Rent The Runway, Inc. · NASDAQ:RENT
Rent The Runway — Q2 2023 Earnings Presentation
32 slides from Rent The Runway's earnings presentation, Sep 8, 2023
Slide 1: Q2 2023 Earnings Presentation
RENT THE RUNWAY CONFIDENTIAL Q2 2023 Earnings Presentation September 8, 2023 1
Slide 2: Forward-Looking Statements Disclaimer
Forward-Looking Statements Disclaimer RENT RENT THE THE RUNWAY RUNWAY This presentation contains forward-looking statements within the meaning of the the Private Securities Litigation Reform Act of 1995. All statements contained in this presentation that do not relate to matters of historical fact s
Slide 3: Improved the Financial Profile of RTR Significantly Since FY19
Improved the Financial Profile of RTR Significantly Since FY19 RENT THE RUNWAY RENT THE RUNWAY CONFIDENTIAL Note: See GAAP to Non-GAAP Reconciliation in appendix. Free cash flow defined as net cash (used in) provided by operating activities plus net cash (used in) provided by investing activities. Margi
Slide 4: Contents
Contents RENT RENT THE THE RUNWAY RUNWAY ➢ Q2 2023 Summary ➢ Q3 and FY 2023 Strategy CONFIDENTIAL ➢ Q3 and FY 2023 Guidance 44
Slide 5: Q2 2023 Summary
RENT THE THE RUNWAY RUNWAY CONFIDENTIAL 55 RENT Q2 2023 Summary
Slide 6: Q2'23 Key Metrics and Financial Highlights
Q2’23 Key Metrics and Financial Highlights RENT RENT THE THE RUNWAY RUNWAY Total Revenue Active Subscribers Total Subscribers 137.6K, up 11% YoY $75.7M 184.4K Average Active Subs down 1% YoY 141.4K, up 9% YoY up 6% YoY CONFIDENTIAL Gross Profit / Margin Net Loss / Margin1 Adj. EBITDA / Margin $33.2M
Slide 7: Active Subscribers as of July 31, 2023 +11% YoY
Active Subscribers as of July 31, 2023 +11% YoY RENT THE RUNWAY RENT THE RUNWAY Subscribers (in thousands) CONFIDENTIAL YoY Active Sub Growth 40% 80% 78% 110% 82% 27% 15% 10% 8% 11% YoY Avg Active Sub Growth (31)% 60% 79% 93% 94% 51% 20% 12% 9% 9% Pause % of Total Subs 29% 23% 22% 28% 24% 28% 24% 26
Slide 8: Total Revenue Down (1)% YoY in Q2'23
Total Revenue Down (1)% YoY in Q2’23 RENT THE RUNWAY RENT THE RUNWAY Total Revenue, Net ($ in millions) ➢ 89% of revenue from subscribers in Q2’23 CONFIDENTIAL ➢ 23% of subscribers added one or more paid items into their subscriptions in Q2’23 YoY (44)% 62% 66% 91% 100% 64% 31% 18% 11% (1)% Growth N
Slide 9: Revenue to Gross Profit - Q2'23 and Q2'22
Revenue to Gross Profit - Q2’23 and Q2’22 RENT THE RUNWAY RENT THE RUNWAY Fiscal Quarter Ended July 31, 2023 % of Revenue 30 % 17 % 10 % 44 % $ in millions CONFIDENTIAL Fiscal Quarter Ended July 31, 2022 % of Revenue 31 % 18 % 9% 42 % $ in millions Note: Calculations are based on unrounded figures. 99
Slide 10: Gross Profit to Adjusted EBITDA - Q2'23 and Q2'22
Gross Profit to Adjusted EBITDA - Q2’23 and Q2’22 RENT THE RUNWAY RENT THE RUNWAY Fiscal Quarter Ended July 31, 2023 % of Revenue 44% (11)% (17)% (34)% (5)% 10% 22% 2% 10% $ in millions CONFIDENTIAL Fiscal Quarter Ended July 31, 2022 % of 42% (12)% (19)% (39)% (6)% 9% 24% 3% 2% Revenue $ in millions
Slide 11: Adjusted EBITDA to Free Cash Flow - 1H'23 and 1H'22
Adjusted EBITDA to Free Cash Flow - 1H’23 and 1H’22 RENT THE RUNWAY RENT THE RUNWAY Six Months Ended July 31, 2023 % of 8% (24)% (1)% (0)% (2)% (0)% 0% (20)% Revenue $ in millions CONFIDENTIAL Six Months Ended July 31, 2022 % of (5)% (19)% (3)% (7)% (4)% (1)% 2% (36)% Revenue $ in millions Note: See
Slide 12: Q3 2023 and FY 2023 Strategy
12 RENT THE THE RUNWAY RUNWAY CONFIDENTIAL 12 RENT Q3 2023 and FY 2023 Strategy
