our GMV expectations. We do expect marketing expense to be slightly down quarter-over-quarter this quarter and leverage on the full year, significantly even versus the pre-COVID baseline of 2019. Notably in the quarter, we saw, in Q1, substantial leverage in marketing, and our buyer acquisition cost was down significantly. We're pleased with that trending. What do you think, Julie? Well, yeah. It's just too early to tell what's happening in the stores. I would say it all looks very positive right now. I'd like us to get out of COVID restrictions. Let's just say there are still lines outside the store to get in. People will wait, because they either want to shop or consign, and it's all very encouraging, actually. Some stores are way ahead on their path to their own profitability, even under the most conservative terms. It looks good. Having said that, again, we're going to do 13 and see what happens before we go crazy with it, because we are still in uncertain times. Thank you. Thank you. Next question comes from the line of Ike Boruchow from Wells Fargo. Your line is now open. You may ask a question. Hey, good afternoon, everyone. Matt, I have two questions on the direct business. Well, I guess first one is, on the direct gross margins, I understand the buyer incentives are there, and it's muddying the waters a bit the last quarter too. Where do you see the gross margin structure for that channel once you kind of move past that, maybe into the back half and beyond? Sure. The direct business, as you know, has an inherently lower gross margin, given that we have to recognize GMV as revenue in this case. We did see about 300 basis points of margin improvement quarter-over-quarter in direct, and we saw that in the consigned businesses as well. They tend to trend together more or less. We expect that to continue going up, particularly as the mix with indirect starts to move more toward purposeful direct revenue, where we have bought inventory upfront on purpose rather than just out of policy returns. We'd expect to see direct margins trend up over time, not necessarily in a straight line, but several percentage points as we get through the year. Got it. Buyer incentives impact consign and direct roughly equally. Understood. Just one more, Matt. I think in the shareholder letter, you mentioned a large vendor transaction in the fourth quarter, which helped you in 1Q. It should help the rest of the year. Can you give any more detail on that comment and what exactly that is? Yeah. Sure. We made our largest ever vendor transaction in the 4th quarter of last year. Broadly speaking, it wasn't that large, but it was significant for us. We've begun selling through. We're seeing good sell-through, realizing the margins and the actually pretty high selling prices for those products. We'll expect that to continue selling through the balance of the year. Really, will accelerate when we get the functionality up on the website we were referring to earlier with, we call it depth and SKU, allowing to have multiple quantities behind the same image on the site, which still doesn't exist. That limits our ability to launch or surface all of those items onto the site. Sell-through should accelerate once we enable some technology. Got it. Thanks, guys. Okay, next question comes from the line of Mark Altschwager from Baird. Your line is now open. You may ask your question. Thanks. Good afternoon. Great to see the in-home appointments back. I guess that, relative to pre-COVID levels, can you quantify the level of supply you're generating from that channel in the March and April period? You mentioned in the shareholder letter and on the call, you're seeing evidence of pent-up supply. I was hoping you could expand on that a bit. Just maybe any metrics you can share on the productivity of these in-home appointments or kind of number of units or GMV you're generating per appointment versus where you were before. Thanks. We just started really in March offering it. It wasn't even something you could choose by looking at the website. April, we changed the website to make sure it was in-home, and May 1st is when we're really going sort of full throttle on offering it, meaning it's our first option we're offering for consigners if they're comfortable. Prior to COVID, an in-home pickup would yield between 17 and 20 units per pickup. Now when we're going in, it can be on average 30 units, but we don't know how long that's going to last. We're still at a pretty small percentage for Q1 because again, you couldn't choose it if you were going to the website, does that mean you couldn't choose in-home. You could only choose virtual. The reps we have would say, "We're now offering in-home if you're comfortable." We expect to see that accelerate. It's still a pretty small number, even in April, because it was in transition where it was evident on the website that you could actually book an in-home appointment, and people are getting much more comfortable as they're getting vaccinated. Yeah. Relative to pre-COVID, still substantially lower volume as a share of the appointments and consignor volume now. A long way to go. Thank you. If I could just follow up on the marketing front. Could you speak to the decline in the buyer acquisition cost and the drivers there? I know it's early in the neighborhood stores. Is that moving the needle, or are you seeing efficiencies in other areas? Thanks. Oh, well, really what happened last year, we're coming into sort of an odd time because usually in Q1, we spend pretty heavily to get prepared for. It's a spring cleaning, so it gets people thinking about spring cleaning out their closets. We had done that in March of last year, spending at our normal levels. This year, we're taking a more back-end approach, meaning that we didn't know what was going to happen with COVID. We actually reduced it consciously, given the fact that the spring cleaning phenomenon may not be happening during COVID, we saw better results. I would say it's an ongoing testing situation with marketing, we do, as Matt indicated, we do expect them to be significantly more efficient than last year overall, because we cut marketing completely when our facilities were shut down. We spent last quarter, in Q4, more heavily than normal to prepare us for a strong Q1, which actually worked. It's going to be one of those uneven years, but overall, the trend will be a significant reduction in acquisition costs. Right. Just to pick up on the point that Julie made. Last year, we didn't really reduce our marketing spend until we had already made