Rent The Runway, Inc. · NASDAQ:RENT

Rent The Runway — Q2 2022 Earnings Presentation

28 slides from Rent The Runway's earnings presentation, Sep 12, 2022

  1. Slide 1: Q2 2022 Earnings Presentation

    RENT THE RUNWAY CONFIDENTIAL Q2 2022 Earnings Presentation September 12, 2022 1

  2. Slide 2: Forward-Looking Statements Disclaimer

    Forward-Looking Statements Disclaimer RENT THE 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 should be conside

  3. Slide 3: Q2'22 Key Metrics and Financial Highlights

    Q2’22 Key Metrics and Financial Highlights RENT RENT THE THE RUNWAY RUNWAY Total Revenue Active Subscribers Total Subscribers $76.5M 124.1K 173.3K up 64% YoY up 27% YoY up 37% YoY CONFIDENTIAL Gross Profit / Margin Net Loss / Margin Adj. EBITDA / Margin $32.4M / 42% $(33.9)M / (44)% $1.8M / 2.4% Marg

  4. Slide 4: 2022 Strategies to Drive Top Line

    2022 Strategies to Drive Top Line RENT RENT THE THE RUNWAY RUNWAY 1. EVENTS RESURGENCE Events-Based Merchandising ● Strong demand of high formality styles: cocktail dress utilization hit a new high and gowns continue to track near all-time highs ● Launched relevant partnerships (Black CONFIDENTIAL T

  5. Slide 5: Q2'22 Top Line Business Highlights

    Q2’22 Top Line Business Highlights RENT THE RUNWAY RENT THE RUNWAY 2. SEARCH & DISCOVERY 3. FIT ● Back-end infrastructure investments to support an ● Rolled out ‘fit tags’, personalized fit recommendations enhanced search experience for the consumer, which within product pages, after testing showed me

  6. Slide 6: Q2'22 Bottom Line Business Highlights

    Q2’22 Bottom Line Business Highlights RENT THE RUNWAY RENT THE RUNWAY 2. BUILD UPON WAREHOUSE 1. EXPAND AT-HOME 3. GROW EXCLUSIVE DESIGNS TECHNOLOGY TO REDUCE PICKUP TO ~30% OF UNITS ACQUIRED FULFILLMENT EXPENSES ● Expanded to over 25 markets covering over ● Leveraged RFID technology and digital iss

  7. Slide 7: Framework for Revenue Growth and Path to Profitability

    Framework for Revenue Growth and Path to Profitability RENT RENT THE THE RUNWAY RUNWAY Grow Revenue Leverage 3 Main Expense Categories Ongoing: Grow Subs Ongoing: Optimize Fulfillment Active Approach: Organic virality Fulfillment Approach: Diversify transportation + Subscribers + efficient marketing Cost

  8. Slide 8: Restructuring plan

    Restructuring plan RENT THE RUNWAY RENT THE RUNWAY ● On September 12, 2022, the Company announced a restructuring plan to reduce costs, streamline its organizational structure and drive operational efficiencies DETAILS ● Total workforce reductions of approximately 24% (primarily a reduction in force,

  9. Slide 9: Target Margin Profile

    Target Margin Profile RENT THE RUNWAY RENT THE RUNWAY ILLUSTRATIVE Revenue Scenarios: Restructuring Impact Near Term Medium ● $25-$27M reduction in (At ~$400M) Term costs in FY23 (relative to Q2’22 run rate) from restructuring plan ● Significantly improves Adjusted EBITDA and cash burn 1 CONFIDENTIAL

  10. Slide 10: Q2'22 Ending Active Subscribers +27% YoY

    Q2’22 Ending Active Subscribers +27% YoY RENT THE RUNWAY RENT THE RUNWAY Ending Subscribers (in thousands) 132 to CONFIDENTIAL 134 YoY Active Sub Growth (48)% (49)% (45)% (59)% 40% 80% 78% 110% 82% 27% Pause % of Total Subs 42% 29% 23% 22% 28% 24% 28% Note: FY19 ended January 31, 2020, FY20 ended Ja

