RENT - Earnings call transcript Q1 2022

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Operator

Greetings. Welcome to the Rent the Runway First Quarter 2022 Earnings Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host Janine Stichter, Vice President of Investor Relations.

You may begin.

Janine Stichter

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

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

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

Jen Hyman

for us Thanks today. joining everyone. Hi,

ending subscribers. five margin guidance ending subscriber We finished XXXX. bottom key are points all and high a robust year-over-year grew our and engagement very EBITDA the our year-over-year across year-over-year. momentum, came proud grew QX on of active in business Adjusted improved active QX new our hitting We We gross quarterly strong XXX% record We points showcases QX performance metrics accelerated QX X which subscribers, line. for top and revenue with profitability. both exceeded XXX,XXX by above margin

double near-term over we off record are place we the evidenced to are achieving XXXX. track our what term May cash rate margins engaged, many was Additionally, highly our cases. meaning nearly One, key XXXX. laid in have strategies with in two out Two, XXXX, as evidence as year additional in are and bottom top completed they more for QX last laid on opt in line goal three more plans, loyal of operating are line they by profitable increasingly XXXX. rollout expenses with In confident see they our as more items three subscription pre-COVID. are and over which a subscribers in to to new are out have profitability And the April, quarters. they earnings for four paying impact us I reasons. subscribers were we well whose intended at strategies the call We sum, we the from to next continued for for on free use the our business cash more items three, in cover intended we that remain In key in our medium flow the drive three their to rent the subscriptions, pay hand than

While gearing in on to I initiatives and these QX updates wanted they're our are up, provide just financials. impacting our how progress

years one just opportunity advantage We the to of business: of boom unique to events top growth year of events. most believe initiative us XXXX gives out Rent the the Runway for The but not subscribers our in line flywheel. aspects potential taking of this first is come, funnel organic the the our build for

an others space customers to to our have of word-of-mouth. into on consumer in so renting as the very as them It's response result, red notice is And bold XX% knockout event come ensues, work the a the rent clothing typically, over same when from subscribers in us look customer did why the sexy year that's years, opportunities paid clothing organically. from some a via walks be women or room Rent The us And by had other when XX is dress, we us. restaurant women as wearing Runway. wow, Multiply and the conversation this reason have viral get XX is For not And Where reliant days share lot the marketing. Rent the roughly thanks. because you to or you our and are per that? the in awesome. Runway a of a

our as hemlines, new I why on full-funnel Rent into into like successful for tie highly as words, bolder are because COVID. is with solution addressable fashion trends We've the as during peak XXXX wedding sweat own shorter self-expression to am XXXX. The to partnership women partnerships tripled our us. tie-ins Zola cost-efficient across the future content product they other were taking teams and events-focused Runway events. that benefiting and and this for emerge building the a up We're coming as now from is wearing a continue It's clothing our wedding approach subscription bringing strategy of ever. nearly months pipeline now? translates So our using we this In dedicated women to position multiple to end, for season. are recent acquisition capturing market fact a market demand we've focused creative and than right right cutout, XXX business is marketing customer been experience. reserve this through with for channels strong from both and and the out To pants colorful fashion head Black

gravitate towards We any in all-time evidencing confidence category are gowns of highs. Customers are customers plans. and upcoming utilization greater highest more in QX having cocktail dresses the seeing reaching and their with formal looks our

almost international case our XXXX. doubled travel As an has example, since as use fall for new subscribers a

coming cloud efficiency an over support enhanced back-end work experience that top Our discovery term quarters. focused and expected search and investments consumer the nature. to line which fit, rolled scaling we third more for provide and infrastructure long and in search and second and QX, our are be and the initiatives, provide is iterative In on to benefits out

bottom our line. Now to the strategies shifting impacting

we First, at-home X/X in over for about currently over the which well pickup excited XX remain live subscriber is the of markets, base. prospects covering extremely

a As also for to the pickup consumer convenient is us back more only expensive reminder, pickup national consolidation and but not to density for less inbound at-home thanks shipments versus our warehouses. carriers, of

base today at-home via to is pilot efforts. customers find of minimal offering We The garment well on her its Customer on half marketing phase more our plan adoption to sticker this are subscriber home year-end. with our pickup way initial a way of during our than by exceeded back. pickup out about bringing

to We within at-home meaningfully app the the product few months. pickup adoption experience next as increase expect to our is we set of which integrate launch into

code rental RFID, products more simplify took affords XX non-transportation are X XX% item has build XX via see automatically decade a to past in further year-over-year processes points RFID our to be many which individually readers to RFID the versus and of a our drove scanned step bar enables at RFID another we our our the labor gather reduction quality garment utilize quickly improve labor XXXX XXXX into with scan we software. Prior logistics warehouses, QX, automating which without see more out rollout data. end reverse sort technology of of costs the hundreds Second, completed we've within each This productivity and the over and on we the full to XX processes automation distinct continuing XXXX We by reduce returned units In all inventory we of we ongoing continue on than use tagging in in and rolling RFID into in investments millions benefits. issue us had throughout warehouses us can processes now, fulfillment to gathered of improved our to of our cleaning intervention. also process expense opportunities to digital and opportunity. longevity. cost-savings human times and to the data to

