Rent The Runway, Inc. · NASDAQ:RENT

Rent The Runway — Q4 2021 Earnings Presentation

34 slides from Rent The Runway's earnings presentation, Apr 13, 2022

  1. Slide 1: Q4 2021 Earnings Presentation

    RENT THE RUNWAY CONFIDENTIAL Q4 2021 Earnings Presentation April 13, 2022 1

  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 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

  3. Slide 3: 2021 Highlights and 2022 Strategy

    RENT RENT THE THE RUNWAY CONFIDENTIAL 33 RUNWAY 2021 Highlights 2022 Strategy and

  4. Slide 4: Q4'21 Key Metrics and Financial Highlights

    Q4’21 Key Metrics and Financial Highlights RENT RENT THE THE RUNWAY RUNWAY Total Revenue Active Subscribers Total Subscribers $64.1M 115.2K 159.5K up 91% YoY, up 9% vs. Q3 up 110% YoY up 68% YoY CONFIDENTIAL Gross Profit / Margin Net Loss / Margin Adj. EBITDA / Margin $23.5M / 36.7% $(39.3)M / (61.3)

  5. Slide 5: FY21 Key Metrics and Financial Highlights

    FY21 Key Metrics and Financial Highlights RENT THE RUNWAY Total Revenue Gross Profit / Margin Net Loss1 / Margin $203.3M $69.7M / 34% $(211.8)M / (104)% 84% from subs Margin up 24 pts YoY Margin up 4 pts YoY up 29% YoY CONFIDENTIAL Adj. EBITDA / Margin Product Acquisition CFO+CFI / Margin $(19.2)M /

  6. Slide 6: 2021 Top Line Strategic Highlights

    2021 Top Line Strategic Highlights RENT THE RUNWAY Full Rollout of Personalized Subscription ARPU of $135 for FY2021, Programs, Which Have Driven with 30%+ Add-On Adoption in Q4 ‘21 Higher Margin, Engagement and Loyalty CONFIDENTIAL 6

  7. Slide 7: 2021 Bottom Line Strategic Highlights

    2021 Bottom Line Strategic Highlights RENT THE RUNWAY More Technology, Automation and 55% of Product Acquisition via Greater Use of Data into Our Warehouses Capital-Efficient Channels vs. 26% in FY19 Over 30% YoY Reduction in Non-Transportation Fulfillment Cost / Unit % Items Acquired in FY2021 CONFIDE

  8. Slide 8: 2022 Strategies to Drive Top Line: Events Resurgence

    2022 Strategies to Drive Top Line RENT RENT THE THE RUNWAY RUNWAY 1. EVENTS RESURGENCE ● Market Subscription as value-oriented way to dress for multiple events in a month ● Strengthen funnel from one-time rental to CONFIDENTIAL Subscription through onsite marketing and post-order offers ● Increase ev

  9. Slide 9: 2022 Strategies to Drive Top Line: Search & Discovery

    2022 Strategies to Drive Top Line RENT RENT THE THE RUNWAY RUNWAY 2. SEARCH & DISCOVERY ● Implement intelligent, intent-based search algorithms ● Enhance 1:1 personalization to drive diversity CONFIDENTIAL and trial in users’ selections ● Provide stronger product suggestions, inspiration, and stylin

  10. Slide 10: 2022 Strategies to Drive Top Line: Fit

    2022 Strategies to Drive Top Line RENT RENT THE THE RUNWAY RUNWAY 3. FIT ● Collect and display more reviews for each style ● Encourage customers to use recommended styles / sizing, powered by machine learning fit algorithms, which reduce fit issue rates significantly CONFIDENTIAL ● Add upfront educatio

  11. Slide 11: 2022 Strategies to Drive Bottom Line

    2022 Strategies to Drive Bottom Line RENT THE RUNWAY RENT THE RUNWAY 1. EXPAND AT-HOME 2. BUILD UPON WAREHOUSE 3. GROW EXCLUSIVE DESIGNS PICKUP TO 50%+ OF SUBS TECHNOLOGY & AUTOMATION TO ~30% OF UNITS ACQUIRED Reduce transportation costs, while Drive further productivity gains and Increase talent pi

  12. Slide 12: We Launched Our Impact Strategy in March 2022

    We Launched Our Impact Strategy in March 2022 RENT THE RUNWAY ADDITIONAL KEY GOALS PRIORITIES Displace the need for new Reduce carbon emissions so that production of 500K garments in we operate with net zero the next 5 years emissions by 2040 CONFIDENTIAL Divert 90% of waste from landfill Ensure our

