In This Article:
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Revenue: $75.9 million, up 4.7% year-over-year.
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Adjusted EBITDA: $9.3 million, or 12.3% of revenue.
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Free Cash Flow: Negative $3.4 million, a $14 million year-over-year improvement.
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Ending Active Subscribers: 132,518, up 0.6% year-over-year.
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Gross Margin: 34.7% in Q3 2024.
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Fulfillment Costs: $21.4 million, 28.2% of revenue.
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Operating Expenses: 48.7% of revenue, down from 60.1% in Q3 2023.
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Resale Business Growth: Up 23% year-over-year in Q3.
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Reserve Orders Growth: Up 23% year-over-year.
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Marketing Efficiency: Paid marketing costs improved by 23% year-over-year.
Release Date: December 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Rent the Runway Inc (NASDAQ:RENT) achieved a significant milestone by nearing free cash flow breakeven, a major improvement from burning $70 million in cash last year.
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The company reported a 4.7% year-over-year revenue growth in Q3, marking the fourth consecutive quarter of positive revenue growth.
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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.
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Significant improvements in paid marketing efficiency were noted, with a 23% year-over-year improvement in customer acquisition costs.
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The launch of a new subscription plan at $119 per month has shown promising initial uptake, indicating potential for subscriber growth.
Negative Points
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Adjusted EBITDA margin was slightly below guidance, primarily due to lower than expected other revenue.
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Free cash flow for Q3 was negative $3.4 million, although it was a $14 million improvement year-over-year.
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Average active subscribers decreased by 2.9% year-over-year, indicating challenges in subscriber retention or acquisition.
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Gross margins decreased quarter-over-quarter due to seasonally higher revenue share payments and higher fulfillment costs.
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The company had to strategically pull back on its resale business to preserve inventory for subscribers, potentially limiting revenue growth in that segment.
Q & A Highlights
Q: Can you explain the widening of the revenue guidance range for Q4 compared to previous quarters? A: Siddharth Thacker, CFO: The Q4 guidance range reflects our full-year revenue guidance of 2% to 4%. The range is due to our decision to retain more inventory as the rental business improves, impacting other revenue. Additionally, the timing of subscriber acquisitions and reduced promotions contribute to this range. The range is not indicative of negative trends but rather our strategic choice to hold inventory.