it through the month of March, even though we had a half of the month where the business was disrupted significantly. Some pretty inefficient spend in the second half of March. We got that freebie. Beyond that, yes, the stores are absolutely helping. A meaningful share of our new consignors and a significant number of new buyers are coming through our stores. We're always testing and optimizing our media mix, and the team is great at finding new and innovative ways to stay one step ahead of the curve. I think they'll continue to do that as we go throughout the year and beyond. Very helpful. Thank you. Thank you. Next question comes from the line of Lauren Schenk from Morgan Stanley. Your line is now open. You may ask your question. Great. Thanks. Inventory was up quite a bit at the end of the quarter, both year-over-year and sequentially, despite the strength in direct revenue. Could you just help us think about sort of the drivers there, and then how you're expecting that to trend through the rest of the year? Yeah, sure. I think we had about $50 million of inventory, still pretty small numbers overall in the grand scheme of things for a business of our size. Not the majority of it, but a significant amount was that large vendor transaction at the end of the fourth quarter, and other similar types of purchases that, until we have certain technology on the site that allows us to merchandise the products in a more scalable way, the sell-through is going to be a little bit slower because we only have a small fraction of the inventory actually available to purchase at any point in time. That should normalize once the technology is available, and I wouldn't expect to see inventory growing anywhere near that rate as we get into the back end of the year. Okay, great. Is there any sort of high level commentary you can give about trends that you're seeing in April or quarter-to-date, versus maybe what sort of the March or 1Q broadly run rate was? I thought about that in the context of guidance, but now we're in kind of silly numbers as we're lapping COVID, and the growth rates in a short-term basis are sort of meaningless. We're spending more time looking at what our performance looks like versus a pre-COVID period in 2019. I would say that it's looking very encouraging and positive, with some acceleration versus the equivalent period in 2019. We're very optimistic about the short and long-term future. Okay. Thanks so much. Thank you. Next question comes from the line of Simeon Siegel from BMO Capital. Thanks. Good afternoon, everyone. Sorry if I missed this, and understanding moving pieces with mix, but any help on what you're expecting for take rate going forward? To go back to the stores for a second, great to see the heightened productivity. How are the AOVs and frequency of those shoppers before they started using the stores? Just trying to think through the lift you're seeing as they become omni, and what type of customers they were beforehand. Thank you. Well, we have some information in the shareholder letter. We're still getting a high percentage of new consignors and new shoppers to the stores. On an efficiency basis for acquiring consignors, they're actually accretive for us, so we're pretty excited about seeing that. On the AOV, in general, stores are adding significantly to our AOV mix. Almost half of the reason our AOV is at an all-time high is due to the impact of stores, because people do spend more at, they spend sort of less units per, but they spend more dollars per unit at a store. Sure. Yeah, I'll just add on to both. On stores, in terms of what we see broad brush, of course, everyone's a little different, so averages are sort of a little misleading. Generally speaking, as Julie said, about half the people who interact with the stores are new to us altogether. Those who are interacting with the store after having worked with us previously online, their store activity is pretty close to purely incremental to their overall activity. Their online activity continues at the frequency and the dollar volume that it was before they started interacting with the stores. That's significantly accretive for that segment of folks, both on the buyer side and the consignor side. With respect to take rate, we just don't know at this point. In the short term, we're seeing quarter to date, AOVs continue to be very high. Take rate's going to be comparatively low versus pre-COVID. They more or less offset. They just keep focused on gross profit dollars per order. Over time, we think it's going to normalize, but to what degree and exactly when is hard to say. Great. Thanks a lot, guys. Best of luck for the year. Thanks. Thank you. Next question comes from the line of Susan Anderson from B. Riley. Your line is now open. You may ask a question. Hi, good afternoon. Alec Legg for Susan. My question is just on the First Look subscription, where customers can view items a day in advance. How big is that subscription service relative to your consumer ecosystem? Any details you can provide on consumers who utilize that, such as their consumer spending habits. Do you think that service could be a meaningful portion of your revenue going forward? It is our most engaged customers. It's still a pretty small number, but that one sort of just took a back seat during COVID, so we're going to take a look at it and see really the value of really aggressively marketing it. It's one of those things that if people do sign up for First Look, they tend to be very frequent buyers, maybe three to six times a year. Some buy every month. It's still small. Matt has some statistics on it. It's still small, but they're meaningful. Yeah. First Look as a direct revenue line is very small. It's immaterial. There's a number of people who have access to First Look who aren't paying members, so our VIP consignors, et cetera. Overall, the people who participate in First Look are about 20% of our GMV, and that hasn't really changed over time. That's some disclosures that are in our S1. Small number of people who are very important. Thanks. I guess just to follow up, it's great to hear that you're offering relocation assistance for the Brisbane employees. We've seen some companies having trouble finding employees, and they're offering hundreds of dollars, just to get them to sign up. Have you seen, or have you had any challenges finding employees to work in your authentication centers? Are you expecting any meaningful wage costs to materially impact the rest of the year? Thanks. I'll start with, then I'll kick it over to Matt. All of