Rent The Runway, Inc. · NASDAQ:RENT
Rent The Runway — Q4 2022 Earnings Presentation
41 slides from Rent The Runway's earnings presentation, Apr 12, 2023
Slide 1: Q4 2022 Earnings Presentation
RENT THE RUNWAY CONFIDENTIAL Q4 2022 Earnings Presentation April 12, 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: Contents
Contents RENT RENT THE THE RUNWAY RUNWAY ● Q4 2022 Summary ● FY 2023 Strategy CONFIDENTIAL ● FY 2023 Guidance ● Path to Profitability 33
Slide 4: Q4 2022 Summary
RENT THE THE RUNWAY RUNWAY CONFIDENTIAL 44 RENT Q4 2022 Summary
Slide 5: 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 6: Q4'22 Key Metrics and Financial Highlights
Q4’22 Key Metrics and Financial Highlights RENT RENT THE THE RUNWAY RUNWAY Total Revenue Active Subscribers Total Subscribers 126.7K, up 10% YoY $75.4M 172.0K Average Active Subs up 18% YoY 130.5K, up 12% YoY up 8% YoY CONFIDENTIAL Gross Profit / Margin Net Loss / Margin1 Adj. EBITDA / Margin $33.3M
Slide 7: FY 2022 Key Metrics and Financial Highlights
FY 2022 Key Metrics and Financial Highlights RENT RENT THE THE RUNWAY RUNWAY Total Revenue Active Subscribers Total Subscribers 126.7K, up 10% YoY $296.4M 172.0K Average Active Subs up 46% YoY 128.6K, up 38% YoY up 8% YoY CONFIDENTIAL Gross Profit / Margin Net Loss / Margin1 Adj. EBITDA / Margin $120
Slide 8: Record Number of Active Subscribers as of April 8, 2023
Record Number of Active Subscribers as of April 8, 2023; RENT THE RUNWAY RENT THE RUNWAY Q4’22 Ending Active Subscribers +10% YoY Subscribers (in thousands) CONFIDENTIAL YoY Active Sub Growth 40% 80% 78% 110% 82% 27% 15% 10% n/a YoY Avg Active Sub Growth (31)% 60% 79% 93% 94% 51% 20% 12% n/a Pause %
Slide 9: Strong Revenue Growth of 46% in FY22 and 18% in Q4'22
Strong Revenue Growth of 46% in FY22 and 18% in Q4’22 RENT THE RUNWAY RENT THE RUNWAY Total Revenue, Net ($ in millions) ● 86% of revenue from subscribers in FY22 CONFIDENTIAL ● 28% of subscribers added one or more paid items into their subscriptions in Q4’22 YoY (44)% 62% 66% 91% 100% 64% 31% 18% 2
Slide 10: Revenue to Gross Profit - Q4'22 and Q4'21
Revenue to Gross Profit - Q4’22 and Q4’21 RENT THE RUNWAY RENT THE RUNWAY Fiscal Quarter Ended January 31, 2023 30 % 16 % 10 % 44 % % of Revenue $ in millions CONFIDENTIAL Fiscal Quarter Ended January 31, 2022 % of Revenue 32 % 20 % 12 % 37 % $ in millions 1010
Slide 11: Revenue to Gross Profit - FY22 and FY21
Revenue to Gross Profit - FY22 and FY21 RENT THE RUNWAY RENT THE RUNWAY Fiscal Year Ended January 31, 2023 % of Revenue 31 % 18 % 11 % 40 % $ in millions CONFIDENTIAL Fiscal Year Ended January 31, 2022 % of Revenue 30 % 25 % 11 % 34 % $ in millions 1111
Slide 12: Gross Profit to Adjusted EBITDA - Q4'22 and Q4'21
Gross Profit to Adjusted EBITDA - Q4’22 and Q4’21 RENT THE RUNWAY RENT THE RUNWAY Fiscal Quarter Ended January 31, 2023 % of Revenue 44% (10%) (17%) (33%) (5%) (3%) 8% 21% 3% 1% 9% $ in millions CONFIDENTIAL Fiscal Quarter Ended January 31, 2022 % of 37% (13%) (19%) (44%) (7%) - 8% 27% - 3% (9%) Reve
Slide 13: Gross Profit to Adjusted EBITDA - FY22 and FY21
