Rent the Runway, Inc. (NASDAQ: RENT) Q1 2025 Earnings Call | 6/5/2025

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Rent the Runway, Inc. (NASDAQ: RENT) reported Q1 2025 results on June 5, 2025, with revenue declining 7.2% year-over-year to $69.6 million, primarily due to lower average revenue per subscriber and increased promotional activity. Despite the revenue drop, the company achieved a 1% increase in active subscribers, reaching 147,157—the highest quarter-ending active subscriber count in its history, signaling improved customer retention and engagement. Gross margin fell sharply to 31.5% from 37.9% a year ago, reflecting higher revenue share and fulfillment costs as a percentage of revenue. Net loss widened to $26.1 million (–37.5% margin), and adjusted EBITDA turned negative at –$1.3 million (–1.9% margin), compared to a positive $6.5 million in Q1 2024. Free cash flow was negative $6.4 million, with increased inventory purchases as part of a strategic initiative to drive future subscriber growth and retention. The company’s turnaround strategy centers on significant investment in new inventory, digital product enhancements, and revitalized customer engagement—including the launch of 36 new brands and over 1,000 new styles, personalized styling support, and back-in-stock notifications. These efforts led to the strongest quarterly customer retention in four years and a 27% reduction in first-month churn. Social media engagement surged 163% year-over-year, supporting brand revitalization. Looking ahead, Rent the Runway guided Q2 2025 revenue to $76–$80 million and expects double-digit growth in ending active subscribers for the full year. However, management anticipates full-year free cash flow consumption of $30–$40 million, reflecting continued investment in inventory and ongoing operational challenges. CEO Jennifer Hyman emphasized, “We made a big bet on new inventory and we’ve already seen higher customer engagement and retention. I believe that Rent the Runway’s momentum and customer loyalty is back.” While subscriber growth and engagement metrics are improving, the company faces ongoing margin pressure, negative cash flow, and execution risks as it pursues its inventory-driven turnaround. About Inside Ticker: For more expert analysis and real-time updates on Rent the Runway, Inc. (NASDAQ: RENT) and other market movers, follow Inside Ticker and visit InsideTicker.com for in-depth reports, financial insights, and the latest news on leading companies. #RentTheRunway #RENT #EarningsCall #Q12025 #Subscribers #Inventory #MarginPressure #StockMarket #Investing #InsideTicker