Subscriber Growth - Active subscribers increased by 12.4% year-over-year, reaching 148,916 at the end of Q3 2025[6] - Average active subscribers rose by 12.9% year-over-year, totaling 147,645[7] - The company anticipates double-digit growth in ending active subscribers for fiscal year 2025 compared to fiscal year 2024[10] Revenue Performance - Revenue for Q3 2025 was $87.6 million, a 15.4% increase from $75.9 million in Q3 2024[7] - Total revenue for the three months ended October 31, 2025, was $87.6 million, a 15.5% increase from $75.9 million in the same period of 2024[28] - Subscription and Reserve rental revenue increased to $77.0 million, up 16.8% from $66.3 million year-over-year[28] - For Q4 2025, the company expects revenue between $85 million and $87 million[10] Net Income and Gains - Net income for Q3 2025 included a one-time gain of $96.3 million from debt restructuring[7] - Net income for the nine months ended October 31, 2025, was $24.0 million, compared to a net loss of $56.5 million in the same period of 2024[30] - Net income for the three months ended October 31, 2025, was $76.5 million, compared to a loss of $18.9 million in the same period of 2024[34] - The company reported a gain on debt restructuring of $96.3 million for the three months ended October 31, 2025[28] Costs and Expenses - The company incurred total costs and expenses of $103.8 million for the three months ended October 31, 2025, compared to $89.6 million in the same period of 2024[28] - The company incurred $2.8 million in non-ordinary course legal fees related to securities lawsuits for the three months ended October 31, 2025[34] Profitability Metrics - Gross profit was $25.9 million, with a gross margin of 29.6%, down from 34.7% in Q3 2024[7] - Adjusted EBITDA was $4.3 million, with an adjusted EBITDA margin of 4.9%, compared to 12.3% in Q3 2024[7] - Adjusted EBITDA for the nine months ended October 31, 2025, was $6.6 million, down from $29.5 million in 2024[34] - Adjusted EBITDA Margin for the three months ended October 31, 2025, was 4.9%, down from 12.3% in 2024[34] Cash Flow and Assets - Free Cash Flow for the nine months ended October 31, 2025, was $(46.5) million, compared to $(9.3) million in 2024, indicating a significant decline[36] - Free Cash Flow Margin for the nine months ended October 31, 2025, was (19.5)%, compared to (4.0)% in 2024[36] - Cash and cash equivalents at the end of the period were $50.7 million, down from $77.4 million at the beginning of the year[26] - Total current assets decreased to $66.7 million as of October 31, 2025, from $93.9 million as of January 31, 2025[26] Debt and Liabilities - The company completed a transformative recapitalization, reducing total outstanding debt to $120 million and extending maturity to 2029[5] - Total liabilities decreased to $266.1 million as of October 31, 2025, from $422.5 million as of January 31, 2025[26] - The company reported a gain on debt restructuring of $(96.3) million for the nine months ended October 31, 2025[34] Customer Loyalty - Inventory-related churn decreased by nearly 30% year-over-year in Q3 2025, indicating improved customer loyalty[5] Future Expectations - Adjusted EBITDA margin expectations for fiscal year 2025 are not available due to high variability and complexity in excluded items[23]

Core Insights - Rent the Runway reported a 12.4% year-over-year increase in active subscribers and a 15.4% increase in revenue for Q3 2025, indicating strong business growth [1][12] - The company successfully closed a transformative recapitalization plan, which significantly improved its balance sheet by reducing debt and extending maturity dates [2][5] - A community-driven organic growth strategy has been expanded to enhance brand awareness and customer acquisition [5][12] Financial Performance - Revenue for Q3 2025 was $87.6 million, up from $75.9 million in Q3 2024, marking a 15.4% increase [12] - The number of ending active subscribers reached 148,916, a 12.4% increase from 132,518 in the previous year [12] - Net income for Q3 2025 was $76.5 million, compared to a net loss of $18.9 million in Q3 2024, reflecting a significant turnaround [12][30] Strategic Initiatives - The company made its largest inventory investment in history, nearly doubling the new inventory added to its site, which has driven substantial growth [2][5] - Subscriber retention improved, leading to a nearly 30% reduction in inventory-related churn year-over-year [5] - New community-driven initiatives, such as the RTR Muse and City Ambassador programs, were launched to enhance customer engagement and acquisition [5][12] Operational Metrics - Average active subscribers increased by 12.9% year-over-year, reaching 147,645 [12] - Gross profit for Q3 2025 was $25.9 million, with a gross margin of 29.6%, down from 34.7% in Q3 2024 [12] - Adjusted EBITDA for Q3 2025 was $4.3 million, down from $9.3 million in the same quarter last year, with an adjusted EBITDA margin of 4.9% [12][36] Future Outlook - For the fiscal fourth quarter of 2025, Rent the Runway expects revenue between $85 million and $87 million and an adjusted EBITDA margin between 11% and 13% [13] - The company anticipates continued double-digit growth in ending active subscribers compared to fiscal year 2024 [13]

Core Insights - Rent the Runway, Inc. is set to release its third quarter 2025 financial results on December 12, 2025, before market open [1] - A conference call and live webcast will be held at 8:30 a.m. Eastern Time on the same day to discuss the results and provide a business update [1] Company Overview - Founded in 2009, Rent the Runway is transforming the trillion-dollar fashion industry with its "Closet in the Cloud" concept [4] - The company's mission is to empower women to feel their best every day through subscription services, rental items, and resale options from hundreds of designer brands [4] - Rent the Runway offers a diverse range of millions of items for various occasions, including evening wear, workwear, and activewear [4] - The company has developed a two-sided discovery engine that connects engaged customers with brand partners, leveraging its brand, data, logistics, and technology [4] - Under the leadership of CEO and Co-Founder Jennifer Hyman, Rent the Runway has been recognized multiple times on CNBC's "Disruptor 50" and Fast Company's Most Innovative Companies list [4]

As filed with the Securities and Exchange Commission on November 17, 2025 Registration No. 333- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 RENT THE RUNWAY, INC. (Exact Name of Registrant as Specified in Its Charter) (State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification Number) (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal ...