decisions which or ROI. processes garment expected which to we labor record whenever around we a cleaning digitally like Now discover to it us product restoration improve and defect, automate quality allows costs our can reduce is

now We over for which rollout also in used continued packaging is the of of shipments. QX XX% new being

current always to supports be need reusable garment waterproof we've for and but to upon is and improved also making which compared for our packaging water been it pack it, to cost-efficient Our by doesn't us Runway new laundered goals back. easier for and packaging our our the has reducing more usage customers. The Rent sustainability

represent XXXX, grow are excited product RTR year. the about we with track a in partners new. acquisition We Designs Exclusive nearly Exclusive Design and of and by mix Designs remain around QX. Exclusive collections new of are on to to half combined continue six XX% XX launched pipeline which our Share in Third, this

to striking our flow cash within the embedded that's midterm to of distance are get We free X/X in plan profitability.

like to on opportunity U.S. want bit continues ago, our a reflected declined. in our I'd character speak which To and guidance on at is demand and to quarter. was hit when macro and everyone's Lastly, customer But touch home, very which I this sheltering our environment to is grow to business of is the team. the take our years uncertain. to COVID our date, Two significantly mind positive outlook this the

of transformed business. on of the our a as bold Our in nearly focused the changed Runway We of Rent of added them. made amount frugality embedded DNA. way matters doubled our financed tough is We culture to our rental and reacted swiftly We dollar our and and that subscription warehouses processes We programs. the cost every our team cut a products because of from support series we vendor decisions in spend significant with area to were we automation. the every our margins significant

It's We that an the out into a environment the our ownership. benefit believe to conducive the we the a data as days COVID back stands is important drive challenges the business to interestingly, scrappy, dressed. changes long-term resilience. That profitable large reassured said, business to Runway our prepared women to back to customer to experience our of is week. continue back shift that all business us. over consumers' events, give based for opportunity we get get and our that back I this innovative for concerts the is that to office vacations benefit wallet on we that plans and seen world, tested, most Rent battle growth that us and and back that confidence is and of feel entering believe, that even team for are We've have to capture be a our as can weddings, Runway yearning profitability may towards experiences few and business. usual not share And our well-tested what to how Rent but macro to stands

significant we a the savings women if retail will carte Given renting price $XX that renting consider an item in XX% of is believe cost-conscious from she derives around subscription cost around a she in rents la which and environment. program, our

our cost-savings with During in but as environment time, these of how swiftly, react retailers. the At always turn for are the per apparel them of Americans will consumer the to XXXX the larger be it opportunities to about and impacted confident and more they be keep recession, and way by options over to off-price I'll uncertain often aim stay to consideration And value-focused advantage were and plan purchase macro vigilant XX the ability times. They North are will We at part set not purchased we the just articles take that, during today. Scarlett. mainstream continued our We of to year. predict that resale customer Star. consumer our rental customer's can't

Scarlett O’Sullivan

for to financial follow the and us. everyone, quarter overview an call I provide to will our grow framework in towards and want driving Thanks, year. Jen with for again, guidance the joining and full second first while provided last results then of for I revenue 'XX our thanks fiscal profitability. quarter reiterate

businesses revenue our into on important focused ARPU are which from reserve funnels and and growing revenue resale by We also generating subscription. are and growing subscribers

XX% higher free three at in up the which impact I'd compared with subscription inflationary offer year-over-year, XX% target provide operating increased to to we four of update increasing subscriber monthly which the strengthened investments at subs by in of our expense acquisition expectations. fulfillment, QX, revenue with subs, of We flow expectations, end XXX,XXX last adjusted XX% ahead of in one of up the in quarter to Total paid and far, expenses a in seasonal buying in move are was by price the $XX.X value for were million we quarter-over-quarter follow QX. quarter. benefiting rise. major within proportion of of our continue in breakeven a fiscal year-end cost resulting cover bounce-back of was speaks in success subs with like increase OpEx a the average cash being more our revenue Phase an X Thus percentage an which add-on. is XXX,XXX in generated and XXX% subscribers, our subscribers. as the a year-over-year. ARPU, quarter-over-quarter maintain our our as next is rental XX% towards XX% significant continues subscription quarters to from EBITDA breakeven in XX% to to pleased now a out to to up two saw active This increase revenue after ending leverage rolled products. QX free subscribers, post-Omicron the profitability cost strong environment of and pause we reach subscriber total to on period active active rental has to We defined per clothing in add-ons the think cash midterm. of and see buckets the new with activity high subscribers. with subs where QX flow we new we or in XX% been to continued

approximately to as for ARPU add-on reiterate up year. are As to We shipment be fiscal items versus a outlook incremental minimal with X% are reminder, generally year last for existing added an these to our XXXX margin-accretive they cost us.

