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
October 31, 2023.
RTR also announced today that it has amended its
credit facility (the "Amended Facility") with the existing lender
and administrative agent (“Existing Lender”), as noted in our
disclosed regulatory filings with the SEC. The amended facility
eliminates interest (PIK and cash) for the next 6 fiscal quarters
and reduces the minimum liquidity covenant from $50 million to $30
million, and makes additional updates with details described
below.
"We are proud to announce significant modifications
to our debt that are expected to provide meaningful flexibility for
our business. We believe that the terms that we’ve agreed to with
our longtime lender further enable Rent the Runway to achieve
significant free cash flow before the debt’s maturity date, helping
us to demonstrate the strength of our business model to the
market--and, importantly, to grow,” said Jennifer Hyman, Co-Founder
and CEO, Rent the Runway. “Meanwhile, we’ve made significant
strides to improve our inventory in-stock position, which we
believe represents a turning point for Rent the Runway. We believe
nailing our assortment is a key unlock to subscriber growth in 2024
and beyond, and we have data to indicate that the adjustments we’ve
made have already resulted in improved customer retention and
satisfaction.”
"We believe that the debt modifications are proof
of the constructive relationship we maintain with our lending
partner and provide Rent the Runway with additional financial
flexibility,” said Sid Thacker, Chief Financial Officer, Rent the
Runway. “We began to see meaningful greenshoots in our data that
our inventory strategies are working. We believe that these
improvements, in conjunction with continued focus on our cost
structure, provide the business with a solid foundation. Our focus
remains on ensuring that Rent the Runway grows and reaches free
cash flow breakeven for FY24."
The key terms of the Amended Facility
Include:
- Eliminating interest
(PIK and cash) for 6 full fiscal quarters, beginning with Q4 2023.
This means that the debt balances will remain unchanged over that
period.
- Reducing the minimum liquidity
covenant from $50 million to $30 million.
- Alignment on spend in key
categories with mutually agreed quarterly and annual
expense caps on inventory capex, marketing and fixed operating
expenses.
Other key provisions of the Amended Facility remain
unchanged from the existing facility. Additional information about
the Amended Facility can be found in the Current Report on Form 8-K
filed by RTR with the SEC today and available on the RTR’s Investor
Relations website (investors.renttherunway.com).
Third Quarter 2023 Key Metrics and
Financial Highlights
- Revenue was $72.5 million, a (6.3)%
decrease year-over-year from $77.4 million in the third quarter of
fiscal year 2022.
- 131,725 ending Active Subscribers,
representing a decrease of (2)% year-over-year from 134,240 at the
end of the third quarter of fiscal year 2022.
- 134,646 Average Active Subscribers
representing an increase of 4% year-over-year from 129,186 at the
end of the third quarter of fiscal year 2022.
- 175,901 ending Total Subscribers,
roughly flat year-over-year from 176,167 at the end of the third
quarter of fiscal year 2022.
- Gross Profit was $25.2 million,
representing a decrease of (20.8)% from $31.8 million in the third
quarter of fiscal year 2022. Gross Margin was 34.8%, as compared to
41.1% in the third quarter of fiscal year 2022.
- Net Loss was $(31.5) million, as
compared to $(36.1) million in the third quarter of fiscal year
2022. Net Loss as a percentage of revenue was (43.4)%, as compared
to (46.6)% in the third quarter of fiscal year 2022.
- Adjusted EBITDA was $3.5 million, as
compared to $6.6 million in the third quarter of fiscal year 2022.
Adjusted EBITDA margin was 4.8%, as compared to 8.5% in the third
quarter of fiscal year 2022.
Fiscal Third Quarter and Recent Business
Highlights
- Made Significant Progress on
Customer Inventory Experience: Over-delivered against
plans to increase inventory availability for our customers, driven
by the depth strategy we announced last quarter. Q3 In-stock rate
was 1400bps higher than 1H2023 and 1200bps higher than Q3 2022,
which has contributed to the highest NPS scores we have seen since
pre-COVID. Retention has grown month-over-month since August.
- Launched Luxury Evening
Wear: As one of many steps intended to reinvigorate our
special-event rental business, today we unveiled “The Vault,” a new
category of luxury evening wear styles from 20+ of the top designer
brands in fashion, featuring new-to-site designers including Etro,
Oscar de la Renta, Brandon Maxwell, Anna October, Giambattista
Valli, Rachel Gilbert, Paris Georgia, Mara Hoffman, Zac Posen and
Roland Mouret, exclusively for 4- or 8-day rentals.