  11. Slide 11: Strong Q2'22 Revenue Growth, Up 64% YoY

    Strong Q2’22 Revenue Growth, Up 64% YoY RENT RENT THE THE RUNWAY RUNWAY Total Revenue, Net ($ in millions) 87% of revenue from subscribers in Q2’22 CONFIDENTIAL 30% of subscribers added one or more paid slots into their subscriptions in Q2’22 YoY Growth 8% (54)% (45)% (55)% (44)% 62% 66% 91% 100% 64

  12. Slide 12: Targeting ~60% of FY22 Product Acquired via Non-Wholesale Channels

    Targeting ~60% of FY22 Product Acquired via Non-Wholesale Channels RENT RENT THE THE RUNWAY RUNWAY 44% % Items Acquired % Items Acquired % Items Acquired Target % Items Acquired in FY2019 in FY2020 in FY2021 in FY2022E 26% 54% 55% ~60% 11% 18% 22% 15% ~40% ~40% 46% CONFIDENTIAL 45% 33% 74% 36% 34% M

  13. Slide 13: Continuing to Improve Order Economics

    Continuing to Improve Order Economics RENT THE RUNWAY FY20 $150 1H’22 FY21 Net Order Economics were $141 Revenue per FY19 4 points higher in 1H’22 Order1 $133 $127 than FY21, benefiting from: 34% 32% (1) Higher revenue per 30% shipment due to the Less: Fulfillment Expense price increase and high 46% a

  14. Slide 14: Our Business Model - Revenue to Gross Profit

    Our Business Model - Revenue to Gross Profit RENT THE RUNWAY RENT THE RUNWAY Fiscal Quarter Ended July 31, 2022 % of Revenue 31 % 18 % 9% 42 % $ in millions CONFIDENTIAL Fiscal Quarter Ended July 31, 2021 % of Revenue 29% 24 % 8% 39 % $ in millions 1414 Note: Calculations based on unrounded figures.

  15. Slide 15: Our Business Model - Gross Profit to Adjusted EBITDA

    Our Business Model - Gross Profit to Adjusted EBITDA RENT THE RUNWAY RENT THE RUNWAY Fiscal Quarter Ended July 31, 2022 % of Revenue 42% 12% 19% 39% 6% 9% 24% 3% 2% $ in millions CONFIDENTIAL Fiscal Quarter Ended July 31, 2021 % of 39% 10% 22% 46% 10% 5% 34% 7% (4)% Revenue $ in millions 1515 Note: S

  16. Slide 16: Demonstrating Our Operating Leverage with Scale

    Demonstrating Our Operating Leverage with Scale RENT RENT THE THE RUNWAY RUNWAY Revenue: $34M $77M Δ in % of Revenue from Q1’21 to Q2’22 CONFIDENTIAL Q1 2021 → Q2 2022 ● 23% of Product depreciation and revenue share absorbed over higher revenue due to better matching of product supply to active subs

  17. Slide 17: Q3 2022 and Fiscal Year 2022 Guidance

    Q3 2022 and Fiscal Year 2022 Guidance RENT RENT THE THE RUNWAY RUNWAY Q3 2022 Guidance Total Revenue: $72.0M - $74.0M Adjusted EBITDA1: 1.0% - 3.0% of Revenue CONFIDENTIAL Fiscal Year 2022 Guidance Total Revenue: $285M - $290M Adjusted EBITDA1: (2)% - 0% of Revenue Rental Product Acquired2: ~$60M Sh

  18. Slide 18: Appendix

    18 RENT THE THE RUNWAY RUNWAY CONFIDENTIAL 18 RENT Appendix

  19. Slide 19: Continuing to Improve Annual Margins

    Continuing to Improve Annual Margins RENT THE RUNWAY RENT THE RUNWAY CONFIDENTIAL Note: See GAAP to Non-GAAP Reconciliation in appendix. Free cash flow margin defined as net cash used in operating activities plus net cash used in investing activities, as a percentage of total revenue. 1919

