RENT - Earnings call transcript Q4 2021

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Operator

Welcome to Rent the Runway's Fourth Quarter and Full Year 2021 Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the call over to Vice President of Investor Relations, Janine Stichter. you. Thank

begin. may You

Janine Stichter

and fourth joining XXXX quarter everyone, Rent results. to the Runway's and thanks afternoon, us for discuss Good fiscal year

detailed in call materially. as undertake are statements regarding the that actual evening's as press the financials risks Before including you update guidance well assumptions and market These uncertainties like assumptions we'd days. XX-K no our and in These this to include release will growth. as results revise except various and this or required be any uncertainties our SEC, by These We statements expectations we and to next our statements. subject include few to could future filed to our with cause forward-looking opportunities differ law. filings forward-looking obligation information are that begin, that statements our Form will remind or risks

our we of presented isolation financial a will considered I'll non-GAAP in for also or certain financial Reconciliations During intended accordance be website not filings. Jen. information non-GAAP financial of GAAP on non-GAAP this be is substitute our can in and press turn that, it GAAP. release, over presentation And posted this measures call, to with reference our presentation in as SEC slide The with information. found information to investor to

Jen Hyman

joining for Thanks us today. everyone. Hi,

revenue driven momentum macro We saw per and cash on strong margins, cancellations, average progression EBITDA fiscal our in Our XXXX. subscribers a QX this as performance. XXX% team continues challenging closed. guidance, offices a and free Sale year-over-year environment, line the to as better-than-expected remaining carry and grew into revenue improves expectation, it exceeded XXXX. throughout over better, exceeded by and our adjusted Even gross model executed flow unanticipated drove we very in resurgence, bottom well well significant subscriber very our COVID our event despite

affirm business grow value to deliver is the the as I that to CEO my Rent top forward, to to to move our want unique bring and continuing we Before Runway while customers. priority our we profitability,

believe Specifically, cash we free we flow currently can with cash have. positive we the that produce

We developed growth pulling attain and hit our and this business we're to managing goal this we levers on are of can focused a of target. have number the to

While our growing increased drove five happy I'm XXXX, and first, pleased meet value base. it and did; financial that exceed what customer I'm XXXX, loyalty. more to going the for to significant is serving profitability customers. and In our engagement we with expectations, subscriber anticipate to to broaden priorities: which or is and to our path I subscription one number strong continuing, in our Throughout growth our in addition offerings we to say, had world addition to a our second, deliver public, subscription priority recognize programs

industry-wide Third, use labor of cost into to improve to transportation consignment and like our to investment and performance, improved automation customers our technology, namely translate and the Fourth, more higher a ARPU accomplishments. I'd add subscriber. like financial and around to some time bigger focused this very more team off if aforementioned our increased into positively improving profit put and we per our of to value on we higher to I provided warehouses and that data margins, our even channels equally, for the of improvements, that shifting to which bottom non-transportation increase and further context efficiency our impact lower thank an fulfillment place product exclusive in we XXXX. into impact believe throughout And priorities delivered us helped which by by expenses, in spend bit challenges. the are more that designs incredible continue mitigate not the last, want strategic The these top will customers. Runway desired line who we paying believe provide Rent challenging stayed are up rental future.

they plans translated value use programs. our subscribers in built of to flexibility and us, that chosen These for subscription rollout has their on personalized month spend into plans First, give The completed per last financial and are our our subscription how result been longer. the how customers complete increased year full they plan. we retain

our increased in month, the subscription an their an value As to who Omicron, ARPU revenue. can to quarter needs the subscribers more who with and which and them surge, value we into subscribers in more ended unanticipated the their chose quarter. plans. cancel and how paused the seeing paid than The increased we subscriptions, paid the In which Omicron at loyal our QX strength of and can who active suddenly a now ARPU XXXX this to per becoming Rent customers' items is seamlessly our Midway value add-ons many important best and incremental subscriber over how month subscriber added profitability. upgrade indication great resell subs their was example, then, items which in our Runway through in clear into the expectations outfit even extra increases new saw of But and a even the example a our than had momentum additional for of during of their add were to improved increases lives. pause is, us. subscription that, exceeded we rather planned. After and It's is driving are strong impact given our sheltering even XX% of our shipments home, QX, customers more

seen we've disruption this subsided. was Omicron variant Importantly, as the and has strong momentum short-lived,

with which greatly the fulfillment ability customer returns expensive deepens plan enhances by in and national beyond. labor. XXXX, to and innovation within XXXX launched covering in we drove the is As transportation, macro shipping a our dramatically This of it to subscriber our the we transportation and increases pickup pickup logistics, operation in at-home nine some innovation upon to in simplifying than markets it and build our our process. mitigate, expenses, a-quarter of we At-home experience in cost moat Within of carrier, base. less relates improves our