- Further Improved Operating
Efficiencies: Further internationalized our technology
team by relocating roles from NYC to Galway, Ireland, which is
expected to result in lower technology costs for the remainder of
fiscal year 2023 and for fiscal year 2024. RTR is leveraging our
existing strong presence and technical leadership at our Galway,
Ireland EU software development hub, which was established in
2019.
- Grew Resale Business:
Purchase rate, which we believe represents a significant sales and
loyalty lever for customers, is up 50% in Q3 in units sold vs. last
year. Subscribers are increasingly using Rent the Runway as a “try
before you buy” sales channel, where she can understand how the
product fits into her life by first wearing it through her
subscription.
- Drove Record Adoption of RTR
Concierge Service: Our SMS-based luxury styling and
support service, RTR Concierge, has reached an all-time high
adoption rate with over 30% of new subscribers opting in as of the
end of Q3. We have seen sustained retention improvements for people
that use concierge across all terms of membership.
FY 2023 OUTLOOK
For the fourth quarter of fiscal year 2023, Rent
the Runway expects:
- Revenue of at least $74 million
- Adjusted EBITDA Margin of at least
7%
For fiscal year 2023, Rent the Runway expects:
- Revenue of at least $296.4 million,
our fiscal year 2022 Revenue
- Adjusted EBITDA Margin of 7% to
8%
In addition, we continue to expect to achieve free
cash flow breakeven in FY2024 on a full year basis; however, we are
withdrawing our previous Free Cash Flow outlook for FY2023.
Please see our third quarter 2023 earnings
presentation at https://investors.renttherunway.com/ under the
“Presentations” section for supplemental guidance.
Earnings Presentation, Conference Call and
Webcast
The third 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 third quarter 2023 financial results and
provide a business update today, December 5, 2023, at 4:30 pm
ET.
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 13742193.
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, subscriber growth, impacts of the Company’s
debt restructuring on its business and operating flexibility,
future product launches, business objectives, benefits of our
inventory-focused strategy and other strategic initiatives,
including building inventory depth, a-la-carte rental strategy and
onboarding initiatives, anticipated cost savings including from
technology team actions, and expectations regarding subscriber
trends, customer retention and satisfaction. 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; risks related to the Company’s debt, including the
Company’s ability to comply with covenants in the Amended Facility;
the Company’s ability to achieve anticipated cost savings and
operate within its anticipated budget; risk related to COVID-19 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
Quarterly Report on Form 10-Q for the quarter ended July 31, 2023,
as will be updated in our Quarterly Report on Form 10-Q for the
quarter ended October 31, 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,
Adjusted EBITDA margin, free cash flow, and free cash flow 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 and free cash flow and free cash flow
margin are useful in evaluating our performance and liquidity.
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), non-ordinary course legal
fees, restructuring charges, loss on asset impairment related to
restructuring, income tax (benefit) expense, other income and
expense, net, and other gains / losses. Adjusted EBITDA margin is
defined as Adjusted EBITDA calculated as a percentage of
revenue.
We define free cash flow as net cash used in
operating activities and net cash used in investing activities on a
combined basis. Free cash flow margin is defined as free cash flow
as a percentage of revenue.