Core Insights - Rent the Runway, Inc. has successfully completed a recapitalization transaction aimed at improving its financial position by reducing debt and extending maturity [1][2][3] Financial Position - The recapitalization involved converting a significant portion of existing debt into common equity and raising $20 million in cash from an investor group [2] - Following the recapitalization, the total outstanding debt was reduced to $120 million, with maturity extended to 2029 [2] - An additional $12.5 million was raised through a concurrent rights offering [2] Strategic Goals - The CEO of Rent the Runway emphasized that this recapitalization is a crucial milestone for the company's transformation, allowing it to focus on customer service and profitable growth [3] - The company aims to continue its mission of reinventing how women access fashion while maintaining its status as a public company trading under the ticker symbol "RENT" on Nasdaq [3] Company Overview - Founded in 2009, Rent the Runway is disrupting the fashion industry by offering a subscription-based model for renting and purchasing designer items [6] - The platform provides a wide range of products, including evening wear, workwear, and activewear, through its "Closet in the Cloud" concept [6] - The company has received multiple accolades for its innovation and impact in the industry, including being named to CNBC's "Disruptor 50" list five times [7]

Core Viewpoint - Premarket trading is showing notable activity with significant price movements indicating potential investment opportunities before the market opens [1] Premarket Gainers - Society Pass Incorporated (SOPA) has increased by 139% to $3.34 - Critical Metals Corp. (CRML) has risen by 79% to $14.30 - Sanmina Corporation (SANM) is up 26% at $144.61 - Palisade Bio, Inc. (PALI) has gained 25% to $2.00 - Advanced Micro Devices, Inc. (AMD) has increased by 24% to $205.07 - Odyssey Marine Exploration, Inc. (OMEX) is up 22% at $2.46 - Youxin Technology Ltd (YAAS) has risen by 21% to $3.14 - NioCorp Developments Ltd. (NB) is up 18% at $9.38 - Snow Lake Resources Ltd. (LITM) has increased by 14% to $5.66 - Plug Power Inc. (PLUG) is up 7% at $4.10 [3] Premarket Losers - Rich Sparkle Holdings Limited (ANPA) has decreased by 15% to $22.10 - CCH Holdings Ltd Ordinary Shares (CCHH) is down 15% at $3.73 - Xcel Brands, Inc. (XELB) has fallen by 14% to $2.04 - Quantum Computing Inc. (QUBT) is down 13% at $21.39 - Rent the Runway, Inc. (RENT) has decreased by 12% to $4.70 - MDJM Ltd (UOKA) is down 11% at $2.96 - CID HoldCo, Inc. (DAIC) has fallen by 9% to $2.72 - Algorhythm Holdings, Inc. (RIME) is down 9% at $2.47 - Corbus Pharmaceuticals Holdings, Inc. (CRBP) has decreased by 8% to $13.50 - Art's-Way Manufacturing Co., Inc. (ARTW) is down 7% at $2.58 [4]

Core Viewpoint - Rent the Runway, Inc. is a fashion rental service aiming to provide a sustainable alternative to traditional retail, competing with companies like ThredUp Inc. and Allbirds, Inc. [1] Financial Performance - Rent the Runway's Return on Invested Capital (ROIC) is -39.57%, significantly lower than its Weighted Average Cost of Capital (WACC) of 6.54%, resulting in a ROIC to WACC ratio of -6.05, indicating insufficient returns to cover capital costs [2][6] - ThredUp Inc. has a ROIC of -18.82% and a WACC of 11.66%, leading to a ROIC to WACC ratio of -1.61, suggesting it is also struggling but performing better than Rent the Runway [3] - Allbirds, Inc. has a ROIC of -80.40% and a WACC of 7.75%, resulting in a ROIC to WACC ratio of -10.37, indicating even greater difficulties in generating returns compared to Rent the Runway [4] - Warby Parker Inc. has a ROIC of -3.46% and a WACC of 13.06%, leading to a ROIC to WACC ratio of -0.26, making it the most efficient in capital utilization among the analyzed companies [5][6]

TABLE OF CONTENTS As filed with the Securities and Exchange Commission on September 29, 2025 Registration No. 333-290358 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Amendment No. 1 to FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 RENT THE RUNWAY, INC. (Exact Name of Registrant as Specified in Its Charter) (State or Other Jurisdiction of Incorporation or Organization) (Primary Standard Industrial Classification Code Number) Delaware 7389 80-0376379 (I.R.S. Emplo ...

TABLE OF CONTENTS As filed with the Securities and Exchange Commission on September 18, 2025 Registration No. 333- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 RENT THE RUNWAY, INC. Copies to: Nicole Brookshire Paul Scrivano Davis Polk & Wardwell LLP 450 Lexington Avenue New York, New York 10017 (212) 450-4000 (Exact Name of Registrant as Specified in Its Charter) (State or Other Jurisdiction of Incorporation or Orga ...

Part I - Financial Information This section presents the unaudited condensed consolidated financial statements, notes, and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements (Unaudited)](index=7&type=section&id=Item%201.%20Financial%20Statements) Presents unaudited condensed consolidated financial statements, notes, and details on net losses, liquidity, and a major recapitalization transaction [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Provides a snapshot of assets, liabilities, and stockholders' equity, highlighting changes in financial position Condensed Consolidated Balance Sheets (in millions) | Metric | July 31, 2025 | January 31, 2025 | | :-------------------------------- | :---------- | :--------------- | | Cash and cash equivalents | $43.6 | $77.4 | | Total current assets | $63.3 | $93.9 | | Rental product, net | $86.7 | $73.3 | | Total assets | $219.0 | $240.0 | | Total current liabilities | $68.3 | $47.4 | | Long-term debt, net | $343.9 | $333.7 | | Total liabilities | $451.1 | $422.5 | | Total stockholders' equity (deficit)| $(232.1) | $(182.5) | - **Total assets decreased from $240.0 million to $219.0 million**, while **total liabilities increased from $422.5 million to $451.1 million**, leading to a **larger stockholders' deficit**[21](index=21&type=chunk) - **Long-term debt, net increased by $10.2 million from $333.7 million to $343.9 million**[21](index=21&type=chunk) [Condensed Consolidated Statements of Operations](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Details the Company's revenues, expenses, and net loss for the three and six months ended July 31, 2025 and 2024 Condensed Consolidated Statements of Operations (in millions) | Metric | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Total revenue, net | $80.9 | $78.9 | $150.5 | $153.9 | | Operating loss | $(20.1) | $(9.6) | $(39.8) | $(26.1) | | Net loss | $(26.4) | $(15.6) | $(52.5) | $(37.6) | | Net loss per share (basic & diluted)| $(6.55) | $(4.17) | $(13.12) | $(10.18) | - **Total revenue, net increased by 2.5% for the three months ended July 31, 2025**, but **decreased by 2.2% for the six months ended July 31, 2025**, compared to the prior year periods[22](index=22&type=chunk) - **Net loss significantly widened for both the three-month period (from $(15.6) million to $(26.4) million) and the six-month period (from $(37.6) million to $(52.5) million) year-over-year**[22](index=22&type=chunk) [Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit)](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity%20(Deficit)) Outlines changes in additional paid-in capital, accumulated deficit, and total stockholders' equity (deficit) Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit) (in millions) | Metric | July 31, 2025 | January 31, 2025 | | :-------------------------------- | :------------ | :--------------- | | Additional Paid-in Capital | $943.4 | $940.5 | | Accumulated Deficit | $(1,175.5) | $(1,123.0) | | Total Stockholders' Equity (Deficit)| $(232.1) | $(182.5) | - The **accumulated deficit increased by $52.5 million from January 31, 2025, to July 31, 2025**, reflecting the **net loss incurred during the period**[27](index=27&type=chunk) - **Share-based compensation expense contributed $2.9 million to additional paid-in capital for the six months ended July 31, 2025**[27](index=27&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Summarizes cash flows from operating, investing, and financing activities for the six months ended July 31, 2025 and 2024 Condensed Consolidated Statements of Cash Flows (in millions) | Metric | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | | Net cash (used in) provided by operating activities | $(2.2) | $6.8 | | Net cash (used in) provided by investing activities | $(30.7) | $(12.7) | | Net cash (decrease) increase in cash and cash equivalents and restricted cash | $(34.3) | $(7.4) | | Cash and cash equivalents and restricted cash at end of period | $52.2 | $86.6 | - **Operating activities shifted from providing $6.8 million in cash in 2024 to using $(2.2) million in 2025**[29](index=29&type=chunk) - **Cash used in investing activities significantly increased from $(12.7) million in 2024 to $(30.7) million in 2025**, primarily due to **higher purchases of rental product**[29](index=29&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=14&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [1. Business Description](index=14&type=section&id=1.