Q3 2024 Rent the Runway Inc Earnings Call Transcript
Key Points
- Rent the Runway Inc (RENT) achieved a significant milestone by nearing free cash flow breakeven, a major improvement from burning $70 million in cash last year.
- The company reported a 4.7% year-over-year revenue growth in Q3, marking the fourth consecutive quarter of positive revenue growth.
- The special event rental business 'Reserve' saw a 21% year-over-year increase, and the resale business grew by 23% year-over-year in Q3.
- Significant improvements in paid marketing efficiency were noted, with a 23% year-over-year improvement in customer acquisition costs.
- The launch of a new subscription plan at $119 per month has shown promising initial uptake, indicating potential for subscriber growth.
- Adjusted EBITDA margin was slightly below guidance, primarily due to lower than expected other revenue.
- Free cash flow for Q3 was negative $3.4 million, although it was a $14 million improvement year-over-year.
- Average active subscribers decreased by 2.9% year-over-year, indicating challenges in subscriber retention or acquisition.
- Gross margins decreased quarter-over-quarter due to seasonally higher revenue share payments and higher fulfillment costs.
- The company had to strategically pull back on its resale business to preserve inventory for subscribers, potentially limiting revenue growth in that segment.
Welcome to Rent the Runway's third-quarter 2024 earnings results conference. (Operator instructions) As a reminder, this conference is being recorded.
I would now like to turn the call over to Rent the Runway's Chief Legal and Administrative Officer Cara Schembri. Thank you. You may begin.
Good morning everyone and thanks for joining us today. During this call, we will make references to our Q3 2024 earnings presentation which can be found in the events and presentations section of our investor relations website. Before we begin, we would like to remind you that this call will include forward-looking statements.
These statements include our future expectations regarding financial results, guidance and targets, market opportunities and our growth. These statements are subject to various risks, uncertainties and assumptions that could cause our actual results to differ materially. These risks uncertainties and assumptions are detailed in today's press release as well as
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