The reconciliation of presented 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, Adjusted
EBITDA margin and free cash flow expectations for Q4 2023, fiscal
year 2023, and fiscal year 2024 (as applicable) 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)
|
October 31, |
|
January 31, |
|
|
2023 |
|
|
|
2023 |
|
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
105.9 |
|
|
$ |
154.5 |
|
Restricted cash, current |
|
4.8 |
|
|
|
3.1 |
|
Prepaid expenses and other current assets |
|
10.6 |
|
|
|
14.5 |
|
Total current assets |
|
121.3 |
|
|
|
172.1 |
|
Restricted cash |
|
5.2 |
|
|
|
6.0 |
|
Rental product, net |
|
103.9 |
|
|
|
78.7 |
|
Fixed assets, net |
|
37.5 |
|
|
|
44.7 |
|
Intangible assets, net |
|
3.8 |
|
|
|
4.1 |
|
Operating
lease right-of-use assets |
|
34.8 |
|
|
|
26.7 |
|
Other assets |
|
3.8 |
|
|
|
3.9 |
|
Total assets |
$ |
310.3 |
|
|
$ |
336.2 |
|
Liabilities and
Stockholders’ Equity (Deficit) |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
22.4 |
|
|
$ |
12.4 |
|
Accrued expenses and other current liabilities |
|
21.9 |
|
|
|
24.4 |
|
Deferred revenue |
|
11.8 |
|
|
|
12.0 |
|
Customer credit liabilities |
|
6.3 |
|
|
|
6.8 |
|
Operating lease liabilities |
|
3.1 |
|
|
|
4.4 |
|
Total current liabilities |
|
65.5 |
|
|
|
60.0 |
|
Long-term debt, net |
|
300.2 |
|
|
|
272.5 |
|
Operating lease
liabilities |
|
46.5 |
|
|
|
38.3 |
|
Other liabilities |
|
0.7 |
|
|
|
0.7 |
|
Total liabilities |
|
412.9 |
|
|
|
371.5 |
|
|
|
|
|
Stockholders’ equity
(deficit) |
|
|
|
Class A common stock |
|
0.1 |
|
|
|
0.1 |
|
Class B common stock |
|
— |
|
|
|
— |
|
Preferred stock |
|
— |
|
|
|
— |
|
Additional paid-in capital |
|
925.6 |
|
|
|
904.5 |
|
Accumulated deficit |
|
(1,028.3 |
) |
|
|
(939.9 |
) |
Total stockholders’ equity
(deficit) |
|
(102.6 |
) |
|
|
(35.3 |
) |
Total liabilities and
stockholders’ equity (deficit) |
$ |
310.3 |
|
|
$ |
336.2 |
|
Rent the Runway,
Inc.Condensed Consolidated Statements of
Operations(in millions, except share and per share
amounts)(unaudited)
|
Three Months Ended October 31, |
|
Nine Months Ended October 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Revenue: |
|
|
|
|
|
|
|
Subscription and Reserve rental revenue |
$ |
64.7 |
|
|
$ |
68.8 |
|
|
$ |
199.5 |
|
|
$ |
200.2 |
|
Other revenue |
|
7.8 |
|
|
|
8.6 |
|
|
|
22.9 |
|
|
|
20.8 |
|
Total revenue, net |
|
72.5 |
|
|
|
77.4 |
|
|
|
222.4 |
|
|
|
221.0 |
|
Costs and expenses: |
|
|
|
|
|
|
|
Fulfillment |
|
21.5 |
|
|
|
23.2 |
|
|
|
65.9 |
|
|
|
69.5 |
|
Technology |
|
12.1 |
|
|
|
14.1 |
|
|
|
38.1 |
|
|
|
42.6 |
|
Marketing |
|
7.1 |
|
|
|
9.7 |
|
|
|
24.6 |
|
|
|
27.4 |
|
General and administrative |
|
24.4 |
|
|
|
25.3 |
|
|
|
76.8 |
|
|
|
84.1 |
|
Rental product depreciation and revenue share |
|
25.8 |
|
|
|
22.4 |
|
|
|
66.7 |
|
|
|
64.8 |
|
Other depreciation and amortization |
|
3.5 |
|
|
|
3.9 |
|
|
|
11.0 |
|
|
|
12.6 |
|
Restructuring charges |
|
— |
|
|
|
2.0 |
|
|
|
— |
|
|
|
2.0 |
|
Loss on asset impairment related to restructuring |
|
— |
|
|
|
3.8 |
|
|
|
— |
|
|
|
3.8 |
|
Total costs and expenses |
|
94.4 |
|
|
|
104.4 |
|
|
|
283.1 |
|
|
|
306.8 |
|
Operating loss |
|
(21.9 |
) |
|
|
(27.0 |
) |
|
|
(60.7 |
) |
|
|
(85.8 |
) |
Interest income / (expense), net |
|
(10.0 |
) |
|
|
(9.3 |
) |
|
|
(28.3 |
) |
|
|
(28.2 |
) |