  13. Slide 13: Q4 2021 Update

    1313 RENT THE RUNWAY CONFIDENTIAL RENT THE RUNWAY Q4 2021 Update

  14. Slide 14: Framework for Revenue Growth and Path to Profitability

    Framework for Revenue Growth and Path to Profitability RENT RENT THE THE RUNWAY RUNWAY Grow Revenue Leverage 3 Main Expense Categories Ongoing: Grow Subs Ongoing: Optimize Fulfillment Active Approach: Organic virality Fulfillment Approach: Diversify transportation + Subscribers + Efficient marketing Cost

  15. Slide 15: Strong Active Subscriber Growth in FY21, Up 110% YoY

    Strong Active Subscriber Growth in FY21, Up 110% YoY RENT THE RUNWAY RENT THE RUNWAY Ending Subscribers (in thousands) 130 132 to to CONFIDENTIAL 132 134 YoY Active Sub Growth (48)% (49)% (45)% (59)% 40% 80% 78% 110% 77% Pause % of Total Subs 42% 29% 23% 22% 28% Note: FY19 ended January 31, 2020, FY

  16. Slide 16: Strong Q4 Revenue Growth, Up 91% YoY

    Strong Q4 Revenue Growth, Up 91% YoY RENT RENT THE THE RUNWAY RUNWAY Total Revenue, Net ($ in millions) 84% of revenue from subscribers in FY21 31% of subscribers CONFIDENTIAL added one or more paid slots into their subscriptions in Q4, the highest rate of add-ons since we launched Subscription YoY

  17. Slide 17: Attractive Customer Cohort Trends

    Attractive Customer Cohort Trends RENT THE RUNWAY RENT THE RUNWAY Customer Cohorts: Total Revenue1 CONFIDENTIAL Our FY 2021 subscriber cohorts (primarily new programs) generated on average: ● $300 in cumulative revenue in 3 months2 ● $497 in cumulative revenue in 6 months2 1 Reflects cumulative reven

  18. Slide 18: Growth in Capital Efficient Product Acquisition Channels to 55% of Total in FY21

    Growth in Capital Efficient Product Acquisition Channels to RENT RENT THE THE RUNWAY 55% of Total in FY21 RUNWAY 44% % Items Acquired % Items Acquired % Items Acquired % Items Acquired in FY2019 in FY2020 in FY2021 in FY2022E 26% 54% 55% ~60% 11% 18% 22% 15% ~40% ~40% 46% CONFIDENTIAL 45% 33% 74% 36

  19. Slide 19: Order Economics Improving Significantly

    Order Economics1 Improving Significantly RENT THE RUNWAY Net Order Economics in FY20 FY21 are 13 points higher $150 than FY19, benefiting from: FY21 FY19 (1) Lower fulfillment $133 Revenue per Order $127 costs due to structural program changes (2) Lower rental product Less: Fulfillment Expense depreciat

  20. Slide 20: Our Business Model

    Our Business Model RENT THE RUNWAY RENT THE RUNWAY Year Ended January 31, 2022 % of Revenue 30 % 25 % 11 % 34 % $ in millions CONFIDENTIAL Year Ended January 31, 2021 % of Revenue 34 % 44 % 12 % 10 % $ in millions 20 20 Note: See GAAP to Non-GAAP Reconciliation in appendix. Calculations based on unr

  21. Slide 21: Our Business Model

    Our Business Model RENT RENT THE THE RUNWAY RUNWAY Fiscal Year Ended January 31, 2022 % of (104) % 26 % 37 % 13 % 6% 12 % 1% (9) % Revenue $ in millions CONFIDENTIAL Interest (Income) / Expense: includes $38.8M of PIK interest, $8.3M of cash interest and $5.9M of debt discount amortization. Deprecia

  22. Slide 22: Continuing to Improve Margins

    Continuing to Improve Margins RENT THE RUNWAY 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. 22 22

  23. Slide 23: Product Acquisition Strategy Meaningfully Improved Free Cash Flow

    Product Acquisition Strategy Meaningfully Improved Free Cash Flow1 RENT THE RUNWAY ($ in millions) Product Costs - Gross Margin Impact Product costs are the most FY19 FY20 FY21 significant component of our Product Depreciation 29% 44% 25% cash consumption Revenue Share 4% 12% 11% Total as a % of Reve

  24. Slide 24: Demonstrating Our Operating Leverage with Scale

    Demonstrating Our Operating Leverage with Scale RENT RENT THE THE RUNWAY RUNWAY Revenue: $34M $64M Δ in % of Revenue from Q1’21 to Q4’21 CONFIDENTIAL Adjusted EBITDA Operating Costs EBITDA Adjustments Margin Q1 2021 → Q4 2021 ● 18% of Product depreciation and revenue share absorbed over higher reven

