Financial Data and Key Metrics Changes - Total revenue for Q2 2025 was $80.9 million, an increase of $2 million or 2.5% year-over-year, and up $11.3 million or 16.2% quarter-over-quarter [17] - Adjusted EBITDA for Q2 2025 was $3.6 million, or 4.4% of revenue, compared to $13.7 million, or 17.4% of revenue in Q2 2024 [19] - Free cash flow for Q2 2025 was negative $26.5 million, compared to negative $4.5 million in Q2 2024 [20] Business Line Data and Key Metrics Changes - Subscriber growth ended Q2 with 146,400 active subscribers, a 13.4% year-over-year increase, accelerating from -4.9% in Q4 2024 and 0.9% in Q1 2025 [8][15] - Subscription and Reserve rental revenue increased by $0.7 million, or 1% year-over-year in Q2 2025, primarily due to higher average subscribers [18] - Revenue share units from existing partners were up 40% year-over-year, and total revenue share units increased by 119% year-over-year [10] Market Data and Key Metrics Changes - Engagement with new inventory in Q2 overperformed last year across every key metric, including share of views up 84% year-over-year and hearts per style up 15% year-over-year [10] - Organic channel acquisitions had the best performing quarter in years, with engagement on social media channels up 796% and views up 175% year-over-year [12] Company Strategy and Development Direction - The company announced a recapitalization plan aimed at reducing total debt from over $340 million to approximately $120 million, which is expected to strengthen the balance sheet and provide financial flexibility [4][5] - The strategy focuses on capturing subscribers through a new inventory strategy, increased product innovation, and improved customer connection [6][8] - The company plans to continue adding inventory and enhancing customer experience, with a focus on organic growth through community engagement [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence that the company is on the right track to generate strong medium and long-term performance, with improved momentum evidenced by subscriber growth [21] - The company expects revenue for Q3 2025 to be between $82 million and $84 million, with adjusted EBITDA margins projected to be between negative 2% and 2% of revenue [20] - Management believes the recapitalization transaction is a key step forward for continued investment in customer experience [16] Other Important Information - The company implemented a price increase for subscription plans on August 1, with an average increase of $2 per item, and the most popular plan increasing from $144 to $164 per month, a 14% increase [13][14] - The company is excited about the future and views the recapitalization as a new chapter, akin to an "IPO 2.0" [5][6] Q&A Session Summary Question: What are the expectations for subscriber growth moving forward? - Management indicated that they expect double-digit growth in ending active subscribers for fiscal year 2025 [20] Question: How will the recapitalization impact the company's operations? - The recapitalization is expected to significantly reduce debt, lower interest expenses, and provide cash infusion for continued investment in inventory and customer experience [16] Question: What are the anticipated challenges in the upcoming quarters? - Management acknowledged that free cash flow is expected to be lower than negative $40 million due to costs associated with the recapitalization transaction [20]

Q2 2025 Earnings Presentation September 11, 2025 2 33 3 RENT THE RUNWAY Q2 2025 and Recent Highlights Forward-Looking Statements Disclaimer RTR Announced a Transformative Capital Transaction to Strengthen Our Balance Sheet and Inject Capital into the Business The Business is Growing This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements herein that do not relate to maers of historical fact should be considered forward- ...