%20Business) Rent the Runway operates a shared designer closet, offering subscription and a-la-carte rental services primarily in the United States - Company's mission is to empower women through a shared designer closet, offering **Subscription and Reserve rental services**[32](index=32&type=chunk) - All revenue is generated in the United States, primarily from **rental subscription and a-la-carte rental fees**, with a portion from **product sales**[33](index=33&type=chunk) [2. Summary of Significant Accounting Policies](index=14&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) Outlines the Company's significant accounting policies, including basis of presentation, revenue recognition, and rental product depreciation - The Company operates as a **single operating and reportable segment**, with the CEO reviewing financial information on a consolidated basis[40](index=40&type=chunk) - **Rental product is depreciated using the straight-line method over estimated useful lives (3 years for apparel, 2 years for accessories) with estimated salvage values (20% for apparel, 30% for accessories)**[52](index=52&type=chunk) - **Subscription and Reserve rental revenue is recognized in accordance with ASC 842**, while **other revenue (primarily product sales) is recognized under ASC 606**[57](index=57&type=chunk) - The Company has identified new accounting pronouncements (**ASU 2024-03 and ASU 2023-09**) related to expense disaggregation and income tax disclosures, which are currently being evaluated for impact[69](index=69&type=chunk)[70](index=70&type=chunk) [3. Liquidity](index=20&type=section&id=3.%20Liquidity) Discusses the Company's financial position, including net losses, debt, and a planned recapitalization to improve capital structure - The Company incurred **net losses of $(26.4) million and $(52.5) million for the three and six months ended July 31, 2025**, respectively, with an **accumulated deficit of $(1,175.5) million**[71](index=71&type=chunk) Liquidity Metrics (in millions) | Metric | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | | Net cash (used in) provided by operating activities | $(2.2) | $6.8 | | Cash outflows from investing activities | $(30.7) | $(12.7) | - As of July 31, 2025, **cash and cash equivalents were $43.6 million**, and **long-term debt was $343.9 million**, maturing in October 2026[71](index=71&type=chunk) - A **recapitalization transaction**, expected to close by December 31, 2025, aims to **significantly reduce total indebtedness, lower interest costs, and provide financial flexibility**, including a **temporary reduction of the minimum liquidity maintenance covenant to $15 million**[75](index=75&type=chunk)[76](index=76&type=chunk) [4. Restructuring and Related Charges](index=22&type=section&id=4.%20Restructuring%20and%20Related%20Charges) Details the restructuring plan initiated in January 2024, including workforce reductions and associated costs - A **restructuring plan initiated in January 2024 included a ~10% reduction in corporate workforce** to support profitability goals[77](index=77&type=chunk) - **Restructuring charges of $0.2 million for severance were recognized in the six months ended July 31, 2024**, with **no charges in the current period**[78](index=78&type=chunk) - The **restructuring plan was completed during the first quarter of fiscal year 2025**, with **cumulative charges of $2.2 million**[78](index=78&type=chunk) [5. Leases - Lessee Accounting](index=23&type=section&id=5.%20Leases%20-%20Lessee%20Accounting) Outlines the Company's minimum fixed lease obligations as a lessee for operating and financing leases Minimum Fixed Lease Obligations (in millions) | Fiscal Year | Operating Lease Obligations | Financing Lease Obligations | | :---------- | :------------------------ | :------------------------ | | 2025 | $5.8 | $0.1 | | 2026 | $11.5 | $0.1 | | 2027 | $11.2 | $0.1 | | 2028 | $11.3 | $0.1 | | 2029 | $10.0 | $0.1 | | Thereafter | $18.8 | $0.2 | | Total | $68.6 | $0.7 | - The Company entered into a **sublease agreement for its corporate headquarters' ninth floor**, commencing December 2024, with immaterial additional assets recorded and net proceeds in G&A expenses[79](index=79&type=chunk) [6. Rental Product, Net](index=23&type=section&id=6.%20Rental%20Product,%20Net) Details the composition and changes in rental product assets, including depreciation and write-offs Rental Product, Net (in millions) | Metric | July 31, 2025 | January 31, 2025 | | :-------------------------------- | :------------ | :--------------- | | Apparel | $154.5 | $138.2 | | Accessories | $4.9 | $4.2 | | Less: accumulated depreciation | $(72.7) | $(69.1) | | Rental product, net | $86.7 | $73.3 | Depreciation and Write-offs (in millions) | Metric | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Depreciation and write-offs | $15.9 | $16.2 | $29.1 | $31.1 | [7. Long-Term Debt](index=24&type=section&id=7.%20Long-Term%20Debt) Provides details on the Company's long-term debt, including principal outstanding, payment-in-kind interest, and amendments to the debt facility Long-Term Debt (in millions) | Metric | July 31, 2025 | January 31, 2025 | | :-------------------------------- | :------------ | :--------------- | | Debt Facility principal outstanding | $271.6 | $271.6 | | Payment-in-kind interest | $47.6 | $40.3 | | Unamortized debt premium | $24.7 | $21.8 | | Debt Facility, net | $343.9 | $333.7 | - The **2023 Amended Temasek Facility eliminated all interest (PIK and cash) for six fiscal quarters starting Q4 FY2023** and **reduced the minimum liquidity covenant from $50 million to $30 million**[86](index=86&type=chunk) - The **Fourteenth Amendment (August 2025) capitalized cash interest, temporarily reduced the liquidity covenant to $15 million**, and **eliminated fiscal year 2025 spend levels**[88](index=88&type=chunk) - The Company was in **compliance with all applicable financial covenants as of July 31, 2025**[91](index=91&type=chunk) [8. Income Taxes](index=26&type=section&id=8.%20Income%20Taxes) Discusses the Company's income tax position, including valuation allowance, unrecognized tax benefits, and the impact of recent tax legislation - The Company maintains a **full valuation allowance on all United States net deferred tax assets**[93](index=93&type=chunk) Unrecognized Tax Benefits (in millions) | Metric | July 31, 2025 | January 31, 2025 | | :-------------------------------- | :------------ | :--------------- | | Unrecognized tax benefits | $1.3 | $1.2 | - The **One Big Beautiful Bill Act of 2025, enacted July 4, 2025, had an immaterial impact on the Company's financial statements for the quarter ended July 31, 2025**[95](index=95&type=chunk) [9. Accrued Expenses and Other Current Liabilities](index=26&type=section&id=9.%20Accrued%20Expenses%20and%20Other%20Current%20Liabilities) Details the components of accrued expenses and other current liabilities, highlighting significant changes Accrued Expenses and Other Current Liabilities (in millions) | Metric | July 31, 2025 | January 31, 2025 | | :-------------------------------- | :------------ | :--------------- | | Accrued operating and general expenses | $15.6 | $6.6 | | Revenue share payable | $9.6 | $6.9 | | Accrued interest | $4.0 | $— | | Total accrued expenses and other current liabilities | $36.4 | $20.3 | - **Accrued expenses and other current liabilities increased by $16.1 million**, driven by **higher operating expenses, revenue share, and accrued interest**[96](index=96&type=chunk) [10. Fair Value Measurements](index=27&type=section&id=10.%20Fair%20Value%20Measurements) Explains the fair value estimation for financial instruments, particularly long-term debt - The **estimated fair value of the Company's long-term debt was $236.0 million as of July 31, 2025**, classified as **Level 3 within the fair value hierarchy**[98](index=98&type=chunk) - **Carrying amounts of cash, restricted cash, prepaid expenses, accounts payable, and accrued liabilities approximated fair value due to short maturities**[97](index=97&type=chunk) [11. Stockholders' Equity](index=27&type=section&id=11.