boosting reserve above the We also units revenue from earnest benefit relative to our in Customers in our saw and resale more revenue a social events led to And reserve bounce-back. plan of beat anticipated, post-Omicron resale XX% our particular also buy for expectations. saw which than over forecast. we subscribers our of

rental improvement as points higher higher revenue costs. X to absorbed at and year XX%. XX% rose versus costs versus share margin year-over-year in The product gross shipment 'XX due last XX% QX higher revenue, and count Our per to significant QX is therefore subscriber revenue revenue product and of depreciation

items performance-based share versus RTR no In some brands. shared which of Share with a forecast by was addition, are percent as revenue on our after their longer revenue revenue favorable payout, is hitting as max

which XX% year last QX in 'XX. higher costs compared expect due gross to transportation increases. largely We expected, margin full were costs. of in in year to shipping were QX knew with been year we mitigate 'XX HX these slightly XX% We have be increases these steadily for Fulfillment revenue cost diversifying starting generally to coming partners full as compared last year with and helped our

to productivity warehouse increases. offset addition, shipping improvement the In helped partly

revenue negative EBITDA percentage million last higher comping Adjusted as approximately full had negative at negative percent reiterate breakeven the maintain to of terms given year, five resulting $X.X revenue a XX.X% the target QX expectation environment, was We subscribers negative year, last 'XX versus last giving in costs versus margin confidence in unlimited year, of engaged last us as for 'XX. against quarters. for adjusted point of pricing getting our year. million four $X.X of QX improvement to and two to next COVID XX.X% our fulfillment subscription fulfillment a still in EBITDA representing year the In QX were a prior costs lower less and of XX%

of and fit results expect year. to in Our scaling to plan into of intend We again Marketing invested continuing QX revenue our QX. strong provides our dollars for costs, for the expense, spend 'XX, of marketing, efficiency in rest compared organic this year revenue G&A, our grew due and we in significantly excluding revenue as to in excluding QX which with absorb quarter out costs, saw fixed in the total maintain was technology our the rest in expenses, year. for higher forecasted employee-related when technology for XX% which QX into growth. 'XX in even with ability of lower marketing represented demonstrating at the was employee in to discovery we target operating and costs business XX% XX% and than of XX% I investments XX%, QX revenue you keep 'XX the approximately a our want search, subscribers marketing and call and benefits that we

Moving cash to free flow.

spend We continue largest to $XX CapEx, tends higher. anticipate our rental at product million you 'XX QX and cash be of approximately QX fiscal expenditure, remind seasonally, that and to

expectations product measured as fiscal for cash breakeven we should a hand. Free track more are our annually path reach flow spend. acquisition. out product be in in our laid year remain the of in normalized be than free flow on due in to on free seasonality cash flow to lower year margin slightly the 'XX We cash have of cash we with And on we previously to the midterm this

that remainder at look Rent A outlook environment and in And and a cost quarter. save reflected Jen provide the of are our and financial environment. are our environment our monitoring. the the a a reminder macro Runway as la subscription recessionary guidance carte is we cost-conscious very we services started noted, XXXX, As mindful closely of to believe a we even this in value in way and more

with can COVID just are also of costs a In portion particular, and fixed business. and in investments have our are we and demonstrated to ready impact manage a to and years we on a navigated negative We significant and effective experience variable impact our act respond we two costs downturn. of our tools able to

of that reported just on Turning -- acquisition of rest naturally to for slower summer see that QX. of for the what in pause This acquisition. year changing the months, customers the is is over reiterate of we I their means and and and periods guidance think about stronger when of generally want guidance. higher our to one typically We our year subscriber wardrobes. QX seasonality reflected for rates in historical acquisition

of to and for expect Runway variants two resale QX. In continuation and which we strong businesses addition, our expect though greater the higher half to impact reserve And Rent to years revenue second in only and environment the the time, saw this year continue of we for than has variants the patterns our we that means be incorporated QX a have watch expectations in similar resilience over we benefit COVID closely we events QX. slightly shown potential to prior

expect million, For $XX year-over-year midpoint we million QX, versus of at revenue the XX% to $XX representing QX growth 'XX.

For adjusted we in negative $X $X expect negative QX, to million EBITDA million.