Revenue and Growth - Rent the Runway reported Q2 2025 revenue of $80.9 million, a 2.5% increase from $78.9 million in Q2 2024[7] - Active subscribers reached 146,373, representing a 13.4% year-over-year growth from 129,073 in Q2 2024[7] - Total revenue for the three months ended July 31, 2025, was $80.9 million, a 2.5% increase from $78.9 million in the same period of 2024[28] - Subscription and Reserve rental revenue for the six months ended July 31, 2025, was $131.2 million, down 2.5% from $134.6 million in 2024[28] - The company anticipates double-digit growth in ending active subscribers compared to FY 2024[10] Profitability and Loss - Gross profit was $24.3 million, down 25.0% from $32.4 million in Q2 2024, with a gross margin of 30.0% compared to 41.1% in the prior year[7] - Adjusted EBITDA was $3.6 million, down from $13.7 million in Q2 2024, with an adjusted EBITDA margin of 4.4% compared to 17.4% in the prior year[7] - Net loss for the six months ended July 31, 2025, was $52.5 million, compared to a net loss of $37.6 million in the same period of 2024[30] - Operating loss for the three months ended July 31, 2025, was $20.1 million, an increase from $9.6 million in the same period of 2024[28] - Net loss for the three months ended July 31, 2025, was $(26.4) million, compared to $(15.6) million for the same period in 2024, representing an increase in net loss of 69.9%[34] - Adjusted EBITDA for the six months ended July 31, 2025, was $2.3 million, a decrease of 88.6% from $20.2 million in the same period in 2024[34] - Free Cash Flow for the six months ended July 31, 2025, was $(32.9) million, compared to $(5.9) million in 2024, indicating a significant decline in cash flow[36] - Net Loss as a percentage of revenue for the three months ended July 31, 2025, was (32.6)%, compared to (19.8)% in 2024, indicating a higher loss relative to revenue[34] Financial Position - The company reduced its debt from $340 million to $120 million, extending maturity to 2029, providing financial flexibility for future growth[5] - Total assets as of July 31, 2025, were $219.0 million, down from $240.0 million as of January 31, 2025[26] - Total liabilities increased to $451.1 million as of July 31, 2025, compared to $422.5 million as of January 31, 2025[26] - Cash and cash equivalents at the end of the period were $43.6 million, a decrease from $77.4 million at the beginning of the period[26] - The company incurred $34.3 million in net decrease in cash and cash equivalents and restricted cash during the six months ended July 31, 2025[30] Inventory and Engagement - Engagement with new inventory increased significantly, with share of views up 84% year-over-year and new units at home up 57% year-over-year[7] - Revenue share units from existing partners increased by 40% year-over-year, with total revenue share units up 119% year-over-year[7] - The company plans to add over 80 new brands in FY 2025, with 56 already launched in the first half of the year[7] - Purchases of rental product for the six months ended July 31, 2025, totaled $(42.0) million, compared to $(26.3) million in 2024, showing increased investment in rental inventory[36] - Proceeds from the sale of rental product for the six months ended July 31, 2025, were $11.8 million, down from $13.6 million in 2024, indicating a decline in sales[36] Future Outlook - For Q3 2025, Rent the Runway expects revenue between $82 million and $84 million, with an adjusted EBITDA margin between (2)% and +2%[10] - The company plans to continue focusing on technology and marketing investments to drive future growth[23] - Free Cash Flow Margin for the six months ended July 31, 2025, was (21.9)%, compared to (3.8)% in 2024, reflecting a worsening cash flow situation[36] - Adjusted EBITDA Margin for the three months ended July 31, 2025, was 4.4%, down from 17.4% in the same period in 2024[34] - Non-recurring adjustments for the three months ended July 31, 2025, included $2.0 million of transaction-related costs, impacting overall financial performance[34]

Core Insights - Rent the Runway has announced a transformative recapitalization plan aimed at strengthening its balance sheet and injecting capital into the business [2][3] - The company reported a 13.4% year-over-year increase in active subscribers as of July 31, 2025, indicating continued growth [1][11] - Customer satisfaction, measured by the Net Promoter Score, has improved significantly, achieving a score of +77% year-over-year [1][5] Financial Performance - Revenue for Q2 2025 was $80.9 million, reflecting a 2.5% increase from $78.9 million in Q2 2024 [11] - The company reported a net loss of $(26.4) million for Q2 2025, compared to a net loss of $(15.6) million in Q2 2024 [11] - Adjusted EBITDA for Q2 2025 was $3.6 million, down from $13.7 million in Q2 2024, with an Adjusted EBITDA margin of 4.4% compared to 17.4% in the prior year [11][35] Recapitalization Plan - The recapitalization plan will reduce the company's debt from $340 million to $120 million and extend the maturity to 2029, providing financial flexibility [3][5] - The transaction involves converting over $100 million of debt into common equity and adding $20 million in incremental cash [5] Inventory and Customer Engagement - The company has significantly increased its inventory, posting nearly double the inventory units compared to the previous year, with substantial increases in styles [5] - Customer engagement metrics have improved, with share of views up 84% year-over-year and new units at home up 57% year-over-year [5] Market Position and Strategy - Rent the Runway is positioned to capitalize on growing interest in clothing rental, supported by a bold inventory strategy [2] - The company plans to add over 80 new brands in FY 2025, with 56 already launched in the first half of the year [5]

Company Announcement - Rent the Runway, Inc. plans to release its second quarter 2025 financial results on September 11, 2025, after market close [1] - A conference call and live webcast will be held at 4:30 p.m. Eastern Time on the same day to discuss the results and provide a business update [1] Access Information - The financial results and live webcast will be accessible through the Investor Relations section of Rent the Runway's website [2] - To access the conference call, U.S. callers can dial 1-877-407-3982, while international callers can use 1-201-493-6780 [2] Replay Details - A replay of the conference call will be available shortly after the call for at least fourteen days [3] - U.S. callers can access the replay by dialing 1-844-512-2921, and international callers can use 1-412-317-6671 with access code 13755468 [3] Company Overview - Founded in 2009, Rent the Runway is transforming the fashion industry with its "Closet in the Cloud" concept [4] - The company offers subscription services, a-la-carte rentals, and resale options from hundreds of designer brands, featuring millions of items for various occasions [4] - Under the leadership of CEO Jennifer Hyman, Rent the Runway has received multiple accolades, including being named to CNBC's "Disruptor 50" five times and Fast Company's Most Innovative Companies list four times [4]

