Rent the Runway (RENT) 9 Dec 242025 Q3 Earnings call transcript

Welcome to Rent the Runway's Third Quarter 2024 Earnings Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the call over to Rent the Runway's Chielf Legal and Administrative Officer, Cara Schembri. Thank you.

You may begin.

thanks us and everyone, morning, for today. joining Good

Investor make our be QX this of in call, earnings to will we our section Presentations can During XXXX references presentation, Events and website. Relations the found which

that are Before any differ uncertainties market detailed this that will cause materially. we growth. as opportunities except the could include future as our assumptions obligation and file These law. include forward-looking that results, and SEC, by risks, financial statements statements call uncertainties expectations These our required begin, regarding update results We like subject plan with statements. we in guidance well actual remind statements and are today. risks, to or would filings XX-Q release today's our no we assumptions to later to various press information, forward-looking Form to including and our These our undertake targets, as to

financial reference in a substitute and can intended During to slide our GAAP GAAP. as of in or this information not call, isolation website of posted non-GAAP found investor release, be measures is also we to our Reconciliations considered certain for be non-GAAP information. information presentation non-GAAP our will in financial press with accordance presented this presentation financial The on filings. SEC

I'll Jen. that, to with over And it turn

our joining. both proves year. entered this pleased flow are laser-focused and we cash attractive. for XXXX huge that accomplishment I'm $XX way are sustainable on a We is for and well it be are that that on in free reiterating will a our business that everyone, business our to you, returning is cash This margins and and fronts year, model believe million our flow burned we business that breakeven last breakeven cash guidance were thank Rent to report fiscal we on we our and free Cara, the well Thanks, to -- growth. bringing Runway

This come On recruiting realigning the one, talent has processes; elevating and key realignment areas an three, to simplifying that important done and transforming towards around most front, and teams growth and work we've from: goals. two, up is critical and with in talent resources towards growth; goals setting by the growth. our organization mandates their agile cross-functional work external right orienting clear manner the talent internal in internal

our business far, reserve year-over-year up QX. rental special event is XX% in Thus

Our and subscribers. our resale loyalty business up significant amongst XX-day we've gains in QX, post is XX% in year-over-year achieved

we set Our here. plan is and feel to win up growth, to spend subscriber XXXX accelerating

idea women ever What The market is all years when now rental with before. comfortable designer a was renting XX than ago more of mainstream, is clothes now with established. radical rent ages we to started

inventory at million have year-over-year. was our QX QX million $XX but cover $XX We for first, achieved resale year-over-year financials. $XX.X of the midpoint positive availability and order of on to business million our was revenue fourth subscribers. range, the We growth guidance to of much strategically let's despite progress in share, to quarter the up newer back pulling X the X.X% consecutive acceleration this X. of of our fastest growth preserve revenue

Free a Adjusted $XX our was below margin to year-over-year bit XX% of guidance, or EBITDA million QX to other lower-than-expected $X.X million, primarily revenue, was negative $X.X XX% XX.X% revenue. due flow a million cash improvement. for

towards million are than and quarters flow better and $XX is flow X of free of our very breakeven free way XXXX out X now journey $XX than cash better that cash year-to-date proud the XXXX. through million are We

Turning back the to business.

year. start we inventory, consequential Let's which decisions with one is strategic the every most of make

customers. has buy greatly XXXX Our with resonated

she is style high by that year-over-year, satisfied bps desired increased demanded the what Two, she highly and proving more. inventory in. we bps our of year-over-year, meaning new was per third, increased utilization that proving inventory [indiscernible] brought customers the rate more the of it. very inventory once our XXX wears with hearts XXX up XX.X% And First, year-over-year, she

In top increased. already per proving inventory units XX% to sold had units XX% is you our program productivity home buy our key year-over-year, at benefit styles keep orders allows and a try on subscribers of the Resale grew Reserve, grew subscription they year-over-year, before of us our that and fresh.