efficiency to RFID cost automation of non-transport focus non-trans investment, our that, room largely time. our increasing and given per spent than ROI styles Share that designer product our In XX% the on advantage to reducing unit rental drove regarding use rental reduce launched around meet we reduced product customers us channel love cost Via more sites. these expanding wholesale side, of RTR, has channels projects, which which the And upfront, to to we consignment at non-wholesale than payments overall on of to with Designs, more significantly while last, Happy XXXX, fulfillment further the data our On are we our by fiscal reduced performance-based. over been year-over-year in XXXX, via other develop Exclusive partners acquisition. did lower demand, growing and selection cash. collections product use allows say, have are acquire with cost of to we than product our our cash low amount risk represent XX% other higher our XX% we

we a the total future. will product science our deactivation continue XXXX rate which are useful needing In fewer and means expertise, to extending showed lead units initiatives advance our to of reduction the the life XX% procured to and in units garment in addition, year-over-year, we be

business long to subscriber because an cash attract margins OpEx built to a profitability. and margin cost free progress to a current XXXX view time. XX% growth flow to I'm station on of current count. free revenue attractive subscriber We've to cash Runway built this as base via way we're over free in as the confident profitability the our XX% multiple key a a base. OpEx we base profitability term. high to expanding is intended and be is priority subscriber flow higher flow flow the that I through that Rent path a of rather destination. Our over We our then primarily believe scale the grow a than high And attaining support cash cash as confident will We base, business well multiple will delivering our free

growth other get and will us our attractive more long-term on even to believe we focused lead more can faster growth. goals than our we goals subscriber us can initiatives margins. While a lot to get We these that alone subscriber to are believe

initiatives per customer One loyalty is revenue value the to easier by other discover fit to increase our of these therefore customers making and our of to great that it them for service subscription and and programs well. products our use

fulfillment moderate Another and automation, is expenses as revenue on labor focused our key of of in data percent a through productivity, warehouses. use technology improvements and year-over-year in increased initiative driving

host around looking COVID subsided priorities assortment our an capitalize on we have we XXXX to greater we've that into to to our plan continue year our investors Another the rates key rental significant are basis unique investments. In product execute to from exclusive the investments We firsthand plan a Day and concepts designs. more today. is to regular to of our efficiency I also detail and built. see on the distribution XXXX to the facilities by trends percentage bringing moat now over And of and on discussed core forward provide some and key consignment our next increasing Analyst shifting a initiative

to and have our business impacting engagement. strategies three growth with the the start and bottom to impact topline We intended I'll three key related line. strategies topline

events this Runway's years special for they We into be sites and that and is long-term refresh and that comes to demand Over First, an XXXX's plan going events translate with it. of need cost-efficient on upcoming have and would at into clothes that attractive one-off out to to occasion dressing new we've a banner and planned, home. for we will Renter XX% year number Rent million this acquisitions. year a think X.X a subscriber two a because of closets expected believe our proven the ability weddings serious capitalize convert wardrobe office to directly subscriber. record our there extremely after be We unprecedented XXXX traffic can be event

multiple our and successfully social, events across, are a marketing. the three performance our value-oriented two subscription media more a SEO-optimized and an amount We're volume on-site increasing the geared to CRM, for leaning to creative content as times positioned example, of events with way in in content. As this towards into we've and dress month

subscription. from focused funnel also We our into rentals are strengthening onetime on

will easier times can and annual make want them progress in per browse for to find what nature, acquisition discovery, long make quickly. believe improving make increase are they're to easier These to on experience week, continue we discovery customer visit and search into find app clothing and it app. they we love to and for subscribers customers important to to multiple make our investments site our our Second, looking faster Because term for efforts it we product our we and by but retention. customer

items plan Third, as likely this customers. efficient. who And most to making doesn't reviews are and plan amongst our our best recommends Examples This in focused fewer our that new that to algorithm we fits to recommendations. fitting customers new driven enhance our that We the already They tools one which for in fit a conversion. even of cover sizes calls, how XXXX bottom are customer and improve the introduced our top service our lower customers. items reasons line of topline include higher we're proprietary receiving won't customer has take to should fit turn on drive fit issues, scales, clothing traffic more improve well success satisfaction expanding prioritizing fit. We to XX% our to and customer more is customers confidence fit why products convert.

cheaper nimble to at-home we to the at-home the have increase than penetration pickup expect strategy, regional half last and more to is mile and pickup important First, transportation our of more of costs shipments cost we base towards ship by mitigation against At-home rising year-end. access as subscriber carriers. pickup intend an and

labor productivity put Second, automation the and we to costs. build in into to of drive facilities and continue to reduction technology gains XXXX further our on plan top we in

around at Third, maintaining make designs, grow while to deeper investments acquired. Share to of by units we XX% RTR plan exclusive

on launching designs, exclusive designer Esteban collection has launched to work that conducted last third-party of half need the around the partners of year. negative XX have For environmental are across, estimate our carbon later This accounts industry. when apparel strong XXXX. close nearly these for XXXX Busayo, for celebrity-designed which I'm we our this renting and energy Cortazar, Atlein and new majority purchasing our water, new for we clothing the a findings, vast displaced years impact a including new compared that operations. on environmental lineup our and shipping, production on Based platform, share emissions our XXXX We drives to Strategy happy savings because other assessment in over core that since cycle that we has for clothes, of life to Impact model builds cleaning in of net which and mission. month found first garments of accounting X.X production million matters even been our

