Rent the Runway, Inc. (“Rent the Runway” or "RTR") (NASDAQ: RENT),
the world’s first and largest shared designer closet platform,
today reported financial results for the fiscal quarter ended
April 30, 2023.
"I’m proud of the momentum we’re continuing to
drive across the business, and of our Q1 2023 financial results,
where we beat on the top and bottom line,” said Jennifer Hyman, CEO
and Co-Founder of Rent the Runway. “Given our financial
transformation over the past several years, we believe we are in a
strong position to invest the majority of resources into our
strategy of improving the customer experience. Rent the Runway has
always been great at three things: agility, innovation and
continuous improvement, and we’ve leveraged these guiding
principles to make great progress on our strategy in Q1. We look
forward to delivering for our customers in the quarters to come
while working towards our subscriber growth and profitability
goals.”
“We're pleased with the strong start to fiscal
2023. Quarter over quarter subscriber growth was strong and we
exceeded both our revenue and Adjusted EBITDA guidance. Our
commitment to being disciplined on cost control is reflected in our
strong improvement in Adjusted EBITDA, while we invest in important
customer experience improvements,” said CFO Sid Thacker. “Based on
this solid foundation for progress, we’re reiterating our fiscal
2023 goals of 25%+ ending active subscriber growth and almost 50%
reduction in cash consumption on our path to free cash flow
breakeven.”
First Quarter 2023 Key Metrics and
Financial Highlights
- Revenue was $74.2 million, a 10.6%
increase year-over-year from $67.1 million in the first quarter of
fiscal year 2022.
- 145,220 ending Active Subscribers,
representing an increase of 7.6% year-over-year from 134,998 at the
end of the first quarter of fiscal year 2022.
- 135,966 Average Active Subscribers
representing an increase of 8.7% year-over-year from 125,119 at the
end of the first quarter of fiscal year 2022.
- 185,720 ending Total Subscribers,
representing an increase of 4.8% year-over-year from 177,213 at the
end of the first quarter of fiscal year 2022.
- Gross Profit was $31.4 million,
representing an increase of 39.6% from $22.5 million in the first
quarter of fiscal year 2022. Gross Margin was 42.3%, as compared to
33.5% in the first quarter of fiscal year 2022.
- Net Loss was $(30.1) million, as
compared to $(42.5) million in the first quarter of fiscal year
2022. Net Loss as a percentage of revenue was (40.6)%, as compared
to (63.3)% in the first quarter of fiscal year 2022.
- Adjusted EBITDA was $4.5 million, as
compared to $(8.8) million in the first quarter of fiscal year
2022. Adjusted EBITDA margin was 6.1%, as compared to (13.1)% in
the first quarter of fiscal year 2022.
Fiscal First Quarter and Recent Business
Highlights
- Introduced text-based
concierge service: In early May, launched RTR CONCIERGE, a
luxury-style service that offers complimentary 1:1 communication
via text with our customer service team to help subscribers early
in their tenure. Concierge is focused on onboarding new subscribers
to ensure they get the most out of their membership.
- Improved product discovery
features: In early April, launched Rent the Look to enable
customers to rent a complete outfit or a similar option based on
our recommendations. This feature has led to a 34% increase in
engagement with substitute items.
- Further elevated delivery and
returns experience: Launched a new convenience feature in
At-Home Pickup, leading to an increase in in-market adoption of the
service by nearly four percentage points from the end of Q4 of 2022
to the end of Q1 of 2023, and launched Saturday delivery to more
than half of our subscribers.
- Achieved faster site
speed: Made improvements to load times across the site
experience, driving a 48% improvement in average load times on a
key entry point into our conversion funnel, which resulted in an
89% lift in conversion on that page.
- Made foundational investments
in AI: Took a first and important step in leveraging AI
models to improve the RTR search & discovery experience by
developing an AI-driven search beta. Expected to launch in the
coming weeks, the feature will allow customers to leverage RTR’s
existing search tools and product catalog using common phrases or
fashion terms, which is intended to make the process of discovering
products more intuitive and natural.