the term XX%, to last against desirability QX for style subscribers merchandising may progress that goals improved pick and that inventory X.X%, call. inventory season QX showcasing our new our older -- the has the made fact our in the merchandising or season and goal of also for Time on decreased I customer to outlined hearts from We early before. by be

more continuing changes, We to launch merchandising the also more including personalized use to test of frequent ways and AI. through are

communicated an lines. of we've satisfaction important before, revenue As rates growth inventory our predictor is across

in both inventory, styles XXXX more Our picking even considerable by job investing we data feel we shows that into that customers depth. breadth a our can drive great do love. growth confident business and We

that pillar the platform. our We using customer plan significantly increase to styles of Runway demand that we certain and In Rent to our data XXXX, designer see in outsized set from and the brands have of brands a velocity high cares access on our about the top depths Runway. Rent on XX breadth our

inventory the think will these of customer board, we We get better stocked out do how even brands satisfaction. but in job a utilization, be of she and we most. loves never outperformed the that can know velocity rental an perfect, the quickly availability brand hearts, on Across they platform

design manner. and revenue We growth also plan in platforms incredible in our a we share leverage inventory this acquisition program help capital-efficient to inventory the our drive exclusive to collections created have

more some highlights QX. to from turn Let's

XX% year-over-year. for a of strategic Today, call, into shared We confirm first approximately QX up we August, with Reserve achieved around year-over-year. by through XX% we of Equally that steps. grew new in entire the these faster momentum XX% quarter, Reserve. our around QX, even up, results important, seen an that First up up month we had to pace, orders pleased On orders last are the at ending continued series customers year-over-year.

As we pods shared last Reserves. a on focused staffed quarter, we cross-functional solely

bookings. our we booking window, reserve expanded summer, In which increased the

We also productivity, and warehouses. improve implemented buffer expediting as our such series turnaround of days removing changes time to in a

we've number the times higher that of that year. October result, prior X-plus was the a XX% As seen in units than turned

also styles started into encourage UX the of experience that We upsell our throughout customer via promise, leaned [indiscernible] focus of user accessories. guarantee customer and fit on addition changes by the additional and our journey reinforcing the to

we in road we that of believe Looking continued a drive ahead into XXXX, growth Reserve. map have robust revenue improvements will

free to invest significant our Rent marketing, dollars improved Reigniting into Runway paid seen believe time, we've in us to our new critical reignite that to the we initiatives traffic. QX, organic in it's Second, efficiencies to to customers will brand. increasing that via take have brand enabled up but

from In this paid year-over-year. come improvement improvement tailored XX% our of has content by marketing well We all the dynamics of to saw creative channels marketing, second we the that across quarter for believe improved more as as services better paid tax consecutive QX diversification of with much environment.

our point to service a we We innovation are creative that that inventory with with than superior and designer proposition customers higher deserves prospects customer reinforcing believe also price luxury a is competitors. and higher-end our critical in

loyal launch media Have key new On to audience believe Our and to, of campaign, customers step also authenticity their that direction. of the on in the saw social brand have is is XX-year the making features We centerpiece that Nothing, which responds the customers anniversary and in succeeding Everything, our some our to November stories. most the stories a of our

past we and quarter, have highs we capture traffic, believe tactically rankings, increase we non-branded quarter-over-quarter resulted a organic our in saw More impressions we a XX% in on quarter-over-quarter new traffic. to plan opportunity improvements. that non-branded XX% SEO in in This keyword meaningful growth which via

we towards new QX, the plan. subscription launched Third, end of a

in closet month, For subscription designer get offering. $XXX shipment a Rent marquee month Runway a the the to X-item, per X full of customers brands access

item Our other customers to plan items X points. with retail lower price limits

this have varying stages. that One cater new of Runway guiding and our is the with consistent at month needs strategy. principles differentiating to products per is to $XXX life program The and Rent

data of dig joining resonates new prospects we've plan. the eager far, into new how are to how and on prospects loyalty. We Thus this seen percentage the sizable it impacts with plan a

in third designed we to In promise initiatives launched for relaunched quarter, improve several September, our subscription. the we onboarding experience. customer Fourth, the

any customers first the During will for replace reason. days XX item any of subscription, we

styles we or also launched and with appointments team, a initiatives October, new to Zoom Early out these recommend onboarding are try. are who items In loyalty indications text pick to can book first phone, engagement. and improving driving styling customers shipments them over for their that help new