Our and by encourage need Impact is new rent million to full Strategy's year goal X.X for to XXXX. production buy customers garments hero the displace to not of

goal We XXX% also from shipments we to of Last from from operations, to landfill. from month includes continuing to have carbon from began a XX% and of XXX% our waste offsetting divert customers. of emissions warehouse unusable divert landfill clothing which

that's we're XXXX's believe our customer annual by place in conducive to improving to over to We our early the XXXX. We're we invest significantly, subscription To We opportunities. macro while back-to-life, is the progress strategies and capitalize in the behind market to carbon innings for our on experience in plan improve that, up, a with environment for back-to-work in goals Scarlett. more a of the sum turn against rental these value margins. have our and fashion also excited I'll us the goal net-zero business we and will and beginning to it report. And huge that continue simultaneously committed report have grow to year to plans ahead about emissions opportunities achieving

Scarlett O'Sullivan

and results of follow overview with thanks and fiscal will XXXX for everyone full an quarter Jen fourth for and I our quarter Thanks then XXXX. the first for joining guidance year again us. provide the of

the I the growing business. a This want to towards on Before what Runway reiterate we is our get I into said for Rent profitability. our framework financial while around numbers, focus Jen driving revenue use

from time-to-time on focused from digit increase both ARPU and growing revenue growing value. as mid and by are we price growing subscriber single We add-on subscribers actions

our are We revenue resale into businesses, also subscription. of a-la-carte from both derive our funnels which rental customer reserve and important

achieved unanticipated per had by subscriber subscriber generating revenue impacted planned. decreasing paid which in higher We Omicron year-over-year us higher three We I our move which by to buckets, of free holiday continue to rental in half in subscriber the these and which negatively revenue quarters. of our expenses, of via progress this cost The by three expense a refill and flow slots, are higher is significantly came ways, cover that most operating we are two, all do million in our fulfillment investments and from back of higher driving we reserve cash were towards XX% above the business our guidance. OpEx, QX plan next up products. expenses events leverage in areas. revenue major Phase to by one in and of in to key add-on rate highlight revenue will profitability quarter; transportation three effect margin includes than in $XX.X and five one,by non-transportation reducing acquisition pause. increasing as canceled; three, was the QX

as XXX,XXX had XX, subscribers. subscribers XXX,XXX result of a of up increased up and X% Total active we subs our As year-over-year. quarter-over-quarter fiscal XX% end the to January QX,

strong year, HX the total due subscriber to per rental Average revenue, the XX% in versus we versus generated $XXX.X and in rates. $XXX or monthly was For million ARPU higher year subscriber HX subscription for up XXXX. revenue add-on

margin QX year-over-year rose Our XX to gross points XX%.

COVID and was of year gross of XX% due demand margin price due and in depreciation versus were revenue this products QX margin the this in cost with higher a product due versus the at and We products XX% XX% revenue improvement significant subscription revenue to QX productivity increases XXXX gross shipping benefited We our even higher QX The gross share throughout in shipment, to and year, of We supply in achieve with year, compared to higher from full line year. to largely last the diversification last product QX XX% transportation For per high had fulfillment XXXX. with anticipated. versus warehouses. in to is we with with entered in XX% improvements year. that's in mitigated revenue XX% being matched costs improvement significant last the rental better able at margins item of

versus representing QX as X.X% negative EBITDA $X.X last negative negative we and Adjusted QX full revenue, expenses, in XX% total was represented improvement technology invest for in last with $X.X with higher Our and year in absorb XXXX, QX marketing, million of year, G&A the negative and our XX% operating margin versus XX.X% costs a year. XX% four-point business. to ability even revenue, million compared XXXX demonstrating fixed for

EBITDA For originally spend costs negative in for employee-related adjusted XX.X% the of anticipated XXXX. marketing slightly X.X% margin more XXXX, an in year, at versus We a revenue. into to we in set marketing the resulting on up expense, ramp QX chose significant business of negative had to XX% than higher-than-planned excluding

That's Moving can million CapEx $XXX results reduced expenditure. and free at in cash retail. flow advantage shift deck, slide CFI, in in payments. we towards for significant to XXXX of XX% or negative XX% cash by cash for years, XXXX. revenue both RTR Rental in XX% XXXX. million is fiscal plus $XX with investment on over product and be represented total CFO This spent free you We $XX rental XX% negative XXXX, of improving and earnings cash The or This to compared which product fiscal in our accessories XXXX. XX or from XXXX. ended versus XX% reduction year in We is cash acquisition revenue fiscal as our and We a upfront importantly, purchases of towards assess is fiscal products our procure the outlay. to between 'XX. reduced shift channels, basis, that to cash monetized showcases in cash and key need This of to more XXXX a the profitability which improvement And significant our our million and traditional difficult capital-efficient products acquisition On due and share clothing backdrop. in ability $XXX costs $XXX our products mix we environment a largest invest by more flow. outlay versus drive Share looking equivalents. reflects product competitive see with significantly product of cost even in with to multiple XX% manage and units on a

at think about, few guidance. As here and a end things XXXX, I'll then are to you with look

First, as it subscriber for high engagement. announced increase and acquisition guidance. for our The our revenue, continued and is to year impact a price in relates new customers, expectations week, will expect QX. customers existing we Last go into for increase retention we of this in which this in subscriber incorporated effect

to expect 'XX year We flat slightly be up pressure anticipate approximately versus fiscal for year We the in QX due acquisition. be for gross versus to full to ARPU XXXX. seasonal to XXXX, with up margin X% product

We to and versus basis higher QX fulfillment points on continued will XXXX, of by offset expect that due largely approximately revenue of transportation XXX fulfillment ARPU be pressure cost annual productivity headwinds.