Outlook
For the second quarter of fiscal year 2023, Rent
the Runway expects:
- Revenue in the range of $77.0 million
to $79.0 million
- Adjusted EBITDA Margin of 7% to
8%
For fiscal year 2023, Rent the Runway continues to
expect:
- Ending Active Subscriber growth of
more than 25%
- Revenue in the range of $320 million
to $330 million
- Adjusted EBITDA Margin of 7% to
8%
- YoY reduction in cash consumption by
almost 50%
Please see our first quarter 2023 earnings
presentation at https://investors.renttherunway.com/ under the
“Presentations” section for supplemental guidance.
Earnings Presentation, Conference Call and
Webcast
The first quarter 2023 Earnings Presentation is
now accessible through the Investor Relations section of Rent the
Runway’s website at https://investors.renttherunway.com/ under the
“Presentations” section.
Rent the Runway will host a conference call and
webcast to discuss its first quarter 2023 financial results and
provide a business update today, June 7, 2023, at 4:30 pm EDT.
The financial results and live webcast will be
accessible through the Investor Relations section of Rent the
Runway’s website at https://investors.renttherunway.com/ under the
“Events” section. To access the call through a conference line,
dial 1-877-407-3982 (in the U.S.) or 1-201-493-6780 (international
callers).
A replay of the conference call will be posted
shortly after the call and will be available for at least fourteen
days. To access the replay, dial 1-844-512-2921 (in the U.S.) or
1-412-317-6671 (international callers). The access code for the
replay is 13737124.
About Rent the Runway, Inc.
Founded in 2009, Rent the Runway is disrupting
the trillion-dollar fashion industry and changing the way women get
dressed through the Closet in the Cloud, the world’s first and
largest shared designer closet. RTR’s mission has remained the same
since its founding: powering women to feel their best every day.
Through RTR, customers can subscribe, rent items a-la-carte and
shop resale from hundreds of designer brands. The Closet in the
Cloud offers a wide assortment of millions of items for every
occasion, from evening wear and accessories to ready-to-wear,
workwear, denim, casual, maternity, outerwear, blouses, knitwear,
loungewear, jewelry, handbags, activewear and ski wear. RTR has
built a two-sided discovery engine, which connects deeply engaged
customers and differentiated brand partners on a powerful platform
built around its brand, data, logistics and technology. Under CEO
and Co-Founder Jennifer Hyman’s leadership, RTR has been named to
CNBC’s “Disruptor 50” five times in ten years, and has been placed
on Fast Company’s Most Innovative Companies list four times, while
Hyman herself has been named to the “TIME 100: Most Influential
People in the World" and as one of People Magazine’s “Women
Changing the World."
Forward-Looking Statements
This press release contains forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. All statements contained in this press release
that do not relate to matters of historical fact should be
considered forward-looking statements. These statements include,
but are not limited to, statements regarding our future results of
operations, financial position, and revenue, future product
launches, strategic initiatives, business objectives, anticipated
macroeconomic environment, benefits of our customer-focused
strategy and other strategic initiatives, including use of
artificial intelligence and the expected timing of the launch of an
AI-driven search beta, and expectations regarding customer loyalty
and other subscriber trends. Forward-looking statements are
inherently subject to risks and uncertainties, some of which cannot
be predicted or quantified. In some cases, you can identify
forward-looking statements because they contain words such as
“aim,” “anticipate,” “believe,” “contemplate,” “continue,” “could,”
“estimate,” “expect,” “intend,” “may,” “plan,” “potential,”
“predict,” “project,” “should,” “target,” “toward,” “will,” or
“would,” or the negative of these words or other similar terms or
expressions. You should not put undue reliance on any
forward-looking statements. Forward-looking statements should not
be read as a guarantee of future performance or results and will
not necessarily be accurate indications of the times at, or by,
which such performance or results will be achieved, if at all.