So to and QX plan scale them into XXXX. we

role mobile fashion leadership product and career years ran experience His successful welcomed most and on recently the Etsy personalization, Chief in growth, Reverb, more driving prospect visions. Officer the focus multiple for an all new was subsidiary. buyer is an Officer, version innovating eBay organization focused of in including our recently consumer on high-growth with Rent at We drove the entire to whose categories, and having to a where emphasis Chief Bradford experience Bradford start-ups, company's loyalty. a and things on platform the Product drive subscriber also higher Scholhamer, spans founding product product he the X.X Runway, Product

started increase from tech and the UX, merchandising could we increase load our in deliver throughout allow like in The rolled as We've enabled items least, new time drives customers. improved add initiatives a Last conversion, out to to Apple to experiences XX% changes. delayed but for have Pay. also not we've viewed resulting faster. grids upgrades in implemented more grids. creation our per better a of and to that see and frequent that resulted us text improved customers XX% made launch QX We find session faster On faster-loading that

we card holidays. the Finally, in gift programs relaunched time our for

quarter product, our year-to-date, flow the our demonstrated buy have stayed delivered merchandising improvements Reserve conclusion, and to on and free the inventory, in through and the breakeven marketing, within right business. technology this ability brand cash we laser-focused followed progress on on goal, In reemphasize

and work We continue growth fired enter across are on QX with culture growth, business our up levers. XXXX a and core momentum a excited to our throughout sustainable

turn I'll that, it to Sid. With over

everyone, and us. for joining Jen, thank Thanks, you,

we We quarter. Indeed, fiscal flow. growth, cash growth, growth progress and in improvement Revenue make has X.X% EBITDA with the improvements continue free 'XX. 'XX, growth than to consecutive of X.X% third the shown revenue quarter QX good in versus experienced year-over-year revenue the adjusted better active QX of year-over-year was fourth ending in growth 'XX subscriber in

QX our growth in after Consistent returned active to declining ending expectations, with year-over-year 'XX. subscribers

our to 'XX versus retention As the stronger were 'XX versus year-over-year Ending QX subscribers versus QX in a 'XX quarter. QX reminder, asset in ending to changes strategy. X.X% promotional and due subscribers acquisition QX grew prior 'XX due active subscriber down X.X%

'XX lower QX free to less 'XX. Adjusted EBITDA compared EBITDA in chose slightly and XXXX. QX EBITDA was continued Adjusted substantially QX revenue. XX% cash revenue of to revenue primarily of QX versus were to XX.X% Adjusted improved rental margins flow X.X% lower-than-expected of than adjusted as EBITDA revenue inventory guidance We sell improve. XX% business due to our other of to in

the addition, be to of parties third originally timing weighted QX In inventory we sales to expect than anticipated. more

by XX, cash months flow for EBITDA we XXXX. As reiteration profitability months negative evidenced XXXX, X progress million $X.X strong full fiscal XX, million, year on ended adjusted the to $XX.X guidance, October X October of Free improvement our this ending was continue negative versus expect year.

our As XXXX. I free cash breakeven are reiterating we detail, more in flow year be to fiscal will for outline guidance

active the improved acquisitions QX were more 'XX XXX,XXX review of subscribers quarter end now strong Average ended the XXX,XXX up as 'XX increased of We XXX,XXX provide approximately versus during quarter. due QX subscribers, me X.X% to decrease the subscribers as X.X%. retention a Let active ending from subscribers quarter of detailed with prior a versus year-over-year. year, subscribers prior the XXX,XXX third at active in well Ending primarily results.