In terms million, $XXX of versus 'XX. year, guidance full growth $XXX XX% our revenue representing of to are XX% we million year full to reiterating

revenue we We continue to longer grow believe in that XX% can sustainably of annually. term, excess

our fiscal actively are 'XX. and From X% of higher product acquisition pre-COVID expect seasonality be the lower negative EBITDA margin also profitability to free QX QX with than and flow to therefore and reminder quarterly seasonal a standpoint, when We progression of maintain to we managing dollars guidance higher revenue our typically by a spend profitability customer lean margins for prior would We cash share. negative marketing by of and X% impacted on QX profitability. adjusted

the up attain are balancing happy objectives that, we it for questions. to and value the intently with be Runway. With focused both we'll growth to to to continue open long-term strike of We profitability maximize robust on and right the Rent balance seek

Operator

with Stanley. And Morgan comes line our Lauren of from [Operator first Instructions] Schenk question the

Lauren Schenk

assuming percentage fair maintained from uncertain you you benefit, to pickup And And like do how trade-down cost a one of base can guidance is little margin more at-home want the it say serve guess, pickup. given subscription XQ a guess, potential any much you just long outlook, I on sort upside I results the with from you I embedding better just if given then the what you're at-home and that? ask the to quarter seeing are ultimately, ultimately savings And think or more explicitly. transportation of will? some the term? macro benefit the then second year conservatism is bit full backdrop? better not just of

Scarlett O’Sullivan

start with the Yes. Thanks, question. the for don't guidance. Lauren, Why I

we we we're given the reported really the rest and for for feel We So COVID good years what a for really really also to the prior and quarter. think that impact just it's the the the full our strong year. in the guidance best potential two and the guidance it's we're seen on maintain QX. based we've early of And that fact environment last giving volatile about macro in year year,

guidance targets terms the potential keeping could And want we're where pickup, be what why you one to at-home answer of really do maybe around then there? that's Jen, that our is. it So in

Jen Hyman

growth again, we stronger planned. embedded getting to at-home in with we few than had is kind I quarters. And continue into via the markets going see a both our high back carrier. mean us to in and app very national customers for this of activated versus up engagement over pickup cheaper It's pick units to shipping the next this customers from the way them be

for it but for think many I that are So possible we as access. to this had given can seen to it We to as subscribers possible looking as as big have remains this have the And big is more be a that. customers, how by get goal XX% able end just of to for pickup convenient at-home year. subscribers to much experience. access a hope We the that of to get beat be would

Scarlett O’Sullivan

the that yet the we the app don't stickers seen about in the Yes. few the I the opportunity we build app. over next into pickup we're to And the we've right months. just mean what on customers But excited it say, but are have will the when bag also seeing would and hoping there experience really know good now, we're

Operator

Wells Fargo. with comes line Ike And our next question of the from Boruchow

Ike Boruchow

or willing existence guys a it. we're into founded way talk Scarlett you effectively recession. you last like about feel of recession I of after Jen, were I kind the all curious, guess, I'm the kind

And in Scarlett, you your level? at were your But we you specifically, levers more So to how I to if be about this pull? what -- slowdown, think, you see can throw to guys do would an a prepared kind path that much high of alluded able it -- to economic then potentially would off you kind how remarks. of talk profitability

Jen Hyman

Thanks, Ike.

to date, first, business So continues grow. to our

Our positive reflected our But that's outlook closely in monitoring. quarter. guidance we're is and this

again customers U.S. remind to want to and by at fashion. years significantly I And wardrobe the impacted primarily we people in two wearing therefore, were in less just were So for that their sheltering home you need sheltering where a COVID subscription for of home. they impact, navigated when pajamas, had their variety we at

So during that period effective of we any think every to And time, we negative reacted incredibly to we're quickly. and We our to made costs with cut act the business. with that lots business. of on ready impact of tough respond across decisions experience able tools, to area

to We also of data the is monitor Runway. really to core Now Rent it's kind and time. going that understand data important back to analyze XXXX, real

this have app advantage a to that we highly week. subscribers unique in engaged. So our come over times They're three

as see it. So we their change a in soon behavior, as there's

to the to early us decisions throughout in those that the the we data XXXX for early hesitate And make costs led see to on. decisions making started and in really March cut right we So very swift didn't bold business. business

when So we shifts in know early are behavior. on there

us right clothing She for feel with a really showing and she's ever wants whether that in is our wants customers it's than engaging she the celebratory in before. shifting events, are how behavior interestingly, up are show And she for a that special to whether into and get feel what to it's shift way happy and it's she's now, we the seeing use the renting is to world. way. actually to ready whether fashion Now more sense weekends, for work, as out that we've seen into back she

Scarlett O’Sullivan

side in environment. the then laser-focused we take a represent terms the COVID. we they way of financial last on high get or of that practically profitability to significant speaking, with is remind Ike, means that our really which the to automatically we of let vary And costs path adjust the and more to question business either the And would of staying even cash will there have model of demand first the is that operating about equation, largely are operating a recessionary me our the did bit you which the more and discretion we on kind structure as XX% A that costs we they of are have. throughout business variable and flexibility with portion our approximately

would product change stuck in which CapEx, is had different that and saw be like PP&E are fixed. clearly, that remind businesses is our service XX%, the and the we would the performance-based things to remaining marketing. levered the is also than fulfillment I that which also our our But that it, then just share expenses, ability products card cash capital other largely with of the demand. payments customer costs, last that saw fixed you to that credit on be about if monetize revenue And fees, their And So before. cost of expenditures a couple or have over costs years. me mostly which us we over and we a mention do demonstrated at and our be G&A able And as rest companies e-comm these tech, heard And as we're bucket, could you've say reduce in business or that's retailers in could within XXXX scenario. of COVID I'd in XX% want other just onset because many second that we approximately inventory, we are employee-related opposed the you to lower-growth years the

the structure a cost about good in So of a business kind react to ability we downturn the our and feel of environment.