Forward-looking statements are based on information
available at the time those statements are made and were based on
current expectations, estimates, forecasts, and projections as well
as the beliefs and assumptions of management as of that time with
respect to future events. These statements are subject to risks and
uncertainties, many of which involve factors or circumstances that
are beyond our control, that could cause actual performance or
results to differ materially from those expressed in or suggested
by the forward-looking statements. In light of these risks and
uncertainties, the forward-looking events and circumstances
discussed in this press release may not occur and actual results
could differ materially from those anticipated or implied in the
forward-looking statements. These risks and uncertainties include
our ability to manage our growth effectively; risks related to the
macroeconomic environment; the highly competitive and rapidly
changing nature of the global fashion industry; our ability to
cost-effectively grow our customer base; any failure to retain
customers; risk related to the COVID-19 pandemic and other future
pandemics or public health crises; risks related to shipping,
logistics and our supply chain; our ability to accurately forecast
customer demand, manage our offerings effectively and plan for
future expenses; our ability to improve website and mobile app
performance and keep pace with technological changes; risks arising
from the restructuring of our operations; our reliance on the
effective operation of proprietary technology systems and software
as well as those of third-party vendors and service providers; our
ability to remediate our material weaknesses in our internal
control over financial reporting; laws and regulations applicable
to our business; failure by us to adequately obtain, maintain,
protect and enforce our intellectual property and proprietary
rights; compliance with data privacy, data security, data
protection and consumer protection laws and industry standards;
risks associated with our brand and manufacturing partners; our
reliance on third parties for elements of the payment processing
infrastructure underlying our business; our dependence on online
sources to attract consumers and promote our business which may be
affected by third-party interference or cause our customer
acquisition costs to rise; failure by us, our brand partners, or
third party manufacturers to comply with our vendor code of conduct
or other laws; and risks related to our Class A capital stock and
ownership structure. Additional information regarding these and
other risks and uncertainties that could cause actual results to
differ materially from the Company’s expectations is included in
our Annual Report on Form 10-K for the year ended January 31, 2023,
as will be updated in our Quarterly Report on Form 10-Q for the
quarter ended April 30, 2023. Except as required by law, we do not
undertake any obligation to publicly update or revise any
forward-looking statement, whether as a result of new information,
future developments, or otherwise.
Key Business and Financial
Metrics
Active Subscribers is defined as the number of
subscribers with an active membership as of the last day of any
given period and excludes paused subscribers.
Average Active Subscribers is defined as the mean
of the beginning of quarter and end of quarter Active Subscribers
for a quarterly period; and for other periods, represents the mean
of the Average Active Subscribers of every quarter within that
period.
Gross Profit is defined as total revenue less
fulfillment expense, revenue share and rental product depreciation.
We depreciate owned apparel assets over three years and owned
accessory assets over two years net of 20% and 30% salvage values,
respectively, and recognize the depreciation and remaining cost of
items when sold or retired on our statement of operations. Rental
product depreciation expense is time-based and reflects all items
we own. We use Gross Profit and Gross Profit as a percentage of
revenue, or Gross Margin to measure the continued efficiency of our
business after the cost of our products and fulfillment costs are
included.
Non-GAAP Financial Measures
This press release and the accompanying tables
contain the non-GAAP financial measures of Adjusted EBITDA and
Adjusted EBITDA margin. In addition to our results determined in
accordance with GAAP, we believe that Adjusted EBITDA and Adjusted
EBITDA margin are useful in evaluating our performance. Adjusted
EBITDA is a key performance measure used by management to assess
our operating performance and the operating leverage of our
business prior to capital expenditures. These non-GAAP financial
metrics are not meant to be considered as indicators of our
financial performance in isolation from or as a substitute for our
financial information prepared in accordance with GAAP and should
be read only in conjunction with financial information presented on
a GAAP basis. There are limitations to the use of the non-GAAP
financial metrics presented in this press release. For example, our
non-GAAP financial metrics may not be comparable to similarly
titled measures of other companies. Other companies, including
companies in our industry, may calculate non-GAAP financial metrics
differently than we do, limiting the usefulness of those measures
for comparative purposes.
We define Adjusted EBITDA as net loss, adjusted to
exclude interest expense, rental product depreciation, other
depreciation and amortization, share-based compensation expense,
write-off of liquidated assets, non-recurring adjustments (see
below footnotes to reconciliation table), other income and expense,
net, and other gains / losses. Adjusted EBITDA margin is defined as
Adjusted EBITDA calculated as a percentage of revenue.
