Rent the Runway revenues increase, targets 25 percent active subscriber growth

Rent the Runway (RTR) has welcomed positive financial results for FY22, notably achieving a 46 percent revenue growth as it completes its financial transformation.

For the year ended January 31, 2023, the rental platform reported a revenue of 296.4 million dollars, up from 203.3 million dollars in FY21.

While its gross profit also saw an increase of 72 percent, representing 120 million dollars, the firm lowered its net loss, which sat at 138.7 million dollars, down from 211.8 million dollars in the year prior.

Its adjusted EBITDA was 6.7 million dollars, compared to 19.2 million dollars in 2021, while its net cash used in operating activities, as well as investing, was 92 million dollars, 31 percent of revenue. As of January 31, RTR’s cash and cash equivalents were at 154.5 million dollars.

The platform also reported a 38 percent YoY increase in average active subscribers, with figures rising from 93,371 to 128,586 between fiscal years. As of April 8, 2023, RTR said its active subscribers reached a record high at 141,205.

The company further outlined its results for Q4 2022, during which time its revenue rose 18 percent YoY to 75.4 million dollars, while its gross profit came in at 33.3 million dollars, an increase of 42 percent from 23.5 million dollars.

Its net loss was 26.2 million dollars, compared to 39.3 million dollars in 2021’s Q4, with its adjusted EBITDA up from 5.5 million dollars to 7.1 million dollars.

Outlook raised for FY23, CFO to step down

The company’s positivity also extended into its outlook, for which it is expecting another revenue increase in the range of 320 to 330 million dollars in FY23. It is also targeting an active subscriber growth of 25 percent, while it further expects a reduction in cash consumption by almost 50 percent.

For the FY23 Q1, it is expecting revenue in the range of 72 to 74 million dollars, with an adjusted EBITDA margin of 2 to 3 percent.

The results come after a period of significant change at RTR, which has shifted a number of areas in its business model in order to deliver greater value to its customers.

Such initiatives have included permanently adding an extra item to every shipment in its rental subscription programmes, the rolling out of fully rentable outfits in ‘Rent the Look’, product discovery features and an expanded at-home pickup to 34 markets.

Alongside its financial results, RTR also revealed that its CFO, Scarlett O’Sullivan, will be stepping down from the role from May 25, 2023. She will be succeeded by Sid Thacker, the company’s current SVP, FP&A, with O’Sullivan to continue in an advisory capacity until August 25.

In the filing, CEO and co-founder of RTR, Jennifer Hyman, thanked O’Sullivan for her contributions over the past seven-plus years, adding: “Scarlett has been a consistent and strong strategic partner to me, helping to guide RTR through critical financial and business transformations: from an a la carte business to a subscription business, through Covid-19, and from private company to public company.

“Scarlett’s leadership post-IPO enabled us to double our gross margins, restructure our debt and position the company for future free cash flow profitability."