Rent the Runway, Inc. Q2 FY2025 earnings call

• Recapitalization plan: Announced on August 21, designed to strengthen balance sheet and inject fresh capital. Reduces total debt from over $340 million to approx $120 million, extends maturity to 2029, with APS, STORY3, and Nexus involved.
• Business growth: Active Subscribers continued to grow, inventory increased with more styles and brands added, engagement with social media channels up 796% and views up 175% year-over-year, hosted 12 events with 1,200+ subscribers attending in person in Q2.
• Customer experience: Price increase on August 1 to account for inflationary pressures, organic social media strategy driving acquisitions, product innovation including personalized home screen and rewards program.

Active Subscribers: Ended Q2 2025 with 146,373 Ending Active Subscribers, up approximately 13.4% year-over-year. Average Active Subscribers during the quarter were 146,765, up 6.8% year-over-year. Total revenue for Q2 was $80.9 million, up $2 million or 2.5% year-over-year and up $11.3 million or 16.2% quarter-over-quarter. Subscription and reserve rental revenue was up $0.7 million or 1% year-over-year in Q2 2025, primarily due to higher average subscribers offset partially by lower average revenue per subscriber versus Q2 '24. Other revenue increased $1.3 million or 12.5% year-over-year. Fulfillment costs were $22.5 million in Q2 2025 versus $20.6 million in Q2 2024 and $20.4 million in Q1 2025. Gross margins were 30% in Q2 2025 versus 41.1% in Q2 2024. Operating expenses were 8% higher year-over-year. Adjusted EBITDA for Q2 2025 was $3.6 million or 4.4% of revenue versus $13.7 million or 17.4% of revenue in Q2 2024. Free cash flow for Q2 2025 was negative $26.5 million versus negative $4.5 million in Q2 2024.

• Q3 2025: Expect revenue to be between $82 million and $84 million, adjusted EBITDA margin to be between negative 2% and 2% of revenue.
• Fiscal year 2025: Continue to expect double-digit growth in Ending Active Subscribers, free cash flow to be lower than negative $40 million primarily due to costs associated with the recapitalization transactions.

• Forward-looking statements are subject to various risks, uncertainties and assumptions that could cause actual results to differ materially. Risks, uncertainties and assumptions are detailed in the press release and SEC filings.