Rent The Runway, Inc. · NASDAQ:RENT
Rent The Runway — Q1 2023 Earnings Presentation
34 slides from Rent The Runway's earnings presentation, Jun 7, 2023
Slide 1: Q1 2023 Earnings Presentation
RENT THE RUNWAY CONFIDENTIAL Q1 2023 Earnings Presentation June 7, 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 ➢ Q1 2023 Summary ➢ FY 2023 Strategy CONFIDENTIAL ➢ Q2 and FY 2023 Guidance 44
Slide 5: Q1 2023 Summary
RENT THE THE RUNWAY RUNWAY CONFIDENTIAL 55 RENT Q1 2023 Summary
Slide 6: Q1'23 Key Metrics and Financial Highlights
Q1’23 Key Metrics and Financial Highlights RENT RENT THE THE RUNWAY RUNWAY Total Revenue Active Subscribers Total Subscribers 145.2K, up 8% YoY $74.2M 185.7K Average Active Subs up 11% YoY 136.0K, up 9% YoY up 5% YoY CONFIDENTIAL Gross Profit / Margin Net Loss / Margin1 Adj. EBITDA / Margin $31.4M /
Slide 7: Record Number of Active Subscribers as of April 30, 2023
Record Number of Active Subscribers as of April 30, 2023 +8% YoY RENT THE RUNWAY RENT THE RUNWAY Subscribers (in thousands) CONFIDENTIAL YoY Active Sub Growth 40% 80% 78% 110% 82% 27% 15% 10% 8% YoY Avg Active Sub Growth (31)% 60% 79% 93% 94% 51% 20% 12% 9% Pause % of Total Subs 29% 23% 22% 28% 24%
Slide 8: Revenue Growth of 11% in Q1'23
Revenue Growth of 11% in Q1’23 RENT THE RUNWAY RENT THE RUNWAY Total Revenue, Net ($ in millions) ➢ 87% of revenue from subscribers in Q1’23 ➢ 25% of CONFIDENTIAL subscribers added one or more paid items into their subscriptions in Q1’23 even with launch of 5-item plans YoY (44)% 62% 66% 91% 100% 64
Slide 9: Revenue to Gross Profit - Q1'23 and Q1'22
Revenue to Gross Profit - Q1’23 and Q1’22 RENT THE RUNWAY RENT THE RUNWAY Fiscal Quarter Ended April 30, 2023 % of Revenue 30 % 16 % 12 % 42 % $ in millions CONFIDENTIAL Fiscal Quarter Ended April 30, 2022 % of Revenue 34 % 20 % 12 % 34 % $ in millions Note: Calculations are based on unrounded figures
Slide 10: Gross Profit to Adjusted EBITDA - Q1'23 and Q1'22
Gross Profit to Adjusted EBITDA - Q1’23 and Q1’22 RENT THE RUNWAY RENT THE RUNWAY Fiscal Quarter Ended April 30, 2023 % of Revenue 42% (13)% (18)% (36)% (5)% 12% 21% 1% 6% $ in millions CONFIDENTIAL Fiscal Quarter Ended April 30, 2022 % of 34% (13)% (20)% (44)% (6)% 8% 27% 2% (13)% Revenue $ in milli
Slide 11: Adjusted EBITDA to Free Cash Flow - Q1'23 and Q1'22
Adjusted EBITDA to Free Cash Flow - Q1’23 and Q1’22 RENT THE RUNWAY RENT THE RUNWAY Fiscal Quarter Ended April 30, 2023 % of 6% (20)% (1)% (0)% (1)% 0% 0% (16)% Revenue $ in millions CONFIDENTIAL Fiscal Quarter Ended April 30, 2022 % of (13)% (20)% (3)% (7)% (1)% 0% 0% (42)% Revenue $ in millions No
Slide 12: FY 2023 Strategy
12 RENT THE THE RUNWAY RUNWAY CONFIDENTIAL 12 RENT FY 2023 Strategy
Slide 13: Addressing First 90-Day Experience Can Meaningfully Augment Loyalty
We Believe Addressing First 90-Day Experience RENT THE RUNWAY RENT THE RUNWAY Can 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
Slide 14: Three Customer-Centric Pillars
We Continue to Deliver Against Our Three Customer-Centric Pillars RENT RENT THE THE RUNWAY RUNWAY Inventory She Wants When She Wants It CONFIDENTIAL Best-in-Class Product Discovery Efficient and Easy-to-Use Experience 14 14
Slide 15: Accelerated Buying Strategy to Focus on Reorders and Depths
Accelerated Buying Strategy to Focus on Reorders and Depths of RENT RENT THE THE RUNWAY Most Demanded Styles RUNWAY CONFIDENTIAL ➢ Re-ordered best-renting styles at attractive discounts in Q1 and early Q2 ➢ Because of real time data signals we get on actual and unmet demand, we are one of the few re
Slide 16: Rent the Look Feature Enhances Search & Discovery
Rent the Look Feature Has Enhanced Search & Discovery Process RENT RENT THE and Increased Member Engagement THE RUNWAY RUNWAY ➢ Launched Rent the Look to enable customers to rent a complete outfit CONFIDENTIAL or a similar option based on our recommendations ➢ This feature has led to a 34% increase i
Slide 17: Elevated Customer Support with RTR Concierge
Elevated Customer Support with RTR Concierge for More Seamless RENT RENT THE Onboarding and Styling Assistance THE RUNWAY RUNWAY ➢ Launched RTR Concierge, a text-based luxury-style service that offers complimentary 1:1 communication via text with our CONFIDENTIAL customer service team to help new sub
Slide 18: Continued Strides in Simplifying the Customer Experience
Continued to Make Strides in Simplifying the Customer Experience RENT RENT THE THE RUNWAY RUNWAY Achieved faster site speed Further enhanced delivery experience by launching free Saturday delivery CONFIDENTIAL ➢ Made improvements to load times across the site experience ➢ Launched free Saturday deli