%20Stockholders'%20Equity) Provides information on the Company's common stock, including a reverse stock split and outstanding shares and warrants - A **1-for-20 reverse stock split became effective on April 2, 2024**, with trading on a post-split basis starting April 3, 2024[99](index=99&type=chunk) Shares Outstanding | Stock Class | Shares Outstanding (July 31, 2025) | | :---------- | :------------------------------- | | Class A | 3,899,124 | | Class B | 155,634 | Warrants Outstanding (in millions) | Warrant Type | Number of Shares | Fair Value at Issuance | | :----------- | :--------------- | :--------------------- | | Equity classified | 131,574 | $13.4 | [12. Share-based Compensation Plans](index=28&type=section&id=12.%20Share-based%20Compensation%20Plans) Details the Company's equity incentive plan, including RSU and stock option grants, and associated compensation expense - The **2021 Incentive Award Plan is the primary plan for equity awards**, with **300,504 Class A common shares available for issuance as of July 31, 2025**[105](index=105&type=chunk) - **No stock options were granted during the three and six months ended July 31, 2025 or 2024**[106](index=106&type=chunk) Total Share-based Compensation (in millions) | Metric | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Total share-based compensation | $1.4 | $2.4 | $2.9 | $5.4 | - **Unrecognized compensation cost for RSUs was $2.5 million as of July 31, 2025**, with a **weighted average recognition period of 0.85 years**[111](index=111&type=chunk) [13. Net Loss per Share Attributable to Common Stockholders](index=30&type=section&id=13.%20Net%20Loss%20per%20Share%20Attributable%20to%20Common%20Stockholders) Reports basic and diluted net loss per share and the treatment of potentially dilutive securities Net Loss per Share (basic & diluted) | Metric | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net loss per share (basic & diluted)| $(6.55) | $(4.17) | $(13.12) | $(10.18) | Potentially Dilutive Securities | Potentially Dilutive Securities | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :------------------------------ | :------------------------------- | :------------------------------- | | Stock options | 30,284 | 35,325 | | Common stock warrants | 131,574 | 131,574 | | RSUs | 286,606 | 461,484 | | Total | 448,464 | 628,383 | - All **potentially dilutive securities were excluded from diluted loss per share computation because their inclusion would have been anti-dilutive due to the net loss**[114](index=114&type=chunk) [14. Commitments and Contingencies](index=31&type=section&id=14.%20Commitments%20and%20Contingencies) Outlines restricted cash, purchase commitments, and ongoing legal proceedings the Company is involved in Restricted Cash Balances (in millions) | Metric | July 31, 2025 | January 31, 2025 | | :-------------------------------- | :------------ | :--------------- | | Restricted cash balances | $8.6 | $9.1 | Technology Service Commitments (in millions) | Fiscal Year | Technology Service Commitments | | :---------- | :--------------------------- | | 2025 | $3.1 | | 2026 | $4.8 | | 2027 | $4.3 | | Total | $12.2 | - The Company is a defendant in a **putative class action lawsuit (Rajat Sharma v. Rent the Runway, Inc., et al.)** and a **stockholder derivative lawsuit (Bandyopadhyay v. Hyman, et al.)**, both of which it intends to vigorously defend[118](index=118&type=chunk)[119](index=119&type=chunk) [15. Subsequent Events](index=33&type=section&id=15.%20Subsequent%20Events) Details a comprehensive recapitalization transaction entered into on August 20, 2025, to improve capital structure and extend debt maturities - On **August 20, 2025, the Company entered into an Exchange Agreement and other related documents for a recapitalization to improve its capital structure and extend debt maturities**[120](index=120&type=chunk)[121](index=121&type=chunk) - The **recapitalization involves exchanging $100 million of existing debt for new term loans** and the **remaining outstanding debt for newly issued Class A common stock**, representing **86% of total outstanding shares post-conversion**[123](index=123&type=chunk) - A **New Credit Agreement will provide $120 million in term loans ($100 million from existing debt exchange, $20 million new money)** maturing on the fourth anniversary of closing, with a **temporarily reduced minimum liquidity covenant of $15 million**[130](index=130&type=chunk) - A **$12.5 million rights offering is planned**, with the **Investor Group agreeing to backstop all unsubscribed shares at $4.08 per share**[134](index=134&type=chunk) - The **CEO's employment agreement was amended**, and a **Management Incentive Plan (MIP) pool of approximately 18.3% of Class A common stock was authorized**, contingent on stockholder approval[136](index=136&type=chunk)[138](index=138&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=39&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Provides management's perspective on the Company's financial condition, operating results, liquidity, and critical accounting estimates, including details on a recapitalization [Overview](index=39&type=section&id=Overview) Introduces Rent the Runway's business model, offerings, and key subscriber metrics - Rent the Runway offers **'unlimited closet' access through Subscription and Reserve offerings**, and product sales via Resale[146](index=146&type=chunk) Subscriber Metrics | Metric | July 31, 2025 | | :---------------- | :------------ | | Ending Total Subscribers | 185,102 | | Active Subscribers | 146,373 | - **89% of total revenue for the six months ended July 31, 2025 and 2024 was generated by subscribers**[146](index=146&type=chunk) [Key Fiscal Second Quarter and Recent Business Highlights](index=39&type=section&id=Key%20Fiscal%20Second%20Quarter%20and%20Recent%20Business%20Highlights) Summarizes significant business developments and operational achievements during the fiscal second quarter and recent periods - Announced **Recapitalization Transactions to improve capital structure**[149](index=149&type=chunk) - Deployed a **bold inventory strategy, posting almost twice the inventory units year-over-year**, with **323% more styles in May, 235% in June, and 253% in July**[149](index=149&type=chunk) - **Increased customer engagement, with share of views up 84% YoY, hearts per style up 15% YoY, and new units at home up 57% YoY in Q2 FY2025**[149](index=149&type=chunk) - **Subscription net promoter score increased by 77% YoY in Q2 FY2025**[149](index=149&type=chunk) - **Revenue share units from existing partners increased by 40% YoY**, and **total revenue share units increased by 119% YoY**[150](index=150&type=chunk) - Launched **56 new brands in H1 FY2025 and seven new exclusive brand collaborations**[150](index=150&type=chunk) - **Organic social media engagement increased by ~800% YoY and views by 175% YoY in Q2 FY2025**[150](index=150&type=chunk) - Enhanced subscription experience with a **new personalized home screen, tiered rewards program, and 'coming soon' style previews**[150](index=150&type=chunk) - Implemented a **pricing adjustment for subscription plans on August 1, 2025**, with an **average increase of $2 per item**[150](index=150&type=chunk) [Recapitalization Transactions](index=42&type=section&id=Recapitalization%20Transactions) Details the announced recapitalization transactions aimed at improving the Company's capital structure and financial flexibility - **Recapitalization Transactions were announced to improve the Company's capital structure, enhance financial flexibility, and extend debt maturities**[153](index=153&type=chunk) [Our Product Acquisition Strategy](index=42&type=section&id=Our%20Product%20Acquisition%20Strategy) Explains the Company's methods for acquiring rental products, focusing on capital efficiency and future purchasing plans - Products are acquired via **Wholesale, Share by RTR (consignment with performance-based payments), and Exclusive Designs (data-driven collaborations)**[154](index=154&type=chunk) Product Acquisition Methods (% of new items) | Acquisition Method | FY2024 | FY2023 | | :----------------- | :----- | :----- | | Wholesale | 30% | 39% | | Share by RTR | 48% | 33% | | Exclusive Designs | 22% | 28% | - The Company expects to incur **higher purchases of rental product in fiscal year 2025 to approximately double new rental product added to the site**[156](index=156&type=chunk) [Key Factors Affecting Our Performance](index=42&type=section&id=Key%20Factors%20Affecting%20Our%20Performance) [Subscribers and Customers](index=42&type=section&id=Subscribers%20and%20Customers) Discusses the importance of attracting and retaining subscribers and customers, influenced by product availability