In dollars expect revenue to depreciation addition, expense in growth product in we due rental and higher share assortment.

quarters. though the employee-related revenue higher in recurring our lowest revenue breakeven drive earlier adjusted our expected we proportion in maintain higher anticipate we year. first the stated 'XX previously in half, We estimate expect ability for of of to about percentage we EBITDA spend revenue and five growth marketing XX% expenses and revenue percentage is QX higher typically of we we in and a represent XXXX. our gauge pull keep subscriber and the plan to quarter to we how next to share this year. versus spend three higher Adjusted As costs, of cover at operating again a EBITDA is to forward excluding a the year as profitability drive this consignment.

search and represent of should we anticipate and we in largely investments revenue We due time, as of but QX year. over fit. G&A a less are the XX% with This discovery OpEx some tech expect higher scale. QX, to result percentage which significant believe headcount deleveraging in technology expense as such revenue than for could leverage fixed in Over strategic

believe upfront active to maintain cash channels In free we with in by XXX,XXX can the lower and 'XX terms these of reaching get average flow, free to focus acquisitions there medium over further mid-term through of remain the term channels. subscribers. we flow on cost our products We two-third cash path on we in of and intend breakeven acquiring fiscal XX% non-wholesale acquired our drive approximately product approximately to

more rather cash for compared expect due XXXX. the fiscal revenue percentage ourselves normalized year products cash yearly measure flow flow we free in slightly XXXX quarterly in to As of to lower basis on a the be anticipated, to to on investments XXXX, in free seasonal than due fluctuations. We than

when want guidance, to impact of Subscriber to see rates pause think Runway. May in Rent highest their typically I clarify through over about go end the the naturally we January. wardrobes. to March acquisition is seasonal September We that the customers higher and summer Before patterns mid-December and November, through changing

usually peak given by the levels and subs Transportation before we pause therefore in typically the So see uptick quarter. and of the fulfillment expense end highest holidays. competition QX, is cost an in service during higher QX active mid-quarter

products. QX QX invest is and typically in we Finally, rental when

The on depending activities in the of that quarters. and impacts you on a and statement. So QX investing on This gross means receipts. impact those that spend lag you'll overall cash expect margins which in higher cash flow impact on negatively margins should see timing be could QX,

later focused generally percentages revenue business. current dollars range margins the and earlier reflecting through scale grows environment. of choose the may to rather of more more count dollars reflects to low to and the investments. we and reinvest impact revenue benefit from subscriber than reflecting As more into Shifting our the due normalized high absorb on base We're a COVID with The operational guidance. the higher year case quarters leverage to midpoint

other business of we to last months, half the will a greater to has watch continue anticipating are though BA.X, COVID seasonality We to variants shown Omicron resilience over the return to QX normalized potential XX started in closely The progressively as impact. variants abate. starting and second patterns

full XXXX XX% year term, to XXXX. annually. We expect believe grow we $XXX at XX% a growth fiscal million million, of to can full versus sustainably bounce back. we year we year, from $XXX for anticipate benefiting longer revenue in And This revenue representing XX% COVID excess

recently revenue we million a to year $XX.X XXXX, million, and QX, the QX at For year-over-year active XX% the experienced of $XX.X a representing bounce back midpoint. of we Though enter quick XXX,XXX we XXX,XXX sub the expected, lower XX% expect growth expect to out of ending subscribers count coming at with Omicron of at midpoint. year-over-year the we representing than end growth

For full top dollars our margin, profitability year we moving and cash managing as are XXXX, actively is towards overall free goal. to flow

are negative of We into X% less year, due range fiscal a product EBITDA acquisition we a shift. for invest are OpEx be for able experience CapEx and to our customer to for Fulfillment this negative XXXX, and investments continues technology to margin. X% prioritizing expect in Therefore, to successful headwind. adjusted

marketing negative to against For $XX of QX beginning result XXXX, fulfillment higher early the higher year. a expect revenue we $XX.X technology adjusted in million. of at investments of is negative lower million expenses the expense, and the EBITDA This

Rent the with focused right of We balancing to value maximize robust will the profitability attain balance long-term intently and to seek on objectives both strike Runway. growth and are the

With for deck. Finally, are happy have a on XX it few our I note up earnings open that questions. to we Slide more that we provided metrics want guidance of on to

Operator

you. Thank

you. [Operator Thank now a question-answer-session. conducting will be Instructions] We

with from question is Schenk Morgan Please first Lauren question. with your proceed Stanley. Our