or X.X% growth million, and the average year-over-year or business revenue $X.X up quarter-over-quarter. and or in Other million $X increased in X.X% down revenue year-over-year per Reserve QX revenue revenue up Subscription primarily $XX.X and million Total was due our for was quarter subscriber. XX.X% rental million to year-over-year. X.X% higher reserve 'XX, $X.X

of $XX.X QX were and QX continued from $XX.X XX.X% QX Fulfillment in in costs 'XX efficiencies. $XX.X costs 'XX Fulfillment in in and 'XX a benefited percentage in costs Fulfillment of QX at of 'XX. compared revenue were million revenue as warehouse revenue to million 'XX. higher resale lower QX versus XX.X% revenue million year-over-year

margins year's gross 'XX revenue inventory fiscal fulfillment and XX.X% product margins stock last debt XX.X% by offset QX higher costs. were inventory Gross of QX to rates XX.X% reflect 'XX beyond. in in higher QX increased adjustments 'XX versus 'XX a XX.X% Increased to 'XX reflects inventory fiscal in in to percentage decreased costs QX seasonally share in investment QX year payments costs in rental margins as higher 'XX, investment to improved due 'XX. increase quarter-over-quarter due and in fulfillment gross revenue. partially from

XX.X% Operating QX operating year-over-year QX to expenses, expenses in 'XX marketing of XX.X% of reduction lower and impact revenue 'XX. due stock-based favorable of and QX lower due XX% of efforts in cost expenses. XX.X% the in G&A, technology, revenue were Total 'XX were which versus primarily revenue includes and our compensation

of costs, EBITDA $X.X revenue year. $XX.X ending the in versus for approximately XX.X% million was of revenue the EBITDA million October efforts, year-over-year quarter and due the XX.X% to XX, was revenue fulfill improvement Adjusted Adjusted X.X% XXXX, million reduction impact of versus or offset prior of or in by $XX.X of $X.X higher payments revenue the X X.X% or fixed reflects of for a revenue million months proportion the revenue units. or revenue our share lower year. cost partially higher greater the share Adjusted EBITDA prior

Free for in cash due October million product profitability. QX flow months $X.X and cash October X 'XX $X.X million was 'XX, ending of $XX.X the negative XX, flow ending X million $XX.X to XXXX. cost the XX, for XXXX, higher million lower rental primarily versus QX negative Free negative versus months in negative was

I discuss XXXX. will guidance and 'XX fiscal QX now for year

revenue. Let me start with

year revenue and grow fiscal expect X% XXXX. year X% between XXXX versus We for to fiscal

million. be is million between a QX As revenue result, to $XX.X XXXX and expected $XX.X

guidance EBITDA million $XX.X We XXXX. are fiscal adjusted of implies and of year year EBITDA XX% adjusted between XX% and QX full for of revenue our between reiterating This $XX.X million.

are positive fiscal flow we the resulting flow cash breakeven free fiscal free Free our year. guidance for year million, in fourth cash quarter approximately reiterating $X.X is be Finally, flow cash for of fiscal expected the 'XX XXXX. breakeven in to

negative QX through cash progression 'XX walk Let for flow me to take $X.X to flow a QX free 'XX. was cash moment QX from 'XX Free million.

positive for account EBITDA and flow in After million cash $XX.X differences $X implies these of changes, year is expenditures into QX flow Further, guidance adjusted expect lower product factors Our million non-inventory-related expected rental to result versus to 'XX. to XXXX. in free combination $X.X over 'XX. improvement QX capital for breakeven cash taking a in we 'XX. working X expenditure QX QX million capital The fiscal reach free expect capital in we

'XX. cash through free continued flow as first for We well quarters our goals have the require Achieving 'XX improved fiscal free cost for the cash X vigilance quarter flow plans control. of will significantly QX as on executing on

free first demonstrate In also we Rent underlying months fiscal summary, year the through ability these at the significantly we in believe business trends improvement this We have an Runway. results X to flow. demonstrated of believe improve cash the continued

beyond. 'XX making business we in outlined, accelerating stronger decisions and to on are in by our squarely that Jen and growth the As fiscal customers for our foundation now focused subscription growth lay listening

take questions. now will your We

the Instructions] from [ with Systems of JMP. Boone ] Andrew [Operator Our comes first line question

a ask quick to XQ revenue guide. specifically wanted I

like million more quarters. This $X And of high it's versus terms be $X low expectations? guide a at you about XQ. That end then talk the embedded may end looks last million in to quarter, in the what of compares widening less Can the or X for range? the the it

Sure.