  20. Slide 20: Product Acquisition Strategy Meaningfully Improved Free Cash Flow

    Product Acquisition Strategy Meaningfully Improved Free Cash Flow1 RENT THE RUNWAY RENT THE RUNWAY ($ in millions) Total Product Costs FY19 FY20 FY21 Purchases of Rental Product $118 $55 $31 Revenue Share $10 $19 $21 Product costs are the most Total ² $127 $74 $52 significant component of Total as a

  21. Slide 21: Condensed Consolidated Statements of Operations

    Condensed Three Three RENT THE RUNWAY RENT THE RUNWAY Months Months Six Months Six Months Ended Ended Ended Ended Year Ended Year Ended Consolidated 7/31/22 7/31/21 7/31/22 7/31/21 1/31/22 1/31/21 (in millions) Statements of Total revenue, net $76.5 $46.7 $143.6 $80.2 $203.3 $157.5 Operations Fulfill

  22. Slide 22: Condensed Consolidated Balance Sheets

    Condensed RENT RENT THE Consolidated THE RUNWAY As Of 7/31/22 As Of 1/31/22 RUNWAY (in millions) Balance Sheets Cash and cash equivalents $192.3 $247.6 Restricted cash, current 4.6 5.4 Prepaid expenses and other current assets 10.8 11.7 Rental product, net 76.9 76.3 Fixed assets, net 52.3 57.2 Opera

  23. Slide 23: Condensed Consolidated Statements of Cash Flows

    Condensed RENT THE RUNWAY Consolidated Six Months Six Months Year Ended Year Ended Ended 7/31/22 Ended 7/31/21 1/31/22 1/31/21 Statements (in millions) Net loss $(76.4) $(84.7) $(211.8) $(171.1) of Cash Flows Net cash (used in) provided by operating activities (33.0) (12.7) (42.3) (42.8) Net cash (u

  24. Slide 24: Selected Cash Flows Detail and Supplemental Cash Flow Information

    Selected Cash RENT RENT THE Flows Detail and THE RUNWAY Six Months Six Months Year Ended Year Ended Ended 7/31/22 Ended 7/31/21 1/31/22 1/31/21 RUNWAY Supplemental (in millions) INVESTING ACTIVITIES Cash Flow Purchases of rental product $(27.6) $(8.5) $(30.8) $(54.9) Information Proceeds from liquid

  25. Slide 25: Reconciliation of Purchases of Rental Product to Rental Product Acquired

    Reconciliation Six Months Six Months RENT RENT THE Ended Ended Year Ended Year Ended of Purchases THE RUNWAY 7/31/22 7/31/21 1/31/22 1/31/21 RUNWAY (in millions) of Rental Cost of owned rental product paid for in the period, as presented on the Product to Purchases of rental product $(27.6) $(8.5) $

  26. Slide 26: Reconciliation of Net Loss to Adjusted EBITDA

    Reconciliation RENT RENT THE of Net Loss to THE RUNWAY Three Three RUNWAY Months Months Six Months Six Months Adjusted Ended Ended Ended Ended Year Ended Year Ended Year Ended 7/31/22 7/31/21 7/31/22 7/31/21 1/31/22 1/31/21 1/31/20 EBITDA (in millions) Net loss $(33.9) $(42.4) $(76.4) $(84.7) $(211.

  27. Slide 27: Reconciliation of Cash Used by Operating Activities to Free Cash Flow

    Reconciliation RENT RENT THE of Cash Used THE RUNWAY RUNWAY Six Months Six Months by Operating Ended Ended Year Ended Year Ended Year Ended 7/31/22 7/31/21 1/31/22 1/31/21 1/31/20 Activities to (in millions) Free Cash Net cash (used in) provided by operating activities $(33.0) $(12.7) $(42.3) $(42.8

  28. Slide 28: Operating Expense Detail

    Operating RENT THE RUNWAY Three Months Three Months Six Months Six Months Expense Detail Ended 7/31/22 Ended 7/31/21 Ended 7/31/22 Ended 7/31/21 (in millions) Technology $14.9 $10.5 $28.5 $20.2 Marketing 9.0 4.8 17.7 7.4 General and administrative 29.6 21.6 58.8 40.6 Total operating expenses $53.5 $

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