The reconciliation of the non-GAAP financial
metrics to the most directly comparable GAAP financial measure is
presented below. We encourage reviewing the reconciliation in
conjunction with the presentation of the non-GAAP financial metrics
for each of the periods presented. In future periods, we may
exclude similar items, may incur income and expenses similar to
these excluded items, and may include other expenses, costs and
non-recurring items. Reconciliation of Adjusted EBITDA and Adjusted
EBITDA margin guidance to the closest corresponding GAAP measure is
not available without unreasonable efforts on a forward-looking
basis due to the high variability, complexity, and low visibility
with respect to the charges excluded from these non-GAAP measures,
in particular, share-based compensation expense and non-recurring
expenses which can have unpredictable fluctuations based on
unforeseen activity that is out of our control and/or cannot
reasonably be predicted.
Investor ContactInvestor Relations
investors@renttherunway.com
Media ContactAlison
Rappaportpress@renttherunway.com
Rent the Runway,
Inc.Condensed Consolidated Balance
Sheets(in millions)(unaudited)
|
April 30, |
|
January 31, |
|
|
2023 |
|
|
|
2023 |
|
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
141.4 |
|
|
$ |
154.5 |
|
Restricted cash, current |
|
4.2 |
|
|
|
3.1 |
|
Prepaid expenses and other current assets |
|
12.9 |
|
|
|
14.5 |
|
Total current assets |
|
158.5 |
|
|
|
172.1 |
|
Restricted cash |
|
5.8 |
|
|
|
6.0 |
|
Rental product, net |
|
87.8 |
|
|
|
78.7 |
|
Fixed assets, net |
|
41.8 |
|
|
|
44.7 |
|
Intangible assets, net |
|
3.9 |
|
|
|
4.1 |
|
Operating
lease right-of-use assets |
|
26.0 |
|
|
|
26.7 |
|
Other assets |
|
3.6 |
|
|
|
3.9 |
|
Total assets |
$ |
327.4 |
|
|
$ |
336.2 |
|
Liabilities and
Stockholders’ Equity (Deficit) |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
18.8 |
|
|
$ |
12.4 |
|
Accrued expenses and other current liabilities |
|
21.8 |
|
|
|
24.4 |
|
Deferred revenue |
|
13.6 |
|
|
|
12.0 |
|
Customer credit liabilities |
|
6.5 |
|
|
|
6.8 |
|
Operating lease liabilities |
|
4.5 |
|
|
|
4.4 |
|
Total current liabilities |
|
65.2 |
|
|
|
60.0 |
|
Long-term debt, net |
|
281.2 |
|
|
|
272.5 |
|
Operating lease
liabilities |
|
37.1 |
|
|
|
38.3 |
|
Other liabilities |
|
0.5 |
|
|
|
0.7 |
|
Total liabilities |
|
384.0 |
|
|
|
371.5 |
|
|
|
|
|
Stockholders’ equity
(deficit) |
|
|
|
Class A common stock |
|
0.1 |
|
|
|
0.1 |
|
Class B common stock |
|
— |
|
|
|
— |
|
Preferred stock |
|
— |
|
|
|
— |
|
Additional paid-in capital |
|
913.3 |
|
|
|
904.5 |
|
Accumulated deficit |
|
(970.0 |
) |
|
|
(939.9 |
) |
Total stockholders’ equity
(deficit) |
|
(56.6 |
) |
|
|
(35.3 |
) |
Total liabilities and
stockholders’ equity (deficit) |
$ |
327.4 |
|
|
$ |
336.2 |
|
|
|
|
|
|
|
|
|
Rent the Runway,
Inc.Condensed Consolidated Statements of
Operations(in millions, except share and per share
amounts)(unaudited)
|
Three Months Ended April 30, |
|
|
2023 |
|
|
|
2022 |
|
Revenue: |
|
|
|
Subscription and Reserve rental revenue |
$ |
66.8 |
|
|
$ |
61.4 |
|
Other revenue |
|
7.4 |
|
|
|
5.7 |
|
Total revenue, net |
|
74.2 |
|
|
|
67.1 |
|
Costs and expenses: |