and satisfaction - **Long-term growth depends on attracting new and retaining existing subscribers and customers**, influenced by **rental product availability and satisfaction**[159](index=159&type=chunk)[160](index=160&type=chunk) - In fiscal year 2025, the Company plans to **significantly increase the quantity and desirability of rental product purchases to improve customer satisfaction and retention**[161](index=161&type=chunk) [Brands and Products](index=43&type=section&id=Brands%20and%20Products) Highlights the importance of a strong product assortment and efficient acquisition methods for customer loyalty - **Ability to acquire, manage, and monetize products efficiently is crucial for customer loyalty**, leveraging deep partnerships and flexible buying timelines[162](index=162&type=chunk) - **Purchases of rental product as a percentage of revenue was 16% in fiscal year 2024**, but is **expected to increase in fiscal year 2025 due to a significant increase in units purchased**[163](index=163&type=chunk) [Ability to Achieve Leverage in our Cost Structure](index=44&type=section&id=Ability%20to%20Achieve%20Leverage%20in%20our%20Cost%20Structure) Focuses on operational efficiency, technology-driven processes, and key metrics for assessing performance and cash consumption - **Restructuring plans in September 2022 and January 2024 reduced operating expenses by approximately $27 million and $12 million annually**, respectively[165](index=165&type=chunk) - The Company uses **technology and customer data to drive efficiency in products, fulfillment, and operating costs**, including a **proprietary rental reverse logistics platform**[166](index=166&type=chunk) - **Adjusted EBITDA and combined net cash used in operating and investing activities are used to assess operating performance and cash consumption**[168](index=168&type=chunk) [Seasonality](index=44&type=section&id=Seasonality) Describes the seasonal fluctuations in subscriber acquisition, pause rates, and expenses throughout the year - **Highest subscriber acquisition typically occurs in March-May and September-November**[169](index=169&type=chunk) - **Higher subscriber pause rates are observed in summer and mid-December through January**[169](index=169&type=chunk) - **Transportation expense is typically highest in Q4**, and **most significant rental product receipts occur in Q1 and Q3**[170](index=170&type=chunk) [Impact of Macro and Consumer Environment on Our Business](index=44&type=section&id=Impact%20of%20Macro%20and%20Consumer%20Environment%20on%20Our%20Business) Addresses the significant uncertainty from macroeconomic factors impacting consumer spending and operational costs - **Macroeconomic factors (inflation, interest rates, global trade policies) create significant uncertainty**, impacting **consumer spending and operational costs**[171](index=171&type=chunk) - **Active Subscriber levels have been impacted by seasonal changes, remote work, inflationary pressures, and pricing sensitivity**[172](index=172&type=chunk) - The Company implemented a **price increase for subscription plans in August 2025** and **increased wage rates in Q1 FY2025 to address inflationary pressures**[173](index=173&type=chunk) [Key Business and Financial Metrics](index=45&type=section&id=Key%20Business%20and%20Financial%20Metrics) Presents key performance indicators such as Active Subscribers, Gross Profit, Net Loss, and Adjusted EBITDA Key Business and Financial Metrics (in millions, except subscribers) | Metric | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Active Subscribers | 146,373 | 129,073 | 146,373 | 129,073 | | Average Active Subscribers | 146,765 | 137,455 | 140,116 | 137,455 | | Gross Profit | $24.3 | $32.4 | $46.2 | $60.8 | | Net Loss | $(26.4) | $(15.6) | $(52.5) | $(37.6) | | Adjusted EBITDA | $3.6 | $13.7 | $2.3 | $20.2 | - **Active Subscribers increased by 13.4% year-over-year to 146,373 as of July 31, 2025**, driven by **higher acquisitions, increased promotional activity, and improved retention**[179](index=179&type=chunk) - **Gross Profit and Adjusted EBITDA decreased for both periods**, primarily due to **higher revenue share and fulfillment costs as a percentage of revenue**[182](index=182&type=chunk)[185](index=185&type=chunk) [Components of Results of Operations](index=47&type=section&id=Components%20of%20Results%20of%20Operations) Describes the various revenue and expense categories, their drivers, and expected trends - **Total revenue, net, comprises Subscription and Reserve rental revenue (recognized ratably over subscription/rental period) and Other revenue (primarily product sales, recognized upon delivery)**[187](index=187&type=chunk)[188](index=188&type=chunk)[189](index=189&type=chunk) - **Fulfillment expenses include shipping, personnel, and cleaning costs**, expected to **decrease as a percentage of revenue long-term due to efficiencies**[190](index=190&type=chunk) - **Rental product depreciation and revenue share expenses are expected to increase in absolute dollars to support subscriber growth**, varying with acquisition mix[194](index=194&type=chunk) - **G&A expenses are expected to increase in the near term due to Recapitalization Transactions costs** but **decrease as a percentage of revenue long-term**[193](index=193&type=chunk) [Comparison of the three months ended July 31, 2025 and 2024](index=49&type=section&id=Comparison%20of%20the%20three%20months%20ended%20July%2031,%202025%20and%202024) Analyzes the Company's financial performance for the three-month period, detailing changes in revenue, expenses, and net loss Financial Performance (in millions) | Metric | 3 Months Ended July 31, 2025 | 3 Months Ended July 31, 2024 | Change ($) | Change (%) | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------- | | Total revenue, net | $80.9 | $78.9 | $2.0 | 2.5% | | Subscription and Reserve rental revenue | $69.2 | $68.5 | $0.7 | 1.0% | | Other revenue | $11.7 | $10.4 | $1.3 | 12.5% | | Total costs and expenses | $101.0 | $88.5 | $12.5 | 14.1% | | Rental product depreciation and revenue share | $34.1 | $25.9 | $8.2 | 31.7% | | Fulfillment | $22.5 | $20.6 | $1.9 | 9.2% | | Technology | $9.8 | $8.7 | $1.1 | 12.6% | | General and administrative | $24.6 | $22.2 | $2.4 | 10.8% | | Net loss | $(26.4) | $(15.6) | $(10.8) | 69.2% | - The **increase in total revenue was primarily driven by higher Other revenue (up 12.5%) and Subscription and Reserve rental revenue (up 1.0%)**[201](index=201&type=chunk)[202](index=202&type=chunk)[203](index=203&type=chunk) - The **significant increase in costs and expenses was mainly due to higher Rental Product Depreciation and Revenue Share (up 31.7%) and Fulfillment costs (up 9.2%)**[204](index=204&type=chunk)[205](index=205&type=chunk)[213](index=213&type=chunk) [Comparison of the six months ended July 31, 2025 and 2024](index=51&type=section&id=Comparison%20of%20the%20six%20months%20ended%20July%2031,%202025%20and%202024) Analyzes the Company's financial performance for the six-month period, detailing changes in revenue, expenses, and net loss Financial Performance (in millions) | Metric | 6 Months Ended July 31, 2025 | 6 Months Ended July 31, 2024 | Change ($) | Change (%) | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------- | | Total revenue, net | $150.5 | $153.9 | $(3.4) | (2.2)% | | Subscription and Reserve rental revenue | $131.2 | $134.6 | $(3.4) | (2.5)% | | Other revenue | $19.3 | $19.3 | $0.0 | 0.0% | | Total costs and expenses | $190.3 | $180.0 | $10.3 | 5.7% | | Rental product depreciation and revenue share | $61.4 | $51.9 | $9.5 | 18.3% | | Fulfillment | $42.9 | $41.2 | $1.7 | 4.1% | | Technology | $19.4 | $18.3 | $1.1 | 6.0% | | General and administrative | $45.3 | $45.0 | $0.3 | 0.7% | | Net loss | $(52.5) | $(37.6) | $(14.9) | 39.6% | - The **decrease in total revenue was primarily driven by lower Subscription and Reserve rental revenue (down 2.5%)**, partially offset by flat Other revenue[221](index=221&type=chunk)[222](index=222&type=chunk)[223](index=223&type=chunk) - The **increase in total costs and expenses was mainly due to higher Rental Product Depreciation and Revenue Share (up 18.3%) and Fulfillment costs (up 4.1%)**[224](index=224&type=chunk)[225](index=225&type=chunk)[233](index=233&type=chunk) [Non-GAAP Financial Metrics](index=53&type=section&id=Non-GAAP%20Financial%20Metrics) Provides a reconciliation of net loss to Adjusted EBITDA, a key non-GAAP metric used to assess operating performance Non-GAAP Financial Metrics (in millions) | Metric | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net loss | $(26.4) | $(15.6) | $(52.5) | $(37.6) | | Adjusted EBITDA | $3.6 | $13.7 | $2.3 | $20.2 | | Adjusted