Jen Hyman

different. One consumer is other thing that I is would that slightly our add

have over incomes household of our XX% $XXX,XXX. subscribers So

and that. we'll the this environment in to So be may macro consumer to less changes sensitive monitor continue

Operator

Our Ross Barclays. with Sandler question of comes line next from the

Ross Sandler

impacts that flesh we the But if a they're recessionary clients, you of what a change improve designers then how auctions competition launch Jen, other the I Just I'm -- see savings those a conversations sudden, down, departments the be acquisition Runway might Could on like Share down. prop other returns rev of your just what from pay over to lots get threshold whereby all you mentioned that et in the go recession. through business when Scarlett, might bunch for the the of ad getting bit? mentioned inventory would trading shine customer RTR assume goes into consumers out then, that follow-up their positive, with might if costs value a cetera? have they the you curious, crossed huge Rent share. just if parts And to you by you macro that a the of from little And of question. a

is that curious, Share kind meaningful how we going forward? a we a and go-forward that benefit RTR? on that that basis Just And be like crossed of permanently the like a percentage about think of should do by

Jen Hyman

Ross. Thanks, Yes.

came that in for in and per growth I similar the became the very she T.J. world, student fashion. kind the Burlingtons Maxxs was what she still buying up she really of found recession, at XXXX really idea year pre-recession. massive fast saw we retail Runway sites that that apparel emergence really sale retailers in was XX was which a not that of things And that trading last and into flash of with of items and value-oriented other time, also going I what was -- of to that And only and the also was Rosses of like the like on Rent were the So during fascinating was recession. one buying customers

variety, for think quantity the and still high she was kind us at changing price she's consumer kind but lower showing she's same buying I So going wanted still that units points. amount of of of

in inventory of I would share their environment, even and/or ability consignment, shift sale off-price deeply alternative sites that would revenue own acquisition we product what with benefits. our to to to kind our into Their perspective, have able and So of to to more kind in take lower kind of where us sell flash be for from discount be happened? rates. it brand would brands Well, think more or of a

getting their agreements wholesale time. XXXX, during as many we our when have are designers that, into they went I COVID back over hit So in think designers. share into transitioned costs more been -- even revenue those COVID, saw When with we of

able think also leverage channel a kind environment. So your I be more as point to well, marketing consignment I do of this in as I comes even consignment more come To they and drive have case think importantly, trust partners. the we'd to transportation of we would paid more might leverage negotiating negotiating back relates to spend. it it think, that when recessionary

transportation were transportation because from the over partners two partners one we amount proactive increased So in And we were just dozen two, to more XXXX partners with in rising two of is we more approximately Number and of actually expenses started a negotiating centers that the equals ways. we worked may saw which leverage. consolidation partners as we down examples. to that table and our pickup implementing first a be strategy, the rates might negotiate in go consolidation think partners for and home to potentially little back e-commerce are We come time willing while.

Scarlett O’Sullivan

that the forecasted. hit percentage Ross, exact we the of the I'm better our had positively pleased than of terms not but we RTR, gross did units disclosing were that it in results And were their impact with really and cap to related by margins so questions Share

In a year what do is which call vary. increase going can would products I the last the at products versus really slightly Share on our of expect that how I year. going close of and said which to to those by their already the benefit. forward, depend ongoing customers terms look RTR choose possible an caps margin are that on But gross certainly proportion it's hitting we take it's It's to this

Operator

Sachs. And next from question line the Sheridan comes Goldman with Eric our of

Eric Sheridan

two, as is on an about in terms the or long your of of a Anything either out better how could over office that customer gross behavior update growth? efforts us that the sense be call I term. can. would prior be playing in one. in there automation there talked seeing the about of dynamics the geographic business a margins how long should to to of driver thinking anything the might some a we promote calls, differences That Maybe as give term? number if additions in the we've future be terms into add automation about And lot of for you're business to might One, return

Jen Hyman

Yes.

them We're back we're We're are geographic behavior a actually in and our in So all much resilient the differences customers there's far seeing. office be board geographies seeing across that certainly a week. COVID customer that seeing more not the impacts few to variants. in days

two she back office the aspects One the of is a five therefore, bought interesting way the to years. that she going of office in workwear just the And in past a week. hybrid hasn't -- back isn't yet and in days

what dress purchasing So a anymore. if less don't workwear makes justifying to five there really not is days if week, you know even be your sense code going you're new

that workers now the the come runway the kind the one I renting office lead environment, power in more to past. believe employers even office the think back. days makes during of So sense a out sheltering think more events. we And in going And their think things weren't week may People people just we have cases of to attending They into offices. celebrate weren't people interestingly, still be not the many we recessionary not were a a at People than really and get into when go they for still of They home, They Year. were could that more to call because back offices into is more would may were people in walking still recessionary COVID, about that more. go married. around people I neighborhoods. offices environment, New In socializing. lot request

wardrobe. the more that to variety think even we So here focused consumers. more in dressed and way get we on their the an to positioning be may Rent environment cost-effective intently because attractive And we know need people want where Runway heading we becomes this still as are that into most

