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, primarily due to higher revenue share expenses [19] - Free cash flow for Q2 2025 was negative $26.5 million, a decrease from negative $4.5 million in Q2 2024, mainly due to lower adjusted EBITDA and higher purchases of rental products [20] Business Line Data and Key Metrics Changes - 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] - Fulfillment costs were $22.5 million in Q2 2025, up from $20.6 million in Q2 2024, reflecting higher transportation and warehouse processing costs [18] - Gross margins decreased to 30% in Q2 2025 from 41.1% in Q2 2024, impacted by higher revenue share costs and fulfillment costs [19] Market Data and Key Metrics Changes - Active subscribers at the end of Q2 2025 were 146,400, a 13.4% year-over-year increase, showing significant growth compared to previous quarters [8][17] - Year-to-date, the company added 2,200 new styles and 56 new brands to the platform, enhancing customer experience [9] Company Strategy and Development Direction - The company announced a recapitalization plan aimed at reducing total debt from over $340 million to approximately $120 million, enhancing financial flexibility [4][5] - The strategy focuses on inventory growth, product innovation, and improving customer experience, with significant investments made in inventory this fiscal year [15][16] - The company plans to continue adding inventory and enhancing customer engagement through organic marketing strategies [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's position, indicating that the recapitalization will allow for sustainable growth and improved customer care [22] - 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 that the business is showing improved momentum, with a focus on prudent investment management to drive growth [22] Other Important Information - The company implemented a price increase for subscription plans, with an average increase of $2 per item, reflecting inflationary pressures [13][14] - Engagement with new inventory has significantly increased, with metrics such as share of views up 84% year-over-year [10] 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, driven by improved inventory and customer experience [21] Question: How will the recapitalization impact the company's financials? - The recapitalization is expected to significantly reduce debt, lower interest expenses, and extend maturity to 2029, providing a stronger financial position [16]

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- ...

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]

Financial Performance - Revenue for Fiscal Q3 2025 was $673.8 million, a decrease of 3.5% compared to $698.2 million in Fiscal Q3 2024[15] - Gross profit decreased by 10.1% year-over-year, from $202.5 million in Fiscal Q3 2024 to $182.1 million in Fiscal Q3 2025[15] - Gross margin decreased by 197 basis points year-over-year, from 29.0% in Fiscal Q3 2024 to 27.0% in Fiscal Q3 2025[15] - Adjusted EBITDA decreased by 26.3% year-over-year, from $86.9 million in Fiscal Q3 2024 to $64.0 million in Fiscal Q3 2025[15] - Adjusted EBITDA margin decreased by 295 basis points year-over-year, from 12.4% in Fiscal Q3 2024 to 9.5% in Fiscal Q3 2025[15] - Free cash flow decreased by 71.1% year-over-year, from $27.7 million in Fiscal Q3 2024 to $8.0 million in Fiscal Q3 2025[15] Revenue Disaggregation - Consolidated uniforms revenue decreased by 6.7%, from $279.004 million in Fiscal Q3 2024 to $260.427 million in Fiscal Q3 2025[48] - Consolidated workplace supplies revenue decreased by 1.4%, from $419.244 million in Fiscal Q3 2024 to $413.372 million in Fiscal Q3 2025[48] - Rental revenue decreased by 2.7%, and direct sales revenue decreased by 14.2%[13] Liquidity and Debt - Total available liquidity was $290 million, including $24 million cash on hand[14] - Net debt was $1.3 billion[38] - Net leverage ratio was 4.50x[14, 38]

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]

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]

Financial Performance - Total revenue decreased by 72% year-over-year to $696 million in Q1 2025[9] - Gross profit was $219 million with a margin of 315%, a decrease of 6 percentage points year-over-year[9] - Net loss was $261 million with a margin of -375%, a decrease of 8 percentage points year-over-year[9] - Adjusted EBITDA was -$13 million with a margin of -19%, a decrease of 11 percentage points year-over-year[9] Subscriber Metrics - Active subscribers reached 1472 thousand, up 1% year-over-year[9] - Average active subscribers were 1335 thousand, down 2% year-over-year[9] - Total subscribers were 1822 thousand, down 2% year-over-year[9] Inventory and Customer Engagement - Q1 2025 new inventory receipts increased by 24% year-over-year[33, 36] - April add-on gross bookings increased by 11% year-over-year[42] - Share of views increased by 23% year-over-year[43] Guidance - Q2 2025 total revenue is projected to be between $76 million and $80 million[65] - FY2025 free cash flow is projected to be between -$30 million and -$40 million[65]

Core Insights - Rent the Runway reported the strongest quarterly customer retention in four years and a return to subscriber growth with over 147,000 active subscribers, the highest count in the company's history [2][3][4] Business Strategy and Performance - The company is undergoing a multi-year corporate strategy transformation, focusing on aggressive inventory acquisition, enhancing product experience, and rebuilding customer relationships, which has led to improved subscriber growth and retention [3][4] - A significant investment in inventory has resulted in a 24% increase in new inventory receipts in Q1 2025 compared to Q1 2024, with expectations for a 134% year-over-year increase for the remainder of the year [5][10] - The launch of 36 new brands and over 1,000 new styles in Q1 2025 has contributed to increased customer engagement, with metrics showing a 23% higher share of views and 46% more hearts compared to the previous year [5][10] Financial Highlights - Revenue for Q1 2025 was $69.6 million, a decrease of 7.2% from $75.0 million in Q1 2024 [10] - The company reported a net loss of $26.1 million, compared to a net loss of $22.0 million in the same quarter of the previous year, with a net loss as a percentage of revenue at 37.5% [10][27] - Adjusted EBITDA for Q1 2025 was $(1.3) million, down from $6.5 million in Q1 2024, indicating a significant decline in operational performance [10][27] Subscriber Metrics - Ending active subscribers increased by 1% to 147,157 from 145,837 at the end of Q1 2024, while average active subscribers decreased by 2% [10] - The total number of subscribers decreased by 2% to 182,209 from 185,346 in the same period last year [10] Future Outlook - The company expects double-digit growth in ending active subscribers for fiscal year 2025, indicating confidence in the effectiveness of its new strategies [6][7] - Revenue guidance for the second quarter of 2025 is projected between $76 million and $80 million, with an adjusted EBITDA margin expected to range from -2% to +2% [10][7]

Business Overview and Market Trends - Rent the Runway (RTR) operates in the U S apparel market, which is valued at $359 billion[7], focusing on the online segment, a $165 billion market growing at a 9% compound annual growth rate (CAGR)[7, 22] - The secondhand apparel market is a key area of focus, representing a $43 billion market with a 24% CAGR[7, 22] - RTR's subscribers receive approximately $4,000 worth of designer clothing per month, which is about 25 times the value of their spending[7] - Over 80% of RTR's revenue is generated from subscribers[12] Customer Base and Engagement - RTR has 2.5 million lifetime customers and 126,000 current subscribers[15] - 74% of women spend more on clothing annually compared to their male counterparts[19] - 77% of RTR subscribers consider sustainability important when purchasing clothing[19] - 83% of subscribers say RTR makes them the most confident version of themselves[43] - Over 40% of RTR subscribers have embellishments[41] - Approximately 20% of RTR subscribers are the color black[41] - Over 50% of RTR subscribers have printed styles[41] Financial and Operational Highlights - The company anticipates achieving free cash flow breakeven in 2024[7] - Fulfillment costs as a percentage of revenue have decreased by 17 percentage points since 2019[89] - In FY23, 61% of items were acquired through non-wholesale channels, compared to 26% in FY19[58] - Since its founding, less than 10% of total revenue has been spent on marketing[43]