Lauren Schenk

can if from -- business to the sort notable short-term? much thus Great. color far? important continue half that them? One people really of consumer any in be Thanks very change. value is risk headwinds would questions. you've you backdrop then comment this you the hold rising of think Is And of anything Just you that a environment? will its think there this seen helpful. Any back that been Two do you. to year, to potential so on the for BA.X how of Thank is, terms macro curious to a the secondly service as it any Just on in performing that in of color. there's is more slowing about

Jen Hyman

Sure. Hi, Lauren.

any We comes more business and get impact BA.X it to the when variants. haven't continues resilient seen to-date more and to of

for to is our people office Rent even seeing And why year, have in actually growth million X.X to guidance. competitive As that's million from rehearsal they returning the about We're bachelorette it X.X year a relates means this People increases boom. weddings, issued lot brunches. we Sunday but feel talked benefiting an confident we We're then parties, the benefiting from full for that manner and hybrid fashionably office. value the revenue because dinners, very events actually more that dressing that we're subscriber the getting are even a inflation the Runway. us a advantage, is it from honeymoons,

and we the And as in hasn't month $X,XXX base, tracked I'll different seen inflation, more our sub value. designer higher peers. apparel getting prior seeing to she's she's we've XXx geographic retail paying products and why are of going our is and higher $XXX or note that also She's anticipate diversity cost even is about receiving worth that So diversity, a of product. value, very which even continuing. with business age up,

and two for receive customer purchase household So even can later; over base something over $XXX,XXX, use stimulus. we're we any income the they last others two, years, you the number didn't that stimulus one, and so number of our see a today XX% that instance, has because got, didn't not benefits

and on spend track does experiences. to business Our services

benefits. So our concerts, business people like offices, more more things Uber rides, returning and when go restaurant things to bookings, up, vacations, resume as those

feel good we the year. really about So

Lauren Schenk

Very helpful. Thank you.

Operator

Thank you.

Please proceed Boruchow from with Fargo. Wells Our Ike question next comes your with question.

Ike Boruchow

two for Scarlett, Hey, there. you. questions

just how Thanks. with second the referenced your can elaborate you on okay the in So the drop existing in any customers you with QX. the be off maybe increase? some that through you subs wouldn't on expectation Are earlier? over question And free you for that active that price price customers just to to then is, the increases go baking XXX,XXX get flow medium-term breakeven cash

Scarlett O'Sullivan

I Sure. for Ike, say. or questions the the question Thanks should

a yes, to give little detail. So, you bit more happy

incorporated yes, increase, acquisition, have on assumptions price the around retention as some On impact well. on we impact

all path also provided guidance in the the we've really So our XXX,XXX our in subscribers, terms that's and in average to that year, of expectations, reflected for And and then profitability. the okay?

XXX,XXX flow me to really So, the into an more XXXX a average an can And we'll revenue of there number go is Analyst get we expected at key Day. cash give in let's use would ARPU think the the assumptions resale at would And that of to about million. total math use in to and But first, of are that way say, in in detail you that over mid-term. this levers it I on $XXX and are five let on exercise. a moderate really that there free framework subscribers, reserve lot result growth that a now, profitability the

first included So, we is increases ARPU. not one an ARPU, increase, would to The we've I you in that said right? just but anticipate

than this XXX for let's will So million. use higher be just revenue that. But even simplicity,

fulfillment. is second The

us lower the about can XX% of we percentage feel which were fulfillment putting we points overall confident a in where a XXXX, percentage So by than few revenue revenue. of next reduce that as years we over cost few was

that prices continue been the non-trans get diversification. year. trans single then there offset we And doing every can that that slightly improve we which we've assume is the with the we continue go up way partly believe that and to side, that So on is we that way we to

share. is The third revenue

the expect mentioned is as that to higher I OpEx. fourth we We IPO. we had do normalize anticipate this that to said at So, XX% in that XX% The year.

So, parts. there more fixed on the

comp say right So, excluding because and cash would and G&A technology let's stock trying understand we're here. talk to I really through

currently two these subscriber growth. expect much what larger Our grow I And than to talk OpEx we XXXX supports count. moderately and base and it's happen will in we a beyond. think slower year this certainly items revenue to

we of the less XX% at expect can less revenue. or $XXX XX% So, of revenue. spend And of tech we at G&A million continue to and or marketing, to we're on be about then revenue, confident

which expenses operating basically CapEx. to in And and us results margin ability the around largest final adjusted again EBITDA really that of item XX%. the the CapEx is leads that So, our to is an product the cover which

So, and about be XX% non-wholesale with of of at you we that in saw expect at this year acquisition. revenue as guidance that's to the XX%

more goal non-wholesale that would making in our mid-term. us than the product put cash to CapEx heard is me so just that be for two-thirds You profitable. say below XX% flow free

little the Now, profitability. driving bit included turn and what flow to maybe think over and which and increases about about ARPU that. it cash anticipate I'll we And a revenue would talk reminder be per higher how I'll we accretive, I that margin free to ARPU customer a Jen do haven't do