EBITDA Margin | 4.4% | 17.4% | 1.5% | 13.1% | - **Adjusted EBITDA and Adjusted EBITDA Margin decreased year-over-year for both periods**, primarily due to **higher revenue share and fulfillment costs as a percentage of revenue**[241](index=241&type=chunk) [Liquidity and Capital Resources](index=54&type=section&id=Liquidity%20and%20Capital%20Resources) Discusses the Company's liquidity position, including cash, debt, and the impact of the ongoing recapitalization transaction - The Company has incurred **significant recurring net losses** and had an **accumulated deficit of $(1,175.5) million as of July 31, 2025**[243](index=243&type=chunk) Liquidity and Capital Resources (in millions) | Metric | July 31, 2025 | | :-------------------------------- | :------------ | | Cash and cash equivalents | $43.6 | | Long-term debt | $343.9 | - A **recapitalization transaction (detailed in Note 15) is intended to improve the capital structure, enhance financial flexibility, and extend debt maturities**[246](index=246&type=chunk) - The Company believes **existing cash and cash equivalents, and cash from operations, will be sufficient for the next twelve months**, assuming the Recapitalization Transactions close[249](index=249&type=chunk) [Cash Flows](index=56&type=section&id=Cash%20Flows) Analyzes the Company's cash flow activities, highlighting changes in operating, investing, and financing cash flows Cash Flows (in millions) | Metric | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | | Net cash (used in) provided by operating activities | $(2.2) | $6.8 | | Net cash (used in) provided by investing activities | $(30.7) | $(12.7) | | Net (decrease) increase in cash and cash equivalents and restricted cash | $(34.3) | $(7.4) | | Cash and cash equivalents and restricted cash at end of period | $52.2 | $86.6 | - **Cash consumption (operating + investing activities) increased from $(5.9) million in 2024 to $(32.9) million in 2025**, primarily due to **higher rental product purchases and increased net loss**[250](index=250&type=chunk) - **Purchases of rental product were $(42.0) million for the six months ended July 31, 2025**, compared to **$(26.3) million in the prior year**[253](index=253&type=chunk)[254](index=254&type=chunk) [Contractual Obligations and Commitments](index=57&type=section&id=Contractual%20Obligations%20and%20Commitments) Summarizes the Company's debt obligations, lease commitments, and technology service purchase commitments - The **2023 Amended Temasek Facility eliminated interest for six fiscal quarters** and **reduced the minimum liquidity maintenance covenant**[256](index=256&type=chunk) - **Fiscal year 2025 spend levels for rental product capital, fixed operating, and marketing expenditures were eliminated under the Fourteenth Amendment to the debt facility**[256](index=256&type=chunk) - As of July 31, 2025, the Company had **$343.9 million of total debt outstanding**, with a **pending recapitalization to restructure it**[256](index=256&type=chunk) [Critical Accounting Estimates](index=58&type=section&id=Critical%20Accounting%20Estimates) Identifies key accounting estimates requiring significant judgment, such as rental product useful life, lease liabilities, and long-lived asset recoverability - **Significant estimates include useful life and salvage value of rental product, incremental borrowing rate for lease liabilities, valuation of share-based compensation and warrants, and recoverability of long-lived assets**[44](index=44&type=chunk)[393](index=393&type=chunk) - An **impairment analysis was performed due to stock price decline in Q1/Q2 FY2025 and Q4 FY2024**, concluding **no impairment for long-lived assets**[259](index=259&type=chunk) [Recent Accounting Pronouncements](index=58&type=section&id=Recent%20Accounting%20Pronouncements) Discusses the Company's evaluation of recently issued accounting standards and their potential impact on financial statements - The Company is **evaluating ASU 2024-03 (Expense Disaggregation Disclosures) and ASU 2023-09 (Improvements to Income Tax Disclosures)** for their impact on consolidated financial statements[69](index=69&type=chunk)[70](index=70&type=chunk)[260](index=260&type=chunk) [JOBS Act](index=58&type=section&id=JOBS%20Act) Explains the Company's status as an "emerging growth company" and its election to use the extended transition period for accounting standards - The Company qualifies as an **'emerging growth company' under the JOBS Act**[261](index=261&type=chunk) - The Company has **elected to use the extended transition period for complying with new or revised accounting standards**, aligning with private companies[261](index=261&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=58&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) States that there were no material changes to market risk disclosures from the prior annual report - **No material changes to quantitative and qualitative disclosures about market risk for the three months ended July 31, 2025**[262](index=262&type=chunk) [Item 4. Controls and Procedures](index=59&type=section&id=Item%204.%20Controls%20and%20Procedures) Reports on the effectiveness of disclosure controls and procedures, identifying material weaknesses in internal control over financial reporting [Disclosure Controls and Procedures](index=59&type=section&id=Disclosure%20Controls%20and%20Procedures) Concludes on the effectiveness of the Company's disclosure controls and procedures as of July 31, 2025 - Management concluded that **disclosure controls and procedures were not effective as of July 31, 2025**, due to **material weaknesses in internal control over financial reporting**[263](index=263&type=chunk) - Despite weaknesses, management believes the **condensed consolidated financial statements fairly present the Company's financial condition**[264](index=264&type=chunk) [Material Weaknesses in Internal Control Over Financial Reporting](index=59&type=section&id=Material%20Weaknesses%20in%20Internal%20Control%20Over%20Financial%20Reporting) Identifies specific unremediated material weaknesses in the Company's internal control over financial reporting - **Material weaknesses remain unremediated as of July 31, 2025**[265](index=265&type=chunk) - Identified weaknesses include **insufficient evidence of control operation, inadequate segregation of duties and journal entry review, and ineffective IT general controls (program change management, user access, computer operations, program development)**[266](index=266&type=chunk)[267](index=267&type=chunk) - These weaknesses did not result in a misstatement to current financial statements but **could lead to material misstatements in the future**[269](index=269&type=chunk) [Remediation Efforts to Address Material Weaknesses](index=59&type=section&id=Remediation%20Efforts%20to%20Address%20Material%20Weaknesses) Outlines the Company's ongoing efforts to remediate identified material weaknesses in internal control - **Remediation efforts include formalizing control frameworks, improving segregation of duties, enhancing journal entry review, and implementing IT general controls**[270](index=270&type=chunk)[271](index=271&type=chunk) - The **timing for full remediation is uncertain**, and additional measures may be required[272](index=272&type=chunk) [Changes in Internal Control Over Financial Reporting](index=60&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) Reports on any changes in internal control over financial reporting during the quarter ended July 31, 2025 - **No changes in internal control over financial reporting occurred during the quarter ended July 31, 2025, that materially affected or are reasonably likely to materially affect the Company's internal control over financial reporting**[273](index=273&type=chunk) Part II - Other Information This section covers legal proceedings, risk factors, equity sales, defaults, and exhibits, providing additional context to the financial disclosures [Item 1. Legal Proceedings](index=61&type=section&id=Item%201.%20Legal%20Proceedings) Incorporates by reference information on commitments and contingencies from Note 14 of the financial statements, detailing ongoing legal proceedings - Information on **legal proceedings is incorporated by reference from Note 14, Commitments and Contingencies**[275](index=275&type=chunk) [Item 1A. Risk Factors](index=61&type=section&id=Item%201A.