  25. Slide 25: Fiscal Year 2022 and Q1 2022 Guidance

    Fiscal Year 2022 and Q1 2022 Guidance RENT RENT THE THE RUNWAY RUNWAY Fiscal Year 2022 Guidance Total Revenue: $295M - $305M Adjusted EBITDA1: (6)% - (5)% of Revenue Rental Product Acquired2: ~$60M Share-based Compensation: $28M - $29M CONFIDENTIAL Q1 2022 Guidance Ending Active Subscribers: 130K -

  26. Slide 26: Appendix

    26 RENT THE THE RUNWAY RUNWAY CONFIDENTIAL 26 RENT Appendix

  27. Slide 27: Condensed Consolidated Statements of Operations

    Condensed RENT THE RUNWAY RENT THE RUNWAY Three Months Three Months Year Ended Year Ended Consolidated Ended 1/31/22 Ended 1/31/21 1/31/22 1/31/21 Statements of (in millions) Total revenue, net $64.1 $33.5 $203.3 $157.5 Operations Fulfillment Technology 20.4 12.3 9.2 9.7 61.9 45.3 53.0 37.7 Marketing

  28. Slide 28: Condensed Consolidated Balance Sheets

    Condensed RENT RENT THE Consolidated THE RUNWAY As Of 1/31/22 As Of 1/31/21 RUNWAY Balance Sheets (in millions) Cash and cash equivalents $247.6 $95.3 Restricted cash, current 5.4 3.4 Prepaid expenses and other current assets 11.7 4.7 Rental product, net 76.3 97.6 Fixed assets, net 57.2 64.7 CONFIDE

  29. Slide 29: Condensed Consolidated Statements of Cash Flows

    Condensed RENT THE RUNWAY Consolidated Statements Year Ended 1/31/22 Year Ended 1/31/21 (in millions) of Cash Flows Net loss $(211.8) $(171.1) Net cash (used in) provided by operating activities (42.3) (42.8) Net cash (used in) provided by investing activities (22.5) (58.4) Net cash (used in) provid

  30. Slide 30: Selected Cash Flows Detail and Supplemental Cash Flow Information

    Selected Cash RENT RENT THE Flows Detail and THE RUNWAY RUNWAY Year Ended 1/31/22 Year Ended 1/31/21 Supplemental (in millions) Cash Flow INVESTING ACTIVITIES Purchases of rental product $(30.8) $(54.9) Information Proceeds from liquidation of rental product 5.7 2.4 Proceeds from sale of rental prod

  31. Slide 31: Reconciliation of Purchases of Rental Product to Rental Product Acquired

    Reconciliation RENT RENT THE of Purchases THE RUNWAY RUNWAY of Rental Year Ended Year Ended Product to (in millions) 1/31/22 1/31/21 Rental Purchases of rental product $(30.8) $(54.9) Cost of owned rental product paid for in the period, as presented on the Condensed Consolidated Statements of Cash F

  32. Slide 32: Reconciliation of Net Loss to Adjusted EBITDA

    Reconciliation RENT RENT THE Three Three of Net Loss to THE RUNWAY Months Months RUNWAY Ended Ended Year Ended Year Ended Year Ended Adjusted 1/31/22 1/31/21 1/31/22 1/31/21 1/31/20 (in millions) EBITDA Net loss $(39.3) $(38.8) $(211.8) $(171.1) $(153.9) Interest (income) / expense, net 9.3 14.4 53.

  33. Slide 33: Reconciliation of Cash Used by Operating Activities to Free Cash Flow

    Reconciliation RENT RENT THE of Cash Used THE RUNWAY RUNWAY by Operating Year Ended 1/31/22 Year Ended 1/31/21 Year Ended 1/31/20 Activities to (in millions) Free Cash Net cash (used in) provided by operating activities $(42.3) $(42.8) $(37.6) Purchases of rental product (30.8) (54.9) (117.7) Flow P

  34. Slide 34: Reconciliation of Operating Expenses to Operating Expenses Excluding One-time Share-based Compensation

    Reconciliation of RENT THE RUNWAY Year Ended 1/31/22 Year Ended 1/31/21 Operating (in millions) Expenses to Technology $45.3 $37.7 Marketing 26.5 8.1 Operating General and administrative 104.4 77.2 Total operating expenses $176.2 $123.0 Expenses Less: One-time share-based compensation ¹ 14.4 - Exclu

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