our experts, the experts we train in the training program, we're having absolutely no problem recruiting. There is some pushback, a little bit, at our Perth Amboy facility. Not a large percentage, I would say, though, we do have openings in Perth. What we hear, this is anecdotal only, that the government's paying them too much not to work. An anecdotal comment. Do we think we have to change our wages? We're a really good wage payer in general. Our starting wage is $17 an hour, what we're hearing is some people would rather stay home. I would say that, I really do hope the government does stop subsidizing the workers. I think there's something to the low unemployment numbers. It's a pretty interesting time. It's an interesting time. Look, we have a high retention rate of our experts. In fact, our Arizona facility actually is fully staffed with experts, so it really comes recruiting hourly employees. Honestly, most employees, when they really think about it, the combination of benefits and having a paying job that they can count on and building a career, we hope will win over staying at home because $17 an hour isn't enough to get out of bed. There is enough anecdotes that it makes me feel that the government's overpaid, to be honest. Do we have to raise our wages? No, we don't have to do that. We think it's all going to equalize. If you think of how many people are at Perth, Matt, about 725. We have 50 openings. We've never had that many openings. On the grand scheme of things, we're fine, but we've never had that many openings and had to recruit that hard to fill them because they tend to be really good jobs versus other jobs in the area. That's really helpful. Best of luck rest of the year. Thank you. Thank you. Next question comes from the line of Marvin Fong from BTIG. Your line is now open. You may ask a question. Great. Thank you for taking my questions. Just a couple. Maybe at a high level, I realize you're not disclosing supply units anymore, but maybe just give us some qualitative assessment on how supply units are tracking versus GMV. Do you feel like it's in balance now with demand? Any commentary there would be great. Second question, just as I try to unpack guidance and sequentially flat, just curious, and I know we've asked about stimulus in the past, but, do you feel like stimulus in the first quarter had any impact, and that might explain some of the flatness going into second quarter? Any commentary there would be great. Thank you. No, I'll tackle some of it. The truth is, we have no indication that stimulus impacted our business at all. It really is our ability to generate supply. As we've always been saying that it tends to be true, and it's hard for us to separate supply incoming from demand and stimulus. Now, we were in quite a hole last year because we had a complete shutdown in the state of California for supply acquisition that was prolonged, and then natural COVID fears slowed that down. However, I'm happy to say that we are getting back to a nice balance. If we had more supply, we could sell it through, but everything feels like it's moving in the right direction right now, and it's a very positive time for the company. Yep. Supply and demand are always very tightly correlated in our business. We have the comment that to the extent that we see supply and demand trends diverge, then we'll go back to providing some level of transparency in supply metrics. They're in perfect harmony at the moment. With respect to the guidance, again, I just point back to the quarter-over-quarter cadence of the flatness is perfectly typical of our business. Notably, we're just getting started with resuming guidance. You have to characterize, our willingness to even put it out means it's high confidence at this point. Got you. Thanks so much for the color. Really appreciate it. Thank you both. Thank you. Abha, I think we'll take one. Let's make this our last question. All right. Perfect. Thank you. Last question comes from the line of Aaron Kessler from Raymond James. Your line is now open. You may ask your question. Great. Thanks, guys. Maybe first on the gross profit per transaction, kind of the 2022 kind of the target of $100. Should we think of that as kind of a base case, kind of aspirational case? What are the biggest factors, I know you've talked about this number before, but kind of what are the biggest factors in terms of achieving this, and, yeah, kind of what's the probability weighting that you think we can get around that number by the end of 2022? Thank you. Biggest factors haven't really changed. It's AOV and take rate and their relationship together. The product of one and the other are essentially our take dollars per order or per unit. Return rates do come in there, but they've been very stable, lower during COVID, are normalizing. What's left is predominantly shipping expense, which we have seen substantial leverage and expect to continue seeing leverage over time. Short term, buyer incentives have been an offset to progress there, but we expect to see those normalize as well. The rest of it you get from scale leveraging certain fixed costs that are in cost of goods. Our confidence of getting there by the end of next year is high. Got it. Maybe just quickly on a follow-up. On terms of like going out, wear kind of for dresses, et cetera, are we starting to see the pickup in that now? We've seen some mixed data points so far. One of the companies recently said March is a big month in the quarter for more going out wear. Are you starting to see that trend as well? Well, apparel's up. It's just not as up as much as fine jewelry, handbags, and watches. Apparel, it has recovered into growth mode. The mix has shifted to more high-value items. Got it. Great. Thank you. Thank you. I am showing no further questions this time. I would now like to turn the conference back to Ms. Julie Wainwright. Ma'am? That concludes our Q1. I'm happy to say what a difference a year makes. There's a lot of positive enthusiasm in the employees and the team. We are seeing people excited to shop the site, shop in the stores. We're hoping this continues. Honestly, it's all about getting people vaccinated at this point, and the government stopping with their care packages. We're excited. Right now it looks like a totally different view than we had a year ago, and it feels like we're getting back, and we're stronger than ever. Thank you for your time, and we appreciate it, and we'll talk again soon. Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you all for participating. You may now disconnect.