Slide 19: Q2'23 and FY23 Guidance
19 RENT THE THE RUNWAY RUNWAY CONFIDENTIAL 19 RENT Q2’23 and FY23 Guidance
Slide 20: Q2'23 and Fiscal Year 2023 Guidance
Q2’23 and Fiscal Year 2023 Guidance RENT RENT THE THE RUNWAY RUNWAY Q2 2023 Guidance Total Revenue: $77M - $79M Adjusted EBITDA1: ~7% - 8% of Total Revenue Fiscal Year 2023 Guidance CONFIDENTIAL Total Revenue: $320M - $330M (2H’23 stronger than 1H’23) Ending Active Subscriber Growth: >25% Growth Adj
Slide 21: Appendix
21 RENT THE THE RUNWAY RUNWAY CONFIDENTIAL 21 RENT Appendix
Slide 22: Illustrative Future Cash Requirements
Illustrative Future Cash Requirements RENT THE RUNWAY RENT THE RUNWAY ILLUSTRATIVE Revenue, Adjusted EBITDA, Rental Product Replenishment, and Cash Required ($M) ➢ Revenue of ~$1900 per average sub/yr (assumes -4% ARPU in 126,712 active subscribers (ending FY22 level), FY23) and FY23 carried for a y
Slide 23: A Larger Existing Subscriber Base Expected to Improve Cash Consumption
A Larger Existing Subscriber Base Expected to Improve ILLUSTRATIVE RENT THE RUNWAY RENT THE RUNWAY Cash Consumption For all three scenarios: Revenue, Adjusted EBITDA, Rental Product Replenishment, and Cash Required ($M) ➢ Same assumptions as in 126,712 existing With~185,000 existing subscribers, sub
Slide 24: 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 25: 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 26: Customer Acquisition Economics Are Strong
Customer Acquisition Economics Are Strong RENT THE RUNWAY RENT THE RUNWAY Cumulative LTV to CAC, Measured Across Months (M) ➢ Strong LTV/CAC for 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 27: Condensed Consolidated Statements of Operations
Three Three Condensed Months Months RENT THE RUNWAY RENT THE RUNWAY Ended Ended Year Ended Year Ended Consolidated 4/30/23 4/30/22 1/31/23 1/31/22 (In millions, except per share amounts) Total revenue, net $74.2 $67.1 $296.4 $203.3 Statements of Fulfillment Technology 21.9 13.1 22.9 13.6 92.2 55.4 61
Slide 28: Condensed Consolidated Balance Sheets
Condensed RENT RENT THE Consolidated THE RUNWAY RUNWAY Balance Sheets As Of 4/30/23 As Of 1/31/23 (in millions) Cash and cash equivalents $141.4 $154.5 Restricted cash, current 4.2 3.1 Prepaid expenses and other current assets 12.9 14.5 Rental product, net 87.8 78.7 CONFIDENTIAL Fixed assets, net 41
Slide 29: Condensed Consolidated Statements of Cash Flows
Condensed RENT THE RUNWAY Consolidated Statements of Cash Flows Three Months Three Months Year Year Ended Ended Ended Ended 4/30/23 4/30/22 1/31/23 1/31/22 (in millions) Net loss $(30.1) $(42.5) $(138.7) $(211.8) Net cash (used in) provided by operating activities (3.3) (17.4) (47.7) (42.3) CONFIDEN
Slide 30: Selected Cash Flows Detail and Supplemental Cash Flow Information
Selected Cash RENT RENT THE Flows Detail and THE RUNWAY RUNWAY Supplemental Cash Flow Three Months Three Months Year Ended Ended Year Ended Information 4/30/23 4/30/22 Ended 1/31/23 1/31/22 (in millions) INVESTING ACTIVITIES Purchases of rental product $(14.6) $(13.4) $(62.1) $(30.8) Proceeds from l
Slide 31: Reconciliation of Purchases of Rental Product to Rental Product Acquired
Reconciliation RENT RENT THE of Purchases THE RUNWAY RUNWAY of Rental Three Three Product to Months Months Year Year Ended Ended Ended Ended Rental 4/30/23 4/30/22 1/31/23 1/31/22 (in millions) Product Cost of owned rental product paid for in the period, as presented on the Purchases of rental produ
Slide 32: 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 Three Three Free Cash Months Ended Months Ended Year Ended Year Ended Year Ended Year Ended Flow 4/30/23 4/30/22 1/31/23 1/31/22 1/31/21 1/31/20 (in millions) Net cash (used in) provided by operating activities $(
Slide 33: Reconciliation of Net Loss to Adjusted EBITDA
Reconciliation RENT RENT THE of Net Loss to THE RUNWAY Three Three RUNWAY Months Months Year Year Year Year Adjusted Ended Ended Ended Ended Ended Ended 4/30/23 4/30/22 1/31/23 1/31/22 1/31/21 1/31/20 EBITDA (in millions) Net loss $(30.1) $(42.5) $(138.7) $(211.8) $(171.1) $(153.9) Interest (income)
Slide 34: Operating Expense Detail
Operating RENT THE RUNWAY Expense Detail Three Months Three Months Ended Ended 4/30/23 4/30/22 (in millions) Technology $13.1 $13.6 Marketing $9.3 $8.7 General and administrative $26.5 $29.2 Total operating expenses $48.9 $51.5 Less: Share-based compensation $8.8 $5.5 Total operating expenses exclud