Rent The Runway, Inc. · NASDAQ:RENT
Rent The Runway — Q3 2021 Earnings Presentation
25 slides from Rent The Runway's earnings presentation, Dec 8, 2021
Slide 1: Q3 2021 Earnings Presentation
RENT THE RUNWAY CONFIDENTIAL Q3 2021 Earnings Presentation December 8, 2021 1
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
Slide 3: Investment Thesis
Investment Thesis RENT THE RUNWAY Addressing Fastest-Growing Compelling Value Proposition for At the Center of Key Trends Segments in $300B Customers and Brands: U.S. Apparel Market1 Two-Sided Discovery Engine ● Shift in consumer spend from ● Online: $107B market growing at 12% ● Subscribers receive
Slide 4: Third Quarter Key Metrics and Financial Highlights
Third Quarter Key Metrics and Financial Highlights RENT THE RUNWAY ● 116.8K active subscribers as of October 31, 2021, up 78% YoY and up 20% from Q2 2021 ○ Representing 87% of active subscriber count at the end of fiscal 2019 ● 150.1K total subscribers, representing 101% of total subscribers at the e
Slide 5: Third Quarter Business Highlights
Third Quarter Business Highlights RENT THE RUNWAY ● Strong subscriber engagement: 24% of subscribers added one or more paid additional items into their subscription program ● All major U.S. metros back to approximately 90% of pre-COVID subscriber count except NY, DC, and SF; Markets in South Atlanti
Slide 6: Strong Active Subscriber Growth, Up 113% YTD
Strong Active Subscriber Growth, Up 113% YTD RENT THE RUNWAY Ending Subscribers (in thousands) Q3’21 Total Subscribers Above FY2019 Level CONFIDENTIAL YoY Active Subscriber Growth (48)% (49)% (45)% (59)% 40% 80% 78% Note: FY19 ended January 31, 2020, FY20 ended January 31, 2021. Active Subscribers r
Slide 7: Strong Revenue Growth, Up 66% YoY
Strong Revenue Growth, Up 66% YoY RENT THE RUNWAY Total Revenue, Net ($ in millions) +66% YoY In Q3 YTD, ~82% of our revenue came from subscribers Seeing higher CONFIDENTIAL engagement from our subscribers with average revenue per subscriber higher in Q3 vs. Q2 YoY Growth (39)% 8% (54)% (45)% (55)%
Slide 8: Growing Geographic and Use Case Diversity of Our Subscribers Increases our TAM
Growing Geographic and Use Case Diversity of Our RENT THE RUNWAY Subscribers Increases our TAM Q3 2021 Ending Active Subscribers by Region Q3 2021 Shipped Items by Use Case Examples 15% 6% include: blazers, work Examples dresses, skirts, suits include: 23% trousers, 4% Work sweaters, 50% 29% athleis
Slide 9: Growth in Capital Efficient Product Acquisition Channels
Growth in Capital Efficient Product Acquisition Channels to RENT THE RUNWAY 56% of Total % Items Acquired % Items Acquired % Items Acquired in FY2019 in FY2020 in FY2021 (estimate) (1) Share by RTR and 26% 11% 54% 56% Exclusive Designs drive 18% 22% stronger cash flow today 15% 44% 46% and continue t
Slide 10: Our Business Model
Our Business Model RENT THE RUNWAY Nine Months Ended October 31, 2021 % of 30 % 27 % 10 % 33 % Revenue $ in millions CONFIDENTIAL Nine Months Ended October 31, 2020 % of 35 % 44 % 12 % 9% Revenue $ in millions 10 Note: See GAAP to Non-GAAP Reconciliation in appendix.