Jen Hyman

Yes.

subscriber is So, but ARPU one for us is take from the value; increase we as two price continued we could second which are time-to-time things; from actions engagement. through

we've these the personalized of really So, done with engagement one customer subscription well and we've increased things programs of level is the loyalty.

paid They're month. I more our items month. a shipments of days highest deciding six traveling they're we actually their and that more What at quarter incremental subs extra QX and few in So, seven of was impacted sheltered subscription. of items our outfits this subscription were And an us weeks rate at extra XX% adding into our to means saw in where an by Omicron people because week. outfit I'm this of paid are real quarter home. the the need using need more paid in terms I they're into

the time-to-time. we through customer feel take to and to about we up have which primarily why from ability improvement So, actually customer increased focused also we're ARPU great -- due is actions going engagement experience to on price the

Ike Boruchow

Awesome. much. Thanks so

Operator

Thank you.

Our Michael with proceed with Suisse. question. Credit question from Binetti comes Please your next

Dan Silverstein

This is progress. for on on Michael. the Silverstein Dan Congrats

us. from questions quick two Just

to your any the to XXXX? demographics from of And of few supply words it's strong would in factors there different channels, terms so other far? longer more strategy in such evolved these any? really Runway's brand progress secondly markets rental extending the the the beyond the are very exclusive. all then might years non-wholesale reach progress like some geographic for So, been or cities onboard constraints coastal And then the term in acquisition to Rent there's you've in noted how the Can your front Difficulty] acquisition from solid limiting especially anything [Technical Firstly, customer on to over that encouraging recently given be if subscriber the Is next see pent-up New you have how in major or speak geography? Thanks. past L.A. demand progress York. one-third there capture

Jen Hyman

So, less case our COVID rates. and south and great has certainly in business on geography that's reaction those because to diversified. have the also seeing We're southeast more places subs

like Florida, and really places been are in XXX% And and one states and and they kind of us Georgia, on continue this to big of sunshine is always than for they were have more local sub that areas are So, pre-COVID counts focusing active fast. resilient during COVID. year larger strategies example Texas, our for approximately marketing on grow

you'll we're growth just of pace. earned focus finding and geographic owned of channels geographies that more kind is So, continuing and into paid some dollars kind at that marketing diversification us of our and those nice see and of our a

Scarlett O'Sullivan

answer it exclusive and there. maybe then designs the kick And Dan I'll on the question off

So, acquisition look in approximately if design XX%. for you year. be that stated And think XXXX our last that, already we've at penetration this year XX% was will that exclusive we for at

a of can bit have you for imagine, plan this to As quite time. we ahead

is in So really wholesale. confident we this feel on we're XX% goal mind that, to two-thirds going a-third And overall in business the have of of close very we in. that terms

one-third. to we getting about feel really good So

Jen Hyman

that a we'll we as this at was Yeah. of year, consignment X% XX%. XXXX, had And designs. And business for just our reminder basically in exclusive be

period in of So time. how short we a acquire very our tremendous drove we product change in

of to strategies. no will kind why see not I these build we continue reason winning So upon

and and really Our designers exclusive consignment also designs love from this. benefit

And about designers are the the So all platform. visit prestigious on brands for is to great. that you kind we're new amazing be off most And we're you some excited in to of excited have. kind some the new see our kind of how of to of us of it's quality bringing we show These actually we're we the do think the and that coveted the how facilities and year. styles for going of and the continue and trends

Dan Silverstein

Excellent.

Operator

Thank you.

Goldman your Sheridan proceed with Our next is question. Please with Sachs. from question Eric

Eric Sheridan

Thanks the for follow-up. taking I could if Maybe question.

were the XXXX we earnings then make talk reopening call, the On on those through against the growth investments? answers we and those and special about executed those back you so talked as What growth the investments about key to you the into variant broadly on part learning's a XXXX into Can investments? And how building what you dynamic proceed and more so the Thanks some be your investments West occasion out. little dynamic of played XXXX? far from of calendar thinking should wanted we growth bit about much.

Jen Hyman

Yeah.

we this So we're for on doing strong plan what environment. a capitalize market have really to

talk for let's a So like specifically events moment. about

rental So renters channels, subscribers. track event-focused creative we by would doing of CRM across are Why doing we to able owned paid – event and Because we into be this? earned like content across record have our and things SEO-optimized Xx long-term are to media content. paid convert one-off social increasing Xx being already a

help to not we funnel marketing of intentionally our for period have a time if for to as upcoming and very for many Runway, but this wedding position your dressed also We utilizing cost-efficient We've in launched increase Rent multiple month. recently in you're so easily of call And started wedding can just our a year, a you drive into us all the guest. very even only believe events to a events our for will concierge, efficiently this years so get come. stylist growth way the cost a to that book looks subscription you

to kind year. that the of a kind these for customers really group for a is to seeing strong certainly that, can really and of and code dress of think in office high-value lot ever there now, of fashionable I kind two years. to to than is seeing code to think more that that we that, trying it that, about it way buttressed And this a being do by before. a efforts. in we're as also We're So dress And is we're make momentum people was success easy of back I everything we're think a us get hasn't dressed there's workwear going And work. bought new