%20Risk%20Factors) Outlines numerous risks that could materially and adversely affect the Company's business, financial condition, results of operations, and prospects [Risks Related to the Recapitalization Transactions](index=61&type=section&id=Risks%20Related%20to%20the%20Recapitalization%20Transactions) Highlights risks associated with the pending recapitalization, including stockholder approval, dilution, and new debt covenants - **Failure to obtain stockholder approval for Recapitalization Transactions could lead to termination of the Exchange Agreement, inability to enter the New Credit Agreement, and potential default on the 2025 Amended Facility**, materially impacting the business and going concern ability[277](index=277&type=chunk)[279](index=279&type=chunk) - **Approval of the Required Proposals will result in immediate and substantial dilution to stockholders** due to the issuance of significant Exchange Stock and shares from the Rights Offering Backstop Agreement[280](index=280&type=chunk)[281](index=281&type=chunk) - The **New Credit Agreement, if entered, will include covenants that could restrict operations and growth strategies**; failure to comply could materially adversely affect the business[282](index=282&type=chunk)[283](index=283&type=chunk) [Risks Related to Our Business and Industry](index=63&type=section&id=Risks%20Related%20to%20Our%20Business%20and%20Industry) Covers various business and industry-specific risks, including growth management, competition, consumer spending, and operational challenges - **Inability to drive future growth or manage it effectively could harm brand, culture, and financial performance**, especially given the need to attract and retain subscribers and manage product offerings[284](index=284&type=chunk)[285](index=285&type=chunk) - The **global fashion industry is highly competitive and rapidly changing**; failure to compete effectively against traditional and online retailers could result in lost market share[290](index=290&type=chunk)[295](index=295&type=chunk) - **Reliance on consumer discretionary spending makes the Company vulnerable to economic downturns, inflation, and macroeconomic conditions**, which could reduce demand and negatively affect operating results[297](index=297&type=chunk)[299](index=299&type=chunk) - **Continued growth depends on cost-effectively attracting and retaining customers through organic and paid marketing**; ineffective strategies or increased costs could harm the business[300](index=300&type=chunk)[301](index=301&type=chunk)[303](index=303&type=chunk) - **Failure to retain customers, influenced by product quality, pricing, experience, and customer service, could negatively affect operating results**, especially given the importance of longer-tenured subscribers[304](index=304&type=chunk)[305](index=305&type=chunk)[306](index=306&type=chunk) - The Company has a **history of net losses and may not achieve or sustain profitability**, particularly with planned investments in rental product and potential unanticipated costs[307](index=307&type=chunk)[308](index=308&type=chunk)[309](index=309&type=chunk) - **Inability to anticipate and respond to changing fashion trends and consumer preferences, or accurately forecast demand**, could harm the business, especially if rental product availability is suboptimal[312](index=312&type=chunk)[313](index=313&type=chunk)[315](index=315&type=chunk) - **Shipping and logistics are critical**; changes or interruptions in operations, reliance on a single national carrier, or difficulties in reverse logistics could adversely affect operating results and customer satisfaction[316](index=316&type=chunk)[318](index=318&type=chunk)[319](index=319&type=chunk) - **Failure to effectively acquire and manage products from brand and manufacturing partners, or plan for future expenses**, could adversely affect operating results, especially with reliance on capital-efficient channels and global sourcing risks[320](index=320&type=chunk)[321](index=321&type=chunk)[322](index=322&type=chunk) - **Inability to maintain and enhance the brand, or negative publicity**, could impair customer attraction and retention, harming business and financial performance[324](index=324&type=chunk)[325](index=325&type=chunk)[326](index=326&type=chunk) - **Failure to improve website/mobile app performance, keep pace with technological changes (e.g., AI), or develop new offerings in a timely way** could harm business, financial performance, and growth[327](index=327&type=chunk)[329](index=329&type=chunk) - **Heavy reliance on proprietary technology systems and third-party vendors**; effective operation is crucial, and disruptions, bugs, or vulnerabilities could adversely affect business and safeguard confidential information[330](index=330&type=chunk)[332](index=332&type=chunk) - **Significant technology disruption, cyberattack, or data security incident** could adversely affect business, financial condition, and operations, leading to costly investigations, litigation, and reputational harm[333](index=333&type=chunk)[334](index=334&type=chunk)[337](index=337&type=chunk) - **E-commerce business faces distinct risks, including order fulfillment, product availability visibility, and managing online sales**; failure to manage these could negatively impact profitability[339](index=339&type=chunk)[340](index=340&type=chunk) - **Quarterly and annual results may fluctuate due to various factors (e.g., customer acquisition, costs, product launches, economic conditions, seasonality)**, making future performance difficult to predict[344](index=344&type=chunk)[345](index=345&type=chunk)[346](index=346&type=chunk) - **Restructuring operations (e.g., workforce reductions) carry risks such as failure to achieve targeted savings, decreased employee morale, increased employment claims, and loss of institutional knowledge**[348](index=348&type=chunk) - **Evolving ESG expectations from stakeholders may result in additional costs, reputational damage, or impact demand for offerings**, adversely affecting financial condition[349](index=349&type=chunk)[350](index=350&type=chunk)[351](index=351&type=chunk) - **Reliance on key personnel, including the Co-Founder/CEO and senior management, and ability to attract/retain talent (especially in engineering, marketing, logistics, and fulfillment) is critical**; loss or inability to retain could harm the business[354](index=354&type=chunk)[355](index=355&type=chunk)[357](index=357&type=chunk) - **Inability to maintain Company culture as it grows**, due to factors like employee morale, restructurings, or competitive pressures, could harm the business[358](index=358&type=chunk)[360](index=360&type=chunk) - **Material changes in brand/manufacturing partner pricing or raw material costs could negatively impact profitability**, especially with global trade policy changes and tariffs[361](index=361&type=chunk) - **Seasonality affects subscriber acquisition, pause rates, and expenses**; adverse events during peak periods could disproportionately impact operating results[362](index=362&type=chunk)[363](index=363&type=chunk) - **Additional capital may be required for growth and debt obligations**, but might not be available on acceptable terms, leading to potential dilution or operational restrictions[365](index=365&type=chunk)[366](index=366&type=chunk) - **High indebtedness ($343.9 million as of July 31, 2025) could adversely affect ability to generate sufficient cash for obligations** and react to business changes[368](index=368&type=chunk)[369](index=369&type=chunk) - The **2025 Amended Facility contains covenants restricting actions (e.g., incurring debt, paying dividends)**; failure to comply could lead to default and acceleration of borrowings[370](index=370&type=chunk)[371](index=371&type=chunk) [Risks Related to Our Legal and Regulatory Environment](index=89&type=section&id=Risks%20Related%20to%20Our%20Legal%20and%20Regulatory%20Environment) Addresses legal and regulatory risks, including compliance with various laws, intellectual property, and potential litigation - The business is subject to **numerous evolving U.S. and non-U.S. laws and regulations (consumer protection, privacy, labor, etc.)