of X% of range to we year revenue for function to to guidance know, full for implied X% really range with started year, X% QX full full X% the guidance X% now. is we range you the narrowed and the The guidance that the year. As to year for the a X%

year, sort likely quarters of outcomes year. the of range the made already to so to through for the it sense we're range X reflect narrow Now the about

we or the for in revenue see highlighted and to part QX the is, main inventory the other think the is number on well progressed. both as top because range I reason the QX business want a end year to we that in actually main variation doing one, the the fact that better hold rental of QX in as of more the reduction we as in function

as of is lower acquisitions factored into as as also we the range of terms second the which promotions, end the last decision. discussed quarter, timing in well reduction the and the subscriber the of top range the then the factor of And in impact

on primary is the think quarters. reason much past sell it dependent inventory to is So over I seen the just for how the range we've not reflection X we QX a choose QX, but in as

The Revenue better underlying do better. businesses growth about feel trends. and has reserve continued the We to business accelerate. starting is subscription to

our that us range for a than So the of function and inventory other anything more isn't it is to customers, really keep desiring of uncertainty. reflective

And growth the like place. forward, going inventory of traction product. top with right, subscriber customers seems about is It trying as I funnel now in you about it if think think there's better better then like seems guys Reserve, a

Can What about you think that think year? for guys we as subscriber accelerating just operational have initiatives next we about outline are guys you key as metrics the key for the the subscriber levers growth growth XXXX?

to just think bit. I backtrack a

as and P&L. primarily time at was cost-cutting is prioritized. do our it's and kind Runway to transforming Just We certainly prioritized generation margin XXXX reminder, mode. financially and we of what what XXXX, we between the the had Rent a in This

flow able confidence entered breakeven year, we had be in would XXXX, this to the we that growth business to lower we free even When bring cash scenarios.

goals. X had we So

let's achieve Let's growth free change the breakeven mode. company cash of into the back culture and from actually flow cost-cutting

for P&L, business XXXX. And an asset-light were growth. And in an amount year, have we really we So asset-heavy into our business setting XXXX an this enormous accomplished business. and up certainly transforming we successful from between the in move

We've reorganized operate. business simplified talent one, how our growth. We terms we've in of number we We our So goals. internal reoriented towards changed talent.

nice are really teams seeing goals, and to these we cross-functional have We already traction. achieve created

mentioned, talked business XX% QX, we about, reserve So is as up over you our year-over-year. in

XX% Our like of going up, tax up going nice our and year-over-year, is indicators resale loyalty really that subscription down. seeing some leading business and our over we're rate

So is now key which the business primed subscriber whole is growth. growth lever, for our really

we drive how we're Now on inventory. do focused foremost, growth? and First subscriber

So inventory set low inventory of acquire lot acquisition capital. -- of exclusive is one And of business important up design share is able the most in incredible cost these important business very of one of most channels rev predictors our at our position inventory growth. and to we've inventory the be or no to a the

inventory a key heavily into subscriber unlock So into to our XXXX we as are position investing growth.

component So that's one of it.

Another we've that component and up team few over we've cross-functional the last is focused on a set internally, improving therefore, that calls, subscriber warding mentioned on the retention. experience

pod inventory focused of So to feel set for up we focused subscriber across retention win depth subscriber drive that's the and really to and experience between on growth, breadth between are kind and on XXXX here.

And then to I question, helpful. my That's inventory. double-click last for just on wanted

changes some of X? made in that guys have initiative? right line feel in about place? or more multiyear Can like Or terms we get like a where you is But next time is just the retail. you of inventory can the that's in talk guys the there quarter You when Understood. evolving will thing you guys expect an

