Rent The Runway, Inc. · NASDAQ:RENT

Rent The Runway — Q3 2022 Earnings Presentation

30 slides from Rent The Runway's earnings presentation, Dec 7, 2022

  1. Slide 1: Q3 2022 Earnings Presentation

    RENT THE RUNWAY CONFIDENTIAL Q3 2022 Earnings Presentation December 7, 2022 1

  2. 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

  3. Slide 3: Q3'22 Key Metrics and Financial Highlights

    Q3’22 Key Metrics and Financial Highlights RENT RENT THE THE RUNWAY RUNWAY Total Revenue Active Subscribers Total Subscribers $77.4M 134.2K 176.2K up 31% YoY up 15% YoY up 17% YoY CONFIDENTIAL Gross Profit / Margin Net Loss / Margin1 Adj. EBITDA / Margin $31.8M / 41% $(36.1)M / (47)% $6.6M / 8.5% Mar

  4. Slide 4: We Are a Fundamentally Stronger Business Today Versus 2019

    We Are a Fundamentally Stronger Business Today Versus 2019 RENT RENT THE THE RUNWAY RUNWAY More Powerful Revenue Platform CONFIDENTIAL More Powerful Fashion Platform More Powerful Financial Platform 44

  5. Slide 5: We Have a More Powerful Revenue Platform Today Versus 2019

    We Have a More Powerful Revenue Platform Today Versus 2019 RENT RENT THE THE RUNWAY RUNWAY Only platform to offer rental subscription, Our subscribers and use cases are more diverse, a la carte rental, sale and resale all in one place leading to higher quality revenue and a larger opportunity FY2019

  6. Slide 6: We Have Improved the Fashion Assortment on Our Platform

    We Have Improved the Fashion Assortment on Our Platform RENT RENT THE While Significantly Reducing the Cash Needed to Acquire It THE RUNWAY RUNWAY % Items Acquired Estimated % Items Acquired in FY19 in FY22E 26% ~60% 11% 15% Reduced Inventory Risk 40% CONFIDENTIAL ~30% consignment and 74% ~30% ED dev

  7. Slide 7: Improved the Financial Profile of RTR Significantly Since 2019

    Improved the Financial Profile of RTR Significantly Since 2019 RENT RENT THE THE RUNWAY RUNWAY Q3 2022 Fulfillment Cost as % of Revenue 30% -16pts from 46% in 2019 CONFIDENTIAL Gross Margin Adj. EBITDA Margin 41% 8.5% ~2x since 2019 +16pts since 2019 Restructured fixed cost base expected to be $25-27M l

  8. Slide 8: We Laid Three Primary Foundations in 2022 for Growth in 2023

    We Laid Three Primary Foundations in 2022 for Growth in 2023 RENT RENT THE THE RUNWAY RUNWAY 2022 2023 Goals Customer Experience Customers Finding More Foundation Fashion They Love CONFIDENTIAL Higher Conversion and Loyalty Technology Increased Foundation Site Speed Fashion Lower Upfront Foundation

  9. Slide 9: Customer Experience Foundation Powers More Intuitive Ways to Find Inventory

    Customer Experience Foundation Powers More Intuitive Ways for RENT RENT THE Customers to Find Inventory They Love THE RUNWAY RUNWAY Launched Richer Connecting Our Proprietary Launched Fit-Signaling Search Experience Inventory Data System into Features and Improved On-Site Search & Discovery Reviews

  10. Slide 10: Technology Foundation Enables Scale, Resiliency, Reliability, Faster Site-Speed

    Technology Foundation Enables Scale, Resiliency, Reliability, and RENT RENT THE Faster Site-Speed to Increase Conversion THE RUNWAY RUNWAY Migrated to the Cloud to Made Key Adjustments to Unlock Better Resiliency, Checkout Flow to Drive Performance and Reliability Higher Conversion ILLUSTRATIVE INIT