Gross Profit to Adjusted EBITDA - FY22 and FY21 RENT THE RUNWAY RENT THE RUNWAY Fiscal Year Ended January 31, 2023 % of Revenue 40% (12%) (19%) (37%) (6%) (3%) 9% 23% 3% 3% 2% $ in millions CONFIDENTIAL Fiscal Year Ended January 31, 2022 % of 34% (13%) (22%) (51%) (10%) - 13% 34% - 5% (9%) Revenue $
Slide 14: Adjusted EBITDA to Free Cash Flow - FY22 and FY21
Adjusted EBITDA to Free Cash Flow - FY22 and FY21 RENT THE RUNWAY RENT THE RUNWAY Fiscal Year Ended January 31, 2023 % of 2% (21%) (3%) (6%) (2%) (1%) 0% (31%) Revenue $ in millions CONFIDENTIAL Fiscal Year Ended January 31, 2022 % of (9%) (15%) (5%) (4%) 5% (3%) (1%) (32%) Revenue $ in millions Not
Slide 15: FY 2023 Strategy
15 RENT THE THE RUNWAY RUNWAY CONFIDENTIAL 15 RENT FY 2023 Strategy
Slide 16: Our Revenue is Driven by Strong Customer Loyalty
Our Revenue is Driven by Strong Customer Loyalty RENT THE RUNWAY RENT THE RUNWAY Total Revenue, Net by Customer Cohort Year ($M) ● Strong historical Revenue supported by strong cohort retention, revenue retention consistency, and stability over time across cohorts despite business changes ● Large an
Slide 17: Addressing First 90-Day Experience Can Meaningfully Augment Loyalty
Addressing First 90-Day Experience Can RENT THE RUNWAY RENT THE RUNWAY Meaningfully Augment Loyalty ● Average churn rate for TOP REASONS FOR NEW subscribers who have been active for more CUSTOMER CHURN 2 than 90 days is ⅓ that of subscribers 55% Time and effort to pick within their first 90 clothes da
Slide 18: Happy Customers Influence Organic Growth
Happy Customers Influence Organic Growth RENT THE RUNWAY RENT THE RUNWAY Top 5 subscriber responses to “How did you hear about Rent the Runway?”1 ● ~80% of total subscription acquisitions have been organic in FY19-22 Higher retention matters for organic growth and has the potential to drive ● The maj
Slide 19: Extra Items Is A First Step Towards Improving Customer Experience
Extra Items Is A First Step Towards Improving Customer Experience RENT THE RUNWAY New subscription plans launched on OLD PLANS NEW PLANS March 6th, 2023 Monthly Price Shipments/Month Items Items per Month per Month $94 1 4 CONFIDENTIAL 5 $144 2 8 10 $235 4 16 20 Better Price / Value: 10 items for $1
Slide 20: Higher-Item Subscription Plans Have Halo Effects
We Believe and Have Seen Early Evidence that Higher-Item RENT THE RUNWAY Subscription Plans Have Halo Effects That Improve the Business More Virality / Referrals and Additional Unit Organic Acquisition Increases Units Worn and CONFIDENTIAL Diversity of Use Cases More Compliments! Greater Loyalty Hig
Slide 21: Extra Item Launch Already Generating Increased Momentum
Extra Item Launch Already Generating RENT THE RUNWAY RENT THE RUNWAY Increased Momentum Above expectations improvement in subscriber retention post-extra item launch period ● Positive customer reaction in surveys and customer Significant increase in former customers service feedback rejoining per day
Slide 22: FY 2023 Strategy Directly Addresses New Customer Opportunities