Scarlett O’Sullivan

second that terms in we that we of is absolutely there then a and more automation. think lot out Eric your the of question, get can

just more restoration. it Jen of As We implementing just to and the us issue call, cleaning RFID. tagging make mentioned are which finished rollout when efficient comes the much digital on should we

of benefits which down that we we call confident can good last is in think fulfillment really few get that to there back is why believe this next over revenue are the So we cost ahead of that the XX% feel below years. us, have said what we why

Operator

comes Binetti Suisse. Credit with the Michael line question of next from Our

Michael Binetti

is for I jewelers. wedding of of first you the environment, the think that obviously, decades in that store diamond XX% -- heard just to biggest want to calls through year of us earnings kind for feel XX% of hammered rest home season know is point XX% lap this quarter XX% year. big I data and kind the to the gets revenues year. ask do a this we've those And you to but And -- I that going questions It's the marketing and said the connected in department onetime-ish to been don't converting kind quickly the of into this think this think business deploy you potential about reserve to the about how that of of towards how that summer bump comparisons should more onetime you customer? next you maybe lucrative big reserve customers LTV subscription very makes those some that

Jen Hyman

organic employee-related involve strong revenue marketing about to benefit plan doing lot our our on year, marketing. flywheel. We're about continue number growth marketing XX% spend we to good to really expenses continue really doesn't a that this of this from of paid actually feel excluding We one, because,

content. business. that about enhance might the partnerships. talked of We our virality about talked we improvements about product So talked We

period we success of pleased this for to reserve our current come. us subscribers many you really to QX terms business, for funnel expectations. our with And agree we're build our with the both beating time in in of is So by completely that a XX% and years versus really subscribers for important

we're back with the really a a convert rent la past customers coming again who really subscription. carte able rented this have and also We first-party for from database. to to to engage our prospects or coming back event to large And an them into

So balance can more and to XX% we to spend we business that number cash don't is growth that free one we with profitability. our than goal profitability that think the have driving flow

Michael Binetti

I could a if ask follow-up. And

to could do I'm you of ran feel that something help which every a nice and in probably experience I helped the New the over you've in little in like again that right that, the brand good consumers retail? this monetize that quarter. deemed resale add you? to for good and sample while -- on a resale move in year product some number think the was if of three-dimensional once you Was York that you sale Is -- that quarter to that realized a a aspect touch first

Jen Hyman

Yes.

which important it's because asked you revenue I sales that So are inventory resale. of distinguish think I'm for sample glad our part liquidation that really and to between

can are is over we our So three monetizing life. that end salvage salvage and know, We over single inventory that associated of inventory line sell years. is straight our the tested that a by to every accountants. as much multiple inventory years value apparel year depreciate the with is That how useful for we related of there's value kind you then its at

means it life longer no looks brand-new. useful to that a Now us

will unit the one the inventory. condition sales our condition, new resale into not consider take clear will we we that of like that clear kind in from we Sample not inventory once salvage goes are of and which channels inventory of we So But is rentable and our revenue. that's inventory value. it which out rentable of really

make keep revenue we is from they have when that home. to units they So at the resale revenue decide already subscribers

So as to it. it and come condition unit our units new which of a I they I at to is home. our any resale love with that's person part dress four dress I home. at revenue. pricing I can a their any have dynamically subscription, purchase the that these price in We're click have decide can and still like site which and/or to time dynamic see at and buy

Scarlett O’Sullivan

depreciating is want has little to the finished fact that really that sale or are This the life is line. even we've something gain strategy. the of not We've And just because something And does always double-click to a and that at as valued sample items a customers. already doing the at been double-click I points and new of This strategy. product to on bit we've Jen our more, by end sale useful sales sample is that Michael. still revenue really years, done on for a been said is That which revenue recognized is not successful a end life. always right? just that its It hit

our in resale reflected not actually that's line. So

Michael Binetti

on clarification. nice helpful And Very congrats a Okay. again quarter.

Jen Hyman

Thank you.