  11. Slide 11: Fashion Foundation Enables RTR to Acquire Better Inventory at Lower Cost

    Fashion Foundation Enables RTR to Acquire Better Inventory at RENT RENT THE Lower Upfront Cost per Unit THE RUNWAY RUNWAY Fall 2022: Four new Diversified Production November Launch of First Exclusive Design Brands Capabilities to Reduce Celebrity Collection with Upfront Cost Per Unit Ashley Park, Co-

  12. Slide 12: Framework for Revenue Growth and Path to Profitability

    Framework for Revenue Growth and Path to Profitability RENT THE RUNWAY RENT THE RUNWAY Grow Revenue Leverage 3 Main Expense Categories Ongoing: Grow Subs Ongoing: Optimize Fulfillment Active Approach: Increase Fulfillment Approach: Diversify transportation + Subscribers Conversion and Loyalty Costs inc

  13. Slide 13: 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,

  14. Slide 14: Q3'22 Ending Active Subscribers +8% QoQ

    Q3’22 Ending Active Subscribers +8% QoQ RENT THE RUNWAY RENT THE RUNWAY Ending Subscribers (in thousands) 132 to CONFIDENTIAL 134 YoY Active Sub Growth 40% 80% 78% 110% 82% 27% 15% Pause % of Total Subs 29% 23% 22% 28% 24% 28% 24% Note: FY21 ended January 31, 2022 and FY22 ends January 31, 2023. Act

  15. Slide 15: Strong Q3'22 Revenue Growth, Up 31% YoY

    Strong Q3’22 Revenue Growth, Up 31% YoY RENT RENT THE THE RUNWAY RUNWAY Total Revenue, Net ($ in millions) Raising Q4 and FY’22 Revenue Guidance 84% of revenue from CONFIDENTIAL subscribers in Q3’22 28% of subscribers added one or more paid items into their subscriptions in Q3’22 YoY Growth (44)% 62

  16. Slide 16: Our Business Model - Revenue to Gross Profit

    Our Business Model - Revenue to Gross Profit RENT THE RUNWAY RENT THE RUNWAY Fiscal Quarter Ended October 31, 2022 % of Revenue 30 % 18 % 11 % 41 % $ in millions CONFIDENTIAL Fiscal Quarter Ended October 31, 2021 % of Revenue 33 % 23 % 11 % 34 % $ in millions 1616 Note: Calculations based on unrounde

  17. Slide 17: Continuing to Improve Order Economics

    Continuing to Improve Order Economics RENT THE RUNWAY FY20 Q3’22 YTD Net Order Economics were $150 $143 5 points higher in Q3’22 FY21 Revenue per FY19 YTD than FY21, benefiting Order1 $133 $127 from: 34% 31% (1) Higher revenue per 30% order due to price Less: Fulfillment Expense increase and high 46%

  18. Slide 18: 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 October 31, 2022 % of Revenue 41% 13% 18% 33% 5% 8% 9% 23% 7% 4% 9% $ in millions CONFIDENTIAL Fiscal Quarter Ended October 31, 2021 % of 34% 18% 22% 61% 8% - 29% 31% - 6% (9%) Revenue $ in milli

  19. Slide 19: Demonstrating Our Operating Leverage with Scale

    Demonstrating Our Operating Leverage with Scale RENT RENT THE THE RUNWAY RUNWAY Revenue: $59M $77M Δ in % of Revenue from Q3’21 to Q3’22 CONFIDENTIAL Q3 2021 → Q3 2022 ● Technology and G&A combined improved 31% with acceleration of revenue and fixed cost leverage, somewhat offset by stock comp add-bac

  20. Slide 20: Q4 2022 and Fiscal Year 2022 Guidance

    Q4 2022 and Fiscal Year 2022 Guidance RENT RENT THE THE RUNWAY RUNWAY Q4 2022 Guidance Total Revenue: $72M - $74M Adjusted EBITDA1: 4% - 5% of Revenue CONFIDENTIAL Fiscal Year 2022 Guidance Total Revenue: $293M - $295M Adjusted EBITDA1: 1% of Revenue Rental Product Acquired2: ~$60M - $61M Share-base