Other income / (expense), net |
|
0.2 |
|
|
|
0.1 |
|
|
|
0.3 |
|
|
|
1.4 |
|
Net loss before income tax benefit / (expense) |
|
(31.7 |
) |
|
|
(36.2 |
) |
|
|
(88.7 |
) |
|
|
(112.6 |
) |
Income tax benefit / (expense) |
|
0.2 |
|
|
|
0.1 |
|
|
|
0.3 |
|
|
|
0.1 |
|
Net loss |
$ |
(31.5 |
) |
|
$ |
(36.1 |
) |
|
$ |
(88.4 |
) |
|
$ |
(112.5 |
) |
Net loss per share
attributable to common stockholders, basic and diluted |
$ |
(0.45 |
) |
|
$ |
(0.56 |
) |
|
$ |
(1.31 |
) |
|
$ |
(1.76 |
) |
Weighted-average shares used
in computing net loss per share attributable to common
stockholders, basic and diluted |
|
69,296,968 |
|
|
|
64,521,433 |
|
|
|
67,608,792 |
|
|
|
64,015,444 |
|
Rent the Runway,
Inc.Condensed Consolidated Statements of Cash
Flow(in millions)(unaudited)
|
Nine Months EndedOctober 31, |
|
|
2023 |
|
|
|
2022 |
|
OPERATING ACTIVITIES |
|
|
|
Net loss |
$ |
(88.4 |
) |
|
$ |
(112.5 |
) |
Adjustments to reconcile net loss to net cash (used in) provided by
operating activities: |
|
|
|
Rental product depreciation and write-offs |
|
31.9 |
|
|
|
35.9 |
|
Write-off of rental product sold |
|
8.5 |
|
|
|
5.1 |
|
Other depreciation and amortization |
|
11.0 |
|
|
|
12.6 |
|
(Gain) / loss from write-off of fixed assets |
|
0.3 |
|
|
|
2.5 |
|
Loss on asset impairment related to restructuring |
|
— |
|
|
|
3.4 |
|
Proceeds from rental product sold |
|
(16.2 |
) |
|
|
(13.7 |
) |
(Gain) / loss from liquidation of rental product |
|
(0.9 |
) |
|
|
(2.7 |
) |
Accrual of paid-in-kind interest |
|
22.5 |
|
|
|
10.6 |
|
Amortization of debt discount |
|
5.2 |
|
|
|
3.2 |
|
Share-based compensation expense |
|
21.1 |
|
|
|
19.0 |
|
Changes in operating assets and liabilities: |
|
|
|
Prepaid expenses and other current assets |
|
3.9 |
|
|
|
(3.1 |
) |
Operating lease right-of-use assets |
|
(8.1 |
) |
|
|
4.2 |
|
Other assets |
|
0.1 |
|
|
|
0.8 |
|
Accounts payable, accrued expenses and other current
liabilities |
|
(4.4 |
) |
|
|
0.2 |
|
Deferred revenue and customer credit liabilities |
|
(0.7 |
) |
|
|
2.5 |
|
Operating lease liabilities |
|
6.9 |
|
|
|
(8.1 |
) |
Other liabilities |
|
(0.4 |
) |
|
|
0.7 |
|
Net cash (used in) provided by operating activities |
|
(7.7 |
) |
|
|
(39.4 |
) |
INVESTING ACTIVITIES |
|
|
|
Purchases of rental product |
|
(56.3 |
) |
|
|
(43.6 |
) |
Proceeds from liquidation of rental product |
|
3.7 |
|
|
|
7.9 |
|
Proceeds from sale of rental product |
|
16.2 |
|
|
|
13.7 |
|
Purchases of fixed and intangible assets |
|
(3.2 |
) |
|
|
(8.5 |
) |
Net cash (used in) provided by investing activities |
|
(39.6 |
) |
|
|
(30.5 |
) |
FINANCING ACTIVITIES |
|
|
|
Other financing payments |
|
(0.4 |
) |
|
|
(3.8 |
) |
Net cash (used in) provided by financing activities |
|
(0.4 |
) |
|
|
(3.8 |
) |
Net (decrease) increase in cash and cash equivalents and restricted
cash |
|
(47.7 |
) |
|
|
(73.7 |
) |
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 |
$ |
115.9 |
|
|
$ |
185.9 |
|
Rent the Runway,
Inc.Condensed Consolidated Statements of Cash
Flow(in millions)(unaudited)
|
Nine Months EndedOctober 31, |
|
|
2023 |
|
|
|
2022 |
|
RECONCILIATION OF CASH
AND CASH EQUIVALENTS AND RESTRICTED CASH TO THE CONDENSED
CONSOLIDATED BALANCE SHEETS: |
|
|
|
Cash and cash equivalents |
$ |
105.9 |
|
|
$ |
176.0 |
|
Restricted cash, current |
|
4.8 |
|
|
|
4.1 |
|