Look, I get want for specific don't plans to into 'XX. think we

-- we I short you I make a we period can to say that 'XX substantial make can we think fairly time, I improvements just actually of right? what in show kind to mean fiscal second, back of reasonably bring a will for is --

to lower lot for were talked and and 'XX, significantly we problem fiscal if rates, it X depth within issue about we recall, year, were have fiscal significantly the was. more than an you And effectively able be rates a in-stock buy that that So in-stock us. fact a in

a So lot I think make we progress. of can

that made almost half short coming purchased evolution If you on mix share. periods revenue the channel we're year the have relatively for we in at we our considerable share inventory strides of time revenue look units through, of of buying this from instance,

pretty we're we've channels we have to how quick progress make utilize customers of the and learned, some the from both So more what I appropriately, to want, learnings inventory. on to have lessons think all target the customer that unlocked going we

love have high high have mentioned of are enormous an platform we We customer that of on data see have incredibly satisfaction brands our what love, that rate, customers call demand, on hearts, high have we amount this rates. that have set high on and a there our

to And and being rental we time. have But when every to able brands to pillar for, double on brands Runway she our that an certainly of for to ensure availability a down chance giving position we're better in can even wear going that the into the come you're Rent now perfect those platform, improve comes. her really brands at these point people

XXXX that's dollars. for the that's to an already That's relates we've just that's about And just not it more brands. of of example XX of necessarily strategy so our these as against okay, a inventory. And top pillar that more saying, executed distribution dollars,

a been year, be I the very or requires year think thing million necessarily is, on expect in of isn't you function think running if $XX time. breakeven other what This last -- inventory out inventory, full the this will year really shift. And something year. for for that instance, consumption has cash flow We a point we from went main free negative huge to tight of cash to on a progress amount about it isn't

we of partners comfortable that, making sure make us continue so in needed were significant progress to significant to revenue providing mix, part And the with on. as inventory and also channel share defying

responding, in the think as of the So and with with you telling we're subscription blocks you and with is leading I can business, what business breakeven. are the reserve the place, customers are the see is building resale indicators

do things. to trying the put characteristics while business, of of is of element sustainability that and in now accelerate us the to that capital the we're preserves in accelerate to It revenue the telling the business up to investment way to a and growth this we're really you the growth, trying really cash

Our with next question comes Helgans the from Jefferies. Ashley line of

call Resale trends little how each to they're a the and And performing? talk in customer Subscribers? bit can you out? between maybe start, Reserve, to about just So Any difference

as an just come party as Reserve our a to starting, the to Reserve $XX business -- low a can or price you XX% have of easy the provides pricing certainly for at et dress, for of a a Rent and great Runway renting wedding, retail kind experience cetera. holiday way So part rent

we've diverse Reserve so seen the into business. across And always base geography, in-level customer a across age, across

that, XXXX, customer new to was had we prior year-over-year, driving been Reserve the seen because that had growth. of traditionally, Rent not declining terms business And been which in a growth into new driver customer of Runway great has

we reaccelerate year-over-year so an in some put business up really XX% that into it. And emphasis on and in We've up progress customers over given reserve significant QX. this Reserve quick new is QX to our made business that year are XX% very and

can people drive So we're of the Rent we that Runway. showing ecosystem into the more

And shipment subscription entree month the access gives our this have subscription communications. of set inventory. a customer where month in assortment even a another customer have marketing with month, prem to And then get more our into from the $XXX of you up lightweight the but we one swap that Runway, reserve Once this yet obviously, experience life one to really resell launch we've to the kind have familiarize plan of cycle of that great to subscription. products a Rent great that us suite full you a

comfortable what dressed. with radical subscription that ago, way was been seeing fashion early a is was get that the really positive were we're about X, to a adopters, So years subscription to things one fundamentally people X new of about

as kind more she's coming engage that And has how of We the more And a do age we high because where Now that become subscription the into and cases. mainstream. use fashion to subscription, from berth know of much a the engagement into very know with, first diversification more customers geographies with coming seeing subscription product even we're Runway. they Rent amongst the diverse of diverse certainly demographic that?

going with year nice lot XXXX goals that right our and acquisition subscriber very key simplified the that feel in very cross-functional around be a with is where and focus subscription and business our we see growth. this now really of we So really alignment to confident accelerate momentum

session. that floor back management comments. Ladies and gentlemen, question-and-answer the our closing concludes any turn for to I'll

really Thank forward in year, April. we this QX and you our this chatting for call. with you on on call our joining progress We're us look excited about QX to

Thanks, everyone.

today's Thank you. concludes conference This call.

at disconnect this Thank You lines may your time. for participation. you your