FY 2023 Strategy Directly Addresses New Customer Opportunities RENT RENT THE THE RUNWAY RUNWAY Improved Inventory She Wants Faster Personalized Search & Discovery When She Wants It Site and App Onboarding Customer-Facing Backend ● Newness Systems Improvement to ● Deeper Buys home page, Improved ● Ne
Slide 23: FY 2023 Guidance
23 RENT THE THE RUNWAY RUNWAY CONFIDENTIAL 23 RENT FY 2023 Guidance
Slide 24: Typical Seasonality Would Indicate Growth in Q2 vs. Q1
Typical Seasonality Would Indicate Growth in Q2 vs. Q1 RENT THE RUNWAY RENT THE RUNWAY Quarter Ending Active Subscribers (Q1 each fiscal year indexed to 1) ● Q1 and Q3 are stronger net FY22 did not exhibit historical seasonal subscriber addition patterns for active subscriber growth quarters ● Among
Slide 25: Expect 25%+ Ending Active Subscriber Growth in FY23
Expect 25%+ Ending Active Subscriber Growth in FY23 RENT THE RUNWAY RENT THE RUNWAY ● Strong start to extra Ending Active Subscribers item launch: 141,205 ending active subscribers as of 25%+ growth 4/8/23 ● Q1’23 YoY subscriber growth CONFIDENTIAL rate reflects comparison to Q1’22 post-Omicron recov
Slide 26: FY23 Revenue Growth Expected to Lag Subscriber Growth
FY23 Revenue Growth Expected to Lag Subscriber Growth RENT THE RUNWAY RENT THE RUNWAY ● Revenue reflects average subscribers FY23 Subscriber and Revenue Guidance (Subscribers in 000s, Revenue in $M) which lags ending active subscribers $320-$330 ● Anticipate lower 2H’23 revenue growth expected to be
Slide 27: Q1 2023 and Fiscal Year 2023 Guidance
Q1 2023 and Fiscal Year 2023 Guidance RENT RENT THE THE RUNWAY RUNWAY Q1 2023 Guidance Total Revenue: $72M - $74M Adjusted EBITDA1: ~2% - 3% of Total Revenue Fiscal Year 2023 Guidance CONFIDENTIAL Total Revenue: $320M - $330M (2H’23 stronger than 1H’23) Ending Active Subscriber Growth: >25% Growth A
Slide 28: Path to Profitability
28 RENT THE THE RUNWAY RUNWAY CONFIDENTIAL 28 RENT Path to Profitability
Slide 29: Anticipate Improvement in Free Cash Flow in FY23
Anticipate Improvement in Free Cash Flow* in FY23 RENT THE RUNWAY RENT THE RUNWAY Free Cash Flow FY22* Actual and FY23 Guidance ($M) Cash consumption in FY23 to benefit from revenue growth, ● FY23 benefits from restructuring savings and lower cash interest expense anticipated revenue growth, ~$25M in
Slide 30: Illustrative Future Cash Requirements
Illustrative Future Cash Requirements RENT THE RUNWAY RENT THE RUNWAY ILLUSTRATIVE Revenue, Adjusted EBITDA, Rental Product Replenishment, and Cash Required ($M) ● Revenue of ~$1900 per average sub/yr (assumes -4% ARPU in 126,712 active subscribers (ending FY22 level), FY23) and FY23 carried for a y
Slide 31: A Larger Existing Subscriber Base Expected to Improve Cash Consumption
A Larger Existing Subscriber Base Expected to Improve ILLUSTRATIVE RENT THE RUNWAY RENT THE RUNWAY Cash Consumption Revenue, Adjusted EBITDA, Rental Product Replenishment, and Cash Required ($M) For all three scenarios: ● Same assumptions as in With~185,000 existing subscribers, 126,712 existing Adj
Slide 32: Customer Acquisition Economics Are Strong
