Rent the Runway(US:RENT)2022-09-13 00:15Financial Data and Key Metrics Changes - Revenue grew 64% year-over-year to $76.5 million, marking the highest quarterly revenue to date [7] - Adjusted EBITDA was positive for the first time since the IPO, generating $1.8 million with a 2.4% margin [7][51] - Active subscribers increased 27% year-over-year to 124,000 but declined 8% quarter-over-quarter [43] Business Line Data and Key Metrics Changes - Subscription and reserve revenue grew 63% year-over-year [7] - Event-based rental business saw strong demand for wedding and party attire [9] - Resale business demonstrated excellent performance [9] Market Data and Key Metrics Changes - The company observed an increase in subscriber pause rates and a decrease in retention starting mid-June [10] - Total subscribers increased 37% year-over-year to 173,000 but declined 2% quarter-over-quarter [45] - Average revenue per user (ARPU) is expected to increase approximately 5% for fiscal year 2022 [46] Company Strategy and Development Direction - The company aims to build a profitable business with strong margins and self-funding capabilities [6] - A restructuring plan was announced to reduce annual operating costs by $25 million to $27 million [20] - The company plans to focus on customer experience and efficiency to drive profitability [19][36] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the difficulty in predicting customer behavior in the current macro environment [11] - There is confidence in the long-term growth potential of the business despite short-term challenges [10][12] - The company is committed to maintaining a healthy cash position to navigate potential economic downturns [23] Other Important Information - The company plans to roll out a loyalty program to enhance customer retention [14] - A partnership with Saks OFF 5TH to sell pre-owned clothing was successful, indicating a favorable market trend [17] - The company expects to generate a mid-teens adjusted EBITDA margin at approximately $400 million in revenue [22][35] Q&A Session Summary Question: Can you elaborate on the cost initiatives and the timing of the cuts? - Management stated that the reductions are aimed at both growth and efficiency, allowing for reinvestment in customer experience [62][65] Question: Can you walk through the near- and medium-term margin targets? - The near-term goal is to achieve a mid-teens adjusted EBITDA margin at approximately $400 million in revenue, with a focus on cost discipline [70][75] Question: Where were the bulk of the cuts made in the restructuring? - Cuts were primarily in back-office functions, with a focus on maintaining customer-related functions and growth initiatives [82][85] Question: How do you feel about the price-value relationship in the current macro environment? - Management noted increased pricing sensitivity among customers but emphasized the value proposition of renting versus buying [87][108] Question: What factors contributed to the slowdown in subscriber growth? - Changes in customer behavior post-pandemic and macroeconomic factors were cited as potential contributors to the slowdown [94][96] Question: Can you provide more detail on the improvement in subscribers early in Q3? - The company has emphasized value-oriented messaging in marketing efforts, which has contributed to improved subscriber metrics [130][131]