Rent the Runway(US:RENT)2025-09-11 21:32Financial 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]