Rent the Runway Inc Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Andrew Boone - JMP - Analyst : Good morning and thanks so much for taking my questions. I wanted to ask specifically about the 4Q revenue guide. This quarter, it looks like it's a more or less $6 million guide for 4Q that compares to $2 million in the last three quarters. Can you talk about the widening of the range and then what may be embedded at the high end versus the low end in terms of expectations?

Question: Andrew Boone - JMP - Analyst : And then if I think about subscriber growth going forward, right? It seems like there's traction with reserve better top of funnel. Now, as you guys think about new customers trying the product, it seems like inventory is in a better place. Can you guys just outline the key levers as we think about subscriber growth for 2025. What are the key metrics or operational initiatives that you guys have, as we think about accelerating that subscriber growth next year? Jennifer Hyman - Rent the Runway Inc - Chairman of the Board, President, Chief Executive Officer, Co-Founder, Chief Operating Officer Yeah, I think just to backtrack a bit. Just as a reminder between 2020 and 2023, Rent the Runway was primarily in cost cutting and kind of margin generation mode. This is what we had to do at the time and it's certainly what we prioritize. We prioritized financially transforming our P&L. When we entered 2024, we had confidence that we would be able to bring the business to free cash flow breakeven this year, even in lower growth scenarios. So we had two goals. Let's actually achieve free cash flow breakeven and let's change the company from the culture of cost cutting back into growth mode. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 09, 2024 / 1:30PM, RENT.OQ - Q3 2024 Rent the Runway Inc Earnings Call So we were certainly successful between 2020 and 2023 in really transforming our P&L, we moved from an asset heavy business into an asset light business. And this year, we have accomplished an enormous amount in setting up the business for growth. So number one, we've changed talent. We've reoriented internal talent towards growth. We reorganized our business in terms of how we operate. We simplified our goals. We have created cross functional teams to achieve these goals and we are already seeing really nice traction. So we talked about, as you mentioned in Q3, our reserve business is up over 20% year-over-year, our resale business is up over 20% year-over-year and that we're seeing some really nice leading indicators of subscription going up like our loyalty rate, and our tax going down. So now the whole business is really primed for our key growth lever which is subscriber growth. Now, how do we drive subscriber growth? First and foremost, we're focused on inventory. So inventory is one of the most important. The inventory position is one of the most important predictors of growth. And we've set up these incredible inventory acquisition channels in our rev share business and our exclusive design business to be able to acquire a lot of inventory at very low or no cost of capital. So we are investing heavily into our inventory position into 2025, as a key to unlock subscriber growth. So that's one component of it. Another component is that we've set up a cross functional team internally that we've mentioned over the last few calls focused on the subscriber onboarding experience and improving, therefore retention. So between kind of the pod that's focused on subscriber experience and retention and between our focus on depth and breadth across inventory for 2025 to drive subscriber growth, we feel set up really to win here.

Question: Andrew Boone - JMP - Analyst : Thank you.

Question: Ashley Helgans - Jefferies - Analyst : Hi. Thanks for taking our questions. So to start, maybe you can talk a little bit about the difference in customer between reserve resale and subscribers, any trends to call out. And just how they're each performing. Thanks. Jennifer Hyman - Rent the Runway Inc - Chairman of the Board, President, Chief Executive Officer, Co-Founder, Chief Operating Officer Hi. Yes. So our reserve business certainly provides an easy way to enter Rent the Runway for reserve pricing as low as kind of 10% of the retail price starting at just $30 to rent a dress. You can come and have a great experience renting for a part, a holiday party, a wedding, etcetera. And so we've always seen a diverse customer base across age, across geography, across income level into the reserve business. And prior to 2024, we had seen that business had been declining year-over-year, which was not great in terms of driving new customer growth and to Rent the Runway because traditionally reserve has been a driver of new customer growth. And so we really put an emphasis on reserve this year to re-accelerate it. We've made some very quick and significant progress given that our reserve business is up over 20% in Q3 and new customers

Question: Ashley Helgans - Jefferies - Analyst : Great. Thanks so much.