Rent the Runway(US:RENT)2023-09-07 16:00Revenue Performance - Revenue for the three months ended July 31, 2023, was $75.7 million, representing a 1.0% decline year-over-year, while revenue for the six months was $149.9 million, reflecting a 4.4% growth year-over-year [125]. - Total revenue for the three months ended July 31, 2023, was $75.7 million, a decrease of $0.8 million, or 1.0%, compared to $76.5 million for the same period in 2022 [167]. - Total revenue for the six months ended July 31, 2023, was $149.9 million, an increase of $6.3 million or 4.4% compared to $143.6 million for the same period in 2022 [179]. - Subscription and Reserve rental revenue was $68.0 million for the three months ended July 31, 2023, a decrease of $2.0 million, or 2.9%, compared to $70.0 million for the same period in 2022 [168]. - Subscription and Reserve rental revenue was $134.8 million for the six months ended July 31, 2023, an increase of $3.4 million or 2.6% compared to $131.4 million for the same period in 2022 [180]. - Other revenue increased to $7.7 million for the three months ended July 31, 2023, an increase of $1.2 million, or 18.5%, compared to $6.5 million for the same period in 2022 [169]. - Other revenue increased by $2.9 million or 23.8% to $15.1 million for the six months ended July 31, 2023, representing 10.1% of total revenue, up from 8.5% in the same period last year [181]. Subscriber Growth - Ending total subscribers as of July 31, 2023, was 184,389, representing a 6% growth year-over-year, with active subscribers increasing to 137,566, an 11% growth year-over-year [125]. - Active Subscribers reached 137,566 as of July 31, 2023, representing an 11% year-over-year increase, primarily due to improvements in customer experience [147]. - Average Active Subscribers increased to 141,393 as of July 31, 2023, up 9% from 129,565 as of July 31, 2022 [148]. Profitability Metrics - Gross profit for the three months ended July 31, 2023, was $33.2 million, with a gross margin of 43.9%, compared to $32.4 million and 42.4% in the same period last year [125]. - Adjusted EBITDA for the three months ended July 31, 2023, was $7.7 million, representing an Adjusted EBITDA margin of 10.2%, compared to $1.8 million and 2.4% in the same period last year [125]. - Adjusted EBITDA margin improved from (4.9)% in the six months ended July 31, 2022, to 8.1% in the same period of 2023 [193]. Expenses and Cost Management - Total costs and expenses were $93.2 million for the three months ended July 31, 2023, a decrease of $8.9 million, or 8.7%, compared to $102.1 million for the same period in 2022 [170]. - Fulfillment expenses were $22.5 million for the three months ended July 31, 2023, a decrease of $0.9 million, or 3.8%, representing 29.7% of revenue [171]. - Technology expenses were $12.9 million for the three months ended July 31, 2023, a decrease of $2.0 million, or 13.4%, compared to $14.9 million for the same period in 2022 [172]. - General and administrative expenses were $25.9 million for the three months ended July 31, 2023, a decrease of $3.7 million, or 12.5%, compared to $29.6 million for the same period in 2022 [174]. - Total costs and expenses decreased by $13.7 million or 6.8% to $188.7 million for the six months ended July 31, 2023, primarily due to cost savings from a restructuring plan [182]. - Fulfillment expenses decreased by $1.9 million or 4.1% to $44.4 million, representing 29.6% of revenue, down from 32.2% in the same period last year [183]. - General and administrative expenses decreased by $6.4 million or 10.9% to $52.4 million for the six months ended July 31, 2023, representing 35.0% of revenue compared to 40.9% last year [186]. Financial Position and Cash Flow - Cash and cash equivalents as of July 31, 2023, were $123.7 million, down from $192.3 million year-over-year [125]. - As of July 31, 2023, the company had cash and cash equivalents of $123.7 million and total indebtedness of $290.6 million [196][198]. - For the six months ended July 31, 2023, net cash used in operating activities was $(4.1) million, compared to $(33.0) million for the same period in 2022, indicating improved cash flow management [201][204]. - Total cash consumption, combining net cash used in operating and investing activities, was $(29.6) million for the six months ended July 31, 2023, down from $(53.8) million in the prior year, primarily due to lower operating costs [202]. - The company had approximately $290.6 million of total debt outstanding as of July 31, 2023, with none maturing within the next 12 months [209]. - The sum of net cash used in operating and investing activities as a percentage of revenue was (19.7)% for the six months ended July 31, 2023, compared to (37.5)% for the same period in 2022 [202]. Strategic Initiatives - The company implemented a rental product depth strategy, increasing new rental product depth at approximately 1.7 times the depths of buys in the first half of 2023, expected to enhance customer experience [123]. - The company introduced new site features and AI search beta to 20% of the customer base, aimed at improving customer engagement and reducing selection time [125]. - The company plans to continue to invest in customer experience and optimize shipping methods to mitigate rising costs and drive growth [142]. - The company anticipates total revenue growth rate to decelerate in fiscal year 2023 due to a lower growth rate of Average Active Subscribers and a decrease in Reserve revenue [153]. - The restructuring plan announced in September 2022 is expected to significantly improve operating expense leverage in fiscal year 2023 compared to fiscal year 2022 [152]. - The company expects annual operating expense savings of approximately $25 million in fiscal year 2023 due to a restructuring plan announced in September 2022 [199]. - The company opportunistically purchased additional rental products to support higher subscriber demand, reflecting a strategic response to market conditions [205]. Macroeconomic Factors - The impact of macroeconomic factors, including inflation and supply chain issues, continues to create uncertainty in consumer spending and purchasing behavior [140]. - The company may need to seek additional capital if current liquidity sources are insufficient, which could negatively impact its financial condition and operations [200].