Rent The Runway, Inc. · NASDAQ:RENT

Rent The Runway — Q4 2023 Earnings Presentation

42 slides from Rent The Runway's earnings presentation, Apr 10, 2024

  1. Slide 1: Q4 2023 Earnings Presentation

    Q4 2023 Earnings Presentation April 10, 2024

  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 Private Securities Litigation Reform Act of 1995. All statements contained in this presentation that do not relate to maers of historical fact should be considered f

  3. Slide 3: Contents

    Contents RENT THE RUNWAY TBU 01 Q4 + FY2023 Summary 02 Recent Business Highlights 03 2024 Plans 04 Q1 + FY2024 Guidance 33

  4. Slide 4: Q4 + FY2023 Summary

    RENT THE RUNWAY Q4 + FY2023 Summary 4

  5. Slide 5: Improved the Financial Profile of RTR Significantly Since FY21

    Improved the Financial Profile of RTR Significantly Since FY21 RENT THE RUNWAY 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. Margins 5 calculated as percentage

  6. Slide 6: Q4'23 Key Metrics and Financial Highlights

    Q4’23 Key Metrics and Financial Highlights RENT THE RUNWAY TOTAL REVENUE ACTIVE SUBSCRIBERS TOTAL SUBSCRIBERS 126.0K, Down 1% YoY $75.8M AVERAGE ACTIVE SUBSCRIBERS 173.2K Up 0.5% YoY 128.8K, Down 1% YoY Up 1% YoY GROSS PROFIT / MARGIN NET LOSS / MARGIN ADJ. EBITDA / MARGIN $29.9M / 39% $(24.8)M / (3

  7. Slide 7: FY23 Key Metrics and Financial Highlights

    FY23 Key Metrics and Financial Highlights RENT THE RUNWAY TOTAL REVENUE ACTIVE SUBSCRIBERS TOTAL SUBSCRIBERS 126.0K, Down 1% YoY $298.2M AVERAGE ACTIVE SUBSCRIBERS 173.2K Up 0.6% YoY 135.2K, Up 5% YoY Up 1% YoY GROSS PROFIT / MARGIN NET LOSS / MARGIN ADJ. EBITDA / MARGIN $119.7M / 40% $(113.2)M / (3

  8. Slide 8: Active Subscribers as of January 31, 2024 (1)% YoY

    Active Subscribers as of January 31, 2024 (1)% YoY RENT THE RUNWAY SUBSCRIBERS (IN THOUSANDS) YoY Active Subs 40% 80% 78% 110% 82% 27% 15% 10% 8% 11% (2)% (1)% YoY Avg Active Subs (31)% 60% 79% 93% 94% 51% 20% 12% 9% 9% 4% (1)% Pasued % of Total 29% 23% 22% 28% 24% 28% 24% 26% 22% 25% 25% 27% Note:

  9. Slide 9: Total Revenue Up 1% YoY in Q4'23

    Total Revenue Up 1% YoY in Q4’23 RENT THE RUNWAY TOTAL REVENUE, NET ($ IN MILLIONS) Subscriber Highlights ● 89% of revenue from subscribers in Q4’23 ● 27% of subscribers added one or more paid items into their subscriptions in Q4’23 YoY Growth (44)% 62% 66% 91% 100% 64% 31% 18% 11% (1)% (6)% 1% Note

  10. Slide 10: Revenue to Gross Profit - Q4'23 and Q4'22

    Revenue to Gross Profit - Q4’23 and Q4’22 RENT THE RUNWAY Rental Product Expenses (Depreciation & Revenue Share) $26M in Q4’23 vs. $19M in Q4’22 primarily due to the impact of the depth adjustments on inventory purchases in FY23 FISCAL QUARTER ENDED JANUARY 31, 2024 % of Revenue 27% 22% 12% 39% $ IN

  11. Slide 11: Revenue to Gross Profit - FY23 and FY22

    Revenue to Gross Profit - FY23 and FY22 RENT THE RUNWAY FISCAL YEAR ENDED JANUARY 31, 2024 % of Revenue 29% 19% 12% 40% $ IN MILLIONS FISCAL YEAR ENDED JANUARY 31, 2023 % of Revenue 31% 18% 11% 40% 11 Note: Calculations are based on unrounded figures.