Slide 13: Marked Improvement Across Customer Experience via Strategic Pillars
We Continue to Drive Marked Improvement Across the Customer RENT RENT THE Experience via Our Strategic Pillars THE RUNWAY RUNWAY Inventory She Wants When She Wants It Increasing Inventory Depths CONFIDENTIAL Improving Customer Onboarding for Subscription Efficient and Easy-to-Use Experience & Clarifyi
Slide 14: Inventory Depth Strategy is Underway
Inventory Depth Strategy is Underway - Impact is Expected to Begin RENT RENT THE to be Felt Over the Course of 2H and Throughout 2024 THE RUNWAY RUNWAY CONFIDENTIAL ➢ Depths of our 2H2023 buy are expected to be approximately 1.7X the depths of our 1H23 buys ➢ We have acquired even higher depths in o
Slide 15: Higher Inventory Availability is Associated with Lower Customer Churn
Higher Inventory Availability is Associated with Lower Customer RENT RENT THE Churn THE RUNWAY RUNWAY RELATIONSHIP BETWEEN CHURN AND IN-STOCK RATE ➢ RTR’s data shows that R2 = 0.561 as in-stock rate High In-Stock increases customer churn rates decrease Weekly In-Stock CONFIDENTIAL ➢ RTR’s depth stra
Slide 16: Reinvigorating Our Reserve Business & Returning it to Growth
We are Focused on Reinvigorating Our Reserve Business & RENT RENT THE Returning it to Growth THE RUNWAY RUNWAY We have made 3 exciting changes to our Reserve business over the past quarter: 1. New Product Experience: Debuted a distinct product experience for Reserve which separates the Reserve funne
Slide 17: Key Updates to Enhance Product Discovery & Ease of Experience
We Continue to Introduce Key Updates Designed to Enhance Product RENT RENT THE THE RUNWAY Discovery & Ease of Experience RUNWAY New App PDP Enhanced Editorial Improved Filters for AI Search Beta Experience Curations Search Rolled out AI search beta to 20% of our customer base, Launched a new product
Slide 18: Investing in the Customer Experience to Drive Retention
We are Investing in the Customer Experience to Drive Retention RENT RENT THE THE RUNWAY RUNWAY SMS-Based Onboarding Launched New More Premium Look Enhanced Site Concierge is Leading to Subscriber Onboarding and Feel Across Site Reliability Loyalty Improvements Improved Lighthouse scores1 of key page
Slide 19: Q3 2023 and FY 2023 Guidance
19 RENT THE THE RUNWAY RUNWAY CONFIDENTIAL 19 RENT Q3 2023 and FY 2023 Guidance
Slide 20: Q3'23 and Fiscal Year 2023 Guidance
Q3’23 and Fiscal Year 2023 Guidance RENT RENT THE THE RUNWAY RUNWAY Q3 2023 Guidance Total Revenue: $72M - $74M Adjusted EBITDA Margin1: ~3% - 4% of Total Revenue Fiscal Year 2023 Guidance CONFIDENTIAL Total Revenue: At least $296.4 million (FY2022 Revenue) Adjusted EBITDA Margin1: 7% - 8% of Total
Slide 21: Appendix
21 RENT THE THE RUNWAY RUNWAY CONFIDENTIAL 21 RENT Appendix
Slide 22: Condensed Consolidated Statements of Operations
Condensed RENT THE RUNWAY RENT THE RUNWAY Consolidated Three Three Six Six Months Months Months Months Year Ended Ended Ended Ended Ended Statements of 7/31/23 7/31/22 7/31/23 7/31/22 1/31/23 (In millions, except per share amounts) Total revenue, net $75.7 $76.5 $149.9 $143.6 $296.4 Operations Fulfil
Slide 23: Condensed Consolidated Balance Sheets
Condensed RENT RENT THE Consolidated THE RUNWAY RUNWAY Balance Sheets As Of 7/31/23 As Of 1/31/23 (in millions) Cash and cash equivalents $123.7 $154.5 Restricted cash, current 4.2 3.1 Prepaid expenses and other current assets 9.6 14.5 Rental product, net 88.0 78.7 CONFIDENTIAL Fixed assets, net 40.