there's more a that have stuff I casual. and blazers is up and closet. usage her but miss actually certainly risks work. she's renting that, still We're year-over-year, willing colors pastel doesn't have work this fashion super So think she's wearing floral with blazer XXX% Actually, in take finding to that been she's and gone in prints, to offices blazers she

when more preferences So That's change, sizes most are solution. whenever customer trends we the whenever change, a customers. whenever change, hold we to really value-oriented value

on really this capitalize environment. just trying we're So to

for Another have that, pandemic. as well. We is thing another a-third view size, that interesting of changed that is the since Americans opportunity as us

sending focus address our travel focus this already we're continue successful how focus targeted for that, you've and a this been work, and to probably it. on very in to it's been So return on seen of out we've going this some to events, marketing on

Scarlett O'Sullivan

of on overall average even really just in we reminder months. one And And as to our at your customer investments. questions six efficient think these productivity we Eric are the And $XXX break a months. within blended of continue approximately acquisition revenue were on generating CAC subscribers cumulative beginning I and also in the around in operate a costs

Operator

Thank you.

question next Ross question. your Our Barclays. comes with Sandler from with proceed Please

Ross Sandler

to slides wanted ask of XXXX. I the or guys. the about at XX% at-home XX% in to with subs reach Hey pickup goal

costs the can on cost bit the is items unit And question of they But So much the how they from retention in behavior sub? more I deleverage -- changer standpoint other then XXXX like transportation how year? And then amount on is per for or it side? of Do guess Do Thanks. cetera? terms et seeing everywhere first the how a this game does frequency is more? in do change a-la-carte that or elaborate from good you a just or Scarlett just that of in your marketing that coming transportation to like order deleverage is sounded system. little we're a inflation that EBITDA EBITDA relative just a

Jen Hyman

Yeah.

national with the than she working it drive a depot blue is the on carriers it her experience It's a has pickup, really cheaper dramatically in and drop to no win-win. So pack us and because customer first up for longer to at-home off. bag and simplifies clothes it UPS

right customers this. app integrated our love not And our have seen now site experience. it So is we that into or

of crazy this option experience seamlessly still So doing you excited has integrating this very things and one schedule to experience impact it, and experience, a clunky adoption. few to many customer experience. come can just friction which we're feeling And product have reducing pickup to What seeing over it's and customer on can't think we're miss your we're months loyalty is the fairly about home. but into that improve so our next doing you the the we we're people a from this is

programs Now we it's you're shipments. personalized your not leading that paying fully last subscription to more remember these rolled out for year, because shipments

on reducing the So off time friction it's revenue more it's to every But you are might add at-home and the shipment, charts. and for CSAT a pickup want it's certainly scores higher that for margin us us. the

So we goal this subs set of of having XX% access.

a we're and we higher we'll our going to into experience hopefully see think integrating will that beat it adoption. no-brainer product And course, be goal. try Of to

Scarlett O'Sullivan

to we've that of on free And adjusted terms shifted question product is slightly Great. going able Ross OpEx, really as and some A acquisition EBITDA what's result being are the terms EBITDA maintaining we fulfillment and in So on as of our flow that so yes impact think invest we're clear planning in couple but year. product. we year in how adjusted in And you of three more successful for of CapEx we're of less that for the of should in this just, year part, this shift on, are in one we breakeven, EBITDA to And right? about the income things we to targets on want said. are in a spending is see that the statement then way then be I expense reasons dollars again, just on this adjusted cash of dollars for your managing and terms I margin. five overall our And that quarters. to

largely to We expect of whole points the and that versus for year basis pressure to see that's of really due transportation. hundred a couple QX

that with that just technology. We in deflect mention we investing what did about. course, are we Of of Jen talked some

we make the that invest with set the investments we started investments really Those strategic that in customer in to and doing business for the up fact really able are us. sure In be to want experience. to QX really

see And that's as that percentage then you'll we as QX close and of and of actually head in well about. So fit search earlier the in just reflected should again talked discovery really in revenues. stay count terms marketing reasonably

there's not a -- are there. much we there, So of change

business what So we're the it's dollars. first. in overall really a those overall cash focused margin the two look items. But free and do flow at That's really take on

Operator

Thank you.

Our next question. question Securities. comes from your with with JMP proceed Andrew Please Boone

Andrew Boone

question. Thanks taking Two for Hi, please. my guys.

you much. more process? it take product add-ons? Where for bring loyalty? think you to And Can model. can more experience, financials. overall many just marketing. customers? on personalization? talk any activity, this how in a this help we Maybe of on as double-click then strong a resurrecting more consumers strategy past And this back the to and the it Is so just about specific about you consumer then, customer increasing and this calendar is, is question, relates Thanks for guess. Is back us terms I can help second, to summer it of better first The understand more Just

Jen Hyman

Sure.