  12. Slide 12: Gross Profit to Adjusted EBITDA - Q4'23 and Q4'22

    Gross Profit to Adjusted EBITDA - Q4’23 and Q4’22 RENT THE RUNWAY FISCAL QUARTER ENDED JANUARY 31, 2024 % of Revenue 39% (9)% (15)% (33)% (5)% (4)% 7% 27% 4% 3% 15% $ IN MILLIONS FISCAL QUARTER ENDED JANUARY 31, 2023 % of Revenue 44% (10)% (17)% (33)% (5)% (3)% 8% 21% 3% 1% 9% Note: See GAAP to Non-G

  13. Slide 13: Gross Profit to Adjusted EBITDA - FY23 and FY22

    Gross Profit to Adjusted EBITDA - FY23 and FY22 RENT THE RUNWAY FISCAL YEAR ENDED JANUARY 31, 2024 % of Revenue 40% (10)% (16)% (34)% (5)% (1)% 9% 24% 1% 2% 9% $ IN MILLIONS FISCAL YEAR ENDED JANUARY 31, 2023 % of Revenue 40% (12)% (19)% (37)% (6)% (3)% 9% 23% 3% 3% 2% Note: See GAAP to Non-GAAP Reco

  14. Slide 14: Adjusted EBITDA to Free Cash Flow - FY23 and FY22

    Adjusted EBITDA to Free Cash Flow - FY23 and FY22 RENT THE RUNWAY FISCAL YEAR ENDED JANUARY 31, 2024 % of Revenue 9% (26)% (2)% 0% (4)% (1)% 0% (24)% $ IN MILLIONS FISCAL YEAR ENDED JANUARY 31, 2023 % of Revenue 2% (21)% (3)% (6)% (2)% (1)% 1% (31)% Note: See GAAP to Non-GAAP Reconciliation in appen

  15. Slide 15: Recent Business Highlights

    RENT THE RUNWAY Recent Business Highlights 15

  16. Slide 16: Q4 Other Revenue Grew 49% YoY, Driven by Strong Inventory Selling

    Q4 Other Revenue Grew 49% YoY, Driven by Strong Inventory RENT THE RUNWAY Selling Performance Record Resale Revenue Buy from Cart Buy from Homepage Achieved record quarterly and annual inventory resale sales In Q4 ‘23 and FY2023 Cash Flow Accretive Our pricing strategy enables us to generate ROI on

  17. Slide 17: We are Showing the Value in Buying by Embedding it Deeper

    We are Showing the Value in Buying RENT THE RUNWAY by Embedding it Deeper in the Experience IMPROVED SHOPPING More ways to purchase items from our racks Merchandising-focused New opportunities across shopping for new and the experience to keep recurring RTR customers her rentals forever 17

  18. Slide 18: Movement Towards a Capital Light Model, Planned 2024 Inventory Capex 37% Lower

    With Continued Movement Towards a Capital Light Model, RENT THE RUNWAY Planed 2024 Inventory Capex is 37% less than last year Non-Wholesale Channels Expected to be ~70% of New Receipts in FY24 Higher Inventory Depth FY23 FY24 High In-Stock Rate 33% 39% 28% ~70% Non-Wholesale Lower Upfront Capital 18

  19. Slide 19: We Significantly Improved Our Customer Experience in 2023

    We Significantly Improved Our Customer Experience in 2023 RENT THE RUNWAY Outputs of Improved Customer Experience 20 point Improvement in Subscription Net Promoter Score 10% Q4 YOY Loyalty Improvement Improved discovery Easier to use + beer merchandised product pages 19

  20. Slide 20: We Significantly Improved Our Customer Experience in 2023

    We Significantly Improved Our Customer Experience in 2023 RENT THE RUNWAY Outputs of Improved Customer Experience 20 point Improvement in Subscription Net Promoter Score 10% Q4 YOY Loyalty Improvement Text with a stylist Customer Onboarding Improved photography & styling 20