Operator

Our from the Piper Sandler. Zvejnieks next with Abbey question comes of line

Abbey Zvejnieks

question subscribers Runway first for Or off the do to two the mix there? the with discount business? customers you you Are subscribing, events? Or coming they subscription little of you been mix in directly what's the you highest convert the business? because going Michael's going a in wedding into decades. that are of What months them do to of season into see see the like in it's Rent your Going bit them being Like a later? reserve like do see get

Jen Hyman

is Well, about renting we've subscription for trying and and done for a a renters intentional, multiple first-time positioning even a this better to and over time subscription event. as try events drive into solution before job better special they

We see amount healthy customers be inventory on into a And come that intending. so of new that we are the of they subscription. event rent seeing may directly based them some

year. we us continues reason reserve signing in subscribers. XX% come That a of being though to be a rent is as majority because our of carte, critical for us the of that even are to And this certainly business people la buy people continues times our subscribers, funnel have up resale. a our really said, for our healthy funnel So subscription why that of year, such people customers over a a this comes continue from revenue a into can few future to that be kind from tap

we experience. renting, So try see aspirational more brands, to get agnostic. an in, Runway, dressed our inventory, and the deliver try Rent for use of breadth to is the time we're to way that that carry see you depth you customer incredible our designer want that of of we life. a just over course, come and kind you a job convince everyday smarter sustainable it's once And your to We subscription

Operator

JMP comes of Andrew Boone Our line Securities. the question with next from

Andrew Boone

paused subs. I'd like to start on

a subs -- be terms COVID just think COVID that there continued of a impact about future paused we we in In how normalized, expected? about secondly, accounts? think percentage do multiple do us that how is other past the seeing more of about increase, think way increase, increases? the for we looking about about But given how it's just guys next year or should going years. going are to for I'm more Or should think then As in words, what becoming of from guess, forward? paused you whether not do think structurally, whether guidance is that this we terms price potential price price forward? for I learnings And or on your from

Jen Hyman

paused coming keeps are them who's of month. are people people in like flexibility use coming and of that on pause a part in next there's subscription. our creates is how our different for a paused, want that That this their in than in subscribers loyal. people group are we mentioned business. lives, going the seasonality to the the people on kind call that natural what's It on which of subscription of month just out So I to based out pause

general of March between period May, -- in November they and So fashion and consumers more this buy time. about new generally, and about during been between to September wardrobes care think actually when and people more their we've trained clothes as

January be and where at more periods the rates newness for in opposed let's see we're we lot So of year natural period time snuggled the pause. winter kind home, might during a when higher for time of we those as of customers a wanting to that pajamas say, see of of use up the at our variety in during of to, engagement with sweaters dead and subscription a

very the we're in now that were compare in terms of in different folks we we of Now how do XXXX. that pre-COVID, are than pause a think percentage to right in environment

programs almost had different the have have that product we in XXXX. We double margins of that the have a programs that we

than much people in was baseline who's know what us don't wider to it used pause that like next continue XXXX. be later. bottom XX%? automatically out for We We of seen us be a and about baseline world. the in that quarters. total for over she to in data days this completely be customer All honest, a subscribers rebilled grow the know funnel subs cases XX%? percentage And is few because active we is use post-COVID we remains have of Will the in are to know. subs it XX for stay going We paused around XXXX. don't They're array us. using what to very the it of Will care around the But

provides. of active So excited fact in that about we sub a And record the are count love it number QX. reached that we the ending flexibility we

Scarlett O’Sullivan

and A continue probably a the Andrew. question really you we and for normally we have really year to to invest And think drive thank those. the you value. how have would in to over mid-single-digit that bit ARPU is to through how saw the time. say, We what portion one confidence do is of a time, think have about and actions price giving inflationary you some that, say, trying really don't to experience little get pricing her -- time ARPU you're We do would customer you more for the annual it that price And we increases future, trends. add-on And fact increase, the might on increases. driving right, to of believe those. happens than time as from see when this engagement, we right, increases makes perhaps we think we through when That's strong have that it that I plan account might customer the the sense, for I in macro over do seen when decide activity really we're do specific we continues. higher for I that

Operator

comes next with the question of Jefferies. line from Ashley Helgans Our

Ashley Helgans

Congrats on the nice quarter.

Just wanted you to gross could provide a little on follow nice see bit us. the color up a We for just and if quick one margin more expansion.

Scarlett O’Sullivan

question, Thanks for Ashley. one. that take I'll the

And changing seeing made that to changing we So the model, acquire program, past changes we've show benefit the margin. to in the see these about intended revenue talked way transformative very of products the we the was really like business lot gross of that and that changes a really we've we're scaling was now the that even COVID, similar out more actually versus last in higher dollars a break much year. year, margin of One, our so this couple XXX% why pretty the And depreciation the there's our QX up up reasons. year. If you'll see are year then was product gross versus down I that some numbers. I'd in say to last revenue reasons last

of So that as as now basically as means a percentage revenue half did about last that they those year. costs much what represent

that's just about really of add-on which we activity we but see numbers talking percent a in of favorable then nice the which reason been expected, pay one show revenue brand. strong said for obviously, as MACs So to than we also our up always Two, discussed those the higher to that I we've had and it's payout it mentioned longer today. we is because the what was us. improve forecast is to significant is what versus it is the the have going because no And share margin revenue three which of ARPU where

to being three business you dynamic margin So little to off I'll year. contributed those really product talk the a is of to gross the was Jen, last that unique better elements to want longevity are depreciation hand our model. about it and items the it the you really if substantially of bit which maybe our And maybe, than