Customer Acquisition Economics Are Strong RENT THE RUNWAY RENT THE RUNWAY ● Strong LTV/CAC for Cumulative LTV to CAC, Measured Across Months (M) FY18-FY22 cohorts ex-COVID impacts ● FY19 and FY20 cohorts largely impacted by COVID ● FY21 benefited from CONFIDENTIAL high loyalty post Months Since Acqui
Slide 33: Appendix
33 RENT THE THE RUNWAY RUNWAY CONFIDENTIAL 33 RENT Appendix
Slide 34: Condensed Consolidated Statements of Operations
Condensed RENT THE RUNWAY RENT THE RUNWAY Three Months Three Months Year Ended Year Ended Ended 1/31/23 Ended 1/31/22 1/31/23 1/31/22 Consolidated (in millions) Total revenue, net $75.4 $64.1 $296.4 $203.3 Fulfillment 22.7 20.4 92.2 61.9 Statements of Technology Marketing 12.8 7.7 12.3 8.3 55.4 35.1
Slide 35: Condensed Consolidated Balance Sheets
Condensed RENT RENT THE Consolidated THE RUNWAY RUNWAY As Of 1/31/23 As Of 1/31/22 Balance Sheets (in millions) Cash and cash equivalents $154.5 $247.6 Restricted cash, current 3.1 5.4 Prepaid expenses and other current assets 14.5 11.7 Rental product, net 78.7 76.3 Fixed assets, net 44.7 57.2 CONFI
Slide 36: Condensed Consolidated Statements of Cash Flows
Condensed RENT THE RUNWAY Consolidated Statements Year Year Year Year Ended Ended Ended Ended of Cash Flows 1/31/23 1/31/22 1/31/21 1/31/20 (in millions) Net loss $(138.7) $(211.8) $(171.1) $(153.9) Net cash (used in) provided by operating activities (47.7) (42.3) (42.8) (37.6) Net cash (used in) pr
Slide 37: Selected Cash Flows Detail and Supplemental Cash Flow Information
Selected Cash RENT RENT THE Flows Detail and THE RUNWAY RUNWAY Supplemental Year Ended Year Ended 1/31/23 1/31/22 Cash Flow (in millions) INVESTING ACTIVITIES Information Purchases of rental product $(62.1) $(30.8) Proceeds from liquidation of rental product $8.8 $5.7 Proceeds from sale of rental pr
Slide 38: Reconciliation of Purchases of Rental Product to Rental Product Acquired
Reconciliation RENT RENT THE of Purchases THE RUNWAY RUNWAY of Rental Product to Year Ended Year Ended Rental 1/31/23 1/31/22 (in millions) Product Cost of owned rental product paid for in the period, as Purchases of rental product $(62.1) $(30.8) presented on the Condensed Consolidated Statements o
Slide 39: 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 Year Ended 1/31/23 Year Ended 1/31/22 Year Ended 1/31/21 Year Ended 1/31/20 Free Cash (in millions) Net cash (used in) provided by operating activities $(47.7) $(42.3) $(42.8) $(37.6) Flow Purchases of rental prod
Slide 40: Reconciliation of Net Loss to Adjusted EBITDA
Reconciliation RENT RENT THE Three Three of Net Loss to THE RUNWAY Months Months Year Year Year Year RUNWAY Ended Ended Ended Ended Ended Ended Adjusted 1/31/23 1/31/22 1/31/23 1/31/22 1/31/21 1/31/20 (in millions) EBITDA Net loss $(26.2) $(39.3) $(138.7) $(211.8) $(171.1) $(153.9) Interest (income)
Slide 41: Operating Expense Detail
Operating RENT THE RUNWAY Expense Detail Three Months Ended 1/31/23 Three Months Ended 1/31/22 Year Ended 1/31/23 Year Ended 1/31/22 (in millions) Technology $12.8 $12.3 $55.4 $45.3 Marketing $7.7 $8.3 $35.1 $26.5 General and administrative $24.9 $28.0 $109.0 $104.4 Total operating expenses $45.4 $4