**; non-compliance could lead to liabilities, fines, and reputational harm[402](index=402&type=chunk)[403](index=403&type=chunk) - **Compliance with export/import controls, sanctions, anti-corruption, and anti-money laundering laws is required**; violations could impair market competition and lead to criminal liability[404](index=404&type=chunk) - **Subject to claims, legal proceedings, regulatory disputes, and governmental inquiries (e.g., class action lawsuits, derivative lawsuits)** that could incur significant expenses, divert management attention, and harm business[405](index=405&type=chunk)[406](index=406&type=chunk) - **Failure to adequately obtain, maintain, protect, and enforce intellectual property and proprietary rights** could harm the brand, devalue proprietary content, and adversely affect competitive ability[408](index=408&type=chunk)[409](index=409&type=chunk)[410](index=410&type=chunk) - May incur costs to **defend against intellectual property infringement, misappropriation, and other claims by third parties**, potentially resulting in substantial damages or business model changes[413](index=413&type=chunk) - **Use of third-party open-source software could adversely affect ability to offer products** and subject the Company to possible litigation if license terms are violated or construed unfavorably[414](index=414&type=chunk)[415](index=415&type=chunk) - **Subject to rapidly changing and stringent data privacy, security, protection, and consumer protection laws (e.g., CCPA, GDPR, TCPA)**; non-compliance could materially impair business growth and lead to liabilities[416](index=416&type=chunk)[417](index=417&type=chunk)[419](index=419&type=chunk)[421](index=421&type=chunk)[424](index=424&type=chunk) - Could incur **significant liabilities and costs in complying with environmental, health, and safety laws and regulations**, including permitting issues and waste disposal[425](index=425&type=chunk)[426](index=426&type=chunk) - **Ability to utilize net operating loss carryforwards (federal $654.4M, state $633.2M as of Jan 31, 2025) may be limited by ownership changes (Section 382) or future regulatory changes**[428](index=428&type=chunk)[429](index=429&type=chunk) - **Changes in effective tax rate or tax liability due to varying income amounts, tax law changes, or audit outcomes** could adversely affect results of operations[430](index=430&type=chunk) [Risks Related to Our Dependence on Third Parties](index=97&type=section&id=Risks%20Related%20to%20Our%20Dependence%20on%20Third%20Parties) Examines risks arising from reliance on brand partners, payment processors, cloud infrastructure, and marketing platforms - **Risks associated with brand and manufacturing partners (Wholesale, Share by RTR, Exclusive Designs) include discontinuation of supply, less favorable terms, supply chain disruptions, and financial instability**, which could impair product acquisition[431](index=431&type=chunk)[433](index=433&type=chunk)[435](index=435&type=chunk) - **Reliance on third parties for payment processing infrastructure**; unavailability or unfavorable terms could disrupt business, increase costs, and harm customer trust[436](index=436&type=chunk)[437](index=437&type=chunk) - **Reliance on third-party cloud infrastructures (e.g., for website, mobile app, operations)**; disruptions, interference, or security incidents could adversely affect business, financial condition, or results of operations[438](index=438&type=chunk)[439](index=439&type=chunk)[440](index=440&type=chunk) - **Dependence on search engines, social media platforms, and mobile app stores to attract consumers**; changes in algorithms, policies, or increased marketing costs could adversely affect customer acquisition[441](index=441&type=chunk)[442](index=442&type=chunk)[443](index=443&type=chunk)[445](index=445&type=chunk)[446](index=446&type=chunk) - **Failure by the Company, brand partners, or third-party manufacturers/marketing partners to comply with vendor code of conduct, product safety, labor, or other laws** could damage reputation and harm business[447](index=447&type=chunk)[448](index=448&type=chunk)[449](index=449&type=chunk) - **Significant losses from fraud (e.g., unauthorized purchases, unreturned rentals) could occur**, leading to higher fees, loss of credit card acceptance, litigation, and reputational damage[450](index=450&type=chunk) - **Insufficient insurance coverage or inability of providers to meet obligations** could prevent mitigation of business risks, leading to significant additional costs[451](index=451&type=chunk)[452](index=452&type=chunk) [Risks Related to Ownership of Our Class A Common Stock](index=102&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Class%20A%20Common%20Stock) Details risks associated with owning the Company's Class A Common Stock, including voting control, listing requirements, and stock price volatility - The **dual class structure of common stock (Class B has 20 votes/share) and a stockholders' agreement concentrate voting control with pre-IPO stockholders**, limiting other investors' influence on corporate matters, including change of control[453](index=453&type=chunk)[454](index=454&type=chunk)[455](index=455&type=chunk) - **Failure to meet Nasdaq Global Market's continued listing requirements (e.g., minimum share price) could risk delisting**, negatively affecting stock price and future financing ability[457](index=457&type=chunk)[460](index=460&type=chunk) - The **share price may be volatile and subject to wide fluctuations due to various factors (e.g., financial performance, competition, macroeconomic conditions, litigation)**, potentially causing investors to lose value[461](index=461&type=chunk)[462](index=462&type=chunk) - Management has **broad discretion in using cash resources**, which may not be effective in pursuing growth strategies or could be invested in ways stockholders disagree with[463](index=463&type=chunk) - **Business and financial performance may differ from disclosed projections or third-party attributions**, as projections involve risks and uncertainties beyond control[464](index=464&type=chunk) - **Future sales of common stock in the public market, including through equity incentive plans or future offerings**, could cause the share price to fall and dilute existing stockholders[465](index=465&type=chunk)[466](index=466&type=chunk)[467](index=467&type=chunk)[468](index=468&type=chunk) - **Provisions in corporate charter documents and Delaware law (e.g., blank check preferred stock, classified board, super-majority requirements) may prevent or hinder attempts to change management or acquire a controlling interest**[470](index=470&type=chunk)[471](index=471&type=chunk)[472](index=472&type=chunk) - The **Amended Charter designates Delaware Court of Chancery and federal district courts as exclusive forums for disputes**, potentially limiting stockholders' ability to choose a favorable judicial forum[474](index=474&type=chunk)[475](index=475&type=chunk) - The **Amended Charter states that the 'corporate opportunity' doctrine does not apply to non-employee directors**, allowing them to pursue business opportunities for personal advantage[477](index=477&type=chunk) - **Effects of climate change and related regulatory, customer, and investor responses may adversely impact business through facility damage, supply chain interruptions, increased costs, and reputational risks**[478](index=478&type=chunk) [Item 2. Unregistered Sales Of Equity Securities and Use Of Proceeds](index=107&type=section&id=Item%202.%20Unregistered%20Sales%20Of%20Equity%20Securities%20and%20Use%20Of%20Proceeds) States that there were no unregistered sales of equity securities or use of proceeds to report for the period - **No unregistered sales of equity securities**[479](index=479&type=chunk) [Item 3. Defaults Upon Senior Securities](index=107&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) States that there were no defaults upon senior securities to report for the period - **No defaults upon senior securities**[480](index=480&type=chunk) [Item 4. Mine Safety Disclosures](index=107&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Indicates that this item is not applicable to the Company - **Not applicable**[481](index=481&type=chunk) [Item 5. Other Information](index=107&type=section&id=Item%205.%20Other%20Information) States that there is no other information to report for the period - **Not applicable**[482](index=482&type=chunk) [Item 6. Exhibits](index=108&type=section&id=Item%206.%20Exhibits) Lists all exhibits filed with the Form 10-Q, including corporate documents, credit agreements, and certifications - Includes **amendments to the Certificate of Incorporation and Bylaws**[485](index=485&type=chunk) - Lists several **amendments to the Credit Agreement (Twelfth, Thirteenth, Fourteenth Amendments)**[485](index=485&type=chunk) - Includes the **Exchange Agreement, Investor Rights Agreement, and Rights Offering Backstop Agreement**[485](index=485&type=chunk) - Contains **certifications from the Chief Executive Officer and Chief Financial Officer, and Inline XBRL documents**[485](index=485&type=chunk)[486](index=486&type=chunk) [Signatures](index=110&type=section&id=Signatures) Confirms the due signing of the report by the Chief Financial Officer on September 12, 2025 - The report was **signed by Siddharth Thacker, Chief Financial Officer, on September 12, 2025**[490](index=490&type=chunk)