Rent the Runway, Inc. Q3 FY2025 earnings call

• Completed a strategic recapitalization, reducing total debt from ~$319 million to ~$120 million and extending maturity to 2029, with Nexus and Story3 joining the board.
• Q4 on track for 11%-14% year-over-year revenue growth, up from 1% in Q4 2024. Fiscal year 2025 ending active subscribers grew 12% year-over-year.
• Inventory-related cancellations down over 20% year-to-date, 30% in Q3. Q3 subscription Net Promoter Score up 43% year-over-year.
• App improvements: personalized homepage redesign up 57% engagement, better onboarding for new subscribers, add-on pricing transparency, instant gratification feature, and improved search/discovery with 70% click-through rate increase.
• Community-driven initiatives: news program generated 10 million impressions in Q3, City Ambassador program with 875 ambassadors producing over 2,700 reviews and referrals.

For Q3 2025, total revenue was $87.6 million, up 15.4% year-over-year. Subscription and reserve rental revenue was up $10.7 million or 16.1% year-over-year due to higher average subscribers and a price increase effective August 1. Other revenue increased $1 million or 10.4% year-over-year. Fulfillment costs were $24 million in Q3 2025, 27.4% of revenue. Gross margins were 29.6% in Q3 2025 vs. 34.7% in Q3 2024. Operating expenses were 7% higher year-over-year, at 45.2% of revenue. Adjusted EBITDA for Q3 2025 was $4.3 million or 4.9% of revenue, down from $9.3 million or 12.3% in Q3 2024. Free cash flow was negative $13.6 million in Q3 2025 vs. negative $3.4 million in Q3 2024.

• Q4 revenue expected $85M-$87M, adjusted EBITDA margins 11-13% of revenue.
• Fiscal year 2025 expects double-digit growth in ending active subscribers, revenue $323.1M-$325.1M, adjusted EBITDA margins 4.9-5.5% of revenue, free cash flow lower than negative $40M due to recapitalization costs.

Forward-looking statements subject to various risks, uncertainties, and assumptions detailed in press release and SEC filings. Non-GAAP financial information presentation not a substitute for GAAP, with reconciliations needed.