Core Viewpoint - Rent the Runway is implementing a recapitalization plan to convert $243 million of debt into common equity, add $20 million to its balance sheet, and extend the maturity of its $120 million outstanding debt to 2029 [1][2]. Group 1: Recapitalization Plan - The recapitalization involves Aranda Principal Strategies (APS) converting part of its debt investment into common equity, with additional capital contributions from APS, STORY3, and Nexus Capital Management [2][5]. - The transaction is expected to close by December 31, subject to customary closing conditions [2]. Group 2: Business Performance and Strategy - The CEO of Rent the Runway highlighted the partnership with APS, STORY3, and Nexus as a means to improve the company's balance sheet and capitalize on the expanding rental market in the U.S. [3]. - The company has achieved nearly free cash flow breakeven in 2024 and is transitioning to an asset-light model [3]. - Rent the Runway reported a record high of 147,000 active subscribers and a four-year high in customer retention at the end of the first quarter [4]. Group 3: Market Challenges and Future Plans - The company announced a restructuring plan in January 2024, following a 2% decline in active subscribers, which included a 10% reduction in corporate employees [5]. - Ongoing inflationary challenges have led subscribers to reconsider their subscriptions, prompting the company to double its inventory this year to maintain subscriber interest [6]. - Rent the Runway is forming agreements with brands to design exclusive apparel or provide apparel at lower costs in exchange for a share of rental revenue [6].

Core Viewpoint - Rent the Runway, Inc. is undergoing a growth recapitalization to strengthen its balance sheet, reduce debt, and enhance financial flexibility, while continuing to operate as a public company under the ticker symbol RENT [1][2][3] Financial Restructuring - The recapitalization will significantly reduce the Company's debt, with APS converting over $100 million of its debt into common equity, resulting in an estimated $243 million of debt converted at an effective price of $9.23 per share, an 80.9% premium to the recent average price [5][6] - The outstanding debt balance will be reduced to $120 million, with maturity extended to 2029 [6] - An additional $20 million in cash will be contributed to the balance sheet, increasing the loan balance equivalently [6] Rights Offering - A rights offering will be initiated, allowing existing stockholders to purchase up to $12.5 million of shares at a price of $4.08 per share, representing a 20% discount to the recent average price [7] Business Strategy and Growth - The Company aims to execute a multi-year transformation plan focused on expanding its customer base and enhancing the product and customer experience, having ended Q1 2025 with a record 147,000 active subscribers [4][5] - The management team has made significant progress towards a differentiated strategy and financial discipline, positioning the Company for long-term value creation [3][4] Market Position and Potential - The partnership with STORY3 and Nexus is expected to leverage their sector expertise to drive growth in the expanding rental market, which has been identified as a significant opportunity for fashion brands [3][4] - The Company has seen improved customer retention and reduced churn rates, indicating a positive trend in customer engagement [5]

Core Insights - Rent the Runway is experiencing growth in active subscribers, with a reported increase of 23% to over 147,000 as of April 30 [2] - The company is making its largest-ever investment in inventory, planning to double its inventory this year to enhance brand and style offerings [3] - To manage inventory costs, Rent the Runway is forming exclusive agreements with brands for apparel design or lower-cost apparel in exchange for rental revenue shares [4] Business Strategy - The company is focusing on its subscription model, having introduced a new $119/month subscription tier aimed at expanding its customer base and positioning for growth in 2025 [6] - Rent the Runway's CEO indicated that the company is back in "growth mode" after years of cost-cutting, with plans to accelerate subscriber acquisition in 2025 [5][7] - The company is also addressing potential consumer shifts towards renting apparel to avoid tariff-driven price increases, although it does not have significant direct exposure to tariffs [4][5]