Restricted cash, noncurrent |
|
5.2 |
|
|
|
5.8 |
|
Total cash and cash equivalents and restricted cash |
$ |
115.9 |
|
|
$ |
185.9 |
|
|
|
|
|
Supplemental Cash Flow
Information: |
|
|
|
Cash payments (receipts)
for: |
|
|
|
Fixed operating lease payments, net |
$ |
8.3 |
|
|
$ |
10.6 |
|
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 lease right-of-use asset amortization |
$ |
0.4 |
|
|
$ |
0.4 |
|
ROU assets obtained in exchange for lease liabilities |
|
— |
|
|
|
1.3 |
|
Adjustments to ROU assets or lease liabilities due to modification
or other reassessment events to operating and finance leases |
|
10.6 |
|
|
|
(1.2 |
) |
Purchases of fixed assets and intangibles not yet settled |
|
0.2 |
|
|
|
0.8 |
|
Purchases of rental product not yet settled |
|
17.3 |
|
|
|
14.0 |
|
Reconciliation of loss on asset impairment: |
|
|
|
Accrued expense related to the loss on asset impairment |
$ |
— |
|
|
$ |
0.4 |
|
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 October 31, |
|
Nine Months Ended October 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
(in millions) |
|
(in millions) |
Net loss |
$ |
(31.5 |
) |
|
$ |
(36.1 |
) |
|
$ |
(88.4 |
) |
|
$ |
(112.5 |
) |
Interest (income) / expense, net(1) |
|
10.0 |
|
|
|
9.3 |
|
|
|
28.3 |
|
|
|
28.2 |
|
Rental product depreciation |
|
15.5 |
|
|
|
13.9 |
|
|
|
40.4 |
|
|
|
41.0 |
|
Other depreciation and amortization(2) |
|
3.5 |
|
|
|
3.9 |
|
|
|
11.0 |
|
|
|
12.6 |
|
Share-based compensation(3) |
|
4.9 |
|
|
|
6.6 |
|
|
|
21.1 |
|
|
|
19.0 |
|
Write-off of liquidated assets(4) |
|
0.9 |
|
|
|
2.5 |
|
|
|
2.6 |
|
|
|
4.9 |
|
Non-recurring adjustments(5) |
|
0.1 |
|
|
|
0.3 |
|
|
|
0.6 |
|
|
|
1.3 |
|
Non-ordinary course legal fees(6) |
|
0.2 |
|
|
|
— |
|
|
|
0.2 |
|
|
|
— |
|
Restructuring charges(7) |
|
— |
|
|
|
2.0 |
|
|
|
— |
|
|
|
2.0 |
|
Loss on asset impairment related to restructuring(8) |
|
— |
|
|
|
3.8 |
|
|
|
— |
|
|
|
3.8 |
|
Income tax (benefit) / expense |
|
(0.2 |
) |
|
|
(0.1 |
) |
|
|
(0.3 |
) |
|
|
(0.1 |
) |
Other (income) / expense, net(9) |
|
(0.2 |
) |
|
|
(0.1 |
) |
|
|
(0.3 |
) |
|
|
(1.4 |
) |
Other (gains) / losses(10) |
|
0.3 |
|
|
|
0.6 |
|
|
|
0.5 |
|
|
|
0.8 |
|
Adjusted EBITDA |
$ |
3.5 |
|
|
$ |
6.6 |
|
|
$ |
15.7 |
|
|
$ |
(0.4 |
) |
Adjusted EBITDA Margin(11) |
|
4.8 |
% |
|
|
8.5 |
% |
|
|
7.1 |
% |
|
|
(0.2) |
% |
(1) |
Includes debt
discount amortization of $1.8 million in the three months ended
October 31, 2023, $1.2 million in the three months ended
October 31, 2022, $5.2 million in the nine months ended
October 31, 2023 and $3.2 million in the nine months ended
October 31, 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
October 31, 2023 includes $0.1 million of costs primarily
related to the option exchange and the three months ended
October 31, 2022 includes $0.3 million of costs related to
public company SOX readiness. Non-recurring adjustments for the
nine months ended October 31, 2023 includes $0.6 million of
costs primarily related to the option exchange and for the nine
months ended October 31, 2022 includes $1.3 million of costs
related to public company SOX readiness. |
(6) |
Non-ordinary course legal fees for the three and nine months
ended October 31, 2023 includes $0.2 million of costs related
to a class action lawsuit. |
(7) |
Reflects restructuring charges primarily related to severance