Jen Hyman

Yes.

few clothing possible based is how kind that the that the of the time. feedback So about one on of things of the Runway Rent it's one that over last and I've misunderstood over observed I've clothing how -- months, monetize to is gotten things

season, don't later, have mark we go then and clear data because things industry again things that weeks years few you is a go has that this that, style have and then it. big it how mark the miss it XX there you that a of of away you down show right actually out forever, So number down out that's style fashion is Often, from to something one, launch don't functioned don't industry or in she retail it that after And and the never product many a customer you and as about her about years runway long to whether inventory something that cares new the and every Rent they it's is can know of time the Runway. comes she as right our customers worn single that to seasons monetize previous is for wearing before. care the what off they've we cares

that show we've invested items because so why So customers to much our that's a are to we constantly of her. personalization fresh in new assortment want new

So frequently it's garment the really that's how important understand thing highly to old to it the is seasons other cleaned the is. of how that many used is more correlated lifetime been and much to

times new It's So to items the dependent restore fashion lifetime is cleaned. trends. it's entirely the not been and our on dependent many condition on into ability like how

anticipated still still fully XXXX We and can has and cohorts these depreciated. we inventory we make already that during So get we as XXXX much were And customers because didn't originally acquired in that have are cohorts in kind of that off inventory money as producing COVID. still use actually QX. been monetizing want they them and revenue

So of really able as that, think personalization drive things think, that time, is inventory of understand one the most important Rent to Runway. to well over we're monetization the I use of about dynamic to understanding I how

Operator

Telsey the of comes Group. line question Telsey next Dana Advisory from our And with

Dana Telsey

you points any what you you costs think costs you reduced revenue XX in it have year-over-year. XX% from far, the at costs the all that opportunity on product that and which obviously, from on in? As it been the have so been It could forward? in data why? put going Where And Any do seems product certainly markets markets of come what XX down, learning learnings the it's it by see home, the then there? about very coming like, product next that enhances interesting you're

Jen Hyman

was our acquisitions. to cash product to free profitability to that mentioned We've goal move non-wholesale drive flow

move of for XX% XXXX. our by us that RTR consignment to and a acquisition we Designs, from as non-wholesale non-wholesale business to Exclusive XX%. So QX started reminder, in Share And of is our product acquisition only

gone X.X of XX% being X% from to acquisition non-wholesale we've our in years. So

short to we ability highly midterm. acquisition the in from feel move over XX% our to kind to of So product confident XX%

Scarlett O’Sullivan

Maybe something I to can add that.

Jen Hyman

Yes. Yes.

Scarlett O’Sullivan

I -- on think So we think of CapEx where question percentage just revenue, is. your product that as and a follow-up was do

And about we're of do that that, with So number we down revenue. range you XX% of the can see and midpoint our and said comes on time of we guidance you $XX over spent reasons have CapEx with percentage Exclusive at about the for talking product confident is feel the of percentage of helps the that higher mix the which that Designs total Jen the that dollars the fact and revenue. and see shifting just more obviously million

So key that's a to of cash flow breakeven getting free midterm. element we optimistic and do in confident that and feel in the

Jen Hyman

learning biggest customer on how of I wants this think launch pickup that much it. at-home the is the

pick garment find yes. this And more So who and sticker, at has that, now it XXX% a engagement. the it never for is is that so right given the schedule, bag many woman a busy a could who the customer you on me much life, your non-technical was is out gives who we'll has in who me up very ability to customers sticker job, is it house who the has has house even at pick and that it order -- a the way and family, my Come launch. convenient The control may up see is. to She especially a via social only you once they're see. that like cases,

the Rent Runway the make experience we're out we the -- the taking so friction some of experience. of And

Because we kind as next data going customer been pickup, broadly. months launch app. is the and at-home think site pickup has into real our the high Dana, over come, I more it satisfaction into the we've of our of few how of tried just rate to Now launch to at-home

of getting saw, subs like of XX% available the to the XX% moving of the quickly in by it's over markets predicted the So very of QX. we at than as We're more year. being it you to of full end in a to -- to it be lot end

thrilled. it's And I a we'll once lot launched data think the on really and we're So have more app in site. the

Operator

to the turn have of session. we the reached call question-and-answer back now end for I'll management the over And closing remarks.

Jen Hyman

joined momentum. the to continuing by on I'm have continued energized our excited XXXX So us thanks place. to so plans I'm QX look much who And progress we on we call. our in everyone to today. about forward update you our

for So thanks joining us. again

Operator

Thank And at your disconnect you lines this you time. your may this conference today's for concludes participation. and

Rent the Runway (RENT) 10 Jun 222022 Q1 Earnings call transcript