Financial Performance - Total revenue for the three months ended April 30, 2025, was $69.6 million, a decrease of 7.2% year-over-year compared to $75.0 million in the same period of 2024[128] - Gross Profit was $21.9 million, representing a gross margin of 31.5%, down from 37.9% in the previous year[128] - Net Loss for the quarter was $(26.1) million, with a net loss as a percentage of revenue of (37.5)%, compared to (29.3)% in the prior year[128] - Adjusted EBITDA was $(1.3) million for the three months ended April 30, 2025, down from $6.5 million in 2024, with Adjusted EBITDA margins of (1.9)% and 8.7% respectively[158] - Total revenue, net for the three months ended April 30, 2025, was $69.6 million, a decrease of $5.4 million, or 7.2%, compared to $75.0 million for the same period in 2024[173] - Subscription and Reserve rental revenue was $62.0 million for the three months ended April 30, 2025, a decrease of $4.1 million, or 6.2%, compared to $66.1 million for the same period in 2024[174] - Other revenue was $7.6 million for the three months ended April 30, 2025, a decrease of $1.3 million, or 14.6%, compared to $8.9 million for the same period in 2024[175] - Total costs and expenses were $89.3 million for the three months ended April 30, 2025, a decrease of $2.2 million, or 2.4%, compared to $91.5 million for the same period in 2024[176] - General and administrative expenses were $20.7 million for the three months ended April 30, 2025, a decrease of $2.1 million, or 9.2%, compared to $22.8 million for the same period in 2024[183] - Interest expense, net was $(6.3) million for the three months ended April 30, 2025, an increase of $0.7 million, or 12.5%, compared to $(5.6) million for the same period in 2024[191] Subscriber Metrics - Active Subscribers increased by 1% year-over-year, reaching 147,157 as of April 30, 2025, compared to 145,837 in 2024[128] - Active Subscribers increased to 147,157 as of April 30, 2025, up from 145,837 year-over-year, driven by improved retention and promotional activity[152] Customer Engagement - Customer engagement metrics improved, with Spring 2025 rental products showing a 23% higher share of views and 46% more hearts compared to Spring 2024[128] - The company plans to focus on increasing the quantity and desirability of rental product purchases to enhance customer satisfaction and retention in fiscal year 2025[136] Cash Flow and Liquidity - Cash and Cash Equivalents decreased to $70.4 million from $82.0 million year-over-year[128] - Cash flows from operations for the three months ended April 30, 2025 were $8.3 million, an increase from $4.6 million in the same period of 2024[203] - Total cash and cash equivalents, along with restricted cash, decreased to $79.4 million as of April 30, 2025, down from $86.5 million at the beginning of the period[203] - The cash consumption of the business was $(6.4) million for the three months ended April 30, 2025, compared to $(1.4) million for the same period in 2024, indicating higher operational costs[203] Operational Strategy - The company launched 36 new brands and over 1,000 new styles in the first quarter of fiscal year 2025, with a projected 134% increase in rental product receipts year-over-year[126] - The company expects to double the new rental product added to its site in fiscal year 2025 compared to fiscal year 2024[131] - The company is focused on investing in customer value and improving the customer experience to mitigate inflationary pressures and rising labor costs[147] - The company plans to continue leveraging technology and automation to drive efficiencies and improve margins as it scales its operations[140] - The company plans to significantly increase rental product availability, which may impact cash and cash equivalents in fiscal year 2025[197] Financial Challenges - Net loss for the three months ended April 30, 2025, was $26.1 million, compared to a net loss of $22.0 million for the same period in 2024[172] - The company's accumulated deficit reached $(1,149.1) million as of April 30, 2025, indicating ongoing financial challenges since inception[197] - The macroeconomic environment remains uncertain, impacting consumer discretionary spending, price sensitivity, and overall business operations[145] Cost Management - Transportation costs decreased as a percentage of revenue in fiscal year 2024, attributed to higher revenue per order and a new transportation contract, with expectations to further reduce these costs in fiscal year 2025[147] - Fulfillment expenses were $20.4 million for the three months ended April 30, 2025, representing 29.3% of revenue, compared to 27.5% for the same period in 2024[177] - The January 2024 restructuring plan is expected to generate total annual operating expense savings of approximately $12 million[189] Market and Risk Factors - The company qualifies as an "emerging growth company" under the JOBS Act, allowing it to adopt new accounting guidance within the same time periods as private companies[214] - There were no material changes to the company's quantitative and qualitative disclosures about market risk in the three months ended April 30, 2025, compared to the 2024 Annual Report[215] - The company experienced seasonality in subscriber acquisition, typically peaking in March through May and September through November, with disruptions noted during fiscal year 2022 and 2023 due to pricing changes and inventory levels[143] Asset Management - The company performed an impairment analysis of its long-lived assets as of April 30, 2025, and January 31, 2025, concluding that undiscounted cash flows exceeded carrying values, resulting in no impairment recognized for the respective periods[212]

Core Points - Rent the Runway, Inc. is conducting its Q1 2025 Earnings Conference Call on June 5, 2025, at 4:30 PM ET [1] - The call will include references to the Q1 2025 earnings presentation available on the Investor Relations website [3] - Forward-looking statements will be made regarding guidance for Q2 2025 and the fiscal year 2025, focusing on business strategies, subscriber growth, customer loyalty, and inventory increases [4] Financial Information - The call will reference non-GAAP financial information, which is not intended to be considered in isolation from GAAP financial information [6]