  21. Slide 21: Appendix

    21 RENT THE THE RUNWAY RUNWAY CONFIDENTIAL 21 RENT Appendix

  22. Slide 22: 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 historically Total ² $127 $74 $52 are one of the most Total as a % of

  23. Slide 23: Condensed Consolidated Statements of Operations

    Condensed Three Months Three Months Nine Months Nine Months RENT THE RUNWAY RENT THE RUNWAY Ended Ended Ended Ended Year Ended Year Ended 10/31/22 10/31/21 10/31/22 10/31/21 1/31/22 1/31/21 Consolidated (in millions) Total revenue, net $77.4 $59.0 $221.0 $139.2 $203.3 $157.5 Statements of Fulfillment

  24. Slide 24: Condensed Consolidated Balance Sheets

    Condensed RENT RENT THE Consolidated THE RUNWAY As Of 10/31/22 As Of 1/31/22 RUNWAY Balance Sheets (in millions) Cash and cash equivalents $176.0 $247.6 Restricted cash, current 4.1 5.4 Prepaid expenses and other current assets 14.8 11.7 Rental product, net 81.6 76.3 Fixed assets, net 48.2 57.2 CONF

  25. Slide 25: Condensed Consolidated Statements of Cash Flows

    Condensed RENT THE RUNWAY Consolidated Statements Nine Months Nine Months Ended Ended Year Ended Year Ended 10/31/22 10/31/21 1/31/22 1/31/21 of Cash Flows (in millions) Net loss $(112.5) $(172.5) $(211.8) $(171.1) Net cash (used in) provided by operating activities (39.4) (23.5) (42.3) (42.8) Net c

  26. Slide 26: Selected Cash Flows Detail and Supplemental Cash Flow Information

    Selected Cash RENT RENT THE Flows Detail and THE RUNWAY RUNWAY Supplemental Nine Months Nine Months Ended Ended Year Ended Year Ended Cash Flow 10/31/22 10/31/21 1/31/22 1/31/21 (in millions) Information INVESTING ACTIVITIES Purchases of rental product $(43.6) $(17.0) $(30.8) $(54.9) Proceeds from l

  27. Slide 27: Reconciliation of Purchases of Rental Product to Rental Product Acquired

    Reconciliation Nine Nine RENT RENT THE Months Months Ended Ended Year Ended Year Ended of Purchases THE RUNWAY 10/31/22 10/31/21 1/31/22 1/31/21 RUNWAY of Rental (in millions) Cost of owned rental product paid for in Product to the period, as presented on the Purchases of rental product $(43.6) $(17

  28. Slide 28: Reconciliation of Cash Used by Operating Activities to Free Cash Flow

    Reconciliation RENT RENT THE of Cash Used THE RUNWAY RUNWAY by Operating Nine Months Nine Months Ended Ended Year Ended Year Ended Activities to 10/31/22 10/31/21 1/31/22 1/31/21 Free Cash (in millions) Net cash (used in) provided by operating activities $(39.4) $(23.5) $(42.3) $(42.8) Flow Purchase

  29. Slide 29: Reconciliation of Net Loss to Adjusted EBITDA

    Reconciliation RENT RENT THE Three Three Nine Nine of Net Loss to THE RUNWAY Months Months Months Months Year Year RUNWAY Ended Ended Ended Ended Ended Ended Adjusted 10/31/22 10/31/21 10/31/22 10/31/21 1/31/22 1/31/21 (in millions) EBITDA Net loss Interest (income) / expense, net $(36.1) 9.3 $(87.8

  30. Slide 30: Operating Expense Detail

    Operating RENT THE RUNWAY Three Months Three Months Nine Months Nine Months Ended 10/31/22 Ended 10/31/21 Ended 10/31/22 Ended 10/31/21 Expense Detail (in millions) Technology $14.1 $12.8 $42.6 $33.0 Marketing 9.7 10.8 27.4 18.2 General and administrative 25.3 35.8 84.1 76.4 Total operating expenses

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