  21. Slide 21: 2024 Plans

    21 RENT THE RUNWAY 2024 Plans

  22. Slide 22: We Plan to Continue to Innovate How we Merchandise

    We Plan to Continue to Innovate How we Merchandise RENT THE RUNWAY to Drive Increases in Conversion and Loyalty We’ve introduced use-case based shopping hubs to show how the RTR closet can fully outfit her for work, events, travel and beyond 22

  23. Slide 23: We Plan to Continue to Innovate How we Merchandise

    We Plan to Continue to Innovate How we Merchandise RENT THE RUNWAY to Drive Increases in Conversion and Loyalty Styling advice & immersive visuals show customers how to use our assortment and educate her on latest trends and designers Seasonal hubs showcase trends Styling advice highlighted Helping

  24. Slide 24: Evolving Navigation to Proven Content to Make Her Journey Seamless

    We are Focused on Evolving Navigation to Proven Content to RENT THE RUNWAY Make Her Journey Seamless NOV 2023 APR 2024 From focusing on broad categories… …To highlighting use cases and style guides that make it easy to get dressed. 24

  25. Slide 25: We Plan to Accelerate Our Marketing Efforts Around Big Bets

    We Plan to Accelerate Our Marketing Efforts Around Big Bets RENT THE RUNWAY ● Building mid funnel consideration marketing plans focusing on driving customer reasons to believe and supporting incremental conversion ● Scaling new marketing channels with a social first approach ● Rebuilding our lifecycl

  26. Slide 26: Reigniting Creative

    Reigniting Creative RENT THE RUNWAY Where we’re going OPTIMIZED CREATIVE CAPTURE FOR BRAND STORYTELLING Utilizing content as a lever for growth by diversifying our creative approach through distinct capture style- intermixing lo-fi, influencer, refreshed pdp and editorial content to inspire. Focus on

  27. Slide 27: Building More Brand Love

    Building More Brand Love RENT THE RUNWAY Current Plans Include: ● Focusing our marketing eorts towards mid and upper funnel work designed to put brand love back at the forefront of our marketing campaigns ● Our storytelling and investments will be social first - we will drive our strategy around bei

  28. Slide 28: Rebuilding our Lifecycle Strategy to Drive Further Customer Loyalty

    We are Focused on Rebuilding our Lifecycle Strategy to RENT THE RUNWAY Drive Further Customer Loyalty We believe we have a sizeable opportunity to realize more value across the network with our existing customer base and plan to focus our eorts on 4 distinct life stage segments of the customer jour

  29. Slide 29: Q1 + FY2024 Guidance

    RENT THE RUNWAY Q1 + FY2024 Guidance 29

  30. Slide 30: Fiscal Year 2024 Guidance

    Fiscal Year 2024 Guidance RENT THE RUNWAY Q1 2024 Guidance Total Revenue: $73M - $75M; (2)% - 1% YoY Growth Adjusted EBITDA Margin1: 7% - 8% of Total Revenue FY2024 Guidance Total Revenue: $301M - $316M; 1% - 6% YoY Growth Adjusted EBITDA Margin1: 15% - 16% of Total Revenue Purchases of Rental Produ

  31. Slide 31: Our Primary Focus in FY24 is to Become FCF Breakeven

    Our Primary Focus in FY24 is to Become FCF Breakeven RENT THE RUNWAY Free Cash Flow Bridge FY23 vs. FY24* ● We anticipate reaching FCF breakeven based on ~$0M a wide range of revenue FY23 Debt growth strategies Amendment Placed majority of ● Our cost base has FY24 rental reduced significantly as a pr

  32. Slide 32: Appendix

    32 RENT THE RUNWAY Appendix

  33. Slide 33: Condensed Consolidated Statements of Operations

    Condensed Three Three RENT THE RUNWAY Months Months Ended Ended Year Ended Year Ended Consolidated (In millions, except per share amounts) 1/31/2024 1/31/2023 1/31/2024 1/31/2023 Statements Total revenue, net Fulfillment $75.8 20.1 $75.4 22.7 $298.2 86.0 $296.4 92.2 of Operations Technology 11.0 12.8

