Rent the Runway, the groundbreaking shared designer closet platform, disclosed its financial performance for the fiscal third quarter (Q3) ending October 31, 2023, revealing a challenging landscape for the industry leader. As the market digested the news, the company’s stock experienced a significant decline, opening Wednesday’s trading at $0.60, down from Tuesday’s closing value of $0.66, with further decreases observed as the day progresses.
At the time of this publication, Rent the Runway Inc stock (RENT) has witnessed a decline.
Rent the Runway Inc
Current Price: $0.51
Change : -0.16
Change (%): (-23.56%)
Volume: 1.8M
Source: Tomorrow Events Market Data
Rent The Runway Q3 2023 Financial Results:
Rent the Runway reported Q3 2023 revenues of $72.5 million, marking a 6.3% decrease compared to the same period in fiscal year 2022 when revenues stood at $77.4 million. Active subscriber metrics showed mixed results, with ending active subscribers decreasing by 2% year-over-year, totaling 131,725, while average active subscribers increased by 4% to 134,646. Total subscribers remained relatively flat at 175,901, only slightly down from 176,167 in the third quarter of fiscal year 2022.
Gross profit for Rent the Runway in Q3 2023 was $25.2 million, reflecting a significant decline of 20.8% from $31.8 million in Q3 2022. The gross margin also contracted, falling from 41.1% to 34.8% over the same period.
The net loss for Q3 2023 improved compared to the prior year, standing at $(31.5) million, compared to $(36.1) million in Q3 2022. The net loss as a percentage of revenue decreased from 46.6% to 43.4%.
Adjusted EBITDA for Q3 2023 was $3.5 million, down from $6.6 million in the same quarter last year. The adjusted EBITDA margin also contracted, declining from 8.5% to 4.8%.
Outlook for Fiscal Year 2023
Rent the Runway provided guidance for the remainder of fiscal year 2023, projecting a fourth-quarter revenue of at least $74 million and an adjusted EBITDA margin of at least 7%. For the entire fiscal year, the company anticipates achieving revenues of at least $296.4 million, the same as fiscal year 2022, with an adjusted EBITDA margin ranging between 7% and 8%.
In a press release, Rent the Runway expressed confidence in achieving free cash flow breakeven in fiscal year 2024, but notably withdrew its previous outlook for free cash flow in fiscal year 2023.
Credit Facility Amendment
Concurrently, Rent the Runway announced amendments to its credit facility with the existing lender and administrative agent, a move disclosed in regulatory filings with the SEC. The revised facility eliminates interest for the next six fiscal quarters and reduces the minimum liquidity covenant from $50 million to $30 million.
Investors and industry analysts are closely monitoring Rent the Runway’s trajectory amid these financial developments. The company’s ability to navigate these challenges and adapt to evolving market dynamics will undoubtedly be a focal point in the coming quarters.