Slide 11: Our Business Model
Our Business Model RENT THE RUNWAY Nine Months Ended October 31, 2021 % of (124) % 31 % 40 % 15 % 9% 18 % 0% (10) % Revenue $ in millions CONFIDENTIAL Interest (Income) / Expense: includes $35.4M of PIK interest, $3.4M of cash interest and $4.9M of debt discount amortization Depreciation & Liquidati
Slide 12: Continuing to Improve Margins
Continuing to Improve Margins RENT THE RUNWAY CONFIDENTIAL Note: See GAAP to Non-GAAP Reconciliation in appendix. Free cash flow margin defined as net cash used in operating activities plus net cash used in investing activities, as a percentage of total revenue. 12
Slide 13: Product Acquisition Strategy Has Meaningfully Improved Capital Efficiency and Free Cash Flow
Product Acquisition Strategy Has Meaningfully Improved RENT THE RUNWAY Capital Efficiency and Free Cash Flow ($ in millions) Free Cash Flow (1) Improvement in product as % of Revenue depreciation with right-sizing of product relative to active subscribers and revenue Purchases of Rental Product CONF
Slide 14: The Subscriber Opportunity
The Subscriber Opportunity RENT THE RUNWAY Converting Only 3.5% of Opportunity Set Would Drive 5X Increase in Subscribers Subscriber Opportunity 130M U.S. Women 18+ Current RTR 3.5% of 21M 56% of women state that Subscribers Opportunity Set they will subscribe to 61M fashion at some point over the n
Slide 15: Due to Our High ARPU, We Only Need a Fraction of Peers' Subscriber Bases
Due to Our High ARPU, We Only Need a Fraction of Peers’ RENT THE RUNWAY Subscriber Bases to Reach the Same Revenue Level Most-Popular 2.49M @ $39.00 Subscription $13.99 $9.99 887K @ $12.99 $135.00 Price Blended: $32.171 Illustrative # Subscribers per 71 100 31 7 $1,000 revenue Multiple of RTR Subscr
Slide 16: Q4 and Fiscal Year 2021 Guidance
Q4 and Fiscal Year 2021 Guidance RENT THE RUNWAY Q4 2021 Fiscal Year 2021 Ending Active 121K - 122K 121K - 122K Subscribers Guidance Total Revenue $62.8M - $63.3M $202.0M - $202.5M Adjusted EBITDA (8)% (9)% Margin(1) (1) A reconciliation of Adjusted EBITDA and Adjusted EBITDA margin guidance to the
Slide 17: Appendix
RENT THE RUNWAY 17 Appendix
Slide 18: Condensed Consolidated Statements of Operations
Condensed RENT THE RUNWAY Three Three Nine Nine Months Months Months Months Consolidated Ended Ended Ended Ended Year Ended Year Ended 10/31/21 10/31/20 10/31/21 10/31/20 1/31/21 1/31/20 Statements of (in millions) Total revenue, net $59.0 $35.5 $139.2 $124.0 $157.5 $256.9 Operations Fulfillment Tech
Slide 19: Condensed Consolidated Balance Sheets
Condensed RENT THE RUNWAY Consolidated As Of As Of As Of 10/31/21 1/31/21 1/31/20 Balance Sheets (in millions) Cash and cash equivalents $278.7 $95.3 $31.4 Restricted cash, current 5.6 3.4 10.5 Prepaid expenses and other current assets 5.4 4.7 5.0 Rental product, net 79.9 97.6 116.0 Fixed assets, ne
Slide 20: Condensed Consolidated Statements of Cash Flows
Condensed RENT THE RUNWAY Consolidated Statements Nine Months Ended Nine Months Ended Year Ended Year Ended of Cash Flows 10/31/21 10/31/20 1/31/21 1/31/20 (in millions) Net loss $(172.5) $(132.3) $(171.1) $(153.9) Net cash (used in) provided by operating activities (23.5) (33.9) (42.8) (37.6) Net c
Slide 21: Selected Cash Flows Detail and Supplemental Cash Flow Information
Selected Cash RENT THE RUNWAY Flows Detail and Nine Months Nine Months Ended Ended 10/31/21 10/31/20 Supplemental (in millions) Cash Flow INVESTING ACTIVITIES Purchases of rental product $(17.0) $(48.7) Information Proceeds from liquidation of rental product 4.8 0.9 Proceeds from sale of rental prod
Slide 22: Reconciliation of Purchases of Rental Product to Rental Product Acquired
Reconciliation RENT THE RUNWAY of Purchases of Rental Nine Nine Months Months Ended Ended Product to 10/31/21 10/31/20 Rental (in millions) Cost of owned rental product paid for in the period, as presented on Product Purchases of rental product $(17.0) $(48.7) the Condensed Consolidated Statements o
Slide 23: Reconciliation of Net Loss to Adjusted EBITDA
Reconciliation RENT THE RUNWAY Three Three Nine Nine of Net Loss to Months Months Months Months Ended Ended Ended Ended Year Ended Year Ended Adjusted 10/31/21 10/31/20 10/31/21 10/31/20 1/31/21 1/31/20 (in millions) EBITDA Net loss $(87.8) $(44.3) $(172.5) $(132.3) $(171.1) $(153.9) Interest (incom
Slide 24: Reconciliation of Cash Used by Operating Activities to Free Cash Flow
Reconciliation RENT THE RUNWAY of Cash Used by Operating Nine Months Nine Months Ended Ended Year Ended Year Ended 10/31/21 10/31/20 1/31/21 1/31/20 Activities to (in millions) Free Cash Net cash (used in) provided by operating activities $(23.5) $(33.9) $(42.8) $(37.6) Purchases of rental product (
Slide 25: Reconciliation of Operating Expenses to Operating Expenses Excluding One-time Stock-based Compensation
Reconciliation of Three Months Three Months Nine Months Nine Months RENT THE RUNWAY Ended Ended Ended Ended 10/31/21 10/31/20 10/31/21 10/31/20 Operating (in millions) Expenses to Technology $12.8 $9.4 $33.0 $28.0 Marketing 10.8 1.4 18.2 6.5 Operating General and administrative 35.8 17.9 76.4 59.9 T