Slide 24: Condensed Consolidated Statements of Cash Flows
Condensed RENT THE RUNWAY Consolidated Statements of Cash Flows Six Months Six Months Ended Ended Year Ended 7/31/23 7/31/22 1/31/23 (in millions) CONFIDENTIAL Net loss $(56.9) $(76.4) $(138.7) Net cash (used in) provided by operating activities (4.1) (33.0) (47.7) Net cash (used in) provided by inv
Slide 25: Reconciliation of Net Loss to Free Cash Flow
Reconciliation RENT THE RUNWAY of Net Loss to Free Cash Flow Six Months Six Months Ended Ended Year Ended Year Ended Year Ended Year Ended 7/31/23 7/31/22 1/31/23 1/31/22 1/31/21 1/31/20 (in millions) Net loss $(56.9) $(76.4) $(138.7) $(211.8) $(171.1) $(153.9) CONFIDENTIAL Operating loss (38.8) (58
Slide 26: Selected Cash Flows Detail and Supplemental Cash Flow Information
Selected Cash RENT RENT THE Flows Detail and THE RUNWAY RUNWAY Supplemental Cash Flow Six Months Ended Six Months Ended Year Ended Information 7/31/23 7/31/22 1/31/23 (in millions) INVESTING ACTIVITIES Purchases of rental product $(36.3) $(27.6) $(62.1) CONFIDENTIAL Proceeds from liquidation of rent
Slide 27: Reconciliation of Purchases of Rental Product to Rental Product Acquired
Reconciliation RENT RENT THE of Purchases THE RUNWAY RUNWAY of Rental Product to Rental Six Months Six Months Ended Year Ended Ended 7/31/23 7/31/22 1/31/23 Product (in millions) Cost of owned rental product paid for in the Purchases of rental product $(36.3) $(27.6) $(62.1) period, as presented on
Slide 28: Reconciliation of Cash Used by Operating Activities to Free Cash Flow
Reconciliation RENT RENT THE of Cash Used THE RUNWAY RUNWAY by Operating Activities to Six Months Ended Six Months Ended Year Ended Year Ended Year Ended Year Ended Free Cash (in millions) 7/31/23 7/31/22 1/31/23 1/31/22 1/31/21 1/31/20 Flow Net cash (used in) provided by operating activities $(4.1)
Slide 29: Reconciliation of Free Cash Flow before Cash Interest Expense
Reconciliation RENT RENT THE of Free Cash THE RUNWAY RUNWAY Flow before Cash Interest Expense Six Months Six Months Ended 7/31/23 Ended 7/31/22 Year Ended 1/31/23 CONFIDENTIAL (in millions) Free Cash Flow $(29.6) $(53.8) $(92.0) Cash Interest Expense (3.0) (9.9) (20.1) Free Cash Flow Before Cash Int
Slide 30: Reconciliation of Net Loss to Adjusted EBITDA
Reconciliation RENT RENT THE of Net Loss to THE RUNWAY Three Three Six Six Months Months Months Months Year Year Year Year RUNWAY Ended Ended Ended Ended Ended Ended Ended Ended Adjusted 7/31/23 7/31/22 7/31/23 7/31/22 1/31/23 1/31/22 1/31/21 1/31/20 (in millions) EBITDA Net loss $(26.8) $(33.9) $(5
Slide 31: Reconciliation of Net Loss to Free Cash Flow
Reconciliation RENT RENT THE of Net Loss to THE RUNWAY Six Months Six Months RUNWAY Ended 7/31/23 Ended 7/31/22 Free Cash (in millions) Net loss $(56.9) $(76.4) Flow Interest (income) / expense, net $18.3 $18.9 Rental product depreciation $24.9 $27.1 Other depreciation and amortization $7.5 $8.7 Sha
Slide 32: Operating Expense Detail
Operating Three Three RENT THE RUNWAY Months Months Six Months Six Months Expense Detail Ended Ended Ended Ended 7/31/23 7/31/22 7/31/23 7/31/22 (in millions) Technology $12.9 $14.9 $26.0 $28.5 Marketing $8.2 $9.0 $17.5 $17.7 General and administrative $25.9 $29.6 $52.4 $58.8 Total operating expense