Rent the Runway (RENT) Q1 2025 earnings summary

Executive summary

• Q1 2024 revenue reached $75 million, up 1.1% year-over-year, with adjusted EBITDA of $6.5 million (8.7% margin), and net loss improved to $(22.0) million; record low quarterly cash consumption of less than $2 million.

• Active subscribers ended at 145,837, up 16% sequentially and slightly year-over-year, with total subscribers at 185,346; strong retention and rejoin rates supported by enhanced inventory and marketing.

• Free cash flow burn reduced to -$1.4 million, an $11 million improvement year-over-year and a $27 million improvement over two years.

• January 2024 restructuring plan included a 10% workforce reduction, expected to generate $12 million in annual operating expense savings.

• Business initiatives included reopening the NYC flagship store, new creative campaigns, and enhanced customer reactivation efforts, driving a 40% increase in site traffic month-over-month.

Financial highlights

• Gross profit was $28.4 million (37.9% margin), down from $31.4 million (42.3%) year-over-year due to higher rental product depreciation and revenue share.

• Fulfillment costs decreased to $20.6 million, representing 27.5% of revenue, down from 29.5% year-over-year.

• Operating expenses fell 15.3% year-over-year, with total operating expenses at 55.2% of revenue.

• Net loss margin improved to (29.3)% from (40.6)% year-over-year.

• Cash and cash equivalents stood at $82.0 million as of April 30, 2024.

Outlook and guidance

• Q2 2024 revenue expected between $76 million and $78 million, with adjusted EBITDA margin guidance of 14%–15%.

• Full-year 2024 guidance unchanged: revenue growth of 1%–6%, adjusted EBITDA margin of 15%–16%, and free cash flow breakeven.

• Rental product acquisition guidance remains at $48–$50 million, with more purchases weighted to the first half of the year.

• Management expects further cost savings and operational efficiencies to reduce fulfillment and G&A expenses as a percentage of revenue.

• Focus on expanding the customer base, improving customer experience, and growing resale revenue.