|
|
|
Fulfillment |
|
21.9 |
|
|
|
22.9 |
|
Technology |
|
13.1 |
|
|
|
13.6 |
|
Marketing |
|
9.3 |
|
|
|
8.7 |
|
General and administrative |
|
26.5 |
|
|
|
29.2 |
|
Rental product depreciation and revenue share |
|
20.9 |
|
|
|
21.7 |
|
Other depreciation and amortization |
|
3.8 |
|
|
|
4.2 |
|
Total costs and expenses |
|
95.5 |
|
|
|
100.3 |
|
Operating loss |
|
(21.3 |
) |
|
|
(33.2 |
) |
Interest income / (expense), net |
|
(8.8 |
) |
|
|
(9.3 |
) |
Net loss before income tax benefit / (expense) |
|
(30.1 |
) |
|
|
(42.5 |
) |
Income tax benefit / (expense) |
|
— |
|
|
|
— |
|
Net loss |
$ |
(30.1 |
) |
|
$ |
(42.5 |
) |
Net loss per share
attributable to common stockholders, basic and diluted |
$ |
(0.46 |
) |
|
$ |
(0.67 |
) |
Weighted-average shares used
in computing net loss per share attributable to common
stockholders, basic and diluted |
|
65,865,906 |
|
|
|
63,431,165 |
|
|
|
|
|
|
|
|
|
Rent the Runway,
Inc.Condensed Consolidated Statements of Cash
Flow(in millions)(unaudited)
|
Three Months Ended April 30, |
|
|
2023 |
|
|
|
2022 |
|
OPERATING ACTIVITIES |
|
|
|
Net loss |
$ |
(30.1 |
) |
|
$ |
(42.5 |
) |
Adjustments to reconcile net
loss to net cash (used in) provided by operating activities: |
|
|
|
Rental product depreciation and write-offs |
|
9.6 |
|
|
|
12.3 |
|
Write-off of rental product sold |
|
2.5 |
|
|
|
1.3 |
|
Other depreciation and amortization |
|
3.8 |
|
|
|
4.2 |
|
(Gain) / loss from lease termination and write-off of fixed and
intangible assets |
|
0.1 |
|
|
|
1.9 |
|
Proceeds from rental product sold |
|
(5.4 |
) |
|
|
(4.0 |
) |
(Gain) / loss from liquidation of rental product |
|
(0.2 |
) |
|
|
— |
|
Accrual of paid-in-kind interest |
|
7.1 |
|
|
|
3.4 |
|
Amortization of debt discount |
|
1.6 |
|
|
|
1.0 |
|
Share-based compensation expense |
|
8.8 |
|
|
|
5.5 |
|
Changes in operating assets and liabilities: |
|
|
|
Prepaid expenses and other current assets |
|
1.6 |
|
|
|
0.9 |
|
Operating lease right-of-use assets |
|
0.7 |
|
|
|
2.5 |
|
Other assets |
|
0.3 |
|
|
|
0.3 |
|
Accounts payable, accrued expenses and other current
liabilities |
|
(3.7 |
) |
|
|
(1.8 |
) |
Deferred revenue and customer credit liabilities |
|
1.3 |
|
|
|
3.0 |
|
Operating lease liabilities |
|
(1.1 |
) |
|
|
(5.5 |
) |
Other liabilities |
|
(0.2 |
) |
|
|
0.1 |
|
Net cash (used in) provided by operating activities |
|
(3.3 |
) |
|
|
(17.4 |
) |
INVESTING ACTIVITIES |
|
|
|
Purchases of rental product |
|
(14.6 |
) |
|
|
(13.4 |
) |
Proceeds from liquidation of rental product |
|
1.3 |
|
|
|
0.6 |
|
Proceeds from sale of rental product |
|
5.4 |
|
|
|
4.0 |
|
Purchases of fixed and intangible assets |
|
(0.9 |
) |
|
|
(2.0 |
) |
Net cash (used in) provided by investing activities |
|
(8.8 |
) |
|
|
(10.8 |
) |
FINANCING ACTIVITIES |
|
|
|
Other financing payments |
|
(0.1 |
) |
|
|
(1.6 |
) |
Net cash (used in) provided by financing activities |
|
(0.1 |
) |
|
|
(1.6 |
) |
Net (decrease) increase in cash and cash equivalents and restricted
cash |
|
(12.2 |
) |
|
|
(29.8 |
) |
Cash and cash equivalents and restricted cash at beginning of
period |
|
163.6 |
|
|
|
259.6 |
|
Cash and cash equivalents and restricted cash at end of period |