So let start me with personalization. just

drivers rent. whether of you wear the the loyalty that items of is, customers top One

as simply, in you. your the call, items fit And these I you fitting confidence is items the very conversion, when So of on mentioned a driver you major them. whether receive

see So We over of have fit, easier both photo lot with a from we'd photo she's rents into she customers that when also less of we're an know for customer. putting it XX% front you'll reviews investing likely submit issue an to fit. recommended and making perspective, our reviews kind in but those that algorithmic styles, the

to next most more and we features the fit unconverted critical into few customers her for to as view over things is out kind the the being we traffic especially and a confidence of her product prompt see will going of know new fit are that her you'll that likely give her, So personalization. part for quarters roll stuff that that

what of very of stuff kind journey, most items up that important that days fit your you'll the love for initial part of So is will show personalization you. you in that early

we're subscribers reserved on subscription fit, that and So are for see search customers. this acquired former reactivation our XX% of then continue of investing we that's discovery former customers, why in to year. And

business and this fairly So the -- been reactivation organic. always is has

come spend customers, building funnel to dollars in investing into we and even need reserve back to is, doing paid Our don't former an we're What back. subscription. from They better get are like, reserve organically. them we

event the a out this Runway to we of on-site testing amount of because we're offers, product the experience Rent macro subscription, from in mind, higher, to come. people coming an of kind to ways environment. And just with do year this do the that to is So and given think we lot be to want both going this use years fuel to to subscription growth year for

Andrew Boone

you. Thank

Operator

you. Thank

Dana question Telsey Group. comes next proceed Telsey with Advisor with Please from question. Our your

Dana Telsey

Thank you. everyone. afternoon, Good

pause is fourth the Thank of to the or What it incident, back? the do different As the how how in I see bringing paused back, about you. investment then around this seen the you kind need -- in were to who do you total them what which XX% see have do what cadence and quarter, post time, percentage was subscribers And than bring you you think Omicron the what in back? what's past? them what's trajectory comes this subscribers, you you think do of see of

Jen Hyman

Dana. Thanks,

as strong seen that, already we've bounce sub So, can I back. QX think, and nice guidance quick the you see really from a

great And some pause that's due to organic reactivation. of

was she seasonality about pause. when when already, to like, seasonality mentioned Scarlett people there's talking So that, some

reactivations quarter. But that as we things they we've heightened rates this a XX certainly this and of higher as end and even by less soon going January, And going up the as Omicron. January. on, lives, momentum their year, normal and kind normalizes, especially there's obviously as and in things on seen in year, of of because people was pick between December pause environment So in slightly see pause have have that

Dana Telsey

Thank you.

Operator

you. Thank

with comes Jefferies. your from Helgans question. Ashley Our next Please question with proceed

Ashley Helgans

thanks for our Hi, taking question.

when see reserve what's With of X.X that convert those then expect -- from this subscribers to Thanks. reserve to the the growth And over than million users and users year, weddings a user higher you to typical a subscriber time. evolve timeline do you conversion?

Jen Hyman

feel and we been event guests. fortunate always especially weddings synonymous our brand has with wedding and with really rental So, that

to because So, as traffic of comes they have our I said upcoming site event than more occasion. the XX% an or

other subscription. Now I And and it we've sheer into convert quantity right to this actually few into customers month, done because that over even the for two you them at have of events are of rehearsal more away that year a making job weddings, have any subscription financially directly might wedding-oriented two of convert in a to better better dinners, traffic kind getting time a events. think a logical kind wedding-associated given

that the months few the value-oriented for are we So, this last you positioning in as our dressed might get more have marketing way subscription seen that. over of to

see is feel reflected year kind revenue think actually that that, to drives you'll rental. events as growth reserve we going boom our the this that we drive much boom And to the just XX% of which it events full So, very is of think subscription year I in guidance about. good larger XX% as

from customers. converting kind come subscription XX% of reserve into the our of subscribers of trajectory customers terms from In former

test right job that better in the We over on-site via a subscription. types she's about we lot when on-site doesn't few lot And excited to you're via still going opportunity see convert her a be getting have it think have of recent offers, order a to offers, experiences try different via a can just though. had of types to the and do interestingly experience, of experience, her. I to see getting necessarily quarters after though. of next us reserve Like she's different to customer we us here a that successful

still are that see rented a event to years into customers even who convert for ago special back we older coming few subscription. a So,

really that database. we large kind this is fact the of have a we leverage first-party So, where very

kind target information to marketing We have our lots able to of communications and customers. of our customer convert on We're this order them. highly to in base data

Ashley Helgans

Great. Thanks so much.

Operator

closing no are over turn like time. questions back you. to There this to further Thank the comments. management at any I'd floor for

Jen Hyman

Yes.

forward everyone really proved for the thank today. that execution much anything, And so normal. the the all excited opportunity proud to for team. And guys about our you we have rental momentum you as capitalize our especially see I'm year joining thank on I'm us. and ahead, Runway’s that who look you look of call. our forming. progress we a on the Rent tailwinds Thanks on to macro So I our to be to joined in updating but QX again We 'XX for

Operator

This concludes today's conference.

You Thank may time. you disconnect your at for participation. your lines this

Rent the Runway (RENT) 14 Apr 222021 Q4 Earnings call transcript