and related costs in connection with the September 2022
restructuring plan. |
(8) |
Reflects the asset impairment charge related to discontinuing a
warehouse operations project in connection with the September 2022
restructuring plan. |
(9) |
Primarily includes $1.4 million of monetized tax credits for
the nine months ended October 31, 2022. |
(10) |
Includes gains / losses recognized in relation to foreign
exchange, operating lease terminations and the related surrender of
fixed assets (see “Note 5 - Leases – Lessee Accounting” in the
Notes to the Condensed Consolidated Financial Statements). |
(11) |
Adjusted EBITDA Margin calculated as Adjusted EBITDA as a
percentage of revenue. |
Rent the Runway,
Inc.Reconciliation of GAAP to Non-GAAP Financial
Measures(in millions)(unaudited)
The following table presents a reconciliation of
net cash (used in) provided by operating activities, the most
comparable GAAP financial measure, to Free Cash Flow and Free Cash
Flow Margin for the periods presented:
|
|
Nine Months Ended October 31, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
(in millions) |
Net cash (used in) provided by operating activities |
|
$ |
(7.7 |
) |
|
$ |
(39.4 |
) |
Purchases of rental product |
|
|
(56.3 |
) |
|
|
(43.6 |
) |
Proceeds from liquidation of rental product |
|
|
3.7 |
|
|
|
7.9 |
|
Proceeds from sale of rental product |
|
|
16.2 |
|
|
|
13.7 |
|
Purchases of fixed and intangible assets |
|
|
(3.2 |
) |
|
|
(8.5 |
) |
Free Cash Flow |
|
$ |
(47.3 |
) |
|
$ |
(69.9 |
) |
Free Cash Flow Margin |
|
|
(21.3) |
% |
|
|
(31.6) |
% |
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 Free Cash
Flow and Free Cash Flow Margin for the periods presented:
|
|
Nine Months Ended October 31, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
(in millions) |
Net loss |
|
$ |
(88.4 |
) |
|
$ |
(112.5 |
) |
Interest (income) / expense, net |
|
|
28.3 |
|
|
|
28.2 |
|
Rental product depreciation |
|
|
40.4 |
|
|
|
41.0 |
|
Other depreciation and amortization |
|
|
11.0 |
|
|
|
12.6 |
|
Share-based compensation |
|
|
21.1 |
|
|
|
19.0 |
|
Write-off of liquidated assets |
|
|
2.6 |
|
|
|
4.9 |
|
Non-recurring adjustments |
|
|
0.6 |
|
|
|
1.3 |
|
Non-ordinary course legal fees |
|
|
0.2 |
|
|
|
— |
|
Restructuring charges |
|
|
— |
|
|
|
2.0 |
|
Loss on asset impairment related to restructuring |
|
|
— |
|
|
|
3.8 |
|
Income tax (benefit) / expense |
|
|
(0.3 |
) |
|
|
(0.1 |
) |
Other (income) / expense, net |
|
|
(0.3 |
) |
|
|
(1.4 |
) |
Other (gains) / losses |
|
|
0.5 |
|
|
|
0.8 |
|
Adjusted EBITDA |
|
$ |
15.7 |
|
|
$ |
(0.4 |
) |
Purchases of rental product |
|
|
(56.3 |
) |
|
|
(43.6 |
) |
Purchases of fixed and intangible assets |
|
|
(3.2 |
) |
|
|
(8.5 |
) |
Cash interest expense |
|
|
(4.8 |
) |
|
|
(14.9 |
) |
Cash interest earned |
|
|
4.2 |
|
|
|
0.5 |
|
Change in assets and liabilities |
|
|
(2.7 |
) |
|
|
(2.8 |
) |
Non-recurring adjustments |
|
|
(0.6 |
) |
|
|
(1.3 |
) |
Non-ordinary course legal fees |
|
|
(0.2 |
) |
|
|
— |
|
Other adjustments (1) |
|
|
0.6 |
|
|
|
1.1 |
|
Free Cash Flow |
|
$ |
(47.3 |
) |
|
$ |
(69.9 |
) |
Free Cash Flow Margin |
|
|
(21.3) |
% |
|
|
(31.6) |
% |
(1) Other adjustments primarily includes cash tax
adjustments and other cash gains (losses).
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