  34. Slide 34: Condensed Consolidated Balance Sheets

    Condensed RENT THE RUNWAY Consolidated Balance Sheets As Of 1/31/2024 As Of 1/31/2023 (in millions) Cash and cash equivalents $84.0 $154.5 Restricted cash, current 5.2 3.1 Prepaid expenses and other current assets 13.0 14.5 Restricted cash, fixed 4.8 6.0 Rental product, net 94.0 78.7 Fixed and intang

  35. Slide 35: Condensed Consolidated Statements of Cash Flows

    Condensed RENT THE RUNWAY Consolidated Statements of Cash Flows Year Ended Year Ended Year Ended 1/31/2024 1/31/2023 1/31/2022 (in millions) Net loss $(113.2) $(138.7) $(211.8) Net cash (used in) provided by operating activities (15.7) (47.7) (42.3) Net cash (used in) provided by investing activitie

  36. Slide 36: Reconciliation of Net Loss to Free Cash Flow

    Reconciliation RENT THE RUNWAY of Net Loss to Free Cash Flow Year Ended Year Ended Year Ended 1/31/2024 1/31/2023 1/31/2022 (in millions) Net loss $(113.2) $(138.7) $(211.8) Operating loss (80.0) (103.6) (125.9) Interest income / (expense), net (33.7) (36.8) (53.0) Gain / (loss) on warrant liability

  37. Slide 37: Selected Cash Flows Detail and Supplemental Cash Flow Information

    Selected Cash RENT THE RUNWAY Flows Detail and Supplemental Cash Flow Year Ended Year Ended 1/31/2024 1/31/2023 (in millions) Information INVESTING ACTIVITIES Purchases of rental product $(77.9) $(62.1) Proceeds from liquidation of rental product $4.6 $8.8 Proceeds from sale of rental product $23.3

  38. Slide 38: Reconciliation of Purchases of Rental Product to Rental Product Acquired

    Reconciliation RENT THE RUNWAY of Purchases of Rental Product to Rental Year Ended Year Ended Product 1/31/2024 1/31/2023 (in millions) Acquired Cost of owned rental product paid for in the period, as presented on Purchases of rental product $(77.9) $(62.1) the Condensed Consolidated Statements of C

  39. Slide 39: Reconciliation of Net Loss to Adjusted EBITDA

    Reconciliation RENT THE RUNWAY of Net Loss to Three Months Ended Three Months Ended Year Ended Year Ended Year Ended Adjusted (in millions) 1/31/2024 1/31/2023 1/31/2024 1/31/2023 1/31/2022 EBITDA Net loss Interest (income) / expense, net $(24.8) 5.4 $(26.2) 8.6 $(113.2) 33.7 $(138.7) 36.8 $(211.8)

  40. Slide 40: Reconciliation of Cash Used by Operating Activities to Free Cash Flow

    Reconciliation RENT THE RUNWAY of Cash Used by Operating Activities to Free Cash Flow Year Ended Year Ended Year Ended 1/31/2024 1/31/2023 1/31/2022 (in millions) Net cash (used in) provided by operating activities $(15.7) $(47.7) $(42.3) Purchases of rental product (77.9) (62.1) (30.8) Proceeds fro

  41. Slide 41: Reconciliation of Net Loss to Free Cash Flow

    Reconciliation RENT THE RUNWAY of Net Loss to Year Ended 1/31/2024 Year Ended 1/31/2023 (in millions) Net loss $(113.2) $(138.7) Free Cash Interest (income) / expense, net Rental product depreciation $33.7 $57.1 $36.8 $52.9 Flow Other depreciation and amortization Share-based compensation $14.7 $26.

  42. Slide 42: Operating Expense Detail

    Operating RENT THE RUNWAY Expense Detail Three Months Three Months Ended Ended Year Ended Year Ended 1/31/2024 1/31/2023 1/31/2024 1/31/2023 (in millions) Technology $11.0 $12.8 $49.1 $55.4 Marketing $6.6 $7.7 $31.2 $35.1 General and administrative $24.8 $24.9 $101.6 $109.0 Total operating expenses

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