$ |
151.4 |
|
|
$ |
229.8 |
|
|
|
|
|
|
|
|
|
Rent the Runway,
Inc.Condensed Consolidated Statements of Cash
Flow(in millions)(unaudited)
|
Three Months Ended April 30, |
|
|
2023 |
|
|
|
2022 |
|
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED
CASH TO THE CONDENSED CONSOLIDATED BALANCE SHEETS: |
|
|
|
Cash and cash equivalents |
$ |
141.4 |
|
|
$ |
219.0 |
|
Restricted cash, current |
|
4.2 |
|
|
|
5.0 |
|
Restricted cash, noncurrent |
|
5.8 |
|
|
|
5.8 |
|
Total cash and cash equivalents and restricted cash |
$ |
151.4 |
|
|
$ |
229.8 |
|
|
|
|
|
Supplemental Cash Flow
Information: |
|
|
|
Cash payments (receipts)
for: |
|
|
|
Fixed operating lease payments (reimbursements), net |
$ |
2.8 |
|
|
$ |
3.7 |
|
Fixed assets and intangibles received in the prior period |
|
0.1 |
|
|
|
0.8 |
|
Rental product received in the prior period |
|
5.4 |
|
|
|
6.5 |
|
Non-cash financing and
investing activities: |
|
|
|
Financing leases right-of-use asset amortization |
$ |
0.2 |
|
|
$ |
0.1 |
|
ROU assets obtained in exchange for lease liabilities |
|
— |
|
|
|
0.1 |
|
Purchases of fixed assets and intangibles not yet settled |
|
— |
|
|
|
1.5 |
|
Purchases of rental product not yet settled |
|
13.0 |
|
|
|
12.7 |
|
|
|
|
|
|
|
|
|
Rent the Runway,
Inc.Reconciliation of GAAP to Non-GAAP Financial
Measures(in millions)(unaudited)
The following table presents a reconciliation of
net loss, the most comparable GAAP financial measure, to Adjusted
EBITDA for the periods presented:
|
Three Months Ended April 30, |
|
|
2023 |
|
|
|
2022 |
|
|
(in millions) |
Net loss |
$ |
(30.1 |
) |
|
$ |
(42.5 |
) |
Interest (income) / expense, net (1) |
|
8.8 |
|
|
|
9.3 |
|
Rental product depreciation |
|
12.1 |
|
|
|
13.6 |
|
Other depreciation and amortization (2) |
|
3.8 |
|
|
|
4.2 |
|
Share-based compensation (3) |
|
8.8 |
|
|
|
5.5 |
|
Write-off of liquidated assets (4) |
|
1.0 |
|
|
|
0.6 |
|
Non-recurring adjustments (5) |
|
— |
|
|
|
0.3 |
|
Other (gains) / losses (6) |
|
0.1 |
|
|
|
0.2 |
|
Adjusted EBITDA |
$ |
4.5 |
|
|
$ |
(8.8 |
) |
Adjusted EBITDA Margin (7) |
|
6.1 |
% |
|
|
(13.1 |
)% |
|
|
|
|
|
|
|
|
(1) Includes debt discount amortization of
$1.6 million in the three months ended April 30, 2023 and $1.0
million in the three months ended April 30, 2022.
(2) Reflects non-rental product depreciation
and capitalized software amortization.
(3) Reflects the non-cash expense for
share-based compensation.
(4) Reflects the write-off of the remaining
book value of liquidated rental product that had previously been
held for sale.
(5) Non-recurring adjustments for the three
months ended April 30, 2022 includes $0.3 million of costs related
to public company SOX readiness.
(6) Includes gains / losses recognized in
relation to foreign exchange, operating lease terminations and the
related surrender of fixed assets (see “Note 4 - Leases – Lessee
Accounting” in the Notes to the Condensed Consolidated Financial
Statements).
(7) Adjusted EBITDA Margin calculated as
Adjusted EBITDA as a percentage of revenue.
Rent the Runway (NASDAQ:RENT)
Gráfico Histórico do Ativo
De Abr 2024 até Mai 2024
Rent the Runway (NASDAQ:RENT)
Gráfico Histórico do Ativo
De Mai 2023 até Mai 2024